Land Acquisition, Clearance Issues Delay 22 Indian Steel Projects worth $82 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--According to an assessment report released by the Indian Steel Ministry, 22 major steel projects in the country are being held up because of procedural delays in obtaining environmental impact assessment clearance from the Environmental Information Center of India, delays in land acquisition chiefly due to public protests, and the global economic downturn. Some of the major domestic and international players affected by the delays are ArcelorMittal (NYSE:MT) (Luxembourg), Essar Steel (Mumbai), Jindal Steel & Power Limited (BSE:532286) (JSPL) (New Delhi), Posco (NYSE:PKX) (Pohang, South Korea), and Tata Steel Limited (BSE:500470) (Mumbai).

The 22 project sites are in different parts of the country. Of these, eight are distributed across Andhra Pradesh, Gujarat, Maharashtra, Karnataka and West Bengal, eight are in Jharkhand, and six are in Orissa. The total investment involved in these projects is more than $82 billion. In fact, the three projects being developed by Posco and ArcelorMittal in the states of Jharkhand and Orissa alone will require investments to the tune of $27 billion.

Four of the largest projects in terms of investment are Posco's $10 billion project in Orissa; ArcelorMittal's two greenfield projects in Jharkhand and Orissa, each with a capacity of 12 million tons per year and an investment of $8 billion; and JSPL's $8 billion project, also in Jharkhand. Posco's project in Orissa is facing opposition from the local residents in acquiring land, but despite strong public protests, the company has managed to acquire 4,000 acres of land and is in the process of acquiring another 200 acres. The company is also facing problems regarding the allocation of the Khandahar iron ore mines.

ArcelorMittal is facing similar problems in acquiring private land for the Jharkhand project, and those problems have created further delays in procuring the 1,000 acres of government land that the company had applied for almost a year ago. The company already has shifted the project site once from East Singhbhum to Gumla and Khunti because of strong public protests. But the new site is drawing equally fervent protests. Land survey for the company's project in Orissa is still incomplete, and the company has yet to acquire any private land. Similar land issues are plaguing JSPL's project to be set up at Nimdih in Jharkhand.

Tata Steel has two projects planned, one at Saraikela in Jharkhand and one at Kalinga Nagar in Orissa, with a combined investment of $6.7 billion. While the first phase of the project at Kalinga Nagar has a scheduled start date of March 2013, the company is facing land acquisition delays because of encroachment issues. A company spokesperson said that the firm has registered 3,008 acres of land for the project and rehabilitation processes are under way. According to company sources, the project at Saraikela will be completed within four years of land acquisition. Tata Steel already has placed equipment supply orders worth more than $1.2 billion for various projects.

JSPL's second project at Jharkhand is the $7.6 billion project at Patratu, while the company's project at Angul in Orissa envisages an investment of $4.6 billion. Of the 3,114 acres of land required at Patratu, the company has acquired 964 acres.

Essar Steel's mega project at Chaibasa in Jharkhand will require an investment of $4.7 billion. Of the required 3,000 acres of land, the company has applied to the Jharkhand Industrial Infrastructure Development Corporation (JIIDCO) (Ranchi, Jharkhand) for 2,120 acres of land. Essar Steel already has acquired 351 acres of land for its $4.6 billion project at Paradeep in Orissa.

Although the 22 projects could be delayed because of various issues, all the companies are serious about the projects and are committed to their plans, according to the Steel Secretary PK Rastogi. He added that the economy had lowered global steel demand, causing several companies to push back project schedules, but he was confident that by the time the economy stabilized, all the regulatory and social issues would be sorted out. An ArcelorMittal spokesman also has reiterated the company's commitment to complete its projects in India even if there are a few delays. In fact, reports in April had stated that the company intended to delay its projects in Jharkhand and Orissa by two years because of the recession and procedural delays.

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