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Posco clears the final green test

BS Reporter  |  New Delhi 

The company cannot export iron ore, will have to pay for regeneration of alternative forest land.

South Korean steel company Posco can finally go ahead with its $12-billion project in Orissa.

The environment ministry on Monday gave the Orissa government the go-ahead for using 1,253 hectares forest land for the project. The final nod has come six years after Posco’s agreement with the state government.

This will be the biggest foreign direct investment into the country to date.

Posco had got the environmental clearance in January, but with 60 riders. The project was held up on the issue of use of forest land.

The final nod has also come with riders. One is that Posco cannot export iron ore. The government discourages these exports. It levied a 20 per cent tax on iron ore exports in this year’s Budget.

Environment Minister Jairam Ramesh said the provision for export of iron ore in the original agreement between the Orissa government and Posco made him “deeply uncomfortable with this project”.

The agreement, signed in 2005, expired last year. “I would expect that the revised agreement between the state and Posco will be negotiated in a manner that export of the raw material is completely avoided,” he said.

Posco would also pay for regeneration of an equivalent degraded forest land in a district determined by the state government.

The Orissa government and Posco had signed an agreement on June 22, 2005, for setting up an integrated steel plant with a capacity of 12 million tonnes per annum (with four million tonnes in the first phase) at Paradip in Jagatsinghpur district.

The project requires about 1,621 hectares land, of which about 1,253 hectares is forest land.

The environmental clearance came on January 31, 2011. After this, Ramesh was handed over resolutions of Dhinkia and Gobindpur village councils by the Posco Pratirodha Sangram Samiti (PPSS), which is opposing the project.

PPSS said Dhinkia and Gobindpur had claims on the forest land on which the project was proposed to be built. The minister referred the matter to the Orissa government.

In its reply on April 29, the state government said the “resolutions” were “fake ones” and action for violation of the Orissa Grama Panchayat Act, 1964, would be taken against Dhinkia Sarpanch Sisir Mohaptra. It alleged the sarpanch “overstepped the jurisdiction vested in him and misutilised his official position” to serve the interest of PPSS, of which he is the secretary.

Ramesh said he expected that the Orissa government would “immediately pursue action” against the sarpanch for what it categorically said were “fraudulent” acts and “if no action is taken forthwith, I believe that the state government's arguments will be called into serious question.”

Many steel and mining projects have been either shelved or delayed in the recent past for failing Ramesh’s green test. Last year, the environment ministry rejected a proposal by Vedanta Resources to mine bauxite in Niyamgiri hills in Orissa.

Hindustan Construction Company (HCC)
* PROJECT: Building a hill city, Lavasa, near Pune
* STATUS: HCC has spent Rs 3,000 crore. The work has been on hold since November 2010 after the environment ministry termed the construction “unauthorised”
* Lavasa moves the Bombay High Court. Case pending
* In January 2011, the ministry recommends conditional approval Final nod pending
* PROJECT SIZE: Rs 40,000-50,000 crore
* STATUS: Pending
* PROJECT SIZE: Rs 1 lakh crore each
* PROJECT: The world’s largest steel maker entered into a pact with the Jharkhand government in 2005 and a year later with the Orissa government to set up two plants of 12 millions tonnes per annum each.
* STATUS: Pending
* PROJECT SIZE: Rs 1 lakh crore each.
Anil Agarwal’s Vedanta Resources Plc
* PROJECT:  Mining bauxite in Niyamgiri hills, Orissa.
* STATUS: Proposal rejected in 2010. Vedanta in talks with the ministry

Two projects of ArcelorMittal, the world’s largest steelmaker, have been delayed.

Ajit Gulabchand’s ambitious hill city project, Lavasa, in Pune is also awaiting the final go-ahead.

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First Published: Tue, May 03 2011. 00:00 IST