Will Indonesian stainless steel group be sold to Chinese state-owned corporation?
Will Indonesian stainless steel group be sold to Chinese state-owned corporation?

August 16, 2022 – According to media reports, a majority stake in Tsingshan’s Indonesian stainless steel operations is to be sold to a Chinese state-owned company. Is this the price of salvation in the collapsed nickel deal? South African bill on scrap export ban tabled. And nickel ore quality in Australia declines – government expects nickel demand to be unmet by 2030.

South Africa to introduce scrap export ban

In order to lessen copper cable theft, which has disrupted the electrical grid and left trains stranded, South Africa proposes to outlaw the export of scrap metals.

Ebrahim Patel, the minister of commerce, industry, and competition, has issued suggestions in the government gazette outlining strategies to stop the trade in scrap metal and ferrous and non-ferrous trash.

A six-month export ban on scrap metal is suggested in the first of three phases. A new, improved registration system for scrap buyers and sellers, better monitoring, policing, and law enforcement, as well as limiting the ports and border posts for scrap metal trading, are among the forthcoming actions.

To make the trade of stolen copper and metal more challenging, proposed legislative modifications have been made.

According to the government, the export of metal gives criminals a vital means of making money, and the nation’s ports and borders lack the necessary resources to stop the export of stolen scrap and semi-finished metal products.

According to the gazette notification, the general public and interested parties have 21 days to comment on the suggestions.

South African steel producers welcome export ban

South African steel producers have already welcomed the draft scrap export ban. Which indicates that not only theft of metal is among the motives for the bill.

Ferrous scrap of strategic importance

The European Union is already planning a de facto export ban on ferrous and non-ferrous scrap. In the United Kingdom, it is being considered aloud. And in many other countries, especially those with strong steel industries, similar measures are under discussion.

As a strategic raw material, scrap is becoming increasingly important in the face of dwindling raw material reserves and the transformation toward a Net Zero society.

Australian nickel ore quality declines

According to a recent report by The Commonwealth Scientific and Industrial Research Organisation (CSIRO), an Australian government agency responsible for scientific research, the quality of Australian nickel ore deposits has declined in recent years and will continue to decline.

According to Australian commodity forecasts to 2030, demand for steel, zinc, copper, aluminum, rare earths, lithium, uranium and nickel will increase significantly.

Nickel demand not to be met by 2030

The Australian government projects that nickel demand alone is expected to increase by more than 67%. And with current global capacity, demand cannot be met.

The transition to zero-emission technologies, urbanization, growing affluence and population, and the use of electronic devices are all contributing to this demand.

New extraction techniques are not enough

Although Australian ore grades have declined in recent decades, according to the report, advances in extraction technology have enabled the recovery of metals from lower-grade ores. However, declining ore grades can increase the price, energy consumption, emissions and environmental impact of mining.

Future developments will likely focus on improving the sustainability of mining operations and the accuracy of their exploration and extraction technology.

Will parts of Tsingshan be sold to Chinese state-owned corporation?

Tsingshan Holding Group, owned by Chinese tycoon Xiang Guangda, plans to sell some of its stainless steel facilities in Indonesia to China Baowu Steel Group Corp, media reports, citing sources.

Will Indonesia Ruipu Nickel and Chrome (IRNC) be sold?

State-owned Baowu, the world’s largest crude steel producer, is likely to acquire a majority stake in some integrated production lines Tsingshan owns in Indonesia’s Morowali Industrial Park, according to the report. This could mean PT Indonesia Ruipu Nickel and Chrome (IRNC), for example.

Is sale the price for saving Tsingshan?

After a nickel deal for Tsingshan went massively off the rails in March 2022 and the company was suddenly faced with an open mountain of debt of more than US$8 billion, the Chinese state, among others, stepped in to save the company. The planned sale of Indonesian companies to the Chinese Baowu group could be the price paid for saving the corporation.

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