Bangalore: The world’s largest steel maker ArcelorMittal plans to build a Rs30,000 crore steel plant in Karnataka after making little progress in proposed projects in Orissa and Jharkhand.

The Luxembourg-based firm signed an agreement with the Karnataka government on Thursday to construct a 6 million tonnes integrated steel plant along with a 750MW power plant in the Bellary region in the northern part of the state.

Going south: Other states where his company had project plans didn’t make much progress, says Mittal. Hemant Mishra/Mint

ArcelorMittal’s proposed projects in Jharkhand and Orissa have not been able to take off due to a slew of problems that include land acquisition, local protests and environmental clearances.

“Karnataka is not a trade-off for us because other states didn’t make much progress," ArcelorMittal chairman Lakhsmi N. Mittal said. “Priorities change depending on approvals, market conditions, and if this moves fast, then Karnataka will be first priority."

He added that the Jharkhand project has shown some positive signs in the past few weeks and his firm is looking at alternative land options there.

Mittal said demand for steel in India would only grow and the company wanted to be a part of it. ArcelorMittal Netherlands BV, through which Mittal controls ArcelorMittal, this year bought a 33.8% stake in India’s Uttam Galva Steels Ltd.

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Mittal said he was concerned about the European economic situation and the fall of the euro. “The good part is that weakening of the euro has increased competitiveness in the business."

Navin Vohra, partner at audit and consulting firm Ernst and Young, said that land and critical approvals are some of the mandatory elements required to set up a steel plant.

“If ArcelorMittal wants raw material linkage, a mining license is crucial," he said.

Mittal said he was happy with the progress even though the company hasn’t yet got a mining licence.

The Karnataka government has rolled out the red carpet for ArcelorMittal’s project, the largest investment at the Global Investors Meet after Posco’s Rs32,000 crore investment, which had been announced earlier.

Posco signed an MoU for a steel plant in Bagalkot at the end of the inaugural day, after the government expressed doubts over the South Korean company going ahead with its plans.

Land allocation has been made to ArcelorMittal, which has paid over Rs200 crore in acquisition costs.

Once the foundation of the Bellary project is laid, execution should take about 36 months, Mittal said. “There may be hurdles, but they should be small obstacles."