Posco rejects PM proposal for tie-up with PSU

The Centre's initiative for forging a joint venture between state-run Kudremukh Iron Ore Co Ltd (KIOCL) and South Korean steel major Posco to break the deadlock over access to Orissa's Khandahar mines seems to have fizzled out.

While Posco has stuck to its demand for captive mines, the mines ministry is not too keen on the proposal either. "We are not looking at any such possibility," said a ministry source.

The Centre had made this suggestion last month in order to remove the roadblock in the way of Posco's Orissa plans. According to the proposal, KIOCL would do the mining while Posco would get supplies on commercial terms.

The mines have become a bone of contention with Posco and KIOCL basing their claim on the fact that they have done the prospecting work in the area. Posco, which will need around 18 million tonnes iron ore annually once its plant starts, is optimistic that the state government will help it secure raw material.

The state government supports the Posco project on the ground that it has scope for value addition and downstream investments. "A captive mine for Posco is still indispensable. We cannot tie up with other parties and lose control over supplies and costs. We came with the idea of investment with certain assumptions and we still stick to them," a source in Posco said.

This might come as a disappointment to the Prime Minister's Office, which has been trying to expedite the project through periodic meetings with the stakeholders.

The deadlock over mining lease is one of the two impediments for the project, the other being land acquisition. The company has got approval for its port and is expecting the environmental nod soon.