Posco's Odisha plant got environmental clearance after 8 years delay

The $ 12.6 billion Posco steel plant in Orissa, the biggest foreign direct investment in India finally has got go ahead from the center that was stuck in a eight years long delay due to environmental concerns. The proposed 12 million-tonnes-per-year plant has been stuck for more than eight years due to delays in getting clearances and acquiring land.

Top sources confirmed that the steel plant got the green signal after it was delinked from the port project. It is learnt that the green nod came after South Korea’s ambassador to India called on Moily last week to suggest that the plant and port projects be delinked in respect of clearances, so that at least the former could take off.

“It was felt that there was merit in this argument, and there was no rationale for holding up one project because of another. So with all requisite conditions, the Posco steel plant has been granted approval. The issue of the port will be examined separately,” a senior source in the environment ministry said.

The revalidation of the lapsed environmental clearance comes days before South Korea’s President Park Geun-hye visits India for four days starting January 15. Posco’s integrated steel plant and port project was to originally come up on some 4,000 acres in the coastal town of Jagatsinghpur in Orissa. Strong opposition over land acquisition issues has, however, forced the project now to a 2,700-acre site. While the Orissa government signed the deal with Posco in 2005, so far no more than the boundary wall for the project has come up.

The environmental clearance has been strongly supported both by Orissa Chief Minister Naveen Patnaik and the Prime Minister. Posco India had only last month written to the Cabinet Committee on Investment requesting that the long delayed project be fast-tracked.

The breakthrough comes within three weeks of Moily replacing Jayanthi Natarajan as environment minister. Moily is learnt to have cleared around 15 projects since taking over on December 24. Among them are the Tawang II hydel project and the Teesta IV hydroelectric project and, now, Posco.

A Reuters report on Thursday said Posco could also hear some good news on its request for a licence to explore iron ore. Orissa will reply within a “day or two” to the union mines ministry on granting an iron ore exploration licence, the state’s mines director Deepak Kumar Mohanty told Reuters.

How the go ahead comes with certain conditions. It has been suggested that POSCO must spend 5% of its total investment on “enterprise social commitments”, POSCO-India spokesman I G Lee told Reuters. This will mean the project’s cost will go up by $ 600 million to $ 12.6 billion.

LEE said, “Though an additional burden has been put on us, we are happy with the revalidation (of environmental clearance). It means the removal of a hurdle for us.”