Macarthur Rejects New Hope Bid

Xstrata "Mulling Own Bid" - Report

Australia’s Macarthur Coal has rejected a $3.4 billion bid from rival Australian miner, New Hope.

New Hope has made an all-share offer worth $14.58 a share, a 58c premium over the rival bid from the US’s Peabody Energy.

Macarthur’s shares closed at $15.50 – a rise of 8.2% on the day.

Macarthur has announced that a meeting on Monday to discuss a deal with Hong Kong’s Noble Group will take place as planned on Monday. Peabody has tried to get Australia’s Takeover Panel to stop the meeting from taking place.

Meanwhile, the Australian Financial Review reported on Friday that international mining company Xstrata has approached two of Macarthur’s shareholder, POSCO and ArcelorMittal, about a bid to rival the offer from America’s Peabody Energy.

The newspaper did not disclose its source for the information.

Peabody Asks Takeover Panel To Intervene In Macarthur Bid

US coal miner Peabody Energy has asked Australia’s Takeover Panel to block a shareholders’ meeting on Monday by takeover target Macarthur Coal to approve Macarthur’s acquisition of Noble Group subsidiary, Gloucester Coal.

If Monday’s meeting approves the Gloucester acquisition it would give Noble Group a stake of 24% in Macarthur effectively blocking Peabody’s bid for the Queensland miner.

Peabody wants the panel to provide an updated independent expert's report on the Gloucester bid and for the Macarthur shareholder vote on that bid delayed until at least two weeks after the report has been sent to shareholders.
Macarthur’s response was it was justified in not engaging with Peacock on the basis that the conditional bid was “not a superior proposal” to the Gloucester/Noble transaction. It said that this resulted in it not being permitted to engage under its Gloucester agreement.

"It is disingenuous for Peabody to now seek to delay the shareholder meeting in circumstances where it has not made a binding offer to Macarthur shareholders," Macarthur said in a statement to the stock exchange, adding "Your directors believe the Peabody [press] advertisements are self-serving and potentially misleading."
Macarthur rejected an independent report compiled in February which valued its shares at below the Peabody bid, saying that the report did not take into account gains in coal prices since then.

It rejected Peabody claims that Noble would have a controlling influence over Macarthur. It also said that a February independent expert's report valuing Macarthur shares at below Peabody's bid was out of date and did not take into account gains in coal prices.

Macarthur shares rose 5c on Thursday to $14.36, 36c higher than Peabody’s $14 a share bid.

Meanwhile the Australian Financial Review suggested that Macarthur is holding out for a $15 a share bid and that Peabody was offering major shareholders Posco, Citic Pacific Ltd. and ArcelorMittal to persuade them to accept the bid. The newspaper gave no source for its report.

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.

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.

Coal Companies Want To Bid For Queensland Coal Lines

A group of coal producers want to pre-empt Queensland Rail’s impending IPO by bidding for the state’s coal rail network.

The IPO, valued at between A$3 billion and A$4 billion and due to take place in the final quarter of this year, was to have been the largest of 2010, however Queensland Resources Council chief executive Michael Roche said coal producers unanimously agreed that the privatisation was neither in the best interest of the industry nor state taxpayers.

“Coal producers - as owners of the coal track network - have a very strong incentive to ensure a high performing network and to make timely investment in new rail capacity to avoid export bottlenecks,” Mr Roche said in a statement on Monday.

He added “The coal industry is not asking the Queensland government to abandon the public float process. Rather, industry is simply asking for the opportunity to provide an alternative bid and have that industry alternative judged side by side against the public float option.”

Mr Roche’s statement followed a meeting in Brisbane on Monday chaired by former New South Wales premier, Nick Greiner and attended by mining companies including Anglo Coal Australia, BHP Billiton Mitsubishi Alliance (BMA), Ensham Resources, Felix Resources, Jellinbah Resources, Macarthur Coal, New Hope Coal Australia, Peabody Energy, QCoal, Rio Tinto Coal Australia, Vale, Wesfarmers Resources and Xstrata Coal. Mr Greiner previously worked with coal companies to resolve a dispute in the Hunter Valley in New South Wales in 2008.

The QR flotation will include the rail network and trains. Queensland is selling the assets to prop up finances after the recession cut government revenue.

ArcelorMittal Expecting 70-80 Per Cent Iron Ore Price Hike

Steel giant ArcelorMittal is predicting a rise of 70 to 80 per cent iron ore prices for long-term contracts that have to be extended in the coming month, according to Robrecht Himpe, chief executive of the company’s Flat Carbon Europe business.

ArcelorMittal sources two-thirds of its iron ore from its own mines, however Mr Himpe told Dow Jones Newswires that large Asian producers were key to pricing because they were first to negotiate with mining companies. With short-term contracts needing to be extended steelmakers in Asia are expecting a rise of up to 80 per cent.

Mr Himpe criticised the size of the rise saying that buyers needed to find stable levels.

ArcelorMittal Steps Efforts To Secure South Africa Raw Materials

South African steel producer ArcelorMittal South Africa has stepped up its efforts to secure control of raw material resources in Southern Africa, and is ready to partner with black economic empowerment (BEE) companies that have secured exploration rights for those categories of resources.

Speaking on Wednesday, CEO Nonkululeko Nyembezi-Heita said that the group was intensifying its efforts to secure control of additional iron ore and coal resources although she said that the group was following a strategy of lowering costs rather than any concerns over security of supply.

"We are not concerned about accessing iron ore, we are concerned about having control over than iron-ore," she explained, adding that the same was true for coal, which underpinned its decision to invest in Coal of Africa. ArcelorMittal lost out in a long-running dispute with Kumba Iron Ore over its right to participate in the R8.5-million Sishen South project, in the Northern Cape. The imminent closure of the Thabazimbi mine, in Limpopo province, also meant that an alternative supply source was needed to close a capacity shortfall.

The company reported a loss of R440-million for the year ended December 31, 2009 against a record profit of R9,5-billion in 2008 but still had more than R4-billion of cash on hand, which it could use for investments and acquisitions, including into mining assets or companies.

ArcelorMittal Loses SA Iron Dispute

Engineering News reported that an arbitration panel has ruled in favor of Kumba Iron Ore in a long running dispute over ArcelorMittal South Africa's right to participate in KIO's South African growth projects.

ArcelorMittal currently accesses 6.5 million tonne early on a cost plus basis from KIO and sources its remaining requirement at market prices.

But Africa's largest steelmaker was of the view that it was permitted, in terms of a 2001 agreement that led to the unbundling of the then Iscor into separate iron ore and steel entities that it could extend the arrangement to new projects, if it could prove that the material would be beneficiated in South Africa.

Mr Alec Erwin trade and industry minister of South Africa said that it is vital for the standalone steel entity to remain reverse integrated into iron ore, notwithstanding the unbundling. He asserted, too, that access to additional raw material at competitive rates would be key to sustaining the group's low cost position. ArcelorMittal South Africa took this principle to suggest that it could participate in new projects and access additional material on a cost plus basis.

However, KIO, which subsequently became a subsidiary of Anglo American, had a different interpretation, which led to the dispute. Corporate negotiations, which were pursued for some time, failed to secure a remedy which ultimately led to the arbitration process. The arbitration panel eventually assembled in mid 2009.

Recently, the panel issued an award in favor of the Sishen Iron Ore Company determining that ArcelorMittal South Africa was not entitled to participate in the ZAR 8.5 billion Sishen South project, currently under development in the Northern Cape. The ruling, which is said to contain 19 points, could be appealed but ArcelorMittal South Africa gave no immediate indication as to whether such a course of action would be pursued.

The steel company said would examine its options. The decision could have an impact on future investment decisions by ArcelorMittal South Africa inside the borders of South Africa. Ahead of the global economic crisis, the group was considering a new ZAR 3 billion long steel investment in Newcastle, KwaZulu Natal. The project was put on ice as recessionary conditions took hold and would now have to be remotivated to the board.

Source: Steel Guru

ArcelorMittal To Resume Operations At Liberia Iron Ore Mine In 2010

ArcelorMittal, the world’s biggest steelmaker, will resume full operations at its Liberian iron- ore mine next year, Arthur Massaquoi, public relations officer of the company’s Liberia unit, said.

Acelormittal in March scaled down operations at its Nimba mine in Liberia by half, firing 80 percent of its expatriate workers because of the global financial crisis.

The first iron-ore exports from the plant will now leave in 2011 and not next year, Massaquoi told reporters in the capital, Monrovia, today. In December last year, Liberian President Ellen Johnson-Sirleaf said the company would not be able to meet its deadline of shipping its first ore from the mine in 2009.

AccelorMittal signed a $1.6-billion iron-ore exploration agreement with Liberia in 2007. The company is redeveloping the mine after it was abandoned in 1992 during a civil war that engulfed the West African nation. It says it expects 12.5 million tons of ore a year, or 21 percent of the company’s production, from Nimba.

Source: Bloomberg

Arcelor Mittal Not Buying Iron Ore On Spot Market

Lakshmi Mittal, chairman and chief executive of ArcelorMittal, the world's biggest steelmaker, said his company is not buying any iron ore on a spot basis and all its ore purchases were based on traditional contracts.

He did not give a price level for the contract-based purchases of iron ore, a key ingredient in steelmaking.

Source: Reuters

Russia Threat To ArcelorMittal Coal Mines

ArcelorMittal, the world's largest steelmaker, could lose ownership of two West Siberian coal mines if it fails to bolster production, an Russian regional governor warned.

Aman Tuleyev, who heads the Kemerovo region where the two coalmines are located, made the warning to ArcelorMittal chief executive Lakshmi Mittal in a letter posted on the government Web site Thursday.

"If you are not able to stabilize production at these facilities, then we propose that you hand them over without compensation," Tuleyev wrote in the undated letter.

Messages left with ArcelorMittal officials in Luxembourg were not immediately returned.

ArcelorMittal's three Russian coal mines are located in Kemerovo, about 3,000 kilometres (1,850 miles) east of Moscow. In March, ArcelorMittal said it could temporarily shut down two of the mines.

The Kemerovo region said workers at the mines were being paid in full, but that work was "chaotic and untransparent."

Coking coal is a key raw material for steel manufacturing.

Tuleyev also wrote that he would seek to revoke the company's exploration license at the large Zhernovskoye deposit if Mittal does not respond, the statement said.

Steelmakers have been hard hit by the global financial crisis and falling demand forced several Russian steelmakers to trim production and lay off staff.

Source: Los Angeles Times

ArcelorMittal Suspends Senegal Iron Ore Project

World number one steelmaker ArcelorMittal is suspending development of its Faleme iron ore project in Senegal as a result of the global economic downturn, a company source in the West African country said on Friday.

The $2.2 billion project in the south-east of the country was due to begin producing steelmaking raw material iron ore in 2011, and full production capacity was estimated at 25 million tonnes per year.

"We are suspending the project for the time being because of the economic situation worldwide, but we hope to carry out the project as soon as the situation gets better," the source said, speaking on condition of anonymity.

The project, which included building a new port and railway line, would have created 10,000 jobs for Senegalese workers, the company said when announcing the inception of the plan in 2007.

ArcelorMittal officials in London and Luxembourg were not immediately available for comment on Friday.

"The government is saying, 'either you do it or we look for another company to do it,'" the source said.

"We are open to the option of doing it with a partner but for the time being we cannot do it alone," the source said.

The firm has cut output as it struggles with falling demand for steel. It reported slightly worse than expected first-quarter results in April, and had its ratings downgraded by Standard & Poor's in June.

Faleme is its second African project to be delayed in less than two months. In May, the firm said it was delaying the launch of a planned $1.5 billion iron ore mine in Liberia.

Source: Reuters

Ten Vie For Indian Coal Mines

Coal India Ltd. short-listed ArcelorMittal, Rio Tinto Group and eight other companies to develop its abandoned mines to help ease a shortage of coal used in power plants in Asia’s third-biggest economy.

State-owned Coal India is offering 18 of its abandoned mines for development, Chairman Partha S. Bhattacharyya said by telephone, confirming a report in the Business Standard newspaper today. The offered mines hold combined reserves of 1.6 billion metric tons, Bhattacharyya said.

Finding partners may help the country’s monopoly miner increase production by 29 percent within three years and allow the nation to avoid costly imports. India aims to add 13,000 megawatts of new power capacity every year, President Pratibha Patil told parliament June 4. Coal fuels half of India’s power- generation capacity.

“We are amongst the companies considering,” the mines, Ian Head, a spokesman for Rio Tinto, said in an e-mail today.

London-based Rio Tinto, JSW Steel Ltd., GVK Power & Infrastructure Ltd. and Essar Mineral Resources Ltd. were short- listed, according to the Business Standard report.

“Steel producers have captive power plants and if they can get mines that can assure coal supplies, they would be interested,” said Pawan Burde, an analyst at Angel Broking Ltd. in Mumbai. “Secondary steel producers use sponge iron where they need thermal coal and they may be trying to secure coal for future expansion plans.”

Steel demand growth may almost double the pace previously estimated with the government planning to spend $8.95 billion to build networks of roads, telephones, electricity and irrigation.

Coal India aims to complete the bidding process by the year-end, Bhattacharyya said. The company invited separate bids for the mines, owned by three of its units, he said.

“Our portion of the equity will largely be the mines,” Bhattacharyya said. “The partners can have 50 percent of the coal provided they have customers in the country.”

Coal India produced 403.7 million tons in the year that ended March, according to data on the company’s Web site. The company signed a 20-year agreement on May 29 to supply the fuel to the coal-fired plants of NTPC Ltd., the country’s biggest power producer.

India’s coal shortage will be about 228 million tons by the year ending March 2012, J. Goel, chief general manager of sales and marketing at Coal India, said on Feb. 24. Demand may reach 731 million tons a year by then, government estimates show.

Source: Bloomberg

Vale, ArcelorMittal Agree Iron Ore Price Cuts

Steel giant ArcelorMittal will pay Vale 28.2% less for iron-ore fines and 44.47% less for lumps during the 2009 contract year, compared with 2008, the Brazilian miner announced on Friday.

The pellet price decreased by 48.3%, Vale said.

The resources giant announced earlier this month it had agreed to cut 2009 benchmark iron ore prices by the same percentages to Japanese and South Korean steelmakers.

Annual benchmark prices for iron ore have historically been negotiated annually in closed-door talks between individual miners of the steelmaking ingredient and their customers in Asia and Europe.

This year, the 'big three' producers – Vale, Rio Tinto and BHP Billiton –have started settling some contracts, but have yet to reach agreements with buyers in the biggest iron-ore consuming country, China.

Chinese steel producers are understood to want a price cut of at least 40%.

Source: Mining Weekly

ArcelorMittal Delays Liberia Iron Ore Exports

Global steel giant ArcelorMittal announced late on Monday that it is delaying plans to export iron ore from Liberia because of the global economic crisis and that some 1,200 contractors will be laid off.

The company, the first to start a big foreign investment in post-war Liberia, is investing more than $1.5 billion in the iron ore industry and was set to start exporting ore this year, said Joseph Mathews, chief executive officer of ArcelorMittal Liberia.

Mathews told The Associated Press that the company has almost halved its global steel production in the current economic downturn, and that in turn has reduced the demand for iron ore.

Mathews said the company originally had planned to ship iron ore out of the West African nation later this year but that the company will now "postpone that to maybe 2010, 2011."

Some 1,200 workers who were employed by a contracting company to build a railway to transport iron ore from the mining site will have to be laid off because "the contract has been terminated."

"We put a stop to our construction activities," he said, adding that the termination of the railway contract "is definite."

Liberia's Lands, Mines and Energy Minister Eugene Shannon said the company's management needs to explain whether the slowdown also will affect money the company was due to pay to the Liberian government.

Shannon wants ArcelorMittal Liberia to state when the company will start exporting ore and what happens to the portion of the agreement relating to exports this year.

"The Mineral Development Agreement also talks about employment opportunities for our people; he needs to explain what happens to this," Shannon said.

The concession agreement grants the right to ArcelorMittal to export 12 million tonnes of ore a year for 25 years.

Liberia was ravaged by civil wars for years until 2003. The drawn-out conflict that began in 1989 left about 200,000 people dead and displaced half the country's population of 3 million.

Source: Associated Press

Mittal Considering Mothballing Russian Coal Mines

ArcelorMittal, the world's largest steel producer, is considering halting operations at two of its three Russian coal mines bought last year from competitor OAO Severstal until market conditions improve.

This, however, would be done if the company's proposed comprehensive programme of cost saving and restructuring of the workforce at Anzherskaya and Pervomayskaya mines does not result in sustainable operations of the mines, ArcelorMittal spokesperson said in an emailed company statement.

"...if the cost reduction programme does not result in sustainable operation of the mines, the process of temporary dry conservation of Anzherskaya and Pervomayskaya mines would be initiated until market conditions improve," the L N Mittal-led company said.

In Kuzbass territory of Russia, ArcelorMittal owns three mines -- Berezovskaya, Pervomayskaya and Anzherskaya -- besides the Severnaya washery. It had acquired the mines and associated assets for USD 720 million last year. At present, there are 5,830 employees working in these enterprises.

Facing the heat of the global economic slowdown that has led to challenging and unpredictable market conditions, the steel major said it would go for restructuring of the workforce at its Russian mines, which produced 2.7 million tonnes of coal and 1.3 million tonnes of coal concentrate in 2008.

As part of the restructuring, the company would introduce voluntary retirement programme and redeploy key officials from Pervomayskaya and Anzherskaya mines to Berezovskaya mines.

The steel major said the restructuring would be in line with the Russian Federation's labour laws and collective labour agreements.

Even as the company is planning to temporarily idle Anzherskaya and Pervomayskaya mines, it said the Berezovskaya mines will continue normal operations and contracts for the supply of new equipment will be implemented.

Source: Economic Times

ArcelorMittal Denies Brazil Asset Sale

ArcelorMittal has denied reports in the Brazilian media that it intends to sell off any of its Brazilian assets. The company said that its operations in Brazil "are at the heart of the Group's strategy.”

Brazilian mining giant Companhia Vale do Rio Doce has also denied that it is in negotiations with Chinese steel manufacturer Shanghai Baoshan Iron & Steel Co to buy ArcelorMittal's Tubarao mill. The mill is located on the east coast of the Brazilian state of Espirito Santo and is directly connected to Vale's railway and high grade iron ore mines

ArcelorMittal Signals Intent In China

ArcelorMittal, the world's largest steel producer controlled by Indian billionaire Lakshmi Mittal, intends to acquire a majority stake in a major Chinese steel producer but achieving the goal may take at least five years. That was according to Mr Mittal at a briefing to reporters at the American Metal Market Steel Success Strategies Conference in New York on Tuesday.

The Chinese government may not allow majority stakes for foreigners in the steel industry until it completes regional consolidation, said the chairman and CEO of ArcelorMittal. Striking a positive note, Mr Mittal said that when China decides to let foreign companies in, ArcelorMittal would be ready to replicate the success story of merger of Arcelor and Mittal in China.

ArcelorMittal already holds a one-third stake in mid-sized Chinese steelmaker Valin Steel Tube & Wire Co and a part of China Oriental Group Co, owever, its plans for acquisition of Laiwu Steel Co one of the top 10 steelmakers in China, fell apart.

Source: China Knowledge