The South Korean Pohang Steel Company (POSCO)'s investments in Orissa state have been marred with controversy, violence and stiff opposition. News about tension in Jagatsinghpur has been flashed over days in different newspapers and television channels. While local resistance against the project is a critical aspect of the issue, a new dimension to POSCO's plans has emerged which deserves more scrutiny.

POSCO's plans include setting up of a steel plant, mining operations, a captive port and allied activities in Orissa. With the delay in the grant of Special Economic Zone (SEZ) status, POSCO began pursuing environment and forest clearances for two components -- steel plant and port -- separately in May and June 2007 Both these components have since been granted environment clearance by the Ministry of Environment and Forests (MoEF), despite opposition at the mandatory public hearing in April 2007. And neither of the clearance processes tried to look at all the three components of the project as part of the same "plan" together nor were the environment and social impacts assessed cumulatively. (See: Uneasy quiet on the POSCO front)

If the clearances had not gone through this additional step of scrutiny at the Supreme Court, it is likely POSCO's unbundling would not have been exposed for what it is.

 •  Uneasy quiet on the POSCO front
 •  Whose expert is an expert?
 •  Mine, what mine?
 •  MoEF fails to act once again

While the process was headed in POSCO's favour, the company had perhaps not anticipated that its decision to break up the project into three would become a problem. Today, it has.

The setting up of the steel plant and port at the cost of Rs.55,000 crores required a diversion of 1,253.255 hectares of forest land for non-forest use. This is a mandatory procedure to be followed as per the Forest Conservation Act, 1980. The grant of clearance would mean felling of about 280,000 trees. As per procedure, the proposal was considered by the Forest Advisory Committee (FAC) under the MoEF on 9 August 2007. This committee recommended the grant of forest clearance.

This is was not the final green signal that POSCO was looking for that would have allowed them to go ahead with pushing construction. The reason for this was a 27 April 2007 order of the Supreme Court. According to this order, all fresh decisions of the FAC would be subject to review by the Supreme Court bench in the T N Godavarman v/s Thirumulpad case. Before taking a final view, the apex court now seeks comments of the Central Empowered Committee (CEC) set up as a monitoring body by the same bench. (Also see: and Whose expert is an expert?)

Amongst other things this order said: "… We make it clear that pending the decision of the larger question, all clearances by the F.A.C. of fresh cases shall be subject to approval by this Court. Before giving approval, we would like to have responses from C.E.C. in respect of each clearance. In order to avoid delay, we direct the concerned Ministry to give a copy of the clearance to C.E.C. so that C.E.C. would give its response expeditiously. We will examine each clearance and decide whether to grant or not to grant the approval thereto. Once the approval is granted by this Court, the matter may be placed before the Central Government for disposal in accordance with law…"

The CEC stepped in, assessed the facts at hand and submitted a report on 14 November 2007. It linked all three components of mining, steel plant and captive port in the report - a clear disagreement with the unbundling attempted by POSCO. The report establishes that POSCO's proposal is only for forest land for the integrated steel plant and captive minor port. The proposals for forest land required for the other components like mines, railways, road, corridor etc are in the process of finalisation. With these facts as a base, the CEC made two clear recommendations:

    "The CEC is of the view that instead of piecemeal diversion of forest land for the project, it would be appropriate that the total forest land required for the project including for mining is assessed and a decision for diversion of forest land is taken for the entire forest land after considering the ecological importance of the area, number of trees required to be felled, adequacy and effectiveness of the R&R plan for the project affected persons and benefits accruing to the State. The diversion of forest land for the plant, without taking a decision for the linked uses particularly the mining project may not be in order.

    "Since the number of trees involved is about 2.8 lakhs, it would be in order that an independent expert committee including representatives of the NGOs should undertake a site visit in order to assess the impact of the cutting of such a large number of trees and suggest mitigative measures for the area, specially since there is a large dependence of local population on these forests. Subject to the compliance of the above observations the proposed diversion of foresee land may be permitted."

The Posco-India Chairman and Managing Director Soungsik Cho has been quoted in the Business Standard on 30 January as being baffled with the CEC's report; he says that the company is presently struggling to get a prospecting licence. POSCO is yet to procure a mining lease, carry out assessments and seek mandatory clearances for it. It is reported that the entire process could even take the company 3-4 years.

The mining site is proposed to be located the highly sensitive Khandadhar area of the state. The same area was earmarked for Kudremukh Iron Ore Company Ltd (KIOCL), because of which the mines ministry had returned POSCO's application for granting prospecting mining licence. Reports in a number of dailies show that this problem is yet to be resolved.

Meanwhile, the issue has been heard in the Supreme Court twice, in December 2007 and January 2008, after the CEC report was submitted. POSCO has allegedly stated in the apex court that the mining component is inherently not linked with the port and the refinery and these are not interdependent on each other.

Instances like this are a reminder of a reality that plagues our environment and forest clearance procedures. If the clearances had not gone through this additional step of scrutiny at the Supreme Court, it is likely POSCO's unbundling would not have been exposed for what it is. Project proponents often break up project components and seek separate environment clearances. Then each of these components goes and procures separate forest clearances. In the bargain the cumulative impacts of the project never get looked at. What also happens often is that grant of clearance of one part becomes a rallying point for expediting approvals of the others. This is the fait accompli argument (See also: Mine, what mine? and MOEF fails to act).

In all this, the role of the MoEF has also been exposed. There are different Expert Appraisal Committees (EACs) under the Environment Impact Assessment (EIA) notification that are to assess and recommend environment clearance of a project. Each of these operates in isolation. Should not the committee on thermal power projects check with the committee on river valley projects if there is a linked dam to feed water to the plant? (E.g. The Tamnar thermal power plant and Rabo dam in Chhatisgarh.) What about the committee on industrial projects checking with that looking at the mining projects? With lack of coordination within one single division (Impact Assessment) of the MoEF, can we expect it across divisions when it comes to grant of forest clearances? Can the FAC not draw from or build on the information received for the same project by the respective EACs?

Will the decision on POSCO also fall prey to these lacunae?