July 4th (Economic Times) – South Korean steel giant Posco’s $12 billion project in India, one of the largest investments proposed by an overseas company, may finally get going with the government expected to give nod to its proposal for iron ore mining lease and forest diversion clearance plan almost simultaneously next month. The project has been awaiting formal clearances for almost three years now.

Grant of the two clearances would be major step forward in salvaging the steel major’s 12 million tonne (mt) steel project that has been in the midst of controversy ever since an MoU was inked in 2005. The company hopes to begin work on the first phase of 4 mt capacity immediately after getting land and mining clearance and targets to complete it ahead of original schedule of 36 months.

“The government is according utmost priority to the Posco project. In this regard its proposal for prospecting licence for Khandhadhar iron ore block in Orissa would be given as soon as the state sends its recommendations to the Centre. The Supreme Court’s Central Empowered Committee (CEC) on environment has also said that it would recommend for land diversion clearance once there is clarity on mining lease for the project,” an official source connected with the project told ET.

The project requires captive iron ore mines with reserves of about 600 mt. While the state has identified three blocks at Khandhadhar, Melang Toli and Thakurani for the project, only Khandhadhar is close to be being offered to the steel maker. The state is conducting a public hearing from other applicants for the same block and expects to conclude the process by July 26, before finalising the name of Posco as the most deserving applicant for the iron ore block with a firm investment commitment and project development plan. Though the mining block has a reserve of about 200 mt of iron ore, sufficient to meet just one-third of Posco’s total requirement, it could support entire first phase of the steel project.

On the forest diversion plan clearance, the matter has reached the final stages as both state and the Centre have cleared the application and CEC is waiting for clearance of mining rights before recommending PL for Khandhadhar in favour of Posco. The company has submitted its application of forest diversion plan for changing the land use of 3,093 acre of forest land on its project site of 4,004 acres. This clearances would mean that Posco would be in possession of over 3,500 acre of government land soon. It would then begin the process to acquire the remaining about 450 acre of private land.

“We could begin work on the project even if we get a portion of the total project land,” a Posco spokesperson said. Anticipating final lot clearances for the project soon, the company has already finalised a rehabilitation and resettlement plan that has even bettered the one finalised by the state government.

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June 26th (Steel Guru) – PTI reported that ArcelorMittal has formally applied for iron ore mines, ahead of submitting the detailed project report for its proposed Greenfield project in Orissa’s Keonjhar district.

Though ArcelorMittal had not mentioned the name of any specific iron ore reserve, it had applied for PL for mines including Mankadanachha, Malangtoli and Thakurani in Keonjhar district and Badamgadapahad and Balipahada spread over both Keonjhar and Sundargarh districts. ArcelorMittal, which requires 7,750 acres for setting up its plant, CPP and township, was also working on the forest diversion proposal.

Mr Sanak Mishra ArcelorMittal chief for Greenfield projects said that “We have 10% of the total land which required forest diversion clearance.”

Official source said that ArcelorMittal, which is expected to submit its detailed project report to the state government by June end or early July 2008, had applied for a prospecting license as well as mining lease for its proposed 12 million tonnes per annum steel mill. It added that the state government, which was busy in hearing applications for PL over Khandadhar iron ore reserve in Sundargarh district, would begin hearing on other mines after July 2008.

June 10th (The Statesman) – The unprecedented hike in the price of diesel will have little impact on the transportation of iron ore from mineral rich Orissa’s Keonjhar district to the port town of Paradeep. At best it will only marginally cut down the huge profit margin of transporters and hence they will be least affected.

Stocking of iron ore in the harbour for export by cargo from Paradeep port in Jagaisinghpur district is largely dependant on road transport. As many as 4000 trucks carry iron ore from different iron ore mines in Joda, Barbil, Deojhar, Bansapani, Tensa, Koida, Jurudi, OMDC, Thakurani, Bolani and other mines in the Keonjhar district to Paradeep port every day. These iron ore laden trucks ply on National Highway No. 215, 5 and 5 (A) everyday to reach the destination.

Sheikh Sahazahan of Chandikhole who owns five trucks and engages them all in iron ore transportation trade from Keonjhar to Paradeep port said nothing would hit transportation of iron ore in the aftermath of the diesel price hike. “To move a truck laden with iron ore for about 310-315 km, it costs nearly Rs 30,000, while a similar truckload of other goods travelling the same distance will cost Rs 14,000 only.

On an average, each trip costs Rs 7,000 inclusive of various heads like fuel, lubricants, food for the driver and helper, loading and unloading of the materials, weighing fee and the owners’s income is something around Rs 23,000 in this business,” he added further. Jaraka Truck Owners Association (JTOA) general secretary Sheikh Zuman said, “With the hike in diesel price, each trip of iron ore from Keonjhar mineral sector to Paradeep port is likely to be costlier by a roughly Rs. 450 to Rs 500. It will have no impact on our iron ore transport business.” He said the freight charge for iron ore transportation trucks from Joda to Paradeep costs Rs. 2950 per tonne, while the same distance travelled from Cuttack to Raipur in Chhatisgarh, costs Rs. 1200 per tonne at the old diesel price. The truck fare from Cuttack to Hyderabad (600 km), comes to around Rs 1300-1400 per tonne.

May 29 (Indian Express) – Public sector steel giant SAIL’s Rs 54,000-crore capacity expansion and modernisation programme is likely to be hit if the Chiria mines’ leases are not renewed immediately. The Jharkhand government is undecided on the issue despite intervention by the Centre. SAIL has embarked on an ambitious capacity expansion plan to ramp up production to 26 million tonne (mt) by 2010. It further aims to increase production to 60 mt by 2020, sources in SAIL said.

“If the leases are not renewed immediately, SAIL will have serious problems in proceeding with modernisation and expansion plans which have already commenced in full swing,” the source said, pointing out that the PSU’s Board has already approved investment of Rs 40,000 crore for the programme.

SAIL had applied for renewal of the Chiria mining leases from the Jharkhand government. Three of six leases were rejected during 2004-05, resulting in the PSU submitting a revision petition to the Mining Tribunal. The Tribunal quashed the Jharkhand government’s rejection orders and asked it to renew the leases. The state then approached the High Court, which reserved judgment after two hearings in August last year.

Thereafter, SAIL filed an interlocutory application seeking the constitution of a committee to resolve the mining lease dispute but the High Court quashed it. SAIL then filed a Special Leave Petition in the Supreme Court and, following a hearing in January this year, the apex court granted a stay on proceedings in the High Court and asked the state to reply to the SLP.

The delays in renewing mining leases affected SAIL’s expansion plans. As a result, the development of mines in Chiria, Rowghat, Taldih and Thakurani cannot be effected by 2010-11. Even the Parliamentary Committee on Public Undertakings has endorsed SAIL’s contention that it has a legitimate right on Chiria and asked the government to grant the Chiria iron ore mine lease to the steel giant. Prime Minister Manmohan Singh wrote to Jharkhand chief minister to look into the matter and ensure its early resolution. However, the state’s response of the state government was not encouraging, sources said.