Monday, July 10 2006 17:30 Hrs (IST) - World Time -

Ranchi: Close on the heels of Lakshmi N. Mittal expressing unhappiness with Jharkhand, the state government has moved to expedite a proposed 12-million-tonne steel plant that the India-born global steel baron is to set up in the state.

The Jharkhand government has suddenly become active in efforts to translate the project into reality. It has issued a letter of comfort to Mittal on 400 million tonnes of iron ore for the first 30 years and 200 million tonnes for another 20 years.

The state mines and geology department issued the letter two days ago.

Mittal had expressed unhappiness over the progress of the Rs.400 billion ($8.6 billion) project, during his visit to neighbouring Orissa on July 7. He also announced a proposal to set up a similar steel plant in that state.

Mittal Steel had sought a letter of comfort for 600 million tonnes of iron ore in June.

Jharkhand Chief Minister Arjun Munda has directed the industries and the mines and geology department to do the necessary work needed for the project.

"The chief minister will convene a meeting of different departments to review the progress of Mittal Steel and the bottlenecks coming in the way of the project," a top official told sources.

"The chief minister has also directed officials to expedite work on the draft of the rehabilitation policy (for the people whose land would be acquired). The state government may announce a rehabilitation policy this month so that the land issue can be sorted out," he said.

"Mittal Steel has not applied for iron ore mines lease, for power connection and for land. Mittal Steel should first apply and then analyse the pace of progress," maintained Madhu Koda, mines and geology minister, reacting to Mittal's statement in Orissa.

Mittal Steel wants the Chiria mines, which is with the Steel Authority of India Limited (SAIL). The state government is fighting a legal battle with SAIL in the Jharkhand High Court. Officials point out that unless the legal battle is over, the state government cannot commit to giving Chiria mines.

"Our lawyers requested the high court to clear the mines issue at the earliest. The hearing on the Chiria mines will come in the first week of August. The state government does not want to send a wrong message to other investors," said the official.

The state has signed memorandums of understanding (MoUs) with 45 companies in the steel, mining, power and other areas. The investors will pump more than Rs.2 trillion in the state.