Posted on 22 Jun 2015
Posco completes a decade waiting for elusive India steel plant
It is an imperfect 10 for
Posco. After a decade's wait, the South Korean firm's steel plant project in India looks unachievable, issues surrounding it seem irresolvable and people associated wit it too weary to discuss it.
Posco's $12 billion, 12 million tonne (mt) integrated steel plant project was formalized on 22 June 2005 with the signing of a memorandum of understanding (MoU) with Odisha, but what was India's largest foreign direct investment—a showpiece to attract more foreigners—is now an example of how things go bad in India's bureaucratic set-up.
In the past 10 years, social, political, environmental and regulatory hurdles have bogged down Posco and forced it to downsize the plant to 8 mt using about half of the 4,004 acres promised earlier; yet, land for the plant is still elusive.
"The project has been a complete mess. Other multinationals in India have succeeded mainly because they have assembling units such as those in the auto and telecom sectors but converting natural resources to metal is very different," said a former senior executive of Posco. "There are too many components and too many approvals are needed."
Still, in these 10 years, the company hasn't said it will withdraw from Odisha.
That is because India's need to build infrastructure would require 200 mt of steel by 2020, double that of current levels.
Posco has been tenacious also because of loyal clients that need high-grade steel, including those from its home country such as
Hyundai Motors,
Samsung,
LG and
Daewoo group that have manufacturing bases in India.
The firm imports about 2 mt of steel into India and has made massive investments to set up processing centres in the industrial hubs of Pune, Gurgaon and Chennai where its steel is cut and finished as per clients' needs. It naturally is keen for a backward integration.
"I don't think they will give up that easily because it is in their economic interest to build a plant in India," said
Ghanshyam Shah, a retired professor of social sciences at the Jawaharlal Nehru University.
The spokesperson of Posco did not reply to emailed questions on the future of the project and did not return phone calls made to his cellphone.
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