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Orissa unable to finalise mining area for Posco steel plant, more delays expected

In case of Khandadhar mines, the state government has compounded problems for Posco by failing to demarcate the notified areas.

New Delhi |
April 7, 2014 1:42:30 am

South Korean steel maker Posco’s plans to set up a 12 million tonne integrated steel plant in coastal Orissa may get delayed further. The state government has told the Union mines ministry that it is unable to demarcate the boundaries of the Khandadhar iron ore mines sought by the company for its raw material security.

Pohang Steel Company or Posco, had planned to set up a 12 MT steel plant in Orissa’s Jagatsinghpur district entailing an investment of over Rs 52,000 crore.

The project has been mired in controversy for 10 years due to stiff local opposition over compensation and environment concerns. About a year ago, the project had come to a virtual halt in the wake of intense opposition by residents of at least two villages — Dhinkia and Nuagaon around the project site.

An inter-ministerial group (IMG) set up by the Centre to iron out hurdles impeding implementation of mega projects had early this year sought a response from the Naveen Patnaik administration on grant of iron ore prospecting licence to Posco.

In its reply last week, which is being examined by the mines ministry, the state has not distinguished between notified areas and non-notified areas needed for granting the prospecting licence.

Under the Mines and Minerals (Development and Regulation) Act 1957, the government notifies iron ore-bearing areas as mines which can be exploited for commercial use, while non-notified areas are those which require several regulatory approvals before being allowed to be explored.

In case of Khandadhar mines, the state government has compounded problems for Posco by failing to demarcate the notified areas.

“At a meeting of the IMG chaired by steel secretary G Mohan Kumar on March 10, Orissa’s steel and mines secretary G Srinivas said bifurcation of the area in notified and non-notified parts is posing a problem,” an official who attended the meeting told The Indian Express.

The IMG asked the state to increase coordination with the mines ministry to “settle the matter without further delay”. The company has even approached the Cabinet Committee on Investment in this connection.

Orissa is not the only state delaying matters. Karnataka too has been delaying the surveying of a mine, which led state-run Visvesvaraya Iron and Steel Limited to curtail its output to 67,000 tonnes against a level of 1 lakh tonnes in 2013 because of scarcity of iron ore.

VISL suffered a net loss of Rs 116 crore in FY13, nearly Rs 130 crore in FY12 following the de-commissioning of its Kemmannugundi mine in 2004 as the lease expired.

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