Centre seeks Odisha's response on iron ore lease to Posco

The Centre has sought response from the Odisha government on grant of iron ore licence to South Korean steel giant Posco for its Rs 52,000-crore (Rs 520-billion) steel project involving the largest ever foreign direct investment in India.

The development comes in the wake of a high-level panel formed to address issues impeding mega projects in the steel sector, reviewing the stalled projects this month.

"The state government has been asked to clear the Discrepancies. . . State Government's reply is awaited, "Mines Ministry has told an Inter-Ministerial Group, which had sought to know the status on grant of prospecting license for Khandadhar iron ore mine.

The global steel player's plans to set up a 12 million tonnes steel plant at Jagatsinghpur in Odisha entailing over Rs 52,000-crore investment is stuck for the last eight years on account of various regulatory hurdles and delays in land acquisition.

The IMG which reviewed the progress of mega projects earlier this month asked Mines Ministry as to what steps were initiated after Apex Court judgement on grant of PL for Khandadhar iron ore mine in May last year, an official said.

The Supreme Court in May had set aside the Odisha High Court order which had quashed state government's decision to allot iron ore licence to Posco in Khandadhar hills in Sundergarh district and had asked the Centre to consider all the objections raised by various parties pertaining to the mega steel plant and take a decision.

The High Court, on July 14, 2010 on the petition of Geomin Minerals, had set aside the state government's decision for allowing Posco mining in the hills.

Geomin Minerals had contended before the High Court that it had applied for the prospective licence for Khandadhar iron ore mines much before Posco.

The Odhisa government, which had moved the apex court, on October 29, 2010 on this issue, had contended that the High Court could not have quashed the state government's grant of licence to Posco as it was under section 11 (5) of Mines And Minerals (Development And Regulation) Act, 1957.

The state government in January 2009

had recommended Posco to the central government for granting prospective licence for Khandadhar iron ore reserves.

This was challenged by Geomin and later 16 other firms who have also applied for mining leases also intervened.

Meanwhile, any work on the Posco project is likely after Lok Sabha polls despite the steel maker securing environmental clearance in January for the plant.

"There is no progress on the project as the state government has not transferred remaining 1,000 acres to Posco.

Now, considering the elections, we assume there is not going to be any development shortly," an official has said.

Posco had also expressed inability to start work on the steel-to-port project in the absence of adequate land.

The steel giant had inked a pact with the Odisha government in June 2005 to set up the integrated steel plant and port project on 4,000 acre in the coastal town of Jagatsinghpur.

It needs 2,700 acre to commence work on the first phase, while the state government has already transferred 1,700 acre to it.

"Acquisition of the balance 1,000 acre is ending with the state government. Renewal of Memorandum of Understanding is also pending with the state government," a Posco official has told the ministry during the review meeting on March 10.

The steel project had received initial clearance from the Environment Ministry in 2007 and final approval was granted in 2011.

The National Green Tribunal, a quasi-judicial body, suspended the permit in March 2012 citing environmental concerns.

However, in January it obtained the clearance with a condition that Posco must spend 5 per cent of its total investment on ‘enterprise social commitments’, which will push up cost by $600 million (over Rs 3,600 crore).

As per Posco, if everything goes as planned, the Phase 1 of the project might be commissioned in 2018; Phase II will be completed three years after completion of Phase I, and Phase III will be commissioned within three years after Phase II.

Last year, facing inordinate delays in land acquisition and local opposition, Posco scrapped its proposed Rs 30,000- crore (Rs 300-billion) project in Karnataka.