News

China's Shanxi province sets up steel fund worth $770 mln

Date Jan 10 2018 16:23:36 Source:Reuters

    SHANGHAI, Jan 9 (Reuters) - A third steel industry restructuring fund was set up in China's Shanxi province worth 5 billion yuan ($770 million), state newspaper Securities Times reported on Tuesday. 

    The fund is the third in China aimed at pushing ahead with consolidation and upgrading of the nation's steel industry. The newspaper did not cite sources nor disclose the names of companies that have put money into the fund. 

    China's biggest state-owned steelmakers are under pressure to rationalise operations and rise up the value chain as part of a state plan to revitalise a sector saddled with debts and a price-sapping capacity glut. 

    China's top steelmaker Baowu Steel Group set up the Siyuanhe fund with other companies in April, with between 40 billion and 80 billion yuan, according to local media reports. 

    Second-biggest steelmaker Hebei Iron & Steel Group HEBEIH.UL also helped start up a similar fund at 10 billion yuan in July. 

    Siyuanhe fund provided funding to Chongqing Changshou Iron & Steel to help restructure debt-ridden Chongqing Iron & Steel, Chongqing Steel said in September.

    China, which produces and consumes half the world's steel, has cut about 115 million tonnes of legal capacity and another 120 million tonnes of illegal capacity since January 2016.

    

($1 = 6.5148 Chinese yuan)

 

Edited by SHMET

EXCLUSIVE-Amplats reaches deal with S.African tribal leader in community fund row

Date Jan 10 2018 16:22:49 Source:Reuters

     JOHANNESBURG, Jan 9 (Reuters) - A South African tribal leader has agreed to a more transparent structure for a 175 million rand ($14 million) community trust funded by Anglo American Platinum (Amplats)  AMSJ.J , a move that aims to curb unrest around the firm's most profitable mine.

    The changes relate to the Mapela Trust, which was set up to fund development projects in communities around Amplats' Mogalakwena operation, the world's largest open-pit platinum mine and the Anglo American  AAL.L  unit's main cash spinner.

    The structure of the fund has proved a flashpoint, with local communities saying the way cash was spent has not transparent and too much authority was given to the local chief, known as Kgoshi, to determine where money was invested.

    Protests over two years ago temporarily closed the mine and community leaders had threatened more action to demand changes.

    Lawyers representing local communities told Reuters a deal between Amplats and the tribal chief had been reached. "There is a significant dilution of the chief's power across the board," Johan Lorenzen, one of the lawyers, said.

    Amplats confirmed this. "We have signed the agreement. The issues have been resolved," spokeswoman Mpumi Sithole said.

    Under the new structure, four of the Mapela Trust's nine trustees will be elected directly by local communities instead of just two that were picked by the chief to represent them.

    The other trustees include an independent chairperson, the Kgoshi, a member of a traditional council, a member elected by village chiefs and a senior Amplats representative.

    Amplats' Sithole said the community would elect their representatives before any cash was allocated to local projects.

    Protests over the fund that erupted more than two years ago prompted the temporary closure of the Mogalakwena mine, leading to the loss of 8,600 ounces of its annual 200,000-plus ounces of production.

    Local communities had hired prominent South African human rights lawyer Richard Spoor to spearhead their case.

    Other South African mining companies have also been cutting deals with tribal leaders who have royal titles and feudal-style control over their former homelands, often islands of rural poverty where most blacks were confined under apartheid.

    The bulk of the platinum reserves in South Africa, the world's top producer of the precious metal, lie in or near these tribal areas.

    Impala Platinum IMPJ.J and Lonmin  LMI.L  have also had operations disrupted by community protests linked to deals with tribal chiefs.

    Social and labour violence, alongside soaring costs and depressed world platinum prices, have made two-thirds of South Africa's platinum operations unprofitable at current prices, according to the country's Chamber of Mines.

    

    ($1 = 12.3896 rand)

 

Edited by SHMET

BREAKINGVIEWS-Indian tycoon has golden opportunity in aluminium

Date Jan 10 2018 16:22:04 Source:Reuters

    MUMBAI, Jan 10 (Reuters Breakingviews) - Kumar Mangalam Birla is shifting gears. The Indian tycoon has been feverishly tidying up his cement-to-textiles empire, based around the flagship Aditya Birla Group. Now a $2.5 billion bid from affiliate Hindalco  HALC.NS  for U.S. aluminium products-maker Aleris, as reported by Bloomberg, suggests growth is back on the agenda. 

    Birla has been busy. Last year he agreed to merge his local telecoms operator, Idea Cellular IDEA.NS, with Vodafone India VODA.NS after Mukesh Ambani's Jio upended the market, and also completed the complex merger of two holding companies. Now Hindalco, his separately listed $10 billion metals giant, is on the prowl, as one of several mooted bidders for Aleris.

    Private equity-owned Aleris is back on the block after U.S. officials raised national-security concerns about a $2.3 billion sale to the Chinese-backed Zhongwang USA. By contrast, Indian bidders carry less stigma thanks to New Delhi's relatively lower barriers to inward investment, and because there is less controversy about Indian manufacturers "dumping" cheap products abroad. 

    The prospect of an Indian metals giant venturing overseas conjures memories of the ill-fated acquisition of Corus, the Anglo-Dutch group, by Tata Steel TISC.NS, which is now being offloaded into a joint venture with Thyssenkrupp TKAG.DE of Germany. But this deal is much smaller, relative to the buyer, which makes it less risky for Hindalco. And Birla is

an experienced dealmaker too: the mooted acquiring unit, Novelis, was itself was acquired by the tycoon in 2007 for around $6 billion.

    At about 12 times trailing EBITDA, Aleris would be expensive relative to Hindalco's own 8.5 times. It is always risky to pay a high multiple in cyclical industries such as metals. But the Indian magnate is apparently betting on increased demand for strong, lightweight aluminium amid the uptake of electric vehicles, which tend to use more of this metal, and tougher rules on fuel emissions, which should drive increased usage in traditional cars too.

    That looks smart. Ducker Worldwide reckons the use of aluminium in cars will increase by up to 30 percent by 2025. And brokerage Kotak reckons automotive sheet demand in North America will probably result in a supply deficit for rolled products, a form of aluminium used in car-making. That, in turn, will help producers charge more. If so, the original price tag would look more lightweight too. 

    

    CONTEXT NEWS

    - India's Hindalco has submitted a $2.5 billion bid for aluminium producer Aleris, Bloomberg reported on Jan. 4, citing people with knowledge of the matter. 

    - Mumbai-listed Hindalco made a non-binding offer through its privately held U.S. unit, Novelis, the sources added. 

- Ohio-based Aleris is owned by Oaktree Capital and Apollo Global Management. Aleris had earlier agreed to sell itself to Zhongwang USA for an enterprise value of $2.3 billion. That deal was scrapped after U.S. officials raised national security concerns about the Chinese-backed bidder. 

 

 

 

Edited by SHMET

Gold inches down on higher U.S. Treasury yields

Date Jan 10 2018 16:20:47 Source:Reuters

    Jan 10 (Reuters) - Gold prices edged down on Wednesday as a surge in U.S. treasury yields and an ongoing rally in equities dented the precious metal's safe-haven appeal.

    Spot gold  XAU=  was down 0.2 percent at $1,310.16 an ounce by 0708 GMT. It declined 0.6 percent on Tuesday, in its biggest one-day drop in a month.

    U.S. gold futures  GCcv1  were down 0.2 percent at $1,310.80 an ounce on Wednesday. 

    Benchmark U.S. Treasury yields hit a 10-month high on Tuesday after the Bank of Japan tweaked its bond-buying programme. 

    Wall Street's major indexes extend the New Year rally to record levels into a sixth day on Tuesday, but Asian shares slipped on Wednesday on profit-taking.  MKTS/GLOB 

    "We are wary about going long on gold at these levels... The spike in U.S. treasury yields is an obvious negative, as is the fact that the dollar is now quite oversold against a number of currencies," said INTL FCStone analyst Edward Meir.

    "We are particularly concerned by the latest CFTC data showing dollar short positions at multi-year highs and so a short-covering rally cannot be ruled out."

    A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies. 

    The dollar index, which tracks the greenback against a basket of six major rival currencies, was steady at 92.487 .DXY . It touched a more than one-week high at 92.640 on Tuesday.  USD/ 

    The U.S. Federal Reserve should keep interest rates low so that wage gains accelerate and inflation rises, Minneapolis Federal Reserve President Neel Kashkari said on Tuesday.

    Investors are betting on more U.S. interest rate hikes after last week's payrolls data did nothing to challenge the outlook for monetary policy tightening by the U.S. Federal Reserve. 

    Higher rates could dent demand for non-interest-paying gold.

    Spot gold may be range-bound between $1,305 and $1,313 per ounce, as suggested by a Fibonacci retracement analysis, according to Reuters technical analyst Wang Tao. 

    "From a technical point of view, the area $1,300 now represents a support. If gold manages to remain above this level, markets could see this as a signal of strength from the buyers," said ActivTrades chief analyst Carlo Alberto de Casa.

    Holdings of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, fell 0.35 percent to 831.91 tonnes on Tuesday from Monday, the biggest drop since Dec. 18, 2017.

    Spot palladium XPD= fell 0.5 percent to $1,094.28 an ounce on Wednesday, after hitting a life-time high on Tuesday at $1,111.40.

    Silver XAG= was down 0.1 percent at $16.93 an ounce.

Platinum XPT= dropped 0.7 percent to $958.60 an ounce.

 

Edited by SHMET

U.S. producers seek to block Chinese aluminum shipped via Vietnam

Date Jan 10 2018 16:19:53 Source:Reuters

    WASHINGTON, Jan 9 (Reuters) - U.S. aluminum products makers sought new trade protections against Chinese imports on Tuesday, accusing China Zhongwang Holdings Ltd  1333.HK  and its affiliates of evading U.S. anti-dumping and anti-subsidy duties by shipping aluminum products through Vietnam.

    In a filing with the U.S. Commerce Department, the Aluminum Extruders Council said that aluminum extrusions from Zhongwang affiliate Global Vietnam Aluminum Co should be subject to the same U.S. import duties as Chinese extrusions.

    The duties are currently a combined 106 percent, according to the Commerce Department.  

    The anti-circumvention petition follows a number of U.S. actions to raise barriers to Chinese aluminum, including Commerce Department preliminary duties on Chinese aluminum foil and a rare U.S. government-initiated investigation into imports of Chinese aluminum alloy sheet products.

    It also comes as the administration of U.S. President Donald Trump is considering much broader global restrictions on aluminum imports on national security grounds. 

    The Commerce Department is due to issue recommendations to Trump from its "Section 232" investigation into aluminum imports on Jan 22. Recommendations from a similar probe into steel imports are due on Jan. 16, but it is not clear whether either report will immediately be made public.

    China's excess production capacity of both metals has emerged as a major trade irritant for the United States and Europe, prompting them to consider new steps to protect domestic industries and jobs from a flood of Chinese imports. 

    In the Vietnam petition, the Aluminum Extruders Council said it provided evidence that Zhongwang's affiliate in Vietnam was changing the shape and form of Chinese extrusions in minor ways but claiming their origin as Vietnamese.

    "These blatant attempts to evade duties and flood the market with unfairly traded Chinese aluminum extrusions must be halted," the trade group's president, Jeff Henderson, said in a statement.

    In June, the Commerce Department ordered that fabricated aluminum pallets imported from China should be subject to the U.S. duties after determining that they were part of a duty evasion scheme. The Aluminum Extruders Council argued that these products are being shipped through Vietnam with minor changes.

    The Commerce Department has shown receptiveness to similar anti-circumvention cases in the steel sector. In December, the agency slapped steep duties on steel products from Vietnam that originated as Chinese made hot-rolled steel.

 

 

Edited by SHMET
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