Indian iron ore prices nearing USD 150 mark

China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters released the average reference prices for import transactions of Fe 63.5% Indian iron ore concluded last week on September 10th 2007.

The change is with respect to prices posted on September 3rd 2007.

The movement of CCCM released prices over last one year is as under
Issuance Date

In USD

The CCCMC reference prices are average prices for import transactions of Fe 63.5% Indian iron ore concluded the week prior to issuance date of such reference prices and the reference price practice is intended to regulate the domestic trading of Indian iron ore and avoid speculation on the raw material for China's booming steel industry.

MOIL to set up a ferroalloy plant at Bobbili in AP

It is reported that Manganese Ore India Limited will set a 75,000 tonne capacity ferroalloy plant at 100 acres of land in Andhra Pradesh Industrial Infrastructure Corporations Bobbili industrial area in Vizianagaram district of Andhra Pradesh with an investment INR 150 crore. The facility is slated for commissioning within 2 years

MOIL proposes to set up a 16.5 MVA furnace for ferromanganese and a 27 MVA furnace for silicomanganese at the Bobbili facility, which would produce 30,000 tonne and 45,000 tonne of the ferroalloys respectively.

Mr Kishan Lal Mehrotraa CMD of Manganese Ore said that it has chosen Bobbili in the north coastal Andhra region for the plant due to its close proximity to rail & port facilities and the power subsidy being offered by the state.

Mr Mehrotraa added that “While planning to enhance the manganese ore production in line with the growing demand for the same from the steel industry in India, we are also going for value addition because if we remain a single commodity entity, it will be difficult to take our growth plans forward.”

Steel Authority of India Limited and Manganese Ore India Limited had signed a MoU for setting up of a 50:50 JV company to produce ferromanganese and silicomanganese in July 2007. Through three furnaces to be set up in or around Bhilai in Chattisgarh, with total capital outlay of INR 225 crore with a debt equity ratio of 1:1, the proposed JV will initially supply a projected volume of around 31,000 tonnes of ferromanganese and 70,000 tonnes of silicomanganese, to meet a part of SAIL's requirement of these ferroalloys to produce 24 million tonnes of crude steel by 2010, as part of the SAIL's growth plan.

MOIL in the public sector has large resources of manganese ore in India and is capable of providing high value added inputs. It currently has a small ferroalloy plant with 10,000 tonne capacity at Balagarh in Madhya Pradesh.

SAIL to fund expansion plans from internal resources and market borrowings

Dr Akhilesh Das union minister of state for steel recently informed the lower house of Indian Parliament that Steel Authority of India Limited, which is undertaking ambitious modernization and expansion plans will fund the expenditure from its own internal resources, supplemented by market borrowings as required.

SAIL is undertaking various projects to increase production of hot metal from present level of 14.6 million tonnes per annum to 26 million tonnes per annum by the year 2010-2011 at an indicative cost of INR 49,000 crores. SAIL has taken various steps to rationalize its cost of production, which includes 100% production of steel through basic oxygen furnace route,100% processing of steel through continuous casting, value addition by reduction of semi finished steel, auxiliary fuel injection system in all the blast furnaces, state of art process control computerization/automation, de bottle necking and productivity improvement schemes, secondary refining and augmentation of production facility at coal and iron ore mines.

SAIL plans to develop area adjoining the Salem Steel Plant into a steel sector special economic zone, which will have units that would be setting up manufacturing facilities in different areas such as utensils, kitchen and hospital wares, machines and equipments for food processing, chemicals and pharmaceutical sectors, pipes and tubes manufacturers etc to be set up by companies other than SAIL. SAIL will provide customized steel input to the processing units in the proposed SEZ. The details of the project will be known only after formulation of project contours such as master planning, detailed feasibility report, utility planning and market study. The scheme is currently in planning stage.

NTPC and BHEL to form JV for EPC activities in power sector

National Thermal Power Corporation Limited and Bharat Heavy Electricals Limited shall form a JV for carrying out Engineering Procurement and Construction activities in the power sector on mutually beneficial terms. MoU to this effect was signed in New Delhi today in the presence of Mr AK Puri CMD of BHEL and Mr T Sankaralingam CMD of NTPC.

JV shall be jointly owned by NTPC and BHEL on the basis of 50:50 equity participations. The post of CMD of the proposed Joint Venture Company shall be rotated amongst the senior officials of NTPC and BHEL

NTPC , having an operating capacity of over 27,900 MW accounting for 29% of India’s power generation capacity, is looking for business synergy in order to expand its business activities in addition to plans to become a 75000 MW plus Company by 2017. NTPC has developed world class technology and skills in design, engineering, construction, project management, operations & maintenance and renovation & modernization of power projects.

BHEL is the largest engineering and manufacturing enterprise in India in the energy related infrastructure sector and is having specialization, expertise in manufacturing power plant equipment like thermal, hydro, gas and nuclear turbine generators, transformers, capacitors, reactors, circuit breakers, switchgears, insulators, manufacturing equipment and systems for industries viz. captive power plants, industrial steam turbines, industrial boilers, development of rolling stock and traction propulsion systems and technology for exploiting non conventional and renewable sources of energy etc.

Orissa villagers accuse NINL of water pollution

SNS recently reported that villagers of Sarangapur, located inside the Kalinga Nagar industrial complex in Orissa locked all the 3 gates of the Nilachal Ispat Nigam Limited, burning tyres and stopped the entry of employees demanding displacement.

The agitators, under the banner of the Sangram Jan Manch accused NINL of polluting the ground water resources of the villages, depriving them of clean drinking water and damaging cultivable lands due to discharge of effluents.

Mr Harekrushna Sahoo leader of the Sangram Jan Manch said that “The Sarangapur village has over 650 residents. The plant is located close to the village, as a result of which effluents from it are damaging our houses and fields and polluting water bodies, besides spreading various diseases among the villagers. We had been repeatedly assured by the district administration about displacement earlier. But it was not meted out. We have been cheated time and again. Hence, we locked up all the three gates of the plant and prevented the entry of the officials and the workers.”

The report cited Mr DP Mishra deputy GM personal of the NINL as saying that “The villagers prevented our officials and workers to enter the campus since early in the morning. The agitation continued about 10 hours and both our A and B shift workers and officials could not enter. The production of the plant has been hampered, following the agitation.”

He added that the agitation by the Sarangapur villagers is not related to the NINL management. He said “They are demanding displacement and we have nothing to do about it. Their problem lies with the state government and it has already initiated the measures. Earlier, the revenue divisional commissioner, central division had reviewed the problems of the villagers and the government will do the needful.”

Later, the villagers withdrew their agitation after an assurance was given by the district administration that a meeting would be held on September 12th 2007, to sort out their grievances. The villagers threatened to agitate further, if they did not get displaced by September 15th 2007.

HZL reduces zinc price by 2.1%

It is reported that Hindustan Zinc Limited has lowered the prices of zinc for the third time in eight days to match global rates.

HZL reduced zinc the price by INR 2,900 or 2.1% to INR 136,300 per tonne and reduced lead prices by 1.2% to INR 137,500 per tonne.

Vedanta bauxite mining plan in Niyamgiri hills facing trouble

Mint recently reported that Vedanta Resources is facing fresh delays in its battle to mine Niyamgiri Hills in Orissa forest considered sacred by tribals after Supreme Court ordered an impact study. Supreme Court has ordered a comprehensive government report on the impact of large scale mining activities in the region on tribes, wildlife and the environment.

Justice Mr Arijit Pasayat, while issuing the order last week, said that “Vedanta’s application will set a precedent for all projects in mineral rich forest areas. The court wants the impact report by October 5th 2007, when it next hears the case.” He added that the court, which will need time to study the report, has the power to halt the project, force Vedanta to find another area to mine or give the project the green light.

Niyamgiri Hills, which has elephants, rare golden geckos and orchids, are worshipped by the Dongria Kondh tribe. Local tribes said that “Niyamgiri is our god. We are dependent on these mountains. If we go somewhere else we will die.”

Ms Bratindi Jena of the international NGO ActionAid, which has been working with the tribals, said that “If this mining permission is granted, the primitive group will completely vanish, they cannot go and live in some other place and cope with another way of life. They live a completely different lifestyle, they go into the woods to collect their food and they are completely dependent on the mountain for their social, religious and cultural identity.” She added that Vedanta’s plans proceeding would make a mockery of the special protection that primitive tribal groups are afforded under the constitution.

Vedanta’s project is made up of 3 parts, an alumina refinery, smelter and the mine to obtain the bauxite buried under 672 hectares of forest in the Niyamgiri Hills. The construction of refinery is already completed and the smelter is being built.

India placed at 69th place in world economic freedom ranking

It is reported that India stands at 69th place in world ranking with 6.6 points out of 10. Mr Kamal Nath India’s union commerce minister while releasing the Economic Freedom of the World annual report 2007 said that “In 1990, India was rated at 4.9 out of 10 and in 2005 it is 6.6. This is one of the largest increases in the last 15 years of any country."

China with 6.3 points is placed at 86th place in 2005, while Hong Kong and Singapore once again occupy the top 2 positions, followed by New Zealand, Switzerland, US, UK, Canada, Estonia, Ireland and Australia.

The Economic freedom of the World annual report 2007 compared the level of economic freedom in 141 countries. The essential ingredients of economic freedom are personal choice, voluntary exchange, freedom to compete and security of privately owned property.

JSW Steel Jharkhand coal JV in troubled waters - Report

PTI recently reported that JSW Steel’s move to acquire a coal block in Jharkhand seems to have run into trouble with Jai Balaji Sponge, one of its JV partners, walking out of the proposed consortium.

The report cited a Jharkhand official as saying that “Jai Balaji walked out of the JV, prompting JSW to seek the coal ministry’s help in this connection. The coal ministry had asked Jai Balaji Sponge to submit a legally tenable agreement by May 2007 but none of Jai Balaji’s representatives participated in any of the meetings to form the JV and the project is getting delayed.”

However, the report cited Mr Seshagiri Rao finance director of JSW Steel denying that Jai Balaji has walked out of the JV and insisting that Jai Balaji is still a partner in the JV.

The Rohne coal block in Jharkhand was allocated to a JV company floated by JSW Steel, Bhushan Steel & Power Limited and Jai Balaji Sponge. The JV was aiming to extract 230 million tonnes of coal from the block.

Group constituted to review the royalty rates

It is reported that a study group has been constituted in the ministry of mines to review the royalty rates for minerals.

Mr Sis Ram Ola union minister of mines said that as per the provisions of the Mines and Minerals (Development & Regulation) Act 1957, the rates of royalty can be enhanced only once in 3 years. Mr Ola added that “Since the rates of royalty were last revised on October 14th 2004, further revision in royalty rates is possible only after October 13th 2007.”

He informed the House that state governments have sought to give preference to such applicants in grant of mineral concession who are willing to do value addition of the minerals within the state. He added that a national mineral policy, which also covers this issue, is under consideration of the central government.

Iron ore road movement restriction in Keonjhar hits rail loading

BL reported that the rake loading of iron ore in Orissa’s Banspani Daitari area, served by the East Coast Railway, has remained suspended for the past few days due to the non availability of ore after the district administration in Keonjhar has imposed restriction on the movement of ore in view of the critical road condition in the area.

As a result, as many as 1,200 indents, placed by both exporters and domestic consumers of ore, pending with East Coast Railway for iron ore loading have been cancelled and no indent for loading iron ore in Banspani to Daitari area is pending with East Coast Railway.

East Coast Railway, on an average loads 3 rakes a day in the Banspani to Daitari area, though it can load up to 5 rakes a day. There are as many as 12 railway points in the area where ore is brought by road from the mines for loading into the rakes. The restriction clamped by the district administration has thrown everything out of gear. ECoR has taken up the matter with the state government as well as exporters and domestic consumers.

NTPC looking for alternative site for Badarpur power plant

It is reported that NTPC is in the process of scouting alternate site for the Badarpur thermal power station stage III, which is to be shifted due to technical problems, and has short listed Rihand and some other sites in Uttar Pradesh for the purpose.

While Rihand will be brownfield expansion, more than 1 Greenfield locations at other places in Uttar Pradesh have also been identified. Power from the project will be supplied to Delhi.

The third stage expansion of Rihand super thermal power project has been included in the 11th Plan capacity addition program of the company to replace the third stage of Badarpur. The stage III Rihand expansion will involve putting up an additional capacity of 500 MW. The second stage expansion of Rihand super thermal power project in Sonebhadra in UP was completed in 2005 and involved setting up of two units of 500 MW each.

NTPC is also planning to use Rihand Dadri Bipole transmission line for evacuation of power from the stage III of project to Delhi.

SCCL Jallaram shaft approved by CCEA

The Indian Cabinet Committee on Economic Affairs recently gave its approval for Jallaram Shaft project of Singareni Collieries Company Ltd for a net capital requirement of INR.467.78 crore and total outlay of INR.512.87 crore including a portion of interest during construction of INR.14.35 crore.

CCEA also accorded flexibility to SCCL in the implementation stage within the approved cost estimates to respond to improvements in technology and equipments which would result in improved profitability and productivity parameters.

Jallaram Shaft Project is located in Karimnagar District of Andhra Pradesh. Upon completion of the project, 2.285 million tonnes per annum of coal would be produced and will cater to the demand of NTPC Ramagundam and other cement units.

Singareni Collieries Company Ltd is a Public Sector company owned by Government of Andhra Pradesh with equity sharing of 51:49 between Government of Andhra Pradesh and Government of India. At present, SCCL has 45 Underground and 12 opencast operating mines and the Company produced 37.71 million tones of coal in the year 2006-07.

CLP to set up 100MW wind power project at Samana in Gujarat

The Hong Kong based CLP group, earlier known as China Light and Power Company, has announced that it will develop a 100.8 MW wind farm at Gujarat in India. The Samana project will be the largest wind project undertaken to date by CLP and increases its renewable energy portfolio by almost one third to approximately 4.4% of its total generating capacity.

Construction of the new wind project, which will cost more than USD 125 million is planned to commence in November 2007 and it is expected to be completed in two phases, 50.4MW by June 2008 and the other 50.4MW by January 2009. The wind farm will involve the building of more than 126 wind turbines of 800KW capacity each.

Mr Andrew Brandler CEO of CLP said that "The Samana project reinforces CLP's commitment to growing our position as a leading Indian power producer through CLP India. It will also make an important contribution to the Group's renewable energy portfolio, which is growing both geographically and in terms of its contribution to our generating capacity."

CLP India is one of the largest foreign investors in the Indian power sector and is responsible for developing CLP's presence in that market. CLP India already owns and operates a modern 655MW combined cycle gas power plant in Village Paguthan in Gujarat through its subsidiary Gujarat Paguthan Energy Corporation Private Limited. Last year, CLP, through its Roaring 40s JV with Australia's Hydro Tasmania, entered a separate agreement with Enercon India to develop a 50.4 MW wind farm project at Khandke in the state of Maharashtra to be commissioned by the end of this year.

ArcelorMittal to acquire 51% stake in Rozak

ArcelorMittal announces the proposed acquisition of 51% of the shares of Rozak AS, the main Turkish steel stockholding company. The transaction is subject to antitrust authorities’ approval, and is expected to be completed by year end 2007.

Rozak has 5 facilities in Turkey at Gebze, Ikitelli, Eregli, Iskenderum and Izmit and its offices are located in Ikitelli and Eregli. Gebze and Izmit. Rozak is specialized in H profiles, sheet and plates. In 2006, it shipped 450,000 tons and its turnover reached EUR 260 million. It was created in 1983 and was owned since then by the founding family

Mr Gonzalo Urquijo member of the Group Management Board of ArcelorMittal and in charge of Steel Solutions & Services said that “This acquisition is an important step for ArcelorMittal to meet the strong Turkish demand in all products. Turkey is one of the fastest growing steel markets. The construction sector is very dynamic, with a growth rate above 10%. The acquisition of this stake in Rozak will allow our steel distribution business in this country to reach its capacity target in 2010.”

ArcelorMittal is already active in Turkey in flat carbon steel production, through a participation in Borçelik, as well as in the packaging and steel service centre businesses.

Severstal’s H1 net profit surges by 134% YoY

Severstal has reported half year results reflecting a significant improvement compared with the same period last year due to the continuation of positive first quarter trends.

H1 2007 Highlights are
1. A record USD 7,711 million in revenues up by 31.1% YoY
2. EBITDA of USD 2,094 million up by 60.7% YoY
3. Net profit up 134.5% YoY to USD 999 million
4. Operating margin up to 19.2% from 13.9% due to higher prices and management action
5. Higher average prices across all markets and segments

IN USD million

Mr Alexei Mordashov CEO of OAO Severstal said “I am pleased to report a very positive set of half year results for Severstal, with market conditions improving in all markets apart from North America. We continue to be well placed to benefit from the growing Russian economy and stable steel markets in Europe. These results demonstrate improved trends in the key areas of our business with exception of the North American market.”

Mr Mordashov added that “EBITDA growth in H1 2007 was 60.7% year-on-year. Prices continue to be strong in both Russian and export markets and there was a significant improvement in volumes compared with H1 2006. Russian Steel built on its good performance in Q1 2007 with an excellent second quarter, showing a 68.5% increase in EBITDA YoY.”

He commented that “Our Mining business has also had an exceptional first half compared with the same period last year. EBITDA was up by some 46.7% YoY. Prices were up on average by 16.7% with a 10.4% growth in volumes. In Q2 2007, the EBITDA margin in Mining was slightly down compared to Q1 2007 as a result of lower volumes and unfavourable changes in product mix at our Vorkuta mine, where the share of soft grades of coal was higher than projected.”

Mr Mordashov said that “Our European operations, Lucchini, performed strongly, in line with expectations. EBITDA increased by 54.1% in H1 2007 in comparison with the same period the last year. Poor market conditions in North America in H1 2007 affected SNA’s results with EBITDA down 15.2% year-on-year. We expect that volume cuts and stabilized inventory levels across the industry are beginning to improve the overall market outlook. However, as expected, the relining of SNA’s blast furnace “C” in Q3 will impact on SNA’s volume in Q3.”

He added that “Izhorsky pipe mill, the producer of large diameter pipes, demonstrated significant growth with EBITDA margin increasing from 14.3% in Q1 to 31.3% in Q2.”

Al EZZ Steel to buy Arcosteel

Egyptian Al EZZ Steel Rebars SAE announced that it has agreed to acquire a minimum of 83% and up to 100% of Arcosteel, a special steel producer located in Sadat City. The financial details of the deal were not disclosed.

The Government's interest in Arcosteel has been offered for sale as part of the Government's privatization program and the last date for submitting offers was September 9th 2007. Ezz Steel has been notified that a final decision on the successful bidder will be taken on September 30th 2007.

In 2006, Arcosteel produced approximately 150,000 tonnes of special steel mainly directed at the export market.

Venezuela and Bolivia to form JV for El Mutun steel project

It is reported that Mr Hugo Chávez president of Venezuela and Mr Evo Morales president of Bolivia have entered into four letters of intent to build jointly an iron and steel plant, a petrochemical compound and two cement factories, in addition to forestry related plans.

They signed a preliminary JV agreement to help develop Bolivia’s steel industry at the massive El Mutun deposit, where Jindal Steel & Power Limited plans to develop 50% of the deposit. The joint mining iron and steel company that will be located at Cerro Mutún area of Santa Cruz Department in east Bolivia.

Mr Iván Hernández Venezuela's deputy minister of basic industries and mining told BNamericas that "A letter of intent has been signed to see if it is possible to create a JV between Venezuela and Bolivia to develop half of El Mutún."

Mr Hugo Chavez had declared last month said that "We are willing, together with Bolivia and hopefully other nations, to install ourselves there, not to take the iron from El Mutún, but to develop a 'steel city,' a steel industry. That is what is going to give Bolivia technological development, jobs, and more income."

Bolivia's Government has already submitted for congressional review a USD 2.1 billion deal giving India's Jindal Steel and Power half ownership in El Mutún. The project includes a 10 million tonne pellet plant, a 1.7 million tonne steel mill and a 450 MW power plant. El Mutún is anticipated to generate USD 200 million annually in export revenues for Bolivia.

Anshan inks iron ore agreement with Gindalbie

Following a joint formal signing ceremony today, Western Australian iron ore company Gindalbie Metals Limited announced that it has executed a wide-ranging Joint Venture Development Agreement with leading Chinese steel and iron ore company, Anshan Iron & Steel Group Corporation Ansteel, to proceed with development of the Karara Magnetite Project and Mungada Hematite Projects in Western Australia.

The announcement follows the delivery earlier this week of positive Bankable Feasibility Studies for both iron ore projects, which are located 225 kilometers east of Geraldton in the Mid West region of Western Australia. The projects will involve a total combined investment of up to AUD 1.8 billion in new mining and processing facilities and associated infrastructure both in Western Australia and China. The Development Agreement covers both the production of hematite lump and fines with shipments targeted to commence in the first quarter of 2009 and magnetite concentrate in Australia and pellets in China with production scheduled to commence in 2010.
Under the terms of the Development Agreement, Gindalbie and Ansteel have agreed to develop both the Karara and Mungada Projects subject to the following conditions
1. The signing of an Equity Joint Venture agreement for the Joint Venture Pellet Plant in north eastern China
2. Finalization of the approval for the decision to mine within two months
3. Finalization of off take and financing arrangements
4. Environmental approvals being received for both the Australian and China Projects.

The financing terms of the Development Agreement are generally consistent with the original Karara Joint Venture Feasibility Study Agreement with the Project proposed to be funded on a 70/30 debt to equity ratio. For the equity component of the Project, Ansteel will contribute AUD 105 million plus 50% of the required equity whilst Gindalbie will contribute the balance of equity funding which equates to approximately 25% of the total equity funding requirement. The Project is now to be developed under an incorporated structure.

Mr George Jones chairman of Gindalbie said “Today represents a historic day for Gindalbie and Ansteel, marking the culmination of 18 months of feasibility work which has laid the foundations not just for a successful and profitable new iron ore venture in Western Australia but which has also cemented a strong and cooperative relationship between our two organizations.”

Dr Zhang Xiaogang president of Ansteel’ and Chairman of the China Iron and Steel Association said “Ansteel is very pleased to commit to the development of these important new Australian iron ore projects through the formal signing of our Joint Venture Development Agreement with Gindalbie today. It is also an important step for Ansteel as part of its long term and sustainable development strategy. The high-quality iron products produced at Karara represent a key input to our long-term growth plans, and we would like to see production from Karara expand in the future to meet the growth requirements of our new steel-making facilities. “We look forward to continuing to work closely with Gindalbie towards the timely and efficient implementation of these substantial projects as the basis for a profitable and mutually beneficial long-term business relationship.”

Merrill Lynch upgrades iron ore prices forecast to 30%

World's leading financial management and advisory companies, Merrill Lynch, has revised its forecast for iron ore and coal prices upward, saying unprecedented demand from China will remain high and supply will struggle to keep pace.

In a recent research note reported by Bloomberg, Merrill Lynch analysts said that iron ore and coking coal could both rise by 30% globally next year and could remain at record highs for the next three years.

It added that “Iron ore has the best fundamentals of any resource commodity over the next three years. China now consumes 45% of global seaborne iron ore, and we believe it will drive 80% of growth in iron ore demand in 2007.''

Merrill Lynch’s outlook matches with a recent report from RBC Capital Markets which said that iron ore prices could rise as much as 35% in the next year due to booming demand from steelmaking regions in Asia.

GVM Metals to acquire 70% of Coal of Africa

Australian mining and metals processing company focusing on Southern Africa GVM Metals reported that it has made significant progress towards the development of its coal projects in South Africa.

It also said it has been granted mining right for areas of the Mooiplaats project by Coal of Africa and expected to complete the acquisition of a 70% stake in CoAL shortly.

The company said it expects to complete mining contracts and sales agreements for Mooiplaats before year end and production should commence in the third quarter of 2008.

GVM Metals' other coal operations include the Baobab Coal Project, the Holfontein coal project in Witbank and the Thuli coal project in Lompopo.

Nippon Steel posts 4% higher recurring profit for H1

Nippon Steel has announced that the consolidated recurring profit during for April to September 2007 has reached JPY 280 billion, which is JPY 10 billion higher than original outlook and up by 4% YoY as compared to April to September 2006. Nippon Steel has however maintained the full year outlook at record JPY 600 billion. Nippon Steel said it would pay a dividend of JPY 5 for the April to September 2007 up from JPY 4 in April to September 2006.

Nippon Steel said that stronger demand for Japanese cars and stable steel prices in Asia are boosting profit at Nippon Steel and its smaller rival JFE Holdings, though some analysts see a slowdown in earnings momentum for another Asian giant South Korea's POSCO.

Nippon and their biggest client Toyota Motor earlier this year agreed to price rises of more than 10% for specialty steel and 5% for steel sheet used in car bodies.

Nippon Steel, the world's second biggest steel maker and the biggest beneficiary of strong worldwide sales of Japanese cars had said in April 2007 it expected JPY 350 billion in group net profit for the business year ending in March 2008. In revised forecasts issued recently it left its expected full year pretax recurring profit unchanged at JPY 600 billion (USD 5.2 billion).

MMK signs a cooperation agreement with the Belgorod Region

Mr Victor Rashnikov president of the MMK and Mr Yevgueni Savchenko governor of the Belgorod Region of Russia signed an agreement on social and economic cooperation.

The parties have agreed to cooperate in the sphere of development and implementation of social programs corresponding to the vital interests of the Belgorod Region's population, as well as in the implementation of OJSC MMK's production plans.

MMK plans to build a mining enterprise at the Prioskolsky Iron Ore Deposit bringing it to the design capacity of 25 million tonnes of iron ore per year by 2016. In implementing the project MMK will strictly abide by the requirements of the environmental, hygienic, labor safety and all other applicable standards. The government of the Belgorod Region intends to assist OJSC MMK in the construction of the mining enterprise, and ensure it reaches the design capacity level within the scheduled timeline.

In the process of implementing the project the parties will build their relations on the principles of equitable partnership and mutual interests.

Mechel commissions new excavator at Krasnogorsk coal mine

Mechel announced that it has commissioned a unique backhoe hydraulic excavator with an 11 cubic meter bucket, Liebherr R-994, at Krasnogorsk open pit mine of its coal mining subsidiary Southern Kuzbass OAO.

This is the second excavator of that type put into operation at Krasnogorsk open pit mine in 2007 in line with the technical re-equipment program being implemented at Southern Kuzbass OAO. The cost of the newly commissioned equipment is more than RUB 80 million. A similar machine was also put into operation and successfully operates at Sibirginsk open pit mine.

The new machine is designed for complete coal seam extraction with an open cast method of coal mining, especially at lower levels where space is confined. This will enable operational losses of coal to be reduced by 2% to 4%. Operation of the excavator’s backhoe requires half the number of workers as compared with electric drive excavators, which enables increased labor productivity and reduced coal production costs. In addition, the back hoe technology enables operations in complicated mining and geological conditions eight meters below the excavator’s standing level.

The new excavator’s cab provides conditions suitable for highly productive work and conforms to the sanitary standards and requirements. The excavator team was formed of the best employees of the open pit mine and received additional two month training with the involvement of the manufacturer representatives, which allowed workers to learn the construction of the excavator and the specificity of its operation.

The renewal of equipment at Southern Kuzbass OAO is a part of Mechel’s long-term capital expenditure program, which is aimed at increasing coal output to 25 million tonnes in 2010.

LME confirms steel billet futures launch on April 28th 2007

The London Metal Exchange confirmed that the two regional steel billet contracts would commence trading on April 28th 2008. The contracts cover two regions: Mediterranean and Far East.

Both contracts are physically deliverable; the initial delivery point for the Mediterranean will be Turkey, and Far East delivery point will be South Korea.

Liz Milan steel business manager of LME said that “Trading in steel will take place on all three platforms that the LME offers providing LME member firms with the flexibility that their clients demand. Official price discovery will take place on the ring as this is an excellent mechanism for concentrating liquidity. The contracts will trade for 15 months out and the first prompt date will be July 28th 2008.”

Milan added that “The market dialogue is ongoing, critically important and valuable. LME members have suggested that they could consider off exchange trading in advance of the official Exchange launch. I am delighted that the launch is on track and that support is building. Later this year we will provide details of both the brands and the warehouses.”

Ferrochrome prices in China on upswing

It is reported Cr series alloys prices keep generally stable recently. Quotations in some regions recover, owing to tight spot supply and climbing costs for pig iron.

High carbon FeCr is offered at around CNY 8,350 to CNY 8,550 per tonne in Shanxi and Southwest China, CNY 8,400 to CNY 8,600 per tonne in North and Northeast China and CNY 8,600 to CNY 8,700 per tonne in Shanghai.

Price for low carbon FeCr and trace carbon FeCr is posted at CNY 14,500 per tonne and CNY 15,000 per tonne respectively in Gansu. The same resources are quoted at CNY 13,500 per base tonne and CNY 14,000 per base tonne in Zhejiang's Jiande.

Many traders attribute the price hikes to tight spot supply, rising ore price, climbing power rate and up surging international prices.

FeCr quotations present an overall stability after adjustments in previous months. Prices nose up in some regions that witness nice sales. If market demand shrinks in the future, price will follow to drop.

(Sourced fro MySteel.net)

Anshan Steel funding plan for Bayuquan project approved

Securities Daily reported that the issuance examination committee of China securities regulatory commission has approved Anshan Steel's share placement plan. Anshan Steel planned to raise capital of some CNY 17 billion by placing 1.186 billion to 1.779 billion shares or 2 to 3 shares for per 10 A-or H-share holding.

All collected capital will be invested in Yingkou Bayuquan steel project, which is designed with additional pig iron capacity of 4.93 million tonnes, crude steel of 5 million tonnes, steel product of 4.88 million tonnes including 2 million tonnes wide and thick plate, 2 million tonnes HR sheet plate and 1 million tonnes CR sheet. It will build the largest, 5500mm wide and thick plate rolling mill in the world.

With money raised from this share placement, Anshan Steel will plunge CNY 22.6 billion in first phase of the project to build 5 million tonnes per year prime steel product lines. By end of last year, CNY 5.1 billion was injected. Its forecast 2007 and 2008 will respectively receive 12 billion and 5.5 billion.

The project received official approval May 17th 2006 from the national planning body and will start production May 2008. High end specialty medium plate such as shipbuilding plate, naval vessel plate, bridge plate, line steel plate and HR/CR sheet for automobile and household appliance making will be manufactured. In first half of 2006, Anshan Steel's medium plate plant obtained exalted certificate for shipbuilding plate manufacturing and became the largest production base of subject product in China.

But Mr Fu Jihui, the secretary to chairman said that “Bayuquan project will completely rely on imports for the costs are the same compared with that origin from the group. The domestic materials rise as well. Though we enjoy 10% discount, but the transportation fee for carrying over 100 kilometer may set it off. Marine freight is easier and more convenient."

The Bayuquan steel project is to bring continuous output growth and performance elevation in the next 3 years. By then, Anshan Steel will have 21 million tonnes per year steel product output with a higher percentage for the high end, gaining 3 million tonnes and 2 million tonnes in 2008 and 2009 respectively.

(Sourced from MySteel.net)

Global shipbuilding sector may face downturn by 2011

The Korea Institute of Industrial Economics has warned that the rapidly expanding shipbuilding sector could face a crisis by 2011, when the available capacity with the yards will exceed the demand for new buildings.

As per the report, this situation may arise due to massive capacity addition undertaken by major shipyards of South Korea including Daewoo, Samsung and Hyundai, the tendency among sub contractors to convert their facilities into full fledged yards and the capacity addition of the Chinese yards at a much accelerated speed.

Global shipbuilding order volumes increased to 69 million gross tonnes during the first half of 2007 compared with 52 million gross tonnes during 2006 and nearly double the 35.5 million gross tonnes in 2003. But the institute is concerned that demand for new building dwindling over next few years, causing a down cycle for the builders like the ones experienced in the mid 1970s and mid 1980s.

APC to supply pipes for Karama to Qaroun gas pipeline in Egypt

It is reported that Sabic affiliated Riyadh based Arabian Pipes Co was recently declared winner of a contract to supply steel ERW linear welded pipes for a 115 Kilometer long natural gas pipeline from Karama to Qaroun field in Egypt. The contract is valued USD6.8 million and the supplies would take place before the end of 2007.

Arabian Pipes Co a Saudi Joint stock Company is the largest manufacturer of medium range High Frequency Welded steel pipes in the Middle East. The Facility, within an investment exceeding SAR 750 million is centrally located in the Riyadh Second Industrial City on an area of 228,000 square meters and specializes in the manufacture and anti corrosion coating HFW pipe for Oil & Gas, Petrochemical, Agricultural & Construction Industries.

Arabian Pipes Co is also having a state of the art anti corrosion coating plant for external FBE, 3LPE and 3LPP. Its annual production capacity is 160,000 tons per year.

Aquila looses legal case bid for AMCI JVs

Como based mining company Aquila Resources Ltd announced that it has failed in an attempt to gain control of iron ore and coal joint ventures after the Supreme Court of Queensland ruled against its application. The complex case flowed from the decision by Aquila's joint venture partner AMCI to sell its interest in the joint ventures to Brazilian mining giant CVRD.

Aquila unsuccessfully argued that the restructuring resulted in a change of control, which would have entitled it to acquire AMCI's joint venture interests.

The release said that “Aquila is disappointed with the outcome in the case and together with its legal team, is currently examining judgment to determine whether there are appropriate grounds for an appeal.”

Aquila was informed on April 2nd 2007 that the AMCI group of companies had restructured the AMCI interests in the Australian Premium Iron Joint Venture and the Belvedere Coal Joint Venture, in which two of Aquila's subsidiaries respectively hold 50% venture interests. After the sale of AMCI Holdings Australia Pty Ltd to Companhia Vale do Rio Doce on February 26th 2007. Aquila Subsidiaries had commenced proceedings in the Supreme Court of Western Australia seeking declarations that, in respect of the two joint ventures, there had been a change in control as a result of the AMCI restructuring.

Panzhihua to develop V-Ti steel base in Xichang

It is reported that Sichuan based Panzhihua Steel has signed a framework agreement with Liangshan government on August 29th 2007 in Chengdu to build a vanadium titanium steel base in Xichang with an invest of CNY 15 billion. Panzhihua steel maker began negotiation with local government since August 2006.

The new base will produce 4 million tonnes of iron, 3.5 million tons of steel, 3.5 million tonnes of flat products and nearly 200,000 tons of vanadium slag every year.

Mr Zhou Jun a senior official of Panzhihua Steel told reporters that "The project has been reported to the State owned Assets Supervision and Administration Commission of the State Council and National Development and Reform Commission and we are waiting for the approval. Once started, the new base will be completed in some three years.”

Mr Zhou Jun said that “Once the base is approved, Xichang New Steel Enterprise Group Corp a local steel maker will become a shareholder in virtue of iron ore resources."

This is the third steelmaker, following Chuanwei Group and Chongqing Steel to scramble for iron ore resources in Liangshan. Panzhihua Xichang is China's second largest iron ore mining area, boasting 20% of the China's total reserves. Vanadium titanium magnetite reserve registers nearly 10 billion tonnes, including 15.7 million tonnes of vanadium resources representing over 60% of China's total and 11.6% of the world's total. Titanium reserve records 870 million tonnes accounting for China's 90% and the world's 30%.

(Sourced from MySteel.net)

Vina Kyoei Steel to expand capacity by 30% in 3 years

It is reported that Kyoei Steel's Vietnamese rolling plant, Vina Kyoei Steel plans to expand its capacity of concrete reinforcing steel bar and wire rod by around 30% to annual 400,000 tonnes under 3 year plan from fiscal 2008.

Kyoei Steel plans to utilize the capacity fully by improving the roughing mill capacity and operation efficiency to meet strong construction market, which grows by more than 10% per year. It also plans to improve the quality and cost structure and keeps study to add steel making shop or rolling line depending on the market.

LOI to supply plate Q&T plant to Chinese Zhangjiagang Shajing

It was reported that the Chinese company Zhangjiagang Shajing Heavy Plate Company Ltd had awarded LOI Thermprocess a contract to supply a new roller hearth furnace with continuous quench facility for the heat treatment of alloyed carbon steel and high alloy steel plates in July 2007.

The LOI plant will be highly automated, featuring heating control and material tracking systems. An optimization computer will adapt furnace operation to capacity utilization levels. The result will be extremely low energy consumption and environmental impact combined with very low scale formation and losses for extremely good surface quality.

The scope of services under the contract includes the training of the client’s personnel, design meetings in Germany and China and the construction supervision, commissioning and test operation of the plant. This plant, due to be commissioned in May 2008 will be the tenth quenching and tempering plant for steel plate supplied by LOI Italimpianti to China in the past two years.

Tangshan Guofeng invests heavily in pollution control

It is reported that Tangshan Guofeng Iron & Steel Co, the largest private steelmaker in Hebei Province, has invested CNY 450 million to improve energy conservation and environmental protection facilities since 2003 accounting for 6.35% of its fixed asset investments.

These facilities are playing a more important role in the steelmaker's development, citing effective environmental and economic benefits. Guofeng Steel so far produces some 5 million of pig iron, steel and finished products per annum, while owns 72 sets of dust removal devices, 3 sets of sewage treatment equipments, steel making red mud disposal satiation, a 20,000 cubic meter converter gas recovery machine and 145 mufflers. Thanks to sizeable investment in such facilities, no dust or smudge can be seen in its factories now.

The report added that Guofeng paid equal attention to energy conservation as environmental protection. From 2004, a big sum was plunged to reform coal spray system, heating system and power generators, which have realized fairly good fruits accordingly. By exerting efforts in comprehensive utilization of coal gas, solid waste and sewage, it can save 1 million tonnes of standard coal, 7 million tonnes water and further save over CNY 10 million cost per annum.

Guofeng has labeled its energy conservation and environmental protection dept as first level in terms of importance, and estimates to invest some CNY 530 million in the 11th five year period to promote the conservation and protection campaign.

(Sourced from MySteel.net)

Krivy Rih Iron ore output in 8 months down by 1% YoY

Interfax reported that Ukraine's Krivy Rih Iron Ore Combine edged production of iron ore commodities by the deep mining method down 1%YoY in January to August 2007 to 4.644 million tonnes including 564,000 tonnes in August 2007.

The mine sells its ore via a company called Rudsnab which was an investor prior to the mine's privatization.

Its output rose by 9.9% YoY in 2006 to 7.1 million tonnes.

Chelyabinsk Zinc starts exports to UK

Itar Tass reported that the Russian zinc major Chelyabinsk Zinc Plant has begun zinc supplies to Britain.

An official of the Chelyabinsk Zinc Plant public relations department told Itar Tass that the first batch made up 1,000 tonnes. By the end of the year the CZP will export up to 6,000 tonnes and next year it will increase exports to 22,000 tonnes.

Last July the plant within the framework of the vertical integration strategy acquired Brock Metal Britain’s leading producer of zinc and aluminum alloys.

Mr Vsevolod Geikhman director general of Chelyabinsk Zinc Plant said that “As a result, Brock Metal found in us a guaranteed supplier of high quality metal and our plant a guaranteed consumer. He added that this deal opened for us opportunities for integrating in the production and marketing produce with higher added value.”

The Chelyabinsk based plant accounts for 60% of the Russia’s zinc output.

AIM inks off take deal for zinc concentrate from Bukina Faso mine

AIM Resources announced it has signed its first zinc concentrates off take deal for production from its new Perkoa mine project in the West African country of Burkina Faso.

It added that Brazil’s Votorantim will take around one third of production under an ongoing contract built around an initial five year sales term. The concentrates will be processed at Votorantim’s Juiz de Fora smelter in Brazil and its Cajamarquilla smelter in Peru. Letters of intent have also been signed with two other, as yet unnamed, zinc smelting companies.

Perkoa is due to come into commercial production early next year and to produce around 60,600 tonnes per year of contained zinc once at full capacity.

Tertiary Mineral to drill in Finland's main iron ore district

Thomson Financial reported that Tertiary Minerals PLC is planning to drill a prime iron ore target at Sivakkalehto in Kolari at the heart of Finland's main iron ore district.

The geophysical interpretation of this magnetic anomaly suggests that the deposit may contain over 200 million tonnes of the iron mineral magnetite within 2 kilometers by 300 meter to 500 meters broad area within Tertiary's claims.

Tertiary Minerals said it has been approached in recent months by a leading company for a farm in at Sivakkalehto but has opted in favor of adding value itself before talking to interested parties.

Quinto Mining starts drilling at Peppler Lake

Quinto Mining Corporation informed to its shareholders that they have commenced a fall/winter drill program at our Peppler Lake iron ore project in Quebec.

Quinto Mining Corporation said that a second drill is expected to be on site by the end of September and they we will update shareholders as information are received from the field.

The Peppler Lake Iron Ore project is located in the Mount-Wright region of North Central in Quebec, approximately half way between the mining towns of Gagnon and Fermont.

Quinto Mining Corporation is a junior mining exploration development company with two advanced projects in the Province of Quebec.

Choice of SS grade depends on chlorine and chloride content

Australian Stainless Steel Development Association said that choosing the correct grade of stainless steel for a tank, pipe or process vessel requires information about the temperature, pH, chemical composition of the contents and how much chloride is present.

According to ASSDA, chlorine is a poisonous, yellowish green gas, which readily dissolves in water to give a strong disinfectant or bleach. The strength of a bleach solution is sometimes measured by the available chlorine.

Swimming pools are usually treated with dilute hypochlorite solutions which produce a few parts per million of chlorine. This acts as a strong, oxidizing biocide. Drinking water is normally treated to give a residual of 0.2 to 0.5 mg/L of chlorine. There are also other disinfection methods such as chloramine or ozone.

Chlorine is aggressive to stainless steels. The Nickel Institute guidelines for continuous exposure at ambient temperatures (~20°C) and neutral pH (~ pH7), are that 304 can cope with 2ppm chlorine and 316 can cope with ~5ppm chlorine.

In alkaline solutions (pH>7) higher concentrations are possible but this does not help much in swimming pools or drinking water. Chlorine frequently causes corrosion problems. Chlorine attack can occur with bleach laden wash down water if pools form in drains, which are usually empty. Chlorine concentrations in droplets or water films immediately above a still pool or water tank can be higher than the chlorine level in the bulk water. When dosing concentrated chlorine into pipes or tanks, it must be well mixed. Otherwise concentrated streams will eat out downstream elbows or tank walls near the chlorine inlet.

Much higher concentrations can be used for short periods as the attack on the stainless steel must initiate and form a stable pit for failure to occur.

The American Water and Wastewater Association permit 25ppm for 24 hours in cases of emergency disinfection. The food industry can use up to 100ppm in hot water for minutes followed by rinsing and/or passivation. It is an effective biocide because the kill rate depends on exposure time and concentration of biocide. But the stainless steel is resistant to the chlorine for the relatively short, high concentration exposure.

According to Australian Stainless Steel Development Association, chloride occurs naturally in drinking water and ranges from less than 10mg/L in Melbourne to more than 200mg/L in Adelaide. Chloride is not oxidizing and is not a biocide. The most common form is sodium chloride. Seawater is about 3% sodium chloride although there are other compounds. Nickel Institute guidelines for continuous exposure at neutral pH and ambient temperatures permit chloride levels of 200ppm for 304, 1000ppm for 316 and 3600 ppm for 2205 duplex.

The guidelines allow for the presence of crevices (such as bolt heads, flanges or deposits) but assume that the surface has been passivated. In alkaline environments (pH>7) higher chloride levels can be tolerated. Higher temperatures reduce the permissible chloride level. Temperatures over 60°C are not recommended for 304 or 316 as they are at risk of sudden failure from chloride stress corrosion cracking.

The message Chlorine and chloride are different forms of the same element but with vastly different effects on stainless steel. Chlorine is bleach and stainless steels can only tolerate exposure to a few ppm continuously. Chloride is part of the salt in natural waters and even 304 can cope with a few hundred ppm at ambient temperatures and pH~7.