Environment panel clears Posco Plant of ecology threat

Environment panel clears Posco Plant of ecology threat

New Delhi: A government panel has said there are no ecological concerns over a $12 billion steel mill planned by South Korea’s Posco , a landmark project seen as a test of the country’s business climate.

The panel said its recommendation was for initial capacity of 4 million tonnes per annum (mtpa), adding other studies were needed before approving expansion to 12 mtpa.

The report needs to be approved by environment minister Jairam Ramesh, who has promised a decision by end-January.

Posco, the world’s third-ranked steelmaker, in 2005 signed the agreement for the Orissa mill - billed as India’s biggest foreign direct investment project. It was scheduled to begin production by end-2011.

The environment ministry in August asked Posco to halt work at the project, including land acquisition, while a panel looked into whether forest laws were being violated. Last month, the forest panel recommended the temporary withdrawal of permits.

In its report, accessed by Reuters, the government panel said: “(The environmental assessment) justifies the recommendation in 2007 for according approval to the project."

It recommended 5% of the project cost be spent on local communities and that Posco set up drinking water facilities for nearby villages.

Posco faces a separate hurdle in the form of a court case filed by a local firm against the Orissa state government, contesting its decision to grant a mining concession to the South Koreans. The local company had also bid for the project.

That decision lies with the Supreme Court.

Ramesh has hauled up or blocked several high-profile projects and his ministry has become more proactive in checking whether green guidelines are being followed.