July 10, 2008
July 10th (Reuters) – Australian iron ore group Midwest Corp (MIS.AX: Quote, Profile, Research, Stock Buzz) said it plans to issue just over three million new shares if China’s Sinosteel succeeds in acquiring over 50 percent of the company.
The sale will raise A$19.3 million ($18.4 million), which Midwest said would be used to pay the fees of its corporate adviser Morgan Stanley.
July 4, 2008
July 4th (The Sydney Morning Herald) – Vale plans to sell as much as $13.3 billion of new shares, the biggest offering in Brazilian history, to fund projects and acquisitions intended to create the world’s largest mining company.
The sale of up to 256.9 million common shares and 164.4 million preferred shares will take place as soon as today, Vale said yesterday.
The shares, excluding underwriters’ over-allotments, are worth 20.5 billion reais ($13.3 billion), based on Wednesday’s closing price in Sao Paulo.
“If Vale gets these resources, it must be for a possible acquisition,” said Daniel Gorayeb, a metals and mining analyst for Sao Paulo-based broker Spinelli. “The offer will certainly be oversubscribed.”
Rio de Janeiro-based Vale, which bought Canadian nickel producer Inco last year, said June 10 it would sell as much as $US15 billion ($15.6 billion) in stock to pay for expansion and possible takeovers.
Vale, which abandoned a $US90 billion bid for Xstrata Plc in March, said this week it may try to buy a copper smelter and a phosphate-fertilizer unit from Brazil’s Paranapanema.
Vale preferred shares fell 69 centavos, or 1.6%, to 42.71 reais yesterday in Sao Paulo. The company’s common shares fell 1.24 reais, or 2.4%, to 50.95 reais.
An acquisition would be in addition to the $US59 billion that Vale, led by chief executive Roger Agnelli, is already spending over five years as it tries to overtake BHP Billiton as the world’s top mining company.
With the investment, Vale aims to increase annual iron-ore output by 40% to 450 million metric tonnes by 2012, equal to more than a third of global seaborne trade of the commodity.
Vale also plans to double nickel and copper output to about 500,000 tonnes and 592,000 tonnes, respectively.
The share sale is the “next step in the process to strategic development or acquisition,” Cristiane Viana, a Rio de Janeiro-based analyst with broker Agora Corretora, said. She recommends buying Vale shares.
Vale’s share offering, equal to about 8.7% of its market capitalisation, would be the biggest ever by a Brazilian company.
The government and minority shareholders first sold a stake in Vale for 3.34 billion reais in 1997.
Vale will apply to list its ADRs on the Paris-based Euronext exchange. Shareholders who are residents of Brazil will have priority in the sale.
July 3rd (Steel Guru) – It is reported that West Perth based Giralia Resources NL has exercised its one off put option on July 1st 2008 to sell its remaining 2.6 million shares in Red Hill Iron Ltd at USD 7 per share on the terms set out on March 20th 2008 between Giralia and both AMCI Investments Pty Ltd and Australian Coal Inter Holdings IA BV. The proceeds of the sale will be about AUD 18.5 million.
Giralia had previously sold the first tranche of 4 million Red Hill Iron shares to AMCI and ACIH at AUD 7 per share.
The report said that following completion of the transactions, Giralia will have AUD 77 million in cash which will be used to accelerate exploration and development of its project portfolio, particularly its wholly owned iron ore assets.
July 2, 2008
July 2nd (Steel Guru) – Shanghai Securities News reported that Wuhan Iron & Steel Corp has got an approval of borrowing USD 169 million from a foreign bank group for buying iron ore.
This is the largest loan registered in China this year featured with a biggest number of lending banks and lowest lending rate in USD. According to the report, the bank group consists of 9 foreign banks, Banque de l’Indochine and Royal Band of Scotland as the lead banks, NanYang Commercial Bank, Commerzbank, KBC Bank NV, Swedbank, Westpac Banking Corp, Bangkok Bank Public Company Limited and Public Bank Limited.
Mr Xavier Roux director of branch bank in China of Banque de l’Indochine said in the current situation of weakening economy over the world as well as badly limited USD liquidity, so many foreign banks joined to invest in WISCO was a sign of their acknowledgement of the achievements the steel maker has obtained during past years and the confidence in the company’ ability to win the future.
As reported, under the circumstance of tight monetary policy and declining USD to CNY exchange rate, WISCO adjusted the capital structure for maximization in due time and enhanced ratios of USD liability and medium and long term debts among efforts to cut down capital cost, while controlling the debt scale. It adopted vehicles like choosing financial products which combine CNY with foreign currency, expanding direct investment ratio and making good use of functions of finance house in financing and hedge to guarantee FOREX value.
June 30, 2008
June 30th (Economic Times) – Godawari Power & Ispat has received an ‘in principle’ approval from the forest department for mining iron ore from 107 hectares at Ari Dongri in Chhattisgarh, which was pending for 18 months. This is a major milestone achievement in obtaining the final mining approval.
Now, the company will be able to complete all legal formalities to get the final mining licence within three months. Ari Dongri has high grade lumpy ore that is suitable for sponge iron production. Iron ore production is expected to be ramped up to 400-600 kilo tones per annum (ktpa) in FY10. The company is currently buying iron ore from private miners at ~Rs 4,000/tonne.
Once the iron ore mine is operational, the cost of mined iron ore will be ~Rs 1,000/tonne, which will generate savings of more than Rs 100 crore in FY10 due to substitution of purchases. During FY09, sponge iron production is expected to increase 17% and margins are likely to improve due to substantial increase in sponge iron and steel prices, while the cost increases will be moderate.
Margins have already expanded, as is evident from the recently announced Q4 FY08 results. The current prices of sponge iron and steel are substantially higher than the average prices during Q4. Hence, margins are likely to be even better in subsequent quarters. The stock at a price-to-earnings (P/E) multiple of 4.1x FY09E and 2.5x FY10E. If the savings of Rs 100 crore on account of captive mining of iron ore are factored in, the stock trades at a P/E of 1.7x FY10.
June 27, 2008
June 27th (E-Trend) – Last year the cabinet approved state support for Siderit of a total value of 183.5 mil. Sk (6.05 mil. EUR). The company in Nižná Slaná, which extracts iron ore and processes it into pellets, had been applying for state aid without success for many years.
It needed the funds for modernisation and finding new deposits as otherwise it was threatened by collapse. Now, a few months after the contract on state support was signed the directors of Siderit are still not satisfied.
They keep complaining about the same issue as before. Lack of help from the state. This time they are complaining the state is not offering the company sufficient protection from competitors from Ukraine and Russia.
They want import surcharges to be imposed on the products as Siderit cannot produce the pellets cheaper than the competition from the east. In addition to this the management of the factory in Gemer realised that the modernisation would cost more than originally expected. Whose fault is this? The state’s.
June 22, 2008
June 22nd (The Australian Business) – STRONGER metals prices are helping Rio Tinto offset margin pressure from rising input costs, according to chief executive Tom Albanese. His statement comes at a time when the company is touting its value in light of a hostile takeover offer.
“We’re seeing costs pressures in a number of sectors,” Mr Albanese told Dow Jones Newswires. But surging prices had helped to offset those costs, “if not totally mitigate” them. In aluminium production, for example, rising power costs and increasing prices for inputs such as pitch, coke and caustic soda had been dampened by the roughly 20 per cent rise in London Metal Exchange aluminium prices this year, he said.
In addition to room for greater aluminium price appreciation on a stronger Chinese currency, increasing marginal costs and increasingly constrained smelting on a lack of available power, “we see continued strength in iron ore,” Mr Albanese said. That should carry “into the foreseeable future” as supplies continued to be tight, he said.
In copper, low inventories had helped increase the red metal’s price, and “it’s going to take time” for new copper projects to come online enough to boost supply, Mr Albanese said.
For example, the company’s Mongolian copper-gold Oyu Tolgoi project would probably not begin production until at least 2011, he said. “We see a strong macro outlook for (Rio Tinto’s) products,” Mr Albanese said, adding that the company had been communicating its “very robust growth profile to 2015” with its shareholders in light of BHP Billiton’s hostile $US141 billion all-share offer.
The wide-ranging interview also touched on Rio’s ongoing iron ore talks with Asian steel mills, with Mr Albanese saying Rio is still seeking a freight differential and that he couldn’t predict how long the talks will extend. “I hope we’re in the latter stages, and the timing is becoming more urgent,” he said.
Regarding the announced Chinese boycott of the company’s spot ore, Mr Albanese said Rio was still “comfortable” with the expectation that it would sell 15 million tonnes into the spot market.