Korean company gets tired of delays in mining rights, land acquisition.
By R Chandrasekaran
CHENNAI: At a time when India is reeling under the deteriorating current account deficit, South Korea-based Posco’s decision to drop a steel mill project in Karnataka is a serious set-back to the government’s efforts to attract more foreign direct investment.
In a regulatory filing in South Korea, the company disclosed that it is dropping the idea of setting up a $5.3 billion or Rs.314.66 billion steel mill developments in Karnataka citing delays in getting iron ore mining rights besides land acquisition as a fall out of strong opposition from the residents.
A few years back, the company struck an agreement with the Karnataka government for setting up a plant to produce 6 million tons of steel annually.
The fifth largest steel maker in the world, however, said that it will not disturb the other $12 billion project in India, which is considered as the biggest single foreign direct investment. The mega project is coming in Odisha after passing several hurdles in the last few years.
Only in May, the Supreme Court gave a favorable verdict that gave enough room for the company to get access to iron ore for the project. A recent report also indicated that India is ready to grant license to Posco for iron ore exploration. The company struck a deal with the Odisha government sometime in June 2005 and is expecting 2,700 acres of land to commence the first phase of the project.
While the indications available suggest that the South Korean company may get the required land for the first phase of the project in few months, Posco said that it could commission the first phase of the project in 2018. The company aims to produce 12 million tons of steel once the full production commences. This will represent about 16 percent of India’s approximately 77 million tons of steel output.