KOLKATA (miningweekly.com) - India’s federal government would intervene in the grant of a prospecting licence to South Korean steel major Posco, a crucial step for its $12-billion steel plant in the eastern Indian province of Odisha, which has been hanging fire for over a decade in the absence of iron-ore linkage.

A proposal has been received from the provincial government seeking a prospecting licence in favour of Posco across 2 082 ha of notified land with iron-ore reserves. The matter was now under consideration as the local and central governments were extremely keen that the steel project gets under way despite the delays, a Mines Ministry official said.

This was the third time that a proposal for a prospecting licence in favour of Posco had been submitted to the federal government in the last ten years.

However, officials at the provincial level involved in facilitating in what could be India’s largest foreign direct investment, continued to be sceptical over the Mines Ministry’s claims that the prospecting licence was under consideration.

These officials pointed out that in January 2014, then-Prime Minister Manmohan Singh had said that “the prospecting licence was in advanced stage of processing,” but 12 months later, Posco was still without any raw material linkage without which the eight-million-tonne-a-year project would not see the light of day.

Ironically, while various levels of governments have failed to offer raw material linkage to Posco for the last ten years, the provincial government of Odisha has not yet renewed a memorandum of understanding signed with the steel major in 2005, on the grounds that Posco had not achieved the milestones stipulated in that agreement.

In a desperate bid to hasten up the protracted process of allocating iron-ore resource to Posco, the provincial government split up the Khandahar iron-ore reserves into 2 500 ha of iron-ore bearing land as `notified’ and 417 ha as ‘non-notified’.

Government procedures for grant of prospecting licence and mining lease were supposed to be easier in case of notified land than non-notified land.

On October 10, the Mines Ministry sought clarification from the Odisha government on its recommendation for grant of prospecting licence to Posco India, with the Ministry seeking that local government submit two separate recommendations for notified and non-notified iron-ore-bearing land. In response to this, the Odisha government had submitted that two prospecting licences be granted for differently classified land.