August, 07 2005
Indian Government may impose coal cess
The government is considering a proposal to impose a cess on the price of domestic coal in order to raise funds for the coal sector and also increase the domestic prices by bringing it closer to international ones.
The low domestic price of coal vis-a-vis the international prices was a big deterrent for investments in the coal sector. While raising the domestic price of coal was one option, the other option put forward was to impose a cess.
The money raised through this cess would be reploughed back into the sector and would not be used for other fiscal needs.
In addition to this, for the coal sector it is decided to cancel the licenses of promoters who fail to utilise their captive coal mines. It was found that out of the 86 captive coal blocks that have a potential to generate 204 million tonnes of coal annually, only 9 MT of coal was produced in 2004-05.
Mahindras keen on auto plant in Orissa
Orissa, which has witnessed largest number of MoUs with steel majors, is likely to figure in the automobile-manufacturing map of the country.
Mahindra Group has shown interest for to set up an auto component plant in Orissa in collaboration with the US-based Truck and Engine Corporation in the State.
The proposed auto component plant is part of Mahindra Groups global expansion plan and the State Government has reportedly assured the company of infrastructure and policy and implementation support.
Set up in 1954, Mahindra Group is a leading player in the auto component, telecom, finance, IT, infrastructure and steel sectors. It is also the largest manufacturer of tractors in the country with overall annual production of 80,000 units including the utility vehicles.
Taiwanese two-wheeler giant Kymco has also proposed to set up a factory in Orissa.
Police conduct raids
Chhattisgarh police conducted overnight raids at several places but drew a blank into the sensational murder four days ago of a general manager of the SAIL in the industrial town of Bhilai.
Police raided several places in Durg district and interrogated several suspects regarding Tuesday night's killing of Radheshyam Agrawal by two unidentified assailants.
On the basis of preliminary investigations the murder is being to industrial killings and the assassins seem to be hired killers. Police is hopeful of tracking down the killers soon.
Indian Coal policy needs changes
The present Indian coal policy laying down norms for bidding captive coal blocks prohibits the mining above 120% of annual rated capacity and stipulates that captive users give a share of the output to the Government as a part of licensing fees over and above dues like royalty and cess
There are other anomalies in the draft guidelines. Objective transparency in bid evaluation, as also the weightage for various bid parameters are all missing.
India has over 91 billion tonnes of fully proven coal reserves but inspite of growing coal shortages output remains stuck at well below 400 MT, for years.
Therefore the whole concept of captive mining needs to be junked, with its rigidities and all.
Surana Ind expects Rs10cr saving
Surana Industries Ltd expects to save at least Rs 10 crore a year in power costs due to its recently completed 73 crores worth 12-MW wind farm which will start generating power from September. Surana Industries produces construction steel from its 1.10 lakh-tonnes-a-year facility in Gummidipoondi, near Chennai.
The company has reported a doubling of net profit for the first quarter of the current year, compared with the same quarter last year. Net profit for the quarter rose to Rs 1.57 crore from Rs 60.86 lakh in the corresponding quarter last year - an increase of 158 per cent. In the full year 2004-05, the company's net profit was Rs 3.93 crore. Turnover increased to Rs 151.53 crore from Rs 58.47 crore previously. In 2004-05, the company's turnover was Rs 489.70 crore.
CIL has potential to be globally competitive
The Union Minister of State for Coal & Mines said that to face the world market, the public sector major Coal India Limited (CIL) will have to overcome constraints such as small and uneconomic underground mines, unskilled manpower, poor work culture and problems relating to land acquisition and rehabilitation
CIL is the largest coal company in the world and has potential to be globally competitive. It has abundant coal resources in the lease hold areas, wide geographical spread of coal mines, well developed marketing network, surplus resources for investment and support of Central and State.
CIL through its seven coal producing subsidiaries and one planning & designing consultancy subsidiary has raised nation's coal production from a level of 78 million tonnes (MT) at the time of state taking over mines to currently 323 MT making India the third largest coal producer in the world.
The company is now keen on investing in frontier technology i.e exploration of coal bed methane and underground coal gassification. CIL offers a wide range of opportunity for prospective investors in the coal sector. Coal India at present seeks co-operation in the areas of technical, operational and commercial areas for entering into mutual beneficial relationship with the foreign agencies.
Metallurgical coal negotiations for 2006 to be hard
Talks between coal companies and steel producers could become strained this year if sides stayed far apart on views about prices of a key product used in steelmaking, analysts said on Thursday. Some buyers are already negotiating with sellers of the metallurgical coal with the hope of striking a deal ahead of the customary "mating season" closer to the fourth quarter.
Enthusiasm this year for humble met coal is due to the current boom in steelmaking, which was fueled in part by red-hot industrial expansion in China and India.
Jim Thompson, editor of the Coal & Energy Price Report, said tensions may rise in this year's discussion, after met coal and steel prices exploded higher last year amid phenomenal demand from international steel companies.
"It's early stages yet, but I think it's likely to be difficult and lengthy negotiations," he said. "Suppliers are reluctant to give up those gains that they've made, and steel prices, while they've slumped a little bit, still are high historically."
Players are especially keen to see what kind of a tack Mittal Steel will take in discussions. The company became the No. 1 global steel maker following its $4.5 billion purchase of International Steel Group. "It sounds like, from the way suppliers are complaining, that Mittal will take a pretty tough stance," said Thompson. "People are wary of them because they are a big market power and are somewhat of an unknown at this point."
In a met coal deal announced on Tuesday, Canada's Elk Valley Coal finalized 10-year sales pacts with producers Nippon Steel Corp. and POSCO of South Korea. The agreement calls for a total of 4.85 million metric tons per year of met coal for 2005, rising to 6.25 million tonnes per year for the 2007 coal year onward. Terms were not disclosed.
Analysts said customers this year hope to secure deals for "low-vol" met coal, the rarest and priciest type, at $70 to $80 per ton, while sellers are seeking at least $80 to 90 per ton. Last year, sides reportedly shook hands at about the $80 per short ton level domestically and at the mid-$90's per ton mark internationally. Market sources said U.S. coal producer Peabody Energy Corp. has made a two-year supply deal with a domestic steel company at levels near last year's low-$70's per ton level.
Ian Synnott, an analyst at Natexis Bleichroeder Inc., said the Elk Valley and Peabody news was encouraging in that some steel companies wanted to sign long-term deals right now. "You may see met coal data looking a little stronger than people expected this year," he said. "The steel industry had to work through some excess supply, but you haven't really seen a collapse in prices there."
Alpha Natural Resources Inc. said Thursday the market for poorer-quality met coal may weaken and prices slip in the short-term, but demand and prices for higher-quality met coal should remain firm due to supply constraints.
Longer-term, prospects are more promising, it said, with 10 million to 15 million tons of new or rebuilt coke oven capacity seen coming on stream in 2006 to consume met coal.
A few kinks have developed in the coal supply chain this year, and experts said that output and transportation problems are likely to remain commonplace in the industry. For example Australia, the biggest met coal producer, has plenty of product, but its terminal space at many locations remains inadequate to handle shipping volumes.
In the United States, Consol Energy Inc.'s Buchanan mine halted production at its Virginia pit for four months due to a fire before operations reopened in June. A Walter Industries Inc. U.S. coal mine is expected to stay shut for this year due to operational problems, losing around a half-million tons of met coal output, analysts said. Coal Producer Massey Energy Co. said last week that rail service delays and disruptions and less underground mining have been to blame for reducing some coal shipments. Massey expects to ship 10 million to 11 million tons of met coal this year.
US Pipe maker file complaint against Chinese imports
Seven U.S. steel pipe producers have filed a petition under the Trade Act of 1974 with the U.S. International Trade Commission, seeking relief from market disruption caused by imports of "standard pipe" from the People's Republic of China.
The companies who joined in filing the petition are: Allied Tube & Conduit Corp., IPSCO Tubulars Inc., Maruichi American Corp., Maverick Tube Corp., Sharon Tube Co., Western Tube & Conduit Corp., Wheatland Tube Co. and the United Steelworkers of America.
Tamara Browne, an attorney with Schagrin Associates of Washington, lawyers who represent steel companies in trade cases, said the filing is different from the Section 201 trade action that led to steel import sanctions in 2002. "This is not an antidumping case. It is a China safeguard action, an import surge petition. It challenges that imports have surged at such a great volume that it creates displacement in the industry," she said.
She said the pipe case is important to Mittal Steel USA-Weirton and Wheeling-Pittsburgh Steel Corp. because the pipe industry is a customer to the integrated mills.
Standard pipe and tube are intended for low-pressure conveyance of water, steam, and gases in plumbing and heating systems; air conditioning units; automatic fire sprinkler systems; and fence and construction.
EVRAZ buys 49% Palini & Bertoli
MPS Venture SGR real-estate fund announced the handover its 49 pc share in Palini & Bertoli S.p.A to Russian steel company Evraz for Euro 75 million bringing Evraz share to 75%.
Palini & Bertoli producers of metal sheeting recorded Euro 200 million earnings and Euro 31 million EBITDA in 2004.
Timken names Tim Jr as new chairman
Timken Co. on Friday named Ward J Timken Jr. chairman of the alloy steel and bearings manufacturer. The 38-year-old will succeed his uncle, William Robert Timken Jr., who is resigning to become the U.S. ambassador to Germany. Ward Timken has been president of the company's steel group, which accounted for about $1.2 billion of the company's $4.5 billion in sales last year.
The company was founded in 1899 by Henry Timken and now has 26,000 employees worldwide. Five generations of Timkens have served as the company's board chairman.
Since the company went public in 1922 a family member has served as chairman with a non-family chief executive and president. The family, together with the Timken Foundation, still owns 13 percent of the company, but the board is largely independent.
Schulz to build plant in Campos Brazil
German steel products manufacturer Schulz will build a plant for making stainless-steel tube connectors. in the Rio de Janeiro suburb of Campos at the cost of 44.5mn-reais (US$19mn). This factory will be the Schulzs first in Brazil.
Schulz will spend 20.7mn reais on the project with help from state investment fund Invest Rio (10.6mn reais) and international lenders
In addition the plant will receive tax breaks to reduce service taxes
Schulz is a leading supplier of stainless steel and copper-nickel tube connections for the naval, oil, gas and chemical industries.
Liaoning's Steel Production 17.5% up in H1
Liaoning Province, a traditional industrial base in the northeast of the China turned out a total of 15.242 million tons of steel products in the first half of this year, increasing 17.5 per cent year on year, according to the provincial economic and trade commission.
The output of crude steel was 14.945 million tons in the first half, jumping 21.5 per cent year on year; continuous casting billet, 14.0885 million tons, up 21.8 per cent; and pig iron, 15.258 million tons, up 30.2 per cent.
At the same time, the province's key iron and steel enterprises exported 2.573 million tons steel products in the first half, an increase of 1.628 million tons over the same period of last year. The export of Anshan Iron and Steel was 2.7 times of that of the same period of last year export of Benxi Iron and Steel was seven times of the same period of last year and Beitai Iron and Steel was 6.6 times of that of the same period of last year.
S. Korean SK network launches steel processing firm in China
SK Networks Co. the trading arm of South Korea's SK Group has launched a locally incorporated subsidiary in China to process and retail steel products.
DongGuan Skok Processing, capitalized at 2.02 billion won (US$1.99 million), is located in Dongguan, China's Guangdong Province.
SK Networks also plans to launch a coil center in DongGuan in February next year and to operate a logistics center in Jiangsu Province, the company added.
Guangdong is currently crowded with companies manufacturing electrical appliances, IT and auto parts and thus the demand for steel is high in the area.
Mittal Steel Zenica H1 Output Up To 142,000 Tonnes
Bosnian steel maker Mittal Steel Zenica produced 142,000 tonnes of steel worth 57 million euro in the first six months of the year, increased by 30,000 tonnes compared to the same period last year.
A total of 102,000 tonnes worth 41 million euro were exported, of which 40,000 tonnes worth 16 million euro to Serbia and Montenegro.
The remaining 40,000 tonnes worth 16.5 million euro were delivered to domestic companies.
Coal Mine Roof Collapses - One Dead One Trapped
The roof of a coal mine collapsed Thursday, killing one miner, and rescue crews were searching for another who could be trapped in or behind a wall of fallen rocks, authorities said.
The 400-square-foot section of roof gave way around midnight as a crew of about eight performed retreat mining, which involves removing coal pillars that support the roof, said Paris Charles, executive director of the Kentucky Office of Mine Safety and Licensing.
The first miner's body was recovered from Stillhouse Mining Mine No. 1 just outside Cumberland before dawn Thursday and about 20 rescue workers were trying to find the other man.
Stillhouse is owned by Black Mountain Resources, a division of Cumberland Resources. The mine in southeastern Kentucky has been in operation since 1999.
S. Korean Dongbus Q2 earnings sink 43%
Dongbu Steel Co. South Korea's fifth-largest steelmaker posted a plunge in its second-quarter earnings due to increased costs and a fall in product prices.
Net profit sank 43.1 per cent from a year earlier to 21.43 billion won (US$21.04 million), the company said in a regulatory filing with the Korea Exchange.
Revenue rose 13.3 per cent to 642.33 billion won, but operating profit tumbled 43.8 per cent to 36.30 billion won.
Dongbu Steel said it is aiming for sales of 2.5 trillion won for this year.
Anglo looking to expand in copper & iron ore
Anglo American, the world's second-biggest miner, plans to expand operations in commodities such as copper and iron ore to take advantage of rising prices, as its earnings lag competitors.
Anglos net income fell 17 per cent to $US1.84 billion from $US2.23 billion for the six months ended June, which included $US1 billion gain from asset sales profit last year.
Anglo was founded in Johannesburg in 1917 by Ernest Oppenheimer to exploit the Witwatersrand, the world's biggest gold field. In the 1920s, it established South Africa's platinum industry on the Bushveld Complex, the world's largest platinum field. Anglo has sold assets ranging from banks to wine farms since moving to London from Johannesburg in 1999 as it increased output of industrial metals and cut dependence on precious metals and South Africa.
Now Anglo is "looking for more acquisitions", chief executive Tony Trahar said as Anglo is "not in the exciting commodities to the same extent" that other players are
Rio Tinto Group, the world's third-largest mining company, in 2000 beat Anglo in the bidding for North Ltd, an Australian iron-ore producer. This year, Rio also acquired a stake in the Hope Downs iron ore project in Western Australia's Pilbara region after Anglo's Kumba Resources unit was forced to sell its interest when it lost a legal battle.
Venezuelan caution over steel price decline
Venezuela's steel industry suppliers association Aces is recommending caution in the sector over a drop in prices stemming from China's recent economic slowdown.
It is not very clear whether there will be a change in steel prices in the medium-term and the extent of their Chinese decline in growth or when will it pick up again is not known therefore companies cannot predict whether prices will rebound in the near-term.
Aces recommend caution and that companies not go ahead will all projects, expansions or upgrades, but only execute the ones necessary for productivity and competitiveness.
Steel prices down in July Brazil
Prices for iron, steel and their derivatives declined 2.13% in Brazil last month. The decline, which was the largest monthly dip since August 1994, primarily reflects the strong real, which was pushing down prices for industrial resources related to the US dollar
High stocks at distributors also were a factor which pressured prices
Concern over rising steel prices led Brazil's foreign trade council to drop trade tariffs on 15 different steel products earlier this year, opening the domestic market to imports in an effort to avoid any impact on inflation.
Peruvian Siderper records Q2 loss on high costs
Peruvian steelmaker Siderper reported a 1mn-sol (US$310,000) net loss for the second quarter of 2005 compared with a 4.9mn-sol net profit same period last year.
Gross margin dropped to 14.6mn soles in the second quarter from 25.4mn soles in 2Q04. Net sales grew nearly 16% to 177mn soles thanks to higher prices and a 7% increase in shipments, although repair work in April on a furnace slowed output.
The gross margin shrank due to higher costs registered in the year without the corresponding growth in sales prices.
Siderper, based in Chimbote in central Peru's Ancash department, has a production capacity of 400,000t/y and is controlled by local holding Sider.
Kumba sees higher iron ore output, steadier prices
Africa's biggest iron ore producer Kumba Resources said on Wednesday it could more than double output to 70 million tonnes by around 2010, and forecast steady prices for 2006.
The South African miner, which tripled half-year 2005 headline earnings per share to 318 cents due to stronger iron ore prices, said it expected the output increase from a string of projects, some of which were still under exploration.
Kumba's Chief Executive Con Fauconnier said the outlook for iron ore prices would be clearer by late this year or early next year, but he expected a steady market despite speculation among analysts of a decline. "The fundamentals say the price will not change, I'd be surprised if there is a large reduction in the price," he said at a results briefing. "I don't see a reason for iron prices to come off when we have orders that are not being filled."
Kumba is majority owned by Anglo American Plc and the world's fifth-largest iron ore miner and produces about 30 million tonnes of iron ore, mostly for exports, about half of which goes to China.
Labrador Iron Ore announces Q2 results
Labrador Iron Ore Royalty Income Fund announced that Royalty income for the second quarter of 2005 amounted to $20.91 million as compared to $13.23 million for the second quarter of 2004, an increase of 58% over the same period last year.
Net income was $21.34 million compared to $8.30 million or $0.26 per unit
for the same period in 2004.
The price increases for pellets (86.1%) and concentrates (71.5%) negotiated for 2005 resulted in IOC's earnings increasing to $10.7 million compared to $1.1 million in the 2004 second quarter.
The Fund's revenues are entirely dependent on the operations of Iron Ore
Company of Canada (IOC) as its only assets relate to the operations of IOC and its principal source of revenue is the 7% royalty it receives on all sales of iron ore products by IOC.
China to Slow Expansion of Smaller Copper Smelters
China, producer of 13 percent of the world's refined copper, plans to slow the expansion of smaller copper smelters as part of wider efforts to cool its economy which grew by 9.5 percent in the first half of the year.
The government has taken a series of measures to curb lending to industries such as real estate and steel, and to restrict property loans, in an attempt to rein in the world's fastest-growing major economy. It recently allowed its currency to strengthen to restrain expansion and keep inflation in check. The government wants to avoid what happened to the aluminum industry where expansion was too fast, causing a glut
China plans to add as many as 18 copper smelters with an output capacity of 2.49 million metric tons. Three copper smelters are being built, seven are under study and eight are planned by local governments,
At the same time, the government supports investment in big smelters such as Jiangxi Copper Co. as it needs more metal for wires and cables to supply the rapidly expanding power industry and reduce electricity shortages.
Jiangxi Copper, the biggest producer, plans to boost output to 700,000 tons in 2007 from 420,000 tons last year. Yunnan Copper Co., the third largest, aims to more than double capacity to 500,000 tons by 2010 from 223,396 tons last year.
Output of copper, used for wires and cables, may reach 2.45 million tons this year. Demand for copper from China, the world's largest consumer, has pushed prices of the metal to records in London and Shanghai. The price of copper for delivery in three months in London reached an all-time high of $3,600 a ton yesterday.
Dhaka Electric tighten steel rolling mills
Most of the steel and re-rolling mills that produce MS rod and steel bars, the two main materials for building construction, are located in Jurain and Postagola areas in Dhaka. More than 200 mills in the areas produce 80 per cent of the steel used in the construction sector. These mills are the consumers of huge electricity and they have long been blamed for the power pilferage and system loss.
The operators of the steel and re-rolling mills claimed that the system loss in the areas where their mills were located, had come down to almost zero level in recent days, due to their initiative to stop the malpractice, like electricity pilferage. They asked the DESA to install two meters for each mill, one inside the mill and another in the main feeder lines, from where the mill gets the connection to monitor the malpractice like meter tampering or bypass connections.
Chiles CAP H1 earnings up 123%
Chilean iron and steel company CAP reported US$122mn profits during the first half of 2005, up 123% year-over-year thanks to metal prices
During the period sales grew 36.3% to US$453mn while Ebitda increased 72% to US$177mn. Sales volume increased 0.5%, bolstered by a 61.8% increase in exports and hindered by a 1.1% drop in domestic shipments. Steel prices reached US$630/t during the half compared with US$478/t in 1H04.
"The combination of prices and volumes obtained in our principal businesses explain the excellent performance in the first half of 2005," according to the CAP statement.
CAP has iron ore mines in northern Chile operated through its mining unit Minera del Pacico and owns the Huachipato steel complex in south-central Region VIII.
NZ Steel joins greenhouse queue
New Zealand Steel, operator of the Glenbrook steel works, has joined the queue of companies seeking negotiated greenhouse agreements.
Firms whose international competitiveness would be at risk if subject to the carbon tax due to come into effect in 2007 can negotiate agreements which exempt them from the tax in return for a binding agreement to move to world's best practice in greenhouse gas emissions for comparable plants.
New Zealand Refining and miner Oceana Gold have completed agreements.
