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ArcelorMittal, in July 2013, scrapped its plans to set up a steel plant in Keonjhar, Odisha, citing land acquisition and iron-ore linkage issues. The proposed steel plant was one of the biggest foreign direct investments proposed in India, and hence this move by the steelmaker has come as a major setback to the investment outlook in the country.
Inordinate delays, problems in acquiring land and securing iron ore linkages are the reasons stated by ArcelorMittal for abandoning the steel project. A week earlier, stating the same reasons, POSCO, the South Korean steel major, cancelled its Rs 40,000 crore investment plan in Karnataka.
ArcelorMittal had signed an MoU with the Odisha government in 2006 to set up a 12 million tonne steel plant in two phases of 6 million tonne each, entailing an investment of Rs 50,000 crore. The project was to be supported by a 750 MW captive power plant, iron ore mine and port. Detailed project report (DPR), for the steel project, was submitted to Odisha government in September 2008. However, in 2009, the project was put on hold for two years as global demand for steel started declining.
Even after fulfilment of certain project milestones like preparation of a feasibility report, an environmental impact assessment study, CSR projects and other relevant technical reports, the steel project made no progress in the last three years. Inordinate delays at the state government level made the project unviable.
ArcelorMittal also stated that it would go ahead with two other projects in Jharkhand and Karnataka states. However, going by the progress made by these two projects, one cannot be sure of their fructification in the near future.
In 2010, ArcelorMittal signed an MoU with the Karnataka government to set up a six million tpa steel plant with a captive 750 MW power plant at Bellary district, entailing an investment of Rs 30,000 crore. The company has acquired 2,659 acre of land and the process for acquiring the remaining 136 acre is underway. They are still awaiting various clearances including environmental clearance for the steel project.
The company is also awaiting iron ore linkages for the proposed steel plant as following a recent Supreme Court order relating to illegal mining activities in Karnataka, and new mining legislation proposed by the Government of India, the allocation of new mining leases in Karnataka has been put on hold.
As for the Jharkhand steel project, ArcelorMittal signed an MoU with the state government in 2005 to set up a 12 million tpa steel plant in two phases. However, since then the project has not reported any progress at the ground level.
In 2008, Union Ministry of Mines rejected the company’s application to acquire the Karmapada mine in West Singhbum district. The project got further delayed in 2009 due to the economic slowdown. In 2010, ArcelorMittal relocated the steel project from the earlier proposed Khunti-Gumla district to the Bokaro district due to delays in land acquisition. In the same year the company also reduced the project capacity from 12 million tpa to 6 million tpa. Local opposition and disputes over land acquisition in Petarwar village of Bokaro district halted the progress of project.
Given the slow progress reported in the execution of both, the Jharkhand and the Karnataka projects, Mittal’s dream of setting up large scale greenfield steel projects in India, might remain on paper only.
ArcelorMittal’s plan to scrap its Odisha project was preceded by POSCO’s move to call off its decision to invest Rs 32,336 crore to set up a 6 million tpa steel plant in Gadag, Karnataka. Thus, India witnessed its biggest foreign investment pullout as these two major steel projects worth Rs 72,336 crore got shelved.
The two project pull-outs do not augur well to India, when the government is trying its level best to increase the FDI inflows and to raise the steelmaking capacity from the current 100 million tonne a year to 300 million tonne by 2025.
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