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We all know that the growth engine for global steel industry is Asia. The Asian region can be further divided into four sub-regions. First is undoubtedly China, which is far ahead of other regions in terms of steel production and consumption. The other regions namely India, Gulf and SE Asia are also putting up impressive growth rates for steel consumption and offer excellent opportunities for steel industry.

Out of these, I would like to draw your attention to Gulf region. Infrastructure projects are coming up all over and the steel requirement of the region is growing substantially. Conventionally, the steel making capacity of the region is lagging behind the demand and thus it is being imported from Turkey, CIS and also India. The steel demand of Gulf comprises of two parts. Firstly, the demand for billets and also the construction bars is ever growing. This is mainly due to construction boom in countries like UAE, Qatar, Oman, Saudi Arabia etc. The second part of demand comprises of flat steel products like CR, GI and coated steels. This is the reason many steel projects of long products as well as flats are coming up there. Many governments have responded very fast to this situation by not only starting big infrastructure projects, but have also developed what are called as 'Free Zones'. These are specially designated areas where overseas companies can put up their factories with 100 % ownership. The other infrastructural facilities such as electricity, transport are also provided to facilitate smooth operations. Many 'Free Zones' are besides a sea port so that the raw material and finished good's movement becomes easy. All these efforts are sure to yield fruits and one can be assured of a seamless growth of iron and steel industry in the Gulf.

A growing steel industry would give impetus to other industries such as slitting lines, metal component manufacturing units, galvanising lines, technology providers, equipment suppliers, automation companies and many more. I am clearly seeing that in next five years or so, the region would be very well developed in terms of industrialisation.

Interested parties will have to start working NOW to ensure their presence and also a share in this growth !!!

 D.A.Chandekar
Editor & CEO

 

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Durgapur Steel H1 net Rs 202cr

Durgapur Steel Plant, a unit of Steel Authority of India Ltd, has recorded a net profit of Rs 202 crores in the first half of the current fiscal, as compared to Rs 261 crore for the whole of last year. DSP officials said, the plant had intensified efforts to maximise production and profitability in the current year and had taken several major initiatives besides providing a major thrust on production. "The sustained efforts to improve house keeping and preventive maintenance coupled with the impetus on production have resulted in the plant surpassing all the major monthly production records," they added.

The hot metal (iron) production was the highest ever at 1,94,117 tonne in November, 2006 surpassing the previous best of 1,90,503 tonne achieved in January, 2004. Similarly, crude steel production at 1,73,145 tonne was also the best ever, surpassing the previous best of 1,72,554 tonne also achieved in January, 2004. The blend mix production crossed 3.5 lakhs tonne for the first time bettering the previous high of 3,31,795 tonne achieved in December, 2004. DSP's thrust on special steel has seen gradual enhancement in special steel production at 32,454 tonne in November, 2006.

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Essar Steel completes Gujarat unit expansion

Essar Steel announced that it had completed the expansion of steel manufacturing capacity at its Hazira complex in Gujarat to 4.6 million tonnes. The expansion project was completed in 18 months with an investment of Rs1975 crore. The Company said that it was the culmination of Essar Steel's strategy to be a low cost, high quality and value added producer for the niche, high end markets in India and abroad. The expansion makes Essar Steel India's largest producer of flat steel in the private sector, accounting for close to 23 per cent of the country's flat steel capacity.

The company also installed two more modules for HBI/DRI production, increasing total capacity to 5.5 million tonne per annum. This makes the Essar Steel the largest, single location producer of HBI in the world. It also increases the share of value-added products in Essar Steel's portfolio to 75 per cent from the existing 45 per cent and will contribute significantly to reduction in imports of critical special grades of steel meant for sophisticated applications. The company also said that it expected a quantum jump in exports of its products and it would consolidate its pre-eminent position as India's largest exporter of flat steel. Prashant Ruia, Director, Essar Group said: “We are extremely pleased that the capacity expansion will make India an even more potent force in international steel markets.

This expansion and modernisation puts Essar Steel in the premium league of high-end steel producers. We are privileged to be at the core of India's economic development at a time when the country is being recognised as one of the fastest growing economies in the world.” The expansion included adding a new electric arc furnace, a third caster, RH degasser and allied equipment. In order to meet the requirements of the expanded steel capacity, infrastructure facilities have also been enhanced. This includes a captive power plant of 500 MW capacity, increase in capacity of the port to 12 MTPA and allied machinery and equipment workshops.

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Sponge iron firms face margin pressure threat

A fresh bout of margin pressure is seen to be acting upon small to medium size standalone sponge iron producers. This is because of higher input costs and lower demand from steel producers. While several small plants are closing down, some mid-size plants are being offered for sale. “Margins of some standalone units have now moved into the negative territory now, from their boom time levels of 10-11 per cent,” an industry player said.

At least 200 plants with an installed capacity of up to 9 million tonne are currently facing acute margin pressures, and about 20 of them have been put up for sale. Having declined by Rs 500 in the past one month, sponge iron prices are currently quoting at Rs 11,000 a tonne. However, there has not been any price fall in prices of scrap a sponge iron substitute. “Sponge iron producers are being squeezed from both sides. Iron ore prices have doubled in the last one year. Electricity charges and freight rates have also gone up substantially. But, they are yet to percolate on sponge iron prices,” an industry source said. Even survival had become a problem for standalone sponge iron players, he said, adding that companies with backward or forward integration, however, faced no real problem.

The companies in the latter category were still making money as their costs of production were low between Rs 5,000 and Rs 10,000 a tonne depending upon the source of raw materials, technology used etc, the source said. Iron ore at Rs 3,500 a tonne, duty at 1.6 per cent, coal at Rs 3,000 a tonne, and conversion charges and others at roughly Rs 1,000 take the total cost of production beyond Rs 10,000 a tonne. Sources said half of sponge iron units survived on the “escape route” evading taxes, sourcing raw materials through hidden channels etc. Now, with the government tightening industry-specific norms to combat malpractice, these units were finding it tough to even survive, they added.

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Study backs Posco steel project in Orissa

The proposed 12 million tonne steel plant of POSCO-India, Indian subsidiary of POSCO in Orissa will play a major role in powering the economy of the state, says a recent study by National Council of Applied Economic Research (NCAER). According to the study, the investment by POSCO-India will set off a chain reaction on the economy of Orissa resulting in increase in its gross output, employment and value addition. An enormous tax contribution to both the State and Central governments is also expected, it said. POSCO-India will invest Rs. 52,810 crores to construct a greenfield steel plant, develop iron ore mines and also construct support-infrastructure in both the domestic tariff area (DTA) and the special economic zone (SEZ) in Orissa.

The project is expected to generate Rs 29,760 crores of additional output for the state. In terms of value addition, it would contribute 11.5 per cent to the estimated State Gross Domestic Product (SGDP) by 2016-17, the study revealed. The study projects employment of 8,70,000 persons per year across all sectors of Orissa economy over the next 30 years. This will consume almost all of the current unemployment backlog of 9.9 lakhs in the beginning of 2005~2006. Apart from 18,000 direct employments by POSCO-India, numerous jobs are expected to be created in the agro and forest, mining, manufacturing, trade, and other service sectors. Under the SEZ status the company will contribute a total of Rs 174,971 crore of tax revenue to the state and central governments for next 35 years at the nominal value. Of this, the company will pay Rs 77,872 crore to the state government and Rs 97,099 crore to the central government.

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Consolidation new watchword for steel industry

Indian steel-makers, except a few, are either wholly or largely commodity players, since they don't have access to the technology of the kind at the disposal of Arcelor, Corus and Nippon Steel. To borrow from Guy Dolle, the commodity part of the steel industry is to be likened to 'cologne' and steel for high-end applications to 'perfume'. Dolle finally became the fall guy because of the indiscretion to publicly describe the world's largest metal man as a maker of 'cologne' variety steel. But Dolle was not wrong. The pull of hitching his wagon to Arcelor, a rich repository of technology, was so strong that Lakshmi Mittal, in spite of his initial refusal to do so, revised the initial bid price thrice for the trophy.

Similarly, Tata Steel's eyeing of Corus, which resulted from the merger of British Steel and Hoogovens and is nearly four times larger than the Tata's facilities here, is to get a high degree of value addition in European plants to slabs to be produced in Jamshedpur and also at the proposed mills in the three ore-bearing states in India. An identical strategy of adding significant value to basic steel at offshore mills and close to large markets in south-east Asia and the Far East led Tata Steel earlier to buy the multi-locational Natsteel and Millennium Steel in Thailand.

If a group is engaged in the making of carbon steel, then volume becomes all important. The Mittal model, of which there are many champions now, including Tata Steel, is vindication of the proposition. The world's three leading iron ore producers, namely CVRD of Brazil and the Anglo-Australian BHP Billiton and Rio Tinto, presiding over 75 per cent of the global trade in the mineral, have shown in recent years what good capacity consolidation is doing to them. Not surprisingly, therefore, Steel Minister Ram Vilas Paswan is encouraging SAIL to look for capacity acquisition opportunities abroad. China too has seen the merits of consolidation. It wants half the country's steel capacity to be owned by 10 groups by 2010.

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SAIL not to share Chiria mines

Steel Authority of India Ltd (SAIL) today ruled out the possibility of sharing Chiria mines with any other player. The statement assumes significance since Mittal Steel has ruled out the possibility of setting up a plant in Jharkhand without Chiria. S K Roongta, chairman said at the sidelines of the Bengal Chamber of Commerce & Industry (BCCI) Metals 2006 that the PSU was working on an amicable settlement on Chiria, but would not share its resources. As part of the settlement, SAIL was willing to set up greenfield capacities in Jharkhand. On what would be the capacity of the greenfield plant, Roongta said it would be in tandem with the aspirations of the Jharkhand government. Over and above the greenfield facility, SAIL was also expanding the Bokaro steel plant.

Chiria was originally leased out to IISCO, but post-merger with SAIL, it is under SAIL. The steel major has also lined up an investment of Rs 1,800 crore for Chiria. The environment impact study has been completed and the detailed project report was being worked upon. S Satapathy, Jharkhand mines secretary said, Mittal Steel had been offered an alternative, Ankura mines, but the company was yet to respond. Sanak Mishra, chief executive officer (CEO) Mittal Steel India was not available for comment. Ankura has reserves of around 500 million tonne.

However, it was only partially explored by MECL. Mittal's 12 million tonne plant required 600 million tonne of iron ore over a 30-year period. The project is proposed to be set up in two phases at an investment of Rs 40,000 crore. Mittal Steel was eyeing the two Chiria leases which were under litigation in the Jharkhand High Court, as they had been cancelled by the state government. The leases were much coveted since Chiria happens to be Asia's largest iron ore belt with reserves in excess of two billion tonne.

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Turkish Steel Mill Buys MORGOIL® KLX Bearings

Iskenderun Iron and Steel Works Co. (ISDEMIR) of Iskenderun, Turkey, has ordered multiple sets of MORGOIL KLX bearings from Morgan Construction Company's MORGOIL division in Worcester, Mass., USA. The bearings will be spares for the Mitsubishi-Hitachi (M-H) Hot Strip Mill currently under construction at Iskenderun. The first set of MORGOIL KLX bearings were supplied by Morgan through M-H for the mill's initial equipment. “The KLX design is the most advanced oil film bearing technology in the world. It is the highest capacity bearing for its size available in the market, which results in a reduction of mill capital investment and operations costs,” said Gabriel F. Royo, Vice President and General Manager of MORGOIL Bearing Division and the Rolling Mill Spares, Installations and Services Division. “The new mill in Turkey will also benefit by lowering operational and lubrication systems costs.”

Bearings featuring the KLX technology are now installed or are being installed in 31 different mills worldwide. “It is clear that the KLX is the bearing technology for the 21st century,” added Royo. Engineering and technical support for this contract will be supplied by the company's headquarters facility in Worcester, Mass. The bearings are scheduled for delivery during the third quarter of 2007.The MORGOIL Bearing Division provides a wide range of oil film bearing solutions for the most demanding applications in the metal rolling industries worldwide. Its parent firm, Morgan Construction Company, is a designer and producer of high-quality rolling mill products and services for the metal industry worldwide.

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Uttam Galva Steel to up production capacity

Uttam Galva Steels plans to increase its production capacity of cold rolled and galvanised steel to meet growing global demand.The company's director Ankit Miglani says that it is planning to shut down one cold rolled & galvanising line in Q3 and the production of cold rolled, galvanised sheet will be 20-25% less. The Plant will be shut down for capacity expansion & modernisation. Galvanised Steel prices will be increased by Rs 1,000/tonne.

Uttam Galva Steels is planning to Auto grade cold rolled capacity to 1.8 lakh TPA.Rs 600 crore has been earmarked for total expansion programme. Cold rolled steel production will be increased to 1 mt by year-end. Uttam Galva steels has also launched service centre with investment of Rs 100 crore.

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High-level panel to sort out Caparo`s MP investment

Swaraj Paul-promoted Caparo Group's deal with Steel Tubes of India Ltd (STI) to acquire the latter's Dewas stamping plant for an undisclosed sum has hit a roadblock because the plant has been attached by a department of industries arm. Now a three-member committee, constituted on November 23, comprising the principal secretary (finance), principal secretary (commerce and industry), and the managing director of the Madhya Pradesh State Industrial Development Corporation (MPSIDC), will decide on the deal.

The issue has been brought to the notice of Chief Minister Shivraj Singh Chouhan in a meeting held at the chief minister's residence today, where senior government officials, MPSDIC officials and Caparo group representatives took part. “The chief minister has instructed the committee to look into the matter and solve the issue within a week,” said a government insider, adding, “Caparo, the IDBI and MPSIDC will have to enter into a tripartite agreement probably to swap the loans since the MPSIDC also owes a loan amount of Rs 135 crore to IDBI.” Steel Tubes owes a huge amount of about Rs 97 crore, disbursed by the MPSIDC as inter corporate deposit (ICD). Steel Tubes got Rs 25.7811 crore and its subsidiary STI Products Ltd Rs 9.88 crore, in 1997 and 2000 (Rs 35.33 crore principal and Rs 58.11 crore interest as on March 31, 2006). “Steel Tubes has paid only Rs 1.50 crore against the outstanding amount as part of one-time settlement of Rs 5,810.72 lakh, and signed an MoU with the MPSIDC to pay the rest of the amount but later asked dilution in the conditions.

The corporation rejected the demand and issued a revenue recovery certificate (RRC) against the outstanding. Further, the corporation filed criminal cases against the company under Sections 138 and 141 at the Dewas district court after cheques of Rs 14.57 crore had been dishonoured,” said a government source. The Corporation also has attached the properties of the company by issuing a revenue-recovery certificate, against which the company has filed a case in the high court bench, Indore.

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Chinese Customer Orders Sixth Morgan Mill

Morgan Construction Company has been awarded a contract for a high speed wire rod mill outlet, its sixth mill order from the Zhangjiagang Shajing Steel Company, Ltd,, located in Zhangjiagang City, Jiangsu Province, People's Republic of China.Engineering started in July 2006, and manufacturing is underway at Morgan's facilities in Worcester and in Shanghai, China. The project includes a 2-stand 300 Horizontal/Vertical Pre-Finishing Mill, 2-stand Vee Pre-Finishing Mill, water cooling nozzles, guides, 8-stand Vee No-Twist Mill®, pinch roll and laying head. Morgan is also responsible for the engineering design for all equipment from the exit of the intermediate mill to the exit of the reform station. The rod outlet is scheduled to be commissioned in the second half of 2007.

“Zhangjiagang's continued use of Morgan's technology and service for each of their six mills is a clear recognition of the superior performance and reliability of a Morgan mill,” notes Dave Pariseau, Vice President of Corporate Projects. This single-strand high speed wire rod outlet will allow Zhangjiagang to produce approximately one million tons per year of 8mm to16mm plain rod using a 100 percent rolling rate of 166 tons per hour and a guarantee speed of 105 meters per second. Morgan Construction Company is a designer and producer of high-quality rolling mill products and services for the metals industry worldwide.

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BHP Billiton reviews judgment on iron ore rail operations

The Federal Court has ruled BHP Billiton Ltd.'s (BHP.AU) Mount Newman and Goldsworthy iron ore rail lines aren't part of the company's production process.The ruling will threaten the further growth of one of Australia's major exports, the company said in a statement."Open access to dedicated rail infrastructure would compromise the efficient production of iron ore and cause delays in future investment decisions, making Australian producers less reliable," said Chris Lynch, Executive Director and Group President Carbon Steel Materials.The company is reviewing the judgment and will consider its options in regards to an appeal, the company said.

The ruling doesn't automatically enable a third party to run its trains on BHP's Pilbara iron ore rail lines, BHP said."Separate proceedings underway in the Australian Competition Tribunal will determine the broader question of whether the rail lines should be 'declared' pursuant to Part IIIA of the Trade Practices Act," it said.Fortescue Metals Group Ltd. (FMG.AU) initiated the tribunal proceedings in June after the Federal Treasurer Peter Costello declined to follow a National Competition Council recommendation that the Mount Newman rail line be declared, BHP said.It is expected that a full hearing of the facts will be conducted during the second half of 2007, it said.There was an alternative that would provide an approach to infrastructure access, without significantly affecting BHP's iron ore production process, BHP's Lynch said in the statement.

"We have been actively engaged in discussions with the West Australian state government about developing a revised iron ore haulage regime based on BHP Billiton's current obligations under the Rail Transport Agreement," he said."It is our understanding that the state plans to complete this process by the middle of 2007," Lynch said.The rail lines are in the Pilbara region of Western Australia and transport more than 100 million tons of iron ore each year to Port Hedland for blending, processing and shipping.The Pilbara iron ore operations currently provide annual export income in excess of A$5.5 billion, directly employ more than 7000 people, and deliver about A$1 billion in royalties and taxes to Australia each year.

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Stainless steel prices to continue to rise

Stainless steel sheet prices, already setting records, could move even higher in late December and January, due mainly to an unprecedented hike in the price of nickel on the London Metal Exchange in October and November. That's the word from analysts at MEPS (International) Ltd., who also believe the peak of this current transaction price cycle will occur at the turn of the year. (Note: Buyers polled by Purchasingdata.com reckon that stainless sheet prices already have plateaued.)

"In the longer term, we expect stainless selling values to decline, albeit at a much slower rate than the escalation this year," suggests the MEPS analysis. The steel consultancy anticipates the LME monthly average nickel cash pricewhich peaked at $14.83 in October and was $14.57 in Novemberwill decline to $10.89/lb by September 2007, a month later than previously predicted. Nickel prices appear to show no signs of any steep fall off as they have averaged almost $11/lb through November. This could signal a soft landing in nickel prices next year, MEPS suggests.

However, the analysis also shows that nickel stocks are still extremely low, "so any small capacity problems can lead to another hike in the price on the LME, causing prices to climb even higher."Also, global nickel consumption is starting to show signs of slowing down and a period of lesser demand will ease the tight supply that has been seen in previous months. "This will put pressure on the mills and, as a result, we should start to see an easing of stainless prices after the New Year," says MEPS.

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70% of exports of Ez-Dk flat Products go to USA's markets

The total production of Ezz-Dikheila of long and flat products during the first eight months of this year amounted to 3.157 million tons of which 1.97 million tons are long products, equivalent to 59% of the total production against one million tons of flat products, that is, 41%, according to the figures «Arab Steel» obtained from the company's resources.
Sales to the domestic market constitute the biggest portion of the produced quantities of long products, while exports to the foreign markets constitute most of the production of flats. The Middle East and North Africa markets take about 54% of the total exported quantities of long products, followed by the European markets 30%, while the markets of USA take about 70% of the exported quantities of flat products, followed by the European markets 25%.
Directing most sales of long products to the domestic market during the past months of this year was reinforced by the obvious improvement witnessed by the selling prices in the domestic market as a result of the increasing demand in these markets.

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New Steel Factory exceeds one million ton mark

King Abdullah laid the corner stone for the first phase of a new South Steel Factory in Jizan, which is owned by Trans Kingdom for Investment Company (TKI) with an annual production capacity exceeding one million tons of steel ingots and bars. The total cost of the first phase is about SR1 billion. The TKI will soon start civil works at the project that covers an area of one million square meters and is designed with the most modern international specifications. The factory will meet the steel needs of the entire southern region and its excess production will be exported to nearby countries including Yemen, which is just around 140 km away, and African countries including Djibouti, Eritrea and Ethiopia.

The first phase is considered to be part of a series of many stages with investments expected to exceed SR3 billion. Currently, the company is negotiating with a number of international strategic partners to participate in various stages of the project. The factory is expected to positively impact the national economy as much as the Jizan area. It earlier signed a contract with Corus Consulting, which is part of the Corus Group, a giant European entity, for the preparation of engineering designs and documents required for the import of specialized equipment for iron ore processing in Jizan. This is considered to be one of the biggest in the private sector in the area and will have a positive impact on Jizan's investment program and help create job opportunities locally. The construction activity covers new development projects and residential buildings, as well as expansion of the existing factories and projects, both across the Kingdom and the GCC.
Demand for steel will continue to increase in the area and by 2008 will witness a huge increase.
Mohamed Al-Darjam, general manager of the company, said that this project was a giant one and steel production is one of the yardsticks that measures a country's development growth. "Demand for iron is huge in the area. There are so many projects in the Kingdom that have been approved and they all need huge quantities of iron for building their infrastructure. I expect that the Kingdom will become a major producer of iron in the area in the near future," he added.

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Arabian Pipe Company and Husteel Pushe Merger Deal

South Korea's steel pipe manufacturer Husteel said Tuesday 18 july its joint venture partner in Saudi Arabia is pushing to merge with Arabian Pipes Co. (APC) to strengthen its competitive edge in the Middle Eastern market.

Saudi Steel Pipe (SSP), in which Husteel has a 24.1 percent stake, is Saudi Arabia's leading welded steel pipe manufacturer. Arabian Pipes Co. (APC) produces steel pipes for oil and gas production and agriculture in Saudi Arabia.

Husteel gave no other details except to say that its Saudi joint venture was in merger talks. “We aim to sharpen our competitive edge in the Middle East market and make it easier to raise funds through the merger with APC.

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DGCX to launch steel futures by March

Dubai Gold & Commodities Exchange will launch a planned steel futures contract in the first quarter of next year followed by a second steel contract, gold options and more currency contracts thereafter, a top executive said. DGCX's first steel futures contract will be for prime steel reinforcement bars and will have a minimum size of 10 metric tons, the exchange's chairman, Colin Griffith said. "We can get that on the blocks by the end of the first quarter next year," Griffith said. DGCX, which is part of government-owned Dubai Multi Commodities Center, or DMCC, was launched in November 2005 to meet the Middle East's growing needs for diversified investment and hedging options as high oil revenues are boosting liquidity across the region.

Six futures - gold, silver, fuel and three currency contracts - are presently being traded at the exchange, which surpassed a trading volume of $11.5 billion in its first year of operations. The upcoming steel rebar contract will be for delivery in Dubai, Abu Dhabi and Fujairah, three U.A.E. emirates with fast growing construction markets. Steel rebar is widely used in construction for reinforcement in concrete or asphalt pourings. The prime steel rebar futures contracts will be priced in U.S. dollars and have a size of 10 tons, with a maximum order size of 100 contracts, according to DGCX's draft contract specifications.

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Thai Millennium Steel to invest in blast furnace

Millennium Steel PCL, a Thai unit of India's Tata Steel Ltd., will invest THB3.4 billion to THB3.6 billion to build a mini blast furnace project, reports said quoting the company's president, Santi Charnkolrawee,. Santi said the blast furnace, located in the eastern province of Chonburi, will have a capacity of 500,000 metric tons of hot metal a year. Construction will start early next year and is expected to be completed in the third quarter of 2008. The new project comes after Tata Steel took over Millennium Steel earlier this year in a wave of mergers and acquisitions in the global steel industry. "With this project, we could gear our products toward customers in the automotive industry," said Santi.

The company will finance the new project with loans from local financial institutions, he added. As the company expects to sell more steel products to manufacturers of cars and automotive parts, Millennium Steel will likely boost its production to full capacity in two years, Santi said. Millennium Steel, which produces hot-rolled steel, currently produces just over 60% of its total capacity of 1.7 million tons of steel a year. "For the full year, we are likely to sell around 1.0 million to 1.1 million tons, compared with around 900,000 last year," he said. In the first nine months of this year, the company sold 814,000 tons of steel, up from 788,000 tons a year earlier. Millennium Steel is in the process of changing its name to Tata Steel (Thailand) PCL after Tata Steel recently completed the acquisition of Millennium Steel shares from industrial conglomerate Siam Cement PCL. With the company's new name, its trade symbol will be changed to TSTH from MS, Santi said. Tata Steel controls 67% of Millennium Steel through direct and indirect ownership.

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Bluescope Steel may buy first iron mine as costs gain

BlueScope Steel Ltd., Australia's largest steelmaker, may buy its first iron ore mine after prices of the raw material rose for four straight years.Stemcor Holdings Ltd. wants to sell the Savage River mine in Tasmania state, which needs to be expanded after 2009, Noel Cornish, president of industrial markets at Melbourne-based BlueScope Steel, said in an interview. Dave Sandy, who runs the mine, confirmed Stemcor is in talks with potential investors.

Iron ore prices are expected to rise for a fifth year and BlueScope joins global rivals including Arcelor Mittal, the largest steelmaker, in seeking to secure supplies of raw materials as nickel and zinc prices also reached records. The Savage River mine produced 2.2 million tons of iron ore pellets last year. The processing plant was damaged by a fire in June, disrupting supplies to customers including BlueScope, as well as Posco, Japan's Nippon Steel Corp. and China's Shougang.The mine's life could be extended to last till 2022, at a cost of A$140 million, said Sandy of Australian Bulk Minerals, a unit of Stemcor.

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Dragon Steel to invest NT$70b in output expansion
 

 Dragon Steel Corp., an affiliate of the China Steel Corp. (CSC), said it has recently sent a third-stage expansion project to the Industrial Development Bureau (IDB) under the Ministry of Economic Affairs (MOEA) for approval.For the third-stage expansion project, Dragon Steel will invest NT$70 billion (US$2.12 billion at US$1:NT$33) to erect a second blast furnace, which is designed to have an annual output of 2.5 million metric tons of steel slabs.

With its promise to assist private sector in making investments, the MOEA said it is willing to help Dragon Steel complete the expansion project. Dragon Steel said the expansion project is an extension from construction of its first blast furnace and needs not undergo the environmental impact assessment (EIA) procedure.In April, the EPA announced that all the investment projects launched by such high energy-consuming industries as iron and steel, and petrochemical have to pass through EIA.

On another front, the IDB has recently issued a statement on the steel industry development policy, saying it's not so urgent for Dragon Steel to make expansion as the Formosa Plastics Group will erect a large-sized steel mill in Yunlin County, central Taiwan. The IDB said if the FPG completes the construction of a large-sized steel mill, Taiwan would no longer need to build another steel mill.With an attempt to help Dragon Steel smoothly complete the investment project, the MOEA has suggested that Dragon Steel should focus on distinct products from those made by the FPG which has resolved to penetrating the steel industry by setting up a large-sized steel mill with annual designed output reaching 7.5 million metric tons of steel slabs.

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Japan Steelmakes buying own shares Amid Realignment

JFE Holdings Inc. has decided to buy back up to 30 million of its own shares, or 5.11 pct of the company's total outstanding shares, the latest in a recent series of moves to brace for further global industry realignment.The holding firm for major steelmaker JFE Steel Corp. said it will spend a maximum of 120 billion yen to acquire the shares between Monday and June 30, 2007. As of the end of September, JFE Holdings owned 0.3pct of its outstanding shares.

JFE Holdings' own share buyback plan follows similar schemes announced earlier by its peers Nippon Steel Corp. and Sumitomo Metal Industries Ltd., apparently aimed at fending off possible hostile takeover attempts at a time of major consolidation in the global steelmaking industry. Nippon Steel, Japan's largest steelmaker, is buying back some 6 pct of its outstanding shares for 150 billion yen this year; while Sumitomo Metal is spending up to 75 billion yen to repurchase own shares. By using their own shares, Japanese steelmakers are strengthening capital affiliations with industry competitors in the Asian region to protect themselves from unsolicited bids.

Nippon Steel in October inked a business and capital tie-up deal with POSCO of South Korea, while JFE Steel in September announced an agreement to raise its stake in South Korea's Dongkuk Steel Mill Co. to 15 pct from 4.1 pct before the end of this year to make it a group firm.In the global steelmaking industry, world leader Mittal Steel Co. of the Netherlands earlier this year acquired Arcelor SA of Luxembourg, which was the world's No. 2 player, through a hostile tender offer.

Most recently, India's Tata Steel, which ranks 53rd in the world by production volume, reached a basic agreement to acquire Anglo- Dutch steelmaker Corus Group PLC, which ranks eighth.Nippon Steel is the world's second biggest steelmaker, while JFE is the fourth largest. Japanese steelmakers are seen as possible targets of hostile takeover bids, as they have advanced technologies to produce high-value added products.

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Arcelor Mittal sell Italian carbon steel businesses

Arcelor Mittal said it sold its Italian carbon steel businesses Travi e Profilati di Pallanzeno and San Zeno Acciai to the Duferco Group, to comply with European Commission requirements for the merger the two companies. The businesses are valued at EUR117 million, Arcelor Mittal said in a statement. As part of the transaction, Arcelor Mittal sold its 49.9% stake in the steel plant San Zeno Acciai-Duferco SpA; the steel plant was a joint-venture between Travi and Duferco's wholly-owned subsidiary Duferdofin.

The plant is located in San Zeno, northern Italy, and recycles scrap steel to produce semi-finished steel products. In 2005 it generated sales of approximately EUR200 million. "In response (to the European Commission), the company committed (itself) to dispose of three European medium-heavy section mills: Arcelor's Stahlwerk Thringen and Travi e Profilati di Pallanzeno (Italy), as well as Mittal Steel's section and bar mill Huta Bankowa (Poland)," Arcelor Mittal said in a statement.

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Brazil's mining giant to start steel pellet plant in China

Brazilian mining giant Compania Vale Do Rio Doce has signed a joint venture agreement with two Chinese companies to build a new steel pellet plant with an annual production capacity of 1.2 million tonnes in the country's south. The Brazilian firm CVRD, through its subsidiary Mineracoes Brasileiras Reunidas S.A., will have a 25 per cent stake in a joint-venture (JV) called Zhuhai Ypm, which will operate the new plant in Zhuhai, China's southern Guangdong province, according to the statement released by the Brazilian firm.

The plant is expected to begin operations in 2008. CVRD's Chinese partners include Zhuhai Yueyufeng Iron and Steel Co Ltd. and the pioneer Iron & Steel Group Co. Ltd., which will hold 40 per cent and 35 per cent stakes in the JV respectively, Xinhua news agency reported. Under a 30-year contract, CVRD will invest four million U.S. dollars and supply at least 70 per cent of the plant's iron-ore feedstock. CVRD said the deal is part of the company's strategy to support the development of the steel industry in China, especially in the field of pelletising, in which CVRD is a global market leader.

The company is confident of the JV, saying its pellet feed fits well with the local iron-ore that is produced in China. It added that several other pelletising plants are being built in China, which also increased the potential demand for CVRD's iron-ore.

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Nippon Steel, Posco to jointly negotiate iron ore prices

Japan's Nippon Steel Corp. and South Korea's Posco said that they have agreed to jointly negotiate to buy iron ore, in what may elevate their buying power in price talks with major producers in Brazil and Australia. On the Tokyo Stock Exchange, shares of Nippon Steel closed 4.0% higher at Y570. The combination of Nippon Steel and Posco, the world's second- and fifth-largest steel makers by output, may position them better when negotiating with iron ore suppliers such as Companhia Vale do Rio Doce SA (RIO). Robust steel consumption, particularly in China, has kept global iron ore supplies very tight, leading to higher prices in recent years.

Nippon Steel and Posco said the two companies will team up to negotiate benchmark prices with iron ore producers for the 2007 fiscal year. They will also start a joint study of global demand and other market conditions for iron ore. By strengthening their tie-up in the area of price talks, the two companies "aim for smooth procurement of iron ore," they said in a statement. Nippon Steel and Posco said in October that they have agreed to reinforce their capital and business ties. By forging a closer alliance, the two companies aim to strengthen their business of supplying high-grade products to automakers and shipbuilders as global competition in the steel industry shifts due to Mittal Steel Co.'s takeover of Arcelor.

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China Jan-Nov steel PDTS exports doubled to 37.46m tons

China's exports of steel products in the January-to-November period doubledon year to 37.46 million metric tons, preliminary data provided by the General Administration of Customs showed recently. Exports in November totaled 4.63 million tons, it said. The customs department also said imports of steel products in the January-to-November period fell 29.1% on year to 17.01 million tons, and imports in November were at 1.48 million tons

Exports of steel billet in January-November rose 30.7% on year to 8.54 million tons, and in November alone totaled 1.48 million tons. Imports of steel billets in the January-to-November period fell 71.4% on year to 350,000 tons, while imports in November were at 20,000 tons. The customs department didn't provide figures for on-year changes in November. The report didn't provide any reasons for the changes.

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Chinese steel mills told to cut output

The Chinese government has announced fresh measures to scale back its steel production. According to the official Xinhua news agency, the Chinese government announced that the outdated steel-smelting ovens of 26 steel firms will be demolished next year. The strategy is part of its overall measures to help cut Chinese steel production by 100 million tonne over the next five years. As part of these fresh measures, the Chinese government has decided that 26 steel mills in the northern province of Hebei would cut their output. The province is understood to produce about 21 per cent of China's total steel output.

Although in the short term, this move may not lead to a substantial improvement in global steel prices, analysts at domestic brokerage houses pointed out that it does send a strong signal that Chinese steel players will not be engaged in price wars to grab a larger share of the global steel market. A recent Citigroup report on Asian metals and mining had said the Chinese steel surplus between January and October was 29.2 million tonne and had resulted in the surging Chinese steel exports. According to the Brussels-based global industry body, International Iron and Steel Institute, the Chinese steel output in the first ten months of CY06 stood at 346.1 million tonne, a growth of 18.4 per cent on a year-on-year basis. Chinese steel production during this period accounted for 34.25 per cent of the total global steel production.

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United Minerals up 35% on Pilbara iron or news

Shares in United Minerals surged more than 35 per cent today after the explorer, formerly United Kimberly Diamonds, released preliminary results showing the potential for high-grade iron ore at its Pilbara Iron Project.Shares in United Minerals jumped 35.6 per cent, or 8 cents, to 30.5 cents with more than 3 million shares changing hands.United Minerals said an initial field mapping and grab sampling program at its Pilbara Iron Project had revealed high grade surface mineralisation of up to 65 per cent iron.The explorer said it had identified three initial drill targets.DJ Carmichael & Co dealer Mike Munro said the results were a positive step for the group.

"Anything above 60 per cent is generally good grade," he said.Another big mover was WorleyParsons, which jumped 4 per cent, or 79 cent, to $20.70 after hitting $20.88 earlier in the day. The trading, on healthy turnover of 1.5 million shares, was fuelled by speculation in the market that the engineering group would be the next Australian company to receive a takeover offer.The local share price run came against a lacklustre day on the broader market with the ASX-200 retreating from record highs, closing 31.8 points lower to 5559.7. The all ordinaries shed 30.6 points to 5541.6.

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UK Takeover panel mulls auction for Corus

The UK Takeover Panel is planning to auction Anglo-Dutch Steel company Corus Group PLC to the two rival suitors, India's Tata Steel Ltd and Brazil's Companhia Siderurgica Nacional (CSN), Indian newspaper Business Standard reported without citing the source.

The paper added the panel might consult Corus (nyse: CGA news people ) to decide on an auction date to avoid a drawn-out battle and may also decide on a sealed process where bidders' offers are final, or a standard auction held over a period of days.

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Brazilian MMX to sell 30% Minas-Rio stake to Sumitomo

Brazilian mining and metals company MMX Mineracao e Metalicos SA (MMXM3.BR) is in negotiations with Japanese industrial conglomerate Sumitomo Metal Mining Co. (5713.TO) about Sumitomo's taking a stake in MMX's Sistema Minas-Rio.MMX President Rodolfo Landim said that MMX was in talks to sell a 30% stake in Sistema Minas-Rio to Sumitomo. The deal would be structured similarly to an accord with U.S.-based miner Cleveland-Cliffs Inc. (CLF) earlier this year.In September, Cleveland-Cliffs acquired a 30% stake in MMX's Sistema Amapa for $133 million. Cleveland-Cliffs also agreed to contribute 30% of the estimated $275 million still needed to develop the mine and associated facilities.The Amapa mine is currently under construction, with the start of operations expected in the fourth quarter of 2007. The mine is expected to produce 6.5 million metric tons of iron ore per year. Bahrain-based iron pellet producer Gulf Industrial Investment Co., or GIIC, has already signed a 20-year supply contract with MMX for Amapa ore, Landim said.

However, MMX's Sistema Minas-Rio is the company's most ambitious mining project, with total investments of more than $2.4 billion. The investments include development of the Minas mine in Brazil's Minas Gerais state, as well as a slurry pipeline, port facilities and pellet plant.Some $2 billion will be invested in the Minas mine, which is expected to produce 26.6 million metric tons of iron ore by April 2009. In addition, the company will build a 550-kilometer slurry pipeline to transport iron ore pulp, or sinter feed, to a pellet plant at the Acu port in Rio de Janeiro state. Port facilities are expected to be finished by May 2009, while the pipeline will be completed by July 2009. The $433 million pellet plant will produce 7 million metric tons of iron pellets, which are prized by steelmakers for their efficient use in blast furnaces. The plant is expected to be completed by May 2010.

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