The world’s largest steel maker, ArcelorMittal, said on Wednesday that it is scrapping its proposed `50,000-crore steel plant in Orissa due to delays in getting land and captive iron ore linkages, a move seen as resulting in the biggest FDI pullout from the country.
There were also agency reports that the investment firm Berkshire Hathaway Inc., led by US billionaire Warren Buffett, has decided to close its online insurance broking business in India.
ArcelorMittal’s announc-ement comes a day after South Korea’s Posco had called off its decision to invest `32,300 crore to set up a six-million-tonne-per-annum steel plant in Karnataka.
India losing two large multi-billion-dollar FDI projects in just two days is likely to raise concerns in the government at a time when it is looking at attracting more foreign investment. The government had only on Tuesday raised the FDI cap in a number of sectors to lure overseas capital.
“ArcelorMittal has met today with the government of Odisha’s chief secretary to inform him that the company has decided not to progress with its planned construction of an integrated steel plant and a captive power plant in the district of Keonjhar,” said the company in a statement. The company said this announcement does not affect ArcelorMittal’s plan to pursue its two other Indian projects, in Jharkhand and Karnataka.
ArcelorMittal initially planned to construct a 12-million-tonne integrated steel plant in Keonjhar and signed a memorandum of understanding with the government of Orissa in December 2006.
Since that date, ArcelorMittal said that it has completed important milestones, such as the completion of a feasibility report, an environmental impact assessment study and other relevant technical reports, as well as holding eight gram sabhas (public hearings) and investing in a number of CSR projects.
However, the company said the project has faced significant external delays. “Over the last seven years we have invested considerable resources into this project; however, the delays relating to land acquisition and allocation of captive iron ore blocks means this project is no longer viable,” said Mr Vijay Bhatnagar, executive vice-president, member of the management committee and CEO for India and China.