Uncertainty over Tata Steel Europe going concern status
Tata Steel UK's reliance on its Indian parent company Tata Steel Limited for financial support is causing uncertainty over Tata Steel Europe's (TSE) ability to continue as a going concern, TSE said in its annual results to March 2021.
TSE, which includes Tata Steel UK and Tata Steel Netherlands, reported a loss after tax of £793mn in its last financial year, as the Covid-19 pandemic caused demand for its products to tumble by 20pc in April-June. Its earnings before interest, taxes, depreciation and amortisation margin was minus 1pc. Tata Steel has pledged financial support to TSE above the amount the European operation expects to require in the next 12 months, but auditors PwC said: "there can be no certainty that the funds required by TSE will in fact be made available".
Tata Steel Limited's directors have said for years that the European operations need to stand on their own and be cash positive, or in the worst case cash neutral, to avoid relying on financial infusions from the parent firm, which plans to grow in the more dynamic Indian market.
TSE is separating its mainland European and UK operations, enabling them to "follow different tracks" and "separate strategic decisions" as they look to decarbonise, chief executive Henrik Adam told the Business, Energy and Industrial Strategy Committee inquiry into Liberty Steel on 22 June.
The company wrote off historical UK losses of £304mn in the latest financial year, as well as interest deductions of £735mn.
The steel market has strengthened since Tata's annual report, which was heavily impacted by the ravages of the pandemic. Spreads between hot-rolled coil (HRC) and blast furnace raw materials have reached record highs and catapulted leading producers' to strong results in the April-June quarter. The spread between Argus' daily benchmark NW EU HRC index and raw materials was $844.50/t yesterday, substantially above the historical average of close to $260/t. One year ago the spread was just $283/t. Spreads rose as high as $920/t in May.
TSE produced 9.6mn t of liquid steel in April 2020-March 2021 — 6.2mn t at Ijmuiden in the Netherlands and 3.4mn t at Port Talbot. This was down from 10.3mn t in the previous 12 months, because of the demand contraction caused by the pandemic.
Costs for the company increased by around 15pc because of Brexit, which alongside Covid-19, has resulted in major logistics and haulage challenges with demand outstripping supply. Around a quarter of UK output is destined for the EU, while some EU material also comes to the UK.
Tata has submitted plans to the Dutch government that would allow it to reduce emissions by 5mn t/yr, or around 40pc, by 2030. The plans include Project Everest, the capture of carbon from Ijmuiden, which would be stored in empty North Sea gas fields, and the usage of by-product gas to produce 100,000 t/yr of hydrogen. In the second phase of Everest, the stored carbon would be converted into suitable raw materials for the chemical industry and synthetic fuels. TSE produced 1.97 t of carbon for each tonne of crude steel during the financial year, down from 1.98 in the preceding 12 months.
The company remains in talks with the UK government over plans for decarbonising its Port Talbot plant. Much talk has focused on the commissioning of at least one electric arc furnace, but there is little clarity over the company's plans.
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Indian state approves chip, EV manufacturing plants
Indian state approves chip, EV manufacturing plants
London, 6 September (Argus) — The Maharashtra state cabinet in India has approved three foreign investment manufacturing projects — a $1bn semiconductor plant and two battery electric vehicle (EV) and hybrid vehicle factories. The semiconductor chip plant, a joint venture between Israel-based Tower Semiconductor and Indian industrial conglomerate Adani Group, is planned to be built in two phases. The 587.63bn rupees ($7bn) first phase will have a production capacity of 40,000 wafers/month and the Rs251.84bn second phase will add another 40,000 wafers/month, the state's deputy chief minister, Devendra Fadnavis, announced. The facility, to be located outside Mumbai, will be the second semiconductor fabrication plant in the country. The project still needs approval from the central government and Ministry of Electronics and IT, which plans to revise its semiconductor incentives. The project is designed to capitalise on the Indian government's plans to establish a domestic semiconductor manufacturing supply chain, driven by strong local demand in the electronics, EV and manufacturing sectors. Earlier this week, the Indian cabinet approved a proposal from Kaynes Semicon to set up a chip assembly, testing and packaging plant in Gujarat. The Rs33bn plant will have a capacity to handle 6mn chips/d. The governments of India and Singapore on Thursday signed an agreement to co-operate on semiconductor industry development and supply chain resilience, with an eye to Singaporean companies investing in Indian production. The two automotive plants that were also approved by Maharashtra state will be built by Skoda Auto Volkswagen India and Toyota Kirloskar, which is a joint venture between Japan's Toyota Motor and local firm Kirloskar Systems. The Rs150bn Skoda facility in the city of Pune will produce battery electric and hybrid cars. The company already has plants in Pune and Chhatrapati Sambhaji Nagar (previously named Aurangabad), which produce 180,000 cars and 60,000 cars, respectively. The Rs212.73bn Toyota plant will be built in Chhatrapati Sambhaji Nagar and will manufacture battery EVs, hybrids, plug-in hybrids and fuel cell vehicles. The announcement comes after the company signed an initial agreement with the Government of Maharashtra in July to explore setting up a new manufacturing plant in the city. The company operates two automotive plants in Bidadi in the state of Karnataka with an annual installed capacity of 3.42mn vehicles/yr and plans to build a third plant in the town to start operations in 2026 with a capacity of 1mn units/yr. The new plants reflect Toyota Kirloskar's growing product portfolio at it expands into EV manufacturing, rising consumer demand and an increase in exports, the company said. By Nicole Willing Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US adds 142,000 jobs in August, unemployment at 4.2pc
US adds 142,000 jobs in August, unemployment at 4.2pc
Houston, 6 September (Argus) — The US added 142,000 nonfarm jobs in August, fewer than forecast, raising the odds of a half-point rate cut at the Federal Reserve's policy meeting in two weeks. The job gains followed downwardly revised gains of 118,000 for June and 89,000 for July, for combined losses of 86,000 for the two prior months, according to the Labor Department. The gains in August were below the average monthly gain of 202,000 for the prior 12 months. The unemployment rate ticked down to 4.2pc in August from 4.3pc in July, still near five-decade lows of 3.4pc reached in early 2023. The gains were slightly lower than the 160,000 job gains forecast in a survey by Trading Economics, increasing the odds of a 50 basis point cut in the target rate to 45pc probability today from 40pc Thursday, according to the CME FedWatch tool. Odds of a quarter point cut fell to 55pc today from 60pc the day prior. Fed policy makers in late July kept their target rate unchanged at a 23-year high, but Fed chair Jerome Powell told a bankers symposium last month that the "time has come for policy to adjust," his clearest signal that the Fed is ready to begin lowering borrowing costs as inflation has slowed markedly and the labor market was beginning to show signs of weakening. A rate cut after the 18 September Fed meeting would come less than two months before the US presidential election on 5 November. Job gains were reported in construction and health care. Health care added 31,000 jobs in August, about half the monthly gain in the prior year. Construction added 34,000 jobs, more than the average. Manufacturing jobs fell by 24,000 in August. Employment was little changed in other major industries, including mining and oil and gas extraction. Average hourly earnings increased by 3.8pc over the 12 months ending in August, up from 3.6pc through July. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
PCC BakkiSilicon calls for trade defence on Chinese Si
PCC BakkiSilicon calls for trade defence on Chinese Si
London, 6 September (Argus) — Iceland's PCC BakkiSilicon has renewed its call for political support to apply increased anti-dumping duties on silicon metal from China, produced at lower prices with higher emissions, after PCC received an International Sustainability and Carbon Certification (ISCC) certifying its CO2 equivalent footprint. PCC BakkiSilicon — the Icelandic subsidiary of Germany's PCC SE — is discussing protective measures on an EU level through industry association Euroalliages, and directly with the German and Icelandic governments, a company representative told Argus . "Protective measures for the silicon industry should consist of an increase of anti-dumping duties from China," the representative said. "As well as stronger measures to comply with supply chain law requirements to prevent imports of material that is being produced under violation of human rights, work safety and environmental standards," they added. Silicon metal imported into the EU from China is already subject to an anti-dumping duty of 16.8pc (or 16.3pc for Datong Jinneng Industrial Silicon) originally imposed on 1 July 2016, and renewed on 11 August 2022 after a request for review from Euroalliages. Anti-dumping measures are usually imposed for five years, but interested parties may ask for an interim review provided that there is sufficient evidence of changed circumstances. Interim reviews usually concern the level of duty in force, but can also extend to injury, scope and form of measures. Whether an interim review can be requested remains open at the time being, the PCC representative said. The renewed political plea comes as PCC is the first silicon producer to receive ISCC Carbon Footprint Certification, confirming a footprint of 3,102.56kg CO2 equivalent (CO2e) per t of silicon metal — as produced in the reference period from 1 July 2022 to 30 June 2023. This is compared with a global industry average of 10,900kg CO2e/t of silicon metal, according to PCC, and the company estimates that Chinese manufacturers are operating far above this number. "The material produced so efficiently in environmental terms by PCC in Iceland is rarely measured by customers in Europe against criteria such as sustainability or climate protection, but still only against price," PCC SE chief executive Peter Wenzel said. By Samuel Wood Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan approves $2.4bn for EV battery projects
Japan approves $2.4bn for EV battery projects
Tokyo, 6 September (Argus) — The Japanese government has approved to fund a maximum of ¥347.9bn ($2.4bn) for electric vehicle (EV) battery investments, in a bid to build out 150 GWh/yr of domestic output capacity by 2030. A total of 12 projects will be subsidised, according to the ministry of trade and industry (Meti) on 6 September. This includes lithium-ion (Li-ion) battery cell production by a consortium of battery producer Panasonic and auto manufacturer Subaru ( see table ). Around ¥326bn will be allocated for Li-ion battery production, including lithium iron phosphate (LFP) batteries. Some ¥17bn for raw material production, such as electrolyte and ¥5bn for manufacturing equipment, will be financed, Meti said. The funding is part of Meti's wider battery strategy that aims to build out 150 GWh/yr of battery production capacity domestically by 2030. The projects being subsidised are expected to lift total capacity to 120 GWh/yr from 85 GWh/yr currently once they begin operations, a Meti official said. To achieve 150 GWh/yr target, the country needs to secure 100,000 t/yr of lithium, 90,000 t/yr of nickel, 150,000 t/yr of graphite, 20,000 t/yr of cobalt and 20,000 t/yr of manganese, according to Meti. The battery strategy is part of pricing policy across industries based on Japan's Green Transformation Initiative, a policy to promote decarbonisation. Japan by 2030 aims to set a battery pack price for EVs at ¥10,000/kWh or less to make EV prices competitive with gasoline cars, and for storage batteries for industrial facilities at ¥60,000/kWh. Domestic battery production will be an essential factor to meet those targets by reducing cost. Meti's battery strategy also aims to reduce foreign dependency for the battery supply chain, in line with the country's economic security law that designated batteries a critical resource in December 2022. By Yusuke Maekawa Japan EV battery projects with subsidy Project owner Product Capacity (GWh/yr) **** Project cost (¥bn) Government funds (¥bn) Expected year to start supplying Panasonic/Subaru lithium-ion battery cell 16.0 463.0 156.4 Aug '28 Panasonic/Mazda lithium-ion battery cell 6.5 83.3 28.3 July '25 Nissan LFP (lithium-iron phosphate) 5.0 153.3 55.7 July '28 Toyota/PPES*/PEVE** Next generation battery/ASSB*** 9/n.a 245.0 85.6 Nov '26 Nippon Shokubai Electrolyte 21.4 37.5 12.5 July '28 Toagosei Binder 142.0 3.8 1.3 Oct '26 artience/Toyocolor a) Conductive agents, b)carbon nano-tube a) for cathode 40, for anode 17, b) 120 8.8 2.9 a) Dec '27 (cathode), Sep '26 (anode), b) Jan '27 Kaga Explosion-proof cover cap 3.1 0.6 0.2 Oct '25 Ricoh/Seibu Giken Battery manufacturing equipment 3.0 4.7 2.3 Sep '27 Kyoto Seisakusho Battery manufacturing equipment 21.0 5.4 1.9 Jul '26 Soft Energy Controls Battery manufacturing equipment 18.0 0.8 0.4 Apr '25 Marui Sangyo Battery manufacturing equipment 8.0 0.8 0.4 Apr '26 * PEVE=Primearth EV Energy **PPES=Prime Planet Energy & Solutions *** All-solid-state-battery **** battery equivalent for raw material and battery manufacturing equipment Source: Meti Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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