Corus backs TATA Steels bid Report

Financial Times, citing people close to the matter, has reported that the board of Corus has recommended a takeover bid from TATA Steel and will make a statement about this, possibly as soon as Friday. Reports also mention that TATA Steel may also make an announcement anytime.

The move will throw down the gauntlet to any potential counter bidders which include Evraz, NLMK, Severstal and CSN as per the reports and speculation making rounds in the media.

The Economic Times reported citing undisclosed sources reported that TATA Steel Ltd's acquisition of Corus may have a scheme of arrangement, where Corus could be merged with a special purpose vehicle or holding company which will be wholly owned by TATA Group and that the SPV, if formed is likely to be based outside UK to meet regulatory requirements.

As per reports, TATA Steel has lined up more than $6 billion in loans from Standard Chartered, Dutch bank ABN Amro and Deutsche Bank to finance a possible acquisition of Corus.

JSL to acquire ThaiNox reports

ET, citing sources close to company, has reported that Jindal Stainless Limited is close to buying out Thailands largest stainless steel company ThaiNox for $325 million.

ThaiNox, which was formed in 1990 through a JV between Arcelor, Nippon Steel and the Mahagitsiri Group of Thailand and is now controlled by the Thai partners. While Arcelor has already exited the company, Nippon Steel still holds close to 5% in the Thai firm.

If the deal goes through, this will be JSLs second acquisition in the region after it acquired Indonesias Maspion Steel in 2004.

However the report mentions a JSL spokesperson as saying that "We keep looking at opportunities to expand our business and routinely evaluate them. Right now, we have not firmed up our plans."

JSW Steel outlines growth strategies

JSW Steel Ltd has announced formation of wholly owned subsidiaries for the purpose of investing in overseas Coal assets, to pursue acquisition opportunities in steel business and for setting up service centers subsequent to decision taken by its board in a meeting held on October 19th 2006.

As per the release, JSW has been pursuing the strategy of integrating its operations vertically to bring down the costs and a focused effort is being made for the last two years to identify prospective coal mining assets and invest in them to ensure long term coal security. JSW has identified certain coal assets in Mozambique and has started financial, legal and technical due diligence. Now JSW board has approved the opening of a new arm to pursue these initiatives by setting up a wholly owned subsidiary overseas with permission to form step down subsidiaries in various destination countries for acquiring the coal assets. The initial investment approved is up to $ 25 Million to be contributed either by equity or loans or extension of financial guarantees.

The release adds that JSW has been on the look out for acquiring value added facilities in Europe and USA and company has wide international presence with large exports, imports and foreign borrowings requiring a continuous interaction with various stake holders. To identify and to speed up acquisition of steel business related assets and also to intensify the interactions with various stake holders to improve its business activities in international arena, the Board has approved the formation of wholly owned subsidiary overseas with an investment up to 1 Million. This investment is by way of equity or loans or extension of financial guarantees.

The release also said that JSW has decided to set up steel service Centre through wholly owned subsidiaries JSW is setting up a manufacturing facility to produce 0.8 million tonnes of CRCA and 0.2 million tonnes of HRPO products which will be operational by May 31, 2007. Considering the requirements of discerning customers and long term strategic benefits and financial feasibility, JSW board has approved the proposal for setting up a Service Centre at a cost of Rs 135 cores in a wholly owned subsidiary with an Equity Investment by the Company, upto an amount not exceeding Rs 50 crores in one or more tranches and also to give guarantee for a term loan of Rs 85 crores to be raised in the subsidiary company. The Service Centre, as a separate profit center, can over a period of time, take on and meet service requirements of the other Companies also.

POSCO India has changed plant layout 60 times

POSCO India officials, announcing their efforts to convince people about their proposed steel plant, told media that they had redrawn the layout for their mega steel plant project 60 times to minimize displacement of people.

Mr KW Sung vice president environment of POSCO India reaffirmed the companys unwavering commitment to establish the project in the state and said the site selection for the plant as well as the port had been done after conducting a careful study of the all aspects.

However, Mr Sung admitted that the alternate patch of land was being considered to avoid displacing people from Dhinkia, Nuagaon and Gadakujang where a strong resistance from the inhabitants has been impeding the project, was not suitable due to water logging.

The 60 changes, as proclaimed by POSCO India, in a span of about 16 month makes about one change in layout every 8th day on an average, if true, casts doubts on the planning process of the project.

Indian Railway to form a wagon building JV in Kerala

Indian Railways is exploring the possibility of setting up a wagon manufacturing unit in Kerala in the joint sector with the state owned Autokast Ltd and Steel Industrials Kerala Ltd using the latest technology. If the proposal materializes Indian Railways would invest up to Rs 450 crore in the venture.

The team members of Railway Board's ED Mr VK Panja, Expenditure Director M Sanjay Lavanya and South Western Railway's Chief Mechanical Engineer Mr NK Java have met Mr VS Achuthanandan chief minister of Kerala and Mr Elamaram Karim industry minister. Another round of discussion would be held between the officials of the railways and the state government before the signing of a MoU.

Autokast, engaged in steel casting, is already supplying castings to Bharat Heavy Electricals Ltd, Steel Authority of India Ltd and National Thermal Power Corporation. Autokast, as of now, is utilizing only 40% of its annual installed capacity of 9,000 tonnes.

Autocast possesses land to the extent of 54 acres in Cherthala and together with the 26 acres of SILK adjacent to it, is having enough land for setting up the wagon manufacturing facility.

There is a huge gap between the demand and supply, with the Railways needing 25,000 new wagons every year. Against this, the Chittaranjan unit is manufacturing only 180-360 wagons. The demand for wagons is expected to go up further in the Eleventh Plan period with the implementation of the proposed freight corridor plan.

CEA asks states to speed up power capacity development

It is reported that Indias Central Electricity Authority has asked all state governments to speed up tariff based competitive bids for the development of 500MW to 1,000MW capacity power plants based on coal from captive blocks and to apply to the coal ministry for direct allotment of such blocks.

CEA has said in a note to the Tamil Nadu Electricity Board that States need to act urgently to facilitate the emergence of merchant power plants which would compete in the market for supply of electricity to open access consumers as well as to meet short term needs of distribution licenses. Captive coal blocks may be allotted to those developers who give assurance backed by sufficiently strong bank guarantee or bid bond to develop the captive coal mine and the power plant in a time-bound manner."

The guidelines for allocation of coal blocks for IPPS and central power producing companies says, "In order to have adequate competition among the merchant power plants, it would be desirable to try and initially allot one coal block each to all serious developers who apply."

L&Ts net profit in July to September quarter up by 40.66%

Larsen & Toubro has registered a rise of 40.66% YoY in net profit after tax and after extraordinary items to Rs 2012.20 million for the quarter ended September 30th 2006 as compared to Rs 1430.50 million for the quarter ended September 30th 2005.

Total income, net of excise, has increased marginally to Rs 38478 million for the quarter ended September 30th 2006 as compared with Rs 35117.90 million for the quarter ended September 30th 2005.

CII plans power plants in Nashik

Business Standard has reported that Confederation of Indian Industry is planning to form a public private partnership to set up a captive power plant in Nashik to overcome the power shortage problem in the state of Maharashtra.

CII has decided to form a public private partnership in major cities of the state to mitigate the power shortage. Such a pilot project has been successfully implemented in Pune, which is now completely free from power cuts.

Punj Lloyd completes SembE&C acquisition

Punj Lloyd has acquired the balance 12% stake in Sembcorp Engineers & Constructors through its wholly owned subsidiary Punj Lloyd Pte Ltd. With the above acquisition Sembcorp Engineers has become a wholly owned subsidiary of Punj Lloyd.

Punj Lloyd on 2nd June 2006 had announced its acquisition of 88% stake in SembE&C at a consideration of SG$35.2 million.

SembCorp Engineers & Constructors is a design, engineering and construction service provider with core capabilities encompassing process & plant engineering, heavy civil engineering and building. SembE&C recorded revenue of over SG$1 billion for 2005.

Global crude steel production grows by 8.8% in September 2006

World crude steel production for the 62 countries reporting to the International Iron and Steel Institute was 101.357 million tons in September 2006, which is 8.8% higher than for the same month of 2005. The production during January to September 2006 amounted to 900.239 million tonnes an increase of 9.2% over corresponding period of 2005.

The growth in crude steel production during September 2006 among regions was again led by Asia which registered growth of 14%. South America, CIS North America and European Union (25) registered positive growth of 8.9%, 4%, 2.9% and 2.1% respectively in September 2006 YOY. Middle East, Oceania and Africa witnessed negative growth of 4.5%, 3.5% and 1.2% respectively in September 2006.

The crude steel production during January to September 2006 was led by Asia, which produced 476.110 million tonnes registering a growth of 13.4%.

In million tonnes
Source IISI

Among the top 20 nations, China as usual stood first with 36.162 million tonne production of crude steel.

In 000 tonnes
Source IISI

CVRD obtains Investment Canada Act approval

Companhia Vale do Rio Doce announced that it has obtained approval under the Investment Canada Act, in the form of a net benefit to Canada ruling from the Canadian Minister of Industry, in connection with its offer to acquire all of the outstanding common shares of Inco Limited.

CVRD has now received all regulatory approvals necessary to complete its all cash offer.

Mr Roger Agnelli CEO of CVRD said "We are delighted with this news, which confirms that the Minister of Industry is satisfied that CVRD's acquisition of Inco will be of net benefit to Canada. We have always believed that this transaction was good for Inco and for Canada. In fact, we think it is positive for everyone involved for CVRD, Inco shareholders, employees, suppliers and the provinces and communities in Canada where Inco carries on business. We now look forward to CVRD completing the offer."

Xicrin Indians leave CVRDs Carajas Mine

Indians daubed in war paint and armed with bows and arrows agreed on Thursday to leave mine belonging to CVRD allowing output to resume. The mine, located in the world's largest iron ore deposit in the Amazon, produces 250,000 tons of ore daily. The area has 17 billion tons of reserves.

About 200 Xikrin Indians invaded the Carajas mine on Tuesday and demanded that the company increase monthly payments to the community, construct 60 new houses in two Indian villages, and repair and maintain two local roads.

Companhia Vale do Rio Doce clarified that
1) The 200 Xicrin Indians, from the Catete and Djudjtribes, left CVRD's installations in Caraj, in Parstate, late Thursday afternoon October 19th.
2) The Indians have in part complied with the federal court decision authorizing CVRD to immediately retake the possession of its installations as some community leaders remain at the site.
3) CVRD reaffirms that Carajas mine is not located in Indian land.
4) Operational activities should resume today.
5) About 500,000 tonnes of iron ore were not exported.
6) CVRD reaffirms that it does not accept negotiating with communities that use illegal methods to force the Company to accept their demands.
7) CVRD reaffirms it has been fully complying with an agreement signed with the indigenous communities in the region and will always be open to dialogue under Funai's (Indian National Foundation) guidance.
8) CVRD understands that Funai is responsible for any negotiation with the Indians.
9) CVRD thanks the support it received from the authorities for the reestablishment of the public order.
10) CVRD reiterates it does not accept such illegal methods and will continue not to give in to blackmail of any kind.

POSCO & Nippon partnership talks still on

POSCO announced that it has not yet reached an agreement with Japan's Nippon Steel Corp on expanding their capital and business partnership. A POSCO spokeswoman said Nothing has been decided yet and the talks are still going on.

Earlier, Tokyo's Nihon Keizai Shimbun reported that POSCO and Nippon Steel have agreed to expand their capital and business partnership, including mutual supply of products and boosting cross shareholding stakes to a maximum of 5%. According to the Nihon Keizai Under an enhanced deal, the two will likely spend about 30-50 billion yen to buy additional shares. On the business area, the two intend to bolster ties in the procurement of iron ore and other raw materials, by jointly developing mines in Australia and elsewhere, as well as by working together to transport materials. They also plan to supply each other with semi-finished slab steel.

Nippon Steel and POSCO forged a comprehensive tie up based on a cross shareholding arrangement in 2000, but cooperation has been limited mostly to such areas as personnel exchanges and research and development in environmental technologies.

Currently, Nippon Steel holds a stake of just over 3% in POSCO, while the South Korean firm has an interest of slightly more than 2% in Nippon.

CSN may move on Corus Report

Daily News & Analysis has reported that Brazilian steel producer Cia Siderurgica Nacional SA is set to make a counter bid for Corus Group PLC, after TATA Steel confirmed a 455 pence per share offer approach to Corus earlier this week.

However, the report said the uncomfortable history between Brazil's largest steel maker and Corus could work in TATAs favor. In 2002, Corus had called off a proposed multi billion stg merger with CSN.

Eramet resumes production at New Caledonia mine

Eramet SA announced that it is resuming production at its largest ferro nickel plant in New Caledonia and hopes to resume shipments next week.

Mr Pierre Alla CEO in an interview with Bloomberg said that "This will relieve the situation on the ore supplies and that 90% to 95% of the workers have come back to work at the mine."

The strike to protest at the rising cost of living and to call for more local benefits from the islands large deposits of nickel began two weeks ago and slashed the workforce at its local unit Le Nickel-SLN.

CVRD to base nickel business in Canada

In order to demonstrate to the Canadian Minister of Industry that its offer will be of net benefit to Canada, CVRD has made commitments to the Minister to establish CVRDs global nickel business CVRD Inco and based it in Toronto with responsibility for the global nickel business of CVRD and a mandate to expand its business as a global leader in the nickel industry.

CVRD also announced that in furtherance of this mandate, CVRD will transfer management responsibility for its interest in existing and future nickel projects to CVRD Inco, including its interest in the On Puma and Vermelho projects in Brazil. CVRD Inco's global activities will be managed from its Toronto, Ontario head office, which will continue to exercise head office functions and activities with significant Canadian participation, including a Canadian Chief Operating Officer and a majority of its senior management. There will be no layoffs at Canadian operating facilities for at least three years, and in any event total employment at such facilities will not fall below 85% of current levels.

EU sets deadline of November 21st for NLMK-Duferco JV

The European Commission said the deadline for its inquiry into the proposed joint venture between Russian producer OJSC Novolipetsk Steel and Duferco Participations Holding Ltd is November 21st 2006.

The venture is being examined under the EU's simplified merger review procedure; cases which the commission believes do not pose competition concerns.

Hyundai Steel seeks $1.5 billion funds

Reuters has reported that Hyundai Steel Co has sent out a request to about 15 banks for proposals for a $1.5 billion equivalent financing. The deadline for proposals is October 27.

The funds will be used to expand existing facilities in Dangjin in South Korea's South Chungcheong Province. The expansion will boost present production of 3.8 million tons of hot rolled products and 1.2 million tons of bar steel products annually. The total project cost is estimated to be roughly $5 billion.

The financing has been divided into an export credit agency backed portion and a commercial loan portion. The commercial loan portion of $225 million is a 5 year bullet term loan.The ECA portion will have a tenor of 11.5 years and comprises of a Euro 500 million to Euro 600 million tranche insured by Germany's Euler Hermes; a $150 million to $200 million tranche insured by China Export & Credit Insurance Corp, a $100 million to $150 million tranche insured by Japan Bank for International Cooperation and or Nippon Export & Investment Insurance, and a Euro 100 million to Euro 200 million tranche insured by Italian SACE or other European ECAs.

Banks that received the RFP include: BNP Paribas, Calyon Corporate & Investment Bank, Citigroup, ING Bank, SG, Standard Chartered Bank and Sumitomo Mitsui Banking Corp.

Mr DiMicco blames China for global oversupply

Mr Dan DiMicco chairman & CEO of Nucor during a conference call said that China was the most serious abuser in contributing to what it called global overcapacity in the steel industry and vowed redress at the World Trade Organization.

Mr DiMicco said that China's steel industry is heavily subsidized or outright owned by the government. He said "China is indirect violation of the WTO agreement on subsidization and they will be held accountable for that.

WBMS puts tin deficit of 4,900 tonnes in the 8 months

The World Bureau of Metal Statistics announced that the global tin market was in deficit by 4,900 tons in January to August after allowing for deliveries from US government stockpiles. According to the WBMS, the tin market was almost balanced during January to July but world refined production stood at 32,400 tons and demand at 32,600 tons in August.

Reported production of refined metal in the period was up 3.6% at 250,500 compared with the first eight months of 2005. US government stockpile deliveries were 7,700 tons lower, bringing total availability to 258,200 tons.

Global demand totaled 263,000 tons in January to August. Global demand rose by 41,000 tons, with increases recorded in China, up 33%, Japan, up 29% and the US where demand rose by 10%.

Tin mine production was just over 229,800 tons up by 8% above the total for the previous year. WBMS said that "All of the increase was recorded in China. The rise in refined output was achieved due to higher production in China and Malaysia.

Kemerovo to auction coal block on December 15

Interfax has reported that the natural resources agency for the Kemerovo region will hold an auction on December 15 for the rights to explore and mine the Spichenkovsky section of the Berezovskoye coal deposit. The starting price is 1.5 million rubles. Applications from potential bidders will be accepted until November 13th 2006.

Mr Alexander Mamlin head of natural resources agency told Interfax that Spichenkovsky has estimated reserves of 1.8 million tonnes of T-brand steam coal that are not included in the state balance. Mr Mamlin added that the property was being offered at auction at the request of LLC MPS a company from Prokopyevsk.

The winner will have to explore the property and build a mine with capacity of at least 100,000 tonnes of coal per year within 72 months of license registration. The winner will get a 20 year license, the term of which may be revised based on the project proposal.

Peabody Energys Q3 profits up by 25%

Peabody Energy Corp reported that its third quarter earnings rose by 25% as sales and coal prices continued to climb. It posted net income of $142 million for July to September 2006 quarter up from $113.3 million in Q3 of 2005. Its revenue rose by 3% YoY to $1.27 billion from $1.22 billion. EBITDA rose by 15% to $270.7 million for the quarter.

Through nine months, earnings per share rose 63% to $1.58 on record net income of $425.7 million. EBITDA rose by 31% to a record $809.0 million through nine months. Revenues rose by 14% to $3,893.2 million.

Mr Gregory H Boyce president and CEO of Peabody said "Peabody continues to produce solid results again in 2006, posting the 12th consecutive quarter of double digit EBITDA growth over the prior year, and we remain on track for another record year in 2007. The strength of our operating base to meet rising demand and manage costs, and the multi year benefit of sales commitments signed earlier, should lead to continued strong earnings growth in 2007 and beyond. This growth will be further enhanced by our completion of the Excel acquisition in Australia."

Kumba resumes iron ore exports at Saldanha

Africa's biggest iron ore producer Kumba Resources announced that it had resumed iron ore exports on October 15th, four days earlier than originally estimated after repairs to a ship loader.

Kumba said in a statement "The initiative to re-commission ship loader No 1, which sustained damage to its feed conveyor during the failure, was completed ahead of schedule and Kumba's iron ore exports are now back on track. Kumba and its customers are currently re-scheduling the shipping in order to minimize the impact on this year's shipping volumes.

Kumba had said on September 28 that exports of iron ore from the port of Saldanha, operated by a division of state logistics group Transnet, had been disrupted following the failure of ship loader No 2 two days earlier.

NLMK to modernizes Lipetsk HSM

NLMK AG has commissioned SMS Demag, Germany, to modernize the finishing train for the hot strip mill 2000 at the Lipetsk Works for improvement of product quality and increasing hot strip capacity. Commissioning is scheduled for the spring of 2008.

The scope of supply includes the complete renovation of the entry and exit guides of the stands, the work-roll cooling system, loopers as well as all requisite utility systems. New installations include an interstand cooling system and a roll gap cooling system.

Corus agrees for takeover by TATA Steel

The boards of TATA Steel and Corus have announced their agreement on the terms of the recommended acquisition of the entire issued and to be issued share capital of Corus at a price of 455 pence in cash for each Corus Share, valuing Corus at 4.3 billion.

Corus is Europe's second largest steel producer with revenues in 2005 of 9.2 billion and crude steel production of 18.2 million tonnes, primarily in the UK and the Netherlands.

Tata Steel is Indias largest private sector steel company with 2005/06 revenues of US$5.0 billion and crude steel production of 5.3 million tonnes across India and South-East Asia. It is a vertically integrated manufacturer and is one of the worlds most profitable and value creating steel companies. Tata Sons, Tata Steel and other Tata companies had combined revenues in 2005/06 of approximately US$22 billion. Tata Sons current investments are valued at approximately US$50 billion.

The combination is strategically compelling, creating a vertically integrated global steel group:
1. Fifth largest global steel producer with pro forma crude steel production of 23.5 million tonnes in 2005
2. High quality, low cost, attractive growth platform in Asia combined with a leading European steel player
3. High value-added product mix and strong market positions in automotive, construction and packaging
4. A more resilient business model and a strong platform for further growth
5. A strong and committed combined management team
6. A common business culture and shared values

The price of 455 pence per Corus Share represents:
(i) On an enterprise value basis, a multiple of approximately 7.9 times underlying EBITDA from continuing operations for the twelve months to 1 July 2006 (excluding, inter alia, the non-recurring pension credit of 96 million) and a multiple of approximately 5.4 times underlying EBITDA from continuing operations for the year ended 31 December 2005; and
(ii) A premium of approximately 26.2 per cent. to the average closing mid-market price of 360.5 pence per Corus Share for the twelve months ended 4 October 2006, being the last business day prior to the announcement by Tata Steel that it was evaluating various opportunities including Corus.

Tata Steel has held constructive and satisfactory discussions with Corus two main UK pension schemes and has offered:
(i) To fund upfront the IAS 19 deficit on the Corus Engineering Steels Pension Scheme by paying 126 million into the scheme; and
(ii) To increase the contribution rate on the British Steel Pension Scheme from 10 per cent. to 12 per cent. until 31 March 2009.

The Acquisition will be made by Tata Steel UK, a wholly-owned indirect subsidiary of Tata Steel, and will be implemented by way of a scheme of arrangement under section 425 of the Companies Act 1985.

The Corus Directors, who have been so advised by Credit Suisse (as lead financial adviser), JPMorgan Cazenove and HSBC (as independent financial adviser for the purposes of Rule 3 of the City Code), consider the terms of the Acquisition to be fair and reasonable, so far as Corus Shareholders are concerned. Accordingly, the Corus Directors intend to unanimously recommend that Corus Shareholders vote in favor of the Scheme as they have undertaken to do in respect of their own beneficial holdings of Corus Shares, representing approximately 0.1 per cent. of the existing share capital of Corus. In providing their advice, Credit Suisse, JPMorgan Cazenove and HSBC have taken into account the commercial assessments of the Corus Directors.

Mr Ratan Tata, Chairman of Tata Steel said "This proposed acquisition represents a defining moment for Tata Steel and is entirely consistent with our strategy of growth through international expansion. Corus and Tata Steel are companies with long, proud histories. We have compatible cultures of commitment to stakeholders and complementary strengths in technology, efficiency, product mix and geographical spread. Together we will be even better equipped to remain at the leading edge of the fast changing steel industry."

Mr Jim Leng, Chairman of Corus said "This offer from Tata Steel reflects the substantial value created for Corus shareholders since the placing and open offer and launch of our Restoring Success program in 2003. In the middle of last year, my board agreed a strategic way forward for Corus to seek access to low cost production and high growth markets. Consistent with this, the Company held talks with a number of parties from Brazil, Russia and India. This transaction represents the culmination of these talks. This combination with Tata, for Corus shareholders and employees alike, represents the right partner at the right time at the right price and on the right terms. This creates a well balanced company, strategically well placed to compete in an increasingly competitive global environment."