March, 06 2006
India should stay neutral on Mittal Steel bid Mr Ratan Tata
Mr Ratan Tata, chairman of the TATA group, has said that the Indian government should not have any role to play in Mr Lakshmi Mittals bid for Arcelor. It was a decision best left to Arcelors shareholders.
In an interview to TV anchor Charlie Rose, Mr Ratan Tata said: If they think its good for them, I would imagine they would sell. Its not an Indian company. He is an Indian national but has lived overseas for many years. His company is registered in Rotterdam. The Indian government should ideally not be involved or take sides as its an issue the Arcelor shareholders have to decide.
JSW Steel to raise $275m to part fund expansion
JSW Steel plans to raise Rs 1,250 crore ($275m) by securitizing future export receivables and pure borrowing in the international market. The funds will be used to part finance its 2.8 million tonne per annum capacity blast furnace. It is reported that JSW Steel is borrowing Rs 350 crore ($75 million) from the international market and securitizing some of its future receivables to raise Rs 900 crore ($200m). Sources said that the export receivables are part of a long-term sales agreement with Duferco.
The 3 million tonne expansion, which will produce slabs, is estimated to cost Rs 5,000 crore of which Rs 2,000 crore will be financed through its own cash. The Rs 1,250 crore ($275m) loan arrangement is part of the JSWs Rs 3,000 crore debt raising exercise. About Rs 1,750 crore has already been arranged from different domestic banks in the form of rupee term loans.
The BF project will be implemented in 36 months and is expected to be on stream by March 2009.
JSW Steel is also setting up a cold rolling mill complex, with a capacity of 1 million tonne. The CRM complex will be commissioned by March 2007, at an estimated cost of Rs 1,000 crore to be financed out of the rights issue proceeds, own cash of Rs 400 crore and Rs 600 crore of debt.
Australian coal miner Thiess eying coal venture in India
Australian Leighton Holdings offshoot Thiess is angling to be the first foreign private sector coal miner in India through a tender for a $1.3 billion long term contract to mine coal in Raj Mahal in West Bengal. Thiess is the only foreign bidder for a contract to take over the operation of a mine in Raj Mahal. If it succeeds, it will be the first time a foreign company has been allowed to mine coal for the government-owned Coal India and could be a model for future deals as the Indian Government seeks ways to boost coal production.
The eight-year Raj Mahal contract requires taking over the mine and boosting production from 10 million to 20 million tonnes a year. It would involve mining and washing the coal for use in local power stations and building new infrastructure.
The combination of India's rapid growth rate and its cash strapped, inefficient, government owned coal industry has led to an increasingly severe coal shortage, even though it has the world's third-largest reserves. As a result, the Indian Government is considering outsourcing coal production for its power industry in a bid to generate the energy needed to maintain its economic growth, forecast at 7% in 2006. Citibank predicts India's coal deficit will rise from current levels of about 23 million tonnes a year to as high as 160 million by 2010.
Thiess CEO Mr Roger Trundle said "The Indian Government has a program to step up coal mining by another 200 million tonnes a year over the next five to seven years. This would be a 50% rise on the current level of 400 million tonnes. Coal India recognizes they will have to outsource to achieve that goal. It's a mammoth task, which we hope to participate in."
Thiess, which produces about 30 million tonnes of coal a year from three coal mines on the Indonesian island of Kalimantan, hopes its experience in contract mining will help win the deal.
Indian shipping ministry seeks service tax relief for shipyards
The shipping ministry has asked the finance ministry to explore possibilities of providing service tax exemption to the shipyards to let them remain competitive, without which the survival of the domestic ship repair industry would be jeopardized.
In an urgent note to the finance ministry, the shipping ministry has pointed out that as far as domestic ship repair industry was concerned, it was yet to attain the critical size to attract business and investments without support from the government.
The margins of the ship repair industry are very thin and the additional expenses due to the levy of 10.2% service tax cannot be passed on to its customers. The industry faces stiff competition from foreign shipyards located nearby, such as, in Dubai, Singapore and Colombo, said Mr Susheel Kumar joint secretary in shipping ministry.
AML Steel eyes units abroad
AML Steel, a Chennai based steel manufacturer, has set eyes on units based in Central Asia and Eastern Europe as part of its plan for inorganic growth. We are in talks with a couple of players and should get a more concrete picture by the first quarter of the FY07, said MD Mr Ashok Agarwal. The company, which had earlier bought and turned around a sick steel unit in Sri Lanka, is open to either acquiring units or taking the management control through equity participation.
As part of its organic growth strategy, AML is implementing a 3 phase greenfield project to set up a steel plant in Jharkhand with a capacity of two million tonnes per annum. The Rs 1,944 crore projects first phase, which includes a sponge iron plant and billet caster will be operational by January 2007. AML has signed a MoU with the Jharkhand government for a 20 year lease for an iron ore mine spread over 384 acre with estimated reserve of 25 million tonnes.
AML Steel has units in Pondicherry and Karaikal for producing steel ingots, TMT bars and rounds.
NTPC firms up strategy to secure coal supplies
National Thermal Power Corporation, whose capacity addition of over 30,000 MW by 2017 heavily relies on coal supplies, has chalked out a multi pronged strategy to overcome increasing coal shortages.
NTPC, which has projected a coal shortage of 87 million tonne by 2017 for the Indian power sector, during short and medium term would import coal, enhance long-term linkage, rationalize linkages and strengthen infrastructure of coal unloading. As a long term strategy, NTPC would apply for more and more captive mining, develop basket mines for a pool of stations and set up integrated coal mine power projects.
Coal for 18,990 MW would be on linkage mode and the balance 10,400 MW on integrated basis. By 2016-17, for NTPC power stations on linkage mode of about 38,000 MW, the coal requirement would be of the order of 185 million to 200 million tonne per year.
States want ad valorem royalty on coal
The Centre and the states are sharply divided over the issue of revising royalty on coal that has remained unchanged since August 2002. Sources said that consensus eluded the meeting of the committee on coal and lignite royalty on February 27 where the states stuck to their stand of changing from the present system of tonnage based royalty to a complete ad valorem rate.
The Centre had asked the states to consider the report of Economic Advisory Council of the Prime Minister headed by Mr C Rangarajan. It recommended that the new coal royalty rates may be based on both specific and ad valorem levies.
The committee is expected to meet again and request states to accept the combined royalty formula for the time being on the promise that the Centre would seriously look at completely shifting to ad valorem rate at the next revision. It may also decide to shift to ad valorem rates only for lignite.
RINL to focus on value added steel products in expansion
Rashtriya Ispat Nigam Ltd, which is expanding its capacity to 6.5 million tonnes from 3.4 million tonnes, will be focusing on the high value added steel products to cater to the growing automotive and oil and gas sectors.
Mr HS Chhatwal director commercial of RINL said that the company was finalizing the packages for the expansion program and has hired Dastur Co to advise it on awarding the packages for a Steel Melt Shop, three casters, one sinter plant, and four mills. The expansion is estimated to cost Rs 8,600 crores.
He said. "RINL has set up a high-powered committee comprising of the chairman of the company, director finance and the joint secretary in the steel ministry. The fourth member of the committee would be director projects. We are waiting for the Public Enterprises Selection Board to appoint director projects, who will be in charge of the expansion program," Mr Chhatwal said.
Indian steel majors parking surplus funds with banks
It is reported that most of steel companies including Steel Authority of India Ltd, Rashtriya Ispat Nigam Ltd are moving out of Treasury Bills and parking funds with public sector banks in a bid to maximize earnings out of investments. The report said that steel companies were asking for interest rates of close to 7.75% for their 90 day deposits citing highly placed banking sources.
The bankers said the companies usually adopted the bid route for parking the deposits. This implied that the funds would be parked with banks offering the highest rates. But some of the private sector steel companies were also parking the funds in certificates of deposits offering slightly higher rates.
PMs Trophy panel member all praise for RINL
Mr KC Agarwal a member in the panel of judges for Prime Ministers Trophy. During his visit to Vizag was all praise for VSP and said that the greenery and neatness at VSP and its township is unique among the steel plants in the country. He also lauded the energy and water conservation measures at VSP.
Mr Y Siva Sagara Rao CMD of RINL explained about the significant progress achieved during 2004-05. Due to the dedicated efforts of the VSP collective, we have created several records on various fronts, achieved several national accolades and introduced several processes. In spite of the severe crunch for coal and coke, we could sustain the production tempo and register stupendous sales and significant net profit during 2004-05, he said. All the employees are fully geared up to complete the expansion project as per schedule. The management has taken several measures to improve the bottom line of the company, which has resulted in 30% growth of our net profit during 2004-05, the CMD said.
Kamdhenu Ispat receives SEBI nod for IPO
Kamdhenu Ispat Limited announced that it has received the Securities and Exchange Board of India approval for entering into the capital market with an initial public offering of 1.28 crore equity shares of Rs 10 each at a premium of Rs 15 per share. The equity shares of the company would also have a green shoe option of 13.68 lakh, it said.
The company would invest the IPO proceed, aggregating Rs 32 crore, to meet the long-term working capital requirement as also for setting up of stock yards at nine different locations, it said in a release here.
China plans to shut small steel mills and encourage mergers
China plans to use new environmental, energy and water consumption and product quality standards to close 30% of the country's shoddiest steel capacity said Mr Luo Bingsheng, secretary general of the China Iron and Steel Association. "Foreigners taking a controlling stake in our major steel mills is against our iron and steel development policy. We have a batch of competitive steel mills, which can play an important role in the restructuring of the industry."
The new regulations, yet to be issued, will force outdated, polluting steel capacity to shut Mr Luo said and that the top priority is legally eliminate steel mills with heavy pollution and high energy consumption.
CISA opposes any foreign efforts to take a controlling stake in Chinese mills Mr Luo said, citing Mittal Steel's talks with Baotou Iron and Steel (Group) Co for a 49% stake. He said Arcelor would have difficulty getting central government approval of a recently signed deal to take a 38.41% stake in Laiwu Steel Corp. Ltd.
China's steel industry produced a surplus of 45 million tonnes of steel in 2005, driving down prices and making it harder for the newly expanded mills to pay their debts. "The overcapacity problem has provided a very good opportunity to promote restructuring in the steel industry," Mr Luo said.
The steel association targets steel output growth of 10% this year, after nearly 25 percent growth last year. "If we produce more than the target, the output will exceed demand, which will hurt everybody's interests," Mr Luo said. "This year we will actively push for mills to produce only what they know they can sell." He added.
Competition concerns from auto majors boost Arcelor defense
Some of Arcelor's biggest customers are concerned that the takeover bid by Mittal Steel could reduce competition in steel supply, potentially boosting the defense strategy of Arcelor. Ford Motor and PSA Peugeot Citro, both large customers of Arcelor, told the Financial Times last week that they were concerned by moves which lowered competition. The comments are likely to be seized on by Arcelor as it tries to fight off the unwanted approach from Mittal.
"We hope to see increased competitive pressures not reductions so we are concerned about it," said Mr Lewis Booth executive VP of Ford in charge of its European and luxury divisions.
Mr Jean-Martin Folz CEO of Peugeot, the French carmaker, said the company did not buy any steel from Mittal. But he said: "We are expecting as much competition as possible on the steel market. We feel there is probably room for some more competition than there is today."
A spokesman for General Motors, a major customer of both steelmakers, said: "Fewer competitors can sometimes mean less opportunity to save money."
However, not all vehicle manufacturers are concerned. Mr Leif tling, CEO of Scania, the Swedish truckmaker, told the FT this month that the proposed deal did not worry him as Mittal was not a supplier.
Rio Tinto declares force majeure on Pilbara iron ore
Rio Tinto Plc's Western Australian iron ore units have declared force majeure because of mine site flooding, a spokesman for the Anglo-Australian mining group told press. Rio Tinto is still calculating what impact the move caused by recent heavy cyclonic rains in the state's Pilbara region will have on shipment schedules and volumes, the spokesman said. "It is a precautionary thing to do while we assess the extent of the issue," he said, adding that Hamersley Iron and Robe River Iron put the measure in place on Thursday evening.
Macquarie Equities said in a research note that Hamersley Iron and Robe River - the latter is a joint venture 53% owned by Rio shipped 140 million metric tonnes of iron ore in calendar 2005.
Force majeure is declared by mining companies when they are at risk of not meeting contract terms because of circumstances beyond their control or acts of God.
Rio Tinto's move comes amid an already tight iron ore market.
Philippines cabinet OKs import duty raise for GSII
Philippines governments committee on Trade and Related Matters has approved the implementing rules and regulations of a Malacan directive raising import duties on steel products once Global Steelworks International Inc. becomes commercially operational.
The new rules will be applied to all products listed in Annex A of Executive Order 375, which raises steel import duties from 3% to 7% thus helping ensure the viability of Global Steelworks.
Under the IRR, the 7% tariff on hot rolled and cold rolled steel products will be imposed once GSIIs production volume is found to have reached 50% of its BoI-registered capacity for hot mill or cold mill products, or 50% of average Philippine importation volume of hot-rolled or cold-rolled steel products for five years immediately prior to the state of operations.
GSII will have to inform the TRM officially by submitting pertinent documents related to its production. A TRM committee working group will validate GSIIs claim on the commercial operation of its hot mill and cold mill and also visit GSIIs facilities to confirm the claims of GSII. It will submit a formal report of its findings to the CTRM not later than 15 days following the plant visit. Once the claim is confirmed, the BoC will then issue the necessary order implementing the 7% tariff within 15 days upon the receipt of the CTRM notification.
Global Steelworks operates the former National Steel Corp, which parent Global Infrastructure Holdings Ltd bought in a deal that enjoyed Malacan backing. After bagging NSC, Global Steelworks has been seeking tariff cover from government to nurse its revival plan for the steel mill.
GSII has claimed it is operating commercially. The Department of Trade and Industry, however, countered it has yet to validate GSIIs claim.
Danieli to upgrade mini mill at Aceros Arequipa of Peru
Corporacion Aceros Arequipa SA awarded Danieli the order for the additional upgrading of its steelmaking, casting and rolling plant in Pisco in December 2005. Rolling mill capacity, presently of 300,000 tonnes per year with a product mix that includes up to 40 mm dia round bars, up to 50 mm angles and 5.5 to 16 mm wire rod in coils weighing 500 kg, will now be brought to 500,000 tonnes per year and the product range will be extended up to 100 mm dia rounds, 100 mm angles and correspondent channels and flat bars. Startup of the upgraded Pisco mini mill is scheduled for spring 2007.
The installation of a new 70 tonnes EAF, as well as a further implementation of the 4 strand continuous caster and FTP will enable to cope with the new operating conditions. Danieli will also supply a new 130 tonnes casting crane. The rolling mill will be fed by a new 80 tonnes per hour Danieli Centro Combustion walking hearth reheating furnace designed for future connection to the continuous caster for hot-charging purposes. The rolling mill will be transformed into a fully-continuous arrangement through the installation of SHS housing less stands and auxiliary machinery. All this will enable to exploit the wire rod line at its full design capacity, allowing production of up to 2 tonnes coils.
Danieli Automation will supply all electrical and an advanced process control and automation system for the whole mini mill upgrading.
Mittal Steel Poland to expand production
It is reported that Mittal Steel Poland is planning to invest $450 million in 2006 to increase the production capacities of its plants in Poland. The investment will allow the company to meet the constantly rising demand from car manufacturers as many West European car companies have set up their plants in Poland because of easy availability of cheap technical labor.
The company is also planning to put up a new plant in Krakow, besides modernizing the existing plants in Sosnowiec, Dabrowa Gornicz and Swietochowice. The company has also put in its tender to acquire few coalmines in the Katowiec region. The tender is close to $70 million.
Mittal Steel Poland accounts for 70% cent of Poland's total steel production and it has already invested more than $3 billion in different steel plants that it had brought from the Polish government in the last three years.
Kazakh SSGPO to boost iron ore shipments to MMK
Sokolov-Sarbai Mining Production Association SSGPO Kazakhstan's biggest iron ore producer, plans to ship a monthly 1 million tonnes of iron ore to Magnitogorsk Iron & Steel Works from March. SSGPO chief Mr Mukhamedjan Turdakhunov told a press conference that overall exports in March would be 1.6 million tonnes, of which MMK would receive 1 million tonnes, China 400,000 tonnes and Mittal Steel Temirtau 200,000 tonnes
"MMK, which is a long-standing buyer, is very important to us. We have signed a contract valid to the end of this year," Mr Turdakhunov said.
SSGPO provided up to 70% of MMK's ore requirement until May last year, when the two fell out over prices and SSGPO stopped selling ore to MMK and MMK arranged alternative ore supplies from Ukraine and Russia. MMK and SSGPO then agreed on a partial resumption of supplies and SSGPO shipped 200,000 tonnes of concentrate to MMK in each of August and September and 250,000 tonnes in October and 100,000 tonnes of pellets in September and 150,000 tonnes in October. But this was still a far cry from the 750,000 tonnes of ore a month that MMK bought on average from SSGPO in 2004.
SSGPO will sell around 17 million tonnes of iron ore this year as against 12 million tonnes in 2005.
Steel & Tube to buy New Zealand Fasteners Stainless Group
Steel & Tube, New Zealands largest distributor of steel and steel products said that it has conditionally agreed to buy New Zealand Fasteners Stainless Group for about $11 million. The price is subject to adjustment based on net assets of the business on April 3. The purchase, subject to due diligence, will be effective from April 3.
NZSFG employs 80 people at eight regional locations offering a chance to grow Steel & Tube's stainless steel arm CEO Mr Nick Calavrias said.
Steel & Tube is half owned by Australia's OneSteel.
Kin steel reactivates Praias plant
Malaysian Kin steel Bhd has reactivated Praia Steel Sdn Buds Gurun Plant and strengthened the workforce by a quarter to 2,500 workers. About five months ago, Kinsteel announced its plan to buy 51% of Perwaja and its assets for RM298 million in cash and shares.
Perwaja, which is Malaysia's leading steel mill with its capacity of 1.1 million tonnes a year, owns two mills; one in Gurun, Kedah, and the other in Kemaman, Terengganu. The Gurun factory makes steel bars, wire rods, beams, sections, bolts and nuts, nails and wire meshes. It now operates at half the capacity or 500,000 tonnes of steel a year. Perwaja's Kemaman mill is Malaysia's only billet making factory that makes steel products through direct reduction of iron ore.
The Perwaja-Kinsteel alliance has changed one of Kinsteel's original plans to build its own billet plant. "Through this strategic alliance with Perwaja, Kinsteel doesn't need to build its own billet plant anymore. Instead, the billets will be sourced from Perwaja's DRI factory in Kemaman," Mr Pheng said.
Besides reactivating the Gurun mill, Kinsteel is also setting up a wire rod mill in Gebeng. The new wire rod mill, which can produce 300,000 tonnes a year, will be the fourth in Malaysia. Existing wire rod producers are Amsteel Corp Bhd, Southern Steel Bhd and Malayawata Steel Bhd.
RZD to announce Sakhaugol tender results by month end
Russian Railways said that it would name the winner of a tender for its stake in the nation's largest coal field at the end of March. The tender for the company's 29.5% share in eastern Siberia's Elgaugol closed on March 1, RZD spokeswoman Ms Yelena Kulakova said.
Russian steel producer Mechel said Thursday that it had offered as much as $300 million to create a coal venture with RZD and the government of the republic of Sakha.
The venture, Sakhaugol, would combine the assets of coal producer Yakutugol and Elgaugol.
Romanian Republicas worker ask for re privatization
It is reported that former employees of Bucharest based Republica workers are requesting authorities to pass the ironworks from the current owner back to the Authority for State Assets Recovery in order for the property to be re-privatized,
Mr Constantin Dobre leader of Nicolae Malaxa union claims that two American companies showing interest in the drilling pipes rolling mill and that Republica could become productive again within six months after re privatization.
Nikopol Ferroalloy cuts production in January-February
It is reported that Nikopol Ferroalloy Plant, Ukraine's biggest ferroalloy producer, reduced ferroalloy production 5.9% YOY in January-February to 151,200 tons.
TopWorker killed in Coke oven accident in Mittal Steel Galati
It is reported that a worker lost his life in an accident that occurred on Saturday morning in the coke ovens of Mittal Steel Galati. The daily reported that the worker attempted to release a blocked coke chute through which the coke was entering the installation by climbing the equipment, while it was in motion and was crushed between the passage the upper part of the equipment citing Mr Dorian Dumitrescu, Mittal Steel Galati spokesperson.
The accident is investigated both by labor inspectors from Mittal Steel Galati, and by those from Territorial Labor Inspectorate.
As per the reports this is the fourth accident to occur at the Mittal Steel Galati since the beginning of the year.
Ukraine cuts iron ore exports 1.1% in January
Ukraine reduced iron ore exports 1.1% YOY in January to 1.46 million tonnes as per release from Rudprom.
Ukraine exported 667,000 tonnes of pellets down by 8.1% YOY and 582,000 tonnes of sintering ore down by 9.9% and 197,000 tonnes of concentrate up by 41.7%.
