By Krittivas Mukherjee
NEW DELHI, Nov 5 (Reuters) - South Korea's POSCO wants to build a $12 billion steel mill in eastern India, but the project has faced delays because of environmental worries and protests by local residents concerned about the mill's impact on their agriculture-based livelihoods.
Here are some questions and answers about the project, which has already been delayed by three years:
WHAT IS THE PROJECT?
The world's third-largest steel company wants to set up a mill in the eastern state of Orissa to produce 12 million tonnes of steel every year. POSCO also has plans to build a 6 million tonnes-a-year plant in the southern Karnataka state and another mill to produce 3 million tonnes a year in central India.
But the Orissa plant has faced problems, mainly over clearance from the environment ministry.
WHY IS THE PROJECT IMPORTANT?
The plant in Orissa is billed as India's biggest foreign direct investment, and its progress is being watched by prospective investors as a reflection of India's investment climate. The prime minister's office is monitoring the project, signalling the importance the government accords it.
The South Korean company is among several corporations, including London-listed Vedanta Resources, whose Indian projects have come under scrutiny by an environment ministry that has been tightening rules.
That has often brought it into conflict with other government departments pushing for rapid industrialisation.
WHAT ARE THE CHANCES OF THE MILL BEING CLEARED?
Highly likely. Optimism for the project has risen, given its progress is being monitored by the office of pro-reform Prime Minister Manmohan Singh.
Ramesh has also said POSCO's project was "fundamentally different" from Vedanta, whose mining plans were scrapped by him along with a proposal to expand its alumina refinery.
One of the earlier panels had also said POSCO's mill would not displace tribespeople.
WHAT ARE THE PROBLEMS FACING THE PLANT?
POSCO signed the agreement for the Orissa mill in 2005 and was scheduled to begin production by end-2011, but local protests, environmental worries and litigation over the related mining concession have delayed the project.
In August, India's environment ministry ordered a halt to all work on the project, including land acquisition, while a panel investigated if the Forest Rights Act that seeks to protect forest land and settlers had been violated.
That panel gave a split verdict after which Environment Minister Jairam Ramesh asked a new expert panel to review whether the proposed mill can be given green clearance.
The committee's findings are not binding and the final decision lies with Ramesh.
POSCO faces another problem: a local firm also seeking a concession has challenged the concession granted to the South Koreans, and is proceeding with a legal case against the Orissa state government.
The decision on the mining concession lies with Supreme Court, but the litigation is unlikely to hold back the mill's construction once the green nod is given. (Editing by Bryson Hull and Miral Fahmy)