RINL orders for 3 continuous casting machines

Rashtriya Ispat Nigam Limited announced that it signed an agreement with a consortium led by Italian equipment and steel technology major Danieli for supply, erection and commissioning of 3 continuous casting machines for both square and round billets. The Indian partners in the consortium are Gilanders Arbuthnot and Danieli Engineering India.

The contract signed is worth INR 538 crore and involves a foreign exchange component of EUR 32 million. This will be completed in 25 months.

The agreement was signed by Mr AK Banerjee ED of Rashtriya Ispat Nigam Limited and Mr John C Parker VP of Sales and representative of Danieli India in the presence of Mr P K Bishnoi CMD of RINL and other senior officials.

The project is an important part of the 6.3 million tonne expansion of RINL.

SAIL may take minority stake in coalmines overseas

BL reported that Steel Authority of India Limited is looking at picking up minority stakes in coalmines not only in Australia but also in other parts of the world.

Mr SK Roongta chairman of SAIL told BL “SAIL is looking at picking up minority stake in coal mines, may be between 10% and 20%, so that the future requirements of the company are met. We have invited the expression of interests and there has been good a response. But nothing has been finalized so far.”

This is in addition to the acquisition that are proposed to be undertaken through a special purpose vehicle, which would be promoted by five public sector companies to acquire coal mines abroad. This proposal is awaiting Government clearance. The five public sector units that that the Government has identified to be part of the consortium in the SPV are SAIL, Rashtriya Ispat Nigam Limited, National Mineral Development Corporation, National Thermal Power Corporation and Coal India Limited.

Essar, Metinvest and Severstal in race for Stelco – Report

BS reported that Essar Global has been short listed along with Ukrainian Metinvest and Russian Severstal for the acquisition of Canadian steel maker Stelco Inc.

The report cites sources close to the development as saying that executives of these three companies recently visited the facilities of Stelco.

The report cites an Essar Group spokesperson as saying that “The Group keeps looking for growth opportunities across the globe. However, as a matter of policy, we do not comment on any particular transaction.”

Stelco is one of the largest Canadian steel producers with 4,300-odd employees and an estimated 16% share of the domestic market. It has two steel making units with 4.8 million tonnes of raw steel production capacity, four steel processing facilities and ownership in three iron ore mines which have combined reserves of 480 million tonnes for a reserve life of over 25 years. Stelco was put on the block last month and going by its stock price, the acquisition of Stelco could cost over USD 700 million.

TATA Steel unveils plans to raise USD 2.5 billion for Corus

PTI reported that TATA Steel would raise over INR 10,000 crore (USD 2.5 billion) through issue of securities in domestic and overseas market to part finance the acquisition of Corus.

TATA Steel, in a notice to shareholders, said it would come out with a rights issue of ordinary shares and cumulative convertible preference shares, besides issue of securities in the domestic or international markets.

TATA Steel plans to raise INR 3,655 crore through the rights issue, another INR 4,350 crore would be raised through issue of cumulative convertible preference shares. Existing shareholders would get one share at a price of INR 300 for every five ordinary shares held. It would also raise additional funds up to INR 2,042 crore from the domestic and international markets.

As per reports, TATA Steel has already paid USD 4.1 billion for the acquisition of Corus that was valued at USD 12.9 billion.

RKKR Steel plans auto steel project at Krishnapatnam in AP

BL reported that Chennai based RKKR Steels Limited plans to set up an INR 500 crore integrated steel project at Krishnapatnam in Andhra Pradesh. The facility will have a capacity to produce 0.5 million tonnes of pig iron and 0.25 million tonnes of steel. The project will be executed in two phases. The first will consume investments of INR 200 crore, of which debt will be INR 130 crore.

The plant will comprise a sinter facility and a blast furnace with downstream steel making and rolling facilities to manufacture alloy and special steel required by the automotive and engineering sectors. SBQ Steels will initially buy coke from abroad but may put up its own coking plant later. Also, part of the project is a 16 MW waste heat recovery power plant.

Mr Rajiv Rai director of RKKR Steels Limited told Business Line that the plant is being put up under a special purpose vehicle, SBQ Steels Ltd. Mr Rai told “AP Government has allotted 250 acres of industrial land for the project and preliminary site work has been completed. Financial closure is expected by the end of this month.”

Mr Rai said that iron ore for the plant would come from mines in Bellary. He said “SBQ Steels will buy fines and sinter them for putting into the blast furnace. Technology for iron making is being sourced from TRF Limited.”

Mr Rai added that “The company is in negotiations with a few Japanese steel manufacturers for steel making. Certification by auto majors is a necessity for a unit like ours and hence the technical tie up is important.”

JSW to produce 10 million tonnes of steel by 2010

It is reported that Jindal South West Steels plans to produce 10 million tonnes of steel by the year 2010.

The launching ceremony of the factories expansion work was held at JSW’s premises at Toranagal in Karnataka and delegates from various parts of the country were attended.

JSWL in a statement said that it set to reach the production of 7 million tonnes of steel per annum by 2008.

Orissa opposition disrupts assembly proceedings on POSCO issue

PTI reported that unruly scenes were witnessed in the Orissa Assembly after the Opposition stalled the proceedings, demanding that it should be allowed to raise the issue of the steel project being set up in the state by South Korean company POSCO.

Mr JB Patnaik leader of opposition raised the issue during zero hour that an adjournment motion tabled by the opposition on the POSCO project should be taken up. However Mr Maheswar Mohanty speaker of Orissa did not allow this but the opposition Congress members moved into the well of the House shouting slogans against the government and Mr Naveen Patnaik CM of Orissa.

Mr Tara Prasad Bahinipati Congress member pulled up a chair and stood before the Speaker as he led the members in shouting slogans. But Mr Mohanty tried to ignore the protests and go on with the proceedings by asking members to make submissions as listed but he had to adjourn the house for 30 minutes when the din increased.

The adjournment was extended by 15 minutes but the proceedings became normal thereafter.
`
Mr Satyabhushan Sahu chief of congress later told reporters that the Speaker had assured the opposition that the issue would be taken up in the house within the next two days.

TATA Steel undertakes flood relief operations in Orissa

It is reported that TATA Relief Committee, on the request of the government of Orissa, has rushed to different parts of Orissa including the Joda valley of Keonjhar district and many places in Balasore district where life came to a halt after one of the heaviest down pour to rescue and distribute relief to the flood affected.

The relief operation at Balasore stared on July 10, 2007 to ease life for the affected. Relief has been distributed to almost three thousand families in two blocks namely Bastra and Baliapal till date. TATA Relief Committee aims at moving ahead three blocks and covers around five thousand families by July 16th 2007.

In consultation with the district administration of Keonjhar, TATA Steel Rural Development Society has also started medical relief and sanitation work on July 8th 2007 among the flood affected rural areas of Joda and ensured services of its medical and para medical staff. Two Mobile Medical Vans of TATA Steel Rural Development Society have been sent to serve in rural areas around Joda.

TATA Steel initiated immediate action to repair the damaged bridges at Joda, which had crippled the traffic as well as telecommunication network. As an instant measure, embankments of the bridges are being repaired which were washed away by the rain. The flood has also affected the telecommunication system in Joda and adjoining areas. TATA Steel is making efforts to repair the damaged portion of the bridge, paving the way for BSNL authorities to restore the telecommunication lines.

In addition to these services rendered during this emergency situation at Joda, TATA Steel supplied 20,000 litres of treated drinking water to Joda based Cess Hospital for the treatment of the ailing patients. This is in addition to the regular supply of 10,000 liters of water by TATA Steel to Joda Municipality since last summer, post the scarcity of water.

Change of guard at Mukand Steel likely

BS reported that Mr Rahul Bajaj chairman of Mukand is expected to resign soon after the annual general meeting of Mukand to be held in Mumbai on Saturday. He will continue as a director on the board.

A board meeting has been called just prior to the AGM to elect the new heads of the company. As per report, the present managing directors Mr Niraj Bajaj and Mr Rajesh Shah are expected to take over as chairman and cochairman, respectively.

Mr Rahul Bjaja told BS that “I did not have enough time since June last year, when I became a Rajya Sabha member. I want to see how these two boys perform as the head of Mukand. It’s time for the next generation to run the company.”

Indonesian invite TATA Steel and ArcelorMittal for PT Krakatau

It is reported that the Indonesian government has invited TATA Steel and ArcelorMittal to take part in the privatization process through which the government is selling 35% in PT Krakatau Steel and talks are at a preliminary stage and are likely to be finalized by the end of 2007.

However, the report cites a spokesperson for TATA Steel as saying that “It has not been approached anyone to acquire a stake in Krakatau Steel.”

As per available information, Indonesian government would also dilute another 30% stake through a public offer later.

The proposed privatization plan is a part of Indonesian government's aim to scale up the country's annual steel production capacity to 10 million tonnes in three years from 6 million tonnes now. For this, the government wants Krakatau to increase its capacity to 4 million tonne from the existing 2.5 million.

Indonesian clamp on iron ore export pushing Indian miners out

It is reported that Indian mining and trading firms operating in Indonesia are gradually exiting the island nation as Indonesia contemplating a ban on iron ore exports. The report added that 5 Indian companies including 3 based in Bangalore have mining and trading operations in Indonesia. Three of them have already initiated the process of exiting that country.

Indonesia does not rank among the top 10 iron ore producers in the world. However its proximity to China makes the country an attractive destination for Indian mining companies, which have supply contracts with Chinese steel mills. Indonesian iron ore deposits have 62% to 68% iron content. Mr SB Chauhan adviser to the Federation of Indian Mineral Industries said that Indian companies showed interest in Indonesia because of the business proposition. He said that “Much of Indonesian ferrous mineral resources are not explored. This presents a good opportunity for Indian firms.”

Mr SK Lal director of SL Mining Industries, which is engaged in iron ore trading from Indonesia said that “It is the price margin of around USD 10 a tonne that makes supply of Indonesian iron ore attractive when compared with Indian iron ore.”

Other mining company, which is operating in Indonesia is Matha Minerals and Mineral Enterprises. Matha Minerals which operates iron ore mines in Chitradurga and Tumkur districts of Karnataka has secured a mining lease in Indonesia. Mr Pradeep Wodeyar director of Matha Minerals said that “Inconsistent policies have stopped us from going ahead with expansion in Indonesia. We are no more exporting Indonesian iron ore to China.”

Many other issues including infrastructure such as transportation and port connectivity are forcing Indian mining companies to pull out of Indonesia. Mr Basant Poddar MD of Mineral Enterprises said that “The road and railway network for iron ore transportation is poor in Indonesia. We did not receive our last consignment from that country. Most of the iron ore traders in Indonesia are not keeping the deadlines.”

S&P lowers TATA Steel rating to BBB

It is reported that Standard & Poor's Ratings Services has lowered its corporate credit rating on TATA Steel to BB from BBB with positive outlook. The rating is also removed from Credit Watch, where it was placed on October 18th 2006 with negative implications after its announcement on acquiring Corus.

S&P said that the ratings on TATA Steel's senior unsecured bank loans of USD 750 million and USD 500 million have been lowered to BB from BBB. The rating downgrade reflects the impact of the leveraged acquisition financing on the risk profile of the consolidated entity.

Mr Anshukant Taneja analyst of Standard & Poor's credit said that "The rating on TATA Steel reflects the consolidated credit profile of the company and its subsidiaries including Corus. TATA Steel intends to fund its USD 12.9 billion acquisition of Corus primarily through debt which is legally structured as non recourse to the parent company.”

Mr Taneja added that "In addition the rating remains constrained by the weak business profile of Corus which is characterized by lack of integration or upstream linkages and relatively high cost of operations in the United Kingdom resulting in lower than average operating profitability."

Mr Taneja said that "The positive outlook reflects the likelihood of a one notch upgrade in the rating on TATA Steel to 'BB+' upon its issuance of the proposed hybrid securities (USD 2.56 billion) and new equity (USD 545 million),accompanied by a reduction in total debt by this amount all other elements of the transaction remaining intact."

The rating on TATA Steel is supported by the enhanced scale of the combined entity in the rapidly consolidating steel industry the broader market coverage and client base and the higher contribution of value-added products in the business portfolio of the combined entity.

27 SEZ proposals approved by Indian government

It is reported that India’s Board of Approval gave formal approval to 21 SEZ proposals and in principle approval to 6 SEZs, despite a Parliamentary Committee seeking a freeze on fresh notifications.

The list of SEZ’s approved includes following prominent SEZ’s
1. Reliance Industry’s Navi Mumbai SEZ
2. Lark Projects Pvt Ltd’s electronic hardware and software SEZ at Landran village in Mohali
3. Sukhmani Towers Private Limited’s IT/IteS SEZ at Nenetpur and Jawaharpur in Punjab.
4. Unitech Realty Projects Limited’s IT/IteS SEZ at Tikri Gurgaon in Haryana.
5. Hindalco for aluminum SEZ in Orissa.
6. Videocon Realty and Infrastructure Limited in West Bengal
7. SIPCOT’s automobiles and auto ancillary SEZ by in Tamil Nadu
8. Skil Infrastructure’s multi product SEZ by in Karnataka.
9. First multi product SEZ in Nagaland

So far formal approvals have been granted for setting up of 341 SEZs, out of which 130 have been notified.

MIDC to get eco clearance for its Butibori power plant

Projects Today reported that Maharashtra Industrial Development Corporation is expected to receive clearances from pollution control board and ministry of environment by July 2007 for its proposed 300MW coal based group captive power plant at Butibori in Nagpur.

The project will be implemented by Reliance Energy’s SPV Vidharbha Industries Power Ltd. MIDC has completed the rapid environmental impact assessment and risk assessment study for the plant and has allotted 175 acres of land to Reliance Energy and the SPV is expected to get its captive coal mine by July 2007.

MIDC plans to implement group captive power plants for the benefit and primary use of industries located in and around its industrial estates in Maharashtra. As a first step along with the Butibori captive plant intends to set up a natural gas based power plant of 100MW to 200MW at Thane Belapur area.

MIDC official also informed Project Today that the gas based power plant at Thane in Belapur area has been postponed due to unsuitable land.

Bhilwara to raise USD 150 million to fund power project

It is reported that Bhilwara Energy Limited is proposing to raise USD 150 million (INR 606 crore) in two tranches by offering stakes to private equity investors. The funds raised will be used to finance its hydel power generation and plans to enter the commercial production of thermal power. It will raise USD 25 million in 2008-09 and USD 125 million two years later.

Bhilwara Energy recently agreed to place equity worth INR 105 crore with Mauritius based New York Life Investment Management India Fund II Llc and WIH Holdings. Bhilwara Energy is the LNJ Bhilwara Group's holding company for all its power businesses, which includes majority stakes in Malana Power Company and AD Hydro Power.

LNJ Bhilwara Group has hydel power projects with a combined capacity of 1,350 MW. BEL's equity is presently held by the LNJ Bhilwara Group of companies including its listed entities HEG Ltd, which holds 39.13%, and RSWM, which holds 26.41% equity. The balance is held by other LNJ Bhilwara Group companies and individuals.

The group is the sole bidder for a 335 MW project in Arunachal Pradesh and also the highest bidder for two projects with a combined capacity of 340 MW in Himachal Pradesh. BEL has also entered into talks with some Nepal based companies for setting up hydroelectric power projects in that country.

Rio Tinto makes USD 38.1 billion cash offer for Alcan

Rio Tinto and Alcan announced that they have reached an agreement for Rio Tinto to make an offer to acquire all of Alcan's outstanding common shares for USD 101 per common share in a recommended, all cash transaction. The offer represents a total equity consideration for Alcan of approximately USD 38.1 billion.

The release said the offer represents a premium of 65.5% to Alcan's all time high closing share price of USD 61.03 on May 4th 2007 prior to the Alcoa offer. It also represents a premium of 32.8% to the value of Alcoa's current offer of USD 76.03 based on Alcoa's closing share price on July 11th 2007.

As per release, the combined aluminum product group to be named Rio Tinto Alcan will be a new global leader in the aluminum industry with large long life, low cost assets worldwide. The combined Group's access to significant bauxite reserves, competitive alumina refining, low cost hydropower, leading smelter technology and a deep and diverse talent pool provides an excellent position to capitalize on the favorable demand fundamentals of the aluminum industry.

Nippon Steel & ArcelorMittal sign MoU for cooperation

Nippon Steel Corporation and ArcelorMittal announced that they executed a non binding MoU on matters, including their global strategic alliance and joint business activities in North America. The companies have discussed those matters since the creation of ArcelorMittal in July 2006.

The release outlines that

1. With respect to the agreements relating to the global strategic alliances between NSC and ArcelorMittal the companies have basically agreed that ArcelorMittal would replace Arcelor to assume the rights and obligations of Arcelor under those agreements with certain modifications. The companies will negotiate and execute definitive, amended agreements hereafter.

2. With respect to the joint business activities focused on automotive steel sheet in North America, the companies are discussing and studying expansion of the business, and intend to enter into definitive agreements as soon as they have come up with a definite plan.

However, as per a report in Japanese Nikkei, the agreement does not include a provision forbidding ArcelorMittal from attempting to acquire Nippon Steel Corporation leaving open the possibility of a future takeover battle.

MMK crude steel production in H1 up by 9.4% YoY

Russian steel major MMK has released the production update for January to June 2007 as under

In ‘000 tonnes

Average steel prices for H1 2007 and H1 2006

In USD per tonne
The prices are indicative and do not consider either steel grade and quality characteristics or sales markets, Average prices calculation is based on division of revenue by volume.

During this period, MMK realized several projects, including construction of Plate Mill 5000 with production capacity of 1.5 million tonnes per annum, revamping of hot rolling Mill 2000 which will improve the quality of products, expand products range and increase capacity. Commissioning of these facilities will enable MMK to process the whole production volume of billets. Besides, due to all long products mills reaching their full operation capacity in H1 2007, MMK increased output of long products by 164,000 tonnes.

Steel majors see bigger consolidation ahead

AP reported that world's large steel makers see more consolidation ahead most likely across continents and within China's fragmented and fast growing industry.

Mr LN Mittal president & CEO of ArcelorMittal and Mr John Surma CEO of US Steel Corp in a joint interview told AP that the steel industry can expect to see more intercontinental combinations like those of the past year as opposed to the more regional marriages of earlier years. Mr Mittal and Mr Surma said that China, which has doubled its steel production in 5 years, might be the next hot spot for deals. They added that they expect to see a significant restructuring of China's industry, although the role of foreign investors remains uncertain.

Mr Surma said that “I think consolidation now will be between bigger companies and perhaps across longer distances and will be bigger transactions. But how quickly that happens depends on how adventuresome companies are and how much they want to risk.”

Mr Surma added that “I think the size of the industry in China is so enormous that it's impossible to ignore it. We are all being vigilant about the trade flow from China.”

Mr LN Mittal said that his company holds the lone steel partnership with a Chinese producer, but its two year effort to buy China's Laiwu Steel has to date been blocked. He said that “So far they have not been very open.”

Mr Mittal added that but China along with Russia, India and other nations in the throes of industrialization are also a source of robust demand for steel.

China’s new policy clears hurdles in Laiwu stake sale to ArcelorMittal

It is reported that China’s State Assets Regulator’s new policy has cleared obstacles for Shandong based Laiwu Steel to renew its stake sale deal with ArcelorMittal.

Last weekend, the State owned Assets Supervision and Administration Commission joined hands with China Securities Regulatory Commission and issued a regulation regarding state owners’ transfer of equity interests in listed companies.

In the new regulation, SASAC set a rule on how to price the stake in the listed companies when it is to be sold by state owners. The new regulation requires the state owners to sell the stake in listed companies either via the in time trading system on the stock exchange or via a block sale. If it is via the trading system the price should be no less than the weighted average trading price of the day. If it is via a block sale, the stake sale price should be no less than 90% of the average price of the past 30 trading days before the stake sale deal is announced, according to the new regulation.

A Laiwu source said that we are studying the new regulation these days and have not started to talk with ArcelorMittal on the deal revision. The source added that they need to completely understand the key rules of the new policy before they can start to renew the stake sale deal with Luxemburg based ArcelorMittal.

Arcelor signed an agreement in February 2006 with Laiwu Group to take a 38.41% stake in the Shanghai listed subsidiary Laiwu Steel for CNY 2.086 billion (USD 260 million). Previous reports mentioned that Laiwu Steel had never terminated the stake sale deal with ArcelorMittal and Laiwu Steel was in active communication with the National Development and Reform Commission and prepared all kinds of documents required by NDRC for the deal approval.

TMK and Corinth pipe JV at Seversky launches new line

TMK Corinth Pipeworks, a JV between Russian pipe major TMK subsidiary Seversky Tube Works and Greek pipe industry leader Corinth Pipeworks SA subsidiary Humbel Limited, announced that it has launched a new production line at the Seversky Tube Works plant.

Mr Ilias Klis Ambassador Extraordinary and Plenipotentiary of the Hellenic Republic to Russia and Mr Eduard Rossel Governor of Sverdlovsk region and the JV shareholders attended the launch of the new production line.

The JV produces ERW longitudinal pipes with diameters of up to 530mm in wall thickness of 4.8mm to 12.7mm and in lengths up to 18 meters as well as special purpose pipes. These products are intended for oil and gas companies in Russia and the CIS and for use in their rapidly developing construction industry.

As per released TMK Corinth Pipeworks JV activity is aimed at increasing TMK sales of premium products and at satisfying the growing high quality product demand from key industries. Annual JV production capacity amounts to 200,000 tonnes of tubular goods.

US regulator approve Nucor purchase of Magnatrax

It is reported that federal antitrust regulators have approved steel maker Nucor Corporation's USD 280 million purchase of Magnatrax without imposing any conditions.

As per report, the Federal Trade Commission included the acquisition on a list of transactions that received an early termination of their antitrust review. Early termination refers to the completion of a review before the end of a 30 day waiting period specified under antitrust law.

Magnatrax based at Alpharetta in Georgia operates 7 fabricating plants and associated engineering service centers and transportation facilities across the US.

Charlotte NC based Nucor said that the purchase will expand its business in the metal buildings industry and expects its earnings to increase when the deal closes which is planned for the third quarter.

Rio Tinto will borrow USD 40 billion for Alcan purchase

According to Moody’s Investors Service, London based Rio Tinto Group will borrow as much as USD 40 billion to finance the acquisition of aluminum producer Alcan Inc.

Rio Tinto in a statement said that it hired Royal Bank of Scotland Group plc, Deutsche Bank AG, Credit Suisse Group and Societe Generale SA to finance the USD 38.1 billion deal

Standard & Poor’s and Moody’s said that the prospect of higher borrowing caused credit default swaps on Rio Tinto’s debt to match the risk premiums on companies rated three or more grades lower including media firm Bertelsmann AG and Linde AG in Munich and they may cut the ratings after Rio Tinto aims to keep them from slipping below A- the 6th highest investment grade.

Mr Alex Herbert analyst for Standard & Poor’s said “The rating could come down below the A category and the review is still fluid and a possibility that Rio would have to increase its bid.”

Rio Tinto is currently ranked at A+ by S&P the 5th highest investment-grade ranking and a step higher at Aa3 by Moody’s.

Kobe Steel transfers HBI plant to Venezuela

It is reported that Kobe Steel Limited transferred a Hot Briquetted Iron plant to Venezuela after successfully managing the facility for nearly 20 years. On June 1st 2007 CVG Ferrominera Orinoco formally resumed operation of the HBI facility.

In late 1987, Kobe Steel and Venezuela's Corporacion Venezolana de Guayana reached an agreement for Kobe Steel to refurbish restart and operate the idled Minorca direct reduction plant located in Ciudad at Guayana, Bolivar State and owned by CVG. Under an innovative build, operate and transfer scheme Kobe Steel converted the facility to use the MIDREX direct reduction process and produce HBI for merchant sale. The BOT arrangement called for Kobe Steel to manage the HBI facility for a specified period of time and eventually return it to the owner in good operating condition.

In 1997, the annual production capacity was increased from the initial 830,000 tonnes to 1 million tonnes following modifications to the plant. In May 2003 the plant achieved a record when it produced a cumulative total of 10 million tonnes of HBI. At the end of May 2007, the Minorca Plant produced more than 13.5 million tonnes under operation by Kobe Steel.

Kobe Steel continues to be involved in the direct reduction business in Venezuela as an operator of and equity partner in the Comsigua HBI plant. Kobe Steel and other Japanese companies together hold a majority equity share in this JV, which started up in 1998 and has annual production capacity of 1 million tonnes of HBI.

German SKW Stahl acquires ESM Group in US

SKW Stahl Metallurgie Holding AG announced that it is to acquire a 100% interest from Platinum Equity LLC in the US based ESM Group Inc, which is headquartered in Amherst at New York in USA. The company will be first consolidated after the transaction is closed, which is expected by the end of August 2007. The transaction is subject to the approval of the relevant antitrust authorities.

The cash component of the purchase price will amount to around USD 60 million. In addition, a working capital loan of around USD 15 million will be assumed. The final purchase price will be determined at the closing of the transaction and will be financed from SKW Metallurgie’s existing liquidity and by debt.

ESM is the clear market leader in North America's hot metal desulphurisation field. This makes SKW Metallurgie the global market leader in this segment allowing it to venture into new dimensions due to an acquired turnover volume of around USD 150 million.

Mr Ines Kolmsee CEO of SKW Metallurgie said that “SKW Metallurgie has succeeded in concluding a strategically very important transaction by acquiring ESM. This step not only makes us the global market leader in hot metal desulphurisation but also provides us with access to the US market in this field and stronger protection of the supply of raw materials. ESM’s excellent profitability will lead to a substantial earnings improvement for SKW Metallurgie already in 2007.”

SKW Stahl Metallurgie Holding AG SKW Metallurgie is the world market leader for numerous chemical additives for hot metal desulphurisation and for secondary metallurgy. Its products enable steel makers to efficiently manufacture high quality steel products. The SKW Metallurgie Group has more than 50 years of metallurgical know how and is today active in more than 35 countries. Approximately 47% of its turnover is generated in Europe and 43% in the NAFTA region.

Removal of pipe export rebate to erode Chinese tube mill margins

China Securities cited Mr Kong Lingming secretary general of China Steel Pipe Association as saying that removal of steel pipe export rebate tallies with the trend of the times and its export is to drop considerably in later half year of 2007.

On the basis of the January to May 2007 figures, the rebate cut policy taking effect from July 1st 2007 would scissor some CNY 1.5 billion of this sector's profits of 2007. Mr Kong said that "Yet, it’s possibly an opportunity pushing us to shift from being big to strong in this regard."

Talking of whether the export rebate would receive further revision Mr Kong said that removal of the rebate is sooner or later. Abroad the US department of commerce has decided on anti dumping & subsidy investigation against Chinese pipe. In the meantime, insiders say that export quota is unlikely to be applied, as it's not in line with WTO rules. They believe by correcting export rebate and tax policy, and raising threshold for qualified export enterprises in terms of production capacity, technology, environment protection, energy saving, credit and execution of contract a desirable situation can be expected.

Mr Kong warned that domestic pipe producers should keep an eye on the export volume these months for its quite likely more policies will come out if exports remain such a high after July's curb.

(Source from MySteel.net)

Fitch places Gerdau & Acominas on rating watch negative

Fitch Ratings announced the following ratings of Gerdau SA and related entities on Rating Watch Negative
1. Foreign currency Issuer Default Rating BBB-
2. Local currency Issuer Default Rating BBB-
3. National scale rating AA+
4. USD 600 million 8.875% guaranteed perpetual notes BBB-

Fitch also placed on Rating Watch Negative the BBB- local and foreign currency IDRs of Gerdau's Brazilian operating subsidiary Acominas and its national scale rating of AA+. Fitch has also placed on Rating Watch Negative the BBB- local and foreign currency IDRs of Brazilian Steel Importer Limited and the following secured export note issuances
Series 2003-A BBB
Series 2004-A BBB

The placement of the ratings on Negative Watch follows the announcement by Gerdau Ameristeel Corporation that it has reached an agreement to acquire Chaparral Steel Company in a transaction that values the equity of Chaparral at USD 4.2 billion. Gerdau Ameristeel whose controlling shareholder is Gerdau SA has stated that it intends to fund the acquisition with a mix of debt and equity. Positively the transaction would strengthen Gerdau Ameristeel's business position in the competitive North American steel market.

The Negative Watch reflects the uncertainty of the ultimate financing structure that will be pursued by Gerdau Ameristeel. It also reflects concern that Gerdau SA may need to raise a material amount of debt, which would likely be guaranteed by its main Brazilian operating subsidiaries to fund its portion of a future equity increase by Gerdau Ameristeel. At the end of 2006, Gerdau SA had USD 4.7 billion of total debt and USD 3.0 billion of cash and marketable securities. Gerdau's consolidated EBITDA for 2006 was USD 2.6 billion.

Headquartered at Porto Alegre in Brazil, Gerdau SA is a holding company for the group's steel production facilities in North and South America and Europe. It operate mini mill and integrated steel facilities in Brazil, Argentina, Chile, Colombia, Peru, Uruguay, the United States, Canada, and Spain and have a crude steel production capacity of 19.2 million tons in 2006.

CISA to hold ore imports working conference

China Iron & Steel Association is slated to convene an imported iron ore working conference on July 13th 2007 in Guiyang to discuss the status quo of the ore imports market. 16 steelmakers including Baosteel, Anshan Steel, Wuhan Steel and Shougang would attend the conference.

China’s Customs data shows that China imported 26.9 million tonnes of iron ore in June 2007 down by 6.36% YoY. The supply disruptions at CVRD’s mines coupled with 3 month closure of western coastal ports in India have also reduced shipment to China.

As a result, the spot price of ore imports is expected to rise further in following months due to limited availability in the spot market, particularly high grade ore.

(Sourced from MySteel.net)

ICBC signed strategic cooperation agreement with Angang

It is reported that Industrial and Commercial Bank of China has signed bank strategic cooperation agreement and investment bank service agreement with Anshan Iron and Steel on July 5th 2007.

As per the agreement as a long term partner of Angang, ICBC will provide the mill with all around financial support including traditional commercial bank service and new type of investment bank service.

The current agreement is a strong alliance between industry and financial sector, a move not only being conducive to boost Angang’s development target and industry layout, but also suggesting a motive of ICBC extending business scope from traditional commercial bank to investment bank service.

Mr Lu Xin vice governor of Liaoning Province said that economy in the province has shown a strong growth trend with faster and better pace since the country carried out revival policy in China’s northeastern areas. He said “The further cooperation between ICBC and Angang set up a good model for strong alliance in cross-sectors and cross regions in Liaoning province and will certainly play an active role in advancing overall development in the region.”

As a largest commercial bank in China, ICBC has become one of the 3 largest banks in the world in the light of market value in the wake of being successful listed in the market.

Thai Namheng Steel restart trails at its mill at Lop Buri

It is reported that the Thailand based Namheng Steel mill is starting four days of trial operations to determine whether it can reopen permanently as the mill in Tambon Deelang of Lop Buri's Phattana Nikhom district of Thailand was ordered to shut down on June 14th 2007 for repairs to its roof and dust control system as residents had complained that the mill released dust harmful to health.

Mr Samphan Kositpol who heads the Lop Buri Industrial Works Office's said that "It has reported THB 3.35 million in repairs and improvements for the roof furnace hood vacuum cleaning pipes and filter replacement."

Mr Boonchu Iam ek chief of provincial industrial works said a certified company would check dust particle levels in the vicinity of the mill. He said "If it finds satisfactory results the steelworks will be allowed to resume operations."

Namheng Steel Co Ltd is a member of Namheng Group. Its production currently totals 300,000 tons per annum comprising of billets, rounds, rebars and wire rods.

Norilsk extend its offer to acquire Lion ore till July 23rd 2007

RIA Novosti reported that Russian Norilsk Nickel has further extended its cash offer to acquire the common stock of Canada's gold and nickel producer LionOre until July 23rd 2007.

Norilsk in a statement said that "This extension will provide holders of LionOre's convertible notes due 2011 with the opportunity to convert their notes into common shares of LionOre and deposit the resulting common shares into Norilsk Nickel's offer."

Norilsk Nickel and LionOre announced June 15th 2007 that they had entered into a support agreement in the wake of the Russian metals giant's offer to acquire all of LionOre's outstanding common stock in a friendly all cash transaction for around CAD 6.8 billion (about USD 6.2 billion) or CAD 27.5 (USD 25.32) per common share.

Norilsk earlier said it was seeking to acquire LionOre to boost its metals output expand the geography of its operations and implement exciting projects.

Solidarity accepts pay offer and withdraws from strike

It is reported that South Africa trade union Solidarity has accepted a three year pay pact with metals and engineering industry employers ordering striking members back to work. But the strike goes on as the National Union of Metalworkers of SA is still consulting regional structures on the new offer. Numsa is expected to reach a decision shortly.

As per report employers raised their offer to inflation plus 3%, and included other favorable terms in the package. The above inflation offer is seen as a strategic victory prompted by dire lack of skills in an industry preparing for increased demand as the state and private sector ramp up capital expansion projects.

Mr Alistair Smith CEO or of metal and engineering industries bargaining council said employer body Seifsa had nudged up its offer to 8% for Rate A workers and 9% for Rate H workers just short of unions' demand for 10% across the board. The increase is backdated to July 1st 2007 Rate A workers will get rises of 7% in the second and third year of the agreement and Rate H workers 8% over the next two years.

Mr Brian Angus ED of Seifsa said the offer tops those across sectors during this year's negotiation season while Solidarity accepted it and the remaining unions Numsa and Uasa were holding out for higher pay rises. Second and third years were still a sticking point.

POSCO to invest USD 105 million to build plant in Vietnam

POSCO announced that it would invest USD 105 million to build a plant in Vietnam by August 2009.

Ms Ko Min Jin a spokeswoman of POSCO said that the plant located in Vung Tau near Ho Chi Minh city will produce 300,000 tonnes of coated galvanized and aluminized steel sheets a year She added that "Products manufactured at the plant will be sold in the Vietnamese market and other Southeast Asian markets."

POSCO said the construction of the Vung Tau plant POSCO' first overseas manufacturing facility will begin in January 2008 and will be completed in August 2008.

Yuzhny GOK sinter production in H1 up by 18.7%YoY

Interfax reported that Yuzhny GOK’s iron ore beneficiation plant at Krivy Rih in Dnipropetrovsk region of Ukraine has increased sinter production by 18.7% YoY in January to June 2007 period to 2.67 million tonnes. YuGOK in a statement said that iron ore concentrate production also went up by 2.1%YoY to 4.367 million tonnes.

It produced 455,000 tonnes of sinter and 707,000 tonnes of concentrate in June 2007.

YuGOK produced 4.652 million tonnes of sinter and 8.71million tonnes of concentrate in 2006 up by 13.5%YoY and 7%YoY respectively from 2005.

YuGOK is controlled on a parity basis by the Dnipropetrovsk based Private Group and Zaporizhiya based Smart group.

Mt Gibson Iron eying iron ore and coal takeovers

Bloomberg reported that Australian Mt Gibson Iron Limited is looking for iron ore and coking coal acquisitions in Australia and overseas to benefit from soaring demand for steelmaking ingredients driven by China. Mr Luke Tonkin MD of Mt Gibson said that “We have identified some very clear winners within the M&A space. Potential acquisitions could be made within the next 12 to 18 months.”

Mr Tonkin said that Mt Gibson will closely look at acquisitions overseas as well as coking coal assets as its business cycle is complementary to iron ore. He added they also completed the AUD 207 million takeover of rival Aztec in January 2007 to gain control of the Koolan Island mine where first ore was shipped last month. They have got to be the right size so around Aztec's size is good but we could certainly do a little bit larger at the moment and the reason for that is we are in exactly that sweet spot in the cycle.

Mr Tokin further added that Mt Gibson also owns the Tallering Peak mine in Western Australia state and is awaiting environmental approvals at a third mine Extension Hill to bring total production to about 10 million tonnes annually. He said that development of the Extension Hill mine will cost about AUD 80 million and take four months to construct once approval is received. The mine will produce about 3 million tons annually.

Mr Tokin said that “Demand for iron ore is as strong as we have seen it. You just can't stop the juggernaut overnight.'' He added that additional supply in the next 3 to 5 years might reduce the price of the ore. Mr Tokin said that increased production at steel mills is driving demand for iron ore. That leaves BHP Billiton Ltd, Rio Tinto Group and Cia. Vale do Rio Doce the mining companies responsible for three quarters of global trade in iron ore in a better bargaining position for higher prices.

Mr Mike Harrowell and Mr Stuart Howe analysts of Merrill Lynch & Co in a July 10th 2007 report said that “Mt Gibson has a track record of acquisition. We expect this pattern to continue with a positive valuation outcome for shareholders.''

Fox Resources discussing iron ore project with Chinese firm

It is reported that Australian base metal miner Fox Resources Limited is in discussions with a major Chinese group in relation to the development of its recently discovered Mt Oscar iron ore prospect.

Fox Resource in a statement said that it was in early stage discussions with a major Chinese iron ore company about the prospect, which was discovered last week.

Mt Oscar prospect is located about 32 kilometers east of the company's flagship Radio Hill nickel and copper mine in the Pilbara region of Western Australia. The prospect is well located to key infrastructure and sits about 30 kilometers south of Rio Tinto Ltd's Cape Lambert port.

Chinese groups have been keen to secure future iron ore supply with a number of outfits inking JV agreements with the many iron ore juniors in WA. These include Gindalbie Metals Limited and Anshan Iron & Steel Group Corporation, Midwest Corp Limited and SinoSteel Corporation and Australasian Resources Limited and Shougang Corporation.

Shenhua becomes China's 1st 100 million tonnes coal base

Shanhua Group, based in Inner Mongolia's Erdos, has become China's first modernized coal production base with annual capacity of 100 million tonnes. The group's core production base Shendong Mining Area now tops the industry in China in terms of production technique level production capacity and efficiency.

It has created the first 20 million tonnes mine and the first 10 million tonnes grade mine well cluster. Work efficiency has risen to 124 tonnes from less than 10 tonnes in 12 years ago, over 30 times of average level of state owned key coalmines. Output of the area jumped to 114.68 million tonnes from 9.55 million tonnes in 1998 up by almost 12 times.

Total investment in the area during past decade amounted to CNY 21.6 billion, among which CNY 13.3 billion or 61.7% was used to introduce sophisticated equipments.

In 2006 death rate per million tons recorded merely 0.064, 1/133 of the China's average level and lower than average level in the US and Australia, countries with the most advanced coal mining techniques.

In the past 5 years the group poured nearly CNY 4 billion in system reconstruction and safety administration. In the latter only, it invested over CNY 800 million every year and CNY 1.95 billion in 2006.

(Sourced from MySteel.net)

Ukraine metallurgical coke production in H1 up by 7.7%YoY

Journal Staff reported that Ukraine increased production of metallurgical coke by 7.7%YoY to 9.97 million tonnes in the first half of 2007, including 1.664 million tonnes in June 2007.

Mr Ukrkoks Anatoly Starovoit head of industry association said that “Coke production is growing on the back of stronger demand whereas Ukraine increased production of 6% moisture metallurgical coke by 0.3% to 18.914 million tonnes in 2006.”

South Korea eyes iron ore and manganese deposits in Cote d'Ivoire

It is reported that South Korea's state run natural resources company is taking steps to mine for iron ore and manganese in West Africa's Cote d'Ivoire.

Mr Lee Han ho president of Korea Resources Corporation in a meeting with Mr Leon Monnet minister of mines & energy of Cote d'Ivoire expressed its interest in iron ore deposits in the Grand Lahou region and manganese in Adzope.

Korea Resources Corporation said that it has already conducted initial feasibility studies in Cote d'Ivoire and nearby countries that indicate there is potential for further development.

South Korea has aggressively moved closer to African countries to win mineral and energy resource development deals in exchange for building industrial and social infrastructure including roads, railways and factories. The cost of raw materials has risen sharply in recent years as demand in China and India has exceeded supply.

Higher electricity bill for high energy consuming firms in He’nan Province

According to Xinhua News Agency, He’nan Province’s Development and Reform Committee intends to implement higher prices for electricity to 8 high energy consuming industries in the province including electrolysis aluminum and so on to restrain the over development of such industries.

To restrain the high energy consuming industries over development, and to boost the structure adjustment and improving, from July 1st 2007 different prices of electricity will be implemented to eight industries, including electrolysis aluminum, iron alloy, calcium carbide, cement, iron and steel, zinc melting, caustic soda and yellow phosphorus in accordance with such four types of enterprises classified as washed out, restrained, permitted and encouraged.

Kosovo allocates EUR 20.5 million for a new coal mine

It is reported that government of Kosovo has allocated EUR 20.5 million for opening the coalmine of Sibovc. The allocated amount covers only the needs for 2007 and does not include preparations for the new power plant Kosova C. The report added that around EUR 250 million would be needed to open the entire area of the Sibovc mine.

Kosovo Energy Corporation official said that “Coal reserves in Bardh and Mirash are approximately 27 to 28 million tonnes and they can only last for the next two years. Sibovc mine needs to be opened in order to be ready for digging in 2009-2010.”

Mr Haki Shatri minister of economy & finances stressed that the ministry will support all reasonable requests coming from Kosovo Energy Corporation. He added that “In long term this will help the economic development and budget savings since the energy production will replace the expensive import of electricity.”

Sangang to commission new plate mill

It is reported that China’s Sangang has invested around USD 158 million on its first plate mill, which has annual capacity of 800,000 tonnes. The main application for these plates is for the construction business and shipbuilding sectors

As per report this mill could supply steel plate for the size range with thickness between 5mm and 50mm, width between 1,500mm and 2,700mm and length between 3,000mm and 12,000mm.

Fujian Sangang’s output was about 3 million tonnes per year and originally focused on long products especially for high speed wire rod. This is the first time that they get into the flat products market.

AUZ assumes capital development at Blair nickel mine

It is reported that Australian Mines AUZ has assumed decline capital development at the Blair nickel mine in Western Australia effective July 2nd 2007. Previously, capital development was contracted out to a third party.

Anticipating the decision to make the transition to owner-operator of the mine, AUZ has acquired additional underground mobile equipment over the past 6 months.

Mr Brett Young CEO of AUZ said that the decision to move to full owner-operator status greater control and flexibility will provide long term cost efficiencies.

Shengli wins tender for Kenyan oil pipe project

INTERFAX CHINA reported that China's Shengli Engineering and Consulting Co Ltd won a tender for an oil pipeline construction project in Kenya. The new oil pipeline project will link Kenya's capital of Nairobi to the western city of Eldoret.

Shengli to be responsible for designing the pipeline, undertaking related consultancy activities and managing construction bids for the project.

A Shengli official said that "We have not yet discussed the details of the project with the Kenyan side nor signed the contract so we may not start on the project until later this year."

In January2007, Shengli signed a USD 41 million contract for the reconstruction of an oil pipeline between the eastern coastal city of Mombasa and Eldoret. As Kenya's oil transmission capacity is currently limited, the eastern African nation has recently undertaken efforts to construct new pipelines from Mombasa to the country's western regions as well as to central African countries. Uganda, Rwanda and other eastern African countries also buy fuel oil from Kenya.

Shanxi to invest on fresh coal resource

According to a source with geologic examination department Shanxi Province discovered fresh coal reserve of 140 million tonnes last year.

In virtue of total investment of CNY 401.7693 million, the province newly discovered 140 million tonnes of coal, 155 million tonnes of alumyte, 20 million tonnes of iron ore, 1,330 tonnes of copper, 50,000 tonnes of zinc and 885 tonnes of silver.

(Sourced from MySteel.net)

South Africa mining production up in May 2007

According to Statistics South Africa’s data, total South African mining production for May 2007 was reported to have increased by 0.8%YoY as compared with May 2006. however, Stats SA noted that total mining production for the March to May 2007 remained on the same level as compared with March to May 2006.

Stats SA also announced that the seasonally adjusted value of mineral sales at current prices for the February to April 2007 reflected an increase of 7.5%MoM as compared with the previous three months. Stats SA added that this increase was attributed to a 7.8%MoM increase in the sales of gold and a 7.4%MoM increase in the sales of non gold minerals. The actual value of mineral sales at current prices for the February to April 2007 increased by 38.4% YoY. This increase is higher than the increase of 25.1%YoY.

Major contributors to the increase of 38.4% YoY were Platinum Group Metals up by 17.3%, gold up by 6.8%, coal up by 6.4%, nickel up by 4.6% and iron ore up by 2.0%.

Stats SA noted that total sales reached ZAR 18.1 billion for the month of April 2007 which is the third consecutive month that sales were above the ZAR 18 billion mark.

Anyang Steel production capacity to reach 10 million in 2008

Interfax China reported that Henan based Anyang Iron and Steel Group launched the operation of a 150 tonnes converter and a continuous hot rolling line that will allow the Anyang's steel production capacity to reach 10 million tonnes in 2008.

Fitch assigns Sr unsecured B+ ratings to IUD finance notes

Fitch Ratings announced that it has assigned IUD Finance Plc's proposed issue of USD 350 million to USD 500 million of loan participation notes expected senior unsecured B+ and Recovery RR4 ratings. The notes will benefit from surety from three group entities including the parent company Corporation Industrial Union of Donbass.

Fitch said that the expected rating is in line with IUD's Long term Issuer Default B+ rating with Stable Outlook which along with IUD's Short term Issuer Default B rating is affirmed. The final rating on the notes is contingent on the receipt of final documentation conforming to information already received and further details regarding the amount and tenor.

The notes are unsecured obligations of the issuer that rank equally with other unsecured obligations and will have the benefit of a trust deed. IUD intends to use the proceeds of the bond issue to retire the group's USD 150 million credit linked notes repay a new bridge loan of USD 200 million that was drawn in H1 of 2007 and to fund capital expenditure needs.

IUD Finance Plc is an SPV incorporated in England and Wales.

Nippon Steel & Sumikin reduce Ni series SS prices

Nippon Steel & Sumikin Stainless Steel announced that the firm decreases the selling price of nickel series stainless cold rolled sheet without edge and with 2 millimeters thick by JPY 40,000 to JPY 710,000 per tonne for domestic distributors for July 2007 order.

It is the first drop since November 2005 as they kept increasing the price since January 2006.

This move reflects the lower nickel price in June 2007 under the surcharge mechanism. It also decreased the plate price by JPY 40,000 to JPY 720,000 for product with 2 mm thick while the firm left the chrome series stainless cold sheet unchanged at JPY 245,000.