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Saturday, July 23, 2011

Karnataka mining scandal ensnares BJP leaders

Jul 22, 2011
By C.J. Kuncheria and James Pomfret, Reuters

NEW DELHI (Reuters) - A judicial report has indicted top ministers with illegal mining in BJP-ruled Karnataka, an explosive charge that will hurt the party's anti-graft campaign against Prime Minister Manmohan Singh and his government.

Karnataka, the country's second largest iron ore producing state, has long struggled with illegal mining and become a showcase of a failure by institutions to crack down on graft and where politics and business are closely intertwined.

Justice Santosh Hegde, an independent ombudsman tasked with investigating charges of corruption in the southern state run by the Bharatiya Janata Party (BJP), confirmed on national television the contents of the report leaked to local media.

The report is an embarrassment for the BJP, which has aggressively taken on the Congress party-led federal coalition government over a series of scandals.

The BJP may be forced to sack the top officials implicated in the report to avoid a collapse of the state government.

Three ministers in Karnataka are accused of charging miners up to 45 percent of their produce before allowing it to be transported to ports, costing the state coffers more than 18 billion rupees ($400 million) in lost revenue, Hegde said.

The state's Chief Minister B.S. Yediyurappa was also named in the report but the specific allegations against him were not revealed.

"It's a huge racket. As a matter of fact, the CM (chief minister) is responsible for what's happening," Hegde was quoted by the Times of India and Indian Express newspapers as saying.

Yediyurappa is on holiday abroad and his spokesman, K.P. Jagadish, declined to comment on the report saying it had not been presented to the state government yet.

The chief minister has in the past denied any wrongdoing.

"Let the report come out. We will take adequate and appropriate action once we have studied the report," BJP spokeswoman Nirmala Sitharaman said.

The ongoing tussle in Karnataka resulted in the banning of iron ore exports from the state for a period. The state accounts for about a quarter of the country's iron ore exports.

Yediyurappa is one of the few leaders in the party with a mass following.

"With the monsoon session of parliament days away, the BJP can hardly expect to put the UPA (federal government) on the mat on the issues of corruption and governance unless it cleans house in Karnataka," said a Times of India editorial on Friday.

Corruption and red-tape have long hindered India, Asia's third-largest economy, from maximising its growth potential.

India is ranked 87th in Transparency International's 2010 corruption perception index, behind China, Brazil and Greece, a situation consultancy firm KPMG says could hurt economic growth.

Public anger has risen sharply, with people blaming politicians of all hues for maintaining a situation where bribes have to be paid for everything from a school admission to getting a death-certificate.

Topping the scandals is a charge a telecoms minister rigged the 2007/08 issuance of lucrative telecoms licences, causing a loss of $39 billion to the state coffers. The minister, since fired, is in prison along with several executives pending trial.

Perceptions of government inaction have built up massive support for the anti-graft campaign of veteran social activist Anna Hazare, who went on a hunger strike in April to demand the creation of an independent ombudsman to investigate charges of corruption against senior officials, including the prime minister.

Fitch declares default, Greece pledges no let-up on debt

July22, 2011

(Reuters) - Fitch ratings agency declared Greece would be in temporary default as the result of a second bailout, which Athens said had bought it breathing space.

But the agency pledged to give Greece a higher, "low speculative grade" after its bonds had been exchanged and said Athens now had some hope of tackling its debt mountain, which most economists still expect to force a deeper restructuring in the future.

An emergency summit of leaders of the 17-nation currency area agreed a second rescue package on Thursday with an extra 109 billion euros ($157 billion) of government money, plus a contribution by private sector bondholders estimated to total as much as 50 billion euros by mid-2014.

Under the bailout of Greece, which supplements a 110 billion euro rescue plan by the European Union and the International Monetary Fund in May last year, banks and insurers will voluntarily swap their Greek bonds for longer maturities at lower rates.

"Fitch considers the nature of private sector involvement… to constitute a restricted default event," said David Riley, Head of Sovereign Ratings at Fitch.

"However, the reduction in interest rates and extension of maturities potentially offers Greece a window of opportunity to regain solvency, despite the formidable challenges that it faces," he said.

The summit agreed the region's rescue fund, the European Financial Stability Facility, will be allowed to buy bonds in the secondary market if the European Central Bank deems that necessary to fight the crisis.

It can also for the first time give states precautionary credit lines before they are shut out of credit markets, and lend governments money to recapitalise banks, both moves which Germany blocked earlier this year. For more visit Reuters

An Indian Port set a world record for conventional coal dischargin

Sunday, 24 July 11

Krishnapatnam Port has set a World record for discharging 106,171 tons of steam coal in just 24 hrs using the conventional unloading system in form of advanced Mobile Harbor cranes, said an e-mail statement from KPCL.

Vessel MV. Grand Clipper carrying 137,495 tons of steam coal berthed at Krishnapatnam Port at 07:20 hrs IST on July 22, 2011 and the discharging commenced at 10:30 hrs IST the same day. The record was achieved at 10:30 hrs IST on 23rd July 2011. Remaining cargo is expected to be discharged by tomorrow early morning.

This feat surpassed Krishnapatnam Port’s previous record of discharging 95,528 tons of steam coal in 24 hrs which was also achieved from the same vessel last month on June 17, 2011.

This achievement is the first ever in the history of any port in India & possibly in the world.

ACC Limited, the receivers of the cargo has expressed their joy to be a part of this record and has appreciated the port management, staff, workers and others who helped in achieving this marvelous feat, the statement further said.

(sourced coalspot)

Mahagenco may stop use of washed coal

Sat, Jul23,2011
By Ashish Roy & Mazhar Ali,TNN

NAGPUR: Power generation company Mahagenco is doing a rethink on use of washed coal due to poor quality of coal supplied by the washeries and in light of several irregularities in washing operations. The company had stopped supply of coal to all the seven washeries for three weeks. However, deputy chief minister Ajit Pawar, who holds the power portfolio, asked Mahagenco to temporarily start supply to the four supplied by WCL from Thursday.

Pawar will take the final decision on use of washed coal. He has convened a meeting of washery operators and officials of Mahagenco and WCL on Monday.

Mahagenco sources told TOI that coal supply to seven washeries, which supply washed coal to the company, had been stopped from July 1. The seven washeries are - Bhatia International, Gupta Coal, Indo Unique Flames, Aryan Beneficiaries (Chandrapur) - supplied by WCL and Global Minerals, Aryan Beneficiaries (Korba) and Spectrum Coal and Power - supplied by SECL.

Coal is washed to improve its quality. The coal from mines contains stones, other minerals and other contaminating materials. These cause boiler tube leakages and reduce efficiency of power plants. Mahagenco washes 17 metric tonne (MT) of the total 40 MT coal it uses.

Mahagenco sources said that around six lakh tonne coal was lying with the washeries. Hence it stopped issuing delivery orders (DOs) to coal companies. These companies provide coal to the operators only on receipt of DOs from Mahagenco.

Sources further said that massive irregularities had come to light in some washeries. It was found that they were selling coal allotted for washing in open market. "The rates of coal are very high in open market. Coal having 36% ash content is fetching Rs 4,500 per tonne. We rarely receive washed coal consignments on time," a generation company official said.

The official further said that Mahagenco had also found that some washery operators had apparently managed to replace samples before they reached the laboratory in Nagpur. "In one case the washed coal had 40% ash content when tested at the power station. However, it showed 26% ash content at our Nagpur lab. All these things have made Mahagenco to do a rethink on washed coal."

Mahagenco's bid to not use washed coal is being hampered by WCL. Genco managing director Subrat Ratho had asked WCL to arrange transport of raw coal it supplied to washeries, directly to it. However, WCL expressed its inability to immediately enhance the infrastructure and make transport arrangements to accomplish the job and asked Genco to make arrangements on its own.

Meanwhile, washery operators have protested that they were not able to meet Mahagenco's standards for washed coal because the coal supplied by the mining companies was of very poor quality.

(sourced TOI)

JSW Energy puts Ratnagiri plans on hold due to high coal prices

July23, 2011

ByJohn Satish Kumar Livemint

The rising price of coal has forced JSW Energy Ltd to put a 2,000 megawatts (MW) capacity expansion plan at Ratnagiri on hold.

The power producer will plan future projects on assured domestic coal linkages, vice-chairman and managing director Sajjan Jindal said on the sidelines of its annual shareholder meeting.

“Long-term contracts are not a solution as prices have to be renegotiated all the time,” Jindal said. “The only way forward is for the government to give coal linkages and we expect to hear something on this front shortly.”

Even owning coal mines abroad doesn’t help as coal has to be brought into the country at benchmark prices, he said.

Over the past year, ICE Rotterdam coal price has risen more than 26% to $124.35 per tonne, according to Bloomberg data. JSW Energy needs about 10 million tonnes of coal each year and imports all its requirement.

The company has two units producing 300MW each at Ratnagiri. A third 300MW unit started production in May, while a fourth unit of similar capacity is close to commissioning. JSW Energy had planned to add another 2,000MW.

The company declared a 42% fall in stand-alone net profit for the June quarter compared with a year earlier despite growing sales, mainly owing to rising expenses.

Stand-alone net profit for the three months ended 30 June fell to 190.26 crore from 327.20 crore, while net sales rose 27% to 1,119.26 crore.

Total expenses soared 84% to 856.07 crore, with a 77% rise in fuel costs doing most of the damage.

Other expenses also more than doubled to 65.04 crore from 25.50 crore.

The company’s stock fell 6.6% to 71 on the Bombay Stock Exchange, while the benchmark Sensex index fell 0.4%.

JSW Energy said it plans to take various measures to mitigate the impact of rising imported coal prices and reduce fuel costs in the coming quarters, without elaborating.

IDC funds coal JV in Waterberg

Firestone says first stage of Waterberg project is to develop Smitspan mine, also Vetleegte mine a metallurgical coal deposit

July23, 2011
By Siseko Njobeni, Business Day

THE state-owned Industrial Development Corporation (IDC) has started funding a coal project in Waterberg in Limpopo, JSE-listed Firestone , a partner in the project, said yesterday.

The IDC had approved the first drawdown of the funding facility by Firestone’s partner in the coal project, Sekoko Resources, for mine development costs.

Sekoko is a black-owned energy and minerals company developing the coal, as well as magnetite iron ore and platinum group metals projects in Limpopo.

"The IDC is now a confirmed strategic partner in the Waterberg project. The commencement of this funding represents the first step in our final phase of bringing our Waterberg coal project into production," Firestone chairman David Perkins said yesterday. Coal production is scheduled to commence next year.

In a statement issued yesterday, the IDC said the Waterberg project had economic merit and the potential to become a sustainable and profitable venture for all stakeholders.

"While it is still in its infancy stage, the IDC believes that the Waterberg area will be a key region for the future of the South African coal industry. This investment allows the IDC to establish an early footprint in the region.

"The project is positive in terms of regional development as it is expected to create new jobs and stimulate economic activity in Limpopo," the IDC said.

The IDC said the project would also ensure the long-term security of coal resources to support Eskom’s electricity generation programme.

Sekoko signed a memorandum of understanding with Eskom earlier this year. The project will supply 525000 tons a year for three years from April next year, and thereafter 1-million tons of coal a year for three years from April 2015 to March 2018 to Eskom’s nearby Matimba power station.

The joint venture is conducting further discussions with Eskom in connection with the supply of further tonnage to power stations other than Matimba.

Eskom’s other power station in the area is the 4800MW Medupi power station, which is under construction.

Firestone said the first stage of the Waterberg project was to develop the Smitspan mine, "which has a substantial measured thermal-coal resource, and to develop the Vetleegte mine, which is a substantial metallurgical coal deposit".

The IDC’s interest in the Waterberg project is through a 33,3% equity interest in Sekoko Waterberg Colliery, a special purpose vehicle.

Sekoko Resources holds the remaining 67% in Sekoko Waterberg Colliery.

Sekoko Waterberg Colliery has a 40% interest in the Waterberg project and Firestone holds the other 60%. Sekoko Waterberg Colliery also owns 800-million Firestone shares and this pushes Sekoko Waterberg Colliery’s effective interest in the project to about 58%.

The IDC said yesterday it would pay about R190m for its 33% interest in Sekoko Waterberg Colliery, "to be used for project-development costs, as well as to cover any funding shortfalls".

Sekoko’s Waterberg coal reserves are located on eight farms in an area of almost 8000 ha. According to Sekoko, when in full production, Waterberg will produce about 3-million tons a year of washed export-grade coking coal, destined principally for China and India.

Read more

Why Coal Prices Will Soar in the Coming Years

Lontoh Coal Limited of South Africa has planned to open up China’s market

Coal prices area at US$ 120 a tonne

Mozambi Coal to acquire Mozambican coal concession

Newcastle steam coal price rises by 1pct

S.Africa's June coal exports rise to 4.78 mln T

Coal of Africa shares up almost 20%

Kumba scales new heights with dividend

Headline earnings up 40% to R9bn despite adverse conditions

By Mark Allix, Business Day

KUMBA Iron Ore scaled new heights in the six months to June 30, returning a record interim cash dividend of R7bn to shareholders following a 56% rise in export iron ore prices, driven by robust Chinese steel demand.

Despite abnormal rainfall hampering operations, additional tax effects and higher labour and input costs, headline earnings were up 40% to R9,1bn, and its broad-based empowerment shareholders received an interim dividend of R2,4bn, the company said yesterday. Kumba has returned R11bn to empowerment partners since 2006.

The stellar results came after the miner increased total dividends 136% the previous year. But it says arbitration with steel maker ArcelorMittal SA over iron-ore prices, and a politically charged court case over mining rights, has stymied long-term contracts at its flagship Sishen mine.

The period has also seen the continuing development of the Kolomela mine, which is 94% complete and is expected to produce up to 5-million tons of iron ore a year by next year.

"Kumba’s operational and strategic focus has delivered another strong set of results. Despite … abnormally high rainfall, total sales were maintained," CEO Chris Griffith said.

Exports were supplemented by sales from stockpiles, ensuring Kumba benefited from record prices. Stakeholders had approved a move into Africa, likely in partnership with parent company Anglo American, but operations in SA remained the platform for growth. "There is a much better chance of being successful in your own backyard than anywhere else," Mr Griffith said.

Kumba’s outgoing chief financial officer, Vincent Uren, said that despite the strong rand, secondary tax and mineral royalties, the group remained on track. Mr Uren will continue to work on Kumba’s unfinished legal issues and will consult for the group.

"We never anticipated these businesses to do so well. It’s good management and good (commodity) prices and we have reaped the benefits," Wim de Klerk, financial director of miner Exxaro , said yesterday, referring to Kumba’s and Exxaro’s share prices.

Exxaro, a big producer of coal and mineral sands, is Kumba’s main empowerment partner, having a 20% stake in the Sishen Iron Ore Company. It resulted from the unbundling of Kumba Resources’ iron ore assets.

The hefty rise in export iron ore prices was partially offset by the continued strength of the rand and a 14% increase in operating expenses following increases in waste mining, the mineral royalty, inflation and lower production volumes, along with higher costs for labour, electricity and diesel.

But Kumba’s operating profit shot up 51% to R16,9bn, and margins of 70% rose from 63% previously, with the group generating R15bn in cash in the six months.

Read more

Namibia plans to raise mining tax from 37.5% to 44%, diamonds exempt

Foreign mining operations in Zimbabwe

Kumba sees rise in H1 earnings on higher prices

FIIs trimming holdings in Indian steel companies - Report

Saturday, 23 Jul 2011 |By BL

BL reported that Foreign Institutional Investors, on concerns of a weak profit outlook for the steel sector, are trimming their holdings in Indian steel firms.

As per report, the April to June quarter saw FIIs reduce their holdings QoQ in almost all steel firms including Steel Authority of India Limited, TATA Steel, JSW Steel, Jindal Steel & Power Ltd and Godavari Power & Ispat Ltd etc.

The report added that the shares dumped by FIIs have either largely been picked up the domestic institutional investors or non institutions, including individual shareholders.

The rising input costs such as coking coal and iron ore have hit the steel companies' bottom lines in the recent quarters. Analysts expect the pressure on profitability to continue in the July to September quarter as well.

Also, the inability of steel companies to pass the burden to consumers amidst an uncertain demand scenario will add up to the margin pressure. The recent hike in interest rates to curb inflation has cast a spell on the demand side. An analyst said that “There is a concern on demand side due to the slower pace of infrastructure projects. As a result, there is no pricing power with the steel producers.”

Steel makers have seen a slowdown in demand to an extent from sectors such as automobile, consumer durables and construction. While the global steel prices have seen a margin decline in the recent past, the domestic producers have managed to hold on to prices at this point in time.

Friday, July 22, 2011

Metso awarded lining contract for Northland's Kaunisvaara iron ore mill

Scandinavian iron ore developer has just announced the mill lining service and inspection contract for its under-construction Kaunisvaara iron ore project in northern Sweden.

Northland Resources S.A. (TSX: NAU, OSE: NAUR, Frankfurt: NPK) has announced an agreement with Metso for a five-year mill lining service and inspection program for the Kaunisvaara mill. The project is under construction in northern Sweden.

The contract complements previous project orders that were announced by Northland earlier this year. The order, which will cover five years, is valued at €19 million.

The Metso life-cycle services (LCS) program for Kaunisvaara includes both the supply and installation of the mill liners as well as technical and maintenance support for the semi-autogenous mill for the Tapuli process line. Metso on-site resources will also conduct liner inspections to maximize mill availability. The contract period will commence when the installation of the Tapuli process line is completed at the end of 2012.

"We're pleased to have concluded this contract as it maximizes the availability of our grinding line," said Shane Williams, Vice President -- Projects, at Northland. "As this is a cost-per-tonne contract, we'll be able to forecast expenditures over an extended period of time. It will be a very useful asset in view of the total investment involved."

"We embrace the opportunity to partner with Northland in a five-year LCS commitment," says João Ney Colagrossi, President of Services business line, Metso. "The speed at which operations at Kaunisvaara are progressing is impressive and we are looking forward to further strengthening our relationship with Northland."

Northland is a development-stage mining company with a portfolio of iron ore projects in northern Sweden and Finland. The Company's Kaunisvaara Project will exploit two magnetite iron ore deposits in Sweden. The process will yield a very high-grade, high-quality magnetite iron concentrate. The construction of the Kaunisvaara project is well underway and production is planned to start in the 4th quarter of 2012. Northland has entered into industrial off-take contracts which will last for 7--8 years for the entire production from Kaunisvaara. The Company is also preparing a Definitive Feasibility Study for the Hannukainen Iron Oxide Copper Gold Project in Kolari, northern Finland. The study is expected late in the 4th quarter of 2011.

Metso is a global supplier of sustainable technology and services for mining, construction, power generation, automation, recycling and the pulp and paper industries. Metso has about 28,500 employees in more than 50 countries.

(sourced Metso)

Namibia plans to raise mining tax from 37.5% to 44%, diamonds exempt

According to the country's ministry of finance, Namibia will raise the tax in a bid to strengthen revenue collection within the country and stave off volatility in key revenue sources

Friday , 22 Jul 2011

WINDHOEK (Reuters)

Namibia plans to raise its mining tax to 44 percent from 37.5 percent but said the hike will not apply to diamond mining companies, the ministry of finance said in a statement on Friday.

The ministry said the country is facing volatility in its key revenue sources and is looking to strengthen revenue collection.

"The ministry has also proposed amendments to various tax laws as well as new tax legislation," it said.

Why Coal Prices Will Soar in the Coming Years

Written by Post Carbon
July21, 2011

World energy policy is gripped by a fallacy — the idea that coal is destined to stay cheap for decades to come. This assumption supports investment in ‘clean-coal’ technology and trumps serious efforts to increase energy conservation and develop alternative energy sources.

It is an important enough assumption about our energy future that it demands closer examination.

There are two reasons to believe that coal prices are likely to soar in the years ahead.

First, a spate of recent studies suggests that available, useful coal may be less abundant than has been assumed — indeed that the peak of world coal production may be only years away. One pessimistic study published in 2010 concluded that global energy derived from coal could peak as early as 2011.

Second, global demand is growing rapidly, largely driven by China. Demand rose modestly in the 1990s (0.45% per year), but since 2000 it has been surging at 3.8% per year. China is both the world’s biggest producer of coal (40% of global production) and its biggest consumer. Its influence on future coal prices should not be underestimated.

Economic shocks from rising coal prices will be felt by every sector of society. Better data on global coal supplies is long overdue and energy policies that assume a bottomless coal pit need rethinking urgently. Click here for the full article

Anglo, Xstrata Coal Miners in S.Africa Plan Strike Over Pay

July21, 2011
By Jana Marais, Bloomberg

Anglo American Plc (AAL), Xstrata Plc (XTA) and Exxaro Resources Ltd. (EXX) expect workers at their coal mines in South Africa to start striking over pay on the night of July 24, the Chamber of Mines said.

The National Union of Mineworkers, South Africa’s biggest, is yet to serve notice of its intention to strike, Frans Barker, the lead negotiator on behalf of the coal producers, said in an e-mailed response to questions. An estimated 30,000 workers are affected, he said.

The union is demanding a pay increase of 14 percent, while coal companies are offering 7 percent, and 8.5 percent to entry- level employees. Annual inflation in the country is currently 5 percent, the highest in 15 months.

The pay dispute is one of several affecting South Africa’s mining and energy industries as workers push for above-inflation wage gains that they say are needed to address the inequalities caused by apartheid, a system of institutionalized racial discrimination that ended in 1994. South Africa is the biggest supplier of power-plant coal to some European countries and is selling an increasing amount of the fuel to India.

Gold miners at companies including AngloGold Ashanti Ltd. (ANG) may walk out if talks with employers scheduled for July 25 fail, the NUM said, while miners at diamond producer De Beers plan to start a strike tomorrow, and oil company workers have been on strike for more than a week. Engineering workers ended a strike after winning a pay rise of double the inflation rate.
Coal supplies

There’s no “immediate short-term danger” to coal exports or supplies to national power utility Eskom Holdings SOC Ltd., Barker said yesterday in a telephone interview.

“Eskom’s stocks are relatively high and the companies themselves also have stockpiles,” Barker said. Eskom is involved in its own wage talks and the NUM has rejected a 5.5 percent pay rise offer made by the company, it said today.

Other coal companies involved in the talks are Optimum Coal Holdings (OPT) Ltd., Kangra Coal Ltd. and Delmas Coal Ltd. Delmas Coal, a closely held company, has made a lower offer of 7.5 percent for entry level workers and 6 percent for other miners.

Exxaro shares were little changed at 186.38 rand at 3:47 p.m. in Johannesburg trading while Optimum declined 1.9 percent to 25.51 rand. In London, Anglo was little changed at 2,979.5 pence while Xstrata dropped 1.2 percent to 1,348 pence.

Exxaro is based in Pretoria while Optimum has its headquarters in Johannesburg. Xstrata is based in Zug, Switzerland, and Anglo is based in London.

Lontoh Coal Limited of South Africa has planned to open up China’s market

Lontoh Coal Limited of South Africa has planned to open up China’s market

Friday, 22 July 2011

The president of South Africa's miner Lontoh Coal Limited Tshepo Kgadima stated currently in Beijing, they would open up China's market and find partners in China. He predicted Lontoh Coal Limited would provide 18 million mt coking coals to China each year. According to him, the company is committed to the pipeline building and it will be complete in the next two-three year, then to make the coal price competitive through decreasing freight rate cost.

New World Resources coking coal price down 9 percent in Q3

Friday, 22 July 2011 |By Steelorbis

On July 22, Central Europe-based miner New World Resources Plc (NWR) announced that it has reached agreements with its customers for coking coal and coke sales for the third calendar quarter of 2011.

NWR set the average agreed price of coking coal for delivery in the third calendar quarter of this year at €192/mt, down 9 percent compared to the second quarter realized price. The decrease is in line with lower international prices both for hard and semi-soft coking coal. The average price agreed for coke sales during the third calendar quarter of 2011 is €378/mt, decreasing by 4 percent compared to the second quarter realized price.

NWR also announced the production and sales results. While it produced 3.25 million mt coking and thermal coal and 198,000 mt coke in the second quarter of 2011, sales volumes of coking coal and coke are reported to be 1.2 million mt and 1.6 million mt respectively.


Friday, 22 July 11

Japan’s Marubeni Corporation acquisition 42.86% stake in YTL Jawa Power Holdings BV, which owns a 35% equity interest in Indonesia’s PT Jawa Power. Marubeni paid US$ 224 million for YTL Jawa Power stake.

According YTL annoucement’s to Malaysia Stock Exchange, Jawa Power owns a 1,220 megawatt coal-fired power plant at the Paiton Power Generation Complex in the district of Probolinggo, in East Java. YTL Power acquired its 35% stake in 2004.

Right now, Jawa Power supplies power to PT PLN (persero), the Indonesian state-owned integrated utility, through a 30-year power purchase agreement. The plant is operated and maintained by PT YTL Jawa Timur, a wholly-owned subsidiary of the YTL Power Group.

“Marubeni is a strong and well-respected player in the international utilities market and this collaboration will enable YTL Power and Marubeni to corporate on potential investments and develop future opportunities in the global utilities industry,’ Yeoh Seok Hong, YTL Power’s executive director say.

Meanwhile, Masumi Kakinoki, chief operating officer at Marubeni’s Power Projects & Infrastructure Division, said that through this transaction, Marubeni will build a firm partnership with YTL as a strategic partnet for future development, not only in Asia but also all over the world. Marubeni and YTL will collaboration in multiple areas such as power, water, and transportation for the further growth of Marubeni and YTL as global utility players.

If you believe an article violates your rights or the rights of others, please contact us.

(By Coalspot)

Vietnam’s Thachkhe Iron Ore Company to restructure its joint venture partners lacking fund

Friday, 22 July 2011

Nguyễn Tấn Dũng,the premier of Vietnam, demanded Vietnam's Thachkhe Iron Ore Company (TIC) to restructure its joint venture partners lacking fund to start iron ore production project 400 kilometers away from the south of Ha Noi.

It is learned that construction company SongDa, Tele-Communications Company VNPT, shipbuilding company Vinashin and bank BIDV are ordered to quit from the project. VNPT holds 4% shares of TIC, and other companies hold 5% each. Others stockholders will increase fund investment to resume the project.

(sourced coalspot)


Indonesia shipped 28.27 Million tons of coal in June 2011, a 2.3 percent lesser than May export of about 28.962 million tons, Indonesian coal industry sources said.

Indonesian coal producers have shipped approximately 8.236 million tons of coal to China in June, which was 0.24 percent higher than May 2011 exports. However, Indonesian producers failed to push more coal to India in June.

Indian importers have imported 2.63 percent lesser coal compared to May Imports. India has imported only around 6.20 million tons, which were around 21.95 percent of Indoneisan total coal exports in June. In the meantime, India has imported approximately 36.033 million tons coal, which was slightly lesser than Chinese's imports of 36.071 million tons, during first half this year.

India was the largest Indonesian coal importer since January 2011 until April 2011, until China becomes the largest importer of Indonesian coal since May 2011.

According to the coal minister of India, India's coal imports may be at 250 million tons per annum by 2016. Coal imports are an unavoidable options for Indian utilities due to non availability of economically viable coal from domestic mines. However, according to Indian UMPPs, due to Indonesian government regulation that forces all coal producers must sell coal at government declared monthly prices, would cost them at least US$ 30 per ton higher than they previously budgeted.

According to Indian power industry sources opined that Indian UMPPs ( ultra-mega power project) suddenly caught in between as the concept of UMPP was implemented 4 to 5 years back. The large scale industrial houses in India have bided and secured UMPP licenses based on the open market prices /long term coal contracts from Indonesian producers (I.e., pre regulated Indonesian market). Now that Indonesian coal reference price mechanism is in place all the UMPP's are seeking Indian government’s assistance in revising the Power Tariff of UMPP.

There are mixed of reactions from Indian mine investors in Indonesia related to government regualtion on coal referance price. Indian power plants are must focus on the fuel security than price advantages out of Indonesian coal mine operations. Mine investments in Indonesia will definitely a good option for power producers of India to secure fuel for their plants, according to an Indian power producer who had invested coal mine in Indonesia.

Meantime, another investor opined that, more and more of Indian lenders are concerned with the sourcing of coal from Indonesia for their power generating plants after reported backing out of Reliance Power from their proposed 4000 MW UMMP in Krishnapatnam port zone due to higher cost for coal imports from Indonesia.

Indonesia has introduced bench mark pricing mechanism for its coal since February 2010, and it has implemented for the domestic supplies as well the export market. The pricing was done on the transparent way using four internationally acceptable coal indices to generate monthly Indonesian coal reference prices for about 62 types of coal, including 8 types of bench mark qualities.

The regulation also requires miners to report sales volumes, prices, and buyers every month to the government, allowing it to ensure that the rules are being followed. Violations can lead to revocation of mining permits. The price benchmark aims to prevent firms selling coal to affiliates at low prices to avoid taxes that hurts Indonesia's efforts to collect revenues from its massive commodity exports.

Ministry of Energy and Mineral Resources of Indonesia has set the July 2011 Indonesian Coal Reference Price for thermal coal at US$ 118.24 per ton per ton, which was 0.66 percent lesser than June 2011 price. Assessment basis of coal price reference was calculated considering coal with GCV (GAR) 6,322 kcal/kg, Total Moisture (arb) 8.00%, Total Sulphur (arb) 0.8%, Ash Content (arb) 15.00% and delivery free on Board (FOB) Vessel basis and applicable for spot contract, delivery between 1 – 31 July 2011.

Indonesian government is currently drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5100 kilocalories (on air dried basis) in value.

Indonesian large-scale producers were offering bituminous coal of 5,500 kcal/kg NAR at around $ 108 a ton, FOB vessel basis, and the price was almost flat since last week, buyers said.

79.77 percent of total coal exports in June shipped to China, India, South Korea, Japan and Taiwan respectively.


Indonesian coal production in 2011 is expected to reach 360 million tons or 5.8 percent higher than government's forecasts. The increase in production was driven by the higher price trend and the higher demand triggered producers ramped up production.

Executive Director of Indonesian Coal Mining Association Suhala Supriatna said, the realization of coal production this year expected to exceed the government's forecasts of 340 million tons. "Production in 2011 will be higher than the target, and may reach at least 340 million to 360 million tonnes," he explained.

He also said that, the production increase was driven by a higher price for Indonesian coal and higher demand. After the accident at a nuclear power plant (NPP) in Japan, coal demand continues to rising. In fact, in the next 20 years, coal will play major roll to replace nuclear energy in Asian countries.

This year's coal price for coal with calorific value 6300-6500 have reached around US$ 120 per ton. This figure is much higher than last year's price of US$ $ 90/ton. " Due to higher price and demand, most of coal producers are planning to increase their production," he added.

Indonesian has already produced about 170 million tons of coal till end June 2011.

(sourced coalspot)

SSAB Q2 beats forecast, sees growing demand

Fri Jul 22, 2011 | By Reuters

* EBIT 1.3 bln SEK vs consensus 1.1 bln
* Sees weaker Q3 than Q2 but recovery continuing
* Shares up 7 pct

STOCKHOLM, July 22 (Reuters) - Swedish specialty steelmaker SSAB (SSABa.ST: Quote) posted a better-than-expected second-quarter operating profit on Friday and said the recovery was continuing.

Operating profit at the company, which bought North American steel maker IPSCO in 2007, grew to 1.3 billion crowns ($203 million) from 708 million the same period last year, against an expected profit of 1.1 billion in a Reuters poll.

Operating profit was boosted by good demand at the beginning of the second quarter, a trend that slowed down towards the end of the quarter, SSAB said.

SSAB's shares rose 6.9 percent at 0702 GMT, outperforming the STOXX Europe 600 Basic Resources Index which was up 0.75 percent .

Several planned maintenance stops, continued price pressure, together with higher raw materials costs and uncertainty about Europe indicate that the third quarter will be weaker than the second, the company said.

"However, the recovery is continuing and demand is expected to be stronger than in 2010," Chief Executive Martin Lindqvist said in the report.

Extended maintenance work in Sweden will affect operating profit negatively by 100 million to 150 million crowns during the third quarter. A longer outage in Montpelier, Iowa in the third and fourth quarter will hit operating profit by 350 million to 400 million crowns, of which roughly 25 percent will be in the third quarter.

More news from European steel market
North European steel coil prices close to bottom

EUROMETAL: Germany leads the European economy


Iron Ore-Shanghai rebar eyes 3rd weekly gain, outlook upbeat

Fri Jul 22, 2011 | sourced Reuters

* Construction activity boosting demand for rebar
* Iron ore price indexes rise, offers firm

By Manolo Serapio Jr

SINGAPORE, July 22 (Reuters) - Shanghai rebar futures edged up on Friday and are set to extend their winning streak to a third consecutive week on brisk construction demand in top steel producer China.

Higher steel prices helped boost demand for iron ore, the key steelmaking ingredient, lifting price indexes on Thursday, although traders said some Chinese mills are more keen on buying lower-grade material.

"Iron ore prices may remain firm next week as steel prices will continue to edge up amid construction activities," said an iron ore trader in Beijing.

"Rebar and wire rod producers are enjoying high profit margins and I don't expect iron ore prices to fall easily."

China's steel production could maintain its breakneck pace in the second half of 2011 as a construction boom buoys demand, with full-year output seen hitting at least 700 million tonnes, a new record, as mills cash in on rising prices.

The most-traded October rebar contract on the Shanghai Futures Exchange rose 0.2 percent to 4,925 yuan a tonne by the midday break. It has risen 1.1 percent for the week, its third straight week of gains.

Iron ore price indexes, based on spot deals in China and used by global miners as basis in deciding supply contract prices, rose on Thursday.

The price of ore with 62-percent iron content rose 50 cents to $175.10 a tonne, based on The Steel Index .IO62-CNI=SI, and gained 18 cents to $173.46 a tonne, according to the Metal Bulletin .IO62-CNO=MB.

Platts index IODBZ00-PLT showed the 62-grade price at $176.75, up 25 cents.

"It's difficult to push the price up strongly because the mills have been quite selective on the grade," said a shipping manager for an iron ore trading firm in Shanghai.

"They are now more interested in low-grade fines at 52-55 (iron content) which they tend to mix with high-grade fines that they get from long-term contracts."

Offers for 62-grade Newman fines from Australia were steady at $179-$181 a tonne, with freight, on Friday, said Chinese consultancy Umetal. Quotes for Indian 63.5/63 ore were also unchanged at $182-$184.

Traders said global miner BHP Billiton sold 90,000 tonnes 62.5-grade Newman fines at $180 a tonne, cost and freight, and another 80,000 tonnes of 61.5-grade MAC fines at $174 a tonne, in line with market expectations.

Hopes are high that China's demand for steel and iron ore will strengthen further amid a busier construction sector and optimism that Beijing may relax credit restrictions in the second half of the year.

"Some mills are expecting China to lift some restrictions on credit control so the liquidity situation might be better in the second half," said the Shanghai trader, but added it was not clear how the credit curbs may be eased.

Beijing has been taking aim at property prices, limiting the number of homes people may purchase in some cities and ordering banks to limit their loans to the sector.

That has come on top of interest rate rises and other monetary tightening aimed at containing inflation, which has made it harder for mills and their customers to obtain loans.

More News about Iron ore
Iron Ore-Spot offers steady; no spike in summer prices seen

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Iron Ore-Shanghai rebar hits over 2-mth high, ore firm

Chinese imported iron ore stocks hit record in


MSMDC warned on de allocation of Maha coal block

Friday, 22 Jul 2011 |Agency PTI

The coal ministry has warned Maharashtra State Mineral Development Corporation that Warora coal block allocated to it would be cancelled if it fails to develop it in time.

The coal ministry in a letter to the MD of MSMDC said that "The allocattee is hereby warned to develop the block immediately. In case of further failure necessary action will be initiated including de allocation of the coal block.”

The government has recently warned two firms, including National Thermal Power Corporation for delay in developing their coal blocks, saying that they would be deallocated if no immediate action is taken by the companies.

Power major NTPC had received the warnings regarding delay in development of two coal blocks each in Jharkhand and Chhattisgarh, and Utkal Coal Ltd for its asset in Orissa.

Besides, the ministry had last week warned Gondwana Ispat and Andhra Pradesh Development Corp regarding deallocation of coal assets for not developing them on time.

The government had last month said the panel set up by the ministry to look into the process of deallocation of coal blocks had recommended issuing warnings to 29 coal and three lignite blocks allocattees. The panel had also suggested cancellation of 14 coal blocks and one lignite block to six PSUs, including NTPC and three private firms for failing to develop the mines.

This year, the government has deallocated coal blocks of various firms, including NTPC, Damodar Valley Corporation and Andhra Pradesh Power Generation Corporation Ltd.

Read more news about Indian Coal Ministry news
Cancelled Coal Blocks may be Returned to NTPC

Indian coal ministry issues warnings to 3 firms

Japan complains to Mongolia over Tavan Tolgoi bidding

Fri Jul 22, 2011

TOKYO, July 22 (Reuters) - Japan has joined South Korea in filing a complaint with Mongolia over the bidding process for part of its massive Tavan Tolgoi coal development project, as firms from both countries appear to have been excluded from the winners.

Mongolia this month said it had picked U.S. miner Peabody Energy , China's Shenhua and a Russian Railway- Mongolia consortium out of six preferred bidders to develop the west Tsankhi deposit but later added the decision was not final.

Japanese and Korean firms were not mentioned in the announcement even though they are part of the consortium that includes Russian Railway. Instead the announcement says that Russian Railway is now part of a consortium with Mongolian firms but it is not clear what firms are being referred to.

Trading firm Mitsui & Co was also not mentioned although it is a partner with China's Shenhua.

The complaint said Mongolia's President Tsakhia Elbegdorj `in a visit last November called on Japan to help with the development of its resources, saying that bilateral partnerships in minerals development would be mutually beneficial.

"If it transpires that Japanese firms are not included in the winning camps, it would go against what the two governments have been working towards", the complaint said.

"It would be extremely regrettable."

South Korea has called the bidding process "unclear and unfair."

Company sources also said that the four Japanese trading firms in the consortium with Russian Railways -- Itochu Corp , Sumitomo Corp , Marubeni Corp and Sojitz Corp -- have also jointly filed a complaint with Mongolia but have yet to get an official response, sources said.

The west Tsankhi block of Mongolia's Tavan Tolgoi coal deposit which holds approximately 1.2 billion tonnes of mostly high-priced coking coal used in steel making.

Read more news about Tavan Tolgoi coal development project
Mongolia's Tavan Tolgoi coal resources could reach 7.5 bln T

Indian iron ore mining mess - Lokayutka slams politicians

Friday, 22 Jul 2011 |By IANS

The Karnataka capital has been abuzz since Wednesday that Lokayutka is set to charge Karnataka chief minister Mr BS Yeddyurappa of doing precious little to check illegal iron ore mining and allowing his sons' business ventures to benefit from it.

The buzz started within hours after Lokayukta N Santosh Hegde told reporters that his officials have found illegal mining evidence against influential politicians and people.

The speculation in the political circles on contents of the report was that there seemed to be nothing new except that business ventures of Yeddyurappa's sons had financially benefited from those indulging in illegal mining.

The names making round as getting mentioned in the report are those already facing serious charges of illegal mining barons and Bharatiya Janata Party ministers, the Reddy brothers and their associate and Health Minister Mr B Sriramulu. Of the Reddy brothers, Mr G Janardhana the most vocal is tourism minister and his elder sibling Mr G. Karunakara holds the revenue portfolio.

Mr Hegde, a retired judge of the Supreme Court, has to submit his report on rampant illegal mining in the state within the next ten days as his five year term expires Aug 2.

Read related news about Indian iron ore mining mess - Independent regulator to be set up

Indian iron ore mining mess - Shortage cripples steel industry in South India - Report

Friday, 22 Jul 2011 |By BS

BS reported that the steel industry in South India is in doldrums following a severe shortage of iron ore and a large number of sponge iron manufacturers and small steel mills are on the verge of closure while many have already shut shop.

As per report, some of the steel mills like Sathavahana Ispat, Kirloskar Ferrous, Kalyani Steels, Unimetal Ispat, Sandur Manganese and Iron Ore and Sandur Laminates have suspended their operations partially.

Karnataka contributes 30% of the national steel output, at 18.4 million tonnes annually. For 2011-12, steel, pig iron and sponge iron units collectively require 45 million tonnes of ore, while the present availability is limited to about 24 million tonnes which is 48% of the state’s total output.

According to Mr Vinod Nowal CEO and director of JSW Steel and president of the Karnataka Iron and Steel Manufacturers’ Association, 22 of 60 sponge iron plants in Karnataka are closed for want of raw material.

Mr Nowal said that “While we strongly condemn any illegal mining, the government needs to ensure supply of required iron ore to steel plants without disruption.”

He added that “All the industries manufacturing steel, pig iron and the sponge iron, among others, are process oriented units and stopping/ starting of the furnaces involve huge risk and losses. To ensure continuity in the operation of the industries, there is a need to ensure the availability of iron ore to meet the day-to-day demand of various industries.”

Mr Basant Poddar vice president of Federation of Indian Mineral Industries said that “The industry fears the Supreme Court may order closure of many more mines in the BHS region and, if that happens, the availability of iron ore could be reduced to as low as 7 million tonnes to 8 million tonnes, which will be a death blow to the steel industry in the state.”

The shortage of iron ore is in the wake of suspension of activities in almost 50 mines in this state following the direction of the Supreme Court, which is hearing a case on illegal mining. Based on the recommendation of the Central Empowered Committee out of 99 mining leases, the apex court has ordered the shutting of 40 mines in the Bellary, Hospet and Sandur region.

China steel production to remain strong in H2, 2011 -CISA

Fri Jul 22, 2011

* China's steel product inventories down for 4th month in row
* Demand to remain strong on high fixed asset spend
* Oversupply, tighter credit and rising energy prices weigh on market

SHANGHAI, July 22 (Reuters) - Steel output in China, the world's top producer, will stay strong in the second half of this year as investment in infrastructure and social housing underpins demand, the country's steel association said on Friday.

"China will continue to maintain high fixed asset investment for the remainder of the year, with water conservation and social housing construction coming on top, which will boost steel demand," the China Iron & Steel Association (CISA) said in its monthly market report.

Despite government credit curbs and falling exports weighing on an already oversupplied sector, China's crude steel production is expected to post increasingly higher year-on-year growth over the remainder of the year.

Data from CISA earlier this week showed that daily output of crude steel from Chinese mills fell 3.1 percent in the first 10 days of July to 1.955 million tonnes, but analysts expect the decline will be limited, with producers of construction steel running close to full capacity.

China's steel firms have been turning out more than 1.9 million tonnes a day since February, from around 1.7 million tonnes last year.

China's steel production may maintain its breakneck pace in the second half of 2011 as a construction boom buoys demand, putting it on track for another record year despite the credit curbs.

Steel output in China amounted to 350.5 million tonnes of crude steel from January to June, up 9.6 percent from a year ago.

"Long steel products will benefit from affordable housing and rural water conservation projects, while flat steel products may face a worsening supply glut," CISA said.

In the 26 major cities monitored by CISA, total inventories of five main steel products -- rebar, wire rod, hot-rolled coil, cold-rolled coil and plate -- fell 290,000 tonnes to 14.32 milion tonnes in June from the previous month, the fourth consecutive monthly fall.

Slower growth in steel-consuming sectors and chronic oversupply problems dragged steel prices down in June, with CISA's long product index falling 0.87 percent and its flat product benchmark dipping 1.59 percent from May.

But high raw material prices will limit the scope for further price cuts, CISA said.(sourced Reuters)

ArcelorMittal Karnataka steel plant progress update

Friday, 22 Jul 2011 |By TOI

ToI reported that ArcelorMittal is quietly making progress in Karnataka with more than 50% of the land acquisition process has been complete.

As per report, ArcelorMittal has completed acquisition of more than 2,200 acres of the required over 5,000 acres.

ArcelorMittal representative told TOI that "By God's grace, land acquisition process has been smooth and is more than 50% complete. Farmers are coming forward to accept the compensation for their land. Once we reach about 60%, the firm will get into building the layout plan.”

Initially, some farmer groups in Bellary had opposed land acquisition as they were seeking compensation higher than what was fixed by the state government.

A senior Karnataka Industrial Areas Development Board official said that "Now, the government has fixed compensation in three slabs INR 800,000, INR 1.2 million and INR 1.6 million per acre. The response from the land owners is overwhelming.”

On the progress from the Union government front, ArcelorMittal has obtained terms of reference from environment and forest ministry and the firm currently has commissioned environmental impact study. Spokesperson of the company said that "This study would take nearly a year. Later the study has to be submitted to the ministry.”

ArcelorMittal plans to set up a 6 million tonne per annum plant at Kuduthini and Haraginadoni villages in Bellary district with an estimated investment of INR 30,000 crore. When the company entered into an agreement with industries department during the Global Investors' Meet last year, it needed 4,864 acres of land. As the firm is planning to build its own railway network to transport iron ore from the mining site to the plant, the company now has sought additional 324 acres land.

Thursday, July 21, 2011

Sesa Goa posts net profit of Rs 840 cr in Q1

Thu,July 21, 2011 |Press Trust of India

Mumbai: Iron ore producer and exporter Sesa Goa today announced a consolidated net profit of Rs 840.59 crore in the first quarter ended June 30, 2011.

The Vedanta Group company had a consolidated net profit of Rs 1,301.79 crore in the June quarter last fiscal, Sesa Goa said in a filing with the Bombay Stock Exchange (BSE).

The results were not comparable consequent to merger of erstwhile subsidiary Sesa Industries with the company, it said.

The group posted consolidated total income of Rs 2,260.95 crore in the quarter under review whereas the same was at Rs 2,574.02 crore during the same period previous year, it said.

The figures of the pig iron segment were incorporated in the company's results on standalone basis from the quarter ended March 31, 2011.

The figures for the quarter ended June 30, 2011 are therefore not comparable with those or the corresponding quarter of the previous period on standalone basis.

For the three-month period ended June 30, 2011, it earned a standalone net profit of Rs 672.98 crore whereas the same was Rs 1,025.51 crore in the June quarter previous year.

Its standalone total income stood at Rs 1,831.68 crore in the period under review whereas the same was Rs 2,067.99 crore during the same period last fiscal.

Shares of the company closed at Rs 278.05, down 2.63% from previous close on the BSE.

Goldman Sachs prepares to trade physical iron ore

Thu,Jul21, 2011

LONDON, July 21 (Reuters) - Goldman Sachs started to trade iron ore swaps earlier this year and is preparing to enter the physical iron ore market, market sources said.

Growing liquidity levels in the iron ore swaps market attracted many banks to invest in it and some have also decided to set up physical iron ore desks to strengthen their positions.

"Some of the banks are looking at getting more involved on the physical side, which further enhances their trading opportunities in the paper market," an iron ore swaps broker said.

The volume of iron ore swaps cleared on the Singapore Exchange (SGX) in May reached a record at 3.5 million tonnes, up from 1.6 million in April and it is on track to hit a new record at 4 million tonnes in July, brokers said.

"It is always good to have physical positions to back your financial positions but it's always going to take some time," said Macquarie analyst Colin Hamilton, underlining that regulatory issues make it a slow process for banks.

Goldman Sachs declined to comment on the subject.

Vietnam forced to import coal

Thursday, 21 Jul 2011 | By VNS

Vietnam is becoming a coal importer due to high demand and dwindling domestic supplies. Last month, the state owned mining giant Vinacomin Group accepted the country's first ever batch of imported coal for domestic use.

The shipment of 9,570 tonnes imported from Indonesia arrived at Cat Lai Port in the southern province of Dong Nai and would be used as fuel for thermal power plants in the central and southern regions.

According to Vinacomin, Viet Nam has been a coal exporter for decades, relying on its large coal deposits, but the imports have become necessary as buying imported coal has become cheaper than extracting domestic coal.

Importing lowenergy bituminous coal for use in power generators became preferable to using domestic coal, a high energy anthracite mainly used in chemicals and metallurgy, Vinacomin's acting deputy director Vu Manh Hung said that "We should sell our high-quality coal and import cheaper coal. Power plants have been advised not to waste anthracite to generate electricity."

Mr Le Minh Chuan general director of Vinacomin said that earlier projections had said coal imports would become necessary in 2015, but heavy exports of domestic coal and inadequate policies for stockpiling supplies have pushed that date forward.

Kuzbassrazrezugol to boost coking output

Thursday, 21 Jul 2011 |Bloomberg

Bloomberg reported that OAO Kuzbassrazrezugol, Russia second largest producer of coal for power stations will raise output of coking coal used to make steel as prices climb.

According to the company annual report the producer based in Kemerovo and controlled by Russian billionaire Mr Iskandar Makhmudov will boost output of coking coal concentrate 12% this year to 3.37 million tonnes.

It said overall coal output will drop to 47 million tonnes from 49.7 million tons as the company seeks to mine more efficiently. Exports will increase 3.4% to 25 million tonnes.

According to the report sales rose 2% last year to RUB 50.7 billion and net income was flat at RUB 7.4 billion using Russian accounting standards.

CME to launch coking coal swap futures contract on July 25

Thursday, 21 Jul 2011 |By Reuters

Reuters reported that the Chicago Mercantile Exchange will launch a coking coal swap futures contract on July 25th 2011 in an attempt to cash in on the increased interest in steel derivatives.

The contract is the latest in a series of steel related contract launches in recent months by the CME. Coking coal is a key steel making ingredient together with iron ore.

Mr James Oliver director of client development and sales at CME said that "At CME Group, we have created a virtual steel mill as we have launched contracts that can be used to hedge a steel mill's input and output. This set of contracts is our way to help the steel industry to manage risk."

The contract will be settled against Platts indexes and will list on the New York Mercantile Exchange and clear through CME ClearPort. The trading volumes for some of the previous steel contracts have not been as high as the CME expected.

Mr Oliver said that "Clearly we were hoping for more turnover, but we appreciate that it takes time to build a marketplace and we are confident that there is going to be an evolution in terms of volumes. Our most successful (ferrous) contract so far is the Mid US HRC contract. That contract trades every day and we are growing our open interest."

The coking coal contract unit will be 1000 tonnes. It will add to the CME's existing steel contracts such as the ferrous scrap cost and freight Turkey swap, US Midwest hot rolled steel and iron ore swaps and options. The CME also listed a steel billet, free on board Black Sea swap futures contract in April.

North European steel coil prices close to bottom

Wed,July21, 2011 |By MEPS

Prices for steel flat products in northern Europe continued to slide in July, although further substantial reductions are not anticipated. Most buyers have been operating on a hand-to-mouth

basis as the summer shutdowns approached, not wanting to carry excess inventory into the break. Distributors and end-users alike, though, are expected to carry out some restocking after the vacation period. This may enable producers to go ahead with price hikes.

Demand for coated sheet and coil in the region continues to be significantly supported by the robust state of car manufacturing in Sweden and Germany, and the supply chains servicing these industries.

Sales of hot rolled plate have been holding up better than those for coil products, with healthy demand from several sectors, including line pipe, yellow goods and construction. However, there has been downward pressure on selling values due to the low prices available from southern and eastern European suppliers.

Selling values for long products showed signs of improving before those for flat products, although figures for wire rod and medium sections and beams slipped gain this month, in most of the countries surveyed. Several mills have announced increased size extras for rebars and merchant bars in recent weeks but these have not been universally accepted. Indeed, effective prices for merchant bars were largely unchanged in July, while transaction values for rebars increased by less than the proposed hike in dimensional extras.

Indian iron ore mining mess - Independent regulator to be set up

Thursday, 21 Jul 2011 |source BL

Intensifying its drive against large scale illegal mining, the government has approved setting up an independent sectoral regulator vested with the power to investigate such cases and launch prosecution.

The decision to set up an independent regulator, the National Mining Regulatory Authority for the mining sector was taken by a Group of Ministers formed to iron out the inter ministerial differences on the Mines and Minerals Development and Regulation at its recent meeting.

The GoM headed by the finance minister, Mr Pranab Mukherjee had resolved that “On the role of NMRA, it was agreed that it would be a body to review sectoral issues and would have the power to investigate and launch prosecution against cases of large scale illegal mining.”

The ministerial panel also recommended the establishment of similar authorities by state governments at their level to curb illegal mining, as per an official document.

It said the authority, besides keeping a close vigil on illegal mining and reviewing sectoral issues will also advise the Government on policy and strategy, including royalty rates.

Asking the mines ministry to prepare a fresh draft of the Bill, the panel directed it to place it before the Cabinet for approval at the earliest, so that the Bill can be introduced in the monsoon session of Parliament.

Concerned over increasing instances of illegal mining in 11 mineral rich states, the centre has already asked all the state governments to constitute high level committees to crack down on the menace.

At present, there are not enough legal provisions for central intervention when illegal mining takes place in states. The magnitude of the problem is such that as many as 42,000 cases of violation were detected in the states last year.

Vale would be disciplined in making acquisitions - CEO

Thursday, 21 Jul 2011 |

Vale, aiming to boost production of the metal almost fivefold to 1 million tonnes by 2015, on July 11th 2011 dropped out of bidding for Johannesburg based Metorex after China's Jinchuan Group Co trumped its USD 1.13 billion offer with a USD 1.36 billion bid. Last year, Rio de Janeiro based Vale produced about 207,000 tonnes of copper.

Mr Murilo Ferreira CEO of Vale SA said that it will have discipline in making acquisitions.

Mr Ferreira said that the company will only make opportunistic acquisitions that bring shareholders returns. Africa is the priority for efforts to expand in copper output.

Mr Ferreira said that "If it's a deal that won't generate returns for our shareholders, I'd rather not do it."

Mr Ferreira said that Vale is interested in any asset in the iron ore, fertilizer, nickel, coal and copper markets as long as it creates growth and return for its shareholders. Energy assets aren't on its radar, even as rival BHP Billiton Limited has made such acquisitions.

Mr Ferreira, who just returned to Rio after two weeks visiting customers and suppliers in Europe, China, Japan and Australia, is seeking to intensify the company's relationship with its shareholders. He said that "I want to strengthen the relationship with analysts and investors. It will be much more intense."

Mr Ferreira said that Vale scrapped its planned IPO of its fertilizers unit because it has low debt levels and doesn't need additional resources to develop the assets. Selling shares now would lead to discounts of as much as 45% in the value of the assets.

Mr Ferreira said that Vale, which is due to report its results for the second quarter on July 28th 2011, expects to finish an internal review of all its projects in the next 60 days. The company will have more clarity on its long term nickel and copper output forecasts after the review.

Mr Ferreira replaced Mr Roger Agnelli as CEO of Vale on May 22nd 2011 after the Brazilian government criticized the company in the past two years for not spending more on domestic steel projects and for buying ships in China when the country was setting up its own yards. Since taking over, Mr Ferreira scrapped a plan to sell shares of Vale's fertilizers business in an initial public offering, cut its long term iron ore output forecast by 10% and announced a share buyback of as much as USD 3 billion.

Ezz Steel full-year net profit pulled down by cost


Egypt's Ezz Steel Co reported a 53 percent drop in full-year 2010 net profit on Tuesday after surging costs outweighed higher selling prices.Net profit was 116.08 million Egyptian pounds ($19.5 million) versus 249.56 million in 2009. Net sales grew 40 percent but cost of sales rose by 46 percent, causing operating profit to tumble 61 percent, according to a company statement.

Analyst Omar Taha at investment bank Beltone said the lower profit was to be expected -- the company's operating margins were squeezed all year -- but the standalone results did not include earnings from its high-performing unit Ezz Dekhaila.

"Last year saw prices continue to rebound but growth in raw material prices outpaced that increase," said Taha. "These results are not indicative of the group ... Including Ezz Dekhaila, we expect an increase in 2010 net profit."

The results predate turmoil that engulfed Ezz Steel when a popular uprising unseated President Hosni Mubarak in February and sparked a series of corruption investigations targeting Mubarak's business allies including company founder Ahmed Ezz.
The company has parted ways with Ezz as he fights graft charges from prison, and has replaced him with managing director Paul Chekaiban.

Ahmed Ezz, who was a top official in Mubarak's now disbanded party, is accused of illegally monopolizing Egypt's steel market and wasting public funds.
He said in a letter sent to media from jail that the charges against him were unfounded and a fair trial would prove his innocence.

Ezz's shares have lost half of their value this year.
Analysts have said the corruption probe has deflected investor attention from what remains a positive business outlook for the top player in one of Egypt's most vital industries.
The company showed sharp improvements in its results in the first three quarters of 2010 as it raised prices to recoup higher raw material costs and changed its pricing model in line with top global producers Vale and BHP-Billiton.

(source Reuters)

Fed govt backs coal exports to China

Thursday, July 21, 2011 | source AAP

Labor frontbencher Craig Emerson said China was a stand-out when it came to renewables, but it will take time to reduce its dependence on existing energy sources."(China is) going through this major transformation and will continue to need energy sources such as coal and natural gas," he told the Nine Network on Tuesday. "China is already talking about an emissions trading scheme for itself, it's starting this in five cities and there's talk today about a national emissions trading scheme." His comments come following Opposition Leader Tony Abbott's attack on the government over coal exports. "How can it be that it is wrong to burn Australian coal in Australia but it is somehow right to burn Australian coal in China?" he asked reporters in Geelong.

But Dr Emerson dismissed the criticism, arguing that Mr Abbott's negative campaign on the carbon tax had gone so far he was even attacking his own policy. Mr Abbott told a forum on the Gold Coast on Monday that reducing emissions by five per cent by 2020 was crazy, even though it's the target adopted by both the government and the coalition. Mr Abbott clarified a day later, saying he was criticising the government's method of getting to its five per cent target, not the target itself.

Dry bulk rates edge further down on weak market sentiment

Thursday, July 21, 2011

The dry bulk market fell once again on Wednesday marking the ninth straight day of losses. The industry’s benchmark, the Baltic Dry Index (BDI) was down to 1,328 yesterday, retreating by 0.15%

on the day. Once again it was the bigger ships which suffered. The Capesize segment fell by 0.96% to 1,886 points, while the Panamax market was down by 0.32% to 1,536 points. Among the silver linings of the market was the Handysize/Handymax market with a gain of 0.43% to 695 points.
The first half of the year ended with the average value of the BDI standing at 1,372 points, down by 57 % from the first half of 2010 when the BDI was at 3,166 points and capesizes were earning $11,507/day more than today’s levels. “However, shipping investments have shown a 7% increase from the first quarter of the year with bulk carriers being protagonists in the secondhand market and containers dominating in the newbuilding scene” said Golden Destiny in a relative analysis.

It went on to mention that although bulk carriers have lost their strength in the secondhand and newbuilding market they are still holding the lion share in both markets, 35% of the total volume of transactions. “The lost of confidence is mainly attributable to the weak environment of the dry market as the BDI still hovers below the psychological barrier of 1,000 points mark and Chinese commodities’ demand appears not enough to absorb the ongoing flow of newbuilding deliveries. But, when the demand side will be rebalanced with the supply? The recovery of the market remains pending from the start of the year. During June, the BDI managed to gain a 6% month-on-month rise, but it seems that the high levels of 2010 are not yet feasible. Capesize time charter equivalent earnings have shown a 39.5% growth from May levels, but China’s high iron ore port stockpiles, barriers in electricity consumption and persistent high levels of commodities’ inflation cannot still narrow the gab with the supply side. According to data from the General Administration of Customs, China’s imports of iron ore fell to 51.09 million tones in June, compared with 53.30 million tones in May. The agency said that imports rose 19.3% year-on-year last month, versus the 24.8% rate expected by the economists. The June result was below the 28.4% rate in May and the lowest annual growth rate since the -6.4% posted in October 2009, which was the last of 12 consecutive months year-on-year declines that started in November 2008 after the global financial crisis” said Golden Destiny.

In a separate weekly report from shipbroker Fearnley’s, it was mentioned that the lack of direction in the Capesize market has continued this week, but now showing signs of weakening. “The West Australia market was struggling to decide which side of usd 8.00 the market should be, and fixture have been concluded on both sides, though the most recent reported is at a low usd 7. 75. Also the Front haul market was stable, just over the usd 20.00 mark, but has now dropped below and is not closer to usd 19.50pmt. The Atlantic again was living in its own world, but saw a significant down turn towards the end of the week, but has now stabilized at a healthier usd 13,000 level p/d. This market may not last as we suspect re-let charterers have cleared their tables pending the holiday season, but it should be noted that the tonnage supply is still tight. On the period front some more short period deals have been done in the usd 11,500-12,000 level which is only slightly down from the last rally. One can attribute this to fewer vessels idle (not trading) due to the low market level” said the shipbroker.

Referring to the Panamax market Fearnley’s said “it faced a slow start to the week, with limited activity in all basins. Atlantic rounds have stabilized around mid teens, however the north continent is somewhat tighter on tonnage, so this area might improve somewhat in the next few days. Ballasters for the Pacific are keeping the EC South American market down, in spite of quite a few cargoes out of that area. A few fresh cargoes emerged as well out of Indonesia and Aussie, but not enough to support any rise in rates for the time being. However the fall in rates seems to flatten out. With a tic more positive tone in both basins the last day, the end of the week may bring a steadier market, but this remains to be seen”.

As for the Handy market, “Atlantic softening across all segments with little fresh enquiry ex Bsea/Cont/USG and ECSA. Trips to Feast remain healthy. More cargoes expected for 1st half of August but this remains to be seen. Overall sentiment remains soft in Pacific, however few enquiries keeping market busy. For Indo-India, supras in South China are getting close to 12k. Nickel-ore rounds are getting firm rates in low mid-teens. Very quiet on iron ore front due to monsoons as WCI-China rates slided to 10k and from ECI around 9k. Few cargoes seen from RBCT. As a result, RBCT biz fixed on ECI tonnage around 11k. Red Sea, ferts on handymax/ supras are fixed at very mid 20´s pmt on voy bss to WC India. Period deals done at 13k for large supras” concludedd Fearnley’s.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

China Bohai Shipbuilding to deliver first mega dry bulk ship

Thursday, 21 Jul 2011 | Reuters

Reuters reported that China Bohai Shipbuilding Heavy Industry will soon deliver its first mega bulk carrier to Berge Bulk a move that could put further pressure on the weak shipping sector grappling with overcapacity and depressed freight rates.

The imminent arrival of the 388,000 tonne mega ship, Berge Everest, comes on the heels of the delivery of two similar sized vessels to the world largest iron ore miner Vale. The launch of each new mega vessel is expected to further weigh on the global freight market which is down 25% since the start of the year as ship supplies outpace demand.

The state owned Bohai will build another three 388,000 tonne bulk carriers for Berge Bulk for delivery by 2012. Berge Bulk four mega vessels could ultimately end up in the hands of Vale which seeks to operate as many as 35 very large ore carriers before the end of 2013 on expectations Chinese demand for the steel making ingredient will continue to grow.

Vale has contracts to purchase 19 mega ships with the remaining vessels likely to be chartered from other companies like Berge Bulk.

The Vale Brasil built by Korean shipbuilder Daewoo Shipbuilding & Marine Engineering in May has already completed its maiden voyage delivering iron ore to Italy.

Steelmaking pig iron rises slightly at Shanxi

Thursday, 21 Jul 2011 |By Mysteel

It is reported from Shanxi that recently the prices of steel products, billet steel, iron ore and steel scrap etc pick up in some extent, driving the price of steelmaking pig iron to rise slightly in Shanxi.

At present, spot price of steelmaking pig iron is posed at about CNY 3,650 per tonne in Shanxi while quotations from some iron plants even reach to CNY 3,700 per tonne. However, no customers could accept this high price temporarily.

Since last week, the slight price inch-up of steel products and billet steel in domestic market gives the market players a little hope and making more people hold positive attitude towards future. This slightly stirs up the prices of ore, steel scrap and other raw materials and also arouses a wide scale price hike of steelmaking pig iron in Hebei, Shandong, Jiangsu and Shanxi provinces.

Molten iron is the major transaction object in the market. Although iron plants rush to lift the EXW price one after another, most steelworks do not heel the trend. This makes steel mills’ purchase price higher than the market price. However whether the pig iron market can keep upward or not in future will depend on the steel market trend and the release level of pig iron demand from downstream users.

High cost continues to curb steel industry in China

Thursday, 21 Jul 2011 | Mysteel

It is reported that steel output kept in high level due to rapid release of crude steel production capacity in H1 of the year.

According to news issued by NDRC, national crude steel output during January to May was 290.35 million tonnes up by 8.5%YoY and steel output at 358.66 million tonnes up by 12.3%YoY.

Latest statistics by CISA showed crude steel output of 76 key enterprises in late June was 16.9231 million tonnes up by 3.21% compared to mid June. Considering no output report from three enterprises, it is estimated that total crude steel output may be 20.1805 million tonnes in late June with average daily output firstly hitting 2 million tonnes.

It is worth noting that the growth of crude steel output has shown obvious decline. During January to May the growth of national crude steel output slowed by 15.3% with growth of steel output cut by 15.2%, indicating the falling demand on the market. High temperature and heavy rains in most districts of China affected infrastructure construction, dampening demand for longs and flats.

Monitoring data showed social inventory in China ramped up, for instance, the national social inventory index was 166 points on July 1 up by 0.07% WoW turning to rising trend from decline in last week despite the inventory was still 2.7% lower than last month and 6.29% lower than the same period of last year.

The profitability of steel mills is not good with sales profit at 2.86% for national steel industry in H1 of the year far lower than one year bank interest rate and the average profit level 6.2% of national industrial enterprises. Actually, there are four years that steel industry profit was lower than one year bank interest rate.

High cost is the key factor to curb steel mills to make profits.

According to statistics by NBS, the purchasing prices of industrial producers rose by 10.55YoY in June in which fuel and power increased by 12%. In addition, the CIF price of imported iron ore in May was USD 167.15 per tonne hitting record new high up by 4.18%MoM or 30.06%YoY given CSPI only rose by 12.86% during the same period. Despite the Q3 iron ore prices issued by 3 giant miners kept in line with Q2, rapid release of domestic crude steel output bolstered iron ore prices in Q3.

In general, though the capital scale becomes larger and larger with high growth in sales, the continuing low prices of products and surging costs of raw materials caused low profitability of steel industry. China steel industry should speed up upgrading and foster new profit growth.

Indian steel industry plans mega investment on iron ore pelletization

Wednesday, 13 Jul 2011 |BS

BS reported that to address the several restrictions on iron ore exports, many mining and steel companies have decided to invest in the processing of low grade iron ore into pellets, the processed raw material used for making steel.

With the restrictions, steel and mining majors such as JSW Steel, Essar Steel, Ispat Industries and NMDC have decided to invest in making pellets to feel steel plants. Their combined plans total INR 8,000 crore in the next four years, to establish pelletisation capacity of 40 million tonnes a year.

Mr Haresh Melwani CEO of H L Nathurmal & Co a Goa based iron ore miner and exporter said that “The industry requires INR 20,000 crore to process the entire amount of exportable fines, which looks impossible at this point in time unless steel mills take an aggressive initiative.”

Mr RK Sharma secretary general of FIMI said that “The government is inviting a big risk by forcing iron ore miners to set up pelletisation plants to convert iron ore fines into pellets. Despite incurring a cost on conversion, miners are unlikely to get adequate remuneration, as pellets need to compete with high grade iron ore. Steel mills may prefer to use lumps instead of pellets at a premium.”

The Indian government has already levied 10% ad velorem royalty on iron ore mining and this is likely to be doubled. Also, the proposed changes in mining rules call for an amount equal to the royalty to be paid for the welfare of project affected people. The government has also levied a 20% export duty.

India may remove 5pct duty on coking coal - Report

Thursday, 21 Jul 2011 | Indianexpress

To boost India-New Zealand bilateral ties, the finance ministry is eager to consider exempting the 5% customs duty on weak coking coal for steel makers using the blast furnace route. It has asked the steel ministry if it wanted a zero duty window.

Anticipating export losses to India, the New Zealand government had suggested extending the exemption to producers using the blast furnace technology.

Its officials told commerce and industry minister Mr Anand Sharma that more than 90% of their export of coal to India fell in the category where weak coking coal is imported by steel makers using this technology.

In a letter on June 18, Mr Sunil Mitra finance secretary informed steel secretary Mr Pradeep Kumar Misra that his ministry had received many representations from domestic steel producers seeking duty exemption on a certain variety of weak coking coal imported by them. The ministry agreed to it for all producers except those using the BF system.

Mr Mitra told the steel secretary that “The New Zealand High Commission too has taken up the matter of extending the said exemption to these producers. This development is likely to adversely impact trade between New Zealand and India about which concerns were raised by them during the recent visit of our commerce and industry minister to their country.”

EUROMETAL: Germany leads the European economy

European association of steel and other metals distributors and service centers (EUROMETAL) has recently released a report on the performance of economy and global steel markets.

The data regarding the change in GDP from 2005 to 2011 in the euro area highlights significant differences among countries. The performance of Slovakia stands out above all, with a +30.1%, followed by Luxembourg (+17.2%), Malta (+14.7%) and Cyprus (+14.4%), while among the weakest countries there are Ireland (-1.2%), Italy (-1%), Greece (unchanged) and Portugal (+0.4%). Germany performed well, with a +8.6%, while the GDP of France and Spain was up 5.6% and 5.3% respectively.

In 2005-2011, the European industrial production showed a very heterogeneous picture as well. Slovakia was in the lead again (+43.3%), followed by Belgium (+14.2%), Austria (+9.4%) and Ireland (+9.3%); in the bottom of the list there are Spain (-16.6%), Greece (-16.1%), Italy (-11.4%), Luxembourg (-10.1%) and France (-7.8%). Germany did well again, with a 4.2% increase.

Focusing on 2011 only, global GDP is estimated to grow by 4.3%, but the world is growing with different intensity depending on the different macro-regions: advanced economies, held back by low consumer confidence, fiscal tightening and government debt, will grow only by 2.2% this year, while emerging countries will grow by 6.5%. In detail, the healthiest countries are China (+9%), followed by India (+8.6%), Argentina, Chile, Indonesia and Turkey (all above 6%). A second group consists of the countries of Central-Eastern Europe and North America: Germany (+3.4%), Poland (+4.2%), Russia (+4.2%), Slovakia (+3.5%), United States (+2.5%) and Canada (+2.9%). Western Europe and Japan grew within limits: -0.6% for the latter, +0.9% for Italy, +0.7% for Spain, +1.5% for the United Kingdom, +2.1% for France. The figure for the 17 European countries was up 1.9%.

Speaking of steel, in 2011 EUROMETAL expects an apparent steel consumption of 157 million mt in the EU-27, up 8% compared with last-year 145 million mt, but still behind the pre-crisis levels (the peak was reached in 2007, with 184 million mt). As for the European production of crude steel, in the first 5 months of this year it was up 4% over the same period of 2010. The figure has to be compared with the 6% increase of the CIS area and the 23% of Turkey, direct competitor of Europe in the Mediterranean.

In the report by EUROMETAL, it emerges once again that the long steel segment is struggling more than any other to come out definitively from the crisis. In the first 5 months of 2011 the output of the European construction sector has declined 1% year on year, while the sales of rebar, beams and profiles distributors were up 7%, though this progress is largely attributable to restocking activities. The situation is far better in the flat steel market: in January-May 2011, service centers' sales increased by 14% year on year, in line with the increase in orders in the mechanical, automotive, appliance, construction and equipment industries.