TATA Steel orders BF for Kalinga Nagar project

It is reported that TATA Steel Limited has placed a blast furnace order with Siemens Group Industrial Solutions and Service’s division Metals Technologies for the supply of engineering and key equipment for a new blast furnace for its Greenfield integrated iron and steel works at Kalinga Nagar in Orissa. The value of the contract has not been disclosed.

Siemens Metals Technologies will engineer and supply key technological equipment for the Blast Furnace No 1. The furnace will be designed with a hearth diameter of 13.8 meters, an inner volume of 4,300 meter cube, a furnace top pressure of 2.5 bar g, a nominal daily production capacity of 9,150 tonnes and a nominal annual capacity of 3.2 million tonnes.

The blast furnace will be characterized by a low fuel consumption rate of 500 to 535 kilogram per metric tonne of hot metal, depending on the pulverized coal injection rate and burden type, a high coal injection rate of 160 to 200 kilogram per metric tonne hot metal, advanced waste heat recovery and environmental systems, Level 1 automation systems in addition to Level 2 control and optimization systems. A flat cast house floor will be provided for improved access and blast furnace operations. Training, commissioning supervision and start-up assistance is also part of the Siemens scope of supply.

India to become net steel importer by March 2008 - ISA

It is reported that Indian Steel Alliance recently forecast that India would become a net importer of steel by the end of this financial year due to rupee depreciation and rising demand in the domestic market. Currently, India’s imports and exports of steel are almost at the same levels.

Mr Moosa Raza president of Indian Steel Alliance said that “Net imports could be in the range of 0.5 million tonnes to 1 million tonnes.”

Mr Raza added that India’s steel production, currently at 50 million tonnes, is likely to increase to 55 million tonnes by the year end and consumption would also be around the same level.

Mr Raza said that the main sectors driving the demand are construction and white goods. He added that “The automobile segment is a little down but that is probably seasonal. The rising per capita income of the middle class is another contributing factor.”

Orissa CM calls for ad valorem royalty on coal royalty

Mr Naveen Patnaik chief minister of Orissa, voicing his strong protest to the August 1st 2007 notification of the centre for revision of coal royalty, has demanded that the royalty be fixed on ad valorem basis.

In a letter to Dr Manmohan Singh prime minister of India, he said that the manner in which the centre is going to revise the royalty, the state will be a loser and as such Orissa has already sustained a huge loss because of 2 year delay in the revision. He urged the prime minister to compensate the revenue loss of the state and delete the provision of adjusting the cess collected by the state during payment of royalty.

He said that under the new hybrid formula, the state will get INR 10 more per tonne of coal which is nothing given the delay in the revision of royalty.

As per the Mines and Mineral Development & Regulation Act 1957, the centre is bound to revise royalty on coal and other minerals every three years. The Act provides that the state should be compensated accordingly for the delay in revision of royalty. The latest revision of the Act was made on August 1st 2007 after 5 years.

As per the Supreme Court ruling, the collection of cess by the state for the development of the people in the mining areas is justified.

JSPL Q2 net surges by 76% YoY

Jindal Steel & Power Limited has announced the following unaudited results for the quarter ended September 30th 2007

JSPL has posted a net profit of INR 2774.7 million for July to September 2007 quarter up by 76.4% YoY as compared to INR 1572.3 million July to September 2006 quarter. Its total Income has increased from INR 7929 million in July to September 2006 quarter to INR 12719.4 million for July to September 2007 quarter.

ArcelorMittal to participate in Jharkhand industrial fair

Ranchi Express reported that ArcelorMittal, in an apparent indication of its seriousness towards its proposed Jharkhand project, has given its consent to participate in the industrial fair called Udyog Mela being organized from November 14th 2007 to November 21st 2007 at Ranchi in Jharkhand by Jharkhand’s industries department to mark the 7th statehood day.

It is noted that ArcelorMittal's absence at the 2006 Udyog Mela had led to speculations about the company's seriousness towards INR 40,000 crore worth 12 million tonne Greenfield project in Jharkhand.

PGCIL eying 10% stake in the assets of Philippines Transco

It is reported that Power Grid Corporation of India Limited is in the race to acquire a 10% interest in Philippines National Transmission Corporation of Philippines.

Acting in concert with Citadel Holdings of the Philippines, it plans to acquire the special purpose vehicle being floated to take over and manage the assets of Philippines National Transmission Corporation for 25 years. While Citadel, one of the largest private holding companies in that country with interests in aviation services, freight management and logistics and telecommunications, will hold 90% while Power Grid will hold the remaining 10% in the SPV. The Power Grid board has already approved the acquisition of the 10% equity stake in the SPV.

The Philippines government is privatizing Transco with a valuation estimated at USD 3.5 billion to USD 4.6 billion as part of the market reforms led by Mr Gloria Arroyo president to decrease the government’s debt burden. According to the global bidding a norm set by the Philippine government, a local partner with a stake of 60% or above is necessary to qualify for the bidding round. The bidding round is expected to begin in December 2007. Apart from the Citadel Power Grid combine, Terna of Italy, State Grid of China, Tenega of Malaysia and SNC Lavlin of Canada are also in the fray, along with local partners.

Top level officials of Power Grid said that “We have the best chance to bag Transco because of our expertise in managing such assets and Citadel’s ability to bring funds for the huge project. The Philippines government is expected to announce the qualified bidders in a day or 2.”

GAIL to foray into gas pipeline construction business

BL reported that GAIL India Limited is considering diversifying into gas pipeline construction business. The move is expected to create increased synergy in its core area of activity of gas transmission and marketing. GAIL, which has rolled out ambitious plans to expand its existing pipeline network, currently outsource this activity.

A GAIL source said that “Now there is thinking within GAIL to form a JV with a company which has a sound footing in the pipeline construction business, expertise as well as international exposure. It has considered a few options for unbundling the business including that of a pyramid structure, where there would be one holding company followed by subsidiaries. The unbundling will not affect the company’s profitability.”

GAIL has a market share of 78% in natural gas transmission and 70% in natural gas marketing in India. GAIL is expanding the pipeline infrastructure, which would double its existing trunk pipeline network to 12,000 kilometer, costing about INR 20,000 crore by 2011-12. Its existing carrying capacity will increase from 140 million standard cubic meters a day to 300 million standard cubic meters a day, which will also boost its revenues from the transportation business. It plans to complete eight new gas pipelines in two phases targeting 100% completion by 2011. These will form part of an integrated gas grid in the country spread over more than 5,000 kilometer.

Mr KS Shankar appointed as RINL’s director finance

BL reported that Mr KS Shankar has assumed charge as director finance of Rashtriya Ispat Nigam Limited on Monday.

Mr Shankar, an experienced cost accountant, has rich managerial experience in corporate financial management and accounting. He is at present chief patron of Ukkunagaram chapter of cost accountants and vice chairman of city chapter of Computer Society of India.

BEML Q2 net profit down by 33% YoY

Bharat Earth Movers Limited has announced the following unaudited results for the July to September 2007 quarter

BEML has posted a net profit of INR 243.20 million for the July to September 2007 quarter down by 33% YoY as against INR 365.70 million for the July to September 2006 quarter. Total income in July to September 2007 quarter is INR 4872.80 million as against INR 6187.80 million for the July to September 2006 quarter.

Ankit Metal starts production of its re rolling mill

Ankit Metal & Power Limited has informed BSE that it has started the commercial production of its re rolling mill with capacity of 100,000 tonnes per annum on October 26th 2007. It has also started trial of its captive power plant.

Chattisgarh slashes power tariff for industrial consumers

It is reported that, the Chattisgarh State Electricity Regulatory Commission has recently slashed power tariffs for various consuming segments despite pressure from state electricity board for a hike. The new tariff would come into effect from November 1st 2007 and it would remain effective till March 31st 2008 or the issuance of the next order.

1. For low voltage industrial consumers, the commission has revised the tariff from INR 3.90 per unit to INR 3.72 per unit down by 4.62%.
2. For heavy industries from INR 3.83 per unit to INR 3.60 per unit
3. Steel industries in the state that come under the EHV category will pay INR 2.86 per unit instead of the INR 2.91 per unit at present.
4. For steel plants under the heavy voltage category has been revised from INR 3.16 per unit to INR 3.06.
5. The tariff for coal and cement industries has been reduced to INR 4.74 per unit from INR 4.75.
6. For railway traction, which comes in the extra high voltage industrial consumer category, the new tariff will be INR 3.85 per unit as against the existing INR 4.02 per unit.

Mr SK Misra chairman of Chattisgarh State Electricity Regulatory Commission said that “In the wake of the ongoing industrialization in the state, it is necessary to keep power tariffs for industrial consumers at a level not more than in the neighboring states. The tariff has been rationalized and the commission has tried to keep it low.”

Mundra Port SEZ’s IPO likely on November 1st 2007

It is reported that Security Exchange Board of India has cleared the proposed INR 1,500 crore IPO of Adani Group promoted Mundra Port SEZ Limited. According to sources, the issue is expected to open on November 1st 2007. According to sources Port SEZ Limited SEZ is the largest port based SEZ project in India and the first such public issue to hit the capital market.

While the issue price is yet to be finalized, sources say that considering the fact that the company will issue 4.02 crore equity shares of INR 10 each, the issue price should be in the range of INR 380 per share.

The proceeds from the issue will primarily be used to part finance construction and development of basic infrastructure and allied facilities in the proposed SEZ and south basin terminal for coal and other cargo at Mundra Port. This apart, the IPO will also finance the projects lined up by Adani Petronet Port, Adani Logistics. The 10,000 hectare SEZ will include industrial, business, and social infrastructure including industrial plots and recreation facilities.


Adani group is the developer and operator of Mundra Port and is primarily engaged in providing bulk cargo services, container cargo, crude oil cargo and value-added port services, including railway services between Mundra Port and Adipur. Port SEZ Limited is the group’s logistics arm.

SEBI approves setting up of a SME exchange

It is reported that Securities and Exchange Board of India has given its approval for setting up an exchange dedicated to small and medium enterprises to allow them better access to risk capital.

Mr M Damodaran chairman of SEBI said that "The Board has cleared the proposal to have a separate exchange. Consequent to the Board’s decision, a policy framework will soon be announced and persons interested in setting up a small and medium enterprise exchange would be invited to come forward with their proposals." He added that after studying the proposals and eligibility criteria, SEBI would approve one of the proposals for setting up the exchange.

The SEBI move is aimed at promoting the small and medium enterprise sector comprising several unlisted companies belonging to different sectors. Worldwide, the concept of small and medium enterprise exchange is already being implemented successfully. London Stock Exchange’s Alternative Investment Market has succeeded in attracting a large number of small sized firms globally, including a few Indian companies.

Committee of secretaries to take call on Balco stake sale

It is reported that the Indian government’s cabinet committee on economic affairs has decided to set up a committee of secretaries to take a stand on the call option notice given by Sterlite Industries to acquire 49% stake in Balco. The committee will comprise secretaries of department of legal affairs, department of disinvestment and mines ministry. It will finalize the government’s position on legal issues in the process.

Mr Priyaranjan Dasmunsi union minister of information and broadcasting recently said that “The cabinet committee on economic affairs has considered the call option notice given by Sterlite Industries India to acquire 10.81 crore equity shares held by the government in Balco. Since that the issue of selling the stake is in high court, the committee will consider the government’s position in the case and in the ongoing mediation and arbitration as well. “

It is understood that the mines ministry had told CCEA that the centre may be forced to sell its remaining 49% stake in Balco at 75% of the pre determined price as per the shareholders’ agreement if Sterlite’s right to buy the shares is upheld in the arbitration process. Mines ministry said that “If the arbitration award goes against the government, it may have legal and financial implications.”

While accusing the government of a breach of contract, Sterlite has asked the Delhi High Court to restrain the former from selling equity to any other buyer or the public.

In 2001, 51% of the government stake in Balco was sold to Sterlite for INR 551.50 crore at INR 49.01 per share. In March 2004, Sterlite sent a call notice to acquire the remaining 49% shares along with a cheque of INR 1,098 crore but the government declined the offer. The law ministry has maintained that Sterlite cannot ask the government to sell the remaining stake in Balco at pre determined price under the provision of call option in the shareholders’ agreement.

Eurofer files AD complaints for HDG and SS against China

European Confederation of Iron and Steel Industries have filed the first two of four anti dumping complaints with the European Commission. These primarily cover cold rolled stainless coil and HDG imports from China and stainless cold rolled flat products from South Korea and Taiwan. Two further complaints are likely to be filed for wire rod and plates.

The Commission is understood to have a maximum of 45 days to decide whether or not to launch a full investigation. The European Commission will investigate the complaint and could impose provisional measures on Chinese imports within nine months. The commission's decision will ultimately need approval from EU member states and could be challenged by Beijing at the World Trade Organization.

Mr Gordon Moffat GD of the European Confederation of Iron and Steel Industries said Chinese output was out of control and talks with Beijing have failed to cap overcapacity. Eurofer said “Exports of the products concerned had inundated the EU market, following exponential export surges into the market by up to 3,300% over the past four years. Massive volumes have been dumped on the EU market at dumping margins of up to 40%. EU domestic prices have been undercut by up to 25%.”

The call for countermeasures is likely to be backed strongly by several South European countries and Germany but opposed by countries more committed to free trade like Britain and the Nordic countries. The request sets the scene for a debate likely to divide European governments as steel makers and companies reliant on cheap imports fight out of their respective corners.

Mr Adrian Harris secretary general of Orgalime, which represents the engineering industry, said that its members are already having difficulty sourcing raw materials including steel. Orgalime said that 250,000 jobs in Europe depend on steel making, as opposed to 7 million in metalworking and mechanical engineering, which use imports.

Those figures are disputed by Eurofer, which said that steel making employs 372,000 directly and a further 1 million indirectly. Moreover, the antidumping request was aimed at specific products to avoid harming consumers.

JPMorgan increases 2008 coal price outlook

Bloomberg reported that JPMorgan Chase & Co boosted price estimates for coal used by power generators and steelmakers by as much as 17% because of rising imports into China and increased steel output.

JPMorgan lifted its forecast for a tonne of coal in 2008 to USD 70 from USD 60 before. It analysts in a report said that the estimate for hard coking coal to USD 120 a tonne from USD 105 per tonne.

They said that “The Chinese will be net importers' of power coal. Strong demand from fellow Asian countries will keep the markets tight.''

JPMorgan expects supply to increase after 2008 as producers respond to the high margins on offer pushing prices lower. The report said that the fuels will fall in the following two years on rising supply.

Philippines to impose 7% tariff on steel

It is reported that Philippines Bureau of Customs is set to impose 7% tariff on imported steel products from 3% anytime now following the go ahead signal by Mr Margarito Teves finance secretary of Manila.

Mr Peter B Favila trade and industry secretary of Philippines said that the department of finance is ready to implement the higher tariffs on steel following his recommendation. He said that "Based on my conversation with Secretary Teves he already instructed the Bureau of Customs to issue a memorandum order to implement the higher tariff on steel products so I guess it will be implemented anytime now. The issuance of the memorandum order is to make sure that shipments in transit are not affected.”

Adjusting tariffs on imported steel products from 3% to 7% was provided for under Executive Order 375, which says that once Global Steel Philippines Inc goes on full commercial operations, tariffs on steel must revert to 7% from 3% as a protection to the local steel manufacturer against cheap imports.

Krakatau Steel seeking strategic alliance

ANTARA News reported that PT Krakatau Steel is considering a strategic alliance with a number of world steel companies to improve its performance particularly in supplying iron ore.

Mr Daenulhay president director of Krakatau Steel at a press conference in Cilegon on said that Krakatau Steel would explore the possibility of developing a strategic alliance with four world companies and with domestic steel producers. He said that the four international companies it is considering are Essar, BaoSteel, Ispat and Nanjing Iron Steel Co Ltd.

Mr Daenulhay said that “The alliance is expected to be realized next year before the company conducted an initial public offering in 2009. The alliance is also aimed at raising the corporate value before it is being privatized."

He said the alliance was also needed to meet the company’s production target of 20 million tons in 2020 from the currently two million tons a year. He said it was also needed to secure raw materials supply which had been increasing. In the mid term between 2008 and 2013 the alliance was expected to complete the construction of an iron manufacturing plant with a capacity of 8.2 million tonnes.

MEPS forecast that world steel prices for flats moving up

MEPS reported that US transaction values appear to have bottomed out in September. MEPS said that “Although we have posted some small transaction price increases this month, several smaller mills are still discounting in some instances to keep production levels up. Inventories at service centers and OEM's are now more in line with demand. Distributors are reporting slow activity and those buyers who can afford to wait before placing orders are doing so. The weak US dollar continues to hold imports at bay. Some of the larger steelmakers are actively pursuing export opportunities.”

MEPS said that “Transaction prices in Canada have been undermined by low sales, oversupply and a strong currency. Local mills are experiencing weak demand from end users and distributors, whilst at the same time trying to maintain good or growing plant utilization rates to perform well for their new owners. Third country offshore offers are scarce but US imports are still a force in the market as they become increasingly competitive because of the devaluation of the US dollar. Inventories are coming down but the decline is slow.”

MEPS said that “Chinese domestic flat product prices have undergone some small downward adjustments after peaking in September. Consumers are cautious because the mills continue to expand capacity. In Japan, demand from major end-user sectors remains firm. However, inventories of strip mill products continue to climb. Total domestic stocks of coil held by steelmakers and service centers, as end August grew by 1.8% compared to July. Quayside inventories of imported flat products jumped by 7.5% in the same time frame but traders believe the increase was just a blip rather than the start of a long term trend. POSCO and CSC have both warned Japanese customers that they are about to cut export volumes.”

MEPS added that “We can detect signs of strengthening demand in South Korea where prices are stable. Consumption in Taiwan continues to be brisk and prices have spiralled upwards since late September. These higher values could start to undermine sales. However, we expect that mills will continue to try to implement increases inline with the growing costs of production.”

MEPS further added that due to competitive imports as well as continuing high inventories, Polish producers have dropped their strip mill product prices by the equivalent of EUR 10 per tonne for fourth quarter deliveries. Distributors are trying to reduce stocks. The strong Zloty and booming domestic demand is drawing in imports of finished goods and damaging exports. Czech/Slovak steel consumption is good. However, prices are so high that some small discounts have been applied for sales to large, regular buyers. Imports pose no real threat for the moment. Delivery lead times from domestic mills are acceptable. Stocks at the service centers are normal.

MEPS said that in Western Europe, end user demand for strip mill products remains good but distributors, who continue to carry surplus inventories are buying very little. This lack of activity, together with what appears to be a determination on the part of European producers to drive out imports at all costs has created negative price pressure. However, the mills are intimating that they will seek advances at the start of 2008.

SRM attacks Mittal Steel’s financial advisers for Arcelor merger

Financial Times reported that SRM Global Fund, the investment fund run by the former UBS trader Mr Jon Wood, has attacked the investment banks advising Mittal Steel on its EUR 26 billion merger with Arcelor over their alleged material conflicts of interest.

SRM claims that the banks, which include Goldman Sachs, Morgan Stanley, Fortis and Société Générale, did not provide independent advice in issuing their fairness opinion relating to the treatment of Arcelor’s minority shareholders. Along with other minority holders, SRM accounts for 6% of Arcelor’s capital. It said it was evaluating its options for legal recourse against Arcelor, Mittal Steel and the banks.

SRM said that “We note from regulatory filings that Goldman Sachs and Morgan Stanley have together received fees of in excess of USD 70 million from Arcelor and Mittal Steel. In view of this significant fee income, SRM questions whether both of the banks can provide objective fairness opinions.”

SRM’s claim is that offer was made in June 2006 by Mittal Steel of 11 shares in ArcelorMittal in exchange for 7 Arcelor shares. The value of this exchange ratio was cut by about 30% in May 2007 when Mittal Steel offered 8 ArcelorMittal shares for 7 Arcelor shares. It said that the new terms amounted to a difference of about EUR 900 million.

Mittal Steel said the terms were supported by fairness opinions provided by several banks. It is seeking to impose the terms on minority shareholders at an extraordinary meeting in Luxembourg on November 5th 2007. ArcelorMittal said that “The exchange ratio has been calculated on the intrinsic value of both companies and subject to independent fairness reports. We strongly believe that the ratio is equitable to both Arcelor minorities and ArcelorMittal shareholders.”

US Steel gets clearance from Canada for acquisition of Stelco

United States Steel Corporation announced that it has received approval of its acquisition of Stelco Inc from the Canadian minister of industry under the investment Canada Act. All regulatory clearances required to complete the acquisition of Stelco have now been obtained.

In connection with the approval under the Investment Canada Act, US Steel has made commitments to the minister of industry that highlighted the net benefit to Canada that will arise from the acquisition. These include commitments relating to
1. The funding of Stelco's main pension plans
2. Increases in production and exports from Canada
3. Significant capital expenditures at Stelco's facilities and R&D
4. Endowment of a Priority Chair in the Department of Materials Science and Engineering at McMaster University to facilitate the continuing development of steelmaking technology in Ontario
5. Transfer of US Steel's operating experience and best practices to the Stelco facilities.

Mr John P Surma chairman & CEO of US Steel said that "We are pleased with this news, which confirms that the Minister of Industry is satisfied that US Steel's acquisition of Stelco will be of net benefit to Canada. US Steel brings the financial strength, operating experience and advanced research and technology capability that are critical for the continued success of the Stelco facilities. We look forward to realizing the benefits of combining our operations with those of Stelco and to building on the unique talents, commitment and expertise of Stelco's employees."

SSAB continues strong growth in Q3

SSAB announced that once again it presents strong third quarter results. Sales amounted to SEK 13,686 million, of which SEK 5,838 million is attributable to the acquisition of the North American steel company, IPSCO. Profit before depreciation and non recurring items amounted to SEK 2,956 million.

SSAB said that the single most important event during the quarter was that SSAB completed the acquisition of IPSCO. During the quarter, a great deal of work has been expended on bringing the two companies together and IPSCO is now organizationally fully integrated into SSAB. The acquisition of IPSCO lays the foundations for continued strong growth for SSAB’s niche products.

Mr Olof Faxander. CEO of SSAB said that “The first stage in the merger of SSAB and IPSCO has now been successfully completed. The work on achieving synergies is underway and proceeding according to plan. SSAB’s and IPSCO’s management teams have developed an extremely positive cooperation which made possible a successful integration process.”

He added that “In terms of earnings, IPSCO is performing as we had anticipated, apart from the fact that we have witnessed a certain weakening due to inventory liquidation by North American pipe customers during 2007.”

As a consequence of the acquisition of IPSCO, the results before tax include non recurring items of SEK 1,271 million. These items relate primarily to the allocation of the goodwill that has arisen in conjunction with the transaction.

The original part of SSAB has shown a strong earnings trend with an increased proportion of core niche products. In August, SSAB carried out a new issue of SEK 10 billion as part of the financing of the acquisition. Interest was extremely strong among current and new shareholders, both in Sweden and internationally.

Production ramped back up after strike ends at Outokumpu Tornio

Outokumpu announced that its Tornio Work’s production ramped back up after strike ended.

It said that “Production was ramped back up during the weekend and the mill is now capable to meet all orders. Due to the short duration of the strike, direct effects to the group's results were marginal.”

Among some other Finnish companies, Outokumpu's Tornio Works was affected last week by the Salaried Employees Union strike. The strike started on October 22nd 20087 and ended on October 26th 2007. During the strike most of the stainless steel production operations in Tornio were suspended. But deliveries continued from existing stock.

Rautaruukki Q3 pretax up at EUR 159 million

Finnish steelmaker Rautaruukki on announced that it’s July to September pretax profit rising to EUR 159 million from EUR 141 million in July to September 2006 on net sales of EUR 935 million, up from EUR 885 million in 2006.

Summary of the January to September 2007 results is as under
1. Net sales EUR 2 895 million up by 16% on comparable net sales.
2. Operating profit EUR 518 million up by 49% on comparable operating profit
3. Operating profit for 2007 will markedly exceed the comparative figure for last year. The good market situation in the company’s customer industries is expected to continue. This will form a good platform for Rautaruukki in 2008.

January to September highlights include
1. Continued strong demand across Ruukki’s core market area and in main customer industries
2. Strong demand and deliveries continued within building construction in the Nordic countries, Russia and Central Eastern Europe
3. Brisk demand and deliveries at good level in infrastructure construction
4. Ruukki Construction almost doubled operating profit to EUR 117 million
5. Strong order books in all engineering customer sectors
6. Acquisitions have given Rautaruukki major new customers in the lifting, handling and transportation industry and expanded its product range
7. Special steel products continued to form an increasing share of sales
8. Strong organic business growth, especially in Central Eastern Europe and Russia, increased Group’s headcount by 12% YoY

Mr Sakari Tamminen president & CEO of Rautaruukki said that “Our net sales increased by 16% and operating profit by 49% on a comparable basis over the same period last year. We have seen steady, strong profitability development during past quarters. In line with our strategy we have successfully increased the share of the solutions businesses. Ruukki Construction and Ruukki Engineering of our net sales. We also aim to increase the share of special products of Ruukki Metals division’s net sales from the current figure of 24% to 40% by the end of 2010.”

He added that “There was continued brisk construction activity during January to September and deliveries increased in all markets, especially in the Nordic countries, Russia and Central Eastern Europe. Strong demand continued both in office and commercial construction and in infrastructure construction. Most of our deliveries focused on large transport infrastructure and harbor projects already under way in Finland, the Nordic countries and Russia. Our investments to increase production capacity in Central Eastern Europe, Finland and Russia progress as planned and will strengthen our delivery capability in our fast growing core market areas.”

Mr Schorsch outlines optimistic outlook for steel in US

Mr Louis Schorsch president & CEO of ArcelorMittal North America said that his company plans to grow 20% by 2012 as the demand for steel continues in the world's emerging economies.

Mr Schorsch during a keynote speech at the CRU North American Steel Conference said that "Our market is driven by what's happening on the other side of the world. United States formerly drove the world economy, but it will never be that way again. The fundamentals have fundamentally changed.”

But Mr Schorsch said that he is bullish about the global steel market because of the growing demand from developing economies of Brazil, China, India and Russia that started at the beginning of the century and continues unabated. He added that "There's no prospect for a global slowdown. Emerging markets will drive global growth."

Mr Schorsch also noted that steel industry consolidation has added the potential for stability in the market. Mr Schorsch said that "It gives us flexibility as a large company pointing to ArcelorMittal's 25% to 30% of market share, which he contends gives it better capacity utilization, economies of scale, market influence and the ability to produce at the correct level for market conditions.”

Mr Schorsch predicted that “US steel market will pick up from its current level because steel service center inventories are at a three month level, original equipment manufacturer inventory levels are reasonable, the underlying domestic market demand is relatively stable, and the prices of metallics and iron ore have sharply risen, putting pressure on global price levels.”

Sundance not to pay break up fee to Gindalbie

Sundance Resources Ltd announced that it is not liable to pay a break fee to Gindalbie Metals Ltd, after its planned merger with Gindalbie was scrapped.

A Sundance release said that as there have been considerable speculations regarding the payment of an AUD 15 million break fee and the recommendations of the independent expert, it would like to clarify as under.

1. No break fee is payable by Sundance as a consequence of the decision by Sundance and Gindalbie to terminate the merger
2. No report was completed by, nor any recommendation received from, the independent expert. The independent expert was engaged by Sundance to report on whether the proposed merger by way of scheme of arrangement was in the best interests of Sundance shareholders. The independent expert had no role in undertaking due diligence investigations into Sundance or Gindalbie.

Kenya releases new standards for rebars

The Kenya Bureau of Standards has streamlined the manufacture of steel bars by publishing new standards which provide for the measurement of steel bars for concrete reinforcement in weight and not in length. The new guidelines provides for standard weights that must be adhered to by manufacturers of steel bars to ensure that underweight and weak steel bars are not sold to building constructors.

According to the new regulations, a Y8 steel bar of the standard 12 meters used in concrete reinforcement must now weigh 4.7 kilograms. Previously buyers were unable to tell the weight and strength of the steel bars because they were sold in terms of length.

Kenya Bureau of Standards, in a notice to manufacturers, contractors, structural engineers and the general public said that “This is in line with the current practice prevailing in the international market and is aimed at streamlining trade in steel bars and at the same time safeguarding the safety of the end users.

Kenya Bureau of Standards said that “Manufacturers, traders, consumers and all other businesses involved in the trade of square twisted bars are hereby advised to sell and or buy in weight only. Constructors, home builders and structural engineers have been unable to detect the strength of steel bars because length has been the determining factor in setting the price.”

Newcastle coal price reaches record on limited supply

Bloomberg reported that energy coal prices at Australia's Newcastle port, the world's biggest export harbor for the fuel, rose by 1.3% to a record on expectations of supply shortages in Asia and a disruption to deliveries from a Queensland mine.

According to the globalCOAL NEWC Index, coal for immediate delivery at Newcastle rose by 96 cents to AUD 76.95 a ton in the week ended October 26th 2007. The previous all time high was AUD 76.16 reached two weeks ago. It said that supply has struggled to meet demand this year because of bottlenecks in producer countries including Australia and South Africa and as China. Anglo American Plc, the world's second biggest mining company, last week declared force majeure on shipments from the Dawson mine.

Mr Rory Simington a senior coal analyst at AME Mineral Economics in Sydney said that “It is the expectations that demand continues to outpace supply so the market is in deficit; it's about people's perceptions of what is around the corner. We're coming into a period of higher demand, winter is approaching, and people are wondering where the additional supply is going to come from. There is a good chance it's going to have a seven in front of it, a very good chance. We have increased our price forecast a couple of times, we've been surprised by the strength of the prices.''

Wheeling Pitt plans vote on merger with Esmark

It is reported that The Securities and Exchange Commission has signed off on the impending merger of Wheeling Pittsburgh Steel and Esmark, and now shareholders will get to decide how they are compensated. Wheeling Pittsburgh said that the company has called a stockholder meeting for November 27th 20007, to consider and vote on the merger.

The Securities and Exchange Commission had asked for some changes in the time frame for shareholders to make their decision about compensation. The agency could have required the company to essentially start the whole process over if the changes weren't made. Rather than allowing Wheeling Pittsburgh shareholders to choose how they'll be compensated for their stock after they vote on the deal, the newly amended merger requires them to decide beforehand.

Wheeling Pittsburgh shareholders can choose between standing pat; keeping their original stake and buying new shares at USD 19 apiece; or selling to Esmark for USD 20 in cash.

Esmark and Wheeling Pittsburgh agreed to the merger in March after Esmark seized control of the Wheeling based steelmaker in a proxy battle.

The merger is expected to close in the fourth quarter of 2007.

Massey to export more coal on steel growth

Coal producer Massey Energy Co announced that it was spending USD 480 million to expand its Central Appalachian mines so it can export more and take advantage of increasing demand from the global steel industry.

Massey's two year internal expansion and cost reduction plan anticipates developing net additional annual production of 8 million tons in 2010 versus 2007, with the ramp up occurring during 2008 and 2009. Additionally, these new tons will be weighted towards high value and more profitable metallurgical coal production and which the Company believes will be cost advantaged versus existing comparable quality competitor mines. Massey stated that it expects to fund all of its expansion projects out of existing liquidity and 2008 2009 operating cash flow.

Mr Don Blankenship chairman & CEO of Massey Energy said that "This is a very exciting time for Massey. We have the capital, resources and market position to execute our strategic plans for growth. With a large portfolio of idle reserves, we have abundant opportunities to expand low-cost production. We expect to be able to take further advantage of current strong metallurgical coal prices and expected favorable long-term utility coal fundamentals to earn attractive margins and high returns on these investments."

Massey Energy Company headquartered at Richmond in Virginia with operations in West Virginia, Kentucky and Virginia, is the fourth largest coal company in the United States based on produced coal revenue.

Red Hill Energy finds more coal in Mongolia

Red Hill Energy announced that it has made a major new coal discovery in southwest central Mongolia contiguous to CVRD's lead Mongolian coal project. Drilling on Red Hill's 100% owned Chandgana Khavtgai coal property has defined a 678.4 million tonne coal resource, with 188.7 million tonnes measured and 489.7 million tonnes indicated.

Red Hill said that additionally, another 439.6 million tonnes of inferred coal resource has been outlined. Red Hill's total coal resources from two separate Mongolian coal districts now exceed 1 billion tonnes. This includes 504.5 million tonnes classified as measured resources and 524 million tonnes classified as indicated, with an additional 475.5 million tonnes classified as inferred. This is a 193% increase in tonnage from September 10th 2007, and is attributable to the very large Chandgana Khavtgai discovery.

Chandgana Khavtgai is located in southeast central Mongolia and is a sister property to Chandgana Tal Red Hill's 100% owned property 9 kilometers to the northeast. Both Chandgana projects are in the historic Nyalga Coal Basin and are contiguous to a large coal project underway by a subsidiary of Brazil's Companhia Vale do Rio Doce, also in the Nyalga Coal Basin. Combined, Red Hill's Nyalga Coal Basin projects account for 819.7 million tonnes coal (330.0 measured, 489.7 indicated) and an additional 439.6 million tonnes inferred.

Mr Ranjeet Sundher president of Red Hill said that "Reaching the 1 billion tonne milestone in less than 24 months of Mongolian coal exploration is a testament to our people. Going forward, Red Hill's goals remain unchanged, continuation of our projects, advancements towards production, and continued exploratory drilling regionally."

Red Hill Energy Inc is advancing over one billion tonnes of 100% owned coal from two Mongolian coal basins towards production. Red Hill also has multiple uranium properties and several gold and copper exploration projects located throughout Mongolia. Red Hill has a strategic alliance with Mega Uranium Ltd to jointly develop its uranium assets and has a full time office in Mongolia's capital of Ulaanbaatar.

Grupo Mexico zinc production down by 20% YoY in Q3

Metals Insider reported that Grupo Mexico production of mined zinc during the July to September 2007 quarter was 29,306 tonnes down by 20.3% YoY from production of 36,786 tonnes in July to September 2006 quarter.

Cumulative production over the January to September 2007 period fell by 7.9% YoY to 95,049 tonnes from 103,162 tonnes in January to September 2006 period.

Grupo Mexico didn’t specify in its results the causes of the production decline but our best guess is that the Q3 drop reflects the impact since the end of July of strike action at the San Martin and Taxco mines. These two operations produced just under 30,000t of contained zinc last year.

Grupo Mexico has been fighting a protracted battle in the Mexican courts to have the strikes and that at the Cananea copper mine declared illegal so far without success. It has also announced it intends to close permanently Taxco on a combination of the strike action and falling reserves.

BNSF coal traffic to exceed 290 million short tons in 2007

Platts reported that Burlington Northern Santa Fe Railway's total coal tonnage is expected to exceed 290 million short tons in 2007, as mines in the Powder River Basin are off to a great start in the Q4 of 2007.

Mr John Lanigan executive VP and CMO of Burlington Northern Santa Fe Railway during a third quarter conference call told reporters that significant flooding and washouts in the Midwest affected Burlington Northern Santa Fe Railway's coal traffic early in Q3 of 2007 and while operations rebounded quickly, Powder River Basin mines kept the railroad from significantly increasing shipments out of the basin during the remainder of the quarter.”

Mr Lanigan added that "Utility forecasts continue to indicate higher demand than what the mines are producing." But he added that the railroad has seen improvement in mine loadings in recent weeks. Demand for Powder River Basin coal is strong noting that the Powder River Basin burn is up 5% year to date over the 2006 period.

Mr Lanigan also said the railroad is focusing on improving the efficiency of its coal operations, which includes replacing some of the older steel railcars with aluminum railcars that are lighter and more efficient.

Burlington Northern Santa Fe Railway loaded a total of 228.2 million short tons through October 15, an increase of almost 2% over the 2006 year to date total of 224.5 million short tons.

Burlington Northern Santa Fe Railway's coal revenues were up by 14% YoY to USD 849 million in Q3 of 2007 and the results included a net increase in revenues of USD 14 million as a result of developments in several coal rate disputes.

Steel cleaning plant opening in Erie

It is reported that a group of Toledo area steel servicing executives is opening a USD 3 million steel cleaning plant at 222 Lavoy Road in Erie. The 32,000 square foot American Roll Coating and Cleaning Co LLC is to open in May with 10 employees.

It will use a high pressure wash process to clean steel that has been damaged by rusting and other means. The steel is intended for use in autos, appliances and lawn and garden products.

Majority partners are Mr John Bates of Heidtman Steel and Mr Bill Feniger of Universal Metals. Mr Mike Leonard will be president and GM.

Turkish rebars exports to Middle East weakening

It is reported that the exports of Turkish rebars has softened in recent weeks, especially to USA and UAE although exports to Iran, Lebanon, and Kuwait are still firm.

As per report, the latest export price offered to the Iranian market is at USD 620 to USD 630 per tonne on CFR basis while price for other areas except for American and Persia Gulf market, shipments delivered in November and December are quoted around USD 560 to USD 570 per tonne on FOB basis on actual weight.

Stroytransgaz starts work on Shaybah Abquaiq pipeline

It is reported that Russia's engineering and construction company PJSC Stroytransgaz, which was awarded the contract in March 2007, has started construction of the linear part of the new 217 kilometer long, 30 inches diameter oil pipeline between Shaybah to Abquaiq in Saudi Arabia. The Saudi state oil company Saudi Aramco is the owner of the project and the project is being implemented on EPC basis.

Besides welding and installation of the linear part of the new pipeline, Stroytransgaz will accomplish installation of 5 surge dissipating units, systems of leak detection, cathodic protection and electric equipment at the oil pipeline in progress and 21 surge dissipating units at the existing oil pipeline.

The scope of work of Stroytransgaz also comprehends construction of antibacterial protection plants drag reducing agent and biocide at the refinery GOSP 2 situated in the territory of the Shaybah field, as well as 2 hot tappings and installation of 2 tap valves at the Abquaiq refinery.

The pipeline forms part of the project of extending the capacity of the existing oil pipeline Shaybah Abquaiq and runs parallel to it. At present the oil of the Shaybah field in the desert Rub el Hali at the border of the UAE is delivered for processing to the refinery in Abquaiq by the 1 640 kilometer long, 46 inches diameter oil pipeline SHBAB 1.

Pakistan traders eying 6 million tonnes cement export to India

It is reported that, after acquiring provisional certification from the Bureau of Indian Standards to sell their product in India by 7 Pakistani companies, Pakistani traders are eying export of 6 million tonnes of cement per annum, making India the largest export market for Pakistani cement by the end of 2007.

Egypt to build 3 nuclear power plants

Mr Hosni Mubarak president of Egypt announced that a program will soon be launched to build several nuclear power plants in Egypt. Mr Mubarak said that a decree would soon be issued establishing a supreme council on peaceful uses of nuclear energy, which will oversee Egypt's nuclear plant program.

Mr Mubarak said "We believe that energy security is a key component of building the future of this country and an integral part of Egypt's national security Use of nuclear power would enable Egypt to meet its energy needs and diversify sources, allowing the country's hydrocarbon reserves to last longer.”

As per report, Egypt intends to build three nuclear plants with aggregate capacity of 1,800 MW of 600 MW each. The first plant is expected to go online in 2015-16.

China Pakistan JV to build light rail link in Jordan

Xinhua reported that China Electronics Technology Cooperation International has signed a contract with Pakistan Infrastructure Development Company to jointly build a light rail between Amman and the northeastern industrial center of Zarqa in Jordan. According to the contract, the time limit for the EPC project includes a 20 month construction time, a 3 month trial operation and a 1 month examination period.

Mr Yan Lijin president of China Electronics Technology Cooperation International said that the 25 kilometer long, 2 way light rail, which is to be completed by the end of 2009, has a contract value of USD 200 million and is the first such project in Jordan. Mr Yan said that after the completion of the light rail, the metro system will be able to transport 100,000 passengers a day at a speed of 90 kilometer per hour.

He added that the Infrastructure Development Company of Pakistan is the general contractor for the rail's building, operation and transfer and the China Electronics is contracted to build the engineering procurement and construction part of the project.

Mr Saud Nseirat minister of transportation of Jordan said earlier that a light rail is an economical and environment friendly way to ease the heavy traffic on the highway between Amman and Zarqa as nearly 52% of Jordan's industry is located in Zarqa while 50% of Jordan population lives in these 2 cities.

Chinese steel industry cannot sustain expansion - Analyst

It is reported that China's steelmaking industry cannot sustain its current expansion in production and exports due to limited resource supplies and a deteriorating environmental situation. However, as a net exporter of steel products, China will continue to supply global demand and increase the number of overseas steel mills in the future.

Mr Ma Zhongpu director of the market research centre with China Commodity Marketplace said "Constructing steel complexes in other developing countries that have both adequate raw material supplies and growing demand will help offset the risk from high iron ore prices, freight rates and product oversupply."

Mr Ma also called on the Chinese government to implement favorable policies, set up overseas development funds, and promotes consolidation in the domestic steel industry in order to ensure steel groups can compete on the international market for overseas projects.

Mr Ma said China is still undergoing rapid industrialization and urbanization, and this development is driving domestic demand, so it is difficult to determine what constitutes oversupply in terms of steel production in China. He said since this March, China's crude steel output has lingered at around 40 million tonnes to 42 million tonnes per month and it is unlikely that the country's crude steel output will exceed 490 million tonnes this year.

Although China has enjoyed rapid economic growth this year, its growth in steel product apparent consumption has been slowing down since 2004. In 2003, growth in apparent consumption stood at 25.75%. This fell to 11% in 2006 and 10% in the first eight months of this year.

WISCO bags Bekaert Quality Award for wire rod supplies

Bekaert has granted the ‘Vincent Gaeremynck Award’ to its wire rod supplier Hubei Province based Wuhan Iron and Steel Group.

Mr Bert De Graeve CEO of Bekaert said that “Wire rod and its quality play a vital role in our production processes. This not only determines our product quality, it also has a major impact on productivity and process stability. In order to be able to supply our own customers with high quality products, we impose very strict quality standards on the wire rod suppliers worldwide. In China, Wuhan Iron and Steel Group is one of our most important strategic suppliers for wire rod. In the last 2 years they really stood out for their speed of product development, the intrinsic quality of their products, the continuous investment in their facilities and their in-time deliveries.”

This award is presented to the supplier who has shown the greatest improvement in the quality of its wire rod supply, Bekaert’s most important raw material every 2 years. Candidates for the award are evaluated against the following criteria
1. Quality of the wire rod in terms of internal and external characteristics, chemical composition and mechanical properties
2. Wire rod research and development program
3. Delivery conditions and general logistic support
4. Process ability of the product in Bekaert plants worldwide
5. Supplier’s responsiveness in terms of quality improvement and claim handling.

WISCO owns a complete set of steel processing plants, including mining, coking, sintering, iron making, steel making, rolling and the associated utilities. With an annual capacity of 20 million tonnes Wuhan Iron and Steel Group is one of the major players in its industry. Its products include wire rod, rails, plates and different types of sheets.

Baosteel Q3 net to fall on weak SS market conditions

It is reported that Baoshan Iron and Steel Corp is set to report a drop in third quarter earnings as stainless steel prices weakened and the outlook for the fourth quarter is clouded by oversupply. While the global steel market is showing signs of recovery after a bout of weakness earlier this year, Chinese steelmakers' earnings are seen under pressure until next year as they struggle to digest overcapacity.

Mr Luo Wei analyst at China International Capital Corp cut his full year earnings forecast for Baosteel to CNY 0.90 per share from the CNY 1.00 which many analysts forecast.

According to the average forecast of seven analysts Baosteel is expected to post a 7%YoY fall in its third quarter net profit to CNY 4.38 billion when it reports results on October 30th. Baosteel earned CNY 4.48 billion for the April to June period.

In August, Baosteel cut prices of its major products for the fourth quarter, partly due to economic uncertainty caused by the global credit squeeze. Baosteel has said its stainless steel operation will face a big challenge in the second half.

Ms Helen Lau Shanghai based analyst at Daiwa Securities said that they lost money from hot rolled stainless steel, although its cold rolled stainless steel business remained profitable."

This summer Baosteel cut the output of its stainless steel products by 20% to 30% in what industry sources said was an effort to prevent domestic prices from weakening further.

Chinese ferroalloy price to increase on removal preferential power rate

China’s National Development and Reform Commission, Ministry of Finance and the State Electricity Regulatory Commission have jointly announced removal of preferential power rate policy for ferroalloy industry from October 20th 2007. They also stressed provinces such as Sichuan and Hubei must cancel preferential power rate policy for ferroalloy industry immediately.

Besides ferroalloy producers, traders are also deeply concerned about the implementation. They fear that power rate hikes will drive up prices for ferroalloy products, which will directly affect their purchase prices and quotations.

As the policy is implemented differently in various regions, some producers now maintain prices as they have not witnessed power rate advances. However, power rate adjustment will come inevitably. Some producers have raised quotations and the rest are likely to follow.

SiMn price has surpassed CNY 9,000 per tonnes and is expected to break CNY 10,000 per tonnes, driven by Mn ore price rises and power rate hikes.

(Sourced from MySteel.net)

Tianjin Port sees 15% YoY increase in coke exports in 9 months

Customs statistics show that China's January to September 2007 coke exports totaled 9.33 million tonnes worth USD1.717 billion up by 14.7% and 55.3% respectively on a year on year basis. The average export prices go at USD 183.9 per tonnes FOB, an increase of 35.3%YoY

It is learned that 50% of the coke that exported through Tianjin port go to Japan, Brazil and Belgium. Coke producers in Shanxi Province, the major force of exports, shipped out 5.08 million tonnes through Tianjin port during January to September period.

The major reasons for the increase in both export volume and prices are believed to be as under:

A) The growth is bolstering by the continuous increase in world steel output since steel industry account for 70% of the total coke demand. The coke output in developed countries are reduced greatly due to environment protection, thus they have to import coke from China to meet their demand.

B) The jump in export tariff lifts coke export prices to USD 340 per tonnes to USD 350 per tonnes FOB. Since June1st 2007, China improved the export tax rate to 15% from 5% so as to further rein in coke exports. However, as a result of robust coke demand on international market, importers are willing to bear the price hike, which has led to jack up in both export tonnage and price.

C) The rise in raw material price is adding to cost of coke. Coking coal prices account for 75% and up for the total cost of coke production. While coking coal prices are growing substantially because producers are levied some fee or tax for the sake of environment protection. In addition, increase in inland transportation rate is driving up the coke export price.

(Sourced from MySteel.net)

Shanxi proves additional coal reserve of 8.8 billion tonnes

It is reported that North China's Shanxi Province, the country's largest coal producer, has proved additional coal reserves of 8.8 billion tonnes since 2004.

According to the statistics released on the bureau's website, the newly found coal reserves added up to 8.45 billion tonnes from 2004 to 2006.

An official with the Shanxi Provincial Bureau of State Land and Resources was quoted as saying that the overall coal reserves of the province amount to more than 260 billion tonnes. He said that with an estimated annual coal reserve consumption of 1.2 billion tonnes, supply to the country's coal industry can be guaranteed for at least 200 years.

The annual coal production of Shanxi is 580 million tonnes.

SHFE completes steel futures launch preparations

Interfax China reported that the Shanghai Futures Exchange has completed drafting contract items, risk management systems and trade rules for steel product futures. Steel product futures were previously launched in Zhejiang Province in 1993, but were closed two years later due to excessive speculation. In May 2007,

Mr Wang Lihua director of SHFE during China Financial Derivative Conference 2007 told Shanghai Securities News that "The SHFE has completed preparation for rebar and 6.5 mm high speed rod futures trading, including drafting contract items, risk management and trade rules.”

SHFE said that it cannot offer a timetable for the development of steel futures yet, as it is still waiting for approvals from the China Securities Regulatory Commission. However, various local media have been reporting that steel futures are expected to start in the latter half of this year. SHFE handed in the proposal for initiating steel futures with rebar and wire rod in 2005.

China Iron and Steel Association previously opposed the reintroduction of steel product futures on the grounds that it would cause excessive speculation. However, CISA changed its attitude at the end of last year and announced that steel product futures might be a solution to unregulated, electronic steel product trading occurring in major cities.

Mr Qi Xiangdong deputy secretary general of the China Iron and Steel Association in May 2007 said steel product futures will be launched on the SHFE in the near future. He said that “China's status both as a large steel product producer and consumer is a solid basis for the proposed steel product futures trade. China could learn much from the steel product futures system currently trading in Mumbai. Steel product futures will help stabilize China's domestic steel product market and aid China's transformation into a more powerful player in the global iron and steel market.”

China's domestic steel product prices are not currently market led, but set by major domestic steel mills. However, the current price setting system has seen prices lag behind actual market supply and demand forces.

China steel products output in January to September 2007

China province wise Steel product in January to September 2007 is as under

In million tonnes

(Sourced from MySteel.net)

Wulanhaote seeking development opportunities

Inner Mongolia based Wulanhaote Iron and Steel Co Ltd announced that it is seeking to further develop its business and upgrade its technical capabilities through a stake transfer. Mr Wang an official with the transaction center involved in the Wugang Steel project told Interfax that through such investor restructuring, Wugang Steel hopes to upgrade its technical capabilities, optimize its products and further develop iron ore resources in Inner Mongolia's Xing'an League as well as Russia and Mongolia.

Mr Wang added that "Due to high steel product prices and a strong steel market, Wugang Steel is in a favorable operating position at the moment. The company's cash flow accounts for up to 30% of its total assets and though its net assets are currently being evaluated, they are expected to sit somewhere between CNY 500 million and CNY 600 million (USD 66.66 million and USD 79.99 million)."

Mr Wang added that "Several steel mills have already expressed interest in becoming involved in Wugang Steel's restructuring, yet it is still too early to reveal their names. Steel mills that lack iron ore resources could be interested, as they could gain access to possible mineral deposits in the region. At the same time, steel mills that are seeking to increase their own steelmaking capacity could also be interested, as government restrictions currently prevent them from developing completely new steelmaking projects."

According to Mr Wang, Wugang Steel could potentially expand its annual steel production capacity up to 1 million tonnes after the restructuring and may expand its product portfolio from low end products to also include cold rolled or even special steel products.

At the end of June 2007, Wugang Steel's net assets had a book value of CNY 403.76 million (USD 53.83 million). When questioned as to whether or not Baotou Iron and Steel Group is a prospective investor, Mr Wang said that "Baotou Steel Group approached Wugang Steel about a potential acquisition at one stage, but later pulled out. This was because Wugang Steel was not integral to Baotou Steel's long term development plans and the company's operations are located quite far away from Baotou Steel's own operations."

Wugang Steel is focused on producing construction products, such as rod and reinforced steel and is capable of producing 400,000 tonnes of steel products and 300,000 tonnes of cement each year. In contrast, Baotou Iron and Steel Group focus mainly on high end products such as steel plates, pipes and profiles.

SK Networks completes steel processing facility in China

South Korean trading company SK Networks Co announced that it has finished on building a new steel processing plant in eastern China to form an alliance with POSCO.

The annual capacity of SK Networks is 140,000 tonnes of steel products utilized for manufacturing liquid crystal displays, digital video discs and personal computers at the plant in Pinghu of Zhenjiang Province.

SK supplies the plant with information and technology and to other electronics companies in eastern China as well.

Evraz seeking USD 2.2 billion loan -Report

Reuters reported that ABN AMRO is putting together a group of mandated lead arrangers for a USD 2.2 billion syndicated loan for Evraz Group.

The report cited a banking source as saying that the loan will be used to refinance a USD 1.8 billion bridge facility which expires in the spring of 2008.

In March 2007, Evraz signed a one year USD 1.8 billion bridge financing to fund its acquisition of Oregon Steel of the United States. That deal paid a margin of 110 basis points over LIBOR.

MMK upgrading automation systems at HSM

It is reported that the hot rolling mill 2000 automatic control system is being restored at Magnitogorsk Iron & Steel Works. The spokesperson for the enterprise said that upgrading the automatic control system is part of the complex modernization process of the hot rolling mill.

The system is two fold. The basic equipment responsible for immediate control of various mechanisms was made by Siemens, while the second level numerical schemes were designed by AGIKA. The first level equipment has been almost fully replaced by now and the schemes will have been upgraded by May 2008 and all this without any production stoppage.

Hot rolling mill 2000, launched in 1994 is MMK’s most productive facility. Last year, its output amounted to more than 5.5 million tonnes of hot rolled sheets. The company’s management decided to raise its capacity to 6 million tonnes, which required putting up the fourth heating furnace improving on the mechanical equipment, and upgrading the automatic control system.

Severstal Resurs acquires two gold mines in Russia

Severstal’s mining division, Severstal Resurs, has acquired two gold mining enterprises through Severstal’s subsidiary Bluecone Ltd, in a cash deal for an undisclosed sum. Both mines were originally managed by the Arlan investment company.

OOO Neryungri Metallic that mines gold from the Tabornoye deposit in the Sakha-Yakutiya Republic. Tabornoye is located in the southern part of Yakutiya, 100 kilometers from Baikal to Amur railway. Tabornoye has a reserve balance of C1+C2 gold amounting to 15 tons, while P1+P2 gold exceeds 70 tons.

ZAO Rudnik Aprelkovo which mines from the Pogromnoye gold deposit in the Chitinskaya oblast. Pogromnoye is in the Chitinskaya oblast, 300 kilometer east of Chita city. The Pogromnoye gold deposit’s reserves are estimated to be 25 tons of C1+C2.

Both deposits are operated as open pit mines with gold extracted utilizing heap leaching technology. Gold production at Tabornoye and Pogromnoye for 2007 is estimated to be 2.7 tons or 87,000 ounces.

Mr Roman Deniskin, CEO of Severstal Resurs said “Both the Tabornoye and Pogromnoye deposits are very attractive assets with significant development potential. We see these deals as an important next step in the formation of Severstal Resurs gold mining division. The deals also progress our strategy of developing Severstal`s mining business.”

Chelyabinsk tube rolling plant to borrow up to USD 500 million

Interfax reported that Shareholders in Chelyabinsk Tube-Rolling Plant approved a deal to borrow up to USD 500 million from ChTPZ Capital SA in distance voting at an extraordinary meeting on October 17th 2007.

The loan will be for seven years at an interest rate of no more than 10% annually. Repayment will be made once every six months.

RUSAL to invest in Binh Phuoc province of Vietnam

It is reported that Russia’s United Company RUSAL is looking to invest in a hydro electric power plant and a bauxite aluminum factory in southern Binh Phuoc province of Vietnam.

Mr Evegen V Volosov head of RUSAL’s representative office in Viet Nam have worked with the Binh Phuoc People’s Committee on the proposed projects. He said the planned bauxite aluminum plant will have an output of 750,000 tonnes per year, noting that if approved, the two projects will create stable jobs for thousands of workers.

Mr Nguyen Tan Hung chairman of the People’s Committee pledged to facilitate the implementation of the project once it receives the nod from the government.

Atomenergomash buys 51% stake in Czech Arako

RIA Novosti reported that Atomenergomash, a Russian supplier of equipment for nuclear power plants, bought a 51% stake in Czech company Arako a top manufacturer of industrial valves.

The purchase agreement was signed in Prague by Mr Zdenek Mitas and Mr Andrei Sleptsov general directors of Arako and Intelinergomash, a subsidiary of Atomenergomash which paid the EUR 7.5 million from it own funds.

Arako could now capture up to 50% of the Russian small diameter industrial valve market. The segment is worth an estimated USD 50 to USD 100 million annually.

Atomenergomash is a subsidiary of the state-owned TVEL Corporation, a leading producer of nuclear fuel.

Severstal to invest RUB 70 million in agglomachine

FIS reported that the repair of the agglomachine includes the reconstruction of the charging unit similarly to that of agglomachine No 11. A one year experience of the operation confirmed the correctness of the selected variant of the reconstruction of agglomachine No 3.

The reconstruction aims to increase the usable agglomeration area by 9.5 square meters which will enable the plant to increase agglomerate production by 1.5 % of the annual output of AGM-3.

Dutch Group to invest in Irkutsk Coal

Reuters recently reported that A Dutch investor group has agreed to invest more than USD100 million in the Irkutsk region to exploit coal and potassium salt as well as to convert coal to liquid fuel.

The group plans to invest USD 50 million in the first 18 months for geological research and project development, with the investment rising to over USD 100 million for exploitation, processing and setting up a sales network. The aim is also to bring leading edge coal to liquid technology to Russia.

Mr Roel Pieper entrepreneur of Dutch Group, who manages investment company ETIRC, said that the group hoped to avoid problems such as those faced by Shell with its Sakhalin 2 project. He said that "By being a public private partnership we start out differently. We have set aside money for the environment as part of the business model. We have government officials in the board right from the beginning."

Mr Pieper said the Irkutsk project also involved Russian Railways, which will extend tracks to serve the project.

GAZ to launch bus plant with Brazil's Marcopolo

Russian automaker GAZ Group announced that it would start producing medium sized buses with Brazilian bus manufacturer Marcopolo in November 2007.

The plant, in which USD 3 million has been invested, will have annual production capacity of 1,000 vehicles and will be located in Pavlovo in the Nizhny Novgorod Region of Russia.

The statement said production of buses at the plant under the 'Real' brand will reach over 100 by the end of the year. The Real bus, built on a Hyundai chassis with 22 seats is intended for city and suburban roads."

GAZ supplies vehicles to 29 countries in the former Soviet Union, Central Europe, Southeast Asia, Africa, Latin America and the Middle East. The company produces around 200,000 vehicles annually.

Transneft H1 net profit up by 0.2% YoY

RIA Novosti reported that Russian oil pipeline major Transneft’s net profit calculated to International Financial Reporting Standards grew by 0.2%YoY in the first half of 2007 to USD 1.45 billion.

Transneft's sales increased by 8% YoY to RUB 110 billion (USD 4.4 billion) in the reporting period, with operating profits went up by 2% YoY to RUB 51 billion (USD 2 billion) and pretax profits grew by 1.3% YoY to RUB 50 billion (USD 2 billion).

Transneft had earlier said that its consolidated profit should reach RUB 64 billion (USD 2.6 billion) in 2007 as against RUB 55 billion in 2006.

Transneft is one of the world's largest oil pipeline company, in which the Russian government holds a 75% stake.

Gazprom and StatoilHydro to jointly develop Shtokman

RIA Novosti reported that Gazprom and Norway's StatoilHydro signed an agreement on the joint development of the Shtokman gas and condensate deposit in the Arctic.

Gazprom has so far invited France's Total to take part in the ambitious USD 30 billion project to develop the gas field in the Russian sector of the Barents Sea, with estimated gas reserves of 3.7 trillion cubic meters. The field will supply the Nord Stream pipeline from Russia to Germany, being built under the Baltic.

Under the deal, Norway's StatoilHydro will receive a 24% share in the project while Total and Gazprom will have 25% and 51%, respectively, the Russian energy giant said.

Mr Alexei Miller CEO of Gazprom said "The agreement signed today opens a new page in cooperation with the united company StatoilHydro. We have gigantic gas reserves on the shelf of the Barents Sea while our partners from Norway possess good experience in gas production and transportation in extreme conditions in the north. Our combined efforts will guarantee successful work in the Arctic."