Years after its exit from a major project in Odisha, the impending return of South Korean steel giant POSCO to the state has come as a shot in the arm for the BJP government that has been trying to drum up investments since coming to power in June.

This also ticks the box for the BJP politically as POSCO’s decision to back out of the Jagatsinghpur project in 2017 is seen as a failure of the Naveen Patnaik government and provides the ruling party with an opportunity to question the Biju Janata Dal’s (BJD) track record in attracting investments to the state.

Earlier in the week, the South Korean steel major announced its collaboration with Sajjan Jindal’s JSW Group in setting up an integrated steel plant of 5 million tonnes per annum (mtpa). Though the official statement did not mention any state, Odisha Chief Minister Mohan Charan Majhi confirmed that this plant would come up in the mineral-rich Keonjhar district, his home district.

“During the recent meetings with investors in Delhi and Mumbai, I discussed with top officials of JSW and POSCO for a steel plant in Odisha. They have collaborated on the project. They have said they will set it up in Keonjhar district,” Majhi told reporters in Keonjhar on Friday.

POSCO forayed into Odisha in 2005 to set up a steel plant worth Rs 50,000 crore in the coastal district of Jagatsinghpur, which was then billed as the biggest foreign direct investment (FDI) project in India. It ran into trouble over land acquisition and getting a mineral block amid protests by locals. After waiting for over 12 years, the company in 2017 officially exited the project.

The BJP claimed that the South Korean company’s impending return indicated that the change in government had had a positive impact on the investment climate in the state. Sources said the Majhi government had approved the officials concerned to ensure the “smooth grounding” of the greenfield project.

“There has been a vast difference in state’s investment climate between 20 years back and now,” said a senior government officer. “The government has also changed its approach as far as land acquisition is concerned, which generally hits hurdles for big-ticket projects. Earlier, companies used to look for possible land after entering into an agreement with the government but now we give them multiple land options to boost their confidence.”

On raw materials, which were a big concern earlier, the official said that while JSW already owns iron ore blocks in the state, the new entity can also participate in auctions to acquire new blocks.

Officials in the state industries department said after an offer from the state government, top JSW officials had already visited two possible sites in Keonjhar: Banspal (2,500 acres) and Patana (nearly 2,000 acres).

The JSW-POSCO collaboration is expected to officially sign an agreement with the state government during the Utkarsh Odisha conclave scheduled to be held in January, according to sources. While the companies have yet to reveal the total investment in the project, officials said it would be more than the amount POSCO had previously committed. According to them, it is estimated to be more than Rs 50,000 crore.

“The JSW-POSCO entity plans to develop the steel plant using green technology to reduce greenhouse gas emissions. The company will generate thousands of direct and indirect employment opportunities for the youth,” Odisha Industries Department Secretary Hemant Sharma told The Indian Express.

Sharma said the CM would lead a delegation to Singapore from November 18 to 20 to discuss potential investments in sectors such as green energy and skill development.

Since assuming office, Majhi has been attempting to get a steel major to build a plant in Keonjhar, which has more than 30% of the country’s total iron ore reserves. In August, the state government formed a task force headed by Chief Secretary Manoj Ahuja to scout for a possible investor for the proposed steel plant. Officials said they approached leading steel makers in the country to set up a plant, promising them that the government would facilitate the quick acquisition of land and raw materials and ensure other clearances.

“When the CM approached the JSW and POSCO officials during roadshows in Delhi and Mumbai and got a positive response, we did not leave any stone unturned. We offered them the options of land patches at different locations and other advantages,” said an official in the task force.

With the BJP attempting to portray POSC’s second foray in the state as a telling remark on the Naveen Patnaik government’s track record on industrial development, the BJD responded saying that the investment climate in a state does not change overnight. It also questioned the South Korean company’s intentions and said the CM should issue a clarification.

“It is because of years of rigorous efforts of the Naveen Patnaik government that investors are positive towards Odisha,” said BJD’s Rajya Sabha MP Sulata Deo. “Through three editions of Make in Odisha conclaves, the BJD government attracted investments in diverse sectors that have already started operations.”

Deo alleged that POSCO’s “real intention” in the Jagatsingpur project was to take away “precious minerals” from Odisha to South Korea for which it had proposed a port despite having a major port in Paradip just 20 km away.

“As it plans to make a comeback, we apprehend that the company has eyes on Odisha’s mineral resources. The CM should clarify to the people of the state that the company will not plunder our mineral resources,” Deo told The Indian Express.

The Make in Odisha conclaves that the BJD leader referred to started in 2016 and were also held in 2018 and 2022. The BJD government received investment proposals worth Rs 16 lakh crore across the three editions of the conclave and almost 20% of the investors put in money in the state as promised, officials said.