ArcelorMittal, Posco May Start Building India Plants
Sept. 10 (Bloomberg) -- ArcelorMittal, the worlds biggest steelmaker, and Posco may start building $32 billion of factories in India next year as domestic demand defies the global recession, Steel Minister Virbhadra Singh said.
Posco is very keen and would like to start tomorrow, Singh said in an interview. Im hopeful Posco will begin work next year. ArcelorMittal should also be able to start next year, at least on one of its two plants.
Posco, ArcleorMittal and Indian rivals such as Tata Steel Ltd. are rushing to build factories in the country as demand increases for cars, roads and bridges. Prime Minister Manmohan Singhs administration, which returned to power in May, aims to resolve land disputes and delays in allocating mining licenses to steelmakers to achieve as much as 9 percent economic growth.
Im talking to state governments to ensure the companies get mining leases and can start work, the steel minister said yesterday in his Udyog Bhavan office in New Delhi, without specifying the measures he plans to implement. India needs extra capacity because soon well not be able to meet demand.
Shares of Posco, Asias third-biggest steelmaker, rose as much as 2.8 percent to 480,000 won and traded at 477,500 won, up 2.3 percent, as of 12:52 p.m. in Seoul. ArcelorMittal rose 1.7 percent to 26.12 euros at the end of Amsterdam trading yesterday.
Economic Growth
India should aim for economic growth of between 8 percent and 9 percent in the medium term as the 7 percent target for this year isnt sufficient, the Prime Minister said on July 6. The government is expanding a rural jobs program, giving more income to farmers and lifting consumption in villages and towns.
Domestic steel consumption this quarter may rise 6 percent, the steel minister said yesterday. Demand grew 5 percent in the three months ended June 30, Steel Secretary Pramod Rastogi said on July 6.
Globally, steel demand will probably decline 10.3 percent this year, Nomura Holdings Inc. said in a report last month. Consumption should rebound 12.2 percent next year, supported by demand in China, according to Nomura.
Pohang, South Korea-based Poscos $12 billion, 12 million metric ton plant in eastern Orissa state, potentially the single- biggest overseas investment in India, has been delayed since plans were drawn up in 2005.
Cut Delays
India plans to cut permit delays and attract overseas capital through simpler mining laws, Mines Minister B.K. Handique said last month. The legislation will be presented to parliament in the winter session this year, he said.
ArcelorMittal in October 2005 said it would set up a factory with a final capacity of 12 million tons in Jharkhand and announced another plant of the same size in neighboring Orissa the following year. Its looking at starting work on the plants as soon as possible, Vijay Kumar Bhatnagar, chief executive officer of the India unit, said in a phone interview yesterday.
Of the two projects, we are slightly ahead in the Jharkhand project as we have secured a mining license in the state, he said.
Posco aims to start construction early next year after land acquisition problems are resolved, spokesman Choi Doo Jin said on Aug. 27. The company has yet to win a license from the Orissa government to mine iron ore.
The issue has to be resolved by the local people and the state government, Steel Minister Singh said. I am ensuring the process is expedited.
ArcelorMittal secured a permit to mine iron ore in 500 acres of land in Jharkhand in June 2008, three years after signing an agreement with the state government to build the plant. The Indian states of Jharkhand, Orissa and Chhattisgarh account for 70 percent of the nations coal reserves and 55 percent of its iron ore, according to McKinsey & Co.
ArcelorMittal is looking at how the global market shapes up and wants to synchronize its production with the global situation, the steel minister said. L.N. Mittal met me a few days ago and put forward the problems, he said, referring to ArcelorMittal Chief Executive Officer Lakshmi Mittal. Im using my good offices to see the state governments expedite the process.
ArcelorMittal, Posco May Start Building India Plants (Update1) - Bloomberg.com