AluNews - October 2005

VALCO gives industries lifeline

GhanaWeb, Ghana 01-Oct-2005

The Volta Aluminium Company (VALCO) has started producing molten aluminium for supply to Aluworks Limited to meet local aluminium demands after a three-year break that has affected local production of Aluminium products.

About 300 tonnes of Aluminium has already been supplied within the last two weeks to Aluworks which has since the closure of VALCO, been importing Aluminium ingots from South Africa. VALCO, originally owned by Kaiser Company- 90 per cent and Alcoa -10 per cent, was shut down in October 2002 following disagreements with the Government of Ghana, principally over power supply rates.

Determined to revive VALCO, the government acquired Kasier's shares and now holds 90 per cent with partners Alcoa owning 10 per cent. The managing director of VALCO, Seth Adjei told the Times on Thursday that VALCO was way ahead of schedule as almost 60 of the 100 cells in the first pot line had been started and were producing Aluminium.

He said the country's main concern now is to produce enough to feed the local Aluminium industry, which nearly collapsed due to the break in VALCO's production. He described VALCO's restart as historic because it is the first time in its 38-year history that the restarting of the plant had been done with wholly Ghanaian manpower as compared to the past where restart schedules were done under the supervision of expatriates.

Nalco plans to set up JV project abroad

Sify, India Saturday, 01 October , 2005, 12:08

Bhubaneswar: Public sector National Aluminum Company (NALCO) likely to set up a joint venture project abroad with its surplus alumina as a part of its business development strategy. Today in Sify Finance

Disclosing to newsmen here yesterday NALCO Chairman-cum-Managing Director C R Pradhan said three companies in Oman, Dubai and Qatar have been short listed for setting up of an Aluminum Plant in joint venture.

He said a consultancy company has been asked to prepare a feasibility report within a month. It would be submitted before the cabinet for approval.

Pradhan said the company decided to go for a joint venture with foreign company to utilise its surplus alumina to the tune of 1.2 million tonnes to be available after the completion of the second phase expansion.

The NALCO CMD said the company has signed up agreement with MOSCOW Institute of Steel and Alloys (MISA), Moscow in collaboration with Romelt Sail India Limited (RSIL), Delhi for development of effective technology for extraction of aluminum from Partially Laterised Khandolite (PLK).

Power costs drive Eastalco to the brink

Hagerstown Morning Herald, MD Sunday October 2, 2005


When the Maryland General Assembly passed electricity deregulation in 1999, the intent was to give consumers and businesses the opportunity to shop for cheaper power.

But when the cap on business rates expired in January, there was no cheaper electricity to be found and many local companies saw power bills soar by 30 percent or more. For one local industry that employs about 200 Washington County residents, higher power prices could put them of business.

The company is Eastalco, a division of Alcoa Primary Metals that employs 630 at an aluminum-smelting plant in Buckeystown in Frederick County. If no solution is found, officials of the United Steelworkers of America said Eastalco could send out Worker Adjustment and Retraining Notification (WARN) notices as early as Oct. 15.

The WARN act, passed in 1988, provides workers, their representatives and local government officials 60 days' notice whenever a company plans to close or lay off massive numbers of workers.

Union officials aren't exaggerating the seriousness of the problem, according to Earl H. Robbins Jr., manager of North American Public Strategy for Alcoa.

Barring some change, Robbins said, the power Eastalco buys that now costs approximately $87 million per year will go to $160 million.

"In the smelting process, one-third of our costs is in the electricity. And the way the power market has changed, Allegheny (Energy) will only sell us power at market rates. At those rates, we won't be able to afford it," he said.

Chip Cook, president of Local 7886 of the Steelworkers of America Amalgamated, said that his organization has met with members of Congress and Frederick County's delegation to the Maryland General Assembly in an effort to get their help.

"We've had talks to make them aware of the situation," Cook said, adding that some sort of emergency legislation might be written to help the company hang on until another answer is found.

Asked what that might involve, Cook said that "the biggest thing is a commitment by Alcoa to invest some resources, which may allow a long-term solution."

Cook said that what the union has in mind is an investment in a coal-fired generating plant that would allow the firm to generate its own affordable power.

Asked if Alcoa was seriously considering such an option, Robbins said it was.

"We have discussed many options. A coal-fired plant is one of them" he said.

But Robbins added that "it wouldn't solve our immediate problem. It would be a long-term solution. In the meantime, we have to find a way to bridge that cost."

At one time, Robbins said, there were discussions about building a power plant fired by natural gas on the site.

But given the rise in gas prices in the past few years, Robbins said, "that's not even a viable option now."

Asked about when WARN notices might be sent, Robbins said that "I know we will send them out as required by law if we don't have a solution in the next couple of weeks."

For Cook and his union colleagues, the problem is also personal.

Phil Wagner, Local 7886 Eastalco unit president, said that both he and Cook have been Eastalco employees for 30 years, during which Eastalco has provided them with a wage that averages $17 an hour and good benefits.

"It's one of the few companies to provide both pension benefits and retiree health care," Cook said.

Asked if the company might offer buyouts if WARN notices are sent out, Cook said that hadn't been discussed yet.

If and when it does, Cook said that the union would begin what is known as "effects bargaining," in which discussions include such topics as severance pay. Some workers will be eligible to retire and receive pensions right away, Cook said, while others could receive supplemental unemployment payments.

Not only would the plant's closing affect Eastalco's workers, Cook said, but it would also hurt also those businesses that supply the smelter with goods and services.

Still, Cook and fellow union officials remain hopeful.

"Long term, we may be able to get some help. Short term, we need some help to ride the storm out," he said.

In the next few months, state lawmakers who six years ago foresaw happy consumers shopping for the cheapest power just as they shopped for cheaper groceries will now have a chance to apologize for that inaccurate prediction and to try to make some changes in the law.

Will such changes come too late to save Eastalco? It's hard to say. Eastalco is facing a $73 million power increase, but finding even half that much in the state budget could be difficult and would result in an annual subsidy of more than $50,000 apiece for each of those 630 jobs.

However, there is still time to take care of average citizens, who will face "market rate" power costs in 2008, when the cap on residential rates comes off. This should be an election issue for every member of the General Assembly running in 2006.

If you would like to help lobby on behalf of Eastalco, contact Cook by e-mail at or by phone at 301-582-2899.

Bob Maginnis is editorial page editor of The Herald-Mail newspapers.

Alcan in preliminary talks about possible sale of Swiss smelter, Canada October 3, 2005

MONTREAL (CP) - Aluminum giant Alcan Inc. said Monday it has entered into preliminary discussions with a Swiss-based consortium for the sale of an aluminum smelter in Sierre, Switzerland.

"Alcan has informed government agencies, works councils and its Steg employees of its intentions," said Daniel Anliker, site director, Alcan Aluminium Valais SA in Sierre.

Subject to the successful completion of the preliminary discussions, a definitive timeframe for the sale will be determined, Alcan said.

At the same time, the company (TSX:AL) said it remains in the process of negotiating power contracts for what it calls the Steg smelter "in an effort to achieve competitive conditions."

The Steg smelter has a capacity of 44,000 tonnes per year.

© The Canadian Press 2005

Venezuelan government earmarks US$104 million for Alcasa modernization, IL 03-Oct-2005 Harvey Beltran writes: Venezuela's government has approved US$104mn to modernize Venezuelan aluminum reducer Alcasa, a subsidiary of state heavy industry holding company CVG.

"This investment will enable the company to upgrade the reduction cells at lines 1 and 2 and at the same time maintain installed capacity of primary aluminum output," an Alcasa official told BNamericas.

The investment also will upgrade operations at the reducer's foundry area that could receive more metal and produce steel slab and cylinders.

The company also is negotiating resources to upgrade the rolling plant and raise installed capacity from the current 33,000t/y to 45,000t/y, the official said.

Part of these new resources will be earmarked to modernize the Clesim Cosim and Davy McKee rolling plants and to honor the agreement signed with state-owned oil company PDVSA to supply slabs for the shipbuilding industry, he added.

Alcasa is 92% owned by CVG, with the remaining 8% held by US-based Alcoa. Currently Alcasa has installed capacity of 210,000t/y, which could be expanded to 450,000t/y.

Global Alumina closes off-take and initial subscription agreement with Dubai Aluminium

Yahoo! News (press release) Tuesday October 4, 11:44 am ET

TORONTO, Oct. 4 /PRNewswire-FirstCall/ - Global Alumina Corporation (Global Alumina) (TSX: GLA.U - News) announced today that it has entered into a long-term off-take agreement with Dubai Aluminium Company Limited (DUBAL) covering 40% of the expected alumina production from Global Alumina's planned alumina refinery in the Republic of Guinea. As announced yesterday, Global Alumina has also closed the initial US$20 million tranche of DUBAL's estimated US$200 million subscription agreement.


"Securing the long-term sale of 40% of the planned production from the initial phase of Global Alumina's refinery with a company of the stature and financial strength of Dubai Aluminium provides a strong foundation for raising the balance of our capital requirement," noted Bruce Wrobel, Chairman and CEO of Global Alumina.

DUBAL, a company 100% owned by the Government of Dubai, UAE, and Guinea Alumina Corporation S.A., a wholly owned subsidiary of Global Alumina, have entered into a twenty year purchase and sale agreement for 1,120,000 tonnes of alumina per annum from Global Alumina's proposed 2.8 million tonne refinery, which is expected to come on stream in late 2008.

In addition, DUBAL has purchased 10 million shares of Global Alumina stock for US$20 million. Under the existing subscription agreement between Global Alumina and DUBAL, upon the satisfaction of certain pre-conditions, DUBAL will ultimately acquire additional common shares for an estimated purchase price of US$180 million. This additional investment will bring DUBAL's ownership in Global Alumina to 25% of Global Alumina's then-issued and outstanding common shares. Details of the US$200 million subscription agreement were announced on August 11, 2005.

"We are pleased to add DUBAL as a strategic partner in Global Alumina. DUBAL's experience in the development, financing, construction and operation of aluminum smelters of a similar size and complexity to our planned alumina refinery in Guinea is already making a positive contribution toward the implementation of our exciting venture" added Mr. Wrobel.

Kaiser Aluminum Seeks To Extend Control Of Chapter 11 Case

Yahoo News Wednesday October 5, 10:18 PM

WASHINGTON (Dow Jones)--Kaiser Aluminum Corp. (KLUCQ) is seeking, for the 11th time, to extend exclusive control over its Chapter 11 case to give it more time to win judicial approval of its reorganization plan.

Preserving exclusivity until the turnaround plan - and a separate liquidation plan for its Jamaican and Australian units - is approved will allow an orderly exit from bankruptcy protection, Kaiser Aluminum said in a court filing last Friday.

The filing, obtained Wednesday by Dow Jones Newswires, seeks to extend to Jan. 31, 2006, the company's sole right to file a Chapter 11 plan, as well as pushing forward its sole right to lobby creditor support for its plan to March 31 next year.

The creditors committee supports the company's latest exclusivity extension request.

Exclusive periods prevent other parties from filing competing plans, enabling the company in bankruptcy to retain control of its reorganization process.

Kaiser Aluminum's exclusive right to file a plan has been extended by the U.S. Bankruptcy Court in Wilmington, Del., on 10 prior occasions, and was set to expire Sept. 30. The company's latest extension request, however, was filed before the expiration, preserving exclusivity until Judge Judith Fitzgerald holds a hearing on the extension on Nov. 14. Objections are due Oct. 17.

As reported, Fitzgerald will consider approval of the company's reorganization plan, which recently went out to creditors for their vote, at a confirmation hearing set for Jan. 9 and 10.

Confirmation hearings on the liquidating plans for Alpart Jamaica Inc., Kaiser Jamaica Corp., Kaiser Alumina Australia Corp. and Kaiser Finance Corp. concluded on May 2; however, the court hasn't yet entered a confirmation order.

Foothill Ranch, Calif.-based Kaiser Aluminum and 20 affiliates or units filed for Chapter 11 protection Feb. 12, 2002, upon facing tough industry conditions and asbestos liabilities. The company fabricates aluminum products for aerospace, engineering, automotive and custom industrial applications.

Aluminum Dust accumulation blamed in ’03 blast

Fort Wayne Journal Gazette, IN Thu, Oct. 06, 2005

Feds weigh in on deadly Huntington plant explosion

By Rebecca S. Green. The Journal Gazette

Almost two years after an explosion ripped through a Huntington manufacturing plant, killing one and injuring six, federal officials Wednesday put much of the fault on the manufacturing company for failing to properly handle and dispose of highly explosive fine-powder aluminum dust.

The explosion and fire at the Hayes Lemmerz International-Huntington Inc. plant at 1870 Riverfork Drive on Oct. 29, 2003, drew the attention of the U.S. Chemical Safety and Hazard Board, or CSB. The independent federal agency investigates the root causes of chemical accidents.

According to the report, the aluminum dust ignited in the factory’s dust collection system. The dust originated in a scrap system at the plant, and a high concentration of the dust, when suspended in air, is extremely combustible.

The plant manufactures cast alloy aluminum wheels, and until the time of the explosion, had dried and melted down scrap metal chips created during its manufacturing process. The dust from the process was separated from the chips and conveyed to dust collectors on the outside of the building, according to the report.

When the dust in the collector exploded, it sent a pressure wave through the system’s ductwork and back into the building, according to CSB Chairman Carolyn Merritt. A fireball then erupted in the building, which lofted and ignited more aluminum dust that had accumulated on the rafters and equipment, she said.

Shawn Boone, a 33-year-old maintenance worker, died hours after the explosion. He had suffered burns over 90 percent of his body. Another worker, David Ripplinger, also was severely burned. Five others suffered minor injuries.

"This accident followed a classic syndrome we call ‘normalization of deviation,’ in which organizations come to accept as ‘normal’ fires, leaks, or so-called small explosions," Merritt said Wednesday. "The company failed to investigate the smaller fires as abnormal situations needing correction or as warnings of potentially larger, more destructive events. The CSB almost always finds that this behavior precedes a tragedy."

CSB investigator John Vorderbrueggen said the agency responded to the Hayes factory within 24 hours of the explosion. What it found was inches of explosive aluminum dust still coating the rafters.

To blow the roof off the building, a layer of dust only as thick as a dime is needed, Vorderbrueggen said.

Aluminum dust is among the most explosive of all metal dusts, Merritt said, and the conditions in the dust collectors presented the ideal environment for an explosion and fire.

And it doesn’t take much to set it off. Anything from a hot surface to static electricity to a spark from a metal tool dropped on the concrete floor could ignite it.

The CSB listed 22 key findings against the company in its report – including inadequate housekeeping in the foundry, insufficient maintenance of the chip processing equipment that led to the dust accumulation and maintenance workers not wearing flame-retardant clothing at the time of the explosion.

They also noted that Indiana fire inspectors are not trained in recognizing or preventing combustible dust hazards.

The CSB cannot fine the company, issue citations or sanction Hayes Lemmerz in any way, officials said. They hope the report will serve to educate the public, fire officials and manufacturing companies about the dangers posed by explosive dust.

"We’re finding the situation with explosive metal dust is not well-known or identified within the industry," Merritt said.

The best thing they can do to memorialize Boone is to get the message out and to get companies to take steps to prevent this, she said.

Marika Diamond, director of public relations for Hayes Lemmerz International Inc., said the company had no comment on the CSB’s findings because the 2003 explosion is the subject of pending litigation. The company has paid more than $42,000 in fines levied by the Indiana Occupational Safety and Health Administration.

According to court documents filed in Huntington Circuit Court, Hayes Lemmerz is the defendant in a lawsuit filed by Boone’s mother, David Ripplinger and Rhonda Ripplinger.

The company is joined as a defendant by the manufacturer of the chip-melting equipment, and a furnace cleaning company.

According to the complaint, the defendants were negligent in their duties to design, build, install, clean and/or monitor the aluminum dust collection system and aluminum chip reprocessing system at the plant.

The lawsuit was filed in May, and it appears that Hayes Lemmerz has not answered the complaint, aside from numerous motions for an extension of time, according to court documents.

A jury trial has been requested.

For Boone’s sister, Tammy Miser, Wednesday’s report brought mixed emotions.

"I had a mini-breakdown today," she said in a telephone interview from her Lexington, Ky., home. "I don’t think anything in the report is surprising to me."

Miser has been busy since Boone’s death, founding an organization, United Support and Memorial for Workplace Fatalities, to raise awareness about workplace fatalities and support people who have lost loved ones.

The group is joining forces with organizations, including the National Council for Occupational Safety and Health, to begin a "Stop Corporate Killing Campaign."

Miser said the report makes their understandings and perceptions of the explosion more "permanent," and gives them a leg to stand on as they try to push for stiffer regulations with the federal Occupational Safety and Health Administration.

"Now we’re finally starting to get different people together on these issues," she said. "I was beginning to wonder if it was doing any good … something good is coming out of it."

Eastalco, state consultant at odds

Business Gazette, MD 06-Oct-2005

by Kevin M. Smith, Staff Writer

Eastalco officials have set a new deadline — Oct. 15 — to decide whether to close down the Frederick aluminum plant at the end of December.

Eastalco officials and a state-hired consultant appear at odds over electricity issues, as the new Oct. 15 deadline approaches for a decision on shutting down the Frederick aluminum plant.

Eastalco spokesman Earl Robbins said the company hopes the General Assembly will intervene to keep down the plant’s costs with Allegheny Power.

However, South River Consulting of Baltimore, which was contracted by the Maryland Department of Business and Economic Development to work out a solution to the plant’s rising electricity costs, has been exploring the possibility of Eastalco parent Alcoa building or purchasing its own energy generation facility in Maryland, said Mark Schroeder, a principal at South River.

Schroeder said South River will present its proposals ‘‘within the next couple of weeks."

Eastalco’s 1994 contract with Allegheny Power expires in December; Allegheny has proposed a new contract that would increase Eastalco’s annual electricity bill from $87 million to $159 million, an 82 percent hike, said Brian Dahlberg, works manager at Eastalco. According to Allegheny, Eastalco now pays about 50 percent below market cost.

The plant uses about 350 megawatts, Robbins said — enough to power the homes of about 350,000 people.

In August, Eastalco officials said that they would need to decide by mid-September whether to close the plant at year-end.

Negotiations between Eastalco and Allegheny stalled and with DBED’s interest in finding a solution, Eastalco postponed its deadline by a month.

Closing the plant would mean the loss of almost 640 jobs in Frederick County.

‘‘We’re still trying to find a solution," Robbins said.

Schroeder sounded optimistic.

‘‘We hope to get this wrapped up in the next week or two and have the options out there for the company," he said. ‘‘The state is working very hard trying to keep those jobs in Frederick County.

‘‘I think that all the options are still on the table with the primary focus on finding a solution that will work for the company," Schroeder said.

While Alcoa does own some generating units, and has sought similar solutions in the past at other locations, the Pittsburgh company discounted the idea for Eastalco.

Alcoa spokesman Kevin Lowery said it is unlikely the company will build a generating plant.

‘‘It’s a pretty big capital endeavor to create a power plant," Lowery said. ‘‘Would it be cost effective? Would it keep our rates globally competitive?"

Instead, Eastalco seems to be keeping its focus on Allegheny Power as its primary provider — which Allegheny officials say casts their company as the villain in the situation, a position they called ‘‘troubling."

‘‘One thing I would like to point out is that Eastalco seems to regard Allegheny as the only supplier in Maryland," said Allen Staggers, manager of communications for Allegheny Power in Greensburg, Pa. ‘‘To view Allegheny as the only solution is simply not accurate. There are over 40 providers" in Maryland. Eastalco, Staggers said, ‘‘is free to procure energy from any number of sources."

Staggers pointed out that Maryland law prohibits Allegheny from offering special contracts, which is what Eastalco seeks, he said.

‘‘We are sensitive to their situation and will continue to provide power as the local provider," Staggers said. ‘‘But this has everything to do with the environment in Maryland, which fundamentally changed" with deregulation.

Eastalco’s current strategy is to try to change that environment, rather than change providers.

‘‘We’re looking at trying to get legislation that will give us some life to work out a long-term deal," Robbins said. ‘‘We’re looking at going back into regulation by the state for a short-term solution. That would be the best way to control costs for the short-term to get us to a long-term deal. I‘m pretty confident that it will take a legislative solution to get us through the short term."

Robbins said the company is assessing support for a legislative solution. ‘‘We have to find out pretty quick," he said.

With only a week or so left to make a decision on the 90-day shutdown process, Robbins acknowledged that Eastalco officials are between the proverbial rock and a hard place: A legislative solution can’t happen until the General Assembly convenes in January, after the Allegheny contract expires.

‘‘There are some things, notifications that the law requires us to make" in the event of a shutdown, he said. ‘‘I think the last date we talked about was Oct. 15. We’re still eyeing that and gearing towards that date, but I can’t say we’ll make an announcement on that date. We’re not going to stop trying to find solutions just because we hit a certain date. I want to be optimistic.

‘‘This is the direction we have chosen to take. It is not the direction recommended by the consultant."

Copyright © 2005 The Gazette

BHP, Mitsubishi to build Sarawak smelter

Business Times - Malaysia, Malaysia 06-Oct-2005


ANGLO-AUSTRALIAN miner BHP Billiton and Japanese trading and investment house Mitsubishi Corp are teaming up again to build an aluminium smelting plant in Sarawak.

Both giants have concluded a memorandum of understanding to jointly build the smelter, according to a statement issued by the two firms yesterday.

They did not provide any details nor say where the smelter will be located.

A few companies have expressed interest to build an aluminium smelter in Sarawak but nothing concrete has emerged.

Among them are a company controlled by businessman Tan Sri Syed Mokhtar Al-Bukhary, China’s Shandong Luneng Group, Cahya Mata Sarawak Bhd and an unidentified Chinese partner.

BHP Billiton and Mitsubishi have a successful history of developing projects together, including the award-winning Mozal smelter in Mozambique.

"BHP Billiton expertise in aluminium smelter development and Mitsubishi expertise in infrastructure development will help deliver a world-class smelter industry to Sarawak.

"Mitsubishi has also developed extensive business knowledge and expertise within Malaysia as a result of Mitsubishi’s 45-year history of operations in the country," the statement said.

BHP Billiton is the world’s largest diversified mining company with a market capitalisation of US$98 billion (US$1 RM3.77).

BHP Billiton Aluminium produces 1.3 million tonnes aluminium per annum and 4 million tonnes of alumina per annum.

Mitsubishi Corp, with a market capitalisation of US$31 billion, is one of the world’s largest diversified trading and investment companies with over 200 operation bases in about 80 countries.

Russian and SA ministers set record

Mineweb, South Africa 06-OCT-05 06:42' GMT © Mineweb 1997-2004

By: John Helmer

MOSCOW ( -- Russia's Minister of Natural Resources, Yury Trutnev, who is the co-chairman of the Russia-South Africa intergovernment committee on trade and economic cooperation (ITEC), brought two days of proceedings to a close with a 12-minute press conference in Moscow on Wednesday.

According to Trutnev, he and SA's co-chairman, Foreign Minister Nkosazana Dlamini-Zuma, signed a "framework" for cooperation. But he declined to provide details of how this differed from the series of ITEC boilerplate documents that have been signed by the two sides before. Trutnev said Russia has interests in SA platinum and oil, but he did not go into details.

Barry Davison, the Anglo American director and former head of Anglo Platinum, and Richard Duffy, head of Anglo Gold Ashanti's new projects, participated in business discussions. Duffy has been negotiating to buy Russian gold assets, but so far he has been beaten to the punch by Russian and Canadian competitors.

SA energy investors Petro SA and Mvela are regular visitors to Moscow, and they reappeared this week. But so far, Russian oil majors say they are concentrating their forward investment in Africa in Libya, Algeria and Nigeria. SA purchases of Russian crude oil have been very small to date, and there is no sign that government encouragement of diversification of oil import sources has had any impact in Moscow.

Other South African miners and industry participants who were represented at ITEC include Mintek, Xstrata, Rand Gold, and Sekoko Resources.

South African coal may be on the menu for Russian Aluminium (Rusal), which needs additional energy sources for its bauxite and alumina operations in Guinea. Rusal is currently under pressure from Chinese and North American rivals in Guinea, and has failed to follow through on promises to start operations in Nigeria and the two Congo republics.

South African government officials are coy about their Russian objectives, but emphatic that they have nothing to do with the major mining transactions that have dominated Russian-SA corporate relations over the past twelve months. According to Sandile Nogxina, director-general of the Department of Minerals and Energy, he and his ministry have had nothing to do with the Norilsk Nickel attempt to take control of Gold Fields, and they have no view on the issue. He is equally non-committal and uninvolved, he says, about De Beers's attempt to retrieve its stake in diamond-mining mining in the Arkhangelsk region for Archangel Diamond Corporation. There has been no South African government involvement in a multi-million dollar dispute between Bateman and Alrosa over payment for proprietary mining technology.

In parallel, but unconnected to ITEC or the South African business programme, Gary Ralfe and Gareth Penny, the two heads of De Beers, were also in Moscow this week. They had detailed talks with Alrosa CEO, Alexander Nichiporuk, and met briefly with Trutnev, Russian sources said.

De Beers is hoping to finalize the terms of its export agreement with Alrosa, which is in the final stage of approval by the European Commission in Brussels. It is also discussing with Alrosa how the two leading diamond-miners in the world may be able to collaborate in the development of new mines in undeveloped Russian diamond fields.

South African officials have justified the unusual expense and effort of the annual ITEC jamboree by saying publicly that it is intended to stimulate investment and trade. Two years ago, ITEC was the forum for the South Africans to secure Russian agreement to remove a 5% import duty penalty that had been applied to SA fruit and other foodstuffs, and allowed rival goods from Chile and Argentina to enjoy a market advantage. Fruit -- citrus, apples and grapes -- is the principal South African export to Russia, worth currently about $60 million.

Russian exports of steel have been hindered for several years by anti-dumping penalties sought by South African steelmakers, but these have now been dropped, and the southward trade is picking up, led so far this year by vehicles.

In her brief public appearance in Moscow on Wednesday, Dlamini-Zuma added her agreement with Trutnev, noting that South African exports to Russia reached $130 million in 2004. The combined value of South African exports and Russian exports to South Africa has continued to rise this year, almost doubling in the six months to June 30, compared to the same period of 2004.

What made this week's Moscow session unusual was the presence of the largest official delegation from South Africa ever to come to Russia, topping even the delegation that accompanied Nelson Mandela on his farewell presidential visit.

South African Embassy spokesman Sylvester Rascher refused to disclose details of the delegation, or its work.

According to Russian sources, 64 South African officials flew to Moscow for the ITEC conference, including Dlamini-Zuma, Minerals & Energy Minister Hendricks, Health Minister Tshabalala-Msimang, Deputy Minister of Sport Oosthuizen, and groups of officials from the departments of Science and Technology, Transport, Water Affairs & Forestry, and Trade & Industry. A group from Northern Cape province was also included.

BHP Billiton Confirms Malaysia Aluminum Smelter JV

Yahoo! News Friday October 7, 12:43 PM

SYDNEY (Dow Jones)--Anglo-Australian miner BHP Billiton Ltd. (BHP) Friday confirmed it has signed a memorandum of understanding with Japan's Mitsubishi Corp. (8058.TO) to jointly develop an aluminum smelter in Malaysia.

"The MOU signals a very early stage of assessing the project before it gets anywhere near pre-feasibility then feasibility," a BHP spokeswoman told Dow Jones Newswires.

Despite a Bernama news agency report citing a joint press release, she said BHP Billiton is yet to issue any release in line with its policy of not commenting on such early stage projects.

Bernama reported the smelter project in Sarawak state is key to the government's development of the 2,400 megawatt Bakun hydroelectric dam given the energy-intensive smelting process.

The Sarawak project would be the global miner's first step into Malaysia. It currently produces over a million metric tons a year of primary aluminum from smelters in South America, Africa and Australia.

Mead Smelter Oct 2005

Just for those people who worked at the Kaiser Mead Smelter I posted some pictures I took today from Hawthorne road, looking at the potrooms. Note the piles of cut steel structures.

Union says Corporación Venezolana de Guyana (CVG) subsidiary running into debt

Daily Journal, Venezuela 08-Oct-2005

A labor leader has alleged that the state company, Venalum – which is part of the Corporación Venezolana de Guyana (CVG) – is running up debts with suppliers.

José Luis Azuaje, a senior official at the aluminum workers’ union, claimed that Venalum owed its raw material supplier, Bauxilum Bs.16 billion, according to a report in Ultimas Noticias newspaper on Friday.

The electricity company Edelca, was owed Bs.20 billion and twice that much was owed to other suppliers, the report added.

This is not the first time that unions at the company have questioned the way Venalum was being managed.

BHP in Malaysia smelter queue

The Age (subscription), Australia October 10, 2005

By Rod Myer

BHP Billiton and partner Mitsubishi could spend as much as $US2.5 billion ($A3.3 billion) on developing an aluminium smelter in the Malaysian state of Sarawak, after joining the impressive list of companies conducting feasibility studies on the project.

BHP and Mitsubishi, Japan's biggest trading company, would take advantage of a massive hydro-electric scheme that Malaysia will establish in the jungle-bound province on the island of Borneo if they go ahead with the smelter. The $US2.4 billion Bakun scheme, to be completed by 2007, will have generation capacity of 2400 megawatts.

BHP said it was too early to reveal details of its smelter plan, but Malaysian construction company Cahya Mata said its proposal for an aluminium smelter in conjunction with two Chinese companies would cost $US1 billion to $US2.5 billion. Other companies interested in the project include Rio Tinto, Alcan and Malaysia's Smelter Asia.

BHP is spending heavily on new development to take advantage of the resources boom created by China's appetite for raw materials. It has about $US11.9 billion worth of mine developments on its agenda.

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BHP Billiton confirms Sarawak smelter plan based on Bakun hydro scheme

Forbes 10.09.2005, 10:32 PM

SYDNEY (AFX) - BHP Billiton and partner Mitsubishi Corp have confirmed their planned aluminum smelter in the Malaysian state of Sarawak will use power from the controversial 2.4 bln usd Bakun hydro-electric scheme.

A BHP Billiton spokeswoman said the proposal is based on using the Bakun scheme -- due to be finished by 2007 -- as an electricity source but said it is too early to provide further details.

The partners announced last week they have concluded a memorandum of understanding on the project.

They join several other companies, including Rio Tinto, Malayasian construction group Cahya Mata Sarawak Bhd, Malayasia's Smelter Asia, and Alcan Inc, which have put forward proposals to build smelters in Sarawak, on Borneo island.

Cahya Mata has stated it is studying the feasibility of building a smelter in Sarawak with China's Luneng Group Ltd and Sinohydro Corp, at a cost of 1-2.5 bln usd.

The three companies signed an MoU in May to undertake a feasibility study to set-up, own and operate the proposed smelter.

Opposition parties demands cancellation of agreement with Vendant, India 09-Oct-2005

Bhubaneswar: Four Opposition parties in Orissa today demanded immediate cancellation of agreement with Vedant Aluminum Limited (VAL) for setting up of alumina plant in Kalahandi district.

The Orissa Gana Parishad (OGP), CPI, CPM and the Janata Dal (S) JD (S) in a statement here also strongly criticised the Naveen Patnaik government for handing over valuable mines to the private and multinationals sacrificing interest of the state.

The Opposition parties led a demonstration of thousands of tribals in Bhawanipatna before the Kalahandi District Collector office on October 7 last in Bhawanipatna. They submitted a memorandum addressed to the Governor urging the DC to initiate action against the officials, cancel mining lease of the Niyamgiri hill and stop all construction work of VAL.

OGP President Bijaya Mohapatra alleged that the Chief Minister had violated all norms while signing agreement with VAL for Alumina plant and displaced the tribals by permitting the company to explore mines from the Niyamgiri hill.

''The Chief Minister for his own interest has shown undue favour to POSCO, JINDAL and VAL at the cost of state exchequer'' he said and called for a statewide agitation against corruption in mining deal.

State Secretaries Nityananda Pradhan of CPI and Janardan Pati CPM have also criticised the BJD-BJP government agreement ignoring various anti-poverty programmes and development of agriculture in the poverty-stricken Kalahandi district.

China demand, input costs keep aluminium price high

Source: Dow Jones Metals Place, UK 11-Oct-2005

Aluminium prices will likely stay strong in the coming months, driven by continued strong demand in China, as well as higher production costs due to tight alumina supply and rising energy costs, analysts said this week.

There has been an increase in global production of the metal, but the issue is that demand is growing even faster, said Merrill Lynch analyst Daniel Roling.

China is the main driver of this demand, with aluminium consumption expected to grow 7.2% annually in the next five years. Chinese demand for aluminium is expected to reach 6.78 million tons this year and 7.66 million tons in 2006, according to estimates by China Nonferrous Metals Industry Association.

In comparison, the rate of world average primary aluminium consumption growth in the past five years was 4.6%. In Europe it was 3.76% while North America saw a growth of just 0.37%.

Roling tips an average aluminium price of 90 cents per pound ($1,984 per ton) in 2006, compared with 83 cents/lb so far this year.

The London Metal Exchange three-month aluminium contract ended at $1,903/ton Monday.

The world for now will be watching the impact of China's new aluminium industry policy, which is expected to be announced this month, said Antaike analyst Wang Feihong.

The policy is expected to call for the integration of aluminium production facilities with upstream and downstream companies, as well as an integration of aluminium producers and electricity generators.

Analysts are adopting a wait-and-see attitude as to how the new policy will help check expansion in the sector as previous measures with similar objectives seem to have failed.

Despite the government's efforts to rein in the sector, China remains a net exporter of aluminium, exporting 944,016 tons in the first eight months of this year, up 4% from a year ago.

China produced 4.8 million tons of aluminium from January to August, up 21% on year. State-owned Beijing Antaike Information Development Co. estimates China's aluminium output this year will reach 7.50 million tons, up 14% from 6.56 million tons last year.

Global aluminium production in the first eight months of this year rose 6.3% on year, mainly due to an increase in Chinese production, according to latest figures from the International Aluminium Institute.

Tight alumina supply, rising energy costs

Although aluminium production is on the increase, there hasn't been a similar rise in production of the raw material used to make it. Limited production growth in alumina has resulted in supply tightness and the situation is exacerbated by higher world aluminium production capacity, said analysts.

Spot alumina prices have jumped more than 20% in the past month to over $500 a metric ton.

Last week, India's second-largest aluminium producer, National Aluminium Co., or Nalco, sold 25,000 tons of alumina to a Hong Kong trading company at $516.33 per ton, free-on-board, said a company spokesman.

The cost of producing aluminium has also been driven up by rising energy costs. Aluminium is one of the most energy intensive metals to produce, energy costs contributing 35% to the overall cost of production.

Analysts estimate between 1.2-1.6 million tons-per-year of the world's aluminium capacity is threatened with closure in the next three years, primarily in Europe and North America, due to the high operating costs in those regions.

Lower-cost producing regions to gain

But aluminium prices aren't about to set new highs as production in energy-surplus locations such as the gulf countries is expected to pick up as the result of an industry shake out.

In fact, Barclays Capital has revised downward its third quarter forecast for next year to $1,825/ton from $1,880/ton and to $1,800/ton from $1,850/ton in the fourth quarter of 2006.

In the gulf state of Bahrain, state-controlled Aluminium Bahrain B.S.C., or Alba, opened a $1.7 billion production plant last month, increasing total production capacity to 840,000 tons a year from 530,000 tons a year, making it the largest smelter in the Middle East.

State-owned Dubai Aluminium Company, or Dubal, has a $284 million expansion project lined up, which will add 100,000 tons a year to the company's production capacity by 2006, bringing the total to 861,000 tons a year.

Aluminium producers outside of the Middle East are also migrating to the region to take advantage of cheap energy found there.

India's Nalco is planning to build a $2.5 billion aluminium smelter with 250,000-300-000 tons-per-year capacity in Abu Dhabi, while Norsk Hydro's 570,000 tons-per-year smelter in Qatar is due to start in 2009.

Ore Supplier Eyes China Growth

Investor's Business Daily (subscription) 10/11/2005


Brazilian iron-ore giant CVRD (RIO) has China on its mind.

CVRD, short for Companhia Vale do Rio Doce, is one of the world's largest iron-ore suppliers. Though China isn't CVRD's biggest user, enormous demand for iron ore by Chinese steel makers is keeping prices for iron ore high.

CVRD's average iron ore price in the second quarter was $38.58 a ton, almost twice as much as the year before. The prices factor in freight rates. CVRD ships most of its output overseas.

Price increases were the main engine behind the company's 81% year-over-year increase in second-quarter revenue, which reached $4.1 billion. Earnings more than tripled to $1.41 a share. CVRD reported an 11.8% quarterly increase in the amount of iron ore and pellets it shipped.

Unlike prices for most base metals, iron ore prices are negotiated once a year, typically in the first quarter. This year the benchmark price rose 71.5% to around $21 a ton. That doesn't include freight, which can add $20 to $30 a ton.

Freight en route to China saw the biggest increases per ton of any route in the world, says analyst Jorge Beristain of Deutsche Ixe.

"The key issue for CVRD is price," Beristain said. "China is the price setter."

China accounts for about a third of steel production in the world. Mills need iron ore to make steel.

"China has a long way to grow yet before peaking, in our view," CVRD Chief Financial Officer Fabio Barbosa told analysts in a recent conference call.

A Change Of Heart

As recently as a few months ago Wall Street predicted that benchmark iron ore prices in 2006 would fall from today's high levels. Analysts also predicted that steel production in China would slow after five years of 30% compound annual growth rates.

Those declines aren't expected to happen now, Beristain says. Current speculation is that iron ore prices will rise 10% to 20% next year, he says.

Revised estimates caused a sharp rally in CVRD's stock in August. The month before, Moody's Investors Service upgraded CVRD's credit rating to investment grade, which was considered another positive driver of the company's stock.

Some observers expect the current cycle to last beyond next year.

"Iron ore prices should remain high for over the next two years and at a higher plateau over the long term," Merrill Lynch analyst Andrea Weinberg wrote in a Sept. 26 research note. "CVRD would generate the highest returns in the industry."

Her latest estimate is that the benchmark price for iron ore will reach $26 a ton in 2006.

Analysts surveyed by First Call expect CVRD's 2005 earnings to reach $4.45 a share, then move up 17% to $5.20 in 2006.

Sales of iron ore and pellets to China comprised nearly 19% of CVRD's total in the second quarter, up from 15% a year earlier.

Sales to Europe, where about 30% of CVRD's iron ore is shipped, grew only marginally. Sales to Japan and the U.S. were down. Japan received 10% of CVRD's iron ore in the last quarter.

Iron ore produced in China tends to be low quality, meaning it takes more iron ore to make steel than it does using higher quality grades. CVRD's iron ore is high grade.

"The pressure for more high quality iron ore is increasing (from China), so we are benefiting from this point," Jose Martins, CVRD's executive director of ferrous minerals, said in the recent conference call.

There is one problem, however: CVRD can't produce enough iron ore to meet demand. The company plans to spend $3.3 billion in capital improvement projects this year, in part to expand production capacity.

Company officials have said they expect to spend at least as much next year. They estimate output will reach 300 tons a year by the end of 2007, up from 200 tons last year.

Meanwhile, Merrill Lynch's Weinberg expects CVRD to generate $7.3 billion in cash next year, which should lead to higher dividends for shareholders.

Though CVRD officials recently agreed to pay another $300 million in dividends in addition to the $1 billion previously announced earlier this year, the equivalent 2005 dividend yield of 2.6% is below the historical 3.5% to 4.5% range, Weinberg noted.

Why the lower dividend? In her report, Weinberg speculates that it's because of CVRD's proposed bid to take over Canada's Canico Resource Corp.

The $650 million deal, which hasn't been approved by Canico shareholders, would give CVRD a second nickel-mining business.

Part of the firm's ongoing strategy is to diversify into other commodities such as copper, aluminum and nickel.

Chalco project

Shanghai Daily, China 2005-10-12 Beijing Time

ALUMINUM Corp of China, or known as Chalco, launched its 3.67-billion-yuan (US$453 million) alumina project with a capacity of 800,000 tons per year, the State-owned Assets Supervision and Administration Commission said yesterday. The project is in Shanxi Province.

The biggest alumina maker in the country will boost its alumina capacity in Shanxi to 2.2 million tons annually.

Russian Aluminum Won't Help Aluminum of Kazakhstan

Kommersant, Russia 11-Oct-2005

The joint Russian Aluminum-Eurasian Financial and Industrial Co. project to construct a bauxite and aluminum complex in Kazakhstan will not be implemented. Neither company is providing an official explanation, but unofficial sources say that the companies were unable to come to the necessary agreements. Russian Aluminum needed a bauxite plant, while Alexander Mashkevich, owner of the Eurasian Financial and Industrial Co. and Aluminum of Kazakhstan has promised the Kazakh government an aluminum plant. Russian Aluminum and Eurasian Financial and Industrial Co. signed a memorandum on the joint construction of a bauxite and alu8minum complex last spring. The project was to be worth $3 billion and consist of a bauxite plant with a capacity of 1.5 million metric tons per year and an aluminum plant with a capacity of 500,000 tons per year. The plants were to be built simultaneously with a start at the beginning of 2006 with an operator owned jointly by the two sides.

Mashkevich won a tender for 31.7 percent of Aluminum of Kazakhstan through the Swiss-register Corica company. That stock, combined with his previous holdings gave him a controlling package. One of the conditions of the tender, however, was the construction of an additional plant to bring the country's total aluminum capacity up to 1 million tons per year. Russian Aluminum, which produces 75 percent of its raw materials, was interested in the bauxite facility. When the difference in interests led to the dissolution of the partnership, Russian Aluminum began to concentrate on its own projects to produce bauxite in Guinea and Guyana and expand production at its Achinsk and Nikolaevsk plants. The purchase by Russian Aluminum of a production license for the Severo-Onezhskoe bauxite deposit undoubtedly also contributed to the reconsideration of the partnership with Mashkevich. Russian Aluminum plans to build facilities there with a capacity of 1.4 million tons per year. Also, Russian Aluminum signed an agreement with SUAL, another Russian aluminum company, for the joint construction of a bauxite plant with a capacity of 1.4 million tons for $1.2 billion.

Russian Aluminum states that Kazakhstan is still a priority location for it. "We have not given up our plans and are looking at other options for implementing [bauxite and aluminum] projects in that country. In particular, we are negotiating with the Kazakh government and are preparing proposals for participation in the economy of that country," the company's press service stated.


Russian Article as of Oct. 11, 2005

Mibam: $2 bln for raw materials, steel

Daily Journal, Venezuela - Oct 10, 2005

The Basic Industries and Mining Ministry (Mibam) announced investments worth $2 billion for a raft of projects, including bauxite mining, a new aluminum producer and a steel- maker for the domestic market.

Mibam Minister Víctor Alvarez said the projects, to be funded by the National Development Fund (Fonden), would begin next year and continue to 2013. The fund derives its funding from the country’s hard currency reserves and petroleum revenue.

Mibam said $6.43 million would be allocated for bauxite exploration and aluminum refining and $30 million would be used to boost the country’s output of aluminum. The ministry also announced $185.6 million for the construction of a new steel producer to supply the domestic gas and petroleum industries.

"With this investment (for a new specialized steel plant) we are assured that in the short term the substitution of steel imports for domestic production," Alvarez said.

The ministry also announced $104 million in new equipment for state aluminum maker Alcasa – which aims to double its current output capacity of 210,000 tons a year by 2007, with the addition of a fifth production line. The smelter is in talks with companies such as Alcan’s French unit Pechiney and Italy’s Fata Hunter.

Another $261.2 million would be used to build a new tube plant, again for the gas and oil industries.

"The petroleum industry needs a lot of tubes for the oil pipelines, as well as the petrochemical for transporting gas," Alvarez said.

A new plant to process friable quartzite worth $150 million would also be constructed.

Other plans include a parts plant for the automotive industry and a vehicle assembly facility will receive $31.9 million. A bridge on the Orinoco River will receive $346.56 million and Bs.237.76 million will be allocated to a national telecommunications network, the ministry said.

China,US co-found big aluminum company 2005-10-12 22:28:14

BEIJING, Oct. 12, (Xinhuanet) -- China CITIC Group, the country's biggest state-owned financial group, joined hands with the Aluminum Company of America (Alcoa) Wednesday in Beijing to establish an aluminum company.

According to the bilateral agreement, the CITIC Group holds 27 percent of the stakes and Alcoa 73 percent of the joint venture, named as Alcoa Bohai Aluminum Industries Company Limited.

Alcoa plans to pour 200 million US dollars into the joint venture for the expansion of facility construction,including an aluminum hot mill plant, announced Joseph Muscari, Alcoa's executive vice president, at a press conference held here Wednesday.

Alcoa is a world leading aluminum producer and also China's biggest investor and trade partner in the aluminum industry, Muscari said, noting that Alcoa aims to shape the joint venture into a technologically advantageous enterprise with global competitiveness.

Information from the CITIC Group showed that the Alcoa Bohai Aluminum Industries Company has acquired a registered investment of 1.87 billion yuan (about 233.75 million US dollars), and the company will achieve an annual production of 22,3000 tons of high quality aluminum products after the completion of the hot mill plant in 2008. Enditem

Alcoa's Belda battles woes with new directions

Pittsburgh Post Gazette, PA - Wednesday, October 12, 2005

By Paul Glader, The Wall Street Journal

Before ending his widely praised dozen-year stint as chief executive of Alcoa Inc. in 1999, Paul O'Neill said the mark of his success would be if Alcoa went on to achieve new heights after he left.

It hasn't quite happened that way. Soaring costs for energy and raw materials as well as a weak dollar have clobbered the aluminum industry. Alcoa, one of the industry's two giants along with Alcan Inc. of Montreal, has frequently missed its earnings projections and has yet to surpass its earnings peak in 2000, the year Mr. O'Neill retired as chairman to become President Bush's first Treasury secretary.

Alcoa's stock, one of the 30 components of the Dow Jones Industrial Average, is down nearly 40 percent since the beginning of 2004. Alcoa received a shock in 2003 when Boeing Co., a customer for decades, said it would use significantly less aluminum in its next-generation plane as it turns to cheaper and lighter materials. Although demand for aluminum is otherwise strong and prices are firm, the commodity boom that's lifting steel and other metals companies is proving elusive at Alcoa.

All this has left Mr. O'Neill's successor, Alain Belda, pleading for time. "We are managing what is in our possibilities, and we do stumble once in a while," Mr. Belda told analysts during an earnings conference call this week. He said Alcoa still boasts "the highest return on capital, the best balance sheet and the best long-term growth potential" among its peers.

To make that growth happen, Mr. Belda, a 62-year-old Brazilian citizen, isn't hesitating to tinker with the playbook of his predecessor. He is retrenching from Mr. O'Neill's favorite market, cars, and refocusing on airplanes. Mr. Belda is courting global aerospace customers that Mr. O'Neill didn't and recently signed a big contract with Airbus. And he is pouring money into Russia -- a country avoided by Mr. O'Neill, who once told Fortune magazine it had trolls under every bridge collecting duties.

On Wall Street, the frequent missteps on earnings have left investors frustrated. Alcoa announced this week that third-quarter net income was $289 million, well below analysts' original forecasts though slightly above company guidance issued in late September. "Investor psychology toward the company appears hostile," wrote Prudential analyst John Tumazos in a note to investors.

The hostility is striking because Wall Street had a long love affair with Mr. O'Neill. He sliced overhead, eliminated underperforming operations and acquired two big rivals including Reynolds Metals. Revenue rose to $23 billion in 2000 from $8 billion in 1987, net income soared and the stock price rose more than fivefold.

Mr. O'Neill, who still lives in Pittsburgh, declined to be interviewed. "He went off the board when he retired," says his secretary, Linda Murray. "He didn't want people to feel like he was looking over their shoulder."

As Alcoa chief, Mr. O'Neill displayed the same plain-spoken, idiosyncratic ways that got him fired as Treasury secretary in December 2002. He built a $67 million aluminum-clad headquarters in Pittsburgh in which everyone, including himself, had the same 81-square-foot cubicle. "It was a delight to not be recognized for rank, or privilege or anything else," he said during a 2002 leadership and ethics conference at the University of Pittsburgh. Mr. O'Neill was obsessed with employee safety, believing it would improve morale and productivity.

In 1999 the former Aluminum Company of America formally changed its name to Alcoa Inc., a move pushed by Mr. O'Neill to signal that it is a global company. Nothing symbolized the change more than the promotion of Mr. Belda.

Born in French Morocco to a Portuguese mother and Spanish father, Mr. Belda moved as a child to Brazil, then Montreal, then back to Brazil. Joining Alcoa's Brazilian affiliate in 1969, he quickly rose through the ranks and as its chief pushed through new investments of more than $1 billion. The investments took years to pay off amid Brazil's political turmoil, but Mr. Belda won credit for navigating the currents and turning the Brazilian operations into a reliable profit-maker.

As the No. 2 under Mr. O'Neill, Mr. Belda directed Alcoa's adoption of quality techniques inspired by Toyota. The company's accident rate plunged. Executives who know Messrs. Belda and O'Neill describe Mr. Belda as a more attentive salesman and, after three decades in aluminum, more knowledgeable about the details of the business.

Shortly after Mr. Belda took over as chief executive in 1999 (he added the chairman's post in 2001), the company's performance began to weaken. Mr. O'Neill's growth strategy -- buying competitors and quickly boosting their efficiency -- wasn't an option any longer, because Alcoa had run out of large U.S. aluminum companies to buy. Lower aluminum prices and a weak dollar also hit Alcoa after the 9/11 terror attacks. Mr. Belda, who had said early on as chief executive that he wanted to make Alcoa into a company with $40 billion in sales by 2004, struggled to keep the figure above $20 billion.

More recently Alcoa has enjoyed higher aluminum prices amid a world-wide commodity boom. But aluminum companies including Alcoa and Alcan have experienced fewer benefits from the boom than steel, nickel or iron-ore companies. That's largely because aluminu Chinese economy less of an opportunity so far than Alcoa expected.

To combat high costs, Alcoa has idled aluminum smelters in the U.S. and announced plans for new smelters in places such as Iceland, Trinidad and Brunei where energy is cheaper. But building plants in these places takes time and money. The payoff won't come for years.

As he seeks growth, Mr. Belda is often zigging where his predecessor zagged. Mr. O'Neill long believed cars would be a growth business for aluminum because stricter environmental rules would favor the lighter metal. He was pictured in Alcoa's 1995 annual report sitting on the hood of a sleek Audi A8, built with a complete aluminum body and an aluminum spaceframe developed jointly by Alcoa and Audi.

But steel made a comeback with better lightweight products. Richard Schultz, who was formerly president of Alcoa Automotive Structures and now is a Pittsburgh-based consultant for Ducker Research, says Mr. O'Neill, for all his success, "had too much tunnel vision" on the potential for the car business.

While some within Alcoa were pushing as recently as last year to put lots of aluminum in mass-market cars, Mr. Belda is cautious. He believes the metal is too expensive for average cars at a time when car makers are slashing prices. Alcoa will work with the Ferraris of the world, he says, but "we are not making the Ford Taurus." He plans to cut 3,500 jobs at plants in Mexico that produce aluminum-related car parts.

Meanwhile, he's accelerating a push into aerospace, where margins are higher. Alcoa aluminum was used by the Wright Brothers on the first planes, and Alcoa claims to have developed and patented 95 percent of the aluminum alloys on planes flying today. It has long had a tight relationship with Boeing. But during the late 1990s, Alcoa failed to keep pace as makers of composite materials such as fiberglass and plastic combinations reduced the weight and cost of their products.

Bill Christopher, Alcoa's executive vice president for aerospace, recalls a 2003 meeting in which Boeing told Alcoa that the wing on its new wide-body jet, now called the 787, would have more plastic composites than aluminum, including a plastic fuselage. Overall, the plane is set to be only about 20 percent aluminum, instead of the traditional three-quarters. At Alcoa, the news "really shocked the organization to its bones," says Mr. Christopher.

To reverse the trend, Alcoa hired Jens Hinrichsen, the senior design engineer at Airbus. Mr. Hinrichsen headed materials selection for the Airbus A380, the new jumbo jet being built by the European plane maker. At Alcoa, he has helped reduce the weight and cost of aerospace aluminum by making larger sheets of aluminum and using new welding methods to replace rivets.

At this year's Paris Air Show, Alcoa had a two-story corporate chalet and a staff of 30. A decade ago under Mr. O'Neill, it didn't even have a booth. "Our view of the business was we developed a unique alloy, or unique sizes ... and we delivered it basically to Boeing. Ten years ago, that's it. That was the business," said Mr. Belda in an interview at the show, his suit wrinkled and shoes dusty after a dozen back-to-back meetings.

At the meeting Alcoa wooed Airbus, aerospace engine maker Rolls-Royce PLC, military jet builder Lockheed Martin Corp. and regional-jet maker Bombardier Inc. among others. Alcoa signed a $2 billion deal to supply Airbus with aluminum through 2011 for its A380s and other planes. Alcoa executives feted the deal with champagne toasts on the chalet's outdoor deck.

The danger is that aerospace, after a strong cycle, will see a downturn. Mr. Belda believes aerospace investment will pay off in products for many applications such as vehicles and building exteriors. An example is a wafer-like composite developed by Alcoa that compresses sheets of glass, resin and aluminum. It limits the spread of cracks on a metal and is ideal for aircraft noses and tails that sometimes strike birds and debris during flights. But it may also be one day used on sports cars, says Mr. Hinrichsen.

The change in business focus is mirrored by a change in style under Mr. Belda, current and former executives say. Mr. O'Neill liked to make policy at regular meetings where dozens of business-unit heads would debate strategy. At one such meeting in the early 1990s, the unit heads recommended Mr. Belda as a potential successor to Mr. O'Neill, who had goaded them by suggesting that no one at Alcoa was capable of filling his shoes. By contrast, Mr. Belda has vested power in a smaller number of executives including his younger brother, Ricardo, who has been promoted to a top post that includes overseeing European operations.

Mr. Belda has moved a staff of 60 including several top executives and key functions to an office on Park Avenue in Manhattan. Mr. Belda, who lives nearby on Fifth Avenue, rarely visits the headquarters Mr. O'Neill built in Pittsburgh. The move disappointed some Pittsburgh employees, who proudly refer to themselves as "Alcoans." Executives who know Mr. Belda, including Mr. Schultz, say he prefers New York for its restaurants and easy access to overseas destinations.

Aerospace still accounts for only 10 percent of Alcoa's revenue. A much bigger chunk comes from its traditional business of digging up bauxite from the ground and turning it into alumina and later aluminum.

As Mr. Belda hunts for places to make and process aluminum with lower energy costs, one answer is Russia. Last year, Alcoa spent $257 million to buy two huge mills from competitor Rusal in Russia. Mr. O'Neill had avoided the country, whose aluminum industry was notoriously associated with corruption and danger including the 1995 murder of a former aluminum-plant manager.

Once a linchpin of the Soviets' military-industrial complex, the mills bought by Alcoa formerly churned out metal for jet fighters, rockets and spaceships. Alcoa will use them to make forged wheels for companies like General Motors Corp., cans for Coca-Cola Co. and perhaps aerospace parts. President Vladimir Putin has pledged to revive Russia's aerospace industry, raising hopes that Alcoa will have a new customer. But it will take a lot of new investment to make the old mills efficient. Alcoa says it is investing $80 million in the two plants this year and doesn't expect them to turn a profit for another two to four years.

(Guy Chazan in Moscow contributed to this article.)

Chalco Plans Alumina Price Hike in Near Future

Resource Investor, VA 12 Oct 2005 at 09:37 AM EDT

By Michelle Yuan

CHONGQING (Interfax-China) -- Aluminum Corporation of China Ltd.(Chalco) [NYSE:ACH], China's largest alumina producer, will most likely raise prices due to the steady increase in domestic aluminum prices, Xiao Yaqing, chairman and CEO of Chalco, told Interfax in an exclusive interview Wednesday.

"The domestic aluminum price broke the threshold of $2,101per tonne a few days ago, which enhances the possibility that Chalco will raise its alumina prices in the near future," Xiao said.

"We are closely watching the aluminum and alumina market both domestically and internationally and looking for an appropriate time for the appreciation," he said.

Xiao said the world's alumina market is largely impacted by China's prices and demand, so raising the alumina prices is in the long-term interests of Chalco’s shareholders.

"Moreover, there is a considerable gap between Chalco's alumina prices and international prices, which gives Chalco the space to lift the price," he said. "However, we will continue to leave a reasonable space between our price and the international price."

Right now, Chalco's alumina price is $531 per tonne, while the international price is around $123 higher than that.

However, since the downstream aluminum makers have been suffering from the government's "macro-controls" and soaring alumina prices and power charges, Chalco’s likely increase of alumina prices is bad news for the producers.

"Chalco has also taken the aluminum makers interests into consideration. If we increase alumina prices, we will control the rising scale in order to guarantee the aluminum makers basic economic interests," Xiao said.

Additionally, many alumina projects by private companies in China are scheduled to start production in 2006 and 2007, which could challenge Chalco's leading status in domestic alumina market.

"Currently our market share of the domestic alumina market is more than 90%. However, with a few alumina projects being launched by private companies, Chalco’s market share will certainly gradually fall in the future," Xiao said.

Since competitiveness is a must for a market-oriented economy, Xiao said Chalco would focus on patented technology R&D and, as usual, production capacity expansion as part of its long-term development strategy.

Chalco has already developed technology for a large pre-baked anode and has exported the technology and equipment worth more than $12 million this year.

© InterFax-China 2005. For more intelligence on Chinese metals and mining, click here or call Alison Crawford in London at +44 (0) 20 7256 3919.

Prime Minister urges ban on export of crude bauxite

Nhan Dan, Vietnam 12-Oct-2005

Prime Minister Phan Van Khai has instructed that the export of crude bauxite should be banned, the Government Office said in a document issued on October 11.

The document laid down the PM's opinions concerning a master plan for the exploration, exploitation, process and use of bauxite by 2010 and towards 2020, and projects to exploit bauxite, produce alumina and refine aluminium in central highlands Lam Dong and Dak Nong provinces.

PM Khai underlined that Vietnam now has to import aluminium to meet all its demands, so the country has to accelerate the exploration and exploitation of bauxite resources and start the production of alumina for export, while preparing the necessary conditions for the production of aluminium after 2010 to meet the domestic demand and for export.

The PM instructed the Industry Ministry to co-ordinate with relevant ministries and agencies to implement the 2006-2010 plan for exploiting bauxite in several mines in Lam Dong and Dak Nong provinces and processing alumina for exports with an initial output of 2 million tonnes per year. At the same time, more surveys should be conducted to assess the country's bauxite reserves. The PM also asked to accelerate a project to build a complex for bauxite exploitation and alumina production in Bao Loc district of Lam Dong province.

He assigned the Industry Ministry to work out a project to set up a coal and mineral consortium based on the Vietnam Coal Corporation and the Vietnam Mineral Corporation to submit to him for approval within this October. (VNA)

ALCOA To Invest $1bn In Power For VALCO

Daily Graphic, Ghana (10/13/2005)

ALCOA World Aluminium is to invest about $1 billion in the provision of power for the Volta Aluminium Company Limited (VALCO) through the West African Gas Pipeline Project.

President of Global Manufacturing, ALCOA Primary Products, Mr Alan Cransberg, announced this when he visited some installations of VALCO in Tema Tuesday.

During the visit,it was noticed that some of the workers were busily carrying out civil works in preparation for actual casting to begin in December this year. Currently, the bulk of VALCO’s products are being transferred to Aluworks.

Mr Cransberg said discussions were also under way for ALCOA to establish a bauxite plant at Kyebi and Nyinahin in the Eastern and Ashanti regions respectively, under a VALCO/ALCOA deal.

The investment is part of efforts aimed at reactivating VALCO, in line with the government’s vision to revive the dream of Ghana’s first President, Osagyefo Dr Kwame Nkrumah, to establish an integrated aluminium industry, comprising a bauxite mine, a refinery and a smelter, in the country.

In January 2003, the government of Ghana and the Volta River Authority (VRA), on one hand, and representatives of Kaiser Aluminium & Chemical Corporation (Kaiser), which had 90 per cent shares in VALCO, on the other, met in Washington, DC, USA, in the hope of resolving a dispute relating to the expiration of their power contract in April 1997.

The contract entailed the provision of electric power from the VRA to VALCO. However, the mediation broke down at the instance of Kaiser.

When the mediation was later restored, Kaiser agreed to sell its 90 per cent shares in VALCO to the government of Ghana, paving way for the reactivation of the company.

There are bright prospects ahead for the company and the nation as a whole with VALCO’s new lease of life.

Mr Cransberg expressed delight at the enthusiasm of the management of VALCO at getting the company in operation, in spite of its handicaps.

He said ALCOA’s decision to invest in Ghana could be credited to the country’s good infrastructure, skilled workforce, less political risk, the presence of bauxite, among others.

He said the company was also exploring other long-term business opportunities in the energy sector, adding, "We believe these opportunities will have a positive impact on Ghana’s economy."

Mr Cransberg commended the government for creating investment opportunities in the country, adding that they would yield good results.

The Managing Director of VALCO, Mr Seth Adjei, called for support for VALCO as a solution to the country’s industrialisation advancement, adding that "if VALCO survives, a lot of things will change for the better".

He said by the end of February next year, the production level would hit 120,000 tonnes and that would be increased when the country started benefiting from the West African Gas Pipeline Project.

Mr Adjei said after the company was shut down, only 300 workers, out of about 2,000, were retained and said with its reactivation, the workers had been given orientation to undertake the new task ahead.

Story by Timothy Gobah

Layoff notices to go out to Eastalco employees

Centre Daily Times, PA - Thu, Oct. 13, 2005

Associated Press

ANNAPOLIS, Md. - Layoff notices will go out this week to employees of an Eastalco aluminum plant that state officials are trying to save, a company spokesman said Thursday.

The company still hopes to reach a deal to keep the plant open, but is sending the notices to comply with a federal law that requires advance word of layoffs, said company spokesman Earl H. Robbins Jr.

"We're doing what the law requires but that's not going to stop us from still trying to work out a deal," Robbins said.

More than 600 workers are employed at the plant.

Eastalco, Maryland's largest electricity user, says its power costs will rise by up to 83 percent after Dec. 31 if it has to pay market rates for power it currently buys from Allegheny under a long-term contract that expires at the end of this year. Plant officials say they can't afford the steep increase and have asked state and federal officials for help.

Allegheny, based in Greensburg, Pa., has been unwilling to give Eastalco a break and says Eastalco can shop for a lower rate from nearly 40 electricity suppliers in the deregulated market that Eastalco supported.

The Eastalco plant near Frederick is owned by Pittsburgh-based Alcoa.

Alcan to begin progressive closure process of Lannemezan aluminum smelter in June 2006

Canada NewsWire (press release), Canada 13-Oct-2005


PARIS, France, Oct. 13 /CNW Telbec/ - Alcan Inc. (NYSE, TSX: AL)

announced today that it has begun discussions with its local stakeholders over a project regarding the definitive and progressive closure process of its Lannemezan, France, aluminum smelter. The closure process is expected to begin by June 2006 and would be completed at the latest during the course of 2008, depending on economic and operational conditions. Following the outcome of discussions with employee representatives and unions, financial provisions for closure costs will be recorded in the fourth quarter 2005.

"In the long-term, this progressive process will benefit both Alcan and its French stakeholders; it allows for the orderly and efficient closure of operations and provides time to evaluate alternative opportunities for Lannemezan and the region," said Cynthia Carroll, President and Chief Executive Officer, Alcan Primary Metal Group. "This process represents the most suitable solution for affected employees, as well as the local community, and we will work closely with them in ensuring that it is as seamless as possible and is concluded in the appropriate manner," she added.

In operation since 1939, Lannemezan presently employs 300 people (including 60 part time employees) and produces 50kt of aluminum per year or approximately one percent of Alcan's primary metal production. It has become a high cost facility due to its age, technology, size and geographic location relative to plants established across the industry over the past few decades.

The June 2006 expiration of the energy contract put in place before the last few years of rapidly increasing energy costs will put added pressure on Lannemezan to remain competitive and confirms the plant's inability to be viable in the long term. Studies conducted to evaluate the possible modernization of the smelter determined that future investments in the plant would not yield a sustainable operational outcome.

Over the next several months, Alcan will discuss the means to mitigate the anticipated economic and social impact with the appropriate employee representatives and unions.

"We intend to take the necessary measures to ensure a stable and orderly projected closure. A commitment from all involved will allow us to rapidly facilitate alternative sustainable solutions. At this time, it is critical to ensure the safety of our employees and maintain the quality and security of our equipment," said Olivier Baud, President, Alcan Primary Metal Group for

Europe and Africa.

This process will allow for an assessment period to support opportunities for industrial diversification in the region. As part of this, a study assessing the potential assets of the region and the Lannemezan plateau has recently been completed.

IFP North America Inc. is forging ahead

Akron Beacon Journal, OH 13-Oct-2005

ERIE, Pa. (AP) - IFP North America Inc. is forging ahead with plans to build a fruit juice processing plant on a 50-acre site in eastern Erie despite construction delays.

The factory, expected to bring about 300 jobs to the area, was scheduled to be built starting in June on property donated by Kaiser Aluminum and Chemical to a local development agency. But the plant's construction has been held up by legal procedures over the transfer of the land's ownership.

IFP is now trying to get permits to begin construction in January 2006, said the company's CEO Herb Fiss.

The plant plans to make not-from-concentrate juices as alternatives to the concentrated juices that dominate the market.

Alcoa's Wenatchee Works smelter has begun restart (subscription), OR 13-Oct-2005

MALAGA, Wash. (AP) — Alcoa's Wenatchee Works smelter has begun the slow process of reheating an aluminum production line, or "pot line," that froze after a Sept. 4 power outage.

The problem cost the company about $8 million in lost production and millions of dollars more in restart expenses, spokesman Jim Baxter said. The frozen line reduces production capacity by about $220,000 per day, he said.

Plant employees started heating some of the line's 150 pots on Monday. The full line should be powered up and producing again by late November or early December, Baxter said.

Employees have almost finished using hydraulic equipment to dig the solidified aluminum out of the line's final pots, Baxter said. The residue must be removed before the pots can be reheated, company officials have said.

The power went out after a circuit-breaker fire at the Chelan County PUD's McKenzie Switchyard, about 5 miles south of Malaga. The cause has not yet been determined.

Battle for bauxite hots up

Brisbane Courier Mail, Australia 14oct05

Richard Owen

THE Aluminium Corporation of China (Chalco) has sent one of its most experienced advisers Down Under to lead the Chinese government-backed team's bid for rights to exploit the massive Aurukun bauxite deposit on Cape York Peninsula.

Zhongxiu Liang, a 41-year veteran of China's burgeoning aluminium industry and a former general manager of Chalco's parent company Chinalco, arrived in Brisbane three weeks ago to secure a new long-term supply of bauxite and alumina for the rapidly growing nation.

His first move was to lodge Chalco's official expression of interest (EOI) almost two weeks before today's 4pm deadline, getting a jump start on potential competitors like Russian colossus RusAl, Canada's Alcan, Norway's Norsk Hydro, Alcoa World Aluminium, Rio Tinto's aluminium unit Comalco, BHP Billiton and Xstrata.

"Chalco's not focused on what its competitors are doing because we are focused on coming up with a plan which is better for the State Government and best for the people of Queensland," he said through an interpreter.

But Mr Liang, 62, also has what's best for China in mind.

Chalco's plan rests on a multibillion-dollar commitment to build an alumina refinery to process the bauxite, either at Aurukun or at one of Queensland's port locations, and consider developing an aluminium smelter if cheap enough power is available.

"Development of the PNG gas pipeline project could help the economics of a smelter," Mr Liang said.

China ploughed through 14 million tonnes of alumina last year, half of it imported.

Of this two-thirds came from Australia – a factor which has made investment here appealing, along with the country's stable political system, rule of law and bilateral trade flows which topped $US24 billion ($A32 billion) last year.

Alumina imports in 2005 are forecast at 7.5 million tonnes and Mr Liang said this level of growth was expected to continue, with Chalco accounting for 90 per cent of China's aluminium production.

"Chalco is the end user so the company will be committed to building this project as quickly as possible," he said.

The company also claims to have the technical edge to deal with Aurukun bauxite's high silica content as it is similar to China's.

"The Chinese Government is also committed to Chalco's success in this endeavour," Mr Liang said. "Chalco has a strong operational and financial capacity to deliver this project which fits with the company's development strategy to expand overseas."

In April last year, to accelerate development of the 650 million tonne deposit, the State Government repealed the Aurukun Associates Agreement, reached in 1975 between the Bjelke-Petersen government and French company Pechiney.

Alcan, which took over Pechiney in late 2003, confirmed yesterday it would lodge an EOI today while Vince Gauci said his company Gallipoli Mining had not joined a bidding team.

State Development Minister Anna Bligh said interest had been "very keen" but declined to say more until after today's deadline. Final bids do not close until next May and the preferred developer will be announced in July.

Chalco's 20-strong bid team now has all the information available from the State Government's data room and is being supported by an army of advisers from 20 companies including Deutsche Bank, Bechtel, GHD, Mallesons and Enhance Management.

Mr Liang believes a successful Chalco bid could also prove the catalyst for a further wave of Chinese investment in Queensland's resources sector by sending a welcome signal to Beijing's captains of industry – many of whom are friends of his or associates.

Work is under way on costing the refinery at several sites to determine the location, the capital costs required for additional infrastructure and the final production capacity.

"Chalco's aim is to build the infrastructure itself but we might get to a point where it was just too expensive for a reasonable return, in which case we don't preclude having discussions with the Government if the infrastructure was not just for the project and might benefit the community as well," he said.

Rain Calcining plans joint ventures in China, US

Newindpress, India Friday October 14 2005 00:00 IST

CHENNAI: Andhra Pradesh-based Rain Calcining Ltd (RCL), a leading producer of Calcined Petroleum Coke (CPC) has plans to establish manufacturing facilities in China and the US in the coming years by investing about USD 50 million each.

The company was looking for a joint venture partner in the Chinese venture, where the Indian company would hold 51 per cent stake. The proposed venture was likely to take shape during the next fiscal, Srinivas Vedala, president (marketing) of RCL told reporters on the sidelines of a function here.

RCL owns a 300,000 tonnes per annum plant of CPC, one of the raw materials used along with Alumina in the manufacture of aluminium, at Visakhapatnam.

The company would also jointly market the output from the proposed 350,000 tonnes per annum project in Kuwait, once it goes on stream in 18-months' time.

He said RCL was having global ambitions and was eyeing a key share in markets such as South Africa, Venuzuela and Oman, where aluminium majors were setting up plants. In Oman for instance, global aluminium major ALCAL is setting up a 250,000 tonnes per annum plant.

RCL would be the supplier of raw material CPC for ALCAL in Oman, Vedala said.

RCL, promoted by N Jagan Mohan Reddy along with oxbow carbon & minerals would fund the expansion projects in China and the US through assistance from the World Bank and other financial institutions, he said.

For the year ended March 2004, RCL posted a net profit of Rs 336 million on a turnover of Rs 3,362 million.

North tipped for ore plant

Townsville Bulletin, Australia 15oct05

By TONY RAGGATT Business Editor

TOWNSVILLE is being touted as a strong contender for a billion-dollar alumina refinery associated with the development of huge bauxite resources on Cape York.

The State Government yesterday announced that its call for expressions of interest in the Aurukun bauxite project had attracted 10 bids.

The bidders include major companies in the aluminium industry in Australia and overseas.

One of the bidders is Chinese aluminium corporation Chalco which is proposing a $2 billion development involving the mining of bauxite and construction of a refinery and smelter in North Queensland.

Reports suggest Townsville is a probable refining site. Other suggested sites are Gladstone, Mackay and Abbot Point near Bowen.

Townsville Mayor Tony Mooney and council CEO Brian Guthrie are in China, although a spokesman said the trip had nothing to do with the bauxite project.

The spokesman said the council had lodged a submission on the Aurukun project, noting the city's strategic position in the Asia-Pacific, its existing refining and industrial capability and great lifestyle.

However the spokesman said: "We've been given no indication we are a preferred candidate".

Townsville Enterprise CEO Glenys Schuntner said it was not a foregone conclusion Townsville would attract the project's downstream processing but believed the city was a strong contender.

"We certainly think of the possible sites for the refinery that Townsville has a very strong business case," she said.

In a statement released yesterday, Premier Peter Beattie said the Government's competitive bid process launched on September 14 had generated interest from China, Brazil, Norway, India and Russia as well as major producers in Australia.

Applications had been received from BHP Billiton, Chalco, Rio Doce Australia (CVRD), Mitsubishi, Hydro Aluminium, Alcoa, SUAL, Hindalco, Alcan and InterTech Systems.

Mr Beattie said the companies would be accepted by the Government as bidders in a competitive process and would now begin preparing provisional proposals.

"Bidders will have until the end of January 2006 to deliver these preliminary proposals to the co-ordinator general (Ross Rolfe)," he said. "Short-listing for the selection of a preferred developer will then begin."

Rio absent from bauxite rights bidding

Brisbane Courier Mail, Australia 15oct05

Richard Owen

GLOBAL resources giant Rio Tinto was notable by its absence yesterday from a field of 10 international bidders now vying for sole rights to exploit the massive Aurukun bauxite deposit on western Cape York.

Rio Tinto's local light metals arm Comalco Aluminium opted not to lodge a formal expression of interest by the stipulated deadline yesterday after earlier accepting the State Government's invitation to join and contribute to an industry advisory panel.

Russian industry giant Rusal did not lodge a bid either, but its Siberian rival Sual has.

Comalco's external affairs manager Jim Singer said the company had elected to withdraw because it had "large economic reserves and undeveloped bauxite resources" nearby which were considered "sufficient for future needs".

Queensland Premier Peter Beattie said bids had been received from most of the major companies in the aluminium industry in Australia and overseas including China, Brazil, Norway, India and Russia.

"We have had applications from BHP Billiton, Chalco, Rio Doce Australia (CVRD), Mitsubishi, Hydro Aluminium, Alcoa, Sual, Hindalco, Alcan and InterTech Systems," he said.

"The line-up of companies shows the confidence of the industry in Queensland as a location for substantial investment in the bauxite mine and an alumina refinery.

"It also demonstrates the confidence of these major industry players in the fair and transparent bidding process that the Government has put in place."

Bidders have until the end of January next year to deliver preliminary proposals after which shortlisting for selection of a preferred developer will begin.

Mr Beattie said the bidders would now be invited to a government presentation on infrastructure and refinery site options.

"They will also have an opportunity to visit the Aurukun site and have initial discussions and negotiations with representatives of the traditional owners," he said.

The preferred developer will be announced next July.

VND500bil allocated for bauxite exploitation and alumina production complex

VietNamNet Bridge, Vietnam 17:44' 14/10/2005 (GMT+7)

The Ministry of Finance has been authorised to allocate VND500bil for the complex in Lam Dong Province, and the capital will be returned to the State Capital Business and Investment Corporation for management, once the corporation becomes operational.

In addition to this project, which is expected to put out 600,000 tonnes of alumina per year, another alumina project with a planned capacity of 100,000 tonnes a year invested by Vietnam Coal Group will also be kicked off in Nhan C Industrial Zone, Dak Nong Province. The Dak Nong bauxite project will be carried out by the joint venture of Vinacoal (Vietnam Coal Corporation), which holds over 50% of capital and a Guang Xi partner.

According to the Ministry of Industry, bauxite ore is one of Vietnam’s most important mineral resources, fundamental to developing a comprehensive industry of bauxite exploitation, alumina production and aluminium refining.

Currently Vietnam still has to import all its aluminium, while in the future demand for aluminium will be increasingly high as it is used widely in many industries, including construction, defence, electric technology, and household appliances. This is why the government has asked the Ministry of Industry to encourage exploration and exploitation, and upgrades to bauxite natural resource reserves, and alumina production for export, as well as to prepare necessary steps for developing the aluminium refining industry from 2010.

Accordingly the government has approved a plan on bauxite ore development for 2010 to 2020, and in the period of 2006-2010, Vietnam will focus on bauxite exploitation in explored mines and produce alumina for export. The total alumina output in the initial stage will be 2mil tonnes per year. The second phase from 2011 to 2020 will focus on alumina production and aluminium refining.

H. Phuong

China's CITIC close to $1 bln Iran aluminium deal

Webindia123, India Beijing | October 14, 2005 4:30:31 PM IST

China and Iran are edging closer to agreeing on a $1 billion deal to build an aluminium smelter on the Arabian Gulf coast, Iran's foreign minister and a diplomat said on Friday.

''We have had good discussions with the Chinese side,'' foreign minster Manouchehr Mottaki told reporters in Beijing, speaking through a Chinese translator.

An Iranian diplomat told Reuters later that the deal would involve top Chinese financial conglomerate China International Trust and Investment Corp participating in an aluminium smelter project in the port city of Bandar Abbas.

Both Iranian officials said investment would come to about $1 billion.

''Nothing has been signed, but that is the plan,'' the diplomat said, adding that other details had yet to be worked out.

Iran's South Aluminium Corp., or Salco, tendered this year to build a 1 million tonne-per-year aluminium smelter in Bandar Abbas. The smelter would be constructed in three phases of about 310,000 tonnes each.

CITIC submitted the lowest bid of $935 million to build a 275,000-tonne per year smelter, but the contract was not immediately awarded, the Middle East Economic Digest said last month.

Iran's main aluminium export markets are in the Gulf and Southeast Asia. It exported 90,000 tonnes of the lightweight metal in the year through March 2005, up from 56,000 tonnes in the year before.


An Aesop fable for Russian Aluminium

Mineweb, South Africa '14-OCT-05 06:17' GMT © Mineweb 1997-2004

By: John Helmer

MOSCOW ( --Among the world's top producers of aluminium, all are public companies regulated by the laws, securities market and anti-trust regulations, and disclosure requirements of the United States and the European Union, save one. The exception is Russian Aluminium (Rusal), which is owned by Oleg Deripaska, a young Russian.

What Deripaska allows to be known is that Rusal sells about 3 million tons of primary metal per annum for about $5 billion in revenues, and carries more than $2 billion in debt. In output volume and market value, Rusal ranks third in the global aluminium league. Alcoa of the US ranks first, with a current market capitalization of $20 billion. Alcan of Canada – which acquired Pechiney of France – ranks second with a market cap of $12 billion. Although the commodity price of aluminium has been climbing, the share price of these two companies has been falling – by roughly 30% apiece so far this year.

Rusal is privately owned by Deripaska. But when he bought out the 50% stake owned by Roman Abramovich and his friends at Millhouse, a London holding, over the past three years, the exit price (still secret) put a valuation of about $8 billion on the entire company. A year or so later, and Moscow investment bankers believe that Rusal is currently worth $10 billion, a purported gain of 25%.

How to realize this value, and enjoy it at the same time, is Deripaska’s biggest problem. How to get him to share it with Russia is the problem to which the Kremlin has been giving attention recently.

Aesop once told the fable of the man who turned his earnings into gold, and buried it. Every day he went to the spot to contemplate how rich he was. But a passing labourer spotted him, dug up the gold, and made off with it. When the owner returned and discovered his loss, he started to tear out his hair. A wise passerby told him not to despair. "When you had all that gold," he said, "you didn’t really have it." He advised burying a stone, and imagining it to be gold, for that would serve the same purpose. The moral of his story, Aesop thought, was that possession is nothing – without enjoyment.

Deripaska’s contemplative and recreational habits are a matter of rumour, but his financial strategy is straight out of Aesop. This was made clear by his friend, junior shareholder, and chief executive of Rusal, Alexander Bulygin. He has suggested that the best way to hang on to the gold would be to take it away from Russia, and leave a stone in its place. A few weeks ago, he told the Sunday Times of London – the city where everyone goes to bury their gold, and display their enjoyment – that Rusal is thinking of making a share flotation to foreign investors.

Exaggerating the value of the assets left behind in Russia, and minimizing their indebtedness, he claimed "we are very close to announcing that our company is fully compliant with the principles required by the stock exchanges with regard to issues such as corporate governance, transparency and accounting."

Bulygin came closer to the truth when he added that Russian "companies are using floats to hedge against political risks. They hope foreign investors will defend them against any politically motivated tax risks."

As show ponies go for these foreign investors, Deripaska is something of a piebald. He produces the aluminium metal in Russian smelters, but as his former spokesman, Yevgenia Harrison once admitted, most of the value (read profit) in Rusal is earned offshore. "To a very large extent," she said, "we are processors of imported raw materials. Thus, a relatively large portion of Rusal's value added is created outside of the Russian Federaton."

This is done through what are known in the metals trade as tolling schemes. Tolling is a chain of contracts, according to which raw materials, such as alumina, are supplied to a smelter, which electrolyzes it into metal. This is then returned to the owner of the alumina and the trading chain. In Russia, this scheme eliminates 18% internal value-added tax and other taxes payable when the alumina enters the country, and the metal leaves it. But if the scheme is owned and secretly controlled by a single Russian owner, with the objective of avoiding tax, then, according to the letter of the law, it is illegal. The perpetrator of such a scheme could thus be vulnerable to back-tax claims, penalties, and interest.

Deripaska’s domicile and Rusal’s also have enormous tax implications because Russian law on transfer pricing and on tax residency could be interpreted and applied in such a way as find Deripaska, Rusal and Basic Element, Deripaska’s Moscow-based holding, liable for hundreds of millions, if not billions of dollars in obligations to the government. That’s what Bulygin has admitted he is afraid of.

It is possible to make a rough calculation of what Rusal avoids paying in tax through its tolling schemes by estimating the difference between the price at which Rusal aluminium is declared when it enters an import market with reliable customs statistics, like the United States; and the price it was declared at for export, when it left the shores of Russia. For the first half of 2004, for example, there was a difference of $423 per ton. Multiplying that by the 525,000 tons imported in the period to the US produces a value of $222 million. The US is not the most significant of Rusal’s export destinations, and if you were to multiply the differential by Rusal’s full export volume, you are likely to guess that the gold Deripaska is burying outside Russia may be worth about $1 billion a year.

That is a lot to gloat over, and enjoy. But it is far too much to hide from passersby. And so, a flotation in London for Rusal is only one of the two big options which Deripaska must now consider, if he is to preserve his fortune. His second option is to follow the example of his fellow oligarch Roman Abramovich, and sell Rusal to the Russian state. Selling, you should understand, is much better than having the property confiscated as the outcome of a tax and fraud claim and a federal prosecution. That has proved to be the fate of the Yukos oil company oligarch, Mikhail Khodorkovsky, and his fellow shareholders. Deripaska has been taking pains to ensure he does not follow them into exile or prison.

He has, however, acquired a residence in Belgrave Square, London, establishing himself there as England’s 6th richest man. For a time, Downing Street and the Home Office were obliged to issue Deripaska a waiver of the visa ban which had been applied by the US Government, and which, under UK visa rules, is generally applied to the same people the US blackballs. According to an Australian government official, Australia, which belongs to the US-UK intelligence-sharing network, also granted Deripaska a waiver to visit there too.

Then on October 1, Deripaska announced through a brief posting in the Financial Times that he had been granted a visa to enter the US. According to the newspaper, the restriction on Deripaska had just been raised "after the American immigration authorities lifted a long-standing visa ban. Georgy Oganov, deputy director general of Basic Element, said yesterday US officials had not given any reasons for lifting the ban."

Oganov should not have said this, because it implied the reasons the ban had been imposed in the first place.

Deripaska has been trying to lift this US visa ban for almost a decade, and he has employed well-known US law firms and Republican Party politicians to lobby in Washington for him. But he has never admitted there was a visa ban – until Oganov did so. This could be why for the past two weeks Oganov has refused to answer questions from Mineweb to clarify what he told the Financial Times. Oganov also ordered his deputy Eleanora Vaitsman, and everyone else in the Basic Element office in Moscow, to pretend that they were not on the receiving end of telephone-calls or emails, seeking clarification of the matter.

For if Deripaska is now free to cross the US border, he is also free to enter US legal jurisdiction to answer the charges the FBI and other investigative and law enforcement agencies have deemed credible enough to block his visa for so long. What these charges are can be found in federal US court documents stretching back for several years. Although the US courts have so far ruled that they had no jurisdiction to try the civil claims, the American press, along with the US stock market regulators, have yet to assess these charges publicly.

Just how damaging this review could be for Deripaska’s prospects of floating Rusal shares to US investors was signaled in a ruling of the federal US District Court for the District of Columbia on September 27. In that case, Deripaska’s fellow Russian oligarchs, Mikhail Fridman and Pyotr Aven, controlling shareholders of the Alfa Bank group, lost a libel suit they had waged for five years against the Center for Public Integrity, an investigative journalism group in Washington, and two journalists who had reported that Fridman and Aven had acted criminally in the acquisition of their Russian assets and fortune. The initial publication had relied on a variety of evidence, including Russian government agency documents, as well as US intelligence agents’ testimony and US government reports.

But federal judge John Bates ruled to dismiss the case without trial, and without cross-examining the documentary evidence or witnesses. In his ruling, the judge declared that, under the US constitution and decided case law, Russian businessmen like Fridman and Aven are "limited public figures for purposes of the public controversy involving corruption in post-Soviet Russia." The very extent of Fridman’s and Aven’s effort, through media they have sought out, and public relations they have paid for, established themselves as appropriate targets for investigation, criticism, and public opinion. "Serving as the target of criticism – sometimes false -- is the burden our system of laws quite consciously places on the shoulders of public figures," the judge declared.

Now criticism is not something Deripaska tolerates. But he has also found that the best way to deflect, or inhibit criticism is not to sue for libel – he has tried that in Germany – but rather to persuade the managements of publications that Rusal can be a generous donor, sponsor, or advertiser. The effect is a demonstrable loss of editorial interest at several publications in investigating the charges against Deripaska, Rusal and their companies, which have been aired in courts around the world, or settled out of court by payments from Deripaska.

Deripaska has also tried to remove some of the reason for the criticism – the claims that have been lodged in court alleging he stole the assets currently making up Rusal’s value, or defrauded his partners on trading and import-export contracts. A few days ago, the Sunday Times began reporting the most recent case, currently before the High Court in London. "According to court documents seen by the Sunday Times, Ansol [the plaintiff] alleges that Deripaska unlawfully broke the terms of the joint venture by personally brokering a new deal with the president of Tajikistan in which Rusal was granted complete control of the lucrative smelter [in Tajikistan]." Stealing assets is not a new charge Deripaska, Bulygin, and Rusal have faced, and which they consistently deny. But they have settled the other claims, and this is the first time the charges may be tried in an English court.

The Sunday Times went further, reporting the counter-claim in the court documents which contains "serious allegations, including details of a plot by Deripaska’s office to kidnap Nazarov [the smelter’s former supplier and investor]." According to the initially talkative Oganov, "we want to develop our involvement in Tajikistan…Our lawyers are looking at the allegations in the counterclaim. It will take some time but it is a matter for the court."

Another misspeak by Deripaska’s spokesman, for the London judge has already intimated that he has grave doubts about Rusal’s veracity. According to a court transcript of proceedings in July, Justice William Blackburne said that "on the face of it [Rusal] is as involved in all of this as is Ansol." That being the case, he surmised, "Rusal is at the back of this and it is the pot calling the kettle black."

Is Deripaska ready to invite the readers of a Rusal prospectus to put on Blackburne’s judicial wig, and decide whether to put their money in a black pot?

For any man to put his reputation on trial in a court of law, or in the stock market, there is always the risk of adding to his notoriety, and thus, win or lose on the legal issues, to reinforce the impression that he is the very bad man he has been made out, so wrongly, to be. After all, it is not the exoneration, or esteem, of the man in the street, or the reader of newspapers, that an oligarch is seeking when he goes to court. His target is a bankers’ head of risk, the chairman of the credit committee, the insurer of officers and directors’ liability, the independent auditor, and the legal drafter of his next prospectus for an unsecured Eurobond or American Depositary Share. That’s a small, sophisticated audience, who know the unprintable truth. They are not greatly influenced by guilty or innocent verdicts in libel cases.

Deripaska’s men can make mistakes as bad the one Aesop warned of , in the case of the man who stared too hard at the gold he had hidden. Entering the High Court in an attempt to launder the takeover of the Tajikistan aluminium smelter may be recognized as one. Instructing his spokesman to announce his US visa may be another. Both are a funny way of preparing investor sentiment for a Rusal IPO.

But there is an alternative, and it is plain that Deripaska has begun pursuing it.

A direct sale to the Kremlin – I mean the Russian state – is more straightforward to accomplish than selling an IPO to foreign investors. For one thing, there are no international regulations, no disclosure requirements, no accounting rules, no transparency required. The state buyer is also in a position to agree relatively easily to the asking price, if international lenders like Citigroup, BNP Paribas, Morgan Stanley, and so on, are willing to put up the loan money. Securing multi-billion dollar loans for a deal like this has already proved swift and uncomplicated for the banks when the state-owned oil company Rosneft recently took over Yukos; and when Gazprom proposed buying Abramovich and the Millhouse holding out of Sibneft. You might say that so long as President Vladimir Putin appears to be pledging the full value of the state’s credit, and commodity prices can be expected to remain high enough for the payback period, then the banks are only to happy to open their ATMs.

What has yet to happen, however, is that the Kremlin will decide to apply their model of state interest beyond the oil and gas sector of the economy to the metals. That, too, is what Deripaska has had reason to be afraid of, at least until now, not least of all because he is just one of two proprietors of aluminium in Russia; and it might seem to a commonwealth-minded policymaker that everyone would be better off if they were consolidated under control that was invulnerable to offshore supply manipulation, paid taxes, and complied with the law.

Kremlin officials have also noted that Deripaska has appeared to have political ambitions for himself, regionally perhaps to start with, and then perhaps nationally. Then he tried to sell two of his aluminium finishing plants to Alcoa – a deal that offended the national interest lobby in the government for months, until Deripaska found the way, and the means, to persuade officials that they could share in the transaction, and in the offtake of metal, once Alcoa took over producing it.

The cool sentiment towards Deripaska on the part of Putin’s men has also ensured that he was barred from several transactions which he tried to take over on his terms – hydro-electricity generation and heavy-machine building were two in which he has recently failed.

But that does not mean that Deripaska does not have a deal to offer for selling Rusal that would be difficult to refuse – more difficult, that is, for Russian officials than for foreign investors.

Iran, China to sign contract to build aluminum mill in Bandar Abbas, Iran 15-Oct-2005

TEHRAN, Oct. 15 (MNA) -– Iran and China are about to reach an agreement to work out a deal to construct an aluminum plant near the shores of the Persian Gulf, noted Saturday, Iranian Foreign Minister Manuchehr Mottaki.

We entered into good negotiations in this regard with the Chinese side, the foreign minister said in an interview at Iran’s Embassy in China. He was clearly referring to the one-billion-dollar contract to be secured between the two countries to build an aluminum plant in the southern Iranian port city, Bandar Abbas.

According to an Iranian diplomat, the agreement provides for the presence in Iran of the Chinese company, China International Trust and Investment.

The South Iran Aluminum Co. (SAMCO) had earlier this year put out to tender the construction of an aluminum mill with a production capacity of one million ton per year.

Whereas the Chinese company had made the lowest bid – 935 million dollars - the contract to build the aluminum plant was awarded to it, elsewhere in its report ISNA quoted Middle East Economist Digest.

Exporting some 90,000 tons of aluminum until March, 2005, Iran’s output of the commodity has significantly increased by 56,000 tons compared to the past year. Persian Gulf littoral states as well as the countries in the South Asia are Iran’s major aluminum markets.

Cape crusade for mine bounty, Italy 16-Oct-2005

QUEENSLAND Premier Peter Beattie has conceded it will be very difficult for mining companies and indigenous people at Aurukun on Cape York to get the best possible outcome from plans to mine 650 million tonnes of bauxite there. The Queensland Government closed off the time for expressions of interest in mining the deposits last Friday. There is a short list of 10, with most major mining companies included as well as interests from developing nations such as China and India. The big surprise was that Comalco, the largest bauxite miner in Australia and with considerable bauxite deposits at Wiepa which directly adjoin the Aurukun deposits, did not lodge an expression of interest.

All parties now have until January to work up more detailed proposals, with the successful miner for the $2 billion worth of deposits to be announced next year.

The Government has specified that it wants downstream processing of the minerals, which would take the form of a bauxite refinery and aluminium smelter, to be included in the proposals.

Australia's Aldoga Aluminum Delayed Another 6 Months

Yahoo! News Monday October 17, 2:31 PM

SYDNEY (Dow Jones)--The long-delayed Aldoga aluminum smelter project in northeastern Australia is facing another six-month holdup, its U.K.-owned operator said Monday.

The setback comes just six weeks after Aldoga Aluminium Smelter Pty. Ltd. said it had reached a preliminary agreement with its Chinese partners over engineering studies for a A$1.5 billion smelter in the Queensland port of Gladstone.

Aldoga Managing Director John Benson confirmed the delay without giving the reasons for it.

In late August, Benson said Aldoga, controlled by Anegada Metals Corp. of the U.K., said final approval of the studies was imminent.

The project has been unable to take a major step forward since late 2003 when it signed agreements with China Nonferrous Metal Industry's Foreign Engineering & Construction Co ( to supply equipment, technology and engineering.

The agreement, inked ahead of a scheduled June 2004 construction start, secured Aldoga a deferred payment of A$771 million from the Export-Import Bank of China.

Benson previously attributed delays in the project to his company's decision to revise, and ultimately go back to, an original configuration of 420,000 metric tons a year.

An analyst specializing in Asia Pacific metals projects said the latest delay is a likely sign the Chinese have lost interest due to high development and running costs despite the appeal of using Chinese know-how in a Western project.

Power costs of about US$24 a megawatt hour are double that of other aluminum-producing areas, the analyst said, and the partners may have realized they were not guaranteed low cost feedstock despite alumina refineries in the area.

Speculation has also linked the delays to Aluminum Corp. of China Ltd.'s (ACH) participation in the Queensland government's bidding process for a concession to develop the Aurukun bauxite-alumina project.

According to some analysts, Aluminum Corporation of China, or Chalco, looms as the favorite in the bidding Aurukun bidding process.

Aldoga has defended the project's feasibility on Australia's low sovereign risk, the site's close proximity to Asian demand centers and reliable local power supply.

Aldoga sister company Metallica Minerals Ltd. (MLM.AU) plans to study the feasibility of building a A$1 billion-plus alumina plant in Queensland, which could feed the Aldoga aluminum smelter.

Aluar awards Puerto Madryn plant expansion contracts - Argentina

Business News Americas, Chile Monday, October 17, 2005 18:23 (GMT -0400)

Argentine aluminum reducer Aluar has awarded the main contracts to expand its Puerto Madryn plant, a company executive told BNamericas.

"The largest awards have been completed, now there is a large amount of supply works to award, but that will progress as the project moves forward," he added.

Aluar is on track to have the plant ready by 2007.

The executive added there are still a series of energy projects to carry out, including work to prepare the plant to hook up with the national grid.

The expansion project at the plant in Puerto Madryn will require US$650mn in investment and increase production capacity 35% to nearly 400,000t/y from 280,000t/y.

Construction work at the smelter will add two new 74-cube lines to the six existing ones plus one new rebar line to ease congestion and an anode treatment line.

Part of the required investment funding will come from Aluar's own resources.

Aluar is the largest aluminum producer in Argentina and exports 85% of its production, mainly to the US, the European Union and Asia, and is controlled by the Madanez Quintanilla family.

By Harvey Beltrán

Bauxite play-off pits BHP v China

The Age (subscription), Australia - October 18, 2005

By Tan Hwee Ann

BHP Billiton, the world's biggest mining company, Aluminum Corp of China and Alcoa are among 10 companies that have submitted bids to develop the Aurukun bauxite deposit in Queensland.

The companies have until January 31 to send in preliminary proposals to develop a mine and a refinery, a Queensland Government statement says.

Bauxite is mined and then refined into alumina, which is smelted to make aluminium.

BHP, Alcoa and Aluminum Corp of China (also known as Chalco) are competing for Aurukun, which may contain more than 650 million tonnes of bauxite, after alumina prices rose 26 per cent in the past year on rising demand in China. Australia has 22 per cent of the world's bauxite reserves, the biggest holder after Guinea.

"The production of alumina in China is expensive because the bauxite quality is poor, so imports into China continue to grow," said analyst Tony Robson, of Global Mining Research in Sydney. "That's fuelling high spot prices and returns for new alumina refinery projects."


AdvertisementChina's economy grew 9.5 per cent in the first half. The country is the world's largest producer and second-largest user of aluminium. It accounts for 10 per cent of global alumina output, though it has no more than 2 per cent of proven reserves of bauxite.

Other bidders for Aurukun, located on Cape York, are Brazil's CVRD, Mitsubishi, Hindalco Industries, Hydro Aluminium, Alcan, Sual Group and Intertech Systems.

Most of the major companies in the aluminium industry in Australia and overseas had submitted bids, the Government statement said.

The Aurukun deposits were previously owned by Pechiney SA, which was bought in December 2003 by Montreal-based Alcan. The Queensland Government revoked the lease last year after Pechiney didn't build a plant to refine the bauxite.

Aurukun may be worth as much as $US900 million, Chalco estimated in March.

Chalco hired Deutsche Bank and Bechtel Group to advise on a $2 billion development of Aurukun, which would include a mine and refinery on site and an aluminium smelter in Townsville, it was reported last week.

Aurukun contained 439-650 million tonnes or more of bauxite, depending on the grade of the deposit, Queensland Government spokesman Tim Shipstone said yesterday.

Md. to Alcoa: We’ll help if you will

Daily Record (subscription), MD October 17, 2005

600 jobs at company’s Frederick plant in jeopardy

By KATHLEEN JOHNSTON JARBOE Daily Record Business Writer

State economic officials said they can’t help Alcoa Inc. save a Frederick aluminum plant threatened by surging energy costs unless the global aluminum maker helps itself by buying a regional power plant.

"The fact is, we need to know if Eastalco is even serious about the long-term commitment of the plant," said Chris Foster, deputy secretary of Maryland’s Department of Business and Economic Development. "With energy prices going up over the last three years, certainly it’s a legitimate question."

Last week the Pittsburgh company sent layoff notices to its approximately 600 employees as it faces a Dec. 31 deadline to find a new power supplier. Next year, its current fixed energy contract with Allegheny Energy Inc. expires. Its power bill is expected to grow to three times the average global price for energy.

Driven by high operating costs, Alcoa has been building plants in other countries where the price of power can be much cheaper. Energy makes up about one-quarter of the cost to produce aluminum.

Other countries can offer less expensive power partly due to hydropower plants. Brazil, for example, has a hydro facility that requires no fuel cost yet produces the same amount of power as 20 nuclear facilities. China is building an even larger hydro plant.

Alcoa has said it cannot afford to operate its Frederick plant if it has to pay U.S. market-driven energy prices starting in 2006. Their loss would be about $300,000 per day, according to estimates given to DBED.

The company has asked for state help to keep the plant’s operating costs down. But years ago, Maryland started moving toward a deregulated market. Businesses in Allegheny’s service territory were some of the last to lose their old fixed-rate contracts with utilities.

Maryland officials said they were surprised the company didn’t move sooner with a deadline set years ago and a steady increase in energy prices during the past few years. Foster said the state could consider a series of loans or grants but only if Alcoa made a long-term commitment to solving its energy crisis.

"For me to believe they’re really committed, I need to see some action on their part," Foster said.

The state comments come after the Department of Business and Economic Development received a preliminary report last week outlining energy purchasing options for the global aluminum producer, according to sources familiar with the study. The report was part of an effort by economic officials to keep the plant operating in the state.

Foster said buying a power plant and purchasing electricity on the spot market in the short term would be the only likely option for Alcoa. The site is now approved for a gas plant. But a coal-powered plant would be more affordable. Still, building a power plant could take as long as six years and cost $1 billion, making the purchase of an existing facility a more viable option.

Owning a power plant to supply its own power is not new for Alcoa. An Indiana Alcoa plant and another in Tennessee both produce their own energy.

An Alcoa official said the company hadn’t seen the consulting report but is open to options to save the plant.

"We are still actively pursuing as many options as we possibly can to keep this facility operating. That is what we’d like to do," said spokesman Kevin Lowery.

Nevertheless, state officials expect there could be bad news for the immediate future, especially concerning Alcoa’s employees in Frederick.

"I think that ultimately this is going to be a real hard thing for people at the plant. I expect there will be a major layoff because this things are not going to get solved that fast," Foster said.

SUAL to Go to Australia for Bauxite

Kommersant, Russia Oct. 18, 2005

For the first time in the company’s history, SUAL-Holding (with over 90 percent of business facilities located in Russia) has eyed production assets outside CIS. The company may bid at the tender for developing Aurukun bauxite deposit, Australia, opposing such giants as CDRV and BHP Billiton.

Russia’s second aluminum maker, SUAL Holding has notified Australia of its interest in bidding for Aurukun, SUAL spokesmen said Monday, contradicting the statement of Australian authorities that SUAL had submitted the preliminary application already.

For SUAL, the raw base extension is hardly the matter of exigency now, as its business is well-balanced if measured by alumina and primary aluminum. The Australian deposit should be of interest to Rusal, the experts specify, which raw resources meet only the 75 percent of the company’s demand and which has bought out 20 percent in Australian Queensland Alumina enterprise early this year. But Rusal has forwarded no interest notification concerning Aurukun so far.

Aurkun has 500 million tons of bauxite in estimated reserves. French Pechiney (currently controlled by Canadian Alcan) had held the license till 2003, but lost it on failure to follow investment agreement.

In case of success, Aurukun will be the first asset owned by SUAL outside CIS. But the experts don’t think SUAL capable of winning alone, as it will have to withstand such giants as BHP Billiton, Ñ?VRD, Hydro Aluminium, Alcoa and Alcan, which may raise the price to from $1.5 billion to $2 billion. Moreover, the successful bidder will undertake to construct an alumina plant and a mine, spending around $1.5 billion to the effect. In this context, SUAL’s alliance with another bidder or Russia’s co-investor seems much more logical. And the chances for this move of SUAL are rather solid – the company’s partner in Komi-Aluminum, Rusal may still bid for Australian deposit, including in tandem with other bidder, according to data available to Kommersant. “At today’s stage, the company won’t submit a bid, but it is still interested in the project and will follow the development,” Rusal representatives said.

The deadline for Aurukun bids is May 31.


Russian Article as of Oct. 18, 2005

Richard Evans to take top job at Alcan

Reuters Wed Oct 19, 2005 9:24 AM ET

By Robert Melnbardis

MONTREAL (Reuters) - Alcan Inc. (AL.TO: Quote, Profile, Research) said on Wednesday executive vice-president Richard Evans will be its new chief executive officer and president when Travis Engen retires next year.

Alcan, the world's second-largest maker of primary aluminum, said Evans, 58, will immediately take on the role of chief operating officer to ease the transition to Engen's retirement when his contract ends in March.

Alcan's presidents of its four key groups -- bauxite and alumina, primary metal, engineered products and packaging -- immediately begin reporting directly to Evans.

"Dick's extensive background in the aluminum industry and nine years at Alcan, as well as his wide-ranging business experience, make him the ideal candidate and logical successor to Travis," Yves Fortier, chairman, said in a statement.

Engen, 61, led Alcan's 2003 acquisition of France's Pechiney and the spin-off of most of the Canadian company's aluminum rolled products business into independent Novelis Inc.

(NVL.TO: Quote, Profile, Research).

Alcan also appointed Michael Hanley, 40, as chief financial officer. Hanley has been interim CFO since May.

Alcan said Evans has overseen all four of Alcan's business groups at differing times, and had a key role in the company's strategy development and integration of Pechiney.

He joined Alcan in January 1997 as senior advisor of corporate development, following 27 years at Kaiser Aluminum Corp. (KLUCQ.OB: Quote, Profile, Research).

Born in Oregon, Evans has a bachelor's degree in engineering from Oregon State University and a master's degree in management from the Stanford University Graduate School of Business.

California-born Engen, an avid racer of vintage cars, became Alcan's president and chief executive in March, 2001, after stepping down as chairman and chief executive of industrial conglomerate ITT Industries Inc. (ITT.N: Quote, Profile, Research).

© Reuters 2005. All Rights Reserved.

Alcan picks Richard Evans to succeed Travis Engen as CEO; Hanley to be CFO

CBC News, Canada 09:44 PM EDT Oct 19

MONTREAL (CP) - Travis Engen, 61, will retire as president and CEO of Alcan Inc. in March and be replaced by company veteran Richard Evans, the global aluminum company said Wednesday.

In addition, Michael Hanley will become the Montreal-based firm's chief financial officer. Hanley, 40, has been interim CFO. Engen has been Alcan's president and CEO since March 2001. To facilitate a smooth transition until next spring, Evans, 58, has been appointed chief operating officer and been elected to the board of directors.

Evans joined Alcan in January 1997 as senior adviser for corporate development after 27 years of U.S.-based and international postings with Kaiser Aluminum & Chemical Corp.

In July 1997, he was appointed Alcan's executive vice-president for fabricated products in North America and president of Alcan Aluminum Corp. In March 1999, he was appointed president of global fabrication before relocating to Europe in October 2000.

"Alcan is fortunate to have among its executives an individual of Dick Evans' calibre, someone who has proven business acumen, has a deep knowledge of Alcan's businesses and strategy and embodies the company's values," company chairman Yves Fortier said in a release.

As for Engen, Fortier said, "During his time at Alcan, Travis has overseen a period of tremendous growth and change for the company."

That included the acquisition of Europe's Pechiney aluminum group.

"I am pleased by the board's actions," Engen said. "This new organizational structure keeps a tight focus on execution and allows for an effective future management transition. We have in place a strong and capable management team for both today and tomorrow."

Alcan employs about 70,000 people and has operating facilities in 55 countries and regions.

© The Canadian Press, 2005

Romania: Aluminium Alprom Invests $9 mln in New Equipment (subscription), Greece 12:12 - 19 October 2005 -

Aluminium alloy producer Alprom Slatina will invest $9 million this year in new equipment.

"Investments are meant to increase sales of high value added products and reduce the electricity consumption.

Alprom will produce panels.

There is a large deficit on this market worldwide at the moment, and our meeting international standards will help us achieve the objective of increasing the output to 120,000 tons per year," Marian Nastase, deputy chairman of the Alro board said.

Aluminium producer Alro Slatina, controlled by Marco Industries group, holds majority stakes in Alum Tulcea and Alprom Slatina.

The main sale markets are the European Union, Turkey and Balkan states.

Alprom also exports to the USA, Israel, South Korea and Saudi Arabia.

Ghana officials exploring business links

Jamaica Observer, Jamaica Wednesday, October 19, 2005

Officials from Jamaica and Ghana begin a three-day meeting in Kingston today, exploring possibilities for cooperation in areas ranging from mining and energy to tourism and public health.

This week's meeting is under the umbrella of the Ghana-Jamaica Permanent Commission for Cooperation, activated in July when the Ghanian president, John Kufuor, made a three-day visit to Jamaica.

At the time Kufuor and Patterson spoke extensively about Jamaica's bauxite/alumina sector and shared information on plans for the expansion of their industries - Jamaica's arrangement for the more than doubling of the capacity of its Jamalco alumina refinery in Clarendon, and Ghana's proposal for expanding its aluminium smelter.

Energy will be a big factor in both projects.

In Jamaica's case, the plan is for the refinery, now owned 50:50 by the government and Alcoa, to lift its capacity from 1.25 million tonnes to 2.65 million tonnes a year.

The proposed energy source under the near US$1billion expansion is liquefied natural gas (LNG), to be supplied by Trinidad and Tobago under an energy conversion plan for big industries that the government now has on the drawing board.

Ghana has used hydro-power for its aluminium smelter, but wants to explore, with Jamaica, least-cost energy mixes and supply arrangements between the major supplier and independent producers who sell into the national grid.

Both sides also want to share regulatory arrangements for their bauxite industries, with Ghana hoping to tap into the expertise of the Jamaica Bauxite Institute (JBI).

Ghana (the Gold Coast) is the origin of many of the slaves who came to the Caribbean, including Jamaica, and both countries hope to exploit this connection in cultural and tourism cooperation.

Among the ideas that have been floated is Ghana's creation, with Jamaican support, of a museum on slavery and the transatlantic slave trade.

The two countries are also discussing the possibility of joint tourism promotion and the strengthening of a project for building unity among people of African descent.

Ghana is also keen on collaboration in education and sport development. Jamaica has shown particular interest in cooperation in research and development in medicinal herbs

Alcan names new boss

Montreal Gazette, Canada October 20, 2005

'Extremely competent operator'. Minimizing costs, maximizing profits, sustainability, integrity are his targets

LYNN MOORE The Gazette

An Alcan Inc. executive whose career was fully forged in the aluminum industry is to replace Travis Engen as president and CEO of the world's second-largest aluminum producer, the company announced yesterday.

Richard Evans, 58, was appointed chief operating officer and Alcan board member effective yesterday. He will become president in March when Engen's contract runs out and he retires after five years at the helm of the Montreal-based multinational.

"For the first time in decades, perhaps, the Alcan CEO is going to be a guy with a strong operational background," said BMO Nesbitt Burns analyst Victor Lazarovici, describing Evans as an extremely competent operator who garnered attention early at Alcan.

Alcan surprised industry-watchers in 2001 when it named Engen, then an Alcan director and chief executive of a U.S.-based Fortune 500 conglomerate, to succeed Jacques Bougie, who retired suddenly.

Engen is an aerospace engineer. And although Bougie spent about 10 years at Alcan before becoming president, his training was in law and he worked as a school board manager, Lazarovici said.

Bougies's predecessors, David Culver and David Morton, "were finance guys," he added.

By all measures, Engen's tenure was eventful. He and his team oversaw the $6.3-billion (U.S.) takeover of French aluminum giant Pechiney SA in 2003 and the spinoff of most of Alcan's aluminum-rolled products business into Novelis Inc.

"I would describe it as a very transformational period for Alcan ... a period of significant and dramatic changes," Evans said in an interview.

Asked what he hopes to accomplish within the next five years, Evans spoke of minimizing costs, maximizing profits and of sustainability and corporate integrity.

"I would also like to see us demonstrate a truly multinational multicultural model as the best model for the new global world that we live in," Evans said.

"I think we are uniquely positioned with a very diverse management team and asset base to be capable of doing that."

In a company of Alcan's size and scope, change proceeds at an evolutionary pace, Lazarovici said.

"It took almost a year before we could discern that Engen had a slightly different vision than Bougie," he said.

Evans should be kept busy with the ongoing integration of Pechiney operations and dealing with the challenges of higher energy costs in an energy-dependent industry as well as the impact of currency fluctuations, Lazarovici said.

"Clearly, there has been a slower period of integration than originally thought (connected to the Pechiney acquisition) and the stock has really not performed well," said Lazarovici, who has had a "buy" recommendation on Alcan stock.

Evans, an avid fisherman who held the world record for snagging the largest Dolly Varden Trout for about seven years, joined Alcan in 1997 following a 27-year career with U.S.-based Kaiser Aluminum and Chemical Corp. The Oregon native had key roles in all four of Alcan's four business groups before his appointment as executive vice-president in 2001.

Yesterday also saw Alcan name its interim chief financial officer, Michael Hanley, as CFO, effectively immediately. Hanley, 40, is a Montreal native and joined Alcan in 1998.

Evans's appointment eliminates any nervousness the market might have had about succession plans for Engen, 61, Lazarovici said.

Alcan's executive organization structure, which until yesterday included the Office of the President, was immediately modified to reflect Evans's appointment as chief operating officer, which was described as a measure designed to facilitate the transition between CEOs.

Alcan's four group presidents, overseeing bauxite and alumina, primary metals, engineered products and packaging, now report directly to Evans.

Earlier this month, Alcan announced its long-term targets, including 15-per-cent annual growth in operating earnings and at least $2 billion in annual cash from operations starting in 2006.

Last year, the company earned $258 million U.S.

Alcan's stock has fallen six per cent during Engen's tenure, compared with a 4.5-per-cent fall in the Standard & Poor's 500 index, Bloomberg said yesterday.

Alcan employs about 70,000 people and has operating facilities in 55 countries and regions. Among its operations are 11 alumina refineries and 22 smelters. It is the second-largest primary aluminum producer after Alcoa.

© The Gazette (Montreal) 2005

'BALCO set to be India's top aluminium producer'

Hindustan Times, India October 20, 2005|13:20 IST

Sujeet Kumar, Indo-Asian News Service

Korba (Chhattisgarhg)

Bharat Aluminium Company Limited (BALCO) is set to become the top aluminium producer in the country after completion of its expansion project in 2006, a top company official said.

"BALCO is India's third largest aluminium producer with the current production of 100,000 tonnes per annum. This will touch 365,000 tonnes per annum by the end of 2006 and we will overtake NALCO and Hindalco," claimed T.L. Palani Kumar, managing director of BALCO.

A Rs. 50-billion ($1.1-billion) expansion project would be completed by March 2006, Kumar told IANS.

BALCO was incorporated in 1965 as a public sector undertaking with an integrated aluminium complex in Chhattisgarh.

In 2001, the Indian government divested 51 percent equity and management control to the Sterlite Industries, which is now part of the Vedanta Resources group.

The Vedanta Resources group is listed on the London Stock Exchange and has an annual turnover of approximately $2 billion. The group has interests in metal and mining sectors in India, Australia and Africa.

Kumar said BALCO has set up 288 aluminium pots and a 540 MW captive power plant with Chinese technology at its existing plant here at Korba and the commissioning work of the smelter pots and the power project has already begun.

He claimed that under a deal with the Indian government in 2001, Sterlite would acquire total control over BALCO in future, but he refused to give any timeframe.

Praising China for outperforming the world in the aluminium sector in recent years, Kumar said the country has invented the best technology, which guided it to produce over five million tonnes per annum despite a raw material crunch.

India's combined production is below 1.5 million tonnes per annum despite having surplus raw material.

"Presently, India lacks technology needed to compete with China and Western countries in the aluminium sector, but the country has a good future thanks to the sufficient availability of raw material," Kumar said.

He added that India needed to improve aluminium consumption, too, as its per capita consumption is only 0.8 kg per annum, compared to four kg of China and 12 kg in the developed nations.

Alcan chooses Richard Evans to succeed Travis Engen as President and CEO (full article and photos)

- Michael Hanley, EVP, is appointed CFO

MONTREAL, Oct. 19 /CNW Telbec/ - Yves Fortier, Chairman of the Board of Directors of Alcan Inc. (NYSE, TSX: AL) is pleased to announce today that Richard Evans (58), Executive Vice President (EVP), has been chosen by the Board to succeed Travis Engen (61) as the Company's President and Chief Executive Officer. Mr. Engen has informed the Board of his intention to retire when his contract ends in March 2006.

To facilitate a smooth transition, effective immediately Mr. Evans has been appointed Chief Operating Officer (COO) and has been elected to the Board as a Director. Also effective immediately, Michael Hanley (40), EVP and interim Chief Financial Officer (CFO), has been appointed Alcan's CFO.

"Alcan is fortunate to have among its executives an individual of Dick Evans' caliber; someone who has proven business acumen, has a deep knowledge of Alcan's businesses and strategy, and embodies the Company's values," said Mr. Fortier. "Dick's extensive background in the aluminum industry and nine years at Alcan, as well as his wide ranging business experience, make him the ideal candidate and logical successor to Travis."

"The appointment of Michael Hanley as Alcan's CFO recognizes that he has both an extensive financial background and the operational management experience to ensure that the Company's financial strategy meets its business priorities and objectives," added Mr. Fortier.

Commenting on his appointment and the leadership transition, Mr. Evans said, "It has been my distinct pleasure to work with Travis on Alcan's transformation over the past four and a half years. I look forward to continuing to work closely with Travis, the Board of Directors, and my colleagues at Alcan, in strengthening the Company's position as a global leader in aluminum and packaging during this transition."

In recognition of Mr. Engen's tenure, Mr. Fortier said, "During his time at Alcan, Travis has overseen a period of tremendous growth and change for the Company. His leadership, vision, commitment, and deep understanding of the industry have shaped today's Alcan into a company focused on maximizing value for its stakeholders. He continues to exemplify strategic leadership by managing an orderly transition with a dedicated executive management team. On behalf of everyone at Alcan, we thank him for his tireless dedication in continuing to ensure a smooth succession."

Mr. Engen was appointed President and CEO on March 12, 2001. Among his many achievements at the Company, Mr. Engen led two challenging and successful initiatives - the acquisition of Pechiney and the spin-off of Novelis - as well as overseeing the implementation of the Alcan Integrated Management System (AIMS). He has served on Alcan's Board since 1996.

Alcan's executive organizational structure, which until today included the Office of the President, is modified immediately to reflect the appointment of Mr. Evans as COO. The four group Presidents, Jacynthe Côté, Alcan Bauxite and Alumina, Cynthia Carroll, Alcan Primary Metal Group, Michel Jacques, Alcan Engineered Products, and Christel Bories, Alcan Packaging, now report directly to Mr. Evans in his capacity as COO.

Michael Hanley, Executive Vice President and CFO, David McAusland, Executive Vice President Corporate Development and Chief Legal Officer, Gaston Ouellet, Senior Vice President Human Resources, and Daniel Gagnier, Senior Vice President Corporate and External Affairs, continue to report to the President and CEO.

"I am pleased by the Board's actions," said Travis Engen. "This new organizational structure keeps a tight focus on execution and allows for an effective future management transition. We have in place a strong and capablemanagement team for both today and tomorrow."

Alcan is a multinational, market-driven company and a global leader in aluminum and packaging. 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 well positioned to meet and exceed its customers' needs for innovative solutions and service. Alcan employs approximately 70,000 people and has operating facilities in 55 countries and regions.

(Note to editors - Biographical details for Dick Evans and Michael Hanley are attached)

Biographical Notes

Richard Evans

Executive Vice President and Chief Operating Officer (COO) Alcan Inc.

Richard Evans is Executive Vice President and Chief Operating Officer of Alcan Inc., which has its corporate headquarters in Montreal, Quebec. Until his appointment as Chief Operating Officer, Mr. Evans has overseen all four of Alcan's Business Groups at differing times: Bauxite and Alumina, Primary Metal, Engineered Products and Global Packaging; as well as, participating in the overall strategic governance of the Company and the integration of Pechiney acquired by Alcan in 2003. Prior to taking on this role, Mr. Evans was based in Zurich, Switzerland and was responsible for Fabrication Europe, as well as, the global integration of Alcan and algroup following their merger

in October 2000.

Mr. Evans has an extensive background in general and executive management with the aluminum industry. He joined Alcan Aluminium Limited in Montreal, in January 1997, as Senior Advisor, Corporate Development, following 27 years of US-based and international postings with the Kaiser Aluminum & Chemical Corporation. In July 1997, he was appointed Executive Vice President, Fabricated Products, North America and President of Alcan Aluminum Corporation; and, in March 1999, he was appointed President of Global Fabrication before relocating to Europe in October 2000.

Mr. Evans is currently a Director of Bowater Incorporated and a Director of the International Aluminium Institute (IAI). He is a past Chairman of the U.S. Aluminum Association's Board of Directors (1997 to 1999), and has served as Vice Chairman of the European Aluminium Association, which is a Brussels-based European trade association. He is a former Director of the Alcan Deutschland GmbH Supervisory Board, former CEO of Alusuisse following the combination with Alcan, and has previously served as a Director and Chairman of Logan Aluminum Inc., which is a joint venture in Kentucky, USA.

Mr. Evans is a graduate of Oregon State University with a bachelor's degree in engineering. He also earned his master's degree in management from the Stanford University Graduate School of Business. He is a native of Oregon, USA and he and his wife, Gretchen, are the parents of two grown daughters.

October 2005

Biographical Notes

Michael Hanley

Executive Vice President and Chief Financial Officer (CFO)

Alcan Inc.

Michael Hanley joined Alcan in 1998 as Director of Finance for the Bauxite, Alumina and Chemicals Group in Montreal. He transferred to Cleveland, Ohio in 1999 as Vice President and Assistant Financial Controller, Global Fabrication.

In September 2000, Michael Hanley was named Vice President, Investor Relations, for Alcan Inc. and in January 2002, he was appointed to the position of Senior Vice President of Alcan Inc. and President and Chief Executive Officer of Alcan Bauxite and Alumina.

He was appointed Executive Vice President - Office of the President on February 3, 2005. Since mid-May, he was also assuming interim responsibilities as Chief Financial Officer (CFO) and has now been appointed Chief Financial Officer.

Before joining Alcan, Michael Hanley was Vice President and Chief Financial Officer with two public companies in the energy and forest products sectors.

Born in Montreal, Michael Hanley is a graduate of the Hautes Etudes Commerciales business school at the Université de Montréal and is a member of the Quebec Order of Chartered Accountants. He is married and has two daughters.

In 2002, Michael Hanley was awarded the Quebec Order of Chartered Accountants' "Jeune CA Décideur". A year later, he was recognized as one of "Canada's Top 40 Under 40(TM)" executives.

October 2005

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Meridian to spend $3b on hydro and wind, New Zealand 22 October 2005


State power company Meridian Energy is considering hydro and wind power investment of $3 billion in the next 15 years, including a huge wind farm in the Maniototo.

An upbeat chief executive Keith Turner yesterday announced a record profit of $218 million for the biggest of the four state power firms, a 64 per cent increase on the previous year.

The message from the industry veteran of 37 years was that New Zealand's energy future was more secure.

Renewable energy such as wind, hydro and geothermal power could meet the country's energy needs in the medium term and New Zealanders should know a crisis was not imminent.

There had been "a remarkable turnaround" in energy forecasts.

Electricity prices were high enough to support wind farm and hydro development, but he warned that imported gas would drive them higher.

He believed there was no case for importing liquefied natural gas to fuel power stations.

AdvertisementAdvertisementMeridian was negotiating a supply contract for Comalco's Tiwai Pt aluminium smelter from 2012 but that would be "tough" if imported gas drove up wholesale electricity prices.

The record profit resulted from high wholesale electricity prices because of below average hydro inflows this year. Electricity sales reached $1.65 billion, 27 per cent higher than last year.

Dr Turner said though steep power price rises had been painful, they were necessary to increase profits to enable investment in power plants.

This year Meridian's retail price rise was 3.5 per cent.

"If we had not seen that change (in prices) New Zealand would be looking at a serious energy shortfall."

The company was investigating 25 wind sites and several hydro power possibilities.

One site south of the Maniototo plains in north Otago could take a 650 megawatt wind farm carrying about 225 wind turbines.

The site covered 300 square kilometres and was sparsely populated.

"It's well out of the way and we think it represents an exciting possibility for us and New Zealand.

"It's important that New Zealand, other generators, the public know that wind is a very serious energy form and that we are not sitting here with an imminent crisis on our horizon for energy in this country."

Meridian hopes to get resource consent for a $380 million 210MW wind farm at Makara, near Wellington, comprising 70 turbines. It is also considering an underground power station of about 260MW, costing up to $900 million, on the lower Waitaki River.

It has consent to build a $120 million, 58MW wind farm in Southland.

"We're talking in the region of $2 billion to $3 billion of new capital investment in wind and hydro that we think is economically feasible in the next 10 to 15 years."

RusAl aims to be world's top aluminium producer

Metals Place, UK - Dow Jones 21-Oct-2005

Just five years after its creation, Russian Aluminium , or RusAl, is the world's third-largest aluminium producer, but the company isn't about to rest on its laurels.

"Our key strategy going forward is to be the world's number one aluminium producer within the next 10 years," RusAl Chief Financial Officer Vladislav Soloviev told Dow Jones Newswires.

To achieve this, RusAl is targeting annual production of 5 million metric tons of aluminium and 8 million tons of alumina. It currently produces 2.7 million tons of aluminium and 4.1 million tons of alumina a year.

"We also plan to develop the energy supply side of our business so we're in a position to have some control over our smelting costs, as well as ensure the quantity and quality of that energy," Soloviev added.

RusAl's energy and smelting plans are moving ahead in the Kraznoyarsk region of Siberia. The company is participating in the construction of the 3,000-megawatt Boguchanskya hydropower station and of a greenfield smelter adjacent to it that would handle 600,000 tons of aluminium a year.

Tajikistan is the other location where RusAl's metals and energy plans go hand-in-hand. The company reached a deal with the government in October 2004 that will lead to the development of the Rogunskaya hydropower plant, which will be capable of producing 4 billion kW per hour.

Bauxite key to growth plans

Mindful of the need to grow its raw materials base, RusAl's smelting growth plans are to be matched by the development of its bauxite and alumina division.

Expansion of existing capacity, the acquisition of new production facilities and participation in joint ventures will all be used to achieve alumina production of 8 million tons a year, Soloviev said.

RusAl has the rights to develop bauxite deposits in Russia's North Onega field, which has reserves estimated at over 800 million tons. It is also thinking of building an alumina refinery there with a capacity of 1.4 million tons a year, with the possibility of eventually doubling this capacity.

The company has also entered into a joint venture with fellow-Russian producer SUAL to develop the country's last remaining bauxite deposit in the Komi Republic in northwest Russia.

"This undeveloped deposit has over 250 million tons of bauxite reserves. We'd be looking at an alumina refinery to be built adjacent to the bauxite mine, with total capacity of 1.4 million tons a year – RusAl would have the supply rights to half of this," Soloviev said.

"The project is at the feasibility stage and is now looking for financing worth around 70% of the project's cost," he added.

Bauxite resources in Russia are limited, so RusAl is also actively searching for new deposits outside the country.

For starters, it's signed a deal with the government of Guyana and the country's state-owned Aroaima Mining Co. to jointly develop bauxite reserves in the Baurbice River area. "RusAl is to expand the existing mine's capacity from 1.3 million tons to 2.5 million tons annually, with part of the output destined for the Nikolayev alumina refinery in Ukraine," Soloviev said.

He added that Nikolayev, which has already hiked annual output from 800,000 tons in the last few years, aims to boost alumina production from 1.3 million tons to 1.6 million tons a year by 2009.

RusAl has looked globally for opportunities to increase its alumina output.

Its recent acquisition of Boksitogorsk alumina in Russia and a 20% stake in Australia's Queensland Alumina Ltd. have given the company an additional 970,000 tons of annual capacity.

RusAl's Achinsk refinery will also see a capacity expansion, from 1.1 million tons to 1.2 million tons a year by 2008, Soloviev said.

The Republic of Guinea has become a key area for RusAl's raw materials growth. Soloviev pointed out that the company is developing reserves around the existing Compagnie des Bauxites de Kindia bauxite mine site. Annual output will rise from 3 million tons to 3.8 million tons, Soloviev said. A feasibility study is meanwhile ongoing into a project to build a refinery with a capacity of 2.8 million tons a year based on bauxite sourced from the development of the Dian Dian deposit in the West African state, Soloviev added. The Friguia complex in a western part of the Republic of Guinea is also central to the company's alumina growth.

"We're in the midst of a program to boost production at the 780,000-tons-a-year refinery to 1.4 million tons a year, by 2009," Soloviev said. "Alongside this, annual bauxite production at Friguia will rise from 5 million tons currently to 8 million tons."

Soloviev said RusAl believes the aluminium market will be "very strong" in 2006. "You have to take a global view. Changes in oil prices and the world economy act as the main driver, and this wont change going forward," he added. "Energy is a very important factor going forward, whether this is electricity, hydroelectric, nuclear – plus it's very important for aluminium," he said.

"Around 30% or so of smelting costs are energy, so on this basis the market should be very strong," he added.

Norsk Hydro says HAW owners turn down bid; shutdown to continue as planned

Forbes AFX News Limited 10.21.2005, 05:11 AM

OSLO (AFX) - Norsk Hydro ASA said it and the other shareholders of Hamburger Aluminium-Werk GmbH (HAW) have rejected a bid by Georgsmarienhutte Holding GmbH (GMH).

HAW is owned by Norsk Hydro, Alcoa Inc and Austria Metall Aktiengesellschaft through subsidiaries, each with a 33.33 pct stake.

Norsk Hydro said the bid was rejected because the owners have serious doubts about the sustainability of positive cash flow under the business plan presented, including adequate protection of shareholders and employees from the risk of a future insolvency.

The smelter and carbon production at HAW, which employs about 450 employees, will shut by the end of the year as earlier announced, Norsk Hydro reiterated.

President commends VALCO (Thanks to Eric Amissah for this article!)

Tema, Oct 21, GNA

Tema, Oct 21, GNA - President John Agyekum Kufuor on Thursday commended the Volta Aluminium Company (VALCO) for its role in helping to realise Dr Kwame Nkrumah's dream to establish an integrated aluminium industry, comprising a bauxite mine, a refinery and a smelter. President Kufuor, who made the commendation during a second informal visit to the company in two months, noted that the re-activation of VALCO was in line with government's vision to revive the dream of Dr Nkrumah of blessed memory.

He repeated the call on management and workers of the company to see the re-activation as the cornerstone of the nation's economic take-off and to put in their maximum to ensure its success. President Kufuor told workers of VALCO that Ghanaians were glad in celebrating their initial success of producing molten aluminium. He commended VALCO for rescuing Aluworks from the doldrums with the supply of its aluminium needs.

The President assured the company that once it had installed the aluminium plant, other installations would follow, thus resulting in VALCO's entry into the export market to earn enough foreign exchange for the nation.

Mr Seth Adjei, Managing Director of VALCO, noted that sufficient and reliable power supply was crucial to the company's continued operations, adding, "It is good for Ghana to support VALCO with power to be converted into value-added aluminium."

Mr Adjei said, so far, a total of 1,750.7 metric tonnes of aluminium had been tapped, out of which 1,686.9 metric tonnes had been sold to Aluworks.

He was optimistic that the continued operations of VALCO would provide the base load for a viable West Africa Gas Pipe Line Project, which would become fully operational by the end of next year. Mr Adjei earlier conducted President Kufuor round the Cell Lines and the Cast House.

At the Cast House, where metal products were being dealt with, the President poured metal, and before leaving VALCO, he was presented with a plaque to show its appreciation for his concern in helping to resuscitate the company by breathing a new lease of life into it.

SUAL Group Maintains Strong Production Growth 24_Oct-2005

SUAL Group has announced its production results for the first nine months of 2005. The results show that production continues to grow across the SUAL Group. The overall production volume exceeded the results for the same period of 2004.

SUAL Group's overall production of bauxite for the first nine months 2005 was 3.97 million tonnes, an increase of 4.8% on the year. The bauxite output increase at the Middle-Timan Mine compensated for the bauxite output decrease at SUBR due to the ore depletion of the Ivdelsk open pits and mines 15-15 bis and 16-16 bis. With the operational launch of the Novo-Kalyinskaya mine in Q3 2005, SUBR's capacity will be maintained with no expected displacement of workers.

SUAL Group's businesses produced 1.72 million tonnes of alumina for the first nine months of 2005. The addition of Zaporozhye Aluminium Smelter (ZALK) to the SUAL Group provided the majority of the 11.1% growth in production volume despite a temporary decrease of production volume at Pikalevo Alumina Refinery. The decrease was due to a shortage of nepheline concentrate, which is now being supplemented with bauxite.

For the first nine months of 2005, SUAL Group's overall production of primary aluminium was 782,400 tonnes. This 13.3% year-on-year growth was again primarily due to the incorporation of ZALK into SUAL Group, a number of technical improvements and the continual optimization of production parameters.

SUAL Group's production of silicon increased by 19.1% for the first nine months of 2005. This year-on-year growth was due to the expanded supply to the domestic market and the incorporation of the Zaporozhye Aluminium Smelter.

The output of SUAL Group's downstream businesses continues to significantly increase due to reconstruction, technical upgrades, aggressive marketing policies and management system improvements. The production of rolled and semi-finished products for the first nine months of 2005 exceeded last year's results for the same period by 7.6%. The output of foil and aluminium strips increased by 11.5% on the year. Consumer goods output for the first nine months of 2005 increased by 7.2%.

Cable production output for the first nine months of 2005 decreased by 0.4% on the year. However, in value terms the production volume grew due to the re-profiling of the product portfolio in favour of high value-added production.

Foreign bankers to aid bauxite project

Viet Nam News, Vietnam (25-10-2005)

HA NOI — The Viet Nam Mineral Corporation (VIMICO) has said it will have to source VND7.7 trillion (US$484 million) for the Lam Dong bauxite exploitation and processing project in the central highland province of Lam Dong.

To gain this sum the corporation aims to borrow VND5.5 trillion from foreign bankers, VND1.2 trillion from State Investment and Development Fund and VND500 billion from the Fund for Equitisation of State-owned Enterprises, the company said.

The first phase of the project, which includes construction of the complex’s infrastructure such as roads and offices, will be commenced in the first quarter of next year, the country’s largest mineral exploiter said.

The second phase, the major phase of the project, which will see construction of the bauxite processing plant, will be started by the end of next year.

The bauxite exploitation and processing complex, which is scheduled to be operational by the end of 2009, will have a production capacity of 600,000 tonnes of alumina per year.

According to the Ministry of Industry, the world’s four biggest alumina importers the US, Canada, Russia and China, are importing 14 million tonnes of alumina per year, which is then used to produce aluminium.

Therefore, output from the Lam Dong project would mostly be exported, the ministry said. In a separate development, Prime Minister Phan Van Khai earlier this month proposed a temporary ban on the export of crude bauxite.

A document issued by the Government Office earlier this month laid down the PM’s opinions concerning a master plan for the exploration, exploitation, processing and use of bauxite by 2010 and towards 2020, and projects to exploit bauxite, produce alumina and refine aluminum in the two Tay Nguyen (Central Highlands) provinces of Lam Dong and Dac Nong.

Khai emphasised that Viet Nam now has to import aluminium to meet its own domestic demand, so the country needs to accelerate exploration and exploitation of bauxite resources and increase aluminum production, both to meet domestic demand and for export.

Khai instructed the Ministry of Industry to co-ordinate with relevant ministries and agencies to implement the 2006-2010 plan for exploiting bauxite in Lam Dong and Dac Nong provinces and process aluminum for export with an initial output of 2 million tonnes per year.

Geological surveys indicate Viet Nam has more than 8 billion tonnes of bauxite, raw material for alumina production, the fourth highest behind Australia, Guinea and Brazil.

Of the figure, 120 million tonnes are in the northern provinces of Cao Bang and Lang Son, and 7.9 billion tonnes are in the central highland provinces.

However, none of these bauxite deposits has been exploited. — VNS

Alcan, Cameroon mull smelter expansion

Reuters Canada, Canada Wed Oct 26, 2005 10:45 AM EDT

MONTREAL (Reuters) - Alcan Inc. (AL.TO: Quote) (AL.N: Quote) and the Cameroon government are considering a $900 million upgrade and expansion of their joint-venture Alucam aluminum smelter, the company said on Wednesday.

Alcan, the world's second-largest maker of primary aluminum, said the project for the southern Cameroon site would include expanding primary aluminum production capacity to 260,000 tonnes a year from 90,000 tonnes, and building a new hydroelectric power station.

The government of Cameroon and Alcan each own 46.7 percent of Alucam, which employs 750 people.

The smelter expansion portion calls for upgrading its existing potline by 20,000 tonnes and building a second, 150,000 ton potline.

The additional smelting capacity would represent a 2 percent increase in Alcan's company-wide annual capacity of almost 3.5 million tonnes.

A letter of intent signed by the two allows for technical and environmental studies to examine the feasibility of the project, which would require the government to build the Lom Pangar dam to provide electricity for the project.

Alcan said it expects to make a decision on the project in 2006.

Alcan said the agreement also gives it two years of exclusivity to conduct studies on bauxite deposits, which is refined into alumina to produce aluminum.

Alcan shares rose 22 Canadian cents to C$37.60 on the Toronto Stock Exchange and 26 cents to $32.14 on the New York Stock Exchange on Wednesday morning.

© Reuters 2005. All Rights Reserved

Alumina tie-up as costs bite -

The Standard, Hong Kong Thursday, October 27, 2005

China's 18 top aluminum smelters and two largest importers have agreed to form an alliance as early as next month in an attempt to drive down alumina import costs, industry officials said.

China's 18 top aluminum smelters and two largest importers have agreed to form an alliance as early as next month in an attempt to drive down alumina import costs, industry officials said.

The alliance will set price requirements for imported alumina, from which aluminum is made.

Forming the alliance may also help Beijing cut a surplus in the energy- intensive aluminum industry because the smelters may cut production when they cannot buy alumina at expected prices.

Strong demand from China, the world's largest buyer for spot alumina, has helped push up world prices by 7.5 percent in the past month and 31 percent so far this year.

Aluminum Corp of China, the dominant alumina producer, and China Minmetals Nonferrous Metals, the biggest importer of alumina in the country, will lead talks with overseas alumina suppliers for the alliance.

The 18 smelters, out of about 140 in China, are allowed to directly import taxed alumina.

State-controlled Aluminum Corp, or Chalco, and Minmetals are authorized to resell their imported alumina to other smelters in China.

The government will not give a necessary permit for alumina imports bought at higher prices, an official for one of the smelters said.

"If they have no joint production cuts, [the impact] of the alliance will not be obvious," said an official for another smelter joining the alliance.

Since 2003, Beijing has imposed measures, including credit curbs, taxes and high power fees, to cool the industry. But China still produced 5.4 million tonnes in the first three quarters of this year, up 17.6 percent from a year ago.

It exported one million tonnes of primary aluminum and aluminum alloy in the same period.

The government in April asked Chalco and Minmetals to form the alliance. It now wants the alliance to start operations next month as high alumina prices are hurting smelters. More than 60 percent of operating smelters in China suffered losses in the first half, partly because of high alumina prices.

Traders said spot alumina had changed hands around US$570 (HK$4,446) a tonne for delivery to mainland ports, against about US$530 a month ago and US$435 at the start of this year, on strong demand from China and less availability of spot alumina.

Imported alumina already in mainland ports were trading at about 5,600 yuan (HK$5,377) a tonne, up 4.7 percent from a month ago. China imported 5.3 million tonnes of alumina in the first nine months of this year, up 20.4 percent from a year ago. REUTERS

© 2005 The Standard, Sing Tao Media Corporation.

$3.7 bn investment for VALCO

Choice FM Ghana, Ghana Wed 26 Oct 2005

New Volta Aluminium Company (VALCO) is to gain $3.7bn investment package from its partners: the Ghana government and ALCOA to aid the operation of the company.

However, the investment package would be spread between the periods of three to four years.

Executive Chairman of VALCO, Dr Charles Mensa indicated that the investment was likely to change the economic fortunes of the country as it was expected to generate about $1billion in foreign exchange annually from the aluminium smelter and refinery.

Dr Mensah explained that the refinery would generate about $600 million a year, while the smelter would also bring $400million.

The investment would be allocated accordingly such that: The company is expected to use $700 million to double output of the aluminium smelter from 220,000 metric tonnes to about 500,000 metric tonnes, $1bn for the setting up of a 1,000 megawatts thermal power plant at Tema through the West African Gas Pipeline Project, which will enable it lessen its dependency on the hydro dam at Akosombo and the subsequent $2billion will be provided towards the mining of bauxite and the construction of an aluminium refinery.

The foreign exchange earning would rank with revenue from cocoa and will boost the economy and as well raise the Gross Domestic Product (GDP) by two or three percent.

Dr Mensa said soil testing and drilling had begun at Kyebi, while architectural drawings for the refinery and site for aluminium refinery would be ready by next June for work to commence, with the engineering test already done.

The project is expected to provide job for 3,500 artisans such as welders and masons, while the mine will also provide about 2,500 job avenues.

He said the project would conform to environmental demands because VALCO was aware that the environment was a sensitive issue to the Okyenhene, Osagyefo Amoatia Ofori Panin, and the company would not overlook that critical stand.

Battle to safeguard 570 island jobs

Daily Post ic NorthWales, UK Oct 26 2005

A MINISTER last night pledged to help safeguard 570 North Wales jobs.

Anglesey Aluminium Metal bosses met energy minister Malcolm Wicks to voice fears soaring fuel costs could force them to sack workers.

The firm's smelter is powered by nearby Wylfa power station under a long-term deal due to run out in 2009.

The Magnox reactor is set to shut down 12 months later.

Ynys Môn MP Albert Owen yesterday joined company bosses in Westminster talks to outline three options for protecting jobs.

They said either Wylfa's closure could be delayed - a decision which could only be taken by ministers.

Alternatively, the company would be allowed to receive its power from the National Grid or the firm could be given the green-light from the Department of Trade and Industry to build a replacement gas-fired power station.

Mr Wicks vowed to explore all three options and assured company bosses the DTI would work closely with the firm in the years leading up to Wylfa's closure.

Speaking after the meeting Mr Owen said: "We were pleased with the meeting. We talked through all the options and they will be looked at.

"I want a special case made for Anglesey Aluminium. Anglesey Aluminium and Wyfla are worth 30% of the GDP of the island.

"In terms of the gas options a moratorium of building new power stations has been lifted but energy prices are rising and we need to know whether that trend will continue."

The Anglesey Aluminium smelter consumes 12% of all energy used in Wales, with electricity accounting for more than a third of its running costs.

The Commons Welsh affairs select committee is on the verge of launching a year-long inquiry into energy policy including the future of the Wylfa plant.

Venezuelan aluminum reducer Alcasa secures US$240 million financing, IL 28-Oct-2005 Harvey Beltran writes: Venezuelan aluminum reducer Alcasa, a subsidiary of state heavy industry holding CVG, has secured financing to build a US$240 million rolling plant, a company executive told BNamericas.

"President Hugo Chavez announced he would earmark the money for Alcasa's complex, which will be operating in 18 months," added the executive, without providing production targets for the new project.

According to the executive, both Alcasa and Venalum, Alcasa's neighbor and fellow aluminum reducer also controlled by CVG, could use the plant.

Meanwhile a modernization and improvement project is underway at Alcasa, which will help expand coil processing capacity at the United rolling plant to 7Mt/y from 3.5Mt/y.

The reducer announced in July the signing of a modernization contract with Italy's Fata Hunter, owned by Italy's Fata group, which will guarantee technology transfers through a technical training program for Alcasa personnel.

Alcasa is in the Matanzas industrial zone in Puerto Ordaz state in the country's eastern Guayana region.

Alcoa Publishes Jamalco Sustainability Report

10/28/2005: Press Release from Alcoa Inc.

(CSRwire) CLARENDON, Jamaica--(BUSINESS WIRE)--Oct. 28, 2005--Alcoa announced today it has released its 2004 Jamalco Sustainability Report, which provides detailed insight into the environmental, social, and economic achievements and challenges of Alcoa in Jamaica. The report is available online at

"Jamalco believes that sustainable development is the basis for our future," said Alberto Fabrini Jr., Jamalco Location Manager. "This report demonstrates that sustainability is more than just environmental stewardship. Sustainability involves the cooperation of business, government, and communities to better understand each other's needs and to work closely to ensure future generations of Jamaicans will enjoy a higher quality of life in addition to a cleaner environment."

In 2004, Alcoa's significant Jamalco highlights included the following:

-- Alcoa's Jamaica operations are some of the most efficient in

the entire Alcoa system. Because of this and government

actions to create a favorable investment climate, Alcoa

announced plans to double operations in Jamaica by 2007.

-- Recipient of the Environmental Management Award from the

Jamaica Bauxite Institute.

-- Creation of the "Clarendon Express," a sustainable project to

boost tourism on Jamaica's south coast.

Jamalco is owned 50% by Alcoa Minerals of Jamaica LLC and 50% by Clarendon Alumina Production, Ltd., a wholly owned subsidiary of the Government of Jamaica.

Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers.

In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) foils and plastic wraps, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 131,000 employees in 43 countries and has been named one of the top three most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at

Copyright Business Wire 2005

Face-lifting the Edea Aluminium Smelter Plant (ALUCAM) will further swell the economy.

Cameroon Tribune (Yaoundé) October 28, 2005

Lukong Pius Nyuylime

An economic project which fails to bring in revenue, create jobs and change the face of the economic were better not to exist. The Edea Aluminium Smelter Plant (ALUCAM) which was already drifting towards collapse is expected to bring in one of the greatest contributions to the economy following the signing last Wednesday of a letter of intent between the government and ALCAN, a Canadian multinational industry. The letter of intent sets the pace for the development of the existing structure in order to step up production capacity from 100,000 to 260,000 tonnes. To arrive at this objective, three major things will be done: modernising and increasing the intensity of the existing plant in Edea; constructing of a second set of electrolysis with a production capacity of 150,000 tonnes per year; and developing a new hydro-power station on River Sanaga at Nachtigal, with an installed capacity of about 33 Megawatt, to cover part of ALUCAM's energy needs.

Of what importance is this to the economy, is the question many are asking? The new ALUCAM and its surrounding projects will bring in a great deal. The General Manager of ALUCAM, Titi Manyaka, has been quite categorical about this. "A great deal of advantages that will be drawn from the project including jobs, revenue for the State, assistance to communities, increased volume of trade with the rest of the world etc, etc", he said.

In effect, the amount of investment to be harnessed in the project is estimated at USD 900 million, equivalent to about CFA 500 billion. In the meantime; extension works on the plant and the development of the Nachtigal power station will fetch some 3,000 jobs. In its operation phase in 2010, the project will help generate more than 2,000 direct and indirect permanent jobs. The procurement of goods and services from local suppliers and sub-contractors could account for roughly 30 % of the project cost. The building of the Nachtigal dam will generate many more new activities around it. Restaurant business will flourish. Hotels will generate more money as the area may likely develop into a tourism centre.

For the refurbishment to be complete, a lot of other subsidiary projects will be realised. These include: the commissioning of a new gas thermal station in Kribi, the construction of the Lom Pangar dam and the signing of a new long-term energy contract between ALUCAM and AES-SONEL. Government is also expected to realise a set of facilitating projects including, rehabilitating infrastructure, increasing the harbour area at the Douala port, upgrading the entrance to Douala and the highway between Edea and the shipment point in Douala.

The letter of intent allows for a two-year exclusivity period to conduct studies regarding bauxite quality, quantity and accessibility which ultimately would guide decisions regarding their potential development. In the letter of intent therefore, the Government and ALCAN Consortium have agreed to extend their collaboration in order to carry out, by end-2005, studies aimed at identifying and specifying future opportunities for the integrated development of the aluminium industry, mining of bauxite and processing of aluminium.

When the ball must have been set rolling as from the end of this year, new economic horizons would have been opened.

Corus Aluminium secures long-term power contract for Voerde

Metals Place, UK Platts 28-Oct-2005

Corus Aluminium's German Voerde smelter has secured an electricity supply contract with Eon Sales and Trading of Munich, the company said. Delivery starts in January 2006, but the partners remained cagey about the length of supply. "The contract runs beyond 2006, for a few years, but we won't say how long for," said a spokesman for Eon Sales & Trading. Corus said the contract was "an important step towards the competitiveness of the Voerde location".

Aluminium Voerde has annual power demand of about 1.5TWh and is one of only five aluminium smelters left in Germany. "It is very important for us that the energy-intensive industry can be kept in Germany and local jobs secured," said Karl-Michael Fuhr, chairman of the board at Eon Sales & Trading. "It was important to us that we can plan, but also that our supplier is active not only in Germany, but also in the whole of Europe," added Gerhard Buddenbaum, member of the board at Corus and manager of the company's aluminium division. Voerde produces about 120,000mt aluminium products. The parent company Corus is based in London. Eon Sales & Trading has annual sales of about 100TWh, with trade volume coming to 309TWh.

Guinea reaches deal with Alcoa and Alcan on Global

Metro Toronto, Canada Saturday, October 29, 2005 2:24:15 PM ET

By Saliou Samb

CONAKRY (Reuters) - Guinea has reached an agreement with the world's top two aluminum producers, Alcoa and Alcan, to allow rival Global Alumina access to bauxite in their concession in the northwest of the West African state.

A joint statement from the Guinea government and Halco Mining, a venture between Alcoa <AA.N> and Alcan <AL.TO>, said they would award Global Alumina <GPCu.TO> rights to mine bauxite in the their concession in the Boke region.

Halco owns 51 percent of CDG, a partnership with the Guinea government, which operates the Boke concession.

Global wants to mine bauxite to supply a 2.8 million ton alumina refinery it is planning in the same part of the country.

In return, the CDG would receive permission to extract an additional 2 billion tonnes of bauxite of a quality to be agreed upon, from outside its original concession, the statement said.

A tripate agreement between Global, Halco and the government plus the award of the additional mining rights must be signed by November 15 at the latest, the statement said.

Guinea contains a third of the world's known reserves of bauxite, the raw material for alumina.

Will Aluminium be the next metal to run?

Australasian Investment Review (subscription), Australia Oct 31 2005

Kaiser plans $75M investment at Trentwood facility

Puget Sound Business Journal, WA Oct 31, 2005

Kaiser Aluminum & Chemical Corp. said it will invest $75 million in a three-year expansion of its aluminum products fabrication facility in Trentwood, near Spokane. Spending on the project is incorporated in Kaiser's Chapter 11 reorganization plan, according to the news release.

The expansion would include equipment that would expand the number and type of aluminum sheeting it sells to manufacturers, as well as increase the amount and quality of the sheeting it already produces.

Those improvements are needed to "address the significant growth in demand for fabricated aluminum products," Kaiser said in a statement.

Kaiser Aluminum's Trentwood facility employs about 600 people.

Houston-based Kaiser Corp. (OTCBB: KLUCQ), along with Kaiser Aluminum & Chemical and 19 subsidiaries, filed a reorganization plan with the U.S. Bankruptcy Court for the District of Delaware in February 2002.

Alcan eyes up expansion: new COO

Reuters Canada, Canada Mon Oct 31, 2005 4:06 PM EST

By Carole Vaporean

LONDON (Reuters) - Alcan Inc. (AL.TO: Quote) is studying plans to expand its presence in China, exploring bauxite development in Cameroon, and maintaining packaging as one of its four core businesses, newly appointed Chief Operating Officer Richard Evans said on Monday.

In an interview with Reuters, Evans said, "We have no plans at this point to divest packaging. Some people saw what we did with the (spun-off) rolling business, and jumped to the conclusion that that's our strategy with packaging."

Instead, Alcan views packaging, which generates $6.0 billion in revenues a year, as one of its four core businesses along with primary aluminum, bauxite and alumina, and engineered products.

The difference, he said, is that anti-trust requirements forced Canada-based Alcan to divest some rolling assets when it acquired French producer Pechiney, and packaging offers more growth prospects, at rates above GDP, than the mature rolling business.

"And we see a lot of consolidation in the packaging industry and therefore a lot of value potential for us to capture, given that we're well positioned in terms of share and a strong team," Evans said.

He said Alcan continues to make small acquisitions, following its customers into countries where they expand, specifically Russia, Poland, Malaysia, China and Mexico, to supply them locally in food, beauty, pharmaceutical and tobacco businesses.

In China, where Alcan currently has a 50 percent stake and managing position in one of the country's lowest cost smelters, the executive said, "We will continue to use that as a platform to determine whether to expand."

Evans said those options include expanding capacity at its current joint venture at Ninxjia or making similar arrangements with other smelters in China that have approached the company with potential opportunities.

"We'll certainly study it closely. I would not be surprised to see us grow our participation in China, but we will do it very selectively and if we have energy sources to go with it."

In the next year or two, Evans said, Alcan may be making another investment in China either at Ninxjia or elsewhere.

Alcan's recently announced Cameroon upgrade may turn out to be one of the world's only fully integrated operations.

"There is bauxite in Cameroon and we may develop that as well. So you could have refining and bauxite and smelting and power generation all in the same country," Evans said.

And Alcan is looking at ways to expand its booming aerospace business, which, with soaring energy costs boosting demand for new fuel efficient plane technology, Evans said is the best he has seen in his 35 years in the aluminum business.

"We see strong demand. We're well positioned with both Airbus and Boeing. We're the second largest producer in aerospace and growing. Sold out for the next few years and looking at de-bottlenecking options," he said.

One of its steps is to expand capacity at Ravenswood, West Virginia, after signing a 5-year labor contract there.

On the other hand, Alcan has targeted closures of some of its older and less efficient European smelters.

When their electricity contracts end, new power costs double, making them less effective to operate.

Specifically, Evans said, "We have a buyer for Steg in Switzerland. If we don't find a buyer, we're not saying it's certain that we'll close, but its prospects are not good."

In the Netherlands, Evans said the Vlissingen smelter also has high energy costs, but its larger size and more modern facility make its closure more problematic.

"We're looking at all options there--negotiating a new power contract and running it, selling it, or closing it. We'll continue to study all three and look at what's best." Other, more modern European facilities already have long-term fixed power contracts and will continue to operate, he said.

Evans, 58, takes over as chief executive in March when his predecessor Travis Engen's contract expires after five years in the top job. But, Evans said his own tenure will be open ended.

Provided Alcan's board approves, Evans said he has "no specific time frame, but to be effective and have an impact it needs to be a number of years."

© Reuters 2005. All Rights Reserved.

Alcan's Ravenswood unit to supply aluminum for Boeing 737, 777 projects

Canadian Press Monday, October 31, 2005

RAVENSWOOD, W. Va. (CP) - Alcan Inc. has signed a multi-year agreement to supply The Boeing Co. with a variety of high-performance aluminum products primarily for Boeing 737 and 777 commercial aircraft.

The deal was announced Monday by Montreal-based Alcan, which owns the Ravenswood rolling mill. Financial details weren't disclosed. "This contract is strategically important for Ravenswood as it represents a significant increase in its business and is a clear indication of the new initiatives underway to build a bright future for the plant," said Michel Jacques, CEO of Alcan Engineered Products.

Alcan shares (TSX:AL) traded at $37.64 Cdn, up 95 cents, on the Toronto Stock Exchange.

© The Canadian Press 2005

China sets limits for new aluminium plants

Metals Place, UK Source: Asia Pulse 31 Oct, 2005

China's National Development and Reform Commission (NDRC) has promulgated the Special Development Program and Policies for the Aluminium Industry, demanding all new aluminium plants meet the standards of having an annual production capacity of at least 100,000 tons.

The energy-gobbling industry should adapt to the real situation of the state's natural resources and be subject to macroeconomic control, the policy document says. China will strictly limit the production of electrolytic aluminium and alumina and ban blind expansion in order to achieve an orderly development.

An official of the China Non-Ferrous Metals Industry Association (CNIA) told reporters that contributors to new projects must provide 35 per cent of the total investment as against only 20 per cent at present.

The central government has imposed similar caps on the steel and iron industry this year in a bid to rein in overheated investment and prevent power shortages and transportation bottlenecks from worsening.

The official pointed out that the new policy would neither restrict investors from holding controlling shares in aluminium projects nor encourage them to do so. Overseas investors may acquire minor stakes.

The same policy is in the works for copper projects, he said, in a bid to prevent similar speculative activities from happening again like in the aluminium industry, although it is not as serious as it is in the aluminium industry.