Posco Closes Last Chapter in Odisha Project

Posco's letter is seen as the first official communication marking the scrapping of the project

It’s official now that South Korean steel major Posco has scrapped the plan to set up a 12-million tonne (mt) steel mill in Paradip, Odisha. It has written to the state government that it wants to surrender the land allotted for the project. 

It is the second big-ticket foreign direct investment (FDI) project to leave Odisha, after ArcelorMittal walked out of its project in 2013.

“We have received a letter from Posco expressing its intention to surrender the land”, an official of the state industries department said.

Though all activity on the plant came to a halt two years ago, leading to speculations of the firm pulling out of the venture, both Posco and the Odisha government had denied it. Therefore, Posco’s letter is seen as the first official communication marking the scrapping of the project. Posco had signed an agreement with the state government in June, 2005, seeking 4,004 acres of land to set up the project. The land acquisition was delayed due to agitation by the locals, which often took a violent turn. 

Finally, the government could acquire 2,700 acres in 2013 for the firm to set up an 8-mt steel mill in the first phase. Of this, the government managed to transfer 1,700 acres to Posco.

But before the work could start, the central amendment in the Mines and Minerals Development and Regulation Act in January, 2015 sealed the fate of the project. The amended Act made it mandatory for Posco to go through the auction route to get captive mines, dashing its hopes of getting an iron ore mine on a preferential basis according to the agreement. To make matters worse, the government did not renew the tenure of the agreement, which expired in 2010.

Reference - http://www.business-standard.com/article/companies/posco-closes-last-chapter-in-odisha-project-117031700810_1.html