Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 73
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 74
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Warning (512): Unable to emit headers. Headers sent in file=/home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php line=853 [CORE/src/Http/ResponseEmitter.php, line 48]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 148]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 181]
Notice (8): Undefined variable: urlPrefix [APP/Template/Layout/printlayout.ctp, line 8]latest-news-updates/indias-bitter-choice-water-for-steel-or-food-by-abhishek-shanker-3693.html"/> LATEST NEWS UPDATES | India's Bitter Choice: Water for Steel or Food? by Abhishek Shanker | Im4change.org
Resource centre on India's rural distress
 
 

India's Bitter Choice: Water for Steel or Food? by Abhishek Shanker

Global steel giants ArcelorMittal (MT) and Posco are leading $80 billion in planned spending in India, an investment that would vault the country ahead of Japan as the second-biggest steelmaker. There's one hurdle: India's farmers and their water supply. The farmers refuse to move from irrigated land in three states that hold more than half of India's reserves of iron ore, a key material used in the making of steel. That's stymied Prime Minister Manmohan Singh's ambitions to more than triple India's steel capacity, to 232 million metric tons.

"We're not going to allow the government to take the land and water and give them to Posco," says Prasanth Paikare, a spokesman for opposition group Posco Prathirodh Sangram Samiti, which says it represents 25,000 farmers. "The government has promised us land at a new location, but there is no good land available in the state now and there won't be enough water for agriculture," he said in Bhubaneswar, the capital of Orissa state.

The farmers' concern over water for crops has delayed plans by ArcelorMittal, based in Luxembourg and London, South Korea's Posco, and at least five other rivals to benefit from a local steel market that has expanded by more than 55 percent since 2005 even as Indian imports of the metal tripled over the same period. Posco's plan to build a $12 billion plant in Orissa, for one, has been stalled for five years by farmers who refuse to move despite efforts to relocate them.

"With over 60 percent of India's population dependent on the monsoons for livelihood, there's population concentration and serious competition in areas with water," explains Rahul Jain, an analyst at RBS Equities India in Mumbai.

The continuing delays over water access are starting to worry Posco investors, says Im Jeong Jae, who helps manage $26.3 billion of assets at Shinhan BNP Paribas Asset Management. "India is very important because it has the best growth potential after China for steel demand and Posco can also source iron ore and raw materials there." The latest hurdle is an Environment Ministry report due this month on the impact of the Posco project. Tired of waiting, Chief Executive Officer Chung Joon Yang has announced competing investment plans in Indonesia and Vietnam.

The 160 million tons of planned steel capacity would consume 640 billion gallons of water a year, based on the average consumption by U.S. steel mills. That's enough to provide adequate water for drinking and cooking for 133 million people in India over the same period, according to government figures.

That level of water consumption would yield 1 million tons of rice a year, enough to feed 9 million people in India, based on U.N. Food and Agriculture Organization estimates. At today's price of $299 a ton, however, that rice would fetch only 0.3 percent of the value of the steel produced with that amount of water. "Posco wants our land, it wants our water," said Makar Kandi, 75, who supports a family of eight with a one-acre plot on which he grows betel leaves in Orissa's Dhinkia village. "Agriculture is our only means. We'll have no livelihood."

ArcelorMittal, the world's largest steelmaker, is also facing delays for a $10 billion mill in Orissa and another project in Jharkhand state. (Projects by Tata Steel, India's biggest maker of the metal, are faring no better in those two states and in Chhattisgarh.) According to an agreement with Jharkhand, ArcelorMittal would have access to 20 million tons of iron ore annually for 30 years. That's enough to raise the company's self-sufficiency in the commodity by 33 percent. "Securing iron ore assets has become very important for the steel companies as prices have been very volatile," says Elora Sahoo, an analyst at Dhanlaxmi Bank in Mumbai. ArcelorMittal is now trying to secure land at a different location in Jharkhand, says spokeswoman Mandakini Sud. There has been "good" progress in persuading locals, mostly people engaged in nonagricultural activities, to give up land, she says.

Posco is having a harder time because of declining rainfall in the Jagatsinghpur district, where it's planning its mill. Rainfall during the June-September monsoon period, critical for agriculture, declined by 26 percent from 2007 to 2009, forcing farmers to compete with manufacturers for water from the Mahanadi River. Posco plans to get water through pipes from the river's Jobra dam. "Opposition to the project is unfounded," Posco India General Manager Simanta Mohanty says. "We will not use local water. There's enough water available."

Undeterred, big steelmakers in June began exploring sites in the southern state of Karnataka, home to India's second-biggest iron ore deposit. The catch? Lack of water.

The bottom line: Competition is raging between steelmakers and farmers in India over access to water, which is critical to both groups.