Indian steel production estimated at 124 million tonnes by 2011-12

The first meeting of Inter Ministerial Group, constituted to monitor and coordinate issues concerning major steel investments in the country was held under the chairmanship of secretary steel. It took note of the present production, consumption, export & import and demand growth and the likely scenario during the next 5 years and beyond.

Based on the detailed discussion with 15 major steel investors of the country by the Ministry of Steel on 17.8.2007, the most likely scenario of steel production in the country has been estimated at 124.06 million tonnes in the year 2011-12. This translates into an annual compounded growth rate of nearly 16% over the present crude steel production capacity of 56.84 million tonnes.

However, the participants were unanimous in its view that in order to convert this potential into a reality, a huge task lies ahead in creating a conducive investment atmosphere combined with right policy shift and building up of associated infrastructure particularly in railways, roads and port sectors.

It was also decided that a time frame regarding allocation of raw material resources as well as land is vital and a fixed time line, with regard to each major project will be formulated and monitored by the group in its subsequent meetings.

The meeting was attended by chief secretary, secretary steel & mines) and other secretaries from Orissa, secretary industry of Karnataka and resident commissioners of Jharkhand and Chattisgarh. The central ministries & departments were represented by officials from mines, environment & forest, railways, road transport & highways, coal, shipping and petroleum & natural gas.

TATA Steel and VSC ink MoU for CR complex in Vietnam

TATA Steel Limited and Vietnam Steel Corporation have signed a MoU for setting up a cold rolling mill complex in Vietnam. Mr Dau Van Hung president of Vietnam Steel Corporation and Mr Hemant Nerurkar COO Steel of TATA Steel signed the MoU at the corporate office of Vietnam Steel Corpora in Hanoi.

TATA Steel in cooperation with Vietnam Steel Corporation will undertake a feasibility study for the cold rolling project. On the successful completion of the study and financial closure, TATA Steel will have a stake of 65% and Vietnam Steel Corporation will have a stake of 35% in the CRM complex.

TATA Steel already has a Joint Venture with Vietnam Steel Corpora in Rolling Mills through its Singapore based subsidiary Natsteel. In addition TATA Steel and Vietnam Steel Corporation are in the process of carrying out a feasibility study for a steel project in Ha Tinh province for which a MOU was signed on May 29th 2007 in Hanoi.

Vietnam Steel Corporation was established in 1995 by a merger of Vietnam Metal Corporation and Steel Corporation and is Vietnam's largest steel company and has various manufacturing plants and a distribution system across Vietnam. Vietnam Steel Corpora has several JV’s in partnership with foreign partners in steel manufacturing. The total capacity of Vietnam Steel Corporation including that of its JV is around 2 million tonnes. In addition, Vietnam Steel Corporation also has businesses in other areas such as mining, real state and sea ports etc.

Essar Steel H1 sales up by 35% YoY

Essar Steel Limited registered a growth of 23% YoY in total income at INR 2562.85 crore for July to September 2007 quarter as compared to INR 2081.58 crore in July to September 2006 quarter. Its net profit for July to September 2007 quarter is INR 152.01 crore as against INR 154.34 crore in July to September 2006 quarter, after providing for finance cost at INR159.96 crore (INR136.86 crore), depreciation at INR 186.40 crore (INR 149.01 crore), provision for FBT at INR 2.38 crore (INR 1.13 crore), deferred tax at INR 90.17 Crore (INR 78.81 crore), provision for current tax at INR 19.43 crore (INR 7.06 crore credit)

Essar Steel registered a growth of 35% in total income at INR 5128.21 crore for April to September 2007 period as compared to INR 3801.81 crore in April to September 2006 period. The net profit for the period under review registered a growth of 96% at INR 383.07 crore as compared to INR 195.47 crore after providing for finance cost at INR 253.32 crore (INR 317.54 crore), depreciation at INR 373.49 crore (INR 298.20 crore), provision for FBT at INR 3.80 crore (INR 1.91 crore), deferred tax at INR 189.44 Crore (INR 93.94 crore), provision for current tax at INR 48.95 crore (INR 1.22 crore credit).

Essar’s production of hot rolled coils steel increased by 14% to 0.780 million tonnes in July to September 2007 quarter as against 0.686 million tonnes in July to September 2006 quarter. Its total sales registered a growth of 19% at 0.827 million tonnes for July to September 2006 quarter as compared to 0.692 million tonnes in July to September 2006 quarter.

In order to take advantage of rising domestic demand, Essar Steel focused on the domestic market and exports focused only on value added segments and products. Essar’s domestic sales registered a growth of 54.75% at 0.619 million tonnes in July to September 2007 quarter as compared to 0.4 million tonnes in July to September 2006. Its export sales stood at 0.208 million tonnes in July to September 2007 quarter as against 0.292 million tonnes in July to September 2006 quarter. Essar Steel Hypermart clocked sales of 0.13 million tonnes for July to September 2007 quarter accounting for 21% of total domestic sales.

FACOR plans 0.5 million tonne SS plant in Orissa

It is reported that Ferro Alloys Corporation will invest about INR 2,500 crore to set up a Greenfield stainless steel plant and power plants in Orissa.

Mr RK Saraf CMD of FACOR said that “We plan to move ahead the value a chain, from producer ferroalloys to an integrated player with captive chrome ore mines, coal based power plant, Ferro chrome plant and a stainless steel plant. To realize this, we plan to spend INR 2,500 crore over the next few years to set up 0.5 million tonne Greenfield stainless steel plant in Orissa close to our existing ferroalloy facility and a 250 mw captive power plant.”

FACOR plans to use the entire production of 140,000 tonnes of ferroalloys from its plants in Orissa and Andhra Pradesh for use in the proposed steel plant. It already has a 60,000 tonne facility for producing stainless steel and carbon steel.

Essar’s Minnesota project back on track

It is reported that Minnesota Governor Tim Pawlenty, after receiving assurances from Essar officials that they will abide by US laws regulating business practices with Iran, announced that he would fully supports state assistance for the Iron Range steel mill proposed by Essar Group.

Mr Madhu Vuppuluri of president of Essar Group’s American operations in a letter to Governor Pawlenty said that “Essar considers its investments in the state of Minnesota of strategic importance both to Essar and to the state and people of Minnesota. No investment or firm commitment will be made in Iran, unless and until permitted to do so under the applicable US or international laws."

Mr Pawlenty said that he is satisfied with Essar's response and he will include infrastructure funding for the steel mill project in his 2008 bonding bill. Work on the project should start next spring. He said "This project is now back on track.”

Essar closed a deal to buy Minnesota Steel on October 22nd 2007 and plans to begin construction on a USD 1.6 billion steel mill near Hibbing early 2008. That plant will include ore mining, ore processing, direct reduction and steelmaking.

But late last week, federal officials contacted the governor to inform him that Essar also may be working on an oil refinery project in Iran a deal that might violate US trade policy. Governor Pawlenty, referring to Iran as a terrorist state, called those alleged ties deeply troubling and said that he will withdraw his support for the steel mill and even work to block the project if Essar's ties to Iran are confirmed.

Ispat Industries to invest INR 1,500 crore in MP

It is reported that Ispat Industries is planning to invest INR 1,500 crore in Madhya Pradesh on 3 new projects and has recently signed a MoU with Madhya Pradesh Trade and Investment Facilitation Corporation, a wholly owned subsidiary of the Madhya Pradesh government

1. A 1 million tonnes per annum coke oven battery plant
2. A coal washery and a 1.05 million tonnes per annum beneficiation plant
3. A 150 MW power plant for captive consumption.

The investments will be made through a special purpose vehicle for setting up these facilities.

Ispat Industries has earlier signed a MoU with the Maharashtra government and will be investing INR 2,000 crore on the expansion of plant located at Dolvi in Maharashtra and is also looking at a 4.5 tonnes per annum pelletization plant in Visakhapatnam for which the investment will be around INR 900 core.

Shyam Group’s Jamuria steel plant approved by WB government

It is reported that Kolkata based Shyam group will set up a 1 million tonne per annum capacity steel plant on1500 acres land at Jamuria in Burdwan district of West Bengal at an investment of INR 6,000 crore.

Mr Amit Kiran Deb chief secretary of West Best, after approving the project, told reporters that the steel plant would come up along with a 100 MW captive power plant and would create 5,000 jobs.

Punjab imposes 4% entry tax on iron and steel

It is reported that Punjab cabinet, which met under the chairmanship of Mr Parkash Singh Badal chief minister, has given its nod to impose entry tax on iron and steel including scrap at 4% thereby bringing an amendment in the Punjab Tax on Entry of Goods into Local Areas Act, 2000.

Ispat Industries Q2 net surges by % 483%YoY

Ispat Industries Limited has announced the following un audited results for July to September 2007 quarter.

Ispat Industries posted a net profit of INR 135.4 million for July to September 2007 quarter up by 483.6% YoY as compared to INR 23.2 million for July to September 2006 quarter. Its total Income has increased from INR 18912.5 million for July to September 2006 quarter to INR 20486.9 million for July to September 2007 quarter.

Wheels India opens new manufacturing unit in Chennai

Wheels India Limited announced that it had inaugurated its new wheels manufacture plant for earth moving and construction equipment at Sriperumbudur near Chennai on October 29th 2007.

The plant, which has the capacity to manufacture 6,300 wheels a year, will commence production on November 1st 2007. It has been set up with an investment of INR 32 crores. It will manufacture larger wheels for high capacity dumping trucks and earth moving equipment.

Mr S Ram CMD of Wheels India told ET “The share of the construction equipment business has grown over the years to INR 170 crore now, of which 75% goes to export markets. Both Komatsu and Caterpillar account for two thirds of this business. A major part of the investment in the new plant will be aimed at meeting the requirements of their growth plans.”

He said the new facility will start with a capacity of 7,000 large wheels and will be expanded to 18,000 wheels in three years. It will produce wheels for dump trucks of capacity between 50 tonnes and 100 tonnes. While the plant at Padi makes wheels for small and medium construction equipment, the new facility will make wheels for large mining trucks.

Mr Srivats said the company currently has a total production capacity of 8 million steel wheels from its plants at Padi, Rampur, Pune and Bawal. This includes 5 million passenger car wheels, 1.7 million truck wheels, 1.2 million tractor wheels and 0.1 million earth moving equipment wheels.

Electrosteel Castings Q2 net profit down by 2.3% YoY

Ductile iron pipe manufacturer Electrosteel Castings has recorded a net profit of INR 28.8 crore in the July to September 2007 quarter down by 2.3% YoY as compare to INR 29.3 crore in July to September 2006 quarter on the back of higher raw material prices.

Its net sales stood at INR 296 crore up by 13.88% YoY while total income was up by 14.95% YoY at INR 317.4 crore.

MSK Project to bid for hydel power plant

It is reported that engineering & construction major MSK Projects India is planning to get into setting up hydel power projects in the next financial year. Mr Ashok Khurana MD of MSK Projects said that “We are seriously looking at hydel power construction and we will bid for projects starting next financial year.”

Mr Khurana said that MSK will raise about INR 37 crore from the preferential allotment to execute its build operate transfer contracts. He added that “We will have enough funds after the preferential issue. The rest of the expenditure will be made from the toll collected from various BOT projects.”

Hydel power accounts for 25% out of India’s total installed power capacity of over 135,000 MW. The government also plans to raise hydel power’s share to 40% in view of its environment friendliness and cost effectiveness. According to the Central Electricity Authority, India has been able to tap merely 21% of the total 148,701 MW identified hydel power capacity.

Indian Railways to book wagons and berths through e auctions

It is reported that Indian Railways will soon start online bidding of vacant passenger berths and freight wagons, just like airlines do. As per report, Indian Railways is developing a commercial portal for online booking of berths and wagons. Once the portal is ready, it would start inviting bids.


A senior official at Rail Bhawan said that “We would keep a floor price for berths as well as wagons. Customers can bid online. The highest bidder would be allotted the berth or wagon of his choice. Initially, the bid value would be kept low. We would scale it up in future. At present, we are against idling a single wagon in any sector. Getting something is certainly better than getting nothing.”

Indian Railways looses huge revenue in the movement of freight when a train returns empty after delivering goods and now, the loss could be minimized as customers could book wagons at half the price. The official added that Indian Railways would thus earn revenue from berths which otherwise remain unoccupied during lean season or in the empty flow direction.

SCI Q2 net profit down by 43% YoY

Shipping Corporation of India has posted a net profit of INR 182.31 crore for the July to September 2007 quarter down by 43.26% YoY as compared with INR 321.29 crore in July to September 2006 quarter. Total income has also dropped by 18.18% YoY to INR 945.8 crore from INR 1,155.98 crore.

Bharat Forge net profit up by 6% YoY

Bharat Forge has posted a net profit of INR 79.1 crore for the July to September 2007 quarter up by 6% YoY as compared with INR 74.2 crore in July to September 2006 quarter. The consolidated revenue is recorded at INR 1071.2 crore in July to September 2007 quarter up by 8% YoY as against INR 990.1 crore for July to September 2006 quarter.

On a stand alone basis, Bharat Forge has recorded a revenue growth of 25% at INR 588.5 crore in July to September 2007 quarter up by 25.2% YoY as against INR 469.89 crore in July to September 2006 quarter, while its net profit rose by 9% YoY to INR 67.7 crore from INR 62.18 crore.

Mr Baba Kalyani CMD of Bharat Forge said that "It has been able to maintain a strong growth momentum, in India, Europe and Asia pacific region. The hit on the EBITDA margins in Q1 has been recouped to a substantial extent and will show further improvement in the coming quarters. The improved performance has come on the back of strong demand from Europe and Asia Pacific which now constitute roughly 50% of the exports. Also important was the successful ramp up in production of heavy duty engine parts and passenger car engine components for the US and European market."

An official release said that Bharat Forge's exports recorded a growth of 42% YoY despite continued softness in the medium and heavy commercial vehicles market in the United States and a strong rupee, adding that the exports growth adjusted for currency appreciation is 54%. Rupee appreciation that resulted in a lower realization on the export earnings of the company to the extent of about INR 26 crore was partially compensated for by a net gain of INR 10.8 crore on account of the revalorization of foreign currency loans and deposits.

The release added that the company's expansion program at Baramati and Pune for non auto forgings is progressing as per schedule and the facilities will come on line for trial runs during the early part of the year 2008-09.

Iron ore price negotiations - Battle lines being drawn

It is reported that with the start of November, negotiations between the three producers of iron ore and their major customers in Asia are due to commence soon and the battle lines are already being drawn.

Xinhua cited Mr Luo Bingsheng vice chairman of China Iron and Steel Association as saying that China, Japan and other steel producing nations have common interests in negotiating this year’s iron ore contract prices. He said “We are in this together, China and Japan. The two countries both have common interests in the negotiations' with the three major ore suppliers, BHP Billiton Rio Tinto and CVRD.”

CVRD had circumvented Chinese opposition to a fierce price increase by signing agreements with European customers in2005, resulting in a feeling that similar strategy may be used by iron ore minors.

UBS analysts recently said that current spot prices in excess of USD 100 per tonne on FOB basis suggest pricing expectations in the market of plus 50% may possibly be exceeded.

US Steel completes acquisition of Stelco Inc

United States Steel Corporation announced that it has completed the acquisition of Stelco Inc and that Stelco has been renamed US Steel Canada Inc.

US Steel has financed the acquisition cost of approximately USD 1.2 billion and the refinancing of approximately USD 750 million of existing Stelco debt through a combination of cash on hand, borrowings under a USD 500 million three year term loan and a USD 400 million one year term loan and USD 400 million of sales under a receivables purchase agreement that expires in 2010. In this transaction, each share of Stelco common stock has been converted into the right to receive CAD 38.50 per share and warrants to acquire Stelco common stock have been converted into the right to receive CAD 27.50.

In addition, US Steel named the management team for US Steel Canada.
1. Mr Douglas R Matthews has been named president and general manager
2. Mr William C Harrison has been named vice president and chief financial officer.
3. Mr Charles J. Shuster has been named director-human resources
4. Mr Scott D Buckiso has been named plant manager Lake Erie Works
5. Mr Bryan P Vaughn has been named plant manager Hamilton Works. The changes are effective immediately.

Mr John Surma chairman & CEO of US Steel said that "We welcome the customers, employees and communities of Stelco to the US Steel family. This acquisition expands the footprint of our North American flat-rolled operations with facilities on both sides of the Great Lakes to better respond to customer needs, including the ability to process US Steel Canada slabs at other US Steel facilities."

Villacero to invest USD 75 million in new CR mill

BNamericas reported that the board of directors at Mexican company Grupo Villacero is planning to approve USD 75 million investments for a cold rolling mill.

Mr Julio César Villareal president of Villacero told BNamericas that the investment would be carried out over 12 months to 18 months and the new mill will allow the company to process hot rolled sheets at thinner gauges to shrink inventory of larger products and produce a line of products ideal for the market.

He added that the company is getting back to its roots by making pipes, galvanized products and profile rods.

Iron ore price negotiations - To drive steel prices up

Dow Jones reported that global steel prices will likely follow the upward trend as seen in key raw materials such as iron ore and coking coal.

The news paper quoted Mr Jose Armando Campos president of ArcelorMittal Brazil during an interview at a steel industry conference held at Cartagena in Colombia as saying that "With all of the investments being carried out by the steel industry everywhere, steel prices must follow the general trend and align with raw materials prices." He said that international steelmakers are expected to start negotiations with global iron ore miners on 2008 price contracts in coming weeks.

Mr Campos said that heated demand, driven largely by China's insatiable appetite for commodities, has resulted in soaring iron ore prices in recent years.

Mr Campos said that in addition to recent increases to raw materials costs, rising global demand for steel products would also send prices higher. He said that “The driver continues to be China, with development in India also adding to the mix.”

Sumitomo Metal H1 operating profit up by 4.9% YoY

Japan's third largest steelmaker Sumitomo Metal Industries Ltd announced that its operating profit in April to September 2007 period up by 4.9% YoY on higher sales and delivery prices.

Sumitomo Metal reported operating profit of JPY 141.73 billion in April to September 2007 period as compared to JPY 135.13 billion in April to September 2006 period. Its revenue expanded 10.4% YoY to JPY 847.81 billion due to brisk demand for its high grade stainless steel sheets. But net profit down by 2.9% YoY to JPY 96.91 billion, hit by increases in deferred tax obligations.

For the year to March 2008, the steelmaker expects to make net profit of JPY 190 billion, operating profit of JPY 285 billion and revenue of JPY 1.73 trillion.

Sumitomo Metal said that the figures are slightly higher than the previous guidance it gave three months earlier, when it said it was looking at a full year net profit of JPY 190 billion, operating profit of JPY 280 billion and revenue of JPY 1.71 trillion.

Zinifex Q3 zinc output up by 13% YoY

World’s third largest zinc mining company Zinifex Ltd produced 13% more of zinc in July to September 2007 quarter because of increased output from its Century mine in Australia.

Zinifex in a statement said that its total output of zinc from its mines in the July to September 2007 quarter rose to 153,985 tonnes from 135,682 tonnes in July to September 2006 quarter. Lead production fell to 18,543 tonnes from 18,913 tonnes.

Mr Tony Barnes acting CEO of Zinifex said that "The increased production occurred at Century, which benefited from steady operations and by not incurring a major maintenance shutdown as was the case last year.”

Steel Technologies starts operations at Juarez in Mexico

Steel Technologies Inc announced that it’s new, USD 8.5 million facilities at Juarez in Mexico, has begun initial operations with slitting and storage capabilities. It also announced plans to expand capacity and service capabilities with the addition of rail service and a new multi-blanking line.

Mr Carlos von Rossum G GD of Steel Technologies de Mexico said “We are extremely pleased with the start up and the strong customer reception of our new, world class steel processing center that has begun serving customers in the fast growing manufacturing base in the Juarez area.”

Steel Technologies entered the Mexico market in 1994 and has continued to grow through Greenfield expansion. The Juarez facility expands Steel Technologies’ Mexican platform to six facilities. Steel Technologies now operates processing facilities in Monterrey, Matamoros and Juarez and distribution centers in Queretaro, Puebla and Saltillo.

Steel Technologies Inc, a wholly owned subsidiary of Mitsui & Co (USA) Inc. processes flat rolled steel to specific thickness, width, temper, finish and shape requirements for automotive, appliance, lawn and garden, office furniture, agriculture, railcar, construction, hardware, and consumer goods. Steel Technologies has 25 facilities, including its JV operations, located throughout the United States, Canada and Mexico.

Fergumar secures injunction to resume supplies from CVRD

It is reported that Brazilian pig iron maker Fergumar has secured an injunction forcing local mining and metals group CVRD to resume iron ore supply.

CVRD in a statement said that it will follow the judicial order, but it plans to appeal the decision.

CVRD has requested in August 2007 for information and documentation from 8 pig iron companies to certify that operations were observing environmental and labor legislation.

As a result of its analysis of the documents, CVRD had sent a letter to Fergumar and to the Maranhão environment department on October 25th 2007 communicating the immediate halt of iron ore shipments. On the same date, CVRD also cut off supply to pig iron producers Cosipar, Simasa and Usimar. For the other pig iron producers Itasider, Ibérica, Viena and Simara, CVRD provided a 15 day window to present new documents to ensure a more adequate and conclusive analysis.

Iron ore price negotiations -BHPB may create iron ore index later

It is reported that the world's largest mining company BHP Billiton Limited is studying the establishment of an iron ore pricing index amid increasing demand and rising prices for iron ore.

The news pricing index system, similar to that used in pricing European thermal coal, first emerged from an analysts tour of BHP's iron ore operations in the Pilbara region of Western Australia, where the miner also told analysts it would not push for freight equalization in this year's round of negations with steel makers.

A spokeswoman for BHP said that BHP is considering an iron ore index, but said it would not be a feature of the current round of price negotiations. She added that "While it is clearly not relevant to this year's negotiations, the establishment of an iron ore index would represent a quantum leap in improving the industry pricing mechanism for the long term without disrupting the fundamental nature of supply security and relationships."

She said that "A good index could help buyers and sellers to have a common view of the market clearing price and could help to facilitate a faster, less stressful and less confrontational process to agree an annual price. This would work well in both a strong and weak market."

Under the benchmark system, prices are set in an annual round of negotiations between steel makers and the three big miners, BHP, Rio Tinto and Brazil's CVRD. Together they account for more than 70% of the global seaborne iron ore trade. With the iron ore market tight and spot prices soaring, many analysts are forecasting increases of between 30% and 50% in the benchmark price in this year's round of negotiations, which are now getting underway.

Straits Asia acquires Jembayan coal mine in Indonesia

Australia's Straits Resources’ Singapore listed Straits Asia Resources Ltd, which operates a coal mine in Indonesia, announced that it will acquire 100% interest in the Jembayan coal mine in East Kalimantan region of Indonesia for USD 350 million.

Straits Asia said the MoU on the acquisition, signed with Jembayan vendors Vital Century Investment, Pacific Communication Corp and Mitsui Matsushima International Pty Ltd on September 27th 2007 has now become a definitive sale and purchase agreement.

Straits Asia Resources Ltd intends to settle USD 275 million of the purchase prices in cash and issue 75.09 million new Straits Asia shares for the balance. The share issuance represents 6.9% of the company's enlarged issued share capital.

The coal mine is located 150 kilometers North West of Balikpapan The Jembayan mine has been operating since 2004. As of last year, the mine had produced about 4.0 million tonnes of coal.

Straits Asia had also announced on October 26th that it has agreed to buy two more coal mining concessions near its coal mines on the Indonesian island of Sebuku. The two concessions are estimated to have coal reserves of 34 million tonnes to 50 million tonnes, of which 4 million tonnes can be mined immediately.

Mr Richard Ong CEO of Straits Asia said that "The acquisition will deliver immediate benefits to Straits Asia as it allows us to expand our 2008 production to a target of around 8.5 million tons to 9.5 million tons from our two mines.”

Jamaica bans export of steel scrap

Platts reported that the government of Jamaica will suspend scrap metal exports to try to stem skyrocketing levels of metal theft that have reached crisis proportion.

Mr Karl Samuda minister of industry & commerce of Jaimaca told the Jamaican House of Representatives that he would sign an order Wednesday to suspend the export of scrap metals and the order will be gazetted immediately. He said that "The order will stop all exports of scrap metal until a complete assessment of the trade is undertaken.”

Mr Samuda said that "The problem of persons stealing public property such as bridge railing and manhole covers as well as private property to be sold as scrap metal for export has reached crisis proportions and could no longer be allowed to continue.” He added that the theft is being driven by strong demand for metals in China and India.

He said statistics from the Jamaica Exporters' Association indicated that exports of scrap metal increased from USD 13.3 million in 2005 to USD 99.58 million in 2006.

Kobe Steel H1 net profit down by 8.8% YoY

Japan's fourth largest steelmaker Kobe Steel Ltd announced that its net profit fell by 8.8% YoY in April to September 2007 period, hit by higher procurement costs for basic materials such as coke.

Kobe Steel reported a net profit of JPY 47.01 billion during the April to September 2007 period as compares to net income of JPY 51.58 billion in April to September 2006 period. Its operating profit fell by 3.2% to JPY 95.71 billion, while revenue rose by 15.1% to JPY 1.03 trillion.

The steelmaker also blamed rises in depreciation costs following a change in corporate tax rules and declines in evaluation profit on its metal inventory for the decline in profitability.

Kobe Steel has maintained its guidance for the full year to March 2008 that was revised on October 15, when it forecast a net profit of JPY 90 billion, an operating profit of JPY 195 billion and revenue of JPY 2.15 trillion.

STX buys 39.2% stake in Norwegian Aker Yards

It is reported that South Korean STX Shipbuilding Co will pay USD 800 million to become the biggest shareholder in Norway’s Aker Yards ASA.

STX Shipbuilding in a statement said that STX Shipbuilding and STX Engine Co, part of the STX Group, will raise USD 300 million in new stock and borrow USD 500 million to buy 39.2% stake in Europe’s biggest shipbuilder. It added that it is the first overseas acquisition for STX Shipbuilding.

The stake in Oslo based Aker Yards would enable Korea’s fifth biggest shipyard to shift into cruise liners, a business with better margins, as competition mounts with Chinese shipbuilders. Orders for cruise liners reach USD 13 billion annually, accounting for more than 12% of the global ship market.

US weekly crude steel production up by 1.2% YoY

American Iron & Steel Industries reported that in the week ending October 27th 2007, US’s raw steel production was 2.088 million net tons while the capability utilization rate was 87.5 %. Production was 2.063 million net tons in the week ending October 27th 2006 while the capability utilization then was 86.2%. The current week production represents 1.2% YoY increase from the same period in 2006.

Production for the week ending October 27th 2007 is down by 1.7% from the previous week ending October 20th 2007 when production was 2.126 million net tons and the rate of capability utilization was 89.1%.

Adjusted YTD production through October 27th 2007 was 85.878 million net tons at a capability utilization rate of 85.9%. That is a 4.2% YoY decrease from the 91.808 million net tons during the same period 2006 when the capability utilization rate was 89.8%.

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

Radioactive material found in scrap container at Honduras

Reuters reported that a cargo container that departed from an Atlantic coast seaport was discovered with strong traces of radioactive materials in Honduras. The container, bound for Hong Kong, contained steel scrap.

Puerto Cortes port authority said that the discovery was made during a scan, when authorities found high readings of radioactivity. Mr Edwin Araque manager of Honduras' port authority said that "We immediately declared an alert and have seized the container for inspection."

One government official said the material found was Cesium-137, which could have come from a hospital. It is used often to sterilize medical equipment but also has a wide range of industrial applications.

Philippines seeks 2.36 million tonnes coal for power plants

Reuters reported that Philippines’s state owned National Power Corp has issued tenders for 2.36 million tonnes of coal to run its three remaining coal fired plants in 2008.

According to an official of National Power Corp said that in addition, the Masinloc and Calaca plants, sold to private investors this year, will need 1.67 million tonnes of coal.

Mr Juan Carlos Guadarrama a senior Napocor official said that tenders were issued last week for 2.36 million tonnes of coal to run the Sual, Pagbilao and Naga Cebu plants next year. He added that an additional 200,000 tonnes of coal for Naga Cebu will be sourced domestically and the rest will be imported.

Steel Warehouse to build processing plant on St Louis riverfront

It is reported that Steel Warehouse Co based in Indiana has agreed to lease a 152,000 square foot building from the St Louis Port Authority and will use it for steel processing along the city's riverfront.

Steel Warehouse will invest about USD 18 million to equip the facility, which will encompass both sites. The company will use the facility as a steel service center where it will process steel coils. Its primary customer group includes makers of large equipment, such as John Deere and Freightliner.

Mr Gordon AuBuchon executive vice president for development of Steel Warehouse Co said that Steel Warehouse has yet to set a start date for operations, but the facility eventually will have about 100 employees.

He added that the company also is waiting to take possession of an adjacent three acre property containing a 40,000 square foot building that it purchased from metals processor Ryerson Inc. Steel Warehouse agreed to allow 18 months to 36 months for Ryerson to vacate the property. Terms of the two deals were unavailable.

Tenova honored with award of excellence for Toyohashi project

It is reported that Tenova Goodfellow has been recognized by the Canadian Engineering Community for the process control technology work conducted at the Topy Industries Ltd’s Toyohashi Factory in Japan.

The project involved the successful transfer of Canadian technology and engineering skills in the International Category. The merits of this project were improved environmental benefits which includes a 45% reduction in the use of kerosene, 13% reduction in carbon consumption along with reductions in greenhouse gas emissions. The overall success of this project has provided for a cleaner environment along with an annual cost savings of USD 1.5 million for the client.

This award represents the second Award of Excellence in 2007 for project work completed at Toyohashi Factory, Topy Industries Ltd in Japan with the first award being received from the Consulting Engineers of Ontario in May 2007.

The Canadian Consulting Engineers of Canada Awards, launched 39 years ago, are the most important national mark of recognition for projects recently completed by Canadian consulting engineering firms.

Rio Tinto Alcan expands landmark alumina deal

Rio Tinto Alcan announced it has reached an agreement with Norsk Hydro ASA to expand its alumina supply to Hydro Aluminium from 500,000 tonnes of alumina per year to 900,000 tonnes from 2011 to the end of the contract.

Under a 20 year contract signed in 2003 with Norsk Hydro, Rio Tinto Alcan is committed to supplying Hydro Aluminium with 500,000 tonnes of alumina per year from 2006 until 2030. This contract also gave Norsk Hydro an option to increase its purchases of alumina.

Mr Steve Hodgson president & CEO of Rio Tinto Alcan (Bauxite and Alumina) said that "The expansion of our supply contract with Norsk Hydro underpins our decision to invest in an expansion of the Yarwun alumina refinery. It is consistent with our strategy to maximise the value of Rio Tinto Alcan's world class bauxite deposits at Weipa in north Queensland, Australia."

Fording Canadian Coal Trust Q3 profit and revenue fall

Fording Canadian Coal Trust announced its Q3 of 2007 results. Cash available for distribution for the quarter was USD 61 million as compared with USD 123 million in 2006. On a year to date basis, cash available for distribution was USD 274 million a decrease of USD 197 million from 2006.

Fording Canadian Coal Trust’s net income from continuing operations was USD 91 million in the Q3 of 2007 compared with USD 123 million in 2006. Net income from continuing operations before unusual items, future income taxes and unrealized gains or losses on foreign exchange forward contracts was USD 83 million in the Q3 of 2007 compared with USD 120 million in 2006 and primarily reflects lower coal prices for the 2007 coal year that commenced April 1, 2007.

On a year to date basis, net income from continuing operations was USD 274 million for 2007 as compared to USD 428 million for 2006. Net income from continuing operations before unusual items, future income taxes and unrealized gains or losses on foreign exchange forward contracts was USD 282 million years to date versus USD 468 million in 2006, primarily due to lower coal prices.

Mr Boyd Payne president of Fording Canadian Coal Trust said that “The financial and operating results of this quarter were in line with our expectations. Looking forward, the hard coking coal markets appear to be robust, however if the Canadian dollar remains at current levels, substantial increases in the 2008 US dollar coal price will be required to avoid significant reductions in our margins.”

Fording Canadian Coal Trust is an open ended mutual fund trust and one of the largest royalty trusts in Canada. The Trust makes quarterly distributions to unit holders using royalties received from its 60% interest in the metallurgical coal operations of the Elk Valley Coal Partnership. The Elk Valley Coal Partnership is the world's second largest exporter of metallurgical coal, supplying high quality coal products to the international steel industry.

GVM Metals pays next installment on Coal of Africa

GVM Metals announced that it wishes to advise that an additional 10 million pounds has now been paid as part of the STG 35.5 million payable to acquire a 70% interest in Coal of Africa.

GVM Metals in consideration for the STG 21.5 million already paid in relation to the acquisition the first stage of the acquisition has been completed and it has been issued 93 shares in Coal of Africa, representing 46.6% of its issued capital.

The company has issued 8,888,888 shares owed in part consideration for the acquisition. Transfer to the company of the remaining 47 shares required to complete the second stage of the acquisition will take place upon satisfaction of outstanding conditions precedent, at which time the company will make the final payments of STG 10 million in cash and issue 4,444,445 shares due under the relevant acquisition agreements.

Coal of Africa is a South African company that owns the Mooiplaats coal project and surrounding new order prospecting rights.

DGCX rebar futures get muted response on launch

It is reported that Dubai Gold and Commodities Exchange's international rebar futures contract received a muted response in its debut on Monday.

However, Mr John Short director of steel & base metals of DGCX voiced confidence in the contract's success. He said "Once the first few deliveries have occurred and the weekly contracts have had time to mature, then that is when we can look to see the contract picking up momentum, the second half of 2008 Steel is simply too new for even seasoned derivatives traders to pile in and even more so for the steel community itself.”

The Dubai steel contract is for reinforcing bar. Each contract is for 10 tonnes of grade W460 rebar of 12 meters.

DGCX plans to issue three other contracts for stainless steel, flat products and freight by the end of 2009.

Drydocks bids for Singapore based shipyard Labroy Marine

Khaleej Times reported that maritime holding company Drydocks World has made AED 6 billion (SGD 2.37 billion) voluntary conditional cash offer for Singapore shipyard Labroy Marine Limited.

As per report, Drydocks World has received irrevocable undertakings from a significant number of Labroy shareholders to accept the offer covering some 65.49% of all the shares in Labroy.

Incorporated in Singapore on April 14th 1980, Labroy is listed on the main board of Singapore Stock Exchange. It has 2 full service shipyards on Indonesia's Batam Island and a large and diversified fleet of vessels. Labroy is also engaged in the construction of offshore rigs the oil and gas industry.

Mr Sultan Ahmed bin Sulayem chairman of Drydocks World described the acquisition of Labroy as integral to his company. He said that "The acquisition of Labroy has marked yet another milestone for Drydocks World in consolidating its position in the maritime industry worldwide."

Mr Geoff Taylor CEO of Drydocks World said that the senior management teams of both companies would work closely for a smooth handover of the business. He added that "At this time, Drydocks World does not envisage making major changes to the business, redeploying assets, or discontinuing the employment of any of Labroy's employees. Drydocks World will make a comprehensive review of Labroy's businesses with an aim to mapping out future strategies when the offer is done.”

Ground broken for Sirjan steelworks in Iran

Midlands News Association reported that Mr Ali Akbar Mehrabian acting industries and mines minister of Iran broke ground for Sirjan Steel Mill in Kerman Province in southeastern Iran. The permit for the factory was issued in 2002.

The mill, with over USD 295 million worth of investment, aims to produce 1 million tonnes of steel bars. The plant will be equipped with USD 18.6 million and USD 280 million worth of respectively Iranian made and foreign machineries. The factory will be constructed in a 600 hectare area near Gol Gohar iron ore mine in southwestern Sirjan.

Pakistan’s coal reserves estimated at 200 billion tonnes

Mr Irfanullah Marwat minister for mines & minerals of Sindh said that Pakistan retains over 200 billion tonnes of coal reserves and if every house in Pakistan utilizes electricity even then the coal reserves would not end for the next 300 years.

He put the blame on Water & Power Development Authority for the coal industries’ poor performance. Mr Marwat said that Pakistan has coal companies which have capacity of 150 MW but are using only 40 MW because it is the responsibility of WAPDA to check on them which it is failing to do.

He added that the promised power plants have also not been set up due to WAPDA’s inconsistency which made the mining sector suffer. He accused WAPDA for making them lose a deal that was about to be with China. He said that foreign countries have an image that Pakistan is not serious in its dealings and therefore, they hesitate to invest.

Mr Marwat also complained that the coal mining sector is unaware of the tariffs that would be charged and they would also discourage investments as no one would like to make blind deals.

SS maker Sanyo Seiki to join ‘The Big 5 Show’ in Dubai

Philippine stainless steel manufacturer Sanyo Seiki said that that the rising demand of stainless steel in the Gulf region signals new opportunities for small and medium enterprises home building companies and that it will join ‘The Big 5 Show’ in Dubai on November 25th to November 29th 2007.

Mr Glenn Chan of Sanyo Seiki said that “We plan to bring our stainless steel products like coils, sheets, mirror finish, satin finish, HL hairline finish, super polish welded tubes, welded pipes, plates, angle and round bars and others stainless steel products. We are on the lookout for distributors that would help us strategically penetrate the Middle East market.”

The Big 5 Show is an annual event that has been running for more than 25 years now and is considered the biggest building materials event with a strong and reliable sales track record. The Big 5 Show combines seven major exhibitions under one roof, namely air conditioning and refrigeration, water and environment, glass and metals, marble and machinery, bathroom and ceramics, cleaning and maintenance, including building and construction materials.

BaoSteel Q3 profit slumps

It is reported that China's biggest steelmaker BaoSteel has posted a 49.68% drop of net profits during July to September 2007 quarter as its sales were hit by a difficult stainless steel market and costs were fuelled up by carbon steel export taxes.

Its net income in July to September 2007 quarter nearly halved to CNY 2.4 billion as compared to July to September 2006 quarter.

Baoshan Iron & Steel Co said in a statement that the stainless steel unit recorded losses in the third quarter after the price of nickel, which had been purchased in the previous quarter, plunged from a record. The decline in nickel, which is added to stainless steel, dragged down product prices.

Stainless steel only accounts for 13% of BaoSteel's revenue but contributed to 6.2% decline on the gross margin.

By contrary, China's biggest stainless producer Taiyuan steel, whose 47% revenue derives from stainless steel, has reported its gross margin dip 1.3% in Q3.

Iron ore price negotiations - China sends signals of weakening demand

It is reported that the Chinese steel industry recently sent two strong messages to Australia's iron ore producers, as negotiators prepare to fix next year's ore price.

As per report, China Iron and Steel Association warned that
1 Steel production is moderating as exports are curbed
2 There will be no concessions to acknowledge soaring shipping rates.

As per reports, Mr Hu Shitai GM of Rio Tinto's China operations for iron ore during an industry event said that the landed cost of a tonne of ore from Australia is less than USD 80, while that from Brazil is USD 180 and from Indian spot market is USD 170.

Mr Zhang Jingang, deputy secretary general of the China Iron and Steel Association, who was the moderator of the session, responded that the profitability of steel makers had declined this year and that some were already losing money and could thus not afford further price rises.

Mr Luo Binsheng secretary general of CISA said the rise in iron ore imports would slow to 10.8%in 2008, from 14.2% in2007. He said Steel exports would remain the same or even decline recognizing China's desire to remove backward production facilities, to improve the environment.

Mr Luo described the freight cost hike as abnormal and temporary. Chiefly as a result, steel production costs have risen by a remarkable 11% so far this year while the growth rate in steel production had been declining. He said "We believe the current shipping price will fall back to normal levels, with effort from both sides."

In the first nine months of 2007, China imported 108.6 million tonnes of ore from Australia up by 14.8% YoY, 72.2 million tonnes from Brazil up by 28% YoY and 60.9 million tonnes from India up by 4.3% YoY.

Rebar and wire rod prices improving in China

On Shanghai market, HRB335 20mm rebar is being quoted at CNY 3930 to CNY 3950 per tonne, HRB400 material at CNY 4080 to CNY 4100 per tonne, up CNY 30 per tonne from last Friday. Q235 wire rod and hi speed cargo jumped up by CNY 50 to CNY 60 per tonne to CNY 4000 per tonne and CNY 4010 to CNY 4050 per tonne respectively.

South China's Guangzhou market see much prices due to less billet supply and high delivery fee from North to South. HRB335 16mm to 25mm rebar stays at CNY 4400 per tonne almost flat with last week. There seems to be not much room for further rise since a lot of cargoes are flowing into the Southern provinces from North China with winter drawing near in North.

There are several reasons that are behind the increases for rebar and wire rod prices, especially in North and East China.

1) The upcoming iron ore benchmark price negotiation for 2008. Almost all market participants are anticipating an increase of 20% to 30% for iron ore prices next year. Some are even expecting as much as 50%.

2) Rising billet prices are eroding the profits of producers though rebar and wire rod prices are on the rise. They have to raise EXW prices to offset the improving cost.

3) The price of billet is regarded as the bottom level of rebar; hence there has been no low priced cargo already.

4) Prices in Shanghai are comparatively low and dealers have to shoot up prices to secure their profit. Low market prices also keep fresh material out taking into account higher EXW prices, which has led to not enough supply.

5) High domestic transportation rate. Current cost for delivered billet from North China has reached CNY 4050 per tonnes.

Export prices are still mixed and the range is normally between USD 585 to USD 640 per tonne on FOB basis. However, exports seem to have suspended because the delivered prices have been the same as those in destination market or even higher.

(Sourced from MySteel.net)

Taigang Stainless Q3 net up by 20% YoY

Shanxi based China's biggest maker of the stainless steel Taigang Stainless Steel Co announced that its profit increased by 20% YoY in July to September 2007 quarter due to increased production. Its net income increased to CNY 841.7 million.

Taigang in a statement, without giving figures, said that its profit will rise by between 50% and 100% in 2007 from 2006 on rising prices. It had posted a profit of CNY 2.4 billion in 2006.

Baosteel Xinyu Steel merger gaining ground

21 Century Business Herald reported that China's biggest steelmaker Baosteel could merge with Xinyu Iron & Steel Co the Jiangxi Province based mill.

The potential merger is based on cooperation on Xinyu Steel's 3 million tonnes per year steel sheet project, which is confirmed by the provincial development and reform commission and state owned assets supervision and management commission, though it's still unknown what percentage of stake Baosteel may take in the item.

Jiangxi Province Metallurgical Group Company, the parent group of Xinyu Steel, declined to disclose more details as there are still a lot to talk about. While the provincial top officials pin big hope the cooperation and expect a substantial elevation of the province's stainless steel making technology by this chance.

Local officials said the company's 3 million tonnes per year sheet project was launched February 28th 2007 with total investment of CNY 12.6 billion slated for operation in 2008 and 2009 respectively in two phases. BaoSteel's participation would ensure the project's money invested.

On BaoSteel's side, it's revealed the timetable may depend on building of the 3 million tonnes per year steel project and Jiangxi government and local officials. Baosteel pointed out its blueprint in September to expand output to 80 million tonnes per year by 2012 and the cooperation with Xinyu Steel may become its first step to the expansion path in central China, which is expected to lead to merger eventually.

(Sourced from MySteel.net)

China exports 11.7 million tonne coke in January to September 2007

China has exported 11.734 million tonnes of coke during January to September 2007 period.

The details are as under

In million tonnes

Fosun determines three strategies for development

Mr Guo Chuangchang chairman of Shanghai Fosun High Technology Co Ltd while speaking at the small & medium size enterprises' development forum held in Shanghai disclosed that he has determined three directions for development.
1. Expanding specialty steel production
2. Steel service centers
3. Involvement in steel sector's consolidation.

Fosun will strengthen input in technology and develop specialty steel. Nanjing Steel, which had only 2 million tonnes per year output when it first invested in, a majority being low & medium end steel, now owns up to 6 million tonnes with a majority as specialty steel, especially pipeline steel.

Fosun plans to improve the industrial chain by moving from lower end to higher end and devoting into service sector. Forte Group, a subsidiary of Fosun, has set up a steel logistics center Gangling in Baoshan. Mr Guo said the group is keen on capitalizing on production service sector.

Mr Guo said third is participation in steel consolidation, such as raw material supply, transportation and merger between steel enterprises etc. He said “This is intended to share the profits with iron ore suppliers and ship owners, which have squeezed steelmakers' profit margin. The first integration Fosun involved was steel related upper stream sectors like transportation and rare metals supply; and the second would be consolidation between large and small steel mills.”

(Sourced from MySteel.net)

Taigang to supply X80 steel to CPMEC

It is reported that recently that Taiyuan Steel Group has signed contracts with China Petroleum Material & Equipment Corporation, a specialized service company fully owned by China National Petroleum Corporation.

According to the contract, Taiyuan Steel Group will provide CPMEC with 1000 tonnes of X80 pipeline steel. The steel products will be used in making West East natural gas transportation line II.

Taiyuan Steel Group has formed 3 million tonnes of annual capacity in 2007. In 2006, the steel maker realized sales revenue of CNY 53.2 billion and pretax profit of CNY 6.7 billion. It is expected that the steel maker's stainless steel outputs will exceed 2 million tonnes with over CNY 100 billion of sales revenue and over CNY 10 billion of pretax profits.

China GengSheng announces refractoriness supply contracts

China GengSheng Minerals Inc has announced new supply contracts for its refractory business. The contracts are expected to generate CNY 25.1 million in sales over the life of the contracts.

China GengSheng Minerals signed a one year refining ladle refractories maintenance service contract with Heilongjiang Jianlong Steel Limited whose annual output of high quality steel is 1 million tonnes.

It has also signed a supply contract with Shanxi Zhongyu Iron Steel Co Ltd to provide refractory products for its hot blast furnace and a 600 tonnes mixer furnace. Shanxi is a new steel mill which began operation this year.

Guangzhou Iron Q3 net surges by 265% YoY

It is reported that Guangzhou Iron and Steel Enterprises Group achieved net profits of CNY 7.86 million in the third quarter of 2007, up 265.1% from a year earlier.

The good results rested on sharp recovery in the domestic construction steel market, stern control over the inner cost, substantial expansion of the output and outstanding reduction of the expenditure in overhaul and logistics.

Jinan Steel gears up for new share issuance

Interfax China reported that Shandong Jinan Iron and Steel Co Ltd the listed arm of Jinan Iron and Steel Group plans to issue a maximum of 380 million new shares in order purchase assets from its parent company worth a total of CNY 6.736 billion (USD 901.74 million).

Kazchrome to launch new chrome pellet plant in 2009

Reuter reported that world's 3rd largest ferrochrome producer Kazchrome is spending USD 111 million to build a new plant to produce 700,000 tonnes a year of chrome ore pellets.

Eurasian Natural Resources Corp said in a statement said that "The launch of the plant is planned for the second quarter of 2009.It said Finnish mining equipment maker Outotec will also participate in the project and supply the technology.

The new plant, which is expected to be running at full capacity by the end of 2009, will supply most of its pellets to Kazchrome's ferro alloy smelters in Aksu and Aktobe.

Kazchrome is already operates a 600,000 tonne per year pellet plant in the town of Khromtau in the northwestern Kazakh region of Aktobe.

Kazchrome posted a net profit of USD 266 million in 2006. Annual production of ferrochrome was more than 1 million tonnes.

It is one of the main assets of Eurasian Natural Resources Corp, which also controls Aluminium of Kazakhstan, Zhairem GOK and the Sokolov-Sarbai Mining and Production Union.

Mechel Campia Turzii renews ISO 9001

Mechel announced the completion of the quality management system audit at its Romanian subsidiary Mechel Campia Turzii resulting in the recertification of its compliance with the ISO 9001:2000 international standards.

A regular supervisory audit of the quality management system for its compliance with the ISO 9001:2000 international standard was completed at Mechel Campia Turzii in October 2007. The auditors recertified the plant's compliance with the established requirements and the ISO 9001:2000 certificate, which shall remain in effect till December 2009.

The original certification of Mechel Campia Turzii's quality management system was obtained from the international quality assurance company, Lloyd's Register, in 2000, with a recertification conducted in November 2006.

Mr Gennadiy Somov GD of Mechel Campia Turzii said that "Mechel Campia Turzii is currently at its final stage of preparing the plant's long term development program for 2008-2011, which provides for development of the entire enterprise: from its own steelmaking to producing long products and hardware with high added value. By the end of 2007, we plan to finalize contracts for delivering equipment, constructing a continuous caster, and reconstructing Wire Mill 230.”

He added that “Long term development of the plant also provides for improving the quality system at Mechel Campia Turzii. The system will enable the plant to maintain its share in the rolled and hardware product market by maintaining high quality levels, while significantly reducing production costs and production cycle time."

Russian firms to expand business presence in Venezuela

RIA Novosti citing Mr Alexander Zhukov deputy prime minister of Russia reported that at the end of his official visit to the South American country, he said that Russian businesses will expand their presence in Venezuela.

Mr Alexander Zhukov, who visited Venezuela on October 25th to 27th said UC Rusal has received permission to build an alumina plant, in which it will hold a 50% stake. Mr Zhukov said an agreement on Rusal's participation in the USD 1 billion project, with a capacity of 1 million metric tonnes of alumina a year would be signed in the foreseeable future. He said that under Venezuelan law, in projects with a share of foreign capital, over 50% must belong to the Venezuelan partner but that Mr Hugo Chavez President of Venezuela made an exception for Rusal allowing it to hold a 50% stake.

He also said Russian energy giant Gazprom would soon sign an agreement with the Venezuelan state oil and gas company PdVSA on the certification and appraisal of oil reserves at the Ayacucho-3 block in the Orinoco oil belt. He said that under this project, the sides will hold consultations on setting up a joint venture as well as on Gazprom's possible participation in other oil producing projects in the area. Mr Zhukov said Gazprom had also asked the Venezuelan government for permission not only to participate in geological prospecting but also in the independent production and marketing of Venezuelan gas.

He said TMK, Russia's largest steel pipe manufacturer, would sign soon an agreement with Venezuela on the delivery of 25,000 tonnes of seamless pipes for trunk pipelines, adding that the volume of deliveries may subsequently increase, since Venezuelan authorities said they need about 750,000 metric tonnes of pipes.

He also said LUKoil expects to sign before the end of the current year an agreement with state controlled oil company PdVSA on the rehabilitation of oil wells in Venezuela. LUKoil is putting into operation several projects in the South American country. The Russian company is completing geological prospecting of the Junin-3 block in the Orinoco oil belt, and is holding talks on setting up a joint venture with the national petroleum company of Venezuela, PdVSA, for the rehabilitation of inactive oil wells. The joint venture is expected to be set up in 2008.

Aricom eying Chinese iron ore market

Mr Pavel Maslovskiy chairman of Aricom Plc, UK based miner of iron ore and titanium in Russia, said that he expects Chinese consumption of iron ore to keep growing.

Mr Maslovskiy spoke in an interview recently in London that “Consumption in China will continue to grow. The trend will remain as it is now. The greatest benefit our project has is that transportation costs from our mines to China are lower than the same product from Brazil or Australia.”

Gazprom to divest stake in Tagil pipe plant

FIS reported that Gazprom has put for bidding a 19.9% shareholding in Tagil large size pipe plant. It consists of 238,800 ordinary shares of the par value of RUB 1,000. The start price is set at RUB 238.8 million and the auction step at RUB 3 million.

Participants are to make a deposit of RUB 23.88 million.

The bidding to be conducted in the form of an open auction will be held on November 15th 2007. Applications for participation in the auction will be accepted until November 13th 2007.

Irkutskenergo starts Golovinsky coal complex

It is reported that Irkutskenergo launched the first complex of Golovinsky Coal Pit. The second stage will be in operation in summer next year.

The coal field covers 9000 hectare and has estimated reserves of 190 million tonnes of coal. The development is provided by Olkhon as Irkutskenergo. Now the output reached 500,000 tonnes per year to be reached to 1 million tonnes per year in 2008.

Irkutskenergo was set up in 1992 to involve 3 power plants, 9 heat stations and heat networks. The 2006 consolidated revenues increased 18.1% to come to RUB 22.571 billion; net profit RUB 1.75 billion the 2006 net profit rose 13.7% to RUB 2.1 billion revenues 22.6% to RUB 23.7 billion. The IQ net profit declined 1.3% to RUB 989.64 million.