ArcelorMittal aborts Indian steel plant planned in Orissa

India News Bulletin Desk

British Indian steel magnate Lakshmi Mittal’s firm ArcelorMittal has decided to scrap the construction of an integrated steel and power plant in Orissa’s Keonjhar district because of “significant external delays” and land acquisition complexities.

Lakshmi Mittal, CEO of ArcelorMittal
Image: ArcelorMittal

The company’s executives met with the state government’s chief secretary to inform him about killing the plant construction more than six years after it was first planned.

ArcelorMittal and the Orissa state government had signed a Memorandum of Understanding (MoU) in December 2006 for the steel company to construct a 12-million-tonne integrated steel plant in Keonjhar.

Since that date, ArcelorMittal has completed a feasibility report, an environmental impact assessment study and other relevant technical reports, as well as held eight public hearing session and invested in a number of CSR projects.

But, the project has faced significant external delays.

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, which is a necessary requirement for the project. Therefore, taking into account the current economic climate, ArcelorMittal has concluded it will no longer be pursuing its plans for a steel plant in Keonjhar at this stage, the company said.

“Over the last seven years we have invested considerable resources into this project; but, the delays relating to land acquisition and allocation of captive iron ore blocks means this project is no longer viable,” said Vijay Bhatnagar, executive vice president and member of the management committee, its chief executive of India and China.

But this announcement does not affect ArcelorMittal’s plan to pursue its two other Indian projects in Jharkhand and Karnataka.

“We will continue to pursue our other two projects in Jharkhand and Karnataka, both of which are making steady progress,” Bhatnagar said.  

ArcelorMittal has become the second company to withdraw its steel plant construction in India in one week. earlier this week, South Korean firm Posco dropped its $5.3bn (£3.5bn) planned steel project in Karnataka state after facing land deal delays and local opposition.

The pulling off of both the global players is thought to be a severe blow to India’s FDI strategy.

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