ArcelorMittal announces plans to venture deeper into Power Generation sector in India

 

The world’s largest steel producer, ArcelorMittal, announced plans to venture deeper into power generation in India making it the company’s second energy project in India. The company has 49% equity in HPCL-Mittal Energy Ltd that is currently undertaking the construction of a petroleum refinery plant in Bhatinda, Punjab. Sources said that the steel company had hired a new chief executive to head its power division- the former head of India’s biggest liquefied gas importer, Petronet LNG Ltd- Mr. Prosad Dasgupta.

 

The Indian born company has a small presence in the power sector through LNM India Ventures. It holds 8.79% stake, presently valued at Rs 513 crores, in Indiabulls Power that is involved in the development of thermal power projects totaling 6,600 MW capacity. AcelorMittal is expected to commission thermal power plants as starters and may consider gas based power plants later, the sources confirmed. However, the capacity and location of the proposed investment remain a largely guarded secret by the company.

 

Even so, AcelorMittal company spokesperson said that the company intends to create a team to build power plants that would serve its proposed steel power plants in India. The plants would be built in Jharkhand, Orissa and Karnataka, based on thermal coal linkages. Most steel companies in India are as well involved in power generation, mainly for satisfying their captive requirement.

 

AcelorMittal’s investment plans in India have not come of age due to delays in land acquisition and grant of mining leases. Mittal had planned two mega integrated steel projects worth $20 billion, Rs 90,000 crore, in Jharkhand and Orissa back in 2005 and 2007 respectively and the two were to be its first ever since its creation.

 

Little progress has been forthcoming and in 2009, the company approached the Karnataka government with a proposal for the construction of a steel plant at an investment worth $6 billion, Rs 28,000 crore. Recently, the company went into a joint partnership agreement with another steel producer, Uttam Galva, to acquire 35% stake in it, partly via share purchase from existing promoters and an open offer.

 

Through this power investment, L N Mittal Group joins other giants like Tata, Essar group, JSW Steel and JSPL that are present in both in the steel and power industries in the country.

 

June 2, 2010.