November, 26 2007
TATA Steel may set up iron ore pellet plant
The Telegraph reported that TATA Steel plans to set up an 8 million tonne iron ore pellet plant at an investment of over INR 1,000 crore at Jharkhand or Orissa where the company has iron ore mines.
Dr Amit Chatterjee advisor of TATA Steel while speaking at a steel seminar said that TATA Steel would set up the pellet facility near its iron ore mines to make use of the fines generated during the extraction of ore lumps.
TATA Steel had announced in 2004 that it would set up a 4 million tonne pellet plant to ensure a steady supply of feedstock for its proposed steel unit in Bangladesh after the controversy over iron ore exports from the country.
SAIL push for Chiria gathers pace
It is reported that Jharkhand government, despite instructions from Prime Minister’s Office to grant lease for entire Chiria deposits to rightful owner Steel Authority of India Limited, is still clamoring for a pie to satisfy private steel makers.
Jharkhand government is understood to have asked for a realistic assessment of requirements of SAIL. As per reports, "Jharkhand government has questioned the basis of SAIL's assessment of seeking entire 2 billion tonnes of iron ore from Chiria mines and has suggested that SAIL should make a realistic assessment of its needs.” Jharkhand government has also contended that since it has signed 35 MoUs, it needed to ensure adequate ore to the steel companies seeking to set up projects there.
The report cited an official as saying that “There is some resistance from the state to the concept of SAIL retaining the whole of Chiria but they too have accepted the principle that SAIL’s needs for iron ore has to be met first. We are increasingly getting the feel that the state government will accept SAIL’s position.”
According to the officials the alternative before Jharkhand government is prolonged litigation which will serve no purpose. He added that “Besides once the new iron ore policy comes in, the state cannot even allocate any iron ore deposits to industrialists of its choosing.”
The sources said that "But SAIL too is in desperate need of iron ore to fructify its expansion plans worth INR 54,000 crore to take up its production capacity to 26 million tonnes. Besides, we are the rightful claimant of the mines. When the commodity cycle was low and the fate of Chiria was being debated there were no takers. Suddenly the state government realizes that Chiria is so important."
SAIL has refused to part with Chiria which it acquired when it took over IISCO Steel Plant in Bengal two years ago. Even Mr Ram Vilas Paswan union steel minister had reasoned that 2 billion tonnes of ore should be given to SAIL. He has opposed sharing of the ore saying it could be prejudicial to the long term interest of the steel company. He added that SAIL's existing iron ore resources were insufficient to meet its long term needs and therefore it was not in a position to share the mineral.
SAIL had placed its case before the PMO, which is a mediator in the PSU’s dispute with Jharkhand, arguing it needs the ore for its projects in the state and the expansion of IISCO at Burnpur. In Jharkhand, besides ramping up capacities of the Bokaro plant, SAIL will set up a new plant at Manoharpur with a capacity of 12 million tonnes, which will take its steel making capacity in Jharkhand and Burnpur alone to 32.5 million tonnes.
Usha Martin expects EU AD duties to be removed
It is reported that Usha Martin Limited is expecting to convince the European Union authorities to remove anti dumping duties on Indian exports, which was imposed in 2005.
The report cited a senior official of Usha Martin as saying that "We expect a final review of the imposition of the anti dumping duty by the European Union by the beginning of 2008.”
He added that “The imposition of the duty, for the second time since 1999, has severely us. About 10% of our total exports have been hurt after duties to the extent of 23.4% were imposed on wire ropes."
It is noted that apart from putting penal duties on wire ropes from India, EU has also made Usha Martin to accept a price undertaking or pre fixed band.
12 injured in anti POSCO clash in Orissa
PTI reported that at least 12 people, including two women, were injured on Sunday in a clash between supporters and opponents of POSCO's proposed Greenfield steel plant near Paradip in Orissa.
Trouble erupted when several PPSS activists were proceeding nearby Nolia Sahi to invite people for a meeting of anti project camp at Dhinkia as they were challenged by a group of steel plant supporters, they said. What began as a verbal duel and minor scuffle soon snowballed into a violent clash.
The two sides fought a pitched battle using sharp edged weapons and sticks besides indulging in stone pelting near Nuagaon village in the proposed project site, causing injuries to members of both groups.
Bramhani awards BF and sinter plant contract to China Shougang Intl
BS reported that Bramhani Industries Limited, which has proposed to set up a 4-million tonne integrated steel plant in Kadapa district in Andhra Pradesh, has awarded its first major contract worth INR 450 crore to Beijing based China Shougang International Trade & Engineering Corporation for building a blast furnace and a sinter plant for the project.
Mr G Janardhana Reddy chairman of Bramhani Industries Limited and Mr Jhang Longjin president of China Shougang International Trade & Engineering Corporation signed the contract in Bellary last week.
The contract covers design, engineering, manufacture, supply, erection, supervision, testing and commissioning of a 1,780 cubic meter blast furnace and a sinter plant required for its 2 million tonne phase one project.
The blast furnace and the sinter plant will adopt modern technologies such as bell less top, conveyor changing, cast house slag granulation, pulverized coal injection, oxygen enrichment, and blast humidification.
The sinter plant will have the emission optimized control system together with circular cooler and extensive dust extraction system.
A Bramhani Industries Limited told BS that “The other major packages, such as coke oven, raw material handling system, LD converter shop, continuous casting department, power plant and air separation plant are in the process of getting finalized.”
As per report, the proposed project had received pre environmental clearance from the environment and forest ministry last week.
Essel Mining may acquire thermal coal mines in Indonesia
BS reported that Essel Mining & Industries is looking at acquiring thermal coal mines in Indonesia.
Mr Ravi Kastia MD CEO of Essel Mining, while speaking on the sidelines of Global Steel 2007, said that “We are looking at some coal initiatives in Indonesia, primarily thermal coal.” He added that if it materializes then it would be Essel Mining’s first coal mine.
Essel Mining currently operates 4 to 5 iron ore mines at Barbil in Orissa and some small manganese mines. Its total iron ore production would be in the range of 7.5 million tonnes and the mines were fully explored. It owns more than 125 million tonnes of ore having an iron content of more than 65%.
Australia looks forward to reforms in India’s mining sector
Mr John McCarthy Australian High Commissioner to India, while addressing at Global Steel 2007, said that Australia is looking forward to reforms in India’s mining sector. He said that “Australia has been actively encouraging reform of the sector and we look forward to the recommendations of the Hoda Committee report into the reform of India’s mining regime being implemented.”
Calling for increased Indo Australian co operation in the Indian resources sector, Mr McCarthy lamented the paucity of FDI in the mining sector despite the introduction of a more liberalized FDI regime.
Mr McCarthy, however, added that “India must determine its own development path, including with regard to the development of its steel industry. Australia’s experience is that a liberal and internationally competitive mining regime operating under clear and transparent regulation works for the host country. It can be a huge stimulant to national prosperity. But it is up to you.”
Speaking on the occasion, Mr Ian Macdonald minister for mineral resources of New South Wales said that several Australian companies were interested in providing technology to Indian companies operating in the mining sector. He added that some Australian companies were also keen to partner their Indian counterparts for taking up joint R&D projects in the mining sector.
Shipbuilders press for subsidy revival to stay competitive
BL reported that Indian shipyards, which are facing the threat of becoming less competitive following the expiry of the 5 year government subsidy scheme about 2 months ago despite the boom in the global shipbuilding market, have asked the government to resume the subsidy scheme, as shipbuilding, unlike conventional manufacturing, is not protected by tariff barriers and they have to compete with global players for both domestic and export orders.
Mr V Kumar MD of Bharati Shipyard and secretary of the Shipbuilders Association of India said that “Initially, the government was not willing to even talk about it, but our subsequent meetings with senior officials in the finance and shipping ministries have drawn a positive response. They have understood the importance of the subsidy scheme.”
Sources said that the end of subsidies may not have an immediate impact on the balance sheets of the shipyards as the global market continues to be hot as also the prices of new ships.
Union government had introduced the 30% subsidy scheme for private sector shipyards in 2002, as the industry had no protection in the form of tariff barriers. Aided by the government support and the subsequent boom in the market, the turnover of the shipyards increased from INR 1,017 crore to INR 3,657 crore in the last 5 years.
With trends indicating that the boom may continue for another 5 to 7 years, shipbuilders have lined up investments of INR 18,500 crore. L&T and Pipavav shipyards head the list with planned investments of INR 3,000 crore each, followed by Good Earth Marine with INR 2,000 crore and ABG, Bharati and Adani Group with INR 1,500 crore each.
RIL and Essar to make Jamnagar world’s biggest petroleum refining hub
It is reported that Reliance Industries Limited and Essar Oil are all set to create the world’s biggest petroleum refining hub as part of plans to expand their plants at Jamnagar in Gujarat. Essar is doing a USD 6 billion expansion plan to more than triple capacity at its refinery, while Reliance is working on plans to almost double capacity.
According to figures compiled by Fesharaki Associates Consulting & Technical Services of Singapore, the expansion projects will bring their combined refining capacity at Jamnagar to 1.9 million barrels a day, the largest in the world in a single location, outstripping hubs such as Rotterdam and Singapore and those in China and South Korea.
The plants at Jamnagar will mostly handle crude imported from the Middle East for refining and re export, underlining India’s growing role as an off shoring hub not only for computer services but also for more traditional industries.
RINL bags National Sustainability Award 2007
It is reported that Rashtriya Ispat Nigam Limited’s Visakhapatnam Steel Plant has won the national sustainability award for 2006-07 for its outstanding quality control aspects in steel sector, among the integrated steel plants category.
Everest Kanto to commission its plant in China by mid January
Mr Prem Khurana chairman of industrial and CNG storage cylinder maker Everest Kanto Cylinder announced plans to commission its plant in China by mid January 2008.
Everest Kanto will invest USD 50 million to manufacture 1 million cylinders in a 65:35 JV with Congzhou Gas of China. For starters, it will make 200,000 industrial cylinders and 5,000 jumbo cylinders that are used for bulk storage and transportation of gas.
Mr Khurana said that “The advantage with China is that raw material is 15% cheaper.”
Everest Kanto completed the expansion in Dubai in September 2007, it, where it doubled the cylinder making capacity to 200,000 per annum. It also plans to expand capacity at Gandhidham and set up an SEZ in Kandla.
Mormugao Port seeks consultants for preparation of DPR
It is reported that Mormugao Port Trust has taken a step further in its effort of developing the waterfront west of the existing breakwater and is now seeking consultants for the preparation of the detailed project report, bidding for which closes on December 4th 2007.
Mormugao Port Trust has already received around 15 expressions of interest from private sector developers to this project. After the DPR is ready and the project scope crystallizes, MPT will hold a meeting with the private developers that have expressed interest. The next step would be to invite requests for qualification, culminating in the signing of the concession agreement.
Mormugao Port Trust has proposed to develop the waterfront through private sector participation, with an investment of INR 170 crore. It has estimated that 2 berths of 200 meter each can be developed at the proposed location, with the reclamation of 25 acres of water area. It could set up cargo and container berths, marina, facilities for marine tourism, floating hotels, offshore bases, ship repair facilities and roll on roll off services etc.
Mormugao Port is amongst India's major ports. In 2006-07, it handled 34.24 million tonnes of cargo, accounting for 7.4% of the combined traffic of all major ports in India. Exports of iron ore is the largest contributor of maritime trade at the port.
5 MECON engineers to get SAIL Awards 2007
Ranchi Express reported that 5 MECON engineers have been selected for the prestigious SAIL Award 2007.
A MECON team comprising of Dr PK Chatterji AGM-CCPS, Dr Subir Bhattacharya Manager MAS. Mr S Bhattachuarya DGM I/C Met Wing, Mr AK Saxena GM Marketing and Mr RC Khowala GM MAS & CP had submitted the papers that were finally selected for the prestigious SAIL Award 2007.
The papers they had presented at the Indian Engineering Congress were found to be outstanding quality that had taken into consideration the latest researches in steel technology. The papers were all related to their chosen subject "The changing face of steel products: From Commodity to customization."
Vedanta to abide by Supreme Court order on bauxite mining
After the Supreme Court has barred it from mining bauxite in Orissa, Vedanta Resources said that it would take steps to abide by the court’s decisions.
Vedanta Resources, in a statement, said that “We are awaiting a judgment copy and as soon as we receive the same, we shall be taking all steps immediately to abide by the directions and conditions set out by the Supreme Court. We are committed to the cause of bringing social upliftment through responsible industrialization and creating employment opportunities in the state of Orissa.”
Supreme Court order has said that Vedanta’s India based group company, Sterlite, could come up with a fresh proposal to protect the rights of the local people in the mining area through a new company established by the group. The order added that “Adherence to sustainable development is a constitutional requirement.”
It is noted that last month, the court had set new conditions for Vedanta and Sterlite before allowing them to mine in the region. The conditions included paying 5% of its annual profits from mining throughout India to the state government to be ploughed into developing the region. It was also asked to deposit INR 50 crore with the state government, and specify how many local people would be employed in the project.
Vedanta’s open cast bauxite mines were meant to feed its alumina refinery in Orissa.
UCIL to set up a uranium processing plant in AP
It s reported that Uranium Corporation of India Limited plans to set up a uranium plant in Andhra Pradesh at a cost of INR 1,106 crore.
With a capacity to process 3,000 tonnes of ore daily, the plant will be the third in India and the first in Andhra Pradesh besides 2 others mills with a total capacity of 5,090 tonnes per day operate in Jharkhand.
It is noted that UCIL has acquired 1,122 acres of government land and 1,118 acres of private land for the project. It has paid INR 50,000 per acre for government land as compensation and INR 180,000 per acre for private wet land and INR 120,000 for private dry land.
UCIL had earlier announced that it would invest around INR 3,100 crore to open new mines and set up processing plants in Jharkhand, Andhra Pradesh and Meghalaya. It is also exploring uranium deposits in Chattisgarh, Rajasthan and Karnataka. India has an estimated 78,000 tonnes of uranium.
SER H1 freight up by 62.5% YoY
South Eastern Railway has carried approximately 26 million tonnes of parcel during April to October 2007 period up by 62.5% YoY as against 16 million tonnes in April to October 2006 period. The earnings stood at INR 47.8 crore up by 62% YoY as INR 29.5 crore.
Karnataka receives initial bids for Karwar deep sea port
It is reported that government of Karnataka has received initial bids from various private companies for developing and operating a deep sea port at Karwar in Karnataka, with an investment of INR 1,000 crore.
The companies who submitted their bids include:
1) IL&FS
2) GVPREL
3) Sical Logistics
4) Navyug Engineering Co
5) ABG Heavy Industries
6) Gujarat-based Adani Group
7) JSW Infrastructure & Logistics
8) Gammon Infrastructure Projects
9) IMC has teamed up with ITD Cementation India
10) Maytas Infra with Nagarjuna Construction Co
11) Sical Logistics, teamed up with Subhash Projects & Marketing
12) IL&FS, Hill Co, Punj Lloyd and IVRCL Infrastructure & Projects Ltd
13) Anant Transport in partnership with the Port of Rotterdam
14) Future Metals along with Jurong Infrastructure India
15) North Canara Seaports
16) HIP& Engineering with Westports Malaysia Sdn Bhd
The Karnataka government's department of ports and inland water transport is currently evaluating the bids to shortlist the companies that meet its eligibility criteria for the project. Only short listed bidders will be allowed to submit a financial bid and the 30 year project will be awarded to the bidder quoting the highest percentage of revenue to be shared with the state government.
Russia offers India investment option in uranium project in Siberia
Russia has offered India the option of investing in its upcoming international uranium enrichment centre at Angarsk in Siberia, in lieu of paying for nuclear fuel to be supplied to the Koodankulam nuclear station, which is being built with Russian assistance.
At the delegation level talks between India and Russia during Dr Manmohan Singh’s recent Moscow visit, the Russians indicated at the possibility of India investing in the centre as one of the ways for India to pay for the nuclear fuel to be supplied the Koodankulam plant in Tamil Nadu.
An Indian government official involved in the exercise said that “The Russian government has proposed that fuel supplies from the Angarsk facility could be considered for units being set up through Russian assistance in the country. The investments that India might make in the Angarsk enrichment centre would, in such a scenario, are considered as payment for the uranium fuel to be supplied to Koodankulam.”
The Angarsk International Uranium Enrichment Centre is being set up by Russia for supply of uranium to countries with nuclear energy programs under the International Atomic Energy Agency safeguards. The Angarsk facility has traditionally been associated with Russian civilian nuclear program and had been kept completely out of the erstwhile Soviet Union’s atomic weapons program, thereby, making it easier for the plant to be put under IAEA control. The centre is expected to produce only low enriched uranium, which cannot be diverted for building nuclear weapons. Uranium enriched to low levels can be used as fuel for nuclear power plants, but higher levels of enrichment make it possible to divert the fuel for the construction of the core of a nuclear bomb.
Russia is currently helping build 2 nuclear units with 1,000 MW light water reactors at Koodankulam and talks are in advanced stages for collaborations on four additional units at the same site in the wake of the pact reached between India and Russia in January 2007. Russia has committed to refuel the Koodankulam station throughout its service. The project’s first unit, being built in collaboration with Russian firm Atoms troy export, is likely to be commissioned in the second half of 2008.
Power ministry approved NTPC's proposal to join the FutureGen
It is reported that power ministry has approved National Thermal Power Corporation’s proposal to join the FutureGen Industrial Alliance either along with Coal India Limited and Oil and Natural Gas Corporation Limited as a single entity or independently.
NTPC officials said that letters have been sent to CIL and ONGC inviting them to join the Alliance with NTPC. They added that "We have been pursuing them for their participation as a single entity."
The approximate cost of USD 1.4 billion will be shared between the government steering committee with 68%, multiple participating governments with 6% and FutureGen Industrial Alliance with 26%.
The Alliance is a non profit consortium consisting of some of the largest coal producers and users in the world, specifically formed to partner with the US department of energy on the FutureGen project. FutureGen, a public private coal research initiative started by the US government, aims to design, build and operate the first research based, coal fired, emission free, electricity and hydrogen producing technology demonstration plant of 275 MW net capacities.
The government of India signed a framework protocol agreement on April 3rd 2006 to become the first foreign government to join the government steering committee on the FutureGen project.
Iron ore price negotiations – May last for a long time
It is reported that annual iron ore contract talks between global steel mills and iron ore majors may not be settled until the second quarter of next year after a jump in cash prices. Baosteel, the biggest steel maker in China and CVRD agreed to a 9.5% gain in near record time on December 21st 2006 but this time they are reported to be far apart on how much contract prices will have to rise.
Mr Malcolm Southwood and Mr Paul Gray of Goldman Sachs in a report last week said that "With hindsight this was a generous outcome for the buyers, we anticipate a more protracted negotiation process this year, an agreement may not be reached until the second quarter of 2008." Goldman Sachs JBWere said that as rates for individual shipments of the commodity from India have almost doubled over the past five months, contract prices could rise more than 50%.
Credit Suisse also said that "Despite the tight market conditions, we expect tough, drawn out negotiations. The level of the increase will be determined effectively by the ability of steelmakers to pass on additional costs, totally or partially, through steel prices."
CVRD, Rio Tinto and BHP Billiton are slated to started talks this month with steel makers in Asia for 2008 benchmark prices effective from April 1st 2008.
BHPB bid for Rio - May spark new M&A wave in mining
A spurned bid approach by BHP Billiton for Rio Tinto is likely to accelerate consolidation in the mining sector as rivals are spurred into action as rival diversified mining companies such as Anglo American Plc, Xstrata Plc and CVRD might be tempted forge new partnerships to keep from being swallowed up.
Shares of mining companies have surged after BHP Billiton proposed paying three of its shares for each Rio share.
An analyst said that "I think what this does, is it throws everything wide open again. Anglo, Xstrata, Lonmin, Alcoa, Freeport, anything that has a decent size and decent set of assets is potentially on the blocks."
South African mining union plans safety strike on December 4th 2007
Reuter reported that South Africa’s National Union of Mineworkers plans to ask its members to down tools on December 4th 2007 to protest against a spate of deaths in the country’s mines. The strike would mark the first total shutdown of all mines in South Africa in some 20 years and be the first nation wide protest on safety issues.
Mr Senzeni Zokwana president of National Union of Mineworkers unveiled the date of the planned action in a speech at a congress of global miners unions being held in Thailand.
National Union of Mineworkers officials said a permit for the strike had not been granted yet, but that a meeting between mining companies, the union and an arbitration authority that has the mandate to give the go ahead for the strike would be held on November 27th 2007.
BHPB bid for Rio - - Anti monopoly issues
According to independent competition lawyers and industry observers, a merger between mining giants BHP Billiton and Rio Tinto would likely trigger in depth investigations by competition authorities given the size and product overlaps of the companies.
Given the presence of the companies in numerous countries, the deal would likely require competition approvals in several jurisdictions. They will likely need approvals in the US and EU, but other jurisdictions such as South Africa, Canada, Brazil and New Zealand could well be involved too.
An competition lawyer said that “The assumption is that at least somewhere in the world there will be an in depth investigation unless they get rid of the problems upfront. But some enormous transactions have been cleared at Phase I when parties had addressed issues ahead.”
However experts feel that the length of such investigations could, however, is shortened if parties were to offer an upfront divestment package or if BHP Billiton were to carve out areas of concerns through a joint bid with another player.
An industry observer pointed out that a major issue was the iron ore market in Far East Asia and Australia. He said “Brazilian CVRD serves mainly North America and Europe while Rio Tinto and BHP are predominantly in Far East Asia and Australia, and I cannot see such a monopoly as a result of their combination going through.” He said that disposals would be required, but pointed out that “The companies could not cherry pick the bits they do not want because mines come as part of integrated businesses with railway and port activities and will have to be sold as that.”
RBCT FOB coal prices touch USD 100 mark
Plats reported that Richards Bay prices stunned the coal market with a series of trades around USD 100 per tonne FOB last week, as nervous buyers from Asia and southern Europe scrambled for available cargoes.
News that a lightning strike had knocked out the power supply to part of the Richards Bay rail line brought nervous buyers rushing to the Richards Bay market. One source in South Africa suggested the line may only operate at 50% of its capacity for the next two weeks and could shut down completely between Christmas and the New Year. The source said that "Richards Bay stocks could fall to 500,000 tones and then the market would go through the roof.” Stocks at Richards Bay usually hover around 3 million metric tonnes.
Market sources stated that rising demand for Richards Bay cargoes was coming from India, Japan, Korea, Pakistan and the Mediterranean and southern Europe. South African producers are believed to be largely sold out of coal and the few cargoes available are in the hands of trading companies.
A utility source said that "The Richards Bay price in the next four to six weeks will depend on the perceived situation in the Asian market. Any signs of a cooling down in the Pacific of people paying USD 90 per metric tonne FOB for Newcastle coal will be transmitted to Richards Bay prices."
Mr Mike Asefovitz a spokesman for Transnet which is responsible for the Richards Bay rail line confirmed that train deliveries to the coal terminal were experiencing delays. He added that "A sub station was hit by lightning. Trains are still running but there have been delays." But he downplayed reports that the line could be out of action for some time.
Murchison rejects Midwest claims
West Perth based Murchison Metals Ltd last week confirmed its 375 million tonnes estimate over the 15 year mine life of its Jack Hills iron ore project by saying Midwest Corporation Ltd's statements about the project were incorrect.
A release said that “Murchison has obtained confirmation from independent specialist iron ore group Ferrum Consultants that Murchison's methodology is reasonable. Whilst Murchison believes that its prior disclosure in relation to targeted production is both reasonable and consistent with accepted market practice, Murchison is making this additional disclosure in light of statements made by Midwest in its Target's Statement as to the resource potential of the Jack Hills Project.”
The release added that “Murchison believes that the Midwest Board has failed to make adequate reference to the fact that AMC qualified its report in a number of significant respects and that any recommendation to reject the offer arising from reliance on the AMC Report should also have been significantly qualified.”
It concluded that “Murchison believes that Midwest's statements about the resource potential of the Jack Hills Project are incorrect.”
V&M Brazil to invest up to USD 170 million in 2008
BNamericas reported that V&M Brazil a subsidiary of French steel tube maker Vallourec is due to invest some BRR 250 million to BRR 300 million (USD 170 million) in 2008 in the South American country.
Disbursements will target the refurbishment of a blast furnace in addition to the construction of a steel treatment unit where the metal is cooled off rapidly from high temperatures.
In other future investments, Vallourec and Japanese group Sumitomo Metals formed earlier this year a JV to produce seamless pipes in Brazil's Minas Gerais state, expected to require USD 1.6 billion. Some infrastructure and drainage works are scheduled to occur by year end.
Vallourec also has pipe manufacturing plants France, Germany and the US.
Seaborne thermal coal market to stay tight in 2008-09
Credit Suisse resources analyst Mr Peter O'Connor in a research report said that the seaborne thermal coal market is expected to remain tight in 2008 an 2009 driven by China and India increasing imports.
Mr O'Connor said that “Though Indonesia is expected to increase exports as production disruptions caused by heavy rains are overcome and new mines come on stream, supplies will be unable to keep up with demand, especially as Australian exports continue to be hampered by rail and port infrastructure constraints. He added that thermal coal prices will also continue to be supported by strong oil prices which shift more energy demand into coal.”
Mr O'Connor said that “We are revising up our thermal coal prices by USD 10 a tonne from our previous forecast.” He added that Credit Suisse's new 2008 estimated seaborne thermal coal price is USD 80 a tonne while the long term price forecast is USD 60 a tonne.
Credit Suisse estimates there were potential losses in Indonesian production of up to 20 million tonnes in the second and third quarter of this year. Supply should be stronger in the current quarter. Mr O'Connor said that there may be a supply response to the strong prices from Chinese exporters but this is likely to be limited as the Chinese domestic market for thermal coal is also tight.
Wheeling Pitt merger vote set for Tuesday
Pittsburgh Tribune reported that Wheeling Pittsburgh Corp shareholders will vote next week on the proposed merger of Wheeling Pittsbugh Steel with Esmark Inc a combination that supporters say will create a new, profitable company. The long awaited shareholder vote caps a 16 month struggle.
The release added that stockholders have the option to elect one of three choices for their shares of Wheeling Pitt common stock
1. Receive USD 20 per share in cash
2. Receive a share for share exchange in the parent company of Wheeling Pitt and Esmark after the merger, plus a right to buy newly issued shares of New Esmark common stock at USD 19 per share
3. Receive a share for share exchange for New Esmark common stock.
In July 2006, Chicago based group of steel services companies Esmark, began a USD 1.1 billion hostile takeover for troubled Wheeling Pittsburgh Corp parent of Wheeling Pittsburgh Steel. Esmark won control over Wheeling Pittsburgh's board in a November 2006 proxy fight and seized control of the company December 4th 2006 when Esmark Mr James P Bouchard was named chairman and CEO. Wheeling Pitt and Esmark signed a definitive merger agreement March 16th 2007.
Singapore Tin gets OK for exports of its first shipment
Platts reported that Singapore Tin Industries wholly owned tin smelting plant PT Bangka Global Mandiri International, on Bangka Island in Indonesia is scheduled to make its first shipment of tin in December 2007. Singapore Tin Industries has been issued the approval to export on November 20th 2007 by the Indonesian central government.
Singapore Tin in a statement said that “Construction of the plant was completed in September and it started production in October. Although the plant has a capacity of 18,000 tonne per year we are planning to produce 1,000 metric tonne per months.”
Meanwhile, Singapore Tin Industry’s plant in Singapore has been producing at 1,000 tonne per month since October. It added that "From January to September, we were producing at about 300 metric tonne per year due to the lack of raw material."
STI has reduced its target for 2007 to 6,000 tonnes down from its initial target of 18,000 tonnes. The company has two production lines, with capacity 18,000 metric tonne per year each.
Official of Singapore Tin said that meanwhile, the construction of the 36,000 metric tonne per year integrated tin mining, smelting, refining and products operation on Bangka island in Indonesia remains in progress. This project is owned by PT Indo Yunnan Mineral Utama, which is a joint venture between STI and Yunnan Tin. The company will focus on lead, tin, nickel and copper exploration and mining. All the concentrate mined, except for tin, will be sent to Yunnan Tin for processing. Tin will be processed at PT BGMI.
Singapore Tin is jointly owned by China's Yunnan Tin and Singapore's KJP International. Its tin grade is 99.90% and can go up to 99.99%.
Big drop expected in nickel prices in 2008 due to likely surplus
Analysts at ABN Amro bank in London see nickel prices unwinding after a blistering rally that started in 2001, with the market staying in surplus around 100,000 tonnes. Despite relentless Chinese stainless steel production growth, the rest of the world is looking to reduce production of SS in 2008. The slippage in prices began at midyear when stainless steel producers slowed purchases had not been as strong worldwide as had been projected and nickel inventories had been overbuilt.
The International Nickel Study Group has forecast that the world market for nickel is expected to be in a 120,000 tonne surplus in 2007 and that the glut is expected to slide during 2008 to feed China's stainless steel industry but only to 100,000 tonnes. The International Nickel Study Group also suggested that world primary refined nickel production is estimated to increase to 1.47 million tons in 2007 and is forecast at 1.57 million tons in 2008. Meanwhile, world primary nickel usage is estimated to decrease to 1.35 million tonnes in 2007 and is forecast at 1.47 million tonnes in 2008.
Ms Rebecca McCallum analyst at the Australian Bureau of Agricultural and Resource Economics said that "Some stainless steel producers began to delay their purchases of nickel this past summer in the expectation that prices would continue to fall. The lower nickel price reflects an increase in world stocks as supply growth exceeds demand growth. However, nickel prices are forecast to remain high historically as demand for stainless steel remains strong in the area of 16 million metric tons worldwide.”
According to various new forecasts, the slippage in economic growth in North America and Western Europe in 2008 and possible cutbacks in stainless steel output in China to cool an overheated metals economy may cut nickel prices by as much as 25%.
Environmental Services acquires Bartin Recycling Group
It is reported that Veolia Environmental Services has signed an agreement to acquire the Bartin Recycling Group, a leading French company in the recovery and recycling of ferrous and non ferrous metals.
The Bartin Recycling Group specializes in the collection and recycling of industrial waste, in particular ferrous and non-ferrous metals. It generated revenue of EUR 249 million in 2006 and recycles 780,000 tonnes of metals per year.
Mr Denis Gasquet CEO of Veolia Environmental Services said that “This acquisition adds to and strengthens our capabilities and capacities in the recycling of metals at a time when these raw materials are of growing importance in tense international markets. It's an important step in the roll-out of our strategy, and will help us continue to support our public and private clients in managing their waste in a cost effective and environmentally responsible manner.”
Mr Jérôme Le Conte GM (France) of Veolia Environmental Services, added that “This acquisition will create excellent synergies and raise the metal recycling capacity of Veolia Environmental Services in France from 250,000 metric tons per year to over 1 million metric tons per year.”
Taiwan steel import in October up by 114% MoM
According to the Taiwan statistics of Customs, the import of common steel products in Taiwan hits 235,000 tonnes in October 2007. The figure was increased by 114% MoM. It added that the price on average was at NTD 23,260 per tonne decreasing by NTD 80 per tonne from that of September 2007.
The total import of common steel products from January to October 2007 amounted to around 2.54 million tonnes up by 108% YoY as compared with the January to October 2006. In terms of exports, the figure in October rose by 109% MoM to 775,000 tonnes from September 2007.
Poland holds off coal miners and KGHM privatization
Reuters reported that the new Polish government will not cut its stake at copper miner KGHM below 41.8% held at the moment.
Mr Donald Tusk prime minister of Poland in parliament said that his government would discontinue preparations to partially privatize the Polish coal mining sector. He added that "I was asked about continuing the KGHM privatization no we do not have such plans."
Mr Tusk also promised to accelerate privatization of state owned companies not seen as strategic to the country.
TKC Steel and Rizal forge raw material deal
Mindanao based mining firms TKC Steel Corp announced that it has formed a JV with a mining cooperative in Rizal province in its bid to secure raw material supply for its operations. TKC Steel in a statement said that its board gave the green light for the accord with the Kooperatiba ng mga Katutubo Remontado at Dumagat ng Santa Ines in Rizal.
The cooperative owns the land that has several mining tenements and about 30 million metric tons of iron reserves. Under the agreement, TKC Steel would own 70% of the JV while the cooperative, represented by two indigenous tribes in the area, would control the remaining shares. The agreement also stipulates that the cooperative would receive social benefits provided by TKC Steel besides the financial rewards due them from the mining operations.
TKC Steel would then buy the iron ore output of the JV firm for its blast furnace facility that is set to operate by the last quarter of next year. Iron ore is the primary raw material for manufacturing steel billets, which is the main product of TKC Steel’s local unit, Treasure Steelworks Corp. The firm said similar arrangements are applicable to its joint venture with the Rizal-based cooperative.
Mr Anthony Dizon president of TKC Steel said “These initiatives are aimed at establishing an effective backward integration model to secure a steady supply of iron ore as a major component for the manufacture of high quality steel products.”
UK steelmakers for opting out of tougher emission limits
It is reported that Britain's steelmakers are lobbying the government and the European commission for the industry to be given special treatment within the European Union's emissions trading scheme. British steelmakers are concerned that an increase in the cost of carbon permits within the scheme could raise the marginal cost of production, undermining competitiveness and triggering carbon leakage as buyers switch to countries where environmental controls are not as tough.
Under the emissions trading scheme, companies in industries with high levels of carbon dioxide emissions are given an allocation of how much they can emit through national allocation plans. Companies that pump out less carbon dioxide than their permitted level are allowed to sell the excess capacity to other companies. Conversely, over polluters have to buy permits to cover the excess or face hefty financial penalties. The system is designed to encourage companies to cut carbon emissions but has been criticized for setting permitted levels too high.
However, the second phase of the scheme, which comes into effect at the beginning of next year, has set tougher limits. The commission is now working on a third phase that would come into operation after 2012 and is expected to put much more emphasis on auctioning carbon permits to companies, rather than them being given away.
Mr Ian Rodgers director of UK Steel, a division of the EEF manufacturers' organization, which represents about 95% of UK steel producers and further processors, warned that aggressive carbon pricing would have a serious impact for the steel industry, potentially adding up to EUR 50 a tonne to prices. He warned that the system of allowances under the ETS had to reflect available technology and the realities of the international steel market. Mr Rodgers said that “Aggressive carbon pricing is not going to curb emissions. It will just move the emissions elsewhere. It's not going to save the planet. Steel industry is not the only one to be concerned about the European commission's plans on carbon emissions. The automotive sector is also facing statutory limits on carbon dioxide emissions from cars in place of the current voluntary system.”
PT Arpeni bags major coal transportation contract
Bloomberg reported that Indonesia's third largest shipping company by value PT Arpeni Pratama Ocean Line won a coal contract that may boost revenue by 20% in 2008.
Mr Oentoro Surya president director in a telephone interview said that “Arpeni Pratama won a IDR 3.1 trillion (USD 330 million) contract to deliver 4 million tonnes of coal to feed the Tanjung Jati B power plant in Central Java annually as well as manage a jetty for 15 years.”
He added that the contract is expected to increase the company's sales by as much as 20% next year after a gain of 16% to IDR 1.3 trillion in 2006.
Indonesia is promoting the use of coal and gas to cut fuel costs in power generation after crude oil prices surged to a record this year. Shipping companies including Arpeni and PT Berlian Laju Tanker are expanding their fleets on rising demand to transport commodities in the domestic and overseas markets.
Steel shop reduces downtime 88% with software
It is reported that Sterling Steel, a manufacturer of wire rod for its parent company Leggett & Platt, has increased throughput and reduced downtime at its plant at Sterling in Illinois, using the Ivara EXP reliability software solution from Ivara Corp, a provider of asset reliability solutions based at Burlington in Ontario.
As per report, by using EXP, Sterling realized significant improvements in asset performance, including an 88% reduction in downtime at the company’s rod mill and a 30% increase in melt shop throughput.
Ivara helped Sterling gain control over equipment failure. By implementing Ivara EXP enterprise software, Sterling was able to bring together a wide range of equipment condition data, including maintenance inspections, operator rounds and online information. Sterling now has a complete picture of its equipment health and performance online in real time E.
Mr Kevin Mullen plant maintenance manager of Sterling Steel said that “Ivara provided us with a solution that has allowed us to adopt a proactive business process for maintenance. We’ve not only increased throughput levels, but we’ve implemented a maintenance strategy that is aligned with our business goals.”
Pipe maker Hiap Teck gets API certificate
The Star reported that Malaysian pipe maker Hiap Teck Venture Bhd's wholly owned subsidiary Alpine Pipe Manufacturing Sdn Bhd has obtained certification from the American Petroleum Institute which allows the company to sell its pipes to the oil and gas industry.
Up till now, Hiap Teck had been selling its pipes to various industries, principally the building and water sectors but could not sell its products to the O&G industry until it received API certification.
API sets the standards for equipment used in the industry, and issues certification to companies whose products meet those standards.
Bangladesh to export coal after ensuring 50 years needs
It is reported that Bangladesh’s national coal committee working on the draft coal policy said that it would not suggest anything that goes against the country’s interest. It has suggested a limited export of coal after ensuring the country’s 50 years energy security and has left the issue of coal export to a future committee to be set up under the coal sector master plan to be adopted soon.
As a huge investment is involved in coal sector the committee might suggest the government to consider the coal export issue prudently.
About the method for development of the coal field Mr Abdul Matin Patwari former BUET vice chancellor and president of the committee told the meeting that the mining method should match with the consumption requirement of the country’s coal industry.
The committee observed that the total amount of the country’s coal reserve is needed to produce electricity in future, as gas would be exhausted by 2015 if new discovery is not made. So it suggested not going for coal export against the interest of people as people are the real owner of the country’s natural resources. At the same time there should be some room for the investors who will develop the field.
The Bangladesh’s renowned mining expert Md Mosharrof Hussain former chairman of Petrobangla told the meeting that both the open pit and underground method has some limitations. He suggested for underground mining in Barapukuria considering the geological factors such as layer of coal, water and other parameters, which are totally different in Barapukuria. Mosharrof urged the committee to go for open pit mining at Phulbari coal field as they found in Barapukuria underground mining method did not work properly.
Lupatech optimistic on performance in Q4
BNamericas reported that Brazilian metal parts producer Lupatech is upbeat on its business performance in the fourth quarter and beyond.
The report quoted Mr Nestor Perini president of Lupatech as saying that "The first two quarters of the year were marked by the unusual retraction in the level of our business in Brazil and to a lesser extent in Argentina. As we mentioned at the end of Q2 of 2007, based on the sales level at that time, there would be an evolution for the third quarter. We are confident that the signs for the fourth quarter of 2007 are equally positive."
Mr Perini believes that oil and gas sectors will bring the best upside for the company in coming years. He added that "The high level of investments worldwide, mainly due to the oil exploration programs in deep waters, offers us great potential for growth in this segment."
He further added that recent discoveries made by Brazil's federal energy company Petrobras in the country, such as Tupi will expand Lupatech's business perspectives for the future significantly. Petrobras estimates that its Tupi area in the offshore Santos basin holds 5 billion to 8 billion barrels of oil equivalent of recoverable light oil and natural gas.
Mr Perini said that "The impact of the discovery in the investment program of Petrobras and its suppliers will occur in the mid to the long term adding such impact would be noticeable after 2011 or 2012.”
Mr Perini without disclosing further details said that "Due to strong demand from this sector, we are concluding investments which will allow us to provide added alue products to our clients and higher volumes.”
Xstrata Copper establishes a technology group in Antofagasta
Xstrata Copper's North Chile Division has announced the establishment of a Technology Development group in the city of Antofagasta to support Xstrata Copper's operations and growth strategy in South America.
The new Xstrata Copper technology platform will complement and draw upon the technological expertise provided by Xstrata Technology, based at Brisbane in Australia and Xstrata Process Support, based at Sudbury in Canada.
In particular, the group will focus on adding value to Xstrata Copper’s significant pipeline of Brownfield and Greenfield expansion projects in the region. The phase four expansion at Altonorte and the leaching of molybdenum concentrates, ESP dust and oxide and sulphide ores are among the Technology Development group’s initial areas of investigation.
Mr Jon Evans COO of Xstrata Copper North Chile Division said that "The primary focus for this group will be in the areas of leaching where we believe we have a competitive advantage compared to our peers.”
Erdemir posts strong production growth in April to September
Turkish steel major Erdemir Group has announced that production of cold rolled and hot rolled flat steel at Ereğli plants amounted to 742,300 tonnes and 1,204,700 tonnes respectively in April to September 2007 period. Consequently, total flat steel production increased by 6.5 % YoY to 1.947 million tonnes
Erdemir’s İskenderun plant produced 1.141 million tonnes of long products including 151,400 tonnes of slab in April to September 2007 period.
Erdemir’s flat product sales in April to September 2007 amounted to 2,115 million tonnes up by 7.2 % YoY, comprising of 824,100 tonnes of cold rolled and 1,290,900 tonnes of hot rolled products. Its long products sales in April to September 2007 period amounted to 1.256 million tonnes up by 4.9% YoY including 145,100 tonnes of slab.
Mobarakeh share offer on Tehran Stock exchange fail to find buyer
Iranian media reported that block sale of over 3.1 billion shares of Mobarakeh Steel Complex, set to be the largest offer at Tehran Stock Exchange, failed to find buyers on Sunday.
Mr Mehdi Aqdaei deputy head of privatization organization told MNA that “The deadline for sale passed and no real or legal entity was able to pay IRR 10,232 billion to buy the 20% shares of the giant steel company. This failure to find purchaser was earlier predicted by the organization.”
He however added that as a result the shares would gradually be offered in the stock exchange in four 5% blocks. Mr Aqdaei said that first 5% percent block worth IRR 3,000 billion will be put on sale on November 27th 2007.
Mr Aqdaei added that “It seems no private entrepreneur has the financial clout to invest more than IRR 10,000 billion in the bourse.”
Construction boom in GCC estimated at USD 2.4 trillion
It is reported that the construction boom in the Gulf region has reached new heights, with 2,837 projects estimated to be worth in excess of USD 2.4 trillion now underway with majority of development being carried out in Saudi Arabia and the UAE. The phenomenal scale of current and planned projects across the GCC was highlighted as the Big 5 PMV opened in Dubai.
According to research by database company Proleads, which monitors regional construction projects across all industry sectors, the biggest construction project currently underway in the region is the King Abdullah Economic City in Saudi Arabia valued at USD 120 billion followed by USD 86 billion Silk City Project in Kuwait and Dubailand in the UAE valued at USD 60 billion.
The research also shows that, when additional developments currently at the early planning or concept stage are also taken into account, the Gulf countries account for a total of 3,519 projects worth USD 2.527 trillion. Massive developments like this have turned the Middle East into the world’s biggest market for plant, construction vehicles, machinery and equipment.
QASCO commissions new billet caster
It is reported that Qatar Steel Company’s steelmaking project was commissioned in September 2007 with the startup of the 4 strand continuous billet caster as the other production units included in the project were previously commissioned, starting with the LF no 1 in November 2006.
The Qasco steelworks major upgrading and expansion project, carried out by Danieli on a turnkey basis, is aimed at adding 600,000 tonnes per year of production capacity of billets and included the supply of a new 80 tonnes EAF, a ladle furnace and a 4 strand continuous caster.
The scope of work also included the upgrading of one of the existing EAFs and a new LF for the existing melt shops.
The turnkey supply also included auxiliary equipment and services such as cranes, fume and water treatment plants, electric substation and the extension of the existing buildings.
Gulf economies should be seen as asset based and not oil based
Dr Nasser Saidi chief economist with the DIFC authority & ED of Hawkamah recently said that Gulf countries should no longer be seen as oil based economies but rather as asset based economies.
Speaking on the first day of DIFC week Dr Saidi said that “For the foreseeable future, the income from assets and net foreign assets will exceed the income from oil for these countries. For them, interest rates will matter more than oil prices.”
He added that Gulf countries' foreign reserves have been growing throughout the decade and are approximately USD 365 billion in 2007 and set to grow to USD 455 billion in 2008.
He said that the region is living in an economic renaissance, in large part because of the unprecedented value and depth of investments in infrastructure, which now total more than USD 1.3 trillion. As a result of this investment, there is an increase in labor productivity and the absorption capacity of these economies, as compared to the 1970s and 1980s when most oil revenue went into consumption.
Dr Saidi also pointed to strong population growth rates and a reverse brain drain that is seeing highly trained and experienced Arabs and other expatriates returning to the region.
GCC pledge USD 750 million for climate change fund
Gulf Times reported that Qatar and other Gulf OPEC members have pledged a total of USD 750 million to a new fund to tackle global warming through financing research for a clean environment.
Mr Saud al Faisal foreign minister of Saudi Arabia said that Qatar, Kuwait and the United Arab Emirates pledged USD 150mn each for the fund. He added that Saudi Arabia would invest USD 300 million in the fund which is set to focus on finding technological solutions to the climate change problem.
According to the final summit statement “OPEC leaders will insist on the importance of technology to enable the use of clean oil, notably carbon capture and storage, to help fight global warming.”
During a recent summit, the leaders stressed the importance of cleaner and more efficient petroleum technologies for the protection of the local, regional and global environment and the importance of expediting the development of technologies that address climate change, such as carbon capture and storage. They also reaffirmed the core principle of common but differentiated responsibilities and respective capabilities, in addressing climate change policies and measures, including the implementation of UN Frame Work Convention on Climate Change and Kyoto protocol.
Pakistan’s ship breakers hit by import of re rollable scrap
Pakistani media has reported ship breaking industry in Pakistan is on the verge of total collapse owing to large scale import of re rollable material under the garb of ferrous scrap which does not have duty and sales tax at import stage. Pakistan Ship Breakers’ Association has taken up the issue with the Mr Abdullah Yusuf chairman of Federal Board of Revenue.
The report cited Mr Azam Malik chairman of Pakistan Ship Breakers’ Association as saying that “Due to rampant import of re rollable scrap under the garb of re meltable material which does not have 15% sales tax at import stage, it has become impossible for the industry to import ships for scrapping which are presently being quoted at USD 490 to USD 520 per tonne in the world market.”
Pakistan Ship Breakers’ Association pointed out that it is not only causing huge revenue loss but also damaging the ship breaking industry. The ship breakers alleged that large scale import of re rollable material was being cleared by the Model Customs Collectorate under the customs administrative reforms, thereby causing severe damage to ship breaking industry which provides jobs to a large number of skilled and unskilled workers.
Pakistan government in the budget 2007-08 increased the assessable value for import of re rollable scrap from USD 290 per tonne to USD 400 per tonne, but the customs authorities did not feed these tariffs in their computer system which caused millions of rupees loss to the national exchequer. PSBA chief said under this automotive system of clearance a very large number of container loads of re rollable scrap are making its way into the domestic market.
Mr Malik said that a huge quantity of misdeclared scrap, such as used ship chain, shafting, pipes, moon shape pipes, channels etc, are available in the local market. Similarly, he said a large number of trucks loaded with moon shaped pipes are available in the market that are making their way from Taftan and Quetta through RCD highway after being cleared under the garb of re meltable scrap.
UAE’s GDP to grow 7.7% per annum in next 5 years
It is reported that UAE's real Gross Domestic Product growth is forecast to average 7.7% per annum over the next five years, while its budget surplus will stay at an average 6.3% of the GDP.
The GDP growth forecast by EIU is almost close to the outlook for the GCC given by the IMF. According to its forecast, the GDP of the UAE will grow by 8.2% in 2007, slower than previous year's 9.7%. And Abu Dhabi Commercial Bank has said UAE's economy would expand by over8% in 2007.
A report by Economist Intelligence Unit said that this upbeat forecast for 2008-12 reflects the buoyant public and private investment expenditure. The report added that "While consumer price inflation will fall from its peak 2006 level, primarily because increased housing supply will push down rental costs, the dirham's peg to the dollar will help to contain imported inflation from 2008 as the dollar stabilizes.”
The EIU report said UAE's budget surplus will stay healthy, averaging some 6.3% of GDP on the back of continued high levels of spending in 2008-12 by the government. It added that "Moreover, a large part of the surplus oil revenue from 2004-06 has been placed in overseas funds that can be tapped in times of lower oil related earnings. Monetary policy will continue to be dictated by the UAE dirham's peg to the US dollar. Furthermore, even if the exchange rate regime were to be altered, the dirham would be likely to remain closely linked to the dollar."
The report said UAE's current account would continue to record huge surpluses throughout the forecast period. It said that "Although the current account will be supported by rising income credits in the form of returns from the government's massive overseas investment portfolios, as a proportion of GDP the surplus will narrow to an average of 13.4% in 2010-12. The government will continue to attempt to attract investment in 2008-12 by offering low tax rates, imposing little trade or exchange controls, providing solid infrastructure and projecting a positive attitude to private sector investment.”
Inflation in the UAE, stoked largely by soaring housing costs and a weakening dollar pegged currency, has been predicted to fall to 8% in 2007 from 9.3% 2006 by the International Monetary Fund.
Pakistan plans to cut number of taxes
It is reported that Pakistan government plans to cut the number of taxes from 11 to 7 as part of the World Bank funded reforms project of the tax administration.
A recent notification released by federal board of revenue said that the numbers of members will be squeezed to this minimum level under the new FBR rules 2007, which can be increased as there was no capping for maximum.
According to the rules, under the current set up there will be 3 line members namely direct taxes, sales tax and federal excise and customs. 4 functional members namely fiscal research and statistics, human resource management, audit and administration. Support members namely legal, tax policy and reforms, information management systems and facilitation and tax education.
Under the original concept of reforms as agreed with World Bank, there would be 2 line members namely internal taxes and customs. The internal taxes will includes income tax and sales tax. While the strength and positions will be adjusted before the implementation of the whole reform project.
A senior tax official said that FBR has also sought one year extension from the World Bank for implementation of the decision, which was extended to June 2008 from June 2007. This deadline could be extended till December 31st 2009.
UAE's oil investment is a big boost to Pakistani economy
It is reported that UAE, the top foreign investor in Pakistan, has come out with the biggest investment that will boost Pakistan's economy. The latest agreement between UAE and Pakistan is to establish an unprecedented USD 5 billion oil refinery at Khalifa Point in district Lasbela on Pakistan's Arabian Sea coast. It is the single biggest direct foreign investment in Pakistan's history.
The agreement to build the refinery was signed by Mr A Al Qubaisi MD of IPIC and Mr Farrukh Qayyum. Mr Mohammad bin Dha'en Al Hamili energy minister of UAE and the outgoing Prime Minister of Pakistan Mr Shaukat Aziz witnessed signing of the agreement to implement the project.
The agreement will establish the refinery with a capacity of 300,000 barrels a day of middle distillate products that are required in Pakistan, but will leave an exportable surplus of POL products. It will add 1.4 million tonnes of additional POL storage capacity. The refinery will more than double Pakistan's oil refining capacity. The refinery is planned to go on stream by December 2012. Islamabad has offered several tax breaks for the Khalia Point refinery. These include a 20 year tax free status. Pakistan has also provided 1,000 acres of lands to facilitate construction of the project. The location will be developed as a new city with all the necessary infra structure.
Mr Aziz said that "It is an historic day in the relations between the two countries. The refinery project will be a symbol of friendship and pride between the two nations. The project will further cement the relationship with UAE. It will be the largest refinery in the region, will meet domestic requirements and will be able to export its surplus output. Today, we culminated a long journey to come to this point."
Mr Hamili said that "UAE and Pakistan, both are witnessing economic growth. UAE has already been cooperating in many projects in Pakistan and the latest agreement to establish an oil refinery is another real expansion of those projects and cooperation with this country. Both sides are enjoying excellent relationship. UAE will make more investment in Pakistan which will be beneficial for people of both the countries."
Pakistan has an installed capacity to refine 12.8 million tones annually that means 250,000 barrels per day, contributed by its 5 existing refineries. It uses 15 million tones of POL products a year. With a 7% plus growth of GDP, the demand for POL products is rising rapidly. It is projected to rise from the current annual consumption of 58 million tonnes to 177 million tonnes of oil equivalent within the next 12 years.
Vopak Horizon considering expansion of oil terminal
It is reported that a further expansion of up to 1.2 million cubic meters and 4 to 6 additional berths is being considered for the oil terminal of Vopak Horizon Fujairah to better serve the Middle East sector for black and clean mineral oil products.
Vopak Horizon, in a statement, said that “The plan is on top of the ongoing expansion involving 380,000 cubic meters and 2 berths which will be commissioned in January 2008. The expansion is planned for the north side of the terminal and its conceptual design has already started. The oil terminal will have a total capacity of 2.7 million cubic meters and 10 to 12 berths to accommodate large and heavy vessels and tankers.”
Mr Walter Moone MD of Vopak said that the expansion project strengthens our position as a strategic regional hub. He added that "We are very pleased to continuously experience our customers' trust and the good cooperation with our valued partners and local authorities."
Mr Hussain Sultan CEO of Emirates National Oil Company said that "We are proud to announce that our valued JV partners are continuing their growth, as shown by this significant expansion in Fujairah, now one of the world's main bunker markets."
Vopak is a JV between ENOC Group and the Vitol Group.
Danube bags contract for Dubai Mall project
Trade Arabia reported that Danube Building Materials, a leader in construction, building materials and shop fitting industry, has signed an AED 1.2 million contract to supply Formica toilet cubicles to the Dubai Mall project.
The Dubai Mall, which is set to become one of the world’s largest shopping centers on completion by the end of 2008, contract ranks as one of the largest projects undertaken by Danube and will entail the delivery of 500 Formica toilet cubicles using 13mm and 18 mm thick anti scratch compact laminates in crest walnut color.
The Formica toilet cubicle is made up of a thick, moisture resistant and beautifully designed Phenolic core compact laminate, which is complemented by highly durable and fashionable accessories to address the functional and aesthetic requirements of commercial buildings, shopping malls, hotels, hospitals, educational facilities and airports.
Mr Rizwan Sajan chairman of Danube Building Materials said that “Danube’s involvement in the construction of another significant landmark in Dubai is a great step towards reinforcing our reputation as the number one choice for leading developers and contractors across the region.”
The contract follows the launch of a complete line of bath solutions by Danube earlier this year, which has been received positively and is currently being used in various major projects in the country including Dubai Investment Park and Discovery Gardens.
Danube is one of the largest building suppliers in the UAE and the region with an extensive portfolio of over 10,000 products ranging from MDF, plywood, timber, laminates, veneers to sanitary fittings, hardware, ironmongery, steel, aluminum and glass among others.
Chinese tax increase rumor swaying steel market in Vietnam
According to the Vietnam Steel Association, the information that China may raise the export ingot steel tax to 25% from the current rate of 15% in early December 2007, has heated up the regional steel market. If the government of China raises the export tax rate on ingot steel as the websites are reporting, the regional steel market will be strongly shaken.
Vietnamese enterprises have calculated that if the billet export tax is increased by another 10% and the import duty remains at 2%, the ingot steel price will exceed the USD 650 per tonne threshold and domestic steel prices will be higher than VND 13 million per tonne.
Nevertheless, some analysts said that it is just a rumor that China will raise the ingot steel export tax. Mr Le Ngoc Son deputy director general of VIS said that “Chinese billet exports are now limited with the export tax rate of 15% and the exports would be more limited if the tax rate was raised to 25%. Therefore, a tax increase should not be seen as a wise move.”
Vietnamese enterprises are trying to import more finished steel products as well as sources said that China is also considering raising the export tax on finished steel exports from 10% to 15% together with the ingot steel tax increase.
Zinc falls to 20 month low on speculations of rebate ending by China
It is reported that Zinc fell to a 20 month low as shipments from China, the world's largest producer, accelerated on speculation the government will end a tax rebate on exports. Copper and lead also dropped.
Mr Michael Jansen an analyst at JPMorgan Securities Ltd in London said that China may remove a 5% rebate on zinc exports next year. He said holders of stockpiled zinc may have sought to liquidate' before the change. Exports from China jumped 21% in the first 10 months of this year sending zinc prices down 44%.
Mr Robin Bhar a metals analyst at UBS AG in London said in an interview “There's probably an oversupply and people are in a rush to export.''
Mr Gayle Berry an analyst at Barclays Capital said in a report that “Chinese market participants are concerned that a possible 5% to10% tax on special high-grade zinc exports from January will lead to substantial oversupply in the domestic market.”
Zinc for delivery in three months fell USD 170 or 6.7% to USD 2,355 a metric tonnes on the London Metal Exchange after earlier reaching USD 2,270, the lowest since March 14th 2006. The price has dropped 49% since reaching a record high of USD 4,580 on November 10th 2006.
Zinc for January delivery on the Shanghai Futures Exchange dropped as much as the exchange imposed limit of 6% recently. The metal, used to galvanize steel has declined 42% this year in London, more than other metals traded on the LME.
Siemens to supply gearless system for grinding mills to CITIC Heavy
It is reported that the Siemens Industrial Solutions and Services Group has received an order from CITIC Heavy Machinery, Luoyang to supply gearless drive systems for five 40 foot autogenously grinding mills for use in Sino Iron ore project in Australia. The order is worth around EUR 60 million and the ore mills are scheduled to start operating successively in the course of 2009.
The systems from Siemens each have an output of 28 MW and are therefore the most powerful mill drives that are commercially available.
Mr Ren Qinxin GM of Citic Heavy Machinery commented that “This is a landmark project for both our companies. It is the biggest order for ore mills ever placed in the mining industry. With Siemens, we have a good cooperation history and a deep relationship. We are confident together we will be able to successfully implement this outstanding project.”
The Sino Iron project in the Pillbara region of west Australia is being developed by CITIC Pacific Co Ltd in collaboration with Chinese steel producers such as Wuhan Iron & Steel Corporation, Tangshan Iron & Steel Corp and Handan Iron & Steel Corporation. The China Metallurgical Group Corp is responsible for the construction work. The mine is to start production in 2009 and after completion in 2010 will have a capacity of 24 million tonnes of concentrate, making it one of the largest open cast iron ore mines in the world.
Chinese steel sector fighting overcapacity – UBS
It is reported that different from the mainstream viewpoint that the slowing fixed asset investment is set to solve overcapacity problem, Mr Tang Xiaobo analyst and associate director of UBS used "fragile, cautious handling" to describe the 2008 outlook for China's steel industry in its report and pointed out overcapacity remained a big risk.
Mr Tang held neutral to the steel industry development in following 12 months, with M&A as the theme and price rise feature. Meanwhile, he said rising material cost, iron ore mainly, and freight rate, easing export and new capacity release are three concerns. He predicted overcapacity to protrude in H 2 2008.
Mr Tang disapproved slowing fixed asset investment can help ravel out overcapacity for
1. It needs some 16 to 24 months for invested steel to come on stream
2. The capitalized cost is on the decrease. A 4 million tonnes per year long flow line costs CNY 5000 per tonne in 2001-2005 and CNY 4500 per tonne for the moment
3. Efficiency of production facility is advancing and technological upgrade of the mills can lead to bigger output.
According to Mr Tang macroscopic risk facing the steel industry is slowdown in the world and China's economy; from perspective of the industry, steel price hike is short for offsetting raw materials' cost rise.
(Sourced from MySteel.net)
Baosteel to double COREX plant capacity
Reuters reported that Baosteel Group will double the pig iron production capacity of its low emission Corex plant to 3 million tonnes in an expansion project due for launch before the end of the year.
Baosteel said Corex direct iron ore smelting technology, which produces pig iron without processed coking coal, can cut production costs and pollution emissions.
Baosteel, the parent of listed Baoshan Iron and Steel Co, recently started commercial production at the first phase of the plant, able to produce 1.5 million tonnes of pig iron per year.
Iron ore mine tailings dam collapse kill 6 in Liaoning
Xinhua reported that 6 people were confirmed dead and 7 others were reported missing after an iron tailings dam collapsed early Sunday morning in northeast China's Liaoning Province. They suffocated when their homes were buried in debris from the dam.
According to the local rescue headquarters another 17 people were injured in the accident which happened at around 6AM at Shiqiaozi Village, Anshan City in central Liaoning.
The injured have all been hospitalized, one in critical condition. Three others were seriously hurt with crushing injuries, the side effects of choking and abrasions, but all were expected to survive.
More than 200 rescuers were searching for the missing on Sunday evening in the rain with 10 bulldozers clearing mud and ore.
High steel prices forcing Chinese auto majors to find substitutes
It is reported that due to continuous price hike of steel products and fierce market competition in auto industry, many Chinese and foreign automakers have tried to use new materials to substitute for auto steel plate.
Mr Shi Jianhua deputy general secretary of China Automotive Industry Association said that the application of steel in auto making is decreasing, while the proportion of such light metal materials as aluminum and magnesium used has kept increasing. He said “The proportion of steel substitute materials, featuring light and high strength for sedan use is increasing rapidly. Aluminum, magnesium and plastics have become the first choice materials used to replace steel plate in auto making industry, due to their light weight and high strength.”
However, as China's auto industry is expanding as a whole, the industry's demand for steel is also expanding. China's auto making industry is expected to need 12.55 million tonnes of steel in 2007 and 21.76 million tonnes by 2015.
Chinese coal and coke production in October
According to the National Bureau of Statistics China's coal production in October 2007 was 198.77 million tonnes. Domestic coal output in the January to October period totaled 1.88 billion tonnes up by 10.2% from the same period of 2006.
China coke output rose 12.3%YoY in October 2007 to 28.54 million tonnes. In the January to October period, domestic coke output totaled 269.87 million tonnes up by 18.1%YoY.
Shenhua’s October coal output increased by 18.4% YoY to 13.5 million tonnes and its coal sales totaled 17.4 million tonnes up by 21.7% from its monthly average in 2006. Of the total sales 1.7 million tonnes were exported recording a 15% decrease.
China taking new steps to control investment
It is reported that China government is to strengthen the management of all new investment projects and will pull the plug on any that do not have appropriate approval. Analysts said that these measures are designed to stop Chinese economy from overheating.
According to a document published recently by the State Council all new projects must be properly authorized and abide by land use, energy efficiency, market access and environmental protection criteria.
The document said relevant departments must establish records for investment projects valued at more than CNY 50 million and submit all relevant information to upper level governments.
It said that projects found to be breaking the guidelines will be halted immediately and offenders punished. It also said there have been too many new investment projects in recent years, some of which have failed to follow relevant laws and regulations. Coupled with loose management and poor law enforcement, these have led to excessively fast investment growth and too much duplication.
The China government has been increasingly concerned with the speed at which the economy has been growing, with figures for the first three quarters showing YoY year growth of 11.5%.
Manganese ore prices in China to go upward due to overseas monopoly
It is reported that robust demand for imported manganese ore has resulted in price surges and imported manganese ore price maintains at a high level with price for high grade ones still jumping.
45% plus Brazilian ore is mainly offered at CNY 73 per MTU, 43% to 45% Australian ore at over CNY 80 per MTU and 37% Indonesian one at CNY 44 per MTU.
Manganese ore resources from Brazil and Australia have occupied a considerable share in ocean shipping market, leading to a monopoly. China now purchases resources from the two above countries, mostly high grade ones.
(Sourced from MySteel.net)
Jinhui Holding to buy 2 iron ore carriers
Hong Kong listed shipping firm Jinhui Holdings announced that its subsidiaries would buy two very large ore carriers for a total of USD 245.24 million, expanding its fleet to meet the growing iron ore transportation market.
Jinhui subsidiaries would buy the two vessels from Chinese shipbuilder China Shipping Industry Corp at USD 122.62 million each. The vessels, each with 300,000 DWT, will be delivered in June and December 2011 and will be used for chartering out for iron ore transportation.
Chinese car plant breaks ground in Mexico
It is reported that construction began on Friday on an auto assembly plant in central Mexico, the first to produce Chinese cars. Mr Felipe Calderon president of Mexico led the groundbreaking ceremonies for the factory.
Mr Calderon said that “Most of the world’s investments used to go to China, and today China has come to invest in our country because it recognizes an enormous opportunity in Mexico thanks to its domestic market and proximity to the US and Latin America.”
The car project will be financed by an arm of Mexican conglomerate Grupo Salinas and China’s state owned FAW Group Corp. Due to open by 2010 in Michoacan state, the plant is expected to churn out 100,000 cars a year for sale in Mexico and Central America.
China to tightens grip on foreign investment in mining sector
Catalogue for the Guidance on Foreign Investments Industries, released by National Development & Reform Commission and Ministry of Commerce, is to take effect as of December 1st 2007, under which wholly foreign owned enterprises are no longer encouraged.
The amended catalogue has prohibited exploitation of non ferrous metals like tungsten, molybdenum and tin etc and also eliminated foreign investment in exploitation of coal, copper ores, plumbum ores from Catalogue of Encouraged Foreign Investment Industries.
Mr Xiaojiong GM of trading unit of Asia Pacific Resources International Holdings Limited, fears that foreign investment in China mining sector may become more and more difficult.
In contrast, Mr Jiao Yushu senior advisor of Metallurgical Mines Association of China pointed out that the new catalogue has divided mineral resources into different categories and adopt different policies either encourages restriction or prohibition. The authority no longer encourages foreign investment in certain critical mineral resources.
Mr Zhangyong director of policy research department of China National Coal Association said that "There is an obvious line between restriction and prohibition. He said that take coal for example, the catalogue has only restricted prospecting and exploitation of special and rare coal and highlighted Chinese investors hold the controlling stake. The amendment has been misread by some as an all around restriction for foreign investment in coal industry.
Sources of Asian American Coal Inc China's first foreign coal exploitation company disclosed that "We may make some adjustment according to the government regulation. It has obtained the first joint coal exploitation license together with its Chinese partner from Shanxi government this July 2007.”
Mr Ke Ziyi CEO of its mainland unit said that the company may shift its focus to down stream coal products given the policy uncertainty regarding foreign investment in coal mining.
32% urban construction applications rejected in China
It is reported that the China State Council has rejected almost 32% of the urban construction applications for 2007 amid efforts to curb the growth of energy intensive, polluting industries.
The Ministry of Land and Resources said the rejections covered 31.81% of the land area filed for approvals by cities nationwide this year. It did not give any further breakdown. It said that of projects approved, 39.14% of the land involved was for housing, 24.56% for infrastructure 18.23% for public buildings and 17.34 for industrial facilities such as factories and warehouses.
The Ministry urged local authorities to compensate farmers in a timely manner and maintain their living standards at levels no lower than before any land acquisition. It also called on local governments to rein in land approvals for any projects involving polluting, energy intensive and resources industries.
The rejection of such applications has slowed the decline in farmlands, which have been shrinking in many regions due to urbanization.
China to improve on energy saving and pollution reduction mechanisms
Mr Xie Zhenhua deputy commissioner of the China’s State Development and Restructuring Commission, while speaking at the recent China Energy Saving and Pollution Reduction Forum, said that China will gradually improve its policies and procedures related to energy conservation and pollution.
Mr Xie said the Chinese government plans to revise directives for readjusting industrial structure and it will coordinate its industrial policies with those on credit, land, finance, taxes, prices, and quality control.
He said stricter rules will be adopted for companies seeking to enter some key areas and industries, to prevent the development of energy intensive, high pollution, low technology projects. He added that the country still faces severe problems with energy conservation and pollution, since the industrial structure has yet to be improved.
According to Mr Xie the central government will provide local governments with financial assistance, in the form of transfer payments, to help them reduce the capacity of energy intensive, high pollution industries. He criticized some localities for sticking to old style GDP centered targets while neglecting the issues of energy conservation and pollution reduction.
Mr Xie disclosed that the government plans to regulate prices of fuel and power, taxes on mineral resources like coal, non ferrous metals and iron ore as well as high emission cars and wooden flooring.
China Shipping scrambling for iron ore shipping market
It is reported that China Shipping Development Company Limited is to sign contracts of affreightment to develop its large dry and bulk cargo ship fleet, especially 230,000 tonnes and 300,000 tonnes vessels and actively participates in transportation of China's imported iron ore resources.
China Shipping Development Company Limited signed an iron ore transportation agreement with Shougang Group to transport 37 million tonnes in 15 years on October 26th 2006 then it inked a same agreement with Baosteel Group on January 16th 2007. It reached overall cooperation with Wuhan Steel and signed an agreement for iron ore transportation of 170 million tonnes during 15 to 20 years on October 19th 2007. CSDC also promised to launch 200,000 tonne plus vessels and set price according to international regulations.
It inked a contract with CSSC Guangzhou Longxue Shipbuilding Co Ltd on February 2nd 2007 to build four 230,000 tonne Very Large Ore Carriers and another contract to construct four 230,000 tonne ones on October 27th 2007. It also signed a contract with Dalian Shipbuilding Industry Co Ltd.
China's iron ore imports surged in recent years. Import volume recorded 275 million tonnes in 2005 up by 32.3%YoY and 326 million tonnes in 2006 up by 18.6%. The figure in the first nine months has broken 284 million tonnes YoY increase of 14.9%. Experts forecast China's iron ore imports will rise some 13% every year during the 11th "Five Year" Plan and will surpass 500 million tonnes in 2010. Robust demand is even expected to continue until 2015.
Australia, Brazil, India and South Africa are major sources of the country's iron ore imports, thus the imports are mainly transported by ocean shipping approximately half of the world's total shipping volume. BDI index hit record high of 4512 points in 2004, then dropped owing to China's macro control yet rocketed up in this year and broke 10000 points in October 2007.
(Sourced from MySteel.net)
Polish regulators approve IUD purchase of Stocznia Gdansk shipyard
Ukrainian Journal reported that the Office of Competition and Consumer Protection of Poland has permitted ISD Polska, subsidiary of Donetsk based Industrial Union of Donbas to receive control over Stocznia Gdansk SA shipyard.
The Polish office said that ISD Polska could build up a stake of over 80% of the stocks in the shipyard.
100 miners officially listed dead in Zasyadko coalmine blast
Itar-Tass, citing Mr Sergei Storchak the head of the mining and industrial supervision authority reported that the official death toll in the November 18th 2007 methane explosion at the Zasyadko coal mine in the Donetsk region of Ukraine is 100. An air and methane mixture exploded at the depth of 1,078 meters at 04:11 0111GMT when there were 457 people inside the coalmine. A total of 366 workers were evacuated.
Mr Storchak said that the coalmine employed less than 5,000 people, including miners, those who work on the surface and administrative personnel. He said that “Rescuers are continuing the search and rescue operation at the coalmine. They have found 89 bodies. The fate of 11coalmners remains unknown. 39 miners are in hospitals.”
According to preliminary information, the methane explosion was caused by defective electric equipment. The governmental commission is working at the coalmine to investigate the causes of the accident. The commission is led by Mr Andrei Klyuyev deputy prime minister.
The Zasyadko coalmine, which belongs to the Ukrainian State Property Fund, was commissioned in 1958. It has a high risk of sudden gas discharges, coal dust explosions and spontaneous combustion of coal. Two technological safety inspectors are permanently on duty at the coalmine. The latest inspection, which took place on November 7th 2007 did not expose an excessive concentration of methane. In 1996, a methane explosion at a Ukrainian mine killed six works. Three years later 50 coalminers were killed in a blast. In 2001, 55 miners died in a coalmine explosion, in 2002 a coalmine tragedy claimed 20 lives and 13 people died coalmine accident in 2006.
Ukraine’s crude steel output expected to rise 4% to 42.7 million tonnes in 2007
UkrRudProm an association uniting major metal producers reported that Ukraine’s output of crude steel is expected to increase 4% to 42.7 million tonnes in 2007 up from 40.8 million tonnes in 2006.
The association said Ukraine also plans to boost pig iron production this year by 8% to 35.57 million tonnes and to increase rolled metal output by 5% to 36.06 million tonnes.
Russian Alfa arranging Maxi-NLMK steel deal
Reuters reported that Russia's Alfa Bank is organizing the sale of a 51% in steel maker Maxi Group to Novolipetsk Steel.
Alfa Bank said in a statement said that the deal foresees an immediate loan of about USD 400 million from Novolipetsk as well as the refinancing of debts incurred by Maxi Group subsidiaries and an investment program to raise steel production to 10 million tonnes of finished products a year.
Kerch disaster blamed on customs evading cargo transfers
Ukrainian Journal Staff cited Mr Borys Panov director of the Kerch R&D for fishery and oceanography as saying that the reason behind a recent disaster in the Black Sea was that ship owners and captains were transferring goods not in ports but in the Kerch Strait itself.
Mr Panov in an interview with Dzerkalo Tyzhnia weekly said that "We stated dozens of times that this is unacceptable. And here you are. The bomb went off. If they had not transferred cargo, no one would have drowned. Why there were 150 vessels because millions of tonnes of various goods are transferred there."
Arctic Urals brown coal resources estimated at 17 billion tonnes
Interfax cited Mr Vladimir Korotkov the deputy head of the National Mineral Resources Institute as saying that that the brown coal resources in the Sosvinsko Salekhard basin in the Arctic Urals are estimated at 17 billion tonnes.
Mr Korotkov during a conference on the problems of developing the solid mineral resource potential of the Arctic Urals said that "The region's coal potential is especially great right along the proposed route is the Salekhard brown coal basin in a narrow strip."
He said the main metal and other mineral reserves in the Sub Arctic and Arctic Urals are concentrated at the Yun Yaginskoye iron ore deposit, Central chromite deposit and Sofronovskoye phosphorite deposit.
Mr Korotkov said "Total anticipated reserves of iron ore in the region amount to more than 5 billion tonnes. However, actually assessed resources are still small and concentrated in two districts for initial development Shchuchinsky and Kharasursky. In addition a whole series of prospective properties are being identified. Exploration work was done at six properties in 2007 with total financing of RUB 154 million.
Russian economy sliding into a pit - Report
Russia’s Economic Development and Trade Ministry recently said that “Rising oil prices will not let Russia suffer an imbalance in trade until 2011, rather than 2009. This, however, does not alter the gist of the matter. We are gradually sliding into a pit. The unfavorable trade balance could lead to a cash squeeze in the economy and its downturn.”
Mr Andrei Klepach director of the ministry's consolidated department of macro economic forecasting said the ministry forecasts a 2007 surplus of USD 129 billion to USD 130 billion. He said “In this situation the Russian economy risks finding itself without cash. In view of the slow fall in the trade surplus, an inflow of overseas capital will play a decisive role in the future.
Ms Natalia Orlova chief economist of Alfa Bank said this situation will require the devaluation of the national currency and in 2011, the strengthening of the ruble could give place to the strengthening of the dollar or euro. She said an alternative to a Russian economy totally open to foreign capital could be repatriation of Russian capital.
She added that "The only rescue is to stop depending on exports and develop the domestic market," is Rozhankovsky's other piece of advice. It is necessary to diversify the economy and reduce its dependence on energy exports.
3 workers missing at Ukraine’s coalmine rock slide
Itar Tass cited Ms Olga Negrebetskaya from the regional department of the State Mining Supervisory Service as saying that 3 workers of the Abris coalmine in Ukraine’s Lugansk region got under a rockslide on Sunday.
She said there is no contact with the workers and rescuers are looking for them.
Russia dismisses claims that it uses gas as weapon
Interfax cited Mr Boris Gryzlov Chairman of State Duma as saying that “It is a myth that the claims by Western countries of Russia using its energy resources as a weapon.”
Mr Boris Gryzlov while speaking at an international conference entitled "Russia Europe Developing Together" in Berlin recently said that the claims that Russia is allegedly using gas supplies as a weapon is the widest spread myth in the European media. He said that “As a result, many Europeans have a distorted impression. Energy stability in Europe is vital to us.”
Mr Gryzlov said the politicization of energy is destructive for all Europe and may slow down economic development. He said that the Russian administration staunchly supports equal economic cooperation between Russian and European companies and a free market of cross-border investment. We object to artificial or unlawful limits in this sphere.
Mr Gryzlov said that "I would like the shareholders in European companies to base their decisions about possible mergers and sale of stock exclusively on economic expediency rather than Cold War mentality of the Russians are coming' type."
Roseneft’s Chinese JV to build oil refinery in Tianjin
It is reported that China and Russia have agreed to locate a planned oil refinery capable of processing 10 million tons a year in the northern port city of Tianjin.
China's top oil firm, China National Petroleum Cooperation and Russia's Rosneft have set up a joint venture in Tianjin to implement the project, which is still subject to approval by the National Development and Reform Commission.
A possible site for the refinery will be the Tianjin Harbor Industrial Park, about 80 square kilometers off the Bohai Bay east of Beijing. The central government has listed Tianjin as a national base for the development of the oil industry.
The refinery project is a concrete follow up to the two companies' agreement reached in March 2006 to intensify cooperation in the oil sector.
Mitsubishi to build Outlanders in Russia
It is reported that Japan’s Mitsubishi Motors Corp will soon unveil the plans for constructing a carmaker in Russia. The new facilities will produce Outlanders and are due to become operational in 2010. Its most probable location is somewhere near St. Petersburg.
The project budget is estimated at USD 180 million with the annual capacity of 30,000 vehicles a year at the first stage. Production of popular Lancer sedans could be launched later on.
Mitsubishi Motors and Russia’s government sealed a memorandum in December of 2006 that spells out the company’s intention to construct car assembly facilities. So, Mitsubishi is to arrive at some definite decision till the end of December if it counts on getting financial preference in Russia.
In Russia, the sales of foreign cars surged 64% on year in the first ten months of this year. Mitsubishi ranks the seventh in this indicator, but the company forecasts Russia’s sales to step up by 43% to 100,000 by March of 2008.
Shell inks deal to buy gas fields in Ukraine
Royal Dutch Shell has recently announced that it inked a preliminary USD 410 million agreement to take a 51% interest in two Ukrainian natural gas fields controlled by a subsidiary of Regal Petroleum a London listed gas group.
The agreement envisions Shell taking a 51% interest in Jersey registered Regal Petroleum Limited, a wholly owned subsidiary of Regal Petroleum Plc that indirectly holds licenses for Ukraine’s Mekhediviska-Holotvschinska and Svyrydivske natural gas fields. Should the transaction take place, Shell will pay USD 50 million to Regal for its 51% stake. The remaining USD 360 million will be used to develop the fields.
Mr Patrick van Daele GM of Shell Ukraine Exploration & Production LLC said “The MOU is another important step in Shell’s development in Ukraine. He said the growth potential from the Mekhediviska-Holotvschinska and Svyrydivske fields is a clear fit with Shell’s strategy.”
The signed MoU marks the continued rapid expansion of Shell in Ukraine which has sought investment and know how from Western energy majors to break its heavy reliance on Russian fuel imports. Shell is the only major global energy company to have moved fast to expand its presence in Ukraine.
