SC asks Centre to decide on grant of iron ore licence to POSCO

Odisha government granted mining, prospecting leases to POSCO in Khandadhar hills by ignoring earlier applications of other claimants

By Anupam Chakravartty
Published: Saturday 04 July 2015

In a major setback to POSCO’s plan to locate its mines close to its proposed steel plant near Paradip in Odisha, the Supreme Court on Friday directed the Central government to take a call on the grant of iron ore mining leases in the state. A private mining and marketing firm, Geomin, along with several other mining companies had alleged that the Odisha state government favoured Korean steel giant POSCO while granting prospecting and mining licence. The main contention of the petitioners was that in several cases the mining and prospecting lease given to POSCO in Khandadhar hills of Sundergarh district of the state overlapped with the leases for which several other companies, including the Jindals, have already applied.
This is the second setback the company has suffered in the past few weeks. Last month, the company was asked to revise its steel project plans in order to obtain fresh environment clearance. This was after the National Green Tribunal suspended the final clearance granted to the project in March last year and had sought fresh review of the project.
On Friday, the Supreme Court heard the special leave petition filed by Odisha government challenging state high court order which had set aside the state's recommendation to allow POSCO to start mining in the area. The apex court in its order on Friday asked if POSCO could be granted a mining lease. The court also took cognisance of the fact that the state government delayed grant of mining and prospecting leases for up to 14 years in clear violation of the Mineral Concession Rules. The rules clearly state that such applications have to be processed within six months from the time of submission of applications. Further, the petitioners argued that since mineral area in the said region was not notified, the state government ought to respect the rules which should have allowed Geomin to start prospecting as well as mining on first-come-first served basis. On the other hand, the state government argued that applications for grant of mining and prospecting lease to Geomin had defects and that the area was declared a mineral zone way back in the 1960s by the state.

Geomin, which is representing various iron and steel manufacturing companies, claimed that they had entered into a Memorandum of Understanding with Odisha government in the 1990s to set up a 12 million tonne per annum capacity integrated steel plant in the region. For the same, the companies applied for prospecting and mining lease. However, later in 2005, the state government gave the prospecting and mining licence to POSCO.  The Odisha-based company challenged the state's decisions to allocate a 200 MT iron ore reserve at Khandadhar in the Sundergarh district for captive use of the South Korean steel manufacturer. The petitioners stated that the lease given to POSCO overlaps an area of 186 hectares in Rantha village in Sundergarh district, for which Geomin had applied.

Earlier in 2012, as a fallout of several petitions filed in Odisha High Court, challenging the delays caused by the state department of mines to decide on the applications related to mining and prospecting iron ore, the Central government had asked the state to hold a fresh hearing of 227 applications made for Khandadhar iron ore reserve. At that time, the Centre asked the state government to hold fresh hearing, and had rejected POSCO’s prospecting licence to start mining in the area.

Meanwhile, at Jagatsinghpur in Odisha, POSCO has started the acquisition an additional 700 acres (one acre equals 0.4 ha) of land for its 8 million tonne per annum capacity iron and steel plant. Construction of boundary wall for the 2,000 acres it has already acquired with the help of the the state government is under way. Posco Pratirodh Sangram Samiti in Jagatsinhpur has been protesting the land acquisition of more than 4,000 acres for the plant, saying that the matter is still pending before the National Green Tribunal and Ministry of Environment and Forests for the final environmental clearance to the plant.


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