Tata Steel [Get Quote] is considering the option of shifting its Rs 2,500-crore (Rs 25 billion) titanium dioxide projects to Andhra Pradesh or Orissa as it has failed to initiate the process of land acquisition in Tamil Nadu even as a year has gone by since the announcement of the project, according to S Asokan, head of the project.

"We will talk to the Tamil Nadu government first before taking a decision," he said. The mining project, which was announced in June 2007, needs an estimated 10,000 acres of land. However, the state government has failed to help the company in the land acquisition process, said Asokan.

Tata Steel officials are planning to meet shortly to decide on the future as the cost of excavating ore may negate the benefits of a captive mine. Asokan declined to give details on the cost increase in the project.    

Initially, sections of the local population, particularly those with strong political leanings, accused Tata Steel of attempting to acquire agricultural land for mining.

The steel maker is now facing trouble in acquiring land since small pieces of land aggregating to its needs are scattered among several hundred owners.

"We need a proper title and are finding it difficult to approach each individual owner," said the Tata Steel executive. He also said that since the project hit its first road block at the local level with demand for unreasonable prices for land, today more land owners are willing to sell but they do not aggregate to the size (9,829 acres) Tata Steel wants.

"If we buy 100 acres, some other land owners might increase their prices. We cannot afford to take that risk. Since the last one year, the project cost, too, has already gone up due to delays," he said. He, however, could not specify the exact escalation in the project cost that was announced at an investment of Rs 2,500 crore a year back.

The project, within Tata Steel, is considered vital for its foray into non-ferrous metals. The project was conceived in part for making up the opportunity lost by Tata Steel by not branching into other metals like copper and aluminium when the opportunity came along.

Titanium dioxide extracted from red sand found in this region, has a wide range of applications, from aerospace,  roofing, paints to food colouring.