November, 23 2007
Indian steel capacity seen at 124 million tonnes by 2011-12
Mr RS Pandey secretary steel said that India's steel making capacity is expected to rise to 124 million tonnes by 2011-12 from 56 million tonnes in the current fiscal year to March 2007 beating an earlier official estimate of 80 million tonnes by a wide margin. The ministry which is yet to officially revise its estimate is expected to do so shortly.
Mr Pandey said that a substantial part of the new capacities will come from existing players through Brownfield expansion, while the rest would come from new Greenfield plants due to come up by 2011-12.
Mr Pandey added that steel production and consumption was seen growing at 15% in 2007-08, higher than the 11% target set by the government. He said that “It is due to unprecedented and unanticipated industrial growth. There is a direct co relation between growth of steel use and high level of economic activity.”
Dr Das updates parliament on expansion plans of SAIL
Dr Akhilesh Das union minister of state for steel informed the members of lower house of Indian parliament that Steel Authority of India Limited, which has proposed to modernize and expand capacity of its plants and mines, is targeting to increase production of hot metal from the present level of 14.6 million tonnes per annum to about 26 million tonnes per annum by 2010.
He said that “Apart from augmenting the production capacity at the plants, SAIL also envisages removal of technological obsolescence, reduction in energy consumption, improvement in product mix, up gradation of pollution control measures and augmentation of infrastructure facilities in all the plants to support higher production.”
He added that “To meet the enhanced requirement arising from the expansion plans of the steel plants, SAIL has decided to modernize and expand its existing mines at Kiriburu, Meghahataburu, Gua, Bolani and Barsua and develop new mines at Rowghat, Chiria, Taldih and Thakurani.”
Dr Das also said that SAIL’s Rourkela Steel Plant proposes to expand its capacity to achieve hot metal production of 4.5 million tonnes per annum at an indicative cost of INR 7668 crore and the expansion work of RSP is likely to commence by June 2008.
TATA Steel appoints 2 more directors
TATA Steel announced that its board of directors, at its meeting held on November 22nd 2007, has appointed following directors on the board as additional directors.
1. Mr Andrew Robb as a Non Executive Independent Director
Mr Robb is a Non Executive Director of Corus Group Ltd since August 2003.
2. Dr T Mukherjee as a Non Executive Director
Dr Mukherjee had retired as the deputy MD steel on October 31st 2007.
According to the company website, the board consists of chairman Mr RN Tata, Mr NN Wadia, Mr Subodh Bhargava, Mr SM Palia, Mr Suresh Krishna, Mr Ishaat Hussain, Dr JJ Irani, Mr B Muthuraman, Dr T Mukherjee, Mr James Leng, Mr Jacques Schraven, Mr Anthony Hayward, Mr Phillippe Varin and Mr Andrew Robb.
JSW Steel to approach land owners directly in Jharkhand
Ranchi Express reported that JSW Steel Limited has decided not to wait for Rehabilitation and Resettlement Policy, but instead go ahead with its own means to acquire land for its 10 million tonne green field steel project in Jharkhand.
Mr RP Singh CEO of JSW Steel Jharkhand said that "We will directly to go to the people with our company's policy and convince them to be partners in our project." He added that it is difficult to acquire land in absence of the policy.
JSW Steel Limited needs nearly 9,000 acres to come up with its project that includes 900 MW power plants, coming up at Ichagarh and Seraikela Karsawan district in the state with an investment of INR 35,000 crore.
Coal blocks allocated for ArcelorMittal’s proposed steel plants
ArcelorMittal announced that it has been allocated thermal coal blocks for the first phase of its Indian Greenfield projects in Jharkhand and Orissa.
The union government has allocated ArcelorMittal coal blocks on a sharing basis at Sereghara block in Jharkhand and Rampia and Dip side Rampia block in Orissa. In Jharkhand, ArcelorMittal has been allocated 83.33 million tonnes of steam coal out of the 150 million tonnes allocated. In Orissa, the share is 84.16 million tonnes out of a total of 645.24 million tonnes.
Mr MP Singh VP of mining, mergers & acquisitions at ArcelorMittal said that "This is a good beginning towards the realization of our Jharkhand and Orissa projects, which will both bring considerable economic benefits to India and the states of Jharkhand and Orissa in particular. This announcement is a positive sign that the Government of India and the State governments of Jharkhand and Orissa are supportive of ArcelorMittal and our commitment to these projects."
ArcelorMittal plans to build integrated steel plants in Jharkhand and Orissa each with a total annual capacity of 12 million tonnes at a combined investment of approximately USD 20 billion. The projects would be developed in 2 phases of 6 million tonnes each and will also have captive power units for which the coal block allocations will be utilized.
TATA Steel’s retail venture to expand its business
It is reported that TATA Steel’s retail venture steeljunction is planning to expand to tier II cities of Bengal, Jharkhand and Orissa, which will have 8 franchisee outlets by March 2008.
Mr Sarvesh Kumar chief of agrico & retail at TATA Steel said that “We are opening a steeljunction Express in Barasat on November 23rd 2007. For tier II cities we are looking at express formats spread across 1,500 to 2,500 square feet compared with the 20,000 square foot steeljunction in Kolkata. These outlets will have more of TATA products and lower priced steel hardware, furniture, utensils and other accessories. The product mix will vary according to the surrounding region.”
TATA Steel’s retail venture is expected to clock a turnover of INR 15 crore by the end of this fiscal and is expected to go up to INR 28 crore in the next financial year. There is a steeljunction outlet in Siliguri. Other cities being considered for expansion are Asansol, Durgapur, Ranigunj, Murshidabad and Krishnanagar in Bengal and Ranchi and Bhubaneswar respectively.
Mr Kumar said that in Kolkata store, about 8% to 10% of the turnover comes from TATA brands but in tier II towns this will be as high as 40% to 50%. He added that “We chose to launch the format in eastern India as we wanted locations where we could leverage the brand. The concept of a specialized store is not like any other retail format and, therefore, takes time to expand.”
BHEL bags INR 2,108 crore contract for Maithon power plant
Bharat Heavy Electricals Limited announced that it has bagged an INR 2,108 crore order from Maithon Power Limited, a JV of TATA Power and Damodar Valley Corporation, to supply steam generators and turbines for the upcoming Maithon Right Bank Thermal Power Project in Jharkhand. The order has been clinched under international competitive bidding company and involves two units of 525 MW each.
BHEL's scope of work in the project envisages supply and commissioning of steam generators, turbine generators, electrostatic precipitators and associated auxiliaries, besides controls and instrumentation.
Meanwhile Maithon Power said that "BHEL has fully established technology for manufacture of thermal sets up to 525 MW rating and has the capability to manufacture sets up to 1,000 MW rating, suited to Indian conditions by using Indian as well as imported coal."
Jharkhand rules out any problem for ArcelorMittal project
Jharkhand government announced that ArcelorMittal is happy with the progress on its proposed steel project and that its requirement of land, power and water would be definitely addressed.
Mr Madhu Koda chief minister of Jharkhand, while reacting to a query that steel tycoon Mr LN Mittal reportedly expressed disappointment with his projects in the state, said that "Mr Malay Mukherjee management board member of ArcelorMittal was here in Ranchi. He said the company is satisfied with the development of the proposed steel project in Jharkhand."
Expressing happiness over ArcelorMittal participating in the ongoing trade fair, Mr Koda said that the state would leave no stone unturned with regard to its 12 million tonne integrated steel project entailing an investment of about INR 40,000 crore. He added that "They need 600 million tonne iron ore and the state government will provide them with the same. We have a number of iron ore mines and their requirement will be met."
Gopalpur Port to start exporting iron ore
It is reported that after receiving stocks of iron ore by goods trains recently, the Gopalpur Seasonal Port is now all set to receive a cargo vessel as the first customer of the current season.
Gopalpur Seasonal Port, earlier managed by the Orissa government, was handed over to Orissa Stevedores Limited last year, to develop it into a full fledged all season port, on a build own operate share transfer basis for a concession period of 30 years. It was over an area of 282.755 acres while the planned all season port will come up on an area of 513.786 acres.
As per the notification by the state government, the district administration already initiated measures to hand over the land to OSL, besides leased out some stone quarrys to use the same for the construction of the all weather port.
As per initial plans, the port would be developed in 2 phases at a cost of INR 720 crore. The first phase would involve the up gradation and rehabilitation of the existing minor port at a cost of INR 20 crore. Phase II involves an investment of INR 700 crore for the development of the port into an all season one. After completion of 30 years, the developed port will be in the hands of the state government.
TATA Steel to develop modern cooperative farm in Bastar
It is reported that TATA Steel, which has been struggling to acquire land in Chattisgarh for mining, is proposing to develop a modern agricultural cooperative farm in the Bastar region in the state once it acquires land.
The land will be used to employ farmers who sell land to TATA in a cooperative. This is being offered as part of the rehabilitation package to farmers in Chattisgarh. The cooperative would be part of the industrial project of it which is trying to acquire 2063 hectares of land in 10 villages in Lohandiguda in Bastar for its 5 million tonnes a year integrated steel plant. The cooperative farm, to be extended over 500 acres, is also expected to provide jobs for elderly villagers impacted by the project and the blueprint of the proposal has been designed and sent to the district administration. Workers on the farm would be paid the government rate.
TATA Steel officials said that “The local people raised apprehension about becoming jobless after handing over their land and suggested that the company find some land based solution as a large number of people were working in farms. Later, a cooperative society will be formed to give total control of the farm to the villagers. About 500 people are likely to get jobs in the farm. Work for developing the farm will begin soon after land acquisition for the steel plant is completed.”
Mr Sanjay Chowdhary chief of corporate communications of TATA Steel said that “TATA Steel can think of implementing it in other proposed projects if project affected people demand it. In Jharkhand we would like to offer this package but the state is yet to come out with a relief and rehabilitation policy.”
Maoists release CDs containing anti TATA and ArcelorMittal songs
Ranchi Express reported that Maoist rebels in Jharkhand have come out with audio and video CDs against the TATA and ArcelorMittal companies.
As per report, the audio CD has 7 songs in tribal language Khotha, which calls the steel majors plunderers of the state's resources. The first song read as "Mittal hai Jharkhand ke lutera, ekera ke bhaga debe re. Garib janata ke assu piye re Mitaal aur TATA ekere bhaga debe re. (Mittal is the plunderer of Jharkhand, we will force them to flee from the state. TATA and Mittal are drinking the tears of poor people and we will force them to flee from Jharkhand)."
The second song read as "Hamara raj dekh ke, hamar satta dekh ke, shosak shashak ghabara gaile re. Mohe ugrawadi bana dele re. (The government is scared of our rule and administration, so they have branded us extremists)."
UP inks JV with NTPC for coal based power station
It is reported that Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited will form a JV company and National Thermal Power Corporation Limited for setting up 2X660 MW coal based power station at Meza in Allahabad.
A MoU to this effect was signed in the presence of Ms Mayawati chief minister of UP, Mr GB Patnayak chairman of UPRVUNL, Mr VN Garg principal secretary in the state energy ministry and Mr T Sankaralingam CMD of NTPC.
Hindalco Industries set to foray into aluminum alloys
BS reported that Hindalco Industries has targeted the automobile and aviation sectors to drive it foray into aluminum alloys. Hindalco’s new acquisition Novelis owns the niche technology that creates special aluminum alloy that could replace steel in cars.
Mr D Bhattacharya VC of Novelis said that it would bring special technologies that could add value to the overall operations of Hindalco. Though it would take some time before car makers in India replace steel with aluminum, car makers in Europe are already using this technology. The technology has helped to make an Audi much lighter than a Maruti 800. He added that “The weight of personal utility vehicles is going to be an important aspect of the overall strategy in controlling green house gas emissions in the developed world, where aluminum alloy is going to play a big role”
He said that the special technology alloy is expected to make a car over 40% expensive than the normal car made with steel. But it would provide as much strength and shaping capability as steel. He added that “As the consumption grows, the cost of this special metal would come down finding its way into emerging countries like India.”
Meanwhile, Hindalco is investing about INR 150 crore in Hindalco Almex Alloys Limited, a 70:30 JV company between Hindalco and Almex of US, to develop high strength aluminum alloys for the aviation industry. The plant is expected to be an INR 700 crore company once it reaches the full capacity of 45,000 tonnes and is expected to be ready in a year.
Mr Shashi K Maudgal executive president (marketing) of Hindalco said that “Aviation offers high business potential as the sector is growing at 15% to 20% annually.” He added that it is looking at tying up with tier 2 and tier 3 customers, who are essentially the component suppliers to aircraft manufacturers such as Boeing and Airbus. Besides the aviation sector, it also expects to find several domestic customers, including the Defense Research Development Organization for these aluminum alloys.
Gujarat NRE to complete acquisition of Elouera coal mine soon
Mr Arun Kumar Jagatramka vice CMD of Gujarat NRE Coke Limited recently said that it will complete the acquisition of the Elouera coal mine in Australia from BHP Billiton within the next 1 month. The mine, which is located south of Sydney, is being acquired through a group company for AUD 50 million.
Mr Jagatramka, while speaking on the eve of the Global Steel 2007 Conference, said that Elouera would be the third coal mine in Australia to be acquired by the GNCL Group after the NRE No I Colliery in Southern Coalfields of New South Wales in Australia and the NRE Avondale coal mine.
He added that the aggregate capacity of both the earlier acquisitions was 0.7 million tonnes per annum at present and would be hiked to 4.5 million tonnes within the next 4 years. By that time, the capacity of the Elouera mine would stand augmented at 2.5 million tonnes per annum.
GSPL to invest INR 2,500 crore for 850 kilometer long pipeline
BS reported that Gujarat State Petronet Limited, subsidiary of Gujarat State Petroleum Corporation, will invest around INR 2,500 crore in laying 850 kilometer of gas pipelines in 2008.
Mr PPG Sarma executive director of GSPL said that "We will expand our pipeline network to 2,000 kilometer from the current 1,145 kilometer within Gujarat. The cost of laying the pipelines would be approximately INR 3 crore per kilometer. We have pipeline networks till just about 50 kilometer away from Maharashtra. There are many companies we are talking to."
He added that out of the 850 kilometer pipeline expansion, work has already started on a 300 kilometer stretch. He said that the pipeline would transport gas from GSPC offshore gas discovery to consumption centers in Gujarat.
Mr Sarma said that GSPL is also in talks with various companies to set up JVs for retailing gas to kitchens and vehicles in cities in Maharashtra and Rajasthan. The city gas distribution policy will be finalized by the Petroleum and Natural Gas Regulatory Board. The draft policy however envisages that all gas projects, including city gas distribution and pipeline projects, will be built by a company which wins the project on a competitive bidding process.
Vedanta keen to buy out 49% government stake in BALCO
It is reported that Vedanta Resources is poised to make over INR 13,000 crore investments in expanding its aluminum capacities in India and is keen to buy out the government stake in Bharat Aluminum Co Limited.
Mr Pramod Suri CEO of Vedanta said that “The loss making BALCO is now a great turnaround story, after we took over its operations. Its overall capacity has been added significantly and last year it recorded profit of INR 900 crore. We have expressed our intension to buy out the 49% government stake and the matter has been subjected to a 3 member committee. The process is under evaluation and SBI Caps and independent consultants are evaluating the company. We expect to complete the buyout soon.”
Mr Suri said that Vedanta has targeted creation of capacity of 1 million tonnes each of zinc, lead and aluminum in India. The aluminum sector alone will have investments of about INR 13,000 crore. About aluminum capacity expansion, he said that with additional capacities at Korba mines and Jhashua, the first phase of expansion would help achieve overall capacity of about 1.5 million tonnes in India.
Kakinada Dadri gas pipeline feasible – PNGR
Petroleum & Natural Gas Regulator said that the proposed 1,600 kilometer long gas pipeline from Kakinanda in Andhra Pradesh to Dadri in Uttar Pradesh, which will be the longest in India, is prima facie feasible. The pipeline, estimated to cost INR 14,000 crore, has been proposed by Reliance Natural Resources Limited.
A member of the Petroleum & Natural Gas Regulatory Board said that “The project seems feasible as there is a market for gas along the route of the pipeline, besides the demand from the proposed Dadri power plant. However, according to the new draft pipeline policy, pipelines will be set up by companies that win the project in competitive bidding.” He added that the board is in the process of finalizing the draft cross country pipeline policy.
The Regulatory Board member said that “We have to wait and see if gas is available for the pipeline. If that is tied up, we will call for competitive bidding according to the policy we have drawn up.” He added that since gas pipelines were a national property and were given a 10 year tax holiday in the last Budget, ensuring competition and transparency was a must.
Reliance Natural Resources Limited had earlier sought the board’s approval for laying the pipeline to transport its share of gas from Reliance Industries’ D6 block in the K G basin to Dadri.
ONGC Board approves re development of Mumbai High
Mr Dinsha Patel union minister of state for petroleum & natural gas said that the second phase of the re development of Mumbai High South has been approved by ONGC Board on October 3rd 2007 at an estimated cost of INR 5713.07 crore with completion schedule of 31 and half months from the date of approval.
The project envisages an incremental gain of 20.7 million tonnes of oil and 3.32 billion cubic meter of gas by the year 2030.
Jharkhand industry bodies set to arm twist JSEB for power
Ranchi Express reported that various industrial associations in Kolhan are set to get a major share of the new 100 MW electricity procured recently by the Jharkhand State Electricity Board from the Damodar Valley Corporation. JSEB is presently getting 50 MW of the procured electricity, with rest to be supplied soon.
Adityapur Small Industries Associations had demanded the entire 100 MW for Gamharia grid and Chandil Industry Association has demanded 45MW of the produced electricity for Chandil gird.
Mr Guddu Singh president of Chandil Industry Association said that "We have decided to stop electricity payment to JSEB from this month. The industrial units in the region require 40 MW to 45 MW of electricity which can be easily supplied from the power procured from DVC." He added that various industries in the Chandil area are presently paying INR 4 crore revenue to JSEB every month.
NHPC IPO delayed due to non appointment of independent directors
National Hydroelectric Power Corporation, which filed a draft prospectus for its initial public offer with market regulator SEBI in April 2007, said that it is awaiting government approval to appoint independent directors before it can go ahead with the issue.
As per regulatory requirements, NHPC must have 7 independent directors on its board. It currently has only government nominees and functional directors on its board.
Mr SK Garg CMD of NHPC said that "We will launch the IPO by the end of last quarter of 2008 fiscal, subject to the appointment of independent directors by the government." He added that NHPC has a mandate to sell up to 24% stake. In the first phase, it proposed to offer 10% to the public and an additional 5% disinvestment of government stake.
It is noted that NHPC had filed draft documents for its IPO with SEBI in April 2007. The IPO proposed to include over 111 crore fresh equity shares and offer for sale of more than 55 crore shares. Post IPO, government stake in NHPC would come down to about 86%. At face value, it expects to mop up around INR 1,700 crore from the market.
The government had in December 2006 approved the IPO plans of NHPC and Rural Electrification Corporation.
CVRD to postpone iron ore shipments due to rail and port delays
Bloomberg reported that Cia Vale do Rio Doce will postpone about 20 iron ore shipments in December 2007 causing shipping rates to slump today.
The reported cite a posting on CVRD website as saying that “The number of ships waiting to load ore at Vale's Ponta da Madeira port near Sao Luis, Brazil, doubled to 14 today from seven a month earlier. Seasonal rains reduced output and protests that blocked a railroad disrupted shipments from Carajas.”
The report also cited Mr Fernando Thompson of CVRD as saying that “Our ports are backed up because output has been delayed and by freeing up ships that would otherwise just sit at anchor. By freeing up ships that would otherwise just sit at anchor, we are increasing the supply of shipping capacity to the world market.''
Speculation earlier today that CVRD canceled cargoes sent shipping costs lower. As per Baltic Exchange, daily rate of hiring Capesize ships, dropped by 3% to USD 178,215. According to Freight Investor Services. FFA contracts for Capesize ships for the first quarter of next year fell to USD 140,000 a day from USD 150,000 a day yesterday.
EU clears ArcelorMittal purchase of Saar Ferngas AG
It is reported that EU regulators have cleared the purchase of German gas distributor Saar Ferngas AG by steel giant ArcelorMittal, saying that the EUR 367 million deal would not violate EU competition rules.
The European Commission said its antitrust review of the deal found it would not impede effective competition within the 27 nation bloc. It said that the deal, which sees ArcelorMittal buying a controlling 76.88% stake of the largest gas supplier in the German states of Saarland and Rhineland Palatinate, would not hinder national and regional markets for natural gas supply, saying alternative sources of gas supply were available.
Saar Ferngas AG is the largest gas distribution company in Saarland and Rhineland-Palatinate. EON AG holds 20% of the shares in Saar Ferngas while various municipalities hold another 3.12%. The Group supplies natural gas to municipal power utilities, industrial plants and power stations.
ArcelorMittal is buying Saar Ferngas to help provide better gas supplies to its steel production at its German plants. Steelmaking uses large amounts of energy to heat furnaces to high temperatures, traditionally using coal.
BHPB bid for Rio – UBS and Deutsche Bank join the battle
Reuters reported that UBS have joined the army of advisers lined up by BHP Billiton for its takeover bid for Rio Tinto and Deutsche Bank has been engaged by Rio to ward off the threat.
According to regulatory filings Deutsche Bank started to reveal daily dealings in BHP and Rio shares on Tuesday because it is advising Rio, and UBS began to publish trading in the companies on the same day as an adviser to BHP.
BHP already has advisers Citigroup, Goldman Sachs, Australian investment bank Gresham Partners and HSBC as well as Merrill Lynch as corporate broker to the company.
Voestalpine to expand steel processing through acquisitions
Boersen Zeitung cited Mr Wolfgang Eder CEO of Voestalpine AG as saying that Voestalpine AG aims to expand its steel processing operations through acquisitions to lessen its dependence on the steelmaking market. Mr Wolfgang Eder in an interview with the newspaper said that “We do not want to make more steel but rather make more out of steel.”
Mr Eder said voestalpine could raise funds for a takeover, even after its purchase of Boehler Uddeholm earlier this year and may next year issue EUR 500 to EUR 750 million worth of bonds to replenish its war chest.
He added that the Boehler Uddeholm takeover valued at EUR 3.7 billion will help reach a target of generating 60% of sales in steel processing. Mr Eder said that he now sees synergies from the Boehler Uddeholm takeover reaching EUR 100 million well above the EUR 65 million originally indicated. He added “That does not sound like a lot, but per tonne it is more than ArcelorMittal achieves.”
BHPB bid for Rio – Not to lead to price control of iron ore
It is reported that BHP Billiton has assured the biggest buyers of iron ore, Chinese steelmakers, that it will refrain from using a potential takeover of Rio Tinto Group to control prices.
Mr Shen Wenrong chairman of Shagang said "We told them we want to see reasonable iron ore prices after the merger. They said the prices will continue to be decided by the market."
Mr Shen added that "In my view, BHP and Rio have had an alliance in pricing iron ore for a long time. We have not had and are unlikely to have, any benefits even if they don't plan to merge."
Mr Marius Kloppers CEO of BHPB met executives of Jiangsu Shagang Group Co, Wuhan Iron & Steel Group and Magang (Group) Holdings Co in Shanghai.
Riversdale to raise AUD 235 million for Mozambique mine
Australia based coal mining company, backed by TATA Steel, Riversdale Mining Ltd announced that it will sell shares worth as much as AUD 235 million to fund the development of a project in Mozambique.
Riversdale will issue as many as 25.3 million shares at AUD 9.3 each, mostly to institutional clients of Hartleys Ltd and RBC Capital Markets.
He said “Riversdale is now very well positioned to progress the development of the Mozambique project and will be applying the necessary resources to ensure that the project will be delivering hard coking coal and thermal coal products to market by 2010.”
TATA Steel in August agreed to spend AUD 100 million to buy a 35% stake in the Australian company's Benga and Tete exploration tenements in Mozambique as it seeks increased supplies of coal for steelmaking. The Benga license in the Moatize district of the southern African nation may have 1.225 billion metric tonnes of coal resources.
Tenaris opens an office in Peru
It is reported that Tenaris has opened an office in Lima to support Peru's oil and gas exploration and production activity, which is on the rise. From its location in Lima, the company will be able to better serve customers in the Andean country.
Tenaris said that “With closer proximity to customers' operations in the Andean region, Tenaris will provide a variety of on site and technical services to facilitate material selection and the introduction of its premium threads.”
The release added that “Tenaris products are already breaking ground in the South American country. The company recently supplied products and services to two of the largest energy companies operating in Peru, Repsol and Pluspetrol, for their operations in the Camisea region.”
As per release, “For both Repsol's Kinteroni gas well and Pluspetrol's Pagoreni gas wells, Tenaris supplied N80 steel grade 11 3/4” and 9 5/8” OD casing. Both customers chose to use TenarisBlue® Near Flush connections due to the wells' great depths and tight annular clearances. The two projects marked the debut of the TenarisBlue® Near Flush connections in the Andean country.”
Mr Patricio Wehncke Tenaris Sales Manager in Peru said that premium connections are gaining popularity in the region. He said “As energy companies in Peru begin to drill wells with greater depths, there is a need for premium connections that can withstand high pressure and temperatures to achieve an optimum operation.”
BHPB bid for Rio – Chinese government may step in
It is reported that the Chinese Government would act to protect its steel manufacturers against the adverse effects of iron ore pricing power if a merger between BHP Billiton and Rio Tinto merger went ahead.
Ms Susan Ning, a partner of Chinese law firm King & Wood, said that “The Chinese Government would extend its influence, one way or another, given the potential effect of a merger on iron ore prices paid by Chinese steel manufacturers.”
She said "If they used that ground, I would not be surprised. This is regarding national security, given that China is probably the biggest consumer of iron ore.”
But Ms Ning said existing Chinese merger and acquisition laws including the introduction of anti-monopoly legislation due to be passed next year gave the Government very little ability to do anything concrete about pricing power issues arising from the merger. She also said that it remained unknown exactly how the Chinese Government would exert its influence, raising the possibility of strategic investments by government owned corporations as one possibility.
ArcelorMittal confirms interest in increasing stake in China Oriental
ArcelorMittal in response to media reports has confirmed that it is in talks with the controlling shareholders in China Oriental Group Limited about future co operation and including increasing its stake in the Company.
ArcelorMittal currently holds a 28% equity stake in the Company.
Aker Kvaerner wins major contract from Woodside Petroleum
Aker Kvaerner announced that it has signed a frame agreement with Woodside Petroleum Ltd to become the Australian oil and gas giant's preferred supplier of steel tube umbilicals. The contract could be worth between NOK 150 to 200 million annually.
The frame agreement is awarded for a three year period with optional periods of one + one year and has the potential to support Woodside Petroleum Ltd with its proposed LNG developments.
The agreement will make Aker Kvaerner's subsea division the main supplier of steel tube umbilicals to Woodside's field developments off the western coast of Australia. As part of the contract, Aker Kvaerner will be responsible for the design, manufacturing, testing, certification, delivery and installation support of the umbilical systems.
Mr Raymond Carlsen executive vice president of Aker Kvaerner Subsea said that "It is of major strategic importance that we now get a proper foothold in the Australian market. The predictability a frame agreement offers is beneficial to both Woodside and us. We are very pleased that Woodside considered our technical solution to be the best and most cost effective one."
Woodside is Australia's largest publicly traded oil and gas exploration and production company with a market value of AUD 34 billion.
HWE Mining secures a AUD 600 million contract from BHPB
The Australian Business reported that Leighton Contractors subsidiary HWE Mining has secured an AUD 600 million deal with BHP Billiton bringing the total value of contracts won in the past six months to AUD 1.8 billion. HWE has been associated with Yandi since 1991.
The latest deal to mine iron ore at BHP Billiton's Yandi mine in Western Australia's Pilbara region would run from August 2009 to 2012, with an option for a further two year extension. Early this month, HWE Mining won an AUD 700 million contract for a two year extension at BHP Billiton's Area C iron ore mine in Pilbara.
Mr Peter McMorrow CEO of Leighton Contractors told The Australian Business that around 50% of the company's current mining contracts came from BHP Billiton. He said the company was focused on BHP Billiton and sought opportunities to secure extensions to other contracts with the mining company. He added that "We are doing a little work for Rio. But we are talking to Rio about opportunities to work with them.”
Mr McMorrow expected Leighton Contractors' total value of work in hand, currently worth AUD 7 billion, to exceed AUD 9 billion by the first half of next year. As a result, he expected its total turnover to be more than AUD 4 billion this year as compared with AUD 3.2 billion in the 2007 financial year.
Leighton Contractors, a wholly owned subsidiary of Leighton Holdings, acquired what was Henry Walker Eltin Mining for around AUD 211 million last year to boost its contract mining capabilities and to expand into iron ore mining. Together with HWE, Leighton Contractors had secured some AUD 2.8 billion worth of work in hand since the middle of the year.
Mincor plans to start exploring Kambalda nickel region soon
YIEH reported that the nickel producer Minor Resources NL reached an agreement with BHP Billiton to start developing the Kambalda nickel district.
The first target is Stockwell and Grimsby area, which may be the last mine near the surface. Mincor will sublease the Kambalda areas, but the deal details are not disclosed.
Flinders claims 390 million tonnes of iron ore in WA
It is reported that junior explorer Flinders Diamonds has identified a 390 million tonnes iron ore target in the Pilbara region of Western Australia.
Flinders in a statement said that it had conducted an independent review of its Hamersley tenement after iron ore hopeful Fortescue Metals discovered a 1 billion tonnes resource in the area. It added that its Hammersley tenement adjoined Fortescue's newly discovered iron ore resource.
Flinders said it is conducting a review of available options for the tenement.
ArcelorMittal restructuring tinplate operations
It is reported that ArcelorMittal is planning to cut production of tinplate in Canada and Belgium, as output is boosting at its remaining US operation at Weirton in West Virginia. The planned changes were confirmed by group executives at the presentation of its third quarter.
AreclorMittal said that “In North America the main planned change is the closure of one tinplate line at the 380,000 tonnes per year Dofasco operation in Hamilton.”
Mr Aditya Mittal CFO of ArcelorMittal said that “At Dofasco we have two tinning lines in operation and we intend to streamline these into one, whilst increasing production at our Weirton facility. These measures are intended to improve the dynamics of the tinplate market in the US.”
The group’s other US operation producing tinplate, at Sparrows Point, is being sold to E2 Aquisition Corp, a consortium involving Esmark and Brazil’s CVRD, among others. This divestment, announced at the start of August, is reported to be proceeding slowly and has started to meet opposition from local union representatives.
Meanwhile in Europe plans to consolidate capacity at ArcelorMittal’s five plants in France, Spain and Belgium have raised concerns about the future of the smallest operation, the 170,000 tonnes per year Liege plant.
Mr Michel Wurth group management board member of ArcelorMittal said that “In 2008 we expect to see a reduction of production of tinplate at our Liege plant. There are currently discussions taking place with stakeholders as to how this can best be achieved.”
Japanese small rod products output drop
According to the data issued by the Japan Iron and Steel Institute, Japan’s small rod output was some 1.049 million in October down by 6% YoY and it has kept dropping for two month in a row.
Japan produces around 10.12 million tonnes of small rod products in the January to October 2007 period up by 1.6% YoY. It added that the volume for the whole year is predicted to reach 12.14 million tonnes.
The output from April to October also up by 0.5% YoY to 7.2 million tonnes.
Bengalla miners to strike over collective agreements
It is reported that 35 workers at the Bengalla mine near Muswellbrook in the New South Wales Hunter Valley will walk off the job in a dispute with mine owner Coal and Allied. The employees will stop work for two days.
Mr Ian Murray president of Union northern district president says their current Australian Workplace Agreements have expired and Coal and Allied is refusing to negotiate a collective agreement.
He added that "They've been looking for a collective agreement now for a number of months in negotiations with the company and the company have refused to entertain any sort of idea for a collective agreement, which is greatly concerning to us on the basis that we've got collective agreements at all their other operations that they manage in the Hunter Valley.”
Meanwhile, Coal and Allied has released a statement saying most workers at the Bengalla mine have agreed to sign the AWAs being offered. It says that the remuneration package is close to AUD 150,000 a year and will put the workers at the top of the pay scale for the Hunter Valley mining industry.
Sims sees H1 net profit earning fall
Metal recycler major SIMS Group said that its H1 of 2007 earnings may drop as much as 13% as rising shipping costs and a weaker US dollar cut profit. Sims in a statement to the Australian Stock Exchange said that its net income in the July to December 2007 may be between AUD 105 million and AUD 115 million as compared with AUD 120 million profits in 2006.
Mr Jeremy Sutcliffe CEO of Sims while addressing his last annual general meeting said that its second quarter net profit is likely to be in line with last year's.
Mr Sutcliffe said the “Global environment and demand for metals remains strong, with steel inventories in the US at historic lows. We anticipate that the utilization of US steel mills will increase in the first quarter of 2008 and that this will be matched by increases in Turkey and the Far East.”
He added that “The likely increase in the price for iron ore following this year's annual negotiations is another important indicator of the future trends in scrap prices in 2008."
WBMS says nickel market balanced in 9 months of 2007
According to the latest assessment by the World Bureau of Metal Statistics, the global refined nickel market recorded a tiny surplus during the January to September 2007 period.
The World Bureau of Metal Statistics’ figures factor in estimates of Chinese nickel pig iron production and it noted that output of this material fell in both August and September 2007.
Algoma Steel discloses Q3 loss of CAD 30.8 million
It is reported that Algoma Steel lost USD 30.8 million dollars in the July to September 2007 quarter during the same period last year, the steel manufacturer saw a profit of USD 59.5million. The company however, stresses that the comparison is irrelevant because the loss is related to the sale of the company to India based Essar Steel when taking into account the cost of accounting and other sales related expenses.
Last year sales in the third quarter were CAD 516.9 million as compared to this year’s third quarter sales of $368.5 million. The company sustained an operating loss of CAD 92.8 million, compared to an operating income of CAD 97.2 during the same period in 2006.
436,000 tonnes of steel were shipped this year as compared to 622,000 last year.
A 52 day shutdown of the No 7 blast furnace for a partial reline, as well lower steel prices and unfavorable US dollar exchange rates were responsible for the dip in third quarter sales.
Low river levels hurting Rio Tinto's iron ore operation in Brazil
BNamericas reported that low water levels in Brazil's Paraguai and Paraná rivers due to an extended drought are hurting shipments at Mineração Corumbaense, the Brazilian iron ore unit of Anglo Australian miner Rio Tinto.
Mineração Corumbaense in a statement said that “As a result, 77% of direct employees at the iron ore unit have been given nearly a month off work starting December 3rd 2007 through January 1st 2008.”
A spokesman with Rio Tinto in Brazil told BNamericas that "The company would not lay off any employee from its current staff. To the contrary, the expectation is that more people will be hired throughout next year, as part of the expansion project in the country."
Rio Tinto plans to expand iron ore output at its Corumbá mine in Brazil's Mato Grosso do Sul state to 15 million tonnes per year from the current 2 million tonnes per year and secure a partner to develop a mining and metals complex in the region, which would include a steel mill and logistics infrastructure.
In Latin America, Rio Tinto has a 30% stake in the Escondida copper mine in Chile, borates operations in the US and Argentina and the La Granja copper project in Peru, and has rejected takeover advances from resources company BHP Billiton.
UK iron ore imports in August slip
YIEH reported that UK's iron ore import volume was 755,000 tonnes in August 2007. The import volume totaled 11.164 million tonnes from January to August 2007, down by 2.3% YoY than 11.424 million tonnes in January to August 2006.
The statistics of UK's iron ore import from January to August 2007
1. Brazil was 4.432 million tonnes up by 0.2% YoY
2. Canada was 2.25 million tonnes up by 6.9% YoY
3. South Africa was 2.08 million tonnes up by 11.6% YoY
4. Australia was for 1.435 million tonnes down by 34.7% YoY
Vinacomin to issue VND 3 trillion bonds
Vietnam Industrial Times newspaper Vietnam Vinacomin plans to raise VND 3 trillion (USD 186 million) via bonds by early 2008, to fund its power and bauxite projects. The paper quoted report Mr Tran Xuan Hoa general director of Vinacomin as saying that “Vinacomin will sell VND 2 trillion (USD 125 million) of bonds on domestic markets next month and the remaining VND 1 trillion (USD 62 million) in the first quarter of 2008.”
Vinacomin would need to invest up to VND10 trillion (USD 620 million) annually in the coming years in several coal mines, each with annual output of 3 to 4 million tons, as well as in hydro and thermal power plants.
The paper added that partly private An Binh Bank and its brokerage arm will underwrite the issue for the unlisted Vinacomin and Citigroup is advising on the sale.
Vinacomin has interests in coal mining, electricity generation, mining and trading natural resources, of which coal accounted for 60% of its revenues in 2006 and 2007.
Innov installs 2 online QC testing for Sandvik at Scranton
Innov X announced it has installed two systems for online QC testing of stainless steel tubes at Sandvik Materials Technology at Scranton in Pennsylvania.
The FOX IQ On line XRF analyzer is a totally automated elemental analysis system, providing fast, positive material identification. Designed for high throughput alloy sorting and quality control, the new system will make a significant impact on tube and pipe manufacture in Sandvik's production line by providing quick, reliable, non destructive alloy analysis.
There are many different steel alloys used in Sandvik high quality product lines. All must be matched with customer requirements before, during and after manufacturing. Keeping a constant eye on the alloy content in production is a major task for both production and quality control, and now that is done faster using the FOX IQ System. Its FastID mode provides alloy grade and chemistry in as little as 5 seconds.
Mr Russ Jones GM of Sandvik Materials Technology said "The installation of the in line Innov-x system has allowed us to reduce the test cycle time by more than 50% when compared to the previous system. The result is increased production throughput. In addition, the FOX IQ has been very stable, and our inspectors find it easy to setup and operate."
South Korea to tighten regulation on foreign takeover bids
It is reported that South Korea will introduce a new regulations in January 2008 aimed at preventing speculative foreign investors from making hostile takeover bids of companies that are important to the national economy. Once the regulation takes effect, it will become difficult for foreign investors to attempt takeover bids of large conglomerates such as Samsung and POSCO.
According to the South Korea’s National Assembly Commerce, Industry and Energy Committee and the Ministry of Commerce, Industry and Energy, the National Assembly and the government agreed in a bill review subcommittee introduce the Korean version of the US’ Exon Florio Act. They agreed to introduce the bill by revising a presidential decree instead of revising the relevant laws, which requires a more complicated formal revision process.
The ministry will this month put a preliminary notice on a revision bill to the enforcement ordinance of the Foreign Investment Promotion Act. The new regulation will come into effect from January after public opinions are gathered, the Ministry of Legislation reviews it and the Cabinet approves it.
The government's revision bill on the enforcement ordinance of the Foreign Investment Promotion Act envisages allowing the minister of commerce, industry and energy, after a review by a working level committee on foreign investment, to prevent foreign investors from taking over Korean enterprises in case of materials or technologies that could be diverted to military purposes, of contracts related to national secrets that are in danger of being exposed, or of threats to national security. This will serve as the foundation to prevent foreigners from attempting takeovers of defense industry businesses or key conglomerates that are important to the national economy.
New exploration permits granted to Waratah Coal in Galilee Basin
Waratah Coal Inc announced that it has been granted two new exploration permits in the Galilee Basin in Queensland. The permits known as EPC 1079 (Alpha Extended) and EPC 1080 (Laglan) flank the western boundaries of Waratah Coal tenures EPC 1040 (South Alpha), EPC1039 (Pocky Creek) and EPC 1053 (North Alpha).
Waratah recently announced an Inferred Resource of 1.470 Billion tonnes of thermal coal in EPC 1040 and 0.675 Billion tonnes of thermal coal in EPC 1053. The southern extension of the EPC 1053 resource is currently being drilled and will extend west into EPC 1039 shortly. A third party currently holds a 2.1 billion tonne resource between EPC 1040 and EPC 1053. EPC 1079 also flanks this resource to the west. The granting of these new EPC's will allow Waratah to track the extent of the known current resources, including the Hancock Prospecting P/L resource, further down dip. As current drilling indicates a benign structural environment with the coal seams dipping 0.5% to the west, Waratah believe that further resources at reasonable mining depths are highly likely.
Waratah Coal now has a total of 5 EPC's granted which cover an area of 2,577 square kilometer in the Galilee Basin. A further 4 applications are pending. Waratah Coal is the largest resource tenure holder in this newest coal province of Australia.
Whilst Waratah continues to expand the known resource the company is also currently investigating options to develop this province to deliver world class tonnage production. This scoping study includes high volume rail and port options as well as "coal to oil" and domestic power generation options. Waratah believes the global physical demand and price outlook for thermal coal is robust and augers well for a future resource development on the area.
Mr Peter Lynch president & CEO of Waratah said that “The new permits would allow the company to formally begin drilling on the western flank of its Galilee Basin interests. The granting of EPC 1079 and EPC 1080 is an important development for Waratah and marks the expansion of drilling activity on the western or down dip flank at our licenses in the Galilee Basin. Recent work strengthens our confidence that our properties contain a world class resource of marketable, export quality thermal coal."
Czech New World Resources likely to announce IPO
Thomson Financial reported that an initial public offering for Czech coal miner New World Resources, expected to be worth EUR 300 to EUR 500 million, could be announced officially within days. Although a final decision on launching the offer has not been taken due to recently poor market sentiment.
The deal may be expanded to include a listing in Warsaw as well as Prague and London.
The company is likely to sell a third of its shares to raise money for investments in infrastructure and coal mine acquisitions in Poland and Eastern Europe.
A banking source said that “The announcement could be made any day now, apparently the prospectus is ready it's now only a decision of the owners who are concerned about the poor sentiment on markets globally.”
ArcelorMittal share buyback program status report
ArcelorMittal, under the new share buy back program, as announced on September 13th 2007, announced that it has repurchased 3,000,000 shares from November 16th until 21 November 2007.
The shares were repurchased at an average price of EUR 47.7669 and for a total amount of EUR 143,309,280.00.
UNISTEEL to set up 1 million tonne rebar mill in Kuwait
Kuwait News Agency reported that United Steel Industrial Company and Italian Danieli have signed a KWD 70 million contract for establishing a new rebar line for UNISTEEL in Kuwait.
Mr Awad Al Khaldi chairman of UNISTEEL said that the production capacity of the new factory, to be built on a total area of 100,000 square meters, will be 1 million tonnes of rebars annually and is expected to complete in 28 months.
Mr Al Khaldi said that this is the 2nd such project and arrangements are under way for a 3rd one to be set up in a Gulf state, since it needs natural gas which is not available at home.
He added that UNISTEEL provides about 60% of the total 1 million local consumption, while other factories provide only 10% and the rest 30% is imported. Mr Al Khaldi further added that the new factory will help save the money spent on importing 600,000 tonnes of rebars annually from China, Iran, Brazil and Turkey and other countries and it would limit the impact of the world's changing reinforced bars prices on the local market as well as reducing the prices.
Gulf countries seeking alternative energy sources- Report
Mr David Weaver group CEO of ESR Technology said that “The vast majority of power generation projects in the Arabian Gulf are for power stations using conventional gas for their energy source. But the region is struggling to find enough suitable gas to meet future power demands and the first signs are beginning to emerge of major investment in the region into alternatives.”
He said that “It may seem surprising that, with all the available hydrocarbon reserves, alternatives are figuring increasingly in Gulf region power planning. However this is displaying the classic wisdom ‘In victory plan for defeat.’ In other words, when times are good, build resources against future uncertainty.”
He added that there are 114 active power generation projects of all types in the Gulf Co operation Council countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates worth a combined total of well over USD 160 billion.
He said that “A nuclear program study is to be carried out on behalf of Abu Dhabi’s Mubadala Development Company and is said to have a budget of USD 4 billion. This project is not connected to the GCC’s nuclear program with the General Secretariat of the GCC budgeting USD 10 billion for the design, supply, build and operation of a nuclear plant for power generation and water desalination in a country yet to be chosen.”
He added that there is also considerable new activity beginning in the renewable energy field, principally in the United Arab Emirates. A design study is being carried out for a USD 500 million solar power plant for the Abu Dhabi Future Energy Company Masdar. The project aims to decrease the use of oil and gas in power generation to preserve hydrocarbon reserves. The UAE’s solar radiation is measured at 2,200 kilowatt hours per square meter per annum. In co operation with the Abu Dhabi Water and Electricity Authority and the Abu Dhabi National Oil Company, Masdar is also studying the possibility of building a hydrogen fired power plant. The project is in the early stage of study but has a budget of USD 100 million.
Meanwhile, Dubai is taking a lead in wind power research. A study is being carried out for Dubai Electricity and Water Authority for a USD 1 billion wind farm project. The research is on wind as alternative source for power in the region and is on a grand scale, aiming to supply up to 10% of Dubai city's power requirement. The scope of work involves the meteorological study, design, supply, installation and operation of 70 metre high wind turbines.
In addition, the growing energy demands of the region have also raised the prospect of clean burn, coal fired power stations. A study into a USD 1 billion coal fired power plant is being carried out by Taqa. He said that “Taqa is planning coal fired power plants as an alternative energy, due to increasing demand for power and insufficient gas to meet demand. Similarly, Oman is studying a USD 1 billion coal fired power generation plant at Raysut in southern Oman.”
There are also major plans in Saudi Arabia for waste to energy plants. The plants aim to convert commercially hazardous, organic and toxic wastes into saleable electricity and potable water. One of the first plants could be in Jeddah with 4 to 6 more plants in major cities. Me Weaver added that “All these projects demonstrate that even in the hydrocarbon rich economies of the Arabian Gulf, the move towards sustainable and renewable energy sources is gathering pace.”
Dubal crosses 10 million tonnes of aluminum production mark
Dubai Aluminum Company Limited has recorded a milestone recently when it produced 10 million tonne of finished aluminum products in total.
Mr Ahmed Humaid Al Tayer VC of Dubal said that “This outstanding achievement is in line with the vision of Mr Sheikh Hamdan bin Rashid Al Maktoum deputy ruler of Dubai, the UAE minister for finance & industry and chairman of Dubal, to make our company one of the foremost players in the global aluminum industry. It is also a credit to his guidance and leadership.”
Mr Abdulla Kalban CEO of Dubal said that the 10 million tonne production milestone meant that the company has effectively doubled its finished product yield since 2001. He added that “Last year, we produced approximately 923,000 tonnes of cast aluminum in total up by 7.8% YoY. This continuous growth trend is the result of ongoing collaboration between the casthouse and the potlines that produce the molten aluminum, complemented by our dedicated, multi national workforce across all of Dubal’s function delineated departments.”
Mr Kalban said that a series of consecutive, multi billion dollar expansion projects over the years has seen Dubal grow from an initial 3 potlines with an annual molten metal capacity of 135,000 tonnes in 1979 to 8 pot lines capable of producing 890,000 tonnes of primary aluminum a year. He added that “The latest expansion project, which is due for completion by the first quarter of 2008, will raise our hot metal production capacity to 945,000 tonnes per annum, while the casthouse will have an annual production capacity of 1.13 million tonnes.”
Dubal is planning to increase production to 2.5 million tonnes per annum by 2015 from the current output of 922,982 tonnes per annum. Mr Kalban added that “Dubal has further growth ambitions. Our vision is to become one of the world’s largest aluminum smelters by 2015. We have already laid the foundations for achieving this target by investing in our people and investing laterally in the development of green field smelters; as well as in the upstream aluminum industry, so as to secure our future alumina requirements.”
Dubal is widely acclaimed as the world’s top producer of both automotive foundry and high purity ingot and is among the world’s leaders in the production of extrusion billet.
Pakistan auto part maker call for regular steel supply
Pakistan Association of Automotive Parts and Accessories Manufacturers, in a meeting with Engineering Development Board under the chairmanship of Mr SM Adil Shah GM of EDB said that under the prevailing situation it would not be possible to meet the production targets of cars, tractors and motorcycles.
Mr Mehdi Ali Rizvi chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers informed that the raw materials required by auto parts manufacturers were available in the open market at premium prices which adversely affects the cost of production and resulting in uncompetitive product prices in the international markets.
A 4 member delegation of PAAPAM headed by Mr Rizvi, a 2 member team of Pakistan Steel, representative of ministry of industries & production and concerned officials of the EDB attended the meeting. In the meeting, it was decided that the PAAPAM would prepare a comprehensive report indicating demand of raw materials like steel billets of SAE 1045, 1044 grades, foundry grade pig iron and hard coke for manufacturing of auto parts. The report will also suggest a system for uninterrupted supply of these materials.
Mr Rizvi also suggested concluding a MoU with Pakistan Steel ensuring regular supply of raw material. While, the representatives of Pakistan Steel suggested that a system should be devised so that the raw material required by them can be streamlined.
The Engineering Development Board has taken serious notice of the problems being faced by manufacturers of automotive parts. The PAAPAM will submit its report to EDB within a fortnight. The report will also suggest a system for uninterrupted supply or raw material, thereafter, the EDB will examine it before transmitting the report to Pakistan Steel for a favorable consideration and necessary action.
French firms line up for potential railway contracts in UAE
Gulf News reported that leading French firms in the transport business are lining up for potential contracts in the multi billion UAE national railway network.
Mr Dominique Bussereau state transportation minister of France held talks with Mr Sultan Bin Saeed Al Mansouri minister of governmental sector development of UAE and also chairman of National Transport Authority, to offer French expertise in the fields of land and sea transport, traffic safety and training facilities.
A statement issued on behalf of Mr Al Mansouri said that French companies would provide extra value to future transport projects in UAE. The UAE government is expected to soon unveil plans for an 800 kilometer railway line that will connect all the emirates.
A consortium of German rail companies is advising the federal government on the project, which could be worth USD 2.5 billion. The cost estimate is much higher than projects of similar nature because the UAE likes to have its projects gold plated.
TAQA gets Canadian approval in PrimeWest Energy buy
Canada based PrimeWest, in a statement, said that Abu Dhabi National Energy Co's CAD 5 billion purchase of PrimeWest Energy Trust has been cleared by Investment Canada, the federal agency that regulates foreign investment regulators in Canada.
Abu Dhabi National Energy, known as TAQA, said in September 2007 that it would offer CAD 26.75 a unit for PrimeWest, its third Canadian purchase since May 2007 as it seeks to turn its Canadian unit into a major oil producer.
However, the offer attracted the attention of Canada's Conservative government, which is looking to introduce new rules on foreign acquisitions of Canadian companies. The government wants to add a provision to the rules that allow it to block purchases of Canadian companies and resources by state controlled firms on national security grounds.
However in October 2007, Mr Stephen Harper Prime Minister of Canada said that TAQA's acquisition would be judged on existing rules.
Taqa is 75% owned by the government of Abu Dhabi.
Bahrain to host the 9th Annual Pipeline Conference 2007
Kingdom of Bahrain is all set to host the 9th Annual Pipeline Rehabilitation & Maintenance Conference and Exhibition from December 9th to December 13th 2007 at Bahrain International Exhibition Centre.
Co hosted by Saudi Aramco and BAPCO, Pipeline Rehabilitation & Maintenance will take place alongside PennWell's inaugural Oil & Gas Maintenance Technology conference and exhibition.
This annual technical forum will provide the oil and gas industry with opportunities for pipeline specialists from the Gulf's national oil companies, suppliers, contractors and other maintenance specialists to learn about new techniques and technologies being deployed in the industry and share best practice with industry colleagues. The conference sessions will cover topics including managing and evaluating pipeline integrity, operational problems, cleaning and coating of pipelines, making repairs during rehabilitation, as well as rehabilitation process and procedures.
Ms Frances Webb event director of the exhibition said that “These 2 simultaneous conference programs have been produced with a view to addressing the key challenges faced specifically in the Gulf by oil, gas and pipeline maintenance and operations personnel. With a world class conference and an exhibition of more than 50 exhibitors showcasing the latest technology, this event is certain to be an annual fixture in the Gulf.”
DMCC plans world's first LNG contract
Reuters quoted Mr David Rutledge CEO of Dubai Multi Commodities Centre as saying that it is planning to launch a liquefied natural gas futures contract on its exchange soon, as surging energy prices increase demand for hedging tools.
Mr David said that an LNG contract could help invigorate spot trade in the product, which is now sold primarily on the basis of decades long contracts and would aid efforts to arbitrage cargoes between Asia and Europe and the United States, where pipeline gas futures contracts are already actively traded. He added that "We will be looking to start the LNG futures contract reasonably soon. With a storage hub in place, we are in good shape to launch that contract."
DMCC, along with LNG Impel, is setting up a 40 billion cubic feet to 65 billion cubic feet LNG storage facility at a cost of about USD 2 billion to offer customers the ability to store and trade the product. He declined to give the exact schedule for the launch of the futures contract on the Dubai Gold and Commodities Exchange, in which DMCC holds a majority stake.
Arab Asian Investment Conference 2007 to be held in Dubai
Dubai International Capital LLC has announced that it will host the Arab Asian Investment Conference from December 3rd to 4th 2007 in Dubai at the Dubai International Financial Centre.
The conference will focus on the climate for Arab investment in Asia and will enable the highest levels of interaction between GCC investors and the senior management of 14 invited Asian multinational companies. The conference participants will include over 100 representatives from leading financial institutions and individual investors from the GCC, as well as senior international economists and government officials from each of the Asian nations represented.
Mr Sameer Al Ansari executive chairman & CEO of Dubai International Capital said that "Economic alliances between the GCC and Asia continue to strengthen, and we believe that these links provide a strong foundation for investment. As Asia's leading companies offer exciting potential for GCC investors, we are delighted to host this conference designed to act as a catalyst for GCC investment into Asia."
The Arab Asian investment conference has attracted participation from several of Asia's multinational companies including Hyundai Motor Company and ICICI Bank.
Sharjah and Air BP jet fuel pipeline and storage facility
It is reported that Sharjah government and Air BP, a leading global marketer of aviation fuels and related support services, have jointly inaugurated a USD 32 million jet fuel facility, designed to boost Sharjah International Airport’s operational capabilities and increase its potential refueling capacity in line with the northern emirate’s projected aviation industry growth.
The 50,000 metric tonne state of the art facility is located in the Hamriyah free zone and comprises a 45,000 square meters jet fuel storage terminal and 45 kilometer long pipeline linked directly with the airport. The facility will be managed by Anabeeb, a JV set up between the Sharjah government and Air BP.
Mr Sheikh Sultan Bin Ahmed Bin Sultan Al Qasimi of Sharjah Petroleum Company said that “This is a major milestone in Sharjah’s bid to cement its credentials as a forward planning regional aviation hub for both passenger and cargo traffic and is in line with our urban planning policies aimed at reducing road congestion and CO2 emissions. The new facility is a highly strategic asset and it will provide a solid growth platform for Sharjah’s aviation sector and its flagship airline Air Arabia, whilst introducing internationally accepted safety and environmental standards for the emirate’s people, today and for the future.”
Air BP is currently the largest fuel supplier to Air Arabia and is a 49% partner in Sharjah Aviation Services Co which manages the fuel systems and Into Plane services at the airport.
Kuwait Oil takes delivery of a new mega oil tanker
Kuwait News Agency quoted Mr Nabeel Buresli chairman of Kuwait Oil Tanker Company as saying that it has taken delivery of a new giant oil tanker as part of a USD 600 million nine vessel deal. He added that the deal will be completed with the arrival of a liquefied petroleum gas tanker and a petroleum products vessel in December 2007, to wind up the first phase of the fleet’s modernization.
The new tanker called Wafra has a capacity of 300,000 tonnes. It is one of two very large crude carriers coming from South Korean builders. The rest of the deal includes 2 LPG tankers, 3 petroleum products vessels and 2 ship fuel boats.
Mr Buresli said that it is planning to start the second phase of modernization early next year by ordering 4 VLCC tankers, each with a capacity of 320,000 tonnes and 2 petroleum products vessels. He did not reveal the estimated cost of the new phase but said that each oil tanker is worth between USD 140 million and USD 150 million. Delivery of the new order is expected to be completed in 3 years. He added that KOTC will then start the 3rd phase of purchases as part of its long term plan to increase its fleet to 28 tankers.
Established in 1957 by a group of Kuwaiti private investors, Kuwait Oil Tanker Company was taken over by Kuwait government in 1979. Kuwait Oil Tanker Company now owns 23 tankers but a number of old tankers will be replaced by new ones. The total maximum tonnage of the company is 3.4 million tonnes, making it one of the largest in the world.
Iran allocates large fund for economic ties with Tanzania
Mehr News Agency quoted Mr Mohammad Nahavandian head of Iran’s Chamber of Commerce, Industries and Mines as saying that Iranian government has earmarked a remarkable budget for boosting economic ties with African countries.
Talking to MNA, Mr Nahavandian announced that Iranian companies are to conduct housing projects in Tanzania and the construction of inexpensive houses helps reinforce bilateral relations. He added that agriculture and food industries and investment in Tanzania’s mines especially gold mines are the main fields for cooperation.
Paying a visit to ICCIM, Mr Ali Mohamed Shein Vice President of Tanzania called for Iranian investors’ presence in his country’s economic projects. He said that “The chamber plays a great role in encouraging the investors for getting involved in the projects.”
Putting Tanzania’s economic growth at 2%to 5% in the past 10 years, Mr Ali said that the figure touched 8% in 2007, making it a proper land for investment. He pointed to the fertile lands, gold mines, coal and gas reserves and tourist attractions as the areas for investment in Tanzania.
Talaat Group’s IPO oversubscribed by more than 40 times
Reuters reported that Egyptian real estate firm Talaat Mustafa Group has received initial public offering worth EGP 29.6 billion for shares, 41.4 times the amount on offer.
Mr Hesham Talaat Mustafa chairman of Talaat Group said that shares worth EGP 715 million would be allocated on a pro rata basis of 2.415% of the amount sought. Trading on the shares will begin on November 28th 2007 and it also plans an international listing. He added that "As soon as December 2007 we will begin working on listing our shares in international markets."
Earlier Talaat Mustafa Group said that it would sell a total of 396 million shares to both public and private investors to raise up to USD 900 million to fund projects in Egypt and the Middle East.
PECO achieves PKR 202 million profit during 2006-07
Mr Ashique Ali CEO of Pakistan Engineering Company, at its 58th AGM, said that it has achieved the highest sales of PKR 983 million with profit before tax of PKR 202 million during the year 2006-07.
Mr Ali said that despite the increase in steel and zinc prices internationally and 5 decades old machines and equipment's resulting in frequent breakdowns, PECO managed to achieve this target. In order to reduce dependence on single customer, it was decided to enter into Telecommunication Tower business which proved to be successful diversification and contributed business of PKR 308 million during the year at better margin.
Mr Ali explained the efforts and policies of company's board and management, which resulted into these remarkable achievements. He also explained that plans for renovation and modernization of machines, equipment and sheds were in progress in order to enhance production capacity with latest version machines. He said steps were being taken to change the outlook, working techniques, and methods to improve efficiency, reduce cost to become more competitive and acceptable in export market.
The meeting was informed that pump shop of PECO would restart in December 2007 and will add to the business and profitability of the company.
Iron ore price negotiations – Declining trend to help Chinese steelmakers
It is reported that Chinese steelmakers, which are likely to embark on the benchmark ore price negotiations with leading global ore miners in late November, would be helped by declining iron ore spot prices and shipping cost, both of which have shown weakening sign in recent days.
As per report, delivery price for Fe 63.5% Indian ore fine drops to USD 185 per tonnes to USD 190 per tonnes on November 19th 2007 down by USD 5 per tonnes from USD 190 per tonnes to USD 195 per tonnes the week before. The transaction price for 63.5% Indian ore fine also falls CNY 30 per tonnes to CNY 1450 per tonnes at Tianjin port, 58% ore fine down CNY 20 per tonnes to CNY 980 per tonnes.
Iron ore freight costs from Brazil's Tubarao Port to Beilun to Baoshan ports stood at USD 96.06 per tonnes on November 19th 2007 down by USD 0.01 per tonnes while freight costs from Western Australia to Beilun to Baoshan ports reached USD 38.24 per tonnes on November 19th 2007 dipping USD 0.41 per tonnes.
Both spot price of imported iron ore and freight rates have roared up on a monthly basis, therefore, widening price gap between spot ore and contract ore has prompted big three to seek for sharp hike in the upcoming ore talks.
(Sourced from MySteel.net)
Chinese HRC export offers likely to rise further
It is reported that Chinese hot rolled steel coil export prices have kept firm these days and there is strong likelihood that they would keep going on in the rest of 2007.
Export quotations for commercial 4.5mm to 11.5mm HRC are prevailing at USD 590 per tonnes to USD 600 per tonnes FOB which compares with USD 580 per tonnes FOB in October 2007. The rise is believed to be reflecting the increase in domestic market prices.
A North China's Tangshan based steel maker told Mysteel that it has just raised its commodity grade HRC to USD 595 per tonnes FOB from USD 590 per tonnes at which price a lot of cargoes have been booked. Each party is required to bear half of the loss if there is rise in export tariff rate.
Another producer in East China is tagging at USD 610 per tones FOB, January shipment up by USD 10 per tonnes from early November. It also asks for half split of possible export tax rise with buyer. Meanwhile, a central China based major steel maker shoot up its offer for January shipment to USD 590 per tonnes FOB from USD 575 per tonnes FOB in October 2007. Its delivered price to South Korea has reached USD 605 per tonnes CFR and up.
Export prices are strengthening and they are going to improve further taken into account that domestic steel makers would follow suit in succession after Baosteel hiked its ex works price for Q1 2008 substantially. It is clear that Baosteel is upbeat on steel prices in the first half of 2008.
(Sourced from MySteel.net)
China tightens short term corporate borrowing
It is reported that Chinese enterprises will face greater difficulties in raising short term financing, especially those with low credit ratings, after a move taken by the People's Bank of China to tighten liquidity. With the tightening measure, Chinese enterprises may have to pay a premium above the one year rate.
These measures may affect the ongoing boom which the domestic real estate industry has witnessed, so far.
As per reports, enterprises that issue short-term debt are scored under a seven level rating system: 3A, 2A+, 2A, 2A-,A+, A and A-, with triple A being the highest rated. Companies with triple A ratings can get short term financing at rates as low as 20 to 30 basis points more than the Shanghai Interbank Offered Rate SHIBOR and in some cases, they can borrow at below-SHIBOR rates.
The PBOC moved on November 10th to increase the bank reserve ratio a half percentage point to 13.5% effective on November 26th 2007, the ninth hike this year, in an effort to tighten liquidity. The central bank has also raised interest rates five times this year, taking the one year rate from 6.12% in March to 7.29%. Those hikes have driven up the SHIBOR and short -term bond rates.
Chinese steel industry to pass cost to downstream sectors
It is reported that in light of price difference with the spot market, Baosteel revised its ex work price policy for Q1 of 2008 and put the prices back to parallel that posted in Q2 and Q3 of this year. Taking account of raw material price rise aside from iron ore, Baosteel's carbon steel products are hopeful to regain a similar profitability as in Q2 and Q3 2007.
Baosteel's price hike is set to strengthen the market's confidence regarding steelmakers' capability of transferring cost pressure and to deliver a motive for the steel stock to rebound in short term. Yet, this may not fundamentally alter the sector's prevailing inverse prospect. The sector has not ushered in a big time of investment, while the leading steelmakers' value is emerging in midst of recent stock adjustments.
Despite that the domestic prices are showing upward momentum boosted by cost and demand, the overall industry remains up against negative influencers such as the 2008 iron ore benchmark talk will be tough and probable to engender unexpectedly high price hike; the domestic steel price rise could be constrained with narrowing price differential with the international market; it's still possible for the nation to raise export duty; the weakening US economy is delivering an downward pressure on the global steel demand.
2008 contract ore price hike is predicted at 30% to 35%. Suppose at 40%, Baosteel's cost for per ton steel produced will rise 240% in Q2 2008, further based on the global demand and supply analysis, the top steelmaker will largely be able pass on the cost by price lift.
Without regard to output expansion and tax rates change, Baosteel is expected to reap EPS CNY 0.23 if tax rates down and output up its EPS will reach CNY 1.05. Stainless steel and specialty steel are looked pessimistic, with contribution of CNY 0 to CNY 0.05 in EPS anticipated.
(Sourced from MySteel.net)
Coal prices likely to soar in new negotiations
It is reported that the annual conference on coal production, transport & demand is under way. The 2008 preparative conference on coal production, transport & demand was held by Economic Operation of National Development and Reform Commission Bureau of Transportation of the Ministry of Railways and China department of Water Transport of the Ministry of Communications in Beijing in the middle ten days of August 2007.
The preparative conference believes that the general demand & supply in China's coal market in 2008 will continue to maintain strong and periodical shortage may appear in some coal products as well as some areas. Industry insiders express that coal contract price may rise by a large margin in the meeting on production, transport & demand.
The construction of wire project of BaoSteels’ Ergang starts
It is reported that Baosteel’s Ergang is increasing capacity of high technology and high value added PC products by 150,000 tonnes per year to 300,000 tonnes per year. Meanwhile, the output of string wire and wire rope could be expanded to 20,000 tonnes per year by next year.
Additionally, the production system of high quality wire rope for port, steelworks and elevator would be moved to the new production base of steel wire.
It is reported that that total investment of the wire project in Ergang by Baosteel is CNY 1 billion.
Slower growth of world's economy will not impact China
Mr Zhou Xiaochuan president of People's Bank of China said that the growth of world's economy may slow properly next year due to the influence of market risks from America's subprime mortgage, but there is no big impact on China's economy.
He said against the decline of American economy, China's export enterprises can seek multi paths for products sales, pay more attention to other markets and sale some products in domestic market.
He added that China's governments should encourage enlarging domestic demand, which will release the impacts from America's export decline on China's economy.
Shenhua to invest in Mongolian coking coalfields
It is reported that China Shenhua Energy Co Ltd is planning its first overseas project in South Gobi at Mongolia. Mr Huang Qing secretary of Shenhua Energy confirmed on November 19th 2007 that it is contacting a coalmine there. He said that “The deal still depends on the Mongolian government's offer.”
As per report the local government officially announced the coalmine project three years ago and it was expected to invite a public bidding as soon as possible. The upcoming project is forecasted to see an annual coking coal production capacity of more than 10 million tonnes.
As the main part of the coal product catalog in Mongolia, coking coal is chiefly supplied to iron and steel companies. However, Shenhua Energy had not paid attention to it before. As a matter of fact, Shenhua Energy will have more advantage to win the project in an effort to transport the coal produced in South Gobi to China directly.
Mr Wang Ye an analyst with CITIC Securities said that “If an agreement is reached, it would be the company's first overseas project. It will help Shenhua improve its product mix, and it is an important step for the company to boost its overseas expansion."
Presently Shenhua Energy owns an integrated railway and port transportation network, which can ensure its coal production and marketing sufficiently. The network includes five self owned railways with a total length of 1,367 kilometers and port facilities with 115 million tonnes of coal throughput.
CR market remains stable in Shanghai
YIEH reported that China's market price of carbon steel cold rolled remained steady in Shanghai recently.
The price of cold rolled sheet with thickness 1.2 mm to 2.0mm from Ansteel is between CNY 5,100 and 5,150 per metric tonne and thickness 1.0mm is at CNY 5,200 per metric tonne.
Moreover, cold rolled sheet with thickness 1.0 mm to 2.0mm from Bensteel is between CNY 5,080 per metric tonne and CNY 5,100 per metric tonne. Regarding the cold rolled coil, the price with 1.0mm thickness from BenSteel is CNY 5,020 per metric tonne.
Kunming Steel's JV in Laos to start soon
It is reported that Kunming Steel's iron ore project in Laos has obtained go ahead signal from local government.
The project, including prospecting, mining and smelting, is jointly financed by Kunming Steel and local enterprises. Kunming Steel will invest nearly USD 200 in the project.
Kunming Steel will invest USD 3.3 million in a mining company in Laos. Besides, the steel maker will also invest USD 168 million in an integrated steel mill with annual capacity of 500 thousand tons.
In order to secure these projects, local government allowed a five year tax exemption to Kunming Steel followed by a three year 50% tax reduction
(Sourced from MySteel.net)
Handan Iron and Steel orders a shearing line
China’s Handan Iron and Steel Group Co Ltd announced that it has awarded to Germany’s SMS Demag an order to supply a heavy shearing line.
The feedstock will be hot strip coils with a strip width of 800mm to 2,130mm and a strip gage of 5mm to maximum 25.4mm. After a delivery time of 22 months, the mill, designed for an annual production of 450,000 tonnes will produce leveled hot strip plates of 2mm to maximum 16mm in all of the above mentioned strip widths and gages. The cutting speed is about 40 meter per minute.
Optimum plate flatness with only a minimum of residual stresses is achieved through the use of the two precision levelers together with the leveling model developed by SMS Demag. The quality of the final product is equivalent to that of heavy plate with very good further processing properties for high pressure vessel construction, shipyard and bridge construction and pipeline manufacture.
The supply scope comprises the flying shear as well as the electrical and automation systems.
Chinese to setup USD 440 million steel mill in Philippines
The STAR reported that a USD 440 million modern integrated steel mill will be constructed next year in a coastal village of Bagac town in Philippines.
Mr Ramil del Rosario Bagac Mayor told The STAR that a group of Chinese investors has completed its feasibility studies and economic development scheme for the establishment of a new steel plant which would provide 6,000 jobs for the province’s fast booming resort town of Bataan. He added that the Chinese investors have already pinpointed a viable site, some 200 hectares of hilly lands facing the South China Sea, big enough to erect an integrated steel plant away from the center of the town.
Mr Del Rosario said Bagac town would earn some PHP 200 million yearly from the realty and business taxes when the integrated steel plant operates in 2008.
Mr Del Rosario said that the proposed steel plant is expected to produce some 600,000 to 800,000 metric tons of steel which is sufficient to fill the country’s shortage.
Xinye Steel enacts new national standard
It is reported that a new steel detection method was approved by expert group of National Standardization Administration in HuangShi on November 20th 2007 and a new method drafted by Hubei province based Xinye Steel will become a national standard.
Its success will provide more scientific and more stringent basis for the examination of special steel products and also marks the progress for Xinye Steel from selling products to selling standards, so it will enhance Xinye Steel’s competitiveness greatly in the iron and steel industry.
Iron ore imported via Guangdong Province up by 54%YoY
According to statistics from Guangzhou Customs, Guangdong Province imported 7.89 million tonnes of ion ore valued at USD 770 million up by 54% YoY. The import prices averaged some USD 98 per tonnes up by 30.4%YoY.
During January to May 2007 averaged iron ore import price were lower than USD 88 per tonnes. And from this June, iron ore import price stayed on a high level of more than USD 100 per tonnes.
During January to October about 2.403 million tonnes of iron ore were imported from Brazil, down 11.4%YoY accounting for 30.5% of Guangdong Province's total import volume, down 22.5%YoY. Volume of iron ore imported from India and Australia surged by 1.1 times and 1.2 times year on year respectively during the same period.
(Sourced from MySteel.net)
General Steel appoints Mr Wang as new independent director
General Steel Holdings Inc has announced the appointment of Mr Chris Wang as a new independent member to its board of directors.
Mr Wang's career includes extensive experience in finance and management as well as being the CFO of a public company. Most recently from 2005 to the present, he has served as CFO of Fushi International. He was instrumental in assisting with Fushi's Nasdaq listing, completing a key strategic acquisition, and playing an important role for Fushi in raising USD 72 million in both equity and debt. He was also responsible for all internal investor relations.
Mr Wang was executive vice president at Redwood Capital and helped private Chinese companies gain access to the US capital markets. From September 2002 through November, 2004, he was an assistant VP in the portfolio management department at Century Investment Corporation, where he helped managed USD 25 million in private equity investments and before that was an associate with the Credit Suisse First Boston investment banking team in Hong Kong. Additionally, he was the GM at Southern Africa Tractor Manufacturers.
General Steel Holdings, Inc headquartered in Beijing, operates a diverse portfolio of Chinese steel companies. With 3 million tons aggregate production capacity, its companies serve various industries and produce a variety of steel products including reinforced bar hot rolled carbon and silicon sheet and spiral-weld pipe. The Company has steel operations in Shaanxi province Inner Mongolia autonomous region and Tianjin municipality.
China import large amount of resources from North Korea
It is reported that China imports large amount of resources from North Korea, while South Korea imports from North Korea is only one fifth of China imports.
North Korea has a large reservation of iron ore. The potential value of natural resources in North Korea attain KRW 2287 trillion 24 folds of South Korea's.
Tianjin Tiantie’s steel plant plans get approved
It is reported that the high grade metal goods production base and seamless steel tube plant of Tianjin Tiantie Group, have gained the removal permission, which started constructing in Jinghai County, Tianjin City.
As per report Tiantie Group pooled CNY 4 billion for its high grade metal product mill, aiming at manufacturing most advanced large spec, low relaxation and high strength pre stresses concrete wires etc varieties and this grogram can add CNY 8.2 billion of sales revenue with 1 million tonnes of high class metal goods production capacity.
Its seamless steel tube plant is co invested with Youfa Steel Pipe, a private company, injecting CNY 2 billion and after operation, it can annually manufacture 1 million tonnes of high quality seamless steel tube with CNY 5.2 billion sales value which can complement left pipe market of Tianjin Steel Pipe, further strengthening the market competence for Tianjin tube sector in China seamless tube industry.
TMK offers to buy stake in seamless tube maker Walcownia Rur Jednosc
It is reported that Pipe Metallurgical Company OJSC has made a formal offer to buy a majority stake in Poland's steel pipe maker Walcownia Rur Jednosc Mill. The decision will be made by the Polish government.
In February 2007, Mr Konstantin Semeryakov GD of TMK said his company was in talks to buy a pipe making unit of Walcownia Rur Jednocs. He estimated the pipe unit's capacity at 250,000 seamless pipes per year. According to Mr Semeryakov, the talks have extended over a period of about two and a half years. He did not announce the value of the possible transaction.
TMK's Russian divisions include Volzhsky Pipe Plant, Seversky Tube Works, Sinarsky Pipe Plant, Taganrog Metallurgical Works and Orsky Machine Building Plant; it also has TMK-ARTROM pipe plant and TMK-Resita metallurgical works in Romania. The group accounts for over 40% of pipe production in Russia, making more than 60% of all pipes for the oil and gas sector. The company's authorized capital of RUB 8.73 billion is divided into 873 million ordinary shares, with a nominal value of RUB 10 each.
Ferrexpo to boost output by 15% over next 3 years
Switzerland based Ferrexpo plc announced the commencement of a USD 158 million project to expand production at its current mining operation on the Gorishne - Plavninskoye Lavrikovskoye deposit to approximately 32 million tonnes of iron ore per annum by 2011 and to extend the life of the mine at these production levels to at least 2035.
This additional ore production will enable the Company to take advantage of currently under utilized processing capacity to increase high quality pellet production by approximately 1.3 million tonnes per annum. This production expansion and extension of mine life are in addition to that detailed in the business plan associated with Ferrexpo's listing in June announced that it will spend USD 158 million to boost its output by 15% over the next 3 years.
As foreshadowed at the time of the listing, a GPL pit optimization study has been undertaken by Ferrexpo in conjunction with South Africa based mining engineering partner Turgis Consulting Limited, which has determined that it is possible to increase production of iron ore at the GPL mine from current production levels of approximately 28 million tonnes per annum to at least 32 million tonnes per annum.
The Board of Ferrexpo PLC has approved USD158 million in development capital expenditure for this project. USD 68 million will be spent on capitalized stripping works over the next 3 years, to be implemented immediately to the north of the of the current pit operations. Most of the remainder will be spent on additional mining equipment.
The engineering design work carried out on the GPL open pit has determined that the mine life can be extended at the expanded production levels by at least 12 years, to 2035. SRK Consulting and Turgis have been engaged to independently review and verify the resource and reserve estimates and the GPL reserves will be formally restated once this evaluation is complete.
Mr Mike Oppenheimer CEO of Ferrexpo said that "In September we announced the initial capital commitment for the new Yeristovskoye mine, the first of our major growth projects. While moving this project and our other longer term growth options ahead on schedule, we have also been aggressively pursuing nearer term options for expanding our production to meet strong demand from our customers and to take full advantage of our under utilized processing capacity.”
Gazprom and Eni ink South Stream pipe line deal
It is reported that Russian energy giant Gazprom and Italy's Eni SpA signed a deal to build a gas pipeline that will run under the Black Sea from Russia to the European Union. The project is expected to strengthen Russia's position as Europe's energy supplier.
The document to establish the South Stream joint venture was signed in the Kremlin by Mr Alexei Miller CEO of and Mr Paolo Scaroni president of Eni in the presence of Russian President Mr Vladimir Putin and Italian Prime Minister Mr Romano Prodi.
Mr Putin said that "The South Stream project has strategic significance for the energy security of Europe as it is based on transparency, and consideration for mutual interests of suppliers and consumers. We are grateful to the European Commission for supporting the project.”
Gazprom and Eni agreed in June 2007 to build the 900 kilometer South Stream pipeline, which will deliver 30 billion cubic meters of gas annually via Bulgaria to Austria, Slovenia and Italy. Under the memorandum on establishing the South Stream, Gazprom and Eni will each hold 50% in the company and a third company could join the project during the feasibility study. Investment in the South Stream project is expected to exceed USD 10 billion, Scaroni said. Gazprom and Eni have also agreed that the feasibility study will be completed by the end of 2008 and the pipeline will come on stream in 2013.
The South Stream project, announced by Gazprom in June, replaces previous plans to extend the Blue Stream pipeline which runs from Russia to Turkey and which is also operated by Gazprom and Eni.
Strabag wins 2 orders for construction of steel plants in Russia
Thomson Financial reported that Austria's Strabag SE has won an orders from to build two steel plants in Russia, with the overall investment volume of the two projects totaling EUR 484 million.
Russia's United Metallurgical Company OMK awarded Strabag SE EUR 334 million construction contract to build a steel factory in Vyksa near Nizhny Novgorod.
Strabag also won a EUR 150 million construction order from the Ural Mining and Metallurgical Company Serov to build a steel plant in the Siberian city of Tyumen.
Russian steel sector outperforms on profitability and EBITDA margins - S&P
Standard & Poor's Ratings Services said profitability and EBITDA margins have forged ahead in Russian steel companies, outpacing Ukrainian steel companies despite sharing the same positive and negative ratings factors.
In a report S&P said despite the common origins of the Russian and Ukrainian steel sectors, their fortunes have diverged widely since companies underwent privatization back in the 1990's post Soviet era.
A key similarity that survives is that both sectors still enjoy low cost bases, provided most notably by the low cost of labor representing an important rating factor in what is essentially a commodity industry.
The ratings agency said both sectors also have access to exports, which serve to diversify market positions and because steel markets are regionalized, help smooth the risks of price fluctuations and protectionist barriers.
S&P noted that the largely commodity skewed nature of product mix, high capital expenditure needs and financial policy issues weigh on performance, furthermore, both Russian and Ukrainian companies face significant institutional risks that pressure their ratings, such as uncertainty surrounding the tax and regulatory rules applications.
Rescue workers find 89 dead in Ukraine mine blast
RIA Novosti cited the emergencies ministry as saying that the death toll following a methane explosion in a mine in eastern Ukraine has risen to 89, with 11 miners still missing. The statement said "The bodies of 89 miners have been recovered and all of them have been brought to the surface and sent for forensic examination. The fate of 11 miners is still unclear."
Mr Sergei Tulub the Ukrainian coal minister said the mine resumed operations late on Wednesday following checks.
The Zasyadko coalmine is notorious for fatal accidents a methane gas explosion killed 50 miners in 1999, with twenty dying in another explosion three years later. A gas leak at the mine killed 13 miners and injured dozens more in September 2006.
Mechel applies for approval to buy Bulgarian power plant
Interfax reported that Mechel OAO's Mechel International Holdings AG has applied for Bulgarian regulatory approval to acquire the Balkan nation's Toplifikacia Ruse power plant,
Bulgaria's competition commission told Interfax that it received the request on November 14th 2007, but it did not say when it would issue a ruling on the matter.
Earlier press reports indicated that Mechel agreed to acquire the 400 MW power plants from Slovenia's Holding Slovenske Electrarne for more than USD 117 million. HSE acquired the plant at a Bulgarian government tender for USD 117 million earlier in 2007.
TMK completes 1st stage of its Options Program
OAO “TMK” announced the completion of the first stage of its three ear options program, in which members of the board of directors, the management board and senior management are eligible to participate.
As of November 19th 2007, the members of the Board of Directors in the aggregate held 444 275 shares or a 0.05 % share of TMK’s charter capital. The members of the Management Board had acquired 711 338 shares, representing a 0.0815% stake in TMK’s charter capital.
The Option Program was approved in March 2007 and split into three stages with options exercisable in 2007, 2008 and 2009. Participants can purchase up to 1.1% of the total ordinary shares in OAO TMK.
Mr Konstantin Semerikov CEO of TMK said that the Program was initiated to provide additional incentives to the top management of the company. He said “We use best practices such as this option program to further motivate management to increasing the company’s market capitalization.”
Naftogaz Ukrainy interrupts gas price talks with Gazprom
Itar-Tass reported that a delegation of Ukraine’ s national oil and gas monopoly Naftogaz Ukrainy had to interrupt talks with Russia’s major producer of natural gas, OAO Gazprom regarding the prices at which the latter corporation will sell gas to Ukraine in the next three years and to return to Kiev in the wake of threats by the Ukrainian tax inspection to bloc the company.
Naftogaz Ukrainy press service said that Mr Yevgeny Bakulin, the president of the company returned home urgently, as information had appeared that tax inspectors might seize the company’s headquarters by force and impose an administrative arrest on its operations on the pretext that Naftogaz had failed to pay off a debt of USD 17.6 million to the state budget.
It said that “The scornful attitude to our company on the part of tax inspectors puts in danger the normal business relations between Nafotgaz Ukrainy and its partners and severely damages Ukraine’s image in the eyes of international investors.”
The debt was accumulated at the end of 2006 when a different person had the post of president in Naftogaz. It recalled that the tax burden the company has to shoulder keeps growing without a stop since 2005 and it reached 4.4 billion U.S. dollars this year versus the 1.1 billion U.S. dollars in 2004.
Imperial Energy rejects Gazprombank offer
Imperial Energy, the London listed oil explorer accused by Russia of overstating reserves, rejected a bid by Gazprombank to buy as much as 25% of the company's stock.
Gazprombank had earlier made an offer for the stake in Imperial Energy, a British company focused on oil exploration and production in former Soviet republics at a discount to the market price as of November 1st 2007.
In early November, Imperial Energy said an investor offered a below market price for its shares, which brought the company's stock down 1.7% to 13.53 pounds and then further down to 13.31 pounds. Imperial Energy said in a statement that "Discussions have now concluded and the initial proposal will not be progressed. It said however, there is room for cooperation in many areas between the companies in the petroleum industry in Russia.”
Gazprom Neft raises USD 3 billion
Interfax, citing unidentified people with knowledge of the transactions, reported that Gazprom Neft has raised more than USD 3 billion from banks and a bond sale.
As per report, Gazprom Neft, the state run company's oil producer, borrowed USD 2.2 billion from foreign banks. Separately, Gazprombank sold RUB 20 billion (USD 820 million) of bonds.
RZD to sell 10% of freight unit to financial institution
Interfax reported that Russian state railways RZD will offer a 10% stake in its Transcontainer freight unit to a European financial institution.
Russian carmaker GAZ posts 32% rise in revenues in H1 of 2007
RIA Novosti reported that GAZ Group announced that its revenues calculated to International Financial Reporting Standards increased by 32.4% YoY in January to June 2007 to RUB 67.4 billion (USD 2.7 billion).
GAZ said that its EBITDA grew by 15.6% YoY in the reporting period to RUB 7.4 billion and gross profit was up by 24.4% YoY to RUB 13.3 billion.
Russia may ban oil shipments through river ways
It is reported that the Russian government may impose limits on oil products shipments by river in 2008 following a large fuel oil spill from a river barge in the Kerch Strait earlier this month.
A Transportation Ministry source said "We will take serious measures to impose sailing bans on ships that are more than 25 years old. We will most likely ban floating storage operations."
Russian refiners use river barges and floating storage facilities to export around 3 million tonnes of fuel oil from ports on the Baltic Sea and another 2 million tons of refined products towards the Mediterranean market. Products arrive in small barges from refineries, belonging to oil majors Rosneft, LUKoil, TNK BP and the independent Ufa refiners. They are stored in bigger sea floating storage vessels and are then reloaded into tankers for re export.
Ukrainian gas extraction in October down by 2.7% YoY
Ukraine fuel and energy ministry's press service told Ukrinform that gas extraction in October totaled 1,720,400,000 cubic meter which is by 2,7% less YoY.
Ukrainian NaftoGaz extracted 1,607,400,000 cubic meters in October which is by 2.2% less YoY. Other gas processing companies have extracted 113.04 million cubic meter of gas which is less by 9.7% YoY.
October gas extraction totaled 1,626,100,000 cubic meters which is less by 2.9% YoY.
SUEK appoints Mr Belova as director
It is reported that Mr A Belova was appointed the strategy and corporate development director of SUEK.
SUEK covers 30% of the coal delivery market and 20% of the exports from Russia. It has the subs in Krasnoyarsky, Primorsky and Khabarovsky region, Irkutsky, Chitinsky and Kemerovsky regions, Buryatia. Besides, it is the largest strategic investor of the Far Eastern and East Siberian energy systems. It has the blocking stakes in Altaienergo, Chitaenergo,
The major holder is the Cyprus based Donalink Ltd beneficiaries MDM Bank and EuroKhim owners. In 2006 the entities produced 89.7 million tonnes of coal and 23.7 million tonnes being exported.