State steel & mines dept against swapping clause in Posco MoU

Ipicol approves revised project plan.

The renewal of the lapsed Memorandum of Understanding (MoU) with Posco India has moved a step ahead with the Industrial Promotion & Investment Corporation of Orissa Ltd (Ipicol) giving its consent to the revised project plan of the steel maker.

Confirming the development, a top official of the steel & mines department said, “Posco India had submitted a revised project plan according to which it would build the 12 million tonne per annum steel plant in three phases. Earlier, the project proponent had aimed to develop the steel plant in two phases with two modules (three mtpa capacity in each module) in each phase. We had sought Ipicol's views and it has agreed to the revised plan.”

The steel & mines department is against the inclusion of iron ore swapping clause in the revised MoU with Posco India.

“We are not in favour of inclusion of the swapping clause in the new MoU. The department will seek Posco India's views on the matter”, the official said.

He also exuded confidence that the MoU with the steel maker will be renewed soon and a meeting will be held with Posco India officials to finalize the process.

In his final order on the Posco project, the Union minister for environment & forests Jairam Ramesh had given a proposal to the Orissa government to avoid swapping of ore. According to the original MoU signed between Posco India and the Orissa government on June 22, 2005, "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 Government of India applicable from time to time."

The MoU had provisions clarifying that no export of iron ore will be allowed from the captive mine except by way of full replacement through the import of an equal quantity of high grade ore. The South Korean steel major needs 600 million tonnes of iron ore of an average iron content of 62 per cent to meet the requirement of the proposed steel project of 12 million tonne per annum.

The state government had signed an MoU with Posco India on June 22, 2005 and it had lapsed on June 21 last year. The revised MoU with the steel major will contain the mandatory employment clause of the state government.

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