Green Light for Indian
Steel Project

POSCO finally gets license to build 12-mln-ton annual capacity steel plant in India

Chairman Chung Joon-yang of POSCO is visiting Indian Prime Minister M. Singh at his office in New Delhi, India, last year, to discuss speeding up POSCO's steel mill construction project in India.

After six long years, POSCO has finally obtained a license to build an integrated steel plant in Orissa State in India with the Indian government confirming the report from the Orissa State government that no residents in the area where the projected steel mill is planned object to the steel plant's construction.
The Indian government's official approval comes after POSCO signed an agreement with Orissa State to build an integrated steel plant capable of producing 12 million tons of steel annually in June 2005, in Paradip, Orissa. Environment Minister Jairam Ramesh finally confirmed on April 30 that no local residents in the neighborhood of the site where the projected steel mill is to be built had objections to the steel plant based on the reports by the Orissa State Government to that effect.
Minister Ramesh announced on May 2 that POSCO can convert the 1,253 hectare mountain area to a site for its planned steel plant now that his ministry has issued the permit.
POSCO India sent a copy of the approval document to the POSCO Head Office in Pohang and POSCO is set to kick off the construction of the project in the second half of this year.
In the first stage, the project calls for building a steel production plant to turn out 4 million tons of crude steel by 2013 from its blast furnace in Paradip, Orissa, and expand the production to 12 million tons by 2015 at a total cost of $12 billion.
Industry sources said POSCO must have learned many things about building steel plants overseas after the ordeal they went through just to get the approval from the Indian government, which took a long time to issue the final go-ahead for the project. The Indian authorities tediously examined every detail of the project to the astonishment of POSCO, which had not expected such difficulties in getting the approval.
From 2000, POSCO began to eye Orissa State when competition for securing iron ore mines around the world by steelmakers got tough, and the Korean steel giant thought that the Indian state was the right place to erect a steel plant, as it has some 600 million tons of iron ores in reserve.
Shortly after, the steelmaker signed an MOU with Orissa State in 2005 to build the steel plant in Paradip and secured iron ore mines in the state. No one expected that it would take this long to secure the official license for the project at that time.
Soon, the project ran into all kinds of problems including protests by environmentalists and local residents objecting to POSCO's securing of land for its steel plant and conducting surveys in the area.
Some said that POSCO should have known better after both Arcelor-Mittal and Nippon Steel withdrew their plans to build steel mills in the state. NGOs raised objections to POSCO's project on the basis that it violated the forest law and the Environment Ministry ordered its suspension. Even executives of POSCO thought the steelmaker should give up the project as the protests by both NGOs and environmental groups continued.
But things began to look better when a committee under the Environment Ministry ordered an investigation of the project, resulting in a report that the project would not poison the drinking water in the area and the reimbursement for the land by POSCO was adequate.
On Jan. 31, the Environment Ministry gave conditional approval for the project and said POSCO should give 2 percent of its net profit to local society; build harbor facilities in the right locations; and that 25 percent of the land for the steel plant should be utilized for the formation of green space, among other conditions.
POSCO officials said the project may be kicked off in the second half, as 93 percent of the land for the steel plant is government owned. nw


Photo on Courtesy of POSCO