April, 11 2007
RINL considering buying coking coal blocks in US & Australia
FE reported that Rashtriya Ispat Nigam Ltd is considering acquiring a coking coal block with reserves of 100 million tonnes in the US. Mr YSS Rao CMD of RINL told FE We have received a proposal for coal blocks in the US. It is under consideration. We will soon decide whether to purchase it or not. As per report, RINL is likely to spend between INR 100 to INR 150 crore for the purpose.
AS per report, RINL has also initiated talks with a number of Australian companies for potential coal block acquisition. Mr Rao added that We have received some coal from Australia and we are currently testing the quality. If we find the quality good enough, we will begin talks with them.
Mr Rao added that Our focus is coking coal as India does not have sufficient amount of the same. However, we may buy coal blocks not having coking if we find it within our parameters.
Indian iron ore majors going for forward integration
Indian Express reported that some of the private iron ore miners are going for forward integration by setting up steel plants. Mr RK Sharma secretary general of Federation of Indian Mineral Industries said that For any industry, going into forward integration is a logical decision and many miners have been considering this even before exports became a debate. However, the duty has led to the industry giving it more serious thought as survival is endangered if exports suffer.
Mr Rahul N Baldota ED of MSPL Ltd told Indian Express that We are investing INR 8,000 crore in a 2.5 million tonnes per annum steel plant. The first phase of 1 million tonnes per annum will be over by 2009 while the second phase for the remaining 1.5 million tonnes per annum will be over in another year.
Mr Siddharth Rungta.president of Rungta Mines told that We are in the process of acquiring land for the steel plant in Orissa while our sponge iron plant in Jharkhand will be operational soon. The investments for the two plants are to the tune of INR 2,200 crore and INR 570 crore respectively. Rungta Mines is planning to set up a 2 million tonnes per annum steel plant in Orissa and a 0.5 million tonnes per annum sponge iron plant in Jharkhand.
Karnataka based Bharat Mines and Minerals is investing in a 1.2 million tonnes per annum pellet plant in Orissa. Mr Dinesh Singhi CEO of Bharat Mines said that Our investment in the pellet plant in Orissa is intended to create demand for our product in the country, considering that it is still not clear what the policy on exports will be.
Standalone mines account for almost 75% of the iron ore production in the country and almost 90 million tonnes of ore were exported in 2005-06.
TATA Steel board to meet on April 17
TATA Steel announced that its board would meet on April 17th to discuss plans for funding the USD 12 billion acquisition of Anglo-Dutch firm Corus Group Plc.
TATA Steel said in a filing to the BSE that the board would consider proposals to finance investment in the Special Purpose Vehicle floated for acquiring Corus that had outbid Brazil's CSN to acquire Corus at a price of 608 pence a share after a nine-round auction in January 2007.
TATA Steel UK Plc, a subsidiary of the Indian firm, had said recently that the consideration money and applicable loan note certificates for the takeover would be dispatched to Corus shareholders on April 11 2007.
NMPTs 2006-07 cargo traffic down due to KIOCLs export reduction
New Mangalore Port Trust has handled 32.04 million tonnes of cargo during 2006-07 as against 34.45 million tonnes in 2005-06. The cargo handled includes 17.92 million tonnes of imports and 14.12 million tonnes of exports. NMPT earned total revenue of INR 240 crore in 2006-07.
The container traffic registered a growth of 79.25% YoY. As many as 17,290 TEUs of containers with around 0.265 million tonnes of cargo were handled during 2006-07 as against 9,646 TEUs of containers with 0.148 million tonnes of cargo during 2005-06. Coal cargo witnessed a growth of 103.94% YoY as NMPT handled 1.046 million tonnes of coal during 2006-07 as compared to 0.513 million tonne in 2005-06. NMPT also handled 0.265 million tonnes of limestone cargo as compared to 0.031 million tonne in 2005-06.
One of the main reasons for the reduction in traffic was the decline in the cargo handled by Kudremukh Iron Ore Company Limited, which exported only 0.58 million tonnes of iron ore concentrates and pellets during 2006-07 as against 3.45 million tonnes recording a shortfall of 2.8 million tonnes.
Mr P Tamilvanan chairman of the New Mangalore Port Trust said
"In spite of that, we have done well in various other segments such as containers, coal and fertilizer cargoes.
Government to float new port tariff norms
BS reported that Indian government is planning to change the tariff setting norms at 12 major ports from cost plus to an upfront payment system to make the ports more competitive. Tariff structure for the 12 major ports is decided by the Tariff Authority for Major Ports for a three year period.
In the proposed upfront tariff system, the ceiling of the tariff will be fixed first, after which the bidding will be carried out on a revenue share basis.
Under the current system, the license is granted to the bidder sharing the highest revenue with the port authority and the successful bidder is also assured a 15% return on capital employed while deciding the tariff.
Adhunik Metalics buys iron ore miner OMM
It is reported that Kolkata based Adhunik Metaliks acquired Orissa Manganese & Minerals but the valuation of the acquisition has not been disclosed.
0MM has mining rights for 15 million tonnes of manganese ore in about 2,365 acre in Orissa and 35 million tonnes of iron ore and graphite in about 680 acre in Bihar. Its turnover on account of manganese ore is about INR 10 crore per annum.
Adhunik Metaliks, in a statement issued to the BSE said that it is planning manganese ore mining immediately and iron ore mining within 3 to 6 months. The mines do not have any captive clause and could be sold in the open market to various end users.
New Dredging Policy to achieve 11th Plan targets
The newly launched dredging policy which is designed to give Indian companies an edge while bidding for contracts has stated that all 13 major ports shall invite open competitive bids for dredging works and Indian companies owning Indian flag dredgers shall have the right of first refusal if the rate is within 10% of the lowest valid offers. The policy will take effect from 1st April 2007 and remain valid for 3 years.
It will apply to both maintenance and capital dredging works, with the exception of maintenance dredging requirements of the Kolkata port, for which separate instructions will apply. The Indian government also reserves the right to assign, in public interest, any contract for dredging work in any of the major ports to Dredging Corporation of India on nomination.
The policy also said that major ports should also ensure that a pre qualification criterion is fixed in advance and that they should not be stringent in restricting entry of certain potential Indian bidders. The pre qualification conditions should be exhaustive.
The total dredging requirement in the country's 13 ports during the 11th Five Year Plan period of 2007-2012 is an estimated 812.55 million cubic meters. In addition, minor ports also have plans to dredge a total of 391.07 million cubic meters. Dredging projects worth over INR 2,000 crore are planned in the next couple of years at various ports. Some of the dredging projects are at Jawaharlal Nehru Port INR 800 crore, Paradip INR 250 crore and Ennore INR 143 crore.
Gammon India to construct Vynatheya bridge in AP
Gammon India has bagged a contract from the government of Andhra Pradesh for constructing Vynatheya Bridge on the Godavari River for connecting Amalapuram and Razole. Work on the project is scheduled for completion by 2010.
The INR 56 crore 1 kilometer long bridge at Kathipudi-Pamarru section of NH 214, connecting Bodasakurru on Amalapuram side with Pasarlapudi on Razole side, is being funded by the union ministry of shipping, road transport and highways.
CVD exemption on cement imports linked to retail price
Indian Government vide Notification no 53 of 2007 of Customs dated April 3rd 2007 exempted Portland cement from counter veiling duty and special additional duty.
The clarification release said that the CVD in respect of such exempted cement is INR 350 per tonne for cement of declared retail sale price not exceeding INR 190 per 50 kilogram bag and for higher priced cement the excise duty is INR 600 per tonne.
JNPT to award channel deepening project contract soon
It is reported that Jawaharlal Nehru Port Trust is planning to award a INR 800 crore contract for channel deepening project by end April 2007 and that 3 international dredging companies are participating in the bidding process.
Under this dredging programme, the channel will be dredged to accommodate vessels up to a shipping channel depth of 14 meters as against the current 12.5 meters that will enable the port to handle a vessel carrying 6,000 TEU by using tidal window in the first phase.
Work on Phase I is likely to start by mid 2007 and is scheduled for completion within 27 months. In the second phase, the shipping channel will be dredged to accommodate vessels with 15 meters depth for ships carrying 6,000 TEU at any point of time and vessels up to 15 meter depth for ships with 9,000 TEU using tidal waters.
As per reports, JNPT will be sourcing internal accruals to fund the proposed project and may tap debt market. Japan Bank for International Cooperation and Asian Development Bank have evinced their interest in the dredging project.
Krishnapatnam Port to setup 1 million TEU port
Reuters reported that Krishnapatnam Port Co will invest USD1.6 billion in a new container port with initial annual capacity of 1 million TEU. The port is due to open for container ships in June 2008 and will be completed by 2011. The port expects to move around 200,000 containers in its first year of operation and some 450,000 in the second year.
Mr Mahesh Goel of Krishnapatnam Port told Reuters in an interview that the port had received strong interest from container lines. He said "Lines are telling us they want a port with better facilities. Charges at Krishnapatnam will definitely be lower than in Chennai. There is just not enough capacity on the Indian east coast. Container trade between east coast India and China is growing at 8% a year and the existing ports can't cope.
Krishnapatnam Port Co is owned by Hyderabad based businessman Mr CV Rao and his sons. The family also owns the Navayuga Group, which has proposed for a minor port near Puri in Orissa recently. Krishnapatnam Port is already handling bulk cargos and would handle specialized cargoes such as liquefied natural gas and oil and petroleum products once its expansion is completed in 2011.
China Steel Export Tax Rebate Policy Released
It is reported that Chinese government has reduced export tax rebate of some special steel products, stainless steel plate and cold rolled products (totally 76 tariff numbers) to 5% and moreover, the export tax rebate of other 83 tariff number steel products is cancelled to zero.
As per the report, Chinese exporters with contractual qualification for foreign projects should take relevant document copies to the tax office in charge of export rebate before April 21st 2007 and make registration before being granted the permit to carry out their contract according to previous rebate rate if their long term foreign project bid was won before April 15th 2007 or their existing long term contracts are not allowed to change price. Those missing the deadline April 21st are obliged to subject to new rebate rate.
Indonesia's crackdown to keep tin prices high in 2007
Industry experts forecast that tin will fetch record prices over 2007 because of a regulatory clampdown on illegal tin miners and smelters in the world's 2nd biggest supplier of the metal Indonesia.
Mr Isnaputra, a mining analyst with securities house Danareksa, told AFP that "Indonesia previously supplied 120,000 tonnes per year, which represented 17% of global tin supply. Half of its supply was from unregistered companies." It is estimated that Indonesia's supply could fall by about 30,000 tonnes in 2007 as firms comply with the new rules.
Mr Djoko Purnomo energy and mineral resources ministry official said that dozens of small smelters had been shut since October 2006 as a result of the crackdown on illegal operators. Mr Purnomo said that "About 37 small smelters were forced to close because they did not have licenses from the central government. They only possessed an authorization from the local administration."
Indonesia began closing down unregistered tin operators last year and implemented stricter export regulations in February 2007 that require firms to register for clearance. The moves cut supply into the global market and contributed to a rise of about 15% in the tin price so far this year.
Romanian government to pay damages to Mittal Steel Galati
Romanian media reported that the Romanian government has mandated the State Asset Resolution Authority to conclude an additional act to the Sidex Galati privatization agreement with Mittal Steel Galati, under which they will pay USD 24 million in damages to the company.
The additional deed is for damages caused by the fluctuation of specific indicators and of amounts set to be paid by Sidex to Sidex International by the London Court of International Arbitration.
The first one was about the specific indicators representing any difference between the financial and asset-related situation of Mittal Steel when the agreement was signed on December 31st 2000 and the one upon the definitive conclusion of the transaction on November 15th 2001.
And the second refers to the executable decision of the London Court of International Arbitration ordering AVAS to pay USD 49.3 million.
Severstal Considers Merger with other Steel Producers
Mr Alexei Mordashov owner and CEO of Russias biggest steelmaker Severstal said in an interview with British Financial Times that it would be interested in pursuing a merger with one of the other leading steel producers.
Mr Mordashov while asking about a potential link with the 2nd largest Russia based steelmaker Evraz said that there were positives and negatives about such an idea but did not rule it out.
Ha said that Yes of course Id like to get involved in a consolidation in the Russian steel industry and all combinations could be valuable.
Other potential options could include a union between Severstal and one of the other two large Russian steelmakers, Novolipetsk or Magnitogorsk. The idea of a merger of some of the Russian steel companies owing to low operating costs and access to cheap local deposits of iron ore has for some months seemed a possibility in the context of the series of large steel industry unions.
Mr Mordashov is the biggest shareholder in Severstal, which has a market capitalization of about USD10 billion with a fifth of the shares traded publicly in London. His latest comments may indicate he is more upbeat about the notion of a pan Russian steel merger than last October when he said the idea of creating a larger Russian steel producer through uniting Severstal and Evraz would be dangerous.
Mr Mordashov said he was particularly interested in the possibilities in the US steel industry, where Severstal is spending USD 900 million in increasing the quality of the steel it makes in a 2 million tons a year plant near Detroit besides USD 800 million in a new plant in Mississippi which should be operational by 2009 when it is scheduled to make 2.6 million tons of steel a year.
Another bid for LionOre may be in the offeing
Australian Business Day reported recently that there could be room for a rival bidder for LionOre after Xstrata's lock up of 19.5% of shares as part of its USD 4 billion friendly offer would evaporate if a higher bid were lodged. LionOre would be allowed to hold discussions with a rival bidder for a week and would even be able to provide extra due diligence documents if it received an unsolicited proposal. Xstrata would then be given five days to match or exceed the rival offer. Any rival bidder would be forced to pay a CAD 131.4 million break fee to Xstrata if its friendly deal with LionOre fell through.
RBC Capital Markets said the numbers suggested there was room for a higher bid, given Xstrata did not appear to be paying anything for its cost savings or LionOre's Activox nickel processing technology.
Sources have suggested to the Herald that BHP Billiton might be interested in LionOre because its 1 million tonne Honeymoon Well project is close to BHP's Mt Keith nickel operations in Western Australia. Additionally, the Activox hydrometallurgical process might be useful at the Mt Keith deposit. A BHP offer for LionOre would mean the miners would go head to head in a public bidding war for the first time since their fight for Australian nickel, copper and uranium miner WMC Resources in 2005.
China may increase export tax on manganese products
Interfax citing an industry analyst reported that China may increase the export tax on electrolytic manganese and manganese alloy in a move to counter rising exports. Industry rumors suggest that China may raise the electrolytic manganese export tax from 15% to 28% or 30% this month while the export tax on manganese alloy may increase from 10% to 15%.
As per industry experts, the price difference between electrolytic manganese and manganese alloy in domestic and overseas markets encourages exports under the current export tax rates. The current manganese export price is USD 2,800 per tonne on FOB basis while the domestic electrolytic manganese price lies between CNY 17,000 (USD2,200) and CNY 18,000 (USD2,329) per tonne and with the current 15% export tax the domestic price is approximately USD 113 to USD 270 per tonne less than the export prices.
According to Beijing Antaike Information Co Ltd, China exported 33,900 tonnes of electrolytic manganese in January and February down by 19.15% YoY but high carbon ferromanganese exports increased by 106% YoY to 24,967 tonnes and silicomanganese exports increased to 87,100 tonnes up 55.9% YoY during the same period.
On August 1st 2005, the Chinese government cancelled the 13% export tax rebate on unrolled manganese and scrap manganese of tax. China imposed the current 10% manganese alloy export tax on January 1st 2007.
USs EAF based steel mills factor higher scarp costs
Platts reported that despite lower prices for some grades of steel scrap in the US market last week, most steelmakers have factored into their business plans the reality that scrap and scrap substitute costs will remain at historically high levels for an extended period and perhaps permanently.
The report adds that US steel makers have been able to pass along much of the increased cost to their customers so far during a period of strong economic growth in many regions but most of them are accepting the fact that their margins are shrinking or will shrink going forward especially for electric arc furnace operators.
Higher prices for scrap were probably inevitable, driven in large part by steel demand in rapidly emerging economies in Asia and a twenty year long trend toward mini mills and EAFs, which primarily consume scrap. In fact, scrap has always represented a significant percentage of operating expenses for these mills, but now EAF operators are seeing scrap costs exceed 50% of their per ton costs.
Commercial Metals, recently said that scrap in fiscal 2006 accounted for 54% of its per ton costs as compared with 35% five years earlier, or an increase of more than 50%.
Xstrata and Felix Resources in land dispute
Coal miner Felix Resources has accused Xstrata of trying to stall its AUD 300 million Moolarben coal mine project in NSW after a simmering land dispute spilt into court. Felix, which want to mine the land as part of its Moolarben open pit development, claims Xstrata is trying to gain leverage to muscle in on the project.
Mr Brian Flannery MD of Felix said "These companies have benefited enormously from the goodwill of Australia and its governments in giving them access to the mineral resources of this country and are now attempting to stop an Australian company from mining.
Xstrata has launched action in the Supreme Court to stop the NSW Government from transferring 700 hectare of its land to Felix. Xstrata operates the Ulan mine next to Moolarben and claims it needs the land to abide by its environmental commitments.
The court action comes after AMCI beat rival bids from Xstrata and others to buy a 19% stake in Felix recently.
Chinas export of Steel Product up by 22.8%.
China's exports of finished steel products in March 2007 rose to 5.38 million tons, up by 22.8% or by 1 million tonnes from that for February. The nation's exports of semi-finished steel climbed up to 660,000 tons, up by 22.2% or by 120,000 tonnes from February.
(Sourced from MySteel.net)
Six Problems Facing China's Steel Industry Restructuring.
According to Mr Jia Yinsong deputy director general of the economic operation dept, NDRC, made a list of the problems facing China's steel industry restructuring on the awarding ceremony for Shanghai 50 top steel trade companies on April 7th 2007.
Mr Jia reported the achievements made in the restructuring process since last March, when the state council issued a notice to speed up elimination of obsolete capacities.
1 Investment in steel industry is curbed effectively citing 2.5% YoY decrease in 2006.
2 A stream of restructuring purposed projects were approved, like that for Anshan Steel, Wuhan Steel and Magang.
3 A certain amount of obsolete capacity was washed out by end last year.
4 Layout of steel industry is being rationalized.
5 Cyclic economy is paid close attention in enterprises' technical innovation.
Mr Jia said that there are many problems facing Chinas steel industry sector.
1 Market prospect stands high and the output goes on booming, bearing risk of sharper oversupply.
2 Demand posts robust both at home and abroad, making it more difficult to wash out obsolete capacity.
3 Construction of low-level new projects is aroused when a batch of old is being forced out.
4 Irrational export structure adds pressure on anti-dumping threats.
5 Heavy reliance on iron ore import is continuing.
6 M&A between domestic steel mills proceed too slow.
Mr Jia pointed out that in order to improve the restructuring work, we first need to be aware of slowing demand growth and hence likelihood to see severer oversupply. These measures he put up are for implementation: raise admittance threshold, curb blind expansion of capacity and take measures to force out the backward, i.e. differentiate water price, electricity price and upgrade export structure; give a push to technical innovation, encourage merger and annex by policy support; develop cyclic economy.
(Sourced from MySteel.net)
Qasco doubles Q1 production
It is reported that Qatar Iron and Steel Company has achieved during the first quarter of 2007 a new production peak at the level of all its affiliated mills.
Its production of the direct reduction iron has doubled to 460,206 tonnes during the first quarter of 2007 up by 107% YoY as against 221,862 tonnes during the same period in 2006. Its production of molten steel amounted to 556,782 tonne up by 108% YoY as against 267,434 tons in the same period of 2006.
Its production of billet has doubled and amounted to 455,211 tonnes during the first quarter of 2007 up by 108% YoY as against 201,785 tonne during the same period in 2006. Rebars production during the first quarter of 2007 has increased by 44 % YoY from 182,697 tonnes in 2006 up to 332,921 tons during the first quarter of 2007.
This increase in the production quantities has come as a result of new capacities that came into existence. It plans to increase its production of sponge iron to 2.25 million tonnes per year with its new mill, which has come into production stage in March 2007 and its rebars production will be increased to 1.44 million tonnes per year with addition of its new bar mill which came into production stage in March 2007.
Dalian Lushunkou & HK New Century sign shipbuilding project
It is reported that the government of Dalian Lushunkou District and HK New Century International Trading Ltd have signed a contract for shipbuilding project of New Century No 1 Dockyard Ltd located within Shipbuilding Park in Sanjianbao Industrial and Technological Zone of Lushunkou District.
The new 2.4 million tonnes dockyard project is planned to have USD 1.12 billion investment by HK New Century International Trading Ltd. The Dalian government will chip in approx USD 780 million input in fixed assets covering land of 4 square kilometers.
As per report this project is currently, undergoing environment evaluation, sea & land measuring, land requisition, etc. Ninth Design Institute of China State Shipbuilding Industry is to compile Feasibility Study Report.
Ridge Mining may sell part stake in Sheba vickle project to Zijin
It reported that Ridge Mining may sell a stake in its USD 700 million Sheba's Ridge nickel and platinum project to the Chinese firm Zijin Mining, which owns about 20%its shares. Ridge Mining can increase its stake in terms of a JV agreement on the project, while its partner Anglo Platinum, would see its stake diminish to 12.5%.
Mr Donald McAlister finance director of Ridge Mining said that "I can't speak for Anglo, but I imagine this is not their kind of investment. If they could bring some cheap capital to the project, we'd be interested in giving them some of our shares in the project as well."
Ridge Mining is also considering enlisting a partner to build a USD 200 million smelting and refining facilities at Sheba's Ridge. Mr McAlister said there had been exploratory talks with a Johannesburg listed empowerment firm, African Rainbow Minerals and Toronto's LionOre Mining International. He said that "We are looking at options for the smelting as well as different technologies. We have talked to LionOre about its Activox. We haven't closed the door on anything. There is no smelter large enough at the moment for the size of nickel concentrate Sheba's Ridge will be producing".
Ridge, which owns 50% of the relatively small Blue Ridge platinum mine, would predominantly become a nickel producer on completion of Sheba's Ridge. Sheba's Ridge is slated in its pre feasibility study to produce 24,000 tonnes per year of nickel, and copper and platinum group metals as by products. The project is profitable at about USD 4.50 per pounce against current very high nickel prices of USD 20 per pounce.
Changzhou Wujin to increase SS output at Jiagnsy
China's Changzhou Wujin Natsteel, fully invested by Taiwans major stainless mill called Walsin Lihuwa, announced that it is going to purchase more lands from Chinas government for expanding its stainless production at Changzhou located in eastern Chinas Jiagnsu Province.
At present Wujins capacity is 300,000 tons per year and there main products is wire rod with diameter sizes from 6.5mm to 10mm as Wujin stopped operating carbon steel production at the end of 2006. Walsin Lihuwa is now aiming at increasing its stainless production in China though this newly obtained factory in Changzhou.
China's iron ore stockpiles down to 41.89 million tonnes
INTERFAX reported that iron ore stockpiles in China's 23 major ports were down to 41.89 million tons on April 6th 2007, a reduction of 2.6 million tons or 5.84% from March 30th 2007.
The report also added that Indian iron ore concentrate stockpiles were down by 2.12% to 830 million tons on April 6th 2007.
Taiwan's crude steel output up by 108% YoY.
It is reported that output of crude steel in Taiwan reached to record 20.09 million tonnes in 2006 up by 108% YoY.
The output from converters was totaled 10.68 million tons and 9.41 million tons from electric arc furnace. The consumption of scrap was around 11.18 million tonnes, including imports of 4.48 million tonnes and domestic output of 6.70 million tonnes.
