‘No official word from Posco freezing project’

Bhubaneswar: Two days after media reports emerged about South Korean steel behemoth Posco ‘freezing’ its Rs 52,000-crore green field project in Jagasinghpur district, the State government today went into a damage control mode saying the company has not intimated about such a decision.

“We got the information from media only and the company has not informed us about freezing of the project. And we are hopeful that the project will take off,” Steel and Mines minister Prafulla Mallick said.

“The State government has cleared its stand on the project. Besides, there is no issue in the State so far as industrialisation is concerned. Out of 49 MoUs, so far 32 have been executed. And we hope that the remaining projects will see the daylight soon,” the minister further said.

On Wednesday, media reports quoting Posco officials said that the steel giant has put on hold its 12-million tone per annum (mtpa) multi-purpose project in the State due to delays in various regulatory approvals.

“We are tentatively suspending the Odisha (India) project due to lack of any progress,” reports quoted Posco chairman and CEO Kwon Oh Joon as saying.

“Business conditions at home and abroad have changed due to drop in global steel demand, growing deficit of subsidiaries, which have led us to come to a conclusion that we must step up our reform efforts,” he said at an investor event in Seoul.

However, the steel major’s India spokesperson said that it is not quitting Odisha, even as its over USD 12 billion project has been hanging fire for almost a decade.

“That is not the fact. Due to no progress in the project area, much of office space was lying vacant in Odisha. It was decided to renovate the office space to a smaller area,” the spokesperson said on being asked to clarify about the reports.

Posco has been facing problems in commissioning the mega project on account of delays in raw material security, land acquisition as well as other clearances.

The company is reducing its unused office space and other expenditure that can be stopped as part of a massive global cost restructuring programme, said a person in the know of the developments.

Posco has announced the restructuring programme, which involves reducing “30 per cent of the overseas business within the group”.

This will involve “early turnaround of newly run overseas business” as well as “dispose/liquidate/merger non-core business within the group”, the reports said.