Steelmaker ArcelorMittal to Focus on Smaller Units in India

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading steel company ArcelorMittal (NYSE:MT) (Luxembourg) has changed its strategy and decided to set up smaller steel plants in India, following difficulties in acquiring land, protests indigenous tribes, and the Indian environmental ministry's crackdown on large industries being set up.

ArcelorMittal will now focus on smaller steel plants in India with production capacities of 1.5 million to 3 million tons per year.

Instead of building mega-steel plants in India's eastern states of Orissa and Jharkhand, ArcelorMittal is now considering Karnataka in southern India, as it may have the least risk in executing such projects. The company had earlier proposed to set up mega-steel plants with production capacities of 12 million tons each in Orissa and Jharkhand. For the Karnataka greenfield project, land acquisition is expected to be completed by the end of this year," said ArcelorMittal's chief financial officer, Aditya Mittal, who is also member of the group management board. "We are also expecting to get some mining leases in Karnataka.

"Our strategy in India has changed. We are now on the ground selling branded steel. Our first domestic production is expected by 2013."

He said the group will consider factors beyond iron-ore deposits for future projects like logistics, proximity to markets, infrastructure, execution time, social factors, business friendliness and a downstream presence, which could supply its global network of mills.

Mittal said even though there had been no problem in obtaining licenses for mines and land in Jharkhand and Orissa, the plans had been slowed due to what he described as "high tribal influence" and that progress on land acquisition had been especially slow in Orissa.

However, he did not specify the state in which it proposed to set up a plant. "The project locations will be well spread across east, west and south India. There will be a mix of captive and partially bought-out iron-ore projects."

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