POSCO Chairman Kwon Oh-joon answering to questions of reporters after attending the 39th Steel Industry Development Forum held at the POSCO Center in Daechi-dong, Seoul, on August 25./ Photo: Newsis

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By Ha Man-joo, India correspondent, AsiaToday - As the Government of Odisha offered to set up a joint venture, POSCO is in a dilemma as it virtually gave up the steel plant project.

A leading Indian business newspaper, Business Standard, reported on Wednesday that the Odisha government offered POSCO various options, which are to either establish a joint venture (JV) with the state-run Odisha Mining Corporation (OMC) or be given OMC's iron ore mines, or enter into a JV with a public sector steel company such as Steel Authority of India (SAIL) for the project, at the meeting called by the Prime Minister's Office (PMO) held on Tuesday on the POSCO-related issue.

The PMO has convened a meeting on Tuesday to resume POSCO's Odisha project in jeopardy. The meeting was attended by Prime Minister's Principal Secretary Nripendra Misra, Mines Secretary Balvinder Kumar, Steel Secretary Rakesh Singh, Odisha Chief Secretary GC Pati, and POSCO India CMD Sung Ji-woong.

POSCO asked to solve land expropriation issues and provide to the firm the first right over the mines in order to resume the project. It's not known whether there was a new proposal for land expropriation issue in the meeting.

“As the Centre has said Posco is not eligible for a mining lease on a preferential basis, we will offer them long-term iron ore linkage through Odisha Mining Corporation,” said a senior government official.

POSCO's response is not known yet. However, POSCO chairman Kwon Oh-joon said, "The Odisha project will be restarted at any time if the conditions are favorable," at the 39th Industry Development Forum held at the POSCO Center in Seoul on Tuesday.

Several challenges must be solved in order to resume POSCO's Odisha project. Posco's drastic restructuring of its business and the world steel oversupply problems are some of negative factors. Distrust between POSCO and the Odisha government is also a problem. Most of all, the land expropriation issue is the toughest one to solve.

In addition, POSCO is concentrating all its strength on building a steel plant in Maharashtra with Uttam Steel & Power. So it's not certain whether POSCO could carry forward its Odisha project.