As the ministry of environment & forests (MoEF) gears itself to give a final verdict on the steel giant Posco next week, several financial consultants researching on this `51,000-crore mega project have questioned the MoU signed between India and South Korea.
Sulakshan Fontana, who works closely with Navdanya, questions how the Indian government has agreed to sign a deal where it stands to forego `300,000 crores in profits because the royalty fixed by them is much lower than the actual price of steel.
“India will be paid a royalty for the iron ore at `27 per tonne while the value of the ore has already jumped to around $150 per tonne?” she asks.
“A great deal is being made out about it being the largest FDI project in India but little has been told to the general public that although the company will be investing `52 crores per year over a period of 30 years, it stands to make a profit of `6,500 crores per year from the eighth year onwards from the sale of steel alone. It will make an additional profit from the 400 million tones of iron ore that will also be exported to South Korea.” Ms Fontana revealed.
Ms Fontana also questioned as to why nearly one lakh displaced villagers in Jagatsinghpur, who were being evicted from the 4,004 acres of land to build the steel plant will receive a one time payment of `11, 500 whereas their present declared income of the cultivators has been calculated to be `40,000 per annum.
Former steel secretary in the ministry of mines, Atul Chaturvedi agreed that mining consortiums were making windfall profits in the last few years.
“It is for the government to renegotiate how much royalty they want to charge,” Mr Chaturvedi said.
At present, royalty rates vary within the country with different states charging different amounts depending on the quality of the iron ore,” he said.
The government has obviously not learnt its lesson from the export of iron ore in Karnataka where upper end iron ore was being charged a royalty of `11 a tonne while ore with less than 62 per cent iron was being charged a royalty of `8 per tonne.
Chairman of the Posco Pratirodh Sangram Samiti, Abhay Saboo, who has successfully led this agitation against this project for the last five years said, “The mining sector has witnessed 30 per cent decrease in employment between 1991-2004 and it has no linkages to other local industries.’