Brazil Steelmakers to face coking coal supply difficulties - Mr Luiz Sarcinelli

Fri, July,2011

Industry consultants said that some new steel mills planned in Brazil won't emerge due to coal supply difficulties.

Mr Luiz Sarcinelli director of Sage Consultoria at a coal conference in Rio de Janeiro said that companies including Vale SA, ArcelorMittal, Techint and Wuhan Iron and Steel Co plan to add a total of 19.2 million tonnes of extra steelmaking capacity in Brazil by 2016, but some projects probably won't move ahead due to increasingly scarce metallurgical or coking coal, a basic raw material.

Mr Sarcinelli said that "The situation's getting increasingly difficult. Coking coal demand is growing most in countries that are deficient in this raw material: China, India and Brazil, where steelmaking is growing most.”

Mr Otacilio Pecanha of Negotiare Consultoria said that “Coking coal demand in Brazil is set to double in four to five years, with the new projects adding an extra 23.6 million tonnes of demand. At the same time, coking coal prices will continue rising on China led demand, which has already prompted a six fold increase over the last decade to about USD 330 a tonne recently.”

He said that prospects for some new Brazil steel projects look doubtful in this scenario. Projects related to miner Vale and the Acu port being developed by billionaire Eike Batista's EBX group may still receive the push needed to move forward.(sourced from Dow Jones Newswires)

ThyssenKrupp unit hit by rail cartel probe

Fri,July01,2011

German authorities said that they are investigating 10 steel and rail companies, including ThyssenKrupp subsidiary GfT Gleistechnik GmBH, for operating a cartel between 2001 and 2008.

Prosecutors said that German national rail operator Deutsche Bahn may have been defrauded of hundreds of millions of euros as a result of the suspected price-fixing scheme.

Prosecutors in Bochum in Germany's industrial west said “If guilty, companies could face fines and individuals could be jailed.”

Authorities began investigating the alleged cartel in May.

Nearly all of GfT Gleistechnik leadership has been replaced as a result of the investigation.

A ThyssenKrupp spokesman said that "Such (anti-competitive) agreements are not tolerated. We are working closely with the authorities."

GfT Gleistechnik is a small subsidiary of the German steel giant. It employs 280 people and has annual revenue of about EUR 300 million.

Deutsche Bahn is thought to have bought up to 300,000 tonnes of steel a year at fixed prices, German prosecutors said, confirming a figure first reported by Westdeutsche Allgemeine Zeitung newspaper.

In 2006, the rail operator may have overpaid by as much as 100 million euros for steel and rail equipment, the paper said.

Deutsche Bahn legal executive Gerd Becht in a statement said that "As soon as we know more about the cartel, we will investigate possible claims."

Investigators said that regional and local rail companies may also have been harmed.(sourced from Reuters)

JFE Steel to increase stake in NAMISA

Friday,July,2011

JFE Steel Corporation announced today that it will acquire an additional 1,674,499,584 shares, or 6.45%, in Brazil Japan Iron Ore Corporation from Nippon Steel Corporation and thereby effectively raise its holdings in the Brazilian iron ore producer and distributor Nacional Minérios SA from 6.48% to 8.64%. JFE Steel’s share of Brazil Japan Iron Ore will rise to 25.78%.

JFE Steel obtained its current stake in NAMISA when a consortium formed by Brazil Japan Iron Ore comprising JFE Steel, Nippon Steel, other Japanese steel producers, Itochu Corporation and additional companies and South Korean steelmaker Posco acquired a combined 40% share of NAMISA in December 2008.

Going forward, JFE Steel expects to make additional equity investments in competitive mines to secure stable, longtime supplies of iron ore in response to the soaring global demand for this resource.

Nacional Minérios SA Established: November 2006
Location : Minas Gerais, Brazil
Capita l: BRR 1,174 million
Performance (2010) : Net sales : BRR 2,937 million
Net income BRR 1,955 million
Iron ore sales : 16.9 million tonnes

Turkey expected to return to purchase scrap

Fri, July, 2011

Turkish buyers have postponed purchasing for consecutive two weeks due to poor sales of rebar and billet. At the same time, the scrap prices have declined in Turkey’s domestic market.

It’s known that the US mills offered the HMS scrap 80:20 (1&2) quoted at USD 480 per tonne C&F but the prices were unfavorable to Turkish buyers. Besides, the European mills cut the export quotes of HMS scrap 70:30 (1&2) by USD 20 per tonne to USD 439 per tonne C&F to Turkey.

However, it’s said that Turkey may return to purchase soon as the sales of rebar and billet has risen slightly. This week, some US and European scrap suppliers have started to negotiate the prices with Turkish buyers. It’s predicted that US and European mills might give in to Turkish buyers’ bid prices to activate the purchase. (sourced from YIEH)

Mongolia shortlists three bidders for Tavan Tolgoi - Report

Fri, July01, 2011

Reuters reported that the Mongolian government has shortlisted three bidders from a list of six vying to develop the prized Tavan Tolgoi coal mine and will announce the winners within the next few days.

It did not give the names of the bidders who have been shortlisted.

However, the Mongolian ambassador to China said separately in a press conference in Beijing that the government would consider the interests of its two neighbors, Russia and China when deciding the winners and that group including Chinese and Russian firms were still in the running.

ArcelorMittal, Vale, Xstrata, US Peabody and a consortium of Chinese energy firm Shenhua and Japan Mitsui & Co are among the six bidders originally shortlisted to develop the mine, which is touted as one of the world's largest untapped coking coal deposits.

Another consortium, led by South Korean state body Korea Resources and including POSCO utility KEPCO, trading firm LG Corp, Daewoo International, Russian Railways and Japanese trading houses Itochu Corp Sumitomo Corp, Marubeni Corp and Sojitz Corp is also in the running.

The Mongolian government said the short listing came after 18 rounds of talks with all six bidders over issues such as pre-payment, mine management and environmental concerns.

Government officials have previously said more than one winner may be picked to develop the project. (sourced from Reuters)

Environment minister clears five coal blocks in NO GO areas

Fri, July01, 2011

BS reported that Indian environment minister Mr Jairam Ramesh has cleared six coal blocks, including five in NO GO areas, in Orissa.

This was the second time in a week that the environment ministry has shown a softening in stance about coal blocks caught in green hurdles.

Mr Jairam Ramesh said that of the six blocks, three (Meenakshi-A, B and Dipside) were allotted to the 3,960 Mw/4000 Mw ultra mega power plant in Orissa. Two blocks, Manoharpur and Manoharpur Dipside, were awarded to Orissa Power Generation Corporation for its proposed 1,320 MW power plant in the Ib Valley, while one (Dulanga) was allotted to NTPC for its proposed 1600 MW Darlipalli power plant.

Mr Ramesh in a statement said that “Only one (Meenakshi-A) is presently in the ‘go’ area, the other five being in ‘no go’ areas...All six blocks will now be considered by the Forest Advisory Committee as ‘go’ areas.”

Mr Ramesh said it was decided to take a relook at the three projects together to get a broader picture of the biodiversity impact.

Last week the ministry had given its approval to open up Tara Parsa East and Kante Basan coal blocks in the Hasdeo-Arand forest region of Chhattisgarh.

Under the initial NO GO exercise, the environment ministry had barred mining in 203 coal blocks, with a production potential of over 660 million tonnes.(sourced from BS)

Mr Jaiswal asks NTPC for fresh report on 5 cancelled coal blocks

Fri,July01, 2011

Considering NTPC's request to have a relook at the decision to cancel coal blocks, Indian coal minister Mr Sriprakash Jaiswal has asked the power major to come up with a fresh representation detailing steps taken to develop these blocks.

A ministry official told PTI that "NTPC chairman was asked by the coal minister to make a fresh representation of its five coal blocks which were recently deallocated by the ministry.”

The official said that the minister has asked NTPC to provide details of steps taken to develop these blocks and investments entailed in the process.

Citing NTPC's failure to develop the fields as a reason, the coal ministry had cancelled NTPC's five coal blocks Chhati Bariatu (South), Chatti Bariatu, Kerandari, Brahmini and Chichro Pastimal in May.

Earlier this month, the power ministry had requested the coal ministry to review the decision, saying that NTPC's plans to add 15,000 MW generation capacity were likely to be hit. Mr Arup Roy Choudhury CMD of NTPC had met coal minister Mr Sriprakash Jaiswal and requested him to have a re look at the decision to cancel the allotment of five coal blocks to the company.

(sourced from ET)

KIOCL iron ore pallet production to boost New Mangalore Port

Friday,July01, 2011

KIOCL Ltd is likely to add a significant share to cargo handling at New Mangalore Port Trust, if production plans at its iron ore pellet plant in Mangalore are any indication.

KIOCL is one of the major users of the port.

In a chat with Business Line here, Mr K Ranganath CMD of KIOCL Ltd has said the company is hopeful of producing around 3 million tonnes of iron ore pellets during 2011-12. He added that “If we can do this amount, it will be almost 60 shipments a year from the port here."

Mr Ranganath said that the Mangalore pellet plant will be able to produce more after it is modified.

Mr Ranganath said the company supplies around 40% of its production to the domestic market, while the rest is exported.

The New Mangalore Port handled 2.76 million tonnes of iron ore pellets during 2010-11 as against 1.5 million tonnes in 2009-10. The port handled 0.93 million tonnes of iron-ore fines cargo during 2010-11 as against 5.2 million tonnes in the previous fiscal.

The company it had stopped mining on December 31st 2005, at Kudremukh in Chikmagalur district of Karnataka following a Supreme Court order is now procuring the ore from public-sector NMDC Ltd and some private miners. (sourced from BL)

Steel prices may not change next quarter -Mr Nerurkar

Friday,Jul01, 2011

TATA Steel Ltd executives said that steel prices in the July to September period may remain the same as in the current quarter, with raw material costs continuing to bite, but festival demand afterwards will determine whether consumers will pay higher prices.

Mr HM Nerurkar MD of TATA Steel told reporters that “Coal remains at a similar level. So if we want to maintain the same margins we need to roll over the prices to the next quarter.”

Mr Nerurkar said interest rate increases 10 times since March 2010 have hurt demand, mainly in the consumer goods sector, but there was still a chance it may rebound.

Mr Nerurkar said that “To some extent, it’s the consumables like automobiles and other things that depend a lot on loans (where demand has been hurt). That’s the initial shock. After some time, people do get used to a particular thing and they start to take it in their stride.”

He said the construction sector had also taken a hit, but government spending on infrastructure was supporting it.

Mr Nerukar added that “If the market does not support (demand), if there is a glut, the situation will be different. If there is a big slowdown, marginal players, who have the highest costs, will trim down production. Nobody would want to make losses.” (sourced from livemint)

US crude steel recovery pushes India to No 4 position in 2010

Friday, 01 Jul 2011

World Steel in Figures lists the top steel-producing countries and worldsteel member companies. In 2010 the five major steel producing countries were:

2010

Rank	Country	Capacity	Change
1	China	626.7	9.3%
2	Japan	109.6	25.3%
3	United States	80.5	38.3%
4	India	68.3	7.6%
5	Russia	66.9	11.5%

In million tonne

2009

Rank	Country	Capacity
1	China	573.6
2	Japan	87.5
3	India	63.5
4	Russia	60
5	United States	58.2

In million tonne

Total world production was 1,413.5 million tonne in 2010, up from 1,230.9 million tonne in 2009.

(Sourced from www.worldsteel.org)

Iron Ore-Shanghai rebar at 2-week top, but down on month

Thu Jun 30, 2011

* Spot iron ore fall to fresh 3-month lows
* BHP sells 180,000-190,000 T of fines via tender
By Manolo Serapio Jr

SINGAPORE, June 30 (Reuters) - Chinese steel futures edged up 0.6 percent to two-week highs on Thursday in a technical bounce after recent losses, but a second straight month of decline for prices in June clouds the outlook for demand in the third quarter.

A lull in steel demand in top consumer China has weighed on spot iron ore prices .IO62-CNI=SI which fell to their lowest in more than three months on Wednesday and are also bound for a second consecutive month of losses.

The most-active October rebar contract on the Shanghai Futures Exchange rose 27 yuan to close at 4,753 yuan a tonne. Despite the gain, Shanghai rebar fell 2.5 percent for all of June, more than three times its losses in May.

"It's a modest rebound, there's nothing much else to it. Actual physical trading of steel and iron ore remains thin," said a Shanghai-based trader.

BHP Billiton sold around 100,000 tonnes of 63-grade Newman iron ore fines at $174, cost and freight at a tender on Wednesday, traders said. The world's No. 3 iron ore miner also sold 80,000-90,000 tonnes of 57.7-grade Yandi fines at $152.50 a tonne, C&F, they said.

"The prices are more or less within market expectations. We believe prices will continue to fall in a slow pace because of weak Chinese demand," said an iron ore trader in Beijing.

"Besides the BHP tender, we didn't hear of any other deals for iron ore."

Global miners like BHP and Rio Tinto Thomson Reuters)

Mining Boom Makes Truck Tires Pricier Than Porsches, Condominiums in Miami

Jun29,2011

By Elisabeth Behrmann

China’s insatiable demand for commodities has prompted a tripling in the price of mining truck tires, making them more expensive than a Porsche 911 Carrera S type or a condominium in Miami.

Prices for tires about 3.5 meters (11 feet) across, used on the Caterpillar Inc. trucks that haul iron ore and coal, have touched $100,000 on the spot market, according to Leighton Holdings Ltd. (LEI), a contractor for mining companies including BHP Billiton Ltd. (BHP) and Anglo American Ltd. Prices rose as high as $150,000 in 2008.

That compares with contract prices of about $30,000, according to Roesler Tyre Innovators GmbH, which retreads so- called off-the-road tires. Demand from China, the world’s biggest metals buyer, drove copper, iron ore, gold and coal to records this year, forcing companies to compete for the equipment and labor needed to mine them.

“We fear the situation will become as tight as in 2007,” Paul Roesler, managing partner of Dortmund-based Tyre Innovators, said by phone from the company’s Perth office, citing Michelin & Cie and Bridgestone Corp. as major suppliers. “We see tight tire supply and high prices become a challenge for mining companies again but we think that the large players have prepared for this and have better contracts with suppliers and have improved stock.”
‘Just Exploding’

Demand for mining tires is “just exploding,” according to Titan International Inc. (TWI) Manufacturers are reporting full order books for off-the-road tires for the next 18 months and alerting customers to the risk of shortages this year, according to Global Markets Perspectives Ltd.

“Where we need to expand rapidly or where we have a new project, then we have to source tires on the spot market like everyone else,” said Christian Sealey, a spokesman at Sydney- based Leighton, Australia’s biggest builder, in a telephone interview. “In those situations we’re finding some inflation.”

The last time tire prices surged was during the mining boom before the global financial crisis. Barrick Gold Corp. (ABX), the world’s largest gold producer, said in January 2008 that it paid as much as $60,000 a tire for its largest vehicles, while some sold for as much as $300,000 in Internet auctions. The tire drought left companies such as De Beers, the world’s biggest diamond producer, unable at times to use new trucks.

The Porsche 911, including tires, costs $91,450, the carmaker says on its U.S. web site, while the median price in the first quarter of a previously owned condo in Miami-Fort Lauderdale was $79,200, according to the National Association of Realtors.
Market Tightening

“There seems to be a tightening of the market,” Lyndon Fagan, an analyst at Royal Bank of Scotland Group Plc, said by phone Sydney. “There are comments there’ll be a wait for tires.”

In Australia, the world’s biggest exporter of iron ore, coal and alumina, there are a record A$174 billion ($183 billion) of minerals and energy projects at an advanced stage of development, according to government forecasts last month. Rio Tinto Group, the No. 2 exporter of iron ore, is planning a $14.8 billion expansion to double output in Western Australia’s Pilbara region to 333 million metric tons by 2015.

Rio is prepared, said Gervase Greene, a Perth-based spokesman for the company. “We have appropriate arrangements with long-term suppliers to ensure that these price movements don’t affect us.”

The price of tires used in Australia by Newmont Mining Ltd., partner in the nation’s biggest open-cut gold mine, increased 4 percent this year, though this was offset by a stronger local currency, said Brian Watt, a company spokesman.

“Smaller players and mining contractors will find it difficult to meet their demand because they don’t tend to have longstanding supply contracts,” said Tyre Innovators’ Roesler. (By Bloomberg)

Iron-ore and coal help push Australia-China trade to over A$100bn

Thursday,30th June 2011
By Esmarie Swanepoel

Perth − Australia’s two-way trade with China reached record levels in 2010, driven by major exports of iron-ore and coal.

The Department of Foreign Affairs and Trade said this week that total trade had grown by 23.6% during 2010, to over A$100-billion for the first time ever.

Australia’s exports to China increased by 13.9% to A$284.6-billion, while imports rose by 5.4%, to A$267.8-billion. The federal government noted that Australia’s export volumes to China increased 5.2%, while import volumes increased 13.5%.

Japan was Australia's second largest two-way trade partner, at A$66.1-billion, followed by the US at A$49.8-billion. Japan was also Australia's second largest export market, with A$45.7-billion worth of exports, while the Republic of Korea was Australia's third largest export market, at A$22.4-billion.

Australia's top three exports were iron-ore and concentrates, reaching A$49.4-billion in 2010, up 64.3%, coal, which accounted for A$43-billion in exports, and education-related travel services, which reached A$17.7-billion.

Gold was also one of the largest export commodities, reaching A$15-billion during 2010. Despite being the fourth largest export product, gold’s volumes fell by 3.8% during the year.

The export of crude petroleum products was up by 46.4% during the year, to A$10.5-billion, while copper ore and concentrate exports were up by 32.8%, to A$5-billion. Copper export increased by 26.3%, to reach A$3.2-billion during 2010, while natural gas export was up by 23.6%, to A$9.4-billion.

The Australian Bureau of Agricultural & Resource Economics & Sciences has previously forecast the value of Australia’s commodity exports to rise by 17.8% in 2011/12, to reach some A$256-billion.

Earnings from energy and minerals exports are forecast to increase by 20% in 2011/12 to around A$218-billion, following an estimated rise of 31% to A$182-billion in 2010/11.

Edited by Mariaan Webb, Miningweekly)

Orissa HC rejects CBI probe into multi-crore coal linkage scam in Orissa

Thursday, June 30, 2011
(UNI) Orissa High Court today refused to order for a CBI probe into the alleged multi-crore subsidised linkage coal scam in the state.

A division bench, comprising Chief Justice V Gopala Gowda and Mr Justice B N Mohapatra, while disposing of a PIL seeking court's direction for a CBI probe into the scam, observed that the State Vigilance Directorate should be allowed to continue its probe in the matter.

'At this stage, direction for CBI probe is not necessary,' the division bench ruled ordering the State Vigilance to conduct the enquiry.

The court also directed the Vigilance department to take appropriate coercive steps against the accused persons involved in the scam and the anti-corruption wing of the police should complete the enquiry as soon as possible.

However, petitioner Nishikanta Mishra, an advocate of the High Court, indicated that he would challenge the High Court ruling in the Supreme Court in a special leave petition (SLP).

Mr Mishra had filed the PIL in June last year in which at least seven persons, including the Director of State Vigilance, were made opposite parties.

Earlier, the vigilance sleuths had registered at least seven criminal cases against several persons including IAS officer Srikant Prusty, two officials of Orissa Small Industries Corporation (OSIC) were also arrested in connection with the scam.

State Urban Development Minister Badri Narayan Patra and School and Mass Education Minister Pratap Jena, who on different occasions headed the OSIC were alleged to have been involved in the corruption as irregularities were committed when they were heading the OSIC.

The incident created a furore both inside and outside the State Assembly as the opposition parties created a hue and cry over the issue and demanded resignation of these two ministers.

The High Court had granted anticipatory bails to as many as 20 officials and traders, including BJP leader and former president of Orissa Consumers’ Co-operative Federation (OCCF) Golak Mohapatra who were booked by the State vigilance directorate for their involvement in linkage coal scam.

Former Managing Director of OCCF Akhila Chandra Jena, former MD of Cuttack DIC Srikant Prusty, were among the accused who obtained the anticipatory bails.

Later the Vigilance Directorate submitted a status report in the High Court stating that at least 83 witnesses had been examined and a total of 97 documents were seized so far in all the seven criminal cases. sourced UNI, Indlawnews)

Three coal blocks cleared to pave way for Orissa UMPP

Thursday, Jun 30, 2011,
By Rajesh Kumar Singh & Abhijit Roy Chowdhury,DNA

New Delhi:The environment ministry approved three coal blocks for a very large power plant in Orissa, paving the way for completing the process of inviting bids for the 4,000 megawatt project.

An additional three blocks were approved for two other power generation projects in the state, including a 1,600 mw plant by NTPC Ltd, according to a release on the website of the environment ministry signed by environment minister Jairam Ramesh.

Bids for the Orissa ultra mega power project, one of nine coal-fired plants with a capacity of 4,000 mw being built to expand access to electricity nationwide, were invited in June last year.

Deadlines for the bids were extended six times as environmental approval was awaited for mining the project’s coal blocks.

Approval for the coal blocks was given after the power ministry, NTPC and Orissa Power Generation Corp proposed to reduce the forest area that would be affected by mining.

All the power units that were allocated the six coal blocks will use supercritical technology, which will save carbon dioxide emissions.

The project builders are required to bear the cost of replanting an area equivalent to the forest land diverted for mining.

The last day for submitting bids for the Orissa ultra mega power project is August 1, according to a notice on the website of state-owned Power Finance Corporation, the agency handling the bids.

Orissa Power Generation is building a 1,320 mw plant, which has been allotted two coal blocks.

Five of the six blocks in the Ib Valley coalfield are in densely forested areas, in which the environment ministry prohibits mining. The ministry has begun to make exceptions recently as demand for coal outpaces supply and forces imports at higher prices.

Last week, the environment ministry overruled a panel’s recommendation to hold back approvals for three coal blocks in Chhattisgarh state, saying they were on the fringes of the bio-diversity rich Hasdeo-Arand forests.

A panel of ministers set up to consider mining in forest areas is scheduled to meet on July 14 and will likely discuss delayed projects of Reliance Power Ltd, Essar Power Ltd and the Aditya Birla Group, PTI reported on Wednesday.

Kiwi coking coal play takes chequered flag

July 01, 2011 12:00AM
By Tim Boreham From The Australian

THINK of a Bathurst winner and Peter Brock or Jim Richards come to mind, but investors in this New Zealand coking coal developer saw the chequered flag in 2010-11.

Bathurst Resources (BTU) $1.025 and others

Bathurst shares last night closed up 585 per cent for the year, making it easily the best performer in the ASX 200 index.

Bathurst's fortunes contrast with the Pike River mine 100km down the road, which fell into administration after November's disaster that killed 29 workers.

Tellingly, eight of the 10 top performers were mining stocks, with another, contractor NRW Holdings (NWH, up 184 per cent), riding the coal dragon.

Seeing you asked, the others were US shale play Aurora Oil & Gas (AUT, 354 per cent); rare-earths developer Lynas (LYC, 263 per cent), mineral sands miner Iluka Resources (ILU, 260 per cent), Indonesia copper/gold hopeful Intrepid Mines (IAU, 181 per cent), coal-to-gas specialist Linc Energy (LNC, 197 per cent), WA gold play Regis Resources (RRL, 177 per cent) and African iron ore developer Sundance Resources (SDL, 161 per cent).

The odd man out, biotech Mesoblast (MSB), rounded out the top 10 with a 367 per cent gain.

Most are at a crucial stage of development that will justify (or otherwise) their heady valuations. Sundance has entered commercial partnering discussions re its Mbalam project in Cameroon. Expect good news.

Lynas shares are on trading halt until Monday pending the results of an independent review of its proposed Malaysian processing plant. Don't expect good news. Linc, which has gone on a US asset buying spree, is a longer-term story. Intrepid has had a spot of bother with illegal miners on the periphery of its Tujuh Bukit project, but otherwise it's all wow factor as it shapes up as a billion tonne-plus deposit.

Coming back to Bathurst, the company is engaged in an environmental consent process. Hearings are due to resume on July 6.

Bathurst plans to be in production by the end of the year. The initial production target is 650,000 tonnes, rising to 4mt by 2015.

Bathurst's high-quality output is likely to command a 15 per cent premium over the prevailing benchmark hard coking coal price of $US330 a tonne.

Bathurst also has money in the bank, port and rail facilities and a ready workforce.

Bathurst's $680 million market cap looks stretched on a dollars per resource tonne basis, but on a projected earnings basis the sums are more interesting.

On rough (and conservative) numbers, Bathurst should generate $100m of EBIT in 2011-12, representing an enterprise value to EBITDA valuation of seven times. If the 2015 production ramp-up is reached, this ratio falls to 2.3 times. Recent coal transactions such as Rio's takeover of Riversdale Mining have been on a multiple of 8-10 times. That's enough evidence to warrant a hold call, in our view.

As for the others, we recently rang the bell on Aurora Oil & Gas and Iluka on valuation grounds.

This month we endorsed Linc as a spec buy because its $1.5 billion market cap is accounted for by its Australian tenements alone.

Solco (SOO) 10c

CHANGES to solar subsidies and revelations of shoddy wiring in NSW home installations have left the solar industry in disarray.

In this context, the Brisbane-based panel wholesaler's guidance of record profit and revenues is as welcome as a ray of sunshine on a winter's day.

Solco expects to generate $3.6m for the year on a 50 per cent rise in revenue to $52m.

Solco executive chairman Dave Richardson says the capital cost of a panel has halved over the past five years, while quality has improved.

Given Solco imports its panels (mainly from China), the strong dollar has also helped.

Solar, he says, is now "a very well accepted technology". But for hermits who haven't noticed those "buy before June 30" solar ads, changes are afoot: from today, the federal government's multiplier scheme -- by which households receive five renewable energy certificates for each megawatt hour of electricity produced -- is wound back to three.

Richardson expects demand will ease for a couple of months, but then pick up again.

The lower cost of production coupled with soaring power bills means we're reaching "grid parity", the point at which solar power (without subsidies) is no dearer than conventional electricity.

Solco, which is supported by a base of 1400 retail holders, trades on a lowly multiple of four times and last year paid a 0.25c dividend. (By TheAustralian)

Electricity companies switch from gas to coal

Increased use of coal for electricity generation undermines UK effort to fight global warming

Thursday 30 June 2011

Britain's electricity generators have been beefing up their use of coal and turning their back on more carbon-friendly gas, in moves that undermine government efforts to fight global warming.

Statistics from the Department of Energy and Climate Change (Decc) show power providers used 8% more coal for electricity production in the first quarter of this year and 21% less gas.

The "big six" energy companies, which include British Gas parent group Centrica, Scottish and Southern Energy (SSE) and RWE npower, are already under fire for allegedly overcharging customers.

The Decc figures also show the total amount of electricity generated by wind and other renewable sources over the 12 months of 2010 was 25,734 gigawatts – only 2.2% up on the year before.

Renewable energy accounted for 3.3% of total UK energy consumption, an increase of only 0.3 percentage points over 2009, although its contribution to electricity output rose from 6.7% to 7%.

There was also a worrying picture for Britain's balance of payments, with domestic production of oil and gas from the North Sea falling heavily. Oil output was down 15.5% in the first quarter of 2011 on the same period in 2010, while imports of oil and oil products shot up fourfold, to 4m tonnes.

Total indigenous production of natural gas fell in the first three months of 2011 by nearly 18% and while exports were nearly 12.5% lower, imports were down 1.5% too.

The power companies have been benefiting from local coal production, however, with the small but active number of British facilities recording a 31% increase in output in the first quarter. Deep-mined coal – as opposed to surface-mined – showed an 80% increase, as coal stocks were depleted due to demand from the utilities.

Power companies are meant to be trying to reduce their use of more carbon-intensive fuels but are understood to be switching away from gas because of a surge in prices.(sourced Guardian)

NTPC buys 5 mn tonne coal from SCCL at extra price

Thu, Jun 30, 2011 | Source PTI

State-run NTPC , which is looking for coal to produce power after the Coal Ministry cancelled five coal blocks allotted to it, is all set to buy 5 million tonnes of coal from Singareni Collieries Company (SCCL), by shelling out Rs 814 extra per tonne.

According to NTPC, it entered into an agreement with SCCL, an Andhra Pradesh government-owned coal mining company, for coal supply in addition to normal supply. "Under the MoU, SCCL would supply five million tonnes of additional coal to NTPC stations for a period of one year from July 1, 2011, to June 30, 2012, in addition to supply of 10.2 million tonnes of coal per annum under the existing long term fuel supply agreement with the thermal power major," a company statement said today.

"We will charge Rs 814 extra per tonne from NTPC on the long term contract price of Rs 600-1900 per tonne," a senior official of SCCL told PTI. The Ministry of Coal recently cancelled five coal blocks - Chhati Bariatu, Kerandari, Chhati, Bariatu (South), and Brahmini in various parts of Jharkhand as there was no progress in developing the coal fields which were allotted for captive purpose.

The ministry has also issued warning letters to NTPC for not showing any progress in two coal mines - Talaipalli coal block (Chhattisgarh), and Pakri Barwadih, (Jharkhand).

According to a NTPC official, the power ministry is lobbying with coal ministry to revoke the de-allocation letters issued to the PSU power major. When contacted, NTPC spokesperson said with the current supplies from SCCL they are able to achieve 80-84% Pay Load Factor (PLF).

"If we want to achieve higher levels we need extra reserves of coal. This (MOU) is for short term supplies and is for one year," the spokesperson said.

Tags: NTPC, Singareni Collieries Company sourced moneycontrol

Brazilian steel industry almost at crisis - Mr Assumpcao

Thursday, 30 Jun 2011

Brazil's steel industry is "almost at crisis point," due to the country's strong currency and soaring raw materials costs

Mr Marcos Assumpcao head of natural resources equity research at Itau BBA said that "There's been a sharp fall in Brazilian steelmakers' profitability. In early 2008, EBITDA margin levels were above 40%: they're close to 10% now.”

Mr Assumpcao said that "Coal prices have risen even more than iron-ore prices which is damaging to Brazilians.”

Steelmakers have been hit by soaring prices for raw materials, including metallurgical coal and iron ore, prices for which reached record high levels earlier this year as a result of high Chinese demand. Some steelmakers, including Companhia Siderurgica Nacional SA, Usinas Siderurgicas de Minas Gerais SA and Gerdau SA have intensified their own iron ore production activities in Brazil to shield themselves from high ore prices. However, they are unable to hedge adequately against surging coal prices as Brazil is deficient in metallurgical coal and is therefore dependent on coal imports.

Metallurgical coal quarterly contract prices reached an all-time high of around USD 330 a metric tonne on global markets in the second quarter, while spot iron-ore prices touched USD 170 a tonne.

In addition to the pressure from coal and ore costs, which account for an ever growing proportion of steel production costs, Brazilian steelmakers have also suffered from the appreciation of the real, which has boosted local operating costs.

Mr Assumpcao said that "The real has appreciated much more than currencies in other steel producing countries.” (sourced from MarketWatch)

China shipping exchange launches first forward freight contract

Thursday, 30 Jun 2011

Reuters reported that the Shanghai Shipping Freight Exchange Co has launched China first forward freight contract allowing local exporters and shipping companies to manage growing volatility in freight rates.

The forward contracts are based on ship rates for the China-Western America route and the China-Europe route. The contracts which track dry bulk freight rates began trading on Tuesday which saw the most active Europe route contract open at USD 886 per 20-foot equivalent unit, and the US route open at USD 1,658 per 40 foot equivalent unit.

The SSEFC said each route will have maturing periods beginning from July until December. Trading margins were set at 10%.

The Shanghai freight index is based on quotations from shipping companies as well as cargo brokerage firms on 15 major routes leaving the city.

Shanghai has been the world busiest dry bulk port for the past three years. The city also overtook Singapore to become the world largest container port last year.

(Sourced from Reuters)

Finland’s Outotec to deliver world's largest iron ore pelletizing plant in Brazil

Thursday, 30 June 2011

On June 30, Finnish mining and metal manufacturing equipment provider Outotec announced that it has come to an agreement with Brazil-based mining company Samarco Mineração S.A. (Samarco) on a turnkey delivery of the world's largest iron ore pelletizing plant in Brazil.

The contract value is approximately €200 million, which will be booked in Outotec's second quarter order intake. In addition, the contract includes local Brazilian purchases worth €100 million performed on behalf of the customer. Some 90 percent of the services and supplies for the project will be delivered from Brazil.

The new plant will be installed at Samarco's iron ore port in Ponta de Ubú, Espírito Santo, Brazil. Once operational at the end of 2013, the plant will treat 9.25 million mt of iron ore per year. (sourced steelorbis)

Tags: iron ore , Brazil , Finland , Outotec , raw mat , Europe , European Union , South America , mining

Vale to produce 6.37 million mt of coal in Mozambique next year

Thursday, 30 June 2011

Brazil's Vale SA plans to produce 1.56 million metric tons (mt) of coal at its Moatize mine in Mozambique this year, with output rising to 6.37 million mt in 2012. The mine currently has an 11 million mt capacity and is still in its first stage of production.

By 2014, production capacity at the Moatize mine is expected to rise to 22 million mt of coal--about two-thirds of coal output at Moatize is of metallurgical coal, and the rest is thermal coal. Vale is due to make its first export shipment this October.

Tags: Met Coke , Brazil , Mozambique , Vale , raw mat , Africa , East Africa , South America , mining , production
(sourced steelorbis)

Iron ore exports from Indian state of Orissa fall in Q1 FY 2011-12

Thursday, 30 June 2011

Exports of iron ore from Paradip port in India's eastern state of Orissa have fallen 13.6 percent to date in the first quarter (April to June) of the current Indian fiscal year (FY 2011-12), due to stringent rules imposed by the local government and a fourfold increase in export tax, Reuters has reported.

According to a port official, exports totaled 2.55 million mt in the period in question compared with 2.95 million mt in the year-ago quarter.

Exports from Paradip, India's second-largest iron ore exporting port, dropped 14.2 percent to 13.84 million mt in the fiscal year 2010-11 ended on March 31, compared to the previous fiscal year.

"There is hardly any movement from Orissa due to high railway freight and export duty. There is no feasibility in the market, and exporters are losing INR 500-800/mt ($11-17/mt)," said Dhruv Goel, managing director of Orissa-based iron ore trader SteelMint.

Lower exports from India, the world's third biggest exporter of the steelmaking raw material, have resulted in a tight supply situation in the global market amid thin buying by China.

Meanwhile, since the beginning of the week, China reports rising iron ore inventories at its ports probably due to cautiousness of the steel mills towards booking activity given the slowing down of the domestic steel industry.

Tags: iron ore , China , India , raw mat , Far East , South Asia , East Asia and Pacific , Southeast Asia , Indian Subcon , trading , imp/exp statistics
(sourced steelorbis)

TATA Steel eying steel scrap recycling in SE Asia

Thursday, 30 Jun 2011

TATA Steel is looking at acquisitions in steel scrap recycling in South East Asia and will continue to invest upstream to increase its self sufficiency in raw materials.

Mr Kees Gerretse TATA Steel group director of procurement told Reuters on the sidelines of the Metal Bulletin steel scrap conference in Istanbul that "We are looking at opportunities.”

He added that "We are looking of course not at the big ones, we are looking at tier two or three opportunities. We would like to have something in Southeast Asia as there is shortage of scrap in that region." (Sourced from BS)

JFE and Itochu to lift stake in Brazilian mine

Thursday, 30 Jun 2011

Japan's JFE Steel Corp and Itochu Corp plan to buy out the stakes held by Nippon Steel Corp and Sumitomo Metal Industries Ltd in the operator of the Namisa mine in Brazil, in a bid to secure a steady supply of iron ore.

Itochu which has been hunting new revenues in mining rights said that it would spend JPY 40.9 billion (USD 504 million) to boost its stake to 22.45% from 16%.

JFE Steel said that a JFE Holdings Inc unit will invest about JPY 13.7 billion to raise its interest to 8.64% from 6.48%.

Currently, 60% of the Namisa mine is owned by Brazilian steelmaker Companhia Siderurgica Nacional, with the rest held by a consortium of Japanese companies and South Korea's POSCO.

Nippon Steel and Sumitomo Metal are selling their stakes amid an ongoing review of portfolio performance and asset use. The transfer will take place on June 30.
(sourced from Reuters)

Sundance shortlists partners for $4.6B iron ore project

Jun 29, 2011 2:04am GMT

* Talks continue with potential partners
* Aims to start construction before end 2011
* Shares up 3.2 pct after early jump (Adds details)

MELBOURNE, June 29 (Reuters) - Sundance Resources has shortlisted potential partners for its $4.6 billion iron ore project in West Africa, it said on Wednesday, sending its shares up as much as 6 percent.

The company, which did not name the shortlisted companies, had been talking to Chinese steel mills, South Korean steel maker POSCO and others, as potential partners, over a deal that may involve selling up to a 50 percent stake in the project and agreements for long-term supply of iron ore.

"Sundance has shortlisted the preferred potential partners and has entered into commercial negotiations," it said in a statement to the Australian Securities Exchange before its self imposed June 30 deadline.

It said it aims to make a final investment decision on the Mbalam iron ore project, which is developing deposits in Cameroon and the Republic of Congo, in time to begin rail and port works before the end of 2011.

That appeared to be a slight change on previous statements, where it said it aimed to make a final investment decision by the end of September.

Stage one of the project is due to produce 35 million tonnes a year, starting in late 2014, with stage two designed to double that capacity, with higher quality product.

Sundance Managing Director Giulio Casello was not immediately available to comment on how many parties were on the shortlist.

Chinese mills want to secure long term supplies of iron ore to reduce their dependence on the major iron producers, Vale , Rio Tinto and BHP Billiton , Casello told Reuters in March.

The company said potential partners and several Chinese banking institutions had visited Sundance's operations in Cameroon and the Republic of Congo to finalise due diligence, and it is in talks with the two governments to finalise mining conventions.

"The governments involved have shown strong support and are eager for the completion of talks so that construction may commence as soon as possible," it said.

Sundance's biggest shareholder is private Chinese company Sichuan Hanlong Group, with a 19 percent stake.

Sundance's shares rose to a high of A$0.335 and last traded up 3.2 percent at A$0.325. (Reporting by Sonali Paul; Editing by Balazs Koranyi, Thomson Reuters)

Rio Tinto comfortable with Australia project

Thursday, 30 Jun 2011

Reuters reported that Rio Tinto chief executive is comfortable with the company multibillion-dollar project budgets in Australia where labour and input and services costs were all increasing.

The comment from Chief Executive Mr Tom Albanese came after rival BHP Billiton and Woodside Petroleum both recently announced cost blowouts on projects in Australia.

Rio Tinto biggest investment is a USD 14.8 billion expansion of its iron ore capacity to 330 million tonnes a year which it expects to complete by the first half of 2015.

Mr Albanese said at a business lunch that "I'm comfortable that our budgets in Australia are being managed appropriately. He said one of the challenges to managing budgets was the strength of the Australian dollar. With costs incurred in Australian dollars any increase is magnified when translated into US dollars, Rio reporting currency.”

Mr Albanese reiterated that the long term outlook for Rio Tinto is strong, supported by demand from rapidly developing countries like China, India, and in Southeast Asia, but there will be a range of challenges, including economic uncertainty.

He said that "We're going to climb a wall of worry over the next 10 years. In the meantime, the long term picture continues to be sound."

Mr Albanese said he expected uranium demand to continue growing, but at a slower rate than before the Fukushima nuclear plant crisis in Japan, as countries delayed new nuclear plants or phased them out as Germany plans to do.

He said that "For us that means maybe the growth rate of uranium could be slower than it was pre-Fukushima. He added that as long as countries went ahead and put a price on carbon, then there would be a push towards building new nuclear capacity.

Despite a recent dip in spot iron ore prices, Rio Tinto iron ore chief, Mr Sam Walsh said the company was not seeing any drop in demand. He said that "We've got healthy queues at both of our shipping areas."

He added that "Importantly we're also seeing strong demand from Japan, Korea and Taiwan. So the business is continuing to run flat out."

(Sourced from Reuters)

Iron Ore-Prices at 3-month lows, miners put more cargo on spot

Jun 29, 2011
* China steel prices slip further as construction slows
* BHP Billiton, Rio selling more cargoes on spot-trade
* BHP tenders 190,000 tonnes iron ore fines
By Manolo Serapio Jr

SINGAPORE, June 29 (Reuters) - Spot iron ore prices languished at three-month lows and deals remained scarce on Wednesday as lower steel prices in top producer China continued to limit buying interest for the steelmaking ingredient.

Global miners BHP Billiton and Rio Tinto <0#SGXIOS:> extended losses on Tuesday, with Singapore Exchange-cleared contracts from July 2011 through December 2013 mostly lower, reflecting investor expectations of further decline in spot prices.

Brazil's Vale , the world's No. 1 iron ore miner, has cut its production target for 2015 by 10 percent as the outlook for Chinese growth slows and new mine projects face delays.

(Reporting by Manolo Serapio Jr.; Editing by Ed Lane, Thomson Reuters)

Demand for Australian iron ore strong - Rio Tinto

Thursday, 30 Jun 2011

Dow Jones quoted Rio Tinto PLC said there are no signs of demand tapering off for its iron ore despite a recent weakening in spot prices for the steel making commodity.

Mr Sam Walsh Rio Tinto iron ore chief executive said "We're continuing to ship flat out. He said that we've got healthy queues at both of our shipping areas we're steady as she goes."

He added that spot iron ore prices have fallen a smidgen in recent weeks, but this is a normal market fluctuation.

Mr Walsh said alongside strong consumption in China, Rio Tinto is also seeing good demand in other Asian markets such as Japan, South Korea and Taiwan.

Earlier this month Rio Tinto said that, it is quickening the pace of its expansions in the Pilbara region of Western Australia after being encouraged by strong demand for the steel-making ingredient.

The miner now expects to achieve the desired 50% capacity increase to 333 million metric tons a year in the first half of 2015, six months earlier than previously forecast.
(Sourced from Dow Jones Newswires)

Japan July-Sept crude steel demand seen up 1.5 pct

Thu Jun 30, 2011 8:41am GMT

* Demand for Q2 steel products seen up 7.1 pct Q/Q
* Inventory levels remain high - trade ministry (Adds trade ministry comment)

TOKYO, June 30 (Reuters) - Japanese demand for crude steel in July-September will be just 1.5 percent higher than the previous three months despite a robust recovery in the manufacturing sector as inventory levels remain high, the trade ministry said on Thursday.

A government survey of domestic steel users, such as carmakers and electric appliance makers, in combination with high inventory levels point to total demand for crude steel of 26.92 million tonnes for the period, the second quarter of the 2011/12 financial year, the ministry said.

That would be down 1.6 percent from the same period a year ago.

"Japanese carmakers are planning big production increases during the period as their damaged supply chains have come back online, but the level of inventories is very high," Masaki Koito, director of the ministry's Iron and Steel Division, said at a news conference.

The government expects demand for steel products to grow 7.1 percent in July-September compared to three months earlier, pulled higher by a 27 percent jump in demand from the car sector.

But domestic inventories of steel products are estimated to stay at around 5.56 million tonnes at the end of June, slightly below the end-May level of 5.63 million tonnes, Koito said.

(Reporting by Yuko Inoue; Editing by Joseph Radford, Thomson Reuters)