Orissa asks Posco to tag local ally

The Orissa government has thrust on Pohang Steel Company (Posco) India a clause of inducting an Indian company for mining.

Although unwritten clause is not part of the memorandum of understanding (MoU), the state government has asked Posco to rope in an Indian company for partnering its mining project.

Tae-Hyun Jeong, deputy managing director and head of Posco's India project, said the Orissa government has said that the company would have to partner with an Indian company, adding, that this was the reason why Posco could not enter into a joint venture with Australian mining major, BHP Billiton.

Posco, Jeong said, was in the process of shortlisting potential partners for mining at the site and in fact had zeroed in on BHP Billiton when the state government's clause was intimated to the company.

He said, there were 7-8 companies in mind, many of which were were interested in the project. The mining project entailed acquisition of 600 million tonne of mining leases for captive use.

Jeong clarified, that the it was at the insistence of the state government and not the central government. Accordingly Jeong was chalking out plans for the mining venture. The estimated investment cost was around $500 million for the first stage. Posco would enter into joint venture for the exploration.

The company had applied for prospecting license would then acquire exploration licence. The final stage would the mining lease stage. The 12 million tonne project was estimated to cost $12 billion. Jeong said, the company was not expecting any returns in the first 15 years.

He said, the company decided to invest in India as it believed that it was a high-growth market. Jeong said, initially the company would focus on manufacturing of slabs.