The global financial downturn may delay steel behemoth ArcelorMittal's India plans of setting up two greenfield steel projects with an investment of about Rs 80,000 crore (Rs 800 billion), a top company official has said.
"If demand for steel continues to be down for two years, the pace of our proposed projects is likely to slow," ArcelorMittal India CEO Vijay Bhatnagar told PTI on the sidelines of an international metal conference here.
The L N Mittal-led company plans to set up integrated steel plants of a 12 million tonne capacity each in Jharkhand and Orissa, for which it had inked memoranda of understanding with the respective state governments about three years ago.
The company had envisaged commencing the first phase of production from its Jharkhand plant by 2012, which would now be delayed in view of slackening demand for steel as also the liquidity crunch.
"If it is a downturn of huge proportions, then we don't know where are we heading towards. One has to be cautious and prudent as there is a huge liquidity crunch," Bhatnagar said.
Asked which of the two projects is expected to come up first, the ArcelorMittal top brass said the company is facing a peculiar situation in both the states.
"In Jharkhand we have got iron ore mines, but don't yet have land whereas in Orissa we are better placed in terms of land, but are yet to get mines," he said.
In both Orissa and Jharkhand, ArcelorMittal is facing stiff resistance from locals, who are not ready to part away with their land for the proposed projects.
Though admitting to protests, Bhatnagar exuded confidence in resolving the matter through dialogue.
"We want to take everybody along in our projects and so are engaging all the stakeholders in the dialogue," he said.
In Orissa, the steel major has completed the draft of its detailed project report whereas in Jharkhand it is likely to finish it by March next year.
In both the states, consultant M N Dastur has been entrusted with the job of preparing the DPRs.
As per standard practice in the steel industry, it takes nearly 18 months from the date of MoU signing to complete the DPR and four years thereafter to commission production at a new steel plant.
In the case of ArcelorMittal, however, the DPRs have been delayed.
Though expressing satisfaction over the progress of the two projects, Bhatnagar said things should have moved faster.
Even as Bhatnagar claimed the company's long-term plans for India remain intact, he said neccessary approvals and land acquisition would decide the pace of the projects.
The steel major has been alloted iron ore mines in Karampada with a reserve of about 65 million tonnes in Jharkhand while it is yet to procure mines in Orissa.
The company's total iron ore requirements for both the plants would be pegged at about 1,200 million tonnes over a span of 30 years.
The company has requisitioned around 11,000 acres from the Jharkhand government and 7,750 acres in Orissa.