April, 21 2006
TATA Steel finalizes plans for 2 million tonnes plant in Iran
TATA Steel has finalized plans to set up a manufacturing unit in Iran, which could start production by 2009 with an initial capacity of 2 million tonnes which could be expanded to four million tonnes. Mr Somdeb Banerjee chief of overseas project said "Most of the arrangements have been finalized, including gas and pellet supply for the plant from the government. We would be getting pellet supplies from the government and would also have a long term arrangement for gas supply, an agreement on which is expected to sign in another two three months."
He clarified that TATA Steel would not go in for mining in Iran, he said, adding the proposed plant would only be for production of steel.
He also said that the company has not yet taken a final decision as to whether TATA Steel would go in for the plant on its own or with a partner. "But legal requirements in Iran may require us to go in with a partner" he said.
POSCO India Project Opposition parties unite
It is reported that all opposition political parties except the Congress have decided to form a joint forum to fight for the rights of the people likely to be displaced due to the POSCOs proposed steel plant and also oppose the proposed port to be constructed at Jatadhari. Criticizing the Government for giving the green signal to POSCOs proposal for a port, the Orissa Gana Parishad, CPI, CPM and Janata Dal (S) alleged in a joint statement that this would adversely affect the Paradip port. They suggested that Paradip port could be expanded to meet the requirement of Posco's steel plant.
The four parties announced that a seminar to be attended by the experts would be organized to discuss the environmental issues along with its adverse impact on Paradip port.
SAIL's RMD increases iron ore production by 12.3% in 2005-06
Steel Authority of India Limiteds raw materials division has recorded the highest ever production and dispatch of iron ore during 2005-06. A SAIL spokesman said that the production by RMD was 12.3% YOY and that the total production of iron ore from Kiriburu, Meghataburu, Bolani, Barsua, Kalta, Gua and Manoharpur in Chiria crossed 13.46 million tonne during 2005-06.
RMD aims to step up production to 18 million tonne during 20006-07 to meet the enhanced iron ore requirements for SAIL units in Bokaro, Durgapur, Rourkela and the IISCO steel Plant.
It is learnt that to ensure availability of iron ore in the coming years, SAIL has undertaken various mine development activities, including expansion of Bolani to 5 million tonne. It is also developing the central block of Meghataburu and south block of Kiriburu mines. RMD was also in the process of developing the Taldih deposit in Barsua-Taldih-Kalta area for which it had already obtained the mining lease and has entered into a MoU with Kundremukh Iron Ore Company Limited.
Maruti to increase share of domestic steel sourcing
Maruti Udyog announced its plans to buy more steel from domestic companies rather than import in order to cut down on rising production costs. Mr Jagdish Khattar MD of Maruti Udyog told presspersons on the sidelines of a press conference announcing a new loyalty program that the company is in talks with a few Indian steel producers for the same.
He said that the company usually negotiated prices for six months and on volumes for a year as this helps to maintain a steady supply of raw materials irrespective of price fluctuations.
Mr Khattar did not specify what percentage of steel the company currently imports, though industry watchers estimate it to be about 60-70%.
TATA Steel set to acquire chromite mine in South Africa
TATA Steel plans to acquire a chromite ore mine in South Africa, even as it is getting ready to start construction work next month on its ferrochrome plant at Richards Bay. Mr Somdeb Banerjee chief of overseas projects said "Currently the exploration and evaluation process is on. In another six months time we should be able to finalize the exact location, after which we would apply to the South African government. Two locations, at the western and eastern chromite rich belt of South Africa, are being evaluated and in another 16 to 18 months the company was likely to own its first mine in that country.
Mr Banerjee said that the chromite ore mine could be of capacity between 20 million tonnes to 50 million tonnes and the company has envisaged as much as $10 million to $20 million investments for the acquisition. The mine would supply to the company's ferrochrome plant in Richards Bay.
He also said that the company would also import chromite ore from India, which has higher grade chrome, for its ferrochrome plant, that is expected to start production by last quarter of 2007.
Adhunik Metal served closure notice by pollution authorities
It is reported that Adhunik Metalics, Pawanjoy Sponge and Vedvyas Sponge have been served with closure notices by the district administration as per the directions of the state Pollution Control Board citing Ms Sujata K Pandiyan, collector of Sundergarh.
Ms Pandiyan said We found the three units to be violating the pollution control measures and were not operating their ESPs during the night. The raid was carried during the night after receiving specific complaints from the local residents and independent observers. The case was immediately forwarded to the SPCB in Bhubaneswar and show cause notices were also served on the guilty units. As the response of the units to the notices was found to be less satisfactory and convincing the pollution control body directed the district administration to serve the closure notice.
Adhunik Metalics chairman Mr Manoj Agarwal during an interaction with the scribes two months ago had assured that his group is committed towards environment and will take every possible steps to keep the atmosphere here clean and green and only within a span of two months it has been served a closure notice for violating environment norms.
Maharashtra Seamless net profit in 2005-06 up by 61%
Maharashtra Seamless Ltd has announced unaudited results for the quarter & year ended on March 31, 2006.
MSL has posted a net profit of Rs 420.30 million for the January to March 2006 quarter as compared to Rs 312.60 million for the same quarter of 2005. Total Income, net of excise, has increased from Rs 2321.40 million in Q4 of 2004-05 to Rs 2980.80 million for Q4 2005-06.
MSL has posted a net profit of Rs 1368.80 million for 2005-06 as compared to Rs 848.80 million in 2004-05. Total Income, net of excise, has increased from Rs 7813.80 million in 2004-05 to Rs 9904.40 million for 2005-06.
PSEB coal import under scanner
Tribune News Service Chandigarh has reported that the imported Chinese coal being supplied to the various thermal plants of the Punjab State Electricity Board was discovered to be of substandard quality as against what was agreed upon in the purchase order signed by the PSEB authorities with private suppliers of coal.
It is reported that PSEB had issued purchase orders in November for supply of 0442 million tonne imported coal worth Rs 220 crore at Ropar Thermal Plant and for supply of 0.272 million tonnes worth Rs 130 crore to Lehra Mohabbat thermal plant from the Datong mines in China through a port in Gujarat.
The reports said that the coal received varied in size as well moisture content
The report also said that a senior officer at Lehra Mohabbat thermal plant, when contacted by The Tribune for an official version, said he was satisfied with the quality of coal. It was softer and its grinding proves less costly. Its use is good for boilers in the thermal plants, he said.
RSPs personnel department gets ISO certification
The personnel department of SAILs Rourkela Steel Plant has received the ISO 9001-2000 QMS certificate from TUV India Limited. RSP's personnel department has become the second company in Steel Authority of India Limited to bag the accreditation.
Mr S Talukdar lead auditor of TUV India presented the certificate to RSPs executive director works Mr AK Bhandari.
March 2006 global crude steel production up by 7% - IISI
World crude steel production for the 62 countries reporting to the International Iron and Steel Institute was 99.7 million tonnes in March. This is 7% higher than for the same month of 2005. Crude steel production during January to March 2006 283.8 million tonnes up b y 6% over 268.1 million tonnes in January to March 2005.
For the month of March production in the Asia region was 51.7 million tonnes, 12.7% higher than in March 2005. China produced 32.9 million tonnes in March, 20.1% higher than for the same month in 2005 followed by India which produced 3.6 million tonnes an increase of 17.2% over March 2005. Japan produced 9.7 million tonnes of crude steel up by 0.8 % YOY.
In the EU-25 total production in March was 17.3 million tonnes, an increase of 4% over March 2005. France produced 1.8 million tonnes of crude steel, a rise of 8.7% YOY. UK produced 1.2 million tonnes, an increase of 11.8%. Italy, Poland and Czech Republic also registered growth of 6.9%, 16.1% and 9.9% respectively. Turkey produced 1.9 million tonnes in March, up 10.8% on the same month last year.
CIS registered a negative growth of 1.6% by producing 9.56 million tonnes in March 2006 as against 9.715 million tonnes in March 2005. Russia produced 5.87 million tonnes and increase of 3.5% whereas Ukraine registered a decline of 12.2% by producing 3.045 million tonnes as against 3.465 million tonnes in March 2005.
US produced 8.38 million tonnes in March 2005 an increase of 2.3% as against 8.19 million tonnes in March 2005.
South America produced 3.669 million tonnes down by 3.9% over March 2005. Brazil produced 2.5 million tonnes of crude steel in March, which is 10.2% lower than for the same month in 2005.
Middle East produced 1.325 million tonnes up by 8.4% over 1.222 million tonnes in March 2005.with Iran registering growth of 14%.
Mittal Steel - Arcelor will create a unique European industry leader
Mr LN Mittal, Chairman and CEO of Mittal Steel on a visit to Gandrange in France said that a combination between Mittal Steel and Arcelor will provide a rare opportunity for a European company to be an undisputed global industry leader. Mr Mittal said Europe is steeped in industrial tradition and yet today few European industrial companies are global sector leaders. This transaction will change that. A European company will be the undisputed number one in the steel business. I believe this creates a business platform from which Europe can only stand to benefit.
Mr Mittal said that he understood the concerns the governments had raised initially about Mittal Steels offer, but that he was confident this position has changed. I fully understand the affiliation governments have had historically with their steel industries, he said. We have been in a process of dialogue with all the leading governments and have shared with them our very thorough industrial plan. I have sought to explain to them that this deal does not take away anything from Europe. We are not planning to cut jobs. We are not planning to shift or reduce investment.
He proceeded to highlight the positive response the offer has attracted from the financial markets. Both the share prices of Mittal Steel and Arcelor have risen considerably, clear recognition by the markets that this deal creates significant value. The Arcelor share price has risen 50% in just twelve weeks since our offer was announced. The question Arcelor shareholders will be asking themselves is where does that value go without Mittal?
Mr Mittal then addressed a number of the myths he said were circulating about Mittal Steel. I feel obliged to comment on these because they are disingenuous and misleading to stakeholders who deserve to be in possession of the full facts. It is natural that change should prompt concerns as people are forced to confront the unknown. But it is wrong when people who should know better play upon such fears through use of disinformation.
He concluded by saying that a combination of Mittal and Arcelor would create the steel company of the future. In ten years time the industry leader will be producing around 150 to 200 million tons per annum and will have a footprint in both the high quality and the high growth markets. It is this very company that a combination of Mittal Steel and Arcelor will create not in ten years, but today.
Mexican police storm Sicartsa steel plant and 3 strikers killed
Hundreds of Mexican police stormed Sicartsa steel plant on Thursday to force out striking workers in a violent clash that spilled onto the streets and left three workers dead. Two of the dead were shot and the other was crushed in tussles between steel workers and police with riot gear and shields at the Sicartsa complex, which has been closed for three weeks by workers defending a union boss whom the government accuses of graft. Dozens more were injured when some 600 police moved in firing tear gas canisters early in the morning at the plant in the western state of Michoacan, officials said. The Villacero steel company briefly regained control of its Sicartsa complex as strikers were pushed out but it later said workers were again blocking the plant and it was unlikely to reopen on Friday.
Both workers and police were hurt, some of them by people in the crowd throwing stones and homemade petrol bombs. "A very violent conflict situation arose," Enrique Bautista, a senior official in the Michoacan state government, said in a radio interview. "There was a very large number of injured and there are three people dead," he said, adding that the police were on orders to go in armed with only riot shields and batons.
It was the worst clash since thousands of mining and metals workers across the country went on strike last month in defense of union boss Napoleon Gomez, whom the government no longer recognizes because of the corruption accusations. The dispute followed a horrific mining accident in northern Mexico where 65 workers died in an underground gas explosion, sparking angry protests over mine safety and the failure of rescue teams to reach the bodies. Hundreds of Villacero workers at the Sicartsa steel complex joined the strike in early April.
The union said President Vicente Fox had "blood on his hands" and demanded an investigation into the violence. "There was a violent evacuation where more than 600 officers from different police forces in Michoacan entered the complex to unblock the strike," union spokeswoman Consuelo Aguilar said. "We dont know where it will end."
Nucors earnings up by 7% in Q1 of 2006
The Charlotte based steel manufacturer Nucor Corp reported first quarter earnings of $379.2 million, a 7% increase on net income of $354.7 million in the same period last year. Sales also increased by 7% to $3.55 billion from $3.32 billion in the first quarter of 2005. The average sales price per ton of steel fell by 5% in the quarter but the company increased shipments by 12%.
Nucor and its affiliates have operating facilities in 16 states. The company's products include carbon and alloy steel used in bars, beams, sheet and plate; steel joists and joist girders; steel deck; cold-finished steel; steel fasteners; metal building systems; and light-gauge steel framing.
Bolivia orders Brazilian EBX out of the country
Bolivia on Thursday ordered EBX Siderurgica Boliviana, a unit of Rio de Janeiro based Grupo EBX SA out of the country after it allegedly built a pig iron plant without proper permits and backed protests aimed at forcing the government to allow the company to stay. The move came after military and police forces on Wednesday freed Bolivia's minister of planning, economic development and mining who had been held hostage overnight in the town of Puerto Suarez by protesters supporting the company. Bolivian Vice President Mr Alvaro Garcia said "The decision is firm. A company that doesn't respect the law has to go."
The government has ordered the district attorney to investigate claims that the company has helped organize the protests in Puerto Suarez as well as the hostage-taking of the three government ministers.
EBX began construction last year of the $150 million pig iron plant without construction or environmental permits and is violating a law barring foreign companies operating within 50 kilometers of Bolivia's borders. EBX set up its first wood-burning ovens last year to produce pig iron using iron ore from EBX's Ucurum mine located just across the border in Brazil. Pig iron is used in making steel. Bolivia's National Environmental Office denied permission to EBX at the time saying that the operation result in thousands of acres of forest being cut down in order to feed the plant with wood. EBX said its plant would not harm Bolivia's forests.
EBX said in a statement, however, that its presence in Bolivia is legal and it hopes to discuss the issues with the government. The company also condemned violent protests and the hostage taking. The company employs 1,500 people in Puerto Suarez, near the Brazilian border 1,150 kilometers east of the capital of La Paz.
Russian pipe makers increase output 14% in Q1 of 2006
Russian Federal State Statistics Service has announced that Russian pipe makers have increased steel pipe output by 14.2% YOY during January to March period of 2006 to 1.67 million tonnes. Rosstat said that the total included 676,200 tonnes of seamless pipe, down by 0.1%, but 957,300 tonnes of ERW pipes up by 28.8%.
Production soared by 57.7% at the Vyksa Metals Plant, which is controlled by United Metallurgical Company OMK. OMK's Almetyevsk mill boosted output by 48.7%.
It rose by12% at the ChTPZ Group's Chelyabinsk Tube-Rolling Plant but fell by 2.1% at the group's Pervouralsk New Pipe Plant.
Pipe Metallurgical Company's Volzhsky, Taganrog and Seversky mills raised output 2.7%, 7.9% and 5% respectively but TMK's Sinara mill reduced production 4.4%.
Russian annual pipe production rose by 10.6% in 2005 to 6.67 million tonnes.
AK Steel hikes Zinc coating extras by 40%
AK Steel announced that it will increase prices for zinc coatings by a minimum of 40%, effective with new orders for shipment on June 1, 2006. The premiums are being added to AK Steel's current pricing extras for all ZINCGRIP(R), galvannealed and electro galvanized products. AK Steel said that it may make additional adjustments to its coating extras in the future depending upon the fluctuation in zinc prices.
The increases are in addition to AK Steel's previously-announced increase of 70% for zinc coatings, which was effective with shipments on April 1, 2006.
AK Steel said that the increases are being made in order to recover the record high cost of zinc that is used to coat galvanized steel sheet products. The April 1, 2006 increase was in response to zinc costs that had climbed by approximately 70%, from a mid-2005 cost of about $0.60 per pound to an average cost of $1.01 per pound in February 2006. This week, zinc again set a record high price of $1.44 per pound, making an additional increase in zinc coating extras necessary.
Headquartered in Middletown, Ohio, AK Steel produces flat-rolled carbon, stainless and electrical steel products, as well as carbon and stainless tubular steel products, for automotive, appliance, construction and manufacturing markets.
Rio Tinto Hamersley iron ore output falls by 9%
Rio Tinto PLC announced that the iron ore production from its key Hamersley unit in Western Australia fell 9% in first quarter of 2006 as compared with the 2005 fourth quarter due to impact of cyclones. Rio also said that production from the smaller Robe River operation also in the state's Pilbara region dived 19%. Rio said that overall iron ore output fell by 12% in January to March of 2006 as compared to October to December quarter. Rio Tinto produced 28.7 million metric tons of iron ore in the three months ended March 31, down from 32.5 million in the quarter before.
Cyclones in Western Australia's Pilbara region, where Rio Tinto produces nearly all its iron ore, brought heavy rains, resulting in temporary closures of the rail line and flooding of several mines, the company said. "The severity of the weather conditions is likely to have a modest effect on iron ore production early in the second quarter and a consequent increase in unit cash costs," Rio Tinto said.
Group iron ore production rose by 4% YOY as the company continued to expand iron ore production, Rio Tinto said.
"Global iron ore demand remains strong, with supply limited," Rio Tinto said in the statement.
PSMC Privatization - Opposition alleges manipulated bidding
Opposition in the National Assembly on Wednesday questioned the privatization of Pakistan Steel Mills but failed to push for a parliamentary probe into the issue as Pakistan government defended the deal as prudent and transparent during a debate. Opposition said that PSMC was sold too cheaply in what they saw as manipulated bidding for much costlier assets and even called into question the desirability of privatizing such a vital unit built by the former Soviet Union. The opposition staged two protest walkouts after Speaker Chaudhry Amir Hussain rejected a demand to use his discretion to order a vote in the house for referring the PSMC sale to the National Assemblys Public Accounts Committee for a scrutiny.
Mr Manzoor Ahmed, who opened the debate, called the PSMCs fast track privatization scandalous in which, he said, the bidding was deliberately restricted to two consortiums. He even cast doubts about the bid winning consortiums Pakistani partners who, he said, might be there on behalf of some undisclosed party. Who is behind it? People should be told whose front man Mr Arif Habib is, Mr Ahmed said while referring to Arif Habib Securities, whose other consortium partners are Tuwairqi Steel Mills of Saudi Arabia and M. Magnitogorsk Iron and Steel Works Open JSC of Russia.
Mr Aitzaz Ahsan pointed to what he saw as a key position of the PSMC for exports and imports because of its proximity to the Gulf, the Arabian Sea, the Indian Ocean and the Pacific and said it should have been spared the sale as one of commanding heights of the state which cant be given to others. He described the Steel Mills as a sacred trust and an ornament of the mother state and remarked: The ornament is being sold during the mothers lifetime.
Minister in charge for Privatization Mr Awais Ahmed Leghari rejected the oppositions allegations as baseless and said there was no wrongdoing in the deal, insisting the government got a good price for it, one that was higher than the reserve price. He disagreed with the opposition argument against sale of profitable enterprises and said a unit could bring a good price only after it was made profitable.
EU to investigate Chinese silicon trade via South Korea
The European Union has opened an investigation after complaints that Chinese exporters may be sending shipments of silicon via South Korea to avoid hefty EU import tariffs. If upheld, the complaints filed with the EU's executive Commission by European metals producers could lead to tariffs of up to 49% being imposed on Korean silicon imports.
"The request for an investigation shows that a significant change in the pattern of trade involving exports from the People's Republic of China and the Republic of Korea to the Community has taken place," EUs Journal said. "This change in the pattern of trade appears to stem from the transshipment of silicon originating in the People's Republic of China via the Republic of Korea."
The Commission imposed anti-dumping duties on Chinese silicon exporters in March 2004, slapping a penalty of 49% on silicon imports. Significant volumes of silicon imports from Korea seemed to have replaced Chinese supply and were undermining the effect of the original anti-dumping tariffs, the Journal said.
Silicon has a high resistance to heat and is used as a semiconductor in electronic equipment, in the chemicals sector and as an alloy for aluminium. But its main use is as ferro-silicon, a strengthening alloy for the steel industry.
Czech Trinecke Zelezarny eying 2.5 million tonnes in 2006
North Moravian based steel maker Trinecke Zelezarny has, after last year's decline in output, reported growth again to levels similar to the record year 2004, due to the demand from the construction sector and the car industry. "We put out a record 632,000 tonnes of steel in Q1" said CEO Mr Jiri Ciencala. "If everything goes smoothly in the rest of the year we could turn out over 2.5 million tonnes" said Mr Ciencala.
In 2004, TZ produced 2.43 million tonnes of steel, highest since 1996.
PSMC Privatization Consortium makes 25% payment for PSMC
Pakistans Privatization Commission has received Rs.5.420 billion, 25% of the total bid for the 75% stake in Pakistan Steel Mills Corporation from Consortium of Magnitogorsk Iron & Steel Works of Russia, Tuwairqi Steel Mills of Saudi Arabia and Arif Habib Securities of Pakistan.
The consortium was required to deposit 25 % of the bid within 20 days after the issuance of LoA, which was issued after the approval of the Cabinet Committee on Privatization on March 31, 2006.
The remaining amount is to be deposited within the 60 days after the issuance of LoA.
Chiles CSH to double steel output by 2020
It is reported that Chile's Compaa de Aceros del Pacico forecasts that output from its steel unit Huachipato in southern Chile's Region VIII, close to the city of Concepci will almost double in 2020 to 2.3 million tonnes of liquid steel and 2 million tonnes of finished product. CSH produced 1.08 million tonnes of finished products in 2005.
Chile's only integrated steelmaker CAPs board approved investment of $83.5 million to expand CSHs output to 1.45 million tonnes of liquid steel and 1.2 million tonnes of finished products in August 2005. The project is earmarked for completion toward the second half of 2007. CAP CEO Mr Jaime Charles at an investment seminar said that approved investment at the complex totals $30mn in 2006, $25mn in 2007 and $30mn in 2008. According to his presentation, Huachipato output is earmarked to rise to 1.55 million tonnes of liquid steel in 2010, 2.03 million tonnes in 2015 and to 2.30 million tonnes in 2020.
The company is studying the implementation of COREX direct reduction technology at Huachipato to provide additional increases to steel production reduce pig iron costs and self-generate electric power. If approved, COREX would partially substitute Huachipato's blast furnace system and be implemented toward the end of the decade, it said. The technology would have the advantage of making available sufficient gas to generate 240MW in a combined cycle plant. Huachipato's current requirements are 90MW so the excess could be sold to third parties.
Mr Usmanov increases stake in LGOK and Oskol
Russian Vedomosti has reported that Mr Alisher Usmanov bought the shares he did not already own in Lebedinsky GOK iron ore mine and Oskol Electrometallurgical Combine.
Mr Usmanov's Metalloinvest holding company already held 81% of Lebedinsky and 71% percent of Oskol a steel mill.
Universal Stainless Q1 profit up by 33%
Universal Stainless & Alloy Products Inc reported that the net income for the first quarter of 2006 rose by 33% to a record $3.9 million on a 4% increase in sales, which reached a record $44.9 million. This is in comparison to net income of $2.9 million and sales of $43.0 million reported in the 2005 first quarter.
Universal Stainless & Alloy Products segment had sales of $39.1 million and operating income of $4.9 million as compared with first quarter 2005 sales of $38.4 million and operating income of $2.7 million. The 2% increase in sales compared with the 2005 first quarter was achieved despite a 23% reduction in tons shipped, although tons shipped were up 9% from the 2005 fourth quarter. The sales increase over the prior year first quarter was due to higher product prices and a continued favorable product mix, including strong growth in shipments of bar products to service centers and OEMs and of special shape products, which offset lower shipments to rerollers.
The Dunkirk Specialty Steel segment reported first quarter 2006 sales of $14.0 million and operating income of $1.5 million, resulting in an operating margin of 10%. This compares with sales of $13.7 million and operating income of $1.9 million, or 14% of sales, in the first quarter of 2005. In the 2005 fourth quarter, sales were $13.0 million and operating income was $1.3 million, or 10% of sales. Dunkirk's sales increased 2% over the 2005 first quarter and 8% over the 2005 fourth quarter due to higher selling prices and increased shipments of bar products to service centers and OEMs.
President and CEO Mr Mac McAninch said Our record first quarter results reflected the continued strength of our niche markets, particularly aerospace. Our base price and surcharge initiatives enabled us to cope successfully with volatile raw material costs. Process improvements and our strategic shift to higher value products over the past year also contributed to our earnings growth."
Nippon Steels takeover defenses best for company
Lazard Freres financial advisor to Nippon Steel Corp, which recently introduced hostile takeover defense, said that these will serve as an effective method for its shareholders to objectively evaluate a potential acquirer's proposal and decide what is best for the company. If anyone tries to acquire 15% or more of the company's voting rights, the steelmaker will request the necessary information for its shareholders to examine the offer. Lazard Freres put together the rights plan with Nippon Steel's legal advisor, Sullivan & Cromwell.
"In designing the rights plan, we spent quite a lot of time thinking about how to make the plan operate as an effective defensive measure and, equally importantly, how to make the plan acceptable from the stand point of the shareholders and the market" Mr Yasushi Hatakeyama, the CEO of Lazard Freres in Japan, said in an interview with DJ
Company boards may choose different defense measures for various reasons, such as the number of outside directors and the needs of each company. In Nippon Steel's case, Mr Hatakeyama said Lazard decided against designing a defense in which an independent committee consisting of people from outside the company plays a key role in evaluating a takeover proposal. Nippon Steel's rights plan is the most suitable for the company, considering factors such as the size of the firm, he said. "When it comes to a rights plan, shareholders are always concerned about the possibility that the plan might be abused for management's entrenchment purposes," he said. Nippon Steel's rights plan "therefore objectively stipulates a clear path the bidder can follow so as to minimize the possibility that the board may exercise undue discretion" said Mr Hatakeyama.
If an acquirer presents the requested information, which is specified in the rights plan, and goes through the process set by Nippon Steel, the steelmaker will review the takeover proposal for up to 18 weeks and decide whether to offer a counter proposal to its shareholders. As long as a bidder presents all the information as requested, Nippon Steel's board will not ask for any additional information later on, Mr Hatakeyama said. A review period of that length is necessary for a complex corporate management matter and isn't intended to raise the bar for potential acquirers or leave room for employing delay tactics, he added.
Nippon Steel's rights plan includes a poison pill to fend off an abusive or coercive buyer, such as a green mailer. But Mr Hatakeyama said that it is often difficult to prove the malicious intention of abusive acquirers, raising the possibility that Nippon Steel could bring to its shareholders an offer with even a questionable plan in terms of raising corporate value, as long as the bidder is following the process.
Reliance Steel Q1 profit up by 55%
Metals processing company Reliance Steel & Aluminum Co announced that its first quarter earnings rose 55% on strong customer demand in aerospace and commercial construction markets. Net income for the first quarter was $71.9 million as compared with $46.4 million in the year-earlier period. First-quarter sales rose by 22% to $988 million.
Citing market demand for metals and the successful integration of recent acquisitions, the company provided improved guidance for second quarter earnings.
Theco to announce plan for steel investment
Thai Heat Exchange plans to announce a new investment in a steel company by the end of the month, according to Mr Chamni Janchai, the company's rehabilitation planner. He said the company also expected to exit the Rehabco sector and transfer to the vehicle sector on the Stock Exchange of Thailand next month. Mr Chamni, who will stay on as president after the company exits business rehabilitation, said the investment would be in a company with a production capacity of 200,000 to 300,000 tonnes per year.
He said the steel business continued to offer strong prospects, with domestic production of five million tonnes per year, well short of the estimated demand of six million. He declined to state the value of the investment or the name of the steel company, but said Theco currently had working capital of up to 250 million baht available for the deal.
Thai Heat Exchange, a coil and condenser producer for air conditioners will remain focused on the auto sector Mr Chamni said although it had plans to expand into the building and materials industry. Major shareholders of Theco include Yupin Chaiwikrai and Sopin Chaiwikrai at 18.39% each, Somsak Srithanawiboonchai at 8.36%, Mr Chamni at 5.5%, and Chatchai Thamsarnsoonthorn at 4.74%.
Incos profit falls in Q1 due to increased costs
Canada based metals miner Inco Ltd announced that its first quarter profit declined as costs outpaced the rate of revenue growth. Earnings fell to $202 million from $317 million YOY. Sales rose by 8% to $1.21 billion in the quarter from $1.12 billion a year earlier. Costs grew by 22% to $886 million, as the company logged higher interest expense, research and development costs and depreciation charges.
The nickel market gained momentum through the quarter, bolstered by a rebound in demand for stainless steel, Inco said. For the second quarter, Inco expects to produce between 135 million and 140 million pounds of nickel and 85 million pounds of copper.
Kobe Steel group unveils medium term business plan
Kobe Steel, Ltd. announced today its medium-term business plan for April 1, 2006 to March 31, 2009. Under the business plan, Kobe Steel aims to achieve top-class profitability as a domestic manufacturer by implementing the following policies
1. Expand the sales of and create "Only One" distinctive, upper-end products that make full use of the Kobe Steel Group's strengths and expertise.
2. Maintain and strengthen production infrastructure, the basis for manufacturing industries.
3. Establish a solid financial base to undertake necessary strategic investments.
At the same time, the Kobe Steel Group intends to build a strong corporate structure that is responsive to changes in the business environment. It aims to achieve stable profitability, as well qualitative and sustained growth.
The brief on Iron & Steel includes
(1) Steadily expand sales in areas of stable, anticipated growth. (Automotive specialty steel, high strength steel, electro galvanized steel sheet with special treatments)
(2) Actively respond to growth fields such as steel castings and forgings, titanium products, and welding consumables.
(3) Strengthen manufacturing technologies and build a stable production system.
(4) Carry out strategic investments in line with demand trends.
Tokyo Steel names Mr Nishimoto as new president
Tokyo Steel Mfg Co announced that it has appointed Mr Toshikazu Nishimoto, head of the company's factory in Takamatsu, Kagawa Prefecture, as its new president, replacing Mr Masanari Iketani. Mr Nishimoto, 45, will assume the presidency of the electric furnace steelmaker on June 27. Mr Iketani, 60, will step aside to become an adviser.
Mr Nishimoto joined Tokyo Steel in 1984 after graduating from Waseda University. He has headed the Takamatsu factory since November 2004.
It is the first time for the steelmaker to appoint someone outside the founding Iketani family to become president, practically ending the Iketanis' family management practice. It is also highly unusual for a manager, who is not a board member, to be promoted to the top of the company.
The steelmaker, which has purchased a factory site in Aichi Prefecture, has been planning to supply high quality steel sheets to Toyota Motor Corp.
