October 11, 2008

POSCO plan to compensate displaced farmers driven by returns

It was recently reported that POSCO has agreed to pay higher levels of compensation to farmers who will be displaced from non forest land but this decision of POSCO is not driven by kind heartedness, but from shrewd planning and analysis of what they can get away with.

The report said that “As part of the initial deal, POSCO has promised a flat rate of royalty at USD 0.5 per tonne of iron ore to the government of Orissa. This results in less than INR 1620 crore to government of Orissa over time of the contract of 600 million tonnes. The current global market rate of iron ore is over USD100 per tonne. By this rate, 600 million tonnes of iron ore at greater than 62% iron content would result in INR 288,000 crore.”

The report added that “The indirect costs of this effort to the people of Orissa add up even further. Thousands of acres of land and millions of gallons of water given almost free to the company, coal at give away prices and the economic venture framed within a special economic zone providing tax benefits to the company.”

It concluded that “And yet, the government of Orissa has continued to argue that this project is for the good of the state.”

People who will be affected by the project, however, have realized the harm they come to and have continued to oppose this effort in spite of extreme intimidation, threats, offer of jobs or money.