The Posco spat may be coming to an end

  • Kanchi Kohli
  • Updated: May 03, 2015 22:42 IST

This is the 10th year of the MoU that was signed between South Korean steel giant Posco and the Odisha government for setting up a range of operations — a steel plant, captive port, and a power plant along with rail and road networks — in the state.

Back then no one anticipated that this MoU, touted as India’s largest foreign direct investment, would be where it is today. Over the years, this proposal has presented lessons on what could happen if environment laws are compromised and investment is pushed through despite local opposition.

It is known that Posco’s efforts to roll out operations in Jagatsinghpur were met with stiff on-the-ground resistance, legal tussles related to environmental approvals and granting leases. The state set up review panels to assess the project’s impacts but they were inadequate or lacked critical information.

One important issue based on which the environmental clearances for the steel plant and port were sent back to the ministry of environment in 2012 was that Posco had done impact assessments for only a 4-million tonnes per annum (MTPA) steel plant when they were acquiring land to construct a 12-MTPA plant. This was when the clearances for both the plant and the port were challenged before the National Green Tribunal (NGT) and the issue remains unresolved even today.

There is a case pending before the NGT since 2014 and it has questioned the revised grant of approval to the steel plant on several important issues including optimisation of the land.

For the last one month the media have been abuzz about Posco shelving the project and possibly moving it to Jharkand. There is some other related information floating around: Major investors are withdrawing from the project and Odisha is taking back the land that was earmarked for the project.

But more importantly Posco has now been asked to bid in the auction for the iron ore mine at Khandadhar in Sundargarh district of Odisha. When the project’s objectives were being debated, studies had pointed out that mining iron ore was the key economic focus of the project. It is for this reason it required the captive port: For exporting iron ore.

Steel production was never the primary objective. With the new mining law and a system of auctioning mines in place, it has been reported that there are no chances of the South Korean company getting the mine without participating in the competitive bidding process.

The MoU expired in 2005 and was never renewed. Today, the company has only the environment clearance for the steel plant which is operational.

All other approvals have either expired, been struck down by courts or are yet to be made operational. The mining proposal never reached the impact assessment or approval stage as the lease was not granted.

Despite this, the fate of the Posco project is still not clear because there are no official papers on its future in the public domain. It is for this reason that the Posco Pratirodh Sangram Samiti, which has led the local resistance in Jagatsinghpur, issued a statement in April that they “are not willing to buy the story” till there is a public announcement on the issue.

Kanchi Kohli is member, Kalpavriksh Environmental Action Group
The views expressed by the author are personal

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