JFE looking at increasing stake in JSW Steel

Tuesday, 15 Nov 2011

Japan’s JFE Holdings Inc is eyeing a larger chunk of JSW Steel Ltd, India’s third biggest steel maker hoping to take advantage of a steep fall in the share price and recently eased takeover norms.

According to Bombay Stock Exchange data, JFE had a 14.78% stake in JSW on September 30th

Mr Hironobu Fukushima head of corporate communications at JFE Steel Corp said that “We expect to start talking soon with JSW Steel.” But declined to elaborate.

JFE acquired a 14.99% stake in JSW in July 2010 in return for certain technology and technical assistance for automotive steel production. JSW issued 32 million shares at INR 1,500 apiece.

JFE’s Fukushima said under Japanese law, if a company acquires more than 20% of the voting rights in another company, the latter becomes an equity method affiliate of the buyer. If the second firm is an important equity method affiliate of the first, its performance must be included in the latter’s financial statements. The level of importance is decided by the acquiring company.
, he said.

This implies that if JFE considers JSW an important affiliate, it will vie for a 20-24% stake in the Indian firm, just short of the 25% open offer trigger that requires the buyer to offer to purchase more shares from the public. The previous trigger was 15%. India’s new takeover code took effect on 22 October.

(sourced:livemint)

Rio Tinto increases its stake in Ivanhoe Mines to 45pct

Saturday, 27 Aug 2011

Rio Tinto exercised its right to subscribe for and acquire common shares in Ivanhoe Mines Limited under its Subscription Right. As a result, Ivanhoe Mines will issue 27,896,570 million new shares to a wholly owned subsidiary of Rio Tinto, Rio Tinto International Holdings Limited increasing Rio Tinto's ownership in Ivanhoe Mines by 2.0% to a total of 358,158,442 common shares or 48.5%.

The price paid per share was CAD 18.98 and the total consideration for the exercise of this Subscription Right was CAD 529.5 million. The subscription was made in accordance with existing contractual arrangements between Rio Tinto and Ivanhoe Mines that permits share purchases in certain circumstances and subject to certain limits. Under the terms of these agreements and subject to certain exceptions, Rio Tinto's current maximum permitted shareholding in Ivanhoe Mines is 49%.

The subscription was made in order to increase Rio Tinto's ownership of Ivanhoe in accordance with its contractual rights. Depending upon its assessment of Ivanhoe's business, prospects and financial condition, the market for Ivanhoe's securities, general economic and tax conditions and other factors, Rio Tinto will consider availing itself of its rights to acquire additional securities of Ivanhoe.

Today's subscription reinforces Rio Tinto's commitment to the Oyu Tolgoi project, which is a natural fit with its strategy of focusing on cost competitive, long life assets with significant growth potential. Together with Ivanhoe and the Government of Mongolia, Rio Tinto is determined to develop Oyu Tolgoi in a sustainable, mutually beneficial manner for the people of Mongolia.

Peru gov't, miners reach deal to increase royalties

Aug26, 2011

* Miners, gov't negotiate new royalty scheme
* Humala campaigned for higher taxes to help the poor
* Mine society sees rates defined in next couple weeks
By Caroline Stauffer and Patricia Velez

LIMA, (Reuters) - Peru has reached an agreement with mining companies that will raise the vital industry's annual payments to the government to about $1 billion, the government
said on Thursday, fulfilling a campaign promise by leftist President Ollanta Humala.

Humala took office in late July, vowing to tax mining companies' windfall profits to bolster social programs in a country where one of every three people is poor. Mining accounts for 60 percent of Peru's export revenue.

The new royalty rates have not been set yet but a sliding scale will be devised to take individual company profits into account, Pedro Martinez, the head of Peru's mining company
association, told Reuters.

The royalty rates should be defined "in the next couple of weeks," the sector's lead negotiator added. Companies now pay royalties of between 1 percent and 3 percent, charged on sales in the world's No. 2 copper producer and No. 6 gold producer. Mines Minister Carlos Herrera said the
new levy will be applied to operating profits instead of sales, a change that mining companies supported.

"We want to announce today that we have ensured mining companies will make tax payments of approximately 3 billion soles a year," Prime Minister Salomon Lerner told Congress, where he was presenting Humala's government plan.

"This tax will not affect investment or companies' competitiveness," he said. Last year, miners contributed $646 million in royalties and paid corporate income taxes at a rate of 30 percent. It was unclear whether Lerner was referring to revenue from royalties alone or overall tax contributions.

Mining profits have surged on the back of record high gold, silver and copper prices this year.
"It is healthy to have reached a successful conclusion, that we can contribute something more," Roque Benavides, head of Peru's biggest precious metals producer Buenaventura , told local radio.

Asked how the contribution would be paid, Benavides said: "This is a more complex issue because this is based on profits, which do not have a set value and which depend on metals prices
(and) the cost of each company's operations." He said the government's revenue calculation of approximately $1 billion was based on metals prices and company profits from the first half of 2011.

GREATER CERTAINTY
Humala's government has been under pressure from his leftist backers to act on campaign promises to improve the lot of the poor, after he pleased investors by appointing a pro-market economic team. In his speech, Lerner reaffirmed Humala's commitment to gradually improving social programs. "We will not have an economic policy that is divorced from our social policies," he said. "Our model of economic growth with social inclusion implies a profound, gradual reform of the state and its ties to society."

Lerner also said the government would aim for economic growth of at least 6 percent a year.

Large international mining firms including Xstrata , BHP Billiton , Anglo American , Barrick Gold , and Grupo Mexico's Southern Copper operate in Peru. Peru collects a mere 15 percent of GDP in taxes, well below the nearly 35 percent of GDP in Brazil and less than the 18.2
percent in Chile.

"The announcement of a negotiated agreement between the government and mining companies eliminates one of the remaining sources of uncertainty about the overall direction of policies in Peru," Goldman Sachs analyst Eduardo Cavallo wrote in a research note.

A stocks trader in Lima said shares in mining companies were unaffected by the news. Lima's benchmark exchange , which is heavily weighted by miners, closed down 0.14 percent. "Lerner has given the framework that the government seeks but investors want to know what the (royalty) rates are and if they will be competitive for each company," the trader said.

Indian coking coal imports increase in 2010, 33% YoY JUMP

Tuesday, Feb 01, 2011

India imported 36.1 million tonnes of coking coal in 2010, a 33% year-on-year jump, according to The Salva Report.
Australia was by far the biggest supplier of coking coal to the Asian nation, contributing 84% with US imports accounting for 5%, New Zealand 3% and South Africa 2.3%, Salva Reports.

Indian thermal coal imports for Nov dropped to 5.3 million tonnes, from the record 6.4 million tonnes imported in October, according to Salva which said the fall could be attributed to increased domestic production throughout October and the rising cost of imported thermal coal.