Posco may start work on Orissa project in July, to expedite other Indian projects

South Korean steel major Posco may begin work on its Rs 52,000 crore steel mill in Odisha in July, as the state government likely to hand over 2,700 acres to it by June.

“The Odisha government would start land acquisition work next month and is likely to hand over 2,700 acres of land to Posco by June in the wake of discussions Prime Minister’s Office,” sources said.

The development follows Prime Minister Manmohan Singh’s office reviewing with the Odisha government the progress of long pending 12 million tonne steel plant in the state.

Singh is on a visit to South Korea where he is scheduled to hold bilateral talks with South Korean President Lee Myung-bak. The project is expected to figure in the discussions.

The steel plant, proposed at Jagatsinghpur district in Odisha, is hanging fire for over six years due to land acquisition hurdles.

Sources said Posco is in the possession of 500 acres It requires 4,004 acres for the 12 million tonne per annum capacity plant. The state government so far has acquired about 2,000 acres.

When contacted, a Posco official said once the state government transfers 2,700 acres to it, the company will go ahead with 4-MTPA capacity initially and augment it as and when the required land is available.

Officials of the Odisha government are understood to have told the PMO that Posco should at least begin work on the land already acquired for the project.

The PMO is learnt to have asked from the state officials as to why the memorandum of understanding (MoU), expired more than a year ago, has not been renewed.

The issue has been raised twice in past by South Korean President Myung-bak with President Pratibha Patil and Prime Minister Singh.

Posco is yet to initiate any work at the proposed site due to opposition from the locals and activists against land acquisition. Besides, the environmental clearance for the project was also stuck for few years, before being given go-ahead early last year, with certain conditions.


Though the 12 million tonne, Rs 52,000-crore greenfield steel plant in Orissa remains its main focus, Korean steel giant Posco is looking at expediting work on some of its other projects across India as well.

Even as negotiations with the Odisha government and interaction with various organizations spearheading the opposition to the acquisition of land that Posco requires, proceeds, the company has partnered with SAIL to set up a proposed steel plant in Bokaro in Jharkhand. In Maharashtra is has also started work on downstream facilities, while it has also signed for a plant in Karnataka.

High on the agenda of its other plans is the introduction of FINEX, its patented non-coking coal steelmaking technology that uses iron ore fines, instead of lumps. While a few Indian steel makers have reportedly evinced interest, there are differing perceptions on the scale of operations with most proposing capacities of 6 lakh to 1.5 mn tonnes while Posco is keen on a 3 mt capacity.

The tie up with SAIL, for a 3 mtpa Finex plant on existing land available with SAIL in Bokaro that would utilize existing mounds of unused and freshly generated fines from SAIL’s mines at 10% discount to market rate, is delayed due to negotiations over the equity stakes of the partners, 51-49% is reported to be Posco’s preference, while government is keen on a 50-50% tie up.

Meanwhile, the allotment of Posco’s Kandadhar iron ore lease in Odisha has been challenged in the courts, and the company has begun looking for other supplementary raw material supplies.

Ho Chan Ryu, deputy managing director, Posco India said this is part of the company’s policy of being “flexible” in its India operations.

Posco’s investments and projects in India will be discussed when PM Manmohan Singh meets President Lee Myung of South Korea in Seoul where he will be going to attend the Nuclear Summit.

[Sources – MBSS & Business Standard]

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