Why Is JSW Steel Expansion in a Holding Pattern?

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Continued from Part One.

West Bengal State Industry Minister Partha Chatterjee was obviously trying to save face following the kibosh on the new JSW plant, especially since his state had lost a very prestigious multimillion-dollar car project by Tata Motors to another state because of local politics just a few years ago.

Now, to lose yet another potentially employment-generating project would mean a double body blow to his government – hence the last minute face-saving attempts.

Nobody, however (Jindal and the minister included) was willing to offer any timeline for the project. The JSW West Bengal project was first announced in 2007. It was delayed at various times for various reasons, including a land acquisition row, which was later resolved.

Now, the iron ore issue has stalled it yet again. So what are JSW’s conditions moving forward?

Reports say JSW wants a captive iron ore mine, preferably somewhere in the vicinity of the proposed plant, before getting on with the project. It has a similar 10-million-ton steel plant in Karnataka, but there, too, it was forced to source ore from the open market, affecting its revenue. For over 18 months now, JSW has been running the Karnataka plant at a reduced capacity due to iron ore crunch.

In fact, JSW Steel had earlier put on hold expansion plans of this Vijayanagar plant, to take it from 10 million tons to 12 million tons of capacity, due to the ore shortage. The lifting of the iron ore mining ban by the Supreme Court of India is expected to benefit JSW the most in Karnataka, where it is the largest steelmaker. Experts now expect JSW to go ahead with its plant expansion in Karnataka.

According to the original plan, JSW’s West Bengal project was to have a 10-million-ton steel plant along with a 1,600-MW captive power plant spread over 4,300 acres of land. In the first phase, the company had plans to set up a 3-million-ton steel plant and a 300-MW captive power plant.

Sohrab Darabshaw contributes an Indian perspective to MetalMiner.

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