After waiting in vain for a decade, South Korean steel major Posco has made up its mind to temporarily suspend its proposed mega steel project in Odisha's Jagatsinghpur district.
"We decided to tentatively halt the project as we have not seen visible progress. The project will remain at all-stop unless the Indian Government offers a better deal," Posco chairman Kwon Oh-joon told The Korea Herald after an investors' relations session in Seoul on Wednesday.
"For now, we are not backing the project due to a number of factors there. If the situation changes for the better, we'll see what happens next," a company spokesperson said. He, however, made it clear that the company is not pulling out from India but is shifting its focus from upstream to downstream manufacturing process with processed materials.
In another clear pointer to the company's intention to pull out of the project, the Posco has written to the State-owned IDCO that it is winding up its Odisha office and is vacating its 1,000-sq ft office space on the fifth floor of the Fortune Tower in Bhubaneswar.
Sources said the company has taken a decision to withdraw its project due to recession in the steel market since one year.
The sources also said the company has expressed its keenness to invest its capital in Maharashtra, where it has two processing units. The company imports steel from South Korea and processes it through specialised skill and supplies the product to automobile and electronics manufacturing units. Presently, a number of automobile manufacturing units like Hyundai and renowned electronics companies like Samsung and lG are using Posco steel in the manufacture of their products. Besides, the company also has its processing units in Chennai and Delhi. The company has planned to expand its processing unit in Maharashtra.
The Posco had informed its decision in this regard to Prime Minister Narendra Modi during his recent visit to South Korea.
The company's project to build a plant with a yearly 12 million-tonne production capacity near Paradip has been delayed for 10 years due to a backlash from residents, environmental concerns and other reasons.
The stalled project had met the biggest hurdle earlier this year after an amendment to the MMDR Act that made it mandatory for all companies seeking minerals to set up industry to go through the auction route, something that the Korean giant is unwilling to do since it fears that Indian steel manufacturers could form a cartel to outbid it.
Besides, the IDCO has refused to part with the additional 1,000 acres of land it has already acquired for the project because of a payment dispute with the Posco over the 1,700 acres of land already handed over to the company.
The Posco had signed an MoU with the Odisha Government on June 22, 2005 for a 12 MTPA port-based steel plant. As per the original MoU, the proposed plant would have become operational in 2010. The project was inordinately delayed due to problem in land acquisition as the locals protested the move of the company and the State Government.