Posco likely to renew Rs 54k-cr pact with Orissa

South Korean major Posco today said it expects to renew "shortly" its pact with Orissa government for building Rs 54,000 crore (about $12 billion) steel plant while assuring no exports of any iron ore from there.

The statement comes in the wake of the Centre granting final approval to Orissa for diversion of 1,253 hectares of forest land for Posco's 12 million tonne (MT) steel plant at Jagatsinghpur in the state, the biggest foreign direct investment in the country.

"We hail Centre's decision to grant us clearance and expect to renew our agreement shortly for the 12 million tonne (MT) plant with the Orissa government that expired last year ," Posco India Vice President Vikas Sharan told PTI.

Sources said the pact, which is pending with the State Government's law department could be renewed in 10 to 15 days.

Sharan said the company is committed to the project and the welfare of the local community and would not export any iron ore from the project.

"There was no plans for export of iron ore from the project and now also we do not intend to do any exports. The low-grade iron ore available will be entirely consumed in the plant, which will be built on finex technology," he said.

Under finex technology, which is presently not available in India, low grade ore or fines is used in steel making.

Clearing the decks for the project, Environment Minister Jairam Ramesh today said the company should not export ore.

"I would expect that the revised MoU between the state and Posco would be negotiated in such a manner that exports of the raw material are completely avoided," Ramesh has said adding that the expired MoU had provisions for export which made him deeply uncomfortable with the project.

Asked when the company intended to start work on the project, Sharan said, "We are ready and would start work as early as the land acquisition is done. We hope that the state government would soon complete the land acquisition process".

Posco requires 4,000 hectares of land for project and state government has already transferred 600 hectares to it.

The clearance to the project, seen as of considerable economic, technological and strategic significance to the country, has been given on certain conditions including ensuring of tribal rights and compensatory afforestation.

The Environment Ministry had in January this year given conditional clearance to the project.

The Posco project comprises a steel mill, a captive power plant and a minor port, setting 60 conditions, project that included earmarking 25% of the area for the steel mill cum power plant as green area.

However, it had said that the final approval of diversion of 1,253 hectares of forest land for the Posco project would be granted "as soon as this assurance (for ensuring non-violation of Forest Rights Act) of state government is received by the MoEF".

The Ministry has put Posco project, which sought diversion of forest land, under scanner since August 2010, citing alleged green law violations.