India gives conditional approval for POSCOs plant

By Kang Seung-woo

India has given final “conditional” approval to POSCO’s plan to build a $12-billion steel mill in its east coastal region ― the single biggest foreign investment project for India.

“Undoubtedly projects such as that of POSCO have considerable economic, technological and strategic significance for the country,” Environment Minister Jairam Ramesh said in a statement.

“At the same time, laws on the environment and forests must be implemented seriously.”

The approval comes five years after the world’s No. 3 steel maker proposed building a steel plant with an annual capacity of 12 million tons in Orissa. Since then, the plan has been caught in wrangling between local villagers and the central government.

“We welcome the decision by the environment ministry. We will try our best to cooperate with the Indian government and continue to purchase more land,” an official of POSCO told The Korea Times.

“The government asked POSCO to donate 2 percent of its annual net profit to the community, to avoid high erosion zones in the construction of a harbor and afforest 25 percent of the land,” the official explained as the conditions attached to its approval.

The Pohang-based company signed a memorandum of understanding with the state government in June 2005 and the deal was billed as India’s single-biggest overseas investment since the country launched market reforms in 1991.

However, the welcome turned out to be short-lived, as the construction was delayed due to ongoing protests from villagers who were concerned about losing their livelihood and property.

In August 2010, the Ministry of Environment and Forests ordered the Orissa government to stop all work including land acquisition for the steel maker’s project site because it violated the rights of forest dwellers by violating the Forest Rights Act, which stipulates that locals’ permission is required before acquiring forest land for a project.

The POSCO approval comes after India suffered a sharp decline in foreign direct investment last year, which put the nation’s environment “sensitive” policies under fire.