* Says will not pursue 12 mln tonne/yr plant in Odisha
* To stick to 12 mln tonne Jharkhand plant, 6 mln tonnes
* Govt official says Odisha project was dormant for two
By Krishna N Das
NEW DELHI, July 17 ArcelorMittal, the
world's top steelmaker, said it would scrap a planned steel
plant in India due to delays in acquiring land and an iron ore
mine, obstacles that have also caused South Korea's POSCO
to abandon plans.
The decision to scrap the planned 12 million-tonnes-a-year
(MTA) plant in the eastern state of Odisha, comes a day after
the world's fifth biggest steelmaker, POSCO, said it was
ditching a 6 MTA plant in the southern Karnataka state because
of delays in receiving iron ore mining rights and opposition
from residents which had held back land acquisition.
The failed projects will be a blow to India's federal
government, which on Tuesday relaxed foreign investment rules to
draw in funds needed to turn around slowing economic growth and
support a weak rupee.
ArcelorMittal India and China Chief Executive Vijay
Bhatnagar said the company's other two projects in mineral-rich
states of Jharkhand and Karnataka were making "steady progress"
and it would continue to pursue them.
The Jharkhand plant is expected to have an annual capacity
of 12 million tonnes, while the one in Karnataka is expected to
have capacity of 6 million tonnes.
"The delays relating to land acquisition and allocation of
captive iron ore blocks means (the Odisha) project is no longer
viable," Bhatnagar said.
POSCO said on Tuesday that it would focus on its main steel
project for a 12 MTA plant in Odisha.
An Odisha government official said ArcelorMittal had not
deposited the required 10 percent value of the 8,000 acres of
land it wanted.
"Despite repeated reminders from the state authorities, the
company did not deposit the required charges," said Vishal Kumar
Dev, chairman of the Industrial Infrastructure Development Corp
of Odisha, the agency that facilitates industrial investment.
"The project was dormant for the past two years," he added.
ArcelorMittal spokesman Ritesh Sinha declined to comment on
the deposit but Bhatnagar said in a statement the company had
invested "considerable resources into the project" over the past
Industry executives have estimated it costs about $1 billion
to set up a plant in India of 1 million tonnes.
"I don't think many people had factored in them continuing
with the (Odisha) project," said Neil Sampat, analyst at Nomura
Although ArcelorMittal is pulling out of Odisha, its rival
POSCO is expected to get an iron ore exploration licence for its
planned $12 billion plant in the state, two government
officials told Reuters last week.
Odisha lies in the heart of India's mining belt and holds a
third of the country's iron ore reserves, a quarter of its coal,
half its bauxite and more than 90 percent of its nickel and
Since January 2008, the state has attracted investment
proposals worth $210 billion. Jindal Steel & Power Ltd
, Tata Steel Ltd and Vedanta Resources Plc
are some of the top companies with operations there.