TPT November 2008

From the AmericaS

› 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. 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 Steel Novolipetsk Steel’s acquisition of Beta Steel will support its tube making operation in the US

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

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