China's steel companies are refusing to accept the iron ore price cut reached between Rio Tinto and Japan's Nippon Steel Corp., the China Iron and Steel Association (CISA) said Sunday.
The price cut failed to reflect the real supply and demand situation on the international market and would lead to overall losses for Chinese steel companies, the CISA said in a statement on its website.
Anglo-Australian iron ore giant Rio Tinto on Tuesday announced it had agreed a price cut of between 33 percent and 44 percent with the Nippon Steel.
"This does not represent the mutually-beneficial relationship between steel producers and iron ore suppliers," said the CISA statement. "Chinese steel companies will not accept or follow the price cut."
The CISA has insisted that the iron ore price should fall back to 2007 levels, which meant a price cut of more than 40 percent in the annual contracts of iron ore.
CISA officials were not available for comment on Sunday.
Source: Xinhua
Sunday, May 31, 2009
Mount Gibson Passes On Iron Ore Benchmark
Mount Gibson Iron has passed on to its Chinese customers the new iron ore benchmark prices set by Rio Tinto and Japan's Nippon Steel, fuelling the fight against China's push for a deeper discount.
The Perth-based iron ore miner, which had to look to China to bail it out as it struggled through the downturn, said yesterday it had advised its customers that its long-term contract prices would be in line with the prices set by Rio and Nippon this week. China has fought hard for a significant drop in iron ore prices, seeking a decrease of up to 50 per cent, and is expected to continue pushing for a better deal than Japan, which settled on a cut between 33 and 44 per cent.
Mount Gibson managing director Luke Tonkin said most of the major steel mills would probably accept the new benchmark, as they needed the security of long-term, high-quality supply.
"We have had interim prices in place since April 1. Those prices were reflective of where we thought the prices would end up in this contract year, and they were close to where the prices have been settled," he said.
He said Mount Gibson's customers had accepted the interim prices.
Rio's new agreements for its Hamersley products with Nippon Steel and South Korea's Posco will see the price for fines decline -- for the first time in seven years -- by about 33 per cent to $US62 a tonne, and the price for lump fall 44 per cent to around $US71 a tonne.
The mining major's much anticipated iron ore settlement came as its chairman, Jan du Plessis, began a series of investor meetings in Australia to discuss the contentious Chinalco deal.
Mr du Plessis continues his discussions next week when he heads to Sydney. Yesterday he met the Australian Shareholders Association, which earlier this month publicly objected to the $US19.5 billion ($24.6 billion) Chinalco rescue deal.
ASA member Duncan Seddon, who met with Mr du Plessis, described the talk as a "meet and greet" and said no potential alternatives to the deal were offered by Rio.
"We, like everybody, know the deal will be changed," Mr Seddon said after the meeting.
The statement is consistent with other reports of Mr du Plessis' investor meetings, where he has listened to concerns but remained supportive of the Chinalco deal.
Rio's board is expected to have an online meeting next week.
While the market awaits changes to the Chinalco deal, the heat is on China. Analysts believe China will eventually accept similar prices to Japan's, but the economic powerhouse is still confident it has greater bargaining power than Japan and can secure a better deal.
In a report on Rio yesterday, Credit Suisse said it expected the Chinese to settle in the next few weeks in line with or slightly below the prices agreed to with the Japanese.
Mount Gibson's customers include China's Shougang Concord International and APAC Resources, which took a stake of up to 40 per cent in the miner, after some of its customers defaulted on iron ore shipments last October.
Mr Tonkin said the company was contractually obliged to set its contracts on the prices set by Rio for its Hamersley products.
China's opposition to the new benchmark could drive more supply into the spot market, but most producers think the steel mills would not want that to happen. The spot price is now around $US67.50.
"Once there is competition for supply of quality material, it drives the spot price up. I don't think anyone wants to see that in the market," Mr Tonkin said.
Source: The Australian
The Perth-based iron ore miner, which had to look to China to bail it out as it struggled through the downturn, said yesterday it had advised its customers that its long-term contract prices would be in line with the prices set by Rio and Nippon this week. China has fought hard for a significant drop in iron ore prices, seeking a decrease of up to 50 per cent, and is expected to continue pushing for a better deal than Japan, which settled on a cut between 33 and 44 per cent.
Mount Gibson managing director Luke Tonkin said most of the major steel mills would probably accept the new benchmark, as they needed the security of long-term, high-quality supply.
"We have had interim prices in place since April 1. Those prices were reflective of where we thought the prices would end up in this contract year, and they were close to where the prices have been settled," he said.
He said Mount Gibson's customers had accepted the interim prices.
Rio's new agreements for its Hamersley products with Nippon Steel and South Korea's Posco will see the price for fines decline -- for the first time in seven years -- by about 33 per cent to $US62 a tonne, and the price for lump fall 44 per cent to around $US71 a tonne.
The mining major's much anticipated iron ore settlement came as its chairman, Jan du Plessis, began a series of investor meetings in Australia to discuss the contentious Chinalco deal.
Mr du Plessis continues his discussions next week when he heads to Sydney. Yesterday he met the Australian Shareholders Association, which earlier this month publicly objected to the $US19.5 billion ($24.6 billion) Chinalco rescue deal.
ASA member Duncan Seddon, who met with Mr du Plessis, described the talk as a "meet and greet" and said no potential alternatives to the deal were offered by Rio.
"We, like everybody, know the deal will be changed," Mr Seddon said after the meeting.
The statement is consistent with other reports of Mr du Plessis' investor meetings, where he has listened to concerns but remained supportive of the Chinalco deal.
Rio's board is expected to have an online meeting next week.
While the market awaits changes to the Chinalco deal, the heat is on China. Analysts believe China will eventually accept similar prices to Japan's, but the economic powerhouse is still confident it has greater bargaining power than Japan and can secure a better deal.
In a report on Rio yesterday, Credit Suisse said it expected the Chinese to settle in the next few weeks in line with or slightly below the prices agreed to with the Japanese.
Mount Gibson's customers include China's Shougang Concord International and APAC Resources, which took a stake of up to 40 per cent in the miner, after some of its customers defaulted on iron ore shipments last October.
Mr Tonkin said the company was contractually obliged to set its contracts on the prices set by Rio for its Hamersley products.
China's opposition to the new benchmark could drive more supply into the spot market, but most producers think the steel mills would not want that to happen. The spot price is now around $US67.50.
"Once there is competition for supply of quality material, it drives the spot price up. I don't think anyone wants to see that in the market," Mr Tonkin said.
Source: The Australian
Indian Mineral Royalty Likely To Be Revised Upwards
The government may soon increase the royalty rates on extraction of minerals like copper, iron ore and zinc to enrich the exchequers of states possessing these resources.
A Committee of Secretaries is scheduled to meet in the first week of June to finalise the new royalty rates after which the matter would be placed before the Cabinet for final approval, a top government official told PTI.
Mines Minister Bijoy Krishna Handique, who took charge of the ministry yesterday, has said the revision of royalty rates is on his top priority list.
The royalty rates on minerals are normally revised every three years. Last assessment was done in 2004 so the new revision is due since 2007.
The ministry has been working on the proposed changes in royalty for the last two years. However, the quantum of the proposed hike could not yet be ascertained.
Mineral-rich states like Jharkhand and Chhattisgarh earn in the range of Rs 1,500-4,000 crore per annum from royalties.
Even as state governments see their cash reserves inflating by the Centre's move, miners like Vedanta and NMDC, which have been hit by the global economic crisis, feel it would aggravate things for them as they would have to shell out more money.
Royalty on minerals are calculated on the mineral content in ore extracted. As per the last assessed rates, on iron ore lumps a mining firm pays up to Rs 27 per tonne as royalty. On iron ore fines it shells out up to Rs 19 a tonne.
On copper, the royalty rates stand at 3.2 per cent of the prevailing London Metal Exchange prices (LME) while on zinc and lead it is 6.6 per cent and 5 per cent respectively.
An industry observer said, "The state governments have seen a decline in their royalty collection as LME rates of all the minerals crashed by up to 70 per cent on account of waning demand amid the global economic crisis. The move may help them to bridge the deficit," an industry observer said.
Source: The Hindu
A Committee of Secretaries is scheduled to meet in the first week of June to finalise the new royalty rates after which the matter would be placed before the Cabinet for final approval, a top government official told PTI.
Mines Minister Bijoy Krishna Handique, who took charge of the ministry yesterday, has said the revision of royalty rates is on his top priority list.
The royalty rates on minerals are normally revised every three years. Last assessment was done in 2004 so the new revision is due since 2007.
The ministry has been working on the proposed changes in royalty for the last two years. However, the quantum of the proposed hike could not yet be ascertained.
Mineral-rich states like Jharkhand and Chhattisgarh earn in the range of Rs 1,500-4,000 crore per annum from royalties.
Even as state governments see their cash reserves inflating by the Centre's move, miners like Vedanta and NMDC, which have been hit by the global economic crisis, feel it would aggravate things for them as they would have to shell out more money.
Royalty on minerals are calculated on the mineral content in ore extracted. As per the last assessed rates, on iron ore lumps a mining firm pays up to Rs 27 per tonne as royalty. On iron ore fines it shells out up to Rs 19 a tonne.
On copper, the royalty rates stand at 3.2 per cent of the prevailing London Metal Exchange prices (LME) while on zinc and lead it is 6.6 per cent and 5 per cent respectively.
An industry observer said, "The state governments have seen a decline in their royalty collection as LME rates of all the minerals crashed by up to 70 per cent on account of waning demand amid the global economic crisis. The move may help them to bridge the deficit," an industry observer said.
Source: The Hindu
Jindal Granted Orissa Prospecting Licence
The government in the Indian state of Orissa has recommended the prospecting license for Horomoto iron ore mines in favor of Jindal Stainless Limited, which is setting up a 1.6 million tonnes per annum integrated stainless steel project at Kalinganagar in Jajpur district at an investment of more than INR 10,000 crore.
The recommendation has been sent to the Union ministry of mines along with comments from the publicly-owned Steel Authority of India Limited, which held the lease of the property before it was notified for the grant of a prospecting licence (PL) in 1991.
Though JSL had applied for a PL for 1052 hectares, the recommendation is for 892 hectares. The total area of the Horomoto iron ore mines is 1700 to 1800 hectares and out of it, 1000 hectares are known to have good reserves.
Meanwhile, JSL has spent about INR 4600 crore on its stainless steel plant at Kalinga Nagar and committed another INR 3500 crore of investment in the project. The work on the stainless steel melting shop, cold rolling mill, hot rolling mill are in progress and the project is scheduled to go on stream in mid 2010.
Source: Steel Guru/Business Standard
The recommendation has been sent to the Union ministry of mines along with comments from the publicly-owned Steel Authority of India Limited, which held the lease of the property before it was notified for the grant of a prospecting licence (PL) in 1991.
Though JSL had applied for a PL for 1052 hectares, the recommendation is for 892 hectares. The total area of the Horomoto iron ore mines is 1700 to 1800 hectares and out of it, 1000 hectares are known to have good reserves.
Meanwhile, JSL has spent about INR 4600 crore on its stainless steel plant at Kalinga Nagar and committed another INR 3500 crore of investment in the project. The work on the stainless steel melting shop, cold rolling mill, hot rolling mill are in progress and the project is scheduled to go on stream in mid 2010.
Source: Steel Guru/Business Standard
Saturday, May 30, 2009
SAIL Proftiable Despite Slowdown
Domestic steel demand helped Steel Authority of India Ltd to remain profitable, even as the global demand has slowed down significantly.
Most global steel makers have witnessed 20-40% drop in sales volume. In contrast, SAIL reported just over 5% drop in offtake at 3.6 million tonnes in the March ’09 quarter from the year-ago level. On back of the results, the stock closed 5.17% higher at Rs 172.85 on BSE.
However, higher input cost continue to haunt SAIL’s operating margin which contracted by around 700 basis points to 18%. SAIL is self-sufficient in iron ore but meets 70-80% of its coking coal requirements through imports.
The cost of coking coal is 80-100% higher than what it was a year ago. This reflects in 45% rise in raw material cost. Coal prices are expected to come down once the new coking coal contracts are signed some time next month.
The company tried to mitigate higher input cost through various measures. The higher operating efficiencies like lower coke rate and higher blast furnace productivity could save Rs750 crore. Employee cost, which accounts for 20-25% of operating expenses, more than halved during the March quarter.
This was on account of lower provisions under Sixth Pay Commission recommendation and reduction of over 7,500 in manpower. The management has hinted at lowering the head count by another 6,000-7,000 during the current fiscal.
Preservation of cash in terms of higher liquid investments yielded better results during such tough times. Its interest income for the quarter jumped almost 70%, in line with rise in liquid investments, to Rs 535 crore. The company had short-term investments of Rs 16,216 crore as on December 2008.
The company is going slow in its capital expenditure plan and has a target of Rs 10,000 crore for the fiscal year 2009-10. The management believes that in spite of good domestic growth, current year is going to be a challenging one.
Source: Economic Times
Most global steel makers have witnessed 20-40% drop in sales volume. In contrast, SAIL reported just over 5% drop in offtake at 3.6 million tonnes in the March ’09 quarter from the year-ago level. On back of the results, the stock closed 5.17% higher at Rs 172.85 on BSE.
However, higher input cost continue to haunt SAIL’s operating margin which contracted by around 700 basis points to 18%. SAIL is self-sufficient in iron ore but meets 70-80% of its coking coal requirements through imports.
The cost of coking coal is 80-100% higher than what it was a year ago. This reflects in 45% rise in raw material cost. Coal prices are expected to come down once the new coking coal contracts are signed some time next month.
The company tried to mitigate higher input cost through various measures. The higher operating efficiencies like lower coke rate and higher blast furnace productivity could save Rs750 crore. Employee cost, which accounts for 20-25% of operating expenses, more than halved during the March quarter.
This was on account of lower provisions under Sixth Pay Commission recommendation and reduction of over 7,500 in manpower. The management has hinted at lowering the head count by another 6,000-7,000 during the current fiscal.
Preservation of cash in terms of higher liquid investments yielded better results during such tough times. Its interest income for the quarter jumped almost 70%, in line with rise in liquid investments, to Rs 535 crore. The company had short-term investments of Rs 16,216 crore as on December 2008.
The company is going slow in its capital expenditure plan and has a target of Rs 10,000 crore for the fiscal year 2009-10. The management believes that in spite of good domestic growth, current year is going to be a challenging one.
Source: Economic Times
New Coal-Steel Company Aims For Competitive Edge
The Shanxi Coal-Steel Energy Development Company began operation recently in Taiyuan, the capital city of north China's Shanxi Province, a senior official with the Shanxi Coking Coal Group confirmed on Saturday.
The move is believed to be a significant measure for the province, which is located on China's major coal belt, to cope with the global economic downturn through deepening cooperation between coal and steel industries.
According to Bai Peizhong, chairman of the Shanxi Coking Coal Group, the new company has a registered capital of 500 million yuan (73.3 million U.S. dollars), with the coking coal supplier taking 60 percent of the stake and Taigang Group holding the remaining 40 percent.
The new energy company will engage in coal mining, dressing and marketing. It will ensure coal supplies for Taigang Group and share profits from coal mining with the steel maker, Bai said.
As China's largest coking firm, the Shanxi Coking Coal Group turns out 10 percent of the country's total product and supplies more than 20 percent of such materials needed by 18 big steel makers nationwide.
Taigang Group is a world leading stainless steel manufacturer in terms of production capacity and technologies.
Industry observers said the establishment of the new company would be conducive to sharpening competitive edge of both coal and steel producers.
Source: Xinhua
The move is believed to be a significant measure for the province, which is located on China's major coal belt, to cope with the global economic downturn through deepening cooperation between coal and steel industries.
According to Bai Peizhong, chairman of the Shanxi Coking Coal Group, the new company has a registered capital of 500 million yuan (73.3 million U.S. dollars), with the coking coal supplier taking 60 percent of the stake and Taigang Group holding the remaining 40 percent.
The new energy company will engage in coal mining, dressing and marketing. It will ensure coal supplies for Taigang Group and share profits from coal mining with the steel maker, Bai said.
As China's largest coking firm, the Shanxi Coking Coal Group turns out 10 percent of the country's total product and supplies more than 20 percent of such materials needed by 18 big steel makers nationwide.
Taigang Group is a world leading stainless steel manufacturer in terms of production capacity and technologies.
Industry observers said the establishment of the new company would be conducive to sharpening competitive edge of both coal and steel producers.
Source: Xinhua
Orissa Clears Iron Ore Benefication Projects
Orissa's State Level Single Window Clearance Authority (SLSWCA) headed by the chief secretary Ajit Kumar Tripathy today cleared five projects worth Rs 2807.7 crore
These include three iron ore beneficiation and pelletisation plant, one capacity expansion proposal of a cement plant and a ferro-chrome plant proposal of Visa Bao Ltd, a joint venture of Visa Steel and Bao Steel of China.
SLSWCA also recommended 6 other proposals to the high level clearance authority (HLCA) headed by the chief minister Naveen Patnaik while deferring decision on one captive power plant (CPP).
Briefing the media after the meeting, Askok Kumar Meena, managing director, Industrial Promotion and Investment Corporation of Orissa Ltd (Ipicol) said, out of the 12 proposals considered by SLSWCA, the proposal of Bhubneswar Power Private Ltd for setting up of a 2X67.5 Mw CPP was deferred. The energy department has been asked to consider the proposal from the policy point of view.
Two major investment proposals by Vedanta Aluminium Ltd (VAL) and Hindalco Industries were partially approved in today’s meeting due to non-availability of bauxite and pending the environmental carrying capacity study by the Orissa State Pollution Control Board.
VAL had proposed to expand the capacity of its refinery at Lanjigarh from one million tonne per annum (MTPA) to 6 MTPA and the smelter plant capacity from 0.25 MTPA to 1.6 MTPA. Besides, the capacity of the CPP was proposed to be raised from 674 Mw to 1350 Mw with a combined investment of Rs 37,440 crore.
The company had signed MoU with the Orissa government for the present capacity at an investment of Rs 12,400 crore. However, SLSWCA only recommended for a smelter capacity of 0.5 MTPA as the company had already achieved this level. It also approved the capacity expansion of the CPP to 1350 Mw as sought by the company. The additional smelting capacity will be considered only after ascertaining the availability of bauxite and receipt of the OSPCB study on environment. Similarly, Hindalco Industries Ltd (Aditya Aluminium) had proposed to expand its alumina refinery capacity to 1.5 MTPA from 1 MTPA at present.
Along with this, the company also sought expansion of its smelting capacity to 0.72 MTPA from 0.26 MTPA and increase in the CPP capacity to 1650Mw from 650 Mw.
SLSWCA has decided to recommend a marginal increase in the smelting capacity from 0.26 MTPA to 0.36 MTPA and CPP capacity from 650 Mw to 950 Mw to the HLCA.
It also put conditional approval to the proposal of the Tata Sponge Iron Ltd. to set up a 1.5 MTPA steel making capacity along with a 52 Mw CPP at an investment of Rs 3101 crore. While the existing sponge capacity of the company is 0.39 MTPA, it had sought to expand its capacity by 0.45 MTPA to 0.84 MTPA.
Similarly, the company proposed to set up one MTPA blast furnace and 1.6 MTPA pellet plant in a separate location in Keonjhar district. It will have to increase the steel making capacity first and after that the increase in the sponge making capacity will be allowed.
The other projects which were approved include 4 MTPA iron ore beneficiation plant at an investment of Rs 360.85 crore to be set up by Kolkata based Rashmi Metaliks at Nayagarh in Keonjhar district.
Similarly, the Rs 624.7 crore investment proposal of Rungta mines, Shyam Steel Industries proposal for setting up 2 MTPA iron ore pelletisation plant were cleared by the SLSWCA. Besides, the Toshali Cement’s proposal to expand its capacity to 2100 tonne per day from 600 tonne per day along with 3.96 lakh tonne per annum grinding unit at Choudwar was also approved.
The proposal of Orissa Thermal Power Corporation, a joint venture between Orissa Hydro Power Corporation (OHPC) and Orissa Mining Corporation (OMC) to set up 2000 MW power plant at Rengali at an investment of Rs 8250 crore also received the nod of the committee.
Jindal India Thermal Power’s proposal to increase the capacity from 1200 Mw to 1800 mw and Lanco Bhawan Power’s proposal to increase its capacity to 2640 Mw from 1230 Mw were approved for recommendation to the HLCA on the basis of strong recommendation of the energy department.
In another significant decision, SLSWCA decided not to allow any more cement plant in the state except Malkangiri district as the state does not have sufficient amount of limestone.
Source: Business Standard
These include three iron ore beneficiation and pelletisation plant, one capacity expansion proposal of a cement plant and a ferro-chrome plant proposal of Visa Bao Ltd, a joint venture of Visa Steel and Bao Steel of China.
SLSWCA also recommended 6 other proposals to the high level clearance authority (HLCA) headed by the chief minister Naveen Patnaik while deferring decision on one captive power plant (CPP).
Briefing the media after the meeting, Askok Kumar Meena, managing director, Industrial Promotion and Investment Corporation of Orissa Ltd (Ipicol) said, out of the 12 proposals considered by SLSWCA, the proposal of Bhubneswar Power Private Ltd for setting up of a 2X67.5 Mw CPP was deferred. The energy department has been asked to consider the proposal from the policy point of view.
Two major investment proposals by Vedanta Aluminium Ltd (VAL) and Hindalco Industries were partially approved in today’s meeting due to non-availability of bauxite and pending the environmental carrying capacity study by the Orissa State Pollution Control Board.
VAL had proposed to expand the capacity of its refinery at Lanjigarh from one million tonne per annum (MTPA) to 6 MTPA and the smelter plant capacity from 0.25 MTPA to 1.6 MTPA. Besides, the capacity of the CPP was proposed to be raised from 674 Mw to 1350 Mw with a combined investment of Rs 37,440 crore.
The company had signed MoU with the Orissa government for the present capacity at an investment of Rs 12,400 crore. However, SLSWCA only recommended for a smelter capacity of 0.5 MTPA as the company had already achieved this level. It also approved the capacity expansion of the CPP to 1350 Mw as sought by the company. The additional smelting capacity will be considered only after ascertaining the availability of bauxite and receipt of the OSPCB study on environment. Similarly, Hindalco Industries Ltd (Aditya Aluminium) had proposed to expand its alumina refinery capacity to 1.5 MTPA from 1 MTPA at present.
Along with this, the company also sought expansion of its smelting capacity to 0.72 MTPA from 0.26 MTPA and increase in the CPP capacity to 1650Mw from 650 Mw.
SLSWCA has decided to recommend a marginal increase in the smelting capacity from 0.26 MTPA to 0.36 MTPA and CPP capacity from 650 Mw to 950 Mw to the HLCA.
It also put conditional approval to the proposal of the Tata Sponge Iron Ltd. to set up a 1.5 MTPA steel making capacity along with a 52 Mw CPP at an investment of Rs 3101 crore. While the existing sponge capacity of the company is 0.39 MTPA, it had sought to expand its capacity by 0.45 MTPA to 0.84 MTPA.
Similarly, the company proposed to set up one MTPA blast furnace and 1.6 MTPA pellet plant in a separate location in Keonjhar district. It will have to increase the steel making capacity first and after that the increase in the sponge making capacity will be allowed.
The other projects which were approved include 4 MTPA iron ore beneficiation plant at an investment of Rs 360.85 crore to be set up by Kolkata based Rashmi Metaliks at Nayagarh in Keonjhar district.
Similarly, the Rs 624.7 crore investment proposal of Rungta mines, Shyam Steel Industries proposal for setting up 2 MTPA iron ore pelletisation plant were cleared by the SLSWCA. Besides, the Toshali Cement’s proposal to expand its capacity to 2100 tonne per day from 600 tonne per day along with 3.96 lakh tonne per annum grinding unit at Choudwar was also approved.
The proposal of Orissa Thermal Power Corporation, a joint venture between Orissa Hydro Power Corporation (OHPC) and Orissa Mining Corporation (OMC) to set up 2000 MW power plant at Rengali at an investment of Rs 8250 crore also received the nod of the committee.
Jindal India Thermal Power’s proposal to increase the capacity from 1200 Mw to 1800 mw and Lanco Bhawan Power’s proposal to increase its capacity to 2640 Mw from 1230 Mw were approved for recommendation to the HLCA on the basis of strong recommendation of the energy department.
In another significant decision, SLSWCA decided not to allow any more cement plant in the state except Malkangiri district as the state does not have sufficient amount of limestone.
Source: Business Standard
India Favours Steps To Curb Steel Imports
India's new Minister of Steel, Mr Virbhadra Singh, sympathised with the demand of the steel producers for fiscal measures to curb the threat of cheap steel imports.
Steel producers have been asking for an increase in import duty to 15-20 per cent or a safeguard duty of about 25 per cent. With the slowdown in the US and European markets, CIS, Russian and Chinese steel makers have turned their attention to India, where growth is still positive.
In November, the Government re-imposed a five per cent import duty on steel and brought hot rolled steel under the restricted list of imports. Steel producers, though, complained that actual import of the metal continues unabated.
The decision to impose a safeguard duty was deferred earlier this month by the Board of Approval, chaired by the Commerce Secretary, till the board had received the user industry’s views. Compared with the Indian steel prices of Rs 26,000-27,000 a tonne, steel is being imported at landed cost of about $430 (Rs 20,200). Input cost is yet to come down for steel producers tied in long-term contracts with their raw material providers.
The Minister said he intended to set up appropriate empowered mechanisms for hastening investment proposals. Currently, 222 memorandum of understanding, amounting to Rs 11 lakh crore, have been signed between various investors and State Governments.
He would also take up the issue of supporting infrastructure, whether its port facilities, railway and road access or power, that the ongoing capacity expansion of PSUs will require.
The timely completion of Steel Authority of India Ltd’s and Rashtriya Ispat Nigam Ltd’s expansion projects, together totalling investments of Rs 70,000 crore, and NMDC’s plans for an integrated steel plant in Chhattisgarh would be a priority, said Mr Singh.
On his first day at his new office, the Minister also requested the Ministry of Mines to undertake consequential amendments to the Mines and Minerals Policy to facilitate allocation of mines. He also pointed out that half of the country’s annual production of iron ore was being exported, and stressed on the need for cautious utilisation.
Source: The Hindu
Steel producers have been asking for an increase in import duty to 15-20 per cent or a safeguard duty of about 25 per cent. With the slowdown in the US and European markets, CIS, Russian and Chinese steel makers have turned their attention to India, where growth is still positive.
In November, the Government re-imposed a five per cent import duty on steel and brought hot rolled steel under the restricted list of imports. Steel producers, though, complained that actual import of the metal continues unabated.
The decision to impose a safeguard duty was deferred earlier this month by the Board of Approval, chaired by the Commerce Secretary, till the board had received the user industry’s views. Compared with the Indian steel prices of Rs 26,000-27,000 a tonne, steel is being imported at landed cost of about $430 (Rs 20,200). Input cost is yet to come down for steel producers tied in long-term contracts with their raw material providers.
The Minister said he intended to set up appropriate empowered mechanisms for hastening investment proposals. Currently, 222 memorandum of understanding, amounting to Rs 11 lakh crore, have been signed between various investors and State Governments.
He would also take up the issue of supporting infrastructure, whether its port facilities, railway and road access or power, that the ongoing capacity expansion of PSUs will require.
The timely completion of Steel Authority of India Ltd’s and Rashtriya Ispat Nigam Ltd’s expansion projects, together totalling investments of Rs 70,000 crore, and NMDC’s plans for an integrated steel plant in Chhattisgarh would be a priority, said Mr Singh.
On his first day at his new office, the Minister also requested the Ministry of Mines to undertake consequential amendments to the Mines and Minerals Policy to facilitate allocation of mines. He also pointed out that half of the country’s annual production of iron ore was being exported, and stressed on the need for cautious utilisation.
Source: The Hindu
New Way To Market Iron Ore
A new way to market iron ore is underway in the Northland.
5,000 tons of low grade iron ore from United Taconite is on its way to Chicago. Instead of heading for the steel mills, it will be used in road construction.
"It's a new beginning for us, in terms of marketing iron ore. We're always looking for ways to stabilize our taconite industry, with value added products or byproducts, like this road aggregate," said Don Fosnacht, Director of the Natural Resources Research Institute run by UMD.
Researchers have tested and proved that waste rock from the mining industry can be used successfully in different highway projects. This has been done locally. Now it's being marketed and sold to places like Chicago.
The rock was loaded at Hallett Dock on Thursday afternoon. It's being brought down on the vintage barge the Pere Marquette, with the help of the tug Undaunted.
Officials say this type of rock has been shipped before, but never for the road project purpose. The hope is more shipments happen in the future.
Source: WDIO-TV
5,000 tons of low grade iron ore from United Taconite is on its way to Chicago. Instead of heading for the steel mills, it will be used in road construction.
"It's a new beginning for us, in terms of marketing iron ore. We're always looking for ways to stabilize our taconite industry, with value added products or byproducts, like this road aggregate," said Don Fosnacht, Director of the Natural Resources Research Institute run by UMD.
Researchers have tested and proved that waste rock from the mining industry can be used successfully in different highway projects. This has been done locally. Now it's being marketed and sold to places like Chicago.
The rock was loaded at Hallett Dock on Thursday afternoon. It's being brought down on the vintage barge the Pere Marquette, with the help of the tug Undaunted.
Officials say this type of rock has been shipped before, but never for the road project purpose. The hope is more shipments happen in the future.
Source: WDIO-TV
Friday, May 29, 2009
$3Bn Nickel Project Planned For Mindanao
Jspan's Sumitomo Metal Mining Co. Ltd. and local holding firm Nickel Asia Corp. will put up a $3-billion nickel ore processing plant in northeastern Mindanao next year.
The joint venture partners will operate the nickel processing plant by 2013, Rogelio G. Cadano, technical services manager of Taganito Mining Corp., said yesterday in a presentation to Mines and Geosciences Bureau officials.
The $1.7-billion investment target set by the venture last year was almost doubled to $3 billion this year given an increase in expected mineral production to 45,000 metric tons of nickel per year, with 4,500 metric tons of cobalt, from the original 30,000 metric tons per year.
The ores to be processed will come from a 1,000-hectare nickel mine in the municipality of Claver in Surigao del Norte, Mr. Cadano said.
"The joint venture company with Sumitomo should be formed by the end of this year or early next year," said Antonio K. Espeleta, vice-president for operation of Taganito HPAL Nickel Corp.
Taganito Mining is a subsidiary of Nickel Asia. Sumitomo subsidiary Taganito HPAL will operate the $3-billion project.
Nickel Asia operates nickel mines Rio Tuba, Taganito in Surigao del Norte, Taganaan in Surigao City, and South Dinagat and Cagdianao in northern Mindanao.
"The Sumitomo group is preparing the feasibility study but there was a re-scheduling so it will be completed late this year or early next year," Mr. Cadano told reporters.
The Sumitomo-led venture will employ 4,000 workers during the development phase.
The number of workers, however, will go down to 1,300 during the 30-year operation to extract 150 million wet metric tons of nickel ore. Annual mining operation is estimated to cost $200 million.
The ores will be shipped exclusively to Sumitomo’s refinery in Japan, Mr. Espeleta said.
"By that time [of the operation], prices of nickel might have already increased," Mines bureau Director Horacio C. Ramos said
Source: Business World, Philippines
The joint venture partners will operate the nickel processing plant by 2013, Rogelio G. Cadano, technical services manager of Taganito Mining Corp., said yesterday in a presentation to Mines and Geosciences Bureau officials.
The $1.7-billion investment target set by the venture last year was almost doubled to $3 billion this year given an increase in expected mineral production to 45,000 metric tons of nickel per year, with 4,500 metric tons of cobalt, from the original 30,000 metric tons per year.
The ores to be processed will come from a 1,000-hectare nickel mine in the municipality of Claver in Surigao del Norte, Mr. Cadano said.
"The joint venture company with Sumitomo should be formed by the end of this year or early next year," said Antonio K. Espeleta, vice-president for operation of Taganito HPAL Nickel Corp.
Taganito Mining is a subsidiary of Nickel Asia. Sumitomo subsidiary Taganito HPAL will operate the $3-billion project.
Nickel Asia operates nickel mines Rio Tuba, Taganito in Surigao del Norte, Taganaan in Surigao City, and South Dinagat and Cagdianao in northern Mindanao.
"The Sumitomo group is preparing the feasibility study but there was a re-scheduling so it will be completed late this year or early next year," Mr. Cadano told reporters.
The Sumitomo-led venture will employ 4,000 workers during the development phase.
The number of workers, however, will go down to 1,300 during the 30-year operation to extract 150 million wet metric tons of nickel ore. Annual mining operation is estimated to cost $200 million.
The ores will be shipped exclusively to Sumitomo’s refinery in Japan, Mr. Espeleta said.
"By that time [of the operation], prices of nickel might have already increased," Mines bureau Director Horacio C. Ramos said
Source: Business World, Philippines
Assmang To Lay Off 261 At Ferromanganese Operation
Assmang, a subsidiary of diversified mining house African Rainbow Minerals, plans to retrench 20 percent of the workers at its Black Rock mine, the Solidarity union said yesterday.
Two hundred and sixty-one workers at the ferromanganese operation would be affected by the layoffs. "The group blames the planned retrenchments on the effect of the sudden economic downturn, unstable market conditions, a decrease in demand for their product as well as the strengthening of the rand," the union said.
Sources: Business Report, South Africa/Reuters
Two hundred and sixty-one workers at the ferromanganese operation would be affected by the layoffs. "The group blames the planned retrenchments on the effect of the sudden economic downturn, unstable market conditions, a decrease in demand for their product as well as the strengthening of the rand," the union said.
Sources: Business Report, South Africa/Reuters
Heron To Develop Nickel-Cobalt Project With Chinese Partner
Heron Resources and China's Ningbo Shanshan will jointly develop Heron's Yerilla nickel-cobalt project.
Shanshan will undertake a feasibility study into treating ore from Yerilla using Shanshan technology, to produce a nickel and cobalt concentrate for further processing in China.
As part of the transaction Shanshan would also become a significant shareholder in Heron holding up to 14.99 per cent of the company.
A bulk sample of Yerilla ore has been shipped to test compatibility of the ore with Shanshan’s processing technology.
In case of a positive feasibility outcome, Shanshan may earn a 70 per cent interest in the Yerilla project, in Western Australia, by funding construction and commissioning.
The agreement is subject to Chinese and Australian regulatory approvals, Heron said in a statement today.
Source: The Australian/Dow Jones
Shanshan will undertake a feasibility study into treating ore from Yerilla using Shanshan technology, to produce a nickel and cobalt concentrate for further processing in China.
As part of the transaction Shanshan would also become a significant shareholder in Heron holding up to 14.99 per cent of the company.
A bulk sample of Yerilla ore has been shipped to test compatibility of the ore with Shanshan’s processing technology.
In case of a positive feasibility outcome, Shanshan may earn a 70 per cent interest in the Yerilla project, in Western Australia, by funding construction and commissioning.
The agreement is subject to Chinese and Australian regulatory approvals, Heron said in a statement today.
Source: The Australian/Dow Jones
India Looks Overseas For Coal
Faced with shortages of domestically produced coal, Indian coal producers are looking to buy stakes in overseas miners. India’s state-owned and private coal miners are looking at operations in the US, Canada, Russia, Australia, Indonesia, Kazakhstan and Mozambique.
India’s electric power sector is the main consumer of coal – nearly 70 percent of the country’s electricity is generated from over 80 coal-fired thermal plants.
And with the Indian government’s plans to provide electricity to all of its residents by 2012, the country will need an additional 68.5 gigawatts of baseload power generation capacity, and nearly all of that will be met with coal.
India’s demand for coal is expected to nearly double over the next two decades, rising from 390 million tons in 2002 to some 760 Mt by 2030. By that date, only China's demand for coal is expected to exceed that of India's.
India’s domestic coal production has increased from nearly 300 Mt in 1997 to nearly 400 Mt in 2005. At the same time, consumption has risen from over 300 Mt in 1997 to over 430 Mt in 2005. The soaring demand has led India to import coal from abroad. From January to March, India imported some 3.7 Mt of South Africa's 15 Mt of thermal coal exports.
State-run trading firm Minerals and Metals Trading Corp will import 12.5 Mt of coal this fiscal year for the country’s largest power producer, National Thermal Power Corp (NTPC). NTPC recently set up a subsidiary similar to ONGC Videsh Ltd, the overseas unit of explorer Oil and Natural Gas Corp. Ltd, to look for opportunities, primarily coal prospects, abroad. The company has announced the formation of International Coal Ventures Pvt. Ltd (ICVL) for the purpose in association with Steel Authority of India (SAIL), Coal India Ltd. (CIL), Rashtriya Ispat Nigam Ltd. and National Mineral Development Corporation (NMDC).
NTPC has been looking for sometime to set up a structured approach to its overseas efforts. It is estimated that ICVL will negotiate investments to the tune of $2 billion. Coal is the prime resource that ICVL will target. NTPC has plans to augment its power generation by an additional 22 GW and achieve the target of 50 GW by 2012. NTPC’s projects include 15 GW of coal-fired generation and over 4.5 GW of natural-gas fired power.
NTPC is the second state-owned firm in the power sector, after Power Grid Corp. of India Ltd to look at the option of an overseas subsidiary. The company has tried to source natural gas from Nigeria; it has been interested in power projects in Kazakhstan, as well as in America, Europe, Bangladesh Mozambique and Indonesia.
Meanwhile, government-owned CIL has garnered two exploratory coal mining blocks (A1 and A2) in Mozambique. The A1 may hold 1 billion ton of coal reserves. The prospects of investment are $150-200 million and production will yield assets for 5 years.
New Delhi is also negotiating deals along with NMDC. NMDC’s chairman and managing director, Rana Som, said the company received offers from coal mines in South Africa and Siera Leone.
Meanwhile, Indian manufacturer JSW Steel Ltd is hoping to buy coking coal assets in Australia. The company’s vice-chairman and managing director, Sajjan Jindal, recently said that “prices of coking coal assets have come down significantly and this is the right time to expand.” JSW is also in the end stages of acquisition of a sub-Saharan African thermal coal mine, which has an estimated 200 Mt of reserves and will require up to $100 million of investment. Furthermore, JSW has obtained a mining stake in Chile to exploit magnetite iron ore deposits.
Another Indian firm, Oswal Chemicals and Fertilizers, has initiated talks with three separate Indonesian coal firms to acquire thermal coal reserves for captive and commercial use. The company has already been offered six thermal coal mines in Indonesia with reserves ranging from 25-260 Mt. The intent is to own three mines with reserves of over 100 Mt.
Source: Energy Tribune
India’s electric power sector is the main consumer of coal – nearly 70 percent of the country’s electricity is generated from over 80 coal-fired thermal plants.
And with the Indian government’s plans to provide electricity to all of its residents by 2012, the country will need an additional 68.5 gigawatts of baseload power generation capacity, and nearly all of that will be met with coal.
India’s demand for coal is expected to nearly double over the next two decades, rising from 390 million tons in 2002 to some 760 Mt by 2030. By that date, only China's demand for coal is expected to exceed that of India's.
India’s domestic coal production has increased from nearly 300 Mt in 1997 to nearly 400 Mt in 2005. At the same time, consumption has risen from over 300 Mt in 1997 to over 430 Mt in 2005. The soaring demand has led India to import coal from abroad. From January to March, India imported some 3.7 Mt of South Africa's 15 Mt of thermal coal exports.
State-run trading firm Minerals and Metals Trading Corp will import 12.5 Mt of coal this fiscal year for the country’s largest power producer, National Thermal Power Corp (NTPC). NTPC recently set up a subsidiary similar to ONGC Videsh Ltd, the overseas unit of explorer Oil and Natural Gas Corp. Ltd, to look for opportunities, primarily coal prospects, abroad. The company has announced the formation of International Coal Ventures Pvt. Ltd (ICVL) for the purpose in association with Steel Authority of India (SAIL), Coal India Ltd. (CIL), Rashtriya Ispat Nigam Ltd. and National Mineral Development Corporation (NMDC).
NTPC has been looking for sometime to set up a structured approach to its overseas efforts. It is estimated that ICVL will negotiate investments to the tune of $2 billion. Coal is the prime resource that ICVL will target. NTPC has plans to augment its power generation by an additional 22 GW and achieve the target of 50 GW by 2012. NTPC’s projects include 15 GW of coal-fired generation and over 4.5 GW of natural-gas fired power.
NTPC is the second state-owned firm in the power sector, after Power Grid Corp. of India Ltd to look at the option of an overseas subsidiary. The company has tried to source natural gas from Nigeria; it has been interested in power projects in Kazakhstan, as well as in America, Europe, Bangladesh Mozambique and Indonesia.
Meanwhile, government-owned CIL has garnered two exploratory coal mining blocks (A1 and A2) in Mozambique. The A1 may hold 1 billion ton of coal reserves. The prospects of investment are $150-200 million and production will yield assets for 5 years.
New Delhi is also negotiating deals along with NMDC. NMDC’s chairman and managing director, Rana Som, said the company received offers from coal mines in South Africa and Siera Leone.
Meanwhile, Indian manufacturer JSW Steel Ltd is hoping to buy coking coal assets in Australia. The company’s vice-chairman and managing director, Sajjan Jindal, recently said that “prices of coking coal assets have come down significantly and this is the right time to expand.” JSW is also in the end stages of acquisition of a sub-Saharan African thermal coal mine, which has an estimated 200 Mt of reserves and will require up to $100 million of investment. Furthermore, JSW has obtained a mining stake in Chile to exploit magnetite iron ore deposits.
Another Indian firm, Oswal Chemicals and Fertilizers, has initiated talks with three separate Indonesian coal firms to acquire thermal coal reserves for captive and commercial use. The company has already been offered six thermal coal mines in Indonesia with reserves ranging from 25-260 Mt. The intent is to own three mines with reserves of over 100 Mt.
Source: Energy Tribune
BC To Ship Iron Ore Over Fortescue Railways
Australia's Pilbara iron ore minnow BC Iron Ltd says it has struck a deal with the Fortescue Metals Group to ship ore to port over Fortescue's railways. BC said on Thursday that the in-principle agreement related to its Nullagine Iron Ore Project.
The agreement provides for an initial three million tonnes per year, rising to five million tonnes when port and rail facilities are expanded.
BC Iron managing director Mike Young said that whilst final details were being worked out, the deal would overcome the critical barriers to production caused by lack of open access to rail and port facilities.
Source: Trading Markets
The agreement provides for an initial three million tonnes per year, rising to five million tonnes when port and rail facilities are expanded.
BC Iron managing director Mike Young said that whilst final details were being worked out, the deal would overcome the critical barriers to production caused by lack of open access to rail and port facilities.
Source: Trading Markets
Bukit Asam Looking At 20 Per Cent Revenue Growth This Year
Indonesian state coal miner PT Tambang Batubara Bukit Asam expects a 20 percent rise in revenue this year on the back of higher prices and sales volumes, the firm's president director Sukrisno said on Thursday.
Bukit Asam reported revenue of 7.216 trillion rupiah ($698 million) in 2008, up from 4.12 trillion rupiah in 2007. In the first three months of this year, the firm booked revenue of 2.33 trillion rupiah.
The company has said it aims to boost sales by 13 percent to 14.5 million tonnes in 2009.
"Coal prices fell from a record high, but prices early this year were much better than the same period in 2008," Sukrisno told reporters.
"Sales volume will also increase which would help revenue to grow by 20 percent in 2009," he said.
Coal prices have fallen from a record peak of $201 a tonne hit in July last year.
Thermal coal prices at the globalCOAL Newcastle weekly index stood at $66.31 a tonne late on Wednesday.
The company will also increase its coal transportation by train to 11.6 million tonnes this year, from 10.3 million tonnes by adding more trains, Sukrisno said, adding that this would help to increase sales.
The company -- Indonesia's second-largest listed coal miner by market value -- has said it planned to increase coal production to 50 million tonnes a year within five to six years thanks to several projects including railway expansion and coal mine acquisitions.
It has already said it would form a joint venture with state train operator PT Kereta Api Indonesia to upgrade existing rail links from its coal mines to a port on the southern tip of Sumatra. The South Sumatra provincial governor also plans a new rail project estimated to be worth $1 billion.
Once the new provincial rail link is completed, Bukit Asam will be able to deliver 20 million tonnes of coal a year to a port on the southeast side of Sumatra.
South Sumatra, where Bukit Asam's coal mines are located, has 47 billion tonnes of coal reserves, or half of Indonesia's total of 93.4 billion tonnes, data from the energy and mines ministry shows.
But the province's coal production averages just 12 million tonnes a year due to poor transportation. Kalimantan island accounts for most of the coal produced in Indonesia.
Source: Reuters
Bukit Asam reported revenue of 7.216 trillion rupiah ($698 million) in 2008, up from 4.12 trillion rupiah in 2007. In the first three months of this year, the firm booked revenue of 2.33 trillion rupiah.
The company has said it aims to boost sales by 13 percent to 14.5 million tonnes in 2009.
"Coal prices fell from a record high, but prices early this year were much better than the same period in 2008," Sukrisno told reporters.
"Sales volume will also increase which would help revenue to grow by 20 percent in 2009," he said.
Coal prices have fallen from a record peak of $201 a tonne hit in July last year.
Thermal coal prices at the globalCOAL Newcastle weekly index stood at $66.31 a tonne late on Wednesday.
The company will also increase its coal transportation by train to 11.6 million tonnes this year, from 10.3 million tonnes by adding more trains, Sukrisno said, adding that this would help to increase sales.
The company -- Indonesia's second-largest listed coal miner by market value -- has said it planned to increase coal production to 50 million tonnes a year within five to six years thanks to several projects including railway expansion and coal mine acquisitions.
It has already said it would form a joint venture with state train operator PT Kereta Api Indonesia to upgrade existing rail links from its coal mines to a port on the southern tip of Sumatra. The South Sumatra provincial governor also plans a new rail project estimated to be worth $1 billion.
Once the new provincial rail link is completed, Bukit Asam will be able to deliver 20 million tonnes of coal a year to a port on the southeast side of Sumatra.
South Sumatra, where Bukit Asam's coal mines are located, has 47 billion tonnes of coal reserves, or half of Indonesia's total of 93.4 billion tonnes, data from the energy and mines ministry shows.
But the province's coal production averages just 12 million tonnes a year due to poor transportation. Kalimantan island accounts for most of the coal produced in Indonesia.
Source: Reuters
Thursday, May 28, 2009
Nippon Steel Looks To Raise Production As Prices Edge Upwards
Chinese spot steel prices edged up this week for the fifth time in a row as traders continued restocking amid rising prospects of firmer prices after an iron ore deal struck by Asian mills and Rio Tinto as the result of protracted talks.
Prices of China's benchmark hot-rolled coil rose 0.6 percent to 3,465 yuan ($507.5) a tonne, versus 3,443 yuan quoted last week, gaining around 10 percent from a 5-month low hit in late April, data from Metal Bulletin showed.
"Steel inventories held by traders now appear to have returned to normal levels and restocking activity is propping up prices," said a Chinese steel trader.
Macquarie estimated that trader inventory of six major steel products in China had fallen by some 30 percent from a peak in October and November.
"One thing to note is that traders' inventories are declining or stable, despite recent price rises. This is different from January/February this year, when traders' speculative restocking was the sole driver of prices," Macquarie analyst Christina Lee said.
Demand is also held up by expectations that an agreement between miner Rio Tinto and Asian steelmills to cut iron ore prices by a third, less than Asian customers' demand for a reduction of at least 40 percent, may stop further price slides in steel, traders and analysts said.
"We see some potential for Asian HRC (hot-rolled coil) spot prices to rise from recent lows of $400 towards $470 by July, but this will trigger some blast furnaces to be brought back online around the region," CLSA analyst Goeff Boyd said.
Japan's Nippon Steel, the world's No.2 steelmaker, will reverse some of its production cuts as early as July on expectations of a recovery in demand from carmakers and others, the Nikkei business daily reported on Thursday, a move that may check the upside of any price recovery.
China, which has demanded a bigger price cut, has yet to agree on the benchmark deal, which Japanese and South Korean mills decided to accept, and miners and analysts say China may also accept the deal to avoid being exposed to a volatile spot market.
"We've never heard of any steel mill in China which has said they wouldn't prefer a benchmark, as the spot price is dangerously volatile," Andrew Forrest, the chief executive of Fortescue, Australia's third-largest iron ore miner, said on Thursday.
On the Shanghai Futures Exchange, construction steel futures traded almost unchanged from last week, with September rebar futures SRBU9 quoted at 3,618 yuan and September wire rod SWRU9 quoted at 3,512 yuan.
In South Korea, traders, who have delayed purchases to deplete stocks, also increased buying, encouraged by recent price reductions by POSCO and its smaller rival Dongkuk Steel in recent weeks.
"End-users' steel inventory remains quite low and traders are preparing for their return to the market and building up stocks," said a trader.
Source: Reuters
Prices of China's benchmark hot-rolled coil rose 0.6 percent to 3,465 yuan ($507.5) a tonne, versus 3,443 yuan quoted last week, gaining around 10 percent from a 5-month low hit in late April, data from Metal Bulletin showed.
"Steel inventories held by traders now appear to have returned to normal levels and restocking activity is propping up prices," said a Chinese steel trader.
Macquarie estimated that trader inventory of six major steel products in China had fallen by some 30 percent from a peak in October and November.
"One thing to note is that traders' inventories are declining or stable, despite recent price rises. This is different from January/February this year, when traders' speculative restocking was the sole driver of prices," Macquarie analyst Christina Lee said.
Demand is also held up by expectations that an agreement between miner Rio Tinto and Asian steelmills to cut iron ore prices by a third, less than Asian customers' demand for a reduction of at least 40 percent, may stop further price slides in steel, traders and analysts said.
"We see some potential for Asian HRC (hot-rolled coil) spot prices to rise from recent lows of $400 towards $470 by July, but this will trigger some blast furnaces to be brought back online around the region," CLSA analyst Goeff Boyd said.
Japan's Nippon Steel, the world's No.2 steelmaker, will reverse some of its production cuts as early as July on expectations of a recovery in demand from carmakers and others, the Nikkei business daily reported on Thursday, a move that may check the upside of any price recovery.
China, which has demanded a bigger price cut, has yet to agree on the benchmark deal, which Japanese and South Korean mills decided to accept, and miners and analysts say China may also accept the deal to avoid being exposed to a volatile spot market.
"We've never heard of any steel mill in China which has said they wouldn't prefer a benchmark, as the spot price is dangerously volatile," Andrew Forrest, the chief executive of Fortescue, Australia's third-largest iron ore miner, said on Thursday.
On the Shanghai Futures Exchange, construction steel futures traded almost unchanged from last week, with September rebar futures SRBU9 quoted at 3,618 yuan and September wire rod SWRU9 quoted at 3,512 yuan.
In South Korea, traders, who have delayed purchases to deplete stocks, also increased buying, encouraged by recent price reductions by POSCO and its smaller rival Dongkuk Steel in recent weeks.
"End-users' steel inventory remains quite low and traders are preparing for their return to the market and building up stocks," said a trader.
Source: Reuters
Global Steel Demand To Remain Substantially Weaker
Global steel demand is likely to be substantially weaker in 2009, affecting sales of Australian iron ore and coking coal, a new analysis shows.
The analysis by National Australia Bank paints a gloomy picture for Australian coal and iron ore exporters, adversely affected by the troubled United States economy.
"The World Steel Association forecasts global steel demand to fall by around 15 per cent in 2009 after declining 1.4 per cent over 2008," the NAB analysis said.
The findings come as Australia's largest coal and iron ore producers remain in negotiations with big steelmakers from Japan and China to determine 2009 contract prices.
The NAB report said steel use in the US is expected to fall by 36.6 per cent over 2009.
"The slump in the US and parts of emerging Asia will obviously have substantial implications for Chinese and Japanese exports," the report said.
"This suggests much of the outlook for global steel production growth and hence demand for Australia's coking coal and iron ore resources of the near-term is levered to the pace of a turnaround in the US economy."
Rio Tinto Ltd announced recently it had reached an agreement with Japan's Nippon Steel Corporation to sell iron ore at prices between 33 and 44 per cent lower in 2009.
China is pressing for larger cuts and there is a risk their iron ore imports may weaken this year because steel production is outpacing underlying demand, the report says.
The report said that even if Chinese steel production was curtailed in the short term, global output should increase robustly during 2011, leading to higher prices.
It said BHP Billiton had reached an agreement with Mitsubishi Corporation and Nippon Steel for a contract price of $US128 to $US129 per tonne for coking coal, a 57 per cent drop compared to last year.
The report also said the low prices for coking coal could lead to mines in the US and Canada cutting production, leading eventually to supply constraints.
"Over the next two to three years, we see coking coal prices gradually increasing from current levels as the global economy recovers, with upward price pressure in 2011-12," the report said.
For thermal coal the report said Xstrata had recently agreed to a contract price with Japan's Chubu Electric Power that led to a 44 per cent drop in the contract price.
According to the NAB report, slumping Japanese demand for thermal coal is likely to be exacerbated by a planned emissions trading scheme in that country.
Source: WA Today
The analysis by National Australia Bank paints a gloomy picture for Australian coal and iron ore exporters, adversely affected by the troubled United States economy.
"The World Steel Association forecasts global steel demand to fall by around 15 per cent in 2009 after declining 1.4 per cent over 2008," the NAB analysis said.
The findings come as Australia's largest coal and iron ore producers remain in negotiations with big steelmakers from Japan and China to determine 2009 contract prices.
The NAB report said steel use in the US is expected to fall by 36.6 per cent over 2009.
"The slump in the US and parts of emerging Asia will obviously have substantial implications for Chinese and Japanese exports," the report said.
"This suggests much of the outlook for global steel production growth and hence demand for Australia's coking coal and iron ore resources of the near-term is levered to the pace of a turnaround in the US economy."
Rio Tinto Ltd announced recently it had reached an agreement with Japan's Nippon Steel Corporation to sell iron ore at prices between 33 and 44 per cent lower in 2009.
China is pressing for larger cuts and there is a risk their iron ore imports may weaken this year because steel production is outpacing underlying demand, the report says.
The report said that even if Chinese steel production was curtailed in the short term, global output should increase robustly during 2011, leading to higher prices.
It said BHP Billiton had reached an agreement with Mitsubishi Corporation and Nippon Steel for a contract price of $US128 to $US129 per tonne for coking coal, a 57 per cent drop compared to last year.
The report also said the low prices for coking coal could lead to mines in the US and Canada cutting production, leading eventually to supply constraints.
"Over the next two to three years, we see coking coal prices gradually increasing from current levels as the global economy recovers, with upward price pressure in 2011-12," the report said.
For thermal coal the report said Xstrata had recently agreed to a contract price with Japan's Chubu Electric Power that led to a 44 per cent drop in the contract price.
According to the NAB report, slumping Japanese demand for thermal coal is likely to be exacerbated by a planned emissions trading scheme in that country.
Source: WA Today
China "May Have To Pay Spot Prices" - Forrest
Fortescue Metals Group Ltd chief Andrew Forrest says China may have to pay spot prices for iron ore if it doesn't accept the contract prices set with Japan as the new benchmark.
Mr Forrest said China's steel makers will either have to accept the new iron ore prices its rival miner Rio Tinto Ltd struck with Japan this week or choose the "dangerously volatile" spot price.
Major producers would not agree to a different benchmark price with China, he said.
Chinese steel makers are pushing for cheaper iron ore prices than the 33 per cent discount struck this week by Japanese and Korean steel mills with Rio Tinto.
"As a major importer of iron ore, which Japan has been - it founded the Pilbara and will always be a major importer of iron ore - if they have now set a price and it doesn't get followed, then that is fine," Mr Forrest told journalists in Sydney.
"But those that choose not to follow it have to have the alternative, which is the spot price."
Rio Tinto, the world's second-largest iron ore miner, on Tuesday agreed to new 2009 contract prices for fine and lump iron ore from its Hamersley Iron operation with Japan's biggest steel maker Nippon Steel Corporation.
It agreed to supply Nippon with fines at a 33 per cent discount to the 2008 contract price, and lump at a 44 per cent discount to last year's price.
But China's steelmakers are pushing for a price reduction of around 40-45 per cent and BT Investment Management resources analyst Tim Barker said this week they would probably hold out for the better deal.
"I don't think there will be a quick settlement with the Chinese," Mr Barker said.
Iron ore prices have dropped due to weak demand caused by the global economic slump.
South Korea's top steelmaker Posco said on Thursday it had negotiated a deal with Rio Tinto at the same prices set by Nippon.
Posco, the world's fourth largest steelmaker, said it would buy iron ore for $US58.2 ($A75.02) to $US68.9 ($A88.81) per tonne.
It remains in talks with other major iron ore suppliers, including BHP Billiton and Brazil's Vale, about prices for the current contract year.
Mr Forrest said the iron ore spot price was highly volatile.
"If they don't accept the Nippon/Rio new benchmark, they will consign themselves to the spot market and that certainly in the past has shown extreme upside volatility.
"I think the whole of the industry would prefer a benchmark.
"The spot price is dangerously volatile.
"Whichever way China goes will have very formative impact on the future of the global seaborne iron ore trade."
Mr Forrest said he was confident of China's recovery from the economic downturn and said Chinese demand for iron ore was strong.
"We think that China's recovery is absolutely certain."
Asked if production was tracking with guidance, Mr Forrest said the "trend was very healthy".
Mr Forrest was also asked if the sales guidance of 26 million tonnes for 2008/09 still stands.
"I think we will probably be upgrading that, but let me get back to you," Mr Forrest said.
Mr Forrest also said Fortescue was "absolutely serious" about listing on the Shanghai stock exchange.
The plan follows Chinese mill Hunan Valin Iron and Steel Group Company acquiring a 17 per cent stake in Fortescue last month.
Source: Sydney Morning Herald
Mr Forrest said China's steel makers will either have to accept the new iron ore prices its rival miner Rio Tinto Ltd struck with Japan this week or choose the "dangerously volatile" spot price.
Major producers would not agree to a different benchmark price with China, he said.
Chinese steel makers are pushing for cheaper iron ore prices than the 33 per cent discount struck this week by Japanese and Korean steel mills with Rio Tinto.
"As a major importer of iron ore, which Japan has been - it founded the Pilbara and will always be a major importer of iron ore - if they have now set a price and it doesn't get followed, then that is fine," Mr Forrest told journalists in Sydney.
"But those that choose not to follow it have to have the alternative, which is the spot price."
Rio Tinto, the world's second-largest iron ore miner, on Tuesday agreed to new 2009 contract prices for fine and lump iron ore from its Hamersley Iron operation with Japan's biggest steel maker Nippon Steel Corporation.
It agreed to supply Nippon with fines at a 33 per cent discount to the 2008 contract price, and lump at a 44 per cent discount to last year's price.
But China's steelmakers are pushing for a price reduction of around 40-45 per cent and BT Investment Management resources analyst Tim Barker said this week they would probably hold out for the better deal.
"I don't think there will be a quick settlement with the Chinese," Mr Barker said.
Iron ore prices have dropped due to weak demand caused by the global economic slump.
South Korea's top steelmaker Posco said on Thursday it had negotiated a deal with Rio Tinto at the same prices set by Nippon.
Posco, the world's fourth largest steelmaker, said it would buy iron ore for $US58.2 ($A75.02) to $US68.9 ($A88.81) per tonne.
It remains in talks with other major iron ore suppliers, including BHP Billiton and Brazil's Vale, about prices for the current contract year.
Mr Forrest said the iron ore spot price was highly volatile.
"If they don't accept the Nippon/Rio new benchmark, they will consign themselves to the spot market and that certainly in the past has shown extreme upside volatility.
"I think the whole of the industry would prefer a benchmark.
"The spot price is dangerously volatile.
"Whichever way China goes will have very formative impact on the future of the global seaborne iron ore trade."
Mr Forrest said he was confident of China's recovery from the economic downturn and said Chinese demand for iron ore was strong.
"We think that China's recovery is absolutely certain."
Asked if production was tracking with guidance, Mr Forrest said the "trend was very healthy".
Mr Forrest was also asked if the sales guidance of 26 million tonnes for 2008/09 still stands.
"I think we will probably be upgrading that, but let me get back to you," Mr Forrest said.
Mr Forrest also said Fortescue was "absolutely serious" about listing on the Shanghai stock exchange.
The plan follows Chinese mill Hunan Valin Iron and Steel Group Company acquiring a 17 per cent stake in Fortescue last month.
Source: Sydney Morning Herald
Wednesday, May 27, 2009
Baltic Dry Index At Highest Since October
The Baltic Dry Index, a measure of shipping costs for commodities, surpassed 3,000 points for the first time since October, buoyed by Chinese demand for iron ore.
The index tracking transport costs on international trade routes rose 222 points, or 7.6 percent, to 3,164 points, according to the Baltic Exchange today. The measure posted an 18th straight gain, its longest advance in two years.
Such is demand that shippers “are almost pleading” to hire vessels, Stuart Rae, co-managing director of M2M Management Ltd., a hedge fund group that trades freight derivatives and operates carriers, said by phone today. The rally “is being driven by iron ore, by congestion in China, and by a lack” of ships available for hire in the Atlantic.
China’s 4 trillion-yuan ($586 billion) package to stimulate its economy “gives hope for a V-shaped” economic recovery there, Sam Walsh, chief executive officer of Rio Tinto Group, the world’s third-largest mining group, said yesterday. Chinese buying is setting a floor for bulk commodities prices, Goldman Sachs JBWere Pty analysts said.
Rental rates for capesize vessels advanced 12 percent to $56,698 a day, according to the Baltic Exchange. Daily rentals for smaller panamax ships added 10 percent to $20,934. A capesize normally hauls about 175,000 metric tons, while a panamax is half the size.
“It feels very strong out there,” Michael Gaylard, strategic director at broker Freight Investor Services Ltd., said by phone today from London. The supply of capesizes is “really tight in places, so it’s driving some routes higher.”
The Baltic Dry Index advanced fourfold since the start of the year, recovering some of last year’s record 92 percent collapse. China’s iron ore imports ran at a record pace in February, March and April, according to customs data.
The line of capesize vessels at Chinese ports has climbed to 70 from 33 two months ago, according to data from Simpson, Spence & Young Ltd., the world’s second-largest shipbroker. The carriers are waiting nine days to unload, compared with five on March 25.
Contracts indicating future freight costs surged. July-to- September forward freight agreements, bets on the exchange’s future price assessments, rose 21 percent to $47,000 a day for rentals on capesizes. Panamaxes gained 16 percent to $21,250.
Sourc: Bloomberg
The index tracking transport costs on international trade routes rose 222 points, or 7.6 percent, to 3,164 points, according to the Baltic Exchange today. The measure posted an 18th straight gain, its longest advance in two years.
Such is demand that shippers “are almost pleading” to hire vessels, Stuart Rae, co-managing director of M2M Management Ltd., a hedge fund group that trades freight derivatives and operates carriers, said by phone today. The rally “is being driven by iron ore, by congestion in China, and by a lack” of ships available for hire in the Atlantic.
China’s 4 trillion-yuan ($586 billion) package to stimulate its economy “gives hope for a V-shaped” economic recovery there, Sam Walsh, chief executive officer of Rio Tinto Group, the world’s third-largest mining group, said yesterday. Chinese buying is setting a floor for bulk commodities prices, Goldman Sachs JBWere Pty analysts said.
Rental rates for capesize vessels advanced 12 percent to $56,698 a day, according to the Baltic Exchange. Daily rentals for smaller panamax ships added 10 percent to $20,934. A capesize normally hauls about 175,000 metric tons, while a panamax is half the size.
“It feels very strong out there,” Michael Gaylard, strategic director at broker Freight Investor Services Ltd., said by phone today from London. The supply of capesizes is “really tight in places, so it’s driving some routes higher.”
The Baltic Dry Index advanced fourfold since the start of the year, recovering some of last year’s record 92 percent collapse. China’s iron ore imports ran at a record pace in February, March and April, according to customs data.
The line of capesize vessels at Chinese ports has climbed to 70 from 33 two months ago, according to data from Simpson, Spence & Young Ltd., the world’s second-largest shipbroker. The carriers are waiting nine days to unload, compared with five on March 25.
Contracts indicating future freight costs surged. July-to- September forward freight agreements, bets on the exchange’s future price assessments, rose 21 percent to $47,000 a day for rentals on capesizes. Panamaxes gained 16 percent to $21,250.
Sourc: Bloomberg
POSCO May Agree 33 Per Cent Iron Ore Price Cut
South Korea's POSCO will follow its Japanese peer Nippon Steel and accept a 33 percent cut in iron ore prices, sources said on Wednesday, a deal that moves the agreement one step closer to being accepted as a global benchmark.
On Tuesday, Rio Tinto said it had agreed to cut key iron ore prices to Japanese steelmakers by a third in this year's first contract.
The long overdue settlement for contracts starting from April was in line with levels rumoured last week but some analysts have speculated the 40-year-old benchmark-setting system may not hold this year, as China has made strong demands for a deeper cut of around 45 percent.
China, which buys more than half of the world's traded iron ore, wants to see prices return to 2007 levels after six years of rallies have roughly quadrupled iron ore prices.
"The deal between POSCO and Rio Tinto may come as early as today," one of the sources told Reuters.
"Chinese mills may also have to accept it as a benchmark, because they can't completely switch to the volatile spot market and need to maintain the benchmark system to a certain degree to secure a long-term and stable supply of iron ore," the source said.
Some analysts also said China may be forced to accept the deal as it needs to depend heavily on iron ore imports to replace decreasing output from high-cost domestic mines, and the market may tighten later this year when the economy recovers.
"Ensuring security of supply by following the benchmark might now make more sense than risking full exposure to the spot market," Goldman Sachs JBWere analysts said.
Shares of Asian steelmakers got a boost on Wednesday as the reduction in prices, smaller than the 35-40 percent cut expected by some analysts, eased concerns of another deep steel price cut.
"As POSCO has now announced price cuts and benchmark iron ore prices have finally settled, we do not see significant uncertainties ahead of the company. We expect earnings to sharply recover in the second half on falling raw materials costs and improved output," Deutsche Bank analysts said on Wednesday.
Source: Reuters
On Tuesday, Rio Tinto said it had agreed to cut key iron ore prices to Japanese steelmakers by a third in this year's first contract.
The long overdue settlement for contracts starting from April was in line with levels rumoured last week but some analysts have speculated the 40-year-old benchmark-setting system may not hold this year, as China has made strong demands for a deeper cut of around 45 percent.
China, which buys more than half of the world's traded iron ore, wants to see prices return to 2007 levels after six years of rallies have roughly quadrupled iron ore prices.
"The deal between POSCO and Rio Tinto may come as early as today," one of the sources told Reuters.
"Chinese mills may also have to accept it as a benchmark, because they can't completely switch to the volatile spot market and need to maintain the benchmark system to a certain degree to secure a long-term and stable supply of iron ore," the source said.
Some analysts also said China may be forced to accept the deal as it needs to depend heavily on iron ore imports to replace decreasing output from high-cost domestic mines, and the market may tighten later this year when the economy recovers.
"Ensuring security of supply by following the benchmark might now make more sense than risking full exposure to the spot market," Goldman Sachs JBWere analysts said.
Shares of Asian steelmakers got a boost on Wednesday as the reduction in prices, smaller than the 35-40 percent cut expected by some analysts, eased concerns of another deep steel price cut.
"As POSCO has now announced price cuts and benchmark iron ore prices have finally settled, we do not see significant uncertainties ahead of the company. We expect earnings to sharply recover in the second half on falling raw materials costs and improved output," Deutsche Bank analysts said on Wednesday.
Source: Reuters
Teck In Talks To Sell Coking Coal Assets
Teck Resources Ltd., Canada's biggest base-metals company, is in talks to sell coking-coal assets to Chinese companies to help reduce debt.
"We are going through a process" of talks with Chinese companies, including steelmakers, to buy as much as a 20% stake in its coking coal business, Chief Executive Officer Donald Lindsay said in a television interview in Beijing. He declined to name the companies.
Mr. Lindsay, 50, is raising cash to help pay debt after the company added US$9.8-billion of loans last year to buy Fording Canadian Coal Trust, a producer of coal used in steelmaking. Teck completed the acquisition shortly before metals and energy prices slumped amid the global recession.
"We are in a very strong position to take our time to get a right partner and a right price," Mr. Lindsay said. "We'd like to see the steel industry recover a bit" before a sale.
The Vancouver-based company sold US$4.2-billion of bonds on May 5 to refinance its short-term obligations. Teck may also consider selling a stake in coking-coal production assets to institutional investors, Mr. Lindsay said.
Teck last year sold more than half of its coking coal production to Japan and Korea. It recently started selling the product to China and sales are "encouraging", Mr. Lindsay said.
The company plans to increase sales to China, the world's biggest producer and consumer of steel, he said.
Almost 70% of its operating profit in the first-quarter came from coal, Mr. Lindsay said. The company's net income dropped 30% to $241-million (US$195-million), or 50 cents a share, in the quarter from a year ago, it said on April 21.
Teck agreed to sell its stake in gold output from a Chilean mine to Royal Gold Inc. for about US$270-million on April 6 and two days later sold 5.6 million shares of Toronto-based Kinross Gold Corp. for about US$101-million.
Teck shares gained 1% to close at $15.95 on May 26. The stock has more than doubled this year.
Rio Tinto Group, the world's third-largest mining company, this week said it is hopeful of a "V-shape" recovery in China, the world's biggest metals buyer. The Asian nation increased imports of copper, aluminum and iron ore to a record in April as buyers restocked for the country's 4-trillion yuan (US$586-billion) stimulus.
There are "early signs" of demand recovery in China, spurred by the stimulus package, Mr.Lindsay said. Metals demand growth will be sustained in China if the economy meets its growth target of 8 percent, he added.
SourcE: Financial Post
"We are going through a process" of talks with Chinese companies, including steelmakers, to buy as much as a 20% stake in its coking coal business, Chief Executive Officer Donald Lindsay said in a television interview in Beijing. He declined to name the companies.
Mr. Lindsay, 50, is raising cash to help pay debt after the company added US$9.8-billion of loans last year to buy Fording Canadian Coal Trust, a producer of coal used in steelmaking. Teck completed the acquisition shortly before metals and energy prices slumped amid the global recession.
"We are in a very strong position to take our time to get a right partner and a right price," Mr. Lindsay said. "We'd like to see the steel industry recover a bit" before a sale.
The Vancouver-based company sold US$4.2-billion of bonds on May 5 to refinance its short-term obligations. Teck may also consider selling a stake in coking-coal production assets to institutional investors, Mr. Lindsay said.
Teck last year sold more than half of its coking coal production to Japan and Korea. It recently started selling the product to China and sales are "encouraging", Mr. Lindsay said.
The company plans to increase sales to China, the world's biggest producer and consumer of steel, he said.
Almost 70% of its operating profit in the first-quarter came from coal, Mr. Lindsay said. The company's net income dropped 30% to $241-million (US$195-million), or 50 cents a share, in the quarter from a year ago, it said on April 21.
Teck agreed to sell its stake in gold output from a Chilean mine to Royal Gold Inc. for about US$270-million on April 6 and two days later sold 5.6 million shares of Toronto-based Kinross Gold Corp. for about US$101-million.
Teck shares gained 1% to close at $15.95 on May 26. The stock has more than doubled this year.
Rio Tinto Group, the world's third-largest mining company, this week said it is hopeful of a "V-shape" recovery in China, the world's biggest metals buyer. The Asian nation increased imports of copper, aluminum and iron ore to a record in April as buyers restocked for the country's 4-trillion yuan (US$586-billion) stimulus.
There are "early signs" of demand recovery in China, spurred by the stimulus package, Mr.Lindsay said. Metals demand growth will be sustained in China if the economy meets its growth target of 8 percent, he added.
SourcE: Financial Post
Samancor May Close Restarted Ferrochrome Operations
Samancor Chrome Ltd., the world’s second-biggest ferrochrome producer, may shut some of the South African operations it restarted earlier this year as costs rise.
Expenses have climbed “dramatically” and electricity fees will gain further, Chairman Danko Konchar said in an interview late yesterday. Samancor restarted about three-quarters of its capacity after suspending all output in December on weak demand.
Eskom Holdings Ltd., which supplies about 95 percent of power in South Africa, has asked regulators to permit a 34 percent increase in tariffs this year after 2008’s 27.5 percent jump. Ferrochrome producers pay about 20 percent on top of regular tariffs during winter, when power demand is higher.
Samancor will reconsider its level of production in June, when winter tariffs start, Konchar said. Gains by the South African rand, trading at about 8.24 per dollar now compared with 10.1949 at the end of January, also are a “concern,” he said.
Xstrata Plc, International Ferro Metals Ltd. and other ferrochrome producers suspended output as prices fell because of lower stainless-steel demand. Quarterly ferrochrome contract prices have slid 63 percent to 69 U.S. cents a pound in 2009.
Price may increase “slightly” or remain flat in the third quarter, Willem Venture, head of equities at Cape Town-based Prescient Securities, said by phone yesterday, adding that demand remains “fairly weak.”
Third-quarter price negotiations will probably start next month, Stuart Elliot, a director at Merafe Resources Ltd., said yesterday. The company’s South African venture with Xstrata is the world’s biggest ferrochrome producer.
“If you look at the dynamics, the price ought to increase,” Jasper Pieters, operations director at Hernic Ferrochrome Ltd., said yesterday, citing rising electricity prices, the “stronger” rand and an “apparent shortage” of lumpy ferrochrome. Hernic restarted some output this month.
“There are early signs of recovery in demand,” Alwyn Smit, chief executive officer of Finnish investment group Ruukki Group Oyj, said yesterday. “The question is whether those are sustainable. If we haven’t seen the worst, then we are close to the bottom.”
Ruuki is spinning off wood businesses to focus on natural resources. It’s already purchasing Mogale Alloys Ltd., a South African ferrochrome producer.
Ferrochrome prices will average 70 cents a pound this year, down 62 percent from 2008, Citigroup Inc. estimated last month.
Source: Bloomberg
Expenses have climbed “dramatically” and electricity fees will gain further, Chairman Danko Konchar said in an interview late yesterday. Samancor restarted about three-quarters of its capacity after suspending all output in December on weak demand.
Eskom Holdings Ltd., which supplies about 95 percent of power in South Africa, has asked regulators to permit a 34 percent increase in tariffs this year after 2008’s 27.5 percent jump. Ferrochrome producers pay about 20 percent on top of regular tariffs during winter, when power demand is higher.
Samancor will reconsider its level of production in June, when winter tariffs start, Konchar said. Gains by the South African rand, trading at about 8.24 per dollar now compared with 10.1949 at the end of January, also are a “concern,” he said.
Xstrata Plc, International Ferro Metals Ltd. and other ferrochrome producers suspended output as prices fell because of lower stainless-steel demand. Quarterly ferrochrome contract prices have slid 63 percent to 69 U.S. cents a pound in 2009.
Price may increase “slightly” or remain flat in the third quarter, Willem Venture, head of equities at Cape Town-based Prescient Securities, said by phone yesterday, adding that demand remains “fairly weak.”
Third-quarter price negotiations will probably start next month, Stuart Elliot, a director at Merafe Resources Ltd., said yesterday. The company’s South African venture with Xstrata is the world’s biggest ferrochrome producer.
“If you look at the dynamics, the price ought to increase,” Jasper Pieters, operations director at Hernic Ferrochrome Ltd., said yesterday, citing rising electricity prices, the “stronger” rand and an “apparent shortage” of lumpy ferrochrome. Hernic restarted some output this month.
“There are early signs of recovery in demand,” Alwyn Smit, chief executive officer of Finnish investment group Ruukki Group Oyj, said yesterday. “The question is whether those are sustainable. If we haven’t seen the worst, then we are close to the bottom.”
Ruuki is spinning off wood businesses to focus on natural resources. It’s already purchasing Mogale Alloys Ltd., a South African ferrochrome producer.
Ferrochrome prices will average 70 cents a pound this year, down 62 percent from 2008, Citigroup Inc. estimated last month.
Source: Bloomberg
Ruuki May Sell Shares To South African Investors
Ruukki Group Oyj, the Finnish investment group, plans to buy platinum assets and may sell shares to investors in South Africa next year to fund acquisitions.
“We are actively pursuing discussions with several players,” Alwyn Smit, Espoo-based Ruukki’s chief executive officer, said in an interview yesterday. “We may well consider a capital raising next year when we list.”
Ruukki is spinning off its wood businesses to focus on natural resources. Many of its assets will be in South Africa, where the company plans a secondary listing in the first half next year, Smit said.
Ruukki is already buying South African ferrochrome producer Mogale Alloys Ltd. and part of that plant could be converted to process platinum ore, Smit said. South Africa is the largest producer of platinum, used in jewelry and autocatalysts.
“We’re looking for investments that will be cash generative in the relatively near term, and in the current market circumstances,” Smit said. “It’s a good time for us to be looking around,” he said, adding that several smaller mining companies are currently “struggling.”
While Ruukki, about 30 percent-owned by Kermas Ltd., has funds and no debt, an acquisition may trigger a capital increase, Smit said. The company may also consider other acquisitions in ferrochrome and nickel, both used in stainless steel.
Ruukki will boost chrome-ore production capacity at its Turkish operation by about 75 percent to 70,000 metric tons a year after last week approving a project to extract the metal from waste rock, Smit said. The plant would take nine or 10 months to build and production costs would be less than half current levels, he said.
Source: Bloomberg
“We are actively pursuing discussions with several players,” Alwyn Smit, Espoo-based Ruukki’s chief executive officer, said in an interview yesterday. “We may well consider a capital raising next year when we list.”
Ruukki is spinning off its wood businesses to focus on natural resources. Many of its assets will be in South Africa, where the company plans a secondary listing in the first half next year, Smit said.
Ruukki is already buying South African ferrochrome producer Mogale Alloys Ltd. and part of that plant could be converted to process platinum ore, Smit said. South Africa is the largest producer of platinum, used in jewelry and autocatalysts.
“We’re looking for investments that will be cash generative in the relatively near term, and in the current market circumstances,” Smit said. “It’s a good time for us to be looking around,” he said, adding that several smaller mining companies are currently “struggling.”
While Ruukki, about 30 percent-owned by Kermas Ltd., has funds and no debt, an acquisition may trigger a capital increase, Smit said. The company may also consider other acquisitions in ferrochrome and nickel, both used in stainless steel.
Ruukki will boost chrome-ore production capacity at its Turkish operation by about 75 percent to 70,000 metric tons a year after last week approving a project to extract the metal from waste rock, Smit said. The plant would take nine or 10 months to build and production costs would be less than half current levels, he said.
Source: Bloomberg
Zinc Samples Found In Kerry
Rock samples containing over 51 per cent zinc, found near Castlemaine, have fuelled speculation that hundreds of jobs may be created.
On Thursday, exploratory zinc mining company Connemara Mining PLC announced the find on land close to the historic silver and lead mine at Annagh.
Company chairman John Teeling said the find could mirror similar zinc finds at Tara, Co. Meath, and Lisheen, Co. Tipperary, which are ranked the fifth and 12th largest zinc mines in the world.
"We have no idea how much is in Castlemaine but we have found high grade," said Mr Teeling , adding: "There's more high grade in there, this didn't happen by itself. This is very significant from a geological perspective."
A geophysics process will now be started to discover the extent of the underground zinc pods and a further two years of exploration will then be required. Depending on the significance of the find, it would be a full seven years before a fully functioning mine could be developed.
"The rule is that the best place to find a mine is where there has already been one," the chairman stated, adding that the company had an experienced base metal geologist who recognised the full potential of the adjoining former mine.
SourcE: The Kerryman
On Thursday, exploratory zinc mining company Connemara Mining PLC announced the find on land close to the historic silver and lead mine at Annagh.
Company chairman John Teeling said the find could mirror similar zinc finds at Tara, Co. Meath, and Lisheen, Co. Tipperary, which are ranked the fifth and 12th largest zinc mines in the world.
"We have no idea how much is in Castlemaine but we have found high grade," said Mr Teeling , adding: "There's more high grade in there, this didn't happen by itself. This is very significant from a geological perspective."
A geophysics process will now be started to discover the extent of the underground zinc pods and a further two years of exploration will then be required. Depending on the significance of the find, it would be a full seven years before a fully functioning mine could be developed.
"The rule is that the best place to find a mine is where there has already been one," the chairman stated, adding that the company had an experienced base metal geologist who recognised the full potential of the adjoining former mine.
SourcE: The Kerryman
ICVL Close To Acquiring Mozambique Coal Blocks
International Coal Ventures, the special purpose vehicle of five leading PSUs to scout coal properties abroad, is close to acquiring four mining blocks in Mozambique with estimated reserves of 900 million tonnes.
"ICVL is the front runner to acquire the mining assets of Zamdezi Energy Corporation. The bidding date for the blocks was postponed from April 17 to May 22 as the Indian consortium had not got the necessary regulatory approvals to bid for the coking-coal assets,"an official source said.
Of the four blocks, two are unexplored while in the rest, partial drilling has been done, source added.
ICVL, which comprises SAIL, RINL, NMDC, CIL and NTPC as members, is understood to have bid on May 22 to takeover the Mozambique company that possess the mining blocks, another source familiar with the development said.
" ICVL had to seek approval from the Coal Ministry that led to a delay in its bidding for the blocks,"a senior government official said.
The Prime Minister&aposs Office during a review of ICVL had directed its members to acquire virgin thermal coal properties through Coal India&aposs overseas arm Coal Videsh. For acquisition of developed coking coal assets, it was decided that the proposals would be routed through ICVL.
As the coal properties in Mozambique are greenfield, ICVL has sought permission from the Coal Ministry to proceed with the bidding process.
Source: PTI
"ICVL is the front runner to acquire the mining assets of Zamdezi Energy Corporation. The bidding date for the blocks was postponed from April 17 to May 22 as the Indian consortium had not got the necessary regulatory approvals to bid for the coking-coal assets,"an official source said.
Of the four blocks, two are unexplored while in the rest, partial drilling has been done, source added.
ICVL, which comprises SAIL, RINL, NMDC, CIL and NTPC as members, is understood to have bid on May 22 to takeover the Mozambique company that possess the mining blocks, another source familiar with the development said.
" ICVL had to seek approval from the Coal Ministry that led to a delay in its bidding for the blocks,"a senior government official said.
The Prime Minister&aposs Office during a review of ICVL had directed its members to acquire virgin thermal coal properties through Coal India&aposs overseas arm Coal Videsh. For acquisition of developed coking coal assets, it was decided that the proposals would be routed through ICVL.
As the coal properties in Mozambique are greenfield, ICVL has sought permission from the Coal Ministry to proceed with the bidding process.
Source: PTI
Indonesia Formulating Mining Permit Procedure
The Indonesian government is currently formulating a procedure for companies willing to obtain mining permits (IUP in its Indonesian abbreviation). The procedure would then be included in a bylaw on mineral and coal business, the draft of which is presently in a finalization at the ESDM ministry.
M.S. Marpaung, the Director of Technique and Environment of the ESDM ministry, was quoted as saying that the government would try to conclude proceedings to obtain the permit in a matter of two weeks' time only, although this may not be a final case. The explanation was given in response to a question from participants in a seminar on the future of mining business post the new mining law No. 4/2009 in Balikpapan, East Kalimantan, on 14 May 2009.
The government, according to Mr. Marpaung, had proposed a merger of two or more mining authorizations (KP in its Indonesian abbreviation) of less than 5,000 hectares, as the new law laid down that mining permits would be granted to mining authorizations with the minimum size of 5,000 hectares only.
The government would also try to ensure that conversion from KP into IUP be finalized as quick as possible. He admitted that previously the process could take years to conclude, depending on the KP owners' negotiation with the local governments. He stated that the KPs would still be recognized and that the central government would coordinate proceedings with its local counterparts.
Source: Majalahtambang
M.S. Marpaung, the Director of Technique and Environment of the ESDM ministry, was quoted as saying that the government would try to conclude proceedings to obtain the permit in a matter of two weeks' time only, although this may not be a final case. The explanation was given in response to a question from participants in a seminar on the future of mining business post the new mining law No. 4/2009 in Balikpapan, East Kalimantan, on 14 May 2009.
The government, according to Mr. Marpaung, had proposed a merger of two or more mining authorizations (KP in its Indonesian abbreviation) of less than 5,000 hectares, as the new law laid down that mining permits would be granted to mining authorizations with the minimum size of 5,000 hectares only.
The government would also try to ensure that conversion from KP into IUP be finalized as quick as possible. He admitted that previously the process could take years to conclude, depending on the KP owners' negotiation with the local governments. He stated that the KPs would still be recognized and that the central government would coordinate proceedings with its local counterparts.
Source: Majalahtambang
BMO Sees Improvement In Iron Ore Demand
BMO Capital Markets Global Mining Research projects very poor iron ore demand this year.
Nevertheless, BMO Capital Markets Global Commodity Strategist Bart Melek forecast Tuesday, "With project delays and production cuts, BMO Research projects a return to reasonably balanced conditions in fairly short order."
In his analysis, Melek asserts, "The post recession long-term steel, iron ore and met coal story remains quite positive-U.S. and Indian fixed asset investment trends a key driver."
‘With the developing world set to keep demand growing and with a recovery in the western world," he added, "BMO Research expects the global annual iron ore consumption growth in 2010 through 2012 to trend around 3-4%."
BMO's global mining research found global steel output was down 23% year-on-year in April and "there is very little evidence that a material turnaround is coming anytime soon."
Meanwhile, Melek termed this year's iron ore contract negotiations "very interesting indeed."
"A big part of the reason why major seaborne producers do not want to settle yet is the concern that Chinese mills may not honour their contracts if the spot price drops materially lower," he said. "The price of Chinese spot fines is some 30% lower than the contract. However, very robust production cuts are lending some support for now."
"Another reason to wait may be associated with the Goan monsoon," he suggested. "Goa supplies, which accounted for some 45 million tonnes in 2008/09, will dry up in three weeks due to the rains."
"There is increasing speculation that spot markets will rule the day and a Chinese benchmark price for iron ore may not be set this year at all," Melek advised, "especially since major commodity financial institutions are gearing up to start iron ore trading. ...Japan and Europe may, however, choose to settle a benchmark price and leave the spot market to the Chinese."
While Melek believes iron ore prices will decline sharply, "they are still very, very healthy considering the massive decline in demand, considerable spare capacity and the cost structure. Iron ore at US$63/tonne is a victory for producers as they have negotiated a price well above the cost of production. This speaks to market power and alludes to better steel production activity in China, which is already near its 2008 highs in April."
Source: Mineweb
Nevertheless, BMO Capital Markets Global Commodity Strategist Bart Melek forecast Tuesday, "With project delays and production cuts, BMO Research projects a return to reasonably balanced conditions in fairly short order."
In his analysis, Melek asserts, "The post recession long-term steel, iron ore and met coal story remains quite positive-U.S. and Indian fixed asset investment trends a key driver."
‘With the developing world set to keep demand growing and with a recovery in the western world," he added, "BMO Research expects the global annual iron ore consumption growth in 2010 through 2012 to trend around 3-4%."
BMO's global mining research found global steel output was down 23% year-on-year in April and "there is very little evidence that a material turnaround is coming anytime soon."
Meanwhile, Melek termed this year's iron ore contract negotiations "very interesting indeed."
"A big part of the reason why major seaborne producers do not want to settle yet is the concern that Chinese mills may not honour their contracts if the spot price drops materially lower," he said. "The price of Chinese spot fines is some 30% lower than the contract. However, very robust production cuts are lending some support for now."
"Another reason to wait may be associated with the Goan monsoon," he suggested. "Goa supplies, which accounted for some 45 million tonnes in 2008/09, will dry up in three weeks due to the rains."
"There is increasing speculation that spot markets will rule the day and a Chinese benchmark price for iron ore may not be set this year at all," Melek advised, "especially since major commodity financial institutions are gearing up to start iron ore trading. ...Japan and Europe may, however, choose to settle a benchmark price and leave the spot market to the Chinese."
While Melek believes iron ore prices will decline sharply, "they are still very, very healthy considering the massive decline in demand, considerable spare capacity and the cost structure. Iron ore at US$63/tonne is a victory for producers as they have negotiated a price well above the cost of production. This speaks to market power and alludes to better steel production activity in China, which is already near its 2008 highs in April."
Source: Mineweb
Delta Quits Liberia Iron Ore Project
Delta Mining Consolidated Ltd. said it quit plans to develop the Western Cluster Iron Ore project in Liberia after the government added bidding terms it couldn’t meet.
“One of the requirements was a large cash guarantee, which wasn’t do-able in the short time we had available,” Delta director Bernard Swanepoel said by mobile phone today. “This specific project is now out of our hands.”
While Liberia previously named Delta as preferred bidder, it reversed the decision last year, saying on Sept. 15 that the bidding process may have been compromised. The government last month cleared the Johannesburg-based company of all alleged improprieties, prompting Delta to withdraw a legal order preventing the government from re-tendering the project. Companies had until May 15 to bid.
“Liberia remains a country with iron ore opportunities,” Swanepoel said, adding the government has “pointed out one or two projects” Delta may be interested in.
The Western Cluster project consists of three deposits and two idled mines. The mines on the deposits closed in 1976 and 1985 and their equipment was sold as scrap during Liberia’s two civil wars, the last of which ended in 2003.
Source: Bloomberg
“One of the requirements was a large cash guarantee, which wasn’t do-able in the short time we had available,” Delta director Bernard Swanepoel said by mobile phone today. “This specific project is now out of our hands.”
While Liberia previously named Delta as preferred bidder, it reversed the decision last year, saying on Sept. 15 that the bidding process may have been compromised. The government last month cleared the Johannesburg-based company of all alleged improprieties, prompting Delta to withdraw a legal order preventing the government from re-tendering the project. Companies had until May 15 to bid.
“Liberia remains a country with iron ore opportunities,” Swanepoel said, adding the government has “pointed out one or two projects” Delta may be interested in.
The Western Cluster project consists of three deposits and two idled mines. The mines on the deposits closed in 1976 and 1985 and their equipment was sold as scrap during Liberia’s two civil wars, the last of which ended in 2003.
Source: Bloomberg
Antam To Complete Coal Mine Deal This Year
Indonesian state-owned miner, PT Aneka Tambang Tbk, expects its acquisition of coal mine interests to be completed this year, president director Alwinsyah Loebis said on Wednesday.
"We are now in the due diligence process for five coal mines in Kalimantan, we cannot state the names yet," Loebis told reporters. He did not elaborate on how many of those mines the firm would acquire.
He also said that Antam would increase gold production to about 3.8 tonnes next year, from about 2.8 tonnes in 2009.
Antam, which has a stock market value of $1.77 billion, is involved in the exploration and production of nickel ore, bauxite and iron sands as well as smelting of ferro-nickel, exploration and production and refining gold and silver.
Source: Reuters
"We are now in the due diligence process for five coal mines in Kalimantan, we cannot state the names yet," Loebis told reporters. He did not elaborate on how many of those mines the firm would acquire.
He also said that Antam would increase gold production to about 3.8 tonnes next year, from about 2.8 tonnes in 2009.
Antam, which has a stock market value of $1.77 billion, is involved in the exploration and production of nickel ore, bauxite and iron sands as well as smelting of ferro-nickel, exploration and production and refining gold and silver.
Source: Reuters
Chinese Mills Should Demand Bigger Cut In Iron Ore Prices
Chinese steelmakers should demand a bigger cut in iron ore prices than agreed by Japanese rivals because there is an oversupply of the raw material, the chairman of China’s fifth-biggest steel producer said.
“There are huge stockpiles at Chinese ports,” Shen Wenrong, the chairman of Jiangsu Shagang Group Co. said today in an interview. “We shouldn’t accept the Japanese steelmakers’ accord with Rio Tinto Group for a 33 percent cut", he said.
China’s steel association is discussing “counter measures” to respond to the agreement between Rio Tinto and Nippon Steel Corp. that set iron ore prices at the second- highest annual price on record, Shen said. Chinese mills, the world’s biggest producers, have previously called for prices to be as much as halved and are yet to agree an accord.
Chinese producers “can choose” to buy more iron ore on the spot market should contract agreements with producers not be reached, Luo Bingsheng, vice chairman of the China Iron and Steel Association, said May 22.
“We are already buying some from the spot market,” said Shen, who’s Jiangsu Shagang is also China’s biggest closely held steel mill. “The 33 percent cut is too far from our demand of 40 percent to 45 percent.”
Almost 40 percent of China’s 72 biggest steel mills had losses last month, the Ministry of Industry and Information Technology said May 22. The steelmakers had a combined loss of 5.2 billion yuan in the first four months, it said.
Chinese steelmakers are likely to follow their Japanese rivals in agreeing to the 33 percent cut, Goldman Sachs JBWere Pty analysts led by is Melbourne-based Malcolm Southwood said yesterday.
Source: Bloomberg
“There are huge stockpiles at Chinese ports,” Shen Wenrong, the chairman of Jiangsu Shagang Group Co. said today in an interview. “We shouldn’t accept the Japanese steelmakers’ accord with Rio Tinto Group for a 33 percent cut", he said.
China’s steel association is discussing “counter measures” to respond to the agreement between Rio Tinto and Nippon Steel Corp. that set iron ore prices at the second- highest annual price on record, Shen said. Chinese mills, the world’s biggest producers, have previously called for prices to be as much as halved and are yet to agree an accord.
Chinese producers “can choose” to buy more iron ore on the spot market should contract agreements with producers not be reached, Luo Bingsheng, vice chairman of the China Iron and Steel Association, said May 22.
“We are already buying some from the spot market,” said Shen, who’s Jiangsu Shagang is also China’s biggest closely held steel mill. “The 33 percent cut is too far from our demand of 40 percent to 45 percent.”
Almost 40 percent of China’s 72 biggest steel mills had losses last month, the Ministry of Industry and Information Technology said May 22. The steelmakers had a combined loss of 5.2 billion yuan in the first four months, it said.
Chinese steelmakers are likely to follow their Japanese rivals in agreeing to the 33 percent cut, Goldman Sachs JBWere Pty analysts led by is Melbourne-based Malcolm Southwood said yesterday.
Source: Bloomberg
China May Hike Steel Export Rebates
According to Mr Su Ming, deputy director of research at the Institute for Fiscal Science at the Ministry of Finance, China’s export rebates of some steel products have reached 13%. It is likely to be enhanced in the future.
Referring to the relative fiscal policy, Mr Su figured that the government will further push the reformation of tax rate and mining right.
As far as he concerned, the nation should turn to support all those guarantee enterprises through investment subsidies, finance discounts and so on regardless of their ownership.
Mr Luo Bingsheng, vice chairman of China Iron and Steel Association, suggested that the relative departments take measures to improve China’s export environment as well as putting flexible export tax policies in practice in order to stabilize the international market share of Chinese steel products. Mr Luo said that plans were in hand to further regularise import & export trade orders and strengthen both import and anti-dumping inspections. The department has already started discussions on how to adjust export rebate policy.
In order to sustain the domestic steel price and the price competitiveness, the Chinese government should take more measures despite existing adjustments.
Source: Steel Guru
Referring to the relative fiscal policy, Mr Su figured that the government will further push the reformation of tax rate and mining right.
As far as he concerned, the nation should turn to support all those guarantee enterprises through investment subsidies, finance discounts and so on regardless of their ownership.
Mr Luo Bingsheng, vice chairman of China Iron and Steel Association, suggested that the relative departments take measures to improve China’s export environment as well as putting flexible export tax policies in practice in order to stabilize the international market share of Chinese steel products. Mr Luo said that plans were in hand to further regularise import & export trade orders and strengthen both import and anti-dumping inspections. The department has already started discussions on how to adjust export rebate policy.
In order to sustain the domestic steel price and the price competitiveness, the Chinese government should take more measures despite existing adjustments.
Source: Steel Guru
Shanxi Plans Listing For Five Major Coal Groups
North China's Shanxi Province, whose coal output accounts for one third of the country's total, plans to list its five major coal groups by 2015, according to a plan recently released by the local government.
The five coal groups, whose coal output accounts for more than 50% of the province's total, are Shanxi Datong Coal Group Co, Shanxi Coking Coal Group Co, parent of the country's largest publicly traded coke producer Shanxi Coking Co Ltd<600740>, Luan Group, Yangquan Coal Industry Group Co and Shanxi Jincheng Coal Group.
The plan, which aims to raise capital for development, may also accelerate industrial consolidation, according to an official with the local government, adding that the proportion of the five groups' coal output will be increased to about 70% of the province's total.
Group listing will not only help the coal producers develop into strong multinational conglomerates, but also will protect the interests of small shareholders.
The local government said in late April that it will launch an unprecedented reform for the coal industry during the next three years, that it will cut the number of coal mines to 1,000 from the current 2,600, and that it will restrict its annual coal output to 850 million tons, according to an earlier report from China Knowledge.
Source: China Knowledge
The five coal groups, whose coal output accounts for more than 50% of the province's total, are Shanxi Datong Coal Group Co, Shanxi Coking Coal Group Co, parent of the country's largest publicly traded coke producer Shanxi Coking Co Ltd<600740>, Luan Group, Yangquan Coal Industry Group Co and Shanxi Jincheng Coal Group.
The plan, which aims to raise capital for development, may also accelerate industrial consolidation, according to an official with the local government, adding that the proportion of the five groups' coal output will be increased to about 70% of the province's total.
Group listing will not only help the coal producers develop into strong multinational conglomerates, but also will protect the interests of small shareholders.
The local government said in late April that it will launch an unprecedented reform for the coal industry during the next three years, that it will cut the number of coal mines to 1,000 from the current 2,600, and that it will restrict its annual coal output to 850 million tons, according to an earlier report from China Knowledge.
Source: China Knowledge
Napocor Awards Coal Contract To PNOC
Philippine electricity producer National Power Corp (Napocor) said on Wednesday it has awarded a contract to oil and gas explorer PNOC-Exploration Corp to supply 100,000 tonnes of coal to the state-run power firm.
PNOC-EC bid 3,890.7 pesos ($82.24) per tonne for the local blended coal meant for the Naga-Cebu power station in central Philippines, in line with the government's budget, Napocor said on on its Web site.
PNOC-EC was the lone bidder for the coal tender on March 18 which Napocor had terminated after PNOC-EC fell short of the required bid bond.
PNOC-EC later submitted a fresh bond and Napocor reconsidered its bid, said Edmund Anguluan, chairman of the bidding committee.
It was the second tender for the same volume of coal for Naga-Cebu after a failed bidding in December when potential bidders found Napocor's budget for the consignment too low.
Napocor imports most of its coal requirements but sources some from local suppliers. The company has said it needs nearly 3.5 million tonnes of imported coal this year, and has so far awarded 1.365 million tonnes to several Indonesian suppliers.
Source: Reuters
PNOC-EC bid 3,890.7 pesos ($82.24) per tonne for the local blended coal meant for the Naga-Cebu power station in central Philippines, in line with the government's budget, Napocor said on on its Web site.
PNOC-EC was the lone bidder for the coal tender on March 18 which Napocor had terminated after PNOC-EC fell short of the required bid bond.
PNOC-EC later submitted a fresh bond and Napocor reconsidered its bid, said Edmund Anguluan, chairman of the bidding committee.
It was the second tender for the same volume of coal for Naga-Cebu after a failed bidding in December when potential bidders found Napocor's budget for the consignment too low.
Napocor imports most of its coal requirements but sources some from local suppliers. The company has said it needs nearly 3.5 million tonnes of imported coal this year, and has so far awarded 1.365 million tonnes to several Indonesian suppliers.
Source: Reuters
No Substitute For Manganese
This morning Bluescope Steel announced it was deferring restarting its No.5 blast furnace at Port Kembla due to market conditions.
Late last week, South Africa’s number two manganese producer, Assmang, said it was cutting back production of its two steel feed-stocks, manganese and chrome, due to the 24 per cent decline in global steel production in April. Ferromanganese is added in the process to strengthen steel - and there is no substitute for manganese in this process. Moreover, the percentage of manganese being used by mills has been rising as makers trend toward producing higher quality steels.
The falling demand for manganese is the short-term situation. Longer term, of course, steel production will pick up and manganese will again be in strong demand, and we will almost certainly see a return to the high contract prices that were locked in for 2007 and some of 2008.
And you have to remember that the weaker players will be going to the wall.
Northern Territory manganese producer OM Holdings said this morning it was expanding its product range to take advantage of new market opportunities. It noted that many higher cost, low grade Chinese domestic and marginal seaborne ore producers were not economic and - most importantly - were ceasing production at these present low prices.
The explorers are hard at it, too.
Aurora Minerals has identified new high grade manganese zones at its Capricorn East project southwest of the large Tom Price iron ore mine. Sampling produced assays up to 53.5 per cent. And AusQuest said it has identified 1.5km-long strike zone at its Wolfe manganese project in the Kimberley region, with another 10km still to be mapped.
SourcE: The Australian
Late last week, South Africa’s number two manganese producer, Assmang, said it was cutting back production of its two steel feed-stocks, manganese and chrome, due to the 24 per cent decline in global steel production in April. Ferromanganese is added in the process to strengthen steel - and there is no substitute for manganese in this process. Moreover, the percentage of manganese being used by mills has been rising as makers trend toward producing higher quality steels.
The falling demand for manganese is the short-term situation. Longer term, of course, steel production will pick up and manganese will again be in strong demand, and we will almost certainly see a return to the high contract prices that were locked in for 2007 and some of 2008.
And you have to remember that the weaker players will be going to the wall.
Northern Territory manganese producer OM Holdings said this morning it was expanding its product range to take advantage of new market opportunities. It noted that many higher cost, low grade Chinese domestic and marginal seaborne ore producers were not economic and - most importantly - were ceasing production at these present low prices.
The explorers are hard at it, too.
Aurora Minerals has identified new high grade manganese zones at its Capricorn East project southwest of the large Tom Price iron ore mine. Sampling produced assays up to 53.5 per cent. And AusQuest said it has identified 1.5km-long strike zone at its Wolfe manganese project in the Kimberley region, with another 10km still to be mapped.
SourcE: The Australian
Tuesday, May 26, 2009
Vale To Press For Smaller Price Cut - Analyst
Vale SA, the world’s biggest iron-ore producer, will seek a smaller cut in contract prices from customers than the 33 percent reduction negotiated today by Rio Tinto Group, mining analysts said.
Vale will seek to lower benchmark prices for iron ore supplied this year to global steel mills by 20 percent to 27.5 percent, Gilberto Cardoso, a Rio de Janeiro-based analyst with Banif Securities, said today in a telephone interview.
Earlier today, Rio Tinto agreed to a 33 percent cut in contract prices for the steelmaking raw material with Japanese steelmakers including Nippon Steel Corp., the first decline in seven years as the global recession slashes demand.
Today’s agreement “will serve as a parameter for Vale to negotiate”, Luciana Leocadio, analyst with Ativa Corretora, said by telephone from Rio de Janeiro.
Vale press spokesman Fernando Thompson declined to comment on iron-ore pricing in an e-mail today.
Last year, Vale gained a 65 percent price increase while Rio Tinto and BHP Billiton Ltd. which settled prices later in the year after demand surged, won increases of 85 percent or more.
Source: Bloomberg
Vale will seek to lower benchmark prices for iron ore supplied this year to global steel mills by 20 percent to 27.5 percent, Gilberto Cardoso, a Rio de Janeiro-based analyst with Banif Securities, said today in a telephone interview.
Earlier today, Rio Tinto agreed to a 33 percent cut in contract prices for the steelmaking raw material with Japanese steelmakers including Nippon Steel Corp., the first decline in seven years as the global recession slashes demand.
Today’s agreement “will serve as a parameter for Vale to negotiate”, Luciana Leocadio, analyst with Ativa Corretora, said by telephone from Rio de Janeiro.
Vale press spokesman Fernando Thompson declined to comment on iron-ore pricing in an e-mail today.
Last year, Vale gained a 65 percent price increase while Rio Tinto and BHP Billiton Ltd. which settled prices later in the year after demand surged, won increases of 85 percent or more.
Source: Bloomberg
Coal India To Increase Prices Across The Board
Weighed down by Rs 4,000 crore per annum on account of the upward revision in salaries of its 400,000 employees under the National Coal Wage Agreement (NCWA)-VIIII, Coal India Limited (CIL) is set to go in for an across-the-board hike in coal prices.
Confirming the development, a senior CIL official said, “The hike in price of coal by CIL is inevitable and it would be applicable to all grades of coal. The board of directors of CIL is empowered to hike coal prices. But the coal PSU would approach the new government at the Centre keeping in view the impact of an increase in coal prices on the economy as a whole.”
However, the official declined to comment on the percentage of hike in coal prices and also on the time-frame of the price hike.
The implementation of the NCWA-VIII posed a serious threat to CIL’s bottomline and the price hike of coal was needed for the coal public sector undertaking (PSU) to remain profitable.
CIL’s net profit in 2008-09 stood at only Rs 96 crore after the navratna coal firm paid arrears of Rs 7,856 crore to its employees as a result of the hike in salaries under NCWA-VIII which was to be implemented with retrospective effect from July 2006. The coal PSU had recorded a net profit of Rs 5,233.46 crore in 2008-09.
The salary hike had rendered 33 projects of CIL unviable which were to be taken up in the 11th Plan (2007-12) and they were to add 28.37 million tonnes of coal production per annum. The hike in salaries had also sparked fears of the possibility of CIL missing its target output by the end of 2011-12 which was projected at 520 million tonnes.
It may be noted that CIL had announced hike in prices of coal three times since 2000 and the last price hike was in December 2007.
The average price of coal sold by CIL was 30-35 per cent lower than the prevailing international prices of the raw material even though the spot price of hard coking coal in the international market had drastically fallen to $130 a tonne after touching an all-time high of $300 in 2007.
Bharat Coking Coal Limited (BCCL), one of the subsidiaries of CIL supplied washed coking coal to its consumers at Rs 6,300 per tonne and raw thermal coal at about Rs 1,200 per tonne.
Source: Economic Times
Confirming the development, a senior CIL official said, “The hike in price of coal by CIL is inevitable and it would be applicable to all grades of coal. The board of directors of CIL is empowered to hike coal prices. But the coal PSU would approach the new government at the Centre keeping in view the impact of an increase in coal prices on the economy as a whole.”
However, the official declined to comment on the percentage of hike in coal prices and also on the time-frame of the price hike.
The implementation of the NCWA-VIII posed a serious threat to CIL’s bottomline and the price hike of coal was needed for the coal public sector undertaking (PSU) to remain profitable.
CIL’s net profit in 2008-09 stood at only Rs 96 crore after the navratna coal firm paid arrears of Rs 7,856 crore to its employees as a result of the hike in salaries under NCWA-VIII which was to be implemented with retrospective effect from July 2006. The coal PSU had recorded a net profit of Rs 5,233.46 crore in 2008-09.
The salary hike had rendered 33 projects of CIL unviable which were to be taken up in the 11th Plan (2007-12) and they were to add 28.37 million tonnes of coal production per annum. The hike in salaries had also sparked fears of the possibility of CIL missing its target output by the end of 2011-12 which was projected at 520 million tonnes.
It may be noted that CIL had announced hike in prices of coal three times since 2000 and the last price hike was in December 2007.
The average price of coal sold by CIL was 30-35 per cent lower than the prevailing international prices of the raw material even though the spot price of hard coking coal in the international market had drastically fallen to $130 a tonne after touching an all-time high of $300 in 2007.
Bharat Coking Coal Limited (BCCL), one of the subsidiaries of CIL supplied washed coking coal to its consumers at Rs 6,300 per tonne and raw thermal coal at about Rs 1,200 per tonne.
Source: Economic Times
Phoenix Coal Gets Go-Ahead For KO Mine
Phoenix Coal Inc said it has received the final permit to start mine development and coal production on its KO property and would lift its force majeure declaration once production ramps-up.
Force majeure is a clause included in contracts that frees both parties from liabilities in case of an unavoidable circumstance beyond the control of the parties.
The company, which received the final permit from the United States Army Corps of Engineers, said it now has all the three permits required to commence operations at the KO property.
The KO mine is expected to contribute over 400,000 saleable tons this year and to reach full production levels by late June, the company said.
SourcE: Reuters
Force majeure is a clause included in contracts that frees both parties from liabilities in case of an unavoidable circumstance beyond the control of the parties.
The company, which received the final permit from the United States Army Corps of Engineers, said it now has all the three permits required to commence operations at the KO property.
The KO mine is expected to contribute over 400,000 saleable tons this year and to reach full production levels by late June, the company said.
SourcE: Reuters
ThyssenKrupp Expects To Cut Iron Ore Bill By One-Third
ThyssenKrupp Steel AG expects it will be able cut its iron ore bill by considerably more than one third in ongoing negotiations with its suppliers, a spokesman for the steel unit of German industrial conglomerate ThyssenKrupp AG said on Tuesday.
"We haven't yet reached an agreement, but we expect our iron ore prices will decline by considerably more than one third, including shipping costs," the spokesman said.
Earlier this month, ThyssenKrupp Chief Executive Ekkehard Schulz said the company was aiming to halve iron ore prices in negotiations with its suppliers.
The spokesman's comments came in response to a deal struck between Anglo-Australian miner Rio Tinto PLC (RTP) and Nippon Steel Corp. that cut iron ore fines prices for the Japanese steelmaker by 33%.
He declined to specify when the talks with iron ore producers will be concluded.
"Talks could end pretty soon, but they could also drag on for several weeks," he said.
The Rio Tinto-Nippon deal is the first this year and could become the benchmark for the other two big miners, BHP Billiton Ltd. (BHP) and Companhia Vale do Rio Doce (RIO), which are continuing negotiations with steel mills.
Source: Dow Jones
"We haven't yet reached an agreement, but we expect our iron ore prices will decline by considerably more than one third, including shipping costs," the spokesman said.
Earlier this month, ThyssenKrupp Chief Executive Ekkehard Schulz said the company was aiming to halve iron ore prices in negotiations with its suppliers.
The spokesman's comments came in response to a deal struck between Anglo-Australian miner Rio Tinto PLC (RTP) and Nippon Steel Corp. that cut iron ore fines prices for the Japanese steelmaker by 33%.
He declined to specify when the talks with iron ore producers will be concluded.
"Talks could end pretty soon, but they could also drag on for several weeks," he said.
The Rio Tinto-Nippon deal is the first this year and could become the benchmark for the other two big miners, BHP Billiton Ltd. (BHP) and Companhia Vale do Rio Doce (RIO), which are continuing negotiations with steel mills.
Source: Dow Jones
Surprise Boost In Australia Coal Exports To China
A surge in coal exports to China could stave off what looked to be an industry-wide slump.
Coal producers have attributed the jump to heavy Chinese buying, which has offset declines in markets such as Japan.
Chief executive of Felix Resources Brian Flannery, said his company has previously sent only one shipment to China in four years, but was likely to sell 10 shipments this year: “We’ve had a cutback in the Japanese off-take, which has probably been picked up by our Chinese off-take.”
While China has its own coal mines, demand may have spiked after the Chinese government closed some of them due to safety concerns.
The demand is mostly for coking coal, used in steel production, which may mean the Chinese stimulus package, and a subsequent increase in production, has had positive effects on the Australian industry.
Source: Dynamicexport.com
Coal producers have attributed the jump to heavy Chinese buying, which has offset declines in markets such as Japan.
Chief executive of Felix Resources Brian Flannery, said his company has previously sent only one shipment to China in four years, but was likely to sell 10 shipments this year: “We’ve had a cutback in the Japanese off-take, which has probably been picked up by our Chinese off-take.”
While China has its own coal mines, demand may have spiked after the Chinese government closed some of them due to safety concerns.
The demand is mostly for coking coal, used in steel production, which may mean the Chinese stimulus package, and a subsequent increase in production, has had positive effects on the Australian industry.
Source: Dynamicexport.com
Oromonde Mining Upbeat On Outlook For Tungsten
Irish-based mineral exploration company Ormonde Mining has reported pre-tax losses of €2.5m for the year to December 2008 compared to losses of €580,00 the previous year.
The company said this was due mainly to a write-down of early exploration work on the Salamon and Trives projects.
Ormonde said that an increase in the total resource led it to double its proposed production rate to 400,000 tonnes a year.
It said its Barruecopardo Tungsten project at Salamanca in Spain is positioning itself to become a major, low-capital, long-life tungsten operation at a time when structural changes and integration within the industry continue in anticipation of future tungsten shortages.
Tungsten has a hardness close to diamonds. It is mainly used in the manufacture of cutting steels and in tungsten alloys, electronics, and chemical products
Chairman Mike Donoghue said that the company - in line with many firms - has been curtailing discretionary development and administrative expenditures, and adopting a very conservative approach to budgeting.
He said that credit crisis and overall fall in demand has impacted adversely in metal prices and stock market valuations.
'However, it would appear that we may have reached the trough of the downturn and a sustainable recovery of the stock market is predicted in anticipation of a broader, if low, economic recovery in 2010/2011,' he stated.
He said that within the mining industry, there is general acceptance that the metal commodity shortages have not been rectified during the last five years and stronger metal prices are deemed inevitable when the world economy recovers.
Source: RTE
The company said this was due mainly to a write-down of early exploration work on the Salamon and Trives projects.
Ormonde said that an increase in the total resource led it to double its proposed production rate to 400,000 tonnes a year.
It said its Barruecopardo Tungsten project at Salamanca in Spain is positioning itself to become a major, low-capital, long-life tungsten operation at a time when structural changes and integration within the industry continue in anticipation of future tungsten shortages.
Tungsten has a hardness close to diamonds. It is mainly used in the manufacture of cutting steels and in tungsten alloys, electronics, and chemical products
Chairman Mike Donoghue said that the company - in line with many firms - has been curtailing discretionary development and administrative expenditures, and adopting a very conservative approach to budgeting.
He said that credit crisis and overall fall in demand has impacted adversely in metal prices and stock market valuations.
'However, it would appear that we may have reached the trough of the downturn and a sustainable recovery of the stock market is predicted in anticipation of a broader, if low, economic recovery in 2010/2011,' he stated.
He said that within the mining industry, there is general acceptance that the metal commodity shortages have not been rectified during the last five years and stronger metal prices are deemed inevitable when the world economy recovers.
Source: RTE
Rio Agrees 33 Per Cent Price Cut With Nippon Steel
Rio Tinto Group, the world’s second- largest iron ore exporter, has agreed to a 33 percent cut in contract prices with Japanese steelmakers, the first decline in seven years as the global recession slashes demand.
Nippon Steel Corp., the world’s second-biggest steelmaker, agreed to pay Rio 97 cents a dry metric ton unit for its benchmark product in the year started April 1, London-based Rio said today in a statement. Goldman Sachs JBWere Pty had forecast a 40 percent drop from last year’s record.
Rio’s shares reversed a decline and rival Australian iron- ore exporters surged on optimism the agreement will set a global benchmark for contract prices, which had risen more than fivefold since 1999. Chinese steel mills, the world’s biggest producers, are likely to resist the accord after calling for prices to be as much as halved.
“What looks like a pretty good deal might end up being a bit tougher when they come across the Chinese,” said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. “Historically you could say this is a done deal, when Rio strikes with Nippon, well everyone follows, but I get a feeling maybe the Chinese have got something else in store.”
The price accord is the second-highest on record, according to Bloomberg calculations. “The fines settlement is better than most brokers expectations for a 35 to 40 percent fall,” Marcus Padley, a broker at Paterson Securities Ltd., wrote in his trading newsletter, Marcus Today.
Nippon Steel spokesman Hayato Uchida confirmed an agreement with Rio at the cited prices. JFE Holdings Inc., Japan’s second- biggest steelmaker, agreed to the same prices, according to a spokesman for the company, who declined to be named. Kobe Steel Ltd., Japan’s fourth-largest producer, also reached an agreement for a 33 percent cut, said Ryuichi Nakagami, a company spokesman.
Sumitomo Metal Industries Ltd., Japan’s third-largest steelmaker, also reached agreement with Rio on the same conditions, said Nobuaki Masuda, a spokesman for the company.
Posco, Asia’s third-biggest steelmaker, is still in talks with Rio, Choi Doo Jin, a spokesman for the Pohang, South Korea- based company, said by telephone.
“I can’t comment because we need to study” the accord, said Ding Shouhu, the iron ore price negotiator for Baosteel Group Corp., China’s largest steelmaker. “We haven’t got in touch with Rio for two weeks. Rio hasn’t set a time for the next round of negotiations with us.”
The worst recession since World War II has slashed demand for autos and building materials, cutting profits for steelmakers and ore producers. Spot prices for iron ore into China have dropped 66 percent from their February 2008 record.
The price of iron ore for immediate delivery, including the cost of freight to China, rose 0.8 percent to $67.50 a ton for the week ended May 22, according to Metal Bulletin. The cost of freight from Rio’s Dampier port in Australia to Qingdao port in China rose to $10.75 a ton in the week ended May 15, according to prices from SSY Futures Ltd., a unit of the world’s second- largest shipbroker.
“This settlement is a realistic outcome for both parties, one that reflects the global market for iron ore and the current challenging market conditions facing our customers,” Sam Walsh, Rio’s iron ore unit chief executive, said in the statement.
After taking into account an expected loss on aluminum, iron ore may generate about 85 percent of Rio’s earnings in 2009, JPMorgan Chase & Co. said in a report this month.
Nippon Steel agreed to pay 112 cents per dry metric ton unit for Rio’s premium Pilbara Lump product, 44 percent lower than last year’s contract price, the statement said. Rio last year won an 80 percent gain in fines prices with Asian customers and a 97 percent rise in lump prices.
Vale SA, the world’s biggest iron-ore producer, last week said it was waiting for rival BHP Billiton Ltd., the third- biggest exporter, and Rio to reach an accord before deciding prices for the year. Melbourne-based BHP spokeswoman Kelly Quirke declined to comment on the progress of BHP’s iron ore talks with customers. The stock rose 1.2 percent to A$34.29. BHP has been pushing to scrap the benchmark contracts in favor of an index linked to spot prices.
“The market consensus was a 30 to 40 percent cut,” said Kazuhiro Harada, an analyst at Tokyo-based UFJ Mitsubishi UFJ Securities Co. “The settlement won’t have a big impact on earnings forecast as the rate of the cut is seen to be in line with the companies’ expectation.”
China, the world’s biggest consumer of iron ore, has previously wanted a price cut of between 40 percent and 50 percent. Calls to Shan Shanghua, secretary general of China Iron and Steel Association, weren’t immediately returned.
Source: Bloomberg
Nippon Steel Corp., the world’s second-biggest steelmaker, agreed to pay Rio 97 cents a dry metric ton unit for its benchmark product in the year started April 1, London-based Rio said today in a statement. Goldman Sachs JBWere Pty had forecast a 40 percent drop from last year’s record.
Rio’s shares reversed a decline and rival Australian iron- ore exporters surged on optimism the agreement will set a global benchmark for contract prices, which had risen more than fivefold since 1999. Chinese steel mills, the world’s biggest producers, are likely to resist the accord after calling for prices to be as much as halved.
“What looks like a pretty good deal might end up being a bit tougher when they come across the Chinese,” said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. “Historically you could say this is a done deal, when Rio strikes with Nippon, well everyone follows, but I get a feeling maybe the Chinese have got something else in store.”
The price accord is the second-highest on record, according to Bloomberg calculations. “The fines settlement is better than most brokers expectations for a 35 to 40 percent fall,” Marcus Padley, a broker at Paterson Securities Ltd., wrote in his trading newsletter, Marcus Today.
Nippon Steel spokesman Hayato Uchida confirmed an agreement with Rio at the cited prices. JFE Holdings Inc., Japan’s second- biggest steelmaker, agreed to the same prices, according to a spokesman for the company, who declined to be named. Kobe Steel Ltd., Japan’s fourth-largest producer, also reached an agreement for a 33 percent cut, said Ryuichi Nakagami, a company spokesman.
Sumitomo Metal Industries Ltd., Japan’s third-largest steelmaker, also reached agreement with Rio on the same conditions, said Nobuaki Masuda, a spokesman for the company.
Posco, Asia’s third-biggest steelmaker, is still in talks with Rio, Choi Doo Jin, a spokesman for the Pohang, South Korea- based company, said by telephone.
“I can’t comment because we need to study” the accord, said Ding Shouhu, the iron ore price negotiator for Baosteel Group Corp., China’s largest steelmaker. “We haven’t got in touch with Rio for two weeks. Rio hasn’t set a time for the next round of negotiations with us.”
The worst recession since World War II has slashed demand for autos and building materials, cutting profits for steelmakers and ore producers. Spot prices for iron ore into China have dropped 66 percent from their February 2008 record.
The price of iron ore for immediate delivery, including the cost of freight to China, rose 0.8 percent to $67.50 a ton for the week ended May 22, according to Metal Bulletin. The cost of freight from Rio’s Dampier port in Australia to Qingdao port in China rose to $10.75 a ton in the week ended May 15, according to prices from SSY Futures Ltd., a unit of the world’s second- largest shipbroker.
“This settlement is a realistic outcome for both parties, one that reflects the global market for iron ore and the current challenging market conditions facing our customers,” Sam Walsh, Rio’s iron ore unit chief executive, said in the statement.
After taking into account an expected loss on aluminum, iron ore may generate about 85 percent of Rio’s earnings in 2009, JPMorgan Chase & Co. said in a report this month.
Nippon Steel agreed to pay 112 cents per dry metric ton unit for Rio’s premium Pilbara Lump product, 44 percent lower than last year’s contract price, the statement said. Rio last year won an 80 percent gain in fines prices with Asian customers and a 97 percent rise in lump prices.
Vale SA, the world’s biggest iron-ore producer, last week said it was waiting for rival BHP Billiton Ltd., the third- biggest exporter, and Rio to reach an accord before deciding prices for the year. Melbourne-based BHP spokeswoman Kelly Quirke declined to comment on the progress of BHP’s iron ore talks with customers. The stock rose 1.2 percent to A$34.29. BHP has been pushing to scrap the benchmark contracts in favor of an index linked to spot prices.
“The market consensus was a 30 to 40 percent cut,” said Kazuhiro Harada, an analyst at Tokyo-based UFJ Mitsubishi UFJ Securities Co. “The settlement won’t have a big impact on earnings forecast as the rate of the cut is seen to be in line with the companies’ expectation.”
China, the world’s biggest consumer of iron ore, has previously wanted a price cut of between 40 percent and 50 percent. Calls to Shan Shanghua, secretary general of China Iron and Steel Association, weren’t immediately returned.
Source: Bloomberg
Goldman Says "Worst Is Over" For Raw Materials Demand
The “worst is over” for raw materials demand and investors should increase investment in companies including BHP Billiton Ltd. and Newcrest Mining Ltd., according to Goldman Sachs JBWere Pty.
“We are becoming increasingly confident that the period of weakest demand for raw materials is behind us,” analysts led by Melbourne-based Malcolm Southwood said yesterday in a report. “We have also seen the bottom of the price cycle for base metals, and particularly for copper, which remains the most supply-constrained, and therefore our preferred commodity for investment exposure.”
Rio Tinto Group, the third-largest mining company, is hopeful of a “V-shape” recovery in China, the world’s biggest metals buyer, an executive said today. The Asian nation increased imports of copper, aluminum and iron ore to a record in April as buyers replenished stockpiles for the country’s 4 trillion yuan ($586 billion) stimulus.
“The rate of copper and iron ore imports into China has been extraordinary and certainly implies a degree of restocking,” Goldman’s Southwood said. “The bottom line here is that we think economic sentiment, demand for raw materials, and commodities prices will be better in 12 months’ time and 24 months’ time than they are now.”
BHP rose 1.2 percent to A$34.29 at the 4:10 p.m. Sydney time close on the Australian stock exchange. Newcrest, Australia’s biggest gold producer, advanced 1.9 percent to A$32. Goldman reiterated “buy” recommendations on BHP, the world’s largest mining company, and Newcrest, it said in the report.
Copper futures in London have jumped 52 percent this year as demand for pipes and wires rebounds and China boosts imports. New supplies probably won’t meet the estimated additional 4 million metric tons of demand by 2013, analysts at Macquarie Group Ltd. led by Jim Lennon said today in an e-mailed report.
“What is unshakeable is our belief that China and India and the other emerging economies will be the key engines of any return to world growth and commodity demand growth,” Rio Tinto’s head of iron ore Sam Walsh said at a resources industry presentation in Canberra today. London-based Rio is the world’s second-largest exporter of iron ore.
Chinese imports of iron ore and coal will increase by more than previously forecast this year and the nation is now setting a floor for prices, Goldman said in the report.
Australia’s economy will benefit from positive signs on exports to China, its biggest trading partner, and other developing nations, Treasurer Wayne Swan said today.
Goldman also reiterated “buy” ratings on Equinox Minerals Ltd., PanAust Ltd., Felix Resources Ltd., Whitehaven Coal Ltd., Lihir Gold Ltd., Sino Gold Mining Ltd. and Dominion Mining Ltd, the report said.
Source: Bloomberg
“We are becoming increasingly confident that the period of weakest demand for raw materials is behind us,” analysts led by Melbourne-based Malcolm Southwood said yesterday in a report. “We have also seen the bottom of the price cycle for base metals, and particularly for copper, which remains the most supply-constrained, and therefore our preferred commodity for investment exposure.”
Rio Tinto Group, the third-largest mining company, is hopeful of a “V-shape” recovery in China, the world’s biggest metals buyer, an executive said today. The Asian nation increased imports of copper, aluminum and iron ore to a record in April as buyers replenished stockpiles for the country’s 4 trillion yuan ($586 billion) stimulus.
“The rate of copper and iron ore imports into China has been extraordinary and certainly implies a degree of restocking,” Goldman’s Southwood said. “The bottom line here is that we think economic sentiment, demand for raw materials, and commodities prices will be better in 12 months’ time and 24 months’ time than they are now.”
BHP rose 1.2 percent to A$34.29 at the 4:10 p.m. Sydney time close on the Australian stock exchange. Newcrest, Australia’s biggest gold producer, advanced 1.9 percent to A$32. Goldman reiterated “buy” recommendations on BHP, the world’s largest mining company, and Newcrest, it said in the report.
Copper futures in London have jumped 52 percent this year as demand for pipes and wires rebounds and China boosts imports. New supplies probably won’t meet the estimated additional 4 million metric tons of demand by 2013, analysts at Macquarie Group Ltd. led by Jim Lennon said today in an e-mailed report.
“What is unshakeable is our belief that China and India and the other emerging economies will be the key engines of any return to world growth and commodity demand growth,” Rio Tinto’s head of iron ore Sam Walsh said at a resources industry presentation in Canberra today. London-based Rio is the world’s second-largest exporter of iron ore.
Chinese imports of iron ore and coal will increase by more than previously forecast this year and the nation is now setting a floor for prices, Goldman said in the report.
Australia’s economy will benefit from positive signs on exports to China, its biggest trading partner, and other developing nations, Treasurer Wayne Swan said today.
Goldman also reiterated “buy” ratings on Equinox Minerals Ltd., PanAust Ltd., Felix Resources Ltd., Whitehaven Coal Ltd., Lihir Gold Ltd., Sino Gold Mining Ltd. and Dominion Mining Ltd, the report said.
Source: Bloomberg
Rio Tinto Chief Predicts China Economic Recovery
Rio Tinto iron ore chief executive Sam Walsh said today China has shown signs of economic improvement that may lead to a rapid, "V-shaped" recovery.
Speaking at the Mineral Week conference in Canberra today, he said China and India would be the key engines for an economic recovery, and while signs as yet lacked clarity, there was hope for a swift recovery in China on the back of aggressive government stimulus spending.
In terms of iron ore, Rio Tinto will be able to quickly respond once markets improve, reversing output cuts and going ahead with a planned iron ore expansion from 220 million tonnes annually to 300 million tonnes.
“Our major projects are ticking over, and we can bring them back to full production quickly once markets improve,” Mr Walsh said.
“We are ready to approve (the expansion) at short notice once markets improve.
“We have a positive medium-term outlook for our markets.”
Noting record iron ore imports into China, Mr Walsh said that was due to the closure of Chinese domestic iron ore mines and low spot prices.
Turning to Rio’s proposed $US19.5 billion landmark deal with Chinalco, Mr Walsh said Australia’s resources industry had long been built on customer relationships such as those with Japan, resulting in many joint ventures that haven’t impaired resource development.
“This is a time to recognise that trade and investment into resources go together,” Mr Walsh said.
He said the miner would determine any changes to terms of the proposed deal after Rio Chairman Jan du Plessis has met with shareholders.
“Once we have heard shareholders’ views, we will determine action,” he told reporters.
“We are proceeding for now with the existing terms of the deal.Yes, the economic situation is improving and we need to take into account what shareholders want.
“And we need to (meet with shareholders) first before any revision of the deal.”
Mr Walsh confirmed that Mr du Plessis will meet with government representatives and with shareholders in Australia this week.
Source: The Australian
Speaking at the Mineral Week conference in Canberra today, he said China and India would be the key engines for an economic recovery, and while signs as yet lacked clarity, there was hope for a swift recovery in China on the back of aggressive government stimulus spending.
In terms of iron ore, Rio Tinto will be able to quickly respond once markets improve, reversing output cuts and going ahead with a planned iron ore expansion from 220 million tonnes annually to 300 million tonnes.
“Our major projects are ticking over, and we can bring them back to full production quickly once markets improve,” Mr Walsh said.
“We are ready to approve (the expansion) at short notice once markets improve.
“We have a positive medium-term outlook for our markets.”
Noting record iron ore imports into China, Mr Walsh said that was due to the closure of Chinese domestic iron ore mines and low spot prices.
Turning to Rio’s proposed $US19.5 billion landmark deal with Chinalco, Mr Walsh said Australia’s resources industry had long been built on customer relationships such as those with Japan, resulting in many joint ventures that haven’t impaired resource development.
“This is a time to recognise that trade and investment into resources go together,” Mr Walsh said.
He said the miner would determine any changes to terms of the proposed deal after Rio Chairman Jan du Plessis has met with shareholders.
“Once we have heard shareholders’ views, we will determine action,” he told reporters.
“We are proceeding for now with the existing terms of the deal.Yes, the economic situation is improving and we need to take into account what shareholders want.
“And we need to (meet with shareholders) first before any revision of the deal.”
Mr Walsh confirmed that Mr du Plessis will meet with government representatives and with shareholders in Australia this week.
Source: The Australian
Monday, May 25, 2009
Arrow Mines, Ursa Major Ponder Merger
Canadian Arrow Mines Ltd. and Ursa Major Minerals Inc. are considering a strategic merger that would lead to the creation of a mid-tier nickel producer in Ontario.
The companies said Monday they envision an equity swap that would have Ursa Major buy Canadian Arrow.
The combined company's board would have three members nominated by Ursa Major and two by Canadian Arrow. Representatives of the two companies would also hold senior management positions.
Ursa chief executive Richard Sutcliffe would be chairman of the board and CEO of the combined company while Canadian Arrow president Kim Tyler would be president and chief operating officer.
The combined company would have reserves and resources containing an estimated 200 million pounds of nickel, plus significant copper and precious metal by-products.
Ursa would exchange one of its shares in return for 1.5 Arrow share, subject to a price adjustment if certain conditions aren't met. All Arrow options and warrants would be exchanged for Ursa options on the same basis and Ursa's existing options would remain intact.
"This merger is a key step in our goal of becoming a mid-tier nickel producer," Sutcliffe said in a statement.
Ursa's main asset is the Shakespeare nickel project in the Sudbury area, a fully permitted open-pit nickel-copper sulphide deposit containing over 86 million pounds of nickel.
Canadian Arrow's main asset is the Kenbridge nickel-copper sulphide deposit, 70 km southeast of Kenora, Ont., containing over 98 million pounds of nickel.
Canadian Arrow CEO Dean MacEachern said his company anticipates increased exposure to the platinum-group precious metals as a result of a Ursa combination "as well as the operational flexibility to take rapid advantage of improved market conditions."
Each company's board has agreed not to solicit other proposals during their exclusive agreement and each has agreed to a $400,000 reciprocal break fee provision.
Canadian Arrow shares traded at 6.5 cents on the TSX Venture Exchange at midday Monday. Ursa Major shares haven't traded since May 21, when they closed at 14 cents on the Toronto Stock Exchange.
Source: Canadian Press
The companies said Monday they envision an equity swap that would have Ursa Major buy Canadian Arrow.
The combined company's board would have three members nominated by Ursa Major and two by Canadian Arrow. Representatives of the two companies would also hold senior management positions.
Ursa chief executive Richard Sutcliffe would be chairman of the board and CEO of the combined company while Canadian Arrow president Kim Tyler would be president and chief operating officer.
The combined company would have reserves and resources containing an estimated 200 million pounds of nickel, plus significant copper and precious metal by-products.
Ursa would exchange one of its shares in return for 1.5 Arrow share, subject to a price adjustment if certain conditions aren't met. All Arrow options and warrants would be exchanged for Ursa options on the same basis and Ursa's existing options would remain intact.
"This merger is a key step in our goal of becoming a mid-tier nickel producer," Sutcliffe said in a statement.
Ursa's main asset is the Shakespeare nickel project in the Sudbury area, a fully permitted open-pit nickel-copper sulphide deposit containing over 86 million pounds of nickel.
Canadian Arrow's main asset is the Kenbridge nickel-copper sulphide deposit, 70 km southeast of Kenora, Ont., containing over 98 million pounds of nickel.
Canadian Arrow CEO Dean MacEachern said his company anticipates increased exposure to the platinum-group precious metals as a result of a Ursa combination "as well as the operational flexibility to take rapid advantage of improved market conditions."
Each company's board has agreed not to solicit other proposals during their exclusive agreement and each has agreed to a $400,000 reciprocal break fee provision.
Canadian Arrow shares traded at 6.5 cents on the TSX Venture Exchange at midday Monday. Ursa Major shares haven't traded since May 21, when they closed at 14 cents on the Toronto Stock Exchange.
Source: Canadian Press
Ruuki Buys Controlling Stake In Mogale Alloys
Ruukki South Africa, the South African subsidiary of Finnish industrial refining group Ruukki, has acquired an 84,9% stake in Mogale Alloys, in Krugersdorp, from JSE-listed commodities trading company Metmar for about R2-billion, it announced on Monday.
The subsidiary was planning to make further investments in South African minerals and metals operations, it noted in a statement, adding that it was particularly interested in minerals and alloys, with a focus on chrome and platinum processing.
The group, which was listed on the NasdaqOMX Helsinki, was also planning to make a secondary listing on the JSE during 2010, following the acquisition of South African interests, it said in a statement.
Black economic-empowerment partners would own the balance of Ruukki SA, which has been headed by CEO Alwyn Smit since 2008.
Of the purchase amount, R1,2-billion was payable immediately, with R1,125-billion going to the vendors and a further R75-million being paid into the Mogale Management Trust over five years.
The remaining R800-million would be financed by the vendors with R200-million to be repaid after a year and R600-million to be repaid over the next five years.
Mogale has four smelting furnaces and produces silico manganese, ferrochrome and stainless steel alloy, with a combined capacity of 100 000 t/y.
Smit said the Mogale acquisition was an ideal opportunity for Ruukki, both as a ferrochrome operation and as a base from which Ruukki could expand into platinum and other metals processing.
“As demand recovers, ferrochrome market prices are expected to outperform other minerals, owing to limited supply and growing demand. The Mogale transaction expands and diversifies Ruukki’s current Turkish and German minerals capabilities of special grade ferrochrome, and gives opportunities to utilise existing sales channels,” he commented.
Source: Mining Weekly
The subsidiary was planning to make further investments in South African minerals and metals operations, it noted in a statement, adding that it was particularly interested in minerals and alloys, with a focus on chrome and platinum processing.
The group, which was listed on the NasdaqOMX Helsinki, was also planning to make a secondary listing on the JSE during 2010, following the acquisition of South African interests, it said in a statement.
Black economic-empowerment partners would own the balance of Ruukki SA, which has been headed by CEO Alwyn Smit since 2008.
Of the purchase amount, R1,2-billion was payable immediately, with R1,125-billion going to the vendors and a further R75-million being paid into the Mogale Management Trust over five years.
The remaining R800-million would be financed by the vendors with R200-million to be repaid after a year and R600-million to be repaid over the next five years.
Mogale has four smelting furnaces and produces silico manganese, ferrochrome and stainless steel alloy, with a combined capacity of 100 000 t/y.
Smit said the Mogale acquisition was an ideal opportunity for Ruukki, both as a ferrochrome operation and as a base from which Ruukki could expand into platinum and other metals processing.
“As demand recovers, ferrochrome market prices are expected to outperform other minerals, owing to limited supply and growing demand. The Mogale transaction expands and diversifies Ruukki’s current Turkish and German minerals capabilities of special grade ferrochrome, and gives opportunities to utilise existing sales channels,” he commented.
Source: Mining Weekly
India's Iron Ore Exports Down 54 Per Cent In March
India's exports of iron ore, a key ingredient in steel manufacturing, plunged by 54 per cent in March from a year-ago due to recession in world's major economies such as the US and the Europe.
Overseas sales were down to $392 million in March from $852 million in the same month last year, according to Commerce Ministry data.
During the financial year 2008-09, iron ore exports fell by 25 per cent to $4.37 billion from $5.83 billion in the same period last year.
Industry experts opined that iron ore exports dipped due to price cut by rivals to win customers in China -- the world’s largest buyer of the steel making ingredient.
The spot prices of the ore was traded at $63 per tonne, against the February high of $84 per tonne.
Meanwhile, India's mica, coal and mineral ores exports also declined by 46 per cent in March from the year-ago period, the data said.
The overseas sales were down to $162 million in March from $301 million in the same month last year.
In the financial year 2008-09, the country's mica, coal and mineral ore exports dipped by 6.5 per cent to $3.09 billion from $3.3 billion in the previous fiscal.
SourcE: Business Standard
Overseas sales were down to $392 million in March from $852 million in the same month last year, according to Commerce Ministry data.
During the financial year 2008-09, iron ore exports fell by 25 per cent to $4.37 billion from $5.83 billion in the same period last year.
Industry experts opined that iron ore exports dipped due to price cut by rivals to win customers in China -- the world’s largest buyer of the steel making ingredient.
The spot prices of the ore was traded at $63 per tonne, against the February high of $84 per tonne.
Meanwhile, India's mica, coal and mineral ores exports also declined by 46 per cent in March from the year-ago period, the data said.
The overseas sales were down to $162 million in March from $301 million in the same month last year.
In the financial year 2008-09, the country's mica, coal and mineral ore exports dipped by 6.5 per cent to $3.09 billion from $3.3 billion in the previous fiscal.
SourcE: Business Standard
China Becomes Net Importer Of Ferroalloys
China became a net importer of ferroalloys in January and February, according to customs statistics. The country imported 242,211 tonnes of ferroalloys and exported 177,697 tonnes in the first two months of 2009.
The main reason is the much lower level of exports and, since price of high carbon ferrochrome produced in China is now higher than that produced in South Africa, India and Kazakhstan, the imports of high carbon ferrochrome into China have increased to a considerable extent. The price of ferrosilicon and silicon metal produced in China has remained competitive in the export market.
Higher raw materials costs and other cost increases to offset the enviornmental impact of production has led to an erosion of the cost advantages previously by China. As a result almost half of China's ferrochrome demand has to be satisfied by imports.
In addition, falling prices for ferrochrome in the western market along with a decreased demand has caused a trend to sell more ferrochrome into China.
The unit prices of ferrochrome imported into China in February of 2009 and calculated from the values cleared the customs were:
1. High carbon ferrochrome at 62.78 US Cents per lb of Cr CIF on Cr 65% base of Cr CIF on Cr 50% base
2. Low carbon ferrochrome at 93.5 US Cents per lb of Cr CIF on Cr 65% base.
In view of the facts that China imported considerable quantities of chrome ore at higher prices in 2008 the cost price to produce high carbon ferrochrome in China is estimated to be higher than 65 US Cents per lb Cr. Western suppliers are supposed to have taken the offensive to sell high carbon ferrochrome to China at lower prices than 60 US-Cents per lb. Cr CIF in February and March of 2009.
China imported silicomanganese at USD 871 per tonne of material CIF in February of 2009 and this price level is lower than that at which China exported silicomanganese produced by themselves. Chinese silicomanganese has been offered for Japan at USD 1,300 per metric ton CIF but when export duty of 20% and ocean freight are deducted from this CIF price, its FOB price comes to USD 1,050 per metric ton. Indian silicomanganese is currently being offered at USD 1,100 per tonne CIF Japan, which is USD 200 per ton lower than that of Chinese product.
South Africa, India and Kazakhstan are the countries producing raw materials for manganese-based and chrome-based ferroalloys and, in view of the depression in the markets at present, the matter in question is whether or not Chinese products are able to compete with those produced in the three countries as mentioned.
Source: Steel Guru
The main reason is the much lower level of exports and, since price of high carbon ferrochrome produced in China is now higher than that produced in South Africa, India and Kazakhstan, the imports of high carbon ferrochrome into China have increased to a considerable extent. The price of ferrosilicon and silicon metal produced in China has remained competitive in the export market.
Higher raw materials costs and other cost increases to offset the enviornmental impact of production has led to an erosion of the cost advantages previously by China. As a result almost half of China's ferrochrome demand has to be satisfied by imports.
In addition, falling prices for ferrochrome in the western market along with a decreased demand has caused a trend to sell more ferrochrome into China.
The unit prices of ferrochrome imported into China in February of 2009 and calculated from the values cleared the customs were:
1. High carbon ferrochrome at 62.78 US Cents per lb of Cr CIF on Cr 65% base of Cr CIF on Cr 50% base
2. Low carbon ferrochrome at 93.5 US Cents per lb of Cr CIF on Cr 65% base.
In view of the facts that China imported considerable quantities of chrome ore at higher prices in 2008 the cost price to produce high carbon ferrochrome in China is estimated to be higher than 65 US Cents per lb Cr. Western suppliers are supposed to have taken the offensive to sell high carbon ferrochrome to China at lower prices than 60 US-Cents per lb. Cr CIF in February and March of 2009.
China imported silicomanganese at USD 871 per tonne of material CIF in February of 2009 and this price level is lower than that at which China exported silicomanganese produced by themselves. Chinese silicomanganese has been offered for Japan at USD 1,300 per metric ton CIF but when export duty of 20% and ocean freight are deducted from this CIF price, its FOB price comes to USD 1,050 per metric ton. Indian silicomanganese is currently being offered at USD 1,100 per tonne CIF Japan, which is USD 200 per ton lower than that of Chinese product.
South Africa, India and Kazakhstan are the countries producing raw materials for manganese-based and chrome-based ferroalloys and, in view of the depression in the markets at present, the matter in question is whether or not Chinese products are able to compete with those produced in the three countries as mentioned.
Source: Steel Guru
Sunday, May 24, 2009
Strong Demand From China Offsets Australian Coal Export Slump
A surprise surge in Chinese demand for high-quality coal used in steel making has raised hopes that Asia's growth engine could offset the slump engulfing Australia's biggest export.
Queensland's coal terminals at Hay Point and Dalrymple Bay last month posted their strongest results since November, shipping 7.2 million tonnes from the region's coking coal mines.
Producers say the turnaround was driven by heavy Chinese buying on the spot market - in stark contrast to the country's traditional role as a net coal exporter.
After slashing production when recession hit last year, miners are meeting the extra demand by running down stockpiles. If the surge continues, it could help revitalise demand for the type of coal that fetched $US300 a tonne last year, compared with about $US125 ($A161) a tonne in recent contract negotiations.
The chief executive of Felix Resources, Brian Flannery, said after making one shipment to China in four years, the company was likely to sell 10 shipments this year, possibly more. "We've had a cutback in the Japanese off-take, which has probably been picked up by our Chinese off-take," he said.
The executive general manager of corporate development at Macarthur Coal, Ian McAleese, said the Chinese buying had prompted "quite a significant turnaround" in demand but the longevity of the surge remained uncertain. "Because they historically have not been in this market, it's very difficult to get a read," he said.
Producers say it has suddenly become cheaper for Chinese companies to buy coal from Australia because of difficulties setting domestic prices. China's Government has closed several mines because of safety concerns, further limiting supply.
A spokeswoman for the world's biggest private coal producer, US-based Peabody Energy, said the extra demand was equivalent to 10 million tonnes a year of coal being sent to China. Although it had not offset the global slump in world production, she said the company was confident the market was picking up.
While the trend is promising for the industry, coal is unlikely to test the record contract prices of last year while the world's biggest buyer - Japan - remains in recession.
An analyst at Patersons, Andrew Harrington, said demand growth in India and China was the most likely reason behind any improvement in the coking coal market in the next six months.
But hopes of a fast recovery were hit last week by news that Japan was shrinking by 15.7 per cent a year, the fastest rate of decline since the Second World War. "There will be too much uncertainty, even in the first quarter of next year, to be confident of a price increase," he said.
Source: Sydney Morning Herald
Queensland's coal terminals at Hay Point and Dalrymple Bay last month posted their strongest results since November, shipping 7.2 million tonnes from the region's coking coal mines.
Producers say the turnaround was driven by heavy Chinese buying on the spot market - in stark contrast to the country's traditional role as a net coal exporter.
After slashing production when recession hit last year, miners are meeting the extra demand by running down stockpiles. If the surge continues, it could help revitalise demand for the type of coal that fetched $US300 a tonne last year, compared with about $US125 ($A161) a tonne in recent contract negotiations.
The chief executive of Felix Resources, Brian Flannery, said after making one shipment to China in four years, the company was likely to sell 10 shipments this year, possibly more. "We've had a cutback in the Japanese off-take, which has probably been picked up by our Chinese off-take," he said.
The executive general manager of corporate development at Macarthur Coal, Ian McAleese, said the Chinese buying had prompted "quite a significant turnaround" in demand but the longevity of the surge remained uncertain. "Because they historically have not been in this market, it's very difficult to get a read," he said.
Producers say it has suddenly become cheaper for Chinese companies to buy coal from Australia because of difficulties setting domestic prices. China's Government has closed several mines because of safety concerns, further limiting supply.
A spokeswoman for the world's biggest private coal producer, US-based Peabody Energy, said the extra demand was equivalent to 10 million tonnes a year of coal being sent to China. Although it had not offset the global slump in world production, she said the company was confident the market was picking up.
While the trend is promising for the industry, coal is unlikely to test the record contract prices of last year while the world's biggest buyer - Japan - remains in recession.
An analyst at Patersons, Andrew Harrington, said demand growth in India and China was the most likely reason behind any improvement in the coking coal market in the next six months.
But hopes of a fast recovery were hit last week by news that Japan was shrinking by 15.7 per cent a year, the fastest rate of decline since the Second World War. "There will be too much uncertainty, even in the first quarter of next year, to be confident of a price increase," he said.
Source: Sydney Morning Herald
Big Fall In China Nickel Imports
According to customs statistics recently released, China imported 1,700,000 tonnes in material of nickel ores in the January to March quarter of 2009, down by 52% compared with 3,550,000 tonnes in the same quarter of 2008.
Also the unit price of nickel ores imported from the Philippines and Indonesia into China in the beginning of May and discharged at such main Chinese ports as Rizhao, Lianyungang and Lanshan were at CNY 260 to 280 per wet tonne of material on a CIF base.
For reference, the unit prices of nickel ores imported into China in May of 2008 were at CNY 880 per wet tonne CIF for Philippine ore and CNY 760 per wet tonne CIF for Indonesian ore a fall of two-thirds in comparison with those in the same month of 2008.
In order to fix the price of nickel ore containing 2% min of Ni to be imported into China, the country has adopted the formula linked with the LME nickel price which Japan has already applied, but the price of low grade nickel ore, containing less than 1.8% of Ni has been settled for each case through mutual negotiation.
According to customs statistics released in China, in January to March quarter of 2009, the country imported 726,000 tonnes in material of nickel ore from Philippines and 804,000 tonnes from Indonesia. China had nil of nickel ore to be imported from New Caledonia in January to March quarter of 2009.
Source: Steel Guru
Also the unit price of nickel ores imported from the Philippines and Indonesia into China in the beginning of May and discharged at such main Chinese ports as Rizhao, Lianyungang and Lanshan were at CNY 260 to 280 per wet tonne of material on a CIF base.
For reference, the unit prices of nickel ores imported into China in May of 2008 were at CNY 880 per wet tonne CIF for Philippine ore and CNY 760 per wet tonne CIF for Indonesian ore a fall of two-thirds in comparison with those in the same month of 2008.
In order to fix the price of nickel ore containing 2% min of Ni to be imported into China, the country has adopted the formula linked with the LME nickel price which Japan has already applied, but the price of low grade nickel ore, containing less than 1.8% of Ni has been settled for each case through mutual negotiation.
According to customs statistics released in China, in January to March quarter of 2009, the country imported 726,000 tonnes in material of nickel ore from Philippines and 804,000 tonnes from Indonesia. China had nil of nickel ore to be imported from New Caledonia in January to March quarter of 2009.
Source: Steel Guru
Vale Not Negotiating Over Prices
Vale SA, the world’s biggest iron-ore producer, isn’t negotiating annual contract prices with steelmakers and is selling on the spot market, said Jose Carlos Martins, the company’s executive director.
“Vale can quite easily survive on spot-market sales,” he said in a telephone interview today from Angra dos Reis, Brazil. Vale, which in recent years has sold almost exclusively through contracts, confirmed the spot sales for the first time.
The company posted a 65 percent increase last year on so- called benchmark prices for the steelmaking material, though Australian rivals BHP Billiton Ltd. and Rio Tinto Plc settled months later after demand surged and got an 85 percent increase. Chinese and Japanese steelmakers now want price reductions of as much as 40 percent as demand slumps during the global credit crisis.
Vale, which is based in Rio de Janeiro, has yet to have negotiations with the steelmakers who buy the raw material in annual contracts, as it waits for BHP Billiton and Rio Tinto to come to price terms with the steel companies first.
Vale chose to pass on talks, he said, “because of last year’s problems when BHP Billiton and Rio Tinto didn’t follow us. We won’t be cornered again.”
Martins said today he didn’t know if Vale will reach an agreement with steelmakers on prices for annual supplies of iron ore.
A settlement will occur between Australian miners and Asian buyers before the end of June, when Vale will review the situation, he said.
China spot market prices for iron-ore fines rose 0.75 percent yesterday to $67.50 a metric ton, according to London- based publication Metal Bulletin. That’s a 30 percent discount to last year’s record contract price for Rio’s benchmark ore of about $91 a ton.
Source: Bloomberg
“Vale can quite easily survive on spot-market sales,” he said in a telephone interview today from Angra dos Reis, Brazil. Vale, which in recent years has sold almost exclusively through contracts, confirmed the spot sales for the first time.
The company posted a 65 percent increase last year on so- called benchmark prices for the steelmaking material, though Australian rivals BHP Billiton Ltd. and Rio Tinto Plc settled months later after demand surged and got an 85 percent increase. Chinese and Japanese steelmakers now want price reductions of as much as 40 percent as demand slumps during the global credit crisis.
Vale, which is based in Rio de Janeiro, has yet to have negotiations with the steelmakers who buy the raw material in annual contracts, as it waits for BHP Billiton and Rio Tinto to come to price terms with the steel companies first.
Vale chose to pass on talks, he said, “because of last year’s problems when BHP Billiton and Rio Tinto didn’t follow us. We won’t be cornered again.”
Martins said today he didn’t know if Vale will reach an agreement with steelmakers on prices for annual supplies of iron ore.
A settlement will occur between Australian miners and Asian buyers before the end of June, when Vale will review the situation, he said.
China spot market prices for iron-ore fines rose 0.75 percent yesterday to $67.50 a metric ton, according to London- based publication Metal Bulletin. That’s a 30 percent discount to last year’s record contract price for Rio’s benchmark ore of about $91 a ton.
Source: Bloomberg
Iron Ore Industry Must Improve Quality
With the steel industry making a mad scramble for top grade iron ore amid depleting reserves, there’s an urgent need to improve ore quality at reduced costs to ensure steel makers remain profitable.
This was the general opinion at a two-day seminar on "Iron Ore Beneficiation: Challenges to the Iron & Steel Industry", organised by Steel Authority of India Limited (Sail) in partnership with Indian Institute of Plant Engineers.
Jindal Steel & Power executive director N.D. Rao said: "Reduction of one tonne alumina load through beneficiation from ore will generate savings of Rs 1 lakh in the steel-making process. And a 1 per cent reduction of alumina will give a benefit of around Rs 100 crore per year for a 3 MTPA steel plant."
Source: Economic Times
This was the general opinion at a two-day seminar on "Iron Ore Beneficiation: Challenges to the Iron & Steel Industry", organised by Steel Authority of India Limited (Sail) in partnership with Indian Institute of Plant Engineers.
Jindal Steel & Power executive director N.D. Rao said: "Reduction of one tonne alumina load through beneficiation from ore will generate savings of Rs 1 lakh in the steel-making process. And a 1 per cent reduction of alumina will give a benefit of around Rs 100 crore per year for a 3 MTPA steel plant."
Source: Economic Times
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