ArcelorMittal's plans to build two greenfield steel projects in India with an investment of about $16.5 billion might be the next victim of the current global financial downturn.
According to the initial plans of ArcelorMittal, an integrated steel plant of 12 million mt capacity was to be built in both Jharkhand and Orissa, for which a memorandum of understanding (MoU) with the related state governments were signed three years ago. The company was considering initiating the first phase of production from its Jharkhand plant by 2012; however, these plans might face delays on the back of the weakening steel demand as well as the prevailing credit crunch.
The company has completed the draft of its detailed project report (DPR) in Orissa, whereas it is likely to finish the report for Jharkhand by March next year.
Meanwhile, ArcelorMittal had been allocated iron ore mines in Karampada with a reserve of about 65 million mt in Jharkhand, while it has not procured iron ore mines in Orissa. It is estimated that the company will require around 1,200 million mt of iron ore for both Indian steel plants over 30 years.
Commenting on its Indian plans, an ArcelorMittal official told SteelOrbis: "ArcelorMittal's long-term strategy for India remains intact and our preparatory work for our projects will continue. Depending upon the evolving macro-economic environment and its impact on the steel industry, we will align the pace of our projects with the new emerging reality. It isn't possible to put a definitive timeline on this, given current market conditions. It will depend on the speed and nature of the recovery in steel demand which we should see emerging in 2009."