Sumitomo, Nisshin and JBM form a JV for auto tubing in India

Nisshin Steel Co Ltd and Sumitomo Corporation have announces their agreement to establish a three party JV to manufacture and supply steel tubes for the India's automobile component industry, in cooperation with JBM Group, an India's leading auto component supplier.

The JV will be named ANS Steel Tubes Private Limited and located at Faridabad in the state of Haryana. JBM Group will hold 51% stake. Total investment will be JPY 1.2 billion and the venture will start operations in August

The JV will engage in the business of manufacture and sale of ordinary steel and stainless steel tubes for the automobile applications, responding to the expected sustained future growth in demand for the Indian automobile market.

Also, Nisshin Steel Co Ltd and Sumitomo Corporation, have an intention, utilizing the JV as a core, to actively exert the new market development efforts for the high grade steel tubes in India's fast growing automobile market.

Japanese steel users such as Toyota Motor, Suzuki Motor and Honda Motor are expanding in India as rising incomes boost vehicle purchases. Toyota estimates the nation's car market will rise 38% from 2005 levels to 2 million vehicles by 2010.

BHPB to enter Indian mining scenario through alumina JV with Ashapura

BS reported that BHP Billiton has formed a 51:49 JV with Mumbai based mineral producer and exporter Ashapura Minechem for jointly operating Ashapura Minechem’s INR 2,500 crore alumina refining project in Orissa. However, the agreement is likely to be signed later as government approval for the project is awaited.

As per report, the two partners will invest INR 800 crore towards equity participation and the remaining INR 1,700 crore will be mobilized through debt.

Mr Chetan Shah MD of Ashapura Minechem has declined to disclose the identity of his partner for the project. He added that government clearance would take another 3 months and the project would be commissioned by the end of 2008.

This will be Ashapura Minechem’s 2nd JV with foreign partners, as it has signed an agreement with Chinese firm Qingtongxia to set up an alumina project in Kutch in March 2007. The project will cost around INR 2,500 crore and is expected to come up in the next 2 years.

Although BHP, which has a presence in 25 countries, has been doing business in India for over 30 years, it does not have an equity interest in any domestic project. Its involvement with the Indian market began with technical tie Steel Authority of India Limited.

PSL commissions spiral pipe plant at Sharjah

It is reported that Indian steel tube major PSL Limited will double its capacity at its just commissioned plant in the Hamriyah Fee Trade Zone at Sharjah in UAE. As per report, doubling of the capacity would need an investment of another INR 40 crore.

Mr Ashok Punj MD of PSL however told that “Increasing capacity at Sharjah can happen either immediately or after a year. We are yet to decide.”

PSL has so far invested INR 65 crore in setting up the 75,000 tonne spiral welded pipes plant. It also has three layer polyethylene coating line, an internal liquid epoxy coating line and a concrete weight coating unit.

The unit will cater to the markets of Saudi Arabia, Oman, Qatar and Kuwait, with potential supply to Iran and Iraq. It will provide these markets with pipe supply and coating services both for onshore and offshore pipelines.

Mr Punj said “PSL has already been supplying pipes to several countries in the Middle East. Its assessment was that the freight incurred in transporting pipes from the company's Kandla plant to the Middle East could be eliminated by undertaking manufacturing in situ at a suitable location in one of the Gulf Cooperation Council countries.”

K Line and JSW Energy ink long term coal transportation agreement

It is reported that Japanese Kawasaki Kisen Kaisha, one of Japan's biggest shipping lines, has won a long term supply contract to deliver Indonesian coal to India's JSW Energy.

K line in a statement said that it would haul Indonesian thermal coal in a 15 year charter beginning in 2009 aboard two of its largest Panamax vessels.

The coal would be supplied to two new power stations due to be completed by JSW Energy in 2008 and 2009. The power plants are expected to supply energy to India's JSW Steel Ltd.

Visa Steel adds a bar mill at Kalinga Nagar

Visa Steel announced that its board of directors has approved expansion of the scope of its projects at Kalinga Nagar Industrial Complex in Jaipur are of Orissa to include a 0.5 million tonnes per annum bar & wire rod mill and an additional 25MW power plant.

Mr Vishal Agarwal MD of Visa Steel said that Visa Steel has increased the scope of the Orissa project with an additional investment of INR 400 crore.

Visa Steel is setting up a 0.5 million tonne specialty and stainless steel project at Kalinga Nagar in Orissa at an investment of INR 1,800 crore. The steel plant will be commissioned by the end of 2008, but a 50,000 tonne ferrochrome plant that is part of the project is expected to start production soon. The 300,000 tonne sponge iron and 50MW power plant will go on stream earlier than the steel plant.

ArcelorMittal to fast track Jharkhand project

ArcelorMittal announced that its Greenfield project in Jharkhand would be put on the fast track after Mr MP Singh of Arcelor Mittal recently met Mr AK Chug chief secretary of Jharkhand, Mr SK Satpathy industry secretary and Mr JS Tiwari mines and geology secretary and discussed the project.

Mr Singh said the meetings with the senior government officials were fruitful. He said “The state government is an important stakeholder in our project and we have solicited its support for the success of the project.”

He said ArcelorMittal has signed an MoU with Jharkhand for its 12 million tonne steel plant at an investment of INR 43,000 crore and the company would fulfill all the conditions laid down in the agreement including applying for land and iron ore leases and getting water for the project.

But BS cited Mr Sanak Mishra CEO of Mittal Steel India as saying that “We wanted to convey to the state government that we are serious about the Jharkhand project. We are committed to the project and Chiria is the main thing in the picture.”

CIL calls for single window clearance for acquiring coal blocks overseas

UNI reported Coal India Limited has appealed to the central government for setting up a committee of secretaries, a mechanism modeled on ONGC Videsh, for giving clearance for acquiring coal blocks overseas. A committee of secretaries clears ONGC Videsh projects quickly and CIL also wants a system like this.

Mr NC Jha director technical of CIL told UNI that ''A one window systems should be evolved to allow expedite clearances while acquiring coal blocks. Whenever we identify a coal block abroad, the procedural delays stop us to acquire the blocks.”

Mr Jha added that “Private sector companies bit us while acquiring mines as things happen very fast there. In the globalize scenario, foreign blocks change hands fast and the global companies do not wait for these delays.”

As per report, Coal India Limited will form a special purpose vehicle and the whole process would be operational soon. CIL is also a part of the consortium formed under the aegis of the Steel Ministry, in which SAIL, NTPC, RINL are also part. The consortium would together acquire coal blocks in various countries.

Midhani to increase melting capacities

BL reported that Hyderabad based Mishra Dhatu Nigam Limited is increasing its melting capacity from the current 5 tonnes to 15 tonnes in the next 12 months and taking a host of measures including implementation of ERP to increase efficiency and cut costs.

Mr M Narayana Rao C MD of Midhani said that the Ordinance Factory Board is providing financial aid to add another furnace at a cost of over INR 20 crore to increase the melting capacity to 15 tonnes.

Mr Rao said "In the last four years we doubled sales to INR 192 crore. Our current order book stands at INR 600 crore and target to double our turnover within two years. Currently 20% of our revenue comes from commercial sales and we intend to increase it further." He added that Midhani is in the process of signing MoUs with many customers to know about their future requirements in advance

Mr Rao also said that "The raw material costs in the international market up by over 600% in the last four years. To remain competitive, we are implementing ERP this year."

MIDHANI was set up to fulfill the need of in hi tech special metals and alloys essential for space, atomic energy, aeronautical, and defense sectors soon after Independence by Indian government. With modern metallurgical facilities and high degree of technical competence it manufacturers a wide range of super alloys, titanium, special purpose steels and other special metals & alloys.

Essar Global appoints Mr Alain Davezac as new executive VP

Essar Global announced that it has appointed Mr Alain Davezac as executive VO of strategic planning and mergers & acquisitions of the company. Mr Alain will be responsible for the company’s growth strategy through mergers, acquisitions, alliances and business development opportunities.

Mr Alain holds a master’s degree in Political Science and Information & Communication Sciences as well as a degree in Literature. . He has also attended an International Executive Education Program at INSEAD. He has over of 32 years experience in the steel industry and has been involved in the process of international business development, business & public affairs and intercultural negotiations.

Essar Steel Holdings Limited is a global producer of steel with a footprint covering India, Canada, United States of America, Middle East and Asia. It has a current capacity of 8 million tonnes. With its expansion plans in India and other parts of Asia and North America, its capacity will go up to 20 million tonnes to 25 million tonnes by 2012.
Essar Steel Holdings Limited is part of Essar Global Limited, which is a diversified corporate house with interests in steel, energy, power, communication, Shipping & Logistics and Construction with an asset base of USD 10 billion.

Vikas Metal to set up 2000MW power plant at Barauni in Bihar

It is reported that Bihar State Electricity Board has signed a MoU with Vikas Metal and Power Limited for setting up the state's first private sector power plant at Barauni in Begusarai district of Bihar. Under the agreement a 2,000 MW coal based power plant would come up in Barauni where thermal power plant run by Bihar State Electricity Board was already in operation.

The INR 2,500 crore projects had already been approved by Bihar State Investment Promotion Board and cleared by the Bihar State Pollution Control Board.

Once the plant becomes operational by 2011 and the Bihar State Electricity Regulatory Commission would determine its power tariff. However as per the agreement Vikas Metal and Power Limited would be free to sell power to other states in case Bihar does not purchase them for its own consumption.

Sandvik Asia secures major orders from NMDC and MPT

It is reported that Swedish Sandvik Group’s subsidiary Sandvik Asia has bagged contracts worth INR 143 crore from NMDC Limited and Mormugao Port Trust.

NMDC is setting up a 7 million tonnes per annum iron ore beneficiation facility, which involves a conveyor system for transportation of iron ore at Kirandul in Dantewada district in Chhattisgarh. NMDC has awarded the INR 116 crore contract to Sandvik Asia for design, engineering, manufacture, supply, construction, erection, testing, and commissioning and performance test of the system. The scope of work also includes technological equipment, civil, structural and electrical works and service facilities like cranes, hoists, water supply and dust suppression facilities on a turnkey basis.

Sandvik Asia has also bagged an INR 27 crore contract from Mormugao Port Trust for design, manufacture and supply of bulk handling machines to handle iron ore.

CSEB inaugurates unit II of Korba East project

Mr Rajiv Ranjan chairman of Chattisgarh State Electricity Board has inaugurated the unit II of 250MW Korba East expansion project. The commercial production of unit II is expected by November 2007.

Bharat Heavy Electricals Limited was awarded the INR 1,572 crore EPC contract to develop the plant in April 2004. Unit I of 250MW was inaugurated on January 16th 2007 and is expected to begin commercial production by July 2007.

The Chhattisgarh Electricity Board came into existence in early 2001. The Korba East project will be the first power plant to commission after the new state was formed. The project was earlier conceived as a 2x210MW project but the capacity was revised to 2x250MW keeping in mind future energy demand.

Chhattisgarh current power capacity is 1,405MW including 1,280MW from thermal plants and 125MW from hydel plants.

JSW Steel gets shareholder OK to raise up to USD 500 million

It is reported that JSW Steel Ltd has obtained shareholder permission to raise up to USD 500 million to fund its capacity expansion.

MR Seshagiri Rao Finance Director of JSW at the company's annual general meeting said "We are not raising it immediately. We will do it as and when the market is right."

Mr Sajjan Jindal vice CMD of JSW assured shareholders "We don't see any reason for equity dilution. Promoters hold 49% stake in the company.

Currently JSW is raising USD 325 million through a foreign currency convertible bond issue that is scheduled to close on June 27th 2007. In addition to this JSW plans to raise USD 500 million through either a debt or equity issue to fund its expansion that is estimated to cost INR 171 billion.

Karnataka to float a SPV for three 1000MW thermal plants

It is reported that the Karnataka government has decided to float a special purpose vehicle called Karnataka Power Company Ltd for the implementation of 3 thermal power projects with a capacity of 1,000MW each. The proposed SPV, which will soon be registered, will not only select the developers for these projects through bids but also work towards getting the necessary clearances from central and state agencies.

The coal based power projects at Chamalapura in Mysore district, Jewargi in Gulbarga district and Ghataprabha in Belgaum district are being offered to the private sector for implementing on a build, own, operate basis and each of the 5 electricity supply companies will invest a share of INR 1 crore in the proposed company.

Karnataka government had invited expressions of interest from generating companies on February 22nd 2007 to set up the power plants and 29 companies including TATA, Reliance, Lanco and the National Thermal Power Corporation, GMR group, Jindal Power Co, Nagarjuna Chemicals & Fertilizers, Torrent Power and the Orissa Power Corporation have shown the interest.

Carborundum to acquire Russians Volzhsky Abrasives Works

Abrasives maker Carborundum Universal Ltd recently announced that it had signed a deal to acquire 84.14 % of Russia's Volzhsky Abrasives Works.

Global crude steel production up by 6.4% YoY in May 2007

International Iron and Steel Institute reported that the total crude steel production in May 2007 for the 67 countries was 112.2 million tonnes up by 6.4% YoY as compared to May 2006. The global crude steel production in January to May 2007 was 540.393 million tonne up by 9.1% YoY.

The growth in crude steel production during May 2007 among regions was again led by Asia which registered growth of 11.3%, South America, Oceania, European Union (27), CIS (6) and Africa also registered YoY positive growth of 11.2%, 8.7%, 3.2%, 3.1% and0.3% respectively in May 2007. Other regions witnessed negative growth.

In million tonnes
Source IISI

Among the top 20 nations, China as usual stood first with 41.304million tonne production of crude steel registering tremendous growth of 15.7% YoY as compared to April 2006.

In million tonnes
Source IISI

FMG to expand its Pilbara iron ore project

Australian Fortescue Metals Group Ltd announced that it is looking at expanding capacity at its AUD 2.7 billion Pilbara iron ore project site in Western Australia to 200 million tonnes a year from the initial plan of 45 million in response to strong customer demand particularly from China.

Fortescue Metals Group Limited announced that it is reviewing strategies to speed up the initial construction plan for the Pilbara Iron Ore and Infrastructure Project. FMG said that these include bringing forward construction of the project’s lump circuit, which was originally slated for commissioning in 2009. Fortescue said its other initiatives include increasing investment in the project’s rail track and formation in particular an early super lift of the rail to increase track capacity and to increase iron ore available to market in 2008 and 2009 and the costs will be announced as soon as they are available.

Fortescue said beyond the initial improvements to project capacity it is examining more substantial production expansion opportunities to 200 million tonnes per annum and has appointed Citi and JPMorgan to advise on options that may potentially be used to raise circa USD 1 billion in the global project finance capital markets. The company said it is also discussing the potential for an Infrastructure Leasing Fund with major infrastructure investors and international banks for the project’s port and rail assets, which could provide capital for the expansion to 200 million tonnes per annum.

FMG said with first ore on ship scheduled for May 2008, it is being strongly urged by its customers to maximize ore production and begin distribution of iron ore products as soon as possible. It said this increased market demand is reflected in the additional iron ore off take agreements entered into with customers over the last several months.

FMG hopes to become the third major of supplier of iron ore from the Pilbara region where Rio Tinto and BHP Billiton's key iron ore operations are based.

OECD Steel Committee sees favorable outlook for steel demand

Driven by buoyant steel intensive economic activity including construction and infrastructure building in many developing economies, global apparent consumption of steel has increased at an average pace of more than 7% per annum since 2002 to reach a record level of 1.113 billion tonnes in 2006.

To meet this rise in demand, steel production growth has accelerated sharply, reaching 1.24 billion tonnes in 2006 up by as much as 393 million tonnes or 46% compared to its level of 850 million tonnes in 2001.

Mr Risaburo Nezu Chairman of the OECD Steel Committee at the 62nd meeting of the Steel Committee at Istanbul in Turkey during May 2007 said that “This growth in demand for steel is creating a favorable situation for many steel makers. Steel prices and the prices of some raw materials in some markets are two times higher or more compared to levels prevailing in 2001. Profits of steel companies are, for the most part, strong, and restructuring and consolidation have further strengthened the steel industries of many economies.”

Mr Nezu said that “The rapid expansion of China’s industrial production and its strong urbanization trend will ensure that steel consumption continues to rise though growth should moderate slightly in coming years from the double digit rates observed in recent years. China’s apparent crude steel consumption has doubled over the last five years to reach 398 million tonnes in 2006. The economy now accounts for around 32% of the world’s apparent steel consumption.”

Mr Nezu said that “In India, there is enormous potential for growth in steel consumption. Heavy investment in developing the country’s infrastructure, such as railways, ports, and roads will fuel growth in the steel intensive construction sector. In Russia, steel consumption prospects are favorable, supported by the consumer boom that is now spreading to automobiles and housing as well as the replacement of ageing infrastructure. Brazilian demand for steel will continue to be supported in the future by the country’s automotive and construction sectors. Steel consumption in the Middle East is expanding rapidly from a relatively low level of 37 million tonnes. Massive infrastructure and other building activity are driving this development.”

Mr Nezu added that “In NAFTA, housing market problems and a slowdown in manufacturing activity in the US could contribute to a reduction in steel consumption this year from around 155 million tonnes in 2006 while a recovery in demand could take place in 2008 as economic growth reaccelerates. Steel consumption in the EU 27 is expected to stay on a gradual growth path in 2007 and 2008, thanks to the relatively healthy outlook for domestic as well as external demand for products manufactured in steel using industries.”

Mitsubishi and Murchison ink USD 3 billion iron ore agreement

Mitsubishi Corporation announced the execution of an agreement by its wholly owned subsidiary Mitsubishi Development Pty Ltd with Murchison Metals Limited on the development of Murchison's iron ore assets in the mid west region of Western Australia. The agreement also includes the joint development of the proposed associated mainland multi user rail and port infrastructure and envisages a total investment of AUD 3 billion.

Mitsubishi and Murchison will establish and jointly control two special purpose joint venture vehicles that will each own and actively develop the mining and infrastructure assets and opportunities. Mitsubishi will be the exclusive marketing agent in relation to all iron ore sales excluding supply to certain customer. In exchange for 50% ownership of the mining and infrastructure vehicles, Mitsubishi will, pay USD 150 million upon completion of the definitive JV agreements and a residual payment based on an agreed valuation of the Jack Hills project at or around the time of completion of a feasibility study of bankable standard on the expanded Jack Hills operation and associated infrastructure. Mitsubishi will manage the arranging of limited recourse debt and, subject to final JV decision to proceed with the mine and infrastructure projects will provide Murchison with additional funding support through the provision of subordinated loans and an overrun facility.

The two firms will set up by September 2007 a 50:50 JV, which will develop the Jack Hills mine with the aim of expanding output to 26 million tonnes of iron ore a year starting in 2011 where construction of infrastructure for the project including a harbor along the west coast capable of accommodating 150,000 tonne class vessels and a 420 kilometer railway linking the harbor and the mine will begin in 2009.

Murchison Metals is an ASX listed iron ore company that owns the Jack Hills Project located in the northern corridor of the Mid West region of Western Australia. The Jack Hills Project contains a number of deposits of high grade hematite ore. Murchison Metals' high grade hematite ore can be mined and shipped directly to customers without further processing or concentration, which significantly improves the economics of the project and distinguishes Murchison Metals from many other iron ore producers. Stage 1 of the Jack Hills Project commenced in late 2006 and involves initial production of 1.5 million tonnes of iron ore per annum expanding to 2 million tonnes per annum in 2008. In Stage 2, Murchison Metals proposes to increase annual production of direct shipping high grade ore up to 26 million tonnes per annum. Iron ore would be railed to a new port facility at Oakajee north of Geraldton for export to customers in North Asia.

Mitsubishi Development Pty Ltd is Mitsubishi Corporation's wholly owned carbon steel raw material & energy resource mining arm based in Australia. Incorporated in 1968, Mitsubishi Development Pty Ltd has long been engaged in investments, production and sales primarily in the coal sector including its 50”0 coking coal alliance with BHP Billiton in the Bowen Basin, Queensland. Mitsubishi Development Pty Ltd is currently the third largest coking coal exporter in the world and has recently expanded its scope to Uranium and now Iron Ore.

Global iron ore production up by 12% YoY in 2006

UN Conference on Trade and Development in its yearly iron ore market review said that World production of iron ore went up by 12% YoY in 2006 to reach 1.5 billion tonnes. It added that world iron ore exports increased by 6.1% YoY in the year, with Australia maintaining its leading position accounting for 248.4 million tonnes of global exports.

UNCTAD said the high pace of growth has continued in the first months of 2007. This has led to iron ore price negotiations for 2007 being concluded unusually fast with a mark up of 9,5% for fines.

China was the world's largest steel producer steel consumer, steel exporter, iron ore importer and the second largest iron ore producer and accounted for 43% of global iron ore consumption.

Chinese steel exports unlikely to slow down in long term

Mr Xu Zhongbo CEO of Beijing Metal Consulting Ltd during a conference in Toronto said that that China's steel exports will remain at least at current levels because producers are making higher grades and upgrading equipment to meet environmental standards.

Mr Xu said that China's steel makers are investing in factories that pollute less and don't use as much energy to fend off government efforts to force inefficient producers out of business. He said that “The new equipment used by Baoshan Iron & Steel Co, Angang Steel Co and other large Chinese producers is better than Nucor's or US Steel's the engineers are smarter and labor is cheaper, so whatever steps are taken to curb exports will only have a short term effect at best.”

Chinese government officials including Premier Mr Wen Jiabao and Central Bank Governor Mr Zhou Xiaochuan have sought environmental controls to slow economic growth and ease trade tensions.

Tenaris to supply 500 kilometer line pipes to Petrobras for Plangas

It is reported that Tenaris will be supplying nearly 500 kilometers of welded line pipes to For Brazilian Petrobras for pipeline infrastructure, including pipes for offshore use in a contract valued at approximately USD 450 million. These products will be used to build two pipelines to take the gas from the developments to the refineries. Deliveries are scheduled over ten month period starting in August 2007.

Confab, Tenaris's mill in Brazil, will produce 395 kilometers of coated tubes with 24 inch, 28 inch and 37 inch outside diameters. Part of this order will be coated within the plant in Pindamonhangaba and the rest will be finished at the adjacent Socotherm Brazil plant a JV between Tenaris and Socotherm in order to prepare the products to withstand demanding offshore applications.

Another 100 kilometers of pipes with 22 inch outside diameter will be supplied by Tenaris from its mill at Valentin Alsina in Argentina with coating at Socotherm America's nearby facility.

Mr Idarilho Nascimento sales coordinator of Tenaris in Brazil said that “The great challenge of Plangas is that it is made up of eight developments that are completely different in terms of product requirements sizes and technical characteristics, the geographical locations and delivery areas in three southeastern Brazilian states São Paulo, Rio de Janeiro and Espírito Santo.”

Mr Rogério Martin commercial manager of Tenaris Pipeline Services in Brazil said that “The pipes for this project have very rigorous technical specifications since they will be used in acidic environments.”

Under the Plangas development, Petrobras plans to increase the production and supply of natural gas in southern and southeastern Brazil from 15.8 million meter cube per day to 55 million meter cube per day over the next three years. The development of these reserves will amongst other benefits, increase the reliability of the country's national electricity system and make natural gas available for heat generation.

Consol energy to acquire AMVEST Corp for USD 335 million

It is reported that Coal miner Consol Energy Inc has agreed to purchase privately held AMVEST Corp and certain of its subsidiaries and affiliates for nearly USD335 million. The acquisition, which is being financed using cash and debt, will close early in the third quarter.

Consol Energy said that the addition of AMVEST is expected to increases its production capacity in Central Appalachia to 18 million tonnes to 20 million tonnes annually.

AMVEST West Virginia Coal comprises of Fola Coal Company, Little Eagle Coal Company, Powellton Coal Company, and Terry Eagle Coal Company. Its coal reserves consist of approximately 200 million tons of high quality, low sulfur steam and high volume metallurgical coal. During 2006, AMVEST shipped approximately 4.9 million tons of coal.

Mr J Brett Harvey president & CEO of CONSOL Energy said that "This acquisition allows us to create a solid Central Appalachian platform for future growth and profitability. Infrastructure is a key part of this acquisition because it substantially reduces the cost to develop our existing reserves in the area."

CONSOL Energy Inc is one of the largest producers of high Btu bituminous coal in the United States. Currently it has 17 bituminous coal mining complexes in six states.

CVRD signs long term pellet contract with Emirates Steel

Companhia Vale do Rio Doce announced that it has signed a long term contract with Emirates Steel Industries of Abu Dhabi to supply direct reduction iron ore pellets.

The contract with ESI involves shipments of 500,000 tonnes of DR iron ore pellets per year for seven years from 2008 onwards.

CVRD release said that “This agreement highlights our support and long term commitment to serve the Middle East market with high quality products.”

Thermal coal demand in Russia may triple by 2020

Reuter citing Mr Vladimir Shchadov deputy director of the Federal Energy Agency reported that demand for thermal coal in Russia could more than triple by 2020 as the Russia is investing billions of dollars to expand its power network.

Mr Shchadov during 3rd Coaltrans conference said that thermal coal supply would rise by more than 50% and the proportion of exports in overall output from the world's third biggest coal exporter would fall. He said that "The considerable increase in forecast demand for Russian thermal coal from 98.4 million tonnes to 342 million tonnes in 2020 will motivate coal producers to increase production at a faster pace."

Mr Sergei Shatirov first deputy chairman of the Russia's industrial policy committee said that coal's share in Russian energy production would rise to from 38% to 40% by 2020. Most Russian energy is generated from gas. Officials have given coal's current share in energy output at either side of 20%, well below the world average.

Mr Geoff Crocker chairman of SUEK AG said that rising coal output would be required to meet the addition of 40 GW to 80 GW of new coal fired power capacity by 2020. He added that "The general picture is clear increasing dependence will be on coal fired generation and the coal share in the fuel market will increase."

Unified Energy Systems is investing USD 119 billion by 2010 to upgrade the Russia's grid. By 2020, coal fired power will have risen and possibly doubled its share of the Russia's overall energy output.

Ferrobahia to sell 30% of its pig iron project

BNamericas quoted Mr Geraldo Basques president of Brazilian pig iron producer Ferrobahia as saying that it has plans to sell 30% of its project to be installed in Bahia state to a foreign group.

Mr Basques said that "We plan to make the official announcement this week and the deal would be inked with a Canadian investment group, which will provide structure for our growth. If we secure financing for the project, we will start with 200,000 tonnes per year."

The new pig iron plant, which includes two blast furnaces in addition to two thermoelectric plants, is due to start operations in 2008 with a capacity of some 200,000 tonnes per year destined for export. Investment in the facility is due to reach USD44 million.

Ferrobahia will be the first pig iron producing plant in Bahia.

Base metal production in China surges in January to May 2007

According to statistics released by China's National Bureau of Statistics China produced 1.27 million tonnes of refined copper in the January to May 2007 up by 11.5% YoY. The released added that production of aluminum surged by 36.1% YoY to 4.68 million tonnes. Its copper concentrate output reached 300,300 tonnes for the January to May period growing by 9.4% YoY.

China's domestic base metal output from January to May 2007

In tonnes
Source - The National Bureau of Statistics

China's domestic base metal concentrates output in January to May 2007

In tonnes
Source - The National Bureau of Statistics

Newcastle Port reaches 50% to 70% coal export capacity

AP reported that coal exports from Australia's Port of Newcastle have resumed after violent storms earlier this month shut down the world's biggest coal port.

According to the Hunter Valley Coal Chain Logistics Team, daily coal shipments from mines in the Hunter Valley in New South Wales have been restored to 50% to 70% of the target capacity of 320,000 tonnes a day and are expected to be up to 80% of the port's capacity by midweek.

Hunter Valley Coal Chain Logistics Team said that one coal vessel would complete loading and that other coal vessels will load in the next couple of days.

Floods and landslides had damaged rail lines after a violent storm earlier this month stopping the flow of coal to the port and forcing BHP Billiton Ltd, Rio Tinto Ltd subsidiary Coal & Allied Ltd and Xstrata PLC to declare force majeure on some sales contracts.

Commodity shipping rates on downward trend

It is reported that the cost of shipping coal, iron ore and other dry bulk commodities, which has fallen by 14% recently, may decline further because of expectations that additional capacity will outstrip bookings.

As per report, the Baltic Dry Index, a measure of commodity shipping costs on different routes and ship sizes, has dropped by 2.4% to 5,736 on June 8th 2007 falling for a third day based on data from the London based Baltic Exchange.

The Baltic Panamax Index, which reflects the movement of Panamax vessels that can carry 70,000 tonnes consignments, dropped a second day, losing 2.3% to 5,719 on June 8th 2007 while the average daily hire rate for a Panamax vessel has fell by 2.2% to USD 46,096.

Meanwhile, the average daily rental rate for a Capesize vessel which typically hauls 175,000 tonnes of goods has fell for a fourth straight day by losing 4.1% to USD 85,700.

A London based shipbroker said that "The two perceived biggest risks to the freight market are a slowdown in trade imports by China, and an oversupply of tonnage to carry this cargo growth." According to another shipbroker Chinese shipyards are seeking ways to increase their production lines to cope with demand for bulk carriers.

According to customs figures released in Beijing, China’s import has climbed by 19.1% YoY from a year earlier in May 2007 while export has jumped up by 28.7% YoY.

EZDK to put new rebar finishing facilities at Alexandria

It is reported that Egyptian Al Ezz Dikheila has awarded Danieli Morgårdshammar a contract for the supply of new finishing facilities for replacing the present cooling bed and services at the No 1 bar mill in Alexandria. Startup of the new production outlet will take place in autumn 2008.

The supply will include the installation of a new QTB quenching and self tempering line at delivery side of the existing finishing mill, new 90 meter long cooling bed with entry and delivery facilities, pendulum type cold shear for on the fly continuous cut to length, bar counting facilities of the latest Danieli generation, bundle forming, tying and collecting stations. Danieli Automation will supply the electricals and an advanced Level 1 and 2 automation system.

Once in operation, the new bar finishing outlet will enable production of 10mm to 40mm rebars at output levels of up to 130 tonnes per hour.

ISRI begins 20th anniversary year as “Voice of the Recycling Industry”

Institute of Scrap Recycling Industries announced that it has begun a yearlong celebration to honor its 20th anniversary of speaking with one voice, the Voice of the Recycling Industry. To honor the anniversary, ISRI is planning various activities throughout the year culminating in a tribute to the 20 years of success at the 2008 convention in Las Vegas.

On June 9th 1987, members of the Institute of Scrap Iron and Steel and the National Association of Recycling Industries each held meetings in New York to approve a merger of ISIS & NARI. One month later, at the new organization’s first board of directors meeting, a new name was approved: the Institute of Scrap Recycling Industries Inc.

Mr Frank Cozzi chairman of ISRI said that “The momentum that was created by that initial merger to create ISRI has continued to grow, boosted as of late by great markets and boosted even more by the inclusion of the scrap tire industry and the creation of the Electronics Recycling Council. ISRI is strong today because of the foundation built two decades ago, and it will continue to grow stronger.”

ISRI has played a key role in promoting the importance of the scrap recycling industry to the manufacturing economy, global trade, and the environment. ISRI’s professional staff has developed education and training programs and services to help member companies operate more safely and efficiently. And as the unified voice of the for profit recycling industry, ISRI has advocated for legislative and regulatory policies that increase recycling and open markets for commodity materials produced by the industry.

BHBP considering Alcan takeover – Report

Australian media reported that Australian mining and metals giant BHP Billiton has hired investment bank Merrill Lynch to explore a possible rival bid for Canadian aluminum producer Alcan.

As per report, BHPB is reportedly still considering whether it will make a bid for Alcan, which is currently the target of a USD 34 billion hostile takeover bid by US based aluminum giant Alcoa.

BHP is one of several mining companies that may be interested in mounting a bid for Alcan, which has rejected the Alcoa offer.

US’s raw steel production in last week down by 5.5% YoY

American Iron & Steel Industries reported that in the week ending June 16th 2007 US’s raw steel production was 2.084 million net tons while the capability utilization rate was 87.1% as compared to 2.207 million tons in the week ending June 16th 2006 when the capability utilization then was 92.1%. The current week production represents 5.5% decrease from the same period in 2006.

Production for the week ending June 16th 2007 is however up by 2.2% from the previous week ending June 9th 2007 when production was 2.039 million tons and the rate of capability utilization was 85.2%

US’s adjusted YTD production through June 16th 2007 was 48.043 million tons at a capability utilization rate of 84.7%. That is a 7% decrease from the 51.697 million tons during the same period 2006 when the capability utilization rate was 90.5%.

AISI's estimate is based on reports from companies representing about 75% of the US raw steel capability and includes revisions for previous months.

Star Steel secures loan to finance setting up of plant in Sharjah

It is reported that Arab African International Bank, as the sole mandated lead arranger, has put together a AED 280 million (USD 76 million), club deal syndication to finance the setting up of a AED 350 million steel melting plant by Star Steel International at Fujairah in Sharjah. The new plant is scheduled to commence production by early 2009 and gather momentum to achieve full capacity later in the year.

As per report the new plant being financed by the AAIB led consortium will complement the Star Steel International's steel rolling plant in Sharjah. It will produce 700,000 tonnes per annum of billets and blooms for rolling reinforced steel bars and structural steel.

The end product will be consumed largely by the Star Steel’s International's construction division. But it will also be marketed within the GCC where there is considerable demand, and a known shortage of supply over the foreseeable future.

Other banks involved in the deal are Qatar National Bank, acting as senior lead arranger; First Gulf Bank, lead arranger, and The Housing Bank for Trade and Finance, acting as manager.

Shenhua coal output in May 2007 up by 18.4% YoY

It is reported that China’s largest coal producer China Shenhua Energy Company produced 18.4% YoY more of coal in May 2007. Shenhua in a statement said that its coal sales rose by 15.4% YoY to 16.5 million tonnes in May 2007 and its exports of coal increased by 5% YoY to 2.1 million tonnes.

Shenhua, which operates 10 power plants, also said that its total electricity output rose by 30% to 6 million MWH in May 2007 and power sales during the month climbed by 30% to 5.6 million MWH.

Coal producers in China are increasing capacity to meet growing demand for the fuel from power companies. China burns coal to generate 78% of its electricity. China is the world's largest energy consumer after the US.

Russians pipes export to EU in Q1 down by 41%YoY

Rusmet reported that Russian export of pipes and tubes to EU countries in January to Match 2007 decreased by 41% YoY or 33,000 tonnes.

Among the countries where the reduction was most prominent include
1. Netherlands down by 78% YoY
2. Germany down by 59% YoY
3. Poland down by 28% YoY

Incidentally, export volumes in this direction fell by 34% in 2006.

AISI sponsored survey reveals consumer perception about steel protection in cars

American Iron and Steel Institute informed that a survey, conducted by the global research firm Harris Interactive, found that when it comes to automotive safety for their families, American consumers rate seat belts, air bags, steel frames and steel side impact beams as the most effective car features in protecting themselves in the event of a crash.

The survey also found that 81% of consumers say that steel is the automotive material that provides the best protection in the event of a car crash indicating the important role that steel plays in automotive safety.

Mr David Jeanes senior VP of Market Development at AISI said "The results of this survey show that consumers continue to recognize an important connection between automotive safety and the strength of steel. By advancing new technologies to meet the needs of automakers and their customers the North American steel industry has made great strides in recent years when it comes to producing the types of steels that achieve greater crash protection while at the same time, producing an affordable, lighter structure that requires less fuel consumption."

The steel frame of a car, also referred to as the steel safety cage, is designed to absorb the energy created in a crash by bending without breaking. Because steel is strong, and gets stronger as it bends, it reduces the chance of intrusion into the passenger compartment, better protecting the passengers of the vehicle. In today's vehicles, steel comprises 62% of the mass.

AISI sponsored the automotive related questions as part of AISI's summer safety campaign, whose objectives are to educate consumers about the safety benefits of steel and to provide safety tips for consumers to help make their summer driving vacations fun and safe.

Rio Tinto settles old dispute with Australian Tax Office

Rio Tinto and the Australian Taxation Office have reached an agreement to settle their outstanding dispute regarding tax assessments imposed on 1997 franking credit transactions.

As at the 2006 year end, the net amount in dispute, including additional tax, penalties and interest, stood at approximately AUD 515 million. As required by Australian tax law and practice, in August 2003 Rio Tinto made a part payment of AUD 164 million pending resolution of the ATO's claims.

The agreed settlement, made without any concessions or admissions of liability by either Rio Tinto or the ATO, will involve the ATO repaying the amount of AUD 42 million from Rio Tinto's part payment of AUD 164 million; the ATO retaining the balance of AUD 122 million and Rio Tinto canceling net franking credits of AUD 48 million.

Rio Tinto said "The settlement will have no impact on the expectation that Rio Tinto will be in a position to pay fully franked dividends for the reasonably foreseeable future that made without any concessions or admissions of liability by either Rio Tinto or the Australian Tax Office.”

Franking credits are part of the Australian taxation system that allows companies to pay tax on dividends to shareholders.

Highveld expects H1 earnings to rise by 55% to 65%

South Africa's Highveld Steel and Vanadium Corporation announced that it expects its H1 headline and basic earnings per share to jump by up to 65%. Highveld in a statement said that "The main reasons for the increase in earnings in 2007 are higher steel selling prices and the weaker rand."

Shares in Highveld, which is majority owned by Russia's Evraz Group, jumped as much as 3.4% after it released the trading statement saying its headline EPS to end June would rise by 55% to 65%.

Highveld also said that its furnace No 1 was currently inoperative being converted to open slag bath technology, expected to be commissioned during late 2007 or early 2008.

Mechel pays USD 44 million for 49% of Kuzbassenergo

Mechel recently announced the fulfillment of its obligations related to the previously announced acquisition of 49% of the shares of Kuzbass Power Sales Company OAO after obtaining permission for the deal from the Federal Antimonopoly Service of the Russian Federation.

As the result of the auction held on May 22nd 2007, Mechel OAO has concluded an agreement to acquire 297,020,200 ordinary shares of Kuzbass Power Sales Company comprising 49% of the charter capital of Kuzbass Power Sales Company for RUB 1.14 billion (USD 44 million).

The acquisition will close upon completion of the transferring of the ownership of the ordinary shares and making a respective record in the securities register at which time Mechel will become the fully legitimate owner of the controlling stake of 50.2% in Kuzbass Power Sales Company.

Mechel is one of the leading Russian mining and metals companies. Mechel unites producers of coal, iron ore, nickel, steel, rolled products, and hardware.

CVRD to create new position in its executive committee

Companhia Vale do Rio Doce announced that the executive committee has approved and will submit to the approval of the board of directors and the general shareholders meeting a proposal to create a new position that will be responsible for information technology. CVRD said that the growth of CVRD throughout the globe requires some advances in its information technology platform to strengthen the integration of its operations worldwide.

Mr Roger Agnelli CEO of CVRD has invited Mr Demian Fiocca to be the new ED immediately after he left the presidency of Banco Nacional de Desenvolvimento Econômico e Social the National Development Bank of Brazil.

Mr Roger Agnelli said that "My invitation to Demian is a result of my admiration for his work in every position he has been in charge, particularly regarding our relationship when he served as a board member of CVRD"

Mr Demian Fiocca has a vast experience and a successful career in the private and public sectors. If the invitation is accepted and approved, Mr Fiocca will assume the position.

Russia suspended 6.5% tariff on coke

Reuters reported that the Russian government has announced that it has suspended a 6.5% tariff on coke produced from coal for nine months.

The announcement was published on the government's web site. A resolution suspending the tariff will become effective one month after it is published in Rossiiskaya Gazeta.

Mr John Fast to Retire from BHP Billiton

BHP Billiton announced that Mr John Fast Chief Legal Counsel and Head of External Affairs would retire from BHPB early in the new financial year. An announcement about Mr Fast’s replacement will be made in due course and until that time Mr Peter De Zwart Regional Counsel Americas, will assume the responsibilities of the role.

Mr Fast said that he had enjoyed his period with BHP immensely and was looking forward to applying the experience he had gained to new challenges. He said "This is a great company and I have enjoyed being part of its tremendous success and growth over the last seven years."

Mr Chip Goodyear CEO of BHPB said that Mr John had made a significant contribution through the execution of best practice across the Company’s legal government and asset protection functions and by providing his wise counsel on many important issues and strategic transactions. He thanked him for his commitment over the years. He said "Mr John has been a valued member of my senior executive team and I wish him well in his future career."

Wheeling Pittsburgh comments on dispute with Strauss & MMI

Wheeling Pittsburgh Corporation, the holding company of Wheeling-Pittsburgh Steel Corporation, has commented on an arbitration proceeding commenced by Herman Strauss Inc and a lawsuit filed by Metal Management Inc.

It said that “The arbitration demand filed by Strauss arises out of the termination in the first quarter of 2007 of three agreements dated April 8th 2004, between Wheeling-Pitt and Strauss relating to the supply and processing of steel scrap by Strauss. That termination arose out of the failure to resolve several issues, including workplace safety practices, billing issues and other significant matters, relating to Strauss’ non-performance under those agreements. Wheeling-Pitt’s response to the arbitration demand will be filed shortly at which time Wheeling Pitt intends to assert substantial claims arising out of Strauss’ practices under the agreements.”

It added that “The litigation filed by MMI was in response to Wheeling Pitt’s June 4th written notification that due to an unacceptable number of scrap quality deficiencies, it was rejecting and would accept no further deliveries of several grades of steel scrap. The June 4 notice of default was preceded by several weeks of efforts by Wheeling Pitt to cope with, and mitigate injuries arising out of, these steel scrap deficiencies. Wheeling Pitt also advised MMI on June 4 that, subject to compliance with specifications, it would continue to accept delivery of and make timely payment for the two remaining scrap grades ordered by Wheeling Pitt. To date, Wheeling Pitt has made payments of over USD 25 million to MMI for steel scrap. A significant portion of the claims asserted in MMI’s lawsuit are for scrap that was rejected as out-of-specification as well as amounts that are not yet due under existing contractual terms. Wheeling-Pitt will file a responsive pleading in due course and intends to vigorously assert its claims relative to MMI’s failure to comply with scrap specifications.”

The release adds that there can be no assurance as to the outcome of these actions or their effect on the financial condition or results of operation of Wheeling Pittsburgh Corporation.

Polish government likely to extend debt payment schedule for KW

Puls Biznesu reported that Poland’s ministry of economy wants to let Kompania Weglowa pay PLN 1.6 billion (EUR 418.6m) of debts to ZUS social insurance till 2013. Mr Krzysztof Tchorzewski deputy minister of economy responsible for the mining sector said that “We have proposed to shift the payments till 2013. The deadline has been included in the strategy for the mining sector which may be approved by the government before vacation.”

As per report, Kompania Weglowa comprising of 17 mines, should pay within three years its debts at ZUS social insurance state owned company. The installments would destroy the company, which had PLN 100 million of loss at the end of May.

The report said that Polish government would probably approve of the idea because KW would not be able to pay back the debts within three years. KW took over the debts in 2002 when five mining companies were incorporated into the group. Today, KW has debts worth PLN 4.3 billion. Its situation may soon improve. KW is going to sell 9.9% of Pulawy azote producer and 9.9% of Ruch Press distributor.

According to Mr Grzegorz Pawlaszak CEO of KW, the group needs PLN 5.5 billion till 2015 to invest to keep coal production at the present level of 50 million tons. KW employs 67,300 people.