December, 27 2005
Steel is hot with mega-capacity plants lined-up
Steel minister Ram Vilas Paswan on Monday said that investment of INR 271,000 crore are lined up in the steel sector through 102 MoUs signed by different state governments to add 103 million tonne steel capacity. This is while briefing reporters about the performance of the domestic steel sector.The steel minister said record investment commitments was a result of investment friendly policies being pursued by the government that has attracted the interest of both domestic and foreign steel giants.
Out of the total investment commitment, about INR 80,000 crore would be foreign direct investment component coming from two large steel projects - Posco in Orissa and Mittal Steel in Jharkhand.
The National Steel Policy announced by the government recently has set a target of increasing steel capacity in the country from present 38 mt to 110 million tonne by 2019-20. One-third of this capacity would come from PSUs while rest would be contributed by private sector.
He also said that the iron ore reserves in the country are 22 billion tonnes that are sufficient to meet all the growth and expansion needs of the sector for a period of at least 125 years. However the ministry needs to review the issue of iron ore exports with high Fe content, as a need arose, he said.
He said this during a meet with a Group of Ministers for meeting the objectives of the National Steel Policy.
Essar Steel to clear Rs 487cr debt to UTI by Dec 31
Essar Steel (ESL) will repay Rs 487 crore of outstanding debt by March 31. The repayment will be done partly through refinancing and partly through internal accruals, according to the report. The UTI has agreed to the three-month delay. ESL will pay a 10% interest for the delayed payment. ESL had reached a restructuring agreement with UTI in 04 to repay the entire debt of Rs 927 crore by December '05.
The restructuring involved Rs 80 crore being paid by the company before December '04, Rs 10 crore to be paid every month there after, and the balance Rs 737 crore was to be paid before December '05.
ESL, managed to pay only Rs 250 crore of the balance Rs 737 crore before December. ESL now plans to be out of the corporate debt-restructuring (CDR) package before March 31 by pre-paying lenders.
The company has a foreign currency loan of Rs 400 crore, and Rs 1,400 crore of debts, which were raised to refinance the CDR debt and the Rs 737-crore due to UTI. These debts are excluding debts towards UTI.
The company had earlier agreed to clear UTI debt by December 31.
Cheap ore for Orissa sponge iron makers
Orissa government along with Orissa Mining Corpotration is planning to reduce the prices of iron ore following a sudden fall in steel prices in the international market. This step is necessory to save a large section of steel industry as it uses sponge iron as a raw material to produce steel.
The fall in steel prices in the international market and rising input prices, has put 79 sponge iron units in Orissa in a dificult situation. To produce one tonne of sponge iron, 1.5 tonnes of ore and a huge amount of coal are needed. The plants with a total annual production capacity of 6.9 million tonnes require about 17 million tonnes of ore and 13 million tonnes of coal. These plants appear to be on the verge of closure.
The state has already reduced the price of chrome ore, a raw material for stainless steel, from Rs 5,300 per tonne to Rs 3,200 per tonne, he added.
Ministry opposes captive iron ore mining by steel producers
The Ministry of Mines has opposed to the proposals of captive iron ore mining by steel manufacturers as a matter of principle.
This leads to an element of subsidy through transfer pricing and the mining sector is deprived of its share of profits in the value chain. There is also a loss of revenue to the Government.
The Ministry said that allowing steel producers to hold the value added from captive mining of iron ore for steel production results in a huge subsidy to them. In a case of captive mining by the steel producer the former gets subsidized in two ways.
Hurdles block plan to make SAIL a mega PSU
As told by Ram Vilas Paswan, union steel minister, Maharashtra Elektrosmelt, a subsidiary of SAIL, wants to be merged with the parent company. SAIL wants Manganese Ore and Iron (MOIL), too, to be amalgamated with it whereas MOIL does not want to be merged. SAIL wants
Rashtriya Ispat Nigam (RINL) under its umbrella, but RINL does not want the merger.
Citing this situation, the government's ambitious plan to make Steel Authority of India (SAIL) a mega PSU may hit a roadblock.
The ministry also has to protect states' interests while making this merger successful. He told that Andhra Pradesh does not want RINL to be merged with SAIL as they feel supply of steel in state may suffer. He says that the final decision will be taken very soon in this regard. Paswan also emphasized that the center favored the mergers in view to make SAIL a truly international standard steel producer. SAIL has already embarked upon its own expansion plan, envisaging an investment of over Rs 34,000 crore by 2012 to augment its production capacity to
over 20 million tonne.
Guj NRE mulls overseas issue
Gujarat NRE Coke Ltd (GNCL), the largest non-captive metallurgical coke manufacturer in the country, is planning to raise $50-$100 million from the international market. The board will meet on December 29 to weigh the options of raising the funds through ADR, GDR or FCCB.
This is the second time in less than a year that GNCL is raising funds from overseas markets.
Gujarat NRE has decided to expedite the mining plan for Avondale Colliery in New South Wales (NSW), Australia to cash in on the booming global coking coal market.
The mine has a reserve of 96 million tonnes of coking coal. The company is expected to pump in $65 million to develop the mine, which is likely to start production in 2007. Initially the production capacity of 0.5 million tonnes, will go up to an annual output of 1-1.5 million tonnes within three years.
Coking coal price in the international market is likely to be at $110 a tonne FoB, while GNCL can produce it at $60 a tonne in Australia. The company will get the return on investments in less than two years.
The majority shares of Avondale Colliery are with FCGL. With the merger, the complete ownership of the mine will come to GNCL. This consolidation will also bring another Australian colliery to GNCLs kitty.
NTPC to go ahead with non-coking coal import
Although the overall availability position of power grade coal from domestic coal companies has improved in recent weeks National Thermal Power Corporation (NTPC) has decided to go ahead with its plan to import a minimum of about four million tonnes (mt) of non-coking coal in 2006-07.
The stocks have increased in each of the company's power stations in recent weeks, in the eastern region especially. The subsidiaries of Coal India Ltd (CIL) agreed to supply an additional quantity, over what has been earmarked by the coal linkage committee at prices agreed to between both parties in the Coal Supply Agreement (CSA).
TBUHO to meet CM on KIOCL
It is reported that Tunga Bhadra Ulisi Horata Okkoota decided to meet Chief Minister N Dharam Singh to clarify the Governments stand on closure of Kudremukh Iron Ore Company Limited (KIOCL).
A meeting of like-minded people, held under the auspices of TBUHO here decided to take the delegation under the leadership of Kadidal Shamanna to the CM on Dec 30.
The SC had ordered to close KIOCL and mining in Kudremukh before December 31.
But efforts have been going on to continue mining activity and to run KIOCL by highlighting the problems of laborers in the factory.
Delegates decided to urge the Chief Minister to form a committee comprising of environmentalists, villagers and Government officials to resurrect damages caused to the forest and ecology in Kudremukh area.
The meeting also decided to plan its future course of action depending on the developments that would take place after December 31.
Govindacharya opposes POSCO project
Mr KN Govindacharya, Swadeshi Jagaran Manch leader called upon the people to oppose the proposed Posco steel plant project, irrespective of party affiliations, in an organized way.
Addressing a meeting organized by the Manch at the end of a week-long march in protest against the proposed Posco project, Mr Govindacharya said there was a need for launching a powerful mass movement as had been done in case of Enron power plant.
Posco is setting the steel plant in Orissa only on profit motive. Development of the state is just eyewash, he said.
It is the people of Orissa who will suffer in the long run due to lack of foresight of few politicians when the precious mineral resources of the state will get depleted, warned the Manch leader citing the instance of Ethiopia.
The South Korean company and not the people of Orissa will get richer, he said stating that all the profits would go to Posco. Hence, the people of Orissa should organise themselves and give an united fight against the foreign company.
Mukand plans second mega land sale in Mumbai
Steel major Mukand has now embarked on another land sale of close to 1 million square feet at Vidyavihar in Mumbai. The land is close to 0.93 million square feet land sold by the company at Kurla also in Mumbai to rake in Rs 221 crore few weeks back.
The company is holding talks for selling its 1 m sq feet land at Vidyavihar under one of its subsidiaries. Mukand is expected to close this transaction by March 2006.
The sale of Vidyavihar land will further trigger a reduction in debt and a commensurate reduction in interest cost. The company had a debt of Rs 1,100 crore in its book as on March 31, 2005 which resulted in an interest outgo of Rs 80 crore per annum.
The company is utilizing the proceeds from the sale of the Kurla property for repayment of part of the debts and to part finance the ongoing expansion plans of the company including enhancing the capacity and creating further down stream facilities at both its Ginigera and Dighe (Thane) plants at an investment of Rs 120 crores.
Essar plans steel Special Economic Zone at Hazira
Essar Steel has proposed to set up a special economic zone at Hazira in Gujarat. The SEZ is estimated to cost Rs 13,000 crore. The proposed SEZ would be spread over 1,100 hectares of land adjacent to Essar's existing site.
Essar has sought support from the Gujarat government for the proposed SEZ. An additional investment of Rs 400 crore is estimated for setting up the SEZ's infrastructure. The SEZ will be the country's first for steel and the second dedicated zone in Gujrat.
The capacity of the plant in the SEZ could not be confirmed but is likely to be over 5 Million tonnes. The plant is reported to be integrated steel and power project. The power project will use Natural Gas and have capacity upto 1,000 Mw depending on the size of steel plant.
Political discrimination wage dispute settled by Nippon Steel
Nippon Steel Corp. on Monday negotiated settlement with a group of five former workers who filed a damages suit against the major steel maker, saying they were discriminated against in wages because they were communists, as reported.
The five workers joined Fuji Iron & Steel Co. between 1956 and 1962, and later joined the Japanese Communist Party. Fuji merged with Yawata Iron & Steel Co. in 1970 to become Nippon Steel.
The amount of compensation soars to 'more than double' the 15.4 Million yen which was set by a District Court in Kobe in 2004 that acknowledged the discrimination based on their political party affiliation.
This settlement happened in Osaka High Court which included a provision saying Nippon Steel shall not engage in discrimination based on thought or creed and treat all employees fairly.
The workers were seeking 78 Million yen in damages, the report said.
Mittal Steel eyes stake in China's Baotou Iron and Steel Group
Mittal Steel Co NV, the world's largest steel manufacturer, plans to buy a stake in Baotou Iron and Steel Group Co. Baotou is a second-tier steelmaker in China. Mittal has completed due diligence of Baotou Iron and Steel and is keen to buy as large a stake as possible.
Mittal is looking for maximum of 49 percent stake in Baotou Iron and Steel,as China does not allow foreign companies to hold a controlling stake in steel mills. Baotou is a state-owned steelmaker based in Inner Mongolia.
Chinese companies plea for extension rejected by Pakistan Government
Saying it does not fit well in the government of Pakistan's (GoP) sell-off plan, the Privatisation Commission has rejected Chinese steel giant Shanghai BaoSteel Corporation's demand for three months extension in Pakistan Steel Mills Corporation (PSMC) bidding deadline.
Shanghai BaoSteel Corporation, of China, is one of the short-listed parties for PSMC. It had approached the Privatisation Commission for three months' extension in the deadline.In its request the company said that after going through evaluation it has to refer the report to its board for approval, which requires some more time. To deal with this situation, it had demanded three months extension in sell-off deadline, media report said.
The Privatisation Commission has given the deadline of January 15, for PSMC transaction. Its team is engaged in completing the process on fast track basis.
Khuzestan steel Co. exports $ 230 million of products since March 2005
Iranian steel maker Khuzestan Steel Co. has exported over 230 million tons of its products since the beginning of the current Iranian year (started March 21). It is estimated that the production to reach 2.2 million by the end of the current year of which one million tons will be exported.
Khuzestan Steel Company managed to raise its output to 2,150,000 tons in the last Iranian calendar year of 1383.
The Company had exported 820,000 tons of its products for $355 million last year. The company exports its products to China, Taiwan, Indonesia, India, Saudi Arabia, Kuwait and Britain. The exports are up 15 percent in weight and more than 200 percent in value compared to the previous year as reported.
Khuzestan Steel Co. is one of the major steel producers in the Middle East.
Chinese steel for Samsung Heavy Industries
Samsung Heavy Industries Co., one of Korea's leading shipbuilders, will be receiving supply from China's largest steel company, Shanghai Baosteel Group, says report. Samsung Heavy denied that it has signed a contract but says it is optimistically looking into the offer.
Baosteel reported to have agreed with Samsung Heavy to supply 100,000 tons of shipbuilding steel sheets starting next year. In order to boost decreasing sales, Chinese companies are trying to increase production of high quality steel with added value, such as steel sheets used in ship and automobile production.
Samsung Heavy now uses 2 to 3 percent of Chinese steel sheets out of its 1 million ton annual consumption.
Earlier this year there was friction between Korean shipbuilders and Posco, Korea's leading steel company, over the high price for steel sheet.
Two other leading Korean shipbuilders, Hyundai Heavy Industries Co., and Daewoo Heavy Industries and Machinery, are also said to be looking into using Chinese steel, which is 10 percent cheaper than Korean steel sheets. These retail at 645,000 won ($636) per ton.
Most profitable year ever for Australian mining industry
The Australian mining industry has had its most profitable year ever. With the China-driven commodities, Australia is expecting to see 2006 even more profitable.
This was supposed to be the year prices eased as supply began to catch up with demand and Chinese growth slowed to more normal levels.
It didn't happen and instead 2005 saw analysts deciding the party were not yet over and the commodities boom was going "stronger for longer". Driving the sustained demand are the twin trends of rapid urbanization and industrialization in China. The breakneck pace of construction of housing and infrastructure and the growth of China's manufacturing sector look set to drive demand for base metals for some time to come.
Stainless steel to be produced by Esfahan for the first time in ME
Esfahan Steel Complex (ESC) will be implementing a stainless steel pilot production within next tow months. This will be first time ever in Middle East that some company is producing Stainless steel.
Annual market production of 50,000 tons is projected for the year 2006. The production will cover for domestic consumption and exports. For the year 2003-2004 ESC's exports were at $77 Million which is 150 times more compared to ESC's exports in 1997 due to downturn in steel export business.
