The process of renewal of the lapsed Memorandum of Understanding (MoU) with Posco India has moved a step further with the state government seeking the steel maker's views on the renewal.
“We have prepared a draft MoU and have now sought Posco India's comments on the matter. The new draft MoU will have the mandatory employment clause of the state government and efforts to be made by the company to promote ancillary and downstream units around the mother plant. Besides, the new MoU will omit the contentious clause on swapping and contain the revised plan of Posco India wherein they have proposed to develop the 12 million tonne per annum (mtpa) steel plant in three phases of four mtpa capacity each,” said a highly placed official source.
Earlier, the steel & mines department had exuded confidence to renew the MoU by the end of this month. The pact with Posco had expired on June 21 last year.
The MoU renewal had hit a roadblock presumably due to the contentious issue of swapping of iron ore by the South Korean steel major. The clause relating to swapping was a part of the original MoU.
The original MoU signed between Posco and the Orissa government on June 22, 2005 allowed swapping of 30 per cent of iron ore reserve allotted to the company. "Any export of iron ore by way of swap will be allowed only after an equivalent quantity of ore has been imported for the plant,” it said.
The South Korean steel major needs 600 million tonnes of iron ore of an average iron content of 62 per cent to meet the requirement of the proposed steel project of 12 million tonne per annum.
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Meanwhile, Posco India had agreed to adhere to the employment clause prescribed by the state government for industries.
The employment clause of the state government to which Posco India has given its consent stipulates that industries setting up their projects in the state have to reserve 90 per cent jobs for locals in the unskilled and semi-skilled category, up to 60 per cent in skilled category and 30 per cent for the supervisory and managerial cadre while giving them the option to fill up the post of senior executives from the open market.