POSCO remains a non starter after 2 years of tussle

Opposition to the 12 million tonne per annum capacity steel mill of POSCO in Orissa is steadily growing even after two years of the signing of the MoU between the company and the State government on June 22nd 2005.

The second anniversary of MoU between POSCO and Orissa government is a reflection of all that has transpired over the last two years with people’s resistance at the project site increasing everyday. Orissa’s unit of the Communist Party of India organized a rally in Bhubaneswar where a large number of workers of the party participated and demanded that POSCO should pack its bags. Activists of the POSCO Pratirodh Sangram Samiti also launched their Black Week

Launching their protest week at Dhinkia today PPSS activists with active participation of women folk and children took out a rally before gathering for a public meeting addressed by Opposition political party leaders. Congress leader and former chief minister Mr J B Patnaik pledged his support to the resistance movement. He said “One is not opposed to POSCO per se but the location of the project cannot be on rich agriculture land and not at the expense of livelihood of so many people.”

The much hyped biggest FDI in the country has so far only been on paper without any action at the site or field level although it is a matter of prestige for the present government of Orissa and has the blessings of India PM and the South Korean President.

But on the other hand, POSCO is putting up a brave face and hoping to find a solution, although this project forms a major part of their growth strategy and is facing a big uncertainty and may derail or at least delay their expansion.

India’s production of finished carbon steel up by 10.1% YoY

As per a latest release from the government, India’s production of finished carbon steel has increased by 10.1% YoY during April to May 2007 as compared to April to May 2006. Exports of finished carbon steel has also shown an increase of 7.6% YoY while imports rose by 11.1% YoY during April to May 2007 as compared to April to May 2006.

In million tonnes
All the figures are provisional

Royalty rates for coal and lignite revised

Indian government’s Cabinet Committee on Economic Affairs has approved the revision of Royalty rates on coal and lignite effecting amendment to the Second Schedule of the Mines and Minerals (Development and Regulation) Act of 1957 through a Gazette Notification in terms of Section 9 of the said Act.

The weighted average royalty payable after revision excluding West Bengal as a percentage of weighted coal price (based on 2004-05 production level) works out to about 14%.

This will give the coal producing states a reasonable share of the income earned by production and selling of non renewable mineral resources like coal. The earnings of coal producing states will increase as a result of revision in the coal and lignite royalty rates.

Royalty rates on coal were not revised since 2002 and on lignite since 2001. The states were insisting that value of rupee has depreciated substantially since the last revision. They also contended that while coal companies have been revising prices frequently and since royalty rates are fixed on tonnage basis, the benefit of higher prices has not been shared with states.

Once the royalty rate is notified, it would be up to the coal mining companies to decide if they would absorb the burden or pass it on to customers.

Stemcor plans a 4 million tonne pellet plant in Orissa

DNA reported that Stemcor plans to invest INR 1,500 crore for setting up a 4 million tonnes iron ore pelletization project at Kalinga Nagar in Orissa through its Indian unit Stemcor India. As per report, the plant would be connected by a 220 kilometer slurry pipeline to Barbil in Keonjhar district of Orissa and use iron ore fines of low Fe content.

The Orissa project will be Stemcor’s second venture in ore pelletization in the country. In 2000, it entered into a joint venture with Essar for a pelletization plant AT Vishakhapatnam but later in 2005 sold its 51% stake to Essar itself.

Mr Mathew Stock MD of Stemcor India told DNA that the company’s foray into ore pellets began with the joint venture with Essar, but as the latter’s requirement continue to grow in tandem with steel production and since Essar had the first right to production and very little of pellets were left for Stemcor’s businesses. He added that “It is against this backdrop that the Orissa venture was conceived, along with one at Tasmania in Australia.”

Initial plans are to find a domestic market for 70% of Stemcor’s output while the balance would be exported to Stemcor partners overseas. Mr Stock said “We are basically looking at the domestic market for iron ore pellets where the demand will typically come from smaller non integrated steel plants with blast furnace but no iron ore mine or sinter plants and do not have resources to invest on pelletization. These plants, by using a combination of lumps and pellets, can increase steel production substantially. Of course, we are not looking at the TATA Steels or the SAILs but plants with half or 1 million tonne capacities.”

Mr Stock added that “We also do a lot of business of supplying raw materials and picking up finished steel in return and our own pelletization plant will enable us to strengthen such alliance with our partners.”

This will be the company’s second pelletization plant after the 6 million tonne unit at Tasmania in Australia.

Mittal Energy gets approval for 49% stake in HPCL Bhatinda refinery

Indian government has given the final approval to the proposal of Mittal Investments Sarl Luxembourg to pick up a 49% stake in Hindustan Petroleum Corp’s Guru Gobind Singh Refineries Ltd at Bhatinda in Punjab. Mittal Investments plans to acquire the stake for INR 3,365 crore (USD 830 million) through its 100% arm Singapore based Mittal Energy Investments Pte Ltd.

With the cabinet approval, both the Mittal Investments and HPCL will hold 49% stake each in the INR 17,973 crore (USD 4.4 billion) project while 2% will be offered to financial institutions.

The cabinet approval was required since current government policy restricts foreign direct investment in public sector petroleum refineries to up to 26%. The foreign investment promotion board had earlier rejected the Mittal Investment’s bid to acquire the stake.

The 180,000 barrels per day Bhatinda refinery has already acquired some 2,000 acres of land in Bhatinda for the project and has taken 230 acres on lease in Mundra, Gujarat, for a crude oil terminal. Land rights for putting the 1,011 kilometers long crude oil pipeline from Mundra to Bathinda have also been secured.

Keonjhar-Paradip iron ore highway to be upgraded to 4 lanes

BS reported that Panikoili to Rajamunda national highway 215, one of the most crucial roads in the Indian mining sector connecting iron ore rich Keonjhar to Paradip Port and the proposed steel plants in the Kalinga Nagar Industrial Complex in Jajpur, would be upgraded soon to 4 lanes.

The National Highways Authority of India under the union ministry of surface transport has notified the 4 laning of the Panikoili to Rajamunda section of the national highway 215 under the National Highway Development Project under phase-III.

The project will be taken up under the build, operate and transfer scheme will go through three revenue districts of Jajpur, Keonjhar and Sundargarh. The proposed project was sanctioned by the NHAI in 2004-05 mainly to cater to the needs of Paradip Port Trust.

The NHAI notification has asked the district administrations to undertake the land acquisition under Section 3(A) along the section of Panikoili in Jajpur district to Rajamunda in Sundergarh district except for the section of Rimuli to Guali in Keonjhar district. The land acquisitions thus have to be made for 230 kilometer of the total length of 263 kilometer of NH 215 under the National Highways Act, 1956.

With the condition of the road deteriorating due to heavy traffic, there was persistent demand from the government, Parliamentarians from the area and industry for widening of this stretch of NH-215. The stretch had an estimated 5 million users every month.

PFC gets Navratna status

Power Finance Corporation Ltd has announced that union government has granted Navratna status to the company and a formal investiture ceremony in this regard is scheduled in New Delhi on June 22nd 2007.

The release added that “Now it will allow higher operational freedom to the board of directors of the company regarding extent of investment in JVs, incurring of capital expenditure, creation of below board level positions, investment in equity etc.”

PSL bags major pipe orders from Sharjah and Malaysia

It is reported that Indian pipe major PSL Limited has bagged orders worth INR 380 crore from Sharjah and Malaysia.

PSL said that Petronas Malaysia has contracted for USD 43 million (INR176.3 crore). Pipes for Petronas will be supplied from the Kandla unit in Gujarat. Petronas will use PSL pipes for its Peninsular Gas Utilization Project a Malaysian internal gas network. The order will be executed by March 2008.

In Sharjah, PSL has 3 orders worth USD 50 million (approx INR 205 crore). The supply will partially be made from PSL’s newly commissioned unit at Sharjah. PSL’s Sharjah facility has an installed capacity of 75,000 tonnes per annum of spiral pipes with facilities for three layered polyethylene coating, internal liquid epoxy coating, and concrete weight coating.

L&T to build 2 heavy lift vessels for Dutch BigLift

Larsen & Toubro Ltd announced that it has won another key contract for construction of two ships valued at over USD 94.95 million from BigLift Shipping BV of the Netherlands, which is a part of the Spliethoff Group. L&T said that the vessels would be built at the existing shipyard at Hazira in Surat. Production of the ships is scheduled to commence in June 2008 and the vessels shall be delivered by March 2010.

The new vessel ordered are multipurpose heavy lift vessels to be equipped with 2 Huisman Heavy lift mast cranes each having an SWL of 900 million tonnes and a total lifting capacity of 1800 million tonnes in tandem. The vessels will be able to carry all kinds if dry cargo as well as project cargoes and heavy lift in the most efficient manner. The vessels have a length of 154.8 meter, beam 26.5 meter & 18680 DWT and shall be delivered in November 2009 and March 2010.

BigLift Shipping of Netherlands is a shipping Company that specializes in the worldwide transportation of heavy lifts and project cargoes. BigLift Shipping is currently operating 13 heavy lift vessels having a maximum lifting capacity of 1400 million tonnes.

L&T had forayed into shipbuilding last year.

BEML follow on offer opens on June 27th 2007

Mr VRS Natarajan chairman & MD of Bharat Earth Movers Ltd and Mr V Mohan Director of Bharat Earth Movers Ltd at a press conference in Mumbai on June 20th 2007 announced that BEL is entering the capital market with a follow on public offer.

According to a release, BEML intends to sell about 4.9 billion new shares of INR 10 each. BEML will raise about INR 450 crore at a price band that will be decided one day prior to the issue opening date. The issue would constitute 11.77% of the fully diluted post issue paid up equity capital of the BEML. The issue opens for subscription on June 27th 2007 and closes on July 3rd 2007.

The release further add that at least 50% of the net issue to the public shall be allotted on a proportionate basis to qualified institutional buyers of which 5% will be earmarked for to mutual funds. Further, 15% of the net issue shall be available for allocation on a proportionate basis to non institutional bidders, while 35% of the net issue to the public shall be for allocation on a proportionate basis to retail bidders.

Of the total issue, less 10% reserved for employees, 35% has been reserved for retail investors and 15% allocated for non institutional. Qualified institutional buyers have a lion’s share in the issue at 50%, of which 5% is for mutual funds.

ICICI Securities Primary Dealership Ltd is the book running lead manager to the issue.

Bharat Earth Movers Ltd plans to fund its expansion and capital expenditure from the issue and out of the proceeds, INR 214.51 crore will go towards expansion of the Metro coach manufacturing facility at Bangalore, and INR 90 crore on capital expenditure, including up gradation of current facilities. It also plans 5MW windmill for captive consumption at a cost of INR 27 crore and a R&D centre for Metro coaches at an investment of INR 9 crore.

The government currently holds 61.23% in Bharat Earth, mutual funds hold 13.89%, financial institutions/banks hold 7.26%, foreign institutional investors hold 7.8%, resident individuals hold 6.11% and corporate bodies hold 2.6%. Post issue, the government’s holding in the company will fall to 54.03%.

Mercator Lines eying dredging business

Exim News Service reported that Mercator Lines Ltd has decided to enter the dredging field and Mercator is understood to be scouting the market for second hand dredgers.

Mr Atul J Agarwal JMD of Mercator Lines said that "We are exploring the possibility of buying dredgers." The Major Ports have also lined up investments worth INR 6,304 crore to deepen their channels over 3 to 5 years. Even ports owned by the state governments that have been given to private entities for development and operation, also require dredging.”

It has joined the list of other players like Larsen & Toubro Ltd, Hindustan Infrastructure Projects & Engineering Pvt Ltd, the Shipping Corporation of India and Gujarat Maritime Board, to garner a slice of the lucrative dredging pie. All the companies have announced their intention to float dredging ventures, attracted by the huge opportunities for dredging works at major ports and the mega INR 2,427.4 crore Sethusamudram Ship Channel Project.

The new entrants have also been enthused by the policy and fiscal support provided by the government. Dredgers are covered under the new tonnage tax, a tax based on the capacity of ships that lowers tax outgo of firms when compared with the normal corporate tax. The union budget has also granted infrastructure status to navigation channels in the sea and exempted dredgers from payment of the 9% customs duty.

CIL to adopt e procurements for explosives

BS reported that, confronted with the problem of formation of cartels by explosive suppliers, Coal India Limited has embarked on a plan of procuring explosives through the e-procurement or electronic reverse auction route.

The report cites a CIL official as saying that "We are introducing the e-procurement model for explosives to avoid the problems arising out of the formation of cartels by suppliers. We are confidant that this would bring in more value to the company."

The e- procurement model would become effective from end of June 2007 or early July 2007 and CIL would be procuring INR 800 crore worth of explosives through the e-procurement route. CIL would shortly roll out the process of e-procurement to all its subsidiaries.

CIL purchases over INR 4000 crore worth of materials and spare parts and INR 1000 crore worth of capital equipments annually and CIL management feels that with the introduction of e-procurement model, gathering of large volumes would be made in a more competitive, transparent, equitable and fair manner.

MP to continue charging entry tax on steel induction units

BS reported that the Madhya Pradesh government has reportedly rejected the demand of the state’s induction furnace units to waive entry tax, which has been raised from 1% to 2% from March 31st 2007, although the state cabinet meeting organized recently did not disclose its decision on the demand.

As per report, Induction furnace units have to pay 2% entry tax on scrap purchase, 4% value added tax and 2% entry tax on each product, ingots and steel, rods manufactured by them.

Mr SM Jain president of the All India Induction Furnace Association said that “We wanted entry tax waived since we pay one rupee more per unit of power consumed in comparison with the units in Chhattisgarh or Maharashtra.”

These units produce mild steels, low alloy steels, stainless steel, grinding media and special cast iron castings through electric induction melting furnaces. Succumbing to the cost pressure 4 units has shut shop. The association has said higher power tariff was the main reason for the closure of the units and not the entry tax.

Indian Railways to use auction route for un economical routes

Exim News Service quoted a Railway ministry official as saying that “With a view to maximizing revenue from freight services, the Railways plans to auction wagons at low prices where it is uneconomical.”

Indian Railway will soon conduct a survey to identify sectors where the wagons are running at below their capacity.” The official added that at the same time the ministry is considering fixing a floor price for such uneconomical wagons. Despite offering several discounts, the wagons have not been able to earn profits.

He said that "We will set the floor price for the empty wagons, which will initially be kept low. The companies can then participate in the auction. The bids are expected to be more than the auction price. In future, the bid values could be scaled up."

As per report, the Railways may also set up a transport exchange to facilitate the wagon auction scheme in which a special team would track all freight movements.

Hydro power plant developers offering equity to host states

It is reported that many hydro electric power plant developers, both in private and public sector, are offering equity of up to 49%, in addition to free power, to the host state governments for ensuring expeditious clearances of the projects as the delay are hampering the progress of most hydel projects in the country. The list of such players includes GMR Energy, National Hydroelectric Power Corporation and Dutch firm Brakel Corporation NV.

As per report, GMR Energy, which was recently awarded an INR 900 crore 160MW project in Arunachal Pradesh through competitive bidding, is offering 12% equity to the state in the project, besides the offer of 14% free power and 2 paise per unit as additional benefit to the state. It will also implement the Talong Hydro Power Project, scheduled for commissioning by end 2011 on a build own operate transfer basis.

NHPC is reported to be in talks to offer up to 26% to the Arunachal Pradesh government for its 3,000MW Dibang project, besides the 12% free power entitlement for the host State. In the case of the INR 2,047 crore Rampur Hydroelectric project being executed by the Satluj Jal Vidyut Nigam Ltd the Himachal Pradesh government has been offered 30% equity participation.

Brakel Corporation NV of the Netherlands, which has been, assigned 2 projects in Himachal Pradesh with 480MW each Jhangi Thopan and Thopan. Himachal Pradesh is also in talks for equity in NHPC's 2,051MW Parbati hydroelectric project and NTPC's 800MW Kol Dam project, with stakes of up to 25% equity being eyed by the state.

Malana Power’s AD Hydro Power Ltd has offered Himachal Pradesh 15% power produced by its 192MW plant in the state while private developers are offering up to 19% free power in Arunachal Pradesh to bag hydro projects.

As per report, while some State Governments offer concessional land in lieu of equity, most of these deals are happening with minimal or no cash outgo.

Credit Suisse forecast 25% hike in iron ore prices next year

It is reported that global iron ore minors Companhia Vale do Rio Doce, Rio Tinto Group and BHP Billiton may further increase iron ore benchmark price by as much as 25% next year an upward revision for its former forecasts of 10% as China's demand for iron ore keeps growing up driving up iron ore price.

Mr Roger Downey and Mr IvanFadel analysts from Credit Suisse Group in a report released said that the new iron ore projects may be postponed and China may see a 22% increase in imports this year. They analysts added that "It is June now and iron ore market has witnessed tight supply. New supplies in 2007 to great extent derive from new projects, but we think exports of some projects may be insufficient or be postponed."

Credit Suisse Group once forecasted in this April iron ore price would maintain on a high track before 2013. The group's forecasts about iron ore are always optimistic yet reliable.

China surpassed Japan and became the largest iron ore buyer in 2003 and became the setter of bench mark prices this year. CISA's latest statistics show that 54.84% iron ore consumed in China during the first three months was imported from other countries.

(Sourced from MySteel.net)

ArcelorMittal chief dismisses steel future idea

It is reported that the head of the world's biggest steel producer on Wednesday dismissed the idea of a steel futures market as a way of controlling price volatility.

Mr LN Mittal president & CEO of ArcelorMittal while addressing at an American Metal Market steel conference said that steel price volatility is at the heart of the industry's poor image with customers and the public. He said "One of the negative impacts of the progress the industry has made is that our customers find it difficult to come to terms with the new pricing levels. This is understandable given the pricing model of the past. Volatility of steel pricing has led to sustained periods of low cost steel spattered with short periods of exaggerated pricing highs."

Mr Mittal said that this is one of the reasons why many in the industry were talking about a steel futures market. He said "Some customers have expressed a belief that this would be a useful starting point to help establish a more stable pricing market."

Mr Mittal said "I do not believe this to be the case. Steel futures are essentially a mechanism for financial companies mainly dealing with hedging and futures. It is not a solution for curbing price volatility."

Mr Mittal said that further consolidation of the industry is a better way of maintaining price and supply sustainability as it would enable steel makers to invest heavily in research and development and new product development. He said "It enables us to offer global solutions with consistent quality anywhere in the world whether a developed or a developing market and enables them to better manage their own input costs."

Mr Mittal stressed that steel companies had to think more like service companies, which are customer demand led and innovative rather than supply driven. Mr Mittal said "We must really focus on implementing this partnership approach with our customers. We must work together, not against each other."

MEPS sees decline in long product prices in EU by 2007 end

MEPS reported that Nordic average merchant bar and drawing quality wire rod prices peaked in spring at record levels based on increases in scrap costs and a shortage in supply. It said that in the recent months scrap values have fallen and result in a gradual decrease in transaction figures for over the next few months.

MEPS said the construction sector is likely to stay strong through 2007, which should have a positive impact on the Merchant Bar market. It said “Consumption is predicted to hold up due to higher demand from the construction industry and a steady price decline to the end of 2007 due to lower scrap costs and seasonal factors with an upturn forecast early in the New Year.”

MEPS said drawing Quality Wire Rod demand is not as strong due to pressure from imports of finished wire products particularly from Eastern Europe, which is reducing demand for wire rod within the EU. MEPS concluded that “As a consequence, we see a sharper decline towards the end of the year.”

China pushes US down in 2006 to become No 1 polluter

According to an analysis by the Netherlands Environmental Assessment Agency China's carbon dioxide emissions were greater than those of the United States, with which China tops the list of carbon dioxide emitting countries for the first time. China CO2 emissions were still 2% below those of the United States in 2005 but in 2006 they were 8% higher. USA emissions in 2006 decreased by 1.4% YoY as compared to 2005.

Globally in 2006 CO2 emissions from fossil fuel use increased by about 2.6% which is less than the 3.3% increase in 2005.

Mr Jos Olivier a scientist who crunched the numbers at the Netherlands Environmental Assessment Agency said that "There will still be some uncertainty about the exact numbers but this is the best and most up to date estimate available."

The figures are based on a preliminary estimate by the Netherlands Environmental Assessment Agency using recently published energy data from British Petroleum, as well as cement production data, which is a major source of CO2 emissions in China which accounting for almost 9% out of a total of about 6200 mega tonne of CO2 emissions.

MNP said that industrial processes and the burning of fossil fuels oil, gas and coal are the main causes of carbon dioxide emissions. Of the industrial processes, cement production is one of the principal sources of greenhouse gas.

Symmetry Holdings to buy Novamerican for USD 585.2 million

Symmetry Holdings Inc and Novamerican Steel Inc announced that they have entered into a definitive agreement whereby Symmetry will acquire all of the issued and outstanding shares of Novamerican. The transaction will be carried out pursuant to an arrangement agreement under a court approved statutory plan of arrangement governed by the Canada Business Corporations Act. Following the completion of the transaction, Novamerican will be a wholly owned indirect subsidiary of Symmetry.

Under the terms of the arrangement agreement, Novamerican shareholders will receive USD 56 in cash per share (USD 585.2 million in cash in the aggregate) for all of the outstanding common shares of Novamerican. The per share consideration represents a 19% premium over the volume weighted average price of USD 47.03 for the 20 trading days prior to this announcement.

Novamerican principal stockholders Mr D Bryan Jones and Mr Scott B Jones have agreed, pursuant to a lock up agreement, to irrevocably support and vote in favor of the arrangement. These stockholders collectively hold approximately 67.5% of the outstanding shares of Novamerican. The lock-up agreement continues through November 30th 2007, subject to the extension of such date to January 31st 2008.

Novamerican, based at Montreal in Canada with twenty two operating locations in Canada and the United States, processes and distributes carbon steel, stainless steel and aluminum products and operates as an intermediary between primary metal producers and manufacturers that require processed metal. Novamerican also produces roll formed steel sections and manufactures heavy equipment parts and accessories. Novamerican's flat rolled processing capabilities include pickling, slitting, blanking, leveling, temper rolling and cutting to length to precise customer specifications.

Mr Bryan Jones chairman of the board & CEO of Novamerican said that "I am convinced that this transaction is in the best interests of all Novamerican stakeholders. It represents fair value to stockholders and ensures continuity for the employees of the company. Symmetry is dedicated to the long-term future of the company. As it will rely on present management for operational experience, I am confident that Novamerican will stay on its present course and will pursue expanded opportunities. After 28 years building the company, I leave with the certain knowledge that Novamerican's growth will be uninterrupted and its future secure."

Mr Corrado De Gasperis, Symmetry's CEO said that "This transaction provides our investors with an accelerated opportunity that is both consistent with the parameters presented in our initial public offering and well suited for the implementation of our operating methodology The Decalogue. We look forward to carrying on the highest quality of performance established by Mr Bryan and MrScott Jones and the rest of the Novamerican team."

CIBC World Capital Markets Corp acted as financial advisor to Novamerican. Stikeman Elliott LLP and McDermott Will & Emery LLP provided legal advice to of Novamerican and its principal stockholders in connection with the transaction and Ogilvy Renault LLP acted as the independent legal counsel to the Special Committee of Novamerican. Davies Ward Phillips & Vineberg LLP and Kelley Drye & Warren LLP provided legal advice to Symmetry in connection with the transaction and the financing.

JFE inks long term agreements with Statoil for line pipes

JFE Steel Corporation has been awarded 5 years or maximum 9 years frame agreements for the supply of large diameter welded steel pipes and 12% chrome seamless line pipe by Norwegian Oil and Gas Company Statoil ASA.

The outline of the contracts is as follows

The large diameter line pipes supplied under the frame agreements will be used for long distance sub sea pipelines, mainly in Europe and the North Sea as they must meet low temperature toughness requirements and have the heavy wall thickness and high strength to withstand operations under high pressure. For services near the wellhead area where anti corrosive properties are also required, 12% chrome seamless pipes are used.

JFE Steel has achieved the award of these contracts because of its proven capability to meet these very severe requirements, the quality of our high grade pipes, and its experience of production for similar large pipeline projects. JFE Steel will continue to develop and supply high quality pipes to be used in oil and natural gas developments where a more severe environment is expected.

Norway based Statoil is Scandinavia's leading energy company and has a presence in more than 30 countries globally. Statoil is continuing to expand their operation area from the Norwegian Continental Shelf to international markets.

Sims Group to merge its Californian assets with Adams Steel

Sims Group Limited announced that it has entered into an agreement to merge its Southern Californian Metal Recycling assets with those of Adams Steel LLC to create a new entity SA Recycling LLC. The merger is subject to the notification and waiting period requirements of US Hart Scott Rodino Antitrust Improvements Act.

SA Recycling, which will be owned 50% by Simsmetal West LLC and 50% Adams Steel, will operate within a territory encompassing Southern California, Arizona, Southern Nevada and Northern Mexico. The venture will combine Sims deep water facility at the Port of Los Angeles with Adams Steel’s two inland shredding operations and extensive network of inland feeder yards. The combined business will handle in excess of 2 million tonnes of ferrous scrap and nearly 100,000 tonnes of non ferrous scrap and have revenues in excess of USD 600 million.

Mr George Adams, current President of Adams Steel, who will report to a board comprising of eight directors, 4 nominated by Sims and 4 by Adams Steel, will run the new business. A nominee of Sims will be chairman of the new company and will also nominate its CFO.

Mr Jeremy Sutcliffe CEO of Sims Group said “Sims has had a close association with Adams Steel based around its long term exclusive supply agreement with the former Hugo Neu operations. This agreement was due to expire in early 2008 and the combination of the two businesses is a logical extension of our existing relationship. The merged business is a perfect fit of Sims export capability and Adams Steel’s strength and reach in the domestic sourcing of material. At a time when our industry faces increasing competition from containerized scrap exports it is vital that Sims secures greater access to the procurement of material at source. This transaction achieves this objective with the added benefit of gaining Mr Adams’ considerable regional expertise.”

Sims Group’s is headquartered in Australia and earns over 70% of its revenue from international operations in the UK Continental Europe, North America, New Zealand and Asia. Sims has over 3,500 employees with annual turnover of AUD 5 billion and is listed on the Australian Stock Exchange.

ArcelorMittal gets more time to sell Sparrow Point plant

AP recently reported that the US’s Justice Department gave Mittal Steel another 15 days until July 5th 2007 to sell its Sparrows Point plant near Baltimore that it must divest to settle anti trust issues relating to its merger with Arcelor.

The report cites Ms Gina Talamona spokeswoman of Justice Department as saying that the government can extend that period for up to another 15 days if necessary.

A spokesman for Mittal Steel USA said that his company is working closely with the Justice Department to divest Sparrows Point. He said his company will make a formal announcement when the process is done.

US’s Justice Department has ordered Mittal to sell Sparrows Point as a condition of the company's pending merger with Arcelor.

CVRD’s nickel reserves increase at Creighton in Canada

Brazilian miner Companhia Vale do Rio Doce has announced that exploration drilling at nickel mine at Creighton in Canada is confirming mineralization at depth that has the potential to extend the mine life well into the future and continue its longstanding economic contribution to its wholly owned subsidiary CVRD Inco Ltd Ontario operations.

In a statement CVRD said that the Creighton Deep Project has the potential to almost double the proven and probable reserves at Creighton from 17 million tonnes grading 3.1% nickel and 2.5% copper to up to 32 million tonnes grading 1.9 to 2.2% nickel and 2 to 2.3% copper.

In operation since 1901, Creighton has delivered a total of 173 million tonnes over its life with an average grade of 1.52% nickel and 1.22% of copper. Exploration and advanced exploration diamond drilling have shown significant high grade nickel, copper and platinum group elements mineralization between the 2,150 and 3,200 meter levels at the mine.

CVRD has acquired the Sudbury nickel reserves when it took control of Canadian nickel miner Inco in 2006 to create CVRD Inco Ltd.

Tenaris to supply Gazprom's pipe requirements in 2008

Russian energy giant Gazprom has asked world’s leading tubular products manufacturer Tenaris to serve their needs throughout 2008. The supply contract includes 450,000 feet of tubes with TenarisBlue® connections, mostly in sour service steel grades, to be used in the Astrakhan and Orenburg gas fields in 2008.

Gazprom in 2006 entrusted that Tenaris the supply of its OCTG needs for the Astrakhan, Orenburg and Kuban fields and throughout 2007, Tenaris has been providing 500,000 feet of high end tubes with TenarisBlue® connections and sour service steel grades for these developments.

Mr Gustavo Cedillo sales director of Tenaris Oilfield Services Nationals for the Former Soviet Union and North Africa said that “The good performance and project management supported by all of Tenaris's functional areas were essential to create the right environment and credibility to negotiate the current award.”

Mr Raul Ageno head of Tenaris said that ties between the two companies were further enhanced by the first running of TenarisBlue® connections by Gazprom at the Astrakhan and Kuban fields. Tenaris provided technical running assistance and support in the field, which was fundamental to avoid problems and to provide the right guidelines at the right moment.

South African unions rejects Kumba's 8% offer

Bloomberg reported that South African Trade unions Solidarity and the National Union of Mineworkers have declared a wage dispute with Kumba Iron Ore after rejecting the company's 8% wage hike offer.

Solidarity is demanding 12.5% wage increase and the National Union of Mineworkers is demanding 13.5% increase.

Mr Reint Dykema spokesperson of Solidarity said that "Record profits are being achieved and aggressive expansions are being undertaken. What Kumba Iron Ore needs to do now is to share this prosperity with its workers."

Mr Lesiba Seshoka a spokesman of NUM said that they have rejected an improved offer from Anglo American Plc’s Kumba Iron Ore Ltd.

The next step now will be for the Commission for Conciliation Mediation and Arbitration to appoint a facilitator in an attempt to bring the parties closer to a settlement.

CMC net earning in third quarter up by 27% YoY

Texas based Commercial Metals Company announced a surge in its net earnings for the third quarter ended May 31st 2007 as compared to 2006. CMC said that the third quarter performances were backed by significant segmental performances especially that of CMCZ, the Polish steel operation that recorded 187% increase in adjusted operating profit. CMC in a statement said that its third quarterly net earnings increased to USD 99.4 million as compared to USD 78 million in corresponding quarter of 2006.

CMC’s third quarter sales increased to USD 2.3 billion from USD 2 billion in 2006. Sales for Domestic Mills increased to USD 447.183 million from USD 422.473 million in 2006, while sales for CMCZ, the Polish steel operation reached USD 233.761 million up from USD 157.884 million in 2006. Adjusted operating profit from domestic mills increased by 6% to USD 73.6 million, while adjusted operating profit for CMCZ surged by 187%YoY to USD 39.8 million.

CMC added that its domestic fabrication recorded sales of USD 488.399 million up by 6%YoY to USD 459.951 million and Marketing and Distribution segment reported 11% increase in sales to USD 872.868 million from USD 783.553 million a year ago. Recycling segment posted 22% increase to USD 471.096 million from USD 385.475 million last year. Adjusted operating profit for Domestic Fabrication segment climbed by 37% to USD 17.5 million and Recycling segment contributed adjusted operating profit of USD 24.7 million up by 10% YoY. Marketing and Distribution segment reported 66% increase in adjusted operating profit to USD 33 million.

For the nine month period, CMC’s net earnings stood at USD 250.7 million recording a significant growth from USD 227.7 million. Net sales for the period increased to USD 6.3 billion from USD 5.3 billion in the prior year.

Mr Murray McClean CEO & president of Commercial Metals said that “Our fiscal fourth quarter should be our strongest quarter of the year. Global economic conditions remain favorable. International steel prices are off their peaks, but should remain relatively stable. China's export tax on many steel products is a positive. However China needs to curb excessive capacity growth and steel exports through environmental and energy regulations. In the US, the nonresidential construction market should continue to be strong.”

Mitsubishi bags major order for pipes from Uraltrubprom

Japan's Mitsubishi Trade and Investment Corporation announced that Russian companies had placed the largest ever order in Japan Russia trade worth JPY 10,000 million (USD 81.3 million) to the corporation for the delivery of equipment for the production of steel seam pipes to Russia. Following the announcement, Mitsubishi shares at biddings in Tokyo rose markedly.

The Urals tubing mill Uraltrubprom acted as the customer and Mitsubishi is to conclude a credit agreement with the Uraltrubprom. Financing will be carried out through the Japanese Bank for International Cooperation, the Mizuho Corporate Bank Ltd and Russia's 3rd largest bank the Gasprombank.

As per the announcement, the equipment is to be started up in April 2007. 70% of the aggregate amount of pipes that are to be made will be used in the building industry, including the housing sector, while the other 30% of pipes will be employed for prospecting for and transportation of oil and natural gas.

The products will be manufactured on the basis of the technologies of the Japanese industrial companies Nakata MFG Co Ltd and the Mitsubishi Hitachi Metals Machinery.

Mitsubishi Corporation's press release points out that due to the placed order, Mitsubishi will launch still more vigorous commercial activities on the Russian market, where sustainable economic growth has been observed in recent years against the background of high prices of natural resources, in particular.

Ukraine & Russia to have a new steel trade agreement from July 1st 2007

Interfax citing a Russian ministry source reported that the Russian economic development & trade ministry and the Ukrainian economics ministry plans to sign an agreement on trade in Ukrainian flat cold rolled steel products during Mr Viktor Yanukovych Prime Minister of Ukraine’s visit to Russia on June 22nd 2007.The agreement would enter into effect on July 1st 2007.

A government spokesman said that Russian Prime Minister Mr Mikhail Fradkov instructed the Russian ministry to conduct negotiations leading to the signing of the agreement.

PSC Metals acquires Midwest Sales in Missouri

Scrap processor PSC Metals announced that it has acquired the assets of Midwest Sales a regional ferrous and nonferrous processor at Cuba in Missouri State of US. Terms of the transaction are not disclosed.

Midwest Sales operates a single six acre site which will in future act as a feeder yard in support of PSC's shredding operations in St Louis about 90 miles away.

The acquisition is the second this year for Ohio based PSC. In January the PSC purchased the assets of Akron Recycling another Ohio processor from Ravenna Salvage. Akron Recycling's two locations now act as feeder yards for PSC's recently commissioned scrap facility at Canton in Ohio where a super shredder was installed in 2006.

Czech ministry approves fine levied on Mittal Steel Ostrava for overpricing

AP reported that the Czech finance ministry has approved a fine of CZK 2.7 billion (EUR 94 million) levied on the Mittal Steel Ostrava AS.

The report cites Mr Ondrej Jakob spokesman of Czech finance ministry as saying that Mittal Steel Ostrava can still challenge the fine at a court and does not have to pay until the dispute is settled.

Mittal Steel Ostrava denied in a statement any wrongdoing. It said the ministry's decision was in breach of law and that it planned to take legal action against it.

Mittal Steel Ostrava was fined for charging Vysoke Pece Ostrava too high a price for blast furnace coke in 2004 by a tax office in Ostrava in 2006. The company appealed to the ministry against the fine.

Mittal Steel Ostrava is the biggest Czech steel maker. It produced 3.06 million tons of steel in 2006 and employs 7,400 people.

General Steel & Shaanxi Longmen for a JV for steel plant

China's first US publicly traded steel company General Steel Holdings Inc announced that it has entered into a JV agreement with Shaanxi Longmen Iron & Steel Group Co Ltd. The JV will be located in Shaanxi province the bridgehead for development in China's Western Region and produce rebar and infrastructure related steel products. Initial capacity for the site will be 3 million annual tonnes.

General Steel will invest in the JV through two of its subsidiaries, Tianjin Daqiuzhuang Metal Sheet Co Ltd and Tianjin Qiu Steel Investment Co Ltd. Through these subsidiaries General Steel will collectively hold 60% of the JV.

Mr Henry Yu CEO & Chairman of General Steel Holdings Inc said that "This is a transformative step for our company in our goal to become the nation's largest non government owned steel company. Western Regional development is a top priority for the central government and we are now ideally suited, in terms of geographic location and product mix, to capitalize on this growth. Long Steel has grown into a regional powerhouse through careful planning and the guidance of its seasoned management team. They have an outstanding reputation and we are honored they have chosen to partner with us."

Mr Zhang Danli President of Shaanxi Longmen Iron & Steel Group Co Ltd said that "We are extremely happy to be joining with General Steel to form this Joint Venture. The steel industry in China is changing rapidly and consolidation is the dominant trend. In this environment, it is especially important to choose partners wisely. We have been developing our relationship with General Steel for many years and have the utmost confidence in our ability to work together. We trust each other and value the contributions each brings to the table, and that is the basis for a successful future together."

According to China's National Statistic Bureau, Shaanxi Longmen Iron & Steel Group Co Ltd. is the largest steel producer in Shaanxi province and among the top 50 producers in the nation.

General Steel Holdings Inc is one of the leading manufacturers of high quality hot rolled steel sheets used in the construction of small agricultural vehicles. Since 1988, it has expanded its operations to ten production lines capable of processing 400,000 tonnes of 0.7mm to 2mm hot rolled carbon steel sheets per year.

OMK bags first order from Petroleum Development of Oman

FIS reported that Russian pipe major OMK has received its first order for large size pipes from Oman’s Petroleum Development of Oman.

OMK will supply 1,500 tonnes of large size pipes with the diameter of 914 mm for Oman’s Petroleum Development of Oman’s Marmul Polymer Flooding project.

Oman’s Petroleum Development of Oman is the subsidiary of Shell and extracts over 90% of crude oil and practically 100% of natural gas from Omani deposits.

Japan mills increases SBQ plate prices for Chinese shipyards

YIEH reported that Japanese steel makers have reached a price agreement for ship plate with China’s shipbuilding company for the third quarter of 2007. As per report the new price is settled as USD 650 per tonne FOB.

The Q3 price is up by USD 30 per tonnes than the second quarter of 2007. The main reason of price raise results from China’s strong demands of ship plate.

Japanese steel makers usually hold a price contract meeting with China’s ship plate buyers in every six months.

Jiangsu Xihu to start trial runs on new SS wire rod line

It is reported that China's Jiangsu Xihu Special Steel will commence trial runs for a 200,000 tonne per year stainless drawing quality stainless steel wire rod line in next month.

According to a company official the new line can produce the rod diameter in range of 5.5mm in 200, 300 and 400 series stainless steel.

Jiangsu Xihu is a privately owned stainless steel company. It currently makes stainless steel round bar but with only 30,000 tonnes per year capacity. It will raise its capacity up to 200,000 tonnes per year to 250,000 tonnes per year after the new high speed line ramps up production.

US’s steel shipment in April 2007 down by 3.4% YoY

American Iron and Steel Institute reported that in the month of April 2007, US steel mills shipped 8.849 million tons of steel down by 3.4% YoY as against 9.159 million tons shipped in April 2006 and also down by 5.2% MoM from the 9.331 million tons shipped in March 2007.

US’s adjusted YoY comparison of YTD shipments shows the following changes within major market classifications
1. Service centers and distributors down by 7.3%
2. Automotive down by 3.2%
3. Construction and contractors’ products down by 1.1%
4. Oil and gas down by 9.8%.

AISI serves as the voice of the North American steel industry and plays a lead role in the development and application of new steels and steelmaking technology. AISI is comprised of 31 member companies representing more than 75% of both US and North American steel capacity.

NLMK’s update on Technical Upgrading Program in Q1’07

Novolipetsk Steel continued the process of enhancement and modernization of existing production facilities, value chain optimization and integration of recently acquired assets into the Group structure. NLMK announced that following major projects were realized under the Technical Upgrading Program during January to March 2007 quarter.

1. Signing an equipment supply agreement with the Austrian company Andritz AG. Andritz AG will supply two rolling mills, each with 110,000 tonnes per year capacity, for the production of grain and non grain oriented steel and new hot-dip galvanizing line with 300,000 tonnes per year capacity.
2. Installation of a new coil slitting line with a capacity of 60 tonnes per year. The new equipment will enable the company to introduce a new product grain oriented steel strip, with a width ranging from 80mm to 400mm in thickness of 0.23mm to 0.30mm.
3. Re commissioning of a 460,000 tonnes per year coke battery #2 after major renovation at the production site in Lipetsk.

Mr Galina Aglyamova VP Finance & CFO said “At the beginning of the year, NLMK Group started to implement the next phase of the Technical Upgrading Program as part of our “Sustainable Growth Strategy 2007 - 2011”.

Poland considering opening up of coal mine sector

WJS reported that Poland is opening its large and politically important coal mining industry to private investors in a move that could have a big impact on Central European energy supplies. A government plan completed last week would enable state owned mining companies to float their shares on the Warsaw Stock Exchange over the next two years to raise money for expansion and investment in new technologies. Sales of state owned mines and JV would also be permitted for the first time under the Poland Economy Ministry's plan, subject to cabinet approval.

Privatization has been high on the list of many of the Polish governments that have come to power since the Soviet backed communist regime collapsed in 1989. But Polish coal miners have until now been able to resist those efforts, largely because the mining sector was a major employer and politicians were unwilling to alienate its half million workers by allowing foreigners to take over the industry and cut jobs.

But over the last decade, Warsaw itself has slowly reduced the number of employees in the sector to about 118,400 from 430,000 employees, according to the Polish Economy Ministry. By slowly phasing out operations that required large capital spending, the government reduced bloated staffing and stopped the financial losses of the sector. Those moves have been crucial in paving the way for private investors to enter the sector without fear of labor-union reprisals.

Poland is Europe's largest coal producer, mining more than 94 million tons in 2006. More than 90% of the country's electricity is generated by coal fired power plants.

Metinvest to optimize IT infrastructure at Pivnichny & Tsentralny mines

Journal Staff reported that Metinvest Holding, jointly with Microsoft Ukraine, has started realizing a project to standardize software and optimize IT infrastructure using Microsoft software at Pivnichny Ore Mining and Processing Mill and Tsentralny Ore Mining and Processing Mill based at Kryvy Rih in Dnipropetrovsk region.

Mr Oleksandr Vikul president of Pivnichny and Tsetralny ore processors said that the tentative cost of the project is over UAH 6.3 million.

ChTPZ orders for new pipe welding unit

It is reported that Chelyabinsk Tube Plant and Germany's SMS MEER has signed an agreement to supply technological equipment worth EUR 160 million for the large size pipe electric welding unit.

The unit of the annual capacity of 700 thousand tons of single seam pipes with the diameter 508 mm to 1,420 mm with outside and inside polymer coating is to be put into operation in the middle of 2009.

The new project will have an investments exceeding USD 500 million.

Antam reports problem with new FeNi plant

Metals Insider reported that Indonesian state nickel, gold and bauxite producer Aneka Tambang reported a new problem with its new 15,000 tonnes per year FeNi III ferronickel plant but said that it still hopes to meet its 2007 target of 20,000 tonnes nickel in ferronickel. The latest incident also involves a small metal leak, although the company said it was entirely unrelated to the much more serious leak experienced last year.

Mr Alwin Syah Loebis operations director of Antam said that “We are disappointed that a leak has occurred at FeNi III. We are eager to find the details of this incident following a full investigation. We will endeavor to keep our 2007 ferronickel production target of 20,000 tonnes.”

Antam said it has reduced the plant’s power load to allow repairs and that it should return to normal operations in around three weeks’ time.

The plant was commissioned in January 2007 after experiencing significant delays in the ramp up phase last year, most notably a leak from the furnace.

South African engineering sector may face strike

It is reported that thousands of South African workers in the metals and engineering sector could down tools after unions were issued with a certificate to strike after wage talks deadlocked.

The report added that last week, employers tabled a final wage increase offer ranging from 6.8% for skilled workers to 7.3% for unskilled workers, which the unions rejected. Workers were demanding an 11% increase for the lowest paid worker and a 13% increase for the highest paid employee.

Mr Dirk Hermann a spokesman said that this means that workers could embark on a legal strike within 48 hours after it served a notice to employers.

But Mr Hermann said that the union would first meet with the Steel Industry Engineering Federation of South Africa to consider a revised offer. Mr Hermann however noted that the union was not very optimistic about the outcome of the meeting and that it was likely that a strike notice would be issued.

Blackham signs Russian coal JV agreement with Marr Group

Leederville based Blackham Resources Ltd will raise USD 1 million through a placement to Russia based Marr Group Holdings Ltd after finalising a joint venture agreement which could leave it with a 60% in a Russian coal project. Following this finalization of the Agreement, the Marr Group have subscribed for 3.855 millions shares in the Company at 26 cents each, in accordance with the terms of the MoU originally signed in December 2006. Blackham intends to apply these funds towards part of the cost of acquiring the Project.

Blackham is excited to have the Marr Group on the share register and looks forward to working closely with them with a view to acquiring the Russian Coal Project as planned in the Agreement.

The Marr Group has a diverse range of successful interests in areas such as construction, land development, holdings in the telecommunications and technology sectors, commodity trading, investments in the oil, gas and coal, as well as international trade finance and private equity investment. The Marr Group has considerable financial resources and assets to support diverse business activities globally, principally in Russia, Europe, the Far East and the Middle East.

Zinifex completes purchase of Wolfden Resources

Australian zinc-lead producer Zinifex announced that it has completed the compulsory purchase of shares in Canadian junior Wolfden Resources not tendered during the recent take over action.

Wolfden becomes a wholly-owned indirect subsidiary and its shares have been delisted from the Toronto Stock Exchange.

Wolfden’s prime asset and Zinifex’ prime target is the Izok Lake property, which Zinifex has said it is capable of producing 130,000 tonnes per year of zinc and 25,000 tonnes per year of copper from 2013.

Amer Group to set up a wire rod plant

It is reported that Amer International Group, a manufacturer of premium quality power cables in China and Taiwan, has recently placed an order with SMS Meer for the supply of a CONTIROD® CR 3500 wire rod plant for its Amer Copper Technology works at Tongling in China.

The new plant will produce 225,000 tonnes of 8mm diameter copper wire rod per year, equivalent to an hourly output of 35 tonnes. The SMS Meer scope of supply encompasses the complete process equipment, starting from the shaft furnace for melting copper cathodes, the Hazelett twin belt caster for casting a 93 x 70 mm large starting cross section and the twelve-stand rolling mill, as well as the media supply systems, electrical equipment and a fully automated coil packing system.