June, 28 2006
Hoda panel likely to give space to steel makers
It is reported that the Hoda committee, which had favored miners over steelmakers, is now being persuaded to accommodate the steel sector at the cost of the mining sector for whose benefit the report was originally designed. The reports cite that the Hoda Committee is falling prey to this pressure and is redrafting its recommendations to allow a concession to steel makers by assuring iron ore captive mines to them. This compromises the Hoda Committee's initial vision of stepping up mineral exploration activity by attracting world class, stand alone, resource mining companies like Billiton and Rio Tinto to the country.
The steel ministry is insisting that captive mining for extraction of iron ore at cost rather than at market prices is basic to the survival of steel sector.
Federation of Indian Mining Industries said that that worldwide, of around 1 billion metric tonnes of steel produced, only 10% is made with iron ore from captive mines. Steel producers in Japan, Korea and other countries, procure iron ore at market prices from countries like Brazil and Australia.
The final meeting of the Hoda Committee is scheduled for Friday.
India signs long term iron ore export deals with Japan & Korea
India has signed new 5 year agreements with Japan and South Korea for iron ore exports by National Mineral Development Corporation during 2006-11. Mr Christy Fernandez additional secretary in the ministry of commerce told PTI "The new Long Term Agreements with Japan and Korea have been signed. Iron ore exports to these two countries during 2006-11 would be in the range of 2.70 million tonnes to 6.78 million tonnes per annum." Ore exports to China would hereafter be carried out by MMTC for which a separate agreement would be negotiated next month in Beijing.
Mr Fernandez said while actual quantities to be exported would be negotiated every year, the range would not be revised till the end of March 2011 when the contracts expire. The quantity of exports for 2006-07 has been fixed at 3.5 million tonnes.
The previous agreement for exports of iron ore during 2001-06 had the quantity in the range at 9.6 million tonnes to 16.5 million tonnes of ore exports per year but included exports to China
Orissa issues notices for cancellation of 7 MoUs
It is reported the Orissa government has issued notices to Sunflag Special Steel, Maharashtra Seamless, AML Steel and Power, Agrim Steel Industries, MSP Metalik, Tube Investment India and Stats Steel India for cancellation of the MoUs due to inordinate delay in implementation of their respective projects. The MoUs with these companies were signed between August 2004 and November 2005.
As per reports notices for cancellations have been sent after issuance of show cause notices earlier as to why the MoUs should not be cancelled. During the review process it was concluded that these seven companies had not shown any interest to put up their projects after signing of the MoUs.
Orissa government had signed MoUs with 43 companies for setting up steel plants but many most of them remain on paper primarily due to issues like iron ore mines allotment and land allocation. During the progress review meeting Orissa government was satisfied that 20 companies had made substantial progress in implementation of their projects by committing investments to the tune of 25% of their respective project cost thus making them eligible to apply for captive iron ore mines.
During the review meeting steel companies which have started production demanded supply of iron ore at a concessional rate pending allotment of captive mines to them and also drew the governments attention to the problems relating to the transportation of raw material & finished products and land acquisition.
SAIL issues LoI to Jaiprakash for cement JV at Bhilai
Steel Authority of India Ltd has informed BSE that the Company has identified Jaiprakash Associates Ltd as the strategic partner for setting up 2 million tonnes per annum slag based cement plant at its Bhilai Steel Plant, Bhilai. A letter of intent in this regard is being issued to JAL on June 27, 2006.
The proposed cement plant would be set up by a Joint Venture Company, in which SAIL would hold minority stake of 26% with the remaining stake held by JAL. The plant would use slag generated at the blast furnace of its integrated steel plant at Bhilai. Further, the lime stone would be made available to the JV Company from the lime stone mine at Satna.
Centre approves 3 iron ore mining leases in Jharkhand
According to the Jharkhand mines and geology minister Mr Madhu Koda applications by Sunflag Iron & Steel Co Ltd, Electrosteel and Rungta Mines Ltd have been approved by the central government for grant of leases on around 500 acres, 250 acres and 200 acres respectively of land in the Saranda forest area of Kodlibagh.
The allocated areas are under the state forest department and would need the departments clearance before any of the three parties could begin mining in the area.
This is the first instance of approval of iron ore leases in Jharkhand since the recent rejection of 10 such applications in the state on grounds that most of them had been recommended by the state for lease on land reserved for iron ore mining by only public sector units.
Jharkhand assures Mittal Steel for iron ore deposits
In response to Mittal Steels request for a comfort letter regarding allocation of iron ore mines, Jharkhand government has assured Mittal Steel that they will get the required supply of iron ore for its proposed 12 million tonne Greenfield steel project in Jharkhand.
Mr SK Satapathy states mines and geology secretary said "We are ready to provide a Letter of Comfort to Mittal Steel. The company should first choose one of the locations where it would set up its plant."
Mittal Steel had demanded 600 million tonnes of iron ore for the first 30 years to meet its operational needs. During negotiations Mittal Steel had sought Chiria mines which are presently with SAIL and state government is fighting a legal battle over it with SAIL in the Jharkhand High Court.
Mittal Steel has identified six locations in Jharkhand for its project Torpa, Govindpur, Muri, Serailkela, Santhal Pargana and North of Ghatsila. It would shortlist one of them soon.
SAIL welcomes Arcelor-Mittal merger
Steel Authority of India Ltd has welcomed the merger of Mittal Steel and Arcelor and said it would help contain the volatility in prices. Mr VS Jain chairman said "With such mergers and acquisitions, it is expected that the volatility of steel, with sharp swings in prices will come down. This is beneficial not only for manufacturers but for consumers also."
SAIL also said that global mergers and acquisitions would also have an indirect impact on the minds of Indian entrepreneurs.
SAIL added that mergers and consolidation in India may not materialize in the near future but over a period of time such a path may become inevitable.
SCCL may increase coal prices
Andhra Pradesh owned Singareni Collieries Company Limited is considering an increase in coal prices in view of increasing production costs and pressure on the company's financial health. Mr RH Khwaja CMD told reporters "There is a definite possibility of the price hike. We will discuss the issue at the SCCL Board and also with the government." CMD added that care would be taken to see that the power utilities and industrial customers were not burdened.
Mr Khwaja said that reducing the production cost, adoption of modern technologies and mining methods, cutting down wastage and improving operational efficiency were among the challenges being faced by the company.
SCCL accounts for 9% of the country's coal production. It had achieved a record coal production of 36.13 million tonnes in 2005-06 and set a target of 37.50 million tonnes this year. SCCL operates 47 underground and 11 open cast mines in South India. It serves major power houses and cement industries in Andhra Pradesh, Karnataka, Maharashtra and Gujarat & also about 5,000 customers across various industries. SCCL had earned a net profit of Rs 182.35 crore during 2005-06.
Nagarjuna forecasts 63% increase in revenue in 2006-07
Nagarjuna Construction Co Ltd expects its net profit to jump 63% during 2006-07. Mr YD Murthy senior VP told Reuters in an interview forecast the firm's revenue would rise 63% to 30 billion rupees in this year with net profit also rising by the same margin to 1.7 billion rupees. He said that Nagarjuna is executing projects worth 60 billion rupees and expects new orders for 43 billion rupees in 2006-07.
He said that Nagarjuna is also planning to set up a wholly owned firm with a capital of 2.5 to 3 billion rupees to bid for government contracts for toll roads and that the new company may go public in the next one or two years.
BHEL gets substation contract in Bangladesh
Bharat Heavy Electricals Limited has been awarded a 55 crore contract by the Power Grid Company of Bangladesh for setting up a sub station in Bangladesh. BHEL would supply and install of a new 230 KV substation and the expansion of an existing substation. The Asian Development Bank is funding the project.
BHEL would be involved in design, supply, construction and commissioning of 230 KV substations at Baghabari and expansion of Ishurdi substation.
BHEL has executed a number of contracts in Bangladesh, including a turnkey project for a 100 MW power plant, but this would be the first order for substations.
TATA Steel to raise funds for expansion
TATA Steel in its latest annual report mentioned its plans to raise up to 65 billion rupees through one or more equity related issues to help increase its capacity by a combination of new projects and acquisitions. The report said that "While the current internal accruals from the operations are strong, the above project would require significant outlay of funds in the next 4 to 5 years."
TATA steel said share issues to fund the expansion would increase the company's paid up capital by up to 15%.
G Steel & NSM announce strategic partnership
Thailands G Steel Plc announced of a strategic partnership with Nakornthai Strip Mill Plc and said that it would invest $180 million to buy out more than 90% of NSM's debts from creditors. G Steel said that this proposal would result in the company controlling approximately 33% of NSM within 18 months. The move is the first consolidation to take place in the local steel industry since Millennium Steel was formed in 2002 through the merger of NTS Steel with Cementhai Steel.
Initially, G Steel will convert a certain amount of debt into equity in the first six months to bring its holding to 19%. G Steel said that $120 million would be paid upfront through a subsidiary that would raise the funds from financial institutions, and the remaining $60 million would be paid in the form of a share swap based on average trading prices over a period of between 15 and 90 days.
Mr Sawasdi Horrungruang chairman of NSM said in a telephone interview ''This is the way to go forward in the future and if we could merge our operations, it would make it more attractive to foreign investors if and when they want to move into this country. 'We are also in talks with other market players such as SSI to participate in a future merger to create a bigger firm.'' Mr Sawasdi stressed the need to have a larger operation, adding that both NSM and G Steel would invest money to expand production capacity to six million tonnes per year from 3.3 million at present.
Mexican miner postpones strike on June 28th
Mexican miner unions plans to postpone a nationwide strike scheduled for June 28 until after the July 2 presidential elections. The miners union will continue strikes at the Cananea and La Caridad copper mines Grupo Mexico SA's two largest mines and a steel plant owned by Grupo Villacero.
The miners union has been protesting the government's decision on February 19 to recognize Elias Morales as leader of the union after an oversight committee charged Gomez with corruption. The union went on strike at the copper mines and steel plant to demand Mr Gomez be reinstated as leader.
POSCO to increase prices of HR & CR
South Korean steelmaker POSCO is to hike the price of hot rolled coil and cold rolled coil starting next month due to recent price increase in iron ore and demand recovery in the US, Europe and China. It is likely to raise HRC prices by about W20,000 - W40,000 per ton or 3.3-8.3 percent starting from July 13.
But POSCO said that it will not immediately raise prices for thick steel plates for ships, wire rods and other products, whose prices will be adjusted according to future changes in the global market.
Mittal Steel denies rumors of South African operations sell off
Mittal Steel denied rumors that following Arcelor's agreement to merge with the Mittal Steel it would sell its 52% stake in Mittal Steel South Africa. Mr Paul Weigh a Mittal Steel spokesman said "We firmly deny this rumor and it couldn't be further from the truth". He added that Mittal's SA operations were a flagship subsidiary of the overall business.
A daily newspaper reported on Monday that Mittal would consider dumping its South African operations should Arcelor and Mittal Steel merge.
Arcelor unions to vote for merger with Severstal Group
Russian Itar-Tass has reported that an association of shareholders from Arcelor labor collectives said on Tuesday that they would vote for a merger with Russias Severstal Group on June 30. They have only 2% of Arcelor stock, but this statement is very important because it is supported by trade unions of EU member countries that host Arcelor plants.
The AASA association of employee shareholders of Arcelor SA said it still opposes Mittal Steel Co NV's takeover offer and will not tender its shares. AASA said it was still concerned about the impact of restructuring following a merger with Mittal Steel and what it sees as an excessive degree of control the deal gives the Mittal family.
Arcelor board has recommended the shareholders to vote for a merger with Severstal on June 30. The owners of 50% plus one share should turn down the Severstal bid for repealing the earlier agreement. If not, Severstal CEO Alexei Mordashov will have a right to demand 250 million Arcelor shares, which amount to 25% of the company costs.
Blizzard of mega mergers in last 5 days
The Wall Street Journal has reported that in less than 100 hours starting last Friday, around $110 billion in acquisition deals were sealed world wide in sectors ranging from natural gas, to copper, to mouthwash to steel, linking investors and industrialists from India, to Canada, to Luxembourg to the US.
The deals included merger of Arcelor & Mittal Steel, Phelps Dodge Corp acquisition of both Inco Ltd. and Falconbridge Ltd and Johnson & Johnson merger with the consumer brands division of Pfizer Inc.
The year end tally could top $3.5 trillion, based on Thomson Financial figures.
EU considering AD adopts measures for seamless tubes
The European Union member states are adopting a regulation designed to protect EU steel firms from cheap competition by companies from Romania, Croatia, Ukraine and Russia The move follows an investigation by the European Commission into complaints by EU producers that their eastern competitors are selling seamless pipes and tubes on the EU market at dumping" prices.
The EU will now respond to its industry's complaints by imposing anti-dumping duties of up to 35% on pipes and tubes from Croatia, Ukraine and Russia.
EU currently imports 4.6% of this type of pipes and tubes from Romania, with Romanian firm prices undercutting EU industry prices by more than 20% according to Monday's regulation. But the Brussels-imposed measures on Romanian firms will expire immediately once Romania joins the EU which could be 1 January 2008 at the latest should there be a one year accession delay.
Mr. Zaleski backs Mittal Steel
Financier Mr Romain Zaleski, Arcelor SA's biggest shareholder said he plans to tender his 7.8% stake to Mittal Steel, in a show of support that boosts Mittal Steel's chances of succeeding.
Mr. Zaleski said in an interview yesterday "I think Mittal has all the winning cards."
SCIA calls for coke output cut by 20% in Shaanxi
The Shanxi Coke Industry Association recently asked Shanxi coke companies to cut output by 20% this year to curb overcapacity and stabilize coke prices, according to a senior association official. This is the second time that the SCIA called for output reduction. The association urged all its members to cut production by 20% to 40% for a period of three months starting on June 10, 2005. SCIA made this reduction plan based on last year's output of 80 million tons.
Mr Han Yongqi a senior official with the SCIA told Interfax that "The coke industry still has overcapacity, although coke prices have risen recently." According to information from the SCIA China's coke capacity reached 300 million tons, including 150 million tons contributed by Shanxi in 2005 although the actual demand in the country is only 185 million tons. Mr Han Yongqi said that "We worry the price recovery will drive many coke plants to resume production or expand production. As you know, the FOB price at the Tianjin Port will immediately drop if coke stockpiles go higher. Stockpile growth directly indicates Shanxi's coke output increase."
There are 243 members of the Shanxi Coke Association including 93 coke producers who contribute for more than two thirds of Shanxi's coke output and 40% of the world's coke trading volume per year.
Union opposes Phelps Dodge-Inco-Falconbridge merger
Leaders of the union representing thousands of mine workers in Canada are challenging US copper giant Phelps Dodge Corp's $40 billion takeover bid for Canadian nickel makers Inco Ltd and Falconbridge Ltd.
Mr Wayne Fraser Ontario Atlantic director of the United Steelworkers said "The best thing that could have happened to Canada was Teck Cominco, Inco and Falconbridge put together a strong mining company. It would have been one of the fifth largest companies in the world; it would have made sense for Canada, for Canadians, for our members, for our retirees and our communities."
The union represents more than 7,500 Inco and Falconbridge workers in 13 bargaining units across Canada. The transaction would create a company with more than 40,000 employees but shift control of Inco and Falconbridge to Phoenix in Arizona where Phelps Dodge is headquartered.
Mr Mittal & Mr Mordashov to appear before French parliamentary panel report
As per some reports citing French parliamentary sources heads of Mittal Steel and Severstal, Mr LN Mittal and Mr Alexei Mordashov, are to make separate appearances on Wednesday before the French National Assembly's economic affairs committee. They will appear behind closed doors in connection with Mittal Steel's successful bid to form a partnership with Arcelor.
Arcelor management until Sunday had been fiercely opposed to an alliance with Mittal and at one point sought a merger with Russian group Severstal in order to thwart the Mittal Steel initiative. The board changed its mind on Sunday after Mittal Steel offered a substantial increase in his bid. Arcelor shareholders are nonetheless scheduled to meet on June 30 at a special general assembly to vote on the proposed merger with Severstal.
Autostrade buys 21.7% in Poland's Stalexport
Autostrade SpA said it will acquire 21.7% in Polish group Stalexport SA for Euro 17 million by subscribing to a capital increase and may bid for 66% of the company at a later stage. The second capital increase is conditional on Stalexport shareholders' approval, the sale of the company's steel activities, and regulatory clearances.
The initial stake will be for 34.2 million newly issued Stalexport shares at a price of 2 zloty each. Autostrade said it may subscribe to a second recapitalization, which would raise its stake to 5% plus one share, also at 2 zlotys each, for a total of Euro 47 million. Once it passes the 50 pct threshold, Autostrade will be required by Polish law to launch a takeover offer for up to 66% of Stalexport's capital.
Stalexport, a Warsaw-listed company, operates in the steel business and holds a concession to operate the Cracovia-Katowice motorway until 2027. Autostrade and Stalexport are bidding for the construction and management of two new motorways in Poland, the Strykow-Pyrzowice and the Varsavia-Strykow, it said.
Western Canadian books orders for 70% of production
Western Canadian Coal Corp announced that it has secured sales commitments for Wolverine hard coking coal of approx 880,000 tonnes, representing 70% of its planned Wolverine sales of 1.25 million tonnes in this fiscal year. These commitments are to major steel mills around the world encompassing six countries over three continents.
WCCC also said that it is in active negotiations with a number of other steel mills and anticipates it will have concluded agreements for the balance of the Wolverine's planned sales by the end of August 2006.
WCCC said if the remaining price settlements follow those already concluded, an average price of around $100 per tonne is anticipated for the current coal year.
Sharjahs Hamriya Free Zone signs deal for 2nd steel factory
An agreement for a Dh370 million steel factory in Hamriya Free Zone was signed in Sharjah by Hamriya Steel Factory board chairman Dr Shaikh Sultan Bin Khalifa Al Nahyan and Hamriya Free Zone chairman Shaikh Khalid Bin Abdullah Bin Sultan Al Qasimi.
Hamriya Steel Factory will have an annual capacity of 1 million tonnes in the first phase. The project is being set up in partnership with a Russian group that will provide know how for the plant which is scheduled to be ready in 16 months.
Mr Rashid Al Leem director general of Hamriya Free Zone said "This is the second mega steel project in Hamriya. It will help in meeting the huge demand for steel in the UAE construction sector." Indian steel maker Essar is also setting up a plant here. Mr Al Leem said Sharjah will continue to direct its marketing efforts to bring big industry players to the emirate. He said "We have created infrastructure that supports heavy industries."
UMW forms a seamless tube JV with Jiangsu Fanli in China
Malaysian UMW Holdings Bhd's 51% owned Wuxi Seamless Oil Pipe Co Ltd plans to invest RM16.13 million in a proposed JV in China with the Jiangsu Fanli Pipe Co Ltd. The investment would be financed from WSP's own funds and WSP would subscribe for new capital to be issued by Jiangsu Fianli. This would translate into 70% of the total new capital of RM23.04 million in Jiangsu Fianli.
The JV was to enable WSP secure stable supply and consistent quality of raw materials as well as to undertake WSPs oil and gas manufacturing activities in China at a lower cost. Arrangements would then be made to change Jiangsu Fianli to WSP Jiangsu Pipe Co Ltd It did not indicate a completion date for the proposed exercise.
Jiangsu Fianli manufactures and sells seamless steel pipes, including oil well pipes, boiler tubes and bearing tubes.
Nigerian government sets up monitoring team for Ajaokuta
Nigerias federal ministry of power and steel has set up a monitoring team to monitor the activities of Ajaokuta Steel Complex after allegations of asset stripping surfaced against Global Steel Holding Limited. Mr Liyel Imoke minister of power and steel told journalists that the monitoring team will ensure that the company continues to run according to agreed terms. He declined to disclose the names or positions of members of the monitoring team.
He confirmed that till date, his ministry had not discovered any evidence to substantiate the asset stripping allegations. Mr Imoke stated that the ministry investigated the allegation but found no evidence. Yet, it said, it had to constitute a monitoring team to ensure that such development does not happen in the Ajaokuta Steel Complex.
The former managers of the complex Solgas Energy Incorporated had in its petition to the minister had accused Global Steel Holding Limited of massive asset stripping using its Nigerian subsidiary. Solgas had charged that ISPAT was moving equipment worth over N654 million out of the Ajaokuta Complex to Delta Steel Company in Aladja and the company's operations abroad without the approval of the Ministry of Power and Steel or the Presidency. Solgas also accused officials of the GSHL of distributing illicit payments to gain the plant's management concession.
PSMC Privatization Permission sought for revamping
The management of the Pakistan Steel Mills has sought the permission of the federal government to urgently revamp the mills with enlisting its 10% shares on the stock market. As per reports in local dailies that after the verdict of the Supreme Court against the privatization the biggest challenge before the management of the Mills was to restore some of the aging plants on fast track basis.
It is reported that the management has informed the authorities that the Mills has with it Rs10 billion equity which could be spent on carrying out the necessary revamping in a shortest possible time. As per reports the management has informed the higher authorities that major revamping work involved the restoration of coke oven batteries plant so as to expand its life for another 3 to 4 years.
Sources said it would take six to nine months to once again plan the privatization of the Mills after the clearance by the Council of Common Interests and also by the approval of the Cabinet Committee on Privatization.
Trinecke Zelezarny to pay out CZK 811million in dividends
Czech steelmaker Trinecke zelezarny will pay out a gross dividend of CZK 100 per share or a total of CZK 811 million from last year's net profit of CZK 2.068 billion. The biggest sum will go to. The firm has paid out dividends only for the past three years. Last year, shareholders received CZK 70 per share, after CZK 45 for 2003.
Trinecke reported record operating profit of CZK 2.443 billion in 2005 up by CZK 686 million over 2004 in spite of lower output. During 2005 sales amounted to CZK 30.826 billion. It produced 1.814 million tonnes of pig iron in 2005 as compared with 1.979 million tonnes in 2004. Exports accounted for 55% of sales.
Supervisory board chairman and the principal owner Mr Tomas Chrenek told shareholders that last year was the best year since the company was privatized in 1996.
Moravia Steel holds 69% of Trinecke shares. Other shareholders in Trinecke zelezarny are Finitrading with 16% and Commercial Metals Company holding 11% of the CZK 8 billion share capital. The remaining shares are in the hands of small shareholders.
Steel Technologies names Mr Shanon as new CFO
Steel Technologies Inc has named Mr Roger D Shannon as its chief financial officer and treasurer, effective July 24. Mr Joseph Bellino resigned as CFO last month to accept a job at Kaiser Aluminum.
Mr Shannon most recently served as assistant VP and assistant treasurer for Louisville based Brown Forman Corp. He also has held various financial positions with Vulcan Materials, Lexmark International Inc. and Brown & Williamson Tobacco Corp.
Louisville based Steel Technologies processes flat rolled steel for automotive, appliance, agriculture, rail car, construction and other industries. The company has 20 facilities throughout the United States and Mexico.
