India is expected to grant an iron ore exploration licence to POSCO for its planned $12 billion steel plant in the country, two government officials told Reuters, in a step that should speed up the project stuck for eight years.
The Supreme Court in May handed a decision on a licence to the government, raising the South Korean firm's chances of getting access to iron ore for the project billed as India's largest foreign direct investment.
"POSCO India should get the license in a month or so," said a senior government official involved with the decision-making. "The government is looking at it positively."
Another official directly involved in the matter said the government was speeding up the process given that the Supreme Court has already ruled against a lower court order declining a prospecting licence for POSCO.
Prospecting licences are generally valid for three years, after which a prospector has to apply for a mining lease.
Access to iron ore, the main raw material in making steel, is the most important factor in POSCO deciding to set up the plant in India, experts have said.
"We are hopeful that the central government will give its approval soon," POSCO-India spokesman IG Lee told Reuters. The government is currently looking at the legal aspect of the process of granting a licence, another source said.
POSCO first signed an agreement with Odisha in June 2005 to set up the steel plant on 4,004 acres of land. It is seeking 2,700 acres to begin the project's first stage, which involves setting up two 4-million-tonne plants in two phases.
The company is expected to get the land for the first project later this month, two government official said.
POSCO has said that if it gets the required land this year, the first-phase of the plant may be commissioned sometime in 2018. At full production of 12 million tonnes, the project would have accounted for 16 percent of India's total current annual steel output of 76.7 million tonnes.
© Thomson Reuters 2013