March, 25 2006
Coal sector modernization recommendations by committee
It is reported that the expert committee appointed to draw a roadmap for modernization of the coal sector has recommended raising drilling capacity of state run Central Mine Planning and Design Institute Ltd to 1.5 million meters per annum. The committee has recommended that a time bound plan be prepared, for regional mapping of the country in 15 years, by the Geological Survey of India, CMPDI and the coal ministry and funding for this should commence from next fiscal. "The coal ministry must launch a program of detailed exploration and drilling in the Eleventh Plan, aimed at increasing proven category reserves," the committee observed in its report.
The expert committee also recommended creation of an Rs 500 crore corpus. Indias Coal Minister Mr Shibu Soren told reporters that "The fund would recover the outlays once the mining leases are granted on the reserves so proven. Such an enhancement in the capacity for detailed exploration could potentially add about 10 billion tonnes of coal to the proven category annually,"
The expert committee strongly recommended that CIL be granted status of a navratna company, in which case the company need not come to the government for approval of projects irrespective of capital expenditure involved. Else, it suggested that CIL subsidiaries be granted the status of mini ratnas, in which case only proposals involving capital expenditure of above Rs 500 crore need approval.
Stating that environmental clearance for these projects was a major cause of concern, the committee said projects which were crucial to meet Tenth and Eleventh Plan targets should be taken up on a priority basis by the ministry of environment and forests. "If necessary a special task force with adequate powers may be set up for examining these issues on a priority basis," Mr Soren said. It recommended that state government must give clearance within six months failing which it should be deemed to have been approved.
To enhance domestic coal production capacity rapidly requires that the coal ministry set up a permanent special task force to monitor progress of clearances and project implementation of all projects required to be completed by the end of the Eleventh Plan to fully realize Coal India's production plans including the emergency production plan. "This task force must also monitor clearances and progress of approved captive projects. The task force must include representatives of ministry of environment and forests, railways, ministry of power and concerned state governments," it recommended.
The allottee of coal blocks having 2.5 million tonnes of coal must have a minimum worth Rs 200 crore. The minimum net worth requirement would rise by Rs 100 crore for every mine under certain categories, the committee said.
Tribals attack steel plant site in Orissa
BBC has reported that in the second incident of steel plant land related violence nearly 40 people have been injured in Orissa. The protestors were demanding jobs for people who have been displaced by the construction of the Adhunik Metals steel plant located near Birmitrapur town in Rourkela district.
Hundreds of tribes people armed with bows, arrows and axes, barged into the Adhunik Metallic plant around noon on Friday. Most of the injured were staff members. A spokesman for the steel plant said that the plant had suffered extensive damage to property and vehicles.
The protest was organized by the Anchalika Suraksha Samiti, which is fighting for the rights of tribes people. Police arrested around 40 demonstrators, including the president of the organization Mr George Tirkey.
Four other sponge iron industries in the area were also attacked.
The protests follow similar incidents earlier this year at Kalinga Nagar.
CCEA extends DEPB scheme for one year
Indias Cabinet Committee on Economic Affairs has extended the validity of the duty entitlement passbook scheme by a year. Exports affected up to March 31, 2007 will now be eligible for duty neutralization benefits under the scheme. The existing scheme neutralizes the Customs duty on the imports content of the export product. The Government had already extended the DEPB scheme twice and had last extended its validity to March 31, 2006.
A new scheme to replace the DEPB scheme has been in the works for more than a year. The Revenue Department and the Commerce Ministry have had their share of differences on the features of the proposed new scheme.
Jaypee, Shree and Birla Cement in race to form JV with SAIL
Three cement manufacturers Jaypee Cement, Shree Cement and Birla Cement are reported to be in the race to form a JV with Steel Authority of India Limited to set up a 2.5 million tonne cement plant.
SAIL would have 24% stake in the JV, while the majority 76% stake would be owned by one of the three bidders, sources said. The final decision with regard to selection of joint venture partner will be taken soon by SAIL.
Baosteel increases steel prices for May to June period
China's largest steel maker, Baosteel Group, has raised prices for hot rolled steel delivered in May and June by a further 7%, after earlier hiking second quarter prices for the products by about 13%.
Baosteel raised hot rolled steel prices by an average 250 yuan ($31.14) a tonne on Thursday. It also lifted prices for some hot rolled specialty steel products by 100 yuan a tonne. Baosteel had raised some cold rolled specialty steel products prices last week, dealers said.
Baosteel's quarterly price adjustments are a benchmark for the Chinese industry. "Normally, we adjust prices every quarter, but if the market changes more than anticipated, we will also respond accordingly," an official in Baosteel's marketing department told media. The official said the company would still primarily rely on quarterly.
Mittal Steels Europe CEO tones down on investor support
Mr Roeland Baan CEO of Mittal Steel Europe is reported to have toned down on comments by the group's CEO that Arcelor shareholders support its takeover bid and said he was still waiting to learn their views. "I don't think we have ever said whether they are in favor or against," he told Reuters in an interview. "We have met with 50 to 60 % of Arcelor's shareholders. We have talked to them and given them the industrial rationale. They have not given their position to us," he said. Although the industrial logic of the deal was undeniable Mr Baan said the opposition to the deal came as a surprise.
Last month, Mittal Steel's founder Mr LN Mittal said that investors had been overwhelmingly positive and that he was confident he could get the backing of all the shareholders. "We have the positive support of 50 to 60% of Arcelor shareholders," he said then.
Mr Baan also said Arcelor should not look at active defensive measures against the bid such as buying up new companies to make it harder to digest, or issuing shares to bloat the value of the deal. Such a move could force Mittal to resubmit its bid. "The use of a poison pill will be so much against the interest of shareholders that it would be unwise to do it," he said "It will raise a lot of questions from shareholders." Neither did he think issuing a large number of shares to a third party was beneficial to shareholders.
Laiwu Steel's net profit down by 43.96% in 2005
Laiwu Iron and Steel Co Ltd, the listed arm of China's eighth largest steel mill Laiwu Iron and Steel Group, said that its net profits dropped by 43.96% in 2005 from the previous year due to rising production costs. Laiwu Steel's primary production revenue was up by 11.56% to RMB 19.82 billion ($2.48 billion) in 2006 but net profits fell to RMB 415.77 million ($51.97 million) down by 43.96% according to their annual report. Laiwu Steel produced 3.849 million tons of pig iron, 6.04 million tons of crude steel and 5.957 million tons of steel products last year.
The company plans to produce 5.34 million tons of pig iron, 5.95 million tons of crude steel and 5.83 million tons of steel products in 2006. The company said it would face a tough competitive environment in 2006 due to overcapacity and rising production costs. Hence, it forecasts that primary revenue will slide to RMB 19 billion ($2.375 billion) in 2006.
Laiwu Group and Arcelor signed an agreement in February to transfer 38.41% of Laiwu Steel or 50% of Laiwu Iron and Steel Group's state owned shares in the company. The deal is still waiting for central government approval.
Luxembourg government not to sell Arcelors shares
PTI has reported that the Luxembourg Government, the largest shareholder in Arcelor on Friday made it clear that it has no reason to sell the shares in the near future. "There is no reason to sell the Arcelor shares in the near future," Mr Guy Schulles spokesperson for the Luxembourg government is reported to have said over the telephone from Brussels.
Mr Schulles said the Luxembourg Prime Minister Mr Jean-Claude Juncker has also made this clear in Brussels.
Incidentally, it was reported yesterday that Mr Juncker said he was not satisfied with draft changes introduced by the Parliament to the country's takeover law, which may help Arcelor fend off Mittal Steel's unsolicited bid. "The government considers that this way of legal prohibiting is not the Luxembourg way and is not according to our tradition," Mr Juncker said on Thursday, referring to the draft changes. The Prime Minister said the government would not take any legal steps or actions and that it was up to the shareholders to decide whether to accept Mittal bid.
Morgan to upgrade Sicartsa Bar Mill in Mexico
Morgan Construction Co announced that it has bagged an order to supply new shears for the two strand bar mill at Siderrgica Laro Cdenas-Las Truchas SA de C.V (Sicartsa) in Laro Cdenas Mexico. Morgan also will supply the necessary electrical hardware and automation. This will be the first significant mechanical update to the mill, which Morgan supplied in the mid 1970s. Installation will begin in January 2007.
According to Morgans sales manager Mr Neil Gow, The new equipment will increase mill utilization by improving the condition of the front-ends before entering the finishing stands.
Baosteel likely to post major drop in Q4 profit
Baoshan Iron and Steel Co, the world's sixth largest steelmaker, is set to post its slowest growth in at least three years for the fourth quarter of 2005, as a major expansion failed to compensate for sliding steel prices. Its fourth-quarter results are due early next week. Analysts said raw material costs, particularly for iron ore, were a key uncertainty facing Baosteel, which hopes to achieve a goal of ranking among the world's top three steelmakers by 2010.
Baosteel is also almost certain to see profit fall in the first quarter of 2006, its first such slump since 2003, as higher iron ore prices erode margins.
Recovering steel prices could help Baosteel's earnings rebound in the second quarter, but its net profit is still likely to fall by 23 percent for all of 2006 compared with 2005, according to forecasts by six analysts.
Still, Baosteel could do better than a 68% slump in POSCO's profits in the quarter and a similar 67% drop from Taiwan's China Steel Corp, because Baosteel managed a major capacity expansion in April 2005 courtesy of a $3.3 billion asset infusion from its State parent.
Coal mine blast kills 8 in Hebei province in China
8 miners were killed and 5 injured in a gas blast that occurred in a coal mine in North China's Hebei Province on Monday, government sources confirmed said.
Rescue work and investigation into the cause of the accident is still under way .
Initial investigations show that owner of the individual run coal mine tried to cover up the accident, according to the Hebei Provincial Workplace Safety Supervision and Management Administration. The administration did not disclose other details such as how many workers were working underground when the accident took place at the No. 2 Coal Mine of Huzhuang village, Zhulu County.
Baosteel to supply steel for Jintang Bridge
Baosteel is reported to have won in the purchase bid of 90,300 tons of HR coils and plates to be used in the steel tube stake construction of CG1 segment contract of Jintang Bridge, the last bridge in a project aiming to connect Zhoushan mainland and the Islands.
The project, which is to connect the mainland and the islands, spans 48 kilometers and has 5 bridges in total. The last bridge, Jintang Bridge is the longest one and involves the largest amount of investment. It would be the third ultra big size sea spanning bridge after East Sea Bridge and Hangzhou Bay Bridge.
Chinese SS fittings flooding US market
US producers of stainless steel butt weld pipe fittings in mid February pointed to increasing volumes of low-priced imports from China as a serious and growing problem. "What is occurring here is a remarkable influx of Chinese stainless fittings over a very short period of time and at depressed values," said Mr David A Hartquist, an international trade counsel speaking on behalf of the Flowline Division of Markovitz Enterprises, Gerlin and Shaw Alloy Piping Products.
Official US Census Bureau data reflect that from an annual volume of 287,223 kilograms in 2002, stainless fittings imports from China skyrocketed 403% to 1,446,603 kg through the first 11 months of 2005. China is now the largest single source of stainless fittings imported into the United States among all countries that export stainless fittings to the US market.
From January to November 2005, the average unit value of the Chinese stainless fittings was $8.91, almost 15% less than the average unit value of $10.46 during that period for total stainless steel fittings imported into the United States from all other countries.
"As disturbing as these trends are, they are not surprising given the unfair advantages Chinese producers have, not the least of which are the Chinese government's manipulative undervaluation of the yuan and other subsidies," Mr Hartquist said. "We intend to monitor these imports from China very closely and take action as appropriate."
Stelcos Q4 loss balloons to $120 million
The Hamilton based steelmaker Stelco Inc, set to emerge later this month after two years under bankruptcy court shelter, said that its fourth quarter loss ballooned to $120 million compared to a year earlier profit of $1 million. The fourth quarter loss also includes a $53 million loss from discontinued operations. Those include a number of subsidiaries the steel maker sold as it trimmed down to its two remaining plants in Hamilton and Nanticoke.
The shutdown at its Lake Erie facility dragged on longer than expected last fall, as the company spent about $50 million upgrading its hot strip mill which, combined with softer demand, lower prices, and a higher Canadian dollar than the fourth quarter of 2004, pulled revenue per tonne of steel down 11%. Sales fell by 10% despite a constant level of steel shipments.
During all of 2005, Stelco lost $73 million, compared to restated earnings of $64 million in 2004. Last year's results included a $64-million loss from discontinued operations and reorganization expenses of $76 million. Steel imports made up 51% of domestic steel consumption last year, compared to 46% in 2004, taking market share away from Canadian steelmakers, Stelco said.
Stelco also cautioned that the first quarter of this year will be hurt by a long shutdown at its key steel plant in Nanticoke and costs related to its restructuring.
Arcelor says that investors will lose $1.56 billions on Dofasco
Mittal Steel's plan to sell Dofasco Inc, should it succeed in buying Arcelor SA, will cost investors 1.3 billion euros ($1.56 billion), Arcelor CEO Mr Guy Dolle said.
Arcelor is buying Dofasco for C$5.5 billion ($4.5 billion). Mittal Steel plans to sell Dofasco to ThyssenKrupp AG for C$5.3 billion, should its $23.7 billion hostile offer for Arcelor succeed. The additional loss would be due to missed cost savings and acquisition expenses, Mr Dolle said at a shareholder meeting in Paris yesterday, according to Arcelor spokesman Mr Luc Scheer.
Molten steel spills at Butler SDI plant
Mr Mark Millett VP and GM of SDIs Flat Roll Division said that molten steel burned through the side wall of a melting furnace at Steel Dynamic Inc.s Iron Dynamics plant in Butler. Most of the iron was contained to an area designed to handle such spills, Mr Millett said, but the accident ruptured a small water line and caused a series of small explosions.
One employee sprained his ankle, but no serious injuries resulted from the accident, he said.
The melting furnace will be down a few days for repairs, but no other equipment at the plant was damaged.
Rautaruukki gets nod from competition authority for Steel Mont
Rautaruukki Corporation has received approval from competition authorities to purchase Steel-Mont AS. The transaction is expected to be finalized within two weeks. The total purchase price is about 10 million euros.
Steel-Mont is the leading steel constructor in Slovakia, with net sales in 2005 of Euro 27 million. The company employed 129 people at the end of 2005. The company's customers are international and Slovak investors and construction companies building industrial and commercial premises in Slovakia.
The purchase of Steel-Mont will boost the implementation of Ruukki's strategy. Ruukki's goal is to be one of the leading suppliers of metal-based construction solutions in the Nordic countries and Central & Eastern Europe.
Government directs PT Krakatau to expand in Kalimantan
Indonesias steel industry VP Mr Jusuf Kalla told that state owned steel producer PT Krakatau Steel plans to build its new plant in resource rich Kalimantan. "All production expansion plans for Cilegon should be rerouted to Kalimantan," Mr Kalla said Thursday in his opening address to an industry symposium. "And this is not just some plan or policy, but rather a direct order intended to help our steel industry."
Mr Kalla said that Kalimantan, the Indonesian half of Borneo Island and particularly South Kalimantan province, was an ideal place to site a steel plant as it enjoyed abundant supplies of iron ore and coal. This would reduce production costs and increase the overall competitiveness of Indonesia's steel industry. The location of a steel plant in Kalimantan would also be in line with the government's policy of optimizing the use of the country's natural resources including iron ore, natural gas and coal.
Industry Minister Mr Fahmi Idris concurred with Mr Kalla on the importance of increasing both the efficiency and production of the country's steel industry in order to ensure security of supply on the domestic steel market and beat off the overseas competition. Relocating Krakatau Steel's expansion to South Kalimantan would be the ideal way of achieving this, he said, especially given the availability of deep water harbors in the area.
Mittal Steel outlines offer for Arcelor in US filing
Mittal Steel announced that it has outlined its offer for Arcelor in a US Securities and Exchange filing. The registration statement on Thursday relating to its 19.9 billion euro ($24 billion) offer for the shares and bonds of the Arcelor includes the exchange of 4 Mittal Steel class A common shares and 35.25 euros in cash for every five Arcelor shares or Arcelor American Depositary shares and four Mittal Steel class A common shares and 40 euros in cash for every five Arcelor convertible bonds.
In conjunction with that offer Mittal Steel is registering 90.3 million of its class A common shares for sale, the company said in its SEC filing.
