NRI billionaire L N Mittal-led steel giant ArcelorMittal said it is “anxious” to start work on its proposed India projects which entail an estimated investment of Rs 1.30 lakh crore. Envisaging 10-15 percent Y-o-Y consumption growth due to hundreds of billions of dollars infrastructure projects in pipeline in India which requires steel, an ArcelorMittal official said that he was eager to go ahead with Indian projects.
The company has planned to set up three steel projects in the country-- two in Jharkhand and Chhattisgarh-- with an annual production capacity of 12 million tons each. But they have been facing regulatory hurdles and problems in acquiring land for over past four years.
Mittal had met Karnataka Chief Minister B S Yeddyurappa last month and proposed setting up a 6-MTPA plant at a cost of Rs 30,000 crore. Also, disappointed with the inordinate delays in starting work on its integrated steel projects, the company has tied up with steel maker Uttam Galva, marking its first operational presence in the country. Mittal expects the apparent demand for steel globally to be around 10 percent in 2010 while the trend would continue to rise in emerging economies like India and Brazil at 15 percent. Also, betting big on emerging economies for growth in 2010, the company has outlined a capital expenditure programme of USD 4 billion.
There is some capex forecast for India and elsewhere. In India, it is primarily land acquisition cost as well as mining development. ArcelorMittal chairman L N Mittal had last month criticised the government policies and investment climate of the country citing the delays the proposed projects of the company has seen so far. The world's largest steel maker ArcelorMittal said steady improvement in demand, coupled with massive cost-cutting, helped it register a net income of USD1.07 billion for the December quarter, against a net loss of USD2.63 billion in the year-ago period. The company said it saved USD 2.7 billion in 2009 through various cost cutting and is on way to achieve the management gains target of USD 5 billion by 2012. During the economic crisis of last financial year, ArcelorMittal had initiated several temporary and permanent cost cutting measures.

Sustained growth in infrastructure, manufacturing and automobile sector helped India's steel industry secure a growth of three percent in 2009 despite recession, reports said quoting industry players.
India registered three per cent growth in steel sector during 2009 at a time when the global industry was struggling to recover from economic recession. Steel production worldwide dipped by eight percent in 2009. India's steel industry stood out significantly in the global arena due to its demonstrated resilient during the downturn period.
The market players concede that the steel production growth received a setback due to decline in the real estate and housing sector during the global recession. Emphasising that India is the fifth largest steel producer in the world, the industry envisages that the country will become second largest producer by 2015. India's per capita consumption of steel continues to be at 44.3 kg as compared to the world average of 190.4 kg during 2008. The players feel that the rural sector has significant growth opportunities due to its low per capita consumption as compared to that of the urban sector.

industry has expressed concern that although over the last three-four years, many states have signed 222 MoUs with private players, many of them are yet to take off, reports said.
Over the last three-four years, states have signed 222 MoUs with various players, which would take steel capacity close to 276mt, but not many of the projects have taken off. But, according to experts, the major issue faced by companies relates to land acquisition, securing mining leases, forest clearances and relief and rehabilitation policies. POSCO is a good example of a company that has seen its USD12 billion greenfield project in Orissa getting delayed by more than two years. Other projects from ArcelorMittal, Tata Steel, Bhushan, Jindal, Sterlite, UttamGalva and Welspun Steel have also been deferred by over three years. Obtaining environment clearance is also a major issue.
There have been cases of mines being closed due to non-clearance under the Forest Act. Despite Supreme Court's directions on sending applications for clearance to the Union Environment and Forests Ministry within two weeks of proposals being submitted, state forest departments keep applications pending for years.

India needs to halt export of its iron ore reserves which are required in huge quantity to meet the projected steel production in the country, said Amit Chatterjee, advisor to Managing Director of Tata Steel Ltd.
Increasing exports of iron ore is a disturbing trend. Exports should be banned and higher grade steelmaking raw material should be restricted. Lower grade is a different issue, he added. Foreseeing a great future for the domestic steel industry, Chatterjee said: “India will have a greater usage of steel in general. There will also be increased usage of steel in construction and boom in automobile industry will add to the demand." Chatterjee has been awarded fellowship of Imperial College, London for his outstanding capabilities in the field.

Increase in the demand for steel in the domestic market coupled with reduction in the iron ore export can help India match China in the production of the metal, reports quoted industry players as saying.
They stated that the country's iron ore industry is entangled in a debate over iron ore exports. While the steel industry is lobbying for imposition of export tax on iron ore exports from the country, the exporters are fighting for more leeway in the exports. Official figures revealed that during 2008-09, the production of iron ore was 227.64 million tons while the domestic consumption was only 87 million tons.
Export duty on iron ore fines is five percent and that on lumps has been increased to 10 percent from five percent. The iron ore exports from India stood at 53.2 million tons between April to October 2009, which is 21 percent more than the corresponding period of earlier year. Close to 50 percent of the iron ore produced in India is exported.
The exporters' body like Goa Mineral Ore Exporters Association has already expressed concern over the constant hikes in export duties. The experts feel that Indian government is targeting 200 million tons of steel productivity by financial year 2020 for which 320 million tons of iron ore is needed. However, Steel authority of India limited (SAIL) chairman S K Roongta feels that exports will automatically come down if domestic demand matches production level. He said that accessibility of a cheap raw material is an added advantage for the Indian steel industry. The country will be able to meet its additional iron ore requirement by making investment in beneficiation to improve the quality of the existing ore and also by focusing more on exploration and prospecting to identify resources and boost production significantly.

McNally Bharat Engineering Company Ltd., a leading engineering company in the country, bagged a Rs. 436- crores project from the country's largest power company National Thermal Power Corporation Ltd. (NTPC).
The scope of work includes supply, installation, testing and commissioning of coal handling, lime handling and gypsum handling plant with capacity of the Coal Handling Plant being 1000TPH / 1100 TPH. These plants are being installed at NTPC's Bongaigaon (Assam) Thermal Power project comprising of 3 power plants, each having a capacity of 250 MW.
The project would involve equipment supply and installation of conveyor, stacker cum reclaimer, vibrating screens & feeder, rotaside wagon tippler with side arm charger, ring granulator, hammer mill, coal sampling system etc. The project is to be completed in a tight time schedule of 17 months.
Speaking on this occasion, Srinivash Singh, Managing Director, McNally Bharat Engineering Ltd said: “We are excited at the prospect of being associated with an organization of repute like NTPC. This will further consolidate our position in the EPC space and we hope to execute the project successfully.”

Hyderabad-based steel company Pennar Industries Ltd is looking at an inorganic growth by acquiring a company or a few companies that share synergy with it.
The company proposes to spend about Rs 150 – 200 crore as the company will be debt-free by next fiscal. The company has been spending Rs 30-crore a year for expansion in organic mode. The Pennar Engineered Building Systems Ltd (PEBS) factory, with a capacity of 60,000-tonnes capacity, made half the capacity operational and Rs 50-crore out of the planned Rs 100-crore had been invested in plant so far.
The pre-engineered building systems market in India was estimated to be around Rs 4,000-crore and rapidly growing, orders worth Rs 60-crore are on hand and it is eyeing Rs 500-crore business once the facility is fully operational. The consolidated sales of the company would cross Rs 1,100-crore in FY 11. Ch. Ananth Reddy, Executive Director of the group said that the company had built 2,000 school buildings in Nepal. It also secured orders from Tanzania.

Adhunik Group of Industries is in talk with major automobile companies to supply specialised steel and auto components. Adhunik Metaliks Limited, a flagship company of the group, has been in discussion with automakers like Toyota, Honda, Bajaj and Maruti Suzuki to supply automobile parts and steel, a company official said. He said the technical discussion with Toyota and Honda was completed and discussions for commercial tie-up were in the final stages. Honda has plans to supply specialised steel as well as auto components being produced by the subsidiary companies of the group to the automobile industry. Similar discussion was in a satisfactory stage with Bajaj automobile companies while it was in the preliminary stage with Maruti Suzuki.

Tata Steel Ltd's steel sales for January month from its Indian operations rose 9 percent in January to 556,000 tons. The company's crude steel production for the month rose 14 percent from a year ago to 596,000 tons. The Indian operations account for about a quarter of the group's total annual capacity of 30 million tons, which includes unit Corus, Europe's second largest steelmaker.
Sales of long products, used in construction, rose 10 percent in January from a year earlier, while sales of flat products, used in automobiles and consumer goods, increased 8 percent, the company said in a statement.

The latest figures in terms of production capacity to come up by 2011-12, compiled by the steel ministry suggest that the country can have an annual steel production capacity of about 120 million tons, if all new projects are commissioned on time. However, looking at the snail-paced developments of many large projects, Earnst & Young report says it is unlikely to happen. POSCO is a good example of a company that has seen its US $12 billion greenfield project in Orissa getting delayed by more than two years. Other projects from ArcelorMittal, Tata Steel, Bhushan, Jindal, Sterlite, UttamGalva and Welspun Steel have also been deferred by over three years, the E&Y report said. The industry is expected to augment existing production capacity by 29.96 million tons and add new line totaling to 26.22 million tons by 2011-12. The current installed capacity is 64.44 million tonne annually. It is unlikely that the greenfield projects with a total capacity of 26.22 million tons will be completed by 2011-12 and thus India can miss the 124 million tons target by a huge margin. SAIL has an annual capacity of about 14 million tons now. Ernst & Young said over the last three-four years, various states have signed as many as 222 steel MoUs, which when completed would take annual capacity close to 276 million tons, but many of these projects are still in paper only.

India steel major producer Tata Steel Ltd and Nippon Steel, Japanese steel major formed a joint venture (JV) for production and sales of automotive cold-rolled flat products at Jamshedpur. The JV is expected to invest $400 million to set up an automobile venture in India.
Tata Steel-Nissan is just one among a slew of such JVs announced recently between Indian and Japanese steel producers. About three months earlier, Sajjan Jindal-promoted JSW Steel signed an agreement with Japan's second largest producer, JFE, to collaborate for making automobile steel.
“In autos, the outer panel and bonnet require high quality of annealed products,” said Seshagiri Rao, director, finance, at JSW Steel. “We have been producing cold-rolled coil (CRC) for a number of years but we are not able to do outer panel,” he said. Hence the company collaborated with JFE.
JSW has 1.8 million tons (mt) of CRC capacity and is not planning any additional investments. It would use the technological collaboration to produce from the installed capacity. Currently, India produces 4.5-mt of CRC, of which 1.9-mt is used for auto manufacture and the rest for consumer durable products. This is expected to double, as the Society of Indian Automobile Manufacturers expects passenger car sales to rise to three million units annually in the next five years from 1.5 million units in the last financial year.
Automakers import the annealed products but as the volume of cars and the raw material demand increases, Japanese steel makers want to cash in on that surge. That also explains why Bhushan Steel signed a technical collaboration and marketing agreement last month with Sumitomo Metals, Japan's third largest steel producer.
Bhushan is India's largest (in the secondary sector) cold-rolled steel plant owner to manufacture auto grade-CRC and sheets for automobiles and white goods industries. Bhushan Steel and Sumitomo had first entered into a six-year strategic alliance in 1997, which they renewed in 2003 and then in 2009.
This time, the two companies are also exploring the erection of a six-mt steel plant at Asansol in West Bengal. The company signed two agreements with Sumitomo Metals for technical know-how and marketing for selling products from its Orissa plant.
The first phase of the Orissa plant, with a capacity of 2.2-mt, is scheduled to go on stream in January. In the second phase, the plant's capacity will go up to 5-mt by October 2012. The company's current capacity is 1-mt. The Japanese steel major will provide technical expertise to Bhushan's Orissa plant and market a part of the produce under the Sumitomo brand for its customers in India.
“At least USD 1 billion of investment is expected in the next three years in auto grade-steel, including those used by component makers,” said Anjani K Agarwal, partner, metals and mining, at global management consultancy Ernst and Young.

Steel Authority of India and POSCO are not in talks for a possible joint venture at Kulti in West Bengal. But the two companies, which have a wide ranging technology tie-up, did recently discuss ways to revive Kulti Works which comes under SAIL's Growth Division.
Citing top official of SAIL, a report said : “There have been no talks to form a joint venture with POSCO." In this light, a top company official pointed out that as a Navratna PSU, SAIL is not in a position to choose a joint venture partner without following the official procedure.
Any joint venture plan has to be first discussed at the board level and details worked out before the company can invite bids or expressions of interest (EoIs) from possible partners. “Nothing of that sort has been done in this case,” he said.
Moreover, Kulti Growth Works which was earlier under IISCo Steel Plant (ISP) has in the last few years been brought under Sail's Growth Division. In that case, the works have to be hived off into a separate unit before any joint venture can be formed. In its response to a media report on a possible joint venture with POSCO at Kulti, a SAIL spokesman said: “We have nothing to comment.” The Kulti Works at present include two foundry shops which are operational and a general casting shop which remains closed down. Since reopening it in December 2007, SAIL has been trying to revive the works and had even provided a lumpsum for revitalising the foundry shops last year.

Indian steel prices could rise in the next fiscal year if global suppliers increase price for raw material coking coal and iron ore under annual supply agreement, said S K Roongta, Chairman, Steel Authority of India.
Quoting S K Roongta, a report said : "If the raw material prices increase, there will be a cost pressure on steel producers, which they will have to pass on to buyers."
Steel Authority of India has captive iron ore resources, but must import more than 70 percent of its annual 15 million ton coking coal requirement through imports from countries such as Australia, US and New Zealand.

About 15 months after the Centre returned the proposal for prospecting licence (PL) of Karampada mines to ArcelorMittal, the Jharkhand government has sent fresh recommendations for it. According to State Mines Secretary NN Sinha, his department has sent recommendations for PL on 1,080 hectare of Karampada mines in West Singhbhum district. A final decision will be taken by the Union Ministry of Mines, he said.
The Union ministry had returned the application in October 2008. “The Centre wanted us to split the proposal by bifurcating it into notified and non-notified area categories, which we have done now,” Mr Sinha said. Accordingly, 662.95 hectare comes under notified, while 416.93 hectare comes under non-notified category.
The file had been pending for the past 15 months because of political uncertainty. During President's Rule, which lasted for 11 months, the governor had made it a policy not to recommend any proposal for mining lease. However, with Jharkhand having a popular government in power, the file has been sent to the Centre for clearance.
The Centre had awarded the lease for mining of iron ore at Karampada on 202.43 hectare in June 2008. The returned application was another one from the company for the Meghataburu (Karampada) reserve forest which was forwarded by the state government.
The company has signed an MoU with the Jharkhand government for setting up of a 12-mtpa greenfield steel project, with an estimated investment of Rs 40,000 crore. It has identified areas in Khunti and Gumla districts as sites for the mega project. It has also been allotted Seregarha coal block for power generation.

Intensifying its efforts to secure a global footprint, state-run mineral giant National Mineral Development Corporation (NMDC) is understood to have signed a confidentiality agreement with ArcelorMittal for jointly developing the latter's Faleme iron ore mines in Senegal.
The mines having an estimated reserve of around 750 million tons would be jointly developed by both the companies at an estimated investment of nearly Rs 10,000 crore. The reserves are located in multiple locations in the Faleme region in southeast Senegal, containing both hematite and magnetite ores. “As of now, both the companies have decided to invest Rs 5,000 crore each for the project, wherein there is an express need to build a new port as well as develop nearly 750 kms of railway infrastructure to link the mine and the port,” a highly-placed source told The Indian Express. The Navratna mineral giant was also eager for quite some time to explore new horizons overseas to strengthen its resource base “and the new venture amply provides the same. “Both the companies would sign the necessary agreements after sorting out the details,” the source said.

Sajjan Jindal-owned JSW Steel said it is evaluating proposals to acquire coal mines overseas to meet its long-term captive requirement and hedge against surging prices of the dry fuel.
"We have been looking for coal mines acquisition in Australia, America and Africa. We are currently evaluating some proposals, though nothing has been finalised yet," JSW Steel Joint Managing Director MVS Seshagiri Rao told.
"However, it might take some time to take a final call since the viability of the target mines has to be seen before going in for acquisition," he added. JSW Steel had received a set back in Mozambique as the blocks for which mining concessions were granted to it found to be unviable for steel making. Initial survey in these mines revealed that the ash content was around 60 percent there.
"We will go for coal mines having reserves in the range between 10 million tons and one billion tons," he said. JSW Steel currently imports its entire coal requirement of 4.5 million tons per annum (mtpa) to feed its Bellary steel plant mainly from Australia. The plant has 6.8 mtpa steel making capacity now.
However, JSW Steel's demand for coal is set to go up further as it increases the installed capacity at the plant to 10 mtpa by March 2011. "However, it might take some time to take a final call since the viability of the target mines has to be seen before going in for acquisition," he added.

Automotive and consumer durable companies may have to shell out more to buy steel under long term contracts from domestic metal producers starting April 1. Top Indian steelmakers are likely to increase price of the metal by 5-8 percent sold under quarterly , six-monthly or annual arrangements on the back of rising costs of coking coal and iron ore, key inputs for steel production.
The price of coking coal is likely to increase by 10-15 percent in April, traditionally a month during which steel producers enter into supply contracts with their customers or the steel consumers . Majority of steel makers also sign long-term purchase agreement with coal suppliers every April.
In April 2009, domestic steel firms had entered into long-term agreement with overseas coking coal suppliers at around USD 130 per tonne, against USD 300 per tonne the year ago.
“Japanese steel producers are currently negotiating coking coal prices with global suppliers, which would eventually become the benchmark price for Indian steel companies. Prices of coking coal are likely to be on a higher side next fiscal and so will the steel prices,” JSW Steel joint managing director Seshagiri Rao said. He, however, did not comment on the quantum of price increase.
Coking coal prices have been facing pressure partly due to lower supplies after economic slowdown forced many mines to be shut in Australia, one of the top global sources of the mineral. Moreover, demand for coking coal has picked up in China which is putting an upward pressure on raw material prices, said a Delhi-based steel analyst requesting anonymity.

State-owned steel maker Steel Authority of India Ltd (SAIL) and Shipping Corporation of India (SCI) have agreed to set up a joint venture “very soon” that would provide shipping related services to the former.
Confirming the development, SCI chairman S. Hajara said that the company is making very good progress to set up the joint venture and hope it would be established very soon. Echoing similar view, SAIL chairman S K Roongta said that the joint venture would be set up soon. However, both the officials declined to give a specific timeline for the JV or the investment planned. The two companies had signed a memorandum of understanding (MoU) in 2008 to establish a JV that would render shipping-related services to the steel maker in importing the coking coal required for its mills.
The scope of the MoU also provided that the JV firm could also participate in the international shipping trade. While speaking on the sidelines of an event organised by Indian Chamber of Commerce, Hajara also said SCI will double its current fleet strength of 79 vessels in the next 5-7 years with an investment of US $3.5 billion.