AluNews - November 2007

Chemical fertiliser firm wins award, Australia - Oct 31, 2007

A CHEMICAL fertiliser company which locks up liquid carbon dioxide to reduce its environmental footprint has won one of the nation's prestigious NAB Agribusiness Awards, announced in Melbourne last night.

CSPB Limited, which is based in Kwinana, Western Australia, took out the Environmental and Energy Management Award.

The company produces a range of agricultural fertilisers, ammonia, sodium cyanide and ammonium nitrate.

It supplies around 70,000 tonnes of liquid carbon dioxide - a by-product of ammonia production - for injection into residue from bauxite, which is a type of aluminium ore.

The process locks up the carbon, saving the equivalent amount of emissions to taking 12,000 cars off the road.

The company has also greenhouse gas emission reduction strategies in place as it expands its ammonium nitrate facilities in Kwinana.

CSPB Ltd beat other finalists supermarket giant Coles, Longwarry Food Park in Victoria, investment company the Rewards Group and Warrnambool Cheese & Butter Factory on Victoria's south-west coast.

Other award winners were Australian Agricultural Company Ltd (Employer of Choice), GrainCorp managing director Tom Keene (Agribusiness Leader of the Year), Boundary Bend Limited (Export), Australian Country Choice (Primary Producers of the Year) and Grains Research and Development Corporation (Risk Management).

Rio Tinto expands alumina supply deal with Norsk

Reuters UK, UK - Oct 30, 2007

SYDNEY, Oct 31 - Rio Tinto Alcan today announced it has reached an agreement with Norsk Hydro ASA to expand its alumina supply to Hydro Aluminium from 500,000 tonnes of alumina per year to 900,000 tonnes from 2011 to the end of the contract.

Steve Hodgson, president and chief executive officer, Bauxite and Alumina, Rio Tinto Alcan, said, "The expansion of our supply contract with Norsk Hydro underpins our decision to invest in an expansion of the Yarwun alumina refinery. It is consistent with our strategy to maximise the value of Rio Tinto Alcan's world class bauxite deposits at Weipa in north Queensland, Australia."

Under a 20-year contract signed in 2003 with Norsk Hydro, Rio Tinto Alcan is committed to supplying Hydro Aluminium with 500,000 tonnes of alumina per year from 2006 until 2030. This contract also gave Norsk Hydro an option to increase its purchases of alumina.

© Reuters2007All rights reserved.

Volgograd Aluminum Plant Restructures Management System

Financial Information Service(Registration), Russia - November 6, 2007

VOLGOGRAD At present, VgAZ is completing the adjustment of the plant's organizational structure to make it in conformity with the typical structure of enterprises of the aluminum division of UC RUSAL. According to the company's standards the organizational structure has five levels from Director General to workers. Such an organizational structure is in place at all enterprises of the aluminum division located in Russia, Ukraine, Sweden, Nigeria.

Vietnam wants $15.6 bln to tap vast bauxite reserves

Reuters -Wed Nov 7, 2007

HANOI (Reuters) - Vietnam needs about $15.6 billion to invest in major bauxite and alumina refining projects by 2025, to make use of its vast, and largely unmined, bauxite ore reserves, the government said on Wednesday.

The country's bauxite ore reserves, the world's third-largest after Guinea and Australia, are estimated at about 5.5 billion tonnes, 62 percent of which is located in the central highland province of Dak Nong, Prime Minister Nguyen Tan Dung said in a government directive.

Bauxite is a clay compound used to produce aluminium.

Dung has asked relevant authorities to set up shareholding companies in which Vietnamese entities would hold majority stake to mine and process the minerals.

A host of foreign companies have expressed interest in investing in Dak Nong, the bauxite hub, including China's Chalco, Alcoa Inc. of the United States and Russian firm United Company RUSAL.

Dung said in the directive that up to $13.7 billion would be invested in seven plants by 2015 to produce 8.4 million tonnes of alumina per year and 650,000 tonnes of aluminium oxide, as well as two aluminium refineries by 2025.

A sea port for 50,000-tonne vessels and a railway linking its central highlands with the sea port, needing a total investment of $1.9 billion, will be built in the south-central province of Binh Thuan as part of the infrastructure, he said.

(Reporting by Nguyen Nhat Lam; Editing by Valerie Lee )

China to bar foreign investment in non-renewable mineral resources - UPDATE

Hemscott, UK - 07 Nov 2007

BEIJING (XFN-ASIA) - China will bar foreign companies from investing or exploring in some major non-renewable mineral resources, according to a policy statement issued by the Ministry of Commerce and the National Development and Reform Commission (NDRC).

Tungsten, tin, antimony, molybdenum and rare earth exploration are in the 'prohibited' category for foreign companies, according to the latest issue of Foreign Investment Industry Guidance Categories.

Under the new guidance, the government will restrict foreign investment in the refining of copper, zinc, aluminum and rare earths.

Exploration for gold, silver and platinum will be on the 'restricted' list, the guidance shows.

The 'encouraged,''restricted' and 'prohibited' categories are used as principles in the government's examination and approval of projects.

Foreign firms will also be restricted or forbidden to invest in projects which emit high amounts of pollution or consume excessive amounts of energy.

China welcomes foreign investment in oil shale, oil sands, heavy oil and superheavy oil, according to the guidelines.

But the guideline categories limit foreign investment in oil refining.

The country will, however, encourage foreign firms to invest in renewable energy, ecological, and environmentally-friendly projects, the guidance added.

The government will 'prudentially' open up strategic industries involved in matters of economic security to foreign investors, according to the statement.

The Ministry of Commerce and the NDRC said that China will not focus solely on an export-oriented trade policy amid a large trade surplus and surging foreign reserves.

The guidelines will take effect on Dec 1. - xfnkz/xfnjanm

BHP May Need to Add Cash to Rio Offer After Rejection (Update6)

Bloomberg November 9, 2007 01:05 EST

By Tan Hwee Ann and Rebecca Keenan

Nov. 9 (Bloomberg) -- BHP Billiton Ltd., the world's biggest mining company, may need to sweeten its all-stock offer for Rio Tinto Group with cash as its seeks to gain greater advantage from the commodities boom fueled by China's hunger for copper, coal and iron ore.

Rio rose to a record in London and Sydney trading, valuing the company at $167 billion, after yesterday rejecting Melbourne based BHP's approach. A takeover may generate as much as $5 billion in savings, UBS AG said today.

``Cash is king, and it may be the sweetener that could force the hand of Rio's directors,'' Ric Ronge, who helps manage A$1.9 billion ($1.8 billion) at Pengana Capital including Rio shares, said from Melbourne.

The proposed takeover, the world's largest, underscores Chief Executive Officer Marius Kloppers prediction that the five-year rally in commodities will be sustained. It would create a company with more than a third of the iron-ore market, the most energy coal and copper reserves, and operations in six continents.

Rio rose A$17.50, or 15 percent, to A$130.90 at the 4:10 p.m. close in Sydney on the Australian Stock Exchange. BHP dropped 1.8 percent to A$42.47. At the close of trade, BHP's three-for-one share indicative offer was worth 2.7 percent less than Rio's value.

Profit at Rio has jumped 11-fold since 2002, the year that copper, iron ore and nickel began a rally that's lifted the UBS Bloomberg CMCI Index of 26 commodities threefold. The company had net income of $7.44 billion last year, compared with BHP's $13.4 billion in the latest fiscal period.

`Market Matter'

Australia lawmakers may not oppose the bid as the offer is a ``market matter,'' Prime Minister John Howard said today on Melbourne radio 3AW. Treasurer Peter Costello's spokesman David Gazard would not offer any comment on the bid this morning.

Australia's antitrust regulator, the Australian Competition and Consumer Commission, will look closely at any deal that eventuates because of the ``large amounts of iron ore deposits'' and infrastructure, spokeswoman Lin Enright said today.

``If they were to say you have to sell one of the rail lines in Western Australia, that could be a deal killer,'' Bradford said. BHP, Rio and Brazil's Cia. Vale do Rio Doce control about 80 percent of seaborne trade in iron ore.

BHP yesterday said it ``has examined in detail the regulatory issues and other practicalities of a combination.'' BHP spokeswoman Samantha Evans declined to comment. Rio Tinto spokesman Ian Head couldn't immediately comment today.

Bad for Chinese Mills

Rio, BHP and Vale are in talks with Baoshan Iron & Steel Co. and rival steelmakers to set annual contract prices for iron ore next year, which may rise 50 percent, Macquarie Bank Ltd. said.

A combination would be ``bad news for Chinese steel and metal producers,'' Lu Yizhen, who helps manage $640 million at Citic- Prudential Fund Management Co., said in Shanghai. ``The foreign firms will tighten their grip on global ore supplies leaving the Chinese with little bargaining power.''

Lu sold shares in Chinese mills because of the rising price of iron ore, used to make steel.

BHP yesterday said it planned to pursue the bid after its approach was rejected. The bid ``significantly undervalues Rio Tinto and its prospects,'' Rio said yesterday.

Global Assets

The potential combination would be the biggest in a record year for mergers. The value of transactions through October overtook last year's $3.5 trillion total, according to data compiled by Bloomberg. A successful bid may eclipse America Online Inc.'s $124 billion purchase of Time Warner Inc. Time Warner is now half the size it was when the deal was completed.

Combining BHP and Rio, which just bought aluminum producer Alcan Inc., would create a company with an estimated net profit of as much as $26 billion, according to Tony Robson, co-head of mining research at BMO Capital Markets in Toronto.

The merged company's assets would include a stake in Chile's Escondida, the world's largest copper mine, and have operations in uranium, aluminum, diamonds, silver, lead and nickel. It may generate between $3 billion to $5 billion in pretax cost savings, and a friendly bid would create the most value, UBS said.

``In terms of the synergy, it would be enormous, particularly in iron ore,'' Troy Angus, who helps manage A$4 billion at Paradice Investment Management Ltd., said in Sydney. ``The dynamics for the deal definitely stacks up from the investor perspective.''

Bid Review

``I would be surprised if (Rio) remains independent,'' said Evan Smith, who helps manage $1.5 billion at U.S. Global Investors Inc. in San Antonio, including Rio stock. ``Someone else who might be interested could make a run at it. I think it is pretty good odds.''

BHP's rating may be cut from ``A1'' should an offer eventuate because of uncertainties about integrating the businesses and potential regulatory restrictions, said Moody's Investors Services. Standard & Poor's Ratings Services said its ``A+'' rating on BHP would not be affected.

Credit-default swaps tied to the debt of BHP increased 5 basis points to 30.5 basis points after the approach was announced, prices from JPMorgan Chase & Co. show. Rio credit default swaps declined 1 basis point to 46.5 basis points.

Rio hired Morgan Stanley, Macquarie Group Ltd., Credit Suisse Group and NM Rothschild & Sons Ltd. BHP will use Goldman Sachs Group Inc. and Sydney-based Gresham Advisory Partners Ltd., said people briefed on the transaction.

To contact the reporters on this story: Tan Hwee Ann in Melbourne at ; Rebecca Keenan in Melbourne at

A galaxy of opportunities

Business Spectator, Australia - 11:37 AM Nov 9, 2007

Rio Tinto chairman Paul Skinner and his chief executive Tom Albanese pulled off the deal of a lifetime in buying Alcan and its hydro power driven global aluminium leadership position.

BHP chairman Don Argus and his aggressive CEO Marius Kloppers now want to buy Rio Tinto before the market understands just how good the Alcan deal is. To succeed, they will have pay a lot more than they have so far offered.

My guess is that Argus and Kloppers understand this and will pay the required sum, although top price might stunt earnings per share growth in the short term.

I am not privy to the longer term planning of Argus and Kloppers, but as the new BHP CEO and his experienced chairman sat down and examined the future of the BHP group, a number of obvious conclusions would have come to them.

They would have asked themselves: "What metal looks like having the best potential in the next 20 years?"

Obviously copper and iron ore would have ranked high, but there can be no doubt that aluminium produced by hydro electricity where the rainfall patterns look good would have been very hard to beat in a carbon-curbed world. Such aluminium is produced with little carbon, can be recycled easily and its lightness means it actually saves carbon in many uses.

Late last year Skinner and Albanese were being studied by the private equity groups and had to make a move. And what a great move it was -- they grabbed Alcan and gave Rio Tinto incredible long-term potential and at the same time the extra borrowing frightened off the private equity groups. Private equity consortiums no longer have access to the required funds, but the Alcan deal has made Rio Tinto very attractive to BHP.

In theory, BHP should have launched a counter bid for Alcan but it may have reasoned that it was better to let Rio Tinto do the Alcan deal and then go for Rio. And because BHP has a strong oil position, it has a better market premium, making a Rio bid much easier than a few years ago when Rio Tinto was more favoured by the market.

Rio Tinto is now the world’s largest aluminium producer - an sector in which BHP is a minor player. It entered the aluminium business via the Billiton takeover, but ranks only fourth or fifth in the world. It does better in bauxite and alumina but again is not in the top two. The company is considering another aluminium plant in Africa based on a massive hydro scheme but that’s a long way down the track and bristles with political difficulties. BHP’s low-priced takeover of WMC will generate great growth, if uranium fulfils its promise, as will its series of new oil and gas production projects.

Of course, a Rio Tinto acquisition offers a galaxy of other opportunities apart from aluminium leadership. For example, it transforms the economics of iron ore production in WA and means that even in any future tough times the Chinese will not be able to screw down the price by playing BHP and Rio Tinto off against each other. My guess is that to get the Chinese on side it may be necessary to offer them some equity on the iron ore operation, but it will be a last resort.

Copper also looks set to be a growth material and any Rio Tinto acquisition would greatly increase BHP’s copper footprint -- and it would be acquiring the Rio Tinto Mongolian deposits for a token sum. When Former BHP chairman Jim McNeill bought Utah in the 1980s, the Escondita copper deposits were given very little value. They turned out to be the best asset. Mongolian copper may also prove to be a winner.

Rio Tinto is relatively small in coal and the takeover would further reduces the percentage of coal in the BHP portfolio. Unless coal burning is made much more carbon efficient, it is not going to be a growth material in the next decade or two.

And then there are diamonds, where BHP would have a much larger stake -- plus the nickel joint-venture in Russia and a number of other new projects such as Indonesian nickel.

Most of the above advantages to BHP are not incorporated in the Rio Tinto share price, but Skinner and Albanese are much smarter than WMC directors and they will make sure that Argus and Kloppers pay full value.

The Australian Government also has a chance put its stamp on the bid. While Rio Tinto did not tell untruths, during the CRA merger it out-manoeuvred the then prime minister, Paul Keating, and shifted control to London. In the Canberra public service that still rankles. Wayne Swan or Peter Costello must make sure that the head office of the combined operation is in Australia.

Don Argus delivered on all his promises in the BHP Billiton deal, so has great credibility in Canberra. Argus will get the deal through Canberra -- if the BHP board is prepared to pay the Skinner/Albanese price.

US$11-15bil needed for ore and aluminum exploitation by 2025

Vietnam Economic Times, Vietnam -: 08/11/2007

Vietnam will require an estimated investment of 11.8-15.6 billion USD to exploit and process bauxite ore (aluminum production and electrolysis) for the 2007-2025 period, including infrastructure projects (railway and port), according to Decision 167 approved by the Prime Minister.

Under the decision, cooperation and investment for exploiting bauxite in the near future will be based on the joint-stock company type.

From now until 2015, the country will invested into additional seven aluminum and hydro plants together with a bauxite-aluminum complex, with a total aluminum output of 6.4-8.4 million tons a year and a total hydro-aluminum output of 0.65 million tons a year.

Estimated for geological surveys come in at 47.5 million USD, bauxite projects, at 9.9-13.7 billion USD, and other infrastructure projects, at 1.9 billion USD.

Two aluminum electrolysis plants with an output of 0.2-0.4 million tons a year for each are planned to be built over the 2007-2025 period.

A specialized port in Binh Thuan Sea will be built to serve the development of aluminum industry in Tay Nguyen and the South central region, with a handing capacity of 30,000-50,000 tons a year.

The country’s total bauxite output is forecasted to reach 5.5 billion tons this year, mainly concentrating in Konplong-Kanak, Đ?ak Nong, Bao Loc – Di Ninh, and Phuoc Long.

With Buy Out of Alcan By Rio Tinto, Is Kitimat Smelter Dead?

Opinion250 News, Canada - Friday, November 09, 2007 03:59 AM

Prince George, B.C. - Questions are being raised about Rio Tinto, (formerly, Alcan) and its ability to be able to construct a new smelter in Kitimat given the huge debt Rio Tinto amassed in the Alcan buy out.

The buy out of Alcan’s shares are quickly closing.

Rio Tinto paid a 33% premium for the Alcan shares in the $38 billion dollar buy out. Tom Albenese ,who was formerly Alcan’s chief but then moved over to Rio Tinto, finds himself with a debt load of about $47 billion dollars. The company will sell some Alcan divisions and come up with about $ 8 billion which will leave them with a debt of $39 billion dollars. That will eat up a staggering $2 billion dollars a year in interest alone.

Industry experts say that in order for the deal to work, long term aluminum prices need to be about $1.26 a pound, the current spot price is $1.15 a pound, and analysts are saying that the long term price will be around 85 cents a pound.

That is of course unless Rio Tinto is able to freeze up the supply and drive up the price of the product. That, according to the experts, is not likely.

Now what effect will this latest move have on the dark clouds that have hung around Kitimat for years?

If Rio Tinto wants to snare some big money it could sell its power producing facilities to another source. That would free up needed cash.

The Company could (in order to get the cash flow going) simply shut down the Kitimat aluminum smelter as a way to reduce the source of product and simply sell power to the BC Hydro grid that hands them a tidy cash flow.

They could also go ahead with the new smelter, but that required $2 billion dollars and the question quickly arises, where will the money come from?

The Kitimat smelter is becoming less and less of a reality as Rio Tinto takes control of Alcan and looks to see from where it can milk some much needed cash.

DEQ, Alcoa announce PCB cleanup schedule at former aluminum plant on Columbia River

The Oregonian, November 09, 2007 14:53PM

Alcoa will remove freshwater clams from its property on the Columbia River shore this winter as a first step in speeding cleanup of a contaminated site, officials said today.

And November 2008 -- the next possible "fish window" -- the company will remove contaminated sediments along the river. The fish window is the time of year when dredging and other in-water work can be done without harming fish and other aquatic life.

Both actions are intended to eliminate potential human exposure to polychlorinated biphenyls next to the former Alcoa aluminum smelter in Vancouver, said officials who announced the plan.

It's important to remove the sediment and the clams, which tests have shown are contaminated with dangerously high levels of PCBs, because of the possibility the chemical will move up the food chain, Jay Manning, Washington state Department of Ecology director, said in a conference call this morning. Alcoa officials also participated in the announcement.

Manning acknowledged that state Ecology officials have known for at least 10 years that PCBs were located along the Columbia River shoreline next to the 218-acre Alcoa site. But he defended Alcoa, noting that the company has spent $42 million since 1988 cleaning up areas away from the river. That cleanup took priority over the riverside, Manning said, to remove the possibility of continued leaching of contaminants into the river.

In the past 10 years, however, Pittsburgh-based Alcoa has focused its Washington cleanup efforts on its Intalco smelter in Ferndale. That site was deemed more of a toxic threat than the Vancouver site, Manning said.

"We always intended to come back to Vancouver," Manning said, though he added that recent news reports prompted today's announcement of an accelerated cleanup plan. 


-- Allan Brettman;

RusAl Seeks To Diversify Its Business

Bloomberg Tuesday, November 13, 2007. Issue 3784. Page 6.

LONDON -- United Company RusAl, the world's largest aluminum producer, may expand into other businesses to reduce its reliance on the lightweight metal whose price has fallen this year, Artyom Volynets, the company's head of strategy, said Monday.

The firm is considering adding other products traded on the London Metal Exchange, Volynets said. He said no decision had been made on which metal or when an investment would be made.

"Sooner or later we'll have to diversify," Volynets said. "Clearly it would be good to be in all metals traded on the LME. Which metals exactly, will depend on the particular opportunity."

Diversification would allow RusAl, owned by Oleg Deripaska and Viktor Vekselberg, to compete better with rivals such as BHP Billiton and Xstrata in exporting to China. Aluminum for delivery in three months has fallen 7.7 percent this year, making it the exchange's second-worst performer after zinc.

Once a company dominates a market, anti-monopoly rules tend to curb its ability to expand, Volynets said. Spreading the business risk reduces the volatility of a company's cash flow, he said.

RusAl was the "best placed" Russian company to consolidate other businesses because it has assets in 17 countries, including some in "challenging environments," Volynets said.

"We're already operating like a diversified company," he said.

Plants will be built in countries including Indonesia, Venezuela and Russia to help meet demand, Volynets said. The list includes a $7 billion aluminum and nuclear power project in Russia,and another venture to complete a Soviet-era dam and hydropower plant that will power a nearby smelter.

A mining megalith in the offing

Business Day, South Africa - Nov 12, 2007

"Billiton’s disclosure of its bid for Rio Tinto follows years of intermittent speculation that a major merger was about to happen in the resources sector"

ONLY six weeks into the job and BHP Billiton CEO Marius Kloppers has already sent ripples through the markets.

On Thursday, in response to market speculation, Billiton said it had written to Rio Tinto’s board recently proposing a merger with Rio Tinto at a premium.

Rio Tinto had rejected the proposal, but Billiton said it was continuing to seek an opportunity to meet and discuss the offer. According to Rio Tinto, Billiton’s approach "significantly undervalues Rio Tinto and its prospects".

Kloppers took over as CEO of the group from Chip Goodyear with effect from October 1.

But Billiton would have been hatching its bold bid for Rio Tinto for many months.

Kloppers, who has a PhD in chemical engineering and an MBA, has spent 14 years with Billiton. His previous experience included a stint as a management consultant with McKinsey in the Netherlands. He was described as playing a central role in the 2001 merger of BHP and Billiton.

In a speech to the UBS Wealth Management Symposium three weeks ago, Kloppers presented a graph showing Billiton was the largest company in the sector with a market cap of $217bn, which is larger than Companhia Vale do Rio Doce’s (CVRD’s) $164bn and Rio Tinto’s $118bn. Anglo American has slipped to fifth position, after China Shenhua Energy.

Kloppers told the BHP Billiton annual general meeting two weeks ago that as the world was experiencing a step-change in demand for commodities because of growth in the Chinese and Indian economies, Billiton’s job was to maximise the benefits of these opportunities for shareholders.

It would seek to accelerate opportunities for organic growth and, in particular, focus on the larger opportunities, he said.

Billiton’s disclosure of its bid for Rio Tinto follows years of intermittent speculation that a major merger was about to happen in the resources sector.

Rumours have included the possibility that a consortium including Rio Tinto, Xstrata and CVRD could make a bid for Anglo American, or that Russian group Sual-Rusal could take over Anglo American.

Anglo has always been perceived as the most likely target because there were long periods when its share price underperformed its rivals’. But CEO Cynthia Carroll was perceived to be setting a new strategy for the group, rather than planning to sell.

In the wake of the latest announcements, market rumours surfaced that a Chinese entity could be preparing a rival $150bn bid for Rio Tinto. Reuters yesterday reported that Chinese bankers said this was unlikely, but the Chinese could come in as financial backers for Billiton’s bid.

Other rumours included the resurgent one that Anglo American could attract a buyer, which boosted Anglo’s shares by 10% on the JSE on Friday, and that Xstrata could merge with its major shareholder, Glencore.

Billiton’s initial merger proposal to Rio Tinto, on the basis of three Billiton shares for one Rio Tinto share, values Rio Tinto at $140bn. But hopes that Billiton would have to increase its offer sent Rio Tinto’s market capitalisation up to $167bn.

The biggest global mergers in any sector to date have been America Online’s $124bn takeover of Time Warner in 2000, followed by Vodafone’s $104bn bid for Mannesman the same year. This would be the biggest merger in the resources sector. A combined Billiton-Rio Tinto would control more than a third of the global iron-ore market and the biggest reserves of energy coal and copper.

Though analysts theorised last week that this combination would raise opposition from competition authorities, Billiton said it had considered "in detail the regulatory issues and other practicalities of a combination".

A more immediate concern was raised by Chinese steel producers, which have been hit by rising input costs including iron ore, copper, nickel, magnesium and ferrochrome. A increase of up to 50% is widely expected for contract iron-ore prices due to take effect next April.

Analysts in London and Sydney said there would be huge potential for cost savings from merging Billiton and Rio Tinto. According to some, the merged entity could realise some immediate value through disposing of some iron-ore assets, which would also satisfy competition concerns.

But other analysts argued that the most powerful competition authorities were in the US and Europe, while the most concerned steel-makers were in Asia, so the deal might not hit heavy antitrust opposition.

Rio Tinto’s aluminium assets could be of far more importance to Billiton than iron ore. Earlier this year Rio Tinto became the world’s biggest aluminium and bauxite producer after making a $38bn all-share bid for Canadian aluminium producer Alcan.

Rio Tinto CEO Tom Albanese said in a presentation on the transaction in July that the fundamentals for the aluminium market were strong and attractive.

Demand had been growing at 7,7% a year for the past four years and aluminium had a wide range of applications, from construction to power, transport and consumer goods packaging.

Rio Tinto’s acquisition of Alcan boosted its pro forma revenue for its last financial year to $49bn from $25,4bn.

It was rumoured that after Rio Tinto’s bid for Alcan, Billiton contemplated making a bid for another aluminium producer, Alcoa, which had itself made a bid for Alcan that Rio Tinto had topped.

There is also potential synergy between Billiton and Rio Tinto’s copper, diamonds, energy coal and uranium, and mineral sands businesses. In southern Africa, Rio Tinto has stakes in the Rössing uranium mine in Namibia, copper miner Palabora Mining, and has a joint venture with Billiton in the titanium slag business Richards Bay Minerals. Recently, through its purchase of Alcan, it acquired the $2,7bn aluminium smelter project at Coega.

Also in southern Africa, Billiton has stakes in the Hillside, Bayside and Mozal aluminium smelters, five energy coal mines in SA, and a majority stake in Samancor Manganese.

The two groups have operations on almost every continent, with a concentration of activities in Australia, though Rio Tinto has a wider spread of operations in North America and Billiton a wider spread in South America.

Rio Tinto’s two biggest revenue contributors in its last financial year were copper and iron ore at about $7bn. Energy and aluminium each contributed about $4bn to total gross revenues of $25bn.

For Billiton, stainless steel materials were its biggest revenue contributors last year at $6,9bn, followed almost equally by petroleum, aluminium and base metals at about $6bn each. The base metals division consists mainly of copper operations. Iron ore contributed $2,7bn to total group revenue of $39,5bn.

John Meyer, an analyst with Fairfax in London, said in a note to clients that the merger of Rio Tinto and Billiton could cause commodity prices to stay stronger than if the mining houses exerted greater supply discipline and reduced competition for market share.

The bid would drive up valuations in the sector, particularly for iron ore and copper producers. Investors should look for opportunities, especially in iron ore, he said.

China's mixed feelings over mining marriage

The Australian, Australia - Nov 12, 2007

THE Chinese finance, minerals and steel industries are split over BHP Billiton's audacious takeover bid for Rio Tinto.

On one side are those who fear the marriage of their two main suppliers will result in a monolith wielding frightening pricing power.

On the other, are those who anticipate an assets spill sparked either by regulators' requirements or by the two companies' need for alliances. That would then open the door to a greater Chinese grip on the mining industry in Australia that the country's planners greatly covet.

Clearly, BHP-Billiton's bid for Rio Tinto is arousing intense excitement as well as anxiety in the companies' biggest market, China.

It comes as interest is reaching fever pitch over the negotiations about to start for the price of iron ore next year. China has rapidly become the world's biggest steel maker and iron ore importer. The value of ore it is set to buy from Western Australian mines dominated by the two corporations will almost certainly exceed $10 billion in 2008.

Securities analyst Zhao Chun at China Merchant Bank warned at the weekend: "The purchase will strengthen the monopoly power of the suppliers, and we can predict that in the future, the steel industry's profits will be gradually seized by the world's mineral giants."

China's leading business magazine, Caijing, commented: "The bid has aroused strong concern among people in the industry in China.

"Some say there is a possibility that BHP made this move before the price talks have begun, in order to have more cards to play at the negotiations."

The magazine also said that it heard as the country's new $US200 billion ($218.7 billion) sovereign fund, the China Investment Corporation, would buy a substantial stake in BHP, but that it had learned nothing further since. Shanghai Securities News complained at the weekend that the proposed merger "will give the new company too much power over supply". An Australian industry expert said at the weekend: "It's probably too early for the Chinese to do anything at this stage. I expect that they are in shock.

"But they have the foreign exchange to take out BHP-Billiton, and could take a strategic interest in the company of, say, 19.9 per cent" to lock in a high level of influence without necessarily making a full-blown take-over itself. China's foreign reserves now exceed $US 1.4 trillion.

Melbourne-based Robin Chambers, who has represented Chinese resource investors in Australia since the Channar joint venture with Rio in 1984, said in an industry conference speech in Perth earlier this year: "The need to secure access to overseas raw materials to support China's economic growth rate of 10 per cent or more per year, is a key strategic driving force."

Mr Chambers said in his speech that BHP and Rio "appear to have adopted a policy of not introducing the Chinese steel mills into new joint ventures.

"They have been keen to retain 100 per cent of the profits, and offer only long-term sales contracts with the Chinese mills.

"This has frustrated the Chinese, which have been under pressure from their government to go out and do more projects to secure long-term supplies of iron ore.

"And, of course, as with the Channar joint venture, to share in the massive profits which apply."

Australia last year provided China about 38 per cent of its imported ore, Rio supplying slightly more than BHP, with 23 per cent coming from Brazil, via its mining giant CVRD, which will attempt next month to set a benchmark ore price for the eighth consecutive season - this time in negotiation with leading steel mill Baosteel - provides about 34 per cent.

A range of industry experts in China and Australia agree that Chinese state-owned minerals trader Sinosteel has been given a strong mandate by the government's key planning agency the National Development and Reform Commission to lead the go global charge in the mining industry by seizing every opportunity to take strategic interests in Australia and elsewhere.

China's own mining industry is highly fragmented.

The Government introduced tough new regulations against foreign investment in the sector last week, in part to help foster domestic consolidation. Essence Securities analyst Heng Kun in Beijing, said: "China wants a large state-owned, metal and mining firm to secure supplies to meet its surging demand." This demand is unrelenting.

This article is being written from Chongqing, which was largely destroyed when it became China's temporary capital during its war against Japan, and exemplifies that demand.

It is now being rebuilt in gargantuan style with huge steel inputs in bridges across the Yangtze River and countless high-rise buildings - and already claims to be the world's biggest city, with a population of 30 million, although many live in the surrounding semi-rural hinterland. The country already has one massive champion that operates vertically-integrated businesses across the bauxite-alumina-aluminium industry - Chalco, which is investing at Aurukun in Queensland's Cape York Peninsula.

And Chinese analysts are speculating that Chalco is coming under consideration, alongside the smaller Sinosteel, as a vehicle to exploit opportunities arising from the BHP-Rio takeover battle. These might include forming a strategic alliance with one of the Australian parties, or taking a stake in, (preferably buying outright) any properties that competition conditions might force the merged entity to shed.

The global investment banks, with massive teams in China and Hong Kong, are eager to find their way into the takeover action. They have targeted China's intense interest as one of their best potential routes, and are thus helping stimulate the fevered talks in Beijing.

The BHP bid for Rio is also likely to encourage Chinese steel companies to speed up their mergers and restructuring in order to improve their competitiveness on the global market. Luo Bingsheng, executive vice-president of the China Iron and Steel Industry Association, said: "Although some progress has been made, the pace of mergers and acquisitions is still too slow, and the move to close factories with low productivity and scrap out-of-date equipment is far from satisfactory."

The Chinese eagerness for Australian resource assets is reinforced by the skyrocketing rates charge for shipping such goods. This causes Australian ore to cost Chinese steel mills in landed terms less than half that from Brazil.

Alcoa starts shipping alumina from Jamalco

Reuters Tue Nov 13, 2007

NEW YORK, Nov 13 (Reuters) - Alcoa (AA.N: Quote, Profile, Research) began shipping alumina last week from its newly repaired port at Rocky Point, Jamaica, after storm damage from Hurricane Dean disabled its Jamalco operations in mid-August, a company spokesman told Reuters.

"Jamalco began its loading activities at the port last week. They began loading alumina at the Rocky Point port. That was completed and that shipment is underway," said Kevin Lowery, spokesman for the world's top aluminum producer.

On Aug. 30, partial production resumed at Alcoa's 1.4-million-tonne-per-year Jamalco alumina refinery in Clarendon, Jamaica, but damage to the port prevented shipments until now.

Refinery operations at Jamalco, which Alcoa owns jointly with the Jamaican government, were halted Aug. 18 in advance of Hurricane Dean.

Jamalco's port facility at Rocky Point, Clarendon, suffered considerable damage in the summer hurricane

Lowery said the process for restarting the remainder of the alumina production had also begun as anticipated. But, he added that the ramp-up to full capacity will take time.

"They are on the way to getting up to a normal production level," he said, but refrained from setting a target date.

"We don't like to put a timetable on that piece of it because it's not an exact science. It will take a little bit of time but they are on that path," said the spokesman.

He also said repairs on the port had evolved into two phases. The first was intended to put Jamalco in a position to begin shipping immediately and was underway.

The second, longer-term phase is intended to make changes at the port to help minimize the impact of future storms.

"So we are taking steps to be in a position to do something both short term and longer term. The short term has now been completed. The longer term is what we're still working on, like reinforcements," said Lowery.

The alumina refinery had been operating at half capacity, and the restart of the second digester had begun.

"It's not as if you flip a switch and you are there. But they are in the process of ramping up to full production," the spokesman said.

He added that the port damage raised two different issues.

"One, that we could not ship alumina, and the second was that we could not store it. As a result, we could not produce it and have no place to store it. So they had to take down the production level," he said.

With the shipping and storage problems addressed, he said production can ramp up again as work continues on the longer-term project.

Lowery also said the force majeure declared after the hurricane will remain in place until the refinery gets up and running at 100 percent.

Force majeure is declared in extenuating circumstances to let customers know a company may not be able, temporarily, to deliver materials according to its contracts. (Reporting by Carole Vaporean; Editing by Christian Wiessner)

Norsk Hydro ASA signs joint venture agreement with United Minerals Corporation in Australia

Trading Markets (press release), CA - Tuesday, November 13, 2007

Nov 13, 2007 (NORDIC BUSINESS REPORT via COMTEX) -- UMRC | charts | news | PowerRating -- Norwegian aluminium company Norsk Hydro ASA said on Tuesday (13 November) that it has signed a joint venture agreement with the Australian mining company United Minerals Corporation (UMC).

The agreement, which expands previous cooperation between the companies, gives Norsk Hydro a 75% stake in a bauxite recovery and alumina producing project in Kimberley, Western Australia.

"If commercially recoverable deposits can be confirmed, consideration will be given to setting up a mining company and an alumina refinery, which may then result in an investment decision," Norsk Hydro said.

Norsk Hydro, headquartered in Oslo, Norway, is a global aluminium and energy group with 25,000 employees in over 30 countries. The company is listed on the Oslo Stock Exchange and traded under the ticker NHY.

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Kaiser Aluminum profit climbs 73 percent, UK Wed Nov 14, 2007

(Updates with revenue figure, CEO comments, stock rise)

By Steve James

Kaiser Aluminum Corp (KALU.O: Quote, Profile , Research) said on Wednesday that third-quarter profit rose 73 percent, driven in part by higher aluminum prices and strong sales of fabricated products, especially for the aerospace and defense industries.

But it also said demand in ground transportation and general industrial markets was soft, with "downward pressure on pricing."

Kaiser Aluminum stock rose over 6 percent after it announced its results, but fell back to close up $2.10, or 3 percent, at $71.75 on the Nasdaq.

Net earnings increased to $24.8 million, or $1.22 per share, from $14.3 million, or 72 cents per share, a year earlier, the Foothill Ranch, California-based company said. Sales increased 11 percent to $367 million.

The company said the strong results in its primary metal producing business were driven by increases in aluminum prices, improved contractual pricing for alumina -- which is mined from bauxite and smelted into aluminum -- as well as favorable realized hedging results.

"The company's earnings for both the quarter and year-to-date reflect strong results in both our fabricated products and primary products segments," said Chairman, President and Chief Executive Officer Jack Hockema.

"Robust demand for aerospace and defense-related applications continues, although increasing at a slower rate than anticipated.

"Demand in ground transportation and general industrial markets remained soft, and we expect normal seasonality for the rest of the year," he said in a statement.

Later, in a conference call with Wall Street analysts, Hockema said prices for its products had slipped, but not precipitously.

"There has been some downward pressure on pricing in ground transportation and industrial markets," he said, while noting Kaiser had increased its market share in the auto industry.

"But they are not falling off the cliff," he said, adding that prices were significantly lower in the last cycle in 2003, when Kaiser sold more at spot prices.

"There will be no return to that (level) as we have a higher percentage of contract (pricing) now."

Hockema also said that Kaiser, which emerged from bankruptcy in July 2006, was looking to grow organically and also through acquisitions.

Asked how the company planned to use its cash, he said: "If there is excess cash we will look to other alternatives such as dividends of some sort or stock repurchases.

"But the board's and management's view is that we hope to use excess cash for growth and acquisitions."

In response to a question about the status of the aluminum smelter Kaiser operates with Rio Tinto (RIO.L: Quote, Profile , Research) in Anglesey, Wales, Hockema said the British government was reconsidering a previous decision to phase it out. The plant is driven by electricity generated by nuclear power.

"The (Tony) Blair administration was intent on eliminating nuclear power and said the life of the plant would not be extended," Hockema said. "But it is in review now." (Editing by Gary Hill)

China's Chalco says wants to work with Alcoa, denies acquisition plans - November 14, 2007

BEIJING (XFN-ASIA) - Aluminum Corp of China Ltd (Chalco) is not interested in buying Alcoa (NYSE:AA) Inc, but wants to continue working with the US firm in various tieups, Tai Yu, Chalco's executive vice president, told XFN-Asia.

'We are cooperating with Alcoa and have great respect for them. But we have no plans to acquire them,' Tai said.

After Rio Tinto recently outbid Alcoa for Canadian aluminum firm Alcan (NYSE:AL) , some reports have pointed to Chalco seeking to participate in the global consolidation trend, with Alcoa seen as a potential target.

Tai said Chalco's plan over the next few years would be to continue building itself up as a leading producer, with a greater focus on 'global expansion.'

$5.6bn Qatalum project stone to be laid today

Middle East North Africa Financial Network, Jordan - - 19/11/2007 [-] Text [+]

(MENAFN Press) The foundation stone laying ceremony for the $5.6bn Qatalum project will be held today under the auspices of the Heir Apparent H H Sheikh Tamim bin Hamad Al Thani at Mesaieed marking the start of active construction at the site of the upcoming primary aluminum plant.

Qatalum, a 50/50 joint venture between Qatar Petroleum (QP) and Norwegian Hydro, will be a fully-integrated primary aluminum plant consisting of a smelter, casthouse and carbon plant as well as a dedicated gas-fired power plant.

With total investments estimated at $ 5.6bn of which the power plant will account for approximately $1bn, the plant will produce 585,000 tonnes of primary aluminum per year when it reaches full capacity. The first metal will be produced in late 2009 and full production commissioned in 2010.

Hydro starts building huge plant in Qatar

Aftenposten, Norway - 19 Nov 2007

Norwegian industrial concern Norsk Hydro laid the cornerstone on Monday for what may become the world's largest aluminum plant, in Qatar.

The plant has been under the planning stages for several years, and Hydro chief executive Eivind Reiten claimed the company has "very good relations" with both the people and authorities of Qatar.

"I'm convinced that will continue," Reiten said, as Qatar's crown prince and Norway's oil and energy minister joined him for the construction launch ceremonies. Officials said Norway and Qatar will also cooperate on the recapture of carbon emissions.

Hydro recently sold its oil and gas operations to Statoil, and is re-emerging as a mostly metals producer. The Qatar plant, built in cooperation with Qatar Petroleum, will produce 585,000 tons of aluminum a year when it opens in 2010.

Production is expected to climb to 1.2 million tons a year, more than is produced at all Norwegian plants today.

Aluminum giant presents environment blueprint

China Internet Information Center|, China - 19 Nov 2007

As a global aluminum firm focusing on both upstream and downstream business, Alcoa regards China as an increasingly important emerging market. While the Chinese government attaches increasing importance to energy efficiency and emissions reduction, Alcoa offers suggestions to save energy and protect the environment. Helmut Wieser, vice-president of Alcoa and group president responsible for Alcoa's global mill products, rigid packaging and hard alloy extrusion businesses, shares the company's views on energy efficiency and business expansion in China with China Daily.

Q: What are your views on the development of China's aluminum industry, both upstream and downstream segments?

A: China's aluminum industry has undergone a very impressive development, and the growth is just phenomenal. We are glad that Alcoa has participated in the growth process with Chinese partners. Alcoa came to China in 1993 and has invested over $700 million so far in the country. Looking back several years ago, China's aluminum industry was small. But today, China has become the world largest aluminum producer and market. Quite a few Chinese newspapers were talking about the possibility that China aluminum consumption would take in 30 percent of the global aluminum production by 2015. This is a significant contribution to the growth of the aluminum industry.

I noticed that China is encouraging its aluminum companies to develop more technologies for extensive use of aluminum in various industries and areas. That is a great practice. Aluminum has advantages that many other metals cannot match. For example, use of aluminum, instead of steel, for automobiles and commercial vehicles can significantly reduce the weight of vehicles. As a direct result, the vehicle will produce less greenhouse gas (GHG) and consume less gasoline.

Q: There are reports saying that Alcoa was looking for expansion opportunities across both the upstream and downstream sectors of the aluminum industry in China. Is that so? If it is, through what means is Alcoa seeking business expansions in China - through organic growth or mergers and acquisitions, or both?

A: Alcoa understands the importance of the growth of China's economy and the opportunities that growth brings to all of us. As such, Alcoa will do two things. First, we will continuously improve our operations in China to make it more productive and more environmentally and energy sensitive. Second, we will keep our eyes open for growth opportunities. This could mean organic or inorganic growth. China is growing so fast, and Alcoa is determined to grow with China. This is a win-win situation. As to a preference of investment methods, I am open to any approach solely depending on business needs and situational demands.

China, as the world's largest aluminum producer as well as market, provides tremendous opportunities for everyone. My priority is to make this company fully prepared and ready to face challenges and capture opportunities. It is important to point out that Alcoa is willing and ready to bring to China many of its technologies that will help China's aluminum industry reduce emissions and energy consumption.

Q: It is said that no aluminum fabrication business can succeed without upstream leadership. It seems Alcoa has not established its upstream facilities in China. Are you planning to make any changes in this regard?

A: The aluminum industry is a vertically integrated industry. If you look at a successful aluminum company, you may find that it is always globally integrated. One cannot look at a successful aluminum company's operation in one country only. Alcoa has operations in over 40 countries with nine refineries and 26 smelters. Alcoa has access to bauxite, refinery, smelting and fabrication. Alcoa is recognized by the industry as the leader in energy development. As a matter of fact, Alcoa is the largest energy company, second only to energy and utilities companies. Alcoa is working with various Chinese companies and is continuously exploring business opportunities to expand its business in China.

Q: What is Alcoa's view on the sale of Chalco's stake?

A: Alcoa had been a significant investor in Chalco since its initial public offering (IPO) in 2001, holding approximately 7 percent of its shares. Although Alcoa normally does not act as a financial investor, it participated in the Chalco IPO six years ago to help facilitate Chalco's entry into the capital markets. Over the past seven years, Chalco has become firmly established in the equity market, so Alcoa's role as a financial investor is no longer needed. Alcoa can re-deploy the capital in other value-adding options, including projects in China. Alcoa will continue to pursue opportunities with Chalco for mutual investment and growth, both within China and overseas.

Q: What is your suggestion for your Chinese counterparts and the Chinese authorities to maintain sustainable development in the aluminum segment?

A: Many of our Chinese counterparts are doing well, and some are doing better. Growth should not mean an increase of pollution. The most important point is that every one of us should keep the environment and energy use in our minds when we grow. It may cost some money to develop technology or to install certain devices to reduce emissions or to save energy. But every company should take social responsibility as its operational philosophy.

We are paying special attention to environmental protection, even though this move costs us extra investment. Alcoa Shanghai has a series of strict and thorough standards on environmental governance. In 2007, a project with an investment of 2.56 million yuan is under way to improve the waste-water treatment facility and install dust catchers for four melting furnaces to catch dust during the processes of ignition, refining and skimming. As a result, the particle-removal efficiency is expected to be higher than 90 percent, which will lead to an annual emission reduction of 42.43 tons.

We are glad to see that the Chinese government is taking an active role in environmental protection and energy efficiency. As a matter of fact, Alcoa is working closely with the relevant Chinese government agencies to further promote environmental protection and energy efficiency. In these areas, China has a long way to go, and there will be many challenges in front of us. But I am very certain and positive that China's aluminum industry will become a more energy-efficient and environmentally friendly with our joint efforts.

Face-off over Global Alumina

Globe and Mail, Canada - 19 Nov 2007

Andrew Willis, today at

Two of the world’s biggest mining companies seem to be on a collision course over the fate of mid-cap Canadian miner Global Alumina Corp.

Global Alumina, a TSX-listed company with a $490-million market capitalization, said last month it was in takeover talks. GMP Securities is advising the New Brunswick-based firm, which owns a 33 per cent interest in a planned alumina refining plant in Guinea, Africa.

Global Alumina won’t say which rival is offering to buy the company, but did say in an October news release that if an offer comes, it will be priced at $2.65 a share, which would value the Canadian company at $538-million. The stock is now trading at $2.40 on the TSX.

However, money managers say Global Alumina has been approached by UC Rusal of Russia, the world’s largest aluminum producer. Global Alumina’s existing partner in the Guinea refinery, BHP Billiton, is said to be totally opposed to the prospect of being allied with Rusal.

So there’s speculation that any formal bid for Global Alumina out of Rusal will kick off a counterattack from BHP Billiton, even if the world’s biggest mining company is more than a little caught up in its bid for Rio Tinto.

Cos mining bauxite may have to share 20% of profits with tribals

Economic Times, India - 22 Nov, 2007, 0531 hrs IST, TNN

HYDERABAD: Companies mining bauxite in tribal areas may have to share 20% of their profits with tribals displaced by the mining project. The proposed national mineral policy, which is pending before the Cabinet, will have a provision on profit-sharing with tribals, according to minister of state for mines T Subbarami Reddy.

Displaced tribals could also get an equity stake in a project, Mr Reddy said at the International Conference on Aluminium here on Wednesday. The policy is expected to be ready in two months.

The government wants to offer such incentives to prevent any backlash from the tribals who are displaced by bauxite mining projects. The idea is to avert problems faced by the promoters of special economic zones in acquiring land from farmers.

A report by The Energy and Resources Institute (Teri) had earlier cautioned that access to bauxite would lead to massive displacement of population, depletion of vegetation and water pollution, besides heavy damage to the environment and soil erosion.

India has the fifth largest bauxite reserves globally. But it has not been able to mine even 5% of it due to the lack of a national mineral policy. There are rehabilitation and environmental issues as well.

The government has liberalised FDI policy in the mining sector allowing foreign equity holding up to 100% through the automatic route for all non-fuel and non-atomic minerals except diamonds and precious stones. This covers exploration, mining, mineral processing and metallurgy. It has approved over 70 proposals in the mining sector. Many Indian subsidiaries of global mining companies have also taken permits for reconnaissance operations.

According to Mr Reddy, the aluminium industry will attract investments worth Rs 1,00,000 crore in the next few years. India’s per capita consumption of aluminium is about one kg compared to 30 kg in many other developing countries. An aluminium policy is also on the anvil to promote the use of the metal.

The availability of better quality bauxite compared to China makes production of the metal viable here. The growth in auto and aviation sectors, energy and the packaging industry will trigger demand for aluminium in India, said Aluminium Association of India president D Bhattacharya.

Hindalco to ride on Novelis technology

Economic Times, India - 22 Nov, 2007

HYDERABAD: Hindalco’s acquisition of US-based Novelis for $6 billion in February this year is set to pay off, with its subsidiary’s fusion technology finding many takers in the auto and rail wagon sector.

Fusion technology is a new process that simultaneously casts multiple alloy layers into a single aluminium rolling ingot. This makes automobile parts very strong, less corrosive but lighter in weight compared to steel. "European carmakers Audi and BMW had used Novelis’ fusion technology to make lighter cars. Given the low weight, the technology will also contribute to huge savings on fuel and lesser green house gas emissions," claimed Hindalco managing director D Bhattacharya.

Shashi K Maudgal, executive president, marketing, Hindalco Industries, said, "Thanks to the technology, there is a remarkable difference in weight which comes in handy for bigger cars like Audi." While big cars like Audi weigh about 750 kg, small cars like Maruti weighs 850 kg. Though the cost of the aluminium alloy used in fusion technology is higher, it can be offset by the weight advantage.

So is the case for railway wagons. The wagons in India are made of steel which is heavy and consumes more fuel. The fusion technology will have distinct advantages here as well.

Novelis, which was on Hindalco’s (Birla group) radar for some time, is the world’s largest flat rolled aluminium maker. It had been a loss-making company with no captive source of bauxite, which forced it to buy alumina from the spot markets.

Novelis had reported a loss of $170 million in the first nine months of 2006 calendar year because it was locked into fixed-price contracts with many customers that run up to 2011. Hindalco will have to bear the losses till that period.

Aluminium production set for quantum jump

Hindu, India - 22 Nov, 2007

Major producers draw up Rs. 100,000 crore expansion plan in the next five years

HYDERABAD: Union Minister of State for Mines, T. Subbarami Reddy, has said that the expansion plans announced by various aluminium companies would result in an increase in aluminium production from the present 1.5 million tonnes to four million tonnes.

Aluminium majors such as Hindalco, Nalco, Vedanta and others had drawn up plans to invest about Rs. 100,000 crore in the next five years which should increase annual production levels to four million tonnes, Mr. Reddy said while inaugurating the International Conference on Aluminium organised by the Aluminium Association of India (AAI) here on Wednesday.

Mr. Reddy said the new mining policy, to be introduced by the Centre, would be of immense help to the aluminium industry as it envisaged immediate clearance of applications for issue of mining leases. The prospective lessees could approach the appropriate tribunal if the applications were not cleared within 14 months. Since the present policy did not prescribe any time limit, the applications for mining leases were pending with the State Government for years.

D. Bhattacharya, President of AAI, and Managing Director of Hindalco Industries, said the Indian aluminium companies were the best in the world in terms of performance. But the question was whether they could sustain it. India was also among the four top power producing countries.

The AAI President said consumption of aluminium would go up in the coming years as many new sectors that needed the metal were emerging. The car industry and the rural electrification programme would spur growth.

Pramod Suri, CEO and whole-time Director of Balco (now Vedanta), said his group was all set to become an aluminium giant in the current scenario. He expected the industry to cross five million tonnes annually in the next five years.

Guinea PM seeks investments

Bahrain Tribune - 23/11/2007

(MENAFN - Bahrain Tribune) The Prime Minister of Guinea, Lansana Kouyate yesterday offered a tranche of concessions to Aluminium Bahrain (Alba) to explore bauxite mining in the West African nation.

Mineral rich Guinea has two-thirds of the world's bauxite reserves, which form the crucial raw material for aluminium production. Alba is the largest modern aluminium smelter in the world.

"The potential in bauxite is rich. We have in excess of 50 billion tonnes of bauxite reserves while the second-ranking Australia has a bauxite reserve of about 5 billion tonnes. We are also ready to give these mining reserves as guarantee for investors who can set up huge hydroelectric projects to tap the abundance of water resources there. It will be mutually beneficial to the investors as well as people of Guinea," he said.

The West African nation's Minister for Finance and Economy and the official spokesperson, Ousmane Dore, after holding a high-level meeting with officials of Alba, said the aluminium major had evinced interest in setting up an aluminium smelter in Guinea Bissau.

Joint venture bauxite mining and alumina operations in northwest Guinea historically provide about 80 per cent of Guinea's foreign exchange.

Guinea's mineral wealth also includes more than 4 billion tonnes of high-grade iron ore, significant diamond and gold deposits and undetermined quantities of uranium.

Kouyate is in the Kingdom with six of his ministerial colleagues to attract foreign investments to his country.

Talking at 'Invest in Guinea" forum organised by CransMontana Forum, the Prime Minister called upon the investors in Bahrain and the Gulf region to benefit from the promising investment opportunities in his country.

He said the new Government, which took over the reins of Guinea in March this year, had put in place a series of structural reforms to improve the climate for private investments, promote economic diversification and restore fiscal discipline.

"We have rich reserves of minerals and an abundance of water and plan to use them to bail the country out of the ongoing economic crisis."

He suggested that the possibility of transporting drinking water to the Kingdom from Guinea could also be explored, dipping into its huge reservoir of water sources - 18 billion cubic metres of ground water and another 183 billion cubic metres of natural water resources.

A long period of political instability has resulted in a depressed economic activity and increased macro-economic imbalances and the present effort was to make a turnaround, tiding over the problems.

Dore said hydro-electricity and energy and telecommmunications were promising areas of investment.

"We are shortly issuing licences to private and foreign telecom operators for mobile telephony and broadband services and Bahrain's Batelco evinced interest in launching its services there," he said.

He said the macro-economic situation in Guinea was improving thanks to major structural reforms initiated this year and already showing results.

"Plagued by problems we missed out on investment opportunities in the last five decades, not anymore."

Osama A. Al Khajah, Vice Chairman and Managing Director, Crans Montana Forum Middle East, said the effort was to strengthen economic relationships between Middle East, African and East European nations.

"While Guinea was endowed with rich natural resources, Bahrain was blessed with liquidity and these could be put to optimum use for the benefit of both the nations," he said.

Norwegian pension fund decision echoes in SC: Vedanta can’t mine in Orissa hills

Indian Express, India - : Saturday, November 24, 2007 at 0000 hrs

Sonu Jain

NEW DELHI, NOVEMBER 23: In the last hearing, Vedanta appeared all set to get a clearance for bauxite mining in Niymagiri hills, a few metres away from their Rs 2,200-crore aluminium refinery in Lanjigarh, Orissa. The Supreme Court reserved its verdict and asked the London-based company to commit to a share in local development. But today the court dismissed its petition saying it could not take "the risk" of handing such a national asset — the hills — to the company. Instead, it asked Vedanta’s Indian subsidiary Sterlite to come with a fresh proposal along with the Orissa government.

Ironically, although activists had been long campaigning for this and the Supreme Court’s Central Empowered Committee had submitted a series of reports highlighting alleged environmental violations by the company, the judges cited the decision of the Norwegian Government Pension Fund — the largest pension fund in Europe — to divest its stake in Vedanta.

The stake is tiny, just 0.16% ($15.16 million) — the fund’s corpus is $359 billion — but the Norwegian decision was announced by its government earlier this month claiming that Vedanta "has caused serious damage to people and to the environment as a result of its economic activities."

"It was very interesting for us to hear that the Supreme Court of India has referred to a small investment like ours," said Gro Nystun, chairman of the Council of Ethics, Norwegian Government Pension Fund speaking to The Indian Express today from Oslo.

The purpose of the Norwegian fund is to invest parts of the large surplus generated by the Norwegian petroleum sector to hedge against future shocks in oil prices. In the last three years, it has developed ethical guidelines on environmental degradation, human rights violations and child labour. It has interest in 7,000 companies and systematically goes through every portfolio each month.

"In Vedanta’s case, the company kept popping up on both the environmental and the human rights violations," said Nystun. That is when they decided to send a a fact-finding team in October last year. The team investigated all of Vedanta’s subsidiaries here — Sterlite Industries, Madras Aluminium Company, Bharat Aluminium Company and Vedanta Alumina.

"We were comfortable with our findings as we relied on a number of sources, including the NGOs and the media. Once that matched with CEC’s findings, we were pretty solid," she said. According to the council, they check and double-check claims and allegations by NGOs and "become familiar with their agendas".

The council’s recommendation was based on surveys and investigations conducted or commissioned by Indian authorities, reports from national and international non-governmental organisations, articles in Indian and international newspapers, and letters and documentaries. Besides, the council had commissioned its own studies by external Norwegian, British and Indian consultants.

Then the pension fund gave the company an opportunity to reply but they didn’t respond. The report has a paragraph on Vedanta’s "corruption" but has not based its disinvestment decision on it. "Corruption is always difficult to document and prove, so we just mentioned it," said Nystun.

Today, the three-judge bench of Chief Justice K G Balakrishnan, Justice Arijit Pasayat and Justice Court said, it was not opposed "in principle" to the mining of the Niyamgiri Hills, and has ordered Vedanta’s Indian subsidiary Sterlite Industries to submit a fresh proposal after setting up a joint Special Purpose Vehicle with the Orissa state government’s Orissa Mining Corporation to increase the company’s accountability in India.

It will have to commit to Rs 55 crore for Net Present Value for forest destruction , Rs 50 crore for wildlife management plan, Rs 10 crore or 5% of profits before tax (whichever is more) from mining projects all over the country to the Orissa government, and Rs 12.20 crore for tribal development. It will also have to supply a list of people the project will absorb on a permanent basis.

The activists, while welcoming the decision, have begun to train their guns at Sterlite too: "While we appreciate the concern of the Court in taking the mining rights away from Vedanta Resources PLC, which is not even listed in India, we are at a loss to understand how the same can be considered for Sterlite even through an SPV."

Production of alumina must remain at home

Advertiser Adelaide, Australia - November 24, 2007

AUSTRALIAN-MADE alumina uses just over half the energy and produces less than half of the greenhouse gases as the same product produced in China, Alcoa of Australia managing director Wayne Osborn said this week.

But Australian policy makers need to ensure any emission trading regime does not force alumina production overseas, where anti-pollution measures might not be as stringent, or this benefit could be lost, Mr Osborn said.

Mr Osborn, who was speaking at the Australian Academy of Technological Sciences and Engineering's 2007 symposium, said that in 1998, his firm set a target to reduce its greenhouse gas emissions by 25 per cent from 1990 levels.

"We actually achieved that by 2003," Mr Osborn said. "We've been working on this issue for our operations in Australia."

One of the strategies was to partner with Alinta to build co-generation plants at its refineries.

"The plants produce electricity and steam from natural gas and represent one of the most efficient uses of fossil fuels in the world," Mr Osborn said.

"We save about 450,000 tonnes of greenhouse emissions per year, compared to a conventional coal-fired plant, and that's the equivalent of taking 112,000 cars off the road."

Alcoa had also developed a carbon-capture technology which used waste carbon dioxide to treat bauxite residue.

"The process locks up large volumes of carbon dioxide while improving the environmental properties of the residue," he said.

But climate change was still a large issue for the industry, with benefits gained from Alcoa's efficiencies likely to be eroded by an increase in China's internal production.

"We expect aluminium consumption to double between 2005 and 2020. We expect China to be about half that total consumption," Mr Osborn said.

"Alumina produced in Australia has less than half the greenhouse footprint of alumina produced in China. As we move into an emissions trading world, as we will here, there actually isn't a way of capturing that value or that environmental benefit overall."

Mr Osborn said it was important that any emissions trading regime did not force alumina production offshore.

"Perversely, you could have a situation where alumina was preferentially made in China because of an emissions trading regime and global greenhouse emissions actually go up.

"These are some of the challenges which scientists should be keeping in front of government as they make policy decisions."

Mr Osborn said Australia's competitiveness had been eroded greatly in the past five years, with construction costs for example, doubling in recent years.

Rio Rises on Speculation of Rival Bid From Chinese Companies

By Rebecca Keenan and Emma O'Brien

Bloomberg - Nov. 26, 2007

Rio Tinto Ltd. rose the most since BHP Billiton Ltd. proposed buying the company on speculation China's $200 billion sovereign wealth fund may make a rival bid for the world's third-largest miner.

China Investment Corp. is planning an offer that may include the participation of state-owned steelmakers including Baosteel Group Corp., Shougang Corp. and Anshang Iron & Steel Group, the China Business Journal reported today. China Business Journal is published by the Chinese Academy of Social Sciences, a research body under the State Council, the nation's cabinet. Spokesmen for the steelmakers said they were unaware of any proposal.

Steelmakers in China, the biggest producer of the alloy, last week joined Japanese and European mills in opposing BHP's three- for-one stock proposal to buy Rio, saying the combined company would control too much of the export market for iron ore, the main raw material used to make steel. Any bid from a Chinese company would be subject to Australian competition rules.

``It's positive because it brings a bidding contest into the process,'' said Atul Lele, who helps manage the equivalent of $500 million at White Funds Management in Sydney. Still, a bid from a Chinese company ``will probably have problems on national interest and regulatory grounds,'' he said.

Rio rose by as much as A$9.82, or 7.6 percent, to A$138.22 on the Australian Stock Exchange and was at A$137.63 at 12:37 p.m. in Sydney. BHP rose A$1.59, or 4 percent, to A$41.86.

Rio Chief Executive Officer Thomas Albanese, who has rejected BHP's bid, is scheduled to outline his plan to stay independent and increase aluminum and iron ore earnings later today.

Wu Jianxin, a Shougang spokesman, said he wasn't aware of the proposal to join the bidding for Rio Tinto. Baosteel's Head of Asset Operation Wang Chengran also said he wasn't aware of the issue. Fu Jihui, board secretary of Angang Steel Co., Anshan Steel's listed unit, wasn't immediately available for comment.

A combined BHP and Rio Tinto would control about 38 percent of iron-ore exports, the same as Brazil's Cia Vale do Rio Doce, according to Australia & New Zealand Banking Group Ltd.

To contact the reporters on this story: Rebecca Keenan in Melbourne at ; Emma O'Brien in Wellington on

All eyes on aluminium

Sydney Morning Herald, Australia - November 26, 2007

Jamie Freed

ALTHOUGH aluminium is the most traded commodity on the London Metal Exchange, it rarely receives as much attention as other base metals such as nickel and copper. When Rio Tinto splashed out $US38 billion ($43.5 billion) buying the Canadian aluminium producer Alcan this year, it had a lot of explaining to do, given aluminium price gains have severely lagged other metals gains during the commodities boom.

Rio's chief executive, Tom Albanese, said his company was looking at the forward curve - which was pricing aluminium higher than many analyst forecasts - and the possibility of a carbon-constrained world, which made Alcan's low-cost, hydropowered smelters look very attractive.

Given BHP Billiton waited until Rio had acquired Alcan to present its own combination proposal to Rio, it appears the Big Australian also has a bullish view on the commodity.

ANZ commodity strategist Mark Pervan last week noted aluminium was the only metal in which futures were trading higher than the spot price, even three years out. "The long-term outlook for demand looks very positive," he said.

Apart from BHP and Rio, the only Australian-listed miner with aluminium production is Melbourne's Alumina , and its sole asset is its 40 per cent share of the Alcoa World Alumina & Chemicals (AWAC) joint venture, the world's largest producer of bauxite and alumina.

Beyond exploration

It's only been a month since Perth's Bauxite Resources listed on the Australian Securities Exchange to become the second pure-play alumina company after Alumina.

Bauxite has a 3000-square-kilometre landholding in Western Australia's Darling Ranges. The region boasts some of the world's lowest-cost alumina refineries, owned by BHP and AWAC. Both own bauxite mines and refineries south of Perth, closer to the port facilities at Kwinana, but Bauxite Resources' ground is about 50 kilometres north of the city.

Bauxite Resources is planning to revisit a feasibility study Pacminex prepared in the 1970s after drilling more than 10,000 holes. It plans a stage-one project which would ship about 1 million tonnes of bauxite a year to China, and a second-stage project involving a refinery built around bauxite production of 3 million tonnes a year.

"It's not a pure exploration play - it's much more advanced than that," a Bauxite Resources director, David McSweeney, says. "You have increasing demand coming out of China for alumina. I see a lot of similarities with bauxite and alumina and where the iron ore industry was four or five years ago."

High-energy venture

It's been well known for at least 45 years that there's a lot of bauxite in the Kimberley - particularly in the undeveloped Mitchell Plateau project controlled by Rio - but a lack of infrastructure and energy has hampered development.

Two years ago, United Minerals pegged 6800 sqkm of open tenements in the region, and it is working hard to prove up a resource close to its targeted figure of 300 million tonnes, which could support a 2 million tonnes-a-year alumina refinery.

United quickly realised it lacked the financial resources to develop the project on its own, so it signed up Norway's Norsk Hydro as a joint-venture partner. Norsk, which is one of the world's top aluminium producers, agreed to take a 75 per cent interest in the project.

Alan Birchmore, the chairman of United's wholly owned bauxite subsidiary, Bauxite Australia, says new gas projects under development in the offshore Browse Basin should give it the energy needed to construct an alumina refinery.

China finds an appetite In Australia's other major bauxite state, Queensland, Cape Alumina is busy proving up resources at its Wenlock project in the high-grade Weipa bauxite province on western Cape York.

Cape expects to list next year with a market value of more than $100 million but in the meantime, investors can gain exposure to its projects through its 40 per cent shareholder, Metallica Minerals.

Cape's first objective is to produce bauxite for the Chinese market. Next is to build an alumina refinery. It hopes to prove up 130 million tonnes of bauxite by the end of next year and to export up to 7 million tonnes a year. China's second largest alumina refiner, Chiping Xinfa Huayu Alumina, owns 17.5 per cent of Cape and might be a major customer for the bauxite.

Cape's chief executive, Paul Messenger, says there used to be few independent bauxite or alumina producers because its a very capital-intensive industry. Until recently, there hadn't been a bauxite export market to China, but now Indonesian, Indian and Australian producers are all benefiting from growing demand there.

Alcoa Receives NADCAP Certification for Heat Treatment and Nondestructive Testing at Its Samara Forging Business

Business Wire (press release), CA - November 27, 2007

NEW YORK & MOSCOW--(BUSINESS WIRE)--Alcoa (NYSE:AA) today announced it has received the National Aerospace and Defence Contractors Accreditation Program’s (NADCAP) approval for ultrasonic inspection and heat-treated forged products at its Samara manufacturing facility in Russia. NADCAP is an industry-managed accreditation program designed to develop a global aerospace industry supplier base with world-class quality control for special processes.

The Samara plant became the second Russian production facility to acquire the right to enter the world aerospace market and work with such customers as Airbus and Boeing. Alcoa’s Belaya Kalitva heat-treated sheet and plate received NADCAP approval this past summer.

The NADCAP certification audit was conducted in two stages. The first included certification of the heat treatment process, pyrometry and laboratory tests at Samara Forging Production. The second stage included certification of the ultrasonic testing procedures, which are particularly important for aerospace products.

Alcoa Russia President Bill O’Rourke, said, "We have made considerable progress in a relatively short time period in order to achieve this milestone. We placed a great deal of emphasis on achieving the certification in light of the Memorandum of Understanding between Alcoa and United Aircraft Corporation as well as in our serving aerospace leaders such as Airbus and Boeing. The next stage is to go through final certification with Airbus and Boeing."

Specter visits Alcoa tech center

VALLEY NEWS DISPATCH Tuesday, November 27, 2007

By Charlie Ban

As the U.S. Army makes its operations more flexible, Alcoa is hoping commanders will consider more flexible materials in their equipment.

With a $4 million earmark from the 2008 Defense Appropriations Bill, the company is pushing aluminum-based light military vehicles that Alcoa managers say will better protect servicemen.

U.S. Sen. Arlen Specter, R-Pa., was skeptical of the plan while touring the Alcoa research facility Monday.

"If aluminum isn't as strong as steel, why are you using it?" he asked while examining the chassis of a Joint Light Tactical Vehicle (JLTV), developed here by Alcoa with prime contractor Lockheed Martin in Oswego, NY.

John Siemon, Alcoa's division manager of product manufacturing, said the vehicle's design compensates for its comparable weakness to steel, using a more flexible material.

"Steel is an unpredictable metal," he said. "It reacts differently if you hit it with a hammer or detonate an explosive near it. It will splinter near an explosion, but aluminum won't. It's predictable.

"We designed this to minimize the shrapnel that goes into the personal space of the cab."

The design is a measure to protect servicemen from improvised explosive devices (IED) -- homemade bombs planted throughout Iraq that have made the war-torn country even more hazardous.

More than 40 percent of U.S. fatalities -- 1,586 of 3,874 -- in Iraq are due to IED detonations, according to the Iraq Coalition Casualty Count, which counts Defense Department statistics. It notes that numbers from some areas of Iraq may be incomplete.

Alcoa will submit its JLTV prototype to the Army in early 2008 in a bid to replace the Humvee military vehicle.

"It's a 30-year-old design," Dave Williams, Alcoa's program director for sea systems, said of the Humvee. It is a workhorse for the Army, which has 140,000 of them. "Some elements of the Army want to replace the Humvee.

It's not designed to go behind enemy lines."

The aluminum frame will also make the JLTV lighter, making it more maneuverable, faster and easier to deploy in air cargo.

Charlie Ban can be reached at

Japanese Aluminum Giants Seeking Magnesium in China

Trading Markets (press release), CA - Tuesday, November 27, 2007

TAIYUAN, Nov 27, 2007 (SinoCast via COMTEX) -- SLGMF | charts | news | PowerRating -- Three Japanese aluminum giants announced on November 22, 2007, that they would team up to invest in a Chinese joint venture Shanxi Jinwei Magnesium Co., Ltd.

The three investors are Kobe Steel Ltd. (Kobelco), Sumitomo Light Metal Industries Ltd., and Furukawa-Sky Aluminum Corporation. It is their first investment in overseas companies as they are seeking raw material magnesium in China for their aluminum alloy production.

Taiyuan Yiwei Magnesium Co., Ltd. contributes 51% of the CNY 19.5 million registered capital of the JV and the rest 49% will be provided by the three and Alconix Corporation, who is already a shareholder of the JV. Their shares are: Kobelco and Furukawa-Sky, respectively 14.7%, and Sumitomo and Alconix, respectively 9.8%.

The JV will pour JPY 600 million (USD 1 JPY 109) in building a plant in China, which is planned to be put into production in March 2008. The plant will produce 6,000 tons of magnesium metal every year by then, including 2,940 tons to be exported to Japan.

China produces 80% of the magnesium in the world each year, according to data.

From Jinghua Times, Page 1, Monday, November 26, 2007 info@SinoCast.Com

Rio Tinto takes steps to repel a BHP Billiton buyout

Bloomberg News 11/26/2007

By Rebecca Keenan and Brett Foley

Rio Tinto Group, parent company of Kennecott Utah Copper and the world's third-largest mining company, will increase its dividend 30 percent and may sell as much as $30 billion of assets in an attempt to repel BHP Billiton Ltd.'s unsolicited offer.

''Rio Tinto has under-promised and over-delivered,'' the company's London-based chief executive, Tom Albanese, said Monday. ''This has not been appreciated by the market, so we need to redress that.''

Rio's rejection of BHP's $128 billion all-share offer as too low has spurred speculation of further bids. The state-owned China Business Journal reported Monday that China Investment Corp., a $200 billion sovereign wealth fund, is planning an offer. Rio, whose shares have doubled this year, is the world's second-largest supplier of iron ore, used in steelmaking.

''They are trying to defend their turf and ensure they are in a better position for when the eventual discussion takes place for the groups to merge,'' said Australian stock broker Paul Xiradis. ''They were very bullish and were not guarded at all, given BHP has expressed interest in them.''

BHP Chief Executive Marius Kloppers wants Rio shareholders to pressure management to discuss a combination that would control more than a third of the iron-ore market and supply the most energy coal and copper. BHP has predicted annual savings and revenue gains of $3.7 billion from a merger.

Rio may treble iron-ore production to more than 600 million metric tons a year, Albanese said. Two new mines in Western Australia's Pilbara region will be developed at a cost of $2.4 billion. It would cost about $10 billion to increase output in the region to about 430 million tons, he said.

Shareholders can expect a further 20 percent gain in dividends in 2008 and in 2009, Albanese said. The increased dividend is ''a defensive move,'' against BHP, said Tobias Woerner, an analyst at MF Global in London. He added that Rio Tinto "should have shown its convictions earlier, especially in terms of mergers and acquisitions, and it wouldn't have been in this situation in the first place.''

The takeover battle offers investors a choice between two newly appointed CEOs who both predict a five-year rally in commodity prices will be sustained. Rio Tinto said Monday that demand for iron ore, copper and aluminum may as much as triple over the next 25 years, driven by expanding economies in China and India.

Rio Tinto Group, which bought aluminum producer Alcan Inc. for $38.1 billion, said the metal's price may rise as global demand increases and higher costs force China to cut production.

China, which tripled export taxes in 2006 to 15 percent, may become a net importer of aluminum next year. The government has removed a tax rebate on exports of some aluminum products to slow the expansion of smelters.

The price of aluminum gained 82 percent in the past five years, even with increased Chinese aluminum production during that time putting a ''damper'' on pricing, said Rio Tinto Alcan chief executive Dick Evans.

Also Monday, Rio Tinto approved a plan to invest $563 million in underground operations at its Diavik diamond mine.

Century Aluminum Company Icelandic Subsidiary Energizes Expansion Capacity - November 28, 2007

Century Aluminum Company (NASDAQ: CENX) announced today that Nordural Grundartangi ehf, a wholly owned subsidiary, has completed the energizing of all of the cells for its most recent 40,000 tonne expansion project at its primary aluminum smelter at Grundartangi, Iceland. This expansion takes rated capacity at the plant to 260,000 tonnes.

In October of 2006, the company completed a 130,000 tonne expansion project at the Grundartangi facility which took plant capacity from 90,000 tonnes to 220,000 tonnes.

"Over the past two years we have grown capacity at the Grundartangi facility nearly three-fold, on-time and on-budget," said Century president and chief executive officer Logan W. Kruger. "I would like to thank our operating management, contractors and employees for meeting this challenge. In addition, we are grateful for the ongoing support we have received from the local communities, government officials and Hitaveita Sudurnesja, Orkuveita Reykjavikur and Landsvirkjun."

Century Aluminum Company owns primary aluminum capacity in the United States and Iceland, as well as an ownership interest in alumina and bauxite assets in the United States and Jamaica. Century's corporate offices are located in Monterey, California.

RusAl and Kazakhs in Coal Pact

The Moscow Times, Russia - Friday, November 30, 2007. Issue 3797. Page 7.


United Company RusAl and Kazakh state firm Samruk Holding have agreed to set up a joint venture on the basis of RusAl's coal mines in Kazakhstan, RusAl said Thursday.

The joint venture will develop the Ekubastuz coal field in the area of Bogatyr and Severny coal mines in northern Kazakhstan, a RusAl statement said.

The coal may be used to generate power for metals production. In addition, RusAl and Samruk will examine opportunities for the development of the Kazakh energy sector, it said.

Samruk will compensate RusAl in cash the value of its 50 percent participation in the joint venture. The exact sum is to be evaluated by an independent international authority.

The reserves of Bogatyr and Severny are estimated at 4.5 billion tons of coal. Output totals 42 million tons a year, which is about 45 percent of all coal produced in Kazakhstan.

The joint venture intends to raise the capacity of the mines to 60 million tons of coal per year.

RusAl was formed in March through a merger of Russian Aluminum with smaller domestic rival SUAL and the alumina assets of Swiss trader Glencore.

The Kazakh mines were transferred to RusAl by Access Industries, a SUAL shareholder, as a result of the merger.

Prior to the merger, SUAL announced plans to build a $1.5 billion smelter in Ekibastuz to add 500,000 tons per year to the company's aluminum output from 2011.

RusAl had approached Kazakh authorities with a proposal to invest $3.5 billion in building an energy and aluminum complex on the basis of the mines and a utility, Kommersant reported in October

RusAl has said the company was discussing various energy projects with Kazakhstan that could form the basis for such a project, but gave no details.

RusAl agreed last week to buy a blocking stake of 25 percent plus one share in Norilsk Nickel, from co-owner Mikhail Prokhorov. The deal can only happen if his co-owner, Vladimir Potanin, fails to take an earlier offer to buy his stake for $15.7 billion by the end of the year.

Chalco Acquired Hewan Power Generation

Trading Markets (press release), CA - Thursday, November 29, 2007

BEIJING, Nov 29, 2007 (SinoCast via COMTEX) -- ACH | charts | news | PowerRating -- Aluminum Corporation of China Limited (Chalco, SHSE: 601600), China's largest alumina and primary aluminum manufacturer, announces on November 28, 2007, that it has acquired a 49% stake in Lanzhou Aluminum Hewan Power Generation Co., Ltd.

Chalco signed an agreement on the stake transfer with its controlling shareholder Aluminum Corporation of China (Chinalco) in Beijing on November 23 and paid CNY 496.8 million to the latter.

The stake was put up at auction at China Beijing Equity Exchange on October 26. Because Chinalco controls 41.08% of Chalco, the transfer is actually an affiliated transaction.

Previously, Hewan Power Generation was a subsidiary 51% owned by Chalco, with a registered capital of CNY 816.33 million. Now, it becomes wholly owned by Chalco.

Hewan Power Generation is mainly engaged in thermal power generation, and the development and utilization of by-products. Its project is expected to be completed by the end of 2007

Chinese Alumina Producers Raise Spot Price in Line With Chalco Price

Resource Investor, VA - 29 Nov 2007

By Ida Chen

SHANGHAI (Interfax-China) -- China's major non-Chalco alumina producers followed the Aluminium Corporation of China Co. Ltd.'s (Chalco) [HKE:2600] lead and raised alumina spot prices to RMB 3,800 ($514.21) per tonne Wednesday.

"Weiqiao and 12 domestic non-Chalco alumina producers, including Shandong Chiping Xinfa, Henan Kaiman Aluminium and Shanxi Luneng Jinbei Aluminium lifted alumina spot prices to RMB 3,800 ($514.21) per tonne yesterday," a Shandong Weiqiao Electricity and Aluminium Group sales official, who wished to remain anonymous, told Interfax yesterday.

The non-Chalco alumina producers previously raised alumina spot prices from RMB 3,250 ($439.78) per tonne to RMB 3,450 ($466.85) per tonne on Nov. 15, and further increased prices to RMB 3,600 ($487.14) per tonne on Nov. 26.

"Downstream aluminium smelters should have no problem in absorbing the new price hike, as they've recently increased orders to such an extent that stockpiles at our four alumina plants are empty, when they normally stand at between 20,000 tonnes and 50,000 tonnes in any one month," the Weiqiao official said.

Weiqiao is China's second largest alumina producer, and has an annual production capacity of 4 million tonnes of alumina and 500,000 tonnes of primary aluminium.

Chalco, China's largest alumina and aluminium producer, lifted alumina spot prices by 8.5% to RMB 3,800 ($514.21) per tonne several hours before non-Chalco producers, due to tight alumina supply and a high alumina CIF price at around $430 per tonne.

The company previously slashed 10.25% off alumina spot prices, from RMB 3,900 ($527.74) per tonne to RMB 3,500 ($473.61) per tonne in September this year, after feeling the heat from domestic market oversupply.

Chalco's parent company, the Aluminium Corporation of China Group (Chinalco), expects to produce 11 million tonnes of alumina this year.

China's electrolytic aluminium capacity expansion has so far outpaced alumina supply growth this year, with several domestic alumina plants running into delays in commissioning new capacity. Moreover, stockpiling from domestic aluminium smelters in the run up to the Chinese New Year holiday and Chinese Spring Festival will only increase supply problems.

"We expect alumina prices to maintain their current high levels through the Chinese Spring Festival on the back of rising imported bauxite prices and a temporary tight market supply. However, we need to be aware that market oversupply will most likely come back to haunt us next year," the official said.

The CIF price of bauxite from India has increased over 60% from the beginning of the year to a current between $80 per tonne and $85 per tonne, due to soaring freight rates and demand growth from China.

Aluminium prices fell recently on concern over an economic slowdown in the United States and ample global stockpiles, with the benchmark three-month aluminium price on the London Metal Exchange (LME) falling to $2,507 per tonne on Tuesday, down 0.12% from the previous trading day.

Chalco sells over 60% of its alumina through long-term contracts at a fixed price of 17% of the average monthly aluminium futures price on the Shanghai Futures Exchange, while the remaining 40% is sold at spot market prices. However, the Weiqiao official said that Chalco may decrease its long-term alumina sales contracts if the market becomes more sluggish.

© Interfax-China 2007. For more intelligence on Chinese metals and mining, contact David Harman in Hong Kong at or (852) 2537-2262.

Newfoundland presses CRVD on aluminum smelter in Labrador

Montreal Gazette, Canada - Nov 28, 2007

ROB ANTLE, CanWest News Service

Newfoundland and Labrador Premier Danny Williams says a recent tour of Brazil gave him the chance to press mining giant CVRD to consider an aluminum smelter in Labrador.

"The province is actively seeking requests from various companies to look at the possibility of an aluminum smelter in Labrador, which would utilize the Lower Churchill power when that comes on stream around 2014, 2015," Williams told reporters yesterday. "So that made it very worthwhile."

Brazil-based CVRD - the acronym stands for Companhia Vale do Rio Doce - is one of the largest mining and metal companies worldwide.

CVRD became owner of the Voisey's Bay nickel deposit and mine in Labrador when it obtained control of Inco Ltd. a year ago.

Williams and a provincial delegation spent a week in South America meeting with company officials.

The premier said he likes what he heard from CEO Roger Agnelli about CVRD's plans to follow through on its promises in the province.

"He gave me his personal undertaking that they would live up to their commitments, and he said that on a couple of occasions during the course of our meeting," Williams said. "So I take him at his word."

The owners of Voisey's Bay have committed to finish construction of a commercial processing plant in Long Harbour by 2011.

Williams said CVRD is not the only player in the running for a possible aluminum smelter. He said discussions are under way with other companies.

Newfoundland and Labrador Hydro is actively pursuing the issue, the premier said.

St. John's Telegram © The Gazette (Montreal) 2007

BHP seen likely to keep Alcan smelter projects

Reuters UK - Mon Nov 26, 2007

By Cameron French

TORONTO, Nov 26 (Reuters) - BHP Billiton's (BHP.AX: Quote, Profile , Research) proposed takeover of Rio Tinto (RIO.AX: Quote, Profile , Research) will likely not affect several billion dollars' worth of planned aluminum investment that Rio inherited when it took over Alcan this year, analysts say.

Expansion projects in the Canadian provinces of British Columbia and Quebec, as well as in Iceland, South Africa, Saudi Arabia and Oman are expected to proceed as part of a top aluminum portfolio for BHP if its proposal -- valued at around $120 billion -- succeeds.

"The aluminum, the alumina, the bauxite and all that, that will be kept. That's the business BHP and Rio are in. They're not going to dispose of those assets," said Ian Howat, analyst at National Bank Financial.

His comments echo those of other observers who believe the timing of BHP's stated interest in Rio -- announced a day after Rio completed its own $38 billion acquisition of aluminum producer Alcan -- is a sign BHP sees the business as an opportunity for growth, rather to shed costs.

"Nobody makes an acquisition in order to destroy what they acquire. If anything they'd want to add to it," said Charles Bradford of Soleil-Bradford Research.

The bid, which has been rejected by Rio as too low, should produce $3.7 billion in annual cost savings after seven years, BHP has said.

It is expected to see scrutiny on the iron ore side, where the combined company would dominate the global market, a concern for buyers worried about pricing competition.

But BHP's aluminum presence would not be as commanding as those of other global players such as Alcoa (AA.N: Quote, Profile , Research) and Russian producer RUSAL.

"There's a lot of fairly big players and a lot of competition there," said David Whetham, a fund manager at Scotia Cassels.

BHP has said the aluminum business would account for 16 percent of the combined company's pretax earnings.


On the cost side, the offer is all stock, and even if BHP is driven to add cash to the offer, it has lined up a $70 billion financing package.

A majority of analysts polled by Reuters last week predicted BHP will have to add cash to the proposed 3-to-1 share offer.

Rio has taken a $40 billion loan to finance the Alcan takeover, and plans to sell at least $15 billion of assets, including Alcan's packaging business.

Analysts doubt the expansion projects would be part of that sell-off.

In addition to a planned 150,000-tonne-a-year smelter expansion at Kitimat, British Columbia, Rio has the 720,000-tonne-a-year Coega smelter project in South Africa, the 350,000-tonne Sohar smelter joint venture in Oman, and a joint venture with Saudi Arabian miner Ma'aden to develop a $7-billion integrated aluminum-making operation.

Rio also has Alcan's planned expansion of the ISAL aluminum smelter in Iceland, which has run into local opposition, and commitments to expansion in Quebec's Saguenay region.

While BHP hasn't spoken specifically about plans for the projects, it did list Kitimat, Coega, ISAL, Ma'aden, and Sohar as tier 1 assets of a potential combined company.

BHP spokesman Illtud Harri said he could not comment on individual assets or on whether BHP would keep Rio's head office for aluminum operations in Quebec, which is a requirement to maintain cheap power deals with the province. (Reporting by Cameron French; Editing by Bernadette Baum)