POSCO AND THE PERILS Published on January22, 2014 in orissapost, page-8 (available in archives also) (The new push for Posco at the government level has left activists dismayed. A look into the issues involved) SANTOSH KUMAR MOHAPATRA . After eight years of wait, Posco`s Orissa`s plant has got environment clearance from the Union Government. This has dealt a body blow to anti-land acquisition agitators in Jagatsinghpur district while there is considerable happiness among Pro-Posco villagers. The matter, however, is not simple as yet. The Posco Pratirodh Sangram Samiti (PPSS) has resolved to oppose Posco with renewed vigour. The project may not take off soon also for the reason that the National Green Tribunal (NGT) had put a stay in May 2013 on land acquisition by the plant following a petition filed by an activist. The case is scheduled to for hearing in NGT. Since the introduction of new economic reforms, policies pursued in India are based on the growth-at-any cost model. The poor people, farmers and the environment suffer while the corporate and rich reaps the benefits. The tragic thing is that the administration which is supposed to maintain law and order and protect the interest of people is utilized for protecting the interest of a multinational company such as Posco. It is alleged that without renewing Memorandum of Understanding (MoU) that lapsed in 22nd June 2010, Orissa government has made forcible eviction and ensuring all facilities so that the project makes headway. Steel –plants are not permitted in areas coming under Coastal Regulation Zones. A National Institute of Oceanography study commissioned by Posco itself found the plants falls within such zone. The South Korean steel behemoth had earlier proposed a 12 million tonne per annum (MTPA) steel plant with land around 4,004 acres. But due to stiff opposition, it sought at least 2,700 acres to start an eight MTPA facility in order to get entry first, then spread empire .Meanwhile, the state government has already handed over 1,703 acre of land to Posco-India for the purpose and another 1,000 acre of land is ready to be given, and Posco has already started construction of the boundary wall. There is huge propaganda that Posco with its biggest ever foreign direct investment of $52 billion is expected to help rid the economically backward State of its `poor` tag and usher in progress. Activists argue that this is an empty promise. The sate getting biggest Foreign Direct Investment (FDI) does not necessarily mean an automatic improvement in state’s economic growth or people`s prosperity. Rather there are several instances of the FDI bait pushing a government to form rules and regulations with less regard to the people`s plight. A crucial question is, under what conditions are such investments coming? In countries such as China, investment comes under condition that the national interests are enhanced but in our country, feelings are that the interests of multinational companies are accorded top priority ignoring people`s interest. Posco will not straight away bring $12 billion dollar .Posco will bring technological inputs from its home country in lieu of capital. It may also raise capital from our capital market. It will make its expansion on the basis of the profit it earned here and will not bring promised capital in to country as such. When it will start repatriating its profit, it will lead outflow of foreign currency, nullifying any benefits the country has received through that FDI. For argument`s sake, If employment generation is prime mover behind establishment of Posco, then why is it that state government is not reviving the sick industries first? Their numbers are large. Posco would use sophisticated technology and engage less number of people. The promise made by it for reserving jobs for local people and spending 5% ($600 million) over social commitment, as a condition for clearance, could be a chimera. Once project starts, Posco is likely to ignore all its promises as is often done by several multinational companies. Posco had gone to Brazil first before coming to Orissa but when Brazil wanted it to purchase iron ore at market price, and use sea water by purification instead of river water, Posco changed its plan and turned to India, Orissa. This sate is a haven of an iron ore, and we give iron ore at cheaper rates even as the price of steel in international market keeps skyrocketing. That`s why, in the pro-reforms period, corporate giants from all parts of the world are making a beeline for Orissa. They all want to grab a share of the State`s abundant natural and mineral resources. Orissa government earned a loyalty of Rs 27 a tonne till the Centre fixed the rate at 10 per cent of the market price in 2009.But, with global prices hovering around Rs 7500(variable) a tonne after accounting for loyalty (about Rs750) and operating costs (about Rs 750 on mining, freight, etc) an extracting company enjoys a margin of around Rs 6000 a tonne on shipped iron ore. If Posco extracts its allotted 600 million tonnes of iron ore, in global market, it will make net profit of around Rs 3.60 lakh crore . Posco will extract 1,000 million tonnes as against requirements of 600 million tonnes and export iron ore. For 400 million tonne, the company`s income adds up to around Rs 1.20 lakh crore at todays prices .Again Prices are bound to rise by over 500 per cent in next 30 years` time. If so, Posco will gain much more than what now assessed. In return, it will give nothing substantial to Orissa. Rather, it will make huge profits through iron ore sales and get huge tax benefits as it will come under the ambit of SEZ Posco gets this deal at a time, when there is emergence of nationwide consensus between the government, the Judiciary and the Indian industry in limiting iron ore exports, so as to buttress the domestic steel industry. Various studies have estimated that business-as-usual will exhaust Indias iron ore reserves anytime after 2030 .Karnataka banned iron ore exports in 2010; Chhattisgarh, for another, is considering the option. Apart from acquiring 2,700 acres for project, Posco will also acquire a large mass of land for its captive port at Jathadhari (though for time being, the two are de-linked) and also around a 1,000 acres of forest in Kandadhar Hills for mining purpose. Kandahar, a unique water fall and famous religious spot, will, it is feared, be subject to devastation, undermining the livelihoods of many villagers and the tribal population. Any kind of industrialization helps in overall progress. But industrialization does not mean only one mega industry or mineral based industries. Industrialization also involves establishment small and medium scale, handicraft units, cottage, agro-based industries etc. During the British rule, there was remarkable industrialization and development in the country, but the basic aim was to plunder the country`s national wealth. It is important that such plunder is not repeated by foreign agencies or industries. The South Korean President has visited India recently to, among other things, help speed up the Posco project. Prime Minister Manmohan Singh is reported to have assured them all help. We have our misgivings, it is high time there is an assessment of not only gains but also losses in term of depletion of mineral and natural resources, environmental degradation, discontentment due to people`s displacement and loss of livelihood of people. Fears are that the Posco steel project is anti-people and that it would lead to ecologically degradation and affect the livelihood of farmers and fisher-folks. It could lead to destruction of the prosperous and self sustaining agricultural economy of Jagatsinghpur. If posco Projects cannot be halted, it should be shifted to some other infertile land as is demanded by activists. Land, iron ores and other mineral resources should be given to Posco only at market price. (The author is an Orissa based financial columnist. E-mail: skmohapatra67@gmail ( On January24,the National Green Tribunal directed that Posco was not to cut any trees at the project site in Jagatsinghpur district of the state till the state government gave the final forest clearance. It means, indirectly states will give clearance as it wants posco at any cost even to the detriment of people`s interest)
Posted on: Mon, 27 Jan 2014 15:03:41 +0000
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