Bureaucratic Hurdles Kill Three Major Steel Projects in India

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--In just a few days, three major Indian steel sector projects have been scrapped. The latest project to be cut is sponge iron producer Monnet Ispat's (BSE:513446) (New Delhi, India) proposed 1.5 million-ton steel plant in Jharkhand. This follows an announcement by ArcelorMittal (NYSE:MT) (Luxembourg) and POSCO (NYSE:PKX) (Seoul, South Korea) of the cancellation of multi-billion dollar steel mill projects.

For related information, see July 19, 2013, article - Indian Steel Projects Dropped by ArcelorMittal, POSCO.

Monnet's cancellation of the project in Jharkhand follows repeated delays in obtaining clearances for land, water and raw material linkage. Sandeep Jajodia, executive vice chairman and managing director of the company: "We have been trying to put up this project and get clearance for quite a while but Jharkhand government has not been very responsible. There has been a very chaotic business environment in Jharkhand."

However, he added that if the Jharkhand state government were willing to support the project, the company would be happy to go back.

Scrapping of the project would still lead to a loss of $2.6 million to the company, Jajodia said. He added that the steel industry in India is probably going through one of its worst times.

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