ArcelorMittal Cancels Giant Steel Plant in India

Luxembourg-based steelmaker ArcelorMittal SA has abandoned plans to build an $8.5 billion steel factory in the city of Keonjhar in eastern India.

The company says the project is "no longer viable" because of India's cooling economy and seven years of still-unresolved delays in lining up locally produced iron ore and acquiring land for the project.

ArcelorMittal, the world's largest steel company, intended erect a facility with annual capacity of 12 million metric tons of steel in Keonjhar. The company notes that its projects to build steel mills in Jharkhand and Karnataka, India, will proceed.

ArcelorMittal's announcement came a day after steelmaker POSCO said it was abandoning plans to erect a $5.3 billion steel plant in Karnataka for similar reasons.

The South Korean company declares it will continue plans for a $12 billion plant in Orissa India's largest single foreign investment despite delays acquiring land for the facility. That project was unveiled in 2005.

Automakers have similar problems. Farmers in the state of Gujarat are protesting the government's efforts to buy land for a Maruti Suzuki Ltd. plant there. The carmaker says it plans to start construction of the 40 billion-rupee ($671 million) factory this year.

Similar protests in 2008 caused Tata Motors to abandon a nearly completed factory in Singur, West Bengal, that was to build the ultra-cheap Nano car. Instead the company erected a new Nano facility in Gujarat.