The Hindu Business Line : Cashing in on mineral reserves

Orissa, the most backward State of India, has finally burst onto the scene of industrialisation on strength of its mineral might. Its entry has been so powerful that about Rs 3,00,000 crore has been promised to the State in three sectors such as steel, thermal power and alumina sector only. Now, Orissa is being identified as steel capital as well as the next powerhouse of the country. Why the rush?

Orissa sits on rich mineral deposits, which are yet to be tapped to their fullest potential. The State has about 33 per cent of country's iron ore reserve, 27.59 per cent of coal and 49.74 per cent of bauxite ore. But who are the companies those reposed faith on the State Government? South Korean steel major POSCO, which has promised highest foreign direct investment of the country so far, world's largest steel maker Arcelor-Mittal, the country's top private steel maker Tata Steel, Essar and Jindal group.

While POSCO has chosen coastal Jagatsinghpur district for its 12-million tonne steel mill at an investment of Rs 52,000 crore and Arcelor-Mittal concentrated in the mineral-rich Keonjhar district for a mega greenfield steel project, Tata has made its preference at Kalinga Nagar, a strategic place from point of view of access to ore reserve, water and communication.

POSCO, around which a number of downstream industries were developed in South Korea, has promised a similar turnaround in the State. The world's third largest producer of steel has already sought additional land from the State Government to facilitate these industries such as auto components or ship manufacturers. If all controversies and land hurdles are put aside, the company has promised to build its plant in a record time.

Production target

Though Tata has been going round the world on buying spree to fulfil its ambitious dream of becoming a global player, the proposed six-million tonne steel project would definitely help the company to cross the 30 MTPA target production within the next five years. Arcelor-Mittal seemed to paying equal importance to its 12 million-tonne each steel project in both Orissa as well as Jharkhand. Unlike its affairs with Jharkhand, the company has maintained regular communications with the Orissa Government.

Cashing in on the ore reserve, the State Government has signed memoranda of understanding with 51 companies to set up steel plants to produce around 75 mt of steel per annum, entered into MoU with 13 companies to establish thermal power plants with as projected capacity of about 17,000 MW and three to aluminum companies also promised substantial investments.

Power plants

Besides private companies, five PSUs of the State Government have drawn up plans to set up power plants. The State Government has also floated 3 Shell companies to set up mini-ultra power projects. Though Reliance Energy Ltd is yet to come up with any concrete plan and programme to set up the world's largest pit-head thermal power project in Orissa's Sambalpur district, the company signed a communiqué with the State Government to resolve all contentious issues before embarking on the project.

Similarly, Tata Power, the country's largest independent power producer, has recently upgraded its MoU raising the capacity from 1000 MW to 2000 MW. In the process, the company promised about Rs 8,000 crore. The other prominent power producers who entered into MoU with the State Government included GMR Energy, Lanco Power, Monnet Group, and KVK Nilanchal.

In the aluminum sector, public sector National Aluminum Company Ltd had chosen Orissa as its headquarters in 1980s. Nalco is now the leading producer and exporter of alumina and aluminium in the country, with a sales turnover of more than $1000 million and net profit of more than $300 million. It is now on the verge of becoming a global entity by exploring opportunities in West Asia and Indonesia. Among new comers, Vedanta Alumina Ltd, Hindalco and Utkal Alumina Industries Ltd have started work at a brisk pace in different regions of the State.

Favourite destination

Recently, infrastructure major L&T and the world's seventh largest aluminum producer Dubai Alumina Ltd, had shown interest to come up with joint ventures. Why has the State become a favourite destination for companies? The State is also intertwined by rivers, which could solve major headache of getting water supply for industries. Moreover, Orissa is considered as a peaceful State with less incidents of law and order problem, that also encourages companies shift their base to the State.

Bhubaneswar being an ideal location from point of view of education, the companies were showing interest in the State. The impact of industrial revolution is already evident from the scores of proposals in infrastructure development.

The State Government has already identified 13 sites having potential for minor ports. While the Government has signed MoUs with four private developers for the development of minor ports, several other companies have shown interests in four more sites. Dhamra Port, a greenfield project, has already been handed over to Dhamra Port Company Ltd, a joint venture between L&T and Tata. It is being developed with a project cost of Rs 2,469 crore and is scheduled to be commissioned by 2009.

Port development

The Gopalpur Port. - Lingaraj Panda

The Gopalpur Port has been handed over to a consortium of private developers for development of this port as an all-weather port. The port has already commenced operation from February. The Jatadhar Muhan, is another strategic point for development of minor port that has been proposed to be developed by POSCO India Ltd as a captive minor port. The State Government signed MoU with the Chennai-based Creative Port Ltd last year for which an investment to the tune of Rs 2,000 crore had been proposed. The railway linkage between important mineral reserve districts with minor ports is all set to improve. Private steel producers including POSCO have come up with special purpose vehicle to develop railway link between Paradip and Haridaspur.

Similarly, discussions are in advance stage to improve Gunupur-Thirubali and Sukinda-Angul railway link.

The term CSR has finally become a buzzword in Orissa. Several private companies even before their projects becoming operational have launched CSR activities to showcase glimpse of developments in the offing. Nalco, since its inception, has been a responsible company as far as pollution control is concerned. Nalco's technology associate Aluminum Pechiney (AP), France, with their experience of stringent pollution control standards in Europe, have ensured eco-friendly process technology. Reclamation process taken up by the company at its Damanjodi facility has been a benchmark in the country. Besides rehabilitation packages, the company has been in the forefront of sponsoring public events and improvement of public utility services all over the State. Similarly, after new zone in name of East Coast Railway was founded in Bhubaneswar, the zone's social responsibility is fast becoming visible. The zone has kicked off flurry of activities, which has contributed to State's economy.

Take the example of POSCO-India. The company has, so far, taken physical possession over only seven acres of land but has involved itself in different activities. POSCO-India emphasised upon the collective development of society through continuous social responsible activities. As a part of its CSR programme, the company has announced vocational training for youths of the to be displaced and affected families in the proposed plant site area even before the commencement of the construction of its project work to enhance their employability.

Meanwhile, the company has started the ground preparation for HRD training centre near Paradip, which will provide high quality training in various disciplines not only to POSCO-India employees but also to the locals leading to better employment opportunities.

With an aim to bringing the benefits of technology advancement to the local people in healthcare fields, POSCO-India, organised a cleft-lip surgery and palate correction camp for identified patients of Jagatsinghpur district in July 2006 in which 27 children were treated. The camp was conducted under the expertise of 13 medical professors from Dental Department of Seoul National University.

Moreover, POSCO-India, in collaboration with T.J. Park Foundation is also providing scholarships to talented students from all over India to foster higher education and research. In 2006, 72 students, including 38 from Orissa, were awarded scholarships for Management and Technical studies, research and studies abroad. The company aims to double the number of scholarships in the current year. Similarly, Tata Steel, which proposed six million tonne project at Kalinga Nagar area, announced that for the first time, 200 boys would undergo football training from Tata Football Academy (TFA). Some of them are also expected to be selected for getting regular coaching from TFA.

Tata Steel said the company was going beyond the stipulations of rehabilitation and resettlement policy to provide better quality of life for them under the concept of Tata Steel Parivar.

It is implementing this Parivar concept for the displaced families for the first time in Kalinga Nagar, which apart from ensuring improvement in the quality of life would also give importance to the cultural and emotional requirements.

Tata Steel Parivar is providing technical training along with personality development to the youths of displaced families and providing them with jobs with construction partners to build the steel plant.

The first batch of 29 boys trained in welding technology have been employed in Punj Loyd and these boys have started earning Rs 8000-12,000 per month. Two women self-help groups (SHGs), supported by the Tata Steel Rural Develo)pment Society have begun the process of bringing into the forefront empowerment activities for the women members of Tata Steel Parivar. Today there are nearly 20 SHGs working in Kalinga Nagar area.

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