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Centre seeks Odisha’s response on ore lease for Posco steel project

The development comes in the wake of a high-level panel formed to address issues impeding mega projects in the steel sector, reviewing the stalled projects this month.

‘The state government has been asked to clear the discrepancies ... the state Government’s reply is awaited,’ the Mines Ministry told an Inter-Ministerial Group (IMG), which had sought to know the status on grant of prospecting licence (PL) for the Khandadhar iron ore mine. The global steel player’s plans to set up a 12 million tonne (mt) steel plant at Jagatsinghpur in Odisha, entailing over Rs 52,000 crore investment, has been stuck for the last eight years on account of various regulatory hurdles and delays in land acquisition.

The IMG which reviewed the progress of mega projects earlier this month asked the Mines Ministry what steps were initiated after the Supreme Court judgement on grant of prospecting license for Khandadhar iron ore mine in May last year, an official said. The Supreme Court in May had set aside the Odisha High Court order which had quashed the state government’s decision to allot an iron ore licence to Posco in Khandadhar hills in Sundergarh district and had asked the Centre to consider all the objections raised by various parties pertaining to the mega steel plant and take a decision.

The High Court, on July 14, 2010 on the petition of Geomin Minerals, had set aside the state government decision to allow Posco mining in the hills. Geomin had contended before the High Court that it had applied for the PL for Khandadhar iron ore mines much before Posco. Odisha, which had moved the apex court, on October 29, 2010, on this issue, had contended that the High Court could not have quashed the state government’s grant of licence to Posco as it was under Section 11 (5) of the Mines & Minerals (Development & Regulation) Act, 1957.  The state government in January 2009 had recommended Posco to the Central government for granting prospective licence for Khandadhar iron ore reserves.

This was challenged by Geomin and later 16 other firms who have also applied for mining leases also intervened.  Meanwhile, any work on the Posco project is likely after Lok Sabha polls despite the steel maker securing environmental clearance in January for the plant. ‘There is no progress on the project as the state government has not transferred the remaining 1,000 acres to Posco. Now, considering the elections, we assume there is not going to be any development shortly,’ an official has said.

Posco had also expressed its inability to start work on the steel-to-port project in the absence of adequate land. The steel giant had inked a pact with the Odisha government in June 2005 to set up the integrated steel plant and port project on 4,000 acres in the coastal town of Jagatsinghpur.  It needs 2,700 acre to commence work on the first phase while the state Govt has already transferred 1,700 acre to it.

The steel project had received initial clearance from the Environment Ministry in 2007 and final approval was granted in 2011. The National Green Tribunal (NGT), a quasi-judicial body, suspended the permit in March 2012 citing environmental concerns.

In January it got clearance with a condition that Posco must spend 5 per cent of total investment on ‘enterprise social commitments’, which will push up cost by $600 million (Rs 3,600 crore).
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