June, 04 2005
CIL, Sail plan JV to acquire coal mines abroad
Steel Authority of India Ltd (Sail) and Coal India Ltd (CIL) are planning to set up a joint venture company for acquiring coal mines abroad. The move aims to end the perennial shortage of coking coal and low ash non-coking coal in the country reported a leading business daily.
The Coal India board has already cleared setting up of CIL Videsh as a wholly owned subsidiary of CIL with a proposed equity base of Rs 100 crore. `Initially, it would be Rs 100 crore, but we would be investing as much as required, the CIL Chairman, Sashi Kumar, told Business Line, and added that initial talks with Sail had taken place earlier this week.
CIL would be looking at Indonesia, Mozambique, South Africa and Australia for good mines, Kumar said. He said that CIL may not directly form a joint venture company with Sail, but will do it through the subsidiary, CIL Videsh.
Earlier, Sail and CIL were independently planning to acquire coal mines abroad. Sail is searching for mines to ensure assured supply of coking coal throughout the year because India does not have the necessary grades of coal that is required for steel plants. The company had to cut down production last fiscal due to shortage of coking coal.
Sources said that earlier this year an attempt by Sail to acquire a particular mine failed because the company was not able to undertake a proper due diligence exercise as it does not have the necessary expertise in coal mining.
On the other hand, the CIL Videsh, which is being set up following the ONGC Videsh model, had been planned during the NDA regime.
CR steel-makers not to cut prices
Cold-rolled (CR) and galvanised steel manufacturers have no intention to toe the line of hot-rolled (HR) steel manufacturers and are opting for a wait and watch approach till the end of the quarter reported a leading business daily.
By the end of June, the situation of low inventory across the globe including China -- the biggest consumer -- would move up leading to a firming up of prices, they said.
Steel-maker Uttam Galva is not planning cut prices of CR and galvanised steel. The company expects steel prices to firm up by the end of the quarter eliminating the necessity of an increase in prices. Its contracts for supply and sourcing of raw material and finsihed products are on a quarterly basis.
The demand of steel would increase by the end of the quarter and prices would either stabilise or rise. There is a slight cut in inventory, which had lead to the present slump. However, this is unlikely to continue, Uttam Galva Director Ankit Miglani told Business Standard.
According to industry sources, Bhushan Steel & Strip was also not planning to cut the prices of CR and galvanised steel, as the company is also supplying on a long-term basis. Bhushan Steel officials could not be contacted for comments.
Tata Steel is yet to take a decision of price cuts, despite all major producers revising their prices downwards. `There is no immediate move to cut prices, an official of the company said.
Ispat Industries Executive Director (Marketing) Vinod Garg said CR and galvanised steel makers normally source and supply on a long-term basis.
There would not be any price changes for the long-term contracts as the markets are expected to stabilise with an expected increase in offtake begining by the end of this month, he said.
The company is planning to slash the prices of HR in line with that of the industry majors, while a similar reduction is also being contemplated for monthly contracts, Grag said.
Major steel makers had cut prices on Wednesday following a fall in international prices of the commodity.
Major steel producers, including Steel Authority of India, Essar Steel and Ispat, except Tata Steel revised their prices downwards by Rs 2000 a tonne.
Steel producers pointed out that there has been poor demand in Europe and US which resulted in prices declining by at least $ 100 per tonne. Also, the domestic market was flooded by imports from CIS countries.
Same was the case with aluminium, with Nalco and Hindalco reducing prices by Rs 2500 per tonne due to weakening of aluminium prices on the London Metal Exchange over the past few months.
Analysts tracking the aluminium sector said that China was expecting an appreciation in its currency and has stalled any purchase of the metal.
BSIL enters rebars mkt
Bhuwalka Steel Industries Ltd (BSIL) is to enter the reinforcement steel bars (rebars) segment in the country with a tieup with German company Thermex reported a leading business daily.
As part of the agreement, Thermex is to give Bhuwalka Steel the technical know how to manufacture quenched and self tempered rebars, said S K Bhuwalka, CMD, Bhuwalka Steel Industries Ltd.
For this, the company has upgraded its Hoskote plant and has plans to sell the product under the Bhuwalka Thermex brand.
Electrosteel to raise fund from GDRs
Electrosteel Castings on Friday said it will raise about Rs 225 crore through issue of Global Depository Receipts for its expansion plans reported a leading business daily.
The Board of Directors have approved the issue of GDRs for raising around Rs 225 crore for its expansion plans, subject to shareholders approval, the company informed the Bombay Stock Exchange.
The proceeds will be utilized to meet the expansion of ductile iron (DI) pipes production estimated to cost Rs 51 crore and the incremental working capital requirement of Rs 49 crore. The balance will be utilized to retire the high cost long term debt of Rs 100 crore, it said.
DI pipe plant capacity will be increased to 2.50 lakh tonne per annum from the present 2 lakh tons per annum and the project is expected to be completed by middle of 2006.
The Board also approved that the authorised capital should be increased to Rs 50 crore from the present Rs 20 crore.
No divestment plans for Nalco
Apparently ignoring a finance ministry letter, recommending disinvestment of 20 per cent government stake in the National Aluminium Company Limited (Nalco), Union minister for mines, Mr Sis Ram Ola today categorically said that there was no plan to divest governments stake in the aluminium major.
There is no plan to disinvest governments stake in Nalco, Mr Ola told a media briefing here.
In a letter written to the ministry of mines last month, the finance department asked the mines ministry to consider the proposal of divesting 20 per cent of the governments 87 per cent stake in Nalco.
Mr Ola made it clear, while answering a question, that he was against the proposal as Nalco was performing well and there was need to add more strength to the company, which made highest ever net profit of Rs 1,222.43 crore in the just concluded financial year 2004-05.
Nalco chairman and managing director Mr C R Pradhan, who was present during the press conference, agreed with the minister, saying: given a choice we will not favour disinvestment. The company is performing very well and it should be allowed to grow on its own. As far as further expansion is concerned, we can generate resources. It will not be a problem, he added.
The mines ministry has so far not responded to the letter and has expressed their opposition to it. Every Union ministry is entitled to have its own views on each particular matter. The Union finance ministry supports disinvestment but we do not agree. We have so far not responded to it but when we do so, we will express our opinion against it, Mr Ola said. We do not want to reduce the companys (Nalco) strength and we will try that disinvestment in the company does mot take place, Mr Ola concluded.
Mittal brothers slug it out in Liberia courts
Lakshmi Mittal, owner of the worlds biggest steelmaker, is embroiled in a legal wrangle with a company run by his brother over attempts to develop Liberias run-down iron-ore industry.
Mittal Steel says it approached Liberias government last year to develop via a joint venture the Liberian Mining Corporation (Liminco) concession, which encompasses iron ore deposits, a railway and the port of Buchanan.
But a court case filed against the government by rival steel company Global Infrastructure Holdings Ltd, run by Lakshmis younger brother Pramod Mittal, has pushed back talks over possible investment in the multi-million dollar project.
GIHL and its partner Provider Ltd claim they have the rights to the project after signing a memorandum of understanding with Liminco in November 2003.
Both Mittal Steel and GIHL are keen to develop the project in the face of rising global prices for iron ore. Mittal Steel needs raw materials for its mills in Algeria and South Africa. GIHL needs more resources to feed the giant Ajaokuta steel mill and the Delta Steel Company in Nigeria.
GIHL and Provider say a letter seen by the Financial Times and signed by Jonathan Mason, Liberias mines minister, on August 30, 2004, states that a motion to engage GIHL in contract negotiations was agreed by Liminco's board after considering proposals from other companies, including Mittal Steel.
GIHL and Provider said the decision by Gyude Bryant, Liberias interim president, to halt any further negotiation in October 2004 so the project could be more widely advertised was a violation of Liberian law.
Jacob Varnam, a Provider director, said Mittal Steel's discussions were spurred on by John Blaney, US ambassador to Liberia.
In a letter to Mr Blaney in September 2004, Inland Ispat, a US-based Mittal Steel company, said that sourcing cheap iron ore from Liberia for its US operations would safeguard in excess of 30,000 jobs in the Chicago area through direct and indirect employment.
Tata Steel launches business excellence campaign
Tata Steel Thursday launched "ASPIRE Unlimited" as part of its march towards excellence in all spheres of business processes.
The programme was launched by Tata Steel managing director B Muthuraman in the presence of senior officials of the company along with union office bearers at a glittering ceremony in Jamshedpur.
With the help of the ASPIRE Unlimited programme, Tata Steel expects to establish a clear competitive edge by delivering more value to its customers and further reinforce the supply chain process.
The programme is expected to deliver measurable improvements in operational performance and profitability.
Tata Steel has appointed Goldratt Consulting Limited of Britain for implementing its 'Viable Vision Programme', which has been branded by the company as "Aspire Unlimited" and will run as a campaign internally. It is based on the principles of "Theory of Constraints" (TOC) developed by Eliyahu M. Goldratt.
Steel ministry to streamline licensing policy
Irked by the ongoing controversy between West Bengal and Jharkhand over the allotment of iron ore mines to the Jindal Group, the steel ministry has decided to act tough.
Accordingly, it plans to streamline the national policy for awarding licence and lease of mines to various companies. The ministry has already formed an expert body headed by its former secretary R K Dang to look into the matter and formulate the guidelines on the issue of granting lease and licence for iron ore, manganese and chrome.
A senior official of the ministry stated here on Friday, The guidelines given by this body will have to be followed by all the states. However, their interests will also be looked after. But the main intention is to see that investments across the country are not held up on the whims of certain states.
The expert body, however, will interact with all the top industrialists, trade bodies like the CII, FICCI, etc as well as major steel companies before formulating the guidelines. In recent times there has been a mad rush to acquire lease and licence of mines in Orissa, Jharkhand and Chattisgarh.
However, the governments of these three states have refused to grant the lease unless investments take place in their respective state itself. They have also framed policies on the same lines, something that has not gone down very well with the Union steel ministry as they feel that it is unethical and against the Mines and Minerals Act.
The official pointed out, The new guideline will help in solving tricky issues, like the ongoing one between West Bengal and Jharkhand.
He also added that the guidelines would be finalised within the next three months. Initially, the Jindal Group had proposed to invest in West Bengal. But the project ran into trouble when the Jharkhand government refused to grant them the lease of iron ore mines.
The Jindals then decided to split the Rs 10,000 crore project between the two states allotting an Rs 2,000 crore share to Jharkhand. But Jharkhand chief minister Arjun Munda has turned down the second proposal as well.
