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Dear Readers,

Since last few years, Asia has always been a leader in world Steel consumption with around half of the world Steel demand generated in its markets. The Asian region comprises of developing countries like India, China, the Middle East, SE Asian countries and some CIS countries where infrastructural development is at the forefront of the agenda. The other Steel consuming sectors like auto industry and the white goods sector view Asia as the fastest growing market, thus further strengthening Steel demand. Though the region witnessed a setback when economies of some of the South East Asian countries faced currency crisis, most of the lost ground has been made up and these countries are again on fast growth track. All this makes Asia the most favoured destination for not only Steel makers but for all the allied sectors like technology providers, equipment manufacturers, raw material suppliers etc.

Any change in finished Steel prices has a cascading effect and it influences the whole supply chain. Raw material prices, which were also shooting out of the roof for quite some time, have also started settling down. Today, Iron ore and Coal linkage along with met coke availability are the key factors influencing the prospects of any company. What are the short term and long term perspectives regarding Steel raw materials?

The international trade is slowly being dominated by value added products day after day. Also, the winds of liberalisation are reaching developing countries opening new markets for Steel products. Which are these new products? Where are the emerging markets? How big is the role of logistics? Where will the international Steel trade reach by 2012?

The viability, longevity and growth of any manufacturing based business largely depend upon technology. It can be the strongest driver of cost competitiveness and can provide the required cutting edge to overcome competition. What is the right technology for a particular product? How local conditions affect the selection of technology? How much should be the 'cost of technology'?

These and many other crucial issues, country profiles, success stories, technology updates will make the 7th Asian Steel Conference meaningful, informative and thus IMPORTANT.

 D.A.Chandekar
Editor & CEO

 

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ISPAT INDUSTRIES TO INVEST RS 1,500 CR IN MP 

Pramod and Vinod Mittal-promoted Ispat Industries said it would make an investment of Rs 1,500 crore on various projects in Madhya Pradesh pursuant to the allotment of a coal block. The company has entered into an MoU with Madhya Pradesh Government's MP Trade & Investment Facilitation Corp (MPTIC). MPTIC is a wholly-owned subsidiary of the state government, the company said in a communiqué to the Bombay Stock Exchange.

The company would make investments through a special purpose vehicle for setting up the facilities in the state, it said. The facilities would provide employment to about 500 people, the company added. The facilities set up by the company would include a coke oven battery plant, coal washery and beneficiation plant and a 150-MW pit head power plant. The company would start with setting up of the facilities after it has obtained all the required approvals for the same, it said.

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FACOR TO INVEST RS 2,500 CR ON EXPANSION

Enthused by growing demand, metals and mineral company Facor group plans to invest Rs 2,500 crore for setting up a stainless Steel plant and a captive power unit in Orissa. The facility would completely absorb the production of ferro alloys from the group's units in Andhra Pradesh and Orissa and help it to become a large player in the stainless Steel market. “We plan to move ahead the value a chain, from a producer ferro alloys to an integrated player with captive chrome ore mines, coal-based power plant, Ferro chrome plant and a stainless Steel plant,” Facor group Chairman and Managing Director R K. Saraf said. “To realise this, we plan to spent Rs 2,500 crore over the next few years to set up 0.5 million tonne greenfield stainless steel plant in Orissa close to our existing ferro alloy facility and a 250 mw captive power plant,” he added.

The company plans to use the entire production of 1,40,000 tonnes of ferro alloys from its plants in Orissa and Andhra Pradesh for use in the proposed steel plant. It already has a 60,000 tonne facility for producing stainless steel and carbon Steel. Facor is also eyeing wind power and has made a beginning by setting up a 12 mw unit with an investment of Rs. 60 crore. It is also looking at setting up a forging unit. Meanwhile, the group on Monday announced results for the second quarter ended September 2007 posting 52% increase in turnover to Rs 266 crore. The net profit of the company has also increased by 188% to Rs 44 crore. The group intends to close the current financial year with a turnover of Rs 1,000 crore.

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CPI WARNS BJD OF 'SEVERE CONSEQUENCES' ON POSCO ISSUE

The Communist Party of India (CPI) warned the ruling BJD in Orissa of 'severe consequences' if it engaged anti-social elements to acquire land for setting UPA the proposed steel plant by South Korean Steel giant POSCO. The statement by the state unit of CPI came a day after local BJD MLA and former Minister Damodar Rout led a pro-POSCO rally near the proposed project site at Balitutha in Jagatsinghpur district. Without naming Rout, senior CPI leader and former MLA Nityananda Pradhan alleged that the BJD leader was championing the cause of POSCO for personal interest.

The BJD leader was taking help of anti-social elements to terrorise people who oppose POSCO project, Pradhan alleged. Cautioning the state administration, CPI said that another Kalinga Nagar type incident, where 13 people were killed in police firing last year, might occur if Chief Minister Naveen Patnaik encouraged such practice. Pradhan asked the government to settle the issue with local people through dialogue instead of instigating violence. He also warned the Earsama MLA (Rout) that POSCO would not come to his rescue, if people oppose him in his constituency. When contacted, Rout told the media that he had never used any anti-social element to advocate for POSCO.

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MITTAL STALL IN INDUSTRIAL FAIR SHOWS INVESTMENT INTENT: CM

Arcelor-Mittal, which has proposed to build a 12 mtpa Steel plant in Jharkhand, will put up a stall at the state-sponsored industrial fair this month - in which the government showed the company's commitment to invest. “This shows how serious Mittal Steel (now Arcelor-Mittal) is in setting up its project in the state,” Chief Minister Madhu Koda said, adding that L N Mittal had invited him to visit his company headquarters in London.

Although Mittal had signed an agreement with the state in 2005 for setting up the plant at an investment of Rs. 40,000 crore, work on the plant is yet to start owing to issues ranging from land acquisition to rehabilitation. Mittal, who was apparently unhappy with the pace of progress, later announced an identical project in Orissa but also did not scrap the Jharkhand project.

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JINDAL SAW MOVES SC FOR SUPPLY OF DUCTILE IRON PIPES

Jindal Saw Limited has approached the Supreme Court against a Calcutta High Court order that restrained it from supplying ductile iron pipes to the West Bengal government on a petition filed by rival Electrosteel Castings Limited. AS per report, a bench headed by Chief Justice KG Balakrishnan refused to stay the High Court's interim order and directed the matter to be listed for hearing during end.

Kolkata High Court had passed the order on a petition filed by Electrosteel Castings Limited challenging the Tamluk Municipality's decision to award INR 3 crore contract for supply of ductile iron pipes to Jindal Saw Limited. Initially a single judge bench refused to stay the award of the contract and held that any decision would be subject to the final outcome of the petition but on Electrosteel's appeal, a division bench had stayed the contract and restrained the state government from accepting goods from Jindal Saw Limited till the petition is disposed. According to Jindal Saw Limited “High Court failed to notice that Tamluk Municipality had awarded the contract to both the firms to ensure none of them enjoyed a monopoly.

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LANCO TO SET UP TWO 76 MW HYDEL PROJECTS IN UTTARAKHAND

Lanco Hydro Energy Private Limited is setting up 2 hydel projects of 76 MW each with a total investment of over INR 1,000 crore in Rudraprayag district of Uttarakhand. The projects were allotted through the competitive bidding route and the project development agreements have been signed with the Uttarakhand government. Survey and investigation activities have been initiated for the projects.

While Lanco Hydro is setting up 1 project at Phata Byung area on the banks of the Mandakini River with an investment of INR 484 crore, another project is coming in the Rambara area with an investment of nearly INR 490 crore. For the construction of the Phata Byung project, a 9.4 km long tunnel is also being built as its power house will be underground. Similarly, the Rambara project will have a 7 km long tunnel.

The detailed project report on both the dams had been submitted to the government. These are run of the river type hydel power projects and are likely to be completed by 2011. The project officials said that they were awaiting environmental clearance from the ministry of environment and forests. Lanco officials said that there would be no displacement due to the construction of the projects in the area.

The hydro electricity scenario in Uttarakhand is improving gradually with the government already identifying 20,000 MW of hydro electricity potential in the state. Altogether, 12,784 MW of hydel projects are in different stages of implementation in the state with the government shortly commissioning its Maneri Bhali Phase II hydro project with 304 MW on the river Bhagirathi in Uttarkashi district.

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ESSAR SEES STEEL PRICE RISE IN Q1 OF 2008 DUE TO COST PRESSURES 

It is reported that Essar Steel has forecast a price increase of USD 25 to USD 30 per tonne in the first quarter of 2008. Mr. J Mehra, Director of Essar, said that, “There is a general perception that as a result of iron ore, coal, petroleum and energy prices going up, there would be a certain amount of push on steel pricing starting from January next year. Across global markets, the indications are that there will be an increase in prices by USD 25 to USD 30 for the first quarter of 2008.”

Mr. Mehra however added that, “It would not cover fully the rise in input cost. It will partially offset the burden of increase in prices. Companies will obviously have to improve their efficiencies to absorb the balance cost because it may not be possible to pass on the entire cost to customers. Going forward if prices remains as firm as they are, there are speculations that prices may go up much beyond normal expectations, it would certainly have to be passed on and steel prices would certainly go up.

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MSP STEEL SIGNS MoU TO INVEST RS 1,000 CR IN MP

MSP Steel and Power Ltd on Friday said it has signed an MoU with Madhya Pradesh Trade and Investment Facilitation Corporation for setting up a two-million-tonne clinker and cement unit at an investment of Rs 1,000 crore. The Madhya Pradesh government would facilitate allocation of land and grant of captive limestone mines, the company informed the Bombay Stock Exchange. It sought the state government's assistance for allocation of coal linkage and allotment of captive coal block for the project from the union government.

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ESSAR STEEL NET DIPS 1.4%

Essar Steel has recorded a 1.4 per cent drop in net profit to Rs 152 crore in the quarter ended September 30, 2007, due to increased costs on account of raw materials during the quarter. Total income increased 23 per cent to Rs 2,562.85 crore. During the quarter, the production of hot rolled coils increased 14 per cent to 7.80 lakh tonnes and total sales registered a growth of 19 per cent at 8.27 lakh tonnes.

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ISPAT IND NET ZOOMS FIVE FOLD

Ispat Industries has posted a net profit of Rs 13.54 crore for the quarter ended September this year, an increase of 483 per cent over the same period last year, on the back of increased sales and foreign exchange gains. The net profit has taken into account deferred tax charges and fringe benefit tax. Profit before tax surged to Rs. 75 crore as against Rs 5.76 crore for the corresponding period last year.

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COAL MINISTRY LIKELY TO ALLOCATE 23 COAL BLOCKS IN DECEMBER

It is reported that union government will consider allocation of 23 coal blocks for the steel and cement sectors in December 2007. The report cited a coal ministry official as saying that “The screening committee of the coal ministry would meet on early December 2007 to consider allocation of 23 coal blocks for the coal and cement sectors which have been seeking adequate raw material linkage for fructifying their expansion plans.”

He added that, “Our key aim in allocating these blocks was to ensure that power generating companies were able to meet their production needs. Since the 11th Plan has set a target of additional power generation of about 78,000 Megawatts, the best way to help the power generators was to ensure them adequate linkage.”

With the allocation of these blocks, the government would exhaust all the 203 blocks it had identified for providing to the power, steel, coal, cement and sponge iron sectors. Earlier, the government allocated coal blocks for power projects and captive coal blocks.

The official pointed out that coal ministry was planning to intensify efforts to increase the pace of regional and detailed explorations for finding out more blocks for further allocation. He added that, “In India, the estimated coal reserves in about 257 billion tonnes of which 95 billion tonnes are proven ones.

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SAIL SEEKS ENTIRE IRON ORE CHIRIA DEPOSITS

Steel Authority of India Limited will not cede control over the Chiria mines and steel ministry has written to the Prime Minister's Office to communicate SAIL's position to the Jharkhand government. In the letter to the PMO, the steel ministry stated that it is not possible for SAIL to give up some of its rights on Chiria because it needed the ore from the mines for its expansion plans.

SAIL is planning to ramp up capacity at its Bokaro plant and IISCO Steel Plant in Burnpur. It is also setting up a 12 million tonne Greenfield plant at Manoharpur in Jharkhand. A total of over 32.5 million tonnes of steel making capacity will come up at these 3 locations, requiring SAIL to ramp up iron ore production at Chiria alone to 25 million tonnes.

Steel ministry officials said that “SAIL had earlier thought of taking ore mining capacity at Chiria to 7.5 million tonnes at a cost of INR 1,800 crore or so. It has now indicated to take the mining capacity to 15 million tonnes in the first phase and then to 25 million tonnes in the second phase.” They added that the Jharkhand government, too, seemed to have accepted SAIL's claim on Chiria and had refrained from trying to award any part of the mines to private players.

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TATA STEEL TO RAISE USD 2.3 BILLION IN RIGHTS ISSUE

TATA Steel Limited will raise INR 91.35 billion from a rights issue of equity shares and convertible preference shares. The issue opens on November 22nd 2007 and close during December end. The issue -a part of the financing for
the takeover of Corus Group- comprises 121.79 million equity shares issued in the ratio of 1:5, and 548 million convertible preference shares in the ratio of 9:10 equity shares held.

The equity shares are priced at INR 300 each and the convertible preference shares at INR 100 rupees each.
JM Financial, Citigroup and DSP Merrill Lynch are the
lead managers to the issue.

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CHINA AND INDIA TO SIGN MoU IN IRON & STEEL SECTOR

India and China have decided to join hands in extending cooperation in iron and steel sector and are all set to sign a MoU for the same next month. An official from Steel Ministry said that, “It is in the interest of the steel and iron sector of both countries that we enhance more cooperation in this sector. We expect to sign a MoU for this purpose with National Development and Reform Cooperation of China next month.”

According to the draft MoU, being considered by the steel ministry, both the nations would resolve to ensure transfer of technology in steel and ferroalloys and undertake joint exploration, development & production of coking coal through joint biddings or establishment of joint ventures. The scope of cooperation in iron and steel sector would include sintering and pelletization of iron ore, manganese and chrome ore fines for low and high capacity plants, technical assistance, training and exchange of personnel in mining, mineral processing, pellet and steel manufacturing besides other areas. Sourcing of raw material by steel industries of both the countries from each other, for example supply of iron ore from India and coke from China on a long term basis or independent supply of coke.

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STEEL EXCHANGE NET UP 237%

Vizag-based Steel Exchange India Limited (SEIL), which is into steel manufacturing and trading, posted a growth of 237 per cent in net profit at Rs 7.29 crore for the half year ended September 2007, compared with Rs. 2.16 crore during the corresponding period last year. Turnover increased by Rs. 37 crore to Rs. 228 crore during the period. “Better reliasation and increase in sales of our products contributed to the phenomenal growth,” B. Suresh Kumar, Director, SEIL, said.

The company expects to end the current fiscal with Rs. 15 crore net margins, as against Rs. 8.08 crore achieved last fiscal. Despite a slowdown in steel trading, it is eyeing a turnover of Rs. 525 crore during this fiscal, compared with Rs. 469 crore in the 2006-07 financial year. The merger of Vizag Profiles production and steel trading divisions with SEIL was completed recently, he said. However, Vizag Profiles' entity would continue with only logistics and handling divisions.

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SAIL Q2 NET UP 18% AT RS 1,700 CR  

  The public sector Steel Authority of India Limited (SAIL) has registered a 17.85 per cent increase in net profit at Rs 1,700.24 crore for the second quarter ended September 30, 2007, mainly on higher price realisation. The co. had a profit of Rs 1,442.81 cr. in the corresponding quarter a year ago. The shares of the country's largest state-owned steelmaker declined sightly from a record. SAIL's revenues totalled Rs. 10,371.63 crore in the quarter, up 8.2 percent from Rs. 9,585.93 cr. in the previous corresponding period. “About 40 per cent of the profit increase came from higher price realisation, while the rest came from higher produ-ction of value-added products, reduction in coke prices and better financial management,” said Chairman, S K Roongta.

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INDIA TO BECOME SECOND LARGEST STEEL PRODUCER BY 2016 

  Mr. Ram Vilas Paswan, Union Steel Minister, said that India is set to become the world's send largest producer of Steel before 2015-16 and the steel sector is likely to witness an investment of INR 870,640 crore by 2020. While addressing at the Economic Editors' Conference, he said that, “During 2006, India emerged as the 5th largest crude steel producing country in the world and is set to become the second largest global Steel producer before 2015-16. Going by the estimate of INR 4,000 crore investments per million tonne of additional capacity, the steel sector is likely to witness an investment of INR 276,880 crore by 2012 and INR 870,640 crore by 2020.”

He added that as per provisional figures, crude steel output witnessed a 9.8% growth to 50.88 million tonnes in 2006-07. Total capacity increased to 56.84 million tonnes last fiscal and the utilization was 89%. Projecting India's steel production to be nearly 124 million tonne by 2012, Mr Paswan said that India is likely to achieve an annual capacity of around 275 million tonne by 2019-20.

Indian Steel sector has emerged as a key investment destination for multinational giants like ArcelorMittal and POSCO, which have promised combined investment of more than INR 130,000 crore. India's domestic steel companies have also announced massive capacity expansions. SAIL and RINL are executing plans to increase their capacity to more than 24 million tonne and 6 million tonne respectively by 2011-12.

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TATA STEEL PACT WITH VIET STEEL FOR ROLLING MILL

Tata Steel, the world's sixth largest steel maker, today signed a memorandum of understanding (MoU) with Vietnam Steel Corporation (VSC), Vietnam's largest steel company, for a cold rolling mill (CRM) complex. Tata Steel would undertake a feasibility study for the project. On successful completion of the study and financial closure, Tata Steel would have a 65 per cent stake and VSC 35 per cent in the CRM complex.

According to intimation to the stock exchanges, Tata Steel has said that the size, scope and investment in the cold rolling project would be determined after the feasibility study. The MoU for CRM is aimed at strengthening ties with VSC. Tata Steel and VSC are in the process of carrying out a feasibility study for a steel project in the Ha Tinh province for which a MoU was signed during May-end, in Hanoi. Though the company has not mentioned the investment in the steel complex, it is estimated at $3.5 billion. The project entails a steel complex with a capacity of 4.5 million tonne.

The equity pattern after completion of the feasibility study and financial closure would be similar to the CRM complex. Moreover, Tata Steel would also have a 30 per cent stake in the Thach Khe Iron Ore joint-stock company which would undertake mining in the Thach Khe Iron ore mine. Tata Steel believes that Vietnam, with a GDP growth of over eight per cent and per capita steel consumption of over 85 kg, is on the threshold of a significant increase in steel consumption including value-added steel. Both the companies believe that the simultaneous development of the domestic primary steel and value–added Steel production is fundamental to the sustainable growth of the steel industry in Vietnam. But, Tata Steel is not the only company to zero in on Vietnam.

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SANYO SEIKI TO JOIN 'THE BIG 5 SHOW' IN DUBAI

Philippine stainless teel manufacturer Sanyo Seiki, said that that the rising demand of stainless steel in the Gulf region signals new opportunities for small and medium enterprises home building companies and that it will join 'The Big 5 Show' in Dubai during end week of November 2007.

Mr. Glenn Chan of Sanyo Seiki said that “We plan to bring our stainless steel products like coils, sheets, mirror finish, satin finish, HL hairline finish, super polish welded tubes, welded pipes, plates, angle and round bars and others stainless steel products. We are on the lookout for distributors that would help us strategically penetrate the Middle East market.”

‘The Big 5 Show’ is an annual event that has been running for more than 25 years now and is considered to be the biggest building materials event with a strong and reliable sales track record. The Big 5 Show combines seven major exhibitions under one roof, namely air conditioning and refrigeration, water and environment, glass and metals, marble and machinery, bathroom and ceramics, cleaning and maintenance, including building and construction materials.

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PAKISTAN'S COAL RESERVES ESTIMATED AT 200 BILLION TONNES 

Mr. Irfanullah Marwat, Minister for Mines & Minerals of Sindh said that Pakistan retains over 200 billion tonnes of coal reserves and if every house in Pakistan utilizes electricity even then the coal reserves would not end for the next 300 years. He put the blame on Water & Power Development Authority for the coal industries' poor performance.
Mr. Marwat said that Pakistan has coal companies which have capacity of 150 MW but are using only 40 MW because it is the responsibility of WAPDA to check on them which it is failing to do. He added that the promised power plants have also not been set up due to WAPDA's inconsistency which made the mining sector suffer. He accused WAPDA for making them lose a deal that was about to be with China. He said that foreign countries have an image that Pakistan is not serious in its dealings and therefore, they hesitate to invest. Mr. Marwat also complained that the coal mining sector is unaware of the tariffs that would be charged and they would also discourage investments as no one would like to make blind deals.

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TUWAIRQI STEEL TO START PRODUCTION IN JANUARY 2009 

It is reported that some 90% civil work of 1.28 million tonne capacity Tuwairqi Steel Mills Limited project in Pakistan has been completed and that it would start its production in January 2009. Mr. Zaigham Adil Rizvi, Project Director of Tuwairqi Steel Mills Limited, while addressing the ceremony of the tallest furnace structure of DRI, said that, Tuwairqi Steel Mills Limited is scheduled to be completed its Phase I in the next 15 months with the cost of USD 197 million for the setting up of the DRI plant. He added that around USD 300 million would be spent for the setting up of melt shop in Phase II.

He said that, “Tuwairqi Steel Mills Limited has chosen the state of the art technology MIDREX, a direct reduction process, which used natural gas to convert iron ore into direct reduced iron. MIDREX process being reliable, efficient and cost effective accounted for over 60 percent of the current world production of direct reduced iron.” He further said that, “The steel making will be carried out at 150 tonnes capacity electric arc furnace to produce 1.28 million tonnes of liquid steel per annum. The furnace would be charged with direct reduced iron and limited amount of scrap and additives and melting would be accomplished by supplying electric energy.”

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GULF COUNTRIES LOOKING FOR ALTERNATIVE AND RENEWABLE ENERGY 

It is reported that, with booming domestic demand for power, the hydrocarbon rich Arabian Gulf countries are exploring the use of alternative and renewable energy resources including coal, nuclear, solar, wind and hydrogen. There are 114 active power generation projects of all types in the Gulf Co operation Council countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE worth a combined total of well over USD 160 billion.

A design study is being carried out for a USD 500 million solar power plant for the Abu Dhabi Future Energy Company Masdar. The project calls for the design, supply, installation and operation of a 500 MW solar plant. It aims to decrease the use of oil and gas in power generation to preserve hydrocarbon reserves. In co operation with the Abu Dhabi water and electricity authority and the Abu Dhabi national oil corporation, Masdar is also studying the possibility of building a hydrogen fired power plant. The project is in the early stage of study but has a budget of USD 100 million.

There are also major plans in Saudi Arabia for waste to energy plants. The plants aim to convert commercially hazardous, organic and toxic wastes into saleable electricity and potable water. One of the first plants could be in Jeddah with 4 to 6 more plants in major cities.

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QATAR STEEL TO INCREASE STAKE IN IRON ORE PROJECT IN MAURITANIA

It is reported that Qatar Steel Company is moving to acquire a 49.9% stake in an iron ore project in Mauritania from Perth headquartered Sphere Investments Ltd and Mauritanian state owned Iron ore company SNIM. As per report, the total consideration will be USD 375 million.

Qatar Steel has already purchased a 15% stake in the Guelb el Aouj project, which is equally owned by Sphere and SNIM and has received board approval to acquire an additional 34.9% interest. A new operating company will be established to develop the initial seven million tonnes per annum direct reduction pellet project following completion of a bankable feasibility study expected in January 2008.

Sphere recently completed a USD 48 million capital raising and will soon commence a drilling campaign at its wholly owned Lebtheinia Iron project in Mauritania. Saudi Arabian company SABIC has become a long term offtake partner.

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GLOBAL CREDIT CRUNCH HITS EXPANSION PLANS OF QATAR INDUSTRIES 

It is reported that the global credit squeeze, sparked by the sub prime mortgage crisis in the US in July this year, has been felt thousands of miles away in Qatar as two units of Industries Qatar, the Qatar Fertilizer Company and Qatar Steel, have had to abandon major financing vehicles this autumn. Qatar Steel has also had to sideline a major borrowing initiative to take on over USD 1.3 billion worth of debt to refinance existing borrowing and to drive forward its expansion plans.

Now it is hoping to press ahead with adding an extra 1.4 million tonnes per annum capacity at its 7 million square foot site at the Mesaieed Industrial City regardless of any financing restrictions and Sheikh Nasser bin Hamad Al Thani, GM, revealed that the deal may be resurrected early in 2008 if borrowing conditions improve.

The current credit squeeze is not Qatar Industries' only concern as its various units look to progress and grow. Escalating building costs, which have spiked right across the Gulf and have been fuelled by rising inflation rates, have created another hurdle to overcome. Just last week, a senior official at Qatar Petrochemical Company told that its intended new plant would cost 14% more than originally estimated due in part to a hike in the price of bulk materials and reactors.

Although lending is becoming harder to come by and with projected development costs rocketing, Qatar Industry is not allowing itself to be held back by its funding concerns and it was recently named as part of an Arab Gulf consortium, known as Foulth, which is teaming up with Japan's Yamato Steel Co. to develop a Steel plant in Bahrain. This venture will also require a bank loan of around USD 1.2 billion to get off the ground.

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MIDREX TO BUILD STEEL PLANT IN EGYPT  

It is reported that Midrex Technologies Inc. has been awarded a key contract to design and build an iron ore processing plant in Egypt. Midrex will build a plant for Egypt Sponge Iron & Steel Co of Cairo at its facility at Sadat City in Egypt. It will be MIDREX's largest facility in that country when completed in 2010. MIDREX did not disclose financials but the contract adds to nearly 2 million tons of output.

MIDREX sells technology that prepares iron ore for the steel making process. MIDRDEX already has designed more than 60 plants in 19 countries and its facilities are already operating in Saudi Arabia, Qatar, Libya and Pakistan
in Middle East region. Plants using MIDREX technology produced 35.8 million tons in 2006 as compared to 32 million tons in 2003.

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QATAR AND SRI LANKA INK MoU FOR COOPERATION IN CONSTRUCTION SECTOR   

It is reported that Qatar and Sri Lanka have signed a MoU for cooperation in the construction sector. The MoU was signed by Mr. Abdulaziz Al Emadi, Vice Chairman of Qatar Chamber of Commerce and Industry and Mr. Surath Wickremsinghe, Chairman of Sri Lanka's Chamber of Construction Industry.

As per the MoU, Sri Lanka would actively cooperate with Qatar in areas like landscaping, contracting, construction manpower supply, engineering and architectural consultancy and building activity. Mr Wickremsinghe who is leading a 32-member delegation from the Sri Lankan construction industry said that Sri Lanka has a vibrant construction industry known for building quality structures.

He said that, “The country produces cement but is an importer of Iron and Steel. Its construction industry has not suffered due to the ethnic crisis, said the visitors. There are a number of Sri Lankan construction companies active in the Gulf region. We have highly experienced building firms.

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ABU DHABI NATIONAL ENERGY'S Q3 NET PROFIT UP BY 172% YOY 

The Abu Dhabi National Energy Company has posted a net profit of AED 215.7 million for the July to September 2007 quarter up by 172% YoY as compared to July to September 2006 quarter. Total revenue reached AED 2.45 billion up by 181% YoY as compared with AED 874.9 million.

Revenue from the electricity and water business grew up by 35% YoY to AED 1.2 billion from AED 874 million. Revenue from oil and gas accounted for AED 334 million.

EBITDA was AED 1.3 billion up by 52% YoY as against AED 585 million. EBITDA margin for 2007 excluding supplementary fuel would be 85%. Finance  costs increased from AED 296 million to AED 644 million, to fund acquisitions.

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INDONESIAN GOVERNMENT MAY PUT QUOTA FOR DOMESTIC COAL SALES

Amid rising Coal prices overseas, Indonesia's govt. is considering obliging Coal producers to sell part of their production on the local market so as to ensure sufficient supplies for the new Coal fired power plants now being built by state owned electricity firm PLN. Mr. P. Yusgiantoro Energy and Mineral Resources Ministry of Indonesia said, “We are still undertaking the necessary internal coordination so to be able to implement the policy. It is necessary to secure future supplies for domestic use. And under a domestic market obligation mechanism, the govt. will oblige Coal producers to allocate a certain percentage of their production to the local market.” However, the govt. has yet to determine the precise percentage.

Mr. Singgih Widagdo, an Indonesian Coal Society representative told that the government needed to change its Coal policy so as to ensure that the new power plants did not experience difficulties in meeting their Coal needs. But Coal producers are worried that the government's proposal to impose a domestic market obligation will leave them unable to take advantage of the surge in international Coal prices as the reference prices set under the domestic market obligation mechanism are usually significantly lower than export prices.

At present, Indonesia's domestic demand accounts for about 30% of the country's total production with the other 70% being exported. However, domestic demand is expected to soar in the coming years, due particularly to the coming on stream of the new Coal fired power plants in late 2009.

The Indonesian Coal Society has estimated that Indonesia will need additional supplies of 70 mts of Coal by 2009, of which about 40 mt would be needed to feed PLN's power plants & another 30 mt for other buyers. It further estimates that Indonesia will need additional supplies of 70 mt of Coal by 2009, of which about 40 mt would be needed to feed PLN's power plants and another 30 mt for other buyers.

PLN, the main buyer of Coal in this country, is currently building 35 new Coal fired power plants as part of its fast track program to provide additional power supplies of about 10,000 MW over three years beginning this year. The new power plants, which comprise 10 plants with a combined capacity of 6,900 MW in Java and another 25 plants with a total capacity of 3,100 MW outside Java, are forecast to commence operations on schedule by the end of 2009. Their operations are expected to double PLN's demand for Coal to 70 mt a year from about 30 mt at present.

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INDONESIA TO DECIDE ON HR AD CASE

It is reported that Indonesia will make its final decision on alleged hot rolled coil dumping by suppliers from five countries before December END. Suppliers from China, Russia, Taiwan, Thailand and South Korea have been accused of selling HRC at dumping prices in the country.

Mr. Halida Miljani, Head of the Indonesian Anti Dumping Committee - KADI, said that the agency is still verifying data provided by the five countries and compared them with data from the petitioners led by state owned steel maker PT Krakatau Steel. He further said the anti dumping import duties will be set based on data provided by those cooperative in the investigation, otherwise we will use data provided by Krakatau Steel. Earlier KADI said it will send investigating team to China and Taiwan to find confirmation of doubtful data they have provided.

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POSCO RANKED MOST SOCIALLY RESPONSIBLE FIRM

It is reported that POSCO was named by Newsweek Japan as the leading Korean company in corporate social responsibility. The world's third largest steel maker said that it ranked 30th in corporate social responsibility among a list of 500 global companies compiled by the news magazine and British corporate social responsibility consulting firm Ethical Investment Research Service.

POSCO scored 94.05 points in total 55 out of 60 points in financial health, which evaluates corporate profitability and security, and 39.05 out of 60 in social responsibility, which evaluates social contribution activities, corporate governance structure and environmental measures. Among Korean companies, Samsung Electronics & Samsung SDI took the 141st and 213th place. It is the first time that Korean
companies have been included in the annual survey.

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Indonesia's United Tractors 9 month coal output up by 24% 

It is reported that Indonesian leading heavy equipment distributor, PT United Tractors coal production from its mining contracting business rose by 24% to 39.2 million tonnes in the January to September 2007. PT United in a statement said that the mining contracting business made up 41.5% of United Tractors' revenue in the H1 of 2007 while coal mining accounted for 7.7%. Sales of heavy equipment, Komatsu, accounted for the rest and remains the biggest contributor to revenue. United Tractors has its own coal mining concession following the acquisition of PT Dasa Eka Jasatama in April.

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SAUDI INVESTORS URGED TO INVEST IN PHILIPPINES

It is reported that, pointing out that some major Saudi businessmen including Prince Al Waleed ibn Talal, has invested in the Philippines, a senior Philippine diplomat has called on prospective Saudi investors to explore trade and investment opportunities in the Philippines including Mindanao.
Mr. Nestor N Padalhin, Deputy Chief of Mission & Consul General of Philippines in Saudi Arab, while addressing the second Integrated Mindanao Economic Forum at the Philippine Embassy, said that Prince Al Waleed bin Talal's multimillion investment in the Philippines in hotel sector is a good indication and would encourage more Saudi to invest in the country particularly in Mindanao.

He informed that, “Saudi businessmen can apply freely for a renewable 21 day visa, adding that others even travel there without getting visa from the embassy.” Dr. Omar Mababaya Chairman of Integrated Mindanao Economic Forum described Mindanao as an island endowed with rich resources and immense potential for growth in terms of trade and investment in view of its proximity to the ASEAN region and the Asia Pacific rim. He added that the island's competitive advantage lies in its huge potential in terms of agro business, tourism and service industries that should attract Saudi investors.

Mr. Abdul Hannan Tago, President of IMEF, said that the objective of the forum was to highlight the economic and human resources of the Philippines in general and Mindanao in particular. It was meant to facilitate business partnerships between the 2 countries' investors so that they could exploit its untapped wealth for the benefit of the 2 countries. The second Integrated Mindanao Economic Forum is sponsored by Arab News in collaboration with Abullah Al Qahtani Group, Hamrani Trading and Import Co., Qatar Airways and the First Philippine School in Riyadh IPSR as co sponsors.

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SUMMARY OF JAPAN'S HEAVY PLATE EXPORT IN AUGUST

Japan has exported 35,912 tonnes of heavy plate to China in August with average price at 83,000 per tonnes. Meanwhile, Taiwan imported 1,728 tonnes of heavy plate from Japan with average price at 70,000 per tonnes, Hong Kong imported 343 tonnes with average price at 120,000 per tonnes, and Vietnam's occupied 1,810 tonnes with average price at 57,000 per tonnes.

China imported total 202,086 tonnes heavy plate from January to August, with average price at 79,000 per tonnes. The figures for Taiwan, Hong Kong, Vietnam were 7,567 tonnes with average price at 67,000 per tonnes, 3,311 tonnes with average price 121,000 per tonnes, and 13,809 tonnes with average price at 69,000 per tonnes respectively.

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THAILAND'S STEEL IMPORTS TO RISE 7.5% IN 2007 

It is reported that the Iron and Steel Institute of Thailand has anticipated a high grade steel imports this year to increase by 7.5% YoY to THB 165.8 billion from THB 153.45 billion in 2006, driven by demand from government infrastructure projects.

Mr. Wikrom Vajragupta, MD of The Iron and Steel Institute of Thailand, at a recent seminar held by The Iron and Steel Institute of Thailand and Thammasat University, said that after the general election, the government would resume infrastructure projects and private investment would pick up as political uncertainties ease. He added that ''The election will bring about confidence and a good investment climate and improve the industrial sector. That could translate into a higher volume of steel consumption.” He further said that around 60% of steel products in Thailand were consumed by the construction sector with 12% by the automotive sector; 11% by industry; 8% by electronics; 5% by packaging and the remaining 4% by others.

Steel consumption in Thailand last year was 12.59 million tonnes. Consumption in the first eight months of the year increased to 8.18 million tonnes, compared with 8.06 million tonnes in the same period last year. He noted that steel consumption expanded 16% per year on average since the 1997 crisis. In 2006, Thailand imported THB 400 billion worth of steel and steel products, accounting for 10% of total import value. Steel prices are increasing but producers are expected to earn lower margins due to high material costs including oil, coke, iron ore and scrap.

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SOUTH KOREA TO START CARBON CREDIT EXCHANGE IN 2008 

It is reported that with climate change becoming a global issue, Korea is planning to set up its own carbon exchange as early as next year. The Korea Exchange in a statement said that it has launched a preparation team to establish a carbon exchange where businesses can trade in credits for carbon dioxide and other greenhouse gases. The idea has its roots in the Kyoto Protocol.

Korea isn't on the Kyoto Protocol list of countries obliged to reduce their greenhouse gas emissions, but it will almost certainly be in 2013. Korea Exchange said that the govt. will set the limit for greenhouse gas emissions for businesses, which can then sell carbon credits they have or buy ones they need on the exchange. Financial institutions will also be able to engage in futures trading based on carbon credits. It further added that like a stock exchange, the carbon exchange will introduce price limits, clearance and settlement systems.

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RUSSIAN COAL EXPORTS IN 9 MONTHS UP BY 9.5% YOY

The Federal Customs Service said that Russian Coal exports in January to September 2007 had increased by 9.5% YoY to 71.449 mt in terms of volume and by 25.1% YoY to USD 3.835 bln in terms of value. Exports to non CIS countries grew by 6.8% YoY to 63.024 mt and exports to the CIS were up by 34.5% YoY to 8.424 mt. In value terms, exports to the non CIS rose by 20.1% YoY to USD 3.249 bln and exports to the CIS grew by 60% YoY to USD 585.7 mn.


Russian Coal imports fell 11.6% to 16.955 million tonnes in the nine months. Russia imported nearly all of this Coal 16.919 million tonnes from the CIS. The imports grew 8.4% by cost to USD 288 million. Mr. Gribanovsky, Director Commercial of Siberian Coal Energy Company, said that both the growth in Coal exports and the reduction in imports were the result of a drop in demand within Russia due to the relatively warm winter at the start of this year. He also said that, “There is only one reason due to the warm winter and a drop in demand in Russia in the electricity and housing sectors a drop in domestic sales and imports occurred. Producers were forced to search for sales outside Russia. All Coal imported to Russia comes from Kazakhstan and is used for power stations in the Urals region. Exports and domestic sales are expected to increase before the end of the year due to a rise in demand in Russia.”

He also added that, “Due to the low level of hydro reserves a reduction in electricity production at hydropower plants, a sharp increase in demand has been seen on the domestic market since August 2007. As a result, we expect a considerable correction in the share of supplies at the end of the last four months of the year.”

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NIPPON STEEL CORP STRENGTHENS TIES WITH BAOSTEEL GROUP

Nippon Steel Corp and BaoSteel Group Corp are strengthening their ties to compete against ArcelorMittal and protect against takeovers in the consolidating global Steel industry. The Japanese and Chinese companies, the world's second and fifth-biggest, also said they would build a 450,000 tonnes-a-year automotive sheet line at their Shanghai plant by 2010, boosting its output by 50 per cent. BaoSteel, Nippon Steel had been discussing the capacity expansion at their joint venture which also includes ArcelorMittal, for some time to cope with a rapid expansion in China's car market.

Nippon Steel President Akio Mimura and BaoSteel Chairman Xu Lejiang said the emergence of ArcelorMittal as the world's biggest Steelmaker last year drastically changed the market, forcing them to adjust their strategy, though in this instance they are collaborating with their European-based rival. “The industry realignment has not ended. An acquisition will have a knock-down effect on another, gradually pushing consolidation in the sector,” Akio Mimura, President of Nippon Steel, said. “Every Steelmaker should get itself ready for a realignment, or it will be taken over.” Asked if the alliance with BaoSteel was to establish an axis to act as a counterweight against ArcelorMittal, Mimura said, “That is exactly what we are doing.” The two firms said they would expand their partnership to areas such as the exploration of raw materials, protection of the environment and exchange of technology.

Mimura said as high share prices make mergers difficult, Nippon Steel aims to form alliances with reliable partners. BaoSteel's Xu said, “We'll get bigger at home through acquisitions and have a reliable partner on the international market. That is our important strategy to avoid being taken over.” He said the company planned to ask partner Steelmakers to agree to cross-shareholdings should it list overseas. The automotive sheet joint venture in Shanghai, which started full production in 2005, already has two continuous galvanising lines, one with capacity of 450,000 tonnes a year and one of 350,000 tonnes. Xu was in Japan to celebrate the 30th anniversary of the relationship between Nippon Steel and BaoSteel, which was founded with Nippon Steel's technical assistance based on an official request by the Chinese govt.

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RAW MATERIAL DEMAND TO DRIVE INVESTMENT - LEIGHTON HOLDINGS 

It is reported that Australian construction giant Leighton Holdings is predicting further strong investment in Australia's infrastructure. Mr. David Mortimer, Chairman of Leighton Holdings, during the company's Annual General Meeting said that, demand for Australia's raw materials is forecast to remain at high levels for the foreseeable future, particularly from China.

Mr. Mortimer said that it is just one factor underpinning the development of infrastructure projects. He added that, “Ageing infrastructure, a growing population, a resources boom and issues such as the recent drought, continue to support the long term outlook for infrastructure investment in Australia.”

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US STEEL PROFIT FALLS 35% ON US PRICES, SHIPMENTS

  US Steel Corp., the largest US - based Steelmaker, said third-quarter profit tumbled 35 percent because of falling demand in North America and plant shutdowns in Europe. The shares dropped the most in two months. Net income fell to $269 million, or $2.27 a share, from $417 million, or $3.42, a year earlier, Pittsburgh-based U.S. Steel said in a statement. Sales rose 6 percent to $4.35 billion. Excluding certain items, profit was $2.50 a share, less than the $2.66 average estimate of 11 analysts in a Bloomberg survey.

A slump in U.S. home construction and cutbacks by automakers such as Ford Motor Co. curbed North American demand for sheet Steel. At U.S. Steel's European business, which accounted for more than half of profit in the second quarter, earnings fell 31 percent because of maintenance work and higher costs for raw materials such as iron ore. “Europe is where the real weakness was,” said Charles Bradford, an analyst at Soleil Securities in New York. “They are probably near the bottom now. The U.S. industry outlook has been very negative through the third quarter as customers used up inventories instead of ordering Steel.”

U.S. Steel said fourth-quarter results probably will decline because of seasonal slowdowns and shutdowns of blast furnaces for maintenance work. Results will weaken from the third quarter for the North American flat-rolled and European businesses, while profit from tubular Steel should be similar, U.S. Steel said. “Downside relative to our estimates was mostly in Europe,” said analysts in a note to investors.

US Steel said it won't know the size of a fourth-quarter charge related to the Voluntary Retirement program until later this year. The company can produce about 27 mt of Steel a year. Planned maintenance at two blast furnaces will limit production in Europe during the fourth quarter. The co. also is planning “several” maintenance outages in North America in the period. U.S. Steel has been making acquisitions to boost output and make itself less vulnerable to a takeover. The $1.1 bln acqui-sition of Canada's Stelco Inc. probably will be completed after the target company’s shareholders approve the transaction.

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BREITENFELD STEEL PLANS IPO TO FUND HIGHER PRODUCTION CAPACITY

Breitenfeld AG, an Austrian steelmaker, plans an initial public offering to fund an increase in its capacity for products used in the oil, gas and power- generation industries. The Mitterdorf, Austria-based company wants to raise capacity to 300,000 tons from 170,000 tons, Breitenfeld said. It recorded revenue of 185 mn euros ($268 million) for the fiscal end.

“This possible IPO would allow us to finance our planned growth strategy and further increase our financial flexibility and independence,” Management Board Chairman Rudolf Jurak said. Breitenfeld plans to list its shares on the Vienna stock exchange. The company didn't say when it may sell the stock.

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VOLVO TO TRUMP SCANIA, MAN AS EASTERN EUROPE TRUCK SALES SOAR

Eugene Shakalida, co-owner of a logistics company in Moscow, plans to almost triple his fleet of trucks over the next four years to ship more Russian Steel pipes, wood and industrial glass to customers across Europe. The construction boom in Eastern Europe that is boosting Shakalida's business also represents a jackpot for Volvo AB, the world's second-biggest truckmaker, and European rivals Scania AB and MAN AG. With share prices down 19 percent since July and signs that a North American sales slump is bottoming out, Volvo's stock may be poised for the biggest gains among the three as it predicts Eastern Europe truck demand will double by 2010. “They will enjoy very strong growth from eastern Europe and Russia for a long time,'' Christer Gardell, Managing Director of Cevian Capital AB, which controls 4.6 percent of Volvo's voting rights, said of the truckmakers. “We are going to be there for a long time as a Volvo investor.'' Volvo shares, which have underperformed MAN by more than 40 percent this year, may rise as much as 37 percent in the next 12 months, according to Fredric Stahl, an analyst at UBS AG in London.

In comparison, Munich-based MAN, already trading at record levels, may gain about 2 percent and Soedertaelje-based Scania may climb 15 percent, according to Stahl. While Volvo's sales have fallen in North America, contributing to three straight quarters of shrinking profit, the Gothenburg, Sweden-based truckmaker boosted nine-month sales 67 percent in eastern Europe to 18.2 billion kronor ($2.87 billion). “Volvo has actually handled this downturn quite well,” said Henrik Breum, an analyst with Danske Equities in Copenhagen, who raised his Volvo rating to “accumulate”' from “hold” after the company announced third-quarter earnings last week. They have been able to offset the negative trend in North America.

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FERREXPO IRON-ORE PRODUCTION ROSE 6.9% IN Q

Ferrexpo Plc, the miner of Iron ore in Ukraine that held an initial public offering in June, said production of the steelmaking raw material gained 6.9 percent in the third quarter. The company produced 7.31 million metric tons, up from 6.83 million tons a year earlier, it said in a statement. Output of pellets, another raw material for steel, fell 4 percent to 2.23 million tons.

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