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Rediff.com  » Business » Mittal inks pact for Orissa plant

Mittal inks pact for Orissa plant

December 22, 2006 02:30 IST

Arcelor Mittal, the world's largest steel producer, on Thursday signed an agreement to build a 12-million-tonne plant in Orissa with an investment of Rs 40,000 crore.

The company has sought a special economic zone (SEZ) status for the plant, which will be located in Keonjhar district. If granted, this could result in substantial tax savings for the company.

"Apart from the steel-making facility, the complex will have downstream industries which will benefit from the SEZ status," said Malay Mukherjee, member, group management, board of Arcelor Mittal.

Attracted by the fast growing Indian steel market, Arcelor Mittal had first proposed a 12-million-tonne greenfield project in Jharkhand, only later coming up with a similar proposal for Orissa.

"Things have moved fast in Orissa. We have signed the MoU in just five months," said Mukherjee, adding, "At this pace, the Orissa project may come up ahead of the Jharkhand project." When asked about the fate of the Jharkhand project, he said, "Our interest in Jharkhand stands."

The Orissa project will be set up in two phases of 6 million tonne each. The first phase will cost Rs 22,000 crore and will be completed four years after the filing of a detailed project report (DPR), which is expected to be put together in 18 months. A preliminary DPR would be prepared in six months, Mukherjee said.

The second phase of 6 million tonne will be completed 54 months after the first phase. The facility, according to the MoU, will consist of a coke oven, steel-making, rolling mills, and a 750 MW captive power plant.

The company has asked for 8,000 acres of land at the proposed location -- 6,000 acres for the plant, 1,000 acres for the power plant and 1,000 acres for a township.

The land size is 2,000 acres more than the 4000 acres sought by Posco, which proposes to set up a steel plant of a similar capacity at Paradip. "It is not that we are going to stop at 12 million tonne. We may go in for a third phase after the second," Mukherjee said, justifying the higher land requirement.

The plant will require 125 million cubic metre of water per annum, which is proposed to be met from river Baitarani and the Kanupur dam (under construction) close to the site.

The project has been assured of raw material linkage to the tune of 600 million tonne, the same as Posco's requirement, over a period of 30 years.

However, unlike the Posco project, the MoU with Mittal does not contain any controversial clause with regard to swapping of ore.

The project is expected to provide employment opportunity for 20,500 people, which includes direct employment for 5,500 and indirect employment for 15,000.
BS Reporter in Bhubaneswar
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