AluNews - November 2003

Row over Balco stake sale whispers

Calcutta Telegraph, India - Nov 2, 2003

Raigarh, Nov. 2 (PTI): The employees’ union of Balco has sought government intervention to stop promoters Sterlite group from allegedly handing over the management of the aluminium major to a foreign player. Company officials, however, have denied such a move.

“Sterlite is indirectly trying to sell its stake in Balco to Mauritius-based company Twinstar Holdings at a hefty profit and transfer management control to that company,” Balco Employees’ Union general secretary Rajendra Mishra said here today.

Balco officials said there were no plans to hand over the management of the company to a foreign player.

Officials said union leaders have been apprised of the whole issue by the management and “they are satisfied”.

The government divested majority stake in the Rs 3,500 crore aluminium company to Sterlite for Rs 551 crore in March 2001, Mishra said, adding that Sterlite is now trying to sell it to Twinstar through the back-door at a hefty profit despite a three-year lock-in period on sale.

The union, affiliated to the RSS-backed Bharatiya Mazdoor Sangh, also alleged that Chhattisgarh chief minister Ajit Jogi and other leaders, who had earlier opposed the sell-off, were now “keeping mum”.

The union alleged that Twinstar has already purchased 55 per cent stake of Sterlite and has sought government permission to hike its stake by another 20 per cent.

Apprehending takeover of management control by the foreign firm, the union wants the Centre to look into the matter and, if necessary, take suitable action.

Balco officials, however, clarified that Twinstar is one of the major stakeholders of Sterlite, promoted by Anil Agarwal and his family.

Even if Twinstar wants to hike its stake in Sterlite, it would not affect Balco's management structure, they said.

The Balco management has allayed fears and informed the union of the latest developments at a meeting on Friday, company sources said.

Dust in the Wind

Gateway 2 Russia, 03 November 2003 16:46

The new way to clean up emissions invented in Sverdlovsk Province is better than Western equivalents and reduces harmful pollutants by several times.

Alexander Pereskokov (Head Specialist at Bioterm Scientific Research Company in Yekaterinburg, innovation manager, with a diploma from the Russian Government Academy of Economics)

Every spring, as the snow melts, the cities of the Urals are surrounded by thick clouds of dust. This kind of air pollution, along with the high incidence of smoking, is one of the leading reasons for the steady growth in lung cancer in the area. According to the International Agency for Cancer Research, around 85% of malignant tumors can be attributed to unhealthy environmental conditions. Emissions from petrochemical, power generating, aluminum, nickel, coking, and other factories have led to a higher concentration of carcinogens in the air over many cities. Specialists from Sverdlovenergo have invented an extremely effective gas scrubbing method to remove contaminants. If installed at factories, it will allow them to comply with the Law on Protecting Air Quality and citizen initiatives.

Homeland smoke

It’s not fair to say that nothing is being done to clean up the air. Companies have scrubbing systems left over from the era of “developed socialism,” which are still being used more or less. However, the privatization of fuel and energy plants and metal manufacturing facilities has not led to noticeable improvements in environmental protection. One rarely hears of new owners refitting their factory to reduce its harmful influence on the environment.
Russian technology to scrub pollutants from the air is now in a position to address this problem more efficiently than its Western counterparts. It provides better technical and economic results for the same money or similar results for less money. How well heavy elements, aerosols, and acid gasses are removed depends on how effectively the large-scale processes involving scrubbing devices are set up. Without a doubt, engineering in this area in other countries has reached far higher levels than in Russia. However, Russia still has specialists capable of conducting complex technical projects, its innovation engineers.

The fruits of progress

Gas scrubbing has been well studied for a long time. Innovations have been made to perfect the large-scale processes at the heart of these devices, where gasses are drawn through a layer of foam (called an emulsion) stabilized by centrifugal force.
Oleg Kochetkov’s scrubber model became the prototype built by Sverdlovenergo for the Artemosky Electric Energy Center. This first “Artemovksy” set-up has been in operation since 1996 for a total of 25,000 hours. Additional modification of Kochetkov’s device led to the creation of an essentially new type of gas scrubbing equipment. The perfected Artemovsky device can remove containments even when dust concentration reaches 60 g/m3. It can remove 98.6% of suspended particles when a furnace is running at low capacity and 99.7% at regular capacity. Low hydraulic resistance means the scrubbing system requires little electricity. It also uses remarkably little water, less than 0.3 m3 for every thousand square meters of gas. This is exponentially less than the water used by disc-shaped scrubbers. The efficiency of the device means that it does not require electrostatic precipitators, which are expensive and not always very effective.

The Russian miracle

The Artemovsky device caught the interest of the Design Bureau at the Yekaterinburg-based Energotsvetmet State Company, which is developing ways to clean emissions from the sintering furnaces on the aluminous production line of the Urals Aluminum Factory.
“The electrostatic property of dust forming in sintering furnaces severely reduces the effectiveness of electrostatic precipitators,” says Yuri Frolov, Technical Director of the Design Bureau. “The disc scrubbers that follow it are literally choked with the dust the precipitators miss. When the gas escapes, it contains a much higher than acceptable concentration of dust particles, as high as 6 grams per cubic meter, and releases them into the atmosphere. As we were looking for a solution to this problem, I met the inventors of these patented devices. Their ideas and experience with the Artemovsky device made such an impression on our specialists that we changed our approach to solving the scrubbing problem at the Urals Factory. The ideas in the patents were also applied in our system for cleaning up emissions from the Urals electroplating production line.
According to Frolov’s estimates, installing the updated Artemovsky device at the Urals Aluminum Factory reduced emissions from the sintering furnace polluting the atmosphere by 60 times. This means that the volume of dust drifting over the town of Kamensk-Uralsky will fall by 4,500 tons in a year.

But the pollution remains

The residents of Kamensk-Uralsky are lucky. But what about those living near other industrial centers and living with air pollution? The resistance of many factory owners to installing new environmental technologies must be opposed by legislation and citizen initiatives.
Until 1999 the State Committee for the Environment did the best it could to fight for a cleaner environment. The committee was then dissolved under the government of Mikhail Kasyanov. Only in May 2003 did members of the State Council recall Russia’s environmental problems and the ineffectiveness of the 1999 federal Law on Protecting Air Quality. This State Council meeting came on the eve of a series of official visits by the Russian president to several EU countries, where environmental ministers had just announced new regulations for industrial emissions due to come into effect in 2005. The EU intends to reduce emissions by 8% compared to 1990 levels.

Pechiney and Nela Harbin Set the Basis of a Joint-Venture in China

Business Wire (press release) November 04, 2003

Pechiney and Nela Harbin (Heilongzian Province) have reached an agreement in principle to launch a joint venture in plates and sheets production, for general engineering markets.

The parties will launch a feasibility study regarding the establishment of a joint company, the upgrade of the present equipment in the existing plant or the construction of a new manufacturing unit. In both cases, the potential production could reach 50,000 t after 4 years. If a new plant was to be constructed, the total investment could amount to EUR250 million.

Pechiney Rhenalu, a 100% subsidiary of Pechiney, will hold at least 51% and Nela Harbin a maximum of 49% interest in the proposed joint-venture project, subject to formal approval by the relevant Chinese authorities.

This project aims to the supply of the expanding Chinese and Asian markets and western countries.

Nela Harbin is located 800 km from the Russian border; it is the oldest-established and one of the leading aluminum plants in China, manufacturing a large range of products.

Pursuant to article 7 of the COB Rule book no. 2002-04, this press release was disclosed to the Commission des Operations de Bourse before its release.

Alcan defends Pechiney on Aurukun
Financial Times (subscription), UK November 4 2003 4:00

By Ken Warn in Toronto

Travis Engen, Alcan's chief executive, has hit out over Australia's dispute with France's Pechiney concerning the development of one of the world's largest bauxite deposits.

Mr Engen, who is in the final stages of the Canadian aluminium maker's €4bn ($4.6bn) bid for rival Pechiney, said it was "probably a big mistake for the [Queensland state] government to have . . .a public dispute at this point".

Queensland has launched legal action against Pechiney, alleging that the company has failed to comply with the terms of its lease by not developing the Aurukun bauxite deposit on Cape York, the state's northern tip.

The reserve contains an estimated 500m tonnes of bauxite and could produce several billion dollars worth of exports. Pechiney denies the allegations and has blamed the delay in development on the state authorities.

In an interview with the Financial Times, Mr Engen said he did not know the full details of the case, but added: "It's got to make anybody who has concessions or ideas of developing in the [Australian] region wonder."

Alcan's offer for Pechiney, set to close on November 24, would create the world's biggest aluminium group by revenues, challenging Alcoa of the US for industry leadership.

Mr Engen said he hoped to make announcements about the structure of the combined company shortly after legal closure of the deal in early December. He declined to comment on when Jean-Pierre Rodier, Pechiney's chief executive, would step down.

"It's his decision. What he has made very clear is that he is and will be accessible for continuing advice and counsel. He is not going to be like some cowboy and ride off into the sunset."

Mr Engen said Alcan was well placed to execute the merger and to realise the projected $250m in synergies by the end of 2005.

Alcan's takeover of Switzerland's Algroup three years ago involved a 50 per cent expansion in Alcan's activities, and the combination with Pechiney was of a similar order, he said.

Alcan had "several hundred people" who had been involved in integrating Algroup. "They have a very real knowledge and experience from the standpoint of completing a successful integration, and that represents a huge risk reduction."

Alcan's original attempt to merge with Pechiney in 1999 - as part of an ambitious three-way deal that also took in Algroup - would also help smooth the transition, he said.

In a meeting with the top 50 Pechiney executives, Mr Engen asked how many had been involved in the earlier talks. "All these hands went up. Only about 25 per cent were not involved [before], so there is a lot to build on."

The original Pechiney deal was called off amid European Union competition concerns, but this time around Alcan has satisfied Brussels.

Mr Engen said Alcan was still analysing which assets it would divest to meet EU requirements. Alcan has agreed to sell either its 50 per cent share in the AluNorf rolling mill and in the Gottingen and Nachterstedt rolling mills, or Pechiney's rolling mill at Neuf-Brisach and the Rugles foil mill.

Alcan had received expressions of interest in various possible divestitures since its bid for Pechiney was unveiled in July.

Board says aluminum dust caused fatal explosion (subscription), MI The Associated Press 11/5/03 7:20 PM

HUNTINGTON, Ind. (AP) -- An explosion at a casting plant that killed one worker and critically injured another was caused by aluminum dust near a melting furnace, federal investigators said Wednesday.

In a preliminary report, the U.S. Chemical Safety and Hazard Investigation Board said the first explosion at the Hayes Lemmerz International plant on Oct. 29 led to a secondary explosion minutes later in dust-collection equipment.

The board also said there were smaller explosions involving gas cylinders and tires outside the building in a contractor's trailer in Huntington, about 20 miles southwest of Fort Wayne.

Company spokeswoman Marika P. Diamond stressed that the findings were preliminary. The plant's parent is the Northville, Mich.-based Hayes Lemmerz.

"They indicate themselves that this is a work in progress, and it's an ongoing investigation," she said. "We don't know the exact source."

Shawn D. Boone, 33, a maintenance worker from Roann in Wabash County, died a day after the blast from burns he suffered in the explosion.

Another maintenance worker, David Ripplinger, remained in critical condition Wednesday at St. Joseph Hospital in Fort Wayne.

Five other people also injured in the blast were treated and released at area hospitals.

The board said a fire in a duct system earlier on the day of the explosions does not appear to be connected to the blasts.

Gerald V. Poje, a board member, said investigators are concerned by the number of dust explosions that have occurred around the country.

An explosion in February at a Kentucky insulation factory killed seven people and injured 30 others. Three weeks earlier, an explosion in a Kinston, N.C., medical supply factory claimed six lives.

The Hayes Lemmerz International facility resumed operations over the weekend, although the area where the explosion occurred remains closed, Diamond said.

Canadian greens protest Noranda aluminum smelter

Forbes, Reuters, 11.06.03, 2:23 PM ET

TORONTO (Reuters) - Standing in front of a 12-foot cardboard dam with the words "Noranda in Patagonia, no dam way" painted in bold, Greenpeace activists protested outside the mining firm's offices Thursday against its planned hydro-powered aluminum smelter in Chile.

Wearing hard hats and jumpsuits, about 10 protestors handed passersby leaflets calling on the Toronto-based miner to abandon its plam to develop the smelter and three hydroelectric plants in Chile's Patagonia province. Four musicians played Chilean music.

Noranda Inc. suspended work on the $3 billion Alumysa development earlier this year amid a storm of objections from Chilean salmon farmers, politicians and citizens who say the venture will destroy the area's pristine beauty and the livelihood of thousands.

"It's another one of their big mega-projects that would do environmental damage...We're losing the battle to protect the rainforest," Peter Tabuns, Greenpeace director for Canada, told Reuters outside Noranda's offices in Toronto's financial district.

Greenpeace also handed over a document to Brascan Corp. that detailed Noranda's "appalling record of environmental contamination and illegality". Brascan owns 42 percent of the aluminum, copper and nickel producer.

Noranda spokesman Dale Coffin denied the allegations, saying the miner always maintained solid environmental management practices and operated at the highest standards.

He said two factors were holding up the Alumysa project: Noranda needed approval from the Chilean government on an environmental impact study for the project and it needed a foreign partner to help shoulder the hefty start-up costs.

"Right now neither one of those components are advancing," he said, adding that there was no time frame on the project.

Copyright 2003, Reuters News Service

Alcoa uses technology for early warning

Texarkana Gazette, TX 11/7/03 By AARON BRAND

Alcoa is using state-of-the-art wireless technology at its Texarkana mill to give the company almost instant knowledge of problems that may arise in the plant.

Using a remote monitoring device called the TT-501 made by the Tyler, Texas, company Teletouch, Alcoa has rigged two of its plants at the mill to reap the benefits, said Mark Chenevey, an Alcoa electrical engineer. In both locations, the monitors act as something of an alarm system to alert workers.

At the compressed air plant, compressed air is provided to points throughout the mill. When the pressure at the plant drops below a certain amount, the TT-501 goes to work.

"If we have an alarm situation, it will trigger the tracker device," said Chenevey. That device lets the maintenance crew know of the situation so they can correct the problem as soon as possible. Though it hasn't been used for an incident, test runs have shown the response time is about five minutes.

"This speeds up our process a bunch," said Chenevey. In use for the past couple of years, the monitoring system saves on the bottom line since Alcoa doesn't have to have personnel act as monitors.

"I know it's saved us tons of downtime," noted Chenevey.

The technology is so promising that when the U.S. Environmental Protection Agency issued new emissions monitoring regulations, Alcoa utilized the Teletouch TT-501 at the facility's re-melt plant, where scrap aluminum is recycled to use again.

"It's driven by an EPA standard that just went into effect," said Chenevey.

The bag house, a section of that re-melt plant that is hard to access and is located between the furnace and smoke stack, is the area monitored, he said.

Alcoa is able to gauge whether smoke is escaping out of the smokestack. If it is, Alcoa workers are notified within that same five minute response time. EPA standards state that Alcoa would have only an hour to fix the problem if a bag breaks.

"If we can respond to this and fix it, it saves putting any smoke into the environment, it puts us in compliance with the EPA, and it also helps us run more efficiently," said Chenevey.

Teletouch is based in Tyler, but it has several offices, including one in Texarkana. Kathi Couch, a senior account manager with the company, said they've been in business communications for 40 years.

"We're getting into sophisticated wireless services via terrestrial and satellite-based networks," said Couch. That type of technology can monitor remote operations, track vehicles and even single workers out in the field.

Such applications have been used not only at Alcoa, but also business operations ranging from wastewater treatment plants to chicken houses.

The TT-501 system "can gauge whatever you program it to monitor," said Couch.

"It has four inputs that are selectable for contact and one output. Therefore, it can tell you ... what you need to know about a particular piece of equipment," said Couch.

If something is on or off, warm or cold, or at a particular kind of pressure, the monitoring device will contact someone with that information through a relay system, a message ultimately sent via alphanumeric pager, cell phone, or e-mail. The product's power is in the customer's hands.

"If they know immediately that something has gone down, then they can get it back up immediately," said Couch. The demand is there because companies want to be able to monitor equipment and workers for safety reasons, particularly with companies cutting their costs and thereby removing workers from such monitor positions.

Ultimately, the wireless monitoring device can be customized for each customer. And this technology has applications in a variety of businesses.

"So we're taking our products on the road," said Couch. A different product is geared toward trucking companies that want to track trailers, telling the company where a trailer is at any given time.

"We're moving forward to provide business applications that our customers need," she said.

Pechiney unwraps increased quarterly loss

Sunday Times, South Africa Friday November 07, 2003 12:13 - (SA)

PARIS - The French aluminium and packaging group Pechiney reported on Friday a net loss of 76 million euros (88.0 million dollars) in the third quarter from a loss of 14 million euros in the same period of last year.

The latest loss was after exceptional charges of 117 million euros owing to costs of 33 million euros to challenge a takeover bid by Alcan of Canada, and the writing down of asset values to the extent of 84 million euros.

The bid by Alcan to acquire all of Pechiney is under way.

Operating profit fell to 58 million euros from 95 million euros. In the first nine months operating profit fell to 196 million euros from 336 million euros.

In the third quarter sales fell by 17.2% to 2.5 billion euros from 3.02 billion euros and in the first nine months sales were down by 13.3% to 8.00 billion euros from 9.23 billion euros.

Company chairman Jean-Pierre Rodier said in a statement that he expected margins to steady in the fourth quarter because results from the primary aluminium business had improved.

This was partly a result of a rise of aluminium prices on the London Metals Exchange.

Slugging It Out For The Top Slot

Indian Express, India 10 - Nov -2003

Birla should worry with Agarwal going global


Kumaramangalam Birla should be worried. Anil Agarwal has just raised the ante in the battle for Nalco. Both men hope to be the biggest aluminium producer in India, and control of the National Aluminium Company will be the key. At the moment Birla is clearly number one with Hindalco and Indal. Agarwal owns a controlling stake in Balco, which he bought over from the government two years ago and the much smaller Madras Aluminium Company. The only other big player is Nalco. Whoever wins Nalco when it is privatised, as it eventually will, becomes the Aluminium King of the country.

Size is important in this industry as in any other commodity business, since it helps drive down the cost of every kilo you produce. Since producers have little control over selling prices, which are decided on the world’s commodity exchanges, the lower your costs, the more money you make, so being large and global helps.

What Agarwal began last week was a process to take his companies global. Apart from Balco and Malco, he owns Sterlite Industries and Hindustan Zinc. His holdings in these companies are consolidated in Vedanta Resources. This is the company that Agarwal last week announced he would take public on the London Stock Exchange. Agarwal believes the Indian markets don’t have the depth to give him the value that he thinks his companies deserve. The London Stock Exchange, where all his other international peers are listed, is where he thinks he’ll be able to realise their value.

His peers are companies in the $270 billion base metal business, companies that deal in copper, aluminium, zinc and lead. It’s a business where 70 per cent is controlled by the six or seven companies. There are hundreds of others competing for the remaining 30 per cent of the pie.

Two years ago Agarwal told CNBC in an interview that he wanted to get into that elite list of six, seven or eight companies “otherwise I will just be one in the ocean. That’s the vision I have got moving from Mumbai to London”. London will also give him the money to achieve that dream of breaking into the elite league. Vedanta will give investors an opportunity to get into a Rs 10,000 crore group. Under accounting laws, the turnover of all his Indian companies can be shown in Vedanta’s books as it owns over 50 per cent in these companies. Agarwal thinks this will make his company important enough to get it a place on the UK’s FTSE, that’s the equivalent of the Sensex in Mumbai.

So why should Mr Birla be worried by all of this? Well, companies comparable to Vedanta quote at between 15 and 20 times their earnings on the London Stock Exchange. With aluminium, zinc and copper prices just beginning to go up, this can only get better. In about six months, once Vedanta is listed, Agarwal will be able to leverage its value on the LSE to raise money to acquire mining companies around the world. This will be in addition to companies he already has in Australia, Mexico and Armenia.

So by the time Nalco comes up for sale, which will most likely only be after the elections sometime in 2005, Agarwal will come to the bidding table a far bigger player than he is today. And as he has proved in the past he brings a gambler’s flamboyance to these deals. This time he will be a gambler with more than $700 million, over Rs 3,100 crore, in his pockets and the means to raise more.

So, even if Birla is able to wrest Nalco from Agarwal, it will be at a price far higher than he may have bargained for two years ago. In fact if Birla does get Nalco from Agarwal, it will make him more of an entrepreneur than we thought him to be. And while his bean pushers may not approve, being a bit of a gambler may possibly be the only way for Birla to forge world dominance.

The author is executive editor of CNBC-TV18. These are his personal views

Aneka To Produce Bauxite From Tayan Mine In '04

Yahoo News Tuesday November 11, 4:52 PM

JAKARTA (Dow Jones)--Indonesian gold and nickel miner PT Aneka Tambang (ANTM.JK), or Antam, said Tuesday it plans to start production of bauxite, and develop an alumina processing plant next year in a bid to boost long-term revenues.

"The projects will cost between $175 million and $200 million," Antam's president, Dedi Aditya Sumanagara, said in an interview.

Antam is negotiating with potential foreign partners to help finance the projects, Dedi said. He declined to name the foreign companies.

The state-owned company hopes foreign participation in the investment will mean Antam can go ahead without having to raise more debt.

The company issued $200 million worth of dollar bonds last month to more than double capacity at its ferronickel plant in Sulawesi province by 2005. "We are seeking a project financing scheme that won't hurt our commitment to service our debt," Dedi said.

The projects are aimed at reducing Antam's dependency on nickel and gold, which combined account for more than 60% of total annual sales.

"These projects are essential for Antam to reduce its dependence on nickel and gold," Dedi said.

Antam expects its annual nickel production of around 10,000 tons to fall by around 10% next year due to a plan to repair its ferronickel plant in Sulawesi. The repairs to one smelter, which has a production capacity of 6,500 tons a year, will take three months starting in June, he said.

The company has begun developing a bauxite mine in Tayan, West Kalimantan, which should be ready to start production in 2004, he said. The mine is estimated to have bauxite reserves of 200 million tons, with an estimated mine life of 100 years.

Plans for an alumina processing plant, also in Tayan, which will have an annual production capacity of 300,000 tons of alumina per year, have not yet entered the production phase, Dedi said. The company is waiting to get financing for the project for pushing ahead with development.

Meanwhile, strong Chinese demand for alumina, which is further refined into aluminum, has lifted alumina prices on the spot market.

Australia's Macquarie Bank said in a recent report that it expects the alumina market to stay "extremely tight for the next two years," with 2004's annual contracts for alumina supply to be priced higher.

Currently, Antam produces an average 1.1 million tons of bauxite per year from its mine on Indonesia's Bintan island near Singapore. But the mine is set to run out of reserves by next year.

Asia Aluminum Confident Of Funding Output Expansion

Yahoo News Tuesday November 11, 1:54 PM

Singapore, Nov. 11 (OsterDowJones) - Hong Kong-based Asia Aluminum Holdings Ltd. said Tuesday it is confident of having enough cash to fund an expansion that will more than double its extrusion production capacity in three years.

The company, also Asia's largest aluminum extruder, plans to lift its annual extrusion capacity to 250,000-300,000 metric tons from the current 140,000 tons by early 2006, Benby Chan, company vice chairman and chief executive, told OsterDowJones.

He estimates the expansion will cost about US$100 million.

"As our expansion will be over a period of three years, we're comfortable that we'll be able to finance this through our internal funding," he said.

The company will relocate its existing five aluminum and stainless steel extrusion factories in Guangdong's Nanhai city to a new industrial city of Zhaoqing nearby in several phases.

Around 2,100 acres of land in the area, which the company calls the Asia Aluminum Industrial City, are reserved for the extrusion operations.

At the same time, the company will spend HK$3 billion (US$1HK$7.749) to build an aluminum panel plant with a designed annual capacity of 400,000 tons, which it expects to be operational by the end of 2005.

Asia Aluminum owns 60% of the plant, while company Chairman Kwong Wui Chun owns 20% in a personal capacity with the rest held by other strategic partners, said Chan.

With net cash of more than HK$950 million and an annual positive cash flow of around HK$250 million from its daily operations, Chan said the company won't be strained by going ahead with both projects.

Asia Aluminum is publicly listed on the main board of the Stock Exchange of Hong Kong under the stock code 930.

Wong Chia Peck, OsterDowJones, 65-6415-4082

Sibneft out of RusAl BOD.

Gateway 2 Russia, Russia 11 November 2003 20:09

Russian Aluminium (RusAl) EGM elected a new BOD on Nov. 10. In particular, Oleg Deripaska (GD with RusAl), Alexander Bulygin (GD with RusAl-Asset Management Co.), Guldjan Moldazhanova (RusAl), Stalbek Mishakov (Basic Element), Alexander Ushkevich (Basic Element) were elected to the 5-seat BOD.

Former 8-seat Board of Directors had also reps. from Sibneft and Millhouse Capital UK Limited.

Another smelter, another sad story

The Spokesman-Review 11/13/03

Smelter's fate resonates across state, Bert Caldwell says.

Bert Caldwell The Spokesman-Review

They held a vigil for an aluminum smelter last week. No, it was not the Kaiser Aluminum Corp. plant in Mead. But the situation is all too familiar.

The Longview, Wash., smelter was shut down Feb. 27, 2001, within hours of its purchase by Michigan Avenue Partners. "I've never seen a plant go down so quickly," says Gaylen Prescott, a regional representative for the United Steelworkers of America.

Prescott worked at Longview for 20 years.

Michigan Avenue Chairman Mike Lynch obviously had no intention of operating the plant. His goal was an immediate sale of the smelter's electricity back to the Bonneville Power Administration, which obliged by paying him $226 million for the desperately needed megawatts.

Bonneville's purchases shut down every smelter in the Northwest in 2000-2001. Only two or three operating at minimal levels have restarted since then because of high electricity prices.

Even allowing for the $160 million Prescott says Lynch paid Alcoa for the plant, and the $20 million paid employees as part of the power sale agreement, Lynch did well for himself. And, Prescott notes, the state of Washington got stuck with some unemployment benefit bills, as well.

Alcoa did not willingly sell Longview, which was acquired as a result of its merger with Reynolds Metals in 1999. Alcoa had to rid itself of Longview in order to allay concerns too much aluminum production would be concentrated in one company's hands.

Lynch put Longview into bankruptcy in April 2002. He did the same thing with two other aluminum plants he purchased during the 1990s.

Those operations have been liquidated. The vigil was a Steelworker effort to forestall demolition of the Longview smelter, which once employed 900. If liquidation can be forestalled for two or three years, Prescott says, the facility may have far more value than it does today as scrap. And many of those former employees could return to work.

For that to happen, the prices of power, aluminum and alumina -- used to make aluminum -- must rebalance so Northwest smelters can make a profit.

Progress toward Longview's liquidation has been snagged by new interest in some of the plant's assets. A Bankruptcy Court judge in Chicago is scheduled to hear the competing claims today. The Steelworkers need a near miracle.

"We are in a really tough position," Prescott says. "It's a long shot."

Meanwhile, Kaiser's own bankruptcy progresses at its petty pace, with the expectation a much slimmed-down company will emerge next year.

The smelter in Tacoma has already been sold. Other smelters, as well as bauxite and alumina operations, are also on the block. Mead, shut down in December 2000, remains mothballed, with only 12 employees keeping house.

Dan Russell, president of the Mead Steelworkers local, says the plant's movable assets were sold last week over the Internet. Various parties, including a group from China, have toured the facility, where more than 1,000 once worked.

In one building, Russell notes, pieces of the cold mill that used to be a centerpiece of Kaiser's Trentwood rolling mill are being packaged for shipment to their new owner.

Can we expect a vigil here soon, or a wake?

Hydro sets up engineering unit in BTR Park

WMU News, MI - Nov. 13, 2003

KALAMAZOO--A corporate reorganization by Hydro Aluminum North America will bring a new engineering group to Western Michigan University's Business Technology and Research Park in a move designed to consolidate engineering functions for the firm's transportation sector initiatives.

A 10-person staff will open its offices in the park's Pro Line Tech building in mid-December. The unit will be headquarters for the firm's Hydro Aluminum Transportation Components unit and will have engineering operations responsibilities for facilities in Sydney, Ohio, and Fayetteville, Tenn., as well as sales engineering responsibilities for the company's seven other North American sites that produce parts for the transportation industries.

The engineering unit will occupy approximately 2,700 square feet in the Pro Line building, which already is home to three other advanced engineering firms. To round out the unit's capabilities, at least two new engineers will be added to the Hydro staff in the near future.

According to Jack C. Pell, Hydro's vice president and general manager for transportation components, the reorganization has been in the planning stages for 12 months. A successful transition could set the stage for an additional Hydro manufacturing facility in Michigan, possibly in the Kalamazoo area.

"If Transportation Components grows and is successful, there will be opportunities for more work in the future in Michigan," Pell says. "While we'll have operational control for facilities in other states, we chose to stay here, because this is where our market is. In five years, one metric for our success would be the launch of an additional manufacturing facility in Michigan."

In addition to work with the facilities in Ohio and Tennessee, the Transportation Components engineering team will interact with parent company Hydro Aluminum's technical center and its Hydro Aluminum Automotive manufacturing site in Holland, Mich. Research and development and manufacturing at that site focuses on high-end components, such as bumpers, engine cradles and windshield surrounds produced through the company's crash management initiative.

Lance Auyer, director of business development for transportation components, says that as the reorganization evolved, it became clear that it was advantageous for engineering operations to be disassociated from Hydro's Parchment, Mich., facility.

"It became clear to us that Parchment should continue to be what it is--a diverse manufacturing site," Auyer says. He notes that the new engineering unit will be primarily a manufacturing support unit rather than a design or engineering analysis team. For that reason, the proximity of WMU's College of Engineering and Applied Sciences was a special draw when it came time to select a base for the Transportation Components engineering team.

"We would like to consider some technical projects that could be set up more like consulting work for students," Auyer says. "For some time, we've also felt that we'd like to look at sponsoring a senior design project, but that's tough to do when you're not right down the road and don't have easy access to students and faculty."

Pell notes that his company has a long track record of working with students on technical projects. Last summer, for instance, Hydro worked with University of Kentucky students and donated an aluminum frame for that university's solar car, which raced against WMU's Sunseeker in the 2003 American Solar Challenge. Pell says his company also has worked on projects with young engineers from Michigan Technological University.

"Our company is in the process of sponsoring aluminum design expos over the next two years--one specifically aimed at students," Pell says. "That's also something WMU students could get involved in."

"Hydro Aluminum North America absolutely fits in with the mission of the BTR Park," says Bob Miller, WMU associate vice president for community outreach and the University's point person on the park. "There's a real synergy that fits with some of the core competencies of our College of Engineering and Applied Sciences. The company's engineers already have been in conversation with our mechanical and industrial engineering faculty to explore the opportunities that exist."

Hydro Aluminum North America is a leading extruder, the largest drawn tubing producer and the operator of the largest remelt network in North America. It is a unit of Hdro Aluminum, one of the world's three leading integrated aluminum companies. Hydro Aluminum has 27,000 employees in 28 countries and is part of Norsk Hydro ASA, a leading Norwegian industrial company. For more information, visit <>.

WMU's Business Technology and Research Park shares the University's 265-acre Parkview Campus with the College of Engineering and Applied Sciences. Launched in 1999, the park is home to companies in the fields of advanced engineering, information technology and life sciences. The park is one of 11 sites around Michigan designated as a SmartZone by the Michigan Economic Development Corp. and has won commitments from more than 20 partner firms, attracted to the SmartZone by the prospect of collaboration with a major research university and the opportunity to take advantage of business incubator/accelerator services. Information is available at <>.

Media contact: Cheryl Roland, 269 387-8400,

Alcoa takes sales process online

Dayton Business Journal, OH 11/13/03

Pittsburgh-based Alcoa Inc. has partnered with IntraLinks to use virtual data rooms for the sale of multiple properties included in the aluminum producer's previously announced divestiture plan.

Among those properties is the former Stolle Machinery Inc. in Sidney.

Alcoa will use IntraLink's data rooms to manage the due diligence process as well as the marketing and closing phases of the sales.

"To manage multiple physical data rooms in multiple countries would incur prohibitive costs, both in time and money," said Barbara Jeremiah, Alcoa's executive vice president for corporate development. "We know there are many companies -- both U.S. as well as international -- who may be interested in buying these assets but are reluctant to fly halfway around the world, sometimes more than once, to examine the documents."

With IntraLinks, documents are uploaded to a secure virtual data room, where authorized prospective buyers access them at any time through a Web browser.

Documents can by viewed by multiple teams, simultaneously and confidentially.

The Stolle property is located on two parcels, of 55 acres and 35 acres, in Sidney and is being sold for a minimum of $10,000 per acre.

Alcoa also operates Alcoa Home Exteriors in Sidney, where aluminum siding and other home products are manufactured.

© 2003 American City Business Journals Inc.

IFC invests in Chinese aluminum rolling mill 2003-11-13 17:35:04

BEIJING, Nov. 13 (Xinhuanet) -- The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed an agreement to loan 12 million US dollars to Southern Aluminum Industry (China) (SAIC), IFC's representative office in China announced here Thursday.

The loan will partially finance the purchase and installation of an aluminum hot rolling mill, and the refurbishment of SAIC's existing cold rolling and foil mills, said Alim Satria, managing director of SAIC.

China is now the world's second largest producer of aluminum and one of the fastest growing markets for aluminum products.

Satria estimated that the investment would triple SAIC's production capacity, and enable it to produce 40,000 tons of aluminum sheet and 10,000 tons of foil per year.

Assaad Jabre, IFC's vice president of operations, said that the organization regards the project as an example of IFC's commitmentto Chinese companies that are modernizing, becoming more efficient and setting high standards in environmental, social and governance practices.

Statistics from IFC showed that the corporation has injected 1.3 billion US dollars into more than 50 projects in China in the past ten years. Enditem

Chalco-Alcoa jv moves on with power plant set-up

Reuters, 11.13.03, 7:36 AM ET

By Polly Yam

SHANGHAI, Nov 13 (Reuters) - Aluminium Corporation of China Ltd (Chalco) <2600.HK> said on Thursday its planned joint venture with global aluminium giant Alcoa (nyse: AA - news - people) was moving ahead smoothly with the set-up of key power supplies.

The Chinese aluminium giant's chairman Guo Shengkun also said that despite an expected strong rise in China's aluminium output next year, he saw 2004 exports in the primary metal and its alloys matching this year's figure due to a cut in tax rebates.

"The main thing we're working on now is the power supply and the supply of raw material," Guo told Reuters on the sidelines of a metal conference.

In September, the 50-50 joint venture to be formed at Chalco's facility at Pingguo in China's southern region of Guangxi was given a boost by a government decision to allow it to purchase a power plant.

But Guo said no timetable had been set yet for forming the joint venture, which industry officials say had been pushed back from previously planned 2002 as the companies sought to finalise commercial terms and obtain necessary government approval.

"We don't have the timetable for the joint venture, but don't worry, we'll do it," Guo said.

He added that Chalco was conducting a feasibility study for its other venture in Guangxi -- an alumina refinery in Bose that could have a capacity of 1.6 million tonnes per year (tpy). Alumina is the intermediate product needed to make aluminium.

Chinese firms have been building or expanding aluminium plants to tap brisk domestic demand, fuelled by booming expansion in the auto and infrastructure sectors.

Although China, a net aluminium exporter, is seen producing 5.3-5.5 million tonnes of the metal, Guo sees exports in 2004 matching this year's as tax rebate policy changes next year is expected to discourage sales overseas.

But he sees a pickup in aluminium exports before the end of the year, before China trims export tax rebates for primary aluminium and its alloys to eight percent from 15 percent starting January 2004.

In the first nine months, China's primary aluminium exports grew 50.1 percent year on year to 662,595 tonnes, while that for unwrought aluminium alloy rose 17 percent to 142,306 tonnes, custom figures showed.

Looking ahead, Guo did not see any major smelter shutdowns stemming from high power charges in China, though many operations have been hit.

Guo estimated that many smelters would break even at power fees of 0.3-0.35 yuan per kWh and alumina prices of 3,500 yuan ($422.8) a tonne.

But many smelters with polluting technologies would be phased out, Guo said, adding that by 2005, 30 percent of the aluminium capacity in 2002, which official figures say was 5.46 million tonnes per year, would be required by the government to close down.

($18.277 Yuan)

Copyright 2003, Reuters News Service

Pechiney Rolled Products ups some prices 3-5 pct

Reuters, 11.14.03, 11:06 AM ET

NEW YORK, Nov 14 (Reuters) - Aluminum maker Pechiney Rolled Products said it raised prices by 3 to 5 percent on some products, effective with orders received on or after Nov 10 and with all orders scheduled to ship Jan 1, 2004, or later.

The Ravenswood, West Virginia, rolling mill, owned by French aluminum producer Pechiney <PECH.PA>, is lifting prices on 2000-series and 7000-series plate products by 5 percent, it said in a statement.

Pechiney also said that 6061 plate from short lead-time stocks will carry a depot premium of US$.05 a lb.

Pechiney is raising prices on high magnesium alloys 5083, 5086, 5383 and 5454 by 3 percent.

France's Pechiney is divesting the Ravenswood rolling mill as part of the parent company's sale to Canada's Alcan Inc. <AL.TO>.

Copyright 2003, Reuters News Service

BHP upgrades Worsley as demand soars

The West Australian, Australia 11/14/03

By Barry FitzGerald

BHP Billiton's Worsley alumina refinery in the Darling Ranges has emerged as the centrepiece of plans by the group's aluminium division to latch on to the runaway growth in demand from China.

The group revealed yesterday that planning was under way to expand capacity at Worsley by 28 per cent to 4.1 million tonnes a year at a cost of $620 million.

The two-step plan by BHP Billiton follows on from a commitment earlier this year by Alcoa to spend $400 million increasing alumina output from its Pinjarra refinery, also in the Darling Ranges.

Both the BHP Billiton and Alcoa expansions seek to snare near-term growth opportunities in the global business brought on by the huge demand in China for alumina, the key raw material in the production of aluminium.

BHP Billiton said China was a big and growing producer of aluminium, but alumina production was not keeping pace.

It said that raised the question of where the additional alumina, in an increasingly "tight" market for the material, was going to come from. The group said the planned expansion of Worsley would be in two stages.

A study into an expansion to a rate of 3.5 million tonnes a year would be completed in the fourth quarter of the group's 2003-04 financial year, with first production possible by the third quarter of the 2005-06 financial year.

A move to a 4.1 million tonne-a-year rate was also under consideration. The company said that moving to that higher level was constrained by the operation's overland conveyor systems but that the cost would nevertheless be similar to that of the move to the 3.5 million tonne-a-year rate.

The company said that was estimated at $US600 ($830) per annual tonne of increase, although the eventual cost was likely to be less than $US500 per annual tonne of increase.

The group's aluminium marketing director, Rod Kinkead-Weekes, told the briefing the boom in Chinese demand for alumina/aluminium was underpinned by an "absolutely amazing construction boom".

China's aluminium production had grown from 5 per cent of global output in 1990 to more than 20 per cent today and "will still grow", he said.

But the country's alumina output had failed to keep up, with its share of global output growing from 4 per cent to about 10 per cent in the same period.

Mr Kinkead-Weekes said the "divergence" had created a "large opportunity" for the alumina export business.

Smaller capacity expansions are planned by BHP Billiton at its alumina refineries in Brazil sand Surinam. The president of the the group's aluminium division, Mike Salamon, told the briefing that the rapid growth in China could "make one nervous because it is very unlikely to be stable".

He did not know when there might be a change and dismissed recent Western media reports that cracks were appearing. "It's just going gangbusters," he said.

The group's shift in growth focus from aluminium to alumina comes as it sets about bedding down the recent $US1.1 billion expansions of its Hillside (South Africa) and Mozal (Mozambique) aluminium smelters.

Mr Salamon said that there was "still a lot of juice to be squeezed" from the division's $US5.1 billion asset base.

Copyright 2003 West Australian Newspapers Limited
All Rights Reserved.

UES Worst Polluter, According to Study

St Petersburg Times, Russia, Nov 17, 2003

By Maria Danilova STAFF WRITER

MOSCOW - National power provider Unified Energy Systems is the country's worst polluter, according to a new study of 31 top companies.
The annual report, released by the nongovernment Independent Environmental Rating Agency on Monday, ranks the Western Siberian Metallurgical Plant, Norilsk Nickel, Severstal and Russian Aluminum as the next four worst polluters in 2001.

The most environmentally friendly companies are St. Petersburg shipbuilder Severnaya Verf, followed by carmakers GAZ, KamAZ and AvtoVAZ and nuclear fuel supplier TVEL.

The worst polluter on the previous list, which was released last year and ranked only 13 companies, was Norilsk Nickel, while the cleanest company was GAZ.

Companies were rated by how much fresh water they used, the amount of pollution they emitted and the amount of waste - toxic or otherwise - they disposed of, among other things.

"A UES employee leaves an environmental footprint that his 15 times bigger than that of an average Russian employee," Independent Environmental Rating Agency director Alexander Martynov said Monday.

UES said pollution in the electricity sector was part of a global problem. "Unfortunately, emissions into the atmosphere are unavoidable in the energy sector, and this is the case all over the world," UES spokeswoman Tatyana Milyaeva said. "But we pay great attention to environmental issues and work on developing renewable sources of energy to further minimize harmful emissions."

Martynov said companies are gradually becoming more environmentally responsible, pointing out that all 13 companies in the previous list refused to assist researchers while this time around 12 of the 31 companies agreed to help.

In addition, the Tyumen Oil Co. "had the worst environmental indicators last year. But this year the company was readying itself for a merger with British Petroleum and they significantly improved their stance," Martynov said.

"Such environmental ratings can become a real economic force to drive technological and managerial innovations," he said. "We hope that it will affect companies' investment and capitalization ratings and lead them to work on environmental programs to get a better rating than their competitors."

GAZ said it was pleased with is environmentally friendly rating two years in a row. "It is the result of systematic work in this direction," GAZ chief ecologist Sergei Tsymbalov said by telephone. "Last year we spent up to 10 percent of our investment budget on various environmental programs."

CSR/Tomago: Pechiney Has Majority Stake

Yahoo News Wednesday November 19, 8:05 AM

SYDNEY (Dow Jones)--CSR Ltd. (CSR.AU) said Wednesday that its 70%-owned Gove Aluminium finance Ltd. will commit A$75.7 million to the expansion of the Tomago aluminum smelter in the Hunter Valley north of Sydney.

The company said that at an estimate cost of A$210 million, Tomaga will increase annual production by 70,000 metric tons to 530,000 tons.

"The expansion will begin delivering extra aluminum in calendar year 2004 and progressively increase production until full capacity is reached in about three years," CSR said in a statement accompanying its first half profit result.

Tomago is the second largest aluminum smelter in Australia and accounts for about 2% of world production.

It was commissioned in 1983 and currently uses Pechiney's AP18 pot line technology.

CSR said the expansion will see Tomago upgrade to Pechiney AP22 technology, which effectively boosts production by increasing the amperage at the plant.

CSR is billing the expansion as "one of the world's lowest cost projects for increased aluminum capacity."

Gove Aluminium Finance holds a 36.05% stake in Tomago. The balance of the smelter is owned by two subsidiaries of French aluminum giant Pechiney SA with 51.55% and two divisions of Norway's Norsk Hydro ASA's aluminum business with 12.4%.

--- Nicholas Sinclair, Dow Jones Newswires, 612-8235-2957

-Edited by Ian Pemberto

BHP Billiton Alarmed By Low-Cost Chinese Aluminum Tech

Yahoo News Tuesday November 18, 10:28 PM

"We need to get closer to the Chinese speed and cost in developing aluminum smelters," said BHP Billiton's (BHP) Southern African chief operating officer Mohamed Seedat in Johannesburg.

At the moment, the concern by BHP Billiton and others is limited. Less than 10% of China's roughly 5.8 million ton annual aluminum production is exported and the country's rapacious demand for raw materials such as iron ore, copper and alumina is delivering solid profits to miners of those key commodities.

BHP Billiton and rivals Rio Tinto Ltd. (RIO.AU) and Anglo American PLC (AAL.LN) are scrambling to capture more market share in China by ramping up production in such aluminum- and steel-making materials.

But, Mike Salamon, president of BHP Billiton's aluminum business, says the company can't afford to ignore the Chinese smelting methods. He notes that their aluminum smelting costs are 20%-30% below his company's - which he boasts as the world's lowest at the moment.

Moreover, Chinese planning and construction of primary aluminum plants can be completed in 15 months, against BHP Billiton's best-ever forecast delivery of 18 months.

However, he believes that the technology might be more harmful to the environment than BHP Billiton's.

"The question is: can we get to where they are (on cost and development time) or are they going to come to us (on environmental standards)," he said on the sidelines of a media and analyst briefing.

Salamon said that BHP Billiton has held discussions with Chinese businessmen about the technology, but he declined to characterize the nature of the talks.

"We are doing a lot of work" to understand the "rough-and-ready" technology, he told Dow Jones Newswires.

Asked if BHP Billiton might consider purchasing the proprietary technology, Salamon said, "I doubt it." A haziness about its advances and questions about the validity of copyrights in China meant attempts to acquire technology weren't an issue, he said.

But from what he could tell, the Chinese smelting technology did have other drawbacks. Operating costs, appeared to be higher than BHP Billiton's preferred AP-30 smelting technology acquired from France's Pechiney SA (13290.FR).

"We still need to focus on it though," he said.

Company Web site:

Malaysia to build controversial dam

Al-Jazeera, QatarTuesday 18 November 2003
Badawi is not sure whether to privatise the dam project
Malaysia's prime minister has said the government will proceed with the huge Bakun hydroelectric dam, but has not decided whether to privatise the project.

Abd Allah Ahmad Badawi's comments came after tycoon Syed Mokhtar Albukhary made a bid for the project.

His GIIG Capital signed an agreement to buy a 60% stake in dam operator Sarawak Hidro for $249 million.

The government took over the controversial 2400 megawatt Bakun scheme on Borneo island and revived it in 2001 after it was shelved when the main operator fell in debt.

The tycoon's move is aimed at ensuring power supply to a $2 billion aluminum smelter to be developed by GIIG in Sarawak by 2007. GIIG is jointly owned by Syed Mokhtar and Dubai-based Muhammad Ali Alabbar.

'Second thoughts'

"We still want to go ahead with the Bakun project. We don't want to abandon it. The approach we will take has yet to be decided as our officers are still looking at various aspects of the project"

Abd Allah Ahmad Badawi,
Malaysian prime minister

But sources told the Edge weekly newspaper that the agreement had lapsed because GIIG failed to fulfill certain conditions by a 15 October deadline.

They added the government was having "second thoughts" about selling Sarawak Hidro.

Badawi, who is also finance minister, confirmed the government was "not sure yet" whether it would keep control of the mammoth project.

"We still want to go ahead with the Bakun project. We don't want to abandon it. The approach we will take has yet to be decided as our officers are still looking at various aspects of the project," he said on Tuesday.

On plans to sell Sarawak Hidro, he said there had been "no decision yet" and he was waiting for more detailed reports.

Sale on track

"The project must go on but there are some details with regards to the implementation of the project that I'd like to see and to know more about."

Tuesday's Business Times quoted GIIG co-owner Muhammad Ali as saying the company had satisfied all the conditions required and the sale of Sarawak Hidro was on track.

"Everything is moving as scheduled. I am happy with the progress," he told the daily.

"Everything is moving as scheduled. I am happy with the progress"

Muhammad Ali,
GIIG co-owner

But the Edge said it learned other companies had submitted new project proposals to the government.

These included a joint-venture between Malaysian Resources Corp and Sweden's Asea Brown Boveri, which proposed reviving plans to build 1600 megawatt submarine cables to transfer power to peninsular Malaysia.

Environmental problems

Malaysia dropped plans for the world's longest undersea cable network to cut costs after it revived the project.

The total project cost is unclear at this stage, with reports citing more than $2 billion at the time of its revival, but The Edge pegged it at only about $1billion.

The dam, which involves flooding an area the size of Singapore, has attracted fierce criticism for its likely effect on the environment and 10,000 locals who have already been moved out of their homes.

Environmentalists say the dam's capacity far exceeds future power needs in Sarawak.

Billiton's CSG focus on alumina

News24, South Africa 18/11/2003 20:22 - (SA)

Johannesburg - BHP Billiton's aluminium customer sector group (CSG) is turning its focus on expanding its alumina output rather than aluminium smeltering capacity, executive director of the CSG Mike Salamon said on Tuesday at an international investor presentation.

BHP Billiton sees strong growth in demand for alumina rather than the primary aluminium metal.

The change in the group's growth focus is in response to strong demand for both alumina and aluminium from the world's seventh largest economy China, which is growing its gross domestic production at 8% per annum.

The unit cost of BHP Billiton's operations is at the bottom of the global cost curve, Salamon said.

In its 2002/03 financial year, BHP Billiton produced 1.074 million tons of primary aluminium metal, 4.092 million tons alumina and 13.669 million tons of bauxite and by 2004/05 the group is forecasting primary aluminium metal output of 1.300 million tons, 4.3 million tons of alumina and 14 million tons of bauxite.

Bauxite or aluminium oxide is mined before being refined into alumina, the primary feedstock for aluminium, before alumina is smelted to refined form primary aluminium metal.

The group has interests in alumina refining and aluminium smeltering in Australia, South America and southern Africa.

BHP Billiton's key alumina mine is the Worsley alumina refinery and bauxite mine where alumina output is set to increase from under three million tons per annum to as much as 3.5 million tons per annum.

"Worsley is our stand out asset," Salamon said.

The feasibility study on the increase in Worsley's output to 3.5 million tons is likely to be ready by the fourth quarter of the 2004 financial year.

The group will only divert extra alumina output to the open market once the price of alumina is above $500 a ton, Salamon said.

"Our aluminium smeltering costs are the best in the world with the Mozambique Mozal smelter and the Richards Bay Hillside smelter the stand out assets," he added.

Looking ahead, BHP Billiton is looking to expand smeltering capacity at Mozal, Hillside and Bayside, the second Richards Bay smelter.

Further expansion in capacity will depend on securing further capacity from power utility Eskom.

The development of the planned Pechiney-led Coega smelter could have a big impact on the amount of power available to BHP Billiton to expand its existing smelters.

"We have had a short discussion with Eskom regarding power. The big issue is what will happen with Coega and the extent of the power available in the region" BHP Billiton aluminium CEO Mahomed Seedat said.

Regarding the Mozal smelter, Seedat said BHP Billiton was talking to oil and chemical group Sasol regarding using natural gas from Sasol's Mozambique gas pipeline.

BHP Billiton will also focus on finding bauxite deposits that aren't currently available and not under the group's control.

Quebec aluminum workers vote on joining new union

Reuters, 11.19.03, 12:42 PM ET

MONTREAL, Nov 19 (Reuters) - Some 5,800 workers at Alcan Inc. <AL.TO> and other aluminum makers in Quebec will vote on Wednesday on whether to join the Canadian Auto Workers union.

Results of the vote are expected to be unveiled on Thursday afternoon, union officials said.

Members of the 30-year-old Federation des Syndicats du Secteur Aluminium will decide whether to dissolve their union and join the CAW, Canada's largest private-sector union, as a new bargaining unit.

The aluminum workers' union is currently affiliated with the United Steelworkers.

Workers voting on Wednesday include those in primary production and related facilities at Alcan's works in Jonquiere, Quebec. Union members at a Norsk Hydro <NHY.OL> facility in the province and Alcoa Inc.'s (nyse: AA - news - people) Becancour aluminum plant will also vote on the proposition.

Union officials said the outcome of the vote will not affect current labor contracts at any of the facilities.

The proposed merger with the CAW is aimed at solidifying the workers' bargaining position under the umbrella of a larger union, officials told Reuters.

The CAW currently represents more than 4,100 workers in the primary production of aluminum, nickel, copper and steel in Canada.

($1$1.30 Canadian)

Copyright 2003, Reuters News Service

Jamalco considers $27 b investment

Jamaica Observer, Jamaica Saturday, November 22, 2003
STEVEN JACKSON, Observer staff reporter

JAMALCO could invest up to US$450 million (J$27 billion) over the next four years to double capacity of its alumina refinery, but Government says that its partner in the refinery, the American firm, Alcoa, may decide to put its cash elsewhere with a more stable and competitive business environment.

Alcoa (Aluminium Company of America) owns 50 per cent of the Halse Hall, Clarendon plant which is now being upgraded with a US$110 million investment, to increase the current capacity of 1.05 million tonnes a year by a quarter.

But according to Dr Carlton Davis, the chairman of the Jamaica Bauxite Institute (JBI) and one of the industry's foremost experts, the partners are also considering further investments that would take production to 2.3 million tonnes by 2007.

"Almost all of the investment will be taken up by Alcoa," said Davis, who is also the Cabinet Secretary and chairman of the vehicle that the Jamaica government uses to hold its stake in Jamalco refinery.

But he warned that the Jamalco investment could be derailed if Jamaica could not deliver a "stable industrial relations (environment), more competitive construction costs and competitive energy prices".

Jamaica, whose bauxite industry earns the country about US$700 million a year, has substantially increased its competitive position in the world's bauxite/almumina sector since the mid 1990s through a series of initiatives that reduced strikes, encouraged longer pay contracts and provided incentives to workers for productivity.

The island is now in the mid level on the world lead table of efficiency in alumina production. But newly emerging markets such as China and the states of the former Soviet Union, as well as long-time producer Australia are competing hard for new investment with offers of a more efficient environment.

As part of its own response Jamaica has been offering companies a restructured tax regime, with regular income tax on profit replacing the levy on production, in exchange for investment in plant expansion.

It was on the basis of this adjustment that Alcoa this year agreed to its project to increase production at the Jamalco facility

Alpart, a joint venture between the American Aluminium firm, Kaiser and Norway's Nosk Hydro is considering a project to increase its capacity from 1.45 million tonnes to two million tonnes by 2007. It last year invested US$21 million in retrofitting to lift capacity by 200,000 tonnes.

Windalco, which acquired the Aluminium Company of Canada's (Alcan) two Jamaica refineries is looking to move the combined capacity of these plants by 50 per cent to 1.5 million tonnes.

The tax initiative apart, Jamaican officials hope that its proposed project to convert the energy source for the sector from oil to liquefied natural gas would bring down energy costs to the sector.

A feasibility study for an LNG terminal in Jamaica has been done and Ambassador Anthony Hylton, the former energy minister who is driving the project for Prime Minister P J Patterson, has been attempting to woo capital to the scheme and identify natural gas sources.

Metals giants gear for Dragon

The Australian November 22, 2003 By Andrew Trounson

RIO Tinto and BHP Billiton are set to go head-to-head in boosting alumina production to feed rising demand fuelled by China.

The two rivals are also pulling out all the stops to boost their Australian iron ore capacity to keep up with the world's fastest growing economy.

In a presentation in London on Thursday, Rio Tinto head of aluminium Sam Walsh said the company could dramatically boost its alumina production to 10 million tonnes a year within the decade, up from just under two million tonnes in 2002.

Spearheading that is Rio Tinto's new $US675 million ($937 million) Comalco alumina refinery now under construction in Gladstone, Queensland, and due to be in production by late 2004.

"The start-up of our new alumina refinery is in sight and, with the benefit of a strong market, we are already contemplating future expansions," Mr Walsh said.

The refinery will have an initial annual capacity of 1.4 million tonnes but further expansions could raise that to over four million tonnes.

"This year alumina consumption has increased by about 6.5 per cent and refineries have ramped up production to meet demand but we are still seeing a very tight market led primarily by Chinese demand," Mr Walsh said.

He said spot alumina prices were averaging between $US280 and $US320 a tonne, compared with around $US150 a tonne a year ago.

Only last week, BHP Billiton signalled a new focus on alumina with plans for expanding its Worsley refinery in Western Australia, as well as expansions in Brazil and Suriname.

Rio chief executive Leigh Clifford said the company is close to giving the final go ahead to a major expansion of Rio's Western Australian iron ore rail and port capacity that would raise annual capacity at its Hamersley operation to 114 million from 74 million tonnes.

He said the iron ore market is "extremely strong" and he is expecting a rise in annual contract prices to Japan for the year starting April, 2004.

Mr Clifford said he was comfortable with signs that Chinese iron ore buyers are prepared to band together to negotiate prices rather than simply rely on prices set at talks led by Japanese and European buyers.

"We are quite happy to adapt to however the customer wishes to progress," he said.

Mr Clifford was upbeat on the long term outlook for China's commodity demand, though he noted the Chinese Government is trying to rein in the country's runaway growth. Goldmans Sachs expects China's Gross Domestic Product to grow by 8.7 per cent this year, accelerating to 9.5 per cent in 2004.

"Our view would be that China is likely to grow robustly, but not necessarily at the rapid rate we have seen of late," Mr Clifford said.

"In the commodities we are selling, we have seen no slack," he said.

US group may invest US$4bil in Johor

The Star, Malaysia 23 Nov 2003

BY ZAZALI MUSA in Johor Baru
JOHOR could be the recipient of a US$4bil investment next year if a consortium led by US-based Charus Development decides to set up an aluminium smelting plant there.

The state's investment arm Johor Corp (JCorp) has been negotiating with the multinational group, which includes investors from Hong Kong and China, for about two months and a decision by Charus is expected by year-end favouring a site at the Tanjung Langsat industrial park.

This follows the decision by the consortium to look at Johor after it failed to obtain a suitable site close to Tenaga Nasional Bhd's Janamanjung power station in Perak. It is understood the decision to study a Johor location was made because of the state's closer proximity to Kalimantan, from where coal can be sourced to power the plant.

JCorp chief executive officer Tan Sri Muhammad Ali said the chances were good.

“Looking at the progress of the negotiations, we are very confident of clinching the deal,” he said.

Ali said work on the aluminium plant, likely to take at least four years, could start almost immediately after the agreement was signed. Although the main investor was Charus, technology to run the plant would come from the Chinese party in the consortium, he said.

Cabinet nod for halt in Nalco selloff sought

Business Standard, India

Abhilasha, Mamata Singh in New Delhi
Published : November 26, 2003

The Planning Commission has directed the ministry of mines to seek the Cabinet’s approval on the decision to halt work on the disinvestment of National Aluminum Company (Nalco).

At the recent quarterly performance review, it was pointed out that the disinvestment ministry could not stop the selloff process in the public sector mining company on the basis of a public announcement made by the Prime Minister.

“Since the decision to disinvest the company was taken by the Cabinet Committee on Disinvestment (CCD), the decision to halt the process has to be cleared by the same committee,” government officials told Business Standard.

They pointed out that the disinvestment ministry could not drop or delay the sale option — strategic or through market offering — without the Cabinet’s approval.

Alcoa venture moves on 2 overseas expansions

Pittsburgh Business Times, PA 11/25/03

With a plant expansion in Jamaica now complete, Alcoa World Alumina and Chemicals is moving ahead with expansions in Suriname and Australia that would cost more than $300 million, according to Alcoa Inc., which owns 60 percent of the company.

Alcoa World Alumina and Chemicals (AWAC) finished a 250,000 metric ton expansion at its Jamalco alumina refinery in Clarendon, Jamaica, according to Alcoa, which is based in Pittsburgh. The other 40 percent of AWAC is owned by Australia's Alumina Ltd.

The Jamalco refinery is itself a joint venture between AWAC and the government of Jamaica. The expansion was announced in April 2002 as part of an agreement to invest $115 million to grow the refinery. In return, the government is removing a decades-old levy on bauxite from Jamalco.

The expansion, which grew the refinery by 25 percent to 1.25 million metric tons per year, combined with removal of the levy will lower costs at Jamalco by about 30 percent, according to Alcoa.

Meanwhile, AWAC and a partner, BHP Billiton, have broken ground on a $65 million expansion to an alumina refinery in Paranam, Suriname. The expansion will grow the refinery by 250,000 metric tons and is scheduled to be completed by July 2005, according to Alcoa.

AWAC owns 55 percent of the Paranam plant, and BHP Billiton, based in Melbourne, Australia, owns the remainder. BHP Billiton is also the parent company of Alumina Ltd.

Plans by AWAC to expand its Pinjarra alumina refinery in Western Australia are moving forward, too, Alcoa said. AWAC announced the expansion in July and proposed to increase capacity at the facility by 600,000 metric tons.

Engineering work is under way, according to Alcoa. The expansion will proceed if final government approvals are given and market conditions warrant, and could be completed by 2005.

The project would cost about $270 million and could require a construction workforce of up to 1,000, according to Alcoa, which is the world's largest aluminum producer.

© 2003 American City Business Journals Inc.

Alcoa/Expansion: Breaks Ground On Suriname Refinery

Yahoo News Tuesday November 25, 10:46 PM

By Beth Demain Reigber Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Alcoa Inc. (AA) said it is making progress with plans to expand output capacity of alumina, the basic component in making aluminum metal.

It's part of a move to meet rising demand for alumina, even as the Pittsburgh aluminum producer continues making divestments and cutting high-cost capacity elswhere in the company.

The world's biggest aluminum maker said in a statement obtained by Dow Jones Newswires and expected to be released later Tuesday, that its alliance with Australia's Alumina Ltd. (AWC) - Alcoa World Alumina and Chemicals, or AWAC - has completed a 250,000 metric ton expansion of its Jamalco alumina refinery ahead of schedule. It was originally set for completion early next year. Alcoa holds 60% of AWAC.

The expansion of Jamalco, a 50-50 partnership between AWAC and the government of Jamaica, results in the lifting of a levy on bauxite from Jamalco, Alcoa said. Alumina is made from mined bauxite.

In all, the move will lower Jamalco's costs by about 30% and add around 25% capacity. It's part of an agreement unveiled in April 2002, involving a $115 million investment, Alcoa said.

Alumina has been an important bright spot for Alcoa. A strong alumina market and a focus on costs helped sharply boost Alcoa's third-quarter earnings.

Elsewhere, a Suriname alumina refinery, Paranam, which is partly owned by Alcoa affiliates, has broken ground on a planned $65 million expansion. It's expected to be finished by July 2005 and add 250,000 metric tons of capacity, bringing total capacity to about 2.2 million metric tons a year.

A separate AWAC project to upgrade the Pinjarra alumina refinery in western Australia is still awaiting "formal environmental approval" from the state government, Alcoa added. That expansion, to cost about $270 million, would add some 600,000 metric tons to the current 3.4 million metric tons of annual alumina capacity.

Bauxite piles to leave base

Biloxi Sun Herald, MS Tue, Nov. 25, 2003

After three years, tons of ore will be removed completely

GULFPORT - By the first of next week, the bauxite piles at the Naval Construction Battalion Center will be a memory.

Three years of loading and hauling have whittled down the two 35-foot-high piles that contained 800,000 tons and 465,000 tons of aluminum ore.

A small pile of 8,000 to 10,000 tons of the red earth remained Monday.

"We're really pushing," said Will Edds, project manager for Kanorado Corp. of Topeka, Kan., which is removing the bauxite.

The two piles of ore originally were 35 feet high and 2,600 feet long, covering 24 acres on the 1,098-acre base. A $12.8 million, 500,000-square-foot Army Reserve warehouse is under construction at the site of one of the piles.

Since February 2000, some 25 to 38 trucks a day have hauled up to 128 dump-truck loads a day to Theodore, Ala., where the ore has been shipped by barge to a plant in Point Comfort, Texas. There, it is converted into aluminum.

Four tons of bauxite converts into one ton of aluminum, much of which is now recycled. Bauxite is not toxic.

The low-grade ore was given to the United States in 1948 as a war debt payment by the Netherlands East Indies, now known as Indonesia. Alcoa bought the ore in 2000 for $1 million. Hauling it away has cost about $6 million.

The Seabee Center has undertaken more than $110 million in building projects, including dorms, married housing and warehouses.

The base has announced no new building projects, but removing the bauxite has created an area near the railroad where new warehouses could be built.

China denies economy is overheating

Financial Times (subscription), UK -November 25 2003 21:38

By Richard McGregor and James Kynge in Beijing
China's top economic officials have rejected claims that the economy is overheating, saying monetary and regulatory policies brought in recently are reining in credit growth and overcapacity in targeted industries.

Wu Xiaoling, vice-governor of the People's Bank of China, the central bank, told the Financial Times the assertion that the economy was overheating was "a very simple description".

"China is a transitional economy and we are faced with many institutional and structural problems," she said. Her words made it clear that Beijing has no plans to slam the brakes on credit growth or raise domestic interest rates in the near future, Chinese economists said. It was more likely that the People's Bank would continue its open market operations to fine-tune short term rates, they added.

"We are trying to guard against inflation and also to guard against a further slide into deflation because further over- capacity can bring deflation in the future," Ms Wu said.

The consumer price index rose just 0.7 per cent in the first nine months of the year but jumped 1.8 per cent year on year in October, the fastest rate for six years. But Ms Wu said credit growth was already responding to the central bank's efforts to tighten liquidity by issuing bills, a strategy that had also succeeded in curbing pressure on the currency from inflows of "hot" money.

Renminbi-denominated lending grew by Rmb61.6bn ($7.4bn) in October, Rmb10.6bn less than in the year-earlier period, a slight easing that has raised the central bank's hopes that its attempts to mop up liquidity in the interbank market are proving effective.

Ms Wu's view was echoed by other top officials.

Zhang Xiaoqiang, vice-chairman of the National Development & Reform Commission, China's top economic policy body, told the FT: "We think the general economic situation is rather healthy. It is what we have been hoping for, in fact, for several years."

But Ms Wu and Mr Zhang singled out a number of sectors - steel, property, cement, cars and aluminium - that Beijing feared might be adding capacity too quickly.

The NDRC, which used to dictate investment levels, said it was no longer issuing orders on which companies could or could not invest. Instead, Mr Zhang said, the emphasis had shifted to providing information to banks and companies so that they can make their own decisions.

Zhivilo Companies Withdraw $2.4 Billion in Claims Against Russian Aluminum

Yahoo News (press release) Wednesday November 26, 4:02 pm ET

MOSCOW, Nov. 26 /PRNewswire/ -- The United States Court of Appeals for the Second Circuit in New York approved the withdrawal of appeals by Base Metal Trading S.A. and Alucoal Holdings Ltd. against the Novokuznetsk Aluminum factory (NKAZ) and RUSAL.

In March 2003 the Federal District Court for the Southern District of New York dismissed the suit of several trading companies controlled by Michael Zhivilo, a former director and major shareholder of NKAZ. The suit was initially filed in December 2000. It alleged that NKAZ, RUSAL, and other defendants had colluded to take over NKAZ in violation of the civil provisions of the U.S. RICO statute.

The appeals withdrawn by Base Metal Trading S.A. and Alucoal Holdings Ltd. totaled $2.4 billion. Two other companies controlled by Zhivilo, MIKOM and Base Metal Trading Ltd., are continuing an appeal. The claims of those two companies total less than $40 million.

"This is the ultimate vindication," said RUSAL's Chairman, Oleg Deripaska. "Not only has the case been dismissed by the Federal Court in New York, but now even plaintiffs themselves are afraid to go through with the appeal process. More than 90% of the case has been withdrawn. It proves that the plaintiffs had no case to begin with and that they filed in New York only to publish defamatory statements in an effort to extort a considerable sum of money from RUSAL."

"The plaintiffs' tactic was to sue us in many jurisdictions, generate adverse publicity and cause us to incur huge legal costs," said Deripaska. "Nevertheless, we defended ourselves and we will continue to win wherever they sue us."

RUSAL's lead counsel, Michael Burrows, said of the RICO case: "From the beginning, it was a transparent attempt to grab headlines and generate negative publicity. Plaintiffs' lurid descriptions of corruption, money laundering and mafia involvement are false and were made without a shred of evidence to support them. The Plaintiffs came to the United States only after they had been defeated in numerous legal actions in Russia."

RUSAL, a world leader in aluminum production, was formed in March 2000 from the merger of a number of the largest smelters and other aluminum producers located in the CIS. The company accounts for 75% of Russia's primary aluminum output and 10% of the global primary aluminum output. RUSAL is a fully vertically integrated company with a complete production cycle from bauxite mining and the production of raw materials, to the production of primary metal, semi-products and based-based end products. RUSAL is headquartered in Moscow.

For further information:

RusAl Buys Into Rival

Moscow Times, Russia Monday, Dec. 1, 2003. Page 6

MOSCOW (Reuters) -- The country's top aluminum producer, Russian Aluminum, said Friday it had bought at an auction a 14 percent government stake in Metallurg, controlled by RusAl's rival, No. 2 aluminum company SUAL.

"We confirm the acquisition of the Metallurg stake," a RusAl spokeswoman said. She declined further comment.

Metallurg includes the country's smallest aluminum smelter, Volkhov, and the Pikalyovo refinery of intermediate product alumina, located in the northwest.

In November 2002, RusAl bought a 32 percent stake in the Nadvoitsy aluminum smelter, also controlled by SUAL, but later sold it to the rival company.

A spokesman for SUAL, which jointly with its ally Sevzapprom owns over 80 percent of Metallurg, declined to say whether the company intended to buy the stake from RusAl.

"SUAL is ready to continue constructive cooperation with all the [Metallurg] shareholders within the framework of the current legislation," Alexei Prokhorov said