The trial run on the 99 kilometer long railway line between Tomca and Keonjhargarh in Orissa took place on February 15th and the full fledged movement on the section is due to start shortly. The new route will be Banspani-Keonjhargarh -Tomca-Baghuapal-Sukinda Road - Jakhapura - Cuttack - Paradip.

Once commercial run starts on a regular basis, the distance from the iron ore rich Keonjhar area to Paradip will now become 324 kilometer as against 664 kilometer earlier via Tatanagar and Kharagpur. With this, 155 kilometer long Banspani to Daitari rail project has been completed in phases.

This will result in reduction of rail transport cost of iron ore for exports by about INR 300 per tonne although the extent of actual drop in railway freight can be known only after the Railways has notified the new rates for the new route. As a result the FOB cost of the iron ore for exports should be cheaper by at least USD 6 to USD 7 per tonne.

Once the 78 kilometer long Haridaspur-Paradip line, being constructed by Rail Vikas Nigam Ltd, gets commissioned, the distance from the Orissa's iron ore rich belt to Paradip will be further reduced.

Union government appointed 4 members committee to formulate a replacement to the DEPB scheme, is reported to have recommended the continuation of the duty entitlement pass book scheme for 3 years pending clarification of certain constitutional issues to the prime ministers office, which will take the final call on the validity of the scheme.

The finance ministry has already notified that the existing DEPB scheme would be valid only up to March 31st 2007 and so far no replacement scheme having been formulated.

The DEPB scheme serves 30 % of the merchandise exports in value terms which is expected to touch about USD 125 billion in 2006-07.

Jindal Saw Limited announced that it has bagged its single largest order aggregating to INR 1560 crore (USD 355 million) for supply of submerged arc welded pipes from a large Corporation in USA through a competitive bidding process. This order is scheduled to be completed by March 2008.

The order involves supply of 42" L SAW pipes. The order is for approximately 360 miles of pipe line including double jointing and coating. The order will be executed out of Jindal Saws US operations.

With this order, Jindal Saw's order book exceeds INR 6,600 crore (USD 1.5 billion).

ASSOCHAM has reported that high transaction cost, inadequate infrastructure combined with various levies and cess are adversely impacting export competitiveness especially in sectors like engineering goods, metals, ores, textile, leather and pharmacy.

According to a study by ASSOCHAM, the adverse impact of bottlenecks like poor infrastructure and cumbersome procedures on exports was to the extent of 14 % of the total value of exports and levies impact exports the most with an incidence of around 5.22% of FOB value.

Mr Venugopal Dhoot president of ASSOCHAM said "Metals and ores are the most burdened sector with a number of cess, levies, poor infrastructure and export procedures."

The incidence of the FOB value of exports in metal and ore sector is 19.39 %.

Business Line reported that Jindal Steel and Power Limited after acquiring 28 % stake in the 4,000 MW Sasan ultra mega power project recently, is planning to bid for other domestic coal based ultra mega projects.

Mr Naveen Jindal vice CMD of JSPL said that We will certainly be interested in such an opportunity. Since mining is our expertise, pit head coal fired project like Sasan will suit us as it is dependent on locally available coal. Mr Naveen Jindal said that Sasan is an exciting project and together with Lanco Infratech they would make it a success. JSPL would provide financial and technical support to Lanco for Sasan.

JSPL is also setting up a 1,000 MW thermal power plant at Raigarh in Chhattisgarh with an investment of over INR 4,500 crore, which would start generating in phases from June 2007.

It is reported that ONGC and Mittal Investments JV ONGC Mittal Energy Ltd is close to acquiring Oman Oil Company's 7 % stake in the Caspian Pipeline Consortium for about USD 200 million subject to agreement with other partners of the consortium.

Caspian Pipeline Consortium comprises of ExxonMobil, BP, Royal Dutch Shell, LUKOIL and Rosneft as partners. CPC was commissioned in 2001 and pumps 700,000 barrels of oil per day from Kazakhstan's oil fields to Russia's largest Black Sea port Novorossiysk for re export to world markets.

ONGC and Mittal Investment formed OMEL to scout for oil and gas assets across 21 countries including Kazakhstan, Turkmenistan, Azerbaijan and Indonesia. Last year the company won exploration rights for 2 Nigerian blocks and is eyeing an offshore block in Trinidad & Tobago. It is also expected to buy a 25 % stake in Kazakhstan's Satpayev block.

It is reported that IFGL Refractories Ltd plans to make a couple of acquisitions in the coming months to broaden its product base and take advantage of rising demand for steel and also may diversify in non steel refractory segment.

Mr P Bajoria MD of IFGL said that "We are in talks with some companies in the US the UK and also in India and all these companies are connected to the refractories business serving the steel industry. Growth through acquisitions will continue to be our major strategy."

Mr Bajoria said "We may spend between INR. 300 crore and INR.500 crore to fund the acquisitions and we may raise some debts. Our exports, which are likely to go up as steel demand is increasing, now make up nearly 60% of our revenue.

IFGL which has 8 manufacturing plants in 6 countries spent GBP 9 million to buy UK based Goricon Metallurgical Services Ltd and Monocon Group earlier in the current fiscal year.

Business Line reported that Lanco Infratech Ltd and Jindal Steel & Power Ltds JV is likely to sign power purchase agreements with several major consumers for supplying power from the 4,000 MW ultra mega power plant at Sasan in Madhya Pradesh soon.

The PPA coordinated by the Power Finance Corporation would cover supplies to Delhi, Madhya Pradesh, Uttaranchal, Rajasthan, Uttar Pradesh and Punjab among other bulk users.

Mr J Suresh Kumar CFO of Lanco Infratech Ltd said "We are committed to expedite the project. Once the PPA is signed we expect to go on to achieve financial closure by December this year or early 2008 and thereafter implement the project within 36 months."

Lanco has 72% stake and JSPL has 28 % with the latter having the option to step up its stake to 49 %. The project would have equity of INR 3,200 crore.

New Delhi based Subhash Projects & Marketing Ltd has bagged INR 23 crore orders from Karnataka Power Transmission Corporation Ltd and INR 40 crore from Haryana Vidyut Prasaran Nigam Ltd to set up a 220 KV power projects. The completion period for these projects is 12 months.

The scope of work for both projects on partial turnkey basis includes construction of 220KV substation and 220KV transmission lines, supply of all matching materials and equipments excluding power transformer and erection of all materials and equipments as well as testing and commissioning of the same.

With these orders its current order book position is INR 2,800 crore.

Magnitogorsk Metallurgical Combine has negotiated a long term iron ore supply contract with its principal supplier Sokolovsko Sarbayskoye GPO and its owner the Eurasian Natural Resources Corporation. The new contract replaces an annual supply agreement which expires on March 31st 2007.

The terms of the new deal provide for deliveries to MMK of about 12 million tonnes of concentrate and pellets per year, an annual price setting formula and possible extension of term to 20 years.

Industry sources believe that MMK's annual requirement of about 16 million tonnes will remain stable as extra output will come from scrap supplied electric arc furnaces. Additional iron ore supplies of about 10% of MMK's needs are to come from MMK. Industry sources believe that MMK will not be vulnerable to iron ore supply interruptions again.

In the Soviet period, Sokolovka in Kazakhstan, almost 400 kilometers from MMK, used to supply almost all of MMK's requirements. It has reserves estimated at 3.4 billion tonnes. Sokolovka annually produces about 15 million tonnes of iron ore products from 30 million tonnes of ore.

ENGC is a UK registered company and the new contract will be governed by UK law in case of disputes.

Shareholders of electric furnace steelmaker Tokyo Kohtetsu Co have rejected its plan to become a subsidiary of Osaka Steel Co at an extraordinary general meeting. Mr Shunsuke Hirashima president Tokyo Kohtetsu subsequently announced that the company will cancel the management integration. He said "We'll continue our business on our own."

The plan was scrapped as it failed to gain the two thirds majority required for approval at the meeting held at Oyama in Tochigi Prefecture, mainly because investment fund Ichigo Asset Management International Pte Ltd collected proxies from shareholders opposing the plan and voted against it.

Ichigo came out against the deal on the grounds that the estimated value of Tokyo Kohtetsu is too low. It began soliciting proxies from shareholders on February 2nd in a bid to reject the share exchange deal.

Tokyo Kohtetsu Co announced last year that Osaka Steel Co a unit of Nippon Steel had agreed to buy the company. Anticipating an increase in imports of low grade steel products from China and other low cost suppliers, Tokyo Kohtetsu decided to become a wholly owned subsidiary of Osaka Steel at the end of March through an equity swap deal to exchange each Tokyo Kohtetsu share for 0.228 of an Osaka Steel share.

It is extremely unusual for a merger and acquisition deal previously agreed to by the management of the two companies involved to be voted down at a general meeting of shareholders.

The legal merger of Arcelor and Mittal Steel is expected to be completed by July 2007.

Arcelor Mittal is in the process of divesting three mills Stahlwerke Thuringen in Germany, Travi e Profilati di Pallanzeno in Italy, and Huta Bankowa in Poland to satisfy EU antitrust regulators. It has agreed to sell Stahlwerke Thuringen to Grupo Alfonso Gallardo, Travi e Profilati di Pallanzeno to Duferco and Huta Bankowa to Alchemia SA Capital Group for total enterprise value of about USD 1 billion.

US Department of Justice has recently ruled that Arcelor Mittal must sell the Sparrows Point flat products mill on the coast of Maryland to satisfy antitrust requirements and the company is likely to do so soon.

But the main hurdle being faced by Arcelor Mittal is in Brazil, where securities regulator ruled earlier this month that Arcelor Mittal must improve its offer for minority held shares of its Arcelor Brasil subsidiary by approximately 45% by no later than February 27th 2007.

The World Bureau of Metal Statistics estimates that the global zinc market recorded a production and consumption deficit of 194,000 tonnes in 2006. WBMS said that these are preliminary figures and they will be revised.

As per report production of refined zinc was 10.67 million tonnes up by 485,000 tonnes YoY. The biggest increase came in Asia, especially China, with regional output up by 403,000 tonnes YoY. Zinc output in the Americas up by 2.9% YoY but that in Europe down by 0.4% YoY.

WBMS said that the global demand in 2006 was up by 368,000 tonnes YoY with most of increase coming from Asia and America with China being the key driver. The WBMS assessed that Chinas demand at 3.115 million tonnes accounting for 29% of the global total.

The calculated deficit is much smaller than the drawdown in visible stocks 331,000 tonnes over the course of 2006. The WBMS notes that LME inventories represented 18% of total stocks at the end of 2006 year as compared with 47% at the start of 2006.

World's third largest zinc producer Zinifex Ltd announced that its net income was AUD 751.2 million in the six months ended December 31st 2006 up by 230% as compared to AUD 227.6 million in July to December 2005 period. Its sales rose by 97% to AUD 2.2 billion.

Zinifex said production in the half fell 10 % because of longer than normal planned shutdowns at its Century mine and Port Pirie smelter, as well as lower lead grades at Century. It said that output should return to more normal levels in the second half excluding Century lead

Zinifex said operating costs rose by 10 % in the period but pressures will remain while commodity prices are high and labor and capacity constraints continue and overall higher zinc prices are expected to more than offset cost increases.''

Zinifex said if zinc prices remain at current levels all other things being equal and its earnings will be lower in the second half it says we remain positive on the outlook for zinc with London Metal Exchange stocks at historically low levels and a moderate deficit expected during 2007.

Zinc averaged 154 % higher in the half as demand outpaced supply. The metal, which rose to a record USD 4,515 on the London Metal Exchange on November 9th 2006 has fallen 21 % this year.

Mittal Steel South Africa believes that the rate of growth in domestic steel demand will moderate somewhat in 2007, but it still expects overall growth to continue at a healthy 5%.

Mr Rick Reato CEO of Mittal Steel South Africa told Engineering News that he expects growth to slow to around 5% but to remain robust for a number of years yet, given that much of the infrastructure related demand was yet to materialize. Mr Reato said Last year we shot to 5.8 million tons from around 4.6 million tons, which is over 1million tons in a year. We don't think it likely that we will see another 1million tons added this year. However, we do see an increase, but at a slower rate and off a far higher base.

Initial figures from the South African Iron and Steel institute for 2006 estimated apparent domestic steel consumption of 5.8 million tons, which was 10% better than the previous record in 1981. In 2006 South African demand rose by a massive 27% with Mittal Steel SA reporting that domestic sales made up a record 71% of its overall sales, as compared with 56% YoY.

Less than 2 months after the fire that partially destroyed pickling line No 1 at MMK in Russia, the plant has been put again into operation in record time and on January 24th the first coil was processed through the renewed line. This will allow MMK to restart with the production although the complete recovery of the plant should be completed in the next few months.

With this very quick response, Tenova Strip Processing has demonstrated its commitment to reduce to the minimum the production losses of its customer MMK. After the accident Tenova immediately coordinated with MMK and transported more than 80 tons of material and equipment for the rebuilding of the seriously damaged line through special flights.

MMK has Tenovas high performance effluent free pickling line of 2 million tonnes per year of steel strip capacity very high processing speed 300 meters per minute in maximum strip width 1850 mm as well as a new acid regeneration plant of 11000 liter per hour.

Tenova, previously known Techint Technologies, designs and supplies advanced strip processing lines for the metal industry.

China Shipping Development Co Ltd has announced that it signed two iron ore concentrate shipping contracts with Shanghai BaoSteel Co Ltd. A source from the securities department at China Shipping told that this contract marked the first cooperation between the two companies and that China Shipping is hoping to get more iron ore concentrate shipping contracts in the foreseeable future.

Under the first contract China Shipping will transport a total of 6 million tons of iron ore concentrate per year between China's ports for BaoSteel from April 1 to March 31, 2010 and as part of the second contract starting from April 1, 2010 they will be transporting iron ore from Australia to ports around China. Price for the freighting will be based on the annual benchmark for seaborne freight and marine fuel oil prices.

China Shipping company also signed a 15 years shipping contract with Beijing based, Shoudu Iron and Steel Group in October 2006 to transport total 37 million iron ore concentrate from 2009 to 2024 from Australia and Brazil to China.

Cleveland-Cliffs Inc has posted net income of USD 83.7 million for October to December 2006 quarter up by 26.6% YoY as compared with USD 66.1 million in October to December 2005.

Cleveland-Cliffs said that its revenues from iron ore product sales and services rose to USD 622.6 million in October to December 2006 as compared to USD 468.9 million in October to December 2005.

Its Q4 pellet sales volume in North America rose by 18% YoY to 7.2 million tons whereas Q4 sales volume at its Australian subsidiary Portman rose by 37% YoY to 2.3 million tonnes.

Cleveland-Cliffs said that sales margin increase is primarily due to higher sales prices and higher volume but were partially offset by increased costs.

Cleveland-Cliffs said all its operations are expected to operate at or near capacity in 2007 and that total North American pellet production is expected to be approximately 36 million tons, with Cleveland-Cliffs' share of approximating 22 million tons.

Indonesia hopes to sign a contract with Rio Tinto to develop USD 2 billion nickel mines in Indonesia's Sulawesi Island project around the middle of March, which was held up due to unresolved tax and forestry law issues.

Mr Muhammad Lutfi head of the state investment agency told reporters that "We have resolved fiscal and forestry issues. We just have to sign the contract which is hoped to be signed in the middle of March. The project has high economic value as it creates jobs and has a multiplier effect. The project is positive not only for the government but also for the industry."

Indonesia's forestry laws ban open pit mining in the country's protected forests, and mining investors need a license from the forestry ministry to clear land for projects.

Rio Tinto had earlier said that the project will involve capital expenditure of around USD 2 billion and will process nickel into metal. The project will have a capacity of around 46,000 tonnes a year.

London based Clarkson Research Studies said that South Korean shipbuilders were outpaced by their Chinese rivals in terms of new orders received in January 2007.

As per report, Korean shipbuilders such as Hyundai Heavy Industries Co and Samsung Heavy Industries Co won a combined 600,000 compensated gross tons in new orders in January 2007.

ANTARA has reported that Indonesia needs to invest USD 1 billion until 2010 to build 79 vessels, including 32 Handymax ships and 47 units of tugboats and barges, to facilitate transport of coal from coal producing areas to coal fired power plants planned by state electricity company PLN.

A special fleet of vessels will be needed to guarantee coal supply of coal under a crash program of the government to build coal fired plants with a total capacity of 10,000 megawatts to be completed before 2010.

Mr Adhiguna Djoko Tahono president of state shipping company PT Bahtera said that foreign ships still handle the transport of coal in the country despite the regulation banning foreign cargo ships from operating in domestic shipping. He said that the coal fired power plants to be built under the crash program, will need 80 million tons of coal in 2010.

Grange Resources Limited announced that its proposed development plans for its 100% owned Southdown Magnetite Project near Albany in Western Australia have progressed to the public environmental review period. Grange's Public Environmental Review for Southdown of public comment phase will run for a fixed eight week period with members of the community invited to make submissions by April 16th 2007.

Mr Geoff Wedlock Grange MD said "We have undertaken two years of extensive studies into the project and are well advanced in its development. We welcome the release of the PER for public comment, which is one of the final steps in the Government approvals process for major mining developments in WA. If considered acceptable the project could receive final approval as early as October this year such a result would be a major step in developing what will be the first significant iron ore mine in the Great Southern Region, bringing with it a long term industry and the huge benefits of WA's booming resources sector."

The Southdown Magnetite Project involves mining, processing and transporting magnetite via an underground slurry pipeline to Albany for shipping to Grange's approved iron ore pellet plant at Kemaman in Malaysia for which environmental approval was recently received from Malaysian Department of Environment.

Albany Port Authority's Public Environmental Review for the Albany Port Expansion Proposal which will allow Grange to export its concentrate in Capesize ships. The Albany Port PER is anticipated by Grange to be released for public comment in March 2007.

Baffinland Iron Mines Corporation announced that Mitsubishi Corporation intends to exercise its right to participate in its recent public offering of units that closed on January 31st 2007.

Baffinland said that Mitsubishi has advised that it intends to subscribe on a private placement basis to the full extent of its rights of 1,054,875 Units at a price of USD 2.75 per Unit, for total gross proceeds to the its approximately USD 2,900,906 where each unit will consist of one common share of the company and one half of one common share purchase warrant. Each whole warrant will entitle the holder to acquire one additional common share of the company at a price of USD 5.50 per common share until January 31st 2012.

Mr Gordon McCreary president & CEO of Baffinland said that We are very pleased that Mitsubishi one of the largest diversified trading and investment companies in the world has demonstrated its continued interest and confidence in Baffinland and the Mary River Project through it additional planned investment in the Company.

Baffinland intends to use the net proceeds of the subscription by Mitsubishi to finance exploration and potential development activities at the Company's 100% owned Mary River project a high grade, potential direct shipping iron ore operation located in Nunavut Territory Canada and for general corporate purposes.

Polish metal's group KGHM said that a miner was killed and three others injured on Wednesday when a mine shaft collapsed in southwest Poland. Minor earth tremors triggered a slide 950 meters below the surface at the group's biggest mine late on Wednesday night in the town of Rudna about 300 kilometer from Warsaw.

A company spokesman said that rescue teams worked through the night to rescue two workers with minor injuries and the body of a 35 year old miner who was killed. A fourth critically injured miner was taken to hospital.

A total of 30 workers were evacuated. The mine stayed opened and production continued.

State controlled KGHM is the world's sixth biggest copper producer and one of Poland's biggest companies.

Ukrainian Journal Staff reported that Ukraines industrial output increased by 15.8% YoY in January 2007 reflecting a strong external demand for steel which is the main export commodity.

The increase in output was recorded in all key industrial sectors apart from the electricity gas and water production and distribution sectors, which declined due to a warmer then usually weather.

Nippon Steel announced that it expects that Japans domestic steel consumption will increase by 1.65 million tonnes to 79.3 million tonnes in fiscal 2006 ending March 2007.

Nippon Steel said that it expects the demand to increase by around 50,000 tonnes to 19.75 million tonnes in January to March 2007 as compared to January to March 2006 period.

The domestic demand will increase for 4 years in a row since fiscal 2003.

UKs Albidon Limited announced that it has signed key power and equipment supply contracts for its Munali nickel project in Zambia. With this Munali is on track to start production around the middle of 2008.

As per reports the ten year power supply deal covering all of Munalis needs has been signed with Zambian electricity company ZESCO, while an order for two ball mills for the mines concentrator has been placed with Chinas CITIC Heavy Machinery Company.

Albidons off take partner for Munali is Chinas Jinchuan and its existing close relationship with CITIC should facilitate the delivery and commissioning of the mills. Once fully on stream, annual production is expected to be around 8,500 tonnes per year of nickel contained in concentrate.

Thailand's zinc producer Padaeng Industry Public Co Ltd posted a net consolidated profit of THB 1.77 billion (USD 53.01 million) for 2006 up by 215% YoY as compared to profit of THB 561 million in 2005. The total revenue from sales and services amounted to THB 10.31 billion an increase of 68% YoY.

Its sales of metals in 2006 totaled 94,823 million tonnes some 7,000 million tonnes lower than in 2005 reflecting the reduction in exports mainly of alloys. Production of ingots totaled 96,469 million tonnes in 2006 down by 5% YoY due to the combined low availability of concentrates on the market and the lower grade produced at the Mae Sot mine.

Pedaeng said that "The increase of the zinc price pushed the income of the company significantly upwards, even if it was partially limited by the locked in forward sales price and the lower production."

Padaeng said that "Even though the structural deficit of zinc may partially ease in the short term, the prospects for the zinc business remain very good for the coming year."

Pedaeng is one of producer of high quality zinc in South East Asia with a production capacity of 110,000 million tonnes per year of zinc metal and alloy.

Metal insider reported that Rheebu Nuu group is making more veiled threats against the CVRD Incos Goro nickel project in New Caledonia after a partial French court victory was recently overturned by an appeals court.

Local media reports quoted one of the groups leaders Mr Raphael Mapou as saying that it will take tough actions against Goro to coincide with the French presidential elections in April-May.

Although the indigenous group has recently directed its opposition through the courts, it has not shied away in the past from direct action. Attacks on the Goro project site last year caused some USD 10 million of damage.