New Delhi: Posco, the South Korean steel company, has been given the final go ahead by the environment ministry for the setting up of its Rs 55,000 crore ($12.41 billion) steel plant in Orissa.
The plant is to be constructed in east Orissa on more than 4,000 acres, 75% of which is forest land, and will involve the largest foreign direct investment in India to date.
Though environment minister Jairam Ramesh had given the go-ahead to the project in January, he’d specified that forest clearance—or an approval to divert 1,253 hectares of forest land without which no construction could take place on the project site—was contingent on assurances by the state government that there would be displacement of neither tribals nor traditional forest dwellers at the project site.
A Posco spokesperson said that Monday’s clearance “paved the way” for a fresh agreement between the company and the Orissa government.
Last month, Ramesh highlighted allegations by an environmentalist outfit that alleged impropriety in the manner the state government had accorded forest clearances to Posco.
Replying to a texted query, Ramesh said that the Monday order was the “greenest of green signals”, and that “until now, the clearance to Posco was on hold”.
In a formal order, the minister added that the clearance was subject to a host of previous conditions and an additional caveat that the company bear the cost of regenerating 1,253 ha of degraded forest land—equivalent to that used up the company for developing the project—at a location chosen by the Orissa state government.
The conditions include Posco ensuring that the entire project meets nationally mandated air quality standards, allotting 2% of its annual net profit for corporate social responsibility and ensuring that 25% of the project constitutes a “green area”.
Monday’s order also clears plans for an ancillary captive mining port on the back of 32 other conditions that essentially entail no construction in specific regions along the coast and monitoring the health of the coastal region being exploited.
“This has not been an easy decision to take and it will, I know, be both welcomed and criticized....I believe as a minister my responsibility is not just to do the right thing, but do the thing right,” he said in his order.
Forest clearance aside, another key point of contention that hindered Posco’s clearance was a 2005 agreement between Posco and Orissa, allowing the company to export as much as 30% of the iron ore mined in the state. That agreement expired in June last year. Ramesh said that such an agreement to export raw material made him “deeply uncomfortable”, and that any fresh agreement would have to do away with such a clause.
While Ramesh had accorded clearances for Posco to build a mill and captive port in January, which was perceived as the go-ahead for the project which has been on the limbo since 2005, he fired a fresh salvo on 15 April by publicizing a report by the Posco Pratirodh Sangram Samiti (PPSS), an Orissa-based activist group, which alleged that the state government had disregarded the objections of village councils of Dhinkia and Gobindapur to giving up their land.
These councils, according to the group, passed a resolution that villagers, who were tribals as well as traditional forest dwellers, lived in-and-off the forest that was being cleared. Therefore, the group said, the state government’s assurance that no tribals were displaced was false.
Ramesh’s order veers towards the state government’s stand, which is that the resolutions were “illegal”.
Prashanth Paikray, spokesperson for PPSS said the environment ministry’s decision wasn’t surprising. “We’ve raised these issues before and exposed the Orissa government’s lies, but we also knew that the ministry would give in. We will continue with our agitation and take it to the highest courts.”
Posco planned to develop the project in three phases, with the first phase of 4 million tonnes to be operational by end-2011. The rest of the project was to be ready by 2016.
Industry experts said that the controversy surrounding Posco was a major learning exercise.
“Industry should realize that it cannot take things (forest clearances, popular opinion) for granted and government should facilitate a more transparent process by which industries know what clearances are needed beforehand,” said Seema Arora, head, CII-ITC Centre of Excellence for Sustainable Development.
Ritwick Dutta, an environmental lawyer and a close observer of the Posco saga, said the agitation and unrest surrounding Posco was unlikely to die out soon. “Posco got its environmental clearance in 2005, but it was the subsequent popular agitation that led up to closer scrutiny of the clearance. There is still widespread opposition on the ground and several related legal issues that could be brought up to stall Posco.”