South Korean steel major Posco has sounded out unlisted Essar Steel for an alliance to build the planned the 12-million tonnes a year steel plant in Orissa, according to a report. Posco has sought so far to build the $12-billion mega-plant on its own; but the project has run into repeated environmental and land acquisition hurdles since the world's fifth-largest steel maker signed the construction agreement with the state government in 2005.
''They (Posco) have approached us (Essar Steel) through a third party to help revive the Orissa steel plant,'' The Financial Express quoted a person with direct knowledge of the development as saying. ''We are yet to respond to Posco's proposal,'' the person added.
Posco did not respond to questions in this regard.
Posco's move comes after the suspension of the environmental clearance for the project by the National Green Tribunal on 30 March. Analysts also see it as a sign of realisation on the part of the Korean company that the joint venture route, preferred by Japanese steel makers for their Indian plants, could be a more pragmatic approach in the Indian context.
Posco's is by far the largest foreign direct investment proposal for India.
Essar Steel is part of the Essar Group, owned by billionaire brothers Shashi and Ravi Ruia. It owns plants with a combined capacity of 10 million tonnes in India and has another five million tonnes capacity overseas.