October, 24 2006
Sino steel to finalize steel plant MoU by February 2007
Chinese state owned Sinosteel Corporation is exploring possibilities of setting up an integrated steel plant in India with an annual capacity of 3 million to 5 million tonnes hopes to finalize the location and other details within the next two to three months and intends signing the initial MoU with the state government concerned by February 2007. Sinosteel is also reported to be in talks with Indian private sector companies for a possible JV.
Mr Wang Hongsen MD of Sinosteel India Private Limited told Business Line that the company has already held discussions with the Jharkhand and Orissa governments and the company's President Mr Tianwen Huang would be visiting India in November for further deliberations. Sinosteel India is a wholly owned subsidiary of the Chinese company.
Mr Hongsen added "We have received many proposals. After Mr Huang's visit, we hope to finalize our plans with regard to our Indian partners or whether we would go on our own. After that, we hope that a MoU could be signed by February next year.
Sinosteel is an international trader in iron ore, steel and other steel making inputs & equipment. According to mining industry sources, the company is currently buying around 8 million to 10 million tonnes of iron ore from India annually.
India to really open up coal mining report
The Economic Times reported that India will allow private mining firms including foreign ones to enter the coal mining sector next month to help increase energy supplies in the country.
Only power, steel and cement firms are currently allowed to own coal mines, which they operate jointly with mining firms. The new rules will allow mining firms to own and run mines, the paper said, citing unnamed sources in the coal and law ministries.
The newspaper said mining companies, including BHP Billiton & Rio Tinto would soon be able to gain rights to mine and operate coal mines in India, boosting production.
As per report, government is in the final stages of drafting guidelines for allowing captive coal block allocation to private sector mining companies and is expected to notify the same by the month end or in early November. The government will invite bids from mining companies after the new policy is announced.
Home ministry outlines security risks for 2 SEZs
It is reported that Indian home ministry has opposed the special economic zone proposals of TATAs at Gopalpur in Orissa and Shyam Burlap Co Ltds at Kamrup district in Assam due to their proximity to a defense installation and Indo-Bhutan border respectively posing a security threat.
However commerce ministry feels that it would be unfair to treat all SEZ proposals in border areas with suspicion. The report quotes as a commerce ministry as saying that "The suggestions of the home ministrys representative in the board of approval for SEZs would be considered. But the projects viability should be given a higher weightage as far as clearances are concerned. Only if sufficient number of entrepreneurs set up units in the SEZ, can a developer expect high returns. The environment should be conducive for that".
Foreign banks to fund ultra mega power projects
Power Ministry plans to rope in foreign banks and export credit agencies for financing the 4,000 MW ultra mega projects that would require an investment of up to Rs 20,000 crore each.
Power Ministry and Power Finance Corporation last week held a meeting with foreign banks including HSBC, Deutshe Bank, Japan Bank of International Cooperation, Bank of America and Bank of Tokyo among others.
Mr RV Shahi union power secretary while speaking at an ASSOCHAM event said, "We have discussed these projects with foreign banks and Export Credit Agencies. There were some issues, which have been sorted out.
Bid evaluation for Mundra & Sasan ultra power plant soon
The evaluation process of bids for the two major ultra mega power projects of Sasan in Madhya Pradesh and Mundra in Gujarat would begin from November, with the execution schedule likely to be awarded by December.
Mr RV Shahi union power secretary while speaking at an ASSOCHAM event said that the power ministry has received environment clearances for these projects from the respective state governments and is waiting for the central environment and forest ministrys response.
Mr Shahi said that the ministry would also be expediting the contract award process for other ultra mega power projects particularly in states of Andhra Pradesh, Orissa, Maharashtra and Jharkhand and would send a delegation of power experts to these states shortly to identify proposed sites and to set up power projects.
Balmer Lawrie to expand Chennai CFS
Balmer Lawrie & Co is expanding the capacity of its container freight station in Chennai. An additional area of seven acres adjacent to the existing CFS at Manali in Chennai is being developed to allow storage & handling of larger number of containers.
The investment in this project, excluding the cost of land, will be Rs 12 crore. Work has begun and is expected to be completed before the year end. The new facility will generate revenue in the present fiscal itself and the funding of this capital expenditure is being done from internal accruals.
Severstal announces global offering
Severstal announced yesterday that it would start a global offering of common shares and global depositary receipts, which will increase its free float to 25% and that it had started a road show for the offering. It said that Severstal plans to offer common shares and GDRs on a foreign stock exchange and common shares on a Russian stock exchange. One GDR represents one share of Severstal.
Mr Mordashov, who currently owns around 90% of Severstal's share capital through several companies, plans to sell part of his stake through the offering. The common shares and GDRs will be offered by Frontdeal Limited, a Cyprus registered company controlled by Severstal's owner Mr Alexei Mordashov.
After the placement Severstal plans to publicly offer additional shares in order to increase its charter capital. Companies controlled by Mordashov, including Frontdeal Limited, intend to exercise their preemptive rights to buy additional shares, using part of the funds raised in the IPO.
Additionally, Severstal has provided an over-allotment option of 15% of GDRs to global coordinators Citigroup, Deutsche Bank and UBS Investment Bank, Severstal said.
Mr Bruno Bolfo resigns from board of Evraz Group
Evraz Group announced that Mr Bruno Bolfo owner of Duferco has resigned as a member of the Evraz board of directors due to a conflict of interests involving his company and a Russian competitor Novolipetsk Steel.
Evraz said that Mr Bruno Bolfo, Duferco's board chairman notified the company of his resignation on October 20 following an agreement between Duferco and Novolipetsk Steel on establishing a JV.
Mr Bolfo had been a member of the Evraz board of directors from August 9th 2006, after his election at an extraordinary meeting of shareholders in July 2006.
Severstal not in race for Corus Report
Financial Times, referring to the Russian circles close to Severstal, has reported that Severstal will not take part in the bargaining for Corus Company.
According to the information of Financial Times, the owners of Severstal believe the price is overstated, and Severstal does not intend to offer an alternative deal to Corus.
Potential Russian bidders like Severstal and Novolipetsk Steel are now understood to be less keen on a counter bid as they are not sure about winning the support of the Corus management, pension funds and employees.
TATA Steel had unveiled their offer for Corus last week fuelling speculations of higher offers from several companies including Severstal. The possibility of a rival bid gained ground after some of the key shareholders of Corus rejected the offer of TATA Steel on the grounds that the price was not big enough.
CSN could be the only challenger for TATA's bid for Corus
Brazils largest steel maker Companhia Siderugica Nacional is speculated to be the only likely challenger to TATA Steel after denial from Severstal and ThyssenKrupp and with its move to appoint investment bank Lazard to advice on a counter bid.
CSN and Corus had contemplated a merger in 2002 and talks had reached an advanced stage, before they were called off for undisclosed reasons. Both companies know each other very well and strategically CSN is an equally good fit for Corus as is TATA Steel.
CSN is also comparable to TATA Steel with its annual production capacity of 5.8 million tonnes as compared to TATA Steel's domestic capacity of 5 million tonnes excluding NatSteel and Millennium Steel.
CSN was a government owned company till 1993, when it was privatized and was acquired by Mr Benjamin Steinbruch, who is currently its chairman. Shares of CSN are also listed on the New York Stock Exchange besides Sao Polo. CSN operates an integrated steel plant in Brazil and has acquired US based Heartland Steel in the US in 2001. The company also has a presence in Europe through its ownership of Lusosider in Portugal, which was set up as an equal JV between Corus and CSN but Corus sold off its stake to CSN early this year.
CSN employs only about 8,000 people as compared to around 38,000 by Tata Steel. The Brazilian company is one of the lowest cost manufacturers of steel in the world, though its average per tonne cost is higher than TATA Steel's, despite its much lower employee strength. The real strength of CSN is its ready access to abundant raw material as Brazil has one of the largest deposits of iron ore in the world. A consortium led by CSN has a nearly 42% stake in Companhia Vale do Rio Doce the largest global producer and supplier of iron ore and pellets and a major gold miner in Brazil. The CVRD stake was acquired in a privatization process for over $3 billion. CSN directly holds a 16.3 per cent stake in CVRD.
BHPBs posts mixed figures for July September quarter production
BHP Billiton Ltd has posted steep production declines in several metals and minerals during July to September 2006 due to scheduled shut downs, maintenance and lower grades. But BHP Billiton announced that its first quarter production of iron ore, coking coal and manganese rose amid rising demand from steel makers in Asia.
Output of iron ore rose to 25 million tons in the three months ended September 30th 2006 from 23.8 million tons a year earlier.
Energy coal production slipped by 9% to 21.782 million tonnes, but was flat on quarter with challenging geological conditions reported at New Mexico Coal in the US.
BHPBs production of silver, lead and zinc production fell due to problems at Cannington in Australia, while strike action at Escondida cut copper production in Chile. But iron ore production rose from the same quarter last year, aluminium production from continuing operations hit a new record and total petroleum production was in line with expectations.
Fortescue breaks ground at Cloud Break in Pilbara
It is reported that Fortescue Metals Group Ltd has started earthworks at its $3.7 billion Pilbara project in Western Australia as it looks to ship its first ore from early 2008. The project is expected to lift production to 45 million tonnes a year, placing Fortescue as Australia's third largest iron ore miner.
Fortescue and its mining operations partner Roche Mining started ground breaking at the Cloud Break mine on Monday.
Fortescue said "The mines are the center piece of Fortescue's Pilbara Iron Ore and Infrastructure project and this development shows work is on track to commence extracting ore in mid 2007.
AK Steel to increase CRGO capacity
AK Steel said on October 23 that its board of directors had approved a capital investment to increase production capacity for high quality, grain oriented electrical sheet steels by about 12%.
The $55 million expansion project is aimed at helping AK Steel meet continued strong market demand for electrical steel products used in electrical generation and transmission markets. The newly approved capital funds will be used to upgrade and modify existing production equipment at the company's Butler in Pennsylvania and Zanesville in Ohio facilities.
In April, AK Steel announced a $14 million capital investment to increase electrical steel production capacity at its Butler Works. That project is expected to be completed in the first quarter of 2007. Combined with today's announced investment, AK Steel's production capacity for electrical steel products will increase to about 335,000 tons per year by mid 2008.
Mr James L Wainscott chairman, president and CEO of AK Steel said "With this latest investment, AK Steel will significantly enhance its commitment to meeting the needs of customers throughout the world for advanced grain-oriented electrical steels.
Dalrymple Bay to expand to 85 million tonnes capacity
Babcock & Brown Infrastructure Ltd, the owner of Dalrymple Bay in Queensland, Australias 2nd biggest coal export terminal, plans to invest A$639 million in expanding the capacity to 85 million tonnes per year following regulatory approval.
Mr Jeff Pollock COO of Babcock Infrastructure said "The QCA approval now clears the path for expansion of the terminal to the full contracted capacity.
The approval follows an earlier pitch for an initial A$532 million to expand the facilities to cope with 68 million tonnes per year by the end of 2007.
Dalrymple Bay handles about 25% of coal shipped from Australia and the terminal has been on lease from the Queensland Government for 50 years with an option on a further 49 years.
SUEK increased coal production by 10% YoY in 9 months
The Siberian Coal Power Company increased their coal production by 10% YoY to 63.4 million tonnes during January to September 2006.
Sales of coal grew by 11% to 59.8 million tonnes. At that, sales in the domestic market rose by 4%: SUEK delivered 42.9 million tons of coal to Russian consumers, including 30 million tonnes to power industry enterprises. Coal exports increased by 33% to 16.9 million tonnes.
SUEK provides for about 30% of coal supplies in the domestic market and some 20% of Russian coal exports. In 2005, the Company's enterprises produced 84.4 million tons of coal. The Company makes its main deliveries to Great Britain, Japan, South Korea and has considerably increased its coal supplies to China and Poland.
Mttal Steel Temirtau metallurgists accept offer on salary rises
Kazakhstan Today has reported that Mittal Steel Temirtau metallurgists accepted the company management offers about phase-by-phase salary rises but they reserve a right to raise this issue again. The decision was adopted by a majority of votes at a trade union conference of working collectives. 406 delegates were present at the conference, 256 of which voted for, 120 against and 30 refrained.
Mr Vladimir Dubin deputy chairman of the Trade Union Committee of JSC Mittal Steel Temirtau told correspondent "We do not suspend our work." Mr Dubin however added that The labor dispute is not over, we are planning to struggle for the introduction of salaries corresponding with the industrial standards. This is our primary task. Besides, they did not lay down any conditions to us or required any commitments, so we can raise the issue of salary rises at any time.
The Mittal Steel Temirtau metallurgists demanded 40% salary rises at a meeting on September 30. The company proposes that the salaries of the workers of JSC Mittal Steel Temirtau are raised by 20% as from 1 October 2006 and by 10% as from February.
1 miner killed at coalmine explosion in Pennsylvania
A coal mine explosion killed a Pennsylvania miner Monday, but four others were able to escape. The blast happened at the R&D Coal Co. anthracite mine in Schuylkill County, about 80 miles northwest of Philadelphia.
Mr Kurt Knaus, a spokesman for the state Department of Environmental Protection said "We have one confirmed fatality. I believe it is a recovery and not a rescue operation."
State police initially said the accident was an explosion. However, other state officials were more cautious, saying it was too dangerous to go down into the mineshaft to investigate because the incident knocked out the mines ventilation system. They hoped to have it restored Tuesday.
US Steel opens Munhall research center
US Steel Corp announced that it would officially open its new research and technology center at Munhall in Pennsylvania. The center will employ 110 research and technical employees.
This move represents a return to Homestead Works, nearly two decades after Pittsburgh based US Steel closed its operations there. The Homestead Works site was renovated partly into The Waterfront, a retail shopping/dining outdoor complex that includes a movie theater.
Mr John Surma CEO of US Steel "Through our investment in this facility, US Steel is investing in the future of our company and the future of this region.
ThyssenKrupp to decide on equipments for CSA by year end
BNamericas has reported that ThyssenKrupp expects to complete the acquisition of major equipment for its CSA steel mill in Brazil by the year end.
A ThyssenKrupp spokesman told BNamericas that "We want to sign the largest contracts by year end and that minor deals could be signed in the nearer future.
CVRD will hold a 10% stake in the CSA mill and Thyssenkrupp has the balance 90% stake. CSA plans to produce 5 million tonnes of steel by March 2009.
Shougang Century to double steel production capacity
One of the 3 largest steel cord makers in China, Shougang Concord Century plans to invest HK$400 million in the next two years to double production capacity as it looks to cash in on the growth of the automobile market in the country. Shougang Concord Century aims to raise annual production capacity of steel cord products to 60,000 tons by 2008 from 30,000 tons, and further to 80,000 tons after 2009.
Shougang Century formed a partnership with Bekaert who became its second largest shareholder after Shougang Holdings. Shougang Century is also involved in copper trading, and booming profits from this other business have offset the profit decline in the steel cord business, bringing a 23.8% rise in net profits to HK$44.7 million for the first half.
After forming a strategic partnership with Belgium-based Bekaert, the company is thought to have enough resources to fund the expansion plan. The two also expect a combined 50% market share in China by next year, from 40% at present. The Chinese company is hoping that Bekaert, with four manufacturing plants in China and accounted for more than 30% of the market share last year, can help it improve production technology and product quality.
Spoornet to buys 32 new locomotives from Mitsui
South African state owned rail transport operator Spoornet plans to buy 32 new electric locomotives from Japan's Mitsui for its iron ore line at a cost of 1.12 billion rand.
Spoornet is a unit of state logistics group Transnet, which said earlier this year it would inject 64.5 billion rand over five years to upgrade infrastructure in its various units, with the lion's share of spending 35 billion rand pumped into rail.
South Africa's iron ore is railed from Sishen mines to the Saldanha export outlet. The bulk of which is exported by Kumba Resources.
AK Steel board approves $75 million for pension fund
AK Steel Holding Corp announced that its board has approved the early contribution of $75 million to its pension trust fund.
After the contribution, which will be made during the fourth quarter, AK Steel will have made nearly $360 million in early and voluntary pension fund contributions in the last two years.
Mr James L Wainscott chairman, president and CEO said "AK Steel's board of directors remains committed to funding our pension legacy obligation for the 32,000 retirees, and their beneficiaries, who served this company for many years.
The company said that while it has continued to fund retiree health care and pension legacy costs, most of its steel industry competitors have reduced or eliminated their legacy obligations through the bankruptcy process.
