Tata Steel quits Chhattisgarh project

Tata Steel quits Chhattisgarh project

R Krishna Das | Raipur Aug 26, 2016 01:32 PM IST

Tata Steel has finally given up the plan to set up 5.5 million tonne per annum (Mtpa) green-field integrated steel plant in Chhattisgarh’s Bastar district.


The company had inked a Memorandum of Understanding with the Chhattisgarh government in June 2005 for setting up the plant with an estimated investment of Rs 19,500 crore. Since the proposal could not realise, the MoU period was extended that finally ended in June 2016. The company did not seek another extension.


Anand Sinha, Tata Steel’s Chhattisgarh project head, told Business Standard that the company had officially decided to quit the Bastar steel plant project. The delay in the land allocation on the part of state government’s agencies was learnt to be the reason behind the move.


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The company had selected site near Lohandiguda in Bastar district, otherwise infamous for the Naxal violence. About 2000 hectares of land spread across 10 villages was required. Since the pocket had been notified as “tribal area”, the company could not directly purchase land from the villagers. Instead, the government was supposed to procure land and later allot it to the company.


“The Tata Steel had sent a letter to the state investment promotion board (SIPB) informing about the decision to quit the project,” Managing Director of state-run Chhattisgarh State Industrial Development Corporation (CSIDC) Sunil Mishra said. The process of land acquisition in Lohandiguda was in progress, he added.


Besides land, there was another major factor that propelled Tata Steel to take the decision to abandon a mega steel plan. The actual count-down started in February after the steel major lost an iron-ore mine that it was allotted in Dantewada district---about 150 km from the proposed steel plant site.


The company was allotted 2,500 hectares of iron ore bearing land in Bailadila deposit No. 4 in 2008 to feed raw material for the Bastar steel plant. A prospecting licence was issued to the company for the mine that had an estimated reserve of 108 million tonnes of high grade iron ore.


Since the pocket was infested by Naxal activities, the company failed to complete the prospecting work within the set time following which the agreement reached with the state government for the allocation of iron ore mine stood cancelled. Tata steel lost the mine.


According to Mishra, the state government cannot re-allocate or allot the mine to the company under the amended Mines and Minerals (Development and Regulation) Act 2015. The company now had to participate in the auction that would not be viable for the company.


The Tata steel winded up its offices located in Raipur and Bastar while shifting the manpower to other locations.


PROJECT PROFILE


Capacity: 5.5 MTPA with 625-Mw captive power plant

Land Required: 2,044 hectares

Estimated Investment: Rs 19,500 crores

End Products: Long products like Billets, Sections, Wire Rods and Seamless Pipes required for construction purpose

Employment: Nearly 10,000 with 3715 direct employment Opportunity.

(Source: EIA Report)
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