Close on the heels of Vedanta being denied permission to mine bauxite from Niyamgiri Hills, steel major Tata Steel on Tuesday said land acquisition and availability of raw materials would be the two most important issues facing the domestic steel industry in the years to come.
Even though the sector has attracted a lot of investments in the last 10 years including big ticket projects like POSCO's Rs 52,000 crore steel plant in Orissa, almost all of these investments have remained only on paper and are likely to stay that way in the near future.
"Putting up a new steel plant is a big problem today,” said H.M. Nerurkar, managing director, Tata Steel. "No big steel plant has been set up in the 2000s and despite a lot of announcements, no big greenfield plant has come up recently."
Besides land, iron ore which is a key raw material in the production of steel, has also been a bone of contention for prospective steel makers. Both ArcelorMittal and POSCO, for example, have neither been able to get land nor the requisite mining leases that they had hoped for while deciding to invest in India.
"We have sufficient iron ore in the country but there is a lot of controversy surrounding it," Nerurkar said. "We need an iron ore policy on the lines of the one that we have for natural gas. The Hoda committee had made a few recommendations in this regard a few years ago. But now that is being reviewed. Whatever policy stand is taken, it should be stuck to."
Tata's own proposed steel project at Kalinga Nagar in Orissa has been stuck due to resistance from the local population and the company admitted it has not been a smooth ride.
"When we went there, we did not engage with the people and that I think was a mistake," he said. "We found resistance and then we realised that we needed to engage with the community."