Last updated: October 4, 2009 7:33 pm

Mittal set to quit $20bn Indian steel project

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

Lakshmi Mittal is close to pulling out of a $20bn plan to build two large steel plants in India – the centrepiece of efforts by one of the world’s most prominent industrialists to expand in the country of his birth.

Delays in persuading farmers and others to sell the land he needs for the developments in the states of Jharkand and Orissa are “unacceptable”, the chairman and main owner of the ArcelorMittal steel company told the FT.

“If we cannot make progress in these two sites we will have to abandon the idea of starting the projects there and look for other places in India for our expansion,” Mr Mittal said.

Although Mr Mittal said he was still committed to building at least one steel plant in India, abandoning his plan to have two sites producing between them about 24m tonnes of steel a year by around 2015 would be a big blow.

It would delay by several years his plans to have a sizeable presence in India.

Mr Mittal, whose company is the world’s biggest steelmaker but has very little presence in India, said people there had to be “educated” into supporting gradual industrialisation, including the need to build steel plants on agricultural land.

Persuading individuals to release land for development has long been a political problem for India, leading to government efforts to make it easier for industrialists to buy land.

Last year, Tata Motors had to move its plant for its Nano car from West Bengal to Gujarat after difficulties in getting approval for land purchases.

India is well behind China in terms of steelmaking. Last year, it produced 55m tonnes. slightly more than a tenth of Chinese production.

In spite of this, India is already the world’s fifth-biggest country in terms of steel output. Mr Mittal, whose company has been working on its planned Indian plants for more than two years, thinks that by 2020 India will be making four times as much steel as it does now.

Even though this year world steel output is likely to be 10-15 per cent down on last year as a result of the recession, in India 2009 production is expected to be well ahead of last year’s.

ArcelorMittal said that if it decided to abandon plans for the two sites, for which preparatory work has been under way for two years, the financial effect would be “negligible” since no land had so far been acquired and no building work done.

Related Topics

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE