Protests stall Posco’s $12bn Indian mill

Published Jun 22, 2011

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Local protests have forced an Indian state to halt purchases of land for a proposed $12 billion (R81bn) steel plant to be built by South Korea’s Posco, further delaying the biggest foreign direct investment in Asia’s third-largest economy.

The project by Posco, the world’s third-biggest steel producer, is the most high profile of numerous industrial plans delayed because of protests over land. Analysts warn this could hurt economic growth and worsen India’s current account deficit.

“It has been halted indefinitely… it is because of the so-called protests,” said SK Chaudhuri, the top official in the district where the land is being acquired in the eastern state of Orissa. “We are waiting for further instructions from the (state) government.”

The explosive issue of land acquisition, key to India’s industrialisation drive, has often pitted poor farmers against the private sector.

The government has dithered on which way to go, not wanting to alienate a core electoral base, but at the same time keen to push economic growth to double digits.

Thousands of villagers have protested against the Orissa state taking over land for the Posco plant, with women and children forming human chains around the site this month after the project received final clearances from the Environment Ministry.

It is likely that the government in Orissa will try to negotiate with protesters and offer better terms for their land.

Posco’s vice-president in India, Vikas Saran, said he had not been told of the decision by the state, while a Seoul-based spokesman for the firm said the project would go ahead.

“There is no change in our stance on the project. We will proceed with the project,” the spokesman said, adding that it expected the Orissa government to continue talks with residents over land acquisition.

The plant was to have come on stream this year, but Orissa’s government has only just started acquiring the land. Posco needs a 1 600ha site for the mill, which will initially produce 4 million tons of steel a year.

For the past six years the project has been bogged down by protests, environmental concerns and inquiries into alleged illegalities at a related mining concession. – Reuters

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