July, 10 2006
Mittal Steels strategy gives quick results in Jharkhand
It is reported that Jharkhand government has written to Mittal Steel promising a total 600 tonnes of iron ore after Mittal Steel announced a mega project in Orissa last week. Mr SK Satpathy Jharkhands mines and geology secretary said "We have sent a letter of comfort. We have said in the letter that we will give 400 million tonnes plus 200 million tonnes of iron ore to Mittal Steel among other things."
Jharkhand had agreed to provide iron ore reserves of 400 million tonnes for the first 30 years of operation and another 200 million tonnes for the next 20 years for the 2nd phase of the project as per the MoU signed in October 2005.
Mr Karat to watch Mittal Steel investment in Orissa
Mr Prakash Karat general secretary of the Communist Party of India (Marxist) on Saturday warned that the party would oppose Mr Mittal's Rs 40,000 crore Orissa foray if the state tried to give him iron ore cheap or allowed him to export ore.
Mr Karat said "We are opposed to any company being given mineral resources without paying market price and their export. This has been our stand against the POSCO project."
Indian mining policy likely to be announced within 2 months
Union minister of state for mines Mr T Subbarami Reddy announced that the new mining policy, to be announced within two months, will attract investment of Rs 100,000 crore in the next five years and provide employment to half a million people.
The new mining policy would focus on private investment in the exploration of mineral resources, besides the use of modern technology. It would also ensure that there would not be much of a delay in the sanctioning and exploration of mines.
Mr Reddy said that instead of a rigid captive clause, a policy of rational distribution of mines should be adopted. Industries which came to the state might be accorded priority but the needs of others should also be kept in mind.
Mr Reddy said that a high power committee would be set up to review the progress every fortnight and all efforts would be taken to protect the environment and ensure the welfare of the tribals who very often become victims.
Hindustan Zinc increases zinc prices twice in last week
Hindustan Zinc Ltd raised the prices of zinc on Saturday again for the second time this week. HZL raised the price of zinc to Rs 179,400 per tonne up by 1.01% from Rs 177,600.
Hindustan Zinc Ltd had also announced on last Thursday that it had raised zinc prices by 6.86% to Rs 177,600 per ton.
HZL last cut zinc prices on June 21 by Rs 4,100 per ton.
Hindustan Zinc is a part of the UK listed Vedanta Resources Plc.
National coal committee calls for coal regulatory commission
Mr SK Chowdhary ex chairman of Coal India Limited and the chairman of the national committee said that it was important to set up a Coal Regulatory Commission to protect the interest of coal consumers, to review the price structure, productivity and quality.
He also said that coal prices should be linked to international prices of coal and oil. Rail freight, which is an important constituent of cost of the delivered coal, must also to be regulated by a Railway Regulatory Commission to avoid distortion in rail freight due to passenger subsidy.
Chattisgarh announces discovery of iron ore at Kawardha
Mr Shivraj Singh Chhattisgarhs additional chief secretary of mining announced that Surveys conducted across Chhattisgarh confirmed that Kawardha district has the worlds best quality iron ore deposits, not less than 348.2 million tonnes.
Mr Rajesh Munnat industry minister told IANS We are really excited to find new reserves of the worlds best quality iron ore. The government has decided to speed up the process of early excavation in Kawardha district to accelerate the pace of industrialization.
RINL preparing plan for steel SEZ in Vizag
Rashtriya Ispat Nigam Ltd is preparing a blueprint for setting up special economic zone on 250 acres in Vizag exclusively for the steel user industries.
Mr Y Sivasagara Rao CMD while speaking at a seminar on business excellence organized by the Confederation of Indian Industry said that there was a great scope for setting up such a steel specific SEZ which would create great employment opportunities.
Mittal Steel may drop Jharkhand project - Report
It is reported by BL that after 9 months of signing MoU and failing to get the project off the ground, Mittal Steel has dropped the idea citing highly placed sources in London saying that the deal is off as Jharkhand government has not been able to sort out the iron ore mining rights issue.
A company source is cited in the report as saying that "The State Government has done nothing in the last nine months regarding identification of land for ore mining with proven reserves and that the state government has not even responded to Mittal Steel's request last month for a comfort letter over the proposed project.
However, Mr Sanak Misra CEO of Mittal Steel Jharkhand said that a final decision was yet to be made.
Committee suggests combined royalty on coal for states
Indian governments committee on coal and lignite royalty met during last week to finalize the draft report and is reported to have suggested shifting royalty rates on coal to a mix of specific and market duties, from the current specific rate which would push up coal prices by up to 30%. The committee will now submit its report to the coal ministry, which would seek the approval of the federal Cabinet before making the changes.
As per reports, the committee has backed increasing the coal royalty rate on the lines suggested by an economic advisory council to the prime minister headed by Mr R Rangarajan and has also favored combined royalty rates, fixed plus market rates, to balance the aspirations of coal producing states and the apprehensions of consumers.
At present the government fixes the rate of royalty payable to state governments on coal on a per ton basis for three years. As the rates were last revised in September 2002 and a revision was due last year but the government constituted a committee last year to finalize new rates on changed market dynamics.
Finance ministry rules out PSU participation in freight corridor
Indian finance ministry has not agreed to India Railways proposal of involving big user groups like SAIL & CIL in Rs 270 billion railway freight corridor project stating that these public sector undertakings should concentrate only on their core activities and not invest in a rail project. The ministry also said there was no precedent to follow while asking the PSUs to join the SPV being set up for the dedicated freight corridor.
The railways had envisioned an investment of about Rs 90 billion from the ministry for the freight corridor project and if the PSUs in the user industries were also to contribute some equity, the railways envisioned that the cost of financing the project would come down. Rail Ministrys reasoning behind the proposal had been that the project would benefit these organizations to a large extent as they would be able to move their traffic at a much faster pace and therefore add to their productivity. The Railways had decided to seek the support of organizations such as Steel Authority of India Limited and Coal India by their participation in the special purpose vehicle.
Sical, MMTC & L&T consortium gets LoI for Ennore iron ore terminal project
Minister for shipping and surface transport has issued a formal LoI to Sical Logistics Ltd led consortium for executing the Rs 550 crore iron ore terminal project at Ennore. The project involves putting up an iron ore terminal and attendant handling systems including a Rs 100 crore jetty. The project is expected to take 27 months to be completed.
The terminal is expected to handle 9 million tonnes of iron ore in the first year and 12 million tonnes in the second year.
The consortium comprises of Sical Logistics Ltd, MMTC and L&T. Sical Logistics and MMTC would together hold 89% of the equity and L&T, the remaining 11%. The equity component of the project is likely to be around Rs 150 crore. There are doubts over L&T continuing in this venture.
Another case of arms in steel scarp in Meerut
During last week Meerut police has discovered over 200 rocket launchers, hand grenades and missiles in Mawana area of the district. The haul has been buried and the area sealed off. A police officer said that "We suspect that most of the shells are empty but have still called the squad as a precautionary measure.
It is suspected that these arms have been part of steel scarp and dumped by a mill owner.
Canadian economist warns of Chinese steel tsunami
Canadian economists have warned of an expected onslaught of Chinese steel production on the global steel scenario including Canadian steel industry. Mr Peter Hall deputy chief economist at Export Development Canada said "There's a shakeout coming and it's going to affect players around the world. The bottom line is that the world will soon be faced with a tsunami of cheap Chinese production.
The crux of the problem is that even though China makes more steel than it needs, it's still building new foundries. Mr Hall said that Chinese capacity has grown by about 22% annually for the past five years, for a doubling of output in just five years. He said "Those are staggering numbers and this year isn't any different, they're on track to grow another 22%."
The global economy is expected to start losing steam within the next few quarters and the resulting slowdown will put a serious dent in steel demand. Mr Warren Jestin chief economist at Scotiabank said that the economic slowdown that many economists are calling for may have started. He said "The auto industry has already started to show signs of scaling back. Inevitably, you're going to end up with a situation where you have a lot of steel looking for a place to go."
Mr Jayson Myers chief economist of the Canadian Manufacturers and Exporters Association said that steel is already landing in North America at prices significantly below the cost of raw materials needed to make it. He said "There's so much Chinese capacity coming on stream and that's already a problem for the whole of North America."
Steel sector for the past few years has been enjoying a boom due to massive economic growth in China and other developing countries. But China has been aggressively boosting its own steel production capacity and has recently transformed itself from one of the largest importers into an export behemoth and due to Chinese steel capacity global steel production is in danger of outstripping demand.
ThyssenKrupp bags Volkswagen Environment Award
Volkswagen AG has honored ThyssenKrupp Steel with the Volkswagen Group Award for environment awareness recently. Dr Ulrich Jaroni member of the Executive Board of ThyssenKrupp Steel AG accepted the award in Wolfsburg from Dr Bernd Pischetsrieder Chairman of the Board of Management of Volkswagen AG and board member Mr Francisco Javier Garcia Sanz.
The Volkswagen award recognizes suppliers who contribute innovative solutions to making cars more environmentally friendly.
A release said "ThyssenKrupp Steel uses environmentally sound technologies in the cost-effective production and processing of innovative steel products which, with their high strength combined with high formability allow the production of thin walled, weight optimized automotive parts. In addition to efficient energy use at the Duisburg plant, this results in reduced fuel consumption for Volkswagen customers."
TATAs foray in Bangladesh facing uncertainties
Bangladesh's government seems to have developed cold feet in deciding over the investment proposal from TATA group due to elections in January and will consult opposition parties on the issue.
Mr Motiur Rahman Nizami Bangladesh's industries minister told Reuters after a meeting with a TATA delegation "All of us in the government and me feel strongly that it is good for Bangladesh, but it is also difficult to take any decision before the coming election." Mr M Saifur Rahman Bangladesh's finance minister added We will try to take the next move in consultation with the prime minister."
Mr Abdul Mannan Bhuiyan secretary general of the ruling Bangladesh Nationalist Party said the government will consult opposition parties before entering a deal with TATA. He said "This is a very big proposal, which we welcome. At the same time, we will also share opinions with the opposition for taking a decision in this regard."
Apparently a clearer view on the fate of the investment would be available after TATA teams meeting with Mr Mahmudur Rahman chairman of Bangladesh's Board of Investment on Monday. TATA has proposed setting up a steel mill, a urea factory, a 1,000MW gas fired power plant and development of a coal mine in Bangladesh.
2 accidents reported in Chinese mines on Saturday
Xinhua news agency said on Sunday that a gas explosion in a coal mine in Hejin city in Shanxi province of China on Saturday has killed at least eight people. Further details are not available.
In another incident flooding in southwestern Yunnan province trapped seven miners carrying out repairs. Xinhua said "Rescuers are pumping out water from the shaft and clearing debris in the tunnel. More than 230 people have joined the rescue operation. The water level is dropping, but the condition of the trapped miners remains unknown."
Accidents occur almost daily in China's coal mining industry making it the most dangerous in the world. Last year nearly 6,000 Chinese died in 3,300 coal mine blasts, floods and other accidents.
TMK to install a new seamless tube mill at Tahanrog
Russian Pipe Metallurgical Company TMK has ordered for supply & installation of a state of art technology seamless tube plant for its Tagmet Metallurgical Works in Taganrog. The start of production of the plant is scheduled for the beginning of 2008.
The new plant will replace two pilger mills and boost the annual capacity by more than three times with a significant increase in profitability of TMK.
The plant will produce tubes in the size range from 2 ?" to 10 " and is designed for an annual capacity of 600,000 tonnes. The product spectrum includes oil & gas field tubes of the highest grades to meet all international standards.
Fortescue & Nobel may form a marketing JV
Fortescue Metals Group Ltd has confirmed that it is negotiating an equity placement between $270 million to $300 million with Hong Kong based commodities trader Noble Group Ltd. The deal with Noble would see the establishment of a JV marketing company, to be owned 51% by Noble and 49% by Fortescue, which would sell Fortescue's iron ore into China.
Fortescue said 'Agreement on the terms of the marketing joint venture have not been reached and so no concluded agreement has been achieved.
Fortescue said it was seeking strategic equity funding for part financing of its proposed A$2.5 billion Pilbara iron ore project in Western Australia under a broader capital raising program and Noble was one of a number of potential partners it was negotiating with.
Japans small bar makers to reduce production in July to September
JMB has reported that Japanese small steel bar making electric furnaces around Tokyo will reduce the output by 10% to 20% during July to September 2006 as compared to April to June 2006.
The output is expected to decrease to less than 900,000 tonnes in July to September 2006 from around 1 million tonnes in April to June 2006, which increased by 10% from April to June 2005.
Alchevsks rolled steel production up by 14.6% in H1
Ukrainian Alchevsk Steelworks has increased rolled steel output during January to June 2006 to 1.64 million tonnes recording 14.6% increase YOY over January to June 2005. The crude steel output during H1 is also increased by 1.1% YOY to 1.9 million tonnes.
Alchevsk is likely to increase production in September after one of the new continuous casting machines becomes operational some time in August.
The production of rolled and crude steel output was decreased by 1.3% to 2.88 million tonnes and 3.72 million tonnes respectively during 2005.
Work to start on Dung Quat general port next week
Vietnamese Dung Quat International Port, the main contractor on the Dung Quat general port, will start the construction of the first wharf of the Dung Quat general port on July 15. As per reports the provincial authorities will complete site clearance and allocate 1,500 hectare of land to the investors by the end of the year.
Dung Quat general port is a part of the Dung Quat Economic Zone and is located in Quang Ngai province of Vietnam. The port will have a total area of 116,000 square meters, two thirds of which are water. The project is estimated to cost VND 575 billion ($35.93 million). After completion of construction the port will be able to accept 30,000 DWT ships.
Taiwanese group Tycoons has planned a blast furnace based steel mill in the area. Other major projects in the zone would be Dung Quat oil refinery and South Korean Doosans heavy machinery facility.
DMKDs crude steel production up by 13.4% in H1
Ukrainian Dneprovskiy Steelworks has increased output of crude steel to 1.80 million tonnes during January to June 2006 recording an increase of 13.4% YOY over January to June 2005. The rolled steel output also increased by 12% YOY to 1.60 million tonnes.
DMKD had witnessed drop in steel output during 2005 by 0.8% over 2004 to 3.22 million tones.
WCI not likely to be a takeover target
Mr Patrick Tatom president of WCI said he is not fearful of some other company coming in to buy WCI, because it is so small and is not meaningful towards the industry consolidation. Also because WCI has worked hard to design custom products for at least half of its customer base, it does not fit in naturally with most other companies customer lines.
Mr Tatom said Since the height of the steel company consolidation movement in the US, the value of steel companies has increased significantly. It is more expensive to buy and take over steel companies today than it was in 2000. They were cheap then. For someone to buy our assets will be much more expensive. If you look at the market for other steel companies, people have paid between $500 and $1,000 per ton for steel capacity.
WCI is known for its specialty steel produces about 1.3 million tonnes of steel a year. About half are custom products made for the specific needs of clients. Among its products, WCI makes hot rolled high carbon, ultra strength and heavy gauged galvanized steel products.
New York based Harbinger Capital Partners Master Fund I Ltd. took control of WCI from Renco Group in March after a bruising 2 year bankruptcy court battle. Harbinger Capital Partners consists of investors with $260 million in notes secured by the mills assets.
China considering media censorship on sudden events
It is reported that Chinas National Peoples Congress Standing Committee was presented with a draft law last week that would make it a crime for newspapers, magazines, web sites and television stations to publish information on sudden events without authorization. If the bill is passed, media outlets would face fines of up to $12,500 each time they published such information. Members of the standing committee held an initial round of discussions on the bill but adjourned without taking any action.
According to the official Xinhua news agency, sudden events or emergencies are defined as industrial accidents, natural disasters, health and public security crises.
Without a free media China would be able to keep lid on deadly coal mine accidents which happen almost everyday and were being reported by local media embarrassing Chinese government.
Yuzhniy OMEP increases sinter production by 11% in H1
Ukraines Yuzhniy Ore Mining and Enrichment Plant have increased sinter production by 11% YOY to 2.25 million tones during January to June 2006. It also produced 4.28 million tones of iron ore concentrate during the period almost at the same levels as in January to June 2005.
PGZK had produced 4.1 million tonnes of sinter and to 8.15 million tonnes of iron ore concentrate in 2005.
Compliance Energy announces HV metallurgical coal at Raven deposits
Canadian Compliance Energy Corporation has announced during last week that Khan & Associates have prepared a positive preliminary evaluation report on the coal quality and marketability of the coal from the Raven Deposit located on Vancouver Island. Khan & Associates have concluded that it is a high volatile metallurgical coal and can be readily blended with other metallurgical coals. This evaluation was based on coal quality data from prior wash ability and carbonization tests.
Current coal resources at the Raven stand at 38.5 million tonnes as reported by Gardner Exploration Consultants Ltd in their 43-101 compliant technical report dated July 2001 and a $2.1 million exploration program is now underway testing the extension of the deposit. The program is targeted at expanding resources and providing sufficient information to enable the Company to commence mining pre feasibility studies by year end.
Compliance is a Canadian mining company that has significant metallurgical coal interests on Vancouver Island and operates the Basin Coal Mine near Princeton, BC.
Siam Steel & Steel House form JV for steel houses in Qatar
Siam Steel International of Thailand has formed a JV with Doha Based Steel House to manufacture pre fabricated steel houses in Qatar.
Mr Hussain al Mussawi MD of Steel House said that pre fabricated steel houses were cost effective, fireproof, durable and of a very high quality. They can be used both for building residential units and commercial complexes. These houses can withstand extreme weather conditions and can be used in a wide range of locations such as holiday resorts, hospitals, residential complexes and accommodation for workers.
An executive of Siam Steel International said his firm in the last seven years had manufactured 50,000 units of pre fabricated steel houses and supplied them to Japan, Kuwait, Iraq, Afghanistan, Indonesia, Philippines, Cambodia and Laos in close collaboration with the United Nations.
Zaporizhstal offers to buy shares
Zaporizhstal announced that it is ready to purchase shares of shareholders opposing to the merger with its traders at $0.37 per share, substantially below $0.70 mid price at close on Friday, 30 June 2006.
The announcement reads that shareholders will have a chance to send in sale claims before 22 July 2006 and finalize transactions before 7 August 2006.
The logic of this offer is doubtful, because shares alternatively can be sold at a still higher market price.
Trading of Zaporizhstal shares was suspended on July 3rd because of expectation of announcement of this offer.
