Citing inordinate delays in land acquisition and local opposition,South Korean steel major Posco today scrapped its proposed Rs 32,000-crore project in Karnataka.
With the given market conditions and significant delay in acquiring the required land in Gadag,we have decided to close our proposed 6 MTPA steel plant in Karnataka, Posco India chairman and managing director,Yong Won Yoon,said in a statement.
In future,if we get an attractive business proposal from the state,we may consider it and return to Karnataka, he said.
The Korean steel giants announcement is the final nail in the 2010 deal which most people,including the government of Karnataka had given up two years ago.
Posco had first announced plans to set up a 6 MTPA steel plant in Karnataka at a global investors meet organised by the then BJP government in 2010 and were promised 3,000 acres of land in the Gadag region of north Karnataka. Ahead of the agreement,the firm had also demanded an iron ore mining lease to ensure a dedicated supply of ore for the steel plant. The Karnataka government had refused to guarantee a mining lease to go with the steel plant.
Over the months following Poscos 2010 signing of the memorandum of understanding (MoU) for the Gadag steel plant with the state government the iron ore mining sector in the state began to unravel under the influence of illegal mining practices and large scale corruption in the sector eventually leading to orders by the Supreme Court to ban iron ore mining in the state.
The land acquisition process for the Posco project also hit a roadblock in 2011 after an agitation against acquisition of agricultural land was started under the guidance of a prominent Lingayat seer Tontadarya Swami.
The BJP government,then lead by Lingayat strongman BS Yeddyurappa,paying heed to the farmers protests and threats from the opposition parties,including current Congress chief minister Siddaramaiah,halted the land acquisition for the Posco steel plant in July 2011.
The then BJP industries minister Murugesh Nirani made some noises about providing an alternate site for the Posco plant but with water availability being a concern in most parts of north Karnataka no forward movement on an alternate site was witnessed.
With the steel plant project in Karnataka going into limbo and its project in Orissa gaining better traction,Posco recently decided to withdraw its Rs 60 crore deposit with the Karnataka Industrial Area Development Board for land acquisition.