Last month, the Korean steel major said it has decided to freeze its Odisha plan temporarily due to lack of progress. Since 2005, it has been waiting to get all statutory clearances, including land and mine, for its $12 billion investment proposal.
As a last-ditch effort to salvage the country’s single biggest foreign direct investment proposal, the mines ministry might seek fresh legal opinion to provide captive iron ore mine for Posco’s proposed steel plant in Odisha within the framework of the new the Mines and Minerals (Development & Regulation) Act, 2015. The project has remained in limbo for a over a decade.
Top sources in the mines ministry said they would seek legal opinion to explore the possibility of providing Khandadhar iron ore deposit to Posco, without putting the mine under auction. The new MMDR Act has made auction of all major minerals mandatory.
“Let us understand that there were genuine delays in giving mine to Posco by both the centre and states before the auction process became mandatory. There are provisions in the Act to deal with such cases and we would look at those options after getting the view from the state government,” the official quoted earlier said.
When contacted, Posco India spokesperson I G Lee expressed his ignorance about any fresh move by the government with regard to the Odisha project, but said as per the current law, auction is the only procedure to get captive mineral in India, which “we cannot change even in Parliament.”
Earlier this month, in a written reply in Lok Sabha, minister of state for mines Vishnu Deo Sai said the centre had advised the Odisha government to examine whether the application (Posco’s application for Khandadhar mine) is eligible under Section 10A of the MMDR Act so that further action could be taken.
Another official in the mines ministry said giving captive iron ore mine to Posco under the provisions of Section 10A would be difficult, as it waives auction only for such proposal where the government has issued letter of intent (LoI) for reconnaissance or prospecting (PL) prior to enactment of the new mining law. Posco was given assurances both by the centre and the Odisha government for captive mines, but written procedures were not completed before the new law became operational.
Apart from legally handling the issue, the centre is also looking at alternatives to salvage the Odisha project. Finance minister Arun Jaitley is expected to convene a meeting on the Posco project later this month in the presence of the Odisha chief minister and company officials.
The Odisha government has also sought the prime minister’s intervention. The state government fears that Posco’s recent MoU with Shree Uttam Steel for setting up a 3 million tonne capacity plant in Maharashtra might be a precursor to the company’s formal announcement of exiting from Odisha and shifting its focus to western India. Posco’s investment plan in Odisha has become a test case for the government to show investors that the country remains committed to facilitate foreign investment.
Ever since the company signed a MoU with the Odisha government for the proposed investment way back in 2005, the going has been a learning experience for the Korean company with roadblocks at every corner, despite land for the project belonging to the state government. Also, the project was given utmost importance by the centre, with the prime minister’s office constantly monitoring its progress.
Posco signed an accord with the Odisha government to set up a 12m tonne SEZ for steel at Jagatsinghpur, costing $12 billion. This size was subsequently scaled down to 8 mt in 2012, due to the state government’s inability to acquire the required 4,004 acres. It decided to set up two steel units of 4 mt each on 2,700 acres, before scaling up the plant to 12 mt capacity, depending on land availability.
Prasanta Patnaik