ArcelorMittal scraps Odisha steel project

Global steel major ArcelorMittal on Wednesday scrapped the Rs 50,000 crore steel project in Odisha citing inordinate delay and problem in acquiring land and securing iron ore linkages.

The decision to pull out from the State came a day after South Korean steel major Posco scrapped its Rs 30,000 crore steel mill in Karnataka.

“Not a single condition stated in the MoU was carried out. We cannot be faulted for the project’s closure,” steel and mines minister Rajani Kanta Singh said.

The opposition refused to buy the government story. “It is unfortunate that such a mega project proposed in the state, more so in a backward region, was shelved. This proves the lack of vision and insincerity of the government,” said OPCC president Jayadev Jena, who hails from Keonjhar district.

“It is now more than obvious that this government has been signing MoUs only for money and to hoodwink the people of the state. They have no sincerity of purpose,” said former minister and veteran Congress leader Niranjan Patnaik. He found it ironical that a mineral-rich district like Keonjhar has practically no industry and ArcelorMittal, which was the only hope of the people, has decided to leave.

Senior BJP leader Bijay Mohapatra, mirrored the same sentiments. “The withdrawal of ArcelorMittal has exposed the true face of industrialisation in Odisha. Notwithstanding the big claims made by the government, it has failed to provide a conducive atmosphere for the growth of industries. How else can one explain the inordinately long time being taken in acquiring land for big projects?” he said.

ArcelorMittal had signed a memorandum of understanding (MoU) with the State Government on December 21, 2006 to set up a 12 million tonne steel plant in four phases at Patna in Keonjhar district with an investment of $12 bn (Rs 50,000 crore). The MoU, which expired in December, 2011 was due for renewal.

The company has not made any progress during the last three yeas after conducting gram sabhas in eight out of 15 required for land acquisition. During the last three years, the company officials could not move to the project site due to stiff opposition from the locals. The status of the project remained the same, sources said.ArcelorMittal’s proposed project was the second biggest foreign direct investment in the State after the Rs 52,000 crore Posco steel project, which is also hanging fire due to public protest.

In the steel sector, the state government has signed 49 MoUs till date but only 29 of these units have gone into partial production. The aluminium industry scenario also does not appear to be bright with Vedanta’s one-million-tonne alumina refinery at Lanjigarh in Kalahandi district facing a serious raw material crisis with the fate of Niyamgiri bauxite mining project, its biggest hope, yet to be decided.

On the power front, of the 29 MoUs the state government has signed with private companies since 2004, only one project has been commissioned so far while seven others are in different stages of construction. The remaining 21 have failed to take off because of a variety of reasons including problems of land acquisition and delay in forest and environment clearance.

Chief secretary Jugal Kishore Mohapatra said ArcelorMittal’s withdrawal would not affect other projects. He said the company took the decision for ‘business reasons’. The government will not request the company to reconsider its decision, he said. He admitted there was ‘problem in land acquisition’ and said since work on the project had not progressed much, the government did not recommend mine for it.