August, 12 2005
Mittal Steel MoU for India plant this month
The worlds largest steel maker Mittal Steel is likely to sign a memorandum of understanding (MoU) with the Jharkhand government for its proposed 10 million tonne steel plant in the last week of August.
A state-level delegation led by chief minister Arjun Munda had recently visited London. It is believed that the contours of the MoU were finalised during this visit.
According to industry sources, the state government has finalised a draft MoU which is expected to be cleared by the state cabinet later this month. This would clear the way for signing of the MoU between the state government and Laxmi Nivas Mittal-promoted Mittal Steel by late August.
The MoU is likely to offer some sops to the steel maker, details of which could not be ascertained.
Sources said that though the state government had given August 26 as the tentative day for signing of the MoU, there was a possibility that it may be delayed by a few weeks as the state government was yet to finalise the actual location of iron ore mine for the plant. Mittal Steel has sought 600 million tonne iron ore reserves on a 30-year lease. While the Chiria mine area which was shown to a technical team of the company a couple of months back is in the midst of a legal battle between SAIL and the state government, no alternative has yet been found which can provide clean mining rights to the steel major.
According to sources, the MoU would commit guaranteed supply of adequate iron ore but would stop short of identifying the mining area pending order of the Mining Tribunal over the issue of Chiria mines where the state government has cancelled three mining rights of SAILs subsidiary IISCO.
Jharkhand is going all out to bag the proposed investment of about Rs 25,000 crore, one of the largest FDI inflow after Posco, for setting up a 10 mt steel plant, ignoring the pleas of domestic steel manufacturers.
SAIL mines 22% more iron ore in Q1
Steel Authority of India Ltd has recorded a growth of 22.1 per cent in despatch of iron ore in the first quarter of the current financial year compared with the corresponding quarter of the previous fiscal.
SAILs Raw Material Division RMD has informed that the iron ore mines at Kiriburu, Meghahatuburu, Barsua, and Bolani registered growth of 44.7 per cent, 23.5 per cent, 7.4 per cent and 6.4 per cent "These mines by dispatching 1.19 million tonnes (MT), 1.34 MT, 0.41 MT, and 0.99 MT respectively. The quality of iron ore has also improved by optimising the washing plant at Meghahatuburu by introducing stub-cyclones and replacement of old liners among others.
It further stated that despatch of fluxes such as dolomite and limestone from the RMD mines have shown a growth of 5.4 per cent and 1.1 per cent respectively.
RMD has already initiated action to increase its production so that it could match the growing demand of the four integrated steel plants of SAIL. The steel major has already set a target of 20 million tonnes of hot metal production by 2012 for which it would require 32.5 million tonnes of iron ore per annum. The major projects identified are capacity expansion of Bolani mines to 5 million tonnes per annum, development of central block at Meghahatuburu mine to 4.3 million tonnes per annum, to develop the south block at Kiriburu and increase its production to 4.25 million tonnes per annum and develop the Taldih block and a new mine at Thakurani.
Jharkhand, Tata Steel spar over iron ore block lease
The Jharkhand government may object to Tata Steel giving out on a new lease the block six of its Noamundi iron ore mines in the West Singhbhum district to the Kolkata-based Rs 750-crore Adhunik Group.
An officials with the Jharkhand mines and geology department said this was violation of the mining lease agreement signed between Tata Steel and the state and, therefore, a show cause notice will be issued shortly to the company. The lease agreement, the officials said, specified that Tata Steel could only do captive mining of iron ore from the Noamundi mines. :Any mining activity without prior approval of the state government is a violation of the Rule 37 of the Mineral Concession Rules, 1960, which deals with the transfer of lease, the official said.
A Tata Steel spokesperson said the company had so far not received any communication on the matter from the state government. There is no violation by Tata Steel in letter or spirit under any provision of mining law, he said in a faxed response to a questionnaire. The lease agreement with the Adhunik group, the Tata Steel spokesperson said, had expired on July 31 this year and the company was yet to decide whether to extend the lease or mine the iron ore for its own factories. Block six, according to the spokesperson, is a small mine with reserves of around 25,000 tonne per annum. Now that the company is ramping up its production capacity at Jamshedpur to 5.4 million tonne per annum, there is a possibility that we might need the mine for our own use, he said.
Nirmal Agarwal, director, Adhunik Steel, though confirmed about his company working on a contract basis with the Tata company, denied having committed any violation saying contractual mining is all too common. He added, Adhunik Steel was only into mining and giving the product to Futuristic Steel, which was reconverting the iron ore into sponge iron. The sponge iron is finally used by Tata Steel itself, he said.
Magnum Strips invests in capacity expansion
Gurgaon-based Magnum Strips & Tubes Pvt Ltd has undertaken a capacity expansion in its plant and is now in the process of setting-up the second tube mill, trial runs of which are on.
The additional shed in its existing facility in Gurgaon and the new equipment added to the line would be operational by the second half of May. This would increase the installed capacity of the plant to 2500 metric tonnes per month.
The company, which started production in December 2002, is engaged in manufacture of ERW and CEW precision steel tubes for the automotive sector. 'While we currently produce about 1200 MT of tubes per month, once the expansion gets over, our production would go up by more than double,' Yogesh Batra, CEO of the company said.
The company supplies precision steel tubes to ancillaries of Hero Honda, Honda Motorcycles and Scooters, Suzuki Motor (Car & Motorcycle division), Yamaha Motorcycle and TVS Motors. The Rs 60 crore company has also invested in a Steel Service Centre and are supplying blanks to the auto industry on JIT (just in time) basis.
The company has one 30 tonne 1600 wide slitting line and one cut-to-length line and Batra said additional capacity is being generated by adding one more slitting and CTL line. This would also help the company to increase its production to 5000 MT per month. The tube mills have been sourced from Kusakabe/Gallium and Solid State Welder from Thermatool, UK, while the tube cutting and end-chamfering machines have been sourced from SOCO, Taiwan.
In another significant development, the company is in the process of finalising a bright annealing furnace for manufacture of Drawn tubes for shock absorbers, steering wheels, connecting rods and automobile bush applications. The facility is being put-up at Bawal in Haryana, the land for which has just being sanctioned by the Haryana State Industrial Development Corporation. The plant will be in operation by early or mid 2006.
The company is extremely bullish on the opportunities in the domestic front and have signed MOUs with domestic and overseas steel mills for distribution to auto and white goods sector in slit coils and cut to length sheets/blank sizes. This is in addition to the company's long term MOUs with Tata Steel and SAIL for purchase of steels for its steel tube production.
Volkswagen considers buying rolled steel from Severstal Group
Volkswagen is considering buying rolled steel from Russias Severstal Group for its European plants. A group of Volkswagens representatives visited the Russian company on Wednesday for talks on sample supplies of Severstals products.
The negotiations resulted in Severstal and Volkswagen reaching an agreement on future cooperation. The first samples are to be supplied soon.
Volkswagens annual demand for cold-rolled steel sheet amounts to 400,000 tonnes. The company is considering the acquisition of a large amount of cold-rolled steel sheet from Severstal.
Currently Severstal is holding negotiations on exporting its rolled stock with a number of the worlds leading auto producers.
Severstal Group is a large Russian industrial holding that comprises steelmakers, automobile producers, mining enterprises, raw material producers and other companies. Severstal is the leading enterprise of the group. In 2004 Severstal's output rose 5.5% on the year to 9.3 million tonnes, while investments in production amounted to 13.5 billion rubles.
Arcelor still interested in Ukraine's Krivorozhstal
Arcelor said it is still interested in Ukraine's Krivorozhstal after the government announced the launch of the privatisation for the country's leading steel producer.
'In 2004, Arcelor said it that it was interested in Krivorozhstal during the original privatisation process. The group is still interested today,' said an Arcelor spokesman.
CVRD seeks payment for CSN mine rights
CVRD the world's largest iron-ore producer, will seek compensation to give up rights to ore from a mine owned by steelmaker Cia. Siderurgica Nacional as the company complies with an antitrust ruling.
Vale's Chief Executive Roger Agnelli said he's ready to negotiate with CSN's Chief Execuive Benjamin Steinbruch on the value of the contract or go to court secure ``the rights of thousands of shareholders'' after Vale was ordered yesterday to reduce its dominance of the country's transport and iron-ore industries. Steinbruch, 52, rejected his offer.
Agnelli said at a news conference today in Rio de Janeiro where the company is based. ``We accept the ruling, but believe that there is still a contract between us and CSN and that it has significant value.''
Steinbruch said Angelli will get nothing for surrendering a 20-year contract that lets Vale sell ore from CSN's Casa de Pedra mine. Vale won the right to sell ore the steelmaker doesn't use for its own production when CSN sold control of Vale in 2001 for $1.3 billion. There's no possibility that CSN will pay any type of compensation for this decision,'' Steinbruch said in a conference call with investors today. ``If Vale exercised its right to buy ore from the mine it would lose money and we can't really compensate Vale for the fact it won't have a loss anymore.''
Antitrust regulators gave Vale a choice of how to limit its dominant position in Brazil. The company may either abandon its rights to sell ore from the Casa de Pedra mine owned by CSN and cut it stake in railroad MRS Logistica SA or sell Ferteco, an iron-ore mining company it acquired in 2001 that owns a stake in the railway.
The ruling stems from a complaint by CSN, Brazil's third- largest steelmaker, and other metal producers that Vale had too much power. The company supplies about a third of the world's iron ore and 61 percent Brazil's. Vale raised prices 72 percent on April 1 and reported record profit in the second quarter of 3.48 billion reais ($1.53 billion).
CSN is in the middle of an $800 million plan to expand mining capacity at Casa de Pedra and improve its port facilities near Rio de Janeiro for export. CSN and Vale have an 11-year agreement for Vale to sell ore from Casa de Pedra in the export market.
China's Trade Surplus Widened to $10.3 Bln in
China had its second-highest trade surplus on record in July, reflecting a surge in exports that has led the U.S. and Europe to threaten sanctions.
The surplus widened to $10.3 billion from $1.97 billion a year earlier and $9.68 billion in June, according to customs bureau figures reported by the official Xinhua News Agency. Overseas sales rose 28.8 percent from a year earlier, more than double the 12.9 percent gain in imports during January to July period.
Chinese government's July 21 revaluation of the yuan doesn't go far enough and the nation's exporters continue to benefit from an artificially weak currency.
Imports of steel products into China, the world's largest steel producer and consumer, fell 26.5 percent to 13.2 million tons in the first half, China's top economic planning agency, the National Development and Reform Commission, said July 28. Domestic output rose 25.9 percent in the same period and exports of steel products more than doubled to 11.6 million metric tons.
The China Iron and Steel Association warned steelmakers to diversify their overseas markets to avoid dumping probes. Nearly half the country's steel exports went to South Korea, the U.S. and EU in the first half, the association said.
Ukraines richest man Akhmetov suspected of attempted murder
A Ukrainian from Donetsk, Sergey Chernyshov, has accused the countrys richest man Rinat Akhmetov of murder attempt made 17 years ago. Chernyshov claims that Akhmetov shot him twice in the chest in 1988,
Ukraines deputy Interior Minister Gennadiy Moskal was quoted as saying by Komsomolskaya Pravda in Ukraine daily as saying. But we have to prove all this, Moskal stressed.
Akhmetov has already been sought by prosecutors in connection with a criminal investigation. The Ukraines Prosecutor Generals office wants to question a man, whose fortune is estimated at $2.4 billion, about criminal cases into violence a decade ago in his hometown, Donetsk, gripped by gangland warfare in the 1990s. But no charges have been laid against him so far.
Akhmetov failed to appear before prosecutors last month, explaining he had not wanted to interrupt his holiday with his wife and two sons in Monaco. The tycoon claims he invested in the Ukrainian economy under the rules that existed at the time that followed the collapse of the USSR. He is believed to acquire his fortune in the mid-1990s as did other oligarchs taking advantage of low prices in post-Soviet selloffs.
Akhmetov backed ex-prime minister Viktor Yanukovichs run for the presidency last year. Liberal Viktor Yushchenko won a re-run of the election in December after weeks of Orange Revolution protests against cheating in the original poll.
Akhmetov, the president of the Shakhtar FC, whose empire includes steel and machine-building plants, telecoms companies and banks, has already lost a prominent asset, Ukraines largest steel mill, Kryvorizhstal. The plant was sold in June 2004 to Akhmetov and his partners for about $800 million, below other offers in a selloff denounced by Yushchenko as theft. Courts have overturned the sale and the new government is preparing a repeat tender in October.
Chinese import of coal, iron ore soars in first seven months
In the first seven months this year, China's import of coal, iron ore soared, said the General Administration of Customs.
During the January-July period, China imported iron ore of 150 million tons, up 31.9 percent and coal of 14.95 million tons, up 55.4 percent according to figures from the customs.
Villacero strike to continue despite Mexican Govt ruling
Workers striking against Mexican steelmaker Grupo Villacero have decided not to return to work despite a government decision that ruled the protests illegal, a press official with the organizing union STMMRM told the press. In addition the union's six units, which together boast 250,000 workers throughout Mexico, will start staggered work stoppages on August 15 to support Villacero strikers.
Villacero and union officials said on Wednesday the government's federal arbitration and reconciliation council had declared the strike illegal, giving workers 24 hours to return to their jobs. But the union dismisses the ruling as "completely wrong," according to the official.
Roughly 2,000 union workers started striking against Villacero on August 1 over alleged contract violations and to push for new labor agreements.
CSN Cuts 2005 Sales Forecast 5.7% on Domestic Sales
Cia. Siderurgica Nacional, Brazil's third-largest steelmaker, cut its sales forecast 5.7 percent this year as higher interest rates reduce domestic sales.
Rio de Janeiro-based CSN also delayed a decision on whether to invest $2.5 billion to build a new blast furnace in the country until the fourth quarter
Chairman Benjamin Steinbruch told investors that the decision would be made in the beginning of the third quarter. We haven't taken the decision because we're being conservative. We have to see if our bet the domestic market will improve in the second quarter comes true.''
The company's sales probably will total 5 million metric tons this year, down from an earlier estimate of 5.3 million tons. Crude steel output will rise 6 percent this year from a year ago and sales will rise 5 percent from 2004.
Steinbruch expects sales in the domestic market to pick up in the second half of the year as interest rates start to fall. The company expects prices of steel both domestically and abroad to be stable in the third quarter of the year.
Supplies to MMK Resume
Kazakh iron ore giant Sokolov-Sarbai has resumed supplies to Magnitogorsk Iron & Steel Works, or MMK, the Kazakh company said on Thursday, three months after abruptly stopping shipments due to what media said was a pricing dispute.
The dispute forced MMK to halt production at a number of furnaces.
Sumitomo to Take 25% Stake of $2.3 Bln Nickel Project
Sumitomo Corp., Japan's third-largest trading company, will acquire a 25 percent stake in a $2.3 billion nickel project in Madagascar and South Africa led by Impala Platinum Holdings Ltd. and Dynatec Corp which are seeking funds to finance up to half the project cost
Sumitomo is securing nickel supplies after prices of the metal more than doubled in the past four years on demand from steelmakers, who use it to rust-proof stainless steel. Nickel reached a 16-year high of $17,100 a metric ton in January last year in London.
Sumitomo will take delivery of half the nickel produced in the Ambatovy project and will sell it customers globally. The project will produce 60,000 metric tons of nickel and 5,600 tons of cobalt a year from 2009. Production that size will equal 4.5 percent of world demand for nickel and 11 percent for cobalt.
S&P places Erdemir's rating under CreditWatch
Standard & Poor's Ratings Services said it placed its 'BB-' long-term foreign and local currency corporate credit ratings on Turkish steelmaker Eregli Demir ve Celik Fabrikalari T.A.S. (Erdemir) on CreditWatch with developing implications.
"The CreditWatch placement reflects the uncertainty concerning the future operational strategy and financial policy of Erdemir pending the sale of the Turkish government's 49% stake in the company," said Standard & Poor's credit analyst Tommy Trask. "There remains the question of whether the company might be controlled by an entity with a stronger or weaker credit profile than Erdemir currently has itself." If Erdemir is acquired by a higher-rated entity, the ratings could be raised to reflect implicit shareholder support. The extent to which parental support affects the rating depends on several factors, including the strategic importance of Erdemir to its future owners. Conversely, a takeover by a weaker player could have a negative impact on the ratings.
These uncertainties have been heightened by a lawsuit challenging the creation of a golden share that gives veto rights to the privatization administration over certain decisions, and the resignation of the general manager of Erdemir as well as the general manager of its 91%-owned subsidiary Isdemir.
Kriviorogd sale is double edged for Russian steelmaker
The political winds in Kiev appear to be blowing against foreign company bidders, notably Evraz group Russia's largest producer of steel, in the list of qualifications for the new privatization of the Krivorozhstal steel plant, reported in the Ukrainian press yesterday.
President Victor Yushchenko and Prime Minister Yulia Timoshenko have begun the process to resell the plant on terms that may more than double the price which Russian bidders, Severstal and Evraz, proposed in the first round, fifteen months ago.
In the first-round bidding for Krivorozhstal in June 2004, Severstal disclosed its bid was $1.2 billion. Evraz did not report a figure, but Evraz CEO Alexander Abramov announced a plan to change Kriovorzhstal's product mix from long products to a combination of longs and flats.The other foreign bidder was a combination of LNM and US Steel, with $1.15 billion. They were all defeated by a politically favoured local bid of $800 million, offered by the Investment and Metallurgical Union (IMU), a specially created joint venture of two Ukrainian businessmen, Rinat Akhmetov and Victor Pinchuk. Akhmetov runs System Capital Management Holding which includes a number of various metallurgical companies. Pinchuk is an owner of Interpipe Holding, which has exposure to the pipe, ferroalloy and agricultural sectors and is also a son-in-law of the ex-Ukrainian President Leonid Kuchma.
According to this week's reports from Kiev, the list of terms for the re privatization of the plant includes the requirement that no bids from offshore companies or structures with unclear ownership structures will be considered. In its recent IPO in London, the Evraz group issued shares for a Luxembourg-listed entity, Evraz SA, while in its acquisition last week of the Czech steelmaker Vitkovice, the group was represented by the Cyprus-listed Mastercroft. Testimony in court cases in the US and Luxembourg have uncovered significant ambiguities in the ownership structure of the group, while investigations of the IPO have been confirmed as under way by share-market regulators in London and Washington.
Other qualifying terms reported for the new Krivorozhstal bid are that bidders should have at least three years' experience in ferrous metallurgy or affiliated industries, and have been managing related companies for at least a year; and they must be able to supply Krivorozhstal with better quality coal and iron ore than it gets at present.
The sale will take the form of an auction, with a starting price of $2 billion; this compares with the government's reserve of $714 million in the first auction. Bidding will rise in incremental steps of $20 million. The winner must also comply with certain requirements and provide commitments, including a 7-year, $2.4 billion capital expenditure program for modernization of plant facilities; a guarantee that no staff will be laid off for five years and that salaries will be left untouched; a commitment to increase output of higher value-added steel products; and to give priority to domestic Ukrainian demand when allocating output.
According to an industry analyst in Moscow, "we understand that these terms were devised after consultations with potential bidders. It appears that the bids will not be the only factor taken into account when determining the winner, as the bidders will be required to submit proposals on their development strategy for the company."
Abramov, who is also one of the owners of the Evraz group, is already facing opposition in the Ukraine to his attempt to take control of the manganese alloy supplier, Nikopol Ferroalloys Plant FAP. Manganese is an important alloy for hardening steel, and Nikopol is the largest producer of this ferroalloy in the world.
According to a source close to Abramov, he met Ukrainian President Victor Yushchenko a few days ago to ask for his support in a buy-out of Kriviorog. The source say that Yushchenko told Abramov "He agrees to resolve the situation in court or by an out of court settlement." Ukrainian Prime Minister Timoshenko has taken a public stance against the Russian takeover of Nikopol, and is calling for court action to invalidate Pinchuk's stake, and re privatize Nikopol, along the lines of the Krivorozhstal auction.
In his bid to take over Nikopol, Abramov is allied with the Renova group of Victor Vekselberg. It is leant that Abramov "wants to act without public company funds and without Evraz's authority." He said that Abramov is bidding for Nikopol "as an individual". The source acknowledged that there are Ukrainian rivals for Nikopol too, and that Timoshenko may be on their side.
Fortescue seeks transport infrastructure sharing
Fortescue Metals Group has hit out at other iron ore corporations in the Pilbara over their refusal to share transport infrastructure.
Fortescue has been forced to build its own port and rail facilities after being denied the opportunity to share other companies' existing infrastructure. It has now been estimated these facilities will cost Fortescue nearly $2 billion.
Fortescue's chief executive, Andrew Forrest, says his company will be open to sharing its infrastructure facilities on mutual basis with other players to make Pilbara to one major mineral development province.
Mechel Looks at Flat Steel
Mechel Steel, a steelmaker will decide by the end of the year whether to add steel used for cars and household appliances to its range of products. "We're looking at the project and different aspects of it," communications director Irina Ostryakova said by telephone from Moscow on Thursday.
Mechel until now has focused exclusively on so-called long steel products, used for the construction industry. Adding flat steel would help it compete for customers at a time when larger rivals such as Mittal and Arcelor are cutting output to shore up prices.
Czech businessman on lam from Romania for Tepro murder
The case of Frantisek Prlata, a Czech businessman who fled a conviction for inciting murder in Romania, has turned into an international tug of war. Romanian workers have vowed to drag him back while Czech authorities hold firm to a no-extradition clause in Czech law and Prlata tells tales of torture and hired killers in Romanian prisons.
Prlata, 57, along with four Romanian businessmen and two security guards, was convicted in 2002 in the killing of Virgil Sahleanu, a union leader found stabbed to death outside his home in 2000.
In 2000 Sahleanu had pressed the Romanian courts to nullify a 1998 deal brokered by Prlata in which Tepro, a steel tube maker in Iasi, eastern Romania, was privatized for $3 million to Czech steel tube maker Zelezny Vesel Although 40,000 of 50,000 people working in heavy industry in Iasi lost their jobs in the 1990s, Tepro was considered a viable company when Zelezny Veseltook over. But a year later it registered losses of $5 million and debts of $15 million. Workers at Tepro wanted the privatization cancelled, and their calls got louder after 2,400 of Tepro's 4,000 workers were laid off. In 2000 a court voided the Tepro privatization, citing failure by Zelezny Veselto meet its obligations in the privatization.
At the height of calls from the union to cancel the state sell-off, Prlata was acting as an adviser to Topro's management, according to daily Ziarul de Iasi, and was promised stock in the company once the dispute with the union was resolved.
In testimony at Prlata's trial, Catalin Ciubotaru, head of a security company implicated in the killing, said, "Prlata mentioned the necessity of Sahleanu being eliminated." Ciubotaru also testified that managers at Tepro offered him $6,000 to make the union leader "silent." Prlata, who denies being present when Sahleanu's murder was planned, said his connection to Tepro ended with the privatization in 1998.
Prlata's appeals reached the Romanian Supreme Court, which upheld the conviction in June but postponed his jail term until Sept. 7 due to his poor health. Prlata was free but barred from leaving the country when he left Romania, crossing a field on the Hungarian border by foot. His escape not only angered workers in Iasi but also set off a debate in Romania over the practice of allowing felons to delay prison terms by obtaining doctor's notes, which critics say can be obtained with bribes.
Prlata, who plans to appeal his conviction to the European Court of Human Rights in Strasbourg, says his health complaints are legitimate. He suffers from cataracts, arthritis of the hip and difficulty urinating, he says, which he blames on months spent in a Romanian prison before being released on appeal. He says guards refused to let him use the bathroom for up to six hours at a time. He says it was common knowledge in jail that he had a $5,000 price on his head and that he survived only because he was kept in solitary confinement. "I have no doubt I will be killed if I go back to Romanian prison," he said.
On Aug. 4 hundreds of demonstrators in Iasi called on Czech officials to extradite Prlata. Peter Eckstein Kovacs, chairman of the Romanian senate's judiciary committee, said, "The Czechs should cooperate with us. We must resolve this matter. Otherwise, fraud will be encouraged." Constantin Rotaru, who replaced Sahleanu as union head at Tepro, said he and his workers will "seek 500 visas so we can travel to the Czech Republic and bring Prlata back."
"Czech law forbids Czech citizens from being extradited," said Petr Dimun, spokesman for the Justice Ministry. "The only exceptions are EU countries, and Romania is not in the EU." Officials at the Romanian Justice Ministry say they will file an extradition request anyway and, if denied, will ask Czech courts to force Prlata to serve his sentence in a Czech prison.
DBRS initiates coverage of CVRD
CVRD has informed that Dominion Bond Rating Service (DBRS), a Canadian rating agency headquartered in Toronto, specializing in the global metals and mining industry and one of the four largest in the world, has initiated coverage of the Company, assigning a rating of BBB (low).
According to DBRS, the rating reflects CVRD's consolidated position as a global leader in the iron ore business, with substantial and high-quality iron ore mineral reserves and low production costs, its position as the largest logistics player in Brazil, and the development of its expansion and diversification program, with promising prospects for the production of iron ore, bauxite, alumina, coal, copper and nickel.
DBRS is the second rating agency to assign an investment-grade rating to CVRD. The improvement in the market perception of CVRD's credit risk is the result of a continuous effort to implement a long-term strategy focused on value creation, responsible for the Company's powerful cash generation and supported by financial management excellence, which is aimed at minimizing risks and strengthening its capacity to meet financial obligations.
Shougang Concord tumbles on move to boost steel stake
Shares of Shougang Concord International Enterprises, a Hong Kong-listed unit of state-owned Shougang Group, fell because it will almost double its majority holding in a steel maker for 467.5 million yuan (HK$448.28). The purchase will boost Shougang Concord's stake in Qinhuangdao Shouqin Metal Material to 96 percent from 51 percent. The rest is owned by Shougang Corp.
Shougang Concord will pay a combination of 280.5 million yuan in cash, funded by internal resources and bank loans, and shares worth 187 million yuan, which represent 5.52 percent of the enlarged issued capital, the company said in a statement to the stock exchange. The investment can further enhance the group's position in the manufacture and sale of steel products in China,'' the statement said.
Shouqin, which began production a year ago and at present has fully utilized capacity, reported unaudited first-quarter profit of 121.8 million yuan, making the acquisition represent 2.05 to 2.16 times forecast 2005 earnings. Shouqin makes high-quality steel slabs, with about 80 percent of the products supplied to Shougang Concord subsidiary Qinhuangdao Shougang
Plate Mill. Despite analysts' concern of a steel oversupply in the coming years, the company plans to increase its production capacity more than fivefold to 2.6 million tonnes in 2007, from 470,000 tonnes last year. Shouqin estimated its output of steel slabs will reach one million this year.
The company plans to start making 400,000 tonnes of steel plates next year and increase capacity fourfold to 1.7 million tonnes by 2007.
Brazilian Mangels boosts Q2 profit 230% to US$5.5mn
Brazilian galvanized steel company Mangels Industrial reported a second quarter net profit of 13mn reais (US$5.5mn), up 230% from the 3.92mn reais in the same period last year.
Net revenue climbed 20.5% to 146mn reais. At the end of June Mangels' net equity was 186mn reais.
Mangels was founded on October 1, 1928, by two German immigrants, Max H.H. Mangels Jr. and Heinrich Kreutzberg, who had the intent of manufacturing galvanized water buckets and is today a major player in Galvanizing and wheel sector in Brazil.
Brazilian alloy maker Ferbasa posts US$5.4mn Q2 net profit
Brazilian iron alloy company Cia Ferro Ligas da Bahia (Ferbasa) announced second quarter net profits of 12.8mn reais (US$5.4mn), down 53.1% on the same period last year.
Net revenue fell 0.02% to 111mn reais and gross income was down 45% to 27mn reais. Operating costs of 6.8mn reais represented an 8.24% reduction on the second quarter of 2004, while net financial revenue rose 48.8% to 3.1mn reais. Operating income fell 51.5% to 20.2mn reais.
Argentinan Iron output dips 12.8% in July
Argentina's primary iron output totaled 318,500t in July, down 12.8% from 365,300t in June this year and off 0.9% from 321,500t in same-month 2004.
July crude steel production was 454,700t, up 4.7% from 434,200t in July 2004 and up 3% from 441,400t in June this year.
The hot-rolled steel output was 395,300t in July, down 6.6% from 423,200t in same-month last year and down 4.9% from 415,500t in June this year.
July's cold-rolled flat steel output was 113,600t, down 2.7% from 116,800t same-month 2004 and 5.1% lower than 119,800t in June this year.
Steel Expo receives Colombian Govt support
Colombia's government has agreed to lend support to the 2nd Feria Expometica Colombia metal exhibition through the country's export promotion agency Proexport, which has worked abroad to create international interest. The event, which brings together the steel, metal-mechanic and iron sectors, is organized by the Colombian metallurgical and steel sector association Andi-Fedemetal and will be held from September 28-30 in capital Bogot
"This is an international exhibition and will be held in Bogotat the country's most important venue," Expometica official Norma Mej told BNamericas.
Fedemetal aims to promote business opportunities for producers, fabricators, traders and consumers of steel, copper, bronze, aluminium and other metal products.
The association also aims to create a forum to showcase local steel and metal-mechanic products plus products from the Andean community, Mercosur, Central America, Mexico and the US. "Marketing of the exhibition is going well and attendance by companies from Venezuela, Brazil, the US, Mexico and Ecuador is already confirmed," she added.
The 1st Expometica Colombia fair was held in the Palacio de Convenciones y Exposiciones in Antioquia department capital Medell in 2003.
Brazilian Usiminas Q2 profit surges 53% to US$355mn
Brazilian steelmaker Usiminas saw its net profit climb 53% in the second quarter as higher overall steel prices offset weak domestic demand, the company said in a statement. "In spite of the adverse market conditions in the first half [of 2005], the Usiminas system once again has performed well operationally," the statement said.
Usiminas, which includes flat-steel subsidiary Cosipa, posted a 2Q05 net profit of 810mn reais (US$355mn) compared to net profit of 528mn reais in 2Q04. Net revenue totaled 3.49bn reais in the quarter, an increase of 26% compared to 2.77bn reais in 2Q04. Ebitda was 1.63bn reais.
For first half of 2005, net profit rocketed 104% to 1.81bn reais compared to 887mn reais in 1H04. Net revenue was 6.95bn reais, up 35% from 1H04. Ebitda came to 3.34bn reais.
Usminas delivered 1.83Mt of crude steel in 2Q05, a decrease of 7% compared to total sales volume of 1.97Mt in 2Q04. For 1H05 total sales volume was 3.6Mt compared to 3.88Mt in 1H04.
The steelmaker produced 4.37Mt of crude steel in 1H05, down 2% from 4.44Mt in 1H04.
Usiminas produced 2.20Mt of crude steel in 2Q05 compared to 2.22Mt in 2Q04. The flat output was primarily because of planned maintenance work in the quarter, Usiminas said.
Currently some 26% of Usiminas steel products are exported, while 74% feed the domestic market, according to company data.
Also during the quarter the company installed new equipment to improve quality, including an ultrasonic test machine at Cosipa's plate mill. Usiminas also started using natural gas in blast furnaces.
While Usiminas expects high stock levels at distributors to affect international prices during Q3, it does not think the situation will last long given price increases to raw materials steelmakers are paying. "The expectation is that inventory levels in the US and Europe will come down and the mills will return to normal production and sales levels as of the fourth quarter," the company said.
Air officials order Berkeley steel plant to determine source of odor
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The order comes after the district issued three violation notices to the company since March. Residents complain the smell causes headaches, nausea and tightness in their chests.
A spokesman for Pacific Steel Casting says the company has agreed to spend about 200-thousand dollars for environmental consultants to conduct a study.
The company has been making large, stainless-steel castings for the automotive, construction and mining industries for more than 70 years.
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