KOLKATA (miningweekly.com) - India’s principal opposition party, Bharatiya Janata Party (BJP), has opposed the grant of any iron-ore mining leases to Korea’s Posco on the grounds that foreign companies should not be favoured in the allocation of natural resources at a time when government-owned steel producers were facing a raw material supply crunch.

In a communication to the Mines Ministry, BJP Member of Parliament (MP) Hansraj Ahir, said that government-owned companies should get priority in the allocation of natural resources, pointing out that steel producers such as Rashtriya Ispat Nigam Limited were having to import iron-ore as they lacked adequate mining leases in the country.

Criticising the provincial government of Odisha's and the federal government’s allocation of natural resources to private investors, Ahir questioned the rush to allocate iron-ore reserves to Posco at a time when the Mines and Minerals Development and Regulation (MMDR) Bill 2011 was pending before Parliament.

The BJP MP said that, as the MMDR Bill showed a preference for the auction of natural resources instead of discretionary allocation by government, there was no need to hurry in allocating iron-ore mining leases to foreign investors like Posco India.

Ahir was among the first to raise a red flag over the government’s allocation of coal blocks to private companies its and ignoring of government miners like Coal India Limited, alleging a breach of norms as well as corruption, which was the subject of an ongoing Supreme Court-supervised investigation into coal block allocations.

Posco India in 2005 signed an agreement to construct a 12-million-tonne-a-year steel plant in the coastal port town of Paradeep, in eastern India, entailing an investment of $12-billion. The project has been dogged by delays in land acquisition and access to iron-ore reserves. Disputes relating to environmental clearance for iron-ore mining granted to Posco were currently before the Supreme Court.

Senior government officials said that opposition from BJP was to be expected at this point in time, as India was heading towards national elections next year. The allocation or pricing of natural resources and other commercial opprtunities - from coal to natural gas and telecommunication spectrum - had all been embroiled in political controversies.