TPT March 2007

From the Americas

DP World did not disclose the price it received from the sale, but termed it ‘fair’. Company executives said after they agreed to sell the assets in March that they expected to realize about $750 million. Since then, port deals have become increasingly popular for bank infrastructure funds, like that of New York- based Goldman Sachs , which headed a group that won control of AB Ports , a British company, in June. The world’s largest investment bank said its earnings for fiscal 2006, ended 24 November, reached an all-time high of $9.54 billion, more than the previous two years combined. Its fourth straight year of record results contributed to a stellar return on equity of 33 per cent for the year. Nucor looks farther afield to feed its minimills Nucor Corp (Charlotte, North Carolina), has begun production at its Point Lisas plant in Trinidad, the southern Caribbean island off the coast of Venezuela. On 17 January, Nu-Iron Unlimited was reported to have completed a five-day performance test, surpassing an average production of 220t/hour. Dan DiMicco, Nucor’s chief executive, told the Charlotte Business Journal that the Trinidad facility “represents the largest current component of our strategy to control 6 to 7 million tons per year of high-quality metallics for the Nucor steel mills.” In late 2004, Nucor paid $26 million for an idle steel plant in Louisiana. The company moved the equipment of that plant, which processed the iron ore Nucor uses as a substitute for scrap in electric-furnace steelmaking, to Trinidad. There, where natural gas prices are lower than in the US, Nucor increased capacity to 2 million tons per year. The Caribbean site is also better situated to receive Brazilian iron ore, the company said. In other news of Nucor, the second-largest US steel company said 17 January that it had agreed to acquire the Canadian family- owned metals producer Harris Steel Group Inc in a transaction valued at about US$1.07 billion. Harris Steel has several business units, including Harris Rebar (fabrication of concrete reinforcing steel and design/installation of concrete post-tensioning systems); Laurel Steel (manufacture and distribution of cold finished bar and wire and wire products); and Fisher & Ludlow (manufacture and distribution of heavy industrial steel grating, aluminium grating, and expanded metal). These Harris Steel operations serve customers throughout Canada and the US. The company also participates in steel trading worldwide through its 75 per cent ownership of the Swiss trader and distributor Novosteel and in the distribution of reinforcing steel and allied products to US customers through Harris Supply Solutions. US bans recycling 1-cent and 5-cent coins for their higher metal value Concerned that rising metal prices could prompt widespread melting down or exporting of the two lowest-valuation US coins in circulation, the Mint on 15 December imposed a ban on such use of pennies and nickels. Penalties for violation are stiff: a $10,000 fine and up to five years in jail.

Metals

Oregon Steel-Evraz deal needs more time for US security review According to officials of the two companies involved, the unexpected resignation of the head of Evraz Group SA , the Russian businesses seeking to acquire Oregon Steel Mills Inc , will probably not sink the $2.35 billion deal. But both parties expected an extension of the review period well into 2007 to allow additional time for the US government to examine for any national security issues. In December, Evraz announced in Moscow that its CEO, Valery Khoroshkovsky, was leaving immediately to take up a high-level Ukrainian government post. Mr Khoroshkovsky, who took the helm at Evraz only on 1 January 2006, served as economics minister for Ukraine and in other government posts before joining the company in 2004. Writing in the Oregonian on 12 December, Richard Read noted that the US regulators would be looking for indications of potential ties between Evraz and the Russian government. In 2005, similar issues forced the state-owned Chinese oil company CNOOC to abandon its $18.4 billion unsolicited bid for the California-based oil producer Unocal. In another, roughly parallel situation, in March 2006 a state-owned Dubai company seeking a contract to manage terminals at US ports dropped out after an uproar in Congress. Mr Read pointed out that the Evraz-Oregon Steel deal appears different. “Steel lacks the national security significance of oil or ports,” he wrote. “And Evraz is a public company with no apparent foreign-government ownership.” The acquisition would involve the largest Russian takeover to date of an American company, one that would sign over an 80-year- old Portland, Oregon firm with 680 workers to a rapidly expanding Russian steel concern. Evraz planned to borrow $1.8 billion to finance the deal, another aspect needing US approval. Evraz Group is one of the world’s largest vertically integrated steel and mining businesses, with three steel plants in Russia; Palini & Bertoli, in Italy; and Vítkovice Steel, in the Czech Republic. If the Russian company had closed on Oregon Steel within 2006, the newly combined company would have produced 16.8 million metric tons of crude steel. • As an aside, the aborted ports deal mentioned above came to a second point of closure on 11 December, when the giant Dubai company DP World announced the sale of its US holdings to the American International Group , thus bringing to an end a contentious episode that many financial advisers say helped drive Middle East petrodollars away from the US and into developing market areas in Asia and elsewhere. Under pressure from American politicians, DP World is selling terminal operations in six ports, including New York-New Jersey and Philadelphia; cargo-handling businesses in 16 East Coast and Gulf of Mexico ports; and a passenger terminal in New York City to a unit of AIG, an insurance company with little experience in the ports business.

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M arch /A pril 2007