Posco agrees to Odisha scrapping ore swapping for steel projects

Iron ore swapping had become one of the contentious issues surrounding the project

South Korean steel behemoth Posco has agreed to drop an iron-ore swapping proposal for its Odisha project.

Posco had proposed to swap low-grade iron ore from Odisha with high-grade ore from elsewhere in the country, for blending purposes, after diluting its earlier plan to export low-grade ore from the deposits allotted to it and import an equal quantity of high-grade raw material from Brazil.

But the Odisha government, through a recent circular, has disallowed all forms of ore swapping, whether in the country or abroad, for steel projects in the state.

Reacting to the development, Chairman and Managing Director Y W Yoon said, “If Odisha has taken such a decision, we will abide by it. The Odisha project has the top priority among all our projects in India”.

Iron-ore swapping had become one of the contentious issues surrounding the project, with Posco opponents criticising incorporation of such a clause in the memorandum of understanding (MoU) with the company.

Posco maintained the ore in Odisha being high in alumina content, it needed to be blended with high-grade ore for better productivity.

In line with the original MoU, the Korean firm was to export up to 30 percent of the 600 million tonne of iron ore allotted to it and import equal quantity of high grade ore. But during negotiation for renewal of the MoU, which expired in June, 2010, the state government had sought deletion of this clause, forcing the company to dilute the plan to swapping of raw material within the country.

Now, with the company agreeing to completely drop the swapping proposal, the MoU renewal is still not in sight. The state law department had opined against renewal after expiry and suggested a tripartite pact between Posco India, its parent company in Seoul and the Odisha government.

“We have completed negotiation on MoU renewal and agreed to all conditions of the state government two years back. We do not know why a fresh agreement has not been signed. We are told the state law department is looking into it”, Yoon said.

On land acquisition for the Odisha project, he said, the company had reduced its original demand of land from 4,004 to 2,700 acres to start first phase work comprising two modules of four million tonnes of steel capacity each.  The state government has acquired 1,700 acres. “They have handed us over only 548 acres. But this is only on paper and we do not have physical possession of any land”, he rued.

Land apart, the raw material source for the company’s Odisha project is yet to be tied up.

Though the state government had recommended prospecting licence for Khandadhar iron ore mines in favour Posco, a case challenging the move is now pending before the Supreme Court.

“If the court order goes against us, there are many other possibilities, we will talk to the state government on them, which includes providing us low priced iron ore to run the project”, he added.

On the state-owned Industrial Infrastructure Development Corporation (Idco) asking the company to implement Rs 200 crore worth of Corporate Social Responsibility (CSR) package in the project site, Yoon said, “everyday a new list of CSR activity is sent to us. We cannot implement them all, particularly when the land has not been handed over to us. We will do what is good for people”.

[Source — Business Standard]

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