Ferrous Metals News - Metals Place

Major deal for iron ore minor Aurox

2010-02-09T19:06:55Z

Australian junior Aurox Resources says it has signed a binding but conditional deal with Metallurgical Corp of China to construct the $1.8 billion Balla Balla magnetite (iron ore) project near Port Hedland and help Aurox secure Chinese debt funding.
It is understood Aurox expects any Chinese banks that provide funding to also take a stake in the project.

Yesterday, Aurox said MCC had signed a binding heads of agreement to provide engineering, procurement and construction services. This was conditional on MCC helping to find Chinese debt funding on suitable terms.

Aurox shares fell 1.5c to 31c yesterday on a generally positive day for iron ore miners.

The market may have been expecting more from Aurox, which had gone into a trading halt on Thursday pending a material agreement on Balla Balla. Aurox previously expected the project to cost $2bn, but a new estimate from MCC reduced this to $1.767bn.

The cost estimate was non-binding, Aurox said.

Under Aurox's plan, Balla Balla is targeting 10 million tonnes a year of magnetite concentrate, with first production at a rate of 6 million tonnes a year from 2012.

The concentrate, which would have a grade of 57.7 per cent iron ore, would be piped 110km to Port Hedland.

From 2015, when iron ore production would ramp up to 10 million tonnes a year, the mine would also produce 7000 tonnes a year of ferro-vanadium at a grade of 80 per cent and 470,000 tonnes a year of ilmenite concentrate containing 45 per cent titanium dioxide.

Aurox has commitments to sell 6 million tonnes of magnetite a year to Chinese companies.

Spot ore market tends stable, with slight rising

2010-02-08T07:06:42Z

After spot iron ore price stopped dropping, buyers expected that the price and enquires will both increase and the market mind will be improved. The price of 63.5% Indian power ore slightly rallied to U.S.$126-128 per ton (CFR).

Last week, market players estimated that the price of 63.5% Indian power ore would drop to U.S.$125 per ton (CFR) at least, but it is found that suppliers will not accept the price below U.S.$126 per ton (CFR). It is learned that the offer has amounted to U.S.$131 per ton (CFR) in Goa.

It is understood that Rio Tinto required a price increase of 40% in the first round of negotiation with Japan and S.Korea, while the China' s steel mills led by Baosteel have also started the ore price talks with the suppliers.

Steel Dynamics posts $26.7m 4Q profit

2010-02-08T06:58:28Z

Steel Dynamics, Inc. said Wednesday it earned $26.7 million in the fourth quarter, reversing a loss from a year ago as it increased production and lowered costs.

The Fort Wayne maker of steel products reported income amounting to 12 cents per share in the final three months of 2009. That compares with a loss of $82.7 million, or 45 cents a share, in the same period of 2008.

It posted revenue of $1.18 billion, down from $1.21 billion a year earlier.

Analysts expected earnings of 17 cents a share on revenue of $1.08 billion.

CEO Keith Busse said that while demand for structural steel and building components remains weak, he saw "numerous signs of recovery in the U.S. economy" including low steel inventory levels for manufacturers.

Busse said he expects stronger first-quarter profits in the company's steel operations and in metals recycling. The company is expected to provide further guidance later in the quarter.

Steel Dynamics said it produced 996,834 net tons of steel products in the fourth quarter, compared with 760,307 net tons in the same period of 2008. And while lower steel prices pushed fourth-quarter sales down 3 percent to $1.2 billion, the company said production costs fell 18 percent.

For the full year, Steel Dynamics posted a loss of $8.2 million, or 4 cents a share, compared with a profit of $463 million, or $2.45 a share in 2008. Revenue fell 51 percent to $4 billion in 2009.

Company stock dropped 82 cents, or 5 percent, to $15.12 in extended trading after releasing the earnings report. It fell 44 cents to close the regular session Wednesday at $15.92.

ArcelorMittal zeroes in on Bellary for 6-mt steel unit

2010-02-08T02:19:48Z

ArcelorMittal, the world's largest steel maker, has finalised Kuditini near Bellary in east-central Karnataka to set up its Rs 30,000-crore, 6-million tonne per annum steel plant. A team of company officials visited the site yesterday and indicated they needed 4,900 acres, a senior state government official said.

"The company had earlier shortlisted a place in Bijapur district to set up their plant. But, after visiting the state for the third time, a team of officials from the company today informed us that they want to locate their plant in Kuditini. After discussing the matter with Chief Minister B S Yeddyurappa, we have agreed to provide them land at this place," V P Baligar, principal secretary, industries and commerce, said today.

A team from Posco, the South Korean steel giant, has also visited Bellary district to look for a project location but haven't decided.

Talking to reporters on the sidelines of a meeting organised by the Confederation of Indian Industry here, he said the government would provide water for the steel plant from the Tungabhadra dam in Bellary district and the Alamatti dam in Bijapur district. The Karnataka Industrial Area Development Board had already issued a preliminary notification to acquire the land at Kuditini, he said.

The state government has identified 300 hectares of iron ore mines for the company in Bellary district, he said.

The company will sign a memorandum of understanding with the state government during the latter's global investors' meet on June 3. The government has invited L N Mittal, chairman of ArcelorMittal, to be the chief guest at the meet, said Baligar.

The High-Level Clearance Committee headed by the chief minister had cleared ArcelorMittal's proposal in January. In November last year, a high-level team led by their group board member, Sudhir Maheshwari, and executive vice president, Vijay Kumar Bhatnagar, had discussions with the chief minister, industries minister and officials to discuss the project. The team had visited three locations.

Baligar said investment in setting up ancillary units by small and medium enterprises around the new steel plant was likely to be Rs 25,000 crore.

He said a team of officials from Hero Honda had visited three places in the Hubli-Dharwad area in north-west Karnataka to locate their first manufacturing plant in South India. Last week, the team visited Gamanagatti near Hubli airport, Mummigatti and Narendra near Dharwad. The company requires about 100 acres for their plant, 200 acres for an ancillary park and another 60 acres for their township, he said.

Wipro Technologies has applied for allotment of 50 acres near Bangalore International Airport to establish a software technology park. The state government has given an in-principle approval to their proposal, said Baligar.

Miners optimistic about Chinese iron ore price talks

2010-02-08T02:19:04Z

Mining giants BHP Billiton and Rio Tinto will update the markets on their financial performance this week against the backdrop of difficult talks with China over iron ore pricing.

Analysts are cautiously optimistic that the setting of iron prices will come at an opportune time for the two as a result of high global demand. BHP and Rio recently announced plans to merge iron ore operations in Australia which is also expected to increase profit margins.

However, analysts remain concerned about the response of the European regulator to the deal after the west Australian authorities imposed an extra annual levy of A$300m (£166.6m) on the pair.

Rio's recent appointment of a Mandarin speaker to the company's top job in China is expected to ease negotiations with the Chinese authorities.

This year's negotiations are taking place in neutral Singapore after last year's disastrous discussions which resulted in the arrest of four Rio negotiators on corporate espionage charges.

BHP is expected by analysts to announce weak unadjusted earnings of US$7.9bn for the last six months of 2009, down from $13.9bn for the half year to the end of 2008. By contrast, analysts expect Rio to post unadjusted earnings of $7.3bn for the six months to the end of 2009, compared to $6.1bn for the first half of the year.

Japanese steel giants tie up with Indian firms

2010-02-08T02:18:30Z

Last week, Tata Steel, India's largest producer, announced a joint venture (JV) with Japan's Nippon Steel for production and sales of automotive cold-rolled flat products at Jamshedpur. The JV is expected to invest $400 million (Rs 1,850 crore) to set up an automobile venture in India.

For group chief financial officer of Tata Steel, the undisputed world leader in cold-rolled output was Nippon Steel. Unlike European companies, which prefer galvanised steel, cold-rolled steel is used in India.

Tata Steel-Nissan is just one among a slew of such JVs announced recently between Indian and Japanese steel producers.

About three months earlier, Sajjan Jindal-promoted JSW Steel signed an agreement with Japan's second largest producer, JFE, to collaborate for making automobile steel.

"In autos, the outer panel and bonnet require high quality of annealed products," said Seshagiri Rao, director, finance, at JSW Steel. "We have been producing cold-rolled coil (CRC) for a number of years but we are not able to do outer panel," he said. Hence the company collaborated with JFE.

JSW has 1.8 million tonnes (mt) of CRC capacity and is not planning any additional investments. It would use the technological collaboration to produce from the installed capacity.

Currently, India produces 4.5-mt of CRC, of which 1.9-mt is used for auto manufacture and the rest for consumer durable products. This is expected to double, as the Society of Indian Automobile Manufacturers expects passenger car sales to rise to three million units annually in the next five years from 1.5 million units in the last financial year.

Automakers import the annealed products but as the volume of cars and the raw material demand increases, Japanese steel makers want to cash in on that surge. That also explains why Bhushan Steel signed a technical collaboration and marketing agreement last month with Sumitomo Metals, Japan's third largest steel producer.

Bhushan is India's largest (in the secondary sector) cold-rolled steel plant owner to manufacture auto grade-CRC and sheets for automobiles and white goods industries. Bhushan Steel and Sumitomo had first entered into a six-year strategic alliance in 1997, which they renewed in 2003 and then in 2009.

This time, the two companies are also exploring the erection of a six-mt steel plant at Asansol in West Bengal. The company signed two agreements with Sumitomo Metals for technical know-how and marketing for selling products from its Orissa plant.

The first phase of the Orissa plant, with a capacity of 2.2-mt, is scheduled to go on stream in January. In the second phase, the plant's capacity will go up to 5-mt by October 2012. The company's current capacity is 1-mt. The Japanese steel major will provide technical expertise to Bhushan's Orissa plant and market a part of the produce under the Sumitomo brand for its customers in India.

"At least $1 billion (Rs 4,670 crore) of investment is expected in the next three years in auto grade-steel, including those used by component makers," said Anjani K Agarwal, partner, metals and mining, at global management consultancy Ernst and Young.

Finnish tech firm leading MNC in steel space

2010-02-08T02:17:10Z

Finland-based Outotec Oyj, a key global supplier of technology and equipment in the metals sector, has emerged as the leading MNC player in the domestic steel space as companies step up execution of new projects to beat the post slowdown blues. The Finnish major bagged a contract from JSW Steel to supply sintering technology for its upcoming unit in Karnataka, only last week.

With the latest order in its kitty, Outotec has notched up its tally to 11 in the area of sinter plants alone. JSW group is setting up a new iron ore sinter plant at Toranagallu. "We have established our leadership, particularly in areas like sinter and pellet plants in India. With steel-making inputs becoming scarce, our technology helps conserve and make the most out of it. And since it consumes less energy it is also environment friendly," Deepak Khanna, sales director, Outotec India told ET.

JSW's new plant is slated to produce annually around 2.3 million tonnes of iron sinter which will be used as feed for blast furnaces in steel production. For this, Outotec has signed a contract on the delivery of sintering technology. Outotec's delivery is a part of JSW's expansion to take its annual sinter capacity to 10 million tonnes. The commissioning for the plant is scheduled for 2011.

"This is already JSW's fourth sinter plant designed with Outotec's technology in the past five years. The previous plant delivered by Outotec and commissioned this year will be India's largest sinter plant. Outotec has designed eleven sinter plants in India since 2003 confirming the company's position as the leading supplier of agglomeration technology in the iron and steel industry", says Pertti Korhonen, CEO of Outotec. The JSW contract includes technology fee and the supply of proprietary equipment.

Outotec India, which takes up engineering and design consultancy in metals sector, is also putting up sinter plants for Tata Steel, Steel Authority of India at Rourkela, IISCo at Burnpur and Jindal Steel and Power Limited. It is also working for the Vedanta group at its project site at Lanjigarh and Jharsuguda in Orissa and Tata Steel's new pellet plant and pitching for upcoming steel projects being set up by Bhushan Steel in Orissa and JSW Bengal Steel in West Bengal.

Metals prices heading for the roof

2010-02-08T01:19:06Z

Speakers at the Mining Indaba in Cape Town this week seemed as one in warning of a near-term supply-demand squeeze and some solid price increases for a swathe of metals.
Current Font Size:

They made the point that China and India will be central to minerals demand growth. And among the so-called rare-earth metals that are crucial to many of today's high-tech products, China is the leading producer and is curbing exports unless they are already processed into manufactured products. As consultant Jack Lifton saw it, stronger demand has not (and cannot) lead to greater production.

Many of the metals that are needed for items such as solar panels, super-conductors and jet engines are produced as by-products of lead, zinc, copper, manganese or aluminium mining. There is no chance of increasing production of indium, gallium, germanium, rhenium, thorium and tellurium from primary mines.

It is not the same for copper, the metal showing the second-highest price increase over the past year - lead was first and zinc third. These are metals that better reflect the state of demand in the real economy.

Chinese demand is growing and, there are supply constraints. New mines cannot be brought on stream at the flick of a switch. Iron ore is in much the same boat. Price rises will be far more restrained than they were a year or two ago.

Chinese factor behind up and down of gold

2010-02-08T01:11:24Z

Currently, the metal markets are correcting as most pundits are calling for a bubble collapse in all commodities. The prices of metals both precious and base moved up rapidly throughout 2009 resulting in rapid gains.

The market needed a healthy correction from these fantastic gains and late January has been the time for it possibly compounded by the Chinese New Year holidays beginning February 14, 2010. Rising stockpiles in the LME warehouses have also contributed to the correction in base metals.

As usual, the drop in metal prices is accompanied by a strong U.S. dollar as the speculative funds and investors divest themselves of commodities and stocks to buy U.S. dollars, a well-established market play that continues to reward the big speculators regardless of the fundamentals.

The current slide in commodities and stock markets was ignited by China's announcement on January 13, 2010 that it would tighten the banks' reserve requirements by ½ of a percentage point which is perceived as a sign of further monetary tightening creating fear that the Chinese economy will slow further cutting off global recovery. China's economy grew at only 6% in 2009 furthering the belief that China's growth is slowing. The basic fundamentals of supply and demand argue for China and India to continue their modernization and put further pressure on demand for metals. Those same fundamentals as well as the following list are the basis for our continuing emphasis on a 30 year bull market:

Iron production and sales continue to escalate as major producers such as Rio Tinto Ltd./LLC, BHP Billiton and Fortrescue Metals Group step up the world production of iron in 2010 and 2011. China now consumes over 50% of all iron production.

Steel demand and prices continue to strengthen.

China Investment Corp., a Sovereign wealth fund, has invested approximately $50 billion in mining as the $300 billion dollar fund moves out of the financial sector.

Other Sovereign funds are shifting portfolios away from financials to commodities and natural resources. Vast sums of 10's of billions of dollars are and will be invested in mining related activities.

Gold continues to be the first choice by wealthy individuals (and now funds) as a safe haven. Commodities, especially metal, are now beginning to attract these same investors.

New mines can take up to eight years to develop which will restrict the supply side.

The Western world appears to be intent on stifling the development of new mines rather than encouraging investment. In today's world, mining companies have proven to be good corporate citizens concerned about the environment, the creation of jobs, and adding to the wealth of their jurisdictions. To continue to stifle the advancement of mining in the free world only makes us vulnerable and dependent on more hostile countries that are building their minerals wealth.

China will become more aggressive in securing mineral resources off shore for their decades of modernization. India will soon become a serious competitor with China in this regard.

Idled mine capacity has now been reinstated with existing brownfield operation (especially in iron and manganese) substantially maximizing production.

Large LME stocks of metals work well for the major consumer China to mediate the rise and volatility of base metal prices, otherwise China could purchase those stockpiles with ease.

If we monitor and follow the lead that China is adopting there should be little doubt that China is concerned about future supply and taking steps to secure the metals it requires offshore.

2009 has been the best year for commodities since the early 1970's as the vastly oversold sector from precious, base and specialty metals rapidly appreciated in price reversing the fortunes of some of our largest mining giants around the world as well as focusing attention on the continuing demand by China for all metals.

Gold

Gold, the leader of the metals pack, recorded a record high of $1,226/oz. in 2009. 2010 should see a breakthrough of $1,500/oz. on its way to $2,000/oz. Eventually as the world turns to a new gold backed currency the price of gold will be pegged at much higher prices. The realization that gold is the safest haven in these economic times has finally crystallized and will underpin the gold market for years to come. China is again taking the lead not only in world gold production but consumption as well. China narrowly beat out India in household consumption at 432 tonnes versus 422 tonnes. Now that China encourages its citizens to invest in precious metals as well as central bank purchases it will be a driving force in the future price of gold.

More and more central banks are increasing their purchases of gold as western banks are selling less. The fundamentals of supply and demand have had demand overpowering supply and only central bank selling has filled this short fall. There will come a time when the only gold available for sale will be from producers with receding production and reserves, who will want to sell their gold assets and for what? ...Paper? Dehedging of gold also will put upward pressure on the gold price as the total world hedge book drops to 11.5 million ounces.

Financing

North American gold financings came close to $20 billion in 2009, not accounting for base and specialty metal financings. This is the tip of the iceberg when you think of huge amounts of cash from individuals, institutions, sovereign funds and now China's mandate for their resource companies to invest offshore, all to be utilized by metal companies in exploration, development and production.

Although the metal prices have been correcting for the past few weeks with the indication the bottom has been reached, on January 29, 2010 the prices are all up with the exception of molybdenum since my last letter dated August 5, 2009.

Rare earths metals

China has been cutting exports of rare earth metals for several years and the threat of further reductions in rare earths could compromise the growth of the green economy. The western world is on notice that their reliance on China is coming to an end. As China builds out its own economy and requires more and more metals including rare earths one must assume those days are not too distant when strategic metals will no longer be available for export.

Not that China is trying to squeeze the West, but will no longer have the capacity to meet their own needs. The US Government has addressed the situation by providing incentives for industry (Restart Bill) to locate and develop their own resources of rare metals. In the U.S. the time it takes to permit and construct new developments may not coincide with the closing of the door to export from China. This will create a desperate scenario for crucial sectors of our economic advancement.

Are rare earths the only segment which could become affected if China's need for metal continues to grow? There are other strategic metals that are controlled by China that should also raise alarm bells with the rest of the world and could affect our standard of living, progression of manufacturing, the military and economy as a whole.

China depends on the rest of the world for their supply of iron, manganese, copper and oil just to name a few where they have inadequate production. Some of the metals that China exports and controls as well as rare earths are electrolytic manganese and magnesium.

The Chinese production of electrolytic manganese metal (EMM) from dwindling low grade domestic resources of manganese with a production cost of approximately US$0.95/lb. to produce. China produces 97.44% of the worlds' supply of 2.5 billion lbs. per year. Electrolytic manganese production and demand have grown 26%/year for six years up until 2008. Outside of China the rest of the world utilizes approximately 350,000 T's (770 million lbs. per year). The world is almost totally dependent on China for their EMM requirements. EMM's greatest use is in upgrading alloys of steel 47%, aluminum industry 32% and electronics such as batteries 14%.

Magnesium - China controls 78% of the worlds' magnesium utilized in strengthening and weight reduction in fabricating steel.
Rare Earths - China controls the production of rare earth metals required in hybrid vehicles and numerous high tech applications.

The Rare Earth metal scarcity shows how quickly the world could be turned into turmoil. We should be concerned about this and the other critical aspects of strategic metals that one country monopolizes.

The prices of these metals will obviously go much higher either through price increases or higher export duties.

It is now time for governments to pre-empt rather than be reactive to the situation with rare earth metals and develop alternative sources of supply.

The three "M's"

Earlier I talked about the increasing demand for iron for steel fabrication. As steel production increases it will create a demand for specialty metals thereby positively affecting the prices of all strategic metals including the three "M's", Manganese, Magnesium and Molybdenum as well as cobalt, niobium, tungsten, vanadium and titanium.

Production and prices of the three "M's" are:

The general direction for all metals, precious, base and specialty will continue upward as more money than we have ever experienced chases metal commodities and metal stocks while production and reserves dwindle.

Debate on nationalising the mines in South Africa

2010-02-08T00:24:32Z

A storm erupted in policy circles in South Africa after Julius Malema the leader of the African National Congress Youth League (ANCYL) boldly proclaimed the need for the mining industry in South Africa to be nationalized. The demand was predicated on fulfilling the vision of the Freedom Charter, which was adopted at Kliptown in 1955 as the 'manifesto' of the liberation struggle. According to the Charter "The wealth of the country shall be shared among all who live in it!" (Note: the full ANC YL document on nationalisation of the mines can be read here in a PDF version)

Not surprisingly Malema has faced a barrage of criticism from free marketers and other apologists of capitalism. What was surprising, however, were the attacks he had to face from Ben Turok and Jeremy Cronin, leading figures of the Communist Party. Both Turok and Cronin quickly claimed that the notorious Minerals and Petroleum Resources Development Act [28 of 2002] (MPRDA) brought mineral rights under state control, therefore it is not necessary to nationalize mines, as this piece of legislation means that all South Africans through state ownership of the mineral rights already share in the wealth of the mining industry.

The attack on Malema from the leading SACP cadres was so vicious and unexpected that Malema responded by promising that he will defend the ANC against communist takeover with his life, reflecting his and the ANCYLs ideological confusion. However, it is important to note that Malema felt it necessary to pose such a radical demand as mine nationalization, possibly due to pressure from the ANCYL ranks. This also shows that the YCL, basing itself on radical socialist demands, can gain a wide layer of support amongst youth in the alliance organisations. Malema has taken it a step further by demanding the progressive nationalisation of the entire commanding heights of the economy, starting with mining and then moving on to banking. Malema reiterated his demands on the eve of the Mining Indaba in Cape Town. This is an annual event for mining capitalists planning their scramble for African minerals. Susan Shabangu the Minister of Mineral Resources publicly backtracked on Polokwane Resolutions by stating that nationalisation is not ANC policy, and that the nationalisation "will not happen in her lifetime!"

Not surprisingly the Chairperson of De Beers, Nicky Oppenheimer jumped to the defence of Susan Shabangu. Julius Malema's response to the head of the capitalist family which has dominated the mining industry for close to a hundred years, manipulated colonial, apartheid and post apartheid governments in the interest of private profit, shows a high level of class consciousness permeating the ANCYL and its leadership. Malema is reported to have said, "Who is Nicky Oppenheimer? We don't respect him. He has never been a leader of our people. Ours is to take from his family what belongs to the people of this country." The leader of the Youth League demonstrated that his level of revolutionary consciousnesss is light years ahead of that of the leadership of the SACP through comments directed at Susan Shabangu. "Her pronouncements show that she has committed her own life to capital; capital continues to take care of her. What she is saying is that in her lifetime our economy will never be decolonised. She leads the most untransformed sector in our economy and should know better." He accused the mining minister of "sucking up to monopoly capital" (Mail and Guardian, Feb 5-11, 2010.p.10).

The ANC Youth league and its young supporters are running miles ahead of the leadership of the South African Communist Party, and even COSATU. The SACP slogan of "build socialism now", is meaningless without a detailed programme and strategy for doing exactly that. Malema and the ANCYL are putting forward the content of what the building of socialism actually requires, and it certainly does not require a deepening of capitalism. Especially now that global capitalism stands exposed and naked in its bankruptcy. Jeremy Cronin's defence of the MPRDA ignores the fact that the minerals mined are privately owned and disposed off by multinational mining companies, and that the value of the minerals are realized in London, New York, Tokyo, and Toronto where these companies are listed or based. While South Africa sits with the enormous costs of mining, the profits of mining is realized in the First World. The costs include costs to communities surrounding mines, including being pushed off their land; of the destruction of their traditional economies and culture, the destruction of their natural environment, the consumption and pollution of their water sources and the destruction of their health.

The parliamentary offices of Turok and Cronin are situated in the fairest Cape a thousand miles south of the misery and destruction wrought by the mining industry on the land of rural peasants, well removed from the scourge of HIV/Aids associated with mining. HIV/Aids infection levels in mining towns are double the national rates. Mine workers reside in "informal settlements" or squatter camps similar to the one depicted in the Sci-Fi movie District Nine. The tragedy is that the real life aliens are migrant workers from Mozambique, Malawi, Zimbabwe, Lesotho, Swaziland and the Eastern Cape.

The Mining Industry in Southern Africa

Surface workers on South African mines earn roughly R1 500 (US$200) per month, while underground workers earn R3 000 (US$400) per month, figures which have not changed much since 2005 (Hlekiso & Mahlo, 2006). In 2005 the average wage of a Canadian mine worker was US$ 2607 per month (Worldsalaries.org). Canadian mine workers therefore earned 6.5 times more in 2005 than South African mine workers in 2009. Gold is currently trading at around US$ 1200 (SAR 9 000) an ounce, which translates into US$ 38,400,000 per ton, while platinum is trading at US$ 1450 (SAR10 875) an ounce, which translates into US$ 46,400,000 per ton for platinum.

South Africa, like most of the other countries in the SADC region is highly dependent on minerals. Since the late 19th century, South Africa's economy has been based on the production and export of minerals, which, in turn, have contributed significantly to the country's skewed industrial development. Most industries that developed are interlinked with the supply side of the mining industry, with little diversification away from mining. In 1952 the Trade Union organiser and champion of the working class Solly Sachs noted that, "It is abundantly clear to anyone who has the welfare of South Africa at heart that the future of the people and the whole country depends on extensive and intensive industrial development, and that the mining of precious minerals can serve the interests of the country only as a stimulus for the development of other branches of the national economy." Yet he concludes that "It has always been the policy of the Chamber of Mines to subordinate the entire economic life of the country to the selfish interests of the mine owners" (Sachs, 1952, pp. 102-103).

In 2000, mineral commodities accounted for 47% of the $30.8 billion in total exports. Gold, diamonds, platinum, and other metals and minerals were the top export commodities in 2002. The total value of sales of primary minerals was $14.2 billion in 2000 ($12.3 billion in 1999); $11 billion worth was exported ($9.5 billion in 1999). Processed mineral materials added another $2.98 billion to sales in 1999 and $2.43 billion to exports. The leading export earners in 2000 were PGMs [platinum group metals] ($3.9 billion), gold ($3.4 billion), coal, ferroalloys, aluminum, iron ore, vanadium, and copper. The year 2000 was the first in which the value of PGM exports exceeded that of gold. The recent sharp increase in PGMs has helped compensate for the declining role of gold (Encyclopedia of the Nations). Given these staggering export figures one is left with the uncomfortable question as to why in such a wealthy country have the issues of unemployment, poverty, disease, homelessness and crime assumed such equally staggering proportions?

A number of myths have emerged about the South African economy, much of these stem from the ideological desire by the ruling class, particularly during the Mbeki terms in the presidency, to perpetuate neo-liberalism, to reverse the gains by the working class and to commodify even the most basic services such as health, education, electricity supply, water, transport and housing. Thus Wikipedia repeats some of these myths "South Africa has a two tiered economy; one rivalling other developed countries and the other with only the most basic infrastructure. It is therefore a productive and industrialised economy that exhibits many characteristics associated with developing countries, including a division of labour between formal and informal sectors and an uneven distribution of wealth and income. The primary sector, based on manufacturing, services, mining, and agriculture, is well developed" (Wikipedia, -) A well developed primary sector is surely indicative of an extractive economy which is typically Third World, Extractive economies depend on abundant supplies of cheap labour, hence the country has a large pool of unemployed lumpen proletarians, who are absorbed into the informal sector, which sector acts as a safety valve against revolution. The two Southern African countries, lauded for being democratic, capital friendly and responsible, South Africa and Botswana are also two of the most extractive industry dependent countries in the world, with the between them the worst gaps between the rich and poor world in the world, the worst HIV infection levels in the world and both suffering massive unemployment levels. There is no second tier in the South African economy. Those classified to be in the "second tier" are the working class, the poor, the unemployed, the excluded, the majority black African part of the population i.e. they are a product of the form that capitalist development has taken in South Africa since the discovery of minerals in the late 19th century.

In 2000, Anglo Platinum spent $193 million on expansions and two new mines, and $450 million was spent in 2001 (Encyclopedia of the Nations). If we consider than one ton of platinum currently sells at US$ 46,400,000 and multiply this with Anglo Platinum's proven reserves of 145.56 million tons the astronomical income of this multinational corporation from South Africa's platinum reserves is realised once more begging the question - why are the majority of South Africans faced with poverty, unemployment, ill health, poor education, homelessness and crime?

Impala Platinum Holdings Ltd. (Implats), South Africa's second-largest producer, operated 13 shafts within the Merensky and UG2 Reefs, and planned on investing $486 million by 2004 to maintain its capacity at 31,110 kg per year until 2030-from 112 million tons of ore reserves. Lonmin PLC, the third-largest PGM producer in the world, divested its nonmining interests in 2000, restructured itself as a focused PGM producer, and announced plans to increase production by 43% within a 7-year period, to 27,060 kg per year of platinum, at a cost of $550 million. The country's total reserve base of PGMs (metal content) was 62.8 million tons (Encyclopedia of the Nations). Freedom Park is situated in the shadow of Implat's Rustenburg operations. It is a sprawling informal settlement and a festering sore of HIV/Aids, STIs, sex work, alcohol and substance abuse and crime - it is also where Implat's workforce resides.

Primary gold output in 2000 was 430,778 kg, down from 491,680 in 1997 and the 1970 peak of 989 tons. Anglogold Ltd. (the gold division of Anglo American) accounted for 37% of output; Gold Fields Ltd., 25.7%; and Harmony Gold Mining Co., 15.3%-the three companies had capacities of 161 tons per year, 125 tons per year, and 87.1 tons per year, respectively. Gold, discovered in 1886, occurred along a 430-km arc that stretched across Gauteng, the North-West, Mpumalanga, and the Free State. Production of gold rose steadily through the 1960s and 1970s, as newer mines opened to keep pace with burgeoning world-market demands. Gold production declined in the 1990s, because of reduced ore grades, increased mining costs and industry restructuring. In 1996, production reached its lowest level (496,846 kg) since 1956, although South Africa was still the world's largest producer. The world's deepest mine (3,777 m) was the Western Deep Levels gold mine, at Carletonville (Gauteng).

Natural gem diamond output in 2000 was 4.75 million carats; and natural industrial diamond, 6.06 million carats. De Beers mines produced 10.29 million carats, from 23.3 million tons of material treated. Alluvial diamonds were discovered along the Orange River in 1867, and surface diamonds, at Kimberley, in 1870; both types were later discovered in other parts of South Africa. The Big Hole Mine, at Kimberley, was the world's largest hand-dug mine; by the time it ceased production, in 1914, 14.5 million carats of diamond had been extracted from 22.6 million tons of earth (Encyclopedia of the Nations). Diamonds from Southern Africa made Great Britain the biggest exporter of rough diamonds for more than a century. Southern Africa diamonds give employment to 2 million cutters and polishers in India, whereas in South Africa there are roughly 2000 cutters and polishers, 50% of whom are unemployed because they cannot access rough diamonds. Southern African diamonds make a significant contribution to the GDP of both Belgium and Israel. Southern African diamonds partly fund the oppression of Palestinians. Southern African diamonds contribute to non-unionized child labour in India.

The wealth derived from the sale of diamonds provided the initial capital for the development of the Witwatersrand gold mines. The market created by the gold mines, in turn, provided the impetus for coal mining, and, later, for the development of the iron and steel industry, which, in its turn, required the development of other minerals. Taxation of mining enterprises has supported South African agriculture, and financed many of the country's administrative and social needs.

The South African minerals industry operates on a free-enterprise, market-driven basis. Government involvement was primarily confined to ownership of the national electric power supply and the national oil and gas exploration company; under the MPRDA, mineral rights reverted to the state. The bulk of mineral land holdings and production has historically been controlled by five mining investment houses. Since 1994, the industry has undergone a major corporate restructuring, or "unbundling," aimed at simplifying a complex system of interlocking ownership, at establishing separate core-commodity-focused profit centers, and at creating an entry point for the aspirant comprador bourgeoisie, that native bourgeoisie which is dependent on and serving in the interest of imperialism, into the mining industry. The move from Johannesburg to London of two major corporate financial headquarters, Anglo American PLC and Billiton PLC, caused concern over "capital flight," and the government in 2000 blocked the $3 billion merger of Gold Fields Ltd. and Franco-Nevada Mining Corp., of Canada; in 2001, though, the government approved a $19 billion takeover of De Beers Consolidated Mines Ltd. by Anglo American. The leadership of the SACP should be careful that is is not found defending the interests of a comprador bourgeoisie instead of advancing the class interests of the working class. It should also be careful that the lack of substance of its strategies and tactics do not cause it to be marginalised by the much more dynamic and forceful shift to the left in the ANCYL.

For the nationalization of mining under the control of the working class

The MPRDA was designed to release the monopoly stranglehold of five mining investment houses and allow entry by the aspirant black middle class, mainly ANC leadership figures, into the mining industry. Thus instead of benefitting the population as a whole this limited 'nationalization' has benefitted only a small comprador elite. This elite has entered mining in alliance with financial and mining interests from the USA, Canada, Australia, Russia and China. This elite faction of the capitalist ruling class sees Malema's call for a more comprehensive nationalization as a threat to their attempts to accumulate capital. Malema will face significant opposition from the bourgeois elements within the ANC. The SACP needs to stand only for the interests of the working class, both the miners and masses of South Africa as a whole. It must not feel pressured by the mining companies and the class interests of the bourgeoisie. Instead it should enter a constructive debate with the ANCYL on the important issue of nationalization.

Malema's call for nationalization represents a step forward. However, in the face of massive bourgeois opposition the ANCYL has retreated, claiming that South Africa should emulate the Botswana model. The Botswana model is not really the answer to the key questions that arise from the need to build a socialist economy and society in South Africa. However, Malema is a step ahead of Cronin and Turok in this regard. The events of the last week, particularly the remarks by Shabangu at the mining indaba and Oppenheimer's defence of her is pushing the Youth League into an increasingly more radical position. It also shows that Oppenheimer is not even prepared for the limited nationalisation represented by the Botswana model, thus contradicting his oft quoted lofty praise for the relationship between De Beers and the government of that country. The SACP leadership needs to back Malema's call, but also point out the limitations of mine nationalization in isolation. It is important therefore to note the positive development in the thinking of the ANCYL in its realisation that nationalizing the mining sector would be an important gain for the working class, but should be accompanied with nationalizing banking and major industry in the interests of the masses. This would be the only way to realise the Freedom Charter's demand that "The mineral wealth beneath the soil, the Banks and monopoly industry shall be transferred to the ownership of the people as a whole."

Botswana is a poor example, and it is important that we reiterate this. The fact that the Botswana government has a 50% share along with DeBeers in Debswana does not mean that the people of Botswana are benefitting from the fabulous wealth produced in that country's diamond mines. Botswana has an unemployment level ranging between 25% and 30%, it has the highest poverty gap in the world, it has after South Africa and Swaziland the highest HIV/Aids infection rate, almost half of households in Botswana live below the official poverty datum line, and most households do not have water borne sewage. At the same time it has had one of the highest economic growth rates in Africa over the past two decades. Given that it is a capitalist country the economic wealth generated in the country is usurped by a comprador bourgeoisie and international capital. The state's role in the economy is to police the Botswana public in general and the working class in particular - "creating favourable conditions for investment". State ownership is not the answer if the state is an instrument of the capitalist ruling class. Only when the state becomes the instrument of the working class intent on abolishing class exploitation and oppression, and redirecting the income generated by the economy in general and mining in particular to address the challenges of poverty, unemployment, disease, illiteracy, environmental destruction will the socialization of the mining industry be useful.

If we are going to demand socialization then we need to fill this vague term out with concrete demands. Mining in South Africa will only benefit the majority of South Africans if it is placed under the control of the working class, along with banking and the commanding heights of the economy, as nationalized concerns planned in the interest of the masses. In the final analysis the bourgeois state is unable to do this. By putting itself at the head of the working class with a bold socialist programme the SACP can struggle to bring about a real transformation of society. Instead of condemning the ANCYL for its progressive vision, the SACP should take up the challenge and provide revolutionary leadership to the working class. Smashing the bourgeois state machinery and replacing it with a socialist planned economy is the only genuine road to socialism in South Africa.

Orissa inks pact with JSL for stainless steel park

2010-02-05T06:40:52Z

The Orissa government today signed a memorandum of understanding with the Ratan Jindal-owned JSL Ltd for setting up a stainless steel park at Kalinganagar where the company is setting up a 1.6 million tonne integrated stainless steel plant.

Hemant Sharma, director of industries and Rajdeep Mohanty, chief resident manager, JSL, signed the documents in the presence of the chief minister Naveen Patnaik.

As per the MoU, JSL would develop, promote and manage the stainless steel park. It would provide internal infrastructure like roads, drainage, water and power and other external infrastructure linkages.

JSL would make available the required quantity of stainless steel to the units in the park on normal terms pertaining to price, delivery and payment for processing. A steering committee would be formed comprising the representatives of the government and JSL to facilitate completion of project on time.

While JSL would invest Rs 704 crore to develop the park, seventy units, likely to come up in the park, would be making investment ranging between Rs 5 crore to Rs 25 crore each.

The project is expected to provide direct employment to 3800 persons and indirect employment to another 1200. About 300 acres of land would be required for the complex and this would be provided by the state government.

However, the government would recommend for grant of Special Economic Zone (SEZ) or Domestic Tariff Area (DTA) status to the the park, if it is necessary, after undertaking the requisite feasibility studies.

Speaking on the occasion, the chief minister Naveen Patnaik said, the state government has been following the policy of value addition of minerals within the state for last one decade. As a result, Orissa is emerging as a mineral, metal and manufacturing hub of the country.

While a MoU has been signed with Nalco for setting up an aluminium park at Angul, similar downstream parks are proposed in other major industrial hubs of the state, he added.

Ratan Jindal, vice-chairman and the managing director of JSL said, the stainless park would provide growth opportunities for local entrepreneurs. A lot of industries are interested to set up their units in the park. On the other hand, the company would attain 1 million tonne per annum (MTPA) stainless steel capacity in its Kalinganagar plant by September-October this year, he added.

Five companies signed the letter of intent with JSL for setting up units in the stainless park. They are Empowertrans private Ltd, Jagdamba Exports, Jupitor India, Kraftsware Ltd and Kitchen Essentials. Industry minister Raghunath Mohanty, chief secretary T K Mishra and other senior officials of the government were present.

'SAIL's disinvestment may not go through this fiscal'

2010-02-05T06:37:30Z

Steel Authority of India Ltd's proposed disinvestment may not be through this fiscal as it is not clear yet if the Union Cabinet will approve the proposal shortly.

"We're not sure," Mr S.K. Roongta, Chairman of SAIL, told newspersons here on Thursday. "It is for the Government to decide; perhaps, the Ministry of Steel will be able to throw light on it."

The process, he said, would start once the Government gives the green signal. "We're ready with our preparation in this regard," he observed while talking to newspersons on the sidelines of the IREFCON2010, the Eighth India International Refractories Congress organised by the Indian Refractory Makers Association.

The SAIL Chairman did not foresee any major change in steel prices in the coming months unless raw material prices jumped significantly. "The product prices have stabilised," he said pointing out that the prices of long products, after some increases, had stabilised now while the flat product prices had remained stable. Between August and December last year the prices had actually dropped, he said. In reply to a question he said that no decision had yet been taken on the proposal to form SAIL Videsh. "We've no information in this regard," he said, adding that he was not aware of any development on the report of proposed disbanding of International Coal Ventures Ltd.

"We all would like ICVL to make some progress but the participation in ICVL does not prevent its members from bidding for assets independently," he observed. Asked if SAIL would bid for the coal blocks to be auctioned by Coal India Ltd, he replied that the ST Mining, the joint venture between SAIL and Tata Steel, had already responded to the EoIs floated in this regard and was one of the shortlisted firms. SAIL was also in touch with Coal India Ltd and its subsidiary Bharat Coking Coal Ltd to bring to production some of the coal blocks lying unexplored.

Referring to the recent fire in Bhilai Steel Plant, Mr Roongta said the engineers and others were busy bringing the plant back to normal production as early as possible. Later, he left for Bhilai.

Inquiries with Bhilai Steel Plant revealed that one of the boilers in the power and blowing station was commissioned on Thursday and hopefully three blast furnaces would start production shortly.

Six out of the plant's seven blast furnaces were in operation when the fire took place. As a result of the fire, the loss of production of hot metal is estimated at more than 60,000 tonnes. The plate mill started production from Wednesday, add BSP sources.

Fortescue to defend court success vs ASIC

2010-02-05T06:30:45Z

Fortescue Metals Group is disappointed the corporate watchdog is still trying to pursue a case that was unequivocally dismissed in court against the miner and its chief, Andrew Forrest.

But the iron ore miner says it will defend itself as vigorously against an appeal by the Australian Securities Investments Commission (ASIC) just as it did in the lengthy court proceedings.

The Federal Court last month dismissed ASIC's bid to find Fortescue and Mr Forrest breached obligations under Corporations Act provisions governing company announcements.

ASIC accused Mr Forrest and his company of misleading investors over the status of deals it had signed in 2004 with Chinese companies, which appeared to be binding but were later revealed to be "framework agreements".

However, Justice John Gilmour dismissed all of ASIC's claims and awarded costs to Mr Forrest and the company.

ASIC said in a statement on Thursday it had filed an appeal against the ruling.

ASIC says Justice Gilmour's findings raised important issues regarding the interpretation and application of Corporations Act provisions.

Aspects of the law that govern company announcements such as misleading and deceptive conduct provisions, continuous disclosure provisions, and directors duties warranted review, ASIC said.

"It is part of ASIC's regulatory role to ensure that the laws which impose obligations on listed companies and their executives to keep the market properly informed are properly enforced, including by the exercise of its appeal rights," ASIC said.

Fortescue chairman Herb Elliot said in a statement today the company was disappointed by the appeal.

"While we recognise ASIC has a legal right to appeal, the judgement was unequivocal in our favour," Mr Elliot said.

"It is disappointing that after nearly three years of legal proceedings which concluded in a strongly worded judgement in favour of the defendants, ASIC has still elected to pursue the company and Mr Forrest."

Fortescue said their legal teams would "maintain the same vigorous defence during the appeal process".

The case was one of several high-profile legal losses by the regulator.

ASIC has said it intends to appeal recent court losses against One.Tel founder Jodee Rich and former AWB boss Andrew Lindberg.

Posco stainless steel prices up

2010-02-05T01:12:02Z

Posco rose the surcharge of 300 series and 400 series of stainless steel, which was due to the higher price of raw materials such as molybdenum.

The price of ASTM316L was up 150 Won/kg to 1,470 Won and the price of STS316L increased by 170 Won/ kg to 1,910 Won.

But the surcharge of ASTM304L and 304J1 remained unchanged.

The price of ASTM316TI boosted by 150 Won/kg to 2,040 Won.

Posco lifted the surcharge of 436L and 436J1L by 50 Won/kg to 1,170 and 850 Won respectively.

The price of 444 was up by 110 Won/kg to 2,220 Won and the price of 445 by 100 Won/kg to 2,490 Won.

The price of 446M rose by 80 Won/kg to 3,190 Won.

AK Steel recalls 284 laid-off workers

2010-02-05T00:58:36Z

AK Steel Corporation has recalled 284 laid-off employees back to its Mansfield Works Plant.

The last of the laid-off employees returned to work last month. The employees are working a six-week work cycle. They will be laid-off for two weeks in mid-February and will return to work for another six weeks in early March.

According to a report this week in American Metal Market, the U.S. Labor Department is reopening an investigation into whether laid-off workers were entitled to additional unemployment benefits under Trade Adjustment Assistance provisions of the Trade Act of 1974.

AK Steel, based in West Chester, began layoffs at the plant in November 2008. The local union's original unemployment coverage request was denied. Labor Department officials determined at the same time that steel coil imports did not contribute significantly to the layoffs at Mansfield Works.

A decision in the case could come in mid-March.

AK Steel produces flat-rolled carbon, stainless and electrical sheets, primarily for automotive appliance, construction and electrical power generation. The company employs about 6,500 workers in Ohio, Pennsylvania, Kentucky and Indiana.

Indian iron ore prices drop

2010-02-05T00:56:45Z

Indian iron ore with 63.5% iron content went down by $2/mt to $126-$128/mt C&F.

"Prices are above $100. We are bullish about China's demand," said a dealer working for a large international trading company based in south India.

"I'm pretty sure that the slowdown is due to the holiday," an east China-based trader said. "It is likely to continue until after the new year."

China iron-ore price talks reportedly to conclude by April 1

2010-02-05T00:53:08Z

Iron ore benchmark price talks for 2010 will likely end by April 1, the China Securities Journal reported Thursday, citing an unnamed person close to the talks.

At the same time, the Chinese side isn't ruling out a half-yearly price arrangement, given volatile iron ore spot prices, though China still insists on the long-term benchmark pricing arrangement, the daily said.

Chinese steel mills, led by the country's largest steelmaker by output Baosteel Group Corp., negotiate annual bulk prices for iron ore with global miners Rio Tinto Ltd., BHP Billiton Ltd. and Vale SA.

Last year's talks collapsed without a result as China held out for deeper discounts than the miners had settled with other Asian customers against a backdrop of China's arrests of Rio Tinto employees on charges of bribery and commercial espionage.

SteelMin makes case for 20% export duty on high-grade ore

2010-02-05T00:50:48Z

In a move that is likely to hit the miners hard, the Steel Ministry has asked the government to heavily disincentivise iron ore exports. If the ministry has its way then the Finance Ministry could double the export duty on high-grade ore (to 20 per cent) in the coming Budget.

In its set of pre-Budget proposals for the Finance Ministry, the Steel Ministry pointed out that export of the mineral has surged in the first seven months of 2009-10 by more than 20 per cent in comparison to the same period last year and "such an increase in iron ore export was witnessed at a time when the country's overall exports were showing negative growth." Citing that the exports have spiralled up on account of global demand, particularly from China, the spot prices of iron ore fines (63.5 Fe) have risen to $90-95 FOB currently and "therefore there is an urgent need to heavily disincentivise export of iron ore not only to conserve it for the long-term requirement of the domestic steel industry but also to curb its illegal mining."

"To prevent unabashed export of iron ore out of the country and to conserve it for long-term value addition by the domestic steel industry, an export duty of 20 per cent may be levied on export of all varieties of iron ore," the ministry said in its recommendation.

The Chinese steel industry's demand for Indian iron ore has witnessed considerable increase in the recent months, which further surged following the decrease in the export duty. The country's iron ore export during October 2009 was around 10 million tonnes as compared to around 5 million tonnes during October 2008 signifying an increase of more than 100 per cent. Overall during the first seven months of the fiscal 2009-10 (April-October) period exports were higher by more than 20 per cent.

On the steel front, the ministry has pitched for maintaining the status quo on the import duty of 5 per cent on all products including flat, finished, semi-finished, stainless and special alloy steel. While recommending this, it pointed out that domestic steel prices seemed to be firming up in January as major manufacturers had upped the retail prices by Rs 1,000-1,500 per tonne. Besides, the steel demand has surprisingly picked up in December 2009, it said and pointed out that in the same month the finished steel production rose by 14.9 per cent and consumption increased by 15.5 per cent. The ministry suggested that customs duty on all steel products be retained at the current level of 5 per cent.

Japan's steel market will touch bottom to rebound

2010-02-05T00:49:38Z

Since the financial crisis of 2008, Japan domestic steel market was continuously sluggish, although the international market in 2009 touched the bottom to rebound, Japan domestic did not still get better.

In terms of the recent market situation, Japan domestic steel market will feel bottom to rebound, and the reasons mainly include two aspects. One is that China's demand is strong, which boosts the Japan's exports. The other is that the contract price of iron ore and coking coal in 2010 has been fixed, and the increasing cost will drive up the steel price.

Steel price should stabilise at current levels: SAIL

2010-02-05T00:42:21Z

The Steel Authority of India Ltd on Thursday said steel prices should stabilise at current levels after hikes in recent months.

"Prices have been raised and we don't see any further rise in steel prices," SAIL Chairman and MD S.K. Roongta said on the sidelines of an international conference on refractory industry.

On February 2, SAIL had raised prices of flat products by Rs 500 per tonne.

Recently, Tata Steel's MD, H.M. Nerurkar, had also indicated that steel prices are likely to stay stable till March. "Prices of long products had risen sharply in December after which there was some correction and we don't see prices going up again," he said.

Meanwhile, Mr. Roongta informed that SAIL's 50:50 joint venture, S&T Mining, with Tata Steel has been shortlisted by Coal India Ltd. "Coal India had invited Expression of Interest and our joint venture, S&T Mining, has been short listed," Mr. Roongta added.

SAIL and Tata Steel had formed the joint venture in 2008 with an aim to scout for and develop coal mines to secure a key energy source for their respective existing and planned steel capacities.

When asked about International Coal Ventures, the special purpose vehicle formed by several PSUs to acquire coal properties abroad, Mr. Roongta said it had made little progress till date. However, he said, that they have not yet made any decision to exit the joint venture.