From Businessweek

Steel Authority of India Ltd. is in talks with Posco and ArcelorMittal to build two plants in eastern India after land acquisition delays stymied individual proposals from the global steelmakers.

Posco and Steel Authority of India will complete a plan to build a 2 million metric ton mill at Bokaro in Jharkhand state in the next three to four months, Soiles Bhattacharya, the state-owned Indian company’s finance director, said today in an interview. Negotiations are on with ArcleorMittal and Tata Steel Ltd. for a 6 million ton mill at Sindri in the same state, he said.

ArcelorMittal and Posco, whose proposed steel projects in India have been delayed for five years due to local farmer opposition, are looking for partners to tap demand in the world’s third-fastest growing major economy. Steel demand in India last year rose 7.6 percent and is forecast to grow 9 percent this fiscal year, helped by sales of cars and spending on roads and ports.

Posco, South Korea’s largest steelmaker, will be offered a maximum 51 percent stake in the Bokaro project, Bhattacharya said, without giving cost details. A report is being prepared for the mill that will use Posco’s Finex technology, he said. The Sindri project, to be built on a 6,000 acre plot belonging to the fertilizer ministry, will take five years to be planned and commissioned, he said.

Posco rose 1.3 percent to 466,500 won at the close of trading in Seoul. Steel Authority shares gained as much as 1.2 percent to 191.45 rupees in Mumbai and traded at 190.35 rupees, up 0.6 percent, as of 11:54 a.m. local time.

OreOutput
Steel Authority, India’s second-largest producer, will increase its annual iron ore output to 40 million tons from 25 million tons by March 2013, Bhattacharya said.

The company will lift production at its mines in Jharkhand and Orissa and is awaiting government approval to mine in some of the Chiria reserves in Jharkhand, he said. Steelmakers, aiming to set up 160 million tons of capacity in the eastern states of Chhattisgarh, Jharkhand and Orissa that together hold more than half of India’s iron-ore reserves, have failed to win mining licenses from the state governments and acquire land from protesting farmers. Prime Minister Manmohan Singh’s government aims to resolve land disputes and delays in allocating mining licenses to achieve as much as 8.5 percent economic growth this fiscal year.

Posco in June 2005 said it planned to set up a $12 billion steel plant in Orissa to tap demand in India. ArcelorMittal, the world’s largest mill, announced a plan to set up a $10 billion mill in the neighboring state of Jharkhand the same year and said in 2006 it would build a similar-sized unit in Orissa.

Tata Steel, India’s biggest producer, announced a 6 million-ton plant in Orissa in 2004 and a similar-sized plant in Chhattisgarh the next year. In 2005, Tata also announced a 12 million-ton plant in Jharkhand state.

India’s $1.2 trillion economy is likely to expand 8.5 percent in the fiscal year to March, compared with 7.4 percent the previous year, according to Finance Minister Pranab Mukherjee. The economy grew 8.6 percent in the three months to March, the fastest pace among the major growth economies after China and Brazil.