No problem in granting PL to Posco: T Subbarami Reddy

The South Korean steel major Posco which proposes to set up a 12 million tonne per annum greenfield project at Paradeep in Orissa will not face problem in getting the Prospecting Licence (PL) for Khandadhar mines. This was indicated by the Union minister of state for mines T Subbarami Reddy.

The company which plans to start the preparatory work for construction of the plant in October, is facing difficulties due to delay in grant of prospecting license (PL) and land acquisition.

"The legal process is going on and there is no problem in granting the PL to Posco", Reddy said. However, the state government (meaning the Orissa government) will have to co-ordinate and pursue the issue", he added.

The Orissa government had already recommended to the Centre for grant prospecting licence to Posco over an area of 6204 hectares at Khandadhar in Sundargarh district.

However, the Centre has sent the proposal back to the state asking it to hear the applications of other claimants of mining lease for the same area before deciding on Posco application.

It may be noted though the Mines and Minerals Development and Regulation Act-1957 requires the state government to hear all applications before making recommendation for the grant of prospective license, the state government favoured Posco on the ground that it was the largest foreign direct investment (FDI).

Meanwhile, the public sector enterprise, Kudremukh Iron Ore Company Limited (KIOCL), one of the claimants for the same property, had filed a petition in the Orissa High Court against the state government's recommendation for grant of prospecting licence to Posco for the Khandadhar iron ore mines.

KIOCL argued that the state government had earlier committed the area to the company and the company had invested about Rs.2 crore on the prospecting work done by the Directorate of Geology, government of Orissa.

It further contended that about 54 square kilometer of the total area committed to KIOCL overlapped with the mines given to Posco. KIOCL entered into an agreement with the Orissa government way back in 2003.

However, the high court quashed the petition and had asked the Central government to take an appropriate decision on the matter within three months.

In the meanwhile, the state government has sent the forest land diversion proposal to the Ministry of Environment and Forest (MoEF) of the Government of India (GoI) for clearance. The clearance is overtly linked to land acquisition for the project.

The company has sought 4,004 acres of land to set up its steel plant. Of this 3,566 acres were government land out of which 3100 acres are classified as forest land.