India Panel Suspends Environmental Clearance for Posco Steel Plant

An Indian tribunal on Friday suspended environmental clearance for a long-delayed multibillion-dollar steel plant in the east of the country planned by South Korean industrial giant Posco (IW1000/65). Friday's ruling by the the National Green Tribunal is expected to further set back the $12 billion project in mineral-rich Orissa state -- the largest foreign investment commitment to India and first announced in 2005. The decision by the government-appointed panel is likely to fuel further unease among foreign companies about India's regulatory environment that has been heightened by retroactive tax measures proposed this month. "The environment clearance granted on Jan. 31, 2011, to the project shall remain suspended till such a review and appraisal is done by the ministry," Justices C.V. Ramulu and Devendra Kumar Agarwal ruled. The proposed plant in Jagatsingpur, a coastal district 60 miles east of the state capital Bhubaneswar, has been the focus of protests since Posco signed its initial deal with the Orissa government. The tribunal noted the agreement between the Orissa government and Posco refers to a plant able to produce 12 million metric tons of steel annually. But the environmental impact report was prepared looking only at the first phase of the plan to produce 4 million metric tons a year, the justices said. "The environmental impact assessment should assess it [the project] for the full capacity right from the beginning," they said.

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