Posco’s Odisha project gets green nod ahead of Park visit

India's environment ministry today gave the green signal for South Korean steelmaker Posco to go ahead with its Rs52,000 crore ($8.4 billion) project in the country, signalling that the project stalled for more than eight years may finally move ahead.

The ministry has made the approval conditional on Posco spending a large amount on "social commitments". This will raise the cost of the project by $600 million to bring the total investment to $12.6 billion, a company spokesperson said in New Delhi.

The revalidation of the South Korean company's environmental clearance comes days before the country's president, Park Geun-hye, arrives on a four-day official visit to India on 15 January.

Park took office last year to become South Korea's first female leader. Her visit to India will be the first visit by a South Korean leader since 2010, when her predecessor Lee Myung-Bak expressed worry about the stalling of the steel plant project during a trip to New Delhi.

Posco is of course hoping Park's visit will speed up the proposed 12 million-tonnes-per-year project in Odisha has been stuck for more than eight years due to delays in getting various clearances and acquiring land.

The company is hopeful Park's visit will speed up the project - India's biggest foreign direct investment.

"Though an additional burden has been put on us, we are happy with the revalidation," Posco-India spokesman I G Lee told sections of the media on Thursday. "It means the removal of a hurdle for us."

Posco received initial environmental approval for its Odisha factory, billed as the biggest overseas investment in India, back in May 2011. But the permit was suspended by the National Green Tribunal in March 2012 following a petition by activists challenging the decision. The tribunal asked the government to reassess the conditions on which environmental clearance was granted.

The tribunal may hear the case on 13 January, Lee said. He added that the company will have to spend 5 per cent of the total investment on "enterprise social commitments", but added that it was not immediately clear what this would entail.

Posco could also hear some good news on its request for a licence to explore iron ore. Odisha will reply within a "day or two" to the mines ministry on granting an iron ore exploration licence to Posco, the state's mines director Deepak Kumar Mohanty told Reuters.

Posco first signed an agreement with Odisha in June 2005 to set up the steel plant on 4,004 acres of land. But the project languished first because the local population refused to vacate government-owned land that they had occupied for generations, and then due to environmental objections

Posco has already been allotted about 2,700 acres to begin the project's first stage, which involves setting up two 4-million-tonne plants in two phases. The state government is awaiting the tribunal's clearance before transferring the rest of the land to the company.