Stringent forest acts and acute scarcity of coking coal seem to be the major hurdles towards the growth of the steel industry in the country which is aiming to occupy the second place after China by 2020.
India, which produced 57 MT of steel in 2007, targets addition of another 50 MT in the next four years and 200 MT by 2020, official sources said.
"Unless the government comes out with some innovative ways and means to allow mining of iron ore in reserve forests and wildlife sanctuaries, many of the proposed capacities may not materialise," Dalip Singh, Joint Secretary in the Steel Ministry said.
Nearly 40 per cent of the country's reserve fall in magnetite categories, located in reserve forest belts or wildlife sanctuaries, Singh said in his keynote address at the fourth international iron and steelmaking seminar here.
Though the country is endowed with significant reserves of iron ore according to the data given by the Indian Bureau of Mines (IBM), only 7.2 billion tons of ore were economically mine-able. India had a reserve of nearly 25.25 billion tons of iron ore, the data say.
Of the 7.2 billion tons of mineable ore, 1.3 billion tons were categorised as high-grade while the medium grade reserve was only 3.54 billion tons, he said.
"It is important to note that there are substantial resources in low grade categories and industry must focus on utilising these ores through suitable techniques", he said.
Source: Economic Times
Sunday, June 29, 2008
Saturday, June 28, 2008
Nucoal Increases Capacity At Woestalleen
Nucoal Mining, the black economically empowered coal-miner in South Africa, has increased the production capacity at its Woestalleen colliery, in Middelburg, Mpumalanga, from 90 000 run-of-mine (ROM) tons a month to 200 000 t/m, following the successful completion of a R60-million plant expansion project that kicked off in February last year.
Speaking at the opening of the new plant, COO Paul Erskine said that the company had taken the colliery from a wash plant capacity of “400 000 t life-of- mine, when it bought Woestalleen as a junior mining house with 33 800 000 t of coal reserves and a 14-year life-of-mine through various strategic joint ventures (JVs)”.
Nucoal Mining acquired Woestalleen in November 2006, when the Richards Bay Coal Terminal (RBCT) index had just broken into the $40/t to $50/t trading range. Today, it is hovering around $130/t.
The Woestalleen colliery has been producing coal since 1986, and exports some 660 000 t/y through Swiss marketing house Glencore International. The colliery has been exporting coal through the RCBT for more than two years.
“The next project at Woestalleen will be the implementation of a phase which should take the ROM production up another 100 000 t, to 300 000 t/m, and that project is weeks away from signing and should be complete in 11 months,” said Erskine.
Other projects that Nucoal Mining is involved in include the building of a siding in Kendall, in Mpumalanga province, in a JV with another multinational trading company, and a JV coking coal project in Zimbabwe, which produces about 120 000 t/m.
“Coking coal has risen from a low of $60/t in 18 months, to about $240/t for semisoft today, an increase of more than 249%,” he added.
Source: Mining Weekly
Speaking at the opening of the new plant, COO Paul Erskine said that the company had taken the colliery from a wash plant capacity of “400 000 t life-of- mine, when it bought Woestalleen as a junior mining house with 33 800 000 t of coal reserves and a 14-year life-of-mine through various strategic joint ventures (JVs)”.
Nucoal Mining acquired Woestalleen in November 2006, when the Richards Bay Coal Terminal (RBCT) index had just broken into the $40/t to $50/t trading range. Today, it is hovering around $130/t.
The Woestalleen colliery has been producing coal since 1986, and exports some 660 000 t/y through Swiss marketing house Glencore International. The colliery has been exporting coal through the RCBT for more than two years.
“The next project at Woestalleen will be the implementation of a phase which should take the ROM production up another 100 000 t, to 300 000 t/m, and that project is weeks away from signing and should be complete in 11 months,” said Erskine.
Other projects that Nucoal Mining is involved in include the building of a siding in Kendall, in Mpumalanga province, in a JV with another multinational trading company, and a JV coking coal project in Zimbabwe, which produces about 120 000 t/m.
“Coking coal has risen from a low of $60/t in 18 months, to about $240/t for semisoft today, an increase of more than 249%,” he added.
Source: Mining Weekly
Forescue Fuels Pilbara Land Grab
Mining tenements in Western Australia's iron-ore rich Pilbara have all been snapped up in a goldrush-style land grab triggered by Andrew Forrest's Fortescue Metals Group.
Every piece of ground in the Pilbara that was prospective for minerals has either been granted or is under application, a spokeswoman for Western Australia's Department of Industry and Resources (DoIR) said. "This is typical of boom times,'' she said.
Fortescue chief financial officer Chris Catlow said that junior and mid-tier iron ore companies had scrambled to secure Pilbara landholdings. He said this had happened since Fortescue started publicly challenging Rio Tinto Ltd and BHP Billiton Ltd to open up their railways in the region to third parties. The prospect of getting ore to port and record benchmark iron ore prices had made Pilbara iron ore tenements highly sought after. "It's hard to get hold of ground,'' Mr Catlow said. "It's only come about since Fortescue initiated its activities. "Clearly, people are now only interested in looking for iron ore in the Pilbara because there is a prospect of being able to ship it out on open-access infrastructure."
Fortescue's 40,000-square-kilometre tenements are about the same size as Texas, eclipsing those of mining giants BHP Billiton and Rio Tinto, it says. Murchison Metals Ltd, which has a modest iron ore mining operation in WA's mid-west, was recently caught up in the Pilbara fever, securing 400 square kilometres of tenements between Tom Price and Paraburdoo.
Murchison managing director Trevor Matthews said the company was seeking more landholdings in the Pilbara. Mr Matthews said the company would approach private holders of tenements in the region. Budding iron ore producer Atlas Iron Ltd has amassed a sizeable chunk of the Pilbara, with 9,000 square kilometres of tenements containing direct shipping hematite ore and magnetite ore. The $1 billion company, which joins the S&P200 on July 1, aims to commence mining in August, with exports to follow in October.
At the smaller end of the mining spectrum, Warwick Resources Ltd has secured 1,700 square kilometres of Pilbara tenure for iron ore.
Source: News.com.au
Every piece of ground in the Pilbara that was prospective for minerals has either been granted or is under application, a spokeswoman for Western Australia's Department of Industry and Resources (DoIR) said. "This is typical of boom times,'' she said.
Fortescue chief financial officer Chris Catlow said that junior and mid-tier iron ore companies had scrambled to secure Pilbara landholdings. He said this had happened since Fortescue started publicly challenging Rio Tinto Ltd and BHP Billiton Ltd to open up their railways in the region to third parties. The prospect of getting ore to port and record benchmark iron ore prices had made Pilbara iron ore tenements highly sought after. "It's hard to get hold of ground,'' Mr Catlow said. "It's only come about since Fortescue initiated its activities. "Clearly, people are now only interested in looking for iron ore in the Pilbara because there is a prospect of being able to ship it out on open-access infrastructure."
Fortescue's 40,000-square-kilometre tenements are about the same size as Texas, eclipsing those of mining giants BHP Billiton and Rio Tinto, it says. Murchison Metals Ltd, which has a modest iron ore mining operation in WA's mid-west, was recently caught up in the Pilbara fever, securing 400 square kilometres of tenements between Tom Price and Paraburdoo.
Murchison managing director Trevor Matthews said the company was seeking more landholdings in the Pilbara. Mr Matthews said the company would approach private holders of tenements in the region. Budding iron ore producer Atlas Iron Ltd has amassed a sizeable chunk of the Pilbara, with 9,000 square kilometres of tenements containing direct shipping hematite ore and magnetite ore. The $1 billion company, which joins the S&P200 on July 1, aims to commence mining in August, with exports to follow in October.
At the smaller end of the mining spectrum, Warwick Resources Ltd has secured 1,700 square kilometres of Pilbara tenure for iron ore.
Source: News.com.au
Friday, June 27, 2008
EU In Calcium Carbide Price-Fixing Charges
The European Commission has charged at least two suppliers of calcium carbide and magnesium powder with forming a cartel to fix prices of the chemicals.
The chemicals firms named in the charges are Dutch supplier Akzo Nobel and Germany’s SKW Stahl-Metallurgie, which bought its powder business in September 2004 from Degussa.
The primary markets for these chemicals are steelmaking and industrial gas industries. Steelmakers use calcium carbide and magnesium powders to strengthen steel while industrial gas suppliers use calcium carbide to make acetylene gas.
Source: Purchasing.com
Calcium Carbide at www.minerals-and-metals.com/calcium-carbide.html
The chemicals firms named in the charges are Dutch supplier Akzo Nobel and Germany’s SKW Stahl-Metallurgie, which bought its powder business in September 2004 from Degussa.
The primary markets for these chemicals are steelmaking and industrial gas industries. Steelmakers use calcium carbide and magnesium powders to strengthen steel while industrial gas suppliers use calcium carbide to make acetylene gas.
Source: Purchasing.com
Calcium Carbide at www.minerals-and-metals.com/calcium-carbide.html
Maharashtra Seamless In Bid For Indonesian Iron Ore Miner
Maharashtra Seamless (MSL), the flagship company of the Rs 3,000-crore [Rs 30billion] DP Jindal Group, is in the race to acquire an Indonesia-based iron ore mining firm for around Rs 300 crore [Rs 3 billion]. It is learnt that the Indonesian firm has iron ore reserves of close to 20 million tonnes. If the deal goes through, MSL would also establish a 1 million-tonne steel plant close to the iron ore deposits in Indonesia with investments of up to Rs 1,200 crore [Rs 12 billion].
Sources say MSL would resort to internal accruals to fund the proposed steel project as well as the acquisition. When contacted by ET, the company’s spokesperson declined to comment. As part of the backward integration initiatives, the company had planned to set up its first steel plant in Orissa. However, if the deal with the mining firm goes through, the plant would instead come up in Indonesia considering the proximity to iron ore reserves, said sources.
According to the industry sources, the acquisition of the Indonesian iron ore mining company would help MSL meet iron ore requirements for its proposed steel plant. The steel plant, in turn, would serve as a raw material source for company’s seamless pipes and tubes business. Last year, the Indian firm had acquired seamless pipes plant of SC Republica SA in Romania with an aim to double its seamless pipes capacity to 7 million tonnes a year by 2010 from 3.5 tonnes presently. With the acquisition, it also got access to the European and the Middle East markets.
“We are getting technology and equipment of the Romanian firm into India and establishing a 2 million tonnes plant at Nagothane in Maharashtra, which is close to existing seamless tubes facility. The project would entail an investment of close to Rs 300 crore [Rs 3 billion],” said an official of the company. He added the company has already acquired the land worth Rs 80 crore [Rs 800million] for the new plant, which is likely to get commissioned by 2010.
The company plans to add another 150,000 tonnes by de-bottlenecking the existing capacity of 3.5 million tonnes, located at Raigad in Maharashtra, with an additional investment of close to Rs 100 crore [Rs 1billion]. Presently, MSL supplies wide range of pipes and tubes to various domestic industries, primarily oil and gas, for exploration activities.
Source: Economic Times
Sources say MSL would resort to internal accruals to fund the proposed steel project as well as the acquisition. When contacted by ET, the company’s spokesperson declined to comment. As part of the backward integration initiatives, the company had planned to set up its first steel plant in Orissa. However, if the deal with the mining firm goes through, the plant would instead come up in Indonesia considering the proximity to iron ore reserves, said sources.
According to the industry sources, the acquisition of the Indonesian iron ore mining company would help MSL meet iron ore requirements for its proposed steel plant. The steel plant, in turn, would serve as a raw material source for company’s seamless pipes and tubes business. Last year, the Indian firm had acquired seamless pipes plant of SC Republica SA in Romania with an aim to double its seamless pipes capacity to 7 million tonnes a year by 2010 from 3.5 tonnes presently. With the acquisition, it also got access to the European and the Middle East markets.
“We are getting technology and equipment of the Romanian firm into India and establishing a 2 million tonnes plant at Nagothane in Maharashtra, which is close to existing seamless tubes facility. The project would entail an investment of close to Rs 300 crore [Rs 3 billion],” said an official of the company. He added the company has already acquired the land worth Rs 80 crore [Rs 800million] for the new plant, which is likely to get commissioned by 2010.
The company plans to add another 150,000 tonnes by de-bottlenecking the existing capacity of 3.5 million tonnes, located at Raigad in Maharashtra, with an additional investment of close to Rs 100 crore [Rs 1billion]. Presently, MSL supplies wide range of pipes and tubes to various domestic industries, primarily oil and gas, for exploration activities.
Source: Economic Times
Indian Ministry Makes Case For Iron Ore Exports
India’s ministry of mines has come out strongly in favour of the export of iron ore in a meeting with the Parliamentary Consultative Committee attached to the ministry.
The ministry told the committee that there is no need to curb exports of iron ore without a matching increase in domestic consumption of ore produced in the country. In effect, this might be inimical to the country’s standalone mining industry, thus severely affecting employment and economic activity in several backward regions, where these mines are located.
The ministry’s view is significant since it comes in the wake of imposition of a 15% ad valorem export duty on iron ore by the government to rein in inflation earlier this month. India has large pockets of high-grade iron ore deposits. While current reserves are estimated at 25.25 billion tonne (bt) between 1980 and 2005, reserves rose from 17.56 bt to the present level.
This leads to an average increase of a little over 256 mt, while average production has been around 163 mt. Less than 19% of the iron ore bearing area has subjected to detailed exploration. There has been a steady increase in the production of iron ore since 2003-04.
From 122.8 mt in 2002-04, the estimated production in 2006-07 had gone up to 180.9 mt. During the same period, the consumption of iron ore too, has gone up from 44.97 mt to an estimated 72 mt. Between 2003-04 and 2006-07, exports grew from 62.57 mt to 93.79 mt.
Source: Economic Times
The ministry told the committee that there is no need to curb exports of iron ore without a matching increase in domestic consumption of ore produced in the country. In effect, this might be inimical to the country’s standalone mining industry, thus severely affecting employment and economic activity in several backward regions, where these mines are located.
The ministry’s view is significant since it comes in the wake of imposition of a 15% ad valorem export duty on iron ore by the government to rein in inflation earlier this month. India has large pockets of high-grade iron ore deposits. While current reserves are estimated at 25.25 billion tonne (bt) between 1980 and 2005, reserves rose from 17.56 bt to the present level.
This leads to an average increase of a little over 256 mt, while average production has been around 163 mt. Less than 19% of the iron ore bearing area has subjected to detailed exploration. There has been a steady increase in the production of iron ore since 2003-04.
From 122.8 mt in 2002-04, the estimated production in 2006-07 had gone up to 180.9 mt. During the same period, the consumption of iron ore too, has gone up from 44.97 mt to an estimated 72 mt. Between 2003-04 and 2006-07, exports grew from 62.57 mt to 93.79 mt.
Source: Economic Times
Portman Follows Suit With Iron Ore Price Increase
Portman said today it is increasing its contract iron ore prices in line with the price hikes announced by Rio Tinto this week.
Portman which produces about 8 million metric tonnes of iron ore a year, said it has advised its existing Chinese customers that its iron ore fines price will rise by 79.88 per cent and its lump price by 96.5 per cent, in line with the prices struck by Rio Tinto with Baosteel on Monday. The Perth-based miner is 80.5 per cent owned by US iron ore miner Cleveland Cliffs. The company also announced today it has completed its off-market share buyback at a cost of $143.3 million.
The company purchased 9.8 million shares from investors at a price of $14.66 each, representing a 14 per cent discount to the average share price in the five days after the buyback was announced on May 21, Portman said in a statement.
Source: The Australian
Portman which produces about 8 million metric tonnes of iron ore a year, said it has advised its existing Chinese customers that its iron ore fines price will rise by 79.88 per cent and its lump price by 96.5 per cent, in line with the prices struck by Rio Tinto with Baosteel on Monday. The Perth-based miner is 80.5 per cent owned by US iron ore miner Cleveland Cliffs. The company also announced today it has completed its off-market share buyback at a cost of $143.3 million.
The company purchased 9.8 million shares from investors at a price of $14.66 each, representing a 14 per cent discount to the average share price in the five days after the buyback was announced on May 21, Portman said in a statement.
Source: The Australian
Iron Ore Found In The Gambia
“Huge” deposits of iron ore have been found in The Gambia. The discovery, which was revealed by President Alhaji Dr Yahya Jammeh, is in addition to the discovery of offshore oil deposits disclosed three years ago.
However, the president maintained that he would not reveal the specific location of the iron ore deposits until all the modalities have been finalised and tests carried on the quality.
The Gambian leader made the revelation in his office at State House, on Wednesday afternoon, after receiving a D4 million cheque from Salah Ezzeddine of the East Line Company, which operates in three Gulf States: the United Arab Emirates, Qatar and Saudi Arabia.
The amount represents a royalty on the export of 10,000 metric tonnes of sand minerals from The Gambia, which was the consignment seized from Carnegie Minerals Gambia Limited. The company’s operational license had been revoked by the government after it was found to be involved in “illegal” operational activities.
At the meeting, President Jammeh was upbeat about the quality of The Gambia’s iron ore, saying: “Allah will provide the country with the best quality once the tests have been carried out, for the betterment of the country”.
He told the meeting that he will announce another “discovery”, as soon as the iron ore exportation begins, stressing the need for attitudinal change for rapid transformation of The Gambia.
Source: Daily Observer, Gambia
However, the president maintained that he would not reveal the specific location of the iron ore deposits until all the modalities have been finalised and tests carried on the quality.
The Gambian leader made the revelation in his office at State House, on Wednesday afternoon, after receiving a D4 million cheque from Salah Ezzeddine of the East Line Company, which operates in three Gulf States: the United Arab Emirates, Qatar and Saudi Arabia.
The amount represents a royalty on the export of 10,000 metric tonnes of sand minerals from The Gambia, which was the consignment seized from Carnegie Minerals Gambia Limited. The company’s operational license had been revoked by the government after it was found to be involved in “illegal” operational activities.
At the meeting, President Jammeh was upbeat about the quality of The Gambia’s iron ore, saying: “Allah will provide the country with the best quality once the tests have been carried out, for the betterment of the country”.
He told the meeting that he will announce another “discovery”, as soon as the iron ore exportation begins, stressing the need for attitudinal change for rapid transformation of The Gambia.
Source: Daily Observer, Gambia
Vale Signs Philippines Copper And Mining Deal
Vale Exploration Philippines Inc., a subsidiary of Companhia Vale do Rio Doce , and Geograce Resources Philippines Inc. said on Tuesday that they had signed an exploration and option agreement for seven mining claims containing copper and iron ore in Masbate province.
Vale has committed to fund exploration expenditures of up to $6 million for the first two phases of the exploration agreement. This will include geological sampling up to drilling and other exploration activities.
Vale is the world’s top producer of iron ore and iron ore pellets, the second biggest producer of nickel and one of the world’s largest producers of manganese ore and ferroalloys. It is also one of the biggest logistics operators in Brazil.
Geograce said in a disclosure to the stock exchange that it and Vale agreed to cooperate in exploring seven mining claims in Masbate covering 84,046 hectares.
It said its board approved the execution of an “exclusive option agreement” and “irrevocable special power of attorney” with seven companies that own the Masbate claims for the acquisition of these claims from them.
Under the agreement, Vale will conduct preliminary exploration and evaluation of the Masbate claims while Geograce will obtain approvals for the exploration permit applications and maintaining the Masbate claims with appropriate government agencies.
Vale also has the option to form a joint venture for the development and operation of mining activities on the Masbate claims, Geograce said.
Source: Philippines Daily Inquirer
Vale has committed to fund exploration expenditures of up to $6 million for the first two phases of the exploration agreement. This will include geological sampling up to drilling and other exploration activities.
Vale is the world’s top producer of iron ore and iron ore pellets, the second biggest producer of nickel and one of the world’s largest producers of manganese ore and ferroalloys. It is also one of the biggest logistics operators in Brazil.
Geograce said in a disclosure to the stock exchange that it and Vale agreed to cooperate in exploring seven mining claims in Masbate covering 84,046 hectares.
It said its board approved the execution of an “exclusive option agreement” and “irrevocable special power of attorney” with seven companies that own the Masbate claims for the acquisition of these claims from them.
Under the agreement, Vale will conduct preliminary exploration and evaluation of the Masbate claims while Geograce will obtain approvals for the exploration permit applications and maintaining the Masbate claims with appropriate government agencies.
Vale also has the option to form a joint venture for the development and operation of mining activities on the Masbate claims, Geograce said.
Source: Philippines Daily Inquirer
Sumitomo Increases Stake In Assmang
Sumitomo Corp., Japan's third-largest trading company, will spend 30 billion yen ($279 million) to increase its stake in iron ore, chrome and manganese miner Assmang Ltd. to secure supplies of the steelmaking materials.
The investment increases the Tokyo-based company's share of Assmang's holding company to 49 percent, boosting its interest in the South Africa-based miner to 13 percent from 8 percent, Sumitomo said today in a statement on its Web site.
Sumitomo and rivals including Mitsubishi Corp. and Mitsui & Co. are increasing stakes in mines and resource companies from Australia to Africa, South America and the U.S. as climbing demand for steel and copper in China intensifies competition to procure raw materials. Demand for manganese and a power shortage that crimped output in South Africa, the world's biggest producer, has caused prices to quadruple to a record in the past year.
Nippon Denko Co., Japan's biggest ferroalloy maker, in February agreed to pay a record $11.20 per 1 percent manganese contained in a metric ton of ore in the year started April 1. That compares with $2.70 for the year ending March 31. Manganese is used to make steel tougher.
Source: Bloomberg
The investment increases the Tokyo-based company's share of Assmang's holding company to 49 percent, boosting its interest in the South Africa-based miner to 13 percent from 8 percent, Sumitomo said today in a statement on its Web site.
Sumitomo and rivals including Mitsubishi Corp. and Mitsui & Co. are increasing stakes in mines and resource companies from Australia to Africa, South America and the U.S. as climbing demand for steel and copper in China intensifies competition to procure raw materials. Demand for manganese and a power shortage that crimped output in South Africa, the world's biggest producer, has caused prices to quadruple to a record in the past year.
Nippon Denko Co., Japan's biggest ferroalloy maker, in February agreed to pay a record $11.20 per 1 percent manganese contained in a metric ton of ore in the year started April 1. That compares with $2.70 for the year ending March 31. Manganese is used to make steel tougher.
Source: Bloomberg
Environmental Clearance For Pulot Nickel Project
The Environment and Natural Resources Department granted an environmental compliance certificate to Citinickel Mines and Development Corp. for its Pulot nickel mining project in three barangays in Sofronio Española town in Palawan.
Environment Secretary Jose Atienza informed Caroline Tanchay, president of Citinickel, that the department was giving Citinickel the go-signal to proceed with its planned nickel mining project after “satisfying the requirements” and on recommendation of the Environmental Management Bureau.
Citinickel holds the mineral production sharing agreement that covers the 2,200-hectare sprawling nickel-rich mining concession in the towns of Narra and Sofronio Española in Palawan.
Citinickel said the certificate covered mining and direct shipment of 1.2 million metric tons of nickel ore in 1,408 hectares of its concession in Sofronio Española.
The mining project features development and operations limited to waste stripping, ore extraction, loading, and shipment as well as construction, rehabilitation and improvement of mine haul and access roads.
It also includes construction and operations of mine structures and support facilities, such as stockyards, equipment yard and office, camp site and assay and drainage systems, waste dump areas, settling ponds and other silt and erosion control infrastructures.
Source: Manila Standard
Environment Secretary Jose Atienza informed Caroline Tanchay, president of Citinickel, that the department was giving Citinickel the go-signal to proceed with its planned nickel mining project after “satisfying the requirements” and on recommendation of the Environmental Management Bureau.
Citinickel holds the mineral production sharing agreement that covers the 2,200-hectare sprawling nickel-rich mining concession in the towns of Narra and Sofronio Española in Palawan.
Citinickel said the certificate covered mining and direct shipment of 1.2 million metric tons of nickel ore in 1,408 hectares of its concession in Sofronio Española.
The mining project features development and operations limited to waste stripping, ore extraction, loading, and shipment as well as construction, rehabilitation and improvement of mine haul and access roads.
It also includes construction and operations of mine structures and support facilities, such as stockyards, equipment yard and office, camp site and assay and drainage systems, waste dump areas, settling ponds and other silt and erosion control infrastructures.
Source: Manila Standard
Eramet Favoured For New Caledonia Nickel Deposit
Harold Martin, president of New Caledonia, said he wants Eramet unit Societe Le Nickel to be awarded the licence for a giant nickel deposit in the French overseas territory.
'The Prony deposit is available. We must arrange for SLN to get it,' Martin told a news conference.
The Prony West deposit, with 4 million tonnes of nickel ore, came into public ownership following a court decision at the end of last month to reverse the award of a permit to Brazil's Vale by the previous regional council of southern New Caledonia.
Martin said he wants to ensure the capital of Eramet remains in French and Caledonian hands.
This month the Duval family, who own 37 percent of Eramet, renewed a shareholders' pact with Areva which has a 26 percent stake.
'The Duvals want to sell and are in a hurry,' Martin was reported by Agence France-Presse as saying. He believes Prony West could provide development prospects for SLN, whose nickel deposits are running out.
He wants French state-owned bank Caisse des Depots to buy part of the Duval family's shareholding and to do a valuation of the Prony deposit.
New Caledonia's three provinces own a 34 percent stake in SLN and 4.13 percent in Eramet itself.
Source: Forbes
'The Prony deposit is available. We must arrange for SLN to get it,' Martin told a news conference.
The Prony West deposit, with 4 million tonnes of nickel ore, came into public ownership following a court decision at the end of last month to reverse the award of a permit to Brazil's Vale by the previous regional council of southern New Caledonia.
Martin said he wants to ensure the capital of Eramet remains in French and Caledonian hands.
This month the Duval family, who own 37 percent of Eramet, renewed a shareholders' pact with Areva which has a 26 percent stake.
'The Duvals want to sell and are in a hurry,' Martin was reported by Agence France-Presse as saying. He believes Prony West could provide development prospects for SLN, whose nickel deposits are running out.
He wants French state-owned bank Caisse des Depots to buy part of the Duval family's shareholding and to do a valuation of the Prony deposit.
New Caledonia's three provinces own a 34 percent stake in SLN and 4.13 percent in Eramet itself.
Source: Forbes
Thursday, June 26, 2008
ArcelorMittal Signals Intent In China
ArcelorMittal, the world's largest steel producer controlled by Indian billionaire Lakshmi Mittal, intends to acquire a majority stake in a major Chinese steel producer but achieving the goal may take at least five years. That was according to Mr Mittal at a briefing to reporters at the American Metal Market Steel Success Strategies Conference in New York on Tuesday.
The Chinese government may not allow majority stakes for foreigners in the steel industry until it completes regional consolidation, said the chairman and CEO of ArcelorMittal. Striking a positive note, Mr Mittal said that when China decides to let foreign companies in, ArcelorMittal would be ready to replicate the success story of merger of Arcelor and Mittal in China.
ArcelorMittal already holds a one-third stake in mid-sized Chinese steelmaker Valin Steel Tube & Wire Co and a part of China Oriental Group Co, owever, its plans for acquisition of Laiwu Steel Co one of the top 10 steelmakers in China, fell apart.
Source: China Knowledge
The Chinese government may not allow majority stakes for foreigners in the steel industry until it completes regional consolidation, said the chairman and CEO of ArcelorMittal. Striking a positive note, Mr Mittal said that when China decides to let foreign companies in, ArcelorMittal would be ready to replicate the success story of merger of Arcelor and Mittal in China.
ArcelorMittal already holds a one-third stake in mid-sized Chinese steelmaker Valin Steel Tube & Wire Co and a part of China Oriental Group Co, owever, its plans for acquisition of Laiwu Steel Co one of the top 10 steelmakers in China, fell apart.
Source: China Knowledge
ArcelorMittal Set For Orissa Iron Ore Mine
The world’s largest steel producer, ArcelorMittal, has applied for iron ore mine in Orissa as an initiative of its proposed Rs 400million Greenfield project at Keonjhar district.
According to the company official, earlier the company had applied for a prospecting license (PL) as well as mining lease for its proposed 12 million tonnes per annum steel mill and is likely to submit its detailed project report to the state government by July.
It requires about 600 million tonnes of iron ore for 30 years to operate its Rs 400million project to be located at Patana tehsil of Keonjhar district.
Though the company had not mentioned the name of any specific iron ore reserve, it had applied for PL for mines including Mankadanachha, Malangtoli and Thakurani in Keonjhar district and Badamgadapahad and Balipahada spread over both Keonjhar and Sundargarh districts, sources said.
It had submitted applications with the administrations of both the districts.
ArcelorMittal, which requires 7,750 acres for setting up its plant, CPP and township was also working on the forest diversion proposal.
Source: Commodityonline
According to the company official, earlier the company had applied for a prospecting license (PL) as well as mining lease for its proposed 12 million tonnes per annum steel mill and is likely to submit its detailed project report to the state government by July.
It requires about 600 million tonnes of iron ore for 30 years to operate its Rs 400million project to be located at Patana tehsil of Keonjhar district.
Though the company had not mentioned the name of any specific iron ore reserve, it had applied for PL for mines including Mankadanachha, Malangtoli and Thakurani in Keonjhar district and Badamgadapahad and Balipahada spread over both Keonjhar and Sundargarh districts, sources said.
It had submitted applications with the administrations of both the districts.
ArcelorMittal, which requires 7,750 acres for setting up its plant, CPP and township was also working on the forest diversion proposal.
Source: Commodityonline
POSCO To Discuss Coal, Iron Ore Purchases From North Korea
POSCO, South Korea's biggest steelmaker, said on Wednesday that it is holding talks with North Korea to purchase more coal and acquire commodities such as iron ore from the communist state in an effort to secure a stable supply of raw materials. According to the steelmaker -- the world's fourth largest -- Kim Dong-jin, the president of POSCO-China Holding Corp., arrived in Pyongyang on June 24 for the talks with North Korean officials on ways to double coal purchases to 400,000 metric tons this year.
Kim will also discuss methods to secure other raw materials such as iron ore in order to meet rising demand and costs, the company said.
On Tuesday, POSCO said it plans to raise prices of steel products to cover rising costs of raw materials such as iron ore and coal. The planned steel price hike, the third of this year, came as prices of iron ore and coal have risen sharply since last year.
The price of iron ore has risen at least 65 percent this year, with that of coal rising three-fold, according to the company.
Source: Tradingmarkets
Kim will also discuss methods to secure other raw materials such as iron ore in order to meet rising demand and costs, the company said.
On Tuesday, POSCO said it plans to raise prices of steel products to cover rising costs of raw materials such as iron ore and coal. The planned steel price hike, the third of this year, came as prices of iron ore and coal have risen sharply since last year.
The price of iron ore has risen at least 65 percent this year, with that of coal rising three-fold, according to the company.
Source: Tradingmarkets
China Considers Boycott Of BHP Iron Ore
Chinese government and steel industry officials are considering a boycott of iron ore imports from BHP Billiton to apply pressure on the Anglo-Australian miner not to raise prices too much, according to a newspaper report on Thursday. BHP is seeking more for its iron ore than the almost 100% increase mainland steelmakers agreed to pay its rival Rio Tinto the South China Morning Post reported.
It cited an unnamed Chinese official as saying that an agreement with BHP may be reached next week, but any move by the miner to link long-term contract prices of iron ore to higher spot prices would be rejected. Separately, Marcus Randolph, chief executive for ferrous and coal at BHP, said the company wasn't being paid "the same price as somebody else is for their similar product delivered to China," the report added.
Source: Marketwatch
It cited an unnamed Chinese official as saying that an agreement with BHP may be reached next week, but any move by the miner to link long-term contract prices of iron ore to higher spot prices would be rejected. Separately, Marcus Randolph, chief executive for ferrous and coal at BHP, said the company wasn't being paid "the same price as somebody else is for their similar product delivered to China," the report added.
Source: Marketwatch
Wednesday, June 25, 2008
Iron Ore Price Increase Too Small, Says BHP
BHP Billiton Ltd., the world's largest mining company, said higher iron-ore prices agreed to by Rio Tinto Group are too small to cover extra shipping costs.
Rio said yesterday it agreed to increase iron-ore contract prices with Baosteel Steel Corp., China's largest steelmaker, by 80 to 97 percent. It's the first time Chinese buyers have agreed to pay more for Australian ore than supplies from Brazil, which are costlier to ship. Melbourne-based BHP, which is making a hostile $172 billion bid for Rio, hasn't agreed to new prices.
``We are delighted to see that progress,'' Marcus Randolph, chief executive officer of the ferrous and coal units of BHP, said today at a presentation in London. ``It doesn't cover the full $40-50 difference on freight.''
The cost of shipping a metric ton of iron from Australia to China is $53 less than importing the raw material from Brazil, Deutsche Bank AG analyst Rob Clifford said today in a note.
BHP rose 3 pence, or 0.2 percent, to close at 1,911 pence on the London Stock Exchange. Rio increased 36 pence, or 0.6 percent, to 6,010 pence.
Yesterday's announcement by Rio was also a break from the pattern of price settlements in previous years which led to a so-called single benchmark price increase or cut. Brazil's Cia. Vale do Rio Doce, the world's largest iron-ore producer, said in February it won annual increases of 65 percent and 71 percent.
``Normally BHP and Rio would follow Vale's agreement,'' Stephen Pope, chief global market strategist at Cantor Fitzgerald Europe, said today in a Bloomberg Television interview in London. The size of Rio's price gain is ``about right,'' Pope said.
BHP will seek ``greater transparency'' in iron ore pricing and won't sign contracts based on benchmark terms to replace contracts that expire, Chief Executive Officer Marius Kloppers said at the presentation. The company plans to sign more contracts linked to spot prices or pricing indexes.
``We have undertaken that we will not sign any new contracts as they expire, which will take some years,'' Kloppers said. ``We will sign new contracts on new transparent market terms.''
``The annual iron ore benchmark contract pricing system may now be broken forever,'' Christopher LaFemina, a London-based analyst at Lehman Brothers Holdings Inc., said yesterday in a note.
Posco, Asia's third-biggest steelmaker, will probably accept the gain as a benchmark, Ko Min Jin, a spokeswoman for the Pohang, South Korea-based company, said today by phone. Japanese steel mills will agree to the same price increase, the Nikkei newspaper said today.
BHP, which held the presentation to brief investors, analysts and reporters on its production of steelmaking raw materials, also said it increased its Western Australian iron- ore resources by 3.7 billion wet metric tons to 11.7 billion tons.
``A 46 percent increase in resources is an indication of the future potential of these assets,'' Randolph said in an earlier conference call in London. Pre-feasibility studies were underway to expand Pilbara capacity to 300 million tons by 2015, Randolph said.
BHP approved $100 million in funding for the first stage of a new coking coal deposit in Indonesia that is expected to produce 1 million tons a year after beginning production next year. A study is being completed to expand that to as much as 5 million tons, BHP said in the presentation.
The company also raised the manganese resources at the Samancor unit and its Samarco joint venture. Manganese is a steelmaking raw material.
Source: Bloomberg
Rio said yesterday it agreed to increase iron-ore contract prices with Baosteel Steel Corp., China's largest steelmaker, by 80 to 97 percent. It's the first time Chinese buyers have agreed to pay more for Australian ore than supplies from Brazil, which are costlier to ship. Melbourne-based BHP, which is making a hostile $172 billion bid for Rio, hasn't agreed to new prices.
``We are delighted to see that progress,'' Marcus Randolph, chief executive officer of the ferrous and coal units of BHP, said today at a presentation in London. ``It doesn't cover the full $40-50 difference on freight.''
The cost of shipping a metric ton of iron from Australia to China is $53 less than importing the raw material from Brazil, Deutsche Bank AG analyst Rob Clifford said today in a note.
BHP rose 3 pence, or 0.2 percent, to close at 1,911 pence on the London Stock Exchange. Rio increased 36 pence, or 0.6 percent, to 6,010 pence.
Yesterday's announcement by Rio was also a break from the pattern of price settlements in previous years which led to a so-called single benchmark price increase or cut. Brazil's Cia. Vale do Rio Doce, the world's largest iron-ore producer, said in February it won annual increases of 65 percent and 71 percent.
``Normally BHP and Rio would follow Vale's agreement,'' Stephen Pope, chief global market strategist at Cantor Fitzgerald Europe, said today in a Bloomberg Television interview in London. The size of Rio's price gain is ``about right,'' Pope said.
BHP will seek ``greater transparency'' in iron ore pricing and won't sign contracts based on benchmark terms to replace contracts that expire, Chief Executive Officer Marius Kloppers said at the presentation. The company plans to sign more contracts linked to spot prices or pricing indexes.
``We have undertaken that we will not sign any new contracts as they expire, which will take some years,'' Kloppers said. ``We will sign new contracts on new transparent market terms.''
``The annual iron ore benchmark contract pricing system may now be broken forever,'' Christopher LaFemina, a London-based analyst at Lehman Brothers Holdings Inc., said yesterday in a note.
Posco, Asia's third-biggest steelmaker, will probably accept the gain as a benchmark, Ko Min Jin, a spokeswoman for the Pohang, South Korea-based company, said today by phone. Japanese steel mills will agree to the same price increase, the Nikkei newspaper said today.
BHP, which held the presentation to brief investors, analysts and reporters on its production of steelmaking raw materials, also said it increased its Western Australian iron- ore resources by 3.7 billion wet metric tons to 11.7 billion tons.
``A 46 percent increase in resources is an indication of the future potential of these assets,'' Randolph said in an earlier conference call in London. Pre-feasibility studies were underway to expand Pilbara capacity to 300 million tons by 2015, Randolph said.
BHP approved $100 million in funding for the first stage of a new coking coal deposit in Indonesia that is expected to produce 1 million tons a year after beginning production next year. A study is being completed to expand that to as much as 5 million tons, BHP said in the presentation.
The company also raised the manganese resources at the Samancor unit and its Samarco joint venture. Manganese is a steelmaking raw material.
Source: Bloomberg
Tuesday, June 24, 2008
Kapuria Coal Block Development To Aid India Steel Production
In a bid to help SAIL (Steel Authority Of India Ltd) reduce its heavy dependence on coking coal imports, the Steel Ministry has sought the Coal Ministry's intervention in expediting the proposed strategic partnership between the state-run PSU and BCCL for developing the Kapuria coal block in Jharkhand.
"In order to enable SAIL to reduce its dependence on costly imports, we will be grateful for your intervention for ensuring that the proposed strategic partnership between SAIL and CIL/BCCL for the development of Kapuria block takes off at the earliest," the Steel Ministry said in a letter to the Coal Ministry.
Over the years, coking coal availability to Steel Authority of India Ltd (SAIL) from Coal India Ltd (CIL) has gradually declined to around four million tons per annum, forcing the country's largest steel producer to import over 70 per cent of its requirement. When contacted, CIL Chairman Partha S Bhattacharya said developing the Kapuria coal block will need foreign expertise, for which the company has floated an expression of interest, inviting potential companies. "Once we get an overview of the cost of mining and specific availability and grades of coal, we will proceed for a joint venture with SAIL. An in-principle decision for the said venture has already been taken," Bhattacharya told PTI. The CIL Chairman added that "even if there was no alliance with SAIL for developing Kapuria, the entire coal reserve mined from the block will go to the PSU (SAIL), as BCCL has a long-term agreement for the same."
Source: Economic Times
"In order to enable SAIL to reduce its dependence on costly imports, we will be grateful for your intervention for ensuring that the proposed strategic partnership between SAIL and CIL/BCCL for the development of Kapuria block takes off at the earliest," the Steel Ministry said in a letter to the Coal Ministry.
Over the years, coking coal availability to Steel Authority of India Ltd (SAIL) from Coal India Ltd (CIL) has gradually declined to around four million tons per annum, forcing the country's largest steel producer to import over 70 per cent of its requirement. When contacted, CIL Chairman Partha S Bhattacharya said developing the Kapuria coal block will need foreign expertise, for which the company has floated an expression of interest, inviting potential companies. "Once we get an overview of the cost of mining and specific availability and grades of coal, we will proceed for a joint venture with SAIL. An in-principle decision for the said venture has already been taken," Bhattacharya told PTI. The CIL Chairman added that "even if there was no alliance with SAIL for developing Kapuria, the entire coal reserve mined from the block will go to the PSU (SAIL), as BCCL has a long-term agreement for the same."
Source: Economic Times
Zhontian Chengtou In Manganese Ore Deal
Reports from China suggest that Zhongtian Chengtou will cooperate with No.3 Geological Bridge of the Guizhou Bureau of Geology on the development of the Xiaojingou Manganese mine in the Huanghuagang area of Zunyi city.
The two sides had signed a cooperative development agreement.
According to the report, Zhongtian Chengtou will pay CNY 30 million to N0 3 Geological Bridge as early compensation. The bridge will invest by its mining right and earlier geological achievements, while all the capital involved will be paid by Zhongtian.
Meanwhile, the two sides will construct a joint venture, in which 15% of the shares are held by No 3 Geological Bridge and 85% shares by Zhongtian Chengtou. There are about 1.8282 million tonnes of manganese ore completely in the surveyed areas, with the prospective manganese ore of 20 million tonnes.
Source: Steel Guru
The two sides had signed a cooperative development agreement.
According to the report, Zhongtian Chengtou will pay CNY 30 million to N0 3 Geological Bridge as early compensation. The bridge will invest by its mining right and earlier geological achievements, while all the capital involved will be paid by Zhongtian.
Meanwhile, the two sides will construct a joint venture, in which 15% of the shares are held by No 3 Geological Bridge and 85% shares by Zhongtian Chengtou. There are about 1.8282 million tonnes of manganese ore completely in the surveyed areas, with the prospective manganese ore of 20 million tonnes.
Source: Steel Guru
India's Steel Output Almost Static
India’s steel output in May 2008 increased by 0.3 percent to 4.329 mn metric tonnes as against 4.318 mn metric tonnes in May 2007. China’s steel output grew 10.5 percent on a YoY basis to touch 46.622 mn metric tonnes in May against 41.622 tonnes in May 2007.
The figures released by Belgium-based International Iron and Steel Institute, put the overall growth of Asian countries reporting to the institute at 8.3 percent. Among the countries included in the report are India, China, Japan, South Korea and Taiwan.
UK recorded negative growth in steel production at 1.014 mn metric tonnes in May 2008 as against 1.275 mn metric tonnes in May 2007. Belgium has recorded the highest growth of 25 percent on YoY basis at 1.050 mn metric tonnes. US Steel production was 8.56 mn metric tonnes in May as against 8.521 mn metric tonnes corresponding period last year representing a growth of 0.5 percent.
World crude steel production for the 66 countries was 119.5 million metric tons (mmt) in May. This was 5.8% higher than the same month last year. China produced 46 mmt of crude steel in May, an increase of 10.5% compared to the same month in 2007. India, Japan and Korea also showed growth.
Overall, Asia produced 67.6 mmt of crude steel in May 2008 compared to 62.4 mmt in May 2007, an 8.3% increase in crude steel production. In Europe, Germany produced 4.1 mmt of crude steel in May, an increase of 2.6% compared to May 2007. Turkish crude steel production was 2.5 mmt, a 12% increase compared to the same month last year. Over the first five months of 2008, Turkey produced 11.7 mmt of crude steel, which is 9% more than the same period in 2007.
Brazil’s crude steel production also grew in this month. In May 2008, Brazil produced 3 mmt, compared to 2.9 mmt in the same month last year, an increase of 2.8%.
Source: CommodityOnline
The figures released by Belgium-based International Iron and Steel Institute, put the overall growth of Asian countries reporting to the institute at 8.3 percent. Among the countries included in the report are India, China, Japan, South Korea and Taiwan.
UK recorded negative growth in steel production at 1.014 mn metric tonnes in May 2008 as against 1.275 mn metric tonnes in May 2007. Belgium has recorded the highest growth of 25 percent on YoY basis at 1.050 mn metric tonnes. US Steel production was 8.56 mn metric tonnes in May as against 8.521 mn metric tonnes corresponding period last year representing a growth of 0.5 percent.
World crude steel production for the 66 countries was 119.5 million metric tons (mmt) in May. This was 5.8% higher than the same month last year. China produced 46 mmt of crude steel in May, an increase of 10.5% compared to the same month in 2007. India, Japan and Korea also showed growth.
Overall, Asia produced 67.6 mmt of crude steel in May 2008 compared to 62.4 mmt in May 2007, an 8.3% increase in crude steel production. In Europe, Germany produced 4.1 mmt of crude steel in May, an increase of 2.6% compared to May 2007. Turkish crude steel production was 2.5 mmt, a 12% increase compared to the same month last year. Over the first five months of 2008, Turkey produced 11.7 mmt of crude steel, which is 9% more than the same period in 2007.
Brazil’s crude steel production also grew in this month. In May 2008, Brazil produced 3 mmt, compared to 2.9 mmt in the same month last year, an increase of 2.8%.
Source: CommodityOnline
Baosteel, Rio Agree Iron Ore Price Hike
China's largest steel maker Baosteel and Rio Tinto have agreed on the highest price hike in at least over a decade in iron ore term contracts, the companies announced on Monday.
Baosteel has agreed to pay up to 96.5 percent more for its iron ore under a term contract with Australian miner Rio Tinto, higher than the 65-71 percent that Chinese mills and Brazilian miner Vale clinched earlier this year.
But the company, which negotiated on behalf of the Chinese steel industry, said the traditional annual pricing system had been maintained despite an unprecedented divergence in the price rise of Australian ore and Brazilian ore.
"To maintain the traditional pricing system and normal market order and to hold a long-term friendly cooperation between the upstream and downstream sectors, Baosteel has settled 2008 benchmark iron ore prices with Rio Tinto after friendly negotiation," Baosteel said in an emailed statement.
The company agreed to a 79.88 percent price rise for Pilbara blend fines and Yandicoogina fines, and a 96.5 percent price rise for Pilbara blend lump for the fiscal year 2008.
"This is an extremely healthy price for Rio Tinto. It's about $14 higher than we had expected," said John Meyer, head of resources at Fairfax I.S. in London.
London-traded shares in Rio, which had been under pressure to get as high a rise as possible to justify its defence against a take-over bid from fellow Australian BHP Billiton, slipped slightly by 0.1 percent.
BHP Billiton has yet to reach an agreement with Asian mills. Its shares rose by 1.1 percent in London.
Stocks in Vale, the world's biggest iron ore miner, rose 2 percent. Analysts in Brazil say that even though the deal interrupts five years of other miners following Vale in setting benchmark prices, it showed that demand remained red-hot, which will likely benefit Vale when it negotiates 2009 prices.
"And if freight costs diminish ... a return of joint price talks is possible," said Rogerio Zarpao, a Unibanco analyst.
BHP chief executive Marius Kloppers said the higher percentage rise showed the market had recognized the freight differential, or higher FOB price to offset lower shipping costs, that Australian miners had long sought.
He declined to say if BHP would agree to the same terms, but said it represented a small step in a needed adjustment for a disparity in freight rates from Brazil and Australia.
"We're talking about a quarter of the (estimated) long term freight differential that was captured, but at today's rates it's only about a tenth," he said. "Clearly this is something we need to work at."
Both BHP and Rio are now trying to move away from static term prices that for years have stayed well below spot rates for lower-quality ore, to an index system or some other, more flexible mechanism that reflects spot demand and prices.
They are also backing attempts to create iron ore swaps markets, and possibly someday an iron ore futures market.
"The price discovery mechanism is not efficient. You have such a big discrepancy between spot prices and contract prices for iron ore and steelmakers have to find an efficient way of pricing iron ore, said a commodities analyst in Europe.
"This is going to be quite difficult."
But Baosteel, which has benefitted from relatively low term prices even as growing Chinese steel output caused spot ore markets to soar, was adamant the annual system still existed.
"The result represents the sincerity from the two sides to maintain the traditional pricing system and a result from joint efforts of the enterprises that carry responsibilities," Baosteel said.
"Chinese steel mills support Rio Tinto to boost investment and increase output further to meet market demand."
The new reference prices per dry metric tonne Fe unit for 2008 are US$1.4466 for iron ore fines, and US$2.0169 for iron ore lump, Baosteel said.
Source: Reuters
Baosteel has agreed to pay up to 96.5 percent more for its iron ore under a term contract with Australian miner Rio Tinto, higher than the 65-71 percent that Chinese mills and Brazilian miner Vale clinched earlier this year.
But the company, which negotiated on behalf of the Chinese steel industry, said the traditional annual pricing system had been maintained despite an unprecedented divergence in the price rise of Australian ore and Brazilian ore.
"To maintain the traditional pricing system and normal market order and to hold a long-term friendly cooperation between the upstream and downstream sectors, Baosteel has settled 2008 benchmark iron ore prices with Rio Tinto after friendly negotiation," Baosteel said in an emailed statement.
The company agreed to a 79.88 percent price rise for Pilbara blend fines and Yandicoogina fines, and a 96.5 percent price rise for Pilbara blend lump for the fiscal year 2008.
"This is an extremely healthy price for Rio Tinto. It's about $14 higher than we had expected," said John Meyer, head of resources at Fairfax I.S. in London.
London-traded shares in Rio, which had been under pressure to get as high a rise as possible to justify its defence against a take-over bid from fellow Australian BHP Billiton, slipped slightly by 0.1 percent.
BHP Billiton has yet to reach an agreement with Asian mills. Its shares rose by 1.1 percent in London.
Stocks in Vale, the world's biggest iron ore miner, rose 2 percent. Analysts in Brazil say that even though the deal interrupts five years of other miners following Vale in setting benchmark prices, it showed that demand remained red-hot, which will likely benefit Vale when it negotiates 2009 prices.
"And if freight costs diminish ... a return of joint price talks is possible," said Rogerio Zarpao, a Unibanco analyst.
BHP chief executive Marius Kloppers said the higher percentage rise showed the market had recognized the freight differential, or higher FOB price to offset lower shipping costs, that Australian miners had long sought.
He declined to say if BHP would agree to the same terms, but said it represented a small step in a needed adjustment for a disparity in freight rates from Brazil and Australia.
"We're talking about a quarter of the (estimated) long term freight differential that was captured, but at today's rates it's only about a tenth," he said. "Clearly this is something we need to work at."
Both BHP and Rio are now trying to move away from static term prices that for years have stayed well below spot rates for lower-quality ore, to an index system or some other, more flexible mechanism that reflects spot demand and prices.
They are also backing attempts to create iron ore swaps markets, and possibly someday an iron ore futures market.
"The price discovery mechanism is not efficient. You have such a big discrepancy between spot prices and contract prices for iron ore and steelmakers have to find an efficient way of pricing iron ore, said a commodities analyst in Europe.
"This is going to be quite difficult."
But Baosteel, which has benefitted from relatively low term prices even as growing Chinese steel output caused spot ore markets to soar, was adamant the annual system still existed.
"The result represents the sincerity from the two sides to maintain the traditional pricing system and a result from joint efforts of the enterprises that carry responsibilities," Baosteel said.
"Chinese steel mills support Rio Tinto to boost investment and increase output further to meet market demand."
The new reference prices per dry metric tonne Fe unit for 2008 are US$1.4466 for iron ore fines, and US$2.0169 for iron ore lump, Baosteel said.
Source: Reuters
SAIL Renews Interest In Moonidih Mine
With coking coal prices zooming in the global market, Steel Authority of India Ltd is taking a renewed interest in implementing its long pending proposal to fund an estimated Rs 1.66 billion project for re-development of Bharat Coking Coal Ltd (BCCL) operated Moonidih mine in Jharkhand.
The project, conceived more than two years ago, will ensure an additional coking coal supply of approximately 0.5 million tonne per annum to SAIL, on operation cost-plus basis.
The steel major procures 1.67 million tonne coking coal from BCCL – a wholly owned subsidiary of Coal India Ltd – which is roughly 12 per cent of its annual requirement of 13.5 million tonne.
BCCL is the only source of primary coking coal in the domestic market and is currently producing approximately 2 million tonne a year. Chances of any major increase in production are also limited in the short or medium term.
SAIL had entered into a MoU with BCCL in April 2006 for funding the redevelopment of Moonidih mine in Jharia coalfields by replacing a longwall face and introducing other mass production equipment. The near-defunct mine is believed to still have 50-60 million tonnes of recoverable coking coal.
However, according to sources, there was little progress in implementing the MoU until recently when the steel major requested the CIL authorities for fast implementation of the proposal. Backed by renewed interest of SAIL, BCCL recently invited bids from the interested project contractors. Two Chinese companies participated in the tender.
When contacted, CIL official sources admitted that things were finally moving ahead for the re-development of Moonidih. “The technical evaluation of the bids is on. We are expecting to open the price bids shortly to reach at the final estimate of the cost of the project,” the CIL Chairman, Mr Partha S. Bhattacharyya, told Business Line.
While comments were not available from SAIL, sources say that volatility of coking coal prices vis-a-vis limited availability in the domestic market has attracted the attention of the domestic steel makers on BCCL.
The recently concluded price negotiations by BCCL for projected supplies during this fiscal witnessed competitive bidding by domestic steel makers to grab a share of the limited domestic supply. SAIL even agreed to enhance prices equivalent to $150 - up by approximately 50 per cent - to ensure its supplies for 2008-09.
Meanwhile prices are hovering between $160 and $210 in the Asian markets up from $120 a couple of months ago.
Source: The Hindu Business Line
The project, conceived more than two years ago, will ensure an additional coking coal supply of approximately 0.5 million tonne per annum to SAIL, on operation cost-plus basis.
The steel major procures 1.67 million tonne coking coal from BCCL – a wholly owned subsidiary of Coal India Ltd – which is roughly 12 per cent of its annual requirement of 13.5 million tonne.
BCCL is the only source of primary coking coal in the domestic market and is currently producing approximately 2 million tonne a year. Chances of any major increase in production are also limited in the short or medium term.
SAIL had entered into a MoU with BCCL in April 2006 for funding the redevelopment of Moonidih mine in Jharia coalfields by replacing a longwall face and introducing other mass production equipment. The near-defunct mine is believed to still have 50-60 million tonnes of recoverable coking coal.
However, according to sources, there was little progress in implementing the MoU until recently when the steel major requested the CIL authorities for fast implementation of the proposal. Backed by renewed interest of SAIL, BCCL recently invited bids from the interested project contractors. Two Chinese companies participated in the tender.
When contacted, CIL official sources admitted that things were finally moving ahead for the re-development of Moonidih. “The technical evaluation of the bids is on. We are expecting to open the price bids shortly to reach at the final estimate of the cost of the project,” the CIL Chairman, Mr Partha S. Bhattacharyya, told Business Line.
While comments were not available from SAIL, sources say that volatility of coking coal prices vis-a-vis limited availability in the domestic market has attracted the attention of the domestic steel makers on BCCL.
The recently concluded price negotiations by BCCL for projected supplies during this fiscal witnessed competitive bidding by domestic steel makers to grab a share of the limited domestic supply. SAIL even agreed to enhance prices equivalent to $150 - up by approximately 50 per cent - to ensure its supplies for 2008-09.
Meanwhile prices are hovering between $160 and $210 in the Asian markets up from $120 a couple of months ago.
Source: The Hindu Business Line
Australia Ups Commodity Earnings Estimates
Australia, the world's largest shipper of coal, iron ore and wool, may earn 12 percent more from commodity exports than forecast in March because of higher prices driven by China's demand for minerals and energy.
Sales may rise to a record A$212 billion ($203 billion) in the year ending June 30, 2009, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today in an e- mailed statement. That compares with its March forecast of A$189 billion and estimated 2008 sales of A$151 billion.
Economic growth in China will remain robust, maintaining demand for crude oil and steelmaking materials, the bureau said. Prices for coking and thermal coals, iron ore and crude oil have all risen to records this year, bolstering profits for producers including BHP Billiton Ltd. and Rio Tinto Group.
``The consistent story here is that producers haven't been able to match the ever-growing demand from China,'' said Gerard Burg, energy and minerals economist with National Australia Bank Ltd. ``China's demand is still going and still very strong.''
China needs more resources to build homes, offices and factories. Economic growth in China, the world's fourth-largest economy, is forecast at 10 percent in 2008, before easing to 9.5 percent in 2009, the bureau said in a report on its Web site.
``The strength of Australia's minerals and energy exports continues to underpin commodity sector performance,'' the bureau's Karen Schneider, acting executive director, said in the statement. ``The price outlook across minerals and energy commodities remains positive, reflecting continued strong demand and only modest world supply growth.''
Global commodity prices are likely to remain at an ``elevated level'' amid ongoing demand from Asia, the Reserve Bank of Australia said last week. Today's report supports the central bank's forecast that the nation's terms of trade, a measure of income from overseas sales, will surge 20 percent this year. Trade will ``add substantially to national income and ability to spend,'' Governor Glenn Stevens said on June 3.
Australia's exports of minerals and energy are forecast to be A$178 billion in fiscal 2009, up from A$121 billion a year earlier, the bureau said. Woodside Petroleum Ltd., Rio, BHP and competitors are developing a record A$70.5 billion of projects, the bureau said last month. The volume of iron ore exports is forecast to 18 percent while coking coal will gain 7 percent, the bureau said.
``There has been a lot of investment in the mining sector, and that will be driving part of that export improvement,'' said Stephen Roberts, director of research at Lehman Brothers Holdings Inc. in Sydney. Today's revised forecast is ``partly because of price increases, but also gains in volumes,'' he said.
Still, Roberts said the trade boom may not offset slower spending by households and businesses, which account for more than 60 percent of gross domestic product, amid the highest interest rates in 12 years. Australia's economic growth may slow to 2.75 percent in fiscal 2009, from 3.5 percent in fiscal 2008, the bureau said.
Rio, the world's third-largest mining company, may secure a record increase of more than 95 percent price for iron ore shipped to Asian steel mills, according to Macquarie Group Ltd. Annual contract prices for thermal coal, used by power stations, more than doubled to $125 a metric ton for the year from April 1, and coking coal used in steelmaking, tripled to $300 a ton.
``The markets for the big bulk commodities, iron ore and coal, still look particularly strong,'' National Australia's Burg said by phone from Melbourne.
The price of West Texas Intermediate crude oil may average $122 a barrel in 2008, up from an earlier estimate of $86 a barrel, the bureau said. Crude reached a record $139.89 on June 16.
The bureau forecast the Australian dollar would average 90 cents against its U.S. counterpart in fiscal 2009, up from a previous estimate of 83 cents. Rural export earnings are forecast to rise to A$34 billion, the forecaster said.
Source: Bloomberg
Sales may rise to a record A$212 billion ($203 billion) in the year ending June 30, 2009, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today in an e- mailed statement. That compares with its March forecast of A$189 billion and estimated 2008 sales of A$151 billion.
Economic growth in China will remain robust, maintaining demand for crude oil and steelmaking materials, the bureau said. Prices for coking and thermal coals, iron ore and crude oil have all risen to records this year, bolstering profits for producers including BHP Billiton Ltd. and Rio Tinto Group.
``The consistent story here is that producers haven't been able to match the ever-growing demand from China,'' said Gerard Burg, energy and minerals economist with National Australia Bank Ltd. ``China's demand is still going and still very strong.''
China needs more resources to build homes, offices and factories. Economic growth in China, the world's fourth-largest economy, is forecast at 10 percent in 2008, before easing to 9.5 percent in 2009, the bureau said in a report on its Web site.
``The strength of Australia's minerals and energy exports continues to underpin commodity sector performance,'' the bureau's Karen Schneider, acting executive director, said in the statement. ``The price outlook across minerals and energy commodities remains positive, reflecting continued strong demand and only modest world supply growth.''
Global commodity prices are likely to remain at an ``elevated level'' amid ongoing demand from Asia, the Reserve Bank of Australia said last week. Today's report supports the central bank's forecast that the nation's terms of trade, a measure of income from overseas sales, will surge 20 percent this year. Trade will ``add substantially to national income and ability to spend,'' Governor Glenn Stevens said on June 3.
Australia's exports of minerals and energy are forecast to be A$178 billion in fiscal 2009, up from A$121 billion a year earlier, the bureau said. Woodside Petroleum Ltd., Rio, BHP and competitors are developing a record A$70.5 billion of projects, the bureau said last month. The volume of iron ore exports is forecast to 18 percent while coking coal will gain 7 percent, the bureau said.
``There has been a lot of investment in the mining sector, and that will be driving part of that export improvement,'' said Stephen Roberts, director of research at Lehman Brothers Holdings Inc. in Sydney. Today's revised forecast is ``partly because of price increases, but also gains in volumes,'' he said.
Still, Roberts said the trade boom may not offset slower spending by households and businesses, which account for more than 60 percent of gross domestic product, amid the highest interest rates in 12 years. Australia's economic growth may slow to 2.75 percent in fiscal 2009, from 3.5 percent in fiscal 2008, the bureau said.
Rio, the world's third-largest mining company, may secure a record increase of more than 95 percent price for iron ore shipped to Asian steel mills, according to Macquarie Group Ltd. Annual contract prices for thermal coal, used by power stations, more than doubled to $125 a metric ton for the year from April 1, and coking coal used in steelmaking, tripled to $300 a ton.
``The markets for the big bulk commodities, iron ore and coal, still look particularly strong,'' National Australia's Burg said by phone from Melbourne.
The price of West Texas Intermediate crude oil may average $122 a barrel in 2008, up from an earlier estimate of $86 a barrel, the bureau said. Crude reached a record $139.89 on June 16.
The bureau forecast the Australian dollar would average 90 cents against its U.S. counterpart in fiscal 2009, up from a previous estimate of 83 cents. Rural export earnings are forecast to rise to A$34 billion, the forecaster said.
Source: Bloomberg
ArcelorMittal Buys US Coal Miner
Arcelor Mittal, the world's biggest steel producer, said on Monday it had agreed to buy US coal mining group Mid Vol Coal for an undisclosed sum.
Mid Vol, based in Virginia and West Virginia, produced 1.5 million tonnes of coking coal last year and has reserves of 85 million tonnes.
"This acquisition further increases our upstream self-sufficiency in a primary raw material," said finance director Aditya Mittal in a statement.
ArcelorMittal is the biggest buyer of Mid Vol's coking coal, used to produce coke, which is a key raw material required in the steel-making process.
The acquisition fits with the company's strategy of buying mining groups to acquire its own supply of raw materials at a time of rapidly rising prices.
The company, controlled by Indian-born steel tycoon Lakshmi Mittal, has recently bought stakes in South Africa's Coal of Africa, Australian mining group Macarthur Coal and has bought three mines in Russia.
Source: AFP
Mid Vol, based in Virginia and West Virginia, produced 1.5 million tonnes of coking coal last year and has reserves of 85 million tonnes.
"This acquisition further increases our upstream self-sufficiency in a primary raw material," said finance director Aditya Mittal in a statement.
ArcelorMittal is the biggest buyer of Mid Vol's coking coal, used to produce coke, which is a key raw material required in the steel-making process.
The acquisition fits with the company's strategy of buying mining groups to acquire its own supply of raw materials at a time of rapidly rising prices.
The company, controlled by Indian-born steel tycoon Lakshmi Mittal, has recently bought stakes in South Africa's Coal of Africa, Australian mining group Macarthur Coal and has bought three mines in Russia.
Source: AFP
Monday, June 23, 2008
Iron Ore Miners Seeking 95% Increase
Rio Tinto and BHP Billiton, two of the world's biggest miners, have reportedly sought as much as a 95% increase in iron ore prices from Chinese steelmakers. The two companies have asked Chinese steelmakers to accept the largest ever increase in iron ore prices or risk interruption of supplies from Australia, the Financial Times (FT) has reported, citing traders and industry officials.
Separately, Australian securities firm Macquarie says that London-based Rio is committed to securing more than the 71% increase agreed by Brazil's Cia. Vale do Rio Doce (Vale) in February, and greater than the 85-95% estimates that have been bandied about by industry analysts. "Investors should be prepared for an extended and potentially hostile conclusion to the negotiations," Macquarie analysts wrote in a report.
Rio and BHP have warned their Chinese clients some annual contracts will expire next Monday, and they would cease supply under the old terms, the FT says. They have told them that the iron ore would instead be sold into the spot market, where prices are higher, according to the UK paper. It cited analysts as saying that most of Rio's iron ore contracts expire on June 30, but some BHP contracts don't expire until September.
In a related development, Australia may get 12% more from commodity exports than forecast in March because of higher prices driven by Chinese demand for minerals and energy. Sales may rise to a record A$212bn (US$203bn) in the year ending June 30, 2009, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today. That compares with its March forecast of A$189bn and estimated 2008 sales of A$151bn.
Source: Indiainfoline
Separately, Australian securities firm Macquarie says that London-based Rio is committed to securing more than the 71% increase agreed by Brazil's Cia. Vale do Rio Doce (Vale) in February, and greater than the 85-95% estimates that have been bandied about by industry analysts. "Investors should be prepared for an extended and potentially hostile conclusion to the negotiations," Macquarie analysts wrote in a report.
Rio and BHP have warned their Chinese clients some annual contracts will expire next Monday, and they would cease supply under the old terms, the FT says. They have told them that the iron ore would instead be sold into the spot market, where prices are higher, according to the UK paper. It cited analysts as saying that most of Rio's iron ore contracts expire on June 30, but some BHP contracts don't expire until September.
In a related development, Australia may get 12% more from commodity exports than forecast in March because of higher prices driven by Chinese demand for minerals and energy. Sales may rise to a record A$212bn (US$203bn) in the year ending June 30, 2009, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today. That compares with its March forecast of A$189bn and estimated 2008 sales of A$151bn.
Source: Indiainfoline
Lung Ming Considers $1billion IPO
Hong Kong Lung Ming Investment Holdings, which owns and operates a Mongolian iron ore mine, plans to raise up to US$1 billion in a Hong Kong initial public offering before the end of 2008, a newspaper reported on Monday.
Lung Ming was expected to submit a listing application shortly for the deal, which was being sponsored by Morgan Stanley and Credit Suisse Hong Kong Economic Times quoted sources as saying.
Hopu Investment Management, a private equity fund founded by Goldman Sachs') China partner Fang Fenglei, and Temasek Holdings [TEM.UL] jointly invested US$300 million in Lung Ming this year, the newspaper said. It gave no further listing details.
Lung Ming owns an iron ore mine project in Eruu Gol in Mongolia, near Russia's industrial city Darhan.
Source: Reuters
Lung Ming was expected to submit a listing application shortly for the deal, which was being sponsored by Morgan Stanley and Credit Suisse Hong Kong Economic Times quoted sources as saying.
Hopu Investment Management, a private equity fund founded by Goldman Sachs') China partner Fang Fenglei, and Temasek Holdings [TEM.UL] jointly invested US$300 million in Lung Ming this year, the newspaper said. It gave no further listing details.
Lung Ming owns an iron ore mine project in Eruu Gol in Mongolia, near Russia's industrial city Darhan.
Source: Reuters
Iron Ore Price Deadlock Raises Prospect of Asian OTC Market
The annual battle to settle iron ore prices appears to be heading towards deadlock, but exchanges are quietly looking at developing contracts that could change the way the industry sets prices.
Analysts tipped the Singapore Exchange as most likely to be first to carry an over the counter iron ore contract, which would create a more transparent pricing mechanism for the more than $200 billion industry and let some of the heat out of what some see as over-inflated spot prices.
"The dynamic in the iron ore market is changing from one dominated by long-term supply contracts, to the point today where rampant demand has created a viable spot market," ANZ's senior commodities analyst Mark Pervan said. "What has accentuated the need for a contract, especially in Asia, is the increase in freight spreads for iron ore from producers in different parts of the world," he added. Earlier this year, Chinese steelmills settled annual contracts with Brazilian miner Vale at levels 67 to 71 percent up from last year.
But they are yet to settle with Australian miners who argue that the lower cost of freight from Australia to China, versus Brazil to China, should be reflected in higher prices for Australian material, a sticking point for the Chinese.
The freight differential has always been there, but has been given extra prominence by a 1,100 percent rise in the Baltic Dry Cargo Index in the past six years.
Last month Deutsche Bank launched an over-the-counter iron ore contract and the bank said exchanges were looking at developing their own.
"A number of exchanges will be looking into some form of iron ore contract. There is a lot of demand for this kind of product, which we are already seeing in our newly launched OTC iron ore product," Raymond Key, Global Head of Metals Trading at Deutsche Bank said.
Traders in London, Sydney, Singapore and Hong Kong report talk that an Asian exchange may announce something late in the third quarter, and although there is no definite word, Singapore is the hot pick to be first.
"Singapore seems like a viable centre. It's the gateway between Asia and the Pacific basin. The Australians will want a stable and well-developed exchange and importantly, Singapore is also BHP's big marketing hub in Asia," a trader in Sydney said. Other exchanges mentioned that might be interested in iron ore contracts included Hong Kong and Mumbai.
"Hong Kong may be sniffing at iron ore, but it's Singapore that I think is probably furthest along," a source at an international trading house based in the city-state said.
"They already offer a freight contract and it wouldn't be too hard to develop iron ore, and even coal contracts along similar lines," he added.
A spokesman at the Singapore Exchange would not confirm that the organisation was considering iron ore.
"As and when we have new products, we will make the announcements," he said
India's National Commodity and Derivatives Exchange seemed to rule itself out.
"Launching iron ore contracts in India may not be fruitful. The iron ore exported from India has different specifications so standardising a contract for futures trade is very difficult," said Ramesh Iyer, vice president, metals at the Mumbai exchange,
And the London Metal Exchange also seemed an unlikely winner.
Deutsche's Key said: "I don't think the LME is in the running. The system they use with its physical warehouse delivery points isn't well suited. This product will need to be cash settled."
He also noted a contract in Sydney would receive a lukewarm response from Chinese buyers, already worried about Australia's dominance in iron ore production.
Irrespective of who wins, a contract is likely to find broad interest from hedge funds, who want to try and cash in on the spectacular run up in iron ore prices, as well as producers.
"In principle, we support transparent market pricing mechanisms and we will evaluate their use as they are developed," BHP Billiton spokeswoman Samantha Evans said.
The steel industry has show little interest in exchange traded contracts. The LME's recently-launched steel contracts have seen turnover stall at around 10 lots a day for the three-month benchmark Mediterranean and Far East contracts.
ANZ's Pervan said that an exchange contract would benefit Chinese steelmakers, who worry that the dominance of the iron ore market by three players, Vale, BHP Billiton and Rio Tinto gives miners an unfair advantage.
"A contract would quickly narrow the spread between the spot and long term prices and that would benefit the Chinese and result in more sensible prices," Pervan said.
But an official at China's number one steel maker, Baosteel, said the company was not interested.
"Baosteel will not trade there, especially in the early stages. But small mills might consider it," he said.
Source: Reuters
Analysts tipped the Singapore Exchange as most likely to be first to carry an over the counter iron ore contract, which would create a more transparent pricing mechanism for the more than $200 billion industry and let some of the heat out of what some see as over-inflated spot prices.
"The dynamic in the iron ore market is changing from one dominated by long-term supply contracts, to the point today where rampant demand has created a viable spot market," ANZ's senior commodities analyst Mark Pervan said. "What has accentuated the need for a contract, especially in Asia, is the increase in freight spreads for iron ore from producers in different parts of the world," he added. Earlier this year, Chinese steelmills settled annual contracts with Brazilian miner Vale at levels 67 to 71 percent up from last year.
But they are yet to settle with Australian miners who argue that the lower cost of freight from Australia to China, versus Brazil to China, should be reflected in higher prices for Australian material, a sticking point for the Chinese.
The freight differential has always been there, but has been given extra prominence by a 1,100 percent rise in the Baltic Dry Cargo Index in the past six years.
Last month Deutsche Bank launched an over-the-counter iron ore contract and the bank said exchanges were looking at developing their own.
"A number of exchanges will be looking into some form of iron ore contract. There is a lot of demand for this kind of product, which we are already seeing in our newly launched OTC iron ore product," Raymond Key, Global Head of Metals Trading at Deutsche Bank said.
Traders in London, Sydney, Singapore and Hong Kong report talk that an Asian exchange may announce something late in the third quarter, and although there is no definite word, Singapore is the hot pick to be first.
"Singapore seems like a viable centre. It's the gateway between Asia and the Pacific basin. The Australians will want a stable and well-developed exchange and importantly, Singapore is also BHP's big marketing hub in Asia," a trader in Sydney said. Other exchanges mentioned that might be interested in iron ore contracts included Hong Kong and Mumbai.
"Hong Kong may be sniffing at iron ore, but it's Singapore that I think is probably furthest along," a source at an international trading house based in the city-state said.
"They already offer a freight contract and it wouldn't be too hard to develop iron ore, and even coal contracts along similar lines," he added.
A spokesman at the Singapore Exchange would not confirm that the organisation was considering iron ore.
"As and when we have new products, we will make the announcements," he said
India's National Commodity and Derivatives Exchange seemed to rule itself out.
"Launching iron ore contracts in India may not be fruitful. The iron ore exported from India has different specifications so standardising a contract for futures trade is very difficult," said Ramesh Iyer, vice president, metals at the Mumbai exchange,
And the London Metal Exchange also seemed an unlikely winner.
Deutsche's Key said: "I don't think the LME is in the running. The system they use with its physical warehouse delivery points isn't well suited. This product will need to be cash settled."
He also noted a contract in Sydney would receive a lukewarm response from Chinese buyers, already worried about Australia's dominance in iron ore production.
Irrespective of who wins, a contract is likely to find broad interest from hedge funds, who want to try and cash in on the spectacular run up in iron ore prices, as well as producers.
"In principle, we support transparent market pricing mechanisms and we will evaluate their use as they are developed," BHP Billiton spokeswoman Samantha Evans said.
The steel industry has show little interest in exchange traded contracts. The LME's recently-launched steel contracts have seen turnover stall at around 10 lots a day for the three-month benchmark Mediterranean and Far East contracts.
ANZ's Pervan said that an exchange contract would benefit Chinese steelmakers, who worry that the dominance of the iron ore market by three players, Vale, BHP Billiton and Rio Tinto gives miners an unfair advantage.
"A contract would quickly narrow the spread between the spot and long term prices and that would benefit the Chinese and result in more sensible prices," Pervan said.
But an official at China's number one steel maker, Baosteel, said the company was not interested.
"Baosteel will not trade there, especially in the early stages. But small mills might consider it," he said.
Source: Reuters
Nikpol Posts Increased Production Figures
Ukrainian ferroalloy manufacturer, Nikopol Ferroalloy Plant, increased its production of ferromanganese by 7.2% month-on-month or 2,200 tonnes to 32,700 tonnes in April 2008. Production of ferromanganese increased by 52.7% YoY or 41,000 tonnes to 118,800 tonnes in January to April 2008 as compared with January to April 2007.
NZF has also increased silicomanganese production in April 2008 by 6.2% MoM or 3,600 tonnes to 61,500 tonnes.
Source: Steel Guru
NZF has also increased silicomanganese production in April 2008 by 6.2% MoM or 3,600 tonnes to 61,500 tonnes.
Source: Steel Guru
Kermas Snaps Up South African Ferrochrome Rival
Kermas Ltd., which controls the world's second-biggest ferrochrome producer, will buy the rest of a smaller South African rival, Mogale Alloys, after securing a majority stake.
``We're buying 100 percent,'' Kermas Chairman Danko Konchar said adding that a price hasn't been agreed to. ``It's cheaper to build than to buy, but we can't build in the next five years'' because of power shortages in South Africa.
PGR 17 Investments Ltd. agreed to sell its 56.2 percent stake in Mogale to closely-held Kermas in a deal valued at about 1.86 billion rand ($233 million), PGR shareholder Metmar Ltd. said June 2. That values Mogale at about 3.3 billion rand.
Kermas, based in London, controls South Africa's Samancor Chrome Ltd., the world's biggest ferrochrome producer after Xstrata Plc. Mogale has the capacity to produce 150,000 metric tons a year of ferrochrome in South Africa, the world's biggest source of the stainless steelmaking ingredient.
South African utility Eskom Holding Ltd. is rationing power to mines and smelters after its system, straining to meet rising demand, nearly collapsed in January. That pushed up ferrochrome prices which have more than doubled in the past year to a record $1.92 a pound. Power shortages will last until at least 2012.
Sebeso, Dezzo Trading and a workers' trust are the other shareholders in Mogale, located west of Johannesburg, Johan Oosthuizen, who controls PGR 17 Investments, said from his mobile phone today. Sebeso owns 27.69 percent and workers 10 percent, said Oosthuizen, who also manages Mogale.
``We got a very good price,'' he said, declining to be specific. A plan to boost Mogale's annual capacity by 100,000 tons was scrapped because of power shortages, he added.
Samancor produces ``in excess of 1 million tons'' of ferrochrome annually, according to its Web site. Xstrata produced 1.22 million tons last year.
Finnish investment company Ruukki Group Oyj said on June 17 that Kermas offered to sell it 100 percent of Mogale. Ruukki, based in Espoo, Finland, will assess the opportunity ``in the near future,'' it added.
``We're a major shareholder in Ruukki,'' Konchar said, declining to comment further on the agreement.
Konchar controls Nassau, Bahamas-based RCS Trading Corp., which owned shares and forward contracts amounting to more than 26 percent of Ruukki on May 22, according to a Helsinki stock exchange release that day.
Source: Bloomberg
``We're buying 100 percent,'' Kermas Chairman Danko Konchar said adding that a price hasn't been agreed to. ``It's cheaper to build than to buy, but we can't build in the next five years'' because of power shortages in South Africa.
PGR 17 Investments Ltd. agreed to sell its 56.2 percent stake in Mogale to closely-held Kermas in a deal valued at about 1.86 billion rand ($233 million), PGR shareholder Metmar Ltd. said June 2. That values Mogale at about 3.3 billion rand.
Kermas, based in London, controls South Africa's Samancor Chrome Ltd., the world's biggest ferrochrome producer after Xstrata Plc. Mogale has the capacity to produce 150,000 metric tons a year of ferrochrome in South Africa, the world's biggest source of the stainless steelmaking ingredient.
South African utility Eskom Holding Ltd. is rationing power to mines and smelters after its system, straining to meet rising demand, nearly collapsed in January. That pushed up ferrochrome prices which have more than doubled in the past year to a record $1.92 a pound. Power shortages will last until at least 2012.
Sebeso, Dezzo Trading and a workers' trust are the other shareholders in Mogale, located west of Johannesburg, Johan Oosthuizen, who controls PGR 17 Investments, said from his mobile phone today. Sebeso owns 27.69 percent and workers 10 percent, said Oosthuizen, who also manages Mogale.
``We got a very good price,'' he said, declining to be specific. A plan to boost Mogale's annual capacity by 100,000 tons was scrapped because of power shortages, he added.
Samancor produces ``in excess of 1 million tons'' of ferrochrome annually, according to its Web site. Xstrata produced 1.22 million tons last year.
Finnish investment company Ruukki Group Oyj said on June 17 that Kermas offered to sell it 100 percent of Mogale. Ruukki, based in Espoo, Finland, will assess the opportunity ``in the near future,'' it added.
``We're a major shareholder in Ruukki,'' Konchar said, declining to comment further on the agreement.
Konchar controls Nassau, Bahamas-based RCS Trading Corp., which owned shares and forward contracts amounting to more than 26 percent of Ruukki on May 22, according to a Helsinki stock exchange release that day.
Source: Bloomberg
China Looks Into Philippines Iron Ore Venture
China is looking into investing in an iron ore prospect in the southern Philippines, a venture that could involve billions of dollars in capital, officials and press reports said Friday.
The reports quoted Environment Secretary Joselito Atienza as saying state-owned China Metallurgical Group Corp. is in talks with indigenous communities at the prospect on the Zamboanga peninsula on Mindanao island.
If the prospect proves to be economically viable, the company would put up a processing plant with an initial investment of 1.5 billion dollars, Atienza reportedly said in the Philippine Star newspaper.
The Mines and Geosciences Bureau here said the company has yet to file an exploration permit.
Levy Teodoro, an official of the bureau's mining tenements division, told AFP the Philippines, which is largely known for gold, copper and nickel production, has largely undeveloped iron ore potential, including in Mindanao.
"The Philippines produced iron ore in the 1950s and the 1960s, but the operation became non-viable when metals prices tanked," Teodoro said.
With metals prices on the rebound, driven mainly by demand from China and the developing world, the Philippines is aggressively promoting mining investments to revive the sector.
Source: ABS-CBN
The reports quoted Environment Secretary Joselito Atienza as saying state-owned China Metallurgical Group Corp. is in talks with indigenous communities at the prospect on the Zamboanga peninsula on Mindanao island.
If the prospect proves to be economically viable, the company would put up a processing plant with an initial investment of 1.5 billion dollars, Atienza reportedly said in the Philippine Star newspaper.
The Mines and Geosciences Bureau here said the company has yet to file an exploration permit.
Levy Teodoro, an official of the bureau's mining tenements division, told AFP the Philippines, which is largely known for gold, copper and nickel production, has largely undeveloped iron ore potential, including in Mindanao.
"The Philippines produced iron ore in the 1950s and the 1960s, but the operation became non-viable when metals prices tanked," Teodoro said.
With metals prices on the rebound, driven mainly by demand from China and the developing world, the Philippines is aggressively promoting mining investments to revive the sector.
Source: ABS-CBN
Jiangsu Seeks Stake In Brazilian Iron Ore Miner
Jiangsu Shagang Group Co., China's biggest privately owned steelmaker, is seeking to buy a stake in Brazil's Cia. Siderurgica Nacional SA's iron ore unit as prices for the raw material soar to a record.
Shagang is in talks on its own, and isn't aware of interests from other Chinese companies, Shagang Vice President Shen Wenming said today. A group of Chinese steelmakers are considering bidding for part or all of Nacional Minerios SA, the Wall Street Journal said today.
Iron ore prices jumped 65 percent this year, spurring increased attempts by steelmakers to buy mines to secure supplies. CSN, as the Brazilian company is known, plans to triple output at its unit, which could be worth $2 billion.
``The Chinese steelmakers are aiming for a stable and safe supply of iron ore through taking stakes in mining companies,'' said Helen Lau, a Shanghai-based analyst at Daiwa Securities Group Inc. ``Brazilian mines are an option.''
CSN plans to bolster output at Nacional Minerios to 41 million metric tons a year by 2012, from 14 million tons this year.
The unit at present production could be valued at $2 billion, inclusive of a 30 percent to 35 percent premium, said Mark Pervan, a commodity strategist at Australia & New Zealand Banking Group in Melbourne.
CSN hired Goldman Sachs Group Inc. to evaluate a possible sale, and in May said it may sell all or part of the unit in the third quarter to cut debt and fund expansions.
It's too early to comment on the size and value of the stake under discussion, Shagang's Shen said in a phone interview. Shagang is based in Zhangjiagang, 120 kilometres (75 miles) west of Shanghai.
Baosteel Group Corp., China's largest steelmaker, rival Shougang Corp. and China's sovereign wealth fund may also be interested in a stake, Wall Street Journal said, citing an unidentified person familiar with the matter.
Chinese steelmakers are locked in price talks with Rio Tinto Group and BHP Billiton Ltd. over annual contracts for ore delivered from Australian mines. Rio and BHP, which account for half of Asia's iron ore sales, want a higher than 65 percent increase citing rising Chinese demand and the proximity of their mines to Chinese mills.
Source: Bloomberg
Shagang is in talks on its own, and isn't aware of interests from other Chinese companies, Shagang Vice President Shen Wenming said today. A group of Chinese steelmakers are considering bidding for part or all of Nacional Minerios SA, the Wall Street Journal said today.
Iron ore prices jumped 65 percent this year, spurring increased attempts by steelmakers to buy mines to secure supplies. CSN, as the Brazilian company is known, plans to triple output at its unit, which could be worth $2 billion.
``The Chinese steelmakers are aiming for a stable and safe supply of iron ore through taking stakes in mining companies,'' said Helen Lau, a Shanghai-based analyst at Daiwa Securities Group Inc. ``Brazilian mines are an option.''
CSN plans to bolster output at Nacional Minerios to 41 million metric tons a year by 2012, from 14 million tons this year.
The unit at present production could be valued at $2 billion, inclusive of a 30 percent to 35 percent premium, said Mark Pervan, a commodity strategist at Australia & New Zealand Banking Group in Melbourne.
CSN hired Goldman Sachs Group Inc. to evaluate a possible sale, and in May said it may sell all or part of the unit in the third quarter to cut debt and fund expansions.
It's too early to comment on the size and value of the stake under discussion, Shagang's Shen said in a phone interview. Shagang is based in Zhangjiagang, 120 kilometres (75 miles) west of Shanghai.
Baosteel Group Corp., China's largest steelmaker, rival Shougang Corp. and China's sovereign wealth fund may also be interested in a stake, Wall Street Journal said, citing an unidentified person familiar with the matter.
Chinese steelmakers are locked in price talks with Rio Tinto Group and BHP Billiton Ltd. over annual contracts for ore delivered from Australian mines. Rio and BHP, which account for half of Asia's iron ore sales, want a higher than 65 percent increase citing rising Chinese demand and the proximity of their mines to Chinese mills.
Source: Bloomberg
Baotou Cuts Rare Earth Output To Halt Price Slide
South China Morning Post, citing an official from Baotou Steel, reported that Baotou Steel Rare-Earth Hi-Tech Co has joined other producers in cutting output of rare earth last month to halt a price decline.
Mr Zhang Rihui secretary of Baotou, said Inner Mongolia based Baotou Steel, among China's top five rare earth producers and competitors in Jiangxi province, stopped supply to some companies for one month. He said that Baotou hasn't decided whether to extend the suspension.
The paper added that the price of praseodymium oxide, which is used to colour glass and enamel has fallen as much as 39% to about CNY 135,000 per tonne in 2008.
Source: Steel Guru
Mr Zhang Rihui secretary of Baotou, said Inner Mongolia based Baotou Steel, among China's top five rare earth producers and competitors in Jiangxi province, stopped supply to some companies for one month. He said that Baotou hasn't decided whether to extend the suspension.
The paper added that the price of praseodymium oxide, which is used to colour glass and enamel has fallen as much as 39% to about CNY 135,000 per tonne in 2008.
Source: Steel Guru
Chinese Steel Dumping Affirmed By ITC
The U.S. International Trade Commission ruled Friday that China is dumping steel pipe and tube products on the U.S. market at below-cost prices and illegally subsidizing its steel industry, for the first time establishing countervailing duties against Chinese steel imports.
The ITC voted to affirm the U.S. Department of Commerce's June 9 findings that Chinese makers of circular welded steel pipe are dumping their products on the U.S. market at below-cost prices and that the Chinese government heavily subsidises pipe and tube exports.
The Commerce Department had found that Chinese steel pipe producers dump products at rates ranging from 69.2 percent to 85.55 percent, severely limiting domestic producers’ ability to compete. Chinese products, pipe and tube imports from China to the United States increased to 750,000 tons in 2007 from 10,000 tons in 2002.
Source: Northwest Indiana and Illinois Times
The ITC voted to affirm the U.S. Department of Commerce's June 9 findings that Chinese makers of circular welded steel pipe are dumping their products on the U.S. market at below-cost prices and that the Chinese government heavily subsidises pipe and tube exports.
The Commerce Department had found that Chinese steel pipe producers dump products at rates ranging from 69.2 percent to 85.55 percent, severely limiting domestic producers’ ability to compete. Chinese products, pipe and tube imports from China to the United States increased to 750,000 tons in 2007 from 10,000 tons in 2002.
Source: Northwest Indiana and Illinois Times
Global Steel Demand Fuels Rocketing Coking Coal Price
Things, for steelmakers, go better with coke – the coke concerned being, of course, the product used in blast furnaces and electric arc furnaces to produce iron and steel.
Coke is 90% carbon and is light, but strong – it has to be, to bear the weight to which it is subjected in a blast furnace – porous and, when heated, reactive. At the very start of the iron- and steelmaking process, coke fines – also known as coke breeze – are employed in the sintering of the iron-ore, which converts the irregular lumps (iron-ore fines) of the ore into larger pieces between 10 mm and 25 mm. This greatly increases the efficiency of the smelting process.
In blast furnaces, coke plays more than one role – it is the fuel that provides the heat necessary for the smelting process, and it is the source of the carbon monoxide which reduces the oxygen out of the compounds which bind the iron to the ore, separating it, in liquid form (given the heat), to pool at the base of the furnace, from which it can be tapped.
The blast furnace is ‘charged’ with the sintered iron-ore, coke and limestone – this last combines with the impurities (non-iron constituents) of the ore and separates them as slag; this slag floats on top of the liquid iron and so can be skimmed off. In addition to providing the heat and the reduction agent, the coke provides a permeable medium through which the reduction gas can pass.
In electric arc furnaces, coke is not needed to generate heat, but serves to reduce the molten chemical slag in the base of the furnace, created by the electric arc process. Again, this separates the iron from the slag. The molten iron is then taken to another furnace – usually a blast oxygen furnace – and converted into liquid steel. Coke is not employed in this process – the carbonising agency employed in the production of carbon steel is derived from petroleum.
The iron produced in a blast furnace is known as pig iron, and, on average, it requires 1,5 t of iron-ore and 0,45 t of coke to produce 1 t of pig iron. For completeness, it should be noted that coke is used in, and is equally essential to, the smelting of all metals, playing the same roles in every case.
The main alternative to coke would be charcoal, but it requires the destruction of about 4 000 m2 of woodland to make enough charcoal to produce one ton of iron, so this is a highly environmentally destructive option, although it is still used in some parts of the world. “There are very few alternatives to coke, although South Africa is researching alternatives – with some limited success,” states Professor Rosemary Falcon, who holds the Saneri chair for clean coal technologies at the University of the Witwatersrand.
Coke is produced when coal of the right type is heated up slowly in closed ovens in the absence of air. Unfortunately, very few coals are suitable for the production of coke. They are special, high-quality hard coals, and are known as coking or metallurgical coals. In 2005, the coking coal trade represented only 29% of the global hard coal trade.
Eric Finlayson, head of exploration for Rio Tinto, recently remarked that “coking coal is very hard to find – we are scouring the world to find it”. The biggest, highest-quality, most promising deposit they are currently working on – with a delineation drilling programme intended to deliver an inferred mineral resource by the end of this year – is in Mongolia, some 280 km from the nearest railway. It is, however, close to the Chinese market.
Meanwhile, steel production is booming. According to the International Iron and Steel Institute, total crude steel production (in the 66 countries which report to it) for the first four months of this year was 5,6% higher than for the same period last year. For China alone, steel production jumped 9,1%. Global crude steel production increased by 7.5% in 2007 to reach 1 343.5- million tons – the highest level of crude steel production in history. The year 2007 was also the fifth year in a row in which world crude steel production increased by more than 7%. Although there has been a decrease in the growth rate, demand is still strong. China, unsurprisingly, remains the driving force – its crude steel production increased by 15,7% last year, and, if the Asian giant is excluded, world crude steel production would have increased by only 3,3%.
Given the demand, given the scarcity of coking coal, it is not surprising that the price of the latter is soaring. In April, mining giant BHP Billiton revealed that it expected that coking coal prices would rocket this year by 206% to 240% in comparison with prices for last year. BHP operates collieries in Australia in a joint venture (JV) with Mitsubishi of Japan. Also in April, South Korean steelmaker Posco agreed to a 205% increase in the price of the coking coal it buys from Australia, while Japan’s JFE Steel also accepteda more than 200% increase in the coking coal price – from $98/t, to $300/t. JFE is the world’s third- largest steel producer and Posco is the fourth.
The BHP-Mitsubishi JV is the world’s largest supplier to the seaborne coking coal trade, accounting for 28% of world trade, and is Australia’s largest coal-miner. Australia is the world’s largest producer of coking coal, with production of 83-million tons in 2006, followed by Canada (23-million tons), the US, with 19- million tons, and Poland, at one- million tons, while China, Russia and New Zealand combined provided 8-million tons.
Little wonder that steel companies are striving to secure sources of this key input. Late last month, steel magnate Lakshmi Mittal, CE of ArcelorMittal, bought nearly 10% of Australia’s Macarthur Coal and expressed an interest in buying the entire company (although that might not be possible: China’s Citic has 17,6% of the miner).
Mittal had previously bought three coking coal mines in Russia for $718-million. ArcelorMittal is the world’s biggest steel producer. Meanwhile, late last year, Tata Steel, which ranks sixth in the world, bought a 35% share in a coking coal project in Mozambique, for $88.3-million.
South Africa ranks twenty-first in the world in terms of steel production, making 9,7- million tons in 2006 (up from 9,5-million tons in 2005). This amounts to 0.8% of global crude steel production, but 52% of African production. The basic iron and steel industry contributes some 1.4% of South African gross domestic product and 7.9% of the total value of sales by the national manufacturing sector. By far the biggest local producer is ArcelorMittal South Africa (originally Iscor), which has four steelmaking operations in South Africa – Vereeniging, Vanderbijlpark, Newcastle and Saldanha.
It reported liquid steel production of 7,06-million tons in 2006 – falling to 6,38-million tons last year. Ranked number two is Highveld Steel & Vanadium, whose majority share- holder is Russian steel group Evraz, and which produced 863 142 t of crude steel in 2006. South Africa’s other steelmakers do not smelt iron-ore.
One of ArcelorMittal South Africa’s biggest import costs is the import of coking coal – last year the company imported 64% of its coking coal requirements. The company produces coke in three coke batteries, as they are called, at Newcastle, Pretoria, and Vanderbijlpark. Of these, the one at Newcastle is new (having been commissioned in November 2006), and it produced 426 000 t of coke last year, playing a major role in driving the company’s total production to a record 840 000 t.
The Pretoria coke battery was relined last year. The company sells coke to South African ferroalloy industries.
“South Africa has very little high- quality coking coal,” points out Falcon. South Africa’s main coking coal producer is Exxaro. “We have one mine producing hard coking coal and a second producing semisoft,” reports Exxaro senior research and development engineer Pierre Jordan.
The hard coking coal is mined at Tshikondeni, and the semi-soft at Grootegeluk, both in Limpopo province. Tshikondeni has an annual production of more than 400 000 t, all for local consumption, while Grootegeluk last year produced some two-million tons of semisoft coking coal (in addition to some 16-million tons of thermal coal).
Of Grootegeluk’s coking coal, 1.3-million tons went to ArcelorMittal South Africa and 0.7-million tons was exported. There is also small-scale production of hard coking coal in KwaZulu-Natal, but these are small deposits and suffer from small seams, which make mining more difficult.
“Semi-soft coking coal can’t produce good coke on its own, and must be used in a blend, unlike the hard coals,” explains Jordan. These blends see higher-quality coking coals mixed with lower-quality ones. “The practice here, as in many other places, is to import the high-quality coals and blend them with low-quality local coals,” says Falcon. “Determining the optimum blend for each blast furnace is a very scientific process and is not easy.
The coking coals are blended first, and then turned into coke,” elucidates Jordan. “ArcelorMittal South Africa uses a blend of seven coals; other companies use blends of five coals, while Chinese steelmakers use blends of up to 27 coals. It all depends on the availability of coals and the blend you desire.”
To reduce their demand for coke, South African companies use certain anthracites in sintering plants and in ferrochrome production, blended with coke and (in the case of ferrochrome) char – a less mature bituminous coal – and raw coal.
“These South African anthracites are very special, because they possess a horizontal alignment of their molecules, so they break down easily in the hot liquid slags in electric arc furnaces, releasing free carbon,” points out Falcon. “We are exploring in South Africa for more coking coal,” assures Jordan. “But most of the high-quality coking coal found in South Africa is in very narrow seams, making mining very difficult.”
Others are also exploring for coking coal, in KwaZulu-Natal. For example, JSE-listed Miranda Mineral Holdings reports that its four exploration projects – Uithoek, Burnside, Wasbank (these three are contiguous) and Boschhoek-Boschkloof – together contain 120-million tons of coal, much of which is reportedly coking coal. (Another Miranda project, Sesikhona, should start coal production before the end of this year.) Although the seams are narrow, varying between 0,9 m and 1,5 m, the company is confident that the quality of the coal more than compensates for this.
Then there is Mozambique.
“There is a lot of exploration for coking coal in Mozambique,” highlights Falcon. “Mozambique is the most promising area in the region for coking coal,” agrees Jordan, “but the issue is logistics – transport difficulties drive up the costs and can render exploitation uneconomic.”
The big coking coal project in Mozambique is, of course, Companhia Vale do Rio Doce’s (Vale) Moatize project. Moatize is located in Tete province, some 1 700 km north of the capital city, Maputo. The project involves an investment of $1.3-billion by Vale, and the project development plan and the mining contract were both approved by the Mozambican government in June last year.
Moatize will be an openpit operation and will produce an average of 8.5-million tons of metallurgical coal, plus 2.5-million tons of thermal coal, each year. The mining contract is valid for 25 years, but the mine is forecast to have a life of 35 years. The mine is expected to be commissioned in the second half of 2010. Moatize is linked to the port of Beira by a railway that has been concessioned to Indian State-owned railway com- panies, which are currently rehabilitating the line.
It is expected to be reopened next year. However, South African industry is unlikely to benefit from Moatize – it is expected that the metallurgical coal will be sent to Brazil, to feed that country’s large and growing steel industry. (The Brazilian steel industry ranked ninth in the world in 2007, producing 33,8-million tons, a 9,3% increase over 2006.)
An example of other coking coal exploration activities in Mozambique is provided by Australian Stock Exchange-listed company Riversdale Mining (which owns the Zululand anthracite colliery, in KwaZulu-Natal, and also has another anthracite project under development in the sameprovince).
Riversdale holds 16 exploration tenements, totalling 203 460 ha, in the lower Zambezi coal basin, and seven exploration tenements covering 86 620 ha in Tete province. Significantly, the latter are contiguous to both Riversdale’s other tenements in the country, and Vale’s Moatize coal concession area. It was in Riversdale’s Benga and Tete exploration tenements that Tata took a 35% share.
These cover 24 960 ha and, in terms of the deal, Tata will get a 40% share of the coking coal produced and an option to secure more, on commercial terms. The inferred resource for the area covered by this JV stands at 1.9-billion tons. The primary resource is hard coking coal, with thermal coal as a secondary product. Tata wishes to use the Mozambican coking coal to supply its Corus subsidiary in the UK and Europe.
Source: Mining Weekly
Coke is 90% carbon and is light, but strong – it has to be, to bear the weight to which it is subjected in a blast furnace – porous and, when heated, reactive. At the very start of the iron- and steelmaking process, coke fines – also known as coke breeze – are employed in the sintering of the iron-ore, which converts the irregular lumps (iron-ore fines) of the ore into larger pieces between 10 mm and 25 mm. This greatly increases the efficiency of the smelting process.
In blast furnaces, coke plays more than one role – it is the fuel that provides the heat necessary for the smelting process, and it is the source of the carbon monoxide which reduces the oxygen out of the compounds which bind the iron to the ore, separating it, in liquid form (given the heat), to pool at the base of the furnace, from which it can be tapped.
The blast furnace is ‘charged’ with the sintered iron-ore, coke and limestone – this last combines with the impurities (non-iron constituents) of the ore and separates them as slag; this slag floats on top of the liquid iron and so can be skimmed off. In addition to providing the heat and the reduction agent, the coke provides a permeable medium through which the reduction gas can pass.
In electric arc furnaces, coke is not needed to generate heat, but serves to reduce the molten chemical slag in the base of the furnace, created by the electric arc process. Again, this separates the iron from the slag. The molten iron is then taken to another furnace – usually a blast oxygen furnace – and converted into liquid steel. Coke is not employed in this process – the carbonising agency employed in the production of carbon steel is derived from petroleum.
The iron produced in a blast furnace is known as pig iron, and, on average, it requires 1,5 t of iron-ore and 0,45 t of coke to produce 1 t of pig iron. For completeness, it should be noted that coke is used in, and is equally essential to, the smelting of all metals, playing the same roles in every case.
The main alternative to coke would be charcoal, but it requires the destruction of about 4 000 m2 of woodland to make enough charcoal to produce one ton of iron, so this is a highly environmentally destructive option, although it is still used in some parts of the world. “There are very few alternatives to coke, although South Africa is researching alternatives – with some limited success,” states Professor Rosemary Falcon, who holds the Saneri chair for clean coal technologies at the University of the Witwatersrand.
Coke is produced when coal of the right type is heated up slowly in closed ovens in the absence of air. Unfortunately, very few coals are suitable for the production of coke. They are special, high-quality hard coals, and are known as coking or metallurgical coals. In 2005, the coking coal trade represented only 29% of the global hard coal trade.
Eric Finlayson, head of exploration for Rio Tinto, recently remarked that “coking coal is very hard to find – we are scouring the world to find it”. The biggest, highest-quality, most promising deposit they are currently working on – with a delineation drilling programme intended to deliver an inferred mineral resource by the end of this year – is in Mongolia, some 280 km from the nearest railway. It is, however, close to the Chinese market.
Meanwhile, steel production is booming. According to the International Iron and Steel Institute, total crude steel production (in the 66 countries which report to it) for the first four months of this year was 5,6% higher than for the same period last year. For China alone, steel production jumped 9,1%. Global crude steel production increased by 7.5% in 2007 to reach 1 343.5- million tons – the highest level of crude steel production in history. The year 2007 was also the fifth year in a row in which world crude steel production increased by more than 7%. Although there has been a decrease in the growth rate, demand is still strong. China, unsurprisingly, remains the driving force – its crude steel production increased by 15,7% last year, and, if the Asian giant is excluded, world crude steel production would have increased by only 3,3%.
Given the demand, given the scarcity of coking coal, it is not surprising that the price of the latter is soaring. In April, mining giant BHP Billiton revealed that it expected that coking coal prices would rocket this year by 206% to 240% in comparison with prices for last year. BHP operates collieries in Australia in a joint venture (JV) with Mitsubishi of Japan. Also in April, South Korean steelmaker Posco agreed to a 205% increase in the price of the coking coal it buys from Australia, while Japan’s JFE Steel also accepteda more than 200% increase in the coking coal price – from $98/t, to $300/t. JFE is the world’s third- largest steel producer and Posco is the fourth.
The BHP-Mitsubishi JV is the world’s largest supplier to the seaborne coking coal trade, accounting for 28% of world trade, and is Australia’s largest coal-miner. Australia is the world’s largest producer of coking coal, with production of 83-million tons in 2006, followed by Canada (23-million tons), the US, with 19- million tons, and Poland, at one- million tons, while China, Russia and New Zealand combined provided 8-million tons.
Little wonder that steel companies are striving to secure sources of this key input. Late last month, steel magnate Lakshmi Mittal, CE of ArcelorMittal, bought nearly 10% of Australia’s Macarthur Coal and expressed an interest in buying the entire company (although that might not be possible: China’s Citic has 17,6% of the miner).
Mittal had previously bought three coking coal mines in Russia for $718-million. ArcelorMittal is the world’s biggest steel producer. Meanwhile, late last year, Tata Steel, which ranks sixth in the world, bought a 35% share in a coking coal project in Mozambique, for $88.3-million.
South Africa ranks twenty-first in the world in terms of steel production, making 9,7- million tons in 2006 (up from 9,5-million tons in 2005). This amounts to 0.8% of global crude steel production, but 52% of African production. The basic iron and steel industry contributes some 1.4% of South African gross domestic product and 7.9% of the total value of sales by the national manufacturing sector. By far the biggest local producer is ArcelorMittal South Africa (originally Iscor), which has four steelmaking operations in South Africa – Vereeniging, Vanderbijlpark, Newcastle and Saldanha.
It reported liquid steel production of 7,06-million tons in 2006 – falling to 6,38-million tons last year. Ranked number two is Highveld Steel & Vanadium, whose majority share- holder is Russian steel group Evraz, and which produced 863 142 t of crude steel in 2006. South Africa’s other steelmakers do not smelt iron-ore.
One of ArcelorMittal South Africa’s biggest import costs is the import of coking coal – last year the company imported 64% of its coking coal requirements. The company produces coke in three coke batteries, as they are called, at Newcastle, Pretoria, and Vanderbijlpark. Of these, the one at Newcastle is new (having been commissioned in November 2006), and it produced 426 000 t of coke last year, playing a major role in driving the company’s total production to a record 840 000 t.
The Pretoria coke battery was relined last year. The company sells coke to South African ferroalloy industries.
“South Africa has very little high- quality coking coal,” points out Falcon. South Africa’s main coking coal producer is Exxaro. “We have one mine producing hard coking coal and a second producing semisoft,” reports Exxaro senior research and development engineer Pierre Jordan.
The hard coking coal is mined at Tshikondeni, and the semi-soft at Grootegeluk, both in Limpopo province. Tshikondeni has an annual production of more than 400 000 t, all for local consumption, while Grootegeluk last year produced some two-million tons of semisoft coking coal (in addition to some 16-million tons of thermal coal).
Of Grootegeluk’s coking coal, 1.3-million tons went to ArcelorMittal South Africa and 0.7-million tons was exported. There is also small-scale production of hard coking coal in KwaZulu-Natal, but these are small deposits and suffer from small seams, which make mining more difficult.
“Semi-soft coking coal can’t produce good coke on its own, and must be used in a blend, unlike the hard coals,” explains Jordan. These blends see higher-quality coking coals mixed with lower-quality ones. “The practice here, as in many other places, is to import the high-quality coals and blend them with low-quality local coals,” says Falcon. “Determining the optimum blend for each blast furnace is a very scientific process and is not easy.
The coking coals are blended first, and then turned into coke,” elucidates Jordan. “ArcelorMittal South Africa uses a blend of seven coals; other companies use blends of five coals, while Chinese steelmakers use blends of up to 27 coals. It all depends on the availability of coals and the blend you desire.”
To reduce their demand for coke, South African companies use certain anthracites in sintering plants and in ferrochrome production, blended with coke and (in the case of ferrochrome) char – a less mature bituminous coal – and raw coal.
“These South African anthracites are very special, because they possess a horizontal alignment of their molecules, so they break down easily in the hot liquid slags in electric arc furnaces, releasing free carbon,” points out Falcon. “We are exploring in South Africa for more coking coal,” assures Jordan. “But most of the high-quality coking coal found in South Africa is in very narrow seams, making mining very difficult.”
Others are also exploring for coking coal, in KwaZulu-Natal. For example, JSE-listed Miranda Mineral Holdings reports that its four exploration projects – Uithoek, Burnside, Wasbank (these three are contiguous) and Boschhoek-Boschkloof – together contain 120-million tons of coal, much of which is reportedly coking coal. (Another Miranda project, Sesikhona, should start coal production before the end of this year.) Although the seams are narrow, varying between 0,9 m and 1,5 m, the company is confident that the quality of the coal more than compensates for this.
Then there is Mozambique.
“There is a lot of exploration for coking coal in Mozambique,” highlights Falcon. “Mozambique is the most promising area in the region for coking coal,” agrees Jordan, “but the issue is logistics – transport difficulties drive up the costs and can render exploitation uneconomic.”
The big coking coal project in Mozambique is, of course, Companhia Vale do Rio Doce’s (Vale) Moatize project. Moatize is located in Tete province, some 1 700 km north of the capital city, Maputo. The project involves an investment of $1.3-billion by Vale, and the project development plan and the mining contract were both approved by the Mozambican government in June last year.
Moatize will be an openpit operation and will produce an average of 8.5-million tons of metallurgical coal, plus 2.5-million tons of thermal coal, each year. The mining contract is valid for 25 years, but the mine is forecast to have a life of 35 years. The mine is expected to be commissioned in the second half of 2010. Moatize is linked to the port of Beira by a railway that has been concessioned to Indian State-owned railway com- panies, which are currently rehabilitating the line.
It is expected to be reopened next year. However, South African industry is unlikely to benefit from Moatize – it is expected that the metallurgical coal will be sent to Brazil, to feed that country’s large and growing steel industry. (The Brazilian steel industry ranked ninth in the world in 2007, producing 33,8-million tons, a 9,3% increase over 2006.)
An example of other coking coal exploration activities in Mozambique is provided by Australian Stock Exchange-listed company Riversdale Mining (which owns the Zululand anthracite colliery, in KwaZulu-Natal, and also has another anthracite project under development in the sameprovince).
Riversdale holds 16 exploration tenements, totalling 203 460 ha, in the lower Zambezi coal basin, and seven exploration tenements covering 86 620 ha in Tete province. Significantly, the latter are contiguous to both Riversdale’s other tenements in the country, and Vale’s Moatize coal concession area. It was in Riversdale’s Benga and Tete exploration tenements that Tata took a 35% share.
These cover 24 960 ha and, in terms of the deal, Tata will get a 40% share of the coking coal produced and an option to secure more, on commercial terms. The inferred resource for the area covered by this JV stands at 1.9-billion tons. The primary resource is hard coking coal, with thermal coal as a secondary product. Tata wishes to use the Mozambican coking coal to supply its Corus subsidiary in the UK and Europe.
Source: Mining Weekly
Rain Hits Jharkand Coal Output
Coal production by two state-run firms in the mineral rich eastern state of Jharkhand has declined by 55,000 tonnes a day due to torrential rains, officials said.
The two firms, subsidiaries of the country's biggest coal producer, Coal India Ltd, produce both coking and thermal coal, supplied to various power producers and steel plants including that of Tata Steel Ltd.
Central Coalfields Ltd daily produced 45 percent less coal in the last four days due to heavy rains, said R.K. Saha, director technical, at the firm. The firm normally produces 110,000 tonnes of coal a day.
"Today the weather is clear so we may produce 90,000 tonne and if there is no rains we will soon reach 100,000 tonnes," Saha told Reuters. He said dispatches have been affected due to heavy rains.
An un-named official at Bharat Coking Coal Ltd said his firms had been daily producing nearly 5,000 tonnes less coal for the last few days due to muddy roads. The firm daily produces about 60,000-62,000 tonnes of coal a day.
Source: Reuters
The two firms, subsidiaries of the country's biggest coal producer, Coal India Ltd, produce both coking and thermal coal, supplied to various power producers and steel plants including that of Tata Steel Ltd.
Central Coalfields Ltd daily produced 45 percent less coal in the last four days due to heavy rains, said R.K. Saha, director technical, at the firm. The firm normally produces 110,000 tonnes of coal a day.
"Today the weather is clear so we may produce 90,000 tonne and if there is no rains we will soon reach 100,000 tonnes," Saha told Reuters. He said dispatches have been affected due to heavy rains.
An un-named official at Bharat Coking Coal Ltd said his firms had been daily producing nearly 5,000 tonnes less coal for the last few days due to muddy roads. The firm daily produces about 60,000-62,000 tonnes of coal a day.
Source: Reuters
Greek Government Seeks Partner For Larco
Reports in the Greek media suggest that the Greek government is in search of a strategic partner for the state controlled nickel producer Larco. The company produces nickel, electric furnace slag and aggregates.
Larco owns four mines in Evia and Agios Ioannis in south Greece and Kastoria as well as a lignite mine at Servia in northern Greece. Larco also owns a smelting plant in Larymna about 130 kilometres northeast of Athens.
The annual production of the Evia mines is 1.2 to 1.5 million tonnes of ore. Agios Ioannis mines’ annual production is 700,000 tonnes of ore, from which about 60,000 tonnes of high nickel grade ore. The annual production in Kastoria mines is 250,000 to 300,000 tonnes of high nickel grade ore. The annual production of the Servia mine is approximately 250,000 tonnes of lignite. The total quantity of ore processed per year is 2.5 million tonnes, producing an annual ferronickel production of around 18,000 to 20,000 tonnes.
In 2002 the company signed a contract with Lafarge, under which it provides the French cement company with nickel. In early 2007, the company created a joint venture with GEMACO and Latomia Stilidas for the exploitation of overburden material and the development of a new, expanded sales network in the Greek market.
Source: Steel Guru
Larco owns four mines in Evia and Agios Ioannis in south Greece and Kastoria as well as a lignite mine at Servia in northern Greece. Larco also owns a smelting plant in Larymna about 130 kilometres northeast of Athens.
The annual production of the Evia mines is 1.2 to 1.5 million tonnes of ore. Agios Ioannis mines’ annual production is 700,000 tonnes of ore, from which about 60,000 tonnes of high nickel grade ore. The annual production in Kastoria mines is 250,000 to 300,000 tonnes of high nickel grade ore. The annual production of the Servia mine is approximately 250,000 tonnes of lignite. The total quantity of ore processed per year is 2.5 million tonnes, producing an annual ferronickel production of around 18,000 to 20,000 tonnes.
In 2002 the company signed a contract with Lafarge, under which it provides the French cement company with nickel. In early 2007, the company created a joint venture with GEMACO and Latomia Stilidas for the exploitation of overburden material and the development of a new, expanded sales network in the Greek market.
Source: Steel Guru
Friday, June 20, 2008
Chinese Chrome Ore Market Weak
It is reported that chrome ore market for imports into China has weakened lately with plenty of resources, dull transactions, and Chrome ore stockpiles amounting to some 600,000 tonne at Chinese seaports.
Current prices for various origins are as follows:
Cr:50% India CNY 115-CNY 118
Cr:42% Turkish CNY 110-CNY 120
Cr:44% South Africa CNY80- CNY 82
Traders' offer price for imported chrome ore are witnessing a downward trend at the moment, but that for high grade chrome ore remains strong. The offer price for low grade chrome ore experienced a slump recently but is now stable.
The Chinese import market is maintaining its sluggishness as a result of the weak down-stream chrome-series alloy and stainless steel markets. The transaction price has declined despite high offer prices for high-grade ore. The Chinese steel website, Mysteel, predicts that the imported chrome ore market would continue weakening in near future with slack transactions.
Source Mysteel via SteelGuru
Current prices for various origins are as follows:
Cr:50% India CNY 115-CNY 118
Cr:42% Turkish CNY 110-CNY 120
Cr:44% South Africa CNY80- CNY 82
Traders' offer price for imported chrome ore are witnessing a downward trend at the moment, but that for high grade chrome ore remains strong. The offer price for low grade chrome ore experienced a slump recently but is now stable.
The Chinese import market is maintaining its sluggishness as a result of the weak down-stream chrome-series alloy and stainless steel markets. The transaction price has declined despite high offer prices for high-grade ore. The Chinese steel website, Mysteel, predicts that the imported chrome ore market would continue weakening in near future with slack transactions.
Source Mysteel via SteelGuru
Thursday, June 19, 2008
Australian Zircon Despatches First Mindarie Cargo
Australian Zircon says its first full train load of titanium and zircon has been sent from its site at Mindarie in the Murraylands to Port Adelaide for export.
Chief executive Jim Wilton says the company has been able to achieve the 800-tonne load because of operational changes at the Mindarie mine.
"We've made some modifications to the plant and also to the mining, the way we've gone about the mining operation," he said.
"During the month of May we've had pretty good mining rates so that again led us to getting more saleable product, so I suppose that the combination of those things has led to us getting better recoveries of saleable product."
Mr Wilton says the load was 300 tonnes more than the past best.
"The current quarter will definitely exceed all previous quarters which is what we'd expect."
Source: ABC
Chief executive Jim Wilton says the company has been able to achieve the 800-tonne load because of operational changes at the Mindarie mine.
"We've made some modifications to the plant and also to the mining, the way we've gone about the mining operation," he said.
"During the month of May we've had pretty good mining rates so that again led us to getting more saleable product, so I suppose that the combination of those things has led to us getting better recoveries of saleable product."
Mr Wilton says the load was 300 tonnes more than the past best.
"The current quarter will definitely exceed all previous quarters which is what we'd expect."
Source: ABC
SA Mining Down 9%
South Africa's total mining production for the three months ending April 2008 decreased by 9 percent compared with the same period in 2007, Statistics South Africa (StatsSA) reported on Thursday. The actual total mining production for April 2008 decreased by 2 percent compared with April 2007, said Stats SA. The total mining production for the three months ended April 2008, after seasonal adjustment, decreased by 4.1 percent compared with the previous three months. This was due to a decrease of 5.5 percent in the production of gold and a decrease of 3.9 percent in the production of non-gold minerals.
The major contributors to the decrease of 4.1 percent were platinum group metals (PGMs), diamonds and gold, according to the statement released on Thursday. Coal, however, contributed positively to the 4.1 percent decrease with sales increasing 1.3 percentage points. Gold production, one of the biggest drivers of the South African economy, decreased by 10.1 percent in April 2008 compared to the corresponding previous year.
With regard to mineral sales as at the end of March 2008, the total seasonally adjusted value of mineral sales at current first quarter of 2008 reflected an increase of 13.5 percent compared with the previous quarter. The increase of 13.5 percent, or about R8 million, can be attributed to increases of 14.3 percent in the sale of non-gold minerals and 9 percent in the sale of gold.
The actual total value of mineral sales at current prices for the first quarter of 2008 increased by 21.1 percent compared with the first quarter of 2007.
The major contributors to the increase of 21.1 percent year-on-year [y/y] in the actual value of mineral sales were PGMs, coal, manganese ore, other non-metallic minerals, and iron ore.
Source: Buanews
The major contributors to the decrease of 4.1 percent were platinum group metals (PGMs), diamonds and gold, according to the statement released on Thursday. Coal, however, contributed positively to the 4.1 percent decrease with sales increasing 1.3 percentage points. Gold production, one of the biggest drivers of the South African economy, decreased by 10.1 percent in April 2008 compared to the corresponding previous year.
With regard to mineral sales as at the end of March 2008, the total seasonally adjusted value of mineral sales at current first quarter of 2008 reflected an increase of 13.5 percent compared with the previous quarter. The increase of 13.5 percent, or about R8 million, can be attributed to increases of 14.3 percent in the sale of non-gold minerals and 9 percent in the sale of gold.
The actual total value of mineral sales at current prices for the first quarter of 2008 increased by 21.1 percent compared with the first quarter of 2007.
The major contributors to the increase of 21.1 percent year-on-year [y/y] in the actual value of mineral sales were PGMs, coal, manganese ore, other non-metallic minerals, and iron ore.
Source: Buanews
State Government Support For Rio's Pilbara Iron Ore Claim
The West Australian Government has thrown its support behind Rio Tinto's claim to the Rhodes Ridge iron ore deposit in the Pilbara.
The validity of Rio's State Agreement is being challenged in court by the junior miner Cazaly Resources.
Cazaly is taking Rio and its partners, mining heirs Gina Rinehart, Angela Bennett and Michael Wright, to the Warden's Court saying it pegged the Rhodes Ridge tenement more than 18 months ago.
It says the tenement area came up for grabs because Rio failed to meet the terms of its State Agreement.
Cazaly's Nathan McMahon says the issue is a matter of law.
"Given the government has granted Cazaly many many iron ore tenements I'd be very disappointed if general procedure was not followed," he said.
Rio says it will fight Cazaly as it did when the company tried to snare its Shovelanna deposit.
The WA Government says it will use the all its powers to support Rio Tinto's rights to the Rhodes Ridge deposit.
In a statement the Development Minister says he understands people will pursue their own commercial interests, but stands by the State Agreement which the Government renewed in January.
Source: ABC News
The validity of Rio's State Agreement is being challenged in court by the junior miner Cazaly Resources.
Cazaly is taking Rio and its partners, mining heirs Gina Rinehart, Angela Bennett and Michael Wright, to the Warden's Court saying it pegged the Rhodes Ridge tenement more than 18 months ago.
It says the tenement area came up for grabs because Rio failed to meet the terms of its State Agreement.
Cazaly's Nathan McMahon says the issue is a matter of law.
"Given the government has granted Cazaly many many iron ore tenements I'd be very disappointed if general procedure was not followed," he said.
Rio says it will fight Cazaly as it did when the company tried to snare its Shovelanna deposit.
The WA Government says it will use the all its powers to support Rio Tinto's rights to the Rhodes Ridge deposit.
In a statement the Development Minister says he understands people will pursue their own commercial interests, but stands by the State Agreement which the Government renewed in January.
Source: ABC News
Aricom To Announce First Iron Ore Shipment
Aricom, the Anglo-Russian miner spun out of Peter Hambro mining, will today announce that it has completed its first sales of iron ore from its Kuranakh deposit in a deal that marks its transition from developer to producer.
The sale comes almost five years after Aricom - run by Peter Hambro's son Jay - first listed on Aim.
Mr Hambro said he was delighted "to witness the first shipment of ore from our Kuranakh project leave the railway loading facilities. With our first revenue from iron ore sales, Aricom has taken another major step from developer to producer. Although Aricom still faces a number of key challenges in fully commissioning the plants, achieving a revenue stream is a critical stage in the evolution of the group".
Aricom has so far funded the development of its assets with two equity placings and recently appointed Morgan Stanley to raise around $1bn of debt to continue with the projects.
Kuranakh is the smallest of the company's four deposits located in Russia's far east close to natural markets in China, where iron ore is in heavy demand. The location of the deposits gives Aricom significant freight differential advantages over Australian and Brazilian rivals.
Source: Daily Telegraph
The sale comes almost five years after Aricom - run by Peter Hambro's son Jay - first listed on Aim.
Mr Hambro said he was delighted "to witness the first shipment of ore from our Kuranakh project leave the railway loading facilities. With our first revenue from iron ore sales, Aricom has taken another major step from developer to producer. Although Aricom still faces a number of key challenges in fully commissioning the plants, achieving a revenue stream is a critical stage in the evolution of the group".
Aricom has so far funded the development of its assets with two equity placings and recently appointed Morgan Stanley to raise around $1bn of debt to continue with the projects.
Kuranakh is the smallest of the company's four deposits located in Russia's far east close to natural markets in China, where iron ore is in heavy demand. The location of the deposits gives Aricom significant freight differential advantages over Australian and Brazilian rivals.
Source: Daily Telegraph
Murchison Expects Iron Ore Agreement By End Of Month
Murchison Metals Ltd., an Australian iron ore producer, expects annual contract price talks for exports to be completed by June 30, forecasting a significant increase for the nation's producers.
There is a “very positive outlook for iron ore prices'' through to 2011, John Westdorp, chief financial officer of Perth based Murchison, said today in a slides presentation sent to the Australian stock exchange.
Brazil's Cia. Vale do Rio Doce, the world's largest exporter of the ore, agreed in February to at least a 65 percent price increase with Asia's three largest steelmakers for the year started April 1. Rio Tinto Group and BHP Billiton Ltd. are seeking a bigger increase that takes into account cheaper freight costs from Australia. Merrill Lynch & Co. forecast they may secure a gain of more than 71 percent.
“Recognition of freight differential will be a significant boost to the Western Australian iron ore industry,'' Murchison's Westdorp said.
Source: Bloomberg
There is a “very positive outlook for iron ore prices'' through to 2011, John Westdorp, chief financial officer of Perth based Murchison, said today in a slides presentation sent to the Australian stock exchange.
Brazil's Cia. Vale do Rio Doce, the world's largest exporter of the ore, agreed in February to at least a 65 percent price increase with Asia's three largest steelmakers for the year started April 1. Rio Tinto Group and BHP Billiton Ltd. are seeking a bigger increase that takes into account cheaper freight costs from Australia. Merrill Lynch & Co. forecast they may secure a gain of more than 71 percent.
“Recognition of freight differential will be a significant boost to the Western Australian iron ore industry,'' Murchison's Westdorp said.
Source: Bloomberg
Chinese Nickel Pig Iron Production Predicted To Fall
Interfax China reports that China's nickel pig iron production in 2008 is expected to stand 8% lower annually at between 80,000 tonnes and 85,000 tonnes due to sluggish demand from stainless steel mills and low nickel prices.
Mr Fan Runze an analyst with Beijing Antaike Information told Interfax that "The cutting of production by Chinese stainless steel mills by 50% in May 2008 and another 30% in June have been heavy blows. The current nickel price of CNY 185,000 (USD 26,843.11) per tonne puts Chinese high cost nickel pig iron producers between a rock and a hard place.”
Mr Fan believes that slowing stainless steel output growth, increasing production of non nickel stainless steel and the use of refined nickel instead of nickel pig iron for production when nickel prices are low, will all dampen nickel pig iron production this year.
According to Mr China's average nickel pig iron producers have to sell their nickel content at more than USD 21,000 per tonne in order to make a profit. He said that "In addition to low nickel prices, almost all nickel pig iron producers using blast furnaces have halted production, or have turned to produce other more profitable ferroalloys, as it is difficult for them to make ends meet, especially when coke prices have more than doubled.”
Mr Dong Shutong chairman of China Nickel Resources Holdings Co Ltd told Interfax in Shanghai that "If nickel prices drop to CNY 150,000 (USD 21,764.68) per tonne more nickel pig iron production operations will be suspended. Current low nickel prices have sliced off one-third of China's nickel pig iron production capacity.”
However, global nickel market stability cannot do without China's 100,000 tonne nickel pig iron capacity. Without sufficient nickel pig iron production, nickel prices will return to previous high levels of above USD 50,000 per tonne.
Source: Steel Guru
Mr Fan Runze an analyst with Beijing Antaike Information told Interfax that "The cutting of production by Chinese stainless steel mills by 50% in May 2008 and another 30% in June have been heavy blows. The current nickel price of CNY 185,000 (USD 26,843.11) per tonne puts Chinese high cost nickel pig iron producers between a rock and a hard place.”
Mr Fan believes that slowing stainless steel output growth, increasing production of non nickel stainless steel and the use of refined nickel instead of nickel pig iron for production when nickel prices are low, will all dampen nickel pig iron production this year.
According to Mr China's average nickel pig iron producers have to sell their nickel content at more than USD 21,000 per tonne in order to make a profit. He said that "In addition to low nickel prices, almost all nickel pig iron producers using blast furnaces have halted production, or have turned to produce other more profitable ferroalloys, as it is difficult for them to make ends meet, especially when coke prices have more than doubled.”
Mr Dong Shutong chairman of China Nickel Resources Holdings Co Ltd told Interfax in Shanghai that "If nickel prices drop to CNY 150,000 (USD 21,764.68) per tonne more nickel pig iron production operations will be suspended. Current low nickel prices have sliced off one-third of China's nickel pig iron production capacity.”
However, global nickel market stability cannot do without China's 100,000 tonne nickel pig iron capacity. Without sufficient nickel pig iron production, nickel prices will return to previous high levels of above USD 50,000 per tonne.
Source: Steel Guru
Limpopo Boost For CoAl
The resource for the Vele semi-soft coking coal project, in Limpopo province, had been upgraded to 441.47-million tons on site, up from an estimate resource of 352-million tons inferred, JSE-, ASX- and Aim-listed coal development company Coal of Africa Limited (CoAL) announced on Wednesday.
The company based the update on a recently completed 65-borehole drilling programme that had not been incorporated into an updated three-dimensional geological model.
CoAL said not all of the borehole sample results had been received from the South African Bureau of Standards laboratory, but that there was sufficient information available to issue the resource estimation update.
"At this stage the resource estimation covers about 80% of the potential project area. Further resource upgrades are expected as drilling continues on the edges of the known resource and further lab analyses are received," commented CoAL MD Simon Farrell.
The Vele project was formerly known as the Thuli project.
Source: Mining Weekly
The company based the update on a recently completed 65-borehole drilling programme that had not been incorporated into an updated three-dimensional geological model.
CoAL said not all of the borehole sample results had been received from the South African Bureau of Standards laboratory, but that there was sufficient information available to issue the resource estimation update.
"At this stage the resource estimation covers about 80% of the potential project area. Further resource upgrades are expected as drilling continues on the edges of the known resource and further lab analyses are received," commented CoAL MD Simon Farrell.
The Vele project was formerly known as the Thuli project.
Source: Mining Weekly
Chinese Steel Exports 5.6million Tonnes In May
Chinese finished steel exports totalled 5.6mt in May, up 780kt month-on-month, and continuing the recovery from the February low of 3.1mt. Chinese finished steel exports amounted to 21.6mt over the first five months of 2008, still 20% lower than they were over the corresponding period in 2007, yet evidently recovering from the export slump that began in July 2007. Meanwhile, Chinese finished steel imports were 1.3mt in May, and from January to May, total finished steel imports were 7.1mt, down by 3.3% Year-on-Year.
In May, China imported 38.9mt iron ore, the second highest monthly import figure on record, with the peak set in April at 42.8mt. For the first five months of 2008, China imported a total of 192.4mt of iron ore, up by 19.4% Year-on-Year.
The Chinese domestic coke price hit another record high over the past week, reported at $409/t ex-Vat, up by 17% Month-on-Month. Meanwhile, the coke export price also exceeded the $600/t benchmark; also a record high price.
China's Shandong province has increased the peak-rate power tariff for industrial users to 170% of the basis tariff, effective on 10 June. Aluminium output in Shandong province in 2007 was 1.55mt, about 12.4% of total Chinese production, although we estimate production capacity reached 2.4mtpa by the end of the year. We do not expect the hike in power tariffs to negatively affect aluminium output in the province because about 84% of production capacity in the area has captive coal-fired power stations. The main issue raised from the tariff increase is the potential for changes in power tariffs elsewhere in China, especially in the power-deficient South and East.
Source: Mineweb
In May, China imported 38.9mt iron ore, the second highest monthly import figure on record, with the peak set in April at 42.8mt. For the first five months of 2008, China imported a total of 192.4mt of iron ore, up by 19.4% Year-on-Year.
The Chinese domestic coke price hit another record high over the past week, reported at $409/t ex-Vat, up by 17% Month-on-Month. Meanwhile, the coke export price also exceeded the $600/t benchmark; also a record high price.
China's Shandong province has increased the peak-rate power tariff for industrial users to 170% of the basis tariff, effective on 10 June. Aluminium output in Shandong province in 2007 was 1.55mt, about 12.4% of total Chinese production, although we estimate production capacity reached 2.4mtpa by the end of the year. We do not expect the hike in power tariffs to negatively affect aluminium output in the province because about 84% of production capacity in the area has captive coal-fired power stations. The main issue raised from the tariff increase is the potential for changes in power tariffs elsewhere in China, especially in the power-deficient South and East.
Source: Mineweb
Nihao Raises Cash For Nickel Mining
Nihao Mineral Resources International Inc. will raise funds through a stock rights offering for its mining activities in its nickel tenements, the company told the Philippine Stock Exchange.
In a disclosure, the mining firm said its board approved the sale to eligible investors who are entitled to subscribe five rights shares for every one Nihao share held as of record date yet to be announced.
The proceeds of the capital raising activity will go to the exploration, project development and working capital of its nickel mines in Botolan, Zambales, and Manitcao, Misamis Oriental. The new funds would also be used to pay for the advances made from shareholders.
Since last year, Nihao has been aiming to raise P700 million through stock rights offering to finance potential mining projects in the area in joint venture with four possible strategic Chinese partners.
Banco de Oro Unibank has been tapped as the receiving agent and custodian bank for the stock rights offering.
The company also signed an agreement last year with QNI Philippines Inc., a local unit of mining giant BHP Billiton Ltd., for its preliminary exploration of the 7,102-hectare nickel project in Botolan and Iba, Zambales, with prospects for nickel laterite deposits. BHP Billiton will provide technical expertise and advice.
The accord also contains the commercial terms for the offtake agreement, an option available to BHP Billiton, between Nihao and BHP Billiton's Yabulu nickel refinery in Queensland, Australia, one of the world's major nickel processing facilities. The agreement will take effect once the exploration and drilling program is concluded and would extend for five years. The firm agreed it would deliver 500,000 wet metric tons of nickel ore a year, based on London Metal Exchange prices.
Nihao's affiliate firm Geograce Resources Philippines Inc. meanwhile plans to partner with a South American mining firm that would pour in an estimated $26 million for the copper project within a 60,000-hectare area in Masbate.
The Geograce group also plans to put up nickel smelting and processing plants in Bataan to service the Zambales mines or within Philippine Veterans Investment Development Corp. in Cagayan de Oro that would process the ores from the group's mines in Misamis Oriental. A group of Chinese investors will foot the bill of the 10,000-ton a year plant. The group is also looking into the possibility of mining iron ore and chromite.
In a disclosure, the mining firm said its board approved the sale to eligible investors who are entitled to subscribe five rights shares for every one Nihao share held as of record date yet to be announced.
The proceeds of the capital raising activity will go to the exploration, project development and working capital of its nickel mines in Botolan, Zambales, and Manitcao, Misamis Oriental. The new funds would also be used to pay for the advances made from shareholders.
Since last year, Nihao has been aiming to raise P700 million through stock rights offering to finance potential mining projects in the area in joint venture with four possible strategic Chinese partners.
Banco de Oro Unibank has been tapped as the receiving agent and custodian bank for the stock rights offering.
The company also signed an agreement last year with QNI Philippines Inc., a local unit of mining giant BHP Billiton Ltd., for its preliminary exploration of the 7,102-hectare nickel project in Botolan and Iba, Zambales, with prospects for nickel laterite deposits. BHP Billiton will provide technical expertise and advice.
The accord also contains the commercial terms for the offtake agreement, an option available to BHP Billiton, between Nihao and BHP Billiton's Yabulu nickel refinery in Queensland, Australia, one of the world's major nickel processing facilities. The agreement will take effect once the exploration and drilling program is concluded and would extend for five years. The firm agreed it would deliver 500,000 wet metric tons of nickel ore a year, based on London Metal Exchange prices.
Nihao's affiliate firm Geograce Resources Philippines Inc. meanwhile plans to partner with a South American mining firm that would pour in an estimated $26 million for the copper project within a 60,000-hectare area in Masbate.
The Geograce group also plans to put up nickel smelting and processing plants in Bataan to service the Zambales mines or within Philippine Veterans Investment Development Corp. in Cagayan de Oro that would process the ores from the group's mines in Misamis Oriental. A group of Chinese investors will foot the bill of the 10,000-ton a year plant. The group is also looking into the possibility of mining iron ore and chromite.
Wednesday, June 18, 2008
BHP Billiton To Expand In Indonesia
BHP Billiton is expanding its activities in Indonesia, signing a joint venture agreement on Tuesday to develop two nickel mines in partnership with state-owned company Antam, an investment that could top $4.5bn.
Development of nickel laterite mines on Gag Island, off West Papua, and North Maluku would be a significant boon for Indonesia's mining sector, which despite its vast resources has languished amid uncertainty about the introduction of new laws.
Muhammad Lutfi, chairman of the investment coordinating board, said the two companies planned to build a smelter and could spend more than $4.5bn on the project.
BHP said it was too early to predict the size of the investment but in a presentation to investors last Thursday, Marius Kloppers, chief executive, referred to a $2bn-plus investment in an "eastern Indonesian facility".
"We are entering into conditional agreements with PT Antam to form a 50:50 alliance to integrate and evaluate two nickel laterite resources in Eastern Indonesia," BHP told the Financial Times on Tuesday.
"The agreements are conditional, one such condition being approval by the board of BHP Billiton."
The board is expected to make its decision by this time next month. But BHP has already advertised for a project manager, with applications closing on Monday.
Tuesday's agreement breathes new life into BHP's controversial Gag Island project, which was suspended in 1999 following an environmental campaign to protect its forests and surrounding coral reef.
The government reclassified the area as 'protected forest'. But in 2004, it changed the regulations to reinstate the rights of BHP and Antam to mine there.
The other area for development, Halmahera in the Maluku Islands, hosts several mining projects but it also poses its own challenges. In 1999 and 2000, thousands of people were killed on the island during clashes between religious militia groups.
The environmental and conflict risks for BHP may now be outweighed by the potential rewards as nickel prices have more than doubled in the past five years.
BHP is also getting back into coal in Indonesia after selling out of the industry in 2001. Motivated by a tripling in coking coal prices, BHP is building a mine in East Kalimantan, Borneo and production is expected to start by the end of this year.
Rio Tinto, the subject of a takeover bid by BHP, is also looking to develop a large nickel deposit in central Sulawesi. It has been in negotiations with the Indonesian government over the project for more than two years.
Source: Financial Times
Development of nickel laterite mines on Gag Island, off West Papua, and North Maluku would be a significant boon for Indonesia's mining sector, which despite its vast resources has languished amid uncertainty about the introduction of new laws.
Muhammad Lutfi, chairman of the investment coordinating board, said the two companies planned to build a smelter and could spend more than $4.5bn on the project.
BHP said it was too early to predict the size of the investment but in a presentation to investors last Thursday, Marius Kloppers, chief executive, referred to a $2bn-plus investment in an "eastern Indonesian facility".
"We are entering into conditional agreements with PT Antam to form a 50:50 alliance to integrate and evaluate two nickel laterite resources in Eastern Indonesia," BHP told the Financial Times on Tuesday.
"The agreements are conditional, one such condition being approval by the board of BHP Billiton."
The board is expected to make its decision by this time next month. But BHP has already advertised for a project manager, with applications closing on Monday.
Tuesday's agreement breathes new life into BHP's controversial Gag Island project, which was suspended in 1999 following an environmental campaign to protect its forests and surrounding coral reef.
The government reclassified the area as 'protected forest'. But in 2004, it changed the regulations to reinstate the rights of BHP and Antam to mine there.
The other area for development, Halmahera in the Maluku Islands, hosts several mining projects but it also poses its own challenges. In 1999 and 2000, thousands of people were killed on the island during clashes between religious militia groups.
The environmental and conflict risks for BHP may now be outweighed by the potential rewards as nickel prices have more than doubled in the past five years.
BHP is also getting back into coal in Indonesia after selling out of the industry in 2001. Motivated by a tripling in coking coal prices, BHP is building a mine in East Kalimantan, Borneo and production is expected to start by the end of this year.
Rio Tinto, the subject of a takeover bid by BHP, is also looking to develop a large nickel deposit in central Sulawesi. It has been in negotiations with the Indonesian government over the project for more than two years.
Source: Financial Times
Rio Tinto To Spend $667million On Australian Iron Ore Operations
Rio Tinto Group, fending off a $173 billion takeover bid from rival BHP Billiton Ltd., approved $667 million spending on its Australian iron ore operations to help expand output faster as prices rise.
A total of $518 million will be spent on development work and equipment, London-based Rio said today in a statement to the Australian stock exchange. The remaining $149 million will be spent on a study into a new mine near its Tom Price processing plant, the company said.
Rio is seeking to double output from its Western Australian iron ore operations to 320 million metric tons within five years. Prices for the steelmaking raw material have risen six straight years to a record on surging demand from China.
“It is vital that we progress plans to deliver more iron ore to market faster than before,'' Tom Albanese, Rio Tinto chief executive officer, said in the statement. “That requires the strategic early acquisition of long-lead items, leveraging off existing industry leadership to reduce time to market of future expansions.''
Source: Bloomberg
A total of $518 million will be spent on development work and equipment, London-based Rio said today in a statement to the Australian stock exchange. The remaining $149 million will be spent on a study into a new mine near its Tom Price processing plant, the company said.
Rio is seeking to double output from its Western Australian iron ore operations to 320 million metric tons within five years. Prices for the steelmaking raw material have risen six straight years to a record on surging demand from China.
“It is vital that we progress plans to deliver more iron ore to market faster than before,'' Tom Albanese, Rio Tinto chief executive officer, said in the statement. “That requires the strategic early acquisition of long-lead items, leveraging off existing industry leadership to reduce time to market of future expansions.''
Source: Bloomberg
Wealthy Australians Battle Over Iron Ore Rights
Australia's richest man, Andrew Forrest, and its wealthiest woman, Gina Rinehart, are battling over the right to mine one of the nation's largest undeveloped iron ore deposits.
Forrest's Fortescue Metals Group today teamed with Cazaly Resources to apply for prospecting licences over the Rhodes Ridge project in Western Australia's Pilbara region. Rinehart's Hancock Prospecting owns the mining rights in a joint venture with Rio Tinto and Wright Prospecting.
Cazaly, which last year failed in a court bid to win control of another untapped Rio deposit, more than doubled after saying it had started legal action to strip Rinehart and her partners of the right to develop the project.
Companies are spending more than $18 billion expanding iron ore projects in the state to tap demand from China that has driven prices to a record.
"The iron ore sector is hot,'' John Veldhuizen, a resources analyst at BBY said today. Fortescue "have obviously done their homework so it must have some basis for the claim'', he said.
Rio has fully complied with all aspects of the lease, spokeswoman Amanda Buckley said today. "We are confident that the title and agreements that we enjoy with the support and consent of the state are valid and binding.''
The iron ore boom has caused a surge in the personal wealth of Forrest and Rinehart. Forrest is worth $9.4 billion, up from $3.9 billion a year earlier, and a record for an Australian, according to this year's BRW rich 200 list. Rinehart's personal wealth was $4.4 billion, the magazine said.
Her fortune may rise more than $500 million a year because of the development of the Hope Downs iron ore mine in Western Australia, BRW said.
Cazaly lost a High Court appeal in April seeking to overturn a lower court decision rejecting its claims to another iron ore deposit also owned by Rio Tinto.
The state's Mining Warden will hold a hearing to consider the right to occupy the Rhodes Ridge land, Cazaly said today.
"Cazaly believes that the hearing will confirm that the land is open for mining and that there is no reason why the tenement applications cannot be granted,'' the company said in the statement.
"The land the subject of the Rhodes Ridge Project is recognised as containing one of the largest undeveloped iron ore resources in Western Australia.''
Rio Tinto and the project's partners signed an agreement with the state to develop the project by 1982 at the latest, Cazaly said. The land appeared to have been "warehoused' by the Rio joint venture for the past 35 years, it said.
"Should Cazaly be successful in gaining exploration and development rights, Fortescue will provide development, marketing and financial assistance towards the ultimate sale of any mined iron ore from the project area,'' Perth-based Fortescue said today in a separate statement.
Source: Sydney Morning Herald
Forrest's Fortescue Metals Group today teamed with Cazaly Resources to apply for prospecting licences over the Rhodes Ridge project in Western Australia's Pilbara region. Rinehart's Hancock Prospecting owns the mining rights in a joint venture with Rio Tinto and Wright Prospecting.
Cazaly, which last year failed in a court bid to win control of another untapped Rio deposit, more than doubled after saying it had started legal action to strip Rinehart and her partners of the right to develop the project.
Companies are spending more than $18 billion expanding iron ore projects in the state to tap demand from China that has driven prices to a record.
"The iron ore sector is hot,'' John Veldhuizen, a resources analyst at BBY said today. Fortescue "have obviously done their homework so it must have some basis for the claim'', he said.
Rio has fully complied with all aspects of the lease, spokeswoman Amanda Buckley said today. "We are confident that the title and agreements that we enjoy with the support and consent of the state are valid and binding.''
The iron ore boom has caused a surge in the personal wealth of Forrest and Rinehart. Forrest is worth $9.4 billion, up from $3.9 billion a year earlier, and a record for an Australian, according to this year's BRW rich 200 list. Rinehart's personal wealth was $4.4 billion, the magazine said.
Her fortune may rise more than $500 million a year because of the development of the Hope Downs iron ore mine in Western Australia, BRW said.
Cazaly lost a High Court appeal in April seeking to overturn a lower court decision rejecting its claims to another iron ore deposit also owned by Rio Tinto.
The state's Mining Warden will hold a hearing to consider the right to occupy the Rhodes Ridge land, Cazaly said today.
"Cazaly believes that the hearing will confirm that the land is open for mining and that there is no reason why the tenement applications cannot be granted,'' the company said in the statement.
"The land the subject of the Rhodes Ridge Project is recognised as containing one of the largest undeveloped iron ore resources in Western Australia.''
Rio Tinto and the project's partners signed an agreement with the state to develop the project by 1982 at the latest, Cazaly said. The land appeared to have been "warehoused' by the Rio joint venture for the past 35 years, it said.
"Should Cazaly be successful in gaining exploration and development rights, Fortescue will provide development, marketing and financial assistance towards the ultimate sale of any mined iron ore from the project area,'' Perth-based Fortescue said today in a separate statement.
Source: Sydney Morning Herald
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