September, 26 2005
Shareholders laud SAIL performance at AGM
SAIL Chairman Mr VS Jain, during 33rd Annual General Meeting of the company in Delhi on last Friday, stated: "SAIL is well set on the fast track of growth. It has developed the strength to withstand the vagaries of the steel business cycle."
"The performance of SAIL touched a new peak during 2004-05 with net profit zooming by 171% to a record level of Rs. 6,817 crore and turnover touching Rs. 31,800 crore. For the first time the company paid interim dividend of 15% during the year and recommended a final dividend of 18% amounting to a total dividend of 33% on the paid-up equity. The total payout on this account will be to the tune of Rs. 1,363 crore," the SAIL chief added.
Briefing the companys shareholders further on the strong financial position built up by the company, Mr. Jain said that SAIL has earned the status of a virtual zero debt company during 2004-05. During the last two years, SAIL did not acquire any fresh loans and financed its entire VR scheme for more 1,400 employees during 2004-05 from internal accruals. Mr GC Daga, Director (Finance), SAIL, later elaborated upon the factors that contributed to SAILs sterling financial performance during 2004-05. "About 70% of the Rs. 6,737-crore improvement in PBT over the previous year from Rs 2,628 crore to Rs 9,365 crore was on account of market factors," he informed. Various management initiatives resulting in improvement in product-mix, techno-economic parameters, etc., as well as better financial management contributed the remaining 30% of the increase in PBT, he stated.
While drawing attention to the emerging constraints relating to raw materials, especially coking coal, Mr. Jain said the company is contemplating equity participation in certain coal mines and discussions were on to forge joint ventures/alliances for development and up gradation of mines. A major area of concern has been obtaining new mining leases and renewal of old leases, Mr. Jain added.
Later, Mr SK Roongta, Director (Personnel), SAIL who also heads the companys Raw Materials Division, provided information on the status of development of new sources of raw materials, particularly iron ore: "SAIL has planned to develop large capacity mine of 7 MTPA with state-of-art technology and beneficiation facilities at Chiria with high investment." Organizations like MECON, NEERI and the Indian Bureau of Mines are engaged in preparing studies for the project, he added. SAIL was intensely pursuing the issue of renewal of mining leases relating to Chiria and was seeking help from the Central and State governments for providing required linkages of iron ore so as to ensure availability for meeting the companys long-term growth plan, he said.
While updating the shareholders on SAILs future expansion plan which aims at enhancement of hot metal production capacity of the company by 8 million tonnes by 2011-12, the SAIL Chairman also disclosed that capital schemes valued at over Rs. 3,500 crore were under various stages of implementation. Mr. Jain further pointed out that SAIL was confident of maintaining its market leadership by volume in the years to come despite the entry of new players in the market.
The Navratna steel giant has been making significant efforts towards meeting its corporate social responsibilities. These include contribution to develop sports facilities, efforts to preserve national heritage and monuments, and activities to enrich social and cultural life, said Mr. Jain.
Replying to a question from a shareholder on the availability and quality of coking coal required for fulfillment of SAILs growth plan, Mr KK Khanna, Director (Technical) who also has additional charge of the companys commercial functions, said that around 20 million tonnes of coking coal would be required by the SAIL plants, including IISCO, to produce 22.5 million tonnes of hot metal. Steps are being taken to support BCCL/CIL to enhance indigenous production, he disclosed. "We are also exploring strategic alliances/JVs for coking coal mines abroad," he said.
Three steel company foundation stone on Nov 14 in Jharkhand
Three steel companies, Tata Steel, JSPL and Essar Steel have agreed to lay foundation stones to set up steel plants in Jharkhand on Nov 14 to mark the fifth anniversary of the state's formation. The three companies have already signed MoU with the state government to set up steel plants in the state at Manoharpur in Singhbhum district.
Tata Steel will lay the foundation stone to set up a 12 million tonne steel plant at Manoharpur in the state and for expansion of its existing plant at Jamshedpur from five million tonnes to 10 million tonnes.
Jindal Steel & Power Limited will lay the foundation stone for a five million tonne steel plant in Manoharpur.
Essar Steel will also lay the foundation stone at Manoharpur to set up 10 million tonne steel plant
At present India produces 34 million tonnes steel per annum and Jharkhand's share is nine million tonnes per annum. With the three proposed new steel plants and expansion of the existing Tata Steel plant, the state will produce 41 million tonnes steel in next 10 years.
BCCLs rehab program in Jharia to give high grade coking coal
Bharat Coking Coal Limited BCCL has embarked on a massive Rs 6,000 crore rehabilitation program for 300,000 odd people in Jharia, who have been living on an underground inferno for over two decades now endangering both their lives and property.
BCCL CMD Mr Partha S Bhattacharya said that the rehabilitation program under the ''Jharia Action Plan'' would ensure that the entire population living in an area of about 30 square kilometers in the mining town in Jharkhand was rehabilitated in a foolproof, proper and scientific manner within the next five years.
He said though the shifting of the town population outside the danger zone and to a safer place was the prime objective of the Jharia Action Plan, it also envisaged optimum extraction of a huge amount of high grade cooking coal untouched by fire underneath the surface after the rehabilitation process was completed within the next few years.
Claiming that in spite of the continuous burning of coal underground for the past several decades, the total reserve of coal in and around Jharia still remained at more than 1.6 billion tonnes, Bhattacharya said. However, as a result of the unabated underground inferno, which led to huge caving in several places in the township, about 1.1 billion tonnes of coal had already been lost.
Asked about the process of raising necessary funds amounting to Rs 6,000 crore, the BCCL CMD said the majority of the funds would come from additional cess on coal and re-scheduling of duty structures during the next few years.
Indian share highest in Chinese iron ore import market
While China transforms itself into a factory for the rest of the world, India seems to be emerging as the supplier of choice in several product categories for the Chinese manufacturing juggernaut.
Many Indian products, mainly raw material and semi-processed goods, have made major inroads into the Chinese market in recent times. For instance, in the case of ores, slag, and ash, India overtook Brazil and Australia last year to emerge as the largest supplier to China, with exports topping $4 billion.
According to DGCI&S data, Indian suppliers dominate the Chinese import market for iron ore. Indian iron ore suppliers have established a lead in Chinese imports, with a market share of 32 per cent last year. Australia was second with a market share of around 24 per cent.
SAIL- BHP Billiton JV hits road block
Anticipating rush for coking coal and iron ore, and its need to take care of expanded capacity, SAIL has inked MoU with BHP nearly a year ago to develop iron ore mines at home and acquire coking coal mines abroad. But the JV has hit a road block as the iron ore rich states are reluctant to grant fresh mining leases or even renew old ones to SAIL, which can be developed with BHP. SAIL Chairman Mr VS Jain has told that most state governments were in a wait-and-watch mode, refusing to grant fresh leases.
With SAIL targeting an increased production of 20 MT of hot metal from the present 13.5 MT, its iron ore requirement will be 30 MT having minimum 64% Fe content and 2.7% maximum alumina and silica
SAIL was eyeing development of new mines at Thakurani and Taldih and development of mechanized mines of 4 MTPA capacities each in the south and central blocks at Kiriburu - Meghahatuburu as replacement for old mines. It is also planning capacity expansion of Bolani mines in Orissa to 5 MTPA.
All the three state governments Jharkhand, Orissa and Chattisgarh, are not keen to give mining clearances to SAIL, especially for such JV.
China seen net steel importer in 2005
Poor margins for steel exporters have made it probable that China will remain a net importer of steel products this year, a senior industry official said on Sunday. "Steel products exports this year probably won't reach 20 million tonnes," Mr Wu Xichun, advisor to and former chairman of the China Iron and Steel Association told local press. He added "Because of the tax rebate changes and the international price levels, it isn't all that profitable to export."
He put steel products imports in 2005 at 26 million tonnes. China's raw steel output is projected to grow this year to 344 million tonnes, Wu said, a rise of over 25 percent following massive expansions this year and last.
Lower exports turned China into a net importer of steel products and semi-finished products in July, reversing 10 straight months as a net exporter.
China imported a net 2.2 million tonnes of steel products in the first seven months of 2005. But it exported a net 4.58 million tonnes of semi finished products, including steel billet, in the same period
China imported 29.3 million tonnes of steel products in 2004, and exported 14.2 million tonnes.
In May, the Chinese government removed tax rebates on exports of semi-finished steel products and cut the rebate for steel products to 11 percent from 13 percent.
Battle for Erdemir A brief on company
Eregli Iron and Steel Works Co (Erdemir) situated 270 km off from Istanbul in the town of Karadeniz Eregli, is Turkeys largest integrated steel plant. Erdemir, which began production in 1965, today has a production capacity of 3.0 million tons per year of crude steel and is Turkeys only flat steel producer, manufacturing HR Coils, CR Coils, Plates, galvanized coils and tinplate. Erdemir, with long product maker İsdemir, is aiming to achieve a steel production capacity of 7 million tons per year by 2007.
Erdemir, reaching to 3 billion revenue and 15,000 employees, has became a group of companies with its subsidiaries Isdemir, Erdemir Celik Servis Merkezi San Tic AŞ, Erdemir Romania, Erdemir Muhendislik, Yonetim ve Danışmanlık Hizmetleri AŞ (ERENCO), Erdemir Celik Cekme Boru San ve Tic AŞ (CELBOR), Erdemir Logistic, Yarımca Porcelain and Erdemir Gas.
The Turkish Privatization Agency holds 46.12% in the enterprise, Turkish Development Bank owns 3.81%, Mittal Steel 8.6%, 3.7% is in treasury stocks, and 46.1% of shares are on the stock market.
SAMIR invites bids for 22 dia 250 km gas pipeline in Morocco
Societe Anonyme Marocaine de lIndustrie du Raffinage SAMIR has invited bids for an estimated Euro 100 million contract to build a 22 inch diameter, 250 kilometer long gas pipeline between Mohammedia refinery and Ouazzane on the Gazoduc Maghreb Europe GME pipeline. A second tender for construction of a 25 MW power plant estimated at Euro 50 million are also invited
Construction work began on 1 September on the estimated $550 million main EPC contract for the phase 1 rehabilitation of the refinery, won in June by a consortium of Italys Snamprogetti and Turkeys Tekfen.
SAMIR is also looking to finalize the debt financing package on the project where international banks are to provide about $300 million, local banks about $200 million and the African Development Bank about $85 million. Samir will provide equity of about $300 million, about a quarter of which is already in place.
Battle for Erdemir - Russians in search for partners
Today is the deadline for filing applications to bid for the state owned 46.12 percent stake in Erdemir, Turkeys largest steel works. Three Russian companies are to run in the competition and they would probably like to team up with Turkish partners to buy the share although, the example privatization of Turkish Turpas refinery shows that even the participation of a local partner does not secure the success for overseas investors
Yet, staking on local partners seems a better taken step as the privatization of Erdemir has already caused mass protests in Turkey and trade unions, the industrys associations and businessmen are demanding that the authorities do not give the plant away to foreigners
Severstal Group has already teamed up with Nurol-Limak-Ozaltın-Alcohol Marketing Joint Entrepreneurship Group of Turkey and has already submitted a joint application on 23rd September to Privatization Administration
LebGoK-Oskol Joint Entrepreneurship Group comprising of Lebedinsky Ore Mining and Processing Enterprise and Oskolsky Electrometallurgical Plant, planned to engage in the auction for Erdemir with the local company Oyak, but could not come to terms. It is reported that they are now searching for a new partner. The talks are in progress, and if they are successful, we will set up a consortium at one of the next stages of the auction, the companys shareholder explained to local press
The third Russian participant in the auction, Novolipetsk Metallurgic Plant, also would not like to bid for Erdemir on its own. The plants representatives do not comment on the issue but a source in a company hinted that the plant was trying to reach agreement with Arcelor, not with a Turkish company.
Macquarie analysts have revised the supply - demand outlook
Macquarie has increased long term price forecasts for iron ore and coking coal as operating and capital cost pressures are likely to necessitate higher inducement prices for new supply. Similarly, the analysts believe average industry capacity utilization rates will remain higher than in the past, giving more pricing power to suppliers.
The forecast upgrades have been made despite a much weaker demand performance in 2005 than previously expected, the analysts point out, particularly in North America and Europe, where a major de-stocking cycle has unfolded. This has to a certain extent been offset by stronger than expected 2005 demand in China. Overall, projections of 2005 world growth in demand for the main commodities are lower than it was at the start of the year.
Despite this reduction in demand, the markets have either remained in balance or small deficit in 2005, the analysts note. Lead indicators are moderately more positive with regards to growth prospects in 2006 when compared to 2005, although the uncertainties of the impact of high energy prices on growth continue to cloud the outlook. Macquarie is factoring in a modest rather than strong recovery in 2006.
The analysts have raised expectations for the upcoming iron ore contract negotiations, with a 15% price increase now forecast, up from rollover.
Stronger than expected supply growth in thermal coal from Indonesia has resulted in a deterioration of the shorter term outlook, leading to a downgrade of expectations in 2006 by 8% to US$48/t
Battle for Erdemir Ereğli consortium to set example
Turkish Union of Chambers and Commodities Exchanges TOBB Chairman Mr Rifat Hisarcıklıoğlu said Turkish firms are lacking in acquisition growth and partnership initiatives for creating globally competitive firms and that the consortium TOBB established for the acquisition of state owned steelworks giant Erdemir, comprising various local companies, will set an example for future partnerships.
Speaking to a local daily Mr Hisarcıklıoğlu said, The aim of this campaign is not, by any means, to keep Turkey's assets solely in domestic hands nor to initiate a campaign that calls for lower prices for domestic firms in the sale of state assets, adding, Indeed, the question should instead be, Who is going to deal with Erdemir's potential and best develop it into a company that is competitive on a global level?'
He noted that the Eregli consortium will have no cash problems, either in the bidding process or afterwards, as the group will look to make further investments. Regarding the initiative's plan for Erdemir, he said their first target would be to close the gap in Turkey's domestic steel production to meet domestic needs. According to the national consortium's investment plans, Erdemir's production will increase from a 3.5 million-ton capacity to 10 million by 2009 and 15 million tons by 2015.
He added "Currently, Turkish domestic steel consumption stands at around 7 million tons per year. Erdemir's production is 3.5 million tons, with half a million tons exported. Erdemir needs to increase its capacity, which will require some $2 billion in investment.
Erdemir has the potential of controlling both steel production and its overall market within the Middle East region. Currently, Turkish domestic steel consumption stands at around 7 million tons per year. Erdemir's production is 3.5 million tons, with half a million tons exported. According to the national consortium's investment plans, Erdemir's production will increase from 3.5 million tons capacity to 10 million tons by 2009, and to 15 million tons by 2015.
Our target is to replace imported steel with domestic production, he said.
Venezuela creating state steel mill
Venezuelan President Mr Hugo Chavez said that his government would invest $1 billion in a new state iron and steel production company to provide thousands of new jobs and ensure that the nation's vast resources would be used efficiently and with responsibility
The government has been seeking to gradually reduce the amount of primary aluminum and iron that it sells to foreign companies in an effort to promote local manufacturing. Venezuela is the world's fifth largest petroleum exporter, while mining is a major secondary industry due to the country's vast deposits of iron ore and bauxite
Mr Chavez, who has accused foreign mining companies of gaining rights to mineral deposits then leaving them idle, referred again to his pledge from last week to revoke all mining concessions.
When Venezuela's last dictator, Gen. Marcos Perez Jimenez, was overthrown in 1958, Venezuela's new democratic government took steps to create state-owned iron, steel and aluminum firms. That policy continued until the mid-1990s until a trend toward privatization began.
Botswana has major coal reserves
Mr Cletus Tangane, GM of Debswana's Morupule Colliery says that while Botswana is renowned for its diamonds, it should rather be recognized for its coal deposits as the recent estimates place Botswana's coal resources at 200 billion tons.
This is impressive when one considers that a South African Colliery Managers' Association report puts South Africa's recoverable coal reserves in 1998 at 60 billion tons.
Morupule Colliery Limited (MCL), which has been in operation since 1973 to supply coal to Bamangwato Concessions Limited (BCL) copper-nickel mine and Botswana Power Corporation (BPC), has increased production from 145,000 tons in 1973 to just less than a million tons in 2004.
However, in spite of the massive reserves, the mine still only produces some 980 000 tons a year but now MCL is exploring the possibilities of joint venturing with other power companies in the SADC region. Regarding the longer-term plans, I look forward to seeing a mega-coal-mine producing 20 million tons a year being built on the base of the existing colliery, concludes Mr Tangane.
Chinese companies eager for Australian ore and coal
Many Chinese steel companies are in talks to spend as much as $10 billion on Australian mines to make sure China's mills don't run out of raw materials. The planned acquisitions could increase China's total investment in Australian projects six fold within three to five years, said Mr Henry Wang, senior investment commissioner for Greater China at government agency Invest Australia. Half of the proposed Chinese investments are in iron ore, 30 per cent in coal and the rest in natural gas and other metals, said Mr Wang
Australia, the world's biggest coal and iron ore supplier, had garnered $1.6 billion of investment from China by the end of 2004. "Of the total iron ore that China imports, China has some kind of involvement in the supplier in 25 per cent of them," Mr Wang said. "The Chinese industry wants to increase that to 50 per cent."
Overseas investment "is a necessary and natural step for Chinese metal producers because the country is short of natural resources", said Mr Lin Hai, a fund manager with Guotai Asset Management Co. "With these investments they can lower costs and take pre-emptive rights on the raw materials."
Chinese companies are competing for Australia's resources with rivals such as South Korean steelmaker Posco, Japan's Nippon Steel and Mitsubishi Corp, which already own stakes in Australian mines.
UAE & SA to spend Dh30b on rail projects in the next seven years
Gulf countries are expected to spend around Dh30 billion for rail projects in the next five to seven years, according to industry estimates.
Dubai's Metro rail system will be the longest fully automated system in the world when the project will be completed in 2012, according to Dubai Municipality. The project with a total budget of Dh14 billion is expected to cost about Dh12.5 billion for the two lines, stretching to 68.9km with 44 stations
In Saudi Arabia a joint stock company owned by some Saudi investors and some major international firms, is developing the SR15 billion Riyadh Light Railway Project, linking the east and west coasts of the Kingdom. The project involves construction of 950 kilometers of new tracks between Jeddah and Riyadh, a 115km line between Dammam and Jubail, and upgrading of the existing rail link between Dammam and Riyadh.
Caparo makes foray into high end designer furniture sector
After making a name in steel manufacturing, Caparo Group has made a foray into high end designer furniture sector offering premier collections and Limited Edition designs for individual collectors, museums and art galleries.
Lord Swraj Paul led Caparo Group's newest company 'Established & Sons' has commissioned Britain's best designer talents to produce premium furniture, which would be pieces of art. The new company, chaired by Mr Angad Paul, was launched at a party here which was attended by some 4,000 guests including top names in British architecture, fashion and design.
Mr Angad Paul said new company was set up with the objective of reviving interest in skills and capabilities of British furniture manufacturing. Unusual dining tables, chairs, sofas, lights and writing desks are among the items designed by some of the best-known names in architecture and design in Britain.
BHP set to disclose blow outs from Ravensthrope
BHP Billiton will today finally reveal the full extent of cost blow-outs from its Ravensthorpe laterite nickel mine in Western Australia and an upgrade of its Yabulu refinery in Queensland. Originally forecast to jointly cost $US1.4 billion, analysts believe the final development bill will rise by 15-25 per cent and possibly as much as 40 per cent based on recent blow-outs at other resources projects.
Stainless steel materials division president Mr Chris Pointon will this afternoon unveil the results of a detailed review of the project launched six months ago during detailed briefings with analysts and media on BHP Billiton's nickel, ferrochrome and manganese businesses.
Though BHP Billiton has remained tightlipped about the impact at Ravensthorpe, the project is considered especially vulnerable to a blow-out following periods of industrial unrest and shortages of labor and accommodation.
EPC contractors submit bids for SA Aramcos 212 km Rabigh pipeline
7 EPC contractors have submitted bids on 17 September to Saudis Aramaco for the pipeline package on the Rabigh refinery conversion project. The bidders include Italys Saipem, Italy-based Techint, Suedrohrbau of the Netherlands, Turkeys Tekfen, Lebanons Contracting & Trading Company and local firms Faysal M Qahtani Establishment and Tamimi Construction.
The turnkey contract is estimated to be worth $100 million-200 million. The successful bidder will build parallel ethane and butane pipelines over a distance of 212 kilometers, between the integrated Rabigh refinery and petrochemicals plant and the existing Yanbu natural gas liquids (NGL) facility.
Foster Wheeler Energy is the project management services (PMS) contractor. A contract award is scheduled for late October, with the project due to be completed by the second quarter of 2008
RasGas III contracts awarded
Ras Laffan Liquefied Natural Gas Company has awarded the two main upstream construction packages on its $13,000 million integrated gas project, known as RasGas III. The Japanese - French JV of Chiyoda Corporation and Paris based Technip won the estimated $3,500 million contract to build trains 6 and 7 at the RasGas complex, while Jebel Ali-based J Ray McDermott Middle East was awarded the estimated $450 million platforms and pipeline package.
It is estimated that 32,500 tonnes of structural steel will be used
Trains 6 and 7 will each have capacity of 7.8 million tonnes a year and use technology and liquefaction process equipment supplied by the US Air Products. Completion of train 6 is scheduled for late 2008, with train 7 following a year later.
For the offshore engineering, procurement, installation and commissioning (EPIC) contract, McDermott will supply two topsides and install two 38 inch diameter, 100 kilometer long gas pipelines
RasGas II is a 70:30 JV of Qatar Petroleum and the ExxonMobil Corporation and RasGas III financing was completed in August
US Auto parts suppliers face consolidation wave
US auto parts suppliers face a massive shakeout if they are to cope with global competition that is forcing prices ever lower, executives said this week at the Reuters Autos Summit. The sector has been buffeted by several bankruptcies in the past year, including interiors supplier Collins & Aikman Corp but must brace for more Chapter 11 filings or large out-of-court restructurings, executives said.
In the past year, several metal stamping companies have filed for bankruptcy, Visteon Corp has looked to former parent Ford Motor Co for a bailout and Delphi is in talks with former parent General
"I do believe there is going to be a lot of restructuring," Delphi Corp. Chief Executive Steve Miller said. "It has been a devastating period for the American supply base. The impact of globalization and the shrinking market shares of the two largest American automobile makers have had a huge impact"
Successful parts makers will be concentrated as global leaders in a product with the right technology and cost structure to withstand the competition, Mr Miller said. Mr Miller, a turnaround specialist who became CEO less than three months ago, has said he needs help from GM and the United Auto Workers to restructure unprofitable U.S. operations and avoid a bankruptcy filing that could come in weeks.
Many small mom and pop companies must merge with others in their fields and grow large enough to be competitive or they won't survive, said Mr Richard Dauch, chairman and chief executive of American Axle & Manufacturing Holdings Inc.
Mr David Cole, chairman of the Center for Automotive Research, told press in an interview that consolidation could trim overcapacity, though suppliers must avoid taking on too much debt and may look more to alliances.
"We will still see acquisitions ... there are some really distressed companies whose assets are available at a very low cost," Cole said. "That is why you have so many leveraged buyout types hanging around Detroit right now."
The sector has caught the eye of billionaire financier Mr Wilbur Ross, whos expressed interest in Collins & Aikman and other suppliers sparked talk that he might seek to transform the parts sector as he did the US steel industry.
Zadco awards PMC contract to Mott MacDonald for Satah project
The UKs Mott MacDonald has been awarded the contract to provide project management consultancy PMC services on the proposed Satah full field development project in Abu Dhabi. Mott beat off competition from two other bidders Parsons E&C part of Australias Worley Parsons and the US-Canadian VECO for the contract.
Estimated to be worth $200 million-250 million, the project will centre on the supply and installation of gas injection compressors, treatment units, separators, four 20-kilometre pipelines and related facilities at the onshore Arzana site.
The scheme will involve the re injection of 10 million cubic feet a day of associated gas to maintain reservoir pressure at the offshore field. At present, Satah has production capacity of about 25,000 barrels a day.
An award is due by early November for the Satah front end engineering and design FEED contract. The client, Zakum Development Company, is evaluating bids from four companies Worley Parsons, VECO, Jacobs Engineering and Tebodin Middle East a part of Tebodin of the Netherlands, which have submitted commercial and technical proposals in early July.
Mr LN Mittal appoints daughter on the board of Mittal Steel
Mr LN Mittal has appointed his 25 year old daughter Ms Vanisha Mittal on the board of the Mittal Steel. He had earlier appointed his 29 year old son Mr Aditya Mittal as Finance Director at Mittal Steel.
Ms Vanisha is studying for masters degree in South Asian Studies at London's School of Oriental and African Studies
