India approves bid by Korea’s Posco to build $12-bln steel plant in Orissa

India's environment ministry has conditionally approved an application by Pohang Iron and Steel Company (POSCO), the South Korean conglomerate to construct a steel plant in the eastern state of Orissa.

The proposed $12-billion plant would be India's biggest foreign investment project. Based in the port city of Paradip, the site is expected to create almost 50,000 jobs.

Under the conditional arrangement, POSCO would have to spend a portion of profits on corporate social responsibility and adhere to restrictions on construction of the port in sensitive coastal areas, among various other terms.

Projects such as that of Posco have considerable economic, technological and strategic significance for the country, the environment ministry said in a statement. At the same time, laws on environment and forests must be implemented seriously.

The battle to build the plant has pitted government panel citing India’s rising steel demand against environmentalist and other critics who warn the project will lead to the exhaustion of iron deposits within two decades.

In fact, the India government had earlier rejected –on environmental grounds -- a proposal by Indian mining company Vedanta to extract bauxite in Orissa.