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| HOME >> Topics List >> April, 2008 >> 23 (Wed) |
| Successive 3 Cases To Take Over Ferro-Alloy Producers Surged By Resources Companies |
| = Serov Ferroalloy, Vargon Alloys And Tinfos Jernverk |
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The matters to take over ferro-alloy producers by major resources companies, having possessed manganese mines and chrome mines, have been successively materialized on 3 cases from the beginning of 2008. The objective producers taken over by resources companies are the enterprises, which have been operated for such a long period as more than several ten years, but these producers have held an anxiety to ensure the sources for supplies of raw materials. The background is that the extraordinarily risen prices of manganese ore and chrome ore as raw materials emerged from 2007 have caused an opaqueness in securing stable supplies of ores at low prices, which are essential to operate plants. As for chrome ferro-alloys, ENRC (Eurasian Natural Resources Corporation) of Kazakhstan has completed on the 3rd April of 2008 their acquisition of Serov Ferroalloy in Russia for US$210 million. Serov Ferroalloy has held the capacity to produce 200,000 tons per annum of medium and low carbon ferro-chrome. Also, as regards manganese ferro-alloys, Eramet of France announced on the 15th April of 2008 that the Company has taken over Tinfos Jernverk of Norway for approximately US$935 million (Norwegian Krone 4,718 million). Tinfos has possessed the Kvinesada plant in Norway, which produces 180,000 tons per annum of silico-manganese. In addition, Tinfos has also possessed the Tyssedal plant to produce special grade pig iron. Furthermore, in the beginning of 2008, Eti Chrome of Turkey, which is a subsidiary of national mining company owned by Turkish Government, has taken over Vargon Alloys of Sweden. Vargon Alloys is one of few producers of ferro-chrome (to produce charge chrome and high carbon ferro-chrome), having survived in Europe, and has held the capacity to produce 220,000 tons per annum of ferro-chrome. In order to ensure stable production of ferro-alloys, it is necessary to secure chrome ore for Serov Ferroalloy, manganese ore for Tinfos and chrome ore for Vargon Alloys respectively and these requirements are stabilized by the acquisitions as mentioned above. The international prices of manganese ore and chrome ore have steeply risen during from the second half of 2007 to the first half of 2008 as a remarkable phenomenon and the reason for these soared prices is possible to be pointed out by enormous purchases of raw materials from China. China imported 6.64 million tons of manganese ore and 6.10 million tons of chrome ore in 2007, which had considerable increases compared with those (6.21 million tons of manganese ore and 4.32 million tons of chrome ore) imported in 2006, and the unit prices of these two ores averaged on imports in 2007 came to US$195 per metric ton for manganese ore and US$254 per metric ton for chrome ore respectively, which also had substantial rises compared to those (US$104 for manganese ore and US$171 for chrome ore ) averaged on imports in 2006. However, these soared prices of manganese ore and chrome ore are anticipated to continue further rises in 2008 to 2009 and, until the extraordinary purchases of raw materials by China have passed a peak, this aspect has a big probability to continue. One of these three ferro-alloy producers targeted by resources companies to take over has possessed their own mine to cover part of requirements in such case as Serov Ferroalloy but almost of them are the companies to produce ferro-alloys from ores purchased by them from outside sources and, accordingly, have faced an instability on supplies of raw materials. However, in a previous time before 2005 when China was not in the market to import ores, both of manganese ore and chrome ore had suffered from oversupplies, having caused the buyer's markets, and it was comparatively easy to secure raw materials. Therefore, it was rather important for suppliers to keep close connections with major consumers and to maintain the advantage of location for production. In the past years, it was a rare case that the plants to produce ferro-alloys possessed by resources companies had taken an advantage for operations. However, in nowadays, resources companies have successively taken over ferro-alloy producers and these acquisitions have been based on an idea that the total cost to take over the existing facilities is rather inexpensive than that to invest in construction of new facilities. The acquisition of the existing producer has held an advantage to utilize the already established routes, such as to take over environmental matters, to secure supply of electric power, and so on. Also, an attractiveness to be able to operate immediately the existing facilities is substantial. However, Turkey, France (Gabon) and Kazakhstan had been so far positively exporting their ores for China but, in view of the successive acquisitions of ferro-alloy producers materialized in this time as mentioned above, it is marked to see how to be ranked the sales of manganese ore and chrome ore for China by these suppliers of ores, because China becomes a rival in the markets for sales of ferro-alloys. Apart from Kazakhstan where has preserved natural resources and has been located between China and Russia, it is wondered how extent do the suppliers concerned give a priority to sales of ores for China, where is necessary to arrange marine transport with a long distance. There is an opinion in the market that Turkey will go to reduce their exports of chrome ore for China. |
| last modified : Mon 28 Apr, 2008 [12:07] |
