Vignesh Kumar
The poorest State in India with an official estimate of 39.9 per cent of people living below the poverty line, yet Orissa stands proudly at the second position after Gujarat where proposed investment is concerned. According to Assocham Investment Meter, recorded investment proposals in Orissa reached Rs. 2,00,846 crore (roughly 40 billion USD) in 2009. The cause is the availability of rich mineral resources such as coal and iron ore along with cheap availability of manpower. Steel and power were among the sectors which attracted maximum proposed investments in the state. This was in fact the basis for the commencement of the Posco Project in Orissa which today is creating a huge controversy.
History of the Posco Project
23 June, 2005
On 23/06/2005, the global steel giant POSCO signed a Memorandum of Understanding (MoU) with the Government of Orissa in Bhubaneswar for the construction of a steel plant as well as development of iron ore mines in the state. This was the first step towards the construction of a steel plant in Orissa. The MoU was signed by Mr. Soung-Sik Cho, Executive Vice President of POSCO and Mr. Bhaskar Chatterjee, Principal Secretary of the Government of Orissa, with the participation of Mr. Ku-Taek Lee, Chairman and CEO of POSCO and Mr. Naveen Patnaik, Chief Minister of Orissa.
According to the MoU, POSCO will build a 3 million tonne capacity steel plant, blast furnace or Finex route, during the first phase in Paradeep, Orissa between 2007 and 2010 and expand the final production volume to 12 million tonnes. The investment proposed was to the tune of US$12 billion, including an initial investment of US$ 3 billion during the first phase.
The Government of Orissa was supposed to grant POSCO mining lease rights for 30 years that would ensure an adequate supply of 600 million tonnes of iron ore to POSCO. This in turn will ensure the competitive operations of the POSCO India steel plant. The government will also promote the construction plan for railways, roads, industrial water and electricity keeping up with the steelwork construction plan of POSCO.
The key factors that have been taken into account by POSCO for entering India include the highest projected growth rates over 2006-2020, the skilled workforce and abundant natural resources, especially of iron ore, coal and chrome. The Indian governments progressive policies have also helped ease regulations to set up such projects.
India would derive significant benefits from the project once it is functional, including job creation of 48,000 jobs in the region and 467,000 man years of employment during the construction phase. Foreign exchange inflows of US$23 billion were projected, with taxes and royalty incomes of US$20.3 billion for the central government and US$5.1 billion for the Orissa government.
POSCO’s Indian steel plant project is a significant part of the company’s strategy to enhance its global competitiveness and was seen as a mutual win-win initiative for both the parties involved.
Origin of Posco
Founded in 1968 and headquartered in the southeastern port city of Pohang, POSCO operates two of the world’s premier steel works–the Pohang and Gwangyang works. The Pohang works produces crude steel of 13 million tonnes and specializes in small-lot production of a broad range of products, including hot-rolled coil and cold-rolled sheet, plate, wire rod, electrical steel, and stainless steel. The Gwangyang works focuses on mass-production of limited high-demand products such as hot and cold rolled sheet and produces crude steel of 17 million tonnes. POSCO’s products are shipped to over 60 countries around the globe, satisfying some of the world’s most quality-sensitive customers.
POSCO project
The $12 billion Pohang Iron and Steel Company (POSCO) project in Orissa is the largest foreign investment project ever in India. This project has three components:
- Captive iron ore mines in three areas of Keonjhar District and Sundargarh District.
- Mining lease on 6204 Hectares in Sundargarh District recommended to be approved by the Supreme Court.
- Steel plant: in Jagatsinghpur District, coastal area. Private port: at the mouth of the river Jatadhari, close to steel plant area; the MoU only makes reference to the possibility of a “minor port” being created.
POSCO needs some 4004 acres, of which but ten percent belong to the cultivators. The rest of the land required belongs to the government, and this has been recorded as “under forest” in official documentation. Government records do not show that the vast majority of this land has been under cultivation by the people living in these areas for generations
A field study in Orissa made found that during the land survey and settlement operation carried out in the late 1950s and continuing in the 1980s in some areas of Koraput district, hardly one per cent land in actual possession of the tribal communities was recorded in their favour.
Tribal cultivators are then termed “encroachers”, and their eviction from mineral rich forest and hill tracts follows “legally”. Much lauded statutory provisions that purport to give protection to indigenous forest dwellers are ignored (“interpreted”) by the relevant ministries to achieve the same result.
POSCO has delinked the mining project from the plant construction in order to get the vast project underway. A license for over 2,500 hectares for the proposed Khandadhar iron ore mines has been recommended by the Orissa State government, despite opposition from other companies and locals. But existing iron ore mining in the region has already severely impacted the water resources of a large region inhabited by many thousands. In the immediate region of the proposed mines the only constant water source are waterfalls that are already contaminated from iron mining with the result that the water is now not safe for drinking. In the larger surrounding region the Central Underground Water Board has reported that the underground water level in Joda and Barbil river areas has subsided by four metres, that forty percent of the region’s 8,000 tube wells no longer function, and that nearly half of the irrigated land can no longer rely on water from the Khandadhar waterfalls.
The POSCO project as a whole requires an immense impact on one of the last forested areas remaining in central India. Particular concern has been voiced over the State government’s commitment to “facilitate” the provision to POSCO of 7,000 crore liters of water per year for the plant alone from the very limited water resources of the draught ridden state.
But POSCO is not having a smooth run. The anti-POSCO movement is gearing up again against land acquisition. The POSCO struggle has now acquired strategic importance for other industries and corporate groups that face public agitation for destroying forests. This has added an extra dimension to anti-POSCO movement; caging the aspirations of agitators to basic minimum such as maintenance of status-quo or better compensation.
POSCO has not been able to initiate any project-related work on the ground. The forest clearance for POSCO was granted in December 2009. The Scheduled Tribes and Other Forest-Dwellers Recognition of Forest Rights Act, 2006 (henceforth, FRA) provides for settlement of rights by recognising the right of forest-dwellers to occupy, cultivate, use and protect areas within which they were residing before 13 December 2005. The rules for the Act were notified in January 2008. So, the forest clearance for the project could not have been granted till this process of filing claims and conferring rights was initiated and completed.
Since 30 July 2009, there has also been a circular of the Ministry of Environment and Forests (MoEF) in operation which also seeks the above, not just for POSCO but for all projects coming up before the MoEF for forest clearance, which states that the State/UT Governments, where process of settlement of Rights under the FRA is yet to begin, are required to enclose evidences supporting that settlement of rights under FRA 2006 will be initiated and completed before the final approval for proposals..
Nonetheless, within five months, the forest clearance for POSCO was granted without the FRA process in the area being complete. As compensation, the clearance letter included a condition that the processes under the FRA would need to be completed before the clearance became effective.
This and many other violations were brought to the attention of Jairam Ramesh, Minister of Environment and Forests (MoEF). The ministry responded by issuing another note on 8 January 2010 reiterating the condition stipulated in the forest clearance, which says that the rights of the tribal people will need to be settled, prior to the forest clearance being in operation.
The MoU stands expired on 22 June 2010. But the MoU has a clause which states that “no such extension shall be considered unless the Company has made substantial progress on implementation of the project in terms of construction, erection of plant and machinery and investment at site to the satisfaction of the State Government in these five years in implementing the first phase as envisaged in this MoU.”
According to the same document the first phase should have meant that 6 MT production of steel should have been commissioned, which has not happened. By the terms of the MoU, therefore, the absence of progress would imply that the MoU cannot be extended.
For the local opposition to the POSCO project, all these are legalese that will iron themselves out along the way. What matters crucially is that the people resisting remain united in thought and action. Despite differences and tension on the ground, the fact remains that POSCO has not been able to start work on its project for five years.
July 28th 2010
Shrugging off mounting opposition from the local people and objections from the Joint Committee under the Ministry of Environment and Forests, which is overseeing the implementation of the Forest Right Act (FRA), the Orissa government began the land acquisition process for the proposed Posco-India steel project in Jagatsinghpur district.
Revenue officials, flanked by a horde of police personnel, made the first real attempt to acquire land five years after the State government inked a Memorandum of Understanding with South Korean steel major Posco.
The locations of betel vines were documented using the Global Positioning System; the vines were subsequently removed in the presence of the owner and witnesses and the place was demarcated as ‘acquired.’ The administration paid Rs.1.15 lakh to the displaced person.
But the Orissa government halted the land acquisition process overnight for Posco’s Rs51,000 crore mega steel project near here after facing stiff opposition from villagers. Though the administration carried out land acquisition work and paid compensation to two betel leaf cultivators, the official team was prevented from entering Gada Kujang in the proposed project area as villagers blocked the main link road.
State agriculture minister Damodar Rout and Ersama-Balikuda MLA Prashant Kumar Muduli, along with the district collector, had rushed to Gada Kujung to speak to villagers.
They held a marathon meeting with the representatives of the pro-project United Action Committee (UAC) for facilitating the land acquisition process. UAC, the BJD-backed local body supporting the Posco project, is resisting land acquisition by the administration for not informing villagers.
Civil rights groups have accused the state government of knowingly violating norms under Forest Rights Acts and sought the intervention of Orissa high court chief justice.
CPI-backed Posco Pratirodh Sangram Samiti (PPSS) is opposing land acquisition for the project.
Aug 03, 2010
Indian metals major Vedanta Aluminum and Korean steel behemoth Posco fear that their multi-billion projects may face inordinate delays after environment minister Jairam Ramesh told policymakers in Parliament on Aug 2nd 2010 that both firms violated forest laws. Ramesh also maintained that the two companies were under investigation in Orissa for violations.
Chief conservator of forests JK Tiwari’s inspection report of August 16, 2009, clarified that there was no violation of law. The report also stated that there were no environmental infringements. A three-member committee set up by environment ministry also concluded on February 11 2010 this year that there “was no mining or construction on the 660.749 hectares of land under question that was allotted to Vedanta”.
Similar was the tone and tenor of Posco officials who refused to accept that the company violated any law. A senior Posco official told Financial Chronicle that the minister was going against his own guidelines. Already, an environment ministry team led by environment activist Ashish Kothari has raised objections about the way clearances were accorded to the Posco project in the state. Yet another panel led by a retired official Meenu Gupta is examining how these alleged infringements had taken place.
Meanwhile, the Jagatsinghpur district administration has submitted its detailed report on socio-economic, forest and horticulture survey of the proposed Posco steel plant conducted in eight villages including the trouble torn Dhinkia village to state government. According to Posco officials, the report backed the company’s claims on the land
The survey teams collected data of betel vines, prawn gheris and other immovable assets without identification of beneficiaries. The number and area of prawn gheris, betel vines and other immovable assets have been included in this report.
In July 2010, Posco announced a compensation package for the people to be displaced by its Rs 51,000 crore mega steel project. The South Korean steel major would pay Rs 17 lakh per acre of agriculture land while the price of area under betel vine was fixed at Rs 11.5 lakh per acre.
Aug 4th 2010
The Orissa government resumed its global positioning system -based resurvey for the proposed Rs 54,000-crore Posco Steel Project near Paradip, following a three-day halt, after the United Action Committee (UAC), a pro-Posco outfit, agreed to lend support. Following state agriculture minister Damodar Rout and local legislator Prasant Muduli’s assurance to UAC members that after discussions with the state government, their demands would be fulfilled within next 10 days, they agreed to cooperate in the exercise.
Stop Posco project, Centre tells Orissa – 5.08.2010
In the latest hurdle to Posco’s embattled Rs.54,000-crore steel project in Orissa, the Union Ministry of Environment and Forests has told the State government to stop all work related to it, including land acquisition and handover, as it is violating the Forest Rights Act (FRA).
The August 5, 2010 order comes in the wake of a report by a committee set up jointly by the Environment and Tribal Affairs Ministries to assess the impact of the Act on sustainable forest resources management. A sub-group of the committee visited Orissa and found that “certain violations related to the Posco project were taking place as well.”
The Environment Ministry’s clearance for diversion of forest land for the project had stipulated that FRA implementation be completed first before any acquisition and handover. The committee found that the FRA process, to give land rights to the original forest dwellers, had still not even gone beyond the initial stages.
The State government has also failed to respond to the July 29, 2010 demand for urgent information on the land handover to Posco. Instead, the district administration seems to be proceeding with land acquisition from consenting families and demolition of paan cultivation, the order said. “The team’s conclusion is that any work related to the project in the area…is a violation of the FRA and of the conditionality laid down by the MoEF in its forest clearance,” the order said.
Conditional Green Clearance for Posco – 31.01.2011
After putting the project on hold last year, Union Environment Minister Jairam Ramesh on 31.01.2011 granted conditional clearance for South Korean major Posco’s $ 12 billion steel mill project in Orissa.
The Ministry, while granting conditional green clearance for steel-cum-captive-power plant and a captive minor port, however, sought Orissa Government’s assurances before it can give final approval for diversion of 1253 hectares of forest land for the project, mooted as the single biggest foreign direct investment in India.
“The environmental clearance for captive port is being accorded with 32 additional conditions over and above stipulated in the original environmental clearance of May 15, 2007,” the order signed by the Minister said.
Mr. Ramesh also asked Orissa government to give a categorical assurance that those claiming to be dependent on or cultivating the land in the Posco project area do not belong to the other traditional forest dwellers (OTFD) category under the Forest Rights Act, 2006.
This, according to him, would make it clear that there are no legally tenable claims of non-tribals wanting recognition as OTFDs under the FRA.
“Final approval of diversion of 1253 hectares of forest land for the Posco project would be granted as soon as this assurance of the State government is received by the MoEF,” the Minister said.
In August last year, Environment Ministry had directed the Orissa government to stop land acquisition for Korean steel giant Posco because it violates the Forest Rights Act.
The step was taken on the basis of a ground report submitted by a three-member committee set up by the Environment and Tribal Affairs Ministries.
The State government and Pohang Steel Company (POSCO), signed an MoU on June 22, 2005 for setting up an integrated steel plant of a total capacity of 12 million tonnes per annum at Paradeep in Jagatsinghpur district.
The plant would be located on the north-western bank of the Jatadharmohan river creek, 12 km south of the Paradeep Port requiring a total of 1620.496 hectares of land of which 1253.225 hectares is forest land and would affect eight villages in Erasama block of Kujang Tehsil.
The MoU also envisaged that the company would develop and operate a mining project in areas allocated by the government; a transportation project which includes a dedicated railway line, road and port; integrated township and water supply infrastructure.
But the project was delayed over green issues and protests by local residents who alleged that the setting up of plant would affect their largely agriculture and forest-based livelihoods.
Dream Dare Win
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