To many, ecology clearances coming in quick succession first for the 12-million-tonne steel project, including a captive power complex and a minor port that the South Korean Posco is diligently pursuing for close to six years and then for SAIL’s three mining leases at Chiria in Jharkhand appear as history bending revolutions. This is because the ministry of environment and forests, led by environment zealot Jairam Ramesh was till the other day raising the red flag to many industrial and mining projects.
Has Ramesh gone through a metamorphosis on his own? Or his appearing to be a lot more flexible on green issues has got to do with prime minister Manmohan Singh delivering warnings about emergence of an environmental licence permit raj and the Reserve Bank of India seeing in the country’s strict green regulations a reason for a 36 per cent decline in foreign direct investment in the first half of 2010-11 over the corresponding period last year? Ramesh has also come to understand that this country will be denied the benefits of frontier steel making technologies like Finex dispensing with the use of coking coal unless we allow Poscos of the world to build plants here.
Lakshmi Mittal tells us that while emerging nations will continue to have bigger share of the world steel capacity, we will be seeing technology updates happening mostly in the West. Our leading steelmakers like SAIL, Tata Steel and JSW are, however, looking more towards Japan and South Korea for breakthrough technologies to build new mills and also to move up the value chain in their existing facilities. But, for these ambitions to be given shape, environmental clearances should be available in a reasonable time. This certainly was not happening till recently. It is not anybody’s case that environment should be less priority if we are to pursue growth. The prime minister is unequivocal in saying that as we pursue growth we have to protect “our environment, forests and biodiversity.” Equally importantly he says that “benefit of growth must be shared equitably with weaker sections of society.” He believes economic decision makers could work in an “environmentally benign” manner without ushering in “licence permit raj.”
Not only Ramesh but big ticket investors also have fallen in Dr Singh’s line of thinking. Ramesh now recognises the “economic, technological and strategic” importance of an investment of $12-billion that Posco will make to give shape to its Orissa steel project. The South Korean trade minister said many companies in his country having India in their view as investment destination were watching what fate awaited the Posco project. He appreciates India’s concerns about environment and rehabilitation of people who will have to vacate land for the project, describing them as “legitimate.” In Posco clearances we see striking of a fine balance between legitimate concerns and inescapability of big investments in industry.
Both SAIL chairman C S Verma and Posco India CEO G W Sung have announced in the wake of their getting approvals that their corporate social responsibility would focus as much on sustainable livelihood opportunities for the affected people as on maintaining biodiversity and wildlife. Ramesh argues that opening of mines in Chiria by SAIL and its CSR work will be one way of warding off Maoists who thrive on denial of development. Verma says his company will be investing over Rs 5,000 crore to open mines in Chiria, that is half the total SAIL investment proposed in mines development in the next few years.
SAIL and Posco sanctions are laced with a number of conditions. Ramesh will constitute a watchdog to see if mining in Chiria is causing disturbances to the ecology which is to submit reports on a quarterly basis. Verma says environment sensitive SAIL will be employing technologies to take out iron ore which will not disturb ecology. He will not take chance since his work record at Chiria will have a bearing on his getting more mining sanctions in future. SAIL’s ore requirements in 2020 will be around 100 million tonnes to support hot metal production of 60 million tonnes then.
Environment and forest clearances for the other steel and mining projects will hopefully not be tied up in knots and these will come within a reasonable time. Following government assertion that new industries should be built without harming environment, hopefully attention will turn to facilitate steel capacity creation at a speed allowing the meeting of demand, forecast to continue to rise at a double digit rate, from local sources. The steel intensity of the economy will grow as more attention is given to infrastructure development and the metal use is promoted in rural centres.
Rapid project sanctions alone will not do. Our transport infrastructure in particular is not robust enough to support the kind of steel capacity we are targeting. Ernst & Young says, “The lack of availability of quality infrastructure and logistics will have cost and supply chain implications. Huge investments are required in key infrastructure areas such as railways, roads and ports.” Materialisation of a trillion dollar investment in infrastructure in the next five-year plan should ease transport bottlenecks.