Financial Times reported that JSW Steel has delayed the opening of a new USD 1.4 billion plant on account of the global economic crisis that has severely cut demand for the metal in India.

JSW Steel said that the plant, an extension of its large facility in Vijaynagar located 250 kilometer north to west of Bangalore and which should have started up last month will not begin operation until the early part of next year at the earliest.

Mr Sajjan Jindal MD of JSW said that “We will review the situation in December when we will decide for how long to put the opening on hold.”

Mr Jindal said that “A few months ago we’d been expecting steel demand in India this year to be 60 million tonnes. Now it’s more likely to be 55 million tonnes. He said that Indian industry has been feeling a lot of pain and the steel sector is one of the businesses that are being hit.”

He said that added to production cuts JSW Steel has already instituted, the delayed opening of the new plant will mean the company’s steel production in the year to March next year will be only about 3.8 million tonnes rather than the 5.5 million tonnes originally planned. The new plant has a capacity of 3 million tonnes a year. It has been added to a production site at Vijayanagar that has an existing capacity of 4 million tonnes.

He added that from now on, JSW plans to spend a further USD 19 billion on a series of new expansion program both at Vijayanagar and other sites in India to push total output to 32 million tonnes a year by 2020. Mr Jindal said that these projects were unlikely to be affected by the financial crisis.

Mr Jindal further added that “There’s a lot of pessimism at the moment but we are hoping the poor economic situation is temporary and that Indian steel demand will begin to grow reasonably strongly again later in 2009.”