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Saturday, May 7, 2011

Coal ministry to cancel 5 NTPC blocks

Saturday, 07 May 2011

In a major setback to India’s largest power generator and Maharatna NTPC Limited the Union government announced it would cancel allocations of 5 of the 8 blocks awarded to the company over the past seven years.

The five blocks Chatti Bariatu, Chatti Bariatu South, Kerandari, Brahmani and Chichiro Patsimal have combined geological reserves of 3 billion tonnes.

The decision is based on the recommendations of a review committee headed by the special secretary in the ministry of coal, Alok Perti, could hurt NTPC’s long term fuel securing plans experts believe. The power producer currently requires around 150 million tonnes of coal to operate 36,000 Mw capacities annually.

The company plans to meet around 20% of its coal requirement of 250 MT in 2017 through captive production.

The coal ministry had last year initiated a massive review of the development status of 203 captive coal blocks allotted to companies since 2003 as only 23 of these blocks have been able to commence production so far. The ministry had later issued show cause notices to 84 captive coal block holders including the world’s largest steel maker ArcelorMittal, Tata Steel, Jindal Steel and Power and NTPC Limited.

The eight coal mines allotted to NTPC so far by the coal ministry possess reserves of around 5 billion tonnes .All these were expected to come into production between April 2008 and March 2012. However not a single block has commenced production so far even while the power generator has set for itself a target of ramping up coal production from its captive mines to 47 MTPA by 2017.

Apart from NTPC the ministry has decided to cancel the licences for blocks awarded to Damodar Valley Corporation, Andhra Pradesh Power Generation Corporation, Tenughat Vidyut Nigam Limited and the Electricity Boards of Bihar and Jharkhand among others for non -adherence to norms, the official said. The private companies facing deallocationof blocks are VS Lignite and Baidyanath Ayurved Bhawan. (sourced from BS)

ArcelorMittal begins land acquisition for steel plant in Jharkhand

Saturday, 07 May 2011

A senior state government official said that the land acquisition process for ArcelorMittal s proposed INR 42,000 crore green field integrated steel plant in Jharkhand has already begun.

Mr AP Singh Secretary Jharkhand Industry said that the land registration for the proposed steel plant of ArcelorMittal has begun in Kasmar Petrawar in Bokaro district since December last.

He was in Adityapur to take part in the inauguration of Hi Tech Design Lab and foundation stone laying ceremony of Hi Tech Testing Lab building.

Asked how many of acres of land has been registered so far, the Industry secretary said it was below 50 acres and attributed the slow pace of land registration process due to panchayet election and National Games.

Mr Singh said the construction work would not begin till the steel giant acquired at least 500 acres of land as 500 to 550 acres land was required even for a million tonne capacity steel plant whereas ArcelorMittal has proposed to set up a 10 million tonne capacity steel plant in Jharkhand.

He said ArcelorMittal requires 2,200 acres land to start work for the first phase. It had signed a MoU with the Jharkhand government for the proposed steel plant in October 2005.

(sourced BusinessToday)

Iranian Central Iron Ore Co. sees iron ore output rise by 16 percent

May06, 2011 15:06:07 (GMT+2)

Iranian iron ore miner Iran Central Iron Ore Company produced 6.170 million metric tons of iron ore in the last Iranian year (ended March 20, 2011), up 16.1 percent compared to the output volume in the previous Iranian year, according to the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO).

Iran Central Iron Ore Co. is based in the province of Yazd and is one of the oldest Iranian iron ore mining companies.

(sourced steelorbis)
Tags: iron ore , raw mat , Iran , Middle East , steelmaking , production

ANALYSIS - Costs of any Greek euro exit may be prohibitive

Sat May 7, 2011 2:42am IST
By Noah Barkin and Paul Taylor

BERLIN (Reuters) - The costs to a country of leaving the euro zone would be so high that many analysts think the bloc will do everything in its power to prevent an exit, even if that requires the richest members to keep bailing out weak states.

German magazine Spiegel reported on Friday that the Greek government had raised the possibility of breaking away from the 12-year-old euro area and reintroducing its own currency in talks with the European Commission and other member states in recent days.

The report was vigorously denied by the Greek finance ministry and officials from other member states. Sources did confirm that a small group of euro zone finance ministers were meeting in Luxembourg on Friday to discuss Greece and other pressing matters.

Leaving the currency union would carry huge economic, social, reputational and strategic costs for Greece or any other country. Greece would have to hive off its bank deposits from the rest of the euro zone banking system as it introduced a new currency, risking a run on its banks and huge disruption for its companies.

Banks across Europe would face losses on their Greek debt.

For the bloc as a whole, it would represent a humiliating setback because the common currency is broadly viewed as the culmination of half a century of European integration.

"To me the euro zone is a one-way street," said Gilles Moec, senior European economist at Deutsche Bank. "A breakup would have catastrophic consequences for the country that left. It would precipitate a run on the banks. I can't see how you do it in an orderly way."

Speculation about a possible euro zone breakup reached fever pitch in November of last year, but predictions that the bloc will fracture have come mainly from Anglo-Saxon sceptics.

Last summer, British economist Christopher Smallwood of consultants Capital Economics produced a 20-page paper entitled "Why the euro zone needs to break up" and U.S. economist Nouriel Roubini, nicknamed Dr. Doom, has said euro members will be forced to abandon the shared currency.


Greece has struggled to meet the fiscal targets set out for it as part of its 110 billion euro ($160 billion) bailout from the European Union and International Monetary Fund.

Over the past month, markets have priced in the sort of default risk that was once unthinkable for a euro zone state and expectations have risen that Greece will have to restructure its 327 billion euro debt load while other countries will have to provide more aid.

Political opposition in northern Europe to giving Greece more money and rising anger within the country at the tough austerity measures the government has put in place have created a dangerous new dynamic that has convinced more experts an exit may conceivably happen, although probably not for years.

By reintroducing the drachma, the argument goes, Greece could sharply devalue its currency against the euro and keep official interest rates ultra-low, regain competitiveness, and tackle its debt problem without the political and social upheaval associated with years of austerity-fuelled recession.

"I'm not suggesting that these stories are right," said Jonathan Loynes, chief European economist at Capital Economics. "But we have said that we think it's quite likely that there will be some change to the membership of the euro area over the next four to five years and that one possible form will be the exit of a small economy like Greece.

"I don't think the idea is implausible at all."

But U.S. economist Barry Eichengreen, who authored a 2007 paper arguing that the single currency could not be undone, reaffirmed that belief last year as the Greek crisis deepened.

"Adopting the euro is effectively irreversible," he wrote in an article on the economics website Vox.

"Leaving would require lengthy preparations, which, given the anticipated devaluation, would trigger the mother of all financial crises," said Eichengreen, a professor at the University of California, Berkeley.


There is no legal procedure for leaving the euro zone and some economists argue that treaty changes would have to take place before an exit could happen.

"You would have to make it legal in order to leave," said Moec of Deutsche Bank. "You would probably have years of litigation on all the debt held outside the country."

Trade flows would probably be severely disrupted. Business costs would become unpredictable, inhibiting investment. Labour unrest and social strife would likely result as citizens faced mass unemployment, inflation and brutal public spending cuts.

That would far outweigh any potential boost to exports or tourism revenues from a devaluation.

"But what if the bank runs and financial crisis happen anyway?" Nobel prize-winning economist Paul Krugman asked on his blog last November.

An exit that is neither planned nor chosen but imposed by irresistible market forces would dramatically reduce the marginal cost of leaving the euro, Krugman contended.

But that economic logic may underestimate the political will that has driven European monetary union since its inception.

(Additional reporting by Emelia Sithole in London; Writing by Noah Barkin; Editing by Ruth Pitchford, sourced Reuters)

Greece denies may quit euro, European ministers meet

Sat May 7, 2011 5:58am IST
By Michele Sinner and Dina Kyriakidou

LUXEMBOURG/ATHENS (Reuters) - Top finance officials of the euro zone's biggest economies met to discuss Greece's debt crisis on Friday and Athens denied a media report that it was considering whether to leave the bloc.

Jean-Claude Juncker, head of the group of euro zone finance ministers, said the meeting in Luxembourg was attended by ministers from Germany, France, Italy and Spain. He said there was a broad discussion of Greece and other international economic issues.

Juncker denied a report in Germany's Spiegel Online magazine that the talks were held to discuss the possibility, raised by Athens, of Greece withdrawing from the 17-member euro zone, as well as the idea of restructuring Greece's 327 billion euro ($470 billion) sovereign debt.

"We have not been discussing the exit of Greece from the euro area. This is a stupid idea. It is in no way -- it is an avenue we would never take," he told reporters.

"We don't want to have the euro area exploding without reason. We were excluding the restructuring option, which is discussed heavily in certain quarters of the financial markets..."

But Juncker said a meeting of all euro zone finance ministers on May 16 would discuss whether Greece needed a further economic plan, beyond the 110 billion euro bailout which it obtained from the European Union and the International Monetary Fund in May last year. He did not elaborate.

Greek Finance Minister George Papaconstantinou attended the Luxembourg talks, his finance ministry said. It added that Greece remained committed to repairing its finances and returning to economic growth.

"The minister was invited to exchange views (on issues including) economic developments in Greece," the ministry said. "It is clear that during this meeting it was never discussed or posed as an issue whether Greece would remain in the euro zone."

The Luxembourg talks were also attended by European Central Bank President Jean-Claude Trichet and Olli Rehn, the European commissioner for economic and monetary affairs, Juncker said.


Earlier in the day, the euro fell nearly 1 percent against the dollar and the cost of insuring Greek debt against default was quoted at a record high in response to the Spiegel report.

"The government has raised the possibility of leaving the euro zone and reintroducing its own currency," Spiegel said without citing its sources.

Despite its international bailout Greece, which joined the euro zone in 2001, has been unable to cut its budget deficit as fast as planned amid a deep recession. It has been raising taxes and slashing spending but is still plagued by tax evasion, corruption and the economy's lack of competitiveness.

Financial markets have been speculating for months that Athens will eventually have to restructure its debt and with the political will for more austerity starting to flag, some Greek politicians have been suggesting a "soft" restructuring which might involve lengthening maturities on the country's bonds.

An exit from the euro zone could help the economy in the long term; Greece would be able to cut interest rates and having its own, weak currency would boost exports and tourism.

But there is no legal procedure for leaving the zone, and the risks and immediate costs of the process -- Greece could face bank runs, and banks around the region could be damaged -- mean the government is likely to fight hard to avoid that option.

Although taxpayers in rich euro zone states such as Germany are becoming increasingly reluctant to fund weak euro zone states, their governments prize the currency union as one of Europe's great political achievements. The EU is currently negotiating a bailout with Portugal, the third state it is rescuing after Greece and Ireland.

A German government official told Reuters on Friday that a Greek exit from the euro zone "is not planned and was not planned", while a spokesman for the Austrian finance ministry said a breakup of the bloc would be "absolutely unthinkable".

Spiegel quoted from what it said was an internal German finance ministry paper that German Finance Minister Wolfgang Schaeuble was taking with him to Luxembourg, which warned that a Greek exit "would lead to a significant depreciation of the domestic currency versus the euro" and increase Greece's debt levels to 200 percent of gross domestic product. Its debt is officially projected to climb to 153 percent of GDP this year.

(Additional reporting by Jan Strupczewski and Luke Baker in Brussels, Andreas Rinke, Matthias Sobolewski and Noah Barkin in Berlin, Lefteris Papadimas in Athens and euro zone bureaux; Writing by Andrew Torchia; editing by Tim Pearce, sourced Reuters)

ThyssenKrupp $14 bln sale plan flags consolidation

Fri May 6, 2011 12:45pm GMT

* Divestments could total as much as 10 billion euros
* Volume and speed of planned divestments surprise market
* To 'separate' stainless steel business
* Shares up 8.1 percent
(Adds stainless steel valuation, comments from Acerinox and Outokumpu)

By Marilyn Gerlach and Maria Sheahan

FRANKFURT, May 6 (Reuters) - ThyssenKrupp (TKAG.DE: Quote) shares jumped on Friday after the German steelmaker unveiled a 10 billion euro ($14 billion) divestment plan that could spur consolidation in Europe's overcrowded stainless steel sector.

The restructuring will include a spin-off of the company's stainless steel division and aims to help ThyssenKrupp pay down debt and focus on its engineering business.

Analysts had expected a shake-up since the company's new Chief Executive Heinrich Hiesinger took over early this year.

But the scope of the revamp was more far-reaching and quicker than anticipated by the market.

"More surprising is the considered spin-off of Stainless Global, opening up strategic partnerships with former ArcelorMittal stainless unit Aperam or Finland-based Outokumpu," Equinet analyst Stefan Freudenreich said.

ThyssenKrupp shares jumped 8.1 percent to 32.24 euros by 1244 GMT, outpacing Germany's blue-chip index .GDAXI.

ThyssenKrupp's stainless business is Europe's biggest with almost 3 million tonnes of output and annual sales of 5.9 billion euros. The company will examine all options for continuing the business outside the group.

"They might opt for an IPO (initial public offering) because no one really has the money to buy it," said a steel analyst who declined to be named.

Analysts value the stainless business at between 2.2 billion euros and 5 billion euros. They said the wide range was explained by the fact that Thyssen does not break out full unit figures for profit and debt in its earnings report.

Analysts had previously called for divestments at ThyssenKrupp, a lumbering giant that has piled up debts of 5.8 billion euros related to mammoth plants it has built in the United States and Brazil.

Analysts expect Hiesinger -- the company's first CEO who has no steel background -- to strengthen the non-steel sectors, including elevators and other technology-related activities, whose strong performance has offset start-up losses at its Steel Americas division.

Analysts estimate that the non-steel activities, which they see contributing around 70 percent to the group's total value, were the main growth drivers in the fiscal second quarter to end-March, along with European carbon steel operations and the global stainless business.

ThyssenKrupp is due to report quarterly results on May 13 and is expected to show its second-quarter earnings were boosted by higher steel prices and a booming German automotive industry.


Europe's stainless steel sector has long suffered from overcapacity and volatility. ThyssenKrupp and its rivals sounded out possible consolidation in the sector in 2009, but Germany's biggest steelmaker opted for a stand-alone strategy.

It then launched a restructuring that included a shutdown of one of its German stainless factories last year and brought forward production plans for a new stainless plant in Alabama.

Analysts have said a natural partner for ThyssenKrupp could be Outokumpu (OUT1V.HE: Quote) because the Finnish rival has a strong presence in northern Europe and the German firm is absent there.

They also have said the German company would have a clash of culture with ArcelorMittal (ISPA.AS: Quote), while No.1 stainless steel producer Acerinox (ACX.MC: Quote) is not keen to acquire assets in Europe.

"We consider consolidation in Europe as positive and we are following closely the situation, but we are not an active player in this process in Europe," a spokesman for Acerinox told Reuters on Friday.

"At the moment, our main focus is getting production at our plant in Malaysia into full flow."

Outokumpu also said it saw sector consolidation as positive in general, but said it would not speculate about who would play a role in the process.

Global steel market leader ArcelorMittal this year spun off its stainless steel division, Aperam (APAM.AS: Quote), and listed it on the stock exchange, prompting speculation about possible consolidation. [ID:nLDE6B709B]

Aperam kicks off a raft of steel-industry earnings next week with quarterly results on Tuesday, followed by ArcelorMittal on Wednesday, Germany's second-biggest steelmaker Salzgitter (SZGG.DE: Quote) on Thursday and ThyssenKrupp on Friday. (Additional reporting by Robert Hetz in Madrid and Terhi Kinnunen in Helsinki; Editing by Dan Lalor and Jane Merriman,sourced Thomson Reuters) ($1=0.7158 euros)

Cost pressures seen hurting Vale in short term

Fri May 6, 2011 6:20pm GMT

* Projects hampered by lack of work force, equipment
* Sees global inflation as risk factor for ore market
* Sees iron ore price stability through end of September
* Continues to see acquisitions in "opportunistic" way (Recasts with outlook on risks; adds comments, details on record profit, byline; previous dateline SAO PAULO)

SAO PAULO/RIO DE JANEIRO, May 6 (Reuters) - Brazil's Vale, the world's biggest producer of iron ore, could face higher production costs and delays in capital spending as it lacks equipment and a qualified workforce, and raw materials costs rise, executives told investors on Friday.

Costs surged 58 percent in the first quarter, driven by rising maintenance expenses and a general decline in the U.S. dollar in countries were Vale operates. Executives fear that cost pressures could mount in coming quarters amid an uneven global economic recovery.

"We are feeling the pinch of tight labor markets, equipment supplies, higher prices for inputs -- in Brazil, for example, activity is red-hot," Jose Carlos Martins, Vale's head of sales and strategy, told investors on a conference call to discuss first-quarter earnings.

The comments underscore the risks that strong activity in fast-growing regions like Asia and Latin America could pose to Vale, which has some of its best clients across emerging markets. As a result, Vale could fall short of completing its $24 billion investment plan for this year.

"We see that it is becoming harder and harder to meet deadlines in each and every project we have," he noted. Capital expenditures "could be closer to around $20 billion" than the actual target for this year, he added.

If inflation in countries like China gains steam, the risk for the mining giant is that governments act to slow economic growth in those places, crimping demand for metals.

"That is the real risk," Martins said.

The difficult operating environment could extend for a few more months, and could spark revisions to output targets or projects, Chief Financial Officer Guilherme Cavalcanti said on the conference call.


American depositary receipts of Vale (VALE.N: Quote) rose 0.7 percent to $31.14 on the New York Stock Exchange. Its nonvoting shares (VALE5.SA: Quote) were flat at 44.49 reais in Sao Paulo in early afternoon trading.

Vale said late on Thursday that net income rose more than fourfold to a record $6.83 billion in the first quarter from $1.6 billion a year earlier. The result beat the $5.75 billion average estimate of nine analysts in a Reuters survey.

Excluding one-off items, Vale earned $5.32 billion, which led some analysts to say that operating results were weaker than expected.

The result came as iron-ore prices, which account for 60 percent of Vale's revenue, more than doubled, making up for higher energy and wage costs in Brazil. Vale also booked a one-time $1.51 billion gain from the sale of some aluminum assets to Norsk Hydro (NHY.OL: Quote), a deal that was concluded in the prior quarter.

"The main disappointments were iron ore sales that were 15 percent off in a quarter-on-quarter basis due to seasonal weather and continued weak financial performance from all other divisions, despite improved metals prices," wrote Alexander Hacking, an analyst with Citigroup.

Iron ore prices will likely remain stable in the coming months, the executives said. Vale said prices rose 94 percent to $126 a metric tonne from the first quarter of 2010.

Rio de Janeiro-based Vale will continue seeking "opportunistic" acquisitions and is considering options, Cavalcanti said, without elaborating.

(Additional reporting by Inae Riveras in Sao Paulo; Editing by Derek Caney and Richard Chang)
By Guillermo Parra-Bernal and Denise Luna, sourced Thomson Reuters)

India's Bhushan Steel says plans to raise $1 bln

Sat May 7, 2011 10:35am GMT

MUMBAI May 7 (Reuters) - India's Bhushan Steel Ltd (BSSL.NS: Quote) said on Saturday its board had approved raising up to $1 billion through an issue of securities.

It did not disclose details about how the funds would be used. Bhushan had said in April it plannned to spend 50 billion rupees ($1.77 billion) to add 1.8 million tonnes steel capacity at its Orissa unit.

It earlier posted a 21 percent rise net profit in the quarter-ended March to 2.9 billion rupees on net sales of 19.7 billion rupees.

On Friday, its shares ended down 0.34 percent at 471.1 rupees in a strong Mumbai market. (Reporting by Swati Pandey; editing by Keiron Henderson,sourced Thomson Reuters)

Friday, May 6, 2011

China imported iron ore stocks inch up in week to May 6

Fri May 6, 2011 8:05am GMT

BEIJING, May 6 (Reuters) - Stocks of imported iron ore at major Chinese ports inched up this week to 82.41 million tonnes, 110,000 tonnes higher than last week, figures from industry
consultancy Mysteel showed on Friday.

Mysteel said steel mills did not buy much from port spot markets over the week, but prices remained stable, with Indian fines being quoted at $188-190 per tonne.

The Indian monsoon season has already started to put pressure on low-grade ore supplies, and prices have risen accordingly, the consultancy said.

Following is a table showing iron ore port stock movements in the last seven days.
Country of origin Stocks (mln T) Change (%)
Total 82.41 + 0.1
Australia 32.27 + 0.6
Brazil 21.68 - 1.6
India 14.27 + 1.8

Source: Mysteel & Reuters

Wednesday, May 4, 2011

South Korea to postpone rebar imports on low prices

Wednesday, 04 May 2011

Recently, South Korea's importers have stopped the price negotiation for rebar and will postpone the rebar imports as the current local transaction prices are much lower than that of imported materials.

At present, it is known that Chinese and Japanese mills offer the rebar at USD 700 per tonne CFR and USD 738 per tonne CFR for South Korea respectively.

However, the current transaction prices of Chinese and Japanese materials are at KRW 740,000 to KRW 760,000 per tonne and KRW 780,000 to KRW 790,000 per tonne respectively.

Consequently, it has forced South Korea's importers to postpone the rebar imports.

(Sourced from YIEH.corp)

ArcelorMittal South Africa to leave prices flat for May delivery

Wednesday, 04 May 2011

ArcelorMittal South Africa, a unit of the world's biggest steel maker, said that it would leave prices for its products flat for May 2011, but raise some of them in June 2011.

The company said in a statement that "In respect of June 2011 deliveries, there will be a 4.5% increase on a small proportion of the specialty long steel products."

It added that the unit continues to monitor market developments.(sourced Reuters)

Report urges U.S. open door to China investment flood

Wed May 4, 2011 3:35pm IST
By Doug Palmer

WASHINGTON (Reuters) - Tens of billions of dollars of Chinese investment could flood into the United States in the next decade, creating a multitude of American jobs if officials do not succumb to a political backlash and throw up barriers, according to a report released on Wednesday.

The study forecast Chinese companies would unleash some $1 trillion to $2 trillion in new greenfield investments or mergers and acquisitions around the world by 2020.

That would be a four- to eight-fold increase of China's current outward investment of about $230 billion, according to the report done for the Asia Society, the Kissinger Institute on China and the United States and the Woodrow Wilson International Center for Scholars.

"If just 5 percent of China's expected outflows target the United States over the coming decade, the numbers will be enormous," the report's authors, economists Daniel Rosen and Thilo Hanemann, said.

The coming wave could cause even more political heartburn than happened in the early 1980s, when Japanese companies began making substantial investments in the United States.

But U.S. policymakers should keep an "open door" to Chinese investment and the potentially huge job-creating benefits by shielding the U.S. system for reviewing foreign investments from political interference, Rosen and Hanemann said.

"Japan's first investments in the United States during the 1980s were almost as controversial as China's but in the following years, Japanese U.S. affiliates put $1 trillion into America and today employ nearly 700,000 Americans," they said.

The report, released ahead of high-level talks between U.S. and Chinese officials in Washington next week, urged the U.S. Congress and the White House to send a clear bipartisan message that Chinese investment is welcome in the United States.

China is already the biggest foreign buyer of U.S. government debt with holdings of more than $1.1 trillion as early 2011. But U.S. statistics showed just $2.3 billion in Chinese direct investments in companies with operations in the United States at the end of 2009, the report said.

That is approximately 0.1 percent of the $2.3 trillion in total foreign direct investment, or FDI, in the United States.

China's share is less than many smaller countries such as Mexico, Saudi Arabia, South Korea, Brazil and India and dwarfed by the biggest foreign investors in the United States, such as Britain, Japan and Germany, the report said.

However, Chinese investment in the United States already is increasing, likely rising by more than $5 billion in 2010 and supporting more than 10,000 American jobs, the report said.

U.S. companies have about $50 billion invested in China, compared to the low level of Chinese investment here.

Many Chinese companies are wary of investing in the United States because of the political outcry caused by some previous high-profile forays, such as Chinese oil company CNOOC's unsuccessful attempt to acquire Unocal in 2005.

Much of that has to do with an incorrect suspicion held by many U.S. officials that "because China has so many state-owned enterprises, market forces and profit motives do not necessarily apply in that country," Rosen and Hanemann said.

"Therefore, they suspect that if a Chinese firm is coming to America, it must be for some political purpose rather than simply to make money. This conclusion is wrong and if we are to maximize U.S. interests, such misapprehensions must be corrected," they said.

The United States, through its inter-agency Committee on Foreign Investment in the United States, should continue to carefully inspect individual Chinese investment deals for potential national security concerns.

But Washington should "not play the reciprocity game" by linking approval of Chinese investment projects to China opening its market to more U.S. companies, the report said.

"The United States should welcome capital from China, regardless of Beijing's state planners have to say about foreign investment in China," the report said.

"For 30 years, China has grown stronger by opening its door wider to FDI, irrespective of overseas openness. The United States should do the same, or risk Chinese firms setting up plants in Ontario instead of Michigan or Juarez instead of El Paso," the report said.

(Reporting by Doug Palmer; editing by Bill Trott, sourced Reuters)

Portugal agrees EU/IMF bailout, Greece deal teeters

Wed May 4, 2011 7:43am IST
By Axel Bugge and Andrei Khalip, Reuters

LISBON - Portugal agreed a three-year 78-billion-euro ($116 billion) bailout with the European Union and IMF on Tuesday, making it the third euro zone country in a year, after Ireland and Greece, to need financial help.

Giving few details except that Portugal has more time to meet budget deficit targets than previously promised by the government, caretaker Prime Minister Jose Socrates warned:

"There are no financial assistance programmes that are not demanding."

The deal is more complicated than Ireland's 85 billion euro package, agreed last November, or Greece's 110 billion euro programme agreed on May 2, 2010 -- a deal that looks increasingly inadequate to shore up Greece's finances.

Portugal for its part has high public sector debts, banking problems and structural economic shortcomings, with rigid labour markets and a costly state pension system.

"The Portuguese bailout is certainly not good enough," said Greg Salvaggio, vice president for capital markets at Tempus Consulting in Washington.

"What it is is very similar to the situation in Greece last year where it's simply a band-aid. If you look at the plan that was put in place for Greece, for Ireland, and now Portugal, none of them really addressed the underlying fundamentals, which have caused the problem," Salvaggio said.

Portugal is also set to hold a parliamentary election on June 5 after the previous government collapsed when its plans for austerity measures were voted down by parliament.

The political limbo means the EU and IMF have negotiated a deal with politicians looking for re-election. The caretaker government will have to win the endorsement of major opposition parties before agreeing any bailout deal.

But even then, there is the risk that any package will not be approved by all 17 countries in the euro zone.

Finland's likely next prime minister on Tuesday split the issue of EU bailouts from talks on forming a government with the True Finns and the Social Democrats, both against the bailout.

Jyrki Katainen, whose National Coalition party won last month's election, said he would delay formation of a government and hoped instead to secure informal parliamentary approval for the bailout before EU ministerial meetings on May 16 and 17.


Few details were given on a deal Portugal has been negotiating with the European Commission, the European Central Bank and the International Monetary Fund for three weeks.

Portugal's new deficit target is 5.9 percent of gross domestic product this year, rather than the 4.6 percent target of its existing austerity plan. The target is 4.5 percent next year and 3 percent in 2013. A European Commission source said the interest rate would be set by EU ministers on May 16.

"He showed us the bright side of the moon, it is the dark side that remains to be seen, and that includes the interest rate," said Filipe Garcia, head of Informacao de Mercados Financeiros consultants in Porto.

Meanwhile the deal struck with Greece exactly one year ago looked to be unravelling.

Greece's finance minister said on Monday he hoped Athens might get more time to repay the EU/IMF bailout loans, already extended from three to seven years, at a lower rate.

Greece's sovereign debt is set to rise to 340 billion euros, or 150 percent of annual output, this year, a debt that it looks unable to finance without a massive pick-up in growth or one-off income from privatisations.

Michael Meister, deputy parliamentary leader of Germann Chancellor Angela Merkel's Christian Democrats, said he saw logic in extending the repayment schedule.

On Monday, European Central Bank policymaker Nout Wellink said he was open to the idea of extending maturities on all Greek debt -- the first senior ECB official to admit the possibility of a restructuring publicly.

"The direction of the debate is sensible," Meister told Reuters, adding that any softening of the terms would not come without a 'quid pro quo' down the line. "For further aid, Greece must also offer additional measures," he said.

European Union and IMF inspectors are in Greece to assess whether its new austerity plans are tough enough, a review that could determine whether the loan terms are changed.

A restructuring would alarm bondholders, who include many major French and German banks and the European Central Bank. Seventy percent of Greece's debt is owned by foreign institutions.

Under the umbrella of "debt restructuring", there are various options, ranging from writing down the value of the debt by a set amount, known as a haircut, to rescheduling when the debt will be repaid, which is a softer form.

But Finance Minister George Papaconstantinou said that any restructuring would be a disastrous mistake.

"It would have a very big cost and we would not have the benefit, we would stay out of markets for 10-15 years, the wealth of Greek pension funds would suffer writedowns, we would have problems in the banking system and hence the real economy."

(Additional reporting by Jan Strupczewski in Brussels and Andrei Khalip in Lisbon; Writing by Luke Baker and Louise Ireland; Editing by Kevin Liffey, sourced Reuters)

Iron Ore-Shanghai rebar dips, spot ore offers steady

Wed May 4, 2011 7:45am GMT

* Chinese rebar futures ease after hitting 2-month top
* Spot iron ore buying still slow
* Chinese inflation may moderate in H2-cbank official

SHANGHAI, May 4 (Reuters) - Shanghai rebar futures slipped 0.2 percent on Wednesday, after rising to two-month highs in the previous session, with a firm construction demand outlook in China capping losses.

The most active October rebar contract on the Shanghai Futures Exchange ended 12 yuan lower at 4,941 yuan ($761) a tonne, off an early low of 4,931 yuan.

"Demand is picking up," said Wang Dezhi, an analyst with Orient Securities Futures. "While the uptrend in raw material cost will be hard to reverse, steel prices will likely continue to rise this week."

There had been concern that steelmakers in China, the world's top producer, may curb output in view of power shortages that are likely to worsen during the summer.

But analysts say small Chinese steel mills are likely to take the brunt of the power shortages, the worst in years.

"The power shortage effect could be exaggerated at some point, and actually the output losses are just the tip of an iceberg," said Hu Yanping, analyst with Chinese consultancy

China's average daily crude steel output has stayed at near record levels above 1.9 million tonnes since late February as steelmakers boosted output in anticipation of strong demand.

Hu expects China's daily crude steel output to stay around 1.9 million tonnes in May.

Global mining giant Vale , the world's biggest producer of iron ore, may have trippled for the first quarter, analysts estimated, as iron ore prices more than doubled.


Firmer steel prices bode well for iron ore, the key raw material. Offers for high-grade 63.5 percent Indian material remained at $188-$190 per tonne on Wednesday, Chinese consultancy said.

Traders said there was a deal struck for Indian 63.5 percent iron ore fines at $189 per tonne on Tuesday, but the majority of small Chinese mills remain concerned about the demand outlook on worries China's monetary tightening cycle may extend.

"Some steel mills are worried that steel prices and demand may fall at the end May and in June, and they don't want to take the risk of buying forward shipments, which arrive in about a month," said a trader in Beijing.

But comments by a central bank official published on Wednesday showed Chinese inflation will moderate in the second half of the year as government measures to curb price rises hit their mark.

Key iron ore indexes, based on spot Chinese deals and which global miners use in setting contract prices, rose on Tuesday.

Metal Bulletin's 62 percent index .IO62-CNO=MB gained 28 cents to $181.73 a tonne, the highest since April 12.

Forward swaps <0#SGXIOS:> also rose, with all contracts from May 2011 through December 2013 cleared by the Singapore Exchange gaining as much as over $6 a tonne, reflecting investor optimism spot prices will remain firm.

Baoshan Iron and Steel said on Tuesday China's crude steel capacity may rise by 40 million tonnes this year, which may bring the country's capacity to more than 800 million tonnes, despite Beijing's campaign to block capacity expansion, especially by small-scaled privately-owned steel mills.

Baoshan Iron and Steel is a unit of Baosteel Group, China's second-biggest steelmaker in terms of output.

($1 = 6.497 Chinese yuan) (Reporting by Ruby Lian and Manolo Serapio Jr.; Editing by Ed Lane, sourced Thomson Reuters)

Orissa objects to MoEF missive on iron ore export by POSCO

Wednesday, 04 May 2011

BS reported that the Orissa government has raised objections over the recommendation of the union ministry of environment & forests to discourage iron ore exports by POSCO from the state.

The state government has said stating that the move to allow or disallow exports of the raw material is not the prerogative of the MoEF, it will take a final call on the matter.

A top official of the state steel & mines department said that "We are going to renew the MoU with POSCO India very soon. But we are yet to decide on whether we will allow or disallow exports of the raw material. In any case the decision will be taken by the state government and the union environment ministry cannot impose any such condition."

The ministry which granted Stage II forest clearance for the POSCO project has suggested that the revised MoU between the state government and POSCO India needs to be negotiated in a manner that the exports of the raw material are completely avoided. (sourced BS)

Mundra Port wins bid for Abbot Point X50 coal terminal

Wednesday, 04 May 2011

Mundra Port and Special Economic Zone announced that the State of Queensland in Australia has declared MPSEZ as the successful bidder for long term lease of Abbot Point X50 Coal Terminal following international competitive bidding.

The international bid attracted local and foreign companies and international consortia and the bid passed through three distinct stages of selection lasting over six months. Mundra beat other international players to bag this prestigious acquisition with a bid price of about AUD 1.8 billion which had full financial closure.

The deal was signed in Brisbane, Australia between the company officials and the Queensland government. This achievement also marks the beginning of expansion of business of MPSEZL outside India and is also an acknowledgement of the robust management capability of Mundra Port in developing and operating ports anywhere in the world.

Mr Gautam Adani chairman of Adani Group informed with the acquisition of Abbot Point Coal Terminal, Adani Group controlled Mundra Port has established international credentials an efficient world class port developer and operator. We have harbored aspirations to expand globally and were in search of right business opportunity with strategic fit. Abbot Point is our contribution to India’s increasing global ambition and will boost synergy with other businesses of the group, informed.

Shares of the company gained INR 0.8 or 0.56% to trade at INR 144.60. The total volume of shares traded was 266,085 at the BSE.

Australia court bars Fortescue from key Rio Tinto rail line

Wed May 4, 2011 8:36am GMT

SYDNEY May 4 (Reuters) - Fortescue Metals Group said an Australian federal court ruling which prevents its from gaining access to a key rail haul line operated by rival Rio Tinto would not affect its expansion plans.

Fortescue said its target to raise iron ore output to 155 million tonnes per annum was based on its own infrastructure and existing approvals.

Fortescue said in a statement it would consider legal options after reviewing the court decision.

(Reporting by James Regan, sourced Thomson Reuters)

TATA Steel plans more investment in China

Wednesday, 04 May 2011

BOAO Hainan TATA Steel Limited, a subsidiary of TATA Steel Group, will increase investment in China by 5% in 2012 as it seeks to maintain market share according to the company's MD.

Mr Hemant Madhusudan Nerurkar told China Daily that the company will not make any major investments in its rolling mills located in the cities of Wuxi in Jiangsu province and Xiaman in Fujian province this year but next year there will be some changes.

Mr Nerurkar said that the company's problem in China is overcapacity which means production far exceeds real demand.

He added that “Capacity will gradually decline as the government encourages more energy efficiency in the industry. Infrastructure investment in China is still very high and there is still great demand for steel. As Chinese industry becomes more and more self sufficient in raw materials I'm sure it will turn out well."

Mr Nerurkar said rising demand for more value added products such as coated steels, electrical steels, and products for the aviation industry will provide opportunities for the company.

He said the Chinese steel industry has developed very well in the last 10 years at an admirable speed.

He also expects the company's business in China to grow at the same rate as the country's steel consumption growth by 5% to 7% increase year on year.

Mr Nerurkar said TATA Steel will continue to look for coking coal and iron ore assets for acquisition in areas such as Africa, Canada and Brazil to secure raw materials and counter fluctuating prices for coal and iron. The industry is facing severe price fluctuations and 70% of costs come from iron ore purchases, when he spoke at the Boao Forum for Asia in April.

He suggested that iron ore suppliers and steel companies should return to an annual pricing mechanism based on quarterly negotiations between the two sides to avoid frequent price fluctuations for raw materials based on quarterly negotiations between the two sides.

Mr Nerurkar said that in common with the rest of the steel industry, raw material prices will inevitably affect TATA Steel's profitability. (sourced Chinadaily)

Tuesday, May 3, 2011

Vale begins iron ore pelletizing production in Oman

Tuesday, 03 May 2011 02:33:13 (GMT+2)

Brazil-based Vale, the world's largest iron ore mining company, announced that pellet production has commenced at its first pelletizing plant in Sohar, Sultanate of Oman. According to Vale, the US$1.356 billion pelletizing plant and distribution center "will serve as a hub catering to the growing demand of iron ore products in the Middle East, North Africa and India."

Vale's industrial complex in Sohar is comprised of a two-unit pelletizing plant, each with a nominal capacity of 4.5 million metric tons (mt) annually, in addition to a distribution center with an annual capacity of 40 million mt per year.

In a press release, Roger Agnelli, Vale CEO said, "Oman's strategic location outside the Arabian gulf, with the advantage of deep water seas, and its heavy infrastructure investments to provide leading logistics networks, advanced energy and power supply technologies and world class facilities at Sohar Industrial Port, were key to our decision to establish our operations in the Sultanate." (sourced steelorbis)

Former Severstal Columbus CEO to head Essar Steel Algoma

Tuesday, 03 May 2011 02:42:21 (GMT+2)

Sault Ste. Marie, Ontario-based steelmaker Essar Steel Algoma Inc. announced Monday that it has selected James Hrusovsky as Chief Executive Officer (CEO) of the company. The appointment and effective date are subject to pending regulatory approval.

Hrusovsky, who has held a number of senior executive positions in the steel industry, most recently served as CEO of Severstal's Columbus, Mississippi plant.
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Malay Mukherjee, CEO Essar Steel Business Group, said, "We are very pleased to attract an individual with Mr. Hrusovsky's skills to serve as the Company's CEO. Mr. Hrusovsky is one of the leading executives in the steel industry with over 29 years of experience in nearly all aspects of steelmaking including research, quality, product development, engineering, capital projects, sales and profit centre management."

Hrusovsky commented on the pending appointment, "I am excited to join Essar Steel Algoma. Under the Essar brand, this company has continued to grow and expand in the North American steel industry and I look forward to working with the employees, unions, investors, directors and other stakeholders to continue to build a profitable and successful company."(By steelorbis)

SAIL to set up iron ore pellet plant at Gua in Jharkhand

Tuesday, 03 May 2011

A top company official told Business Line Steel Authority of India Ltd has decided to set up a 4 million tones per annum pellet plant at Gua in Jharkhand to utilize accumulated fines at a cost of INR 780 crore.

The turnkey contract for installing the plant is slated to be awarded in May. SAIL has received two bids for the contract. The plant is likely to be operational in 2013.

Currently Gua mines have 35 million tonnes largest among all SAIL mines of accumulated fines and generate fines of around 7 million tonnes a year.

According to sources for more than a year SAIL was seized of the idea of a pellet plant. Research and Development Centre for Iron and Steel, the R&D unit of SAIL and Mecon as the consultant had studied relevant issues such as location of the plant and whether split or single location in relation to the environment, technology and logistics of carrying fines. Finally SAIL opted for locating the plant at Gua and not at the nearest steel plant site at Bokaro.

The oldest mechanized mine in the country; Gua now extracts nearly a third in hematite grade lumps and the balance in fines.

Gua's current lump production capacity is placed at 2.4 million tones per annum. Under the gradual expansion plan undertaken by SAIL, Gua mines capacity is to go up to 3.15 million tones per annum by the end of this fiscal. By 2014 to 2015 the capacity is slated to move up to 8 million tones per annum including pellets which are substitutes of lumps.

Gua now fourth in the pecking order of capacity among the seven mines SAIL's raw material division controls is planned to catapult to the second slot by 2014 to 2015 and in the post-expansion period to share the top slot with Bolani.

SAIL's raw material division estimates the total capacity of the seven mining areas under its belt at 34.6 million tones per annum by 2014 to 2015. According to the long-term plan two Kalta and Chiria of the seven now operated manually are also to be mechanized.

(sourced thehindubusinessline)

Indian environment minister approves POSCO steel plant in Orissa

Tuesday, 03 May 2011

The Indian government gave final approval to South Korea's POSCO to build a giant USD 12 billion steel plant in the country's biggest foreign investment deal since the launch of market reforms in 1991.

Mr Jairam Ramesh Environment Minister said in a statement that "Final approval is accorded to the state government for diversion of 1,253 hectares of forest land in favor of POSCO."

Mr Ramesh said the approval was conditional on POSCO regenerating an equal area of forest in a spot chosen by Orissa as well as paying for the land.

Mr Ramesh said that the plant has "considerable economic, technological and strategic significance, at the same time laws on the environment and forests must be implemented seriously.

The plant in the eastern state of Orissa has been strongly opposed by locals who have campaigned since 2005 to save the farmland and forests needed for the project.

Mr Ramesh said he hopes that the new agreement would avoid allowing POSCO to export any raw material meant for the Orissa mill. The two sides are expected to renew their MoU and Ramesh said he hoped that the new agreement would avoid allowing POSCO to export any raw material meant for the Orissa mill.

POSCO signed an agreement with the Orissa state government in 2005 and it was scheduled to begin production by the end of 2011. But protests, environmental worries and litigation over a related mining concession have delayed what is India's biggest foreign direct investment.

While decision clears the way for the plant to be built POSCO does face a legal challenge from a local firm also seeking a mining concession. That decision on the mining concession lies with the Supreme Court, but the litigation is unlikely to hold back the mill's construction now the green nod has been given. (sourced from ET)

Nalco to take call on steam coal import bids soon

Tuesday, 03 May 2011

National Aluminum Company will decide on bids for coal supply for its INR 18,000 crore aluminum cum power project in Indonesia over the next couple of weeks.

West Asia based MEC Coal and Indonesia based Bumi Prasada are the two companies bidding for supplying coal to Nalco’s east Indonesia based Kalimantan project. PT Bumi Resources is the world’s largest coal producer and Indonesia is the world’s largest exporter of the black gold. MEC is a member of the Trimex group of companies a global minerals and metals conglomerate.

Mr BL Bagra CMD of Nalco said that “There were some clarifications needed and both the companies were in Orissa for discussing it with us. Depending on the price bids received we will finalize the deal in the next couple of weeks and send it for board approval. Both firms will submit detailed commercial proposals over the next couple of weeks.”

MEC Coal Pte through its Indonesian subsidiaries is developing coal concessions in Indonesia, along with an integrated heavy haul rail transportation system and ship loading jetty.

(sourced mydigitalfc)

Qld sells off Abbot Point coal terminal

May 3, 2011 - 4:24PM | Jessica Marszalek

The Queensland government has completed the last plank in its asset sales plan, earning $1.829 billion that will be funnelled into the state's disaster recovery.

Premier Anna Bligh on Tuesday announced that the government had agreed to a 99-year lease of the Abbot Point Coal Terminal to Mundra Port Pty Ltd for a sum above the expected price of $1.5 billion.

Under the deal, the state retains ownership of the port land, its jetty and wharves. The terminal will continue to be operated privately by Xstrata.
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Abbot Point is the last asset to be sold off under the government's controversial privatisation plan.

Ms Bligh said the difficult decision to go ahead with the privatisation program was now paying off.

"Following the catastrophic impact of the floods and Cyclone Yasi, the government announced the proceeds from the lease of the Abbot Point Coal Terminal would help pay Queensland's share of the recovery costs," the premier said in a statement.

She said the port existed purely for coal companies and should now be operated privately.

"Taxpayers have done their bit to establish the terminal and entice investment, now it's time for the private sector to take over," Ms Bligh said.

Representatives of Mundra Port signed the documents in Brisbane on Tuesday afternoon.

Mundra Port is the Australian subsidiary of Mundra Port and Special Economic Zone Ltd, which developed and manages the largest privately-developed port in India and forms part of the Adani Group.

The Adani Group is based in India and has substantial global interests in power generation, mining, oil, and gas exploration, development and operations.

The government has already publicly floated a portion of rail freight company QR National, and sold its forestry business and the Port of Brisbane under its privatisation program, earning $7.3 billion.

It's also been announced that Queensland Motorways will be transferred to the government's investment arm - Queensland Investment Corporation (QIC) - for an expected $3 billion.

The government proposes to sell off the remainder of its stake in QR National in the future.

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Iron Ore-Shanghai rebar hits 2-month top on firm demand view

Tue May 3, 2011 4:22am GMT

* Indian 63.5 pct ore seen rising above $190/T
* Chinese mills seen replenishing ore stockpiles
By Manolo Serapio Jr

SINGAPORE, May 3 (Reuters) - Chinese steel futures rose to more than two-month highs on Tuesday as market players, returning after a long weekend, were upbeat about the outlook for demand in top market China.

Spot iron ore prices also remained firm, with offers for high-grade Indian material expected to edge up above $190 a tonne this week as Chinese steel mills restock.

The most active October contract on the Shanghai Futures Exchange rose as much as 0.9 percent to hit an early peak of 4,960 yuan per tonne, matching its Feb. 24 peak. By the midday break, the contract was up 0.7 percent at 4,951 yuan.

China, along with many markets across the world, was shut on Monday for a public holiday.

"Steel demand in China is becoming bigger as more construction activity takes place so prices are rising," said an iron ore trader in Chinese eastern Shandong province.

Market players are also watching for possible production cutbacks by Chinese steel mills amid expected power curbs ahead of summer although some traders say the overall impact may be marginal.

China's average daily crude steel output has stayed at near record levels above 1.9 million tonnes since late February as steelmakers boosted output in anticipation of strong demand.

But with demand growth expected to slow to 2.6-4.6 percent per year from 2011 to 2015, China needs to curb excess capacity and output. [ID:nL3E7FT03U]

The rise in Chinese steel prices is supporting prices of iron ore, its main raw material.

Metal Bulletin's 62 percent iron ore index .IO62-CNO=MB, based on Chinese spot prices, rose 22 cents to $181.45 a tonne on Monday.

Those gains may continue with offers staying firm on Tuesday. Indian ore with 63.5 percent iron content was quoted at $188-$190 a tonne, including freight, said Chinese consultancy Umetal.

"I feel that the market is on an uptrend, but the increases won't be large," said an iron ore trader in Beijing. "Prices may rise this week as steel mills plan to rebuild inventories."

Tight supplies from India, the world's No. 3 iron ore exporter, during its monsoon season also bodes well for iron ore prices.

"I think 63.5/63 grade may be offered at above $190 this week and big mills may be willing to pay $187," said the Shandong-based trader. (Additional reporting by Ruby Lian in Shanghai; Editing by Sugita Katyal, sourced Thomson Reuters)

Monday, May 2, 2011

Arch to buy International Coal for $3.4 billion

Mon May 2, 2011 2:17pm GMT

* Arch to pay 32 pct premium of $14.60/share
* Deal will create No. 2 U.S. metallurgical coal producer
* Int'l Coals shares jump, Arch shares slip
(Adds analyst comments, background, updates shares, bylines)

By Matt Daily and Steve James

NEW YORK, May 2 (Reuters) - Arch Coal (ACI.N: Quote) will buy smaller peer International Coal Group Inc (ICO.N: Quote) for $3.4 billion to create the second-largest U.S. producer of steel-making coal, the companies said on Monday.

The deal is the latest in the coal industry, following Alpha Natural Resources' (ANR.N: Quote) $6.6 billion plan to buy Massey Energy (MEE.N: Quote) and Walter Energy's (WLT.N: Quote) $3.3 billion agreement to buy Canada's Western Coal.

Arch will pay $14.60 per share for International Coal, a 32 percent premium to the closing stock price on Friday. The companies expect the deal to close in the second quarter.

The news sent International Coal's shares soaring 30 percent to $14.39 in early trading on the New York Stock Exchange, while Arch fell 0.2 percent to $34.24.

The deal should benefit Arch Coal over time, particularly as prices for metallurgical, or "met coal," are expected to remain strong because of rising global demand from steel makers.

"We expect the majority of earnings to ultimately come from the combined company's met coal platforms, and given our positive view on met coal, we view this quite positively," Brean Murray Carret & Co analyst Jeremy Sussman said in a note to investors.

U.S. coal exports have risen sharply in the past few months, led by met coal, as world supplies are tight on production problems in Colombia, Australia, South Africa and other countries.

At the same time, environmental concerns have hurt the outlook for domestic U.S. steam coal used in power plants.

The International Coal deal would make Arch one of the top five global coal producers and marketers, with shipments of 179 million tons based on 2010 figures, it said.

About 30 percent of International Coal's 1.1 billion tons of reserves are metallurgical coal, giving the combined company a total reserve base of 5.5 billion tons.

Cost savings from the deal are estimated at $70 million to $80 million per year, the companies said.

International Coal, which was founded by billionaire investor Wilbur Ross, is the owner of the Sago mine in West Virginia, where 12 miners died in an accident in 2006.

Currently, BHP Billiton (BHP.AX: Quote) and Teck Resources (TCKb.TO: Quote) are the global leaders in production of metallurgical coal.

Arch expects to start its tender offer for International Coal shares around mid-May. Owners of about 17 percent of International Coal shares outstanding have agreed to tender their stock in the offer.

Morgan Stanley (MS.N: Quote) is the financial adviser to Arch, and Simpson Thacher & Bartlett LLP provides legal counsel. UBS (UBSN.VX: Quote)(UBS.N: Quote) is acting as the financial adviser to International Coal, and Jones Day is providing legal counsel. (Additional reporting by Bruce Nichols in Houston; Editing by Lisa Von Ahn and Maureen Bavdek), sourced Thomson Reuters)

India says Posco should not export iron ore from Orissa plant

Mon May 2, 2011 8:48am GMT

By Krittivas Mukherjee

NEW DELHI May 2 (Reuters) - South Korean steelmaker POSCO , which wants to build a $12 billion steel plant in eastern India, should not export raw materials, including iron ore, from the proposed project, India's environment minister said on Monday.

POSCO signed an agreement with the Orissa state government in 2005 and it was scheduled to begin production by the end of 2011. But protests, environmental worries and litigation over a related mining concession have delayed what is India's biggest foreign direct investment.

India is the world's third-largest supplier of iron ore with most of its exports landing in China.

The initial agreement between POSCO and Orissa, which expired last year, allowed the company to swap low-grade iron ore from Orissa for an equal amount of high-grade blended imports for the steel plant in the eastern Indian state.

The two sides are expected to renew their memorandum of understanding, and Ramesh said he hoped that the new agreement would avoid allowing POSCO to export any raw material meant for the Orissa mill.

"I would expect that (agreement) between the state and Posco would be negotiated in such a manner that exports of the raw material are completely avoided," Jairam Ramesh said in a statement clearing land acquisition for the project.

A senior executive of POSCO India told Reuters that export of raw material from Orissa was never part of the agreement.

"There was initally a plan for a swap because of the iron ore's quality issues. But now we have the technology to do it here, so there is no need for even swapping any material," the official said.

Ramesh gave the plant clearance in January on certain conditions, but the project faced another delay last month when the minister asked the state government to address concerns of villagers set to be displaced by the steel mill.

On Monday, Ramesh quashed those objections and gave permission to the state to begin acquiring land for the project which has come to be seen as a test of India's business climate and its struggle to balance growth with environment protection.

India's environment ministry has already scrapped or halted several industrial projects, including plans by London-listed Vedanta Resources Plc to mine bauxite in Orissa.

While Monday's decision clears the way for the plant to be built, POSCO does face a legal challenge from a local firm also seeking a mining concession.

That decision on the mining concession lies with the Supreme Court, but the litigation is unlikely to hold back the mill's construction now the green nod has been given. (Additional reporting by Nigam Prusty; Editing by Jo Winterbottom sourced Thomson Reuters)

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Adaro posts 11.7% increase in revenues on higher prices-The Jakarta Post

Mon, 02 May 2011 | The Jakarta Post

The Jakarta Post reported that, Indonesia’s second-largest coal producer, PT Adaro Energy Tbk, announced an 11.7 percent increase in net revenue to US$757.2 million compared to the same period last year on the back of the increase in coal prices on the international market.

In its first quarter financial reports issued Sunday, the company said the rise in net revenue was contributed by a higher average selling price during the three-month period.

Net profit rose 11.3 percent to $108.9 million mainly due to the higher average selling price, foreign exchange gains of $8.7 million and no goodwill amortization as compared to $13 million incurred during the previous corresponding period, the company said, as quoted by paper.

“We had a good start to the year and are on the track to reach our 2011 target and implement our strategies to create sustainable value from Indonesian coal,” Adaro president director Garibaldi Thohir said in a written statement.

The company said profit increased despite the 6.8 percent and 4.8 percent decline in production and sales volume respectively, to 10.59 million tons and 10.91 million tons during the same period last year.

Production in the first quarter of 2011 declined from the same period last year as Adaro was unable to complete pre-stripping activities in preparation for the wet season due to unusual weather during 2010. The company’s production during the first and fourth quarters tends to be lower because of high rainfall during these periods.

Given the first quarter performance, Adaro is on track to achieve its forecasted production volume. The company’s cost of revenue increased 16.5 percent to $507.3 million due to higher planned strip ratio and longer overburden hauling distances.

Starting from 2011, Adaro will report its financial statements and notes in US dollar to minimize foreign currency conversion effects, considering all of the company’s subsidiaries report their accounts in US dollars as most of their income, costs and debts are denominated in dollars.

Adaro Energy is the second-largest thermal coal producer in Indonesia and is a significant supplier to the global thermal coal market. It continues to maintain a geographically diversified customer base by supplying no more than 10 percent of its sales volume to any one customer.