Indian Steel Projects Dropped by ArcelorMittal, POSCO

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Hard on the heels of POSCO's (NYSE:PKX) (Seoul, South Korea) announcement that it was withdrawing from its proposed $5.4 billion, 6 million-ton steel mill project in the Indian state of Karnataka, ArcelorMittal (NYSE:MT) (Luxembourg), the world's largest steel company, has made a final decision to drop its $12 billion steel mill project in Odisha, India.

"Over the last seven years, we have invested considerable resources into this project," said Vijay Bhatnagar, CEO of ArcelorMittal (India and China). "However, delays relating to land acquisition and allocation of captive iron blocks mean that this project is no longer viable."

Representatives from ArecelorMittal met with Odisha's chief secretary to inform him that they would not proceed with the integrated steel mill and captive power plant.

These project cancellations come at a time when the Indian government is attempting to eliminate barriers and attract foreign-direct investment in order to boost industrial development. A mixture of delays in clearance caused by red tape, difficulties with land acquisition for sites, securing iron-ore feeds, and local anti-project lobby groups has ground down the companies' willingness to move forward.

However, POSCO says that it will proceed with its larger, $12 billion project in Odisha, which also has been subject to serial delays over an eight-year period. This project is claimed to be India's largest foreign-direct investment, and sources say that it will gain focus and impetus, especially now that the Karnataka project has been cancelled.

ArcelorMittal has two other projects in Jharkand (12 million tons) and Karantaka (6 million tons).

For related information, see April 30, 2013, article - POSCO's 12 Million-Ton Indian Steel Project Stalls Again, and May 7, 2012, article - POSCO Turns to Essar Steel Alliance to Unblock 12 Million-Ton Steel Mill.

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