The Odisha government has decided to offer Posco to buy iron ore at a market price from Odisha Mining corporation for its $12-billion steel project in state.
To discuss this issue which has been holding the project in Odisha for 10 years, the Cabinet secretary, mines secretary and the Odisha Chief Secretary will meet Posco executives in New Delhi.
Issues relating land acquisition, delay in environment and forest clearance, and ambiguity over allotment of captive iron ore mines are some of the road blocks to stall the project. To make the matter worse, the enactment of the Mines and Minerals Development and Regulation Act further quashed the hopes of Posco to get any preferential treatment to source the iron ores. The new law has made the auctions of mines mandatory.
Since centre has refused to give any preferential treatment to Posco in mining lease, the Odisha Mining Corporation has decided to offer Posco long term iron linkage, revealed by a senior government official. He is, however, convinced that the centre will not heed to any such request of the State Government as this will lead to similar demand of concessions by other steel makers.
In case the Posco refused the proposal of the state government to buy iron ore from Odisha Mining Corporation, the state may ask Posco to enter into a joint venture with a public sector steel company such as SAIL. In such a condition, an iron ore mine can be reserved for Posco.
In year 2011 Posco and SAIL had signed an agreement for setting up a three million tonne steel plant in Bokaro, but, as both sides wanted majority stake in the venture, it did not see the light of the day.
Posco has a huge requirement of 13 million tonnes of iron ore in a year to feed its eight million tonne steel plant for its first phase of setting up the plant in Paradeep. Earlier Odisha Government had agreed to grant Posco a licence for the Khandadhar mines but before they got any nod from the Centre, a new law came into force. At present the Odisha Government is also not sure if Posco is interested in setting up its Odisha project. As per RP Panda, the industry analyst, the clear picture will emerge only after the meeting between the state government and Posco’s executives.
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