Fresh agreement with Posco likely by August end

Move will end the uncertainty prevailing for over three years since the lapse of the original MoU in 2003

The Odisha government is all set to enter into a fresh agreement with Posco India by the end of August, a move that will end the uncertainty prevailing for over three years since the lapsing of the original memorandum of understanding (MoU) in June 2010.

The pact will be a tripartite one, involving the Odisha government, Posco India and its parent firm- South Korean steel behemoth Posco.

“A meeting at the level of top officials will be held very soon regarding signing of a fresh instrument with Posco. The file will thereafter be vetted by the law department and subsequently move to the chief minister's office for final approval,” said a highly placed source in the state steel & mines ministry.

The Posco project cleared a major milestone on Thursday with the Jagatsinghpur district administration completing land buying of 2,700 acres needed for Phase-I operations of the steel project, envisaging 8 million tonne steel capacity.

Posco India had signed MoU with the state government on June 22, 2005, for its 12 million tonne greenfield steel plant to be set up near Paradeep. The MoU valid for five years, expired on June 21, 2010.

The extension of the MoU was delayed ostensibly due to differences between the state government and Posco India over ore swapping and employment clause.

Initially, Posco India had expressed its reservations over the ‘employment clause’ which stipulates that industries setting up their projects in the state have to reserve 90 per cent jobs for locals in the unskilled and semi-skilled category, up to 60 per cent in skilled category and 30 per cent for the supervisory and managerial cadre while giving them the option to fill up the post of senior executives from the open market.

In the original MoU, the steel maker was provided the facility to swap the low grade ore from its captive mines in state with high grade ore from Brazil. During discussion for fresh agreement, the state government had insisted on dropping this clause, following which, Posco had agreed to abandon its ore swapping plan.

The steel maker had also requested the state government to allow it to swap high alumina content iron ore found in Khandadhar mines with high grade ore within the country. But this was also dropped later due to state government’s opposition.