A review of South Korea's POSCO steel mill project in Orissa said that the plant could violate forest laws and a majority of the review panel says existing green clearances should be scrapped.

The four member panel presented two separate reports which will now be examined on October 25 by the country's Forest Advisory Committee. The panel's report is not final. Environment Minister Mr Jairam Ramesh will take a final decision.

Mr Ramesh said that "Both reports said that there are weaknesses and infirmities in the way the forest rights issue is being implemented. Both reports called for POSCO to carry out fresh environment impact assessment for its USD 12 billion mill.”

If accepted by the minister, this could mean further delays for the project whose clearance is seen by many as a test case reflecting India's investment climate.

Mr Ramesh said three of the four members of the panel have recommended that existing green approvals for what is described as India's biggest foreign direct investment be cancelled while the company carries out a fresh assessment.

In August, India's environment ministry ordered a halt to all work on the project, including land acquisition, while the panel probed if the forest rights act that seeks to protect forest land and settlers had been violated.

The South Korean company is among several corporations, including London listed Vedanta Resources, whose Indian projects face delay as a proactive environment ministry tightens rules that often brings it in conflict with other government ministries pushing for rapid industrialization.

(Sourced from Reuters)