The Orissa government will Wednesday sign a deal with South Korea's Posco for a 12-million tonne steel plant in the state.

Over a dozen Posco officials have arrived in the state capital here as the government rolls out the red carpet for the 36-member South Korean delegation, including South Korea's ambassador to India Jung II Choi.

Posco has proposed a steel complex that will be India's largest foreign direct investment involving a 12 million tonne steel plant costing $9 billion, a 30 million tonne iron ore mine, a mill for hot-rolled coils near the port town of Paradeep and a seaport along the state's coast. The steel plant is likely to start production by 2009.

The office of the Chief Minister Naveen Patnaik and other departments of the government have been working nights to give a final shape to the memorandum of understanding (MoU), likely to be signed at about 5 p.m.

The MoU is to 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 also agreed to a "no net export of ore".

Earlier, it had insisted on exporting a small portion of high-grade ore to Brazil. The deal came in for massive flak from the opposition, including the Left parties, the Janata Dal-S and the Orissa Gana Parisad (OGP).

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

Posco was eyeing the iron ore reserves in Orissa rather than the plant, OGP leader Bijay Mohapatra said. By allowing export of iron ore the Naveen Patnaik headed government was going against the interest of the state, he said.

Earlier on June 17, leaders of the OGP, the Communist parties and the Janata Dal-S met Prime Minister Manmohan Singh to protest the proposed deal.

Though a section of the Bharatiya Janata Party, partners in the ruling alliance, and the main opposition Congress had also objected to the deal, they have now said they would cooperate with the state government.