PROCEEDINGS (XIV Lok Sabha) POSCO Project in Orissa...

PART II PROCEEDINGS OTHER THAN QUESTIONS AND ANSWERS (XIV
LOK SABHA)
Title : Shri Basudeb Acharia called the attention of the Minister of Mines to the situation
arising out of recent agreement of Orissa Government with Korean Steel Major POSCO
allowing them to export mineral wealth of the country and steps taken by the Government
in this regard.
SHRI BASU DEB ACHARIA Sir, I call the attention of the Minister of Mines to the
following matter of urgent public importance and request that he may make a statement
thereon :
“Situation arising out of recent agreement of Orissa Government with
Korean Steel Major POSCO allowing them to export mineral wealth of the
country and steps taken by the Government in this regard.”
SHRI BASU DEB ACHARIA : Madam Chairperson, the Memorandum of Understanding
between the Government of Orissa and POSCO of South Korea will facilitate ...(Expunged as
ordered by the Chair) of such scarce mineral iron ore of Orissa. You will be surprised to know
that a huge concession is being given to this particular company. They will set up a steel
plant at Paradeep.
SHRI ARJUN SETHI (BHADRAK): Madam, I would like to draw your kind attention to
his words. The hon. Member, while speaking, has said that 'it will facilitate … of mineral
wealth'. Will it go on record? No Government, whether the Central or State, will …
(Interruptions)
… (Interruptions)
SHRI B. MAHTAB (CUTTACK): If Shri Basu Deb Acharia is going to suggest what
should be the MoU to be entered by the Government of Orissa, let him come up with the
proposal. … (Interruptions)
SHRI BASU DEB ACHARIA : Madam, I have every right to say. If I have used any
unparliamentary words, you can expunge them. I have not used any unparliamentary
word.
SHRI BASU DEB ACHARIA : They will set up a steel plant with capacity of 12 million
tonnes and captive iron ore mines will be given to POSCO[reporter36].
They will extract 600 million tonnes of iron ore from the captive mines. The Steel
Plant will be set up after 33 months from the day of the company getting the licence. Why
such favour is being given to this particular company? They will start extracting iron ore
immediately after the issuance of licence, although the permission and approval of the
Central Government will be required in it.
Out of 600 million tonnes of iron ore, 30 per cent will be exported to Brazil as the
iron ore in Orissa has high percentage of Alumina. On the other hand, they are being
allowed to import similar quantity of iron ore from Brazil, which has lower percentage of
Alumina. Over and above 600 million tonnes, this company will be permitted to export 400
million tonnes of iron ore for their own steel plant in South Korea. It means that 600 million
tonnes per 1,000 million tonnes of iron ore this company from South Korea would get from
Orissa.
Madam, we have 18 billion tonnes of iron ore in our country, and Orissa has 4.5 billion
tonnes of iron ore. Nearly 36 MoUs were signed with various steel manufacturing
companies prior to this MoU. The total capacity for it would be about 40 million tonnes
of iron ore. What was the price at which they were permitted to purchase iron ore from
the Orissa Mineral Development Corporation at the time of signing these 36 MoUs?
They were permitted to purchase iron ore at the market price. What is the price of one
tonne of iron ore today? It is Rs. 2,000. But in the case of POSCO, the cost of extraction
or the total cost of production per tonne of iron ore would be only Rs. 400. Why is there
such a difference in it? Why this particular company is being permitted to take iron ore at
a much lower price? How much will be the loss to the State of Orissa as a result of the
lower price that has been fixed in the MoU? The loss for the Government of Orissa
would be about Rs. 1.20 crore.
Moreover, the steel plant would be set up in the Special Economic Zone (SEZ), and
it would mean that this company would enjoy concessions in income tax, excise duty, and
other taxes. How much would be the loss for the Government of Orissa on this account?
MADAM CHAIRMAN: Mr. Acharia, please be brief. I am saying this because there is
another Calling Attention to be taken up after this. Therefore, please put your question to
the hon. Minister[ak37].
SHRI BASU DEB ACHARIA : I am coming to the question, Madam.
This company first tried to have an MoU with the Government of Brazil. Brazil has
the largest deposits of iron ore. With the same conditions, which the Government of Orissa
has agreed to, the company went to Brazil. But the Government of Brazil did not agree to
those conditions. They agreed to provide iron ore at the market price. The Government of
Orissa has signed an MoU to supply iron ore at a much lower price. Madam, what will be the
benefit for the people of Orissa? A thousand acres of tribal land will be acquired. Total
employment will be only 13,000 as per the statement of the Government of Orissa.…
(Interruptions)
SHRI DHARMENDRA PRADHAN : This is totally wrong information. … (Interruptions)
MADAM CHAIRMAN : I will give time to your leader and he will have his say.
SHRI KHARABELA SWAIN : There is no tribal there. … (Interruptions)
SHRI BASU DEB ACHARIA : In the MoU, rehabilitation and resettlement of tribal people
has not been provided.
SHRI BRAHMANANDA PANDA (JAGATSINGHPUR): He has absolutely no
fundamental idea about what he is talking about.
MADAM CHAIRMAN: Shri Acharia, now there is no point. Please conclude.
SHRI B. MAHTAB : Shri Acharia had himself migrated from Orissa. He should not forget
that fact. I am just reminding him of his ancestors.
SHRI BRAHMANANDA PANDA : The learned Member should have a fundamental idea
of the point before speaking on it.
MADAM CHAIRMAN: Shri Acharia, please conclude now. There is another Member to
speak from your own party. Within two minutes, you will have to conclude.
SHRI BASU DEB ACHARIA : Madam, the Koreans are being given this iron ore despite
India not having enough iron ore reserves even to last for 50 years. Our per capita
consumption is the lowest among the developing nations; it is only 32 kgs. However, the per
capita consumption in China today is 270 kgs. This will not remain at this. Our per capita
consumption will increase. Our demand also will rise. If 30 per cent of the reserves are given
to this particular company, what will happen to the other steel manufacturing companies?
SHRI B. MAHTAB : In China?
SHRI BASU DEB ACHARIA : Already 36 MoUs have been signed. They require huge
quantities of iron ore. I would like to know from the Minister of Mines or the Minister of
Finance, whosoever replies … (Interruptions)
THE MINISTER OF FINANCE (SHRI P. CHIDAMBARAM): The Minister of Mines will
reply.
THE MINISTER OF MINES (SHRI SISH RAM OLA): I will give the reply.
MADAM CHAIRMAN: Shri Acharia, put your questions please.
SHRI BASU DEB ACHARIA : I would like to know from the hon. Minister as to
how the future requirement of our country will be met. Why such a concession has been
given to this particular company? Why POSCO was not offered market price, as has been
offered to the other 36 companies who will set up the steel plants in the State of Orissa? The
capacity will be about 40 million tonnes. Why in their case it is market rate of Rs.2000 or
Rs.3000, but in the case of POSCO it is only Rs.400?
SHRI B. MAHTAB : Who will give this answer? The Minister of Mines is not capable to
answer this question.

MADAM CHAIRMAN: He will say something. I am giving him chance. It is all right.
SHRI B. MAHTAB : This question can only be addressed to the Orissa Government. This
question has no scope to be answered by the Minister of Mines[KMR38].
Now, there is a need for mines policy. Should not there be a detailed discussion?
There should be a detailed discussion on mines policy before MoUs are signed. …
(Interruptions) Before it is exhausted, the Government of India should announce the mines
policy.
MADAM CHAIRMAN : Keep something
for your own party Member. Now, please conclude.
SHRI BHANWAR SINGH DANGAWAS (NAGAUR): According to the rules, he can be
given only 10 minutes.
MADAM CHAIRMAN: I am looking into it.
SHRI BASU DEB ACHARIA : The Minister of Mines has stated in his statement that the
Ministry of Mines will examine the proposal in detail because the Government of Orissa has
not sent the proposal for approval in accordance with law and in consultation with the
concerned Ministry. When an application is received duly forwarded by the State
Government, the views expressed by the hon. Members here in this House today will be
given due consideration. I would like to know from the Minister, in view of the widespread
criticism in the country in regard to the MoU signed by the Government of Orissa and
POSCO.. … (Interruptions)
SHRI B. MAHTAB : All newspapers supported this MoU. … (Interruptions)
SHRI BASU DEB ACHARIA : Apprehensions have been expressed here about the favour
shown to a particular company and the financial loss for the Government of Orissa as well
as the Government of India. Will the Government of India before approving this
proposal... … (Interruptions)
SHRI ARJUN SETHI : Madam Chairman, my point is.... … (Interruptions)
MADAM CHAIRMAN: You will get time.
SHRI ARJUN SETHI : My point is that whenever any subject concerning the State
Government comes before the House, the same is not allowed. … (Interruptions)
SHRI BASU DEB ACHARIA : But people are complaining...… (Interruptions)
There cannot be any conflict of interest between the development of a State and the
nation development. After all, it is all national resource and if Orissa prospers, the national
also will be benefited. It is a national prosperity. So, there cannot be any dispute about
Orissa's prosperity and the national prosperity. But the issue is that the basic national
resource is limited. We should use it judiciously and carefully taking into account particularly
our per capita steel consumption. What is the projection of demand in the perspective plan
for the coming 20 or 50 years or so when India is emerging as the fast growing economy?
Finance Ministry is always claiming that we are emerging as a very fast growing economy.
We are the fastest growing economy. … (Interruptions) Steel is the key sector. carefully
protect your legal interest, your constitutional interest and your economic interest. But what
I want to know from the Union Government is this. According to Section 5(1) of the Mines
and Mineral Development (Regulation) Act, 1957, the Union Government had given the
prior approval[R39].
On what criteria was the approval given? Did they know that there was going to be
a clause of a swap? If that clause of a swap was taken into consideration, whether the
technology concerned was also taken into consideration? It is because, the technology being
brought in our country is not the latest one… (Interruptions) I am one with the claims made
by our steel majors. I am not naming them.
SHRI B. MAHTAB : Why are you not naming them?… (Interruptions)
SHRI RUPCHAND PAL : Many of our public sector and the private sector steel majors
have stated that they are capable of providing this technology but they are not being given
equal status and there is no level-playing field. What is being given to the multinational
company, had it been given to our steel majors, they could have provided Orissa a new steel
plant with the latest technology. But it is not being done, and it is being denied to them.
(Interruptions)
(Interruptions) … *
SHRI RUPCHAND PAL : Madam, I am asking the Union Government whether there has
been a level-playing field or not.
There was a story about the high alumina content and the technology involved in the
process, what is called the Fenic Process. Does it suggest that we, in the process of our
development of the steel technology, are not at a stage where we could match the technology
and resources that are being provided by the current steel major, who badly needs our
precious underground process, which the world over is yet not planned in a judicious
manner, which is being given a go-bye by the Orissa Government and approved by the
Union Government?
I charge the Union Government whether they have applied their mind before giving
prior approval.
SHRI ARJUN SETHI : Madam, I am very much thankful to the hon. Minister of Mines for
narrating, in detail, in his statement about the MoU that has been signed recently by the
Government of Orissa with the Korean steel major, POSCO. The statement of the hon.
Minister reveals everything. It also clarifies whatever allegations or points have been raised
here. This particular MoU could be possible only because the Government of India -- the
hon. Finance Minister is present here -- have allowed 100 per cent FDI in the mining sector.
In consequence of this particular announcement, this MoU could be possible. Otherwise,
no such MoU could be possible. So, only after the policy decision of the Union
Government to allow 100 per cent FDI in the mining sector, the MoU was signed between
POSCO and the Orissa Government. Madam, the statement of the hon. Minister of Mines
specifically says: “However, the Ministry of Mines is yet to receive any proposal for grant of
prospective licence or the mining lease to M/s. POSCO through the State Government of
Orissa[k40].”
I am simply astonished that incidentally all the hon. Members are from West Bengal.
Fortunately or unfortunately, we do not pull your West Bengal. This is the history. … *
SHRI ARJUN SETHI : Madam, my point is that the Orissa Government is very much
competent, with the approval of the Central Government on policy matter, to enter into
MoUs provided those MoUs do not go against the policies of the Central Government. If
this is so, why are they so much worried? Nothing has yet been achieved. The Orissa
Government has not yet sent the proposal to the Central Government. As has been stated
here by the Government, they will look into the details. They will have consultation on
everything. Why are they still so much agitated about this particular MoU? When the
Government of India has declared that hundred per cent foreign direct investment is very
much there, why are they very much opposed to it? If there is anything - I won’t go into the
details - the Government of Orissa is competent enough to discuss that with the
Government at the Centre. At that point of time, the Central Government can decide
everything on merit. So, there is no point in saying that it has gone against the interests of
the country.… (Interruptions)
MADAM CHAIRMAN: Arjun Charanji, you know that, as a leader, if you want to ask
anything from the Union Government, you can do so by putting questions.
SHRI P. CHIDAMBARAM: If you have some questions, just put them… (Interruptions)
SHRI ARJUN SETHI : Madam, I would like to know whether the lease would be governed
by the Minerals and Metals (Regulation and Development) Act. If so, will the hon. Minister
assure the House that the Government would grant licence to the Government of Orissa as
well as the steel major when it conforms to the provisions of this particular Act?
Madam, it has been said that some amount of minerals will be exported to other
countries, that is, Korea and Brazil. It has been pointed out here and incorporated in the
MoU that swap will be permitted up to 30 per cent provided the POSCO equally imports 30
per cent of the minerals[pkp41].
Moreover, it has also been mentioned in that particular MoU that after having gone
into the details etc., if it is found that it has alumina content to the permissible limit, then
there will be no need of exporting or importing. It has been mentioned there.