Export duty on iron pellets may be withdraw – Report

TNN recently reported that union finance ministry is planning to withdraw the INR 300 per tonne export duty on iron pellets.

The report cited an official source as saying that “Pellets also got covered under the INR 300 per tonne export duty imposed by the finance ministry in the last year’s Budget though there is value addition compared to iron ore. This may be corrected this year to give positive signal to the industry that value addition would be rewarded.”

Indian government imposed an export duty on iron ore at the rate of INR 300 per tonne for iron ores having 62% or more iron content and INR 50 per tonne for ores with less than 62% iron content. Though there was no formal proposal to impose duty on pellets, under a new classification of the Customs department, pellets also fell under the category of minerals covered under higher level of export duty.

This move would provide relief to Indian pallet exporters like JSW, Essar Steel and Kudremukh Iron Ore Company Limited. But 6 to 7 new pellet plants are in pipeline and several mining and steel companies are also looking at setting up pallet plants in India. Lower duty on pellets would encourage pelletization of iron ore within the country that could be used by domestic steel industry and the surplus could be exported.

CIL may spend INR 1,800 crore on coal imports in 11th plan

According to Coal India Limited’s latest estimates, it will have to spend around INR 1,800 crore for importing over 200 million tonnes of coal valued at current international prices to meet domestic demand during the 11th Five Year Plan period.

The imports are necessitated due to a number of letters of assurance issued by the coal ministry recently. The letters of assurances have been issued to different independent power producers, captive power producers, cement and sponge iron units.

CIL’s estimates, worked out on the basis of applications received by way of letters of assurances issued to different coal consumers, reveal that the total domestic coal demand during the 11th plan period would be around 773 million tonnes as against the projected production of 520 million tonnes. It has received 400 odd applications for the 11th plan period, taking the total coal demand figure to around 773 million tonnes. This leaves a shortfall of over 200 million tonnes to meet domestic requirement.

Highly placed CIL sources told BS that “A necessity for imports is genuinely felt if actual demand and supply are taken into consideration during the 11th plan. Talks on imports have just begun and we have to work out the issue in the shortest possible time to cater to requirements.”

The imports would come mostly from Indonesia, South Africa and Australia. According to CIL estimates, the major part of the domestic demand for coal would come from power plants, taking up about 533 million tonnes, followed by sponge iron, cement and captive power units.

Indian major ports handling in 9 months up by 12.5% YoY

It is reported that India’s 12 major ports have a combined throughput of 378.7 million tonnes during April to December 2007 period up by 12.5% YoY as against 336.7 million tonnes in April to December 2006-07. Container traffic increased to 665.1 million tonnes from April to December 2007 as against 532.9 million tonnes during April to December 2006-07.

The tentative numbers are as under

In million tonnes

In million tonnes

BC Jindal Group aiming for 5,000 mw in 4 years

PTI reported that B C Jindal Group’s Jindal India Thermal Power is planning a power generation capacity of more than 5,000 MW in 4 years at an investment of INR 20,000 crore.

Jindal India Thermal Power is planning to set up the 4,300 MW pit head based projects in the coal rich states of Orissa, Chhattisgarh and Madhya Pradesh. It is planning a 2,000 MW project in Madhya Pradesh and 1,200 MW plant in Orissa. It is also proposing to venture into hydel power production with plans to establish a 1,000 MW project in North India at a cost of INR 6,000 crore.

Mr Punit Gupta director of Jindal India Thermal Power said that “The funding for the projects would be done in a debt equity ratio of 80:20. We expect 15% to 18% return on investment for these projects.”

Mr Gupta said that “In Chhattisgarh and Madhya Pradesh, the states have the first right to purchase of 30% of the power, while in Orissa it is 25%.”

Jindal India Thermal Power has appointed SBI Capital Markets Ltd for syndication of loans for the projects.

MP inks 61 MoUs at Jabalpur investor meet

It is reported that Madhya Pradesh government has signed 61 MoUs that would bring investments to the tune of INR .568.3 billion (USD 14.3 billion) to the state at the two day investors’ meet at Jabalpur.

Out of the total number of 61, 9 MoUs worth INR 9 billion are for the agriculture sector, 5 worth INR 246 billion for the energy industry and 3 worth INR 3.5 billion for the IT sector. The other 44 MoUs worth INR 300.6 billion were signed for investments in various sectors such as steel and power, food processing, mining of stones and minerals and cement, iron ore, energy appliances, sponge iron, aluminum and manganese processing, sugar, waste recycling and granite.

Some of the MoUs are as under

1. DB Power Limited signed a MoU for 1,000 MW power plant worth INR 60 billion at Shahdol district

2. Sanghi Energy Limited signed a MoU for 405 MW power plant worth INR 16.2 billion at Satna.

3. Mysore Cements for the expansion of its existing plant at Damoh at an investment of INR 8.9 billion

4. Sandhya Prakash Pvt Limited to set up a cement plant in Satna district at an investment of INR 7 billion

5. Associated Cement Companies for investing INR 1,200 crore at Katni in Jabalpur district

6. Euro Brand Industries for setting up of iron ore based industry at Sihora in Jabalpur at a cost of INR 11 billion.

7. Bhushan Steel Limited for setting up 1 million tonne coke oven plant and 5 million tonne cement plant at an investment of approximately INR 4000 crores in phases

Madhya Pradesh government had invited more than 700 industrialists from within and outside the country. Of them, about 300 arrived here to participate in the meet on its first day, out of which more than 170 were from outside the state. This is the third investors’ meet organized by the state government in the past two years. The previous meets at Khajuraho and Indore have already attracted MoUs worth INR 105,000 crore and INR 114,200 crore respectively.

East Coast Railway likely to miss 2007-08 targets

It is reported that East Coast Railway is struggling to achieve the targeted freight traffic of 94 million tonnes set for 2007-08 as the throughput till January 2008 has showed a growth of 11.6% to 76.14 million tonnes and to achieve the targeted traffic, it has to handle an around 18 million tonnes in February 2008 and March 2008.

As per report, the freight movement on the 450 kilometer long Kirandul Kottavalasa line, used for transporting iron ore from Bailadila mines to Visakhapatnam, has been hit several times during the current year mainly due to the Maoist problem. Now also there are restrictions on movement of rakes on the KK line in view of derailment and the Maoist threat, with the result only 6 to 7 rakes are now being moved per day as against the normal 14 to 15.

In normal situation, the annual throughput of the KK line can be as high as 15 to 16 million tonnes. The throughput this year, it is feared, will be much less.

The report quoted an official as saying that “We have been forced to withdraw rakes from the K-K line and deploy them on other circuits though such an exercise is unlikely to compensate fully the shortfall in traffic.”

Another factor which has been of concern is the not so satisfactory un loading of imported coal at Visakhapatnam port. The target for the month has been set at 103 rakes total but only 26 rakes have been loaded so far.

East Coast Railway handled 83.92 million tonnes in 2006-07.

Government likely to grant sops for mega power projects

Union power ministry proposes to further rationalize the existing mega power policy under which additional concessions may be given. This will be available to companies creating capacities of 1,000 MW and above for thermal power and 500 MW and above for hydel projects.

Mr Sushil Kumar Shinde union power minister, while addressing at the sidelines of the ‘Electricity East 2008’ said that, for the North East, it will be hydel projects of 330 MW and above. He added that out of the 9 projects proposed 3 had been sold and efforts were on to bring at least one unit within this Plan period.

On the new hydro policy, he said in order to give some incentives to companies investing in the North East, it had been decided to allow 40% of the generation to be sold to merchant power producers. With orders being placed for 65,000 MW already, the union power ministry was confident of completing all orders for additional capacity creation in the power sector in the 11th Plan by the end of the Plan period.

Mr Shinde reiterated his concern over constraints in supply of power equipment, especially in view of the government’s move to add huge generation capacities during the 11th and 12th Plan.

Meanwhile, the uncertainties continue over the proposed IPO of Rural Electrification Corporation Limited. The IPO is slated to open on February 19th 2008.

GMDC to set up power plants in Chhattisgarh and Orissa

BL reported that, Gujarat Mineral Development Corporation, through its proposed JVs and sound business model, has emerged as the state’s power manager in other states. GMDC will have 26% equity in all of these JVs.

GMDC is setting up 3 power projects in Chhattisgarh and Orissa to generate a total of 4,500 MW, of which 2,750 MW would be available to Gujarat by 2012. The approximate investments would be around INR 20,000 crore and are planned to be commissioned in the next 4 years.

GMDC plans 2 coal based thermal power plants in Chhattisgarh to generate 2,750 MW from which 1,700 MW will be provided to Gujarat. It is also setting up a similar plant in Orissa to generate 1,750 MW from which 1,050 MW will be made available to Gujarat. The existing peak power demand in Gujarat is 11,000 MW and supply 8,500 MW.

In Chhattisgarh, where it owns the Morga II coal blocks, GMDC is setting up 2 JVs with the Hyderabad based KSK Energy Ventures Pvt Limited for 1,750 MW and Ahmedabad based Torrent Power Limited for 1,000 MW. Gujarat’s share in the 2 would be 1,050 MW and 650 MW, respectively.

The coal block has 350 million tonnes of coal deposits which may last 3 decades. The sites are, however, yet to be finalized by the Chhattisgarh government. These power plants are expected to be commissioned by 2012. While KSK will supply power to Gujarat at the rate of INR 1.92 and a half paisa per unit, Torrent Power Limited at INR 2 per unit.

GMDC also plans to sign a similar agreement with KSK for the Orissa power plant. The 1,750 MW project at Naini in Orissa would provide 1,050 MW of power to Gujarat at a rate of INR 1.97 and a half paisa per unit. It would also be commissioned by 2012.

Other states are also likely to follow the GMDC business model. GMDC is trying to forge similar alliances in Puducherry, Kerala, Delhi and Maharashtra to jointly develop coal blocks. It is suggesting JVs in which GMDC would be majority partners and share power with them.

TATAs to make helicopter cabins for Sikorsky

TATA has announced a tie up with helicopter maker Sikorsky Aircraft Corporation to manufacture chopper cabins in India. This is the third major announcement by the TATA group this month involving aerospace parts manufacturing.

As per report, US based helicopter design, manufacturing and services company Sikorsky has signed a MoU with TATA Advanced Systems to provide integrated solutions for the defense and aerospace sectors. The manufacturing facility for the S 92 helicopter cabins will offer productivity gains to Sikorsky while bringing new technology to India.

Mr Jeffrey Pino president of Sikorsky said that “India represents an expansive rotorcraft market with enormous potential and opportunity.”

Sikorsky has been involved in manufacturing advanced military helicopters since 1943. Its products include the battle proven Black Hawk and Naval Hawk models of helicopters. It recently did a test flight for the advanced multi flight, fly by fire technology enabled H 92, military variant of the S 92 chopper.

The announcement comes a day after TATA Industries and Boeing Company announced their decision to form a JV company that will initially have over USD 500 million of defense related aerospace component work in India for export to Boeing and its global customers.

Pipavav Shipyard start construction of Panamax bulk carrier

BL reported that Pipavav Shipyard Limited has started construction of India's largest ships with the performance of steel cutting ceremony for the first 4 of a series of 26 Panamax bulk carriers on order.

Steel cutting ceremony was performed in the presence of Mr Bhavesh Gandhi executive VC and Mr Ray Stewart CEO of Pipavav Shipyard. Representatives of the Norwegian ship owners Golden Ocean and French buyers Setaf were also present for achieving this milestone in Shipbuilding.

The Panamax bulk carriers with the maximum width to transit the Panama Canal are used for carrying coal, grain, iron ore and other commodities. With a capacity of 74,500 tonnes, it is the largest ships being built in India, which is expected to be delivered from 2009 onwards.

Mr Ray Stewart said that "The steel cutting, coming as it does after our successful sales efforts of the last 15 months, is another major step forward for our company. We have a solid business strategy in place which we have kick-started with our commercial shipbuilding activities."

According to Mr Bhavesh Gandhi, "We have been able to move ahead significantly in the last year and now have an excellent management team in place. We will continue this forward momentum by consolidating our infrastructure and streamline our engineering and business processes to achieve best international practice. The start of production at our shipbuilding facility is a good signpost for the future."

Pipavav Shipyard was established and promoted by SKIL Infrastructure Limited belonging to Nikhil and Bhavesh Gandhi which remains a major shareholder. In addition to Punj Lloyd and SembCorp various Indian institutions such as IL&FS, IDBI and EXIM Bank are also shareholders.

Maharashtra plans 540 MW coal based power plant

Projects Today reported that Maharashtra State Mining Corporation in 51:49 JV with a private company is planning to set up a 540 MW coal based power project at Nagbhid block in Chandrapur district. The project will entail an investment of INR 3,000 crore.

The project has been given in principal approval from the state government and hence the tenders inviting proposal for partnership from private parties have been floated, which will be opened by March 14th 2008.

MSMC will provide coal, land and other government related facilities, while the private partner will look into the investment. The power plant to be spread over 500 acres of land will start work as soon as the company is finalized and is scheduled for completion within 2 years.

Indian Railways on track for diesel locomotive unit

BL reported that Indian Railways appears to be on track to establish the first diesel locomotive unit on a public private partnership basis, having almost finalized the financial bid document.

For firming up the financial bid document or the request for proposal, Indian Railways had taken advisory services from consulting firm PricewaterhouseCoopers. But before inviting the financial bids, the Railways want the documents for diesel locomotive unit to be internationally validated.

Official sources said that “Since these are long term projects with private partners, we would want the bids documents to be examined by another international firm with procurement contract expertise.”

For the electric locomotive unit, Indian Railways has proposed that it would buy 1,000 locomotives over an 8 year period. On its electric locomotive requirement, it requires about 1,800 high power locomotives during 2008-13 for haulage of the projected freight traffic.

American majors GE and EMD had earlier bid for the technical qualification process for setting up a new mainline diesel locomotive factory at Marhowra in Bihar. However, there were some inaccuracies in the bid document of one of the bidders. Thus, now the Railways has decided to combine the technical and financial bids and opt for a single bid.

According to demand projections of Indian Railways, during the 11th Plan period, it would require 1,800 diesel locomotives. The current production capacity is about 200 locos per annum. Incidentally, Indian Railways has just started the process to appoint a consultant which would advise it for preparing the financial bid document for setting the electric locomotive factory at Madhepura in Bihar.

Hinduja Group to set up mega power projects in India

It is reported that Hinduja Group is planning a second innings in India’s power sector. It is currently firming up plans for setting up mega power projects across multiple locations, with a proposal for developing a thermal project in Visakhapatnam in advanced stages and the possibility of a second one in West Bengal under consideration.

Mr Subir Raha executive VC of Hinduja Group India said that “The group plans to set up a thermal power project in Andhra Pradesh. The size of the project depends on the land availability.” He added that while plans entail development of a 1,600 MW project, the project could be scaled up to 2,400 MW if the land is made available at the site.

Mr Raha said that Hinduja Group has around 1,100 acres of land at the location and the land issue is likely to get sorted out shortly. It is also open to the option of roping in a strategic partner for the Vizag project, even as it would remain the majority stakeholder.

According to industry players, there is a likelihood of this project being developed as a merchant project, with around 75% of the power generated from the facility to be earmarked for sale in the spot market. The group is also looking at setting up a power project in West Bengal, where it is already evinced interest in putting up a petrochemical hub.

Bharati shipyard Greenfield facility delayed

Exim News Service reported that delay in getting environmental clearance has delayed the commissioning of Bharati Shipyard’s Greenfield facility. The project, which was to start production by 2007 end, is now expected to go on stream by September 2008.

Bharati Shipyard, which now plans to speed up the process of shipyard integration, is confident of meeting production schedules.

Mr PC Kapoor MD of Bharati Shipyard said that "We have received all clearances and will now deploy extra machinery and resources here to bridge the time lapse for production and the delivery schedules will be met." He added that the shipyard has the capacity to build vessels of up to 60,000 tonnes, including rigs used in oil and gas exploration. Currently, the facility has 15 offshore ships on order, totaling INR 1,200 crore to be delivered by 2009-10.

Bharati Shipyard also has India’s first rig building order from Great Offshore. However, due to delay in production, the rig building was transferred to the company’s latest Greenfield venture at Dabhol in Maharashtra, which had the land environment clearances in place.

With a total order book of INR 4,600 crore, Bharati is currently in the process of deploying the machinery from UK based Swan Hunter Shipyard, which it acquired in 2006.

Pipavav Shipyard may completed by October 2008

BL reported that Pipavav Shipyard Limited’s Pipavav Shipyard in Gujarat is expected to be completed by October 2008.

The new shipyard will construct and repair ships of different sizes and types, besides fabrication and construction of offshore platforms, rigs, jackets and vessels, for oil exploration and production companies.

Out of the total project cost of INR 2,888 crore, INR 1,249 crore has been brought in through issuance of equity. Another INR 935 crore has been tied up as long term debt from banks and financial institutes.

To part finance the remainder, Pipavav Shipyard Limited proposes to enter the capital market through an issue of 86.85 million equity shares to be offered through the book building route. The draft red herring prospectus has been filed with SEBI. It has agreements with 3 international ship owners to build 26 Panamax bulk carriers of 74,500 DWT each for delivery from 2009 to May 2012 at an aggregate contract value exceeding USD 1 billion.

Pipavav Shipyard is based on the principle of concurrent shipbuilding which involves the production of vessels while simultaneously completing construction of the shipyard.

SCI to outsource management of 30 ships

Exim News Service reported that Shipping Corporation of India is currently in the middle of a tendering process to outsource management of 30 of its ships to private companies.

The technical bids have already been opened and are currently being evaluated by the evaluation committee. The financial bids will be opened on completion of this initial process.

A senior SCI official confirmed that the 30 ships, a mix of tankers and bulk vessels, would be placed under private ship management for a period of 2 years. He pointed out that this was a business model followed by international shipping companies as also by some Indian companies, and assured that it would not affect the existing jobs.

It is believed that in the initial transition period, SCI officers may have to serve the ships going under private management, who would return once the private company arranges for manpower on the vessels.

This is not the first time that SCI has outsourced ship management to private companies. In 2000, it had offered 6 ships on contract to a private company for manning and technical management.

VALE release 2007 production report

Vale announced that it has maintained its growth path in 2007 with record production of iron ore of 296 million tons, pellets 17.6 million tonnes, finished nickel 247,900 tonnes, copper 284,000 tons, bauxite 9.1 million tons, alumina 4.3 million tons, aluminum 551,000 tonnes, kaolin 1.3 million tonnes and cobalt 2,500 tonnes.

In ‘000 tonnes
The release said that “This performance derives from the growth process set in motion since the beginning of this decade, through the development and conclusion of twenty large Greenfield and Brownfield projects in several segments of the mining industry, successful acquisitions and productivity gains.”

EU opens new AD probe into Chinese steel wire imports

European Union's executive office announced that it has launched a trade investigation into whether cheap steel wires from China are being dumped below cost on the European market. EU could slap trade duties against Chinese importers if the bloc finds it is selling the goods below cost on the European market.

The European Commission said in a published legal text released on Saturday said tat it had concluded that there is sufficient evidence to justify the initiation of an investigation into the imports of steel wire products.

The investigation will determine whether the product concerned originating in the People's Republic of China is being dumped and whether this dumping has caused injury.

It said the probe would last 15 months and would consider evidence from both Chinese and European companies involved in the trade in steel wire products used in construction.

A growing number of European manufacturers have sought to fend off what they consider to be unfair competition from China with EU anti-dumping duties. The Commission recently launched two separate investigations into imports of Chinese HDG and SSCR after European steelmakers complained of dumping by the Asian export powerhouse.

Rio warns of missed shipments at Queensland coal mine

Rio Tinto Group said it may miss coal deliveries from its Hail Creek mine in Queensland due to heavy rains, adding to supply disruptions in Australia, the biggest exporter and it has advised customers of delays.

Ms Alison Smith a spokeswoman at Rio Tinto's coal unit in Queensland said that the Blair Athol and Kestrel mines, which are also affected by the rains, should meet their supply commitments. Rio is not able to estimate how long the force majeure may last. The rains are continuing to fall in the area.”

Tex Report said that Rio brings to a least six the number of Queensland coal suppliers that have declared force majeure on deliveries since monsoonal rains affected the Bowen Basin in January. The disruptions have driven spot prices for power-station coal and the type used in steelmaking to a record.

Coal rail transportation in central Queensland has been disrupted by the rains, with all services on the Goonyella line suspended. Flooding is also preventing repairs to track and infrastructure in the Newlands coal rail system.

The Bureau of Meteorology on its Web site said that a monsoonal trough lying to the south of Mackay on the central Queensland coast is generating torrential rain, warning of flash flooding in the region.

VALE iron ore production in 2007 up by 12% YoY

Vale iron ore production reached a new record in 2007, namely 295.9 million tonnes. This was an increase of 12% on 2006, when we produced 264.1 million tonnes. This volume was below the programmed level of 300 million tonnes due to the challenges at the beginning of the year the rainy season in Brazil and a lack of equipment besides some interruptions in our operations due to invasions by militant groups in November, a problem that was solved by the action of government authorities.

It added that between 2001 and 2007, the Company's annual production increased at an average annual rate of 14.1%, rising by 162 million tonnes over six years, which has contributed to consolidating our leadership in the global iron ore market.

In million tonnes

CVRD said that Carajas a wealthy mineral province in North of Brazil with the largest and the best iron ore deposits in the world reached a historic level of 1 billion tonne of iron ore production accumulated since the start up in 1985. In its first year, Carajas produced was just 4.5 million tonnes and only achieved the level of 100 million tonnes of accumulated production in 1990. In 1994, the accumulated production reached 250 million tonne, hitting the 500 million tonnes mark in 2000. The first 1 billion tonnes was achieved on October 25th 2007 and by year end it had accumulated 1.019 billion tonnes. The initial nameplate production capacity, of 35 million tonnes was reached in 1993 and in 1997 annual output was 43.8 million tonnes. Therefore, with the 91.7 million tonnes reached in 2007, Carajas iron ore production more than doubled over the last ten years, increasing by 109.4%.

The Southeastern System, which encompasses the Itabira, Mariana and Minas Centrais iron ore mines, performed very well and was responsible for the production of 113.8 million tonne representing 38.4% of the total produced by VALE in 2007. Brucutu produced 22 million tonne, a performance consistent with the planned ramp up. Brucutu is expected to achieve full capacity in 2008, producing 30 million tonne.

The Southern System MBR and Minas do Oeste produced 89.3 million tonne in 2007, 5.9% higher than in 2006. The 4Q07 production decreased relative to 3Q07 due to the heavy rainfall.

Production at Carajas in 4Q07, at 24.6 million tonne versus 24.2 million tonne in 3Q07, broke another record. In 2007, Carajas output reached 91.7 million tonne, a new annual record, up 12.1% on the previous year's production.

Production at Urucum, located in the state of Mato Grosso do Sul, Brazil, suffered a reduction in comparison with 4Q06. This was due to the shutdown of a plant, as a result of lack of a sufficient number of barges in the Paraguay River.

In million tonnes

Pellet production totaled 17.6 million tonnes in 2007, as against 14.2 million tonnes in 2006 in response to the strong global demand. Sao Luis restarted production in August 2006, and began operating at its new nominal capacity of 7 million tonnes, which was in fact exceeded in the last quarter of 2007. Production of pellets in 4Q07 reached an all-time high of 4.7 million tonnes, with an increase of 6.4% YoY compared with the same period a year earlier.

In 2007, 11.2 million tonnes of blast furnace pellets were produced, and 6.4 million tonnes of direct reduction pellets. In 4Q07 production of blast furnace pellets amounted to 3 million tonnes and direct reduction pellets 1.7 million tonnes.

Adding the attributable production of non-consolidated joint ventures Samarco, Nibrasco, Hispanobras, Itabrasco and Kobrasco to the output figure for our wholly owned plants, according to the rules of consolidation required by BR GAAP, pellet production in 4Q07 amounted to 9.4 million tonnes, an increase of 4.1% YoY compared with 4Q06. The production was 36 million tonnes in 2007 as against 33.2 million tonnes in 2006, setting another all-time high level.

The aggregate production of the pellet plant group where VALE has stakes totaled 54 million tonnes up by 4.3% YoY against 2006.

Kumba FY profit declines by 8.3% on asset sales

Anglo American Plc's Kumba Iron Ore Ltd, Africa's biggest producer of the steelmaking raw material, announced that its full year earnings fell by 8.3% after asset sales boosted profit in 2006.

Kumba said that its net income dropped to ZAR 3.1 billion (USD 404.6 million) from ZAR 3.38 billion a year earlier.

Kumba was formed in November 2006 when Anglo's Kumba Resources Ltd split its iron ore mines from its coal, zinc and titanium assets. Stripping out the one time gain of ZAR 1.57 billion from those asset sales in 2006, profit jumped last year as iron ore prices climbed for a fifth year and output at the company's Sishen mine in South Africa rose.

Indonesia to cancel import tariff on HRC - Report

YIEH reported that Indonesia's industry minister has announced that the government decided to cancel the import tax on hot rolled coil from 5% to 0% to help the processing center to grow and improve the competition globally.

The ministry said that current Indonesia’s largest HRC steelmaker PT Krakatau Steel has not enough capacity to satisfy the demand from local processing center. The country is still dependent on imported HRC. Therefore, terminate the import tariff will encourage the global competition power.

Indonesia has boosted its HRC demand to 6 million tonne per year for past 4 years and the import output has also increased every year to 1.5 million tonne per year.

Sidenor increases stake in Bulgarian Stomana to 100%

It is reported that Sidenor SA has increased its participation to 100% in the Bulgarian subsidiary Stomana Industry SA in which participated until now by 86%.

Stomana Industry SA, a subsidiary of Sidenor Group since 2001, has a leading position in the Bulgarian steel industry with over 50 years of experience in the Balkan as well as the European markets.

The incorporation of Stomana to the Group was followed by a large investment plan aiming at the modernization of the production facilities, as well as the organizational restructuring of the Company, aiming at satisfying the needs in steel products for the Balkan, as well as the European markets.

Stomana Industry’s product mix includes steel products targeting the construction and building industries like reinforcing steel, wire rods, merchant bars in the region, plate products for industrial and ship building applications, as well as value added products, such as special steel products targeting Western European markets.

Xstrata Nickel announces extension period for Jubilee

Xstrata Nickel Australia Pty Limited, a wholly owned subsidiary of Xstrata plc, announced an extension to its takeover offer for Jubilee Mines NL to February 22nd 2008. Xstrata Nickel Australia has an interest in 94.7% of the total issued shares of Jubilee.

Xstrata Nickel Australia declared the offer free from all conditions on January 31st 2008. Shareholders who validly accept the Offer will be sent their Offer consideration on or before 5 business days after the date of acceptance. Acceptances must be received before the Offer closes on Friday 22 February 2008.

Mr Ian Pearce CEO of Xstrata Nickel said that “We encourage those shareholders who have not yet accepted our offer to do so now to ensure that they receive payment with a minimum of delay. Our offer of A$23 per share is final and will not be increased.”

He added that Xstrata Nickel Australia is now entitled to proceed to compulsory acquisition of the outstanding Jubilee Shares, and intends to commence this process next week. Any holders of shares that are compulsorily acquired will be unable to receive their offer consideration for approximately six weeks. The directors of Jubilee have recommended that all shareholders accept XNA’s offer and have themselves all accepted Xstrata Nickel Australia’s offer for their own personal shareholdings.

Two RBCT reclaimers out of service for maintenance

The world's single largest coal terminal, the Richards Bay Coal Terminal said that one of its reclaimers and one stacker reclaimer had been placed out of service for urgent technical and structural maintenance. This brings the total number of machines out for maintenance to three, as one stacker machine had been out of service since January 2008 and was only due back on line in May 2008.

RBCT in statement said that the technical problems were picked up during routine inspections and to lower the risk, a technical decision was made to take the machines out of service for immediate repairs. It was said that the stacker reclaimer would be back in operation within seven days, while the reclaimer was due back in service within six to seven weeks.

The statement added that "Delays on the loading of vessels are not an issue at this stage as all ship loaders are fully operational and other six-yard machines are available to be utilised while the other three are being repaired.”

Mr Kuseni Dlamini executive chairperson of RBCT said that "A competent team of engineers and management is working on the recovery plan. The root cause of the technical failure is currently being investigated and thereafter necessary corrective action will be implemented. The stacker reclaimer will be back in operation in the next seven days. This will ensure that at least all stockpiles can be reached by a machine for either stacking or reclaiming. Currently, only three lines are inaccessible for reclaiming.”

Bekaert posts record sales in 2007 with growth of 8.2%

Belgian steel cord and wire manufacturer in the financial year 2007 announced that it has achieved consolidated sales of EUR 2.2 billion and combined sales of EUR 3.4 billion an increase of 8.2% and 7.0% respectively.

The consolidated sales increase was 8% from strong organic growth. This was partly offset by a 2.3% negative impact from currency movements but boosted by a 2.5% movement in acquisitions and divestments.

Consolidated sales by business segment 2007

(In EUR million)

(In EUR million)

Bekaert whose products are used to reinforce tyres and concrete said that it expects the continued growth in 2008 and it will relentlessly continue to pursue its strategy for sustainable, profitable growth. The company added it intends to monitor closely the rising wire rod prices and the effects of any potential economic correction in the markets in which it is active.

Kumba ready to launch new Sishen project

It is reported that Kumba Iron Ore's ZAR 5.2 billion (USD 678.7 million) Sishen South project is ready to start but the go ahead depended on securing commercial rates through export channels and the granting of mineral rights.

Mr Ras Myburgh CEO of Kumba said that delays in completing those two requirements could jeopardize the group's target of almost doubling its Northern Cape iron ore exports to 46 million tonnes by 2013. Kumba exported 24 million tonnes of iron ore last year and sold 8.9 million tonnes to the local market. He said that there is willingness on the part of rail and ports authority Transnet, the other big Northern Cape iron exporter, Assmang and Kumba to reach agreement on the tariffs.

The participants also wanted to determine if the capacity expansion would be to 65 million or 68 million tonnes a year, who would participate and where the line would be extended to. He could not suggest a date when the talks would be completed.

Mr Vincent Uren CFO of Kumba said that Kumba had raised about ZAR 4.25 billion (USD 555.4 million) in loan funding and was examining the level of debt that would be appropriate for its balance sheet to pay for its growth plans. It might fund the completion of its Sishen Expansion Project using only debt.

Kumba Iron Ore remains tight lipped on the details of arbitration proceedings with Arcelor Mittal, one of its main customers over the supply of iron ore from Sishen and with the government of Senegal over the Falémé property that was awarded to Mittal. But at the group's results presentation it emerged that a new dispute has arisen with Mittal over the sale of about 207,000 tonnes of iron ore at export parity prices. Mittal has the right to take all of Thabazimbi mine's output at cost plus 3% and another 6.25 million tonnes from Sishen on the same terms, but if it buys above these levels it must pay export parity prices. Mittal is disputing this in relation to the 207,000 tonnes.

Montenegro approves capital increase of MNSS

MINA reported that the Zeljezara ironwork is going to change the owner for the third time in four years and new investors are coming to Niksic. As per report, the new investors are going to conduct capital increase of Montenegro Speciality Steels which owns the Zeljezara and take over the Niksic Ironworks.

Montenegrin government approved capital increase of EUR 40 million to Montenegro Speciality Steels.

As per report Montenegro Speciality Steels the current owner of Ironworks from Niksic is obliged to submit the bank guarantee until February 15 to invest EUR 20 million in the company during 2008. Montenegro Speciality Steels intends to bring a new investor who is going to invest in Niksic Ironworks EUR 40 million through capital increase. The government said the Montenegro Speciality Steels is a company registered in London with British and Australian capital.

Nikšić Ironworks was previously rented to a Russian company Rusmontstil and later sold to Midland Resource which left Montenegro with no previous announcement. Montenegro Speciality Steels came to Montenegro in January 2007.

Kumba CEO expects output to jump to 38.9 million tonnes in 2008

Reuters reported that South Africa's Kumba Iron Ore expects to raise 2008 production to 38.9 million tonnes from 32.4 million in 2007 despite a domestic power crisis.

The report quoted Mr Ras Mybyrgh CEO of Kumba Iron Ore as saying that "If the crisis doesn't deepen and we only have to reduce power consumption by 10% we believe the impact won't be significant.”

He said the company's unit costs might increase as it substitutes electricity with diesel, but that the impact should also not be too major.

Patriot Coal reports loss during Q4

Patriot Coal announced that its Q4 losses more than doubled as revenue and tonnes of coal sold during the period both decreased.

Patriot Coal lost USD 49.7 million during the fourth quarter ended December 31st 2007. During the fourth quarter of 2006, Patriot Coal lost USD 22.7 million. Revenue dipped slightly from USD 261.3 million in the prior year's Q4 to USD 254.2 million during this quarter. It added that revenue was affected by the Illinois Basin, which declined by USD 13.7 million due primarily to a retroactive upward price adjustment of almost USD 16 million realized in the 2006 Q4 and to the loss of revenue related to the sale of the Big Run mine.

Patriot Coal said that tons of coal sold fell by 9% from 5.6 million to 5.1 million. In Appalachia, volume decreased by 0.2 million tons compared to the Q4 of 2006 as a result of the Federal and Harris longwall moves. In the Illinois Basin, volume decreased 0.3 million tons as a result of the sale of the Big Run mine in late 2006.

Mr Richard M. Whiting CEO of Patriot said that "We are entering 2008 with the expectation of significantly higher operating performance. Our 2008 guidance reflects management's confidence in the changes we are making in our mining operations and our ability to capture opportunities presented by the robust coal markets. We appreciate the confidence the investment community has shown in Patriot and we look forward to sharing with you our future successes."

Patriot Coal was a part of Peabody Energy until Peabody completed its spin off of the company on October 31st 2007.

Alpha Natural Resources reports lower Q4 profit

Alpha Natural Resources Inc reported an 8% improvement in coal revenues in the Q4 of 2007 as worldwide demand for metallurgical grade coals showed continuing strength.

Alpha in a statement said that coal revenues for the Q4 totaled USD 437.6 million up by USD 32 million from the Q4 of 2006. Net income for the quarter was USD 5.7 million as compared with net income of USD 63.3 million in 2006. Earnings before interest, taxes, depreciation, depletion and amortization totaled USD 58.9 million for the Q4 of 2007 as compared to USD 56 million in Q4 of 2006.

Alpha said that a global boom in steel production, coupled with freight and exchange rates that favored US coal producers, resulted in better than planned Q4 shipments of high margin metallurgical coal and record sales volumes of nearly 11 million tons for the full year.

Mr Michael Quillen chairman & CEO of Alpha Natural Resources said that "Market fundamentals continue to improve for both thermal and metallurgical coal, putting prices on a consistent upward trajectory. As an example, so far in 2008 we've contracted with utilities to supply more than 800,000 tons of thermal coal in 2009 at price levels approximately 50 percent higher than we averaged last year. We believe that our margin and cash generation prospects for at least the next couple of years are very favorable."

Mr Kevin Crutchfield president of Alpha said that "The tension between increasing demand for coal around the world and constraints in supply, in our view, will remain intact for some time to come."

Alpha Natural Resources is a leading supplier of high quality Appalachian coal to electric utilities, steel producers and heavy industry. Approximately 91% of the company's reserve base is high Btu coal and 82% is low sulfur, qualities that are in high demand among electric utilities, which use steam coal. Alpha and its subsidiaries currently operate mining complexes in four states, consisting of 62 mines feeding 11 coal preparations and blending plants.

Hyundai Heavy wins USD 652 million drill ship order

Hyundai Heavy Industries Co said that it has won a deal valued at KRW 617 billion (USD 652 million) to build a drill ship. The deal from a Liberian shipping company calls on Hyundai Heavy to deliver the vessel used to explore for oil in deep water by May, 2011.

Shipyards in Korea, the world’s largest shipbuilding nation, have received record orders in recent years as demand has surged for vessels to transport raw materials to China and goods to the rest of the world. The shipbuilders have enough orders to keep them busy for about four years.

Hyundai Heavy delivered 81 vessels valued at USD 6.85 billion last year as compared with 73 vessels worth USD 4.81 billion in 2006. This year, Hyundai Heavy plans to deliver 134 ships and expects to win USD 27.4 billion worth of orders this year.

Kumba hunting for iron in Guinea

Mining Weekly reported that Kumba Iron Ore will start exploration drilling at a new project in Guinea in March. As per report the firm was working with a local partner on the project, situated in the northwest of the African country, where it had concessions for 1 200 square kilometer of prospective ground.

Mr Ras Myburgh CEO of Kumba said addressing his audience at KIO's 2007 results presentation in Johannesburg said that “This was an early stage project.”

When asked by an analyst how the firm would prevent the problems it had encountered in Senegal, where it lost its concession in a case that it has taken to international arbitration, he said that Kumba Iron Ore would keep a much closer watch on what was happening at the project.

Mr Myburgh added that it was also important to build good relationships in the country and to stay a lot closer to what's going on.

Anglo American majority owned Kumba Iron Ore's only producing mines were in South Africa at Sishen in the Northern Cape and Thabazimbi in Limpopo.

CEZ drops interest in MUS coal mine

It is reported that ČTK Coal mines in the most area are no longer attractive for ČEZ.

As per report state run power group ČEZ has ended its courtship of the MUS brown coal mine and will switch its focus to gas.

Bulgaria announces to boost its energy assets

Bulgaria government announced that it would pool its main energy assets into a single company in a move to boost its position on the regional and European energy markets. The move is aimed at increasing the efficiency and competitiveness of the energy sector in the regional and European markets, while enabling it to attract more investment and ensure growth.

Bulgarian government in a statement said that it would transfer the country’s main electricity and gas companies, the only nuclear power station, the main thermal heating plant and the largest coal mines into a single holding company, Bulgarian Energy Holding, by the end of the year. It added that the assets were the National Electricity Company, Bulgargaz, the Kozoluduy nuclear power plant, the Maritza East coal mines and the thermal heating utility Maritza East II.

The statement said that “After consolidation, the holding’s assets will amount to EUR 4.0 billion making it one of the biggest energy companies in the region with expected annual revenues of EUR 1.8 billion.”

ISSF unveils 5 new architectural case studies at Euro Inox

International Stainless Steel Forum has published an update on a new series of five architectural case studies on the Euro Inox website

1. In renovating the Brussels Atomium, the spheres were made from electropolished stainless steel grade EN 1.4404/AISI316L to ensure long-term low maintenance.

2. A pedestrian bridge at Cala Galdana, Menorca, was fully designed in Duplex stainless steel to withstand the high corrosive stress in a coastal location.

3. Vauxhall Cross Bus Interchange was clad in pattern-rolled stainless steel to ensure high mechanical resistance.

4. Wales Millennium Centre involved electrolytically coloured stainless steel to highlight the dramatic architecture of the building.

5. The Milan Trade Fair is a convincing example of the sober elegance of polished stainless steel.

To know details please visit www.euro-inox.org

Akkadian Energy to build 300 MW power project in Pakistan

Unique Pakistan reported that Akkadian Energy is undertaking a 300 MW power generation project in the Sundar Industrial Estate near Lahore, which would start functioning in 2009.

Mr Mohammedmian Soomro caretaker prime minister said that the interim government is working with a focused approach to ensure continuity and consistency of economic policies and is taking numerous steps to meet the rising demand of energy in the country by undertaking new projects as well as through conservation. Pakistan has emerged as a preferred destination for investment and has strong fundamentals as well as substantive structural reforms, which are helping the country attract more investment in all sectors of national economy.

Pakistan with its growing market, strong economy and emerging middle class offers opportunities for business and investment.

Akkadian Energy Limited is an international finance and project development firm that specializes in emerging markets around the world particularly focusing on the energy infrastructure and services sectors.

Industries to face 1,400 MW power shortage by 2010

Daily Times reported that export oriented and labor intensive industries of Pakistan would be faced with power shortages by 2010 due to demand supply gap of around 1400 MW. The main reasons behind the major power crisis are the power and gas shortage and non construction of dams.

At present, domestic consumers are facing 4 hour load shedding, textile industry 3 hour load shedding and steel melting and re rolling units 7 hours loads shedding during the day. Total power generation stands at around 10,000 plus MW against the demand of 12300 MW.

Government official said that new power projects would take some time to cover the power shortage crisis. He added that Water & Power Development Authority would add 2000 MW power to the current power generation that stands around 10,000 MW surpluses by December 2009.

In the medium and long-term power projects plan aimed at generating 5842 MW power in future include 12 power projects to be initiated by independent power producers that would generate 2376 MW power by 2010. These projects would be launched by independent power producers during the current calendar year. Medium and long term plans included 5 other projects aimed at generating 2450 MW power.

WAPDA is also working on small dams that would generate 516 MW power. WAPDA in its long term plan has also included 400 to 500 MW rental power projects that would be completed during the next 6 months.

Agility acquires Kenyan Starfreight Logistics

ArabianBusiness.com reported that Kuwait based logistics powerhouse Agility continued its expansion into the African logistics market through the recent acquisition of Kenyan company Starfreight Logistics Limited.

Starfreight Logistics specializes in the procurement and clearing of goods and machinery into Africa, in addition to warehousing and project forwarding, cross border documentation and transportation, airfreight and customers examination. It has secured a number of contracts from large Kenyan manufacturers in sectors such as automotive, pharmaceutical, plastic products, glass, paper and agricultural equipment. It also provides logistics services to international brands such as Hewlett Packard, Mitsubishi and Nestlé.

Mr Elias Monem CEO of Agility said that "This acquisition comes at an important time for Agility, when it is rapidly expanding its network across the globe. More than 70% of international container cargo comes from or is going to the central and eastern regions of Africa and this acquisition has created a gateway for us to service this rapidly developing market."

Mr Dev Bij MD of Starfreight Logistics Limited said that "With over 150 employees and two offices in Kenya, Starfreight is well positioned amongst the local and regional logistics players. And now, with the help of Agility, we will be able to develop our capabilities to compete on a global scale."

Africa has been flagged as a key region for Agility, which also acquired Medorient Algeria in December 2007 to boost its presence in North Africa.

Pakistan to raise USD 30 billion for infrastructure sector

It is reported that Pakistan is holding a 3 day international conference in Islamabad on May 11th 2008 to May 13th 2008 to secure the much needed USD 30 billion investment for undertaking important infrastructure projects in the country.

Major foreign investors, including banks and multinational funding agencies have been invited to take part in Pakistan's infrastructure development projects particularly for building 5 mega dams and mass transit systems in Karachi, Lahore and Rawalpindi.

Mr Aijaz Ahmad CEO of Infrastructure Project Development Facility of the ministry of finance said that a serious effort will be made during the international conference to arrange the much needed USD 20 billion funding alone for 5 major dams which included Kalabagh, Bahshah, Akhori, Munda and Kurrum Tangi. Mr Ahmad further added that the pipeline of infrastructure projects continues to grow as IPDF is currently has 44 projects, out of which 21 are on the active list while remaining ones are being developed.

Mr Ahmad said that "Then we need to raise about USD 10 billion for three mass transit projects in Karachi, Lahore, Islamabad, two shipyard projects each in Karachi and Gwadar, CNG buses project in Karachi and some other projects in horticulture sector." He added that Pakistan also needed funding for Iran, Pakistan and India gas pipeline which will be discussed during the forthcoming investment conference in the capital.

During the first year of the elected government, about USD 2 billion were expected to be raised through the foreign investment. He said that power sector and telecom sectors have witnessed increased private investment in Pakistan. Many deals collapsed because if not having cost recovery tariffs and due to the absence of adequate government's funding.

Saudi Arabia to have new container terminal at Dammam

Saudi Arabia has announced plans for a new container terminal at King Abdul Aziz Port at Dammam.

The new facilities will raise the port's handling capacity from 1.5 million TEUs to 3.5 million TEUs and will be complemented by a railway expansion project linking the Kingdom's east and west regions. Development costs for the new terminal have been estimated at some USD 267 million and a contract has been signed for a USD 9 million upgrade of current facilities.

Mr Naeem ibn Ibrahim Al Naeem port director general of King Abdul Aziz Port said that the project at Dammam will be on a build operate transfer basis. He said that “Studies have been completed on the new container terminal and tenders will be invited within a few months to implement the project, which is open to Saudi and foreign companies.”

According to Mr Al Naeem, the upgrading works will cover 40% of the port's 39 existing wharves, the remaining wharves are rented to the private sector. Meanwhile, the neighboring Kingdom of Bahrain is looking to boost its maritime industries with the opening of its new port of Khalifa bin Salman, operated by APM Terminals BV.

APM Terminals, which signed a 25 year concession for Khalifa bin Salman and the existing port of Mina Salman in November 2006, has already invested more than USD 60 million in modern equipment and systems.

King Abdul Aziz port is the Kingdom's second largest port after Jeddah in terms of capacity and one of the largest in the Persian Gulf.

Gulftainer holds talks for deals in Turkey and India

Gulf News reported that Sharjah based port operator Gulftainer Company Limited is discussing potential management contracts in Turkey and India in its efforts to grow its overseas business. It is looking for both container and general cargo opportunities.

As per report, Gulftainer is close to forming a JV with a Turkish logistics and transportation company. In India, it has tied up with construction and infrastructure development firm Lanco to explore port and transportation projects.

Mr Keith Nuttall commercial manager at Gulftainer reported that "Gulftainer is negotiating to become involved in one or more ports in Turkey, probably in the Marmara region. It considers Turkey as a major economic force both now and in the future, with huge potential, not least in the ports and transport sectors."

Gulftainer said its facility in Mutsumudu in the African island nation of Comoros should come on stream this year. Under a deal signed in late 2006, the company took over management of the port of Moroni and began developing Mutsumudu port.

In other investments, Gulftainer MTI, the company's partnership with Karachi based logistics firm Pak Shaheen Group, aims to triple its truck fleet to 100 by the end of 2008.

OPEC cuts 2008 oil demand growth forecast

OPEC in its monthly report said that it cut its oil demand growth forecast for 2008 and added that while its demand growth projections are lower than assessments from other agencies, it cannot rule out the potential for further downward revisions.

For 2008, OPEC sees oil demand growing by 1.2 million barrels per day, a downward revision of 0.08 million barrels per day from the last monthly assessment. Its forecast is sharply below the International Energy Agency's call for growth of 1.67 million barrels per day this year.

OPEC is aware of this disparity, but said that “In its view, risks to the world economy have increased considerably since the fourth quarter of 2007 on continued turbulence in financial markets. In addition, there is growing evidence of a slowdown in the US economy, which has fuelled fears of an outright US recession that could have potential repercussions for the rest of the world.”

Turning to supply, OPEC said although it has trimmed its forecast for supply growth from non OPEC countries, it still believes demand for its crude will fall this year. Non OPEC supply is seen growing by 1.1 million barrels per day this year, a downward revision of 0.01 million barrels per day from the last estimate, however, OPEC thinks it will have to produce less crude this year over last.

OPEC is scheduled to meet on March 5th 2008 to set output policy. At its last meeting in February 2008, the cartel opted to keep output levels steady amid concerns over falling demand and economic instability. Moreover, it believes its current output of about 32 million barrels per day should help further ease market fundamentals, resulting in increases in global inventories over the coming quarters.

Galfar wins OMR 87 million Al Seeb wastewater project

Galfar Engineering & Contracting has announced that it has been awarded a contract by Oman Wastewater Services Company SAOC for the execution of the Al Seeb Coastal Vacuum Sewers Networks project, valued at OMR 86.905 million. The contract period is roughly 40 months preceded by a mobilization period of 60 days.

Galfar has announced a 33.1% YoY growth in net profit at OMR 22.13 million for 2007 as against OMR 16.63 million. Contract and hire income soared to OMR 269.96 million from OMR 165.52 million, while contract and hire cost increased to OMR 236 million from OMR 141.11 million during the period.

Underground gas storage tanks to be built in Pakistan

Daily Times reported that Pakistan will make underground storages to store gas imported from Iran and Turkmenistan. A study in collaboration with Asian Development Bank is being conducted to identify the places to store the gas.

Sources said that Sui Northern Gas Pipelines Limited, Sui Southern Gas Company and Interstate Gas Company Limited are conducting the study to identify 3 to 4 places for underground storages. The storages would be made on the places that are geographically and politically safe. It added that the cost of the underground storages, areas and capacity would be identified that would help to materialize the project.

Pakistan will import 2.2 billion cubic feet gas from Iran out of which Pakistani share stands at 1.05 billion cubic feet. If India does not take part in the project, the whole imported gas would be consumed in the country to meet the energy requirements.

From these storages, the gas would be supplied to the different areas of the country. Interstate Gas Company Limited would provide the technical expertise in the project and Economic Coordination Committee has authorized it to sign gas sales purchase agreement on Iran Pakistan India gas pipeline project.

Despite importing 2.2 billion cubic feet gas from Iran, Pakistan would import 3.2 billion cubic feet gas from Turkmenistan and it will be shared by India and Pakistan. Turkmenistan claims to have gas reserves of 159 trillion cubic feet at its Dauletabad fields, and Russia is the main importer.

Pakistan is exploring means to meet energy requirements as the country is said to be facing energy deficit of 45 percent against national requirements by 2015 and it would further widen to 65 percent by 2015.

Indian law on minimum wage to hit construction sector in MEA

Khaleej Times reported that India’s decision to impose a minimum wage for its unskilled workers in the GCC will have a serious impact on the construction industry as developers feel the budget crunch.

India, the predominant labor exporter to the Gulf region, is in the process of rolling out separate wages laws for each country in the GCC in a bid to tackle exploitation. Indian government has banned its unskilled workers from migrating to Bahrain, unless they are paid a minimum wage of BHD 100 a month from March 1st 2008. The move will cut into operating budgets, which have been projected at current wage rates and could even delay the completion of projects.

Mr Bill Ninan CEO of Grey Matter Construction Company said that “The decision to fix minimum wages will definitely affect the budget of many companies. Now, companies are forced to revise their provisions for wages in their budget. It will impact the cost factors of construction."

Mr Ninan said that it would be difficult for companies to source cheap labor from other place such as China, Vietnam and African because of a lack of available manpower and linguistic barriers. He added that Gulf states rely heavily on the cheap labor from countries such as India and the Philippines to work on construction projects.

Mr Abdul Majeed manager of Power Construct said that although he appreciated the need to ensure some standards of living for foreign workers the minimum wage system will have its ripples in the market and the cost of construction will shoot up.

Gulf nations, including Bahrain and Qatar, are reportedly in negotiations with Vietnam to source unskilled laborers in the fields of mechanical engineering, construction and food processing in an effort to reduce their reliance on traditional labor markets such as India.

JICA to help reduce greenhouse emissions in Iran

Japan International Cooperation Agency has deputed a Japanese expert on reduction of greenhouse gases of thermal power plant from February 11th 2008 for 28 days to the ministry of energy of Iran.

Inefficient systems that are currently used in some of the thermal power plants in Iran is one of the main factors for discharging of destructive gases like CO2 as one of the main causes for greenhouse effect. This effect will be hazardously leaded to global warming.

To introduce the Japanese advanced energy conservation technologies and methodologies to ministry of energy as well as proposing the ideas for reduction, capture and storage the GHGs at Tabriz and Isfahan power plants have been defined among the activities of the JICA expert who will be dispatched to Iran based on the request by the ministry of energy.

JICA has implemented the study on evaluation of environmental impact of Tabriz and Isfahan thermal power plants in 1995 through 1999 and has executed energy conservation project and established the national training center for energy management in Tabriz with collaboration with the ministry of energy in 2002 through 2007.

JICA is a Japanese governmental organization whose main role is to distribute Japan’s Overseas Development Assistance to developing countries. JICA has more than 100 overseas offices all over the world and has been active in Iran for last several decades.

DGCX trading volumes in January 2008 surge by 95%YoY

Dubai Gold & Commodities Exchange has reported record transactions in January 2008, with trading volumes surging by 95%. Breaking all earlier records, the total value of contracts traded on DGCX in January 2008 stood at just over USD 4.3 billion up by 130% YoY as against USD 1.9 billion in January 2007.

Mr Malcolm Wall Morris CEO of DGCX said that “The surge in activity in January 2008 marks a strong start to the new year. The rise in trading volumes is reflective of the recent rally in some commodities, and also the growing interest for DGCX. As part of its efforts to expand the regional derivatives arena, DGCX is set to roll out new initiatives in 2008 that will trigger the next level of growth in the market.”

Mr Morris added that “Record transactions were also propelled, to an extent, by a fresh inflow of funds into commodities as participants looked for alternative investment options amid uncertain equity markets.”

Mr Nishat Bandali CMO of DGCX said that “The regional market is witnessing a rise in demand for complex investment products, prompted by liquidity and regulatory reforms. DGCX is committed to offering the right product, through innovation and enhanced awareness. We expect 2008 to be a dynamic year as the Exchange unveils new initiatives, aimed at adding depth to the regional derivatives market.”

In addition to contracts in gold, silver and currencies DGCX also introduced the first of its kind Rupee and steel rebar contracts, and continues to lead the growth in commodity and currency derivatives in the region.

Steel prices up after Chinese festival

According to the market analyst prices of the major steel varieties increased after spring festival, as many producers have planed to raise the ex works price under joint effects of the snow storm and power shortages.

The analyst said due to freezing weather before the spring festival, steel enterprises in bulk of China except for the Northern areas were hit by power strain and production cuts, like in Shanghai, Wuhan and Guangzhou; while transportation of steel products are also stricken. This causes at least to 900,000 tonnes fewer construction steel being produced, which in turns bolsters its price and price of the other products.

The market players said the prices have stood high and if sales prove good at the opening of the market, the producers would definitely hiking them more.

ArcelorMittal eying more investments in China after China Oriental

Dow Jones Business News reported that acquisitions of China Oriental will play a key role in steel maker ArcelorMittal's growth strategy in China this year alongside organic growth and new Greenfield projects.

Mr LN Mittal CEO of ArcelorMittal during an interview with Dow Jones Business News said that it has already plans to spend USD 3.7 billion on mergers and acquisitions in 2008. He added that he expects to use such acquisitions to broaden the company's geographic footprint in emerging economies and diversify the company's product range into items such as tubes and pipes. He also hopes to invest in mining assets that will help the company shield itself from rising prices in iron ore and coking coal, key commodities in steel production.

Mr Mittal said that he wants to continue growing in China through JV focused on research and development. Mittal last year gained access to the Chinese steel market by acquiring Bermuda registered China Oriental Group. He added that "We would like to participate in the Chinese market. We have technologies that could improve Chinese steel product qualities.”

But Mr Mittal did not comment on whether the company would participate in China's steel sector consolidation but said it is already on the way with Chinese steel titans such as Baosteel eyeing annual production of 80 million tonnes in the near future.

Chinese plate export prices increase after holidays

It is reported that Steel plate export offers by Chinese steel makers continue to go up following the Chinese Spring Festival. There is an average increase of USD 20 per tonne to USD 30 per tonne than early this month.

Quotations for commodity grade plate by tier two producers are prevailing at USD 845 per tonne to USD 850 per tonne FOB. While those by tier one steel mills are at around USD 900 per tonne FOB increasing USD 20 per tonne to USD 25 per tonne.

An export director with an East China based major plate maker said that he wish to conclude at a level above USD 900 per tonne FOB for its 2.4 meter wide commercial plate despite its current official quotation of USD 900 per tonne.

Another major steel maker in East China have also raised base export offer to USD 1060 per tonne from USD 1030 per tonne FOB in end January 2008. The price is tagged for end May or early June shipment.

As per report the strong rise is believed to be related with the output decrease as a result of heavy snow and electricity restriction in early February. Producers have shoot up offers sharply so that they could reduce supply and achieve more profits. On the other hand, some steel mills have an urge to offset continuous ascending production cost by improving export prices.

China Precision announces Q2 fiscal 2008 results

China Precision Steel, a niche precision steel processing company principally engaged in producing and selling high precision cold rolled steel products, announced its results for Q2 of fiscal 2008 ended December 31st 2007.

2008 Second Fiscal Quarter Highlights
1. Revenues were USD 11.9 million down by 20.6% from USD 15.0 million in Q2 of fiscal 2007
2. Gross profit was USD 3.4 million; gross margin improved 570 basis points to 28.4%
3. Net income was USD 2.4 million
4. Volume of precision steel products decreased to 14,010 tonnes down by 28.6% from 19,634 tonnes in Q2 of fiscal 2007. High carbon and low carbon products accounted for 37.9% and 46.9%, respectively compared to 52.3% and 47.7% respectively as compared to 2006.
5. New cold rolled mill currently operating at approximately 50% design capacity Completed USD 47.9 million registered direct financing

Dr Wo Hing Li Chairman & CEO of China Precision Steel's said ''During the quarter, our margins improved significantly as our sales mix included higher margin high carbon cold rolled products. Because of the complexity and longer production times involved with these products, our overall sales volume declined, resulting in lower revenues from the year ago period. Our revenues were also adversely impacted by a USD 2.0 million VAT and sales tax adjustment. Production capacity of our second cold rolled mill reached 50% at quarter end. The increased capacity will enable us to expand production of high quality and value added precision steel products, which will enhance profitability in the future.''

China Precision Steel is a niche precision steel processing company principally engaged in the production and sale of high precision cold rolled steel products and provides value added services such as heat treatment and cutting medium and high carbon hot rolled steel strips. China Precision Steel produces high precision ultra thin, high strength cold rolled steel products primarily for automotive components, food packaging materials, saw blades and textile needle manufacturing companies in the People's Republic of China. However, China Precision Steel is expanding into overseas markets such as Nigeria, Thailand, Indonesia and the Philippines, and intends to expand into Japan, the European Union and the United States in the future.

China to tighten elimination of obsolete capacity

It is reported that Shanxi, one of China's major industrial production bases has unveiled stricter measures to accelerate eliminating obsolete steel capacity in 2008.

As per report China provincial government has outlined specific closure tonnage for six energy intensive industries. The steel sector has to shut down 10 million tonnes of inefficient capacity in 2008, the power industry is required to eliminate 53,600 KW of small thermal power generating unit, the coking industry is urged to shut down 12 million tonnes, 2 million tonnes for cement sector, 450,000 tonnes for calcium carbide industry and 50,000 tonnes for ferroalloy sector.

Mr Hong chairman of Commission for Economic & Trade of Shanxi Province said Shanxi plans to draft out similar detailed schedule for other industries and a three year general plan for capacity closure.

China local government vows to take compulsory measures including cutting off supply of water, electricity, gas, transport, bank loan and even revoking the business license. On the end hand, Shanxi would take other economic and market measures like market accession, differential power rates and subsidiary to encourage more backward capacity to exit the market in advance.

Shandong 2007 coal imports reaches 2.154 million tonnes

It is reported that coal imports through Shandong Province added up to 2.154 million tonnes in 2007 amounting at USD 110 million up by 41.4% and 31.5% respectively from a year earlier.

General trade still dominated the imports while barter trader rocketed. The former contributed 2.112 million tonnes up by 40.6% accounting for 98.1% of the total the latter introduced 43,000 tonnes up by 95.9%.

As per report private enterprises imported 1.935 million tonnes up by 64.6%, representing 89.8% of the total state owned enterprises merely imported 219,000 tonnes down by 32.9%.

Anthracite coal was the major import variety. Imports of anthracite coal amounted to 1.901 million tonnes up 52.7%, accounting for 88.3% of the total imports that of coking coal 131,000 tonnes down by 46.4%; that of other varieties 122,000 tonnes up by 250%.

China reduces export tax on SS

It is reported that when export duty of the finished steel products of 38 custom tariff numbers were hiked as of January 1st 2008 three other numbers yet received a cut in the tax rate.

The report quoted Mr Wang Jianhua deputy director of Mysteel Research Institute as saying that this cut in the export tax rate involves non pickled stainless steel coil with a thickness above 3mm and below 4.75mm, pickled stainless steel coil with the same thickness range and non pickled stainless steel coil with a thickness of below 3mm. Their export tax rate was reduced to zero from 5%

Mr Wang said behind this tax cut is the stainless market has already been depressed with price plunges as a result of back flow of the exports after consecutive tax policy changes in 2007.

The analysts had said once current steel tax items classification is revised, some high end products now mixed with the low end in one custom tariff number may enjoy lower tax rate as compensation, in light of the export policies.

Gansu to become China's largest wind power generation base

According to market analyst northwestern China's Gansu Province is expected to be China largest wind power generation base in 10 years period.

According to the wind and solar power resource evaluation center affiliated to the Gansu Provincial Meteorological Bureau Gansu's, wind power resources lies along a 1000 kilometer ancient "silk road" with vast desert beside it for further use. There are no typhoons in the area and the lowest temperature is above minus 29 Celsius degrees, which is good for building and working wind power generation facilities.

The center said Lanzhou Xinjiang railway and No 312 national highway cross the province and large scale grids are scattered across the province, which provides easy access to the transportation of the facilities and transmission of the wind power.

The bureau's latest evaluation showed that the province has a total wind power reserve of 237 million KW which accounts for 7.3% of the country's total.

China made remarkable progress in wind power development in 2007 and the industry will expect further regulatory boost in the coming years.

Hanjin confirms Algeciras acquisition

It is reported that Hanjin plans to spend some EUR 55.3 million on construction of the new facilities in what is the first direct investment by an Asian shipping line in Spain and the Western Mediterranean.

The Algeciras Bay Port Authority said the bidding process was completed last year on December 21st 2008 and Hanjin was the only party to offer on the tender.

Hanjin said the new facilities are due to come on stream by July 2010 with the capability of handling some 1.5 million TEUs per year.

Mr JW Park CEO of Hanjin said “Securing a dedicated terminal in Algeciras will allow us to set forth into the African market. He said “It also allows us to secure an optimum hub port for making our presence in markets such as North Europe, the US east coast and South America.”

Hanjin currently operates 11 terminals around the world and MoUs were signed in 2007 to develop dedicated facilities in Vietnam and Jacksonville on the US East Coast. Other Hanjin US terminals are situated on the west coast at Long Beach, Oakland and Seattle.

China increasing control on ports overseas

It is reported that China has formulated a strategy to purchase global ports to control the global ocean shipping. Through purchasing the ports in the world, China will ensure to gain the direct channel for iron ore, oil resources etc.

As per report China has obtained the control right of Buenos Aires’s container port in Argentina, Panama's port operating company, Ensenada international port of Mexico Atlantic Coast and two ports of Bahamas.

The report said China would also gradually overrun South Korea to control the global shipbuilding industry. South Korean shipbuilding orders was EUR 8.18 billion in Q1 of 2007 accounting for 40% of the global shipbuilding orders. And China just gained 15% of the global shipbuilding orders, but the growth rate was fast. At the same period, Chinese bulk carriers and small oil tankers orders accounted for 56.6% of the global shipbuilding orders. In addition, China also made a great progress in the ship repair industry.

Alstom wins China subway contract worth EUR 85.5 million

It is reported that a consortium including French engineering firm Alstom and Chinese partners has won a contract worth EUR 85.5 million to supply 126 subway cars for the city of Nanjing.

Alstom said its transport division's share of the EUR 85.5 million contracts was EUR 25.5 million. Delivery of the cars which make up 21 trains was scheduled for 2011.

Alstom will design and test the cars while Chinese partner Puzhen, leader of the consortium will build the cars.

The subway cars are scheduled to begin entering service in 2010.

Gazprom Q3 profit down by 2.8%YoY

OAO Gazprom has announced its better than expected Q3 financial results citing higher prices in Russia and the former Soviet Union.

Gazprom said its profit down by 2.8% to RUB 124.440 billion, to International Financial Reporting Standards, from RUB 128.029 billion in the same period of 2006. Revenues up by 5.4% to RUB 516.175 billion in Q3 of 2007 compared to RUB 489.904 billion in the same year ago period and analysts' average forecast of USD 20.025 billion.

Gazprom said that it cut net debt by more than a quarter to RUB 583.435 billion as of September 2007 from RUB 807.814 billion as of December 2006. It said this decrease can be explained by a significant increase of our cash and cash equivalents in bank accounts primarily due to temporary placement of funds in Gazprombank from third parties."

Gazprom said its net sales of natural gas outside the former Soviet Union were down 1% in January to September 2007 to RUB 596.374 billion following lower sales volumes due to warm winter. But gas sales to the former Soviet countries rose 21 percent to RUB 190.374 billion in the period with a 27% increase in average realized prices. Operating expenses rose 15% in the nine months to RUB 1.163 trillion mainly due to higher volumes of purchased oil and gas.

The statement said referring to gas from Turkmenistan, Uzbekistan and Kazakhstan that “This increase is primarily related to the increase of prices for gas purchased in middle Asia, mainly for further reselling.”

Gazprom buys around 70 billion cubic meters of Central Asian gas annually and resells it mostly to Ukraine. Gas supplies from Central Asia help Gazprom cover demand in the former Soviet Union and Europe amid stagnant output in Siberia.

Russia to increase Zinc production

FIS reported that production of zinc in Russia may grow to more than 0.5 million tonnes, as follows from the analysis of current situation.

1. UGMK intends to reconstruct 'Elekrozinc' production to boost output to 110,000 tonnes per annum
2. UGMK plans to construct a zinc plant of the capacity of up to 100,000 tonnes in the Sverdlovsk region
2. Russian Copper Company is set to construct a hydrometallurgical plant in the Chelyabinsk region
4. A lead zinc combine is to be launched by 2012 in the territory of the Krasnoyarsk Krai by Metals of Eastern Siberia.

Claymont Steel commences change of control offer to purchase

Evraz Group SA’s wholly owned subsidiary Claymont Steel Inc has announced that it is offering to purchase for cash any and all of its outstanding 8.875% senior notes due 2015 at a purchase price of 101% of the principal amount of the notes.

The released said that Claymont Steel is required by the terms of the notes and the indenture governing the notes to make this offer as result of the previously announced acquisition of Claymont Steel Holdings Inc Claymont Steel’s sole stockholder by Evraz. The acquisition constitutes a change of control under the indenture governing the notes. The terms of the offer are described in the Change of Control Offer to Purchase, dated February 15th 2008 which will be distributed to holders of the notes.

The purchase price in the offer is specified by the indenture governing the notes and is lower than recent market quotations. Holders are urged to seek current quotations from their brokers or other advisors prior to deciding whether to participate in the offer.

The offer will expire at 5 PM New York City time on March 17th 2008 and will have a settlement date of March 20th 2008 unless the offer is extended. Holders whose notes are accepted for payment pursuant to the offer will also receive accrued and unpaid interest through the settlement date.

Global Bondholder Services Corporation will act as the depositary and information agent for the offer.

Brok Invest Servis to increase processed metal share to 25% by 2010

FIS reported that Brok Invest Servis is planning to increase metal sales to 650,000 tonnes and sales margin to 2.3% by 2010. Its processed metal is to account for 25% of total sales or about 160,000 tonnes.

In 2007 to 2008, the company opened 14 metal selling centers in the Moscow region.

EC favors reconstruction of Ukrainian gas transport system

Ukrainian News Agency reported that the European Commission sees the reconstruction of the Ukrainian gas transport system as necessary.

Ms Benita Ferrero-Waldner European Commissioner for External Relations and European Neighborhood Policy gave the position of the European Commission to the press. She said the European Commission was working jointly with the Ukrainian side to organize a conference in the autumn to raise funds for the reconstruction of the Ukrainian gas transport system.

Ms Ferrero Waldner said the European Commission welcomed the agreement between Mr Viktor Yuschenko president of Ukraine and Mr Vladimir Putin president of Russia in gas issues.

As Ukrainian News earlier reported, the Fuel and Energy Ministry is intending to create a fund to accumulate assets to be channeled to the modernization of the Ukrainian gas transport system. Ukraine is intending to raise EUR 2.5 billion to hold modernization of its gas and oil transport system until 2013.

Unifirm reduces its share in Severstal

FIS reported that Unifirm Limited reduced its share in the statutory capital of Severstal OJSC to 3.16% from 9.11% of voting shares.

In turn, Deutsche Bank Trust Company Americas increased its share in Severstal to 15.03% from 9.08% of voting shares.

ChTZ increases supplies for Honda Wheel Tractors

FIS reported that head of Spain's machine building company Sanefo Comercial visited Chelyabinsk Tractor Plant and reached an agreement on an increase by several times in the supply of 40 kilogram cast dynamic dampers for the wheels of small size 'Honda' tractors in 2008.

In 2007, the foundry of ChTZ increased pig iron and steel casting production to 6,458 tonnes from 5,433 tonnes in 2006.

KOWEPO to buy 5 Panamax thermal coal from Russia

According to unconfirmed reports, Korean Western Power Company has awarded five Panamax shipments of bituminous coal to Russian producers and traders in a recent tender.

The tender was seeking thermal coal for delivery between March 1st 2008 and June 30th 2008. The successful tenders for bituminous cargoes with a minimum calorific value of 5,600 kilocalories per kilogram net as received basis were priced at about USD 110 per tonne on FOB basis.

Other sources said that the price KOWEPO paid was fair and it was cheaper than buying coal from Australia or Indonesia because of lower freight rates.

A buyer at one of South Korea's utilities said "Russian coal can be sold at a more expensive price now, with supply disruptions from China."

Coal prices have jumped 37% since the start of the year to a record high of USD 130 a tonne, bolstered largely by China's two month export halt and supply disruptions from Australian miners due to severe floods.

Rosneft eying stake in Indian LNG sector

It is reported that Russia’s largest crude oil producer Rosneft may buy a stake in a liquefied natural gas processing plant planned by Indian state energy firm ONGC in the southern Indian city of Mangalore.

Mr Sergei Mikhailov head of energy policy at the Industry and Energy Ministry said in New Delhi where he was accompanying Mr Viktor Zubkov PM of Russia that India should also consider investing in 12 upcoming oil and gas projects in Siberia and the Far East.

Mr Mikhailov said "India has investments in Sakhalin-1. That is not sufficient to meet the country's rising energy demand. More opportunities to participate in oil exploration in Siberia and the Far East are coming up. Such participation is quite realistic. He said the government was considering the issue and would make a decision soon.”

The overseas investment arm of India's state run Oil and Natural Gas Corporation, ONGC Videsh, owns 20% of the Sakhalin-1 oilfield, operated by US oil major ExxonMobil.

Mr Firtash finds White Stream gas pipeline as impossible

Ukrainian News Agency reported that Mr Dmytro Firtash, who owns 45% of the shares in the RosUkrEnerg, finds implementation of a Ukrainian European Union project for construction of a gas pipeline called White Stream for delivery of natural gas from Central Asia to European countries through the Caspian Sea and Ukraine as impossible.

Mr Firtash said that successful implementation of such a large scale project required primarily gas delivery contracts with Central Asian countries. He said Russia has already contracted to buy all the natural gas supplied by Turkmenistan.

Mr Firtash said that "There are five countries on the Caspian. They have still not divided the Caspian as a sea. Therefore, how are you going to build this pipe? How can anything be delivered there? It is impossible." He said that construction of the Bohorodchany-Uzhhorod gas pipeline had prospects because it would increase the capacity of Ukraine's gas transport system by 30 billion cubic meters.

Mr Firtash said "It is extension of the pipeline. It will give Ukraine a practical opportunity to increase transit by about 30 billion cubic meters and, in terms of money that is about USD 500 million. He added that this project could be implemented in 2009.”