New Delhi: Recession in the global steel market coupled with "business concerns" may have driven steel giants ArcelorMittal and Posco to resort to scrapping their Indian projects worth USD 18 billion, Steel Minister Beni Prasad Verma said Sunday, breaking silence on their pullout.
He was confident that their move will not impact Indian steel capacity in view of modernisation drive by domestic players like SAIL and capacity augmentation by private players.
"There is recession in the international steel market at present. They (ArcelorMittal and Posco) have their own business concerns. They must have taken the decision in view of their profit or loss," Verma told PTI.
His remarks follow scrapping of USD 12 billion steel mill project in Odisha in the biggest foreign investment pullout by ArcelorMittal last month. It was a day after South Korean major Posco pulled out of USD 6 billion project from Karnataka over delays in land acquisition, securing raw material linkages and other problems.
While Posco attributed "given market conditions and significant delay in acquiring the required land" as the reason to scrap 6 MT Karnataka project, ArcelorMittal cited inordinate delays in land acquisition and problems in securing iron ore linkages for exiting from 12 MT Odisha project.
Verma also said that the world's largest steelmaker ArcelroMittal had yet to come to India.
"ArcelorMittal didn't come here, so there is no question of their withdrawal."
When asked whether the pullouts were going to impact the Indian steel sector, Verma said it would not affect the steel making capacity as domestic players like SAIL, RINL and NMDC had already initiated modernisation and expansion drives while many private players were augmenting their capacity.
"We are increasing our domestic capacity and consumption. We will be producing quality steel. We have set a target of 200 MT capacity by 2020, which will be further enhanced to 300 MT by 2025. Modernisation by domestic players will be completed soon and the production will enhance. Private sector is also increasing its capacity," he said.
Steel Authority of India Ltd (SAIL) is ramping up capacity to 24 MT by next year, from about 14 MT at present, and plans to take it to 50 MT by 2022 at an expenditure of Rs 1.2 lakh crore. RINL is on the verge of commissioning its brownfield expansion to 6.3 MTPA and getting ready to embark on raising it further to 11 MTPA.
Private players like Tata Steel, whose European unit accounts for two-thirds of its total production at about MT at present, had added a new 3 MTPA capacity at the Jamshedpur plant and is setting up initial 3 MTPA plant in Odisha.
The country's steel capacity at present is about 90 MT and Prime Minister Manmohan Singh recently stressed the need to take it to 300 MT by 2025.