Land row clouds Posco's Finex deal with Mesco

Currently, Mesco is entangled in a legal dispute over 825 acres at Kalinganagar, the site of its steel-making facility

The transfer of Finex, a technology patented by Posco, to Mesco Steel has hit rough weather amid pending litigation over land.

Mesco is entangled in a legal dispute over 825 acres at Kalinganagar, the site of its steel-making facility. The land row pending with the Supreme Court has impeded Mesco’s Rs 13,000-crore plan to expand its steel-making capacity to 3.5 million tonnes from 1 million tonnes now.

“The deal (with Posco) has been delayed because of the litigation over land. It has also hurt our expansion plan. The Odisha High Court had given its ruling in our favour and the Odisha government had challenged it in the Supreme Court in 2007. The matter is pending since then,” said PC Sahu, joint managing director, Mesco Steel.

Mesco brushed aside allegations of forcible acquisition of land. “The Odisha government had acquired the land and handed it over to Swraj Paul. After Paul backed out of the deal, Mesco offered to take over the project. We were assigned 825 acres while the rest was given to Visa Steel and Jindal Steel,” said a Mesco release.

“We are ready to resume work as soon as we receive a verdict from the apex court. Meanwhile, there are no villages on the 825 acres and a falsehood is being propagated about denial of rights to farmers,” the release added.

To facilitate the transfer of Finex technology, both Mesco and Posco had signed a memorandum of agreement in March last year. In an earlier statement, Mesco Steel had said Posco would have 26 per cent equity in the joint venture (JV) project.

Consultant Dastur & Company was roped in to study the modalities of the technology patented by Posco. Since the Finex plant requires a lot of oxygen and power, Mesco Steel had already initiated talks with some companies for setting up auxiliary plants on the JV route. The Finex plant during operation would need a running 100 Mw captive power plant (CPP) and an oxygen plant of 1000 tonne per day (tpd) capacity.

Finex process is expected to cut hot metal production cost for Mesco by Rs 2000-2500 per tonne.

Finex technology, developed exclusively by Posco, is the process to smelt iron ore without using expensive coking coal. As the process uses normal coal abundantly found in Odisha, it will reduce the cost of production for hot metal.

Mesco Steel currently has two blast furnaces at its Kalinganagar facility whose revamp has been completed at a cost of Rs 70 crore in the last 18 months.

It has an operational mine at Roida (Barbil), 190 km from the plant site, with an annual production capacity of three million tonne per annum (mtpa).