Protests by farmers, land owners and politicians make expansion difficult.
Indian companies have all along displayed a tendency to lay claim to land much more than is needed to house industries, without giving much attention to compensate the land givers. Not surprising then, that most major steel projects proposed by foreign and domestic groups are facing acquisition problems. As if strident protests by farmers and land owners are not enough, high profile politicians and seers have also been queering the pitch of steel project promoters. South Korean Posco has run into problems in acquiring land both in Orissa, where it is to build a 12-million-tonne mill, and in Karnataka, where the project size is six million tonnes.
In the absence of a proper audit as to how much land is actually needed for, say, a module of three million tonne hot metal capacity, some steelmakers are said to be in pitching their demand for land much in excess of requirement. But such high land demand is not sustainable on technical grounds, since one blast furnace (BF) is now good enough to sustain a three-million-tonne module. Machinery compactness is the order of the day in all BF upstream and downstream areas. Moreover, as we go forward, land which is not to be had from the state government bank will become more and more expensive. Farmers are no longer ready to part with their land unless adequately compensated, including a job for a family member and lifetime annuity.
Fortunately for the ones asking for land in excess of actual requirements, the example of a three-million-tonne mill of SAIL on 900 acres in West Bengal's Burnpur, where the ruins of the once legendary IISCO steel plant were resting, is yet to come to public notice. Similarly, Tata Steel does not have the luxury of space at Jamshedpur where it is making steel for a century. The company has to negotiate many a logistical challenge and draw on its engineering ingenuity to pack in an extra capacity of 3 million tonnes at Jamshedpur to make it a 10-million tonne mill.
Two recent developments will further underscore the compulsion to squeeze in steel capacity in smaller areas than at present. First, Congress general secretary Rahul Gandhi wants the Posco project in Orissa, entailing the single largest FDI, to be shifted to an alternative site of non-agricultural land. Second, the Karnataka government, succumbing to pressure jointly mounted by farmers and local seers, has told Posco it will be given an alternative site to Halligudi in Gadag district to build the proposed Rs 32,000-crore mill.
SAIL chairman C S Verma says the Rs16,408 crore investment at Burnpur to be completed by March 2012 will make it the single largest industrial unit in West Bengal, ahead of Durgapur Steel, also a SAIL unit. As IISCO, which at the pinnacle of its working annually made 1 million tonnes of steel, fell on bad times, the central government was constrained to take it over to save jobs and also the economy of Burnpur. The derelict Burnpur mill was thrust upon SAIL once the government search for a buyer from the private sector came to nothing.
But, 1979, when IISCO became a SAIL subsidiary was not the time when steel groups worried much about the supply and prices of mineral resources. IISCO brought a mill to SAIL which any steel group would like to do without. Now many must be regretting that by not buying IISCO they let go of a treasure trove of 2 billion tonnes of iron ore deposits at Chiria, among the biggest in the world. In recent times, some leading private steel groups, including ArcelorMittal, made unsuccessful bids to acquire slices of Chiria deposits. Of the 4 billion tonnes of iron ore deposits owned by SAIL, the share of Chiria alone is half.
Explaining how it has been possible to build so much capacity in a limited space of 900 acres, Verma says at Burnpur “we have gone for big-sized units conforming to world benchmarks. The BF comes with a size of 4,060 cubic metre. The coke oven battery is 7 metre tall. The two sinter machines will have capacity of 3.8 million tonnes of iron ore sinter. You need a lot more space if, instead of one large machine, you use multiple units. Japan is much constrained for space. So, you find there mills employing BF of sizes ranging from 4,000 to 5,700 cubic metres.”
SAIL did manage to overcome the infrastructure deficiencies of Burnpur while moving heavy machines. What, however, it did not bargain for was that it would be required to remove huge quantities of molten metal accumulated over the years, underground boulders and hillocks for installation of a number of critical facilities. This and difficult soil conditions requiring much extra civil and structural work caused cost and time escalation. The low energy consuming new mill will have labour productivity of 325 tonnes a man year against the earlier 56 tonnes. Hopefully, Burnpur is setting a benchmark for land use for steelmakers here.
