KIOCL may have to make way for Posco

NEW DELHI: South Korean steel giant Posco’s India plan appears to be taking off, a month after it threatened to pull out. State-run Kudremukh Iron Ore Company (KIOCL) is likely to be asked by the Centre to give up its claim on the Kandadhar mine, which was also identified by Posco for its 12 million tonne steel plant in Orissa. Public sector KIOCL had already studied the prospectivity of the mine and was awaiting the lease.

Posco’s plans has been gathering dust for two years now following differences over allocation of mines. Speaking to ET, sources said that the PMO had assured Posco officials that the company would soon be given access to one of the three mining sites short-listed by the state government.

“Since KIOCL is the only public sector company contesting Posco’s claims on the mining sites at Kandadhar in Orissa (the other contestants Tata Steel and Bhushan Steel), the Centre could only ask it to compromise,” the official said. The Centre’s move to accommodate Posco by asking KIOCL to vacate its claim over the mine might finally clear the way for Posco.

Posco had threatened to pull out of the project and move on to Vietnam if the mining issues were not sorted out. While the site may not suffice to meet the entire need of the 12 million tonne capacity, it would give it enough iron ore to start the project. It is being suggested that KIOCL could be given a mining lease at an alternative site. Posco’s CEO Ku Taek Lee met commerce and industry minister Kamal Nath some time back seeking the Centre’s intervention in straightening things. He had said that the issues holding up the project should be resolved in the next 3-4 months.

KIOCL, it is learnt, is not too keen over the settlement. KIOCL’s sole mining operation in Karnataka has been closed after the Supreme Court’s order. The company is now looking at mining rights elsewhere to keep the company financially viable.