Odisha to send report on Posco's mining PL soon

State govt had recommended PL in Posco India's favour in January 2009

The Odisha government would soon send its compliance report to the Union mines ministry on the Khandadhar iron ore mining lease, which has been earmarked for the Posco’s Rs 54,000 crore mega steel project in the state.

In a significant development Chief Minister Naveen Patnaik gave his nod to the compliance report on the Posco’s proposed prospecting license (PL) for Khandadhar mine paving the way for its submission to the Union mines ministry.

The report contains the findings of the DGPS (differential global positioning system) survey of around 2500 hectares of the Khandadhar lease area for which the state government had recommended PL in favour of Posco India.

“We are awaiting the government order for sending the compliance report on the Khandadhar mining lease case. Once we obtain the order, we will send our report to the Centre. We are only responding to a revised check list on which the Centre had sought our compliance. The state government has done a mapping of the lease area which will be sent”, said Odisha mines director Deepak Mohanty.

The state government had recommended PL in Posco India's favour in January 2009, as per Section 11 (5) of Mining and Minerals (Regulation and Development) MMDR Act.

Posco India got a setback when the Odisha High Court (HC) quashed the PL recommendation, directing the state government to conduct a fresh hearing of all the 226 applicants for the Khandadhar mines.

The South Korean steel giant finally got a breather when the Supreme Court in May 2013, set aside the Odisha HC order. And now, the revalidation of the lapsed environment clearance (EC) has rekindled hope for the Posco steel mill coming up near Paradeep. Though the state government had finished acquisition of 2700 acres of land for an eight million tonne capacity plant in the first phase, the steel major could not commence construction activity due to lack of EC revalidation. The EC revalidation, for a four million tonne steel project and 400 Mw captive power plant (CPP), is for a period of five years with effect from July 18, 2012.

In its order, the Union ministry of environment & forests (MoEF) has advised Posco to clinch a long-term agreement with Odisha Mining Corporation (OMC) and other private miners for securing iron ore till the captive lease is ready for operations.

But sources say Posco is unlikely to move ahead in its steel mill construction plan till it wins mining rights over the coveted Khandadhar iron ore deposits. “It does not want a Vedanta like situation where it would be investing such large amount of money without raw material security”, said an analyst. The EC revalidation for Posco has come with some riders. The notable condition is devoting five per cent of the overall project cost for enterprise social commitments (ESC). This is expected to push up the project cost by about Rs 2,600 crore.

The ESC will be based on need of locals and Posco would prepare time-bound action plans that needs to be submitted to the ministry's regional office in Bhubaneswar.

Posco, however, is likely to wait for some specific directions and resolutions from the ministry before committing funds for the ESC.