Investment in Steel Growing Due to Strong Local Demand
Sept. 14 – India’s domestic demand for steel is expected to grow despite the global economic crisis with top steel companies ArcelorMittal and Posco pushing through plans for expanding production facilities.
Demand for steel is rapidly increasing as the country’s infrastructure plans for roads, bridges and buildings takes off and domestic demand for vehicles continues to soar. India’s steel secretary, PR Rastogi, said in a statement last month that the growth steel demand in India will soon cross 10 percent as soon as the effects of global economic slowdown are over.
In July, steel consumption grew by 8.9 percent while production grew by 5.9 percent. ArcelorMittal and Posco will have a combined investment worth US$32billion in production facilities.
The government is also trying to rush to streamline existing mining laws as both companies require guarantees over iron ore assets, mining licenses and land acquisition rights to justify their huge investments. Posco has had a pending US$12billion plant in Orissa state put on hold since 2005 due to concerns over these issues.
ArcelorMittal on the other hand, plans a US$20billion facility in Jharkand. The company only secured a mining licence three years after signing an agreement with the state government to build the plant. It is this type of adminsitrative delay the Steel Ministry wants to cut out. Once the process of investing in the steel industry is streamlined, the same method may also be applied in other industry sectors that need flexibility to cope with India’s rising domestic needs.
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