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Posco's India project could face further delay

business Updated: Jul 26, 2007 15:12 IST

PTI
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South Korean steel giant Posco's 12 million tonne integrated steel project in Orissa is likely to face further delay as the state government has said its application for mining lease would be considered on a priority basis only if "the steelmaker adds value to its proposal."

"It is not necessary that Posco would get a mining lease in the state as there are 40 bidders in the fray. The Korean company's case could only be considered favourably if it adds value to its proposal," Orissa Industry Secretary Ashok Dalwai told PTI.

He, however, did not elaborate on what he meant by adding more value to the proposal.

The world's third largest steelmaker, in its MoU signed in June 2005, had proposed to build the plant in the coastal state's Jagatsinghpur district at a cost of Rs 52,000 crore.

"The government would study all proposals for grant of captive mines, including Posco's proposal. Particular cases in which the applicants add value to their proposal may be considered favourably," Dalwai said.

Commenting on reports that the government has made a proposal under which it would transfer the lease for mining specific minerals to a joint venture company, to be floated by Posco and Kudremukh, Dalwai said Kudremukh has no captive mines.

"Kudremukh has no captive mines and it is also one of the applicants along with Posco," the Orissa Industry Secretary said.

World's largest steel maker Arcelor-Mittal too has signed an MoU with Orissa government and plans to invest Rs 42,000 crore in the state.

Asked if the state had enough iron-ore resources to accommodate both steel majors, Dalwai said: "Orissa has proven reserves of nearly 1.7 billion tonnes and accounts for nearly 30 per cent of the country's ore reserves. We have enough resources to meet requirements of both the players".

Dalwai was heading a 27-member delegation which visited Jindal Stainless' facility here and has appointed the company's Vice-Chairman and MD Ratan Jindal as its brand ambassador to attract investments from Haryana.

Dalwai said Posco requires 4,000 acre land, of which it has already acquired 700 acres.

"Of the 4,000 acres, 800 acres is government land while the remaining is encroached upon by various farmers. The company is working on a rehabilitation and resettlement policy with the help of Xavier's institute, Bhubaneswar.

"No part of the land to be acquired by Posco falls under the tribal belt," Dalwai added.

He said the company is expected to start construction work on its plant by December this year and would subsequently commission a 4 MT steel plant by end of 2009-10.

The Orissa government delegation visited Hisar to attract ancillary and small scale industries in North India to invest in the state in a bid to promote the state as a complete industrial hub.