October, 03 2005
India eyes foreign coal to meet demand at home
The government is turning its attention to promoting acquisition of coal mines abroad in Australia, Indonesia, Mozambique and Zimbabwe to meet the countrys growing demand for coal. This is part of the strategies being worked out by the prime ministers Energy Coordination Committee towards long-term energy security.
These countries are close enough to make transporting coal from India a viable proposition, said a government official, adding that the issue would be considered by an inter-ministerial group, headed by Coal Secretary Mr PC Parikh.
Officials said acquiring coal properties overseas was also being considered as most coal reserves in the country had low-grade coal with high ash content.
Assistance could also be taken from international funding institutions like the Asian Development Bank and a few multinational companies for acquiring mines abroad.
Proposals for equity participation by foreign companies in the development of new domestic coal blocks are already being examined with a view to have a reciprocal arrangement for Coal India Ltd CIL companies in mines abroad. The CIL has a dedicated task force, consisting of a multi-disciplinary team of mining engineers, geologists, marketing and finance professionals. This task force liaises with Indian missions abroad to identify opportunities and to examine and prioritize them. It also carries out the on-site technical, financial, commercial and legal due diligence
The government is also planning to remove the cap on foreign investment in coal mining for steel and cement companies. Currently, while these companies are allowed up to 74 per cent foreign direct investment in coal mining, power companies can have 100 per cent equity.
Jindal Stainless in talks to buy foreign coal and ore mines
Jindal Stainless is in advanced stages of acquiring coal mines in Australia, the Middle East and Indonesia. Jindal, which plans to invest $50-75 million in these acquisitions, is also scouting for iron ore mines in South Africa.
A company executive is reported to have said, Negotiations are in progress to arrive at the right valuations. He said the acquisition would be done either by Jindal alone or through a joint venture.
Earlier this year, the company signed a MoU with the Orissa government to set up a 1.6 million tonne integrated stainless steel plant and a 500 megawatt captive power plant at Kalinga Nagar in the Jajpur district for Rs 6,628 crore. The first phase of the project is expected to see the construction of 0.6 million tonne plant in 30-32 months, while the entire project was scheduled for completion by 2011.
Mukand plans Rs 120 cr capacity expansion drive
Mukund Ltd has earmarked an investment of Rs 120 crore to increase alloy steel capacity by 40 per cent and stainless steel by nearly 80 per cent within a couple of years.
Mr Rajesh Shah, MD of Mukund Ltd, said the company plans to increase its alloy steel capacity from 330,000 tonne to 460,000 tonne, in the next one year, while its stainless steel manufacturing capacity at Kalwe to 100,000 tonne from the 55,000, in two years through de-bottlenecking and productivity improvement measures for meeting the rising demand posed by automobile, auto components, consumer appliances and infrastructure sectors, said Shah.
Mukund is one of the leading alloy steel manufacturers in the country, commanding a market share of about 40 per cent in segments like special steel bars and special alloy steels. In the stainless steel segment, it is a major player particularly in stainless steel long products, bright bars and wires.
Tata's final round of negotiation underway in Bangladesh underway
Indian business conglomerate Tata Group has started the final round of negotiation with the Bangladesh government for its 2.5 billion dollar investment in fertilizer, steel and fertilizer plants and coal-fire power generation in Bangladesh.
"The negotiations may last for six weeks and we hope it will be the final round of talks," said Mr Alan Rosling, Managing Director of Tata Sons, on Sunday after holding a meeting with Bangladesh's Communications Secretary Mr Shafiqul Islam.
Officials said that critical issues like fiscal incentive to Tata investment, gas security, gas price, tariff for purchase of electricity from Tata's proposed power plant, the methodology of coal mining and land allocation featured during the negotiations, adding that the negotiations would continue throughout the month and by November, it would reach a final shape.
SAIL pays highest ever dividend to government
SAIL Chairman Mr VS Jain, presented a dividend cheque of Rs.638.05 core to the Union Minister of Steel, Chemical & Fertilizers, Mr Ram Vilas Paswan as the second and final installment of Rs.1169.75 crore dividend for the financial year 2004-05 paid by SAIL to the Government of India which holds 85.82 per cent of paid-up equity of the Company.
SAIL had paid a maiden interim dividend of 15 per cent on paid up equity of Rs 531 crore in February, 2005. Now with final dividend of 18 per cent, the total dividend paid for fiscal year 2004-05 aggregates to 33 per cent on the companys paid-up equity. The total payout on this account will be to the tune of Rs.1363 crore which works out to be 20 per cent of the companies PAT of Rs.6817 crore for 2004-05.
CII expects healthy 7.3 per cent GDP growth for 2005-06
The Indian economy would clock an impressive 7.3 per cent GDP growth for the fiscal 2005-06, at the back of strong prospects of Kharif grain production and reasonably buoyant industrial and services sector performance, according to the Confederation of Indian Industry CII.
CII expects agriculture to grow at 3.2 per cent for the fiscal 2005-06, a marked recovery from 1.1 per cent growth recorded in 2004-05.
The CII report also points towards a better than expected performance of Index of Industrial Production (IIP) which grew at 9.3 per cent in April-July 2005-06.
At the same time, the report cautions about emerging constraints reflected by slower production in core sectors. The report mentions that the overall growth of core sector production was 5.5 per cent for April-June 2005-06 as compared to 8.1 per cent for the same period in 2004-05.
Sectors that are pulling the growth rate down are crude petroleum, petroleum products and finished steel.
Chattisgarh government to fully support TATA Steel for Bastar plant
Tata Steel which is expected to start installation process of the five million tonne per annum greenfield integrated steel plant in March 2006 has been assured of full support by Chhattisgarh Chief Minister Mr Raman Singh.
"Tata Steel is working much faster than our expectations, the company wants to start setting up a 5 million tonnes per annum steel plant in Maoist rebels stronghold Bastar region from March 2006," Mr Singh said. He added that his government would fully back the company in its efforts to make the plant operational as early as possible. The state government has promised the company to provide the best iron ore deposits in Bastar's Bailadila or any other near by areas that the company prefers. "The government will also take care of its raw material needs and help it for maximum utilization of world's best quality iron ore deposits lying in Bastar's Bailadila and nearby areas," Singh stated.
Tata Steel will invest Rs.120 billion ($ 4 bl) in the plant in two phases as per a memorandum of understandings signed with the state government in June this year. It will set up a two million tonne per annum plant in phase-1 while three million tonne plant in phase-2.
Official sources said that Tata Steel has moved a proposal recently for 6,000-acre land for constructing the plant and residence for its employees at Ransargipal, Barupatha, Salepal villages, 25 km from Bastar district headquarters, Jagdalpur and the Industry department, after completing formalities, will hand over the land
ISO certification for F&A of VSP
RINLs Visakhapatnam Steel Plant VSP has been awarded ISO 9001:2000 certification for its Finance and Accounts Department by the Bureau Veritas Quality International (BVQI)
Presenting the certificate to VSP Director Finance Mr P K Bishnoi on the plant premises on Saturday, BVQI lead Auditor Mr Prasad Panicker said it was essential for VSP management to set trends and sustain the same to ensure world-class development. All departments have to religiously implement the systems and there is no room for complacency, he said and added that it was a rare occasion when BVQI certified a particular department of a business organization.
POSCO chairman sees inventory easing by Q4 end
Asia's steel inventories, boosted by supply glut in China, will probably ease as early as the end of the year and help steel prices rebound, the chairman of POSCO said on Saturday. ''I expect Asia steel inventory levels would be corrected in the end of the year or early next year, and then we may see Asian steel prices rising again,'' POSCO Chairman Mr Lee Ku-taek told reporters.
''I think prices of commodity-grade steel and high end steel would show polarization. Therefore, POSCO will focus on producing high end products and refrain from making low-grade steels,'' he said.
POSCO said last week it would cut prices of 11 steel products by 6 to 9 per cent due to a rise in steel imports from China and high inventory levels.
There has been concern among Asian steelmakers that extra supply from China flood global markets and weigh on steel prices and has spurred global steel giants to cut production.
JFE says iron ore & coking coal prices to decline next year
JFE Steel Corp, Japan's second largest steel producer, said prices of iron ore and coking coal will probably decline next year on increased supplies.
JFE President Mr Hajime Bada said in an interview in Seoul. Prices went up a bit too much. Without mistake, coking coal prices will fall by quite a large extent, as there is excess supply in China. With iron ore too, prices will drop though maybe not by as much. Output from China and other countries is increasing. At current prices, it is feasible to develop Chinese iron ore, which usually has lower iron content.''
JFE's Mr Bada joins Mr Xu Lejiang, president of Shanghai Baosteel Group, who said Sept. 30 that iron ore prices should fall next year because of a weaker steel market in Asia.
Battle for Erdemir Mittal Steel, Arcelor wary of paying too much
Mittal Steel and Arcelor, the world's two biggest steelmakers, will be wary of overpaying for a stake in Turkey's state-controlled Erdemir, the country's largest steelmaker, after its share price rose 46 percent this year. Erdemir's share price has risen in anticipation of a high offer for the company after European steelmakers made record profits.
Erdemir is important for our strategy,'' Lakshmi Mittal, billionaire owner and chairman of Mittal Steel, said yesterday in an interview in Seoul. But not at an irrational price''
It's an interesting and important steel company.'' Chief Executive Guy Dolle said in an interview yesterday. Still, we have to justify the price we pay to our shareholders.''
Corus Plc, which pulled out of the race as it could not find a Turkish partner, CEO Mr Philippe Varin said In July, the market capitalization was in the range of $2 billion. It's now in the range of $3.5 billion and we don't think this would give a profit back to our shareholders.''
Erdemir would give Mittal Steel a foothold in Europe's car-steel market, allowing it to catch up with Luxembourg-based Arcelor. Erdemir sold 18 percent of its steel to carmakers last year. It produced 1.1 million tons of cold rolled steel used for auto panels. Ford Motor Co. and Toyota Motor Corp. are among its customers.
Nippon Steel expects better margins on auto grade steel
Nippon Steel Corp, Asia's largest steelmaker, expects profit to increase next year on surging sales of high end steel to Toyota Motor Corp. and other automakers. President Mr Akio Mimura said Japanese carmakers are increasing their market share worldwide, so auto steel sales should continue to be strong. We have to increase profits under any circumstances.''
Nippon Steel, which is cutting output by a million tons in the fiscal year ending March, is focusing on high-end steel to bolster profit even as a glut of Chinese steel pushes down prices.
Mr Mimura, who gave no figures for next year's profit, also said cost cuts will be implemented. The company is expecting record profit of 310 billion yen ($2.73 billion) in the year ending March 2006.
Our stance is the emphasis of prices over volume,'' Mr Yuki Iriyama, director of Nippon Steel said in a separate interview in Seoul. Besides, China still cannot make the products we really care about.''
ANIE to set up two steel plants in Mussafah
Al Nasser Industrial Enterprises ANIE a UAE's based companies has announced plans to establish two steel manufacturing plants with a combined capacity of 450,000 TPA in Mussafah for manufacture steel billets and the Direct Reduced Iron, as a part to boost ANIE's total steel manufacturing capacity to 600,000 TPA by early 2007 and also to reduce our dependence on the global market
HYL, Mexico and GA Danieli are the technology and equipment suppliers for the respective plants. M. N. Dastur & Co., are the project consultants.
Announcing the establishment of the manufacturing plants Mr Abdulla Nasser Bin Hawaileel Al Mansoori, Chairman of ANIE, said: "The UAE is investing heavily to build new infrastructure and steel is a critical commodity in constructing roads, bridges, power plants, airports, housing and other developmental projects.We expect a continuous growth in the demand for steel in the coming years and our investment in these facilities represents ANIE's intention to support the government's endeavors in transforming the UAE in general and Abu Dhabi in particular into one of the most advanced and infrastructural-attractive locations in the region".
JFE confirms product cut
JFE is cutting production by 1 million tons in the fiscal year ending March, JFE President Mr Hajime Bada said in an interview in Seoul
The cut is in the output of lower- end steel sheets.
Imports by Japan, JFE's home market, have soared as Chinese steel production increased. Japanese imports of ordinary steel from China totaled 497,303 tons in the three months to June, more than double the same period last year, according to the Japan Iron and Steel Federation.
Chinese coal companies attract new interest
Investors have been jittery about the prospect of Chinese coal companies ever since coal prices showed signs of peaking in the middle of this year, giving a lukewarm reception to the country's biggest coal producer China Shenhua Energy Co. soon after its market debut in Hong Kong in June
But buying interest is beginning to rekindle as investors now see limited downside for coal prices. Prices are likely to be supported by two factors: diminishing supply after Beijing ordered the closure of small unsafe coal mines and China's insatiable appetite for energy to fuel its economic boom.
Shenhua Energy, in particular, will likely benefit from sustainable high coal prices and robust production volume growth. The company, which derives a large chunk of its sales from coal, owns the world's No. 2 coal reserves and has exposures to power, rail and port assets. Many investors favor Shenhua Energy over its Hong Kong-listed rival Yanzhou Coal Mining Co. for the former's growth potential and favorable revenue mix.
Shenhua Energy, which owns 5.9 billion tons of proved and probable reserves and operates 21 operating mines in western and northern China, expects production to rise by 47 percent to 149 million tons by 2007 from last year.
Keep duties on imported plate steel to prevent unfair competition
The US International Trade Commission heard plenty of evidence last week in support of keeping in place the tariffs on certain countries that produce cut to length steel plate. The hearing in Washington dealt with plate steel from France, Italy, Japan, Korea, India and Indonesia.
The duties helped bring a 90 percent drop in imports from those countries, from 1.1 million tons seven years ago to about 110,000 tons annually between 2000 and 2004.
US Rep. Pete Visclosky, D-Ind., is vice chairman of the Congressional Steel Caucus. He made forceful arguments before the International Trade Commission in favor of maintaining the penalties against those foreign producers. "If we allow these suppliers to be injured by unfair trade practices, we weaken our industrial base and compromise our own national security," he said.
US Sen Mr Evan Bayh noted that since the tariffs were put in place, the domestic steel industry lost 2,300 jobs in the plate sector. "It is difficult to imagine what the job loss might have been without these orders in place," Mr Bayh said.
Mittal Steels Mr Bob Insetta was among those who testified. "Today, for the first time in years, U.S. plate prices properly reflect the industry's costs," he said. That's what it's all about. Free trade is good, but it must be fair, too.
High gas prices squeeze US steel makers
US steel makers are complaining that the sevenfold increase in US gas prices over the past four years will cause more manufacturers to move offshore. US benchmark natural gas futures hit a peak last week of $14.58 per million British thermal units on the New York Mercantile Exchange. This is more than 50 per cent above the price peaks of last winter, and traders are factoring in even higher gas prices this winter, and for the rest of the decade.
Mr Hank Cox, spokesman for the National Association of Manufacturers in the US, which represents 14,000 manufacturers, said: "Right now natural gas prices is the biggest concern for our members, it has replaced healthcare costs. Some of our members are talking about shifting production offshore to countries where they can get access to cheaper natural gas supplies."
Knight Hawk Coal gets new excavator
The crew at Knight Hawk Coal has a new toy. Their Highwall miner is a $6 million piece of machinery that is new on the Southern Illinois coal scene. Its mean, lean, coal-excavating machine. The behemoth coal crusher cuts 900 feet into a coal seam to extract coal without disturbing the ground above at the Prairie Eagle Mine outside Cutler. Knight Hawk Coal President Steve Carter said the company purchased the Highwall in August 2004.
It is starting to pay for itself, Carter said. It is a low-cost, high- production machine.
The Highwall can recover 60,000 tons of coal per month. It takes only five men per shift to operate the apparatus. The Highwall miner draws upon both trench and underground mining methods. First, a 200-foot pit is cut in traditional strip mining fashion to expose the coal seam. Then the Highwall, with its 350,000 pounds of force cutter-head, removes coal in 12-foot swaths.
This technology enables us to perform underground mining without putting our people in harms way, Carter said. Crews operate above ground. Only the cutter-head enters the cavern.
While the Highwall technology has been around since the 1980s, it is the first time the device will be used in this region. There are only about 30 of such machines currently in use worldwide.
Knight Hawk Coal LLC was created in 1997. It now operates six mines in Perry, Jackson and Franklin counties.
