When contacted, Posco officials in Seoul said both sides had agreed to a "cooling-off period" and hoped to return to the negotiating table soon.
Tae-Hyun Jeong, general manager (director) in Posco's corporate strategic planning department, said each party had agreed to reconsider the other's proposals before commencing fresh talks.
"We have agreed to reconsider the proposal given by the Orissa government. And it has agreed to reconsider our proposal," he said.
The stumbling block in the talks between Posco and the Orissa government was Posco's insistence on export of iron ore from India.
Posco officials said the alumina content in Indian iron ore was 2-3 per cent higher than the requirement and therefore, it would have to be blended with iron ore imported from Australia.
"Even though Australian iron ore is 30-40 per cent more expensive than what is available in India, we wish to produce high-quality steel in India. Hence, we have proposed to exchange the Indian iron ore with what we import from Australia," Tae-Hyun said.
According to him, Orissa is willing to allow exports to the extent of 15 per cent of Posco's total requirement. But Orissa government officials said there would be no compromise on the state's stated policy on mining rights.
Posco had sought mining rights for one billion tonnes of iron ore over 50 years for its proposed steel plant. But, according to the state government's policy, its entitlement for a 12 million tonne plant is not more than 480 million tonnes.
Besides, existing rules do not permit the state government to offer mining rights for more than 25 years.
After protracted negotiations, Posco President Chang Oh Kang and Orissa Chief Minister Navin Patnaik had jointly announced in New Delhi in February that the deal would be finalised soon.
Things took a turn for the worse for Posco last Thursday when replying to the concerns raised by members of the Opposition in the Assembly, Orissa's Steel and Mines Minister P Behera said, "Posco will be allotted as much ore it requires based on the installed capacity of the project."
To salvage the MoU, a high-level Posco team, led by Tae-Hyun and its India project team leader Ryu Ho-Chan, was engaged in discussion with Orissa Chief Secretary Subas Pani, Mines Secretary Bhaskar Chatterjee and other senior officials for the last few days. But talks reached a dead end and it was decided to defer the MoU, which was to be signed on April 14.
