China's Wuhan to explore for iron in Madagascar

Wed Apr 6, 2011 9:13am GMT

* Exploration to take 6-8 months
* WISCO paid $100 million for exploration permit

ANTANANARIVO, April 6 (Reuters) - Wuhan Iron & Steel Co (WISCO), China's third-largest steelmaker, plans to start exploratory drilling for iron ore in Madagascar's Soalala region at the end of May, officials said.

WISCO Madagascar -- one of many foreign firms keen to develop the Indian Ocean island's mineral resources -- paid $100 million for exploration permits in 2010.

"Our investments are made in stages, depending on the results of the survey. The investment decision is expected in six to eight months, then will come the construction phase, which will last four years," said WISCO Madagascar's chief executive, Jun Yuan Lou.

"The actual operation should start in five years," he told a news conference late on Tuesday, when signing an environmental impact study and exploratory drilling agreement with the National Environment Office (ONE).

Exploration in Madagascar, which has oil, cobalt, nickel, gold and uranium deposits, has been hampered by a political crisis since incumbent President Andry Rajoelina seized power in March 2009.

As this project proceeds, "Environmental assessment studies, including the various public consultations will begin this week," said ONE's chief executive, Jean Chrysostome Rakotoary.

An environmental permit will be issued at the conclusion of the studies, which will take at least 45 days, and after the company pays ONE $350,000, he said.

The island's political crisis forced Madagascar Oil last month to declare force majeure on four of its oil blocks to safeguard its exploration rights after failing to reverse a state directive to acquire them. (Reporting by Alain Iloniaina; Editing by Helen Nyambura and Jane Baird)

Supras Ex Richards Bay Coal Terminal to India hovering at $ 25 - 27.00 PMT - FEARNBULK

Friday, 01 April 11

Handy

Atlantic markets remain stable with more activity from the Black Sea to FEast paying in the mid 20´s on Supras. The USG remains firm paying in the mid 20´s for trips into the Med and low/mid 30´s for trips FE.

Outlook: stable. The Pacific market is still weak; the signs of weakening are lack of fresh enquiries and less trading activities. Indian activities are also very slow. Supras on WC India are seeing high teens for trip to China with freight levels hovering between usd 20 pmt. Supras ex Richards bay coal terminal/ India hovering at usd 25/27.00 pmt. Ex Red Sea to India handymax tonnages are seeing mid/high 20´s.

Panamax
With few fresh cargoes entering the market, the rates declined marginally this week. TA´s fixed in average around USD 16k, which is a tick down from last week. South America and coal from US kept the market going. In the Pacific the rates hovered around USD 16500. However rumors stated that Japan would increase their coal import, due to lack of nuclear energy. The ballasters from the Pacific and Indian Ocean obtained decent numbers, around USD 16-17k daily, which was in line with the short period market.

Capesize
Activity is up but same has yet to be reflected in rate levels as this segment remains generally overtonnaged. The main WAust/China ore trade is erratic in volume but stable in value at usd 7.35-45 pmt - equivalent to less than opex. Nuclear concerns have given some support to Atlantic coal activity/ expectations, with resultant transatlantic levels maintained at some usd 12250 and fronthaul also unchanged at around usd 23350. With an inverted forward curve, period activity is limited to 180kdwt/blt 2009 spot FEast done for 12 mos at usd 16k, 177kdwt/blt 2004 China ppt done for 4-6 mos at usd 15500 and 174kdwt/blt 2007 said to be done for 2 yrs at around usd 17500. source:Fearnbulk

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Iron ore exports via Australia’s Port Hedland down 16 percent in Feb from Jan

Fri, 25March 2011 17:42:44 (GMT+2)

In February this year, iron ore shipments from Australia's Port Hedland decreased 1.45 percent year on year and were down 16.19 percent month on month, totaling 12.85 million metric tons, according to Port Hedland Port Authority.

According to the released information, iron ore shipments made from Port Hedland to China amounted to 9.03 million metric tons in February, increasing by 3.54 percent year on year and down 9.37 percent as compared to January. In February, iron ore exports to China accounted for 70.3 percent of total iron ore exports from Port Hedland, compared to 67 percent in February 2010.

South Korea was the second largest export destination for iron ore shipments from Port Hedland in February, with shipments totaling 1.53 million metric tons - up 10.52 percent year on year and down by 5.67 percent over January. Japan imported 1.47 million metric tons of iron ore from Port Hedland in February, decreasing by 24 percent year on year and down 48 percent month on month.

Port Hedland handles production from mines owned by BHP Billiton, Fortescue Metals Group and Atlas Iron in the iron ore-rich Pilbara region of Western Australia. (steelorbis)

All Japanese ports shut after huge quake - shippers

Fri Mar 11, 2011 8:52am GMT

SINGAPORE, March 11 (Reuters) - All Japanese ports have closed, with discharging operations halted, after the country was hit on Friday by an 8.9 magnitude quake and tsunami, shippers said.

The biggest earthquake to hit Japan in 140 years struck the northeast coast, triggering a 10-metre tsunami that swept away everything in its path, including houses, cars and farm buildings on fires.

"It's a big mess. All discharge operations are suspended in the area," said a shipbroker.

TV footage showed at least one large panamax vessel, which typically carries 80,000 tonnes of coal, iron ore and grains, grounded in northern Japan due to the tsunami, a second Tokyo-based shipbroker said.

"Most or all coal stocks will be washed out at many of the coal fired power plants," he said.

"Ports will be closed at least for a short time period until damage assessments can take place."

Shipbrokers expected freight rates to rise in the short-term as Japanese power plants restock their coal inventories and steel companies import more iron ore as part of the rebuilding process.

A tsunami warning has been extended to the whole of the Pacific basin, except for mainland United States and Canada, following the earthquake in Japan, NOAA's National Weather Service said on Friday.

The warning includes Mexico and Central and South American countries on the Pacific, NOAA's Pacific Tsunami Warning Center said. (Reporting by Randy Fabi and Luke Pachymuthu Editing by Ed Lane,Thomson Reuters)

Gold, iron ore to rise; copper to stay steady

Monday, 07 Mar 2011
By Euan Rocha and Julie Gordon (Reuters)

Forecasters addressing the opening day of the PDAC conference said safe haven buying should lift gold through record highs while iron ore is likely to regain momentum on the back of continued demand from Asia

TORONTO (Reuters) -

Gold should push higher from its near-record levels due to its appeal as a safe haven, while iron ore should regain its upward momentum on the back of red-hot industrial demand from Asia, forecasters told the world's larger mining conference on Sunday.

Copper, an economic bellwether due to its industrial versatility, should be well supported at its current lofty levels but may have trouble pushing significantly higher as mine production races to catch up to demand growth, they said.

Addressing the Prospectors and Developers (PDAC) conference in Toronto, forecaster Philip Klapwijk said he saw a "stronger case for investment in precious metals as a safe haven" as demand for base metals declines due to slowing global growth and political turmoil.

Klapwijk, chairman of metals consultancy GFMS, also said he expected global GDP growth to slow slightly this year as compared with last year.

Prices for gold and silver have risen sharply since the outbreak of violence in the Middle East and North Africa earlier this year as buyers turned to precious metals as a haven from risk.

Gold XAU= is holding within $10 of the record above $1,440 an ounce it set on Wednesday, while silver XAG= extended 31-year highs above $35.40 an ounce on Friday.

JPMorgan analyst Michael Jansen told a room packed to overflowing with more than 500 delegates -- from corporate chief executives to geologists to fund managers -- that he expects gold prices to average $1,465 an ounce this year.

His year-end target for gold is $1,500, he said, adding the gold production outlook was strong going forward.

"We think mine supply is easily on track to grow 3 to 4 percent year on year," he said."

His forecast is slightly more subdued other predictions, such as by Barclays Capital, which said in January it expects the metal to average $1,495 an ounce this year, and range as high as $1,620 an ounce.

GFMS said in a January quarterly forecast that gold may top $1,600 an ounce by the end of 2011.

Klapwijk said gold and other precious metals will also get some impetus as investors exit other traditional safe havens.

"We expect the sovereign debt crisis will not be confined to Europe and it will eventually spread to the U.S. and Japan ... It seems to be inconceivable that the U.S will be able to continue on its current path and maintain its 'AAA' rating," Klapwijk added.

More than 20,000 people are in Toronto this week for the annual PDAC conference. Attendance grows every year at the event, a key barometer of mining investment appetite. This year it has also attracted a handful of top government ministers from key mining jurisdictions.

CHINA LEADS DEMAND

As presenters rolled out their outlook from everything from gold to iron ore, and uranium to potash, there was one key word was in almost every presentation -- China.

Demand from the world's most populous country will help underpin demand for iron ore, the main steelmaking ingredient, said Phil Newman, chief operating officer of consultancy group CRU.

He said 95.1 pct of global steel production growth between 2007 and 2021 will be in Asia.

Iron ore spot prices IODBZ00-PLT surged to record highs near $200 a tonne in mid-February, but have since come off their highs to trade around $178 a tonne.

Newman said he expects prices to resume their upward push, but perhaps not until later in the year.

"Certainly in the first half of 2011 we see continued price pressures," he said.

"The good times will continue, but we are approaching an inflection point," he said, referring to in iron ore. ... Over the medium term (around 2015), we see prices drifting lower,"
COPPER DEMAND AND SUPPLY TO GROW

GFMS forecaster Mark Fellows pointed to strong fundamentals underpinning copper prices, but he did not see big near-term gains from a metal that has been on a steady upward churn.

Copper CMCU3 for three-month delivery on the London Metal Exchange has risen by two-thirds since June, hitting an all-time high of $10,190 per tonne in mid-February on concerns that demand for the metal will outstrip miners' ability to produce it.

Fellows said he expects a growing deficit in copper market in the second half of this year, with the market staying in deficit in 2012 and 2013.

He said refined copper consumption should grow 3.8 percent annually between 2011 and 2013, up from 2.6 percent in the past decade. Mined copper production growth of 3.8 percent between 2011 and 2013, well up from 2 percent production growth in the past decade, he said.

(sourced:Thomson Reuters )

Heavy rains in Pilbara adversely affect Fortescue’s iron ore operations

Friday, 04 March 2011

Australian iron ore producer Fortescue Metals Group Limited (Fortescue) has announced that continued and heavy rainfall across the Pilbara region of Western Australia is impacting the company's mining operations.

According to a company release, the sustained wet weather events have caused significant flooding across the Pilbara resulting in extended access road closures and air access restrictions to Fortescue's mining operations, disrupting production.

Fortescue now estimates iron ore production of 8.5-9 million mt in the first quarter of 2011 down 500,000 mt compared to the previous guidance, assuming a return to normal weather conditions.

Fortescue is working to maximize production throughout the remainder of the quarter, the company said.

MOC: Chinese steel prices down 0.6 percent week on week

Friday, Mar04, 2011

According to the report published on March 2 by China's Ministry of Commerce (MOC), due to weak demand from downstream buyers finished steel prices dropped slightly on week-on-week basis in the past week. In the coming period, as supplies increase, finished steel product inventories will also continue to increase. Thus, the MOC foresees that finished steel product prices in China will drop slightly in the short-term future.

According to the data from the MOC, during the past week domestic finished steel prices in China dropped in the past week by an average of 0.6 percent week on week. Prices of 3 mm common carbon sheet, 10 mm common carbon medium plate and 6.5 mm high speed wire rod dropped by 1.5 percent, 1.2 percent and 1 percent respectively on week-on-week basis.

Meanwhile, data from the China Iron and Steel Association (CISA) have revealed that as of February 20 the finished steel inventories of the 77 medium-sized and large Chinese steelmakers which are members of the CISA had increased to 9.46 million mt, compared to 7.57 million mt at the end of January. In addition, the Indian government has increased the export duty on iron ore fines and lump ore to 20 percent, with the CISA calculating that this adjustment will increase the cost to Chinese steelmakers per each ton of steel by $25, and this could push Chinese finished steel prices upward and also reduce the profit margins of Chinese steelmakers

New Millennium, Tata to extend iron ore deal

Tue,March01,2011

March 1 - New Millennium Capital Corp said late Monday it has agreed to extend an iron ore project exclusivity agreement with India's Tata Steel , which could potentially feed the world's No.7 steelmaker's European unit.

Both companies have mutually agreed to extend the exclusivity period to March 7 from February 28, New Millennium (NML) said.

Tata Steel and NML shall continue to work toward negotiating a binding agreement for the development and operation of the LabMag and KeMag iron ore projects, the company said.

NML had extended Tata's exclusivity right twice -- once by 18 months till the end of last year and once till Feb. 28. (Edited by Reuters)

Tags :LabMag iron ore project, KeMag iron ore project, steel mills, steelmaking

Xinjiang to import coking coal from Mongolia

Sunday, 27 Feb 2011 China coal Times

Far western province Xinjiang is seeking to boost coking coal imports from Mongolia to meet demand from its rapidly expanding steel sector. The region plans to raise crude steel capacity from roughly 7 million tonnes per year now to more than 22 million tonnes per year by 2015 however local deposit of coking coal resources is scarce, compared with huge steam coal reserves estimated at more than 2 trillion tonnes.

In Qinhe county of Xinjiang, local authorities are pushing forward the construction of a 1 million tonnes per year coking project with necessary washing facilities by 2015. The project is located at border crossing Takeshiken which will be a major outlet of Mongolian products after a series of infrastructure upgrading complete in the next few years. This includes the construction of railway and road projects that funnel coal and ore products into factories in Xinjiang, such as Bayi Steel a unit under Baosteel.

The border crossing Takeshiken was fully opened on January 13, before which it was closed between December and April. Statistics show Xinjiang produced 45 million tonnes of coal in 2008 of which 3.9 million tonnes was coking coal with hard coking coal only accounting for 0.67million tonnes.

Vale sees 4 year tightness in iron ore after profit quadruples

Sunday, 27 Feb 2011

Bloomberg reported that Vale SA expects tightness for the steelmaking raw material to persist for as many as four years because of rising demand and a limited number of new projects.

Mr Guilherme Cavalcanti CFO of Vale said that the economic recovery is boosting demand for steel, while tight supply is driving up ore prices. The market will be constrained for three to four years.

Mr Jonathan Brandt, an equity analyst at HSBC Holdings Plc in New York, said that "Vale will continue to post impressive financial figures as commodity prices, particularly for iron ore, have risen dramatically. The company should have a robust year as it brings on additional capacity through new projects." (sourced:bloomberg)

Nippon Steel plans 20 pct price hike - Nikkei

Fri Feb 25, 2011 5:06am GMT

* Will ask customers to accept around $240 hike -Nikkei

* JFE also seen asking for similar rise

Feb 25 (Reuters) - Nippon Steel Corp (5401.T: Quote) will ask auto makers and other major customers to accept a roughly 20,000 yen ($242) a tonne price rise for steel products starting in April, the Nikkei business daily said, as soaring material costs take their toll.

Nippon Steel, the world's No.4 steelmaker, will propose the around 20 percent jump as early as mid-March, the daily said on Friday.

That would be in line with rival JFE Steel Corp's (5411.T: Quote) announcement on Thursday that it would up prices of steel sheet for sale through domestic wholesalers by 20,000 yen per tonne from April, signalling to volume contract users such as Toyota Motor Corp (7203.T: Quote) the level of price hike it seeks. [ID:nTOE71N01S]

Asia's steelmakers aim to pass on climbing costs for iron ore and coking coal, the prices of which are expected to climb sharply after April.

But negotiations with their customers, who buy on contract, are expected to be tough. Nippon Steel and JFE have not yet fully passed on the sharply higher input costs from the second-half of the 2010/11 financial year.

The spot price of hard coking coal in Australia in the December-February period, which will be reflected in the April-June contract price, will likely average $279 per tonne, data service company Argus Media Ltd said.

That could mean an about 27 percent price hike in coal during April-June from the previous quarter. ($1 = 82.755 Japanese yen) (Reporting by Yuko Inoue in Tokyo and NR Sethuraman in Bangalore; Editing by Joseph Radford, sourced:Thomson Reuters)

Orissa tops states in value of mineral output

Monday, 21 Feb 2011

Boom in mineral prices and accelerated exploitation of resources in recent years have put Orissa at the top of the mineral bearing states in terms of value of output of minerals.

2009-10
Total INR 15,317 crore
1. Orissa - 13.10%
2. Madhya Pradesh - 7.70%
3. Andhra Pradesh - 7.21%
4. Maharashtra - 4.92%
5. Gujarat - 4.65%
6. Karnataka - 3.96%
7. Tamil Nadu - 3.21%
8. Rajasthan - 2.99%
9. Assam - 2.96%
10. West Bengal - 2.78%

According to the Economic Survey report (2010-11), the value of minerals extracted in Orissa has gone up by more than four times from INR 3694 crore to INR 15,317 crore between 2002-03 and 2009-10 coinciding with the boom in the mineral market during this period.

Orissa boasts of 95% of country's chromite deposit, 92% of nickel ore, 55% of bauxite and 33% of iron ore. Besides, the state has substantial quantity of other minerals and ores like coal, manganese, dolomite, graphite and limestone.

(Sourced from Business Standard)

POSCO to increase cost cutting on ore and coal price surge

Saturday, 19 Feb 2011

POSCO the world’s third biggest steelmaker by output and its units raised their cost cutting target for this year by 20% to sustain profits amid rising iron ore and coal prices.

Mr Chung Jae Woong a spokesman of POSCO said that the group aims to cut overall costs by KRW 2.4 trillion (USD 2.2 billion) this year from a previous target of KRW 2 trillion in an effort to improve competitiveness.

Ms Kim Gyung Jung an analyst with Eugene Investment & Securities Co in Seoul said that “That’s part of POSCO’s efforts to sustain stable profits given that raw material costs are rising, while it’s not easy for them to pass on cost gains to customers.”

POSCO which underperformed the local benchmark stock index last year, in January reported a worse than expected drop in fourth quarter profit after raw material costs gained and demand from builders and home-appliance makers waned. Japan’s Nippon Steel Corp and Sumitomo Metal Industries Ltd said that they plan to combine to cut costs.

HSBC Holdings Plc said that iron ore prices almost doubled from the first quarter to the end of 2010, while coking-coal costs gained 38%. Coal has risen since floods disrupted mining in the northeast of Australia, the biggest exporter.

According to Credit Suisse Group AG on January 7, the price of iron ore will average 21% higher this year and may jump to a record should anticipated supply growth be curbed. Iron ore and coking coal are the two main ingredients for making steel.

(Sourced from Bloomberg)

Tags:steelmakers, steel mills, South Korean

CISA sees Chinese steel prices seen rising in near term

Saturday, 19 Feb 2011

Reuters quoted the China Iron & Steel Association as saying that steel prices in the Chinese domestic market will continue rising in the near term due to recovering demand and rising raw materials costs.

CISA said that it expects a gradual pick up in demand at home and abroad with costs of raw materials such as iron ore, coke and scrap likely to keep surging, pushing steel prices upwards.

It said "This year is the opener of the 12th five year plan, so steel demand will remain strong as economic growth is expected to remain healthy."

It added that major steel consuming sectors such as construction, machinery, transportation, home appliances and shipbuilding would continue to grow, lifting steel demand, noting that infrastructure projects would also contribute to rising demand.

The Ministry of Industry and Information Technology forecast earlier this week that China crude steel output would hit a record 660 million tonnes this year with downstream demand providing a boost.

However, CISA also warned that non steel mill steel product inventories had risen sharply and domestic steel production is also on the rise.

CISA data showed that China produced 1.7033 million tonnes of crude steel on a daily basis in January up by 2.5% from December.

Non steel mill inventories of five major steel products in 26 big cities rose 11.2% to 14.72 million tonnes in January from the previous month especially for rebar and wire rod used in the construction sector.

(Sourced from Reuters)

WISCO inks cooperation deal with ADI on Lac Otelnuk iron ore project

Wednesday, 16 February 2011 13:34:25

Major Chinese steelmaker Wuhan Iron and Steel Group Corp. (WISCO) has announced that on February 15 it signed a cooperation agreement with Canadian iron ore company Adriana Resources Inc. (ADI) for the development, construction and operation of the Lac Otelnuk iron ore project in Quebec, Canada. In January this year, WISCO and ADI signed a binding framework agreement according to which WISCO will hold ADI's interests in the Lac Otelnuk and December Lake iron ore properties in Northern Quebec.

ADI also has iron ore resources in Brazil and Canada. The Lac Otelnuk project has indicated iron ore reserves of 4.29 billion mt and inferred reserves of 1.97 billion mt (grading at about 29 percent Fe), according to ADI's website.

Tags: iron ore , raw mat , China , Canada , Far East , East Asia and Pacific , North America , steelmaking , mining , WISCO , Pellets , Fine ore

ANALYSIS-Small ships to unlock rate boon for bulk owners

Feb8, 2011 17:32 EST

By Krishna N Das and Jonathan Saul
BANGALORE/LONDON, Feb8(Reuters) – Dry cargo shippers with smaller vessels are shifting to more-risk, more-reward spot markets, eyeing rising demand for sugar and grains — commodities well suited to versatile supramax and handysize ships.
Ship owners generally prefer long-term charters in a weak market. The Baltic Dry Index <.BADI> o-year lows in recent weeks but confidence has been rocked by South Korean dry bulk group Korea Line Corp <005880.ks> filing for bankruptcy protection, highlighting the risk of charter-party defaults.
“Concerns now persist industry-wide, as speculation grows as to whether faults,” Deutsche Bank analyst Justin Yagerman said.
“Continued charterer defaults could bring into question many companies’ above-market charters.” Flooding in Australia, the world’s biggest coal exporter, and weather-srupted coal shipments and dented sentiment for capesize vessels — the giants of seaborne trade routes, typically hauling 150,000 tonne cargoes such as iron ore and coal.
Demand for grains, though, has soared. Wheat prices in the European Union, the world’s No.2 exporter, a year, aided by a Russian export ban due to drought and strong demand from North Africa and Middle East countries.
Global food prices, which hit their highest level on record last month, is a mounting worry for world leaders. Recent catastrophic weather around the globe could put yet more pressure on the cost of food, an issue that has already helped spark protests across the Middle East. Egypt is the world’s biggest wheat importer.
Eagle Bulk Shipping , which operates supramax vessels that typically have around half the capacity of a capesize, lowing them to haul a wider range of cargoes, has placed half its ships in the spot market.
That strategy has been welcomed by investors, and Eagle Bulk Shipping’s price-to-earnings ratio of almost 35 is the highest among its peers, Thomson Reuters StarMine data shows.
“We prefer smaller vessels due to the more favorable supply dynamics, more diverse cargo loading options, record spot fixture activity for the last five months due to a recovering worldwide economy, and the increasing ton-mile in the grain trade,” FBR analyst Doug Garber said in a note.
Genco Shipping and Trading could be another to gain from a near-term rebound in day rates — the cost of renting a ship by the day — as it has roughly half its 2011 days in open or linked-to-index charters.
Conversely, Diana Shipping , DryShips , Navios Maritime Partners LP and others whose fleets are dominated by bigger ships, have placed more vessels in long-term contracts, hoping for steady returns. Diana and DryShips trade at just above 5 and 8 times forward earnings, respectively.
Iron ore and coal are the main drivers of the dry bulk trade, accounting for some two-thirds of demand, but both are highly dependent on China, making the shippers that own bigger vessels more vulnerable to demand swings in the world’s biggest commodity consumer.
Sterne Agee expects Baltic Dry Index spot rates to drop 16 percent this year and 9 percent in 2012, noting these declines will be hardest felt by those owning capesizes, where fleet growth is seen at 17 percent this year and 14 percent in 2012.
For capesizes, the brokerage forecast a 25 percent fall in spot rates this year to below $25,000 a day. Only three years ago, owners of these vessels could charge day rates in excess of $100,000 a day.
Supramax rates are seen dropping about 7 percent to $20,845.
“The largest part of the order book concerns the larger ships, the capes. It is actually the capes that are of a bigger concern to everybody in the industry,” said Michael Bodouroglou, chairman and CEO of Greece’s Paragon Shipping Inc , which has smaller supramax and handymax vessels among its fleet.
“The panamaxes, the supramaxes and in particular the handies I think they will fare a lot better particularly in the second quarter which is the season where the grain trades pick up from South America etc — these are trades which are accommodated in the smaller sizes,” he told Reuters.
The Baltic capesize Index <.BACI> has fallen by two-thirds in the past 3 months to its lowest in more than 2 years. Rates for supramax vessels were faring slightly better, though the Baltic’s supramax index <.BASI> has dropped by a quarter in the last 3 weeks.
“In the next few months, a moderate amount of cargo demand is likely to continue to surface, which is likely to result in supramax and handysize rates remaining at healthy levels,” said Jeffrey Landsberg, managing director of dry bulk consultancy Commodore Research.
“Global grain demand remains strong and will lend support to rates once the South American export season kicks in to full gear.” (sourced:reuters)

Tags: coal, drybulk, grains, iron ore, shipping, dry cargo shippers, vessels, spot market, Supramaxes, Handysizes, The Baltic Supramax Index, The Baltic Dry Index, Eagel Bulk Shipping, FBR analyst, Genco Shipping, Conversely, Diana Shipping , DryShips, Navios Maritime Partners LP

Steel deal sets example for Japan Inc say analysts

By David Watkins (AFP)
Monday,14 Feb'2011

TOKYO — The proposed merger of two Japanese steel giants is a sign of an industry looking to reassert itself and an example to Japan Inc. that restructuring is crucial to take on competition, say analysts.

Japan's biggest steelmaker Nippon Steel and third-ranked rival Sumitomo Metal Industries are working towards a merger that would create the world's second-largest steel firm by 2012, behind Luxembourg-based ArcelorMittal.

The agreement is the first steel industry merger in a decade in the country, and analysts say the move sets an example to the rest of Japan Inc. as it grapples with a weak home economy, a strong yen and rising overseas rivals.

"There is a desperate need for mergers and acquisitions to stitch together Japan's diffuse corporate base," said Nicholas Smith, director of equity research with MFGlobal in Tokyo.

The Nippon Steel-Sumitomo Metal move is seen as indicative of the growing need for steelmakers to gain leverage as prices for coal, iron ore and other raw materials of steel touch record levels.

"Increased scale will make them stronger in negotiating with raw material suppliers -- the rapid run-up in material prices had really hammered profitability," said Smith.

"The merger will give Nippon Steel the scale to consider acquisitions of raw material suppliers, like the Chinese steelmakers have done," he said, noting Chinese crude steel production has more than quadrupled in the last 10 years.

The deal also serves as an example to the rest of corporate Japan.

Many see consolidation in Japan's corporate space as essential to taking on overseas competition, with too many companies making the same products compared with the likes of South Korea and industrial champions such as Samsung.

"Often in comparison with South Korea, Japan is said to have too many players in such markets as autos and electrical machinery," added Hideyuki Araki, economist at Resona Research Institute.

"They vie for the same pie and can be worn out in domestic competition. There is no doubt that a single company that has a strong grip on the industry can better compete in international markets," he said.

Sony partly blamed a fall in third quarter profit on falling TV prices amid heavy competition in a sector where it is up against compatriots such as Toshiba, Panasonic and Sharp.

"Japanese companies are forced to cut prices and have only slim margins amid too much competition," said Hiroshi Watanabe, economist at Daiwa Institute of Research.

The Japanese government has recognised the need for consolidation and is promoting M&As because it sees the need for more reorganisation in a wide range of domestic industries, including materials and electrical machinery.

Tokyo is looking to encourage more mergers and acquisitions by simplifying the tender offer process, speeding up anti-monopoly vetting of merger plans and providing loans for deals, Japanese media reports said this week.

The number of mergers and acquisitions by Japanese firms tumbled 13 percent on-year to 1,707 in 2010, slipping far below a recent peak of 2,775 in 2006, according to M&A advisory firm Recof Corp, the Nikkei business daily reported.

But merger efforts have met with failure in the past year, with executives on both sides unable to iron out integration problems.

Shinsei Bank and Aozora Bank last year scrapped a merger plan because they could not agree on a business strategy.

Japanese drink giants Kirin Holding Co. and Suntory Holdings Ltd. last year abandoned ambitious plans to merge and create one of the world's biggest brewers, unable to overcome differences over who would own and manage the future company.

However, on Thursday drinks maker Sapporo announced it would boost its stake in soft drink firm Pokka, the latest in a series of deals in a shrinking market where players are searching for growth.

While it is important to expand scale in the way Nippon Steel and Sumitomo Metal plan to as they seek more control over prices, a balance needs to be struck to retain enough domestic competition to drive innovation, analysts say.

In particular, Japan must not risk ceding its advantage in high-end products where it still has a commanding share, analysts say. Its steel is seen a symbol of its manufacturing expertise.

Toyota buys nearly 60 percent of its sheet steel for auto bodies from Nippon Steel and Sumitomo, analysts say, and Mazda and Honda buy around 70 percent.

On the other hand, "anybody can make construction steel, and a dizzying array of companies do," said Smith.

(sourced:AFP)

ArcelorMittal and Nunavut now own 90 percent of Baffinland, extend offer

Monday, 07 February 2011 16:21:35 (GMT+2)
Luxembourg-based steelmaking goliath ArcelorMittal and Canada-based Nunavut Iron Ore Acquisition Inc. (Nunavut Iron), a subsidiary of US-based Iron Ore Holdings LP, now own 90 percent of Canadian miner Baffinland Iron Mines Corporation (Baffinland) through their C$590 million ($593 million) joint offer, after acquiring 89,710,019 more common shares. The joint stake was 65 percent before this recent transaction. The offer has also been extended until the end of February 17.
The offer seeks all shares of the company for C$1.50 (US$1.51) in cash per common share. Under the joint offer, ArcelorMittal and Nunavut Iron would own 70 percent and 30 percent of Baffinland respectively.
The companies decided to cooperate on January 14, following various rival bids to acquire Baffinland.
C$4 billion project
Baffinland's Mary River project has proven reserves of about 365 million metric tons of ore, grading an average of 65 percent iron, and about 500 million mt of ore resources. For some months now Baffinland has been looking for partners for the C$4 billion (US$4.02 billion) project, which is expected to produce 18 million mt per year.
ArcelorMittal has already received the necessary approvals for acquisition from local authorities, also valid for the joint offer.
Tags: iron ore , raw mat , USA , Luxembourg , Canada , Europe , North America , mining , M&A , ArcelorMittal(sourced:steelorbis)

Iron in the blood, Rinehart tops rich list Erik Jensen

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February 4, 2011

It is almost 20 years since the mining magnate Lang Hancock died. Today his daughter, Gina Rinehart, is officially Australia's richest person and the first woman to hold the position.
While James Packer has diminished his father's fortune, she has far eclipsed hers.
The list of the top-20 richest Australians

The Chinese helped, with their appetite for iron ore. The collapse of James Packer's fortune - though still worth $4.4 billion, and ranked third behind Andrew ''Twiggy'' Forrest - did not hurt either.
But nothing can detract from the fact Mrs Rinehart more than trebled her worth in a year. The US magazine Forbes estimates her fortune at $US9 billion. As much as Silvio Berlusconi's, who ranked a louche 74 on last year's list of world billionaires.

The University of Sydney economics student - once divorced, once widowed - made almost $700 million in revenue from the first year of her joint venture with Rio Tinto in the Pilbara. In the 2008-09 financial year, Hancock Prospecting made a record $225 million profit - equal, almost, to her father's entire fortune when he died, even after adjustments for inflation.
Recently she has made headlines for her raids on media companies - including on Fairfax Media, publisher of the Herald. More quiet has been the offensive she has lately begun on her father's legacy.

Most of his iron ore holdings were lost or sold before she took over, her company says. Royalties from his deal with Rio Tinto went on debts and the deposit now making so much money was then a ''few drill holes'' - the man, when he died, was bankrupt, the company says.
''When Mrs Rinehart became chairman it was very difficult to do the investment and work required with substantial debts and liabilities to pay and even the office building mortgaged,'' Hancock Prospecting said in a recent statement. ''There was no 'inherited money' to fund Hope Downs [deposit]; significant moneys had to be borrowed to do so.''
The dispute bubbled over into a open letter late last year, directed at the journalist Tim Treadgold's suggestion she was riding the ''same flatbed truck'' her father drove.
''Silly attacks on people to divert attention from the real world issues,'' she wrote, ''won't help Australia.''
The net worth of Australia's richest 40 people rose by 40 per cent in the past year, to a combined wealth of $68.4 billion.(sourced:www.smh.com.au)

POSCO to form mining JV with Anchor Holding in Zimbabwe

Sunday, 30 Jan 2011

POSCO announced that it has signed an initial agreement with Zimbabwe's Anchor Holdings to set up a mining joint venture to develop minerals in the African country.
POSCO plans to launch the mining company in Zimbabwe some time in the first half at the earliest to develop chrome, coal, iron ore and other minerals.

The agreement comes as a result of POSCO CEO Mr Chung Joon-yang's trip to four African countries last week, aimed at securing resources from the continent.
(Sourced from DJ)