August, 27 2005
Master stroke from TATA Steel
TATA Steel, which took nearly 100 years to achieve a 5-million tonne capacity, driven by the surge in profits during last two years, decided to increase steel capacity last year and undertook projects in India as well as overseas. Nat Steel was acquired and new capacities were announced in Chattisgarh, Orissa, Iran and Bangladesh. But the home grounds of Jharkhand were left practically untouched except for capacity expansion at Jamshedpur
Jharkhand, home to Indias two biggest steel plants, having reserves of more than 3.5 million tonnes of high grade iron ore, became the one of the most preferred investment center as both the demand and prices of iron ore increased during last two years. More than 30 domestic companies signed MOUs for setting up steel plants totaling to approximately 30 million tonnes. The race for investments in steel sector is for grabbing iron ore mines both by domestic and foreign companies and for export a part of it to their overseas plant by foreign companies
But with the news of MoU for 10 million tonnes plant by Mittal Steel in Jharkhand, suddenly made TATA Steel modify their expansion plan to reach 25 million tonnes in next ten year and intend to sign a MoU with Jharkhand Government for setting up a 10 million tonnes plant few days back
The turn of events is sudden and surprising as Jharkhand Chief Minister Mr Arjun Munda has been all over the place for almost two months about signing MoU with Mittal Steel. He along with his team of ministers visited London to woo Mr Mittal also but is now going to sign an MoU with the Tatas
It seems that Mr Munda has been keeping a close watch on the happenings in Orissa in regard to iron ore clauses in POSCOs MOU. As Mittal Steel wanted permission to export 30 per cent of the iron-ore mined by them to their other steel plants in the rest of the world, Mr Munda developed cold feet and changed the game plan.
TATA has complicated the rules of the game for FDI in steel and iron ore mining sector for both Posco in Orissa and Mittal Steel in Jharkhand, potential threats to TATA, by announcing such large investment which most likely would be without iron ore export clause.
A masterstroke indeed.
Dang committee submits recommendations on Mining Policy
R.K. Dang committee set up by the Ministry of Steel to frame guidelines for allocation of iron ore mining leases has submitted its report to the Minister for Steel, Mr Ram Vilas Paswan, on Friday.
The report said that since iron ore mines are national properties and the President technically owns public sector companies, the first priority for allocating iron ore mining leases should be given to public sector companies.
Second in order of priority must be the integrated steel producers because they contribute towards employment and the economy
With regard to global giants such as Posco and the Mittals, that have evinced interest in setting up steel plants, the committee believes they should be treated as a special category because foreign direct investment is also welcome to meet the target of producing 110 million tonnes of steel by 2020.
Other companies seeking such mining leases should come fourth in the priority list, the report said.
The committee has also suggested ways to amend the Mining and Mineral Development and Regulation Act 1957
Ganeshan Committee outlines IISCO iron ore policies
Since IISCO has both low-grade iron ore and high-grade ore, the Ganeshan committee has given two kinds of methodologies for disposal of ore
On the issue of procedure for sale and price of high-grade ore of 62.5 per cent to 63 per cent, IISCO has been asked to sell half of the ore on long-term basis and the rest through spot sale. This could be done either through an open tender system or electronic disposal. It has been further suggested to the management of IISCO to set aside about 5 per cent of reserves from spot sales for meeting any emergency or unforeseen commitments in spot prices.
For low-grade iron ore, the panel has recommended that IISCO should revert to open bidding system or even go for e-auctioning system. Aggressive marketing by tying up with potential customers and long-term agreements for the quantity with annual revision of prices are part of the other recommendation made by the committee for distribution of low-grade ore.
The committee found very low lifting of rakes by MMTC from IISCO. IISCO was contracted to supply 1 million tonne of iron ore to MMTC at Rs 175 per metric tonne, but MMTC just took 14 per cent of the supply. Hence, it shall be in the interest of IISCO, said the committee, to close the contract with MMTC on 14 September of this year, without breaking the other contract clause.
In view of IISCOs annual production of high-grade ore, which varies from 1.4 to 1.5 million tonnes, the management has been asked to explore the possibility of packaging low-grade and high-grade iron ore.
Tata Steel to source steel plant equipments from China
TATA which has announced a 10-million tonnes steel project in Jharkhand, does not see any difficulty in raising Rs 55,000 crore for the project, but would have to streamline equipment supplies and project management
"Funds are the least of our problems," Tata Steel's MD Mr B. Muthuraman, told as over the next 10 years, Tata Steel expects cash flows anywhere between Rs 60,000 crore and Rs 80,000 crore, "on conservative price assumptions". Enough for putting up 20 million tonnes of steel capacity, at a debt-equity ratio of 1:1, he said.
The hurdles could be equipment supplies and getting people for project management, he said adding, "We will go to China for equipment."
As per the company's plan, 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 take the subsequent five years and Rs 30,000-35,000 crore to enhance the capacity to 10 million tonnes a year.
Tata Steel has plans to grow its capacity to 25-30 million tonnes over the next decade. It proposes to set up a 6-million tonnes plant in Dhubri, Orissa, and a 3-million tonnes plant in Chhattisgarh
Centre to amend Mining Act to curtail rights of state
The Centre is likely to curtail the rights of states to grant iron ore mining leases to companies by framing divergent guidelines and selection criteria for according priority allotment.
The steel ministry is likely to hold discussions with the mining ministry to propose amendments in the Mines and Minerals (Development and Regulation) Act, 1957 giving the Centre more powers to control states which depart from standard norms and frame local guidelines for allotment of iron ore mines. The Dang Committee on iron ore mining, has also suggested removal of certain grey areas in the MMDR Act to enhance the Centers authority in an otherwise state issue.
Though the MMDR Act in its current form has provisions which mandate a no objection certificate from the Centre for grant of mining lease by states, the Centre cannot intervene if states do not adhere to the standard first come first served principle. If the Centre decides against extending NoC, the matter often leads to the courts delaying development projects.
JSW opts for Oracle E Business suite
When Jindal Vijaynagar Steel Limited (JVSL) set up its steel plant in 1997 at Torangallu, Karnataka, it was using the Steel Process Tracking System (SPTS) developed by USIT, a joint venture between US Steel and the SAIL. Te system had its limitations and was not providing information such as the exact cost of production, Data on credit control and accounts payable was inaccurate due to manual component, but SPTS was giving efficient service in manufacturing area. Later an ERP system based on Oracle Financials and Materials Management System, was integrated with the existing system
When JVSL acquired two more steel plants from another group company at Vasind and Tarapur in Maharashtra, which were running on Ramco Marshall ERP system, resulted in integration issues
JSW decided to implement Oracle E-Business Suite across all units, to overcome this problem as well as to take expansions in capacities into account, as it has 20 unique modules such as project module, costing module, financial module and procurement module and is cost effective and do away with existing systems
CVRD is saddled with orders, plans to increase output
CVRD is facing the delightful dilemma of being deluged by customers to expand its production and sign even more long-term contracts to meet the international demand for iron ore. CVRD Executive Director Finances Fabio Barbosa predicted that the company's iron ore output will reach 275 million tons in 2007.
Production for the first half of this year was 112.1 million tons, he said. During the second quarter, iron ore production reached 60.7 million tons while iron ore and pellets sales hit a record 62.4 million tons.
Net earnings were reported at US$1.6 billion, for a 223.4% increase over the same quarter of last year. The second-quarter 2005 net earnings were 72.9% higher than the previous record of $943 million, which was reported in the third quarter of 2004.
China's voracious appetite for steel has resulted in increased pressure on CVRD from Chinese companies to sign more long-term contacts to deliver more iron ore. Nearly 85% of CVRD's current iron ore sales are covered by contracts, according to Barbosa. Therefore, the company is cautious in its decision whether to accept more long-term contracts at the present time.
Chinese steel exports are losing strength, a development which CVRD feels indicates that internal steel consumption is increasing. Meanwhile, Chinese iron ore imports grew 29.4% to 150 million tons between January and July 2005. Barbosa declared that "steel consumption in China has a long way to grow before peaking."
The company is already benefiting from its new investment grade rating, according to Barbosa. Moody's has rated CVRD "Baa3," while DBRS has rated it "BBB low." Nevertheless, he declared "we are not happy yet," and that the company will seek further improvements in its balance sheet. CVRD's total debt as of June 30, 2005, was $4.088 billion.
To meet rising metals demand, CVRD has a portfolio of mineral exploration projects in Peru, Argentina, Brazil, and Gabon. Two new coal projects are planned in Mozambique and Australia. The company officially entered the Australian continent through a JV, which was announced in July.
Latest in grim series of China mine blasts kills 15
A gas explosion killed 15 miners in southwestern China, state media reported on Friday, the latest in an all-too-familiar series of accidents to strike the world's deadliest mining industry.
Twenty-one miners were working underground when the accident happened late on Thursday in a new mine Renhuai, Guizhou province. Two workers escaped and four were rescued. The owner of the mine has fled.
China relies on coal for more than two-thirds of its energy consumption and has the world's biggest and most dangerous mining industry, claiming 2,700 lives in the first half of 2005 alone.
The government has launched campaigns to clear up the industry and pledged to spend more than 50 billion yuan ($6 billion) to improve safety, but they have had little effect. On average, there are seven fatal coal mine accidents a day, the China Daily said.
High inventories weigh on Vietnam steel prices
Vietnam's steel industry is facing a conundrum that despite high inventories of steel products, which are depressing prices, imports of crude steel are rising in tandem with growth in production capacity for finished steel.
As a result, Vietnamese steel product prices are likely to remain under pressure for a long time.
The imbalance between upstream products such as crude or semi finished steel and downstream finished products is evident for last years figures when Vietnam produced an estimated 2.95 million metric tons of rolled steel and just 658,000 tons of crude steel last year. Vietnam imported some 3.24 million tons mostly semi finished steel in the first seven months of this year, over 70% of the year's planned imports
Domestic stocks of finished steel are at a record high level of close to 500,000 tons, according to latest data from the Vietnam Steel Association. High stockpiles and increased production will ensure steel prices won't recover even when construction activity picks up after the rainy season, which ends around October. With the country's total finished steel capacity at 5.8 million tons and consumption this year forecast at only 3.15-3.30 million tons, most fear the slump in steel prices may continue.
Domestic sales of steel fell 12% to 1.26 million tons in the first half of the year and VSA said the industry may fail to reach its target of selling 2.70 million tons of steel this year
Domestic steel producers, however, say the current stock levels are acceptable. Only half of the stocks are for use in the construction industry and the rest consists of bar and plate steel which are not produced locally and are used in the power and shipbuilding industries, said a spokesman from state-owned Vietnam Steel Corporation.
To add to the woes of Vietnam's steel industry, there are several new projects in the pipeline, with at least four steel mills coming into operation this year with total annual capacity of 1.3 million tons. They include the Phu My cold rolled-steel project, the Phu My Steel Factory which will produce steel ingots, the Da Nang rolled steel factory, as well as an expanded Thai Nguyen Steel Complex. Those projects could further increase the need to import crude steel as Vietnam currently imports more than 80% of its raw materials to make finished steel.
A slew of other new steel projects have also been announced in the past month, and while these are expected to greatly reduce Vietnam's dependence on imports of steel products, the additional output will continue to keep prices pressured. Asian Steel Company Ltd., a unit of Japan's Sumitomo Corp, received its license to build a 12,000-ton-a-year steel mill in Da Nang City in South Vietnam and Nippon Steel Trading Co. Ltd. said it will build a 48,000-ton capacity steel plant near Hanoi in 2006. There are however, two projects in the pipeline that could possibly lead to a reduction in the import of crude steel by Vietnam.
Next year will see the beginning of a mammoth steel project in Vietnam, one that is expected satisfy much of the domestic demand for crude steel and even have excess for exports, according to a local analyst who declined to be named. The Thailand-based Tycoons Worldwide Group's $1 billion steel project in Dung Quat Industrial Park in Central Vietnam, will be able to churn out 5 million tons of steel ingots a year at full capacity. The company will import iron ore to make ingots.
Last month, however, the Vietnamese Government approved a pre-feasibility study to exploit the country's largest iron ore deposit in the central province of Ha Tinh. Vietnam's Ministry of Industry has also worked out a plan to build a $3 billion plant to process ore from the deposit. The Thach Khe iron ore deposit is considered one of the largest reserves in Southeast Asia, holding and estimated 550 million tons of ore with a 60% iron content.
Mexican Minister orders STMMRM, Villacero to negotiate
Mexico's labor minister Javier Salazar has ordered mining-metalworkers union STMMRM and Grupo Villacero management to negotiate an end to the ongoing strike at Villacero's Sicartsa steel plant, local media reported.
Salazar has told both sides to use the agreement reached between STMMRM and Mittal Steel as a starting point for consensus. In late-July Mittal agreed with the STMMRM to award a pay rise to workers at its Laro Cdenas unit. The raise comprised an 8% increase in salaries and a 12% increase in benefits.
In addition Mittal agreed to revise clauses in the collective work contract at the unit, something which the STMMRM is also demanding at Sicartsa.
STMMRM director Napole Gez said Villacero had finally presented a formal offer to his union, which the union would now analyze. Although Villacero made an offer Wednesday, Gez complained that it had not been formally presented to the union.
Villacero's offer to the Sicartsa workers consisted of a 4.2% increase in benefits and economic bonuses. The offer also included a 6% salary increase, a 9% increase in social benefits and a one-off 2% salary bonus
However, Gez added that the strike would not be lifted unless there was a new study to determine if Villacero's plant in Apodaca in Nuevo Le state would be subject to a collective contract.
US Steel labor unions figuring out its role
When steelmaking was king in this city and others across the nation, labor unions were as strong as the metal their members made. With hundreds of thousands of members, the United Steelworkers of America and the Independent Steelworkers Union were powerful forces. Today, when organized labor is shrinking with the steel industry, union workers are trying to figure out how they can remain influential in the US and become a force internationally. The steel industry has emerged from tough times by consolidating, and businesses that survived are increasingly tied to foreign firms.
Exactly how globalization will redefine unions is a work in progress is the question as workers have made concessions to keep plants open, such as agreeing to cut jobs and retiree benefits
Labor unions have to deal with globalization by building a stronger global labor organization. USWA has built relationships with two international union organizations: the International Metalworkers Federation and the International Federation of Chemical, Energy, Mine and General Workers' Unions. The Geneva, Switzerland-based International Metalworkers' Federation represents the collective interests of 25 million metalworkers in more than 200 unions or associations in about 100 countries. Some affiliated organizations are the Miners & Metallurgical Workers' Union of Russia in Moscow, the HKTUC Metalworkers' Coordinating Committee in Hong Kong and the HKTUC Metalworkers' Coordinating Committee in Frankfurt, Germany. The groups are creating global councils for sharing information and coordinating bargaining strategies.
Scrap major Sims confident amid volatile market
Sims Group Ltd is benefiting from strong steel demand out of Turkey, but the metal recycler has warned that there is a question mark over the future direction of steel prices.
Sims has announced a record annual net profit of $187.86 million for 2004/05, up 67 per cent on the previous year. Annual revenues rose 37 per cent to $2.57 billion in the year to June 30, reflecting continued high metal prices and an increase in ferrous sales.
In his 2005/06 outlook, Sims chief executive Jeremy Sutcliffe warned that the recent fall in ferrous prices would "significantly lower" first quarter earnings to around $30 million. However, he stressed that the first quarter should not be taken as guidance for the full year, given the recent price rebound driven by high demand for steel in Turkey. "This leads us to anticipate a stronger second quarter and, if ferrous prices remain within the current range into the second half, a strong performance for the full year," he said. Mr Sutcliffe said the future direction of steel prices was uncertain, with China remaining the key factor.
Weekly wrap for Latin American Steel industry
It's not every week that a giant new steelmaker is born but this week Argentine-Italian group Techint unveiled its plans for new Latin American steel producer Ternium. The new company is being created out of the merger of Venezuelan steelmaker Sidor, Argentine steelmaker Siderar and Techint's latest acquisition, Hylsamex. Ternium will have US$5bn/y turnover and 12Mt/y production capacity. Sources close to the merger say the company is considering floating on the New York Stock Exchange, which would allow it raise funds and lower the debt accrued during the acquisition of Hylsamex. Brazilian steelmaker Usiminas will hold a 16% stake in Ternium.
Staying in Argentina, 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. As part of the plans AcerBrag signed a deal with local scrap metal company Promasi to guarantee scrap supply. 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.
There was also plenty of exciting news in Brazil, with the announcement that German steelmaker and technology group ThyssenKrupp had unanimously approved plans to build a 4.4Mt/y steel slab plant at Brazil's Sepetiba port in Rio de Janeiro state. The company's supervisory board based its approval on the project feasibility study and will make final project decisions at its next meeting, "after clarification of various external factors." The US$1.88bn steel mill project also includes developing port infrastructure.
Also in Brazil, BHP Billiton expects to make a decision on the US$1.11bn Alumar alumina refinery expansion in Maranh state at the end of 2005.
The Alumar refinery is a joint venture between BHP Billiton (36%), US aluminum giant Alcoa (35.1%), Canada's Alcan (10%) and Abalco (18.9%).
In Venezuela, Sivensa subsidiary International Briquettes Holding (IBH) 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.
Meanwhile Paraguay steelmaker Acepar said it is up to date on payments to the state and has not been under any pressure from President Nicanor Duarte's administration to pay off its debt. The statement came after Duarte asked Acepar to pay its total debt of some US$24m from its 1997 privatization. The debt makes it hard to execute major investments,although the company will spend US$4mn to buy a ladle furnace this year and fu
nd regular equipment and facility maintenance expenses.
In Mexico, mining-metalworkers union STMMRM rejected an offer made by steelmaker Grupo Villacero to union workers at its subsidiary Sicartsa aimed at ending the 24-day strike there. STMMRM leader Napole Gez said the union had not been sent an official copy of the offer and accused Villacero of playing "wicked games" and engaging in blackmail. The union expects Villacero to comply with seven key aspects of the collective work contract at Sicartsa and is also calling on the company to guarantee a set number of jobs for union members at its new Apodaca plant in Nuevo Le state.
And in Venezuela, the country's steel institute IVES estimates domestic steel sales will suffer a slight decline during the second half of 2005. The sector's performance in 1H05 was similar or even a little better than same period last year, though domestic and global demand is expected to slow down for the rest of 2005.
Mittal Steel SA not involved in Mittal Steels expansion in Africa
Mittal Steel plans to spend about $900 million to develop iron ore mines and build railways and port facilities in Liberia, in West Africa, which has more than a billion tonnes of ore reserves.
Although Mittal Steel SA CEO Mr Davinder Chugh has previously said that the company would be considering all opportunities in Africa, spokesperson Mr Thami Didiza told that the local company had nothing to do with the Liberian deal.
Mittal Steel SA, is unlikely to be involved in the expansion plans of Mittal Steel in Africa, because Mittal Steel would then have to share the benefits of such acquisitions with other South African shareholders.
"Theoretically speaking, if we were to make any further acquisitions in Africa, it would be by Mittal Steel and not Mittal Steel South Africa," the company's corporate communications manager Paul Weigh told press
Aker Yards eyeing Poland's Gdansk shipyard
Aker Yards ASA is eyeing an acquisition of the Polish state owned shipyard in Gdansk. A senior manager at the shipyard confirmed that Aker Yards was interested in the yard, but said he thought more likely that the company would order components from the yard rather than investing in it.
Polish government is currently looking into the possibility of merging the shipyard with others to make a group of yards, or to invite a private investor to invest in the yard. 'I hope to sign a letter of intent with a large European shipyard group who is interested in investing in Gdansk Shipyard,' said Arkadiusz Krezel, manager of Poland's Industrial Development Agency, according to the report.
A spokesman for Aker Yards told that the company is evaluating options to strengthen its access to steel, given the high level of activity in the market, Finansavisen reported.
Metso to supply a shredder line to Makiura Steel Work in Japan
Metso Minerals will supply a metal shredder line to Makiura Steel Work
Co Ltd for its metal recycling plant in Himeji City in Japan by the end of August 2006 for a value of exceeds Euro 7 million. The order comprises of a metal shredder, a complete downstream equipment for ferrous and non-ferrous separation and de-dusting, as well as an additional double-screw extrusion system for processing the shredder light fraction.
The shredder line will complement Makiura's current 1,250 tons cutting force scrap shear and first double-screw extrusion press, delivered by Metso in 1990 and 2003. The new solution complies with Japan's recent automobile recycling regulation, which requires safe and sure treatment of shredder light fraction in the recycling process.
Makiura Steel Work Co. Ltd., one of Japan's leading metal recycling companies, had net sales of EUR 41.5 million in 2004. The shredder line will make Makiura Japan's leading automobile residue processor and metal recycler.
Metso is a global technology corporation serving customers in the pulp and paper industry, rock and minerals processing, the energy industry and selected other industries. In 2004, the net sales of Metso Corporation were approx. EUR 4 billion, and it has some 22,000 employees in more than 50 countries.
Kemerovo miners celebrate Miners day with Khvorostovsky concert
More than 7,000 people gathered on Friday on the main square of Kemerovo, the capital of Russia's mining region located in Russia's largest coal basin Kuzbass in West Siberia, for a concert by well-known baritone Dmitry Khvorostovsky dedicated to Miner's Day, celebrated this Sunday.
The singer performed in rainy weather together with a local symphony orchestra and chorus on a modern covered stage brought from Moscow. Russia's merited artist sang miners' opera arias and songs by Soviet composers.
Kuzbass governor Aman Tuleyev presented Khvorostovsky and well-known conductor Konstantin Orbelyan, who led the local orchestra, with a regional order of precious stones.
Australia's Simsmetal yr profit up 67 pct
Sims Group Ltd, the world's biggest metals recycler, posted a 67 percent rise in annual profit, driven by higher metals prices and strong growth in scrap steel sales, but warned of a weak start to fiscal 2006.
Net profit for the 12 months to June 30 was A$187.9 million ($142.8 million) from A$112.5 million a year ago.
Sims Chief Executive Jeremy Sutcliffe said a temporary softening of metals prices since June was likely to drive first quarter fiscal 2006 earnings about 47 percent lower to around A$30 million, but that the downturn should not act as an indicator for full-year earnings.
"Encouragingly, we were correct in our prediction of higher prices, with group sales as high as US$270 C&F having been achieved in some markets for September," Sutcliffe said in a statement. Sutcliffe also pointed to strengthening metals markets, especially in Turkey, Spain and in the Indian sub-continent. "The U.S.domestic market has also strengthened with prices up by over $70 per tonne since June," Sutcliffe said. "Asian markets, although slower to respond, are now recognising the need to match international price levels," Sutcliffe said.
In June, the company launched a friendly A$449 million scrip bid for recycler Hugo Neu, saying it sees big profits in the 'greening' of New York City and other major U.S. cities. The move is expected to be approved at an extraordinary meeting on Sept. 8 and would give Sims 122 operations on four continents and a bigger say in where recycled steel, plastics, glass and other materials are gathered and sold.
Eramet not in talks with Brazil's CVRD
French mining group Eramet is not in talks with Brazil's Companhia Vale do Rio Doce CVRD, the world's top iron ore mining company, about a possible tie-up, a source close to the situation said on Friday. The source denied a report in the Wall Street Journal Europe that said CVRD was looking to buy Eramet in a deal that would be valued at over $2 billion.
At the end of last year, French state owned nuclear group Areva owned a 26.25 percent stake in Eramet, and its largest shareholders were holding companies Sorame and CEIR, with a joint 37.2 percent. Eramet made a record net profit of 342 million euros ($419.8 million) last year on sales of 2.5 billion euros.
Aztec Resources Appoints New Chief Operating Officer
The Board of Directors of Aztec Resources Limited Friday announced the appointment of Mr Peter Bilbe as Chief Operating Officer and would be responsible for operations of the Koolan Island Iron Ore Project. Mr Bilbe is a highly experienced engineer who has been working in the mining industry for more than 30 years. For the last 15 years, he has held various senior executive roles for mining companies both within Australia and overseas.
Prior to joining Aztec in 2004 as Project Manager for the Koolan Island Iron Ore Project, he was General Manager Operations for Portman Limited with responsibility for the Koolyanobbing and Cocktatoo Island Iron Ore Projects.
Environmental permit process begins for Range mine, steel mill
The Minnesota Department of Natural Resources completed an important first step in the environmental permitting process for a planned $1.6 billion taconite mine and steel plant on the Iron Range. DNR has prepared both the environmental assessment worksheet (EAW) and draft scoping decision document, said Randall Doneen, principal planner in the agencys environmental policy and review unit. Both of these documents will help us identify the issues and analyses to include in the final environmental impact statement (EIS).
The EIS will be prepared by both the DNR and U.S. Army Corps of Engineers, analyze the environmental impacts of the project and propose ways to minimize or avoid them. The EIS is required for both state and federal review. McGovern hopes it will be completed by the end of 2006.
Last December, St. Paul-based newly formed Minnesota Steel Industries initiated a $1.6 billion project of taconite mine and steel plant on the West Range.
Minnesota Steel will reactivate the former Butler Taconite mine three miles west of Nashwauk, and build a new crusher, concentrator, pellet plant, direct-reduced iron plant and steel mill. Minnesota Steel plans to have the entire complex operational by 2008, employing as many as 700 workers.
Court rules against union in Ormet case
US Bankruptcy Court in Columbus ruled against the United Steel Workers Association's USWA appeal of Ormet's reorganization plan. USWA represents the striking employees of Ormet's Burnside Alumina and Hannibal rolling facilities, filed two separate claims in June related to reductions in retiree benefit plans.
USWA filed two separate claims against the company's 1113 reorganization plan accepted by the bankruptcy court. "One claim totaled $6.3 million and was specifically related to previous changes in retiree benefit programs that the company implemented on January 1, 2003," the document states. "The second claim totaled $177 million and was specifically related to the future changes in retiree medical obligations based on the new program of payments to the Voluntary Employee Benefit Association for the Hannibal hourly retirees."
The judge ruled that the company exited bankruptcy because of the 1113," she said. "If it would unravel at this point, it would force the company into liquidation."
There are no talks currently scheduled between the USWA and the Ormet management. She said there is a specific amount of money by which the company must reduce its costs, and she accused the union of refusing to take that into consideration during negotiations.
The current strike began in November of last year and is continuing. Picketers are at the Ormet plants in Hannibal 24 hours a day in 6-hour shifts.
Mechel steel production up by 2% for H1 2005
Mechel raised crude steel production as well as finished steel production by 2% during H1 of 2005 YOY by recording 3.1 million tonnes and 2.4 million tonnes respectively.
Whereas, the production of coking coal decreased by 1.5 percent to 4.13 million tones, the production of coke lowered 7 percent to come to 1.36 million tones, the production of cast iron fell 1 percent to 1.84 million tones.
Mechel is the largest and most comprehensive producer of specialty steels and alloys in Russia, producing 52% of total Russian specialty steel output. Mechel is also the second largest producer of long products in Russia. Company's steel business comprises production and sale of semi-finished steel products, carbon and specialty long products, carbon and stainless flat products, and value-added downstream metal products including hardware, stampings and forgings, as well as coke and coke products.
Company's mining segment comprises production and sale of coal coking and steam, iron ore and nickel. Mechel is the second largest producer of coking coal in Russia in 2003, with a 12% market share. Company also controls 24% of the coking coal washing capacity in Russia.
In 2004, Mechel produced approximately 6,196 thousand tonnes of steel, 4,937 thousand tonnes of rolled products, 3,880 thousand tonnes of pig iron, 2,942 thousand tonnes of coke.
Chiles Asimet seeks US$100mn export credit policy
Chile's metals industry association Asimet is gathering members to negotiate collectively an export credit insurance policy of up to US$100mn in November
"We want to bring customers together to negotiate freight rates and export credit insurance policies. Our idea is to gather a pool of businesses to access better credits and lower costs," Asimet president Abraham Ducasse was quoted as saying.
The Chilean Metal Mechanics Industry Association brings together some 60 companies operating in that sector, providing special support for small and medium enterprises.
BHP Billiton eyeing up US$1.12bn Samarco expansion in Brazil
The board of BHP Billiton aims to make a decision on the US$1.12bn expansion at the Samarco iron ore operation in Brazil at year-end, a company spokesperson told
The project involves increasing capacity at the Germano iron ore mine and concentrator in Minas Gerais state with current capacity of 16.5Mt/y of wet concentrate.
In addition it would require the construction of a third pellet plant with 7.5Mt/y capacity at Ponta de Ubu port in Espirito Santo state and a second 396km-long iron ore slurry pipeline to connect the mine with the pellet plant.
The expansion would increase capacity 53.6% from the current 14Mt/y to 21.5Mt/y of iron pellets. The expansion is due to come onstream in the second half of 2008, according to the recent BHP Billiton fiscal year 2005 presentation.
BHP Billiton owns 50% of Samarco, the world's second-largest exporter of iron ore pellets, and Brazilian mining giant CVRD has the remainder, and therefore the proposed expansion investment split US$560mn each.
BHP Billiton spokesperson Tracey Whitehead said the project, which would add 7Mt/y of pellet production, was still in feasibility and the project approval, construction and startup schedule could be subject to change.
In 2004 Samarco produced 25.2Mt of iron ore at Germano, 4% higher than the previous year, to churn out 13.8Mt of iron pellets at Ponta de Ubu, also 4% higher. A 396km iron ore slurry pipeline connects the two facilities.
Samarco has more than 30 years of measured iron ore reserves
Colombian Paz del R sale is next step
Alberto Hadad, who recently resigned as president of Colombian steelmaker Acers Paz del R (APR), believes the company has completed the first phase of becoming "a viable company" and is set to start the second, the process of finding a buyer. The government has already started working to value to the company and with that information the process of approaching possible buyers in Latin America will begin
APR workers, who control 43% of the company, want to take advantage of the situation and are seeing how they can get together and sell an important piece of the company. Industrial development agency IFI, which controls 9% of the steelmaker, recently selected investment bank Latinvesco Banca de Inversi to value the company.
APR's board designated Carlos Pinz as interim president until it selects a fulltime replacement. APR is in Belencito in Boyacdepartment. The company is executing a US$35mn industrial restructuring plan and boasts a 14% domestic steel market share.
Chiles steel maker CAP centered on domestic market
Chilean steelmaker CAP is dedicated to providing steel to the domestic market, though as a "growth company" has its sights set on international expansion, a business daily quoted president Roberto de Andraca as saying. "We have some projects advancing abroad - a hot-rolled tube plant in Peru and Argentina," he said. "We've been in those countries for eight years and we have grown a lot there."
Despite this growth the company's primary concern is providing "high quality" steel to Chileans so the country can export value-added products.
"The Chilean market is growing and as such we are going to grow alongside it and we are making necessary investments to that end," he said, adding by 2006 the company will be able to produce 1.5Mt/y compared to today's level of just over 1Mt/y
BHP Billiton board eyes Escondida CPR decision 1H06
BHP Billiton expects to make a decision on the US$164mn Escondida coarse particle recovery (CPR) project in Chile in the first half of 2006. "The intention is for the Escondida CPR project to go the board sometime in the first half of next year," said BHP Billiton spokesperson. Feasibility work is still not completed.
BHP Billiton's share of the investment budget would be US$95mn, equivalent to its 57.5% controlling interest in Escondida copper mine, the world's largest copper producting operation.
Escondida CPR was put into the project pipeline early last year and is designed to expand production by a total 50,000t/y at Escondida, which has current capacity of 1.25Mt. The project aims to increase recoveries by introducing further grinding. The project was originally budgeted at US$156mn with the aim of expanding output by 54,000t/y
Rio Tinto holds 30% of Escondida in northern Chile's Region II, a Mitsubishi-led Japanese consortium 10%, and the World Bank's International Finance Corporation another 2.5%
Sir Farmer set to enter big time with UK Coal
Sir Tom Farmer, the Scottish entrepreneur who founded Kwik-Fit chain in 1971 and sold it to Ford for 1 billion, confirmed yesterday he was planning to buy struggling UK Coal, despite the emergence of US billionaire Wilbur Ross as an investor in the group. Farmer told The Scotsman he expected talks with the company, the UK's biggest coal producer, to restart "in the near future", following a more than two-month stand-off.
He has teamed up with the Duke of Buccleuch, UK's biggest private landowner and venture capitalists Alchemy Partners in an effort to win control of the firm, in what would be his most significant investment since selling Kwik-Fit six years ago and mark his return to the business big-time. The consortium is expected to require about 200 million to win a recommendation from the board, but the picture has been clouded after Ross declared a 3.74 per cent share of the company.
Observers speculated that Ross was looking to build his stake to the point of having a controlling influence - which could lead to a strategic partnership with US firm International Coal, which he owns.
In April, UK Coal reported that losses had deepened to 51m from 1.2m amid geological problems and strike action. But the South Yorkshire firm, led by chief executive Gerry Spindler, said it hoped to return to profit in 2006.
Paraguays Acepar workers complain over management
Workers at Paraguayan steelmaker Acepar have sent a letter to President Nicanor Duarte complaining the factory is "falling apart" because of poor management.
The workers, represented by union Sitrasa, are concerned over company plans to lay off 300 workers. In the past the union has complained the company has not invested enough in the plant. In turn, Acepar management says it must pay the state for company ownership before carrying out major investments
