Posted on 29 May 2015
Govt mulls 'Korea Plus' even as Posco's $12-bn steel plant hangs in air
The government is planning to set up ‘Korea Plus’ to attract and
fast-track Korean investments into the country, even as the single
largest foreign direct investment (FDI) project by Korean steel giant
Posco in Odisha got mired into further complications. So much so that
Posco may even shelve its $12 billion, 8-million-tonne-per-annum (mtpa)
steel plant in Odisha, hanging in balance since 2005.
During his recent visit to Korea earlier this month, Prime Minister
Narendra Modi had a closed-door meeting with Posco CEO Kwon Oh-Joon.
According to the ministry of external affairs (MEA) officials, the
Odisha project was not even raised by its chief. Sources said it was a
clear signal by the company that it is planning to exit the project.
This is because under the amended Minerals Development and Regulation
(Amendment) Act, 2015, or the MMDR Act, the Korean steel manufacturer
will now have to participate in auctioning for securing the Khandadhar
mines in Sundargarh district of Odisha for running the proposed steel
plant.
Although the state government is ready to extend all help possible to
ensure that the project sees light of the day, the Centre has played
killjoy. The state government has even gone to the extent of assuring
long-term supply linkage with the Odisha Mining Corporation (OMC). But
the Centre is insistent that as per the new Act, it cannot give
concessional rights to the Korean firm.
“If they (Posco) want a mineral concession in their name they would have
to go for auctioning. A mineral concession of any type cannot be given
to any company without the auctioning route,” mining secretary Anup K.
Pujari told Business Standard.
Pujari also said since the company does not have a mining lease but only
a prospecting licence, it will not be eligible for a preferential
allotment of the mines.
An MEA official, however, played down the issue. “Posco’s Odisha project
is not an issue with Korea any more. The Posco board will decide
whether they bid for the mining rights as per the new law on their own
or with another company. Environmental and land issues are over. So, the
matter was not raised,” said the official, who refused to be named.
However, during the meeting, Modi was learnt to have discussed the issue
of setting up ‘Korea Plus’ similar to that of ‘Japan Plus’. This
exclusive investment channel will be set up under the Department of
Industrial Policy and Promotion (DIPP) under the ministry of commerce
and industry, which is the nodal department for administering
FDI-related issues.
In 2005, the state government was able to lure the firm into investing
there, as it was promised the crucial iron ore linkage for the project,
which has now been watered down by the Modi government, as the company
does not possess a mining lease. According to the original memorandum of
understanding that was signed between Posco and the Odisha state
government, the plan was to set up 12 mtpa steel plant, which it had to
later scale down due to land and environmental issues that are now over.
The matter has also assumed political overtones with the Bharatiya
Janata Party pointing fingers at the intent of Odisha Chief Minister
Naveen Patnaik-led Biju Janata Dal in kick-starting the project.
