In what could be a set back for South Korean steel giant POSCO, the Centre is learnt to be seriously considering the proposal of auctioning the lease for Khandadhar mines, which if happens, may lead to cancellation of the company's prospecting licence (Pl) for exploring the reserves and further delay its plans of setting up an 8 million tonnes per annum (mtpa) steel plant in Odisha.
Highly placed sources have indicated that the Mines Ministry is looking at the option of putting on auction the lease for Khandadhar mines which consist of a rich haul of iron ore and are situated in an eco-sensitive zone located in Jagatsinghpur district of Odisha.
POSCO had been seeking the permission for exploring the Khandadhar mines, as it will require around 600 million tonnes of iron ore for the steel plant project and the reserves are expected to fulfill its raw material requirement quite substantially. In case the Centre auctions the lease, the South Korean entity will be forced to hunt for other reserves as it will have to compete with other players for Khandadhar. This will further delay its steel plant project, which is yet to become a reality despite having been envisaged in 2005.
The steel major had been given the Pl for exploring these mines by the Naveen Patnayak-led State Government. However, after the Orissa High Court quashed the decision, the company had approached the Supreme Court. The apex court in May 2013, had set aside the order of the Orissa High Court, and directed the Union Mines Ministry to review the possibilities of allowing the Pl to POSCO.
The UPA Government, however, kept the matter hanging in balance as it took no decision on it. With a new BJP-led dispensation now ruling at the Centre, POSCO had been harbouring hopes of getting the logjam resolved.
Mines Minister Narendra Singh Tomar has been seeking views of various State Governments on issues related to the mining sector and especially on whether mining leases should be given out on 'first-come-first-serve' basis or they should be auctioned. In this case however, as the Supreme Court had directed it to take a decision on a Pl which had already been given to POSCO by Odisha Government, the Mines Ministry, sources said, is considering the auction route.
If the Centre decides to auction the lease for Khandadhar mines, POSCO will stand to lose majorly as then it will have to bid for them afresh along with other prospective players.
POSCO's Rs 52,000 crore steel plant project in Jagatsinghpur district of Odisha (touted as India's first major Greenfield project), which was originally envisaged in 2005, has faced innumerable delays owing mainly due to opposition from tribals, NGOs as well as environmentalists. land acquisition was the major hurdle for the project and after several road blocks it was allotted 2,700 acres of land, down from the originally planned 4,000 acres. The delays also brought down the plant's capacity from 12 mtpa to 8 mtpa.
With Tomar having already made his intentions clear that all efforts would be made to protect natural resources and the Government's priority will be their proper exploitation, sources pointed out that if the Mines Ministry goes ahead with the auction route, POSCO could be in for more hard times in the coming future.