Move will remove obstacle in ArcelorMittal’s bid for Essar Steel

MUMBAI, APRIL 16

In a move that will smoothen the way for ArcelorMittal to acquire Essar Steel, debt-ladden Uttam Galva has made an offer to repay its entire outstanding debt of about ?5,600 crore by roping in a foreign investor. Uttam Galva’s debt was one of the key hurdles hindering ArcelorMittal’s eligibility to bid for Essar Steel.

The offer by Uttam Galva was made to State Bank of India, which is the largest lender in the consortium of 18 banks with exposure to the company. The company’s fresh offer comes after the banks rejected its offer to repay 51 per cent of its debt if the lenders desisted from dragging it to the NCLT.

The company has asked for some time to firm up its repayment plans as it is on the verge of striking a deal with a foreign investor, said a banking source. The consortium of banks will soon meet and take a call on the offer, the source added.

Uttam Galva officials did not respond to calls from BusinessLine seeking to confirm the development.

Thumbs up for Arcelor

The company’s attempt to pay off its entire debt has come as a blessing in disguise for ArcelorMittal, which had to sell its entire stake in Uttam Galva to prove its eligibility to bid for Essar Steel. The divestment was necessary due to an amendment in the Insolvency and Bankruptcy Code that bars promoters of defaulting companies from bidding for stressed assets. ArcelorMittal exited Uttam Galva and got itself classified as a non-promoter by exchanges in order to be able to bid for Essar Steel.

However, even after selling its stake, questions were raised on ArcelorMittal’s non-disposal agreement with lenders, signed in 2011, to help Uttam Galva raise ?1,400 crore.

The multinational maintains that it has had nothing to do with Uttam Galva after its stake sale. The disqualification of ArcelorMittal in the first round of the Essar Steel bidding was technical in nature and had nothing to do with the non-disposal agreement, said ArcelorMittal.

Meanwhile, some minority shareholders of Uttam Galva have written to the lenders seeking to know whether permission was granted to ArcelorMittal to divest its stake in the company.

“Arcelor was permitted to sell its shares to the other sponsors only if no event of default had occurred,” the minority shareholders said in their letter. “The company agreed that it would not recognise or register any transfer of the shares held by ArcelorMittal without the approval of State Bank of India,” the letter added.

Steel Strips Wheels has bagged another repeat order for 41,000 caravan wheels from Europe. The wheels would be shipped from SSWL’s Chennai plant from next month, the company said a statement to the exchanges. This repeat order makes SSWL a leading supplier of caravan steel wheels in the European region. The company further said that it is expecting to close some more export orders with another European customer. The stock of Steel Strips Wheels jumped 0.46 per cent at ?1,218.85 on the NSE.

Calcutta: The Central Electricity Authority has estimated a generation target of 35,794 million units for the Damodar Valley Corporation (DVC) from thermal and hydroelectric sources in 2018-19, a growth of around 3.12 per cent over the previous year's target. The public sector undertaking's generation units in Bengal, including the 1,200 megawatt (MW) Raghunathpur thermal power plant in Purulia district which DVC has decided to retain in its fold, is set to play a key role in the generation growth this year. Read This - India, US to set up joint task force on natural gas Data from the Central Electricity Authority show that the total generation target from DVC's units in Durgapur, Mejia and Raghunathpur is 22,668 million units in 2018-19 over last year's target of 21,100 million units. "In Durgapur we have retired one plant and for the other unit, there are some IR issues (industrial relation). We are trying to sort them out and hopefully we will be running the unit. When the units runs, there is a good plant load factor of around 85 per cent. We have also decided to retain and revive Raghunathpur," said Prabir Kumar Mukhopadhyay, member-secretary, Damodar Valley Corporation, who has assumed the additional charge of chairman in February. Read This - ONGC Videsh files arbitration claim against Sudan over unpaid oil dues Damodar Valley Corporation had earlier planned to divest the Raghunathpur power plant and had initiated discussions with Neyveli Lignite Corporation. But the deal did not take place eventually. "For Raghunathpur, we already have around 450MW of PPA (power purchase agreement) and the Bengal government is keen to source a sizeable part of the remaining 750MW and discussions on the same are in progress," Mukhopadhyay said. In contrast, the total generation target from the thermal power units in Jharkhand in the current fiscal is 12,921 million units against a target of 13,375 million units in 2017-18. This is primarily on account of restructuring of the generation plants. "In Bokaro, we have retired two units and commissioned a new 500MW plant in 2017," said Mukhopadhyay. Damodar Valley Corporations' two hydroelectric units - Maithon and Panchet - have set generation targets of 100 million units and 105 million units, respectively, both lower compared with the targets last year. But Prabir Kumar Mukhopadhyay said generation would be adequate as it had to be balanced with the flood control measures. Damodar Valley Corporation has recorded a profit of Rs 18 crore in the January-March quarter of 2017-18. "In 2018-19, we hope to sustain the trend in profit. This will come primarily from high power sales by tying up existing idle capacities. We are also looking to supply 300MW of power to Bangladesh soon," Mukhopadhyay said.

http://www.millenniumpost.in/business/cea-sets-35794-mu-of-power-output-target-for-dvc-in-fy19-294728

Renewable energy major the Suzlon Group has commissioned 626 MW in FY18, the highest installations by any player during this fiscal.

Suzlon has built about one third of the country’s wind energy capacity with about 11,900 MW cumulative installations, thus remaining No. 1 in India.

According to Suzlon, it gained a market share of 35 per cent despite an extremely challenging year for the sector due to the transition from Feed-in-Tariff to the bidding regime. It is the second largest operations and maintenance company with over 8,000 turbines in the Indian power sector.

JP Chalasani, Group CEO, Suzlon Group in a statement said, “This achievement is a testament to our strong technical and project execution capabilities and over two decades of experience in the Indian market. We have achieved this excellence despite a challenging year for the industry owing to the transition from Feed-in-Tariff (FiT) to the competitive bidding regime.”

“The FY19 would be the start of a high volumes market with central and state-level auctions in India. The sector will witness exponential growth with 10-12 GW volumes each year. There is a clear visibility of volumes even before the start of FY19. Suzlon is well positioned to reap the benefits in this new business regime with its end-to-end solutions, continuous investment in India specific wind turbine technology, vertically integrated operations and best in class services. Technological innovations will continue to be the bedrock of our growth,”he said.

Published on April 16, 2018

$48 million loan to help revitalise degraded landscapes

The World Bank on Monday signed a $48 million loan agreement for revitalising natural resources in Meghalaya through a community-led landscape approach.

The project is expected to benefit 1,00,000 people in rural Meghalaya besides building the capacity of some 30,000 youth through access to technology.

The Meghalaya Community-led Landscapes Management Project is designed to support the State’s three tribal communities – Khasi, Garo, and Jaintia – in managing its forests and natural resources through customary laws.

Meghalaya’s woods are designated as ‘unclassified forests’ in the State records and for the most part do not receive technical or financial support from State institutions. Besides, there are no institutions or legal frameworks for water management in the State.

Water bodies, rivers, and springs are considered common property like forests and are managed by traditional tribal institutions. But some of them are being polluted due to unscientific coal and limestone mining.

“The project will help manage these depleting resources by strengthening communities and traditional institutions. Restoration of degraded and highly degraded landscapes under the project will increase water for local communities and improve soil productivity,” said Sameer Kumar Khare, Joint Secretary in the Ministry of Finance’s Department of Economic Affairs.

The project will prioritise around 400 villages located in ‘very critical’ and ‘critical’ landscapes over a period of five years. Landscape planning and investments will be preceded by extensive training for communities and project management staff at the field level.

“Various interventions in soil and water management will improve the availability and reliability of water sources for drinking, empower communities to make the best use of their natural resources and accelerate economic growth and well-being of every community in Meghalaya,” said Hisham Abdo, World Bank’s acting country director in India.

A spike in power prices in the spot market has put the Power Ministry in a fix. Given that both the Ministries of Coal and Power had been claiming adequate supplies, they are unable to account for the price surge.

Senior officials in the Power Ministry said the government is addressing the problem. “Coal supply needs to be in sync with demand for power, which is 10,000 MW more than the corresponding period last year,” Minister of State (Independent Charge) for Power and Renewable Energy RK Singh told BusinessLine.

In February, the average number of rakes supplied was 259, and in March it was 270. “From April, we have given a target of 288,” Singh said.

Power demand grew 9.1 per cent in February, and about 6 per cent in March. “On an average we are growing at 6.5 per cent,” Singh added. According to the Indian Energy Exchange, in March this year, the average market price for the day-ahead market stood at ? 4.02 a unit. This was 57 per cent higher than the ?2.56 a unit monthly average reported during March 2017. The price in March was higher by 24 per cent over the ?3.23 per unit average price reported in February.

IEX said the increase in the spot market price was largely on account of the increase in the demand associated with seasonal variation and inadequate availability of coal with thermal generators. During financial year 2017-18, the day-ahead market traded at an average price of ?3.19 a unit, against ?2.41 a unit in fiscal 2016-17.

According to the latest data from the Central Electricity Authority, 15 of the country’s 114 thermal power plants had super-critical levels (less than four days) of coal stock as on April 8. Another 12 power plants have critical levels (less than seven days) of coal. Effectively, 17,022 MW of the country’s 1,40,065 MW thermal power plants are at super-critical levels of coal.

The coal supply situation in the western region is most worrisome: 14 power plants are with either critical or super-critical levels of coal.

Published on April 16, 2018

NEW DELHI: The Supreme Court ordered status quo to be maintained in the insolvency resolution proceedings against Jayaswal NecoNSE 4.88 %, acting on a plea by the company that the process could not have been initiated when a majority of the lenders had agreed to a debt restructuring plan under a Reserve Bank of India directive. 

Status quo will be maintained, a bench led by Justice Ranjan Gogoi directed on Monday. The bench issued notices to all parties on the company’s plea. The company case was argued by senior advocate Harish Salve who was assisted by lawyer Mahesh Agrawal. 

Jayaswal Neco, a producer of iron and steel castings, owes upwards of Rs. 5,000 crore to a group of lenders. The lenders had designated over 60% of the loans as non- performing assets as of March 31, 2016. 

The company had first moved the Bombay High Court against the initiation of the insolvency resolution proceedings, but had been turned away. It appealed against the decision in the top court. 

Jayaswal Neco said the RBI’s master circular allowed the company, which was hit by cancellation of some coal mines and the steel sector crisis, to carry out debt 

CIL to extract methane before mining coal

ET Bureau|

Apr 17, 2018, 07.47 AM IST

Methane would be sold commercially before the company takes up coal extraction from these mines boosting bottomline considerably.

KOLKATA: Coal IndiaNSE 0.52 % (CIL) will undertake commercial extraction of methane from all new mines holding substantial volume of the gas, reports Debjoy Sengupta. Methane would be sold commercially before the company takes up coal extraction from these mines boosting bottomline considerably. 

“It will be possible because the government has recently waived off licensing requirement for extracting methane from coal seams that fall under Coal India’s lease hold area,” a senior Coal Indi .. 

Following methane extraction, which will bring down gaseous deposit to near zero, mining seams would be safer and larger quantities of coal can be mined from them. It would be a two-way revenue gain.” 

Methane released by coal deposits remain trapped in seams, which escapes into the atmosphere when coal is mined. Methane trapped in mines can kill miners if present in high concentration. In order to avoid fatalities at deposits with high concentration of such gas, the practice has been been to puncture these seams and inject air into it forcing out methane into atmosphere or even flare it. 
 

China Iron Ore Recovers As Steel Rises, But U.S. Trade Tensions Weigh

Tuesday, Apr 10, 2018

Chinese iron ore futures jumped more than 2 percent on Tuesday, rebounding after a three-day retreat as steel prices rose, spurred by expectations of a pickup in seasonal demand and a sustained drop in steel stockpiles.

However, worries over trade frictions between the United States and China capped gains in both commodities.

China has stepped up its attacks on the Trump administration over billions of dollars worth of threatened tariffs, but U.S. President Donald Trump again voiced optimism the two sides would hammer out a trade deal.

The most-traded iron ore for September delivery on the Dalian Commodity Exchange was up 2.4 percent at 449.50 yuan ($71) a tonne by 0223 GMT.

“The physical market is still quite stable. We are expecting seasonal demand to increase consumption which will support raw material prices,” said an iron ore trader in Shanghai.

Activity in the construction sector, a big steel user, typically increases as weather warms after winter.

“It’s still quite cold in some parts of China, so I believe it will take one or two weeks before we see construction work fully start,” the trader said.

Iron ore shipments to China from the Port Hedland terminal in top supplier Australia climbed nearly 12 percent in March from a month earlier to 35 million tonnes.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB rose 0.6 percent to $63.95 a tonne on Monday, according to Metal Bulletin.

The most-active rebar on the Shanghai Futures Exchange rose 1.3 percent to 3,407 yuan per tonne, gaining for a second session running.

In a sign of demand picking up, inventory of construction steel product rebar at Chinese traders dropped for a third consecutive week, standing at 8.73 million tonnes on April 4, data compiled by SteelHome consultancy showed. SH-TOT-RBARIN

That compared to a nearly five-year peak of 9.78 million tonnes in mid-March.

“Inventory at traders dropped at a faster pace because of stronger demand,” Morgan Stanley said in a report, pointing to a 6.5 percent weekly drop in traders’ inventory for major steel products during the same period.

Source: in.reuters.com

Tokyo Steel Manufacturing Co Ltd , Japan’s top electric-arc furnace steelmaker, on Monday said it would hold product prices steady in May due to slow local demand.

The decision marks three months of price freezes by the company.

Tokyo Steel’s pricing strategy is closely watched by Asian rivals such as South Korea’s Posco and Hyundai Steel Co, as well as China’s Baoshan Iron & Steel Co Ltd(Baosteel).

“Local demand has slightly weakened as end-users had built up some inventories by early this year and due to some concerns that the new U.S. import tariff on steel may weigh on global steel prices,” Tokyo Steel’s managing director, Kiyoshi Imamura, told reporters at a briefing.

U.S. President Donald Trump pressed ahead in March with import tariffs of 25 percent on steel and 10 percent on aluminium, describing the dumping of these products in the U.S. market as “an assault on our country”.

“But we are hopeful that domestic demand will pick up from around May as there is still strong demand from automakers and other manufacturers,” he said, adding that fears over an impact from the U.S. tariffs are also receding amid strong demand in China and the rest of Asia.

Source: in.reuters.com

Monday, Apr 16, 2018

China’s imports of major commodities may be losing some of their strong growth momentum, with gains in the first quarter of this year failing to keep pace with those from the same period in 2017.

At first glance, China’s imports of crude oil, iron ore, coal and copper looked to have bounced back in March after a poor showing in February.

However, the first two months of the year generally result in some distortions in the data, depending on the timing of the Lunar New Year. This year’s holiday fell entirely within February, resulting in weaker import numbers.

It’s always more illuminating to look at first quarter numbers when assessing China’s commodity imports, and here the story is far more mixed.

Crude oil imports rose 7 percent in the first quarter of 2018 compared to the same period a year earlier to the equivalent of about 9.1 million barrels per day (bpd).

However, the growth rate in the first quarter of 2017 was 15 percent, meaning that although China’s imports of crude oil are still increasing, they aren’t doing so at the same pace as they did in the early part of last year.

In volume terms, the gain still looks impressive, with imports in the first quarter some 600,000 bpd more than they were in the same period in 2017.

However, it’s also worth noting that exports of refined fuels were about 1.27 million bpd, which is about 210,000 bpd more than they were in the first quarter of last year.

This implies that of the additional 600,000 bpd of crude imported in the first quarter of 2018, just over a third was exported as refined products, a further factor pointing to the loss of some growth momentum in China’s crude demand.

IRON ORE LOSES SPEED

Coal imports also looked to have rebounded strongly in March, with a 27.8 percent jump over the previous month, but the gain for the first quarter as a whole was a more modest 16.6 percent.

This growth rate is still robust, but it is about half the pace of what was achieved in the first quarter of 2017.

The story is even weaker for iron ore, with first quarter imports of 270.5 million tonnes actually being 0.1 percent down from the same quarter last year.

In the January-March period last year, iron ore imports were up 12.2 percent from the same period in 2016.

It would appear that China’s vast steel sector may be taking a breather after several months of strong gains, and the build-up of iron ore inventories at ports to record levels in recent weeks probably has helped lower the appetite for imports.

However, copper is an area of strength in China’s first quarter, with imports of unwrought copper increasing 7.3 percent in the first quarter, a reversal of the decline of 20 percent experienced in the first three months of 2017.

However, it’s likely that some of this gain is due to a change in regulations, making it more difficult to import copper scrap and thereby boosting demand for the refined metal.

Overall, the picture that emerges from China’s first quarter trade data is somewhat similar to an Australian government public information campaign on terrorism, which urged citizens to “be alert, not alarmed”.

There is little to suggest that China’s economy is slowing faster than expected, and the data show that commodity imports are still relatively robust, even if the pace of growth is slowing.

It’s likely that a healthy moderation is the best outcome for China, just so long as it doesn’t turn into something more pronounced in the current quarter.

Source: in.reuters.com

Monday, Apr 09, 2018

Australian mining infrastructure group Mineral Resources Ltd (MIN.AX) said on Monday it has agreed to acquire iron ore miner Atlas Iron (AGO.AX) via a scheme of arrangement, valuing Atlas at A$280.2 million ($215.2 million).

Mineral Resources said in a statement that Atlas shareholders would be offered 1 new Mineral Resources share for every 571 Atlas shares, representing a 59 percent premium to Atlas’ last close. Atlas last traded at A$0.019 on Wednesday last week, while Mineral Resources closed at A$17.24.

Atlas directors unanimously recommended that shareholders vote in favor of the scheme.

Atlas shares were worth more than A$4 in 2011, as iron ore prices surged. It was considered an emerging iron ore powerhouse, before getting hit by rapidly declining spot prices.

A debt restructure in 2016 saved Atlas from falling into administration but the company never really thrived again, leaving it little option but to accept the deal proposed by Mineral Resources.

“The scrip nature of the scheme also delivers a number of key benefits to Atlas shareholders, including; retained exposure to Atlas, the opportunity to benefit from potential synergies driven by the combination and greater diversification of revenue and commodity exposure,” Atlas Managing Director Cliff Lawrenson said in a statement.

Mineral Resources said the amalgamation of its existing Pilbara iron ore assets with those of Atlas would lead to greater synergies and economies of scale, helping to drive down costs to ensure the consolidated iron ore business is sustainable amid lower prices for low grade iron ore.

Source: in.reuters.com

Wednesday, Apr 11, 2018

Aperam has agreed to acquire VDM Metals for 438 million euros ($542 million), the Luxembourg-based steel producer said on Wednesday, in a move to boost its position in high-end alloys.

The share purchase agreement with Falcon Metals and Lindsay Goldberg will unlock about 20 million euros of synergies by 2020 and enhance earnings per share and free cash flow from the first year, Aperam said.

“Whilst maintaining our priority of a strong balance sheet, consistent with investment grade ratios, we are confident that this acquisition will create further value for all Aperam’s stakeholders,” Chief Executive Timoteo Di Maulo said.

VDM Metals will be combined with Aperam’s Alloys & Specialties Division, creating an entity with over 3,000 employees based in 20 countries and pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) of 122 million euros.

The deal, which is expected to be completed in the second half of 2018, will be financed through a mix of available surplus cash and debt, Aperam said.

Source: in.reuters.com