AluNews - March 2004

Expert says future of Ormet may be bright

By Tom Hrach, 2-Mar-2004

The bankruptcy and layoffs at the largest single employer in southeast Ohio will affect people around the region, but the future may not be so bleak for the company.

That was the consensus from two workers and at least one economic development expert, who says Ormet Primary Aluminum has the potential to come back and be strong again.

"The bottom line is that there are a lot of forces beyond the company's control, but I feel it will emerge," said Mike Jacoby, the governor's regional economic development representative. "There will be some painful times ahead for the company, but I feel it will come out of this."

Last week, a subsidiary of Ormet announced it would lay off 80 workers at one of its two plants near Hannibal in Monroe County. In total, the Ormet plants near Hannibal employ more than 1,700 workers. That is the largest single employer in any of the eight counties Jacoby represents.

As an economic development representative for southeast Ohio, Jacoby said he is concerned about the future of Ormet, which announced in January it had filed for bankruptcy protection. Monroe County has a population of just 15,180, which means the plants are the lifeblood of the county's economy.

Jacoby said Monroe County is one of the few in southeast Ohio with an influx of workers from other places, rather than an exodus of workers.

But the future may not be so bleak because Jacoby says the company produces a product, aluminum, that has a continued demand, and there are not many places remaining that produce it. It means if the company can reorganize, it could emerge stronger than ever and keep many of the jobs at the two plants.

"Ormet likely will go through a difficult period, but we've been working with them and trying to assist with a training program from the state. We will continue to do that," Jacoby said.

The layoffs will go into effect May 1, and workers say they remain optimistic.

"There's a lot of people who feel this was a ploy for negotiating purposes, but I feel the company officials are serious about the problems - otherwise they would not have opened their books," said Steve McHenry, 48, of Bloomfield. "I feel that the company should be able to work its way out of this."

McHenry is one of the many people from Washington County who go to work every day at one of the Ormet plants near Hannibal. He has worked at the plant for 26 years, and he said keeping the company strong is important for Washington County, too.

One issue for workers is that the members of United Steelworkers Local 5724 are continuing to work under the terms of an expired contract. The bankruptcy and layoff announcement has created uncertainty for workers.

"The problem is that Ormet is not relaying to us about how they plan to bounce back. We are kind of lost," said Ronnie Blatt of New Martinsvile, W.Va., a member of the union's grievance committee. "This is a new situation for the members of our local, and we are taking it one step at a time.

Blatt has worked at the plant for 25 years, and his union, United Steelworkers Local 5724, has about 1,000 members at the plant

US$ 2 billion interest in Ghana`s bauxite

Accra Mail, Ghana Tuesday, March 02, 2004

Mrs. Cecilia Bannerman, Minister of Mines has disclosed that a Dutch organisation, BHP Billiton, one of the largest mining companies has shown interest in the Nyinahin bauxite deposits in the Ashanti Region.

She said the company has applied for prospecting license for bauxite in both the Kibi bauxite area in Eastern Region and Nyinahin.

The Minister was answering a question in parliament put to her by Mr. Akwasi Dante-Afriyie, NPP-Atwima Mponua, regarding the plans the Ministry has to exploit the Nyinahin bauxite deposits.

Mrs. Bannerman said the company "is currently carrying out the necessary environmental studies that will lead to the grant of an environmental permit and ultimately the prospecting licenses.

This grant will enable BHP Billiton carry out the necessary exploration investigations for the project. Then, if the investigations prove successful, the company intends to spend over 2 billion US dollars over a period of 10 to 15 years on exploiting the bauxite, refining it into alumina and also developing the necessary infrastructure."

The Minister said feasibility studies indicated that the production of alumina using the Nyinahin deposits as major raw materials was technically feasible.

She said investors who reviewed the project over the last two decades wanted to exploit the bauxite for use in their alumina refineries in their home countries.

"Since independence, one of the government's policies for the mining sector has been to promote the development of an integrated aluminium industry.

That is mining of the country's bauxite deposits, refining bauxite into alumina, smelting the alumina into primary aluminium and using it for manufacture of finished aluminium products in the country," the Minister explained.

Mr. Dante-Afriyie wanted to know which of the two bauxite areas Kibi and Nyinahin, had the largest deposits. The Minister said Nyinahin was the largest.

Chalco to get green light for JV with Alcoa

Financial Times, UK March 2 2004

By James Kynge in Beijing

Aluminium Corporation of China (Chalco), one of the Hong Kong stockmarket's top performers last year, has received notification from Beijing that the Chinese government will "very quickly" approve plans for a large joint venture with Alcoa, the US giant, a senior Chalco executive said.

Word of top-level approval for the long-delayed joint venture comes as a boost to Chalco, which is trying to increase its production of both alumina and aluminium this year to take advantage of hefty profit margins.

Under a 50:50 joint venture agreement, Alcoa plans to invest $500m to produce 400,000 tonnes of alumina and 130,000 tonnes of aluminium a year at Chalco's existing plant in Pingguo, Guangxi Zhuang Autonomous Region in southern China.

In a planned second phase, the joint venture would produce another 400,000 tonnes of alumina a year. But it is not clear when this second phase may go ahead.

"We have got a clear message from the central government that they will approve our (Alcoa joint venture) project very quickly," said the Chalco executive.

The joint venture's approval had been expected to come before the end of last year but disagreements over the price of local electricity reportedly caused delays. This issue has now been resolved, the executive said.

Chalco plans to increase its output of aluminium to 1.5m tonnes in 2005, up from 760,000 tonnes in 2003, and is about to embark on an aggressive programme of acquisitions to meet this target.

Industry analysts and officials in Beijing have warned of overcapacity in China's aluminium sector but Chalco executives brushed such concerns aside.

Rival smelters that have closed down in the past few months have done so because they were unable to bear the high prices of power and alumina, but Chalco enjoys several low-cost advantages that make expansion a wise move, executives said.

The company's profit margin from selling one tonne of finished aluminium was around Rmb10,000 ($1,200), executives said. Aside from scale, one key cost advantage is that Chalco processes much of the alumina that it then uses to make aluminium.

This year the company plans to boost alumina or aluminium capacity in the northern province of Shanxi and in the northwestern province of Qinghai. It is also searching for the more efficient among smaller smelters to acquire.

In Vietnam, Chalco is one of several Chinese firms to have signed a memorandum of understanding to extract bauxite reserves from Dak Nong district in the Vietnamese central highlands. The plan is to build a refinery near the mine and a railway linking it to a port to ship the alumina to China.

PM sees US$80-m expansion in bauxite earnings

Jamaica Observer, Jamaica - Mar 2, 2004

Observer Business Reporter

Wednesday, March 03, 2004

Prime minister PJ Patterson yesterday said that with the recent expansions in the bauxite sector, the industry will generate US$80 million more per year in earnings for Jamaica.

Jamalco, of which the Jamaican government is major stakeholder owner, recently completed a 25 per cent expansion of its plant, giving it an additional annual capacity of 250,000 tons of bauxite.

Some US$115 million was spent on the upgrade.

Additionally, Alpart last year invested US$21 million in retrofitting, to lift its annual bauxite capacity by 200,000 tons.

"These expansions will generate additional foreign exchange of US$80 million per annum," Patterson told journalists at the Port of Kingston where he commissioned into operation new x-ray machines.

"Even larger-scale expansions are on their way," he added. "And the existence of modern ports with the requisite security systems will be an integral part of these developments."

Last November, Dr Carlton Davis, the chairman of the Jamaica Bauxite Institute (JBI) and one of the industry's foremost experts, said that Jamalco could invest up to US$450 million (J$27 billion) over the next four years to double the capacity of its alumina refinery.

But the government has since said that its partner in the refinery, the American firm, Alcoa, may decide to put its cash in other jurisdictions 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. This will increase the current capacity of 1.05 million tonnes a year by a quarter.

Jamaica, whose bauxite industry grosses about US$700 million each 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.

Alcan study predicts China won't flood aluminum supply market, Canada Thursday, March 04, 2004

ALLAN SWIFT Canadian Press

MONTREAL (CP) - China is unlikely to flood the world with excess aluminum and drive down prices, says a new study released Thursday by Alcan Inc.

The study concludes that while China may remain a net exporter of unwrought aluminum for the next one or two years, the country will likely revert to a balanced position - using as much as it produces - by mid-decade. "The likelihood of China constituting a serious destabilizing force in the global primary aluminum market continues to recede," Dick Evans, executive vice-president, said at a conference.

Many industry analysts, making an analogy to a glut of aluminum from Russia in the early 1990s that flooded the market, saw China's fast-growing aluminum production in the past two years as a major threat to world prices.

However, Evans said Alcan has always believed China is unlikely to be a major exporter even though it has now become the world's largest producer.

"China's production rate actually stabilized over the last six months; this evidence supports our assertion that it is tending back toward balance," Evans said later in an interview.

Evans said China won't flood the world market because of a parallel growth in Chinese demand for the light metal, driven by rising per-capita incomes, urbanization trends and manufacturing growth. These factors are unlikely to abate, he added.

Several North American companies have expanded their presence in China to take advantage of the growth, including Alcan (TSX:AL), which recently signed a joint venture with two Chinese companies that, once approved by authorities, gives Alcan a 50 per cent stake in a new smelter.

"China is the world's largest aluminum producer," said Evans. "We expect this year or next it will become the largest consumer."

In addition, China's production has started to be curtailed by rising alumina (raw aluminum), power and financial costs, Evans said.

Industry analyst Chuck Bradford agreed that although Chinese production has grown rapidly, most of it is being consumed within China.

Bradford, an independent analyst in New York, said China will have to continue to export some aluminum in order to pay for imported alumina, whose prices on the spot market "have gone crazy."

Bradford said a bigger factor in world prices is major capacity that has come on stream in South Africa in the past two years, almost all of it geared for export.

He added Chinese production is expected to reach 6.5 million tonnes this year, compared with 5.5 million tonnes in 2003 and 4.3 million the year before.

Evans said the current high alumina price is unlikely to affect the joint venture, since most of Alcan's alumina is bought on long-term contracts. He added that some alumina will become available with the closure of an old smelter in Saguenay, Que.

Alcan's interests in China also include an integrated extrusion and fabrication joint venture, an aluminum-composite panel facility and four packaging plants.

© Copyright 2004 The Canadian Press

Alcoa to Get China's Go-ahead on Aluminum Tie-up (Update2)

Bloomberg March 5, 2004

Alcoa Inc., the world's biggest aluminum producer, will gain permission this month to invest in a 1.6 million ton-a-year alumina venture with Aluminum Corp. of China Ltd., after a four-year wait, a Chinese official said.

``Approval will come no later than this month'' for the investment in Aluminum Corp.'s complex in Guangxi province, said Luo Tiejun, a State Development Reform Commission official. Alcoa's Alain Belda, who has been seeking the alliance since 2001, will visit China on March 12.

The $500 million expansion of the Guangxi plant would link Pittsburgh-based Alcoa with China's monopoly producer of alumina, used to make aluminum, at a time soaring demand in the nation for drinks cans, cables and car parts has forced the price of the material to double in a year. Shortages of alumina and power forced more than 15 Chinese aluminum producers to shut down.

``Domestic smelters are starved of alumina,'' said Zhou Ming, an analyst with Shanghai-based Guotai Junan Securities Co. ``Limited supplies of the material are crimping growth and may turn China into a net importer again next year.''

Higher alumina prices made Chalco the second-best performer on the 32-member Hang Seng China Enterprises Index over the past year. The company's shares have more than quadrupled to HK$6.55.


Participation in the venture by Alcoa, which owns 8 percent of Chalco, was held up by a disagreement over the planned costs of power to the plant, said Wang Feihong, an analyst with Beijing Antaike Information Development Co., a research affiliate of the nation's non-ferrous association. The two companies in January said they had reached agreement on the price and were waiting government approval.

China, which produces a fifth of the world's aluminum, may become a net importer for the first time since 2001.

Alcoa had originally planned to invest $250 million to help boost annual alumina capacity at China Aluminum's Pingguo complex to 900,000 metric tons of alumina by the end of last year and increase aluminum capacity to 350,000 tons by next year.

Since Alcoa's initial 2001 plan, Hong Kong-listed Chalco has forged ahead with the expansion on its own. The two now plan to increase capacity to 1.6 million tons, according to Antaike.

The price of aluminum for delivery in three months on the London Metal Exchange rose 18 percent over the past year to a record high of $1,748 a ton on March 1. The price for May delivery on the Shanghai Futures Exchange is the equivalent of $2,134 a ton.


Prices of Alumina have surged from $220 a ton in March last year to $450 a ton now, according to Metal Bulletin. Chalco's shares have risen almost fivefold in the past year. Alcoa's stock is up 85 percent, giving the company a market vale of $32.3 billion, more than three times the size of Chalco, the world's third-biggest aluminum company by market value.

Belda will travel to China with other senior executives, Alcoa's China chief representative Ren Bingyan said. Alcoa is also working on a rolled aluminum plant in northeast province of Liaoning with China International Trust & Investment Corp.

Output growth may slow to 12 percent this year to 6.3 million tons, from a 25 percent rise a year earlier, Antaike's Wang estimated. Consumption is expected to grow 18 percent to 5.9 million tons.

Lost Output

China lost 180,000 metric tons in aluminum capacity over the past four months, and 400,000 tons more aluminum capacity is at risk should alumina and power shortage continue, Wang said in an interview.

Chalco was forced to cut production of alumina at its Pingguo plant by more than a third because a drought caused a shortage of power at a local hydroelectric plant, corporate secretary Liu Qiang said.

The gap between China's aluminum capacity and output widened to 2 million tons last year from 800,000 tons in 2001, prompting the government to seek ways to curb expansion.

State-owned Aluminum Corp. of China, or Chinalco, the parent of Chalco, plans to spend 10 billion yuan ($1.2 billion) this year buying local aluminum smelters with a combined capacity of as much as 300,000 tons and on increasing alumina capacity, the China Daily reported, citing Vice President Xiong Weiping.

Alcoa is increasingly taking production overseas, chief says

Pittsburgh Tribune-Review, PA - Thursday, March 4, 2004

By Dave Copeland

Alcoa Inc. will continue to see more growth in manufacturing facilities outside of the United States, the company's top executive said Wednesday.

"We will continue to see more of our facilities located internationally than in the United States," Chairman and Chief Executive Alain Belda said at the aluminum maker's annual investors meeting in New York City. "That reflects the direction the business is heading in."

The comments echo those made at a similar meeting a year ago. Higher domestic costs for electricity -- which can account for up to 40 percent of the cost in making aluminum -- has forced production offshore.

Despite steadily decreasing business in the company's aluminum can segment and the lingering effects of the Sept. 11, 2001, terrorist attacks on the company's aerospace business, Alcoa is projecting organic growth between $1.4 billion and $2 billion in annual revenues by 2007. And Belda said the company is "always looking" for growth opportunities outside of the company through mergers.

Australian ship builders unwelcome in US waters

The Age, Australia March 5, 2004

By Ian Porter

The free trade agreement with the US will not open the American market to Australian ship building - an industry that leads the world and is super-competitive.

Australia's construction of aluminium hulls is unmatched, but US buyers, particularly the Defence Department, are not allowed to buy imported ships.

This blocks out Perth's Austal and Tasmania's Incat at a time when the US armed forces are showing a lot of interest in aluminium ships for quick troop movement.

The trade agreement changes in the automotive area are likely to make little difference to existing trade levels. The American vehicle industry is protected by non-tariff barriers, such as union pressure that, for example, limited the number of Holden Monaros being shipped to the US to 18,000 a year.

Utilities are extremely popular in the US, and General Motors and Ford are more likely to want to make them there. Australian factories are too small to supply the volume the US requires.

The changes in the textile, clothing and footwear industry are almost irrelevant as both countries face far stronger competition from Asian producers. The products brought in from America are premium branded lines and their price is not affected by tariffs.

The Australian aviation fabrication industry appears to be under threat from a deal to drop all requirements for local content in Government contracts.

However, the industry says these have had no practical effect for some time and that it has been living off the strong relationships it has built with US aircraft manufacturers.

Alcoa Targets Increased Alumina Production

Reuters, United States Fri Mar 5, 2004 12:47 PM ET

By James Paton

NEW YORK (Reuters) - Aluminum producer Alcoa Inc. hopes to more than double production of alumina at sites in Brazil and Jamaica in projects costing about $1.35 billion, a top company executive said Friday.

Alcoa, seeing strong long-term consumption of aluminum whose uses run the gamut from cars to construction to aerospace, seeks to raise production capacity at two refineries by a total of about 3.4 million tonnes a year, Bernt Reitan, head of Alcoa's primary metals business, said in an interview with Reuters.

"The alumina situation is very, very tight, and that's driving prices higher," he said. "And we've have had a look at the market long term and think it is appropriate to expand."

Alcoa is also looking at Australia, Reitan said. It's pondering raising output of alumina, the main ingredient in producing aluminum, by between 1 million and 1.5 million tonnes a year at Australian refineries.

The company, with total worldwide alumina production capacity of about 14 million tonnes a year, aims to decide on the expansion program in Brazil and Jamaica in the second half of this year, and to complete the projects in 2007, he said. It has major ownership stakes in the two refineries.

The proposed expansion follows previously announced plans in Jamaica, Suriname and Australia to raise capacity by 1.1 million tonnes a year.

A surging construction market in China, an expected uptick in the aerospace sector, as well as automakers using more aluminum as they make more and more cars, are increasing the world's appetite for aluminum, Reitan said.

If the proposals win government approval, the alumina refinery in Sao Luis, Brazil, would have a capacity of 3.3 million tonnes a year. The Clarendon, Jamaica, site would have capacity of 2.65 million tonnes a year. The company expects Brazil and Jamaica to approve the projects, Reitan said.

Alcoa owns about 35 percent of the Alumar refinery in Brazil, while its Alcoa World Alumina and Chemicals affiliate has nearly 19 percent. The rest is held by BHP Billiton, Alumina Ltd. and Alcan Inc. .

Exactly half of the Jamalco refinery in Jamaica is owned by the Alcoa World Alumina and Chemicals affiliate.

© Reuters 2004. All Rights Reserved.

China to slow growth to focus on array of problems, premier says

Kansas City Star, MO 5-mar-2004


Knight Ridder Newspapers

BEIJING - (KRT) - China needs to ease its foot off the economic gas pedal and deal with a growing array of social, economic and rural problems before they worsen, Premier Wen Jiabao said in a candid address Friday at the opening session of the National People's Congress.

China will catch its breath from last year's blazing 9.1 percent economic growth and address "long-standing and deep-seated problems" frustrating the lives of many of its 1.3 billion citizens, Wen said.

Wen, who became premier a year ago, was giving the annual state-of-the-country address for the first time. It was largely a detailed analysis of surging social inequalities. Hundreds of millions of Chinese lag behind as other parts of the country have become affluent.

"We are clearly aware that many difficulties and problems remain on our way ahead," Wen said, addressing the roughly 3,000 members of the largely ceremonial legislature.

Life is improving rapidly for many urban coastal residents, and urban incomes on average are triple of those in the countryside. The growing income gap and threats of unrest in poor areas have troubled the government for years.

"Rural incomes have grown too slowly," Wen said. "Development in different regions of the country is not balanced. The income gap is too wide among some members of society, and pressure on resources and the environment is mounting."

In rural areas, "widespread illegal appropriation of farmland" has angered farmers, he said, and "people have strong complaints about the cost and availability of schooling and medical treatment."

Wen said the government would boost farmers' incomes by phasing out an agricultural tax, scrapping it completely within five years. He called agriculture "the foundation of the national economy" and said "governments at all levels must invest more in agriculture, rural areas and farmers."

Some Communist Party officials, he said, are "wasteful, extravagant and fraudulent, and sometimes even corrupt," adding that the government was undertaking the "arduous task . . . to rectify itself and fight corruption."

In 2004, Wen said, China will slow a rise in its gross domestic product, which measures economic output, to "around 7 percent" and focus on the sustainable use of resources, easing pressure on the environment.

China is the world's fastest-growing big economy, gobbling one-third of global steel and cement consumption last year.

Foreign business executives in China say breakneck growth has caused some sectors of the economy to hit their limit. Huge flows of imported raw materials choke the system.

"The ports are full. The railways are loaded, and sometimes you can't move your product," said Joerg Wuttke, an executive with the German chemical concern BASF.

"China just sucks up iron ore, aluminum, everything. It's unbelievable," said Wuttke, who's also chairman of the German Chamber of Commerce in China.

Energy shortfalls increasingly plague industry in China. Power shortages amount to 40 gigawatts, "equivalent to the entire power production of Australia," Wuttke said. Overcoming that shortfall will take an investment of $100 billion.

© 2004, Knight Ridder/Tribune Information Services.

Jackson aluminum jobs in peril

Charleston Sunday Gazette Mail, WV March 07, 2004

Wise tries to flank Justice Dept. merger order through federal courts


Gov. Bob Wise is asking the U.S. District Court for the District of Columbia to allow West Virginia to intervene in a federal civil action about the pending merger of Alcan Aluminum Corp. and Pechiney Rolled Products LLC.

Wise opposes one section in a September U.S. Justice Department order that requires Alcan to sell an aluminum rolling mill in Ravenswood, currently operated by Pechiney, after the merger is complete.

Alcan, based in Montreal, Canada, offered $4.6 billion to purchase Pechiney, based in Paris, France.

Wise fears the sale will result in the closing of two Ravenswood plants — once operated by Kaiser Aluminum — and the loss of 1,700 manufacturing jobs. The Pechiney plant also has 900 retirees collecting pensions and health benefits.

“The stakes are so high. We’re trying to do everything we can to challenge the Justice Department,” Wise said Saturday. “We are not contesting the Alcan acquisition, only the requirement that Alcan has to divest itself of the Ravenswood facility. It is not based on sound reasoning.

“We have to challenge it. We had already filed public comments. We also need to have intervener status,” Wise said. “My great concern is that either you won’t find a purchaser for the plant at all or find someone that does not have an interest in the overall plant.”

State officials estimate the closing of the Pechiney aluminum rolling plant would cause the loss of 1,000 jobs and $286 million in annual revenues. But a Pechiney closing is likely to force the neighboring Century Aluminum plant to shut down, as well. Century produces 375 million pounds of aluminum a year and sells 300 million pounds of that total to Pechiney.

If Pechiney and Century close, the state will lose 1,700 manufacturing jobs and $486 million in revenue. Jackson County, where the two mills are located, would lose $3.35 million in taxes each year.

The Justice Department has not responded to previous legal arguments filed by the state and other interested parties.

In September, Assistant U.S. Attorney General R. Hewitt Pate argued that the sale is necessary to preserve competition.

“The divestiture of Pechiney’s Ravenswood mill will preserve competition for brazing sheet sold in North America and will allow motor-vehicle parts manufacturers to benefit from Alcan’s aggressive competition,” Pate said.

Brazing sheet is a composite aluminum material with a core surrounded on one or both sides by an aluminum alloy that has a slightly lower melting temperature. Brazing sheet is a strong, leak-proof product used by automobile manufacturers for radiators, oil coolers, transmissions, air conditioners and power steering units.

Today, brazing sheet is less than a quarter of all aluminum products made at the Pechiney plant.

Pechiney produces about 320 million pounds of aluminum sheet, plate and coil a year, which is sold to the aerospace, transportation and building-products industries. About 72 million pounds is brazing sheet, or about 22.5 percent of total production. Alcan also makes brazing sheet at its plants.

Wise’s legal complaint, which was filed Friday, said the Justice Department’s “proposed final judgment does not require the acquirer to make its commitments for any length of time. How long the acquirer must operate the plant is not specified. The acquirer need not give assurance for sustained operation.”

The complaint also argues that the Ravenswood plant cannot operate successfully if it makes brazing-sheet products alone.

Any company that purchased the plant “would have to possess the financing, experience, facilities and know-how to produce and sell all of the products presently manufactured at the plant, including aluminum and brazing sheet,” the complaint argues.

Wise said, “The state needs to fight this as hard as it can, which is what we are doing. Maybe it is easy in the ethereal world of Washington, D.C., to crank out abstract judgments.

“It is something else when you are in Jackson County, looking at a plant that employs a thousand people and understand what that means to the community. Management and the union are together on this.”

The United Steelworkers of America represents workers at both Ravenswood plants.

Alcan Inc. is the world’s second largest fully integrated aluminum producer that also mines aluminum ores. In 2002, Alcan reported $12.5 billion in worldwide sales.

Pechiney also is one of the world’s top aluminum producers. In 2002, Pechiney reported sales of about $11.3 billion, including more than $100 million in brazing sheet at the Ravenswood aluminum rolling mill.

“The public comment period is now closed,” Wise said Saturday. “The court could make a decision very quickly. I was afraid the public comments already filed would be ignored.

"I want to make sure we are involved in every stage of the legal fight and that we can at least file an amicus brief. Otherwise, we have to rely on the Justice Department, and that is not where we want to be.”

An amicus brief is statement in support of whatever case is before the court at a given time.

Wise also said he is particularly fearful that “if no bona fide purchaser is found in a few months, we will have a plant that, under the court decrees, can be sold at very low costs to someone who wouldn’t operate it as it should be.”

The state’s legal petitions also note that the owners of the Pechiney plant have not been able to operate profitably.

“Unprofitable plants are often bought by purchasers who intend to sell off assets and go out of business,” Wise said. “New owners also might attempt to avoid pension obligations undertaken by Pechiney and its predecessor owners.”

To contact staff writer Paul J. Nyden, use e-mail or call 348-5164.

$41 billion expansion at Jamalco

Jamaica Observer, Jamaica Sunday, March 07, 2004

Alcoa yesterday announced a J$41.4-billion (US$690 million) expansion for its alumina refinery at Halse Hall, in an agreement that will see the Jamaica Government dilute its half stake in the Clarendon facility by 30 per cent.

"This is something that we have been looking at for some time," said Dr Carlton Davis, the chairman of Clarendon Alumina Production (CAP), the company that holds Jamaica's stake in the refinery.

"The expansion will put the plant in a more competitive posture," Davis said.

Clarendon Alumina will have to find an estimated US$1 million to finance its portion of the expansion.

DAVIS. this is something that we have been looking at for some time

The expansion, to be done over the next three years, will move the capacity of the refinery from the current 1.25 million metric tonnes a year to 2.65 million tonnes, and according to Alcoa officials, make it among the world's most efficient.

Up to 1,500 skilled workers will be required during the expansion period, officials said.

Yesterday's announcement follows on the Government's restructuring, more than a year ago, of taxation arrangements for the bauxite/alumina industry to provide incentives for new investment. The major element of that change was to move to a system of a straight tax on profit in the bauxite/alumina industry rather than a levy on production that was introduced 30 years ago. There was also an adjustment to the structure of the royalty paid for the industry's raw material, bauxite.

Previously, in the mid-1990s, an initiative between the Government, the companies and trade unions allowed for more market-friendly labour practices in the sector, a move aimed at pushing Jamaica's alumina refineries from near the bottom to the mid rank on the league table of world efficiency.

Last year, Alcoa, which manages the plant, completed a US$115-million, 250,000 tonne expansion of the Jamalco refinery and this, along with the revised tax arrangements, lowered costs at the refinery by approximately 30 per cent, Alcoa officials said.

The Government first got a seven per cent stake in Alcoa in the mid-1970s when Michael Manley's socialist administration argued that the country should own a share in a strategic sector that was based on a finite resource. That stake was pushed to 50 per cent in 1985 when, in the face of a world recession, Alcoa decided to close the Jamaican plant because of soft demand for alumina and aluminium. At the time, the Edward Seaga Government decided to keep the plant open and subsequently restructured the relationship.

The upgrading of the Jamalco facility is part of a US$1.3-billion investment initiative being led by Alcoa, which also includes the development of the Juruti bauxite reserve in Brazil, as part of a global strategy to meet the growing worldwide demand for aluminium.

Kevin Lowery, director of corporate communications at Alcoa's headquarters in Pittsburgh, Pennsylvania, told the Government's Jamaica Information Service that Alcoa's decision to include Jamaica in the development effort was based in part on the co-operation of the island's Government, as well as the fact that Jamalco "has an outstanding workforce".

"That puts us in an unbelievably low-cost position," Lowery said. "It is much more efficient for us to expand a facility that is really kicking on all cylinders like Jamalco is, versus trying to build a whole new facility."

Last year, Jamaica produced 3.8 million tonnes of alumina, a record, and grossed US$800 million from the sector.

It is expected that the Jamalco expansion, once completed, will add another US$300 million a year in gross earnings.

Dennis Morrison, chief technical director in the Cabinet Office and former senior director at the Jamaica Bauxite Institute, said that expansion will bring substantial economic activity in areas where the project takes place.

"This is the largest expansion that any industry in Jamaica would have seen since the 1960s," Morrison said.

But while the Jamalco expansion is the largest project on the drawing board, it is not the only one.

For instance, the Alpart alumina refinery in Nain, St Elizabeth is being expanded to move its capacity from 1.5 million tonnes to 1.65 million tonnes.

Although Alpart's troubled major shareholder, Kaiser Aluminium, has put its 65 per cent stake in the refinery on the market, it is expected that any new owner will push ahead with plans to get capacity up to 2.0 million tonnes.

Windalco, which two years ago bought the two Aluminium Company of Canada (Alcan) refineries here, with combined capacity of 1.25 million tonnes, has expressed an interest in the Alpart finery.

Jamaican officials believe that the island's bauxite reserves can comfortably carry a peak production capacity of about six million tonnes of alumina for the next half century or so.

"The trick is to use the earnings from bauxite to prepare the next generation for new things," said Davis.

Ormet Rolling Mill Posts Consecutive Record Years

Wheeling News Register, WV 3/8/04

HANNIBAL - A loyal and expanding customer base has propelled Ormet Aluminum Mill Products to achieve consecutive record-breaking production years at the Hannibal Rolling Mill while maintaining significant safety records, the company announced Friday.

Ormet President and Chief Operating Officer Michael Williams said that 2003 was a year of record production volume for the mill, with a net pack production of 384.4 million pounds, breaking the previous volume record of 382.6 million pounds set in 2002.

Williams cited a strong, supportive customer base and a dedicated work force as the primary drivers of the milestone production performance.

"The Ormet work force is to be congratulated for this record production," Williams said. "This is important because our customers view the Hannibal mill as a vital resource in satisfying their diverse sheet requirements. Even when overall market requirements for sheet products are down, as was the case in 2003, we were able to grow market share thanks to our expanding and existing loyal customer base."

That expanding market share has the Hannibal Rolling Mill on track to produce another net pack record of 390.0 million pounds in 2004.

In addition to the rolling mill's overall performance record, the mill cast house ramped up production to new levels. The cast house surpassed its 2002 record of 552.0 million pounds of prime ingot produced to cast its best mark of 559.7 million pounds in 2003. Most recently, the mill's heavy gauge leveling line shattered a nearly 10-year-old production record. On Feb. 22, 2004, the HGLL ran 302,657 pounds per shift, smashing the 1994 achievement of 265,319.

Williams said the recent record performances of the Hannibal Rolling Mill magnify the focus Ormet has set on continuous improvement as the company strengthens its overall operational and financial performance while it moves through its financial reorganization.

Included in overall operational performance, and of extreme performance to management, is Ormet's goal to provide a safe work environment at its manufacturing facilities. That commitment can be seen in a reduction of injury/illness cases at the Hannibal Rolling Mill. While achieving new production records in 2003, the mill also was able to accomplish a 10 percent reduction in total injury cases compared to 2002. "This is a significant achievement, especially in light of increases and record-setting production," Williams said.

Ormet Corporation employs approximately 2,500 people through its subsidiaries, principally including Ormet Primary Aluminum Corporation and Ormet Aluminum Mill Products Corporation. The company operates seven facilities in five states and produces high-quality aluminum products for the fabrication, extrusion and conversion markets.

Alcan ramping up UK aluminium output

Reuters, 03.09.04, 8:27 AM ET

LONDON, March 9 (Reuters) - Canada's Alcan Inc <AL.TO> is set to ramp up production at its UK smelters after a $28 million expansion project, a company official said on Tuesday.

"Commissioning trials have gone extremely well and we have started including the newly designed anodes at both the Lochaber and Lynemouth smelters," John McCabe, corporate affairs manager at Alcan Smelting and Power UK, a wholly-owned unit of Montreal-based Alcan Inc, said.

"What we need to do now is start increasing amperage through the pot rooms and that will allow us to increase hot metal production," he said.

The company has fitted new, larger carbon anodes in the pots or electrolytic cells used to produce aluminium from the intermediate product alumina.

The company said the new anodes would increase metal production and make the plant more energy efficient.

McCabe said production at the Lynemouth plant in northeast England would be in the order of 175,000 tonnes in 2005, but he was unable to give an indication of what the increase would be in 2004.

Before the project capacity was around 160,000 tonnes per year.

"We will be increasing amperage slowly over a period of weeks, At Lynemouth we are looking at amperage of 185 kiloamps," he said.

He said before the new anodes were installed current draw was 173 kiloamps.

McCabe said that the company was energy self-sufficient and operated two hydropower operations totalling 80 megawatts in the Scottish Highlands supplying Lochaber and a 420 megawatt coal burning plant feeding Lynemouth.

McCabe said that the smelters' primary metal output remained within Alcan, with most of it going to the Norf rolling mill in Germany, while the rest was processed in the UK.

Copyright 2004, Reuters News Service

$2Bln SUAL Deal Held

Moscow Times, Russia 09-mar-2004

LONDON (Bloomberg)-- Canada's Alcan Inc., the world's second-biggest aluminum producer, will not decide if it will get involved in a $2 billion Russian project until it has tied up all the details of its purchase of France's Pechiney.

Alcan bought Pechiney last month, making it second only to Alcoa Inc. in output. Pechiney had been holding talks with SUAL Group, Russia's biggest bauxite producer, on developing a production complex around SUAL's mine for bauxite, an ore used to make aluminum, in northeastern Russia.

"We had a list of projects and Pechiney had a list," said Joseph Singerman, a Montreal-based Alcan spokesman. "When Pechiney is fully integrated we'll choose the best ones."

SUAL said last week it wants to resume talks with Pechiney and hopes to collaborate with Alcoa or another Western producer. The company said it may sell shares or debt to finance the smelting and refining complex.

Alcan has no production facilities in Russia, only representatives in Moscow. It has a packaging plant in Kazakhstan.

N.Hydro eyes control of Alpart, seeks partner-source

Reuters, 03.10.04, 8:33 AM ET

By Declan Conway

LONDON, March 10 (Reuters) - Norwegian industrial group Norsk Hydro <NHY.OL> is set to launch a bid for majority ownership of Jamaican aluminium refiners Alumina Partners of Jamaica (Alpart), while seeking a joint venture partner to help boost output, a senior union source at the plant told Reuters.

Norsk Hydro owns 35 percent of Alpart's bauxite mine and alumina refinery and has the right of first refusal to buy Alpart's remaining shares from Kaiser Aluminum Corp. <KLUCQ.OB>

Kaiser is looking to emerge from bankruptcy proceedings and in January signed an agreement to sell its 65 percent stake in Alpart to Swiss metals trader Glencore for a minimum of $160 million.

"Hydro would be prepared to take up the 65 percent stake in Alpart providing it can find a willing partner to take its existing shares," the source told Reuters from Jamaica.

"Hydro wants the sole right in running Alpart and said they would be willing to put more money into the plant only if Alpart (Kaiser) gave them a bigger say in running the plant.

"Hydro is still taking visitors to the plants, bringing some Chinese people from Minmetals in October and again in January, although they brought some Russians at one stage."

A Chinese industry source said state-controlled Minmetals had been unsuccessful in its bid to buy Kaiser's stake in Alpart. The source said Minmetals had held talks with Norsk Hydro and further negotiations were pending, while Minmetals awaited a price offer from the Norwegian company.

A Minmetals official said on Wednesday the company would make an announcement in due course about its involvement with Kaiser. But he did not specify whether he was referring to the Alpart refinery or to Minmetals' alumina supply contract with Kaiser, which remains valid after the two parties settled out of court recently following Kaiser's motion to nullify the deal.


Kaiser, which filed for Chapter 11 bankruptcy in February 2002, had asked the bankruptcy court in Delaware to reject or nullify alumina supply agreements with several companies covering at least 800,000 tonnes annually, of which traders said 500,000 were destined for China.

Kaiser said cancelling the contracts would have enabled it to sell alumina at higher prices and speed up its financial recovery.

Trading sources said Kaiser had agreed with Minmetals to receive $63 a tonne more than the contracted price of about $160 a tonne for 2004 shipments and $20 more in 2005. Spot prices have soared to currently more than $500 a tonne.

The deal between Kaiser and Glencore is subject to approval by the United States bankruptcy court for the district of Delaware, which Kaiser expected to happen on March 22.

However, Hydro will have 30 days after Kaiser's receipt of court approval to decide to buy Kaiser's stake at a price matching the agreement, a spokesman at Hydro said.

"We will consider all options," he told Reuters.

If Hydro exercised its right, Glencore would be entitled to reimbursement of expenses incurred in negotiating the agreement up to a limit of $250,000. Glencore was not immediately available for comment.

Hydro has a major share -- about 35 percent -- in Brazilian alumina refiner Alunorte, which is seeking to secure alternative supplies of bauxite to reduce the risks involved in an expansion project.

One potential supplier could be Jamaica, where there are many bauxite and alumina plants, including Alpart.

Alunorte's recently started work on a project to boost alumina capacity in Para state to 4.2 million tonnes a year from 2.4 million by early 2006.

In January, Kaiser also concluded discussions with Unistar Holdings Inc, a distributor to China, about creating a supply pact through which Unistar would distribute about 1.1 million tonnes of Jamaican alumina to Minmetals between 2003 and 2007.

Copyright 2004, Reuters News Service

World alumina output seen rising to meet demand

Reuters, 03.10.04, 2:20 PM ET

By Peter Blackburn

RIO DE JANEIRO, Brazil (Reuters) - Rapidly rising world aluminum demand, notably from China, will require a major increase in alumina and bauxite production capacity, mining and metals consultants told an international seminar in Brazil Wednesday.

Bauxite ore is refined into alumina, which is smelted into aluminum, a metal used in products ranging from beverage cans to spacecraft.

"Demand for metallurgical alumina continues to grow at an ever-increasing rate," said Harold Christensen, senior alumina consultant to U.S. engineering company Bechtel Corp., noting a 6 percent rise in output to 54.6 million tonnes in 2003.

The spot price for alumina has jumped to more than $460 a tonne, from around $135 at the end of 2002, as Chinese-led demand has outstripped supply.

U.K.-based CRU International Ltd.'s senior consultant Nikhil Shah said that an astonishing rise in Chinese aluminum output to an estimated 5.5 million tonnes in 2003, from 1.2 million in 1993, has sapped world alumina supplies.

Chinese plans that could raise output to 7.7 million tonnes in 2005 would exert additional supply pressure.

"It seems that there is not enough alumina to feed all of the planned aluminum production in 2004 and 2005," he told the seminar.


Christensen forecast that alumina demand would rise by some 4 percent annually to 2010, requiring world production to rise by 17 million tonnes a year.

Roughly 8 million tonnes of the required expansion would come from existing "brownfield" refineries, which are cheaper and quicker to execute than new "greenfield" projects.

Christensen estimated the average cost of a brownfield project at $450-$600 a tonne, compared with a greenfield cost of $750-$900 a tonne.

"Australia will continue to dominate production as it's the lowest cost producer," he said, estimating that Australian expansion costs were more than $100 a tonne below the global average.

Australia is seen producing an extra 11 million tonnes a year of alumina by 2010, with the remaining 6 million coming from countries such as China, Brazil, India and Saudi Arabia.

Australia's six operating alumina refineries plus a new refinery being built by Rio Tinto unit Comalco are expected to undergo major expansions by 2010, Christensen said, adding that a new 1.4-million-tonne-a-year refinery is also likely.


In order to satisfy strong alumina demand, bauxite output would have to grow by up to 3 percent a year in the foreseeable future, said Alistair Beck, principal bauxite consultant for Canada-based Aluminpro (Aluminium Industry Professionals Inc).

Beck forecast that bauxite output needed to double to more than 300 million tonnes over the next 30 years and that this would require an investment of some $4 billion.

"There will be growth in all regions, but a large part of it will be in ... West Africa," he said, noting huge reserves in Guinea, where the ore is accessible and of good quality.

Beck noted advanced plans for a 2.6-million-tonne-a-year alumina refinery to start production in the Boke region of Guinea in 2008 and forecast that the country could produce up to 15 million tonnes of alumina within 20 years.

Guinea is the world's No. 2 bauxite producer with 12 percent of global output, compared with Australia's 37 percent.

Copyright 2004, Reuters News Service

Alcan's Chinese smelter investment approved

FROM CANADIAN PRESS Toronto Star, Canada 10-mar-2004

MONTREAL — Alcan Inc. has won approvals from the Chinese government to proceed with a $150 million (U.S.) investment for a 50 per cent interest in a Chinese smelter, the Montreal-based aluminum company said today.

The project with the Qingtonxia Aluminum Co. and the Ningxia Electric Power Development and Investment Co. Ltd. was originally announced in October.

Under the agreement. Alcan will invest about $150 million for 50 per cent participation and a secure power supply for a 150-kilotonne smelter in the China's Ningxia autonomous region.

The joint venture also gives Alcan the option to acquire, through additional investment, up to 80 per cent of a new 250-kilotonne potline, already under construction.

The joint venture will be effective on or about April 1.

Alcan is a multinational aluminum and packaging company that employs 88,000 people in 63 countries.

Shares in Alcan (TSX: AL) traded down $1.42 at $58.57 this morning on the Toronto stock market.

Alcan and Qingtonxia Aluminum Company Finalise Joint Venture

PRNewswire UK (press release), UK 10-mar-2004

BEIJING, China and MONTREAL, Canada, March 10 /PRNewswire/ --

- Alcan will invest approximately US$150 million for a 50% stake in world-class smelter in China

Alcan Inc. (NYSE, TSX: AL) announced today it has secured the necessary regulatory and government approvals to move forward with its previously announced definitive joint venture agreement with the Qingtonxia Aluminum Company ("QTX") and the Ningxia Electric Power Development and Investment Co. Ltd. ("NEI").

"Alcan is proud to be associated with QTX and NEI, a joint venture that will further enhance our position in China, the world's fastest growing economy and the world's second largest consumer of unwrought aluminum. For Alcan this joint-venture represents the best value-creating opportunity within the Primary Metal Group," said Cynthia Carroll, President of Alcan's Primary Metal Group. "We will work closely with QTX, NEI and the local authorities to ensure the successful operation of this sustainable world- class smelter."

Under the agreement Alcan will invest approximately US $150 million for a 50-per-cent participation and for a secure power supply in an existing 150-kilotonne modern pre-bake smelter located in the Ningxia autonomous region, in the Peoples' Republic of China.

The agreement provides for the joint venture to obtain long-term access to dedicated power on competitive terms sufficient to meet the energy requirements of the smelter. The joint venture also gives Alcan a substantial operating role and the option to acquire, through additional investment, up to 80 per cent of a new 250-kilotonne potline, already under construction.

Alcan and QTX have been working together since June 2002 to develop this joint venture project. The joint venture will be effective on or about April 1, 2004.

Alcan is a multinational, market-driven company and a global leader in aluminum and packaging, as well as aluminum recycling. With world-class operations in primary aluminum, fabricated aluminum as well as flexible and specialty packaging, aerospace applications, bauxite mining and alumina processing, today's Alcan is even better positioned to meet and exceed its customers' needs for innovative solutions and service. Alcan employs 88,000 people and has operating facilities in 63 countries.

Distributed by PR Newswire on behalf of Alcan Inc

Gov't Won't Buy VALCO

GhanaWeb, Ghana Thursday, 11 March 2004

With barely a month to go before the Committee of Energy Experts submits its recommendations on Volta Aluminum Company (VALCO), top government sources say it is unlikely that government will go ahead to buy the beleaguered company.

Even though the committee is yet to make official statement, sources close to the committee have hinted that the government would be asked to consider providing guarantee for private sector led private acquisition.

Furthermore, members of the special Committee of Energy and Aluminum Experts set up by Energy Minister, Paa Kwesi Nduom have reached a critical stage of their work and they are not going to give blind fold.

By the end of his month, the Committee is expected to issue is findings, advising government whether to buy VALCO or not and also to recommend to government the mode of purchase.

Among other issue being considered are VALCO’s balance sheet and how strategic VALCO is to the economy of aluminum industry in the country and within the sub-region. Other worrying aspects of the purchase that the committee is concerned about is the conflict in government’s policy of non-direct involvement in the operations of corporate bodies in favour of the private sector.

The operations of the company had witnessed a downturn in the past decade, forcing it to reduce its production capacity from over 200,000 tons per annum by more than 80 per cent. Kaiser gave government until March to make an offer or express interest, but initially offered VALCO at between $30million to $80million dollars with a flexible payment system.

If government does not buy VALCO, Kaiser will opt for the next step of its strategy. That is to pack back and baggage and probably sell its assets to individual investors under a concession package. This decision will result in the total collapse of the 50-year old smelter and users of VALCO products will rely totally on imports.


On track in China, Alcoa to build plant in Romania

Pittsburgh Business Times, PA 12-Mar-2004

Alcoa Inc. on Friday said it expected the Chinese government to approve a proposed joint venture. But first, Pittsburgh-based Alcoa will open a manufacturing facility in Romania.

Alcoa, the world's largest aluminum producer, said its European Extruded & End Products division would build a plant in Arad County, in northwest Romania, to produce extruded parts for the building and construction markets.

The facility is expected to be ready in 2005 and employ about 200, according to Alcoa, which has around 120,000 workers in 41 countries. The company did not disclose the cost to build the plant in Romania.

It will be Alcoa's third facility in that country, though. Another Alcoa business, Alcoa Fujikura, has two automotive-parts plants there.

"Without exception, the information, openness and willing to work with Alcoa were critical to our decision to begin operations here," Philippe Royer, president of the European Extrusions division, said in a written statement.

On the other side of the globe, Alcoa said it was having success with Chinese officials, too.

The company said it expected regulators there to approve its proposed joint venture with the Aluminum Corporation of China Ltd, or Chalco, to build an alumina-aluminum facility in Pingguo.

As part of that alliance, Alcoa and Chalco have formed a 50-50 joint venture at Chalco's existing facility in Pingguo and "committed" to increase refining and smelting capacities at the plant over the next several years.

In addition, Alcoa is working with China International Trust & Investment. They are partners in Bohai Aluminum and are working to expand a rolling mill in Liaoning Province. Alcoa said it expected to invest about $200 million in the facility.

Alcoa is looking to benefit from the growth of China's aluminum market, which is the fastest growing in the world.

Based on recent discussions with Chalco and representatives of the Chinese government, Alcoa said it expects to finalize the arrangements necessary to obtain government approvals for the projects this year. No United States regulatory approvals are required, the company said.

Chalco is China's largest aluminum producer.

© 2004 American City Business Journals Inc.

Aluminium firm RusAl bids for Jamaica's Alpart

Reuters, 03.12.04, 8:33 AM ET

By Aleksandras Budrys

MOSCOW, March 12 (Reuters) - Russia's top aluminium producer Russian Aluminium (RusAl) said on Friday it had launched a bid to buy a 65 percent stake in top Jamaican producer of feed for aluminium smelting, Alpart, from Kaiser Aluminum Corp <KLUCQ.OB>.

"Yes, we're taking part in this tender," a RusAl spokeswoman said. She declined to give details.

Alpart owns a mine of raw material bauxite and a refinery of intermediate product alumina. It produced 1.53 million tonnes of alumina in 2003. Roughly two tonnes of alumina are needed to produce one tonne of aluminium.

Kaiser, which is looking to emerge from bankruptcy proceedings, signed an agreement to sell its 65 percent stake in Alpart to Swiss metals trader Glencore for a minimum $160 million.

A senior union source at Alpart told Reuters on Wednesday that Norwegian industrial group North Hydro <NHY.OL>, which owns the remaining 35 percent, was set to launch a bid for the 65 percent and was seeking a joint venture partner to boost output.

A Chinese industry source said state-controlled Minmetals had been unsuccessful in its bid to buy Kaiser's stake in Alpart. However, Minmetals had held talks with Norsk Hydro and further negotiations were pending while Minmetals awaited a price offer from the Norwegian company, the source said.

The deal between Kaiser and Glencore is subject to approval by the United States bankruptcy court for the district of Delaware, which is expected on March 22.

However, Hydro, which has the right of first refusal, will have 30 days after Kaiser's receipt of court approval to decide to buy Kaiser's stake at a price matching the agreement, a spokesman at Hydro said.

Privately owned RusAl has said it intends to become the world's top aluminium producer in about a decade, through acquiring new assets and upgrading existing ones.

RusAl produced 2.59 million tonnes of aluminium in 2003, but only 60 percent of alumina it consumed came from RusAl-controlled sources. (Additional reporting by Declan Conway in London)

Copyright 2004, Reuters

Chinese To Help Ghana Buy VALCO?

GhanaWeb, Ghana 12-MAR-2004

The Chinese government has agreed to give Ghana financial support to purchase the Volta Aluminum Company (VALCO). It says a high-powered Chinese trade team is already in the country to hold discussions with the government and work out the details.

The delegation led by the Chinese Deputy Minister of Commerce, Wei Jianguo, includes eight entrepreneurs, 10 public officials and the general Manager of China’s biggest aluminum company.

At a ceremony in Accra yesterday, the two countries signed $3.75, million interest-free agreements for the purchase.

Mr. Jianguo said VALCO was a big investment and therefore his government needed a lot of information and documentation on the matter.

Finance and Economic Planning Minister, Mr. Yaw Osafo Maafo, on his part urged the Chinese government to invest in Ghana’s roads and railways as well as in the telecommunication sector to make Ghana Telecom the best in W/Africa.


Chinese business delegation has expressed interest to invest in the Ghanaian economy, especially in the areas of cocoa and oil palm processing for export.

It also decided to explore areas of investment in solar energy and communication and technology.

The delegation, comprising 16 captains of Chinese industry, has decided to explore the possibility of securing an exclusive industrial enclave for Chinese businesses in Ghana.

The delegation, led by Mr. Wei Jianguo, the Chinese Vice-Minister of Commerce, expressed this interest and optimism when it called on President Kufuor at the Castle, Osu, and yesterday.


Showa Denko KK (SDK) to Change Production Setup of Aluminum Extrusions

Japan Corporate News, Japan

Tokyo, Japan, Mar 15, 2004 - (JCN Newswire) - Showa Denko K.K. (SDK) has decided to sell its idle extruder at Sakai Plant to Yasuda Kinzoku Kogyo Co., Ltd. (Yasuda) and entrust Yasuda with production of 200 tons a month of large-sized aluminum extrusions as from May. The extruder, which has been suspended since March 2003, will be operated at its original location through the lease of relevant land and building.

The market for large-sized aluminum extrusions has been growing rapidly since the autumn of last year for such applications as semiconductor manufacturing equipment, various industrial machinery and plasma display panels. SDK currently has a backlog of orders equivalent to three months' production with delivery period of approximately two months, which is double the normal period.

SDK will focus on the production of extremely large-sized extrusions based on 15-inch diameter billets, using a 3,900-ton extruder at the Oyama Plant. SDK will also focus on precision extrusions that require sophisticated skills. For general large-sized extrusions based on 12-inch billets, SDK will hereafter entrust their production to Yasuda. Through these measures, SDK will increase its supply capacity by approximately 20% and meet growing customer demands for large-sized extrusions.

As for products outside the scope of the tolling arrangement, Yasuda will sell them through Showa Denko Aluminum Trading K.K. All aluminum billets for the production will be supplied by SDK.

[Profile of Yasuda Kinzoku Kogyo Co., Ltd.]

Head office: 11-9, Minami Semba 1-chome, Chuo-ku, Osaka

President: Kou Yasuda

Established: September 1939

Capital: Y76.8 million

Scope of business: Manufacture of aluminum shapes for use as construction materials; anodization of aluminum

Employees: 75

Plants: Gifu Prefecture; Saitama Prefecture

Sales office: Chiyoda-ku, Tokyo

Annual sales: Y5,432 million (for fiscal year ended in October 2003)

[SDK's aluminum extrusion business]

Oyama Plant (Tochigi Prefecture): Producing large-sized extrusions and pipes/bars that require different types of alloy compositions. Monthly output is around 3,000 tons, using 11 extruders.

Hikone Plant (Shiga Prefecture): Producing mainly small-sized extrusions for use as construction materials. Monthly output is around 2,000 tons, using five extruders.

About Showa Denko K.K.

Showa Denko (TSE: 4004) is a major manufacturer and marketer of chemical products serving a wide range of fields ranging from heavy industry to the electronic and computer industries. the company makes petrochemicals (ethylene, propylene), aluminum products (ingots, rods) electronic equipment (hard disks for computers), and inorganic materials (ceramics, carbons). The company has overseas operations and a joint venture with Netherlands-based Montell and Nippon Petrochemicals to make and market polypropylenes. In March 2001, SDK merged with Showa Denko Aluminum Corporation to strengthen the high-value-added fabricated aluminum products operations, and is today developing next-generation optical communications-use wafers. For further information, please visit the Showa Denko K.K. home page at:

Aluminum on the line

Charleston Sunday Gazette Mail, WV March 14, 2004

Jackson County wonders what future holds after merger


RAVENSWOOD — “Years ago, everyone thought you were set for life working for Kaiser Aluminum,” said Jaynie Moore, who owns Cook Floral on Washington Street near downtown Ravenswood.

“My father was one of the first employees hired after the plant opened in the late 1950s. We moved to Ravenswood because of that,” Moore said. “He was a coal miner for Armco near Beckley.

“My husband also worked there until there was a layoff in 1978. Then he went back to teaching. He teaches at Ravenswood Middle School. Today, my son is a millwright at Pechiney.

“Everyone has a family member who works there. I don’t know anyone who won’t be affected. I have a grandson, and I don’t want him leaving.”

Today, Pechiney Rolled Products employs about 1,000 people, 700 of whom are hourly workers. An adjoining plant, owned by Century Aluminum, employs about 800. About 500 of them are paid by the hour. A typical plant worker earns between $15 and $16 an hour. Before overtime, that comes to $30,000 a year, or a little more, plus pension and health benefits.

High-level doings at Pechiney, which include a pending merger with Alcan, have fueled concerns about possible plant closings.

“Just roll up the sidewalks,” said Sam Hicks, who owns Quality Care Cleaners. “It would have a very devastating effect. Things are going good now. My own business is even a little better. But if the plants closed, it would tear the place apart.”

Last week, Moore and Hicks talked about the fears many local people have about what could happen if the old Kaiser Aluminum works cuts back or closes down.

The plant, now 47 years old, runs for more than a mile along the Ohio River. A huge concrete smokestack, no longer in use, towers over the massive plant. Letters running down its side still spell: “KAISER ALUMINUM.”

Today, the plant is divided into two. Pechiney Rolled Products, a major aluminum producer based in Paris, operates one part. Century Aluminum, based in Monterey, Calif., operates the other, which makes molten aluminum from ores and raw materials.

Ten days ago, Gov. Bob Wise filed a legal challenge in the U.S. District Court for the District of Columbia against one section in a September U.S. Justice Department order. That order requires Alcan to sell the aluminum rolling mill Pechiney operates in Ravenswood as a condition of the merger between Pechiney and Alcan Aluminum Corp., based in Montreal, Ontario.

The merger would create one of the world’s two largest aluminum companies.

Wise and others fear an independent buyer might be unable to keep the Pechiney plant operating. Wise and state economic development officials also worry that Century might face problems if its next-door market for molten aluminum closes.

Joan Turner, Ravenswood’s city clerk and treasurer, is a little more positive about the economic outlook.

“At one time, all we had was one large industry. Now, we have a plastics plant and a car [parts] plant. We are more diversified. We also have an industrial park.”

Turner said a closure of either aluminum plant would “have an impact on our economy, but not like it would have had years ago. But I hope and pray that it doesn’t happen. It would be a blow to Jackson County.”

Ravenswood’s new businesses include: K.S. of West Virginia, a Japanese company that makes stainless steel auto parts; SDR Plastics Inc.; and West Virginia Polymer Corp.

The union

United Steelworkers Local 5668 has its union hall on W.Va. 2, just south of Ravenswood, not too far from the plants.

Dave Patrick, president of the USW local, said last week, “Pechiney hasn’t told us much. What are they going to do? I don’t know. There are interested buyers. The Department of Justice will decide who is a viable buyer.

“People have been going through the plant. We don’t know who they are. I don’t think [local] management is even supposed to know who they are,” Patrick said. “There is very little else I can tell you. I am speculating.”

Pechiney officers in Ravenswood declined to comment on the situation.

Patrick wishes the Justice Department would not try to force a sale. “Alcan would sure be nice. But Alcan had to agree to [the terms of the merger]. They can’t fight to get out of those terms.”

Retired workers could also be affected. Dozens of retirees from Kaiser Aluminum saw their benefits cut when Kaiser filed for bankruptcy.

But Patrick is still upbeat. “There has been growth in aluminum in the past couple of years.”

Ryan Corriveau, chairman of the local Steelworkers Safety Committee, said, “Century just added a SOW-Casting facility in the last year that can freeze molten aluminum into square shapes for shipment. It enables them to be more self-sufficient. They can sell their aluminum elsewhere.”

Last year, Century sold about 300 million of the 375 million pounds of aluminum it produced to Pechiney.

Corriveau fears that increased pressure on workers inside the Century plant could produce other problems. “I am afraid that heat stress, in the pot rooms, could cause another serious injury or fatality in the summer months. The company needs to take more precautions.”

The last time a Century employee suffered from heat stress was in May 2000.

Century officials also hope for the best.

Alfred T. Posti, head of investor relations for Century, said his company spent $6 million last year to build its own cast house in Ravenswood. “We felt we needed to solidify. At one point last year, Pechiney was having labor problems.”

Operations at Century never stop. The plant produces molten metal around the clock.

Posti believes Century will continue operating, but could face problems. Should Pechiney’s operations downsize or close down, Century’s costs would increase.

“We would be able to function, but we would incur additional costs. The Ravenswood plant, because of its age, is already higher cost. But in the present market environment, we can continue.

“Our process is also energy intensive. Our energy contract [with American Electric Power] expires in 2005. If aluminum prices drop, that could seriously jeopardize the plant. We do have a mutually advantageous relationship with Pechiney.

“There is always a market for aluminum. It is a worldwide commodity,” Posti said. “Today, we see very good market conditions for steel, stainless steel, copper and aluminum. The Chinese are importing a lot.”

Today, Century owns three plants:

The Ravenswood facility opened in 1957 and produces 375 million tons of primary aluminum a year.

The Hawesville, Ky., plant opened in 1970 and produces 538 million tons of primary aluminum a year.

The Mount Holly, S.C., facility opened in 1980 and produces 243 million tons of aluminum a year. The plant is operated by Alcoa, which owns a 50 percent interest.

Attracting companies

Gov. Wise reiterated his worries about the Ravenswood plants on Friday. “Their economic impact is significant. Aluminum is the largest single source of revenue for the county. Almost 80 percent of their property taxes go to the schools.

“Unemployment is 7.3 percent in Jackson County, already above the national average.”

Retiree pension and health benefits are also a major concern.

After its bankruptcy, Kaiser Aluminum put its pensioners into the federal Pension Benefit Guaranty Corp.

But that move reduced pensions and eliminated company-funded health care for hundreds of families.

“A new buyer will not be able to absorb legacy costs [for retirees] and keep the plant open,” Wise said.

“We are also able to attract new auto parts companies to West Virginia because we can offer proximity to aluminum producers. We don’t want to lose that. We want that plant to operate on a sound basis.”

Pechiney and Century are among the state’s largest consumers of electric power. American Electric Power has also asked the Justice Department not to force a sale of the Pechiney rolling mill.

“We won’t replace these jobs for a long time,” Wise said. “The brazing operations are a small part of Pechiney’s operations. It is a very sophisticated plant. Acquiring it as a free-standing operation, without support from other parts of a major company, a buyer is not likely to be able to meet its technological requirements.”

A Justice Department opinion in on Sept. 29 said Pechiney’s brazing sheet rolling operations, which produces aluminum sheets used to make products including heating and cooling devices for automobiles, would violate anti-trust laws since Alcan already produces brazing sheets.

Problems in Ravenswood reflect problems across the nation, as millions of manufacturing workers continue to lose jobs and pension benefits.

Since George W. Bush became president, Wise pointed out, the federal Pension Benefit Guaranty Corp. went from a $5 billion surplus to an $11.2 billion deficit.

“Airline workers lost their benefits, as have 200,000 steel workers, including 10,000 retirees in Weirton,” Wise said. “The Bush administration says it hates government. But now, it is running the largest pension plan in the country.”

To contact staff writer Paul J. Nyden, use e-mail or call 348-5164.

Jackson's aluminum history

1957: Kaiser Aluminum opens a major plant in Ravenswood after Gov. William Marland helps attract the company to West Virginia.

1988: Kaiser sells out to Ravenswood Aluminum, an investment management group that includes controversial Swiss investor Marc Rich.

1990: Ravenswood Aluminum locks out union steel workers on Nov. 1, touching off a bitter labor dispute that intensifies when company officials hired strikebreakers.

1992: The 20-month labor dispute ends on June 29, after a new management group buys the Ravenswood plant and negotiates a new contract with the United Steelworkers. The new owners change the company’s name from Ravenswood Aluminum to Century Aluminum.

1999: Century Aluminum sells its aluminum rolling mills in Ravenswood to Pechiney Rolled Products.

2003: Alcan announces an agreement to buy Pechiney for $4.6 billion.

2004: Gov. Bob Wise challenges a U.S. Justice Department anti-trust order that Alcan divest itself of Pechiney’s Ravenswood mill.

Alcoa Agree to Sell Aluminium Foil Facilities 15-Mar-2004

Alcoa, the world’s leading producer of primary aluminium has agreed to sell its Alumax aluminium foil facilities to JW Aluminum. Details of the sale were not disclosed, although the two parties expect to complete the transaction by the end of the month.

Alcoa’s Alumax aluminium foil facilities consist of a plant in Russellville, Arkansas and another plant in St. Louis, Missouri.

Alumax is the third largest producer of aluminium foil in in North America. They produce foil in different widths and thicknesses. The aluminium foil produced by Alumax is sold to converters and used in pharmaceutical packaging, food packaging, industrial tapes and insulation.

The sale of the business is part of Alcoa’s strategy of divesting non-core businesses.

Chinese Firm To Take Over VALCO

GhanaWeb, Ghana Monday, 15 March 2004

There is strong indication that China’s Largest Aluminum Company (CHALCO) may take over the Volta Aluminum Company (VALCO), contrary to media reports last week that the Chinese Government would be assisting would be assisting Ghana Government to purchase the Aluminum Smelter.

CHALCO has been selected to be on the delegation by the Government of Chine and has the mandate to under preliminary due diligence on VALCO with a view to taking a decision to invest in or take over the interest of departing Kaiser Aluminum in VALCO, states a report from the Ministry of Trade, Industry and Presidential Special Initiative released the 18-man Chinese trade delegation stormed Ghana last week.

To buttress the drive for the purchase of VALCO, the ministry of trade in their proposals to the visiting delegation, suggested the establishment of processing plant to produce alumina for aluminum smelting industries.

These submissions raise questions on the $3.75million interest free agreement signed between both countries last week to assist Ghana Government purchase VALCO. Meanwhile the real value for the sale of the company has been put between $35million and $100million.

CHALCO is the largest fully integrated aluminum industry in China with a market capitalization of about $9billion and a production capacity of about six million tons of alumina and 760,000 tons of aluminum per annum.

Commentators believe that if the proposed due diligence is conducted and CHALCO is convinced, it might not have problems managing VALCO.

RusAl applied to take part in the auction for 65% stocks of Jamaica`s alumina works.

Gateway 2 Russia, Russia 15 March 2004 14:23

RusAl has applied to take part in the auction for Aluminum Partners of Jamaica (Alpart, Jamaica) stocks, RusAl briefer V. Kurochkina said.

According to Metal Bulletin, 65% stocks of the company kept at the balance of bankrupt Kaiser Aluminum Corp. have been put up for sale. RusAl is ready to pay $237 mln. Successful bidder will be announced on April 29, 2004.

Norwegian Norsk Hydro ASA which holds the remaining stocks has the right of first refusal.

Alcoa lifts its game output plan

South Australia Advertiser, Australia 16mar04

By Nigel Wilson

ALCOA is considering expanding its Australian alumina production facilities by up to 1.5 million tonnes a year in response to what it believes is a fundamental change in the world alumina market.

This boost would lift Australia's annual alumina production, the world's biggest, to 18 million tonnes. Alcoa's expansion, on top of a $440 million, 600,000-tonne-a-year output lift announced for its Pinjarra refinery in Western Australia, was revealed yesterday by Alcoa World Alumina Australia managing director Wayne Osborne.

Speaking at JP Morgan's alumina and aluminium summit in Sydney, he said expansion of existing plants would meet projected alumina requirements over the next three years.

"For the longer term, major greenfield investment in refining capacity is needed to meet growth forecasts," he said. "The new investment will occur where a reasonable return can be achieved from the onset of the operation."

Alcoa World Alumina Australia is 60 per cent owned by Pittsburgh-based Alcoa, 39.25 per cent by Australian-listed Alumina and 0.75 per cent by QBE Insurance. In one of the most frank reviews of the aluminium industry picture in years, Mr Osborne said demand for alumina remained strong.

He said China had picked up most, if not all, spare alumina capacity caused by the closure of large slabs of aluminium smelting capacity in the Pacific northwest of the US from 2000, as high electricity prices made production uneconomic.

The result had been a dive in the aluminium metal price from $US1750 a tonne at the beginning of 2001 to $US1250 a tonne a year later. But, he added, Chinese growth only disguised a substantive issue that, from 1998 to 2002, investment in alumina capacity had not kept pace with higher smelting capacity.

Alcoa said that as metal prices receded - before their current resurgence - the price mechanisms generally used for alumina discouraged substantial new investment in alumina capacity.

Mr Osborne said Alcoa forged strong and lasting alliances in China, including a 30-year supply deal with Minmetals. But 30-year contracts were now the exception and not the rule in the alumina business.

The continued growth in smelting capacity in China, new capacity in Iceland and expansion in the Middle East had caught a number of analysts by surprise. The alumina system was currently short on supply and long on demand.

"Alumina requirements over the longer term appear to be beyond incremental opportunities," he said. "What's required are substantial capacity increases from existing refining systems.

"Greenfield solutions require somewhere around five years from go to whoa and, while the opportunity exists to bring those on over the long term, the immediate need is to have additional capacity available."

Alcoa flags growth to increase global pull

The Age, Australia March 16, 2004

By Barry FitzGerald Resources Editor

Alcoa served notice yesterday that it would protect its dominance of the global alumina market by revealing the potential to expand its business by 50 per cent through low-cost expansions at existing operations.

Like other alumina producers, the group's global alumina business, owned 40 per cent by the locally listed Alumina Ltd, is enjoying strong demand as a result of "fast-growing" demand from Chinese smelters.

The group's alumina business at present accounts for about 25 per cent of the world market, a position it intends to protect as the industry seeks to fill the global alumina capacity shortfall.

Alcoa World Alumina Australia managing director Wayne Osbor told a Sydney conference yesterday that "Alcoa is most probably as well placed as it has ever been to respond to the market's needs".

He said Alcoa had about 6 million (annual) tonnes of "brownfields" expansion capacity across its global system, including the already committed 600,000 tonne-a-year expansion of its Pinjarra refinery in Western Australia.

That compares with Alcoa's present capacity of about 12 million tonnes of alumina, most of it from its three WA refineries.

"Brownfield expansions will meet projected alumina requirements over the next three years," Mr Osborn said.

Beyond that, major "greenfield" investment in refining capacity was needed to meet growth forecasts, he said.

"That new investment will occur where a reasonable return can be achieved from the outset of the operation," he said.

Mr Osborn said new investments required long-term sales contracts, a pointed reference to the growth in spot sales to more than 20 per cent of the market. He said the rise of the spot market in alumina was one of key reasons for its price volatility, with the key aluminium raw material jumping as high as $US500 a tonne.

"Smelters that source their alumina from the spot market are exposed to the kind of volatility we are seeing at present," he said.

Coega faces costs challenge

Sunday Times, South Africa Monday March 15, 2004 07:13 - (SA)

The planned $1,2bn aluminium smelter project at Coega in Eastern Cape will have to pass two major hurdles if it is to be saved.

First, about R300m will have to be shaved off the cost of the project, and then the Coega smelter will have to beat a number of competing projects for limited investment funds.

This twin challenge follows the recent takeover of French aluminium firm Pechiney which was expected to proceed with the smelter plan by Canadian company Alcan.

"If the takeover had not happened, we would have had a decision by now, and it looked like it would have been a positive one," an industry source said.

"Alcan is a different player, and all efforts are being made to sell the Coega location for the smelter project to the Alcan team."

He said Alcan executives visited Coega in January, and decided to seek some changes to the project, with the aim of lowering the cost about R300m.

Construction group Bateman has been selected to manage the project and is being asked to cut its costs.

There will also be an attempt to source more materials for the smelter in SA.

"Previously this was a French project, and as the French tend to do they wanted as much of the material being used in the smelter as possible to be supplied from France," the source said.

"Now it is the Canadians who are in charge of Pechiney, and who are calling the shots, and they are more interested in getting full value for money than in promoting French exports, and so the balance will be tilted in favour of South African firms, where supplies can be sourced reliably and more cheaply."

There would also be efforts to trim the cost of the project by lowering payments for port charges, electricity supplies and payments to the Coega Development Corporation (CDC), which will be the landlord.

The CDC's planning manager, Kelly Byrne, said recently that R7,4bn was being invested in setting up the Coega industrial development zone and deepwater port, where the smelter project is the largest potential investment.

There will be R3,2bn spent on the port, R2bn on zone infrastructure and R2,2bn on a power upgrade by Eskom.

Alcan spokesman Joseph Singerman would not comment at the weekend on the work being done to sell the Coega site to his company. The group had not made any final decisions on the list of Alcan and Pechiney projects that were being evaluated.

CDC spokesman Raymond Hartle said he could not comment either, and he had received no indication that the project would be scaled back.

"We remain convinced Coega is the best location for the aluminium smelter project," he said.

Government would not be concerned if some of the cost of the smelter were to be trimmed, as long as the investment did go ahead.

Although this is repeatedly denied by those in charge, the Alcan smelter is seen by many as an anchor project which could give a major boost to the Coega development, which lies in one of the areas of the country most starved of jobs.

Trade and industry department director-general Alistair Ruiters has devoted a great deal of time to trying to win support, first from Pechiney, and now from Alcan, for the Coega investment.

Business Day

Century Agrees to Acquire Primary Aluminum Capacity in Iceland

BUSINESS WIRE March 16, 2004

MONTEREY, Calif.--(BUSINESS WIRE)--March 16, 2004--Century Aluminum Company (Nasdaq:CENX) has entered into an agreement with Columbia Ventures Corporation (CVC), a U.S. company, to purchase up to 100 percent of the shares of Nordural hf, an Icelandic company that owns and operates a 90,000-metric-ton-per-year (mtpy) primary aluminum plant at Grundartangi, Iceland. The Nordural plant began operation in 1998. An expansion is planned that will double its capacity to 180,000 mtpy by 2006.

The agreement provides that Century will acquire 49.9 percent of Nordural from CVC for $75 million. Century anticipates that its purchase will increase to 100 percent of Nordural subject to the satisfaction of certain conditions that are expected to be met by March 31, 2004. The purchase price for CVC's entire interest would be $150 million. In addition, Nordural has long-term debt of approximately $190 million. The agreement also provides for a contingent payment of $25 million to CVC upon the commencement of the expansion. The transaction is expected to close by May 31, 2004.

Announcing the acquisition, Century's Chairman and Chief Executive Officer Craig A. Davis said:

"The Nordural plant is a world-class facility. The acquisition is a significant step forward in achieving Century's strategic goals of reducing our average cost to produce aluminum and geographically diversifying our asset base. Iceland is a politically and economically stable country with a positive investment climate. In addition, Iceland has extensive hydroelectric power capacity and geothermal reserves for producing electricity."

Century currently owns 525,000 mtpy of primary aluminum capacity. It owns and operates the 170,000-mtpy plant at Ravenswood, WV and the 244,000-mtpy plant at Hawesville, KY. Century also owns a 49.67 percent interest in the 222,000-mtpy reduction plant at Mt. Holly, SC. Alcoa Inc. owns the remainder and is the operating partner. Century's headquarters are in Monterey, CA.

Columbia Ventures is a privately-owned investment company headquartered in Vancouver, WA. Subsequent to this transaction its remaining major investments will be in CTC Communications, the largest facilities-based Competitive Local Exchange Carrier headquartered in New England; Hibernia Atlantic, a transatlantic fiber-optic cable providing broadband connections between Boston, Halifax, Dublin and the United Kingdom; Og Vodafone, a full-service facilities-based telecommunications company in Iceland; Globalstar, the satellite telephony and data provider; Tecnol, an aluminum extruder in Mexico; and Columbia Commercial Building Products in Rockwall, Texas."

Century's press releases may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The company cautions that such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties. Actual results may vary.

The Company will hold a conference call on Wednesday, March 17, 2004, at 2:00 P.M. Eastern Time to discuss the Nordural acquisition. The dial-in number within the United States is 800-553-0273 and the International dial-in number is 612-288-0337. These telephone numbers operate in the listen only mode.

A playback number has been established for those unable to participate in the conference call. Playback begins at 7:15 P.M. Eastern Time on Wednesday, March 17, 2004, and ends at 11:59 P.M. Eastern Time on Friday, March 19, 2004. The playback number within the United States is 800-475-6701 and International 320-365-3844, the access code is 724989. After March 19, 2004, interested parties will be able to access an archived transcript of the call, which will be posted in the Investors section of the company's web site located at The transcript will remain available on the company's website for six months.

Contacts Century Aluminum Company A. T. Posti, 831-642-9364

RusAl Readies for Worldwide Expansion

Moscow Times, Russia Wednesday, Mar. 17, 2004. Page 5

Combined Reports SYDNEY, Australia -- Russian Aluminum, the country's leading aluminum maker, is looking to shift to higher value products for industries such as aerospace and packaging, and away from low grade metal as it expands globally.

Steven Hodgson, managing director of RusAl's alumina division, said Tuesday that the company aimed to boost output of value-added products to 50 percent of volume production from 33 percent this year and about 26 percent in 2003.

"We're into a situation where commodity grades are forming a less and less important part of our mix and the higher value products are more important for us," Hodgson said.

RusAl churns out 2.6 million tons of aluminum annually, providing about 70 percent of Russia's and 10 percent of the world's supply. It is 75 percent owned by businessman Oleg Deripaska and 25 percent owned by Roman Abramovich, who owns the Chelsea Premier League football club in London.

Production of value-added products, typically Aluminum containing other alloys for specific industrial applications, has grown from virtually nothing in the last 10 years, Hodgson said.

Last year, RusAl shipped about half a million tons of metal to the United States and 600,000 tons to Asia, excluding China. Hodgson said China was buying about 100,000 tons of metal per year.

The shift comes amid a $7 billion capital spending spree to modernize RusAl -- buying new assets, building new plants and revamping old ones -- ahead of an initial public offering planned for 2007.

"The primary concern is to secure long-term sales and take away the short-term spot nature that people associate with RusAl," Hodgson said.

RusAl has been seeking a larger role in exporting aluminum, as it expands from its origins in smelting aluminum in Sayanogorsk in eastern Siberia, Hodgson said.

It also aims to trim its dependence on buying raw materials such as bauxite and alumina from outside suppliers.

Last week, it bid for a 65 percent stake in Kaiser Aluminum Corp.'s Alpart, Jamaica's top producer of feed for aluminum smelting.

"All our metal these days is supplied against the [London Metal Exchange] high-grade contract," Hodgson said.

"The former standard was a lower grade -- specifically created to cater for lower grade metal coming out of Russia."

RusAl is extending its Krasnoyarsk and Sayanogorsk smelters and building a new smelter to add a further 400,000 tons of Aluminum-making capacity each year in total.

Hodgson said the new smelter was due to ship its first metal in October 2006.

RusAl has also said it has held talks about acquiring assets that may be sold by governments in India and Nigeria.

India was planning to sell 60 percent of National Aluminum Co., though the Business Standard reported in July that the proposal was canceled. Nigeria is due to decide by April 14 on a buyer for a majority stake in Aluminum Smelting Co.

The company plans to spend more than $7 billion over the next 10 years on new plants, smelter upgrades and acquisitions, Deripaska said last month.

(Reuters, Bloomberg)

Pryor, Okla., Metals Plant Could Return to Activity with Local Assistance

Miami Herald, FL Tue, Mar. 16, 2004

By Paul Monies, The Daily Oklahoman Knight Ridder/Tribune Business News

Mar. 16--PRYOR, Okla. - A Norwegian metals company could restart its plant near Pryor if local officials can give it assistance.

Elkem Pryor, a subsidiary of Elkem ASA of Oslo, Norway, could create between 40 and 50 jobs if it resumes full operations at the plant, Pryor Mayor Jimmy Tramel said.

Tramel said Pryor's planning and zoning board and utility board were scheduled to meet Monday evening to discuss several issues that could lead to the reopening. The Pryor City Council will vote on the issue tonight.

The city's utility board will consider lowering power rates for all industrial users, which could help Elkem. Tramel remained optimistic about the reopening.

"I'm confident it's going to happen," Tramel said. "We've been working on it for some time."

Mark Nilsen, plant manager for Elkem Pryor, said the company closed the furnace at its plant in March 2001. About seven people have continued to work there in crushing and packaging operations, he said.

Nilsen said a new customer in Texas has prompted the company to consider restarting the furnace and full operations at the Pryor factory.

"We're still taking a look at some raw material issues, the largest being power costs," Nilsen said.

Nilsen said a final decision could come within the next few weeks.

The plant, known locally as Midwest Carbide, processed calcium carbide, which is used mostly for acetylene welding and cutting torches.

"When it was fully operational, it brought a lot of money to the county," Tramel said.

U.S. aluminum producer Alcoa and Norway's Orkla jointly own Elkem, which also has plants in West Virginia, Ohio and Iowa.

To see more of The Daily Oklahoman, or to subscribe to the newspaper, go to

© 2004, The Daily Oklahoman. Distributed by Knight Ridder/Tribune Business News. ELK, AA,

Rio, Alcan Consider Alumina Expansions as Chinese Demand Soars

March 16 (Bloomberg) -- Rio Tinto Group, the world's third- biggest miner, said it plans to study boosting capacity at its new A$1.4 billion ($1 billion) alumina refinery in Australia, joining Alcan Inc. in considering expansion as demand soars.

The first stage of the 1.4 million tons-a-year plant will be completed this year, though capacity may rise to 4 million tons, said Hubie van Dalsen, managing director of mining and refining at Rio's Comalco unit. Alcan may decide later this year on a A$1.5 billion expansion in northern Australia, said Richard Yank, president of Alcan's Australian bauxite and alumina operations.

Rio and Alcan are considering adding alumina capacity after Chinese aluminum production jumped 25 percent last year, boosting demand for the material used to make the metal and leading to a doubling in prices. Rising Chinese consumption may boost Asian aluminum demand by 16 percent this year, London-based Rio said.

``China, as a single market, has grown from a minor importer of alumina to the biggest consumer of third-party alumina,'' van Dalsen said at the Asia Pacific Alumina and Aluminum Conference in Sydney. ``Today, 16 million tons of alumina is traded, or 32 percent of the market, of which 6 million tons will end up in the Chinese market.''

Rio's Comalco Alumina Refinery at Gladstone in Queensland state is 75 percent finished and will start shipping in early 2005, van Dalsen said in a speech. The Anglo-Australian miner is the world's ninth-biggest aluminum maker and also ninth-largest in alumina, according to Merrill Lynch & Co.


``We have recently assembled a small team to examine specific expansion options'' for the Gladstone plant, van Dalsen said. ``The design has incorporated options for eventual expansion that would increase production to more than 4 million tons of alumina per annum.''

Alcan is considering expanding its Gove alumina refinery in Australia's Northern Territory to produce 3.5 million tons a year, from 2 million tons a year, Yank said. The Montreal-based company's board may decide on the project early in the third quarter, he said.

Still, Alcan is considering the impact of a 25 percent gain by the Australian currency against the U.S. dollar on its cost estimates for the project, Yank said.

``The Australian dollar has put some cost pressure on our budget costs from where our estimates were a bit over a year ago,'' he said in an interview. ``It's an issue we're addressing but so far we're still on track to have a proposal to submit to our board for approval in mid-year.''

Gains by the Australian and Canadian currencies against the U.S. dollar last year cut earnings at Rio by $412 million. Rio has more than half its operations in Australia and New Zealand.

Russian Aluminium ``We are considering how the current strength of the Australian dollar will impact both capital and operating costs,'' van Dalsen said. ``In addition, we are monitoring the market place and the progress of competing projects.''

Moscow-based OAO Russian Aluminium, which produces one- eighth of the world's aluminum, said it's also expanding. The company, which is controlled by billionaire Oleg Deripaska, has held talks about buying assets that may be sold by governments in India and Nigeria, Steven Hodgson, managing director of Rusal's alumina division, said at the conference.

India was planning to sell 60 percent of National Aluminium Co., though the Business Standard reported in July that the proposal was canceled. Nigeria is due to decide by April 14 on a buyer for a majority stake in Aluminum Smelting Co., Reuters reported last month.

``We've been talking to people like NALCO, we've been talking to people in Nigeria as well,'' Hodgson said. He didn't give specific details or say when the talks may be concluded.

Bauxite is mined and then refined to produce alumina, which is then smelted to make aluminum metal. Aluminum is used to make products from beverage cans to airplanes.

Pittsburgh-based Alcoa Inc. is the world's biggest producer of aluminum.

Rusal chief Deripaska buys into Corus

By Arkady Ostrovsky in Moscow and Peter Marsh in London

Published: March 16 2004 21:54 The pressure on Corus intensified on Tuesday when it emerged that a second Russian metals magnate had taken a strategic stake in the Anglo-Dutch steel producer and might soon start to press for a change in strategy.

The new Russian investor is Oleg Deripaska, who controls Rusal, a giant Russian company that is the world's second-biggest aluminium producer, and is believed to have a stake in Corus of less than 3 per cent.

Mr Deripaska has close business links with Alisher Usmanov, another metals tycoon who owns 11.03 per cent of Corus and has been pressing the London-based company for a seat on the board.

David Geovanis, managing director of Basic Element, a company that manages some of Mr Deripaska's business interests, told the FT that Mr Usmanov was soliciting other Russian investors to take stakes in Corus.

"I understand that Mr Usmanov is out there calling on other oligarchs to take stakes in Corus and lining up forces to put pressure on the company," Mr Geovanis said. However, Mr Usmanov would not comment on whether this was true.

Corus on Tuesday continued to play down the impact of the Russian investors on the strategic management of the company, saying it was up to shareholders to comment on their plans.

The company is tomorrow expected to announce a loss of up to 200m ($362m), excluding restructuring charges, for 2003. That would add to the 2bn of operating losses the company has amassed since its creation in 1999 from a merger between British Steel and Hoogovens of the Netherlands.

It is believed both Mr Usmanov and Mr Geovanis might want to try to persuade Corus to integrate some of its steelmaking operations with Russian activities that they control. For instance, untreated slab steel from Russia could be shipped to Corus's UK plants for final processing. Also, Rusal could be interested in co-operating with, or even buying, Corus's small aluminium business. However, Alexander Boulygine, chief executive of Rusal, said: "Our strategy is to concentrate on the upstream [raw material] business, while Corus's plant is downstream."

Mr Deripaska and Mr Usmanov are co-owners of Nosta, a leading Russian steel producer. Both also have interests in Unified Electricity System, a Russian electricity monopoly.

Alcan says China will lose its place in the aluminium race

Business Report, Africa March 16, 2004

Sydney - Fears that China is set to flood the world aluminium market are unfounded because demand generated by the country's blistering economic growth will absorb domestic supply by mid-decade, an industry conference in Australia was told Tuesday.

Alcan, one of the world's largest aluminium producers, said in a report circulated at the conference that China was unlikely to be an aluminium exporter by 2005.

The report said China had unsettled world markets in recent years by ramping up its aluminium production as industrialisation continued apace, accounting for 60 percent of the increase in global aluminium production in the first nine months of 2003.

At the same time, China's aluminium consumption - driven by increasing income per capita and urbanization - was set to outstrip production in the next few years, as power and investment costs increased.

"Given current expansion plans, China's alumina production should reach about eight million tonnes in 2005 while the country's alumina requirements are expected to exceed 16 million tonnes," Alcan said.

Meanwhile, Alcan's competitor Comalco, said it was responding to fundamental change in the alumina market by constructing a new alumina refinery at Gladstone in the Australia state of Queensland.

Comalco said the decision to build the new refinery reflected strong orders from Comalco's own smelters, long-term contracts with blue chip customers and the influence of fast growing markets in China and Russia. - AFP

Aluminum prices may jump as producers scramble for raw materials

The Associated Press March 17, 2004

Aluminum buyers could see substantial price increases over the next two years as producers scramble for raw materials to feed a rapidly expanding market in China.

Following a survey of more than 100 Chinese smelters, analysts with Merrill Lynch said in a report this month that they "fundamentally changed our two-year outlook for the aluminum industry."

Merrill Lynch pushed its price forecasts upward by 9 percent for 2004, to 80 cents per pound, and 20 percent in 2005, to 90 cents per pound, analyst Daniel Roling said.

Executives with Alcoa Inc., the world's largest aluminum maker, are meeting in Australia this week to talk about the company's ability to meet the global demand for alumina, the raw material used to make aluminum.

The company is well positioned to meet market demands over the next three years, according to Wayne Osborn, managing director of Alcoa World Alumina Australia.

Alcoa just completed an expansion at its Jamalco alumina refinery in Jamaica and is currently expanding alumina plants in Suriname and Australia. Expansion at all three plants will boost production by 1.1 million metric tons per year, Alcoa spokesman Kevin Lowery said Tuesday.

The company also is seeking clearance to expand production by 3.4 million metric tons at two additional facilities in which it has major ownership interests.

"We see this as a way to capture more of the market," Lowery said. "We don't look at these things in the short term. We'll look at the market when the time comes and decide whether to go ahead with work at the other facilities."

Yet analysts with Merrill Lynch warn that despite expansion by Alcoa, which produces more than 26 percent of the world's alumina in a partnership with Alumina Ltd., tight alumina supplies will limit growth in aluminum markets worldwide until at least 2006.

The scarcity of alumina will likely curb global aluminum production growth to 6 percent in 2004, and 5 percent in 2005, analyst Daniel Roling said in the report.

Global demand during the same period is expected to be 7.7 percent and 5.8 percent, respectively, according to Merrill Lynch.

Despite high energy prices and sparse raw materials, China's aluminum production will likely grow at 19 percent in 2004, and 12 percent in 2005, according to the report.

The effect on consumers would be varied.

Aluminum producers and larger consumers like auto and aircraft manufacturers anticipate fluctuations in raw materials and incorporate those costs over the long run.

Some of those companies, however, have stockpiled raw materials when supplies were tight in the past, which can affect industries that don't use as much aluminum, said Michael Carliner, an economist with the National Association of Home Builders.

"If shortages result in rationing, then construction schedules can be disrupted," he said. "There has been a lot of concern about steel companies and prices for the same reason."

Shuttered plant to resume production in April

Biloxi Sun Herald, MS Wed, Mar. 17, 2004 Associated Press

PORT ALLEN, La. - A Mississippi chemical company will reopen a shuttered Alcoa Inc. plant next month and resume production of boehmite alumina.

Southern Ionics Inc., based in West Point, Miss., bought the plant for an undisclosed price in September. Southern has been preparing to reopen the facility for several months, said P.J. Boyle, the company's business manager for high purity aluminas.

The plant will employ about 30 full-time and contract workers.

Southern Ionics is spending $500,000 on the upgrade, according to its application for state enterprise zone program, which gives companies one-time tax credits worth $2,500 for each new job created.

The plant was owned by Discovery Aluminas, a subsidiary of Alcoa World Chemicals, which shut the plant down in December 2000 after four employees pleaded guilty to illegally dumping pollutants into a stream that empties into the Intracoastal Waterway.

Southern Ionics, which specializes in sulfur, aluminum and zirconium production, has 10 locations in the southeastern United States.

Boyle said boehmite alumina, one of a number of oxidized forms of aluminum, has applications as a catalyst or abrasive in other industrial processes.

Aluminerie Alouette Selects Vision Inspection Stations from Invensys

Business Wire (press release) -March 17, 2004

Vision Inspection Stations to Remove Defective Anodes and Stems

MONTREAL--(BUSINESS WIRE)--March 17, 2004--The Invensys Vision & Robotics (UIR:RAN7650) group today announced it has received a (CANADIAN)$1.1 million order from Aluminerie Alouette Inc., an aluminum company based in Quebec.

Aluminerie Alouette will install two vision inspection stations to examine baked anodes before use in production and anode stems after refurbishment. The inspection stations are part of the Alouette Phase II plant expansion project at the Sept-Iles, Quebec plant. The new equipment will assist the company to reach its objective to more than double plant output.

The anode inspection station automatically captures a full image of anodes conveyed from the baking furnace and analyzes them for defects, including cracks, missing parts, burn traces and rod hole symmetry. The station performs inspection at line speeds and prevents defective anodes from moving into production.

The rod inspection station is used to examine stem-rod assemblies that have been refurbished after production to ensure quality. After an anode has been consumed during production, the resulting butt is removed and the stem-rod assembly is refurbished and recycled back into production. Each stem has six rods and rod-ends, or stubs, which are bonded with the anode. The inspection station will check the stubs for several defects including bent or missing stubs and improper length to assure the assembly is properly refurbished and is suitable for production.

"The rod inspection station will enable us to maximize the anode stem lifecycle to reduce operating costs," said Sebastien Charest, sector leader at the Alouette Phase II carbon plant. "And with the anode inspection station we can now perform correlation between the anode forming and baking process and the resulting anode quality. In addition, it will provide a consistent, high-quality result and electronic defect history that we will use to analyze and improve our processes."

"The Alouette plant expansion leverages our capabilities in machine vision, robotics and our experience in previous anode inspection projects," said Charles Magnan, vice president of the Invensys Vision & Robotics business unit. "The systems will enable Alouette to continue to improve productivity, reduce costs and improve their processes."

Russians eye aluminium assets abroad

Business Report, South Africa March 17, 2004

Sydney - OAO Russian Aluminium, which produces one-eighth of the world's aluminium, said it held talks about acquiring assets that may be sold by governments in India and Nigeria.

India was planning to sell 60 percent of the National Aluminium Company, though the Business Standard reported that the proposal was cancelled. Nigeria would decide by April 14 on a buyer for a majority stake in the Aluminum Smelting Company, according to news agencies.

Rusal, as the Russian company is known, planned to spend more than $7 billion (R46.2 billion) over the next 10 years on new plants, smelter upgrades and acquisitions, billionaire Oleg Deripaska, the Moscow-based controlling shareholder, said last month.

"We've been talking to companies in Nigeria," Steven Hodgson, managing director of Rusal's alumina division, said at the Asia-Pacific Alumina and Aluminum Summit in Sydney. He didn't give specific details of the talks or say when they might be concluded.

BHP Billiton, Rio Tinto Group, Alcoa and Hindalco Industries have also said they may bid for National Aluminium.

Rusal increased primary aluminum production by 4.3 percent to 2.6 million tons last year.

Meanwhile, Rio Tinto said it planned to study boosting capacity at its new $1 billion alumina refinery in Australia, joining Alcan considering expansion as demand soars.

The first stage of the 1.4 million tons-a-year plant would be completed this year, though capacity may rise to 4 million tons, said Hubie van Dalsen, managing director of mining and refining at Rio's Comalco unit.

Alcan could decide later this year on a A$1.5 billion (R7.4 billion) expansion in northern Australia, said Richard Yank, president of Alcan's Australian bauxite and alumina operations.

Rio and Alcan are considering adding alumina capacity after Chinese aluminium production jumped 25 percent last year, boosting demand for the material used to make the metal and leading to a doubling in prices.

Rio's Comalco Alumina Refinery at Gladstone in Queensland state is 75 percent finished and will start shipping in early 2005, Van Dalsen said.

The Anglo-Australian miner is the world's ninth-biggest aluminium maker and also ninth-largest in alumina, according to Merrill Lynch.

Alcan was considering expanding its Gove alumina refinery in Australia to produce 3.5 million tons a year, from 2 million tons a year, Yank said. The Montreal-based company's board might decide on the project early in the third quarter, he said. - Bloomberg

VALCO is a strategic asset in Ghana - President Kufuor

GhanaWeb, Ghana

Accra, March 17, GNA - President John Agyekum Kufuor on Wednesday said the Volta Aluminium Company (VALCO) being a strategic asset in Ghana, the Government was prepared to discuss its current state of affairs and operations with prospective investors.

President Kufuor said this when a three-man delegation from Aluminium Company of America (ALCOA) Primary Metals paid a courtesy call on him at the Castle, Osu.

Kaiser Aluminium and Chemical Corporation has 90 per cent shares in VALCO, which it has agreed to sell to Ghana and ALCOA holds the remaining 10 per cent.

President Kufuor said, "ALCOA being an equity shareholder in VALCO, a strategic asset in Ghana it is ideal to talk about the current state of affairs".

Mr Randall M. Overbey, President of the Primary Metals Department of ALCOA, who led the delegation said, they were in Ghana to discuss the state of VALCO with the Government.

They are expected to visit some bauxite deposits at Kibi in the Eastern Region and Nyinahin in the Ashanti Region during the visit.

VALCO, a major long-term investment in Ghana by Kaiser, is one of the largest private enterprises and the second largest smelter in Sub-Saharan Africa. It is a major producer of primary aluminium for the world market.

The Company employed close to 2,000 people when it was in full capacity, 99.3 per cent of who were Ghanaians, with 324 of them holding technical, professional and managerial positions.

The construction of VALCO began in 1964. The smelter shipped its first aluminium in 1967 and the plant has been expanded twice to its present design capacity of 200,000 tonnes a year and running five pot lines.

Government instructs SPF to revise investment commitment of UkrAl

Interfax, Ukraine 18-Mar-2004

Ukraine's Cabinet of Ministers has instructed the State Property Fund, the Industrial Policy Ministry, and Kharkiv regional administration to revise investment commitments undertaken by Ukrainian Aluminum Ltd (UkrAl) when it purchased a 30 percent stake in the Mykolaiv alumina works, the SPF has announced.

The government ordered the agencies to decide whether it will be appropriate to change the commitments and, if so, submit relevant proposals, Mykhailo Chechetov, head of the SPF, said in Wednesday.

Prior to this, Chechetov announced that UkrAl did not consider reasonable to build an aluminum plant in the frames of its commitments due to high electricity tariff in Ukraine. There would be no return on its investment for 22 years, according to UkrAl. Instead, the company proposed to increase the capacity of the Mykolaiv alumina works.

According to the press service of UkrAl, the capacity will be increased to 1.6 million tones of alumina a year.

According to UkrAl, the protocol on sale and purchase stated that 70 percent of electricity supplies would be made by the Unified Power Grids of Russia. However, the Verkhovna Rada several months later passed a bill forbidding direct electricity supplies from Russia.

UkrAl purchased the said stake in March of 2000 for UAH 547.2 million (starting price - UAH 115 million).

The Mykolaiv alumina works boosted production by 6 percent in 2003 over 2002 to 1.198 million tones.

UkrAl Ltd., which was set up to privatize the Mykolaiv alumina works, has invested UAH 35 million in the company's stock.

UkrAl was registered in March of 1999. Its statutory fund tops $120 million. Over 25 percent of the stocks belong to Ukrainian residents including the Ukrainian metallurgical company and UkrSibbank (Kyiv).

Suppliers, politicians protest Justice plan for plant

Charleston Gazette, WV - March 18, 2004

Two Marshall University economists say required sale of Pechiney won’t cause shutdown

By Paul J. Nyden, STAFF WRITER

American Electric Power, Century Aluminum and Jackson County political leaders have all written to the U.S. Justice Department, protesting its order requiring Alcan to sell a rolling mill in Ravenswood before it can buy Pechiney Rolled Products.

Mark Dempsey, AEP’s top official in West Virginia, worries Alcan won’t find a buyer that can keep the plant open.

“Failure of the fabricating plant could itself have an adverse impact on competition in the brazing sheet market and would jeopardize the neighboring aluminum plant and the communities that rely on ...the plants,” Dempsey wrote.

- advertisement-

The Justice Department order argues Alcan’s acquisition of Pechiney’s brazing sheet operations would violate antitrust laws, because Alcan already makes brazing sheet, a high-quality metal used in heating and cooling units for cars and airplanes.

Brazing sheet represents less than 25 percent of the aluminum Pechiney produces in Ravenswood.

Ron Thompson, vice president of operations for Century Aluminum in Ravenswood, also protested the Justice Department order. Pechiney’s rolling mill is next to Century’s plant. Kaiser Aluminum built both plants in the late 1950s.

Today, Pechiney buys about 300 million pounds of the 375 million pounds of primary aluminum Century makes each year.

Century employs 700 and also provides pension and health benefits to 300 retirees. Together, Pechiney and Century employ 1,700 people — one-seventh of Jackson County’s entire workforce.

Jackson County commissioners also wrote a letter: “Though the intent [of the Justice Department] is to find a buyer who could operate the plant successfully, we are doubtful that this can be achieved unless the buyer is a major aluminum producer.

“The only companies who could take over the plant successfully are likely to be in the brazing sheet market already, and they would therefore be disqualified from purchasing the plant.”

Nalco to raise aluminium output

Thursday, 18 March , 2004, 16:53

The country’s second-largest aluminium maker, state-run NALCO, plans to raise output between nine and 16 percent next fiscal year after boosting capacity, its acting chairman and managing director said on Thursday.

"We expect to complete the expansion by April 30 and to produce around 325,000 to 345,000 tonnes of aluminium in the next fiscal year," said S K Banerjee, who is also NALCO's director of projects and production.

The additional output will help NALCO take advantage of aluminium prices that hit a 6-1/2-year high of $1,775 on the benchmark London Metal Exchange in mid-February, and to feed domestic demand in an economy that grew a spectacular 8.9 percent year-on-year in the last quarter.

Banerjee said NALCO was likely to produce 298,000 tonnes of aluminium in the fiscal year ending March 31 2004 at its smelter in Angul in the eastern Indian state of Orissa.

NALCO, or National Aluminium Company Ltd, had already begun the process of raising capacity to 345,000 tonnes a year from 230,000 tonnes and was seeking government approval to expand further at a later date, Banerjee said.

NALCO exported nearly half of its aluminium output, he told Reuters by telephone from the city of Bhubaneshwar. Exports in the year to March 2005 would rise to about 165,000 tonnes from 130,000 in the current year, he said.


NALCO's output of alumina, the key raw material for making aluminium, was expected to rise to 1.58 million tonnes next fiscal year from around 1.50 million in the current year, Banerjee said.

"Small teething problems after the expansion are now over and we hope to produce alumina at full capacity in the next fiscal year," he said.

In 2001, NALCO raised capacity at its alumina refinery, located in the mineral-rich town of Damanjodi in Orissa, to 1.58 million tonnes from 800,000 tonnes.

Alumina exports in 2004/05 would be between 875,000 and 900,000 tonnes, down slightly from the forecast 900,000 tonnes in the current fiscal year, because NALCO would need more alumina for its own consumption, Banerjee said.

Around two tonnes of alumina are required to produce a single tonne of aluminium.

India's Public Investment Board, a government committee, had already cleared NALCO's proposal to raise aluminium capacity to 460,000 tonnes and alumina capacity to 2.1 million tonnes a year, Banerjee said.

Final approval from the Cabinet Committee on Economic Affairs could come by June, he said, adding the company was planning to begin some pre-project work such as finalising tender details.

Banerjee said the current expansion project would be completed by April 30. "It will take about two months after completing the expansion to stabilise production at the full capacity level," he said.

Half of the 115,000 tonnes of new smelting capacity currently being added came on stream in March 2003. The remainder was postponed due to a delay in the construction of a power unit. The full expansion was originally slated for completion by late 2002.

NALCO as raised its power generating capacity to 960 megawatts from 720 by adding two more units of 120 megawatts each.

Copyright 2003 Reuters Limited.

Locke signs tax breaks for aluminum smelters, rural areas (subscription), OR 03/19/2004 Associated Press

The remnants of Washington's once-thriving aluminum smelting industry will get tax breaks under a new law signed by Gov. Gary Locke on Friday.

Locke also approved extending existing tax incentives aimed at sparking economic development in rural areas.

"This is badly needed legislation," Locke said as he signed Senate Bill 6304, which temporarily lowers the business and occupation tax on aluminum smelting. "The increased price of electricity has forced many aluminum smelters to shut down. Employment in the aluminum industry is down by more than 50 percent since 1998."

Locke signed the bill in Ferndale, where the Alcoa Intalco Works plant is the only smelter still operating in Washington. The Northwest was formerly a center for the industry because hydropower provided a key ingredient: cheap electricity. But rising costs for power, coupled with tough environmental restrictions and low prices, have forced nearly all the plants to close.

The tax incentive is aimed at preserving hundreds of jobs at the Ferndale plant and another smelter in Wenatchee which is still open but not actively processing ore. The two plants have about 400 employees each.

"This bill is about jobs, plain and simple," said Sen. Dale Brandland, R-Bellingham, the bill's sponsor. "Too many people in the aluminum industry lost their jobs last year. We have the opportunity to stem the flow of pink slips and bring a sense of security to those who have been on the brink."

Sponsors call the bill a bridge to tide the industry over until power rates fall, but industry officials worry it might be a bridge to nowhere. The Bonneville Power Administration is due to begin discussions soon on power sales contracts expiring in 2006.

Getting lower rates is crucial, Mike Rousseau, manager of Alcoa's smelter at Ferndale, told the Seattle Post-Intelligencer.

"We need this power to keep those jobs," Rousseau said.

Locke also signed Senate Bill 6240, which extends the sales tax exemption on construction of manufacturing and research facilities in rural areas as well as the business and occupation tax credit for creating rural jobs until 2010. The bill also extends the B&O credit for help-desk businesses operating in rural areas.

The incentives are aimed at promoting job growth in areas hit hard by decades of cutbacks in traditional industries such as logging and fishing.

"We know these tax incentives work, and will continue to work, for our state's rural counties and the businesses that locate or expand there it's a win-win," Locke said.

The two bills were among several tax breaks approved by lawmakers this year to improve conditions for various businesses. Although both received broad support in the Legislature, opponents argued that the incentives come at the expense of vital state services.

US court orders auction for Kaiser's Alpart stake

Forbes, Reuters, 03.22.04, 4:05 PM ET

WILMINGTON, Del., March 22 (Reuters) - The U.S. Bankruptcy Court in Delaware on Monday ordered an auction for Kaiser Aluminum Corp.'s <KLUCQ.OB> 65 percent interest in an alumina refinery joint venture in Jamaica.

Kaiser had wanted to sell its stake in Alumina Partners of Jamaica (Alpart) to Swiss trader Glencore AG, but market sources said Russia's top aluminum producer Russian Aluminium (RusAl) and Norwegian industrial group North Hydro <NHY.OL> also were interested in bidding.

There was no date immediately set for the auction.

Copyright 2004, Reuters News Service

Kaiser says minimum bid for Alpart auction set

Reuters, 03.23.04, 11:30 AM ET

NEW YORK, March 23 (Reuters) - Bankrupt aluminum producer Kaiser Aluminum Corp. <KLUCQ.OB> on Tuesday said the minimum bid for the auction of its 65 percent interest in a Jamaican alumina refinery joint venture has been set at $215 million.

The U.S. Bankruptcy Court in Delaware on Monday ordered the auction. Houston-based Kaiser, which filed for Chapter 11 bankruptcy protection in February 2002, has been exploring the sale of some of its businesses -- including Alpart, the joint venture in Jamaica -- in order to speed up its financial turnaround.

Kaiser said it expects the court to rule on the winning bid for Alpart at a regularly scheduled monthly hearing on April 26.

The company wanted to sell its stake in Alpart to Swiss trader Glencore AG, but Russia's top aluminum producer, Russian Aluminum (RusAl), recently submitted a bid that is $72 million higher than Glencore's.

That prompted a disagreement between Kaiser and a committee of its unsecured creditors as to who should win the bid.

Copyright 2004, Reuters News Service

EPA: Alcan pays nearly $14 million for hazardous waste cleanup in Oswego and Fulton

Sarasota Herald-Tribune, FL The Associated Press 3/24/04


The Alcan Aluminum Corporation has paid $13.6 million to cover environmental cleanup costs at a Superfund site in Oswego and a site in Fulton.

The Environmental Protection Agency said Wednesday that it has received payment from the company this week for a case that stretched back to 1983, when the Oswego site was placed on the agency's list of national priorities. The Justice Department filed suit against the company four years later in what became a drawn-out fight between the government and the firm.

The Oswego site was a waste incineration facility that operated between 1970 and 1977. The soil at the site is contaminated with PCB's, a suspected carcinogen.

The EPA found Alcan also stored similar hazardous wastes at the Fulton site between 1972 and 1977. The two cases were eventually joined in federal court.

The 17-year battle finally ended in January when the U.S. Supreme Court denied Alcan's petition.

A spokesman for the company could not immediately be reached for comment late Wednesday.

Furnace explosion rocks Elkem Carbon

Keokuk Gate City Daily, IA - 3/24/04

By Cindy Iutzi/Gate City Staff Writer and Associated Press

Keokuk firefighters responded to the report of an electrical explosion and flash fire at Elkem Carbon, 365 Carbide Lane, shortly before 9 a.m. today.

Fire department first responders were first on the scene and called for two ambulances to arrive "stat." First responders took care of one seriously injured person while other firefighters were directed to begin fighting the fire.

Six additional firefighters were called in, and several minutes later all off-duty fire personnel were called to the scene.

The explosion occurred when workers were testing a new furnace, according to Keokuk Assistant Police Chief Thomas Crew.

"They fired up a new furnace, and there was a flash fire explosion," Crew said.

The injured worker, whose name was not immediately released, was taken to Keokuk Area Hospital. Crew said the injuries were serious.

Crew said everyone else escaped injury. He said the fire was contained but that crews were still on the scene.

"The fire seems to be either out or under control," Crew said. "The fire department has people on the scene to make sure there is no refire or flash fire reoccurrence."

A request to enter the Elkem Carbon property to cover the fire department's fire fighting efforts was denied.

Keokuk police officers were at the scene to keep away onlookers.

The Keokuk Elkem Carbon facility is the largest producer of electrode paste in North America.

These products are used in the ferro-alloy, steel and aluminum industries.

Elkem Carbon is the world's leading producers of electrodes for arc furnace production of metals. The process involves heating anthracite, a hard grade of coal, to extremely high temperatures in specially designed calcining furnaces to create materials used in the electrodes.

Elkem Carbon is headquartered in Norway.

Alcoa CIO Rudi Huber: Transforming Global I.T.

CIO Today, United States March 24, 2004 11:39AM

By Lisa Valentine, CIO Today

"In the past, we viewed technology as a driver rather than as an enabler. Today, the business reason is the driver, and technology is the enabler. Everything starts with a value proposition."

As CIO and vice president for global business services of Alcoa -- the world's leading producer of aluminum with US$21.5 billion in revenues -- Rudolph P. (Rudi) Huber is responsible for global I.T. strategy and operations, financial services, procurement, people services and environment, health and safety services.

He is leading a global consolidation effort with an initial focus on combining Alcoa's North American and European organizations into one structure. In addition to aluminum products and components, Alcoa markets consumer brands, including Reynolds Wrap, Alcoa wheels, and Baco household wraps. The company has 120,000 employees in 41 countries.

Prior to being named vice president and CIO in 2003, Huber held executive-level financial positions in the corporation. He received a finance and management degree from the School for Commerce in Lucerne and a second degree in higher economics from the Institute for Management Education, Berne, Switzerland. He was named a fellow of the UK Institute of Chartered Secretaries and Administrators in 1998.

Huber spoke exclusively with NewsFactor's CIO Today Magazine about the challenges I.T. leaders face in today's business climate.

CIO Today: What are your top concerns as CIO?

Huber: My top concern is demonstrating value in a transparent, understandable, consistent way -- moving away from being considered a 'cost center' and demonstrating value in a systematic manner.

Business alignment is next. In the past, we viewed technology as a driver rather than as an enabler. Today, the business reason is the driver, and technology is the enabler. Everything starts with a value proposition.

Another concern is integration of processes and technology, standardization and usability. For example, most employees have a PDA, a phone, a PC and a mobile phone. How are these devices integrated to make a usable product? We have great tools, but the usability is generally low -- we need to use much more of the functionality available.

CIO Today: How have CIO priorities changed from five years ago?

Huber: Today, CIOs focus much more on cost -- not just at Alcoa but everywhere. At Alcoa, we look for value-driven solutions that link into our business processes.

In the last five years, Alcoa has moved from a decentralized environment to a regional organization. For example, we consolidated 51 data centers in North America into one. This drove tremendous organizational change, because now we no longer have a traditional I.T. leader in the business units who understands software development and infrastructure management. Instead, we have a business technologist who understands technology and can apply it to business processes.

CIO Today: Is the I.T. department more driven by technology or financial considerations?

Huber: I wouldn't pose the question that way. We are driven by business considerations, not necessarily financial considerations.

At Alcoa, we don't implement technology for technology's sake, but look at the business case. For example, we use instant messaging, but we didn't decide to implement it because it's a cool thing to do. We developed a business case for the investment.

CIO Today: How have new legislative demands affected the I.T. department and the CIO in particular?

Huber: We are very fortunate, almost visionary, in fact, in that in the late 1990s we introduced ASAT -- Alcoa Self-Assessment Tool. We use ASAT for most of our processes, including finance, HR, procurement, I.T., environment, health, and safety. It's similar to a quality-assurance program and provides an excellent control environment.

Alcoa's I.T. ASAT tool contains 11 sections, such as alignment with the business and security. Each section has minimum requirements and rules for ensuring requirements are met. This is more than just a checklist.

Many of our key objectives in ASAT are part of the Sarbanes-Oxley requirements. In fact, we test more than is required by Sarbanes-Oxley.

CIO Today: Which enterprise component or technology will be growing most in terms of its slice of your company's budget pie in the next 12 months?

Huber: Our heaviest investment right now is in EBS -- Enterprise Business Solution -- our ERP system based on Oracle 11i that includes financial, commercial, procurement, back office, manufacturing and maintenance. Eighty percent of all our software needs will be met by EBS.

The reason we don't call it 'ERP' is that this is not just an I.T. project, since it also includes process optimization and standardization, and organizational optimization. This is not just rolling out a new ERP system, but changing the way we do business, the way we approach a customer, and the way we do our financials.

CIO Today: Can you walk us through the decision-making process of implementing a large-scale business process management initiative? That is, where does the suggestion typically originate? How does the evaluation process take shape? Who participates in the ROI analysis? Whose buy-in is needed before pitching the project to the CEO and CFO?

Huber: Alcoa has a process called 'ABS' -- Alcoa Business Systems -- which is styled after the Toyota Production System. ABS allows us to look at a problem or an opportunity in a systematic way. As part of ABS, we ask questions such as, 'What is the business case for this?' 'What is the current condition?' 'What is the future condition?' 'What is the action plan, and how will results be measured?'

We also established a global I.T. lead team at Alcoa. The lead team defines the strategies and oversees implementation. To bring new technologies or new processes into the organization, we use an RFC -- request for comments -- process that collects feedback about proposed technology standards. Once the feedback is compiled, it goes to the lead team for signoff and standardization. It's a collaborative effort.

CIO Today: Which emerging technology do you see as most important to the enterprise?

Huber: Web services will be very important to us, as will RFID for our consumer goods, such as Reynolds Wrap. The maturing of wireless is also important. Linux will be a valuable platform, and we will watch it closely. We do use Linux in a limited way today.

CIO Today: Where do you go to do your research on new technologies?

Huber: We use the industry research groups, such as Meta, Gartner and AMR Research. I chair an advisory council that includes major players in the industry, vendors and academics. We meet twice a year to discuss technology strategies. It's a constant inflow of new ideas.

Alcoa also has an internal Global Architecture Strategy Council that evaluates different I.T. technologies and determines [their] value to Alcoa

Vale do Rio Doce's Albras to Buy Power Via Auction, Valor Says

March 24 (Bloomberg)

Albras, the aluminum-production unit of Brazil's Cia. Vale do Rio Doce SA, plans to buy 740 megawatts of power in an auction on April 2, the biggest of its kind that's been done in the country, Valor Economico said, citing an announcement by Albras.

Albras may spend more than $60 million to purchase the power, Valor said. The purchase through an auction process would be for a seven-month supply of power, the Sao Paulo newspaper added.

The purchase comes within days of the expiration of a power- supply contract that Albras has with Eletronorte, or Centrais Eletricas do Norte do Brasil SA, Valor said. Eletronorte wants to renew the contract at a higher rate, and Albras's move is an attempt to pressure the government, which controls Eletronorte, to keep the rate from rising, Valor said, citing unidentified people.

Executives from Albras, Eletronorte and the utility's state- controlled parent company, Centrais Eletricas Brasileiras SA, or Eletrobras, are scheduled to meet today in Rio de Janeiro, Valor said. If the meeting produces an agreement on renewing the Eletronorte supply contract, the April 2 auction could be canceled, the newspaper added.

(Valor Economico online 3-24)

Alcoa eyes Ghana's Valco, others circle -source

GhanaWeb, Ghana

ACCRA, March 25 (Reuters) - Alcoa is considering whether to exploit bauxite deposits in Ghana and increase its 10 percent stake in the Volta Aluminium Company (Valco) smelter, a senior industry source said on Thursday.

Initially, during their recent visit, Alcoa's intention was to negotiate the sale of their 10 percent stake in Valco," the source, who declined to be named, told Reuters.

"But after they had the opportunity to look at the country's bauxite resources, they decided to go back and consider whether to go ahead and sell, or increase their stake and explore the deposits," the source said.

The Minerals Commission, which regulates mining in Ghana, had estimated about 120 million tonnes of bauxite at Kibi in the Eastern Region of the country.

A spokesman at Alcoa said: "Occasionally we stop in and look at our assets, but it's nothing more or less than that."

Kaiser Aluminum Corp, which owns 90 per cent of Valco, said in December it had decided to sell its stake in the smelter to the Ghanaian state. Valco has the capacity to produce 200,000 tonnes-a-year of aluminium and is located in Tema, the West African nation's main port and industrial city.

Alcoa Primary Metals president Randall Overbey held private talks with Ghanaian President John Kufuor in Accra last Thursday, government officials said.

Ghana's Energy Minister Paa Kwesi Nduom declined to give full details, but said that Alcoa was one of many that had visited Valco.

"BHP Billiton, Chalco (Chinese Aluminium Company), Mitsubishi, Glencore -- they've all been here," Nduom said.

Until its virtual shutdown in 2003, Valco -- which was established in the mid-1960s -- imported semi-processed bauxite from Jamaica for processing in Tema.

Nduom said the government's stance in all talks was, "...that we'd like to exploit our own bauxite resources and add value to it. It may not be done immediately, but if possible, we'd like it to be part of the package."

BHP Billiton expressed interest last year in developing a multi-billion-dollar integrated aluminium industry using bauxite from Kibi.

"Their application is still active," Joseph Aboagye, director of planning and policy analysis at the Minerals Commission said.

Nduom said a draft due diligence report on Valco was expected to be ready in about a week.

Source: Reuters


Press Information Bureau (press release), India 25-Mar-2004

The total production of calcined alumina by the National Aluminium Company Limited (NALCO), a public sector unit of the Mines Ministry, during April 2003-February 2004, has been 14,03,800 tonnes against the target of 14,30,000 tonnes. This excludes direct sale of 8,021 tonnes of hydrate to domestic consumers and 1,724 tonnes utilized for special grade alumina. During the period, aluminium production has been 2,72,338 tonnes against the target of 2,62,200 tonnes. The transportation of bauxite during the period has been 4,341,680 tonnes exceeding the target of 4,235,000 tonnes.

During February 2004, calcined alumina production by the company has been 1,35,500 tonnes exceeding the target of 1,28,000 tonnes. Aluminium cast metal production during the month has been 23,738 tonnes against the target of 24,300 tonnes. NALCO produced 586 tonnes of special hydrate and 55 tonnes of zeolite during the month. Bauxite transportation during the month has been 4,12,651 tonnes against the target of 4,30,000 tonnes.

Indonesia aluminium smelter raises output 26 pct

Planet Ark, NY SINGAPORE: March 25, 2004

SINGAPORE - PT Indonesia Asahan Aluminium, the only aluminium smelter in Southeast Asia, will raise output by 26.4 percent to 206,000 tonnes in the fiscal year ending March 31 2004, the company said yesterday.

The Japanese-owned smelter also aimed to raise production of aluminium to 230,000 tonnes, or a further 11.7 percent, in the 2004/05 fiscal year, the company said in a written reply to questions.

"The improvement of the water level of Lake Toba was the main reason for the increase (this year)," an official for the company said. The lake in northern Sumatra is the main source of water for the smelter's hydroelectric power plant.

PT Indonesia Asahan Aluminium, also known as PT Inalum, produced 163,000 tonnes of aluminium last fiscal year as a result of low water levels that the company attribued to the El Nino weather phenomenon.

PT Inalum is owned 59 percent by Nippon Asahan Aluminium Co Ltd, a 12-company Japanese consortium that counts among its members Sumitomo Chemical Co Ltd (4005.T: Quote, Profile, Research) , Nippon Light Metal Co Ltd (5701.T: Quote, Profile, Research) , Sumitomo Corp (8053.T: Quote, Profile, Research) , Mitsui and Co Ltd (8031.T: Quote, Profile, Research) , Marubeni Corp (8002.T: Quote, Profile, Research) and Mitsubishi Corp (8058.T: Quote, Profile, Research) .

The government of Indonesia holds the other 41 percent of PT Inalum.

The official said the smelter sells around 60 percent of its metal output to Japan and 40 percent to the domestic market in Indonesia, most of it on a long-term contract basis.

PT Inalum's nameplate capacity is 225,000 tonnes a year and the company said it had no plans to expand.

It said it received its alumina, the key raw material for producing aluminium, from Australia.

Benchmark three-month London Metal Exchange aluminium was trading at $1,645/1,648 a tonne by 0910 GMT yesterday. The metal hit a 6-1/2-year high of $1,775 in mid-February.

Story by Robin Paxton


Get smart and cut carbon

ic Wales, UK Mar 25 2004

Sion Barry, The Western Mail

A CAMPAIGN has been launched urging Welsh businesses to cut carbon emissions.

Smart Companies is an initiative from the Carbon Trust, highlighting the significant competitive advantage for businesses which take early action to cut carbon emissions.

More than 100 firms and public sector bodies are being targeted to sign up for the project.

Those already on board include Alcan Rolled Products UK, Airbus UK, Anglesey Aluminium, BAE Systems, the University of Wales, Bangor and the Celtic Manor Resort.

The initiative has been unveiled ahead of publication of new details of the EU Trading Emissions Scheme, which sets CO2 emission levels for British business and industry.

Economic Development and Transport Minister, Andrew Davies, said that although businesses are working to reduce their carbon emissions, more need to do so - turning future business risks into opportunities.

He said, "The Welsh Assembly Government is committed to sustainability - and to make that policy successful we need to work closely with business and industry.

"Welsh business needs to make climate change a boardroom priority, not something that is managed further down the management chain.

"Those organisations that act now by cutting carbon emissions will be tomorrow's winners, whereas those that wait could be risking their future business success.

"Climate change is the greatest environmental threat we face. To fight it, we are driving forward a low-carbon economy to meet the target of 20% reduction in CO2 emissions by 2010.

"The companies featured in this campaign are leading the way and I hope their success will encourage other companies to join the low-carbon economy."

The campaign includes media and billboard advertisements, and features a young boy with the slogan 'When he's a dad, all companies will cut CO2 - smart ones already do.'

The Carbon Trust estimates that between them, the UK companies featuring in the campaign could cut more than a million tonnes of CO2 from their annual emissions.

Manager for the Carbon Trust in Wales, Annie Thompsett, pictured, said, "We are advising the pioneering companies featured in our new campaign to help them combat climate change by cutting emissions.

"These companies know that, as well as helping the environment, reducing carbon emissions can increase profitability and reduce risk. But they are still in the minority.

"All companies are affected by these issues so all need to take action. For example, the EU Emissions Trading Scheme will not only affect those sectors and sites directly involved in the first stage; other sectors will be indirectly affected, for example by rising electricity prices.

"Those that have taken steps to cut their carbon emissions and energy use will have a financial and competitive advantage over those that have still to act.

"In coming weeks we will be contacting many organisations in the private and public sectors urging them to join the campaign."

The Carbon Trust works with UK business and the public sector to cut carbon emissions and capture the potential of low-carbon technologies.

An independent company set up by the Government to help the UK meet its climate change obligations, the Carbon Trust creates practical business-focused solutions.

Local businessman eyes possible Congo venture

Richmond Times Dispatch, VA - Mar 29, 2004


ARichmond businessman's possible venture in the Republic of the Congo could lead to a relationship between the city and the West African nation.

Randy Reynolds, who was a high-ranking executive with Reynolds Metals Co. before its acquisition by Alcoa Inc. in 2000, said recently he's been trying to round up investors to build an aluminum smelter in the Republic of the Congo.

Reynolds said the plans are only preliminary, but when he visited the capital city of Brazzaville, officials there expressed an interest in building a closer relationship with Richmond and possibly getting sister-city status.

"It is a fascinating country with great potential, and a lot of problems," said Reynolds, whose other business ventures since leaving Reynolds Metals have included starting a company called Industrial Advisors, which was involved in buying an alumina plant in Guinea.

"You have to move on and do something. You don't want to just sit still," Reynolds said of his numerous business activities. In 2002, members of the Reynolds family also purchased a large part of the former Reynolds Metals corporate complex on West Broad Street.

As for the possible Congo ventures, Reynolds said aluminum prices have been very tight worldwide, but he thinks demand is going to pick up.

The Republic of the Congo, a country of almost 3 million people, has suffered from years of civil unrest and a high rate of HIV infection. But the country's natural resources, and its enormous potential for hydroelectric power, could make it a good site for an aluminum smelter.

"They have got tremendous energy potential," Reynolds said. "They have tremendous raw materials. They have had a great deal of civil unrest, but hopefully that is coming to an end."

Alumina Says Venture Cash Flow Will Fund Expansion (Update1)

March 29 (Bloomberg)

Alcoa World Alumina Australia, which supplies a quarter of the world's alumina, will use operating cash flow from its Alcoa of Australia Ltd. unit to help fund the A$440 million ($328 million) expansion of its Pinjarra refinery, said Alumina Ltd., Alcoa Inc.'s partner in the venture.

Alcoa World Alumina Australia last month gained approval from the Western Australian government to expand its Pinjarra refinery by a fifth.

``The upgrade will be funded by Alcoa of Australia operating cash flow through to the end of 2005, with the benefits expected to be delivered from the beginning of 2005,'' Melbourne-based Alumina said in a statement to the Australian Stock Exchange.

The investment may alter the amount of cash available for tax-paid dividends, Alumina said. Its board ``intends to maintain a dividend payout ratio for 2004 similar to last year,'' the company said. It has ``substantial financial flexibility with cash on hand of A$151 million after paying the 2003 final dividend'' and debt of A$410 million.

The Pinjarra expansion will boost annual production of alumina, used to make aluminum, to 4.2 million metric tons from 3.5 million tons, Alumina said.

$450m export credit package for Alba expansion

Gulf Daily News, Bahrain 28-Mar-2004

Alba sealed a $450 million export credit finance package for the construction of the Line 5 expansion project yesterday. Oil Minister and Alba chairman Shaikh Isa bin Ali Al Khalifa signed two financing agreements with HSBC and BNP Paribas at a ceremony at the Bahrain Ritz-Carlton Hotel and Spa.

The agreement granted Alba loans totalling $450m, which will be used for the project. The financial package has been guaranteed by the two countries that export to Alba, namely Switzerland and France.

Shaikh Isa said Line 5 project would create the largest single-site aluminium smelter in the world, outside of Russia, producing about 840,000 tonnes per year, when it is completed in 2005.

"The development of the Line 5 project has been a challenging undertaking and has required the hard work and collaboration of many parties," he said.

Alba chief executive Bruce Hall said from the total amount, $300m will be used for the construction of the project's new power station and the remaining $150m for other projects including a new casthouse.

"The development of Alba over the past 30 years has given rise to a significant downstream industry that provides substantial employment and economic benefit for the economy of Bahrain across a broad base," he said.

"Alba currently contributes $200m per annum to the national economy, which is in the range of seven to eight per cent of the gross domestic product. With the Line 5 expansion, the contribution is expected to increase to approximately $300m per annum, which is in the range of 10 to 12 pc of GDP."

Present at the event were Bahrain Monetary Agency (BMA) Governor Shaikh Ahmed bin Mohammed Al Khalifa, Finance and National Economy Under-Secretary Ebrahim bin Khalifa Al Khalifa, Alba directors and executive management members, government representatives, shareholders and financial advisers.

Alba Line 6 project viable, says CEO

Trade Arabia, World Sunday, March 28, 2004

Should Aluminium Bahrain (Alba) decide to take up a Line 6 expansion, it would be a good project from the financial standpoint, said its CEO Bruce Hall today.

"We have calculated an internal rate of return of 16 per cent," Hall said, indicating that level was attractive for a project to be taken up.

Although no decision has yet been taken, the company is looking at an expansion of 310,000 tonnes from the 840,000 tonnes in total production capacity that will be realised after the ongoing Line 5 is completed next year. Alba's current capacity is around 520,000 tonnes.

Line 6 would incur an investment of $1.3 billion compared with the $1.7 billion outlay for Line 5, whose expansion is nearly as much as what is suggested for Line 6.

Hall said the cost would be lower because "we can capitalise on quite a lot of synergy from the present plant".

But he maintained that Line 6 had still not been formally discussed at the board level, although directors and company officials had talked about it.

Alba's Line 5 expansion was occurring at a time of bright prospects for the aluminium industry, Hall commented.

"We are about to enter a period of higher growth in demand for aluminium. There's definitely a higher turnover in the world economy and there's pressure for the replacement of heavy vehicle components in favour of aluminium," he added.

Hall also said China's consumption of base metals including aluminium was growing at a fast pace, which was good news for operators such as Alba.

In other remarks, the official said the issue of US firm Alcoa taking a stake in Alba remained with the Ministry of Finance for a decision.

Bahrain owns 77 per cent of Alba, Sabic Industrial Investments of Saudi Arabia 20 per cent and German group Breton Investments three per cent.

According to a non-binding MoU signed last year, Alcoa said it would take 26 per cent of the stake in Alba and provide it with its requirements of alumina, the raw material needed for the production of aluminium.

Last September, Hall had said the stake in question involved $600 million. Remaining to be finalised are the details of the supply agreement and how much Alcoa would have to pay for its stake.

"We do know however there is genuine interest both in Alcoa and the ministry to conclude a deal," he said, adding he could not say when a decision could be taken.

In the event Alcoa joins as a partner in Alba "it is my understanding that it would want to expand the plant".

But he asserted that even if the US firm was not in the picture, the existing shareholders "are quite capable of expanding the plant."-TradeArabia News Service

RusAl to invest $27m in development of foundry operations of KrAZ in 2006

RosBusinessConsulting, Russia RBC, 29.03.2004

Moscow 16:29:00.RusAl, JSC, will invest $27m in the development of foundry operations of KrAZ (Krasnoyarsky Aluminum Factory in 2006, its press service reported. The proposed investments are aimed at enhancing the quality of production, and cutting costs.

KrAZ technical development program suggests three investment projects for 2004-2006 aimed at increasing its output to 328,000 tons of alloys per year.

Chalco Plans 7 Bln Yuan Alumina Expansion This Year (Update2)

Bloomberg March 31 2004

Aluminum Corp. of China Chairman Guo Shengkun said the company will invest about 7 billion yuan ($846 million) this year boosting capacity of alumina, a semi-finished material that accounts for more than four-fifths of its profit.

The company, known as Chalco, will spend 70 percent of its 10.5 billion yuan in capital expenditure this year to boost alumina capacity, Guo said in an interview. ``We will see strong alumina prices for at least two more years,'' he said.

Demand for aluminum from automakers such as Volkswagen AG, power companies building transmission lines and drinks can makers, prompted China's producers of the metal such as Lanzhou Aluminium Co. to increase capacity by more than half last year. That enabled Chalco, China's only producer of alumina, to double the price of the material, helping second-half earnings triple.

``What Chalco aims for in the long term is to be a global supplier of alumina, and this is a good time for them to expand,'' said Liu Yang, who oversees $1.2 billion as managing director at Atlantis Investment Management in Hong Kong, including Chalco shares. ``There is still room for alumina prices to go up this year.''

Chalco shares rose 6.7 percent yesterday to HK$6.40, bringing gains for the past 12 months to 357 percent. The stock is the best performer on the 37 member Hang Seng China Enterprises Index over the period after Maanshan Iron & Steel Co.


Chalco is the world's second-largest producer of alumina, said Zhang Qing, a Beijing-based spokesman at the company.

Chalco plans to expand capacity at its alumina plant in northern Shanxi province by 800,000 metric tons a year to 2.2 million tons, Guo said. The company's plant in northern Henan province would be expanded to 2 million tons a year capacity from 1.3 million tons.

Chalco's capacity at the end of last year was 5.95 million tons. It plans to increase this to 7.1 million tons by the end of this year, according to Liu Defei, an analyst with Beijing Antaike Information Development Co., a non-ferrous metals association affiliate.

Chalco's Guo said the company may build a 2 million ton a year refinery at a bauxite mine it is developing with the Vietnamese government in Dac Nong province. It is also looking to buy into ventures to produce alumina and bauxite -- the raw material refined into alumina -- in Australia, and may buy such so-called upstream assets outright, he said.

`Huge Market'

``Given the huge market demand and the shortage in supply, it's a much more sensible strategy for Chalco to explore the upstream alumina, than aluminum,'' said Pauline Dan, who helps manage $350 million at IG Investment (H.K.) Ltd.

Alumina accounted for 87 percent of Chalco's profit in 2003, from 40 percent in 2002. Gross profit generated from aluminum production dropped to 445 million yuan, less than half the money it made in 2002.

Gross operating profit margins for alumina at Chalco were 33 percent, against 4 percent for the company's aluminum production, according to Geoffrey Cheng, a Hong Kong-based analyst with Daiwa Institute of Research Ltd. If prices of alumina rise further ``Chalco will be the only winner in China,'' he said.


Chalco boosted its alumina price by 16 percent on March 11 to 4,300 yuan a ton on the spot market. It raised alumina prices 46 percent last year. Guo said he expected prices to average 4,000 yuan this year.

About one million tons of Chalco's alumina sales are through long-term contracts, so the average price realized by the company is lower than 4,000 yuan now, said Antaike's Liu. ``Their target price shows that they still expect another rise this year.''

Lu Yizhen, an analyst at Efund Management Co. in the southern city of Guangzhou, said priced could double this year.

The surge in alumina prices combined with power shortages have cut into margins at aluminum companies. Electricity accounts for about 40 percent of the cost of producing aluminum.

Power shortages that hit two-thirds of China last summer are expected to worsen this year. Shortages forced 20 percent of smelters to cut output or close plants, said Wang Feihong, an analyst at Antaike.

Lanzhou Aluminum, the nation's second-largest producer of the metal, last month said its fourth-quarter profit halved on a 68 percent rise in the price of alumina.

Latin America

Chalco's planned expenditure this year is more than double the 5.38 billion yuan it spent in 2003. About 30 percent its spending this year will come from bank loans and most of the rest from cash reserves and operating income. The company doesn't plan to issue bonds or sell more shares this year, Guo said.

Chalco's net income was 1.95 billion yuan in the six months ended Dec. 31, from 572.35 million yuan a year earlier. The figure was derived by subtracting first-half from full-year numbers announced Monday.

The company's debt ratio fell to 34.9 percent at the end of 2003 from a year earlier, Guo said. Last year, Chalco completed the expansion of its alumina refinery in the southwestern province of Guangxi, which more than doubled capacity to 900,000 tons a year. Alcoa Inc., which bought 8 percent of Chalco when the company sold shares publicly for the first time in 2001, is waiting for government approval to take a 50 percent stake in the project.

Chalco and Alcoa are considering boosting capacity at the Guangxi refinery further, Joseph Muscari, Alcoa's Group President for Asia and Latin America, said in an interview on March 12.

Alcoa, which is also planning to expand output of aluminum packaging foil and sheets for auto production with two other state-owned partners, said its revenue in the country is growing by more than 15 percent a year.

Chalco Sees Alumina Output +7%;Avg Selling Price +45%

Yahoo News Tuesday March 30, 8:24 PM

HONG KONG (Dow Jones)--Aluminum Corp. of China Ltd. (ACH) expects alumina production to rise 7.4% on year in 2004, and its average selling price to surge 45%, Chairman Guo Shengkun said Tuesday.

Guo told reporters at a press conference related to its full-year earnings that the company, also known as Chalco, is seeking to produce 6.5 million metric tons of alumina this year, compared with an output of 6.05 million tons in 2003.

It sold 4.22 million tons of alumina last year to clients not related to the company. That's 12.8% higher than in 2002.

The company, China's sole producer of alumina, said late Monday its 2003 net profit more than doubled to 3.55 billion yuan (US$1CNY8.28), due mainly to sharp increases in its alumina selling price amid strong market demand.

Throughout 2003, Chalco raised the spot price of its alumina seven times to 3,700 yuan (US$1CNY8.28) per metric ton including tax, in line with the uptrend in the selling price of alumina imported into China. Its alumina spot price stood at CNY1,830 per ton at end-2002.

The company last raised its domestic alumina spot price to CNY4,300 per ton from CNY3,700 in early March, the first time this year it did so.

The 2003 average selling price of Chalco's alumina for both spot and contract volume - excluding tax - was CNY2,407.7 per ton, up 46% on year.

Guo said despite the strong spot price rallies, Chalco will maintain this year's target to raise the proportion of fixed-price contract sales to 40%, up from 10% in 2003.

"Conservatively speaking, we expect this year's average selling price to be around CNY3,500 per ton," he said, referring to the price excluding tax. "This is on the back of a wide gap between demand and supply in China."

He expects China's demand for alumina to be around 12.8 million tons this year, up from 11.88 million tons. Despite Chalco's production, he said China should still see import demand of about 6.3 million tons this year to meet its alumina shortfall.

The higher production of alumina has boosted unit production costs, including costs for electricity, coal as well as bauxite.

This year, Guo said the company is seeking to increase its bauxite reserves by about 100 million tons, compared with 90 million tons in 2003.

Chalco is also China's largest aluminum producer. However, the country's oversupply in aluminum as well as price hikes in alumina, used to produce aluminum, squeezed the gross profit margins of aluminum in 2003.

Chalco sold 746,900 tons of aluminum to customers not connected to the company last year, down 1.5% from 2002.

Guo said he expects the company this year to produce around 760,000 tons of aluminum, largely flat from a year ago.

It also plans to expand the capacity for aluminum production by an additional 200,000 tons to 300,000 tons this year, by acquiring low-cost facilities and expanding existing ones.

It has been considering the purchase of Baotou Aluminum Co. in Inner Mongolia from its parent later this year, Guo said.

Chalco also plans to further raise its alumina production capacity to reach 8.5 million tons by 2005.

The company earmarked capital expenditure of CNY5.3 billion for 2003, CNY10.5 billion for 2004 and CNY10 billion for 2005.

Alcan to Decide on S. Africa Plant in May, Business Report Says

March 31 (Bloomberg)

Alcan Inc. will decide in May whether to build a $2 billion aluminum smelter in South Africa, Business Report said, citing Industry Minister Alec Erwin.

Erwin met with the Canadian aluminum producer earlier this month in a bid to persuade it to go ahead with the project at the planned Coega port in South Africa's Eastern Cape Province, Business Report said.

Alcan is buying Pechiney SA to create the world's biggest aluminum maker. Pechiney had said it would build the plant.

To contact the reporter on this story:

Antony Sguazzin in the Johannesburg bureau,


To contact the editor of this story:

Stephen Farr at

Sayanogorsk Aluminium Plant will Increase Production of Aluminium Extrusion Ingot On The Basis of New Technology 31-Mar-2004

Aluminium companies Hydro and RUSAL announced today that testing operations at the newly upgraded casthouse at Sayanogorsk have been conducted successfully. The plant will now be able to increase the production of high-quality extrusion ingot on the basis of the new technology.

Hydro has supplied its proprietary casting equipment and assisted with technical and operational know-how in the project, which will bring RUSAL’s billet production into conformity with Hydro's quality specifications.

According to an agreement signed by both companies in July 2002, the modernization project is divided into two stages: The first stage, now completed, will nearly triple the Sayanogorsk plant’s annual billet capacity to 80,000 metric tonnes from 30,000 tonnes, and broaden the facility’s product mix according to customer requirements. Hydro’s marketing organization will be responsible for selling the extrusion ingots from this first stage.

The second stage of the upgrade, the scope of which has yet to be finalized, is intended to raise casthouse billet capacity to 160,000 tonnes per year by the end of 2005.

During the first stage, a new casting unit and aluminium refining system were installed in the casting complex. A continuous homogenization furnace with design capacity of 100,000 tonnes per year was also installed and tested.

"This upgrade allows RUSAL to substantially raise the plant's billets productivity and improve the quality. It also allows RUSAL products to access new markets," said Vladimir Smirnov, Head of RUSAL’s Alloy Export Department. "This is the first stage of our co-operation which now opens the opportunity for further development."

"The Sayanogorsk casthouse will be an important source for Hydro Aluminium in serving the increasing market needs in Asia and North America for high quality extrusion ingots," said Harald Aasheim, head of Hydro’s extrusion ingot business unit. "This will strengthen our global capabilities as the preferred supplier of these products."