Industryweek 10216 Posco Steel Smoke 1

India Approves Posco Plant Construction Ahead of S. Korean Visit

Jan. 10, 2014
But even with the environment ministry's approval, the project still faces land acquisition and other hurdles.

NEW DELHI -- India's environment ministry has approved South Korean multinational POSCO's (IW 1000/78) plans to build a long-delayed $12 billion steel plant, the company said Friday, days ahead of a visit by South Korea's president.

But protest groups vowed to keep up their fight against the plant, which represents the largest ever foreign direct investment in India.

The delays faced by the project have become emblematic of the woes faced by foreign firms putting money into India.

The environment ministry has given its renewed go-ahead to the plant in the eastern state of Orissa, eight years after it first signalled its approval, company spokesman Ongsuman Pattnaik said.

Environmental clearance for the project, first agreed in 2005 with the steel plant originally due to start production in 2011, was suspended by a judicial body two years ago amid bitter opposition from locals.

They had objected to acquisition of farmland and said that the plant would destroy vast tracts of forest and endanger local tribes' livelihoods.

The National Green Tribunal suspended the project on grounds that an environmental impact assessment report had only been carried out for annual output of four million tons of steel, not the 12 million tons laid out in the agreement.

The renewed clearance came just ahead of the January 15 start of a trip to India by South Korean president, Park Geun-hye.

"I have cleared it," Environment Minister M. Veerappa Moily, who took over the ministry three weeks ago, confirmed to the Press Trust of India on Friday.

The ministry has approved the steel plant but clearance of a port needed to facilitate operation of the project is still pending.

But even with the environment ministry's approval, the project still faces land acquisition and other hurdles.

Local leaders on Friday denounced the environment minister's move, pledging to keep up their fight against the plant and the port.

"This environmental clearance is illegal. Under no circumstances will we allow the project," said Prashant Paikray, spokesman for the POSCO Pratirodh Sangram Samiti, a local group which has spearheaded opposition to the plan.

Copyright Agence France-Presse, 2014

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