August, 14 2005
Mittal Steel Jharkhand to match Posco Orissa
Mr Mittal proposed steel plant in Jharkhand will match the output of Posco's proposed Orissa plant, but at a lower cost of Rs 10,000 crore. He plans to invest Rs 40,000 crore to match the output proposed by Posco, which has an investment plan of Rs 51,000-50,000 crore.
The sources in Indian High Commission in London have informed that in principle agreement has been reached for setting up a 12 million tonnes steel plant in Jharkhand at total invest of 40,000 crores in a phased manner over next 6 years and a formal memorandum of understanding will be signed soon.
This was made clear after a series of meetings between a high level delegation headed by Jharkhand CM Mr Arjun Munda and Mr Mittal. The delegation has assured Mittal of all possible assistance, including unconditional mining leases. Mr Munda made it clear that Mittal Steel would not be allowed to export raw materials out of the state. However, Mr Mittal has been allowed to undertake mining activities for copper, bauxite, nickel and coal in the region.
Mr Munda's team included state home minister Mr Sudesh Kumar Mahto, mines minister Mr Madhu Kora, finance minister Mr Raghuvar Das, and chief secretary Mr PP Sharma.
Bombs in steel scrap defused
A bomb disposal squad defused explosives found by local residents in a canal in 25 sacks of steel scrap in the outskirts of the Ghaziabad city. The contaminated steel scarp contained 36 live missile shells and parts of a rocket launcher, a light machine gun and detonators. The origin of the explosives could not be ascertained as the markings are highly corroded.
The explosives seem to have been dropped by some scrap trader or a steel melting unit after they found them in imported steel scrap.
The administration has mounted a massive search of iron and steel units in the district as there is a very strong chance that scrap in these industries could have similar explosives. There are more than 40 steel making units in the area which are importing steel scarp. An alert has been sounded in western UP which has several iron units. Efforts are being made to find the details of the recent steel scarp consignments arrived in the area.
The administration fears this could be a sequel to the events between September 2004 and January 2005 when hundreds of missile shells were recovered from various parts of the country after 10 people were killed at the Bhushan Steel unit in Ghaziabad when explosives in scrap went off.
Indian iron ore investors eying Philippines
Indian iron ore are now training their eyes on the Philippines potential mining during the visit of Confederation of Indian Industry Goa Council as Goa has similar low grade iron ore with the Philippines using Indian technology the mine tailings can be processed to meet the iron ore shortage and unserviced orders. Goa alone exports 37 million metric tons of ore about half of Indias total 60 million iron ore exports.
H L Nathurmal a mid-sized Indian mining company is signing an agreement with the local Abra Mining, which will be the first Indian mining investment in the Philippines.
The other iron ore companies from Goa in the mission are Salgaocar Mining Industries and Denpo Group of Companies are also looking for investment opportunities.
IDBI decides to sell Usha Ispat
A lenders consortium, led by the Industrial Development Bank of India (IDBI), has decided to sell the Mr Vinay Rai controlled Usha Ispats pig iron plant at Redi in Maharashtra as the companys secured borrowings amounted to nearly Rs 1,800 crore by end of 2003-04 and it failed to implement its integrated steel plant project.
The cost of the plant at 750 acres land in Satarda near Redi located on the Maharashtra-Goa border, was first estimated at Rs 1,400 crore by IDBI, and, subsequently, it got escalated to Rs 2,400 crore. The plant was commissioned in March 1994 with an installed capacity to produce 300,00 tonnes per annum of pig iron using Chinese blast furnaces which have remained shut since March 2004 owing to acute shortage of raw materials. Most of the machinery meant for setting up the plant is lying without commissioning.
A lot of steel companies have already shown interest in acquiring Usha Ispats assets because of its strategic location. The plant has the advantage of being located close to a jetty and raw material source and proximity to major steel user base in western India.
TISCO renamed as Tata Steel Ltd
Tata Iron and Steel Company Ltd (TISCO) has officially changed its name to Tata Steel Ltd with effect from August 12, 2005.
Tata Steel is India's largest integrated private sector steel company. Established in 1907, its steel plant at Jamshedpur produces four million tonnes of hot and cold rolled flat and long products. The company is backward integrated with owned iron ore mines and collieries. With its competitive advantage in raw materials, efficient operations and the benefits of a recently-completed $2.3 billion program of modernization, Tata Steel is among the lowest cost steel producers in the world.
RAC converts sponge iron waste to high grade fuel
Sponge iron units which are under attack from environmentalists and government officials over pollution can use the technology developed by RAC to convert the waste materials into high grade fuel.
Research and Analysis Consultants (RAC), a NGO, has successfully installed a recycling unit at Banua in Keonjhar district, close to the MSP Sponge Iron Plant to make briquettes that are low on smoke and high on heat from the sponge iron plants solid waste that contains iron dust, coal dust and charcoal by adding many things like coal powder and bentomite after grinding the solid waste to produce briquettes.
RAC has priced 20-kg bags at Rs 25 for outsiders and Rs 20 for the participating locals, which is way cheaper than traditional fuels like firewood. The unit currently produces 50 tonnes per month, with a single shift operation. About 20 tonnes are consumed by participating villagers while the rest is sold to consumers like roadside eateries and brick kilns. The cost of production, inclusive of inputs like electricity, manpower and additive raw materials is about 75 paise per kg, which translates to a profit of 50 paise per kg at current prices.
The two-year project, undertaken with funding support from CEE under the UNDP-GEF Small Grants Programme, has a total cost outlay of around Rs 15 lakh. The cost of setting up a commercial unit would also be a third of the current project cost and it would not take more than Rs 4.5 lakh to set up a 100 tonne per month unit.
Non Goan mine owners to register with Goa Govt
The Directorate of Mines (DoM), Goa has passed some regulations last year to allow the mine owners from outside the state to register themselves with the directorate as the mine owners from Hospet and Bellary, in Karnataka and parts of Maharashtra have been sending iron ore to Goa for the past four years for blending purpose and DoM Goa has no direct role in enforcement of rules on these non-Goan mine owners.
The restructuring of the directorate is in progress so as to allow the directorate to charge some fees from the non-Goan mine owners as at present the directorate has no direct revenue from the import of iron ore.
As per the report of the Goa Mineral Ore Exporters Association around 9.28 million tonne of iron ore was imported to Goa during 2004-2005 from neighboring states.
China's foreign trade and economic relations 1st half 2005
A good scenario has been seen in China's foreign trade and international economic cooperation over the first six months of this year, as a result of efforts on exploiting the "two markets" domestic and overseas, improving bilateral and multi-lateral trade relations, and handling trade disputes properly.
Trade imbalance with different partners became imminent when the trade surplus soared. The macro economic situation at home and abroad showed that the robust increase in export and moderate rise of imports would be hardly reversible. The trade surplus would likely approach 80 billion USD for the whole year if export rose 25 percent and imports 18 percent. That would double the highest record in history.
In the meantime, the situation varied on trade with different partners. Surplus normally took place in trade with the US and EU while more deficit was created in trade with Russia and Australia. A conservative estimation set China's favorable balance of trade with US at more than 100 billion USD and 60 billion USD with the EU. That would provide new pretexts for trade protectionism on those markets.
The government cut or removed some export tax rebates and banned processing trade of some categories of such products. As a result, export of primary steel products and rolled steel dropped. In June export of billet only went up slightly by 9.6 percent, while in March the export surged 14.3 times. Export of rolled steel doubled in June, compare with that in March when the amount was jumped 2.4 times. However, generally, exports of high energy consumption, heavy pollution and resource related products still spiraled up. Rises of export of billet, rolled steel and aluminum not forged reached 2.6 times, 1.5 times and 21.5 percent respectively. It is no easy task to rein in these exports due to the rapid expansion of investment on the production capacity in the previous years.
Mounting pressure continues on the further appreciation of the Chinese currency. The fast growth of the exports and the upsurging trade surplus have pushed China's forex reserves up remarkably. This in turn adds difficulty into the central bank's decision making on its monetary policy. The US attributed the RMB to its trade deficit with China and the US Congress, government and industrial associations have kept pressurizing China for stronger yuan. There is voice from the Capitol Hill even requiring punitive tariffs on all Chinese products.
China needs to improve its tax rebate system. As local governments have to shoulder more to fund tax rebates, some places deliberately constrain the growth of foreign trade firms, discourage or limit export-oriented foreign-funded projects, or block procurement beyond the local suppliers and export of general trade. New defaulted tax rebates have taken place in some places.
China's foreign trade and economic cooperation will enjoy a favorable overall environment nationally and internationally. The Ministry of Commerce predicts that the scenario of exports exceeding imports would be unlikely to be reversed, which would lead to the fulfillment of the 15 percent growth goal for the whole year. In addition, foreign investors are still optimistic toward China's environment and will hopefully bring more foreign capital influx into China than last year.
Priorities for the second half of the year will be placed on further transformation of the way of export growth, boosting imports, improving the utilization of foreign capital, upgrading the national development zones, accelerating the implement of the "go global" strategy with the focus on the diversified places of origin for textile products, making more efforts on bilateral and multilateral trade and economic relations including more participation into the regional economic cooperation, and handling the world trade disputes properly to protect domestic industries.
Coal import piers considered in Newport News & Chesapeake
An expected increase in US demand for coal, particularly low-sulfur which meets environmental standards, is driving plans to develop two new import piers in Hampton Roads.
Alpha Terminal Co. LLC, the largest partner in the Dominion Terminal Associates coal operation in Newport News, has proposed spending $20 million to $25 million on a new coal import facility there. The terminal primarily has exported domestic coal, shipping out 1.4 million tons last year, and imports would help feed a jump in coal usage within 10 years that is forecasted by the companys chief executive, said Ted Pile, an Alpha spokesman.
Foreign coal mines, particularly those in South America, are a key source of low-sulfur coal that burns cleaner than fuel with higher sulfur content. To meet new clean-air regulations for power plants promulgated by the Bush administration, Dominion Resources is studying the cost effectiveness of using this cleaner coal in addition to installing equipment to reduce emissions at the plant. Dominion Resources already is importing low-sulfur coal from South America by barge to its plant in Salem, Mass.
Alpha Natural Resources Inc., the Abingdon-based parent company of Alpha Terminal Co., has a 24.5 percent interest in a coal mine in Venezuela that is expected to begin operation in 2007, Pile said. As the economy improves and worldwide hunger for power continues to grow, Alpha executives predict the United States will become a net importer of coal within 10 years.
What drives Chinese Steel policy makers
It is difficult to crack the real meaning behind strange and confounding decisions coming from the Chinas ruling authorities. For example, why would China approve Mittal Steels comparatively small investment in their steel industry, and then issue a 15-year industry development plan that sets new rules for foreign investments.
The answer probably lies in what lies behind Chinas recent growth plans. Nations leadership is determined to manage the progress in a way that ensures the government gets the credit for the achievement, and is not destroyed by the changes, which is different as most of the world accepts the instability that goes with economic growth. China seems intent on long-range planning, but its true goal is stability. China seems to pursue capitalist strategies, but it is a planned economy with all the weaknesses discovered about those systems during the 20th Century, on a much larger scale.
Manufacturing and construction activity grows without any let-up, but homes, farms, and whole towns are eliminated. Individuals are wealthier than ever, but their Internet access is regulated. Other restrictions on individual rights are even more notorious. For the most part these oddities dont concern outside investors as they only see the emergence of 1 billion consumers and their capitalist reflexes jump. All the nettlesome regulations about local ownership and domestic supply and manufacturing do not stall the eagerness to build a presence there.
Chinese strategy involves more than controlling the pace and direction of growth. It has forced the rest of the world to rely on Chinas stability, too. Now, the world economy is attuned to the improbably low cost of production there, the flow of investment capital to China, and the rising demand for raw materials and energy there.
This part of the story is well known in the steel industry. China needs steel for all that construction, and for so much more, so it has been closing inefficient plants and building new capacity. It consumes so much steel scrap and iron ore that the rest of the worlds steelmakers are scrambling for alternatives.
And, now we know that Chinas plan for the future of its steel industry is a lot more of the same, only with even more planning. China wants two steelmaking organizations with 30 million tons per year of capacity each to service its domestic market. And, it wants its 10 largest steelmakers to supply 50% of the nations needs by 2010, 70% by 2020. It will pick which producers are allowed to expand and develop based on their revenue potential, and where those expansions may happen. It is recommending capacities for blast furnaces, BOFs, and EAFs, and setting guidelines for sourcing raw materials.
As for foreign firms, China will approve their investments there only if they have a minimum annual production volume of 10 million metric tons. That lets Mittal Steel and some others in, but this is a plan meant to manage huge cash flows, not to spur new ideas or development.
Left unanswered by this blueprint is the question confounding the rest of the worlds steel industry that will China turn its huge capacity loose on the world when the domestic market no longer needs 300 million or more metric tons per year?
Malaysian tube maker Choo Bee to add a pipe plant
Malaysian Steel manufacturer Choo Bee Metal Industries has invested RM40mil to build a new plant next to its Pengkalan plant in Perak to add 160,000 MT of production capacity from the current 180,000 MT by first quarter of next year.
The company will concentrate on producing wider pipes and square hollow sections that command better profit margins. Presently, CMB only produces up to six-inch diameter water pipes and the expansion would increase the production capacity to 16-inch diameter pipes.
Beijing to investigate pit disaster
China has opened a top-level investigation into a coalmining accident in southern China that has claimed at least 123 lives. It is the latest in a string of such disasters, in spite of repeated government pledges to improve safety. The investigation into the accident this week in Guangdong, in which the miners were drowned after the mine was flooded, will take at least two to three months, officials said yesterday.
The accident has attracted unprecedented condemnation from the cabinet and the state media, which have openly blamed greedy local officials for allowing illegal mines to operate in return for a share of the profits as any reconnaissance of the mine would have detected a huge water reservoir above the pit and they could not have got a licence.
Chinese scrap buyer sues Geneva Steel
Chinese steel maker and scrap importer China Shenzhen Materials Rongchang Trading Co has sued bankrupt Geneva Steel Universal Scrap Metals Inc., a California scrap dealer and demolitions contractor over 4,286 metric tons of steel scrap paid for but not delivered.
The suit alleges Universal defaulted on a contract to deliver the scrap to China Shenzhen even though the California company had received $750,000 in escrow payments for $14 million worth of metal scrap China Shenzhen had initially planned to buy from Geneva.
Universal, which was hired by Geneva to demolish its buildings and perform asbestos abatement on the site, was to have paid Geneva $15.75 million for the scrap and residual equipment. But Universal's contract with Geneva was terminated after the California company defaulted on its obligations. It was later replaced by CST Environmental Inc.
The steel scrap was supposed to have been shipped to China starting last year. But since Universal didn't solicit enough bids from scrap buyers to complete its transaction with Geneva, therefore Universal didn't get access to the steel," said Kelly Ryan, an attorney for China Shenzhen. "And Geneva's trustee has refused to refund China Shenzhen the money supposedly because the estate is entitled to it as penalty for Universal's failure to complete its contract." In addition, Ryan said there were questions over whether the scrap that was sold to China Shenzhen by Universal was secured by a lien held by Geneva. As a result, China Shenzhen is also objecting to a planned auction of the Geneva property on Nov. 17 to protect its interests in the scrap.
Boom times makes Australian miners rich
Several mining entrepreneurs in Australia have ridden the commodities boom, in coal and iron ore during last year, to become Australia's latest mining millionaires. The resources boom has given birth to a new generation of mining millionaires who survived the dark times of the 90s and emerged with fledgling companies that have gone on to make them their fortunes.
Talbot, a respected miner with more than 30 years' experience, had invested millions in the development of his Coppabella coal mine in Queensland, but the collapse in world coal prices prevented Ken Talbot from listing his fledgling coal company in the late 1990s. The company, Macarthur Coal, finally listed in 2001. Today it is worth $1.3 billion and Talbot's personal stake has climbed from about $58 million in 2003 to almost $500 million now.
Former Queensland government geologist Chris Wallin, who discovered Coppabella and a string of other coal bodies in the Bowen Basin including the Monto thermal deposit, is also well on his way to joining Talbot in mining's big league. Wallin's name recently cropped up when Macarthur signed a joint venture deal with the government-owned China Huaneng Group to develop the greenfields Monto coal mining project. Another of Wallin's wholly owned companies called QCoal is in the process of fast-tracking development of the $100 million Sonoma coking coal mine near Collinsville which, over the next 15 years, is expected to churn out at least 30 million tonnes worth more than $3 billion at today's prices.
Ian Buchhorn the managing director of Heron Resources, whose fortune has increased from about $3 million to almost $60 million in just two years, puts his success down to persistence.
For Bob Hosking, executive chairman of Karoon Gas, it was a matter of following the big boys on the path to success. He watched BHP Billiton benefit from its move into oil and gas and decided to give the energy industry a go himself. His first venture, Nexus, has had some success, but it is Karoon, which has gas fields in the Browse Basin, that really has the market excited. Hosking's investment is already worth 10 times what it was two years ago and has the potential to be worth 10 times.
John Borshoff is another man who took a gamble on an unpopular commodity and watched it pay off to the tune of more than $25 million. He persisted in exploring for uranium when nuclear was a dirty word and is now able to boast the first new uranium development outside Canada in more than 20 years. Borshoff's company, Paladin Resources, listed in 1994 and languished about until last year, when it was the star performer on the ASX 200.
S Korean Shipbuilders Japan Steelmakers in price talks
South Korean shipbuilders are facing rough going in their talks with Japanese steelmakers on the price of imported steel plates used in shipbuilding, industry sources said Wednesday. South Korean shipbuilders, including the world's No. 1 shipbuilder Hyundai Heavy Industries Co., have engaged in negotiations with the Japanese steel industry since mid-July about the price of steel plates that will be imported between the fourth quarter and the first quarter of next year. But the talks have hit the snag as both sides are wide apart on the proper import price, according to the sources.
South Korean shipbuilders are asking for US$620 to $640 per ton, while the Japanese steel industry is demanding $720, they said. Defining the demand as exorbitant, the local shipbuilding industry is determined to stop a price hike as they feel that the steel prices are expected to fall in the second half due to a oversupply in China. The price of steel is pivotal in determining their profitability and the talks are crucial because the negotiated price will serve as a benchmark for South Korean steelmakers such as POSCO
Japanese steelmakers provides 40 per cent of South Korea's steel plate demand, according to industry sources whereas South Korea, a shipbuilding powerhouse, which accounted for 33.6% of ships built worldwide in 2004, boasts the world's top three shipbuilders Daewoo, Hyuandi and Samsung
Australian companies ride peek in steel prices
Strong non-residential construction demand and higher prices have given a boost to Australian steel companies' profits in H1, which would be reduced in the remaining part of the year due to lower steel price and high input prices. Australia's largest steel company BlueScope Steel Ltd. is forecasted to post an 80 percent rise in earnings . Other major steel producers OneSteel Ltd. and Smorgon Steel Group Ltd. and Boral Ltd are expected to report a higher profit.
But now here is a margin squeeze occurring with the top coming off steel prices at a time when iron ore, coking coal and other inputs have gone up fairly dramatically.
BlueScope, which sells almost half its tonnages in Australia, is expanding output of high-value, further processed steel products in Australia and Asia
OneSteel and Smorgon Steel both make long products such as rod, bar and pipe, primarily for the domestic market, while Smorgon also has a scrap steel recycling business and is a maker of grinding balls used in mining.
OneSteel's main Whyalla plant was hit by operational problems in late 2004, but it forecast earnings would still rise to a range of A$110 million to A$125 million, from A$108.1 million a year ago before a one-off tax gain. A better performance from Whyalla is expected this year, but the company faces higher costs for coking coal used at the plant.
Smorgon Steel is rebounding from a tough fiscal 2004 when margins were squeezed by high prices for scrap metal used in its furnaces, while imports limited its ability to boost prices.
Boral Ltd. , Australia's second-largest building products maker, is expected to report a flat profit, as a slowdown in home building in its key New South Wales market has not been offset as hoped by a pick-up in other construction.
