Mittal may exit Orissa, J'khand projects over delays

ArcelorMittal, the world's largest steel maker, today threatened to abandon its $20 billion steel projects in two Indian states over delays, but will look for new sites within the country for the plants.

"The company continues to work on its two greenfield projects in Jharkhand and Orissa. However, in the event that land acquisition continues to prove difficult, we will start to search for alternative sites in India...," ArcelorMittal Chairman and CEO Lakshmi Mittal said in a statement.

The statement followed a report in The Financial Times, which carried an interview of Mittal, stating: "Lakshmi Mittal is close to pulling out of a $20 billion plan to build two large steel plants in India..."

In the statement, Mittal said: "ArcelorMittal has no plans to quit its investment plans for India... Is an important country for steel demand growth and... Important part of ArcelorMittal's long-term strategic plans."

Shortly after the merger of Mittal Steel with Arcelor in 2006, Mittal had announced plans for a 12-mtpa steel plant in Orissa and thereafter an identical project in Jharkhand. But work on acquiring land for the projects hit a wall of opposition from locals.

"I have no information from the company....I believe that land acquisition for that company's project is on," said Orissa Chief Minister Naveen Patnaik.

Mines Secretary Santha Sheela Nair said ArcelorMittal has "not approached us with any specific complaints. Whatever issues regarding mining (that is) pending with us, we have already cleared that."

Jharkhand Chief Secretary Sheo Basant said that "officially, they have not communicated anything to us."

Out of its requirement of 8,000 acre of land for the proposed steel plant, township and CPP in Orissa, no land has so far been allotted to the company. ArcelotMittal has, however, been holding 'gram sabhas' (village meetings) to acquire land under Patna Tehsil in Orissa's Keonjhar district.

"They (ArcelorMittal) are very positive about their plan in Orissa", Patnaik told reporters.

Mittal told FT that people in India had to be "educated" into supporting gradual industrialisation, including the need to build new steel plants on agricultural land.

Jharkhand's Industry Director Aradhana Patnaik said: "The government can facilitate a dialogue... But the steel company has to purchase land from the villagers by winning their confidence... It seems there is a big communication gap between ArcelorMittal and the villagers."

"Although Mittal said he was still committed to building at least one steel plant in India, abandoning his plan to have two sites producing between them about 24 million tonnes of steel a year by around 2015 would be a big blow," FT said.

The newspaper quoted Mittal as saying that the delays in persuading farmers and others to sell the land required for building the plants were "unacceptable" to the company.