Cuttack, March 27: The second round of legal battle for Khandadhar iron ore reserves has steamed up with Essar Steels also throwing its hat into the ring by challenging the state government’s recommendation for grant of prospecting licence in favour of Posco.

Essar Steels, one of the 226 applicants for mining lease at Khandadhar in Sundargarh district, has sought judicial intervention against the recommendation in favour of the Korean steel major.

The decision is illegal, as it was taken without giving equal opportunities to all applicants, especially the applications filed earlier. The high court would take up the petition for analogous hearing along with that of Kudremukh Iron Ore Limited on April 6.

Acting on Kudremukh Iron Ore Limited’s petition, the high court had on March 20 directed the Union government not to take any decision on the state government proposal till March 26.

The status quo order was extended till April 6 on Thursday.

Public sector Kudremukh Iron Ore Limited pointed out that the 25sqkm recommended in favour of Posco included 10sqkm, over which it was allowed to carry out prospecting work in 2002. A total of 15sqkm was allotted to it for the purpose on deposit of Rs 1 crore.

Kudremukh Iron Ore Limited is contesting the government move in favour of Posco on grounds of preferential rights under Section 11(1) of the Mines and Minerals (Development and Regulation) Act, 1957.

The second round of legal battle assumes significance as Posco’s interest in the proposed steel plant in Orissa largely hinges on it. Posco had signed an MoU with the state government in June 2005 to build a 12MTPA steel plant by 2016 near Paradeep port.