December, 06 2006
India to import more coal to bridge increasing deficit
CRISIL Research has reported that the deficit in the coal sector is expected to increase 18% of supply in five years from the current levels of 10% of supply.
As per report demand for non coking coal, which accounts for more than 90% of total demand, is expected to increase at a compounded average growth rate of 8% to 647 million tonnes in 2011-12 and the demand for coking coal is expected to double to 55.8 million tonnes in 2011-12.
As against this, supply of coal is expected to grow at a compounded average growth rate of 7.4% fuelled by new capacities and greater production efficiencies at Coal India Limited & its subsidiaries as well as increased production from captive mines.
CRISIL Research estimates that this asymmetry between demand and supply growth will cause a deficit of nearly 86 million tonnes in 2011-12. The deficit for non coking coal will peak in 2009-10, at 56 million tonnes before declining to 42 million tonnes in 2011-12. The deficit in coal 43.3 million tonnes of coking coal and 42 million tonnes of non coking coal in 2011-12 would be met through imports.
Mr Nagarajan Narasimhan head of CRISIL Research said that "The deficit scenario in the next 5 years is expected to peak in 2009-10 before reducing on account of captive mines becoming operational. The deficit in coal would be met through imports; hence, augmentation of the coal handling capacity of major ports is the need of the hour. Another option available to meet the shortage is infusion of funds by private players into coal mining."
IIL inks MoU for capacity expansion at Dolvi to 5 million tonnes
Ispat Industries Limited announced signing of a MoU with Maharashtra government for investment of Rs 2,000 crore to scale up capacity to 5 million tonne per year from the existing 3 million tonne per year at its integrated steel plant at Dolvi in Maharashtra in next one and a half years. A second blast furnace, a coke oven plant and a new slab caster will be added to the existing facility in the project.
The Maharashtra government will also facilitate the companys requirement of iron ore mines while the Maharashtra Industrial Development Corporation will act as a single window clearance agency for various infrastructure requirements of the expansion project.
Mr Vinod Mittal MD of IIL said the company would further increase the capacity to 10 million tonnes per year by 2011-12. Mr Vinod Mittal added that the company was open to setting up manufacturing units in other states if it would get assured mining rights.
Ispat Group is the No 1 steel maker in India with its current global capacities adding up to 14 million tonnes. The group operates steel making and processing capacities through ownership, long term concessions or commercial contracts at Bulgaria 2.2 million tonnes, Nigeria 4 million tonnes, Libya 1.8 million tonnes, The Philippines 3 million tonnes and India 3.5 million tonnes.
SAIL, RINL, CIL & NTPC to form JV for coal mining overseas Report
Economic Times has reported that the Indians major coal consumers including Steel Authority of India, National Thermal Power Corporation, Coal India Limited and Rashtriya Ispat Nigam are planning to set up a JV for acquiring coal assets abroad.
As per report on the proposal, the 4 partners will contribute an equity component of INR 35 billion in the venture. SAIL, NTPC, CIL would contribute an amount of INR 10 billion each equity for the new entity while RINL would put in INR 5 billion. Based on this equity, the company would leverage debt of about INR 70 billion.
As per reports, the JV proposal would soon be placed before the boards of all the 4 companies and once approved by their respective boards, it would require Cabinets approval.
CIL considering tie up with BHPB Report
Business Standard has reported that Coal India Limited is in the process of considering a deal with BHP Billiton for cooperation in the area of mining in India and Australia.
However, Mr PS Bhattacharya CMD of CIL said that "There is no formal proposal for this it is just a thought right now. We have kept our options completely open on this.
Mr Bhattacharya also said that CIL has cash reserves of INR 11,000 crore and it will soon have the autonomy to independently take large investment decisions. He said "We have just applied for Navratna. It could take 6 to 12 months. The company plans to invest Rs 15,000 crore over the next five years to increase production to 520 million tonne.
CIL is looking at overseas partners as it explores participation in the coal trade overseas in the form of equity stakes in coal blocks or in companies that are already owning and prospecting in blocks.
Essar Steel considering acquisitions overseas Report
DNA Money has reported that Essar Steel is likely to acquire an integrated steel plant in Eastern Europe and is also looking at opportunities in Indonesia and Dubai. The report added that Essar Steel is also likely to pick up stake in Cape Lambert Iron Ore of Australia.
Company officials declined to comment, the paper said.
Essar steel has early announced plans to set up 3 plants in West Asia with a total investment of $1.5 billion and is also investing $1.1 billion in Trinidad & Tobago to set up a 2 million tonnes plant. In addition, it has announced several plants in India.
EAC recommends combination of royalty on coal
Economic Advisory Council to the Prime Minister has recommended that any revision in royalty on coal should not be made applicable automatically to states which levy own cesses and that the royalty may be shifted from specific levy to a combination of specific & ad valorem levies.
Dr Dasari Narayan Rao minister of state for coal informed Lok Sabha that the EAC felt that this arrangement will provide a certain minimum royalty under the specific component plus a share in the price as a variable component and that the royalty rates on coal were already high as compared to those in other countries. Dr Rao said that the incidence of cess levied by state governments together with the enhanced royalty rates would have a cascading effect on the coal consuming sectors and this would cause disparities across the states.
Dr Rao said that interests of all the stakeholders would be taken into account while deciding on the revision of royalty rates of coal and lignite. He added that royalty rates on other minerals barring fuel and minor ones were last revised in October, 2004 and hence no revision would be possible till October next year.
He said the mines ministry has constituted a study group under the chairmanship of additional secretary to consider the next revision of royalty rates on major minerals other than coal, lignite and sand for stowing.
Iron ore export from Goa to China surge by 76.6%YoY in 7 months
Iron ore export from Goa to China during April to October 2006 has increased by 76.6% YoY to 8.07 million tonnes as compared to 4.57 million tonnes during the same period last year.
Goa Mineral Ore Exporters Association said Exports have gone up because of an increase in Chinas steel production. The increase is also helped by rising freight costs from Brazil.
The bulk of Indias iron ore exports to China are sold in the spot market, which usually command a premium over long term contracts. Last year India exported 90 million tonnes of iron ore, out of which 70 million tonnes were sold to China.
L&T seeks approvals for shipyard at Kakinada
Exim News has reported that L&T is planning to set up a shipyard at Kakinada to build vessels required for defense and has applied to the Central and the Andhra Pradesh government for permission. L&T also plans to build LNG carriers, survey ships and offshore vessels at the proposed shipyard.
As per report it requires more than 600 acres for the purpose and it is also seeking SEZ status for the project. The scale of investment is estimated at around INR 1,000 crore and the project are expected to be completed by 2010.
CSNs due diligence for Corus continuing satisfactorily
Brazilian steel manufacturer CSN said the due diligence process for Corus was proceeding satisfactorily and a formal takeover offer is likely shortly.
A CSN spokesperson while responding to a query on due diligence completion told media persons that "The process is preceding satisfactorily. He also said that the talk with pensions trustees of Corus too was on. He added that "This also applies to financing.
CSN had started the due diligence process on November 20 and Corus had deferred its shareholders meeting to discuss TATA Steels offer from December 4th 2006 to December 20th to enable CSN make a formal bid.
Rio Tinto appoints Mr Tom Albanese as new CEO
The boards of Rio Tinto plc and Rio Tinto Limited announced that Mr Tom Albanese will succeed Mr Leigh Clifford as CEO of Rio Tinto with effect from 1st May 2007 following the annual general meetings to be held in April 2007.
Mr Tom graduated in mineral economics and mining engineering from the University of Alaska. He joined Rio Tinto in 1993 and has had a succession of senior positions including chief executive roles in the Groups Industrial Minerals and Copper businesses and also as head of Exploration. He was appointed to the boards in March 2006 and currently holds the position of director, Group Resources.
Mr Paul Skinner chairman of Rio Tinto said The board is very pleased to appoint Tom Albanese to lead the next phase of Rio Tintos development. He brings wide experience of the mining industry developed in a sequence of challenging technical, operational and strategic roles. Tom has been a key player in a number of major Rio Tinto developments over recent years and also in shaping the Groups strategic direction.
Mr Paul also paid tribute to Mr Leigh's long service to Rio Tinto and said that Leigh has made an outstanding contribution to Rio Tinto over a 37 year career with the Group. During his seven years as chief executive the Group has seen strong growth in profitability and important advances in operational performance. He has been instrumental in developing the Groups position in key markets, notably in Asia, and in major acquisitions which have added significant shareholder value.
MEPS forecast for North American steel prices
UK based consulting group MEPS has announced that its forecast for flat products in North America for the next twelve months is little changed from their assumptions four weeks ago.
MEPS said that November was the fourth consecutive month for decrease in the Average Flat Products value and further reductions are foreseen up to the middle of 2007 as inventories remain high and will take at least six months to be depleted coupled with high volumes of imports into the region. MEPS said that customers are reducing their purchases but the mills are reacting by bringing forward planned outages for maintenance or refurbishment.
MEPS said that an improvement in prices is still anticipated in the second half of 2007 as the lower values will make exporting to the region less attractive, AD actions may also be taken against some foreign steelmakers and Chinese producers will probably reduce their supplies or face punitive action from their government in the form of taxes on exports or the elimination of rebates or both.
MEPS said that the US market for long products is now showing seasonal weakness in the construction segment. On the positive side activity on infrastructure projects should continue to be firm for the next twelve months. In contrast, housing starts in the US are in decline and could continue to drift for several months ahead. Service centers report subdued sales in Canada. MEPS retains their forecast for a further decline in the North American Average Long Products Price into Springtime of 2007 and an upturn is still forecast for the second half of the year as weather conditions improve and the construction sector picks up.
Steel Tech joint venture buying Mitsui Canada unit
Steel Technologies Inc announced that its JV Mi-Tech Steel Inc has entered into an agreement in principle to purchase 100% of the stock in Mitsui Auto Steel Canada Inc from Mitsui & Company Ltd and Mitsui & Company (Canada). Terms of the acquisition of MASCI were not disclosed. The deal is expected to close in January 2007.
Mi-Tech Steel is headquartered in Louisville and owned 50-50 by Steel Technologies and Mitsui Steel Holdings. Mi-Tech plans to invest $12 million to build a new steel processing operating in Woodstock, Ontario, giving Mi-Tech six facilities, including Murfreesboro in Tennessee, Greensburg in Indiana, Decatur in Alabama and Madison in Mississippi.
Mr Stuart N. Ray president and COO of Mi-Tech Steel said "Mi-Tech Steel is very excited about the opportunities that the purchase of MASCI and our follow on investment in Woodstock present. We will have a great platform from which to serve our Canadian customers. MASCI has an outstanding reputation servicing customers such as Toyota from its Cambridge facility, and we hope to build on that tradition. Our new facility in Woodstock will service a broad range of tier-one suppliers that support Canadian automotive original equipment manufacturers, including Toyota.
Steel Technologies is a leading steel processor and converter of flat rolled steel for automotive, appliance, lawn and garden, agricultural, recreational, and office equipment industries segments. The company, including its joint ventures and the above announcement, now operates 25 production facilities located throughout the United States, Canada and Mexico.
Mitsui & Company Ltd is a diversified trading, investment and service enterprise operating globally.
Mittal Steel SA commissions new HDG line at Vanderbijlpark
Mittal Steel South Africa has commissioned its new 100 000 tonnes per year Galvanizing Line No 5 at Vanderbijlpark as part of its strategy to increase the market penetration of its own manufactured products. The total cost of the line, which included freighting, civil work and relocation of an overhead crane, amounted to R110 million.
The project commenced in August 2004 and approval of the EIA was received in May 2005. The main contract was awarded to Flat Products Equipment (India) in June 2005 with civil work beginning a month later. The first saleable product was produced in mid October 2006.
Construction of the new line took place on a brown field site at Vanderbijlpark which required the upgrading of existing infrastructure, the relocation of the overhead crane in Cold Mills South Bay 4, gas, steam and water supply pipe line upgrades and the upgrade of the electrical supply.
Mr Rick Reato CEO of Mittal Steel SA said The galvanizing strategy aims to increase market penetration with our own manufactured products, particularly in the South African and Sub Saharan African markets. Mr Reato said that the new capacity will assist in alleviating the current shortage in galvanized products and by adding a further 100 000 tonnes per annum to the domestic market, Mittal Steel SA will significantly reduce the need for imported galvanized products.
The new galvanizing line forms part of Mittal Steel South Africas R8 billion capital expenditure program to increase its production of liquid steel. This is in addition to the R1 billion the company is spending at its various operations on environmental projects.
MMK secures license for Prioskolskoye iron ore deposits
Magnitogorsk Iron and Steel Works announced that it has received a license for the Prioskolskoye iron ore deposit, which would expire on December 1st 2026.
The auction for the Prioskolskoye deposit was held on November 2nd 2006 and MMK and Aviakom LLC took part in the auction. MMK offered RUB 630 million for the deposit and won the auction.
The Prioskolskoye iron ore deposit is situated in the Belgorod Region. Its estimated reserves total 1.5 billion tons of iron ore.
Steel not suitable for futures trading
Mr Wuxichun the former chairman of China Iron & Steel Association told CBN that "There is a long way for steel sector to adopt futures practice, as many problems stand on the road.
Mr Wu said "It is hard to make a set of clear criteria for steel futures trading due to huge difference in steel grades, qualities and price in China's market. The steel forward trading, mainly involving traders in Shanghai market plays the same role as futures. The special pricing mode in domestic steel market hinders steel enterprises from futures."
Mr Wu added that it is easier for iron ore traders to adopt future practice.
(Sourced from Mysteel.net)
Severstals further acquisitions for value creation only
Severstal has ruled out a bid for Corus as it finds the price too high although it sees lot of synergies but sees consolidation opportunities in Chinese and domestic market as its business model meant that further acquisitions would be based on value creation.
Mr Alexey A. Mordashov CEO of Severstal while speaking at the Metal Bulletin - World Steel Dynamics 4th Steel Success Strategies conference in Amsterdam told delegates "I see a lot of synergies between Severstal and Corus and between CSN and Corus, but I would not be interested at this price."
Mr Mordashov however sees opportunities for possible further integration with Chinese mills but ruled out a full merger. He said "I think that the best way to proceed in China is for a slow, gradual increase in our presence in this market."
Mr Mordashov added that "I think that there will be some consolidation in the Russian domestic market but right now there is no economic pressure, the mills here are all big and they are all making money. He added that the main focus of Severstal would be the domestic Russian market which has seen strong demand and high prices over the past year. He said "We will look to capture the niche markets for high quality steel in Russia, just like every other steel mill.
Russias GDP may grow at 7% in 2006
According to a recent World Banks report on Russian economy, Russias gross domestic product may grow as high as 7% in 2006.
The report noted The fast growth of domestic market continues to stimulate sustainable economic growth in Russia. Significant net capital inflow together with revenues from natural resource exports feed the domestic demand. Under these conditions, starting in the second quarter of current year, acceleration of economic growth rates has taken place. Based on results of the year, GDP growth may reach 7%.
World Bank reports said that the Economic growth is still mainly concentrated in non-trading sectors of the economy, which received advantages due to strong ruble. Stagnation of production and the need for big investments in the fuel and energy complex as well as the fast growing domestic demand provide more and more reasons for concern.
Russian Economy Ministry earlier expected GDP growth of 6.8% to 6.9% this year but submit updated forecast to the government last week.
Salzgitter to announce an acquisition soon
Germany's 2nd largest steelmaker Salzgitter AG may announce a takeover in Western Europe in next few months.
Mr Heinz Fuhrmann CFO during in an interview last week in Frankfurt said that Salzgitter has completed due diligence for a medium sized transaction and will soon enter serious negotiations. He told in an interview last week in Frankfurt that We may announce an acquisition in one of our core areas within the next few months.
Mr Fuhrmann said that there's less than a 30% chance that Salzgitter will go ahead with the purchase of Arcelor Mittal's Stahlwerke Thueringen plant in Germany after previously registering an interest. He added that Salzgitter's own rolling mill in Peine may require less investment and might have somewhat more potential.
Analysts feel that acquisition plans are very important for Salzgitter right now since they have so much liquidity and a fitting target would be Arcelor's stake in Dillinger Huette.
CSCs Dragon Steel orders for converters
Taiwans largest steel maker China Steel Corporations 70% owned Dragon Steel Corporation has decided to build a steel melt shop right next to its existing steelworks at the Taichung to produce 2.5 million tonnes of steel in 1st phase, which would be later enhanced to 5 million tonnes in 2nd phase. The first heat from the steelworks is likely to be tapped in January 2009.
CSC has awarded the contract to SMS Demag for commissioning of two 220 tonnes converters incorporating lamella suspension system, bottom stirrers and a sub lance with robot. The supply scope of the order also includes the complete bin system for ferroalloy supply, the gas cleaning system with primary and secondary dust collecting systems as well as off gas recovery facilities, all vehicles, ladles and slag pots.
This facility will be used above all to treat special steels for the automotive industry as well as transformer steels.
Egypt to undertake another expansion of Suez Canal
Egypt plans to spend at least $ 5 billion over five years to expand the Suez Canal for increasing revenue from the worlds longest manmade waterway. The canal will be deepened by 3.1 meters and widened by 17% to an average of 365 meters
The expansion will enable tankers carrying 350,000 tonnes of cargo, equivalent to more than 2 million barrels, to pass through the canal. Ships carrying a maximum of 200,000 tonnes are currently able to use the waterway.
CSC restarts Kaohsiung billet mill after modernization
China Steel Corporations billet mill in Kaohsiung restarted operation in November after the major upgrading and modernization carried out by Danieli Morgardshammar for increasing capacity, enhancing plant operation flexibility & efficiency and final product quality.
The modification involved the installation of new front back mechanization system and quick roll package changing system for the two high reversing breakdown mill stand, two new 800 mm dia SHS super heavy duty HV housing less stands with automatic quick changing system, revamping of the existing finishing stand with fast changing facilities and a new crank shear for dividing cut before the cooling bed.
The upgraded plant has a nominal capacity of about 2 million tones per year of 118 mm and 145 mm square billets in low, medium and high carbon and alloy steels.
Provinces urged to restructure steel
Chinas National Development and Reform Commission urged Chinese governments to develop a list of outdated steel firms to be demolished in a new round of industry restructuring.
Under the NDRC's plan, China will scale back iron production by about 100 million tons over the next 5 years to eliminate surpluses. Steel production will be reduced by 55 million tons by 2007.
North China and east China account for 81% of the nation's outdated iron production and 59.8% of outdated steel production. NDRC figures show that the provinces of Hebei, Shanxi, Jiangsu, Shandong and Henan have become the key target areas for restructuring.
(Sourced from Mysteel.net)
Sumitomo commissions new galvanizing line at Kashima
Japanese steel maker Sumitomo Metals announced it has completed a new 300,000 tonne per year galvanizing line at its Kashima Steel Works and the commercial operations began on December 1st 2006.
The new galvanizing line, built in response to growing demand for galvanized sheets from the automotive sector, will lift the companys galvanized steel capacity by around 25%.
Chinese coal mine death toll up by 21.7% MoM in November
China state administration of Coal Mine Safety has reported that the death toll from coal mine accidents in China rose by 21.7% in November over the month of October.
As per report during November, eight accidents with a death toll of over 10 were recorded, five of which occurred in unauthorized coal mines and three of which posted a death toll of over 30.
The colliery accidents occurred most frequently in the three provinces of northern Shanxi Province, northwestern Gansu Province and northeastern Heilongjiang Province.
China saw 4,236 deaths in the first 11 months, the lowest number in the past three years. But the safety of coal mines in the country is still well below par. The administration asked coal mine safety departments at all levels to strengthen their supervision of the coal mine sector.
List of Chinese coke exporters for 2007 likely in this month
China's ministry of commerce is scheduled to unveil the full list of qualified coke exporters together with export quota for next year in the middle of this month. Industry rumors suggest that the qualified coke exporters may be reduced to 58 next year from 70 companies in 2006.
The new rules also stipulate that, from next year, coke exporters can only export coke sourced from producers that have already been qualified by China's National Development and Reform Commission.
Chinas ministry of commerce has also tightened the qualifications for coke exporters next year from late October. Only coke producers that exported 250,000 tons in 2005 will be allowed to continue exporting in 2007. In 2004, the total required to receive a new license was 200,000 tons.
Neither China's ministry of commerce nor the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters was able to comment on the matter. However, an official with the ministry confirms that the CCCMC has submitted a draft list already, and the approval procedure is currently underway.
(Sourced from Mysteel.net)
Intec & Polymetals JV starts commercial production at Hellyer
Intec and Polymetals JV has achieved commercial production at the Hellyer project in Tasmania. It said that the plant is now operating at 80% of base case production of 65,000 tonnes per year of concentrates and is ramping up to full capacity output.
Hellyer treats tailings to generate a bulk zinc lead concentrate, grading around 41% zinc, 10% lead and 200g/t silver.
Intec said that just over two thirds of production is earmarked for two Chinese smelters under off take agreements and that these and other smelters have expressed strong interest in the balance 20,000 tonnes per year of production which is currently uncommitted under off take agreements.
Griffin to expand Caijiaying zinc mine in China
Griffin Mining announced that it has decided to expand production at its Caijiaying zinc mine in China to produce more zinc and a separate stream of precious metals concentrate containing gold, silver and lead.
Caijiaying was brought into production last year with 2005 output of 6.700 tonnes of contained metal in concentrates. Initial mine capacity was around 200,000 tonnes per year of ore to generate 18,000 tonnes per year of zinc in concentrates. That has already been lifted to 350,000 tonnes per year and the company now intends a two-phase further lift to 750,000 tonnes per year to be completed in 2008.
Ukrainian Inhulets iron ore concentrate output down by 4%
Interfax has reported that Ukraine's Inhulets Mining and Beneficiation Plant has decreased its iron ore concentrate production tentatively by 4% YoY in January to November to 11.92 million tonnes and that It sold 11.497 million tonnes to Ukrainian steel mills in the 11 months.
Inhulets produced 1.159 million tonnes of concentrate in November and sold 1.132 million tonnes in November to Ukrainian steel makers.
Inhulets has a 77% share of the Ukrainian iron ore concentrate market and Zaporizhiya based Smart Group controls the plant.
AK Steel announces surcharges for electrical and SSS for January
AK Steel has advised its customers that a $150 per ton surcharge will be added to invoices for electrical steel products shipped in January 2007 and that January 2007 surcharges for the broad range of stainless steel products that AK Steel produces can be found on the company's web site.
AK Steel's surcharges are based on reported prices for raw materials and energy used to manufacture the products, with the November 2006 purchase cost used to determine the January 2007 surcharges.
Chelyabinsk announces compensation to victims of fire at MMK
A spokesman of Mr Petr Sumin governor of Chelyabinsk Region announced that the families of fire victims from MMK will receive cash benefits.
The relatives of eight of the companys employees who were killed by the fire and roof failure at the sheet rolling shop of the complex on November 28, 2006 are to get cash benefits of RUR 100,000. The money is to be allocated from the regional budget.
Poltavsky GOK to increase pellet shipments to China
Interfax has reported that Ukraine's biggest producer of iron ore pellets Poltavsky GOK will increase shipments to China this year.
PGOK in a release said "We expect sales to China this year to exceed last year's figure, which represented 10% of our sales. These results are an important element of our sales strategy on expanding markets and are consistent with the current tendency and future plans to increase production.
PGOK has increased pellet production tentatively by 7.4%YoY in the first 11 months of 2006 to 7.768 million tons. Its iron ore concentrate production grew by 14.1% to 8.766 million tonnes.
PGOK exports most of its pellets. PGOK's main customers are located in Austria, Poland, Romania, the Czech Republic, the former Yugoslavia, Bulgaria and Italy.
