May, 16 2006
Centre rejects Chattisgarhs proposal for iron ore
Central government has rejected Chhattisgarh governments proposal of reserving 1475.25 hectares in two deposits within the Bailadila iron ore range for Chhattisgarh Khanij Vikas Nigam, as a lease for 345.25 hectares in the proposed area is being held by the National Mineral Development Corporation.
Minister of State for Mines Mr T Subbarami Reddy also informed that Chhattisgarh government's request for another area also within the Bailadila range was not accepted by the Centre as the state failed to specify the period of reservation required for the said area for CKVN.
Jai Balaji to expand Durgapur operations
Kolkata based Jai Balaji group is planning to expand capacities at an investment of Rs 490 crore, which includes setting up an additional steel manufacturing facility in Durgapur. It is reported that the group is setting up a sintering plant of 544,444 tonnes per year capacity, a mini blast furnace with an annual capacity of 428,750 tonnes per annum and a steel melting shop with a capacity of 4, 42,029 tonnes per annum. BF would be commissioned by April 2007 and other two plants are scheduled to be commissioned by October 2007.
Mr Aditya Jajodia said the investment would be funded through a 70:30 debt-equity ratio and about Rs 350 crore credits is in the process of being syndicated, while internal accruals would fund the remaining Rs 140 crore. He also said the company might consider floating a public issue early next year.
Punj Lloyd joins hands with Kingdom of Saudi Arabia
Punj Lloyd Ltd has announced a 51:49 JV formation with his Royal Highness Prince Khalid Bin Bandar Bin Sultan of Saudi Arabia. The jointly owned company with the share capital of 2 million Saudi Riyals would be named Dayim Punj Lloyd Engineering Ltd. HRH Prince Khalid Bin Bandar Bin Sultan will be the chairman of Dayim Punj Lloyd.
Dayim Punj Lloyd Engineering Ltd will operate in EPC commissioning of onshore and offshore projects for the hydrocarbon sector, power chemical, water and sewage sector, civil infrastructure and industrial projects in the Kingdom of Saudi Arabia. Punj Lloyd would provide engineering, design, construction and project management expertise, apart from selecting, hiring the requisite manpower and assisting the JV in identifying and selecting suppliers for equipment. KBS role would be to identify commercial opportunities for the JV in Saudi Arabia and to liaise with various governmental and regulatory authorities besides organizing banking facilities for the JV.
Mr Atul Punj CMD of Punj Lloyd said "This JV will help Punj Lloyd identify new business opportunities in Saudi Arabia. This JV will be a powerful vehicle for both companies to expand roles in Saudi Arabia by offering the best of each Company's expertise along with a dedicated service and support organization. We have been looking forward to increase our market presence in Saudi Arabia for many years.
Steel Outlook conference in Delhi
More than 120 participants from over 30 countries will take part in the 2 day steel conference that will begin in New Delhi today to discuss the general global overview of the sector. Participants from over 30 countries will deliberate on the general global overview, regional developments and issues related to raw material, transportation, environment and negotiations at the WTO.
Steel Minister Mr Ram Vilas Paswan would inaugurate the Steel Outlook conference, which is being organized by the Ministry of Steel along with the Organization for Economic Cooperation and Development and International Iron and Steel Institute.
Apart from nearly 120 overseas participants, the Ministry has also invited representations from the domestic steel sector, their associations, related government departments and financial institutions.
Iron ore mine allocations key to mega steel projects
Mega steel projects announced last year are in danger of being delayed due to procedural hurdles, stiff local opposition but mainly due to non allocation of iron ore mines.
Bureaucrats from Jharkhand and Orissa say that The firms should start work on the project. Only then can we recommend mines for their projects. As per rules, once the firm places orders for 20% of plant and equipment then they can be recommended for mining leases.
The steel companies say that How can we present our lenders with a bankable project if mines are not allotted.
Therefore it is chicken and egg story in real life.
Rathi Udyog to set up steel plant in Orissa
Rathi Udyog is setting up an integrated steel project at Sambalpur with a 0.15 million tonne sponge iron and steel billet capacity along with a 20 MW captive power plant. It is also expanding its facility in Ghaziabad. Mr Udit Rathi CEO of Rathi Udyog told "The Orissa venture is backward integration for us. It would help us to improve margins."
The cost of these projects is around Rs 277 crore, which would be funded through term loans of Rs 179 crore and the balance would be funded through the issue proceeds. Rathi Udyog Ltd will raise Rs 98 crore through a follow on public issue.
Rathi Udyog increased its rolling mill capacity to 125,000 tonnes per year at its plant in Ghaziabad in early 2006.
AV Birla for long term freight deal with railways
It is reported that Aditya Vikram Birla Group and Indian Railways are finalizing a 30 year agreement to transport 2.7 million tonnes of coal every year across a distance of 600 km from North Karanpura to the AVB Group's Rosa Power Plant. AVB Group is reported to have agreed to pay a 5% premium on the freight charges for coal plus a bonus; should loading go above 95% and in return Indian Railways has conceding to punitive charges that should the railways fail to transport between 85%-95% of the coal, they will have to compensate AVB by deducting 5% of the freight tariff. It is reported that the agreement is now in the final stages of approval and on its way to being inked.
It is also the first signal of the railways strategy for long term freight contracts that will prevent customers fleeing to road or private sector rail transporters and this agreement is likely to set a precedent for similar agreements in the future.
Rosa is a 567 MW power plant being set up for Rs 2,500 crore in a 7:3 debt to equity ratio. The project has faced delays because clearances required by the UP government did not come through for several years. These clearances are now in place and the project will be commissioned very soon.
NLC to study Chinese coal excavation technology
It is reported that a team comprising of Mr KS Anandan director mines and Mr AR Ansari director planning and project of Neyveli Lignite Corporation are visiting China to study the coal excavation technology used in the mines there so as to prepare a feasibility report for implementing the Chinese technology in the NLC mines.
It is learnt that Chinese technology is supposed to be more cost effective as compared to existing German technology and equipments being used in NLC presently.
Marubeni consortium and Essar top bidders for 600MW plant
Essar group and a consortium of Marubeni, Kompo, Tripatra and Samptan are the top two bidders to build a 600MW coal fired power plant in Cerebon West Java in Indonesia. Other bidders are Malaysia's YTL and a consortium comprising Bakrie Power, Indonesian Power and Barcock.
Mr Mulyo Aji a spokesman for state electricity firm PT Perusahaan Listrik Negara said that it will decide the winning bidder within five days.
Mining rivals attack MSPLs iron ore plant in Hospet
It is reported that over 500 miscreants attacked Vyasanakere Iron Ore Plant of MSPL near Hospet on Sunday causing damage to the tune of Rs 10 crore. Police has arrested 95 persons and seized 25 vehicles.
MSPL General Manager had named two miners in the complaint to the police. It is understood that the rival miners had earlier also threatened one of the executive directors of MSPL and a case is pending in Hospet Court.
CVRD settles 2006 iron ore and pellet prices with ThyssenKrupp
Companhia Vale do Rio Doce, the world's largest iron ore producer, concluded the iron ore price negotiations for 2006 with Thyssen Krupp Stahl AG, the largest German steel maker.
As an outcome of these negotiations, iron ore prices for Carajas and Southern System fines increased by 19.0% relatively to 2005. Blast furnace pellets, both from Tubarao and Sao Luis, will be reduced by 3.0%.
Lazard report favors Mittal Steel plan for Belgium
According to a report drawn up for the Belgian government by Lazard Ltd Mittal Steels bid may prove superior for Belgium's future as a steel making center. The press release says that Mittal Steel also envisages other commitments on top of Arcelor's existing commitments. This includes perhaps revising an Arcelor decision to close a blast furnace in Liege in 2009.
The Belgian government authorized Lazard to examine both the Mittal Steel and Arcelor plans. Belgian Prime Minister Mr Guy Verhoftstadt met his Flemish counterpart Mr Di Rupo to discuss Lazard's conclusions on Monday.
Mittal Steel welcomed the government's statement. It said "As we have said right from the beginning, our industrial plan is based on a very sound industrial logic and we remain absolutely convinced that a combination of Mittal Steel and Arcelor would further strengthen the steel industry in Belgium and is in the best interests of all stakeholders."
Belgium takes neutral stance
Despite this positive note on Mittal Steels industrial plan in Lazards report, the Belgian authorities said that it was not ready to make up a decision on whether to recommend the offer. This followed a meeting of Belgian Prime Minister Mr Guy Verhofstadt and the presidents of Belgium's two regions Mr Elio Di Rupo of southern French speaking Walloonia and Mr Yves Leterme of the Flemish-speaking north of the country.
According to a joint statement from the federal and two regional governments "Arcelor's independence plan as it has been currently proposed by the management of Arcelor constitutes a credible strategy based on the development of high added value products. The strategy of Mittal represents a credible industrial project based on a global vision."
The three Belgian governments plan to meet again within two weeks to determine a clear stance, a federal government spokesman said.
Metals tumble on LME
Metal prices across the globe tumbled on Monday, led by nervous selling on the London Metal Exchange following concerns over a slowing US economy and an impending correction in metal prices. The prices of base metals like copper and aluminium were down about 10% in afternoon trade on Monday, but then steadied in the second half. The 3 month copper on the London Metal Exchange fell as much as $760 or 9%, to $7,700 per tonne and a close at the level would be the largest one day loss since October 2004. Zinc lost as much as $450 or 12.3%, to $3,210 per tonne
Analysts attribute selling on the LME to dollar gaining strength against euro and falling of emerging markets by 3% to 3.5% to the fall. Whenever hedge funds sell commodities they always fall steeply.
According to Mr colm Freeman of Ambrian Partners, this correction was a kind of fund liquidation. But he maintains that fundamentally nothing has changed. As per him, If the LME closes lower three days in a row for all the metals, that would trigger a lot of funds into start selling their holdings The fundamentals havent changed. One can make the argument that the prices are far higher than the fundamentals. We are now going to start getting into an area of correction, where the markets maybe back to fundamentally based prices and possibly exaggerated fund driven prices.
Base metal prices have been rising since last year and have scaled 40% since January this year. Last week, copper and aluminium prices on LME hit record highs of $8,800 and $3,310 per tonne.
Competition Board to object Erdemirs sale cancellation verdict
Recently Turkeys State Councils 13th Chamber cancelled the Competition Boards decision to allow sale of ERDEMIR to Turkish Armed Forces Pension Fund OYAK citing the number of Competition Boards members opposing the laws as the rationale behind the cancellation.
Turkeys Chamber of Engineers and Architectures, responsible for opening the case against the takeover, demands ERDEMIR be returned to the public. Mr Emin Koramaz head of the Chamber of Mechanical Engineers stressed that ERDEMIR is a strategic enterprise and said In the suit our chamber filed against the privatization of ERDEMIR, the State Council 13th Chamber overturned the Competition Boards decision to allow the ERDEMIR takeover to proceed, because the Board took the decision with eight members instead of seven, violating the law.
The Competition Board announced its objection to the verdict. Mr Mustafa Parlak head of Competition Board said they will appeal the verdict; if the appeal is rejected, they will meet and reassess the situation. Mr Parlak thinks the development will not damage Erdemirs privatization process.
ThyssenKrupp increases Brazilian slab project capacity
ThyssenKrupp has increased the planned capacity of its steel mill project in Brazil's Rio de Janeiro due to growing global steel demand.
ThyssenKrupp said "With global steel demand continuing to grow strongly and the company's own requirements for its growth strategy increasing, the capacity of the Brazilian steel mill has been raised from the previously planned level of 4.4 million tonnes to 5 million tonnes."
ThyssenKrupp said that Specifically 2 million tonnes of slabs will ensure the full utilization of the German processing facilities, whose bottlenecks are being eliminated through investment in expansion which is already underway. The greater part of the output from the Brazilian plant will be used to implement the Nafta strategy."
ThyssenKrupp's supervisory board approved a $2.4 billion investment budget for the project, which will be operated by Companhia Siderrgica do Atltico. CVRD will hold a 10% stake in CSA. The plant will start production in early 2009.
4 iron ore miners rescued from collapsed shaft in Anhui
Four miners, including a female, had been pulled out alive from the collapsed shaft and were rushed to the Anqing City Hospital on Monday night after Saturday's iron mine collapse in east China's Anhui Province. They were struggling to pull a fifth miner whose legs were stuck by rocks. The remaining three had been confirmed dead in the mine.
Eight miners were trapped underground at a depth of 130 meters after the mine in the Dalongshan Township collapsed at 4:50AM on Saturday. Dust and water capped the ventilation hole and the exit after the tragedy, making it impossible for the miners to escape.
More than 1,000 rescuers have participated in the rescue operation over the past few days.
The Dalongshan Iron Mine was founded in 1992 as a township run company but was privatized in 1999. It employs 15 people and produces 15,000 tons of iron ore a year.
Xstarta reviewing options for stake in Falconbridge
Xstrata is reported to be reviewing options for its 20% stake in Falconbridge and is yet to make a decision.
London based Sunday Times reported yesterday that Xstrata is preparing a possible $18 billion bid to take control of the Canadian mining company without saying where it got the information. The Sunday Times said JP Morgan and Deutsche Bank were assisting Xstrata in preparations for a forthcoming $18 billion bid.
Metal demand from BRIC countries to grow Mr Goodyear
BHP Billiton said that demand for commodities is not just being driven by Chinese economic growth, other emerging economies are following. Mr Chip Goodyear CE of BHP, in a presentation to a mining and steel conference in Miami, said "Demographics and economic development could continue for years. This will require significant new mine capacity."
Mr Goodyear said that demand from BRIC countries for aluminium, copper, nickel and oil is expected to continue to grow at a high rate. Aluminium demand from those countries is expected to grow from 6.1 million tons in 2002 to 47.9 million tons in 2015 to 67.9 million tons in 2025 and 136 million tons in 2050. Copper demand from the BRIC countries is expected to grow from 3.5 million tons in 2002 to 18.6 million tons in 2015, 23.6 million tons in 2025 and 37.2 million tons in 2050. Nickel demand is expected to grow from 180 000 tons in 2002 to 1.2 million in 2015, 1.8 million in 2025 and 4.1 million in 2050.
"China's per capita raw materials consumption is well below that of developed countries," Goodyear said of the potential for Chinese commodities demand to keep growing.
New foreign investors interested in Krivorozhstal
Ukraines State Property Fund chief Ms Valentyna Semeniuk has disclosed to journalists yesterday that there are some foreign investors who are ready to pay more than Mittal Steel for Krivorozhstal so that there be no monopoly not only in Ukraine but also in the whole world. The State Property Fund chief refused to disclose the investors, referring to a commercial secret.
SPFU early had said that it might take Mittal Steel to court for failing to comply with the terms of the purchase contract. The decision followed an inquiry that highlighted a number of abuses. The new owner keeps refusing to adhere to a number of privatization terms, including those concerning the remuneration of employees.
Mittal Steel Krivy Rih is Ukraines biggest producer of steel products. Its share in the market is as big as 20%. It is capable of manufacturing 6 million tons of rolled stock, about 7 million tons of steel and over 7.8 million tons of pig iron.
Acesita to increase electrical steel capacity
Mr Gilberto Audelino Correa investment director of Brazilian specialty steelmaker Acesita plans to invest 230million reais ($105 million) during 2006. Acesita plans to invest 95 million reais to expand silicon based products output capacity from 188,000 tonnes per year to 300,000 tonnes per year and 35 million reais for distribution network.
Mr Correa said that Acesita is in final talks to acquire a steel service center in S Paulo state's Campinas city.
BHPB & Rio to gain after CVRDs 19% increase
BHP Billiton and Rio Tinto may have their earnings boosted after CVRD won a 19% price increase for iron ore fines for 2006 from ThyssenKrupp AG, Germany's largest steelmaker. The 19% gain applies to Carajas and Southern System fines. CVRD's settlement may set a global benchmark and comes on top of a record 71.5% gain last year.
CVRD had been pressing for a 24.6% increase to reflect surging demand in China, the world's largest ore consumer and steel producer.
CVRD, BHP and Rio have been locked in talks with steelmakers to set 2006 prices, with Chinese steelmakers trying to stop a price increase.
Anglo American unlikely to bid for Falconbridge
World's third biggest mining group Anglo American Plc is unlikely to join a bidding battle for Canadian nickel producer Falconbridge while it is busy with a restructuring. An analyst in Johannesburg said "I'm sure that Anglo would potentially be interested, but I think at the moment it's unlikely. They've got a lot to do to clean out their own stable."
Anglo is in the midst of a sweeping reorganization to simplify its structure by culling several subsidiaries to focus on its core mining units. Anglo has interests ranging from precious and industrial metals to coal, iron ore, steel, diamonds, paper and packaging.
An Anglo spokeswoman declined to comment on whether it would be interested in bidding for Falconbridge.
Marubeni & Abu Dhabi in a trading house venture
Marubeni Corp announced it has agreed with Abu Dhabi to set up a JV to conduct a feasibility study on a plan to form a comprehensive Japanese-style trading house in Abu Dhabi. Under the deal with Abu Dhabi's Department of Planning & Economy and Marubeni will arrange for the venture to carry out feasibility studies on plans to export and import cement, process and sell steel products, introduce environmentally friendly technologies, handle Middle Eastern tapped petroleum products and expedite e commerce for used cars.
If the studies conclude a trading house can be run profitably from Abu Dhabi, the two parties will establish a full fledged venture, Abu Dhabi Trading House. The trading house, to be capitalized at $ 15 million, would be owned 40% by Marubeni and 60% by the Abu Dhabi side.
Abu Dhabi seeks to introduce the business model for Japanese trading houses, whose business sectors span a range of industries, in order to limit its economy's heavy dependence on sales of energy related natural resources.
Al-Tuwairqi opts for Midrex for plant in Pakistan
Al-Tuwairqi Group of Saudi Arabia has announced that it has signed a contract with Midrex Technologies Inc to build a new Midrex Megamod Hot Direct Reduced Iron / Hot Briquetted Iron /Cold Direct Reduced Iron Plant in Karachi Pakistan. The new plant will be operated by Tuwairqi Steel Mill, a member of the Al-Tuwairqi Group.
The new DR plant capacity will be rated at 1.28 million tonnes per year and initial production will be 100% CDRI. The plant will be configured to allow the possible addition of briquette machines in the future to produce HBI.
The facility will employ many of Midrexs latest innovations to minimize energy consumption and control product quality. The new DR plants will enable the Al-Tuwairqi Group to better manage raw material costs.
Siemens electrical systems for Hadeeds ore transportation
The Siemens Industrial Solutions and Services (I&S) Group recently received an order from Voest Alpine Materials Handling, Austria, to deliver the electrical equipment for the complete ore transport systems between Saudi Iron and Steel Company Hadeeds own port facility in Al Jubail and the steel plant. The order is worth Euro 7.5 million. The equipment will be commissioned by February 2007.
Voest Alpine Materials Handling, a member of the Swedish Sandvik Group, will contribute two new ship unloaders, four stackers, and eight hoppers to this project and additionally modernize the eight mile long conveyor.
Hadeed belongs to the Saudi Sabic Holding, Riyadh, and is the Gulf Regions leading producer of steel. Established in 1983 as a supplier of structural steel, it has an annual production capacity of around 4 million tons, including a growing share of cold and hot rolled flat products destined for local industry. Hadeed is currently building a new direct reduction plant and expanding its capacities for flat steel. This extension program also encompasses the renewal of the ore transport systems between the port of Al-Jubail and the steel plant.
PSMC Privatization- Mill to clear loan liabilities of banks
Pakistan Steel Mill Corporation will pay Rs 7.5 billion outstanding dues to national banks tomorrow. Pakistan Steel had taken loan worth Rs 19 billions from National Bank, MCB, UBL, ABL and Habib Bank, out of which only Rs 7.5 billion was outstanding and the mill had to return the loan by 2013 but it is being paid in advance due to privatization of the mill.
It is also reported that PSMC administration will be handed over to new administration by the end of this month. PSMC has been sold out to a consortium comprising Al Tawariqi Group, MMK of Russia and Arif Habib Investment of Pakistan.
ThyssenKrupp to close Detroit car parts plant
German industrial conglomerate ThyssenKrupp will close its car parts plant in Detroit and shift production to another facility. Mr Stefan Kirsten CFO told an analysts' conference that he could not rule out further closures as well as divestments in its North American automotive parts operations but ruled out a sale of the entire division.
Mr Kirsten said the company would take restructuring charges of 77 million in the third and fourth quarter, but he did not say to which currency he was referring.
S&P raise Evrazs long term credit rating
Standard & Poor's Ratings Services said that it raised its credit ratings on Russian steel company Evraz Group SA and its core subsidiary Mastercroft Ltd to 'BB-' from 'B+'. The outlook is stable.
S&P said this move follows the strong profitability and cash flow generation posted by the group in 2005, its demonstrated progress in group consolidation, and successful integration of recently acquired assets. The rating action reflects another year of profitable and cash-generative consolidated operations, following the group's consolidation of its trading operations in 2004 and mining assets in 2004-2005 said S&P credit analyst Ms Elena Anankina.
Ukraine & EU to hold talks on steel pipe duties today
Ukraines Economy Minister Mr Arseniy Yatseniuk said that the next round of talks aimed at mitigating EU anti dumping sanctions against Ukrainian pipes will take place on May 16,
Mr Yatseniuk said "I think that the working party which will meet with officials from the European Commission on May 16 will continue the negotiations."
MMKs net profit dips by 26.3% in Q1
Magnitogorsk Iron & Steel Works has reduced net profit as per RAS by 26.3% YOY in the first quarter of 2006 to 6.598 billion rubles.
Revenue decreased by 11% to 33.61 billion rubles, costs fell by 5% to 22.88 billion rubles, gross profit reduced by 21.7% to 10.73 billion rubles and pretax profit dipped by 25.4% to 8.74 billion rubles.
Semirara Q1 profit dip by 20% due to tax provisions
Philippines coal producer Semirara Mining Corp announced that its net income dropped to P270.2 million in the first quarter from P339 million in the same period in 2005 as its provision for taxes increased. Q1 revenue was P1.38 billion, consisting of P1.36 billion in coal sales and coal handling revenue of P28.51 million. Cost of sales was P958.68 million. Provision for income tax in the first quarter amounted to P108.06 million, 13.6 times of last year's tax provision of P7.95 million.
Total material excavation hit 11.5 million bank cubic meters up by 75% YOY from 6.58 million bcm. Run of mine coal production increased to 625,165 tonnes from 584,436 metric tons. Total coal sold during the quarter reached 600,026 tonnes and sales to National Power Corp accounted for 50.7% of total sales.
Semirara Mining Corporation principal activity is exploring, developing, mining and producing sub bituminous coal in Semirara Island. The mining claims are located in Semirara Island in Caluya, Antique with an area of 3,832 hectares. The Company was granted exploration permit for a period of 2 years and renewable for a like period for a maximum of 6 years.
Norfolk & Steel Warehouse expand Rock Island facility
Norfolk Iron and Metal and Steel Warehouse have inaugurated expansion of its Rock Island facility. The processing center opened in 1998 to process carbon flat rolled steel to be used primarily in the agriculture and heavy construction equipment manufacturing fields. Among the clients are Deere & Company, Caterpillar and Case New Holland.
Mr Dave Lerman CEO of Steel Warehouse said "I think there are tremendous opportunities and there are tremendous challenges but overall I think the economy is going to continue to plug along and it's up to us to be a part of it. We would not be investing what we did if we didn't see that continued growth."
Norfolk Iron and Metal is located in Norfolf in Nebraska, Greely in Colorado and Emporia in Kansas.
Steel Warehouse has five operations including South Bend in Indiana, Portage in Indiana, Milwaukee in Wisconsin, Chattanooga in Tennessee and Memphis in Tennessee.
Barloworld to sell steel tube business by September
South African Barloworld announced that the negotiations to sell its steel tube division were at an advanced stage. Mr Tony Phillips CEO said that Barloworld would dispose of the division to a management led consortium with black economic empowerment participation before September this year.
He said that the division had underperformed over an extended period adding that the volatility in world steel prices had also contributed to the decision to sell.
