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Mumbai: It is an imperfect 10 for Posco. After a decade’s wait, the South Korean firm’s steel plant project in India looks unachievable, issues surrounding it seem irresolvable and people associated wit  it  too weary to discuss it.

Posco’s $12 billion, 12 million tonne (mt) integrated steel plant project was formalized on 22 June 2005 with the signing of a memorandum of understanding (MoU) with Odisha, but what was India’s largest foreign direct investment—a showpiece to attract more foreigners—is now an example of how things go bad in India’s bureaucratic set-up.

In the past 10 years, social, political, environmental and regulatory hurdles have bogged down Posco and forced it to downsize the plant to 8 mt using about half of the 4,004 acres promised earlier; yet, land for the plant is still elusive.

“The project has been a complete mess. Other multinationals in India have succeeded mainly because they have assembling units such as those in the auto and telecom sectors but converting natural resources to metal is very different," said a former senior executive of Posco. “There are too many components and too many approvals are needed."

Still, in these 10 years, the company hasn’t said it will withdraw from Odisha.

That is because India’s need to build infrastructure would require 200 mt of steel by 2020, double that of current levels.

Posco has been tenacious also because of loyal clients that need high-grade steel, including those from its home country such as Hyundai Motors, Samsung, LG and Daewoo group that have manufacturing bases in India.

The firm imports about 2 mt of steel into India and has made massive investments to set up processing centres in the industrial hubs of Pune, Gurgaon and Chennai where its steel is cut and finished as per clients’ needs. It naturally is keen for a backward integration.

Manufacturing in India with its advanced Finex technology will cut steel-making costs by a quarter and then it could challenge stalwarts such as Tata Steel Ltd, Steel Authority of India Ltd and the Jindals.

“I don’t think they will give up that easily because it is in their economic interest to build a plant in India," said Ghanshyam Shah, a retired professor of social sciences at the Jawaharlal Nehru University.

The spokesperson of Posco did not reply to emailed questions on the future of the project and did not return phone calls made to his cellphone.

Tangles

Black flags, black arm bands and a march of villagers will mark the 10th anniversary in Odisha on Monday as adversaries have not forgotten the date.

All protesters will gather in Patna village, one of the 11 villages that stand to be affected by the project.

A persistent pressure has been kept up by Posco Pratirodh Sangram Samiti, a body that is said to have the backing of the Communist Party of India and is known to wield its muscle power in the villages.

“From the beginning, our stand has been ‘No Posco’, and it is still the same," said Prashant Paikray, convener of the Posco Pratirodh Sangram Samiti, “People are willing to fight till the end of their lives."

Environmental and regulatory approvals came in fits and starts. Just after the MoU was signed, the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, was passed, that granted legal recognition to the rights of the traditional forest-dwelling communities.

Following this, the Meena Gupta Committee in 2010 recommended to the ministry of environment and forests that the procedure to recognize forest rights be redone in villages that fall in Posco’s site.

The ministry ordered a “stop work", but the following year gave a conditional environmental clearance.

And likewise, the Khandadhar iron-ore mines saw flip flops. The mine that was to be given to Posco by the state was challenged in courts by other mineral companies. Now, the central government is likely to offer it up for auction in the wake of the Mines and Minerals (Development and Regulation) Amendment Act, 2015.

Other opportunities

Posco hasn’t kept all its eggs in one basket. It has been trying to get into integrated steel manufacturing in other ways, too. A few years ago, the firm was in talks with Uttam Galva Steels Ltd for a plant on its land in Maharashtra. But this year, it signed a memorandum of agreement with Mesco Steel for shipping a 600,000-tonne steel plant in South Korea to Mesco’s plant site in Odisha.

“The dismantling hasn’t started yet but discussions are on," said Mathew Stock, director on the board of Mesco and also the chief executive officer of investment and development firm Veer Resources and Projects Ltd. “Now the company has to be formed in terms of a joint venture 9JV)."

If the JV plant works out, Posco will finally set its foot into manufacturing in India, although it would be a small one and might still want a large integrated plant like its Jagatsinghpur project.

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