India's Orissa state is set to clear the way for a $12 billion steel plant deal with South Korea's POSCO by allowing it swap exports of low-grade iron ore for imports of high-grade ore, a senior official said on Sunday. Allowing POSCO to export the ore has been the main obstacle to what would be the single largest foreign investment in Asia's fourth-largest economy.
A part of the iron ore mined in the eastern state has a high alumina content and POSCO has been seeking permission to export this grade of ore, which it says it cannot use in its proposed Indian plant.
"We are on the verge of finalising the deal which will allow POSCO to swap the quantity of poor quality iron ore they take out with an equal quantity of higher quality ore," a senior Orissa government official, who declined to be named, told Reuters by phone from the state capital Bhubaneswar.
"It should be cleared in the next 10 to 15 days."
Previous reports have suggested the total value of the deal to be around $10 billion, but the official said POSCO planned to raise its investment.
"Their total investment will be $12 billion over the next 30 years," he said, adding that POSCO was upping its initial investment to spend another $2 billion on infrastructure.
The project includes building a 12-million-tonne steel plant, a 30-million-tonne iron ore mine, a mill for making hot-rolled coil and a sea port and would be more than triple the value of the now mothballed Dabhol power plant.
The Financial Express reported that POSCO had recommended the plan to export Orissa's ore in exchange for imports of higher-grade ore for blending after local political opposition to POSCO's initial export plan.
"This will be a positive for Orissa as what they take out will be poor quality ore which has high alumina content and they would in turn bring in a grade of ore that is low in alumina and superior in quality from Brazil," the official said.
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