The Posco-India Story
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IRON AND STEAL: THE POSCO-INDIA STORY Mining Zone Peoples’ Solidarity Group http://miningzone.org/ October 20, 2010 ABOUT THE MINING ZONE PEOPLES’ SOLIDARITY GROUP The Mining Zone People’s Solidarity Group is an international research group focused on India, with core interests in new economic policy. We have been following the development of several large projects in India, and for the last six months, we have been investigating claims made by the central and state governments about the benefits to the country due to the proposed POSCO integrated steel project and captive port in Orissa. The authors of the report are: Anu Mandavilli, Friends of South Asia, California, USA Balmurli Natrajan, Assistant Professor, Anthropology and Director, University Core Curriculum, William Paterson University, New Jersey, USA Biju Mathew, Associate Professor of Business, Rider University, New Jersey, USA Girish Agrawal, Civil Engineer & Attorney, California, USA Jinee Lokaneeta, Assistant Professor of Political Science, Drew University, New Jersey, USA Ra Ravishankar, Electrical Engineer, Oregon, USA Shalini Gera, Friends of South Asia, California, USA Sirisha Naidu, Assistant Professor of Economics, Wright State University, Dayton, OH, USA Tathagata Sengupta, Graduate Student, Massachusetts Institute of Technology, Massachusetts, USA Table of Contents Executive Summary …………………………………………………………………………………………………… i 1. Peddling POSCO: An Introduction .................................................................................... 1 2. Commission, Facilitation and Implementation: The State as Company Agent ............ 10 3. Livelihoods in Coastal Jagatsinghpur, Keonjhar and Sundergerh: A Case of Missing Data and Statistical Lies ................................................................................... 29 4. Jal, Jangal, Zameen: People’s Struggle for a Clean Environment and Their Place in it ....................................................................................................................... 51 5. Conclusion: Profit, Lies, Poverty ................................................................................... 67 Iron and Steal: The POSCO India Story Executive Summary POSCO-India’s project to build a 12 million tonnes per year Local popular and democratic resistance to the steel plant in Orissa, with a captive port and iron ore POSCO project has faced brutal repression from mines, is widely celebrated as the single largest infusion of the state’s security apparatus, wherein thousands Foreign Direct Investment (FDI) since the Indian economy of resisters have been severely beaten up at liberalized in 1991. Estimated at USD $12 billion (Rs.52,000 protest rallies, several have been severely injured crores), the project was claimed by Orissa government to in police shootouts, and one activist even lost his “bring prosperity and well-being to its people” by life. Thousands of villagers participating in embarking on major industrialization based upon peaceful and democratic dissent have outstanding exploitation of its natural resources. However, this project warrants and are living in constant fear of has faced strong resistance from a vigorous people’s imminent arrest, and dozens of activists and movement on the ground, comprised of villagers leaders have been imprisoned for months on end. apprehensive of losing lands and livelihoods. Consequently, The government has offered misleading and false five years after the project was launched, POSCO has yet to projections for tax revenues realized from the acquire a single acre of land, and has been embroiled in POSCO project. Given that the POSCO steel plant legal, logistical and procedural quagmires. and captive port would be in Special Economic This report presents a comprehensive analysis of the Zones and benefit from many tax concessions, the claims advanced by the State and Central governments and tax revenues projected by the Orissa government the POSCO company itself, of the various benefits that (based on the NCAER report) are a gross would accrue to “the people”, and the total addition to the exaggeration and are patently wrong. For instance, state economy due to this project. Going beyond the the numbers seem to imply that the corporate tax standard narratives of revenues and cash flow, this report that POSCO would owe the state would be higher investigates the actual impacts of the POSCO project on the if it has SEZ status, than if it doesn’t! residents of Jagatsinghpur, Keonjhar and Sundergerh, The Orissa government’s decision to allocate 600 where the steel plant, the port, and the mines will be set million tons of the highest grade iron ore available up—the same “people” in whose name the POSCO project in India buried in the hills of Khandadhar hills to has been so vigorously pushed by the government of POSCO, taking precedence over more than 200 Orissa. The report also looks at the pivotal roles played by domestic and international applicants, is an the various institutions of the government in justifying and unprecedented handout to the company. The implementing this project, many times in an undemocratic, extraction of iron ore alone allows POSCO to profit illegal and coercive manner. Finally, this report offers a to the tune of Rs. 6,500 crores per year (about 1.5 critical evaluation of the only cost-benefit analysis of the billion U.S. dollars) for 30 years, ensuring that its POSCO project done so far, conducted by the National entire investment of 12 billion U.S. dollars in this Council for Applied Economic Research (NCAER) in 2007, project is recouped within the first 8 years. and highlights the fundamental flaws in its methodology and its conclusions. Conclusions from the three substantive 2. Project affected villages face widespread impoverish- chapters of the report are summarized below: ment and loss of livelihoods: We conducted fresh 1. Subversion of State’s authority and sovereignty for preliminary investigation of the current baseline POSCO’s benefits: All three organs of the Indian economy at the two project sites – the plant/port and state—the executive, judiciary and legislature—have the mining sites. Our data shows that: been severely compromised in order to facilitate a There is a thriving agricultural economy in the swift execution of the POSCO project at the least cost three gram panchayats at the plant/port site, to the company. Various laws and procedures been centered on but not limited to betel vine openly flouted, illegal clearances awarded, and cultivation. Betel vine cultivation is feasible on deliberate attempts have been made to underplay the very small plots of land and provides a steady, costs and overstate the benefits of the project. reasonable income both to the owner-cultivators The Forest Rights Act (FRA) has been openly and and to wage labourers. This economy will be deliberately flouted in the 3096 acres of forest completely destroyed by the project, displacing an land required for the POSCO steel plant. The estimated 22,000 people. administration not only refused to recognize the The Resettlement and Rehabilitation package on rights of thousands of families in the project area offer in the steel plant area is not reasonable under the Act, it also deliberately withheld compensation for the losses that will be suffered information on the palli sabha resolutions passed by the people. For instance, the average loss of by the villages opposing the POSCO project. In income for a cultivator is at an average Rs. 40,000 spite of two committees appointed by the Ministry per year per decimal (100 decimals = 1 acre) of of Environment and Forests verifying these land under betel vine cultivation (minimum flagrant violations, the MoEF has yet to withdraw reported income per decimal= Rs.33,000 and its clearance to the project. maximum reported per decimal= Rs.50,000) under i betel vine cultivation, but the latest compensation disconnected parts so that its actual cumulative on offer is a one-time payment of Rs. 11,500 per environmental impact has been obscured. Rapid decimal. The total loss experienced by a betel vine EIAs were performed instead of Comprehensive farmer per decimal over a 30 year time period EIAs in violation of the EIA Notification, 2006, would be in the range of Rs. 12 lakhs thus making which requires a comprehensive EIA, as does the current one time compensation package on global best practice. The public hearing process offer less than 1% of their cumulative earning was vitiated by holding the hearing in area far potential. from the affected villages as well as by the by An additional estimated 20,000 to 25,000 people heavy deployment of police and the presence of from approximately 30 neighboring gram POSCO officials on the dais. panchayats would suffer loss of their livelihood as The Coastal Regulation Zone Notification of 1991, fishermen because of the proposed POSCO port. which protects fish breeding grounds, has been These people are not even referred to in any R&R violated since the area designated for POSCO’s plan. captive port is classified as an “ecologically In the proposed POSCO mining areas, residents of sensitive area.” approximately 32 villages in Keonjhar and 84 villages in Sundergerh, mostly Scheduled Tribes, Based on the above findings we are forced to are dependent on surrounding forests for minor conclude that the POSCO project, as it currently stands, is forest produce for consumption and sale. The poorly conceptualized and economically unviable. If Forest Rights Act has