New Delhi: South Korean POSCO’s $12 billion steel mill project in India could be cleared soon after a panel investigating a breach of law in acquiring land for the plant submits its report on 16 August, a top official said on Monday.
Optimism for the project, now delayed by over three years, has risen, given the fact that its progress is being monitored by the prime minister’s office as a test case reflecting the country’s investment climate.
“POSCO is not as big a problem (as some other projects awaiting clearance),” the federal official, part of the decision-making process, said.
“We expect the 4-member committee’s report to be submitted on 16 August after which a decision will be formally announced,” the official who did not want to be identified, said.
POSCO wants to build the mill and mine iron ore in the state of Orissa. It signed a memorandum of understanding in June 2005 for the plant, which was to be built in three phases by 2016, with production scheduled to begin by the end of 2011 at the completion of the first phase.
But the project, touted as India’s biggest foreign direct investment, has been repeatedly delayed due to protests by farmers who fear losing their land and livelihood.
While the world’s No. 3 steelmaker is not expected to face any further obstacles from the government if federal authorities clear the steel project, its access to iron ore depends on a court verdict.
Last month, an Indian court told Orissa state officials to review their decision to recommend POSCO for a mining concession in the region.
Last week, India’s environment ministry ordered a halt of all work on the project, including land acquisition, while a 4-member panel probed if the forest rights act that seeks to protect forest land and settlers had been violated.
POSCO required 4,000 acres (1,600 hectares) of land in the state, of which 2,900 acres is forested. Final clearances for acquiring the forested land had been given. But there has been little progress in land acquisition because of the protests, prompting the environment ministry to investigate further.
Top steelmaker ArcelorMittal and India-focused miner Vedanta Resources Plc are also battling delays from allocation of mining licences and protests by villagers in eastern India.
Part of the reason for delays is a proactive environment ministry, which wants to protect India’s remaining forest land as part of a strategy to fight climate change. But that could mean giving up mining about a quarter of the country’s mineral reserves.
The tussle between industry and the environment ministry has drawn in a pro-industry Prime Minister Manmohan Singh whose office has set up a special cell to deal with the issue.
POSCO has said it did not expect the project to be delayed.
“While it is an issue between the Indian state and central governments, POSCO believes it will be settled well soon. We don’t see this will delay our plan to build the mill there,” Choi Doo-jin, spokesman at POSCO, said.
POSCO announced in January it planned to invest more than $7 billion in a second plant in southern India.