Bhubaneswar/Calcutta, Aug. 31: Tata Steel appears to have taken the lead over South Korea’s Posco and transnational ArcelorMittal in the race to establish a greenfield steel plant in Orissa.
The Indian company, which became the sixth largest steel maker after buying Corus of the UK in January, plans to start construction work on its proposed 6-million-tonne integrated steel plant at Kalinganagar in November.
The other two global majors are struggling to clear a number of hurdles before they can reach this stage.
Posco plans to start construction on the plant and a new port in the first half of next year. ArcelorMittal hopes to complete the first phase within 48 months after submission of the detail project report (DPR). So far it has only commissioned the DPR.
While Mittal and Posco want to put up 12mt plants, Tata Steel aims to limit capacity to 6mt because it is proposing to establish new plants in Jharkhand and Chhattisgarh as well.
Mittal has also proposed a 12mt plant in Jharkhand but Posco has zeroed in on Orissa which is rich in iron ore and coal and has ports.
Problems over land acquisition and mining leases have slowed progress on the Tata and Posco projects. Mittal's Jharkhand project is facing the same predicament.
Tata Steel managing director B. Muthuraman, who met chief minister Naveen Patnaik in Bhubaneswar on Thursday evening, said the company had sought mining leases for iron ore and expected to get them soon. Corus chief executive officer Philippe Varin accompanied Muthuraman.
The challenge before Tata Steel is now to relocate the families living on the land where the plant will come up. So far 620 of 1,200 families have been shifted. Tata Steel will start construction once another 200 families are relocated.
Varin said Corus and Tata Steel would be working together to set up the Kalinganagar plant and the best technology would be used. The first phase would call for Rs 6,000-crore investment, while the total project would cost Rs 15,000 crore.
The company was allocated 2,000 acres for the plant at Kalinganagar. The Orissa government is to recommend Tata Steel's case for a mining lease after 25 per cent of the order for the plant and machinery is placed. Sources said the company had started placing orders worth Rs 4,500 crore for a blast furnace, sinter plant and coke oven unit.
The company wants iron ore mining leases at Mankadanacha and Baliapal to be restored. They were scrapped after the company failed to set up a steel plant in Gopalpur in the nineties.
State steel and mines secretary U. P. Singh said the government would consider Tata Steel's application for mining lease according to procedures.
Posco’s application for iron ore mine lease is hanging fire, although it hopes to get the lease by the fourth quarter of this year. ArcelorMittal has already applied for three coal blocks to fire a captive power plant for the steel unit.
The Orissa plant is a building block for Tata Steel’s integration with Corus. It will make primary steel here which will be sent to Corus’s west European finishing mills.
However, the tribals in Kalinganagar are in no mood to relocate. “We won’t accept the rehabilitation package of the government since we don’t want displacement at all. Tata Steel can only build their plant over our bodies,” said Rabindra Jarika, a tribal leader.