South Korea’s Posco said it will pull out of a $5.3-billion steel mill development in Karnataka, but will proceed with another $12-billion project in Odisha, billed as the country’s largest foreign direct investment.
Posco said in a regulatory filing that it had agreed to cancel the project with the government of Karnataka because of delays in receiving iron ore mining rights and opposition from residents, which had held back land acquisition. A senior Karnataka government official said Posco took the decision to exit three-four months ago, and had then asked to return the Rs.60 crore it had deposited for land acquisition.
In 2010, following an invitation from the Karnataka government, Posco signed a preliminary agreement to construct a mill capable of producing six million tonnes of steel a year. The agreement was signed at the Global Investors Meet that saw several massive steel projects being proposed, led by two of the world’s biggest manufacturers, ArcelorMittal and Posco.
The government offered Posco four locations to choose from, and Posco chose Halligudi in Gadag district because of its relatively good rail and road connectivity.
The government issued a preliminary notification to acquire 3,382 acres for the project, but the move immediately led to big protests by farmers and seers of powerful Lingayat mutts of north Karnataka, who argued that fertile land should not be acquired for a steel plant. The Supreme Court’s rulings on mining leases also restricted the state government from allotting mines to Posco. “The BJP government did not take any proper decision, and Posco closed its Bangalore office in October last year,” said a former executive of Posco India.
The pullout from Karnataka could provide fresh impetus to Posco’s main steel project in Odisha. Already eight years in the making, it has recently gained momentum with the clearing of legal obstacles to the granting of an iron ore exploration licence. “We will proceed with a steel mill project in Odisha, which is making progress. The latest move will make us more focused on the project,” Posco spokeswoman Kim Ji-young said.
Posco said in a regulatory filing that it had agreed to cancel the project with the government of Karnataka because of delays in receiving iron ore mining rights and opposition from residents, which had held back land acquisition. A senior Karnataka government official said Posco took the decision to exit three-four months ago, and had then asked to return the Rs.60 crore it had deposited for land acquisition.
In 2010, following an invitation from the Karnataka government, Posco signed a preliminary agreement to construct a mill capable of producing six million tonnes of steel a year. The agreement was signed at the Global Investors Meet that saw several massive steel projects being proposed, led by two of the world’s biggest manufacturers, ArcelorMittal and Posco.
The government offered Posco four locations to choose from, and Posco chose Halligudi in Gadag district because of its relatively good rail and road connectivity.
The government issued a preliminary notification to acquire 3,382 acres for the project, but the move immediately led to big protests by farmers and seers of powerful Lingayat mutts of north Karnataka, who argued that fertile land should not be acquired for a steel plant. The Supreme Court’s rulings on mining leases also restricted the state government from allotting mines to Posco. “The BJP government did not take any proper decision, and Posco closed its Bangalore office in October last year,” said a former executive of Posco India.
The pullout from Karnataka could provide fresh impetus to Posco’s main steel project in Odisha. Already eight years in the making, it has recently gained momentum with the clearing of legal obstacles to the granting of an iron ore exploration licence. “We will proceed with a steel mill project in Odisha, which is making progress. The latest move will make us more focused on the project,” Posco spokeswoman Kim Ji-young said.
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