New Delhi: The world’s leading steelmakers ArcelorMittal and Posco have plans for $14 billion of new investment in India, despite a history of delays in their existing projects.
ArcelorMittal would ink an accord in June to spend Rs300 billion ($6.6 billion) for a 6 million tonnes a year plant in southern Karnataka state, its chief minister said after a meeting with the firm’s chairman Lakshmi Mittal.
B.S. Yeddyurappa also said South Korea’s Posco would bring in Rs323 billion into his state. An India-based Posco spokesman said the Karnataka plant would have an annual capacity of 6 million tonnes and would be in addition to earlier commitments.
Both companies have faced delays of more than two years to erect a total of 37 million tonnes capacity in eastern India on delays in allocation of mining leases and protests by local farmers against land acquisitions.
But rising demand in India and China and slow recovery in demand in key US and European markets are forcing global steelmakers to focus on the two Asian markets.
ArcelorMittal had in November approached Karnataka to set up a steel mill, which it said would be in addition to its plans for units in eastern India’s Orissa and Jharkhand states.
The plants, which will have a combined annual capacity of nearly 25 million tonnes and would cost up to $25 billion, would likely begin production from 2014, two years later than originally envisaged.
When asked whether ArcelorMittal could shift its projects to some other states like Karnataka, Mittal answered that it was possible.
“Steel plants cannot be built in a day. Depending on the progress, and depending on various approvals, land acquisition, mining approvals, the priorities can change.”
Posco has plans to build a 12 million tonne steel mill in Orissa, with a proposed investment of $12 billion.
Mittal said globally there was overcapacity in the steel industry as demand in the developed world was down.
“Since 2008, demand dropped dramatically in the developed world. So there is an overcapacity. But ArcelorMittal is restarting furnaces based on demand from customers,” he said.
The global steel industry is expected to experience a long-awaited recovery in demand this year, but the revival will differ across regions, with mature economies facing a slow and painful improvement and emerging markets enjoying a robust comeback.
Capacity restarts have dominated headlines over the past few months, as steelmakers across the globe ramp up production, citing an improvement in their order books, while prices around the world have bounced from record lows.