October, 09 2006
Indian PM calls for private sector participation in infrastructure building
Dr Manmohan Singh prime minister of India, while inaugurating a conference on Building Infrastructure last week, expressed concern about the deficit in infrastructure and said that Our growth potential will be realized only if we can ensure that our infrastructure does not become a severe handicap. The quality and capacity of our infrastructure is certainly a matter of concern to one and all. We must deal with this deficit.
Dr Singh said that road, rail, air and water transport, electric power, telecommunications, water supply and irrigation need an investment of about Rs 1,450,000 cr ($320 billion) during the 11th Plan Period of 2007 to 2012 and would require substantial private sector participation.
Dr Singh said that the public resources available for investment in physical infrastructure would be limited. He said It is imperative that we explore avenues for increasing investment in infrastructure through a combination of public investment, public private partnerships and occasionally, exclusive private investments wherever feasible.
He also gave an assurance about setting up an independent and transparent policy and regulatory mechanism to ensure fair play. He said In the coming weeks and months, we will be finalizing the remaining elements of the policy, regulator and institutional framework for private public partnerships in infrastructure.
As per planning commission the investment requirement for some of the sector is as under
| Sector | Requirement | Year |
| Roads | 220,000 crore | 2012 |
| Ports | 50,000 crore | 2012 |
| Airports | 40,000 crore | 2012 |
| Railway | 350,000 crore | 2016 |
Krishnapatnam ultra mega power plant gets 17 RFQs
PTI has reported that Power Finance Corporation, the nodal agency for the bidding of ultra mega projects, has received 17 requests for qualification for the 4,000MW ultra mega power at Krishnapatnam in Andhra Pradesh.
The list of interested parties include Sumitomo Corp, Malaysian YTL Corp Berhard, Israel Electric Corp, Khanjee Holdings of the US, China Light and Power, NTPC, TATA Power, Reliance Energy, Essar Power, GMR Energy, Larsen & Toubro, Lanco, Jindal Steel & Power Limited and AES India.
The deadline for submitting RFQs for the project, which would be operated with imported coal, was September 30. The project is expected to be transferred to the selected developer by April next year.
The Krishnapatnam project is the third of the ultra mega power project out of 8-9 projects Indian government has planned at an estimated cost of Rs 15,000-20,000 crore each.
RVNLs SPV for Paradip Haridaspur railway line gets 8 partners
Mumbai: South Korean steel major Posco and eight other companies have confirmed their participation in the Rs590-crore special purpose vehicle (SPV) to develop the Paradip-Haridaspur railway line. The nine companies are expected to sign the shareholders' agreement shortly.
Indian Railways wholly owned subsidiary Rail Vikas Nigam Ltds Rs 590 crore special purpose vehicle to develop the Paradip-Haridaspur railway line is likely to have 9 participants. The nine companies are expected to sign the shareholders' agreement shortly.
RVNL will have equity of 48% in the project. As per reports, the other parties are likely to include are Paradip Port Trust with 10%, Essel Mining Industries Limited with 10.91%, Rungta Mining and Industries Limited with 10.91%, MSPL Mining with 5.45%, Jindal Steel and Power Limited with 1.82%, SAIL with 1.82%, Infrastructure Development Corporation of Orissa with 0.66% and POSCO India with 10%.
The SPV was floated by RVNL along with five other players and the MoU was signed on May 25th 2005. Subsequently, POSCO, SAIL and MSPL joined the consortium.
SAIL considering a stake in DPLs coke oven operations
It is reported that Steel Authority of India Limited is in discussions with West Bengal state owned Durgapur Projects Limited for picking up a stake in its coke oven unit. MECON has conducted a due diligence on the coke ovens of DPL and has submitted report to SAIL and the decision is likely to be taken by the end of the financial year.
DPLs coke over complex is situated at Durgapur and has a capacity of 0.5 million tonnes per year. The JV is proposed to be formed by hiving off the coke operations of DPL into a separate unit.
SAILs Durgapur Steel Plant is slated to increase its capacity to 3 million tonnes by 2012 and would need additional amount of coke and can utilize the facilities of DPL rather than setting up own coke ovens.
Vedanta signs 1200MW power plant MoU with Chhattisgarh
Vedanta Group has last week signed a MoU with the Chhattisgarh government and its electricity board to set up a 1,200MW power plant at Korba with an investment of Rs 5,000 crore.
Dr Raman Singh chief minister of Chhattisgarh after the MoU ceremony told reporters that Chattisgarh is fast becoming a favored investment destination for companys world over due to its huge natural resources and industrial peace
Dr Singh also confirmed that besides the Vedanta's MoU, Rs 5,000 crore worth of MoUs were signed on Friday with 5 private companies in cement and steel sectors.
Mr Anil Agrawal chairman of Vedanta group told reporters that "We are also considering investing another Rs 10,000 crore for setting up a large aluminium plant in Chhattisgarh.
GSI increases drilling and mapping in August MoM
Geological Survey of India, part of the ministry of mines, during the month of August, 2006 has carried out 22.50 square kilometers of large scale mapping on 1:25,000-1:10,000 scale and 0.65 square kilometers of detailed mapping on scale larger than 1:10,000 in place of 68 square kilometer of large scale mapping and 0.62 square kilometers of detailed mapping in July 2006.
GSI also carried out 6242.80 meters of drilling during August 2006 as against 7317.75 meters in July 2006.
GSI also carried out 432 square kilometers of specialized thematic mapping in August 2006 as against the monthly target of 254.90 square kilometers and 190 square kilometers in July 2006.
Vedanta chief praises Indian managers
Mr Anil Agrawal chairman of UK based mining major Vedanta Resources plc told media persons in Raipur that world's leading corporate houses are vying to hire Indians who have proved their mettle across the globe.
Mr Anil Agarwal said I have been living abroad for the past 10 years. Indians have made a mark in all the countries during the past three years and made India proud.
Mr Agarwal said Indians have proved their talent and the world's leading companies have been competing with one another to recruit Indians as they believe Indians are hardworking, flexible, honest and, above all, talented.
TATA eying for Visteon units Report
DNA Money has reported that TATA group is believed to be in the running for acquiring parts of the loss making US auto parts giant Visteon Corporation.
Visteon Corp, formerly owned by Ford Motor, is a $17 billion company, operating in 24 countries with over 170 manufacturing facilities and employs about 49,000 people. It is into electronics, power train control, lighting, chassis and engine induction besides providing engineering services.
However the report mentions a denial of any such move citing Mr Reno Raj VP corporate planning and M&A at Taco as saying that We are not involved in any deal of this nature. Taco is scouting for opportunities in China and Europe but we are rather skeptical about the US market. We may be looking for acquisitions in the US at a later date but nothing is active right now.
Visteon already has two joint ventures with Tata Autocomp Systems Ltd, the auto component arm of the TATA Group. Taco Engineering provides engineering services for Visteon operations globally and Taco Visteon is manufacturing lighting products.
Metalloinvest to upgrade OEMK & Ural Steel
Bloomberg has reported that Metalloinvest is planning $3 billion CAPEX in next 5 year to upgrade its Oskol Metallurgical Plant and Ural Steelits steel mills to produce plates, auto grade CR and pipes for the oil and gas industry .
SMS Demag will replace the old open hearth furnace at Ural Steel with oxygen converters with the capacity to produce 3.5 million tonnes of steel per year and supply a 1.2 million tonnes plate mill and a 0.6 million tonnes large diameter pipes plant.
Demag will also build a complex at OEMK to make 1.2 million tons per year of CR coils for auto and consumer goods thus changing it from long product plant.
Mr Maxim Gubiyev GD of Metalloinvest told reporters last week that "World metallurgy is developing fast, and without continuous investment into the latest technology we won't be able to compete successfully in international markets or in Russia.
Mr Nazim Efendiyev deputy GD informed that Metalloinvest will provide 15% to 20% of the total investment itself and the rest will come from a group of German banks including Deutsche Bank and Commerzbank.
Nippon Steel stops importing coal from North Korea
ITAR-TASS has reported that Japans biggest steel maker Nippon Steel has completely stopped import of anthracite from North Korea due to Pyongyangs announcement on conducting a nuclear test.
The annual volumes anthracite imports from North Korea to Japan amount to about 2 billion yen ($17 million) and account for about 13% of total import of Japan from North Korea.
Following missile testing conducted by Pyongyang in July, the volume of trade between Japan and North Korea has already dropped by 40% as against last year.
EC launches public consultation for safeguarding metal sector
European Commission has last month launched a public consultation on what policy actions could be taken to safeguard metal supplies and production in the EU. The Commission said EU industry faces pressure on how to access raw materials as prices for metals hit record highs due to rising demand in China, India and elsewhere. As metal is a fundamental input material for most EU manufacturing industries and the construction sectors these development represents a challenge to EU companies.
The Commission said in a statement "With the exception of copper (Chile) and nickel (Russia), China has become the biggest producer of metals and a major competitor of the EU on the metals raw materials world market.
Mr Guenter Verheugen said industry commissioner of EU said " The EU metals industry plays an important role in itself and for other manufacturing industries. We need to improve its access to raw materials in a context of fair international competition and to secure and affordable energy."
Many of the possible actions centre on creating a coherent, sector-friendly strategy by tweaking existing initiatives in the field of energy, environment and trade. Amongst others, in its consultation the Commission seeks the views of stakeholders on the following
1. How to support the development of design standards to enhance metals recycling?
2. How technical guidance related to alloys should be best prepared under the new REACH program?
3. How a rapid and full implementation of the energy markets liberalizations can impact on the competitiveness of the sector?
4. How to ensure fair competition world-wide in both production and trade of metals?
According to Commission figures, turnover in the EU metals sector was Euro 227 billion in 2003, employing 1.06 million people in 14,855 companies. Energy and raw materials represent 50% to 90% of the total costs of refining metals in the EU.
Severstal to float IPO on LSE
Severstal announced that it would list Global Depositary Receipts representing its ordinary shares on the London Stock Exchange, within the framework of a global offering of its ordinary shares and GDRs by Frontdeal Limited, a shareholder in Severstal. The IPO will include the offering of ordinary shares and GDRs to international institutional investors abroad and the flotation of ordinary shares in Russia. Severstals ordinary shares are listed on Russias RTS and MICEX stock exchanges.
Severstal plans to increase its share capital following the IPO through new share issues. The company is going to use its proceeds from new share issues to modernize its production facilities, improve production efficiency, fund new acquisitions and take part in joint projects in accordance with Severstals corporate strategy.
As per reports, Severstal has appointed Citigroup, Deutsche Bank and UBS as joint coordinators and book runners for the IPO. Severstals IPO is expected to take place before the end of this year.
Mr Alexei Mordashov CEO of Severstal said that the IPO would help the company pursue major acquisitions and partnerships in a consolidating industry. He said "Our ambition is to become a global leader in steel, at least No 2, not only by volume by more importantly for us by margins. We should expect intensive consolidation in the steel industry, and after the IPO I am sure we will be much more able to participate successfully."
Macquarie lowers iron ore forecast
Macquarie Research Equities analysts have made a number of revisions to both short and long term commodity price forecasts, positive to copper, nickel, aluminium, and negative to iron ore and gold.
MRE have decided to tone down their already optimistic expectations for iron ore pricing into JFY 07-08 to +7.5% as against previous +12.5% due to uncertainty in the market created by the surge in domestic Chinese iron ore production and the narrowing of the gap between spot and contract prices.
Noble to invest in Windimurra vanadium project
Ferroalloys producer Precious Metals Australia announced that HK based Noble Group has exercised its option to provide A$21.7 million in funding and acquire a 10% direct equity stake in the Windimurra vanadium project, which would advance the re development of the mine in Western Australia.
Noble had advised PMA that it was satisfied with the results of its due diligence investigation of the Windimurra mine and of PMA and had exercised its option to acquire a 10% direct equity stake in the Windimurra project for a consideration of A$13.5 million. The company also exercised its option to provide an unlisted, unsecured convertible note with a face value of A$8.2 million to PMA.
PMA said the acquisition of a direct equity stake in the Windimurra project by Noble represents a significant step forward for the project, following the recently announced Vanadium Sales & Marketing Agreement with Noble which will underpin the financing and development of the project. Under this agreement, Noble has agreed to purchase the entire output of the Windimurra mine, at prevailing market prices.
Mr Roderick Smith MD of PMA said "The involvement of Noble Group adds significant value to our project by applying their global contacts and expertise to the marketing of Windimurra Vanadium. Noble will exclusively market and handle all distribution logistics for Windimurra Vanadium worldwide through its international network of offices."
Xstrata complete stage 1 of Mount Isa upgrade
Xstrata Zinc last week announced that it has successfully completed the first stage of the project to upgrade and expand the Mount Isa zinc concentrator.
This first stage of the project comprised increasing the operating reliability of the old plant through the installation of a new crushing circuit and ore feed system, an enhanced maintenance program with special emphasis on the Heavy Medium plant and the recent commissioning of a new zinc filter plant. This project also included a low cost expansion of throughput capacity by an additional 1.5 million tonnes of ore per annum through the installation of a parallel second hand milling and flotation circuit acquired at a nominal cost.
The combined effect of the increased operating reliability of the old plant plus the new parallel circuit will increase the nominal feeding capacity of the concentrator to 6.5 million tonnes of ore per annum, which represents an improvement of more than 40% over the feed rate achieved in the first nine months of 2006.
Mr Santiago Zaldumbide CEO of Xstrata Zinc said "The completion of the first stage of the Mount Isa zinc concentrator upgrade and expansion is an important step in improving significantly the vertical integration of Xstrata Zinc. This important milestone together with the second stage of the project, to be completed during 2008, will increase total throughput capacity of the concentrator to 8 million tonnes per year of ore, representing a key transformational step for Xstrata Zinc."
Salzgitter to increase captive power plant capacity at Flachstahl
Salzgitter announced last week that it will invest 200 million to set up 105MW power plants at their Flachstahl integrated strip works in an effort to reduce the rising costs.
Mr Hans Fischer executive board member of Salzgitter said Well be increasing our energy yield by 30%, well be making 30% more electricity with the same usage of gas.
With the new electricity plants completed, it will push the facilitys electricity capacity to 320MW.
AMEX (R) publishes Steel Index
The American Stock Exchange(R) announced last week that it has begun publishing the Amex Steel Index. The Amex Steel Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the production of steel products or mining and processing of iron ore.
The Amex Steel Index includes common stocks or American Depositary Receipts of selected companies with market capitalizations greater than $100 million that have an average daily volume of at least $1 million over the past three months. The Amex Environmental Services Index includes common stocks or ADRs of selected companies with market capitalizations greater than $100 million, three month trading price greater than $3.00 and three month daily average traded value greater than $1 million.
Amex is also one of the largest options exchanges in the US, trading options on broad-based and sector indexes as well as domestic and foreign stocks.
Turkish steel exports in September up by 50.17% YoY
Turkish Exporters Assembly announced last week that Turkey's September exports were up by 10.48% YoY. According to TIM, Turkey's exports in the first nine months of the 2006 rose by 14.97% YoY.
Exports of manufactured goods increased 15.91% in September, exceeding $6.5 billion. Machinery exports showed the greatest increase, rising 59.12% to $370 million and iron and steel products rose by 50.17%. Exports in the mining sector for September increased 34.33% to $180 million.
Dubai sees price surge in steel & cement due to construction boom
According to a recent report published by the Dubai Chamber of Commerce and Industry steel prices in Dubai is have increased sharply with plate prices jumping up most due to high consumption in the local market.
DCCIs report said that "Steel production in the region increased by 12% in 2005 from 14.2 million tonnes in 2004 while on the other hand consumption increased by 37% in 2005 from 25.3 million tonnes in 2004."
Apart from steel, cement prices increased by 11% in August. Total cement production in 2005 was estimated at 11.2 million tonnes, and consumption was estimated at 12.8 million tonnes. In the Middle East, cement production totaled 122 million tonnes in 2005, while consumption was estimated at 128 million tonnes. The region is facing a deficit of 6 million tonnes and this increased the price in the region by 10%.
INSA estimates $1.25 billion funding for coal transport
The Indonesian National Ship owners Association estimates that the Indonesia's shipping industry needs $1.25 billion in investment to set up a shipping fleet to meet the coal transportation needs to match Indonesian government's program to build new coal fired power plants with a total capacity of 10,000MW by 2010.
Mr Budhi Halim chairman of INSA said that around 35 units of handy max and 55 units of sea train ship will be needed to facilitate coal transport to Java from coal mines in Sumatra or Kalimantan. He said that in the short term 18 units of handy size ship will be needed in 2007 to transport 30 million tons of coal to coal fired power plants.
However, Mr Budhi expressed fears that investment could not be made immediately with bank interest rate still high at 16%.
Xstrata to double Sudburys recycling capacity
Xstrata Nickel plans to more than double its Falconbridge smelter's recycling capacity. The company said that it wants to be a market leader in cobalt and nickel recycling. A new plant will cost an estimated $21.4 million.
Xstrata Nickel has received all necessary environmental permits following a detailed engineering and pilot-testing phase completed mid June 2006. Commissioning of the new plant, which will be operated and maintained by the commodity business unit's current Sudbury employees, is scheduled for July 2007.
Glencores Kazzinc takes 48.3% stake in Novoshirokinsky mine
UK based Highland Gold Mining Limited is selling a 48.3% shareholding in Novoshirokinsky Mine in Chita region of Russia to Swiss Glencore controlled Kazzinc for $36 million.
The agreement will come into effect upon approval of the RF Federal Anti monopoly Service. The deal closing is to take place by the end of 2006.
Vinacomin to step up exploration for coal
VNS reported that Viet Nam National Coal and Mineral Industries Group has announced that it will spur exploitation and raise coal reserves following its ambitious plan to develop the coal industry from 2006 to 15 and towards 2025.
Vinacomin is planning to complete a coal survey of the Hong (Red) River coal basin by 2015 and is also working with a Japanese company to assess by 2010 a 300 meter deep coal reserve at the bottom of Quang Ninh coal basin.
As per reports Vinacomin will make an effort to renew its survey and mining equipment and to make use of capital resources for coal surveying activities so as to develop coal mining industrial zones in the north.
Mr Morales changes mining top brass after miners clash
AP has reported that Mr Evo Morales president of Bolivia has fired Mr Walter Villarroel minister of mines and Mr Antonio Rebollo president of Bolivia's state owned mining company Comibol last weekend after a clash between rival bands of miners over access to the country's richest tin deposit left at least 16 dead and more than 60 injured.
Reports of a halt to the fighting came after the government sent 700 police to control the mountainside where the mine is located. Officials from the two mining groups also met with government ministers in La Paz with both sides agreeing to allow humanitarian aid to enter the town. It wasn't immediately known if the agreement would turn into a permanent cease fire.
Mr Morales said the changes were part of his administration's learning process. Mr Morales said In eight months we cannot solve all of our social problems. I recognize, self-critically, that we are all new at this ministers, vice ministers, president, vice president, all learning to serve the people better.''
The clash followed a breakdown in negotiations in the nearby city of Oruro in which the miners' cooperatives rejected a government proposal dividing Huanuni's veins of tin between the two groups.
Bolivian mines once produced over 30% of the world's tin supply, but production came to almost a complete halt following a collapse of the world metal market in 1985, and national mining company Comibol slashed its workforce by some 25,000 workers. Bolivia eventually granted the Huanuni mine concession to British based Allied Deals. When the company, now known as RBG Resources, abandoned its Bolivian operations in 2005, the mine returned to Comibol despite demands from the miners' cooperatives for some control over the valuable deposits.
In 2005, Bolivia produced only 18,780 tons or about 5% of global output.
Ukraine looks for options for buying gas from Central Asian countries
A Ukrainian energy official last week indicated that Ukraine may reduce or stop purchasing Russian gas beginning next year and opt for cheaper gas from Central Asian states.
Mr Dmytro Marunich spokesman for state owned Naftogaz Ukrainy told media that To avoid an anticipated major price hike from Russia next year, Ukraine has agreed to buy the needed 57.5 billion cubic meters of gas from Turkmenistan, Uzbekistan and Kazakhstan for the same price it is currently paying. There is no need to buy from anybody else.
Ukrainian media has however reported that Mr Yuriy Boiko energy minister of Ukraine last week clarified that that the decision would not disrupt deliveries of Russian gas to European consumers.
Chusovoy Steels finished steel up by 9% YoY in months
United Metallurgic Companys Chusovoy Steel Works produced 329,100 tonnes of finished steel during January to September 2006 up by 9% YoY. Its steel production during January to September 2006 grew by 5% YoY to 397,800 tonnes.
Chusovoys steel production in September amounted to 45,000 tonnes down by 7% YoY but the finished steel volume at 38,200 tonnes was almost equal to 38,300 tonnes in September 2005.
OMK is one of Russias largest producers of pipes, railway wheels and other metal products for power, transport and industrial companies. OMK supplied 17% of Russian pipe consumption, above 60% of Russian consumption of railway wheels and more than 70% of auto spring consumption in 2005. OMK comprises of Almetyevsk Pipe Plant, Vyksa Steel Works, Chusovoy Steel Works, Shchelkovo Steel Works and Gubakha Coke.
Albidon announces share issue for funding Munali nickel project
Albidon Ltd announced that it intends to raise approximately $35 million before expenses by the issue of 39.1 million ordinary shares at a weighted average price of A$1.2 per share.
It said that, in an oversubscribed placing, the Royal Bank of Canada and Numis Securities have committed to subscribe and place 30.90 million shares with RBC's institutional clients in Australia and Asia and Numis's institutional clients in the UK. Albidon said it has placed the remainder of the shares with investors it procured itself.
The purpose of the raising is to fund the Munali Nickel Project in Zambia. The balance of the project funding is planned to be provided by debt. The company said it will also retain a modest cash reserve for working capital purposes.
Ukrainian Railways & Naftogaz nearing bankruptcy
Mr Viktor Yanukovich prime minister of Ukraine that Ukrainan oil and gas company Naftogaz Ukrainy and railways Ukrzaliznytsia are on the verge of bankruptcy adding that Naftogaz losses might reach $1.5 billion this year while the Ukrzaliznytsia had over 7 billion hryvnias ($1.39 billion) in debt.
Mr Yanukovich told a government meeting that These companies turned out to be practically on the verge of bankruptcy due to excessive financial burden and I am not afraid to use these words criminal management for a year and half.
