In a setback to Odisha government’s industrialization process, world’s largest steel maker ArcelorMittal on Wednesday announced it would withdraw its proposed Rs. 40,000 project in the state.
A spokesperson for the company said in a statement that they met Odisha chief secretary Jugal Kishore Mahapatra to inform him that the company was pulling out of the 12 million tonne per annum project in the state’s Keonjhar district, about 400 km north of Bhubaneswar.
“The company has decided not to progress with its planned construction of an integrated steel plant and a captive power plant,” the spokesperson said.
Reacting to the announcement, Odisha steel and mines minister Rajanikant Singh said: “The company had not been pursuing the project for the last few years and was not responding to the state government communications.”
A senior government official said the company did not even deposit 10% of the estimated cost of the land where the project was to be set up. So the announcement to scrap the project has no meaning, he said.
ArcelorMittal, which has a presence in more than 60 countries and a revenue of $82 billion in 2012, had singed a MoU with the Odisha government to set up the plant in 2006 and completed several technical studies including feasibility report, environmental assessment report and had invested in corporate social responsibility activities.
But the company was not satisfied with delay in land acquisition and no assurance for captive iron ore mine, an official said.
He added that as per a new guideline by the Odisha government from January, companies investing in the state would not be provided with captive mines.
The announcement comes a day after South Korean steel giant Posco, facing inordinate delays in land acquisition and local opposition, scrapped a $5.3 billion deal to build a steel plant in Karnataka.
ArcelorMittal and Posco's pull-out from Odisha and Karnataka has cast shadows on India's investment climate even as the government tried hard to ease norms for FDI amid decelerating economic growth.
After the government liberalised FDI limits in a dozen sectors, the rupee on Wednesday strengthened by 21 paise to hit a fresh two-week high of 59.10 in early trade.