Thursday, August 11th, 2022 02:05:09

Updated: April 6, 2013 1:46 pm

Iron & Steel: The POSCO Peril

By Anil Dhir from Bhubaneswar

Ranging from acquisition of land to environmental clearance and rehabilitation of thousands of villagers, the South Korean steel project has been mired in controversies from the word go

It was on a balmy sunny day in June 2005 when the BJD-led Odisha government signed the memorandum of understanding with the world’s third largest steel company, the South Korean Pohang Iron and Steel Company. For the South Koreans, the heat has been on since that day, the Indian summer has been a never-ending one.

The MoU was to build a steel plant with a capacity of 12 million tonnes per year, along with a captive port, an SEZ and allocation of iron ore mines. With a projected estimate of $12 bn (Rs 62,000 crore), it was touted as the biggest Foreign Direct Investment (FDI) in India till date.

Odisha holds a third of the country’s iron ore reserves, a quarter of its coal, half of its bauxite, a quarter of its manganese and more than 90 per cent of its nickel and chromite. The state accounted for about a fifth of all industrial investment proposals in India in the last four years. The bitter truth is that the State also has the poorest of the poor in India. Every mining and metal company wants to be in Odisha for the abundant mineral wealth.

The POSCO project consists of three main parts—the steel plant in Jagatsinghpur, a captive port at Paradeep and mining leases in Keonjhar and Sundargarh districts. The government and POSCO both made grossly exaggerated claims of project benefits. A vastly overblown employment potential of 8.7 lakh jobs was given. A projection that the plant would contribute nearly 10 per cent of the state’s economy was foretold. Having failed to come up with its own justification for the POSCO project, the government has chosen to flaunt this deeply flawed NCAER study to retroactively validate its decision to sign the MoU. This, even after it was established that the NCAER report had been funded by POSCO.

What has happened over the last eight years that prevented the Odisha government from moving ahead on the POSCO project? The answer lies in the disconnect between the “voice” of the government with the “voices” of the people in whose name the government was planning the project.

The steel plant project hit the bottleneck in early days, opposition to the port and mines followed later. The residents of the eleven affected villages and hamlets opposed the land acquisition. The economy of these villagers was totally agrarian, nearly all of them being small and marginal farmers. The produce was just enough for their sustenance except for the betel vine growers, who were fairly prosperous.

Subsequently, a number of the villagers changed their opinion, after the realisation that not all eight villages but only two hamlets would be fully displaced. The promises of liberal compensation packages and future jobs quelled the doubts in the minds of many. The total land required by integrated steel project was 4,004 acres. The protests started just one month later, the three gram panchayats of Dhinkia, Nuagaon and Gada Kujanga came together to voice their opposition. The earmarked land included fertile agricultural land on which paddy, betel nut, cashew and other crops are grown, and the coastal riverine zones where extensive prawn and fish farming is undertaken. The locals were even more peeved by the fact the forest areas around the villages would be cleared and handed over to POSCO. They depended on the forests for pastures, minor forest produce and firewood.

The economy of these three villages is sustained in large parts by betel vine cultivation that is specific to this area- it provides employment to everyone, men as well as women, the young and the old alike. Several organisations like the POSCO Pratirodh Sangram Samiti , Nav Nirman Samiti, Rashtriya Yuva Sangathan, Bhita Mati Surakhya Janmanch and the United Action Committee were formed.

The different groups did not have a common agenda. Most of them just wanted proper compensation and guaranteed jobs. However a few stood out for their stand on their rights to earn their own livelihood and not be displaced from their land. All of them were aware about the poor rehabilitation of previous development project oustees in the State. There was heightened insecurity amongst the villagers as their land ownership was not being recognised by the State, even though they had been tilling the land for generations.

Since 2005, the State government’s law enforcement and administrative machineries have worked with a partisan attitude. It has no choice, even a cursory reading of the terms of the MoU will explain why the Odisha government is eager to play the very questionable role of “facilitator” for the project. Whether it is the clearances required from the Ministry of Environment and Forests, permission from the Central government for transfer of lands or from the Ministry of Mining for acquiring mining leases, the MoU mandates that the state government will provide all possible assistance in obtaining them. A few examples from the MoU itself are the best illustrations:

  • “The Government of Orissa will assist the Company in obtaining all clearances, including forest and environment clearance and approval of the State Pollution Control Board, and the Ministry of Environment and Forest, Government of India under Forest (Conservation) Act, 1980 and Environmental (Protection) Act, 1986 for opening up the iron ore mines, laying roads, constructing township etc.”
  • “Govt. of Orissa will make best efforts and provide all possible assistance to POSCO for expeditious clearance of applications relating to mining lease and related matters such as forest, environment etc. so as to enable POSCO to start its mining operations in time to synchronise with the commissioning of its steel plant. “
  • “The Government of Orissa agrees to facilitate and use its best efforts to enable the Company to obtain a ‘No Objection Certificate’ (NOC) through the State Pollution Control Board in the minimum possible time for the development and operation of the Project.”

For the speedy implementation, the government announced a new Resettlement and Rehabilitation Policy in 2006, which is certainly the best in the country. The land losers would get financial incentives along with compensation and annuity for 33 years. Even the landless and homestead less would have been adequately compensated; the betel vine growers were earmarked for special compensation.

It does not bode well for citizens when the State agrees to essentially become an agent and facilitator for a private corporation. The constitutionally mandated role of the State is to safeguard the interests and rights of the citizens, and to hold the common resources and minerals in trust for current and future generations.

The standard tactic of the Odisha administration has been to treat every attempt by the villagers to preserve their lands and livelihood as a “law and order” problem. During the eight long years of protest, it has exhausted its tactics for pushing the project forward. Instead of consulting the villagers at every stage and respecting their concerns, it has instead taken an adversarial stance, deploying police forces, intimidating villagers, arresting leaders, and suppressing dissent by violence. The scale of violation of the laid out processes for public hearings and gram sabhas is indicative of how willing the government is to subvert democracy for the sake of POSCO. In the eyes of the anti-POSCO lobby, almost every applicable law, whether it is the FRA, FCA, CRZ, or EPA, has been ignored and consequently violated.

Today all that has happened is forced acquisition of about 400 acres of land in Govindapur village. The district collector is confident of acquiring another 300 acres. The IDCO has already handed over given 1700 acres to POSCO. The truth that the entire 4000 acres would never happen has now dawned, and the company is agreed to scale down its size by setting up the first two phases of 8 million tonnes per annum (mtpa) downsizing it from the earlier plan of 12 mtpa on the 2700 acres that it would get.

Today, the only presence of POSCO in the acquired land is a flimsy barbed wire enclosure with a cluster of nine weather-beaten shipping containers, improvised as a camp office.

When South Korean President Lee Myung-bak was the chief guest at the Republic Day celebrations last year, he had expressed his wish to visit Odisha. However as things were on a boil in the area, Naveen Patnaik was instead summoned to New Delhi. The State and the Centre have adopted a mock stand of reassuring the Koreans that the land acquisition would soon be over, but the sticky matter of the mines will be the Achilles heel of the whole arrangements.

POSCO has always been presented as a “South Korean” company. Only a few know that the major shareholding of the company are US banks, such as Citibank and JP Morgan Chase. Warren Buffet owns 4 million shares. The US shareholders greatly outnumber the South Koreans.

Captive Democracy

In POSCO area, where there are no television cameras or sound bites, the State is using every underhand trick in the book to counter the legitimate and peaceful voices of dissent. The methods of suppression are cruel, violent, illegal and with sheer impunity.

The greatest betrayal of the State against its own people is the use of the criminal system to implicate villagers in a large number of false cases to intimidate them, instill fear and break them into submission. The biased nature of the police is evident from the targeting of villagers resisting POSCO and their refusal to initiate any criminal action against goons and other persons perpetrating violence on them.

In a recent case of the continuing saga of violence, bombs were hurled at the meeting room of the PPSS on the evening of the March 2. One person died on the spot, four others succumbed later. There was a large encampment of police on the outskirts, but they did not respond to the request for ambulances. Even though no police personnel visited the spot for 15 hours, the Superintendent of Police made a knee-jerk remark that the bombs went off when the people opposed to the steel project were preparing explosives in their backyards.


How the POSCO agitation has been kept alive all these years has intrigued many. Industry watchers, NGOs, political parties of all hues and colours, human rights activists and the administration are puzzled as to how the movement has been sustained so long. It is a truth that the people in the three villages are practically cut off from the world, both socially and economically, but in spite of this life goes on.

On conditions of anonymity, a POSCO official admitted that they have complained of the complicity of the Indian steel majors’ involvement in keeping the movement alive. If one studies the protests of the last eight years, there were times when it was on the verge of dying out, but every time there was flare-up with renewed vigor.

The senior financial journalists of the State, who have all been taken on pleasure junkets to Korea, also agree that the protests are fuelled by funds from the Indian steel lobby. The entry of the Korean steel major would have had serious effects on the Indian steel industry, which still uses technology that is outdated and obsolete.

If implemented, POSCO would have been one of the world’s most competitive steelwork with advanced state of the art FINEX technology. This technology, which has been indigenously developed by POSCO, is an environment-friendly iron-making process that allows the direct use of iron ore fines and non-coking coal as raw material input. This significantly lowers the operating costs and emissions compared to the blast furnace process. FINEX technology also reduces overall construction costs by eliminating the need for sinter and coke plants. Moreover, a FINEX plant occupies half the area of a Blast Furnace plant of equal capacity. This would have been very beneficial to the State as most of the exports are to China and constitute iron ore fines.

Besides POSCO has developed advanced mining techniques in Brazil and Australia. The Indian mining scenario is still in the dark ages, not much improvement has been done over the years. Ore handling too is another sphere where POSCO would have brought in technology that would have been very cost effective. (AD)

Instead of condemning this act of terror, the police are shielding the company-sponsored goons and spreading canards that the people died while making bombs. The history of POSCO Pratirodh Sangram Samiti shows that the movement has been non-violent and peaceful. They have erected barricades and dug trenches, resorted to forming human chains and Satyagraha, involved women and children, but not retaliated even when attacked.

The recent nude protests undertaken by the women of the village is but another act which shows how the protestors have been driven to the corner.

“Why just our clothes? We are even ready to give up our lives to save our land,” said Manorama Sahoo of Dhinkia village. The sheer desperation and frustration has made them resort to every form of expressing their dissent, but they have not taken the route of violence.

Between 2006 and 2012, more than 230 cases had been filed implicating about 1800-2000 villagers. The protestors have had 16 cases of dacoity and over 100 cases of attempt to murder filed against them. Of the cases that had been filed, the complainants in about 70 per cent of the cases were government officials. Most of the FIRs of these complaints have left the number of accused open-ended, which allows the police to implicate any person in any case, despite not being specifically named therein.

Abhaya Sahoo, the president of the PPSS was arrested on two occasions and has over 50 cases registered against him, including cases when he wasn’t even present in the villages on the day of the alleged offence. Manorama Kathua, who leads the women’s wing of the PPSS, has several cases filed against her- she has not left the village in the last seven years.


The South Koreans are known for their resilience. They have maintained a stoic diplomatic distance from the troubles at the site. The hue and cry that was raised during the recent violence forced them to issue a statement that ran thusly: “During all these years, POSCO has followed all due process of law and complied with all conditions of the government. In that, we have waited patiently and always opted a peaceful way for the progress of the project.” For POSCO, it is now evidently clear that they have very difficult times ahead. The odds are clearly stacked against them on all fronts. The company has adjusted its plant layout over 60 times in a bid to minimise displacement. Legally, the State government cannot acquire land for them, nor any development activity started until the environmental clearance is given. The recent acquisitions and demolition of betel vines was in contravention to the Environment Impact Assessment (EIA) Notification 2006, which forbids activity of any nature at the site without environmental clearance.

The forest clearance granted to the project has been challenged in court, so is the agreement to grant mining lease at Khandadhar. There is no way in which POSCO will be allowed to mine ore on a royalty of Rs 700 per tonne when the market rate is Rs 7000 per ton. The juicy carrot at the end of a short stick is now a shriveled one at the end of a ten feet pole. The Defense Ministry has raised strong objections in the matter of the captive port. Getting the SEZ status too will be difficult as the Indian steel makers too will demand a level playing field. The issue of river water diversion to industry has evoked strong sentiments and a tide of protests. Getting 3.50 cubic metres per second (cumecs) from the Jobra Barrage is a tall order. For POSCO, setting up a desalination plant for their mega project would not be a viable cost-effective option. The discharge of waste materials from the plant in the eco-sensitive coast is another hot issue.

For POSCO today, their “cup of woes are runneth over”. The steel major will have to take a call in the near future, the jury is out and will announce the verdict soon. Naveen Patnaik would want the impasse to continue for a few more months, at least until the next elections. (AD)

The filing of cases and warrants against almost 2000 persons has resulted in targeting of the entire villages, who are under constant threat of arrest and have not left the villages in the last seven years, and whenever they do leave, are constrained to do so surreptitiously. In many cases, entire families have been implicated, resulting in none of them leaving the village for years on end. Nobody from these villages voted in the 2009 state elections due to fear of arrest. Marriages have not been solemnised in the area for years, as no one would give a bride away to the eligible boys from these villages.

The inability to leave the village has resulted in a complete lack of access to medicines or any medical treatment to the villagers. A team of doctors who visited these villages found that at least 30 women needed urgent medical intervention. Many arrests have taken place when villagers were compelled to leave the village for medical aid.


The POSCO imbroglio has deep political roots. The heat has been kept on by the regular fanning of one political party or the other. The cross spectrum of India’s political parties have views and counter views on the project and the opposition to it. The Communist Party of India (CPI) strongly opposes the project, the Communist Party of India—Marxist (CPM) is not opposed to the plant if it is shifted a little and if Paradeep port is used instead of a separate captive port. Understandably, for the ruling Biju Janata Dal, POSCO is a dream project, but there are detractors within the party too.

The BJP has adopted a stand where it wants to have the cake and eat it too. While not opposing the plant, it is strongly against the allotment of mines and drawing of water from the Mahanadi. Prime Minister Manmohan Singh has had a consistent stand of speedy implementation of the project, but it was his own minister Jairam Ramesh who threw the first spanner in the works. The present Congress vice-president Rahul Gandhi spoke against POSCO while addressing the Vedanta affected tribals of Niyamgiri. Sauce for the goose is sauce for the gander. The diverse views of its leaders have kept the State’s Congress leaders mum. (AD)

The government has taken other forms of coercive action, and terminated government employees for having protested against the project. The village postmaster for the last 28 years, Babaji Charan Samantara was suspended. Kailash Biswas employed as high school peon for over 20 years was dismissed and cases were filed against him.

The story of Prabhas Ghochayat, a PPSS activist having 22 cases against him, speaks volumes of the state government’s arbitrariness. Two cases were booked against him, alleging that he was in two different places at the same time. On December 5, 2012, while he was in the Dhinkia village protest, a case was foisted on him alleging that he was involved in an assault case in Govindpur. He was, thereafter, called to Govindpur and was in the Police Station for the day. The same day another case was registered against him for assaulting a person in Panfuli village.  ■



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