December, 30 2007
Iron ore movement on Kirandul Kottavalasa line hit again
BL recently reported that iron ore movement on the 450 kilometer long Kirandul Kottavalasa line under the East Coast Railway is hit again and has been forced to clamp restriction on movement following reports from the intelligence agencies, both state and central, that the Maoists might blow up a portion of line falling within Chhattisgarh.
The Railway staff posted in the stations located in the area too has started receiving threats from the Maoists who are believed to have emerged stronger after the recent jail break incident in Chhattisgarh. It might be noted that the rake movement on the KK Line remained suspended, either partially or wholly, on several occasions this year, largely due to disturbed law and order situation in the areas served by the line.
The railway board chairman discussed the matter with the chief secretary of the Chhattisgarh government. The limited movement, therefore, was introduced from December 25th 2007, with the result only 7 rakes are being run now as against normal 15 to 16 a day. Total suspension of movement was not favored because this being the busy season, the demand for traffic is high. Besides, Visakhapatnam steel plant is totally dependent on the KK Line for iron ore sourced from National Mineral Development Corporation’s mines at Bailadila.
The iron ore movement on the KK Line having been badly hit several times this year, the average throughput so far in the current year works out to barely 10 rakes a day and the railway board is seriously considering cutting down on the deployment of rakes and locomotives on the KK Line.
Villagers protest against ArcelorMittal’s plant in Orissa
SNS reported that, going against the ArcelorMittal’s steel plant at Patna in Keonjhar, thousands of people of Patna area has staged a demonstration at the collectorate under the banner of Mittal Pratirodh Manch. They later submitted a memorandum to the chief minister.
As per report, people of many villages including Jamunapasi, Nuagaon, Kodkaman, Childa and Barudiposi, which will come under the project area, took out a rally through the town and finally culminated at the kacherichhak.
As per report the people of Patna area have declined to part with their land for the steel plant. They also say some 13,189 people of the above mentioned areas are to be displaced as 8422.5 acres of land is yet to be acquired for the plant.
Port workers oppose POSCO’s captive port project
SNS reported that Paradip Port Shramik Sangh, affiliated to the All India Trade Union Congress, raised strong objections to the setting up of a captive port by POSCO at Jatadhari and urged upon the state government to amend this provision in its MoU with the steel major.
The protestors said that POSCO’s captive port will snatch away the livelihood of more than 20,000 fishermen in the area and they also warned about its ecological implications including the possible obstruction of the flow of water in the rainy season into the Bay of Bengal, which will directly affect the cultivation pattern.
Mr Souribandhu Kar general secretary of AITUC said that “The captive port with SEZ status is also a matter of concern as far as internal security is concerned as several defense establishments are there at Chandipur, Charbatia and other places. Technically, Paradip Port is capable enough to handle the cargo of the steel company.”
Stemcor Metals Cyprus to take stake in Electrosteel Castings
Electrosteel Castings Limited has informed BSE that its board of directors accorded their consent, subject to shareholders' approval, towards the issue of up to 12,200,000 convertible warrants on a preferential basis to Stemcor Metals Ltd Cyprus for cash at a price of INR 81 per warrant which is determined as per SEBI (Disclosure and Investor Protection) Guidelines 2000.
The General Meeting for shareholders approval will be held on January 25th 2008.
Danieli Corus bags SAIL ISP BF No 5 stoves contract
Danieli Corus BV has received an order from POSCO E&C of South Korea for the engineering, procurement, inspection and partial refractory supply and installation supervision of three hot blast stoves and hot blast main for the new 4060 m³ inner volume No 5 blast furnace at Steel Authority of India Limited’s IISCO's Steel Plant at Burnpur in West Bengal,
This project is part of the construction of a 2.5 million tonnes per year program.
Danieli Corus release said that “With this order, Danieli Corus has made an important step in the continuation of hot blast stove technology in India. It confirms the leading role of Danieli Corus’ technology in one of the fastest growing economies in the world.”
Bidding norms for hydel power projects to be changed
It is reported that Indian government is planning to overhaul the bidding norms for hydro electric projects under which preparation of detailed project reports and subsequent formation of special purpose vehicles will be made mandatory for states before it invites bids for the development of the project.
As per the proposal, the state governments will be asked to create a bank of detailed project reports on potential hydro electric projects planned by them. This will be done by a special purpose vehicles having both state government agencies and power sector funding and consultancy firms as partners.
The new proposal for hydro electric projects has been drawn on the lines of ultra mega power project scheme of the government where special purpose vehicles are formed and preparatory exercise completed well in advance of inviting bids.
The bids will subsequently be invited by special purpose vehicles for each project and the successful bidder will be given control of the company. Money for conducting detailed project reports may come out from a revolving fund out of the proceeds of 12% free power.
NTPC signs INR 1000 crore loan agreement with LIC
National Thermal Power Corporation Limited has announced that it has signed a loan agreement of INR 1000 crores along with a bond subscription agreement of INR 1000 crores with Life Insurance Corporation of India on December 26th 2007 to finance capital expenditure of its power generation projects, coal mining business, renovation and modernization activity and LNG business.
The door to door maturity of both the agreements is 11 years and the repayments to take place in 14 half yearly installments commencing after 4 years. The interest rate or coupon is linked to 10 year G sec rate plus margin. The proceeds under these agreements are to be utilized before end of March 2008.
NTPC Hydro to upgrade capacity of Rammam plant
Projects Today reported that National Thermal Power Corporation Limited’s wholly owned subsidiary of NTPC Hydro has decided to revise the capacity of its Rammam hydel power project stage III from 120 MW to 153 MW. The project is coming up across Jaldhaka River in Darjeeling district of Uttarakhand.
With Central Electrical Authority's techno economic clearance and NTPC board's approval in hand, NTPC Hydro is all set to float tenders for appointing the EPC contractor.
According to NTPC officials the tender is expected to be floated by April 2008. Land acquisition is going on and the company is in the process of achieving financial closure. The cost of the project is estimated at INR 633.92 crore.
NMDC Board approves Bonus Issue & Stock Split
National Mineral Development Corporation Limited has informed BSE that its board of directors at its meeting held on December 27th 2007, has approved the following subject to the approval of the general body of the company
1. Issue of Bonus Shares by NMDC in the ratio of two shares for every one share held in the Company.
2. Splitting of Shares of INR 10 each into ten shares of INR 1 each.
3. Enhancement of the paid up equity capital of NMDC from INR 150 crore to INR 400 Crore.
4. Amendment of the Memorandum and Articles of Association of the Company to give effect to the increase of authorized Capital, splitting of shares and capitalization of reserves to facilitate issue of bonus shares.
JSPL board approves sub division of equity shares
Jindal Steel & Power Limited has announced that, its members at the extra ordinary general meeting, held on December 27th 2007, inter alia, have approved the sub division of each equity shares of the company of INR 5 each into 5 equity shares of INR 1 each and consequential amendments to capital clause of memorandum and articles of association of the company.
L&T sees exponential growth in power equipment business
TNN reported that Larsen & Toubro is eyeing exponential growth in the power equipment business and may consider hiving it off into a separate company.
Mr K Venkataramana director & president of engineering & construction projects of L&T while speaking at a press meet during Chemcon 2007, said that “Power sector represents a huge opportunity for us. At present, BHEL is the only company in this sector. Hence, there is huge scope to grow our boilers and turbines business manifold. Later, L&T may consider hiving off its boilers and turbines business into a separate company.”
Mr Venkataramana added that “India’s ambitious 60,000 MW capacity addition has led to a shortage of power equipment suppliers leaving tremendous scope for a few more BHEL like companies.”
L&T has set up a joint venture with Mitsubishi Heavy Industries to manufacture supercritical turbines and boilers at Hazira. L&T is also pumping in USD 30 million in Hazira which houses its heavy engineering facilities. The facility is engaged in design and manufacture of fabricated equipment including those for oil, gas and refineries.
DMRC board approves Badarpur Faridabad extension link
It is reported that Delhi Metro Rail Corporation board has approved the extension of metro rail project from Badarpur to Faridabad. The 13.8 kilometer long elevated route from Badarpur to YMCA Chowk in Faridabad is estimated to cost around INR 2,000 crore, as per the detailed project report prepared by the Haryana government.
It is learnt that, work on the 20 kilometer long metro route connecting Central Secretariat with Badarpur is in progress and is expected to be completed by September 2010. The 15 kilometer long Delhi to Noida metro line is underway and expected to be operational by June 2009, while work on the 27 kilometer long Central Secretariat to Sushant Lok in Gurgaon will be completed by 2010.
At present, Delhi Metro covers about 65.1 kilometer in the capital and the network is expected to extend to 120 kilometer by the end of the second phase.
WB approves shipyard JV at East Midnapore
It is reported that the West Bengal Cabinet has approved a shipyard project that is to be set up as a JV in East Midnapore district of West Bengal. The project will entail an estimated investment of INR 2,000 crore.
Mr Amit Kiran Deb chief secretary of WB informed newsmen that state government owned Bengal Shipyard Limited would develop the project in partnership with the private sector Apeejay Surendra Group and Bharti Shipyard.”
Mr Deb added that “500 acres would be acquired for the project under the Mahisadal and Sutahata police stations of East Midnapore district. This acquired land would be used for the shipyard project.” Mr Deb said the state government would offer a comprehensive rehabilitation package to those displaced by the land acquisition for the shipyard.
NTPC plans JV with Bharat Forge for power plant components
BS reported that National Thermal Power Corporation is in negotiations with Bharat Forge to set up a JV to produce components for power plants.
Mr T Sankaralingam chairman of NTPC said that “There is a shortage of good quality forgings and pipes for the power industry in India and we want to meet the growing demand. We are in talks with Bharat Forge. The decision depends on our board of directors.” He added that it has informed the power ministry of its plans to enter the business.
Mr KD Mehru VP at Mumbai based stock brokerage Darashaw & Co said that “Backward integration through the forgings venture can help NTPC increase its revenue by up to INR 500 crore according to our estimate. The market needs all the equipment it can get.”
NTPC, which produces 28,334 MW of power, plans to raise its output to 51,000 MW in the next 5 years. It formed a JV with power equipment maker Bharat Heavy Electricals to build power projects and help reduce component shortages. The government estimates peg a 2 percentage point loss in annual growth to electricity shortages and plans to add 78,577 MW by 2012 to help beat peak hour shortages of up to 13%.
Tenughat to restart unit I with BHEL equipment
Ranchi Express reported that Tenughat Vidyut Nigam Limited, at the 22nd board meeting headed by its chairman and energy secretary Mr Aditya Swaroop, has decided that it will procure necessary equipment from the Bharat Heavy Electricals Limited to restart one its closed unit number 1.
It is noted that the number 1 unit of TVNL has been lying closed since April 13th 2007. To restart it, equipments worth INR 18 to INR 19 crore would be required. Under normal circumstances, BHEL supplies the ordered equipments in 4 to 5 months.
Pig iron prices forecast to reach USD 500 per tonne
YIEH reported that Taiwan’s import prices of pig iron are rising quickly, with increasing scrap prices are behind the price hikes.
The report added that in last month, scrap price kept going up primarily because of low scrap collection in winter season. Meanwhile international freight also on a upward trend.
The import price of pig iron in Taiwan is quoted at USD 455 to USD 475 per tonne C&F and it is likely to reach USD 500 per tonne C&F in next January.
Thach Khe iron ore feasibility study ends
VNS reported that the Viet Nam Steel Corporation and Russia’s Giproruda Institute have announced the results of their feasibility study on the Thach Khe iron mine project in the central province of Ha Tinh.
The feasibility study found that the Thach Khe mine has 370 million tonnes of ore at 60% concentration of iron. The site is stable and could be exploited at an ultimate capacity of 10 million tonnes of ore per year.
The exploitation, according to the study, could initially be carried out in two phases. The first phase would last four years, with the exploitation of 5 million tonnes of ore per year. In the second five year phase, this would be increased to 10 million tonnes per year.
The total capital required for the two phases would be in the range of USD 32 to USD 378 million.
Viet Nam Steel Corporation already has a plan in place for a metallurgy complex in Thach Khe. When the project is carried out, the corporation would have the capacity to produce iron billet and steel from ore exploited from the mine.
CSC approves modernization of 2 sinter plants
It is reported that during the 4th meeting of the 13th Board of Directors of China Steel Corporation held on December 20th 2007, it was decided to remodeling its No 1 and No 2 sinter plants.
This project will commence on January 1st 2008 and is scheduled for completion on January 31st 2011, totally 37 months. Total investment amount of the project will be TWD 1.367 billion.
The project can reduce the energy consumption rate per ton of sinter by 5%, as well as the air pollution, particulate emission from sintering operation.
This project aims to raise the blast furnace's operation rate and sinter production in order to satisfy the need of No 1 blast furnace after its inner shell revamp and volume enlargement after, its fourth revamp campaign’s production is scheduled for beginning at the end of 2010.
Steel furnace explosion injures 7 in Vietnam
It is reported that a furnace for refining steel in Hai Phong in the north of Vietnam exploded on Tuesday wounding seven workers. Three of the victims were still in a critical condition.
Mr Tran Thanh Hien director of the Van Loi Steel Joint-Stock Company, said that the explosion occurred when the employees were loading material into the furnace,
Mr Hien added the blast was possibly instigated by a fault in the gas system.
Taiwan's tube mills increase prices in January
Taiwan’s Chung Hung Steel has increased its prices by TWD 800 per tonne for January to February on December 27th 2007. Therefore, the domestic black pipe mills all plan to raise the price in order to offset the high raw material costs, as the expected rise is about TWD 500 per tonne.
The price of black pipe is projected to reach TWD 23,000 per tonne from TWD 22,500 per tonne in December. On the other hand, CHS will hike its price of galvanized product by TWD 500 per tonne.
PNA Group announces new location in New Boston
Atlanta based PNA Group Inc announced in mid December that its wholly owned subsidiary Infra Metals Co has been awarded tax and financing incentives from the Ohio Department of Development to develop, construct and operate a new facility at New Boston in Ohio.
The proposed location is a 50 acre site directly on the Ohio River. The proposed facility will be approximately 100,000 square feet under roof with an additional 150,000 square feet under hook, at an estimated cost in excess of USD 10 million. Construction is planned to commence at the end of the first quarter of 2008 with operations to expected to commence in the first quarter of 2009
The tax and financing incentives are subject to the negotiation and execution of definitive written documentation that is acceptable to both the Ohio Department of Development and Infra Metals Co.
PNAG is a leading national steel service center group that distributes steel products and provides value added processing services to our customers, which are largely comprised of fabricators and original equipment manufacturers, across a diversified group of industries including the non residential construction, machinery and equipment, manufacturing, oil and gas, telecommunications and utilities markets. The Company distributes a variety of steel products, including a full line of structural and long products, plate, flat roiled coil, tubular and sheet, as well as performs a variety of value added processing services for our customers.
American scrap export up in October
YIEH reported that in October 2007, America exported some 1.43 million tonnes of scrap, increased by 32.9%YoY as compared with October 2006.
The export from January to October was at 13.77 million tonnes, up by 32% YoY and the total export of this year is expected to be at 16.53 million tonnes. Divided by different kinds, there are 236,000 tonnes of H1 scrap, 23,000 tonnes of H2 scrap, and 502,000 tonnes of shredded scrap.
Among the total export in the first 11 months
1. Turkey accounts for 19.5% by importing 2.67 million tons, up by 42.9% YoY.
2. China followed by 2.09 million tonnes, decreased by 12% YoY.
3. Taiwan export was 1.32 million tonnes, up by 117.8% YoY.
Abifa foresees 3.7% growth in 2007
The Brazilian foundry industry's production and gross revenues are expected to increase 3.7% each this year versus 2006.
Mr Devanir Brichesi president of local industry association Abifa told BNamericas that "This growth forecast is considered small due to losses the sector took on exports. We are due to see sales abroad decline 6.7% in volume and fall about 2% in value compared to last year. Sales in the sector are strongly tied to the automobile industry."
He added that "Even with a loss in exports, we were able see growth in the foundry sector thanks to strong demand within Brazil.”
He added that “Meanwhile, 2008 is due to be a positive year for the Brazilian foundry industry, although the exchange rate will continue to have a negative impact on export. We believe it will be a good year and there's an expectation, based on talks among Abifa members of 7% growth next year in terms of revenues and production."
However the strong Brazilian currency could prevent the closing of new deals in the coming year, the executive said. The US dollar was worth 1.78 reais on Friday, having depreciated some 17% this year compared to the real.
Output came in at 3.09 million tonne last year while gross sales reached USD 6 billion. The real's appreciation versus the US dollar is taking a hit on exports. Foundry shipments to clients outside Brazil reached 710,900 tonnes last year and were worth USD 1.37 billion.
Among Brazil's main foundry companies are Tupy, Foseco and Teksid.
Colombian steel association launches quake resistant steel campaign
BNamericas reported that Colombian metallurgical and steel sector association Andi Fedemetal has launched a campaign to promote the use of earthquake resistant steel and control the import of illegal materials that do not comply with similar standards.
The report quoted Mr Juan Manuel Lesmes president of chamber as saying that local steelmakers manufacture bars that comply with technical and quality standards established by Colombian institute Iconotec and bars that enter Colombia legally must also meet the same requirements.
He added that "But there is steel smuggled into Colombia that doesn't meet the earthquake resistance standards so it's necessary to publicize the importance of using the appropriate bars.”
The chamber worked with a permanent advisory board that specializes in earthquake resistant construction to publish a manual on the issue, which is being handed out to steel distributors throughout the country.
Colombian steelmakers Sidenal and Hornasa recently expressed concern about steel entering the country from Venezuela, where it is purchased cheap and brought into Colombia without clearing import requirements.
Sidenal and Hornasa are located in Boyacá department and together produce over 750,000 tonnes per year of steel.
Brazil's pig iron export up in November
According to the statistics, Brazil exported 650,000 tonnes of pig iron in November 2007, up by 7.4% YoY as compared to November 2006.
Brazil exported of pig iron in November 2007
1. America imported 32.4 tonnes
2. China imported 65,000 tonnes
3. Thailand imported 57,000 tonnes
4. Australia imported 52,000 tonnes
Brazil exported some 5.49 million tonnes of pig iron in the January to November 2007 period, down by 2.2% YoY.
WCI gets financing boost from owner
WCI Steel Inc got a boost Thursday when its largest owner increased the company’s borrowing power, easing a credit crunch after a November 9 fire shut down its blast furnace. As per report, WCI will be able to borrow the full USD 150 million of a credit package after Harbinger Capital Partners Master Fund I Ltd replaced the current bank group led by Citigroup.
WCI said that the initial borrowing under the facility will carry an interest rate of 5% over the London Interbank Offered Rate, a commonly used benchmark known as LIBOR.
Harbinger received two year warrants to buy common stock for a penny a share equal to 25 percent of the company’s common stock. Harbinger will get fees and another warrant if WCI doesn’t repay the credit arrangement by April 1 and May 5, respectively, giving Harbinger the right to buy 40 percent of the company’s common shares. WCI added that if all warrants are issued and exercised, non Harbinger common share ownership will decline to 7.7% from 29.3%.
WCI Steel said that Harbinger agreed to waive until July 31 certain borrowing limits. Mr Tim Roberts a spokesman of WCI said that it had reached its limit of slightly more than USD 90 million. He said that the fire, which for 18 days cut off the company’s ability to make steel, reduced the amount of money owed by customers and inventory both items used to back the credit facility. The mill has returned to full operation.
Mr Leonard M Anthony president & CEO of WCI Steel said that ‘‘we appreciate the support of our largest shareholder to improve the financial position of WCI Steel. This amendment provides the company with substantial additional liquidity and the necessary flexibility. I am confident that with the increased liquidity, the support of Harbinger and working together with our customers, suppliers and employees, we can successfully implement solutions to the challenges.’’
WCI emerged from bankruptcy in May 2006.
Mr Forrest likely to overtake Mr Packer as richest Australian
It is reported that Mr Andrew Forrest CEO of Fortescue Metals Group may have become Australia's richest person due to a surge in his company's share price.
According to the report Fortescue Metals share price closed this week at AUD 8.47, up from AUD 5.75 the previous Friday. The West Australian newspaper reported that Mr Forrest's stake in the company would make him worth AUD 1.22 billion more than Consolidated Media Holdings' Director Mr James Packer.
Mr Packer's wealth was measured at AUD 7.25 billion earlier this year in BRW’s annual list of Australia's wealthiest people.
Fortescue claims to have the largest reserves of iron ore in Western Australia. It is developing The Pilbara Iron Ore and Infrastructure Project and will commence shipping ore from Port Hedland in the second quarter of 2008 and plans to sell 45 million tonnes of iron ore a year.
Hyundai Motors plans USD 11.72 billion investment in 2008
According to a report by the South Korean news agency Yonhap Hyundai Motor Co plans to invest KRW 11 trillion (USD 11.72 billion) next year in expanding its production and modernizing.
Hyundai and its subsidiary Kia Motors Corp, plan together to spend KRW 4.5 billion of which KRW 3.5 billion is to go toward research and development. About KRW 5.2 billion is to go toward building a new steel plant for the Hyundai Steel Co in south western South Korea.
Mr Chung Mong Koo chairman of Hyundai said that such a sum would represent a 57% increase from last year. He added that the group, which is the six largest automaker in the world raised its car sales in the third quarter 4.3% to nearly 1.9 million vehicles.
Vietnam’s inflation highest in 12 years
According to Vietnam’s General Statistical Office, Vietnam's inflation accelerated to the fastest since 1995, adding to pressure on the government to let the dong strengthen and make imported goods cheaper. Consumer prices increased by 12.6% in December 2007 compared with the same month last year.
The Southeast Asian nation's strengthening economic growth, spurred by joining the World Trade Organization this year, has drawn direct investment from abroad and foreign buying of Vietnamese stocks and bonds. The government yesterday widened the currency's trading band, a move that may rein in inflation.
Mr Jonathan Pincus Vietnam country economist at the United Nations Development Program office in Hanoi said that “Inflation is much more rapid in Vietnam than even in China, which most people think is overheating. The real culprit has to be the massive inflows of foreign exchange, which are bumping up the money supply.'' He added that Vietnam's inflation only trails that of Kazakhstan and Sri Lanka as the fastest of 17 countries in Asia tracked by Bloomberg. China's consumer prices rose by 6.9% in November.
The report showed that leading the year on year gains, the quickest since 1995, food and foodstuffs rose 18.9% and construction materials surged 17.1%. Vietnam is importing more building materials needed for a real estate boom that's fuelling the economic expansion.
The inflows of foreign capital are challenging the government's policy of devaluing the currency to keep exports cheap against Vietnam's competitors. The central bank hasn't allowed the dong to gain since 1995. The State Bank of Vietnam yesterday expanded the daily trading band for the dong to 0.75% after the government asked authorities to take steps to slow inflation. Vietnam controls the exchange rate by allowing the currency to trade a fixed amount on either side of a level it sets each day.
Central bank Governor Mr Nguyen Van Giau in a telephone interview today from Hanoi said that “In order to constrain inflation, we are consdering a number of measures including changing interest rates, the reserve requirement for banks, and the dong exchange rate.” But he declined to give further details.
He added that the government aims to keep inflation below the economic growth rate, which accelerated to 8.2% through the end of September from a year earlier, the fastest in a decade. The GSO may release 2007 figures this week. The government expects economic growth to quicken to more than 9% next year.
Kaohsiung Port sets new handling record
It is reported that Taiwan's port of Kaohsiung has set a new handling record when it surpassed the 10 million TEUs mark. The cross into unprecedented territory occurred when Ever Ursula, a container ship owned by Evergreen Marine Corporation, offloaded over 5,000 containers at the port.
Officials at the Kaohsiung Harbour Bureau said that the total number of containers handled this year is expected to reach 10.2 million TEUs by year end an increase of 4.4% YoY. An expansion project at the port is currently underway to boost the port's handling capacity, which was designed to handle a maximum capacity of 10 million TEUs.
It said that the first phase of the construction of a new 16 meter deep water container terminal, should increase the port's handling capacity by two million TEUs a year. The first of four 375 meter wharfs is scheduled to be operational by 2011, and the rest by 2013.
Kaohsiung port was the world's sixth largest container port when it handled a record 9.8 million TEUs last year. Despite hitting new highs this year, it is unlikely to retain its spot as Rotterdam port has overtaken Kaohsiung when it hits 10 million TEUs in November.
New Zealand home construction rises
It is reported that the New Zealand's residential building accelerated in the third quarter, suggesting construction may help economic growth exceed.
Statistics New Zealand in a report released in Wellington said that the residential building excluding inflation gained by 5.1% from the second quarter when it rose by 3.9%. Total construction including commercial work increased by 2.1% after contracting in the second quarter.
Mr Alan Bollard Governor of Reserve Bank forecast that the USD 102 billion economy grew 0.6% in the third quarter. He added that a slowdown in property sales and approvals to build new houses hasn't yet slowed construction, which is set to decline next year.
Mr Bollard forecast a 5.9% decline as high borrowing costs curb demand for new homes. He raised interest rates four times between March and July to a record 8.25%. Mr Bollard said that the rates are likely to stay high for longer because of inflation pressures.
Mr Doug Steel, economist at Westpac Banking Corp in Wellington said that “It was a fraction on the high side and seems to go against the trend in consents. Over the next six to nine months, we expect a contraction in construction.”
Westpac is forecasting a 10% slump in home construction in the year ending March 31st 2009.
The Real Estate Institute also said that House sales in October slumped 23% YoY from a year earlier and commercial construction dropped by 2% in the third quarter following a 7.6% decline in the three months to June 30.
DGCX eyes trading larger steel futures
Khaleej Times reported that Dubai Gold and Commodities Exchange is planning to introduce a larger tradable steel futures contract once there is sufficient demand in the market. It is banking on demand from the construction industry in the world’s biggest oil exporting region where more than USD 1 trillion worth of infrastructure projects are in the pipeline.
Mr John Short DGCX director of steel and base metals said that “A decision was taken earlier to proceed first with a mini contract and introduce the 100 tonne mother contract, perhaps 6 to 12 months after. We can introduce both a mother contract and or a block trading facility. There is no firm date, but if we can get it trading before summer, we will.”
Mr Short said that “There is a view that steel participants only just getting used to on market trading may find the concept of off market block trades a little demanding. It is all about how the communication of the tool is managed and whether the target market has the skills as fluency of understanding to use the products.”
DGCX launched the first international tradable steel contract for rebar, used in construction in October 2007. Each contract is for 10 tonnes of grade W460 rebar of 12 meters.
Turkish rebar price to cross USD 700 mark
It is reported that the rebar price has reached historical high in Turkey and is hovering around USD 700 per tonne. The price is further expected to go up at the beginning of next year.
ADPC secures USD 300 million loan for Khalifa port project
Khaleej Times reported that Abu Dhabi Ports Company has secured a USD 300 million financing agreement from the National Bank of Abu Dhabi for the construction of its Khalifa port project.
Reports said that ADPC is still structuring long term project finance facilities while the current loan from the state bank will fund immediate development expenses for first phase construction. The Khalifa Port and Industrial Zone includes plans for a container and industrial port. First phase construction is slated for completion by the end of 2010.
The agreement signed between DP World and ADPC also saw a contract for DP World's sister company Economic Zones World to operate an adjoining 25 square kilometers free trade and logistics zone.
DP World currently has a management services agreement for the port of Mina Zayed in Abu Dhabi and this latest involvement with the Khalifa port project represents the next stage in its growing relationship with ADPC.
Saudi exports to reach record USD 240 billion in 2007 - Report
According to a report issued by Saudi Arabian Monetary Agency, Saudi Arabia’s total exports of goods and services are expected to grow by 6.7% in 2007 to reach SAR 900.8 billion while, non oil exports of goods are expected to grow by 24.9% to SAR 106.8 billion.
SAMA said that Saudi’s trade balance in 2007 was estimated to record a surplus of SAR 555.6 billion with an increase of 1.1% compared to the previous year. Current account is estimated to record a surplus of SAR 344.4 billion in 2007 compared to SAR 371 billion in 2006. It added that Saudi’s exports in 2006 amounted to SAR 791.34 billion up by SAR 114.2 billion or 17% YoY as compared to the previous year when the figure was SAR 677.14 billion.
SAMA pointed out that non Arab and non Islamic Asian countries accounted for 50% of the Kingdom’s exports with an increase of 21%. Japan topped the list of countries that imported Saudi products, mainly crude and petrochemicals, with its imports amounting to SAR 130.37 billion or 17% of the total adding that its imports from Saudi Arabia rose by SAR 24.79 billion.
Saudi’s exports to non Arab African countries accounted for only 2% of its total exports with South Africa receiving products worth SAR 12.6 billion, followed by Kenya receiving products worth SAR 2.07 billion.
SAMA said that the fluctuation in oil prices during 2006 had a big impact on the total value of Saudi exports. However, it noted a 9% drop in the total weight of exports from 469,306 tonnes in 2005 to 429,282 tonnes in 2006.
IFC to finance power project in Pakistan
Dawn reported that International Finance Corporation has signed an agreement to support Engro Energy’s combined cycle power project, which will help meet Pakistan’s increasing energy needs.
The Engro Energy project includes a 217 MW base load plant which will be built in Sindh. The combined cycle power plant will generate electricity using low quality gas, which would otherwise be flared.
Mr Rashad Kaldany director for infrastructure of IFC said that “The project will help Pakistan meet rapidly growing demand for power and contribute to the country’s economic growth. The project will also help reduce carbon emissions by avoiding the flaring of gas.”
The highly efficient technology will reduce the average cost of power generation. Substantial investments in power generation in the country are needed to ease serious power shortages, a situation which could deteriorate further in coming years.
The project is being developed by Engro Energy Limited, a subsidiary of Engro Chemical Pakistan Limited. IFC’s USD 59.5 million financing package will consist of USD 56.9 million in loan and USD 2.6 million in equity. Other contributing development financial institutions include DEG, FMO, OFID, Proparco and Swedfund.
SCAN secures more offshore work in Pakistan
SCAN Geophysical ASA confirmed that it received from BP GEMS an additional 777 miles of 2 dimensional work offshore Pakistan, increasing the total work program to around 6,990 miles.
Mr Kjell Karlsson VP of sales and marketing for SCAN said that "We are pleased that BP GEMS chose to award us this additional work. We recently re commenced acquiring the original 5,903 mile 2 dimensional program and, with this additional work, our vessel, the MV Geo Searcher, will be engaged for the next 4 months or so."
DED issues 12 industrial licenses including steel units
According to a comprehensive report prepared by the economic affairs division at the Dubai Department of Economic Development, it has issued 1,144 licenses in November 2007. The majority of these were issued in the commercial sector with 936, followed by the professional sector with 182, tourism with 14 and industrial with 12.
General trade led the list of the top 10 licensed activities in the commercial category with 105 licenses issued, followed by watches and accessories with 103, ready made garments with 96 and real estate brokerage with 93.
Steel manufacturing, building metal products and kitchen cabinets & fixtures led the list of activities in the industrial category with 2 licenses issued for each. Further detail on steel manufacturing units is not yet known.
In November 2007, DED issued 19 new licenses to branches of foreign firms from India, South Korea, Japan, Great Britain, Spain, Germany, China and elsewhere.
Saudi Q3 2007 profit of listed companies surge to SAR 23.26 billion
According to the quarterly corporate update 3 report by Al Rajhi Financial Services Co, the profits of the Saudi listed companies jumped from SAR 20.77 billion in the third quarter of 2006 to SAR 23.26 billion in the same period this year.
The rise is skewed by the figures of the Kingdom Holding Company, whose profits were not included in last year's figures. For the nine months, the total profit increased by 8% from SAR 59.50 billion in the first nine months of 2006 to SAR 64.06 billion this year.
The report said that "That is an improvement over the first and second quarter of the year 2007 and is an indication of a recovery in the corporate performance." It added that for the fourth quarter, the direction of the market would largely depend on the companies that are able to maintain their margins and the quantum of oil money which is directed toward the capital market. Oil prices are quoting at their all time highs, even though it is the government, which benefits the most; still some liquidity is expected to flow into the capital markets.
The banking sector remains a drag on overall market. Bank profits in the third quarter of 2007 reached a total of SAR 6.30 billion down by 7.4% YoY as compared to SAR 6.80 billion at the same period of last year.
Chinese CRC export prices to move up in January
It is reported that Chinese CR export prices are set to pick up substantially in January due to anticipated strong rise in domestic price and steady overseas demand.
Domestic scenario
Chinese domestic market prices remained firm as there is less supply on the market. There is reported to be little availability of 1.0mm cold rolled sheet in Shanghai. Anshan Steel's 1.0 CR sheet is being offered at CNY 5580 per tonne, 1.2mm-2.0mm CR sheet at CNY 5500 per tonne while 1.0mm CRC remain at CNY 5400 per tonne.
MySteel has forecast that “If we take price for 1.0 CR sheet by Anshan Steel as benchmark, it is going to approach CNY 5900 per tonne to CNY 6000 per tonne after topping CNY 5600 per tonne.”
Export scenario
Now 1.0mm CRC is being offered at around USD700 per tonne to USD 705 per tonne ob FOB basis, up by USD 10 to USD 15 per tonne from middle December.
Domestic increase in early January would certainly lead to increase in export offers.
On the other hand, overseas buyers are expected to import more CRC from China to replace cold rolled strip purchase for pipe making. It does not pay to buy Chinese CR strip now since it would be imposed a 15% export tariff effective January1st 2008, while there is still a 5% export rebate for exports of cold rolled steel coil.
Guangzhou JFE Steel kicks off CR project
Guangzhou Daily reported that construction of a 1.8 million tonne cold rolled steel plate project kicked off in the Guangdong.
The CNY 6.35 billion project is backed by Guangzhou JFE Steel Plate Co Limited, a JV between Guangzhou Steelworks and Japanese steel giant JFE. Located at the mouth of the Pearl River in the city's Nansha District, the project covers an area of more than 52.68 hectares and is expected to start operation in 2010.
The project will mainly produce quality steel sheets for cars, high grade electrical appliances and the building industry. In addition to sales on the mainland market, its products will also go to Southeast Asian nations and the rest of the world.
An official from the Guangzhou Municipal Development and Reform Commission said the project has great significance for the future development of the city's steel industry. He added that "It will help narrow the big steel product supply gap in the prosperous Pearl River Delta region and help Guangzhou Steelworks further improve its industrial structure."
Japan's JFE has advanced technologies in steel production. It is the largest cold rolled steel plate project in the province, where heavy industry lags behind light industry.
Guangdong, where the electrical appliance and auto industries have seen sustained growth, is one of the mainland's major cold rolled steel plate consumers.
2nd round of obsolete capacity elimination pact signed
National Development and Reform Commission has signed a written commitments for the second round of obsolete steel capacity elimination at a conference with 18 provinces or municipalities namely Tianjin, Inner Mongolia, Jilin, Heilongjiang, Anhui, Fujian, Hubei, Hunan, Guangdong, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Sha'anxi, Gansu, Qinghai and Ningxia as well as the country's biggest steelmaker Baosteel Group.
Representatives from 10 other provinces or municipalities, namely Beijing, Hebei, Shanxi, Liaoning, Shandong, Jiangsu, Zhejiang, Henan and Xinjiang also sits in on the conference.
As per the commitments, 573 enterprises in the 18 provinces will wash out 49.31 and 36.1 million tonnes respectively of obsolete iron making and steelmaking capacity by 2010. Local governments have started the work in varying degrees.
Ms Ma Kai At director of NDRC, while addressing at a state council conference held earlier on April 27th 2007, revealed that 10 provinces or municipalities, namely Beijing, Hebei, Shanxi, Liaoning, Jiangsu, Zhejiang, Jiangxi, Shandong, Henan, Xinjiang, had signed first round of written commitments to shut down and eliminate outdated iron making capacity and obsolete steelmaking capacity of 39.86 million tonnes and 41.67 million tonnes respectively in the next 5 year, with 22.55 million tonnes and 24.23 million tonnes to be closed down by the end of this year.
Obsolete capacity elimination campaign has made progress. By the end of November the above mentioned steelmaking provinces or municipalities had eliminated 29.4 million tonnes and 15.21 million tonnes of outdated iron making capacity and steelmaking capacity. Zhejiang, Jiangxi, Henan and Shandong had fulfilled the target. Shanxi, who shouldered the heaviest burden, had washed out 9 of its targeted 10 million tonnes as well as 11.95 million tonnes of unlisted iron making capacity. Shougang Group will also close down 4 million tonnes of iron making and steelmaking capacity in the year end during its relocation.
In the meanwhile energy saving and emission reduction are also pushed forward. During the first ten months of this year, to produce 1 ton steel, large and medium size steelmakers consumed 624.4 kilograms of coal equivalent and 5.46 tonnes of new water, down 2.32% and 16.24% respectively from last year. Emission of sulfur oxide, smoke dust and industrial dust dropped 0.4%, 2.78% and 3.11% respectively.
Despite the progresses, more efforts should be made to realize elimination target of 89.17 and 77.76 million tonnes respectively of obsolete iron making capacity and steelmaking capacity by 2010 and 37.06 and 38.2 million tonnes respectively in 2007.
Danieli Corus to supply BF equipments for Shougang’s BF No 3
Danieli Corus has signed three contracts with Shougang Iron & Steel Company for supplies for the new BF No 3 at their Qian'an plant in Hebei Province.
These contracts are for
1. Injection part of a Pulverized Coal Injection System
2. 4 Hot Blast Stoves with internal combustion chamber, Hot Blast Main and Bustle Pipe
3. A Cyclone Dustcatcher for the furnace's gas cleaning system
The new, 4,000 m³ inner volume Blast Furnace No 3 will be blown in during the middle of 2009 and is an important extension for Shougang Qian'an.
China unveils draft investment guide at NDRC website
Chinese government has unveiled a draft investment guide aimed at phasing out resource intensive industries in line with the nation's development policy. The government is seeking public opinion on the revised 45 page guide, which can be downloaded from the National Development and Reform Commission website.
The draft lists the industries and fields that are encouraged, limited or prohibited. For example, scientific research on improving crop yields, construction of nuclear power stations and psychological consulting are on the encouraged list, which includes 1,000 items. Outdated and small-scale coal mining, power generation and iron and steel projects are prohibited.
The new guide, who will be approved by the State Council after the feedback process, will replace the current 2005 version.
A source from the commission's industrial policy department said the revision was part of a government push for an energy saving, environment-friendly society. He said “"The most evident change is that we have listed many outdated industrial development methods under limited and prohibited.”
The source expects the revised investment guide will meet the demands of the nation's new Scientific Outlook on Development, which was written into the national constitution in October. He added that “"This was the guide for our revision of the investment lists.”
The central government released an updated guide for industries open to foreign investment last month, which replaced the 2004 version. NDRC source said foreign investors should base their activities on the guide. It encourages foreign investors to help develop service outsourcing and modern logistics. They are also invited to join efforts to promote clean production, renewable energy use and environment protection. He added that “The manufacturing sector is open to foreign investment in hi tech, equipment manufacturing and new materials industries. But investment in traditional manufacturing industries in which China has mature technologies and relatively strong production capacity is not encouraged.”
IMX Resources and Tonghua Mining ink ore supply pact
It is reported that Australian emerging base metals and iron ore miner IMX Resources has signed a heads of agreement to supply magnetite and copper ore from its South Australian mine to Chinese steelmaker Jilin Tonghua Iron & Steel (Group) Mining Co Ltd (Tonghua Mining).
In its first deal in Australia, Tonghua Mining will buy the entire production of Cairn Hill ore approximately 1.2 million tonne to 1.4 million tonnes per year for three years at market related prices. IMX expects to make its first shipment in the fourth quarter of 2008.
Tonghua Mining also agreed to pay AUD 13.93 million Australian dollars for a 9.99% stake in IMX Resources through a share placement.
Mr Duncan McVain MD of IMX said” The partnership plays a great significance for the Cairn Hill project, it would make its first shipment in the fourth quarter of 2008.”
The steelmaker plans to build a facility in China to process the Cairn Hill ore into high grade magnetite concentrate and a copper &gold concentrate.
Tonghua Mining is 62.3% owned by Tonghua Iron & Steel (Group) Co Ltd with the remaining 37.7% held by Beijing Huaxi Jianlong Mining & Science Pty Ltd.
Chinese industrial profits up by 37% YoY in 11 months
National Bureau of Statistics said that Chinese industrial firms saw net profits soar 36.7% YoY in January to November 2007, driven by its double digit economic growth and strong consumer spending. Combined profits at the industrial companies with annual sales of at least CNY 5 million reached CNY 2.295 trillion in January to November period.
Total sales of the companies rose by 27.6% to CNY 35.452 trillion. The state owned companies earned CNY 966.2 billion in profits during the period up by 29.6% YoY. Profits at overseas funded firms, including those invested by Hong Kong, Macao and Taiwan business people, jumped by 34.3% to CNY 612.6 billion. Private businesses profit surged 50.9% to CNY 400 billion.
Transport vehicle manufacturing sector profits climbed 68.7% and those with the steel, construction materials and power generation were up 47.2%, 63.1% and 39% respectively. The petroleum processing and coking industry earned CNY 23 billion in profits during the period, compared with CNY 41.7 billion in losses during the same period last year.
Changgang succeeds in trial production of 200×200 H beams
It is reported that Changgang has succeeded in trial production of 200×200 H section steel and had consumed feed of about 100 tonne on December 21st 2007.
Fewer specifications have been the bottleneck for production and sale of H section. With sale company managed to gain an order of 2,500 tonnes of 200×200 H section, the H section steel plant tried hard in the trial production, and succeeded, which makes a good start for the production of 200×200 H section steel, but also gains experiences for other H section development.
The materials have a good quality, with no crack nor flange, but the problem of lower atomizing cooling due to bad water quality steel exists. The officer from H section steel plant said they would try to solve the problem and fulfill the order as soon as possible.
200×200 H section is another series of steel products after H400×200 and H250×250, two catena and five specifications, which marks new progresses on H section steel developing, and also means new markets for H sections.
PetroChina to invest CNY 16 billion for Turkmenistan gas pipeline
China Daily reported that PetroChina Co Limited, the listed arm of China National Petroleum Corporation and another CNPC subsidiary will invest a combined CNY 16 billion to build a gas pipeline from China to Turkmenistan.
Official of PetroChina Co Limited said that "PetroChina and China National Oil and Gas Exploration and Development Corporation will each inject CNY 8 billion in cash into CNPC Exploration and Development Co Limited."
CNPC said in August 2007 that the pipeline would be designed to take 30 billion cubic meters of gas a year. The total project investment is estimated at USD 7.31 billion. Turkmenistan has an estimated 23.1 trillion cubic meters of gas reserves and plans to produce up to 240 billion cubic meters a year.
Earlier this month, CNPC has signed a 30 year contract with US Chevron Corp to jointly develop a large gas field in Southwest China's Sichuan Province. The 1,969 square kilometer gas field, located in the northeastern part of Sichuan, has proven reserves of 175.97 billion cubic meters, making the CNPC Chevron tie up China's largest inland exploration project involving a foreign interest.
CNPC Exploration and Development is cooperating with other companies to build a pipeline to transport natural gas purchased by China from Turkmenistan. China plans to boost its natural gas production 50% by 2010 to meet increasing demand.
China's futures market turnover soared to historic CNY 40 trillion
Xinhua reported that China’s futures market witnessed breakneck growth in 2007, with total turnover surpassing gross domestic product for the first time. The combined turnover of China's 3 domestic futures exchanges hit CNY 40.974 trillion in 2007 up by 95% YoY over 2006.
The aggregate trading volume of the 3 exchanges namely Dalian Commodity Exchange, Shanghai Futures Exchange and Zhengzhou Commodity Exchange was 728.46 million contracts up by 62% YoY over the previous year. More than half of the transactions were completed on the Dalian exchange, while the turnover of the Shanghai exchange reached CNY 23 trillion, making up over 50% of the total.
Mr Ma Wensheng president of China International Futures Co Limited said that the industry's rapid development should be attributed to China's economic performance and better market regulation. He added that in 2007, there were 4 new contracts namely Shanghai traded zinc, Zhengzhou-traded rapeseed oil, and Dalian listed polyethylene and palm oil.
Industry sources said that spring 2008 might be a landmark season for the futures market, as gold is expected to be listed in Shanghai and the long-awaited stock index futures may be rolled out.
Coking coal prices in Russia reach record levels
It is reported that the spot prices for coking coal in Russia has reached USD100 per tonne levels, setting an absolute maximum for several years. As per experts, they are likely to further go up.
Two years ago, when the raw prices started rising as a result of growing steel production they remained below USD100 per tonne even for the most valuable grades of coking coals.
Experts believe that prices are growing mostly because of accidents at Uliyanovskaya and Jubileynaya mines of Yuzhkuzbassugol and Komsomolskaya Mine of Vorkutaugol. Uzhkuzbassugol reduced its coal mining almost by a quarter during ten months of 2007and Vorkutaugol decreased its coal mining by 12.5%.
NLMK makes an offer to buy out shares of its subsidiaries
On December 29th 2007 NLMK submitted an offer to the shareholders of OJSC Stagdok, OJSC Dolomite and OJSC Altai-koks to buy out the shares of these companies. The offer aims at improving efficiency in managing those subsidiaries and is performed under the Russian Federal Law.
Based on independent valuation, acquisition price for the shares will be
1. OJSC Altai-koks – RUB12.53 per share
2. OJSC Stagdok – RUB 3,602.03 per share
3. OJSC Dolomite – RUB 754.74 per share
CJSC Investment Company "Libra Capital" will serve as an Agent for the acquisition of shares. The Agent will establish Share Purchase Agreements with each shareholder, willing to sell its shares.
The shares are to be transferred to NLMK’s accounts within 15 days from the acceptance of the offer by the Seller.
The payment for shares under acquisition will be made by bank transfer within 15 days from the date of credit entries on NLMK’s account in shareholder registers of the above companies.
IUD secures USD 100 million loan from IFC
Ukranian Journal reported that the International Finance Corporation will lend USD 100 million to the Industrial Union of Donbas and arrange a syndicated loan worth USD 250 million for modernization, improvement in competitiveness and implementation of environmental programs at the group's enterprises.
The IFC board of directors approved the project on December 20th 2007 and the documents under the project are to be signed.
RUSTEEL becomes official representative of Hyundai Hysco
FIS reported that RUSTEEL is the first Russian metal trading company that obtained the certificate of exclusive representative of South Korea's leading producer of zinc coated steel with polymer coating Hyundai Hysco.
By this certificate Hyundai Hysco provides exclusive supply terms to RUSTEEL. The latter is cooperating with all leading Asian producers of metal products to provide a broader range of services and products.
The third international conference 'Zinc-coated and painted roll: tendencies in production and consumption 2008' will be held on February 28-29 in Moscow and will be dedicated to the current tendencies in this market.
Mr Medvedev pledges USD 12 billion for national projects in 2008
Bloomberg reported that Russia’s first deputy prime minister Mr Dmitry Medvedev said the government would increase spending on the national projects by 15% to USD 12 billion in 2008.
Mr Medvedev told a cabinet meeting that the government would boost spending on the four national projects housing, health care, education and agriculture to RUB 300 billion (USD 12 billion) in 2008. This year, the country allocated RUB 260 billion to this program.
Mr Medvedev said that "Investment into human capital has proved to be one of the most effective. The national projects paid back not only in terms of development of these industries but the economy and society on the whole.”
Mr Medvedev is in charge of the national projects, which were launched in 2005. The role, in which he has featured regularly on state television, has helped boost his profile. He told the government meeting that the national projects would have to be integrated into a larger program to develop the country until 2020. Education, agriculture and health would remain the government's priorities.
Mr Medvedev said in March that the national projects could be wound up after three years, at the end of 2009. Mr Putin first announced the projects in September 2005 and in November moved Mr Medvedev, then head of the presidential administration, to the Cabinet to oversee them.
Belon Group to produce over 2 million tonnes of coking coal in 2007
FIS reported that Belon Group extracted 4.2 million tonnes of coking and energy coals in January to November 2007 period. Its annual production is estimated at 4.7 million tonnes, up by 40% YoY.
Belon said that production growth is due to the accelerated production growth rates at all enterprises of the Group. Production of energy coals totaled 2.4 million tonnes in January to November 2007 period, up by 64% YoY.
It said that a significant growth was posted by 'Listvyazhnaya' mine after modernization and implementation of high productivity extraction complex. Production of coking coal in January to November 2007 period totaled 1.8 million tonnes, up by 16% YoY.
Russian GDP up by 7.7% YoY in 11 months
According to Russian Economic Development and Trade Ministry in its latest economic review, Russian GDP in November 2007 up by 7.4% YoY and 7.7% YoY in January to November 2007 period.
Russia's electricity net profit down by 31% YoY in H1 of 2007
RIA Novosti reported that Unified Energy System of Russia net profit calculated to International Financial Reporting Standards decreased by 31% YoY in January to June 2007, to RUB 18.7 billion (USD 757 million).
Unified Energy System in a statement said that "Net profit decreased due to an additionally charged deferred tax on income from the sale or the planned sale of government stakes in thermal power generating companies (wholesale generating companies and territorial generating companies) held by UES.”
The statement added that proceeds from the sale of government stakes will go to finance the investment programs of the Federal Grid Company and the Hydropower Company.
Gazprom plans to repurchase all gas under Sakhalin-1 project
Mr Alexander Ananenkov deputy chairman of Gazprom announced that the gas will be used for gas supply to Russia's Far Eastern territories in middle term perspective.
According to Mr Ananenkov, the gas pipeline from Sobolevsky deposit to Petropavlovsk-Kamchatski is to be constructed by 2010 and extended to Vladivostok in 2011.
It added that a branch to the Jewish AR will be built from the Khabarovsk-Vladivostok section of the pipeline. Gazprom is set to develop two gas production centers in the Far East Federal District in Sakha (Yakutia) and on Sakhalin. The price of gas for Russian consumers will be 30% to 40% lower than for the world's consumers due to the lower transportation costs.
