Korea’s Lee Seeking Singh Support for Stalled Posco India Mill

Jan. 24 (Bloomberg) -- South Korea’s President Lee Myung Bak is seeking Indian government support to clear the way for Posco’s planned $12 billion plant that’s been delayed for about three years, his office said.

Lee, to attend India’s Republic Day celebrations on Jan. 26, is seeking Prime Minister Manmohan Singh’s “continued interest and support” for the plant, he said in a written interview with the Times of India newspaper, according to a Korean-language transcript issued by Lee’s office today.

Posco’s mill in the eastern state of Orissa, potentially the biggest overseas investment in India, was announced in 2005 and is delayed, pending mining permits and land clearance. Plans by ArcelorMittal, the world’s largest steelmaker, to build a pair of $10 billion plants in Orissa and neighboring Jharkhand have also been stalled for land acquisition.

Orissa has received only about $1 billion of $44 billion in investment pledged in the last five years, data from the state’s industries department show.

Posco, Asia’s most profitable steelmaker, said this month it had secured India’s permission to acquire 88 percent of the land needed for the plant and said it was continuing talks with residents to purchase the rest.

‘New Turning Point’

Hoping the approval will lead to “a new turning point,” Lee told the Indian newspaper that the deal may become “a model case” for industrial cooperation between South Korea and India.

India, Asia’s third-biggest economy and South Korea, the region’s fourth-largest, signed a trade agreement in August aimed at cutting or eliminating tariffs, giving companies including Hyundai Motor Co. and LG Electronics Inc. better access to the world’s second-most populous nation.

Lee expects trade between the two countries and South Korean investments in India will expand because of the accord, the statement said. He also hopes the two nations will cooperate in fields including nuclear power generation and development of resources, it said.

Policy makers are working to remove remaining hurdles faced by Posco, India’s foreign ministry said on Jan. 22. Lee arrives today and will leave on Jan. 27.

“The government of India and the state government attach considerable importance to the project; it hasn’t evolved at the pace that we would’ve wanted,” Vishnu Prakash, spokesman for India’s foreign ministry, said in New Delhi. “Many of the issues have been sorted out. The remaining issues, hopefully, will be sorted out.”

Prime Minister’s Help

The nation’s steel ministry has also sought the prime minister’s help to secure permits to help get the project off the ground this year, Raja Awasthi, media adviser to Steel Minister Virbhadra Singh, said on Jan. 14.

Difficulties in acquiring land and iron-ore mines have stalled almost $80 billion of steel projects that would have more than doubled India’s 55 million-ton output, the steel minister said in an interview last month.

Posco Chairman Chung Joon Yang said on Jan. 14 the company wants to start construction of the Orissa project this year. He is scheduled to be part of a business delegation visiting India along with President Lee.

Separately, ArcelorMittal and Posco earlier this month announced plans for two new steel mills in the southern state of Karnataka in India.