(Adds POSCO spokesman comments)
By Jatindra Dash
BHUBANESWAR, India, March 19 (Reuters) - South Korean steelmaker POSCO has asked the eastern state of Odisha in India to take back the land it was allotted for a $12 billion steel project as it has not been able to start work, two senior state officials said.
This could be a sign the world's fourth-biggest steelmaker was scrapping the proposed 12 million-tonnes-a-year steel plant, although POSCO said on Sunday that its move to return the land did not mean it would cancel the long-delayed project.
POSCO said it had expressed its intention to give back the land because it "will not be used urgently".
"That has nothing to do with whether we withdraw the project," a POSCO spokesman in Seoul said in a statement.
POSCO offered to surrender the land in a letter to the Odisha Industrial Infrastructure Development Corporation (IDCO), a state government agency that arranges to make industrial plots available to companies. The state government had leased about 2,700 acres of land to POSCO.
"Posco has asked us to take back the land as it could not utilize it as per the lease deed condition," IDCO's chief general manager for land management, Susanta Kumar Mohanty, told Reuters on Saturday.
State Industry Minister Debi Prasad Mishra said the land earmarked for the project will now go into the IDCO land bank.
The 2005 project was billed as India's biggest foreign direct investment at that time, but it has faced several delays due to a regulatory maze and protests from the local farmers.
A mining law enacted by the federal government in 2015 made it mandatory for the company to buy a mining license for captive mines in an auction. Originally, the Odisha government had promised to help the company obtain the licence for free. (Reporting by by Jatindra Dash; Additional reporting by Hyunjoo Jin in SEOUL; Editing by Tom Hogue and Himani Sarkar)