Saturday, February 23, 2008

"Over Our Dead Bodies" A Report from the Barricades.

A brief note on the Anti POSCO struggle in Orissa

The crisis of capitalism and the collapse of the Brettonwood system:

The coming in of Neo-Liberal Economics in the form of "globalization", read imperialism, has led to the intensification of imperialist intervention solely because of capital's ruthless drive for accumulation and profit maximization. This incessant drive is forcing developed capitalist countries in an ever increasing search for cheap labour, cheap resources and captive markets. Ever since the collapse of the Soviet bloc and the counter revolutionary reforms in China, the space allowing imperialist interventions with impunity has increased manifold. In the recent past the globe has witnessed numerous violent and insidious so called "non violent" interventions across the globe, i.e Nicaragua, Granada, Panama, Tahiti, Afghanistan, Argentina, several countries of Africa. The most striking example of early 21st century accumulation through direct occupation and even genocide as is happening in Iraq. These interventions have upset regional and national economies, disposed millions and created areas of unrest and strife; the pauperisation of Latin America, hunger famine and ethnic strife in Africa and the establishment of compradors, outright World Bank puppets, dictatorships/client regimes and military juntas such as in India, Pakistan, Saudia Arabia, Kuwait, Philippines, South Korea, Bangladesh and Afghanistan.

Interventions from imperialist agencies such as the World Bank, IMF, WTO, The ADB and NGO's and donor agencies etc. have so far been effective in imposing a structural shift within the third world economies. This shift from a relative notion of self reliance through "import substitution" industrialisation, food self sufficiency towards dismantling their welfare structures and imposing an outright commodified imperialist culture heavily dependant on the privatization of services and the commodification of natural resources has only resulted in further marginalisation of the people and increasing inequalities.

In the context of India, these imperialist interventions are being implemented by the comprador elite which has taken on the task to facilitate the easy entry of capital. The task for capitalist intervention has been through these compradors who divert the people attention from issues confronting their immediate life and necessities through strengthening feudal oppression and captivating the middle classes within an illusionary web of crass consumerism and cash nexus. Because of this ruling comprador class, imperialist capital has at its disposal an unprecedented quantity of cheap mineral resources, land, labour, youth and government funds. In India we can see the rapid increase in the private service sector, where a huge number of our youth are being lured into working as semi-slaves in late night call centers and BPO's, thousands of which sprung up overnight only because of rising labour costs in core capitalist countries.

With developed nations facing rapidly depleting resources, rising unemployment, high costs of unsustainable consumerism and falling productivity their ruling classes are compelled to intensify their economic, cultural, political and armed interventions in developing nations. This form of brutal primitive accumulation has also given an impetus to several centers of resistance across developing nations. In India we can see an intensification of the struggles of the peasantry against forced displacement taking place across the length and breadth of India, especially in those resource rich regions where the levels of neo colonial extraction are high and brutal. A case in point would be the states of Jharkhand, Chattisgarh and Orissa.

Taking the particular case of Orissa we can see that since the colonial period there have been a huge number of imperialist interventions and parallel struggles being waged by the peasantry on the issue of displacement from forests and farm lands. Orissa is the continuous target for loot by the imperialist powers, finding within an amicable ally in the comprador ruling class puppet such as Naveen Patnaik. Nevertheless, there have been several heroic tribal uprisings against the earlier colonial plunder by martyrs such as Laxman Nayak in the early 20th century and in the recent years we can see the emergence of several struggles in Kashipur, Hirakud, Kalinganagar, Lanjigarh and Jagatsingpur (Anti POSCO). It is in Kalinganagar where resistance by the adivasi peasantry changed the very contours of resistance across India. The Kalinganagar struggle marks a break with the earlier existing forms of Gandhian/Sarvodaya and other liberal forms of protest as organized by various NGO's etc which looked at anti displacement resistance within the structures of official grievance redressal mechanisms of the Indian state which ironically was the primary agent for this imperialist loot. Even while co-opting and diffusing people's anger, these interventions were found inadequate when faced with the wrath and greed of rapacious capital and the armed might of the comprador state. On the contrary, the mass militant resistance at Kalinganagar, for the first time refused to negotiate and engage with the state on its assumed legalistic terms of dialogue which also restricted and set the terms for protest within the ambit and ideology of the ruling classes on how it perceives and allows dissent. The activists of the Kalinganagar Vistaphan Birodhi Janmanch took a stance of no rehabilitation no compensation and no forced displacement from their lands which have now become an immense source of inspiration for other anti displacement movements across India.

The anti POSCO people's resistance has been going on in parts of Jagatsinghpur district of Orissa against the steel plant and captive port proposed in the area. This struggle has been on since July 2005, a month after the Memorandum of Understanding regarding the project was signed between the Government of Orissa and Pohang Steel Company Limited (POSCO). In many ways the anti POSCO struggle is a logical outcome of the mass peasant resistance at Kalinganagar.

The Economy of the region

There is need to counter the misinformation being disseminated by the ruling classes regarding the economy of the region. According to the government the people of this area are very poor and only subsist as marginal farmers. Nothing can be further from the truth. According to a fact finding team's survey done in the area[1];

• The local economy is a thriving, labour-intensive one, based on agriculture and fishing. The economy is also sustained, apart from staple crops such as paddy, coconut etc., on cash crops such as betel, cashew, supari and kewra. Fishing and pisiculture are also prominent sources of livelihood. Most of these sources provide income and employment throughout the year.

• The uniqueness of the betel vine cultivation economy, due to the typicality of the geographical and topographical features like soil, was highlighted repeatedly by everybody the Team interviewed. It is a thriving, highly labour intensive activity which provides income throughout the year, supporting and providing work to a wide age group of people—from the young to the old—who are engaged in various productive tasks related to cultivation, plucking, transport and marketing of betel leaves. The locals are certain that they will not be able to get most of these jobs at the POSCO factory because they do not have the requisite skills. Even if they do manage to get a few of these jobs, they emphasize, the steel project and port will not be able to provide with the kind of secure livelihood they currently enjoy.

• The Jatadhari river, estuary and the forest resource base play a very important role in supporting the cultivation, fishing as well as household needs like fuel wood etc. In the late 1960s, Loknath Chaudhury, a local leader and former CPI(MP), led a struggle for transfer of much of the common land in the area, some of which was already under betel vine, from the revenue records to the Forest Department so that afforestation initiatives could be carried out to provide a natural barrier for protection of villages from impacts of cyclone and to provide for the basic needs of firewood and stalk for betel vine cultivation. Finally the land was transferred to the category of gramya jungle or community forests.


Similarly, concerning the MOU, both the Centre and the Orissa state government have been extremely secretive about the terms and conditions. The above mentioned fact finding team also investigated and found startling facts about the deal.

ON June 22, 2005 the State of Orissa signed a Memorandum of Understanding (MoU) with the South Korean Steel giant—Pohang Steel Company Limited, also known as POSCO. Touted as India's largest Foreign Direct Investment (worth Rs 52,000 crores) the project involves building of a 12 Million Tonnes Per Annum (MTPA) integrated steel plant and a captive port in the Ersama Block of Jagatsinghpur district, Orissa.

As per the MoU, based on the needs of the "Steel Project", the Company will also develop and operate the following infrastructure: [2]

Mining facilities in the areas allocated by Government of Orissa/Government of India:

i). To help POSCO produce steel, the Orissa government has promised recommend to the Union government to hand over captive coal mines to POSCO until it is ready for mining of its coal block.

ii). To make steel POSCO needs 600 million tonnes of ore from the government of Orissa. Iron Ore is available at Rs. 2000 to Rs. 2600 per ton. Discounting extraction costs at Rs 400 per ton, the state government is subsidizing POSCO at Rs. 96000 crore per year in only the use of iron ore. And this does not include the amount it may take away. The MoU is set up to allow extraction for 30 years with extension possible for 20 years. In addition, unspecified amounts of chromium and manganese will also be provided to POSCO. Dolomite and limestone will also be made available at subsidized rates.

Communications and Transport: Road, rail and port infrastructure will be provided with government help, including the dedicated railway line from the mine-belt to Paradeep. POSCO will also construct its own port at Paradeep. The government will also construct, a railway line from Haridaspur-Paradeep and Bansapanl-Paradeep for export of POSCO company's iron ore.

Integrated township: The state government will provide about 6500 acres of land for the plant site in Paradeep. There is no statement regarding the price that POSCO will pay for this land. In addition, the state government has agreed to provide about 20-25 acres of land in Bhubaneswar and hand it over to POSCO for its office. At what price the company will take this land has not been mentioned.

Water supply infrastructure: According to the MoU, the Government of Orissa is to permit withdrawal and use of water (near- about 12 thousand to 15 thousand crore liters) from the Mahanadi barrage at Jobra and Naraj in Cuttack for construction and operation of the "Overall Project". Concerns have been repeatedly raised over the past two years by citizens of the area and technical experts that this would severely impact the drinking and agricultural water supply of Cuttack and neighbouring four districts. The MoU also promises water to POSCO from the Mahanadi from Jobra barrage. For free. The MoU is silent about the quantity of water to be provided.

Revenue: In order to increase profits for POSCO, the government of India has given Special Economic Zone (SEZ) to POSCO. The company will not have to follow various trade, labour and economic regulations. None can compel POSCO to even pay tax in view of liberalised regime prevalent in SEZs. As per current understanding, in 30 years time, the government of Orissa will get Rs 22,500 crore and the central government Rs 89,000 crore i.e. a total of Rs 1,11,500 crore in the form of tax revenue. This works out to Rs 3,700 crore income per annum. This is less than the amount Orissa is paying POSCO in subsidies only for Iron Ores.

Administrative support: In addition, senior IAS officers of the state will be put at the service of POSCO for implementation and coordination. It is mentioned in the conditionality also that if POSCO wants, it can accept foreign and indigenous private players as partners, whenever it finds necessary. The local administration is acting in close collaboration with the Ersama MLA Damodar Rout, (General Secretary BJD). Adept at mobilising Goondas, Damodar Raut, with POSCO officials, the district collector, have been gathering their forces, all of this is monitored by Priyabrata Pattnaik, a notorious IAS officer whose action of applying for mining contract for the officers' club named 'Bhubaneswar Club' was recently exposed. Incidentally Priyabrata Pattnaik is also the Govt. nodal officer for the POSCO. Even the present Collector, Mr. Pramod Kumar Meherda has a history of repression against people's democratic protest, while collector in Rayagada district, he unleashed a reign of repression to silence the Kashipur Movement, against the proposed Utkal Alumina bauxite mining and Alumina plant of the Birlas.

The Struggle:

The modus of the intervention by the Indian state to forcibly evict large mass of the peasantry from their farmlands and forests has also undergone a radical change in the last year. In Nandigram the state first used its armed forces to try and defeat the democratic resistance of the people, failing which, the ruling party sent its armed cadres to brutally suppress the dissent. On Nov 29th 2007 it was the BJD in Jagatsingpur which made the use of goons to terrorize those involved in the anti POSCO struggle. This is an alarming trend seen across India, the Congress and NCP in Maharastra has allowed Reliance to use its goons in intimidating the anti SEZ movement in Raigarh, the BJP has been using the Bajrang Dal to forcibly acquire land for SEZs in Gujarat, the BJP has repeated this using the land mafia to forcibly acquire land for an SEZ near Indore, in Kerala the CPI(M) once again used its armed cadres to evict adivasis in Wynad, the BJP and Janta Dal(S) used goons to evict people from Bangalore and other SEZ's spread across the state and the list is endless. What marks the danger of this current mode of forced displacement by the state is its increase dependence on using extra constitutional means and the hiring of goons and lumpen elements to suppress the democratic struggles and voices of the people.

In POSCO the stakes are very high, not only for the resistance being organized under the banner of POSCO Pratirodh Sangram Samiti, but also for the political and business interests. POSCO is a project which's cost is estimated to about Rs.52,000 crores; flush with money, the POSCO management in open connivance of the ruling class elite is desperate to please their imperialist masters, while the corrupt bureaucracy jump like hungry dogs at even the small crumbs POSCO throws at them.

After the goons of BJD and POSCO drove the agitators from Balitutha in the evening of 29th November 2007, within a period of one hour the police entered Nuagaon village, erected road blockade at Balitutha and establishing a camp at the same site where the protesters were sitting for the last 2 months, barricaded the road and the police establishing check point near Trilochanpur, with two platoons staying in a camp in the Trilochanpur school. The goons with complete support of the armed forces attacked in a strength of about 1500, heavily armed, with bombs, guns, bows and arrows and other weapons. After throwing a bomb at the protestors gathering and burning their tent, the goons mercilessly beat the anti POSCO protestors, especially targeting the aged and women.

The BJD goons were ruthless; Mrs. Ghura Das of Dhinkia a lady of about 65 had her broken by beating her with an iron rod; Mrs. Tulsi Das about 60 years old also had her hand broken by a severe beating; Mrs. Kunilata Swain, 32 years old was grievously injured on her forehead; Mr. Dwijo Dash, about 60 years old and Mr. Parikshit Maiti also about 60 were ruthless beaten and hands fractured. There is a huge list of others injured and beaten black and blue by the lumpen brigade of the BJD and POPSCO and none of the injured have been provided any medical assistance by the state till now, on the other hand the injured have to secretly smuggle themselves out of Dinkia and get medical assistance at Paradeep or Cuttack. Through this entire sordid episode the police were shameless partisans and they watched while old women and men were being beaten ruthlessly.

In a classic revelation of the true nature of the criminal justice system of India, those who were beaten have had further additions to their already absurdly long list of criminal cases filed against them. Several of the anti POSCO leaders and sympathizers have more than 200 criminal cases lodged against them, they cannot leave the area on fear of immediate arrests under ranging from attempt to murder, rape, criminal trespass, dacoity, arson etc. Not one goon has had a single case registered against them. This exposes the farce called the Indian Justice System and the truth behind the much touted "Largest Democracy in the World". This is the truth behind empty slogans such as "India Shining" "Land of Ahimsa" "Land of Mahavira and Buddha" "Father of the nation and non violent Gandhi" all this lies completely exposed while the class nature of the Indian state and its comprador rulers leave no stone unturned in serving their imperialist masters. But why to blame a boot licking dog such as Naveen Patnaik, when his true master, our revered soft spoken P.M., Manmohan Singh can shamelessly declare in Oxford that "India has greatly benefited from Colonial rule…" and in Washington he opens his address to Congress with the words, "I have come to sell India.."

Situation in Dhinkia Gram Panchayat:

Despite the reverses suffered, the morale of the villagers is very high and they are willing to face the police at any moment. The people expect that the first occasion for a decisive fight may come in the shape of entry of survey team along with Goons and Police. Their steely resolve was echoed in words from all age groups, "POSCO can be built only over our dead bodies". They are keeping night vigil on the boundary of the village and are preparing themselves to face the ensuing Nandigram style combined assault by the Armed Goons and Police. About 13 platoons of the police have been deployed all around Dhinkia with the notion of "maintaining peace and order", in reality they have laid siege to Dhinkia panchayat and its villages. Despite this ordeal and isolation, the people of Dhinkia putting behind all personal hardships are ready for a decisive fight. Grocery shops are not functioning properly for the lack of materials, as merchants supplying goods are facing hardships from the Goons and the police. Many injured are suffering without treatment.

Despite such fascist repressive measures the PPSS have been organizing meetings in Gobindpur and Nawagaon. In the last month some positive developments have taken place; the refusal of the Orissa government to compensate any affected families farming on so called government land has forced the pro POSCO agitators to take a harsh look at their anti people stance and to come to terms with the fact that their real interest lie with the PPSS and not with corrupt middle men and contractors such as Damodar Raut.

After the ruthless occupation of Iraq and the down trend and slowdown in the world economy the intensification of loot by developed nations is bound to get even sharper. The only realistic and practical solution to this onslaught can be through mass resistance movements such as Kalinganagar and the anti-POSCO resistance. The point to be noted is that these movements are inspiring in showing the resolve of the militant peasantry, hence they are the important sites of resistance against imperialism and the comprador elite in the third world. Therefore it is imperative for the democratic and progressive forces to firmly rally behind these struggles and provide them their unflinching support.


This Memorandum of Understanding is made on the Wednesday day of June 22, 2005, between the Governor of Orissa on the one part and M/s POSCO on the other part.

1. M/s POSCO having its registered office at 1 Koidong-Dong, Nam-Ku, Pohang-City, Kyungsanbuk Province, Republic of Korea, (hereinafter referred to as POSCO, which expression shall, unless repugnant to the context or meaning thereof, include its successors, executors, administrators, representatives and permitted assignees), is proposing to set up an Integrated Steel Plant of a total capacity of 12 million tonnes per annum in the State of Orissa at Paradeep, in Jagatsinghpur district.

2. The Government of Orissa, desirous of utilizing its natural resources and rapidly industrializing the State, so as to bring prosperity and wellbeing to its people, has been making determined efforts to establish new industries in different locations. In this context, the Government of Orissa have been seeking to identify suitable promoters to establish new Integrated Steel Plants in view of the rich iron ore and coal deposits in the State.

3. POSCO will establish an Indian company (hereinafter referred to as the "Company") through their relevant subsidiaries, related companies or third parties nominated by POSCO to invest in the State of Orissa in :

(A) steel manufacturing;

(B) infrastructure necessary for the Integrated Steel Plant and related Projects; and

(C) related mining of iron ore and other ores.

4. (1)The Company is desirous of developing and operating the following facilities on the basis described in this MoU in the State of Orissa with proposed investment of around US$ 12 billion or Rs.51,000 crores (approximately). The details of the facilities are given in the table below :




Capacity in MTPA

Project Details

Project cost in Rs. Crore (Approx.)

Time Schedule

Finished products

Steel Plant with FINEX / BF, along with other facilities like Lime Calcining Plant, Oxygen Plant, Captive Power Plant, Steel Melt Shop with Converters, Casters, Rolling Mills etc. (collectively, the "Steel Project") & Minor Port


6 (in two modules of 3 MT each)

1st Module

Crude Steel

- 3 MTPA

Finished Steel -2.82MTPA


To be commissioned by July 2010 or 36 months from the date of (i) taking title to and possession of land. (ii) registration of the executed prospecting licence,

whichever is later



2nd Module

Crude steel – 3MTPA

Finished Steel -2.82MTPA


To be commissioned by July 2012 or 24 months from Commissioning of Phase - I, Module – I,

whichever is later

Hot rolled Coil (4.5MT),





6 (in two modules of 3 MT each)

1st Module

Crude Steel


Finished Steel -2.82MTPA


To be commissioned by July 2014 or 24 months from commissioning of Phase - I, Module – 2,

whichever is later



2nd Module

Crude steel – 3MTPA

Finished Steel -2.82MTPA


To be commissioned by July 2016 or 24 months from commissioning of Phase - 2,

Module - 1.

Hot Rolled Coil (4.5MT),

Plate, Cold rolled coil

(1.5MT) etc.**

Note: Detailed time schedule for the commissioning of each phase

will be determined pursuant to Clause 18.

* Cumulative of Phase-1;

** Cumulative of Phase-2.

(2) The Company is also desirous of developing and operating the following related infrastructure based on the needs of the "Steel Project", on the basis described in this MoU :

i. mining facilities in the areas allocated by Government of Orissa/Government of India (the "Mining Project");

ii. road, rail and port infrastructure (the "Transportation Project"), including the dedicated railway line from the mine-belt to Paradeep;

iii. integrated township; and

iv. water supply infrastructure (the "Water Project").

(3) The Steel Project will be located at Paradeep. The Mining Project will be established at the mining site(s) that are identified as the mineral resources for the Company.

(4) To achieve the foregoing purposes, the Government of Orissa and the Company agree to be "Partners in Development" and have, therefore, come together to record their intentions through this MoU.

5. LAND :

(i) The Company will establish their registered office and national headquarters in the State of Orissa, in the city of Bhubaneswar. The Government of Orissa will identify, acquire and transfer a suitable tract of land between 20 and 25 acres for this purpose, in accordance with the specifications provided by the Company.

(ii) The Company will require approximately 4,000 acres of land (hereinafter referred to as the "Land") for the purpose of setting up the Steel Project and associated facilities, including the port facilities and a storage yard for coking coal.

(iii) In addition, the Company will require approximately 2,000 acres of land for township development, recreational activities and all related social infrastructure development (collectively, the "Integrated Township Development"). Out of this, approximately 1,500 acres would be identified adjacent/near to the Steel project and another 500 acres (approx.) near the Mining Project.

State Government will facilitate all clearances and approvals of the Central Government, if required.

(iv) In addition to the land required for the core activities of the Overall Project, the Company may require additional land pockets for development of the "transportation project", the "water project" and any other project-related infrastructure facilities.

(v) The Government of Orissa agrees to acquire and transfer all the above-mentioned land required for the Overall Project, free from all encumbrances through Orissa Industrial Infrastructure Development Corporation (IDCO) on payment of the cost of land.

(vi) The Company shall pay to the relevant authority (ies) the cost of such land. For private land, the Company shall pay the cost as determined under the provisions of the Land Acquisition Act and incidental charges as mutually agreed upon. For Government land, the Company shall pay as per the rates determined by the prevailing Industrial Policy Resolution on this date. For forest land, the Company shall pay the rates determined under the applicable Rules.

(vii) On its part, the Government of Orissa will expeditiously and within a reasonable time frame, hand over to the Company non-forest Government land for which the Company has completed all formalities. Acquisition of private land will be taken up on priority.

(viii) For rehabilitation of displaced families, Rehabilitation and Resettlement Package would be implemented as per prevailing guidelines and practices.


(i) Coal : The State Government agrees to recommend to the Government of India for allotment of suitable coal blocks for captive coal mining for the project either directly or through a PSU. Further, the State Government will assist the Company to get the allocation of coal linkage of suitable grade in the desired quantity to meet its requirement until it is ready for mining of its coal block.

(ii) Iron Ore : The Company will need the equivalent of 600 million tonnes of iron ore of an average Fe content of 62%, to meet the requirements of the proposed Steel Project of 12 million tonnes per annum. The Company may swap certain quantities (not exceeding 30% of the total requirement for the Paradeep Plant annually) of such iron ore which have high alumina content with equal quantity of low alumina content iron ore of equivalent or better Fe content imported for blending, in order to produce better quality steel in the Paradeep Project and conserve energy . Any export of iron ore by way of swap will be allowed only after an equivalent quantity of ore has been imported for the plant. The extent of the above quantity of iron ore by way of replacement for equal quantity of import of higher grade iron ore, will be within the framework of the Export-Import Policy of the Government of India applicable from time to time. It is clarified that no export of iron ore will be allowed from the captive mine except by way of full replacement through import of equal quantity of high grade ore and within the limits mentioned above.

(iii) The Government of Orissa agrees to grant prospecting licenses and captive mining leases for 600 million tonnes of iron ore to the Company after following prescribed procedures and completion of required milestones including approvals of Government of India. For this purpose, the Government of Orissa shall recommend to the Central Government and use its best efforts to obtain the Central Government's approval within the minimum possible time for the grant of prospecting licenses and the captive mining leases for the iron ore mines.

(iv) The Government of Orissa will recommend grant of the Prospecting Licences only after the following milestones have been achieved :

a) Formation of the Indian Company referred to in Clause - 3 has been done;

b) Feasibility study has been started and a Detailed Project Report has been commissioned ( July - November, 05);

c) Additional Soil test and site survey has been started ;

d) Preparation of Port Development Plan has been commissioned (July,05 – January,06);

e) Preparation of Industrial Water Development Plan has been commissioned (July, 05 – January,06);

f) Preparation of Township Master Plan has been commissioned (August,05 – March 06);

g) Preparation of Environment Impact Assessment Study has been commissioned (July,05 – January,06);

h) Requisition has been submitted to the Orissa Industrial Infrastructure Development Corporation (IDCO) for acquisition of land for the steel plant as well as the port;

i) The Indian Company is provided with paid up equity to the tune of at least US$ 50 million to enable it to undertake all the preparatory work required for setting up the plant.

(v) The Government of Orissa will recommend such areas as are free from litigation as well as encumbrances. In the event of litigation at any stage, Government of Orissa will diligently defend their recommendations made in favour of the Company in the appropriate judicial, quasi judicial fora.

(vi) Prior to recommending the case of the Company for Mining Lease, the State Government will ensure that the following milestones have been achieved :

a) The Company has submitted the Detailed Project Report;

b) The Company has submitted the Port Development Plan ;

c) The Company has submitted the Industrial Water Development Plan ;

d) The Company has submitted the Township Master Plan ;

e) The Company has ensured that application for Environment Impact Assessment Study has been submitted to the Government of India ;

f) The Company has filed necessary requisition for land for different components of the project with IDCO and has deposited necessary funds;

g) The Company has submitted the rehabilitation and re-settlement package for the oustees to the competent authority and received the approval of Government of Orissa;

h) The Company has submitted the proposal with requisite details for diversion of forest land which the Government of Orissa will recommend to the Government of India;

i) The Company has applied for Coastal Regulation Zone (CRZ) clearance.

(vi) The Indian Company is provided with paid up equity to the tune of at least US$ 200 million to enable it to undertake adequate investment connected with the setting up of the plant.

(vii) Recommendation for the mining lease will be made in two phases, commensurate with the first two modules and the last two modules of 3 million tonnes each. The recommendation will, however, be subject to suitable adjustment of mining blocks. State Government will take a decision pertaining to the first phase after the following milestones have been achieved for the first phase of 6 million tonnes :

a) Award of 50% of orders for civil and structural contracts in terms of value.

b) Placement of 20% of firm orders for machinery in terms of value.

(viii) State Government will make recommendation pertaining to the second phase after :

a) Commissioning of the first module of 3 million tonnes of the first phase has been achieved ;

b) Award of 50% of orders for civil and structural contracts in terms of value for the second phase of 6 million tonnes ;

c) Placement of 20% of firm orders for machinery in terms of value for the second phase of 6 million tonnes.

(ix) The State Government agrees to assist the Company in making a firm arrangement with the Orissa Mining Corporation (OMC) along with other private iron ore lessees in the State, to meet a substantial portion of the requirement of iron ore of suitable grade for initial period of steel making under mutually agreeable terms and conditions, if required by the Company.

(x) All iron ore Mining Leases and Prospecting Licenses shall be clean and free of any encumbrances.

(xi) Before the grant of mining lease, the Company would submit a detailed progress report of all components of the project with reference to the agreed implementation schedule (referred to Clause 18 (ii) hereinafter). The mining lease would be granted subject to the satisfaction of the Government of Orissa that adequate progress has been achieved in all critical parameters.

(xii) The iron ore mining leases shall be granted to the Company initially for a period of 30 years and will be considered for renewal on an application by the Company before expiry, for another 20 years.

(xiii) 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.

(xiv) The Government of Orissa agrees to provide all possible assistance to the Company for acquiring mineral concession for limestone and dolomite within the ambit of the MMDR Act and MC Rules.

(xv) 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 synchronize with the commissioning of its steel plant.

POSCO have requested to source an additional 400 MT of Iron ore from India for their existing steel plants in South Korea. This can be done through a long–term commercial supply arrangement from the open market. Any such trading arrangement shall fall entirely within the domain of the Government of India and will be regulated by the prevailing Export – Import Policy of the Country. No mine-able reserves can be provided by Government of Orissa purely for the purpose of direct exports beyond what has been indicated for value addition in the steel plant of the Company in Orissa in the preceding paragraphs. However, Government of Orissa will assist POSCO in establishing suitable contacts and interfaces with Government of India for this purpose.

(xvi) Chrome Ore : State Government will facilitate suitable long term arrangement with OMC and other lessees for supply of chrome ore to meet the requirement of the plant.

(xvii) Manganese Ore : The State Government would consider assigning appropriate priority to an application of the Company for mineral concession for manganese ore in the State as and when available within the ambit of MMDR Act and MC Rules.

7. WATER :

(i) The Government of Orissa will permit drawal and use of water from the Mahanadi barrage at Jobra in Cuttack or any other suitable source for construction and operation of the Overall Project as per the prevailing rates and appropriate terms and approval of the Water Allocation Committee, subject to availability.

(ii) The Company shall prepare and inform the Government of Orissa within a short period of time, the water requirement for each phase and the total water requirement for each component. The Government of Orissa will facilitate meeting these water requirements.

(iii) The Government of Orissa will permit implementation of a suitable water supply scheme prepared jointly by the Company and the Department of Water Resources, Government of Orissa. The Government of Orissa will allow the Company to operate and maintain necessary infrastructure including creation of water bodies, laying of pipelines etc. to pump required quantity of water for the development and operation of the Project.

(iv) The Government of Orissa will facilitate the process of obtaining various approvals expeditiously for the Company.


(i) The Government of Orissa shall assist the Company to provide adequate drainage and sewerage off-take facilities for each component project during both the construction and operation stages prior to commencement of construction after following all prescribed procedures and obtaining required approvals.

(ii) The Government of Orissa shall facilitate grant of all necessary approvals for provision of such facilities and the discharge of drainage and sewerage into such facilities.

9. POWER :

(i) The Government of Orissa have agreed to ensure that about 25 MW of power is made available to the Company to meet the construction power requirements of the steel plant, port, township and also the mining project. During the operation phase, the Government of Orissa will make best efforts to meet the power requirement of all components of the project including each of its components.

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