TPT March 2011

G lobal M arketplace

for steel in India. This was estimated by the Ministry of Steel to have grown 10% in 2010. As reported on the business news site bsr-russia.com, Severstal’s main shareholder and chairman, Alexei Mordashov, has said that the company is looking beyond the US and Europe to expand into markets in Southeast Asia and India. › In the view of the chief executive of the third-largest Japanese stainless producer, Japan’s stainless steel mills must combine or else ally with others to regain ground lost to rivals in China and South Korea. According to Hideo Suzuki, of Nisshin Steel Co, Ltd . bigger Japanese steel makers would be in a stronger position to negotiate raw material prices with suppliers and to attract investment. “The current size of operations is too small,” Mr Suzuki told Bloomberg News in a December interview at Nisshin Steel headquarters in Tokyo. “The industry will need to consolidate.” His own firm is seeking to extend an alliance with Nippon Steel Corp, the nation’s biggest producer, Mr Suzuki said. Yasuhiro Matsumoto, an analyst at Tokyo-based Shinsei Securities Co, told Bloomberg that Japanese companies attempting to unite would have to overcome regulatory hurdles – including strict anti-monopoly rules – or else shut down plants and seek manufacturing bases overseas.

Reporting on the 18 December opening ceremony in Madrid, Raphael Minder of the International Herald Tribune also noted that, only two days later, a new rail passage across the Pyrenees would be inaugurated between Figueres, in Spain, and Perpignan, on the French side. This is a significant step toward completion of a cross- border, high-speed rail network connecting Madrid; Barcelona, Spain’s second-largest city; and Paris. Given Spain’s acute budgetary difficulties, which have unsettled investors and sent its borrowing costs soaring, this hardly seems an ideal time to launch a project whose cost has already surpassed $15.7 billion, including the construction of a number of railway stations. To Mr Minder, the counterintuitive timing “underlines the extent to which infrastructure spending has been at the heart of Spain’s boom-and-bust economy.” (“Despite Economic Woes, Spain Continues Investment in Trains,” 22 December) But, while Spain’s financial crisis has forced the shelving of billions of euros in infrastructure projects, the government asserts that the southeastern rail project will go forward as scheduled. According to Inmaculada Rodríguez-Piñero Fernández, the general secretary for infrastructure, Spain’s rail construction costs have fallen 19% over the last 10 years. And, she told the Herald Tribune , “[We] can continue to make dramatic progress in containing costs.” Teófilo Serrano, president of Renfe, the state-controlled rail operator, has said that the high-speed connection between Madrid and Valencia would prove one of Renfe’s strongest businesses. Valencia is a manufacturing centre and moreover commands one of the biggest ports on the Mediterranean. Together, the regions of Madrid and Valencia are home to 19% of Spain’s population and account for 31% of its gross domestic product. Once having reduced travel time between the two cities by almost two hours – to an hour and 35 minutes – the company expects to quadruple its market share of all travel on the route to 41%, largely at the expense of airlines. › Mr Minder of the Herald Tribune observed that Spain also has hopes of leveraging its rail expertise worldwide. In December, he reported, a delegation from the Spanish Ministry of Public Works travelled to Beijing to showcase Spain’s latest rail advances to a Chinese government that has invested billions to extend what is already the world’s biggest high-speed rail network. In addition, a consortium of Spanish companies entertains hopes of securing a €6 billion contract to connect the Saudi Arabian cities of Medina and Mecca. In brief . . . › Europe will remain among the most important areas of investment for China’s world-record $2.65 trillion of foreign- exchange reserves, according to an official of the People’s Bank of China. Deputy Governor Yi Gang said in a statement on the central bank’s website (7 January), “The euro and European financial markets are an important part of the global financial system and were, are, and will be one of the most important investment areas for China’s foreign-exchange reserves.” Other recent Chinese statements of support for the euro area include Vice Premier Li Keqiang’s expression of confidence in the financial markets of Spain and his pledge of further purchases of Spanish debt. In backing European economies, China may help enhance the value of its euro-denominated assets as well as boost demand for Chinese exports in the region that is its biggest market.

Transportation

Spain hopes to remain on track with its high-speed rail network

Spain keeps up its thrust into high-speed rail development even as the central government struggles with a financial crisis In December, when Spain overtook France as the country operating Europe’s biggest high-speed rail network, King Juan Carlos and Prime Minister José Luis Rodríguez Zapatero opened the link between Madrid, the Spanish capital and largest city, and Valencia, the country’s third-largest city. The 242-mile link extended Spain’s high-speed rail lines to a total of a little over 1,240 miles. Neighbouring France, a similarly ambitious participant in the high- speed rail stakes, has 1,178 miles. By way of comparison, Germany has about 800 miles.

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