Tribunal puts $12 billion POSCO plant in limbo

NEW DELHI Sat Mar 31, 2012 3:03am IST

Villagers hold placards during a protest in Orissa May 18, 2011. REUTERS/Stringer/Files

Villagers hold placards during a protest in Orissa May 18, 2011.

Credit: Reuters/Stringer/Files

Stocks

   

NEW DELHI (Reuters) - A tribunal on Friday suspended the environmental licence for POSCO's $12 billion steel project in Orissa, India's biggest foreign direct investment, in a fresh blow to business confidence in Asia's third-largest economy.

"The National Green Tribunal has suspended the environment clearance," environmental lawyer Ritwick Dutta with activist group Green Panel told Reuters.

South Korea's POSCO signed the agreement for the mill in 2005 and was scheduled to begin production by the end of 2011. Protests, environmental concerns and government inquiries into alleged illegalities at a related mining concession have delayed it.

POSCO (005490.KS) spokesman Chung Jae-woong in Seoul said he could not immediately comment on the ruling and it was not clear if the company would appeal. POSCO said it had received no official notification of the court's decision.

Foreign firms vying for a place in one of the world's fastest-growing markets have been rattled by a series of decisions and policies governing investment in recent months, including the cancellation of more than 100 telecoms licenses by India's Supreme Court hearing a corruption case.

The setback for the South Korean steelmaker, the world's third largest, came just days after Prime Minister Manmohan Singh told a group of CEOs in Seoul his country was a stable location for their money.

On a state visit to South Korea this week, Singh tried to convince more Korean businesses to invest in India despite the recent dents to investor confidence.

"The government is keen to move forward with the POSCO project," Singh told the business leaders on Monday. "I believe that India is a stable and profitable long-term investment opportunity. I urge Korean industry to have faith in India," he said.

Environmental groups have long complained that POSCO's plant would destroy large areas of forest in the poor state and would hurt the livelihoods of indigenous tribes in the area.

Dutta said there were serious discrepancies in the way the government issued a conditional approval for the project last year.

The company said it would build a 12 million tonne-per-year mill. Dutta said that was three times the size of project approved by the environment ministry.

"Strangely enough the environmental impact assessment studies are done only for a 4 million tonne project," the lawyer told the CNN-IBN television station.

POSCO is seeking to expand overseas as it faces a growing threat from home rival Hyundai Steel, challenging POSCO's dominance in high-end steel used in autos and ships.

(Additional reporting by Hyunjoo Jin in Seoul; Writing by Frank Jack Daniel; Editing by Matt Driskill)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (2)
lswain wrote:
You invite foreign investment, approve of a steel project, allocate a site for the same and then leave the foreign investors at the mercy of local vested interests, unable to ‘acquire’ the land even after 7 years, amidst protests from environmentalists and spanners thrown by various government agencies.
Would such a scenario qualify for criminal or civil liability of the State and Union governments?! I rest my case!!

Mar 30, 2012 6:12pm IST  --  Report as abuse
crmurthi wrote:
A tribute to UPA2 for the way they are running the government. Deeply mired in corruption, the government is paralysed. The head is unaware of what the arms are doing. PM is blissful ignorance personified. He is happy and content to be eulogised by others. He seems to be keeping himself at arms length from all happenings in his government including his own department. The ministeries are converted into independent fiefdoms,and run to suit the interests of the concerned minister and his stooges. No wonder the government is taking one step forward and two backward. This is evident in the POSCO matter. The world is laughing at us and our PM is gloating over the ironic accolades he receives.

Mar 31, 2012 8:23pm IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Election 2014

REUTERS SHOWCASE

TCS Results

TCS Results

TCS net profit rises 51.5 percent, sees stronger sales growth.  Full Article | Quote 

Election 2014

Election 2014

Promises and more promises: India’s parties pitch their visions.  Full Article | Full Coverage 

India Markets

India Markets

Sensex slumps 207 points, at 2-1/2 week closing low.  Full Article 

Telecom Sector

Telecom Sector

RComm to raise mobile call tariff by up to 20 percent  Full Article 

Chinese Economy

Chinese Economy

China economic growth slows to 18-month low in first quarter  Full Article 

New Direction

New Direction

CEO Nadella pushes data culture at Microsoft.  Full Article 

Bitcoin ATM

Bitcoin ATM

China gets first bitcoin ATM, skirting bank crackdown.  Full Article 

Strong Sales Volume

Strong Sales Volume

Small is beautiful for Coca-Cola as volumes soar in China  Full Article 

Breakingviews

Breakingviews

Diageo throws money at Indian empire-building  Full Article 

Reuters India Mobile

Reuters India Mobile

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