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ArcelorMittal's (MT) India chief Friday said villagers at the site of its proposed $8.8 billion steel plant have shown a willingness to sell land to the company, in what could turn out to be the first instance of a global resources company managing to acquire factory land without a major conflict with locals.

Five years ago, the world's largest steelmaker by output signed a pact with the government in the eastern Jharkhand state to set up the factory. But, unable to buy land in the Torpa-Kolebira region because of protests from activists and local land owners, it decided in March to shift the site to the Bokaro district, where villagers were more willing to negotiate.

ArcelorMittal has agreed to pay the villagers about INR500,000 ($10,680) per acre. India chief executive Vijay Bhatnagar told Dow Jones Newswires.

"We have been in dialogue with the villagers over the past 2-3 months. We have received positive indication from (them)," he said.

The three villages put together could make up the 2,500 acres that ArcelorMittal needs to set up the 12-million ton steel plant, he added.

While this could mean that the factory could get off the ground soon, another ArcelorMittal proposed plant in neighboring Orissa state is still stuck because of protests by local tribes and activists.

South Korea's POSCO too has failed to acquire any land for its steel mill in Orissa due to protests and bureaucratic delays.

India's state governments are often quick to ink initial pacts with corporations for setting up factories, but they provide little or no help to the companies to get land, nor do they help displaced people relocate once villages are cleared to make way for the factories.

As a result, several industrial projects in the mineral-rich states of Orissa, Jharkhand and Chhatisgarh have failed to get off the ground.

Bhatnagar couldn't provide any timeline for ArcelorMittal to start land acquisition.

"The deal between the villagers and the corporation has to be put in a proper framework and that would require the approval of the local administration. The entire deal is still evolving," he said.

However, A.P. Singh, Jharkhand's industries secretary said the government had encouraged ArcelorMittal to negotiate directly with villagers and that he didn't expect any objections from the district administration on the land deal as the company was paying the villagers for their land well above the state's usual market price of INR100,000 for agricultural land.

"Now, the only formality is getting the land registered, which is a simple process," Singh said. He added that the land acquisition can start as soon as the individual landowners and the company reach formal agreements.

- By Prasenjit Bhattacharya, Dow Jones Newswires; 91-11-4356-3358; prasenjit.bhattacharya@dowjones.com

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