statesman news service
Bangalore/Bhubaneswar, 16 July
The announcement by Korean steel giant, Posco, to scrap its proposal to build a six-million-ton plant in Karnataka, involving an investment of Rs 30,000 crore, has not come as a surprise as it has much to do with the overall downtrend in the global economy as well.
Ostensibly, Posco&’s decision is based on the inability of the Karnataka government to procure the much needed land at Halligudi, Gadag district in north Karnataka. At least that is what the company has claimed. Importantly, the Korean giant had signed an agreement with the state government to set up the plant during the Global Investors’ Meet in June 2010 in
Bangalore.
The agreement followed the one signed by Arcelor Mittal, headed by steel magnate Mr Laxmi Mittal. As per that arrangement, Mr Mittal agreed to invest over Rs 30,000 crore for a six-million-ton capacity steel unit at Bellary, the land for which was to be acquired by the state government. Originally, Posco, it is learnt, was trying to get the state government to give a written commitment virtually for everything ~ from the availability of land to assured mining leases. This was something that the then government had frowned upon, especially as similar pre-conditions were not put by Arcelor Mittal.
Official sources here point out that after playing hard, the Korean giant came back to the state government once it learnt that Arcelor Mittal had stolen a march over it. Since then, everything seems to have been going smoothly except, of course, the availability
of land.
Repeated efforts to get the required land for Posco, however, led to a face-off between the landowners as also temple authorities of the area on the one side, and the government. After failing to convince the land owners, the government offered alternative land to Posco at Bagalkot; even Bijapur. These, apparently, were not in tune with the Korean giant&’s requirement or needs.
Accordingly, the company withdrew its proposal. As a senior officer told The Statesman: "This June, we had even returned the Rs 60 crore which Posco had deposited in 2010 to acquire land for its plant with Karnataka Industrial Area Development Board. On its part, the government would, however, be only too delighted to see the Korean giant change its mind."
For the record, Posco signed an MOU to set up a six-million-ton steel plant with a captive power generation unit. It was keen to do so at Halligudi in north Karnataka, in proximity to the iron ore mines in
Bellary. The state government had identified 3,000 acres of land for the company in Mundaragi taluk. Following protests by the farmers and religious heads of the area, the government could not make a headway. This resulted in the project being dropped.
At another level, however, the government has something to be pleased about considering the fact that Arcelor Mittal has already taken possession of the land at Bellary.
The world’s largest steel producer  received allotment of 2,569 acres in Bellary. "We have made progress on land acquisition in Karnataka. The state government has transferred the land in the company’s name and the process to transfer another 136 acres of government land is underway. The process of getting various clearances including crucial environment clearance is underway. We have also applied for mining leases which are critical for the project. We are focusing on getting all relevant clearances," the company said recently.
Of course, it remains to be seen whether the company would want to move as quickly on its project considering that the steel industry is not doing too well, worldwide.