Mega steel investments planned by foreign companies, such as Posco and ArcelorMittal, continue to be dogged by issues relating to land acquisition and resource allocation.

As a result, most of these big projects are in a limbo in States such as Orissa and Karnataka.

Posco project

South Korean steel major Posco, which is setting up an eight million tonne a year plant in Odisha, is still waiting for the State Government to hand over the land acquired for the purpose. The land acquisition efforts by the Industrial Development Corporation of Orissa Ltd (IDCOL) are mired in a controversy, as local people have been protesting the Government’s move to acquire their land.

“IDCOL is yet to hand over the land to us,” said a Posco official in New Delhi. Posco expects to decide on starting construction on the project only when the corporation hands over the land. “We are hoping that the land will be transferred soon,” the official said.

Posco has sought 2,700 acre for its Odisha project, now downsized to eight mt a year from the initial 12 mt a year. It had signed an agreement with the State Government for the proposed project in Jagatsinghpura in 2005. IDCOL has reportedly acquired 2,000 acre, largely forest land, for the project, and is expected to go for an additional 700 acre.

“We continue to protest the land acquisition,” said Prashant Paikary, spokesperson for Posco Pratishod Sangram Samiti, the agency spearheading the agitation against the Korean steel maker.

Posco’s move to set up a plant in Karnataka, too, has not made any progress. “We are waiting for the Karnataka Government to allocate land,” the Posco official said. Efforts to acquire land in Gadag district for a six-mt a year plant with an investment of Rs 30,000 crore also faced strong protests from the farmers, forcing the State Government to look for an alternative location.

Mittal plant

Arcelor Mittal, the other global giant, which has planned a six-mt a year plant at Bellary in Karnataka, has been handed over some 1,800 acre by the Karnataka Industrial Area Development Board. The company, which has sought another 697 acre for the second phase of the project, is waiting for the Government to allot a mineral concession for an assured raw material linkage before proceeding with the project, sources said.

Following the crackdown on illegal mining in Karnataka, there has been a ban on issue of new mining leases. As a result, new steel projects that were hopeful of securing raw material linkages through a mineral concession are in the doldrums.

Severstal-NMDC venture

Russian steelmaker Severstal’s joint venture with NMDC in Karnataka and the proposed joint venture between SAIL and Posco may also face a delay in take-off, with the Government insisting on a majority stake in these ventures. The Severstal-NMDC venture is setting up a three-mt a year project in Karnataka, while the SAIL-Posco JV proposes to set up a three-mt a year plant in Jharkhand.

The steel capacity in India is currently estimated at 90 mt a year and is projected to grow to 126 mt a year by 2014-15.

(This article was published on October 8, 2012)
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