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Suresh P. Iyengar

Mumbai, June 29 A delay in allotment of the iron ore lease is holding up Tata Steel’s six million-tonne project at Kalinganagar, Orissa.

Mr B. Muthuraman, Managing Director, Tata Steel, said on the sidelines of a recent press meet that according to an agreement with the Orissa Government, the company was to have got the lease for iron ore mining after putting in place 25 per cent of the equipment required for the project.

“We have met our commitment and are waiting for the State to allot the mines,” he added. Tata Steel signed a memorandum of understanding with the Government in 2004 to set up the plant.

The company had lined up an investment of Rs 15,400 crore and acquired most of the 1,360 hectares needed for the project. It had also placed orders worth Rs 6,500 crore for equipment such as blast furnace, steel melting shop and other civilian structures. The first phase was to have kicked off by 2008 but was delayed for a host of reasons.

As for the delay in the other five-million-tonne steel project planned at Maoist-infested Bastar in Chhattisgarh, Mr Muthuraman said, “The only solution for the problem (by the Maoists) lies in development. We chose the State knowing well of the challenges ahead and have not given up. Land acquisition is in progress but the reality is that the project is delayed.”

Tata Steel signed an agreement with the State in June 2005 for which nearly 80 per cent of the 2,063.06 hectares identified for the project (across 10 villages in the Lohandiguda block) were acquired. There was opposition from farmers to the move.

The company’s subsidiary, Jamshedpur Utilities and Services Company, has already built a model house to rehabilitate villagers and plans homes for all those families displaced by the project.

“Though the greenfield projects in Chhattisgarh, Jharkhand and Orissa are delayed, the company has not shunned any projects. We will focus spending on value-creating assets with accelerated benefits. The brownfield expansion at Jamshedpur will be completed on time,” Mr Muthuraman said.

Tata Steel also plans to increase capacity at Jameshedpur to 10 mt from six mt in 2011. It has set aside a capex of $2 billion (nearly Rs 9,500 crore) over the next three years. The scrip was up two per cent at Rs 397 on Monday.

More Stories on : Steel | New Projects | Minerals | Tata Steel Ltd

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