Vale agrees 28% price cut with Nippon and Posco

Vale agrees 28% price cut with Nippon and Posco

By Javier Blas in London and Peter Smith in Sydney

Published: June 11 2009 03:00 | Last updated: June 11 2009 03:00

Vale of Brazil, the world's largest iron ore producer, yesterday agreed to a 28 per cent cut in annual prices for its ore sales to Japan and South Korean steelmakers, a smaller reduction than the 33 per cent offered by its main rival Rio Tinto.

The agreement with Nippon Steel of Japan and Posco of South Korea further damages the traditional benchmark system, which has been the cornerstone of the iron ore and steel industry for the past four decades. The first price agreement between a miner and a steelmaker has normally created a benchmark the rest of the industry follows.

The smaller cut for Brazil fine iron ore reverses last year's bigger price increase for Australian ore. Rio Tinto and BHP Billiton, which mine almost all their ore in Australia, have argued in the past that they deserved a higher price for their ore because of lower transportation costs from Australia to China than from Brazil to China.

The deal also complicates the negotiations between miners Vale, Rio Tinto and BHP and their Chinese customers, lead by China Iron and Steel Association. Beijing is demanding a 40-50 per cent cut and is refusing to take a smaller reduction.

The drop in iron ore prices for the year, which started in April, is the first since 2002. In the past six years the total price increase has been about

500 per cent.

After ore, coal is the second most important ingredient for steel, and annual contract prices for this commodity are also moving lower.

BHP Billiton, the world's biggest mining group, yesterday said it had cut annual contract prices for metallurgical coal by about 58 per cent from last year's levels, in line with the benchmark set when Nippon Steel negotiated cuts of up to 60 per cent in March.

BHP holds the number one spot in the global seaborne metallurgical coal market, with leading customers from Japan, India and western Europe.

The Anglo-Australian mining group said a "significant portion of contracts had been concluded after it agreed prices with key global customers" at a price of about $129 a tonne.

"Based on settlements to date, US dollar freight on board prices for prime metallurgical coal products are expected to decrease by approximately 58 per cent from 2008 levels," BHP said in a statement.

The first term-contract that set the industry benchmark was agreed in March, when Nippon Steel and BMA, a joint venture between BHP and Mitsubishi Corp, agreed a coal price of $128-$129 a tonne .

That dramatic drop marked an end to six years of climbing prices, which culminated in a record price of $300 a tonne for coal.

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BHP Billiton cuts coal contract prices by 58%

By Peter Smith in Sydney

Published: June 10 2009 08:26 | Last updated: June 10 2009 08:26

BHP Billiton, the world’s biggest mining group, has cut annual contract prices for metallurgical coal by about 58 per cent from last year’s levels, in line with the benchmark set when Japan’s Nippon Steel negotiated cuts of up to 60 per cent in March.

BHP holds the number one spot in the global seaborne metallurgical coal market with leading customers from Japan, India and western Europe.

The Anglo-Australian mining group said on Wednesday a “significant portion of contracts had been concluded after it agreed prices with key global customers” at a price of around $129 a tonne.

“Based on settlements to date, US$ FOB [freight on board] prices for prime metallurgical coal products are expected to decrease by approximately 58 per cent from 2008 levels,” BHP said in a statement. Metallurgical coal and iron ore are the key ingredients for making steel.

The first term-contract that set the industry benchmark was agreed in March when Nippon Steel and BMA, a joint venture between BHP and Mitsubishi Corp, agreed a coal price of $128-$129 a tonne.

That dramatic drop marked an end to six years of climbing prices, which culminated in a record price of $300 a tonne for coal.

Market conditions have changed since the commodities boom ended last year and as the global economy struggles to recover from the recession.

Metallurgical coal demand has been particularly bad due to the weakness in the steel market.

BHP this year announced production cuts of up to 15 per cent in metallurgical coal and 30 per cent reductions in manganese. It also scaled back its nickel and pellet operations.

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Lloyds prepares for up to 400 branch closures

By Jane Croft and Daniel Thomas

Published: June 9 2009 09:51 | Last updated: June 10 2009 01:21

Lloyds Banking Group is working on the basis that it may close up to 400 bank branches, including 164 Cheltenham & Gloucester outlets set to shut in November.

The bank has hired Jones Lang de Salle and CB Richard Ellis, the property consultants, to carry out work on a reorganisation of its property portfolio that is thought to include the branch closures and dis­posals.

Lloyds announced 1,660 job losses on Tuesday. It has previously said that some of its 3,000 branches will be closed during the next three years as it steps up its integration of HBOS.

The bank has never given a number for future branch closures and on Tuesday declined to comment on the figure of up to 400.

Lloyds said 833 jobs would be lost through the C&G branch closure programme.

The bank is also dropping Bank of Scotland and Intelligent Finance as mortgage brands for independent financial advisers, resulting in 159 job losses.

It is to move its personal loans product team from Chester to London by end of 2011, leading to 265 job cuts, mainly in Chester.

Lloyds added that the retail bank would combine certain roles such as product development, risk and finance, which will result in 168 job losses.

Black Horse Personal Finance business is re­organising its CarSelect business and will move from Cardiff to Birmingham.

Lloyds will also reduce Black Horse centres by 31. These changes will result in a total loss of 140 full-time jobs by October.

Unions were shocked by the scale of the closures and urged the government to use its stake in Lloyds to encourage the bank to move work back from India to the UK.

Steve Tatlow, assistant general secretary of LTU, the trade union at Lloyds, said: “It is wholly unacceptable that at a time when Lloyds is planning to make redundant many thousands of staff working for C&G, mortgages and in head office, it refuses to abandon its jobs-to-India policy.”

Unite, the UK’s largest trade union, called the closure “disgraceful”.

Lloyds said that all but 19 C&G branches had an existing Lloyds TSB branch within 400 metres.

One estimate has suggested that the network accounts for about only 6 per cent of Lloyds’ overall mortgage lending.

Helen Weir, group executive director of the retail bank at Lloyds said: “Cheltenham & Gloucester is a very strong brand. The strategic focus for C&G from now on will be to further strengthen its intermediary and direct savings businesses.”

Lloyds has promised to make more than £1.5bn ($2.4bn) in annual cost savings from its integration of HBOS and has already cut almost 3,000 jobs this year.

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Bazaars feel the wind of change

By Anna Fifield and Najmeh Bozorgmehr in Tehran

Published: June 11 2009 03:00 | Last updated: June 11 2009 03:00

The crowded stone alleys of Tehran's main bazaar, a labyrinth of plates and carpets, spices and DVDs, have long been a conservative stronghold in Iran.

The bazaaris still wield economic and political power, albeit to a lesser extent than in 1979, when they were a strong force behind the Islamic revolution. But many appear to be turning against Mahmoud Ahmadi-Nejad, who will seek a second term as president in a hotly contested election tomorrow that has the economy at its core.

"Some are supporting Ahmadi-Nejad but they are few - he has lost his support in the bazaar," says Abbas, sitting behind the counter in his sock and underwear shop.

"It's because the bazaar has become so stagnant during the last four years. There are not many customers because no one has any money, and Ahmadi-Nejad has broken the backs of the businessmen by increasing taxes," says Abbas.

Mr Ahmadi-Nejad came to power in 2005 promising to share Iran's oil wealth among the people. He has done that by distributing everything from cash to potatoes, contributing to spiralling inflation and a sharp deterioration in ordinary Iranians' purchasing power.

Official statistics put inflation at 24 per cent and unemployment at 12.5 per cent, although independent economists suggest the reality is much worse.

Iran's income has dropped sharply since oil prices began falling from their peak of $147 a barrel 12 months ago, adding to the economic malaise. The International Monetary Fund estimates that growth will slow from 4.5 per cent last year to 3.2 per cent this year.

On the campaign trail in recent weeks, Mr Ahmadi-Nejad has defended his economic performance, saying he has helped improve the lives of the downtrodden.

"The foundations have been laid in these four years for a big economic jump," said Mr AhmadiNejad, who claims that the inflation rate is only 14 per cent.

Certainly, he has helped some ordinary people. Mr Ahmadi-Nejad's supporters have taken to the streets with banners saying: "Guardian of people's money, we support you."

But his three rivals have repeatedly criticised his economic management and have mocked his questionable use of statistics during televised debates.

Mir-Hossein Moussavi, his strongest opponent, is considered to have managed the economy relatively well while he was prime minister during the Iran-Iraq war in the 1980s. But he is still viewed with some suspicion because, at that time, he advocated socialist policies.

While Mr Ahmadi-Nejad has pledged to continue with his populist distribution-oriented policies, Mr Moussavi has pledged to oversee more rational economic management.

The economic plans of the former premier have so far been a mixture of socialist and open market policies. Should he get elected, Mr Moussavi's first priority will be dealing with housing problems as the root cause of poverty, while promising to promote a pro-business atmosphere and accelerate privatisation.

Of course, many people in the conservative bazaar continue to support the incumbent, who has held himself up as a protector of revolutionary ideals.

But there has been a palpable shift in allegiances in the bazaar, where some are supporting the other fundamentalist candidate, Mohsen Rezaei, or the reformist cleric Mehdi Karroubi. Most of those who have moved, however, are supporting Mr Moussavi.

"Ahmadi-Nejad has not been able to curb inflation - prices of everything have doubled in the last four years," says Fazlollah, who has been sitting in his stall selling men's suit fabric for 32 years. He voted for Mr Ahmadi-Nejad in 2005, but says he is supporting Mr Moussavi this time.

Business leaders believe that this will contribute to a shift in support towards Mr Moussavi outside the boundaries of the bazaar.

"The majority of the business community support Mr Moussavi and believe that if Mr Ahmadi-Nejad is re-elected the economic problems will be multiplied," said Saeed Shirkavand, deputy economy minister under the previous reformist government.

"Ahmadi-Nejad basically put aside expertise in running the country's economy, which led to unbalanced allocation of financial resources, replacing long-term plans with daily-based decisions and closing the centres which were making macro-economic decisions," said Mr Shirkavand.

Gholam-Hossein Shafei, the head of the chamber of commerce in the north-eastern city of Mashhad, added that the government had failed on the economy.

"The government's plan to promote short-term projects has been a failure," he said, "and led to [a] shortage of finance for industries, half of whom are now working with less than 50 per cent of capacity, while the rest are struggling or facing bankruptcy".

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KNOC considers Addax tie-up

By Ed Crooks and William MacNamara

Published: June 9 2009 03:00 | Last updated: June 9 2009 03:00

Korea National Oil Corporation is considering a take-over or asset deal with Addax Petroleum, people with knowledge of the situation said.

Addax, an oil exploration and production company active in west Africa and the Kurdistan region of Iraq, revealed yesterday that it had held "preliminary discussions" about a possible deal.

Interest from the state-owned South Korean group is another sign of the growing corporate interest in Kurdistan as hopes rise that the political deadlock obstructing oil exports from the area is breaking.

The Kurdish regional government said oil exports of 40,000 barrels per day from Addax's Taq Taq field and 60,000 b/d from the Tawke field operated by DNO of Norway began on June 1.

Heritage Oil, another small company active in the Kurdish region, and Genel Energy of Turkey are expected to announce a merger this morning to create the largest investor in the area.

Genel and Addax, which is dual-listed in London and Toronto and has a market capitalisation of C$5.6bn ($5bn), are developing Taq Taq as a joint venture.

KNOC has built a strong presence in Kurdistan, with stakes in five blocks close to Taq Taq, described by Addax as "potentially a world-class oilfield". The Korean group said last month it would begin drilling wells on its blocks in October.

The Chinese oil groups Sinopec, CNPC and CNOOC have also been suggested as possible bidders for Addax.

However, investing in the Kurdish region risks souring relations with Baghdad and jeopardising the oil and gas contracts in the rest of Iraq that have attracted Chinese interest.

KNOC was in April rejected as a possible bidder for contracts issued by the Iraqi government, possibly because of its presence in Kurdistan.

Although the oil has started flowing in Kurdistan after years of impasse, political concerns still linger around the region.

Ashti Hawrami, the regional government's oil minister, triumphantly led the June 1 ceremony marking the official start of Kurdistan oil exports, even as Baghdad's oil minister Hussein Shahristani continued to declare many Kurdistan oil licences illegal.

Mr Hawrami said that within four years Kurdistan would produce 1m b/d and $20bn in annual revenues.

Iraq's central government will receive all revenues from Kurdistan's oil, then return 17 per cent to Kurdistan. From this sum, operators such as Addax will in theory be paid.

But no mechanism has been agreed on how to pay the first exporters.

Other companies drilling in the region include OMV of Austria, Mol of Hungary, and Sterling Energy and Reliance of India.

KNOC is advised by Merrill Lynch.

Addax and Merrill Lynch declined to comment. Addax's shares rose 9 per cent in Toronto to C$39.26.

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Chain reaction a threat to Sanea fortune

By Andrew England in Abu Dhabi

Published: June 12 2009 03:00 | Last updated: June 12 2009 03:00

It has been a week when Maan al-Sanea's fortunes have dipped to new lows. For one of Saudi Arabia's most powerful businessmen, having his personal bank accounts frozen by the Saudi central bank and acknowledging liquidity problems with his Saad Group must have been bad enough.

But this week, it is understood the billionaire's woes have caused some international banks to close credit lines to him and his businesses. To make matters worse, the United Arab Emirates' central bank sent a circular to banks enabling them to offset exposure to him and one of his companies against available assets, while ordering banks in that Gulf state to "not allow any new facilities" to them.

The predicament of the Saudi, who is described as a hard negotiator, has shocked investors in the Gulf and beyond.

"From my point of view it is sad," says Tony Pidgley, the co-founder of The Berkeley Group, a UK housebuilder and long-term business associate of Mr Sanea. "It's a shock because I always thought he was a well-balanced, cautious man."

Mr Pidgley first met Mr Sanea some 20 years ago. Then Mr Sanea, 54, was little known inside or outside the Gulf kingdom. But he arrived at Berkeley's office with a team of English analysts, ensured they were satisfied with the management and took a stake in the British company.

In the years since, Mr Sanea's holding in Berkeley grew to slightly less than 29 per cent, while his profile soared both internationally and domestically to new heights - most notably when the Saudi acquired a 3 per cent stake in HSBC two years ago.

Today, however, the unexplained action by the Saudi central bank appears to have triggered a chain reaction that is threatening his empire. At least 20m of Mr Sanea's 32m shares in Berkeley have been placed by Citigroup and Credit Suisse this week, Mr Pidgley says. More shares have been sold in 3i infrastructure, while his stake in HSBC has also fallen to below 2 per cent since the beginning of the year.

Mr Pidgley says his company is largely unaffected, although two real estate joint ventures in London with a total value of about £20m between Berkeley and Mr Sanea's may have to be unwound.

The saga is the latest chapter in the life of a man born into an average Saudi family living in neighbouring Kuwait. He trained as a fighter pilot before entering the business world and building a multibillion dollar fortune. This year, he was listed on Forbes' world billionaires list with a personal net worth of $7bn, and his group has subsidiaries as far afield as the Cayman Islands, Geneva and Bahrain.

People who know the businessmen trace his rise through to his connections to the Algosaibi family, regarded as one of the most respected of Saudi Arabia's merchant families, but which is now facing its own travails.

Not only did he work for the family, but he married Abdelaziz Algosaibi, the daughter of one of the founders of Ahmad Hamad Algosaibi & Brothers.

Mr Algosaibi apparently took him under his wing and it is thought he helped finance Saad Group, which Mr Sanea founded in the 1980s. Upon Mr Algosaibi's death in 2003, Mr Sanea's wife is believed to have inherited a large sum of money, which is thought to have enabled Saad Group to accelerate its expansion.

By the end of 2008, Saad Group, which is named after Mr Sanea's son who was killed in an accident, had seen its assets increase to $30.6bn, according to rating agencies.

Still, a regional banker says Mr Sanea, a keen fisherman who bases himself in Saudi Arabia's oil-rich eastern province, was always classified as a bit of an outsider in the kingdom because he did not come "from blue-blooded stock of merchants".

Mr Pidgley remembers a man who was on hand to help in him in the past - not least during the 1990s UK property crash when Mr Sanea was on hand to provide funding to a joint venture. "It would be easy to say he has not behaved properly but from our perspective over about 20 years, we have always enjoyed [good relations]" Mr Pidgley says. "He's tough, you would expect a man like that to be tough."

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Insolvency laws go on trial

By Robin Wigglesworth in Abu Dhabi

Published: June 11 2009 03:00 | Last updated: June 11 2009 03:00

After almost a decade of healthy growth rates, strong profits and only a few blips to speak of, the Gulf's corporate world has entered uncharted waters and several companies have foundered.

In Kuwait, two leading investment companies have already defaulted, and analysts warn that many more might be bankrupt. In the United Arab Emirates, two property developers in Ajman and Ras al-Khaimah have admitted they are insolvent, and across the emirates many other companies are said to be struggling to meet their commitments as cash flows are sapped by the crisis.

Even in Saudi Arabia, where the corporate world was expected to fare relatively well in spite of the economic headwinds, two leading family-owned groups have run into difficulties, triggering a rash of ratings downgrades and hushed speculation.

In spite of laws that often stipulate that companies that fail to meet financial commitments within a given period must declare themselves insolvent, further bankruptcies in the region could be hidden from plain view by embarrassed local creditors and authorities unwilling to force the issues, experts warn.

"Informal insolvencies are happening; you just don't hear about it. With a lot of the smaller companies you probably never will," says Hani Bishara, head of restructuring for the Middle East at Ernst & Young.

Experts say insolvencies and bankruptcies are likely to continue to emerge in the Gulf, representing an unusual challenge for a region unfamiliar with failing companies and ferocious financial crises.

But the experts warn that the local framework of courts, laws and regulations is inadequate. This keeps many cases informal and out of the legal system, and spooks local bankers, some of whom have lent largely on reputations and family names.

Some fear that a lack of transparency and poor legal recourse will scare away international capital at a time when it is needed.

"All countries have to have an orderly way of going through insolvency," says Christopher Niehaus, regional managing director and joint head of investment banking at UBS. "If not, it will take longer to resolve, be more haphazard, and ultimately be to the detriment of shareholders, creditors - pretty much everyone."

According to a recent report by Hawkamah, a Dubai-based non-profit organisation led by Nasser Saidi, chief economist of the Dubai International Financial Centre, Gulf authorities should therefore step up efforts to improve their legal framework.

The report, authored with the help of the World Bank, the Organisation for Economic Co-operation and Development and Insol International, an insolvency body, said the relevant laws and rules in the Middle East and North Africa scored an average of 88 out of 153. The average among OECD states is 124.

Oman was the highest ranked country, with a score of 105, while Saudi Arabia, the Gulf's economic powerhouse, scored 85 and the UAE, the second largest Arab economy and the main business hub for the region, scored only 74.

"The Gulf countries tend to have better insolvencies than the non-Gulf countries in the Middle East and North Africa, but we all need to improve our insolvency rules," Mr Saidi said. "And it's not just a matter of laws but of implementation."

Most cases never even go to court due to the length of time it takes to resolve, and are worked out between the company and its creditors on an ad hoc basis.

"The creditor enforcement rights are largely untested and there perhaps isn't confidence in the court system or insolvency regime to work through insolvency cases quickly or effectively," says Mr Bishara.

"That's why creditors here are hesitant to take action, as they don't know how well organised it will be, how much value will be destroyed in the process, or what the end result will be."

It takes 3½ years on average to settle an insolvency in the Middle East and North Africa, more than twice the average in the developed world, says the Hawkamah report.

Coupled with often tardy discovery of distressed situations, this means creditors - and others with interests in an insolvency, such as employees - often get a rough deal.

The average recovery rate in Middle East and North African bankruptcies is only 30 cents on the dollar, compared with an average of 55-60 cents in developed countries, says Robert Sanderson, a partner at KPMG, the accountants, and president of Insol.

Gulf corporate governance practices and company structures are often less sophisticated than in developed markets. Lawyers say that this complicates the winding-down process.

Hawkamah hopes it can encourage regional authorities to reform and improve their relevant regulatory and legal framework, to cope with the expected rise in bankruptcies. "The purpose is to improve insolvency regimes and creditor rights in order to mitigate the results of the financial crisis and be better prepared the next time there is a crisis," Mr Saidi says.

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Qatari bail-outs boost local bourse

By Robin Wigglesworth in Abu Dhabi

Published: June 11 2009 03:00 | Last updated: June 11 2009 03:00

Qatar's most recent intervention in its banking sector has been met by hearty applause from investors, who have sent the Doha Securities Market into positive territory after heavy losses earlier this year.

Last month, Sheikh Hamad bin Jassem al-Thani, Qatar's prime minister, offered to buy up to $4.1bn of commercial banks' property investments, to "support the real estate sector . . . and allow banks to continue to play their vital role" in the country's development.

The intervention followed one in March, when the government bought nearly the entire domestic equity portfolio of the banking sector. And late last year the country's sovereign wealth fund spent $5.3bn on equity stakes in local banks.

"All three measures have proven that they're taking a proactive stance to managing the crisis," says Ahmed al-Hammadi, head of EFG-Hermes in Qatar. "They're not waiting for problems to emerge in the banking sector and spreading to the economy, but acted pre-emptively."

The local bourse has reacted jubilantly. After being one of the world's worst performing stock markets this year, Qatari stocks have gained 46 per cent over the past three months, outpacing MSCI Barra's Arabian, emerging and frontier markets indices. The Doha securities market index has risen 6.7 per cent this year.

Details of the latest banking rescue plan are likely to include mortgages, commercial property loans and direct real estate investments, bankers say.

Selling institutions will probably be able to choose between buying government bonds and taking cash, and have the option to buy back the assets at the selling price in the future - in effect a put option that caps their downside.

"Qatar has huge gas reserves and can afford to put money into the economy to shield it from the crisis," says Saleh Etrad Faraj, head of Nomura's operations in the country.

Though asset managers expect this rally will soon come under pressure from profit-taking and the light trading and sharp volatility of the Middle East summer, Qatar may weather the seasonal sell-off better than most Gulf markets.

"There might be hiccups along the way, but people are going to continue to invest in Qatar due to its strong position," says Mr Faraj. "I wouldn't be surprised if we see more help being provided, although Qatar banks remain in a strong position."

However, the triple bail-out of banks could have less welcome longer-term implications.

Like the "Greenspan put" - the former US Federal Reserve governor's strategy of aggressively lowering interest rates when faced by a falling stock market - the "Qatari put" could fuel moral hazard by fostering an expectancy that the state will bail out investors and banks in the future.

In the near term, investors have cause for rejoicing, but Qatar could still rue its nascent reputation for activism if banks are encouraged to lend and invest riskily - knowing that that the financial muscles of the state stands behind them.

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Investcorp taps into discounted US debt

By Robin Wigglesworth in Dubai

Published: June 9 2009 03:00 | Last updated: June 9 2009 03:00

Investcorp, the London and Bahrain-listed alternative asset manager, has dipped into the US discounted debt market, investing in a series of individual loans and senior debt backed by US commercial property.

Two Investcorp credit funds paid about 75-80 cents on the dollar for the loans, which carried a face value of about $171m, James Tanner, head of Investcorp's placement team, told the Financial Times.

"This is very much the premium end of debt," Mr Tanner said.

He added that the investments are in "individual loans that are still performing and that are backed by good tenants and thus cash flows".

Investcorp, which has previously owned Tiffany, the jewellery chain, and Gucci, the luxury goods group, has over the past two decades established itself as an important conduit for sovereign and private wealth in the Middle East into western hedge funds, private equity and real estate.

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Chinese imports keep dry bulk carriers afloat

By Robert Wright

Published: June 10 2009 22:57 | Last updated: June 10 2009 22:57

A surge of iron ore and coal imports into China has boosted the earnings of dry bulk carriers and halted the wave of bankruptcies and defaults that swept the sector late last year and early this year.

Average day earnings for the largest ships, known as Capesizes, have risen from about $17,000 on April 6 to a high of $93,197 on June 3. Prices have since fallen but were yesterday at $70,272 a day, almost four times the rate in early April.

The surge has brought relief to a sector that saw possibly the sharpest fall-off in earnings of any industry as a result of the economic downturn. Average Capesize earnings fell 99 per cent from a peak of $233,988 per day on June 4 last year to about $2,400 in December.

However, owners and shipbrokers fear the slowdown and the large number of dry bulk ships awaiting delivery could soon push the market back down.

“I’m not very optimistic about its sustainability,” Michael Bodouroglou, executive chairman of dry-bulk shipping company Paragon Shipping, said of the spike.

The rate rises follow a recovery of activity in China’s imports of iron ore. The suddenness of the surge has caused severe congestion at the busiest Chinese iron ore ports, such as Qindao. Because congestion prevents ships heading back to pick up new cargoes, it has helped to push prices up further.

The increase has been most pronounced for Capesizes because they had previously seen bigger falls in rates and are uniquely exposed to the steel industry.

Capesize ships carry only iron ore and coal, most of it destined for steel mills. Smaller ships have also benefited as charterers struggling to find affordable Capesizes have resorted to chartering smaller ships instead.

Rates for Panamaxes, the largest ships able to use the Panama canal, were $18,383 per day on Wednesday, up from about $12,000 in early April.

However, Dale Ploughman, chief executive of Seanergy, another dry bulk shipping company, said many of the imports had been by iron ore traders, rather than end customers. That could mean the ore was being imported to be stockpiled rather than used immediately. Large stockpiles can produce sudden falls in imports later.

Quentin Soanes, an executive director at London-based Braemar Shipping, pointed out that 18 Capesize ships had already been delivered this year, a further 106 were due for delivery and only 12 have been scrapped.

“We don’t think it’s sustainable,” Mr Soanes said of the spike. “There are still a lot of newbuildings that will deliver this year.”

The market recovery could prevent owners from scrapping old ships – a move that was widely considered necessary to prevent over-supply. Most of the dry bulk ships that were rested several months ago because they could not operate profitably have already returned to the market.

However, there remain some grounds for optimism. The market was now clearly functioning again, Mr Bodouroglou said. It seized up almost entirely last autumn as the credit crunch restricted trade finance.

“My feeling is that the industry’s fundamentals have come into play again,” he said.

Both Mr Ploughman and Mark Richardson, head of futures at London-based SSY Shipbrokers, also insisted there was real substance to the rally. The iron ore traders must believe there was a real market for their product to be importing it into China in such quantities.

“They don’t take a cargo of iron ore, which is 150,000 tonnes, and just hope they’re going to sell it,” Mr Richardson added.

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Swedish sports car group poised to buy Saab

By John Reed in London

Published: June 12 2009 03:00 | Last updated: June 12 2009 03:00

Koenigsegg, the Swedish producer of supercars, is set to buy Saab, General Motors' Swedish premium brand. GM is to announce it is in exclusive sales talks with the company and its allied Norwegian investors, a -person close to the talks said yesterday. The deal is likely to be closed by early summer.

The development would mark bankrupt GM's third move to dispose of a car brand in less than a fortnight, part of its plan to focus on four core brands. It follows last week's announcement of the sale of Hummer to China's Sichuan Tengzhong Heavy Industrial Machinery and of Saturn to Penske Automotive Group, the dealership chain.

The decision follows talks this week between the three shortlisted bidders and GM at its European headquarters in Zurich. Koenigsegg "has the best overall offer", the person close to the deal said. Further details were not immediately available. The privately owned company, based near Malmo, sold 18 cars last year and is said to be interested in applying its knowledge of nichemodels to a higher-volume carmaker.

GM is putting more money into the deal than any buyer, a second person familiar with the sale said this week, pledging $500m of assets and cash.

Koenigsegg beat bids from Renco, US investor Ira Rennert's holding company that bought and turned round the maker of Humvee, and Merbanco, a group of private investors in Wyoming. About 10 groups toured Saab's plant in Trollhattan, near Gothenburg.

GM Europe and Koenigsegg could not be reached for comment.

Saab cars have ardent fans but the brand was widely seen as neglected under GM's 19-year stewardship.

GM'sadvertising campaign playing up Saab's aviation heritage failed to ignite sales which peaked at 133,000 in 2006 and totalled just 98,000 last year. GM has not seen a profit at Saab since buying its stake in 1990.

Saab is seeking to slash its debt by 75 per cent under court supervision. Its new buyers are expected to announce agreements on engines, manufacturing and technology with GM, which is in talks to sell the rest of its European operations, grouped round Germany's Opel, to a group led by Magna International of Canada.

GM's contribution to a spun-off Saab includes production tooling for a new version of its flagship 9-5 model slated to premier in Frankfurt this year, plus cash of about $150m.

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Telenor outraged by bailiff threats in Russia

By Catherine Belton in Moscow

Published: June 9 2009 03:00 | Last updated: June 9 2009 03:00

Bailiffs raised the pressure on Telenor's main Russian investment yesterday after threatening the immediate sale of the Norwegian company's strategic stake in Vimpelcom, the mobile phone operator.

Russia's federal bailiff service said it had drawn up documents to auction the stake in the "nearest future".

It was the first such statement since a Siberian court issued a $1.7bn ruling against Telenor in March and froze its Vimpelcom shares in preparation for a potential sale amid a stand-off with its Russian partner in Vimpelcom, Mikhail Fridman's Alfa Group.

The legal dispute is being watched closely by investors as a test for Russia's investment climate.

Shares in Telenor fell more than 4 per cent.

The company said any such transaction would be "outrageous" while it was still appealing against the $1.7bn ruling, which it has refused to pay, claiming it has "no merit".

It has claimed that the suit, filed by a minority investor in Vimpelcom, is an attempt by Alfa to seize its shares. Alfa denies any connection to the suit, which came amid a complex five-year legal battle between the two partners over Vimpelcom and Kyivstar, the Ukrainian mobile operator.

Analysts said any imminent move to sell Telenor's shares would damage Russia's investment climate and again cast doubt on Russian President Dmitry Medvedev's pledge to uphold the rule of law.

They said the bailiffs' statement, which was unusual for the service, might be a pressure tactic to encourage Telenor to divide up its assets with Alfa.

It came after senior Telenor executives held meetings with top Russian officials at the St Petersburg Economic Forum over the weekend to press their case in the stand-off, according to a person familiar with the situation.

No one could be reached for comment at the federal bailiffs' service.

Vladimir Putin, the Russian prime minister, called last month on the two sides to solve their dispute by legal means. This followed a meeting with Jens Stoltenberg, his Norwegian counterpart.

Mr Stoltenberg had called on the Russian government to ensure that no sale took place until the appeal process was exhausted. But Mr Putin gave no such assurances publicly.

Any forced sale ahead of hearings on Telenor's appeal "would send a pretty awful signal about the prospects for foreign investment in Russia", said Roland Nash, head of research at Renaissance Capital, the Moscow investment bank.

The escalation of the stand-off is another consequence of the global financial crisis, which has left western markets closed to Russian companies and Russian businessmen with little incentive to behave according to western standards, he said.

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Norwegian model of mineral wealth management offers long-term success

Published: June 9 2009 03:00 | Last updated: June 9 2009 03:00

From Andrew Carlson.

Sir, Martin Sandbu and Nicholas Shaxson (“Give the people their resource wealth”, June 5) manage to dismiss one of the world’s great socio-economic achievements of the modern era with a mere sentence. The effective management by the Norwegian government of their country’s vast mineral wealth has allowed Norway to rise from one of Europe’s poorest countries at the end of the second world war to one of the world’s wealthiest countries today. As one of the few success stories when it comes to mineral wealth management, the Norwegian model offers a far longer-term solution in terms of economic development when compared with the authors' solution of directly disbursing mineral revenue to a country’s citizens.

With the establishment of the country’s sovereign wealth fund in 1990, Norway has been particularly successful in avoiding various aspects of the “Dutch disease” and has shown itself to be a model for other countries seeking to manage their resource wealth prudently so that they can achieve maximum domestic economic development. The Norwegian government’s mandate that its fund invest its assets primarily in international securities has allowed the country to achieve a high degree of economic growth and diversification while at the same time helping to lay the groundwork for low inflation and unemployment.

Instead of proposing various untested methods for managing a country’s mineral wealth, the authors should instead spend their time advocating increased support for the Norwegian government’s oil for development programme, as its method has clearly been proven successful with the passage of time.

Andrew Carlson,
University of Kansas School of Business,
Lawrence, KS, US

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Italy's leaders welcome Gaddafi spending spree

By Guy Dinmore in Rome

Published: June 12 2009 03:00 | Last updated: June 12 2009 03:00

Muammer Gaddafi yesterday launched a shopping spree in Rome on his fence-mending visit to Libya's former colonial ruler.

The Libyan leader investigated further stakes in Italian industry and infrastructure via his $70bn (€50bn, £43bn) sovereign wealth fund.

Despite a few political protests by opposition parliamentarians, students and members of the Jewish community driven out of Libya in the 1970s, Italy's centre-right government celebrated Mr Gaddafi's red carpet visit - his first since taking power in 1969 - as a welcome boost for a struggling Italian economy.

How the world is changing was not lost on Franco Frattini, Italy's foreign minister, who at the same time was hosting a meeting of G8 development ministers focused on improving aid to Africa and examining the impact of the global financial crisis.

Libya had emerged as an important donor in sub-Saharan Africa, Mr Frattini said, even as Italy's "financial constraints" had forced it to curtail - but, it insists, not abandon - the ambitious aid goals it set out at the Group of Eight summit at Gleneagles in 2005.

"Libya at an international level is taking on a more co-operative role," Mr Frattini told the Financial Times. He disclosed that Mr Gaddafi had agreed to work with Italy in trying to stabilise Somalia, where the embattled government was fighting militant Islamists.

Mr Gaddafi, who renounced weapons of mass destruction in 2003, will mark another milestone in his international rehabilitation by attending the G8 summit in Italy next month as president of the African Union.

Among Mr Gaddafi's 200-strong entourage in Rome was Abdulhafid Zlitni, chairman of the Libyan Investment Authority, who said Libya was looking at investing in Italian industry. He named Enel - Europe's second largest power utility - and Impregilo, a construction company. Libya was also "following the value of Telecom Italia stock".

Claudio Scajola, Italy's minister of economic development, said that "in this new climate of friendship" Libya might also increase its stake in Eni, Italy's energy major, which sources the largest share of its global crude oil production from Libya. The construction of four free-trade zones for Italian companies in Libya was also on the agenda, plus agreements on solar energy and infrastructure.

Italy is Libya's largest trade partner. Libya has held long-term stakes in Fiat, the carmaker, and Juventus football club. It recently helped Unicredit in the bank's capital-raising by building a 4.6 per cent stake, and announced its intention to buy up to 10 per cent of Eni.

Silvio Berlusconi, prime minister, clinched drawn-out efforts to take relations with Tripoli to a new level last August when he visited Libya, apologised for Italy's 1911-43 colonial occupation and pledged $5bn in compensation.

In return, Italy gained priority in Libyan infrastructure projects and - of significant political value to Mr Berlusconi - an immigration deal where Libya would take back African refugees intercepted at sea by Italian forces on their way to Italy. That agreement was condemned by the Italian Catholic church and the United Nations refugee agency.

Mr Gaddafi praised his hosts for righting the wrongs of colonial rule and lectured them on the ills of the past. He upset some Italians on his arrival by pinning a photograph to his chest of Omar al-Mukhtar, a resistance hero executed by Italian Fascists in 1931.

Resistance by some Italian lawmakers obliged Mr Gaddafi to address the Senate not in the main chamber but elsewhere. Mr Gaddafi spoke of terrorism, saying people should understand the reasons behind it. He did not directly mention the 1988 bombing of the Pan Am flight over Lockerbie, Scotland, for which Libya accepted responsibility.

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PZ Cussons looks to clean up in Nigeria

By Jenny Wiggins

Published: June 10 2009 23:12 | Last updated: June 10 2009 23:12

When Imperial Leather soap was introduced into the UK in the late 1930s by Paterson Zochonis, scented with a fragrance commissioned by a Russian Count from London perfumers Bayleys, the company was already well-established in West Africa.

Almost 80 years later, Nigeria is the single most important contributor of revenues and the fastest-growing part of the group, whose origins date back to the 1870s when Scot George Henry Paterson and Greek George Basil Zochonis set up a trading post in Sierra Leone.

Chief executive Alexander Kanellis has big plans for the Nigerian operations. PZ Cussons, as the group is now known, is trying to develop the retailing sector in Nigeria so that it can more easily sell its refrigerators, microwaves, televisions and air conditioners – sold under the brand “Haier Thermocool” (a joint venture with China’s Haier Group) – to the country’s expanding middle class.

“There is no modern retail trade at all,” claims Mr Kanellis, who became chief executive in 2006 after more than a decade in brand and regional management jobs with the company in Nigeria, Indonesia and Thailand.

PZ Cussons opened its first “HT Cool World” retail store in Lagos two years ago, after introducing electrical goods to the country in the mid-1970s. There are now five stores in three cities, including Abuja and Kano. Before it started opening the stores, through which it sells less than 3 per cent of its white goods, traders would go into its depots and buy goods on credit before selling them in the open market or small shops.

In a trading statement on Wednesday, PZ Cussons eased analysts concerns about weakness in the Nigerian economy following declines in the value of the Naira against the US dollar and sterling.

It stressed that trading in its Nigerian division continued to be strong thanks to a resurgence in oil prices, which are a key driver of the Nigerian economy.

Analysts are becoming increasingly confident of the company’s ability to increase its profits following investment in Nigeria and the UK.

Goldman Sachs this month raised its rating on PZ Cussons from “sell” to “neutral”, noting the group’s “strong earnings growth outlook, especially in Africa”. Its shares, which on Wednesday gained 1¼p to 180¾p, have risen 23 per cent over the past six months, outperforming the FTSE 100, which is up 3 per cent.

Mr Kanellis foresees more than a decade of growth for PZ Cussons in Nigeria, where it is the leading supplier of refrigerators and freezers, claiming that of the country’s 22m households, only 40 per cent own refrigerators. He argues that the remaining households will buy refrigerators as electricity becomes more widely available, although the company has moved to widen the target market for electrical goods by selling generators.

PZ Cussons also supplies cleaning products, and Mr Kanellis says that rising incomes bode well for sales of its laundry detergent brands, such as Zip and Jet. “As people get richer they wash their clothes every day,” he says.

The company is also building a UHT milk factory in Nigeria to strengthen its nutrition business. It already has one factory making powdered and evaporated milk following a joint venture, Nutricima, with Glanbia in 2003. Analysts say the venture, which has been losing money in part due to record high global milk prices, is expected to make a small profit this year.

Africa (mostly Nigeria but also Ghana and Kenya) accounts for 46 per cent of group revenues, and 34 per cent of its operating profits. Its European business – mostly the UK – contributes more than half of its profits.

In the UK, PZ Cussons’ £75m purchase of the Sanctuary Spa brand – which sells body care products through retailer Boots – from HG Capital last year helped boost sales over Christmas. Analysts say that Sanctuary is attracting consumers who are trading down from more expensive products.

The family-controlled company (the Zochonis family retains a 51 per cent stake) is hoping a new £26m “personal wash centre of excellence”, opened in February at its headquarters on the outskirts of Manchester, will improve the quality and range of its products, which include Carex handwash and Original Source shower gels. It wants to develop more “natural” products, as well as ranges targeted at young people.

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Shell reaches $15.5m settlement with Nigerian activists

By Harvey Morris in New York

Published: June 9 2009 03:00 | Last updated: June 9 2009 23:49

Royal Dutch Shell and the families of Ken Saro-Wiwa, an executed Nigerian opposition leader, and other activists hanged by the military government in 1995, agreed a $15.5m settlement in a court case stemming from allegations the oil group was complicit in the executions.

The settlement, in which Shell and its Nigerian subsidiary denied any liability, ended a 13-year legal campaign by relations and supporters of Saro-Wiwa to hold the company accountable.

A spokesman for the plaintiffs said $5m (£3.1m) of the settlement to be paid by Shell would be put into a trust fund to promote education and welfare in the Ogoniland region of the Niger delta.

The balance would be shared among 10 plaintiffs after legal costs were met, the spokesman said.

Saro-Wiwa and eight other Ogoni activists were hanged after leading a campaign against Shell's activities in the region and the then military-led government of General Sani Abacha.

Shell, which said the civil case before a federal court in New York was without merit, always insisted it had no role in the execution and had appealed for clemency after the death sentences were handed down by a military tribunal.

Oil production stopped in Ogoniland in 1993 when Shell was forced to cease operations amid mass protests led by Saro-Wiwa against the environmental damage alleged to have been inflicted on the region by the company's operations.

The plaintiffs had alleged that at the request of Shell, and with Shell's assistance and financing, Nigerian soldiers used deadly force and massive, brutal raids against the Ogoni people throughout the early 1990s to repress a growing movement against the oil company.

The plaintiffs' spokesman described yesterday's outcome as a fair settlement that spared the families of Saro-Wiwa and his fellow activists up to four more years of litigation if the case had gone to trial.

The case was brought under the Alien Tort Statute, a 1789 law that gives non-US citizens the right to file suits in US courts for international human rights violations. The case had been due to go ahead after Shell failed to have the charges dismissed.

Commenting on the establishment of the $5m trust fund, Ken Saro-Wiwa Jr, son of the late activist, said: "In reaching this settlement, we were very much aware that we are not the only Ogonis who have suffered in our struggle with Shell."

Paul Hoffman, a human rights attorney in the case, said: "This settlement is only a first step towards the resolution of still-outstanding issues between Shell and the Ogoni people."

A statement by the plaintiffs' lawyers after the settlement was announced said the settlement was a step towards holding corporations accountable for complicity in human rights violations, wherever they were committed.

"We hope that this settlement provides another building block in the efforts to forge a legal system that holds violators accountable wherever they may be and prevents future violations," the statement said.

Although it acknowledged no wrongdoing, Shell said it agreed to settle the lawsuit in the hope it would aid the "process of reconciliation", according to a statement quoted by Associated Press. "This gesture also acknowledges that, even though Shell had no part in the violence that took place, the plaintiffs and others have suffered," Malcolm Brinded, Shell's director of exploration and production, said.

The plaintiffs' lawyers stressed the settlement only reflected the claims of their clients and not those of the Ogoni people, although the outcome had the potential to benefit thousands of other people in Ogoni.

"The Ogoni people have many outstanding issues with Shell, and it is Shell's responsibility to resolve those issues with the Ogoni people themselves. The plaintiffs do not speak for the Ogoni people, nor have they attempted to resolve those issues," the lawyers said.

The case had been due to go to trial on May 27 but was repeatedly delayed.

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Armenian “Gohars” will shine in Syria
01:25 pm | Today | Culture

The "Gohar" Ensemble will perform on July 9 at the Opera Theatre in Damascus and the historical fort amphitheatre in Aleppo on July 16-17.

Despite the large number of musicians (15 soloists and 12 dancers in addition to the 150-member choir and orchestra), the "Gohar" Ensemble is the only Ensemble in Armenia that has performed in Lebanon, Cyprus, Russia, Turkey, the U.S. and Canada in the past couple of years.

The DVD version of "Gohar" Ensemble's performances contains information about the Ensemble in Armenian and Armenian with English letters and are distributed more to Armenian schools in the Diaspora than sold.

The concerts of "Gohar" stir crowds and the audience joins the group as they sing and dance on stage.

The "Gohar" Ensemble was founded on December 7, 1999 in Gyumri under patronage of Lebanese Armenian Gohar Khachaturian. The "Gohar" choir and orchestra were founded afterwards. The free musical instruments and instruction gave many talented children the opportunity to receive a substantiated musical education.

Many of the children are continuing their education in the most high-profile music education institutions abroad and some have gone on to become full members of the "Gohar" symphonic choir and orchestra. The creation of the "Gohar" symphonic choir and orchestra is greatly connected to Cyprus-Armenian conductor, composer and educator Sepu Abgarian. Leaving Cyprus, he came and got "enlisted" in the "Gohar" orchestra.

Many of his compositions are part of the list of songs performed by the "Gohar" symphonic choir and orchestra. Sepu Abgaryan has also written numerous symphonic, choir and instrumental songs.

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Real Madrid's business model

Published: June 12 2009 03:00 | Last updated: June 12 2009 03:00

Real Madrid's £80m ($132m, €94m) purchase of Cristiano Ronaldo from Manchester United will doubtless be portrayed, in some quarters, as megalomaniacal madness. In fact, it is part of a carefully thought-out and rather clever business strategy.

About seven years ago Florentino Perez, who has just reassumed control of the football club, built the first team of Real international superstars or " galácticos " - including Zinedine Zidane of France, Roberto Carlos and Ronaldo of Brazil, David Beckham of England and Luís Figo of Portugal. Critics denounced this as a team of show-boaters - the Harlem Globetrotters of football. They pointed out that Mr Perez had sanctioned the sale of a key member of the side, the unglamorous, ungalactic defensive midfielder Claude Makelele - and that Real's fortunes declined shortly afterwards. The galácticos never won very much.

But the critics missed the point. The galácticos were part of a commercial strategy that hugely boosted Real's income, via guest appearances, the sale of merchandise and television rights. Real now have the highest revenues of any football club in the world, and these have doubled since 2002.

I once discussed the strategy with Real's commercial director, who compared football with the film industry. Real, he argued, was a content provider - just like a Hollywood studio. So just as it was rational for a film studio to pay millions to get a box-office star such as Tom Cruise in a movie, so it was rational for Real to pay huge amounts to sign a Beckham or a Zidane. Their celebrity could then be leveraged into higher sales. Real were already looking forward to the age of video-enabled mobile phones. Their dream was to build up a global community of Real fans. Then whenever Beckham or Zidane scored, these fans would get a text message and would be able to watch the goal on their phones - for a price.

It seems to me, seven years on (I had this conversation in 2002, while researching The Economist survey of world soccer - tough assignment), that the technology is just about there. The original galácticos have moved on - although Beckham played quite well for England on Wednesday night. But a new generation of content-providers is about to arrive in the form of Ronaldo and Kaka, the star of the Brazilian national side.

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Broadband ‘lands’ in east Africa

By Barney Jopson in Nairobi

Published: June 11 2009 23:32 | Last updated: June 11 2009 23:32

East Africa will on Friday move closer to ending its isolation as the world’s last region not connected to the global broadband network when a fibre optic undersea cable “lands” at the Kenyan port of Mombasa.

The region at present relies on satellite internet links that are slow, unreliable and often prohibitively expensive, problems that have inhibited business activity, public sector efficiency and the spread of internet access.

The connection of two undersea cables to Kenya’s domestic fibre network promises to deliver the kind of infrastructural transformation rarely seen in Africa, a continent infamous for bad roads, ports and power supplies.

At a “landing” ceremony in Mombasa on Friday, Mwai Kibaki, the president, is due to mark the arrival of the $110m Teams submarine cable, which is part-owned by Kenya’s government and Kenyan telecoms companies, including affiliates of Vodafone and France Telecom.

Bitange Ndemo, senior official at the ministry of information and communication, said: “We used to call such huge infrastructure projects white elephants because the planning was poor, they never got finished and they never benefited the people. This is the first time we’ve had such a major project go through.”

The arrival of Teams follows that of Seacom, a rival $600m cable project, wholly owned by private investors, which connects several points on the east African coast directly to London, Marseilles and Mumbai.

“The cables are the great hope for this economy. Look around and everything else is down,” said Aly Khan Satchu, a Nairobi-based financial analyst. Other likely beneficiaries are Ethiopia, south Sudan, Uganda, Rwanda, Burundi, Tanzania and Mozambique.

Seacom was due to be operational in July, said Jean-Pierre de Leu, its senior vice-president. Teams, which links to Fujairah in the United Arab Emirates, should be operational by September, said Mr Ndemo.

The cables could reduce wholesale internet prices in Kenya from their current level of about $3,000 per megabit per month to as little as $100, said Kai Wulff, head of KDN, a data communications group and Teams shareholder.

Access Kenya, another shareholder and an internet service provider, has bought capacity on both cables, said Jonathan Somen, its managing director. Once the cables are operational the company’s customers could expect to get twice as much bandwidth for the price they pay today, he said.

Kevit Desai, chief executive of the Kenya Private Sector Alliance, a business federation, said the potential was huge, but stressed: “The cables are really enablers, not profit centres.”

To reap the maximum benefit he said that prices for end users must be as “internationally-competitive” as wholesale connection prices.

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改正著作権法が成立、裁定緩和や検索サイトのキャッシュ生成など実現
記事一覧へ >>

　通常国会で審議されていた著作権法の改正案が2009年6月12日、参議院本会議で可決・成立した。2010年1月1日に施行される。

　今回の改正著作権法では、裁定申請中の著作物の利用に関する規定を新設（第六十七条の二）。権利者の所在が不明の著作物を二次利用する場合、文化庁に担保金を供託することにより、裁定を受ける前でも二次利用を可能にする。従来の裁定制度では、申請前に「相当な努力」を払って権利者を探すことが求められており、二次利用にかかる手間が過大であるとされていた。著作物の二次利用をめぐっては、テレビ局が過去に制作・放送した番組をインターネットなどで配信する取り組みが進められており、こうした動きを後押しするものとなっている。

　検索サイト関連では、キャッシュ生成に伴う複製に関する規定が設けられた（第四十七条の六）。検索サイトを業として行う者は、検索や検索結果の提供に必要な範囲内で、インターネット上のコンテンツを自社サーバーに複製し、データベースとして保管することができる。従来は検索サイトの構築・運用に伴うキャッシュの扱いが著作権法上明文化されておらず、検索サイトを運営する事業者などから懸念の声が出ていた。

　違法コンテンツ対策では、いわゆるダウンロード違法化規定を追加（第三十条第一項）。著作権を侵害しているインターネット上の録音／録画コンテンツを、侵害の事実を知りながらダウンロードし、ユーザーのパソコン内のHDDなどに複製する行為を違法とした。従来は、違法コンテンツであっても私的利用の範囲内であれば合法的にダウンロード、複製できる規定となっていた。

　この規定をめぐっては、ネットユーザーを中心に反対意見があった。これを受け、「違法配信と知らずに録音又は録画した著作物の利用者に不利益が生じないよう留意するとともに、本改正によるインターネット利用への影響について、状況把握に努めること」「本改正に便乗した不正な料金請求等による被害を防止するため、改正内容の趣旨の周知徹底に努めるとともに、レコード会社等との契約により配信される場合に表示される識別マークの普及を促進すること」という付帯決議が議決されている。また、同規定に違反した場合の罰則規定は設けず、ネットユーザーに一定の配慮をしている。

　このほか新設／改訂された主な内容は次の通り。

* 国立国会図書館において、古い資料の劣化を防ぐ目的で複製／データベース化し、アーカイブを構築する（第三十一条第二項）。
* 視覚障害者が著作物を認識できるよう、文字を音声に変換して複製したり、それをネット上にアップロードしたりできるようにする（第三十七条第三項）。
* 聴覚障害者が著作物を認識できるよう、音声を文字に変換して複製したり、ネット上にアップロードしたり、貸し出し用として複製したりできるようにする（第三十七条の二）。
* インターネット上のサーバーで故障や混雑が起こるのを予防したり、故障したサーバーを復旧したりするために、サーバー上のデータを複製できるようにする（第四十七条の五第一項）。
* インターネット上のプロキシーサーバーにおいて、送信を効率的に行うために必要な範囲内でコンテンツの複製を認める（第四十七条の五第二項）。
* 調査・研究などのために、インターネット上などの大量の著作物をコンピューターで解析する場合、必要と認められる限度内で複製を認める（第四十七条の七）。
* 著作物の複製物をパソコンなどで合法的に利用する場合に、情報処理を円滑に効率的に行うために必要な範囲内で、パソコン内にキャッシュを生成することを認める（第四十七条の八）。
* 美術／写真の著作物を譲渡／貸与しようとする場合に、作品の所有者やその委託を受けた者がDRMを施した上でネットオークションの画面などに画像を掲載することを認める（第四十七条の二）。

　このほか付帯決議において、「インターネット配信等による音楽・映像については、文化の発展に資するよう、今後見込まれる違法配信からの私的録音録画の減少の状況を勘案しつつ、適正な価格形成が促進されるよう努めること」という項目が盛り込まれている。