TATA Steel awards Kalinga Nagar BF to L&T

Larsen & Toubro Limited announced that it has bagged an order worth INR 980 crores from TATA Steel for the supply and installation of blast furnace for TATA’s 6 million tonnes per annum integrated steel plan in Kalinganagar Industrial Complex at Duhuri in Jajpur district of Orissa. This is scheduled for completion in 40 months.

L&T will supply and install 3.2 million tonnes per annum capacity blast furnace, which will have a furnace volume of 4300 cubic meters. L&T’s scope covers detail engineering, supply, erection and commissioning of mechanical, electrical & instrumentation systems along with site services comprising of civil, structural & sheeting works.

Mr KV Rangaswami president construction and member board of the L&T said that "The new order follows the very recent contract for the sinter plant and the steel melting shop. This order for supply and installation of a new blast furnace for Kalinga Nagar is testimony to the faith that TATA Steel has in L&T and also recognition of the numero uno status enjoyed by L&T in the field of engineering & construction for the steel industry. We are indeed proud of this continued association."

L&T, along with its international consortium partners Pauf Wurth, is executing engineering procurement construction project for construction of blast furnace of 3800 cubic meters for the expansion of TATA Steel in Jamshedpur.

India sets 200 million tonnes of steel production by 2020 target

Members of Parliamentary Consultative Committee of ministry of steel had a review meeting of Rashtriya Ispat Nigam Limited. Mr Ram Vilas Paswan minister for steel, chemicals & fertilizers said that production of steel in India went up by 10.9% YoY during 2006–07 and reached 49.39 million tonnes.

Mr Paswan informed that the revised target for 2010 has been set at 80 million tonnes against the earlier target of 65 million tonnes and the target for 2020 has been set at 200 million tonnes.

Mr Paswan informed that both the two steel majors in the public sector, the Steel Authority of India Limited and the Rashtriya Ispat Nigam Limited have initiated a major expansion plans. He said that RINL expansion plan involves a capital outlay of INR 8692 crore to raise its capacity to 6.3 million tonnes from the current level of 3.4 million tonnes. SAIL is also implementing its expansion plan to raise its capacity to 24 million tonnes from the present 14.6 million tones an investment of over INR 40,000 crore.

Mr Paswan said that both SAIL and RINL have been given operational freedom to take investment decisions. He added that “Which should be transparent without compromising with quality.”

Members of parliament who attended today’s meeting included Mr Anil Shukla Warsi, Mr Virji Bhai Thumar, Mr Bagun Sumbrui, Mr Surendra Prakash Goyal, Mr Tarachand Sahu, Mr Mahadeo Rao Shivankar, Mr Sunil Khan, Mr Madhusudhana Reddy Thakkala, Mr Ganesh Prasad Singh, Mr Kunwar Sarvraj Singh, Mr P. Chalapathi Rao and Ms Jhansi Lakshmi Botcha all from the Lok Sabha and Dr Prabha Thakur, Dr Mahendra Prasad, Mr Tapan Kumar Sen and Mr Mahendra Sahani, from the Rajya Sabha.

Orissa to reassess its mineral resources

It is reported that Orissa government is preparing to take fresh stock of its mineral resources as investors are lining up for mineral based industries like steel, aluminium, power, cement and ferro alloys. Mr Padmanabha Behera steel & mines minister of Orissa said that ‘‘we are planning to take up further exploration of mineral resources with a view to accessing the deposits of different ores.’’

Orissa government has signed MoU with 44 steel companies for an investment of INR 0.197 million crore for built up steel making capacity of 74.66 million tonnes and as many as 25 companies have gone in for production. Besides, 13 MoUs in the power sector, 4 in the aluminum sector have also been signed. However, there are apprehensions that the existing mineral resources would not be able to meet the demand of industries that are coming up, particularly in case of iron ore, bauxite and chrome ore, which will be depleted in the next 25 years.

Mr JN Das an expert on Orissa minerals however cautioned that the state government that mining of iron ore below 25 meters to 30 meters would not be economically viable. He added that ‘‘Oxidization is the ultimate cause of the precipitation of iron oxides in the upper crust. Two rules, which govern the fixation and mobilization of iron in aqueous solution, are:
1. Oxidizing conditions promote the precipitation of iron ore thus reducing conditions promote the solution
2. Acid conditions generally promote the solution of iron, alkaline conditions and promote the precipitation of iron. Thus, iron ore is accumulated towards the surface. Iron ore is not expected below banded iron silica rocks (BHQ/BH)/Quartzite in a normal deposit cycle. Even if it occurs due to structural disturbances like folding etc, it can't be mined economically for use in steel industries."

As per the present estimation of the state directorate of geology, Orissa has 4,177 million tonnes of iron ore, 1,530 million tonnes of bauxite, 60,983 million tonnes of coal, 2,224 million tonnes of limestone and 111 million tonnes of chrome ore.

Indian lawmakers for curbing iron ore export

Members of Parliamentary Consultative Committee of ministry of steel during a review meeting said that exports of iron ore should be resorted to only if we have surplus. They said that “The demand for iron ore from the domestic producers must be met first.”

Some MPs demanded a complete ban on the export of iron ore.

They also wanted Rashtriya Ispat Nigam Limited be given iron ore mines on lease.

The meeting was chaired by Mr Ram Vilas Paswan union minister for steel, chemicals & fertilizers. Members of parliament, who attended today’s meeting included Mr Anil Shukla Warsi, Mr Virji Bhai Thumar, Mr Bagun Sumbrui, Mr Surendra Prakash Goyal, Mr Tarachand Sahu, Mr Mahadeo Rao Shivankar, Mr Sunil Khan, Mr Madhusudhana Reddy Thakkala, Mr Ganesh Prasad Singh, Mr Kunwar Sarvraj Singh, Mr P. Chalapathi Rao and Ms Jhansi Lakshmi Botcha all from the Lok Sabha and Dr Prabha Thakur, Dr Mahendra Prasad, Mr Tapan Kumar Sen and Mr Mahendra Sahani, from the Rajya Sabha.

JSW to start land acquisition for its Salboni project in WB

BS reported that land acquisition for the proposed 10 million tonnes steel project in Salboni in West Medinipur by JSW Bengal Steel would start on July 18th 2007. The report cites some JSW sources as saying that around 4 plots would be acquired and cheques would be disbursed to the landowners on the same day.

Out of the total requirement of 4,500 acres for the project, JSW will have to acquire 500 acres, while the remaining 4,000 acres would be taken from the government. The land acquisition would be completed in 4 months.

JSW has fixed the price for the private land in Salboni at INR 0.25 million to INR 0.3 million per acre. The land has been categorized as cultivable and partly cultivable and priced accordingly. The price of the government land is INR 0.194 million per acre as per Land and Land Reforms Department.

The direct land purchase by JSW will be a test case for the West Bengal government since the land acquisition so far has been done by a government agency and leased out to companies.

TATA Power acquires power plant from Hooghly Met

TATA Power Company has acquired Haldia based INR 410 crores 90MW power plant scheduled to be commissioned in 2007 from TATA Steel and West Bengal Industrial Development Corporation’s 98:2 JV Hooghly Met Coke & Power Company for an undisclosed amount in an all cash deal.

Hooghly Met Coke & Power is setting up a coke oven at Haldia with an annual production capacity of 1.6 million tonnes and had planned to use the excess heat produced in the process to produce electricity. The company’s operations will begin in 2008.

TATA Power in its latest annual report said that “The Haldia project will utilize coke oven gases to generate power. A part of the power generated from the plant will be sold to the West Bengal State Electricity Distribution Company.”

The report added that TATA Power would set up an additional 30MW plant near the upcoming units by mid 2008 with an investment of INR 130 crore.

India’s major ports traffic up by 14.3% YoY in Q1 of 2007

BL reported that India’s major ports handled a total of 123.09 million tonnes of traffic in April to June 2007 up by 14.3% YoY as compared with 107.71 million tonnes in April to June 2006.

The volumes handled and YoY growth is as under

Volume in million tonnes

The report cites a Kandla port sources as saying that “We have contributed 12% of national traffic. There has been a considerable improvement in all productivity parameters during the quarter and the number of vessels calling at the port increased to 633.” Source added that if the present trend is maintained, Kandla would surpass all its previous records. It might be noted that Kandla ranked fourth in terms of traffic throughput for the past three years.

A spokesman for Visakhapatnam port while explaining the slide from the number one position, which it has been occupying for the past several years, pointed out that cyclonic storms coupled with heavy rains and the suspension of iron ore movement along the Kirandul to Kottavalasa line for several days due to power failure hit the port’s traffic throughput which dropped by about 1.1 million tonnes during the period. At least four berths were occupied by fertilizer vessels whose rate of discharge was low. The rain also hit the iron ore loading from around 5,000 tonnes to 1,500 tonnes a day.

TATA Steel finds steel making expensive in Thailand

It is reported that high electricity costs, lack of coal, iron ore and scrap prevents Thailand's steel industry from competing with other Asian countries.

Mr B Muthuraman MD of TATA Steel, during a visit to Thailand for the company's first anniversary said that TATA Steel does not plan to build an iron smelter in Thailand despite the fact that steel consumption in the country would continue to grow in next four decades.

Mr Muthuraman said that Vietnam offered lower production costs and more natural resources such coal and gas. Vietnam's steel market is also expanding due to its rapid industrial infrastructure development and TATA Steel has signed an agreement with Vietnam Steel Corporation for a joint venture project on an integrated steel plant. Mr Muthuraman said feasibility studies for the project were being conducted now. TATA Steel aims to double its steel production capacity in Vietnam to 10 million tonnes per year by 2010.

TATA Steel, instead of undertaking a large iron smelting project in Thailand, opted to import billet or scrap from countries with lower production costs to feed its finishing steel plant. However, TATA Steel has decided to invest THB 3.5 billion to construct a mini blast furnace by October 2008, which would increase its annual production capacity of steel bars to 2.2 million tonnes from 1.7 million tonnes. Mr Muthuraman said the new mini blast furnace would help the company cut production costs significantly and to rely more heavily on iron ore than other steel companies that use scrap as a key raw material to produce steel.

TATA Steel acquired a 65% stake in Millennium Steel Plc in 2005 before raising its stake to 72% and renaming the company TATA Steel (Thailand).

Jaiprakash Associates to raise USD 1 billion overseas

Jaiprakash Associates Limited announced that its board of directors at its meeting held on July 14th 2007 have decided to raise an amount of up to USD 1 billion in two or more tranches out of which USD 400 million including green shoe option would be raised through issue of FCCBs. It will seek the approval of the shareholders for the proposal in its Annual General Meeting fixed for August 30th 2007. The capital would be used to fund its expansion plans that include setting up a 500MW power plant in Uttar Pradesh

Jaiprakash Associates Limited said that the FCCB Issue of USD 300 million, with an option granted to Barclays Capital to subscribe for up to an additional USD 100 million, has been launched by Barclays Capital, the sole book runner and sole lead manager for the offer.

Jaiprakash Associates Limited informed that, the FCCB Issue aggregating USD 300 million, optional USD 100 million to follow, has been fully subscribed on the following terms
1. Launching & Pricing: July 16th 2007
2. Closing & Issue Date: September 11th 2007
3. Maturity: September 12th 2012
4. Coupon rate: 0%
5. Conversion Premium: 45% over the reference share price of INR 854.33 per share
6. YTM calculated on a semi annual basis: 7.95%
7. Initial Conversion Price: INR 1238.78 per share
8. Fixed conversion rate: USD 1 = INR 40.35

Apart from the 500MW power plant at Churk in Uttar Pradesh at a cost of about INR 2,000 crore by 2010, Jaiprakash Associates is also setting up a 1,000MW pithead plant in Madhya Pradesh that will reach its full capacity in two phases with 500MW in each phase. The company will use coal from the Amelia block for its first phase, while for the second stage, it will ask for additional coal blocks from the government.

IPI gas price formula agreed – Report

The Asian Age reported that Iran, Pakistan and India have agreed on a gas price formula on the basis of which Iran will supply gas to Pakistan and India through Iran Pakistan India gas pipeline project.

The paper quoted Mr Hojatollah Ghanimifard special representative of the Iranian minister of petroleum on IPI and director of international affairs in the petroleum ministry as saying that the agreement, on inclusion of a price line in the contract, had been a major achievement in the last round of trilateral negotiations in New Delhi.

As per report, 3 countries have reached understanding on most of the initially identified 16 points of difference and only 5 to 6 controversial paragraphs remain to be discussed.

The paper said that Mr Murli Deora union petroleum minister is expected to visit Pakistan this month to sort out issues of gas duties between Pakistan and India for finalizing the contract.

Mr Ghanimifard further said that the agreement on delivery point and the companies who will sign the contract has also been reached.

Bangladesh bans Indian coal import due to high sulphur

UNI reported that Bangladesh government has directed its Importers and Exporters Federation to import coal from Indonesia or China after enforcing a ban on import of coal from two Indian states Meghalaya and Assam due to high sulphur content, fearing environmental and health hazard. Bangladeshi geologists said the sulphuric content of coal in these states is 7% to9%.

Mr RC Agarwal, Indian coal exporter told UNI this is not the first time that the Bangladesh authorities had banned import of such coal from India. He said that ''We have asked our importers in Bangladesh to negotiate with their government to withdraw the banned on import of coal from Meghalaya.”

On previous occasions, Bangladesh withdrew orders after Bangladesh importers pressed hard to allow the import of coal from Meghalaya due to reasonable rate, compared to coal from Indonesia and China.

IVRCL bags two contracts for irrigation works in Karnataka

IVRCL Infrastructures & Projects Limited announced that it has been awarded two contracts worth INR 202.70 crores for irrigation works in Karnataka.

The projects are

1. Modernisation of 60 kilometers long Bhadra right bank main canal including lining works and rehabilitation of structure awarded by executive engineer No 4 BRLBC division in Bhadravathi of Karnataka Neeravari Nigam Ltd. Value of the work is INR 106.82 crores.

2. Modernization of Malebennur branch canal awarded by executive engineer No 3 Bhadra canal division in Malebennur of Karnataka Neeravari Nigam Ltd. Value of the work is INR 95.90 crores.

High steel export volume may ignite further curbing policy in China

Chinese Customs data shows that China exported 6.36 million tonnes of finished steel products in June 2007, second only to the record high of 7.16 million tons scored in April 2007. The shipment climbs by 43.56%YoY and up by 3.08%MoM.It seems that the export tax has limited impact in curbing steel export yet. In fact, there is always a time gap of a couple of months for exporters to affect the delivery after signing export contracts. Therefore, many of the export shipment in June 2007 are for contracts pre signed in previous months.

Market analysts also suggest falling domestic steel prices have widened the price gap with export price and supported the steel export to some extent. However, they believe that the impact of export tax would be increasingly felt in the months ahead.

The June 2007 export volume obviously goes against Beijing's resolution to reduce energy consumption and tame trade surplus. The market insiders fear that the government may release further restrictive policy once the steel export still perches on a high level in July 2007.

Domestic flats prices keep sliding recently while the longs prices appear to be held steady. High export low inventory has done little help in stabilizing domestic steel prices, which reflects that market participants are pessimistic about market fundamental supply and demand in the future due to fears of possible export downslide. Moreover, global steel price has started downward correction from July 2007 in particular flats prices fall back significantly in US. And a host of HR lines are slated to come on stream in the second half, which would also weigh on the flats market downward in the future.

The good news are China's ore imports set a new low in June 2007, which indicates that domestic crude steel output growth may moderate as the authority are stepping up efforts in eliminating obsolete capacity. However the export tax is set to bite steelmakers' profit by pushing up export cost but pressing down domestic sales price. Market analysts expect the profit in the steel sector to peak in the second quarter, then fall back in Q3 and settle down in Q4. They are upbeat about the prospect of China's steel industry next year on back of improving demand, descending capacity growth and backward capacity shut down.

(Sourced from MySteel.net)

Territory offers AUD 966 million bid for Consolidated Mineral

Territory Resources Limited announced an off market takeover offer for the entire issued capital of Consolidated Minerals Limited. The offer is for AUD2 cash per share and 1.5 Territory shares for each Consolidated Minerals share which values Consolidated Minerals at AUD 966 million on a fully diluted basis. Territory is co advised by Lehman Brothers and Argonaut. Clayton Utz has been appointed as legal adviser to Territory.

As per release, Territory offer represents a
1. 32% premium to the high case valuation of Consolidated Minerals completed by independent expert PricewaterhouseCoopers.
2. 33% and 12% premium to the 90 day volume weighted average price and the 13 July closing price of Consolidated Minerals respectively.

Mr Michael Kiernan chairman of Territory said that the board of Territory considers its offer a superior alternative to the proposed scheme of arrangement currently before the CSM shareholders. Territory's Board considers its offer is a superior alternative for Consolidated Minerals' shareholders.

He said "Territory and its financial backers, Noble Group, DCM DECOmetal International Trading and Lehman Brothers, represent leading marketing, logistics and funding providers on a global scale. Coupled with Territory's digging and delivering expertise, the team represents a formidable group with a track record of delivering value for shareholders. We have put a fully funded offer and our credentials on the table to enable the CSM shareholders to decide on the value. Importantly, the fully funded offer means Territory will not need to raise additional equity funding for the bid."

Territory will fund the cash consideration payable under the offer through a combination of existing cash reserves together with acquisition finance to be provided by Noble, DCM DECOmetal and Lehman Brothers.

Meanwhile, the board of Consolidated Minerals is studying the Territory offer and is seeking to postpone by 28 days a planned shareholders meeting scheduled for July 19th 2007 to vote on Pallinghurst's proposal.

Mr Kiernan said that a combined Territory and Consolidated will aim to make profit of AUD 200 million to AUD 250 million a year within 3 years and would seek to produce 10 million tonnes of iron ore a year to add to Consolidated's manganese production. It would also seek to produce vanadium and mineral sands.

Xstrata Coal makes AUD 143 million offer for Cumnock

Xstrata Coal, through Helios Australia Pty Limited, a related body corporate of Xstrata Coal Pty Limited announced that it has entered into a Merger Implementation Agreement with Cumnock Coal Limited to acquire 100% of Cumnock Coal for a cash consideration of AUD 0.57 per share, or a total of approximately AUD 23 million for the shares that Xstrata Coal does not already own. Xstrata Coal currently owns 83.97% of Cumnock Coal’s ordinary shares and Itochu Coal Resources Australia Pty Limited owns 10.01%.

Under the terms of the Merger Implementation Agreement Cumnock Coal will undertake an equal capital reduction to cancel all the shares in Cumnock Coal and simultaneously issue one new ordinary share to Xstrata Coal, which will pay a cash consideration to Cumnock Coal’s shareholders of AUD 0.57 per share, if they approve the cancellation of their shares by the requisite majorities at a General Meeting of Cumnock Coal. Xstrata Coal will then become the 100% owner of Cumnock Coal.

The proposal requires the transaction to be approved by Xstrata Coal, Itochu and 50% of the non Xstrata and non Itochu shareholders present in person or by proxy at the General Meeting of Cumnock Coal shareholders. A call option has been granted to Itochu, which becomes effective on Xstrata Coal owning 100% of the outstanding shares of Cumnock Coal. The option enables Itochu to buy back 10% of Cumnock No 1 Colliery Pty Limited under a JV agreement and to continue the marketing agreement currently in place between Cumnock Coal and Itochu.

The Independent Directors of Cumnock Coal have recommended the proposal to Cumnock Coal shareholders in the absence of a superior offer. A General Meeting for Cumnock Coal shareholders to consider and vote on the proposal will be convened in late August.

Cumnock Coal’s only source of coal production is from the Cumnock No 1 mine, a single open cut mine in the Hunter Valley coalfields approximately 30 kilometer from Singleton. Cumnock Coal is expected to exhaust its existing economic coal reserves from this pit and cease mining during the 2008 calendar year, although mining may be extended for another year if a satellite pit under the coal preparation plant is mined.

Mr Peter Coates CEO of Xstrata said that “Xstrata Coal’s proposal to acquire 100% of Cumnock Coal will provide Cumnock Coal’s shareholders with the certainty of a risk-free cash payment for their shareholding now. The cash consideration of AUD 0.57 per share is at a significant premium to the last trading price of AUD 0.29 and provides Cumnock Coal shareholders with an opportunity to exit from a fairly illiquid stock at a time of historically high coal prices. The price reflects a fair valuation of the remaining life of mine and the residual resources.”

US Steel joins list of possible acquirers for Stelco – Report

Reuter reported that United States Steel Corporation has joined a growing list of companies looking to buy or invest in Ontario based Stelco Inc.

The report cited Mr Bill Ferguson, president of United Steelworkers Local 8782 at Stelco's Lake Erie works as saying that US Steel officials had visited Stelco last week. This followed similar visits recently by representatives of Ukraine's Metinvest, Russian Severstal and Essar Global Ltd.

But Mr John Armstrong of Pittsburgh based US Steel declined to confirm the visit to Stelco. He added that "However we do occasionally go out and look at opportunities for value added growth either through acquisitions or joint ventures or partnerships."

Stelco said in June 2007 that it would review its strategic options, citing ongoing consolidation in the industry. The company said it would not comment on potential buyers until it received a formal offer.

Heat treatment facility inaugurated in Veracruz works of Tenaris

It is reported that Mr Felipe Calderón President of Mexico has inaugurated a new heat treatment line in Tenaris's production facilities in Veracruz on June 10th 2007. Mr Fidel Herrera governor of Veracruz State, Mr Guillermo Vogel VP finance and member of Tenaris's board and Mr Sergio de la Maza area aanager for Central America for Tenaris were present on the occasion.

The facility, which took 2 years to build at a cost of USD 50 million, will strengthen the position of Tenaris's Veracruz mill as one of the most advanced and competitive tubular production facilities worldwide with the ability to provide customers a wide range of high technology products suitable for use in the most demanding oil and gas drilling environments worldwide.

Tenaris also started up a new heat treatment at its mill in Campana in Argentina in June 2007.

POSCO to cut SS production in July & August

Yonhap reported that South Korea's POSCO is planning to reduce the output of stainless steel products in July and August 2007 as its inventory level rises due to falling demand.

POSCO said that its monthly output would decline to 135,000 tonnes compared with the previous 160,000 tonnes.

MMK mulls building auto body sheet plant in Ohio

Thomson Financial reported that Magnitogorsk Iron & Steel Works is planning to build a steel plant in Ohio to produce auto body sheets.

The report cited Mr Viktor Rashnikov chairman of MMK as saying that “Today, the possibility of building a mill to produce cold rolled automobile body sheets is being considered.” He added that documents are currently being studied and no final decision has been made.

Mr Viktor did not reveal that how much money MMK would invest in the project or what kind of production capacity the plant would have.

Low SS prices force Chinese nickel pig iron producers to cut production

Interfax China reported that China's nickel pig iron producers have been forced to either cut or suspend production due to recent low prices and decreased demand from stainless steel mills.

The report cites an official of Zhejiang Huaguang Group, which is capable of producing 1 million tonnes of nickel pig iron per annum with a nickel content varying from 1% to 14%, as saying that "We are considering cutting nickel pig iron production in the coming months, as downstream demand has shrunk with the price of nickel. We will make a final decision within the week as to how much capacity to cut and when to start the reduction."

The official said that the whole nickel pig iron industry is suffering from both price declines and low purchase volumes from downstream stainless steel mills. However, Huaguang's production has remained stable to date mainly supported by long term contracts previously signed with major stainless steel mills, including Baosteel, TISCO and Zhangjiagang POSCO. The official added that the company supplies approximately 700,000 tonnes of nickel pig iron to stainless steel smelters per year through long term contracts. According to the official many small nickel pig producers in the provinces of Shandong, Sichuan and Fujian have been forced to reduce or suspend production.

Ms Wang Lixin an analyst with Beijing Umetal, a leading domestic metal consultancy said that the price of nickel pig iron grade 4% to 6% nickel fell sharply from a peak of CNY 2,600 (USD 343.01) per tonne unit in May 2007 on the back of all time high prices on the London Metal Exchange to a current CNY 2,000 (USD 263.85) per tonne unit. She added that a sharp decrease in refined nickel prices on both the domestic and international markets, twinned with sluggish consumption from stainless steel mills, is responsible for declining nickel pig iron prices. The three month nickel price on the LME fell to USD 33,350 per tonne from a peak high of USD 51,500 per tonne on May 9th 2007, representing drop of 35.24%.

Last year, Chinese stainless steel mills began to use low grade nickel pig iron as an alternative to refined nickel in an attempt to offset the high costs brought by high nickel prices, resulting in an investment wave in nickel pig iron capacity throughout the nation. Ms Wang said that "Almost 30 new nickel pig iron plants were constructed in Shandong Province alone this year and according to our field research, the new plants are all small-scale and use simple equipment." She claimed that small nickel pig iron plants have flexible production structures and can easily adapt to market demands. She added that "Small plants were able to shift to production of other ferroalloy products when nickel pig iron production became less profitable. Currently, most of the nickel pig iron producers in Shangdong have either cut or suspended production."

China's nickel pig iron production is mostly based on imported laterite ore as a raw material, which is processed in small scale blast furnaces or electric furnaces. China imports laterite ores grade 0.9% to 1.9% nickel mainly from the Philippines, New Caledonia and Indonesia.

Vietnam government to curb steel price increase

It is reported that the Vietnam’s ministry of finance has ordered steel mills to submit reports on their operations and production costs as officials look to curb general inflation in the economy. The report cited Mr Nguyen Tien Thoa head of the ministry’s Price Control Department as saying that "July 20 is the deadline for them to submit the reports. If there are any gross discrepancies between the market price and production costs an investigation will be launched." Mr Thoa said that the finance ministry would work with the ministry of trade to review reports in an effort to stabilize inflation.

Steel prices in Vietnam are still regulated by the government, but like many other commodities, steel has increased by 23% since the start of 2007 to around VND10 million (USD 625) a tonne. The Vietnam Steel Association quoted that deform bar and wire rod late last month at about VND 9.6 million a tonne. After taxes and transportation, costs climb to about VND 10 to VND 10.5 million (USD 625 to USD 656) and even higher when delivering products to remote areas.

Mr Nguyen Tien Nghi deputy chairman of the Vietnam Steel Association attributed the upward trend to rising global prices and a 15% tax on Chinese ingot imports. The majority of Vietnamese mills use ingot imports from China.

But Mr Thoa however, does not agree with the VSA’s explanation, arguing that most of the ingot used in local steel production today was imported months ago when global prices were still low. He said that "When they imported the ingot, the price was only USD 470 to USD 480 a tonne local steel prices should instead be about VND 9.4 million a tonne."

Mr Thoa also criticized the industry for not meeting Government targets. Officials earlier predicted that mills would churn out 3 million tonnes of steel this year. In the first two quarters, companies have only produced 700,000 tonnes. In addition, local ingot supplies can meet about 30% of demand, which should also drive prices lower.

Leighton bags 3 year contract extension for mining services in Indonesia

It is reported that Australia’s Leighton International has been awarded an AUD 125 million 3 year contract extension for mining services for Tanitocoal at its MSJ coal mine in Indonesia.

Leighton has been operating the mine since May 2004. The scope of work for the extension has been significantly increased requiring Leighton to produce almost 8 million tonnes of coal over a 3 year period.

Tanitocoal has a crusher and load out facility on the Mahakam River. The mine is part of Tanitocoal's expansion plans and is located approximately one and a half hours drive from Samarinda, East Kalimantan on the northern side of the river.

PT Tanito Harum is one of Indonesia's first private coal mining companies. The company has been operating for more than 20 years and is currently producing over 7 million tonnes of coal per annum.

The contract extension follows the announcement earlier this month that Leighton had secured 2 new coal mining contracts in Indonesia worth almost AUD 700 million.

SSAB buy of Ipsco cleared by Canadian court

IPSCO Inc and SSAB Svenskt Stal AB announced that the Ontario Superior Court of Justice has issued the final order approving the Plan of Arrangement whereby SSAB Canada Inc a subsidiary of SSAB will acquire all of the outstanding shares of IPSCO.

As previously announced on May 3rd 2007, IPSCO and SSAB entered into an agreement providing for IPSCO to be acquired by SSAB for USD 160 per share in cash for a total equity value of approximately USD 7.7 billion.

IPSCO and SSAB have received shareholder and all regulatory approvals that are a condition to the completion of the transaction. The completion of the arrangement remains subject to the satisfaction of the remaining conditions specified in the arrangement agreement, which are described in the Management Proxy Circular dated June 11th 2007.

IPSCO is a leading producer of energy tubulars and steel plate in North American with an annual steel making capacity of 4.3 million tons. IPSCO operates four steel mills, eleven pipe mills, and scrap processing centers and product finishing facilities in 25 geographic locations across the United States and Canada. The Company's pipe mills produce a wide range of seamless and welded energy tubular products including oil & gas well casing, tubing, line pipe and large diameter transmission pipe.

SSAB is a Swedish based publicly traded corporation with a leading European position in Quenched & Tempered heavy plate and EHS/UHS steel sheet. The Group comprises four divisions Division Sheet and Division Heavy Plate are the steel operations with steel shipments of 3.1 million tonnes in 2006, Plannja is a processing company in building products, and Tibnor is the Group's trading arm supplying a broad product range of steel and metals.

Mechel reports H1 operational results

Russian leading mining and metals companies Mechel OAO announced its operational results for January to June of 2007.

(Thousand tonnes)

Mr Vladimir Polin CEO of Mechel commenting on the operational results for the January to June 2007 said that "Mechel continued to improve output in both its mining and steel business segments in the first half of this year. The coal output increase was supported by the commissioning of our new mine, Olzherasskaya-Novaya, last year and by further operating efficiencies in our functioning mines and open pits. The iron ore concentrate output approximates last year's level, which is consistent with the designed capacity of Korshunov Mining Plant, our iron ore concentrate producer. We took maximum advantage of the favorable pricing conditions at the London Metal Exchange and increased our nickel production."

Mr Polin added that "In our mining segment, we continued increasing the output of commercial value added metal products. In our hardware segment we increased output of the products, which are in demand on the market. In line with that effort, new equipment was commissioned at Beloretsk Metallurgical Plant to produce high tensile stabilized reinforcing wire, which is consumed in the construction industry. Finally, the increase we achieved in coke production was due to the acquisition of Moscow Coke and Gas Plant last year and the commissioning of the new coke battery at Chelyabinsk Metallurgical Plant."

SSINA releases January to April market data

The Specialty Steel Industry of North America has released the latest available statistical data on imports, US consumption and import penetration for January to April 2007 as compared to January to April 2006.

Imports of total specialty steel comprising stainless steel, alloy tool steel and electrical steel in YTD April 2007 were 332,465 tons up by a 14% increase compared to YTD April 2006; US consumption was 984,252 tons up by 1% while four month import penetration was 34%, a four percentage point increase.

Alloy tool steel
Imports in YTD April 2007 were 37,238 increased by 7% YoY as compared to YTD April 2006 while US consumption and import penetration were not calculable.

Electrical steel:
Imports in YTD April 2007 were 36,189 tons, a 100% increase compared to YTD April 2006; US consumption was 147,138 tons, an 11% increase; four-month import penetration was 25%, an eleven percentage point increase.

Stainless Steel
Imports of total stainless steel in YTD April 2007 were 259,037 tons, an 8% increase compared to YTD April 2006; U.S. consumption was 806,585 tons, a 1% decrease; four-month import penetration was 32%, a three percentage point increase.

In tons
Source SSINA

SSINA is a Washington DC based trade association representing virtually all continental specialty metals producers. Its member companies are AK Steel Corporation, ATI Allegheny Ludlum Corporation and ATI Allvac, Carpenter Technology Corporation, Crucible Specialty Metals, Electralloy, Haynes International Inc, ThyssenKrupp Mexinox SA de CV, North American Stainless, Outokumpu Stainless Inc, Precision Rolled Products Inc, Latrobe Specialty Steel Company, Universal Stainless and Alloy Products and Valbruna Slater Stainless Inc.

CVRD JV to build a 5 million tonnes steel mill in Espirito Santo state of Brazil

Brazilian Companhia Vale do Rio Doce announced that it has signed a letter of intention with Baosteel Group Corporation and the Espirito Santo state government of Brazil to build a steel slab plant with an initial production capacity of 5 million tonnes per year in the industrial district of Anchieta in Espirito Santo state.

The announcement ends a long running wrangle with the state government of Maranhao in northern Brazil where CVRD and Baosteel had previously planned to build the plant. CVRD and Baosteel had planned to build a mill in Maranhao since at least 2003, but the project ran into difficulties over its location and other government hurdles and Mr Roger Agnelli CEO of CVRD has threatened several times to cancel the project.

CVRD which will be a minority partner in the project has declined to say how much would be invested in the mill but reports earlier in the year, when the project was first revealed as a possible alternative to Maranhao, suggested investments over the medium to long term could be as much as USD 10 billion.

CVRD said that “This initiative is consistent with CVRD’s strategy of attracting new investments in the steel industry in Brazil, thereby increasing iron ore consumption and promoting job generation and income growth in Brazil.”

EU extends suspension of AD tariff on ferromoly from China

It is reported that European Union will refrain for at least another 6 months from imposing a tariff on a ferroalloy from China to limit costs for EU steel maker.

It is noted that since October 2006, EU had removed the levy for 9 months because imports from China fell, prices rose and European ferroalloy producers such as Belgium's Sadaci NV profited. In fact, such suspension policy of duty was made successfully by Euroalliages, which acts as ferro molybdenum makers.

EU had imposed the levy for 5 years in February 2002 to curtail Chinese exporters for selling ferromolybdenum in Europe below domestic prices or below the production cost. EU began an investigation of as long as 15 months into whether to let the trade protection lapse or to reinstate it for 5 years at the same or a different rate. The inquiry prevented the tariff from lapsing as scheduled in February 2007 without negating the 9 month suspension and the European ferromolybdenum industry has become profitable since the duty was imposed.

Meanwhile, EU has decided to prolong a suspension of the 22.5% duty on ferromolybdenum until January 31st 2008. EU said that it is appropriate to prolong the tariff suspension until the final time limit for the conclusion of the interim review.

Aricom increases stake in Garinskoye iron ore project to 70%

Anglo Russian mineral developer Aricom, in a statement said that it has increased its stake in the major Garinskoye iron ore project in Russia's Amur region to 70% from 60%.

Aricom tips Garinskoye to become one of the world's most attractive iron ore mining assets. The field was explored back in the early 1950s and contains A+B+C reserves of 389 million tonnes of iron ore.

Aricom was established by Peter Hambro Mining, which produces gold in Russia, in 2003. Aricom owns 49% of Bolshoi Seym deposit which contains ilminite and magnetite in the Amur region and Russia's Interros owns the other 51%. Aricom also holds licenses to the Kuranakh iron ore & ilminite deposit in the Amur region and the Kimkanskoye & Sutarskoye iron ore deposits in Amur. These deposits should go on stream in 2010.

MMK orders for secondary refining facility

Magnitogorsk Iron and Steel Works announced that it signed a contract with SMS Mevac for the supply of the equipment to be used in the construction of the secondary metallurgy plant for CCM No 6 of the basic oxygen furnace shop.

The process equipment of the secondary metallurgy plant will include the following machinery twin ladle furnace, twin circulation type vacuum degasser, slag removal stand for the casting ladle and homogenization unit for soft blowing the steel in the ladle.

The construction of the secondary metallurgy plant will ensure serial casting of steel by CCM No 6 up to 20 strength class to be used in producing premium quality automotive sheets for exterior automobile parts and broaden the range of steel grades and secondary metallurgy capacities of the BOF designed to desulfurize and perform deep decarburization of treated steel; increase the volume of steel vacuum treated in the BOF. The facilities will be fitted with the state of the art equipment ensuring the processing of any steel grades produced in the BOF Shop including the steel grades used for production of automotive steel sheets, large diameter longitudinal welded pipes of enhanced hydrogen sulfide resistance and corrosion resistant pipes of X80 and higher strength classes; special steel grades; shipbuilding and high pressure vessels steel grades; steel grades used in automotive industry.

The technology of making steel for producing premium quality automotive sheets and large diameter pipes imposes rigid requirements for steel quality. Almost all steel of the above mentioned grades have to be vacuum treated.

The release added that the commissioning of the Plate Mill Complex and Cold rolling Complex in 2009-2010 would allow broadening the range of steel grades produced by the BOF and will call for the increase in capacity of secondary metallurgy plant and ability to treat the steel using state of the art technology.

Baosteel increases ferritic SS production

Interfax China reported that Shanghai Baosteel Stainless Steel Company Limited would increase ferritic stainless steel production to more than 50% of the company's total stainless steel output in 2007 in an attempt to stabilize sales revenues. Mr Wang an official of Baosteel Stainless told Interfax that "We have already increased ferritic stainless steel production to more than 50% of the company's total stainless steel production for the H1 of 2007 in an effort to stabilize our sales revenue. Moreover, ferritic stainless steel production for the whole of this year has been set to between 50% and 55% of total stainless steel production."

Falling nickel prices have led to a subsequent plunge in stainless steel product prices, with major stainless steel mills such as Baosteel and Taiyuan Iron and Steel Company Limited slashing the price of 304 series stainless steel products by CNY 8,000 (USD 568.03) per tonne as of July 1st 2007. Mr Wang explained that "On the other hand ferritic stainless steel prices are comparatively stable, as this type of stainless steel does not contain nickel metal."

Baosteel Stainless developed and produced 21 new types of stainless steel product in the H1 of 2007, totaling 30,000 tonnes, 40% of which were ferric products. Mr Wang said that Baosteel has reduced stainless steel production by at least 20% since the start of July 2007 due to falling nickel and stainless steel prices. He said that during the surge in nickel prices in the January to May 2007, Baosteel successfully cut production costs by CNY 43 million (USD 5.68 million) through the utilization of low grade nickel pig iron.

Mr Wang said that Baosteel Stainless consumed 36,000 tonnes of nickel pig iron during stainless steel production in the January to May 2007 reducing melting costs by CNY 68 (USD 8.98) per tonnes. The company has long term contracts with nickel pig iron producers and supplies them with imported laterite ore for processing into nickel pig iron. However, Baosteel Stainless ceased nickel pig iron purchases in July 2007 due to a dramatic fall in nickel prices causing nickel pig iron produced stainless steel to become unprofitable. Mr Wang explained that "We have now returned to relying on refined nickel stockpiles, due to concern that nickel prices will fall further and impact stockpile value."

Perstima upgrades its tin mill complex

It is reported that Perusahaan Sadur Timah Malaysia Bhd spent MYR 25 million to upgrade its tinplate plant in Pasir Gudang at Johor, which was completed last week. It will also invest MYR 20 million to upgrade its tinplate plant in Vietnam.

Mr Tan Sri Ab Rahman Omar chairman of Perusahaan Sadur Timah during company AGM told reporters that the production of tin free steel was expected to commence by March. He added that “By the first quarter next year, we expect total tinplate including tin free steel production, to reach 320,000 tonnes a year from 270,000 tonnes currently. We will be in a better position to capture new markets and maintain competitive pricing with the completion of the upgrading at our Malaysia and Vietnam plants.”

On the outlook for tinplate, Mr Rahman said the group’s operational environment was expected to remain challenging and competitive amidst higher raw materials prices, alternative packaging materials and cheaper tinplate imports from China. Despite the uptrend in tinplate prices, Mr Rahman said that “The price increase will not make tinplate uncompetitive as the price of raw materials for other forms of packaging like resins and aluminum are also on the rise.”

China revises 2006 GDP growth to 11.1%

China’s National Bureau of Statistics reported that China's GDP growth in 2006 has been revised to 11.1% based on constant price, 0.4% points higher than the preliminarily calculated growth rate.

China's GDP in 2006 was revised to a total of CNY 21.0871 trillion (USD 2.7746 trillion) based on current price up by CNY 146.4 billion over the preliminarily calculated figure.

According to the revised figures the added value of the primary industry grew 5% in 2006 that of secondary industry 13% and that of tertiary industry 10.8%.

China's annual GDP calculation goes through three steps
1. Preliminary calculation.
2. Preliminary verification and
3. Final verification.

SeverCorr receive its first scrap consignment

It is reported that the new SeverCorr electric arc furnace based steel mill at Columbus in Mississippi has received its first 20 tons shipment of scrap metal from local recycler Columbus Scrap Material Inc. Mr Gregg Rader president of Columbus Scrap Materia said that “We are honored to be the first to supply product to SeverCorr for this next phase of their production.”

Mr Tony Gurley SeverCorr’s melt shop manager said that “We are delighted to be able to do business with a local company like Columbus Scrap Material. It is fitting that theirs should be the first load delivered.”

SeverCorr would use premium busheling factory bundles and shredded scrap in its manufacturing process. It will be the first scrap based CSP steel mill in the world designed to produce exposed automotive steel, regarded in the industry as one of the hardest steels to manufacture in large quantities. SeverCorr uses advanced technology to produce thin slab steel. With its electric arc furnace, the heap of scrap provided by CSM may become a hot band roll of steel in as little as four hours. In a basic oxygen furnace, it could take up to two weeks to produce a hot roll band.

Jefferson Iron & Metal, at Birmingham in Alabama has been retrained by ServerCorr to manage scrap procurement for the mill.

Vinashin to build USD 81 million shipyard in Hai Phong

Vietnam News Agency reported that Vietnam’s largest shipbuilder Vinashin agree to build a VND 1.3 trillion (USD 81 million) Vinashin An Duong shipyard in the northern port city of Hai Phong. The complex will house a 40 hectare factory and 20 hectare wharf. The work is due to begin late 2007 and slated for completion by 2009.

Vinashin also said in a statement that it is also set to spend VND 1.5 trillion (USD 94 million) on rebuilding the Cua Viet seaport in the central Quang Tri province. Vinashin added that it will turn Cua Viet into a 300 to 400 hectare port complex with a shipyard, ecotourism facilities, a golf course and a wharf to accommodate 100,000-ton ships.

Established in 1996, Vietnam National Shipbuilding Corporation and its 20 subsidiaries aim to transform Vietnam into the world’s 11th largest shipbuilder, four spots up higher than its current standing, in the near future. They aim to earn revenues of USD 1 billion in 2007 up from USD 690 million in 2005.

Ukrainian iron ore imports in H1 jump up by 56% YoY

Interfax reported that Ukrainian steel makers increased imports of iron ore commodities by 56.4%YoY to 1.44 million tonnes in the first half of 2007.

As per report, imports of sinter shot up by 94.8% to 534,500 tonnes, while imports of iron ore concentrate dipped by 0.6% to 615,000 tonnes.

Ukraine imported 290,000 tonnes of pellets in the first half of 2007, while it only imported 27,000 tonnes of pellets in the same period of 2006.

It imported 293,200 tonnes of iron ore commodities in June 2007 alone including 97,000 tonnes of concentrate, 60,300 tonnes of sinter and 135,900 tonnes of pellets.

Evraz revised offer for Highveld termed fair but minorities may still not bite

It is reported that minority shareholders in Highveld Steel & Vanadium, which have been presented with a 15% higher offer from Evraz are still not likely to accept the ZAR 93 a share offer for their Highveld stock.

A Johannesburg based analyst, who described the latest offer said that minority shareholders might wait for Evraz to improve the offer again before they would accept. He said that the market share price of Highveld, which was around ZAR 96 a share could indicate that investors were anticipating a higher offer. Mr Troye Brady an analyst from Nedcor Securities commented that the ZAR 93 a share offer was closer to fair value for the company, but added that there might be one or two minorities that planned to hold out until they were offered something closer to ZAR 130 a share.

The new offer is in line with the value determined by the Highveld board’s independent financial adviser, Standard Bank and the board has advised minority shareholders to accept the new offer, which will close on August 6th 2007. Evraz initial offer was valued at around ZAR 82 a share at the time that Standard Bank evaluated the offer and the board accordingly advised shareholders not to accept the offer. Highveld Steel & Vanadium in a statement said that “If Highveld shareholders are able to sell their shares on the market for a higher price then they should consider doing so.”

Evraz owns 54.1% of Highveld and had an option to buy Credit Suisse’s shareholding of 24.9%. It made a general offer to minority shareholders to acquire all the outstanding shares in the company after its shareholding exceeded 35% last month. At the time, the company argued that its offer was fair and later confirmed that the divesture conditions imposed on its acquisition by competition authorities had built in a discount to its offer to minorities.

Australasian Resources update on Balmoral South iron ore project

Australian iron ore development company Australasian Resources Limited is on track with the development of its 100% owned Balmoral South Iron Ore Project located in Pilbara region of Western Australia, with infill drilling almost 50% complete and the Shougang technical team soon to arrive in Australia.

The key points for the development are
1. Infill drilling designed to upgrade Mineral Resource and Ore Reserve at project fifty per cent complete
2. Upgrades to the Mineral Resource and Ore Reserve anticipated to occur during Q3 2007
3. Feasibility study continuing
4. Shougang technical team to arrive in Australia during August 2007

Australasian Resources Limited is currently conducting an infill drilling program that has been designed to upgrade the Mineral Resource and Ore Reserve in future as required for the Balmoral South Bankable Feasibility Study. Both Reverse Circulation and diamond drilling are being undertaken with pleasing progress to date. Since the last market update at the end of May 2007 an additional 10 drill holes have been completed, including 1,700 meters of RC drilling and 500 meters of diamond drilling. Till now 20 of the 42 holes planned in the infill program have been completed and expects the current phase of drilling to be concluded by September 2007. Further upgrades to the Mineral Resource and Ore Reserve are therefore anticipated to occur during the 3rd Quarter 2007.

Iran & China sign coal mining contract

Iran and China have sealed a deal for the extraction of 900,000 tons of raw and 450,000 tonnes of concentrated coal from Iran's Tabas mines. It is reported that Iran Minerals Production & Supply Company, Chinese Kani Kavan Sharq Company and China inked a contract on preparing and equipping the Parvardeh 4 Coal Mine in Tabas at central Iran.

The Chinese ambassador to Iran, the deputy director of the Iranian Mines and Mining Industries Development and Renovation Organization, the managing director of IMPASCO, Yazd Province’s deputy governor general and some members of parliament attended the signing ceremony.

Mr Ardeshir Sad Mohammadi MD of Iran Minerals Production and Supply Company said that the first phase of the mine with a capacity of 750,000 tonnes of coal concentrate per year will go on stream on August 24th 2007 and it will be the country’s first totally mechanized coal mine.

Mr Sad Mohammadi stated that referring to the country’s coal projects, like the Kerman Province project with an annual production capacity of 1.3 million tonnes and Shahrud region project with a similar capacity, within four years the country’s coal production capacity will increase by a factor three. He said "The Tabas coal mines covers an area of around 20 thousand square kilometers in three Iranian provinces of Khorasan, Yazd and Kerman. The coal mines comprise of the Parvardeh, Nayband, Mazino and Abdorghi zones."

Mechel to increase steel assets in Eastern Europe

Interfax reported that Mechel is interested in acquiring metalware enterprises in Eastern Europe. Mechel is looking at buying new assets in Eastern Europe as an addition to developing production capacity at its two plants in Romania and one plant in Lithuania.

Mr Vladimir Polin GD of Mechel Management Company while speaking at the press conference in Beloretsk said that "The Beloretsk Metallurgical Combine covers demand for metalware products in Russia, therefore if we are talking about acquisitions, then we are interested in enterprises in Europe but final decision hasn't been made yet."

The Mechel Steel Group has consolidated controlling shares in the Chelyabinsk Iron & Steel Works Mechel Energo, Yuzhny Kuzbass coal producer, Korshunov GOK metalware producers Beloretsk Metallurgical Combine and Vyartsiliya Metalware Plant, Posyet and Kambarka ports, special steel maker Izhstal Uralskaya Kuznitsa and nickel producer Yuzhuralnikel. The group also has assets in Romania and Lithuania.

Ukraine GDP grew by 7.8%YoY

RIA Novosti reported that Ukraine's GDP grew by 7.8%YoY in June 2007 and 7.9%YoY in January to June 2007.

The report cited a spokesman for the Ukraine’s statistics committee as saying that GDP growth of some USD 58 billion in January to June 2007 followed by a 15.5% increase in gross added value, a 13.7% hike in processing industries and an 11.8% growth in construction.

The Ukrainian economics ministry said its GDP forecast for 2007 would likely be reviewed up to 8% and inflation is expected to total 7.5% to 8.5% in 2007.

The Ukraine's finance ministry also forecasted that 2008 GDP growth and inflation at 7.2% and 6.8%, respectively. In 2006, the Ukraine's GDP hit a historical maximum of USD 114.6 million with 7.1% GDP growth and inflation stood at 11.6% in 2006.