April, 25 2007
Mitsui sells Seas Goa stake to Vendata Resources
Mitsui & Co Ltd announced that its Earlyguard Ltd has sold 100% of Finsider International Co Ltd, which holds a 51% stake in Sesa Goa Ltd, to Vendata Resources Plcs wholly owned subsidiaries Richter Holding Ltd and Westglobe Ltd for USD 981 million. Although the structure of the deal was not available, sources said the company has tied up a debt amounting to USD 1.1 billon while the balance would be through internal sources.
Vedanta will pay INR 2,036 (USD 49) per share for a 51% stake, which is 17% more than yesterday's closing price. The initial bids from the suitors were in the region of INR 2,200 and INR 2,500 per share but were lowered after the budget announcement of INR 300 export tax on iron ore.
Vedanta will offer to buy a further 20% for at least the same price. The offer to buy shares from investors will run for three months. Under Indian law, a company buying more than 20% of another company must make an offer to acquire a further 20% of its shares.
Several foreign and domestic metal and mining companies have been reported to have shown interest in acquiring stake in Sesa Goa and the list included Arcelor Mittal, BHP Billiton, CVRD, Rio Tinto, Vedanta Group, Essel Mining and JSW Steel.
Founded in 1954, Sesa Goa has iron ore mines in the states of Goa, Karnataka and Orissa, and sold 9.6 million tons in 2005-06 and made a pretax profit of USD 193.8 million. Sesa Goa has extractable reserves of over 150 million tonne of iron ore located in Goa, Karnataka and Orissa, which can be expanded.
Mr Anil Agawal chairman of Vedanta said that there are no plans to delist Sesa Goa. He said "Sesa is a natural fit for Vedanta; it is an efficient, low cost miner with growth opportunities in one of the world's fastest growing economies. This transaction is immediately earnings and cash flow accretive and we believe it will create significant long term value for all our stakeholders."
This transaction is in line with Mitsui's corporate strategy under the current medium term management outlook in which Mitsui has been reviewing its portfolio to create shareholder value. Mistui said in a statement that the sale would generate CNY 50 billion (USD 423 million) in profit and that it would use the proceeds to invest in other natural resources. Mitsui invested in Seas Goa in October 1996.
Vedantas principal operations are in India, and it has ventures in Zambia, Australia and Armenia. It produces aluminum, copper, zinc, lead and gold. The move is significant for Vedanta, which until now focuses all its energies on non ferrous metals.
Morgan Stanley advised Mitsui on the sale and Nomura advised Vedanta on the deal.
India records 10.7% YoY growth in finished steel production in 2006-07
As per a government release, production of finished carbon steel in India recorded 10.8% growth during 2006-07. According to the provisional figures, total production stood at 49.35 million tonnes during April 2006 and March 2007 as against 44.544 million tonnes during 2005-06. Indias production of pig iron in 2006-07 increased by 5.6% YoY to 49.6 million tonnes in 2006-07 as compared to 46.95 million tonnes in 2005-06.
India exported 4.75 million tonnes of finished carbon steel during 2006-07 up by 6.1% YoY while imports rose by 6.5% YoY at 4.1 million tonnes.
Public sector Steel Authority of India Limited produced 12.581 million tones of saleable steel in 2006-07 as against 12.051 million tonnes in 2005-06 and 14.606 million tonnes of hot metal as compared to 14.603 million tonnes in 2005-06. Rashtriya Ispat Nigam Limited produced 3.29 million tonnes of saleable steel during the year as against 3.237 million tonnes in 2005-06.
SAIL board to approve CAPEX for RSP soon Report
BL reported that the board of directors of Steel Authority of India Ltd is likely to clear an INR 6,000 to INR 7,000 crore capital expenditure plans for its Rourkela Steel Plant soon.
AS per report, CAPEX outlines an increase RSPs hot metal production capacity to 3.6 million tonnes per annum from current 2 million tonnes per annum, crude steel to 3.3 million tonnes per annum from current 1.9 million tonnes per annum and saleable steel to 3.02 million tonnes per annum from current 1.67 million tonnes per annum by 2011.
The report cites Mr BN Singh MD of RSP as saying that The SAIL board is likely to soon consider and clear RSP's capital expenditure plan that envisages augmentation of capacities as has been done in the case of IISCO Burnpur and the Bokaro and Bhilai Steel Plants".
Mr Singh told Business Line that an increase in the plant's capacity and a change of its product mix was necessary to ensure sustainability of, among other things, RSP's contribution to SAIL's turnover as well as its profitability.
RSPs production target for 2007-08 has been pegged at 2.220 million tonnes of hot metal, 2.08 million tonnes of crude steel and 2.065 million tonnes of saleable steel with turnover of INR 6,900 crore in 2007-08.
Land acquisition victims in Bastar starving Report
IANS reported that more than 200 tribal families in Chhattisgarh's Bastar district are facing starvation and unemployment after National Mineral Development Corp acquired their 403 hectares of farmland in 2002 allegedly at throwaway prices and did not provide them jobs as promised. As per report, NMDC promised to provide jobs to one able member of each of the affected families in the new project however they gave jobs only to 99 people from the 303 oustee families as attendants and other low ranking positions and the remaining 204 families have been struggling to survive.
Ms Dali a 55 year old woman from Bastar told IANS that I have two young sons and an 18 year old daughter who suffer from a number of diseases as they have nothing to eat. My two and a half acres of land was acquired by NMDC for just INR 33,000 and that amount was spent within 6 months in 2002.
Mr Laikhan Baghel who has been leading a protest movement against the NMDC said that We want the land back. What is the use of farmland lying for years with the NMDC for a project which shows no signs of beginning?
The local protesting farmers submitted a memorandum to chief minister Mr Raman Singh in January 2007 demanding that the NMDC return the land to them or pay INR 5,000 per month as interim relief to each affected family till one member from each family is given a job in the planned plant.
NMDC laid the foundation stone for the project in September 2003 at Nagarnar about 20 kilometers from the Bastar district headquarters Jagdalpur for setting up a steel plant with an annual capacity of 1.5 million tonnes. But due to deadlock with foreign collaborator Moscow Institute for Steel and Alloys for getting the Romelt technology, the project has not moved ahead.
Water shortage in Jharkhand may effect steel investments
It is reported that water may become the 3rd issue for steel investments after land acquisition and iron ore linkages as some of the industrial houses, which are keen to set up their steel and power plants in the Subernarekha basin of Jharkhand may be compelled to relocate their sites due to shortage of water in the basin. The huge gap in demand of water in compression to its availability in the river has compelled the department officials to go slow on clearing their proposals.
Mr Phulan Prasad engineer in chief of the department said that "We expect a deficit of 147.50 million cubic meter water if all the proposals were approved and about 700 million cubic meter water was being utilized from the river for irrigation, drinking water and the industrial purposes. The official added that "Since the river is not able to meet the burgeoning need at the moment, we are planning to approve only those proposals wherein the industrial houses are serious in setting up their plants for the larger benefit of Jharkhand."
According to the report in HT, altogether 11 companies including Jindal Steel and Power with 140 million cubic meter, Konto Steel with 53 million cubic meter, Bhushan Steel and Power with 87 million cubic meter, Kalyani Steel with 5 million cubic meter, JSW steel with 132 million cubic meter, TATA steel with 166 million cubic meter, TATA Power with 80 million cubic meter, Adhunik Thermal and Energy power with 52.5 million cubic meter, TATA Steels expansion with 252.75 million cubic meter, Mini Ispat & Udyog Ltd with 10 million cubic meter and Narsig Ispat Ltd with 5.26 million cubic meter have also applied for clearance from the water resources department to draw water from Subernarekha River for their upcoming plants.
As per report, nearly 329 million cubic meter water is being drawn from the river for irrigation, 220 million cubic meter for potable water and 150.75 for industrial usage. TATA Steel is drawing up 124.45 million cubic meter water for its Jamshedpur plant. Five other industries like Hindalco Industries, Adhunik Alloy, Bihar Sponge and Iron Limited and Usha Martin, also draw water from the river.
Subernarekha River has the flow of 1520 million cubic meter water against the demand 1667.15 million cubic meters which also comprises the requirements of 11 upcoming industries.
Sinosteel plans to set up roll making unit in WB
Project Today reported that Chinese Sinosteel Corporation is planning to set up an engineering unit in West Bengal for manufacturing forged rolls which are used in rolling mills.
The report mentions that the proposal is at the preliminary stage and the company is yet to firm up the project details and Sino Steel is scouting for possible local partners for the proposed project.
Orissa governments BJP faction for change in MoU with POSCO
Statesman News Service reported that the state unit of the ruling BJP said that it would continue to press for modification to the MoU signed by the Orissa state government with POSCO, particularly those related to swapping of a certain percentage of iron ore and the mining lease area.
Mr Juel Oram a senior BJP leader pledged his support to the peoples movements resisting both POSCO and Vedanata projects as far as mining activities were concerned. Mr Oram said he would lend whole hearted support to those who are struggling against displacement and destruction of the environment both at Lanjigarh and Khandadhar mines area. Mr Oram said I am with those who are against handing over Khandadhar mines to Posco or any other company for that matter. I am also opposed to the mining area being given to Vedanta industries near Lanjigarh.
Mr Suresh Pujari president of BJPs state unit, taking a softer stance, told reporters that the BJP was not against POSCO and it wanted the plant to come up in the state with minimum displacement. Mr Pujari also said that his party will continue to press for modifications to the MoU.
Jharkhand trying hard to retain Arcelor Mittal investment
Jharkhand government seems to have found some solution for allocating iron ore mines to Arcelor Mittal, as they are confident of retaining their investment in the state.
Mr Madhu Koda chief minister of Jharkhand, while denying reports in a section of the media that Mittal Steel took back the proposal to set up a steel plant in Jharkhand, told PTI that "The Mittals are not going anywhere. We have assured them all help with their proposed steel plant. Let them select the site, we are prepared to provide the infrastructure including iron ore."
He said the representatives of Arcelor Mittal will be visiting Ranchi in the last week of April probably on the 27th to 28th to hold discussion with the government and asserted that Jharkhand was on the right track of development.
Jharkhand government had signed a MoU with Mittal Steel for setting up a 12 million tonne per annum steel plant in the state at an estimated investment of INR 40,000 crore. The project also involved mining operations and setting up a 2,500 MW capacity power plant. But the project is facing hurdles including allocation of Chiria mines which belong to Steel Authority of India Limited.
Monnet Ispats 2006-07 profit up by 31% YoY
Monnet Ispat & Energy Ltd has reported its net profit at INR 42.79 crore for the January to March 2007 quarter up by 96% YoY as against INR 21.88 crore during January to March 2006. Its turnover during the quarter stood at INR 186.45 crore up by 35%YoY as against INR 138.45 crore during January to March 2006.
As per the announced un audited results, Monnet Ispat clocked net sales of INR 638.09 crore during 2006-07 up by 19.9% YoY as against INR 532.37 crore. Its net profit for 2006-07 amounted to INR 138.65 crore up by 31% YoY as compared to INR 105.85 crore in 2005-06.
During 2006-07, Monnet Ispat has completed expansion in the capacity of sponge iron by 0.5 million tonne per annum at Raigarh in Chhattisgarh and is expected to achieve major volume growth in sponge iron during the current fiscal taking up its total capacity to 0.8 million tonnes per annum.
JSW Steels WB steel plant hits minor road block
TOI reported that land acquisition for JSW Steel's INR 10,000 crore steel plants at Salbani in West Midnapore has hit a minor roadblock as the state land and land reforms department has recently refused permission to acquire about 30 acres of land under the project site which belongs to tribal.
The land in question comes under one gram panchayat area where most residents are tribals and the land has tribal settlements. The state land and land reforms department has recently refused permission to acquire this land and WB government is likely to start work on 1,600 acres without this patch.
The report cites Mr Abdur Rezzak Mollah land and land reforms minister of West Bengal after a departmental survey of the project site as saying that I won't allow a steel plant on tribal land. The investor has to drop this part from his project plan.
On the other hand, Mr Dahareswar Sen West Midnapores district secretariat member of CPM said that We do not want the government to acquire the land right at the moment. We are in touch with the 50 odd families who have their huts within the project site. The government may acquire the land only after they willingly shift to other locations. We are not going to put pressure on them. After all, the disputed land is a small part of the entire project site.
DCI gets VPT chairman as interim CMD
Dredging Corporation of India Ltd announced that ministry of shipping road transport and highways has decided to entrust additional charge of CMD of DCI to Mr KR Kishore chairman of VPT in addition to his own duties for a further period of three months beyond February 28th 2007 or until the appointment of regular CMD of DCI whichever is earlier.
The minister for shipping road transport and highways has decided to extend the tenure of Dr S Narasimha Rao as non official part time director on the board of directors of the company for a period 3 months or until further orders whichever is earlier. The ministry has also approved appointment of Mr PC Dhiman as part time official director on the board of the company in place of Mr T Srinidhi with immediate effect. The tenure of Mr T Srinidhi as part time official director on the board of the company ceased with effect from April 13th 2007.
PFCs nets INR 983 crore in 2006-07
It is reported that Power Finance Corporation has posted a net profit of INR 983 crore for the financial year 2006-07 up by 1.24% YoY as against INR 971 crore during 2005-06.
PFCs total income was INR 3,926 crore during 2006-07 up by 25.51% YoY as against INR 3,128 crore in 2005-06.
Chinas March steel production up by 20.4% YOY
Chinas National Bureau of Statistics announced that a monthly record of 40.16 million tonnes of steel was produced in March2007 in China. The output's figure is 20.4% higher than a year earlier and 11.13% higher than in February.
March saw a record 38.07 million tonnes of pig iron produced nationwide up by 17.4% YoY and a new high of 46.95 million tonnes of rolled steel up by 25.7%YoY.
According to customs statistics, China exported 5.38 million tons of rolled steel in March up by 22.8% over February 2007.
Industry observers forecast that China's rolled steel production would exceed 500 million tons for the whole of this year. But Mr Qi Xiangdong deputy secretary general of the China Iron & Steel Association announced that China's crude steel output in 2007 is seen at 470 million tonnes up from 422 million in 2006. Mr Xiangdong while speaking at an industry conference in Beijing also forecast that China's steel products output this year should rise around 12.9% to 527 million tonnes.
Commodity price forecast from Access Economics
According to an Access Economics report published Iron ore, ilmenite and thermal coal are expected to buck the trend of declining commodity prices over the next few years,
In its quarterly Minerals Monitor statement, Access found forecasters agreed that commodity prices will fall sharply in the medium term. The 11 forecasters surveyed for the report were also becoming more optimistic about long term commodity prices, with estimates revised upward by as much as 30% over the course of the last quarter. Commodity prices are expected to fall from current high levels as mining companies boost production. Over the next two years, the prices of cobalt, nickel, lead, tin and zinc are expected to post the biggest slumps. Beyond September 2009, the prices of nickel, copper, cobalt, tin, lead and zinc are expected to fall
Mr Chris Richardson Access director said. The risks of a sharp fall in commodity prices are much larger than the risks of further strong and sustained increases. Although the consensus among forecasters is that the next two or three years will see prices drop back by about a quarter of their recent gains, the view on longer term prices is becoming ever more optimistic.
The price of lump iron ore was forecast to jump 18% to USD 1.05 a dry long ton unit in September 2009 from USD 0.89 per dry long ton unit in March. The price of fine iron ore was expected to rise 15% to USD 0.80 per dry long ton unit from USD per 0.70 dry long ton units in March. Iron ore prices are likely to fall from 2009 onwards but only from their forecast stellar highs.
Thermal coal is expected to post a more modest gain, with prices forecast to rise 4% to USD 49.9 per ton in September 2009 from USD 48 in March.
The price of nickel is forecast to fall 53% to USD 19,301.70 per ton in September 2009 from USD 40,966.50 per ton in March. Access said nickel prices had been pushed to a probable peak by increasing Asian demand for the metal, used to make stainless steel.
MMK raised USD 1 billion during its IPO
Magnitogorsk Iron and Steel Works announced that it raised USD 1 billion at public offering of its shares at London Stock Exchange. The statement made by MMK before the IPO said that the expectations were to raise up to USD1.3 billion. The sale of ordinary shares and global depositary receipts representing 10% of the steel group's capital was two times subscribed.
As the MMK bulletin, 80 million global depositary receipts at USD 12.5 each for 1.04 billion shares were offered to investors. Based on the price of offering, the market capitalization of MMK is USD 11.221 billion. As per bulletin, the shares were offered between institutional investors mainly in the UK and European continent.
The selling shareholder for IPO was Mintha Holding Limited, of which Mr Viktor Rashnikov, owner and chairman of the board of directors at Magnitogorsk Iron and Steel Works, is a beneficiary.
Mr Rashnikov said Offering of shares of Magnitogorsk Iron and Steel Works opens a new stage in the company history. MMK has a good standing at the national and international markets, and our intention is to continue the development of our enterprise.
US Steels Q1 profit up by 6.6% YoY
United States Steel Corp announced that its Q1 profit rose by 6.6% as growth in its European operations helped boosted results. US Steel said that its January to March 2007 earnings are USD 273 million up by 6.6% YoY as against USD 256 million during January to March 2006. The latest results included a USD 3 million pretax charge related to the company's early redemption of debt securities thus reducing profits by USD 2 million. Its revenue in Q1 of 2007 increased to USD 3.75 billion from USD 3.72 billion in the Q1 of 2006.
US Steels income from operations fell to USD 346 million from USD 369 million during the same period last year and flat rolled and tubular segments saw declines but results for the European segment jumped 65%.
Mr John P Surma chairman and CEO of US Steel said that Considering market conditions, we had a good quarter with solid results from flat-rolled and tubular and a particularly strong performance by our European segment. He said that the company continued to generate substantial cash and had redeemed USD 49 million of debt and made a voluntary contribution of USD 35 million to its main defined benefit pension plan.
During this quarter, US Steel announced that it plans to buy Lone Star Technologies Inc in a USD 2.1 billion cash deal that will make it North America's largest producer of tubular steel. The company also said it had formed a USD 93 million joint venture with two South Korean companies to build a new domestic facility to produce spiral welded pipe for the natural gas industry.
Outokumpus Q1 earnings zoom up by 448% YoY
Outokumpu Oyj announced that its first quarter profit surged on higher stainless steel prices. Its net profit during January to March 2007 surged by 448% to EUR 307 million from EUR 56 million in January to March 2006. Its revenue during the quarter also increased by 50% YoY to EUR 2.13 billion from EUR 1.4 billion in Q1 of 2006. Outokumpu said that its profit was caused by a combination of higher prices and improved efficiency.
Mr Juha Rantanen CEO of Outokumpu said that "Although markets for standard SS grades are now softening, the cost reduction initiatives that we carried out during 2006 mean we are in a very competitive position to face these new market circumstances.
Outokumpu cautioned it would temporarily cut production by 10% in the second quarter because of fewer orders for its cheaper stainless steel products, which make up a substantial part of Outokumpu's sales. Outokumpu also said it expects a slight reduction in stainless steel prices from the record high levels reached in the first months of the year.
Outokumpu, based in Espoo, near the Finnish capital Helsinki, has 8,100 workers in some 30 countries. In November, the Finnish government decreased its ownership in the company further to 31% from 38%.
Liberia assembly ratifies Arcelor Mittal iron ore deal
Reuters reported that Liberia's lower house of parliament has ratified a USD 1 billion iron ore mining project signed with Arcelor Mittal. Mr Eugene Shannon Mines Minister of Liberia told Reuters that "They have ratified it and will submit it to the Senate for concurrence. Once that is done, then Arcelor Mittal will have the green light to operate."
Ms Ellen Johnson Sirleaf President of Liberia last year renegotiated an initial Mittal agreement signed in 2005 by an unelected interim government, boosting the state's interest in the deal and raising the investment from USD 900 million. The revisions to the deal ensured the Liberian state would retain control of its main port of Buchanan and a railway serving the mine, both of which had been awarded to the steelmaker under the original agreement.
The 25 year deal signed in December gives Arcelor Mittal the right to mine a huge, high quality ore body in northwest Liberia with reserves currently estimated at 500 million tonnes of iron ore.
Liberia was the world's 5th biggest producer of iron ore before civil war during a 1989 to 2003 which killed some 200,000 people and devastated its infrastructure.
SeverCorr fast tracks expansion plans
It is reported that Columbus based SeverCorr LLC is moving ahead with the second of its stage development, which will increase its available raw steel capacity to 3.4 million tons per year, well above the original projections for the mini mill's planned expansion. As reported in 2005, the second stage of development was seen expanding raw steel capacity to 2.5 million tons per year two to three years after the first phase of construction was completed.
The expansion green light comes about 18 months after groundbreaking at the 1,400 acre site in northeast Mississippi. No investment total for the expansion has been released. Details of the expansion will be made available after regulatory approvals are achieved, capital structures are in place and the equipment specifications are final.
Mr John Correnti CEO of SeverCorr said Our investors, partners and government officials are very supportive about the building of Americas next generation steel mill. Their belief in SeverCorr and belief in this project are driving the acceleration of the expansion and we are grateful to have their partnership.
The project, as originally planned, is an USD 880 million investment featuring a 175 ton DC electric furnace, 2 ladle furnaces, a vacuum degasser, a single strand thin slab caster, tunnel furnace, 6 stand hot strip mill, a pickling & oiling line, a 5 stand tandem mill and a HDG line. When in full production late this year, SeverCorr will produce 1.5 million tons of flat rolled steel for the automotive, building, agricultural, pipe and tube and appliance industries.
The first stage of the construction is still underway, though the mini mill's pickling operation started commercial operation in January 2007.
US March steel imports up by 14% over February
AISI reported that the US imported a total of 2.989 million net tons of steel in March 2007 including 2.455 net tons of finished steel up by 14% and 12%, respectively as compared to February 2007s final data. USs March imports are however down as compared to the all time record year of 2006.
Key products with large increases in March as compared to February include cut to length plates up by 52%, standard pipe up by 45%, tin plate up by 40%, structural pipe & tubing up by 40%, wire rods up by 31%, hot rolled bars up by 24%, hot rolled sheets up by 23% and galvanized hot dipped sheets & strip up by 19%.
For March the largest volume of finished steel imports was from China at 377,000 net tons, followed by European Union-27 at 299,000 net tons and South Korea at 198,000 net tons.
Mr Andrew G Sharkey III AISI president and CEO said "Subsidized and less efficient foreign producers are continuing to ship large tonnages of steel to the US Market. Steel is not the only domestic industry that is being forced to compete increasingly against foreign governments and trade and market-distorting practices, which is why so many American industries are today supporting prompt passage of stronger national trade laws.
Mr Sharkey said The March numbers are a further reminder of why it is essential that the Administration agree to nothing in bilateral or multilateral negotiations that would weaken in any way our vital US laws against dumped and subsidized imports.
USs total and finished steel imports in January to March 2007 quarter are up 3% and 9 % respectively as compared same period in 2005 and on an annualized basis are up 7 % and 11% respectively.
Nucor and CVRD end Ferro Gusa Carajas JV
According to Metal Producing & Process that Nucor Corp has sold its interest in a Brazilian pig iron venture to CVRD its partner in the operation known as Ferro Gusa Carajas SA. No financial terms of the separation have been reported.
Mr Daniel DiMicco Nucor chairman told listeners to a conference call that the corporation decided the day to day operations of the venture were beyond the Nucor's range of interests. It secured the off take agreement in the negotiated separation.
Fero Gusa began producing pig iron from a charcoal fueled mini blast furnace in 2005 and a second mini blast furnace started up last summer and has a stated capacity of 400,000 tons per year of which Nucor has secured 100%.
Toyota overtakes GM as world's top car maker
Toyota has overtaken America's General Motors to become the biggest car maker in the world. Toyota said that it sold more than 2.3 million vehicles worldwide in the first three months of the year about 900,000 more than General Motors.
Analysts have long been saying it was only a matter of time before Toyota took the top spot but many are surprised it has happened so quickly.
China releases output figures for Q1
China's National Bureau of Statistics announced that Chinas output of major industrial products in January to March 2007 is up by 1.6% points YoY and 1.7 % points higher than all of 2006.
The crude steel output amounted to 114.7 million tons up by 22.3%, 08.5 million tons of pig iron up by 19.7% YoY and the rolled steel output increased by 26.2 % to 126.3 million tons.
Over the three months china produced 137.5 million tons of iron ores up by 33.9 % YoY.
China produced 494.9 million tons of raw coal between January and March a growth of 14.8% YoY. The total included 177.8 million tons produced in March up by 10.3% YoY.
The January March period 2007 saw 5.61 million tons of 10 major kinds of nonferrous metals produced, including copper, aluminum, zinc, tin, lead and magnesium up by 30.8% YoY.
Hunan Valin plans investment in overseas iron ore mines
It is reported that Hunan Valin Iron and Steel Group wants to invest in iron ore mines overseas, possibly together with partner Arcelor Mittal.
Mr Li Xiaowei group chairman of Hunan Valin on the sidelines of a Metal Bulletin conference said that the company would probably fund the investment through its own capital and loans from the China Export Import Bank. He said that Valin is looking in Brazil, Australia and South Africa.
Mr Li in an interview said We are pushing forward the overseas expansion with Arcelor Mittal to better control the resources. Australia, of course, would be an ideal place to find iron ore.'' Mr Li added that We are very satisfied with our cooperation with Arcelor Mittal. They gave us technologies, lowered our raw material costs and helped us access the European and Middle Eastern market.''
Hunan Valin and Arcelor Mittal both own stakes in Hunan Valin Steel Tube & Wire Co. Arcelor Mittal paid Changsha, Hunan based Hunan Valin USD 338 million for a 36.7%stake in Valin Steel Tube in September 2005, its first purchase in China.
Chinese steel makers are increasingly eager to source secure iron ore supplies in the face of fluctuating spot prices and rising term prices offered by the world's top three miners.
Erdemirs 2006 profit up by 255% YoY
It is reported that Turkish steel maker Erdemir outperformed all of its Turkish peers of the IMKB-30, an index of the Istanbul Stock Exchange IMKB comprising of 30 companies, in 2006 according to 2006 annual financial statements recently released by 28 of the 30 companies of the index. All together, the 28 out of the 30 indexed companies enjoyed a total profit increase of 31% YoY as compared to 2005.
Erdemir in its first year of operations as part of Oyak Group increased its profit by 255% to YTL 684.8 million as its sales income grew by 16.7% YoY and reached YTL 4.9 billion. The company's assets also reached nearly YTL 8.7 billion
Isdemir, which was turned over to Erdemir in 2002 on the condition that the factory was to begin producing flat iron steel instead of long steel, began production of flats in November 2006, in one of its slab molding facilities with a capacity of 2.5 million tons. While the second facility's construction still continues, it is expected to be operational by 2008. Once the second facility is completed, the company will reach its full capacity. The flat steel capacity of Eregli facility will reach 5 million tons per year as Erdemir Group's capacity reaches 8.5 million tons per year.
In 2006, USD 132 million was invested in 41 projects in Eregli, along with a USD 541 million for 43 projects in Iskenderun. This year an investment of USD 900 million is expected from Erdemir.
11 miners killed in Hebei coal mine accident
It is reported that 11 miners have been confirmed dead recently in gas outburst at a coal mine in north China's Hebei Province. According to the emergency rescue headquarters based at the Tao'er coal mine in Handan an industrial city that all the bodies of the miners had been retrieved by this morning.
Mr Cheng Xianguo deputy manager and spokesman of the mine said during the accident 560 miners were working in the pit and 549 of them managed to escape, Rescuers used fans to dissipate gas in the shafts and took turns entering the pit to search for victims.
Tao'er mine started operating in 1982 with a designed capacity of 900,000 tons a year and run by the state owned mining company, Jinneng Hankuang Group.
CVRD & Baosteel restarts talks for slab plant in Brazil
Bloomberg reported that CVRD has restarted talks with Baosteel Group on a steel slab plant in Brazil that may cost as much as USD 4 billion.
Mr Pedro Gutemberg director of ferrous technology at CVRD said that Baosteel will provide 80% to 90% of the funding for the USD 3 billion to USD 4 billion proposed plant in Maranhao province. He said We started talks because the government changed and local people had tried to block the project because of concern it was a threat to the environment.''
Mr Chen Ying, spokeswoman of Baoshan Iron & Steel Co, Baosteel's publicly traded unit, declined to comment.
Mr Sun Mengxiang the Baosteel official heading the project, said in July 2005 that Shanghai-based Baosteel and Vale had planned to spend USD 1.5 billion building the first phase of the plant at Sao Luis, which would produce 4.1 million tonnes of steel slab a year from 2007 and the plant was stalled in 2005 as costs rose for the project due to environmental issues. After the talks stalled, Baosteel met with Cia Siderurgica Nacional to discuss taking part in one of the two slab mills CSN plans to build in Brazil's Rio de Janeiro or Minas Gerais states.
Police starts investigation in hot metal spill at Qinghe Special Steel
It is reported that Police in northeast China are investigating Qinghe Special Steel Corp owner and three employees in connection with an accident that killed 32 workers and have ordered them not to leave the area.
Investigators have blamed last week's accident a on the use of a hoister not intended for steel production which broke and caused a ladle to fall spilling 30 tons of hot molten steel on the shop floor. According to the State Administration of Work Safety many of those killed had been in a workshop set up just five meters from the ladle.
The reports said that Liaoning provinces Tieling city based factory had been state run until it was sold to private investors last year.
Oriel begins ferrochrome production at Tikhvin in Russia
Reuters reported that London listed mining firm Oriel Resources has started producing steelmaking additive ferrochrome at its plant in Russia. The company in a statement said that it will make 148,000 tonnes per year of high carbon ferrochrome later increasing to 180,000 by 2011.
The company added that metal produced at its Tikhvin plant in Russia will be sold on the free market by a trading firm. Presently it is importing chrome ore for smelting at Tikhvin but from 2008 it plans to use ore from its own Voskhod mine in Russia. Voskhod will also supply chrome ore to Chinese metals trader Sinosteel and Swedish ferroalloys producer Vargon Alloys.
Oriel is also developing the Shevchenko nickel project in Kazakhstan.
Qatar Steel and Sphere Investments form energy JV
Doha Time reported that Qatar Steel has joined hands with Perth based Sphere Investments to establish Sphere Petroleum which will be based in Doha and will focus on oil and gas exploration in West Africa with a start up capital of QAR 100 million.
Mr Sheikh Nasser bin Hamad al-Thani director & GM of Qatar Steel and Mr Regragui Benza CEO of Sphere Petroleum while announcing the establishment of Sphere Petroleum said the new firm would be actively engaged in oil and gas exploration in West Africa besides gold and base metals exploration in Mauritania.
The company in a statement said that Qatar Steel and Sabic had signed share placement agreements with Sphere Investments last year to acquire strategic shareholdings in the latter. Qatar Steel now holds a 9.4% stake in Sphere Investments. Sphere Investments oil and gas exploration division has been transferred fully to Sphere Petroleum.
Sphere Petroleum had already been awarded two onshore petroleum projects in the Taoudeni Basin (Block 8) and Gao Graben (Block 10) in Mali. Besides, negotiations are at an advanced stage in Niger for an onshore acreage and in Guinea Bissau for an offshore permit. It is also seeking opportunities in Bahrain and some other places in the Middle East.
Qatar Steel will also acquire a 15% stake in a Mauritanian company being established to develop the Guelb el Aouj Iron Ore Project and other direct reduction pellet projects in the neighborhood.
Mr Sheikh Nasser said that Qatar Steels investment in Sphere Petroleum is strategic and sets the stage for an entry into the Mauritanian iron ore industry in a joint venture with capable, experienced and reliable partners. Mr Sheikh Nasser hoped Sphere Petroleum would grow into a major oil and gas exploration company and would bring benefits to shareholders and the economies of the regions in which it operated.
Mount Gibson appoints Mr Hamilton as chairman
In a major board restructuring at West Perth based Mount Gibson Iron Mount Gibson Iron Limited has announced restructuring of its board of directors as follows
1. The appointment of Mr Neil Hamilton to the position of Chairman, following the retirement of former Chairman Mr Bill Willis on 24 April 2007
2. The retirement of Mount Gibson's founding Managing Director and current Deputy Chairman Mr Brian Johnson effective as of 30 June 2007
3. Mr Mark Horn, a representative of major shareholder Gallagher, will join the Board from 30 June 2007;
4. Mr Alan Rule will step down as an Executive Director to become Chief Financial Officer and will become an alternate Board member for Managing Director Mr Luke Tonkin from 30 June 2007
5. Mr Peter Bilbe has advised the Company that he does not intend to stand for re election as a director at the Company's 2007 annual general meeting.
Mr Hamilton is presently Chairman of Iress Market Technology, Integrated Group Limited and is a Director of Insurance Australia Group Ltd. He is a former Chairman of Challenge Bank Limited, Western Power and Sons of Gwalia Ltd.
Mount Gibson's outgoing Chairman Bill Willis said Mr Hamilton would bring considerable experience and a new focus to the Board. He said "Neil Hamilton's appointment is a further step in Mount Gibson's growth strategy as Australia's independent iron ore producer and the driving force in the development of the Mid West iron ore industry."
Baosteel hopes for 2008 iron ore price to be market driven
XFN-ASIA reported that China's number one producer and designated iron ore import price negotiator, Baosteel, hopes prices for iron ore imports next year follow market principles.
Mr Li Qingyu president of Baosteel on the sidelines of an industry conference in Beijing told XFN-Asia that Although next year's iron ore import prices are hard to predict, I certainly hope the industry follows the rule of the market and supply and demand principles.
Mr Qingyu said that Despite the annual price hikes, China's largest steel maker has been coping. We have been able to adapt to changes in the iron ore market and we will be possibly seeking steel companies with adequate iron ore reserves when looking toward acquisitions.
Baosteel has for the past several years been the appointed, on behalf of Chinese steel maker, as negotiator with the world's three biggest miners on setting annual iron ore import contract prices for the chief raw material used in steel making. Baosteel dragged out the annual negotiations far beyond the de facto deadline in 2006 before finally settling on a 19% hike but ettled relatively early with CVRD Rio Tinto and BHP Billiton to set 2007 prices 9.5% higher than the year earlier, thus setting global bench mark.
