Cites land acquisition problem in state
By R. Chandrasekaran
CHENNAI: In what is considered as a big blow to the government’s efforts to project itself as investor friendly, the non-resident Indian Lakshmi Mittal controlled ArcelorMittal has decided to pull out of a project in India citing inordinate delay in land acquisition.
The world’s biggest steel producer had planned to set up a plant in Odisha to produce 12 million tons a year of steel at a cost of Rs.400 billion or over $6.5 billion. Arcelormittal blamed the delay in allocation of captive iron blocks and the land acquisition as major reasons for scrapping the project.
On Tuesday, South Korea’s Posco, the world’s fifth largest steel maker, decided to pull out of a steel project in Karnataka. The company also blamed land acquisition problem due to local residents’ opposition.
Significantly, both ArcelorMittal and Posco cited the same reasons for dropping their steel projects. This is undoubtedly a big blow to the government especially after it has decided to increase the cap of foreign direct investment (FDI) in several sectors, including telecom, insurance, defense and retails.
However, the Odisha government put the blame on ArcelorMittal for failing to deposit the required 10 percent of the 8000 acres of land value that is needed for the project. The Odisha government’s Industrial Infrastructure Development Corporation’s chairman Vishal Kumar Dev has reportedly said, “Despite repeated reminders from the state authorities, the company did not deposit the required charges.” He added that the project remained dormant in the last two years.
The company has not reacted to the state government’s charges, but merely said that it had not invested significant resources into the project during the last seven years. Globally, steel companies are undergoing severe stress in the last few years due to slow down and uncertainty in worldwide economic conditions.
However, ArcelorMittal indicated that it will continue to invest in Jharkhand and Karnataka plants to make 12 million tons and six million tons of steel, respectively.
Significantly, while Posco exited from the Karnataka project, it chose to continue with the Odisha project. Both the companies view the conditions in the same state differently.