Further delay likely in Posco's India project

South Korean steel giant Posco's 12 million tonne integrated steel project in Orissa is likely to face further delay as the state government has said its application for mining lease would be considered on a priority basis only if "the steelmaker adds value to its proposal."

"It is not necessary that Posco would get a mining lease in the state as there are 40 bidders in the fray. The Korean company's case could only be considered favourably if it adds value to its proposal," Orissa Industry Secretary Ashok Dalwai told PTI.

He, however, did not elaborate on what he meant by adding more value to the proposal. The world's third largest steelmaker, in its MoU signed in June 2005, had proposed to build the plant in the coastal state's Jagatsinghpur district at a cost of Rs 52,000 crore (Rs 520 billion).

"The government would study all proposals for grant of captive mines, including Posco's proposal. Particular cases in which the applicants add value to their proposal may be considered favourably," Dalwai said.

Commenting on reports that the government has made a proposal under which it would transfer the lease for mining specific minerals to a joint venture company, to be floated by Posco and Kudremukh, Dalwai said Kudremukh has no captive mines.

"Kudremukh has no captive mines and it is also one of the applicants along with Posco," the Orissa Industry Secretary said. World's largest steel maker Arcelor-Mittal too has signed an MoU with the Orissa government and plans to invest Rs 42,000 crore (Rs 420 billion) in the state.