The world?s largest steel producer, ArcelorMittal, has reiterated its confidence in the India story and stated that there?s no question of it reneging on its planned investments in India due to either cost overrun or issues like Singur.
Speaking to a select group of journalists in the Capital, ArcelorMittal?s chairman & CEO, India-born LN Mittal said, ?One case of Singur cannot be an example for the world. One can face this kind of problem in any other country. One particular project can face this kind of opposition from people. But the country as a whole is interested in growing.?
Mittal?s comments assume significance as India Inc has reacted negatively to the Singur developments.
ArcelorMittal has its own share of problems in India. Its proposed steel plants in India would cost more than the estimated $20 billion, as over the last three years capex costs for steel projects have gone up by 30-50% globally. Arcelor Mittal plans to set up two geenfield steel projects of 12 million tonne each in Jharkhand and Orissa, to be commissioned by 2012.
Mittal, who?s is often called a takeover tycoon, however, ruled out acquisition of any Indian company, saying, ?it is very unlikely that we get an M&A opportunity in India, as Indian entrepreneurs are doing very well and whatever expansion we are planning in India would be through greenfield projects?.
Mittal said the company has not worked out the exact cost overrun of the India projects, as all approvals are not yet in place, but costs would definitely go up.
?We cannot call it cost overrun, but cost is definitely going to be more than what has been announced, as prices of all inputs, be it steel, oil, machinery and other raw materials, have gone up,? Mittal said. He said the exact cost overrun can be calculated only after approvals are in place because everything depends on the delay in the process. Despite there being not much progress on mining linkages and land acquisition, both crucial to the projects, Mittal is hopeful of commissioning the first phase of the projects by end-2012 as targeted.
?We expect to start construction at both sites by the first half of 2009 and if that happens the company is confident of commissioning the first phase of steel production by the end of 2012 by producing either 3 mt or 6 mt steel,? he said.
The company, however is yet to get the crucial mining linkage for iron ore as it has got linkage for only 65 mt in Jharkhand, which is far too less.
Talking about his global plans, Aditya Mittal, who?s the group CFO, said that the company plans to invest $50 billion to expand its steel making capacity from the current 110 mt to 130 mt by 2012. This investment would also go towards increasing the iron ore capacity from 45 mt to 110 mt, which would make it meet 75% of their iron ore requirement.