March, 03 2007
JSPL finally wraps up El Mutun investment deal
After almost 8 months of negotiations, Bolivian government and Jindal Steel & Power Ltd have finally agreed on the terms of JSPLs planned USD 2.1 billion investments in development of El Mutun iron ore deposit and setting up of steel making facilities in Bolivia. Bolivia expects to receive some USD 200 million a year in profit sharing and taxes from the 40 year concession at El Mutun.
Mr Evo Morales president of Bolivia and Mr Vikrant Gujaral CEO of JSP during a news conference announced that both parties signed preliminary agreements on the tax rate and natural gas prices for the iron and steel project and will sign a definitive contract within 45 days.
Under the new terms, Bolivia has agreed to sell JSPL natural gas at USD 3.91 per million British Thermal Units for steelmaking representing 70%. JSPL will pay USD 1.955 per BTU as against USD 2.1, it previously offered for gas for power generation accounting for 30%. The normal rates charged by the Bolivian government for export of gas to Brazil and Argentina are between USD 4 to USD 5 per BTU.
Mr Morales said "We're really happy to reach this agreement it's not an easy task because every company has the right to more profit but the state also has the right to see more economic benefits for the country."
Mr Gujral said that "We are committed to begin the project as soon as possible. As per reports, actual production would start by 2010.
JSPL won an international bid, in June 2006, to develop 50 % of the El Mutun reserve in a JV with the Bolivia government. JSPL will build a 10 million tonnes per annum pallet plant, 6 million tonnes per annum DRI plant, a 1.7 million tonnes per annum steel plant and a 400 MW power plant the El Mutun deposit estimated to contain 40 billion tonnes of iron ore of medium grade quality.
Corus joins TATA Steel for centenary celebrations
PTI reported that Mr Ratan Tata chairman of TATA Steel, Mr Jim Leng chairman of Corus and Mr Philippe Varin CEO of Corus along with other officials have arrived at Jamshedpur to take part in the Founder's Day celebrations on March 3rd 2007.
The 168th birth anniversary of Mr JN Tata, founder of TATA Steel, would be celebrated at Jamshedpur. In addition this occasion also marks centenary of TATA Steel.
IIL announces expansion plans in India
Ispat Industries Ltd announced that its board of directors at its meeting held on March 2nd 2007 has decided to issue Foreign Currency Notes aggregating up to USD 500 Million, subject to further requisite approvals & consents, for financing the following projects planned to be undertaken by it.
1. One million tonne per annum recovery type coke oven plant at Dolvi in Raigad district of Maharashtra
2. 4.5 million tonne per annum pellet plant at Visakhapatnam in Andhra Pradesh
3. Enhancement of capacity it's hot rolled coil plant at Dolvi in Raigad from existing 3 million tonnes per annum to 3.6 million tonnes per annum along with auxiliary facilities.
4. Addition of a 0.65 million tonnes per annum blast furnace at Dolvi.
JSW Steel denies talks with Algoma Report
Reuters reported that JSW Steel Ltd while confirming interest in overseas acquisitions has denied specific interest in Ontario based Canadian steel maker Algoma. Mr Seshagiri Rao finance director of JSW Steel told Reuters that "We are completely denying the story. We are looking for small value added steel companies abroad."
HT had recently reported that JSW Steel was in advanced negotiations with Algoma Steel.
Algoma put itself up for sale in 2005 but abandoned the plan later that year. Algoma confirmed last month that it was in preliminary talks with Salzgitter AG. Other companies that, at some point of time, expressed interest in Algoma include Severstal, Evraz Group, US Steel Corp, ThyssenKrupp and Techint Group.
Indian budget focuses on power and road projects
Indian government has continued its focus on infrastructure building, especially power and highways, in the country and has proposed enhancing of budgetary support to some major projects in the Union Budget 2007-08.
Mr P Chidambaram the union finance minister said that I propose to increase the budgetary support for Accelerated Power Development and Reforms Projects from INR 650 crore in 2006-07 to INR 800 crore next year. He added that the Rajiv Gandhi Grameen Vidyutikaran Yojana is being enhanced from INR 3,000 crore in 2006-07 to INR 3,983 crore in 2007-08.
Mr Chidambaram also noted that 2 ultra mega power projects have already been awarded and 7 more are under process with at least 2 more to be awarded by July 2007.
Mr Chidambaram also noted that National Highways Development Program would be enhanced from INR 9,945 crore in 2006-07 to INR 10,667 crore in the next financial year and the road cum rail bridge over the Brahmaputra at Bogibeel in Assam would be taken up as a national project.
Arcelor Mittals Orissa plant update
SNS reported that a team of Arcelor Mittal discussed progress of their proposal to set up a steel plant in Orissa with Mr Naveen Patnaik chief minister of Orissa and other state government officials.
Arcelor Mittal reportedly expressed satisfaction over the response from the state government side and said everything with regard to the setting up of the steel plant was moving as per schedule.
Orissas attempt for peace talks with Kalinga Nagar protestors fails
SNS reported that the leaders of Visthapan Virodhi Janamanch did not turn up at a meeting convened by the Kalinga Nagar district administration to discuss lifting of the 14 month old road blockade from the area.
The report cites Mr Arabinda Kumar Padhee collector of Jajpur as saying that They didnt turn up with a plea that they were not officially invited adding that though the Janamanch leaders were intimated about the meet orally through our district welfare officer Mr Shivaji Bhuyan few hours before the scheduled time.
Mr Chakradhar Haiburu president of Janamanch said Unless we get a written invitation from the district administration we will not attend any meeting.
Visthapan Virodhi Janamanch has been leading the tribal movement and road blockade in Kalinga Nagar since 2nd January 2006 when 13 tribal were killed by the police causing a halt to all ground leveling and construction activity of the proposed TATA Steels plant in the area.
Kohinoor Steel announces increase in investment in Jharkhand
The Telegraph reported that Nepal based TM Dugar Group and Kolkata based Bothra Groups JV Kohinoor Steel would invest an additional INR 300 crore for setting up an integrated steel and power plant at Kuchidih in the Seraikela Kharswan district in Jharkhand.
Mr Vijay Bothra MD of Kohinoor Steel told The Telegraph that the board of directors of the company recently gave a nod for the investment proposal of INR 300 crore.
Mr Bothra added that We have invested INR 200 crore for setting up the sponge iron plant with a capacity of 400 tonnes per day at Kuchidih. The plant, which has been set up in an area covering 45 acres started full fledged production about 6 months ago. Efforts are on to acquire additional 115 acres at the same site for necessary infrastructure development.
Kohinoor Steel signed a MoU with the Jharkhand government for setting up a steel plant in 2005. Kohinoor Steel has also acquired a coal block at Mednirai in Palamau district last December.
Post budget cement retail prices increases by INR 12 per bag
Subsequent to the linking of payment of excise to the selling rate of cement in the recent budget, the retail prices of cement have been increased by almost all cement makers by INR 12 per bag. An upward revision in cement prices will hit the construction sector the hardest as cement constitutes 10% to 20 % of the input cost in various construction projects and the cost of infrastructure, road and housing projects will go up with an increase in cement prices
As per the differential duty structure proposed in the recent budget, excise duty on cement, which was INR 408 per tonne irrespective of the retail price of the commodity, has now been linked to the retail price and the excise duty has been hiked by almost 50% to INR 612 per tonne if the retail price exceeds INR 190 bag and lowered to INR 350 per tonne if the retail price is INR 190 or lower.
Although the budget has unveiled several measures to control prices of various commodities to curb inflation, the restructuring of excise duty on cement, may in long term help in curbing the prices, only when the demand pressures are eased, could be really aimed at cooling the real estate market.
German BaFin clears Suzlons offer for REpower Systems
Suzlon Energy Ltd announced that German Federal Financial Supervisory Authority BaFin has approved its offer document for the friendly tender offer for acquisition of the shares of REpower System AG.
Mr Tanti MD of Suzlon however said "We should not speculate at the moment. However, we are confident of winning the deal and bag shareholders' approval. If the question of raising the offer comes, we will do it accordingly."
The said offer for acquisition has been made at a price of EUR 126 per share and accordingly the shareholders of REpower Systems AG can tender their shares from March 2nd 2007 onwards till April 20th 2007. . The price offered represents a premium of 40% on the closing price of the REpower share on Frankfurt Stock Exchange in the last trading day prior to Arevas offer announcement.
The releases adds that Following the publication of the Suzlon offer document, the offer period of Areva, originally set to end on March 7th 2007 will also be prolonged until April 20th 2007. The shareholders, who have tendered their shares to Areva prior to the publication of the Suzlon offer document on February 28th 2007 can withdraw the offer and instead sell the shares to Suzlon.
The purchase will be partly financed by raising long term and short term debt arranged by a consortium of banks led by ABN AMRO and the rest will be raised through internal accruals.
Mr Buffets firm Berkshire Hathaway owns 4% POSCO stake
Shares of POSCO surged on news that Mr Warren Buffett controlled Berkshire Hathaway Inc owns 4% stake in it. Mr Buffett in a letter to shareholders of Berkshire Hathaway a holding company that oversees and manages a number of subsidiary companies said that the company spent USD 572 million last year to buy 3.48 million shares of POSCO, which equals a 4% stake.
POSCO shares closed at KRW 364000 (USD 386) up by KRW 11,000, or 3.12% after falling as low as KRW 343,500 won. The share price rose as high as KRW 367,500.
Berkshire's ownership of POSCOs stake was published because the aggregate value of the single stock owned by the investment firm hit USD 700 million. The company did not have to disclose its ownership stake when its investment stood at USD572 million, but as the price of POSCOs shares rose, the company disclosed the investment information according to the companys internal regulations.
POSCO shares climbed 53% in 2006 and another 19% so far this year, hitting a record KRW 384,000 on February 23rd 2007. POSCO's share price has surged recently on speculation that the steelmaker, which is more than 60% owned by foreign investors, may become a prime target for a hostile takeover attempt.
SDI to increase Pittsboro bar mill capacity
Steel Dynamics Inc announced that its board of directors has approved an investment of USD 35 million at its Engineered Bar Products Division at Pittsboro in Indiana for increasing the mill's production capacity. The schedule calls for the bulk of investment to be completed in 2007.
The planned modifications to the mill are expected to increase its annual production capacity for special bar quality steels from the current 500,000 tons per year to about 725,000 tons per year. The mill's principal products will continue to be SBQ round bars in a range of one inch to 9 inches in diameter.
The changes to the mill will include EAF furnace and caster modifications of roughly USD 10 million and rolling mill and reheat furnace upgrades totaling about USD 25 million.
Production volume has grown rapidly at the Pittsboro mill since the January 2004 restart of this mill which Steel Dynamics acquired out of bankruptcy. In 2006 the mill shipped 502,000 tons, supplying high quality carbon and alloy steel to a variety of customers, including those in the heavy machinery, agriculture, transportation, and energy industries.
Caterpillar, Inc. recently awarded a 2006 Quality Excellence Award to the Engineered Bar division for providing defect-free SBQ steel to Caterpillar N.A. in 2006.
SeverCorr to start cold rolling on April 1st 2007
Platts reported that SeverCorr will start up its tandem cold rolling mill on April 1st 2007. Mr John Correnti CEO confirmed this at the Port of Tampa's 18th annual steel conference and added that SeverCorr is already purchasing limited tonnage of hot rolled coil from AK Steel and SDI and has already started the pickling and oiling line.
Mr Correnti expects a key market for the new mill which will be automotive sheet that will consume about 25% of the mill's 1.5 million short tons per year output when fully operational. Mr Correnti said that within striking distance of the mill are North American car making plants such as Mercedes, Nissan, BMW and Toyota. Mr Correnti said there are also plans to expand production to 3.2 million short tons per year sooner.
He told Platts that when the mill is producing 1.5 million short ton per year he would expect to be selling about 400,000 short tons per year to such automotive customers. Mr Correnti said "I would estimate about 300,000 short tons per year are now being supplied by Mittal Steel US Steel and AK Steel and maybe 100,000 short tons per year come from Europe.
CSN on the prowl again for big acquisition
It is reported that Brazilian steelmaker Companhia Siderurgica Nacional remains undeterred in its drive to expand its reach overseas and is on the hunt again for foreign acquisitions after losing a recent bidding war for Corus to Indian TATA Steel and failed attempt to take over control of US steel producer Wheeling Pittsburgh Corp.
Mr Otavio Lazcano CFO of CSN told reporters that It is no secret that CSN wants to become an international player by making acquisitions in the European market or in the United States. Corus was just one of several potential investments that the company considered and is a constant process and other options will arise.
Mr Lazcano however cautioned that it may take some time before CSN makes its next move. He said The dynamics of the steel industry are slow.
Answering a question of US Steel being CSNs next target, Mr Lazcano said We are familiar with all the assets out there, but we are not examining any specific potential acquisitions at this moment in the way we examined Corus.
Evraz to buy out VGOK and NMTP minority stakes
Evraz Group announced that its affiliated company OOO Sibmetinvest has commenced cash tender offers to purchase 5.000346% and 5.5896% of outstanding shares of common stock of VGOK and the Nakhodka sea port respectively. The tender offers commence on March 2nd 2007 and will be valid for 70 days.
As per release, Sibmetinvest, which itself and through its affiliated companies holds 94.99965% of VGOK share capital, has made an offer to VGOK minority shareholders to tender the remaining 5.000346% of VGOK outstanding shares for a cash consideration of RUB 5.83 per ordinary share or an aggregate price of approximately RUB 227.4 million.
Sibmetinvest has also made an offer to NMTP minority shareholders to purchase 5.5896% of NMTP common stock for RUB 33.00 per share or an aggregate price of approximately RUB 82.8 million. At present Sibmetinvest owns 94.41036% of NMTP share capital.
Smorgon & OneSteel launch Australian Tube Mills Ltd
Smorgon Steel Group announced that it has launched a Brisbane based pipe making company Australian Tube Mills Ltd with OneSteel and that it has already begun trading.
Australian Tube Mills will have production capacity in excess of 500,000 tonnes a year, and is expected to make synergy savings of between AUD 10 million and AUD 20 million a year.
Mr Tony Schreiber former GM of Smorgon Steel Tube Mills will be the CEO and Mr Geoff Feurtado former GM of the pipe and tube division at OneSteel will be the deputy CEO.
Anglo to divest 26% of Scaw Metals in a BEE deal
Anglo American announced that it will sell 26% of its steel operation Scaw Metals under a black economic empowerment transaction involving three BEE partners, a yet to be selected women's group and an employee trust valued at ZAR 1.3 billion.
The BEE consortium consists of the three partners Izingwe Holdings with 7%, Southern Palace Holdings with 6% and Shanduka Resources with 5%. The deal has a warehoused stake of 3% for a broad based women's empowerment group and 5% is for an employee trust. As a consequence of this BEE transaction 74% of Scaw SA will be held by Anglo American, 21% by the BEE Consortium and 5% by the ESOP.
The deal values Scaw at ZAR 5.3 billion and is part of Anglo Americans plan to ensure all its sprawling interests are empowered by 2007. This deal follows a ZAR 1.9 billion empowerment deals last month at Anglo Coal.
South Africas Scaw Metals owns a number of operations in countries such as Peru, Chile and Canada but in holds less than 10% of the steel market in South Africa.
ChTPZs PNTZ orders meltshop and casters
The Pervouralsky New Pipe Works of Russia has placed orders for the supply of a turnkey electric steelworks with two continuous casting plants. Commissioning is scheduled for the end of 2008.
The new steelworks will produce the starting material for the existing tube rolling mills of the ChTPZ group and will attain an annual production of 1.1 million tonnes of steel. The product mix comprises carbon steels for the manufacture of pipes for the oil and natural gas industry.
The supply scope of SMS Demag for the new steelworks incorporates a scrap yard, a 120 tonnes electric arc furnace, a 120 tonne ladle furnace and a VD vacuum tank degasser. Also included are the dust extraction plant, laboratory equipment, water treatment plant, steam generating system and a supply system for alloying agents.
Two continuous casting machines will cast the steel into round billets and blooms. Concast AG will supply a five strand caster designed to cast 660,000 tonnes of round billets with diameters of 150mm and 220mm. The second caster will come with three strands to produce 440,000 tonnes of rounds with diameters of 220mm, 460mm and 550mm.
In 2005, PNTZ was acquired by the ChTPZ group which accounts for around 22 % of the entire Russian tube and pipe production.
AK Steel announces carbon steel price increase
AK Steel announced that it will increase spot market carbon hot rolled steel prices by USD 30 per ton and cold-rolled & coated steel prices by USD 20 per ton for all new orders accepted for shipment on and after April 1st 2007.
The company also said that it is increasing its price extras for critical exposed cold-rolled and coated carbon steel products by USD 10 per ton to USD 105 per ton, also effective with orders accepted for shipment on and after April 1st 2007. The price extras are for products used primarily for outer body automotive and light truck panels.
These increases are in addition to two previous price increases totaling USD 70 per ton and which applied to all spot market carbon steel products.
CVRD & Previ to sell stake in Usiminas
CVRD announced that it plans to file to sell a 12.3% stake in steelmaker Usiminas in a public share offering. Previ, the pension fund for Banco do Brasil employees, plan to sell shares in a secondary offer.
Companhia Vale do Rio Doce, as the miner is formally known, said that the common shares in the secondary offering aren't part of the controlling block of Usinas Siderurgicas de Minas Gerais SA.
CVRD reduced its stake in Usiminas as part of an agreement to join the steel makers board in November 2006 by selling USD 177 million worth of shares at the time and said it would offer an additional 13.84 million Usiminas shares in a public offering.
Nippon Steel Corp bought part of the Usiminas shares CVRD sold and raised its stake in the company to 23.3%.
Usiminas is a top supplier of flat rolled products to the Brazilian auto industry.
Nucor acquires 96% of Harris Steel
Nucor Corp announced that it has acquired roughly 96% of the stock in Harris Steel. Nucor expects to complete the acquisition of the remaining shares of Harris and delist the companys tock from the Toronto Stock Exchange in the near future.
TopArcelor Mittal coverts Class B shares into Class A
Arcelor Mittal announced that 385,340,210 Arcelor Mittal Class B shares owned by Mittal Investments Sarl have been converted into 385,340,210 Arcelor Mittal Class A shares without any impact on the total number of shares.
Air Liquides 2006 net up by 7.4% YoY
French industrial and medical gases producer Air Liquide SA has reported that 7.4 % rise in net profit for 2006 mainly driven by cost cutting measures. It said in a statement that its net profit rose to EUR 1 billion in 2006 from EUR 933 million reported in 2005 and operating profit grew by 12.8% YoY to EUR 1.66 billion in 2006 from EUR 1.47 billion in 2005 over revenue of EUR 10.95 billion in 2006 up from EUR 10.44 billion in 2005.
Air Liquide is world's second largest supplier of oxygen, nitrogen and hydrogen. It has raised its growth and profit target for the next five years predicting growth opportunities in the energy environment and health care sectors. Air Liquide said it expects like for like revenue to grow between 8 % and 10 % a year in 2007-2011 which should lead to annual growth in net profit of 10 % to 13 %
Mr Benoit Potier Chairman and CEO of Air Liquid forecast that demand for oxygen and hydrogen gas from the petrochemical and steel making industries would increase over the coming years.
Indonesia mining law likely to get delayed
Local media has reported that a new Indonesian mining law may be delayed as Indonesian parliament is still debating arrangements for investors in remote areas. Mining firms have expressed concerns over the draft, which includes plans to replace the use of working contracts with mining licenses which can be altered at any time and are valid for a shorter time.
Mr Sonny Keraf chairman of the mining bill working committee at the House of Representative told Reuters that the Golkar faction wants a kind of mining contract in addition to a mining license as mining in remote areas needs bigger investment and a contract would ensure legal certainty for investors whereas other factions lean towards only a mining license. He added that If talks on the issue are difficult, approval of the new mining law may be delayed from the initial schedule at end March.
Indonesian government and parliament have been discussing a draft mining law for more than a year, which is aimed at maximizing the benefit for the country in one of its most important sectors. Indonesia has some of the world's largest deposits of coal copper gold tin and nickel but most are in remote parts of the archipelago of 17,000 islands.
Belarus 2006 ferrous metal exports up by 24.1% YoY
The Belarussian Statistics and Analysis Ministry told Interfax that Belarus boosted ferrous metal exports 24.1% in 2006 to USD 791.85 million and its exports volume rose by 11.9% to 1.826 million tonnes.
As per BSA report, exports to the Commonwealth of independent state fell by 7.1% YoY to 557,800 tonnes but rose by 8.3% YoY in value to USD 272.7 million. Russia accounted for 81.4% of the CIS exports with 453,900 tonnes, which fell by 13.4% YoY in tonnage but rose by 2.5% YoY in value. Exports to the rest of the world rose by 23% YoY to 1.268 million tonnes and rose by 34.4% YoY to USD 519.1 million. The bulk of the exports were to Latvia, Poland and Italy.
The ministry said that exports to the CIS fell in tonnage for marketing reasons. "Belarusian producers constantly monitor the situation on the metals markets in Russia and Western Europe and arrange their order books according to the trends that emerge." The ministry added that Belarus was able to sustain growth in overall exports to the CIS in value despite reducing shipments in tonnage, because price growth was relatively high and stable in Russia and Ukraine.
Sumitomo, Mitsubishi & Jinchuan in talks with MacroAsia
Philippine holding firm MacroAsia Corp said it was in early stages of talks with Japanese Sumitomo Metal Mining Co Ltd and Mitsubishi Corps Mitsubishi Metal and Chinese Jinchuan Group Ltd to revive a nickel mining project Brookes Point in Palawan province of Philippines.
Mr Lucio Tan Jr of MacroAsia however added that the talks with all the 3 foreign firms were in early stages as MacroAsia is yet to finish a detailed exploration of its nickel mine which it would use as a basis for negotiations with the foreign investors.
MacroAsia holds exclusive rights to explore develop and utilise for commercial purposes nickel chromite iron and other mineral deposits that may be found in 1,114 hectares of land in Brookes Point. Mr Tan also added that a tie up would only be concluded after the Supreme Court rules on a case filed by another local firm claiming rights to the nickel site.
Lundins Aljustrel zinc mine to start in September 2007
According to mine owner Lundin Mining the new Aljustrel zinc mine in Portugal is due to start up in September 2007.
It will ramp up slowly to full production with capacity output of 80,000 tonnes per year contained zinc and 17,000 tonnes per year contained lead scheduled for September 2008.
Gerdau Ameristeels labor conflict at Rose Plant to end soon
It is reported that after two years of negotiations, an end may be in sight for the Gerdau Ameristeel versus Rose City plant union workers battle as Gerdau Ameristeel have reached a tentative agreement with United Steel Workers Union.
USW recently held a ratification meeting to vote on a new contract and the results from vote would be released next week.
As per report, about 250 workers have been locked out since 2005.
Chinese court sentences coal mine owner for 2006 accident
Xinhua reported Mr Li Fuyuan boss of the Xinjing coal mine in Zuoyun County, who tried to cover up the death toll of a mine flooding last year in which 56 miners died, has been jailed for 16 years and fined CNY 5 million by a court in north China's Shanxi Province.
The People's Court of Datong ruled that Mr Fuyuan failed to take effective measures after being informed the mine had been flooded on May 18th 2006. He was also convicted of illegal mining, bribery and falsifying testimony. Another 11 accomplices received prison sentences ranging from 10 months to 6 years.
As per report, Mr Fuyuan reported a death toll of 5 to local authorities and rented taxis to transfer family members of the trapped miners to the neighboring Inner Mongolia Autonomous Region to prevent them from speaking to the press.
