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The iron & steel industry in Asian region is going through a great transition. While the steel producing capacities are getting clustered around raw material belt, the finishing capacities are emerging around the consumption centres. That is how we see a lot of hot / cold rolling mills and other downstream finishing facilities in the gulf as well as SE Asian region. We all know that finished steel requirement of these regions is on the rise and is expected to grow manifolds in coming years. As far as India is concerned, the emerging picture is that it would be having huge capacities for primary steel, producing semi finished items like slabs, HR coils, billets etc. These companies are being set up near iron ore mines in the regions like Orissa, Chattisgarh, Jharkhand etc. Obviously these places are not exactly steel consumption centres. 42 % of Indian steel is consumed in western part of the country and thus this region can expect more finishing capacities being set up in the future. Also these semis can be exported to neighbouring regions like Gulf and SE Asia to feed their finishing lines.

With strengthening of Rupee verses Doller, US and EU markets slowing down, Indian steel makers have to rethink on their export strategies. Last few years, most of the Indian steel was exported to western world but now they have to look for emerging destinations like SE Asian countries, Gulf and also some African countries. A lot is being talked about the growth prospects of MENA region. Middle East & North Africa. The economies of these countries are progressing faster as compared with other countries in the region. Also, steel consumption is growing steadily and can offer good prospects for overseas steel manufacturer or even a trader.

 D.A.Chandekar
Editor & CEO

 

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Steel output growth slows: Credit Suisse

Global steel production expanded at its slowest pace in 17 months in June, indicating that Chinese mills may be responding to the government pressure to restrain output, Credit Suisse reported. Steel output rose 5.7 per cent to 110.6 million tonnes last month, from a year earlier, the International Iron & Steel Institute reported that was the sixth monthly slowdown in growth and the smallest gain since January 2006, Credit Suisse said. Chinese output rose 13 per cent to 41.5 million tonnes, the least since December 2002.
“This is an increasingly clear sign that Chinese production may at last be coming under control,'' Credit Suisse analysts, including the London-based Michael Shillaker, said in the report. Chinese demand for steel is expanding at about 18 per cent, “so production is now seriously undershooting”. China's economy expanded at the fastest pace in 12 years in the second quarter, powered by investments in factories and real estate. Chinese demand for steel will total 443 million tonnes next year, accounting for more than a third of the global total, the Brussels-based IISI forecast in a March 26 report.

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Posco hopes to start work on site soon

Despite two failed deadlines, South Korean steel major Posco has expressed firm optimism on a quick start to its construction activities. The company plans to complete land purchase by the end of this year, which will pave the ground for further construction. “It may require four to five more months from July to start work at the proposed site,” said Posco-India Chief Managing Director Soung Sik Cho.
The company has revised its earlier schedule of starting production (phase-I) by the end of 2010 to the first half of 2011 because of delays in land acquisition and mining and forest clearances. “We may get six to seven months late,” said an official. The project was divided into three phases scheduled for 2010, 2013 and 2015 respectively, each for a capacity of 4 million tonnes. For the acquisition of 3,100 acres of the government land, the forest diversion proposal is already undergoing examination by the ministry of environment and forests (MoEF), after which the formal handover of the land can be done.
“It might take two months,” sources said. “We will be able to get around 1,135 acres of encroachment-free land by October, following which construction will start soon,” added the official. The strategy to start work on conducive lands is a common approach by Posco and the state to avoid any further delays. The company has also clarified its stand on the issue of its executives leaving the place being seen as Posco's withdrawal from India. “This is only a transit phase. A part of the MoU states that 97 per cent of the workforce will be Indian. More Korean people will come, but the extent will not be more than 3 per cent ever. Moreover, some executives have left because of company calls,” the source said.

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Stainless steel output grows 25%

Asian production (including India) of stainless steel amounted to 4.191 million tonnes in the March 2007 quarter, a growth of 25.2 per cent y-o-y, according to data recently released by the global industry body, International Stainless Steel Forum (ISSF). Demand for stainless steel has come mainly from user industries such as construction and industrial applications, point out analysts. Amongst Indian players, Jindal Stainless is one of the largest players and it is leveraging strong demand in the domestic market as well as neighbouring countries, by ramping up the company's stainless steel manufacturing capacity from 0.6 million tonnes to 0.9 million tonnes by FY09. Global production of stainless steel grew 15.1 per cent y-o-y to 7.57 million tonnes in the March 2007 quarter, highlighted the industry body. However, stainless steel companies have been grappling with the rising cost of key inputs such as nickel over the last few quarters – this non ferrous metal is currently trading at $ 31, 900 a tonne on the LME as compared to $ 29,850 a tonne a year earlier. To offset this situation, players such as Jindal Stainless have tilted its sales mix in favour of low-Nickel (200 series) stainless steel products, in a bid to keep operating costs under check. In FY07, Jindal Stainless' consolidated operating profit margin grew 380 basis points y-o-y to 17 per cent.

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Tata Metaliks inks JV with Japan cos

Foundry-grade pig iron producer Tata Metaliks Ltd (TML) declared it's a joint venture agreement with Japan's Kubota Corporation and Metal One Corporation to set up a Rs 150 crore ductile iron (DI) pipes manufacturing unit at Kharagpur. The company would hold 51 per cent equity in the joint venture Tata Metaliks Kubota Pipes Ltd, while Kubota and Metla One would own 44 per cent five per cent respectively. TML Chairman T Mukherjee said in the first phase the unit would produce 1,10,000 tons per annum, a part of which would be exported.
The proposed manufacturing facility would use liquid pig iron from TML's existing mini-blast furnace and would be operational by the fourth quarter of 2008-09. Mukherjee said Kubota would bring in technology from Japan for manufacturing DI pipes. Kubota Corporation President Daisuke Hatakake said the partnership would help in export of DI pipes across the globe .

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Bhushan Steel likely to acquire land directly

Bhushan Steel is likely to purchase land directly from the owners for its proposed steel plant in Bengal, spread over 2,500 acres. The company would start discussions with the land owners over the next two months. “We would like to purchase land directly from the people. We will start talking to them in the next two months,” said Rajiv Agarwal, vice-president, commercial, Bhushan Steel. The land is for setting up a 2 million tonnes plant. The project is set to come up near Asansol and the land has already been identified. The entire site, comprising 2,500 acres, is on private land and is barren.
Agarwal said the company would talk to the land owners first and if it faced any resistance, it would seek the government support. If the direct purchase happens, it will be the second instance in Bengal, where a company is directly acquiring land from the people, the first being JSW Steel. The West Bengal government has so far discouraged direct land purchase by companies. The state government prefers the land to be acquired by a government agency and then leased out to the company. However, Agarwal said Bhushan's memorandum of understanding (MoU) with the state government had both the options and the company would prefer buying land directly from the people. Bhushan's direct purchase of land may set the trend in West Bengal. Recently, Videocon Chairman Venugopal Dhoot also expressed the willingness to go for direct purchase of land for its proposed special economic zones (SEZs) in the state. The land acquisition is expected to be completed in six months. The company would come up with a compensation package after talking to the people.
“We don't know what their demands are, we will find out after talking to them,” said Agarwal. The compensation would be mostly in cash. According to the terms of the MoU, Bhushan would also set up a training institute. “We will absorb people on merit,” he said. Apart from the steel plant, Bhushan would also set up a cold rolling facility. Agarwal said the company was shown land in North 24 Parganas, but it wanted it within
30-35 km from Kolkata. Bhushan requires 70-80 acres for the rolling facility.

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High prices may fuel steel firms' net profit 25%

Investment research analysts expect steel companies to report about 25 per cent rise in profits and 20 per cent increase in turnover following enhanced capacities and steady steel prices during April-June 2007. Manoj Bothra, an analyst at Ernst & Young, said, “For companies such as Essar Steel, Jindal South West (JSW) and Bhushan Steel, which have enhanced capacities significantly during the last year, volumes will go up. These companies may report up to a 25 per cent rise in profits. For others such as Tata Steel and Steel Authority of India (SAIL), where expansion plans are under way, better results may be visible during the third and the fourth quarters.” Essar Steel increased the capacity of its Hazira plant to 4.6 million tonnes per annum (mtpa) last year. JSW completed its 1.3 mtpa expansion and Bhushan Steel increased its capacity by 0.5 million tonnes in Orissa. “Margins may remain stagnant, so volumes will play a greater role,” he added. Another Kolkata-based analyst was of the view that margins would not change much on account of stable input costs during the period. “Although, coking coal prices have declined by $20 during the quarter, it may not reflect now as orders were contracted earlier,” he said.
Year-on-year, coke prices have risen by 6-8 per cent during the quarter. Coke accounts for 30-35 per cent of input costs. “Strong iron ore costs were countered by steelmakers through captive mines and long-term contracts,” he added. Though steel prices were stable during the period, prices of long products rose from an average price of Rs 26,500 a tonne to Rs 31,400 a tonne (18-20 per cent) from April to June on account of increasing demand from hastened construction activity before monsoon. Prices of hot-rolled coils, which are taken as a benchmark for flat steel products, were up 5.5 per cent year-on-year during the quarter. The passenger car industry, a major consumer of hot-rolled products, has grown by around 13 per cent during the period.

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JSW to acquire land in Salboni

Land acquisition for the proposed 10 million tonnes steel project in Salboni in West Medinipur by JSW Bengal Steel started mid July. Sources said around four plots would be acquired and cheques would be disbursed to the land-losers on the same day. The company has fixed the price for the private land in Salboni at Rs 2.5-3 lakh an acre. The land has been categorised as cultivable and partly cultivable and priced accordingly. The price of the government land is Rs 1.94 lakh an acre. Of the total requirement of 4,500 acres for the project, JSW will have to acquire 450 acres, while the balance is vested with the government. The sources said the land acquisition would be completed in four months..
The direct land purchase by the company will be a test case for the West Bengal government since the land acquisition so far has been done by a government agency and leased out to companies. A public hearing for the environment clearance will be held in August. The sources said the company had already submitted reports to the Union ministry. The sources said the issue of shares was being handled by JSW Steel corporate office. The land for which the company is negotiating is the source of income for around 741 families.

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Posco rules out tie-up with KIOCL; wants to go it alone

South Korean firm Posco, the world's third-largest steel maker, today ruled out a tie-up with Kudremukh Iron Ore Company Ltd (KICOL) for its Rs 52,000 crore Orissa project, saying it had the required skills to manage operations. "We have the strength, resources, technology and experience to manage operations and for efficient management we will like to have these operations under our control," said Posco chief Delhi representative Vikas Sharan. His assertion comes amid reports that the government has asked the South Korean steel giant to explore the possibility of teaming up with Kudremukh Iron Ore Company Ltd (KIOCL) as "it will be a win-win situation for both the parties".
“Posco strongly believes to take the project forward as per the terms of the Memorandum of Understanding (MoU) in which captive mines were indicated to us," informed Sharan. He, however, said the company has not received any formal proposal from the government to join hands with KIOCL. Sources said the government is believed to have made a proposal under which it would transfer the lease for mining specific minerals to a joint venture company, to be floated by the two steel makers, instead of handing it over to Posco directly. The proposed joint venture would thereafter sell it to the Korean steel giant. Sharan said the Steel Ministry could also take up the issue of granting captive mines to the Korean firm with the Mines Ministry "as the project has already suffered considerable delay." Sharan said the Investment Commission headed by Ratan Tata could suggest ways to expedite implementation of the company's 12 million tonne integrated project in Orissa's Jagatsinghpur district. "Based on the experience so far, Investment Commission should also identify the bottlenecks and the systemic constraints which are impeding implementation of the biggest FDI project in the country's steel sector and suggest measures to speed up the entire process," he said. Meanwhile, the government has decided to set up an Inter-Ministerial Group (IMG) to suggest measures to ensure early completion of major investments in the steel sector.

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HEG to Hive-off Steel Operations for Rs 88.5cr

HEG Ltd has approved the sale of its fully integrated steel business (including sponge iron, steel billets and a 13 MW waste heat recovery power system power plant) to Jai Balaji Industries Ltd of Kolkatta. The company will transfer the ownership of the unit for a total consideration of Rs 88.5 crore for fixed assets. Net current assets would be transferred on a mutually agreed price on August 01, 2007. Being a non-core business, the durg steel unit will be de-merged from the company with effect from August 01, 2007. Post the de-merger the company will emerge as a focused graphite electrodes company where it enjoys a well-established global position as a manufacturer of world-class graphite electrodes. The company has a number of respected steel manufacturers - Arcelor Mittal, Posco, Krupp Thyssen, US Steel, Nucor, and Usinor in its customer portfolio.
Commenting on the transaction, Mr. Ravi Jhunjhunwala, Chairman and Managing Director of the company said, "The decision to hive-off the steel business stemmed from our strong belier that HEG's core graphite electrodes business addresses a growing global market where HEG is already an established player that is well regarded for the quality of its products and commitment to its clients. I believe that driven by a greater focus on its core business operations, following the divestment in the steel business, HEG will be able to further strengthen its balance sheet and leverage its global market position and deliver progressive performance in the future."

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IMG to monitor major steel investments in India

Amid reports of difficulties being faced by foreign steel giants in setting up their projects in India, the government has decided to set up an Inter-Ministerial Group (IMG) to suggest measures to ensure early completion of major investments in the sector. "Prime Minister Manmohan Singh has approved the constitution of an Inter-Ministerial Group to monitor and coordiate issues concerning major steel investments in the country. The IMG has been mandated to review measures for early completion of major steel capacities," a top Steel Ministry official told reporters. He said the IMG would also delve on the infrastructure constraints impeding investments in the steel sector and suggest measures to improve road, rail and ports network besides hinterland connectivity. "The IMG would also ponder on the availability of coal and iron ore in the country and recommend measures to ensure their due availability to fructify the investments," he said. In fact, Korean steel giant Posco and ArcelorMittal have made it clear that they would require captive iron ore mines to operationalise their mega projects in Orissa and Jharkhand. The IMG comprising Secretaries of the concerned central government departments will also suggest ways for speedy environmental clearance for the projects and ensure availability of land, water resources and issues on relief and rehabilitation, the official said. IMG comprises Secretaries from the ministries of steel, DIPP, railways, shipping, road transport and highways, mines and environment and forests, besides chief secretaries of concerned states, he added.

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JSW Steel lines up Rs 800 crore plant

 JSW Steel, the country's fourth largest steel manufacturer, will invest about Rs 800 crore in iron ore beneficiation project, which would be undertaken at the company's existing plant in Karnataka.
The company is currently in talks with some mining companies in the state for procurement of low-grade iron ore, which would be converted into high grade upon processing. The residual high-grade iron ore, which will have a high Fe content, will then be used for producing steel. Accordingly, through this method, the company is aiming to achieve advantages of cost reduction in procurement of raw materials.
JSW will buy about 17 million tonnes per annum of low-grade, low-cost iron ore from neighbouring mines in Karnataka for its plant based in Vijaynagar. Sheshagiri Rao, CFO, JSW Steel, said, "We are looking to bring down our costs by upgrading the iron ore procured from the surrounding mines in Karnataka, which will then be sent for further processing. For this initiative, the company is investing about Rs 800 crore."
The costs borne by the company for this project will not be a part of the Rs 17,000 crore expansion drive currently undertaken by the company.
In addition, the company is also actively looking at acquiring four more service centres across Europe, which will be used as a processing centre to convert semi-finished goods to the end products. In May this year, the company had acquired the UK-based steel processing company, Argent, for Rs 31 crore.
Sajjan Jindal, VC and MD, JSW Steel, said, "We are currently looking at acquiring at least four more steel processing centres in Europe, which will be similar to the recent acquisition made in the UK."

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Bolivia, India's Jindal Ink Mining Deal

After more than a year of protracted negotiations, Naveen Jindal-promoted Jindal Steel & Power Ltd (JSPL) has bagged the $2.1 billion contract for development of one of the world's largest iron ore deposits, El Mutun, along with steel making facilities. JSPL recently signed the contract with the Bolivian government for developing the El Mutun iron ore mine. The $2.1 billion project is the largest investment by any Indian company in South America, apart from being the largest private investment in Bolivia, company officials announced. The project includes setting up of a 2-million-tonne steel plant. After the project, the deposits will remain Bolivia's property. Jindal Steel had emerged the winner in an international bidding process started by the Bolivian government in May 2006, outbidding several competitors including Arcelor Mittal. The final agreement took time as issues like the price of natural gas to be used in the project became a stumbling block. However, the Bolivian government has now committed supply of natural gas. “We plan to start commercial production of steel by 2010,” said Naveen Jindal, executive vice-president and managing director, JSPL.
Jindal said they would produce TMT bars, wire rods and some flat products. He ruled out the possibility of shipping ore to India for commercial sale or for captive use. El Mutun is considered to be the largest iron ore mines in the world, having reserves of more than 40 billion tonnes, 50 per cent of which has been commissioned to JSPL for development. The total amount will be spent over a period of eight years. It will be an integrated steel plant with steel production of 1.7 million tonnes per annum (mtpa), pellet production of 10 mtpa and direct reduced iron (DRI) production of 6 mtpa. JSPL will also set up a 450 MW power plant to meet production needs. The project will be handled by Jindal Steel Bolivia SA, a subsidiary of JSPL which was created in October last year.

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Stainless steel sector to grow by 5% this year

 Despite the rising price of nickel and strong rupee value against dollar, the domestic stainless steel industry is expected to grow at 4-5% this year- full merit to good demand for consumer products such as stainless steel utensils.
Nickel prices in the world market have risen significantly by 38% to $50,600 a tonne on May 5 from $36,800 a tonne in early January 2007. Also, the rupee value against US dollar has appreciated by 8% since January 2007.
Mr K D Chinivala, president, All India Stainless Steel Industries Association said “I think the domestic industry will continue to grow at 4-5% annually. Demand for stainless steel products such as utensil is superior since nickel is cheaper than aluminium.” Adding further he told, 'industrial uses mainly in automobile, engineering and construction are expected to increase in future and its share may increase from current 30% to 35% in the coming years.’

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IRINL SIGNS AGREEMENT WITH M/s Danieli & C spa of Italy

It was another important day in the history of Rashtriya Ispat Nigam Limited (RINL), the holding Company of Visakhapatnam Steel Plant. RINL has signed the Contract Agreement with M/s Danieli & C spa of Italy for supply, Erection & Commissioning of 3 nos. of Continuous Casting Machine for converting Liquid Steel into Billets both in square and round shape, a semi-finished product which is the input for other Rolling Mills viz., Wire Rod Mill and Seamless Tube Mill in the 1st stage and Structural Mill & Special Bar Mill in the 2nd stage of 6.3 million ton expansion works of RINL.
The cost of the above project is Rs. 538 crores involving a foreign component of 32 million Euros (Rs. 180 crores) to be completed in 25 months. The Indian Consortium Partner of Danieli are M/s Gillanders Arbuthnot (Unit- MICCO), Kolkata and M/s Danieli Engineering India. Kolkata.
The agreement was signed by Mr. A.K.Banerjee, Executive Director (Projects) on behalf of Visakhapatnam Steel Plant and Mr. John C Parker, Vice-President, Sales & representative of Danieli India. Mr. R. Benjamin, Senior Vice-President (Commercial), Gillanders and Mr.B.K.Ghosh, EX.Director(Finance), Danieli Engineering India Ltd.,
The agreement was signed in the presence of Sri P.K.BISHNOI, CMD, RINL and Sri H.S CHHATWAL, Director (Commercial) & In-charge (Projects). Senior officials from VSP S/Sri KS SHANKAR, ED(Finance), G.Shankar, ED(Maintenance) and Sri T.K.Mondal, Director, M/s MN Dastur & Co, Kolkata were also present on the occasion.

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Steel, telecom on top of M&A list: hefty deals in the coming

En route to the big ticket cross-border deals, India's steel and telecom segment clearly has a cut above other sectors in the 'merger and acquisition' (M&A) prospect in the current calendar year, unlike previous year when IT, pharma and healthcare companies topped the M&A chart. Steel companies led by Tata Steel engrossed deals worth $13.9 billion while their counterparts in the buzzing telecom sector contributed $10.9 billion to the tally of $44 billion in the first six months ended June 30, '07.
Investment bankers anticipate M&A activity to strengthen further as there will be tremendous investment opportunities available in buzzing sectors like infrastructure, metal and technology. Aluminium ($6 billion), power and energy ($3.5 billion), FMCGs, food and beverages ($1.7 billion) and IT and IT-enabled Services ($1 billion) are a few other sectors contributing substantially to the $44 billion worth of M&A deals struck during first half of 2007. There were a total of 480 deals worth $20.3 billion previous year.
“There is good scope for M&A activity in the core sector and front-end marketing companies. However, there will not be much action within India,” said investment banker Rashesh Shah, CEO & MD, Edelweiss Capital. 'Though there are many benefits of inorganic growth options, companies going for mergers and acquisitions will always carry normal risk of integration,' he added. Three mega deals - Tata Steel's acquisition of Corus for $ 12.2 billion, Hindalco's acquisition of Novelis Inc. for $6 billion and Vodafone's acquisition of majority stake in Hutch Essar for $10.8 billion - accounted for a significant 66% of the combined value of the 339 M&A transactions. There were 11 deals with size higher than $ 500 million, including seven $1 billion plus deals. The other big deals included Suzlon's acquisition of controlling stake in RE Power and Essar Steel's acquisition of Algoma.
According to data compiled by Grant Thornton, one of the leading accountancy firms in the world, there were 172 cross border deals worth $42.5 billion insofar in '07, against 266 deals worth 15.3 billion in '06 and 192 deals worth $9.5 billion in '05. There has been a phenomenal growth in outbound deals in terms of value as well as volume, according to Grant Thornton. There are many advantages which investment bankers attribute to the thriving M&A activity in the country.

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Steel prices in Punjab dip on lack of demand

Steel prices in Punjab have declined as much as Rs 1,800 per tonne in the last few days due to lack of demand for products in the domestic market. "The steel prices in the state have plummeted by Rs 1,000-1,800 per tonne over the last 10-15 days primarily because of fall in the demand for steel products from industrial sector.
“The monsoon season has also contributed in lowering demand for steel,” said Vinod Vashisht, president of All India Steel Re-Rollers Association, said. The price of steel ingot, a key input for engineering and construction industries, fell Rs 1,550 from Rs 25.400 per metric tonne to Rs 23,850.
Price of TMT bar have come down from Rs 28,000 per mt to Rs 26,500 per mt, while that of other products such as channels and angles are hovering around Rs 27,000 per mt. Steel traders pointed out demand for steel products came down significantly because of rains in Gujarat and Maharashtra.

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NMDC to invest Rs 700 cr in two mines

State-owned National Mineral Development Corporation (NMDC) will develop two new mines in Chhattisgarh and Karnataka at an investment of Rs 700 crore, chairman and managing director B Ramesh Kumar said. Construction to develop 11-B deposit at Biladila mines in Chhattisgarh was taken up in January this year and the new mine would begin production by 2009, Kumar told reporters. The 11-B mine has a reserve of 100 million tonnes and would be developed at a cost Rs 350 crore. Another mine of the same size would be developed at Kumarswamy in Karnakata with an investment of Rs 350 crore, he said. NMDC has also identified iron ore deposit-13 in Chhattisgarh having high grade ore and a reserve of 340 million tonnes.
The company would now apply for forest and environmental clearance to develop the mine. On the proposed greenfield steel plant to be set up by NMDC with Steel Authority of India Ltd (SAIL) and Rastriya Ispat Nigam Ltd (RINL) in Chhattisgarh, Kumar said an MoU for it was likely to be signed by the three PSUs within a month. The proposed steel plant would have a capacity of four million tonnes and involve an investment of around Rs 16,000 crore, he said. Asked about the equity structure in the proposed venture, Kumar replied, "We have suggested that SAIL should be the lead promoter with 40 per cent stake while NMDC and RINL should have 30 per cent equity each".

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RINL and NTPC to form JV for BF gas based power plant at Vizag

Rashtriya Ispat Nigam Limited and National Thermal Power Corporation Limited have signed a MoU for setting up blast furnace gas based combined cycle power plant of around 150 MW capacities through a 50:50 Joint Venture at Visakhapatnam. The MoU was signed by Mr PK Bishnoi CMD of RINL and Mr T Sankaralingam CMD of NTPC Limited.
The JV shall be established as NTPC RINL Power Company Limited in which NTPC shall have the management control and its chairman shall be nominated by NTPC. The power generation from the proposed Gas Turbine Combined Cycle Power Project unit would be 150 MW. JV would supply the power required by RINL at the bus bar of the project with an option to other consumers.
The benefits of GTCC technology are higher efficiency in terms of more power generation and clean environment in the context of global warming. The GTCC technology is the latest available for utilizing the low calorific value lean gases and it envisages efficient utilization of large quantity of surplus gas available at the steel plant. As per release this would be first of its kind in the Indian steel industry to use the BF gas for power generation.
The average power demand for RINL at 6.3 million tons stage is estimated to be 418 MW and the present generation is 226 MW, which is meeting the present requirement.

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Tata Steel to raise Rs 10k cr by Dec

  largest steel maker, is likely to raise Rs 10,000 crore (about 2.5 billion dollars) by December as part of its equity contribution for the 12.9 billion dollar Corus takeover deal. "The target is to complete the entire fund raising plan by November-December," a senior company official said. During April sources from Tata Steel had said, it will raise close to Rs 10,000 crore from domestic and overseas equity markets. It had also announced arranging about Rs 25,800 crore (6.14 billion dollars) in debt for the deal to buy the Anglo-Dutch company. The company, in a recent notice to shareholders, said it would come out with a rights issue of ordinary shares and cumulative convertible preference (CCP) shares, besides issue of securities in domestic or international markets.
The company plans to raise Rs 3,655 crore through
a rights issue and Rs 4,350 crore through CCP shares. Existing shareholders would get one share at a price of Rs 300 for every five ordinary shares held. It would also raise up to 500 million dollars (Rs 2,042 crore) from domestic and international markets through equity or equity-related instruments. The official said the rights issue would be completed by November and other securities would also hit the market simultaneously. Tata Steel said to issue CCP shares, the authorised share capital would have to be raised from Rs 2,000 crore to Rs 8,000 crore. The company has also "saved a lot in financing in the acquisition foreign currency due to rupee appreciation", an official informed, but declined to elaborate. The Indian currency has appreciated nearly nine per cent against the dollar and eight per cent against the pound since the beginning of 2007.

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Union Resources Makes Headway on Iranian Zinc Project

Reports are that Union Resources Limited JV unit, Mehdiabad Zinc Company has approved the feasibility study report on the Mehdiabad Zinc-Silver-Lead project in Iran and believes the acceptance will assist the project to proceed to the development phase.
Union Resources held that it considers Mehdiabad Zinc Co's acceptance to be a significant development as Union Resources has now completed its commitments under the various project agreements and the remaining outstanding matters are largely under the control of its Iranian partners.Union Resources said that the feasibility study report could be updated to a bankable feasibility study upon the granting of requisite licenses, support from the government sector and commitment of foreign financing.
The Union Resources has been in talks with the Iranian Mines and Mining Industries Development and Renovation Organization after IMIDRO had last year purported to terminate four of the five agreements under which Union maintains its interest in MZC.

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Gulf Steel Industries Orders for Rebar Mill

 Siemens Metals Technologies announced that it received an order from Gulf Steel Industries Company Limited for the supply of new rebar mill, which will be built in Mussaffah Industrial Area of Abu Dhabi in UAE. The new line will produce approximately 400,000 tonnes of rebars and plain rounds per year. The project is scheduled to be commissioned by early 2009.
Under the contract Siemens will engineer and supply the mechanical equipment for rolling and handling. The rolling train will be equipped with 18 RedRing rolling stands 6 each in the roughing, intermediate and finishing sections of the line. These mill stands are characterized by their highly rigid and sturdy design, reliable operation, quick roll change capability and easy maintenance requirements. A quick stand change device will be installed in the finishing section to minimize mill downtime. The handling area of the mill will include a 66 meter long cooling bed, a cold flying shear with a 190 tonnes cutting capacity, a bar counting device and an automatic bar bundling system
Gulf Steel Construction Industries Company Limited a subsidiary company of Al Nasser Industrial Enterprises, currently produces reinforcing bars of 120,000 tonnes per annum, cold ribbed bars of 36,000 tonnes per annum and welded mesh of 30,000 tonnes per annum, which are used in the construction industry throughout the Middle East. 

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Industries Qatar Second-Quarter Net Income Increases 41%

Industries Qatar, the largest company on the Doha stock exchange, boosted second-quarter profit 41 percent as it tapped demand for chemicals and steel in the Middle East, Europe and Asia. Net income at the Doha-based company rose to about 1.2 billion riyals from 854 million riyals a year earlier. Like other Gulf petrochemical producers, Industries Qatar is seeking to expand overseas and exploit cost advantages from access to cheaper raw materials than rivals in Europe and North America. The company was formed in 2003 by state-owned Qatar Petroleum, which retains a 70 percent stake. First-half net income was about 2.1 billion riyals, or 4.1 riyals a share, Industries Qatar said in a preliminary earnings statement to the Doha stock exchange. That's 33 percent higher than the 1.58 billion riyals reported a year earlier.
Second-quarter figures were calculated using first-half and first-quarter statements. Industries Qatar didn't immediately respond to calls seeking confirmation of the calculations. The company plans to publish more detailed results in August.

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Construction Boom Sparks Steel Demand in Arab World.

The steel industry in the Middle East is heading for major expansion as crude steel production is projected to increase by nearly 70 percent from 15.4 million tons in 2006 to over 26 million tons by 2010.
According to a report entitled “The Steel Industry Worldwide and Regionally: Assessment of Development and Outlook,” by the Kuwait-based Gulf Investment Corporation (GIC) released recently, steel demand in the region is dominated by long products, most of which are used in construction. Long product output such as rebar will be the dominant form of steel production, although its share of output will be declining. Rebar output grew from 14.1 million tons in 1997 to 21.6 million tons in 2004 and is expected to reach 28.9 million tons in 2010.
Although the Middle East has been one of the world's active regions for steel plant suppliers in recent years, its steel plants are mostly starting from a lower steel-making base especially in flat products. The report said total flat products production has increased from 9.9 million tons in 1997 to 18 million tons in 2004 driven mainly by Turkey and Iran and to a lesser extent Saudi Arabia and Egypt.
In the Middle East, most current investments are driven by growth in domestic demand emanating from strong construction boom. Steel demand in the region is expected to increase from 70 million tons in 2007 to around 90 million tons in 2010. GCC steel demand will be in the range of 20-30 million tons during the same period.
According to a report in the Metal Bulletin Research (MBR) in its December 2006 issue, steel capacity expansion will be dominated by Egypt, Saudi Arabia and UAE. Egypt will have added capacity expansion of nearly two million tons, Saudi Arabia 5 million tons and UAE 1.5 million tons by 2010.
Also finished steel products capacity will increase by 46.7 percent from 22.9 million tons in 2006 to 33.6 million tons in 2010. Main capacity increases include UAE by 3.1 million tons, Egypt by 2.5 million tons and Saudi Arabia by 1.9 million tons. According to MBR report, raw steel production is expected to reach 51.5 million tons and 62.9 million tons in 2007 and 2010 respectively.
Due to rising steel demand, which is growing at 9 percent rate, Middle East to become a net importer of semi-finished steel, mainly billet, slab and HR coils. The large increase in consumption of semis and flat products has been partly met by imports, which have been risen from 6.4 million tons in 1997 to around 25 million tons in 2005 and is expected to reach 30 million tons this year.
According to the GIC report, GCC countries are net importers of products such as ingots, steel tubes, seamless, hot rolled rod in coil, welded tubes and cast iron pipes. However, net imports are likely to fall back to 5.4 million tons by 2010 with the expected increase in domestic demand.
Arab countries have DRI/EAF plants with total capacity of 8.75 million tons. Qatar and Saudi Arabia have started their production in 1978 and 1983, respectively, with production capacity at 0.72 million tons and 3.65 million tons each, then Egypt with 2.92 million tons in 1986 and Libya with 1.46 million tons in 1990. Middle East iron ore imports have increased from 14.5 million tons in 1997 to 22.2 million tons in 2004 and are expected to reach 42.5 million tons by 2010.
Currently, GCC countries are negotiating to sign possible Free Trade Agreements (FTAs) with China and India. Such agreements are likely to have a great impact by inducing more imports of finished steel products to the GCC market, mainly from China.
The GIC report added that the Middle East steel consumption has grown by 31.1 percent from 34.7 million tons in 2005 to 45.5 million tons in 2006 and is expected to reach 73.3 million tons by 2010. GCC countries are considered among the largest consumers of iron and steel products with per capita consumption estimated at 378 kg while world per capita consumption is barely 182 kg.
Total per capita consumption of finished steel in the Middle East in 2004 was 146 kg. For Arab countries, the UAE has the highest per capita consumption with 801 kg while Sudan the lowest with just 12 kg. This reflects the wide divergence among economies within the region. It is expected that by 2010, the population of the Middle East will grow to an estimated 412 million, and per capita consumption will rise to 182 kg. Per capita consumption of crude steel (378 kg) for GCC countries, on average, is relatively high compared to other regions such as Asia (138 kg), CIS (123 kg) and the global average but lower than Europe (399 kg).

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Shadeed plant to start in 2008

The $750 million Shadeed Iron & Steel Company coming up in Sohar is ahead of schedule and is expected to begin production in August 2008. This integrated steel plant has a combined production of 1.5 million tonnes per annum of iron and steel and will be the first in the world to use Hotlink technology, officials of the company said here.
The steel production is expected to significantly help the booming regional construction sector which at present is reeling under a crunch as the demand for steel far outstrip the supply. Shadeed Iron and Steel Co is a fully owned subsidiary of Al Ghaith Holdings PJSC, a UAE-based company. Ali Hamel Al Ghaith, chairman of Al Ghaith Holdings, said that the Hotlink technology will give a clear edge to the company in terms of production costs and efficiency compared to other steel producers in the region.
Ali was speaking to the media while introducing Dr B. N. Singh who was appointed the managing director of Shadeed Iron and Steel. “The induction of Dr Singh into the Shadeed team is a further reiteration of our commitment to carrying forward the project aggressively and ensure that it emerges as a leading steel manufacturing unit in the region in a short time,” Ali said. Speaking about the steel plant, Ali said that their target is to commission the DRI unit in August 2008 and the steel melt shop in the second quarter of 2009. Most of the steel production will be consumed by the regional market to satisfy the voracious appetite of the construction sector.
The technology selection and major site work is being done by leading international companies and the major packages are awarded on a turnkey basis to avoid further interagency conflicts and to ensure timely execution of the project. Dr Singh in his comments said that he was pleased to be part of Shadeed Iron and Steel which has committed leaders at the helm coupled with strong financial backing from Al Ghaith Holdings.
Dr Singh who has over 37 years' experience in steel companies across the globe noted that there are few steel companies which have such strong monetary backing. “We want to thank the Almighty and also thank the Government of Oman for helping Shadeed Iron & Steel to come to a stage where the project is already ahead of schedule and we are confident that it will become a benchmark in steel-making in the region,” Ali said. “We want to make Shadeed Iron & Steel a prized part of Oman and as part of this commitment we will hire and train Omani youth according to the Omanisation rules and make them suitable for our plant,” Dr Singh said while outlining his plans for the future of the company.
Shadeed Iron & Steel will also set up an institute of metallurgy to train local youth, both skilled and unskilled in the nuances of steel-making, and they will be absorbed into the plant.

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Gulf steel makers to get iron ore

Steel makers in the Gulf and neighboring region will start receiving iron ore for their plants from Mauritania in 2010. As per report an Australian listed company Sphere Investments, 18.4% owned by Saudi steel firm Hadeed and Qatar Steel, aims to export 7 mn tonnes a year of high grade direct reduction iron ore pellets from 2010 to the Middle East and North Africa to produce steel. Mr Alexander Burns MD of Sphere said that "We have proven reserves of 472 million tonnes to mine over a period of 33 years. Mauritania will help steel producers in the region in diversifying their sources of iron ore.”
Mr Burns added that iron ore prices have been steadily rising since 2003 and are expected to rise 25 % by 2008. In 2005, iron ore prices soared by 71.5% due to high demand in China. To tap vast liquidity in the region, Sphere has listed on the Dubai International Financial Exchange. Sphere is an equal partner with Mauritania's iron ore producer Societe Nation ale Industrielle et Miniere in the iron ore pellet project. Both companies signed a pact with Saudi Basic Industries Corporation Hadeed's parent, and Qatar Steel Company in March 2007 to develop the Guelb Al Aouj project as part of a new iron and steel consortium. Sabic and Qatar Steel will acquire 34.9% and 15% stakes respectively in the company being set up for the USD 1.5 billion iron ore mining project.

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SABIC to acquire 35% stake in Mauritania

It is reported that Saudi Basic Industries Corp. agreed to take a 35% stake in a SAR 5.6 billion (USD 1.49 billion) iron ore project in Mauritania, it informed in a statement that its share of the project to produce iron ore pellets is costing USD 262
million. Their partners in the project include Australia's Sphere Investments, Mauritanian iron ore producer Societe Nationale Industrielle et Miniere and a unit of Industries Qatar. SABIC H1 profit up by 45% YoY. They announced a net profit of SAR 12.8 billion for the H1 of 2007 up by 45%YoY as compared to SAR 8.8 billion in the same period of 2006.
Mr Mohamed Al Mady VC & CEO of SABIC said that "SABIC's consolidated operating profits for the first half of 2007 amounted to SAR 19.2 billion compared to SAR 13.3 billion in the same period in 2006 an increase of 44%.”
Further he added, “SABIC reported a record Q2 net profits in 2007 of SAR 6.5 billion compared to a record net profit of SAR 6.3 reported for Q1 2007. The SABIC Board of Directors, under the chairmanship of Prince Saud bin Abdullah bin Thenayan Al Saud, has approved the distribution of cash dividends amounting to SAR 2.5 billion at SAR 1 per share to SABIC shareholders for the first half of 2007.

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Japan Steel asks domestic companies to become shareholders

Nikkei reported that Japan Steel Works Ltd has considered asking Tokyo Electric Power Company and other major business partners to buy stakes in it as a way to defend itself against hostile takeover bids by foreign capital. The company will ask nuclear plant builders, steel makers, electric power companies and others to buy its shares.
Nikkei added that holding an estimated 80 % of the world's market for large scale steel parts used for machines such as steam generators and pressure vessels in nuclear power plants, Japan Steel is eyeing such a step amid growing global demand for nuclear power plants.
A Japan Steel company executive said, "We want to increase the number of loyal shareholders that will continue to hold our shares regardless of changes in share prices as part of defense measures." Japan Steel is concerned about takeover bids by foreign companies and investment funds.

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Shougang to receive tax rebate to fund relocation

Xinhua reported that China's State Council has agreed to give a total tax rebate of CNY 3.8 billion (USD 503.32 million) to Shougang Steel Group, while a subsidy to offset the company's bond interest payments will also be offered to support its relocation.
Mr Li Ping, director of the Beijing Municipal Bureau of Industrial Development told Xinhua news agency that China government will return all the value added and income taxes the steel company will be charged between 2006 and 2009. Another CNY 1.9 billion will be offered to offset the company's interest to its bond buyers.
Shougang said earlier that it hoped the government would return CNY 8 billion in taxes between 2004 and 2010. The steel maker also applied for a treasury bond discount loan of CNY 4 billion to sponsor its relocation and provide subsidies to workers.
Shougang is now building a CNY 67.7 billion steel works at Caofeidian deep water harbor. It will move all its Beijing based production facilities to Caofeidian by 2010. The new plant is a JV of Shougang and Tangshan Steel and Iron Group will adopt environment friendly technologies to minimise toxic emissions and waste discharges. The relocation project will cost an estimated CNY 33.8 billion with CNY 17 billion provided by the central government. Shougang will cover the remainder.
State owned Shougang is one of the capital's worst polluters. Beijing's only blast furnace steel maker started relocating its 88 year old plant in 2005 to reduce pollution in the capital for the 2008 Olympic Games. It will move to Caofeidian in Hebei Province.

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TKC Steel Corp acquires Treasure Steelwork

It is reported that Philippine based TKC Steel Corp has acquired the 96 % equity of Iligan based Treasure Steelworks Corp for PHP
96 million. Absolute deeds of assignments of shares were signed by previous Treasure shareholders on June 29th 2007. Billions Steel International Ltd, a corporation existing under the laws of the Republic of the Mauritius and Makati based SYL Holdings Inc transferred their rights and interests in Treasure Steelworks to TKC Corp. With the sale of their shares, Billions Steel and SYL Holdings each ceded a 48% stake in Treasure. Stockholder Dominador Yap holds 4% of Treasure.
Incorporated in February 23rd 2005, Treasure has an authorized capital stock of three million shares worth PHP 300 million. Subscribed and paid in by investors amount to PHP 100 million. Treasure Steelworks operates its billet plant in a 20 hectare area in Brgy Maria Cristina area of Nonucan in Iligan City of Philippines. Its products are principally used by rebar manufacturers. Ms Ma Hazel L Rabara, corporate information officer of TKC Steel Corp said, "The business potential of Treasure, currently the largest billet plant in the Philippines with a current capacity of 300,000 tonnes per annum, cannot be sufficiently emphasised. It is expected to produce 188,000 tonnes of steel billets by the end of 2007.”
Ms Rabara added that Treasure's output is expected to reach 2,64,000 tonnes with sales growing to PHP 6.6 billion. She said, "Given this production capabilities of Treasure, TKC intends to maximise revenue generation by undertaking the marketing and sales of all the billets manufactured by Treasure.”
Treasure has a PHP 500 million capital expenditure program to be completed in the second quarter of 2009. Some PHP 50 million will be spent for the scrap processing equipment to reduce production cost and improve production efficiency and meet quality standards. PHP 450 million will be equally divided for ladle furnace to increase production, rehabilitation and conversion of two operating EAFs or electric arc furnace and port improvement and expansion.

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Vietnam attracting huge investments in steel sector

Vietnam News Agency reported that Vietnam's steel industry is heatening up on the back of foreign investors queuing up to take advantage of the Vietnam's expanding economy and increasing demand for steel from the domestic construction sector.
Mr Pham Chi Cuong president of the Vietnam Steel Association while speaking with a Vietnam News Agency's correspondent said that the presence of big international steel groups in Vietnam reinforced the attractiveness of a Vietnamese steel market that has been fuelled by an average yearly domestic demand growth of 40%. Mr Cuong outlines some of the likely major investments as under
1. India's TATA Group's proposed project near the Thach Khe iron mine in central Ha Tinh province that when fully operational will roll out 4.5 million tonnes a year.
2. South Korean POSCO Group is now planning to invest in a steel plant with a total output capacity of 3 million tones of rolled steel at the Phu My 2 Industrial Zone in southern Ba Ria Vung Tau province. Work on the 1 billion USD plant is scheduled to begin in August.
3. POSCO has also signed a deal with the Vietnam Shipbuilding Industry Corporation Vinashin to build a steel complex with a capacity of 5 million tonnes of steel plates and rolled steel per year.
4. India's Essar has also linked up with the Vietnam Steel Corporation and the Vietnam Rubber Corporation on a 527 million USD project in Ba Ria Vung Tau province that will pump over 2 million tonnes of rolled steel per year into the domestic market.
5. Taiwan's Tycoons and E United have received the green signal from the local authorities to invest 1.8 billion USD in a plant in the Dung Quat Economic zone. Construction of the plant is slated to begin in mid October.
In addition, several smaller projects including a JV in Hai Phong to produce steel pipes and rolled steel and another in Ho Chi Minh City to manufacture corrugated iron are underway.
Mr George E Kobrossy GD of Zamil Steel Vietnam, which has been operating in the country for over a decade said that low cost work force, political stability, incentives from the Vietnamese Government and a readiness of local businesses to cooperate as primary reasons for the boom in the industry.

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POSCO posts 55% YoY increase in Q2 profit

South Korean POSCO has reported that its second quarter profit climbed by 55% YoY as it raised prices to benefit from rising demand from carmakers and shipbuilders.
POSCO's net income rose to KRW 1.11 trillion (USD 1.2 billion) in April to June 2007, the highest in eight quarters, from KRW 716 billion in April to June 2006. Its operating profit rose to KRW 1.25 trillion in April to June 2007 from KRW 941 billion in April to June 2006 as its sales rose by 25% YoY to KRW 5.82 trillion.
Mr Lee Dong Hee executive VP of POSCO said that POSCO would spend KRW 6.1 trillion to boost output this year and that it will raise output to 50 million tonnes by 2010 from 30.8 million tons this year.
POSCO cut KRW 369 billion in costs in the first half and said it expects to save as much as KRW 617 billion won for the year, 27% more than a previous forecast. POSCO has also revised this year's operating profit forecast by 7% to KRW 4.6 trillion and raised the sales target to KRW 22.7 trillion.

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South Korea Steel Export to Rise to 12.8% YoY in 2007

  It is reported that South Korea's exports buoyed by strong sales in automobiles steel and shipbuilding are expected to reach USD 367 billion in 2007.
The Korea ministry of commerce industry and energy said that the revised estimate represents a 12.8%YoY gain from 2006 when exports topped USD 325 billion and forecast that overall export volume will grow USD 7 billion more than January estimates when export growth for 2007 was forecast at 10.6%.
Mr Cha Dong hyung head of the ministry's export import team said that "The good showing is a sign that exports were not seriously hurt by unfavorable exchange rates but helped by steady gains in the world economy that may grow 4.9% in 2007". He added that higher value added products made by South Korean companies improved brand recognition while successful overseas market diversification also contributed to the upbeat forecast.
Mr Cha said that while export growth from January to June 2007 soared to 14.7% and is forecast to dip to 11.2% in the second half whereas imports could rise by 13.9% on an annual basis to USD 352 billion with the country's trade surplus reaching USD 15 billion down by roughly USD 2 billion from 2006.

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TKC Steel now on secondary board

The Philippine Stock Exchange (PSE) approved TKC Steel Corporation's (TKC) application to upgrade its listing to the secondary board from the SME board. PSE likewise approved TKC's request to list 680mn new common shares, which were subscribed by parent firm, Star Equities, Inc. (SEI). The additional common shares will be listed on 01 August, carrying a par value of P1 apiece, to cover SEI's private placement based on subscription of P1 per share. TKC eyes to generate P8.1bn in sales once Iligan-based Treasure Steelworks Corporation reaches full design capacity by 2009

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Philippines miner to register sales contracts with government

According to Philippine department of environment and natural resources, foreign miners in the Philippines will have to clear their sales contracts with the government to ensure proper tax returns.
Mr Angelo Reyes secretary of environment said, "We want to be sure that the government knows and is
made aware of and is informed on what is sold at what price and to whom. This is crucial because price determines aside from volume gross revenue, how much excise tax will be collected and how much income tax will be collected. We want to be reasonably certain that government interest is protected here."
Philippines is reliant on foreign investors to revive its once mighty mining sector but the government is also under pressure to improve tax revenues after admitting it probably missed its first half budget deficit goal due to weak tax collection. Despite record metal prices there has yet to be a major overseas investment in the Philippine mining sector owing
to legal uncertainties and influential opposition from
the Catholic Church.

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Hyundai Steel orders for 3 Slab Casters for Dangjin Works

Siemens Metals Technologies received an order from Rotem, a company of the Hyundai Motor Group, for the supply of three 2 strand slab casters for the new integrated iron and steel works project of the Korean steel producer Hyundai Steel Company. The three casters will be installed at the steel producer's Dangjin Works and are scheduled for start up in late 2009.
Siemens will supply its continuous casting technology and the related engineering and key components for three 2 strand slab casters, which will be installed at the Dangjin plant site. These will have a combined annual casting capacity of 8.4 million tonnes of steel. The slabs will be cast in thickness of 225 mm and 250 mm and at widths ranging from 800 mm to 2,200 mm. The cast steel grades will include ultra low carbon to high carbon steels as well as micro alloyed steels. These will be rolled to coils, which will be primarily used, in the automotive industry of the Hyundai Motor Group and also in the household appliance industry. Steel, which will be rolled to plates will be used in shipbuilding.
Hyundai Steel Company is Korea's largest electric steel producer and the second largest electric steel producer in the world. At three production sites in the Republic of Korea the company currently produces a total of approximately 11 million tonnes of steel per year comprising carbon steel products, including reinforcing bars, angles, channels, wide flange beams, rails, coils and sheets, and stainless steel products, including cold rolled sheets and coils.

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China's iron ore imports to reach only 367 million in 2007 - CISA

Mr Luo Bingsheng deputy director of China Iron & Steel Association at the recent iron ore working conference said that China's iron ore imports are estimated to reach 367 million tonnes lower than the prediction of 400 million tonnes given by overseas institutes. CISA has predicted in the start of 2007 that China may take some 355 million tons of iron ore imports in 2007 while the ore imports already amount to 188 million tonnes in the H1 of 2007.
Mr Luo noted that the global top 3 ore miners have made a deliberate production cutback recently to exaggerate supply tightness and push up ore prices in the spot market, which would help them gain a favorable negotiating position in the forthcoming ore talks. In fact, China's ore imports have reduced by 6%YoY in June 2007 well reflecting the suppliers' preemptive efforts in curbing ore export. The big 3 intend to further trim their shipment to China by 5 million tonnes at least from July to Sept.

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South Korea May Put Quality System For Low End Steel Imports

It is reported that South Korea will set up the quality certified system for low end steel products. A new amendment for construction law was proceeded to define the quality attestation as an obligation of building industry.
This action mainly restraints the import of low end steel products from China and is expected to largely decrease the poor quality of steel like H beams and other construction steels to be applied.

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Baosteel Darts up US4$ bln in the Brazilian board 

China's steel making giant, Baosteel signed up an undertaking - worth US$4 billion- with Brazilian iron ore producer Companhia Vale do Rio Doce (CVRD), for a steel slab manufacturing. The transaction is going to benefit Baosteel as there is surge in the domestic iron sales and thus it eyes CVRD as a feasible option. Amidst transaction, reports are that the trade in material is likely to encounter 25% price of that in China due to taxes and transport costs. Their estimated production capacity this year is 4.1 million tons of steel slabs.
The agreement marks the beginning of positive negotiations for both companies, following their long-standing dispute over a joint-venture site with the State Government of Maranhao- the original location intended for the steel slab plant. Baosteel's very first advance into foreign markets, the steel maker and CVRD had initially planned to build the plant for US$1.5 billion in Brazil's Northern-State of Maranhao four years ago. However, talks were frozen on the project in 2005 when arguments with the Maranhao government over costs relating to environmental licensing, land purchases and tax issues arose. Negotiations resumed early this year.
Built with an initial production capacity of five million tons of steel slabs, the plant will now be constructed in the industrial district of Anchieta in the coastal state of Espirito Santo. According to CVRD Director Pedro Gutemberg, the plant would cost US$3 billion to US$4 billion, of which Baosteel will fund 80% to 90%. Development Secretary of Espirito Santo said that developing the site for Baosteel's plant will stretch over five years and create 21,500 employment opportunities. According to the Dow Jones Newswires, the Shanghai-listed company is all set to report a first-half pretax profit of RMB 22.02 billion, two folds more than the previous year. Baosteel is also likely to stream in RMB 107.5 billion for its first half revenue, a 26% climb from the same period a year ago- bolstered by higher steel prices.
China has been pushing domestic steelmakers on to spread out their output overseas while increasing its supervision on the approval process for constructing new steel plants in the mainland. Since then replying to the push, in May, four steel heavyweights helmed by Wuhan Iron & Steel and Baosteel announced their objective to set up a joint venture iron ore investments in Cambodia.

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'Brazealing' up: Metal executive chalk-out a 'free trade' export plant

Brazilian metals executive Raimundo Pessoa is negotiating the creation of a major steel slabs export project in Maranhao State in North Brazil, which is about to become a free trade zone. "The Companhia Siderurgica Mearim will have a total capacity of 10 million tonnes per year of steel slabs to be built in two or three phases involving a total investment of $5 billion," said Helio Vilaca, a Project Consultant.
"Brazil's CVRD should have a minority stake in the new project, which is also the subject of talks with potential partners from abroad," said Vilaca, adding he could not disclose the identity of the concerned partners. However, it is confirmed that these do not include Chinese steelmaker Baosteel, which was recently involved in studies on another possible slab for export project together with Companhia Vale do Rio Doce (CVRD) at Sao Luis, also in Maranhao state.
The new project will be positioned at Bacabeira, near the Mearim river, where a port will also be set up in a further $100 million investment. "Preliminary environmental licenses for the port and for the steelworks have already been requested from the Maranhao state authorities," he said, adding that these are expected to be approved shortly.
Brazilian Senate has of late approved the area of Bacabeira as a 'free trade zone,' which means the import and export taxes will not be levied. However, this is still subject to approval of Brazil's President Luiz Inacio Lula da Silva. Once the project finds the President's nod, it could take 42 months to build the first 3.5 million tonnes per year phase of the new steelworks. Raimundo Pessoa, who owns a 5,000 hectare stretch of land at Bacabeira, was earlier the President of former Brazilian zinc producer Paraibuna de Metais and owns copper miner Mineracao Caraiba.

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Carving an eco-friendly mark: Latino Steel tracks measures to limit pollution

It is high time now that people have started realising the ill-effects of green house gases. The piling up of untreated industrial domestic waste invites our attention towards global warming.
As regards to the global concerns, Latin American Steel is fast to realise the preventive measures for the environmental hazards. Its regional steel sector has curtailed its carbon dioxide emissions by introducing modern eco-friendly technologies and efficiently using energy resources
In the fast paced environment wherein no country abides by the Kyoto framework, Latin America is a region that stays unique. The competitors within the region have adopted preventive measures on toxic-wastes and inculcated those into their business ethics.
Environment oriented steps are a painstaking tasks indicating higher costs for the company, yet due to its uniqueness, Latin America has gained access to attractive commercial areas such as European Union.

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Colombia Boyacá region to attract steel makers

 BNamericas cited Mr Edgar Jiménez an analyst at local brokerage Promotora Bursátil saying that investing in central Colombia's Boyacá is a good move for steelmakers interested in consolidating their presence in the country.
Mr Jiménez said, "There is a healthy amount of natural resources in the region and most importantly the steel sector has everything it needs because not only is there iron ore but also limestone and coking coal." He believes that Boyacá is important because now there is a merger underway between Hornos Nacionales and Aceros Sogamoso, which are located half an hour from the APR plant and close to all of that mining potential in the department.”
He further added that speculation abound in Colombia that mergers and acquisitions will continue in the steel sector. One rumor claims that Votorantim and fellow Brazilian Grupo Gerdau are very interested in Boyacá companies. There is some fierce competition for this market, which has been handled with a very low profile, but there are rumors about possible agreements. Colombia's principal iron ore deposits are located in Boyacá in the areas of Belencito and Samacá where local steelmaker Acerías Paz del Río is located. Acerías Paz del Río is 52% owned by Brazilian group Votorantim.
According to figures from the Latin American Iron and Steel Institute, in the first half of 2007, Colombia produced 604,800 tonnes of crude steel, up by 3.5%YoY over 584,300 tonnes, while primary iron production fell by 2.6%YoY to 170,900 tonnes. The structure of Colombia's steel chain is made up of integrated and semi integrated steelmakers, steel fabricators and traders and wire producers.

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Arcelor-Mittal acquires remaining equity in Poland facility

 Arcelor-Mittal today announces that it has reached an agreement with the Polish Government to acquire the outstanding 25.2% shares of ArcelorMittal Poland currently held by the Polish State and Treasury Ministry. ArcelorMittal has agreed to acquire each share at a price of PLN 6.5, valuing the remaining 25.2% of shares at approximately PLN 436 million (approx. USD 157 million). ArcelorMittal initially acquired 69% of the Polish company in March 2004. As part of that agreement, ArcelorMittal received an option to purchase a further 25% from the State Treasury at a date in the future.
Arcelor-Mittal also agreed to an investment commitment of some PLN 2.4 billion (approx. USD 865 million) relating to four major projects. This investment has now been implemented in full, with the largest single project – the construction of a new hot strip mill – having been commissioned earlier in June
and formally inaugurated in Cracow recently. Commenting, Mr Michel Wurth, Member of the Group Management Board with responsibility for Flat Products Europe, said: “I am delighted that we have reached an agreement with the Government to acquire the remaining 25.2% shares of ArcelorMittal Poland. Under ArcelorMittal's ownership, the performance of the Polish operations have improved considerably.
Poland's economy is continuing to post strong growth and we are confident about the long-term prospects for the company. Following the completion of the four major investment programs, ArcelorMittal Poland boasts some of the most technologically advanced steel-making facilities in the world and is now capable of producing the highest quality products for the most sophisticated applications in all steel consuming markets.

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Kumba Iron Ore posts 38% rise in net profit

South Africa's Kumba Iron Ore posted a 38 percent rise in first-half basic attributable headline earnings per share to 502 cents, driven by higher prices, sales volumes and output, the miner said. Kumba said recently, revenue rose by 35 percent on higher sales volumes and prices. Kumba, which is majority owned by Anglo American, is the world's fourth-largest supplier of sea-borne iron ore and exports 73 percent of its 32 million tonnes per year production to Europe and Asia.
Kumba Iron Ore was born out the unbundling of Kumba Resources, a process which also created Exxaro. Increased activity at its Sishen Mine lifted the total mined by 23 percent to 51.2 million tonnes (Mt), while operating expenses rose due to increases in labour, contractors, raw materials, fuel, energy and other input costs. Profit for the six months ended June 30 was 2.0 billion rand compared with 1.4 billion rand a year earlier.
Kumba said the figures for the year-ago period were purely for comparison purposes as Kumba Iron Ore started trading in November 2006 after the split from Kumba Resources.

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ThyssenKrupp to expand ferritic stainless capacity at Acciai

Metal Insider reported that German steel giant ThyssenKrupp's Italian stainless operations Acciai Speciali Terni are expanding their ferritic steel product portfolio to include special grades that can replace classic chromium nickel steels in some areas of application.
Thyssenkrupp said that this will be achieved with a new VOD converter which is under construction. It is part of a bigger overhaul of the Terni complex, which is being invested heavily in a quid pro quo with the Italian government and unions for the closure of the Turin operations. Much of the latter will be transferred to Terni with the process due to be completed at the end of fiscal 2007-08.
The ongoing investment will see melt shop capacity rise to around 1.7 million tonnes per year with Terni's cold rolled production expected to rise incrementally from around 600,000 tonnes per year to 700,000 tonnes per year in the medium term.

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China Steel to Expand No.1 Blast Furnace Capacity

China Steel Corporation (CSC) of Taiwan plans relining and expansion of no.1 blast furnace at Kaohsiung works in 2010-2011, for around 6.5 billion new Taiwan dollars. The firm tries to expand the output along with the renewal of old facility. The firm starts the works after commissioning of new integrated steel plant by the group company, Dragon Steel. CSC expands the blast furnace capacity to 2,600-2,700 cubic meters from current 2,434 cubic meters to increase the output by 200,000-300,000 tonnes to 2.3 million tonnes.

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MMK to set up a new 2.1 mn tonne CR complex

Magnitogorsk Iron and Steel Works announced that it has signed a contract agreement with SMS Demag for the delivery of equipment for the new cold rolling complex. The implementation of the project will take 36 months. The equipment of the new cold rolling shop will include a continuous hydrochloric acid turbulent pickling line in combination with a 5 stand tandem cold rolling mill designed to produce 2.1 million tons per year, a 450,000 tonnes per year continuous hot dip galvanizing line, a 650,000 tonnes per year combined continuous annealing and hot dip galvanizing line. A rolls grinding and texturing shop, a strip inspection and slitting line packing lines for full hard and galvanized coils would also be installed.
The product range will comprise cold rolled coils weighing up to 43.5 tonnes in 0.28mm to 3.00mm thickness and 850mm to1880mm width. The project will allow to raise the share of cold rolled and galvanized steel in the total output of MMK broaden the range of steel grades produced, and supply premium quality cold rolled and galvanized sheet to automakers including HSLA, IF-HSS, BH, DP, MP and TRIP steels meeting the most stringent requirements for this kind of products.
MMK said that the necessity of commissioning new facilities for pickling, rolling, continuous annealing and finishing of cold rolled products has been prompted by increased demand for premium quality cold rolled steel, especially auto body sheet. Thus, the new complex using leading edge technologies and processes will produce top quality cold rolled and galvanized steel for the manufacture of exterior and interior automobile parts white goods and for the construction sector.

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Ternium Completes Acquisition of Mexican Steelmaker Grupo Imsa

Ternium SA, which makes steel in Argentina, Mexico and Venezuela, completed the acquisition of Mexico's Grupo Imsa SAB. Ternium now owns all of Grupo Imsa's outstanding shares after paying $6.40 apiece, the Luxembourg-based company said in an e-mailed statement. Ternium said the $3.2 billion acquisition will give it better access to the North American steel market. The company said it will take out a syndicated loan of $3.8 billion to finance the transaction and repay existing debt.

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