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Iron ore worry for Posco

Cuttack, Feb. 27: With Orissa High Court ordering status quo on the grant of prospecting licence to Posco for the Khandadhar iron ore reserves on Monday, there is fresh uncertainty for the Korean steel major’s proposed 12-million-tonne steel plant in the state.

The government had recommended the grant of prospecting licence in December last year but Kudremukh Iron Ore Company Limited (KIOCL) appealed against it on technical grounds.

The Union ministry of mines had sought some clarifications on the proposal after the Orissa government recommended Posco’s application. The desired documentation with the clarification was done after that.

The state had recommended 6,204 hectares at Khandadhar, Sundargarh district, in favour of Posco to assess actual reserves after considering 130-odd applications.

KIOCL, one of the applicants, contested the government move over preferential rights for allotment of mining lease under Section 11(1) of the Mines and Minerals (Development and Regulation) Act, 1957. The company had already done prospecting work in the Khandadhar mining area and incurred an expenditure of Rs 2 crore for the same.

Advocate-general B.K. Mahanti said KIOCL’s application was not taken into consideration in 2006 as the PSU had failed to make any headway in setting up its proposed Rs 700-crore plant in the state over a “period of time”.

Posco’s application was forwarded to Delhi for approval as it was prepared to make a sizeable investment by setting up a steel plant at Paradip, Mahanti said.

The two-judge bench of Acting Chief Justice A.K. Ganguly and Justice N. Prusty asked the state government to file a counter-affidavit by March 12 and issued an interim order for “status quo on leasing out… (the) Khandadhar iron reserves till then”.

The legal battle assumes significance as Posco-India’s interest in the proposed steel plant in Orissa largely depends on it.

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