Posco’s iron ore project in Odisha still shrouded by clouds of uncertainty – by Meera Mohanty (India Times – June 2, 2013)

http://timesofindia.indiatimes.com/

After countless trips between New Delhi and Odisha over the past five years, Ho-Chan Ryu finally moved base to state capital Bhubaneswar in mid-May. The deputy managing director of Posco had good reason to do so. In the second week of May, a Supreme Court (SC) judgement took the Korean steelmaker one step closer to making the metal in India — a goal it has been steadfastly pursing against significant odds for the past eight years.

The SC set aside a 2010 order of the Orissa High Court — triggered by a petition by a rival, Geomin Minerals & Marketing — that had nullified the state’s government’s recommendation of allotting a prospecting licence for the Khandadhar iron ore mines to Posco. “This [judgement] will significantly help expedite the project. We are happy that it has come at a time when there has been significant progress on the land clearance work,” says YW Yoon, chairman and managing director of Posco India.

Burning issues

Getting rights to a virgin reserve of iron ore is clearly a shot in the arm but Yoon and his battle-weary team would know that celebrations are premature. After all, the fate of the Posco project — the largest singlecompany FDI inflow into India, at a little over Rs 50,000 crore when it was first blueprinted in 2005 — is proving to be as unpredictable as the tropical cyclones that hit Odisha. And sure enough, less than three weeks after the SC verdict, the project was shrouded by a cloud of uncertainty, yet again, making an October deadline to begin construction look like a pipe dream.

On May 28, the National Green Tribunal, a fast-track court for environmental issues, ordered a status quo on land acquisition until the Ministry of Environment and Forests (MoEF) decides on the lapsed environmental clearance. Meanwhile, domestic steelmakers, many with a head start in resource-rich Odisha, have decided to contest any allocation of Khandadhar iron ore reserve to Posco by the Centre.

Activists have taken the battle to the parent company and its European investors, in a strategy similar to the one that saw the Church of England sell its stake in Vedanta over controversies with the proposed mining of bauxite on the Niyamgiri mountain of Odisha.

Eager to prove its mettle

Issues pertaining to land acquisition have forced Posco India to scale down from 12 million tons per annum (mtpa) on a little over 4,000 acres that the Korean steelmaker had initially sought to 8 mtpa on 2,700 acres. The location, though, is strategic — 10 km south of the Paradeep private port, and at the mouth of the Jatadhari river. Posco believes this site is most suitable to replicate in smaller scale its 17 mtpa autograde steel unit in Gwangyang, the largest single-location steelmaking facility in the world.

The ideal setting coupled with a possible captive mine may explain Posco’s decision to stick it out through more thick than thin. Yet, the flip side is that much has changed in Indian and global economies since it signed a memorandum with the Biju Janata Dal government in 2005 to implement the project. This has resulted in Posco having to scale down on various fronts, beyond capacity and land. The plan for a captive power plant, for instance, has been revised to 700 MW from 1000 MW, and the facility that was initially expected to create direct employment for 18,000 people will now need just 6,100 workers.

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