India clears Posco's $12 billion steel plant

[February 01, 2011]  NEW DELHI (AP) -- India's environment ministry has given clearance to South Korean conglomerate Posco to build a $12 billion steel plant in eastern India -- but with numerous conditions attached.

The approval came Monday -- more than five years after the Orissa state government and Posco signed the deal, one of the largest foreign investments ever in India.

Mineral-rich Orissa has been trying to woo investors, both foreign and Indian, by giving them mining rights, electricity and water at low prices. But the move to acquire farmland and turn it into industrial development areas has run into violent protests. Angry groups protesting Posco's plans briefly abducted employees in 2007.

Conditions that Posco must meet before final approval is given include restrictions on air emissions, and a pledge to spend 2 percent of its annual net profit on social welfare causes, the Environment Ministry said. Another restriction requires Posco to maintain 25 percent of the land around the area as a green space.

Another condition requires the company to reduce its water intake in order to help out farmers if water for irrigation becomes scarce.

"Undoubtedly, projects such as that of Posco have considerable economic, technological and strategic significance for the country. At the same time, laws on environment and forests must be implemented seriously," said Environment Minister Jairam Ramesh on Monday.

Posco said it expects to be able to meet all conditions.

"None of the conditions imposed will be difficult for the company to meet," The Financial Express newspaper quoted G.W. Sung, Posco India's managing director, as saying.

A review of the Posco project followed a ministry panel report last year that opposed the project due to "serious lapses and illegalities" in the environmental clearance process and in obtaining consent from the local community for the project.

Work on Posco's steel mill -- expected to produce 13.2 million tons (12 million metric tons) of steel per year -- and affiliated power plant, railway line, road, water supply infrastructure and port has not yet begun since the land has not been handed over to the company. The transaction awaits Environmental Ministry approval.

The total project requires about 4,000 acres (1,621 hectares) of land -- including 1,253 hectares of forest.

Local activists belonging to the Posco Pratirodh Sangram Samiti protest group say the project will endanger about 700 families in eight villages. They intend to intensify their protests.

"We are not going to allow Posco to come up with the project here. We are against industrialization of a land which is fertile and helping the agro-economy," Ashok Sahu, the group's president, told the Associated Press on Tuesday.

[Associated Press; By ASHOK SHARMA]

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