POSCO or PEOPLE Choose One and Choose fast !!

Back on June 22, 2005 POSCO, the world's fourth largest steel maker, entered into a pact with the Odisha government for an investment of $12 billion -- or Rs 52,000 Cr. -- for setting up a steel plant in the state. It one of the single largest foreign direct investment in India, but little is known about POSCO in India and people of Odisha definitely hearing this name first time. So, what was it all about ??

 

WHAT IS POSCO ?

As the evolution of human civilization has, interestingly followed the same route of development as that of iron, likewise Korea's economy flourished with the growth of POSCO......(from POSCO website). 

Posco is Pohang Steel Company, the world's fifth largest steel company based in South Korea. On April 1, 1968, under the leadership of Tae Joon Park and 39 employees, Posco began life with hardly any capital or expertise. The grit and determination of the employees saw Posco scale new heights. In 1973, the first production line manufacturing 1.03 million tonne of crude steel was completed and Pohang Works -- with a 9.1 million tonne production line for crude steel -- was established in 1983, after four expansions.

From scratch to success : The implementation of plans, the efficient facilities and the increase in productivity of crude steel pushed Posco to the top of the world's steel industry in 1998. In 1994, it was listed on the New York Stock Exchange. In 1995, the company was listed on the London Stock Exchange, even as it sought to expand its global reach.

The company revamped business in 1999, improving production and sales. It received the ISO 9002 certification in 1999. Posco was privatised in 2000. Meanwhile it developed technology FINEX, which helped it to acquire a leadership position in the world. 

From 2004, Posco has been evaluated as a top global company with corporate transparency and a sound financial structure.

Biggest FDI project in India:  POSCO signed an MoU for setting up a steel plant at Paradip in Orissa with a total investment of $12 billion (Rs 52,000 crore). It is the biggest foreign direct investment in India. 

SO WHY ONLY ODISHA ? 

With 3,567 million tonne of iron ore reserves, 26.50 per cent of India's reserves are in Orissa. The state has substantial reserves of other minerals which go into steel making, like coal -- 51,571 million tonne (24.37 per cent of the national deposit), dolomite -- 434 million tonne (10 per cent) and limestone -- 1,032 million tonne (1.36 per cent). Odisha assures long-term reserves of high quality iron ore, surplus and cheap electricity and easy access to major steel consuming markets and raw material sources.

http://www.rediff.com/money/2004/sep/21spec.htm   ( for more  just check this news article )

TIME LINE :

June 2005:   South Korea’s Pohang Steel Co signs memorandum with Orissa govt to set up Rs 51,000cr steel project, the biggest FDI in India

Jan 2008:   Forest Rights Act notified into force.

Aug 2008 :   SC upholds “in-principle” clearance for use of forest land but directs environment ministry to probe alleged violations

Jan 2010 :   Ministry says clearance for diversion of forest land subject to implementation of Forest Rights Act

Aug 2010 :   Ministry of Environment and Forestry halts project, probes alleged violation of forest rights

Jan 31, 2011: Ministry of Environment and Forestry completes its probe of forest rights compliance, clears steel & power plants and captive port.

Jun 14, 2011: Odisha government paused the land acquisition at Dhinkia grampanchayat.

Sept 8, 2011: Odisha high court rules that land acquisition is in public interest, allow non-private land acquisition but ordered a continued pause on private land acquisition by the state government.  

Nov 25, 2011: Abhay Sahu, the leader of the anti-POSCO movement in Odisha, was arrested over his alleged involvement in several criminal cases. Sahu is the head of Posco Pratirodh Sangram Samiti (PPSS), a Communist Party of India backed organization.

STORY IN DETAIL;

POSCO signed a MoU with the democratically elected state government of Orissa in June 22 :-

According to the MoU, POSCO agreed to invest in the state of Orissa to establish an integrated plant to manufacture steel, mine iron ore and other ores, as well as the infrastructure necessary for its operation in Orissa. The MoU listed the following understanding between POSCO and the state of Orissa.

• Establish a FINEX/BF plant in phases. The first phase would be completed in two modules, together attracting a total of Rs. 21,800 crores ($5.1 billion) investment. The first phase would produce 6 million tons per year of crude steel, and 5.64 million tons per year of finished steel. The MoU mentioned a second phase, also to be completed in steps of two modules, together attracting a total of Rs. 21,500 crores ($5 billion) investment. The second phase would double the plant's capacity to 12 million tons per year of crude steel, and 11.28 million tons per year of finished steel.
• The state of Orissa promised to be a partner in development. The state agreed to acquire and provide three land parcels to POSCO: about 25 acres of land in Bhubhaneswar for POSCO India to establish its Indian headquarters; about 4000 acres in the state of Orissa to set up a steel plant, build port infrastructure, establish a storage yard for coking coal, and other associated facilities; and, about 2000 acres of land for POSCO to develop a township, recreational activities and all related social infrastructure - of which approximately 1,500 acres would be identified adjacent/near to the Steel project and remaining 500 acres near the mining location.
• The state of Orissa agreed to work with the central government of India to arrange necessary supplies and infrastructure for steel production by POSCO India. These supplies included water, electrical power, drainage and sewerage, licenses and permits to obtain coal and iron ore, rail links, and a highway road connection.
• POSCO India agreed to conduct a rapid Environment Impact Assessment (EIA) and prepare a detailed EIA Report and an Environment Management Plan (EMP) for the Project. The Government of Orissa agreed to provide any assistance requested by the Company during the time the EIA is conducted and the EMP is prepared. The state of Orissa also agreed in the MoU to use its best efforts to procure the grant of all environmental approvals and forest clearances from the central government of India within the minimum possible time for the project.

The plan of POSCO was that,

The project will be completed in two phases. Each phase will consist of two modules of 3 tonne per annum. The first module is expected to be completed by June 2010. Thereafter, 3 million tonne capacity will be added every two years and the plant will reach its full capacity of 12 million tonne by 2016. 

FORESTS RIGHTS ACT:

A year after the 2005 MoU was signed, India's Congress Government elected parliament passed a new law, which directly affected POSCO India. This law is known as The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006. This law is also commonly called as the Forests Rights Act. The law granted certain rights to forest-dwelling communities in India, including the use of forest land and other resources.

 The Forests Rights Act was published in 2007, and became effective in 2008. This law was retroactively applied to the POSCO's project in Odisha. India's Supreme Court examined the facts related to the state government of Orissa's initiatives to enter into MoU to encourage economic growth in the state, and whether such development meets the intent of ecological and environmental laws of India. On August 8, 2008, the Supreme Court ruled in favor of the state of Odisha,  In their ruling, 

The August 2008 ruling by Supreme Court of India also instructed the Ministry of Environment and Forests (MoEF) of India to examine, and then if appropriate, grant approval under the law. The Ministry of Environment and Forests of India accepted the ruling and examined the facts and reviewed the facts under Indian laws, including the Forests Rights Act. The review process included a committee that visited Orissa many times, including the POSCO-India's planned site, the villages, the Forests covering the proposed plant site and iron ore mining area, environmentalists, ecologists, social activists, farmers, and families that may be affected by the proposed POSCO initiative. The review process by Ministry of Environment and Forests of India took over 2.5 years.

Finally, 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.

ADDITIONAL CONDITIONS:

• The company should carry out sustainability study of water requirement for the plant by an institute of repute and forgo the water intake in case there is a shortfall of water at the Jobra Barrage for irrigation purposes; 
• 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.
• The company has been barred from undertaking any construction work in the ‘high erosion’ zone.
• 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.

Up to now  we saw the legal and environmental problem what POSCO has faced so far but are people with them ..........NO

PROTEST BY POSCO Pratirodh Sangram Samiti (PPSS):

POSCO PRATIRODH SANGRAM SAMITI lead by Abhay Sahoo is against the steel plant. They didn't allowed minister's or company official to enter in to the villages. Children and women also taken part in that actively. Government used force to remove villagers but it became a back-fire for government.  

“What will I do with the money, fill it in a bag and sit by the road?” said an old betel farmer who was being offered Rs1,100,000 (about USD 22,700) by the POSCO.

"A woman villager said, “we have rice, cashew, fish and betel vines. What will POSCO give us ?” The following is what POSCO will bring to the villagers who are presently living sustainable lives.
 

According to PPSS ;   

POSCO Steel project requires 4004 acres of land out of which 3,700 acres are forest land being cultivated by people who grow betel leaves since 1920. POSCO steel plant will kill about 1,800 betel farms, which provides Rs. 300,000-500,000 (approximately USD 6,000-10,000) annual income to 2,500 farmers. 

The POSCO steel plant,  with a capacity of 12 million tones will require water supply from the Mahanandi River. This will heavily affect the current water supply for domestic use and irrigation in the city and farm lands of Cuttack, Puri and Jagatsinghpur districts of Odisha.
The Khandadhar hills, where the iron mines allotted to POSCO spreads over 6000 hectares, are covered with forests and inhabited by a wide variety of wildlife. 

The iron mining will affect 10,000 hectares of forest and displace more than 50 tribal villages in Lahunipada block in Sundargarh district. In August 2011, 600,000 trees were chopped down. These well-known “cyclone savers” protected villagers from a cyclone in 1999.

Moreover, the construction of a captive port will disturb the water flow in the Jatadhar River, resulting in water-logging, while the expected contamination of the port will affect livelihood of approximately 30,000 fishermen. The port proposed to be established on the banks of Bay of Bengal would violate the Costal Regulation Zone and threaten the nesting habitat of the endangered Olive Ridley turtles.

"An ecological catastrophe is in the making in Orissa where more than six lakh trees are being cut at the POSCO site in Jagatsinghpur district for the south korean steel plant".   By IBN News

Mr. Prafulla Samantray, an environmentalist, had filed the petition though advocate Ritwik Dutta contending against clearance given by MoEF the Memorandum of Understanding between the Orissa government and POSCO states; and the case is in-front of National Green Tribunal. All the parties related to the case presented their arguments at the NGT. The parties involved in the case are petitioner Mr Prafulla Samantray union ministry of environment and forest, Orissa State Pollution Control Board and POSCO India. National Green Tribunal has fixed February 22, 2012 for hearing the appeal challenging environmental clearance granted to the POSCO’s mega steel project in Orissa.

 Any one can't judge a situation without see both side of the coin so ; I got a interview of  Leader of anti POSCO PPSS Abhay Sahoo,

ABHAY SAHOO

Let see what he feels;

Q : And what do you think why POSCO want this very land?

Ans : They say it is port based plant. They want captive port and also sand dunes will help them. All infrastructures are ready for them. In the name of diversion Govt is giving the forest land for free to them. And also they are getting the iron ore with a royalty of just Rs.27

Q: Why you are opposing POSCO?

Ans: All agriculture is on Govt land – forest land is people’s livelihood. It’s a profitable and self reliant economy and it should not be destroyed for industrialization. Cultivable land should never be destroyed. Water is not available for irrigation how shall it be given for industry.

Q:You never spoke to POSCO?

Ans: We never spoke to POSCO, they came but we detained them. It’s decided we will not talk to them. I met CM in June 2010 he agreed to conduct a survey to calculate the loss and damage but not under police supervision. I invited him to village and he promised he will come. Survey guys came but CM never came.

 http://www.justicia.in/face-to-face-a-talk-with-anti-posco-ppss-leader-abhay-sahoo/ ( Check the link for complete interview )

ECONOMIC AND SOCIAL BENEFIT OF POSCO FOR ODISHA AND INDIA :-

India’s National Council of Applied Economic Research completed and published in January 2007, its report on the social cost benefit analysis of POSCO India project.This research team considered two alternatives: producing steel within the state of Odisha versus mining the iron ore, exporting it and importing the steel. The report claimed mining iron ore and producing steel locally in the state of Odisha is significantly better option for India, over the option of exporting lower cost iron ore overseas, encouraging other countries to produce the steel, and then India importing the higher cost produced steel. The report also claims^:

• An economic internal rate of return to INDIA from the POSCO project to be 16.6%
• Sensitivity analysis indicates that even in the worst case scenario — sales 10 per cent lower than estimated — the economic return to India to be 13.9%.
• The economic impact of the POSCO India steel plant alone, to India’s population, to be Rs. 112 billion ($2.5 billion) assuming a discount rate of 12%.
• The project additionally will contribute direct and indirect taxes as the iron ore is mined, steel is produced, the metal is converted into products by Indian economy, and these steel products are consumed in various sectors of Indian economy. 
• The report claims the POSCO India project will produce an average of Rs. 249 billion per year ($5.44 billion per year) of steel for India’s economy, contribute an average of Rs. 49.9 billion per year ($1.1 billion per year) of domestic sales taxes, capital goods taxes, value added taxes (VAT), iron ore duties, and employee income taxes, annually for 35 years, for the social programs of the central government of India and state government of Orissa. The report admits that its analysis is based on nominal numbers using 2007 basis, that it assumes constant steel prices at $450 per tonne through the year 2040, and ignores the effect of inflation in steel prices or in Indian economy. The carbon steel prices between January and July 2011 ranged between $815 to $910 per tonne.
• The POSCO India project’s FINEX process, the report claims will be superior in preventing air pollution in India. It will be 10 times less polluting in sulfur oxides (SOx) emissions than currently used BF process in INDIA. 
• The POSCO process, the report claims, will also be 25 times less polluting in nitrogen oxides (NOx) and 5 times less polluting in particulate dust terms than the process currently used by steel plants of India.

 AFFECT ON INDIA'S IMAGE:-

India is growing...if we the speed of growth its ranked 2nd in the world after China and to continue this growth we need better technology, cost effective way of production and more employment for our country men, otherwise sustainability of this growth rate would be a question mark. To get all this, definitely we need a clear policies in which we surely lack and this is one of the big reason why make our competitor countries a better investment destination than us and dent our image in the international level stage.

Land acquisition is not new for us, we have what happened with TATA in Singur and POSCO is any way there, we can also take example of TATA and VEDANTA which due to same problem couldn't able to start their operation in Odisha.

I understand, rules are required but it shouldn't delay the project either you convince people or decide to shift or have an alternative else foreign player might fly away from India and this will put a negative aspect to our success story.

State government and Central should act fast and decide, and if they take decision in favor of POSCO then they should give appropriate compensation and take all responsibility of the peoples who will get displace.

And also arrange make company develop the infrastructure of the place and also give employment to the people so that it should be completely a win-win situation for all.   

Let see how long it will take ......!!

 

POSCO IN KARNATAKA:-

POSCO signed a memorandum of understanding with the state of Karnataka at the Global Investors Meet in Bangalore. This memorandum envisions a 6 MMT per year steel plant based on Posco's high efficiency, low environment impact FINEX technology. In May 2011, under mandated stock exchange disclosures rules, POSCO confirmed the memorandum of understanding for the steel works in the state of Karnataka; with a cautionary note that POSCO has not made any decisive plans to implement the Project due to the fact that the Government of Karnataka has yet to confirm certain investment plans for the Project.

There also farmer are protesting and now issue is under discussion.