Posco's $12.6 bn plant, largest FDI, gets environmental approval after 8 years

NEW DELHI: South Korean steel maker Posco has received environment clearance for its Rs 52,000 crore steel plant in Odisha, ending an eight-year wait for the project to get off the ground. The ministry has asked Posco to spend on "social commitments", a company spokesman said, raising the project's cost by $600 million to $12.6 billion.

"Yeah, I have cleared it," new Environment Minister M Veerappa Moily told PTI. "It (the approval) was given about a week back."

The approval comes a week ahead of South Korean President Park Geun Hye's visit to India.

The clearance will pave the way for Posco to build the steel plant with an annual production capacity of 12 million tons.

The Odisha project, the largest foreign direct investment in India, has languished since 2005 due to problems related to environmental clearance and land procurement.

Officials in the ministry said Posco's project comprised of two aspects - a steel plant and a port project. Moily delinked the two and granted approval for the steel plant. Environment clearance for the port is pending.

Posco's steel project had received initial clearance from the Environment Ministry in 2007 and final approval was granted in 2011. A year later, the approval was suspended by a quasi-judicial body, citing environmental concerns.

The revalidation of the South Korean firm's lapsed environmental clearance comes days before the country's president, Park Geun-hye, visits India for four days starting January 15.

The company is hopeful Park's visit will speed up the project.

"Though an additional burden has been put on us, we are happy with the revalidation" POSCO-India spokesman IG Lee said. "It means the removal of a hurdle for us."

The company will have to spend 5 percent of the total investment on "enterprise social commitments", Lee said, adding it was not immediately clear what that would entail. The ministry could not be contacted outside regular business hours.