Posco gives up on Odisha steel plant

South Korea’s #Posco has virtually ended its project to build a steel complex in the eastern India state of #Odisha, an investment of US$10-US$12 billion planned more than a decade ago.

Posco, the world’s fourth-largest steelmaker, is willing to give back the site to the Odisha state government as the costs of keeping it have been snowballing while the scheme has remained at a virtual standstill for more than a decade, reported Korea Times on 20 March 2017.

Posco’s India unit has sent a letter to the state government, expressing its intent to return the land after it was asked to pay taxes and other expenses amounting to more than US$10 million, according to a company official.

#Odisha Industries Minister Debi Prasad Mishra has also confirmed receiving the letter from the Korean steelmaker.

Giving up the land essential for building a steel mill means POSCO has finally decided to abandon the Odisha project, which has been delayed for 12 years.

Steel industry observers said it was no longer viable to build a mega steel complex in the current global economic downturn even though the Posco’s Odisha plan had a iron ore supply from a local mine.

The high profile project was monitored by former Indian Primes Ministers #Dr Manmohan Singh and now #Prime Minister Narendra Modi with assurances of having the complex completed.

The site has not been used for a long time so we figured it would be better used for other purposes until we resume the project,” a company official said.

“This doesn’t mean we have completely given up. When the conditions are right, we will definitely restart the project,” Korea Times quoted a Posco official as saying in diplomatic tones.

In 2005, Posco signed a contract with the Odisha state government to invest $12 billion to construct a 4-million-ton capacity steel mill as a first phase development. The complex was designed to have 12 million-ton/year capacity to be built in follow on phases and in response to market demand, which in India remains strong.

Under the agreement, Posco secured rights to develop iron ore mines near the site in which it planned to build the plant.

But it has not been able to even break ground due to opposition from environmentalist groups and residents.

India’s bureaucratic red tape is also said to have stalled the Odisha project, according to industry observers. This had delayed the project and eventually led to its suspension.

Instead of creating a large steel mill, the steelmaker has been building more processing facilities to produce automotive steel plates and other high value-added steel products.

#Posco chief executive Kwon Oh-joon has said it has taken too much time and money to build a large-scale steel mill with furnaces in eastern India, adding that the company will set up more lucrative steel processing plants to supply to the Indian industrial sectors.

Posco currently operates three processing plants in western India, producing automotive and electrical steel sheets.

In 2015, Posco opened its third plant in Maharashtra, producing 1.8 million tons of automotive steel plates annually for General Motors and other global carmakers operating factories nearby.

In 2012, the company opened its first Indian plant to produce 450,000 tons/year of galvanized steel plates, and in 2013 a second 300,000 tons/year of electrical steel sheets in 2013. Both plants are in Maharashtra.

The steelmaker ships hot-rolled steel sheets from its Korean and Indonesian mills for processing at Indian plants, which are processed for carmakers and other industrial manufacturers. fii-news.com