POSCO, the world’s third-largest steelmaker, won final approval from India’s environment ministry for its US$12 billion factory complex in the country, two weeks after the government withheld the clearance given in January.
The approval statement, to be posted on the ministry Web site later yesterday, was obtained by Bloomberg News. The ministry on April 14 had asked Orissa, the eastern state where the plant would be located, to resolve issues pertaining to forestry laws with two villages affected by the project.
The project, the nation’s first overseas steel investment, has been delayed since 2005 because of resistance from farmers unwilling to give up their land.
The environment ministry, while allowing diversion of 1,253 hectares of forest land for POSCO’s mill and captive port, also asked the state government to renew an agreement with the South Korean steelmaker to exclude all raw material exports, according to the statement.
According to an agreement between POSCO and Orissa on June 22, 2005, the company could export as much as 30 percent of iron ore from the state and would have to import a similar quantity. That agreement expired in June last year.
POSCO shares rose 1.3 percent to 474,000 won at the end of trading in Seoul. The stock has declined 2.7 percent this year, compared with an 8.7 percent gain in South Korea’s benchmark KOSPI index. The -announcement came after the market closed.
The future of POSCO’s project came under doubt after three of four members of a government panel in October last year suggested that initial permits given to POSCO be canceled because of flaws in studies to determine the project’s effect on the habitat.
A separate report by Meena Gupta, the head of the panel, asked for conditions to be added to the existing clearances.
In August, the environment ministry rejected a proposal by billionaire Anil Agarwal’s Vedanta Resources PLC to mine bauxite at Niyamgiri hills in the same state, hampering a planned US$8 billion expansion.
ArcelorMittal, the world’s largest steelmaker, is also facing delays for two US$10 billion mills, one each in Orissa and in neighboring Jharkhand state.
Projects by Tata Steel Ltd, India’s biggest maker of the metal, in the two states and in Chhattisgarh, and by JSW Steel Ltd in Jharkhand have also been delayed on land issues.