New Delhi: ArcelorMittal, the world’s biggest steel group, may delay its planned $20 billion to $25 billion investment in India by at least two years from an earlier schedule, the head of its India unit said.
ArcelorMittal had plans to build two steel plants in eastern Indian states of Orissa and Jharkhand to produce about 25 million tonnes of steel in total, but chairman Lakshmi Mittal said last September the cost could rise by about a half due to delays in getting government approvals.
An economic downturn also slashed demand for everything from cars to new buildings and household appliances, hitting world steelmakers, miners and metals processors. ArcelorMittal in February expected overall steel demand to fall 7-10% in 2009.
“What I can say is production is not coming up before 2014,” Vijay Bhatnagar, the chief executive of ArcelorMittal India, told reporters in New Delhi.
The firm earlier planned to start production in 2012.
“The top reason is the economic downturn... second thing is there has been certain procedural (delays). Cycle times have been much more to get land and mining resources, more than we had anticipated,” Bhatnagar said.
He said the company would “reassess” costs and might start with lower capacity, than the six million tonnes planned in the first phase, but added the total capacity would remain unchanged.
ArcelorMittal has been looking to expand its business in emerging markets such as China, India, Mexico and Brazil, but has faced obstacles in China and India.
Mittal had tried to take over steel firm China Oriental in 2007, but had to pull back to a 47% stake as the Chinese government restricts ownership in steel assets.
In India, acquisitions of large tracts of land by foreign and local companies have proved controversial in several states recently, with the country’s courts needing to step to resolve disputes involving big projects.
Last October, thousands of villagers marched in Jharkhand state to protest against the building of the ArcelorMittal plant.