ArcelorMittal changes India strategy, focus on smaller unitsSeptember 16th, 2010 - 9:53 pm ICT by IANS
London, Sep 16 (IANS) Facing delays in land acquisition and protests by tribals in India for its proposed units, top global steel producer AreclorMittal has revised its strategy and will now focus on smaller plants with annual production capacities of 1.5-3 million tonnes.
The $65-billion group led by London-based industrialist L.N. Mittal, which had proposed two mega steel units in India of 12 million tonnes each in Jharkhand and Orissa, now views Karnataka as the state with the least implementation risk.
“For Karnataka greenfield project, land acquisition is expected to be completed by the end of this year. We are also expecting to get some mining leases in Karnataka,” the group’s chief financial officer Aditya Mittal told an investor conference Thursday.
He said the group will consider factors beyond iron ore deposits for future projects like logistics, proximity to markets, infrastructure, execution time, social factors, business friendliness and a downstream presence which could supply to its global network of mills.
“Our strategy in India has changed. We are now on the ground selling branded steel. Our first domestic production is expected by 2013,” Mittal, who is also member of the group management board, told the conference simultaneously from here and New York.
ArcelorMittal has a 34 percent stake in Indian steel producer Uttam Galva and is a co-promoter of the firm.
After becoming the market leader in South America, Central Asia and Africa, and establishing joint venture projects in the Middle East and China, India and Brazil will be the company’s focus markets.
AreclorMittal expects India’s steel demand to triple to 150 million tonnes by 2020 and feels the its portfolio can be balanced by establishing a presence in the country, which it called one of the most growth-oriented markets in the world.
Mittal said even though progress had been been made in getting licenses for mines and land in Jharkhand and Orissa, the plans had been slowed due to what he described as “high tribal influence”.
He said progress on land acquisition had been especially slow in Orissa.
According to the presentation, the stake in Uttam Galva has given the group not just access to a large downstream network but also a partner for a potential greenfield project in western India.
Mittal did not did not mention the state in which it proposes to set up a unit, but said: “The project locations will be well spread across east, west and south India. There will be a mix of captive and partially bought-out iron ore projects.”
There were reports of a possible stake sale by steel company Ispat Industries to ArcelorMittal.
Ispat is incidentally owned by L.N. Mittal’s younger brothers Pramod and Vinod and has a huge Rs.6,700 crore of long-term debt with 15 creditors, including banks and other financial institutions.
Ispat Thursday announced a strategic sale of 10 percent of its equity to Stemcor, the world’s largest independent steel trader, for an undisclosed amount.
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