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POSCO CASE STUDY POSCO-India Private Limited is a planned Indian subsidiary of POSCO, an integrated steel producer with headquarters in Korea. POSCO signed a Memorandum of Understanding (MoU) in June 2005, to incorporate an Indian subsidiary and build a steel plant in Orissa - a state in eastern India. Posco India was incorporated by POSCO in August 2005 with the Registrar of Companies, Orissa, under India's Companies Act 1956. As of July 2011, various delays and controversies have prevented
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    POSCOCASESTUDY      POSCO-India Private Limited is a planned Indian subsidiary of POSCO, an integrated steel producerwith headquarters in Korea.  POSCO signed a Memorandum of Understanding (MoU) in June 2005, to incorporate an Indiansubsidiary and build a steel plant in Orissa - a state in eastern India. Posco India was incorporated byPOSCO in August 2005 with the Registrar of Companies, Orissa, under India's Companies Act 1956.As of July 2011, various delays and controversies have prevented POSCO-India from building the steelplant in Orissa. The June 2005 MoU expired in June 2011. The state government of Orissa expects toreplace the expired MoU, and sign a new and revised MoU with POSCO.As of September 2011, the MOUrenewal remains a subject of negotiation between POSCO India and the state government of Orissa,because the state has proposed changes and new conditions to the srcinal MOU signed in June 2005.In addition to its attempt to establish a steel plant in Orissa, Posco-India is considering alternate sites fora steel plant. In June 2010, Posco signed a memorandum of understanding with the state of Karnataka.In July 2011, the government of Karnataka announced an approach to land acquisition for Posco projectin its state that is different than the approach of the government of Orissa. The history POSCO signed a MoU with the democratically elected state government of Orissa in June 2005.   TheMoU of 2005 stated that the government of Orissa wants to utilize its natural resources and industrializethe State, is seeking new integrated steel plants in view of the rich iron ore and coal deposits in the state.According to the MoU, POSCO agreed to invest in the state of Orissa to establish an integrated plant tomanufacture steel, mine iron ore and other ores, as well as the infrastructure necessary for its operationin Orissa. The MoU listed the following understanding between POSCO and the state of Orissa  Establish a FINEX/BF plant in phases. The first phase would be completed in two modules, togetherattracting a total of Rs. 21,800 crores ($5.1 billion) investment. The first phase would produce 6million tons per year of crude steel, and 5.64 million tons per year of finished steel. The MoUmentioned a second phase, also to be completed in steps of two modules, together attracting a totalof Rs. 21,500 crores ($5 billion) investment. The second phase would double the plant's capacity to12 million tons per year of crude steel, and 11.28 million tons per year of finished steel.  The state of Orissa promised to be a partner in development. The state agreed to acquire andprovide three land parcels to POSCO: about 25 acres of land in Bhubhaneswar for POSCO India toestablish its Indian headquarters; about 4000 acres in the state of Orissa to set up a steel plant, buildport infrastructure, establish a storage yard for coking coal, and other associated facilities; and, about2000 acres of land for POSCO to develop a township, recreational activities and all related socialinfrastructure - of which approximately 1,500 acres would be identified adjacent/near to the Steelproject and remaining 500 acres near the mining location.  The state of Orissa agreed to work with the central government of India to arrange necessarysupplies and infrastructure for steel production by POSCO India. These supplies included water,electrical power, drainage and sewerage, licenses and permits to obtain coal and iron ore, rail links,and a highway road connection.  POSCO India agreed to conduct a rapid Environment Impact Assessment (EIA) and prepare adetailed EIA Report and an Environment Management Plan (EMP) for the Project. The Governmentof Orissa agreed to provide any assistance requested by the Company during the time the EIA isconducted and the EMP is prepared. The state of Orissa also agreed in the MoU to use its best  efforts to procure the grant of all environmental approvals and forest clearances from the centralgovernment of India within the minimum possible time for the project. The need for steel manufacturing in India Steel is an essential metal in transport, construction, housing and power generation, particularly for a low-carbon economic development.,In 2009, India became the world’s third largest crude steel producing country in the world, after China and Japan; still, India used 47.8 kilograms of finished steel products per capita, against a world average of178.9 kilograms, and a European Union average of 240.7 kilograms per capita. The per capitaconsumption of steel in India is disparate, according to India's Ministry of Steel; urban India has a percapita usage of 77 kilograms versus a per capita usage of 2 kilograms in rural India.According to another 2010 report from the World Steel Association, India's steel demand has beengrowing in recent years, and is expected to grow by 13.6% in 2011. With 68 MMT of projected steel usein 2011, India will become the third largest steel using country in the world after China and the UnitedStates.In July 2011, the International Iron and Steel Institute claimed India produced 6 MMT of steel in the monthof June 2011, while China produced 59.9 MMT of crude steel and the world produced 125 MMT.According to a Reuters report, India is one of the largest exporters of iron ore to countries such as China.In the fiscal year ending 2009, India exported 105.86 MMT of iron ore. While India exports high qualityiron ore to countries that produce steel, India routinely imports millions of tonnes of finished steelproduced from the iron ore every year.,The central government of India, and various state governments have adopted a National Steel Vision,citing th e need to dedicate India’s mineral resources for its domestic use, action to address consistent shortage in availability of steel for the Indian consumer, prevent inflationary trends in its domestic steelprices, while ensuring Indian steel industry improves its environmental performance, quality andefficiencies. The state governments of Orissa, Jharkhand, Chhattisgarh, West Bengal, Karnataka, Gujaratand other states have signed a total of 222 memorandum of understandings for steel plants, adding acapacity of 276 MMT per year, thereby raising India to become the second largest producer of steel by2016. Of the 222 MoUs signed, each under different stages of implementation, POSCO-India is one.In early August 2011, an iron ore mining scandal became a media focus in India. In September 2011,Janardhana Reddy - an elected member of Karnataka's legislative assembly - was arrested on charges ofcorruption and illegal mining of iron ore in his home state of Karnataka. It was alleged that his companyorganized and exported billions of dollars worth of iron ore to China in recent years, without paying anyroyalty to the state government exchequer of Karnataka or the central government of India, and theseChinese companies made payment to shell companies controlled by Reddy and registered in Caribbeanand north Atlantic tax havens. It was also alleged that corrupt government officials cooperated withReddy, starting from government officials in charge of regulating mining to government officials in chargeof regulating port facilities and shipping. These officials received monthly bribes in exchange for enablingillegal export of illegally mined iron ore to China. Such scandals have led to a demand in India for
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