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Saturday, April 30, 2011

Cliffs Natural coal producing mine damaged by tornado in Alabama

Saturday, 30 Apr 2011

Cliffs Natural Resources Inc reported that during the evening of April 27th 2011 its above ground operations at its Oak Grove Mine in Alabama were struck by severe weather, including a tornado storm.

All mine operations employees are accounted for and safe with no known injuries at this point in time. Cliffs indicated that it does appear that the severe weather did significant damage to the mine's preparation plant and overland conveyor system and this, along with overall infrastructure damage in Alabama, will impact future customer deliveries.

Cliffs cautioned that it is extremely early in the damage assessment process being conducted by its operations team and therefore, difficult to accurately forecast potential business impact. The Company will continue with its assessment and further information will be communicated as appropriate and available.(sourced steelguru)

Coal to remain power source - EIA

Saturday, 30 Apr 2011

This year’s market outlook said that coal will still be the largest source of energy generation into 2035, but production of Appalachian coal is predicted to decline substantially.

According to the US Energy Information Administration’s “Annual Energy Outlook,” current data suggests Appalachian coal production will decrease “substantially from current levels, as coal produced from the extensively mined, higher cost reserves of Central Appalachia is supplanted by lower cost coal from other supply regions.”

The EIA is also projecting that greenhouse gas emissions from power generation probably aren’t going to decline anytime soon.

EIA Administrator Richard Newell said that “EIA’s projections indicate strong growth in shale gas production, growing use of natural gas and renewable in electric power generation, declining reliance on imported liquid fuels and projected slow growth in energy-related carbon dioxide emissions in the absence of new policies designed to reduce them. But variations in key assumptions can have a significant impact on the projected outcomes.”

According to the EIA, declines in mining productivity in the Appalachian region have substantially lowered the competitiveness of Appalachian coal.

A predicted increase in the northern part of the basin, the EIA predicts, will not be enough to bolster overall Appalachian production. After a sharp decline in coal prices in 2008, the coal market is not anticipated to rebound over 2008 levels until after 2025.

(Sourced from Herald Reporter)

Steam coal to beat oil and gas after Japan quake

Saturday, 30 Apr 2011

Thermal coal may outpace oil and gas this year, rising more than 30% to a record, as demand from China and India accelerates and Japan boosts imports to make up for nuclear power lost after the March earthquake.

According to data compiled by Bloomberg and IHS McCloskey, a Petersfield, England-based researcher, prices at the Australian port of Newcastle, a benchmark for Asia, may average USD 130 a metric tonnes in 2011. That compares with USD 99 a tonne last year. New York crude futures are forecast to rise 26% next year, while US natural gas will be unchanged.

Societe Generale SA said that demand for coal is increasing in China and India as the countries look to fuel economies that are outpacing the rest of the world. China’s purchases may rise by 7.8% in 2011, while India’s may climb 28% last month. Japan may consume as much as 1 million extra tonnes this year as the country turns to coal-fired plants make up for the loss of nuclear generation.

Mr Mark Pervan head of commodity research at Australia & New Zealand Banking Group Ltd in Melbourne said that “The demand story for thermal coal is going to look quite strong. This year we’re going to see quite an accelerated increase in demand from India. China will again be a strong contributor.”

Thermal coal will average USD 132 a tonne this year and USD 145 in 2012 as demand from Japanese utilities for fuel with high energy content rises, Daniel Brebner, an analyst for Deutsche Bank in London, said in an April 8 report. Price estimates ranged from USD 118 to USD 150 a tonne in the survey. (sourced Bloomberg)

Chinese iron ore dependence on imported iron ore to decline

Saturday, 30 Apr 2011

It is reported that Chinese steel mills are shouldering the consecutive hike in iron ore price. In recent years, they are active in mining so as to secure more and more iron ore supplies.

China will focus on building large scaled mines during 12th Five Years, with the target of 8 mines with annual capacity over 10 million tonnes, 15 mines with annual capacity over 5 million tonnes and 20 mines with annual capacity over 2 million tonnes, the total newly built capacity will hit 200 million tonnes a year, 2 or 3 mining mega are designed to appear with annual capacity of 100 million tonnes, and 6 big ones with annual capacity of 30 million tonnes, etc.

Overseas investment achievement: China's mining hand has touched Mongolia, North Korea, Laos, Myanmar, Indonesia, Kazakhstan etc. China's iron ore overseas equity was around 20 million tonnes in 2010, to 30 million tonnes in 2011, and to continue increasing in 2013 when the dependence rate of the world biggest iron ore producer and consumer will decline.

(Sourced from SteelHome)

Indian iron ore mining mess - SC restrains mining operation in Karnataka

Saturday, 30 Apr 2011

The Supreme Court today restrained 19 mines from carrying out mining operations and transportation of iron ore in Bellary region of Karnataka.

A special forest Bench headed by Chief Justice Mr SH Kapadia also said it would pass an order on another 68 mines which have been indicted by the apex court appointed Central Empowered Committees for violating rules in mining operations.

The Bench said in an interim order said that “We make it clear that there would be no mining or transportation of mined materials (in 19 mines) till further order.”

The Bench, however, did not pass any order against 68 other mines, which have approached the Karnataka High Court. It directed the amicus curie Mr ADN Rao to file transfer petition after getting list of the companies which had approached the high court so that those cases could also be heard by it.

The Bench passed the order on the basis of reports of CEC in which it has been stated that large-scale illegal mining was on in Karnataka particularly in Bellary district in connivance with officials and public representatives.

The CEC had on April 15th 2011 filed its report before the apex court in which it had said that there has been illegal mining on colossal scale in the state, particularly in Bellary district with active connivance of officials of the departments concerned and also public representatives.

The SC had in February directed the CEC to conduct a probe over allegations of illegal mining in the state and submit a report within six weeks.

The court's direction had come after a petition filed by an NGO had submitted that as per Karnataka Lokayukta report, mining activities were being carried not only illegally but also in the areas categorized as forest land.

Earlier, the Bench had directed the CEC to probe the Andhra Pradesh side of the Bellary region.

NGO Samaj Parivartan Samudaya had alleged that the governments of Karnataka and Andhra Pradesh had failed to stop the rampant illegal mining of iron ore, which adversely affected the livelihood of local people, especially the rural poor. It had alleged that illegal mining had resulted in an encroachment of 1,114.8 hectares of forest land in Karnataka.” (sourced from PTI)

Indian Supreme Court halts operations in 19 Karnataka mines.

The 19 mining lease holders

1. Ram Rao m.Poal
2. Adarsha Enterprises
3. J.M.Vrushbendraih
4. Sparkline Mining Corporation
5. Shiva Vilas Trust
6. J.M.Vrushbhendraih
7. Jai Santhoshi Matha Mining Enterprises
8. D.Ramesh
9. VSL Mining Company
10. Karthikeshwar Mining & Iron Ore Co.P.Ltd.
11. Arogayya Das
12. Praveen Kumar Nikkam
13. B.Rudragowda
14. Mithra Mineral Enterprises
15. B.Minerals
16. Muneer Enterprises/ Minerals
17. Trident Minerals
18. veeyam Pvt.Ltd.
19. A.Arogayya Das

sourced Business Line

Friday, April 29, 2011

Illegal mining officials will be hanged

Friday, 29 April 2011
By Cole Latimer

Indian officials who allowed illegal mining will be hanged the Goa region’s government says.

Mines in the region have reportedly been operating without mandatory permissions, with mines department officials allegedly turning a blind eye to the practice.

However, recent opposition from anti-mining activists in the region saw two mines closed and greater scrutiny on corrupt mining officials.

According to IANS, Goa chief minister Digambar Kamat told reporters that “mining officials will have to follow the directives. If they don’t do it, they will be hanged.”

Villagers living near the two mines state that they had been operating in collusion with mines department officials, and had not obtained permission under Water and Air Pollution Acts.

Illegal mining is a major issue in India, with nearly a fifth of all mining production in Goa coming from illegal mines. (sourced MiningAustralia)

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Rio increases Indigenous involvement in Pilbara

Friday, 29 April 2011
By Jessica Burke

Rio Tinto says a new contract of more than $160 million for Pilbara construction works is a positive step towards increasing Indigenous business involvement.

Rio Tinto has awarded a contract of over $160 million to the NRW/Eastern Guruma joint venture for construction works associated with the expansion of the Brockman 4 and Western Turner Syncline mines in the Pilbara region of Western Australia.

The one-year contract will support the expansion of Brockman 4 from its current annual capacity of 22 million tonnes to 40 million tonnes.

The Western Turner Syncline will increase to 15 million tonnes per annum.

The expansions are part of Rio’s intended 333 million tonnes per annum capacity in the Pilbara in 2015.

It is the second significant contract awarded to the joint venture between NRW and Eastern Guruma, the traditional owners of the region.

A $200 million contract was awarded in 2009 to construct and operate the Western Turner Syncline mine.

Rio Tinto chief executive iron ore and Australia Sam Walsh said the decision highlights the importance of building indigenous business capacity.

“Rio Tinto has worked long and hard at building our Aboriginal employment levels across our Australian operations, and that work continues.

“But it is equally important that we support indigenous business participation.”

“We have made clear through all the contract tenders that indigenous involvement is a high priority, and this announcement is further evidence of that.”

Mining traditional Aboriginal land in the Pilbara has been a hot topic lately, with Andrew “Twiggy” Forrest’s Fortescue Metals Group (FMG) proposing a $10 million per year deal to mine part of the land owned by the Yindjibarndi people. (sourced MiningAustralia)

Production halted at tornado-hit Alabama coal mine

Fri Apr 29, 2011 4:01pm GMT

* Coal production suspended by tornado damage
* Electrical power still out at mine
* Co has not yet declared force majeure
* Stock drops 1.4 percent

NEW YORK, April 29 (Reuters) - Coal production has been halted at a Cliffs Natural Resources (CLF.N: Quote) mine severely damaged by a tornado in Alabama this week, the company said on Friday.

The company's stock dropped 1.4 percent to $95.26 in midday trading on the New York Stock Exchange.

"Production has been suspended," spokeswoman Patricia Persico told Reuters, when asked about the company's Oak Grove mine.

She said electrical power had not yet been restored to the mine, some 25 miles (40 kilometers) southeast of Birmingham, Alabama, which was hit by severe weather on Wednesday evening.

Persico said Cliffs had not declared "force majeure" -- a legal term under which it might suspend contracts with customers -- but was assessing the situation to determine the next step.

On Thursday, Cliffs said violent storms and tornadoes that tore through Alabama had severely damaged some above-ground operations at Oak Grove. The storms killed more than 300 people in seven southern states in one of the deadliest swarms of twisters in U.S. history.

The company said in a news release that none of the 300-plus workers at the mine had been injured, but that the damage would affect future customer deliveries.

The Oak Grove mine extracts coal from the Blue Creek seam containing metallurgical, or coking coals, used in steelmaking. It produced between 900,000 and 1.4 million tons of coal per year over the last five years, Persico said. (Reporting by Steve James; Editing by Lisa Von Ahn, sourced Thomson Reuters)

Peculiar Knob award iron ore rail contract

Friday, 29 April 2011
By Cole Latimer

WPG Resources have announced a rail haulage agreement with Genesee & Wyoming Australia (GWA) for iron ore transportation from Peculiar Knob.

The agreement will see GWA will transport approximately 3.3 million tonnes of hematite iron ore annually.

Starting in the second quarter of 2012, the trains will operate from a siding near Wirrida in South Australia and run down to the bulk export facility in Port Pirie.

It will operate for a minimum of five years, but may be extended if further iron ore deposits are developed.

The contract is expected to generate around $50 million for GWA, but is dependant on WPG obtaining final pproval for two permits relating to mine and port infrastructure.

The miner expects to be granted these permits by July this year. (sourced MiningAustralia)

Australia Newcastle Thermal Coal Rises 0.7% to $122.27 a Ton

Fri, Apr 29, 2011 6:22 PM GMT+0530
By Pratish Narayanan

Power-station coal prices at Australia’s Newcastle port, an Asian benchmark, increased 0.7 percent in the week ended today.

Coal prices at the New South Wales port rose to $122.27 a metric ton from $121.48 the previous week, according to the globalCOAL NEWC Index.

Xstrata Plc (XTA), the world’s largest exporter of power-station coal, BHP Billiton Ltd. (BHP) and Rio Tinto Group are among mining companies that ship coal through Newcastle. (By Bloomberg)

Rio Tinto proposes to delist Riversdale Mining

Fri Apr 29, 2011 7:59am GMT

SYDNEY, April 29 (Reuters) - Rio Tinto on Friday proposed to delist Riversdale Mining after it said it had control of more than 73 percent of the firm and extended the A$4 billion takeover offer to May 6.

Riversdale's biggest shareholder ahead of the bid, India's Tata Steel , held on to its 27 percent stake, looking to secure high quality coking coal from Riversdale's projects in Mozambique.

The other major hold-out against the A$16.50 a share offer, Brazilian steel maker CSN , has sold its 19.9 percent stake to Rio Tinto. (Reporting by Narayanan Somasundaram; Editing by Ed Davies, sourced Thomson Reuters)

ArcelorMittal Kryvyi Rih to supply steel for Chernobyl project

Friday, 29 April 2011 17:50:10 (GMT+2)

ArcelorMittal Kryvyi Rih, Ukrainian subsidiary of global steel giant ArcelorMittal, will supply 12,000 mt of rebar for the construction of a new steel containment structure over the fourth power unit of the Chernobyl nuclear power plant. In particular, rebar of 40 mm diameter produced by ArcelorMittal Kryvyi Rih will be used for the building of the foundation of the new containment structure.

ArcelorMittal Kryvyi Rih is the only Ukrainian producer of 40 mm rebar. The steelmaker has already shipped 3,000 mt of the rebar supplies in question. (sourced steelorbis)

Rio Tinto takes control of Riversdale board and proposes delisting

Friday, 29 April 2011 16:13:06 (GMT+2)

On April 29, the Australian mining giant Rio Tinto said that it has assumed control of the Africa-focused Australian coal miner Riversdale Mining Limited (Riversdale) board with the appointment of two new directors and will seek to delist Riversdale following the end of its takeover bid.

Today's appointments give Rio Tinto five directors on the nine-member board.

Rio Tinto now holds a relevant interest in more than 73 percent of Riversdale shares.

Also, in relation to the takeover offer for Riversdale by Rio Tinto Jersey Holdings 2010 Limited (RTJ), a wholly-owned subsidiary of the Rio Tinto Group, RTJ intends to seek to delist Riversdale after the close of the offer, as stated in the letter to Riversdale shareholders sent to the Australian Securities Exchange (ASX)

(sourced steelorbis)

China's Baosteel Q1 net profit down 22 pct

Fri Apr 29, 2011 2:31pm GMT

* Baosteel Q1 net 3.07 bln yuan vs 3.93 bln yuan yr ago
* Sector outlook remains severe
By Ruby Lian and Kazunori Takada

SHANGHAI, April 29 (Reuters) - Baoshan Iron & Steel (600019.SS: Quote), China's largest listed steelmaker, reported a 22 percent fall in first-quarter profit as surging raw material costs and overcapacity squeezed margins.

The company, usually referred to as Baosteel, said Japan's devastating earthquake and tsunami last month had triggered uncertainties in the market.

"The steel sector will continue to face a severe outlook due to a tightening credit environment, rising supply (of steel) and slower growth in sectors such as autos," it said late on Friday.

Baosteel, the traditional pricing leader for the Chinese market, said earlier this month it will cut prices of its main products for May, after buyers trimmed orders in recent months in the face of high inventories and weak demand. It will be Baosteel's first price cut in nine months.

Baosteel posted a net profit of 3.07 billion yuan ($472 million) during the January-March period versus 3.93 billion yuan a year ago.

Three analysts surveyed by Reuters forecast an average of 0.19 yuan per share in earnings, which translates to a net profit of 3.33 billion yuan.

EPS fell to 0.18 yuan against 0.22 yuan a year ago while revenue rose to 54 billion yuan versus 44.3 billion yuan.

Prices of iron ore, a key steelmaking ingredient, surged by around 12 percent from January to mid-February, according to three major price indexes, eating into steel mills' profit margins.

Industry data showed China's daily output over the first 20 days of April stood at 1.918 million tonnes, translating to 700 million tonnes on an annualised basis, or a gain of 12 percent from a year ago.

Chinese mills produce nearly half of the world's steel.

Baosteel's Asian peers POSCO (005490.KS: Quote) and JFE Holdings (5411.T: Quote), reported a quarterly drop in net profit, while Nippon Steel Corp (5401.T: Quote) suffered a net loss.

Baosteel's parent, Baosteel Group, was the world's No.3 steel producer in terms of output last year, behind ArcelorMittal SA (ISPA.AS: Quote) (MT.N: Quote) and Hebei Steel.

Shares in Baosteel closed at 6.90 yuan on Thursday and were suspended from trade on Friday. They have gained 8 percent so far this year, outperforming a nearly 4 percent gain in the overall Shanghai index .SSEC.

($1 = 6.502 Chinese yuan)

(Editing by Lincoln Feast and Erica Billingham, sourced Thomson Reuters)

Indonesia's Adaro Q1 net profit up 11 pct on higher coal prices

Fri Apr 29, 2011 3:08pm GMT

JAKARTA, April 29 (Reuters) - Adaro Energy , Indonesia's second biggest coal miner, said on Friday its first-quarter 2011 net profit rose 11 percent as higher coal selling prices made up for lower output.

Adaro's first-quarter net profit was $108.94 million, compared with $97.84 million in the same period a year earlier, it said in a statement.

Adaro, which has a market capitalisation of $8.3 billion, plans to spend $100 million on a joint-venture coking coal project with BHP Billiton this year in Central Kalimantan.

Adaro owns a 25 percent stake in the project that has seven coal concessions with resources of 774 million tonnes of metalurgical coal.

It reported first-quarter revenue grew 12 percent to $757 million, compared with revenue of $678 million in the year-ago period. Coal output was 10.6 million tonnes, down about 7 percent from a year earlier.

Analysts forecast Adaro's 2011 net profit to double to 4.5 trillion rupiah ($524.32 million), according to Thomson Reuters Starmine's SmartEstimate.

Shares in Adaro were down 1.1 percent ahead of the results, and fell more than 13 percent in the first quarter to underperform a Jakarta index down around 0.7 percent in the same period. ($1 = 8582.5 Rupiah) (Reporting by Janeman Latul; Editing by Neil Chatterjee, sourced Thomson Reuters)


Friday, 29 April 11

Korea Midland Power Co. Ltd (KOMIPO) has issued a spot supply tender for supply of total 710,000 MT of thermal coal for delivery between July and December 2011.

According to KOMIPO-Bid Notice-2011-3 dated 2011-04-28, 210,000 MT of inquiry for min. 4,800kcal/kg NAR coal and 500,000 MTof inquiry for min. 5,600kcal/kg NAR coal.

Qualified bidders are required to submit their respectively bids on or before May 6, 2011 at 14:00 p.m. Korean Standard Time.

(sourced coalspot)

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Friday, 29 April 11

PT Harum Energy Tbk (HRUM), that is controlled by Indonesian tycoon Kiki Barki, is poised to spend Rp 2.58 trillion (approximately US$ 301.296 mln) for takeover of coal mining companies as quoted by Insider Stories.

"We have to realize acquisition of coal companies this year," said Harum President Director Ray Antonio Gunara as quoted by Kontan daily today.

According to him, Harum is focusing on acquisition of coal mining with 5,000 kcalories. "We aim to buy coal mining in East Kalimantan as the company has rolled out infrastructure for coal mining in these area."

To support the acquisition, the company has Rp 1.03 trillion (approximately US$ 120.284 mln) of internally generated cash flow and Rp1.56 trillion (approximately US$ 182.179 mln) loan facility obtained from Bank DBS Ltd Singapore.

Harum, with coal reserves of 112.6 million tons, targets 10.4 million tons output this year, an increase from 7.4 million tons last year. The company owns three subsidiaries dubbed PT Santan Batubara, a joint venture with subsidiary of PT Indika Energy Tbk, PT Mahakam Sumber Jaya, and PT Tambang Batubara Harum.

"Production from Tambang Batubara Harum may reach 500,000 tons," Ray said.

(sourced Coalspot)
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Friday, 29 April 11

ICAP Shipping reported that, China's coal imports in the first quarter were some 27% down on a year ago at 32.3 Mt (2010: 44.4 Mt). Part of the reason for the decline has been due to extra availability within the country as it produced some 792 Mt in the quarter - up 8.3% on Q4 2010.

Shipments down the long coast line from the north have increased by 25% this year and this had directly impacted import requirements. The high price of imported coal has also put pressure on imports with steam coal imports this March at $107/t as compared to $85/t in the same month a year ago.

By coal type imports this year have fallen as follows: anthracite -10.5%, coking -3.5% and steam coal -40.3%.

Source: ICAP Shipping &

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Thursday, April 28, 2011

Portuguese president calls for unity against economic crisis

April28, 2011 08:34:40 Xinhua

LISBON, April 27 (Xinhua) -- Portuguese President Anibal Cavaco Silva Wednesday called on the country's political forces to unite against the economic crisis.

The appeal came after the Portuguese parliament rejected a set of measures to cut deficit, forcing the government to resign. The country will have national elections on June 5.

"Beyond the country divisions, there should be a patriotic commitment to unity that should unite the Portuguese people," said a message posted on the Facebook page of the Portuguese presidency.

"Different ideas should not prevent from unity in what is essential for the country," it added.

Pedro Passos Coelho, leader of the center-right main opposition party PSD, said Tuesday that Portugal does not need a National Union, the name of the only allowed party during the 1926-1974 Portuguese dictatorship. He blames the government for the economic situation and for the country's need to recur to an IMF intervention.

In response, Socialist Prime Minister Jose Socrates said that his party is willing to negotiate with all the opposition leaders in order to find a way out to the current economic and political crisis.

Russia's Severstal Q1 steel output up 5 pct y/y

Thu Apr 28, 2011 6:47am GMT

* Q1 crude steel output is 3.65 mln tonnes
* Gold output up y/y, down q/q

MOSCOW, April 28 (Reuters) - Russia's top steelmaker Severstal (CHMF.MM: Quote) said on Thursday its crude steel output rose to 3.65 million tonnes in the first quarter 2011, up 5 percent from the same period last year.

However, production was down 5 percent compared with the last quarter 2010, when output reached 3.84 million tonnes.

Severstal is counting on growing demand at home and overseas to boost sales and production this year after posting a bigger than expected loss in the final quarter of 2010.

Its gold output rose by 42 percent year-on-year to 173,930 ounces but was also down on a quarterly basis by 10 percent.

Severstal has assets in Russia, Ukraine, Kazakhstan, Italy, France, the United States and Africa and is controlled by its Chief Executive Alexei Mordashov.

Severstal is self sufficient in coking coal and iron ore in Russia and 50 percent self sufficient in coking coal in the United States.
(Reporting by Katya Golubkova ; Editing by David Holmes,sourced Thomson Reuters)

Baltic Dry Index nudges up after days of losses - Nikos Roussanoglou,Hellenic Shipping

Thursday, 28 April 11

After consecutive falls, the dry bulk freight market, as followed through the Baltic Dry Index, finally caught a breather yesterday, with the BDI managing to post small gains of 0.72% to reach 1,259 points. While, these levels are among the lowest this year and by far the lowest since the start of 2009, demand seems to be picking up recently, especially for thermal coal cargoes. As a result, the Panamax market, which had been severely suffering lately, finally managed to get up to speed and post increases of 2.05% on a daily basis, with the relative Baltic Panamax Index (BPI) reaching 1,392 points. On a similar note, the Capesize market ended on positive territory yesterday, reaching 1,566 points, up by 1.29%. Still, average earnings for the heavily oversupplied Capesize segment of the market, remain below break-even levels and well below this year’s forecasts by leading investment and shipbroker firms.

According to the latest weekly report from shipbroker Fearnley’s, as expected the end of last week was quiet for the Capesize sector, due to the Easter Holidays. “This working week started flat, but a flurry of activity on the Pacific drove the rates back up to the upper usd 7.00 mark for West Australia/China. Activity on front haul has been limited but a fixture has been reported at a usd 19.80 for Brazil/China which is a welcome rise on this route. Period has been dominated by owners re-fixing vessels prematurely redelivered off long Charters, thus pushing the level for 12 months down to usd 12k´s. Longer term charters have been concluded on 206kdwt vessels at usd 20k for 5 years. The Atlantic market remains very quiet despite low coal stocks on the Continent. The index has remained largely flat but with a slight positive trend” said Fearnley’s.

Commenting on the Panamax market it mentioned that it has been oversupplied with tonnage, both in the Atlantic and the Pacific lately, although activity picked up towards end of last week and cleared out some of the tonnage overhang. “The market remained nervous early this week as well, as most of Europe came back from Easter holidays. Rates in Atlantic remained more or less the same with TA´s around USD 10-12k, and fronthauls fixed in the USD 20k region. The Far East remained over-tonnaged with rates around 8-10k, but mid week activity and rates indicated signs of some recovery. Period business vague but all the way down to mid 12 for 4-6. The FFA market traded stronger and volumes fair” said the report.

As for the Handy/Supramax markets, “in the Atlantic, little changes in rates and a very quiet start to the week. Not many fresh enquiries - it seems Owners and Charterers try to figure out which direction the market will take. A further bank holiday on Monday, England, will surely affect the market with consecutive short weeks – traders will most probably stand by. We expect more enquiries to hit the market in the next weeks (from mid-May?) but will this be enough to stop it from declining and absorb the ever increasing spot tonnage in the Atlantic? The market will remain volatile and positional. Pacific market remains quiet. For Indo-India, Supras in N.China get close to 13k. WCI-China rates slided to 15k - from ECI around 14k, but few ships seen ballasting to Indonesia as not much cargoes ex-ECI. Red Sea, ferts on Hmax/Supras are fixed at very mid 20´s pmt on voyage basis to WCI. Not too much activity on short period as market bit volatile and speculative and hear index type vessels fixed at midteens” concluded the shipbroker.

It also noted the increased newbuilding activity during the past week. Fearnley’s reported increased investments in the container and LNG sectors. In total, 27 container vessels, plus options, have been contracted over the last two weeks. “Seaspan Corp. has placed a huge newbuilding contract at STX for 10 firm plus 10 optional 14,000TEU container vessels. This order comes only few weeks after ordering a series of 10,000TEU vessels at the Yangzijiang shipyard in China. We see great activity in the LNG sector and expect more orders to come over the next few weeks” said the report.

Source: Nikos Roussanoglou, Hellenic Shipping, coalspot

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Wednesday, 27 April 11

South Korea's East-West Power Co's (KEWESPO) has issued a tender to buy total 765,000 tonnes of thermal coal for delivery between July to September for its DangJin, Honam and Donghae Thermal Power Plant, the firm said in its website.

The utility is seeking 325,000MTtonnes of coal with a minimum calorific value of NCV 4,600kcal/kg and 130,000MT tonnes of NCV min 5,100kcal/kg CV coal for Dangjin Power Plant.

Another 130,000MT of NCV min 3,700kcal/kg coal and 180,000MT of NCV min 4,600kcal/kg coal for its Honam and Donghae Power Plant respectively, it said.

The tender will close 3:00 p.m. on May 2nd, 2011 (Korean Standard Time).

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Wednesday, 27 April 11

Indonesian's tenth largest coal miner in term of coal concession, PT Resource Alam Indonesia Tbk (KKGI), is considering to acquire several coalmines in a bid to make exponential growth, as quoted by Insider Stories

The coal company is eyeing several mines with middle rank coal to acquire in East Borneo, said to Head of Investor Relations Resource Alam Eric Tirtana.

IS further said, “There are a lot of mines we can acquire because we seek for small scale ones. Finding 3 million ton more coal is relatively easy, we are unlike big players that seek for tens of millions ton coal assets,” he said as quoted by Bisnis Indonesia daily.

The company currently manages Rp210.03 billion that can be allocated to support the plan, but there is also possibility to generate more funds from loan.


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Wednesday, April 27, 2011

PSL eyes Indonesian coal business

April 26, 2011, 6.39 pm (Singapore time)

Construction-linked PSL Holdings Limited said on Tuesday that it is keen on investing in Indonesia's coal industry given its good growth potential and the positive outlook of the energy sector.

'This investment into the Indonesian coal business will provide an additional business leg for the PSL Group, and thus generate a stable and recurring income stream for the group,' Lee Cheng Peck, PSL's Group Managing Director said.

Mr Lee added that it will serve to boost PSL's earnings growth and help offset against the cyclical nature of the construction industry.

PSL will take a 11.5 per cent stake in Sindo Resources Pte Ltd, which will own PT Bubuhan Multi Sejahtera (BMS) - an Indonesian company with mining rights over at least 25 million MT of coal reserves in Sumatra, Indonesia.

Indonesian businessman, Charles Antonny Melati, will own 65 per cent of the total enlarged share capital of Sindo Resources.PSL will loan Mr Melati about US$3 million to fund his purchase of shares in BMS.(By BusinessTimes)

Indonesia’s First-Quarter Coal Output, Exports Fall on Rains

Apr 27, 2011 12:58 PM GMT+0530
By Dinakar Sethuraman

Indonesia’s first-quarter coal production was below target after rains disrupted mining, said Bob Kamandanu, chairman of the Indonesian Coal Mining Association.

Output rose to 32.43 million metric tons in March from 27.15 million in February and 29.54 million in January, Kamandanu said in an interview at the Coal Upgrading & Conversion conference in Singapore today. The average for the quarter at 29.7 million tons a month compares with 30 million tons a month a year earlier. The monthly target this year was about 30 million tons.

“Production was unchanged because of a very wet season,” Kamandanu said. “We hope to see a real dry season this year as most of last year was wet.”

Indonesia’s coal production may rise to between 335 million and 370 million tons this year, Kamandanu said at the conference. Output climbed to 325 million tons in 2010 from 283 million in 2009, he said.

Exports of the fuel fell 5.9 percent to 68.8 million tons in the first quarter from 73.1 million a year earlier because of a delay in issuing trading permits by the government earlier this year, according to calculations based on Kamandanu’s data.

Overseas sales rose to 25.8 million in March from 20.3 million in February. ( By Bloomberg)

Second grade iron ore mining rampant in Gadag

Apr26, 2011 at 02:03am IST

HUBLI: Illegal miners have been looting second grade iron ore in Kappata hill region of Gadag district and transporting it to Bellary to mix with high quality ore.In the wake of the recent increased vigil on illegal mining activities in Bellary district, iron ore thieves are now concentrating on low quality iron ore. Over 33,000 hectares in Kappata hill region, including Gadag, Shirahatti and Mundaragi taluks, have rich deposits of 35 to 40 per cent graded iron ore. The area also has several valuable medicinal and herbal plants.

Any mining or deforestation activity is banned in surrounding villages like Kadakol, Singatarayanakeri Tanda, Hirewaddatti, Shirahatti, Beladadi, Papanashi Tanda and Kadampur, while the hills is declared as a reserved forest.The ore 'thieves' came to know about the low grade ore deposits in Gadag district some time ago when the illegal mining was at its peak in Bellary region. They started looting the ore deposits in Kappata hills with the help of local politicians. Usually, above 63 per cent graded ore is considered export quality. The ore extracted in Gadag is transported to Bellary via MevundiBaradur route of Mundaragi taluk, which does not connect with any of the national or state highways, up to Hospet. Administration ActsAccording to sources, Gadag district administration seized iron ore worth Rs 3 crore in the past three months.

While the seized ore was stored at Papanashi Tanda stockyard, the illegal miners are said to have attempted to loot it. However, the alert forest officials stymied their attempt. The forest officials seized seven tippers with the illegal ore being transported to Bellary via MevundiBaradur. Mundaragi range forest officer VH Parimal told Express that the ore thieves have been transporting low graded ore without any permit and they looted ore from the stock yard of district administration on Saturday also.

sourced The New Indian Express

China $600 Mln Loan Deal Buys More Aussie Iron Ore

Apr, 26 2011 - 6:18 pm

Chinese Premier Wen Jiabao and Australian leader Julia Gillard signed a $600 million deal for financing an iron ore project in Western Australia’s Karara Mining Ltd during an official visit in Beijing, according to the official China Daily. The deal is the usual Chinese cash for resources loan, whereas the Karara iron ore mine is run in a partnership with Australia’s Gindalbie Metals Ltd and China’s No. 2 iron ore company, Anshan Iron & Steel Group.

Gindalbie and Ansteel have an off-take agreement for Karara iron that has Ansteel taking 100% of the production of the mines to Ansteel’s new 6.5 million tons per year Bayuquan steel mill. Ansteel is already exploring opportunities to expand its steel producing capabilities at Bayuquan above 6.5Mtpa in expectation of additional iron from Karara. The $600 million loan will help finance that.

The Karara iron ore project begain in late 2010, and is expected to see initial production of around two million tons at some point in 2012, according to Gindalbie.

Demand for iron ore is strongly correlated to Chinese steel production growth. Since 2002 the Chinese market has absorbed nearly all related capacity in the global iron ore production system and is expected to continue driving future market growth, according to BHP Billiton, one of Australia’s biggest multinational miners.

BHP, Rio Tinto and Brazilian mining company Vale are the top three suppliers of iron ore to China.(sourced Forbes Blog)

China's Baosteel warns of end to iron ore investment frenzy - paper

Wed Apr 27, 2011 1:26am GMT

SHANGHAI, April 27 (Reuters) - Global supply and demand conditions for iron ore may reverse sooner than expected after a years-long investment frenzy, the chief of China's leading steelmaker said.

"In the last decade, iron ore has turned into a crazy stone from an ordinary stone," Baosteel Group chairman Xu Lejiang was quoted as saying by the Shanghai Securities News.

The current cycle was coming to an end and massive investment over the past 10 years would soon translate into an iron ore supply surge, said Xu.

Xu also predicted a sharp decline in iron ore prices amid a severe supply glut.

China is the world's top iron ore buyer and steel producer, contributing almost half of global steel output. (Reporting by Soo Ai Peng; Editing by Chris Lewis, sourced Thomson Reuters)

World buyers boost iron-ore mining

Quebec-Labrador sees turnaround; 'Our future lies in the burgeoning Asian markets,' says Iron Ore Co. CEO


April 27, 2011

"It's a very exciting time to be taking part in the extraordinary revival of Quebec-Labrador iron-ore mining," says Zoe Yujnovich, the Rio Tinto Brazil executive who became CEO of the Iron Ore Co. of Canada in Montreal 14 months ago.

IOC is investing almost $1 billion U.S. in a three-phase expansion of its Labrador City mines and processing plants to lift annual capacity from 16 million tonnes (in concentrates) to 26 million tonnes and retain the title of largest producer.

Exploration and mining investments worth many billions have transformed Schefferville, on the border's Quebec side, and Labrador City in Newfoundland, into boom towns in just six years - they're often compared with the frontier days of Fort Mc-Murray, capital of Alberta's oilsands industry.

"Traditionally we've supplied most of our concentrates and pellets to steelmakers in North America and Europe, but the world has changed, and our future lies in the burgeoning Asian markets," said Yujnovich, who holds engineering and management degrees and has held several executive posts at the international Rio Tinto Group, IOC's 58.7-per-cent owner. "That's where our new capacity will be headed."

Driven by soaring world prices that recently hit a record $180 to $200 U.S. a tonne, Quebec-Labrador is bursting with ambitious projects to feed iron ore to steelmakers worldwide, especially Europe, China and India. About $7 billion is committed for three, near-term projects and billions more for others further out.

In 2005 iron ore sold for $35 U.S. a tonne and Quebec-Labrador was on the ropes. But China's steel industry was taking off and scouting longterm, secure and low-cost foreign sources of ore.

Chinese, European and Indian steelmakers were quietly doing the same thing and soon saw the potential of Quebec-Labrador's enormous reserves, and mining and transportation infrastructure. The region's total capacity could double, to 100 million tonnes, within five years, and the Port of Sept-IÎes will be expanded for 300,000-tonne ore carriers.

IOC, then U.S.-controlled, had developed the first mines near Schefferville in the early '50s, building a 565-kilometre railway to haul the ore south to Sept Îles. In 1982 it shut Schefferville, citing economic reasons, and consolidated production at its Carol Lake mines and Labrador City processing plants.

It was Consolidated Thompson Iron Mines Ltd., led by former Newfoundland premier Brian Tobin and mine builder Richard Quesnel, that kicked off the revival in 2005 with the $750 million Bloom Lake project near Fermont, Que. By 2008 Thompson was well into construction when the global financial crisis broke.

Prospective customer Wuhan Iron and Steel Co. (Wisco), China's third biggest steelmaker, stepped up with $240 million U.S. in cash to buy 19.9 per cent of Thompson and 25 per cent of the mine. It eased the way to completion last year, and initial exports to China and Korea. Thompson plans to double capacity, to 16 million tonnes.

Next, Cleveland's Cliffs Natural Resources Inc., snapped up Wabush Mines, IOC's neighbour at Labrador City, partly to get its Sept Îles pellet plant. Then early this year Cliffs bought Thompson for $4.9 billion. If Thompson doubles Bloom Lake, Cliffs' total Quebec-Labrador capacity will hit 23.5 million tonnes.

Tata Steel, a unit of the Indian Tata Group conglomerate, had been examining a 200-km swath of high-grade iron ore just North of Schefferville and straddling the border. The reserves would cover all its European (Corus) steelmaking needs for 100 years.

The property was held by New Millennium Capital Corp., and Tata Steel is committed to finance New Millennium's Taconite project and become its main customer. Taconite would need $5 billion to develop capacity of 22 million tonnes.

Tata is already financing New Millennium's directshipping ore project nearby, starting late this year with annual production of two million tonnes, rising later to four million tonnes.

"We're determined to get free of the huge swings in iron-ore prices of recent years," said Tata Steel's managing director H.M. Nerurker in Montreal recently.

John Leboutillier, former head of IOC and the Sidbec steelmaker, said the projects backed by deep-pocketed Cliffs and the big steelmakers will go ahead at a pace set by supply and demand, but moving the ore from Schefferville to Sept Îles may need creative solutions.

"Adriana Resources Inc.'s Lac Otelnuk project 175 km north of Schefferville, and potentially the largest of the new projects, faces real logistics and cost challenges," he said.

Adriana, with financial backing from Wisco, plans to develop 20 million tonnes or so of capacity at Lac Otelnuk.

Quebec-Labrador's other big established producer is ArcelorMittal Canada with its Mont Wright and Fire Lake mines near Fermont and railway to Port Cartier and 15 million tonnes of capacity. It may expand its Port Cartier pellet plant at a cost of several hundred million dollars and raise mine capacity to 19 million tonnes.

ArcelorMittal, the world's biggest steelmaker, led a group that paid $500 million for the big Baffinland Iron Mines property in Northwestern Baffin Island early this year.
sourced:The Montreal Gazette

ASSOCHAM urges Karnataka Govt to review iron ore mining leases

Bangalore, Apr 27, (PTI):

Leading chamber ASSOCHAM has asked the Karnataka government to undertake a detailed review of iron ore mining leases and highlight the needs of steel units before the Supreme Court-appointed Central Empowered Committee while framing new rules.

Mining should be moved from unorganised sector to organised if it is to be done in a legal,scientific and environment-friendly manner, it said. But any interruption in supply of iron ore to steel industry would throw lakhs of employees out of jobs and their dependents would suffer, The Associated Chambers of Commerce and Industry of India said.

The mines in Karnataka supply iron ore to several large steel plants like JSW, Kirloskar Ferrous, Mukand Ltd and Kalyani Steels. The state also supplies raw material to units located in Maharashtra, Gujarat, Andhra Pradesh, Tamil Nadu and dozens of small and medium-sized sponge iron units.

"Absence of iron ore supply would be a death blow to the steel industry which is already grappling with numerous other problems," said ASSOCHAM’s Secretary General D S Rawat in a communication to Karnataka Chief Minister B S Yeddyurappa.

One of the observations made by Lokayukta is that several mines entered into raising contracts and transferred mining leases without the state government’s permission in contravention of Rule 37 of Minerals Concession Rules 1960.

"There is apprehension that in case a conclusion is arrived at by the apex committee without studying individual agreements and makes a prima facie determination of illegality, it could result in wrongful closure of many mines," said Rawat.

Steel, iron and other industries have invested Rs 62,000 crore in the landlocked Bellary-Hospet region as it has abundant availability of iron ore. "Shutting down of these industries will also cause loss of immense magnitude to the state exchequer," Rawat said.

ASSOCHAM said it fully supports the government in ensuring effective implementation of rules and regulations by adhering to systems and procedures as stipulated by various governmental agencies. "We would like to re-emphasise that a decision regarding closure of any mine should be done judiciously after investigating all aspects," he said.

Keeping in view the huge investments, employment of lakhs of workers, social responsibilities and dependency of industries on iron ore, ASSOCHAM requested uninterrupted availability of iron ore lumps and fines to meet industrial requirement while framing policies, he said.

Last month, Karnataka formed a team of officials to compile a detailed reply over issues raised by CEC on illegal mining in the state.

Rio Tinto Now Owns 72% of Riversdale Mining

April26, 2011 By Joel Scanlon

Rio Tinto finally managed to get its hands on Riversdale Mining after Brazil’s CSN gave up its stake to them. On Wednesday Companhia Siderurgica Nacional or CSN announced that it had sold its 20% holding of Riversdale Mining to Rio Tinto because the price was right.

This now brings up Rio Tinto’s stake up to 72% and the remaining stake is held by Tata Steel of India. The takeover bid for Riversdale Mining was initially to close on Wednesday but with this development it has been extended nine days to April 29, 2011.

Rio Tinto will be pleased by the latest development as it puts an end to a stalemate that has been continuing since December last year. The minority shareholders took a long time warming up to the deal and the deadline for it has been extended four times. The bid per share price was also raised from $16 to $16.50 per share. This acquisition will help Rio Tinto establish itself in the BHP Billiton dominated coking coal market.

The Indian steel maker Tat Steel has not yet accepted the offer from Rio Tinto for its stake in Riversdale Mining. This may be due to its need for coking coal as a raw ingredient in steel mining. The Mozambique mines of Riversdale Mining are a good source for Tata Steel.
(sourced: AZoM)

Tug of war between Indian and Chinese steelmakers

Wednesday, 27 Apr 2011

Chinese steel exports took a major leap to 42.6 million tonnes in 2010 and again in Q1 of 2011, these were up 20.7%.

India has reasons not to feel comfortable with China having built more than 700 million tonnes of steel capacity, leaving a lot of that unutilized at last year’s production of 626.7 million tonnes. While this is so, even then the world’s biggest maker of steel is left with large quantities of the metal after meeting domestic requirements which it must export. A neighbor where the demand for steel is growing at annual rate of around 10% and which is not finding it easy to execute new steel mills could be consciously targeted for exports by China.

Chinese exports of steel took a major leap to 42.56 million tonnes in 2010 and again in the first quarter of 2011 these were up 20.7% to 10.51 million tonnes from the corresponding period a year ago. The country imported 16.43 million tonnes of steel last year and 4.18 million tonnes between January and March 2011. Imports are generally of very high grades of steel for which China is yet to build competence. The gaps necessitating imports are sought to be filled by forging alliances with technology leaders in Japan, South Korea and the West.

Beginning 2001, Chinese steel production had grown at a CAGR of over 15%. But now coinciding with China's 12th five year plan (2011-15), steel output growth there will be slowed down to an annual average of 6%.

According to an official of the China Iron & Steel Association, the fall in profit margins to less than three per cent in recent times from over eight per cent during 2001-05 and volatility in prices of raw materials would be disincentives to grow output at the same rate as in the past. Besides finding ways to make operations more profitable, Chinese steelmakers now also have to contend with the government frown on their big carbon footprints.

SAIL chairman Mr CS Verma tells us that the global manufacturing industry is responsible for about 21% of green house gas emission. In the pollution caused by this sector, the share of steel is so high that it alone accounts for up to four per cent of world CO2 emissions.

Indian steelmakers, according to Mr Verma, will have to do a lot of cleaning up job since they are generating 1.5 to 2 times more GHG than the global benchmark. The biggest environmental offenders in our steel space are sponge iron makers who need to be disciplined. The Chinese steel industry is nearly 10 times bigger than ours and more appropriately in the present context, the identified Chinese polluting steel capacity is considerably bigger than our annual production. It is, therefore, a stupendous task for our neighbor to bring down steel related pollution to acceptable level.

A report prepared by Alliance for American Manufacturing said that "Chinese steel producers emit significantly more pollution than their counterparts in the US."

They are found to release five times as much sulphur dioxide, nearly three times more nitrogen oxide and almost 20 times more particulate matter than their counterparts in the US. Even while the Chinese industry last year accounted for 44.3% of the world steel production, its share of CO2 emission by global steelmakers is significantly more than half.

Besides the embarrassment that the steel industry’s major carbon footprints are causing the Kyoto protocol signatory China, steel production in excess of domestic requirements has proved to be a strain on the power sector. China thinks and rightly so that the best way to tackle the problem will be to build pressure on steel groups to phase out ageing, high cost and polluting capacity and encourage at the same time capacity consolidation through mergers and acquisitions.

In 2011, China shut 44 million tonnes of undesirable steel capacity. It further wants to dispense with another 100 million tonne such capacity. Equally importantly, as China is applying brake on growth, it will be selective in approving new steel projects. No doubt, rapid development of steel industry in China is coming to an end as the focus shifts to creating a number of giants with capacity of over 50 million tonnes each this has been predicted by Mr LN Mittal, drafting new age technology and shifting capacity to coastal areas for logistical and environmental reasons.

The 12th plan end will likely see top 10 groups making as much as 60% of the country’s steel and coastal areas accounting for 40% of the output. A Delhi based steel watcher says the next five years will see Beijing encouraging leading groups like Baosteel, Anshan Steel and Shougang Steel to lead restructuring and capacity concentration along identified coastal provinces. M&A is gaining steam backed as it is by the government. China so far has been outwitted by leading miners like BHP, Rio and Vale in iron ore price negotiations because its fragmented steel industry could not present a credible negotiating front.

Being the world’s biggest importer of ore has not come to China’s aid in ore price negotiations. A more consolidated industry will hopefully be able to match the wits of big miners as China steps up ore production.

(sourced from Business Standard)

Indian iron ore mining mess - Headway in iron ore theft case

Wednesday, 27 Apr 2011

The CID filed a revised charge sheet in Ankola JMFC court in connection with the iron ore theft case in Belekeri port of Uttara Kannada district.

The team led by CID SP K P Bheemaih and Dy SP Muddumahadevayya, filed the revised charge sheet of 8,150 pages, against Salgoankar and other four export companies. The court had rejected the previous charge sheet filed against these companies for technical reasons and unclear information.

The court had directed the CID to file a new charge sheet with all details. CID sources said the charge sheet against other companies will be filed soon. The transfer of MN Reddy director general of CID, has resulted in the delay of the investigation. (sourced from BS)

Milberg LLP files lawsuit against Puda Coal

Wednesday, 27 Apr 2011

Milberg LLP announced that on April 21st 2011, the firm filed a class action lawsuit on behalf of investors who purchased the securities of Puda Coal, Inc during the period November 13th 2009 to April 11th 2011, inclusive.

The case, Burquist v. Puda Coal Inc No CV11-03412, is pending in the United States District Court for the Central District of California and alleges violations of the Securities Exchange Act of 1934 by Puda and certain of the Company's officers.

The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements to investors by failing to disclose that the company's chairman, Mr Ming Zhao had transferred ownership of Puda's operating entity, Shanxi Puda Coal Group Co Ltd to himself, thereby rendering Puda an empty shell company.

On April 8th 2011, Alfred Little an investor who researches and blogs about Chinese companies, exposed the transfer of Shanxi Coal to Ming Zhao. In reaction to this news, shares of Puda's stock fell USD 3.10 per share, or over 34% to close at USD 6.00 per share, on extremely heavy trading volume. On the next trading day, April 11th 2011, the Company issued a press release stating that “Though the investigation is in its preliminary stages, evidence supports the allegation that there were transfers by Mr. Zhao in subsidiary ownership that were inconsistent with disclosure made by the Company in its public securities filings. Mr. Zhao has agreed to a voluntarily leave of absence as Chairman of the Board of the Company until the investigation is complete." In response to this announcement, the NYSE halted trading in the Company's stock on April 11th 2011.

If you purchased securities of Puda from November 13th 2009, to April 11th 2011, you may move the court no later than June 13th2011 and request that the Court appoint you as lead plaintiff. (sourced steelguru)

Kinder Morgan to export coal from Port of Houston

Wednesday, 27 Apr 2011

Kinder Morgan Energy Partners LP said it will begin exporting Colorado coal through its bulk terminal in the Houston ship channel.

According to its first quarter earnings report, the company has entered into an agreement with a large western coal producer and will invest about USD 18 million to expand the ship channel facility.

Kinder said that it will be the first time Western coal will be exported from the Port of Houston.

In its earnings report, Kinder said its profit rose 50% in the first quarter of 2010 to USD 337 million, compared to USD 225 million in the same period last year. Quarterly cash distribution rose 7% to USD 1.14 per unit.

In February, Kinder Morgan inked a deal with Richmond, Va.-based Massey Coal Export Co. to export up to 6 million tons of coal annually through Kinder’s Myrtle Grove, La., facility.

(sourced from BizJournals)

Gindalbie secures extra funding for Karara iron ore

Wednesday, 27 Apr 2011

Gindalbie Metals said that it has formally signed off on new debt funding for its Karara iron ore project in the State's Mid West.

The facilities comprise a USD 336 million increase on an existing project loan facility, together with USD 300 million in bank guarantees to provide security to underpin key rail upgrade agreements currently being finalized.

Gindalbie said a facility framework agreement, setting out the key terms and conditions of the two facilities, was signed in Beijing by directors of Karara Mining, a joint venture between Gindalbie and China's Ansteel and representatives of China Development Bank.

The signing ceremony was held in the Great Hall of the People in Beijing in the presence of Chinese premier Mr Wen Jiabao and Australian prime minister Ms Julia Gillard.

The new loans come almost one year after the original USD 1.2 billion Karara project loan facility was signed in Canberra in June last year. (sourced from TheWest)

Anglo American coking coal production update

Wednesday, 27 Apr 2011

Metallurgical Coal

Q1 2011 Q1 2010 Changes

Export metallurgical 2,0563,282-37%
Thermal 3,0023,350-10%

(In '000 tonne)

Weighted average achieved FOB prices

Q1 2011 Q1 2010 Changes
Export metallurgical 21013160%
Export thermal 1027929%
Domestic thermal 353113%

(In USD per tonne)

Q1 2011 Q1 2010 Changes
Export metallurgical 2,0563,257-37%
Export thermal 9471,317-28%
Domestic thermal 1,8921,949-3%

(In '000 tonne)

Anglo American production of metallurgical coal decreased by 37% to 2.1 million tonne due to the record rainfall and subsequent flooding events experienced at the Queensland operations in late 2010 and during the first quarter.

Production of thermal coal from mines in Australia was also impacted by the adverse weather conditions and decreased by 10%.

All operations are producing again with a ramp-up to full production expected in the second quarter. A number of initiatives are in progress for the remainder of 2011 to mitigate the production shortfall from Q1.

C Limited to acquire Mongolian coking and thermal coal assets

Apr26, 2011

C @ Limited has signed an agreement with an international coal developer that has a significant position in the coking and thermal coal industry in Mongolia.

The agreement provides C @ Limited with an option to acquire 8 highly prospective coal exploration licenses in the South Gobi, near the Chinese border, with access to existing infrastructure. The Company has established a technical team and is ready to develop these assets.

Energio Limited has completed an initial geophysical program on the KCMH Iron Ore Project in Nigeria. The program has enabled the Company to select several primary targets and initial field work at the targets has returned positive results. The company is now preparing access roads in the selected areas for a planned drilling program to commence during Q2 2011.

MACA Limited has received a Letter of Intent from Regis Resources Limited for the provision of mining services at the Garden Well Gold Project. The proposed contract will generate AUD 450 million over 8 years. The services to be provided by MACA include various civil works, drilling, blasting and load and haul. Mobilization to site is expected to occur in the third quarter of the calendar year 2011, subject to successful completion of the necessary approvals and contract negotiations.

Panax Geothermal Limited has signed an agreement with PT Bakrie Power to develop the Ngebel Geothermal Project, a 165 MW geothermal project in Indonesia. Under the terms of the agreement, Panax will earn a 35% working interest in the project through funding of required exploration works before commercial development commences in late 2012.

Coal India to Seek Bids for Imports

April 26, 2011, 8:25 A.M. ET


NEW DELHI – Coal India Ltd., the world's biggest coal producer, said Tuesday it will soon seek bids from 16 short-listed overseas companies to import coal, as energy-hungry India tries to secure enough supplies to run its power plants.

Coal India's board approved a proposal Monday to import thermal coal under a 10-year arrangement, Nirmal Chandra Jha, the company's interim chairman, said from Kolkata, where Coal India is headquartered.

"The aim is to bridge the domestic shortfall," Mr. Jha said.

Importing coal will help the state-run company meet its supply commitments to Indian utilities. Coal India, which provides more than 80% of the country's coal needs, can't significantly increase production due to issues such as delays in receiving environmental clearances.

The company therefore is looking to import coal and is scouting for investment opportunities in mines overseas.

India is facing a shortage of about 142 million tons of coal this fiscal year through March 2012. Total demand is 696 million tons, according to government estimates, while local production is just 554 million tons.

More than half of India's power generation capacity of 173.6 gigawatts is based on thermal coal. The country aims to add 163 GW of capacity in the 10 years through March 2017. The power sector is India's main consumer of coal.

"Consumers were not able to meet import targets mainly because of the high price of imported coal," Mr. Jha said. "Our coal is likely to be slightly cheaper compared to international prices, as we are seeking discounts from suppliers."

Mr. Jha said Coal India has short-listed 27 coal-importing proposals from 16 companies -- some submitted more than one proposal -- but declined to name the companies.

Under the proposed agreement, coal prices will be revised every six months, while maintaining the offered discount rate over the average of Australian and South African index prices, Mr. Jha said.

In the financial year ended March 31, Coal India postponed plans to import 4 million tons of coal when it couldn't finalize supply agreements with NTPC Ltd. and Damodar Valley Corp., two state-run power utilities.

"We have consumers for such imported coal," Mr. Jha said. "We have informed them that 50% of the assured commitment will be met through our imports."

Any increase in costs will be passed on to customers, Mr. Jha said, "whether the increase is due to a rise in coal prices or foreign exchange fluctuations. For us, the coal import business will be more like a service than a profit-making opportunity."

Coal India will take advance payment from consumers and pay suppliers in U.S. dollars. The company makes 100 million rupees-120 million rupees ($2.25 million-$2.70 million) every year from hedging its currency risks, Mr. Jha said.

Bhavesh Chauhan, an analyst at Mumbai-based Angel Broking, called it "a good model."

"Coal India will have bargaining power with the foreign suppliers as it would buy in bulk under a long-term contract," Mr. Chauhan said. "Indian power utilities will also reap the benefits."

Mr. Jha said Coal India already has a pact with Shipping Corp. of India Ltd. to ship the coal from suppliers overseas, and is in talks with Indian Railways to move the coal from Indian ports to customers.

"We are also looking at storage capacities at Indian ports," Mr. Jha said. "We are evaluating options."

Big proposals, but Arcelor & Posco spends in Orissa negligible

Wed, 27 Apr, 2011, 03.14PM IST,PTI

BHUBANESWAR: Two of the world's leading steel-makers, ArcelorMittal and Posco, had proposed to invest Rs 91,000 crore for setting up mega steel units in Orissa , but their actual investment was negligible even about half a decade after signing MoUs with the state government.

While ArcelorMittal had proposed to invest Rs 40,000 crore on its proposed 12-mtpa greenfield steel mill in Keonjhar district, Posco planned to invest Rs 51,000 crore for an equal capacity steel plant near Paradip.

While Rs 56,090.34 crore was invested in the steel sector of the state by March, 2011, ArcelorMittal invested nothing, said Orissa Steel and Mines Minister Raghunath Mohanty, adding that Posco claimed to have spent Rs 329.15 crore.

Of the total investment proposal of Rs 2,13,969.40 crore in the steel sector, the share of the two companies was around 42 per cent (Rs 91,000 crore).

Meanwhile, Posco's MoU tenure of five years ended on June 21, 2010, while ArcelorMittal's term would expire on December 20, 2011, he said.

While Posco made some progress, ArcelorMittal was yet to submit a detailed project report (DPR) to the state government, an official in the steel department said, adding that Bhusan Steels Limited had invested the highest amount of Rs 12,000 crore in the state, followed by JSPL's Rs 11,283.24 crore investment.

Bhusan Steels Limited achieved steel production of three mtpa by the end of March, 2011, the minister said.

Besides ArcelorMittal, the companies yet to make investment so far are: SSL Energy Limited (proposed investment of Rs 8,609 crore), Amtek Metal & Mining Limited (proposed investment of Rs 15,820 crore) and Deo Mines & Minerals (P) Ltd (proposed investment of Rs 316 crore).

Moody's keeps negative outlook on Japan, watching developments

Wed, Apr27, 2011, 03.20PM IST, Reuters

TOKYO: Moody's Investors Service is maintaining a negative outlook on Japan's sovereign debt rating and watching developments, its senior vice-president Tom Byrne said on Wednesday.

Byrne made the remarks after S&P lowered the outlook for Japan's sovereign rating to negative on Wednesday, saying the earthquake, tsunami and nuclear power plant disaster will increase Japan's fiscal deficits above previous estimates.

"The bottom line is we are maintaining a negative outlook and watching developments," Byrne told Reuters in an interview. "We are interested in the bottom line, that's the rating bottom line -- the government fiscal deficit and government debt.

Moody's warned in February it might cut Japan's Aa2 rating -- its third highest -- if government policies fall short of comprehensive tax reform.

BUY OR SELL - Can GVK pull-off a jumbo coal mine buy?

Apr26, 2011, 04.59PM IST, Reuters

MUMBAI: The GVK group, promoters of GVK Power and Infrastructure that constructs power plants and airports, is in focus as analysts and investors weigh pros and cons on the company's probable buy of two Australian coal mines from Hancock Prospecting.

For the pay-out, the Hyderabad-based GVK group is said to be arranging funds to the tune of $1.3 billion.
In comparison, the market capital of GVK Power as on Tuesday was $938 million and the debt on books closer to $1.1 billion.

Can GVK Power pull off such a large acquisition? The stock has declined 4.8 percent since late March, when the news gained currency that it is a contender for Hancock mines . In comparison, the benchmark index has gained 3.2 percent.

In 2011 thus far, the stock has lost about 38 percent compared with the benchmark index's 5.8 percent. The stock is at 16.2 times the estimated price-to-earnings ratio for FY12, as per Thomson Reuters Knowledge.

BUY - ACQUISITION UNLIKELY VIA GVK POWER Of 18 brokerages that cover the stock, eight have "strong buy" recommendation on it, and 6 have "buy", according to I/B/E/S estimates.

"The acquisition will not be through the listed entity, that is the indication we get, and there would not be much impact on the listed firm's stock prices," said an analyst with a Mumbai-based brokerage, who has "outperform" rating on the stock.

"We believe that the acquisition would be through a group firm," said the analyst, who did not want to be identified as he is not authorised to speak to the media.

If the acquisition is through it, GVK Power would have to own up an additional capex and working capital burden of $7 billion, spread over five to six years.

"It is just the scale of this acquisition which will make people go into a wait and watch mode," said Vijaykumar Bupathy, Chennai-based analyst at Spark Capital.

"But if they can pull off an acquisition like this over the long term, I definitely think it can pay off. It could be a risky bet but is a high value bet," said Bupathy who has a "buy" on the stock due to his weightage on factors other than those of power and coal.

"The resource (coal) is in short supply, there is a huge market for it," he said.

NEUTRAL - STRAIN LIKELY ON FINANCIALS Three out of 18 brokerages have rated the stock as "hold" and one has ascribed a "sell" rating, according to I/B/E/S estimates.

"GVK has in mind growth proposals for which the equity requirement could be more than its current market capitalisation. Large growth aspirations could pressure leverage and dilution risk would be enhanced," Deepika Belani, analyst at J.P. Morgan told Reuters.

"The market is treating these developments negatively," she said, resulting in the brokerage downgrading the stock in April to "Neutral" from "Overweight".

GVK Power would go in for an acquisition only if the funding is in place, and "if the funding is in place, then what is the problem?" asks a Mumbai-based analyst, who declined to be identified.

Her brokerage, which had put the company "Under Review" a month ago from "Buy", is awaiting clarity from airport regulator on aeronautical charges and looking at how the company will monetise its airport land before re-rating the stock.

Macarthur Coal March Qtr output falls 56 pct on wet weather

Wed Apr 27, 2011 3:37am GMT

PERTH, April 27 (Reuters) - Macarthur Coal on Wednesday said its production had dropped 56 percent during the quarter ending March 31 due to continuing wet weather at its mines in Australia's northeastern Queensland state.

"Due to the wet weather, total coal sales of 0.48 million tonnes during the quarter were well below expectations and down 61 percent on the prior year comparative period," the company said in its quarterly production report.

Macarthur declared force majeure on deliveries from its Coppabella and Moorvale mines on December 3 due to the severe weather in the region.

The force majeure remains in place on the two mines which produce 2.4 million tonnes per annum each of coking coal used for steelmaking. (Reporting by Rebekah Kebede; Editing by Ed Davies, Thomson Reuters)

Coal India shares end up 2.19 per cent

Wed, April27, 2011,15:52 hrs

Shares of Coal India closed the day with a gain of 2.19 per cent at Rs 371.75 on the Bombay Stock Exchange (BSE). In intra-day session the scrip rose by 3.32 per cent to touch a new high of Rs 375.90.

On the National Stock Exchange, the stock settled the day at Rs 369.75, up 1.45 per cent from the previous close.

Meanwhile, the BSE Sensex finished the day at 19,448.69, down 96.66 points or 0.49 per cent.

Tags : Coal India shares, Coal India share price

Tuesday, April 26, 2011

Arch Coal Q1 profit beats Street; raises outlook

Tue Apr 26, 2011 1:42pm GMT

* Q1 adjusted EPS 36 cents vs Street view 32 cents
* Revenue up 23 percent
* Shares up 0.4 pct

NEW YORK, April 26 (Reuters) - Arch Coal Inc (ACI.N: Quote) posted higher-than-expected first-quarter profit, driven by stronger coal prices, and raised its earnings target for 2011.

Net earnings were $55.6 million, or 34 cents per share, compared with a net loss of $1.8 million, or 1 cent per share, a year earlier.

Excluding one-time items, the St. Louis-based company earned 36 cents per share, 4 cents above the average forecast of analysts polled by Thomson Reuters I/B/E/S.

Revenue rose 23 percent to $873 million.

"Based on our current expectation of global and domestic coal market fundamentals, we have raised our full-year earnings guidance range," said Chairman and Chief Executive Officer Steven Leer.

He also said Arch expects sales of steel-making metallurgical coal to increase as the year progresses. Recent floods in Australia have constrained metallurgical coal exports to China and other Asian economies, pushing up prices.

In early trading on the New York Stock Exchange, Arch shares were up 0.4 percent to $33.97. (Reporting by Steve James; editing by John Wallace, Reuters)

U.S. steelmakers see improved second quarter

Tue Apr 26, 2011 2:57pm GMT

* U.S. Steel sees Q2 oper profit
* AK Steel expects Q2 boost in shipments, prices
* AK Steel shares up 5 pct; U.S. Steel's drop (Adds CEO, analyst comments, production, outlook, stock moves)

By Steve James

NEW YORK, April 26 (Reuters) - Two major U.S. steelmakers reported contrasting quarterly results on Tuesday, but both gave positive outlooks for the industry as improving economic conditions boost demand and prices.

U.S. Steel Corp (X.N: Quote) stock fell 2.8 percent to $50.37 as it reported a wider-than-expected loss in the first quarter, while AK Steel's (AKS.N: Quote) shares rose 5.4 percent to $16.81 as its results beat Wall Street estimates.

"We expect to report a significant overall operating profit (in the second quarter), primarily due to the realization of price increases in our flat-rolled segment," U.S. Steel Chairman and Chief Executive Officer John Surma said.

AK Steel (AKS.N: Quote) said it expects a strong increase in second-quarter steel shipments from the first quarter with average per-ton selling prices 7 percent higher.

U.S. Steel posted a third consecutive quarterly loss, but higher steel prices and shipments helped it trim the red ink from the previous year.

The net loss narrowed to $86 million, or 60 cents per share, from $157 million, or $1.10 per share, a year earlier, the Pittsburgh-based company said. Analysts were expecting a loss of 37 cents a share.

AK Steel posted a higher first-quarter net profit of $8.7 million, or 8 cents per share, compared with $1.9 million, or 2 cents per share, for the same quarter of 2010. Analysts on average were expecting a loss of 1 cent per share, according to Thomson Reuters I/B/E/S.

Analyst Mark Parr, of KeyBanc Capital Markets, said AK Steel's results reflected "strong underlying cost performance in the face of iron ore and coal cost pressures.

"AKS is getting back to basics, with solid operational execution beginning to be revealed," he wrote in a note.

Commenting on the first quarter, U.S. Steel's Surma noted "improving economic conditions and firm customer demand" led to increased average realized prices, shipments and raw steel capability utilization for the company's North American and European flat-rolled operations.

He said average realized prices increased by $63 per ton in the first quarter to $720 per ton as the company began to realize the benefits of increased spot market and some contract prices. Shipments increased by 3 percent to 4 million net tons as customer demand for carbon flat-rolled products continued to moderately increase in line with economic growth. The improvements were partially offset by increased raw materials costs, Surma said.

Looking ahead, he said flat-rolled results for the second quarter are expected to improve significantly compared to the first quarter, driven largely by significantly higher average realized prices.

Raw materials costs are expected to remain relatively stable. "While recent order rates have moderated, we remain cautiously optimistic that improving global economic conditions will continue, further stimulating end-user demand," Surma said.

Ohio-based AKS said it expects shipments in the second quarter to be between 1,500,000 and 1,550,000 tons -- up from 1,423,100 tons shipped in the first quarter.

The company anticipates its second-quarter average per-ton selling price will be approximately 7 percent higher than the first quarter, with an operating profit of about $65 per ton.

It said its average selling price for the first quarter was $1,109 per ton, which is about 9 percent higher than the first quarter of 2010. (Reporting by Steve James and Matt Daily; Editing by Maureen Bavdek, Dave Zimmerman, sourced Thomson Reuters)

Karnataka iron ore exporters seek permits

Tuesday, 26 April 2011 11:00

Iron ore traders in Karnataka said they had applied for export permits to test the market and the administrative system as a nine-month ban was lifted temporarily by the Supreme Court.

On 5 April, the apex court ordered the state government to lift the ban with effect from 20 April on movement of iron ore meant for exports and said the next hearing in the case of exporters versus the state government would be held in the first week of May.

“It is risky no doubt. What will be the final outcome of the case, we are not sure, but we want to move the material,” said K. Somasekhar, managing director of ILC Industries Ltd, a large miner-cum-exporter in Bellary district.
Somasekhar said the department of mines in the state had not given the permits. “They are giving some excuse or the other,” he said.

Karnataka, the nation’s second largest iron ore producer after Orissa, accounts for about a quarter of India’s total iron ore exports of over 100 million tonnes a year.
But the state government under the leadership of chief minister B.S. Yeddyurappa banned exports of iron ore from 10 ports in July last year and subsequently stopped issuing transport permits for the commodity to be moved to other ports for exports, citing a drive against illegal mining and the need to preserve the resource for local steel firms.
“The (foreign) market is alright. Today we haven’t got the permit. Tomorrow and day after are holidays. Let’s see if we get it on Monday,” said Rahul Baldota, executive director at MSPL Ltd, one of the petitioners challenging the ban in the Supreme Court.
A metals analyst at a foreign institutional brokerage, said that exporters were also under pressure to reduce inventories before the monsoon, which runs June to September, and, therefore, had applied for export permits, even though chances of the ban getting reinforced could not be ruled out with the case still not over.
“I think miners will make the most of any temporary relief to exports,” the analyst said. He declined to be named.
In a separate matter that has a bearing on the case, a Supreme Court-appointed committee last week recommended a crackdown on illegal mining in Karnataka, including cancellation of mining leases.
The Central Empowered Committee indicted the Karnataka government after it found that the administration officials aided in illegal mining. The case will come up for hearing in the weeks ahead.
Developments in Karnataka are being watched in the international iron ore market, where India is the third largest exporter behind Australia and Brazil. Indian miners mainly supply to China, which has the world’s largest steel industry.

Indian steel makers have campaigned against iron ore exports as they want more of the resource available to them locally at low prices, but the miners contend that most local plants do not have the technology to use the powdery fines that are a by-product of lumps.

Iron ore prices on Thursday were at $185 (Rs.8,196) a tonne with freight for the benchmark 63.5% grade, less than the $200 a tonne level seen early this year. It’s still more than 13% higher than $163 a year ago owing to improving demand from China.

Source: Livemint

China Guodian Corp. to build largest coal distribution center in Hubei

Tuesday, 26 April 2011 11:07:40

The Chinese power producing company China Guodian Corporation has announced that it is investing RMB 150 million ($23 million) to build a large coal distribution center with a storage capacity of 1 million mt in Jingzhou, Hubei Province, in order to ensure coal supplies for its four thermal power plants in the province. The facility will be the largest coal distribution center in Hubei.

The new center is expected to be put into operation in September 2012, with an annual turnover of 3-5 million mt of coal.

China Guodian Corporation is one of the five largest power producers in China. (sourced steelorbis)

Tags: coking coal , raw mat , China , Far East , East Asia and Pacific , Southeast Asia , distribution , investments

Shanxi Province to produce 780 million mt of coal in 2011

Tuesday, 26 April 2011

As stated at a conference on coal mining held in China's Shanxi Province, a total volume of 780 million mt of coal is expected to be produced in Shanxi in 2011.

In Shanxi, over 600 coal projects are either under construction or have recently started production, totaling an annual coal production capacity of 600 million mt. In 2011, Shanxi will complete investments of RMB 75 billion ($11.45 billion) in coal projects, accounting for 10 percent of total provincial investment.

The Shanxi authorities have also stated that after 2012 the number of coal mines in the province will no longer be increased.(By SteelOrbis)

Tags: coking coal , raw mat , China , Far East , East Asia and Pacific , Southeast Asia , steelmaking , production

Australia's Whitehaven says Yanzhou Coal on bid shortlist

Tue Apr 26, 2011 8:35am GMT

* Whitehaven says not been advised Yanzhou has pulled out
* Whitehaven shares drop 5% as hedge funds flee
* India's Aditya Birla lodged bid - sources
By Michael Smith

SYDNEY, April 21 (Reuters) - China's Yanzhou Coal Mining Co is on a shortlist of bidders for Whitehaven Coal , the Australian company said on Thursday, responding to media reports that Yanzhou had pulled out of bidding for the $3.6 billion company.

The media reports sparked a sell-off in Whitehaven's shares, which sent the stock down as much as 6 percent in its most active trade since the firm put itself up for sale last October.

Whitehaven released the statement after online publication dealReporter said Yanzhou was not going ahead with an offer.

Bloomberg later quoted Yanzhou board secretary Zhang Baocai as saying: "We are currently not in any talks to buy Whitehaven."

"We currently don't have any special interest in it. We have looked at this target but that doesn't mean we will necessarily buy it," he was quoted as saying by phone from Canada.

Whitehaven had previously not revealed any of the parties on its shortlist, but said on Thursday Yanzhou was in the running.

"Whitehaven has not been advised of any change to this status," the miner said in a statement.

Yanzhou and India's Aditya Birla had lodged final bids for the company, sources told Reuters last week. One source said Yanzhou's bid involved scrip.

Whitehaven said in February it had selected a short list of bidders to complete due diligence in a process expected to continue for "a number of months". On April 13, the company said its board was considering a shortlist of bidders. [ID:nL3E7FD0QH]

Birla needs thermal coal for its group companies Hindalco , India's top aluminium producer, and UltraTech Cement , the country's largest cement producer.

Sources familiar with the deal have said previously that Whitehaven was seeking bids of at least A$7.50 per share which would value the target at around A$3.7 billion.

Whitehaven shares fell 4.5 percent to close at A$6.78.

Goldman Sachs and Grant Samuel are advising Whitehaven. UBS is advising Yanzhou. (Additional reporting by Sonali Paul; Editing by Balazs Koranyi and Mark Bendeich, sourced Thomson Reuters)

S.Korea's Hyundai Steel to lift domestic steel prices

Tue Apr 26, 2011 9:04am GMT

SEOUL, April 26 (Reuters) - Hyundai Steel , South Korea's second-biggest steelmaker, will join its bigger rival POSCO in raising domestic prices of key products by 160,000 Korean won ($148) per tonne to offset the price surge in raw materials, industry officials said on Monday.

The long-awaited move, and the first price hike since July, comes as steelmakers at home and abroad are struggling with a margin squeeze stemming from the stubbornly high prices of steelmaking ingredients such as iron ore and coking coal.

But they find it difficult to fully pass along the costs onto customers amid slowing demand threatened by China's tightening and Japan's earthquake and tsunami.

POSCO, the world's third-biggest steel producer, on Friday reported weaker-than-expected quarterly profit, hit by its failure to raise prices enough to cover the rise in raw material costs.

The domestic price of Hyundai's hot-rolled products will rise to 1.06 million won per tonne, from 900,000 won, from products to be produced from May, industry officials said. The price of its heavy plates will go up to 1.11 million won, from 950,000 won.

"Hyundai has been notifying customers about the price hike," the sources said. Hyundai Steel declined to comment.

Hyundai Steel is set to report its first-quarter earnings on Thursday.

($1 = 1082.275 Korean Won) (Reporting by Hyunjoo Jin; Editing by Ken Wills, sourced Reuters)

Deal of the day -- mergers and acquisitions

Tue Apr 26, 2011 9:11am GMT

China's Yanzhou Coal Mining Co is on a shortlist of bidders for Whitehaven Coal , the Australian company said on Thursday, responding to media reports that Yanzhou had pulled out of bidding for the $3.6 billion company.

Compiled by Mayuresh Tungare in Bangalore, sourced Thomson Reuters

Sesa Goa eyes 20% volume growth in FY12 minus Karnataka ban

Tue,Apr26,2011 at 12:22 | moneycontrol

Sesa Goa has announced its fourth quarter results. The company's Q4 consolidated net profit was up 21% at Rs 1,462 crore versus Rs 1,213 crore, year-on-year, YoY. Its consolidated net sales were up 40% at Rs 3,915 crore versus Rs 2,800 crore, YoY.

The managing director of the company PK Mukherjee in an interview on CNBC-TV18, spoke about the company’s third quarter results. He also spoke about the outlook of the company going forward.

Below is a verbatim transcript of his comments on CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee. For complete details watch the accompanying video.

Q: Your realizations for iron ore were about USD 104 this quarter. Take us through the market dynamics now and whether you think this level of realization is sustainable?

A: Yes, for the last couple of months we are seeing that the demand is quite strong. We don’t have any reason to believe that in the near future there is any significant change in market sentiment. While sometimes the price goes up and down within a rangebound way but we feel that this sort of market will hold on.

Q: Are you confident for FY12, Sesa Goa should be able to hold triple digits in terms of realizations?

A: As we see today, yes.

Q: You mentioned that sales are going to be half and half between spot and fixed. Where is it that spot rates are trading now and at what rates has Sesa Goa been able to lock-in for the longs?

A: What I said was that our sales contract - 50% is purely spot contract and 50% more or less is what we had done last year on a long-term contract basis. But the price mechanism is not fixed for a long-term contract basis. Previously it used to be annually changed, now long-term contracts that is contracts of Japan and Korea or Europe those are changing on a quarterly basis.

Some of the long-term contracts which we have entered into, in the last couple of years, the price mechanism there also is based on the spot market. So, currently, the whole 100% is more or less on real time price.

Q: What are your expectations for volume growth in FY12 given that you will now start shipments from Karnataka etc what kind of volumes should we expect to see?

A: If Karnataka exports are allowed to happen freely from now onwards, we expect a volume growth of 15-20% in FY12.

Q: Your tax rate was also very high this quarter which surprised a few people. Are we to expect at 35% tax for FY12 as well?

A: The 35% is not the rate one can achieve at any point of time unless there is a negative depreciation effect. This quarter it has gone up because the benefits were coming from the export business. We are expecting on a QoQ basis, that anytime the Karnataka export ban would be lifted but that has not happened.

So for that the corresponding hit has come in this quarter. That is why the effective tax rate only for the quarter has gone up. Going forward, we can expect in FY12 a 28-29% effective tax rate considering the depreciation benefit that we are expecting this year out of our capex.

Q: Post the money that Sesa Goa had to spend both for the Petronas stake and for the open offer on Cairn, how much cash on books remains for Sesa Goa?

A: As of now, there is roughly about Rs 4,000 crore of cash. March 31 we had roughly Rs 10,682 crore after making the payment of Bellary. Out of Rs 10,682 crore, we have already spent Rs 6,600 crore odd for 10.4% deal of Petronas. So the balance is remaining in the books right now.

Q: How much has Sesa Goa been able to get from the open market in that open offer?

A: Open offer result will be out only after April 30. I don’t think it will be right on my part to give daily scorecard on this account.
Rate hikes, non-linear growth to drive profit: KPIT Cummins

Tags: Sesa Goa, PK Mukherjee, Udayan Mukherjee, Mitali Mukherjee, Karnataka exports, Petronas, Cairn