Though South Korean steel maker POSCO is keen to revive its joint venture (JV) with Steel Authority of India ltd (SAIl) for setting up a 3 million tonnes per annum capacity plant in Bokaro (Jharkhand), it may find it difficult to stick to its earlier demand of seeking majority stake in it, as certain clauses in the Mining Ordinance are heavily loaded in favour of State-owned Indian companies.
With the Mining Ordinance entails auction of leases, it further says that State-owned companies or Public Sector Undertakings (PSUs) which are desirous of seeking prospecting lease (Pl) through the joint venture (JV) route with any other entity, will have to select the partner through a competitive process. Also in this kind of a joint collaboration, the Government company will hold more than 74 per cent of the paid up capital.
In the light of this fact, POSCO may have to forego its earlier stand of seeking majority stake in the project, once it takes off. The world's fourth largest steel maker earlier had sought 51 per cent stake in the JV for the project, on the fact that it was to bring its patented FINEX technology of steel making.
The Pioneer had reported on January 22 about POSCO's India head as well as the South Korean Ambassador having met Prime Minister Narendra Modi on January 21, where the Bokaro project was also discussed. According to sources, the steel major may not like to forego the opportunity which the ordinance provides through the JV route for seeking mining lease, considering that its ambitious 12 million tonnes capacity Odisha steel plant project faces prospects of further delays, owing to the same ordinance which entails auction of mining leases. POSCO will now have to bid for the Khandadhar iron ore reserves, which it had been aggressively seeking since quite some time for meeting the raw material requirements of the Odisha plant.
Highly placed sources confirmed to this newspaper that the Government has taken a positive note of POSCO's keenness to revive the Bokaro project, which they confirmed had come up for discussion during the meeting between the Prime Minister as well as Mines & Steel Minister Narendra Tomar. POSCO officials did not discuss the Odisha project during the two meetings, sources claimed.
They added that the provision of the Indian partner having more than 74 per cent stake is in the JV for conducting the prospective operations (or seeking mining lease). Therefore the decision regarding which company (POSCO as well as SAIl) will have greater stake in the JV for the Bokaro steel plant project, could be decided at the commercial level.
However considering the fact that POSCO is currently on not a very strong ground owing to the delay its Odisha project faces, and therefore having initiated the move to revive the Bokaro plant JV with SAIl, sources pointed out that deciding the majority partner in it may not be that difficult.
Moreover the ordinance further says that if a Government company or corporation plans to seek prospecting operations through the JV route, then it will have to select the joint venture partner through a competitive process. With the advantage clearly loaded in favour of SAIl in the mining part of the project, if the Bokaro project does take off, POSCO may not get much leg room in the JV for managing the project, said industry sources.
