ArcelorMittal sees 2-year delay

World’s largest steelmaker ArcelorMittal said it is facing a minimum of two year delay in commissioning its twin projects in India due to bureaucratic and procedural hurdles.

World’s largest steelmaker ArcelorMittal on Wednesday said it is facing a minimum of two year delay in commissioning its twin projects in India due to bureaucratic and procedural hurdles.

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The company said it expects to complete land acquisition in Jharkhand and Orissa by the end of 2011 and start construction at the sites by early 2012. “Actual steel production would only start by 2014,” said Vijay Bhatnagar, CEO, ArcelorMittal India. “There are procedures and layers of bureaucracy that have to be tackled and that needs time.”

ArcelorMittal would also make less steel than envisaged earlier. “Due to the slump in demand we may cut the size of the plants to produce only 3 million tonnes per annum in the first phase. Investments would also come down accordingly,” he added.

In September 2008, ArcelorMittal chairman and CEO, LN Mittal had said he hoped to lay the foundations of the Orissa project early 2009 and start making steel in 2012. “The key issues for us are land acquisition and mining licences. We are working on both these counts,” Mittal had said. The company has announced an investment of Rs 1,00,000 crore in two projects of 12 million tonnes capacity.

News of the delay comes even as steel secretary PK Rastogi said the industry is better placed for greenfield project expansion. “Due to clear signs of demand prospects, greenfield capacity expansions will re-emerge sooner in India than other countries,” Rastogi said at a Ficci conference.

Korean steel giant Posco’s Rs 52,000 crore Orissa project is also in a state of limbo with the company struggling to acquire land and mining licences. While complex procedures are being touted as the reason for the delays, experts said falling demand for steel worldwide and acute shortage of finance may also have contributed to this.

“With production cuts around the world, some of the big MNCs will look to go slow on their projects in India,” said Bishwanath Bhattacharya, associate director, KPMG advisory.