Posco climbs down, way being cleared for Oct launch

The showpiece POSCO iron and steel project in Orissa is set to take off by October this year with the state government and the South Korean company moving ahead to remove two major irritants that have been at the centre of the opposition to the project.

While re-negotiating their 2005 MoU — that expired in 2010 — the state government and POSCO are nearing an agreement to do away with the captive port component of the project, sources have told The Indian Express.

The 12-million-tonne capacity iron and steel plant — to be built in three phases — was supposed to have a captive power plant, a captive iron ore mine, a captive port and a township project.

The port, proposed to be built next to the existing Paradip port, has been opposed by local people and several environmental groups on the ground that a vulnerable coastline would not be able to withstand the pressure of two ports in such close proximity.

In return for POSCO giving up the captive port facility, the state government is exploring the possibility of arranging a dedicated berth for the company at Paradip, sources said. Apart from meeting the requirements of POSCO, such an arrangement will also ensure a regular source of revenue to Paradip port trust.

The renewed MoU is also likely to omit the provision that enabled POSCO to export as much as 30 per cent of the iron ore from its captive mine to other countries and import a similar quantity of processed ore. This was a suggestion made by former Environment Minister Jairam Ramesh while giving his clearance to the $12-billion project last year.

“I would expect that the revised MoU between the state and POSCO would be negotiated in such a manner that exports of raw material are completely avoided,” Ramesh had said. POSCO had said that it never intended to export iron ore from India in any case.

As the two sides try to reach an agreement on these provisions, the state government is also learnt to have opened dialogue with protestors against land acquisition for the project in the Jagatsinghpur district. Senior state officials recently visited the affected villages to find out a workable plan to meet the demands of the protestors.

According to the compromise being devised, the requirement of private land for the project is being scaled down from the earlier 300 acres to about 80 acres. This is expected to reduce the number of affected families who will have to be rehabilitated from about 750 earlier to about 250 now.

The reduced land acquisition could also mean that POSCO might have to downsize its capacity to eight million tonnes per year for the time being from the original proposal of 12 million tonnes per year that was to be set up over a 12-year period.


BHUBANESWAR: Posco, the South Korean steel giant, has agreed to a fresh set of terms and conditions stipulated by the Odisha government to kick off its much-delayed 12-million tonne mega steel project near Paradip in Odisha.

Reviving the MoU for a project announced in 2005 was possible after Posco, in a significant shift, softened its stand on swapping of low-grade iron ore with some foreign countries such as Brazil for import of high-grade ore. In another concession, the South Korean steel maker agreed to implement the policy of the state government regarding employment of domiciles in the proposed plant.

As per the new arrangement, the company has agreed to swap low-grade iron ore from its ‘yet-to-be-obtained’ captive mines within country through the state-run Orissa Mining Corporation (OMC). Besides, it has consented to give priority in recruitment to local youth in various posts,” a senior official engaged in negotiation process with Posco India team told ET on Monday.

Sources further added that the Odisha government, Posco India and its parent organisation Posco, would sign a tripartite agreement on the new arrangement very soon. Posco was not available for an immediate comment. The official negotiators representing the Odisha state had made it clear to the Posco team that the steel project could not be thrust upon the locals.

“We have asked them to earmark at least 100 crore for local area development. We want to earn the confidence of the people by developing infrastructure in the project-affected villages, provide piped water supply and create livelihood opportunities to end the six-year long confrontation,” the official said.

However, the progress in the MoU is just one of the many hurdles before the steel maker. The green tribunal has set aside the conditional forest clearance granted to Posco in 2011. The company has tweaked its project by deciding to make do with a 8-million tonne capacity plant, instead of 12 million, that it has originally decided by resolving to setting up infrastructure on land that is not disputed.

The allocation of mines to Posco has been challenged in the courts. The hearing will resume after the court reconvenes after the summer vacation.

Last week the state-run Industrial Infrastructure Development Corporation (IDCO) chairman PK Jena visited the project area and interacted with villagers likely to be displaced or partially affected. “We are reworking on the entry road to the project keeping opposition from a minuscule section of villagers. We want to carry the villagers with us by bringing substantial benefits to them even before the project is launched. Posco also has given its nod to a pro-people strategy,” Jena said.

On June 22, 2005, Posco India had signed a new memorandum of understanding (MoU) with the Odisha government to set up a 12-MTPA steel project in Odisha with an investment of 52,000 crore, the highest ever foreign direct investment (FDI) in the country.

However, the project’s first phase, which was scheduled to be commissioned in 2011, failed to take off because of protests by the local people against land acquisition.As per the project report of the company, Posco India requires 4,004 acres of land for its integrated green field steel project.

[Sources — Indian Express & Economic Times]

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