Resume iron ore exports to Japan - Foreign Secretary

Sunday, 08 Jan 2012

India’s foreign secretary Mr Ranjan Mathai has sent an SOS to commerce secretary Mr Rahul Khullar suggesting that he send a team to Tokyo to promptly conclude talks on the Long Term Agreement that fixes ore prices for five years and resume exports.

In his letter, dated December 30th, Mr Mathai underlined the urgency by referring to the assurances given by Indian prime minister Dr Manmohan Singh to his Japanese counterpart Mr Yoshihiko Noda at their recent bilateral summit.

Mr Mathai said that on July 7, the cabinet had cleared the LTA’s renewal and exports by Minerals and Metals Trading Corporation.

He added that “Our iron ore exports to Japan though small has connected us historically and has been the foundation of the present day diversified and intense bilateral trade and economic relationship. The delay in finalizing the LTAs by India has been viewed with concern by the Japanese side.”

The Japanese premier raised the issue with Dr Singh on December 28 during his recent visit to India. He assured his Japanese counterpart that we will address their concern.

As per the existing LTA between NMDC and these nations which expired on March 31 last year each year the PSU supplied 2.3 million tonnes of iron ore to Japanese steel mills. This stopped in February 2011.

The steel ministry had expressed a view that the exports should not be allowed as the Comptroller and Auditor General and the Income Tax Department had raised objections. The CAG had questioned the rationale behind exporting iron ore when local demand for it was on the rise. The I T department criticised NMDC for selling at long term prices instead of spot prices and losing substantial revenues.

(sourced IndianExpress.com)

Nigeria finalizes agreement for pipe mill with Jiangsu Yulong

Tuesday, 08 Feb 2011
It is reported that Nigerian Content Development & Monitoring Board and China's major welded line pipe maker Jiangsu Yulong Steel Pipe have agreed to implement a schedule that will lead to the setting up of a 250,000 tonnes per annum longitudinal submerged arc welded pipe mill in Nigeria by September 2012.
The schedule which comprises six key activities and timelines was agreed on during a five day visit to Jiangsu Yulong's facility in China by an NCDMB team led by the executive secretary Mr Ernest Nwapa in January 2011.
The visiting team which included Mr Bola Akano representative of the MD of Addax Petroleum, a member of Sinopec Group, inspected Jiangsu Yulong's Longitudinal Submerged arc welding pipe mill, Helical Submerged Arc welding pipe mill and the High Frequency Resistance Welding Pipe Mill.
The visit was a follow up to the meeting held in September 2010 between NCDMB and representatives of Jiangsu Yulong at the Board’s headquarters in Yenagoa in Bayelsax State.
The Board's efforts are geared towards meeting the targets set for the industry by Ms Diezani Alison Madueke minister of petroleum resources during the inauguration of the Governing Council of the NCDMB by President Mr Goodluck Jonathan in September 2010.
The minister had declared that the steadfast implementation of the Nigerian Content Act will in the next four years lead to the establishment of three to four new pipe mills and other ancillary manufacturing plants to service the demands of the oil and gas industry.
In his remarks during the visit, Mr YongQing Tang the Chairman of Jiangsu Yulong reaffirmed the company’s commitment to set up in Nigeria and confirmed that 80% of the equipment for the production line dedicated to the Nigeria project had been manufactured and is awaiting testing and shipment.
Mr Tang who informed that the basic design of the proposed mill had been completed, added that the visit had demonstrated the commitment of the Nigerian Government to establish pipe mills in Nigeria and develop local steel pipe production.
According to him, Jiangsu Yulong looks forward to partnering with NCDMB, local companies and other Chinese companies like SINOPEC, operating in Nigeria which is familiar with the environment. He however, requested the Board to provide guarantees that the Nigerian National Petroleum Corporation and other major operators will patronize the LSAW mill when operational.
In his comments, Mr Nwapa assured Jiangsu Yulong that the Federal Government is actively promoting foreign direct investments, particularly in the energy sector and will provide all necessary support, approvals and incentives to the company. He said the Federal Government is committed to using locally manufactured pipes in the construction of Nigerian Gas Master Plan infrastructure which involves over 2000 kilometers of large diameter pipeline.
He noted that the Nigerian Content Law protects investors in any facility established in Nigeria to manufacture industry inputs and the NCDMB has demonstrated its ability to enforce this by ensuring that oil majors now source applicable line pipes from SCC Mill, which is the only manufacturer of pipes in Nigeria today.
He further assured Jiangsu Yulong that when the pipe mill becomes operational, NCDMB will not allow any operator in the industry to import longitudinal submerged arc welded pipes until the capacity of its facility and any similar plant is exhausted.
He further assured the company of the Board’s resolve to ensure that the intendments of the Nigerian Content Law as it relates to domiciliation for line pipe procurement is achieved, adding that the law is already being implemented and evidence of local production or concrete plans towards local production is prerequisite for the short listing of companies for contracts.
According to the project implementation schedule, Jiangsu Yulong will work with NCDMB between March and December 2011 to achieve critical milestones including land acquisition, permits, environmental impact assessment, detailed engineering and early site works preparatory to moving the mill. Both parties are also to organize training and attachment of Nigerian operators to ensure that a sizeable workforce is available when the plant is ready for testing.
A Chinese Contractor has already been engaged by Jiangsu Yulong, with the mandate to partner an experienced indigenous construction company in Nigeria for the construction of the plant between November 2011 and August 2012.
The Chinese Contractor and the senior executives of Jiangsu Yulong are expected in Nigeria in May 2011 for preliminary engineering work.
Mr Tang and Mr Nwapa thereafter inaugurated the project team for the Nigeria Pipe Mill which comprises personnel from NCDMB and Jiangsu Yulong as well as a consultant. The project team has since commenced work.
(sourced:vanguardngr.com)

Mineral Resources backs ArcelorMittal’s push for iron ore supply deal

By,Sibonelo RadebeTuesday, 01 Feb.2011

The Department of Mineral Resources (DMR) seems to have thrown its weight behind ArcelorMittal SA which seeks to reinstate the 2001 iron ore supply agreement with Kumba’s Sishen mine in the Northern Cape.
This is clearly spelt out in the affidavit of DMR’s director general Sandile Nogxina who was responding to Kumba in the legal battle for a 21.4% share of Sishen mining rights.
ArcelorMittal has threatened to close down its Saldanha steel manufacturing plant if a favourable iron ore supply arrangement was not found.
Nogxina said the Sishen mineral rights were of strategic importance and thus the decision as to who received the 21.4% portion of the Sishen rights should be alive to broader public interests which far outweighed Kumba’s own parochial interests.
ArcelorMittal held a 21.4% share of Sishen’s mining rights which came with a special iron ore supply agreement from 2001.

In this agreement, ArcelorMittal was entitled to receive 6.25 million tons a year of iron ore from Sishen at cost plus 3%.
Arcelor Mittal lost the 21.4% share of Sishen’s mining rights after it failed to convert them into new order mining rights in 2009.
Kumba, which holds 78.6% of the Sishen rights, is claiming the former ArcelorMittal portion for itself. A firm styled as a black economic empowerment (BEE) entity, Imperial Crown Trading (ICT), successfully applied for prospecting rights over the 21.4% share of Sishen.
After ArcelorMittal failed to convert its rights, Kumba moved to rescind the supply agreement.
An interim supply agreement was put in place after the intervention of government. An arbitration process was put in place and an interim measure which was set to run between March 1 and July 31, 2010, sees ArcelorMittal pay between $50 and $70 per ton. This applies to a maximum of 520000 tons per month.

Nogxina said there were sound reasons for the splitting of the mining rights to the Sishen iron oreed in 2001. These reasons remain valid, said Nogxina. “The mere fact that ArcelorMittal has through its negligence caused its old order rights to lapse, does not in any way affect this reasoning.”
Nogxina added that in November last year, cabinet announced that government would establish an interdepartmental task team which would look into the re-establishment of an arrangement to allow ArcelorMittal and other steel producers to source the 21.4% share of Sishen at cost plus 3%.
This arrangement would be modelled in a way that produces steel prices that are in line with the cheap iron ore supply agreement. Kumba refused to enter into such an arrangement, said Nogxina.
He added that the manner in which the output of the Sishen mine was handled had a direct impact on the local steel industry.
Nogxina said Kumba’s behavior around the Sishen matter and mainly the relentless pursuit of the Sishen rights that it did not own and the suspension of the supply agreement was motivated by parochial interest.
Kumba was driven simply by the quest for profits, said Nogxina.
“I understand that and I have no difficulty with it”.
Kumba’s financial strength benefits the national fiscus, the local community and its BEE shareholders. However the minister was required to pursue a broader range of interests than those affected by Kumba’s commercial success, said Nogxina.
Kumba is expected to respond to DMR’s claims in court proceedings. But the Anglo American subsidiary has maintained that the supply arrangement with ArcelorMittal “became inoperative in its entirety as of May 1, 2009”. (sourced:thenewage.co.za)