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Posco's fate in limbo over environmental hurdles

Posco's fate in limbo over environmental hurdles

The South Korean steel major, which signed an MoU with the state government on June 22, 2005, is still awaiting 4,000 acres of land to set up its 12 mtpa greenfield steel mill.

Orissa's mega steel project Posco has slipped into a limbo with the Union environment minister putting a halt to forest clearance.

Though state Chief Minister Naveen Patnaik is still hopeful about the 'dream' project pulling through, not many share his optimism given the spate of controversies that have hounded the Rs 52,000- crore project.

The South Korean steel major, which signed an MoU with the state government on June 22, 2005, is still awaiting 4,000 acres of land to set up its 12mtpa (metric tonnes per annum) greenfield steel mill.

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"Despite all-out efforts, the state government has not been able to hand over an inch of land to Posco. We will continue to fight for the rights," said Posco Pratirodh Sangram Samiti president Abhay Sahu.

Orissa's steel and industries minister Raghunath Mohanty is confident that the Posco will drop anchor at Paradip.

"We are confident that Posco will be able to set up its unit near Paradip," Mohanty said rejecting speculation, though unsure of how to proceed on overcoming the many hurdles that lay before the project.

According to provisions of the MoU, the company was to complete the first phase of 6 mtpa capacity unit by July 2010, or 36 months from the date of taking title and possession of land.

However, stiff opposition by residents of two of the seven seaside villages has stalled the project that has the support of Prime Minister Manmohan Singh as well as the state chief minister.

"The manner in which the project is facing frequent setbacks, only time will determine its fate," said All Orissa Steel Federation president P L Kandoi.

Further, a company executive on the condition of anonymity said that even if the people were to vacate the land for Posco, the company would find it tough to go ahead with construction unless assured of the raw material link.

While People in Cuttack city have opposed the company plans of drawing water from Naraj barrage on river Mahanadi, there is also opposition against Posco's move of mining iron ore from Khandadhar iron ore reserve in Sundargarh district.

Though Orissa government had recommended Posco-India's name for prospecting license over the Khandadhar reserve, this was challenged in High Court, which is yet to decide on the matter, thus, creating uncertainty over the company's raw material linkage prospects.

"Posco will not invest unless it gets raw material linkage," Kandoi said, adding that the government should first provide raw materials to companies coming to the state.