September 06, 2008

TATA Steel titanium venture facing land issues in TN

It is reported that the INR 2,500 crore TATA Steel’s titanium dioxide project has been stalled with the TATA Steel giving up trying to buy land for the project in Tamil Nadu.

According to TATA Steel officials, it has shut down their offices in Tirunelveli and Sattankulam earlier in 2008 and stopped all attempts to buy land. In the last one year, against an estimated 9,829 acres needed for the project it has been able to get 25 acres.

TATA Steel feels that unless the government intervenes in land purchase, it would be an impossible task. It hopes to make a representation to the government later in April 2008 to support it in buying land.

TATA Steel spokesperson said that the constraints are the legal hassles involved and the arbitrary hike in land prices by middlemen. The main hassle in land purchase is the lack of clarity in legal documents, absence of parent documents and the tough job of tracing the absentee landlords. It had earlier said that it would have to talk to over 4,100 land owners to aggregate the required land area.

TATA Steel is willing to pay the market value as fixed by the government. Land purchase transactions in 3 to 6 months back have ranged around INR 40,000 an acre. But the prices quoted are thrice or four times as much and it would affect the viability of the project.

After nearly a decade since the project was conceived, the Tamil Nadu government entered into an agreement with the TATA Group with its chairman Mr Ratan Tata signing an agreement in the presence of the chief minister Mr M Karunanidhi in June 2007. This was the third such attempt with the state government entering into agreements in 2002 and 2005 to launch the project with the TATAs. The titanium dioxide project, involving mining of 500,000 tonnes of the ore limonite, was touted as one of the two major projects that would drive the economy of the state’s southern districts. TATA Steel had planned to start production by mid 2008.