POSCO's India project stuck as firm has to bid for iron ore mines

South Korean steelmaker POSCO's $12 billion steel plant in India looks stuck as the company will have to bid for an iron ore licence to feed the 12-million tonne steel project. In line with the government's new policy of awarding mining rights, the South Korean steel major will not be entitled to any firm allotment of mines.

The world's sixth-largest steelmaker, which has so far been caught in environmental and regulatory issues over the past 10 years, cannot ordinarily expect any preferential allocation of mines for exploration.

Minister for steel and mines Narendra Singh Tomar also ruled out an exception to the ordinance which mandates auctions for all new mines.

"Even I'll have to bid for a mine if I want one," Tomar said.

This means an escalation in POSCO's costs, a major setback for the company that was expecting the government to allocate it a mine without any competition.

This will also mean that POSCO will have to start from scratch.

POSCO had earlier scrapped some of its India plans while global steel major ArcelorMittal had scrapped all major projects in India citing difficulties acquiring land and iron ore mines.

Meanwhile, POSCO had, last month, inaugurated a $709 million steel mill in western India with plans to gradually scale up its presence in the emerging market.

POSCO said the company would wait for more clarity before deciding on the next course of action.