SAIL and MOIL ink MoU for ferroalloy JV

Steel Authority of India Limited and Manganese Ore India Limited have signed a MoU for setting up of a 50:50 JV company to produce ferromanganese and silicomanganese. The boards of SAIL and MOIL have already given in principle approval to the proposal for setting up of this JV. SAIL decided to enter into a strategic alliance with MOIL to ensure regular and quality supply of manganese ore at competitive cost.

Through three furnaces to be set up in or around Bhilai in Chattisgarh, with total capital outlay of INR 225 crore with a debt equity ratio of 1:1, the proposed JV will initially supply a projected volume of around 31,000 tonnes of ferromanganese and 70,000 tonnes of silicomanganese, to meet a part of SAIL's requirement of these ferroalloys to produce 24 million tonnes of crude steel by 2010, as part of the SAIL's growth plan.

SAIL’s another subsidiary Maharashtra Elektrosmelt Limited already supplies around 55,000 tonnes of ferromanganese and 44,500 tonnes of silicomanganese to SAIL but this does not meet the SAIL's entire requirement of the ferroalloys.

MOIL in the public sector has large resources of manganese ore in India and is capable of providing high value added inputs.

Orissa gets 220 proposals for 15 coal blocks

It is reported that Orissa government has received around 220 proposals and is in the process of recommending allocation of 15 coal blocks to merchant power plants, captive power producers, state public sector undertakings and independent power producers in Orissa.

Mr Surya Narayan Patro energy minister of Orissa said that “Orissa has received the highest number of proposals among all states for allotment of coal blocks for power plants. The government will soon work on the 220 proposals and send its recommendation to the central government. We shall try our best to make suitable recommendations.”

Mr Patro said that “Of the 15 coal blocks identified by the center for Orissa, 3 have already been issued to merchant power plants in the Sundergarh district and we are hopeful that orders for the remaining 12 would also be issued shortly. Proposals for allotment of coal blocks to Track II power plants are also being considered at the Central level.”

The amount of reserve that would be utilized from these blocks is currently being calculated. The Orissa government has already given its estimation over the amount of power that is likely to be generated from the utilization of the 15 coal blocks. Orissa government is likely to set up an expert committee to manage such a large number of applications. Central government would decide the allocations only on the basis of the state’s recommendations.

Orissa government has already signed 13 MoUs with top power producers including TATA, Essar, GMR Group, Jindals, Vedanta, CESC, Visa Power, Lanco Group and Bhushan Energy.

Chhattisgarh tense as Maoists begin two day economic blockade

It is reported that tension prevailed in the southern parts of Chhattisgarh as Maoists began their two day economic blockade. Rebels axed to death 2 tribal members of the civil militia movement Salwa Judum in an overnight attack in Bijapur district. The guerrillas also halted the transportation of iron ore from Dantewada district's Bailadila hills to Visakhapatnam by damaging railway tracks at several points.

Chhattisgarh government has beefed up security at railway stations, highways, government installations and iron ore rich regions to foil Maoist attacks during the blockade.

The outlawed Communist Party of India Maoist has called for an economic blockade to protest the alleged exploitation of the state's natural resources by private and public firms, claiming that the resources belong exclusively to the locals of the area. They are also opposed to the formation of special economic zones in various parts of the country.

Maoists have a strong presence in the Bastar region and even run a parallel government in some areas. According to police estimates, around 5,000 hardcore Maoists armed with AK-47 rifles and landmines, backed by nearly 20,000 cadres, are active in southern Chhattisgarh's hilly terrain.

The Bastar region in southern Chhattisgarh is rich in minerals and forest resources. It is home to several private companies, including Essar Steel Ltd, and India's largest public sector iron ore producer and exporter National Mineral Development Corporation Ltd.

VII independent directors backing Natsteel offer for Vinau & SEE – Report

Wire World reported that TATA Steel appears to have got the support of independent directors of Vietnam Industrial Investments, the parent of Vinausteel and SSE Steel, in the bidding war for these two companies with the rival suitor Prudential Vietnam Securities Investment Fund Management Company.

As per report, the independent directors of Vietnam Industrial Investments have recommended shareholders’ to vote for TATA Steel’s subsidiary NatSteel’s sale and purchase agreement and not that of Prudential Vietnam Securities Investment Fund Management Company.

The independent directors feel that shareholders’ approval may mitigate any claim that NatSteel may have against Vietnam Industrial Investments, arising due to any breach of the sale and purchase agreement, which Vietnam Industrial Investments has denied.

The resolution will now be put to vote on June 29th 2007 at the annual meeting of Vietnam Industrial Investments, after having been adjourned twice.

Interestingly, TATA Steel’s offer is lower than Prudential’s.

Central government to decide on Khandadhar iron ore blocks on July 5

FE reported that the first hearing on Kudremukh Iron Ore Company Limited’s revision petition challenging Orissa government's recommendation to award Khandadhar iron ore blocks to POSCO is slated to take place on July 5th 2007. The report cites a government official as saying that “Central government is likely to hear the case for the first time on 5th of next month."

The hearing is taking place after Orissa High Court dismissed the petition by KIOCL and directed it to file a revision petition before the central government. The court had also asked the government to decide on the matter within three months.

However, if KIOCL is not satisfied by the center's ruling, it can approach the Orissa High Court again.

Orissa government had recommended to central government for allocation of three iron ore mining blocs at Melang Toli, Thakurani and Khandadhar to POSCO in an arbitrary manner by overlooking other applications. In the case of Khandadhar, KIOCL went to the high court staking its claim over the mine as it has spent considerable money on prospecting the deposit.

L&T likely to choose TN for shipyard project

It is reported that Larsen & Toubro is likely to choose Tamil Nadu for setting up its proposed INR 2,000 crore mega shipyard facility. L&T is likely to finalize the location of the facility soon after evaluating three separate locations of about 1200 acres size near Chennai in Tamil Nadu, Kakinada in Andhra Pradesh and Mundra in Gujarat.

Mr AM Naik chairman of L&T met Mr M Karunanidhi chief minister of Tamil Nadu recently in Chennai and is reported to have briefed the chief minister about the project’s importance, employability and benefits of the project to the state government and sought the state government’s approval for the same.

It is also reported that L&T is in favor of an integrated port cum shipyard facility instead of only a shipyard, in light of cost implications of constructing a breakwater facility.

Despite huge potential for shipbuilding and fabrication in India, there was hardly any company in India, which had the capabilities and size that of the companies in Korea and Japan. L&T plans to capitalize on the growing demand for ships not only from domestic companies but also from global companies. The proposed shipyard is being developed as India's largest and the only one that will be equipped to build big sized carriers such as very large crude carriers with capacities of up to 300,000DWT to 350,000DWT.

NHPC to tap hydro power in Arunachal

It is reported that National Hydro Power Corporation will invest INR 27,000 crore in Arunachal Pradesh in the next 10 years for development of mega hydro projects.

Mr Garg CMD of NHPC announced NHPC’s decision to invest in the Arunachal after signing a revised MoU with the Arunachal government for the development of three more projects with a total capacity of 4,500MW and handed over a cheque for INR 225 crore as advance to Mr Dorjee Khandu CM of Arunachal Pradesh.

Mr Garg said the 3,000MW Dibang hydel project would be the biggest in the country when completed by 2016. Two projects of 750MW each would be located in Tawang. He added that NHPC has already spent INR 1,700 crore on the 2,000MW lower Subansiri project in the state, which is by far the biggest in the country.

Indian Railway to spend USD 1.5 billion on IT over 5 years

It is reported that Indian Railway plans to spend USD 1.5 billion over the next 5 years in information technology including ERP, commercial portal and integration of various software platforms.

Mr Lalu Prasad union minister for railways while accepting Nasscom's IT Transformation Award for the India Railways said that "There is a lot of scope for IT in the Railways. India is doing good work in IT and companies should focus on bringing the benefits to the common man in far flung areas."

Mr Sudhir Kumar OSD to the minister said that the Railway has planned to multiply investment in IT by five times over the next 5 years. He added that "We spent INR 1,000 crore on IT in the 10th Plan. We are proposing to spend at least USD 1.5 billion in the next 5 years."

IHC Holland looking for a JV partner to build dredgers in India

Exim News Service reported that leading Netherlands based dredging equipment maker IHC Holland Merwede is scouting for a partner to build dredgers in India as it has bid for the global tender floated by Dredging Corporation of India to build 6 dredgers.

The report cites an executive of the IHC Holland Merwede as saying that "We are in discussions with several Indian entities for collaboration. If we win the deal, IHC will build 3 of the dredgers at our own yards and 3 in India." He however added that his company would prefer to build dredgers at its own yards.

IHC Holland’s proposed collaboration involves the Indian entity building the dredger’s hull, while IHC would provide both design and technical assistance as also components for the dredging installations and their control systems.

IHC Holland is the market leader in the construction of specialist dredging equipment, with a major share of the global market. IHC Holland’s dredger building facilities in Europe are booked till 2010 with dredger owners and operators ordering new equipment to meet the growing global demand for dredging at ports and harbors.

IHC is already understood to have an arrangement with Cochin Shipyard Ltd to repair dredgers owned by the Dredging Corporation of India.

GE offers for setting up a loco JV with Indian Railways

It is reported that international loco manufacturer GE has offered to set up a diesel locomotive manufacturing unit in collaboration with the Indian Railways. In the proposed JV, GE will hold majority stake while the railways will take a minority stake. The plant will be capable of rolling out 100 to 120 locomotives a year and the investment will be in the range between USD 100 million and USD 200 million.

Mr Pratyush Kumar CEO of GE Infrastructure said that "We would desire a JV with the Railway owned SPV to manufacture 6,000 horsepower locomotives."

PricewaterhouseCoopers, which is advising the Railways on the strategy for enhancing its rolling stock capacity, has suggested that the proposed locomotive, coach and wheel manufacturing plants will have majority private participation with 74% PwC has also been entrusted with the job of working out the documents including qualification criteria, request for proposal, bidding and selection processes.

Currently, Indian Railways manufactures 4,000 horsepower diesel locomotives at DLW Varanasi and 6000 horsepower at Chittaranjan Locomotive Works. Indian Railways has recently announced plans to set up 4 new factories to meet rolling stock requirements including two for manufacturing locomotives, one for 150 diesel locos and another for 120 electric locos per year and the others are a unit for 1,100 passenger coaches and another to manufacture 1,00,000 wheel discs per year.

Global players like Alstom, Bombardier of Canada, GE, Siemens and Russia based Transmashholding have evinced interest to set up units in India, have called for duty concessions and assured long term demand from the Railways.

CIL seeking navratna status

PTI reported that Coal India Limited has applied to union government for getting status of Navratna although the heavy industries ministry had granted the status of a mini ratna public sector undertaking only in arch 2007.

The report cites Mr Partha Bhattacharya CMD of CIL as saying that although the turnover of CIL was in excess of INR 35,000 crore and net profit of CIL was also in excess of INR 8200 crore, CIL has not been granted Navratna status.

Mr Bhattacharya admitted that although there was a clause that PSUs getting into the category of a mini ratna would have to wait for a period of 3 years for getting the status of a navratna, CIL has sought a waiver on this matter.

He told reporters that the coal ministry is pushing ahead with this, adding that CIL was hopeful that this would be done by the heavy industry ministry soon.

Mr Bhattacharya further added that CIL would hit the capital market only after getting the Navratna status.

Godawari Power 2006-07 net profit up by 132% YoY

Raipur based Godawari Power and Ispat Limited has reported a 132% increase in its net profit to INR 52.21 crore for 2006-07 as compared with INR 22.50 crore, before extraordinary items, in 2005-06. Its net sales during 2006-07 also increased to INR 442.09 crore as against INR 233.48 crore in 2005-06 registering a growth of 89% YoY.

Mr BL Agrawal MD of Godawari Power and Ispat Limited said “The outstanding performance is on account of continuous expansion in capacity backed up by forward and back word integration in manufacturing facilities. Cost savings measures adopted by the Company coupled with robust demand for sponge iron and finished steel products also fuelled the growth.”

During 2006-07, it acquired balance 49% equity of RR Ispat Ltd., a subsidiary company engaged in rolling of steel billets. It also implemented 2nd phase of expansion project at an investment of INR 200 crore approximately and started commercial production in sponge iron, captive power generation and steel billets. The project is expected to go on full stream by end of July 2007.

Godawari Power and Ispat Limited is manufacturing sponge iron, ferroalloys, steel billets and wire rods in addition to captive power generation.

Cairn Barmar Virangam pipeline gets government approval

It is reported that Indian government has agreed to Cairn India’s proposal to lay a pre heated 580 kilometer long pipeline at a cost of USD 600 million (INR 2,400 crore) to transport the crude oil from its Barmer oil fields in Rajasthan to Virangam in Gujarat replacing the earlier proposal for a mini refinery at Rajasthan to process the crude oil.

Mr RS Sharma CMD of ONGC said that “The economics of the mini refinery was not workable and so the petroleum ministry has agreed to the proposal of building a pipeline from Barmer to the Gujarat coast.”

With this, a solution is in place to evacuate the waxy crude oil from Cairn’s Rajasthan oil find. Crude oil from the field will reach a peak production of 150,000 barrels per day of oil, which will boost the India’s output by 20% from 680,000 odd barrels a day. The area is estimated to have 1 billion barrels of oil.

The cost of laying the pipeline is to be shared between Cairn and Oil and Natural Gas Corporation in a 70:30 ratio, the same as the shareholding in the oil field.

India NRE Mineral IPO fully subscribed

It is reported that the initial public offering of Gujarat NRE Coke Limited’s Australian subsidiary India NRE Minerals Ltd has been closed on stipulated date, after having been oversubscribed. The IPO comprised of 30 million shares at AUD 0.50 each aggregating to AUD 15 million and had opened on May 21st 2007 and closed on June 22nd 2007.

The current issue has been floated to raise funds for the commencement of long wall mining supported by external technical consultants with a view towards ramping up of production from the mine from the current level of 1 million tonnes per annum to more than 4 million tonnes per annum.

Mr Arun Kumar Jagatramka vice CMD of Gujarat NRE Coke Ltd said that “The issue marks the entry of Indian retail investors, perhaps for the first time on such a scale, who have overwhelmingly responded to the call to come on board the flagship in making of the NRE Group in Australia.”

Gujarat NRE Coke would continue to hold more than 90% stake in India NRE Minerals Ltd even after the present public offer. The issue was lead managed by BBY Ltd while Ernst and Young Transaction Advisory Services Ltd of Perth acted as Corporate Advisors.

As per company release, India NRE Minerals Ltd owns and operates the NRE No 1 colliery with proven resources of more than 300 million tonnes in the southern coalfields of New South Wales in Australia. India NRE has negotiated an off take agreement with Gujarat NRE Coke company for up to 1 million tonnes per annum. Gujarat NRE Coke has so far invested over AUD 90 million in the mines.

Mahindra Ugine starts production at Uttarakhand unit

Mahindra Ugine Steel Company Ltd recently announced that its Uttarakhand based stampings unit has commenced its commercial operations.

China’s domestic prices dip by 4.37% after May 21st 2007

China Iron & Steel Association forecast that China’s domestic steel price is likely to tumble further as Chinese government is further tightening its grip over the overheated steel sector. In addition, National Development & Reform Commission has revealed in a latest report that domestic steel price has continued downward path for four weeks from May 21st 2007 and reported 4.37% reduction during this period.

The downward movement in prices is continuing as the average price of four major steel products, wire rod, medium plate, CR sheet and rebar, has slipped 1.1% to CNY 4095 per tonne during June 11th to 17th from the previous week down by 3.7% from same time of 2006.

Weekly average price during June 18th to 22nd 2007
CNY per tonne

Average price of four major steel varieties in China

CNY per tonne

CISA noted in a latest report that domestic steel price rally in first part of May has been fueled by strong demand, and the tightening policies have led to price revision in later May. The report also says that domestic market fundamental supply and demand has not shown any critical change in May and the price falls back since the frequent policy shift has kept market participants on their toes. However, CISA remains positive for the market outlook on back of buoyant steel demand both at home and abroad. Domestic steel price would be propped up by steep cost and wide price spread with international prices despite slight undulation.

Beijing has reduced the rebate for steel exports twice and raised the export tax on low end steel products so far this year. Market analysts believe the impact of these measures would be gradually felt from June and weigh on domestic steel prices downward.

(Sourced from MySteel.net)

US steel imports in May 2007 down by 13% YoY

The American Iron and Steel Institute, based on preliminary Census Bureau data, has reported that US imported a total of 3.21 million tons of steel in May 2007, including 2.77 million tons of finished steel up by 13% MoM and 25% MoM respectively as against April 2007.

The report added that the surge in May 2007 imports produced the highest monthly total for the year. While imports overall this year have declined as compared to the all time record year of 2006, total and finished steel imports through the first five months of 2007, on an annualized basis, are up by 10% and 15% respectively as compared to 2005, which itself saw significant import levels.

Key products with large increases in May vs April include wire rods up by 142%, reinforcing bars up by 90%, structural heavy shapes up by 50%, hot rolled sheets up by 41%, cold rolled sheets up by 37% and numerous tubular products, including oil country goods and standard pipe up by 37% and 34% respectively.

The imports from various countries is as under

(Thousand net tons)

Mr Ward J Timken Jr chairman of the board of directors of The Timken Company and chairman of AISI Said that “During the month of May, steel imports increased substantially from a variety of sources across a wide range of products. The United States clearly remains a magnet for steel imports, despite the fact that the US steel industry has achieved world class efficiency by virtually any measure. With state supported steel capacity additions and trade and market distorting practices on the rise worldwide, we need to ensure consistent enforcement of our trade remedy laws and strengthen these laws up to their WTO allowable limits.”

Mr Andrew G Sharkey III AISI President and CEO said that “The surge in steel imports from China to over 500,000 tons in May, which equates to an annualized rate in excess of 6 million tons is of particular concern to domestic steel producers. It is one more reminder of why we need full and strict enforcement of all of our trade laws with regard to imports from this non market economy.”

Xstrata lifts force majeure on Newcastle coal

Reuter citing an Xstrata spokesman reported that Xstrata had lifted its force majeure on coal shipments from the Australian port of Newcastle following heavy storms earlier this month.

The report cites Xstrata spokesman as saying that “We were only down for about a day and a half for underground and two to two and a half days for open cut. Of the roughly 2.5 million tonnes of coal affected by the storm, Xstrata's collieries accounted for about a third. We are still continuing our assessments of the impact."

Other miners in the Hunter Valley region, including BHP Billiton and Rio Tinto Ltd unit Coal and Allied Industries Ltd made similar declarations as they assessed the damage from wild weather that flooded mines, cut railway lines to the port and disrupted coal loading. BHPB has already lifted force majeure but Coal & Allied last week said that force majeure would stand for the time being.

Norilsk clears all regulatory hurdles for purchase of LionOre

It is reported that Russian nickel giant Norilsk Nickel has received all necessary regulatory approval for the purchase of Canada's leading gold and nickel producer LionOre. The deal was earlier approved by regulators in number of other countries.

Mr Denis Morozov GD of Norilsk Nickel said "We look forward to LionOre shareholders tendering their shares before the expiration of our offer on June 28, after which Norilsk Nickel intends to complete the acquisition of all outstanding shares of LionOre.”

LionOre produces nickel, gold, copper, cobalt, and platinum metals in Australia, Botswana, and South Africa.

Norilsk Nickel is the largest mining and metals company in Russia, the world's largest producer of nickel and palladium, and one of the world's largest producers of platinum and copper.

Chinese exporters moving export cargos to bonded warehouses

It is reported that Tianjin Bonded Logistics Park has seen severe traffic jams in recent months as large number of trucks carrying steel line up to deliver them to bonded warehouses for beating the tax changes. . Steel exporters would be granted the old tax refund if they manage to move the shipment to bonded area before the tax change takes effect.

As per report, in a bid to exempt from the rebate change, some 73 steel enterprises from Tianjin, Liaoning, Hebei and Inner Mongolia have rushed to deliver their steel products for export to Tianjin Bonded Logistics Park. Ore than 700,000 tonnes of steel products flooded into Tianjin Bonded Logistics Park in 5 days following Beijing's announcement to revise the tax regime. The delivered steel products account for over 40% of the total steel exports at Tianjin port in March. Data from Tianjin Customs shows that Tianjin Bonded Logistics Park has unloaded 770,100 tonnes of steel products in April due to the rebate cut, a staggering jump of 299% YoY. The Logistics Park has also witnessed similar long queues both in late May and late June when the authority further reduced or removed the tax rebate for steel exports.

A flood of steel pipe products are delivered to the park in recent weeks after Beijing released the tax change on June 18th 2007. However, industrial insiders ask the exporters who are eager to move shipments to the park to take a second thought as they will be charged with much higher storing cost than normal warehouses. Plus transportation and other handling cost, their efforts would be in vain with almost nothing left from tax refund, the analysts warned.

Another pressing issue for steel exporters at the moment is steep freight cost and thin availability of vessels. The 20 feet container with weight limit of 20 tons for China to Europe route has shot up to USD 2700, while the comparable cost for Turkey also surged to USD 2800 from USD 1750 in April 2007.

The analysts are concerned that a string of bad loans and non performing debt would occur once small mills fail to secure buyers for their materials piling up at the bonded warehouse, then the bonded warehouses would start to undersell the detained products.

(Sourced from MySteel.net)

Indonesia’s new law tightens foreign investment in mining

AP reported that Indonesia's new investment law will restrict foreign investment in transportation, mining, broadcasting and armament, but all other industries will remain open.

Mr Muhammad Lutfi chairman of Indonesia’s Investment Coordinating Board during a World Economic Forum on East Asia said that all foreign investment in mining and other highly polluting industries would be tightly regulated.

Mr Lutfi said that Indonesia wants to develop its petrochemical, and steel and iron industries. It plans to build two new steel plants in southern Kalimantan and two new oil refineries. He added that “We do not want to just sell raw materials. We want to sell at least half finished goods and go up the value chain."

Indonesia’s officials have said the new investment policies will protect Indonesia’s national interest and update current regulations, which have been in place since 1994 and are becoming inconsistent with the country’s needs.

M&A in global steel industry doubled in 2006 – PWC

According to a recent report by PriceWaterhouseCoopers, metal industry mergers and acquisitions more than doubled to USD 77.4 billion in 2006 as companies sought to expand to meet rising global demand for the commodities.

The report added that steel transactions, worth a combined USD 70.4 billion accounted for most of the deals, led by Mittal Steel's USD 38.3 billion purchase of Arcelor SA to create the world's largest producer of steel. According to the report mergers and acquisitions in the aluminum industry totaled USD 4.6 billion in 2006, up from USD 4.2 billion in 2005.

Mr Jim Forbes, global metals leader for PWC said that 5 years of rising metals prices have allowed producers such as Mittal Steel to build cash reserves for expansion. The large steel makers will keep looking to buy producers of raw materials and finished products as a way of increasing control of the industry. He said “It is a case of matching global demand with global suppliers and this stage will continue.''

Mr Forbes added that the top 5 steel makers account for less than 20% of the global market, less than their suppliers in the iron ore industry or customers in the automotive industry.

FMG increases development budget for Pilbara project

It is reported that Australia’s Fortescue Metals Group Ltd had pushed up its development budget for the Pilbara project in Western Australia by USD 99 million, which would be drawn from its cost overrun reserve.

Fortescue said that changes to the construction program, including the addition of 2 new contractors to expedite works on the rail line that would increase the project cost by USD 99 million. As a consequence of this change and certain other changes in the construction program such as the facilitation of more rail accommodation camps along the rail line to initiate more work fronts, the cost of the project will increase.

Fortescue said that Three cyclones that passed through the project area in March, had prompted the company to undertake a review of the impact and how they could improve project economics in response to a strong outlook for the iron ore market.

Fortescue's USD 3.7 billion Pilbara iron project in Western Australia is due to start exporting iron ore from mid May. The project was initially slated to produce 45 million tonnes of iron ore per annum, but Fortescue has touted plans to immediately expand production to 60 million tonnes per annum.

Fortescue has brought forward the early development of the lump circuit at its project in order to facilitate the expansion. The company has also unveiled plans to raise an additional USD 1 million to fund expansion plans.

Iron ore benchmark price changes since 1996

Following is a table on iron ore settlement prices in last 11 years.

The prices refer to material in US cents per metric tonnes per one percent unit iron.
The prices refer to Australian iron ore on a FOB
(Source: Macquarie Bank)

Thailand cuts import tariffs on some electrical steel

It is reported that Thailand’s cabinet has eliminated import tariffs on 28 types of special steel used in electronic appliances, in a bid to solve a tax structure problem that has long hindered the competitiveness of Thailand’s electrical and electronics industries. Of the total 28, tariffs on 13 types of magnetic or electrical steel and silicon steel will be cut from 1%, while duties on the remaining 15 types will be cut from 5%.

Dr Somchai Sujjapongse an adviser to Thailand’s Fiscal Policy Office said that the cabinet's resolution was based on a Finance Ministry proposal that covered 15 items of magnetic steel, which is taxed at 1% to 5%; and six items of silicon steel, which has tariffs of 1% for four product classes. However, the cabinet has lifted waivers on four items of silicon steel as their specifications are not relevant to the industry.

He said that ''The tax holidays are aimed at restructuring factors that have impeded the development of local manufacturers and improving their competitiveness.”

Dr Sujjapongse added that the elimination of the tariffs would not affect local steel producers, because they did not produce any of the 28 types of electrical steel.

Taiwan's largest steel mill gets new chairman

It is reported that Taiwan's cabinet has approved the nomination of Mr Lin Wen yuan as chairman of Taiwan's leading steel mill China Steel Corporation. A China Steel Corp official said that "The cabinet has approved our proposal but the effective date of the appointment has yet to be decided."

Mr Lin will replace Mr Chiang Yao Chung as the head of China Steel Corporation. He had previously served as company chairman but stepped down in October 2005 over some controversy.

Despite privatization, the government remains the single largest shareholder in China Steel Corporation with a 23.3% stake. With a paid in capital of TWD 99.31 billion dollars (USD 3.04 billion), China Steel is headquartered in southern Kaohsiung city.

South African union reject wage offer from coal producer

Bloomberg reported that South Africa’s largest coal producers, including BHP Billiton and Anglo American plc, had their offer of a 6% wage increase rejected by the country’s largest labor union National Union of Mineworkers.

The labor union said the National Union of Mineworkers other demands were dismissed by the Chamber of Mines which also represents Xstrata plc in the talks in which the union asked for a 15% pay rise more than double South Africa’s 6.3% inflation rate.

The union said “Wage negotiations have once again suffered a severe blow as the chamber’s coal negotiators delivered sermons instead of a living wage offer. It said NUM is disappointed that the negotiations have been turned into a comedy.”

Noble buys more stake in Gloucester Coal

Bloomberg reported that Noble Group has bought a 10.4% stake in Gloucester Coal Ltd blocking AUD 391 million (USD 330 million) amidst takeover offer from Xstrata Plc.

Noble Group Ltd said it acquired 4.3 million shares in Sydney based Gloucester taking its stake to 8.2 million shares and making it the largest shareholder and will seek discussions with Gloucester's board.

Noble said buying Gloucester will give the acquirer supplies of coal used by power stations and steel makers as Asian demand increases. Australian benchmark prices for power station coal reached a record last week helped by bottlenecks at export ports and believe that there has been a structural shift in coal markets which reflects higher thermal and coking coal prices.

Gloucester produced about 1 million tonnes of thermal and coking coal in the six months ended December 31st 2007 and is studying an option to boost output by 40% starting in mid 2009.

Vietnam to restructure VSC and its subsidiaries

It is reported that Vietnam government has decided to restructure the Vietnam Steel Corporation and its subsidiaries next month to prepare them for integration.

Under the restructuring plan, Vietnam Steel Corporation will remain the parent company but with stakes cross held by some subsidiaries like the Southern Steel Corporation, Phu My Steel Corporation and others. It will have 12 subsidiaries in which it will own 50% with the rest to be offloaded to parties yet to be named. However 8 of them have already held public offerings of shares. The process is scheduled to be completed in 2007-08.

Vietnam Steel Corporation will focus on streamlining management, restructuring distribution and production, increasing financial transparency and other factors crucial to enhancing competitiveness.

Mr Dau Van Hung general director of Vietnam Steel Corporation said it was in the process of developing a series of projects. As per report VSC recently tied up with India’s Essar Global Limited and Vietnam Rubber Group to build USD 527 million hot rolled steel mill in the southern Ba Ria-Vung Tau Province. It is also in talks with another Indian company, TATA Steel, to build a USD 4.5 billion steel complex.

US weekly steel production down by 4.8 % YoY

American Iron & Steel Industries reported that in the week ending June 23rd 2007, US’s raw steel production was 2.101 million net tonnes while the capability utilization rate was 87.8 %. Production was 2.207 million tonnes in the week ending June 23rd 2006 while the capability utilization then was 92.1%. The current week production represents 4.8% decrease from the same period in 2006.

Production for the week ending June 23rd 2007 is up by 0.8% from the previous week ending June 16th 2007 when production was 2.084 million tonnes and the rate of capability utilization was 87.1%.

Adjusted YTD production through June 23rd 2007 was 50.144 million tonnes at a capability utilization rate of 84.8 %. That is a 6.9% decrease from the 53.904 million tonnes during the same period 2006 when the capability utilization rate was 90.5%.

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

Pakistan may retract sales tax hike on steel

The International News reported that Pakistan’s Central Board of Revenue, on demand from the Pakistan Steel Melters Association, may withdrawn its decision made in the federal budget to enhance sales tax on steel billets and ingots from 15% to 20%.

Mr Mian Muhammad Saeed chairman of Pakistan Steel Melters Association said that the steel smelters just after the announcement had pressured the Central Board of Revenue to withdraw the decision in the larger interest of the industry and general public. Mr Muhammad said that the Central Board of Revenue has assured them that previous sales tax levy of 15% would be implemented on steel billets and ingots from July 1st 2007.

Mr Muhammad added that if the price of steel billets and ingots increases by 5% than the finished product of these two raw materials; Iron Bar, T Irons and others used in the construction industry will automatically increase by 5% thus cost of construction too would increase in the country, which is already at a high.

Mr Muhammad said the PSMA also proposed to the chairman of Central Board of Revenue to zero rate sales tax on imported steel scrap as it was a gray area for the steel manufacturing industry. He added that “No smelter or vendor has prepared sales tax invoice for locally collected steel scrap and it did not come under the purview of sales tax, which created distortions in the market.”

Mr Muhammad said that Central Board of Revenue had agreed with the PSMA viewpoint and would shortly issue an SRO for zero rating of imported steel scrap at the import stage as the summary had been forwarded to the Prime Minister’s Secretariat. He further added that another proposal was also under consideration to impose a fixed tax levy of 15% on billet and ingot productions. In this regard the CBR and PSMA would fix the price of steel billet & ingot according to international market rates, with quarterly mutual consent.

Outokumpu completes sale of Hitura mine to Belvedere

Outokumpu announced that it has sold Hitura nickel mine in Finland to Belvedere Research Ltd for EUR 25 million. The Hitura mine was the last remaining asset in Outokumpu's Exit Mining program that started in 1999.

The total consideration, currently valued at some EUR 25 million, is in Belvedere shares and warrants entitling to subscribe for additional Belvedere shares, resulting in a maximum 19.2% ownership in Belvedere, on a fully diluted basis. Outokumpu has agreed to a 4 month to 8 months lock up with respect to a sale of the shares and will recognize a non recurring gain of some EUR 24 million, which will be entered above operating profit in the second quarter results.

The shareholding in Belvedere will be classified as an available for sale financial asset with changes in fair value recognized directly in equity and the warrants as derivative instruments with changes in fair value recognized in financial income and expenses.

The Hitura mine produces some 2,200 tons of nickel in concentrate annually and has 90 employees.

In addition to the transaction with Outokumpu, Belvedere has acquired full ownership in Suomen Nikkeli Oy, of which it previously owned 45%. With the Hitura assets combined with the nickel exploration targets of Suomen Nikkeli, Belvedere is targeting significant nickel mining in Finland.

The Kemi chromite mine is an essential part of Outokumpu's integrated stainless steel production chain at Tornio in Finland and will continue to be part of the Group.

SinoSteel and Benxi ink cooperation agreement

It is reported that Sinosteel Corporation and Benxi Steel Co Ltd have signed a strategic cooperation agreement on June 21st 2007.

The establishment of strategic cooperation partnership will effectively exert each other’s advantages and further consolidate extensive, all round and deep cooperation to make up each other’s shortcomings, realize win-win and contribute to the sustainable, harmonious and healthy development of Chinese steel industry.

Sinosteel and BX Steel are both under China’s ministry of metallurgical industry and have kept extensive, close and friendly business cooperation relationship for a long time.

As a specialized service provider and production agent, Sinosteel’s specialized companies, overseas branches, production companies and research institutes provide complete set of systematic integration service for all the links in BX Steel production chain.

Benxi Steel is China's high quality flat steel products production base and also an important raw material production base for military industry, space flight and navigation. It is slated for annual capacity of 10 million tons till 2008.

(Sourced from MySteel.net)

Pakistan to set up new shipyard at Gwadar port in Balochistan

Pakistan’s Khaleej Times last week reported that South Korean Daewoo has agreed to help set up a new shipyard at Gwadar port in Balochistan for repair and maintenance of bigger local and foreign ships and vessels.

The report cites a Pakistan government official as saying that Pakistan government has decided to take the advantage of it's strategic location at Gulf and fast pace of growth of maritime activity in the region by having a branch of Karachi Shipyard and Engineering Works at Gwadar as the capacity in the Gulf for such repair of vessels is limited and Gwadar can turn out to be an ideal place for such a facility.

This will be undertaken in collaboration with some leading international shipyards. The official added that "We have had an initial exchange of ideas with Daewoo Shipyard of Korea who have shown keen interest."

The major objectives of the project includes embarkation and disembarkation of ships and vessels, lunching of new shipbuilding project including submarines, ship’s hull survey, cleaning and painting, steel renewal of ships, repairs & overhauling of ship machinery, inspection by classification societies for commercial ships, certification of ships by classification societies, propellers and shafting works, Sonar works for warships and ICCP repair works.

Port Waratah to expand Newcastle coal export capacity

Port Waratah Coal Services Ltd announced that it is preparing to expand capacity at the harbor to meet forecast demand by mining companies.

Port Waratah said that the proposed expansion will boost coal export capacity at Newcastle the world’s biggest export harbor for coal, to 113 million tonne per year in the fourth quarter of 2009 from 102 million tonne per year and will cost AUD 458 million (USD 388 million).

Mr Eugen Weinberg a commodities analyst at Commerzbank AG in Frankfurt said that “Demand for thermal coal is very strong at the moment and they have already increased their capacity dramatically in the last years. It is much needed and see good demand for coal going forward and Newcastle will need to increase capacity dramatically in the coming years."

A rival group, Newcastle Coal Infrastructure Group, or NCIG, expects to start up a separate terminal in the second half of 2009. The group, comprising BHP Billiton Ltd and other Australian coal producers said in April the cost estimate for building the new terminal had risen by more than three quarters to AUD 992 million.

Sedgman win coal handling contract at Middlemount coal project

It is reported that Australian Sedgman Limited has won USD 65 million coal plant contract for the design and construction of a new coal handling and preparation plant at Custom Mining (Middlemount) Pty Ltd’s Middlemount coal project in Queensland together with a ten year operations agreement.

Sedgman said that the coal handling and preparation plant operations contract will deliver recurring income streams over a ten year period, commencing in the 2009 financial year and following the commissioning of the coal handling and preparation plant in 2008.

Mr Peter Hay MD of Sedgman said the planned 400 tonne per hour coal handling and preparation plant will process up to 2.9 million tonnes per annum of coking and thermal coal. Mr Hay said “With record coal prices driving growth in coal infrastructure around USD 3 billion worth of projects are being pursued in Australia alone including capacity upgrades and new coal developments such as this project.”

Rain paralyzes Kagara Mt Garnet zinc production

Bloomberg reported that Kagara Zinc Ltd, which sells its output to Korea Zinc Co, has halted production of zinc, copper and lead at its Mount Garnet mine in Australia after prolonged un seasonal rain.

Heavy monsoon rainfall cut 2 weeks of output at Mount Garnet in the previous quarter. Mr Joe Treacy director of Kagara said that about 1,000 tonnes of zinc metal, 500 tonnes of copper and about 200 tonnes of lead would be lost from production because of the halt. Meanwhile, Mr Treacy added that “It won’t have any impact on our deliveries to Sun Metals, we have got stockpiles of concentrate at the Mount Garnet operation.”

Kagara has also suspended trucking of ore from the mine in Queensland State on June 20th 2007 and halted mining on June 22nd 2007. The suspension will probably result in a 7 day halt to production and will not affect deliveries of concentrate to Korea Zinc’s Australian unit called Sun Metals Corp.

Belon to increase coal production at Chertinskaya-Koksovaya mine

Interfax last week reported that Russian coal major Belon Group plans to increase coal production at its Chertinskaya-Koksovaya mine in the Kemerovo region of Russia by 120% by 2010 as compared to 2 million tonnes per year in 2006. Capital investment in its development will total about RUB 185 million in 2007.

Mr Konstantin Lagutin deputy GD of Belon told Interfax that "We plan to modernize this mine according to the latest requirements, particularly build an inclined shaft now the mine operates through vertical shafts. With inclined shafts of course it is far simpler to move people freight and in the opposite direction mined coal."

Mr Lagutin also said that Belon group is also planning to modernize internal mine transport buy tunneling and mining machinery and further develop the safety and gas monitoring systems. The mine is expected to produce 1.3 million tonnes of coal in 2007.

Bangladesh awards Dighipara coal field to Petrobangla

It was recently reported that Bangladesh government has decided to award the state owned Petro bangla an exploration license for Dighipara coalfield in Dinajpur snubbing a number of proposals from some foreign companies. Bangladesh government has decided to award the license to Petrobangla as according to the mining rules and the state-run organization should always get preference for exploration and development of a coalfield.

As per report the Petrobangla recently applied to the Bureau of Mineral Development for the license to explore the field in which the Bangladesh Geological Survey has already detected a deposit of about 150 million tonnes of high quality coal.

All the three organizations Petrobangla, the BMD that issues licenses and oversees mining activities and the GSB that explores mineral resources are under Bangladesh’s Energy and Mineral Resources Division.

However, the report cites a source in Petrobangla as saying that they were not aware of the government’s decision to give them the license. They said that “If they get the license they might look for strategic partners or contractors for exploration and development of the field. So far around 150 million tonnes of coal has been explored, but the existing reserve is not viable enough for commercial extraction. So we need to explore further to find out more coal.”

Fitch assigned Interpipe long-term BB+ rating

Fitch Ratings recently announced that it has assigned Ukraine’s Interpipe Ltd a long term issuer default rating of 'B+' and a short term issuer default 'B' rating, and citing the Ukrainian steel pipes & wheels maker's leading market share diversified revenues portfolio and strong profile. Fitch also assigned a stable outlook for the company.

Interpipe is well positioned among its international pipe peers due to its low indebtedness and relatively high profitability driven by favorable industry prospects and a low cost production base.