By IANS,
New Delhi : Global meltdown and falling demand have forced Arcelor-Mittal to delay by two years their proposed steel projects in Orissa and Jharkhand, estimated at $20-25 billion, its India head said here Wednesday.
“The top reason is economic downturn,” Vijay Bhatnagar, the chief of India operations, told reporters on the margins of a steel industry seminar organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).
“The second thing is there have been certain procedural delays and the cycle times have been much more to get land and mining resources. It is more than we had anticipated,” Bhatnagar added.
The group, led by India-born, London-based L.N. Mittal, had earlier proposed the groundbreaking for the two projects, each with the overall capacity of 12 million tonnes of steel per annum, by end-2009 and production by 2014.
“What I can say is production is not coming up before 2014,” Bhatnagar said.
A spokesperson for the company here said the group remained committed to the projects and that the current scenario had only prompted them to defer the investment plans for India and not abandon them.
The past month has been particularly severe on Arcelor-Mittal. The company had to cut production in Canada by 45 percent and axe 9,000 employees. Before that, it shut one out of its two blast furnaces in west Belgium.
Consultancies like JP Morgan have predicted earlier this month that the demand for steel will go down further this year by 20 percent, with prices likely to fall further in the coming months.
“The global economic downturn has caused a reduction in the demand for the company’s products,” Arcelor-Mittal said in a statement Wednesday, after it planned to idle a plant in East Chicago and lay off about 400 workers.
“This indefinite closure and corresponding layoffs reflect measures the company is being forced to take around the world to adapt to the market’s situation.”
As of Dec 31, Arcelor-Mittal – which produces some 10 percent of the global steel output – employed 315,867 people at its various locations, with about 12 percent of them in North America.
The company reported a loss of $2.6 billion on a revenue of $22.1 billion in the fourth quarter of 2008, compared with a $2.4-billion profit on revenues of $28 billion in the like period of the previous year.