Bhubaneswar: South Korean steel giant Posco is planning to start construction of a captive port a year ahead of actual work commences on its 12-million tonne steel plan in 2009, against the backdrop of huge concerns on tardy progress of its Rs52,000 crore greenfield project in Orissa, and opposition by local villagers to the project.

Posco-India CMD Soung-Sik Cho said that the company would start work for its captive port early next year, while construction of the proposed steel plant was expected only in 2009, with a view to seek quick redressal of the company''s concerns for the removal of hurdles in land acquisition and mining lease.

He clarified that preparatory work such as the raising of boundary walls and peripheral structures would commence in a month, but the actual construction of the plant will still have to wait on account of very slow progress at ground level.

Cho said that the demarcation of 193 acres of land was likely to take place by the end of the month, admitting that Posco-India was yet to be handed over a single piece of land out of the 4,004 acre required for the project near Paradip.

The demarcation will be followed by registration, after which the company would take physical possession of the land. The company expressed the hope of a speeding up of the land acquisition process in due course, as 89 per cent of the area comprises of government land, where as 11 per cent was private land.

Cho said that work on the project should not be delayed any further, and was hopeful of it gaining the required momentum before cost escalation becomes a matter of serious concern. Presently, he saw costs at "affordable" levels.

On the Indian side, amidst rising fears of the likelihood of the steel major terminating its Indian plans for the Rs52,000-crore project on account of insufferable delays, the government in New Delhi has assured Seoul that the requisite clearances would be expedited.

The assurance came during external affairs minister Pranab Mukherjee''s recently concluded visit to Seoul, during which there were talks with his counterpart Song Min-soon, according to sources. Though one of the largest foreign investment projects in the country, it is yet get off the ground on account of red-tape delays from various government departments.

Through all stops have been pulled out, and even environmental clearances for the plant have been given, Posco faces the problem of securing captive iron ore mines for its proposed 12 MT plant at Paradip in Orissa. The Prime Minister''s Office (PMO) has been monitoring the progress of the project, and has asked the state government to resolve various issues expeditiously.

According to sources, of 400 acres sought by POSCO, 300 acres have already been allocated to the company, and issues pertaining to reforestation and resettlement of project affected persons (PAP) have also been settled. A significant section in the government opines that continuous delays could leave the South Korean steel major with no option but to end its plans, which would be a development that could sink the hopes of many a potential investor abroad by sending non-conducive signals.

Though cho did not specify the present quantum of cost escalation, he did say that it was difficult to calculate at this juncture, and would be of concern if there were further delays in the project. He attributed year-long delay already caused to the project to a "failure of the system for industrialisation," as there were so many stake-holders and a large number of officers and political elements in the decision making process which made things move at a snails pace.

Cho said that opposition to the project was waning, as of three gram panchayats under the project area, people of Gada Kujangaand Nuagaon were convinced about the benefits that would accrue from the plant, with assistance from intelligentsia and others. The last quarter of resistance remains in Dhinkia, but there too the residents would be made aware of the development process that the Posco plant was set to usher.

Another area of concern for the company is the mining lease, which is imperative to ensure a steady flow of iron ore for the Posco plant.

The plant would need 20 million tonnes of ore per annum, and Cho was hopeful about the company''s prospects for obtaining lease of Khandadhar mines, notwithstanding opposition from Kudremukh Iron Ore Company Ltd and other aspirants.

Cho also said that once the project took off, the plant''s superior ''finex'' technology would make it qualitatively different from other plants that use blast furnace technology.