Long before L N Mittal told a British newspaper that he may pull out of the 12 million tonne greenfield steel project in Orissa, the writing was on the wall. The sequence of developments on the projects, since the signing of the agreement between ArcelorMittal and the state government in December, 2006 had already put it in the ‘doubtful’ category.
Nonetheless, sensing that a pullout by Mittal, the world’s biggest steel maker, would tarnish the industry-friendly image they have been at such pains to build up, with investments worth over Rs 6 lakh crore lined up for implementation, the state government has received the news with shock and anguish.
“We have no information on Mittal’s pullout plan,” said Chief Minister Naveen Patnaik. “On the other hand, they were positive on the project, and the land acquisition process for the project was going on,” he said.
Informed sources said Mittal may have attributed the cause for his taking such an extreme decision to the delay in land acquisition (a state government responsibility), but in reality, the company has not pursued the project vigorously, as witnessed from the efforts of promoters of other steel projects in the state, which includes South Korean steel major Posco, Tata Steel, Essar, Jindal Steel and Power and Bhushan Steel, who have hung on to their projects despite the odds.
The day Mittal signed the MoU with the Orissa government, which was more than a year after he had signed one with the Jharkhand government for a project of a similar size, he had mentioned that he would first go ahead with either projectt depending on the support of the respective state government. This had created doubts about his intention, which compelled him to clarify later that he was keen to implement the Orissa project first.
Interestingly, the company has not yet filed the detailed project report (DPR) with the state government, though it had finalised the DPR, prepared by Dastur and Co, in June, 2008. The company had earlier assured the state government that the DPR wouldl be filed within 18 months of the signing of the MoU before the start of the land acquisition process.
In December 2007, the state government had amended its norms for allotment of a captive mining lease for steel plants coming up in Orissa, to state that the milestones achieved by a project to be eligible for recommendation of a prospecting licence or mining lease had be assessed by the public sector company, Mecon. However, sources said, ArcelorMittal had last year applied for a prospecting licence for mines on the Keonjhar-Sundergarh border without getting its eligibility assessed by Mecon: a factor mainly responsible for its PL application not moving forward.
“It is not only in Orissa: land acquisition anywhere in the world is a major issue these days, as it has to deal with human problems,” said Ashok Dalwai, the state’s steel and mines secretary. For ArcelorMittal’s project, it was even more tricky, as the company proposed to set up the project in a scheduled area, where the Panchayat Extension to Scheduled Areas Act comes into play, he pointed out.
ArcelorMittal required 8,500 acres of land in the Patna tehsil of tribal-dominated Keonjhar district. The government had issued a notification under Section 4/1 of the Land Acquisition Act. Being a tribal area, the process of holding gram sabhas was on to get the consent of the people on the project. But in the past three years, the company was able to hold gram sabhas in only two of the required dozen villages.
The state government had extended all support to the project and the process of giving water and power connectivity and land acquisition for the project was on, Dalwai claimed. Stating that because of the hand-holding of the state government, 29 of the 49 steel plants for which MoUs had been signed have gone into partial production in the state in the last five years, he said no one should doubt the government support for the projects.
