India update
Published by MAC on 2007-05-17
India update
17th May 2007
Opposition to Posco's integrated iron and steel project in Orissa has quickened, despite the South Korean company offering minor concessions over land.
The government's recent decision to lower export duty on iron will not apply to high quality ore; even so it is estimated that, by 2011, the country's domestic steel mills will be in deficit supply.
Locals opposing hand over of Khandadhar mines to Posco
Zeenews
17th May 2007
While the Orissa government is facing difficulty to acquire land for POSCO's proposed steel plant near Paradip, the ongoing agitation against the project has spread to Sundargarh with the local people opposing any move to hand over Khandadhar iron ore mines to the company.
People from nearly 40 villages spread over five gram panchayats have launched an anti-POSCO agitation under the banner of 'Khandadhar Surakhya Samiti' backed by local BJP leaders, BJP Rourkela district president and an advisor to the Samiti Khagendranath Pradhan said.
BJP is a partner of the BJD in the ruling coalition.
Khandadhar is a popular tourist place in the state with two huge natural and attractive waterfalls.
The newly formed organisation has vowed not to allow the South Korean company undertake mining activities in Khandadhar area, which, it feared, would lose its natural beauty.
BJP national vice-president and MP Jual Oram had opposed the move to hand over the 62 sq km mines to the steel giant.
The state government had recommended to the Centre to provide prospecting licence to POSCO for the mines in December. But it led to a row with state-run Kudremukh Iron Ore Company (KIOC) opposing the move and approaching Orissa High Court.
The HC had recently asked the Centre to decide the matter within three months.
POSCO-India CMD Soung-Sik Cho had said the company planned to turn Khandadhar into a tourist spot and not to interfere with the streams so that the waterfall was protected.
Two Posco executives detained by villagers
The Hindu
18th May 2007
BHUBANESWAR: Angry villagers detained two Indian executives from South Korea's Posco, the world's third-largest steel maker, and then released them unharmed — the second such incident within a week — police said on Thursday.
The executives had travelled to Nuagaon village in Orissa to start a free clinic and hand out medicine, part of Posco's efforts to win over villagers who will be displaced by the planned steel mill.
They were detained on Wednesday by a group of villagers, most of them women, and were released after two hours, police officer Jaswant Jathwa said.
The Posco plant will be the largest single foreign investment in India.
The Government approved it last year as a Special Economic Zone, making it eligible for tax breaks and was exempt from some government duties and labour rules.
Posco to go ahead
Posco had no immediate comment on Wednesday's detentions. But it has repeatedly said it will go ahead with plans to invest about $10.8 billion in the plant, despite repeated and occasionally violent protests.
Many residents strongly oppose the project because they say it will displace about 20,000 people.
Last Friday, three officials were abducted and detained for more than 10 hours in a nearby village.
They were also released unharmed. — AP
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
http://www.livemint.com/2007/05/18002555/Steel-major-Poscos-mining-lic.html
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.
Posco open to compromise; may skip Dhinkia
Ishita Ayan Dutt / Kolkata, Business Standard
15th May 2007
Posco India is open to realigning its project area and one of the options could be to the south of the site. A Posco spokesman told Business Standard that if the Orissa government came up with a proposal, the company would consider slight realignment. The realignment would entail skipping the 200-acre Dhinkia gram panchayat. Dhinkia is to the north of the project site. According to the spokesman, there was land available to the south of the site, but it was a low-lying one.
If the realignment happened then it would be the second time that the South Korean steel major would be altering its plant area. Of the 438 acres of total private land to be acquired for the project, the most aggressive pocket happens to be Dhinkia gram panchayat involving 266 families whose main livelihood is betel vine cultivation. The 200 acres were required for the third phase of the 12 million tonne project. The Rs 52,000 crore 12 million tonne plant would be built in three phases of 4 million tonne each.
The spokesperson said the 200 acres would not affect the first and the second phases and the company was hoping that once activity starts, people would accept the project. The company has also offered land for land. "We have said that we will find alternative land for betel cultivation if necessary, but the villagers don;t want to talk."
In fact, the formal socio economic surveyis also not complete. Posco last year awarded the project to Tata Instituteof Social Sciences (TISS), but they have not been able to complete due to blockade.
Posco has already scaled down its land requirement for the project. Earlier the company had asked for 5,000 acres, which would have displaced 2,000 families and then later brought it down to 4,004 acres, affecting around 500 families. Of the 4,004 acres, 3,566 acres were government land and 438 acres private land. The private land covers three gram panchayats, Gada Kujanga, Muagaon and Dhinkia. Dhinkia is the largest tract covering 200 acres and according to sources has a significant communist peasant population.
India reduces export tax on low-grade iron ore
The Indian government has reduced the export tax on iron ore fines below 62 percent grade to 50 rupees ($1.23) per ton from the previous tax of 300 rupees ($7.35) per ton, according to an Indian Ministry of Finance announcement on May 3.
However, the export tax on Indian fines above 62 percent grade, and Indian lumps and pellets will remain at 300 rupees ($7.35) per ton.
According to the announcement, the Indian government is intent on controlling high-quality iron ore exports, and has only lowered the export tax on low-grade iron ore concentrate.
"The Indian government intends to reserve domestic iron ore for domestic steel mills, due to the booming Indian steelmaking sector. By the end of 2011, India plans to be able to produce 120 million tons of steel per annum, up 233.33 percent from current production levels," a Mysteel analyst, surnamed Gao, told Interfax on May 8.
Indian domestic iron ore demand is expected to double by 2011 from the current level of 66 million tons to 130 million tons. Iron ore output capacity is also estimated to rise to approximately 240 million tons in the same year.
Overseas steelmakers' involvement will quicken India's steelmaking industry development.
Planned projects include Posco's 12 million-ton steelworks, Arcelor Mittal's 12 million-ton steelworks and Sinosteel's 3 million-ton steel mill.
Provided the present per-annum export growth of 57 percent remains stable until 2011, Indian's iron ore concentrate exports for that year will reach 138 million tons, causing a shortage of at least 8 million tons of iron ore concentrate for domestic steel mills.
"The government wants to restrict high-grade iron ore exports. Indian steel mills mainly use iron ore concentrate above 62 percent grade. The use of low-grade concentrate will raise production costs, as steel mills would be required to build extra sintering facilities," Gao said when asked about the reason for the 62 percent grade boundary.
"Chinese traders and steelmakers seem to have accepted the increased iron ore prices. This amendment of the Indian export tax policy will probably lead to an increase in Indian iron ore exports to China, particularly of Indian fines around 62 percent grade. However, it is unlikely that there will be a reduction in the price of Indian iron ore concentrate above 62 percent grade in China after the change of the policy," Gao noted
"The new policy will result in the price gap between Indian fines above and below 62 percent reaching $5 per ton. In order to avoid the export tax, profit-taking Indian mines may export fines that are tagged below 62 percent grade, which are actually in fact slightly above the 62 percent grade," Gao explained.
China imported 9.83 million tons of Indian concentrate in March, up 38.06 percent from the previous month. The delivery price of Indian concentrate 63.5 percent grade stood at RMB 830 ($107.86) per ton on April 27.
[Source: Interfax China Metals, 18 May 2007]