MMDR Act amendments create fresh hurdle for Posco project.

South Korean steelmaker Posco's ambition to set up a 12-million-tonne-capacity plant in India with an investment of Rs. 51,000 crore may have taken another hit with the Narendra Modi government's move to allocate all future leases through auction. The company, if it still wants to pursue its plans of setting up a plant in India, may now have to bid for an iron ore reserve for captive consumption.

The plagued project, one of the largest foreign direct investment proposals in India, has had an uphill 11-year journey, with protests over land acquisition and green clearances, and criticism of the state government's decision to allot it a prospecting lease for the Kandhadhar iron ore deposit, spread over 2,500 hectares between Keonjhar and Sundargarh districts of Odisha.

Recently, Modi's Cabinet cleared through ordinance amendments to the Mines and Minerals (Development and Regulation) Act, in line with the Supreme Court judgment on telecom spectrum that advised policy changes for competitive allocation - read auction - of natural resources.

'The MMDR amendments do not protect Posco's prospecting lease since it doesn't enjoy a prior reservation and neither does it have a letter of intent (for grant) from the state,' a source in the mines ministry told ET. 'We have recommended a prospecting lease for Posco India. It is for the central government to take a decision on the matter,' said Odisha Director of Mines Deepak Mohanty. senior executive at Posco India said the company was unsure of the implications; the ordinance not being public yet.


ET