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Saturday, June 4, 2011

China says to deploy more coal trains to ease power crunch

Sat Jun 4, 2011 4:13am EDT

BEIJING (Reuters) - China's Railway Ministry is ready to deploy more trains to transport coal around the country to help ease a power crunch which is expected to worsen as the hot summer approaches, state media said on Saturday.

"Relevant local bureaus are paying close attention to the supply and consumption of thermal coal in regions suffering power shortages, and will make sure no power shortage is caused by delays in railway transport," Xinhua news agency cited a ministry statement as saying.

More than 70 percent of China's electricity is generated from coal which is mostly extracted in northern China.

"The ministry often finds itself short-handed when demand for thermal coal surges in summer," Xinhua reported.

China's electricity demand is running so far ahead of supply that it is expected to be short of 30-40 gigawatts of power capacity this summer, twice the deficit caused in Japan by the earthquake and tsunami on March 11.

China has created the shortage by foisting low prices on power companies, who have little incentive to produce electricity because of high coal costs, economists say.

China's overloaded rail and road networks struggle to deliver vast quantities of coal from major producing regions in the north to big electricity-consuming provinces such as Jiangsu, Zhejiang and Guangdong in the east and southeast, where local supplies are scarce.

(Reporting by Ben Blanchard; Editing by Robert Birsel, sourced Thomson Reuters)

Coal ministry proposes to finance railway racks to speed up dispatch of coal

Saturday, 04 Jun 2011

Mr Sriprakash Jaiswal union minister of coal said that coal ministry has proposed to finance the purchase railway of racks to speed up dispatches of coal to various sectors. Dispatches of coal to power sector in April 2011 as grown 12.8% over the corresponding period of 2010. To augment it further CIL required 30 more racks. Coal India can provide required financial support to railway for purchasing racks exclusive for coal dispatches.

Highlighting the efforts being made to augment coal availability in the country, he said coal linkages are being rationalized. The policy guidelines on disposal of surplus coal, by products from captive blocks are also under preparation.

Mr Jaiswal said in order to promote Underground Coal Gasification which is a Clean Coal Technology. Ministry of coal has issued a set of guidelines for conducting UCG operations. Beside this, the policy on allocation of small and isolated coal and lignite pockets has been finalized and placed on the website of the ministry of coal for calling comments from the stakeholders and general public. He expressed the hope that as a result of these initiatives, coal production target this year will be met.

Regarding level playing field for all players in the coal sector, he said that very soon the government will introduce a Bill for Coal Regulator Authority. Suitable suggestions from various stakeholders are being included in a draft note already prepared for this purpose, he informed. Guidelines or competitive meetings of coal blocks have also been drafted and have been circulated for comments or suggestions from the stakeholders. He said these guidelines will bring more transparency in the allocation of coal blocks

Reiterating his ministry's commitment to improve the functioning of coal sector in the country, Mr Jaiswal said performance in all the allocated coal blocks is being monitored continuously and suitable action will be taken if the performance is found unsatisfactory against the mile stone set off. sourced steelguru

Work has begun at Anglesey Labrador iron ore mine

Saturday, 04 Jun 2011

Anglesey Mining has reported that work has begun at its mining venture in Canada. In a statement issued to the London Stock Anglesey reported that operations started at its Labrador Iron Mines’ James Mine site in April.

LIM, which is 33% owned by Anglesey, is engaged in the development of 20 iron ore deposits in western Labrador and north-eastern Quebec near Schefferville.

Anglesey reported that 400m of ore had been exposed and approximately 100,000 tonnes of iron ore has been stockpiled to date.

The company also announced that its Silver Yards processing plant had now been commissioned. It said that “All instrumentation and controls will be fully operational by the end of May. Hot commissioning, with the first ore being fed through the plant, is expected to commence in the first week of June.”

The company is planning to upgrade and expand the Silver Yards plant in subsequent phases to increase recoveries, treat lower grade and higher silica ores and to increase throughput and output.

The second phase, which will see the addition of a new lump ore secondary screen and a fines recovery system, is planned to be completed during the summer.

The company also said that an extension to LIM’s rail spur line and other track work at Silver Yards has been completed.

The company in a statement to the London Stock Exchange said that “LIM has purchased a fleet of 400 previously-used railcars of which the first consignment of 120 rail cars have been delivered to the Port of Sept-Iles, where inspections and modifications are being carried out.”

The company has signed a rail services agreement with Western Labrador Rail Services to provide, operate and maintain up to five locomotives which will be used to haul LIM’s iron ore from Silver Yards.

The company said it is expected that rail shipments of iron ore from Silver Yards to the Port of Sept-Iles will begin this month.

The company has also signed a memorandum of understanding with the Port of Sept-Iles for the use of the Pointe aux Basques terminal for handling and ship loading of its iron ore for the coming year. (sourced Walesonline)

STXNEWS LATAM-BofA says outlook for Brazil steel remains grim

Fri Jun 3, 2011 4:12pm GMT

Sentiment among Brazilian steelmakers is negative, as the industry struggles with a stronger currency, surging raw materials costs and high imports, analysts at Bank of America Merrill Lynch said on Friday. Brazil has become a country where production is getting costlier, the analysts said.

"The steel sector's biggest challenge will then be to reduce costs, as prices are now closely following international benchmarks, and fight imports," the report said. The analysts noted that shares of Usiminas (USIM3.SA: Quote)(USIM5.SA: Quote) will continue underperforming despite their year-to-date tumble. sourced Reuters

Iron ore price negotiations - Global miners may cut Q3 prices

Saturday, 04 Jun 2011

Reuters calculations showed that global miners may trim iron ore contract prices by around 1% in the third quarter following a drop in the average index price from a record high in the second quarter.

Based on Platts index prices for March to May, to which top iron ore miners Vale and Rio Tinto peg third quarter contract prices, the 62% grade averaged USD 176.96 a tonne, cost and freight, down 1.3% from a record USD 179.24 in December February.

Platts in a report, citing Vale's customers in China, Taiwan, Japan and South Korea said that Vale may keep prices of key products unchanged for clients who have agreed with the miner not to adjust prices if a quarterly change is smaller than 5%. It said that those that do not have such a clause in their contracts will see prices drop between 1.4 to 1.5%.

Platts said that Rio Tinto could cut prices by 1.5% with its 62% Pilbara Blend fines likely to be set at USD 168.85 per tonne, free on board, compared with USD 171.35 in the current quarter.(sourced from Reuters)

Trafigura buys U.S. coal, commodity terminal

Jun 3, 2011 5:20pm GMT

* Trafigura paying $28 mln for terminal, to invest $100 mln
* U.S. coal export capacity straining to meet demand
* Terminal idle since 2008 has railroad link nearby
(Recasts, adds detail)

LONDON/HOUSTON, June 3 (Reuters) - Commodity trader Trafigura [TRAF.UL] said on Friday it was paying Ormet Corp (ORMT.PK: Quote) $28 million for the idled Burnside bulk terminal in Louisiana and will invest $100 million to reopen the terminal to handle coal, bauxite and alumina.

The terminal sits on the Mississippi River adjacent to an alumina refinery that Ormet said last month it was restarting after five years.

The terminal would be the second on the Lower Mississippi River with potential access to rail as well as barge shipments of coal, which gives greater flexibility to exporters than terminal operators who depend on barge delivery.

"We are aware that currently the U.S. faces real constraints in supplying coal. The 20 or so terminal facilities across the country are simply maxed out," Simon Collins, a director of Trafigura Beheer, said in a press release.

"The redeveloped terminal will reduce pressure on existing facilities while providing a vitally needed multimodal logistics platform on the Mississippi," Collins said.

Around 11.5 million short tons (10 million metric tonnes) of throughput, including all bulk commodities, are expected annually. Previously, capacity was listed at less than half that. The 40-year-old terminal has been idle since 2008.

Under the terms of the deal, Trafigura will also provide services to Ormet's alumina refinery.

The potential for unloading railed coal to ships at the terminal, if developed, would be a "huge advantage" for a a U.S. export shipper, said New Jersey-based coal trader Frank Kolojeski.

The terminal originally had only capability to load coal from vessels onto rail cars for import, he said.

The terminal is located adjacent to the Canadian National (CNR.TO: Quote) rail line that serves CN's IC Rail Marine Terminal, a big coal-handler downriver from Burnside. And it has a spur off that line.

Depending on barges alone means dealing with seasonal issues, such as high water on the river, currently in spring flood phase, and the availability of barges in fall grain harvest season, he said.

As coal demand worldwide has grown, and key exporting countries have had logistical or weather issues with deliveries, U.S. coal exports have become a more important factor in world coal trade this year. (Reporting by Ikuko Kurahone and Bruce Nichols; Editing by Marguerita Choy, sourced Thomson Reuters)

AK Steel stock up on speculation of news

Fri Jun 3, 2011 5:59pm GMT

* Company declines to comment on market rumors
* Options activity climbs
* Shares rise almost 2 percent

NEW YORK, June 3 (Reuters) - Shares in AK Steel Holding Corp (AKS.N: Quote) rose almost 2 percent on Friday and options trading was heavy on market rumors that the steelmaker might be preparing to announce significant news.

Company analysts told Reuters the stock rise appeared to be driven by rumors AK Steel was pulling out of a steel conference -- often a sign that a company is about to make an announcement.

A spokesman for the company declined to comment on market rumors but said there had been no cancellation to any planned investor presentations.

Analysts said that AK Steel had rescheduled a planned trip by analysts to one of its steel mills, but the spokesman declined to confirm the visit had been changed.

"AK Steel options are seeing increased activity, being driven by speculative call buying," said options strategist Frederic Ruffy.

"It is remarkable that the market thinks that when a company cancels a meeting it's because of an M&A (mergers and acquisitions) situation," said analyst Michelle Applebaum of Steel Market Intelligence in Chicago.

Charles Bradford, of Bradford Research in New York, noted, however, that AK Steel might be in the market to make a deal to secure its own iron ore supplies, since it is currently having to pay high market prices for the raw material.

In afternoon trading on the New York Stock Exchange, AK Steel stock rose 1.8 percent to $15.06 on a day when other steel company stocks were down.

Total options volume of about 42,000 calls and 7,747 puts traded by Friday afternoon was 4.1 times greater than average daily levels for the steelmaker, according to options analytics firm Trade Alert.

The June calls, giving the right to buy the shares at $16 apiece, are the most popular, with more than 18,000 contracts traded. The June $15 and $17 calls are busy as well. (Reporting by Steve James and Matt Daily in New York and Doris Frankel in Chicago; editing by Gunna Dickson and Gerald E. McCormick, sourced Thomson Reuters)

Jharkhand to review MoU with Vini Iron and Steel Limited

Saturday, 04 Jun 2011

ET reported that Jharkhand chief minister Mr Arjun Munda has directed the industries department to review the MoU with Vini Iron & Steel Limited in which ex chief minister Mr Madhu Koda is said to have invested heavily.

Talking to ET, chief secretary Mr Sushil Kumar Choudhary said that he has asked for the related files from the industries department following directions from the CM to review the MoU and mine leases to Vini Iron and Steel Limited.

Jharkhand industries secretary Mr AP Singh said that the Central Bureau of Investigation has already taken away all the files related to Vini Steel. Earlier, the income tax department had taken Xerox copies of the files, but the CBI took away all the files.

Vini Steel had inked an agreement with Jharkhand government, headed by chief minister Mr Madhu Koda, in September 2006 to set up a steel plant in Dhanbad. Later, the company was allotted a coal mine in Palamu and an iron ore mine in Chaibasa.

Sources said that the CBI is looking into the functioning of the company since Koda had made major investments in it. The then chief minister had also recommended coal and iron ore mines for the same, which was accepted by Delhi. (sourced from ET)

POSCO war zone - Orissa government starts using brutal force

Saturday, 04 Jun 2011

Press Trust of India reported that the Orissa government carried on with its land acquisition drive for the POSCO steel plant after police on Friday detained a prominent anti POSCO leader and took over his betel vine.

As per report, 17 others were arrested for opposing the land acquisition process.

Mr Basudev Behera in the Noliasahi area, a prominent leader of the POSCO Pratirodh Sangram Samiti protested the district administration's move to demolish his betel vine was arrested and taken to Kujang police station as he refused to accept a cheque for INR 299,000 for his betel vine.

Police also arrested 17 others, 10 of them from Mr Behera's family, for opposing land acquisition for the steel plant.

The administration was carrying out its land acquisition work after Mr Behera and others were shifted to the police station.

Meanwhile, the communist Party of India general secretary Mr AB Bardhan on Friday asked the Mr Naveen Patnaik government to refrain from forcible eviction of local people from their ancestral lands in the proposed POSCO steel plant site and threatened mass agitation if the latter did not stop the ongoing land acquisition.

The Friday's incident has once against cast a shadow on the fate of the project that is almost in a limbo since 2005. The company had signed MoU with the state government on June 22, 2005 to set up a mega steel project with an investment of INR 52,000 crore. However, the company could make any headway because of protect by the local people. (sourced from PTI & BL)

Friday, June 3, 2011

As costs pinch, sponge iron firms sell out

Jun2, 2011. 11:44 PM IST

Surging iron ore, coal prices force debt-laden small and medium-sized sponge iron makers to look for an exit

By Manish Basu, Livemint

Kolkata: It’s been nine months since SRMB Srijan Ltd—a Kolkata-based maker of construction reinforcement, or TMT bars—took control of Bhaskar Steel and Ferro Alloy Ltd for around Rs 350 crore.

Already, SRMB’s management is regretting its decision to take over the loss-making Rourkela-based sponge iron manufacturer.

The acquisition resulted in Crisil Ltd downgrading SRMB’s ratings on bank facilities in March, saying its “financial risk profile” was expected to deteriorate in the medium term.

“We did not realize (at the time of buying Bhaskar Steel) how bad the raw material situation is in Orissa,” the Kolkata-based firm’s director Ashish Beriwala now says.

Iron ore prices have surged thanks to the efficacy of a campaign against illegal mining in Orissa, forcing small and medium-sized sponge iron makers laden with debt to look desperately for an exit.

In the past three months, SRMB has turned down 10 proposals to take over ailing sponge iron and TMT bar makers. The turnovers of these companies range from Rs 200 crore to Rs 2,000 crore, and they are spread across Orissa, West Bengal, Jharkhand and Karnataka, according to Beriwala.

SRMB is instead diversifying into marketing other products such as cement and paints, leveraging its standing in the construction industry, he said.

According to industry estimates, the price of iron ore has doubled in the past year to Rs 6,000 a tonne.

Companies that buy from large miners such as NMDC Ltd under long-term contracts pay significantly less, but small sponge iron makers don’t have the muscle to conclude such deals.

That combined with the recent increase in coal prices, and the problem of irregular supplies from state-owned miner Coal India Ltd has pushed a large section of sponge iron makers and TMT bar makers to the brink of defaulting to lenders.

The clampdown on illegal mining has resulted in production in Orissa plummeting to around 40 million tonnes (mt) in fiscal 2011 from a peak of 74 mt in 2008-09, according to Subhendu Bhattacharya, secretary of the West Bengal Sponge Iron Manufacturers’ Association.

Bhattacharya, who owns a number of firms, is looking to sell Govinda Impex Ltd, which manufactures 100 tonnes of sponge iron a day at two factories in West Bengal.

The valuation offered to him by potential buyers is “pretty low—only marginally higher than my investment of Rs 30 crore on the firm’s fixed assets”; yet, Bhattacharya says, he is going to sell because one of the likely buyers has agreed to take over its loans of Rs 50 crore.

Though sponge iron makers have raised prices by 10-15% over the past few months to Rs 22,500 a tonne, their price realization is at least Rs 1,000 a tonne lower than their cost, according to Bhattacharya. The recent increase in coal prices was a killer blow—it raised fuel costs by around 30%.

“Sponge iron makers are in a terrible state,” said Bhattacharya. “Our debts are forcing us to sell our companies cheap.”

TMT bar makers are also facing a similar crisis.

The promoters of SMC Power Generation Ltd, one such firm based in Orissa’s Jharsuguda district, are on the lookout for buyers who will agree to take over bank loans of Rs 120 crore.

Despite posting Rs 420 crore in revenue in fiscal 2011, SMC Power needs to sell a controlling stake to be able to repay debt, according to its director Anurag Aggarwal.

Still, the bottom falling out of the market for some is a buying opportunity for others. Some companies such as Shyam Steel Industries Ltd, another Kolkata-based TMT bar maker, are on a buying spree—it has snapped up at least three firms in the recent past.

One of its recent acquisitions was Sova Ispat Ltd, a ferroalloys firm based in Bengal’s Bankura district. Its erstwhile promoter Ashok Mukherjee said he wasn’t even able to recover his investment of around Rs 150 crore from the sale.

“The transactions you are seeing now are distress sales,” said Barindra Bharadwaj, an independent chartered accountant, who acted as an adviser in the recently concluded acquisition of Ma Chhinnamastika Steel and Power Ltd by Gagan Ferrotech Ltd, both TMT bar makers.

Such a shakeout was last witnessed in the mid-1990s, when the West Bengal government took strict measures to curb power thefts, Bharadwaj added.

Some companies, though, continue to be bullish on future prospects.

“Valuations are attractive at the present moment,” said Sanjay Sureka, chairman and managing director of the Concast Group, which recently acquired SPS Steel and Power Ltd, a TMT bar and sponge iron manufacturer, for an aggregate valuation of around Rs 800 crore, of which Rs 105 crore was paid in cash to buy 50% equity stake in the firm.

“We expect returns in the long run to compensate for the difficulties being faced now,” Sureka added.

Bankers are watchful, and some such as Kolkata-based Allahabad Bank have decided not to lend to new projects. “We have decided not to take any fresh exposure,” said Deepak Narang, general manager (credit), Allahabad Bank.

Though the sector was going through “tremendous stress” and a number of companies were on the block, none of Allahabad Bank’s loans to ferroalloys and TMT bar manufacturers had yet turned sticky, he added. (sourced Livemint)

China’s Demand for Resources Brings Brazil Closer

Friday,June 3, 2011

By Vivian Ni, China Briefing

Jun. 3 – China and Brazil, two countries 17,000 kilometers apart separated by the vast Pacific Ocean and see great political and cultural differences, are witnessing an increasingly closer relationship due to China’s growing hunger for the South American country’s natural resources.

With most of its nationals not even familiar with the largest economy in Latin America, China’s role in Brazil’s economic development is becoming increasingly important. It just surpassed the United States as Brazil’s largest trading partner in 2009, accounting for 12.5 percent of the country’s annual exports, while the volume of exports from Brazil to China expanded by 18 times between 2000 and 2009.

The trading effect has also been duplicated by all sorts of investments from China. In 2009, the total influx of China-originated foreign direct investment was still smaller than US$300 million, but this figure surged to US$17 billion in 2010, suddenly making China Brazil’s largest foreign direct investor.

China’s rapid economic expansion is the major contributor to the booming commercial ties between the two countries remote from each other. As a country that hungers for distinct natural resources for its large-scale infrastructure construction and enormous domestic consumption, China is unsurprisingly attracted to Brazil’s abundant production of iron ore and agricultural products, as well as its newly discovered offshore oil fields that boast the world’s fastest growing oil and gas reserves.

Becoming increasingly aware of China’s rise and significance, the famous Brazilian mining company Vale, the world’s largest iron ore exporter, has recently taken steps to better serve their Chinese customers. The company ordered a fleet of the biggest-ever iron-ore carriers with a meaningful name “Chinamax” and welcomed the arrival of the fleet’s first member to Rio de Janeiro’s Guanabara Bay harbor last month.

With a carrying capacity of 400,000 tons, more than twice the capacity of capesizes (currently the most used iron-ore carriers which travel on shipping routes around South Africa’s Cape of Good Hope and Chile’s Cape Horn), the profitability of Chinamaxes in the short term remains unclear because the long-haul shipping costs and earnings can be very volatile. However, one thing that Vale sees for sure is China’s huge appetite for the raw material used to make steel. China, the world’s biggest steel maker, has imported about 10.9 million metric tons of iron ore per month from Brazil last year, according to a Bloomberg report.

While Vale plans to spend some US$720 million in shipping its own iron-ore, this is not the mining giant’s only investment in logistics to make transportation cheaper. It has laid about 10,000 kilometers of railways across nine of Brazil’s 26 states and built nine port terminals, with the Tubarao Port Complex in the southeast of the country capable of handling 43,000 tons of iron-ore an hour.

Another coming logistics project, the Acu Superport developed by Brazil’s EBX Group, is also going to reinforce the resource-driven business relations between Brazil and China. Nicknamed the “highway to China,” the port is designed to be deep enough to service the Chinamaxes and plans to attract US$40 billion in total investment. China’s Wuhan Iron and Steel, is already on the port’s partner list and building a steel plant there.

It is interesting to notice that while iron-ore shipped by Chinamaxes to China is going to bring Brazil massive revenue, most of the ships themselves are going to be manufactured in China. Among the 19 carriers in Vale’s Chinamax fleet, the first seven will come from South Korea, and the next 12 will be made in China. That is to say, when Brazil may benefit more and more from its iron ore exports to China, its dependence on the country’s manufacturing industry increases as well.

It is not only ships that are being manufactured in China. Imports of manufactured goods rose by 60 percent last year, ranging from light industrial products such as textiles to heavy industrial products such as steel. About 80 percent of costumes used at Brazil’s carnival festival this year were imported and nearly all of them were made in China; Brazilian steel producers had to suffer losses brought by a sharp price fall which is claimed to be highly related to the cheap imports from China.

While Brazil is more than happy to see a US$5.2 billion-trade surplus with China last year, generated from China’s demand for its commodities, sentiment against China rose somewhat in the country due to a bitter-sweet situation the closer business ties bring. The trade deficit in Brazil’s manufactured goods reached a record and painful US$23.5 billion last year, against the small US$600 million-deficit seven years ago.

Brazilians also accuse China of being “selective” on what it wants to import from them and controlling its currency exchange rate to make its exports more competitive. As Control Risks’ General Manager for Brazil Geert Albers says, “China has a clear position on what it wants from Brazil, but Brazil needs to clarify somehow what it wants from China.” (sourced China Briefing)

Investec sees big future for West African iron ore mine developers

By Jamie Ashcroft

A host of new projects in West Africa are set to break the dominance of Australian and Brazilian iron ore supplies, according to Investec analysts Hunter Hillcoat and Mark Heyhoe.

“While Africa has some history of production during colonial times and while South Arica continues to provide a small supply, the continent is not noted as a producer of any significance,” the analyst said.

“That may all be about to change with a host of new projects being advanced across a number of countries.”

Investec has initiated coverage on four of six London-listed, West African mine developers who are set to bring new mines online in the next decade that will collectively produce 330 million tonnes each year – about 50 percent more than Rio Tinto’s current yearly output.

The analysts believe that all four stocks offer compelling upside value and as such they give ‘buy’ recommendations for each of them.

The analysts are targeting 751 pence for African Mining (LON:AMI). Afferro Mining (LON:AFF) is given a 177 pence a share target. Meanwhile Zanaga Iron Ore (LON:ZIOC) and Bellzone Mining (LON:BZM) are given price targets of 183 and 89 pence respectively.

The other two iron ore companies that are developing these West African mines are London Mining (LON:LOND) and Sundance Resources (ASX:SDL).

African Minerals is set to be the first of the West African iron ore producers, with the first shipment pencilled in for the fourth quarter of 2011.

“The focus has been on progressing development of its Phase 1 DSO project, including rehabilitation of existing infrastructure, new infrastructure and mine development and stock building, and progress thus far has been in line with expectations,” the analysts said.

The 751 pence a share target suggests the stock could rise over 60 percent from the current price of 536.5p.

Investec sees Afferro Mining – one part of the demerged African Aura Mining - as an interesting company that blends both moderate and high-risk iron ore exposure.

The analysts point out that the moderate risk comes from its 38.5 percent stake in the Putu project in Liberia, which is managed by Russian mining firm Severstal. The AFF’s high risk – and potentially high return - exposure comes from the wholly-owned Nkout project in Cameroon.

Investec’s 177 pence price target implies over 50 percent upside to the current price of 103p.

The analysts reckon Bellzone Mining (LON:BZM) is well funded for fast-tracked production as it pursues a very aggressive development schedule at Forecariah, its first project – which is a joint venture involving a Chinese investment fund and the government of Guinea.

Forecariah’s first production is pencilled in for the first quarter of 2012. Meanwhile Bellzone is also working on its wholly owned Kalia project, which is slated to come online in 2014.

Investec point out that Bellzone was recently boosted by around US$233 million in new capital and consequently it is well placed to advance these projects.

The broker’s 89 pence target implies that the shares could rise an impressive 90 percent from 49.25 pence.

The Zanaga Iron Ore Company (ZOIC) is in a cosy position because of its major partner, Xstrata (LON:XTA), is managing and sole funding the feasibility study for the 4 billion tonne (grading 33.9 percent iron) Zanaga project.

“Unlike most of its peer group, ZIOC is ably funded with negligible capital requirements over the next few years,” the analysts said. “ZIOC’s only role is now to ensure that the value of the project is maximised for the benefit of its own shareholders.”

Investec believe ZOIC shares could rise around from the current price of 178 to the 183 pence a share target. (sourced Proactiveinvestors)

India Shipping Corp to buy 29 vessels for $781 mln-exec

Fri Jun 3, 2011 4:41am EDT
* Aims to take delivery of 17 ships this fiscal
* Shipping Corp's FY11 iron ore shipments down 13 pct y/y
* Chinese firm to buy up to 15 pct more Indian iron ore in 2011
By Ratnajyoti Dutta

NEW DELHI, June 3 (Reuters) - State-run Shipping Corp of India has ordered 29 vessels including bulk carriers and tankers for 35 billion rupees ($781 million), which would boost its fleet by 37 percent, a company executive said on Friday.

The company aims to take delivery of 17 vessels -- including two in July -- in the current fiscal year ending March, Sunil Thapar, director of the bulk carriers and tankers division, told reporters at a conference.

He said SCI, which currently has 79 ships, was formulating a strategy to strengthen its fleet and aims to also buy platform supply vessels and offshore supply vessels.

"We are devising a strategy to buy more ships over and above what have been decided so far," Thapar said.

He said SCI's iron ore shipments declined an annual 13 percent to 87.3 million tonnes in 2010/11, following a ban by southern Karnataka state on export of the major steel making raw material.

The state -- supplier of about a quarter of India's iron ore shipments -- had banned the shipments from 10 ports and stopped its transport to other ports for exports in July last year. It lifted the ban this April.

China is the top buyer of Indian iron ore but it has recently raised quality concerns.

However, Bright Ruby Resources, a key Chinese client for Indian iron ore, said it plans to buy up to 15 percent more from India in 2011 from 8 million tonnes in 2010.

"We are looking at low grade iron ore from Goa," said Victor Wang, vice-president at resource purchase department of Bright Ruby Resources.

Goa, located in western India, is one of the biggest Indian iron ore exporting ports.

He said current delivered iron ore prices of about $176/tonnes in China are expected to ease in one to two months by about $10/tonne. ($1 = 44.825 Indian Rupees)
(Reporting by Ratnajyoti Dutta; Editing by Aradhana Aravindan, sourced Reuters)

China says PH dumped metal waste in port

Friday, June 3rd, 2011
By Kristine L. Alave, Philippine Daily Inquirer

MANILA, Philippines—China has accused the Philippines of dumping mineral wastes at one of its ports and has asked the Department of Environment and Natural Resources to investigate the matter.

The China Certification and Inspection Group (CCIG), a private inspector for the government of China, has written a letter to Environment Secretary Ramon Paje asking him to order an investigation into the shipment of 55,000 tons of metal wastes that were found in a container van in Lianyungan Port in China on May 20.

The shipment that came on the MV Eleni D was classified as iron ore but inspection showed that it was “slag” or mineral wastes, CCIG said.

The ore shipment “was found with anomalies in terms of its appearance and grades,” according to CCIG Philippines general manager Yonghai Wang.

Wang noted that such materials were barred from entering China.

According to CCIG, the metal wastes had come from Pacific Nickel Philippines Inc. (PNPI) which has a nickel project in Talisay, Nonoc, Surigao City.

As far as the Philippine government was concerned, the mineral wastes were illegally shipped from Surigao City, Paje said.

Paje explained that PNPI has buyers for the waste in China as these contain bits of iron ore which could still be extracted.

(sourced Inquirer)

Tags: China , China Certification and Inspection Group (CCIG) , Department of Environment and Natural Resources , Environment Secretary Ramon Paje , Environmental Pollution , metal waste , Philippines

Karnataka to allow iron ore exports within 15 days

PTI | Jun 3, 2011, 03.36pm IST

NEW DELHI: Iron ore exports from Karnataka is likely to resume within a fortnight from the state, a senior official said.

"The consignments should resume very soon... may be within a fortnight's time," Karnataka's department of mines director HR Srinivasa told reporters here on the sidelines of a conference on iron ore.

Karnataka, which accounts for about one-fourth of total iron ore export from the country, had banned transportation of the mineral for exports purposes from the state in last July.

However, following an order of the Apex Court on April 5, it had agreed to lift the ban and had asked for 15 days time to raise the required infrastructure to check illegal mining in the state.

Since then, the state government had first banned all mining operations in May for carrying out Supreme Court directed survey and demarcation (S&D) activities. Later, it was revoked for those mines which do not fall under the survey and demarcation exercise.

On May 6, the apex court had directed to form a special team to carry out survey and demarcation exercise in 99 mining leases in the Bellary-Hospet-Sandur region, which has a total of 118 mines.

However, exports of the iron ore is yet to begin from the mineral-rich state.

As a result of the ban on exports by Karnataka, iron ore exports from India have declined by about 18 per cent to 85.43 million tonnes between April, 2010 and February, 2011, a data compiled by industry body, Federation of Indian Mineral Industries (FIMI) showed.(sourced TOI)

China gives bleak assessment of its battered environment

Jun 3, 2011 4:02am EDT
By Ben Blanchard

BEIJING, June 3 (Reuters) - More than half of China's cities are affected by acid rain and one-sixth of major rivers are so polluted the water is unfit even for farmland, a senior official said on Friday in a bleak assessment of the environmental price of the country's economic boom.

The environmental degradation which has accompanied China's breakneck growth has emerged as one of the most potent fault lines in Chinese society, driving protests against Beijing's perceived inability to effectively tackle the problem.

China has repeatedly promised to clean up its stressed environment. But it often fails to match that with the resources and political will to enforce Beijing's mandates, as local officials put growth, revenue and jobs ahead of environmental protection.

"The overall environmental situation is still very grave and is facing many difficulties and challenges," deputy environment minister Li Ganjie told a news conference.

The waters off the booming cities of Shanghai, Tianjin and Guangzhou were rated as severely polluted, with only stretches around the resort island of Hainan and parts of the northern coast given a totally clean bill of health, Li said.

Pollution monitors found that 16.4 percent of China's major rivers were classified as worse than grade five, he added, meaning that they do not even meet the standard needed for agricultural irrigation.

Just 3.6 percent of the 471 cities monitored got top ratings for air cleanliness, and there was a continued loss of biodiversity around the country, Li added.

Heavy metal pollution was a particular worry, he said, not only on the health front but also for stability in society.

"These heavy metal pollution incidents not only seriously threaten people's health, they affect social stability, and it ought to be said this is a rather severe issue," Li said.

The world's top consumer and producer of lead, China has struggled to rein in polluting industry under lax environmental regulations. Lead-poisoning, especially in children, has roused public anger and resulted in sometimes violent protests.

Unhappiness over the environment in China encompasses a broad range of other areas though.

Last month, the vast northern region of Inner Mongolia was hit by sporadic demonstrations by ethnic Mongolians infuriated by the damage caused to traditional grazing lands, unrest set off by the death of a herder under the wheels of a coal truck.

The government has since begun a month-long crackdown on the coal industry and vowed to "leave no stone unturned" in their probe into mines which damage the environment or seriously affect residents. [ID:nL3E7H11QT]

"As for that incident, I know that relevant departments are currently proactively and appropriately dealing with it. The situation has basically calmed down," Li said, when asked about the protests.

"The Environment Ministry will be paying close attention, and will give help, support, supervision and guidance" to the probe into the environmental problems of coal mines in Inner Mongolia, he added.

But in a comment underscoring the challenge China faces to balance protection of the environment with the need for economic growth, Li said it was important not to demonize the resource extraction sector.

"In places like Inner Mongolia, with their rich natural and mineral resources, their exploitation over the past few years has certainly had a great effect on local economic development and the improvement of people's livelihoods." (Editing by Sugita Katyal, sourced Reuters)

Coal india gets 18 bids for 360 mt imports

Shine Jacob / Kolkata June 03, 2011, 0:45 IST

Coal major to shortlist and strike a deal within five months.

State-run Coal India Ltd (CIL), has got 18 tenders from international companies for long-term thermal coal offtake agreements. The Maharatna company will shortlist and strike a deal from this — based on the price and quantity of coal to be supplied — within five months.

“CIL has got 18 proposals to import about 360 million tonnes (mt) of coal for a period of 10 years . We will shortlist from these, once we finalise the price and the quantity of coal to be imported. It is expected to happen within five months,” Chairman and Managing Director N C Jha said.

The world’s largest coal producer and India’s second largest company in terms of market capitalisation had invited expressions of interest (EoIs) from global companies at a discounted price for long-term offtake agreements early this year. It received 27 proposals from 16 companies and later the PSU had sent them requests for proposal (RFP) and they were advised to give proposals on quality and quantity of coal to be supplied. The last date to submit bids was May 25.

“The deal would be to import coal from four countries — South Africa, Australia, Indonesia and the United States,” Jha added. Though Jha refused to reveal further details about the proposals, an official close to the development said the proposals included some of the global coal giants.

According to reports, the companies which submitted the EoIs included Rio Tinto, Xstrata, Peabody, Massey Energy and Sinarmas.

“Since CIL has already received a demand of 10 mt from NTPC, we are expecting to import some amount of the total 360 mt this financial year only,” Jha said. The company is currently supplying about 125 mt of coal to NTPC on an annual basis, which include supplying for some new plants from March 2011.

According to the memorandum of understanding with the government for the financial year 2011-12, CIL’s targeted production and offtake is fixed at 452 mt and 454 mt respectively. The company has earmarked Rs 10,000 crore as capital expenditure for the current financial year on capacity expansion and acquisitions. (sourced Business-Standard)

HK shares fall ahead of holiday, banks, coal plays drag

Fri Jun 3, 2011 4:18am EDT

Hong Kong, June 3 (Reuters) - Hong Kong shares closed out the week on a bearish note as banks and coal plays dragged the benchmark index lower, keeping it tethered within a narrow range as investors remain wary of further tightening in China.

The benchmark Hang Seng Index finished off 1.31 percent at 22,949.56. The China Enterprises Index slumped 1.74 percent at the end of its worst week in a month.

On the mainland, bargain-hunters lifted the Shanghai Composite Index off a four-month low. The index closed up 0.84 percent at 2,728.02.


* Coal counters ran out of steam, with China Shenhua Energy Co Ltd down 6.4 percent in strong volume. Traders said investors were locking in profit after recent outperformance that had seen the sector easily outpace the benchmark. Shenhua's 7 percent gain in May compared with a flat month for the Hang Seng Index.

* Banks, the biggest weighted sector in Hong Kong, remained on the back foot over uncertainty surrounding a plan to restructure local government debt. China Construction Bank Corp fell 1.9 percent and was the top drag on the benchmark. Industrial & Commercial Bank of China Ltd fell 1.9 percent while Bank of China lost 1.2 percent.

* The debut of MGM China Holdings Ltd , the latest addition to the roster of casino operators listed in Hong Kong, caused a flutter in the sector, sending peers down as investors switched positions. MGM's valuation, at about 19 times forecast 2011 earnings, compares with about 25 times for Sands China Ltd and 26 times for Wynn Macau Ltd . Sands shed 1.4 percent while Wynn fell 3.9 percent. MGM China posted a modest 2 percent gain on its debut. (Reporting by Vikram Subhedar; Editing by Chris Lewis, sourced Reuters)

BHP Coal Mine Workers Vote in Favor of Right to Strike

By Jason Scott - Jun 3, 2011 10:33 AM GMT+0530

BHP Billiton Ltd. (BHP), the world’s largest mining company, may face the first strikes at its Australian coal mines in a decade after workers voted in favor of the right to take industrial action.

The union remains in talks with the BHP Billiton Mitsubishi Alliance after members today voted to support the right to take industrial action, Stephen Smyth, president of the Construction, Forestry, Mining and Energy Union’s mining and energy division in Queensland, said in a phone interview. There’s no possibility of a strike until after a workers’ meeting on June 10, he said.

About 4,000 union members at all seven mines in the Bowen Basin in Queensland state owned by BMA, the world’s largest exporter of steelmaking coal, are lobbying for improved working conditions. Unions in Australia are stepping up demands for job security and wage rises as surging commodity prices have mining companies including Melbourne-based BHP forecast to report record annual profit.

“BMA is continuing to meet with unions to complete negotiations around the remaining points of a new agreement,” BHP spokeswoman Samantha Stevens said today by phone. “We continue to make progress and as such we believe any industrial action would be premature. BMA and the unions have scheduled further meetings through to the end of July.”

Should negotiations break down, the union will give workers the option of taking industrial action, including strikes, Smyth said. The union would need to give BHP three days notice before any strikes could legally start, he said.
Output Threat

Any stoppages may further cut output at BHP, which reported a 14 percent drop in production last quarter as torrential rains in the early part of the year flooded mines. The nation’s coking coal exports plunged to 7.9 million metric tons in February, the lowest monthly volume since February 2009.

Almost all of the coal produced at the mines, with annual production capacity of 58 million tons, is shipped overseas for steel production, BHP said on its website. BMA is equally owned by BHP and Mitsubishi Development Pty. It directly employs more than 4,800 people, according to the website.

The union has been in negotiations for better job security for more than five months, Steve Pierce, a vice president of the Construction, Forestry, Mining and Energy Union in the state, said yesterday. One of the sticking points is a demand by workers to have a bigger say in a new “extended roster system” that the company plans to introduce, he said. (sourced Bloomberg)

JSW sees Rohne coal block out of ‘no-go’ area soon

Friday, Jun 3, 2011, 1:09 IST
By Promit Mukherjee

Mumbai ; JSW Steel, one of India’s largest steelmakers, sees a ray of hope for saving its Rohne coking coal block in Jharkhand, which has become off-limits for the company after the government designated it as falling under ‘no-go’ area for environmental reasons.

The company said there is a policy provision under which ‘no-go’ tag can be lifted from the strategic reserves that are scarce in the country.

Sajjan Jindal, vice chairman and managing director, JSW Group, recently told DNA Money that coking coal is scarce in India, is an important feedstock and a strategic reserve for the steel industry.

“While the Rohne block is not cleared yet, we understand that there is a sort of policy which allows strategic reserves to be used to the optimum, so we expect it to be cleared soon,” he said.

Sheshagiri Rao, chief financial officer of JSW Group, said, “While we are hoping an early resolution to the problem and have given representations to the government, we have already initiated land acquisition in Jharkhand,” said.

The company plans to build a 10 million tonne per annum (mtpa) plant in Jharkhand which is expected to be operational by 2020. It had been allotted an iron ore and a coking coal mine in the state with reserves of 250 mt and 460 mt, respectively.

It also has plans to build a 900 mw captive power plant and a 6 mtpa cement plant in the state. The total proposed area for the plant is 6,500 acres, which is currently being acquired.

Though the company’s current priority is its first 10 mtpa greenfield project in West Bengal, the Rohne coking coal block holds a lot of significance for JSW as it currently has zero backward integration in coking coal, which increases its input costs and affects its margins.

The block was allotted to a consortium of JSW Steel, Bhushan Power and Jai Balaji Group in 2007.

An analyst with an international brokerage said, there is a provision that the company might get a tapering licence under which a company is assured supply of coal in case it has done some substantial work in the mines. “So, for Rohne block too this can be a way out but at what price it will get the coal under such a licence is again uncertain,” the analyst said.

According to the data available with the coal ministry, besides a few companies which enjoy backward integration in coking coal, India has to import almost all its coking coal requirement. The country’s current reserves of coking coal stand at 33,413 mt against a massive thermal coal reserves of 267 billion tonnes.

In 2009-10, Indian companies, especially steel and cement, consumed a total of 40 mt of coking coal, out of which 16 mt was produced indigenously and the remaining had to be imported.

Last year the Union environmental ministry had classified 203 coal blocks, including both coking and thermal coal, as falling under ‘no-go’ zone, which is almost 48% of the total coal mining area available in the country, and had put 350,000 hectares under the area where environmental clearance could be given. But due to lobbying by the coal ministry and corporates, the number of blocks under the ‘no-go’ zone was reduced to 126, or approximately 10% increase in the mining area.

However, after insistence by the coal ministry some of the blocks were freed from the ‘no-go’ zone but it was not very well received by the steel and power industries, which have been demanding further relaxation. (sourced DNA)

Gerdau mulls options for iron ore sale in Brazil

Friday, 03 June 2011 02:09:57 (GMT+2)

Over this past week, Gerdau, Latin America's largest steelmaker, has been looking into various opportunities to sell excess iron ore it produces. According to media sources, Gerdau has said that its iron ore reserves are more than the company needs for its steel mills.

Gerdau is in talks with various steelmaking and mining companies to develop the 2.9 million metric tons of iron ore reserves. Gerdau is considering a partnership, IPO, an offtake agreement, or other opportunities.(sourced steelorbis)

Tags: iron ore , Brazil , Gerdau , raw mat , longs , South America , steelmaking , mining , investments

Baosteel acquires stake in Canada’s Noront Resources

Friday, 03 June 2011 02:12:42 (GMT+2)

Baosteel Resources International Co., Ltd., a subsidiary of Chinese steelmaker The Baosteel Group, acquired 20,234,967 units of mining company Noront Resources Ltd. Thursday-each unit consists of one common share and one half of one common share purchase warrant (Baosteel could exercise each warrant at a later date to acquire one common share of Noront). Baosteel now owns 9.9 percent of Noront, and if Baosteel chooses to exercise the warrants, Baosteel ownership will rise to 14.15 percent.

Noront Resources plans to use the proceeds of Baosteel's investment to fund its fiscal 2012 budget of C$17.6 million (US$18 million) which will be used to complete and expand Noront's current mining operations. (sourced Steelorbis)

Tags: China , Canada , Baosteel , raw mat , Far East , East Asia and Pacific , North America , mining , investments , M&A

Nippon Steel and Sumitomo Metal Industries to merge by October 2012

Friday, 03 June 2011 10:12:58 (GMT+2)

Japanese steelmaking giants Nippon Steel and Sumitomo Metal Industries have announced that they have lately submitted their relevant application files for their integration plan to Japan's Fair Trade Commission (FTC), adding that they intend to complete their integration by October 2012.

According to the official procedure, the FTC will carry out an investigation to the case in the coming one-month period, expanding the period by another 90 days if needed.

Nippon Steel is the largest steel producer in Japan, while Sumitomo Metal Industries ranks third in Japan in terms of its steel production. In 2010, the total crude steel production of the two steelmakers came to 47.89 million mt.

Once the plan is approved, the new company is expected to become the second largest steelmaker in the world, following ArcelorMittal. (sourced steelorbis)

Tags: Japan , Nippon Steel , Far East , East Asia and Pacific , steelmaking , M&A

Dry Bulk Market resurgence appears to be losing some steam - Nikos Roussanoglou, Hellenic Shipping

Friday, 03 June2011

The dry bulk market’s seems to be losing some steam, despite reports of growing Chinese demand for commodities, especially coal, on the back of growing power shortages. Yesterday, the BDI (Baltic Dry Index) managed to edge a bit higher by 0.27% to 1,489, with the Capesize market being the only one able to post daily gains. The Capesize Index was 1.15% higher to 1,934 points, but the Panamax segment was lower by 0.77%.

In a relative weekly report, Fearnley’s said that last week´s enthusiasm in the Capesize market has continued into this week, and the results are apparent in the rates owners are achieving. “West Australia up from usd 7.35 pmt to usd 7.75 pmt. And the strength in the Atlantic continued, with fixtures done this week at USD 13k p/d for round voyages, up from USD 12k. The transatlantic market has helped the Brazil /China trade, which has struggled to move upwards due to too many committed ballasters, and rates are now at usd 20.50 pmt, up from usd 19.75 pmt on Friday, as vessels open in the Atlantic are preferring to fix better numbers on the Atlantic RV route. On the period front there has been a few fixtures concluded for shorter period at healthier numbers such as USD 11250 for 4-6 months on a 178k dwt modern unit” said the shipbroker.

Regarding the Panamax market, Fearnley’s said that “after last week’s rush to cover prompt cargoes on the remaining spot ships with increasing rates, the market took a breather this week. The activity has been slower, and the curves have been pointing downwards in both hemispheres. Ascension day in several European countries on Thursday will probably not help on the activity, but mid week we see signs of more cargoes entering the market for mid/second half June. This will most likely affect owners´ rates, and push the market a bit up again in the Atlantic. Today the Tarv´s getting fixed in the region of 15,500 while fronthauls are being fixed in the low 20´s. In the Pacific the rounds are being fixed ard 13k while the backhauls are fetching around 6k. The period market has been somewhat more active this week with short periods being fixed with Feast delivery at ard USD 15,500” said the report.

Finally, the Handy/Supra market has in general been flat and un-exciting this week. “The Black Sea market is almost non existing while the US Gulf market is more active with grain and petcoke cargoes. Tarv´s are fecthing ard Usd 15, 500 while the South Atlantic is holding stable with rates hovering ard mid 20 ´s for trips back to the Feast. The Pacific market remains quiet. For Indo-India, Supras in North China are getting close to 11k. Nickel-ore rounds are getting firm rates in mid-high teens from Indonesia. WCI-China rates slided to 13k and from ECI around 12k. Red Sea, ferts on handymax/Supras are fixed at very mid 20´s pmt on voyage basis to WC India. Large Supras for RBCT/India round are now asking 14k. Short period deals done at 14-15k for large Supras” concluded the shipbroker’s report.

In a separate note, Commodore Research & Consultancy discussed the current power shortage issues that China faces and the fact that the government is now actively focusing more on constructing bases along the Yangtze River, Beijing-Hangzhou Grand Canal, and the coast.

“The Yangtze River, China's largest river, flows west-to-east from Qinghai province (located in western China) to Shanghai; the Beijing-Hangzhou Grand Canal stretches north-to-south from Beijing to the city of Hangzhou (located in Zhejiang province). Of strategic importance will be the city of Zhenjiang (located in Jiangsu province; please note the city of Zhenjiang is spelled similarly to Zhejiang province but the two are entirely unrelated).

The city of Zhenjiang will hold great strategic importance as a coal base because it is located on both the Yangtze River and the Beijing-Hangzhou Grand Canal. Additional coal bases will be set up along the river, canal, and China’s east coast. While there is no firm date for operation or exact estimate as to how much coal Zhenjiang and other coal bases will hold, early reports suggest that bases on the Yangtze River, the Beijing-Hangzhou Grand Canal, and the coast will hold as much as a total of 200 million tons of coal. We stress that plans have just been initiated, however, and it will be years before the bases are set up. In related news, the government recently announced that the Yangtze River will be further dredged to allow vessels with a carrying-capacity of up to 50,000 tons to be able to travel from Shanghai all the way to Nanjing (located in Jiangsu province) by 2015. We expect that the coal bases will be operational around this time as well.

China consumes roughly 3.5 billion tons of coal per year, however, so we stress that more than anything, these coal bases will eventually be used to ease inland transportation constraints when problems arise from transporting domestic coal from the western and central part of the country to end-users on the east coast Coal imports should be viewed in a similar fashion, as they make up only a fraction of the total amount of coal consumed in China every year. Surges in imports normally occur when demand is strong, port stockpiles are low, and when inland coal transportation constraints occur” concluded Commodore.
Source: Nikos Roussanoglou, Hellenic Shipping (sourced coalspot)

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Mongolian Mining close to buying Kerry Holdings

Friday, 03 Jun 2011

Mongolian Mining Corp the nation’s biggest coking coal exporter is close to buying a Mongolian mine from a unit of Kerry Holdings Ltd for USD 465 million.

According to two people with knowledge of the matter, Mongolian Mining plans to pay about USD 380 million in cash and issue USD 85 million of convertible bonds. The QGX coking coal mine, bought by a unit of Kerry Holdings in 2008, is adjacent to one already owned by Mongolian Mining.

Prices for coking coal, one of two key steelmaking raw ingredients, rose to a record in the first quarter, boosting appetite for mergers and acquisitions. Rio Tinto Group in April won control of Mozambique developer Riversdale Mining Ltd. following a AUD 3.9 billion offer in December.

People said that an announcement may come as soon. Calls to Mongolian Mining and Kerry Holdings after regular business hours weren’t returned.

Mongolian Mining, based in Ulaanbaatar, raised about USD 750 million in an initial public offering in October. The company said in its IPO prospectus that it was Mongolia’s biggest exporter of coking coal in the first half of 2010. (sourced from Bloomberg)

China drought threatens transport of coal

Friday, 03 Jun 2011

Beijing Times without citing anyone reported that China’s driest weather in decades is threatening river transport of power-station coal to eastern Jiangsu province. The drought has started to affect shipments on the Yangtze and Huai rivers.

Some areas in Jiangsu are facing the worst dry spell in 60 years, it said citing Song Yu a vice director at the provincial water resources office. The nationwide drought has cut hydropower output and intensified an electricity shortage in the world’s fastest growing major economy that relies on coal as fuel at more than 70% of its power plants. Boats delivered about 17 million tonnes of coal on the Yangtze in 2007.

Mr David Fang director of international cooperation at the China Coal Transport and Distribution Association said that “This will worsen the electricity shortage as coal supplies will be hampered, but given the relatively small shipment volumes on the two rivers, the impact will be limited.” (sourced from Bloomberg)

Gredelj delivers Riversdale coal locomotives

Friday, 03 Jun 2011

Riversdale Mining is taking delivery of six 1 067 mm gauge GT26CW diesel locomotives for the Benga coal project, 65:35 joint venture with TATA Steel which is expected to begin producing coal in Tete province during the second half of this year.

The 3 300 hp locomotives with EMD 16-645E3B engines were ordered from National Railway Equipment Co and are being built by Croatian supplier TZV Gredelj, which delivered the first to the port of Rijeka by road in late May. (sourced Railwaygazette)

CIC Energy terminates proposed acquisition by JSW Energy

Friday, 03 Jun 2011

TSX listed CIC Energy has terminated the proposed acquisition of the company by Indian group JSW Energy, citing failure to complete the deal by the deadline of May 31st 2011.

CIC now intends getting into negotiations with other potential buyers which had expressed interest.

Mr Warren Newfield CEO of CIC said that "We look forward to beginning discussions with other major corporations that have expressed interest in CIC Energy in recent months, as well as other parties. We believe this is the best course of action for shareholders. We are prepared to continue the process with JSW, but only on a non-exclusive basis."

CIC controls the Mmamabula Energy Complex in eastern Botswana, where it is looking at various power projects as well as an export coal project.

The CIC share price traded as high as CAD 17.50 in 2007-08, when the company was planning to build a 1,300 MW power station and associated coal mine at a cost of USD 3 billion to supply electricity to Eskom. That project has been repeatedly delayed by ongoing uncertainty in South Africa over the role of independent power producers in the country's power supply strategy. The decision by the South African government last year to go for a major nuclear build program and limit the involvement of coal fired IPPs was viewed as being extremely negative for CIC and other Botswana based coal companies. The CIC share price collapsed to CAD 1.21 before JSW made its offer in November to acquire the company through a CAD 7.42 per share cash offer.

CIC shares soared back to CAD 7.25 by January, from where they have drifted back to current levels of around CAD 3.16. A key condition precedent to the JSW takeover was the requirement that JSW obtain a letter of comfort from the Botswana government concerning the key commercial terms for the proposed 300 MW Mookane domestic power project. That was not obtained by the May 31st 2011 deadline, triggering CIC's decision to end the exclusive agreement with JSW.

Mr Greg Kinross president of CIC said that "It is disappointing that after almost eight months the transaction with JSW has not been completed, despite several extensions to the original deadline." (sourced from Miningmx)

Vale sees Q3 iron ore price steady

Friday, 03 Jun 2011

Mr Murilo Ferreira chief executive of Vale said that Brazilian mining giant Vale sees iron ore prices for clients remaining flat in the third quarter compared to the second quarter.

Mr Ferreira at a press conference said that "The price will remain practically unchanged for the third quarter."

Mr Ferreira said credit tightening in China is unlikely to slow the Asian giant's economic growth.

He added that "I don't believe in a slowdown in China, but rather a movement in the economic cycle. I expect a strong second semester for China.”

Spot market prices for iron ore remain close to all time highs, helping Vale and other iron ore miners post record profits. Under the quarterly iron pricing system the company created last year, prices for a given quarter are based on an average of spot market prices during the three previous months. (sourced from Reuters)

Miner Vale losing Brazil market share, eyes steel

Thu Jun 2, 2011 9:44pm GMT

* Steel projects to boost Brazil iron market share
* Dispute over steel helped lead to CEO replacement

RIO DE JANEIRO, June 2 (Reuters) - Brazilian mining giant Vale (VALE5.SA: Quote) is losing its dominant position as a supplier of iron ore to Brazil's steelmakers, a loss of market share it hopes to check buy building its own mills at home.

Rio de Janeiro-based Vale, the world's second-largest mining company, supplies about half the iron-ore used by steel mills in its home market, an amount expected to slip to 30 percent by 2015, said Jose Carlos Martins, Director of Marketing, Sales and Strategy.

In 2004, 70 percent of all steel made in Brazil was made with ore from Vale's mines. Vale's largest market is China.

To regain Brazilian iron-ore market share, Vale is investing in local steel production by taking minority stakes in Brazilian mills, partially abandoning a decade-old policy aimed at avoiding competition with its steelmaking clients.

"Vale needs to pay attention to this loss of market share in Brazil," Martins said during an industry conference. "To participate in this market, you have to produce steel."

Part of the decline has resulted from large local steel makers such as Gerdau (GGBR4.SA: Quote) and CSN (CSNA3.SA: Quote) boosting their own production of iron ore, Martins said.

Vale, which has seen profit and volumes soar as it expanded exports to China and got into new businesses in Canada, Africa and the Middle East, expects to see its domestic iron ore share rise again as new mills come on line.

Government complaints that Vale was not doing enough to spur the steel industry were a key part of a state-led campaign to push former Chief Executive Roger Agnelli from office and replace him with former Vale executive Murilo Ferreira, who began last month.

Vale is a partner with Germany's ThyssenKrupp (TKAG.DE: Quote) in the CSA mill in Rio de Janeiro, with capacity to produce 5 million tonnes per year of steel slab.

It originally owned 10 percent of the project, and now owns about 26 percent.

In coming years it plans to open three new steel mills, including two it is pursuing entirely on its own: the 5 million tonne a year Cia. Siderurgica de Ubu in Espirito Santo state and the Acos Longos de Para mill in Para, with a capacity of 2.5 million tonnes per year.

It is also building the Cia. Siderurgica de Pecem joint venture with Korea's Posco in the northeastern state of Ceara. CSP, as its known, is designed to produce 3 million tonnes per year of slabs in its first phase, most for export to Korea.

(Reporting by Roberto Samora and Alberto Alerigi, Writing by Brian Ellsworth and Jeb Blount; Editing by David Gregorio, sourced Thomson Reuters)

Rio Tinto to announce land deals with Aborigines: reports

Thu Jun 2, 2011 10:19pm GMT

MELBOURNE, June 3 (Reuters) - Global miner Rio Tinto is set to announce a series of land compensation deals with Aboriginal communities in Australia's Pilbara region worth several billion dollars over 40 years, Australian media reported on Friday.

The agreements with five groups, which has taken seven years of negotiations, will cover 71,000 square kilometres -- about the same size as Ireland -- in the Pilbara in northwestern Australia and could potentially double production of iron ore, the Australian newspaper said.

Iron ore production could increase from about 220 million tonnes a year to more than 400 million tonnes, reports said.

The benefits for indigenous communities across the Pilbara are likely to be substantial, with a direct 0.5 percent share of production delivering revenue streams over the 40-year life of new mines. (Reporting by Victoria Thieberger; Editing by Balazs Koranyi,sourced Thomson Reuters)

Nucor CEO says Vale, IOC to supply Lousiana mill ore

Thu Jun 2, 2011 10:37pm GMT

* Nucor has ore accords for 1st of 4 Louisiana DRI units
* Brazilian, Canadian companies to supply Nucor DRI ore
* Nucor has 20-year natural gas deal for new DRI unit
* Nucor considers future Brazil joint venture expansion

By Jeb Blount and Alberto Alerigi

RIO DE JANEIRO/SAO PAULO, June 2 (Reuters) - Nucor, (NUE.N: Quote) the second-largest U.S. steelmaker, has contracts with Vale SA, Samarco and Iron Ore Co of Canada to supply ore to the first of four iron-production units to be built near New Orleans, Chief Executive Dan Dimicco said.

The St. James Parish, Louisiana direct-reduction-iron, or DRI unit also has a 20-year, natural-gas supply contract, Dimicco told Reuters on the sidelines of a conference in Sao Paulo. He declined to name the supplier.

The ore for the Louisiana unit will come from Vale (VALE5.SA: Quote) and Samarco mines in Brazil and IOC mines in Newfoundland and Labrador in Canada, he said. Samarco is a joint mining and pellet venture between Vale and BHP Billiton (BLT.L: Quote). IOC's main shareholders are Rio Tinto (RIO.L: Quote) and Mitsubishi. (8058.T: Quote)

These are the same sources for iron ore used at Nucor's 2-million-tonne-a-year DRI mill in Trinidad and Tobago.

Dimicco also said Nucor is considering Brazil for future expansion.

"We are more than comfortable to be a strong minority shareholder, something like 49 percent would be our objective," he said. "We have to have a strong partner with operating experience."

DRI is used to make sponge iron, a raw material mixed with scrap metal in electric blast furnaces to make steel.

Sponge iron requires less energy to make than pig iron, the main new iron source for electric mills, and has more iron content. This allows steelmakers to use lower-quality scrap when making steel.

The St. James Parish facility is expected to group the DRI units in two plants with the capacity to produce 5.5 million tons (4.99 million tonnes) of sponge iron a year and require an investment of $3 billion, Nucor said in March. (Editing by Robert MacMillan, sourced Thomson Reuters)

China to raise electricity prices for some users

Friday, 03 Jun 2011

Reuters reported that China would raise electricity prices for some users by about 3%, the first increase since 2009 as it tackles its worst power shortage in seven years.

The power price rise affects industrial, commercial and agricultural users in 15 provinces, state media said after a briefing by the National Development and Reform Commission, China's top economic planning agency.

But authorities in the world's second biggest economy may have already played one of their strongest cards to combat the shortages as the NDRC revealed power companies in 13 of the 15 provinces have been paid higher prices for their electricity since April 10th 2011.

China's electricity demand is running so far ahead of supply that it is expected to be short of 30 gigawatts to 40 gigawatts of power capacity this summer, twice the deficit caused in Japan by the earthquake and tsunami on March 11th 2011.

Economists said that China has created the shortage by foisting low prices on power companies, who have little incentive to produce electricity because of high coal costs.

It will avoid a big inflationary effect, economists said, because it excludes residential users but it may also have little impact on the power shortages as it means any fill up power supplies in those 13 provinces already happened almost two months ago. The other two will follow on June 1st 2011, along with the end user prices in all the provinces.

Mr Wang Wei, senior analyst at Guotai Junan Securities, said that "If you take a look at the power shortages over the past month, you can see that the hike had no significant impact on the current power shortages. Actually, it didn't have the impact it should have because after the on grid power price hike in April, coal prices rose again, eroding the power price hike. Coal imports could rise after the power rise hike as coal producers and trading companies are likely to raise coal prices, triggering more coal imports. Every CNY 0.01 rise in power price could offset an increase of CNY 50 in coal prices."

At an average of CNY 0.02 per kilowatt hour, that would add CNY 100 to a tonne of coal, which was trading around CNY 850 per tonne on May 20th 2011.

Chinese coal imports rose in April after a slow start to the year, and analysts at Commonwealth Bank of Australia said that rising prices suggested further Chinese buying.

Mr Jianguang Shen, chief economist at Mizuho in Hong Kong, said the government would try to support power producers by ordering big state owned coal miners not to increase their prices, but it would be difficult to stop prices rising.

While higher coal costs may swamp the effect of the price rise on the supply side of the market, power consumers may not flinch at their own increase, which averages CNY 0.0167 per kilowatt hour.

An official at a Chinese steel mill said that "Steel mills aren't too concerned with power price increases because most of the costs come from raw materials like iron ore, coal. We're not asking for power price increases but they are better than being cut off."

Still, analysts say the government's efforts to raise prices, both those the electricity grid pays to producers and those it charges consumers, are a step in the right direction, with little adverse impact on the overall economy.

Mr Liu Shujie, a senior NDRC economic researcher, told state television that it would raise consumer price inflation by only 0.05 percentage points, while Mr Lin Boqiang, director of the Center for Chinese Energy Economics Research, said the price rises would raise industrial prices by 0.5 percentage points.

Mr Lin told Reuters that "But look what will happen if electricity shortages aren't solved: the inflationary pressures will be even larger because the price of raw materials will continue to surge because of heavy demand. In the end, looking at the power shortages, there is simply no choice but to raise prices."

China has already cut power supplies to some industrial users in eastern, southern and central regions as pent up demand rebounded after local governments ordered power cuts in late 2010 for the purpose of achieving energy saving goals. The State Grid of China, the country's dominant power distributor, has said it will cut supplies to more industrial users in summer, when the shortfalls are expected to worsen.

Mr Shen at Mizuho said that "Price rise was definitely not the last one. But it depends on the coal price and on a lot of things, like CPI inflation and the power shortage situation."

According to the State Electricity Regulatory Commission, China's five state owned power generating groups lost more than CNY 10 billion on their thermal power operations in the first four months of the year. The five groups, including the parents of listed firms China Power International Development Limited, Datang International Power Generation Co Limited, Huadian Power International Corp Limited and Huaneng Power International Inc, had racked up more than 60 billion yuan in losses in past three years.

The end user price increase ranged from CNY 0.004 per kWh to CNY 0.024 per kwh in 15 provinces: Shanxi, Qinghai, Gansu, Henan, Jiangxi, Hainan, Shaanxi, Shandong, Hunan, Chongqing, Anhui, Hubei, Sichuan, Hebei and Guizhou. (Sourced from Reuters)

Rio Tinto seals land use deal with Aborigines

Jun 2, 2011 11:17pm GMT

* Secures current, future Pilbara iron ore operations

MELBOURNE, June 3 (Reuters) - World no.2 iron ore miner Rio Tinto has agreed to pay an undisclosed percentage of iron ore sales to traditional landowners in Western Australia clearing the way for its expansion plans.

Rio said on Friday it had signed land use partnerships with five Aboriginal communities and expected to seal deals with four remaining communities where its mining or infrastructure operations are.

It will make royalty-like payments, which newspapers estimated would be worth several billion dollars over 40 years, to the landowners in return for consent for all new iron ore mine and infrastructure developments on their lands.

"For Rio Tinto these participation agreements secure platforms of stability and business certainty for decades into the future," Rio Tinto iron ore chief executive Sam Walsh said in a statement.

The agreement includes full support for two key port expansions, essential to Rio's plans to increase iron ore production by 50 percent to 333 million tonnes a year by 2015.

Rio's side of the agreement includes providing employment and training and meeting certain standards on environmental management. (Reporting by Sonali Paul; Editing by Ed Davies, sourced Thomson Reuters)

Orissa to speed up land acquisition work for ArcelorMittal project

Friday, 03 Jun 2011

BS reported that after successfully initiating the land acquisition work for the INR 54,000 crore POSCO project, the Orissa government has now shown its readiness to start the same process for another big ticket investor ArcelorMittal, that has proposed to set up a 12 million tonne per annum steel plant in the state at a cost of around INR 40,000 crore.

Mr Raghunath Mohanty minister for industries and steel & mines said that "A few days back, the steel & mines department had taken a review meeting where the representatives of ArcelorMittal were present. For ArcelorMittal, the gram sabha has already been conducted in seven out of 15 project affected villages under Patana tehsil in Keonjhar district. Our department has issued directions to the Keonjhar district collector to expedite the process of conducting gram sabhas in the remaining villages."

The minister exuded confidence that ArcelorMittal would definitely set up the project in Orissa. The state government has already accorded administrative approval for acquisition of 4905.19 acres of private land for it. The state water resources department has allotted 140 cusecs of water for this steel project.

ArcelorMittal had entered into a memorandum of understanding with the state government on December 21st 2006. The mega project involved an investment of around INR 40,000 crore. As per the MoU, the project needed around 8000 acres of land.

The state government owned Industrial Promotion and Investment Corporation of Orissa Limited had approved 7002.72 acres of land for it and an additional 750.58 acres for the plant township. Out of the approved land size, government land is 2583.53 acres with the balance 4419.18 acres being private land. The villages where land is to be acquired for the steel plant are Chilida, Angikala, Chemana, Nuagaonbalabhadrapur, Raikala, Dharuapada, Kimirdapasi, Bhringaraj, Birudipusi, Padmakesharpur, Kodakhemana, Bradaungua, Jamunapasi and Padmapur. (sourced Business-standard)

BHP Mitsubishi coal miners approve right to strike

Fri Jun 3, 2011 6:26am GMT

* Yes vote on industrial action opens door to strike
* Vote will not necessarily lead to industrial action
* Talks planned through at least end-July to avert strike (Adds details)

By James Regan

SYDNEY, June 3 (Reuters) - Miners at Australia's BHP Billiton Mitsubishi Alliance (BMA), the world's biggest exporter of metallurgical coal, voted in favour of the right to take industrial action but gave no indication that they were preparing to strike.

A stoppage would hit BHP Billiton just as Australia's coal mining sector, which supplies nearly two-thirds of the world's traded steel-making coal and more than 10 percent of the country's goods exports, was getting back on its feet after heavy summer rains hobbled operations at dozens of collieries.

It was unlikely that the mine workers representing around two-thirds of BMA's workforce would lay down their tools immediately, with BHP saying meetings with unions are scheduled until the end of July.

Union officials have repeatedly held out the possibility of a strike only as a last resort if talks with the alliance broke down. It's been more than a decade since there was industrial action at BMA mines.

The vote does give 4,000 employees at BMA's coal mines in Australia's Queensland state the right to consider industrial action against the BHP-Mistubishi joint venture.

Coal miners have complained about different pay levels for union workers and non-union contractors and are worried over job security, according to Construction Forestry Mining and Energy Union Queensland district vice-president Steve Pierce.

"BMA is continuing to meet with unions to complete negotiations around the remaining points of a new agreement," a BHP Billiton spokeswoman told Reuters.

"We continue to make solid progress and as such, industrial action would be premature," she said.

Any disruptions could also have adverse implications for the Australian economy.

The country's overall metallurgical coal exports accounted for A$24.5 billion of Australia's A$202.17 billion in total goods exports last year, according to government data. Only iron ore contributes more in export revenue.

Australia is the world's biggest exporter of coking coal and BMA's mines, which have a combined production capacity of more than 58 million tonnes per year, account for about a fifth of the global trade and a third of Australia's exports.

BMA and the unions have scheduled meetings through to the end of July to discuss demands, which include higher wages and assurances over job security, the spokeswoman added.

The talks focus on six of the seven mines operated by the alliance.

Its three-million-tonnes-per-year capacity Broadmeadow colliery already holds a separate agreement with the alliance and was not part of the vote, according to BHP Billiton.

Industrial action at the mines could set back recovery efforts at Australian coal mines already hard-hit by natural disasters earlier this year.

Queensland state lost up to 30 million tonnes of coal production when monsoon rains and a cyclone battered the eastern seaboard between November and February, exacting a high financial toll on the national economy.

The drop, equivalent to 15 percent of annual output, has curbed economic growth and exacerbated a worldwide shortfall of coal. (Additional reporting by Ian Chua; Editing by Michael Urquhart, sourced Thomson Reuters)

Indian iron ore mining mess - Loading at Paradip port hit

Friday, 03 Jun 2011

BL reported that the number of rakes of iron ore moved to Paradip port for exports has dropped.

Sources in the South Eastern Railway said that in February 2011, six rakes a day on an average were moved into Paradip port, which has since declined to around three rakes. During the same period, throughput at Haldia port has increased from two rakes to 2.5 rakes a day. Iron ore loading for Visakhapatnam port, too, has increased from around 2.75 to three rakes a day.

Earlier, East Coast Railway used to move two to three rakes a day into Paradip, as against virtually nothing now. This has led to two unsatisfactory developments for the railways. First, the rail coefficient has dropped to 51% now from 65% in 2010-11. More ore is being transported by road to Paradip than before. Second, the railways is moving empties or empty rakes to the port to facilitate back loading of imported cargo, particularly coal. On an average, 7 to 8 empties are being moved into the port against none previously, adding to the cost of the railways.

When contacted, Paradip port sources said that iron ore exports through the port dropped in past couple of months despite 13% to 14% growth in the port's overall traffic throughput. It added that "We would have achieved a much higher traffic growth but for not so satisfactory situation on the iron ore front."

While neither the port nor the railways would comment on the why iron ore loading has decreased, inquiries reveal that the crackdown on illegal mining by the Orissa Government could be a major reason. The crackdown has led to closure of several mines in iron rich Banspani Jaruli area.

According to one estimate, about 25% of the mines at Joda under Banspani Jaruli area have not been functioning for past few months. Particularly hit are customers of the wagon investment scheme of the railways, especially traders.

They have invested in rolling stock to get an assured supply of rakes at a concessional freight for uninterrupted movement of ore. Now the rakes are without the ore. They, therefore, have stopped placing indents with the railways. (sourced TheHinduBusinessline)

Iron Ore-Key indexes hold at 2-month lows

Fri Jun 3, 2011 4:52am GMT

* Buying interest from Chinese mills remains thin
* Rio Tinto says to study pricing iron ore in yuan
By Manolo Serapio Jr

SINGAPORE, June 3 (Reuters) - Spot iron ore prices steadied on Friday, with key indexes holding at more than two-month lows, as expectations of more price falls kept Chinese buyers at bay.

Australia's 62-percent Newman iron ore fines were quoted at $174-$176 a tonne, including freight, on Friday, unchanged from Thursday, Chinese consultancy Umetal said.

Indian ore with 63.5/63 percent iron content was also steady at $175-$178.

"We don't see much buying interest from the steel mills. Many are still on a wait and see stance on where prices will settle for imported ore so the small and midsized mills tend to use more domestic ore," said a Shanghai-based trader.

Spot prices may be consolidating, Commonwealth Bank of Australia said in a note.

"Even as spot has declined in recent weeks, forward swaps have fallen less and in fact are now higher than the curve a week or two ago," the bank said in a note.

"This suggests that forward buying interesting is picking up and, if this is sustained, we'd expect declines in spot prices to ease in the next week or two."

Iron ore price indexes, which global miners use to set quarterly contract rates, were flat to slightly lower on Thursday, holding at levels last seen in late March.

Metal Bulletin's 62 percent benchmark .IO62-CNO=MB slipped 20 cents to $170.42 yuan a tonne, its lowest since March 30.

Similar indexes by Platts IODBZ00-PLT and The Steel Index .IO62-CNI=SI were steady at $171 and $168.80, respectively, also their lowest since late March.

In the swaps market <0#SGXIOS:>, prices for nearby contracts fell for a second day on Thursday after recent steep gains.

The June contract fell $1.75 to $168 a tonne, July dropped $2 to $166.63 and August slid $1.44 to $165.94.

The volume of iron ore swaps cleared on the Singapore Exchange reached a record 6,905 contracts, equivalent to 3.45 million tonnes, 56 percent more than the previous record set in April 2010.

Rio Tinto , the world's No. 2 iron ore miner, said on Friday it would study the possibility of switching iron ore price settlements to Chinese yuan.

"For us, it's a complex issue," Rio Tinto iron ore chief Sam Walsh told a business lunch, when asked whether there were any plans to switch to yuan for settling iron ore prices.

"It's certainly something we will be looking at and studying," he added. "We don't have any initial plans," he said, emphasising that having iron ore priced in U.S. dollars was an important hedge for the company. (Editing by Himani Sarkar, sourced Thomson Reuters)

POSCO war zone - Orissa to renew lapsed agreement

Friday, 03 Jun 2011

ET reported that the stars are finally beginning to shine for global steel major POSCO. While the Orissa government has decided to renew its lapsed agreement with the South Korean firm in Karnataka, where POSCO is exploring options to build a second steel plant, land has been identified by the government.

With land acquisition for POSCO's much delayed 12 million tonnes steel project near Paradip in Orissa gathering pace, the Mr Naveen Patnaik government has decided to rework the agreement, signed in 2005, by amending vital clauses to pacify local population opposing the project.

According to a senior official of the Karnataka Industrial Areas Development Board, POSCO, which is bringing in India's largest foreign direct investment so far through the INR 55,000 crore Orissa steel project, will likely be given 3,382 acres in Halligudi village, in Gadag district of Karnataka.

The official said that "There is immediate resistance from farmers but when you give them an acceptable price they are okay. In this case, the land identified is dry land with jowar crops."

However, the government will also have to face objections, measure and verify land titles along with the revenue department, before land can be transferred.

The official said that POSCO has deposited INR 60 crore for the land in Karnataka, adding the project can avail gas from the proposed Dabhol-Bangalore pipeline that will pass through the region for the proposed plant's 400 MW power plant. Water can be drawn from the Upper Krishna region.

In Orissa, the renewal of the previous MoU had become mandatory as questions were raised on legality of land acquisition by the state government, without having a valid agreement. A public interest litigation is also pending before the Orissa High Court challenging the acquisition process.

The meeting between the state government and POSCO India will also include issues such as iron ore swapping, reservation of jobs for locals, water supply and corporate social responsibility spending. The project has also been facing opposition on water supplies from the Naraj dam over Mahanadi near Cuttack.

State water resources department principal secretary Mr Suresh Chandra Mohapatra told ET the government was exploring option of providing water from Hansua River.(sourced from ET)

Steel projects remain on paper in Karnataka - Report

Friday, 03 Jun 2011

BS reported that the Karnataka government, which attracted global steel majors a year ago, has seen little progress in realizing their investment. One year after holding the global investors meet in June 2010, the progress in securing clearances for the iron and steel projects, which constituted more than half of the investment proposals, is negligible.

The state had signed MoUs with large steel companies like ArcelorMittal, POSCO, TATA Metaliks, JSW, NMDC, Adhunik Metaliks, Surya Roshni and Hazira Steel Limited among others for setting up steel mills with a total capacity of 45 million tonne per annum at a combined investment of INR 253,000 crore.

While the Mr BS Yeddyurappa led government left no stone unturned to give clearances on its part, many projects are still on paper and held up due to issues of land acquisition and central clearances for mining leases among others.

Mr Murugesh R Nirani, minister for large and medium industries, told Business Standard that "We have already recommended to the Centre for allotting mining leases to six steel companies like Arcelor Mittal, POSCO, JSW, Bhushan Steel, Surya Roshni and KIOCL Limited. It is now up to the Centre to give the clearance."

He said that of the 389 MoUs signed by the government, 27 projects have already been completed and commissioned, involving an investment of a little over INR 2,000 crore, which is less than 1% of the investment committed during the GIM in 2010. Another 218 projects are in their various stages of completion.

Mr Nirani said that the state government is in the process of giving water linkage for many of these steel projects. He added that "We have 170 thousand million cubic feet water available from Krishna tribunal, of which 10% would be allocated for steel projects."

As far as the big ticket steel projects are concerned, the state government has achieved considerable progress in terms of land acquisition for ArcelorMittal. The government has already acquired close to 2,000 acres in Kuditini village in Bellary district. The company has so far deposited INR 260 crore for the purpose.

Korean steel giant POSCO recently identified land in Ron taluk of Gadag district for its 6 million tonne per annum steel plant. The Karnataka Industrial Area Development Board has issued preliminary notification for acquisition of 3,000 acres for this project. Surya Roshni has selected Bagalkot for its 6 million tonne per annum integrated steel plant with 500 MW captive power plant at an estimated investment of INR 24,000 crore.

Bhushan Steel Limited has identified land in between Bagalkot and Koppal for its 6 steel plant with 600 MW co gen project at an investment of INR 27,928 crore. TATA Metaliks has selected Haveri district for its 3 million tonne per annum integrated steel plant at Rs 15,000 crore. The preliminary notification has been issued for this project.

Mr Nirani said that "We are hopeful that most of these steel projects will materialize in the next four years to five years. We are satisfied with the progress achieved so far in these projects. In another six months at least one of the projects will see start of civil work."

(sourced Business-standard)

Riversdale in offtake deal for Benga coal

Fri Jun 3, 2011 5:58am GMT

JOHANNESBURG, June 3 (Reuters) - Riversdale Mining said on Friday that it had entered into an offtake agreement with trader Trafigura for thermal coal from its Benga coal mine in Mozambique.

"The take-or-pay agreement covers all thermal coal produced from the Benga Coal Mine during stage 1 of the mine's development and is valued at over $200 million at forecast thermal coal prices," Riversdale said in a statement.

It said the agreement would help drive profits during the first stage of the mine's development. Riversdale's key assets are its Benga and Zambeze projects in Mozambique, which could supply up to 10 percent of the global market for coking coal, a key ingredient in steel-making.

Global miner Rio Tinto , which won control over Riversdale in April, has said it will move quickly to work Riversdale to accelerate development of the projects, with Benga due to start exporting coal later this year. (Reporting by Ed Stoddard, sourced Thomson Reuters)

2 Indian steel major hike flat steel prices - Report

Friday, 03 Jun 2011

Press Trust of India reported that two leading steel makers, JSW and Essar Steel, have hiked rates for flat products by INR 600 per tonne to INR 1,000 per tonne.

The report cited some company officials as saying that “On the back of rising input costs and strengthening of international prices over the last couple of weeks, there is a case for upward revision of steel prices.”

The report added that However while SAIL has kept prices at last month's levels, TATA Steel is yet to decide on any move. (sourced from PTI)

Thursday, June 2, 2011

Rio Tinto to purchase one bln USD in China in 2011

Thursday,Jun02, 2011

SHANGHAI, June 2 (Xinhua) -- Anglo-Australian mining company Rio Tinto plans to purchase one billion U.S. dollars of commodities in China in 2011, a company official said Thursday in Shanghai.

Rio Tinto plans to purchase 14 billion U.S. dollars in commodities this year, according to Scott Singer, the company's global purchase head.

Singer said that there is still a great deal of room for more purchases in China, as the company's 2011 China purchases will amount to less than ten percent of its global purchases.

Rio Tinto previously purchased 500 million U.S. dollars' worth of commodities in China in 2010. The company has increased its variety of commodities purchased in China in correlation with its increasing purchase amounts, Singer said.

As Rio Tinto's largest single market, China contributes about one-fourth of Rio Tinto's annual income. The company's sales in China have jumped from 400 million U.S. dollars in 2000 to 16.7 billion U.S. dollars in 2010. Editor: Wang Guanqun sourced

Formosa Plastic issues tender for 500000 tonnes of coal

Thursday, 02 Jun 2011

Taiwan’s Formosa Plastic Corporation has issued a spot tender for the supply of 500kt of thermal coal with a minimum CV of 5,700kcal/kg GAR. Delivery is between August 1 and December 31 and bids close May 31.

(sourced from Coalportal)