NEW DELHI, May 10 (Reuters) – POSCO’s planned $12 billion steel project in India moved a step forward on Friday after a court handed a decision on a mining licence to the federal government, raising the South Korean firm’s chances of getting preferential access to iron ore.
The world’s fourth-largest steel producer has waited eight years to get necessary clearances, land and an iron ore mining licence to start work on the project, billed as India’s largest foreign direct investment.
While the project planned in eastern Odisha state may still face hurdles from protesters and over issues such as land ownership, a supportive federal government is expected to clear the path for POSCO’s top concern – a captive mine that will give it steelmaking raw material iron ore.
“This is positive for the company because the central government has been supporting this project,” said Rakesh Arora, a metals expert and head of research at Macquarie Capital Securities (India). “There’s no doubt that without iron ore, this project was not starting at all.”
India was concerned about the delays and Prime Minister Manmohan Singh himself is monitoring the project’s progress, Trade Minister Anand Sharma had said in January.
In Friday’s order, Justice Sudhansu Jyoti Mukhopadhaya of India’s Supreme Court also quashed a lower court’s ruling that prohibited POSCO from mining iron ore.
Shares of POSCO, which counts billionaire investor Warren Buffett as a shareholder, cut their losses after the news to end down 1.24 percent, in a wider Seoul market that closed 1.8 percent lower.
“We believe that this will significantly help to expedite the project,” Y. W. Yoon, chairman and managing director of POSCO India, said in a statement. “We are happy that it has come at a time when there has been significant progress on the land clearance work for the project.”
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