August, 05 2007
Jaiprakash to invest INR 1800 crores in Malvika Steel
Jaiprakash Associates has announced its foray into the steel sector with the acquisition of Malvika Steel at Jagdishpur in Uttar Pradesh for INR 207 crore.
Mr Manoj Gaur executive chairman of Jaiprakash said that Jaiprakash would pump in INR 800 crore and INR 1,000 crore in two phases. He said "We will put in INR 1,800 crore over next 26 to 28 months to make it one million tonne integrated steel plant."
Mr Gaur said that the amount would be funded through a mix of debt and internal accruals. The group would also leverage a part of USD 400 million raised recently through an offshore convertible bonds issue.
Malvika Steel is a brownfield project. Jaiprakash Group seeks to produce long steel products used mainly in the construction sector. Jaiprakash acquired Malvika Steel, earlier promoted by Usha Group in an open auction made by the Debt Recovery Tribunal. It was taken over by some financial institutions after it failed to meet its interest obligations.
Visa Steel Q1 net profit dip by 36% YoY
Visa Steel has posted a net profit of INR 5.13 crore in the April to June 2007 quarter down by 36.8% YoY as compared to INR 8.12 crore in the April to June 2006 quarter. Its net sales stood at INR 72.06 crore April to June 2007 quarter down by 36.5% YoY as against INR 113.5 crore April to June 2006 quarter. Its EBITDA is INR 12.13 crore for the April to June 2007 quarter.
Mr Vishal Agarwal MD of Visa Steel said that pig iron prices are likely to stay firm while coke prices are to remain firm due to China. He expects steel prices to firm up come October 2007 and sees growth from the coke and ferro chrome business.
Visa Steel has commissioned the entire 400,000 tonne capacity of coke oven plant and has a blast furnace, which is already in operation. It expects to roll out a ferrochrome along with the 300,000 tonne sponge iron plant and 15MW waste heat recovery power plant in the current financial year. In 2008, Visa expects to roll out half a million tonne special and stainless steel plant with the bar and wire rod mill along with another 25MW power plant.
Visa Steel has total capex outlay of about INR 1800 crore, out of which INR 600 odd crore is already invested. It expects the ferrochrome plant to start next month that will give additional annualized revenues of about INR 200 crore.
Jindal Saw Limited announces healthy outlook
Indian pipe major Jindal Saw Limited has recently announced the following outlook
1. The developed world's increasing requirements for energy and the emergence of the industrial powerhouses in developing countries is the major catalyst of the growth in the oil country tubular goods and line pipe markets.
2. The boom in oil and gas exploration and production over the last few years has lead to a surge in demand for tubular products. The expectation of a long term bull market in oil and gas prices has resulted in an extended upturn in demand for tubular products as exploration expenditure grows and the search for oil and gas pushes against new geological and technical boundaries.
3. The rapid economic growth in India faces an urgent need to develop and improve water supply and sewerage systems, more prominently in urban areas. Demand for ductile iron pipes, which is main product of pipeline for water supply is increasing rapidly and government budget for development of water supply systems is also increasing and accordingly, Jindal Saw Limited expects a significant growth in the ductile iron pipe demand.
4. Jindal Saw Limited has experienced a steady growth in all the business segments and expects to have improved performance in all the segments including large diameter saw pipes, ductile iron pipes and seamless tubes. It projects better and sustainable productivity and profitability supported by its sustained healthy order book.
NMDC Q1 profit rises 30%
NMDC Limited has achieved a 33% increase in turnover at INR 1,081.66 crore for April to June 2007 against INR 811.53 crore in April to June 2006.
NMDC profit before tax rose from INR 724.47 crore to INR 949.56 crore registering an increase of 31% and profit after tax rose from INR 480.14 crore to INR 625.77 crore an increase of 30% during the comparative quarters.
With the buoyancy in the steel market, NMDC plans to open new iron ore mines to serve the steel industry. NMDC has also signed a joint venture agreement with Chhattisgarh Mineral Development Corporation for opening a new mine at Bailadila Sector.
POSCO likely to stick to Orissa even without iron ore mines
It is reported that Orissa state government has recently said that POSCO although likely to get Khandadhar iron ore mines for its proposed steel plant would even stay in the state even if it does not get the same.
Mr Ashok Dalwai commissioner cum secretary of department of industries of Orissa said it is not necessary that every company should have its own captive mines. He said “POSCO has plants across the world and nowhere does it have captive mines. POSCO never came to Orissa just for iron ore but for a host of other reasons.”
The report cited a senior POSCO official as saying that “We don’t expect a situation where we will not get the mines. Principally, it has already been decided to give the mine to POSCO. It is just a matter of completing the procedures and hearing the other applicants out. We expect to get the lease in the next two months.”
According to the MoU signed between the Orissa government and the company in June 2005 that the state government had agreed to grant prospecting licenses and captive mining leases for 600 million tonnes to POSCO. Khandadhar would provide ore for POSCO first phase of production of 4 million tonnes by 2010. Meanwhile, Orissa government has denied that the mine is owned by Kudremukh Iron Ore Company and said that it was a virgin mine.
Indian Railway to develop India Bangladesh rail route
BL reported that Eastern Railway, which is gearing up to run the proposed international passenger train at 406 kilometers long route from Kolkata to Dhaka, has already spent INR 3 crore on development of infrastructure facilities at Gede Station border point, which is 116 kilometer from Kolkata.
As per report, wire mesh fencing surrounding the platforms at Gede has already been completed for security reasons. An additional INR 3 crore has also been sanctioned for building a new 40 metre wide platform and foot over bridge and other facilities at Gede.
Mr SK Mondal deputy regional manager of Sealdah division of Eastern Railway said that the development of total facilities at Gede immigration and customs point, including security screening, for handling some 600 passengers both ways initially would entail an estimated total expenditure of INR 33 crore. He added that a proposal for necessary sanction has already been sent to the Railway Board.
The international train, once cleared by immigration and customs, will run non stop up to Dhaka cantonment with only operational stoppages. The service is likely to be once or twice a week to start with and expanded later depending on the response evoked. The traction will be diesel as there is no rail route electrification on the Bangladesh side.
JSW Energy Jaigadh power plant achieves financial closure
BL reported that JSW Energy Ratnagiri has achieved financial closure of its 4x300 MW imported coal based thermal power plant at Jaigad in Ratnagiri district of Maharashtra.
The project has a debt equity ratio of 3:1 rupee term loan of INR 3,375 crore for 14.5 years and equity of INR 1,125 crore. A consortium of 21 banks and financial institutions led by State Bank of India will provide the entire debt portion of INR 3,375 crore of the INR 4,500 crore project. State Bank of India capital markets is the lead arranger and advisor for the project.
All major clearances for the project have been obtained and a captive port at Jaigad for import and transportation of coal has also been proposed.
JSW Energy Ratnagiri has also tied up part of its coal requirement with a Chinese company and intends to acquire coalmines in Indonesia and Mozambique to meet the balance requirement. Shanghai Electric Corporation has bagged the boiler turbine and generator contract for the project.
Railway container operations sector to get extra INR 10,000 crore
BL quoted Mr KC Jena member staff of Indian Railway Board as saying that the rail container operations sector is likely to get an investment flow of about INR 10,000 crore for wagons, logistics parks and inland container depots over the next 2 years.
Mr Jena, who is also the National chairman of the Chartered Institute of Logistics and Transport, said that the rail container policy required the development of new inland container depots and multi modal logistics parks.
The exercise is likely to make logistics more effective in India and enable growth of physical trade and economy and optimize the cost of supply chains and transactions.
Punj Sembawang Engineers bags SGD 250 million contract
It is reported that Punj Lloyd's subsidiary Sembawang Engineers and Constructors has secured a SGD 250 million (INR 666 crore) from Singapore based Resorts World for sub structural works at Sentosa integrated resort.
The project includes construction and completion of the raft foundation, 3 levels of the basement and all associated mechanical and engineering work. The project is scheduled to be completed by August 2008.
Balasore Alloys board okays INR 1,215 crore expansion
Balasore Alloys Limited recently announced that its board had approved an investment of INR 1,215 crore for expansion and modernization.
North East region to add power capacity in 11th Plan
BS reported that in order to improve power availability in the North East, union power ministry would adopt rigorous policy measures to curb transmission losses and expedite execution of power projects during the 11th five year plan.
Mr Anil Razdan power secretary of the government of India, while speaking at the Confederation of Indian Industry power summit said that against the target of 1,200MW power generation for the 10th Plan, only 200MW could be generated from the power plants in the North East region. Mr Razdan said that as a corrective measure under the revised accelerated power development and reform program, power projects not completed by the stipulated time would be subject to penalty as central project grants would be converted into loans.
Mr Razdan added that the government would initiate a rolling plan for power generation. He said “At any point of time, a 5 year plan could be finalized for thermal power generation and for hydroelectricity projects, the period would be 10 years. For power generation up to 500MW, the completion time would be 3 years. For 660MW to 800MW power projects, the time period would be 4 years to 5 years.”
He added that with transmission losses accounting for 66% electricity loss in the region, the government aimed at reducing the level to 15% over the next 5 years. During the 11th Plan and 12th Plan periods, union government aimed at creating power generation capacity of 5,600MW and 30,000MW respectively in the North East region with an investment of around INR 50,000 crore.
Ludhiana cycle industry welcomes hike in Chinese steel prices
It was recently reported that Chinese imports in cycle industry are likely to fall in wake of the fact that steel prices and other tax rates have gone up in China, while the export subsidy has been reduced.
It was reported that the export subsidy in China, which was earlier 13%, has now been reduced to 9%. Meanwhile, the income tax rate has been hiked by 3% and the local currency fluctuation in China has caused a loss of 3%. In total, the margin for exporters in China has reduced from 7% to 10%. The one year lending rate in China has been increased from 6.75% to 6.89%, while the inflation last month in China touched around 4.4%.
Mr Charanjit Singh of Vishavkarma Industries said that “Chinese cycle parts, especially those produced on automated machines, are very cheap as compared to our products. The margin in any of these products is 15% to 25% even after we pay the import duty, freight haulage etc. Due to this, a large amount of small scale industry in Ludhiana is dying. However, with the changing scenario in China, things are looking up for us. Though the margin has not been covered up totally even now, I am sure very soon our products would come at par with Chinese ones, at least cost wise.”
Mr Avtar Singh general secretary of Chamber of Industrial and Commercial Undertakings said that “It was around 2007 that China got a chance to dump a lot of their products here in Ludhiana. I am a manufacturer of chains used in cycles and one chain cost me INR 78 in my factory. I would naturally sell it for INR 85, while China was dumping its chains here at a cost of INR 63. Similarly, the children’s cycles that we make cost us around INR 850 per cycle, while Chinese cycles cost INR 650. This gap was too much. However, the Chinese quality is inferior.” He added that industrialists in Ludhiana did not associate themselves with Chinese goods openly because of the quality. However, when the price gap widened, people came out in the open. Now their export profits have fallen by 5%, while ours have increased by 2% due to appreciation of rupee against the dollar. This gap has now narrowed down and we are hopeful that Chinese imports will now reduce.
As per report, Ludhiana dry port receives at least 100 containers of Chinese cycle parts each month at its Dhandhari dry port, which was a major cause of worry for the small scale cycle parts manufacturers of the city.
CVRD's IDR's affirmed at 'BBB-' outlook revised to positive – Fitch
Fitch Ratings has affirmed the following ratings of Companhia Vale do Rio Doce and related entities:
CVRD
1. Foreign currency Issuer Default Rating 'BBB-'
2. Local currency Issuer Default Rating 'BBB-'
3. National scale rating 'AA+(bra)'
4. Rating Outlook revised to Positive from Stable.
Fitch also simultaneously affirmed and withdrawn the following ratings of Inco Limited. Inco is now a wholly owned indirect subsidiary of CVRD under the name CVRD Inco Limited and has suspended reporting obligations with the US Securities and Exchange Commission.
Inco Limited:
1. Issuer Default Rating (IDR) 'BBB-'
2. Senior unsecured debt 'BBB-'
3. Bank revolver 'BBB-'
4. Term loan 'BBB-'
5. Subordinated convertible debentures 'BB+'
Fitch said that the senior unsecured debt issuances by CVRD's wholly owned subsidiaries Vale Overseas and CVRD Inco have been affirmed at 'BBB- CVRD's reais denominated debenture issuances have also been affirmed at 'AA+(bra)'.
CVRD's Rating Outlook has been revised to Positive from Stable to reflect its strong and improving credit profile. Additionally, the current rating level considers the ongoing consolidation occurring in the mining industry. It said the company maintains a solid balance with credit metrics similar to historical (pre-Inco) levels and the ratings will likely be revised upwards over the next twelve to eighteen months.
China demand for iron ore and coal fuels freight rates, says CISA
China Industry News cited China Iron & Steel Association as saying that China's medium and large ore mines have produced 321.29 million tonnes of crude iron ore in January to June 2007 up by 29.28% YoY from January to June 2006. Meanwhile, the ore productions from smaller mines are estimated to reach 50 million tonnes. Therefore, China's iron ore output grows by 24.38% YoY to 371.28 million tonnes in January to June 2007.
Likewise, China's ore imports also rises by 16.46% YoY to 187.9 million tonnes in the comparison period. However, the mining cost in China is CNY 12.33 per tonnes higher than ore imports.
CISA said that the pig iron cost has increased by 34% YoY in January to June 2007 as a result of spiking prices of raw materials and fuel. The delivery price climbs by 21.54% YoY to USD 74.64 per tonnes leading to an additional cost of CNY 18.9 billion. Therefore, most steel producers are faced with mounting pressure from steep input cost.
Mr Luo Bingsheng VC of CISA said that "Soaring freight rates has pushed up the delivery price for ore imports significantly." He added that global seaborne iron ore trade is moving towards better balance of supply and demand, and slight oversupply is possible in the second half.
Scarcity of available vessels is mainly driving dry bulk rates upwards. There is heavy congestion in Australian ports where the average wait time for loading a vessel is estimated at 32 days. An analyst said that "That causes capacity to be taken out of the market." He added that as of late last week there were 66 ships waiting to be loaded at Newcastle port in mid July and there is also congestion in other Australian ports.
A China based analyst said that much of the loading of raw materials involves coal destined for China. He added that China is now a net importer of coal. China is also importing large quantities of iron ore and India is importing coking coal from Australia.
(Sourced from MySteel.net)
Baosteel to build a service center in Xi’an
It is reported that Baosteel has signed an agreement with Xi’an Economic & Technology Development Zone to construct Shanghai Baosteel Xi’an Shearing Service Center with an investment of CNY 180 million during Xi’an’s investment environment illustrating & key projects recommending conference held on July 20th 2007.
Coal & Allied H1 profit fall by 53% YoY
Thomson Financial reported that Australian coal miner Coal & Allied Industries Limited January to June 2007 net profit fell by 53% to AUD 70 million from AUD 148.6 million in January to June 2006 due to its output was hampered by inadequate railways and ports.
Coal & Allied said its January to June 2007, net profit had been supported by a one off income tax adjustment of AUD 46.1 million. It said its underlying net profit of AUD 24 million reflected the difficulties caused by inadequate infrastructure and by flooding in June 2007 at its mines in the Hunter Valley in the southeastern state of New South Wales.
Coal & Allied's output in January to June 2007 was nearly 22% lower than a year before at 8.6 million tonnes despite record prices for thermal coal. Its January to June 2007 revenue fell by 10% to AUD 656.8 million because of a reduction in allocated port capacity and severe weather in the Hunter Valley in June which disrupted port, railway and mining operations.
Mr Doug Ritchie CEO of Coal & Allied said that sharp increases in demurrage costs resulting from queues of ships off Newcastle and the strengthening of the Australian dollar had also adversely affected his company's results. He added that “Infrastructure issues continued to impact Coal & Allied's financial performance and until a satisfactory long-term commercial framework is put in place there is unlikely to be any significant improvement in this performance.”
Coal & Allied is managed by Rio Tinto Coal Australia.
Indonesian government licenses steel project worth USD 1.67 billion
ANTARA reported that Indonesia government has licensed 10 local and foreign companies to enable them to invest a total of USD 1.67 billion in upstream steel industry with a total capacity of 8.72 million tonnes.
The prospective investors include 5 from China, 2 from India and 2 Singapore and 3 domestic investors, data at the Investment Coordinating Board showed. BKPM licensed the investors to produce iron ore, iron pellet, and sponge iron and they are to start implementing their projects in 2011.
Canadian IOC announces CAD 60 million expansion program
The Iron Ore Company of Canada has announced the approval of CAD 60 million to expand production capacity at its operations. The expansion will increase concentrate production capacity to 18.4 million tonnes by mid 2008 and a feasibility study will assess further expansion to 21 million tonnes annual capacity.
The expansion will address operating bottlenecks and improve winter performance. New equipment will be acquired for the mine and concentrator at Labrador City including mine loading & haulage equipment, upgrades to the Automatic Train System which delivers ore from the mine to the plants and additional process spirals for the concentrator. It also includes new railway cars to increase haulage capacity on the QNS&L Railway to IOC's port at Sept Iles in Quebec.
The feasibility study for expanding concentrate production to 21 million tonnes includes an extensive Resource Assessment Program to increase IOC's Ore Reserves by advancing high priority targets and further evaluating IOC's 3 billion tonnes of in situ Mineral Resources. Pre-feasibility engineering studies were sufficiently encouraging for IOC to order the additional primary grinding mill required for the expansion.
Mr Sam Walsh CEO of Rio Tinto Iron Ore and chairman of IOC said that the expansion program would add substantial value and take advantage of the strong on going market demand. He added that these decisions are a vote of confidence in our ability to maintain improved performance following the recent achievement of a 5 year collective agreement. He also added that IOC has added approximately 100 highly skilled jobs since the beginning of the current growth efforts in 2005 and expects to continue to hire as these expansion plans are implemented.
Mr Terence F Bowles president and CEO of IOC said this advance purchase would avoid delays caused by long delivery times in the current market. We are very pleased to be able to proceed with expansion of our business in this strong market. This growth is being driven by strong market demand, and ordering the mill now allows us to overcome constraints due to the current demand for mining equipment.
He added that following on from the achievement of a 5 year labour agreement; these decisions reflect continued confidence in our people and commitment to the provinces of Newfoundland & Labrador and Quebec. IOC's outstanding product quality and commitment to meeting the needs of our customers, helps ensure our ongoing success in a highly competitive market. I am optimistic that the feasibility study results will be positive and that we will be able to commence expanding our capacity to 21 million tonnes by late 2008.
Mt Gibson appeal leaves Mid West future unclear
It is reported that Mt Gibson Iron Ltd has overcome environmental objections to the development of its Extension Hill iron ore mine in the Mid West but the decision by Mr David Templeman environment minister has left the future of iron ore mining in the region unclear.
In a report released by the Office of the Appeals Convenor, Mr Templeman rejected the advice of the Environmental Protection Authority which said the mine should not proceed. However the Minister failed to address wider concerns, which the industry believes could threaten a large number of future mining projects.
A ministerial strategic review is addressing the future of the region, particularly the impact of mining on its flora and fauna.
The EPA released its report and recommendations on the Mt Gibson Mining and Infrastructure proposal in November 2006 and a total of 32 appeals were received against that report.
The grounds of appeal are
1. Reservation of other areas of the Mt Gibson range, in particular significant flora species
2. Floristic communities
3. The adequacy of the proponent's offsets
4. Performance bond
5. The significance of Gastrolobium laytonii
6. Procedural fairness
7. EPA assessment of the Darwinia masonii and Lepidosperma sp at Mt Gibson
8. Conflict of interest
9. The transport of hematite;
10. Dust and surface hydrology
11. Translocation of rare plants
12. Impacts on surrounding properties
13. Compliance Reporting Condition
Mount Gibson Mining Limited proposes to mine and process iron ore hematite and magnetite from the northern portion of the Mt Gibson Range, involving Extension Hill and Extension Hill North, approximately 350 kilometer north east of Perth and some 80 kilometer east of Perenjori. The proposal also includes the construction of infrastructure, being a pipeline to transport the magnetite slurry to Geraldton Port, and infrastructure at the port to remove the ore from the slurry for export. The operation will yield approximately 13 million tonnes of hematite over 8 years and 230 million tonnes of magnetite over 20 years. The transport of the hematite is not part of this proposal, and will be stored at the site in the interim.
KéMag could become 15 million tonne iron ore producer
It is reported that New Millennium Capital Corporation of Calgary has received a preliminary assessment study of its KéMag iron ore project that says it could become a 15 million tonne per year producer after an injection of USD 3.6 billion. The project is located on the Quebec Labrador border near Lac Harris, 250 kilometer north of the province's other iron ore mines.
The study assumed that both an open pit mine and a concentrator will be built at Lac Harris. It is based on indicated resources of 1.35 billion tonnes and inferred resources of 992 million tonnes. Both resource categories grade 30.8% Fe. A 750 kilometer slurry pipeline would be built to a pellet plant and ship loading facility at Pointe Noire, Quebec. The project envisions at least a 30 year long operation providing over 1,000 direct permanent jobs.
New Millennium has a 100% interest in the KéMag property and an 80% interest in the LabMag property.
AK Steel announces September 2007 surcharges for electrical steels
AK Steel has advised its customers that a USD 225 per ton surcharge will be added to invoices for electrical steel products shipped in September 2007.
AK Steel’s surcharges are based on reported prices for raw materials and energy used to manufacture the products, with the July 2007 purchase cost used to determine the September 2007 surcharges.
AK Steel headquartered at Middletown in Ohio produces flat rolled carbon, stainless and electrical steel products, as well as carbon and stainless tubular steel products, for automotive, appliance, construction and manufacturing markets.
MMK buys 25.67% stakes of Bashmetallopttorg
Thomson Financial reported that OJSC Magnitogorsk Iron and Steel Works have acquired a 25.67% stake in OAO Bashmetallopttorg for an undisclosed sum in order to expand its Russian network of metal service centres.
Kumba still hunting iron ore in West Africa
Miningmx.com reported that Kumba Iron Ore is exploring a number of iron ore opportunities in West Africa despite having lost the Faleme deposit in Senegal to Mittal Steel.
Mittal Steel was granted the right by the Senegalese government in February 2007 to develop a mine at the 750 million tonne Faleme deposit at a cost of some USD 2.2 billion. This was despite an agreement Kumba says it had with state owned project company Miferso to develop the deposit.
South Africa largest iron ore producer Kumba has no mining assets outside the country where it produces around 22 million tonnes of material a year. It has projects to grow this to about 80 million tonnes by 2016 at its Northern Cape deposits.
Mr Ras Myburgh CEO of Kumba told Miningmx that “West Africa was the focus for us. We lost Faleme but we still have an interest in West Africa because it is one of the other future long term growth platforms.” He added that “We are exploring a few other opportunities in that region still, but none have progressed to a level where we want to talk about them.”
Mr Myburgh said that Kumba retains an office at Dakar in Senegal’s capital city from where it is hunting for other projects. There are iron ore deposits in Senegal, Guinea and Morocco for example. Kumba, which had been budgeting for a single digit iron ore price increase next year is starting to think there is reason to expect a double digit increase based on the differences between the price of delivered contract material into China and the delivered spot price.
Mr Muburgh added that “Our forecast had not been for a double digit increase but we now believe that might be necessary.”
Kumba said that it posted a 52% YoY increase in operating profit in January to June 2007. Capital expenditure in the H2 of 2007 will be up to ZAR 1.4 billion, with a billion of that going towards the Sishen Expansion Project which will deliver its first ore in August 2007 a month behind schedule but within the ZAR 5.1 billion budget.
Sishen Expansion Project will add 1.5 million tonnes of iron ore to Kumba's output in 2007, 9 million tonnes in 2008 and then hit full capacity of 13 million tonnes in 2009.
Zinifex’s Century mine has record zinc production in Q2
Australian zinc miner producer Zinifex reported that its Century mine had a record production in April to June 2007 quarter with output of 140,505 tonnes zinc in concentrate, up by 15% QoQ and up by 8% YoY.
Zinifex said that Century under performed in April to June 2006 quarter due to an extended planned shutdown in July to September 2006 quarter and then an unplanned failure of the thickener plant in October to December 2006 quarter. As a result production for the financial year to June 20007 fell by 3% YoY to 502,038 tonnes of contained zinc from 515,716 tonne.
With the company’s Rosebery mine holding production relatively steady over the financial year 2007, group mined zinc production came in at 584,976 tonnes down from 599,232 tonnes in financial year 2006. Production of refined zinc these operations are to be spun off into the new Nystar venture with Belgium’s Umicore rose to 635,079 tonnes in the financial year 2007 from 614,564 tonnes in financial year 2006.
Nickel hits 9 month low
Reuter reported that nickel fell to a 9 months low as weak demand from the stainless steel sector prompted investors to cut their positions, while lead was up 3% on speculative buying.
The market stabilized after a sell off earlier in the week triggered by risk reduction but analysts said that prices were driven by fund interest during a stagnant holiday season rather than supply and demand fundamentals.
Nickel for three months delivery on the London Metal Exchange was at 29,200 a tonne, down by 3% or USD 900. Nickel fell earlier fell to USD 29,050 a tonne its lowest since November 15th 2006.
Nickel has lost some 40% since early May 2007, when it hit a record high of USD 51,800, after major stainless steel producers announced production cutbacks.
Stocks of nickel stand at 15,138 tonnes their highest level since June 2006 and compared with around 3,000 tonnes in February.
Macmahon wins AUD 75 million coal contract from BHP
Macmahon Holdings Limited announced that BHP Billiton Mitsubishi Alliance has awarded Macmahon a contract at the Saraji open cut coal mine in Queensland. The two year contract is valued at approximately AUD 75 million and involves the removal of 12 million bank cubic metres of material each year.
The Saraji Mine has a current production capacity of 6.5 million tonnes of high grade coking coal a year and is located in the Bowen Basin, 213 kilometers south west of the Hay Point Coal Export Terminal, near Mackay.
Macmahon has commenced mobilization of the earthmoving equipment and a workforce of 100 personnel, with mining works scheduled to commence this month.
Mr Nick Bowen CEO of Macmahon said that emphasized the significance of this particular coal contract for Macmahon. He said that "This win demonstrates the success of the company's strategy to pursue coal contracts on the East Coast of Australia. We are now well placed to actively increase our market share in this buoyant sector. The contract provides Macmahon with another substantial mining operation and improves the balance within the Group's portfolio across, coal, iron ore, diamonds, nickel, copper and other commodities. He added that "This is further recognition of the capability Macmahon can bring to an existing operation and it extends the strong relationship we have established with BHP Billiton to now cover coal, as well as iron ore, nickel and copper."
Mr Faxander says SSAB long march to expand is blocked
Financial Times cited Mr Olof Faxander CEO of SSAB as saying that Chinese government should ease its restrictions on foreign companies taking control of the country’s steel businesses.
Mr Faxander told Financial Times that his business was interested in expanding in China but was unlikely to proceed very far while Beijing bars overseas groups from controlling local companies. He added that “As a global company, we would like these kinds of restrictions to be reduced. I think the whole of the international steel industry would view it as positive if the Chinese government reviewed its approach.”
The Ipsco deal in May 2007 completed last week was by far the biggest in the 157 year history of SSAB. The combined SSAB and Ipsco group is expected to have sales about USD 9 billion in 2007 from making 8 million tonnes of steel. About 50% of its sales will come from Europe, 45% from North America and only about 5% from Asia of which China is likely to contribute about half.
Given that demand for steel in Asia is growing much faster than in the other two regions, a top priority for Mr Faxander is to find ways to expand in this continent particularly China. He said that “We are establishing a presence in China by setting up a steel distribution operation in Shanghai and we’ll use this to learn about the market and find out about possible acquisitions.”
The Ipsco acquisition is part of a series of takeovers in the global steel industry that has been buoyed by rising prices and robust demand. Both SSAB and Ipsco are specialist in niche areas of the steel industry. These include high strength steel for products such as shipping containers. Such steel can sell for more than USD 2,000 a tonne, three times as much as standard grades.
SSAB has been helped by buoyant requirement for these types of steel, triggered by the surge in global trade that has meant a higher demand for containers, together with the mining and construction boom. Caterpillar, the world’s biggest construction machine maker, is a big customer.
Reflecting the strong trading position, in the H1 of 2007 SSAB’s operating profits rose by 17.6% to SEK 4 billion (USD 601 million) on a 14% rise in sales to SEK 18.4 billion since the beginning of 2006.
Mr Faxander sees few signs of a slowdown “I have a positive outlook for the next few months. It’s not just because of the upward trends in the whole of the steel market. It’s also because a lot of steel customers are interested in substituting higher strength or higher quality steels for products of a lower specification, and this is something that helps us. We make our steel according to tens of thousands of technical characteristics, which are often specified by an individual customer, and where we might sell them just a few tonnes of steel at a time.”
Chinese slow down to effect shipping business
It is reported that Cosco Singapore, part of the biggest Chinese shipping company, expects a gradual slowdown in dry bulk shipping rates if China manages to cool its economy, expanding at the fastest in more than 12 years.
Mr Ji Hai Sheng president of Cosco Singapore president said that "If the Chinese government tries to slow down the economy, it needs to have some time. It is not right away, so the effect on the bulk market will also be gradual."
Mr Ji said that Chinese demand for raw materials has raised the demand for iron ore carriers, and congestion in ports in Australia, New Zealand and India are pushing the Baltic Dry index to records.
Cosco Singapore owns 12 bulk carriers, ranging from handymax to panamax vessels and has entered into long-term charter contracts. Revenue from its dry bulk shipping business rose by 21% YoY to USD 44.4 million in April to June 2007 quarter. For the full year, Cosco Singapore is likely to post a record profit. In 2006, the company's net income was USD 205.4 million.
Gloucester Coal names Mr Rob Lord as CEO
Gloucester Coal Limited has named Mr Rob Lord former executive VP of Norske Skog Australasia as its new CEO. Mr Lord will work with the Board and senior management to develop strategies to optimize production and pursue profitable growth, particularly opportunities for the company outside the Gloucester basin.
Mr Andy Hogendijk chairman of Gloucester Coal said "Rob is well suited to lead the execution of Gloucester Coal's business plan and operating strategies and maximize the opportunities presently available in the resources sector.”
Japanese court awards coal miners JPY 400 million compensation
It is reported that Japan’s Fukuoka District Court has ordered the state and a mining company to pay a total of some JPY 400 million in compensation to 37 former coal miners who contracted black lung disease and to the families of six deceased workers.
While the state argued that the 20-year period for the plaintiffs to demand compensation had expired, presiding Judge Yoichi Kishiwada ruled their right to seek compensation "newly generated at the point when they were certified to have developed complications" associated with black lung disease, or anthracosis.
The plaintiffs, who worked in coal mines between the 1940s and 1990s in Fukuoka, Nagasaki and other prefectures, had sought a total of JPY 780 million from the state and Nittetsu Mining Co. The lawsuit hinged on how the court would define the starting point of the 20 year period in cases where coal miners developed complications such as secondary bronchitis.
An official of the Japans Economy, Trade and Industry Ministry called the ruling extremely harsh and said the ministry will decide its next step after examining the decision.
Inprom could alter its dividend policy in 2009
Interfax recently cited Mr Igor Konvalov GD of Taganrog based metals Inprom as saying that Iprom could alter its dividend policy in 2009.
Mr Konvalov said that "We are not planning to pay dividends for 2008, we will persuade the shareholders to spend profit on development. Inprom intends to start paying dividends in 2009. We will draw up a correct dividend policy in 2009 and I am not ruling out the possibility that will be paid for 2008.”
Mr Konvalov did not specify the size of the dividend payments by saying that everything would depend on the situation on the market."
Rail link would transport Yukon iron ore
According to the feasibility study commissioned by the State of Alaska and the Yukon government and published in June 2007, they estimate that Alaska to Canada rail link would generate 3,000 direct jobs in Alaska’s mining sector and 2,300 additional new jobs in other industries.
According to the study at least 8.8 billion tonnes of mineral concentrates could be developed in the rail corridor in Alaska over a 30 year period with a gross metal value of USD 16.9 billion.
Bekaert posts rise in H1 net, sales boosted by growth in China
Thomson Financial reported that Steel cord and wire manufacturer Bekaert SA posted a rise in January to June 2007 net profit and sales boosted by record growth in its steel cord activities in China, where the group recorded 53%YoY sales growth.
Net profit for January to June 2007 came in at EUR 78.4 million against EUR 75.5 million in 2006, beating analysts' expectations. January to June 2007 sales were EUR 1.065 billion up from EUR 1.009 billion as compared to January to June 2006, just below forecasts.
Bekaert invested another EUR 50 million in expanding its production capacity in China.
In terms of outlook, Bekaert said it expects raw material prices which pressured its advanced wire products in the H1 to remain high driven by the strong global demand for steel.
Brazil ferromanganese exports in H1 down by 44% YoY
It is reported that Brazil's ferromanganese export during January to June 2007 was 17,322 tonnes down by 44.2% YoY as compared to 31,089 tonnes in January to June 2006.
Export of high carbon ferromanganese during January to June 2007 accounts for 11,558 tonnes down by 47.9% YoY compared to 22,197 tonnes from January to June 2006. The low carbon ferromanganese accounts for 5,764 tonnes down by 35.1% YoY than 8,891 tonnes.
In January to June 2007, the export quantity of ferroalloy is still at the lower level which exported to Venezuela, the United States and Argentine.
North China Petroleum develops X100 SAW pipes
According to 1st Machinery Works of North China Petroleum release it has developed X100 grade steel submerged arc butt welded pipes with a diameter 813 mm × 12.5 mm. The release added that the quality of the products is as per international standards as per results of tests carried.
Following the X80 grade steel pipe, the company filled the blanket of ultra strength line pipe in China and also the blanket of steel pipe production by JCOE process in the world.
X100 grade steel pipe will attract more and more interests in the future. The application of X100 grade steel would decrease the costs for long distance oil and gas transportation by a large extant.
