Land acquisition resumed in Odisha for POSCO project

A villager walks past closed POSCO India transit camp at Balitutha in Jagatsingpur district in Odisha October 12, 2012.

BHUBANESWAR (Reuters) - The Odisha government resumed acquiring land for POSCO's(005490.KS) planned $12 billion steel mill in the state amid protests, a government official said, raising hopes the South Korean steelmaker could accelerate a project pending since 2005.

POSCO's Odisha project, touted as India's biggest single foreign direct investment, has run into major delays mainly due to environmental concerns and opposition from farmers over land acquisition, hurting the image of Asia's third-largest economy as an investor-friendly destination.

"We resumed the work only after the villagers voluntarily agreed," Satya Kumar Mallick, the administrative head of Jagatsinghpur district where the POSCO site is located, said on Monday. "Some people tried to obstruct the officials, but police drove them away," he added.

POSCO, which is backed by billionaire investor Warren Buffett and is the world's fifth-biggest steelmaker by output, signed a pact with the state government in 2005 for the 12 million tonnes-per-annum plant on 4,000 acres of land.

Odisha, formerly called Orissa, has already acquired 2,000 acres and is now in the process of acquiring another 700 acres. But locals have been opposing the move.

Betel leaf farmers and fishermen said the project would disrupt their livelihoods. Hundreds of women and children formed human rings at the site over the last few days to prevent police and officials from carrying out further work.

"The male police have ruthlessly beaten our women who had formed a human chain. Police and officials forcibly demolished the betel vines," Said Prashant Paikary, spokesman of POSCO Pratirodh Sangram Samiti, which is spearheading protests against POSCO.

But police denied the charge.

"No force was used. The work is being done without any trouble," superintendent of police Satyabrata Bhoi said.

A POSCO official said the company would continue dialogue with the villagers.

"We are happy to see that the government has started land clearance work. We hope the government will hand over the land to us soon so that we can start our land preparation work for the steel plant," said In Gweon Lee, general manager corporate relations department with POSCO India.

Trade Minister Anand Sharma had last week expressed concern over the delay of the POSCO project and said the federal government will conduct a review.

(Reporting by Jatindra Dash, writing by Siddesh Mayenkar; Editing by Himani Sarkar)