Environment ministry approves Posco steel project
Sharad Matade 31 January 2011

The long-delayed clearance for the country’s biggest foreign direct investment project will give a boost to other infrastructure projects

Posco, the world's third largest steelmaker, was today given a conditional clearance by the environment ministry for a greenfield plant in Orissa that has been delayed due to criticism that it would disrupt the livelihood of thousands of local people. This project is expected to change the steel business in the country in the near term.

The South Korean steel maker proposes to invest Rs52,000 crore for a plant with 12 million tonnes per annum capacity, in Orissa's Jagatsinghpur district. This makes it the largest foreign investment in the country so far. The entire project requires about 1,621 hectares of land, of which about 1,253 hectares is forest land.

This decision by the Ministry of Environment will raise hopes of some other steel makers who have also been eager to tap the growing Indian market. Like billionaire LN Mittal who tied up with his old friend Rajinder Miglani, chairman of Uttam Galva, to enter the Indian market. Japanese steel companies JFE and Nippon Steel also prefer alliances with Indian steel companies.

Lobbying by other ministers may be one of the major reasons that forced the environment ministry to clear the project. Several projects, particularly mines and steel plants, have been under the scanner of the environment ministry, with the minister Jairam Ramesh echoing ecological concerns and protests by local people. The ministry has banned mining at hundreds of coal blocks, and much foreign direct investment has also been delayed due to opposition to these projects.

But Mr Ramesh has had to face criticism from his colleagues. Coal minister Sriprakash Jaiswal, who was promoted to the cabinet this month, commerce and industry minister Anand Sharma and agriculture minister Sharad Pawar, who was keen on the Lavasa project that has also been delayed, have openly opposed the decisions by the ministry. Prime minister Dr Manmohan Singh too has been concerned that these delays could be a setback for foreign investments. The decision on Posco was supposed to be an indicator of the country's position on the approach to foreign participation in the country's infrastructure growth.

It is also said that the government's ambitious plans to ramp up the country's steel production to 120 million tonnes per annum (mtpa) by 2012 pushed the environment ministry to clear the project. As of now, the country's steel production is at around 60 mtpa and is expected to go up to 120mtpa within the next couple of years. Existing brownfield expansion programmes by steel companies are not enough to achieve the target.

According to the World Steel Association, the current production of the country is around 67mtpa, just 6.4% growth over 2009, while China has increased its production by 9.3% to 627 mtpa. Therefore, more such greenfield projects will be required. India is currently the 5th largest steel producer.
 
Posco's foray into India will stiffen the competition, as its proposed capacity is much higher than that of most Indian steelmakers, barring SAIL. The company has planned a 12mtpa in three phases.

With global experience and advanced technologies at its command, Posco will set up its plant at a quicker pace. This will put pressure on smaller players and force some of them to consolidate with its bigger peers.
 
Although Posco has received the environmental clearance, there will be other hurdles in its path like acquiring mines, rehabilitation of locals, allocation of raw material linkages. Posco has said on its website that the government of Orissa has assured a mining lease for 600 million tonnes reserves, which would be adequate for the 12mtpa plant in Paradip for about 30 years. But Posco will be conscious now that there is a lot of difference between signing the papers for such projects and their execution.

Comments
G Ravishankar
1 decade ago
Look forward to Mr. Debashis Basu's commentary on the Posco saga...
Ravindra Shetye
1 decade ago
Jairam Ramesh's 'holier than thou' attitude and the Government's support to it was the most stupid thing from the practical point of view as if the sole purpose of the entire population is to only maintain 'Environment'. None of them thought that the Progress of the Country comes first 9even before 'Environment'. If environment is our only goal then the country and its population definitely goes to dogs.
The Western countries as well as China are to be admired to be practical. To be practical does not mean scrap 'Environment' but maybe sacrifice some of it for the good of the populace.
I recently visited Lavasa and really admired at the balance of developing the hill city with little damage to the environment.
My spontaneous reaction was to include Ajit Gulabchand in the list of at least 'Padmashri's.
vinod gupta
Replied to Ravindra Shetye comment 1 decade ago
ravindra ji have u been ever to those place where any industries related to iron is concerned

i am dead sure we have already sacrificed many of us and our life for ur so called growth,
and please don't visit and pass such wisdom stay some day and then u will feel what locals suffer
Ravindra Shetye
Replied to vinod gupta comment 1 decade ago
Dear Sir,
It so happens that I am a man from steel industry, that too A project man. So, fully familiar from Iron ore mines to cold rolling. Prosperity of the nation comes through tough tasks and not from the armchairs of the MoEF.
pravin
1 decade ago
how does it matter if some babus in new dill or some thus in bhunaneshwar decide to sell off forest land to their cronies?. the whole point of a free economy is that the property owner decides to sell or buy.ridiculous ideas like eminent domain and "public good" need to be abolished for such stuff.oh wait. we abolished the fundamental right to property some decades back.enjoy the fruits of serfdom, y'all
vinod gupta
1 decade ago
now u can tell why 23 licences for mines in orissa were not issued.
the big fish has swallowed the small ones

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