Hundreds of Left activists were arrested in this Orissa capital Wednesday for protesting a proposed deal between South Korea's Posco and the state government for a $12 billion steel plant.

Communist Party of India-Marxist (CPI-M) workers headed by state general secretary Janardan Pati demonstrated in front of the secretariat as the government was preparing to strike the deal Wednesday.

Once it is concluded, the Posco deal will lead to the biggest foreign direct investment in India.

"Over 400 CPI-M workers came in a procession and were picked up by police when they tried to forcibly enter the secretariat," district police chief Amitav Thakur told.

The Posco deal has come in for strong criticism from the opposition, including Left parties, the Janata Dal-Secular and the Orissa Gana Parisad (OGP).

Several trade union leaders, student organisations and opposition parties have said they will protest the government proposal to let the company swap 30 percent of iron ore.

Posco plans to set up a steel complex at the port town of Paradeep, involving a 12 million tonne steel plant costing $9 billion, a 30 million tonne iron ore mine, a mill for hot-rolled coils and a seaport along Orissa's coast.

The steel plant is likely to start production by 2009.

Under the agreement to be signed Wednesday, $3 billion will be initially invested between 2007 and 2010.

The office of Chief Minister Naveen Patnaik and other departments of the state government have been working overtime to give final shape to the memorandum of understanding.

The agreement will allow Posco to swap 30 percent of the 600 million tonne iron ore allotted to it. The steel major has reduced its iron ore linkage demand from one billion tonnes and agreed to a "no net export of ore".

Earlier, it had insisted on exporting a small portion of high-grade ore to Brazil.

Posco was eyeing Orissa's iron ore reserves rather than the plant, OGP leader Bijay Mohapatra said. By allowing the export of iron ore, the government was going against the interest of Orissa, he said.

On Wednesday, hundreds of students of Akhila Bharatiya Vidyarthi Parisad (ABVP) also protested in front of the official residence of the governor against the government proposal to let Posco swap 30 percent of iron ore.