January, 31 2006
Essar Steel registers dip in Q3 net profit
Essar Steel has registered a 29.9% dip in the net profit for September-December quarter of 2005-06 over the corresponding period last year. The company has posted a net profit of Rs 1.38 billion in Q3 as against Rs.1.98 billion in corresponding quarter in the last fiscal It however registered a rise in revenues for the quarter at Rs.14.42 billion as compared to Rs.14.29 billion in the corresponding period of the previous year
"The rising costs of inputs like iron ore, gas, iron ore fines and other raw material, coupled with falling prices of finished steel in domestic and international markets had an impact on the profitability," the statement said.
Overall for the nine-month period of April-December, the company registered a growth of 11.66% in total income at Rs.46.84 billion, as against Rs.41.95 billion in the corresponding period of the previous year.
Govt invites bids from advisors for NMDC disinvestment
The government today invited bids from Merchant Bankers to act as advisors for selling 15% of its stake in National Mineral Development Corporation, which could fetch around Rs 3,000 crore.
The last date for bankers, who will work as book runners cum lead managers for the public issue, to submit the bids is February 15, sources said. Government would select two advisors from the bidders who together would form a team. They will be required to advise the government on the timings and the modalities of the capital market offer, do pre-market survey, road shows, book building and generate interest amongst prospective investors. They would also advise and assist the government in identification and selection of legal advisors, accountants, other intermediaries and coordinate their work. He bankers would also be required to complete due-diligence, draft offering documents and red herring prospectus for the issue. They would also be required to do the underwriting connected with the offering.
The government holds 98.3% in the company and it wants to sell 15% of the NMDC equity through a public offer. Going by the last traded price of company's scrip on the Bombay Stock Exchange, the government could raise upwards of Rs 2950 crore by selling its 19823580 shares in NMDC. The NMDC shares were trading around Rs 1,500 on the Bombay Stock Exchange.
NCDEX launches futures contracts in sponge iron
National Commodity & Derivatives Exchange Limited NCDEX, Indias premium commodity exchange, announced launch of futures contracts in Sponge Iron. The contracts are available for the months of February and March 2006. Subsequent new contracts would be made available on 10th.
With the launch of Sponge Iron contracts, the exchange has added yet another metal contract that is being offered by it. As on date contracts in non-ferrous metals-steel and copper, precious metals, gold and silver, energy brent crude oil and furnace oil are being traded besides 38 commodities in the agricultural sector.
The sponge iron futures will provide the steel industry with an ideal risk management tool. Along with mild steel ingot futures contracts that have been well accepted by the market, the sponge iron futures can help the industry hedge its price risk on the raw material side, Mr Ramesh Iyer assistant VP of NCDEX, said
Coal India may get Navratna status
Coal ministry will seriously consider recommending the name of its largest PSU Coal India Limited for grant of the prestigious navaratna status, said newly appointed Union coal minister Mr Shibu Soren. The ministry will also evaluate the pros and cons of opening up the coal mining to private sector before deciding its position on the matter.
Mr Soren said that the performance of CIL was commendable in recent months, and if after an investigation the ministry found it right, it would recommend its name for grant of navaratna status. I do not know about the proposal in this regard. However, if CIL meets the entire criterion for getting a navratna status, the ministry would strongly pursue the case, the minister said.
CIL, which ended the year 2004-05 with a net profit of Rs 2424 crore, has already applied to Department of Public Enterprises for grant of mini-ratna status. Senior CIL officials also feel that CIL was a fit case for the new status, with not only its important contribution for meeting the energy requirements of the country, but now also through its strong financials.
Infrastructure growth marginally down to 4.7% in December
Indias infrastructure growth slowed down marginally to 4.7% in December 2005 from 4.8% a year ago mainly due to fall in the output of crude petroleum.
The six core sectors, crude petroleum, refinery, coal, electricity, cement and steel, together posted a lower growth of 4.5% during April-December 2005 compared to 6.4% in the year ago period.
NTPC scraps Vidarbha project
National Thermal Power Corporation Ltd has scrapped its plans for a 1,000MW thermal power project at Mouda in Vidarbha. This would have been the first project of the central power utility in Maharashtra. NTPC has conveyed to the state government in a letter sent that the land earmarked for the proposed project was fertile and hence against environmental norms of the country. It also pointed out that it would be difficult to get environmental clearance for the project.
NTPC officials maintained that the state government did not take any interest in the proposed project as it would have exposed the inefficiencies of power plants run by the Maharashtra State Electricity Board.
NTPC is planning a bigger pit head thermal power project with 4,000 mw capacity in Raigad district of Chhattisgarh. The economic feasibility of the pit head project at Chhattisgarh is far better than the Mouda project. The cost of production at the Raigad project will be 45 paise less than Mouda project. The Raigad project will also offer better economy as more energy would be generated.
L&T - Patel Engg consortium secures 520MW hydro project
L&T- Patel Engineering Ltd combine has bagged the 520MW Parbati Hydro Electric Project stage III from the National Hydro Electric Power Corporation Ltd. The project is estimated at Rs440 crore.
Located at Kullu in Himachal Pradesh on the river Sainj, the project includes river diversion, rockfill dam intake, desilting chambers, 5.8km long head race tunnel and other associated construction to be implemented in and will be implemented in 56 months.
Mr Ashwin Parmar director business development of Patel Engineering said "Our government's increasing thrust on infrastructure construction in the country has thrown open an immense growth opportunity in the sector. This is the first project bagged by Patel Engineering in consortium with L&T. We are optimistic of participating in similar projects in future on the back of synergistic strengths of Patel Engineering and L&T."
Mr Mittal starts campaign to explain Arcelor bid
Steel baron Mr LN Mittal met France's finance minister on Monday as he sought to woo politicians and workers for his $23 billion hostile bid for European steelmaker Arcelor.
Luxembourg Prime Minister Mr Jean-Claude Juncker will meet Mr LN Mittal today and is likely to face questions on the deal from the Luxembourg parliament later, Mr Juncker's spokesman said. Politicians in Arcelor's home state of Luxembourg also have opposed the offer.
Mr Mittal will then meet officials from Belgium's government and European Competition Commissioner Neelie Kroes on February 1 in Brussels.
Mr Mittal has said he would honor Arcelor's social commitments and that there would be no plant closures if the acquisition were successful. Mr Mittal told a press told a press conference in Paris that his company did not acquire steel making plants in order to shut them down, adding that the global steel industry was too fragmented. Mr Mittal said he wanted to close the deal in the second quarter of the year. "Mittal Steel is committed to the social policies and commitments that Arcelor has implemented," Mr LN Mittal said. "Regarding employment, this merger is not about job reductions."
Mr LN Mittal also dismissed talk of an improvement on the 28.21 euros per share that Rotterdam-based Mittal Steel is offering for Arcelor, a premium of 27% on Arcelor's closing price Thursday, an "all-time high," as Mittal pointed out Monday. "We are not prepared to change our offer," he added.
In an olive branch to its smaller rival, Mr Mittal also said he was open for discussion about the proposed takeover, which he said he preferred to see as a "merger of equals." The new entity could be based in Luxembourg, he said, adding: "There's ample room for Arcelor's management in this project."
Arcelor CEO sees drawn out battle with Mittal
Arcelor said on Monday it had been preparing against a possible bid from Mittal Steel since last spring and reiterated its rejection of Mittal's $22.7 billion offer. ''We knew they were interested in us and we have been preparing for this possibility since last spring,'' CEO MR Guy Dolle told France's Europe 1 radio station, describing Mittal's offer as ''a bit ridiculous''.
Mr Dolle said he envisaged a bid battle with Mittal lasting from four to six months at least to resolve as opposition from politicians and labor unions mounts and said Arcelor had its defense lines in place
This offer is bad for shareholders, for employees, for clients and the communities around Arcelor,'' Mr Dolle said on French radio station Europe1. The issue is that there are two categories of steel, the high end and the low end. Arcelor produces perfume whereas Mittal Steel makes eau de Cologne. Arcelor does not need Mittal and we believe that the future of Arcelor is much better, for its shareholders and its employees, by being independent than by linking with Mittal," Mr Dolle said.
US Steel Q4 profit slides
United States Steel Corp posted a sharp decline in fourth quarter profit on lower steel prices and volume, and an accounting change related to its Kosice operation that resulted in a one time charge of $35 million.
Including the accounting change, net income slid to $109 million from $451 million in the prior-year quarter. Quarterly sales fell to $3.47 billion from $3.89 billion in the year-earlier period. The price of flat-rolled steel fell to $597 per ton from $623 per ton, while shipments of flat-rolled products also declined to 3.3 million tons from 3.7 million tons in the prior-year quarter.
Full year earnings amounted to $892 million versus $1.12 billion in 2004. Annual sales increased to $14.04 billion from $13.98 billion in 2004.
"Our annual earnings were the second highest on record and we had another year of solid return on capital employed," president and CEO Mr John P Surma said.
Arcelor will not share its future with Mittal Steel
Arcelor has put forth their point of view regarding the bid firm Mittal Steel through a presentation on their web site. The presentation puts forth Arcelors view point that Mittal Steel and Arcelor are diametrically opposed companies, a hostile opaque offer that destroys value and Arcelor has a much better future without Mittal Steel
The presentation mentions t the ends that n Arcelor Mittal Steel combination is not in the interest of Arcelors share holders, nor its employees nor its customers. Arcelor will not share its future with Mittal Steel
To view the presentation, please visit a link on Arcelors web site.
http://www.rawcoms.com/content/corporate/arcelor/060130_uk/index.html
French government concerned but unlikely to protect Arcelor
Arcelor, although not a French company trades its shares in Paris and has a huge French workforce of 28,500. Attempts to shield French companies from hostile foreign bids in sensitive sectors such as defense exclude steel but the French government wants to protect employment
French Finance minister Mr Thierry Breton said in an interview before he met Mr Mittal on Monday that the government had "the greatest reservations about this bid I am very surprised by Mr Mittal's way of proceeding and that he would ask the steel magnate for more details at the meeting on Monday morning." Mr Breton drew parallels between the Mittal Steel bid for Arcelor and the bid by China's third-largest oil company CNOOC for Unocal Corp. CNOOC withdrew its $18.5 billion offer in August 2005 in face of opposition by some US lawmakers on national security grounds.
Mr Breton, speaking after a meeting with Lakshmi Mittal said that the CEO of the world's No 1 steelmaker had "no industrial plan on the table" no detailed vision about where the company should go after taking over its Luxembourg-based rival. He was concerned by the absence of preliminary talks between the companies. "In the 21st century, if you want such a transaction to be crowned with success, you need to start with preliminary discussions between the companies involved, on a friendly basis," Mr Breton said.
Mr Breton said Mr Mittal told him he had to rush the bid for fear that news of the project might leak. "Mr Mittal regretted last week's acceleration of events," Mr Breton said.
But Mr Breton also stressed that the executive was "free to do what he wants" giving a strong indication that France is not planning to intervene on Arcelor's behalf.
Spain's Minister sees difficulties' in Mittal-Arcelor tie up
Spains Economy Minister and Deputy Prime Minister Mr Pedro Solbes said there are clear difficulties in the planned tie-up between Mittal Steel and Arcelor.
Speaking on the sidelines of a conference Mr Solbes saidLogically the operation has fuelled concerns ... we need to see how it will affect employment and business in Spain.
Luxembourg's government also spoke out against the deal on Sunday, expressing its concern about how it would affect the state's 5.62% the company, arguably the jewel in the crown of the country's economy.
S Africa harbor workers on strike
Thousands of workers at South African rail and logistics group Transnet went on strike on Monday, bringing operations at the country's busiest ports to a standstill and disrupting train services, unions said. The workers are protesting against the restructuring of state owned Transnet, which will see the disposal of non-core assets. Unions claim this will cost 30,000 jobs.
"Everything is at a standstill at the harbors. The strike started at 6 this morning. We are not going back until something comes up within the next three days," said a spokesman for one of striking unions.
The industrial action, planned for three days, affected the Durban Container Terminal and the Richards Bay port, two of the country's busiest, hitting the export sector which accounts for about a third of the country's gross domestic product. Transnet spokesman Mr John Dludlu told Reuters that the two harbors were operating at 60% capacity. The Durban Container Terminal, Africa's busiest harbor, handles the bulk of the country's exports and imports, while Richard Bay handles coal exports.
Transnet is being restructured to make it a focused freight company, a process that will see the disposal of non-core assets. The government, seeking to raise economic growth to 6 percent by 2010 from about 4% now to halve unemployment and poverty, has identified Transnet as one of the vehicles to achieve this goal. Transnet is to spend about 40 billion rand over five years on infrastructure, and will sell non-core assets. The non-core assets are valued at 7.7 billion rand, and will help fund the capital investment program.
Chinas steel growth raising fears of global glut MEPS
As per MEPS, results which are now starting to come through for 2005 serve to reinforce the accelerating importance that China has now assumed in the global steel sector. Chinas crude steel production last year was just a few thousand tonnes shy of the 350 million tonne mark. The countrys share of world total output rose from just over 26% in 2004 to almost 31% in 2005.
Its own production growth was partly responsible for the higher share, but reduced output in other countries also played a role. China, however, continued to power ahead. Its 2005 output of crude steel was up by almost 25% YOY. This was supported by domestic production of iron ore that rose by a similar percentage, and by a jump in pig iron production of no less than 28% over 2004.
India was the only other major steelmaking nation to show a significant increase in production last year. Indian crude steel output rose by nearly 17% to just over 38 million tonnes. It has a long way to go before it becomes the next China, but India recently adopted a national steel policy that will seek to raise production to over 100 million tonnes by 2020. Foreign investment is being encouraged.
As to Chinas prospects for 2006, it is a brave forecaster who predicts that steelmaking growth will slow down. All the experiences of the last few years show that China has the capability to far exceed most steel forecasts. However, some signs of a deceleration are definitely there. Already by December 2005, year-on-year growth in crude steel production had slipped to 16%. The Chinese Iron & Steel Association is said to be expecting this years output to be only about 12% more than in 2005 at 390 million tonnes.
Fear of excess capacity is growing. This is piling downward pressure on steel prices and compressing producers profits. One manifestation of their declining profitability is the effort by the mills to play a bigger role in negotiating benchmark iron ore prices this year. The Chinese clearly fear that Japanese and European mills do not have quite the same incentives to cut input costs at this time.
The Chinese authorities have said they want to consolidate the industry into fewer, larger groups, and eliminate smaller inefficient plants. This policy is proving difficult to implement. Some consolidation is taking place China now has more than 20 steel companies producing over 4 million tonnes per year each. But it may be cost pressures, rather than orders from Beijing, which eventually force closures among the inefficient small-scale mills.
Anshan orders Morgoil rolling mill bearings for plate mill
The Morgoil Bearing Division of Morgan Construction Company has received a contract to manufacture Morgoil Bearings for Anshan Iron and Steel Group Corporation, Liaoning Province, the People's Republic of China. The bearings will be installed in a new heavy plate mill that Anshan Iron and Steel Group are building in Liaoning Province. Delivery is scheduled to begin in the summer of 2006.
According to Mr Gabriel Royo VP of Morgoil These bearings are the new Morgoil KLX design. When compared with the previous KL design, they allow for approximately 25% higher load capacity. Alternatively, with the same load, the bearings can be smaller, reducing the overall capital cost of the new plate mill. The KLX bearing also results in a stiffer bearing, and thus an improvement in strip quality.'
The Morgoil Bearing Division provides a wide range of oil film bearing solutions for the most demanding applications in the metal rolling industries worldwide. Its parent firm, Morgan Construction Company, is a designer and producer of high quality rolling mill products and services for the metal industry worldwide.
Vallourec to buy drilling equipment maker French SMFI
Steel tubes maker Vallourec said its subsidiary Vallourec & Mannesmann Tubes V&M Tubes signed a contract to acquire Societe Materiel de Forage International SMFI, a French oil and gas drilling equipment maker for Euros 40 million. The purchase price will be financed from existing credit lines and SMFI is expected to have a positive impact on net income from as early as year one, Vallourec said.
The acquisition, which is subject to the agreement of the German competition authorities, is expected to be finalized by the end of March.
SMFI employs 240 staff, 85% of whom are in France. It generated sales of Euro 46 million in 2005 and expects 2006 sales to exceed Euro 60 million
Thai Sahaviriya Steel reports heavy losses for 2005
Thailand's steel maker Sahaviriya Steel Industries PCL reported that its swung to a net loss of THB1.54 billion in 2005 from THB5.33 billion profit a year earlier due to declining steel prices and rising production cost. The result was far lower than analysts' expectations. Most analysts forecast more than THB1 billion in net profits for 2005.
The company recorded THB36.01 billion in sales in 2005, down from THB36.63 billion in 2004. he company's production cost jumped to THB35.59 billion from THB30.19 billion in 2004, while its selling and administrative expenses also increased to THB930.3 million from THB538 million in 2004.
The company had stocked up expensive raw materials resulting in high production cost, while global steel prices fell steadily last year.
Who's next on the list?
Mittal Steel's bid to combine the world's top two steel firms into a global powerhouse throws down the gauntlet to rivals who will have to consolidate to compete, industry experts said on Monday. Whether or not Mittal Steel's bid for Arcelor succeeds, the pace of steel merger activity looks set to accelerate.
Analysts say the hard part will be picking out the predators and prey in a fragmented industry where national borders and unionized workforces pose obstacles to creating an efficient world market. No company will be safe from the advances of an acquisitive rival and a combined Mittal-Arcelor, with a global market share of around 10 percent, would be so dominant that rivals would have to react.
Even Japan's Nippon Steel and JFE Holdings Inc., the world's third and fourth-largest steel firms, may be vulnerable if Mittal Steel seeks to fill out his global portfolio, said Mr Michael Sones, steel analyst at ABN AMRO in London. "Everything is in play," Mr Sones told Reuters. "If the world's biggest steel player can buy the No 2, then he can buy the No 3 and the No 4 too."
European steelmakers a possible takeover target could include Corus, ThyssenKrupp and to a small extant Salzgitter. Potential targets in the United States include US Steel and AK Steel.
In Asia, Chinese, Indian and Korean players could be swallowed up or merge, although Korea's POSCO the world No.5, looks strong.
Russia's half-dozen players, including Evraz, Severstal and NLMK appear safe despite competition from Mittal in Ukraine and Kazakhstan, thanks to their deep-pocketed "oligarch" owners and low costs.
Stelco seeks facilitation of Mittal Steel deal closure
Stelco Inc. will ask a judge on Wednesday to effectively remove one of its subsidiaries from bankruptcy protection so that it can be bought by Mittal Steel, which agreed to buy three of Stelco's subsidiaries in November. The two companies had been working towards a Jan. 31 closing date, after receiving final approval under the Competition Act and the Investment Canada Act on January 19.
Stelwire Ltd, which has operations in Burlington Ontrio and Hamilton, is covered under Stelco's bankruptcy protection, while the other two subsidiaries are not.
In the meantime, Mittal Steel has expressed concerns about buying Stelwire, said the court-appointed monitor in Stelco's bankruptcy protection, Alex Morrison of Ernst & Young, in court documents. "Mittal Steel has advised Stelco and the monitor that it has serious concerns with respect to any further delay in closing the transaction," Morrison wrote. The concerns include "the possible further deterioration in the value of Stelwire's business," and the need to spend more on turning it around.
Stelwire is being picked up by the Canadian subsidiary of Mittal Steel, Mittal Canada Inc.
Arcelor not in talks with Nippon Steel for white knight role
Arcelor's CEO Mr Guy Dolle said here on Monday that his company is not conducting any talks with Japan's Nippon Steel about playing a "white knight" role against the bid launched by Mittal Steel.
Mr Dolle said however at a news conference that he would meet the head of Nippon Steel on Thursday for routine quarterly talks after insisting earlier that Arcelor was not in any talks with Nippon Steel about mounting a white knight defense against Mittal Steels hostile take over bid for Arcelor.
He did not comment on the question whether Arcelor and Nippon Steel could form an alliance on the model of Renault and Nissan, while saying "Rennault-Nissan is a success".
Al Gaith plans major steel mill in Oman Dubai
The UAE-based Al Gaith group plans to build a steel mill in Oman with an annual capacity of 1.5 million tones, said a report. The first phase of the project will cost $808 million Mr Gaith Bin Hamel Al Gaith, DG of the group, was quoted as saying by Gulf News.
Al Gaith has also bought into Gulf Merchant Group (GMG) and has formed a partnership, becoming the GMG's first GCC investor.
Mitsubishi Heavy wins power plant order from Baotou Steel
Mitsubishi Heavy Industries Ltd. said Monday it has landed an order for a blast furnace gas fired gas turbine combined-cycle power generation plant in China. The power plant, destined for a steel plant operated by Baotou Iron & Steel (Group) Co is slated to go online in April 2008, the heavy machinery maker said. Mitsubishi Heavy stopped short of disclosing the value of the order, but industry sources estimate it at slightly below 20 billion yen.
Mitsubishi Heavy has received a succession of orders for blast furnace gas-fired gas turbine combined-cycle power generation systems from China since 2004, with the latest award bringing the total number of the orders from China to six.
City of Gary set to celebrate 100 years of existence
The steel city of Gary in northwest Indiana is planning to mark its 100th birthday this year with a series of celebrations. The city was officially founded on July 14 1906 by the US Steel Corp. Gary grew to be the largest city in the region by 1920.
The city's Centennial Committee officials say that a highlight of the celebration will be a 30 foot sculpture to be erected at the Genesis Center Plaza. It will feature three steelworkers pouring steel from a piece of equipment.
United Coal purchases Rapoca Group
On January 4 the two Wellmore #7 and #8 coal preparation plants were back in the UCC fold as part of United Coals purchase of The Rapoca Group LLC Bristol Va. As part of the acquisition, United Coal has resurrected a well known name that was associated with United Coal in the 70s, 80s and 90s. The Rapoca Group LLC has been re-named Wellmore Coal Company LLC, and its affiliates that were acquired by United Coal will be subsidiaries of Wellmore Coal Company.
Many of Rapocas employees are former United Coal employees, Mr Jim McGlothlin, CEO of UCC parent The United Company, said. And several of the people who built and managed Wellmore #7 are still employed at United Coal.
In addition to Wellmore #7 and #8, located in Big Rock, Va., and the Nora preparation plant located in Nora, Va., UCC acquired 100 percent of the membership interests in Rapoca and certain of its affiliates. Those assets include 11 underground and six surface mining operations throughout Buchanan, Tazewell and Dickenson counties, with additional reserves in Pike County, Ky., and McDowell County, W.Va. The acquired coal reserves are primarily mid/high volatile metallurgical reserves in the Splashdam, Banner, Glamorgan, Jawbone and Hagy seams. Rapoca has more than 30 million tons of recoverable reserves.
Since its recent re-emergence into the coal business, UCC has aggressively expanded its reserve base in the Central Appalachian coalfields. The company expects to produce more than 6 million tons in 2006 from 27 mines and seven coal preparation plants. United Coal is a privately held company, with subsidiaries in West Virginia, Virginia and Eastern Kentucky.
Aricom acquires interest in mining deposit in Russia
Mining firm Aricom announced the proposed acquisition of a 49% interest in Bolshoi Sejm ilmenite and magnetite deposit for $3.8m. "The deposit is estimated to contain resources of 58 million tonnes of TiO2 and 125 million tonnes of general iron content at P1 or higher, according to independent estimates by Dalgeologiya, the Russian state geological institute," said the group.
The group entered into a non-binding Heads of Agreement for the 49% interest in a holding company which is intended to own Ural Mining, the Russian firm that owns the license to develop the Bolshoi Sejm deposit. Timia Trading will own the remaining 51% interest. Funding is being provided by PetroPavlovsk, a company in which Mr Peter Hambro and Mr Pavel Maslovsky, both deputy chairman of Aricom, have an interest.
"Alongside our recently announced proposed option to acquire a 50% interest in the Kimkanskoye and Sutarskoye iron ore deposits in the Evreyskaya Avtonomnaya Oblast, this transaction is part of a planned strengthening and extension of Aricom's interests in the Far East of Russia," said Aricom chairman Mr Malcolm Field.
PSMC Privatization Opposition political parties grumble
The opposition leaders in Pakistans Senate raised reservations about the privatization of public companies on Monday, and asked the government to consult the parliament on the privatization of Pakistan Telecommunication Company Limited and Pakistan Steel Mills
Senator Farhatullah Babar of the Pakistan Peoples Party Parliamentarians said that his party was not against privatization, but opposed the federal governments approach of hastily privatizing public entities. He accused the government of trying to sell the PSM without doing the necessary homework. He said that people could not understand why the federal government wanted to sell a profit-earning unit within the next three to four months. He said that a similar public entity in the United Kingdom took six years.
The PPPP senator said that he had received reports that the successful bidder for the PSM might not continue steel production. Any buyer would be more interested in the 4,500 acres of land near the Karachi port, he said. He said that the possibility of the new owner launching a real estate project on the PSM land could not be ruled out.
Arcelor announces extension of its offer for Dofasco
Arcelor SA announced that the Notice of Variation and Extension increasing Arcelor's offer for Dofasco to C$71.00 is being mailed today to Dofasco shareholders. Arcelor had announced on January 16, 2006 its increased offer price to C$71 per share and it is now also extending the expiry date of its offer to February 9, 2006 in order to ensure that Dofasco shareholders receive the Notice of Variation and Extension in sufficient time and in compliance with Canadian securities law.
The Notice of Variation and Extension includes confirmation that the Dofasco Board is now unanimously recommending to Dofasco shareholders that they accept the Arcelor offer.
Siemens increases stake in Russian Power Machines
Siemens said it had purchased a 20.62% stake in Power Machines, Russias largest producer of energy equipment, from Russias Interros investment company for $93 million. This acquisition raised Siemens holding in the company to 25% plus one share, Siemens said. Interros retains a 30.4% stake in Power Machines, RAO Unified Energy Power Machines have 25% plus one share, and the remaining 19.5%t is held by minority shareholders.
Our new stake in Power Machines opens up interesting growth opportunities in the upcoming modernization of the Russian power plant network. At the same time, we see our investment as a chance to make a real contribution towards the development of a competitive Russian industry in the power plant sector, Siemens CEO Mr Klaus Kleinfeld was quoted as saying.
Power Machines produces equipment for hydraulic, thermal, gas and nuclear power plants, as well as transportation and railroad equipment.
Siemens AG is Germanys largest engineering company. It employs over 460,000 people and has customers in more than 190 countries.
Arcelor share prices surge
Arcelor's shares jumped as much as 41% to a high of 31.29 Euros before closing on Friday at a record 28.50 Euros, up more than 28%, on speculation Mr Mittal would have to raise its bid. Mittal Steel said on Friday it was offering 28.21 Euros a share, a 27 % premium to Arcelor's closing price on Thursday.
Analysts at ABN AMRO said Mittal had the scope to raise his offer as high as 35 Euros per Arcelor share, if it had to. "To hit 35 euros, a level some market participants we have spoken to are hoping for, a meaningful counterproposal tie-up with third party would be a necessity," ABN AMRO said.
You don't know if this will be the shareholders' choice, or a political choice,'' Michelle Applebaum, a Chicago-based independent analyst who has followed the steel industry since 1981, said yesterday in an interview. For the steel industry, this is Microsoft buying Apple.''
The price Mittal is offering is relatively good, and seems to have largely seduced many investors, but we could see the bidding take it to 35 euros,'' said Salah Seddik, a fund manager in Paris at Richelieu Finance
Fitch Upgrades Severstal to "BB-" From "B+"
Fitch Ratings has upgraded OAO Severstals Senior Unsecured rating to "BB-(BB minus)" from "B+" and National Unsecured Rating to A+(rus) from A(rus). A Stable Outlook has been assigned. At the same time, Fitch has affirmed Severstals Short-term "B" rating. Approximately USD700 million of public debt is covered by this rating action. The rating upgrades reflect Severstals demonstrated ability to manage a strong financial profile thanks to its significant shareholder control of raw materials, diversified geographical sales and revised acquisition policy based on prudent financial metrics.
"Severstals ratings reflect its focus on a value-added product mix dominated by flat steel products aimed to automotive industry," said Sonya Dilova, Associate Director in Fitchs Corporate Group in London. "The ratings also take into account the companys strong credit ratios and profitability compared with its domestic and international peers."
However, Fitch Ratings remains concerned about Severstals largely concentrated ownership structure which encourages transactions with related parties as demonstrated by Lucchinis SpA acquisition in FY05 but comfort is gained from their relatively low scale and limited occurrence.
The Stable Outlook reflects Fitch Ratings expectation that Severstal will maintain a satisfactory financial and business profile in the future despite the continued cyclical nature of the industry. The companys scale, its track record in integrating new businesses, its low-cost structure, diversity of sales and production capacity, coupled with its healthy financial profile, will help to support its future performance.
AK Tube and union reach agreement
Members of the United Steelworkers of America, Local 1915, have ratified a labor contract with AK Tube, a unit of AK Steel Corp., the company said Monday. The agreement with the tube making unit affects approximately 150 hourly production and maintenance workers in Walbridge Ohio.
The deal, which expires Jan. 25, 2009, includes a ratification bonus, wage hikes, a gain-sharing plan, workforce flexibility and healthcare cost-sharing.
"This marks the sixth 'new-era' labor contract we have forged in the last two years, and it was accomplished ahead of contract expiration without a single minute of lost production," said Mr James Wainscott, chairman, president and CEO of AK Steel.
AK Tube LLC, headquartered in Walbridge, manufactures electric resistance welded carbon and stainless steel tubing.
