New Delhi: In an unprecedented move the Indian subsidiary of the world's third largest third largest steel maker, Posco, today signed a shareholders agreement with Rail Vikas Nigam Limited (RVNL) to participate in a special purpose vehicle (SPV) for the Haridaspur-Paradeep railway line in Orissa.

RVNL will build a new 82-km broad gauge rail link between Paradeep port and Haridaspur, which is a virtual extension of the iron ore belts of Bansapani-Tomka where Posco-India's captive mines will be located.

The SPV has been formulated by RVNL to operate the rail line through a public-private partnership on build-operate-transfer basis for the concession period.

Posco India has acquired a 10-per cent equity stake at an investment of Rs27.5 crore and will have one director on the board of the SPV. The railway project envisages a total
capital expenditure of Rs598 crore.

According to Posco India, this infrastructure will prove beneficial for the entire steel sector in Orrisa. This will help to secure assured and competitive rail transportation for iron ores between the mines and the plants. This new rail link will reduce the distance from the existing Haridaspur-Cuttack-Paradeep line by 41km.

Posco has made a guaranteed commitment of 6.48MPTA traffic in the first phase.

It says that a 12-MPTA capacity integrated steel plant requires diverse raw materials like iron ore, coal, limestone and various auxiliary materials and estimates the tonnage of raw material, finished steel products and slag movement by rail to be 9 MPTA during the first phase 19 MPTA in the second phase and 30 MTPA in third phase.

Speaking on the occasion, Soung-Sik-Cho, CMD, Posco-India said, "Participation in the SPV is yet another step towards our commitment to support the steel sector on a long term perspective. We are very happy being a part in the emergence of Orissa as the steel hub of the world in the coming days."