Northern Energy Lands Chinese Deal For Colton Mine

Mine Will Sell 65 Per Cent Of Output To Chinese Mill

Australia’s Northern Energy Corporation has agreed a multi-million dollar deal with the Xinyang Group in China to sell 65 per cent of coking coal mined at its Colton mine near Maryborough in Queensland over the next 10 years.


At current coking coal prices the agreement would result in $700 million revenue to Northern Energy over the next 10 years.


The company will issue 16 million shares to Xinyang, raising $23 million to develop Colton and securing 100 jobs anticipated at the site.


Northern Energy expects to mine 500,000 tonnes a year of coking coal for each of the next eight to 10 years, although the possibility of extending the life of the mine was not being ruled out.


“The agreement with Xinyang provides us with the capital to take the next step in the development of Colton while retaining 100 per cent of the project as we fully evaluate the size of the Maryborough resource base and the potential for further mine expansion,” managing director Keith Barker said.


“The size of the resource identified to date has exceeded our original expectations and the ongoing evaluation work provides us with confidence that additional resources will be defined which will in turn enable us to ultimately increase production beyond the 500,000 tonnes per annum currently planned. Expansion of production will require additional mining lease areas and will be subject to a separate approval process to that applicable to Colton.”

US Slaps 99% Tariff On Chinese Steel Pipe

Decision is latest in 'tit-for-tat' trade war

The United States Commerce Department has announced that it will slap antidumping import duties on Chinese steel pipe used in oil and gas wells. US imports of those goods from China were estimated at $1.1 billion in 2009, though that was well down on 2008’s $2.7 billion.

A group of American manufacturers and trade unions, including U.S. Steel and the United Steelworkers Union, filed a complaint over the issue a year ago.

The Commerce Department said on Friday it had made its "final determination" in the antidumping duty investigation and in a statement it said that China has sold the goods in the United States at 29.94 percent to 99.14 percent less than fair value,
"As a result of this final determination, Commerce will instruct US Customs and Border Protection to collect a cash deposit or bond equal to the weighted-average dumping margins," the statement added.

Tianjin Pipe International Economic and Trading Corp., received a final dumping rate of 29.94 percent, as did 37 other Chinese respondents.

All other Chinese exporters are subject to the final dumping rate of 99.14 percent.
The US International Trade Commission is scheduled to issue its final determination of injury in the case by 24 May.

SAIL, POSCO Sign FINEX Steel JV

New Plant Expected To Use Low-Cost Technology

Steel Authority of India Ltd and the Korean steelmaker, POSCO, have signed a joint venture for steel production using its FINEX technology in order to bring down the cost of production. The two companies are looking at building a 5-million tonne plant in Jharkhand, India.

FINEX uses non-coking coal fines and iron ore fines, to produce iron which will be capable of making high-grade steel. This would then be processed by SAIL to make specialised steel. The cost of production is expected to be lower as it avoids the high cost of converting coal into coke.

AK Steel Slaps Surcharge On To May Shipments

Surcharge Is Based on March Costs

US steelmaker, AK Steel, said on Tuesday that it will add a $420 per ton surcharge for electrical steel products shipped in May.
The surcharge is based on price increases for
raw materials – principally iron ore – and energy used to make its steel products. The March purchase cost was used to determine surcharges for May.

The company's electrical steel products include electrical transformers and generators.

AK Steel produces flat-rolled carbon, stainless and electrical steel, primarily for automotive, appliance, construction and electrical power and generation and distribution markets.

ArcelorMittal Granted Jharkhand Iron Ore Prospecting Licence

Deposits Will Be Used For Planned Steel Plant

The Indian government has granted an iron ore prospecting licence in the Karampada region of Jharkhand to steel giant ArcelorMittal.

Tonight ArcelorMittal welcomed the government’s decision. Group management board member Sudhir Maheshwari said the move will reaffirm the company's commitment in the region.

"We are very pleased that the Government of India and Jharkhand have approved the grant of prospecting licence over Karampada to ArcelorMittal and reaffirm our commitment to fast track the construction of our new steel plant in the region" said Maheshwari.

"ArcelorMittal is committed to developing the project in accordance with its worldwide corporate responsibility strategy which focuses on the socioeconomic and cultural development of the communities in which it operates," he added.

ArcelorMittal is to build an integrated steel plant being in Jharkhand in a project costing some Rs 50,000 ($1 billion). The Karampada deposits would be enough to satisfy the Jharkhand plant’s needs.

Bhutan Ferroalloy and Steelmakers Resume Bank Repayments

Recovery Improving Cash Flows

Bhutan’s ferroalloy and steel industries, based at Pasakha, Phuentsholing near the border with India, have successfully made their first quarterly bank loan repayments since the onset of the global financial crisis.

Bhutan Ferro Alloys, Ugyen Ferro Alloys and Bhutan Concast Pvt Ltd, repaid Nu 8.8 mn, Nu 8.1 mn and Nu 5.7 mn respectively on 31 March. The repayments will be disbursed among a consortium of local lending banks: Bhutan National Bank (BNB), Bank of Bhutan (BoB) and Royal Insurance Corporation of Bhutan (RICBL). The next instalment is due on 30 June.

Five local financial institutions had given a consortium loan amounting to Nu 2.5 bn to the ferroalloy and steel industries in 2006. The borrowers had also borrowed around Nu 1.6 bn from individuals.

Last year the financial institutions and the Bhutan government accepted the industries’ request to defer repayments until the global economy stabilised, on the condition that they pay at least the interest of the loans and inject equity into their projects, which accounts for 50 percent of the loan amount.


“The overall performance of the industries has been better,” the relationship manager of BNB, Pema Jamtsho told the local newspaper, Kuensel, adding that their performances would be based on the performance with the banks. “If cash flow is good, then it means they’re doing good.”

However steel industrialists pointed out that prices had yet to get back to pre-crash levels.
In 2008, the cost of finished TMT bars ranged between Nu 44 and Nu 48 a kg. Today, it is Nu 35-36.

A source at one of the ferroalloy manufacturers said the industry was doing much better compared with last year. “But the market is unpredictable and there will be highs and lows,” he added.

Vale Price Hike May Accelerate Brazil IPOs

CSN, Usminas To Spin Off Mining Units

Brazilian steelmakers could sell off their iron ore mining units following the success of Vale SA’s recent 90+% price rise for its iron ore products.

In a report on Monday, Brazil’s Banco Bradesco SA said that Cia. Siderurgica Nacional SA and Usinas Siderurgicas de Minas Gerais SA may accelerate plans to spin off their mining units after Vale achieved a price hike of over 90% in negotiations with Japanese and Korean steel mills. CSN and Usiminas have already planned initial public offerings of their iron ore divisions.

Banco Bradesco’s Raphael Biderman said that iron ore IPOs would be successful because they have established businesses that will gain from higher prices. He estimated that CSN may raise $10 billion after its shares doubled in the past year along with Usiminas.

UAE Steel Traders Hit By Price Rise

Hike May Hit Dubai Construction Industry

Steel traders in the United Arab Emirates are said to have been hit by the upturn in steel prices.

The regional financial newspaper, Emirates Business, claims that steel traders are being forced to buy steel at high prices and sell it at lower prices to honour contracts made a year ago, when steel prices were much lower and based on lower iron ore input costs.

The newspaper quotes Rizwan Sajan, Chairman of Danube Building Materials, as saying the steel price has gone up by almost 30 per cent across the Gulf Co-operation Council (GCC) states over the last couple of weeks. The price for a tonne of steel is Dh3,000 in the UAE, RO320 per tonne in Oman and BD300 per tonne in Bahrain.
"This sudden, unexpected price hike is a further blow to steel traders. On one hand, we have orders from customers at very low rates while on the other, our present procurement rates from steel mills abroad are high. We are taking positions at $720 (Dh2,644) per tonne and we are not sure what domestic steel prices will be when these orders eventually arrive here," he said.

"Most players in GCC steel markets – the steel mills, traders and the end users – have been caught on the wrong foot as they failed to anticipate that steel prices would gain momentum in this fashion. Since domestic demand was weak, people were under the impression that there was no scope for a surge in steel prices."
After the UAE was hit last year by the fallout from the global financial crisis the domestic steel price in the Emirates is lower than in other Middle Eastern countries such as Syria, Iran, Libya and Egypt.. In the short-term, the high international steel price will adversely affect local contractors, who are trying to recover after the Dubai World debt settlement.

Although Mr Sajan expects a price correction in due course he says it is impossible to predict by how much. All players in the steel supply chain were working on minimum stocks and there is a shortage in the market.

Taiwanese Steel Mill Announces Price Rise

CSC To Increase By Over $60 A Tonne

Taiwan’s largest steelmakers, China Steel Corporation (CSC), Taiwan`s largest has announced that it expects to raise the prices of its major products to be shipped in June.

CSC has accepted a 90% price hike in its iron ore supplies, effective from April 1 while prices for coke have risen by 55%. CSC estimates that steel refinery costs have risen by between US$170 and US$200 per metric ton and has announced that a price rise of $62.89 per tonne for goods to be shipped in June.

Despite the increase, CSC claims that its hot-rolled steel prices are still lower than those from steel mills in other Asian countries with current quotes at $605 per tonne, some $90-140 a tonne lower than those from China, Japan and Korea.

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.

Kobe Steel To Build Plant In Vietnam

$1 Billion Nugget Plant To Start Production In 2013

Japan’s Kobe Steel Ltd. has been granted permission to build a $1 billion steel factory in Vietnam. The plant will use Kobe’s technology to produce nuggets from low-grade iron ore providing feedstock for electric-arc furnaces that usually use scrap steel.

It is envisaged that the plant will serve Vietnam and the rest of south-east Asia.

In a statement on Friday, Kobe said that the factory will be built in the northern province of Nghe And. Construction will begin in January 2011 with production scheduled to commence in 2013. On completion of the secondary phase of construction the plant will have a capacity of 2.4 million metric tonnes of nuggets. A wholly-owned subsidiary of Kobe will conduct a feasibility study for the project.

Iron ore for the plant will be sourced from Vietnam’s Thatch He mine which has a high zinc content and isn’t suitable for blast furnaces.

Iron Ore Talks "Pointless" - Chinese Steel Chief

China Will Have To Accept Near-Doubling Of Iron Ore Price

The chairman of one of China’s largest private steel company has described his country’s talks with the large iron ore miners as “pointless” in the wake of Japanese steel mills’ acceptance of rises of more than 90 per cent for the raw material.

Speaking in a telephone interview with Bloomberg, Shen Wenrong, chairman of Jiangsu Shagang said that Chinese steelmakers will have to accept the higher terms that Brazilian miner Vale SA has negotiated with Japanese steelmakers. Earlier this week Vale agreed a price of $106 per tonne, up 92 per cent over last year’s price, however unlike in previous years were prices were agreed for the period from April to March the current price will only run to the end of June and will be reviewed on a quarterly basis. Vale says that 97 per cent of its customers have now accepted quarterly price contracts.

“We have no options,” said Mr Shen, “Iron ore prices have gone too far. We have to accept it, although we can’t afford it.”

Meanwhile, the World Steel Association has asked regulators to probe what it described as an “oligopoly” among iron ore miners and the China Iron and Steel Association said it will hold an emergency meeting to discuss the issue.
Chinese steelmakers are still discussing their price. He Wenbo of Baosteel, which is leading the talks on behalf of his industry, said yesterday “the negotiations are very difficult.” Some smaller Chinese steelmakers have reached private deals with the iron ore miners.

The knock-on effect of higher iron ore prices looks to have been felt already. Lakshmi Mittal of ArcelorMittal said this week that he expects steel prices to rise by 21 per cent this year as a result of increased raw material costs.

Chinese Steelmakers Still Want Long-Term Prices

Producers Yet To Agree To Quarterly Pricing

Chinese steelmakers say they have yet to agree to move to a short-term pricing mechanism for their iron ore supplies, despite steelmakers in other Asian countries agreeing to quarterly contracts.

Earlier this week, both BHP Billiton and Vale announced that major steelmakers in Japan and Korea had agreed to move to shorter-term contracts for the April to June quarter, based on prices in the sport market. Previously, prices were agreed on an annual basis from April to March each year. Prices to steelmakers in those countries have increased by almost 100% over 2009-10 price.

However, Luo Bingsheng, vice president of China Iron and Steel Association said that the long-standing tradition of annual contracts brings stability to the industry and that steelmakers in China would oppose any move to quarterly pricing. Meanwhile the Chinese government has backed its steelmakers with Jia Yinsong, an inspector from the Ministry of Industry and Information Technology's Raw Material Division, telling reporters at the China Iron Ore Conference this week: "We will certainly support long-term prices."

Mr Jia said that spot prices for iron ore will cause operational risks for companies, a risk for the industry as a whole and a credit risk.

Mr Jia added that he is concerned about the high inventories of Chinese iron and steel producers. The average profit margin for members of the China Iron and Steel Association was only 2.2 percent in 2009 and if iron ore prices double under the 2010 agreement this will push the entire industry into the red. Li Xin, head of the China Metallurgical Industrial Planning and Research Institute said that steelmakers would then be forced to pass price rises on to their customers, which will lead to higher costs for manufacturers of items such as automobile, consumer electronics and home appliances.

Commenting to the Chinese newspaper, People’s Daily, Mr Li said that Chinese steelmakers must break the stranglehold that the three largest iron-producers have on the industry. Chinese steel producers must go abroad, "If Chinese steel producers can control over 300 million tons of annual iron ore output abroad, the trend will be reversed," he said.

Evraz Reports USD1.25 Billion Loss

Russian Steel Makers May Sell Two Siberian Mines

Russian steel producer Evraz reported a net loss for 2009 of $1.25 billion compared with a net profit of $1.78 billion in 2008, Chief Executive Officer Alexander Frolov said on Wednesday. Revenues were down 52.1% to $9.772 billion. Total debt fell to $7.923 billion.

Mr Frolov said the results reflect the fall in construction and infrastructure projects throughout the world; however he was optimistic about Evraz’s prospects for 2010 on the back of increased demand from Asia. Total debt fell to $7.923 billion.

Commenting on the results, Chief financial officer Giacomo Baizini said: "Our net loss of $1,261m for 2009 reflects the global softness of steel markets.

"However it should be noted that in the absence of the effect of the revaluation of certain asset classes due to the change in accounting policy under IAS16, the net loss would have amounted to US$207 million.

"This change resulted in additional depreciation of $558m (net of income tax effect of $148m) due to higher asset values, a loss from the revaluation deficit of $420m (net of income tax effect of $144m) recognised on the date of revaluation, and an additional impairment loss on goodwill of $76m (nil income tax effect)."

Iron Ore Miners, Steelmakers Moving Away From Annual Contract

London’s Financial Times newspaper reports on Monday that iron ore miners and Japanese steelmakers have reached a tentative agreement to adopt short-term contracts linked to the spot market, bringing to an end the 40-year old annual benchmark system.

"There is an understanding on both sides to move to quarterly pricing," the newspaper quoted a source involved in the talks as saying. The source added that a final deal will be settled in a matter of weeks.

Reuters confirmed sources in Asia as saying that negotiations were continuing about a move to quarterly pricing.

"Korea, Japan and China have received 90-100 percent hike offers based on quarterly systems from miners, which Japanese steelmakers seem to move toward accepting," a source at a large Asia steelmaker close to the negotiations said.

One sources suggested that Japanese steel mills are ready to accept the change as they are more concerned about security of supply than prices and are seeking to safeguard tonnage rather than prices.

Current spot iron ore prices are trading at twice the level of the 2009 benchmark.

A move towards quarterly coking coal contracts was announced earlier this month and analysts expect iron ore to adopt a similar system.

More Japanese Steelmakers Agree Quarterly Coal Contracts

In a further indication of a shift to quarterly raw materials contracts, more Japanese steelmakers have struck deals with coal miners for the April to June quarter.

JFE Holdings, Kobe Steel and Sumitomo Metal Industries have both agreed a price of $200 a tonne, up 55 percent from the deal for the previous financial year, the firms said on Wednesday. JFE and Kobe have signed deals with miners BHP, Rio and Teck Resources, while Sumitomo have agreed a deal with BHP.

While the steelmakers are all looking for a return to an annual contract from 1 July, the miners have the upper hand as they try to move to a system that reflects changes in the market, but which leaves the steelmakers exposed to greater volatility in cost and renders them exposed to the spot market.

Steel do Brasil Buys Iron Ore Assets

German-controlled Steel do Brasil has agreed to buy majority stakes in two Brazilian mining companies for $435 million.

In a regulatory filing distributed on Sunday it announced that it would buy 70 percent of Mhag Servicos de Mineracao for $245 million while in a separate transaction, it has agreed to pay $190 million to buy 80 percent of Mineracao Minas Bahia's iron ore Jiboia assets

In the filing the company said it would "increase its capital muscle substantially to conclude the acquisitions and develop its activities for the next two years," the filing said.

Dannemore To Deliver Iron Ore To ThyssenKrupp Steel

Swedish iron ore producer, Dannemora, has signed an agreement with Germany’s ThyssenKrupp Steel Europe AG for delivery of between 20,000 and 30,000 tonnes of iron ore.

Delivery will be in the second quarter of this year and the iron ore will be used in
full-scale production at ThyssenKrupp’s steelworks in Duisburg.

Following technical verification of the production results, negotiations on long-term supply contracts are expected to begin.

Dannemora has already signed agreements for trial deliveries of iron ore to Austrian steel company Voestalpine and German’s Salzgitter. The three companies’ total annual iron ore consumption is 30 million tonnes.

Dannemora will have an annual production of 1.5 million tonnes of iron ore at full capacity.

Staffan Bennerdt CEO and President of Dannemora Mineral: "We are also engaged in
trial delivery negotiations with several other steel companies. Since the
beginning of the year, interest in iron ore deliveries from Dannemora has
soared. We shall increase our efforts to get iron ore to potential customers."

Production is expected to be up-and-running in 2011.

China Armco Signs Scrap Metal Supply Contract

China Armco Metals, Inc., an distributor of imported metal orea and metal recycler with a new state of the art scrap metal recycling facility in China, today announced that its Armet Renewable Resource subsidiary, has signed a $100 million contract to supply a major Chinese steel producer with up to 230,000 tons of scrap steel in 2010.

The company will deliver up to 23,000 tons of scrap steel each month for 10 months commencing in March 2010.

China Armco’s management anticipates that the supply contract will allow it sell all the initial production from its new recycling facility during its first months of operation. The company also believes that the facility will reach its full capacity run rate during Q4 2010. At full capacity the facility is capable of processing approximately 1 million metric tons of scrap steel per year or over $400 million annually at current prices.

Mr. Kexuan Yao, CEO and Chairman of China Armco Metals, Inc. said, "We are very excited to have secured such a sizable contract with this leading steel producer. This essentially has pre-sold the first several months of production from our newly opened facility as we ramp up capacity over the coming quarters. We are confident that this contract coupled with our other operations will enable our company to experience significant revenue growth and enhanced earnings power for the foreseeable future."

Belon To Cease Exports To Supply Parent Co

Russian coal miner Belon Group has said that it will stop exporting production so that it can increase supplies to its parent company, Magnitogorsk Iron and Steel Works.

Belon has sufficient capacity to meet about 70 percent of Magnitogorsk's annual coking coal requirements.

In 2010, Belon expects to mine 5.11 million tonnes of coking coal and 3.10 million tonnes of steam coal. Belon aims also to increase the coking coal processing volume at its Belovskaya enrichment plant to 6.18 million tonnes this year.

According to Belon's investment program, by 2013 the company's coal output will increase to 9.79 million tonnes, including 6.79 million tonnes of coking coal, while its processing capacity will rise to 7 million tonnes of coking coal per year.

Last year Magnitogorsk Iron and Steel Works, doubled its stake in Belon to 82.6 percent in order to secure stable supplies of coking coal for its steel mill near the Ural mountains.