March, 18 2006
Suzlon takes over Belgian firm for Rs 2,500 crores
Indian Suzlon Energy, the worlds sixth-largest wind turbine maker, has acquired Belgiums Hansen Transmissions International NV, the worlds No 2 maker of wind turbine gearboxes for an amount of Rs 2,500 crore ($565 million). The acquisition of Hansen through holding firm EVE Holding is Suzlons second overseas foray this week. It had announced on Thursday a $60 million investment in a wind turbine manufacturing unit in China. Suzlon will acquire the entire shareholding of EVE, a 50-50 venture of Allianz Capital Partners and UK private equity firm Apax Partners, through its Dutch subsidiary AE-Rotor Holding BV.
Gearbox and turbine technologies are the key bottlenecks in our industry, Suzlon chairman Mr Tulsi Tanti said. Its good sense to acquire and then expand capacity.
Mr Matts Lundgren president and CEO of Hansen: The entire management team is very pleased with this opportunity. The deal has the ability to fuel further growth in Belgium and in Asia. It currently employs 1200 engineering and management professionals spread across these establishments.
Hansen, sold by Invensys Plc to Allianz Capital for 132 million euros in 2004, has subsidiaries in Britain, Australia, Brazil, United States and South Africa. Hansen has capacity to roll out 3,600 MW of wind turbine gearboxes and 3,000 industrial gear boxes a year. Hansen had already laid out infrastructure to add another 700 MW of wind turbine gearboxes at its two manufacturing units in Belgium. Denmarks Vestas the world leader has about 30% of the global wind power market. Hansen has about 23% of the market for gearboxes, and Vestas accounts for 65% to 70% of its sales.
Suzlon already has operations in Australia, China, South Korea, the United States and Europe, with an installed capacity of 1.5 GW of wind turbine generating capacity.
TATA Steel ramping up NatSteels units
TATA Steel is reported to be expanding NatSteel Asias facilities in China and Australia. TATA Steel had acquired NatSteel in February 2005. NatSteel is comprised of a group of companies operating as different legal entities in countries like Singapore, Malaysia, Thailand, Vietnam, the Philippines, Australia and China, with as many as five joint venture partners. It had, however, during the buying process left out a unit in China because of issues on local clearances, thus making the existing capacity of the NSA units stand at 1.7 million tonne, instead of the 2 million tonne originally planned.
Dr T Mukherjee deputy MD of TATA Steel said that barring the units in China and the Philippines, which have been under pressure due to local conditions, all NSA units so far during the current year have performed to full capacity. We are adding another line to our wire plant in China and that should increase its capacity by almost 40% during this year, said Dr Mukherjee.
TATA Steel sees growth potential in the South-East Asian countries like Vietnam, Indonesia, Thailand and the Philippines. Some countries in SEA like Vietnam have steel consumption growing at over 10% a year. Other large countries like Indonesia, who traditionally had a very low per capita consumption of steel, are starting to grow rapidly, responded Dr Mukherjee on the steel companys prospects in the region, adding that the steel major also sees potential for growth in Thailand and the Philippines.
Jharkhand unveils road project for mining logistics
Jharkhand government has decided to initiate an ambitious four lane road project that will facilitate the transportation of minerals and mining products such as iron ore, coal and bauxite. Mines minister Mr Madhu Koda told The Telegraph that the proposed road would connect Manoharpur, Jeraikella, Chakradharpur, Chaibasa, Seraikela and Chandil.
A detailed project report will soon be prepared in connection with this road project, said the mines minister, and added, The project is estimated to cost Rs 20,000 crore. We are also thinking of seeking monetary assistance from the Centre to execute the project.
The four-lane passage will facilitate the smooth transportation of mining products, especially iron ore and coal, said the minister.
Indonesias Bumi selling coal mines for $3.2 billion
Indonesia's largest listed mining group, Bumi Resources, has agreed to sell two coal mines to an international investor group in a deal worth $3.2 billion. Bumi said in a statement that it had agreed to sell PT Arutmin Indonesia and a 95% stake in PT Kaltim Prima Coal to a consortium led by PT Borneo Lumbung Energi, an affiliate of Indonesian investment bank Renaissance Capital. Other members of the consortium included Japanese trading house Marubeni Corp and Leighton Holdings Ltd, Australia's top engineering contractor. Bumi is yet to finalize an agreement with Marubeni and Leighton.
The acquisition of the Bumi assets would be financed by a combination of equity and debt.
Bumi, controlled by the family of Indonesia's chief welfare minister Aburizal Bakrie, wants to use proceeds from the sale to build a coal liquefaction plant and to produce biodiesel.
Indonesia is the world's second biggest coal exporter after Australia.
Ms Kroes opines that Luxembourg must follow takeovers rules
Ms Neelie Kroes, Europe's chief competition regulator, said she is concerned about a recommendation by a Luxembourg business group to defend Arcelor SA from a hostile takeover by Mittal Steel. You have to follow the rules for the organization of the internal market,'' Ms Kroes said when asked about the group's recommendation in an interview today in Brussels. She said she is concerned about the maneuver.
A European Union takeover law, now being implemented by national legislatures, lets countries require cash bids when securities aren't sufficiently liquid, though the law provides no definition or threshold of liquidity. Luxembourgs Chamber of Commerce suggested that a company would need to have 25% of its shares publicly traded, to be considered liquid. That would exclude Mittal Steel as its CEO Mr LN Mittal owns 88% of Mittal Steel.
The Luxembourg government's current draft of the takeover law doesn't contain a provision calling for an all-cash offer. Still, the draft legislation would permit companies to use defenses including a poison pill or a mechanism to ward off hostile approaches by issuing cheap stock to other shareholders and diluting the bidder's stake.
Mittal Steel not to raise bid for Arcelor
Mittal Steel CEO Mr LN Mittal said that he had no plans to raise his 19 billion euros ($23 billion) offer for Arcelor SA or make all cash bid, and was confident that Luxembourg would not try to scuttle the deal. "Our offer is a very attractive offer because we offer the shares," he said. "We are anticipating the growth of the company, the merged company will have growth potential more benefits because of the synergies."
Mr Mittal also said he was confident the Luxembourg government would not take any decision to "frustrate this transaction" despite moves by the country's Chamber of Commerce to change its takeover laws. Luxembourg is the center of the financial community and these kind of actions could really disturb the financial community," Mr Mittal said.
Earlier this week, the Luxembourg Chamber of Commerce, chaired by Arcelor VP Mr Michel Wurth suggested changes to takeover rules that would force Mittal to make an all cash bid. It wants to prevent companies with less than 25% of their shares in free float from making a cash and stock bid for a Luxembourg company. Some 88% of Mittal Steel is held by Lakshmi Mittal and his family. "You can understand when the Chamber of Commerce has a president, who is the vice president of Arcelor, what would be the intention of this," Mr Mittal told reporters. "I am confident that we will have full support from Prime Minister Mr Jean Claude Juncker and they will not entertain this kind of proposal."
Asked about the Arcelor board of directors and its opposition to the deal, Mittal said the company was owned by the shareholders. "The management is a tenant and the boards of directors are the trustees. In an issue like this, the shareholders will decide the tenants will not decide what the owners should do," he said.
Belgium seems to be having neutral stance on Arcelor issue
Belgian Finance Minister Didier Reynders told Le Figaro newspaper in an interview published on Friday that the government and the Walloon region, which holds 2.4% of Arcelor, had asked Lazard Bank for an analysis of the Mittal document and invited Arcelor to come up with projects.
"We have known many restructurings in the steel sector, and I remember the upheaval in Belgium because of the closure by Arcelor of some plants. Therefore, I do not see why we should favor one shareholder over another," Mr Reynders said.
Arcelor, formed in 2002 by the merger of Arbed, France's Usinor and Spain's Acelaria, has undergone many restructurings and shed hundreds of jobs in the past few years. Usinor had earlier absorbed Belgium's Cockerill Sambre.
CISA sees problems in launching steel futures
China Iron and Steel Association said that the country's proposed steel futures are a bad idea because of the complexity of steel products and regulatory uncertainties. "The futures would be risky at this time as the domestic economic and judicial environment is not mature," said Mr Qi Xiangdong, vice secretary general of the CISA. "Unlike other contracts, steel products vary greatly in category, quality and origin. No other country except India operates such contracts, and we don't know whether it works well," Mr Qi said.
Mr Qi disputed a media report that the real reason the association is opposed to the futures is that such a move might lessen its control on prices. "That's nonsense. The association never sets prices - the big mills do based on costs and supply and demand. It's already market oriented," Mr Qi said.
China launched steel wire rod futures in 1993, but the government blocked trading a year later due to widespread speculation. The Shanghai Futures Exchange is now waiting regulatory approval to relaunch the futures, and the China Securities Journal said contracts will begin within the year.
Iron ore price talks to be free of official meddling
China government won't interfere in price talks between its steel makers and foreign iron ore suppliers, a Cabinet minister said although insisted it can't afford another jump in already high prices. The comments by Ms Ma Kai, the minister in charge of China's main planning agency, came after suppliers expressed alarm at suggestions that China might try to dictate prices of iron ore. "The government will not interfere in setting the price, and the price will be decided by the market," Ms Ma told.
Ms Ma said, however, that China plans to restrain the growth of its steel industry this year in order to conserve energy and water, as well as cut demand for costly imported raw materials.
National Development and Reform Commission, and the Commerce Ministry issued a statement this week expressing dismay at rising iron ore prices and calling them unacceptable. "The government will pay close attention to iron ore price talks and take necessary measures if prices are unacceptable and unreasonable," the statement said. "Chinese steel and iron enterprises are facing many problems, so China cannot accept another price rise. The companies' costs keep increasing while their profits drop," it said.
NLMK increases stake in iron ore mining venture
Russia's third largest steel producer NMLK, based in Lipetsk has bought an additional 18% of shares in KMAruda to bring its stake to 76.26%. The company denied to specify how much the deal was worth.
KMAruda, based in Belgorod on the Ukrainian border, produces 18% of iron-ore concentrate used by NLMK, and is one of the country's top mining enterprises.
NMLK produces 14% of Russian steel, 21% of flat-rolled products and more than 55% of plastic-coated rolled stock.
French parliament passes law to protect firms from hostile takeover
The French National Assembly, or the lower house of the parliament, approved Thursday a law bill to ensure the transparency of takeover procedures. The text that had been adopted earlier by the French Senate, or the upper house, requires approval from a mixed Senate-Assembly commission to be definite version.
It calls for staff's being well informed about the transaction, increases the powers of the French market regulator, the AMF, and allows companies to issue equity warrants in the event of a hostile bid by enabling them to shore up their capital and making a takeover more expensive for the predator firm.
The law comes amid recent hostile takeover bids in France, especially Mittal Steel's hostile takeover bid for Arcelor, as well as the planned merger between the French state owned utility Gaz de France and another French utility giant Suez, after Italy's Enel showed interest in buying Suez.
Chinas coal output to reach record high of 2.5 billion tonnes
Top energy planners are seeking, in the next five years, to raise China's coal output to an unprecedented level and, at the same time, reduce the number of large mining disasters. China's coal output will be between 2.5 billion and 2.6 billion tons in 2010, as compared with 2.19 billion tons in 2005, according to Mr Guo Yuntao, director of the China Development Research Centre for the Coal Industry. The growth rate being forecast by the planning team led by Guo is much slower than in the last five years, when China's coal output rose from about 1.3 billion tons in 2000.
The forecast was based on the belief that the overall economy will become more energy efficient and that demand is likely to rise significantly only in the power sector, Mr Guo said. In terms of production, coal accounted for 76% of China's energy needs in 2005, calculated using the Standard Coal Equivalent measure. According to Mr Guo, that level has a chance to climb all the way up to 80% after 2010.
His centre is drafting China's coal industry development blueprint for the coming five years, following the national 11th Five-year (2006-10) Social and Economic Development Plan approved by National People's Congress deputies at its annual session that closed in Beijing on Tuesday.
To satisfy growing domestic energy demands, the country will decrease its coke exports in the coming years, the planning director said.
Siemens VAI to upgrade POSCOs pickling lines
The Siemens Group Industrial Solutions and Services (I&S) has received orders from the POSCO for the upgrading and supply of equipment for three of the company's pickling lines located in Pohang and Gwangyang in Korea. Upon completion of these projects POSCO will be able to pickle 6.5 million tons of steel in these lines. All three orders will be implemented by VAI Clecim Saint-Chamond France, a company of the I&S division VAI. It was agreed not to disclose the contract prices.
At the Pohang steel works of Posco the pickling section of the No 2 Coupled Pickling/Cold-Rolling Line (P2 C) will be upgraded with a double-entry section, a new entry-strip accumulator, a new process section with four pickling tanks, an intermediate strip accumulator and an exit-strip accumulator. At the Gwangyang steel works the original preparation station of the No. 3 Pickling Line (POL 3) will be equipped with a new coil-supporting solution which reduces the risk of coil damage during uncoiling. For the same facility a 60-t scale breaker for the descaling of high-strength steels, a preparation station and two online shears will be installed at the No. 4 Coupled Pickling/Cold-Rolling Line (K4 C). The objective of these projects is to increase the productivity of Posco's pickling lines and to improve the quality of the pickling operations.
POSCO, at its facilities in Pohang and Gwangyang, produces a wide range of carbon, stainless and electrical steel grades which are sold as coils, sheets, plates and wire rod that are used for a multitude of industrial applications. 75% of the company's steel production is consumed domestically, and the remaining 25% is exported primarily to China, Japan, other Southeast Asian countries and the USA.
Arcelor CEO says it can defend against Mittal Steel
Arcelor can defend itself from an unsolicited bid from Mittal Steel with its own strength, Arcelor CEO Mr Guy Dolle told Germany's Neue Ruhr/Neue Rhein Zeitung in an interview.
I am convinced that we can fend off the offer with our own strength and with the support of and in the interest of our shareholders," Mr Dolle told.
PSMC gets new construction machinery from Chinese company
It is reported that Chinese Guangxi Liu Gong Machinery Company Limited has handed over construction machinery to Pakistan Steel Mills through their local representative KZK Industrial and Commercial Company of Pakistan on Friday, according to a press release issued.
China is an emerging as an economic supper power. By 2041, its GDP will be bigger than USA. The secret of their success rests in visionary leadership, constantly pursued long term policies, internal cohesion, unprecedented devotion and commitment to the national cause and above all, par excellence transformation of huge population from liability to human wealth, said Lt Gen Abdul Qayyum (Retd), chairman Pakistan Steel while addressing on the occasion of handing over ceremony of Chinese construction machinery at Process Auto Repair Complex of Pakistan Steel.
Highlighting the functional details of Pakistan Steels Process Auto Transport Department, the chairman informed that the department handled about 400,000 tons of process material comprising finished, semi-finished and process material & waste every month. It is also involved in repair activities throughout the plant and even extends help to outside agencies not only in downstream area but also in Karachi city. The department was also instrumental at time of construction & erection of the mill when it provided excellent services and was one of the first departments to be established in PSM, added the chairman.
Allegheny announces phase II expansion of Titanium capabilities
Allegheny Technologies Incorporated announced the Phase II expansion of its titanium production capabilities. These investments, which total approximately $25 million, are aimed at increasing ATI's capacity to produce titanium and titanium alloys for aerospace applications and other robust global markets.
The Phase II expansion includes additional titanium sponge capacity. of 3.75 million pounds of titanium sponge beginning in the first half 2007. In combination with the Phase I sponge investment, this brings ATI's total annual sponge capacity to approximately 11.25 million pounds. Titanium sponge is a critical raw material used to produce titanium mill products.
ATI expects an additional vacuum arc remelt furnace to be in production by the end of the first quarter 2007. Titanium sponge, combined with titanium scrap and master alloy, is melted in a VAR to produce a titanium alloy ingot.
"We expect an additional $100 million of annual revenue growth with attractive after-tax returns from the Phase II expansion of our titanium production capabilities when fully implemented in the second quarter 2007," said Mr Patrick Hassey chairman, president and CEO of Allegheny Technologies. "These titanium investments are a continuation of ATI's strategy to grow our high-value products capabilities. "We believe ATI's long-term growth prospects for titanium mill products remain very attractive. We continue to evaluate further options for additional organic growth of ATI's titanium sponge and melting capabilities. ATI has an unparalleled combination of assets for finishing titanium products, and we believe we are uniquely positioned to grow fast in the global titanium market."
Nucor & Lennar to make steel framing for construction
Nucor Corp is teaming up with Lennar Corp to produce light gauge steel framing for the residential construction market. The companies said their respective subsidiaries, Nucon Steel Commercial and LFB Engineered Systems, have formed a joint venture called NEXFRAME LP, that will be based in Stockton, Calif.
"Nucor believes the opportunity for the use of light gauge steel framing in residential construction is significant today, is growing and will continue to grow in the future," Mr Don Moody, Nucon's GM said in a statement.
"With Nucor's manufacturing prowess and Lennar's homebuilding expertise, I don't think you could come up with a better partnership to enable the use of light gauge steel framing for residential construction," Mr Dave Ball, LFB's GM said in a statement.
Founded in 1954, Miami-based Lennar is one of the nation's leading home builders.
Brazilian steel production registers decline during January February
Crude steel production in Brazil totaled 4.707 million tons in the first two months of the year, 9.1% less than during the same period last year according to the Brazilian Steel Institute. According to the IBS, the country produced 3.577 million tons of sheet steel in the first two months of this year, as against 3.664 million tons in January-February 2005.
In the opinion of the IBS technical staff, these results are in large part a reflection of production drops in February in consequence of the month's being shorter, "together with temporary equipment shutdowns in some factories due to accidents or programmed maintenance." When it comes to exports, the mills have increased their shipments by 38.7% due to favorable world market conditions.
The regional distribution data show that Minas Gerais led the ranking of producer states during the period under analysis, with an output of 1.892 million tons of brute steel and 1.652 million tons of sheet steel and semi-finished products.
Demand for molybdenum should remain robust
Officials with Phelps Dodge said that they look for molybdenum demand to remain strong in 2006 after prices hit record highs in 2005. "Demand in the chemical segment should continue to be strong and steel demand is expected to approximate 2005 levels, led primarily by continued strong demand out of China," said Mr Dave Thornton, president of Phelps Dodge's Climax Molybdenum.
He outlined the price history of molybdenum during a presentation to the investment community. The average monthly price over the last two decades was $5.57 a pound, he said. "Over this 20 year period, prices exceeded this average only 16% of the time, 39 months out of 240 months," he said. "Of these 39 months, 31 of them occurred since June 2003." The gain in the last two years has been so dramatic that if these two years were removed, then molybdenum was averaging only $3.51 per pound, he said. Over the last 20 years, the price moved from a low of $1.88 a pound in December 2002 to above $35 in 2005.
Mr Thornton explained that the global consumption rate has increased over the past several years above the 15 year trend line of approximately 3%. China's demand has been growing faster than the rest of the world, due to its rising steel production capacity. Approximately 33% of global molybdenum use is by the steel industry, followed by the chemical industry with 20%.
The surge in molybdenum prices has meant some risk of substitution materials for certain applications, particularly the chemical segment, Thornton said. "In metallurgical applications, substitution concerns are not as robust due primarily the ability of steel producers to pass through metal surcharges in their base prices," he said. Also, the price of alloys that could be used as substitutes has also risen.
KCI Konecranes supplying 8 cranes to Mittal Steel Poland
KCI Konecranes is supplying 8 cranes to Mittal Steel Polands Dabrowa Gornicza Works through SMS Demag. Mittal Steel contracted SMS Demag for the turnkey supply of a two-strand slab caster, which will double the production capacity at Dabrowa Gornicza works. The plant will have an annual production volume of approximately 3 million tons of slabs. Two cranes will be used for maintenance purposes and the remaining in the handling process.
The cranes have high duty ratings with lifting capacities up to 70 tons and are designed to operate in hot environments. Five cranes will handle up to three slabs simultaneously and the sixth crane is equipped with magnets to handle slabs on the cutting table.
All cranes are equipped with KCI Konecranes' patented inverter frequency control technology; DynAPilot anti sway system and air-conditioned E-rooms. The system enables the handling of large volumes of hot slabs in the new storage area. KCI Konecranes and SMS-Demag are discussing possible modernization services of the existing cranes at the plant.
"During the past years we have cooperated with SMS-Demag and developed crane solutions for the steel industry. SMS-Demag have played an important role in several of KCI Konecranes' steel mill deliveries, but this is the first large and direct order received through SMS-Demag", says Mr Petteri Viinanen Director of Process Cranes Nordic. "At the same time this is our first large delivery to Mittal Steel and we are very happy get an opportunity to supply high performance cranes to the largest steel company in the world".
