January, 09 2006
IISCO modernization to start by September 2006
SAILs Indian Iron and Steel Company IISCO will commence Rs 8,000 crore modernization plans by September this year. Mr Nilotpol Roy MD said "IISCO's first phase of modernization would start by September 2006. After this Rs 8,000 crore project is implemented, this plant would produce two million tonnes of crude steel."
''Out of this Rs 8,000 crore project, Rs 5,000 crore would be utilized for modernizing the plant and Rs 2,000 crore would be used for the mines. Another thousand crore would be utilized for the development of the collieries,'' Mr Roy added.
He also said, "The project work has been conferred to MECON and it would start after considering the topographic view." Currently IISCO produces around 0.5 million tonnes of steel. It would be upgraded to enhance its capacity to around two million tonnes by 2011-12, MD said.
Regarding closed Kulti works, Ray said IISCO has no plan to revive Kulti project under modernization, however, efforts are on to search a joint sector partner either public or private entrepreneur for its revival.
Jharkhand villagers decide not to give up land
The tribal at Tontoposhi Jharkhand, the site of TATA Steels new plant project, are training their guns on potential investors in the state. After the firing incident at Kalinga Nagar in Orissa residents of about 23 villages, armed with traditional weapons held a meeting under the banner of Bhumi Raksha Gramin Ekta Manch. The participants sent out a clear message to the Munda government about their opposition to the influx of prospective investors.
No investors are welcome in the area even if the villagers are made shareholders in the companys profit, Lal Singh Leyangi, the head of Hidibili village, under the Tontoposhi panchayat, thundered.
Incidentally, during his recent visit to the city, Munda had claimed that the Orissa firing incident would not have any adverse affect on the MoUs signed by the state.
Tata Metaliks to make ductile pipes in Redi
It is reported in a daily that Tata Metaliks is in search of a foreign collaborator for its proposed foray into ductile iron pipe manufacturing. The company will make auto castings and ductile iron pipes, which are extensively used for distribution of drinking water, in the newly acquired Usha Ispats Redi plant in Maharashtra.
Tata Metaliks paid Rs 115 crore for buying out the 320,000-tonne unit from Stressed Assets Stabilization Fund and the acquisition helps the company double its capacity.
We now plan to invest another Rs 35 crore to start operations in its three blast furnaces in full swing from 2006 itself, a company executive said.
Simultaneously, the Tata firm will go in for forward integration with auto casting and DI pipe making. However, investments in these areas are not yet finalized.
Tata Metaliks was in search for an acquisition in the western region for a long time in order to establish its presence close to the burgeoning automobile industry in the southern and western parts of the country. Its present unit in Kharagpur, Bengal, caters to the foundry industry in the eastern region.
The company is also looking at expansion in the east by way of steel making. It is now in the process of acquiring land for putting up a billet making unit.
Tribal killings way heavily on Kalinga Nagar future
The Kalinga Nagar Industrial Complex, billed as one of the biggest steel clusters of the country, has as many as six new steel projects of a total capacity of 11 million tones coming up. But, the suddenly the area has become a fear zone for investors.
Even though a week has passed since the Kalinga Nagar tribal killings, thousands of workers and employees working in over a dozen industrial projects in Kalinga Nagar Industrial Complex at Dubri in Jajpur district are living in the fear of retaliation. As anger mounts against industrial houses, too, the project employees have became vulnerable to attacks. Companies have hired armed guards to provide security to their employees.
Work in many of the project sites has come to a grinding halt as contractors have fled. Production in plants is also affected due to workers absence. The week-long blockade of roads leading to the complex has started choking raw material supply to units of Neelanchal Ispat Nigam Ltd, Med-east Integrated Steel Ltd of Mesco group, VISA Steels, and Jindal Stainless Ltd
Even bankers have started questioning the fate of projects coming up in the complex. Companies like VISA Steel, who are planning to tap the capital market to raise money, have started relieving uncomfortable queries about their projects from the Securities and Exchange Board of India.
The Kalinga Nagar incident has really shattered the industrialization of Orissa, says Mr Sarat Sahu, former State Planning Board member. Now it would be very difficult to instill confidence in the hearts of investors, he adds.
Dighi port in Maharashtra gets statutory clearances
Dighi Port in Maharashtra finally got all statutory clearances including environmental clearance during last week
This all weather port situated about 175 km south of Mumbai and estimated to cost Rs 1600 crore will have five berths, two multi-purpose and one each dedicated for containers, coal and liquid cargo.
Capt Jai B Rohilla of Maharashtra Maritime Board said, The Board will continue to be the monitoring agency on behalf of the government for the project being developed on a 50-year concession agreement, on a BOOST basis.
Kolkata based SK Bajoria buys UKs Monocon refractory
Kolkata based engineering company in Kolkata SK Bajoria is reported to have bought Doncaster based Monocon Holdings, a leading supplier of special refractory materials used in the steel industry.
The Indian company is keen to use Monocon's expertise to increase its international presence in refractory linings used particularly in electric steel furnaces to increase manufacturing efficiency.
Firm fights villagers over land
Kohinoor Steel Private Limited, a JV between Nepal based TM Dugar group and Kolkata based Bothra group has filed at least four police cases against the villagers of Khuchidih in Chandil over a 40-acre land dispute alleging that a section of villagers are pressurizing them with unreasonable demands.
Villagers claim that Kohinoor Steels local management has filed false police cases against them, accusing them of extortion and clashing with the companys employees.
Kohinoor Steel has directly purchased 40 acres from the villagers of Khuchidih. At present, the company is approaching the completion phase of erecting necessary infrastructure and had expected to start production by next month
Kohinoors MD Mr Vijay Bothra said the steel company had promised to give the villagers suitable employment if they decided to sell their plots to the firm. But, the company could only provide jobs after the plant was commissioned, he added.
However, the villagers alleged that the contract paper, which mentions the firm will provide them a job, bears no signature of any government authority.
Villagers added that the contract will expire in March this year.
Metallurgical coal spot prices weaken UBS
In UBSs view 2006 is not shaping as a good year for Australian coal producers as coal prices are expected to come under pressure from oversupply. As the broker notes, Australian coal production and exports were higher than expected in 2005, meaning steel mills now have enough coal and in some cases excess supply. This has seen spot prices weaken and demand growth slow, which supports the brokers outlook for price falls this year.
The broker notes while its forecast is for coal price declines this year of 10-15% and market consensus is for falls of 20%, there remains the potential for prices to do worse and fall by as much as 30%.
In the brokers view the sectors most at risk are steam and semi-soft coal, where there is potential for price falls of 20-30%. This compares to the brokers forecast for 2006 of a 12% fall in Hard Coking coal to US$110/t.
Cyclone Clare threatens Pilbara port operations
Cyclone Clare shut Australia's two biggest ports and threatened to disrupt Western Australia's massive resource industries as the severe tropical low rapidly gained strength and speed off the Pilbara coast last night.
The industrial ports of Dampier and Port Hedland, which export more than 200 million tonnes of iron ore and liquefied natural gas each year were empty yesterday afternoon as Clare moved southwest, parallel to the Pilbara coast, with gusts of up to 140km/h. Moving at 22km/h, Clare was upgraded from category 1 to 2 and was expected to intensify into an even more severe tropical cyclone
Alleghenys West Leechburg plant will close
Allegheny Ludlum will close its West Leechburg plant this year and transfer its more than 70 workers to other steel plants. Ludlum's parent company, Allegheny Technologies Inc said that the move will allow the company to save $10 million a year beginning in 2007.
Company spokesman Mr Dan Greenfield said that the plant will be phased out over several months. Although the company's announcement said the plant will be closed "indefinitely," the mill will not likely open again. "Basically, when you do an indefinite idle, you have no plans to restart it," Mr Greenfield said.
West Leechburg serves primarily as a finishing mill, working on steel coils delivered from the Ludlum plant in Brackenridge. Greenfield said most of the work, along with the workers, can be transferred to the Vandergrift plant. Some of the work can be transferred to Bagdad, Mr Greenfield said.
Steelworker Jim Swartz, past president of United Steelworkers of America Local 1183, which represents workers at the West Leechburg plant, said about 85 hourly employees now work at the West Leechburg plant. Ludlum officials put the number at about 70.
Barclay Capital upgrades 2006-07 base metal price forecasts
Barclays Capital has upgraded its base metal price forecasts for this year and next year on expectations of ongoing supply constraints and strong China led global demand. The base metals complex can rise another 10%-15% in the first half of this year, when the cyclical peak will occur, said BarCap's commodities analysts.
The London Metal Exchange's benchmark three-month copper contract, already trading around all time highs of $4,500 a metric ton, can hit $5,000/ton by July, they said. BarCap now forecasts LME copper cash prices to average $4,550/ton this year from its previous forecast of $3,600/ton, before easing back to $3,800/ton next year.
Ongoing cost pressures at aluminum smelters and structurally strong demand are expected to keep the three-month aluminum price rising to $2,500/ton in the first half of 2006 from around $2,300/ton currently, the analysts said. BarCap now forecasts LME aluminum cash prices to average $2,350/ton from its previous forecast of $1,900/ton this year, falling to $2,200/ton next year.
Zinc, meanwhile, has the brightest prospects of the complex, according to the analysts, with the benchmark three-month contract poised to reach $2,200/ton this half as inventories shrink in response to strong demand and lack of sufficient supply growth. "The absence of new mine capacity will remain a key market feature over the next couple of years, and together with rising refined zinc imports into China, is a key reason for our bullish stance."
They said the three-month nickel price is likely to head toward $15,500/ton this half from $14,375/ton currently as the existing surplus decreases due to a rising trend in Chinese refined imports, a pickup in buying from European stainless steel mills and low growth in mine output.
Thermal coal prices to fall
Coal is likely to decline this year from a record because of increased exports from Indonesia, South Africa and Australia. A price reduction of almost 20% to less than $45 a metric ton in Asia is forecast by analysts at National Australia Bank. Prices in Rotterdam, the European port used by utilities including E.ON AG of Germany, will drop to $55 a ton from $60.70 in 2005, according to Societe Generale.
Indonesia, which overtook Australia, last year as the world's biggest coal exporter to utilities, has doubled shipments since 2000. Exports may rise another 8% this year, London-based shipbroker Clarkson Plc estimates. Australian exports may rise 3% to 112 million tons.
A lot of coal will flood into the market'' as the shortage of machinery is resolved, said Mr Ari Hudaya, president- director of PT Bumi Resources, the largest coal producer in Indonesia.
There's been a strong supply reaction from Indonesia and Australia to high prices,'' said Andrew Harrington, industrial economist at Australia & New Zealand Banking Group Ltd., who expects prices to fall to $42 a ton in the Asia-Pacific market.
Europe imports about four-fifths of its coal for the power industry from South Africa, where port and rail capacity constraints limited shipments in 2005. Mining companies in the country, including Swiss-based Xstrata Plc, are working to increase exports. Shipments will rise to 70 million tons in 2006 from between 67 and 68 million tons last year, SocGen said.
While prices decline in Asia and Europe, US coal costs will stay high, according to James Rollyson, a coal industry analyst at Raymond James Financial in Houston. Utilities need to rebuild inventories, and import terminals and railroads are operating at capacity, preventing a surplus outside the U.S. from entering the country, he said. Rollyson forecasts eastern coal prices of about $50 a ton this year, 15 percent higher than the five-year average, and western prices of $20 to $22 a ton. The western average is about $7.50 a ton in the past five years.
The price for coal for immediate delivery from Australia's Newcastle port, the world's largest coal export terminal, already has declined as traders anticipate a lower settlement price in the annual contract talks between Japan and Australia. The coal export price from Newcastle has fallen 22 percent since mid-July to $39.16 a ton on Dec. 30, according to globalCoal. The price at South Africa's Richards Bay terminal, which supplies many European power companies, was $44.13.
Dangote sacks Osogbo Steel plant workers
Workers of Nigerian Osogbo Steel Rolling Company OSRC, from top management down to the cleaners, have been relieved of their jobs by the new owner of the ailing company, Dangote Group of Companies. A local daily reported that the workers numbering about 400 were shown the way out of the company after the new owner had settled the nine months salary arrears owed the workers by the government.
General Manager of the company Mr BA Fasoro, who conveyed the message of management of Dangote to the workers on the eve of the New Year, said the workers have been asked to stay away from the premises of the company located along Ikirun road, for the next three months except those in the security and fire services departments.
He also explained that the workers were advised to hand over all official vehicles in their possession as well as keys to their offices while leaving.
Kura Holdings, a subsidiary of Dangote Group of Companies won the bid for the company at a total cost of N2.61billion during the privatization exercise conducted by the Bureau of Private Enterprises some few months ago.
OSRC started in 1981 and officially commissioned in April 1983 with installed capacity for the production of 210,000 metric tonnes of lron rod and bar products. Among the major problems facing the company then were lack of working capital for several years and obsolete equipment. It is expected that the new owner will pump a lot of money into the company to put it on sound footing and total overhauling.
Coal production in Powder River Basin rises
Total coal production for the year in Wyoming, as of Dec. 24, was an estimated 399.2 million tons, according to the Energy Information Administration. Of that, about 13.7 million tons were produced in southwestern Wyoming. That would put Powder River Basin producers at 385.5 million tons for the year another consecutive record-setting year for the basin and the state.
The Energy Information Administration estimates that the US will demand an additional 100 million tons of coal annually from the Powder River Basin by 2010.
Dubai based ETA-Ascon to buy 76 new ships
Dubai-based ETA-Ascon, a diversified group, plans to buy 76 new ships to expand the size of its fleet to 100 in five years, a report said. The total investment involved in this order will amount to $2.72 billion. The new order book will range vessels from Panamax to very large crude carriers. The ambitious plan will make it the largest fleet owner in the Middle East.
"Due to high demand for bulk carriers and oil tankers, we have decided to expand our fleet," Ameer Faisal, ETA's senior general manager for shipping, was quoted as saying by Gulf News.
The shipping division owns 16 vessels and eight on order. It charters over 200 vessels every year, carrying more than 15 million tons of cargo.
