May, 18 2006
CILs provisional net profit reported at Rs 8,388 crores
Coal India Limited has reported net profit of Rs. 8,388.53 crore (Provisional) during the financial year 2005-06.
Northern Coalfields Ltd - Rs 2,060.32 crore
Mahanadi Coalfields Ltd - Rs 1,718.63 crore
South Eastern Coalfields Ltd - Rs 1,405.94 crore
Western Coalfields Ltd - Rs 1,351.22 crore
Central Coalfields Ltd - Rs 1,105.05 crore
Eastern Coalfields Ltd - Rs 357.40 crore
Bharat Coking Coal Ltd Rs 156.11 crore
North Eastern Coalfields Ltd - Rs 230.27 crore
Central Mine Planning and Design Institute Ltd - Rs 3.59 crore.
Mittal Steels exit improves TATAs chance for Highveld
The chances of TATA Steel acquiring South African Highveld seems to have improved as Mittal Steel SA is understood to be shelving plans to buy Highveld. Mittal Steel SA CEO Mr Davinder Chugh said recently that Mittal SA had not yet submitted any offers for Highveld despite keen interest earlier in acquiring Highveld Vanadium and Steel as it had run into some procedural difficulties with its participation in the Highveld Steel bid which he said were related to perceptions with.
The local arm of UK based Kermas Group, which owns ferro-alloys producer Samancor Chrome, had submitted a non binding bid for the stake. Mr Alisher Usmanov and Mr Vasily Anisimov controlled Russian firm Metalloinvest had pulled out of the race on February 16th. This apparently leaves TATA Steel and Kermas SA is the fray.
It is reported that TATA board will take a decision on the matter soon. Earlier Mr Ratan Tata had said that the group "expressed an interest in the property", but was concerned about the high levels of vanadium output, as the acquisition of vanadium-producing assets is not part of TATA Steel's plans. He had also suggested that high vanadium price level might add extra premium for the company's valuation.
South African Highveld Steel and Vanadium Corporation have been put up for sale of 79% stake in October 2005 by Anglo American, the controlling stakeholder. Highveld is South Africa's second largest steel maker after Mittal Steel SA and the world's top supplier of vanadium, used in the production of special and alloy steel.
Iron ore spot prices up by $8 to $10 YOY
PK Mukherjee MD of Sesa Goa during CNBC-TV18 interview said that 19% increase in iron ore is unrealistic to the Chinese companies and it is highly unlikely that the Chinese will accept such a hike but a price will be settled by the Chinese companies in two weeks. A differential pricing system is already in place as far as China is concerned and that increased percentage will not be same for China as it was not the same for us last year either.
He also noted that only the iron ore fines price is increased and not the iron ore lumps price. Lumps price has not yet been settled although pellets price has already reduced by 3%.
Mr Mukherjee pegged the premium for iron ore prices between spot and contract at this point of time at about $8 to $10 as compared to 20052006.
Screening committee for allotment of coal blocks formed
Minister of State for Coal Dr Dasari Narayana Rao has formed a Screening Committee with representatives from the related central ministries and state governments for allocation of coal blocks for captive mining. After hearing the applicants individually, the Screening Committee makes the selection in accordance with the prescribed guidelines.
Various factors such as the stage of the project for which the allotment is being sought, the feasibility and viability factors and the financial and technical ability of the bidders are considered for allotment of coal blocks. These guidelines are modified from time to time based on experience and necessity.
A proposal to introduce a competitive bidding system for allocation of coal blocks for captive use has been mooted.
Maoists oppose TATA & Essar steel plants in Bastar
It is reported that Maoist rebels have opposed the setting up of steel plants by TATA Steel and Essar Steel in Chhattisgarh iron ore rich Bastar region, saying that capitalists had no role to play there. The Communist Party of India Maoist said in a press statement The indigenous people of Bastar hold ownership rights over the natural resources of Bastar. We oppose the setting up of steel plants by TATA Steel and Essar Steel. The capitalists have no role to play in Bastar.
The Bastar region is divided into three districts Kanker, Bastar and Dantewada and is severely affected by violence. Officials say that out of the 150 lives lost to Maoist violence in 2006 in Chattisgarh, 127 were killed in the Bastar region alone.
TATA Steel & Essar Steel signed MoU with Chattisgarh government in last June for setting up integrated steel plant in Bastar of 5 million tonne & and 3.2 million respectively.
CIL to fund modernization from internal resources
Coal India Limited has no proposal to take loan from the World Bank for modernization of coalfields although modernization of coal mines is an integral part of its production plan of 363.80 million tonnes for the year 2006-07. The capital investment of Rs. 3063.70 crore for the year 2006-07 is proposed to be met from internal resources of CIL and is adequate to finance CILs modernization needs.
Implementation of this plan incorporates modernization initiatives like increase in mechanization of underground operations and utilization of high productive technologies including longwall mining and Room & Pillar method using continuous miner shuttle car combination.
In the area of opencast mining, efforts are made for installation of higher capacity equipments for excavation and transportation, computerized fleet and man management system like Operator Independent Truck Dispatch System.
L&T ventures into dredging
Larsen & Toubro Ltd announced that Company has made a foray into the dredging business by acquiring a majority stake in International Seaport Dredging Pvt Ltd. Following the Shareholders Agreement entered into on January 25, 2006 with Dredging International, L&T has infused equity to acquire 61% stake of the Indian venture of Belgian Dredging International headquartered at New Delhi. Dredging International will hold the balance 39%.
This acquisition is in line with the L&T's strategy to strengthen its position in ports and harbors. The Company has played a major role in construction in several public and private sector ports in the country, including ports at Nava Sheva, Chennai, Mundra Port for Adani, Gangavaram, Hazira for Shell LNG plant, Seabird Project at Karwar; private jetties for Finolex in Ratnagiri, Reliance in Hazira, Chemplast in Karaikal and Ballard Pier in Mumbai.
Dredging International is part of the Dredging, Environmental & Marine Engineering DEME Group. A major player in the global dredging market, it has achieved rapid and sustained growth over the last decade. Dredging International's core activity is dredging and land reclamation. For more than a century, constituent companies of Dredging International have undertaken projects worldwide. Dredging Internationals modern and high tech trailing suction hopper dredgers and the mighty cutter suction dredgers are deepening fairways and reclaiming new land in South America, the Middle East, Australia, Africa and Europe in addition to building ports in India.
Everest Kanto to setup a unit in China
Board of Directors of Everest Kanto Cylinder Ltd has approved formation of a separate wholly owned subsidiary Company in China subject to all the regulatory approvals to manufacture high pressure gas cylinders and all other allied products.
The first phase investment of $50 millions would be raised through FCCBs, GDRs and private placement.
CVRD settles 19% iron ore price hike with Japanese steel mills
Cia Vale do Rio Doce announced that some of the Japanese steelmakers have agreed to a 19% increase in the price of iron ore for 2006 and that the price of iron ore pellets to Japanese mills will fall by 3%. CVRD declined to name the specific companies.
The price increases are for iron ore and pellets from CVRD's Carajas, which ships through the port of Sao Luis Brazil and Southern which ships through the port of Tubarao Brazil on FOB basis.
The price agreement is in line with the announcement with ThyssenKrupp on 16th May and poses a big challenge to Chinese steel mills which are still negotiating 2006 prices insisting on lesser increase with CVRD, BHPB and Rio.
CISA rejects iron ore price settlement
The China Iron and Steel Association said on Wednesday that setting the iron ore price without considering the Chinese market is unacceptable. The price should be made not only according to the European market but also to the Asian Market especially the Chinese market said an official with the CISA.
He said that Chinese steel companies would not accept a decision made without taking into account the China market. Iron ore price negotiation should give full thought to the long term interest of both sides. He said that the negotiation of the international iron ore price should fully consider the interests of both suppliers and customers, stressing that the cooperation ought to be long-term and reasonable.
Xstrata enters into race for Falconbridge
Zug Switzerland based Xstrata Plc has made an unsolicited C$16.1 billion ($14.6 billion) bid for Falconbridge Ltd by offering C$52.50 a share in cash for the 80% of the Canadian miner it doesn't own. Whoever wins Falconbridge will complete the biggest ever takeover in the mining industry. Mergers and acquisitions among miners have jumped as prices for metals and other raw materials surged.
The proposal is 12% more than Inco's May 13 offer. Toronto based Falconbridge at C$20 billion. Inco, also based in Toronto, on May 13 offered C$51.17 in cash or 0.6927 of an Inco share and 5 Canadian cents for each Falconbridge share. Inco itself is a target of a hostile C$17.8 billion bid from Teck Cominco Ltd, announced on May 8. Vancouver based Teck said its offer is conditional on Inco shelving its plans for Falconbridge.
Xstrata in August paid Toronto based Brascan Corp., later renamed Brookfield Asset Management Inc C$28 a share for 20% of Falconbridge. It agreed with Brookfield that if it offered more than C$28 for the rest of Falconbridge before May 15, Xstrata must pay the difference to Brookfield and the period has just expired.
The move indicates that Xstrata CEO Mr Mick Davis wants to create a mining company on five continents that rivals BHP Billiton, Rio Tinto Group and Anglo American Plc. Mr Davis has turned Xstrata from a Swiss listed company with a market capitalization of less than $600 million into one worth as much as $26.5 billion and interests in four continents in last four years. Buying Falconbridge would create a global miner employing 40,000 and add nickel to a production portfolio at Xstrata that already includes coal, copper, zinc and chrome. Falconbridge also has copper mines in Chile and zinc plants in Canada.
Xstrata is being advised by JPMorgan Cazenove and Deutsche Bank.
Mittal Steel hints at cutting of cash component of offer
Mittal Steel plans to meet investors to listen to their demands after its offer for rival Arcelor is launched today but could cut the cash component. Mr Aditya Mittal CFO told France's Les Echos newspaper in an interview that a reduction in the cash component of the 19 billion euro bid would be the automatic consequence if Arcelor went ahead as part of its defenses with a contested share buyback.
He was quoted as saying "This operation creates confusion and raises a number of questions. The financial market authority has expressly forbidden a buyback. If this public buyback goes ahead and finishes before ours, our price will automatically be adjusted down, eventually to the point of reducing the cash component of our offer to zero. But the strong appreciation of Mittal makes the share exchange more attractive than cash."
Mr Aditya Mittal said that "The offer period will last from 18 May 2006 until 29 June 2006 inclusive. The closing of the offer period will occur on the same day in all jurisdictions concerned by the offer, i.e. Luxembourg, France, Belgium, Spain and the United States."
Arcelor, which is fighting to remain independent and set up defenses against its unwanted suitor, declined to comment on Tuesday's development.
Arcelor reported to be in talks with MMK
French weekly Challenges reported that Arcelor is in talks with Russia's Magnitogorsk Iron & Steel Works.
The paper said "Arcelor is said to be in very advanced talks with Russia's MMK which could take a significant stake in its capital."
Arcelor declined to comment to Reuters.
Mittal Steel submits proposal for Ukraines iron ore plant KGOKOR
Mittal Steel has submitted an $800 million bid to Ukraine's government to complete construction of the Soviet era KGOKOR iron ore plant. Mittal Steel said that it is ready to organize cooperation with the governments of Slovakia and Romania who also hold stake in the plant. Mittal Steel also said that it would be able to produce 10.5 million tonnes a year of iron pellets at KGOKOR. It would be able to start production in a year at an initial rate of 7 million tonnes a year without specifying when it would reach full capacity.
Ukraine announced last month that it wanted to set up a JV with a powerful investor to complete KGOKOR, which officials said at the time could cost at least $400 million. Ukraines top producer of iron pellets Ferrexpo Poltava Mining said last month that it was interested in the project. KGOKOR has also attracted a joint proposal from Russia's Metalloinvest and Ukraine's Smart Group.
KGOKOR is located 70 kilometers from Kryvorizhstal. Construction of KGOKOR was begun by the Soviet Union in 1983. After the collapse of the USSR, Ukraine received a 56.4% stake, Romania 28% and Slovakia 15.6%.
Taiwans Tycoons ties up with Jinan to set up plant in Vietnam
Taiwans Tycoons Group Enterprise Co has decided to set up a 60:40 JV in Vietnam with China's Jinan Iron & Steel Co with $20 million investment from each entity. Tycoons noted it began drafting plans to set up a plant in Vietnam about one year ago following the country's entry into the ASEAN Free Trade Area AFTA. Construction will be completed in April 2007.
The JV will roll out products to penetrate the Southeast Asian market, including the Vietnamese market. With production focusing on annealing wire and bolts and nuts, Tycoons plans to extend product lines to include such panel steel products as cold rolled steel and hot dip galvanized steel coils.
Tycoon is one of Taiwan's largest producers of wire rods and one of Asia's largest integrated producers of bolts and nuts wire rods. With annual consolidated sales of $218.75 million in 2005.
Jinan Iron & Steel, established in 1958, is world's 25th largest steel producer with annual output reaching 10.42 million tons in 2005. The company produces plates, HR coils and CR coils.
NSM seeks JV partner to complete DRI project
Thai Nakornthai Strip Mill Plc aims to raise $70 million via a JV with an international steel firm to help start production at its long delayed natural gas powered 500,000 tonnes DRI facility to reduce it's need to import scrap steel. NSM has invested $50 million in constructing the DRI facility in Chon Buri since 1996 but the project was suspended from 1998 to 2004 after NSM entered debt restructuring.
NSM needs $70 million to finish construction of the facility and is reported to have talked with a number of major steel producers from Japan, India and South Korea about a partnership. But overseas producers have expressed more interest in taking over NSM rather than entering into a JV, a condition rejected by the Thai company. NSM may decide to set up a new company to operate the DRI facility and if a partner cannot be found, work on the facility would likely be suspended.
NSM produced 700,000 tonnes of hot rolled coil in 2005 and the company expected to increase actual production volume to one million tonnes in 2006. The company reported a net loss of 720.94 million baht in 2005 as compared with a net profit of 583.38 million baht in 2004.
Mittal Steel & USPF row centers on wages
Mittal Steel has refuted claims by Ukraines State Property Fund, which allege that the international steel giant was not fulfilling investment obligations and insisted that it had fulfilled all investment and social requirements contradicting the words of USPF chief Ms Valentyna Semeniuk. The conflict with the USPF centers on salaries at Kryvorizhstal steel mill, which Mittal Steel renamed to Mittal Steel Krivy Rih. When Mittal Steel won a tender for the mill last fall it agreed to raise salaries for the factorys 50,000 strong workforce and abide by other investment obligations. Mittal Steel claims that it has done so but the USPF sees things otherwise.
Privatization expert Mr Oleksandr Ryabchenko, who serves as director of the Kyiv based International Institute for Privatization, Asset Management and Investments said that the conflict lies in whether Mittal Steel should pay salaries in line with the minimum living standard set by legislation last year, when Mittal Steel acquired the plant or follow the new standard, which was raised this year.
Mr Ryabchenko also questioned Ms Semeniuks threats to reverse Mittal Steels acquisition saying that they could further harm Ukraines image in the eyes of investors, who were spooked last year by alleged weak property rights in Ukraine after news reports alleged that the government planned to review dozens to thousands of privatization deals conducted in the past. He said To demand the fulfillment of investment obligations is fine but threats to reverse the sale of this plant is a bad strategy. There will always be buyers available willing to pay more but overall this will be very negative for Ukraines investment climate.
Iron ore lady becomes Australias first female billionaire
Ms Gina Rinehart the daughter of late iron ore mining magnate Mr Lang Hancock with a personal fortune worth $1.8 billion has earned the enviable title of Australia's first female billionaire. Ms Rinehart doubled her wealth in 2005 to become the eighth richest person in Australia after iron ore prices soared by more than 71.5% and miners posted record profits on the back of the boom. Ms Rinehart also receives income from the royalties from Mr Hancock's other mining discoveries.
Ms Rinehart has she signed a deal this year with Rio Tinto to develop her Hope Downs iron ore mine in Western Australia at a cost of $1.3 billion. The mine is due to start producing early in 2008 and features a railway extension named after her late father Mr Lang Hancock, who discovered the deposit in 1967.
Iron ore boosted the fortunes of another daughter of a mining magnate Ms Angela Bennett's personal wealth of $900 million makes her the nation's second wealthiest woman. Ms Bennett and her brother Mr Michael Wright are the children of the late Mr Peter Wright.
Inco CEO outlines benefits of its offer for Falconbridge
Inco Ltd reiterated its support for its merger with Falconbridge Ltd., as rival Swiss miner Xstrata launched its own takeover bid for the nickel and copper miner. Inco said that it remains convinced that its friendly offer is superior to the $18 billion bid announced by Xstrata.
Mr Scott Hand chairman and CEO of Inco said "The Inco and Falconbridge combination creates a Canadian based global powerhouse that will be the world's No 1 nickel company and a leading copper producer, with a truly outstanding portfolio of growth opportunities in these two great metals. A key feature of our offer is the unique opportunity to deliver significant, tangible value from the enormous synergies available in the Sudbury Basin. While others make vague promises about future joint ventures with unspecified partners, we've calculated the after tax net present value of our Sudbury synergies at about $3 billion, based on year to date metal prices."
Inco is itself the subject of a hostile takeover offer from Teck Cominco, another Canadian zinc miner, whose offer is contingent on the breakup of the Inco-Falconbridge merger.
POSCO to increase auto grade steel by 49% in 4 years
South Korean POSCO is aiming to increase production of steel sheets for cars from 4.36 million tons in 2005 to 4.8 million tons this year and 6.5 million tons in 2009. POSCO is also pursuing a strategy to providing tailored products such as steel sheets for automobiles and is setting up service centers in many countries.
Major steelmakers around the world are increasingly focusing on high value added products to fight competition from cheaper Chinese products.
Czech coal sells 40% stake in MUS
Czech Coal announced that it has sold 40% shares of the second largest Czech brown coal mine MUS to Cyprus firm Indoverse Czech Coal Investments Limited. Price of the transaction was not disclosed. According to media reports, it could be around CZK 10 billion. The company should acquire a further 9% in one year. The proceeds from the sale will help Czech Coal to increase its capital strength.
The Cypriot company is reportedly backed by Czech financier Mr Pavel Tykac.
Czech Coal group comprises a joint stock company of the same name, MUS, heating company Teplarna Otrokovice, Energetika Malenovice and another 24 units. During 2005 the group posted sales worth some CZK 8 billion and CZK 1.8 billion net profits. MUS last year mined over 16 million tonnes of coal.
Japanese steel makers to increase steel prices
Nihon Keizai Shimbun, without citing any sources, has reported that Japanese steel makers are considering raising prices of steel products for auto and electronics manufacturers because of the increased cost of iron ore.
The newspaper said the steel makers including Nippon Steel Corp, JFE Steel Corp, Sumitomo Metal Industries and Kobe Steel plan to demand price increases of 5% to 10% for steel sheet used in automobiles and home electronics, starting with shipments made this autumn here.
They will begin negotiations with Toyota Motor Corp as soon as next month, the Nikkei said.
British Columbia mining sector records best performance in 38 years
PWC in its annual survey of the British Columbia's mining sector said that strong coal prices helped push British Columbia's mining sector to its best financial performance in 38 years. The industry generated a profit of $1.8 billion on sales of $6.3 billion in 2005 as compared to a profit of $871 million on sales of $4.6 billion in 2004.
PWC said that Metallurgical coal was the biggest factor behind the improved results.
Mittal Steel declares quarterly dividend payment
Mittal Steel has declared a quarterly interim dividend of $0.125 per share.
This cash dividend will be payable on 15th June 2006 to Euronext Amsterdam stockholders of record on 2nd June 2006 and to NYSE stockholders of record on 7th June 2006.
Corus unveils new steel & design for crash barriers
The company has developed two new variations of its Vetex highway crash barriers in a bid to appeal to contractors and fight off tough competition from the concrete sector after Highways Agency legislation permitted a concrete barrier to be used for motorways. The N2W2 barrier has 1.6 meter spacing as compared to the previous 0.8 meters and its N2W4 has extended the previous 2 meter spacing to 2.5 meter.
Ms Joanne Larkin marketing manager said that Corus has doubled the barriers post spacing and cut the number of components to make contractors lives easier. She said that the new barriers have about 90% fewer components than the HA approved open box barriers and that it is easier and quicker to install.
Mr Richard Jones engineering director of Corus said that the company has drawn from its automotive manufacturing experience to develop a stronger product to compete with the concrete step barrier. He said The initial catalyst was the legislation. We saw this coming as a threat to our business and started to understand that we can bring the technology from the automotive unit at the University of Warwick. Its gone from being a threat to being an opportunity.
Banker Steel expands in Campbell County
Banker Steel Co announced plans to double its presence in the Lynchburg area by opening a new manufacturing facility in the old Hirschfeld Steel plant located just south of Lynchburg Regional Airport.
Campbell County has negotiated a $2 million capital investment agreement with Banker Steel to keep it from opening its second plant in Columbia. The county is buying the Hirschfeld facility and property for $1.6 million and will lease it to Baker Steel which will pay back the $2 million back through its lease payments. The county also negotiated a $475,000 machinery equipment sale with Hirschfeld on behalf of Banker Steel, which will purchase the equipment from Hirschfeld.
Mr Don Banker president of Banker Steel Co said We selected this site in Campbell County due to the determination and assistance we received from the Campbell County Economic Development Department along with the participation of the Tobacco Region Opportunity Fund.
Banker Steel Company, LLC is an AISC certified steel fabricator headquartered in Lynchburg VA servicing the entire East Coast and provides a complete package including structural and miscellaneous steel.
Chinas coal prices to remain firm KGI
KGI Securities has noted that softening of Chinas spot coal prices in April due to slack season, they are not likely to plummet in future and remain within 5% limit.
High-performance companies that included Xishan Coal & Electricity Power, Shanxi Lanhua Sci-tech Venture and Yanzhou Coal Mining would continue to enjoy earnings growth through capacity expansion, KGI indicated.
Shanduka expanding coal business
It is reported that South African Ramaphosas Shanduka Resources group is on a drive to expand its coal business and has apparently teamed up with Glencore to buy junior coal companies because the prospects for coal in South Africa look excellent after access to the export market is being opened up to juniors previously shut out of it through development of the Phase 5 expansion of the Richards Bay Coal Terminal.
Coal industry sources maintain there is a business alliance in place and an underlying strategy for the two to try and dominate the junior coal business in the country.
Mr Rowan Smith Shanduka MD said that the group has targeted coal as a growth area but denies a formal alliance with Glencore. He says the two companies are well known to each other but that theres no exclusive business relationship. Mr Smith said that Shanduka has been talking to a number of coal companies about possible takeovers but wont provide specifics. "Its open season out there at present. Everybody is knocking on everybody elses door."
Glencore is one of the major players in the worlds export steam coal trade through its trading operations and direct investments in producers like Xstrata. Glencore owns a direct 15% stake in Xstrata. Xstrata is the third largest coal exporter from South Africa owning a 20.9% stake in the RBCT.
Shanduka Resources long term strategy is to build a geographically diverse, multi commodity, black owned and managed resource house. The short term strategy is initially focused on investments in selected value chain assets which will then be supported by operational and managerial capabilities in the medium term. The current resources portfolio comprises investments in Kangra Coal (40%), Mondi Shanduka Newsprint (42%), Mondi Packaging South Africa (40%), Barberton Mines Limited (26%), Lace Diamond Mine (13%), Assore (11.74%), DRA (25%) and Graspan Colliers (30%).
Court approves PTC Alliances moves
PTC Alliance Corp, now in Chapter 11 bankruptcy, received court approval to continue paying employee wages and benefits and to pay pre petition supplier obligations. PTC also won approval to use $35.3 million of $70 million in debtor in possession financing. The financing will allow PTC to continue operations without disruption.
Wexford-based PTC owns the Pittsburgh Tube plant in Darlington and Pennsylvania Cold Drawn in West Mayfield to manufacture welded and cold drawn mechanical steel tubing and shapes, fabricated parts, precision components and chrome plated steel bars.
