While India’s National Democratic Alliance (NDA) government pushes its flagship 'make in India' programme, aimed at attracting foreign investors to set up production facilities in the country, South Korean steel giant Posco has put a $12bn project on hold.
The project – which aimed at producing 12 million tonnes of steel in the southern state of Odisha – was one of the largest FDI deals ine India when it was announced in 2005. But, after more than a decade of negotiation, the project has been “temporarily postponed”, according to Posco's CEO, Kwon Oh Joon. The company is reportedly frustrated that its greenfield project has been stalled due to delays in acquiring land – due to farmer and non-government organisation opposition – securing iron ore leases and other clearances.
Mr Kwon was quoted by Bloomberg as saying that until India’s prime minister Narendra Modi “offers better deals, we won’t resume, and, for now, we will head to the west [at sites in Maharashtra] and do more downstream work".
Mr Kwon met with Mr Modi when the Indian prime minister visited South Korea in May, and Mr Kwon was said to have reiterated Posco’s interest in Odisha, and requested support for downstream projects.
Delays to Posco's Odisha project began with protests by villagers, who were opposed to the land acquisition required by the project. Eight years later, Psoco acquired the land that it needed for phase one of the steel project, but ground-breaking was delayed by the National Green Tribunal, which suspended the government’s environmental clearance for the project, and asked the Ministry of Environment, Forests and Climate Change to revalidate it.
The lack of progress on the steel project in Odisha, led Posco to inform the state government in April 2015 that much of its office space was lying vacant, and it therefore wanted to surrender it. The company also pulled out from the Haridaspur-Paradip rail project, which was instigated in order to transport raw material, and scrapped its captive mine project. Furthermore, the state government’s assurance to Posco that it would secure preferential access to iron ore mines failed to materialise, and the Mines and Minerals (Development and Regulation) Amendment Act 2015 mandates auctions that will raise the project’s cost.