POSCO’s $12 billion steel plant construction project in India is facing another delay as the Indian state government recently announced an ordinance that will require all mining licenses for iron ore and other minerals to be awarded via auctions.

The mines ordinance is likely to dash the steelmaker’s long-awaited hope of getting early preferential access to an iron ore mine near the site of its steel plant in the Jagatsinghpur district of Odisha, India.

“The success of the Indian steel mill project highly depends on securing an iron ore mining license,” a POSCO official told The Korea Herald.

POSCO has expressed hopes of being able to launch its long-delayed investment project since last May, when the Odisha regional government decided to grant the Korean steel company a mining business license, which the company believes is crucial for the project’s commercial viability.

POSCO’s Indian project ― to build a factory with a 12 million-ton yearly production capacity in Odisha’s Jagatsinghpur district ― has been delayed for 10 years due to a backlash from residents, environmental concerns and other reasons.

Meanwhile, the Odisha government has sent a proposal to the state government to grant POSCO a prospecting license for iron ore in a 2,082-hectare area, according to Indian news reports.

“The nation will be sending a very wrong signal to the international investor community by completely ignoring these international commitments for supporting the raw material requirement of the project,” said Odisha’s Steel and Mines Minister Prafulla Kumar Mallik on Monday.

The recent policy changes concerning mining licenses in India have added to the speculation about the purpose of POSCO chairman Kwon’s unexpected visit to the office of Indian Prime Minister Narendra Modi on Tuesday.

Indian news reports said that in the meeting the Indian prime minister vowed to offer more support for the long-stalled project and the POSCO chairman proposed new investments in Gujarat and Maharashtra states.

By Suk Gee-hyun (monicasuk@heraldcorp.com)