Revised Posco pact may exclude ore swap clause

The revised memorandum of understanding (MoU) with Posco India may not include the earlier controversial clause on iron ore swapping. The earlier MoU has expired and a new one is being prepared.

The said clause allowed the company to export 30 per cent of the 600 million tonnes of iron ore reserves to be allotted to it and to import an equal amount of high grade ore from Brazil for blending purposes.

This had drawn flak from different quarters on the ground that with Special Economic Zone status and a captive port facility, the authorities would not be able to properly monitor the ore import-export. Besides, no other company in the country with a captive mine facility had got such a concession.

However, Posco had later decided to switch from the blast furnace route to Finex technology for steel making in India, which obviated the need of iron ore swapping. This new process, patented by Posco, can use the low grade ore available here, an earlier cause of concern for the company, and the reason why it insisted on the swap clause in the 2005 MoU with the state government.

“Posco India has unofficially communicated to us that it no longer needs iron ore swapping, as the company would make use of Finex technology. Hence, the steel and mines department is not in favour of inclusion of the clause in the revised MoU. But any such proposal by the department will have to be scrutinised by the law department, since the iron ore swapping clause was a part of the original MoU,” said a highly placed official source.

‘NOT DECIDED’
Steel and mines minister Raghunath Mohanty said the state government was yet to decide on the issue. “Union minister for environment and forests Jairam Ramesh has proposed that iron ore swapping be avoided and this is being examined,” he said.

According to the original MoU, “Any export of iron ore by way of swap will be allowed only after an equivalent quantity of ore has been imported for the plant. The extent of the above quantity of iron ore by way of replacement for equal quantity of import of higher grade iron ore, will be within the framework of the Export-Import Policy of the Government of India applicable from time to time.”

The minister said the state government was making all efforts to renew the MoU as soon as possible. “We expect it to be renewed by June-end, with retrospective effect from last year,” he added. The 2005 MoU had lapsed on June 21 last year.

Mohanty said the revised MoU would have the now-mandatory employment clause of the state government. The Posco project, the minister claimed, would create direct jobs for 18,000 people.

The employment clause, to which Posco India has agreed, stipulates that industries setting up projects in Orissa have to reserve 90 per cent of jobs for locals in the unskilled and semi-skilled category, up to 60 per cent in the skilled category and 30 per cent for the supervisory and managerial cadre, while giving them the option to fill the posts of senior executives from the open market.

On land acquisition, the minister said, “The state government has acquired 2,000 acres of land peacefully and the remaining land will also be acquired peacefully. Boundary wall construction on the site of acquired land has already started.”