Author Archives: Sohrab Darabshaw

The Vedanta copper plant in India remains shut three years after local residents protested against pollution stemming from the plant’s operation.

That, however, has not fazed the Vedanta Group.

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Vedanta to set up new copper smelter

Vedanta now plans to set up yet another plant in the country. The proposed copper smelter plant will have a capacity of 500,000 tons per year.

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Vedanta Ltd, the subsidiary of Vedanta Resources, has called for expressions of interest from provincial governments in India regarding a new copper smelter unit.

A Vedanta spokesperson told the Business Standard India’s copper requirements will grow. Furthermore, the spokesperson emphasized ample supply of copper is critical for implementation of new-generation technologies.

Three years later

It’s been about three years since Vedanta’s Tamil Nadu smelter was shut down, causing it losses that are already running into millions of dollars.

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The recent curbs on steel making by the local government in one of China’s largest steel-producing cities, Tangshan, may have a cascading effect on steel procurement & demand, as well on iron ore supplies, some experts believe.

The Tangshan restrictions are in effect from March 20 to Dec. 31, 2021. Among other things, the restrictions penalize steel mills there that fail to meet emission control regulations.

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Tangshan part of countrywide effort

The curbs are in line with China’s fresh efforts to cut emissions meet carbon-neutrality targets. China aims to reach carbon neutrality by 2060.

Already, iron ore prices felt effects from the restrictions. Meanwhile, the long-term effect on the import-export of steel from China remains to be seen.

Daily iron ore consumption in Tangshan is also likely to drop drastically. The restrictions had led to the drop in iron ore futures but boosted hot-rolled coil (HRC) futures.

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ArcelorMittal Nippon Steel India Ltd (AM/NS) signed an agreement with the provincial government of Odisha in eastern India to build a US $6.88 billion steel mill.

The proposed plant is a joint venture between ArcelorMittal and Nippon Steel, and will have a production capacity of 12 million tons per year.

ArcelorMittal had to drop its original plan for a 12 million ton per annum steel plant after the company failed to acquire the required land and the necessary permissions for an iron ore mine, VCCircle reported.

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ArcelorMittal Nippon Steel expands

The steelmaker is one of the largest in the world, combining the might of the LN Mittal Group and the technological prowess of Japanese company Nippon Steel.

ArcelorMittal has recently hit some rough times.

In 2020, as a result of the COVID-19 pandemic, its sales went down by 24.6% to US $53.3 billion as compared to US $70.6 billion in 2019. For 2020, the company reported a net loss of US $733 million. Meanwhile, it tallied net income of US $2,454 million in 2019.

In Q4 2020, however, ArcelorMittal posted US $1,207 million net income. The steelmaker posted a net loss of US $1,882 million in the year-ago quarter.

In fact, during that time, the son of steel baron Lakshmi Mittal, Aditya Mittal, the company’s CFO, got the nod to be the next CEO.

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Japan’s steel sector is facing tumultuous times.

But, in the short term, there are initial signs of it pulling through in 2021.

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Pandemic impacts on Japan’s steel sector

The COVID-19 pandemic contributed to the weakening of domestic needs. Furthermore, tepid global demand, cheaper exports by China and an ambitious net-zero emission target to develop cleaner steel have all come together to negatively affect the country’s steel sector.

According to an S&P Global Platts report, Japan’s iron and steel product exports fell 4.9% year over year to 32.14 million metric tons (MT) in 2020.

Quoting from data from the Japan Iron & Steel Federation, the report noted total exports to the US fell 30.5% year over year to 890,000 MT. That marked the fourth straight year of decline since reaching 2.06 million MT in 2016.

A slight recovery in December saw exports rise by 5% from November to 2.56 million MT. Hot-rolled wide strip steel accounted for the bulk of the ordinary steel products exported.

In fact, for the first time since 2009, as the S&P Global Platts report noted, Japan’s crude steel production fell below the 100 million MT mark.

Production fell 16.2% year over year to 83.19 million MT in 2020, according to the World Steel Association.

The country’s crude steel output fell 3.9% in January this year from a year earlier.

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One of the world’s leading producers of low-carbon aluminum, UC Rusal, announced a new collaboration with Japanese automotive component manufacturer Kosei, signifying yet another step in its over 30-year journey.

Last week, the Russian aluminum giant Rusal said Kosei had selected it to be its global supplier of high-quality aluminum alloys.

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Rusal-Kosei aluminum supply deal

Kosei, set up in 1950, designs and manufactures vehicle wheels and autoparts. The firm operates from seven countries.

In the last 30 years, Rusal has proved to be a key partner of Kosei. Rusal has supplied the Japanese company with primary foundry aluminum alloys. Kosei uses in the material in factories in India, Japan, Thailand, and the US.

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Electric vehicle manufacturers are wooing Indonesia to create a nickel-based battery supply chain in that country.

Elon Musk’s Tesla and China’s Contemporary Amperex Technology, otherwise known as CATL, and South Korea’s LG Chem are in the fray. 

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Firms look to secure Indonesian nickel supply

A senior Indonesian government official told news agency Reuters the government had recently received Tesla’s investment proposal. 

Since early last year, Tesla has been courting Indonesia because for the value of its strategic commodities, including nickel. Nickel is a critical metal used in batteries for EVs due to its properties enabling mass energy storage capabilities. Furthermore, nickel reduces the overall cost of batteries by limiting the amount of cobalt required. 

Tesla seems to have come back to the Indonesian government with a reworked proposal to the one it had submitted in May 2020. The latter had shown reluctance in just signing a raw material supply agreement. 

The minister told reporters, while acknowledging Tesla had sent its proposal, that Tesla’s engagement in Indonesia would extend past raw materials. If Tesla only wants to take raw materials, then the government was not too keen in pursuing a partnership.

Indonesia is also talking to CATL and LG Chem regarding their plans to create an EV battery supply chain, the Nikkei Asia reported. 

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A budgetary proposal by the Indian government to reduce steel duties has divided the Indian steel sector.

India proposes reduction in steel duties

In her 2021 budget speech presented in parliament earlier in the week, Finance Minister Nirmala Sitharaman proposed reducing customs duty on imports of semi-flat steel. She proposed cutting the duy for the steel, used to make ships, bridges, line pipes and other equipment, from 12.5% to 7.5%.

Furthermore, the customs duty on longs — used to make rails and wire rods — may also be reduced from the present 10% to 7.5%.

Another proposal called for revoking anti-dumping and countervailing duties on straight length bars and rods of alloy steel, high-speed steel of non-cobalt grade flat-rolled product of steel, plated or coated with an alloy of aluminum or zinc.

At least initially, the move could be interpreted as India opening its doors to cheaper steel and reducing the tax on shipments of the alloy amid surging prices at home.

The chief executives of some of global steelmakers such as JSW and Tata Steel have opined that this would not allow any increase of flow in these steel items. Meanwhile, others fear it will have a negative impact on the profitability of domestic players.

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It is too early to talk of the direction US-India relations will take under US President Joe Biden’s administration.

But Indian trade circles are keeping a close eye on trade-related developments with a hopeful eye.

Hopes for better US-India relations

Much of the hope for better US-India relations focuses on the desire that the US will focus more on its bilateral ties with India because of the former’s strained relation with China, and why the US would benefit from such a move.

China will be on the new US administration’s mind as it assesses the Indo-US trade relationship. For now, though, the Biden administration has made it clear it would not considering any new free trade deals. Furthermore, it’s unclear whether the Biden administration will maintain or rescind existing Section 232 steel and aluminum tariffs.

The two countries have a lot going on together. The two have a robust bilateral trade. Through the first 11 months of 2020, the U.S. imported goods from India worth $46.3 billion and exported about $24.6 billion in goods. In addition, the countries have cooperation in defense and an ever-increasing reliance on each other in the field of energy.

The appointment of four Indian-Americans to senior posts in the Department of Energy (DOE) is being seen as a positive. Energy expert Tarak Shah was appointed as the department’s chief of staff, making him the first Indian-American to serve in the position. The DOE said the new leaders will direct policy and enact Biden’s vision for “bold action on the climate crisis.”

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In the third partnership of its kind between Total SE and the Adani Group, Total will take a 20% stake in renewable power company Adani Green Energy Ltd (AGEL) — the world’s largest solar developer — by way of acquiring shares held by the promoter group.

Last year, we reported on Adani Green Energy’s announcement of its intention to invest $6 billion toward Indian solar projects.

French firm to buy stake in India’s Adani

The French company will acquire 50% of a 2.35-gigawatt (GW) portfolio of operating solar assets owned by AGEL in a deal worth $2.5 billion, Total said in a statement. Total will also have a seat on the AGEL board.

Total SE CEO Patrick Pouyanné called the move a “major milestone” in the company’s strategy in the renewable energy business in India. Pouyanné also cited the size of the Indian market in touting the deal’s significance.

“We have a shared vision of developing renewable power at affordable prices to enable a sustainable energy transformation in India,” Adani Group chairman Gautam Adani said. “We look forward to working together towards delivering India’s vision for 450 GW of renewable energy by 2030.”

Adani is now the second Indian company to raise money in this manner.

Last year, industrialist Mukesh Ambani raised U.S. $27 billion from Facebook, Google and private-equity investors for his technology and retail ventures.

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An Indian agency has reported evidence that shows the presence of a lithium deposit of about 1,600 tons in the southern province of Karnataka.

It may be a small find. Still, it is important, especially with the world moving away from fossil-fueled vehicles to electric vehicles.

Lithium deposit in India

Initial surveys by the Atomic Minerals Directorate for Exploration and Research (AMD), an arm of India’s Department of Atomic Energy has shown the presence of lithium in igneous rocks of the Marlagalla-Allapatna region of Karnataka, according the Indian Express.

Lithium is a vital ingredient of the lithium-ion rechargeable batteries that power electric vehicles (EVs), laptops and smartphones. Furthermore, they are even used in military products.

The lithium find is comparatively small. Reserves in Bolivia are 21 million tonnes), the Indian Express notes, with significant deposits in Argentina (17 million tonnes), Australia (6.3 million tonnes) and China (4.5 million tonnes).

Nonetheless, it has given hope to Indian authorities as they look to move away from lithium imports, on which the country is now 100% reliable.

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