India’s JSW Steel cuts production to 30 percent

September28, 2011

India's leading steelmaker JSW Steel has had to reduce its steel production to 30 percent of its capacity at its Vijaynagar plant due to the abrupt disruption of supplies to JSW Steel from Indian state-run mining company National Mineral Development Corporation (NMDC).

The Supreme Court of India first suspended all mining activity in the Bellary district of India's Karnataka state, but then it allowed NMDC to mine iron ore and sell 1 million mt per month. However, JSW Steel stated that NMDC has not yet fulfilled this order even after 50 days.

According to the company statement, due to this artificial shortage of iron ore, raw material prices may increase to unnatural levels. Steel industry in Karnataka region contributes 0.5 percent to India's GDP and provides employment to thousands of people. If steel production does not continue with timely supply of iron ore, the already slowing Indian economy will suffer from loss of steel production in the Karnataka region as well, the statement said.

Tags: raw mat , India , Indian Subcon , Southeast Asia , investments , mining , JSW Steel , South Asia

(sourced steelorbis)

Keeping more iron ore at home, India exports seen halved

Mon Aug15, 2011
By Manolo Serapio Jr and Siddesh Mayenkar

SINGAPORE/MUMBAI (Reuters) - India's iron ore exports, which fell for the first time in a decade last year, could halve over the next five years as the country feeds the expansion of its steel industry.

Lower shipments from the world's No. 3 exporter should help bolster prices that have already more than trebled from late 2008, as massive increases in global supply are only expected to come through by 2015 and demand from top consumer China rises.

"Indian exports are in a structural decline as resource nationalism becomes a bigger driver behind policy. The policy is definitely not encouraging exports," said Graeme Train, commodity analyst at Macquarie in Shanghai.

In a bid to curb overseas sales, India has raised freight rates and quadrupled export taxes on iron ore fines, the sandy material that typically contains 55-65 percent iron and which comprises around 70 percent of its annual output of about 200 million tonnes.

India's iron ore output and exports,

Iron ore exports from India fell 17 percent to 97.6 million tonnes in the year to March, largely due to a ban on shipments from the key producing state of Karnataka.

Analysts in a Reuters poll forecast another drop to eight-year lows this year on increased costs and a delay in resumption of shipments from Karnataka, source of around a quarter of India's exports.

Tight Indian supplies and booming Chinese demand lifted spot iron ore prices to record highs above $190 a tonne in mid-February. They are currently trading near $176.

EXPANDING STEEL SECTOR

The world's fifth-largest steel producer, India is aiming to lift output to 120 million tonnes by the end of 2012 from nearly 67 million tonnes in 2010, as the likes of steel giants ArcelorMittal and POSCO expand their reach into Asia's third-largest economy.

India is looking at 8.2 percent growth this fiscal year, after expanding 8.5 percent last year, underscoring the need to boost domestic steel output and consumption of iron ore.

With the expansion in its steel sector, the country's iron ore exports are forecast to fall to roughly half of the 97.6 million tonnes shipped in the last fiscal year by the year to March 2016, said Gunmeet Singh, analyst for CRU in Mumbai.

India's traditional steel blast furnaces can use only iron ore lumps, but there is a growing move among steelmakers to invest in more pelletizing and sintering plants that can take the iron ore fines now mostly exported to China.

Singh estimates that the country's pelletizing capacity will triple to 90 million tonnes in five years and its sintering capacity will increase 55-60 percent from 53 million tonnes.

"In many ways the efforts to prevent exports of iron ore are more to support the domestic steel industry which will benefit from much lower raw material costs," said Christopher Ellis, analyst with Metal Bulletin.

While land acquisitions remain a big hurdle that could disrupt India's plans, with protests continuing against POSCO's planned $12 billion steel mill that was meant to start producing this year, there is a pending bill in parliament aimed at boosting payouts to poor villagers for industrial projects developed on farmland.

MARGIN SQUEEZE, KARNATAKA FREEZE

Apart from imposing higher taxes to stop iron ore exports, India also hiked freight rates twice this year, making carriage costs for exports five times more expensive than those for ore for local consumption.

The increased taxes and tariffs pushed the average cost for Indian iron ore to $100 per tonne, more than double the production cost in Australia and Brazil, said Train.

"That would put Indian material at the top of the cost curve this year. They're almost better off selling into the domestic market," said Train.

The higher cost slashed margins of producers, after taking out handling and shipping fees.

"Before the tax hike, miners earned $40 per tonne, but after the tax incursions the margins have diminished to $10-$20," said Dhruv Goel, managing director at Orissa-based Steel Mint.

"The middle man hardly gets $1 (per tonne)."

Indian exports also suffered from a ban on shipments from the iron-ore rich state of Karnataka, source of around a quarter of the country's annual exports, from July 2010, as part of the state's crackdown on illegal mining.

The Supreme Court ordered the ban lifted in April but that order has yet to be carried out with the state government citing procedural delays as it installs monitoring and tracking systems. Political infighting may further progress.

Gavin Montgomery, iron ore analyst at Wood Mackenzie, said he expects Indian shipments to fall to 65 million tonnes by 2015, prompting big suppliers Australia and Brazil to sell more to China and non-traditional exporters to boost shipments.

The burden of producing more to feed China's demand rests on big suppliers Australia and Brazil.

Brazil's Vale and Australia's Rio Tinto and BHP Billiton, which together control around two-thirds of global seaborne supply, are looking to boost their collective output by half to around 1 billion tonnes by 2015.

That will equal China's import demand by then as high production costs and low-quality iron ore reserves boost its purchases, according to estimates from Wood Mackenzie.

"With iron ore prices staying around $180 a tonne, the supply can come from a lot of different sources. If Indian supply continues to disappoint, we will see continued reliance on both traditional and non-traditional suppliers," said Montgomery.

($1 = 45.255 rupees)

SAIL plans public issue by March subject to market conditions

Saturday, 19 Feb 2011

Steel Authority of India said that it will attempt to launch the INR 8,000 crore follow on public offer before the fiscal end though submission of prospectus within February seems to be a difficult proposition.

Mr CS Verma chairman of SAIL told PTI that “We will definitely attempt to launch the FPO before the end of the current fiscal. Filing the red herring prospectus, however, within February seems to be a tall target.”

However, he said the attempt to launch the offer would entirely depend upon the market conditions and liquidity situation in the system. Mr Verma added that “We will attempt it depending upon the market condition. We have to see which are other issues that are hitting the market. We have to make assessment of the market conditions.”

Drawn his attention to the forthcoming FPO of State run Oil and Natural Gas Corporation, he said that “We will also have to see when ONGC is entering the market and when the refunds of the ONGC issue will go back to the investors. There has to be enough liquidity.”

ONGC is likely to enter the market with its proposed INR 13,000 crore FPO on March 15.

The SAIL FPO was earlier slated to hit the market in February, but got delayed due to some issue with the book running lead managers which has now been solved. However, fearing a repeat of sorts, the steel major is now keen on taking legally binding undertakings from the four investments bankers SBI Caps, Kotak Mahindra, Deutsche Bank and HSBC. It has though agreed to keep the banks for managing its issue.

Mr Verma said that “There were some conflict with BRLMs. Now, we have taken the legal opinion of the Attorney General of India. We are to take the legally binding undertaking from them. And, then we will decide on the future course of action and about the timing of the FPO.”

The government has so far garnered about INR 23,000 crore by divesting its stakes in Coal India, Engineers India, MOIL and some other PSUs against its target of INR 40,000 crore. It is banking on big ticket FPOs of ONGC and SAIL to meet the target.

(Sourced from PTI)

POSCO War Zone - Angry villagers damage approach road

Tuesday, 15 Feb 2011

Members of POSCO Pratirosh Sangram Samiti and residents from the Dhinkia panchayat of Jagatsinghpur district guarding the entrance to their village on Sunday to prevent entry of personnel of the Orissa government and POSCO.

The agitation against land acquisition for the POSCO steel plant intensified in this seaside gram panchayat in Jagatsinghpur district on Sunday, with the villagers damaging an approach road to the area earmarked for the project.

Led by Mr Abhay Sahu chairman of the POSCO Pratirodh Sangram Samiti, which has been spearheading the protest since July 2005 more than 150 people from different hamlets in Dhinkia went out with spades and other tools and damaged the ‘kuchha' road leading to the project site from the Paradip port, which is a few km away.

The PPSS activists decided to damage the road, which runs along the coastline, after the chairman of the Industrial Infrastructure Development Corporation and the Director General of Police took the same road to reach the site on Saturday.

The IDCO plans to make the road a ‘pucca' one as it will act as an approach route to the 4,004 acres earmarked for the POSCO's steel plant and captive port near the mouth of the Jatadhari river. Mr Sahu said that “We will continue our agitation peacefully. We will not hand over an inch of land for POSCO in our locality at any cost.”

Talking of the visit of the DGP and the IDCO Chairman to the area, Mr Sahu said that “It clearly shows that the State government is readying for applying force to evict people from their land and homes.”

In August last year, the State government halted the land acquisition process after an order from the Union Ministry of Environment and Forests. But after the Ministry granted conditional environmental clearance recently, the government is now planning to resume land acquisition after giving an assurance to the Ministry about the people claiming to be dependent on the forestland.

But the villagers are in mood to allow the government to resume the work; they have erected six bamboo gates at the entry points of their gram panchayat to prevent officials, POSCO employees and the police from entering their hamlets. (sourced:Thehindu)

Tags:POSCO War Zone,Jagdishpur, Orissa government, steel plant, IDCO, India steel industry news

SAIL gets management control of Steel Complex in Kerala

Tuesday, 15 Feb 2011

Maharatna Steel Authority of India Limited has formally acquired 50% of the shares of Steel Complex Limited in Kozhikode held by the Government of Kerala and taken over the operations of SCL on 13th February 2011.

SAIL-SCL Limited, the joint venture company resulting from the acquisition, will work towards the revival of SCL by setting up a new rolling mill of 65,000 tonnes per annum capacity for producing high grade TMT bars at an estimated investment of INR 45 crore. The JV is expected to be a milestone in the government’s policy of bringing together synergies of PSUs and strengthening them to be competitive in the market.

On the request of the government of Kerala, SAIL had signed a MoU in May 2008 for revival of SCL, owned by the state government. Subsequently, a JV agreement was signed between government of Kerala and SCL in December 2008 to enable acquisition of shareholding by SAIL, development of SCL by setting up a rolling mill and fulfillment of certain terms & conditions by the state government. Subsequent to fulfillment of conditions of the agreement, the JV became operational in December 2010. Operations of the JV will be synergized with SAIL’s core strengths by installation of billet conversion facility, raw material tie-ups and marketing of SCL products by SAIL.

SAIL-SCL Ltd presently has the capacity to produce 55,000 tonnes of liquid steel per annum through the electric arc furnace route and 50,000 tonnes of concast billets per year. The JV aims to tackle issues such as shortage of working capital and non-availability of good quality scrap by ensuring uninterrupted supply of scrap to maintain efficiency of operations and adding value to its products by converting billets into TMT bars. The possibility of marketing SCL products by harnessing SAIL’s nationwide dealer network is being explored.

Tags:SAIL, management control, Steel Complex, Kerala, shares, take over, Acquisitions, JV, PSUs, India steel industry,

Indian Steel Industry Outlook to 2012

Tuesday, 1 Feb. 2011

The Indian steel industry has made a rapid progress on strong fundamentals over the recent few years. The industry is getting all essential ingredients required for dynamic growth.
The government is backing the industry through favorable industrial reforms, while the private sector is supporting it with investments worth billions of dollars.
Even in the tough times of economic slowdown, the industry succeeded to sustain its positive growth momentum on the strong fundamentals of domestic demand from construction, automobile and infrastructure sectors.
With an impressive track record, the country has become a reputed name in the world steel industry.
Global steel giants from all over the world have shown interest in the industry because of its phenomenal performance. For instance - the crude steel production in India registered a moderate year-on-year growth of 2.7% in 2009 and reached 56.6 Million Metric Tons.
On the other side, some Asian countries such as Japan and South Korea saw significant decline in their production levels. This further signifies the resilience and strength of the Indian steel industry against external risk factors.
The global economic slowdown hampered the growth curve of various steel intensive industries such as construction in 2009 and its impact also fell on steel demand. However, the government proactive incentive plans to boost economic growth by injecting funds in various industries like construction, infrastructure automobile and power will help the steel industry to again achieve its previous growth trajectory.
Steel consumption in India is expected to grow significantly in coming years since per capita finished steel consumption is far less from its regional counterparts. In 2008, per capita finished steel consumption stood at an estimated volume of around 44 Kg, which represents tremendous growth potential for coming years. (source:Companiesandmarkets.com)

India approves $12 bln POSCO steel mill

Environment ministry approves $12 billion project
* Project is single largest foreign investment in India
* Approval may ease concern about changing regulations

By Nigam Prusty and Paul de Bendern
NEW DELHI, Jan 31 (Reuters) - India's environment ministry approved on Monday South Korean POSCO's plans for a $12 billion steel mill, a boost for the foreign investment climate after several setbacks for big ticket industrial projects.
The long-delayed clearance for India's biggest foreign direct investment -- as long as the company meets a series of environmental standards -- follows a year in which Environment Minister Jairam Ramesh has blocked several projects, raising criticism he was jeapordising India's growth story.

"Undoubtedly projects such as that of POSCO have considerable economic, technological and strategic significance for the country," the statement said. "At the same time, laws on environment and forests must be implemented seriously."
The mill in eastern Orissa state has been delayed by criticism it would ruin lives of thousands of poverty-stricken people, who say the plant will disrupt their betel leaf plantations and forest-based livelihoods.

India, one of the world's fastest growing major economies, needs foreign capital to boost infrastructure and allow its economy to grow at near double digits. But projects have met with protests from local farmers in this densely-populated country.
A government panel had earlier said there were no ecological concerns over the plant and the final decision was with Ramesh.
Posco is among several corporations, including Vedanta Resources, which have come under scrutiny from Ramesh, putting his ministry in conflict with others in the government who are pushing for rapid industrialisation.

A series of corruption scandals has shaken the government of Prime Minister Manmohan Singh and a recent minor cabinet reshuffle saw several ministers' portfolios change, but Ramesh stayed on as environment minister, indicating his influence.
The ruling Congress party head, Sonia Gandhi, is keen to win over farmers hit by big projects at well as ensuring industrial jobs are created -- a fine line that may have helped create regulatory uncertainty before state elections this year and a general election in 2014.

REGULATORY UNCERTAINTY
While investors tend to shrug off corruption scandals as a risk of emerging markets, regulatory uncertainty threatens to taint India's attractiveness as a destination for foreign firms eager for a slice of its booming $1.3 trillion economy.
In October, Ramesh threw out plans by London-listed Vedanta to expand its alumina refinery over worries it would destroy a "sacred" hill for tribal peoples, but this month Ramesh said he was willing to conditionally reconsider Vedanta's expansion plan.
That remark came soon after the ministry said it could consider approving Hindustan Construction Co's ambitious Lavasa project, a massive new town in a forested area near the city of Pune being built at a cost of $31 billion.
A back-and-forth on whether to ban iron ore exports in the Karnataka state has also worried investors. ArcelorMittal, the world's top steel maker, has also had faced years of delays in building several plants in India.

Approval for the Posco mill would see the Orissa government immediately starting to acquire land for the world's third-largest steelmaker's project.
Posco still faces a series of hurdles that could delay the project, such as a court case filed by a local firm against the Orissa government, contesting its decision to grant a mining concession to South Koreans.
India, which has not yet been able to exploit its potential as a natural resources-rich country, is keen on boosting its trade and political ties with South Korea while Seoul looks to tap into the $150 billion Indian nuclear power market.
Direct investors -- companies building factories or power plants or buying local firms -- often have less flexibility and more to lose than fund investors and are especially sensitive to regulatory uncertainty.
Leading global companies such as Wal-Mart Stores, Vodafone and Posco have been frustrated for years in their efforts to negotiate regulations in a promising but perilous market, and foreign direct investment has suffered.

Vodafone, India's biggest foreign direct investor to date, is fighting a 120 billion rupee ($2.6 billion) tax bill in a court battle and has complained about a telecoms regulatory structure that it said allowed too many players into the market. (Additional reporting by Krittivas Mukherjee; writing by Paul de Bendern and Alistair Scrutton; Editing by Alistair Scrutton)