Indian Steel Producers Increase Their Prices

Major Indian steel producers SAIL, JSW and Essar have increased prices of their products by up to Rs 2,500 ($55) a tonne due to rising input costs

Steel Authority of India Chairman S K Roongta announced on the sidelines of the SAIL Open Golf Tournament in New Delhi on Friday that his company was to increase its prices and private steel makers JSW Steel and Essar Steel later confirmed their price rise.

JSW Steel Director of Sales and Marketing, Jayant Acharya, said his company will review the rates again in mid-April to fix the prices for the next month.

"It is a preliminary review. We are partly offsetting the rise in raw material cost pressure," he said.

An Essar Steel spokesperson said, "The price increase is in the same range as of other steel producers. It is mainly due to steep rise in raw material prices."



The increase in prices by the companies is effective from April 1.

Essar 'Plans London Listing'

Essar Group, the Indian company which at the weekend announced plans to buy US coal miner, Trinity Coal, plans to raise $3 billion overseas to fund acquisitions and expand its oil, power and steel businesses, according to sources familiar with the company.

It is thought that the money could be raised via a listing on the London stock exchange. Such a move would make it the biggest overseas listing by an Indian company. According to a report in today’s Financcal times, Essar group has appointed JPMorgan Chase & Co. and Deutsche Bank AG as advisers for the listing.
Essar is bidding for Royal Dutch Shell Plc refineries and is acquiring steel plants and coal and iron ore mines across the world to compete with rivals including ArcelorMittal and analysts see the London listing as vital to that end.

It is thought that the Bombay-listed Esaar Oil – itself worth $3.9 billion – could also be listed in London.

India's Essar Group Set To Buy Trinity Coal

India’s Essar Group looks set to buy the American coal miner, Trinity Coal, from its current owners Trinity Denham Capital Management in a deal worth $550-600 million. It is Essar’s first major coal acquisition abroad and the deal looks set to go through in the next two weeks.

Trinity is one of the top 10 coal producers in the US with reserves of 200 million tonnes and an annual output of about 7 million tonnes.

The deal will provide Essar with coking coal and thermal coal linkages for its steel mills in North America and for a power project currently under construction in India. Essar has a steel plant in Minnesota plus a plant at Sault Ste Marie in Ontario, Canada, which it acquired in 2007 for $1.63 billion. Capacity at Minnesota Steel is being expanded in two phases, with a 4.1 million tonnes per annum (mtpa) pellet plant and another 1.5 mtpa steel plant, which is expected to be completed by 2012 and 2015, respectively. It is also planning to expand capacity of Algoma Steel in Sault Ste Marie to 5 mtpa from 4 mtpa.

Essar Power, has a 1,200-Mw power project being built in Gujarat, which will be dependent on imported coal. It is also setting up a power project at Salaya near Jamnagar in Gujarat which will also be dependent on imported coal and which is due to be completed by 2011.

Essar is one of a number of Indian power producer to look abroad for sources of coal.

Essar Drops Out Of Race For Rocklands

Essar Steel has dropped out of the race to acquire Rocklands Richfield, leaving only Jindal Steel & Power in the fray.

The move by Ruia-owned Essar, which has interests in steel, shipping and telecom, comes less than two weeks after it joined the race for the Australian coal miner.

Rocklands today informed the Australian Securities Exchange that Essar did not wish to proceed with its AUS$0.50-a-share offer, which was made public on October 7.

Essar made the preliminary and non-binding offer even after Congress MP Navin Jindal’s JSPL signed a term sheet on September 22 with Rocklands.

JSPL had proposed to acquire a 100 per cent stake in the Australian company for AUS$0.42 a share.

In a letter to Rocklands, the Ruias did not offer any explanation on why they chose to exit abruptly.

An Essar spokesperson said: “As a group we keep looking at various opportunities but it is not our policy to comment on any specific deal.”

Once Essar’s withdrawal was made public, Rocklands’ share plunged 15.29 per cent to close at AUS$0.36.

Rocklands said Essar’s decision was based on external considerations and was not a reflection on the company.

Confidential and non-public information was not shared with the Essar management during the period its bid was valid.

Rocklands has written to Essar seeking clarifications on why it withdrew the proposal and whether it is possible for Essar to continue with the proposal. Essar will reply to the letter next week.

The Rocklands management was happy to see two Indian firms bidding for the company.

In the absence of Essar’s proposal, JSPL’s offer is now on. Rocklands said JSPL was already carrying out a due diligence exercise.

JSPL holds a 12.75 per cent stake in Rocklands. The firm shored up its holding in the Australian miner after Essar’s proposal became public.

Rocklands claims to have coal resources of 900 million tonnes. JSPL is setting up steel and power plants in the country and will require coal, especially the coking variety not abundantly available in India.

Rocklands has two main assets — met coke plants in China and coal mines in Australia.

Source: Calcutta Telegraph

Essar And Jindal In Race for Australian Coal Miner

The stage is set for yet another bidding war for ownership of an overseas resource company. Essar Minerals and Delhi-based Jindal Steel
& Power are in race to acquire Perth-based coal and coke producer Rocklands Richfield, which will increase their ownership of key resources and lower production costs in their businesses.

The Essar Group company on Wednesday confirmed that it had put in a bid of 50 cents for every share of Rocklands, which is higher than the earlier bid of 42 cents put in by Jindal Steel.

Essar’s bid values the Australian coal company at A$144 million. The company had revenue of A$125.60 million in the previous fiscal year.

Essar’s bid could prompt Jindal Steel to revise its bid, although executives from the Delhi-based company declined to comment. This won’t be the first time that Naveen Jindal-run Jindal Steel would be involved in a bidding race.

In 2007, Jindal Steel took on ArcelorMittal in a bidding war for iron ore mines in Bolivia. Jindal Steel finally outbid ArcelorMittal to take development rights for the iron ore mines, which have reserves of 20 billion tonnes.

The directors of Rocklands Richfield will convene a board meeting later to consider the merits of both Jindal’s and Essar’s bids, to determine which is superior. “Both offers are preliminary proposals that are subject to due diligence,” said a statement from Rocklands Richfield. “This announcement is being made only in the interests of updating shareholders on developments in relation to competing preliminary proposals.”

The A$125.60-million Rocklands Richfield owns a series of high-grade coking coal deposits in the Bowen Basin of Queensland and the coal deposits are estimated to total about 880 million tonnes. Coal, a key raw material for industries such as steel and power, has been a much-sought after commodity with most Indian companies scouting globally for coal mines.

“Essar Minerals has been looking for mining assets in Australia and Innesia and this is yet another step in that direction,” said a person familiar with the development. While the Essar Group company is unlisted, shares of Jindal Steel closed marginally down at Rs 598, after reaching a high of Rs 609, in a market that fell 0.9%.
The rush to own coal mines is likely to create a shortage for the commodity, thus pushing up prices.

According to brokerages, there could be a shortfall of about 25% in coal availability over the next 5-6 years, which could likely affect power and steel production.

The shortage has also prompted foreign coal producers to offer long-term supplies in return for an equity shareholding in Indian power and resource companies. While offtake agreements have been common, the coal and ore firms have planned ownership swaps to assure coal supplies at a discounted rate.

Source: Economic Times

Essar Steel Wins Brazil Mining Concession

India's Essar group has been granted a mineral concession by Brazil's DNPM (Departmento Nacional de Producao Mineral) for 7851 hectare plot at Amapa, northern Brazil. If successful it is hoped the mine will cater for Essar's proposed steel plant in Trinidad and Tobago.

P R Dhariwal, chief executive officer for the project, said that the survey would take 6-8 months and as part of the concession, Essar would be able to conduct exploratory mining for iron ore, manganese ore, chrome ore or any other available mineral. The group would then go ahead for a full scale mining license based on the results of the exploration.

The area is 150 km from the Santana Public Port in Macapa, on the banks of the Amazon river.

The 2.5-million-tonnes steel plant in Trinidad and Tobago is part of the group’s plan of achieving a capacity of 20-25 million tonnes by 2012 from its current level of eight million tonnes. Sources say that Essar was in the process of achieving financial closure for the Trinidad and Tobago project.

The Brazil iron ore resource would be Essar Steel’s second international raw material deposit. In 2007, Essar Steel acquired Minnesota Steel, which has more than 1.4 billion tonnes of iron ore resources in the Mesabi range.

In India the company has a prospecting licence in Chhattisgarh but is still awaiting necessary clearances. The company sources most of its iron ore requirements from public sector miner, NMDC.

Essar has a capacity of 4.6 million tonnes at Hazira in Gujarat, and plans to increase it to 10 million tonnes. The company is also setting up a six-million-tonne integrated steel plant in Orissa.

Indian steel companies are increasingly abroad for raw material assets as the allocation is much quicker.

India has approximately 23.59 billion tonnes of iron ore scattered in Jharkhand, Orissa, Chhattisgarh, Karnataka and Goa, though only 6.311 billion tonnes is proven reserves.

“Allocation takes time and even if we get a licence, it will take a couple of years before one can start mining in India,” pointed out an industry representative.

Source: Business Standard

Indian Government Allocates 23 Coal Blocks

The Indian government is understood to have approved the allocation of 23 coking and non-coking coal blocks to leading steel, cement and power producers, including Essar, JSPL, Grasim, Monnet and Ispat.

While four coking coal blocks have been allocated in Madhya Pradesh, the other 19 non-coking blocks are in West Bengal, Madhya Pradesh, Chhatisgarh, Jharkhand, Maharashtra and Andhra Pradesh, according to the Press Trust of India.

In its meeting held last week, the Screening Committee of the Coal Ministry, headed by Coal Secretary H C Gupta, decided to allocate the Behrabandh coking coal block to Vinod Mittal-led Ispat Industries on a sharing basis with Essar, Mukund Steel and Ind Synergy.

Of the total 170 million tons reserves, Ispat Industries was allocated 70 million tons, while Essar and Mukund 53 and 25 million tons respectively. Orissa's Ind Synergy got the rest.

Coking coal is a major raw material for steel making in addition to iron ore.

The committee has also approved the Urtan coking coal block, which has an estimated reserves of about 42 million tons, to Jindal Steel and Power Ltd and Monnet Ispat on a sharing basis.

The Urtan North coking coal block with estimated reserves of about 54 million tons was approved for Bhushan Steel and Prakash Industries.

Of the major non-coking coal blocks, Moira and Madhujore (North and South) in West Bengal were allocated to Adhunik Group on a sharing basis with Uttam Galva, ACC, Vikas Metal and Power Ltd, Mideast Integrated and Ramsarup Lohh Udyog.

The block has a reserve of over 685 million tons, of which Adhunik Group was allocated the maximum 30 per cent of the total reserves.

Source: Press Trust Of India