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Wednesday, January 20, 2010
Today's News Headlines
* Unpaid transportation debt putting Bauxilum operations at risk - Venezuela
* ANALYSIS: Energy crisis and devaluation mean new problems for Sidor - Venezuela
* Venalum to keep cells in good condition until energy supply returns to normal - Venezuela
* CAP denies interest in Acepar - Chile, Paraguay
* Crude steel production fell 19.2% in 2009, Ilafa says - Regional
* Votorantim interested in minority stake in Cimpor - Brazil
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* Unpaid transportation debt putting Bauxilum operations at risk - Venezuela
Venezuelan state bauxite and alumina company Bauxilum still has not paid its debt of over US$60mn with the companies that transport the bauxite from the Los Pijiguaos mine to the Matanzas plant in Puerto Ordaz, putting its operations this year in serious danger.
"ACBL [the company most affected] continues to wait for at least part of this money to start up repair and maintenance works on its ships but if there's no payment, then there's no shipping," an official with the Suprobaux union told BNamericas.
In December Suprobaux union general secretary Antonio Rivas said that operations were expected to improve in January thanks to resources received from the Venezuela-China joint fund.
At the time, Bauxilum received about US$16mn to pay suppliers and contractors. However, "to date ACBL has not received a dollar," the union official said.
In November around 500 workers from transport companies disrupted operations by going on strike to demand wage increases.
Bauxilum, controlled by state heavy industry holding company CVG, has an alumina plant with 2Mt/y installed capacity in Guayana region's Puerto Ordaz city.
By Harvey Beltrán
Business News Americas
* ANALYSIS: Energy crisis and devaluation mean new problems for Sidor - Venezuela
On December 30, Venezuelan state steelmaker Sidor was not only preparing to close out the year, it was also readying changes to its production forecast for 2010 after shutting down four furnaces in the plating area and one in the billet area.
Production expectations have dropped considerably. In October, Sidor - the country's largest steelmaker - reduced the run time of its electric furnaces in the plating and billet areas to only five hours a day because of power rationing.
And now, once again complying with government implemented power rationing, Sidor is recalculating its production goals for the year. According to an official from the Sutiss workers union, the plating area - which normally produces 220t/m - is expected to report only 75t in output this month.
The union expects total production to drop by 80%.
Although basic industries and mining (Mibam) minister Rodolfo Sanz said that the company is planning for a 35% drop in exports in 2010, in order to guarantee rebar supplies for the domestic market, things could get even more complicated since the furnace used to make the goods needed to produce rebar, such as billets, has been shut down.
According to data from Venezuela's central bank (BCV) under normal conditions Sidor provides 50% of the steel that the government uses in its housing projects.
It is likely that the government projects will be hurt by the company's situation since the material most used in these projects is rebar and other non-flat steel products.
It is also possible that Sidor will need to import these materials in order to keep up with domestic demand and meet the agreements it has made to supply housing projects.
YET ANOTHER INGREDIENT
On January 8, President Hugo Chávez announced that the country's currency, the bolívar, will now have two exchange rates. The first, of 4.3 bolívares to the dollar, will apply to the majority of goods and services, and the second, of 2.6 bolívares to the dollar, would be used for essential products, such as food, medicine and industrial machinery.
So even if Sidor can fulfill local demand, it will now have to sell its products at prices adjusted to the new exchange rate.
Sidor prices its products for domestic clients in dollars and now that the bolívar has been devalued by 50%, these prices will go up, which could lead to a major increase in the purchases made on foreign markets.
This change will also make companies downstream that purchase Sidor goods less competitive, since they will not be able to access less expensive products.
The impact of this price change will likely become more evident when Sidor starts to sell to countries like Iran, Russia or China, since unlike selling to Colombia just over the border, the company will now have to assume very high shipping charges, and products will become even more expensive.
So it looks like 2010 is not going to be any easier than last year, when Sidor dealt with a number of problems like the fire at the Midrex II plant and a stoppage in the plating area because of a fatal accident.
By Harvey Beltrán
Business News Americas
* Venalum to keep cells in good condition until energy supply returns to normal - Venezuela
Venezuelan state aluminum reducer Venalum will be keeping the 360 production cells it had to suspend because of the government-implemented power rationing in good condition while it waits for the energy supply to return to normal, Sintralcasa union leader José Gil told BNamericas.
"The cells will be put on hold and start back up once the drought is over," he said.
The basic industry and mining ministry (Mibam) recently said that it will be installing a thermoelectric power plant that will provide Venalum with 100MW in order to keep production levels up.
The power rationing also forced the other state aluminum reducer, Alcasa , to close its production lines 1 and 2 and replace them with a new transformation line.
Both companies are owned by state heavy industry holding company CVG and are located within the Matanzas industrial zone in Bolívar state's Puerto Ordaz city.
By Harvey Beltrán
Business News Americas
* CAP denies interest in Acepar - Chile, Paraguay
Chilean iron and steel producer CAP has denied that it is interested in taking over Paraguayan steelmaker Acepar and said it did not hold talks with the government of Paraguay on the matter.
"The CAP group has not directly or indirectly contacted any of the mentioned parties, nor has it expressed any interest in starting up operations in Paraguay," the company said in a statement signed by CEO Jaime Charles.
In December Acepar general manager Néstor Méndez told BNamericas that both the finance ministry as well as the national comptroller held meetings with people from CAP that were interested in buying the steelmaker.
He also said that a CAP engineer, with the last name Vera, visited the plant to learn more about Acepar's situation.
CAP explained that the engineer in question had resigned from the company and "had maintained professional contacts in Paraguay for personal reasons, and in no way as a representative of our company."
Acepar is located on the banks of the Paraguay river some 37km from capital Asunción and primarily makes products for construction.
By Business News Americas staff reporters
* Crude steel production fell 19.2% in 2009, Ilafa says - Regional
Latin America's crude steel output fell by 19.2% in 2009 to 53.0Mt, the Latin American Iron and Steel Institute (Ilafa) reported.
In 2008 production totaled 65.7Mt.
The most significant changes occurred in Brazil, where production was down by 21.4% to 26.6Mt, in Argentina, which saw a 27.6% drop to 4.0Mt, and in Mexico with a fall of 17.3% to 14.2Mt.
Chile's output fell 14.4% to 1.3Mt, Peru registered a 28.3% drop down to 717,000t and Ecuador fell 106% to 264,000t, Ilafa reported.
The region's primary iron output was down 26.6% in 2009 to 44.4Mt.
According to Ilafa, Brazil reported a drop of 28.2% to 25.2Mt, Argentina fell 35.7% to 2.8Mt and Mexico dropped 21.8% to 8.3Mt.
Hot rolled output in Latin America dropped 15.1% to 45.4Mt.
By Business News Americas staff reporters
* Votorantim interested in minority stake in Cimpor - Brazil
Brazilian conglomerate Votorantim is interested in acquiring a minority stake of less than 33% in cement manufacturer Cimentos de Portugal (Cimpor), Votorantim said in a filing with Portuguese securities regulator CMVM.
Votorantim added that it has been in talks with Cimpor's shareholders since 2008.
The Brazilian group also said that it has not made any decision in regards to the acquisition of Cimpor shares and it is not considering making a public offer to merge with the Portuguese firm.
Brazilian steelmaker CSN (NYSE: SID) is also interested in buying the Portuguese company. CSN's offer worth 3.86bn euros (US$5.51bn) has been rejected by Cimpor's board.
The acquisition of Cimpor shares is also being evaluated by Brazilian construction firm Camargo Corrêa, which recently stated its interest in a filing with CMVM as well.
Camargo Corrêa offered to purchase 15-25% of Cimpor and to merge both companies' cement operations.
By Business News Americas staff reporters
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In-deph interview
* A brighter year ahead for São Paulo scrap processors
Valentin Aparicio Escamilla
President
Sindinesfa
Brazil
http://www.bnamericas.com/interviews/metals/Valentin_Aparicio_Escamilla_,Sindinesfa,/170693636
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Main companies covered in today's news
* Aceros del Paraguay S.A.
http://www.bnamericas.com/company-profile/en/Aceros_del_Paraguay_S,A,-Acepar/170693636
* Comisión Chilena del Cobre
http://www.bnamericas.com/company-profile/en/Comision_Chilena_del_Cobre-Cochilco/170693636
* GalvaSud S.A.
http://www.bnamericas.com/company-profile/en/GalvaSud_S,A,-GalvaSud/170693636
* C.V.G. Bauxilum C.A.
http://www.bnamericas.com/company-profile/en/C,V,G,_Bauxilum_C,A,-Bauxilum/170693636
* Barclays PLC
http://www.bnamericas.com/company-profile/en/Barclays_PLC-Barclays/170693636
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