Karnataka moots special package for steel firms

Companies like Posco and Bhushan, setting up their plants away from iron ore mines, will be eligible for the incentive package. 

The Karnataka government is working out a special incentive package for some big-ticket investors in the steel sector, like Posco and Bhushan Steel, which are willing to locate their plants away from iron ore mines. 

Murugesh R Nirani, minister for large and medium industries, government of Karnataka, said the finance department had been asked to work out a special incentive package for Posco and other steel companies on a case to case to basis. According to him, the government is ready to give cross subsidy on transportation of raw materials to those who will locate their plants away from iron ore mines. 

“We have told these companies that the state government will give some special incentives like tax concessions and some cross subsidy in their cost of transportation of raw materials like iron ore. We have discussed the issue with the chief minister and he has agreed,” Nirani told Business Standard. 

Most companies who want to set up plants in the state seek land in iron ore-rich Bellary-Hospet region. Posco and Bhushan Steel have also sought land in Bellary. But Nirani said, “We can not give land to all steel players in one district. So, we have suggested to all companies to select one of the five districts, where the proposed steel zone is being developed, to locate their plants. This is essential to avoid pollution in one place. It also helps them to get required manpower.” 

The state is developing a steel zone across seven districts — Bellary, Koppal, Bagalkot, Gadag, Bijapur, Haveri and Raichur. During last month’s Global Investors’ Meet, the state government signed memorandum of understandings (MoUs), worth Rs 2.56 lakh crore, with 53 steel companies. 

He said, “A notification for acquisition of land in Bijapur district is also issued and allotment will be done on the first come first serve basis.” 

Prior to Global Investors’ Meet in Bangalore, South Korean steel giant Posco, which had shown interest in setting up a plant in the state, indicated that it was withdrawing due to denial of written commitment for allotment of iron ore mines and land by the state government, but signed an MoU after the government assured that it would look into its concerns. 

The state government has offered land to Posco and Bhushan Steel in Bijapur district. It has allotted 4,500 acres of land to ArcelorMittal in Bellary district and 1,500 acres to Tata Metaliks in Haveri district. It has identified land in Bijapur district for Posco and NMDC. 

While Posco has plans to invest Rs 32,300 crore for setting up a 6-MTPA (million tonne per annum) steel plant and a 400-mega watts (Mw) captive power plant, Bhushan Steel will establish a 6-MTPA steel plant at an investment of Rs 27,928 crore. Posco requires 5,000 acres of land and 200,000 kilo litres of water per day for its plant. 

The government has proposed Posco to set up its plant in Basavanabagewadi taluk in Bijapur district on either side of Almatti dam, so that the company could get sufficient water. But Posco is not interested due to higher cost in transportation of ore. 

“We have some 5,000 acres of land available in Bijapur, which can be allotted to Posco.” 

The government has also earmarked land for NMDC in Bijapur and for Surya Vijayanagar Steel in Bagalkot district. NMDC has proposed to set up a 6-MTPA steel plant. 

The government is likely to send a recommendation to the Centre for allotment of mining license to some more companies next month, according to him.