Fresh setback for Posco: HC rules against prospecting licence

In a major setback to the Rs54,000-crore Posco steel project near Paradip port, the Orissa high court yesterday set aside the state government's recommendation for providing a prospecting licence to the company for the Khandadhar iron ore mines in Sundergarh district.

The South Korean steel major had earlier been in an upbeat mood as it recently managed to finalise the compensation package for the project-affected families, largely drawing the teeth of the anti-project protesters.

Disposing of a writ petition of Geomin Minerals and Marketing Ltd, a Bhubaneswar-based company, a two-member division bench of the High Court comprising justices B P Das and B P Ray directed the state government to take a fresh decision on the recommendation of a prospecting licence for Posco, giving preferential right of consideration to the petitioner.

The court directed the state government to conduct a fresh hearing of all the 226 applicants for the Khandadhar mines.

Earlier, in January 2009, the Orissa government had recommended to the Government of India a grant of prospecting licence in favour of Posco over an area of 2,500 hectares at Khandadhar.

The recommendation was made in favour of the company under Section 11(5) of the Mining and Minerals (Regulation and Development) Act. Subsequently, several companies, including Geomin Minerals, had challenged the state government's decision to recommend the licence in favour of Posco India.