Posco-India is in a Catch-22 situation. While the Supreme Court's Central Empowered Committee has asked the South Korean steel giant to submit a composite forest diversion proposal for the entire project, including the mining component, the company maintains the procedure for getting a mining lease in India is such that it is impossible to present a composite FDP.
The company says the labyrinthine process for getting a mining lease will take a minimum of 3-4 years, before which it cannot submit an FDP. A Department of Mines official believes it is an optimistic assumption.
He thinks it could easily take five years since Posco's prospective mining area is huge (over 6,200 hectares).
This is how it works. The company first applies for a prospecting licence and then begins prospecting.
This could take at least a couple of years. Then it prepares the mining development plan and applies for a mining lease in which the forest diversion areas are identified. Officials said the normal time lag for this would be 3-4 years and could at best be scrunched to two years.
"Right now, we are struggling to get the prospecting licence," points out Posco-India Chairman and Managing Director Soungsik Cho, who says the CEC recommendation simply does not make sense. The catch for Posco is that under the memorandum of understanding signed with Orissa, the Korean steel major has to award at least half the orders for civil contracts and 20 per cent orders for the machinery before the state government approves its mining lease, which is granted by the Union steel and mines ministry.
"That means without making investments, we cannot get the mining lease and without the mining lease, we can't have an FDP," says an incensed Cho.
Environmentalists, however, insist that an integrated steel project like Posco should have a clear idea of the total forest land that would be needed. R Sreedhar, Director of the Delhi-based Academy of Mountain Environics who is a geologist by training, says the CEC has a top forest official as one of its five members and has a sound rationale for its observations.
The Supreme Court's decision on the CEC recommendation is expected shortly. For Posco, however, there are more legal pitfalls.
In the wake of a petition filed by the state-owned Kudremukh Iron Ore Corporation Ltd staking first claim on the Khandadhar mines, reserved for Posco, the Orissa mines department is scrutinising the 200 prospecting licence applications made before the South Koreans came into the picture.
KIOCL claims it has spent several crores prospecting the area. According to official sources, most of the scrutiny is over although 65 applicants have failed to appear before the authorities.
The process has been stymied because one of the companies has got a stay from the Orissa High Court contending that the first batch of applications deserved priority.
"In India, nothing happens smoothly because there are different interests at play," says a senior official in Bhubaneswar. "We are hopeful the legal complexities can be ironed out soon."
Posco is unlikely to be deterred by these legal twists and turns.
The Pohang-based steel giant's CEO, Lee Ku-taek, was quoted as saying that the company would stay with the India project regardless of how long it took or how much effort it called for.
The remarks were made to the CEO Forum in Seoul in early January.
