Indian iron ore spot prices stay flat in last week

The China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters has announced that the average reference prices for import transactions of Fe 63.5% Indian iron ore concluded last week on December 24th 2007.

The change is with respect to prices posted on December 17th 2007

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

TATA Steel bids for iron ore mines in Liberia – Report

BS reported that TATA Steel is now eyeing the Western Cluster Iron Ore deposits in Liberia and has already submitted a bid for the project and is among the short listed companies.

As per report, the Western Cluster iron ore deposit in Liberia consists of several deposits spread over 207.58 square kilometers and the investment is likely to be around USD 1.5 billion. The Western Cluster comprises the Mano River Iron Ore, The Western Position of Bomi Hills Iron Ore Deposits and the Mountain Iron Ore Deposits.

However the report also mentioned that a TATA Steel spokesperson refused to comment and said that the company is looking at all opportunities globally in the area of resource security for the group.

China eying long term iron ore supply contracts with India

It is reported that China has again expressed its keenness to enter into long term iron ore supply contracts with Indian suppliers in a bid to offset soaring prices of the iron ore caused by rising ocean freight and tight supply.

Mr Luo Bingsheng secretary general of China Iron & Steel Association recently said that "Beijing will make efforts to establish long term iron ore supply contracts with Indian suppliers in a bid to restrict soaring iron ore prices." He added that the immediate factor pushing up imported iron ore rates is the abnormal hike in ocean freight on spot iron ore trading caused by surging oil prices and US dollar depreciation.

Mr Bingsheng said that "Indian iron ore has led the way in the round of prices rise. We should introduce long term contracts for the importers of Indian ore as well as enhance the threshold for qualified importers.

He said Chinese government is considering changing the way iron ore is imported in an effort squeeze ore imports from India. He added that besides, Chinese steel mills will also be encouraged to strengthen investments in overseas mines and asked to increase the ratio of ore supplied from JV operations outside China to about 60% in future.

The price has since touched USD 200 per tonne before slipping back to USD 180 to USD 185. It is noted that the import price including cost insurance and freight of iron ore being shipped from India hit USD 135.19 per tonne in October 2007 up by USD 68.33 per tonne compared with USD 66.86 a tonne in January 2007.

Protest by unemployed locals at JSL’s Orissa plant

SNS reported that as many as 56 activists of the Sukinda Unemployed Technical Youth Association were recently arrested and released on bail by Kalinga Nagar police on charges of locking up the Jindal Stainless Limited premises. They had been demanding jobs to the local trained technical youths and a probe into the inductions that had taken place.

Mr Dharmananda Ray president of Sukinda Unemployed Technical Youth Association however said that “We are demanding priority for the local employment and reservation of various technical posts up to 70% in the industries in Kalinga Nagar. There should be no age bar and no cut off marks for local candidates.”

The report cited Mr Ashis Das advisor to the Jindal Stainless Limited as saying that “Some local youths under the banner of self styled Sukinda Unemployed Technical Youth Association are locking all gates of our plant and preventing men and materials into the plant premises since December 21st 2007. They are squatting at the company’s gates and chasing away our plant workers and officers.”

Andhra CM announce 2nd steel plan in Kadapa

Mr YS Rajasekhara Reddy chief minister of Andhra Pradesh announced that a second steel plant would come up in Kadapa city in addition to the one in Jammalamadugu in the state.

Mr Reddy said that negotiations are in progress and the government would finalize a proposal within 10 days for the 2nd steel plant in Kadapa district. He said “Two steel plants would trigger tremendous development in Kadapa district too.”

DMRC submits DPR on Bangalore and Hyderabad metro link

It is reported that, paving way for Karnataka and Andhra Pradesh for going ahead with construction of high speed metro links to connect respective capitals with airports, Delhi Metro Rail Corporation has submitted its detailed project report to the state governments.

Official sources said that DMRC, which is acting as a consultant for construction of high speed metro links to airports in Bangalore and Hyderabad, has submitted its report to the respective states sometime back. They added that detailed project report would help the state governments decide on procedures to construct the 2 multi billion dollar projects.

Karnataka and Andhra Pradesh propose to connect their airports with high speed metro links on the lines of the one proposed to be set up in Delhi. While the link in Bangalore is proposed to be on a 33 kilometer stretch, the one in Hyderabad is a 43 kilometer line.

DMRC’s other proposals for metro trains for Karnataka and Andhra Pradesh have already been approved by the states and are being implemented by the respective governments.

Repeal of SEZ and Land Acquisition Act sought

It is reported that speakers at a meeting organized by non government organization Janhastakshep on “Nandigram & Erasama: state policy and emerging patterns of oppression against people”, have unanimously demanded immediate withdrawal of the police from the area and repeal of the SEZ Act and the Land Acquisition Act.

Mr Manoranjan Mohanty former professor of political science with Delhi University political science professor informed how the massive uprooting of population from their lands and livelihoods for large scale projects and SEZs had become a country wide phenomenon. He said “The people who are struggling against such policies have begun to understand the implications of these pro imperialist industrial and SEZ policies: massive unemployment, fall in food grain production, exhaustion of India’s mineral resources and a virtual handing over of the reins of the Indian economy to multi national corporations. Very rightly, the affected people are resisting such projects and have launched powerful movements against such mindless, anti people industrialization.”

Mr Imtiaz Ahmed of the department of social sciences at Jawaharlal Nehru University said that the failure of the state lay in not being able to provide the basic necessities of drinking water, education and employment to a large part of the country and how it had subverted the path of justice on several occasions.

Speakers at the meeting also made an appeal to all progressive democratic forces to stop the Orissa government by lending support to people’s struggle. They also condemned the Orissa government for suppressing the people’s democratic right to dissent.

Baglihar hydel project in J&K to start in June 2008

Mr Ghulam Nabi Azad chief minister of Jammu and Kashmir said that the ambitious 450 MW Baglihar hydel power project would become partially operational by June 2008. He added that the completion of the second phase of the project in the near future would considerably improve the power position in the state.

Mr Azad said that work on the prestigious project has picked up during the past over one year and is going on round the clock.

The Baglihar hydel power project is the biggest ever power project coming up in Jammu and Kashmir.

AP to bring down distribution losses to 9% by March 2008

BS reported that Eastern Power Distribution Company of Andhra Pradesh Limited is targeting to reduce distribution losses to 9% by March 2008.

Mr Lav Agrawal CMD of EPDCL said that “If we can reduce the line losses, the company will not only get additional revenues, but will also be able to improve the entire operational system, including better customer services.” He added that 1% reduction would fetch the company INR 25 crore a year.

Mr Agrawal said that EPDCL had been successful in cutting down the distribution losses by about 2.74% over the last 4 months. Two years back, the distribution losses were about 17%, which came down to 12.22% by March 2007 and is further brought down to 9.44% by November 2007.

He added that EPDCL distributes about 24.5 million units a day and until November 2007, the distribution losses stood at 554.34 million units as compared with 627.52 million units during the corresponding period last year.

Bombay HC awaits reply on JSW’s Jaigad power plant

BS reported that Bombay High Court has reminded the Maharashtra Pollution Control Board and the centre to file replies on the PIL opposing the JSW Group’s 1,200 MW coal based power plant in Jaigad in Ratnagiri district.

The high court is currently hearing a PIL filed by the Ratnagiri Jilla Jagruk Manch. The power project is facing opposition despite getting clearances from both the MPCB and the environment and forest ministry as they feared fly ash generated by the plant will ruin the horticulture in the area. The PIL claims that the thermal power plant will play havoc with the INR 3,000 crore economy of the region.

Mr VA Gangal petitioners’ lawyer said that “On the last 3 occasions, MPCB and the environment and forest ministry were given time to file their replies. They haven’t so far.”

Mr Vivek Bhide president of Ratnagiri Jilla Jagruk Manch alleged that apart from the horticulture, marine life off Jaigad coast too will suffer because of the project. JSW is building a jetty near the old port. Bhide alleges that there are corals in the surrounding sea, which the jetty building operation can destroy.

When the PIL was filed last year, the high court had appointed an expert committee to look into the issue. The committee asked the JSW Energy Limited, which is setting up the plant near the port town of Jaigad, to make a revised environmental impact management report. The petitioners, however, said that this revised report must be cleared by MPCB and the ministry, but there is no reply from their side yet.

Argentum to infuse INR 500 crore to modernize its Noida unit

BS reported that Argentum Motors, the present owners of the erstwhile Daewoo Motors's India unit in Greater Noida, will infuse INR 500 crore to modernize the facility over the next 18 months as it gears up to host global commercial vehicle maker Daimler for its proposed light commercial vehicle roll out.

The report cited sources close to Argentum as saying that the current promoters of Argentum Motors, Mr BVR Subbu ex Hyundai chief and Mr Ajay Singh director of SpiceJet, plan to start contract manufacturing operations at the facility for which the company is in talks with various international players including Daimler, Volkswagen, Renault, Citroen and Peugeot. They added that Argentum is likely to rule in favor of Daimler which intends to roll out its light commercial vehicle from the manufacturing unit.

Mr Ajay Singh said that Argentum intends to start manufacturing within 6 months and is expected to utilize 100% capacity within the 12 months. He added that "This facility is one of the most modern units in India. However, we would invest INR 500 crore over the next 18 months to modernize paint shop, assembly shop and body shop."

He, however, did not comment on the speculation of Argentum finalizing an agreement with Daimler Hero. He said "Yes, we have spoken to several automobile manufacturers and Daimler is one of them. I have nothing more to say beyond that. We make a compelling case for any company to outsource manufacturing as it will have an immediate cost advantage of 8% to 18%."

Centre sets up fund to facilitate PPP projects in pre tender period

BL reported that central government has notified setting up of an INR 100 crore revolving fund for assisting infrastructure projects, under public private partnership model in the pre tender period.

It is learnt that India Infrastructure Project Development Fund will bear the expenses for conceiving new public private partnership projects, which may include feasibility studies, environment impact studies, financial structuring and legal review in the pre tender period.

India Infrastructure Project Development Fund will bear up to 75% of the costs of projects till the bidding stage and will also assist projects that closely support the best practices in public private partnership project identification and preparation.

IOC to venture alone for small on land blocks in NELP VII

BL reported that Indian Oil Corporation is planning to bid alone in the domestic oil and gas exploration & production activities for the small blocks put on offer under the 7th New Exploration Licensing Policy round.

It is noted that in NELP VII, the government has introduced a new type of onland blocks called Type S, covering small areas up to 200 kilometer. For these blocks, the government has provided special dispensation in the form of waiver of technical capability criteria.

Mr BM Bansal director planning & business development of IOC said that “The small blocks give IOC an opportunity to participate on our own as an operator. Till now IOC has not been able to acquire assets as an operator due to the technical criterion prescribed. Participation in this category will give us the desired experience of an operator. However, for deepwater exploration, we will have to rope in a partner with technical expertise.”

Mr Bansal said that “Our business strategy focuses primarily on expansion across the hydrocarbon value chain, both within and outside the country, while simultaneously revisiting its strategic plans and undertaking mid-course corrections, wherever necessary.”

Under NELP VII, 57 oil and gas blocks, comprising 19 deepwater blocks, 9 shallow water blocks and 29 onland blocks have been put on offer. Of the 29 onland blocks, the Type S category has 9 blocks mainly in Cambay Basin. However, for the deepwater blocks offered in the latest licensing round, IOC will scout for a foreign partner.

At home, IOC currently has 12 oil and gas assets. IOC and its consortium partners have been awarded 2 exploration blocks in Mumbai offshore in Round VI of bidding under NELP. With this, IOC has an upstream portfolio consisting of participatory interest in 8 blocks under NELP and 2 blocks under coal bed methane, in addition to 2 farms in blocks in northeast India. It has 7 blocks overseas.

NALCO employees demand Navaratna status

SNS reported that employees of NALCO has demanded disbursement of 5% of distributive profit, better promotional avenues, Navaratna status and the proper use of the reserve funds.

Leaders of the 3 employees’ unions of NALCO at Angul, Damanjodi and the corporate office, which merged to form a Confederation of NALCO Officers Association said that departmental promotion committee meetings is not being held. They charged that the 5% distributive profit has not been given, despite court orders.

They added that the ministry is deliberately not according Navaratna status to NALCO because it wants to retain its grip over the PSU and deny it full financial autonomy. The INR 5,000 crore reserve funds of NALCO are not being put to good use at a time when private players like the Vedanta are expanding rapidly.

ArcelorMittal acquires Austrian steel distribution company

ArcelorMittal announced that it has signed a Share Purchase Agreement to acquire 100% of the shares of the Austrian steel distribution company Eisen Wagner GmbH from the current owners. The transaction is designed to further enhance ArcelorMittal's presence in Central Europe and is subject to the approval of the competition authorities.

Eisen Wagner is one of the leading steel distribution companies in Austria. It sold 140,000 tonnes and out of this 60,000 tonnes of steel products were processed in 2007. Its last yearly turnover from the year ending February 28th 2007 was EUR 127 million, for a staff of 262.

Mr Gonzalo Urquijo member of ArcelorMittal's group management board and in charge of its Steel Solutions and Services division commented that "This acquisition enables us to set foot in the very competitive and dynamic Austrian steel distribution market. Once Eisen Wagner will be integrated into our Central European distribution network, it will allow ArcelorMittal to both strengthen its presence within this market and better serve its customers in Austria.”

ArcelorMittal acquires SS tube maker in Uruguay

ArcelorMittal has announced the acquisition of Cínter SA, an important stainless steel tube producer located in Uruguay. The transaction is being reviewed by the competition authorities.

Cinter SA enjoys a strong position in stainless steel tubes. It has also developed specialties that will complement the current offer of its stainless business. Cinter SA employs about 200 people in 3 sites located in Montevideo. Its net sales for the year ended, September 2007, was USD 47million.

The purchase forms part of the strategy of ArcelorMittal to strengthen its stainless steel business in South America. ArcelorMittal release said that “It is an efficient company that will perfectly integrate within the growth plan of ArcelorMittal in South America.”

Brazilian crude steel production up in November

According to the Brazilian Steel Institute, robust demand for steel products across Brazil's industrial sector continued to fuel output at the nation's steelmakers in November 2007.

IBS in a statement said that Brazilian steelmakers produced 2.872 million tonnes of crude steel in November 2007, up by 6.2% YoY from 2.705 million tonnes in November 2006. Its YTD, Brazilian crude steel output was up by 8.9% YoY to 30.773 million tonnes as compared to 28.255 million tons in the 11 months of 2006.

Production of rolled steel products advanced 12.8% to 2.205 million tonnes in November 2007, as compared with 1.955 million tonnes in November 2006. That was off slightly from October's record output of 2.252 million tonnes.

Output of long steel products continued the upward trend seen throughout 2007 related to a surge in civil construction and infrastructure projects throughout Brazil.

Long steel production reached 867,400 tonnes in November 2007, up by 16.1% from 746,800 tonnes in the same month of 2006. November's output figure also declined from record monthly production of 881,700 tons posted in October.

IBS said that “Record performance by the Brazilian auto industry, as well as increased demand from the oil, gas and naval industries, also sparked demand for flat steel.” It added that “Flat steel production rose 10.7% year-on-year to 1.337 million metric tons, up from 1.208 million tons in November 2006.”

Brazilian steelmakers have steadily boosted production throughout 2007 because of strong demand related to January's announcement of President Luiz Inacio Lula da Silva's Accelerated Growth Program, or PAC and an improved economic climate.

Taiwan's plate import totals 32,000 tonnes in November

According to the Customs statistics, Taiwan imported 32,286 tonnes of plate in November 2007, including 28,000 tonnes from China.

In total, the import quantity of plates hit 414,000 tonnes during the first 11 months, increasing by 103% YoY as compared with the same period of last year.

Meanwhile, Taiwan exported 11,140 tonnes of plate last month and the export quantity totaled 153,000 tonnes during the first 11 months, which is higher than the same period of last year by 109%.

The current circulating price in the domestic market keeps stable with the price of A36 plate at TWD 25,000 to TWD 26,000 per tonne.

Pig iron price up in Brazil

YIEH reported that the export prices of pig iron in Brazil have been increased by USD 5 to USD 10 per tonne last week to around USD 350 per ton FOB.

According to market sources, Cargill bought 44,000 tonne of pig iron at USD 350 per tonne FOB from Ironminas and Ronly purchased 15,000 tons at USD 350 per tonne FOB from Minas Metais and 20,000 tonnes from Brazlink at the same price.

A trader also said that the import price of pig iron in Taiwan was quoted at USD 440 to USD 450 per tonne CFR.

Steel mergers will continue at slower pace in 2008

Ms Victoria Santoella an analyst at Santander bank in New York told BNamericas that the consolidation trend prevalent in the steel sector in Latin America and around the world will continue to develop but "not as quickly as it did over the last three years. She added that "Obviously there are fewer companies available but there is still a lot left to do.”

However, Ms Santoella believes that sector consolidation in Argentina may be coming to an end. She said that "There are two steel companies there: Acindar which is part of ArcelorMittal and Siderar which is part of the Ternium group, both of which are giants that have already consolidated in the sector.”

She added that ArcelorMittal is the world's largest steelmaker and Ternium is the second largest in Latin America after Gerdau, so those companies are already consolidated.

In that regard, Mr Edgar Jiménez Colombian stockbroker said that “There are still midsized and large steelmakers in the South American country that could possibly be takeover targets for foreign investors."

Mr Jiménez said that in Colombia, the biggest steel deal of 2007 was Brazilian group Votorantim's purchase of a 52% stake in local steel company Acerías Paz del Río, but there are still other deals to be made.”

A sector official told BNamericas that Sidenal has received takeover bids from European group Arcelor Mittal, Gerdau and the Ternium steel group.

South African regulator approves 14.2% power tariff increase

It is reported that South African power regulator recently approved a 14.2% tariff increase for State owned utility Eskom's 2008-09 financial year, turning down the power firm's request for an 18.7% raise.

The National Energy Regulator granted the increase after weighing Eskom's plans for expanding power supply and the likely impact of any increase on inflation and affordability for consumers.

It added that the regulator took note of concerns on the possible impact of the Eskom price increase on the economy, especially on the poor, but took the view that the long run benefits to the economy far outweighed the short term fears.

Nersa in a statement said that "This means some trade off is necessary between industry sustainability and consideration over other economic and social objectives.”

Eskom, which generates the vast majority of South Africa's power but has struggled to meet demand in Africa's biggest economy, was allowed to raise the tariffs from April next year to end March 2009.

Downer EDI selected as preferred bidder for two mining projects

Engineering company, Downer EDI announced that its mining division has been selected by Peabody Pacific as the preferred bidder on its Wambo and Millennium Mining projects.

Mr Brent Waldron CEO of Downer said that "This is in addition to a series of recent contract wins across the group approximately USD 800 million since 21 August 2007. We are pleased that our efforts to reinvigorate our Mining Division are bearing fruit."

Mr Damien O'Reilly CEO of Downer EDI Mining said that "This is a vote of confidence in Downer EDI Mining and is a testament to both the strong relationships our team has built with the client and the value of our understanding of the Wambo and Millennium mines."

Peabody Pacific is one of Australia's largest mining companies with 10 operations in Queensland and New South Wales. The Millenium mine, located in the Bowen Basin in Queensland is a coking coal producer. Wambo is one of Peabody's largest operating coal mines, located in the Hunter Valley, New South Wales.

Cuu Long starts plate production

YIEH reported that Cuu Long Vinashin Steel Joint Stock Company has produced the first batch of hot rolled steel plates. The plant’s annual output is around 500,000 tonnes.

It would provide plates to Vietnamese domestic shipbuilding, machinery processing, infrastructure projects.

PT Bakrie & Brothers to supply steel pipes to PT Chevron Pacific

Asia Pulse reported that the subsidiary of PT Bakrie & Brothers Tbk, PT Bakrie Pipe Industries has signed an agreement to supply PT Chevron Pacific Indonesia with steel pipes worth USD 95.75 million in two years.

Australian coal exports held up by infrastructure

ABC.net reported that infrastructure bottlenecks are continuing to hamper coal exports out of New South Wales. A report on the state of the industry shows exports have dropped despite an increase in production in the past financial year.

Mr Nicky Williams from the New South Wales Minerals Council said that the situation should improve, as road and rail upgrades are completed. But he says it's a shame to see Australia's share of the international coal market being limited, when prices are so high.

He added that "The industry is very concerned that the investments are made and made as quickly as possible, and to its credit I think the NSW government has really focused on this in the last couple of years, but infrastructure doesn't get built overnight, major improvements have been made and that will start to affect the supply chain over the next year.”

Mr Chavez signs new energy deal with Cuba

It is reported that Mr Hugo Chavez president of Venezuelan bolstered his cooperation with Cuba by signing energy, farming and finance accords, including a deal to expand of one of his socialist ally's oil refineries.

Mr Chavez attended the signing ceremony in Santiago de Cuba with Mr Raul Castro, who has governed Cuba since his brother, Mr Fidel Castro, handed over power after surgery. Mr Chavez said "We are together and will be together forever. We are conscious that we are one nation."

One of the deals inked on Saturday will expand the capacity of Cuba's Cienfuegos crude refinery from 65,000 barrels per day to 150,000 barrels per day. Other agreements included helping to restore a pipeline from the refinery and expanding agriculture and mining projects.

Venezuela, an OPEC member and a major oil supplier to the United States, already provides 92,000 barrels per day of crude to Cuba on preferential terms in return for medical and other services.

GM announces price increases to cover rising steel costs

Global auto major GM announced a price adjustment on most of its 2008 model year vehicles to partially recover increasing steel and commodity costs.

The price increases, averaging about 1.5% are effective with vehicles invoiced to dealers on and after December 19th 2007.

Mr Mark LaNeve vice president of GM North America, vehicle sales, service and marketing said that “This targeted price increase is designed to partially recover ever increasing commodity costs. While most cars and trucks in our portfolio will go up between USD 100 to USD 500, in hotly contested segments, many vehicles such as the Saturn Aura four cylinder and the all new Malibu LS will have no increase.”

Palamin to spend ZAR 200 million on pre feasibility studies

Mining Weekly reported that JSE listed Palabora Mining has approved ZAR 200 million for a study of additional underground copper reserves (ZAR 150 million) and a pre feasibility study into expanding iron ore output.

Mr Keith Marshall MD of Palabora Mining said that "Having stabilized the underground operations, we have now embarked on the process of identifying opportunities to extend the life of mine and opportunistically exploit all the surface materials that have become commercially viable as a result of the commodity boom.”

Diversified resources giant Rio Tinto owns a 47.2% stake in Palamin.

New union leader taking over at AK Steel Middletown Works

Associated Press reported that the union that represents workers at AK Steel's largest plant, Middletown Works in southwest Ohio has elected Mr D Scott Rich its new president. Mr Rich would assume leadership of IAM Local Lodge 1943 in this southwest Ohio city that is the site of West Chester-based AK's biggest plant next month.

Mr Rich said "At its essence, we share in the company's success. By having an efficient and profitable company, we can share in that prosperity. The more cooperation we can have with AK, the stronger the company and union can be. But in disputes, the union needs to be effective, too."

Mr Alan McCoy spokesman of AK Steel said the company looks forward to working with Mr Rich to continue working to making the Middletown Works a competitive world-class producer.

Carpenter Technology to buy back shares up to USD 250 million

It is reported that specialty alloy producer Carpenter Technology Corp was authorized to buy back up to USD 250 million of its outstanding common shares.

Carpenter in a statement said that the repurchases will be funded with available cash.

Demand for steel in UAE to double in 3 years

Ulf news reported that demand for steel products in the UAE is expected to double in the next three years and that there is not enough supply in the Middle East to meet the growing needs of the construction sector.

Mr Amleshwar Dayal resident advisor for ETA Group's steel division, an during an interview with Gulf News said the rapidly expanding construction sector as well as the oil and gas projects, will drive the UAE's steel demand from 5 million tonnes in 2007 to 10 million tonnes in 2010. Mr Dayal added that the region's steel requirement will grow from 30 million tonnes this year to 45 million tonnes in 2010.

He said that “The region will continue to be an importer of steel, with substantial supplies coming from Turkey and Ukraine. There is no other way but to import. We don't have enough steel manufacturing facilities here. UAE in particular does not have enough electricity and gas to power steel manufacturing facilities, so there is a shortage of steel products in the local market.”

DCCI urges aluminum industry to adopt economy of scale

Khaleej Times reported that Dubai Chamber of Commerce and Industry has suggests that the aluminum industry move to economy of scale or reduce costs through increased production, by embracing new technology.

It said that "Focus should be turned to attracting new modern technologies, developing new and existing smelters and diversifying the assortment into innovative alternatives, such as refined aluminum based finish and semi finished products.”

It said that “UAE, particularly Dubai, must take advantage of the aluminum shortages in both domestic and international markets because it has all the resources to do so. Focusing on economies of scale will decrease the cost of production and increase the competitiveness of the products.”

Dubai produced 0.76 million tonnes of aluminum in 2005 while it imported over AED 2 billion worth of aluminum and its products and re exported AED 226 million. The Middle East's aluminum production rose from 1.2 million tonnes in 2000 to 1.5 million tonnes in 2005 while global aluminum prices jumped 70% from USD 1,431 per tonne in 2003 to USD 2,438 per tonne in August 2006.

Iraq struggles to finance redevelopment of railways program

MEED reported that Iraqi government is struggling to restart a USD 10 billion redevelopment program for the nation's railways because of a lack of funding.

The program, which would include a commuter rail line around Baghdad, is based on plans drafted in the 1980s following the Iran Iraq War. However, the transportation ministry has been unable to find financial backing for the project.

Mr Bangen Rekani acting transport minister of Iraq said that "Most of the plans are already completed, the only problem is that we do not have enough finance. We would like to complete these projects by 2015."

A senior policy adviser to Iraqi government said that "Without doubt, rail is the most cost-effective method to move bulk commodities in Iraq. We have budgeted USD 250 million to get the 5 current lines up and running to the point where rail is competitive with the trucking industry, which dominates at the moment. Baghdad to Basra will account for 60% of passenger traffic and Umm Qasr to Baghdad for 70% of movement in goods and services."

Iraq is also considering a high speed line between the capital and Basra and reopening the passenger route between Baghdad and Mosul. The minerals railway in the west of Iraq is to be reopened in 2008 to transport cement and fertilizer to the rest of the country. The minerals route runs from Akashat and links with the line between Baghdad and the Syrian border at Alqaim.

Ras al Zour to go ahead with smelting complex

ME Steel reported that Ras al Zour aluminum smelting complex planned by Saudi Arabian Mining Company is set to go ahead despite costs rising.

The project is valued at USD 7 billion, but the price of securing contractors and equipment has risen since this estimate was made a year ago. Sources close to the project estimate costs have spiraled to USD 8.5 billion. Bids for the engineering, procurement and construction management contracts for the 720,000 tonne a year aluminum smelter and the 1.6 million tonnes per year alumina refinery are expected to be submitted by the end of January 2008.

Mr Abdullah Busfar VP of Maaden's aluminum strategic business unit admitted that costs have increased but did not say how much the project's budget will now be. He said “All the indications are that the cost will be higher. I can not yet give a precise figure. We are very near to completing a more precise estimate. In January 2008, we will know the latest. But the only challenge we see to our project is securing the required manpower to complete the work without delays.”

Meanwhile, work at the Al Zabirah mine, which is supplying raw materials to the alumina smelter, has uncovered more bauxite than originally anticipated. He said “This will enable us to continue operations for much longer than 30 years. So we may expand the facility or enter the alumina market. It may prove to be more economical to smelt everything we can.”

US based Bechtel and Canadian SNC Lavalin have been invited to bid for the smelter contract. They have also been invited to bid for the alumina refinery contract, along with the US' Fluor Corporation. The contract to build the smelting complex's 1,800MW to 2,400MW power and desalination plant is the only one on the project to be tendered as a stand alone engineering, procuring and construction contract. Maaden will approach the financial community to secure project finance in the second half of 2008.

Iran invests USD 8.3 billion in Assaluyeh petrochemical projects

Mr Reza Afshin production control manager of Iran’s National Petrochemical Company said that USD 8.3 billion had been so far invested in the petrochemical sector of Pars Special Economic Energy Zone in Assaluyeh in southern Iran. He added that “Of the figure, over USD 5.4 billion has been allocated to the production.”

Mr Afshin said that Bandar Imam Petrochemical Complex is the record holder in terms of production. He said “In the first 3 quarters of the Iranian year, petrochemical complexes produced more than 15.97 million tonnes of products and the figure will soar to over 22 million tonnes by March 2008.”

Pakistan to inject PKR 29 billion to help oil companies

Pakistan government is finalizing a PKR 29 billion rolling fund through a consortium of banks to resolve cash flow problems of oil companies and keep them afloat on the back of rising financial claims and inter corporate circular debts.

This is one of the measures Pakistan caretaker government is actively pursuing at the moment to melt down inter corporate circular debt that has already crossed PKR 180 billion due to WAPDA's over PKR 70 billion arrears payable by the public sector and non payment of over PKR 30 billion subsidy to WAPDA by the government and build up of oil companies' PKR 41 billion price differential claims.

Informed sources said that a petroleum ministry's proposal seeking PKR 7 per liter increase in diesel has been shot down and a revised case for PKR 5 per liter increase in diesel has been prepared for consideration by the economic coordination committee.

The sources said that more than 60% of the debt required for this rolling fund was required for Pakistan State Oil. Therefore, a separate bail out package of PKR 12 billion has been put in place for PSO through Habib Bank Limited at about 9.75% interest rate. Shell and Chevron Caltex have a share of 28 and 9% share respectively in the PDC and the government will absorb the interest cost of private companies.

Pakistan government had made an allocation of PKR 87 billion in the budget 2007-08 as subsidies for the energy sector which means that the caretaker government will need to raise more than PKR 90 billion through price and tariff hike or pass on the legacy of even higher circular debt to a new elected government next year. The situation has worsened owing to a freeze on oil pricing that developed PKR 41 billion price differential claims.

Non payment of public sector electricity bills has caused a cash shortfall of about PKR 55 billion to WAPDA's corporate companies. Resultantly, its payables to independent power producers have surpassed PKR 30 billion. It owes another PKR 13 billion to Pakistan State Oil and other fuel suppliers and around PKR 8 billion or so to equipment suppliers. Among WAPDA's defaulters also include Fata and KESC.

Al Badia residential project launched in Oman

Khaleej Times reported that Oman Real Estate Portfolio has launched Al Badia Residential Project in the Sultanate as a result of its strategic partnership to develop a series of projects in Oman with a special focus on Sohar.

The project will be developed and marketed by Al Mazaya Holding, regional leading property developer, which holds a 40% stake of the portfolio. Al Mazaya and its partners are willing to capture a significant chunk of the Omani buoyant real estate business which has begun recording a rapid year on year growth. This boom has resulted in an unprecedented rate of GCC and foreign investment inflow to the real estate sector.

Shagang Group’s pretax profit exceeds CNY 10 billion in 2007

It is reported that Shagang Group's pretax profit broke through CNY 10 billion in 2007 and all indices of the company ranked the top 5 among steel industry. Shagang also took the top role among all private steel mills.

In 2006, Shagang ranked 23 among the top 500 manufacturing enterprises and the 3rd of China private enterprises, it also ranked the top 26 most competitive steel makers in the world.

During 2006, Shagang's annual output came to No4 of China and No14 of the world. It is forecasted that it might generate CNY 88 billion sales income in 2007, realizing CNY 11.5 billion pre tax profit.

Liaoning agrees to exchange Bengang for 33% stake in Anben

The prolonged alliance of Anshan Steel and Bengang Group is expected to inch forward as the Liaoning provincial Assets Supervision and Administration Commission agrees to incorporate the CNY 20 billion Bengang Group into Anshan Steel in exchange for 33% stake in Anben Group.

If succeeds, Anshan Steel and Benxi Steel, would finally end several years of stagnation of their merger due primarily to the ownership issue. The two groups have different owners. Anshan is owned by Assets Supervision & Administration Commission in Beijing, while Benxi is understood to be owned by the Liaoning provincial government.

The merger has achieved little progress since the official announcement made on 8 August 2005. However, the merger has been more like a co-operative relationship. It does not involve profit distribution. Indeed, for now, the merger is yet to affect the listed entities of either Anshan or Benxi Angang New Steel Co Limited and Bengang Steel Plates Co Limited nor has there been any share exchange.

Changes are expected to take place in unifying the two entities' raw material purchasing, marketing and distribution networks. In addition, they will link their research & development, foreign trading businesses and financial statements.

The combined existing capacities of Anshan and Benxi amount to roughly 20 million tonnes per year representing 13 million tonnes per year from Angang and 7 million tonnes per year from Benxi. Further expansions being added or planned by the new Anben could take total capacity to 40 million tonnes per year by 2007.

Chinese steel export price trends in last week

This week, Chinese construction steel and billet prices were still on the decrease and such downward corrections are deemed to be aroused by profit taking after so swift a rise.

Prices for HRC, CRC, steel plate were generally stable

However, HDG prices continued to go up.

Export offers are still on the rise, but exporters remain cautious on account of looming export tax hike on January 1st 2008.

China publishes 3rd list of qualified coke mills

According to the coking industrial admittance standards and the office procedures for publication of qualified enterprises, the third batch authorized coking mills were announced December 17th 2007 by the Chinese National Development & Reform Commission.

The 3rd batch of qualified coking enterprises for industry admittance is as under

1 Tangshan Jiahua Coal Chemical Co Ltd
2 Tangshan Rongyi Coking Co Ltd
3 Fengfeng Pengnan Coking Co Ltd
4 Shexian Tianli Coal Chemical Co Ltd
5 Xiangningxian Coal&Coking Industries Co Ltd
6 Quwoxian Minguang Coking Co Ltd
7 Linfen Wanxinda Coking Co Ltd
8 Shanxi Yuanzhong Coking Co Ltd
9 Shanxi Ruide Coking Co Ltd
10 Shanxi Jiaxiu Sansheng Coking Co Ltd
11 Pingyao Coal Chemical Co Ltd
12 Shanxi Changping (Group) Industries Co Ltd
13 Shanxi Lubao Group Coking Co Ltd
14 Shanxi Lu'an Huanneng Coal Coking Co Ltd
15 Shanxi Liliu Coking Jianmei Jituan Youxiangongsi
16 Shanxi JInyang Coal & Coke (Group) Co Ltd
17 Shanxi Huaxin Coal Coking Industries Co Ltd
18 Shanxi JIntaoyuan Coal Coking Group Co Ltd
19 Shanxi Jinye Coal Coking Group Gujiao Co Ltd
20 Shanxi Yanzi Coking Co Ltd
21 Inner Mongolia Qinghua Group Qinghua Coal Chemical Co Ltd
22 Zhenjiang Coking and Gas Group Co Ltd
23 Nanjing Iron & Steel United Co Ltd
24 Nanchang Changli Iron & Steel Co Ltd
25 Laiwu Iron & Steel Co Ltd
26 Zibo Baota Coking Co Ltd
27 Xintia Zhengda Coking Co Ltd
28 Shandong Fulun Iron & Steel Co Ltd
29 Linyi Yizhou Coking Co Ltd
30 Anyang Chengchen Coking Co Ltd
31 Pingdingshan Mining Group Tianhong Coking Co Ltd
32 Guangdong Shanguan Iron & Steel Songshan Co Ltd
33 Sichuan Shengda Coking Co Ltd
34 Maanshan Iron & Steel Company Coal Coking Co Ltd

Separately, Beijing Coking Chemical Plant (number 2 in first batch) and Tianjin No.2 Coal Gas Plant (number.3 in first batch) are deprived of the access rights, and Jiexiu Maosheng Coal Chemical Co Ltd (No.32 in first batch) was renamed to Shanxi Maosheng Coal Chemical Co., Ltd.

Shanxi takes strict action after Xinyao coal mine blast

It is reported that Shanxi government has vowed to crackdown on corruption in the northern Chinese province's mining industry after a colliery gas explosion killed 105 earlier this month.

Mr Zhang Baoshun secretary of the Shanxi provincial Committee of the Communist Party of China at a meeting in Linfen, where the deadly accident happened, said that "We should use this issue to prevent and crackdown on corruption in the mining industry and as a key target to build a clean party. Governments of all levels should strengthen supervision in coal mining approval and operation. We will not tolerate those Party members who cover up for the illegal behavior of the coal mine owners or managers, and those officials who display dereliction of duty."

Zhang made the remarks following the province's decision to remove Mr Li Tiantai, the mayor of Linfen, from his post as the city's deputy Party chief. Mr Li was said to have breached his duty of supervising work safety at the Xinyao Coal Mine where a gas explosion killed the miners on December 5th 2007.

Following the explosion, which was believed to be the nation's second deadliest mining accident this year, colliery managers were found to have delayed reporting the accident to local authorities. The mine workers were also required to work in a shaft where the depth far exceeded the safety standard. Police detained 37 people allegedly linked to the accident, including mine owner Mr Wang Donghai. Another 11 officials related to the case were also being investigated.

Shanxi Province, China's major coal producer also ordered all illegal coal mines to close in response to the fatal explosion.

Electricity coal prices set to hike further in China

The negotiated price of electricity coal in China has seen an increase of around 10% at a meeting that brought together coal producers and power generation plants to settle on purchase contracts and make arrangements for transportation.

The Shanghai Securities News reports on last Friday that it witnessed several contracts at the meeting in Xianghe near Beijing. The delivery price of coal that one major Shaanxi based coal producer signed with several power plants stands at CNY 320 per tonne up by 20% YoY. Some other contracts have hiked the delivery price to as much as CNY 350 per tonne.

The price of electricity coal in the country's key purchase contracts for next year has increased by over CNY 30 per tonne on average, a manager with a power plant affiliated with China Guodian Corporation, a major Chinese power producer, disclosed to the newspaper. The price increase in Shaanxi Province is between CNY 20 to CNY 25, in Shanxi Province over CNY 30 and in Henan Province over CNY 40.

Electricity generation is expected to consume 1.3 billion tons of coal next year, accounting for half of the national coal demand, the China Business Post reports. The 10% electricity coal price hike will put about CNY 40 billion as extra fuel costs on coal fired power generation enterprises, the report estimates.

An insider with Shaanxi Coal Industry Group Co Ltd said that possibility remains that the coal producers might raise price further as the country's five biggest power producers have not yet settled on the prices on their purchase contracts. The big fives are China Huaneng Group, China Guodian Corporation, China Power Investment Corporation, China Huadian Corporation and China Datang Corporation. The report says the power groups lack effective leverage to control the price of electricity coal as the power generation plants under them, which hold the right of independently negotiating prices, are already finalizing their contracts and the price hike is anything but certain now.

Higher coal prices will put further pressure on coal powered electricity plants, forcing them to operate under losses and cut back on employees' benefits.

Siemens secures metro contracts in Shanghai and Guangzhou

It is reported that a consortium made up of Siemens and its Chinese partner CSR Zhuzhou Electric Locomotive has been awarded EUR 431 million contract for 2 further metro projects in China.

In Shanghai, Siemens Transportation Systems and ZELC are to supply EUR 289 million worth of control systems and rolling stock for the expansion of the city's Metro Line 11. In Guangzhou, the consortium will expand Metro Lines 2 and 8 with trains and control systems to the value of EUR 142 million. In both projects, Siemens is responsible for the automatic train control systems and the traction technology.

The items to be supplied to Shanghai Shentong Metro Group include 58 six car metro trains. These new vehicles, which can reach maximum speeds of up to 100 kilometer per hour, will be manufactured by ZELC in Zhuzhou. As of 2010, they will be put into service on Line 11's north section, which is just less than 60 kilometers long. Guangzhou Metro has ordered 30 vehicles as well as control equipment from the consortium for the expansion of its Lines 2 and 8.

Mr Hans M Schabert group president of Siemens Transportation Systems said that "These latest orders once again demonstrate the trust that the Chinese customers place in Siemens and underscore our competence in the expanding Chinese market. Both of these projects will also help us to strengthen the cooperation with our Chinese partner ZELC."

Siemens has enjoyed a long relationship of cooperation with the two customers. It has been involved in the construction and expansion of the metro in Guangzhou since 1994, but the collaboration between the Shanghai Metro Group and Siemens goes back even further. Siemens, however, is successful in the metro sector in China not only in Shanghai and Guangzhou. It was only in July 2007 that a consortium of Siemens TS and the China Railway Signal & Communication Corp secured an order from the Shenzhen Metro Corp.

KRU to increase coal production 4% in 2007

Interfax reported that Kuzbassrazrezugol Coal Company will mine 46 million tonnes of coal in 2007, 4% more than 2006.

Mr Stefan Dubkov press spokesman of KRU told Interfax that “KRU's branches, including the Tayezhny strip mine, had met their year's target of 45.17 million tonnes by December 22nd.

He said that KRU had mined 44.13 million tonnes in 2006 and this is the sixth year in succession that KRU has met its annual production targets early.

Mr Iskander Makhmudov's UMMC Holding runs KRU, which has 11 of its own open cast mines and in addition it manages one more.

Uralmash to repurchase equipment from Severstal

FIS reported that the machine building corporation Uralmash repurchased Uralmash Metallurgical Equipment Ltd, the developer and supplier of technological equipment for metallurgical companies from Severstal for USD15 million.

The business was sold by Uralmash in 2003. In the near future, the purchased company will enter the subsidiary of Uralmashzavod Uralmash Engineering which already has the divisions Mining Equipment and Oil and gas Drilling Equipment.

The base of Uralmash Metallurgical Equipment is the design divisions of Uralmashzavod having 75 year experience in the development of metallurgical equipment and machines such as roll mills, heavy hydraulic presses and continuous slab casting machines.

AvtoVAZ plans to produce some 1.3 million cars by 2012

RIA Novosti reported that AvtoVAZ plans to increase production from the present 771,600 cars a year to almost 1.3 million vehicles annually by 2012.

AvtoVAZ in a statement said that "The plant's development program envisages increasing the output of Lada cars to 1.275 million vehicles by 2012.”

Last year AvtoVAZ earned RUB 2.512 billion (USD 102 million) of net profit up by 79.4% YoY against RUB 152.4 billion worth of revenues in 2005. The company expects to receive RUB 166 billion (USD 6.7 billion) in revenues this year.

Russian arms export monopoly Rosoboronexport and the Troika Dialog investment company, which together hold a 75% stake in AvtoVAZ, signed on December 8 a tripartite memorandum of understanding with Renault to sign a contract for the sale of a 25% blocking stake in AvtoVAZ to the French giant.

Russian Rosspetsplav plans expansion

Russian Rosspetssplav, which controls top chromium maker Klyuchevsky Ferroalloys Plant and chrome oxide plant Russian Chrome 1915, said on Monday that it was building a ferroalloy holding firm.

Exxon pipeline to China is blocked

Bloomberg reported that ExxonMobil has been denied permission to start work on a gas pipeline to China from Sakhalin-1 this year.

The report quoted industry and energy ministry as saying that the government also refused to allow Exxon to invest in drilling oil deposits discovered near the Sakhalin-1 boundaries.

The government approved a 2008 budget of USD 1.26 billion for Sakhalin-1 instead of the USD 1.84 billion sought by Exxon. The higher figure included spending on the gas pipeline and drilling for the contested oil resources.

Gazprom has said it needs gas from Sakhalin-1 for domestic consumption. Exxon's partners in Sakhalin-1 are Rosneft, Japan's Sodeco and India's ONGC.

The government approved 2008 spending for the country's three production sharing agreements, including USD 2.08 billion for Gazprom's Sakhalin 2 oil and gas project.

EBRD to loan EUR 20 million to Lithuanian group

The European Bank for Reconstruction and Development is to lend EUR 20 million to E-Energija, a Lithuanian group of energy companies, for expansion to Ukraine, as well as for the support of energy efficiency investments in Lithuania and Latvia.

An EBRD statement issued last week said that "The EBRD is increasing its support for E-Energija with a EUR 15 million loan to the private Lithuanian energy company.”

The release added that “EBRD expects to become a shareholder in the company with a EUR5 million equity investment in the next several weeks."

Gazprom to export gas to South Korea

RIA Novosti reported that Gazprom and South Korea's Kogas are discussing the expansion of cooperation in the gas sector.

Mr Konstantin Pulikovsky co chairman of a Russia-South Korea intergovernmental commission told RIA Novosti that the Russian energy giant plans to export liquefied natural gas and gas condensates to South Korea by creating a gas supply system in the East Asian country. He added that the two sides held talks on the construction of an overland gas pipeline across the Korean peninsula, as well as the joint development of oil deposits in the Sea of Okhotsk in the Western Pacific Ocean.

Mr Pulikovsky said that Russian-South Korean trade in 2007 could reach USD 12 billion, adding that it had tripled from USD 2.8 billion to USD 9.3 billion between 2001 and 2006.

Gazprom has said that Russia will be able to annually supply up to 10 billion cubic meters of natural gas to South Korea from 2012-13.

Iranian ISIRI and Russia sign MoU

Tehran Times Economic Desk reported that Institute of Standards and Industrial Research of Iran and Russia signed a memorandum of understanding.

The MoU aims to facilitate trading affairs and exchange of scientific and technical data.

Cooperation in the international arena has been underlined in the memo

Gazprom may increase equity stake in TGK-1

Interfax cited Mr Alexei Miller CEO of Gazprom as saying that Gazprom is considering expanding its participation in the equity of TGK-1.

HydroOGK assigned BBB- rating

RIA Novosti reported that Standard & Poor's and Fitch have assigned long term BBB- credit ratings to Russia's largest hydroelectric power company HydroOGK.

Federal hydropower company HydroOGK, established in December 2004 to consolidate hydropower assets, also received a short term A-3 and Russia national scale ruAAA rating with a positive outlook from S&P, and a national long term rating of AA+(rus) from Fitch.

S&P said that HydroOGK's ratings reflected the company's strategic importance for the Russian government and support from the state, its strong positions on the growing national electric power market, the low cost level and geographically diversified portfolio of electric power plants and also the low debt level.

Fitch said that HydroOGK's ratings reflected the company's improving financial performance and the fact that a controlling stake is held by the state, and also its well-established ties with key government departments responsible for decision-making in the sector.

HydroOGK unites about 50 hydropower plants across Russia with installed capacity of more than 24,000 MW.