June, 25 2006
USIBC awards TATA for being India's most respected group
US-India Business Council has presented India's Most Respected Multinational Business Conglomerate to TATA group chairman Mr Ratan Tata at USIBCs 31st Anniversary Leadership Summit held at Washington DC.
Mr Ratan Tata said the success of TATA Group was due to the legacy and value system left behind by his predecessors and that has driven the organization. He said that 65% of the company's profits were spent on charitable causes like health care, education, rural development and treatment of water in rural areas.
Indias coal production up by 6.34%YOY in May 2006
The total coal produced by Coal India Limited and Singareni Collieries during May 2006 is estimated at 31.07 million tonnes as against 29.10 million tonnes during May 2005 registering growth of 6.34%. The production also crossed Mays combined target of 30.89 million tonnes of these two companies.
CIL allocated 2.02 million tonnes of coal for sales through e-auction route during May 2006. It is reported that 1883 bidders participated in e auction and 1663 emerged successful. The average premium of 27.5% was obtained over average notified price and 6.3% over floor price.
McNally Bharat ties with TPE and VAI Pomini
McNally Bharat Engineering Company Ltd has signed agreements with Russia based steel plant consultant and equipment providers Tyazhpromexport and Austrian Vai Pomini for undertaking modernization and expansion steel plants in India.
The tie ups would enable the company to participate in certain specific areas of steel sector modernization, McNally Bharat said that following the signing of the two agreements it expected the area of its operation, turnover and profitability to improve considerably.
NALCO production hit by workers strike against disinvestment
Workers at National Aluminium Company in Orissa smelter have gone on strike to protest government plans to sell a 10% stake in the company out of 87.15% it currently holds resulting in stoppage of production. The facility employs 4,500 people although it was not clear how many were actually on strike.
Mr CR Pradhan chairman said "Officers and executives are keeping the potline alive as its important to keep it running continuously."
NALCO refines up to 1.57 million tonnes of alumina per year and produces 345,000 tonnes of aluminium per year.
Sical reports higher profit in 2005-06 on lesser turnover
Sical Logistics Ltd has reported a net profit of Rs 18.33 crore for the fourth quarter of 2005-06 as compared with Rs 17.72 crore during Q4 of 200-05. Net sales for the quarter were Rs 269.28 crore.
Sical made a net profit of Rs 53.69 crore during 2005-06 as compared with Rs 27.99 crore in 200-05. Turnover was Rs 960.38 crore in 2005-06 as against that of Rs 1,214.83 crore in 200-05.
Siacl attributes the fall in turnover to fertilizer transport slowing down and reduced off take of coal by Karnataka Power Corporation Ltd. Yet, net profit was higher because the company was able to get higher margins on its other businesses such as trucking and with a financial restructure program the interest cost came down.
Arcelor to have MOST important board meeting today
Arcelor's 18 member board will convene at 10:30AM local time at the company's chateau in Luxembourg and debate competing transactions with Mittal Steel and Severstal which may bring an end to 5 month tussle.
Mr Stephen Pope head of equity research at Cantor Fitzgerald LP in London said that This is the most important meeting since the creation of Arcelor. We've really come down to the sharp end of the deal.
Arcelor board is likely to make a statement after the meeting to announce outcome.
Mr LN Mittal was heading to Luxembourg for the final stages of the battle and Mr Alexei Mordashov was also seen in Luxembourg yesterday.
Reports favor Mittal Steel as the winner
After months of hostility towards Mittal Steel Arcelor is believed to be poised to recommend a second sweetened bid from Mittal Steel. Mittal Steels improved offer is expected to receive approval at an 18 member Arcelor board meeting on Sunday in Luxembourg.
Mr Mittal is understood to be preparing revised cash and share offer of Euro 40 per share, up from about Euro 36 per share, valuing the overall deal at about Euro 26.5 billion. He is also believed to have made significant concessions to Arcelor, including the CEOs position for Mr Guy Dollin a combined business.
It is understood Arcelors enthusiasm for Severstal has been weakened in recent weeks after growing criticism from Arcelor shareholders who argue that the deal would give too much control to Mr Mordashov.
Severstal acquires credit line to counter higher bid from Mittal Steel
Reuters has reported that Severstal has secured a multi billion euro loan facility from investment bank ABN AMRO to give itself firepower to counter any increased Mittal bid with a proposal that would include cash for Arcelor investors. The ABN AMRO facility will allow Mordashov to re-introduce cash to any new proposal.
Mr Mordashov has also entered talks with several Arcelor shareholders including Mr Romain Zaleski and Mr Jose Maria Aristrain to try gaining their backing adding that among options he is pursuing is a purchase of their stakes.
Arcelor, which has agreed to a deal to buy Severstal to defend itself against an unwanted 23 billion euro takeover offer from Mittal Steel is still in talks with Mittal Steel about a possible raised offer.
Severstal reported to be ready for legal action
It is reported that Severstal is prepared to launch legal action against Arcelor if it recommends a rival takeover offer from Mittal Steel. Despite being the latecomer to the proceedings, Severstal managed to win Arcelor board approval for its offer, which gave it control of about one-third of the shares. That agreement is legally binding, people close to Severstal claim.
The Business has reported that Mr Mordashov has instructed his legal advisers to draw up plans for legal action against what Severstal claims would be a blatant breach of a binding contract it has with Arcelor regarding Severstals own previously recommended takeover offer. The threat from Severstal promises to further delay a takeover battle already fraught with problems.
World CO2 emissions to rise by 75% by 2030
The Energy Information Administration, the statistics arm of the Department of Energy of US in its annual forecast International Energy Outlook said that the world's emissions of CO2 will hit 43.7 billion tonnes in 2030 up from 25 billion tonnes in 2003. The report said that in four years, CO2 emissions in rapidly developing countries in Asia, such as China and India, will surpass those from North America.
The forecast did not include potential effects of pending or proposed legislation, regulations, or standards, including the international emissions reduction pact known as the Kyoto Protocol. The Kyoto pact, which went into force early last year, requires 35 rich countries to reduce greenhouse gas emissions to an annual average about 5% below their 1990 levels by 2008 to 2012. Countries signed on to the agreement have agreed to set tougher caps in the second phase of the plan, but no timetable has been set for agreeing on the goals.
Most scientists believe that a build up in greenhouse gases, such as CO2, is raising temperatures and could bring catastrophic changes such as heat waves, stronger storms and melting icecaps that could raise sea levels by almost three feet by 2100. Humans cause much of the buildup of CO2 by burning fossil fuels such as oil, gas, and coal.
Ore deal to expedite steel industry consolidation in China
Fitch Ratings last week said that the 19% price increase acceptance by Chinese mills is likely to speed up consolidation of the Chinas steel industry. China's 260 steelmakers are undergoing a wave of mergers as the government seeks to promote the emergence of fewer, larger companies that can compete more effectively overseas.
Mr Danny Chen associate director of Fitch Ratings said that the price rise should put pressure on profit margins and help to accelerate the consolidation process. China hasn't benefited from increased bargaining power as it is still undergoing the transformation from the biggest market player to the strongest one.''
Fitch said that many Chinese steelmakers are still expanding production to avoid becoming acquisition targets frustrating government attempts to rein in capacity growth. China's crude steel output should grow by 15% to 400 million tons in 2006 indicating demand for an additional 80 million tons of iron ore.
China orders reduction in iron ore inventories at ports
Chinese authorities have ordered steel mills and importers to immediately reduce large inventories of iron ore at domestic ports. China imported 108 million tons during January to April 2006 up by 23.5% YOY resulting in 42 million tons inventory at ports in late May. Authorities have told importers to accelerate their ore sales to qualified steel plants and ports are asked to report their plans to cut their stockpiles to the government before Wednesday.
National Development and Reform Commission and three other government agencies o stock piling at ports said that "That's mainly due to some importers stockpiling, anticipating a price rise. The increased stockpiles have exceeded the demand and put pressure on port unloading activities and rail transport.
Steel futures idea not favored by many steel executives
After Mr LN Mittal CEO of Mittal Steel rejected the idea of steel futures at a steel industry conference in Manhattan cosponsored by American Metal Market and World Steel Dynamics by saying that we do not need futures, several other top executives of some of the world's largest steelmakers later confirmed in the conference that establishing such a contract was a poor idea.
Mr Dan DiMicco CEO of Nucor Corp said that he thought establishing a futures market for steel would be bad for the industry. He said "The folks who are going to make money off this aren't in steel." Mr DiMicco added that financial professionals would be the ones to benefit.
Mr Keith Busse CEO of Steel Dynamics Inc said futures contracts don't add any value.
Mr Rodney Mott CEO of Stelco Inc said that he didn't think the contracts were necessary.
London Metal Exchange is currently in the process of developing steel market futures contracts. The steel industry has long resisted attempts at anything approaching price transparency. The concept of risk management has never been a big hit with steel producers, which have steadfastly resisted using open market mechanisms to facilitate price discovery, as in other metal markets such as copper and aluminum.
Vietnam Steel Corporation reports losses in five months
Mr Mai Van Tinh deputy GD of Vietnam Steel Corporation during last week said that VSC incurred serious losses in the first five months of 2006 as the price of billets surged by $80 to $90 per tonne and the selling price of finished steel increased only by $40 to $50 per tonne. Mr Tinh said that VSC could not sell products, though it tried to raise the selling prices just a little.
Experts say that that the prices of billets will see further increase due to short supply and expensive transportation expenses. China, one of the biggest billet suppliers, has been gradually limiting exports of semis.
South African domestic steel sales up by 25.2% YOY
The South African Iron and Steel Institute has reported that domestic carbon steel sales increased by 25.2% YOY to 1.2 million tons in the first quarter of 2006 and also the imports also increased to a level of 8% of apparent demand in this quarter. The sales recorded 18.5% increase over fourth quarter of 2005. SAISI reported that the sales of flat products increased by 25.1% and sales of long products increased by 25.3% YOY
SAISI said that imports of primary carbon and alloy steel products excluding wire and stainless steel but including rails increased by 64.9% during Q1 of 2006 as compared with the corresponding period of 2005. It added that imports of flat products during the first quarter of 2006 increased by 52.5% while imports of long products decreased by 74.3% compared with the fourth quarter of 2005.
Exports of primary carbon steel products fell by 14.6% YOY to 719 300 tonnes during the period.
PSMC Privatization CCI to decide further course of action
Pakistans Supreme Court on Friday struck down the privatization deal of the Pakistan Steel Mills and referred the matter to the Council of Common Interests. It also directed the federal government to make the CII functional within six weeks to finalize policy issues.
The court ruled We hold that the establishment and working of the Council of Common Interest is a cornerstone of the federal structure for the protection of the rights of the federating units. This important institution is not functioning at present. We direct the federal government to do the needful expeditiously but not later than six weeks. However, the court ruled that the Privatization Commission Ordinance 2000 was not unconstitutional.
There are views and more views on the fate of PSMC, privatization process as such and business environment in Pakistan and now it is left to CCI to decide the course of action, which could be a fresh and more scientific valuation of assets and inviting a fresh bid for privatization or sale of shares in stock exchange or a combination.
Inco gets US clearance for its Falconbridge offer
Inco Limited announced today that it and Falconbridge Limited have reached a definitive agreement with the US Department of Justice on a remedy, consistent with what they had been discussing with the DOJ and the European Commission to address potential competition issues related to Incos pending acquisition of Falconbridge and provide for the DOJs clearance of this transaction.
The remedy consists of the sale to LionOre Mining International Ltd. of Falconbridges Nikkelverk refinery in Norway and the Falconbridge marketing and custom feed organizations that market and sell the finished nickel and other products produced at Nikkelverk and obtain third party feeds for this facility.
The terms of the agreement on this remedy are set forth in a final judgment that has been filed in the United States District Court for the District of Columbia. Formal clearance of the acquisition will also be granted today through early termination of the applicable waiting period under the US Hart-Scott-Rodino Act.
Mr Scott Hand chairman and CEO said We are pleased with the conclusion of the US Department of Justices review and clearance of the pending combination of Inco and Falconbridge and that we are now one step closer to completing the acquisition.
Bangladesh to finalize coal policy soon
Bangladesh is expected to announce its first ever coal policy soon as the final draft of the coal policy will be placed before the Cabinet shortly. The coal policy will give certain basic rights to the government to lease out the existing coal mines of the country including the Phulbari coalmine.
A number of experts of the state owned consultancy firm Infrastructure Investment Facilitation Centre drafted the coal policy at the behest of the energy division and submitted the first draft to the energy adviser last December. The Energy Division had initiated the move to frame such a policy and revised it after getting inputs from the stakeholders, including energy experts, academics and foreign investors. An inter ministerial meeting finalized the draft policy after 4 revisions before putting it up for final approval.
It is reported that the changes during the revisions are in the area of environmental protection and sensitive issues such as the coal export, mining method and the procedures of calculating royalty remain more or less unchanged from the first cut.
The draft policy had generated debate among various stakeholders, with some praising a number of provisions in the regulations while others vehemently opposing those. A group of economists and energy experts at a recent dialogue said the draft coal policy violates the constitution as it seeks to award the coalfields to foreign investors on a royalty basis.
Stelco plans cutting workforce by 15% to improve bottom line
Stelco Inc which emerged from bankruptcy recently is planning to cut 15% of its workforce to improve profitability. The workforce reduction will begin in July and take about six months.
CEO Mr Rodney Mott told the companys annual meeting in Toronto that about 700 job cuts will be achieved through retirements, attrition, a salaried and hourly employee buyout plan and severance packages. He said Everybody thats leaving is leaving on a voluntary basis. This is not a reduction in force or a layoff; this is a voluntary buyout program."
He said that salaried workers who choose to leave will get a years pay to do so, while hourly workers who were preparing to retire have been offered a $20,000 bonus to leave staff early. Depending on participation, the cost of the program is estimated at $25 million, resulting in annual savings of about $45 million.
Most of the cuts are likely to happen in Stelcos biggest and oldest plant in Hamilton.
Polands black coal production in January to May down
The production of black coal in Poland during January to May 2006 reduced by 0.5% YOY to 40.5 million tonnes although the May 2006 production increased by 4.7% to 7.79 million tonnes over May 2005.
The production of brown coal in Poland during January to May 2006 increased by 1% YOY to 25.9 million tonnes and the May 2006 production reduced by 4.3% to .8 million tonnes over May 2005.
