June, 29 2005
Vedanta eyes buyouts to hike zinc capacity
The Anil Agarwal-controlled Vedanta Resources is scouting for acquisitions of zinc assets in Australia and Eastern Europe in order to take its zinc production capacity to one million tonne, which will catapult it into the top three zinc makers in the world, from its current position at number six.
The group currently produces 4 lakh tonne of zinc per annum, through its subsidiary Hindustan Zinc Ltd (HZL).
Anil Agarwal, chairman, Vedanta Resources, said, "We want to become a one million tonne player in zinc and will look at acquiring assets overseas to reach this capacity. HZL is on thSSSSe lookout for zinc assets in Australia and East Europe."
Vedanta will join the bandwagon of global and Indian metal companies queuing up in Australia for acquiring assets.
The Aditya Birla group acquired copper mines in Australia in the last two years, while steel companies like Steel Authority of India, Jindal Vijaynagar Steel are currently on the lookout for coal mines in the mineral rich country.
Agarwal said the group has started scouting for the zinc assets but declined to specify the acquisition targets which the company has identified. Vedanta would acquire these assets through HZL, in which its holds a 64.9 percent stake.
Its a tall order for alloy steel cos as monsoon dries up demand
At A time when the automobile and component industry are claiming a spurt in volumes, alloy steel manufacturers have been showing weak order book positions for the past few months.
Alloy steel manufacturers get a bulk of their orders from automobile and component manufacturers. A senior official from a large alloy steel manufacturer confirmed that order book positions for his company have been shrinking. Orders are currently weak, he said. Compared to June 04, when the company had order books full for 2.5 months, it currently has orders only for 1.5 months, the official said.
Industry officials also attribute the weak order positions of alloy steel manufacturers and auto component manufacturers to the cyclicality or the seasonal impact on the auto industry. Orders go weak before the onset of the monsoon, and the uptrend begins before the festive season, when auto manufacturers start preparing to meet production targets for Dusshera and Diwali, when auto sales peak.
Interestingly, automobile sales for the past two months have been growing at 20%, lower than last years growth rate of 25%. Last year (04-05) was a phenomenal year for the automobile industry. We cant sustain that kind of growth year after year, a leading car manufacturer said.
In fact, analysts believe the auto component stocks have been in action mainly because of export opportunities as more and more global OEMs eye India as a key destination to source components.
Despite the stiff competition from countries like China and Mexico, India is increasingly becoming a sourcing base for auto majors seeking completely built-up units (CBUs) as well as outsourcing of components. The sourcing of auto components from low-cost countries (LCCs), currently worth $65bn, may reach $375bn by 15, industry sources said.
It is expected that the growth in the auto ancillary sector is likely to be around 16% by the end of FY06, which is lower than the growth of 22-24% recorded in FY05. Exports of auto components are expected to rise by 30-35%, while replacement demand is likely to remain steady at 7-8%, as in FY05.
Industry officials maintain that alloy steel manufacturers have seen a 20% lower order book position in the first quarter of FY06, as against the first quarter FY05.
But an official from an alloy steel manufacturing company said that inventory is not piling up as they manufacture only against confirmed orders. In fact, inventory levels have dropped, from over 20 tonnes last month to 18 tonnes in June. He said that the industry is largely dependent on the auto sector . If motorcycles and cars are produced at a higher rate we will have higher sales and vice-versa.
Sail board clears 8 new projects
Going ahead with its expansion plan, the Steel Authority of India (Sail) board of directors today sanctioned implementation of eight important projects at a total investment of around Rs 300 crore this morning. Of these, three have been cleared for Bokaro Steel Plant (BSL), two for Rourkela Steel Plant (RSP) and one each for Bhilai Steel Plant (BSP), Durgapur Steel Plant (DSP) and Visvesvaraya Iron & Steel Plant (VISL), Bhadravati, a company release said.
The projects sanctioned today are in addition to the capital schemes valued at over Rs 3,000 crore, which are under various stages of implementation. The projects form a part of the companys growth plan that envisages enhancing hot metal capacity from 13 million tone (MT) in 2003-04 to 20 MT by 2011-12.
Among the key projects that were granted approval today include the modification of Mae-west Block system at BSLs Hot Strip Mill. The project is likely to improve the consistency in the quality of BSLs hot roiled products. The project is scheduled to be completed in two phases by 2007-08 at a cost of around Rs 92 crore.
Another important project for BSL that received in-principle approval was installation of Hydrochloric Acid regeneration plant for pickling line II at a cost of around Rs 50 crore.
Koda stamp on mining lease terms - Govt skirts Chiriya poser
Mines and geology minister Madhu Koda today asserted that the government would not renew the mining lease granted to IISCO and said only companies which agree to set up new industries in Jharkhand will be given the licence.
Kodas statement was in response to a short-notice question put forward by the BJPs Saryu Rai who wanted to know why the government had not approached SAIL for setting up a steel plant close to the Chiriya mines.
Rai pointed out that though Chiriya was known to have the richest iron-ore reserves in Asia, there was no integrated steel plant located close by.
Speaker Inder Singh Namdhari too asked the minister why his government was not approaching the Centre with the request to direct SAIL to set up an integrated plant in Chiriya. But Kodas stock reply was that six mining leases, including two granted to IISCO, had not been renewed.
Annoyed by the reply, the ruling partys chief whip, C.P. Singh, asked: Will the government only keep on signing big MoUs and awarding mining leases or will it also do something for setting up new industries?
Koda replied that setting up new industries in the state was a condition for securing mining lease. The government, he said, was taking necessary precautions while renewing the old mining leases. IISCOs mining lease expired several years ago, but it never cared to apply for renewal. A few more mining leasesawarded to SAIL several decades ago too have not been renewed.
The members, however, argued that mining lease granted to SAIL and IISCO should be renewed, since it has been operating in the area for the last several years. But Koda was not convinced. He said since IISCO had filed a petition in the high court, the matter should not be discussed in the House.
IISCO was awarded two 30-year mining leases in 1947. Ideally, they should have applied for their renewal in 1976. As per the revised mining rules, they were allowed to carry out mining operations for another 20 years. But they never submitted formal applications for the renewal. Now IISCO has merged with SAIL and it has also approached the high court for the renewal. Sub-judice matters should not be discussed in the Assembly, Koda said.
The minister is making false claims. I can present documentary evidence to prove that IISCO officials have been running from pillar-to-post over the past few years for the renewal, said Manoharpur legislator Joba Manjhi.
