ArcelorMittal’s Rs 50,000-crore Odisha steel plant plan hinges on quick land acquisition

Though rich in mineral resources, Odisha’s chequered past of letting go big-ticket investment proposals for its failure to arrange land is the challenge before Arcelor Mittal-Nippon Steel India (AM/NS India) as it revisits a plan to set up Rs 50,000 crore steel plant in the state.

The unit requires 4,000 acre land and the state government will have to facilitate the acquisition of the land on time.

While the memorandum of understanding (MoUs) signed on Thursday between the Odisha government and the company is just an expression of intent, a binding agreement will be signed only after the land and mining leases are transferred to the world’s largest steel maker.

The Odisha government has assured AM/NS India, according to a statement issued by the state government, to provide “all the required support and facilitation for the setting up of this mega project”, but the MoU does not mention about the land acquisition.

Incidentally, ArcelorMittal hasn’t issued any statement on the MoU so far.

NRI billionaire LN Mittal-led ArcelorMittal had earlier attempted to set up a greenfield steel plant in the state. In 2006, the company had signed a similar MoU with the state, but abandoned the plan in 2013 due to inordinate delay in land acquisition and allocation of captive iron ore blocks. South Korean Posco also aborted its 12 MTPA plant in Odisha for want of land around the same time.

This time around, ArcelorMittal joined hands with Japan’s Nippon Steel for signing on the initial agreement. Jointly they have got a strong foothold in India with the acquisition of erstwhile Essar Steel through the insolvency route. AM/NS India, the 60:40 joint venture between world’s largest steelmaker ArcelorMittal and Japan’s Nippon Steel, has also acquired an iron ore mining lease in Odisha only. Odisha government is also far more investor-friendly now.

Industry watchers, however, are apprehensive, particularly because apart from Tata Steel’s Kalinganagar plant, greenfield steel plants have rarely come up in India in recent times and the main hurdle is issued related to land acquisition.

“An MoU is a very preliminary agreement; it is not binding upon any party. The signing of the MoU does not mean that the plan will be surely be executed. ArcelorMittal had burnt its fingers earlier. But one has to admit that the ground situation is better now and be optimistic that the required land will be made available to the company” one observer said.

A senior industry leader, however, said, “I am sure the state will help the company in acquiring land.”

AM/NS India’s project turning into reality will not just make India closer to the 300 MTPA capacity target, it may also help other foreign companies to set up manufacturing base in India. India’s per capita steel consumption is just around one-third of the world average, and thus, there is a huge scope for growth of the steel industry in India.