Financing energy development in the 1990s

Energy finance has resurfaced as a major issue in energy and energy policy debates. These concerns arise from the recent dismal performance of the private oil industry, and the growing financial demands of the former Soviet Union and other emerging markets. These growing financial imbalances are seen as jeopardizing the continued smooth growth of the world's petroleum industry. However, this paper stresses that the financial difficulties being experienced by publicly held oil companies are due, primarily, to the current economic recession. As economic growth recovers, and owing to recent substantial cost reductions, the balance sheets of the private oil industry will improve. Among state energy companies, recent structural and financial reforms mean that such companies will be able to retain more cash flow than was true historically. Moreover, many national oil companies are again able to access funds on international financial markets and generally at increasingly attractive spreads. And finally, there is the growing importance of financial innovation that is already having a positive impact on the level and pace of petroleum development worldwide.     

Alumina market trends in the 1990s

During the past decade, alumina prices have been highly volatile, so much so that it has endangered the existence of some producers, and limited the ability of some smelters to benefit from higher aluminium prices. Although certain trends can be identified for the 1990s, some factors could again result in large price fluctuations in the alumina market. After a review of those identified trends and factors, this paper attempts to focus on ways to limit the effect of fluctuations in the non-integrated alumina market.     

Prospects for an iron ore cartel

Recent breakdowns of commodity cartels have been associated with sharp price declines, thereby reversing the increases which accompanied their formation. This suggests that cartelization can significantly affect market prices. This paper examines the factors influencing the economics of a cartel with a view to assessing the chances of success of cartelization in the context of the iron ore industry. The structure of the iron ore market is examined with particular emphasis on the dominant producers and the likely alternative suppliers.     

Utilising of the oiled rolling mills scale in iron ore sintering process

Up to 5% of steel is lost with the scale at hot rolling operation. This waste contains 69-72% of iron in the form of oxides. However, its recycling is confronted with presence of up to 20% of oil and 10% of water. E.g. when the oiled scale is introduced as an additive to the iron ore sintering mixture, incomplete combustion of liberated oil at heating during sintering process creates problems for gas cleaning and may even lead to damage of the equipment. A possibility to improve combustion of the scale's oil at the sintering process by preparation of a mixture with peat was shown in the laboratory experiments. Industrial trials demonstrate possibility to increase the oil combustion degree at sintering 2.7 times as much. Consumption of the oiled scale was increased from zero to 12.8 kg (in a form of scale-peat blend) per ton of sinter, which allows for closing the loop of this waste at the integrated steelmaking factory.     

Horizontal mergers in the iron ore industry—An application of PCAIDS

The purpose of this paper is to estimate and analyse the price effects of the iron ore mergers between Rio Tinto and North Ltd in 2000, and CVRD and Caemi in 2001. The analyses are conducted using a merger simulation model that, based on the pre-merger situation, estimates the post-merger outcome. This paper applies the so-called proportionality-calibrated almost ideal demand system (PCAIDS) model, which assumes that the product is differentiated and that the strategic variable is price. The results from the merger simulations show that in the case of the merger between Rio Tinto and North Ltd, the merged firm has a combined market share of almost 20%. However, the estimated market weighted average price effect is only 2.6%. Regarding the merger between CVRD and Caemi, the merged firm's market share is about 29%, and the estimated market weighted average price effect is 4.6%. When removing Caemi's Canadian asset, which was the Commission decision in order to allow the merger, the market price effect decreases to 3.1%. Overall the results in this study support the Commission's decisions regarding both merger cases, and shows that merger simulations of price effects can be valuable tools in merger assessments.     

The internationalisation of the Australian mineral industry in the 1990s

Overseas mineral exploration and mining investment by Australian companies increased dramatically from the early 1990s until 1997. In the wake of the Asian economic crisis and lower commodity prices it declined somewhat in 1998 and 1999. Reflecting their international competitiveness, Australian resource companies were actively involved in projects in about eighty nations in 1999. This study assesses the extent of growth in exploration and mining operations, the distribution between large and small companies and the changing regional focus which has been occurring. It also reflects on some of the key influences on this development. These include a strong domestic finance sector, supporting mining services provision, technological competitiveness, a growing attractiveness of offshore locations and increasing structural impediments at home.     

World coal outlook: 1990s

In the 1990s for the newly industrializing nations of the Pacific Rim and for the OECD countries as well, the demand for energy is expected to increase at a rate in excess of that of the increase in GNP. The demand for coal is likely to increase as well but probably to a lesser degree than GNP. This is because coal can expect increasing competition not from oil, but from natural gas. For a whole host of reasons, economic as well as environmental, gas could be the preferred fuel of the 1990s. Nevertheless, coal prices can be expected to increase but low cost production due to come on stream shortly, is likely to keep those increases modest.     

A horizontal merger in the iron ore industry: An event study approach

The purpose of this paper is to analyse the competitive and efficiency impacts of a large merger in the world iron ore industry, using an event study approach. This method builds on an analysis of stock market reactions of the merging firms as well as close rivals at the time of the merger announcement. The event study method allows for the possibility to assess both the motivations behind as well as the welfare effects of the merger. The event study results for the merger announcement of Rio Tinto and North Ltd. show that, according to the market reactions, the main motive behind the merger was either the market power or the efficiency hypothesis. When adjusting the analysis to include several information releases about the merger, the overall result indicates that efficiency improvements were the predominant motives behind the merger. Thus, the event study results suggest that there are positive welfare effects to expect and the European Commission's decision to allow the merger is supported.     

Surface iron ore mining in eastern India and local level sustainability

Mining often brings certain irreversible changes to the surrounding environment. Different types of natural resources mostly surround the mines. Degradation of natural resources around the active mining zone may adversely affect the local economy. After cessation of mining operations local people may no longer be able to sustain their livelihood from the surrounding degraded natural resource; there are chances that the economy of the region will be shattered. The paper deals with this problem of local level sustainability of iron ore mining in eastern India. This problem is examined in the light of different theories of sustainability and national policies. By using household survey data, sustainability of iron ore mining in this region is tested. Substitution of depleting natural capital with other forms of capital can promote long-term sustainability of the local economy. This necessitates certain policy interventions to induce the mine operators to reinvest some part of their resource rent in the natural capital of the region.     

Chinese resource security policies and the restructuring of the Asia-Pacific iron ore market

This paper reviews the restructuring of the Asia-Pacific iron ore market in the wake of the rise of the Chinese steel industry. Prior to the 2000s, this market was characterised by two key features—high firm-level concentration on both the producer and consumer sides, and price determination through annually negotiated benchmark pricing between Australian mining and Japanese steel firms. However, owing to rapid growth in the Chinese steel industry and its emergence as the region's principal iron ore consumer, the Asia-Pacific iron ore market has been dramatically restructured during the last decade. This process has been accelerated since 2005 by Chinese governmental resource security policies, which have sought to address current record high iron ore prices through the use of foreign investment to sponsor new market entrants and the formation of an import cartel amongst the Chinese steel firms. This paper evaluates how these policies have driven restructuring in the Asia-Pacific iron ore market, through an analysis of the growth of China's steel industry, Chinese resource security policies aimed at lowering iron ore import costs, and their effects upon the regional market's ownership structure and price determination mechanisms. It argues that while Chinese investment and cartelisation policies have catalysed significant changes to the ownership and pricing structures of the Asia-Pacific iron ore market, they have carried only mixed benefits for the Chinese steel industry's resource security.     

What do economic simulations tell us? Recent mergers in the iron ore industry

This paper investigates the European Commission's decision to allow a merger between two Brazilian iron ore mining companies, CVRD and Caemi, using data on the Direct Reduced Iron pellet market. By using a simulation model, we can directly simulate the total welfare effects from the merger and hence evaluate the merger from a new perspective. The results from our simulations suggest that the welfare effects are negative from the merger between CVRD and Caemi, which supports the conclusion drawn by the European Commission decision. By performing different simulations between hypothetical merger candidates, our results show that only mergers between small candidates have the potential to be welfare enhancing.     

Dynamics of state mining enterprises during the 1980s and the outlook for the 1990s

This paper examines the evolution of the control by the state of mining and smelting from 1975 to 1989. In 1950, there was little state-owned mining capacity outside the centrally planned economies. A wave of nationalizations of mine assets swept over the developing countries in the late 1960s and early 1970s. State control continued to rise, in developing countries as well as in the developed market economy countries, until the mid-1980s, when the trend reversed. At present some 20% of Western world mineral production is state controlled. The level of control is highest for those minerals mined mainly in the developing countries, and lowest for those minerals mined mainly in the developed market economy countries. The current trend is toward privatization of state-owned mining enterprises in developed countries and it is expected that as the 1990s progress, privatization of such enterprises will also begin to take place in developing countries.     

Development finance in the 1990s for Latin American resource exporting countries

As a result of the debt crisis, per capita income in Latin America in 1990 was 10% below its 1981 level. Many resource exporting countries in the region have undertaken wide and deep reforms in order, among other reasons, to attract and retain long-term capital to fuel growth prospects. One newly proposed long-term instrument for development finance and risk management is the commodity bond. Given the sovereign risk component, the costly premiums that must be paid to insure it and more efficient alternative instruments for both issuers and investors, commodity bonds are unlikely to generate the required long-term capital needed to enhance growth prospects. With the continuing globalization of the goods, factors and currency markets, long-term capital can be attracted and maintained in both developed and developing countries by an attractive investment environment characterized by a competitive microeconomy, a stable macroeconomy, strong global linkages, and a serious programme to improve physical and social infrastructure.     

Seaborne petrochemical spill analysis within the United States, 1992-1999

Through discussion of causative factors and examination of historical data, petrochemical spill prevention in US waters is reviewed. Unintentional petrochemical outflow is analyzed in a comprehensive manner and presented as a hierarchical sequence of antecedent events to reveal the trends of causative factors leading to release. Specifically, a seaborne petrochemical spill is examined in terms of four basic, antecedent events: (1) an underway source, (2) a failure incident, (3) a marine accident capable of breaching the hull and cargo block, and (4) the onset of outflow. These events are further subdivided into underlying, contributing events to form a causative framework for spill prevention. While a hierarchical review is not necessary to uncover the elements of causation, it does provide a comprehensive and logical structure that clearly defines these elements in terms of occurrence frequency and contribution to resulting outflow. It is found that relatively small, frequent spills less than 40,000 liters (10,567 gallons), attributable to human operator failures, leading to grounding, and cargo transfer system failure accidents, dominate US seaborne petrochemical outflow from 1992 to 1999. Given the frequency of groundings, structural reinforcement regulations such as those contained in the Oil Pollution Act of 1990 (requiring double hulls) appear well justified. However, passive restraint systems are secondary to the need for vigilant training and licensing of tank vessel operators.     

The implications of sustainable development for industry and employment in the 1990s

Summary Sustainable development has increasingly come to be seen as a concept which can reconcile the tensions between economic development and environmental protection. However, the concept is a vague one and little work has been undertaken to examine the practical implications of adopting sustainable development as a guiding principle. This paper examines how sustainable development can be defined, and some of the contradictions involved with the concept. The policy implications of sustainable development are examined, with a particular emphasis on industry and employment.His research interests are in sustainable development and local economic development. The work on which this paper is based was undertaken for the Centre for Local Economic Strategies in Manchester.     

Towards a new planning system for the 1990s and beyond

The paper outlines the emerging effects of the Information Technological revolution and examines the likely consequences for planning in Britain. A number of possible scenarios are described as a basis for thinking about the design of a new planning system for the future.     

Corporate environmental performance expectations in the 1990s: More than just compliance

What do General Motors and Ben and Jerry's Homemade Ice Cream have in common? Both companies have endorsed the CERES principles, a model corporate code of environmental conduct developed by the Coalition for Environmentally Responsible Economies (CERES). This model code generally goes well beyond what is now typically required of industry to maintain compliance with already stringent requirements established by regulatory agencies. And the CERES principles are not the only game in town. Many other environmental initiatives have surfaced both in the United States and abroad over the past few years. This article discusses six sets of current initiatives and provides managers with a vital tool for discussing these initiatives with top management and others throughout their organizations.