ArcelorMittal, the world’s biggest steelmaker, scrapped plans to build a 12 million-ton-a-year mill in India’s eastern state of Odisha after delays in getting land and mining permits for iron ore made the project unviable.
Posco of South Korea said a day earlier that the steelmaker is exiting a project in the southern state of Karnataka, citing similar reasons as today’s by ArcelorMittal. ArcelorMittal’s projects in Karnataka and the eastern state of Jharkhand are making steady progress, the Luxembourg-based company said in an e-mailed statement.
The high-profile exits undermine India’s efforts to secure foreign investment in order to narrow the current account deficit and bolster the currency, which declined to a record this month. Steelmakers have faced land disputes and bureaucratic delays in granting permits amid slowing demand.
“India is no longer an attractive destination for steelmakers,” said Prasad Baji, an analyst at Edelweiss Financial Services in Mumbai. “Consumption is not growing as expected and getting a mine has become extremely messy.”
The nation’s demand for the alloy in the three months ended June 30 rose at the slowest pace in five years as construction slowed and customers deferred purchases of houses and cars due to high interest rates. Steel consumption advanced 0.2 percent to 17.8 million metric tons.
Globally, steelmakers face declining profitability amid the economic slowdown. Posco, South Korea’s biggest steelmaker, in April reported a worse-than-estimated profit for the first quarter, reflecting depressed prices. ArcelorMittal reported its third quarterly loss in a row in the first quarter.
ArcelorMittal is building a 12 million-ton-a-year mill in Jharkhand and another with half that capacity in Karnataka.