Articles in Category: Company News

The ongoing spat between Brazil’s iron ore miner Vale and China has all the hallmarks of a sibling quarrel.

Not that there aren’t fortunes at stake here, but the various parties are so interdependent at a company and a national level that you have to think a solution will be found soon.

The issue at the heart of the quarrel — Vale’s decision to build a total of 35 mega ore carriers each in the region of 400,000 metric tons of capacity — has a great deal of logic to it. Brazil is at a geographic disadvantage to Australia in shipping iron ore to Asia, but by simple economies of scale, it can reduce the per-ton cost by shipping in bulk.

By building its fleet of vessels or operating them under long-term leases, Vale can fix costs and avoid the peaks which inevitably come back to haunt the industry in times of high demand. Shipping in larger vessels reduces fuel costs per ton of ore moved and, Vale says, the carbon footprint by 35 percent or so, adding a little greenery to an otherwise very un-green industry.

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Continued from Part One.

President of Vedanta Aluminum Ltd, India’s numero uno aluminum producer, Mukesh Kumar, told Reuters that due to the closure of some of the aluminum smelters in the US, the demand had improved marginally.

Vedanta Aluminum is part of the billionaire Anil Agarwal-controlled Vedanta Group, and produces about 40 percent of the South Asian nation’s total output.

Indian aluminum exports to South Korea, Japan and China were currently priced at a premium of $223-$230 per ton above the London Metal Exchange (LME) benchmark, lower than the $240-$260 premium from other countries, the news report said. Low costs and availability of better grades of inputs, such as bauxite, give Indian smelters an edge over other suppliers.

On the other hand, declining aluminum prices around the globe, according to the report, had forced major players such as Alcoa and Norsk Hydro to cut output (just not nearly enough, or in some cases, not at all.)

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Despite a decline in profits for the first quarter reported by India’s state-run National Aluminum Company Ltd (Nalco), aluminum producers here remain optimistic about the sector. Most of this sentiment is based on the likely positive demand from the automobile and power sectors which are expected to see an increase in the last months of 2012, also dubbed as the “festive season” in India, when purchases generally register a hike.

India produces around 1.6 million tons of aluminum annually, of which about 1.3 million tons are used by domestic buyers. While its domestic demand is poised to grow by about 8 percent a year, this year’s export figures, too, are also expected to see a rise.

Nalco, India’s third-largest producer of aluminum, reported a 41 percent decline in net profit in the first quarter of 2012-13 having ended in June, against the same quarter of the previous fiscal year. The aluminum major registered a net profit of US $41 million as against $69 million in the same period last year.

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Government-owned Indian Rare Earths Ltd. (IREL) has applied for approval from the Odisha state government for rare earth mining on a coastal stretch, reports Business Standard.

All rare earth prices tracked by the MetalMiner IndX℠ did not move on the weekly Rare Earths MMI® price index this week.

The newspaper report quoted chairman-cum-managing director of IREL, R.N. Patraas, saying that they have submitted an application to the Odisha government seeking a prospective license for rare earth mining in the coastal areas of Bramhagiri in Puri district.

According to the report, the company seeks mining rights on an area of more than 2,500 hectares.

The Atomic Minerals Directorate for Exploration and Research (AMDER) in Hyderabad, in the south Indian state of Andhra Pradesh, which falls under India’s Department for Atomic Energy (DAE), has conducted surveys that show large deposits of rare earth minerals in the coastal stretch of Puri.

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Indian copper refiners led by the nation’s largest refining company, Sterlite Copper, cannot be too bothered by the downturn in global copper prices.

Hopes of a revival in copper prices in the second half of 2012 apart, Indian refiners are in good shape because refining rates have been climbing steadily instead of following the spiraling global metal prices.

A recent report in the Business Standard reported that despite a downward trend in global copper prices, the rates for refining the metal have gone the other way.

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Every problem throws up an opportunity, they say, and the London Metal Exchange’s self-inflicted problems over warehouse queues is prompting the Chicago Mercantile Exchange (CME) to consider revisiting a North American aluminum contract in direct competition with the LME, according to Reuters.

We have written extensively on the problems getting aluminum out of LME warehouses has placed on physical traders. Delays of up to six months have been experienced at some locations, during which time the owner of the metal is forced to continue to pay warehouse rent and insurance. and finance the metal until they can take delivery and move it on.

Such a situation is untenable in the long term and something will have to give.

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Will Germany’s largest steelmaker ThyssenKrupp one day end up as a capital goods manufacturer rather than a steel maker?

You could be excused for suggesting such a situation when you look at the group’s performance this year.

According to the FT, although group net income of €87 million ended a three-quarter run of losses, the net loss so far this year is €980 million – due to the steel division.

Having sold its stainless division and its super yachts business, Reuters reports, Thyssen is still only managing any form of profit due to its capital goods unit, which includes Elevators, Plant Technology, Components Technology and Marine Systems.

Capital goods now represents 40 percent of group sales, and if Thyssen is successful in selling off its troubled Americas steel operations, steel will represent less than half its revenue.

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The government-controlled Orissa Mineral Development Corporation Limited (OMDC) has announced a plan to raise its iron ore and manganese ore production capacity to 10 million tons per year and one million tons per year, respectively, by 2015-16, reports Business Line.

OMDC, a subsidiary of Rashtriya Ispat Nigam Limited (RINL), has six mining leases with estimated reserves of 206 million tons of iron ore and 44 million tons of manganese ore.

Government-owned Eastern Investments Ltd. (EIL) is the holding company of OMDC, while RINL is the holding company of EIL.

In January 2011, RINL acquired a 51-percent stake in EIL, a holding company for OMDC and Bisra Stone Lime Corporation (BSLC), both mining companies holding iron ore, limestone, dolomite and manganese ore reserves.

Reports suggest that the iron ore output in India’s top-producing eastern state Odisha has slipped by 18 percent. Even still, the high and low prices of iron ore 58% fines from India have ranged between $130 and $135 per dry metric ton for the past several weeks, according to the MetalMiner IndX℠.

The iron ore production in the state declined nearly one-fifth to 60 million metric tons during 2011-12 against 73 million tons reported in the previous financial year.

Odisha produced about 75 million tons in 2010-11, a third of the country’s annual output of about 218 million tons.

A clampdown on iron ore mines has brought down the country’s total output for 2011-12. According to latest figures compiled by the Indian Bureau of Mines (IBM), as against 208 million tons produced during 2010-11, the output for 2011-12 stood at 169.6 million tons.

According to IBM figures, Karnataka has seen the highest drop in production. As against 37 million tons, produced last year, the state’s output was only 13 million tons.

Maharashtra, which has a minor contribution, produced 1.4 million tons, but Chhattisgarh produced 30 million tons, recording a growth of 5 percent against the previous year. Goa produced 34 million tons, against 36 million tons in the year before.

Meanwhile, India had produced 2.8 million tons of manganese ore and imported 1.3 million tons in 2010-11. Exports were at a little over 800,000 tons.

The shortage of iron ore in India started after a decision by the Indian Supreme Court last August. The Court had banned mining operations in Karnataka following the recommendations of the Central Empowered Committee.

However, in April this year, the court partially lifted the ban and it is believed that iron ore production by privately owned miners in Karnataka will likely resume by July 2012.

Karnataka accounts for a quarter of India’s iron ore output. The state produces 16 million tons of iron and steel in a year, which is a little less than 25 percent of the country’s total production.

Until last year, India had an iron ore surplus reversed, but now the country has slipped into deficit.

Recently, India has also registered a decrease in exports of iron ore, having exported 117.3 million tons in 2009-10. Exports had dipped by over 36 percent to 56 million tons in the April-February period last fiscal year against the prior year.

 

Move over, GM — Hyundai looks set to take over the top slot for worker militancy.

Not that GM suffers from that nowadays, but unrealistic worker expectations and overly strong unions were undoubtedly a part of GM’s malaise in the last century. South Korean workers have long held a reputation for being some of the most militant among Asian countries and an FT report serves to illustrate, in the midst of a global slowdown, that they have lost none of their hard-line approach.

According to the FT, Hyundai Motor’s labor union was set to stage the most damaging kind of partial strikes for six days to step up their push for higher wages and better working conditions. The paper said the 44,000-strong union will strike for up to eight hours for six days – three days last week and three this week – in an effort to force the company to accept their demands.

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