September, 12 2005
Mittal Steel Jharkhand back on road
Mittal Steels plan to set up a plant in Jharkhand, which had hit a roadblock, as the state unwilling to accept their demand for exporting 30% of the iron ore, is back on the road. TATA Steels signing of MoU last week for setting up steel plant in Jharkhand, without iron ore export clause, seems to have made Mittal Steel change their strategy
Mr Sudhir Maheshwari, corporate treasurer of Mittal Steel has informed press that We have decided to withdraw the ore export clause to respect local sentiments and national aspiration of protecting ore for local companies. The local government has appointed legal consultants and we hope to finalize the proposal soon
7 Cos short listed for supply of API plates for Dahej Uran pipeline
Belgian firm Tractebel Engineering, consultant to GAIL for setting up Rs1416 crores Dahej Uran pipeline, requiring more than 100,000MT of steel, has short listed seven companies for supply of API grade plates. The selected companies Dillinger, ThyssenKrup, Mannesman Salzgitter, Ilva, Azovsthal, Voist Alpine and POSCO are worlds top quality steel plate manufacturer.
API 5L X70, the grade of steel required for fabricating pipes to lay the pipeline, can withstand high pressures under extreme conditions and very few mills in the world manufacturing these qualities of plates.
The pipes can be fabricated by using both plates and HR Coils depending on the requirements for the pipe making process, set by the technical consultants to a pipeline
Indian steel manufacturers like Ispat Industries Limited, Jindal Southwest Limited and Essar Steel, who are regularly supplying HR Coils in API 5L X70 to many similar pipeline projects, have voiced their concern for not being short listed
Opposition plans stir against POSCO
The raging battle against Naveen Patnaik governments bid to give away large mining reserves to Posco not just for captive use but also for exports gathered fresh momentum today with a four party Opposition front in the state declaring to launch a militant protest for the recall of the controversial agreement between the Orissa government and the Korean giant steel maker.
The militant protest would be aimed at preventing Posco from getting even an inch of land, a gram of ore or a drop of water for setting up the steel plant in Orissa. The declaration came at a mass convention organized here by the four parties Opposition Front constituting of CPI-M, CPI, Janata Dal (S) and Orissa Gana Parishad.
The MoU signed on 22 June 2005 for setting up a steel plant in Orissa with a total investment of $12 billion, the biggest foreign direct investment in India has been in the eye of the storm over the concessions allowing Posco to export 30 per cent of the 600 million ton iron ore reserve which it has earmarked for its plants in Korea.
Indian sponge iron industry facing coal shortages
More than 50% of coal based sponge iron plants, out of total capacity of 10 million tonnes in the country accounting for more than 17% of the worlds DRI capacity, are facing sever coal shortage. Sponge iron has emerged as an alternate feed material for production of steel through induction and arc furnaces, due to higher prices of scrap.
Over last few years more than 100 units have been commissioned across the country. Gas based units are mostly situated in the western part due to availability of gas, where as coal based units are mostly in coal and iron ore rich areas in central and eastern parts of the country
Sponge iron is obtained through a process in which iron ore is mixed heated with non coking coal and dolomite in a rotary kiln under controlled combustion conditions referred as direct reduction of iron DRI, so to remove oxygen from the ore in a solid state. The process is undertaken at a critical temperature where coal ash does not fuse with the metalised ore. Such fusion can be avoided only when the coal is of a select grade with high reactivity properties.
Therefore sponge iron units need specific grade of thermal coal, which was being supplied from CIL. CIL produces nearly 100 million tonnes of B and C grades suitable for sponge units. But due to huge shortage of thermal coal in the country and priority to power sector the supplies to sponge units have been severely affected.
Sponge Iron Manufacturers Association SIMA ED Mr SS Bhatnagar has informed that press that 10 million tonnes of good quality coal should be earmarked by CIL for sponge units rather than use it as thermal coal in power plants and other industries. He further added that the introduction of e auction of coal by CIL will help traders to take position for supplies to new sponge units
ESSAR in a row over Ganesan Committee suggestions
The Ganesan Committee on iron ore pricing and distribution has put Essar Steel and some others in a spot by recommending reduced entitlements and charging spot rates by NMDC on ore fines until the company starts lifting the agreed amount. This has been recommended for their failure to lift its quota of iron ore fines that the company had been allotted under its agreement with National Mineral Development Corporation
Essar Steel MD Mr Ruia has countered the charges indicating that NMDC failed to make available the required quantity of fines. He also points to the fact that slump in the steel market had greatly affected demand for iron ore for a few years and under those circumstances lifting of fines may have been affected. He has also charged the panel for unfairly targeting his company when there is a rather long list of defaulters.
Maharashtra's major plans for minor ports
Maharashtra Maritime Board MMB has drawn up major plans for development of minor ports in the State, involving significant private sector participation. With a coastline of 720 km, Maharashtra offers tremendous potential for development of minor ports. Maharashtra offers bright prospects for port development, in the light of the fast growing traffic volume, infrastructure, quick access to large industrial area and the pressure on the major ports for speedy handling of cargos. The MMB was constituted in 1996 and has 13 members, with an annual income of $6 million.
The minor ports in the State handle about 10 per cent of the total cargo handled by all such facilities in the country. The State has 48 of the country's 185 notified minor ports.
The MMB has the blueprints of a port development policy that envisages development on BOOST (Build-Operate-Own-Share-Transfer) basis, with a concession period of 50 years and more than 90 per cent discount on wharfage. The equity participation by the Government or the MMB will be up to 11 per cent and the road linkage to the nearest State highway is to be part-funded by the State.
The minor ports already taken up for development include Rewas with a 21-berth configuration and estimated investment of $960 million for handling 44.7 million tonnes of cargo. The second port being developed is Dighi, 45 nautical miles south of Mumbai here the proposed investment is $131 million for a six-berth facility with a cargo handling capacity of 19 million tonnes.
The minor ports identified for development include Wadhavan, Redi, and Vijaydurg. These ports will be handling a variety of cargoes, mostly dry bulk and liquid.
Allegheny Ludlum to increase electrical steel capacity
Allegheny Ludlum Steel will upgrade its Bagdad Works in Gilpin by investing $ 8 millions, because of an upswing in demand for silicon electrical steel used in making of electrical transformers, transformer lines and other electrical equipments. Ludlum melts the steel in its Natrona Works, does some of the finishing at the Brackenridge Works and completes the process in its Bagdad facility.
The demand for electrical steel is being driven by infrastructure development in China and India and with limited capacity the prices have almost doubled in last 12 months.
Australia's Gindalbie to go for iron ore business
Perth based Gindalbie Metals Ltd has announced appointment of a new chairman and plans to divest gold and base metals assets to focus solely on its Blue Hills iron ore project. It is assessing a number of options for its metals assets, including an outright sale to a third party or spinning off the gold assets in an initial public offering.
Gindalbie's Minjar project includes 400,000 ounces in gold resources and a gold treatment facility with an annual capacity of 600,000 tons Minjar surrounds the Golden Grove zinc-focused operation recently acquired by Melbourne-based Oxiana Ltd
Mr Jones, formerly chairman of iron ore producer Portman Ltd has taken a non executive position on the Gindalbie board and has agreed to invest A$2 million in Gindalbie. Outgoing chairman Keith McKay said Mr Jones' track record of growing iron ore businesses would be invaluable in helping the company achieve its goals of becoming a diversified iron ore producer.
Proceeds from the placement will help fast track exploration at Gindalbie's flagship Blue Hills iron project, 220 kilometers southeast of Geraldton in Western Australia. Gindalbie aims to delineate enough high grade hematite resources at Blue Hills for a direct shipping ore project as a cash generator to underpin its longer-term magnetite ambitions. Concentrate from the magnetite project would be transported through a proposed 260-kilometer slurry pipeline to the coast at Geraldton, where it will initially be shipped out to Asia steel customers.
Residents raise alarm over chromium from smelter of TATA
While Richards Bay residents were waiting anxiously for the final environmental report into the setting up of a steel smelter just a stone's throw from up market suburbs, an environmentalist said the town's strategic plan had failed.
Tata Steel, a subsidiary of India's Tata Group, has proposed a smelter site in Alton North, a light industrial area just 2km away from Brackenham, a residential area, and the Central Business District. Tata Steel submitted a plan in 2001 to build the R600-million plant next door to Mondi Business Paper. What has raised alarm in the neighborhood is that the proposed smelter would emit chromium VI, a toxic chemical that can cause cancer.
Environmental impact assessment studies of the Tata Steel site are near completion and are be expected to be ready for a final decision by the department of agriculture and environmental affairs in October.
Tata's Overseas Project Chief, Mr Somdeb Banerjee, said the risk of chromium VI pollution was "very low" because of the closed-top technology of the proposed smelter. Dr Tonie Heyneke, Richards Bay Municipality's Municipal Manager, said that Tata Steel had assured the municipality that the manufacturing process used was "better than those used in South Africa".
Mr Yushchenko accuses Former PM of favoritism to business groups
Ukrainian President Mr Viktor Yushchenko on Sunday accused former Prime Minister Yulia Tymoshenko of having acted in favor of certain business groups in a dispute over re nationalization of Nikopol Ferroalloy Plant.
The situation around Nikopol, one of Europe's largest ferroalloy plants, came to a head at the beginning of September after Ukraine's Economic Appeals Court ordered the factory's shares returned to the state. Ms Tymoshenko's government endorsed a speedy shareholders meeting in which one group of minority shareholders, Privat Bank, was given key management posts. Privat Bank's leaders are reportedly big supporters of Tymoshenko.
Former President Mr Leonid Kuchma's son in law, who had owned the factory, accused the government of stripping him of his assets only to hand them to his competitors. Mr Viktor Pinchuk rallied his supporters outside the factory, and riot police were called in. Mr Yushchenko eventually intervened, praising the court decision as valid but scolding his government for getting dragged into a feud between two business groups.
Nikopol, which the Ukrainian court ruled had been illegally privatized in 2003, serves at least 15 of the world's largest steel producers including US Steel Corp. and Germany-based ThyssenKrupp. It was considered one of the crown jewels of Pinchuk's holdings.
More mining accidents reported in China
Thirteen miners were trapped underground and remained missing after a flooding accident yesterday in Southwest China's Guizhou Province. The accident happened at 13:40 yesterday when 39 miners were working underground at the Dahao Coal Mine in Tianzhu County. Twenty-six miners came to the surface just before the flood, leaving 13 trapped. Rescue work is now underway, with six water pumps working at full speed to draw water out of the well.
In another development, a colliery fire killed one miner and trapped 14 others at around 10 am yesterday, at Jinyuan coalmine in China's northern most Heilongjiang Province, according to local government. There were 31 coal miners working underground when the fire started suddenly. Rescuers have rescued 16 coal miners, spotted the body of one miner, and gone on looking for the other 14 trapped miners.
Russian steel majors ratings likely to improve
International ratings agency Fitch said that whilst Russian steel majors currently have Stable Outlooks, the agency expects that their credit profiles to improve due to increased international relevance through economies of scale and public listings, and rising domestic demand, while maintaining strong financial metrics underpinned by vertical integration and low-cost production, the agency said in a press release. However, the pace of such developments may be tempered by lower market prices. Russian steel majors are among the 11th to 20th largest steel manufacturers in the world, the release says.
The Russian steel majors have demonstrated an ability to pursue selective international acquisitions, and are considering potentially large credit transforming acquisitions like Turkey's Erdemir and Ukraine's Krivorozhstal. The credit implications of potential acquisitions will be reviewed on a case-by case basis.
Factors which continue to constrain ratings include risks associated with legal structure complexity and potential debt-subordination issues, although all three companies are trying to further improve their corporate governance and transparency.
Russian steel companies are also expected to benefit from favorable domestic demand fundamentals, with Fitch forecasting GDP growth of 5% in Russia in 2006. Historically, Russian steel majors have had balanced export and domestic revenues. Finished products are mainly aimed at the domestic market due to higher than international spot prices, Russian producers' stronghold on customized products and protectionism in some large export markets like EU. Russian steel companies have demonstrated flexibility in re directing exports of mainly semi-finished products to various markets in Middle East and East Asia based on demand and increasing trading restrictions. However, Fitch expects regional exports in the long run to face increased competition from other low cost producers such as those from Ukraine.
Iron Ore Holding announces Lamb Creek investigations
Iron Ore Holdings Limited IOH has announced that stage 1 investigations of the Lamb Creek, North Marillana and Yandicoogina Creek properties have been completed. The company said the activities involved a remote sensing interpretation using satellite imagery and aerial photography followed by helicopter supported ground varification.
The company reported that the results identified an additional 16 new exposed channel iron deposit targets on Iron Ore holdings properties and the Board is of the firm view that these results further enhance the prospectivity of Iron ore holdings tenements and was a significant milestone towards becoming an iron ore producer.
Company chairman Mr Mal Randall said the prospectivity of the targets for channel iron deposit occurrence ranges from very high to limited with pisolitic channel iron deposit or related materials being encountered at the majority of the targets.
Scrap prices spoil Sims growth plan
The surge in world scrap metal prices in the past two years has derailed Mr Jeremy Sutcliffe's plans for recycler Sims Group. Mr Sutcliffe, Sims's CEO, has been reducing his company's dependence on scrap metal and building income streams from other products, since he took over from Mr John Crabb in 2002. The plan has been to transform Sims into a recycler with a base much broader than its traditional metals operations and it was on track until steel and ferrous scrap prices went mad.
"I really wanted to get recycling solutions to 15 to 20 per cent of EBITDA over a three-year period, which we would have done if it weren't for the massive growth in ferrous earnings," Mr Sutcliffe said.
And it is the non traditional recycling done by the Hugo Neu company Sims is about to acquire which has added blue sky to an otherwise expensive deal.
Mr Sutcliffe has always been wary of buying a scrap outfit at the top of the market but Sims shareholders last week agreed to pay about $622 million for the US outfit, which includes assuming $201 million of debt and issuing shares for the remainder. The Hugo Neu acquisition is a major challenge for Sims and is likely to transform the company.
While Hugo Neu is one of the leading US scrap metal merchants and a prize catch for Sims, it is a new Hugo Neu operation which has caught Mr Sutcliffe's eye. Hugo Neu is negotiating a 20 year contract to recycle New York City's post-consumer metals, plastics and glass and will move into paper recycling in five years.
Until now, American plastics manufacturers have been reluctant to recycle plastic, preferring to use virgin material made from oil, but high oil prices are forcing a rethink. "Demand is rising rapidly. A lot of American plastics manufacturers are installing dedicated secondary plastic feed lines," Mr Sutcliffe said. Sims was already upgrading its systems to improve the segregation of recyclable plastics, he said.
