July, 12 2005
JSW Steel eyes to become largest steel plant
Jindal South West Steel (JSW), earlier known as Jindal Vijayanagar Steel, is aiming to become the largest single site steel plant by 2010. Addressing Andhra Pradesh presspersons here on Sunday, J P N Lal, JSW Steel executive director, said, we plan to invest Rs 10,000 crore for capacity expansion over the next five years.
The expansion will be carried out in two stages. The capacity will jump from the present 2.5 million tonne to 4 million tonne by 2007, then to 10 million tonne per annum by 2010, he added. The company is looking at debt instruments and equity issues to finance the expansion, he informed.
As part of the expansion, JSW, the second largest steel producer in the country in private sector, will adopt Corex technology for the complete plant and add two more blast furnaces by 2010. It has a Corex plant with a capacity of 1.6 million tonne.
Meanwhile, JSW which has signed an MoU with the Andhra Pradesh Government to set up a Rs 9,000-crore aluminium plant, will fund the project through internal accruals and financial institutions under phase I.
Vinod Nowal, CEO JSW Foundation, said, We will be raising Rs 3,000 crore through internal accruals and financial institutions in another two years.
Further, the company plans to tap the capital market for phase II expansion plans. He added that JSW which presently has four units under its fold, viz. one near Bellary in Karnataka, two value addition units in Maharashtra and another plant in Tamil Nadu will also set up a holding company, a special purpose vehicle for the project.
He said that the equity holding issue with Andhra Pradesh Mining Development Corporation (APMDC) is in discussion and 51 percent of stake will be controlled by the former, while 49 will be held by the company. As part of the project, the company will set up a 1.25 million tonne aluminium plant and 0.25 alumina plant. The plants to come up near greater Vizag area, closer to Vishakapatanam, will be spread over 4,000 acre of land.
EU may seek duties on SS
A European Union steel group may seek EU anti-dumping duties on two stainless steel products from India and Taiwan to protect manufacturers including Arcelor SA.
The European Confederation of Iron and Steel Industries plans to accuse Indian exporters of cold finished bars and Taiwanese shippers of wire rods of selling at unfairly low prices in the 25-nation EU. The automobile and chemicals industries, among others, use the products.
The situation seems to be serious, Christian Mari, a spokesman at the Brussels-based steel confederation, said by telephone on Monday. We are preparing a possible complaint
Lack of infrastructure a barrier to industrial growth
Orissa is poised for an industrial resurgence, as claimed by the government, with its total steel production capacity is expected to cross 41 million ton per annum after a decade. But the question remains whether the state and central government are ready to create enough infrastructure required to transport raw materials and finished products by that time.
According to an estimate, the projected steel production capacity of the state by 2016 is 56.4 million ton per annum. This requires 175.7 million ton raw materials. That involves movement of around 222 million ton raw materials and finished products to and from the steel plants.
But the existing road and railway networks cannot handle such a huge cargo traffic, especially in the Duburi-Paradip industrial cluster. The ongoing Daitari-Banspani railway line was scheduled to be completed by 2003. But the deadline was extended to 2005 and further to 2007.
By the time the rail line is ready, it may be too late, observe industrial circles.
Meanwhile, the state government has requested the railway ministry to take up the doubling of Daitari-Banpani, Haridaspur-Paradip and Angul-Duburi-Sukinda rail lines expeditiously which could be utilised for carrying raw materials from the mines to the plants and finished products to Paradip port.
An estimated Rs 528 crore is required for doubling of Daitari-Banspani line, another Rs 345 crore for Haridaspur-Paradip and Rs 815 crore for Angul-Duburi-Sukinda line.
The railway ministry is yet to approve the proposals for the above projects, official sources here said.
Industrial circles feel that the railway ministry should take up these projects itself without looking for funds from other sources like the Asian Development Bank (ADB) in view of the high rate of returns.
The state government has also urged the Centre to sanction the Four-laning of Chandikhole-Paradip highway (Rs 428 crore), Keonjhar-Panikoili highway (Rs 1076 crore), Duburi-Talcher highway (Rs 400 crore) and Duburi-Baminipal-Keonjhar road (Rs 200 crore).
Meanwhile, the state government officials have given presentation before the deputy chairman of the Planning Commission, Union finance minister, secretary of the Foreign Investment Development Board and National Investment Commission on the infrastructure requirements of the state. Principal secretary to the Prime Minister has also convened two review meetings.
However, no tangible steps have been taken yet for the development of railway and road networks to handle the increased traffic, official sources admitted
Opposition debunks Orissa CM claim on Posco
Debunking chief minister Mr Naveen Patnaiks claim of the revenue potential of the Posco steel plant, (Rs 800 crore per annum to the state coffer) , the OGP president, Mr Bijoy Mohapatra, said the state would not get even one-tenth of the amount since the government has committed to recommend its case for SEZ status.
All this talk of Rs 22,500 crore revenue over the next few years is humbug, charged the OGP chief while quoting extensively from the Special Economic Zone policy. A company established in SEZ shall be exempt from all taxes and duty, he said. He dared the CM to explain the basis of his revenue calculations.
Raising pertinent points relating to level-playing field, Mr Mohapatra said the Opposition had not protested against any of the 36 MoUs signed earlier. The Posco one is objectionable since it is against the interest of the state and the country, he said.
All cannons of justice and fair play have been thrown to the winds he charged at a press conference here while comparing 36 MoUs signed by the state government with Indian steel companies to the one signed with Posco.
Mr Mohapatra said the level-playing field was simply missing as the state had promised concessions to the South Korean company while the same had not been extended to other steel manufacturers. It is like giving dowry, he remarked.
None of the MoUs mentions about providing prospecting licence to the company for mines. Such a licence would automatically mean handing over the mines to the company. Posco has been extended this favour while the rest including Tatas , Essar, Jindals etc have not been assured of PL.
The South Korean company has been promised recommendation of SEZ status, PL, a particular grade of iron ore, five year time for the MoU to lapse, incentives under various schemes including the industrial policy resolution of the state, leniency in investment prior to recommendation for mining lease etc, he pointed out.
Why should the government deprive the same benefits to the other Indian steel majors who have also signed MoU, he asked.
Mr Patnaik today invited state BJP president Mr Juel Oram for discussions on the controversial MoU between the government and POSCO. Responding to a 4 page stinker sent by Oram on 1 July, the Chief Minister in his brief three paragraph reply said all "doubts" and "misconceptions" would be cleared if the matter was discussed with him.
The chief minister iterated that the POSCO project was the largest FDI in the country. " Let me assure you that the MoU has been prepared with utmost care after protracted negotiations and with the interest of Orissa upper most in mind", stated Mr Patnaik. He concluded by inviting Oram for a discussion.
Land lease solution hope for TATA Steel
The government is toying with the idea of convening a meeting between senior officials of the land revenue department and Tata Steel to end the stalemate over the renewal of the land lease agreement.
Official sources said the government is keen to end the decade-old deadlock once and for all.
The government is of the view that senior representatives of both the parties must sit together and deliberate on the land lease issue so that a possible solution can be arrived at, a senior government official said.
Sources in the government said chief minister Arjun Munda has been advised by some of his ministerial colleagues to convene a meeting with Tata Steel officials and find a lasting solution. Munda is yet to react to the suggestions, said a senior state official, adding that a meeting between the two sides was a possibility.
Of the five schedules of the agreement, the government has declared the renewal of the first three, which involve land area of the company premises, housing and civic amenities. There are no disputes as far these three schedules are concerned.
The main dispute between the government and the company revolves around Schedule IV the land area that has been subleased by the company to different parties. The government claimed that there had been a violation of the agreement in Schedule IV and penalised the company for the same.
Tata Steel, on the other, was of the firm view that there was no violation on its part. The matter is pending with Jharkhand High Court.
One of the reasons, claimed an official source, why the government was eager to reach an understanding with the steel major was because it wanted to grant ownership rights to slumdwellers. Unless we resolve the land lease dispute, grant of ownership rights to slumdwellers cannot be implemented. The land where the 86 slums have come up initially belonged to Tata Steel. So, the land lease agreement has to come into the picture before ownership rights are granted to the slumdwellers, said an official.
Finance and urban development minister Raghubar Das discussed the land lease issue when he met the managing director of Tata Steel, B. Muthuraman, a couple of days ago. Both the parties want the issue to resolved at the earliest, Das said, not giving out the details
Posco to set up $200-million port at Paradip
South Korean steel major Pohang Steel Company (Posco) plans to invest between $200 to $300 to develop a new port facility at Paradip
The decision comes in the wake of infrastructural bottlenecks identified at existing port at Paradip. The worlds fifth largest steel maker had earlier decided to use the existing Paradip port facility for transfer of raw material finished products to and from its proposed 12 million tonne steel plant coming up in the port city. We have decided to develop a new port facility at Paradip as the existing port has been found unsuitable for our requirements by a feasability study, Posco chief representative Sang Moo Doh told FE.He added that the port will be developed in two phase coinciding with the development of the steel plant with an investment of between $200 to 300 million.
The Korean steel major has scaled up investment for its steel plant in Orissa from earlier $10 billion to $12 billion to accommodate additional investment on developing infrastrural facilities like road, township and port.
The development of an exclusive port facility is important for the company as it expects major movement of materials to and from it Orissa facility.
While earlier, existence of port facilities was an important consideration for choosing Paradip for the steel project, the feasability study has found the infrastructure there inadequate. Paradip Port has a tonnage handling capacity of about 12,000 metric tonne whereas Posco is looking to bring larger vessels
State Trading Corp in diversification mode
The State Trading Corporation of India (STC) has unveiled a host of new initiatives and diversification plans to achieve higher turnover and profitability in its golden jubilee year, a statement said Monday.
The STC will complete 50 years in 2006.
Some of the new initiatives include import of consumer goods, IT products, non-ferrous metals and leasing of mining capacity and entering into joint ventures with Indian firms for prospecting of reserves.
The corporation - under administrative control of the commerce ministry - unveiled the initiatives amid record turnover of Rs.97 billion ($2.2 billion) for 2004-05, against the government's target of Rs.67 billion ($1.52 billion).
Last fiscal, the STC was nominated by the Uzbekistan government as a nodal agency for imports from and exports to India. The company is planning to launch joint operations with Uzbek entrepreneurs in pharmaceuticals and textiles.
The corporation has also entered into overseas steel operations in Philippines to supply raw materials from third countries to an Indian steel unit there
Punjab cycle makers face export downturn
In the absence of export incentives, Punjabs cycle industry is diversifying into manufacturing auto components. During the past few months, exports have declined because of the fluctuating raw material market
In spite of the increased steel prices, cycle exports had declined from Rs 850 crore to Rs 800 crore this year, in comparison to last year, said Varinder Kapoor, general secretary of United Cycle and Parts Manufacturers.
Bhupinder Pahwa of Parker Cycle Industries said reduced incentives were causing a decline in exports from the state, resulting in the diversification into auto components manufacturing. On the other hand, the increased competition from China was forcing the industry to look for other options, he added.
There are about 3,500 cycle-manufacturing units in the state and more than 40 per cent of the units have moved to manufacturing of auto components, he says.
Elaborating further, Kapoor said the cycle industry was virtually on the verge of closure, the main reasons for which was the new foreign trade policy.
It had been observed from the total turnover of the cycle industry, the contribution of export was 40 per cent, and in the absence of incentives, it was difficult to survive because the demand was not very good, given the tough competition, he added.
The major players had also cut production by almost 50 per cent because of labour unrest, said Kapoor. As the auto sector was growing, the demand for auto parts would also grow apace, considering the fact that they needed to be changed from time to time, he said, adding that further increased opportunities for the industry.
About 25 per cent of the units had become sick, and if the government did not take serious action to revive exports, the industry would shift to other states to take tax benefits and work in the peaceful environment, commented Pahwa
Mittal seeks to snatch Czech Vitkovice from Evraz
Mittal Steel launched a bid for Czech manufacturer Vitkovice Steel on Monday, offering more than Russian steel maker Evrazholding, which won a government tender last month.
Mittal said in a statement it was ready to pay 9 billion crowns ($355 million) for state-owned Vitkovice Steel, one of Europe's biggest producers of heavy plates, some 2 billion crowns more than Evraz offered in the already completed tender.
Mittal Steel, which is the world's top steel company and dominates the sector in the Czech Republic, was eliminated from bidding in the tender due to a legal row over the price of pig iron it sells to Vitkovice Steel.
Mittal Steel promised to settle all outstanding disputes with Vitkovice Steel and the state.
Government officials were not immediately available to comment on the Mittal offer. The government is expected to discuss the results of the sale in the second half of July.
Vitkovice Steel's sales almost doubled to 4.2 billion crowns while net profit soared to a record 940 million crowns in the first quarter.
The other bidders were Czech investment company Charles Capital, Czech and Slovak financial group Penta, Czech steelmaker Trinecke Zelezarny and Ukrainian investment company System Capital Management.
The Czech government was due to choose the winner of the tender by the end of June, but has yet to announce a decision.
Vitkovice is the Czech Republic's largest producer of rolled steel products, steel plate and steel sheets. Its annual steel capacity is nearly one million tonnes
Brazilian tube maker V&M secures BNDES loan
Brazilian steel tube maker V&M has secured a 99mn-real (US$42.3mn) loan from national development bank BNDES to expand output capacity of seamless steel tubes 15.4% to 582,000t/y from 504,000t/y from 2007 onwards, BNDES said in a statement.
The loan will fund new equipment and upgrades at its industrial unit production line in Belo Horizonte, the statement said.
The loans accounts for 52% of total investment required for the V&M expansion, which totals 189mn reais.
The expansion aims to meet demand from the oil sector, which is a large consumer of 7-inch (4cm) diameter seamless tubes, according to the statement.
The project, scheduled for conclusion in 2006, will create 264 direct jobs.
V&M de Brasil, the country's largest seamless steel tube maker, is controlled by V&M Tubes, a joint venture between France's Valourec and Germany's Mannesmannrohren-Werke AG
Questa Mine May Not Go to Chinese Firm
Questa's Molycorp mine would not be sold to China's state-owned oil company as part of a takeover bid for Unocal Corp. if Unocal shareholders follow the current recommendation of their board of directors.
However Unocal's directors are evaluating the Chinese oil company's offer and are meeting with representatives of the Chinese firm "to discuss a range of issues."
Unocal is the parent company of Molycorp, which employs about 220 people in Questa for mining molybdenum, a key ingredient in steel production.
Last month, the China National Off-Shore Oil Corp., known as CNOOC, entered the bidding for Unocal with an $18.5 billion all- cash takeover offer. Chevron is offering $16.3 billion in cash and stock.
Metals USA Announces Leadership Changes
Metals USA, Inc., a leading metals distributor and processor headquartered in Houston, today announced that Bill Bennett has resigned as Senior Vice President of the Company and as President of the Plates & Shapes Group. Mr. Bennett will remain with the Company as Assistant to the CEO, Lourenco Goncalves, until the closing of the pending acquisition of the Company by Apollo Management, which is expected to occur during the third quarter of 2005.
Joe Longo has been appointed President of Plates & Shapes - East, and David Martens, has been appointed President of Plates & Shapes - West. Both men will assume Mr. Bennett's current responsibilities in their respective regions effective immediately and will report directly to Mr. Goncalves. Both Mr. Longo and Mr. Martens have held significant leadership positions within the Company during the past several years and each has over 20 years of industry experience.
Metals USA provides a wide range of products and services in the heavy carbon steel, flat-rolled steel, specialty metals, and building products markets.
Port Talbot blast furnace inquest opens
An inquest into the deaths of three steel workers killed when a blast furnace exploded at a Corus plant is due to begin today.
Molten metal showered down over workers at the Port Talbot plant, in south Wales, when furnace number five erupted in November 2001. Stephen Galsworthy, 25, and Andrew Hutin, 20, from Port Talbot, and Len Radford, 53, from Maesteg, all died in the tragic accident.A dozen other workers received serious burns in the explosion which shook the close-knit community bordering the sprawling plant.
A jury is due to be sworn after 11am today when the inquest, taking place at the Guildhall, in Swansea, is scheduled to begin.Since the tragedy there have been three separate investigations into its cause. They have been carried out by the Health and Safety Executive (HSE), the police and experts from Corus itself.
During that period the destroyed furnace has been rebuilt, at a cost of 75 million, allaying fears that the company might downgrade the plant.
Preliminary findings from the HSE inquiry in November 2003 indicated water entering the furnace's molten core may have triggered the blast.
More iron ore signed out for China from Australia
An emerging iron ore miner in the Murchison area of northern Western Australia has secured plans to start exporting within six months by signing sales contracts with two Chinese steel producers.
Murchison Metals intends to start mining at the Jack Hills project west of Meekatharra later this year.
The project includes sealing the 200 kilometre section of road from the mine to Cue to cope with the trucks that will be carting one million tonnes of ore to the Geraldton port in the first year.
Murchison Metals' Trevor Matthews says the contracts with Delong Steel and Rizhao Steel Company represent about 30 per cent of the planned 2006 production.
He says the contracts ensure the company has enough revenue to pursue its early mining plans. "It allows us to plan more accurately our revenues in the first year in particular, we've got a reasonably significant amount of capital expenditure to make to go into production in 2006," he said
Posco finishes deal for private power plant
Posco, the world's fifth-largest steel producer, completed the purchase of Korea Independent Energy Corp., Korea's biggest private power producer, to expand its energy business.
Posco bought half of the power producer, the country's second biggest, and Korea Power Investments Co., led by Macquarie Bank, purchased the remaining 50 percent from U.S.-based El Paso, the steelmaker said in an e-mailed statement yesterday.
All-time high steel prices lifted Posco's earnings to a record last year, allowing the steelmaker to outbid eight other companies in the first sale of a Korean power plant in five years. Posco's holdings of cash and securities rose 40 percent last year to 4 trillion won ($3.8 billion)
Inco joint-venture nickel foam plant in China
Jim Peterson, Canada's minister of international trade, joined Inco Ltd. officials Monday to officially open the firm's newest manufacturing joint venture in China.
The new plant in Dalian, called Inco Advanced Technology Materials, makes nickel foam, used in rechargeable batteries.
"This plant puts Inco in an ideal position to supply China's expanding battery, industry as well as battery customers in Japan and other Asian countries," Peter Goudie, Inco's executive vice-president for marketing, said in a release. He said Inco's Goro project in New Caledonia will be an important new source of nickel for the Chinese stainless steel industry when it comes on stream in the latter part of 2007, "and we are expecting to build a facility in China to further process our Goro production."
Inco is the world's second-largest producer of nickel and an important producer of copper, precious metals, and cobalt.
The Dalian plant is a joint venture of Inco Asia Holdings, a subsidiary of Inco; Korea Nickel Corp.; and Liaoning Wanzhong Real Property Development of Dalian. Inco Asia Holdings is the majority shareholder.
"Canada is proud to showcase Inco as a leading Canadian company making strong inroads in China," Peterson said. "This joint venture is a model for any Canadian company wishing to come here, and the government of Canada stands behind them."
Inco has recently grown become the world's leading supplier of nickel foam. Earlier this year, the company acquired the nickel foam assets of Shenyang Golden Champower, one of China's leading nickel foam makers. Inco also makes nickel foam at its refinery in Clydach, Wales.
The Dalian plant can produce above two million square metres of foam per year. Inco's total annual foam production is about four million square metres.
Inco has expanded its presence in China since first opening a sales office in Shanghai in 1994 and today has about 560 employees in five locations, including a nickel salts plant in Kunshan, China, which began operation in 1997
SA Numsa calls off strike
A potential strike action by over 190,000 workers in the steel and engineering industry has been averted, the National Union of Metalworkers of South Africa (Numsa) said.
This comes after workers in the industry overwhelmingly agreed to accept an offer of 6.8% for lowest paid grades and 5.2% for highest paid grades.
The intended strike action on July 12 has been called-off.
Numsa said that it would formally meet with the Steel Engineering Industry Federation of South Africa (Seifsa) today at 11h00 to sign a two-year wage agreement.
The wage increases will come into effect from the pay week ending July 8, and will benefit 310,000 workers employed in the industry.
Qasco signs LoI for steel supply to new venture
Qatar Industrial Gases Company has signed a letter of intent (LoI) with Qatar Steel Company for a long-term supply of oxygen to Qascos Mesaieed facility.
The Qatar Industrial Gases Company is a recently-formed joint venture between Qatar Petroleum (QP), Qatar Nitrogen Company (QAN) and Air Liquide.
A press release issued by Qatar Petroleum here yesterday said Qasco planned to set up new high performance steel furnace using oxygen injection.
These furnaces will require up to 170 tonnes a day of oxygen, which will be supplied by Qatar Industrial Gases Company. Supply is scheduled to commence in 2007.
The LoI was signed for Qasco by its general manager Sheikh Nasser bin Hamad al-Thani and for the other participating companies by Eid Mubarak al-Mohannadi, Qatar Nitrogen Company chairman, Ali Hassan al-Sidiqqi, QP director (downstream ventures) and Pierre Dufour, executive vice-president, Air Liquide
China opens gates to foreign money
China's financial authorities yesterday launched a dramatic bid to revive its stock markets and kick-start doomed plans to privatise huge swathes of industry.
The government confirmed big increases in the amount of money allowed to be brought in from overseas for investment.
It also reversed a whole series of policies aimed at preventing stock market fraud, which had also limited the markets' liquidity.
A trial sell-off of what the Chinese euphemistically call "non-tradable shareholdings" in four companies was announced in April.
The government wanted to inject market-place rigour into China's small and medium-sized state sector, much of it run in cozy arrangements with local authorities. China's big, centrally-run state companies remain protected.
Investors on the Shanghai and Shenzhen stock exchanges have also been demanding government action to reverse their long-term decline.
But instead, the move led to further falls, with the markets losing 10pc to 12pc of value and hitting eight-year lows, as investors feared the value of their shares would be further diluted by a swamp of more low-quality offerings.
The Securities Regulatory Commission tried to rescue the situation, without success, by throwing in more companies, this time big players like Baoshan Iron & Steel and China Yangtze Project Development, which runs the Three Gorges Dam.
Yesterday they went further, confirming a series of changes which in some cases amount to major reversals of long-standing policy.
The most significant for overseas investors is the more than doubling of the amount of foreign money that can be put into the securities market through existing schemes, from $4billion to $10billion.
Officials also confirmed suspicions that a ban was in place on domestic IPOs by state-owned firms. According to western analysts, one of the main causes of the stock markets' malaise is the belief that IPOs have been used to raise cash for a variety of purposes, some corrupt, rather than to fund restructuring and modernisation.
More controversially, the government reversed previous reforms intended to inject internationally accepted disciplines into the market by reducing government interference. It added to recent promises to bail out bankrupt brokerages by confirming it would set up a fund to stabilise markets "in case of emergency". Brokerages deemed to be performing well would have access to low-cost loans.
