Can Posco Cross the India Barrier?

Image: Goutam Roy for Forbes India

A LONG WALK HOME Women and children from Dhinkia return from a rally to prevent the police from taking down betel vines, their main source of livelihood. Most of the betel vines grow on the 2,900 acres of forest land that the Posco project will take over

The news flash from Press Trust of India came on July 10, 2011. Posco, the $32 billion South Korean steel giant had decided to get some local help in Karnataka. It roped in two Indian companies, Bangalore’s Hothur Group and Goa’s Salgaonkar Mines, to get clearances and acquire land for the mines allotted to it for the proposed steel plant in the state, the news report said. I was incredulous. Posco is a fiercely secretive company and a lone ranger. Surely it would never share a project! Phone calls would have to be made.

The trail naturally led to Orissa where Posco has been under siege for the past six years from natives who want it to leave, but the government wants it to stay. The buzz in Bhubaneswar, the state capital, queers the pitch even more. Bureaucrats are saying that Posco is willing to give up a few chips. They say Posco has agreed to give away its right to ‘swap’ up to 30 percent of the ore from its mines in the state.

Because of the high alumina content in the local ore, Posco had in the 2005 memorandum of understanding (MoU) got permission to export up to 30 percent of the ore and replace it with an equal amount of imported ore. The Indian steel industry was already miffed that Posco was getting precious raw material when none of them, other than Tata Steel and SAIL, have captive mines. What riled them more was that, at a time when the focus was on conserving natural resources and value-add locally, Posco was being allowed to export iron ore, possibly to South Korea.

There are more surprises from the company that had its first managing director for its Indian operations working out of Seoul. Posco is in the process of roping in an Indian steel veteran to head its Orissa operations. Sources add that in all probability, even its Karnataka steel project would be headed by an Indian.

The South Koreans are finally giving some ground: Taking on local partners; giving up on a clause in the MoU that was one of the main reasons for it to come to India; and getting Indians to head its operations. For Gee Woong Sung, managing director, Posco-India, this must be a humbling moment. It shows that Posco is finally beginning to figure out India. This is a country where industrialisation has never had unequivocal acceptance. It is not clear whether Sung has ever visited Bokaro Steel City, one of the oldest steel towns of India. If he hasn’t, he should.

Image: Sanjit Das for Forbes India
Gee Woong Sung, MD, Posco-India

The setting sun has just broken through dark clouds over Gadakujang, a village in Orissa’s Jagatsinghpur district. The coconut and palm trees are bathed in a russet glow that contrasts beautifully against green paddy fields. I wish there was a drizzle to create a rainbow. Just like during my childhood in Bokaro Steel City. I would rush to the rooftop of our house to check if there was a rainbow arching over the giant red-and-white chimney of the hot strip mill, part of the steel plant owned by Steel Authority of India. The chimneys were the tallest things I had ever seen.

Like Gadakujang, parts of which will give way to Posco’s steel plant, many farming villages inhabited mostly by tribals had made way for Bokaro. Close proximity to coal and iron ore had made it an ideal site for India’s fourth steel plant. The plant was only half built when in 1968 my father, the first engineer from the family, left our native Kerala and came to Bokaro. Over the next 30 years, ‘Thomas contractor’, as my father was called, would compete with his fellow Madrasi and Bihari contractors to get orders from SAIL. At home, our life was regulated by the steel plant’s sirens that would go off thrice a day — in the morning, afternoon and evening. It was our family clock.

I call my father. My parents left Bokaro in 1997 for their hometown in Kerala where they have been ‘settled’ since then. I want to ask him how things were in Bokaro when he first went there. Were there protests by those displaced by the steel plant? What kind of work did the locals get in the plant?
Though most of the land where the steel plant came up was unused, there were a few villages that were displaced. The natives, mostly tribals, got jobs in the new plant and compensation for the land. But apparently it was not enough and was contested. A Business Standard report, dated May 21, 2007, says that the Jharkhand High Court has directed SAIL to pay compensation to those displaced 47 years after they were first asked to move!

Work for the natives was mostly unskilled or khallaasi jobs. “But they were hard workers,” recollects my father. “Much more efficient than the South Indians or Biharis. And give them an extra Rs. 10 for haandiya [local rice beer] and they would become your most loyal employees,” he adds with a laugh.

By 1997, many of the tribals had got trained on the job and went on to get semi-skilled jobs. While few became engineers or officers at SAIL, some did become ‘contractors’, including Munda, my father’s close associate. Munda started as a welder and went on to become a contractor. He even bought our old Fiat Padmini when we left Bokaro.

Largely though, the natives had become a minority in their own homeland. Both in the city and in the steel plant, ‘migrants’, especially from South India, neighbouring West Bengal and other parts of Bihar, had taken over. That same year, in 1997, Bihar was divided into two states and Bokaro Steel City became a district in Jharkhand. Through my college years I would boast of Bokaro as an oasis of development with broad roads, planned colonies and famous schools.

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