August, 22 2005
Posco to set up an Indian subsidiary
In a bid to speed up the $ 12 billion project in Orissa, POSCO has sought the government's nod for setting up an Indian subsidiary with an equity of $ 50 million to begin mining activities and has already applied to the Registrar of Companies (RoC) for creating the Posco India Corporation, which can apply for the prospecting license to start mining.
POSCO is keen to commence mining activities early so that when it actually begins its productions, it has ample supply of iron ore. The development of a mine in the country normally takes around seven years, but by starting the process early the company would also try to compress this timeframe so that when its first plant went on stream in the next five years it could carry on its production unhindered.
Posco expected the ongoing feasibility study for the Paradip project to be over by the year-end. After the detailed feasibility report is prepared POSCOs Board would give approval for the capital required. Thereafter acquisition of land would take one year while another year would be required for preparing the land for construction. That would help the four MT plant to be set up in the next two years.
Pakistani companies to source sponge iron technology from BeeKay
Seven Pakistani companies have signed MoUs worth $102 million with two Chhattisgarh based steel companies. Six Pakistani companies signed MoU with BeeKay Engineering, a pioneer in supply of sponge iron plants,
while one company with Raipur Alloys Limited for importing ferro manganese
The 16-member Pakistani delegation was here on an invitation from Chief Minister Raman Singh and the MoUs were signed between the companies in his and the CEO of Pakistan Export Development Board presence.
Pakistan would set up some steel plants with Indian technology especially from Chhattisgarh, The annual turnover of the Pakistani steel and sponge iron sector was about four million tonnes, which is likely to be doubled within next five years.
UKs Alfron in talks with Jharkhand for mining operations
London based Alfron has communicated its interest in mining and exploration operations in the Jharkand to Mr Arjun Munda during his foreign visit during the meeting in Buckingham.
Alfron has expertise in the field of scientific mining and exploration of major minerals and can help Jharkhand in the areas of mine safety, minimizing wastage and raising ores in the different mines of the state.
Alfron representatives are expected to visit the state within a month or two and the government would then decide whether the MNCs expertise would benefit the state to upgrade its mining sector. With the industrial horizon set to expand in Jharkhand, it would be necessary to explore the mines scientifically in order to derive the best results.
Forest Dept initiates funding for rural electrification in Jharkhand
The forest wing of West Singhbbhum has asked the leaseholders of iron ore mines to provide funds to the forest department to electrify villages situated inside the Saranda forest zone. Three principal mine players SAIL, Rungta Mines and Shah Brothers have been asked to provide funds of over Rs 50 lakh for electrification of villages in the fringe areas where they are undertaking mining work.
The Jharkhand State Electricity Board (JSEB) would be approached for electrification of rural hubs. If it is unable to supply power, then non-conventional source of energy such as solar power would be explored specially as installing electric poles may not be possible in some parts of the rough hilly terrains.
The electrification project would be implemented phase wise. In the first phase, three villages in the fringes of the mining area would be linked to electricity and in subsequent phases the electrification would be undertaken in the balance of total 49 forest revenue villages in the Saranda territorial forest division.
4th blast in one year in Mukesh Steel Industry
Nine labourers were injured in a suspected blast at Mukesh Steel Industries at Giaspura on the Saturday night at about 1.30 am. The cause of the blast is yet to be ascertained. The police said the blast might have occurred because of an unskilled worker putting some wrong metal in the furnace of the factory.
It is reported that it is not for the first time that a blast has occurred in the Mukesh Steels Industry. In past also, three blasts took place in the same factory on 24th October 2004, 11th December 2004 and 30th December 2004 killing five laborers and injuring many.
Mr Hota suggests to Orissa Govt for changes in mining lease policy
Former MP, Mr Bhabani Shankar Hota has suggested the Orissa state government to make provisions in its proposed mining policy for leasing out maximum 25 percent of identified mineral reserves for non-captive use and reserve another 25 percent for future exploitation.
Mr Hota said 36947 hectares of ore bearing land had been leased to 135 private companies and individuals. But the lessees were holding large areas which were not being exploited. Mining was going on only on the area, for which such parties had secured surface rights, which constitutes not even 10 percent of the total area granted to them. Citing a particular instance, he said 2075 hectares of ore-bearing land were leased out to about 4 parties where the iron ore deposit was of high quality with more than 64 percent iron content. The free hold reserve was more than 500 million tons while the lease hold was for 500 million tons.
The major constraints in optimising the exploitation of these minerals were lack of adequate infrastructure, absence of large scale mineral based industries for use of the minerals and unusual delay in diversion of forest land for mining operation, he claimed.
Mr Hota said that how can such an area be treated as inaccessible, small and scattered where mining lease of 500 million tons have already been granted and another 500 million tons is proposed to be granted to the new lessees and the policy of granting mining lease to non-captive users be reviewed. Mining lease should not be granted beyond 25 percent of total identified deposits for non-captive use and there should be always a balance of at least 25 percent deposits as a reserve for future exploitation. The balance 50 percent may be leased out for captive use.
He further suggested for cancellation of mining leases granted to 135 lessees who have not applied for surface rights for at least 30 percent of the areas for which lease was granted to them within a period of 10 years from the date of grant of mining lease. The idle ore bearing land should either be redistributed or resumed.
Mahindra looking at auto parts JV with US Company in Orissa
The automobile manufacturer Mahindra Group has evinced interest to set up a auto component plant in Orissa as a part of the group's "global expansion drive" in a joint venture with International Truck and Engine Corporation of the United States.
Mahindra proposal comes close on the heels of Taiwanese giant Kymco's talks with the state government recently for establishing a two-wheeler factory in the state.
Mahindra Group, set up in 1954, is the largest tractor manufacturer in the country and also largest utility vehicles manufacturers in India with an annual production figure of 80,000 vehicles. It is also a leading player in the auto-component, finance, telecom, infrastructure and international trading.
Indian Steel makers anticipate 7% price increase from September
An anticipated rise of 7 per cent in steel prices from September may signal the start of an upswing that may lasts till the end of this calendar year, helping boost an industry laid low by a slump of 24 per cent in the last quarter.
Global prices, which influence the rates that buyers at home pay for steel, are on their way up. Industry watchers say global prices have already hardened $50 a tonne to $480 over the past fortnight. This could push up cost at home by at least Rs 500 per tonne next month.
According to a recent report put out by World Steel Dynamics, the steel market is likely to ride the upturn, on the back of new bookings, at least until October. The report goes on to add that from December to March, steel-makers could reap the gains of a spurt in new orders in the US and Europe.
Peter F. Marcus, whose views on where prices are headed weigh heavily on the industry, lists the reasons for the sudden upturn. According to him, a large number of buyers tend to believe that once prices bounce off the bottom, the chances of a reversal are extremely rare.
Though industry watchers in India are not willing to stick their necks out on the possibility of a hike after September, most of them agree that domestic demand will remain strong. On a conservative estimate, they see the growth rate in the current financial year at 8 per cent.
Dang committee on Iron Ore policy to make recommendations soon
The RK Dang committee, set up by the steel ministry, is likely to recommend in its final report that only integrated foreign steel manufacturers be given preference in allotment of mining leases and other linkages.
It may suggest that a foreign sponsored project must have an annual capacity of 10 million tonnes fro mining lease The project must be commissioned within seven years and based on 100 per cent utilisation of all ROM grades of iron ore above 55 per cent iron content with a cap of 30 per cent on any iron ore export or import swap. Iron content and lump ore swap proportions will remain strictly equal but variations in silica, alumina and other gangue material can be permitted. The international steel company should also be bringing in foreign direct investment to the extent of minimum 85 per cent of project cost through an Indian public limited company. The preferential rights will entitle them only for a single ore-based location in any state with large ore reserves
Experts say that the clause will start a fresh round of speculation as to which international steel company will get the right to mine first. This may entitle either of the two global steel tycoons to sign only one integrated steel plant agreement or may start the race where only one of the two get preferential rights to captive iron ore mines.
Poscos MOU clause for swap of 30 per cent iron ore may become a hurdle point for them if Mittal Steel agrees for lesser percentage. Posco has been assured of the Gandhamardan-Malangtuli iron ore mines on the border of Keonjhar-Sundergarh district for its Paradeep project. The belt is estimated to be having about 400-million tonnes of quality iron ore.
Demand for coal changing mining industry face in US
US coal industry, which has seen prolonged slumps that shuttered mines and bankrupted companies in past, is now on a rebound driven by the boost in demand of coal. New breed of miners are replacing older workers who are retiring as todays coal miners job pays well including health and pension benefits although it is tough and dirty
Today's mining is a mix of 21st-century technology and old-era grit. Cramped shaft elevators and rickety, open-air shuttle cars still sink into the mountains and take miners to the low-slung alleys and tunnels. Workers still move on all fours in crawl spaces, so they can mine hard-to-reach seams. And it's still dark, dirty, dusty, and, in some cases, dangerous. But the pickax and shovel days are long gone. Heavy cutting and lifting are executed in a ballet between remote-controlled rock-cutting machines which tear into the vaults of coal and zip loads of coal through battleship-gray passages. Automatically controlled conveyer belts haul the coal hundreds, sometimes thousands, of feet to the surface Often, workers in the mines stand yards from the action, controlling the continuous miners and other equipment as if they were a powering a hulking, remote-controlled toy car.
The National Mining Association expects US coal production to be a record 1.14 billion tons this year, up from 1.11 billion last year. And the increase comes amid rising coal prices to nearly $60 a ton from roughly $30 a ton two years ago.
BHP reaches royalty agreement with Australian Government
BHP Billiton and the Western Australian State Government today announced that they had reached agreement on a new royalty regime for the companys Pilbara iron ore operations. The new royalty rates are consistent with the Western Australian Mining Act and will apply to production that is not currently within the scope of BHP Billitons plans to expand capacity to 152 million tonnes per annum.
President and Chief Operating Officer Western Australian Iron Ore Ian Ashby said the agreement reflected BHP Billitons significant contribution to the iron ore industry. Over the past 40 years BHP Billiton and its predecessors have invested over A$14 billion in the development of the Western Australian iron ore industry in the form of housing, roads, airports and schools, as well as the iron ore mines, rail system and the deepwater port at Port Hedland, he said. This agreement clears the way for further expansion of our iron ore operations which will continue to pay dividends to the State and people of the Pilbara region through the generation of increased royalties, employment opportunities and community investment.
BHP Billiton has completed a Feasibility Study into the expansion of its Pilbara iron ore operations and is currently finalising the development path to increase system capacity to 152Mtpa and beyond. When this capacity is achieved it is expected that increased volumes, combined with higher rates being applied to some production, will increase royalties by around A$80 million per annum, compared to current levels.
BHP Billiton profit to smash all records
Global mining behemoth BHP Billiton is set to unveil the biggest annual profit in Australian corporate history after using its production muscle to take advantage of high prices in a booming commodities market.
BHP is set to post a 2004/05 net profit around $US6.3 billion before one-off items, an average of forecast from six analysts shows as against record profit of $4.90 billion set in 2003/04.
The global miner produced a record 96.7 million tonnes of iron ore and had timed its production lift to coincide with a 71.5 per cent increase in contract prices, which came into effect on April 1.
BHP is already the world's biggest diversified miner, but the WMC acquisition pushed it even further ahead of rivals, Rio Tinto and Anglo American.
Jilin province closes 70 coal mines
The northeastern province of Jilin has ordered the closure of more than 70 local coal mines with potential flooding risks following a coal mine flood that trapped 16 miners on Friday. All coal mines near the Fengguang Coal Mine in Shulan City where the colliery flood occurred were also ordered to stop production for safety check-ups.
The notice says that any coal mine that does not meet the requirement for safe production will not be allowed to resume production.
West China maintains growth in main minerals production
As China's mining industry develops main minerals production in the west maintains constant growth. In 2004 coal output in the west reached 536.814 million tons, 2.24 times that of 2000. Steel production in west China also increased its proportion from 16.4 percent in 2000 to 18 percent.
Zhu Xun, chairman of China Mining Association, said at an international forum on exploiting non-ferrous metals that China's western regions are not only rich in mineral resources but many are inadequately surveyed. It is calculated that the potential value of confirmed reserves per square kilometers land in the west is 8.7615 yuan, only about 85.4 percent of the national average and 64.34 percent of that in the central regions.
Higher scrap prices signal re stocking phase has begun
Steel experts at Credit Suisse have lend their ears to market sources who notified them prices for scrap are on the rise again. The analysts report that recent scrap deals have been done at US$230/t, but theyve also heard of deals at US$270/t. The analysts believe scrap sellers are enjoying a broad based and strong rally in scrap prices globally, noting scrap prices are up in Asia, India, the US, Europe and Brazil.
The analyst warn against investors drawing the wrong conclusions from this as finished steel markets, on the contrary, are not looking strong at all. Capacity utilization is at 80% in the US, production cuts have been announced across Europe and in Asia, yet steel inventories remain high, the analysts note.
Credit Suisses conclusion is that weve entered a re-stocking phase, as scrap users re-enter the market, after a protracted period of standing aside, awaiting further scrap price falls.
The analysts keep their FY06 scrap price forecast of US$230/t unchanged for the time being, while acknowledging there is a reasonable possibility that they will need to raise it in the coming months."
GN aiming to join Billion US $ club by 2008
Hong Kong-based General Nice Development Ltd (GN), a global trading company, is aiming to be a billion US Dollar one by 2008. GN Resources Ltd Executive VP said that the 2004-05 turnover was 400 million USD, while GN is confident of touching 600 million USD in 2005-06. From its current capacity of three MT, it was keen on reaching ten MT within three years time.
The company is engaged in the export of finished steel and Iron Ore from India besides import of metallurgical coking coal into India. About 40 per cent of the company's business was India-centric. Recently, the group had extended its business line related to non-ferrous metals and metal scraps.
Malaysian Melewar Indusrial expects better earnings
Steel maker Melewar Industrial Group Bhd (MIG) expects better profit after completing a RM120 million expansion programme, which will boost production of cold-rolled coil (CRC) to keep up with demand. CRC is produced by Melewar Industrials 54 per cent-owned subsidiary, Mycron Steel Bhd, in Shah Alam.
Mycrons plant is already running at full annual capacity, which will increase by 80,000 tonnes to 260,000 tonnes from the existing 180,000 tonnes. The expansion will also improve product quality to meet increasing demand for high-grade CRC which gives better margins. The plants upgrade, which will take about two years to complete, will be done by an Austrian equipment supplier.
However companys steel tube and pipe manufacturing business, which has five Shah Alam based units with an annual capacity of 300,000 tonnes of steel tubes and pipes, is facing trouble as the higher domestic prices of HRC are making them uncompetitive in global tube market and they are forced to focus on the domestic market only, especially the construction and furniture sectors.
TUI to buy CP Ships for $2 Billion to increase capacity
TUI AG, owner of the Hapag-Lloyd shipping line, agreed to pay $2 billion for CP Ships Ltd., a U.K.-based container company to make it the world's fifth-largest shipping company with 139 ships sailing 100 routes.
TUI has sold industrial assets such as a steel-trading business during the last five years to transform itself into Europe's largest tour operator. TUI, which has a market value of 3.56 billion euros, is more than twice the size of CP Ships
Hapag-Lloyd, Europe's fourth-biggest shipping line by capacity, operates 57 vessels and accounts for almost 15 percent of TUI's annual revenue. CP Ships, which was spun off from Canadian Pacific Ltd. in 2001, has a fleet of 82 ships able to carry a combined 441,000 containers measuring 20 feet each.
Danger of explosives and radioactive substances in steel Scrap
In parts of Eastern Europe selling stolen scrap metal seems to be a lucrative business for almost everyone. Everybody knows about it, only different people do it differently. People will steal anything from mortar shells to entire roofs of church houses!
Ukrainian police has recovered 13 world war 2 live shells from a 80 year old grandmother from east Ukrainian village of Krinichki who had discovered the buried munitions cache while cutting grass for her cow and planned to sell them scrap metal collectors.
Incidents of radioactive scrap being turned in to a Ukrainian mill in exchange for cash doubled in 2005 as compared to 2004 and are up by almost a factor of five since 2000, said Larisa Guseva, industry spokeswoman based in Ukraine's industrial city Donetsk.
Ukraine is one of the world's top scrap metal exporters, averaging two million tonnes sent abroad annually. The country's booming steel industry, one of China's top suppliers, also has a voracious scrap appetite of its own.
The problem is not just Ukrainian. In neighbouring Moldova the national power company Union Fenosa has complained for years that the biggest threat to regional electricity deliveries is rural inhabitants removing transformer boxes, security fencing, and even the cables themselves for sale as scrap metal.
Scrap metal theft also is chronic in Russia, and it's not just rural. A recent audit by the government nuclear control agency Minatom found admirals in Russia's Northern Fleet selling entire mothballed submarines as scrap and concealing from the government millions of dollars in income from the sales.
Ukraine tried using legislation to fight the problem in 2003, slapping steep tariffs on scrap metal leaving the country. Scrap prices in the country fell, but a scrap deficit in Turkey the biggest importer of Ukrainian scrap metal also ensued.
BlueScope to post jump in profit
BlueScope Steel Ltd., Australia's biggest steelmaker, may post a 50 percent jump in second-half profit after global prices rose and as Chief Executive Kirby Adams expands the company's business in Asia with likely announcement of net income of $403 million in the six months ended June
Bluscope is spending more than A$1 billion on plants in countries such as India, China and Vietnam since BlueScope was spun off from BHP Billiton in 2002.
BlueScope produces hot-rolled steel coil, a benchmark product which is processed to make pipes and tubes and is used in cars and buildings. It also paints, coats and processes steel, turning it into roofs, fences and walls.
BlueScope intends to sell more processed steel products to diversify earnings. In April 2004, the company spent $143 million buying Butler Manufacturing Co., which sells custom-designed steel buildings in the U.S. and China. BlueScope is also spending A$280 million on a coating and paint plant in Suzhou, eastern China, making it Australia's largest investor in the country.
Coal prices on a rising trend
With the oil price above $60 a barrel, dragging the cost of natural gas higher, and nuclear power, the coal industry is on a high. The demand for caol has surged, almost doubling the price on the global market in two years as coal still has a big edge over oil and gas: 6,000kcal-worth of coal costs $60 less than a third of heavy fuel oil at $195.
Coal provides about 30% of the world's electricity. In China, which burns half the world's consumption of 4.1bn tonnes a year, the figure is 80%. With the growth of demand from other Asian economies the world could be burning 7bn tonnes by 2030. As with most markets facing a surge in demand, bottlenecks prevent supply keeping up. Shortage of shipping has meant freight rates have become a significant factor driving the price higher.
The big downside for coal is that it threatens to increase the environmental damage that scientists say is causing global warming. Burning coal is a contributor to the greenhouse effect with its carbon dioxide emissions, and its sulphur emissions create acid rain.
Third quarter steel results predicted to be grim in US
Many US steel mills have trimmed production, but continue to slog through a quarter that many companies say will be the low point of the year and a dramatic drop from the third quarter of 2004, when the market hit what many now see as an artificial high. Six weeks into the third quarter, steelmakers are struggling to balance lower prices and still-sluggish demand for their products with the soaring costs of scrap and natural gas.
Key industry players, including Mittal Steel, US Steel and Nucor have all warned investors to expect a drop in third-quarter results which could be 30 percent to 100 percent below the same period last year.
This is happening inspite of opening of buying by end users due to depleting inventories, less availability due to production cuts and a small surge in prices as last year's third quarter was the best the industry ever had. It is reported that 32 blast furnaces were operating in the United States in June 2004 and today only 23 are. That's the fewest since a nationwide steel strike in 1959, when only 19 furnaces were in operation.
The lower volumes, increased cost of raw materials and lesser prices, in comparison to Q3 of 2004 are being accounted as the factors for predicting drop in profits in Q3 of 2005.
