September, 11 2005
TATA assuage Bangladesh steel mills concern
Tata Group has conveyed to Bangladesh's Board of Investment that its proposed steel plant will not clash with the interests of local steel mills. Tata said it would, instead, complement the product of local millers by ensuring the supply of raw materials. The assurance came after local mills expressed concern over Tata's planned investment in Bangladesh.
Bangladeshi steel and re-rolling mill owners, who produce MS rod for construction mainly from scrapped iron, had earlier aired concern that Tata's steel venture would put them out of business.
Jharkhands interest in Mittal Steel melting fast
L N Mittal and Mittal Steels bonhomie with the Jharkhand Government is on the wane. With Tata Steel promising to invest around Rs 53,000 crore in Jharkhand alone, the Arjun Munda Government is not very keen anymore to play the gracious host to the Mittals.
The government has already started to object on some of the conditions that the Mittals have laid down for investing in the state, the primary condition being that the Mittals would export 50 percent of the iron ore extracted from the state to their mills abroad. Jharkhand Chief Minister Arjun Munda was quite categorical a couple of days back in Ranchi when he said,We will not allow any company to take the iron ore abroad.
A couple of months back, Tata Steel managing director B Muthuraman had criticized the Mittals style of functioning.
In Jamshedpur and Ranchi, the feeling is that the Tatas were ready to prevent the entry of the Mittals into Jharkhand at any cost. The price has been Rs 53,000 crore.
Auto components cash in on automobile boom
The auto components manufacturing sector is riding piggyback on the growth in the automobile industry. And future trends look positive for the automobile sector.
"Even if India can acquire 4 per cent of the market for auto components, it would translate into a market of $20-25 billion," Mr Deep Kapuria, President, Automotive Component Manufacturers' Association, says. "The sector could emerge as the third largest earner of foreign exchange among all the manufacturing sectors."
This is one of the main reasons why there is so much domestic investment in the auto components sector. According to Mr Kapuria, annual investments to the tune of $1-1.5 billion would have to be made every year for the next 7-10 years. The industry will have to adopt a futuristic approach i.e. putting capacity in place in advance to cash in on opportunities coming its way.
Last year, the global automobile sector experienced annual growth of 4.9 per cent of which the Asian region accounted for 9.5 per cent.
Investments are pouring in the Indian auto components sector. International auto components major, Mico, plans to invest Rs 1,000 crore. Domestic majors are not far behind. Rico Auto, Sona Koyo, Geotez, Caparo Engineering, Bharat Forge, Automax, Omax Auto and Kalyani Forge have drawn up extensive expansion plans.
IFC keen to invest in coal mine sector in Bangladesh
International Finance Corporation IFC is willing to invest in Bangladeshs coal mine sector, particularly in Barapukuria coal field in Dinajpur and are likely to come up with a specific plan for the investment after conducting a feasibility study on the proposed project and negotiating compensation packages with local NGOs for displaced persons.
A Chinese company has already worked at the Barapukuria coal filed with an underground mining strategy. But, IFC is interested to work further with an open earth coal mining plan which may harm the environment in the area.
The Bangladesh Minister has asked IFC to prepare a model so that the environment can be protected and the affected people of the locality are not deprived of the actual compensation.
Production growth slowdown in steel enterprises in China
Chinas state owned key metallurgical enterprises maintained significant upward trend in terms of production value, sales revenue and profit during January to July of 2005. The growth rates, however, slowed down in comparison with those during the first half of this year.
According to the statistics from State-owned Assets Supervision and Administration Commission of the State Council, 38 key metallurgical enterprises achieved production value of RMB519.94bln, up 33.6% from the previous corresponding period, down 0.8% from that during the first half of this year in growth rate; sales revenue for headline business of RMB559.86bln, up 28.3% and down 1.3%; profit of RMB49.36bln, up 24.6% and down 2.5%.
Meanwhile, oversupply and pressure from stock have eased gradually with inventory value of RMB50.66bln at the end of July, 28% higher than that in last year and down 7.6% from the previous month.
Battle for Erdemir
Turkish Finance Minister Kemal Unaktan said on Thursday Turkey will not discriminate against foreign investors in the sale of steelmaker Erdemir though in his heart he wanted local buyers to win the tender.
Turkey must conduct a transparent tender for Erdemir, Unaktan told in an interview. "We must establish Turkey's credibility in the international arena more every day. If we discriminate between foreign and local investors, then we should cut our hopes of foreign investment," he said. "The company or consortium offering the most will win," he said.
Firms intending to submit bids for the privatization of steelmaker Erdemir must set up consortiums by Sept. 23 in anticipation of a Sept. 26 bidding deadline. Potential bidders have finished paying field visits to Erdemir premises and completed due diligence
Once bids are submitted, final negotiations may take place in the first week of October. Bids must be based on cash numbers in an effort to avoid disputes. If the potential buyer opts to pay in installments, half of the contract price will have to be paid in cash and the rest in two years plus a 7 percent interest charge.
Firms that passed the pre qualification stage in Erdemir privatization are Arcelor, Mittal Steel, Corus, POSCO, Ukranian Azovstal-Metinvest, Russian LebGoK-Oskol, NLMK, Severstal and Turkish Zorlu Holding A., Erei Joint Venture, KoHolding A. Nurol-Limak-altn-Alkol Pazarlama & OYAK
At present, Turkey needs 10 million tons of flat steel a year. Erdemir is producing 3 million tons, and the country buys twice as much as this from abroad and the buyer will have to stick to its $1.5 billion capacity expansion plan for Erdemir
Erdemir has a market capitalization of approximately $2.7 billion, though any buyer of the state's shares is expected to pay a premium to gain control of the company. Erdemir, in which a 49.29 percent stake is slated for privatization, reported a consolidated net profit of $224 million for the first half of 2005. Its total steel output was 3.835 million tons, of which 2.949 million were sold. Erdemir ranks number nine in Europe and 11th worldwide and employs 7,500 workers.
Nucor plans to expand galvanizing facility
Nucor Steel Decatur LLC plans a galvanizing facility at a cost of $150 to $200 million in a 100 acres plot adjacent to its existing plant. Nucor Steel Decatur General Manager Mr Rex Query said construction could begin early in 2006, depending on permitting and regulatory requirements
In May 2004, Nucor purchased a pickle line, four-stand tandem cold mill, temper mill, annealing furnaces and land from a Worthington Steel plant in Decatur for $82 million. The cold mill plant is a finishing operation that prepares steel coils for end-use customers such as auto manufacturers. Nucor now has to ship the products outside Decatur for galvanizing.
The expansion will give the Decatur plant the ability to supply galvanized steel to the construction, automotive and appliance industries, which presently makes hot rolled, pickled and cold rolled sheet metal. The galvanizing line could support also Nucor's recently acquired Nucon, a residential and commercial construction company in Texas specializing in steel-frame and steel-stud buildings.
Nucor, which has operations in 16 states, once made nuclear testing equipment, followed by the manufacture of steel joists. Material shortages led the company to build a mini mill in the 1960s, based on scrap instead of the iron ore route. It was the nation's first mini-mill and the company is the nation's largest recycler.
Mittal Steel secures 950 million dollar iron ore deal in Liberia
Mittal Steel has secured a 950 million US dollar deal with the Liberian government to mine iron ore in Nimba County in the northern part of the West African country. The 25 year deal, was secured on Friday when the parliament ratified at a special session in the capital Monrovia, the nation's first major direct foreign investment in 15 years,
The ratification of the agreement has given Mittal Steel the right to redevelop the former mining concession of the Liberian American Mining Company LAMCO, which folded up during the 1980s. In part, the agreement entails the rehabilitation of the seaport of Buchanan in the south of the country and the rehabilitation of a 400 km railroad link between the mine and the seaport. Operations are expected to begin immediately according to the company, which has 70 percent of the shares in the project while the remaining 30 percent would go to the Liberian government
Liberian Deputy Minister of Lands, Mines and Energy Mr Mulbah Willie said "It is a historic day for this nation because Liberia had, for the last 15 years, been blocked off from the international community," he said, adding that "this agreement is a boost for the country." Mr Willie said "anyone hearing that the world's largest steel producer is investing in Liberia would feel least hesitant to come and invest in the country."
Liberia has about 4 billion tons of iron ore deposit and that the mining sector accounted for 30 percent of the country's GDP prior to the 14 year civil war, which devastated the country.
Another coal mine flooding leaves 13 missing in SW China
A township coal mine in south west China's Guizhou Province was flooded Saturday afternoon, leaving 13 miners missing. Officials of local governments and rescue teams have rushed to the site after the accident.
The accident took place in the Dahao Coal Mine, in the Fengcheng Township of Tianzhu County at about 1:40 p.m., when 39 miners were working underground. Twenty-six miners have managed to escape, but the fate of the 13 trapped is still unknown.
The Dahao mine, with an annual production capacity of over 30,000 tons of coal, is a licensed mine.
Abu Dhabi to build Dh 2-billion Steel complex
Abu Dhabi Saturday inked a Memorandum of Good Will with Italian Danielli company on the construction of an over Dh 2-billion steel manufacturing complex, the largest of its kind in the UAE. The final agreement will be concluded shortly. Atkins of Britain will provide the technical consultancy services for the project
The complex will house the steel factory presently being built by the General Holding Company GHC, a state company, with the addition of two new steel rolling lines and an integrated steel mill comprising two units for direct reduction and smelting.
With a production capacity of around two million tonnes a year, the complex will be able to cater to part of market demand of 4 million tonnes per year.
Evraz Group statement regarding Nikopol Ferroalloy Plant
Evraz Group S.A., one of the leading vertically integrated steel production and mining businesses with operations mainly in Russia, would like to re-confirm its previously disclosed position and clarify the issue regarding Nikopol Ferroalloy Plant.
Any action including investigation of an opportunity to acquire a stake in NFP in the Ukraine is being made by a group of investors that includes Mr. Abramov, Evraz Group S.A.s Chairman and CEO, in their personal capacities only, and not by Evraz Group SA.
A tribute to metal recycler Fred Isaacs
Mr Fred Isaacs, who developed his family's 19th century scrap iron business into one of the biggest 21st century metal recycler in US died last week at an age of 83.
Mr Fred Isaacs' grandfather, a Russian immigrant to Minneapolis, started hauling scrap by horse and wagon in 1885. Fred joined his father, Harry, in the business, American Iron & Supply Co., in the 1930s when he was 15, and started working there full time after high school.
Isaacs may be best known for wanting to put a five-story Kondirator metal shredder along the Mississippi River, a proposal that convulsed the city for a decade as politicians and residents of the area expressed concerns about possible noise and toxic dust from the proposed Kondirator. As the Kondirator controversy dragged on through the 1990s, American Iron sued Minneapolis, seeking compensation for profits lost. The suit was settled in 2000 when the City Council agreed to pay damages of $8.75 million.
Fred Isaacs' son John had become the fourth-generation president of American Iron, but family disagreements over the running of the business became a court fight in 2003 that was settled in Fred's favor.
In addition to his wife, Rhea, and his son John, survivors include another son, Tom; daughters Mindy Isaacs and Nicole Wheeler; stepchildren David Crane and Jillian Crane; eight grandchildren, and a sister, Roselie Rosen.
Chinese economy to grow 9.2% this year says ADB
China's economy will grow 9.2 per cent this year, the Asian Development Bank predicted yesterday. It had earlier put the predicted growth rate at 8.5 per cent.
The country's economy showed little signs of a slowdown in the first half, propelled by surging exports, strong investment and accelerating consumption, the bank's senior economist Mr Zhuang Jian said. The growth will continue in the second half thanks to rising incomes and consumption, he said.
However, Mr Zhuang said the economy faces some problems, including constrained energy supplies, a weak banking system, and over-capacity of some industries.
China has become the world's second largest oil consumer and one of the largest oil importers. The country may face increasing energy bottlenecks in the future unless pricing becomes more responsive to market demand, and energy conservation and efficiency are encouraged. State-owned commercial banks need to improve services and strengthen capital structures and management in face of foreign competition. He added that overcapacity in some industries has resulted from heavy investment.
"If the problem is not solved, deflationary pressure could develop and weaken profitability," he said.
However, the economy is expected to grow at less than 9 per cent next year, according to the bank's Asian Development Outlook 2005 Update.
China to spend $240 billion on railways by 2015
Mr Lu Dongfu, Vice minister of Railways has announced plans to invest $241bn in upgrading Chinas passenger rail system by 2015. It plans to extend the countrys railway system from the existing 74,000km to 100,000km by 2020. Nine new passenger express rail lines were among the investment projects that aim to get passenger trains running at speeds up to 300 kph.
In July, China opened the doors for foreign and private capital to enter its railway industry to help fund its much-awaited network expansion. To raise capital, Zhang said his ministry was also working on reorganizing some state-owned railway companies to list them on the stock market.
The country is largely dependent on railways for passenger and coal transport but the system has not been able to meet the rising demand brought about by rapid economic growth.
Sangan iron ore mine among richest deposits in Middle East
Accounting for 35 percent of Irans iron ore deposits, Sangan iron ore mine in Khaf is one of the richest mines in the Middle East region. The discovered iron ore deposit in the mine is estimated to be about 1,200 billion tons, some 500,000 tons of which is annually exploited as per Iranian Government officials.
The Ministry of Industries and Mines intends to establish an iron ore agglomerate and concentrates mill in the region in cooperation with an Italian company. In its first phase, the plant is slated to produce about 2.6 million tonnes of steel.
