JSW Steel's plan to build a 10 million tonne steel plant in Jharkhand remains uncertain as excess domestic capacity coupled with unabated influx of cheap imports from China, Japan and South Korea in the past one year proved to be real dampeners for future mega steel projects.
Sajjan Jindal-led JSW Steel's Rs 35000-crore Jharkhand project is stuck on the drawing board since 2005 due to lack of direct supply of raw material iron ore mines and land acquisitions issues. But high imports from China have added another problem to the list.
"Jharkhand is a long-term plan for JSW Steel. We are waiting for the right time. At present, there's overcapacity in the steel industry and China is dumping steel into India," said Jayant Acharya, Director for Commercial & Marketing at JSW Steel, on the sidelines of Jharkhand seminar at 'Make in India' week on Wednesday.
He added the company was also awaiting clarity on the iron ore linkages in the state.
JSW SteelBSE 0.39 % reported a consolidated net loss of Rs 923.34 crore for the quarter ended December against a profit of Rs 328.94 crore in the same quarter last year, affected by impairment charges and higher competition from Chinese imports.
Indian government's plan to convert India into a manufacturing destination is led by the belief that more factories in India will lead to job creation and reduction in expensive imports.
While the government is trying to make it easy to do business in India, global commodity meltdown and insufficient demand to absorb the supply of steel is becoming a stumbling block. Indian government recently imposed a minimum import price on steel, giving some breathing space to steelmakers mired in losses.
JSW Steel is in the process of increasing capacity at its existing plants in India, but mega investments like Jharkhand may have to wait until the company is sure about demand and link to iron ore mines.
Earlier JSW Steel, which has no captive iron ore mines, suffered in Karnataka as allegations of illegal mining shut access to most commercial mines in the region, which led to increase in production costs.
Source : economictimes.indiatimes.com