ArcelorMittal, the world's largest steelmaker, has finally decided to pull out of the $12 billion (Rs72,000 crore) steel mill project in Odisha, after inordinate delays in clearances and problems in acquiring land and getting iron ore linkages.
"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," the company said in a statement.
ArcelorMittal's move to scrap the 12- million tonne project comes a day after Korean steel maker Posco announced its pull-out from its proposed Rs30,000-crore steel project in Karnataka.
The developments come as a rude shock to the government that is opening up doors to foreign direct investment across al major sectors of industry.
Another ArcelorMittal project in Jharkhand and the 12-million tonne Posco project in Odisha, the two other major FDI steel projects left in the country, are expected to come up, although after much delays.
"Over the last seven years we have invested considerable resources into this project. However, delays relating to land acquisition and allocation of captive iron ore blocks means this project is no longer viable," Vijay Bhatnagar, chief executive of ArcelorMittal for India and China, said.
Rival steelmaker Posco, however, is expected to get an iron ore exploration licence for its planned $12 billion plant in Odisha.
ArcelorMittal, meanwhile, is continuing to pursue its other two projects in mineral-rich Jharkhand and Karnataka, the company said, adding "both of which are making steady progress".
The Jharkhand project will have an annual capacity of 12 million tonnes, while the Karnataka project is expected to have annual capacity of 6 million tonnes.
ArcelorMittal had signed a memorandum of understanding (MoU) with the Odisha government in 2006, for setting up a 12-million-tonnes per annum steel plant in Keonjhar, involving phased investment of $12 billion.
The MoU, which was due for renewal since December 2011 has, however, never been renewed.