Posco shelves plant in State

Posco shelves plant in State

Steel major cites unfavourable market conditions as reason

Posco shelves plant in State

South Korean steel major Posco has withdrawn its plan to set up a steel plant in Karnataka citing “unfavourable” market condition and trouble with land acquisition as the prime reasons, said sources in the Commerce and Industries Department.

In 2010,  Karnataka Industrial Areas Development Board (KIADB) published a preliminary notification for land acquisition in Gadag district for a steel plant by Posco.

However, agitation by farmers and religious leaders put the State government on the
back foot. The land acquisition process subsequently came to a halt in 2011.
The State government has since been dillydallying on providing land to Posco. In April this year, Posco India chairman-cum-managing director Yong Won Woon had said:

“We have put on hold our efforts for the implementation of the proposed steel project in Karnataka primarily because of political uncertainty in the State. But we have no intention of pulling out of the project. We are waiting for the political uncertainty to settle down.”

A case in the Supreme Court on mining in Karnataka also delayed the project implementation. Posco, according to its website, had applied for a mining lease in Karnataka.

The mine was estimated to have a reserve of 100 metric tonnes (MT).
Sources in the Industries and Commerce Department said Posco has withdrawn and even taken back a deposit of Rs 60 crore from the KIADB.

Sources in Posco said the amount was deposited with the government in 2010 as the initial payment for land acquisition for the proposed steel mill with a capacity six million tonne per annum.

An MoU for the project was signed with the State government the same year.
The status of the preliminary notification for land acquisition at Halligundi Village is not known. Sources in the Gadag Deputy Commissioner office said the land is still with the owners and the entire process has been discontinued. “There is no such project (Posco) in the pipeline now,” said Gadag Deputy Commissioner S T Anjan Kumar.

Principal Secretary for Industries and Commerce M  N Vidyashankar confirmed that
Posco had decided to withdraw from the State. “Soon after the land agitation began, the company had decided to withdraw. It has also withdrawn the deposited amount for the land acquisition,” said Vidyashankar.  The department officials were sceptical on whether the steel company would consider setting up the plant with the change in regime. One official said Posco may return if the market conditions change. But availability of land is a big question, he added.