In January, Korean steel giant POSCO finally received the green light from the Ministry of Environment & Forests (MoEF) of the Government of India (GOI), for the $12 billion project in Orissa -- the state which is located on the east coast of India.
The project is comprised of a steel plant, a captive port and a minor port. However, the clearance for this project comes with several new riders, directing the company to meet a series of environmental standards.
Union Minister for Environment & Forests, Jairam Ramesh, said in an order that environmental clearance for the steel-cumcaptive power plant is being accorded with 32 additional conditions, over and above [those] stipulated in the original environmental clearance of July 19, 2007.
The additional conditions for the steelcum- captive power plant ask the company to carry out sustainability study of water requirement for the plant by an institute of repute; forgo the water intake in case there is a shortfall of water at the Jobra Barrage for irrigation purposes; and ensure that the total green area within the plant is 25% of its area as per the guidelines of the Central Pollution Control Board (CPCB). In addition to fulfilling the Resettlement and Rehabilitation (R&R) obligations mandated by the state government’s package and implementing corporate social responsibility (CSR )-related programmes in the construction phase, the company now also has to devote 2% of net annual profit to CSR in the region where the project is located.
For the captive port, the company has been barred from undertaking any construction work in the ‘high erosion’ zone. Also as per the 32 additional conditions, the company has to undertake shoreline protection measures to counter erosion in the northern side of North Breakwater, and submit detailed Marine Environment Conservation Plan.
Jairam Ramesh also has sought a categorical assurance from the Orissa government that there was no violation of the Forest Rights Act in the land acquisition. Last year in August, he had directed the Orissa government to halt the land acquisition for the project. This directive was based on a ground report submitted by a three-member committee set up by the Environment and Tribal Affairs Ministries.
The seed for this much talked about project was sowed in June, 2005, when Pohang, South Korea-based Pohang Iron and Steel Company (POS CO) signed a memorandum of understanding (MoU) with the Government of Orissa for the construction of a steel plant, and also development of iron ore mines in the state. Later in August, 2007, the company incorporated its Indian subsidiary POS CO-India Private Limited with the Registrar of Companies, Orissa, under the Companies Act of 1956. The company had plans to build the plant in three phases by 2016. Originally, production was scheduled to begin by the end of 2011 after the completion of the first phase. The company says that the integrated steel plant will have a total capacity to produce 12 million tons per annum - with 4 million tons in the first phase.
Billed as the single largest foreign direct investment (FDI ) in India, the project has still not been able to take off as it has been embroiled in one issue after another, including legal, logistical, procedural, and environmental. The locals fear that the project will render them landless and also snatch away their forest-based livelihoods. The proposed plant area will be spread over 1621 hectares of land, which includes nearly 1253 hectares of forest land. In June 2007, the Orissa government sought the permission of MoEF to offer forest land for the project. The ministry granted “in principle” permission on September 19, 2008 and with 13 conditions to be fulfilled.
The project received environment approvals in 2007, and in 2009, the mandatory forest clearance. But, social activists and environmental experts objected to the granting of these approvals, and staged a series of vocal protests against the project - as a result, Jairam Ramesh set up a four-member inquiry committee, which submitted two different reports after a review. The first report concluded that there is no need to cancel clearances, but the project proposal must carry out a comprehensive Environmental Impact Assessment (EIA ). The other report suggested the cancellation of the Environmental Impact Assessment (EIA ) and Coastal Regulation Zone (CRZ ) clearances given to the proposal. Both the committees, however, agreed that provisions under the Forest Rights Act (FRA ) need to be reexamined by the state government. Due to the split verdict, Jairam Ramesh constituted another expert panel to review whether the proposed steel plant could be given green clearance or not.
The POS CO project is seen as something of a test for India, and prospective investors are closely watching the proceedings to see how the country balances its ambitious economic and industrial growth plan with environmental concerns. Lately, the MoEF has been in the news for blocking several projects, citing environmental concerns, and the Minister has been accused of following an “anti-growth” agenda. In a bid to squash the growing criticism that his Ministry is anti-industry, Jairam Ramesh said that undoubtedly, “projects such as that of POS CO have considerable economic, technological and strategic significance for the country.” He added that at the same time, “laws on environment and forests must be implemented seriously.”
Foreign investors, Indian corporate houses and the government of Orissa have welcomed the central government’s decision to clear the Posco project. Reacting to the Ministry’s order, Naveen Patnaik, chief minister of Orissa, said his government would study the conditions and see what could be done. “On the face of it, it seems to be good news.” Raghunath Mohanty, steel and mines minister in the Orissa government, said that the implementation of the POS CO steel project would open a new chapter in the history of industrialization in the state.
Welcoming the decision of the MoEF , G.W. Sung, managing director at POS CO India, said that the company fully appreciates the concerns of different stakeholders on sustainability of environment as well as the livelihoods of affected people. He added that they are committed to taking sustainable green initiatives and effective measures for conserving the land and marine environment of the area, and also are committed to creating sustainable livelihood opportunities for the project-affected people through implementing R&R package sincerely.
The environment ministry approval for the project may have paved the way for the construction of the steel plant, but it still does not look like a smooth sailing for the world’s third largest steelmaker. Social activists and environmental groups have slammed the decision. Posco Pratirodh Sangram Samiti (PPSS ), which has spearheaded anti-POS CO protests since 2005, has condemned the decision. “We will not give up our lands, our forests and our homes to this company. It is not the meaningless orders of a mercenary government that will decide this project’s fate, but the tears and blood of our people,” said Prashant Paikray, a spokesman for PPSS.
Abhay Sahu, president for PPSS , announced that the villagers who were not willing to part with their land for the steel project would intensify their agitation. Environmentalists are concerned that the steel plant locations are close to the breeding sites of the endangered Olive Ridley turtle. They believe that the water released from the plant could affect marine ecology and the livelihood of thousands of local fishermen. The National Fishworkers Forum (NFF ) also came out against the project, and called the clearance a sell-out to economic interest at the cost of not only the environment but also the lives and livelihoods of the fishing community. India’s main opposition party, Bhartiya Janta Party (BJP), has also criticized the Union Government for according conditional clearance to the Posco project in Orissa and has demanded a CBI probe.
In addition to handling the protests and criticisms, the company still has several hurdles to cross before the plant starts production. Some of the upfront issues that need to be tackled by the company are the rehabitation of locals and the acquiring of mines - the government of Orissa has assured a mining lease for 600 million tonne reserves – and the allocation of raw material linkages. However, the biggest challenge for the company is to win the trust of the local populace, and allay their fears. The company has to make them believe that the steel plant will not take away their livelihood but provide them with better opportunities and favourable development of the region.
The long wait for the clearance of the project in Orissa seems to have not dampened the spirit of the company to do business in India, as Asia’s second largest steelmaker has set in motion its second proposal in the country. V P Baligar, principal secretary for commerce and industries in Karnataka, said that Posco has selected Halligudi in the Gadag district of Karnataka to build its proposed six million ton plant at an estimated investment of about 7 billion U.S. dollars. Reportedly, the company has already applied for a captive iron ore mining lease and has sought 3,000 acres for setting up the plant.