Mega deal for steel plant signed

South Korean major Posco’s MoU with Orissa Government

Project to be completed in two phases Plant to reach full capacity by 2016 Orissa to provide 600 million tonnes of iron ore to Posco Centre to earn Rs. 89,000 crores over 30 years

BHUBANESWAR: The Orissa Government and the South Korean steel major Pohang Steel Company (Posco) signed a Memorandum of Understanding (MoU) on Wednesday to set up a 12-million tonne steel plant in the port town of Paradip.

The MoU was signed by the Executive Vice-President of Posco, Soung-Sik Cho, and the Orissa Government’s Steel and Mines Secretary, Bhaskar Chatterjee.

Orissa Chief Minister Naveen Patnaik, the Chairman and Chief Executive Officer of Posco, Ku-Taek Lee, and South Korean Ambassador to India Jung Il Choi were present at the signing ceremony.

Billed as the largest ever single foreign direct investment in the country, the Posco project has created a controversy with several Opposition parties protesting against the company’s proposal for permission to export high-alumina content iron ore from the State.

The mega steel plant will come up at Paradip at a cost of Rs. 51,000 crores and will be completed in two phases, each phase consisting of two modules of three million tonnes a year. The first module is likely to be completed by June 2010. After that, three million tonnes of capacity will be added every two years and the plant will reach its full capacity by 2016.

According to the MoU, Posco has promised to register a company in India in August this year and sign a final Memorandum of Agreement by the year-end after a detailed investigation on the economic feasibility, land purchase and the rehabilitation and resettlement programme.

Employment generation

Orissa will provide 600 million tonnes of iron ore to Posco for captive use over a period of 30 years.

The entire project, including mining, steel plant and a captive port with a big berth for cape size vessels at the plant site, is likely to generate direct employment for 13,000 people and indirect employment for 35,000 people. With the commissioning of the mega plant, the Centre will earn Rs. 89,000 crores over 30 years by way of excise and customs duties, service taxes and corporate income tax.

The Orissa Government will benefit to the tune of Rs. 22,500 crores during the same period. The MoU with Posco is the 37th to be signed by the Patnaik Government for setting up steel plants in different parts of the State.