Delays drive up Arcelor-Mittal's India project costs
Friday, 12 September 2008
NEW DELHI, Sept 11 (AFP): Steel giant Arcelor Mittal said yesterday delays in obtaining approvals for its two Indian plants had pushed up costs by 50 per cent but the company was still committed to investing in the country.
Arcelor Mittal, the world's largest steel firm, said its planned integrated steel plants in mineral-rich Orissa and Jharkhand states were facing big cost overruns due to delays in getting mining, land acquisition and other approvals.
"When we started, we estimated they (the two plants) would cost about 20 billion dollars," Arcelor Mittal chief executive officer Lakshmi Mittal told reporters in the Indian capital.
But "there has been a delay for two years so costs have gone up by 50 per cent," he said. "The more the delay, the more the cost overruns."
The steel tycoon's statements came as India slipped two notches to 122 out of 181 countries in the World Bank's annual global ranking of the easiest places to do business.
At the same time, India-born Mittal, who was in New Delhi for a company meeting, said Arcelor Mittal was "still very excited about our (eastern) Indian projects" and added he "was emotionally committed to the country."
Analysts say Arcelor Mittal is keen on using low-cost facilities in emerging markets to cut production costs.
Neither Arcelor Mittal's experience nor the bitter dispute over the building of a Tata Motors plant in West Bengal slated to produce the world's cheapest car detracted from India's appeal as an investment destination, Mittal said.
Arcelor Mittal, the world's largest steel firm, said its planned integrated steel plants in mineral-rich Orissa and Jharkhand states were facing big cost overruns due to delays in getting mining, land acquisition and other approvals.
"When we started, we estimated they (the two plants) would cost about 20 billion dollars," Arcelor Mittal chief executive officer Lakshmi Mittal told reporters in the Indian capital.
But "there has been a delay for two years so costs have gone up by 50 per cent," he said. "The more the delay, the more the cost overruns."
The steel tycoon's statements came as India slipped two notches to 122 out of 181 countries in the World Bank's annual global ranking of the easiest places to do business.
At the same time, India-born Mittal, who was in New Delhi for a company meeting, said Arcelor Mittal was "still very excited about our (eastern) Indian projects" and added he "was emotionally committed to the country."
Analysts say Arcelor Mittal is keen on using low-cost facilities in emerging markets to cut production costs.
Neither Arcelor Mittal's experience nor the bitter dispute over the building of a Tata Motors plant in West Bengal slated to produce the world's cheapest car detracted from India's appeal as an investment destination, Mittal said.