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| JANUARY 2006 | |
| From the CEO's Desk | |
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Firstly, Indian products are not only technologically comparable to world standards but are also price competitive.This is the reason why industry segments like foundry, auto components, forging, are doing exceedingly well in export area. Secondly, India has vast mineral resources practically of every mineral required for metal manufacturing. This surely controls the price of the final product and makes it competitive in the global marketplace. Many overseas companies are willing to come here to establish metal producing and processing plants. There are two reasons for this. Firstly to cater to growing Indian markets, and secondly to fully exploit the abundant mineral strength of the country and produce metal / metal products at reasonable price to be offered in the world market. These companies would employ latest technologies and can also benefit other enterprises. One may refer to a similar debate going on in steel sector over awarding lease of huge iron ore mines to POSCO, a South Korean giant steelmaker interested in building a 10mt steel plant in Orissa. A similar proposal is there from Mittal's, the biggest steelmaker in the world, to build a mega steel plant in Jharkhand. The issue becomes quite complicated as the mineral reserves are in the custody of the state. It is the state government which awards the lease of mines with the consent of the central government. A widely accepted norm which is emerging is that we may allot the lease to overseas companies but not at the cost of starving domestic players. I feel that we should welcome such proposals for overseas companies but also lay such norms so that newest technology comes here, a lot of employment is created, infrastructure is built and finally, a part of created wealth remains in the country. D.A.Chandekar |
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| Headlines
High prices to benefit metal producers Tribals oppose Jindal’s bauxite mine Demand-supply factors may prop up metals Demand is big risk for some copper cos Nalco to buy 241 specialised rly wagons Sterlite, Hindalco in race for Palco assets Chinese aluminium smelters cut output by 335,000 MT |
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High prices to benefit metal producers The prices of non-ferrous metals such as aluminium, copper and zinc have rallied in a big way in the past year and show no signs of slowing down, reports said. This continued rally is likely to be beneficial for companies such as Hindalco, Nalco, Hindustan Zinc and Sterlite Industries. The sales and margin growth is expected to be between 10% and 15% during FY06. The performance for Q3 is expected to be even stronger with sales growth at around 30% and a profit growth of 35-40% over the last year. During the past year, the average monthly cash contract prices of aluminium have increased 25% to $2,291 per tonne from $1,834 per tonne at the beginning of ’05. Prices jumped 21% in ’04. The current levels of $2,300/tonne are 15-year high levels. Concerns over tight supply situation are likely to keep prices at high levels. The gap between supply and demand of aluminium in ’06 is expected to be around 200,000 tonnes. Shortages in the mining industry will result in shortages in alumina ore, the primary source of aluminium. Ore shortages are expected to be around 300,000 tonnes in ’06. In the current shortage situation, Indian producers of aluminium are placed in an enviable position. Producers such as Hindalco and Sterlite, who have started their expansion plans much earlier than the state-owned Nalco, are expected to do better than the latter in the current year. |
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Tribals oppose Jindal’s bauxite mine Girijans in the agency (tribal) tracts of Visakhapatnam district are opposing the bauxite mining proposed to be taken up by the Andhra Pradesh Mineral Development Corporation (APMDC) for supplying the ore to an alumina smelter to be set up by the Jindal group, sources said. Several NGOs and the communist parties, the CPI (M) in particular, are carrying out a campaign against the State Government’s move. They are educating the Girijans on the hazards of bauxite mining and mobilising them for a struggle against the project. Beespuram, located amidst lush-green forests in the Anantagiri mandal of the district, is a tiny tribal hamlet with 45 families facing an uncertain future. In a bid to persuade the Girijans, the government officials arranged a trip for the locals to Damonjodi in Orissa to show them the progress made there after the National Aluminium Company (Nalco) set up an alumina plant. But the Girijans were not convinced. |
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Indian Copper Development Center and Indian Non-Ferrous Metals Manufacturers Association jointly organized a seminar on copper and copper alloy rolled products trends in equipments /auxiliaries and applications on January 18-19 at Le Royal Meridian , Mumbai. The seminar was inaugurated by Mr. Devkumar Aggarwal [Past President, INFMMA and Managing Director Bralco Metal Industries Ltd.] In this 2-day seminar, the experts in the field of non-ferrous metals of all around the world were participated and discussed many important aspects and most recent developments of the non-ferrous metal industry. It includes conductivity measurement for copper and aluminium ,measurement and control in cold rolling mills leveling of flat rolled strips , global demand creation of copper and copper alloys , modern casting technology for flat products , present condition of Indian Market as well as economic condition of the neighbouring countries. |
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Demand-supply factors may prop up metals The year 2006 is expected to become another strong year for base metal prices because of a combination of demand and supply factors, reports said. Prospect of supply constraints continuing, no let up Chinese demand in addition to positive outlook for western world metals demand, and not the least, prospects of a weaker dollar are all expected to keep the base metals market buoyant. Dollar depreciation is expected to attract investment money into assets with traditional negative correlation to the currency. Unlike in 2005, this time consumers are under-hedged and producers are facing upside pressure on costs because of which dollar weakness will have significant positive implications for metals prices, Barclays Capital Research said in its 2006 Outlook for base metals. Base metals prices have risen for four consecutive years. Copper continues to hit all-time highs, while aluminium and zinc are around their highest levels in about 17 years. Against general expectations, high prices have failed to rapidly attract new production. At the same time, the global demand environment has remained strong. For 2006, in the base metal complex, Barclays Capital is positive on zinc followed by nickel, copper, aluminium, tin and lead. An aggregate upside potential of a further 10-15 per cent in the first half of the year from the current cash price levels is seen, when the cyclical peak may also occur. |
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Demand is big risk for some copper cos The biggest risk facing some copper producers is demand, the chief operating officer of African Copper Plc said. During the RBC Capital Markets Copper Conference, African Copper COO Joseph Hamilton said that demand is a faster variable in the fundamentals of the market and can quickly impact a thriving copper company. Urbanization in China mixed with rebuilding efforts from the 2005 hurricane season reflect steady demand in the short term, Hamilton said, while longer-term demand from hybrid vehicles will also keep demand buoyant. Right now about 40 pounds of copper goes into one automobile and with hybrid vehicles it’s over 100 pounds. While demand could likely remain high, Hamilton also cautioned that supplies could move to an overabundant situation in 2008 and 2009 as many companies ramp up production or initiate new mine projects while copper prices trade to record highs. A lot depends on demand. If China keeps up with its urbanization there could be something like 30 million people moving to urbanized places in China over the next 10 years. Therefore, a lot of electric wire and cable would be required. For 2006, Hamilton said treatment charges for copper concentrate, which his company produces, will move steadily lower. Treatment charges for concentrates spiked in 2005 but are now steadily moving down and that reflects smelters that drew down concentrate inventories. Presently, the industry is at a tipping point and is seeing a shift to (where concentrate charges) will be controlled by miners and producers rather than smelters. While the cycle of treating copper concentrate begins with smelters making money, Hamilton contends that in 2006 and 2007 the profits will turn back to producers. |
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Nalco to buy 241 specialised rly wagons National Aluminium Company (Nalco), the public sector aluminium major, having both mining and manufacturing facilities in Orissa, proposes to acquire an additional 241 specialised railway wagons, each of 55 tonnes capacity, to facilitate dedicated movement of additional quantities of alumina to be produced by the company´s Damonjodi plant from end-2008/early 2009 as a sequel to capacity expansion programme currently in progress, reports said. The production of alumina is estimated to increase by 5.25 lakh tonnes (lt) to 21 lt from 2008-2009 and with it will arise the need for transporting these additional quantities partly for exports through Visakhapatnam port and partly for Nalco’s own use at its smelters at Angul. About half-a-dozen wagon-builders are believed to have responded to the tender floated by the company in this regard and it will be a few more months before the selection is complete. The suppliers had included public sector firms such as Burn Standard and Braithwaite. Right now Nalco has 674 dedicated wagons for transporting alumina, for its own consumption at Angul and also for exports. |
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Sterlite, Hindalco in race for Palco assets Some of the biggest names in aluminium are tipped to join the race to bag the assets of Pennar Aluminium (Palco), which will be put on the block, reports said. Asset reconstruction company Arcil has decided to auction the loans it has bought from IDBI and other banks and financial institutions. Sources confirmed that Arcil will invoke the security enforcement law to sell the loans. And, since the debts of the company is secured against its assets the buyer of the debts will get the possession of the assets, which include Pennar’s 45,000 tonne down stream aluminium plant in Nagpur. There is no official bidding exercise, but Arcil is understood to have sounded out different groups. Aditya Birla Group flagship Hindalco Industries and Hindustan Seal are believed to be interested in the plant. Besides, Sterlite Industries is said to have evinced interest in some of the assets of the company. Industry sources, however, said that Sterlite’s interest is confined to the aluminium conductor manufacturing assets of the company which is only about a third of the total assets. Arcil took possession of the entire assets of the company by exercising powers conferred under the SARFAESI Act in August ‘05, following the failure by the company to comply with the conditions of the notice issued to it. Canara Bank, IndusInd Bank, Industrial Development Bank of India (IDBI), ICICI, SBI, State Bank of Hyderabad(SBH) and State Bank of Mysore(SBM) which were the main lenders to the company transferred their exposure to Arcil in March ‘05. |
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Chinese aluminium smelters cut output by 335,000 MT A total of 17 Chinese aluminum smelters have recently cut collective output by 335,000 metric tons in response to rising raw materials prices, reports said. Three of the country’s largest aluminum smelters, Aluminum Corp. of China (ACH), Qingtongxia Aluminum Co. and Yunnan Aluminum Co., are among those that have cut output, industry analysts close to the deal said. The move comes after 23 Chinese aluminum producers late last year agreed to cut their respective output this year by 10%. The 23 aluminum producers have a combined annual production capacity of 6 million tons, accounting for around 55% of the country’s total capacity. The price of imported alumina - a key raw material for aluminum production - has jumped 43% - 46% on year to around $600/ton currently. China is the world’s largest primary aluminum producer and an important exporter of the metal. Late last year, the association estimated China’s primary aluminum output will likely hit 7.8 million tons this year, up 17% on year. |
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Asia-Pacific Aluminium Conferecne 2006 Aluminium Casters Association of India, Pune, is organizing Asia- Pacific Aluminium Conferecne 2006, between 2-5 November 2006 at Kala Academy, Goa. The theme of the event is Emerging Technologies and Strategies. As the theme indicates, the organizer expects the Asian and European countries to attend the event and participate in the exhibition. The world of aluminium is challenging, value adding and has tremendous growth potential and India is recognized as a global player in the aluminium industry worldwide. The event will cover three areas connected with aluminium viz. Alucast 2006 - Conference on Die casting, Alex ’06 - Conference on Extrusion and DIMO’06 - Conference on Die and Mould technology. The focus areas for the event would be the following for Alucast 2006: aluminium recycling, automation of casting process, collaboration management, CRM – customer relation management, design of experiments, (latest developments in) die casting machine, die manufacture and use, environmental regulations, health & safety, heat treatment of aluminium parts, human resource management, instrumentation and process control, machining of aluminium castings, melting practices & metal treatment, post casting operations, and some aspects of component design to ease the casting process. Alex ’06: melting & casting technology, extrusion presses - new trends and designs, automation, extrusion process and instrumentation, heat treatment of extrusion, new materials - new alloys, surface treatments, quality assurance and die design & manufacturing. DIMO 2006: die materials, material testing equipment, die design with computer aid, role of flow control simulations, die manufacturing process equipment, tool technology, role of heat treatment in die life insurance, human resource qualification in die manufacture, die inspection equipment and productivity & cost reduction in die manufacture. |
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Codelco steps up efforts to maintain copper output Copper giant Corporacion Nacional del Cobre de Chile stepped up efforts to maintain production at its Andina and El Teniente mines after contract workers went on strike at these mines, company spokesperson said. The Andina mine, located high in the Andes northeast of Santiago, went into its “winter mode” where workers can stay up at the mine for 30 days without leaving the mining compound, a spokesperson at Codelco, as the company is known, headquarters said. Striking contract workers at Andina and Teniente have been blocking the access roads, burning tires and stopping traffic. The police is now guarding these roads, so there shouldn’t be any problems,” said a spokesman at the El Teniente mine. While workers are bused in, copper is shipped out through railways, which are working normally, Contract workers at Codelco’s other mines, Salvador, Chuquicamata and Radomiro Tomic, have been reporting to work normally. In their efforts to be heard, four contract workers at El Teniente began a hunger strike, said Danilo Jorquera, president of the Teniente contract workers federation. |
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