ArcelorMittal puts Orissa steel plant on back burner

Perturbed over delays in getting necessary approvals and land acquisition issues, global steel giant ArcelorMittal is understood to have put its proposed 12-million tonne steel plant in Orissa on back burner.

According to company sources, no progress has been made by the company in the state in last one and a half years and at the moment the company is focusing more on its plans for setting up steel units in Karnataka and Jharkhand.

Only 8 gramsabhas meetings out of 15 required for land acquisition in Orissa has been conducted till first half of 2010 and the status remains the same, sources said.

In 2006, ArcelorMittal had signed an MoU with the Orissa government to set up a 12-million tonne steel plant in four phases at Keonjhar, entailing an investment of $10 billion (Rs 50,000 crore). The MoU is due for renewal in December this year.

When asked whether project in Orissa was stalled, the company's India spokesperson declined to comment.

Meanwhile, the company today launched a global asset optimisation plan to save costs to the tune of $1 billion amid slowdown and uncertainty in the global economy.

"The asset optimisation plan will suitably strengthen our business in the long run. This realignment does not impact our proposed investments in India. The country remains the growth target for us," the spokesperson said while talking about the cost-saving exercise which was unveiled today.

The progress in Karnataka is much better, the sources said, adding that Karnataka Industrial Areas Development Board (KIADB)-- which is acquiring land for the 6-million tonne steel plant in the state-- has publicly stated that most of the land has been acquired for the project.

The sources further said that the Lakshmi Mittal firm has also made some headway in Jharkhand where it is directly buying land from the landowners and is prospecting iron ore mines in Karampada region. The iron ore mines in the state are estimated to house about 200 million tonnes of the ore.

In June last year, ArcelorMittal had signed an MoU with Karnataka government to set up a 6-million tonne steel plant in the state in two phases, entailing an investment of Rs 30,000 crore ($6.4 billion). The company requires about 4,500 acres of land to set up the plant.

Besides this, the world's largest steelmaker had signed a similar MoU in 2005 for setting up a 12-million tonne steel plant with Jharkhand government at an estimated investment of $10 billion (Rs 50,000 crore).

However, marred with regulatory delays and issues in land acquisition, the company in September 2010 had decided to bifurcate its original plan into two 6 million tonne plants at two different locations in the state.