Posco drops Billiton as partner

Posco has dumped BHP Billiton as its partner in its proposed steel project in Orissa. "BHP Billiton is no longer our joint venture partner in the Orissa project. Posco alone will sign the agreement with the Orissa government for the proposed steel plant, not with BHP Billiton," said Tae Hyun Jeong, director (India), projects, of Posco.

Tae said Posco India, an Indian company to be promoted by the parent, would be set up for the Orissa project. The proposed 12 million tonne plant envisaging an investment of $12 billion is slated to come up in Paradip.

Tae today met Orissa Chief Minister Naveen Patnaik here and submitted a revised proposal for the project. He told newsmen that the meeting was positive and an agreement had almost been reached. Posco will like to sign the memorandum of understanding (MoU) with the Orissa government as soon as possible.

"We have explained our position to the state government. The ball is now in the Orissa government's court. We hope they will take a favourable decision and invite us to sign MoU", he added.

He further clarified that the company has climbed down from its earlier insistence on export of ore from the mines allotted to it for the project. "Earlier while asking for one billion tonne ore reserve we had sought permission to export 400 million tones of ore. But in the revised proposal we have made up our mind not to export ore and use the ore from the captive mines only for making steel in Orissa", Jeong pointed out.

A government official present in the meeting said that while forgoing its demand of ore for exports, the company has scaled down its ore requirement from one billion tonne to 600 million tonne as being suggested by the state government.

Jeong, however, said a small portion of the allotted reserve may be exported against import of good quality ore from Brazil for blending purposes. The alumina content in the Indian ore is high which is not conducive for making top grade steel. As the export is against the imports, there will be no net export of ore, he added.

He said, though imported ore will be costlier by 35 dollar per tonne (20 dollar higher in price and 15 dollar towards transportation cost) compared to the ore available in Orissa, the import is necessary for producing good quality steel.

Apart from the export issue, Posco has agreed to two other conditions of the state government relating to the commitment on putting up the entire 12 million tonne capacity of the project in 10 years time schedule and investing in building the infrastructure like road, rail link and port expansion at Paradip.

Jeong said though the company had lucrative offers from China and Brazil for setting up the steel plant, he, as the head of the project team, wanted to establish it in Orissa. "Other options may be considered if things did not work out favourably here". Appealing the press and people of Orissa to support the project, he said this will kick off massive development process in the state.

Orissa chief minister Naveen Patnaik, however, described Jeong's meeting with him as a courtesy call and said negotiations are on to remove hurdles in setting up the project. Priyabrata Patnaik, chairman, Industrial Promotion and Investment Corporation (Ipicol), who was present during the meeting that all the stumbling blocks have been cleared for signing of MoU between the Orissa government and Posco. There will be a final meeting with the Posco officials next week to sort out the remaining issues before singing of MoU, he added.