POSCO’s withdrawal from the Jagatsinghpur project in 2017 is perceived as a setback for the Naveen Patnaik administration
OdishaPlus Bureau
Years after withdrawing from a significant project in Odisha, the anticipated return of South Korean steel conglomerate POSCO has provided a significant boost to the BJP government, which has been actively seeking to attract investments since assuming office in June.
This development also serves a political purpose for the BJP, as POSCO’s withdrawal from the Jagatsinghpur project in 2017 is perceived as a setback for the Naveen Patnaik administration. It presents the ruling party with a chance to scrutinize the Biju Janata Dal’s (BJD) performance in securing investments for the state.
Earlier this week, the South Korean steel giant announced its partnership with Sajjan Jindal’s JSW Group to establish an integrated steel plant with a capacity of 5 million tonnes per annum (mtpa). Although the official announcement did not specify a location, Odisha Chief Minister Mohan Charan Majhi confirmed that the facility would be situated in the mineral-rich Keonjhar district, which is in his home region.
During recent discussions with investors in Delhi and Mumbai, I engaged with senior representatives from JSW and POSCO regarding the establishment of a steel plant in Odisha. They have joined forces on this initiative and have indicated their intention to locate the facility in the Keonjhar district, Majhi informed reporters in Keonjhar on Friday.
POSCO initially entered Odisha in 2005 with plans to develop a steel plant valued at Rs 50,000 crore in the coastal region of Jagatsinghpur, which was then recognized as the largest foreign direct investment (FDI) project in India. However, the venture faced significant challenges related to land acquisition and securing a mineral block, compounded by local protests. After a prolonged period of over 12 years, the company officially withdrew from the project in 2017.
The BJP has asserted that the anticipated return of the South Korean firm signifies a favorable shift in the investment landscape of the state following the change in government. Sources indicate that the Majhi administration has authorized relevant officials to facilitate the “smooth grounding” of the Greenfield project.
Officials have indicated that there is a significant disparity in the investment climate of the state when comparing the present to two decades ago. The government has also revised its strategy regarding land acquisition, which has traditionally faced obstacles for large-scale projects. Previously, companies would seek potential land only after reaching an agreement with the government; however, the current approach involves providing multiple land options to enhance their confidence.
Regarding raw materials, which were a major concern in the past, an official noted that while JSW already possesses iron ore blocks within the state, the new entity will also have the opportunity to participate in auctions for additional blocks.
Representatives from the state industries department mentioned that following an invitation from the state government, senior officials from JSW have already explored two potential sites in Keonjhar: Banspal, encompassing 2,500 acres, and Patana, which covers nearly 2,000 acres.
It is anticipated that the JSW-POSCO partnership will formally sign an agreement with the state government during the Utkarsh Odisha conclave scheduled for January, as per sources. Although the companies have not disclosed the total investment for the project, officials have stated that it will exceed the previous commitment made by POSCO, with estimates suggesting it will surpass Rs 50,000 crore.
Since taking office, Majhi has been striving to attract a major steel company to establish a plant in Keonjhar, which holds over 30% of the nation’s total iron ore reserves. In August, the state government established a task force led by Chief Secretary Manoj Ahuja to identify potential investors for the proposed steel facility. Officials indicated that they reached out to prominent steel manufacturers in the country, assuring them that the government would expedite the acquisition of land and raw materials, as well as facilitate other necessary approvals.
