July, 16 2005
Steel Strips secures contract from European co
Punjab-based Steel Strips Wheels Ltd has signed contracts with European company PSA Peigeot Citroen for supply of 2.25 million steel wheel rims worth Rs 120 crore.
The company would supply the steel wheel rims to PSA's plants in Spain and France for their car models including Berlingo Citroen and 407, the company informed the BSE on Friday.
The order is to be executed over a period of three years beginning calendar year 2006, it said.
During the financial year 2004-05, the company has sold 3.55 million of wheel rims and total turnover was Rs 146.10 crore.
POSCO to Invest USD 900 Million in Setting up Dedicated Port at Jatadhari in Orissa
POSCO, the world's fifth largest steel company, will be investing USD 900 million in setting up a dedicated port at Jatadhari in Orissa. The construction of the dedicated port will be done in two phases. The first phase will see an investment of USD 600 million which will be distributed in two modules of USD 400 million and USD 200 million. During the second phase, POSCO will make an additional investment of USD 300 million, taking the total investment in the port to USD 900 million.
The setting up of this dedicated port will be part of POSCO's overall investment of USD 12 billion in Orissa. According to the MoU signed on June 22, 2005 between POSCO and the Government of Orissa, the Government of Orissa will consider granting the Company permission under its existing policy for development and operation of such a port as per standard concessions prescribed.
POSCO plans to build a 3 million tone capacity steel plant, by means of the blast furnace or Finex route, during the first phase between 2007 and 2010 and expand the final production volume to 12 million tones. The investment proposed is to the tune of USD 12 billion, including an initial investment of USD 3 billion during the first phase.
The investment will also include building of necessary infrastructure and logistics such as roads, township, water, power and port in the region, in which the Government of Orissa will provide as needed.
Through the ongoing feasibility study, POSCO found that the Port at Paradeep did not meet its standard requirements to handle the desired tonnage capacity. The new Port, however, will act as a dedicated facility to handle these requirements. The new port will also continue to boost infrastructure development in the state and ensure timely progress of POSCO's plans in the region.
The Port would be built on Build Operate Transfer (BOT) basis also referred to as Build, Own, Operate, Share, Transfer (BOOST) basis.
About POSCO
Founded in 1968 and headquartered in the southeastern port city of Pohang, POSCO operates two of the world's premier steel works--the Pohang and Gwangyang works. The Pohang works produces crude steel of 13 million tones and specializes in small-lot production of a broad range of products, including hot-rolled coil and cold-rolled sheet, plate, wire rod, electrical steel, and stainless steel. The Gwangyang works focuses on mass-production of limited high-demand products such as hot and cold rolled sheet and produces crude steel of 17 million tones. POSCO's products are shipped to over 60 countries around the globe, satisfying some of the world's most quality-sensitive customers.
POSCO employs 19,377 people and approximately 70% of its share is owned by foreign investors. POSCO produced 30.2 million tones of crude steel and generated sales of 19,792 billion KRW (USD189.6 billion dollars) and net earnings of 3,826 billion KRW (USD 36.7 billion dollars) in 2004.
India will derive significant benefits from the POSCO project once it is functional, including job creation of 48,000 jobs in the region and 467,000 man years of employment during the construction phase. Foreign exchange inflows of US$23 billion are projected, with taxes and royalty incomes of US$20.3 billion for the central government and US$5.1 billion for the Orissa government.
Tata Steel violated norms: Jharkhand
Chaibasa mines officer says Tisco selling 55% ore to others without govt approval.
Tata Steel has been charged with violation of mining lease norms in Jharkhand and is facing a possible cancellation of a part of its lease.
The district mines officer of Chaibasa, in a letter, dated June 17, to the states secretary, mines and geology department, had cited Tata Steel's accounts of March 2005 to point out that the company was selling 55 per cent of the iron ore from its captive mine at Noamundi to others. The entire ore was meant for the companys own consumption.
Tata Steel has violated its statutory declaration says the letter, given to the state government, on the basis of the March 2005 returns filed by the company. It says the company had not obtained approval of the government to sell iron ore.
Further, the Chaibasa mining officer had recommended that Tata Steel be given a chance to respond under the provisions of the Mines and Minerals Development and Regulation (MMDR) Act 1957, section 4A.
His own belief, however, was that the iron ore reserve in the mine was considerably more than what Tata Steel needed. Therefore, the letter says, this lease should be cancelled and readvertised.
A Tata steel spokesperson confirmed the sale of iron ore. A letter in this regard has been received by the company and Tata Steel would reply accordingly. Tata Steel was selling iron ore, but only fines and, with the company's future expansion plans in place, the company will progressively reduce its selling in the open market in years to come, he said.
A mining industry expert said that 'many steel companies have been exploiting the government's laissez-faireism policy by producing iron-ore far in excess of their requirements and making money by selling the ore in the open market'.
The expert explained that most of the iron-ore is sold to traders, who further rake in moolah by exporting a chunk of it and selling the remaining in domestic market.
Industry observers maintain that selling iron ore in open market defeats the very concept of captive mining, which in literal sense means that if the area is sanctioned as captive mining, then no produce from the sanctioned area should be sold in the open market.
Tata Steel's Jamshedpur plant's capacity is to be increased to 7.5 million tonne by 2007-08. The expanded capacity will push up Tata Steel's Jamshedpur plant's raw material requirement to 23 million tonne by 2007-08, of which iron ore alone will be about 12 million tonne.
Tata Steel has captive iron ore mines at Joda, Khondbond and Noamundi.
Noamundi Iron Ore Mine is an operating open pit mine, which mainly produces iron ore. Established in 1925, Noamundi is one of the biggest and fully mechanised iron ore mines in Jharkhand and is certified under Environment Management System ISO 14001: 1996 standards.
Indian steel demand to grow by 7%: Tisco
Tisco believes that Indian steel demand will grow at around 7%, while globally the same would be lower at around 4.5-5%. Steel prices have stabilised during the past three weeks, but, a slight uptick in prices can be expected going forward.
B Muthuraman, MD, Tisco believes that Indian demand for steel will grow at around 7%. Globally, steel demand will grow by 4.5-5%, he says.
Muthuraman does not foresee any change in long-term contract prices of steel.
He adds that, steel prices have stabilised in the past three weeks, but going forward, a slight uptick in prices can be expected. Destocking will continue in the short-term, he says.
Muthuraman believes that, the prices of steel that were prevalent about a year ago were unrealistic and that they had to come down.
However, steel prices did not come down due to any economic slow down around the world, but it was due to too much stocking that took place around the world.
Muthuraman believes that steel prices is not the only important issue in the sector. "Issues like low-cost steel, ensuring that customers get it at stable prices, creating value and increasing Indian steel consumption are far more important issues," he says.
He further adds that, steel prices at the commercial end are often speculative and this is due to the psychology of the buyers and sellers. For the last 2-3 months, there has been less buying and therefore price correction is taking place now, he reasons.
India is one of the lowest users of steel in terms of per metre of construction, and there is a need to find out new methods of using steel and proving that steel is economical. Steel has a low life-cycle cost, since it is a very eco-friendly material, he says.
Muthuraman says, "Steel is the most useful material to man and therefore there is a need to communicate this and promote the use of steel with help of architects, construction engineers and designers."
End to steel slump in sight
The domestic steel industry, laid low by a recent slump in prices as global supplies outstrip demand, foresees a course reversal from September.
Early this month, firms slashed prices by 5-8 per cent following sluggish international demand and an inventory pile-up in some countries. It followed a reduction of Rs 500-2000 per tonne, made only weeks back.
While international prices of hot rolled coils are now in the region of $500 per tonne, experts are of the view that the sluggishness will persist in the short term.
A senior official from a leading private sector steel company said while firms have been successful in bringing down inventories in some markets, these continue to be high in other areas of the country. This may lead to the inference of more price cuts. On the other hand, lower production at some of the plants is expected to stem a dramatic decline in future, he added.
The official predicted a recovery in prices from September as stockists step up purchases. Also, demand tends to be stronger during these times in developed markets.
Tata Steel managing director B. Muthuraman is one of those betting on a September spike, but expects prices to stabilise at $450 per tonne after hardening for some time.
Muthuraman, however, ruled out any revision in prices under long-term contracts.
There will be no change in these prices as we need to keep them at a level at which the company can sell, he said on the sidelines of a conference on the steel industry here today. Asked about the demand for steel, he said it was likely to grow 4.5-5 per cent globally and 7-8 per cent in India.
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STC Unveils Major Plans for Diversification
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. Import of FMCG goods, non-ferrous metals, taking mining capacity on lease and entering into joint ventures with reputed Indian companies for mining are some of the measures already pursued by the Corporation this year. Apart from this, the Corporation will commence the import of IT products shortly.
In one of the landmark achievements in the year 2004-05, the Corporation recorded an all time high turnover of Rs.9700 crore as against Rs.6750 crore set in the target for the year. In the export front, the Corporation has made highest ever export of chemicals, drugs & pharmaceuticals items amounting to Rs.227 crore compared to negligible figures to the previous years. The Corporation has also made headway in the export of iron ore by successfully effecting shipments worth Rs.8.5 crore.
In another pioneering initiative, the Corporation earned Rs.11 crore last year by the export of teak wood. The Corporation plays a facilitative role to exporters by providing technical, marketing and financial assistance. Arranging import of machinery and raw material for export production, setting up design centres, providing testing laboratories, taking products of small manufacturers to overseas markets by organising their consortia, participation in exhibitions and trade fairs both within India and abroad give the much needed fillip to the small and medium entrepreneurs.
During 2004-05, STC was nominated by the Government of Uzbekistan as a nodal agency for imports from and exports to India. The Corporation has also been planning to set up operations in the areas of pharmaceuticals and textiles in Uzbekistan jointly with local entrepreneurs. In another significant development, the Corporation has entered into overseas steel operation in Philippines under which the STC would supply raw materials from third countries to a steel plant set up by an Indian company in Philippines.
Over the years, the Corporation has catered to the socio-economic objectives of the country by ensuing remunerative prices to growers of certain agricultural products like rubber, tobacco, shellac, lemon grass oil and sticklac through price support operations undertaken from time to time. These operations always had a salutary impact on the prices. The infrastructure and the expertise developed by the Corporation has equipped it to handle wide variety of trade transactions. Of particular significance is the offshore trade undertaken by STC. In one such transaction, the Corporation realised money under Government of Indias debt repayment plan by procuring rice from Vietnam and exporting it to Singapore.
Established in the year 1956, primarily with a view to undertake trade with East European countries and to supplement the efforts private trade and industry in developing the exports from the country, the STC has built a network of Rs.306 crore and contributed a sum of Rs.775 crore till date to the public exchequer by way of payment of dividends and taxes.
Serving as an arm of the government not only to regulate the foreign trade but also for intervention in domestic market, the Corporation commends a reputed image in the global market, according to various surveys of Indias Fortune 500 companies.
Mittal steel marches into China
The Chinese government has formally approved Mittal Steel, the world's largest steel-maker's purchase of a 300-million-dollar stake in one of the country's biggest, most profitable steel companies.
China's State Development and Reform Commission (SDRC) approved the acquisition proposal on Thursday, the news agency Xinhua reported, immediately after the State-Owned Assets Administration Commission in Beijing gave the green light.
The Mittal deal gives the London-based Indian steel tycoon a 37 per cent stake in Hunan Valin based in the central province of Hunan. It trumps other Western companies rushing to invest in China's key, untapped infrastructure sectors.
Sources said it was Mittal's first step in a masterly strategy to wrest opportunities for global growth.
Mittal Steel will now become the second largest shareholder in the Chinese company.
The decision to buy Hunan Valin, unveiled by Lakshmi N Mittal in January, came 18 months after he first announced he was making a 100-million-dollar investment in a rolled steel plant in Yingkou in north-eastern China.
The purchase cements Mittal's bid to lead the rush into China by making the first sizeable investment by a non-Chinese steelmaker in an established Chinese steel company. Hunan Valin made profits of 85-million dollars last year.
Steel industry experts here said on Friday that Mittal's China strategy was canny as it is one of the world's biggest steel consumers and yet remains woefully behind in terms of foreign investment in its domestic steel industry.
They said Mittal's determination to enter the world's hungriest steel market would surely be followed by a smaller, if equally strategic positioning in India.
Recently, the steel magnate told an industry conference that China was a logical step for his company, which has operations in 14 countries, on four continents because steel consumption per capita in China is high at 200 kilograms per person. Consequently, it would be "logical' to assume it would grow strongly in the next three-to-five years, Mittal said.
He pointed out that China's industrialization in the last three years had its appetite for steel to 300 million metric tons and increased global demand by an average of five percent since the 1970s.
But in a significant nod to his increasing interest in the land of his birth, Mittal said India too represented a growth opportunity in steel demand because it has a population of one billion and its steel consumption was 30 kilograms per person in 2004.
Sources in Mittal Steel have long pointed out that China is expected to produce and consume nearly 30 per cent of world steel shipments of more than one billion tones this year.
Mittal stresses that "strategically, this is a key acquisition for Mittal Steel Co, as it provides us with our first production platform in the world's fastest growing steel market."
In January, Mittal announced his bid for Hunan Valin with the relaxed pronouncement that he was "confident demand for steel in China will remain strong. China is experiencing a period of rapid economic growth and we are excited by the prospect of being a participant in this."
A Mittal Steel spokesman described the Chinese investment as part of the process of a world "leader spreading its wings globally". Experts said the final transactions in the deal were expected to be completed at least a fortnight ago.
Arcelor, Mittal Steel, Corus among 13 companies to bid for Turkey's Erdemir
Thirteen Turkish and foreign companies have been permitted to bid for 49.29 pct of the shares of Turkish steel producer Erdemir, said the office in charge of privatisations (OIB), CNN-Turk reported.
Among them are Arcelor, Mittal Steel, Corus PLC and three Russian firms -- Severstal, Novolipetsk and LebGok-Oskol.
They have until Sept 26 to lodge their offers with the OIB.
