State Assists Tata Steel in Land Acquisition for $625 Million Titanium Dioxide Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--The state government of Tamil Nadu has recently agreed to assist Tata Steel Limited (BOM:500470) (Mumbai) in the procurement of 10,000 acres of land for the proposed $625 million titanium dioxide plant in the district of Tuticorin. This is the first time that the Tamil Nadu government has officially announced its decision to help Tata Steel, which has been unable to begin the project after signing a memorandum of understanding with the state government in June 2007, after two earlier attempts in 2002 and 2005. The company plans to undertake extensive negotiations with the Tamil Nadu government in this regard.

Land acquisition in Tamil Nadu was becoming an arduous task for the steel major due to lack of clear legal documents, unavailability of parent documents, difficulties in tracing the legal owners of the lands and random hikes of 300% to 400% in land prices by middlemen claiming to represent the land owners. With the progress of the project hindered for more than a year, during which it was able to acquire only 25 acres of land, the company had begun to evaluate the states of Andhra Pradesh and Orissa as potential alternatives for shifting the project out of Tamil Nadu. The project also became mired in politics when local powers in Tuticorin claimed that the company wanted to acquire agricultural lands. However, the Tamil Nadu government later repudiated these allegations and clarified that less than 4% of the land area proposed for mining was farming land.

The government of Tamil Nadu will not be directly involved in the purchase of large stretches of land for Tata Steel, but will facilitate a smooth process of land acquisition for the company. The state proposes purchasing small pieces of land that will assist the company in accumulating contiguous regions of up to 10,000 acres for mining. Government officials have been instructed to make available clear title deeds that will enable Tata Steel to approach legitimate landowners.

Tata Steel plans to undertake mining and processing of the mineral-rich beach sands in the Sattankulam and Tiruchendur regions of Tuticorin for the proposed 60,000-ton-per-year titanium dioxide plant. Feasibility studies have revealed that the mineral deposits in these regions are composed of 65% to 70% ilmenite, 15% to 16% sillimanite, 4% to 6% rutile, and 4% zircon. Mining and processing of the sand deposits is difficult due to high slime content and unavailability of water, which is required for processing. The project will be undertaken in two phases. Phase I, which will last for 20 months, will involve mining and separation of ilmenite and other minerals to subsequently produce synthetic rutile or titanium dioxide slag. Phase II will involve the production of titanium dioxide pigment. The project will involve an initial production of 500,000 tons of ilmenite per year, which will later be increased to 1 million tons per year.

The project has been assessed for environmental impact by the Manonmaniam Sundaranar University of Tamil Nadu, which carried out studies related to radiation, and Tamil Nadu Agriculture University, which was engaged to draw up mine rehabilitation schemes. The project is expected to generate more than 1,000 direct employment opportunities. It is considered vital for Tata Steel, which wants to make forays into the non-ferrous metals sector.

India currently imports 30,000 of titanium dioxide each year. Worldwide consumption of the substance is estimated to be 4 million tons per year. When used in the form of a powder, titanium dioxide functions as a pigment that provides opacity and whiteness to a variety of products such as inks, foods, medicines, paints, papers, plastics and toothpastes. It is used as a coloring agent in foods and as a thickener in cosmetic products. Titanium dioxide also has extensive use in plastics, acting as an absorber of ultraviolet light and is widely used in the detoxification of wastewater.

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