August, 08 2005
Inflation drops to 4.07% in India
A substantial surge in the prices of minerals and some manufactured products was offset to a large extent by the fall in prices of food items, helping the rate of inflation to touch a two-year low of 4.07 per cent in the week ended July 23.
The point-to-point wholesale price index (WPI) inflation declined by 0.11 per cent from the previous weeks level of 4.18 per cent.
It was much higher at 7.91 per cent a year ago. The WPI rose by 0.1 per cent to 194.5 points due to a rise in the index of mass consumption products, including vegetables and fruits.
India to face coal shortage during 2005-06
The country will face shortage of 23.96 million tonne of coal against its estimated requirement of about 436.46 million tonne during the current fiscal.
During the year the total production was estimated at about 412.50 million tonne, according to an official report. Of the total production among others Coal India is supposed to produce about 351.04 million tonnes. About 75 per cent of the total coal production goes for generation of electricity. Besides, it was needed in the industries of steel, paper and fertilizer, it said.
At the time of nationalization in 1970, the country used to produce about 70 million tonne coal and it had increased to 355.72 million tonne in 2003-04. It was also estimated that the demand of coal would increase to about 453.29 million tonne by the last year of tenth five year plan 2006-07 and steps were being taken to meet the requirement.
As on January, 2005, the country had an estimated total deposit of about 247.85 billion tonne coal. Of them 160 million tonnes were in Bihar, 72,204 million tonnes were in Jharkhand, Chhatisgarh had 39,975 million tonnes, Madhya Pradesh 19,232 million tonnes and Orissa had 16,926 million, the report added.
PM releases biography of a legend
The Prime Minister Dr Manmohan Singh Released Biography of Shri O P Jindal The Man who Talked to Machines: The Story of Om Prakash Jindal by Shri Anil Dharkar
PM remarked that Om Prakashji was an inspiring and enterprising person, whose life story is one of extraordinary achievements. His myriad accomplishments truly represent the triumph of the human spirit over the many adversities of life.
Om Prakashji belongs to that rare generation of pioneering Indian entrepreneurs whose roots lay deep in the soil of Mother India, but whose dreams soared into the skies. Men like him mastered modern technology and applied such knowledge in the service of the common man. That he could do so much with so little that was at his disposal when he took his first steps in business is a testimony to his immense managerial and technical skills. He not only 'spoke to machines' but he was able to achieve communion with them, thus making them serve the larger goals of our society and nation.
The story of Om Prakashji is a saga of effort, courage and achievement and dedication. Om Prakashji started life as a man of modest means. He did not even have what we now consider to be the initial advantage of an elite education. However, this farmer's son had in him the steel and resolve that are the hallmark of a true son of the soil.
His youthful passion to see the Made in England markings on the products he saw replaced by a Made in India label testify both to his patriotism and his sense of commitment. The nationalist in him could not come to accept that even ordinary pipes used in India had to be imported from England. He translated his dreams into action with the establishment of a plant first near Kolkata and then in his karambhoomi, Hissar. That maiden venture was a landmark. It became a stepping-stone to many other ventures. Today Jindal Iron, Jindal Strips, Jindal Steel and other companies spread over India and the world have become torchbearers of high standards and cutting edge quality in the manufacturing sector.
Danieli lines up growth plans
The Danieli group of Italy has chalked out long-term plans for India based on the electrical furnace making unit it took over from GEC Alsthom.
The Italian firm, which entered India in 1996 by picking up a 51 per cent stake in GA Danieli India Ltd, has completely acquired the company last month. Danielli has also got an approval to change the companys name to Danieli Engineering India Ltd.
Danieli has also infused 1.5 lakh euros to increase the companys share capital to Rs 5.2 crore. The turnover of the company has leaped from around Rs 20 crore in 2002-03 to Rs 36 crore in 2003-04 and further to Rs 76 crore last fiscal.
According to managing director P. Majumdar, the current order book was over Rs 163 crore. Of this, domestic orders account for Rs 120 crore and Rs 43 crore is from Bangladesh, Kuwait, Yemen, Zambia, Ghana and Iran.
By the end of this fiscal, we should gross over Rs 100 crore, Majumdar said. The company has grown from a small arc and induction furnace maker to offer a complete package to steel plants by using the Danieli technology.
Govt misleading people over Posco, charges JB
The leader of the Opposition and former chief minister, Mr JB Patnaik, today alleged that the state government was trying to mislead the people by giving inflated and exaggerated estimates about the Posco project.
Referring to the break-up figure of the total Rs 51,000 crore investment in the Posco project, the Opposition leader pointed out that steel & mines minister Mr Padmanabha Behera had claimed that an estimated Rs 3,622 crore would be invested by the south Korean company for setting up of a captive minor port. This figure appeared to be exaggerated as the project cost of Dhamra major port was a meagre Rs 1,500 crore. Similarly, the projected investment of Rs 4,500 crore on mines development by Posco seemed unrealistic and exaggerated and would not cross Rs 1000 crore, he said.
The real investment only in the steel plant will be within Rs 25,000 crore and not Rs 40,000 crore, as is being projected, said the former chief minister.
Countering the steel ministers claim that the Posco project would be set up with state-of-the-art technology, Mr Patnaik said hot rolled coil would be produced in the project, as per the minister, which was not the highest value added project. Cold rolled coils being produced by other companies were superior to hot rolled coils, he pointed out.
Ennore Foundries to raise 57 crores for expansion
The company makes iron and aluminium casting products such as cylinder block and heads that are used in the automobile industry. It has a captive consumer in Ashok Leyland, which holds a 21 per cent equity stake and accounts for over 60 per cent of the turnover.
The company's financial performance is linked to the fortunes of the automobile sector, Ashok Leyland in particular. Aided by the increased automobile production, Ennore Foundries' performance has improved in recent years. From a loss of Rs 16.6 crore in 2002-03, the company posted a net profit of Rs 13 crore for the year-ended March 2005.
Ennore Foundries has recently acquired a ductile casting unit from Ashok Leyland and is also modernising the existing facilities. To cater to the demand growth, the company plans to set up a new foundry unit in Chennai.
To part-finance these projects, the company is offering shares on a rights basis to raise Rs 57 crore.
Apart from Ashok Leyland, Ennore Foundries is an original equipment supplier to other auto majors such as Hyundai Motors, Maruti Udyog and Mahindra and Mahindra.
Damodar Valley Corp faces coal shortage
The Damodar Valley Corporation is facing a severe short supply of coal. The corporation's Durgapur generation facility is running only on a day's stock. The biggest generation station of 840 MW at Mejia has just seven days' stock.
Sources said production from its captive mines would alone support the proposed 1,000-MW second thermal power station at Durgapur and the existing Mejia thermal power station.
DVC EMTA Ltd, a 26: 74 joint venture between Damodar Valley Corporation and EMTA Ltd, has approached Eastern Coalfields Ltd for geological and excavation reports to commence captive mining on DVC's behalf in three blocks.
The three blocks, with a combined reserve of 150 million tonnes, were awarded to DVC, which has been facing a coal shortage, in April. DVC sources said production from the captive mines is expected to commence after two years. The Coal Ministry has already sought 24 months to prepare the geological and excavation reports, following which DVC will seek environmental clearance.
SJM flays BJP ministers on Posco
The Swadeshi Jagran Manch today criticised state BJP ministers for their silence over the controversial MoU, signed by the BJD-BJP government, with the South Korean firm Pohang Steel Company (Posco) for the establishment of a mega steel plant. I dont understand why the BJP ministers remained silent over the contentious deal, said Mr P Muralidhar Rao, national coordinator of Swadeshi Jagaran Manch while addressing a state-level seminar on Posco and Orissas interest, organized by the SJM here today.
We are neither opposed to the states industrial development nor the foreign investment per se. But what is the net benefit to the state and its people from the Posco project, asked Mr Rao demanding a comprehensive evaluation of employment and other aspects like environmental degradation.
Stating that both the POSCO and the state government are accountable to the people of the state, the Manch leader noted that the entire thing was done in a hush hush manner. This gave rise to suspicion that they were concealing facts. All details relating to the Posco project are be made public and debated in the state Assembly. If genuine doubts are not cleared, people have every right to agitate against the project, said Mr Rao.
Significantly, an unanimous resolution was adopted at the seminar opposing the MoU as detrimental to the state interest and it urged the BJD-BJP government to rethink. The resolution strongly opposed the clauses of MoU relating to iron ore export, captive mining lease, pricing of ore, captive port, grant of special economic zone status and supply of water to the steel plant project.
Production resumes in Kalinga open cast mine
Resting all apprehensions of doom, coal production and over burden removal in the Kalinga open cast mine has resumed from Thursday even as efforts are on to pump out water from the bed of the mine.
The mine was the worst affected in last weeks unprecedented rainfall and recorded 100 feet water inside the mine. Breaches occurred in the embankment erected around the mine as part of monsoon preparation measures. About 3000 tons of coal is being produced in the mine after the suspension of output for over a week due to flooding. However, there is still heavy water in the inner parts of the mine which will take some time to be removed, said a colliery official here. The mine is extremely crucial for meeting the shortfall of coal supply to the power sector in the country. The colliery official sources attributed the disaster behind the heavy water inflow into the mine to the water logging around the mine due to lack of discharge facilities. However, MCL authorities have ordered enquiry into the incident amid allegations of lapses by civil department and low quality construction works.
Global steel is weak & uncertain but on path of recovery
Amid all the uncertainty and sliding steel prices, there is still hope about the prospects of steel prices firming up in the third quarter of this calendar as Steel prices have started rising in international markets. Given the steel production cuts in the US, western Europe and Russia and talk of lower production in Japan and South Korea, WSD expects world hot-rolled band export prices to rally in the coming months. The fact that users probably have less inventories now will help matters. According to the latest report of the World Steel Dynamics WSD prices have firmed up in all major economies, the US, China and Western Europe.
The latest reports from the US indicate a marginal but not negligible increase in most steel product prices, mainly for HR coils. The US stock of steel was mostly liquidated and the process of rebuilding the same has started. There were production cuts and weak domestic demand for some time, which had also brought imports down. In the US, spot prices of hot-rolled coil are up $10-$20 per tonne over levels seen two weeks ago. Prices to steel-service centres, which bottomed out at $420-$440 per tonne free on board FOB are now hovering around $440-$460 per tonne. One indication of this has come from Nucor, the largest steel producer in the US which announced a $30-per-tonne hike for September deliveries.
A similar trend is also being witnessed in western Europe, where prices have gone up around $40-a-tonne in the past one month. With imports down and production cut, the EU steel mills are hoping for another hike in the fourth quarter.
In China, too, spot hot-rolled band prices have rallied in the past four weeks to $480 a tonne from $444 a tonne, though it is still below the high of $678 a tonne.
If export prices are an indication, European, Russian and Chinese mills have witnessed a recovery in prices as well.
Whether the Chinese mills can continue to pay much more on raw materials, produce steel at higher costs and sell the same at lower prices on sustained basis. These are highly questionable options. Chinese production growth rate has come to unsustainable levels, and there is a need for a rest. The Chinese government and industry seem to have appreciated this idea. Therefore, even if demand growth continues, production growth may fall short to keep the steel prices stable.
There are two more areas of the world to be considered to take a larger view of the global market. The Latin American countries are seeing fall in domestic demand and are therefore throwing more steel into the world market. Two, the CIS, with drop in their sales to China and their own weak domestic demand, the CIS mills, with their low costs of production, can bring prices down to any level, especially on the spot market. Although the CIS mills seem to be fetching good orders and are raising both production and prices in recent days, the future remains somewhat cloudy for them. The world of steel therefore lies between two extreme possibilities.
If one reads the demand side of the story, there is no doubt that global consumption demand for steel will rise further almost everywhere. If consumption growth rates improve and production growth somewhat stabilises, even if the latter is higher than the former, the surplus will be limited. World prices in such situations may not rise sharply, but remain stable at a lower level.
The problem, however, is if the Chinese turn out to be a big net exporter and there is pressure on them to utilise their capacities well even at the cost of the world market. This is a distinct possibility but, at this level of production, they will have to face infrastructure bottlenecks and pay much for raw materials they do not possess and have to import.
The upturn in prices is partly seasonal and partly due to inventory replenishment and the trend may continue further and reach another peak by the turn of the year. Alternatively, this rise could be absolutely temporary, and the bubble could burst in a month or two under the sheer pressure of the continued imbalance between demand and supply in global markets. The chances of any of these happening is just about equal.
Steel prices are more driven by supply conditions than demand, and the fear of huge supply and capacity overhang taking another toll on prices cannot be ruled out. Global steel production growth rates have fallen in recent months, as several steel majors have accepted production cuts to save global prices and themselves. If a strong Chinese domestic market takes the consumption growth rate above the production growth rates, then the world will have another occasion to cheer up. World prices will shoot up once again.
Rescuers search for 102 miners trapped by flood in southern China
Rescuers were using water pumps in an effort to reach 102 miners who were trapped underground in a coal mine flood Sunday in southern China, the official Xinhua news agency said. The accident occurred at 1:30 p.m. Sunday in a tunnel 420 metres underground at the privately owned Daxing Colliery in Wanghuai Town of Meizhou City in Guangdong province, Xinhua said, citing a local official. There were no immediate reports of deaths or injuries.
Shortly after the accident, President Hu Jintao and Prime Minister Wen Jiabao ordered the local government and other agencies to "take substantial steps and spare no efforts" to save the trapped miners, Xinhua reported. An investigation into the cause of the accident was underway and local government officials ordered coal mines in the city to suspend operations for a safety examination, Xinhua said.
China suffers more than 5,000 deaths a year in floods, fires and other disasters in coal mines despite repeated government promises to tighten enforcement of safety standards.
Mr Mittal likely to be elevated to House of Lords
Reports in the weekend press suggested Mr Mittal was being considered for elevation to the House of Lords along with Gulam Noon, an entrepreneur who specialises in ready-made meals. Quoting sources, a newspaper said that government wants more successful Asian businessmen in the Lords to act as a role models for disaffected youngsters from ethnic minorities.
A spokesman for the self-made billionaire dismissed suggestions that he has been approached for a peerage and may be amongst the last benefactors to be thanked through the honours system. But Downing Street would not deny reports that Mr Mittal, who recharged Labour's post-election bank balance, is on the shortlist to be honoured in the New Year.
The process normally involves approaches to those being elevated, to see if they would be amenable. But a spokeswoman for Mr Mittal insisted he had not been contacted.
Mr Mittal has been a regular Labour donor since 1997 also caused a controversy in 2002 when Tony Blair intervened while he was in talks to buy Romania's state steel firm. The Prime Minister wrote to his Romanian counterpart saying he was pleased to see a deal cut with "a British company".
The key question, however, is whether Mittal, being an Indian citizen, is eligible to be a peer. Though the report claimed that despite being an Indian citizen, Mittal would still be eligible to sit in the House of Lords as India is in the Commonwealth, however knowledgeable sources pointed out that it was not the case and one has to be a British citizen.
The ennobling of Mittal and Noon would follow that of Lord Sainsbury, Lord Swraj Paul, Lord Drayson, Lord Hamlyn and Lord Bhattacharrya.
Global commodity markets maintain momentum
Commodity markets have cast aside doubts about the health of the world economy with the boom in resource prices tipped by many to last well into next year.
Oil and copper hit records this week, while there has been support for other main commodities. Aluminium has recovered ground lost over the past eight weeks as have zinc and gold. Iron ore spot prices have jumped ahead of contract prices, suggesting that Australia's exporters might get another price increase in the next round of negotiations.
Until four weeks ago, there was a view that the resource boom was running out of steam.
The latest forecasts from the Australian Bureau of Agriculture and Resource Economics had prices for most major mineral commodities slipping later this year, falling more sharply in 2006.
This view was repeated in a survey of 11 commodity analysts published last week by Access Economics. China's breakneck economic growth was expected to slow in response to the Government's tightening of credit and the overbuilding of industrial capacity but China's statistical agency blew sceptics out of the water three weeks ago reporting that its GDP growth rate had accelerated to 9.5 per cent in the June quarter, up from 9.4 per cent in the previous two quarters. Some analysts believe the US's growth rate could rise to 5 per cent in the September quarter. India is achieving 6.5 per cent growth, rather than a historic average of 4.5 per cent. Latin American, Russia and eastern Europe also all had historically high growth rates.
For many bulk commodities, solid demand combined with tight supply conditions are expected to see above average prices in 2006," Rio Tinto's Mr Tulpule told analysts this week.
There has been a turnaround in the iron ore spot market in recent weeks. It had dropped from $US90 to $US60 a tonne over recent months. But China's steel mills, having been drawing on stocks but been forced back to the spot market, paying prices of around $US70. ABN AMRO commodity analyst Robert Clifford believes Rio and BHP Billiton could win another 10 per cent price increase for iron ore at the next contract negotiations.
S Koreas INI Steel H1 earnings almost triple
INI Steel Co, South Korea's second-largest steelmaker, has announced that its earnings nearly tripled in the first half from a year ago on strong exports. INI Steel said the first-half bottom line soared as exports jumped 56 per cent from a year ago to 4.09 million tons.
Net profit amounted to 774 billion won (US$760 million) in the January-June period, up 184 per cent from a year earlier. Sales climbed 3.4 per cent to 2.58 trillion won, but operating profits fell 22 per cent to 271.1 billion won due to increased costs and a fall in product prices
.
In the second quarter, sales dropped 2.4 per cent from a year ago to 1.29 trillion won, with operating profit dipping 34.9 per cent to 141.4 billion won. The company failed to make annual comparisons for the figures or disclose its second-quarter net profit.
The company, however, downgraded its full-year sales target to 5.32 trillion won from an earlier 5.73 trillion won, saying weak demand for steel products would continue till the third quarter.
Bosnian Omarska camp survivors fight for memorial
Thirteen years after the notorious Omarska prison camp was closed down, survivors are still fighting for a memorial on the grounds of the
Omarska Mine, in Prijedor region in northwestern Bosnia, now owned by Mittal Steel. Omarska Mine can produces 1.5 million tons of ore annually and 650 employees.
Since Mittal Steel started to renovate a number of the buildings on the site, the same buildings used for holding prisoners, the issue of a memorial to commemorate what went on there has become more pressing.
In the worst atrocities of the 1992-95 Bosnian war, over 3,000 Bosnian Muslims and Croats, including 37 women, were held in horrific conditions by Bosnian Serb nationalist forces in these mines between May and August 1992, according to figures form the International Criminal Tribunal for the former Yugoslavia (ICTY). Hundreds of prisoners were killed and tortured. Many of the bodies thrown into mass graves have not yet been recovered.
In the summer of 1992, images of emaciated prisoners, forced to run through the canteen to get their meals, made by a British camera crew, shocked the world and showed the horrors of the campaign of so-called ethnic cleansing mounted by the Bosnian Serbs led by Radovan Karadzic.
After the war, Prijedor, which had always been a mixed village with an equal percentage of Bosnian Serbs and Muslims, has become a Bosnian Serb dominated town. There are still Bosnian Serbs, including municipal politicians in Prijedor, who deny the existence of the camps. They are fiercely opposed to a memorial.
Serbian Muslims are hoping for an interactive memorial with films and photographs of what happened in the camp in the "White House" building, As it may not be possible to leave the whole complex intact being a very important site for the local economy.
Building memorials, however small is a problem for all post-war societies especially in countries where a war pitted different ethnic communities against each other. This November there will be a special conference with Bosnian Serbs, Muslims and Croats to decide on a memorial.
After survivors sent a letter in November last year to Mittal Steel, which does not want to offend any one community, named in April a special mediator, Donald Reeves, to try and resolve the issue. "The issue at hand is very sensitive," Mittal Steel said last April. Mittal Steel has agreed not to touch the notorious "White House" on the compound where prisoners were taken to be tortured.
Ukraine's Poltava to raise $200 millions by LSE Listing
Ukrainian mining giant Poltava GOK, the world's largest holder of iron ore reserves, is planning to list on the London Stock Exchange to raise $200m to fund the Ukrainian company's expansion into milling and steel-making. It would be the first Ukrainian listing on London's main market.
Ferrexpo a Swiss registered firm buys and sells the Poltava mine's total output. Both Ferroexpo and Poltava are controlled by Ukraine's Finance and Credit Group, headed by Ukrainian parliamentarian Konstantin Zhevago. Whether Ferrexpo or Poltava should be raising the money would be decided later.
Poltava has a market capitalisation of $800m on the Ukrainian stock exchange, and would have to offer at least 25% of its shares in London to qualify for a listing, but 25% stake could be worth far more than $200m when assessed by London markets.
Management intends to increase profits from the Poltava mine by 1100% in 2005, partly on a 75% rise in ore prices, but primarily by ending the practice of "transfer pricing" whereby Poltava sold ore at near cost to Ferrexpo.
Raging fire destroys Lawrence County Mg plant
Firefighters responded to a raging fire that engulfed one building and spread to others at a magnesium processing plant in Lawrence County. No one was injured in the fire, which broke out shortly after 4 p.m. at the Remacor industrial complex in Taylor, near New Castle.
Smoke from the blaze could be seen from about 20 miles away and prompted Lawrence County officials to advise residents of the nearby village of West Pittsburg to stay indoors. Officials aren't letting anybody into the town, not even local residents who want to return home
Taylor Fire Chief David Allegro said that several barrels of magnesium exploded inside the front manufacturing building of the plant, and that the fire spread to some smaller, metal buildings in the back of the complex. The cause of the fire was not immediately known, but fire officials said they did not believe anyone had been working in the area where it began.
Those in the area reported hearing explosions around the time the fire started, but Allegro said the explosions were from the fire spreading from one barrel of magnesium to another. "It's a chain-reaction and there's nothing you can do," he said.
Firefighters were unable to douse the flames because magnesium is combustible when it comes into contact with water, according to Allegro. He said the front building, which was about the size of a football field, is "a total loss."
Firefighters worked quickly with plant employees, who were using forklifts to move out any remaining magnesium stored outside in drums before they caught fire. Authorities did not know how much magnesium was stored on the site. The fire chief said magnesium is not considered a hazardous material.
The Remacor plant grinds magnesium and repackages it for use in steel-making. That metal reacts when it is hit with water and gives off a blinding white light.
Palladon announces contract to sell one million tons of iron ore
Palladon Ventures Ltd. announced that it has entered into a contract to sell one million metric tons of iron ore over the twelve month period commencing September, 2005 to a Chinese purchaser.
Ore will be mined, crushed and magnetically treated from the
Comstock/Mountain Lion Iron Project in Utah, transported by rail over the Union Pacific railroad running adjacent to the mine, and loaded on the customer's ships at the port in Richmond, California for shipment to Chinese ports.
Specific pricing terms of the contract have not been disclosed at this time, pending additional negotiations on other supply contracts being discussed.
Based on mining and treatment costs and the quoted costs for shipping and handling, Palladon expects to generate substantial cash flow from the contract.
DTI rules out Philippines Govt guarantee to GSII loans
Trade and Industry Secretary Peter B. Favila has stressed that DTI will not guarantee nor endorse for a guarantee the loan being secured by the Indian-owned Global Steelworks International Inc. (GSII) or any other private sector seeking out a loan.
Favila made this clear on a query over the GSIIs, formerly National Steel Corp., pending request with the Philippine Export-Import Credit Agency (Philexim), formerly the Trade and Investment Development Corp. for a sovereign guarantee of a $20-million loan GSII is securing from international banks.
Given the countrys fiscal position, the government has adopted a policy not to give guarantees. A loan guarantor takes the risk of shouldering the loan once the enterprise or the person he guaranteed for is in default in his payments. This principle applies to the government as well.
Former finance secretary Cesar V. Purisima, who was then chair of Philexim, had strongly opposed the granting of the guarantee to GSII.Purisima felt that GSII should first establish a track record as an investor in the country before it should be extended a loan guarantee to partly fund its operations for its newlyacquired steel plant. "Its unfair because GSII has not yet proven itself as an investor," Purisima said earlier.
GSII has yet to start its full commercial operation of the Iligan-based steel plant. A source further noted that instead of pouring in money to fully rehabilitate and put into commercial operation the steel plant, GSII is trying to source its funding from the local market. GSII has also approached other local banks for possible financing.
It could be recalled that Global Infrastructure Holdings Ltd. of the Ispat Group of India bagged the NSC rehabilitation and operation project with its P13.225 billion bid offer to be paid over an 8-year period. The firm has committed to start full commercial in June or July this year since it won the bidding more than a year ago.
Minnesota Iron Mining Industry Remains Optimistic
The combined 78th Annual Minnesota section of SME Meeting and 66th Annual University of Minnesota Mining Symposium was held April 19 and 20, 2005, in Duluth, MN. More than 300 mining professionals, including engineers, executives, mining managers and suppliers, from throughout the United States and eastern Canada attended the meeting. This year's theme was "Global Demand: A Window of Opportunity." The meeting included a keynote address, technical presentations and a trade show.
The atmosphere at this year's meeting was upbeat. The iron ore mining industry in Minnesota is experiencing one of its biggest turnarounds in history. Because of greater demand, iron ore prices increased 20 percent during 2004 and 71.5 percent so far in 2005.
Minnesota's six taconite plants are projected to produce about 41.2 Mt (40.6 million longs tons) of iron ore pellets in 2005, up from 32.1 Mt (31.6 million long tons) just a few years ago. Plans are now in the works to increase the state's iron ore production to 42.6 Mt (42 million long tons). Under proposed expansion plans, Minnesota's mines could be making 1.72 Mt (1.7 million long tons) more of pellets by 2007.
China's power producer acquires interest of Australian coal project
China's top power producer China Huaneng Group (CHNG) has acquired part of interest of a large Australian Monto Coal Joint Venture coal project by a sale agreement with Australia's Macarthur Coal Limited (Macarthur Coal) in Brisbane.
Under the agreement, CHNG will acquire a 25.5-percent interest in the Monto Coal Project for a total consideration of 29.423 million Australian dollars (22 million US dollars). The Monto Coal Project is located in the southern part of the Bowen Basin with total coal resources estimated at over 500 million tons.
CHNG is planning to ship the coal to its newly built large coastal thermal power plants in China to supplement the fuel supply. CHNG has an installed capacity of 40,990 MW. By the end of the first half of 2005, CHNG accounted for 9 percent of the total installed capacity and 10.8 percent of total power generation volume in China.
Macarthur Coal is a coal production and export company that went public in Australia in July 2001, with a current market capitalization in excess of 1.2 billion dollars (900 billion US dollars).
Blue Blade Steel to supply pre tempered steel
Pre-treated heat-tempered strip steel available from Blue Blade Steel enables manufacturers to form higher quality parts to meet demanding specifications at a time and labor savings of up to 10-20%.
High carbon alloy strip steel is custom-finished in heat tempering process that delivers distortion-free material required to hold critical tight tolerances.
Use of pre-treated strip steel eliminates need for off-site secondary heat-treating process and reduces flatness issues as well as defects and sorting of out-of-tolerance parts. By eliminating distortion and flatness issues, manufacturers are able to eliminate many of the costly and brand-tarnishing warranty problems that are frequently the result of component failure and product recalls.
Replacing the costly, off-site secondary heat-treating process with Blue Blade Steel hardened strip steel enables manufacturers to realize important precision tolerances, supply chain efficiencies and cost reduction savings. The savings also result from the elimination of defects and sorting of out-of-tolerance parts along with the elimination of excess scrap waste material, freight shipments to and from the off-site heat treating processor and the purchase and warehousing of back-up steel material.
Steel mergers in US increases Burn Harbor business
US Steel industry merger this year helped drive up coal shipments at Port of Indiana, where total cargo tonnage rose 37 percent for the first half of 2005.
International giant Mittal Steel Co. temporarily used the port as a coal distribution center after merging Ispat Inland and ISG steel mills with Mittal.
Steve Mosher Burns Harbor port director said that "The coal came here until they figured out where to send it and we're trying to do is to let Mittal know if they're looking for a central distribution point, consider us "
It's an arrangement Mosher would like to see cast in concrete but no permanent agreement has been reached.
Strong Demand Keeps NSW Coal Industry Healthy
Strong global demand and production shortages in important producing countries have made a healthy New South Wales coal mining industry, according to the NSW Department of Primary Industries (DPI).
DPI reported that the value of NSW coal exports in 2004-2005 is to be about A$5.3 billion, a 43-percent increase from 2003-2004's value of A$3.7 billion as favorable market conditions helped NSW coal exports to increase by 4.8 percent last year to 85.4 Mt.
The increase in prices and demand for thermal and metallurgical coal, stimulated investment in NSW coal projects. Several new coal projects and expansions are in the approvals process. During 2004, mining leases were granted for the Tasman Mine and an expansion at the Bulga Mine. And in early 2005, leases were granted for an expansion at the Mt. Owen Mine and to the new Werris Creek Mine.
The DPI said the improvement in the global thermal coal market is due to increased demand in Asia, particularly China, and supply disruptions from key suppliers. Spot thermal prices reached more than US$60/t in July 2004, compared with US$23/t a year earlier. They are currently about US$50/t.
The DPI attributed higher metallurgical coal prices to tight supplies and increased demand, again mostly from China.
Schnitzer Steel names VP for Asian sales
Schnitzer Steel Industries Inc. has hired Alter Goldstein, an international scrap metals trader, as vice president of export sales. His responsibilities will include the Asian export trading business for Portland-based Schnitzer's current metals recycling operations.
Goldstein has more than 30 years of experience working for trading firms, including Philipp Brothers, Amalgamet, Clarendon Ltd. and Glencore Ltd.
Schnitzer Steel Industries is one of the nation's largest recyclers of ferrous metals, a leading self-service used auto parts retailer with 30 locations in the United States and Canada, and manufacturer of finished steel products.
Brazilian Caemi likely to post US$184mn Q2 profit
Brazilian mining firm Caemi is expected to report second quarter net profits of around 424mn reais (US$184mn), which would represent a 147% gain on the same period last year, according to a set of projections when it releases Q2 results on August 9th.
Caemi is a subsidiary of iron-ore titan CVRD and higher international iron ore prices and increased volumes have driven Caemi's Ebitda at 799mn reais, up 111% from the second quarter of 2004.
Australian long product prices firming up
As International longs prices appear to have bottomed and the improvement in scrap market is evident, prices of long products may begin to move upward again.
Sims (SMS) has reported that scrap prices indicate that scrap is moving back to the US$230$240/t level and do not anticipate a significant decline from here, nor can they see justification for a sharp rise. Given that, they believe that international longs price should drift up from current levels.
There is plenty of steel available to import at prices 20% below steelmakers OneSteel (OST) and Smorgons (SSX) prices. Onesteels production interruptions in late 2004 and early 2005 encouraged independent distributors to import steel, and OneSteel imported to meet local demand as well.
Cuban steel to double production after modernization
An ongoing technological modernization process will allow the Cuban Metal Industry to produce 500,000 tons of steel by the year 2007 and also allow the sector to diversify in value-added products. With the investment valued at more than 20 million dollars this year formerly imported items could now be locally produced.
The Cuban Metal Industry is expected to double production this year, since its yield grew by 50% in the first half of 2005. The growth had a direct impact on exports to Central America, the Caribbean and Europe.
Stelco union says restructuring plan is 'doomed to fail'
Stelco Inc.'s main union has filed court documents saying the company's proposed restructuring plan is "doomed to fail," claiming it will leave the steelmaker with too much debt and not enough money to compete successfully. Stelco chief executive Courtney Pratt, on the other hand, says the steelmaker is working on the assumption that the restructuring plan outline that was circulated in mid-July will be the basis of the proposal to be submitted to court as a final plan by Sept. 9. However, he admitted last week, that the company's restructuring plan has not yet been endorsed by a single stakeholder.
Stelco's bondholders, who are expected to control a large portion of the creditor vote, are still putting up a fight to get more. Bondholders and other senior creditors will be paid all of the $666 million they are owed, but instead of cash they will receive notes and new shares.
The company says its plan - based on an enterprise value of $885 million - keeps Stelco's liquidity and leverage in line with industry peers, envisioning $650 million of net liquidity and "a significant reduction" in total debt.
In court documents filed late last week, the United Steelworkers of America said Stelco's plan leaves it with "too much debt and insufficient liquidity to compete successfully." It claimed Stelco would become the third most leveraged steel producer in North America, with dramatically more debt per ton of steel shipped than its competitors.
Steelworkers at the company's Lake Erie facility, and the subsidiaries, are backing an offer from Tricap Management Ltd. which makes a $500 million down payment into Stelco's $1.3-billion pension solvency deficit. The company's plan makes a $200 million down payment.
Fear of asbestos-like fibers hampers use of taconite tailings
For several decades, taconite tailings, the leftovers from a mining process that separates iron ore from rock, have been used in highways and other construction projects on the Iron Range. But concerns about the presence of asbestos-like fibers in taconite dust are deeply ingrained on the Range, and scientists disagree whether it has been proven the tailings are safe.
Some former miners say highway and construction workers are already exposed to harmful dust when the tailings are used in Range projects. And they fear that particles could be released into the air when blacktop is worn down or roads are rebuilt, putting the public at risk.
Three decades ago, on what is considered the east Range, scientists found asbestos-like fibers in tailings that had been dumped into Lake Superior. Subsequent studies showed those fibers caused cancer in animals. Consequently, tailings on the east Range can't be moved away from the mines. However, west Range mines face no such restrictions.
The university study concluded that west Range tailings are safe. But two veteran scientists with the federal Environmental Protection Agency said a more compre- hensive and long-term review must be conducted before it can be determined whether west Range waste rock is harmless. The study, the most comprehensive review of taconite tailings from the west Range, was funded by the state Transportation Department. Asbestos is a fibrous mineral known to be toxic. NRRI researchers found no signs of asbestos, specifically, though they did detect small amounts of other mineral fibers of a similar shape. Asbestos is known to cause lung scarring or lung disease, such as mesothelioma, which has been found on the Range.
Jonathan Holmes, the manager of a Virginia mine run by Mittal Steel, formerly Ispat Inland, said taconite tailings sell for between85 cents and $1 per ton. Holmes said Mittal believes the tailings are free of asbestos because unlike parts of the east Range, where pockets of asbestos minerals have been found "we don't have the mineralogy for it here."
John Armstrong, a spokesman for U.S. Steel, which runs Keewatin Taconite and Minntac Mine in Mountain Iron, said transporting taconite tailings to other parts of the Midwest is not yet feasible.
Neither U.S. Steel nor Mittal Steel is currently studying the makeup of taconite tailings and have immediate plans to ship tailings off the Range. For now, their best customers are nearby.
Already, 2 million tons of tailings have been used on the interchange project along Highways 53 and 169 in Virginia. It's thought to be the largest such use of taconite tailings on a single project in Minnesota.
Cliffs to pump $23 million into United Taconite
A total of about $52 million in plant investments to two Northeastern Minnesota taconite plants Tuesday were approved by the board of directors of Cleveland-Cliffs Inc.
Approval was given to go ahead with the planned restart of an idled pellet furnace at United Taconite in Eveleth. The project will cost an estimated $23 million to fire up the furnace in the fourth quarter of 2004, which will have a production capacity of 1 million tons of iron pellets.
Approval by Cliffs' board of directors also was given to expansion at the Northshore Mining plant at Silver Bay announced last week. An idled furnace at Northshore will be restarted by mid-2005, with an added annual capacity of 800,000 tons. Total cost for the expansion is estimated at $29 million.
Cliffs owns Northshore Mining, which has its taconite mine portion located in Babbitt, and is part-owner and operator of two other Minnesota taconite plants, Hibbing Taconite and United Taconite. Cliffs operates two taconite plants in Upper Michigan, Tilden and Empire, and the Wabush mine in eastern Canada. Laiwu Steel of China is 30 percent owner in United Taconite, and joined Cliffs last November in partnering to reopen the shuttered EVTAC mine.
Slowing In Iron Ore And Coal Demand in June
Australian iron ore exports were 20.4Mt in June, just below the March record of 20.8Mt. Year to date, exports are up 19% on a year-on-year basis.
Press reports have suggested Chinese steel mills have been deferring shipments, however UBS reports BHP Billiton (BHP) and Rio Tinto (RIO) have said they are seeing no signs of demand slowing.
Coking coal exports were 7.1Mt in June, which was down 7% month-on-month. UBS does not expect much variation on exports over the next 12 months given that the major ports have capacity restrictions and are now operating under allocation systems. BHP Billiton said at a UBS June 2005 conference that demand was still extremely strong for coking coal and would be driven in the future by India.
Thermal coal exports were 8.1Mt in June, down 8% month-on-month. This is not necessarily a sign of market weakness, says UBS, as the market has seen producers preferentially produce semi-soft coals rather than thermal coals where possible to benefit from higher margins. This has actually tightened the thermal market and could continue to support the price above US$50/t.
Despite the UBS forecast for a 20% price decline for iron ore and a US$15/t decline for coking coal, the analysts now see upside risk due to continued evidence of tight markets.
Thai Ministry to promote raw material, capital goods production
To reduce Thailand's reliance on imports and to cut the country's trade deficit over the long-term, the Industry Ministry is preparing a four-year production development plan, starting this year, to promote production of raw materials, spare parts, and capital goods. This would mean substituting goods now imported by some 50 per cent and foreign exchange savings of 200-300 billion baht during the four-year programme.
Industrial production is divided into four categories, imports of raw materials and spare parts now accounting for nearly half (45.4 per cent) the total, capital goods (28.4 per cent), energy (14 per cent), and consumer goods (7.2 per cent). The Industry Ministry will initially support production of the first two categories as they are a large portion of goods imported into the country, he added.
Steel is part of the plan, the minister said. Sahaviriya Steel Industries Public Co., Ltd. has promotional privileges for a steel smelting plant which could help reduce imports of steel products by 200 billion baht.
Wesfarmers 2nd-Half Net Income May Rise 30% on Coal Earnings
Wesfarmers Ltd., whose businesses range from mining to insurance, will probably say second-half profit rose 30 percent. Earnings from coal likely surged as rising demand from China pushed prices to a record.
Wesfarmers has accelerated development of the Curragh North coal mine in Queensland state, located close to its existing Curragh mine, to take advantage of record prices. Prices of coking coal, used in steelmaking, more than doubled to $125 a ton from April 1 this year. Prices of thermal coal, used by power stations, rose about 18 percent to about $53 a ton.
Wesfarmers last month said fourth-quarter coking coal production at Curragh rose 4.4 percent from a year earlier to 1.3 million metric tons. Curragh steaming coal output surged 44 percent to 797,000 tons. Curragh coal volumes are forecast to rise to 7 million metric tons in 2006, from 4.7 million tons in 2005, Wesfarmers said in May.
Phulbari coal reserve now 572m tonnes
Asia Energy PLC disclosed t yesterday that coal resource of the Phulbari mines in Bangladesh increased to 572 million tonnes from an earlier estimate of 522 million tonnes, with 532 million tonnes now in the Measured and Indicated categories. The basin remained open to further exploration.
Asia Energy has drilled more than 100 exploration holes in the Phulbari area and, pending final authorisation by the Government of Bangladesh, was planning to start mining operations there in 2007.
Asia Energy PLC, a London-based company, is 100 per cent owner of Asia Energy Corporation (Bangladesh) Pty Ltd whose primary activity is the development of an open pit coal mine at Phulbari in Northwest Bangladesh. At full production, the mine is projected to produce 15 million tonnes of high quality coal per year.
