January, 25 2006
100 percent FDI allowed in coal mining in India
In a major push to the flagging economic reforms program Indian Government approved 100% foreign equity in several industries and permitted 51 percent foreign investment in retail trade for single brand products. "This is for the first time in 15 years that the whole foreign direct investment FDI policy has been reviewed in an integrated manner to remove anomalies and inconsistencies," Commerce Minister Mr Kamal Nath said
The FDI limit for captive mining of coal and lignite too would be raised to 100 % Mr Kamal Nath said.
Mr B Muthuraman is Business Standards CEO of the year
TATA Steel MD Mr B Muthuraman is Business Standards CEO of the Year. The award goes to him for the transformation of the steel giant into one of the most efficient companies in India and his triumphs on the global stage through aggressive acquisitions.
One of Mr Muthuramans pet initiatives is to make the best and cheapest steel. The company has prided itself over the years on being one of the cheapest global producers of hot metal, which is used to make steel. Mr Muthuraman turned this on its head when he took charge, pointing out that the cheapest hot metal often meant the most expensive and poor quality steel. Instead, he attacked the entire process to focus on making steel rather than gloating over the hot metal itself.
The list of previous winners of the BS CEO of the Year award includes Bharat Forge CMD Mr Baba N Kalyani, TATA group Chairman Mr Ratan Tata, Reliance group Chairman Mr Mukesh Ambani, Hero group Chairman Mr Brij Mohan Lall Munjal and Infosys Chairman Mr NR Narayana Murthy.
Adhunik Metaliks signs MoU with 11 OEMs
Adhunik Metaliks has entered into MoU with 11 OEMs in the automobile sector for the supply of auto grade special steel. Mr Manoj Agarwal MD of Adhunik Metaliks said that the company has entered into supply contract with Jai Parabolic springs for 40,000 tonnes per annum, Jamna Auto Industries Limited for 40,000 tonnes per annum, JMT Auto Limited for 18,000 tonnes per annum, Sharu Steel (P) Limited for 18,000 tonnes per annum, RL Steel Ltd for 12,000 tonnes per annum, Eknath Rolling Mills Pvt Ltd for 4,000 tonnes per annum, Akar Tools Ltd for 3,500 tonnes per annum, V Cube Forge (India) Ltd for 3,500 tonnes per annum and Harig Crankshafts Ltd for 2,500 tonnes per annum.
He added that the company is at an advance stage of getting product quality approval from auto major like Tata Motors, Bharat Forge, Maruti Suzuki, Ford, Hyundai and M&M. Once the approvals are received Adhunik Metal will enter into long term supply contracts with these companies.
The current product portfolio of the company includes Carbon and alloy billets. Following the implementation of phase two of the project would include various grades of special alloy and stainless steel, suitable for automobile, engineering, utensils and seamless tube industry.
Zamil Steel plans $20m factory in India
Saudi Arabia's Zamil Steel Industries, a sector business of Zamil Industrial Investment Company, said it will set up a $20 million factory in the western Indian state of Maharashtra to design and produce pre engineered steel buildings. The new facility is scheduled for completion towards the end of this year and will have an annual production capacity of three million square meters of pre engineered steel buildings.
Zamil Industrial Investment MD Mr Khalid Al Zamil said "This initial investment of $20 million, which we have made through Zamil Steel India, is part of our investment strategy for the dynamic and growing Indian marketplace. Zamil Steel Industries is a global leader in manufacturing pre-engineered steel buildings and we fully expect our products will partly service local needs and requirements. "In the coming years we anticipate raising further our total investment to $30 million to establish an additional manufacturing facility in the country."
Pre engineered steel buildings have many applications and are used as warehouses, factories, aircraft hangars, commercial centers, offices, recreation centers and showrooms. The most notable advantages of pre engineered steel buildings are the low cost initial investment, the fast construction time, the low maintenance cost, the large clear span interiors, and the ease for future expansions.
SAIL expands Bolani capacity
Steel Authority of India SAIL has set up a new 600 tonnes per hour capacity crushing and screening plant at its Bolani mines in Orissa. The mine is SAILs principal source of iron ore for its Durgapur Steel Plant. Apart from meeting the demand of DSP, Bolani supplies some quantity to Bokaro Steel Plant.
DSP is planning to increase production under the corporate plan of SAIL and will require 5.3 million tonnes of iron ore in the next seven years to reach production of 2.6 million tonnes of saleable steel. It currently needs 3.6 million tonnes of iron ore to produce 1.58 million tonnes of saleable steel.
The mine, located on the Orissa-Chhattisgarh border, has recorded a production of 3.41 million tonnes, a growth of 3.33% over last year.
STC gets iron ore mine on lease in Karnataka
The state owned State Trading Corporation of India STC has been given an iron ore mine on lease in Hospet, Karnataka and the company is planning to offer equity stake in the project. STC plans to use the iron ore from the mine for its global operations and is looking for a partner who is already established in this sector.
The lease is for an iron ore mine of about 514 hectares. However, I cant give estimates about reserves, CMD Mr Arvind Pandalai told press Negotiations between miners and steel companies for fiscal year 20006-07 is currently going on and STCs ownership of the iron ore mine in Hospet could also have an impact on these talks.
PSL to get funds for CAPEX from IFC
The International Finance Corporation IFC the private sector arm of the World Bank Group has agreed to provide $20 million as financial support to PSL Ltd, the countrys largest pipe manufacturer. The financing will support the expansion of PSLs production capacity to meet the domestic and international demand for large-diameter steel piping for use in oil, gas and water applications.
IFCs financing comprises an equity investment of $5 million and a loan of $15 million, which will support the expansion of PSLs installed capacity for large diameter steel pipe manufacturing from 6,75,000 tonne to 14,25,000 tonne a year
Mr Ashok Punj MD of PSL, said: IFC is playing an important part in our expansion plans and is helping us strengthen our financial position. IFC is also helping us upgrade our corporate practices in environmental and occupational health and safety management.
PSL is engaged in various types of pipe coating and pipe manufacturing with plants across Daman, Kandla, Nani Chirai, Chennai, Varsana and Vishakhapatnam.
Gujarat NRE net declines 58%
Gujarat NRE Coke Ltd has reported a 58.3% decline in net profit for the quarter ended December 31, 2005. The net profit stood at Rs 12.5 crore at the end of December against Rs 30 crore in the same period last fiscal. The companys earnings slipped despite a 6.74% growth in sales during the period. The sales revenue stood at Rs 96.5 crore at December end up from Rs 90.4 crore in the corresponding period previous year.
This, in other words, means that Gujarat NREs operating margin has declined during the last quarter of the current financial year which had pulled down the quarterly earnings of the company. According to the company, the third quarter was very bad for the entire met coke industry as domestic prices continued to fall. From the level of Rs 11,000 per tonne, the price has come down to Rs 7,000 a tonne. As a result, we were badly hit, said Mr Sumit Khetan, president, Gujarat NRE Coke Ltd.
Gujarat NRE, however, hoped the trend would reverse soon and the fourth quarter would be better. The worst is behind us, Mr Khetan added.
RINL complimented for outstanding performance
A panel of judges to evaluate the Visakhapatnam Steel Plants eligibility criteria for the Prime Ministers Trophy 2004-05 has complimented the plant management for its outstanding performance in the areas of production, safety, peripheral development, environment and cleanliness and for the lowest specific water consumption in the Indian steel industry.
The panel comprises of Mr YS Rajan former vice chancellor of Punjab Technological University, Mr PDF Lam ED of Godrej, Mr ERC Shekhar former MD of Bhilai Steel Plant, Mr KC Agarwal and Mr YP Sarma former MDs of Durgapur Steel Plant, Mr S Banerjee former director of RDCIS, Mr MK Bharati national convener of Lok Jan Shakti Party and Mr Ajoy Kumar joint secretary of Steel. Officials from PMs Trophy Secretariat Mr Neeraj Sharma and Mr P Bansal are also a part of the panel.
RINL CMD Mr Siva Sagara Rao said that the plant could achieve the best results due to collective efforts. Mr Rao said that the VSP registered a production of 3.92 million ton hot metal, 3.56 million ton liquid steel and 3.17 million ton saleable steel in 2004-05.
STC records Rs 9,500 cr turnover during 2004-05
The State Trading Corporation of India STC has recorded a turnover of over Rs 9,500 crore during the year 2004-05 and hopes to achieve higher growth in the coming years through diversification. The STCI had recorded a turnover of Rs 8350 crore during 2003-04. While informing this to reporters, STC CMD Mr Arvin Pandalai said the Corporation is engaged in diversifying its activities so as to sustain and achieve yet higher levels of growth.
The Corporation, in its bid at diversification, is supplying iron ore and steel raw materials from India and other countries to a steel plant in Philippines through a collateral management agency. Similar operations are being planned in other countries as well, he informed.
The Corporation has also arranged import and supply of 1.9 million tonnes of thermal coal for NTPC.
Bokaro steel city blocked by displaced persons
Life came to a virtual standstill in SAILs steel city Bokaro when all entry and exit points to Bokaro were blocked by people agitating against the brutal violence unleashed by the police yesterday on displaced people demanding jobs in the steel plant. Normalcy was restored only late in the evening.
It is reported that the backlash was related to the steel plant giving selective employment to 24 of the displaced during the last few months, raising hopes among others. Officials also claimed that at least 10 rounds of negotiations had been held between BSL management and the displaced peoples forum.
Surana Industries ties up funds for steel unit
Surana Industries has tied up funds for its Rs 473.27 crore integrated steel complex. Mr Surana has informed the BSE about its plans for further expansion by implementing an integrated steel complex at Raichur. For this purpose, we have applied to the Karnataka government for an iron ore mine.
The total cost of the steel complex has been estimated at around Rs 473 crore, indicated the company sources. The company proposes to fund this project by raising equity of Rs 141.97 crore and term loans of Rs 331.30 crore.
Dofaso and Arcelor announce signature of support agreement
Dofasco and Arcelor announced that they have signed an agreement for Arcelor to make a revised all cash offer to acquire all of Dofasco's outstanding common shares in a supported, all cash transaction for total consideration of approximately C$5.6 billion or C$71.00 per common share.
Dofasco's Board of Directors has resolved to unanimously recommend to Dofasco shareholders that they accept Arcelor's offer, This move follows the announcement on January 23, 2006 by ThyssenKrupp AG of its decision to waive its "right to match" the C$71.00 per share proposed all-cash offer to acquire all of the common shares of Dofasco Inc. announced by Arcelor S.A. on January 16, 2006 and the announcement by Dofasco on January 23, 2006 of the termination of the support agreement between Dofasco and
Mr Brian MacNeill Chairman of Dofasco's Board of Directors said "Dofasco's Board of Directors unanimously supports the Arcelor offer on the basis that it provides excellent value to Dofasco shareholders and reflects the strategic value of Dofasco to Arcelor as a platform for North American growth."
Mr Guy Doll CEO of Arcelor stated that "We are very pleased by this agreement with Dofasco and look forward to welcoming Dofasco as a partner of the Arcelor group. We are convinced that the quality of Dofasco's operations and our superior synergies will create value for all stakeholders." Mr. Dollalso underlined that Dofasco's highly regarded corporate values with respect to its relations with employees, and its legacy of active community engagement, are principles that Arcelor shares and will continue to support.
Acerinox confirms Euro 50 to 60 hike in CRSS prices from February
Spanish Acerinox SA said it will raise its cold rolled stainless steel prices by Euro 50 to 60 per tonne as of February. In a statement, the steel company said it will raise prices by Euro 50 in February, then by Euro 60 in March.
Analysts said This is not a major surprise following the price increases announced by Arcelor and ThyssenKrupp, confirming that the stainless steel sector has reached a turning point, after the sharp decline of last year, and that demand is finally picking up in Europe.
They said the price hike should represent an 8% increase over base prices of last December, adding that they are forecasting an average base price raise of 10%in Europe in 2006. However the analysts noted, however, that overcapacity in Europe is still an issue and that nickel prices could remain high throughout the year.
Air Liquide expands in China
Air Liquide will invest more than Euros 20 million to build a new air separation unit ASU in China. The move follows the French companys establishment in Hangzhou of Air Liquide Zhejiang in December 2004. The new ASU will be build in the Hangzhou Economical Development Area which is according to the company recognized as one of the top industrial parks in China.
Air Liquide will supply liquid nitrogen, oxygen and argon, with a total capacity of 430 tons per day, to customers in Hangzhou as well as in the Zhejiang Province and the Greater Shanghai area. The ASU will also supply large users by pipeline. The new ASU will be designed and manufactured by Air Liquide Hangzhou, which is a 100 per cent Air Liquide subsidiary and the companys engineering centre in China.
Mr Jean-Pierre Duprieu of Air Liquide, said: With growth rates of 40 per cent each year, Air Liquide is experiencing expansion in China in all its business lines. This investment in a large ASU will further strengthen Air Liquides presence and market position in the promising Hangzhou zone. It represents a major move into a new and rapidly growing area.
Air Liquide has been developing the Greater Shanghai market for more than 15 years. It already has ASUs in Wuxi and Shanghai and will shortly commission another in Zhanjiagang to supply Zhanjiagang Posco Stainless Steel by pipeline and also the local market.
Latin American tube market up due to high oil prices
Steel tube producers throughout Latin America are optimistic and bullish about market conditions over the long term thanks to high oil prices in international markets. "This is a good moment for the oil market; demand for tubes in general is very solid and strong, and we expect a positive year for the industry on a global scale," Mr Rafael del Castillo, president of Maverick Tube Latin America told BNamericas. In addition, the executive believes the environment will stimulate demand for other services that are linked to the oil industry.
Mr Le Gutirez, director of Mexican steel tubes producer Tubacero, said that "when oil prices exceed US$20 a barrel all projects are do-able and in Mexico we now have work for several more years." According to Mr Gutirez, the low oil prices of the 80s and 90s discouraged investment in Mexico's oil industry and delayed production of proven reserves. "We are now experiencing the return of an oil price recovery trend and as the previous trend lasted about 20 years. I expect the current one to run if not for 20 years at least 10 or 15 years," he said.
Moreover Del Castillo said he believes that conditions exist to keep steel prices stable for six months, "which is good for everyone."
Meanwhile, business will continue to grow, according to Gutirez. "We would be happy if things turn out like they did in 2005, which was a good year, and we remain confident and very optimistic," he said.
Allegheny Ludlum announces SS price increase
Allegheny Technologies Inc announced that ATI Allegheny Ludlum is increasing transaction prices for all cold rolled stainless steel sheet, strip, and Precision Rolled Strip products. Effective with shipments beginning February 20 transaction prices for these products are being increased by approximately 3%, based on February 2006 surcharge levels.
This will be achieved by reducing the functional discount by two points, which will result in a base price before surcharge, increase of approximately 6%. All surcharges will remain in effect. This increase is necessary to offset rising manufacturing costs and to support capital investments and growth.
ATI Allegheny Ludlum is a world leader in the production and marketing of sheet, plate, and strip specialty materials including stainless steel, nickel-based alloys, titanium, and titanium-based alloys. The company also produces grain-oriented silicon electrical steel products and tool steel plate.
Expressions of interest invited for Orissa rail link project
Rail Vikas Nigam Limited RVNL has invited EOIs for equity participation in the 82 km Haridaspur to Paradip broad guage rail link project in Orissa. The EOIs, invited from strategic investors in the project, are to be submitted by February 3, 2006. The project, scheduled to be completed by 2008, involves upgrade of line to handle 30-tonne capacity freight and electrification.
On completion, this would emerge as a significant line for carriage of steel and coking coal, as it would cater to the steel cluster in Dubri and also prove useful for Poscos upcoming steel plant. This BG rail link would establish a direct link between the iron ore rich areas of Orissa and Paradip Port, thereby shortening the chargeable distance by about 335 kilometer in comparison to the existing route via Kharagpur.
RVNL had signed a MoU with four companies, namely Jindal Steel and Power Ltd, Rungta Mines, Essel Mining and Industries and Paradip Port Trust, for the project in May 2005. Ministry sources said that EOIs were called for as more companies had shown interest in the project after the MoU was signed.
While RVNL would have 30% equity share in the project that of the other parties would be decided after the proposals are received. Majority equity share, however, would be vested with RVNL.
Evraz offers 5% shares to boost liquidity
Evraz Group will offer another 5% of its shares for public trading, a move set to significantly boost the liquidity of Russia's biggest steelmaker. The sale of shares could raise about $330 million, based on the current $6.6 billion market value of Evraz, which floated 8.3 percent of its shares in an initial public offering in London last summer, pocketing $422 million.
Shares would be put for sale by Crosland Global, the Cyprus registered company that holds about 90% of Evraz shares, Evraz vice president Ms Irina Kibina said. "The shares are being sold by Crosland to raise the liquidity of Evraz stock and widen its circle of investors," Ms Kibina said
Crosland is the vehicle through which majority shareholder and outgoing president Mr Alexander Abramov, who with a personal fortune worth $2.9 billion is estimated by Forbes to be Russia's 14th richest man, owns 59.11% of Evraz. Evrazz newly elected board chairman Mr Alexander Frolov and its new president Mr Valery Khoroshovsky also own shares through Crosland. Mr Frolov holds 28.18% and Mr Khoroshovky has 1.88%
AK Steel reports loss for Q4 & 2005
AK Steel Corp. posted a $41.5 million loss in the fourth quarter, citing several large charges. The loss was less than the $102 million loss in the same quarter last year. The company had net sales of $1.3 billion for the quarter, down slightly from 2004 fourth quarter sales of $1.4 billion.
The largest charge was related to AK Steel's investment in AK-ISG Steel Coating Co a JV in Cleveland that will be indefinitely idled in 2006, and losses from previously idled equipment at its Butler Pa and Mansfield plants.
AK Steel also reported a loss for the full year, which ended December 31, reversing a profit from 2004. The company had a net loss of $2.3 million in 2005, compared with a profit of $238.4 million in 2004. The 2004 results included a $201 million gain from asset sales. Sales for the year reached $5.6 billion, compared with sales of $5.2 billion in 2004.
CEO Mr James Wainscott said the continued volatility in energy, raw materials and spot market pricing underscores the company's need to lower operating costs.
EU steel prices unlikely to move up in 2006 MEPS
MEPS have forecasted that prices for flat and long products in Europe both saw a general decline during the course of 2005. But the fall was far smaller than it could have been, given the huge stock overhang and this is giving rise to hopes for more stability of pricing in 2006.
The MEPS weighted average transaction price for flat products fell by 20% between January and December 2005. Mills cut their production, and prices dropped by less than they did in previous down-swings of the cycle. For long products, the MEPS average transaction price declined by a smaller margin more than 9% over the year as a whole. From Januarys 447 per tonne, the average fell to 352 per tonne in August a substantial drop of 21%. In January 2006, prices for both flat and long products stand at lower levels than they did a year ago, but are nevertheless very much higher than they were in January 2004, before the remarkable upsurge that took place later that year.
MEPSs outlook for flat and long product prices in Europe in 2006 is that, on average, they are likely to be lower than in 2005. It is difficult to envisage that Europe will escape the knock-on effects of global over-supply. The continent is very likely to see mounting pressure from import competition as the year progresses. Flat product prices look most vulnerable to import pressure. The stock imbalance that loomed over the market for much of last year may have largely dissipated, but the market is still not ready to accept higher prices. Those mills that attempted to push through price rises of 20-30 per tonne in January have had no success so far leaving the MEPS average transaction price this month unchanged from December.
With growing evidence of over-supply globally, especially in Asia, an increase in imports will pose a threat to EU markets. Last year when the mills cut their production, it gradually became clear they were not simply leaving a gap for imports to fill. This year, things might be different. Any void might well be plugged by the larger volumes of flat products now available internationally. The European mills might not reap the benefits of production cuts in the form of higher prices. This is not to say that prices will fall through the floor. But it is difficult to see where any strong upward move will come from. There are signs of some improvement in industrial activity, notably in France and Germany. This may generate an increase in steel consumption. But any increased buying might equally go to imports.
In long products, with certain exceptions, imports are less of a threat to European mills. Fewer long-distance imports take place, although there are nearer sources of supply such as Turkey that could test European markets. Wire rod is one of the exceptions, and here the European mills are already making noises about anti-dumping action in an effort to scare off imports that they view as disruptive. They will be keeping their attention closely focused on import licensing and arrivals as 2006 proceeds
China's steel industry may involve in Global M&A- Siemens
Germany's conglomerate Siemens boldly forecasts that the Chinese iron and steel industry will be inevitably involved in the global mergers and acquisitions. And only about ten Chinese steel makers would finally survive.
It is the truth that there are defects in the Chinese iron and steel industry like inappropriate deployment although China's steel output exceeds the total of the US and Japan, No. 2 and No. 3 steel producers in the world. Presently, there are more than 1,400 iron and steel processing companies in the country, but many small and ultra-small ones are weak in innovation and competitiveness.
Steel industry experts aired that the industry in China has generated excessive production. Those companies with high-energy consumption will be kicked out of the market or will be absorbed by others from the perspective of the industry experience worldwide.
In the light of the speculation by Siemens, China's ten leading steel makers would produce a half of the overall output across the country, and the production will probably hit 75% before 2020.
Severstal rumored to bid for Estonian Galvex plant
Severstal will offer $160 million for Estonia's Galvex plant, which makes 500,000 tons of hot-dipped galvanized steel per year, Eesti Paeevaleht reported, without saying where it got the information.
Galvex owes about $150 million to investment fund SPCP Group, which also aims to take over the factory, located at Muuga harbor in Tallinn, the daily reported on its web site Tuesday.
Strong demand for coking coal Excel
New South Wales miner Excel Coal Ltd says global demand for coking coal remains strong but it expects the price of weaker grades of coking coal will decline next year. The company said contract coal prices for the next year have not yet been concluded by major consumers and suppliers.
"Global demand for coking coal remains strong," it said. "However, it is likely that the price of weaker grades of coking coal will decline next year.Demand for export thermal coal also remains strong."
Naica Zinc mine workers accept Peles offer
Workers at Mexico's Naica zinc-lead mine owned by mining and metals group Industrias Peles have unanimously voted to accept a pay hike offer from the company and will not strike, mining-metalworkers union STMMRM said in a statement. The workers had threatened to strike starting January 21 later extending the deadline to January 27 before accepting Peles offer.
Each of the more than 350 unionized workers voted to accept the proposal, which included a 6% pay rise, a 2% one-off payment and life insurance benefits, STMMRM said.
Naica churned out 26,767 tonnes of lead concentrate, 22,586 tonnes of zinc concentrate, 114 tonnes of silver concentrate and 103kg (3,311oz) of gold in 2005, according to the union statement.
Evraz assumes ownership rights in Vitkovice Steel
Russian company Evraz Group has assumed ownership rights in Czech steel maker Vitkovice Steel which it bought from the state last summer, Evraz Group has told local press. At a general meeting last Friday, five representatives of Evraz top management assumed posts in Vitkovice Steel statutory bodies, with Mr Alexander Frolov becoming chairman of the supervisory board.
Evraz also decided that Vitkovice Steel supervisory board will only have six members instead of nine. The members are Evraz CEO Mr Valery Khoroshkovsky, Evraz CFO Mr Pavel Tatyanin, and Mr Antonino Craparotta, senior vice-president for competitiveness. The two members representing employees are Mr Rostislav Fromelius and Mr Jaroslav Novak.
Mr Jiri Stanek, Mr Jan Nedvidek, Mr Jaroslav Kubovic, Mr Radmila Kleslova, Mr Antonin Hanzalik, Mr Jan Skurek and Mr Pavel Makovy left the supervisory board.
On the board of directors, the new owner is represented by Mr Alexander Sorokin, director for international production activities in Evraz. Vitkovice Steel CEO Mr Vladimir Bail remains chairman of the company's board of directors. Other members are Mr Zdenek Kvapik, Mr Jiri Postulka and Mr Jiri Chuchro.
Vitkovice Steel, the third largest steel company in the Czech Republic, had a profit of CZK 1.5 billion on CZK 13.5 billion sales in 2004, with a 30 percent increase in both indicators expected for last year. Evraz paid more than CZK 7 billion for Vitkovice Steel shares.
Dofasco terminates support agreement with ThyssenKrupp
Dofasco Inc. announced that the company's Board of Directors unanimously agreed to terminate the support agreement between ThyssenKrupp AG and Dofasco pursuant to ThyssenKrupp's announcement that it has waived its right to match the offer of C$71 per common share made by Arcelor S.A.
Under the support agreement between ThyssenKrupp and Dofasco, a break fee of C$215 million has become payable upon such termination.
Russian GDP grew by 6% in 2005
The head of Russias Federal Statistics Service Mr Vladimir Sokolin announced that the countrys gross domestic product grew by 6% in 2005.
The original GDP growth forecast made by the Russian government for 2005 amounted to 6.5% but in May 2005, Russian business daily Vedomosti reported that the government forecast had been cut from 6.5% to 5.8%. Slowing oil export volumes were to blame for the downgrade, meaning Russia was unable to capitalize on near-record international crude prices. We cannot ignore these factors, Vedomosti quoted one ministry official as saying.
Still, at about the same time the International Monetary Fund forecasted that Russias GDP would grow by 6% We expect this years increase roughly at six percent. Though it is much less than last year, the capital inflow will start reviving, Mr Paul Tomsen, the IMFs senior resident representative in Moscow, was quoted as saying. Later, in September, the IMF changed its mind and downgraded GDP growth forecast for 2005 to 5.5% After a remarkable acceleration in 2003-2004, real GDP growth in the Commonwealth of Independent States (CIS) has slowed down noticeably in 2005. This has especially been the case in Russia, where policy uncertainty, the Yukos affair, and sharply higher marginal tax rates in the oil sector have been key factors in sluggish investment and sharply lower output growth in the oil sector, the IMF report said.
ThyssenKrupp may buy other assets
ThyssenKrupp AG, after bowing out of the bidding for Canadian steel producer Dofasco Inc., may seek to acquire other companies in North America to expand outside Europe, analysts said. This is not the last we've heard of ThyssenKrupp,'' said Mr Michelle Applebaum, an independent analyst.
Besides the acquisition of Dofasco, the alternative planning scenarios are a new mill or alliances,'' ThyssenKrupp said in its statement. After giving up on the Dofasco option, ThyssenKrupp will now further pursue these alternatives.''
ThyssenKrupp said it will focus on its $2 billion plant in Brazil, which it plans to build by 2008 to supply its mills in Europe and North America with low-cost steel slabs. CVRD would be a partner in the Sepitiba project in Rio de Janeiro state. ThyssenKrupp said yesterday that it had planned to use the slabs from Brazil to feed Dofasco mills as starting material for realizing its strategy in North America.
Chinese power producers set for coal price rise
Chinese power producers may have to pay as much as 8% more for their coal in 2006, a third year of record prices, after buyers and sellers were allowed to negotiate and set contract prices. Producers were asking for an average increase of 20 yuan ($2.50) a metric ton for this year's supplies as the government removed a limit on prices, Mr Xie Juchen, head of Zhong Neng Power Industry Fuel Co said. Mr Xie's company buys coal for about half of China's power plants.
"Power companies can't pass on higher costs of coal as quickly and are reluctant to agree to higher prices," Mr Xie said. "They are still holding out for steady prices this year to keep profitability after fuel prices surged."
Coal prices in China, the world's biggest consumer and producer of the fuel, increased in late 2004 because of rising power demand. Transportation bottlenecks in the rail network in 2004 prevented efficient delivery of coal and bolstered prices, increasing costs for the nation's electricity generators and led to power shortages. The National Development and Reform Commission, the country's top economic planner, on December 27 removed a limit on the price of coal, allowing buyers and sellers to set annual contract prices. The commission in August last year limited fluctuations in the price to 8 % higher or lower than a benchmark rate.
Coal suppliers and buyers are continuing talks for annual supplies next week after failing to reach price agreements during 10 days of talks held from January 1 to January 10 in the eastern city of Jinan in Shandong Province. The companies are "hopeful" of reaching final agreements on prices after the week-long Lunar New Year holidays, Mr Xie said. Power companies may sign for about 600 million tons of coal under annual contracts this year, he said. China's week-long Lunar New Year holiday begins January 29.
Huaneng signs deal to build coal mine
China's biggest electricity producer, China Huaneng Group, yesterday signed a letter of intent with Shanxi Coking Coal Group to jointly develop a coal mine in the resource abundant province. Shanxi Coking will own 70% of the project, with the remaining 30% controlled by China Huaneng, according to the agreement. According to the LOI, the two State-owned energy companies will set up another 50-50 joint-venture to build and operate a 48.8 kilometer long rail route, linking the coal mine with the main transport network.
The project at the Xiegou mine is expected to supply at least 5 million tons of coal a year to Huaneng, which relies on the fossil fuel to drive the bulk of its power generating facilities. The mine is scheduled to yield a total of 10 million tons of coal a year in the first phase, with the capacity increasing to 15 million tons in the second phase, Huaneng said in a statement.
Huaneng is in talks with other local companies to jointly develop coal resources in North China's Shanxi and Shaanxi provinces, as well as in the Inner Mongolia Autonomous Region. These projects are expected to produce coal within a couple of years, company officials said last week. Mr Li Xiaopeng, president of Huaneng, last week told its annual conference that the power firm planned to secure 30 million tons of coal by buying stakes in coal mines, further increasing that figure to 80 million tons by 2010.
The power producer last year used about 100 million tons of coal to fire its 75 power plants across 23 provinces and regions in China. Only a small proportion of that came from coal mines in which Huaneng had a stake. Huaneng's move to secure long-term coal supplies follows price disputes between coal suppliers and users.
PSM wants withholding tax on steel import withdrawn
The Pakistan Steel Mills Corporation PSMC has recommended to the government to withdraw the exemption of 6% withholding tax available to some steel importers and allow the PSMC not to charge sales tax on items being exported. PSMC stated that after boom in the international steel industry in the past couple of years, prices of steel products had nose dived in the past six months by nearly S$200 a ton. This crashing of steel market is despite the fact that the raw material prices had increased by 70-112 percent a ton in the international market.
The above mentioned situation was further compounded when taking advantage of low tariff protection 5% to 0 % a ton, many countries such as China, Egypt, Ukraine, Turkey, South Africa, Iran and India flooded the local market with material mainly imported by under-invoicing. Besides, some of the importers exempted from six percent withholding tax are selling their imported stuff in the domestic market on reduced prices.
Australia's Excel H1 coal output up
Australia's Excel Coal Ltd said that first half coal production for the period ended December 31 rose by 12% on year after the expansion of the Wambo open cut mine. Saleable coal production rose to 2.8 million tons in the six months to December 31 up from 2.5 million tons in the same period a year earlier. Second quarter production was up 9% on year to 1.3 million tons, Excel said.
First half coal sales rose 26% on year to 2.4 million tons, "reflecting increased production as well as relatively heavy shipping schedules from all mines," the Sydney based miner said.
Development costs at its Millennium coal preparation and handling plant will increase by about A$35 million and it's running about four months behind schedule, Excel said in a statement. The increase in Millennium's development cost to A$95 million includes an increase in plant capacity of 20% to 1,200 metric tons an hour.
Zamil Steel Vietnam posts strong growth rate in 2005
Zamil Steel Vietnam ZSV yesterday said it earned US$52 million in sales revenue last year, registering a YOY increase of 18% due to the increasing demand in domestic and foreign markets. Vietnams largest pre engineered steel maker said 2005s figure has helped it reach an average annual growth rate of 23% in the last five years, one of the highest growth rates in Viet Nams ailing steel sector.
Besides increasing domestic demand, ZSV said the expansion of its export markets in 2005, which represents 40% of the companys total output, has considerably contributed to the companys high growth rate.
"ZSV has expanded its markets to many Asian countries, including Thailand, Japan, Singapore, Myanmar, Malaysia, Indonesia, Philippines, Cambodia, Laos, Mongolia and Nigeria" said ZSVs GD Mr George E Kobrossy.
Headquartered in Dammam Saudi Arabia Zamil Steel has fabrication facilities and R&D centers in Saudi Arabia, Egypt and Viet Nam. Zamil Steels sales and marketing offices are distributed in 48 locations worldwide.
Molybdenum mine starts near Helena
A Canadian company has started mining molybdenum in a new open-pit operation near here and wants to expand the project. Molybdenum is used to harden steel and inhibit corrosion. Prices are strong in part because of demand for steel in China as construction in that country booms.
The Bald Butte mine on private land near Helena is a project of Montana Molybdenum, a subsidiary of United Bolero Development Corp., based in British Columbia.
Mine supervisor Mr Joe Bardswich said United Bolero, which is pursuing a molybdenum project in the Pioneer Mountains between Butte and Dillon, chose the Bald Butte site because the molybdenum is near the ground's surface. "It's close to the surface so it's cheap to mine, it's a better grade ore and it's on private property," Mr Bardswich said.
Operating on private property eliminates the need to satisfy some regulations that would apply to public property. The company reached a deal with landowners Mr Harmut and Ms Inga Baitis of Missoula almost a year ago and spent the summer test drilling. Mining began last month.
Steel Technologies reports first quarter results
Steel Technologies Inc reported results for the first fiscal quarter ended December 31, 2005. For the three months ended December 31, 2005, sales were $212.6 million, a 16% decline from the record $254.0 million reported for the same period a year ago. Net income for the quarter was $3.2 million compared with a record $14.5 million in the year earlier period.
"In our first fiscal quarter of 2006, volume improved 6% sequentially from the previous quarter, along with quarter-to-quarter improvements in operating margins and net income," said Mr Bradford T Ray Chairman and CEO. "Although shipments of approximately 270,000 tons were down 8% from year earlier levels, this was in line with expected shipments as indicated in an earlier release.Our Mi-Tech Steel joint venture experienced solid results during the quarter," Mr Ray added. "Mi-Tech continues to play an important role in our North American platform."
Steel Technologies processes flat-rolled steel to specific thickness, width, temper, finish and shape requirements for automotive, appliance, lawn and garden, office furniture, agriculture, railcar, construction, hardware, and consumer goods. The Company has 20 facilities, including its joint-venture operations, located throughout the United States and Mexico.
Credit Suisse raises ThyssenKrupp to outperform
Credit Suisse upgraded German steel maker ThyssenKrupp AG to outperform from neutral, noting that ThyssenKrupp showed capital discipline in not upping its bid for Canada's Dofasco Inc.
The broker said the combination of potential restructuring or disposal of ThyssenKrupp's autos and stainless steel division and a likely wider economic recovery in German also contributed to the upgrade. ThyssenKrupp shares rose 3.6% in Frankfurt.
Norilsk to Boost Output
Norilsk Nickel may increase nickel output by as much as 2.1% this year. Nickel output was unchanged at 243,000 tons last year and is expected to rise to 243,000 tons to 248,000 tons in 2006, the Moscow-based company said.
Copper production rose 5,000 tons to 452,000 tons and will this year fall to 422,000 tons to 427,000 tons. (Bloomberg)
Russia extends zero duty on Zinc & its ore
Russian government said that it had extended indefinitely a zero import tariff on zinc ores and concentrates, and that it had scrapped a 5% import duty on iron ores and concentrates. Initially, Russia scrapped a 5% import tariff on zinc ores and concentrates for nine months to support domestic zinc producers.
Russian steelmakers produce steel largely from iron ore mined within the country. But with most domestic mining assets already controlled by key steel companies, some majors like Magnitogorsk Iron & Steel Works are increasingly looking for more imports, mainly from Kazakhstan, Iran and Ukraine, as well as from Brazil.
China Yanzhou Coal produced 34.7 million tonnes coal in 2005
China's Yanzhou Coal Mining Co said in 2005 it produced 34.66 million metric tons of raw coal, or 31.94 million tons of commercial coal. The company didn't provide comparative figures for the previous year's coal production.
Yanzhou said in a legal notice that its output in December was 3.1 million tons of raw coal, or 2.82 million tons of commercial coal, higher than November's production of 2.95 million tons of raw coal or 2.73 million tons of commercial coal.
4Q profits up at US railroad companies BNSF & CSX
Profits surged at two of the US's largest railroads in the fourth quarter as a growing economy increased demand to move everything from coal to consumer goods. Burlington Northern Santa Fe Corp., the nation's second largest railroad company, said Tuesday its fourth-quarter earnings rose 24 %. CSX Corp., the largest rail operator in the eastern United States, said profits more than tripled from a year ago, a jump magnified by a year-ago loss from a business the company has since sold.
Demand was so strong that both companies were able to push rates up in the fourth quarter, allowing them to overcome the high cost of fueling their locomotives. Burlington Northern's chairman and CEO Mr Matthew K Rose said the demand for rail freight service was unprecedented. CSX CEO Mr Michael J Ward called it "an economic environment that favors rail transportation."
Burlington Northern, based in Fort Worth, reported profit of $430 million up from the year-ago quarter's $347 million, or 91 cents per share. Revenue rose 19% to $3.55 billion from $2.98 billion.
For the October-December quarter, CSX earned $237 million up from $66 million in the same period of 2004. The 2004 results were dragged down by a $93 million loss on an international terminals business that CSX later sold. Revenue rose to a record $2.22 billion, up from $2.18 billion but below analysts' $2.33 billion forecast. For all of 2005, CSX earned $1.15 billion up from $339 million in 2004. Revenue rose to $8.62 billion from $8.04 billion.
ThyssenKrupp to shun hostile steel takeovers
ThyssenKrupp does not favor hostile takeover bids for other steelmakers since they are too expensive, CEO Mr Ekkehard Schulz told a news conference on Tuesday. He was speaking after the German group dropped out of a bidding war for Canada's Dofasco but expressed interest in other acquisitions
TopInterros cuts stake in Norilsk Nickel to 0.2%
Interros has reduced its stake of common shares in Norilsk Nickel to 0.2% from 6.79%, Norilsk Nickel said in a press release. However, the Invest holding company has increased its stake in common shares to 6.59% from zero, the release says.
"This is an internal transaction at the Interros group and the stakes of Mr Vladimir Potanin and Mr Mikhail Prokhorov, Norilsk Nickel's main shareholders, remain unchanged," a Norilsk Nickel spokesman told
Aztec Resources reports on quarterly activities
Aztec Resources Limited announced its quarterly report on activities. In its quarterly highlights, the company said that it signed a Letter of Intent with Marubeni indicating their intention to purchase up to 1.5 million tonnes of iron ore per annum and assist with project funding up to A$20 million.
Also, it said that the Environmental Protection Authority (EPA) assessment of the project has concluded that the project can be managed to meet the EPA's objectives, subject to conditions.
Finalization of a Co-Existence Agreement with the Dambimangari People and completion of Native Title Act processes well under way, it said. Also, the company said that ministerial approvals and grant of the mining permits for the project are on track for March 2006.
The also company said that Mr Peter Bilbe former General Manager Operations for Portman Limited was appointed as Managing Director.
Territory Iron upgrades iron ore reserves at Frances Creek
Territory Iron Limited announced that Ore Reserves at its Frances Creek iron ore mine in the Northern Territory have currently been estimated at 3.5 million tonnes at 61.1% Fe following a recently completed resource and strategic mining study by Snowden Mining Industry Consultants. This study was carried out to assist Territory Iron review the viability of a mining operation at the project and followed the completion of the 2005 drilling program at the project.
Resource tonnage at Frances Creek has been upgraded to a total of 6.8 million tonnes at 60.6% Fe. This is an increase on the 3.4 million tonnes at 61.5% Fe reported in the companys February 2005 prospectus. This upgraded resource estimate includes 1.08 million tonnes at 63.9% Fe from Territory Irons Helene 6/7 deposit. Resources and Reserves are JORC compliant.
Territory Iron MD Mr Doug Stewart said the results were encouraging considering only nine of 55 known deposits occurring along a 35 kilometer belt of iron prospective host rocks had been evaluated in detail. These results are very pleasing, Mr Stewart said. Our aim now is to complete a feasibility study and commence mining operations as quickly as possible. We will also be aggressively exploring our additional deposits and believe the high probability of identifying additional reserves will extend the life of any future mine operations. Its been more than 30 years since iron ore was produced and exported from the Frances Creek mining centre. These encouraging results take us a step closer to realizing our dream of reviving the mine and advancing from exploration to production by late 2006, early 2007.
Mr Stewart said the robust iron ore market and continued strong demand from China for iron ore underpinned the solid fundamentals of the project. He said Frances Creek was close to the Adelaide to Darwin rail line and that the Darwin port provided attractive infrastructure for future operations. Negotiations with these parties are in the final stages. He said new mining and processing equipment and modern exploration techniques were just some of the changes that had occurred over the past 30 years which made the revival of the Frances Creek iron ore field potentially very rewarding.
UK Coal plans to extend Kellingley coal mine
UK Coal plans to extend mining work at the Kellingley colliery super pit in North Yorkshire to access about three million tonnes of coal in the Great Heck area in the next six years. Coal reserves at the new site were originally allocated to a mine that was closed in the early 1990s.
Residents have raised concerns about subsidence from the deep mine and want assurances about the limits of any excavation if the plans are approved. UK Coal said it understood people's concerns and had already revised its original application to address them.
"In extraction industries like coal mining it's not uncommon for people to have concerns," said UK Coal spokesman Mr Stuart Oliver. "But Kellingley has been mining coal very successfully over a number of years.We have no desire to change from the current plan, but if there is any change necessary, there will be a full consultation. We will keep people informed."
Natural Resource closes second phase of acquisition in Illinois Basin
Natural Resource Partners LP announced that it has closed the second of three separate transactions to acquire coal reserves in the Illinois Basin. The second transaction for $35 million was funded with senior notes issued in a private placement announced on January 19. The reserves were purchased from Williamson Development Company LLC, formerly known as Steelhead Development Company LLC, and are leased to Williamson Energy LLC.
Williamson Energy is progressing well with development of the mine, and NRP expects the third and final closing to occur in mid-2006. Following the third closing, NRP will have acquired interests in 144 million tons, approximately 60% of which will be owned in fee.
The first production is anticipated to occur later this year during longwall development and NRP expects the acquisition to be accretive on a calendar year basis beginning in 2007 when longwall production commences. Once the mine is in full operation, production is anticipated to exceed 7 million tons per year generating royalty revenues of $16-18 million.
"We are very pleased with the pace and quality of work on this mine. It will be a first class operation and we are excited to be a part of a project that will have substantial long-term benefits for our unit holders," said Mr Nick Carter, President and COO.
Natural Resource Partners LP is headquartered in Houston with its operations headquarters in Huntington. NRP is a master limited partnership that is principally engaged in the business of owning and managing coal properties in the three major coal producing regions of the United States: Appalachia, the Illinois Basin and the Powder River Basin.
Nigerian steel workers threaten nationwide strike
Steel workers have threatened to begin industrial action as from February 1 unless the federal government removes Mr. Douglas Nsofor, MD & CEO of National Steel Raw Materials Exploration Agency NSRMEA, Kaduna, from office. The workers are protesting Mr Nsofors alleged high handedness, gross mismanagement and corrupt practices. No fewer than 190 workers of the agency are calling for his sack.
In a letter to Mr Liyel Imoke, minister of power and steel, the workers under the umbrella of Iron and Steel Senior Staff Association of Nigeria ISSSAN demanded his immediate removal in the interest of industrial peace in the steel sector.
