POSCO Steel plant

Source: http://petitions.aidindia.org/Posco_2008/posco_petition_background.php


On June 22nd 2005, the state government of Orissa signed a Memorandum of Understanding (MoU) with the Korean steel giant, the Pohang Steel Company (POSCO) [1, 2]. Since then the company has signed more than 40 MoUs with the government. Valued at Rs. 52,000 Crores ($13 Billion), this is India’s largest Foreign Direct Investment (FDI) yet, and involves a 12-million ton integrated steel plant, and the construction of a new port for which over 4,500 acres of land has been designated. The proposed steel plant is expected to affect seven villages in three gram panchayats, namely Dhinkia, Nuagaon & Gadakujang, and will allow POSCO to extract 600 million tons of iron ore over the next 30 years.

The terms of the MoUs require the government to recommend, free of encumbrances to POSCO, mining and prospecting licenses, clearances related to matters of forest and environment, and permits for drawing water from the Mahanadi river. In addition, the government has agreed to defend various recommendations made in favor of POSCO in the eventuality of litigation in the appropriate judicial, quasi judicial areas. Similar facilitation of clearances by the state government for all aspects of the project – the steel plant, mines, roads, railways and port – has been agreed upon. In 2006, the project was granted “Special Economic Zone” (SEZ) status, and the Prime Minister issued a statement saying that land acquisition by POSCO must be expedited.

Impact on People

While reports issued by the Government and by POSCO claim that about 400 families will be displaced by the project, according to figures from the 2001 census, the three panchayats (villages) have 3,350 households, which adds up to 22,000 people who will be displaced. This discrepancy is partly due to anomalies in the Government records which recognize only 438 acres out of 4000 acres as being privately owned, whilst in reality, most of the land has been under betel, cashew and other cultivation by adivasi (indigenous) communities for several generations. This is fertile land, and an average family involved in cashew farming earns about Rs. 20,000 ($500) per season. About 50% of the families are also involved in pisciculture (mostly prawns), for which the daily earnings per family can range between Rs. 100-5000 ($2.50-$125). In addition, there are many landless families that depend on ancillary employment like making baskets for packaging Paan leaves grown in the area.

People living adjacent to the mines (Banspal block) will also suffer various health-related effects. [3] The history of Orissa contains many unfortunate precedents where mines have been set up in Fifth Schedule areas (under the 5thschedule of the Indian Constitution, designated adivasi (indigenous) majority areas are constitutionally protected and alienation of adivasi land is to be prevented in such areas) thus displacing adivasi communities from their forest-based livelihoods. Poor working conditions in the mines have also led to respiratory problems as indicated in the “State of the Environment” report.

The project also requires 286 million liters of water per day [4] which will be extracted from Jobra and Naraj barrages of river Mahanadi, as a result of which the farmers irrigating the lands by the canals of Taldanda, Machhagaon, Birupa of Cuttack, Jagatsinghpur, and Kendrapada district will suffer a great loss. Water extraction in these quantities will also lay additional stress on an already overloaded water system, imposing a threat on water security for the locals, in addition to concerns about water pollution [5].

Impact on Environment

Orissa has some of the largest mass-nesting areas in the world for the Olive Ridley Turtle, an endangered species. The proposed POSCO port site lies between the mass nesting beaches of Gahirmata and Devi River mouth where the offshore waters have a high density of turtles from November to April. In 2007, 130,000 of these animals nested at the beaches along the Gahirmata Marine Sanctuary. The port itself will lie just inland from beaches on which turtle nesting occurs, and less than 30 km from the mass nesting beaches of Devi. Lighting, marine pollution, ship traffic and ancillary development of what is currently largely untouched coastline will pose a long term threat to the species[10]. Similarly, the proposed port will endanger several species of fish in the Jatadhari estuary, additionally impacting the livelihoods of fishing communities.

The project involves the felling over 280,000 trees [6] which will directly affect the dense forest covers in the Gandhamardhan and Malangatoli areas. Mining will also affect the Kandadhar waterfall, a famed tourist destination. The new port might entail erosion , thereby threatening the existing government port in Paradeep [7]. POSCO has applied for environmental clearance for different parts of the project separately rather than as a whole in the hope of expediting clearance.

Implications of SEZ status

POSCO gets a 10-year tax-break as a result of its being granted SEZ (Special Economic Zone) status by the central Government. Land will also be sold to POSCO at a lower than market price. These impose significant costs to the exchequer [8]. The SEZ status of this project also removes it from the purview of the local panchayat governments, thus further decreasing the control of the villagers over their local environment. Further, the SEZ status also grants immunity to POSCO from adherence to hard-won labor and environmental laws designed to protect employees.

The number of jobs created due to the steel plant is supposed to number 13,000 and it is claimed that another 48,000 indirect jobs are likely to be created. These numbers do not justify the subsidies granted to the project, including the discounted price of Rs.2000 ($50) per ton of iron ore.

Relief and Rehabilitation:

Since government records recognize only a small fraction of the total number of affected people, most of them will not receive the compensation or rehabilitation they are entitled to. The residents of the area have been growing betelnuts, cashew nuts and paddy, and also engage in pisciculture. No other land in the immediate neighborhood is viable to grow these crops. The POSCO plant will uproot the farmers from a livelihood that they are skilled at and trained for, and convert them to unskilled labor, and transfer them to non-guaranteed jobs in the construction of the plant, port and other facilities.

State-sponsored violence:

The situation in Orissa and the tactics being used by the government are similar to those employed in Kashipur, Kalinganagar, and more recently in Nandigram, West Bengal, where villagers resisting the takeover of their farmland for the construction of an automobile plant were shot and killed by the police. Villagers opposed to the POSCO steel plant are being intimidated by the use of force, including the use of paramilitary troops. During the statutory public hearings in April 2007, the State stationed 15 platoons of armed paramilitary forces in the area thus silencing the expression of local opposition to the project. Amnesty International, the human rights organization, issued a report [9] urging the Government of Orissa against the use of force, and to follow the democratic process.

Such is the level of distrust between the people and the government that the villagers have installed barricades and check posts around their villages. This has resulted in a state of siege where paramilitary troops that have surrounded the village are controlling access to food and medicines. In November 2007, the Orissa State Police captured and occupied 20 local schools thus directly violating the children’s right to education. The National Human Rights Commission has been asked to intervene in this use of schools for non-educational purposes.

References and additional reading:

[1] “Uneasy Quiet on the POSCO front,” India Together, Oct 2007. http://www.indiatogether.org/2007/oct/eco-posco.htm

[2] “Striking while the Iron is hot. A case study of the Pohang Steel Company’s proposed project in Orissa, India, ” Manshi Asher , June 2007. http://epgorissa.googlepages.com/POSCO_FinalCaseStudy_Unpublished.pdf

[3] “Mines of Conflict”, Prafulla Das, Frontline, Nov. 19-Dec. 2, 2005. http://www.flonnet.com/fl2224/stories/20051202002304000.htm

[4] “SEZs could create a water crisis,” Himanshu Thakkar, Rediff, April 17 2007. http://in.rediff.com/news/2007/apr/17sez.htm

[5] “Groups Protest Violence Against Anti-Mining Activists”, Prakrutik Sampada Surakshya Parishad (PSSP) . Press release, Feb 1, 2005.


[6] “Posco: SC panel says take stock of ecological impact,”. Times of India, Jan 4, 2008. http://timesofindia.indiatimes.com/India


[7] http://www.thehindubusinessline.com/2006/08/04/stories/2006080402460700.htm

[8] “SEZ Rush in India,” Property Bytes Blog. http://propertybytes.com/?p=524

[9] “Orissa should avoid forced evictions in Jagatsinghpur, instead consult farmers protesting against displacement,” Amnesty International Statement on State force build-up in Jagatsinghpur, Orissa. April 11, 2007. http://sanhati.com/news/193/

[10] Olive Ridley Turtle . Wikipedia page: http://en.wikipedia.org/wiki/Olive_Ridley

[11] http://www.frontlineonnet.com/fl2908/stories/20120504290803500.htm


Posted on October 27, 2011, in Uncategorized and tagged . Bookmark the permalink. Leave a comment.

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