Posco pulls out of $5.3-bn Karnataka steel project
18 July 2013 5:12 AM IST
Facing delays in land acquisition and local opposition, South Korean steel major Posco on Tuesday scrapped its proposed $5.3 billion (Rs 31,466 crore) project in Karnataka.
‘With the given market conditions and significant delay in acquiring the required land in Gadag, we have decided to close our proposed 6 million-tonnes-per-annum (MTPA) steel plant in Karnataka,’ Posco India Chairman and Managing Director Yong Won Yoon said in a statement. ‘In future, if we get an attractive business proposal from the state, we may consider it and return to Karnataka,’ he added.
Posco had in June 2010 signed an agreement with Karnataka for setting up the steel plant. It zeroed down on Mundargai taluk of Gadag district, which is near the iron ore mining belt of Bellary, as the location for the proposed steel mill. But the land acquisition process was stopped in July 2011 ‘due to agitations by some farmers and religious leaders’, Posco said, adding that ‘the mining scam’ in the state made the project progress stagnant.
Commenting on the development, H K Patil, minister in charge for Gadag district in the Karnataka government, said that the people of the area will be happy with Posco’s pull-out.
‘Farmers were fighting against Posco (being) allowed into that area. (With) Posco not pressing for getting into the same area... people of that area will be happy,’ he said.
The Korean giant has, however, decided to continue pursuing its $12-billion steel plant in Odisha, which was originally proposed in 2006 and has yet to get off the ground.
Former Karnataka Chief Minister B S Yeddyurappa, under whose tenure Posco had signed the memorandum of understanding (MoU) for the project, said that other industrialists too want to withdraw their projects. Yeddyurappa said that he would raise the matter in the State Assembly during the budget discussion with the aim of trying to bring investors back to the state.
According to Posco, it was refunded Rs 60 crore on July 1 from the Karnataka Industrial Areas Development Board (KIADB), which was acquiring land for the proposed project on behalf of the state government. The money was deposited as an initial payment for land acquisition in 2010. ‘We highly appreciate the government of Karnataka’s Industries Department and Karnataka Industrial Areas Development Board for their cooperation and cordial support in this regard,’ said Yoon.
Besides delays in land acquisition, another issue for the South Korean steel major was securing a captive iron ore mines in Karnataka to run the proposed steel mill.
The Supreme Court, while lifting the mining ban in the state in April, had ordered an auction of all cancelled mines. Posco would have had to compete with other claimants, including JSW Steel and ArcelorMittal, for a captive iron ore mine in the state.
‘With the given market conditions and significant delay in acquiring the required land in Gadag, we have decided to close our proposed 6 million-tonnes-per-annum (MTPA) steel plant in Karnataka,’ Posco India Chairman and Managing Director Yong Won Yoon said in a statement. ‘In future, if we get an attractive business proposal from the state, we may consider it and return to Karnataka,’ he added.
Posco had in June 2010 signed an agreement with Karnataka for setting up the steel plant. It zeroed down on Mundargai taluk of Gadag district, which is near the iron ore mining belt of Bellary, as the location for the proposed steel mill. But the land acquisition process was stopped in July 2011 ‘due to agitations by some farmers and religious leaders’, Posco said, adding that ‘the mining scam’ in the state made the project progress stagnant.
Commenting on the development, H K Patil, minister in charge for Gadag district in the Karnataka government, said that the people of the area will be happy with Posco’s pull-out.
‘Farmers were fighting against Posco (being) allowed into that area. (With) Posco not pressing for getting into the same area... people of that area will be happy,’ he said.
The Korean giant has, however, decided to continue pursuing its $12-billion steel plant in Odisha, which was originally proposed in 2006 and has yet to get off the ground.
Former Karnataka Chief Minister B S Yeddyurappa, under whose tenure Posco had signed the memorandum of understanding (MoU) for the project, said that other industrialists too want to withdraw their projects. Yeddyurappa said that he would raise the matter in the State Assembly during the budget discussion with the aim of trying to bring investors back to the state.
According to Posco, it was refunded Rs 60 crore on July 1 from the Karnataka Industrial Areas Development Board (KIADB), which was acquiring land for the proposed project on behalf of the state government. The money was deposited as an initial payment for land acquisition in 2010. ‘We highly appreciate the government of Karnataka’s Industries Department and Karnataka Industrial Areas Development Board for their cooperation and cordial support in this regard,’ said Yoon.
Besides delays in land acquisition, another issue for the South Korean steel major was securing a captive iron ore mines in Karnataka to run the proposed steel mill.
The Supreme Court, while lifting the mining ban in the state in April, had ordered an auction of all cancelled mines. Posco would have had to compete with other claimants, including JSW Steel and ArcelorMittal, for a captive iron ore mine in the state.
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