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POSCO in Orissa

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Basic Nature of Project

This project has three components:

  1. Captive iron ore mines: mining lease applied for in two areas and prospecting leases applied for in three areas of Keonjhar District and Sundargarh District. Mining lease on 6204 Hectares in Sundargarh District recommended to be approved by the Supreme Court
  2. Steel plant: in Jagatsinghpur District, coastal area
  3. Private port: at the mouth of the river Jatadhari, close to steel plant area; the MoU only makes reference to the possibility of a “minor port” being created


Mine / Rail / Road / Water / Power / Township / Office: 7,790 crores

Steel Plant and Port Infrastructure, land development: 202 crores

Steelworks: 44,816 crores

Total: 52,813 crores

The steel plant will be constructed in three phases of 4 MT each:

Phase I: 2007 – Dec 2010

Phase II: three years after completion of phase I

Phase III: three years after completion of phase II


Phase I will produce 2.5 MT of hot rolled coil and 1.5 MT of slab.



13,000 workers to be directly employed and 35,000 indirectly for project as a whole.

18,000 “skilled workers” will be required for construction.

See impact on people for estimates on project affected population


Iron Ore

600 million tons of iron ore will be taken from captive mines. Additional 400 MT is to be sourced for POSCO’s SK plants through a “long–term commercial supply arrangement from the open market”, as per the Exim Policy and subject to the GoI. MoU states that the GoO will not provide any “mine-able reserves” for purposes of export, but GoO will assist with “establishing suitable contacts and interfaces with the Government of India.”


19.2 million tons of ore per annum required to produce 12 million tons of steel, says government estimate. Hence over a life time of 30 years, the plant will require 576 million tons of iron ore, according to the government.


Up to 30% of the iron ore from the captive mines (i.e. 200 million tonnes) is to be “exchanged” for ore from Australia, on the grounds that Orissa ore has too high an alumina content for POSCO’s production process. However, it has been argued that POSCO’s real interest is that Orissa ore has an unusually low phosphorus content, making it actually of much higher quality than the more easily available high phosphorus ore that will be imported.


There appear to be widely varying estimates of India’s total iron ore reserves, ranging from one estimate of 6.9 billion tonnes of “proven reserves” (along with 3.4 billion tonnes of ‘probable reserves’ and 3.2 billion tonnes of ‘possible reserves’) to another of 22 billion tonnes and a third of 25.2 billion tonnes. The lower estimates are presumably those of areas which are possible to mine.


The current iron ore royalty ranges from Rs. 3/- per ton to Rs. 24.50 per ton, depending on the type of ore being extracted.


See economic analysis of the POSCO project for a detailed critique of this aspect of the project


Chrome Ore

State government is to facilitate long term arrangements with Orissa Mining Corporation and other lessees for supply of chrome ore for plant needs. No estimates given.


Manganese Ore

The MoU states that:

The State Government would consider assigning appropriate priority to an application of the Company for mineral concession for manganese ore in the State as and when available within the ambit of MMDR Act and MC Rules.”




Land will be acquired for the project in the following areas:


4004 acres (for plant)

2000 acres (for township; 1500 at steel plant site and 500 near mines)

20-25 acres (for office at Bhubaneshwar)

Total: 6029 acres


This is not including additional land for the mines, roads, port, rail, etc., which would greatly increase the land requirement. One estimate requires that the mines will require at least 500 acres. The MoU requires that, in the case of private land being acquired, the company will pay the cost of land calculated as per the Land Acquisition Act. In the case of government land, cost will be paid as per the applicable Industrial Policy Resolution, which in turn simply states that the rate will be fixed by the Collector / General Administration Department.



The MoU commits the State government to “facilitating” the provision of water required by the project. It specifically refers to drawing water from the Jobra barrage on the Mahanadi river. POSCO estimates that it will require 3.5 cu m of water per second for the plant when it is operational, 1.75 in 2007 – 2009 and 1.75 more in 2013-2014. This works out to total usage of approximately 7,000 crore liters per year for the plant alone (assuming that it functions for 18 hours per day, six days a week). The company proposes to build two pipelines of 1.4 m in width and 86 km in length to draw this water .

Compiled by Shankar Gopalakrishnan


Written by janjagriti

October 14, 2008 at 5:48 am

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