Press Trust of India, New Delhi/Kolkata, Feb 5: In a fresh blow to Posco, the South Korean steel major will be required to participate in auction to get iron ore mine to feed its USD 12 billion facility in Orissa instead of direct allotment as assured earlier.
When asked about the fate of Khandadhar iron-ore mine given to Posco by the state via dispensation route, Steel and Mines Minister Narendra Singh Tomar today said that all firms will have to participate in the auction process to get a mining lease.
“Even I will have to bid to get a mining lease,” he told reporters, putting a lid on Orissa’s demand that commitments should be honoured under the new dispensation to avoid sending a wrong signal to international investor community.
The development comes even as the company’s proposed 12 million tone per annum (MTPA) project at Jagatsinghpur district in Orissa is stalled for about a decade now.
Posco was previously promised the Khandadhar iron ore mine by the state for its mega steel plant, considered as the biggest FDI in India, but the actual allocation never happened due to delays in regulatory approvals.
A Posco spokesperson did not respond to repeated calls. The company has a memorandum of understanding with the Orissa government that assures allocation of mining leases.
However, following the promulgation of the Ordinance, which makes allocation of all mines through auction route only, the MoU will have no value.
Mines can be allocated even now through the dispensation route in case the Centre had already given concurrence or the state government issued a letter of intent “by whatever name it is called”. This is not the case with Posco.
“Now, with the MMDR Amendment Ordinance 2015 in public domain, it is not possible to offer the Khandadhar mine to Posco on preferential basis and this chapter is now closed. It will have to secure this mine by bidding,” a source in the
mines ministry told PTI.
“We are sympathetic towards the mega project and it is the Centre which is keen to facilitate the allocation as recommended by the state for the sake of such a large project.
“But, by the time they (Orissa government) could send the proposal meeting the required technicalities, the Ordinance was already in public domain for feedback,” he said.
“Now, Khandadhar iron-ore mine like any other mine has to go for bidding as we have decided to put all future allocation of minerals through auction route. Government cannot compromise on transparency overlooking the Supreme Court’s observations on mine allocations in the past,” the source said.
The Centre blamed the Orissa government for its failure to meet the technical requirements before the Ordinance as was sought by the Centre on notified and non-notified areas of the block spread over 2,500 hectares, which state had decided to offer to Posco in 2009.
Reportedly, there were more than 200 applicants for the Khandadhar iron ore deposits, but the state government had recommended the lease for Posco calling the project the biggest FDI in the state.
It had invoked Section 11 (5) under the previous MMDR Act, 1957 for making the special recommendation for Posco.
In 2013, Posco had scrapped the 6 MT steel project in Karnataka over land and mineral hurdles. The Orissa project was also scaled down to 8 MT after it failed to acquire the desired quantity of land.
Last month POSCO had inaugurated a USD 709 million steel mill in Maharashtra to scale up its presence in the country.
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