TPT November 2008

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From the AmericaS
77 November 2008 ›
› As for American initiatives in the Arctic, 2008 marks the fourth
year that the United States has sought data defining the extent
of its continental shelf in the Arctic. The oceanic affairs office of the
US State Department has said that the Alaskan continental shelf may
extend as far as 600 nautical miles from the coastline, far beyond the
200-mile limit within which coastal countries have sovereign rights
over maritime natural resources.
On 6 September the US Coast Guard cutter Healy – this time in
the company of a Canadian icebreaker – re-embarked from Barrow,
Alaska, on a voyage to help create a three-dimensional map of the
ocean floor in the area known as the Chukchi borderland. The Healy
had already spent three weeks at sea to determine the extent of the
continental shelf north of Alaska. The Canadian, US, and University
of New Hampshire scientists aboard collected samples to establish
the thickness of sediment in the region, a factor in continental shelf
studies. These and related data are also useful for oil and natural
gas exploration.
› Precision Drilling Trust, Canada’s largest oil and gas driller, will
buy a Texas-based rival, Grey Wolf Inc, for $2 billion in cash and
stock. The agreement announced by the companies on 25August will
create one of the largest oil and gas rig operators in North America,
with a fleet of 371 drilling rigs and 229 service rigs. The combined
companies will offer an array of oilfield supplies and services as well
as turnkey drilling projects. Precision Drilling (Calgary, Alberta) first
made an unsolicited bid for Grey Wolf (Houston) in June. Results
for the six months to that point suggest that the merger will produce
annual revenues of $1.8 billion.
Steel
Novolipetsk Steel’s acquisition
of Beta Steel will support its
tube making operation in the US
The Russian steel producer Novolipetsk Steel has signed a
definitive agreement to acquire Beta Steel, a US steel producer,
from a group of private shareholders in an all-cash transaction. The
deal is expected to close in the fourth quarter of 2008.
Russia’s fourth-largest steel maker by volume is making the
purchase to provide feed for another recent acquisition, John
Maneely Co (Collingswood, New Jersey), one of the largest US
producers of steel tube and pipe. Beta Steel (Portage, Indiana) is
an independent producer specializing in hot rolled flat steel. Over 35
per cent of its output is currently sold to tube and pipe producers.
Novolipetsk Steel said on 4 September that its ‘rationale’ is to
secure additional upstream integration with Maneely’s Atlas Div, to
which Beta is already a supplier. The two companies, Novolipetsk
said, make ‘a perfect match’ .
Beta Steel operates an electric arc furnace melt shop with a capacity
of 725,000 metric tons per year and a hot strip rolling mill of 1.1
million mtpy capacity. For 2007 the company reported revenues
of $324 million on sales of 547,000 mt of steel. Novolipetsk said it
plans to increase Beta Steel’s output through streamlining as well
as supplying its own slabs, from Russia, for re-rolling.
From Moscow, Novolipetsk Steel said, “The acquisition of Beta Steel
is fully consistent with [our] stated strategy of product diversification
and increasing sales of finished products in core markets. The
transaction allows [Novolipetsk] to shape a new, vertically integrated
pipe and tube player in the North American market.”
President and CEO Alexey Lapshin further noted the Russian
company’s commitment to “develop a strong footprint in the US high
value-added finished steel market.”
• Russia is the world’s fourth-largest steel producer. In
expectation of increased demand in North America, over the
last few years Russian steel makers led by Severstal, Evraz
Group, and Novolipetsk have spent over $13 billion to buy up
North American steel assets at the relatively low prices made
possible by the weak US dollar. Having acquired around 10 per
cent of US steel making capacity, these companies are now
looking to secure raw materials for their mills. Severstal, for
example, on 22 August agreed to buy coal miner PBS Coals
Corp (Somerset, Pennsylvania) for about $1.3 billion in cash.
ArcelorMittal’s price cutting in South Africa
is bad news for US steel producers
The 1 September announcement by Luxembourg-based
ArcelorMittal that it was cutting its South African steel prices was
seen by US steel producers as boding no good for the North
American market. Indeed, the effect was evident immediately in a
drop in steel stocks. Nucor, the leading US producer, slid 6.5 per
cent in New York Stock Exchange composite trading. US Steel, the