Posco’s land problems in India are almost over

India’s eastern state of Odisha expects to complete procuring land needed for Posco’s steel complex in less than two weeks as farmers relinquish their opposition to the proposed $12 billion project.

About 200 acres (81 hectares) out of a total of 2,700 acres have yet to be acquired from local residents, said Satya Kumar Mallick, the administrative head of Jagatsinghpur district, the site of the project. All of the land could be handed over by June to Korea’s biggest steelmaker, which already has about 1,700 acres in its possession, he said.

“We’re within touching distance,” Mallick said in an interview. “Procurement has restarted and is proceeding without any problem.”

Posco’s first factory in India, billed as the biggest foreign investment in the nation, has been delayed by eight years because farmers refused to vacate government-owned land they occupied for generations. The company and the Odisha government in 2010 agreed to compensate the local population by offering more money for land, jobs at the plant and allowances to sustain them.

“The process has gained momentum as local people are offering their land following initiatives to reach out to them,” Mallick said. “The biggest hurdle for the project, at least in terms of land procurement, seems to be over.”

Posco is betting on rising steel demand in India and infrastructure initiatives by the government, which is attempting to resuscitate an economy growing at the slowest pace in a decade. The plant will initially produce 8 million metric tons of steel, two-thirds the quantity originally envisaged.

Still, some hostility to the project remains, said Prasanth Paikare, a spokesman for a group that opposes the project, Posco Prathirodh Sangram Samiti.

“While some are now supporting the project, a large number of villagers are still against it,” Paikare said in a phone interview. “We plan to seek political support in scaling up our opposition.”

Posco is awaiting a permit from India’s environment ministry for the project. India’s National Green Tribunal in March 2012 suspended an earlier clearance from the ministry and asked for a review of environmental impact before final approval.

The company has also yet to secure an iron ore mine for the proposed factory. The federal government had challenged in the Supreme Court a lower court’s order that the state’s recommendation to allot the Khandadhar mines to Posco was illegal.

Posco remains committed to its original plan of building a factory with a 12 million-ton capacity, Posco India Deputy Managing Director Ryu Ho-chan said in March last year. Posco India Chairman and Managing Director Yoon Yong-won said the seven-year delay could add 20 percent to the original cost of the plant. Bloomberg