MAC: Mines and Communities

Steel major Posco's mining licence comes under ministry's scanner

Published by MAC on 2007-05-18

Steel major Posco's mining licence comes under ministry's scanner

The licence for the Khandadhar mines was issued to Posco over 249 applications

by Maitreyee Handique, New Delhi, 18 May 2007

India's ministry of mines has written to the Orissa government asking for reasons why the mining licence for the Khandadhar iron-ore mines was issued to South Korea's Posco (the Pohang Iron and Steel Company) over some 249 prior applications for the same.

The letter comes after the Orissa high court asked the ministry to settle the issue of the mining licence; the court was approached by Kudremukh Iron Ore Company. The court has fixed 15 August as the deadline for awarding the licence.

Khandadhar is spread across 6,204 hectares in Sundergarh district of Orissa. The contest over the mines intensified after the state government granted a mining licence to South Korean steel giant, Posco. The world's fourth-largest steel company plans to construct a $12 billion (Rs49,200 crore) steel plant, the country's largest promised foreign direct investment, but progress had been thwarted by delays in acquiring land and mining licences.

Three years ago, Kudremukh, which comes under the control of the Union steel ministry, negotiated a mining lease and entered into an agreement with the state-run Kalinga Iron Works to set up a pelletization plant. The company had spent Rs1.6 crore on drilling and exploration in Khandadhar.

Out of the 250 applications for Khandadhar, nearly 50 cases have been disposed and the state government is in the process of collecting information from district collectorates on another 11, according to an official of the state government who did not wish to be identified.

Orissa has the world's fifth- largest reserve of iron ore and drawn by its rich deposits, nearly 45 companies have signed memorandum of understanding with the sate government to set up steel mills in the state.

According to the state government, nearly 14 of these companies have met conditions laid down in the agreement and are eligible for mining licences. However, the official said that all 45 parties are unlikely to get mines.

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