The Orissa government's move to grant prospecting licence to South Korean steel major Posco for its proposed 12 million tonne steel plant in the state has hit a roadblock.

Kudremukh Iron Ore Company, a Central sector company and claimant to the same ore reserve, filed a case in the Orissa High Court opposing the move.

The Orissa government, in December, 2006, had recommended to the Centre for grant of licence to prospect 6,200 hectare iron ore-bearing area at Khandadhar in Sundergarh district in favour of Posco for assessing the actual reserves.

However, the Union ministry of mines has sought certain clarifications on the proposal. The state govenment is now in the process of replying to that. There were about 130 applicants for the Khandadhar mines, including Kudremukh Iron Ore Company.

The state government had rcommended Posco's case after disposing of the applications of the rest of the claimants. Peeved by this development, KIOCOL has gone to the court seeking a stay on the grant of the licence to Posco.

It argued that the state government had earlier allotted the area to the company for survey of iron ore deposits. KIOCOL also said it had incurred an expenditure of Rs 2 crore (Rs 20 million) for the purpose.