February, 14 2006
SC stops Clemenceau entry at Alang
Indian Supreme Court on Monday ensured that controversial Clemenceau is kept out of India's exclusive economic zone till a panel comprising former heads of naval dockyards and defence experts assessed the hazardous content of the decommissioned French warship, originally planned to be scrapped at Alang in Gujarat. Not satisfied with the report of its Monitoring Committee on Hazardous Wastes, the Supreme Court on Monday directed the Centre to suggest a new panel to go into the issue of allowing the French warship, Clemenceau, into India.
A Bench consisting of Justices Mr Arijit Pasayat and Mr SH Kapadia asked Additional Solicitor General Mr Gopal Subramaniam to suggest the names by February 17. Three or four retired Navy officers could be included. They could be those who headed the dockyards in Mumbai, Visakhapatnam and Kochi, it said.
It was hearing a petition filed by the Research Foundation for Science seeking a direction to stop the entry of the ship into the territorial waters of India on the basis of the interim report of the court-appointed Monitoring Committee on Hazardous Wastes.
Indian government to review taxation agreement with Luxembourg
It is reported that Indian government plans to review signing the proposed double taxation avoidance agreement DTAA that is currently being negotiated with the Duchy of Luxembourg, in an apparent response to the latters hostility towards Mittal Steels bid for Arcelor. Top sources in the government said the decision to use the proposed agreement as a bargaining lever has been mooted by the commerce and industry ministry, which will soon take up the matter with the finance ministry.
Indias permanent mission to the European Union in Brussels has concurred with the planned retaliation measure against Luxembourg. Luxembourg is one of the founding members of the European Union and a DTAA will help investors from the two countries take credit for taxes paid in the other country.
The move comes in the wake of the Duchy of Luxembourg moving to bring a legislation empowering the board of companies to decide on takeovers without going to shareholders for their opinion.
CIL sells 10 million tonnes coal through E-auction route
Coal India Ltd has sold 10.21 million tonnes of coal through e marketing during the April to November 2005 period. Average increase over notified price during the period was 54.2% and a total number of 17,403 bidders took part in the process of which 10,526 were successful, an official statement said.
CIL has also released another 10 million tonnes of coal through the e marketing mode, a system which helps to do away with unscrupulous traders and black marketers.
BCCL to increase coking coal output
It is reported that, after the turnaround in first three quarters of the current fiscal, Bharat Coking Coal Ltd has firmed up an investment plan to augment production of raw and washed coking coal. Steps have been initiated for the development of a fast track Greenfield underground project at Kalyaneswari in West Bengal to produce two million tonnes of medium coking coal and 3 million tones of thermal coal. Action has also been initiated for amalgamating North & South Tisra so as to develop a 5 million tones opencast mine.
It is reported that steps were being taken to hire heavy earth moving equipment for increasing coal production and global tenders had been floated for introduction of "powered support longwall face" technology at Moonidih on a risk/gain sharing basis. It is learnt that a large part of the investment cost for technology and equipment to be deployed in the mine would be sourced from SAIL on attractive terms.
Indian PM may raise Mittal Steel Arcelor issue with French president
It is reported in media that hostile reaction from Luxembourg governments towards Mittal Steels bid for Arcelor is likely to figure in the discussions between Indian Prime Minister Dr Manmohan Singh with French President Mr Jacques Chirac. This could certainly be one of the issues to come up during the discussions, an official sources is quoted said, adding that it was too early to say at this stage in what form the matter is raised.
The Government of Luxembourg, a shareholder of European steel major Arcelor, has indicated that it could rush through a bill aimed at thwarting the Mittal Steels hostile bid to take over Arcelor.
The French President arrives on a 3 days visit to India from February 19.
Ship repair facility likely to come up at Chennai port
Mr K Suresh, chairman of the Chennai Port Trust, said the port did a feasibility study and has sent the proposal to the Union ministry of shipping seeking in principle approval for the project to build a ship repair facility on BOT basis. He said that the project would require an investment of Rs 150 crore and leading organizations such as Dubai Ports evinced interest in participating in the project.
The facility will have space to repair 15-20 ships a month.
The Chennai port's investment would be restricted to Rs 1 crore and other details such as sharing of revenue with the operator and other formalities would have to be finalised, he added.
ThyssenKrupp Q1 net falls by 23%
ThyssenKrupp announced that its Q1 profits fell by 23% percent after European stainless steel prices weakened. Net income in the three months ended Dec. 31 fell to Euros 255 million from Euros 331 million a year earlier. Pretax profit from carbon steel rose to Euro 272 million euros from Euro 252 million euros a year earlier but for stainless steel, it dropped to Euro 7 million from 125 million. However, ThyssenKrupp reiterated that it expects pretax profit of about Euro 1.5 billion for the full fiscal year.
Stainless steel prices reached a trough in the fiscal first quarter because of a stagnant market, increased capacities at competitors and an accelerated reduction in inventories held by distributors,'' ThyssenKrupp said in its statement. European base prices for stainless steel fell to an estimated Euro 1,179 per ton in 2005, compared with Euro 1,445 in 2004, Mr Peter Mallin Jones, an analyst in London at Goldman Sachs Group Inc said in a report on February 2.
ThyssenKrupp's automotive, elevator and services units also reported lower pretax profit. ThyssenKrupp gets about 60% of its pretax profit form steel, 20% from the elevator business and 20% from services. The company today said profit at four of six segments declined.
POSRI predict S Korean steel demand to pick up in second half
South Korean domestic steel demand, which tapered off last year, is expected to recover after the first half of this year, as per POSCO Research Institute POSRI. Korea's nominal steel consumption, including inventories in the first half of this year, is estimated to rise 0.8% from a year ago to 24.12 million metric tons, POSRI said in a report released. "The domestic steel demand is likely to rebound from the recent slump after the first half of this year," POSRI said. "However, considering that steel inventories are piling up due to rash imports of cheap Chinese products, steel business won't be benign."
POSRI forecasts that nominal steel consumption in the first three months would drop 1.4% compared to a year ago to 11.54 million tons but gain 3% YOY in the second quarter to 12.58 million tons. In the latter half of 2006, nominal steel consumption is expected to climb 4% from a year ago to 23.71 million tons. The annual consumption, therefore, would surge 2.4 percent to 47.83 million tons.
POSRI and the Korea Iron & Steel Association estimate last year's nominal steel consumption at 46.73 million tons and 46.91 million tons, down 1% and 0.2% from 2004, respectively. Last year's nominal consumption of steel bars and sections dipped 6.7% from 2004 but is expected to swell 2.2% to 19.85 million tons on recovery of the construction sector. Consumption of flat steel products also rose 4.6% last year and is forecast to grow 2.5% to 23.36 million tons this year with favorable demand of surface treatment plates such as galvanized steel sheets.
The research institute forecast this year's steel exports to gain 3.4% to 16.72 million tons, slower than last year's 7.1% growth. Imports, which soared 12.2 percent last year, are expected to decline 2.7% to 8.31 million tons due to the excess inventories.
Shenhua targets 200 million tones of coal production by 2010
Shenhua Energy Co, China's largest coal producer, plans to increase its production by 64% in the next four years, the company said in a statement.
Shenhua produced 122.1 million tonnes of coal in 2005, with about 85% sold to the domestic market. Now it has set a target of producing 200 million tons by 2010.
Chairman Mr Chen Biting said that it hopes to keep yearly output growth at over 15 million tons. He said it would cautiously select other coalmines for mergers and acquisitions as well as explore coal resources overseas this year in order to boost its market share.
Stemcor eyes stake in Kremikovtzi
It is reported that Stemcor wants to buy the 25.29% stake in Sofia based metallurgical plant Kremikovtzi held by the Bulgaria state, citing a release from the economy ministry. The ministry said the written notification of interest was received on January 3. It is reported that Stemcor is willing to assume $71 million of Kremikovtzi's outstanding debts and to negotiate the acquisition of the state controlled equity at a fair price.
In related news, it emerged that the ministers of economy and finance and the CEOs of national power grid operator NETC and of gas distributor Bulgargaz, the main creditors of the metallurgical company, met last Friday with Kremikovtzi's Indian owners. Global Steel Holdings Ltd reportedly undertook to present to the government the updated investment program of the metallurgical plant.
Sources close to the talks said Global Steel Holdings Ltd asked the government to reschedule Kremikovtzi's outstanding debts but that proposal was rejected.
Zinc Falls to four week low
Zinc fell to a four week low, leading a decline in base metals such as lead and tin that had surged two weeks ago. Zinc, used in galvanized steel, has plunged more than 12% since reaching a record February 2. The rallies faltered on concern high prices will spur new supply and that economic growth will slow, eroding demand growth.
Zinc for delivery in three months fell $82, or 3.7%, to $2,118 a metric ton on the London Metal Exchange. The metal is up 60% from a year ago. Zinc's slump has accelerated as prices fell below preset levels for sell orders, including the 10day moving average of $2,315 ton February 10 and the 30 day moving average of $2,169 on February 13
Barclays Capital, Macquarie Ltd. and Societe Generale say the prospects for zinc demand remain stronger than any other metal traded on the LME, because the production will fall short of demand for a third straight year. Macquarie today increased its 2006 forecasts for zinc and other metals. Zinc this year will average $2,589 a ton, a 47% increase form the bank's previous estimate.
Macquarie expects zinc demand to outpace production by 400,000 tons this year.
Zinc users may use stockpiled metal to fill the production shortfall. Inventory monitored by the LME has declined for seven consecutive months to 372,850 tons, or less than 13 days of global consumption.
Nippon declines to comment on Change of Control clause in tie up with Arcelor
Nippon Steel declined to comment on Monday on reports that its technology tie up with Arcelor could help it fight off a hostile takeover bid by Mittal Steel. Under a change of control clause in the tie up agreement, Nippon Steel can stop Arcelor from using technologies it has provided to the firm if it is taken over, the Yomiuri and Nihon Keizai newspapers said over the weekend. "We cannot comment on anything, including whether there is such a clause," a Nippon Steel spokesman said. It is unclear whether Nippon Steel, which also partners Mittal on steel sheet production through a joint venture, would use the clause, the Nihon Keizai newspaper said. Doing so could cause supply problems for Japanese automakers, the Yomiuri said.
It is learnt that Nippon Steel & Arcelor tie up covers technologies for high grade steel sheets used in automobiles, an area where Japanese steel makers have an edge over rivals because of tough requirements by Japanese automaker, their key clients. The so called Change of Control clause that is understood to be written into the partnership contract would give Nippon Steel the right to withdraw the patents for any technology that it shared with Arcelor, if that company's ownership structure shifts in any way.
But analysts are skeptical. "Mittal Steel's core reason for buying Arcelor is to broaden its presence in Europe and not the Arcelor technological tie up with Nippon Steel," said a steel analyst at a Japanese brokerage who declined to be identified. "If Mittal Steel is interested in Nippon Steel's or Japanese steel makers' technologies, it could have launched a bid for them." He also added that Nippon Steel's most advanced and key technologies are apparently excluded from the alliance, as Arcelor is also one the Japanese maker's top rivals.
EU regulators approve Arcelors stake in Erdemir
European Union regulators on Monday cleared the proposed acquisition of Erdemir by Arcelor SA and the Turkish pension and investment fund Oyak Group. "The proposed transaction would not significantly impede effective competition in the European economic area," the European Commission said in a statement.
Oyak beat off bids by Arcelor and Mittal Steel in October to buy a 46.12% stake Erdemir, for $2.77 billion, but later agreed to sell part of its holding to Arcelor. The sale of Erdemir is part of a privatization program in Turkey that is backed by the International Monetary Fund.
One killed, three trapped in coal mine blast in Liaoning
One person was killed and three others remain trapped after a gas blast hit a coal mine in Northeast China's Liaoning Province on Sunday. The three workers are still missing and the rescue efforts were impeded as the entrance of the mine was sealed by debris.
The explosion ripped through the Liujiali Coal Mine at 2:05 AM on Sunday, when three workers were conducting a safety inspection about 300 meters underground, according to the coal mine's management.
The coal mine, belonging to the Fuxin Mining Group, has got an official license and was under construction when the blast occurred.
Liuzhou Steel sets production targets for 2006
Guangxi Liuzhou Iron and Steel Group Co announced production target for 2006 at an employee congress. It aims to produce 5.65 million tonnes of pig iron, 6 million tonnes of crude steel, 5.85 million tonnes of finished steel and achieve sales income of over 18 billion Yuan as against that of 15 billion Yuan in 2005.
Liuzhou Steel produced pig iron, crude steel and finished steel of 385,000 tonnes, 378,000 tonnes and 343,000 tonnes respectively in January, up by 37.3%, 30.4% and 35.4% from the same period of last year and achieved industrial gross production value of 500 million Yuan, up by 36.1%.
Grande Cache Coal announces Q3 results
Grande Cache Coal Corporation announced its financial and operating results for the three and nine months ended December 31, 2005. As a result of continued improvements, the Corporation's net loss for the third quarter of 2006 was reduced to $6.9 million. Year to date, the net loss was $29.5 million.
During the third quarter, sales volumes of 0.2 million tonnes resulted in revenue of $19.2 million at an average sales price of $106 per tonne. Metallurgical coal accounted for 74% of sales volume in the quarter at an average price of $136 per tonne or U.S.$116 per tonne. The cost of coal produced declined $5 per tonne from the previous quarter to $99 per tonne, despite rising natural gas and electricity costs and production levels that were controlled due to low sales volumes.
As anticipated, export sales during the quarter were low due to delayed customer shipments; however the Corporation remains on track to sell 1 million tonnes of coal this fiscal year. "We believe that fourth quarter shipments will continue at levels sufficient for us to sell 1 million tonnes of coal this fiscal year," said Mr Robert Stan, President and CEO. "Ongoing productivity improvements are also positive signs. We are pleased to have commenced depillaring in our underground mine."
Grande Cache Coal is an Alberta based metallurgical coal mining company and is developing a long-term mining operation to produce metallurgical coal for the export market from Grande Cache Coal's coal leases covering over 15,000 hectares in the Smoky River Coalfield located in west central Alberta.
Alpha Natural Resources reports significant gains for Q4 & 2005
Alpha Natural Resources Inc, a leading Appalachian coal producer, reported a 55% increase in revenues from coal sales in the fourth quarter of 2005 compared with the prior year, triggered by a 22% growth in coal production YOY and a 25% increase in the company's realized price per ton.
For the quarter ended Dec. 31, 2005, Alpha reported coal sales revenues of $432.1 million and net income of $12.4 million. Coal sales revenues for the comparable period in 2004 were $278.7 million and net income was $1.1 million.
For the full year 2005, Alpha posted net income of $21.2 million compared with net income of $20.0 million in 2004.
Alpha sold 7.8 million tons of coal during the quarter, 24% more than the 6.3 million tons sold in the last quarter of 2004. Production from company and contract mines of 5.5 million tons represented an increase of 22% over last year. The company's overall average price per ton of coal rose to $55.68 during the fourth quarter of 2005, a 25% gain from the same period in 2004 and 8% higher than the third quarter of 2005. Metallurgical and steam coal prices rose 22% and 27%, respectively, from last year, and both were up sequentially from the third quarter of 2005.
"Alpha's solid performance in 2005 has set the bar for us as a new public company, and we're confident moving forward," said Mr Michael J Quillen, Alpha's president and CEO. "Alpha has established a competitive presence with its high quality reserve base, proprietary coal blending expertise, and leading market share position in both the international and domestic metallurgical coal markets. Putting this all together, in a period of prolonged strength in the energy sector, we provided a return on invested capital for our shareholders that exceeded 21 percent last year. Importantly, we did so with a constant attentiveness to safety on the part of our miners. I salute them for safely leading us through a banner year."
Alpha Natural Resources is a leading producer of high quality Appalachian coal. Alpha and its subsidiaries currently operate mining complexes in four states in US, consisting of 69 mines feeding 11 coal preparation and blending plants.
Transnet to buy 110 locos from Mitsui for coal exports movement
South African rail and logistics group Transnet has signed an agreement with Japan's Mitsui to supply 110 electric locomotives at a cost of 3.5 billion rand over five years. Transnet CEO Maria Ramos told reporters that the investment was earmarked for the country's coal exporting railway line operated by state-owned rail operator Spoornet. The agreement with Mitsui is the first major investment in Spoornet's 35 billion rand capital investment program for the next five years.
The locomotives will be designed to haul up to 300 wagon trains compared to 200 currently and will enable Spoornet to increase capacity to meet market demand of 76 million tonnes for fiscal 2006-07.
"This investment is in line with Transnet's strategy to reduce transportation costs ... and increase capacity to move freight with the overarching objective of lowering the cost of doing business and improving the competitiveness of the South African economy," said Ramos.
Privatization of Nigerian mining on track
The Nigerian Government has set out guidelines for the privatization process in the mining sector. The move is expected to lead to the concessioning of 10 coal mining properties and auctioning of 200 leases formerly held by the Nigerian Mining Corporation.
Minister of Solid Minerals Development, Mr Obiageli Ezekwesili, said the government aimed to complete the privatization process in three months. Winners of the bids would enter into a 25 year contract with government, which is subject to renewal under a new legislation about to be enacted into law.
Work in Excel Coals Wilpinjong coal mine in NSW to start
Wilpinjong Coal Pty Ltd, a wholly owned subsidiary of Excel Coal Limited, has been granted the mining lease by the NSW Minister for Mineral Resources Mr Ian Macdonald following the project's approval under the Environmental Planning and Assessment Act 1979 last week. Construction of the Wilpinjong Coal mine infrastructure including a coal handling and preparation plant and train loading facility is expected to get under way so. Thiess Pty Ltd, which will operate the mine for the first five years, is also to handle the mine infrastructure construction.
"We are very pleased to have received the Mining Lease from the Minister," Excel Coal MD Mr Tony Haggarty said." We believe the project will make a significant contribution to the local economy, as well as the New South Wales economy."
Mr Haggarty said Wilpinjong would invest $116 million to develop the project, which would produce up to 13 million tonnes of coal per annum of run of mine coal, with up to eight million tonnes per annum of coal for domestic power generation and about 2 million tonnes per annum for export markets.
Iron Ore board approves Mesabi Nugget plant
The Iron Range Resources board has given what should be the final government green light for the Mesabi Nugget plant in the northern Minnesota town of Hoyt Lakes. At a meeting Friday, the board unanimously approved a purchase / leaseback not to exceed $6.49 million for the surface and mineral rights of the former LTV Steel Mining plant site in Hoyt Lakes. IRR will buy and then lease the rights for up to 800 acres at the site to Mesabi Nugget LLC.
The purchase / leaseback plan reduces the project's capital expenditure. The plan's closing coincides with the closing of the financing for the plant, which Mesabi Nugget officials have said should happen this month. Construction of the Mesabi Nugget plant is expected to begin this fall.
Chinas CPC reports 4,878 officials have stake in coal mines
Mr Wu Guanzheng, secretary of the Communist Party of China Central Commission for Discipline Inspection, in a report to the commission's Sixth Plenary Session on January 5 said that a total of 4,878 Chinese officials nationwide have admitted they have stakes in coal mines, with a total capital of 737 million Yuan ($ 91 million) and that stakes worth 562 million Yuan ($69.4 million) were withdrawn by November 2005.
"A campaign to oblige government officials and leaders of state owned enterprises to give up their shares in coal mines has achieved initial success," Mr Wu said in the report.
Pine Valley announces Q3 results
Pine Valley Mining Corporation announced its results for the three months ended December 31, 2005. Operating profit for the quarter was $1.190 million and negative cash flows of $3.792 million were realized from mining activities. Net loss for the quarter was $0.579 million.
Revenues from coal sales for the quarter were $7.811 million, representing 66,307 tonnes of pulverized coal injection metallurgical coal product at an average price of $101.55 per tonne. The Company produced 134,407 tonnes of PCI product. Cash cost of production for product coal to the port was $79.31 per tonne.
Grange iron ore project faces cost overrun
Preliminary capital costs for Grange Resources Ltd's dual iron ore project near Albany and its Malaysian iron ore pellet operation have blown out from just over a billion dollars to more than $1.5 billion. Most of the price increase was on the construction side of the dual project, Grange being the latest in a long line of resources companies reporting project cost blow outs due to skyrocketing construction and manpower costs.
Grange company secretary Mr Mark Smith told an Australian daily that the near half a billion dollar price hike was "consistent with what is happening in the resources sector" and was identified during the current bankable feasibility study, due for completion by the end of March.
Grange is planning production of 6.6 million tonnes of magnetite concentrate a year over 23 years from its Southdown project, 90 kilometers north east of Albany, beginning in 2008. The project calls for the concentrate to be pumped through a slurry pipeline to the Port of Albany where it will be shipped to the Kemaman iron ore pellet facility in Malaysia, due to come on stream in June 2009.
