The Union government recently announced a Rs 11,440 crore revival package for the Visakhapatnam Steel Plant. Chief minister Chandrababu Naidu and other key leaders are touting this as a major achievement for the National Democratic Alliance coalition in Andhra Pradesh, claiming that it resolves all of the plant’s difficulties.
However, the committee leading the movement against privatisation has declared this package a temporary fix. They maintain that only allocating the plant its own mines will truly save it, vowing to continue their struggle until this goal is met. A deeper examination of the situation is necessary to understand the facts.
Struggle against privatisation
On January 27, 2021, the Union cabinet sub-committee decided on a strategic sale or privatisation of the Visakhapatnam Steel Plant. For the past four years, all the plant’s trade unions, united under the Steel Plant Protection Struggle Committee, have been protesting this decision. Dharna camps at the plant’s main entrance and the Visakhapatnam Municipal Corporation office have been in place since February 12, 2021.
The steel plant’s current difficulties primarily stem from its lack of dedicated (captive) iron ore mines. The government’s “Make in India” slogan rings hollow as it exports iron ore to China and Japan while denying allocation to the public sector Visakhapatnam Steel.
Visakhapatnam Steel is the only steel plant in India, public or private, without its own mines. Forced to purchase iron ore on the open market, it pays Rs 4,000-8,000 more per ton than its competitors. Profitable until recently, the plant has incurred losses over the past four years due to disruptions in raw material supply (including coal), delayed railway wagons for exports, deliberate production capacity reduction and the closure of two of its three blast furnaces. These troubles are a result of deliberate actions, not mismanagement.
Visakhapatnam Steel boasts unique advantages. Its coastal location facilitates easy import and export. It also possesses modern technology, a lean workforce and higher productivity compared to other public sector steel plants.
Naidu, tasked with protecting the state’s largest heavy industry, has instead chosen to build a private steel plant with a dedicated port at Nakkapalli in Anakapalli district, recently requesting the prime minister to allocate iron ore mines for it. This move appears to undermine Visakhapatnam Steel.
Commissioned in 1991 with a 1.6 million ton production capacity, the plant has steadily expanded to 7.3 million tons using its own resources. It possesses the infrastructure, including land, to further increase capacity to 20 million tons.
Realising the Union government’s goal of ‘atma nirbhar Bharat (self-reliant India)’ requires significant increases in domestic steel production. While China produces over a billion tons, India produced only 138.5 million tons last year. The government aims to increase this to at least 200 million tons, but achieving this will require heavy investment in the Steel Authority of India Ltd. (SAIL). Despite Visakhapatnam Steel’s potential for easy expansion to 20 million tons, the government’s bent towards privatisation is a roadblock in achieving this goal.
Beyond its coastal advantage and modern technology, Visakhapatnam Steel has 22,000 acres of land and net assets exceeding Rs 3 lakh crore. Steel giants aim to acquire it at a discounted book value.
The decision to privatise aligns with the Modi government’s neoliberal economic policies and its stated belief that “the government has no business doing business.”
Without the steel plant, development in Visakhapatnam and the state would stagnate. Public sector enterprises like the steel plant fuelled Visakhapatnam’s growth into Andhra Pradesh’s largest city (population 2.5 million) and the country’s third largest (682 square kilometres). Known as the industrial capital of united Andhra Pradesh, the plant directly employs 30,000 and supports 100,000 livelihoods. With over 4,000 employees from Scheduled Castes and Scheduled Tribes, it reflects social justice through reservation policies.
Its 8,500-quarter township represents a mini-India. Monthly salaries, contractor payments, etc., inject approximately Rs 100 crore into Visakhapatnam’s economy. During the COVID-19 crisis, the plant demonstrated social responsibility by supplying oxygen nationwide. Numerous small industries in Visakhapatnam rely on the plant. It plays a vital role in the state’s economic and social fabric.
Politically, the plant influences election outcomes. Recent parliamentary and assembly elections saw Telugu Desam Party candidates win by large margins in Gajuwaka and Visakhapatnam constituencies, largely populated by steel plant employees, due to their promise to save the plant.
20 years of struggle behind the plant
This plant possesses a unique history born from struggle. The 1966-67 “Visakha Steel — Andhra’s Right” movement fiercely opposed the Indira Gandhi government’s attempt to relocate the plant to Karnataka. Thirty-two lives were lost, thousands injured and 67 MLAs (including 52 Communists) along with seven Communist MPs resigned in protest.
This two-year struggle forced the government to concede. Indira Gandhi laid the foundation stone in 1971, though funding delays stalled progress. The Janata Party eventually allocated funds and construction began. About 64 villages were relocated, and 16,500 farmers sacrificed 22,000 acres for the plant. Nearly 6,500 remain unemployed despite promises and over 200 workers died during construction. Finally, in 1991, P.V. Narasimha Rao dedicated the plant to the nation.
India possesses abundant iron ore. The central government has granted 100-year iron ore allocations to all private and public sector steel plants, including Tata, Bhilai, Bokaro, Durgapur and Rourkela. Visakha Steel must compete with these plants despite lacking its own mines.
Right to its own mines
Section 17(1)(b) of the Mines and Minerals (Development and Regulation) Act, 1957 mandates raw mineral mine allocation to public sector undertakings. Visakhapatnam Steel’s own mines are its right. The 1985 detailed project report for the plant stipulated National Mineral Development Corporation allocation of mines in Bailadila’s four and five blocks. The continued denial of this allocation is malicious, a deliberate attempt to force losses and justify privatisation. In 1998-99, the Vajpayee government referred the plant to BIFR citing consecutive losses, sparking another major struggle with severe repression. The plant not only survived it but expanded its capacity.
The original proposal for a Gangavaram Port on steel plant land was intended to support its operations. However, the TDP government pressurised the Union government, seizing 1,400 acres of plant land for a private port, now owned by Adani. The Union government’s total investment has been only Rs 4,890 crore. In return, the plant has contributed over Rs 54,000 crore in taxes and dividends, a record unmatched by any private company.
Privatising Visakhapatnam Steel undermines the interests of Andhra Pradesh and the larger cause of social justice. For the past four years, the people of Andhra Pradesh and steel plant workers have waged a continuous struggle to protect it. This struggle will persist until the decision is reversed, the plant receives its own mines and is strengthened. The people and workers of the state are at the forefront of development. Supporting this movement and protecting public sector enterprises built with public funds is true patriotism.
A. Aja Sarma is general secretary, Forum for Development of North Andhra.
This article was originally published on The Wire Telugu.
