Centre suggests JV to solve Posco146;s ore sourcing problems

The Centre has mooted a joint venture between Posco and public sector company Kudremukh Iron Ore Company in order to break...

The Centre has mooted a joint venture between Posco and public sector company Kudremukh Iron Ore Company KIOCL in order to break the deadlock in the South Korean steel major acquiring mining leases.

Access to mines is one of the major constraints in the way of Posco8217;s 12-billion investment plan. Posco would require 18 million tonnes of iron ore annually when its steel plant is in full swing, in order to meet its production requirement. With the company planning to start production by 2010, it needs mines at the earliest for a smooth start to its operations. Posco has been trying hard to get mines on lease, but has failed to do so until now.

8220;To break the deadlock on mining leases for Posco, we have suggested to the Orissa government to consider a joint venture with KIOCL. It will be a win-win situation for both parties,8221; a senior government official said.

According to the plan, the government would transfer the lease for mining specific minerals to the proposed joint venture company, instead of handing it over to Posco directly. The proposed joint venture company would, in turn, offer iron ore to Posco on a commercial basis.

Initial plans suggest that KIOCL would undertake the actual mining work, while Posco would carry out the processing of ore. The joint venture plan is also likely to be discussed by the review meeting on Posco called by Prime Minister Manmohan Singh. Sources also said that the Centre wants to work out a similar solution to the problem Posco faces in land acquisition. Sources close to the development said that the proposal would later be sent to Posco and KIOCL for their approval. Earlier, the state government wanted to award three mines 8212; including the Khandahar mines 8212; to Posco, which was opposed by KIOCL.

Meanwhile, the Prime Minister8217;s office had stepped in to settle the problems faced by Posco, including those of mines and land acquisition. The PMO held a review meeting on Posco last month. However, even after the PMO8217;s intervention, Posco8217;s woes have continued and it is facing stiff resistance to its land acquisition.

rolling mills

8226; Aug 2004: Posco starts talks with Orissa govt

8226; Jun 2005: Signs MoU with Orissa for 12 mt plant

8226; Aug 2005: Posco starts Indian operations

8226; Dec 2006: Orissa recommends mining lease of 600 mt

8226; May 2007: Posco gets environment clearance