ArcelorMittal scraps 12 MT steel project in Odisha citing delays

Says plans for Jharkhand and Karnataka to stay intact

Steel giant ArcelorMittal has decided to drop its plan to set up a 12- million tonne steel plant in Odisha, citing inordinate delays in land acquisition and allocation of iron ore mines.

Company officials met the state government’s chief secretary on Wednesday and requested him not to renew their memorandum of understanding (MoU); this had formally expired in November 2011 and the company had then written a letter for a renewal.

"Over the last seven years, we have invested considerable resources into this project. However, the inordinate delays relating to land acquisition and allocation of captive iron ore blocks means this project is no longer viable,” Vijay Bhatnagar, executive vice-president and chief executive for India and China, was quoted as saying in a company release.

However, its decision to pull out from Odisha will not have any impact on project proposals in other states, the company clarified. “We will continue to pursue our other two projects in Jharkhand and Karnataka, both of which are making steady progress,” it said.

The decision to halt the Odisha project comes a day after South Korea’s Posco announced it was shelving its Karnataka project plan.

ArcelorMittal had initially entered into an MoU with the Odisha government on December 21, 2006, for a 12-mt integrated steel making facility and a captive power plant, at an estimated cost of Rs 40,000 crore. This was to come up at Patna in Keonjhar district. It did not make progress because of stiff opposition from villagers to land acquisition.

The company said it had achieved important milestones such as completion of a feasibility report, environment impact assessment study and other relevant technical assistance reports. Plus, holding of eight gram sabhas of 15 such village meetings to be held in the area.

By the MoU, the project required around 8,000 acres. The state-owned Industrial Promotion and Investment Corporation of Orissa Ltd had approved 7,003 acres for the project and an additional 750.6 acres for the plant township. Of the approved size, 2,583.5 acres were with the state government. The rest was with people in about 15 villages of Keonjhar.

Besides problems in land acquisition, delay in grant of an iron ore lease also forced the company’s hand. Of its seven applications to grant  leases at different places, six remained unprocessed since 2009, sources said. "ArcelorMittal has not been able to acquire the requisite land for the steel plant, nor has it been able to ensure captive iron ore security, a necessary requirement for the project,” the company stated.

Therefore, taking into account the current economic climate, the company has concluded that it will no longer be pursuing its plans for a steel plant in Keonjhar at this stage