July, 07 2005
CCEA clears coal projects
Faced with depleting coal stocks with power, steel and cement industries, government on Tuesday approved two opencast expansion projects worth Rs 3,359.60 crore to meet customers demand at Korba coalfield.
Cabinet Committee on Economic Affairs (CCEA) approved the expansion of Dipka and Gevra opencast expansion projects of South Eastern Coalfields
Coal production was a drag on the performance of other core sector industries last fiscal. A number of power utilities and core industries have been forced to go in for large scale coal imports this year to avoid production cut. The Dipka opencast mine expansion will involve a capital investment of Rs 1,268.53 crore, while Gevra project will be expanded with Rs 1,667.55 crore investment.
Posco MoU: CM urged to examine Orams views
BJP, a ruling partner of BJD in the State, has advised Chief Minister Naveen Patnaik to examine the points raised by its State unit president Jual Oram before reaching a final agreement with Korean steel major Posco.
The Posco deal was discussed here on Tuesday at a party meeting attended by all the eight BJP ministers and senior party functionaries including Oram.
Party spokesperson Nayan Mohanty told this websites newspaper that the BJP welcomes the proposed steel plant by Posco but it has reservations over some points in the MoU signed between Posco and State Government. A resolution to this effect was passed at the meeting.
The meeting presided over by Oram was attended by Industries Minister B B Harichandan and Urban Development Minister K V Singhdeo, among others.
JSL may start ferro chrome output in Orissa by year end
Ferro chrome production from the 1.6 million tonne stainless steel plant proposed by Jindal Stainless Ltd (JSL) in Orissa, comprising ferro chrome is likely to start by the end of this year. This is part of the first phase of the steel project.
The company has already committed an investment of Rs 2,000 crore for the project of which Rs 600 crore has been spent on construction at the site and orders for equipment worth another Rs 1,300 crore has been placed with the suppliers. The total cost of the stainless steel project is pegged at Rs 6,628 crore.
The company today signed a MoU with the Orissa government for the project though it had started work on it since last year.
"The first two ferro chrome furnaces with installed capacities of 80,000 tonnes per annum are slated to go on stream in a couple of months," Ratan Jindal, vice-chairman and managing director of the company told newsmen after signing of the MoU.
He said the rest of the first phase work will be completed in another two years. "Simultaneously, we will start work on the second phase which will get completed in 2009," he added.
The project along with a 500 mw captive power plant is being set up in two phases. The first phase comprises establishment of 2.40 lakh tonne of ferro chrome, 40,000 tonne of silicomanganese, 50,000 tonnes of ferromanganese capacities, blast furnace to produce 5.25 lakh tonne of hot metal, 8 lakh tonne per annum stainless steel melting shop and eight lakh tonne slab caster machine apart from the facility to produce 25 mw power from blast furnace gas and waste and 125 mw captive power. The cost of this phase is estimated at Rs 1,612 crore.
The phase II comprises of setting up of additional 2.4 lakh tonne of ferro chrome, 80,000 tonne of silico manganese and 50,000 tonne of ferro manganese capacities, 5.25 lakh tonne of hot metal, 1 mt hot rolling mill, 8 lakh tonne per annum stainless steel melting shop and 8.25 lakh tonnes of cold rolled coils and 375 mw of captive power.
This phase is estimated to cost Rs 5,016 crore.
Jindal said, the Orissa facility will be the largest integrated stainless steel project in the country and south Asia. With the implementation of the project, JSL will move up to acquire a position among top ten stainless steel producers in the world, he added.
JSPLs Jharkand plant to be set up in 7yrs
Jindal Steel is expected to complete its new Jharkhand steel plant project within the next seven years. Navin Jindal, MD & Executive Vice Chairman, Jindal Steel is confident about raising funds for the new project since the company has strong internal accruals
Jindal Steel has signed an MoU with the Jharkand government for setting up a Rs 11,500 crore steel plant in Chandil. The proposal is to set up an integrated steel plant in Jharkhand, which would have a capacity of five million tonnes.
Jindal Steel and Power Ltd plans to set up two steel plants in Chhattisgarh, at the cost of Rs 2,595 crore, and plans to finance the project via $100 million worth of ECB and domestic debt.
The new plant in Chandil would be set up over the next seven years, where in the first year, land worth Rs 200-300 crore will be accquired, and by the third year the company would be investing about Rs 1500 crore, and bulk of the investment would come towards the end, when the commissioning takes place.
Navin Jindal, MD and Executive Vice Chairman, Jindal Steel believes that it would not be very difficult for them to fund this five million tonne plant since they have strong internal accruals
Orissa bid to kickstart stalled projects
The Orissa government has pulled up a couple of steel companies for not starting work on the ground though the MoU had been signed months ago.
Though the state government was very enthusiastic in signing up companies for setting up of steel and other mineral-based plants in the state, many proposed projects have not yet taken off.
Taking an exception to this fact, the government yesterday issued a terse warning that the MoUs signed with the companies concerned would be cancelled if they did not pursue the projects. The government has so far signed as many as 37 MoUs with several private companies, including Posco, Tata Steel, Sterlite and Jindal.
A high-level review undertaken by steel and mines minister Padmanav Behera found that four out of 17 proposed steel plants for which the MoUs were signed in 2003-05 did not take off at all. The promoters of these projects include Deo Mines & Minerals, Konark Ispat Limited, MSP Metalix Limited and Monnet Ispat Limited.
Deo Mines & Minerals had signed an MoU in October 2003 for setting up a 37,500 tonnes per annum plant, while MSP Metalix agreed to start a 28000 tonne per annum mineral project. Monnet Ispat had signed an understanding in November 2004 for setting up a 25000-tonne-per-annum steel plant and Konark Ispat had signed for a steel plant in May.
The review revealed that the Chhattisgarh-based Monnet Ispat had not shown any interest in starting its Dhenkanal project, while the Deo Mines & Minerals and Konark Ispat had not deposited money with the state government for land acquisition
Govt skirts SAIL appeal
The state government today sidestepped the appeal made by SAIL to re-consider the cancellation of three mining blocks in Chiriya in the neighbouring West Singhbhum district.
The SAIL chairman, V.S. Jain, called on the state mining minister, Madhu Koda, at the state capital this evening.
Koda said, Jain had raised the issue of cancellation of three mining blocks of Chiriya by the state government. I told that we cannot discuss the matter as the matter is sub judice.
SAIL had moved the central mining tribunal and Jharkhand High Court after the state government cancelled the mining leases in January. The high court in its interim order has directed the state government to maintain status quo on the issue. The mines minister said the SAIL chairman told him that the renewal of the leases of the three mining blocks are important since it would require huge quantity of iron ore for its Bokaro Steel Plant
Mittal team keeps govt guessing
The two-day visit of a seven-member team from Mittal Steel Company, which concluded today is being perceived as a very positive feedback as far as setting up a steel plant in the state is concerned.
Even as officials from Mittal Steel Company and the state industries department have been refraining from giving an official statement to the media, there are strong indications that the company is interested in setting up a steel plant here.
The visit comes exactly a month after the high profile visit of top officials from the company. The company officials had refrained from speaking anything on investment plans on its last visit, too, and had said they will only reach to a conclusion a month later.
Company officials held an hour-long meeting today with the state industries secretary Santosh Sathpaty and other officials at the secretariat here. Though a meeting with the state chief secretary P.P. Sharma was also on the cards, it was called off as Sharma took ill today. Sharma is directly monitoring the companys proposal to set up a plant here. This is the second investment proposal in the state (first being a Rs 7,800 crore proposal by Hindalco) that is being monitored by Sharma himself.
Sources in the department of industries said a range of issues ranging from availability of minerals to tax structure to legal issues came up for discussion in the meeting. The company officials reportedly showed a strong interest in the iron ore blocks of Chiriya and Manoharpur in West Singhbhum (Chaibasa).
The company has reportedly identified a railway link to the Paradeep port in Orissa and availability of coking coal as two issues that the state government should immediately attend to. Further, the company representatives have also demanded a detailed information on the tax that the state will impose on the product manufactured by the company here.
Company officials have been told that while their demand for coking coal can be met from unexploited coal mines in Dhori (Hazaribagh), the state will take all possible measures for setting up of an alternate railway line between Manoharpur in Chaibasa and Paradeep, sources said.
The companys public relations executive Charu Khanna said it will only release an official statement 15 days later. We are still exploring possibilities in Jharkhand. An official statement on the future plans of the company will only be released a month later, she said.
Though the company has officially denied that it has made up any investment plans, sources maintain that the company is in the position of spending an amount in between Rs 40,000 crore and Rs 75,000 crore.
The government has been keeping its fingers crossed, at least for the time being, sources added.
ISMT merges with ISSA
Indian Seamless Metal Tubes on Wednesday announced its merger with Indian Seamless Steel and Alloys to create a Rs 1,000 crore company, making it the largest of its kind in the Asia Pacific.
The new entity would be called ISMT Ltd, a company release said here. The Mumbai High Court has ordered to convene a meeting of shareholders of the two companies on August 1, 2005 for approval of the merger, the release said.
The merger proposal provides for offering five equity shares in ISSAL for every four held in ISMT. "ISMT, the new company, would offer a range of precision seamless tubes to high-end suppliers of auto, bearing and other engineering OEMs. The volume growth of the company will be largely driven by exports which have grown at the rate of 40 per cent per annum over the last three years," it said.
"The 1,55,000 tpa tube capacity of the company is planned to be increased to 2,00,000 tpa and its existing steel capacity would be raised to 3,50,000 tpa," the company said.
Foreign investment lags in India, but tide may turn
After more than a decade of economic reform, the hefty foreign investment needed to bolster growth in India is still proving elusive, but analysts say three recent events have sent positive signals to foreign capital.
Labour laws that make it hard for companies to hire and fire, an archaic legal system that can stretch commercial disputes out for a decade and a 20-million-strong bureaucracy that delays decisions -- all are impediments to foreign direct investment (FDI).
But a $12-billion deal signed by South Korea's POSCO, the world's fifth-largest steel maker, for a project two weeks ago and an India-Singapore trade pact last week show that India may finally be trying to make foreigners more welcome.
And a partial settlement last weekend in a case involving General Electric and the Dabhol power plant -- the biggest FDI project of the 1990s -- goes some way to persuading investors that there is legal recourse, albeit slow.
"The solution to the Dabhol project is good news," said Siddhartha Roy, an economic adviser to the Tata group.
"It shows contracts will get honoured and, along with the economic pact with Singapore, the events indicate India is on the road to opening up its economy further to foreigners."
In the late 1990s the government set an annual FDI target of $10 billion but has consistently failed to get anywhere close.
Foreign money is pouring into stocks but data from the central bank last week showed net FDI in Asia's fourth-largest economy was just $3.04 billion in the fiscal year to March 2005, a fraction of the $55 billion a year that China attracts.
Under the agreement with Singapore, India will set higher investment limits in listed companies and the city-state's big banks will be able to to set up branches in India more easily than other foreign lenders.
BUREAUCRACY
In the Dabhol case, in which General Electric reached a settlement to sell its stake in the project, the plant shut down in 2001 after a billing dispute with the local utility, sparking more than 30 court cases and arbitration proceedings.
Such bureaucracy goes far beyond the courts.
"There is a need for a single window approval system, like there is in China, for investors to set up shop here," said Shuchita Mehta, chief economist at Standard Chartered Bank, Bombay.
"Labour laws should be amended in the manufacturing sector," she added. Analysts hold up services, which have more freedom to hire and fire, as an example for manufacturing.
In addition, they say, it should be easier for foreign firms to withdraw from an investment, in line with rules for foreigners entering and exiting India's financial markets, which drew in a net $9 billion in foreign portfolio investments last financial year as investors were lured by economic growth of 6.9 percent.
India is considering opening up retail, accounting and legal services to foreigners, but it will not be an easy task for the Congress party-led ruling coalition, analysts say.
Prime Minister Manmohan Singh's government faces opposition from its communist allies to opening up banking and insurance to foreign capital and they boycotted a liaison panel last month, accusing the government of ignoring them on most economic issues.
Yet the cash-strapped federal government has no alternative but to push for reforms to attract more foreign investors.
Analysts estimate airports and railways need about $55 billion over the next decade, telecoms $25 billion and the power sector $75 billion over the next five years. Since the government spends nearly half its revenue on servicing debt, it needs foreign capital to pay for infrastructure
KOICL, SAIL enter into 50:50 joint venture
Kudremukh Iron Ore Company Ltd (KIOCL) along with Steel Authority of India Limited (SAIL) is planning to form a Rs 1,200 crore Joint Venture (JV) for operating 3 mines in the state of Orissa. The modalities of the JV are in process of formulation with both steel companies having a 50-50 stake in the JV.
This is in addition to the mine which we are independently prospecting in Sundargarh district of Orissa, said P Ganesan, chairman and managing director of KIOCL.
Speaking at a press meet, he outlined the company's future plans in wake of Apex court's October 2002 ruling that gives a deadline of 31 December 2005 for closure of all mining activity in the protected area.
Saying that since the matter is sub-judice, Ganesan said that they were awaiting Supreme courts directive on the company's petition to extend the closure date by another 2 years for ecological reasons. The Apex court directive is expected to be announced in the next few months.
On the issue that whether the company has any plans formulated for the workforce, Ganesan said that the company was concerned about the dedicated workforce and best step would be taken, keeping their interest in mind.
As of 1 June 2005, the zero debt Public Sector Undertaking had 1,926 people on its payroll. The companys profit after tax (PAT) was Rs 649.84 crore for the financial year 2004-05 and paid a dividend of Rs 130.08 crore.
Kalyani Steel moves HC against withdrawal of anti-dumping duties
Kalyani Steel Ltd has moved the Delhi High Court against the withdrawal of anti-dumping duties on certain steel imports from Russia, China and Ukraine. The designated authority, directorate-general of anti-dumping and allied duties, in its final finding had recommended withdrawal of the duty on imports of seamless grade alloys and non-alloy, steel billets, bars, etc from these countries, saying that imports did not inflict any material injury to the local industry.
Besides, it has suggested that the industry had failed to substantiate its claim with regard to surplus production capacities in exporting countries.Kalyani had argued that the imposition had helped the domestic industry in improving its performance and withdrawal would cause irreparable harm and injury to the industry.
The designated authority in December 2000 had recommended imposition of provisional anti-dumping investigations on imports and in June 2001, definitive anti-dumping duty was imposed by Customs.
Posco starts project feasibility study
South Korean steel giant Posco has began the feasibility study for its proposed Rs 52,000 crore steel project in India while keeping out its mining partner BHP Billiton from the detailed study besides kickstarting the process of forming Posco India Corporation as part of its understanding with the Orissa government.
"BHP Billiton will not be a part of the 12 million tonne steel project's feasibility study and we would conduct it. The decision was based on an earlier decision taken by our board," Posco sources said.
Though the company denied having hired any consultancy firm for assisting in the study, but it did not rule out the possibility of doing so in the near future.
"We cannot do the entire study on our own. So we might have to hire private consultancy firms to assist us in the task. However, as of now we have not shortlisted any such firm," sources said.
The detailed feasibility study, which would take somewhere between six to eight months to complete, would delve into the marketing prospects, viability and financial implications of the project, they said.
Sources also refused to spell out the timeframe for signing the Memorandum of Agreement (MoA) with the Naveen Pattnaik government saying it would be decided only after the feasibility study ended.
The company has also began the process of forming a corporation in India as agreed in the MoU and the body would be Posco's nodal agency for implementing its project in India, they added.
Bullock carts for the fast track
To give relief to the ancient practice of rural transportation, a Central Scientific & Industrial Research constituent here has developed a bullock cart with a difference. Made of steel, this reformed bullock cart has been equipped with bearing-fitted wheels, axles and brake, adding a new-age flavour to the vintage vehicle. The CSIR organisation arranged mass training programmes for the fabricator and farmers at its laboratory complex.
The hi-tech laboratory of the CSIR organisation has got attached with many significant and useful research developments like preparing under-water vehicles, manufacturing components for the Saras aircraft, bringing out low- priced tractors with specialised utility for the past few years. The organisation has now come to extend techno-economic assistance to grassroots farmers residing in the rural segment.
The bullock cart developed by the organisation, according to the key designer, Dr PK Sen, will be able to carry a load of up to 2 tons with minimum maintenance cost. The design of the bullock cart made of metal has been tried in many parts of the country and in many places bullock carts with partial metallic components are in use.
The Central Mechanical Engineering Research Institute here has managed to incorporate the experience gained and achievements made in different parts of the country to make this new and improved metal cart. The CMERI has said officially, In some cases the conventional cart has been replaced by the metallic wheel and axle. Also, in some places bearings, brakes and springs have been used or the conventional chassis for the loading platform has been replaced with a metallic frame.
In many parts of Burdwan and Bankura, bullock carts made by local manufacturers are also equipped with bearings and axles. According to them, the CMERI venture is nothing new or amazing. But the developers of the new cart have claimed that it has certain advantages. It is light weight, weighing between 190 to 210 kg and has durability of at least 20 years. The price of the vehicle, too, has been kept within the reach of the masses and has been developed at Rs 20,000 per vehicle, they said.
Dr Sen said: The carts chassis has been made with rectangular, hollow steel sections and the design will help other manufacturers. He added: As compared to the conventional carts, the new cart has improved strength, better load-bearing capacity and is more comfortable.
The new cart has got enhanced durability and the lifecycle cost has been drastically reduced, he said. The project is sponsored by the Institute for Steel Development & Growth. Dr Mou Nandi, senior scientist with the CMERI said: While designing and developing the cart we kept in mind the traditional drawbacks of the ancient bullock cart. We have succeeded in reducing the wheel friction factor and so the ride has become smoother.
Also, she added: The brake adjusted with the new cart will enable the driver to control the motion of the loaded vehicle, especially when it is negotiating a slope, thus reducing chances of accidents. The CMERI has engaged Sk Nazimuddin, a local manufacturer at Amrai village, to help make such type of carts.
Mr Nazimuddin said: I have worked under their supervision. I am not sure that this vehicle will change the scenario of rural transportation. We will discover its drawbacks only after we have tested it on the road. The CMERI is apprehensive of poor response from the people.
The authority officially said: Although it has many advantages over the conventional cart, it is found that it is difficult to popularise it among the targeted segment because of many reasons such as lack of knowledge among the rural people and lack of proper manufacturing centres.
The authority had arranged a five-day training schedule to educate the target market where 35 heads from manufacturing and user segments took part
Form group, buy power
Faced with mounting criticism that the open access system notified this week will only benefit a handful of medium scale and large industrial units, the electricity regulatory commission has clarified that small industries can form cooperatives to take advantage of the system.
The notification for the first time has freed electricity consumers from the monopoly enjoyed by the state electricity board till now. In the first phase, industries consuming 25 MW or more have been allowed to purchase power from any supplier of their choice. They can theoretically now buy power from either Damodar Valley Corporation or Tata Power, if they so desire, by using the transmission lines of the electricity board.
Since most small scale industries use just 15 to 50 KW of power, a thousand kilowatts making up one MW, the benefit of choice, it was feared, would elude them.
The commission also clarified that domestic consumers will have to wait for several years before they can avail of the benefit.
The commission has been trying to make the system as fair and competitive as possible. Any licensee in the state that has set up transmission and distribution lines will have to allow use of its infrastructure by other licensees. It, in return, will be paid wheeling charges every month, the JSERC secretary A.K. Mehta told The Telegraph.
Sullen electricity board officials, who had resisted the reform, have given in and declared that they would have to abide by the commissions recommendation, though the board had defied them earlier.
On at least two occasions, the electricity board had defied the directive of the commission; first when the commission allowed Tata Power to supply electricity to Tata Steel mines at Noamundi and again in April this year when the commission allowed industrial units in Adityapur to buy power from Tata Power. But the board may not have any choice now but to give in.
Experts point out that since the electricity board does not generate sufficient power, it will also benefit by allowing other suppliers to use its transmission lines , in lieu of which the board will also earn some revenue.
It's non-governance
It is difficult to say which government harms the state more: the one that does not perform or the one that misperforms. Both mismanage. Both betray the interests of people. Both are a failure. Practically every state in India - they are 26 - belong to one category or the other. Their inability to govern has made the administration effete and the treasury empty. They have barely funds to run the government with very little money left for development. The meeting of the National Development Council (NDC) held at Delhi amply proves this. Agriculture, which is a state subject, is growing by 1.5 per cent annually, while the population is increasing around two per cent. The price of inputs has gone up. Farmers have no crop insurance and the states no money for agriculture. Their complaint at the NDC meeting was valid: the centre has put them in a straightjacket without disciplining itself. Still, the fact remains that the states' ills are of their own making. I have visited four states - Orissa, Karnataka, Punjab and Andhra Pradesh - in the last few weeks. It has been an unhappy experience. Governance is too chaotic, too dispersed and too politicised. None of the four chief ministers has either leeway or idea to plan, much less perform. Wrangling within their own party take most of their time
[u] Apathy agog[/u]
Orissa Chief Minister Naveen Patnaik is a non-governing type. His reputation is that of an honest person, although inept in administration. But then, he has left all to a clique of his favourite officials. His hobbyhorse is a grand design for the state. In the sterile seventh year of his rule, he has hit upon the idea of handing over the state's rich mineral resources to the multinationals. He has signed the biggest investment deal in the country with a South Korean firm for Rs. 51,000 crore for a steel plant. More details are in the pipeline, this time to export minerals. The state is, however, agog with rumours that multinationals pay "a cut" to Naveen's men at Delhi. There is no evidence of that and it may well be part of a vilification campaign, which, he says, he has been facing since coming to power. In any case, Naveen doesn't lose sleep over such allegations. Nor does it bother him that he can't speak the state language, Oriya. But his greatest handicap is the comparison with his dynamic father, Biju Patnaik, who brought a minor industrial revolution in the state. Karnataka has a coalition, Congress Chief Minister Dharam Singh heading it. He is also a non-performer. But he attributes his helplessness to former prime minister Deve Gowda who, as a coalition partner, is riding his back all the time. Gowda is so meddlesome that he has opposed the proposal to have metro in Bangalore, where roads cannot cope with the congestion. Despite government's inefficiency, a new industrial unit opens practically every day in Bangalore. Karnataka too has a huge quantity of iron ore. Like Orissa, the Dharam Singh government sees to it that every irregular digging is allowed at the expense of forests, provided it gets its share in the bounty.
As if the chief minister's plate is not full, Maharashtra Governor S.M. Krishna, his predecessor, is not letting him devote much to governance. Krishna is, reportedly, in direct touch with New Delhi on the one hand and Bangalore on the other. He wants to return to Karnataka and claims to have better contacts with the coalition partner. Karnataka is one state where the BJP is concentrating in the south and getting some response. Punjab Chief Minister Amarinder Singh is all bluff and bluster. First, he whipped up frenzy in the name of corruption against his predecessor Prakash Singh Badal. But that is thing of the past. Amarinder is now out to fight the extremists. He, reportedly, encourages the worst type of religious elements to retrieve space from the Akalis. He has used the state machinery to capture the Shiromani Gurdwara Prabandhak Committee. But his trip to Canada has exposed his altruistic motives. He has not only visited in Canada the gurdwara of Khalistanis but has also met some of them. He too wants to mix religion with politics as the Akalis do. This keeps him busy, not the Punjab problems. Andhra Chief Minister Y.S. Rajasekhara Reddy is among the misperformers. The state ousted Telugu Desam one year ago and brought the Congress in the wake of frequent suicides by farmers. People expected a down-to-earth administration in place of a high tech and highflying chief minister Chandrababu Naidu they had roundly defeated. But they are a disappointed lot. The number of farmers who killed themselves during the entire five-year regime of Telugu Desam is equal to the suicides in the one-year rule of the Congress. Technical know-how has stopped outside the rural areas because it is considered one of the reasons for the defeat of the Telugu Desam. On the other hand, corruption has increased manifold. It is an open secret that even the highest in the state has a cut in the allocations for irrigation projects.
The Naxalite problem is economic, not political. Talks with the radicals have not been successful because the state's kitty, after the usual outlets of corruption, has not enough to create jobs.This is one state which gives you the impression that the Telugu Desam would return if elections were held today. Even the Telangana, where the Congress swept the polls may go the other way because of people's diminishing faith on the promise to constitute a separate state.
[u] Falling behind[/u]
The visit to the four states has also confirmed my view that non-performance or misperformance means the same thing. It is the absence of governance. The deterioration in law and order, the demand for reservations and marginalisation of the poor - all this has come to the fore because the basic problems have not been tackled. The chief minister either does not perform or misperforms. In fact, India's experience is that a one party government has generally misperformed. There is no accountability. But, in contrast, coalitions perforce are weak. They have to make compromises to keep the flock together. Since concession is the glue, the Centre has to give in when an ally threaten to break away. Consequently, New Delhi has become weak, although it still monopolises power. The states are slowly usurping the territory that belongs to the centre. It cannot assert itself because it is too dependent on political parties in the state. The Manmohan Singh government can do very little under the circumstances. The BJP-ruled states have made their own consortium to defy the Centre. The parties supporting him want a pound of flesh. I wonder how much of the crisis the Left has tried to create at New Delhi is economic and how much political
China tells industry to conserve energy
China has told steel makers and other heavy industry to conserve energy and water, amid soaring demands for fuel to drive the booming economy.
The Cabinet issued an order on Tuesday calling for China to "build a resources-saving society," the official Xinhua News Agency said today.
Economic growth that is expected to top 9 per cent this year has strained China's supplies of oil, coal, water and other resources.
"Efforts should be made to save energy in major energy consuming iron and steel, nonferrous metal, coal, electricity, oil and petrochemical, chemical and building material industries," Xinhua said.
Yieh United to cut output
Yieh United Steel Corp, Asia's second-biggest manufacturer of stainless steel, plans to cut output by 30 percent this month in a move that will reduce its need for nickel, used to make the corrosion-resistant alloy.
The company will reduce stainless-steel production by more than 20,000 tonnes this month to stop prices falling. The company has an annual capacity of 1 million tonnes, or about 83,000 tonnes a month
"By cutting production, we hope to dispel the expectation that prices will continue to fall," he said yesterday.
Global stainless steel prices have declined by more than 10 percent since the beginning of May, after distributors built up excessive inventories, he said. Prices have also fallen on rising supplies from China
Adanac Moly Corp grants Traxys the exclusive right
Adanac Moly Corp reports it has entered into an agreement with Traxys S.A. Luxembourg as its exclusive representative to discuss/market potential molybdenum product from its Ruby Creek deposit over the next six months up to December 15, 2005 in order to determine the feasibility of an Offtake Agreement with Adanac.
An Offtake Agreement is an agreement where a customer for molybdenum product agrees to buy a part or the total output of molybdenum from a producing mine at pre-determined prices and conditions over a number of years.
Offtake agreements can be used by a producer to provide enough funds to repay project financing debt and to pay necessary operating costs and expenses. Offtake Agreements are often requested by banks providing project financing to mitigate the market risk of financing a project.
Adanac's British Columbia project (Ruby Creek) is in the final stages of Socio-Economic and Environmental studies and Feasibility to be completed by year end. The company expects to begin permit applications in September, 2005.
Feasibility is aimed at a 20,000 TPD mining and milling operation expected to produce 12,000,000 lb. of Moly per year over the next 5 years on a 20 year mine life plan.
Traxys is owned by Arcelor (50%) a world leader in steel production and Umicore (50%) a leading value added materials producer. Arcelor has 95,000 employees and Umicore has 12,000 employees. Traxys in turn owns 100% of Sogem Group and Considar Group.
An Offtake Agreement with Adanac would give Traxys a required source of moly and would give Adanac a guaranteed end user purchaser for part of its production.
No growth for Mittal Riverdale
Mittal Steel USA has decided not to proceed with the expansion of its Riverdale plant and it has completed integrating its salaried staff through a voluntary severance plan, the company spokesman said.
Plus the U.S. division of the Rotterdam-based company reportedly is choosing between four Chicago Loop locations for its North American headquarters.
The Riverdale plant's proposed $200 million expansion plan originally was proposed when the plant was owned by Acme Steel Co., then resurrected by ISG in 2004, said David Allen, spokesman for Mittal on Monday.
"We don't see it in our plans for the near future," he said. "It's not one of our priorities."
Allen said he is unable to define the company's definition of "near future" and added "this is not saying never."
The Riverdale expansion proposal included the construction of a second continuous caster and two electric arc furnaces that would have provided the mill with its own steel supply.
The finishing mill currently is operating at 60 percent of capacity because the supply of steel is limited, Allen said. The plant currently receives hot metal from Mittal's Indiana plants via rail car then converts the iron into steel in its "small," basic oxygen furnace.
Vietnam's finished steel import surges in first 6 months
Vietnam imported more than 1.6 million tons of finished steel products worth 1.1 billion US dollars in the first half of this year, posting year-on-year increases of 18 percent and 46.6 percent, respectively, partly to serve construction projects.
Most of the products came from China, Russia, Ukraine and Malaysia, according to the country's Ministry of Trade on Wednesday.
Vietnam produced nearly 1.7 million tons of finished steel in the first 6 months, up 19.5 percent over the same period last year. It is expected monthly consume 750,000 tons of construction steel in the third quarter.
Vietnam, which imported 5.1 million tons of finished steel, steel billets and iron in 2004, imported nearly 2.7 million tons of the goods in the first 6 months of 2005, posting year-on-year rises of 30.6 percent and 11.1 percent, respectively
Mittal Steel Mines Steelworkers at table for new contract
United Steelworkers of America and Mittal Steel USA officials return to the bargaining table today in Pittsburgh in hopes of reaching a new labor contract covering about 5,100 hourly workers, including 301 on the Iron Range.
"I'm cautiously optimistic," said Marty Henry, president of USW Local 6115 at Mittal Steel USA Minorca Mine, formerly Ispat Inland Mining Co., near Virginia. "I hope to stay out there until we get a deal done."
In the midst of a major restructuring of the domestic steel industry, including a merger between Mittal Steel and International Steel Group, negotiations between the two sides have been on and off for about 17 months.
If Mittal Steel USA and Steelworkers reach agreement, the new contract would last about three years and have a common expiration date with the other contracts -- Sept. 1, 2008.
China, Japan, SKorea steelmakers agree on some export controls
Steelmakers from China, Japan and South Korea have agreed to take steps to curb areas of possible trade tension among the three countries, the Shanghai Daily reported, citing a Chinese industry official.
Speaking at a conference in Shanghai, China Iron & Steel Association vice chairman Qi Xiangdong was reviewing recent talks by a Chinese delegation on visits to South Korea and Japan.
He said China had agreed to control steel exports to South Korea, especially for reinforcing bars used in construction, as some domestic traders had been selling the products at unreasonably low rates, the paper said.
Qi also said that the Chinese delegation had requested that Japan cease exporting 200-series stainless steel to China due to some market improprieties. Some traders had been passing off the 200-series steel, which has a nickel content of 0.6-5 pct, as the more expensive 300-series steel, which has a nickel content of 8 pct.
China is the world's biggest steel producer while Japan is the second biggest and South Korea is fifth largest, the report said
Samancor to cut back ferrochrome output
A worldwide slowdown in the production of stainless steel has led to a decision by South African company Samancor Chrome to cut down on production of ferrochrome
The company, recently acquired by the British Virgin Islands-based Kermas Group through its South African subsidiary Kermas South Africa on June 1, announced yesterday that production in the third quarter would be reduced by some 60 000 t as a short-term measure due to a worldwide slowdown in stainless-steel production.
Evraz Looks to Italy
Steel company Evraz wants to buy Italian steel rolling plant Palini e Bertoli for 60 million euros, Prime-Tass said, citing an unidentified person.
Evraz wants to complete the purchase by the end of the year, the news agency reported
Vale Plans to Invest $1.2 Bln in Brazil Nickel Mine
Cia. Vale do Rio Doce, the world's largest iron-ore producer, plans to invest $1.2 billion to build a nickel mine in northern Brazil, the company said.
Vale's decision to develop the Vermelho mine in the Carajas region of Brazil's
The price of nickel, a metal used mainly to strengthen stainless steel, has more than tripled since 2002 to $14,550 a metric ton on the London Metal Exchange as demand from China grows.
This is part of their plan to diversify their operations by expanding beyond their main iron-ore business,'' Pedrosa said in an interview. With world commodities prices high it's also a good time to invest.''
The mine, which has estimated reserves sufficient for about 40 years of production, is expected to begin operation in the fourth quarter of 2008, the statement said, adding that the mine will create more than 4,000 jobs by the end of the decade
Irans steel production to surpass 47m tons
At the moment, there are 48 steel plans under construction by the private sector to come up with production capacity of 30 million tons of steel ingot and other steel products and raw materials.
The above production capacity is 1.7 times more than 17.4 million tons state-operated projects in this field or yet-to-be-implemented ones, indicative of the increasing investment trend in the private sector.
The capital invested for these 48 projects is valued at 1,918 million dollars. Upon full realization of these projects, private and public together, Irans steel production capacity is anticipated to hit 47.4 million tons by the end of the Fourth Development Plan.
The anticipated total production is comprised of 11.1 million tons of steel ingot, 4.3 million tons of various steel products and the rest would be of raw materials. This way, the private sector would have 52% and 30% shares in production of steel ingot and steel products respectively
Malaysian steel industry expected to see lower growth
The steel industry is expected to see lower but sustainable growth, averaging 10 percent annually, for the next six years (2005-2010) compared with the 20 to 30 percent growth experienced during its heydays in the mid-90s.
Steel consumption is expected to be weak this year due to moderate growth of the manufacturing sector and a slowdown in the construction industry, said Malaysian Iron and Steel Industries Federation (MISIF) deputy chairman Datuk Lew Chin Hoi.
He said consumption was expected to improve marginally next year before picking up steam from 2007 to 2009 in line with the implementation of infrastructure development under the 9th Malaysia Plan and industrial activities under the 3rd Industrial Master Plan.
"We saw a more positive situation in 2004 when consumption increased by 16 percent, reaching 7.7 million tonnes against 6.6 million tonnes the year before. Both long and flat products grew by 15 percent and 18 percent respectively in 2004," Lew said.
"We do not expect 2005 to experience such a phenomenal growth as the market demand has slowed since the second quarter in view of the slowdown in the construction industry," he said at the 7th Conference on Status and Outlook of the Malaysian Iron and Steel Industry here Tuesday.
Russia's Magnitogorsk to raise home steel sales
Russia's biggest stand-alone steel plant, Magnitogorsk , said on Wednesday it would raise domestic sales to more than 7 million tonnes by 2010 as it seeks to cash in on growing industries at home.
MMK, whose domestic market share is around 19 percent, produced 11.3 million tonnes of steel in 2004.
"Depending on gross domestic product growth and development of steel-consuming industries, MMK plans to raise domestic steel sales by 1.5-2.5 million tonnes a year in the period to 2010, raising sales volumes to 6.5-7.5 million tonnes a year," it said in a statement issued on its website,
Russia's economy grew by 7.2 percent in 2004 and is expected to continue to expand in the next five years, but growth is not expected to match the boom rates of recent years.
Thai LPN expects strong gains after debt deal
LPN Plate Mill Plc, a Thai hot-rolled steel maker, expects its sales will grow by 20% this year after the company exits its court-supervised business rehabilitation later this month.
LPN, which produces hot-rolled steel for infrastructure and shipbuilding companies, currently has production capacity of 400,000 tonnes.
However, due to limited available cash over the past few years, the company's capacity utilisation has been at only 33%, or 132,000 tonnes, per year. The company expects to increase annual production to 360,000 tonnes over the next two years.
In the future, the company is to looking to expand its customer base overseas, particularly in Asian countries where demand for high-grade, hot-rolled steel remains strong.
Goldman Sachs JBWere lowers iron ore, coking coal price forecasts
Goldman Sachs JBWere said it has revised downward its price forecasts for iron ore and coking coal sold under term contracts, adding that a downturn in the global steel market and increasing supplies will see prices decline from peak levels reached this year.
The firm said it now expects a 10 pct fall in the price of iron ore fines sold under contract over the Japanese 2006/07 fiscal year with sharper falls in the prices of lump ore and pellets.
Previously, Goldman Sachs was forecasting a rollover in contract prices.
It said it now expects the benchmark price for coking coal to be 110 usd per metric ton, 12 pct below the current benchmark. The previous forecast was for no change.
Goldman Sachs said steel mills around the world are now cutting production in response to falling steel prices and excessive inventories and margins are once again under pressure.
'Raw material supply constraints have also started to ease, implying less urgency on the part of buyers in next year's negotiations,' the firm said.
It said with blast furnace productivity no longer paramount, there is less imperative to secure feed and the onus has shifted to cost reduction.
This is in contrast to the environment when prices were negotiated for the 2005/06 fiscal year which began on April 1, which was characterized by booming steel markets and extreme tightness in availability of raw materials.
From the buyers' perspective the key was to lock in tonnage early and secure sufficient feed to maximize blast furnace productivity, resulting in massive price rises, including a 71.5 pct rise in iron ore prices.
Goldman Sachs said steel margins were then at record levels and cost pass through or absorption seemed relatively easy.
It noted Chinese imports of iron ore are now running 34 pct above last year's level but it estimates that European imports are running below year-ago levels and Japanese demand could also turn negative by the end of the year.
Goldman Sachs said it is currently forecasting seaborne iron ore trade in 2005 to be 641 mln metric tons, based on Chinese imports rising by 23 pct to 255 mln tons and trade with the rest of the world falling by 1.5 pct to 386 mln tons.
It estimates Australia and Brazil can supply at least an additional 15 mln tons each this year, leaving a shortfall of about 10 mln tons that needs to come from other suppliers to balance the market.
Goldman Sachs said Indian exports to China rose by almost 40 pct during the first four months of this year but the recent lack of activity in the spot market and decline in Indian spot prices suggests a slowdown in Indian shipments as the year progresses.
'Our base case assumption is that the seaborne market will be closely balanced this year but will tend towards modest oversupply in 2006 as capacity expansions in Australia and Brazil reach fruition,' it said.
Goldman Sachs' analysis of iron ore capacity expansions implies a net addition to export supply of just over 50 mln tons a year between 2005 and 2007 which slightly exceeds its demand growth forecasts.
The firm said the same demand issues apply to the coking coal market but it believes the seaborne market for hard coking coal will remain exceptionally tight for at least the next two years.
Its revised price forecasts imply an annual average price of 108 usd a ton for the three year period 2005/06 to 2007/08, which is 80 pct above its long term price assumption of 60 usd and more than double the 10 year average price before this year's massive price rise.
