August, 24 2005
Tata Steel plans 10 million tonnes new steel plant in Jharkhand
Under the plan approved by the companys board ,Tata Steel has decided to set up a second green field plant with an eventual capacity of 10 million tonnes a year in Jharkhand, entailing an investment of Rs 45,000-55,000 crore in two phases spread over nine years. The decision follows a meeting between Jharkhand Chief Minister Mr Arjun Munda and Tata Sons Chairman Mr Ratan Tata on August 20
The first phase of the plant, targeting 5 million tonnes of steel a year, will be completed in four years at a cost of Rs 15,000-20,000 crore. The second phase will consume the subsequent five years and Rs 30,000-35,000 crore to take the total capacity to 10 million tonnes a year
Communicating the boards decision in a letter to the Jharkhand chief minister, Tata Steel Managing Director Mr B Muthuraman said, We will immediately commence a detailed study to identify a suitable location for such a steel plant, the infrastructure to be created, captive raw materials required and the requirement of other facilities and clearances. The study is expected to be completed in four weeks, after which the company will submit a formal proposal to the state government. The company would like to sign a formal memorandum of understanding in this respect.
The decision to set up a second plant in Jharkhand comes amid expansion announcements by Tata Steel, whose target is to increase its total capacity in India to 15 million tonnes by 2015. In recent times TATA Steel has announced setting up a 6 million tonnes plant in Dhubri, Orissa and a 3 million tonnes plant in Bastar, Chhattisgarh, besides, the capacity expansion at its existing facility in Jamshedpur plant by 2 million tonnes by 2008
Jharkhand rejects Mittal Steels proposal to export iron ore
The Jharkhand government has taken a tough stand against allowing any export of iron ore by the worlds largest steel-maker Mittal Steel Co from the state. According to sources, Jharkhand chief minister Mr Arjun Munda and state mines minister Mr Madhu Koda have changed gears after going all out to get the plant to the state as the export issue was slowly building into a major political controversy in the state. Mr Koda has gone on record to reject Mittal Steels proposal to export ore from India. He said that the state government would not shy away from withdrawing from negotiations to sign the Mittal Steel deal on this issue. The statement is significant as Mittal Steel is understood to have asked the state government for 600 million tonne iron ore mine in the draft MoU with permission to export 30% of the total production.
This effectively means that Mittal Steel will have to either conclude the MoU for its 10 million tonne steel plant in Jharkhand without any commitment to export iron ore, or, decide against its investment plan in the state. Iron ore mining lease and ore exports is an important issue for Mittal Steel as
Mittal Steels operating profit has fallen as iron prices have increased 70% while steel prices have dropped. The company is thus looking at increasing its iron ore mines across the globe to reduce dependence on third party ore supplies.
Incidentally, a mining tribunal has granted stay on state governments decision to cancel three mining licenses of SAIL subsidiary IISCO at Chiria mines region, which have been promised by Jharkhand Government to Mittal Steel
Sources said that after going all out to woo Mittal, the state government is treading cautiously to avoid any controversy. It has, thus, also decided to vet the entire MoU after signing by an international lawyer to remove any chances of flaws creeping into the agreement. Mittal and the state government had earlier indicated that MoU may be signed by month end or during first half of September. However, the new development may delay the entire exercise.
Opposition to POSCO MOU gathers momentum
The political parties opposing POSCOs MOU have got a boost on hearing reports that Jharkhand government has rejected the 30 per cent iron ore export clause in the proposed 12 million ton steel plant of Mittal Steel. If Jharkhand can do it why not Orissa, is the almost immediate reaction of most Opposition leaders who have been vehemently objecting to a similar export provision in the MoU signed with South Korean steel company POSCO.
One of the contentious points in the MoU with POSCO is allowing them to export iron ore up to 30 per cent in lieu of imported high grade iron ore of equal quantity. Allowing such exports at a time when other countries are preserving their natural resources. They had also pointed out that at the rate in which Orissa was signing MoU's and assuring iron ore lease the entire reserve will vanish in three decades.
POSCO had tried its luck in Brazil but the government there insisted that they should purchase their iron ore requirement at market price, Jharkhand has rejected Mittal Steel's plea for 30 per cent export but we in Orissa are providing captive mines and even allowing export of ore, regretted those who oppose the export clause
Coal starved NTPC willing to buy gas from ONGC at 240% premium
Coal starved NTPC, which has to operate some of its plants at half the capacity, is now willing to pay a premium to buy additional gas from ONGC. NTPC has written to ONGC asking for about 6m cubic meters of gas at prices up to $4.08 per mmbtu, as against the current gas price of $1.2 per mmbtu.
This would result in a huge escalation in power tariffs as higher fuel costs will be a direct pass-through to consumers. As of now, NTPC and other state-run power stations buy gas at highly subsidized rates that are government-controlled. However, given a choice between no power and expensive power, NTPC has decided to opt for the latter. Fuel shortages in the gas and coal sectors have led to generation loss and power shortage.
Gas prices in the country vary between $1.2 per mmbtu (controlled price) and $4.62 per mmbtu charged by some of the operators. The ONGC-Reliance-BG consortium has been selling almost 6 mmscmd at about $4.08 per mmbtu.
ONGC, which happens to be the largest gas supplier, is selling its entire production to power companies. However, gas supplies are much lower than the sanctioned amount
H&K Rolling targeting 10 crores turnover for Thermex
Mumbai-based H&K Rolling Mill Engineers Private limited, an exclusive collaborator of HSE Germany for supply of Thermex Quenching & Self Tempering (QST) technology for steel re-rolling mills in India region, is aiming for an Rs 10-crore turnover during the current fiscal as against Rs 7 crore during the year 2004-05.
HSE Germany, which is a global leader in this technology, has appointed K&K as a selling arm for QST technology in Indian subcontinent
K&K has so far sold QST technology, which requires investment between 2 to 8 crores, to 56 units in India including SAILs BSP & DSP units among 250 units in organized sector out of total of about 3000 rolling mills in the country.
Chinas steel industry outstrips forecasts
Chinas steel industry is expanding even more rapidly than analysts had predicted, according to new research by the industrys main association in China. According to the China Iron & Steel Association (CISA), which conducted a survey of 474 steel mills, the capacity for steel production is expected to reach 490m tonnes by the end of next year. Analysts had expected capacity of about 420m tonnes.
At the end of 2004 the industry capacity was already 420m tonnes, the report said, about 120m tonnes more than the actual output for last year.
The main reason for the higher than expected capacity was the expansion of small, private mills, which had previously gone unreported, the research said.
The CISA research will also add to the uncertainty about the real level of demand for steel in China.
Mr Yushchenko wants to reshape Ukrainian coal mining industry
Ukrainian President Mr Viktor Yushchenko said Tuesday he wants to reshape the country's coal industry and offer the state-run coal mines to private owners.
The Ukrainian coal industry suffers from a lack of funds and its coal mines are among world's most dangerous.
Mr Yushchenko said he had ordered Coal Industry Minister Mr Viktor Topolov to "radically change management policy" within a year in a bid to improve the industry's effectiveness as private business will introduce order, and "Unlike in Russia and other countries, we have no privately owned coal mines."
The Ukrainian coal industry is plagued by lack of funds and its coal mines are among the world's most dangerous. Since the 1991 Soviet collapse, nearly 4,300 miners have died in Ukrainian coal mines.
Techint's Latin American steel major Ternium formed
Argentine-Italian group Techint has consolidated its flat and long steelmaking groups in Latin America into Ternium, with US$5 billion per year turnover and 12 million tonnes production capacity. The company will be registered in Luxembourg
Techint acquired Mexican steelmaker Hylsamex having five industrial subsidiaries Hylsa, Acerex, Galvak, Galvamet and Hylsabak, from Mexican conglomerate Alfa in a deal which valued at roughly US$2.25bn during last week and has integrated existing companies Siderar, Argentina and Sidor, Venezuela to form a single entity in the region. Ternium will also be connected to Brazilian Usiminas, as it holds small shares in Siderar and Sidor
This move from Techint has come after the consolidation of steel industry in Latin America, witnessed in recent past by formation of Arcelor Brazil
Bao Steel announce steel price cut for Q4
Baoshan Iron and Steel, China's top steel maker will cut prices for most core products by about 10 percent in the fourth quarter, to catch up with similar cuts by global players like POSCO and domestic rivals Wuhan Iron & Steel. Steel prices in China have fallen one fifth on an average since April after peaking at a decade's high in March, but Baosteel had kept third quarter prices unchanged. Baosteel, like most major Chinese mills, adjusts product prices once a quarter
In the fourth quarter, Baosteel would cut its most widely used hot-rolled thin sheet to a minimum of 4,544 Yuan (HK$4,358) per tonne, down 800 Yuan and the most common cold-rolled steel by 500 Yuan to 5,963 Yuan, it said in the statement.
The move is a sign that steel prices in China remain pressured by overcapacity, even as global prices stabilize. Another US$50-100 widening in the gap between global and domestic prices could open the floodgates for Chinese exports into world markets. Consumption, though failing to keep pace with breakneck capacity expansion, is resilient as China's economy continues to grow in excess of 9 percent annually.
The lending curbs plus overcapacity have pressured steel prices from April, and could lead to a second-half slowdown. But analysts argued the cooling measures would not affect high-end steel producers as much, boding well for Baosteel and its two closest domestic competitors, the parents of Angang New Steel and Wuhan Iron and Steel.
Ilsenburger Grobblech to expand heavy plate mill with SMS Demag
Ilsenburger Grobblech GmbH of Ilsenburg, Germany, a member of the Salzgitter Group, have awarded SMS Demag AG a contract for the supply of a new ultra-fast cooling line and cold plate leveler with finishing facilities.
The contract awarded to SMS Demag is worth 22 million . The scope of supply includes the mechanical equipment and automation system. With this largest single investment since its commissioning in 1981, Ilsenburger Grobblech will complement their SMS Demag-supplied heavy-plate rolling mill with the intention of strengthening their position as one of Europe's leading suppliers of high-quality heavy plates.
The new ultra-fast cooling line is arranged right past the heavy-plate stand and has an up to three times higher cooling capacity than the existing cooling system. It will serve to provide selective cooling of the plates from the rolling temperature in order to keep mechanical properties within close tolerances. In addition, the cooling line is to be used for inter stand cooling during the two- or three-stage thermo mechanical rolling process, thereby reducing mill idle times.
The new cold plate leveler including all ancillary equipment will be integrated in the existing finishing shop. It will serve for leveling either hot rolled heavy plates that have been cooled right from their rolling temperature or heavy plates that have been heat-treated before. The leveler is capable of leveling plates which are up to 50 mm thick. For both parts of the new facilities SMS Demag will supply the automation system with process models.
Commissioning of the new cooling line is scheduled for the end of 2006, while the new cold plate leveler will start operating at the beginning of 2007.
SMS Demag AG forms part of the Metallurgical Plant and Rolling Mill
Technology Business Area of the SMS group active in plant construction and mechanical engineering relating to the processing of steel, non-ferrous metals and plastics. The group is divided into the Business Areas of Metallurgical Plant and Rolling Mill Technology, Tube, Long Product and Forging Technology and Plastics Technology. In the year 2004 some 9,500 employees worldwide generated a turnover of about EUR 2.20 billion.
Mexican steel makers Sicartsa has lost US$66mn due to strike
Mexican steelmaking unit Sicartsa has lost US$66mn since August 1, when some 2,000 union workers went on strike as per Mr Sergio Villarea, Sicartsa Director General
Workers started striking over alleged contract violations and to push for new labor agreements, but Villareal warned that the losses caused by their actions could result in a permanent plant closure. Villareal estimated that 10,000 direct and indirect jobs would be lost if the plant closed permanently.
The plant has 2.35Mt/y of liquid steel production capacity but will have difficulty producing 1.3Mt by year-end. Negotiations between the steelmaker and the union have not progressed.
BlueScope to expand in down stream value added products
BLUESCOPE Steel is ramping up the expansion of its steel products business as rising raw material costs and lower market prices put the squeeze on margins for steel making. BlueScope's strategy of expanding its downstream value-added steel coating and building products operations in Asia would help offset the squeeze on the upstream business. Chief executive Kirby Adams Mr Adams said he regretted not moving earlier on ramping up downstream.
BlueScope last year spent $US221 million for US prefabricated building manufacturer Butler, which gave it a strong base in the downstream segment in China. It also spent $600 million on capital expansion and expects to lift that spending to $700 million this year. New metallic coating lines are due on stream this fiscal year in Thailand and Vietnam. Extra facilities under construction in China, India and in western Sydney are expected to come into production within 12 months.
Russia's Novolipetsk H1 RAS net profit flat
Net profit at Russian steel company Novolipetsk NLMK was near flat in the first half of 2005 at 20.97 billion rubles ($735 million) in year-on-year terms. But in the second quarter net profit fell to 9.9 billion rubles from 11.1 billion rubles in the first quarter as the situation in the global steel market continued to deteriorate. First-half revenues rose to 62.8 billion rubles from 55.6 billion rubles in the same year-ago period
"The main reason why net profit fell in the second quarter was lower sales revenues due to falling production volumes and deterioration in the markets," Novolipetsk said.
The company, run by metals to media tycoon Mr Vladimir Lisin, has cut production by 10 percent in the opening months of this year compared with the same period of 2004 when the steel market was booming and has raised rolled steel production by 4 percent to 8.6 million tonnes last year. NLMK exports more than 70 percent of its output to Europe, the Americas, Asia and the Middle East.
Corus starts investments at Teesside Cast Products unit
Steel producer Corus Group PLC today announced an investment of 12 mln stg in its Teesside Cast Products (TCP) plant as part of the first phase of a $100 million investment program. The investment is targeted at enhancing product quality to meet the specific requirements of the TCP's consortium members and will also focus on improving efficiency to support the production of a competitive product.
There are a number of projects in both the steelmaking and iron making operations with the most significant projects at the Redcar blast furnace and the continuous casting plant to be carried out during 2005 and 2006.
Teesside Cast Products is an integrated steelmaking facility, which currently manufactures around 3.3 mln tonnes a year of slab and bloom across a wide range of specifications and applications. Corus has a 10-year off-take agreement in place to supply slab from TCP to a consortium of re-rolling companies, namely Duferco, Marcegaglia, Dongkuk and Imsa
Coal mining in Colombia attracting overseas investments
Colombia's coal mining potential is bolstering the country's ability to attract investors, an official with the geology and mining institute (Ingeominas) informed local press. "Investors are approaching and making contacts in Colombia, which has become an attractive area for investments," the official said, adding that investors are also interested in minerals other than coal.
A recent report conducted by Colombia's mining and energy planning unit (Upme) shows the country went to fourth from seventh place in Latin America among major direct foreign investment recipients after Brazil, Mexico and Chile, he said.
From 2003-2004 foreign investment flows into Colombia's mining sector rose to US$1.2bn from US$627mn, 96% up in the period and a 45% growth in the mining sector's share of total foreign investment.
The official also highlighted the sector's solid performance in Colombia's GDP, ending as the second highest growth activity with 6.75% in 2004.
One of the reasons for this favorable period is Colombia's coal reserve potential, "making it the Latin American country with highest quality resources, both thermal and coking coal," the official said.
The official believes Ingeominas' plan to free up several coal areas with reserves of some 900Mt and international price forecasts of continued growth will keep the sector strong.
Saudi Al-Tuwalrqi group to establish steel mill in Karachi
Al-Tuwalrqi group of companies (ATG) of Saudi Arabia is setting up Tuwairqi steel mills project at Bin Qasim Karachi. The steel mill has a capacity of one million ton per year and will be completed at an estimated cost of $200 million. This was announced by Mr Hilal Hussain Al-Tuwairqi, Chairman Al-Tuwairqi during his meeting with Pakistans Prime Minister Shaukat Aziz.
The prime minister said that due to growing economy our demand for steel is rising and there is a great potential for investors to exploit Pakistan's growing market. PM has assured that Government will provide incentives and facilities to make Pakistan as a most competitive investment destination in this region. Infrastructure, particularly road network, port facilities and communication services are being expanded to facilitate prospective investors. He added that Pakistan offers export processing zone which are free from income tax and duties for goods, which are exported.
Record result for Macarthur Coal, 423% increase in profits
Macarthur Coal, Australia has announced a record net profit of $61.4 million for the 12 months to June 30, 2005, compared to $11.7 in the previous year.
It reported a 66.5 per cent lift in sales revenue to $370.2 million while EBIT rose 268 per cent to $94.4 million.
Macarthur said the rise in revenue was due to improved coal prices and higher tonnage.
Macarthur managing director Ken Talbot said that "Our project pipeline comprises nine exploration prospects, three of which have coking coal, which will provide the opportunity to extend our product range to cover coking coal, low volatile PCI coal and thermal coal and the challenge is to develop these projects in a staged program that takes account of the infrastructure constraints impacting coal exports from the Bowen Basin."
Latin American steel output growth nearly flat through July
Latin American crude steel production through July 2005 came to 37.1Mt, up 0.3% from 36.8Mt in the same period of 2004, the Latin American iron and steel institute (Ilafa) announced.
Primary iron output grew 3.6% to 36.3Mt through July 2005 from 35Mt in same-period 2004. Hot-rolled production in the first seven months of 2005 totaled 28.1Mt, down 0.4% from 28.2Mt year-on-year
Argentinean AcerBrag invests US$80mn to expand capacity
Argentine integrated steelmaker AcerBrag has completed an US$80mn investment designed to expand production capacity to 300,000t/y by early-2007 from current rates of 140,000t/y
Part of the investment also included construction work to install a new 50t electric arc furnace and billet continuous casting machine, and two new rolling trains, one for bars and the other for wire rods. The bar-rolling plant makes the company the first steelmaker in Argentina to have weld able construction steel directly from rolling trains.
Buenos Aires-based AcerBrag is an integrated steelmaker who processes scrap metal and manufactures finished products such as rebars for construction, wire rods, wires, nails and meshes. As part of the plan to expand production AcerBrag signed a deal with local scrap metal company Promasi to guarantee scrap supply.
The company exports some of its products to countries such as Chile, Paraguay, Uruguay, Bolivia and Brazil.
New Ukrainian Govt enquires into privatization of 20000 companies
Ms Valentyna Semeniuk, Chief of State Property Fund, which is responsible for state-owned property and its privatization, told a local daily that some 20,000 enterprises were misappropriated in Ukraine under former President Mr Leonid Kuchma and they are conducting an inventory and looking into allegations of widespread misappropriations during Kuchma's decade in office.
"We have checked 65 percent (of formerly government-owned property), and the preliminary conclusion is: 20,000 businesses were stolen under Mr Kuchma," the newspaper quoted Semeniuk as saying. She said many of the enterprises were not formally privatized, but were reorganized to place them in new hands, the paper said. She did not discuss specific enterprises or name alleged culprits.
President Mr Viktor Yushchenko, elected in December after the Orange Revolution protests against alleged election fraud on behalf of Mr Kuchma's chosen successor, has repeatedly criticized privatization deals carried out under his predecessor. In June, the government seized control of Ukraine's most profitable steel mill which was sold last year for $800 million to a consortium controlled by Mr Kuchma's son in law Mr Viktor Pinchuk and tycoon Mr Rinat Akhmetov. Mr Yushchenko called the deal theft.
Top officials have made widely varying statements about how many privatizations could face reversal. Prime Minister Yulia Tymoshenko said the number could be in the thousands, but Mr Yushchenko later said it was more likely to be in the dozens.
TOBBs to get guarantee from Garanti Bank for bidding in Erdemir
The Joint Venture established under the leadership of the Turkish Union of Chambers and Commodity Exchanges (TOBB), in order to take part in the privatization of Eregli Iron and Steel Works, (Erdemir) will get the letter of guarantee from Garanti Bank. The Joint Venture was established to ensure that the public shares in Erdemir are taken over by the domestic capital.
Yildirim Companies Group President Mr Ali Riza Yildirim, one of the four authorized person to make a statement on behalf of the JV said that "Our venture reached an agreement with Garanti Bank about the letter of guarantee for one billion US dollars cash and 500 million dollars for a 5-year term. I hope the official agreement will soon be made," said Yildirim. A temporary letter of guarantee for $40 million is necessary in order to be able to take part in the contract.
13 companies or consortiums including 9 foreign companies applied for pre-qualification for the contract that was opened for the block privatization of Erdemir's 46.12 percent public share. Apart from TOBBs joint venture, Koc Holding, Zorlu Holding, Nurol-Limak-Ozaltın Group, OYAK, UK-Netherlands cooperation Corus, Luxemburg based Arcelor, Ukrainian Avovztal-Metinvest Group, Russian Lepgog-Oskol Group, Russian Severstal, Russian Open Joint Stock Company Group, UK-based Mittal Steel, and South Korean Posco also received a pre-qualification warrant.
Erdemir is Turkey's biggest producer of flat steel and is put into contract by the Privatization Administration for privatization. Participators who are pre-qualified will be able to get information about Erdemir on electronic and physical media by paying $50 thousand by 9 September 2005. Last proposals for the privatization will be offered to the Privatization Administration by 26 September 2005 at16.00.
Purezza Group Inc announces name change to Puda Coal
Purezza Group Inc announced that pursuant to a Certificate of Amendment to the Company's Articles of Incorporation, as filed with the Florida Secretary of State on August 2, 2005, the name of the Company has been changed to Puda Coal, Inc.
Puda Coal, Inc., through its affiliates and controlled entities, specializes in coal preparation by applying a water jig washing technology. The Company currently produces 500,000 tons of cleaned coal annually, and management believes it is one of the largest clean coal processing companies in the Shanxi province of China.
Venezuelan Sivensas IBH plans to recapitalize Orinoco Iron
International Briquettes Holding (IBH), a subsidiary of Venezuelan iron and steel company Sivensa, has unveiled measures designed to recapitalize subsidiary Orinoco Iron and reduce its net debt by US$447mn. The announcement comes ahead of the merger of IBH subsidiaries Orinoco Iron and Venprecar, which will come into effect August 27. IBH plans include setting off restricted assets of US$441mn, including US$66mn in bank loans and US$375mn of debt to senior lenders.
Restricted assets are Orinoco Iron and Venprecar's accounts receivables that banks executed in response to Orinoco Iron's breach of financing contract.
Another measure is the neutralization of long-term loans with financial institutions and loans assigned by former part-owner Anglo-Australian resources group BHP Billiton to the senior lenders worth US$460mn and US$17.2mn respectively. IBH would neutralize the loans through a contribution pending for capitalization, which would set off the accumulated losses of Orinoco Iron.
A third measure is to increase IBH's beneficial ownership of Orinoco Iron by 9.86% and decrease IBH's beneficial ownership of Venprecar by 23.17%. The result would give IBH beneficial ownership in Orinoco Iron and Venprecar of 60.86% and 74.67% respectively.
"As a result of these decisions Orinoco Iron's bank debt dropped to roughly US$311mn," the company said in a statement. IBH announced in May 2005 that its Orinoco Iron and Venprecar would merge and the resulting company would be named Venezolana de Prerreducidos Caron or Venprecar.
New Zealand Steel EBIT up 195pct
New Zealand Steel, a subsidiary of BlueScope Steel, announced that it had turned in a third consecutive record year to 30 June, with an EBIT that leaped 195 per cent on revenues of $A756 million compared to $A560 million the previous year.
Company President Mr Bill Jacob said the New Zealand Steels EBIT performance had been driven by production improvements, savings in supply costs, and record sales of non-steel items. New Zealand Steel produced a record 217,000 tonnes in metal coating; there was increased capacity in the paint line
Mr Jacob added that While our results must be seen in the context of the unprecedented global steel market, they go beyond that to reflect an improved total performance, based on productivity improvement, cost controls and new revenue streams. In line with our zero-waste policy we have developed markets for many of our previous problem steel-making by-products, including vanadium slag. We have also increased sales of iron sands to China which have provided an enormous revenue boost beyond our traditional steel-marketing activities.
Bill Jacob said that in every respect New Zealand Steels result was due to very smart team performance confirming a remarkable turnaround for a manufacturing business over which there was once a very big question mark.
FEC Resources acquires iron ore reserves in the Philippines
FEC Resources Inc has announced entering into an agreement to acquire a 20% stake in Transpacific Mining Limited, for an iron ore mining license for 64 hectares with probable reserves of approximately 20 million metric tons located in close proximity to Manila, Philippines.
The acquisition was funded through a US$500,000 non interest bearing and unsecured loan from FECR to TML, to be repaid through an overriding royalty at the rate of 5% of gross FOB export sales.
