Ann Joo Resources expects to sustain operational costs - MD

Monday, 14 Feb 2011

It is reported that Ann Joo Resources Bhd, the largest steel firm in Malaysia by market capitalization, expects to sustain operational costs in the short term despite rising coal prices.

Mr Datuk Lim Hong Thye MD of Ann Joo Resources Bhd said that however, over the long term, the group and other steel mill players would need to pass the escalating costs to end users. He added that "We managed to get two shipments of coal before prices started to increase in the wake of floods in Queensland in Australia. We managed to get two shipments of coal before the price started to increase>"

He added that "This will help us in the short term. As the coal price has been increasing for the past two weeks and gives rise to concerns among the players, we expect continued increase in the steel price, which end users will have to absorb."

Mr Lim said that the group, which has a market capitalization of MYR 1.54 billion, was currently trying to source half its coal supply locally after relying on about 75% of imports. He added that "We have bought 20,000 tonnes of coal from some small suppliers in the local market and are now looking for the right local supplier that can suit our needs."

The new blast furnace project, which is essentially the iron making plant, is expected to be completed by the end of April 2011.

He said that "This blast furnace project is part of the group's expansion plans. It will help save electricity consumption by up to 40% in our existing steel making plant and provide the flexibility in feed materials whereby we are now able to switch between iron ore, coke and scrap, depending on the price levels."

Mr Lim said that the project would also shorten the melting cycle of the existing electric arc furnace, thus boosting steel output from 800,000 to 1.1 million tonnes. He added that "The project will also improve our product quality, especially steel purity, thus enabling Ann Joo to start producing engineering grade steel products."

He said that for its financial year ended December 31st 2010, the group exported 40% of its output to the region, and is aiming to maintain that level in the current financial year. He added that "Our target market will still be the local and regional markets, apart from the Middle Eastern countries."

The issuance of MYR 500 million bonds is for the group to finance its investment in the blast furnace project, which consists of a 450 cubic meters blast furnace and 75 square meters sintering plant as well as upgrade its electric arc furnace.

The bond issuance, jointly lead managed by Affin Bank Bhd, Affin Investment Bank Bhd, Alliance Investment Bank (M) Bhd, OCBC Bank (M) Bhd and United Overseas Bank Bhd, will have a tenure of up to five years.

(sourced:thestar.com.my)

Essar Steel restarts No 7 blast furnace

Tuesday, 08 Feb 2011
The Canadian Press reported that Essar Steel Algoma announced that it has started its No 7 blast furnace after a lengthy, unplanned shutdown that began in late January.
Essar said “The blast furnace is ramping up smoothly and expects to return to normal operating levels in the next few days.”
It added that meanwhile, coke making operations remain in full effect and limited production continues at select downstream operations.

Mr Pramod Shukla COO of Essar Steel Algoma said “As we look forward to the resumption of full operations, we wish to thank our customers, employees and the community for their patience and understanding during this difficult period.”
The company had said earlier that the outage was caused by a cooling water leak and initial efforts at an expedited startup were unsuccessful due to extreme weather conditions.(sourced:The Canadian Press)

General Steel to start trail of BF converter and sintering plant

Tuesday, 01 Feb 2011

General Steel Holdings Inc announced that it will test run two newly constructed 1,280 cubic meter blast furnaces, two 120 tonne converters and one 400 square meter sintering machine at its Longmen Joint Venture.
At their designed efficiency levels, the new equipment has the potential to increase production capacity for the company by 3 million tonnes of crude steel per year.

Mr Henry Yu chairman & CEO of General Steel said “We are pleased to bring the new state of the art equipment online, as it marks a milestone for us in terms of the expansion of our production capacity. We have successfully transitioned to new state of the art equipment which meets governmental industry standards. The new equipment will reduce our costs and improve our profitability, and the increased production capacity will place us in an advantageous position as we strive to meet the increasing demand for our steel products in China’s Western regions.”

The construction of the new equipment was funded by the Shaanxi Iron and Steel Group.
General Steel is currently in negotiations with Shaanxi Group to enter into a lease agreement whereby General Steel will lease the new equipment. During this test run period, General Steel will be able to use the equipment to produce and deliver products to its customers. It is anticipated that this test run period will continue until a lease agreement between Shaanxi Group and General Steel is finalized.