* Approval could be granted this month
* Would be largest single foreign investment in India
* Latest signal environment ministry is softening stance
By Krittivas Mukherjee and Nigam Prusty
NEW DELHI, Jan 21 A $12 billion Indian steel
mill planned by South Korea's POSCO is likely to be
approved by the Indian government this month, sources said on
Friday, after years of delays over environmental concerns.
The expected approval, if given, would be the latest in a
series of moves indicating that the environment ministry, which
has until recently taken an aggressive stance on enforcing green
laws, is softening its position.
Government and industry sources told Reuters on Friday the
project, delayed by over three years, was likely be approved,
possibly with some conditions including initial clearance for a
smaller mill which will be gradually expanded.
Environment Minister Jairam Ramesh, whose hardline has
brought him into conflict with industry, is deciding whether
rules were violated in steps towards building the 12-million
tonne capacity mill, which would be the biggest single foreign
direct investment into India, in eastern Orissa state.
"The vibes are positive and the permission could come first
for (a) 4-million tonne (mill) and then gradually it could be
expanded," an Indian government source said, speaking on
condition of anonymity.
Another government source said although the environment
ministry had some reservations about the site of a port for the
plant, it was likely to consider the project in a "holistic
manner," meaning permission for the port could also be granted.
Neither POSCO nor the Indian environment ministry were
immediately available for comment.
POSCO wants to build the mill in eastern Orissa state, but
has been delayed by environmental issues and protests by local
residents who say the plant will disrupt their largely
agriculture and forest-based livelihoods.
The South Korean company is among several corporations,
including Vedanta Resources , which have come under
scrutiny from what had until recently been seen as an
increasingly aggressive environment ministry, putting the
department in conflict with others in the government who are
pushing for rapid industrialisation.
In October, Ramesh threw out plans by London-listed Vedanta
to expand its alumina refinery over green worries, but this week
Ramesh said he was willing to conditionally reconsider Vedanta's
That remark came soon after the ministry said it could
consider approving Hindustan Construction Co's Lavasa
housing project on certain conditions.
Ramesh has also said POSCO's project was "fundamentally
different" from Vedanta's plans, raising the likelihood that the
steel project will be given the go-ahead.
Approval would see the Orissa government immediately
starting to acquire land for the world's third-largest
Still, the South Korean firm has another hurdle to cross: a
court case filed by a local firm against the Orissa government,
contesting its decision to grant a mining concession to the
South Koreans, as the Indian company had also bid for it.
The decision in this case lies with the Supreme Court, but
that litigation is unlikely to delay the start of the
construction if the government approves it.
POSCO was scheduled to begin production from its plant in
Orissa's Kujanga region by the end of 2011. The deal for it,
which was signed in June 2005, also included iron ore mining
rights in the state's Khandadhar area.
(Reporting by Krittivas Mukherjee and Nigam Prusty; editing
by Malini Menon and Daniel Magnowski)