ArcelorMittal, the world's largest steel maker, has signed an initial agreement to spend 300 billion rupees ($6.4 billion) on the construction of a six million tonne a year steel plant in southern India.
The deal was first announced in January but made official yesterday was signed on Thursday at a global investor conference.
The proposed facility in southern India's Karnataka state, will include a steel plant, a captive power plant and iron ore mines, and will be built in the state's Bellary district over an area of around 4,800 acres (1,920 hectares). It could also be built ahead of two pending projects elsewhere in the country.
Luxembourg-based ArcelorMittal and South Korea's POSCO have faced delays of more than two years to build facilities with a total capacity of 37 million tonnes in eastern India, due to delays in the allocation of mining leases and protests by local farmers against land acquisition.
The company first announced plans to invest a total of $20 billion to $25 billion to build steel plants in the eastern states of Jharkhand and Orissa five years ago. The two plantsÔÇöexpected to each have an annual capacity of 12 million metric tonsÔÇöwere originally scheduled to start operations in 2014.
Karnataka has iron ore reserves of 3.4 billion tonnes, the second largest in the country, and is aiming to reach 25 million tonnes of steel production by 2010, more than triple that of its current production. The state has a total 11 per cent of IndiaÔÇÖs hematite iron ore, which is used in steel making.
Many Indian companies have laid out plans to set up steel plants in Karnataka, as it remains free of the protests and insurgency that have dogged other Indian states, including Orissa, Jharkhand, West Bengal and Chhattisgarh. It has been reported that in some locations, armed militia have been blowing up mines, factories and power stations to express their opposition to industrial projects.
Stalled projects in Orissa and Jharkhand are worth more than $80 billion.
JSW Steel, India's second-largest steel producer by output, has signed an agreement with KarnatakaÔÇÖs government to set up a steel plant, with an estimated investment of around 151.31 billion rupees ($3.24 billion).
Meanwhile, Essar Steel, IndiaÔÇÖs fourth-biggest producer, plans to invest 220 billion rupees to build a six million ton plant. Bhushan Steel may invest 279 billion rupees.
Demand from the infrastructure and automotive sectors in India, the worldÔÇÖs second-fastest growing major economy, is pushing steel sales up at near double digit rates, meaning that prices are continuing to rise.
ArcelorMittal is the largest steel company in the world, with over 281,000 employees in more than 60 countries.
