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Ambarish Mukherjee

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New Delhi, May 11 With the demand for steel growing at around 12 per cent annually, the Government has planned to create more than 250 million tonnes of additional steel making capacity. But land acquisition and environmental problems have effectively stalled all new projects.

Another factor delaying new steel capacities is the stand taken by mineral rich States which insist on granting iron ore mining leases only if the plant is set up within the State.

However, expansion plans of the existing major steel manufacturers are on schedule as there are no land and environmental issues involved. When these projects go on stream, an additional 36.95 mt capacity would be available by 2011-12.

Several State Governments have signed 195 memoranda of understanding (MoUs) with steel companies for putting up an additional 252.9 mt of steel capacity with an estimated aggregate investment of Rs 5,55,038 crore.

But almost all of them have been stalled on issues such as land acquisition.

In addition to the opposition from the local population, environmental clearance is also a major hurdle. In Orissa, around 43 per cent of the land is covered by forest while in Chhattisgarh 46 per cent is under forest cover.

In Jharkhand also, large parts of the State are forest land. Neither the State Governments nor the Centre has any powers to speed up the process of environmental clearance.

After a company gets clearance from the Ministry of Environment and Forest, it has to get this clearance vetted by a division bench of the Supreme Court.

For setting up steel plants, the eastern region has various advantages like iron ore and coal mines, water supply and logistics, such as proximity to ports.

However, steel companies’ efforts to capitalise on the combined benefits offered by the eastern region have failed to take off because of the uncompromising attitude of some State Governments in extending cooperation to the neighbouring States.

For instance, Orissa, Chhattisgarh and Jharkhand are not ready to grant mining licence to companies that have proposed to set up plants in West Bengal.

In order to sort out these problems, the Ministry of Steel is contemplating a policy to bring together the four eastern States and set up a steel investment region because all the raw materials for steel making are available there.

Among the iron ore rich States, leading the pack in terms of MoUs signed is Orissa which has lined up investment plans of Rs 1,92,380 crore followed by Jharkhand with Rs 1,78,496 crore and Chhattisgarh with Rs 89,232 crore.

West Bengal, with two riverine ports but no iron ore reserves, too has lined up investments worth Rs 1,49,500 crore to set up new steel capacities.

Interestingly, not having iron ore does not seem to deter the steel makers from rushing to West Bengal. The last two MoUs for mega steel plants, signed after July 2007, are in West Bengal – JSW Steel (Rs 35,000 crore) and Kalyani Steel (Rs 6,000 crore).

More Stories on : Steel | New Projects | Environment

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