Tuesday, July 11 2006 10:21 Hrs (IST) - World Time -

Orissa: Iron ore deposits could lead Orissa to become the steel state of India. After Luxembourg triumph, it is now, 'destination Orissa' for the steel tycoon Lakshmi Niwas Mittal.

With an opening investment of Rs 40, 000 crores, Mittal announced to setting up a 12 mn tonne steel plant in orissa. It is the biggest proposal of steel plant, after Poscos signed a MoU for setting up a 12 million tonne steel plant at Paradip.

The other major players in the foray is Tata Steel, and Essar Group's Hy-Grade Pellets Ltd 4 mtpa plant at Paradip with a Rs 10,721 crore investment.

Above all according to the sources in the Orissa government Russian steel major MMK is all set to enter the Indian market through orissa gateway by setting up a 10 million tonn steel plant in Orissa with a total investment of about US$ 10 billion

These projects, when fully commissioned, will produce a whopping 70million (Except the proposed 12mn tone by Mittal) tonnes of steel per annum.

The State government's Steel and Mines Department estimates the investment in these steel plants to the tune of Rs,160132 crores.

So would all these positive sign lead orissa to steel manufacturing hub of India in the days to come?

After the announcement of Mittal's entry in to the steel sector in Orissa the whole scenario is now completely different, as two biggest steel manufacturing company in the world will be in Orissa in the steel battle ground.

Experts believes Mittal's announcement will definitely put Posco under pressure as Mittal will come with all Arcelor expertise.

Some other analyst believes Mittal's 12mn tonne (same capacity of Posco) will be produced with less capital (Rs 40, 000 crores) and Mittal enjoys the Indian Origin image in the home turf, which puts Mittal ahead in certain issues.

So all these news developments could force Pasco to rethink about their so many conditions for investment.

Orissa government signs as many as 43 Mous in the recent past many of them are small projects and 43 company may not take on one another in the long run so acquisition and mergers may take place in the years to come, when Metal enter in to the market says a senior official of a company, which signs Mou with Orissa government for steel plans. Similar kinds of views have been expressed by experts citing to the Tata steels plan to increase it's own stake in the company (Tata steel).

Orissa may witness a revolution (merger& acquisition) in the steel sector, in a new kind of business environment, which is taking shape.

Limited Orissa's iron ore reserves, which is estimated at 5,428 million tones, could force many companies to adapt (merger& acquisition) for the economic of scales and optimum utilisation of iron ore along with other reasons. So merger& acquisition will take place in the steel industry in the long run for survival says a Economist of a leading university in the state.

Now the big question floating around is, can Orissa support this capacity build up in terms of raw material linkage and infrastructure facilities?

Poor infrastructure is the biggest bottleneck for the rapid industrialisation of the state. Orissa government should take responsibility to provide a world class basic infrastructure.



"This is really a tough challenge to take on for the Government," says a senior bureaucrat dealing with infrastructure development in the state.

Orissa has to develop railway network, build truck terminals and have to construct delivery channels for water and power supply at various locations where steel projects are coming up.

"The infrastructure development to support the new capacities, which could meet the requirement alone, in Orissa, requires an investment of approximately Rs 30,000 40,000 crores " says a Vice President of a infrastructure development company which keeps a vigil eye on the development in Orissa.

A senior official of the state-owned Industrial Infrastructure Development Corporation (IIDCO) of Orissa is optimistic and says the eco' joint venture in the state to facilitate the mordern infrastructure.

Many captains of Infrastructure Company based in Hyderabad believes that, as the world's No1 steel company announced to investment in orissa. It will provoke many private players to invest in the infrastructure projects in the state as well as this sector has a huge potential of revenue generation.

Likewise the state government should look after the social infrastructure like schools, hospitals and recreation facilities.

Above all land acquisition is the biggest problem that the government is facing now.

Answering to this issue some state government official says "After the implementation of the R& R policy the land acquisition will be easier for us."

The state is used to have such hype. In the mid-90s, Orissa witnessed a similar rush of investment proposals.

About a dozen steel projects were then lined up --Tata Steel and Larsen & Toubro at Gopalpur, and Swaraj Paul's Kalinga Steel at Duburi. But they all fizzled out for one or other reasons. Only Signing of Mous could not make Orissa a steel manufacturing hub of India , Mr Navin Pattanaik must also sign Mous for investment in infrastructure projects and should make policy to attract investment in infrastructure sector in Orissa.

If the Government come up with more transparent policy on land acquisition and strict implementation of R&R policy along with world class infrastructure, Orissa's dream of steel state with could turn into reality this time around.