POSCO steel mill in Orissa likely to win approval - sources

NEW DELHI Fri Jan 21, 2011 6:52pm IST

A man walks past a logo of steelmaker POSCO at the company's headquarters in Seoul October 25, 2010. REUTERS/Truth Leem/Files

A man walks past a logo of steelmaker POSCO at the company's headquarters in Seoul October 25, 2010.

Credit: Reuters/Truth Leem/Files

Related Topics

NEW DELHI (Reuters) - A $12 billion steel mill in Orissa planned by South Korea's POSCO is likely to be approved by the Indian government this month, sources said on Friday, after years of delays over environmental concerns.

The expected approval, if given, would be the latest in a series of moves indicating that the environment ministry, which has until recently taken an aggressive stance on enforcing green laws, is softening its position.

Government and industry sources told Reuters on Friday the project, delayed by over three years, was likely be approved, possibly with some conditions including initial clearance for a smaller mill which will be gradually expanded.

Environment Minister Jairam Ramesh, whose hardline has brought him into conflict with industry, is deciding whether rules were violated in steps towards building the 12-million tonne capacity mill, which would be the biggest single foreign direct investment into India, in Orissa.

"The vibes are positive and the permission could come first for (a) 4-million tonne (mill) and then gradually it could be expanded," an Indian government source said, speaking on condition of anonymity.

Another government source said although the environment ministry had some reservations about the site of a port for the plant, it was likely to consider the project in a "holistic manner," meaning permission for the port could also be granted.

Neither POSCO nor the Indian environment ministry were immediately available for comment.

POSCO wants to build the mill in Orissa, but has been delayed by environmental issues and protests by local residents who say the plant will disrupt their largely agriculture and forest-based livelihoods.

The South Korean company is among several corporations, including Vedanta Resources VED, which have come under scrutiny from what had until recently been seen as an increasingly aggressive environment ministry, putting the department in conflict with others in the government who are pushing for rapid industrialisation.

In October, Ramesh threw out plans by London-listed Vedanta to expand its alumina refinery over green worries, but this week Ramesh said he was willing to conditionally reconsider Vedanta's expansion plan.

That remark came soon after the ministry said it could consider approving Hindustan Construction Co's HCNS Lavasa housing project on certain conditions.

Ramesh has also said POSCO's project was "fundamentally different" from Vedanta's plans, raising the likelihood that the steel project will be given the go-ahead.

Approval would see the Orissa government immediately starting to acquire land for the world's third-largest steelmaker's project.

Still, the South Korean firm has another hurdle to cross: a court case filed by a local firm against the Orissa government, contesting its decision to grant a mining concession to the South Koreans, as the Indian company had also bid for it.

The decision in this case lies with the Supreme Court, but that litigation is unlikely to delay the start of the construction if the government approves it.

POSCO was scheduled to begin production from its plant in Orissa's Kujanga region by the end of 2011. The deal for it, which was signed in June 2005, also included iron ore mining rights in the state's Khandadhar area.

(Reporting by Krittivas Mukherjee and Nigam Prusty; editing by Malini Menon and Daniel Magnowski)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Earnings Season

Reuters Showcase

Obama In India

Obama In India

In parting shot, Obama prods India on religious freedom.  Full Article 

Market Rally

Market Rally

Sensex, Nifty hit record high for fifth straight session.  Full Article 

Restructuring

Restructuring

Max India to be split into three separate companies.  Full Article 

India’s Male Tenor

India’s Male Tenor

India’s lone male tenor wants to ‘Indianise’ opera  Full Article 

Indian Equities

Indian Equities

Hornbill raising $250 mln to invest in equities - partner.  Full Article 

Ratings Downgrade

Ratings Downgrade

S&P downgrades Russia's sovereign credit rating to "junk".  Full Article 

Facebook Outage

Facebook Outage

Facebook takes blame for service outages, which hit wider Web.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage