AluNews - June 2008

Power Plant For VALCO

Modern Ghana, Ghana - Wed, 02 Jul 2008

By Daily Graphic - Daily Graphic

The Volta Aluminium Company (VALCO) Limited is to set up a 1,200 megawatts power plant at Tema as part of the government’s grand design to establish an integrated aluminium industry in the country.

Constructional works of the first phase of the project, involving a 600 megawatts plant, begin in October, this year and are expected to be completed in 24 months.

The Chief Executive of VALCO, Dr Charles Mensa, told the Daily Graphic that VALCO had found strategic partners from China, India, Norway and Brazil to put up the coal-fired plant next to the VALCO plant in Tema.

Dr Mensa explained that when completed, 350 megawatts of the first phase would go to VALCO for full operation, while the rest would be fed into the national grid.

He said although the Ghana government now owned 100 per cent shares in VALCO, funding the plant would be by foreign direct investment from the strategic partners without any government investment.

According to him, the investment of about $1.2 billion in the plant would be treated as equity.

Asked where the plant would source its raw material of coal from, he said VALCO had made contacts with producers in South Africa, Botswana and Mozambique and the prospects looked bright, adding that for the future the company had its eyes on Nigeria.

Dr Mensa said although most of the coal mines had been shut down in Nigeria, the power plant in Ghana would create the demand for coal from Nigeria in future.

He said immediately the first phase was completed, the second phase would begin and would be used to feed the alumina refinery and bauxite mines at Nyinahin and Kyebi. "The rest of the power will be exported to Togo, Benin and Burkina Faso," he said.

Explaining the importance of the integrated project, he said it would allow Ghana to start the anticipated industrialisation project that President Nkrumah dreamt of but could not get it going before his overthrow in 1966.

Dr Mensa said aluminium smelters and steel plants had always acted as magnets for industrialisation.

"The Kufuor administration realised that the transformation of Ghana’s economy can start with VALCO as the engine because when you have an aluminium smelter running in your country, you will attract electricity generators, auto industries, aero industries and shipping industry," he said.

Dr Mensa said for the VALCO staff, the new VALCO would be the leader of Ghana’s industrialisation effort, saying expectation was that the new VALCO would create opportunity for bauxite mining and create job opportunities.

He said the power plant would lead to the expansion of the smelter and offering of opportunity for chemical production by using salt from Ada, caustic soda and lime production by exploring the lime deposit around the banks of the Volta River.

Dr Mensa said VALCO’s revival could lead to an economic transformation and expressed the hope that VALCO would offer Ghana the opportunity to start its industrial transformation.

Asked why VALCO was optimistic about the future when the current smelter was closed because of lack of power, Dr Mensa said previously under the Kaiser administration when the water level was 240 feet, VALCO used to receive 215 megawatts to run three potlines and expressed regret that "at a little above the same level today, VALCO is not working and workers have been laid off just because of pure resentment arising out of other considerations other than the progress of the country".

He made it clear that the decision of the government to purchase VALCO was a pragmatic decision because it was a good buy.

He gave the assurance that Ghanaians would see the purchase of VALCO as an opportunity to transform Ghana’s economy from a colonial exporting economy to an industrial nation exporting finished products.

"We should use electricity as a bait to attract the $4.75 million which the investor would pump into VALCO over the next six years," he said.

Dr Mensa was optimistic that within two years VALCO would have its own power plant.

He said VALCO required power just for the next two years after which it would have some by itself, adding that with many independent power producers now, Ghana would soon have surplus power to export.

Dr Mensa indicated that in the event of VALCO deciding to re-open its plant, the move would not pose a threat to the Volta Dam because "Burkina Faso has warned Ghana about incoming floods and that will increase water level in the Akosombo Dam".

He said VALCO had agreed with the government to shut down its plant if the water level should drop to 240 feet.

Expatiating on the decision to purchase VALCO, he said when Kaiser decided to take its lots elsewhere, any reasonable leader would not allow the country to lose such a giant investment.

He said Nkrumah established VALCO to lead the country’s rapid industrialisation and economic growth along the path adopted by South Korea but "we lost that vision after the overthrow of Nkrumah".

Dr Mensa said after 44 years, President J.A Kufuor had decided to revive the smelter and nurture it to recast the whole vision of Nkrumah for rapid industrialisation and economic growth.

This new vision, he said, called for strategic alliances from strategic partners who were sympathetic to developing countries and he found these friendship in leaders in India, Brazil, China and Norway.

"The first evidence of this grand alliance is their decision to support the biggest power plant in Ghana to kick-start the country’s industrialisation programme," he added.

Dr Mensa said in order to set the tone for industrial development, VALCO required 140 megawatts of power to bridge the gap between now and two years when its plant would come on stream, adding that 140 megawatts was equivalent to two-and-a-half feet of water.

Alumina Prices Pressured by Supply Surplus

Resource Investor, VA - 04 Jul 2008 at 11:25 AM GMT-04:00

SHANGHAI (Interfax-China) -- China's alumina prices will fall from current levels in the second half of this year, pushed down by a heavy market surplus, though are unlikely to stay low for long due to high production costs, industry analysts told Interfax July 4 at an industry conference in Dalian.

"The surplus of alumina on the Chinese market will pull down domestic alumina prices to as low as RMB 3,000 ($437.07) per ton in coming months. Downstream primary aluminum producers have stated they may postpone some projects planned for next year, which would exacerbate the current surplus," analyst Wan Ling, with London-based CRU, said.

The Aluminum Corporation of China Limited (Chalco), the country's largest alumina and aluminum producer, currently offers spot aluminum at an ex-works price of RMB 3,500 ($509.91) per ton, while non-Chalco producers lifted prices from RMB 3,300 ($480.78) per ton to RMB 3,500 ($509.91) per ton on July 4, citing growing production costs.

Beijing-based China Commodity Market (CCM), a leading information provider, released predictions at the forum that China's alumina surplus will stand between 900,000 tons and 1.65 million tons this year, depending on the speed with which domestic alumina and aluminum producers can complete capacity expansion projects.

China will produce as much as 27.23 million tons of alumina this year, while national production capacity will rise by 37 percent year-on-year to 36.47 million tons, according to CCM's forecast. Based on alumina imports and exports, as well as production volumes over the first five months of this year, CCM's calculations suggest there was a surplus of around 462,800 tons of alumina on the Chinese market by the end of May.

Ru Xiaojie, an analyst for Henan Chalco, said that the behavior of alumina prices over the coming months is uncertain, as it remains to be seen whether alumina producers cut production due low prices, or whether smelters do indeed postpone commissioning new primary aluminum projects. She suggested that a drop in the price of alumina to RMB 3,000 ($437.07) per ton would trigger output reductions by the majority alumina producers in Shandong Province.

"At over RMB 3,000 ($437.07) per ton, Shandong alumina producers have the highest production costs out of all Chinese alumina producers, as they almost all use imported bauxite," she said.

Wang Guilan, an analyst at Shandong Chalco, said that up to 99 percent of the country's bauxite imports are supplied to Shandong alumina producers. In China, an average of 2 tons of alumina is used to produce 1 ton of primary aluminum.

A Macquarie Bank analyst surnamed Liu said that global alumina prices in the next six to 12 months will trade between $400 and $450 per ton, supported by higher production costs from increasing freight rates as well as rising oil, electricity, and raw material prices.

China recently raised power tariffs for aluminum smelters from July 1. An aluminum trader based in Beijing told Interfax that he had not yet heard of production cuts from any major aluminum producer. "However, as the government continues to raise power tariffs for energy intensive sectors, some smelters are expected to cut production to minimize losses."

Henan Chalco's Ru predicted that aluminum prices in China will range between RMB 18,500 ($2,695.26) and RMB 19,500 ($2,840.95) per ton for the rest of the year.

Macquarie's Liu said that domestic aluminum prices will be supported by rising costs for major aluminum producers, and that downward pressure from growing stockpiles will only be short-term.

According to a CCM forecast, China's primary aluminum production will stay between 15.18 million tons and 15.76 million tons this year, with the final figure dependent on how aluminum prices track in the second half of this year. The country's aluminum capacity is expected to rise 35.9 percent year-on-year to 19.54 million this year.

Three-month London aluminum price ended down $11.2 on July 3 at $3,184 per ton, though the price was 11 percent higher than that recorded a month previous.

Saudi Arabia's mining flagship IPO raises $2.5bn

Resource Investor, VA - 06 Jul 2008 at 04:36 PM

By Tim Wood

State-owned Saudi Arabian Mining Co (Maaden) raised 9.25 billion riyals ($2.47 billion) on its first day of trading on Sunday.

Valued at almost $5 billion, Maaden says it is applying the funds primarily to a 740,000-tonne aluminium smelter joint venture with Rio Tinto, as well as a three million-tonne phosphate and by-products plant joint venture with Saudi Basic Industries Corp (SABIC).

Spearheading the Saudi effort to diversify the economy after the calamitous frittering away of the 1970s petrodollar surplus, Maaden's investments include phosphate, bauxite, gold and industrial minerals.

Chalco sees output cuts at two aluminum plants due to power shortages

Xinhua Newsfeed Hong Kong - 07 Jul 2008

BEIJING (XFN-ASIA) - Aluminum Corp of China Ltd (Chalco) said it expects power shortages to force it to lower output at two aluminum plants with total capacity of 500,000 tons per year in northern China's Shanxi province..

Output reductions at the two plants are "likely," said investor relations manager Zhang Qing.

"There has been a slight effect from the electricity shortfalls there, but it will only have a small impact on production," she said.

She said none of Chalco's other plants in China faced similar energy bottlenecks.

"It's only a problem worth noting at the two Shanxi plants. We are not free to boost power there due to [electricity] shortages and quotas," Zhang said.

Separately, the National Development and Reform Commission granted Chalco permission to expand annual capacity at its Zhongzhou facility in central Henan province by 700,000 tons.

The project will help meet market demand for alumina, a raw material in aluminum production, it said.

Zhang said Chalco had yet to draw up construction plans for the expansion.

"We will start building and decide on production quantities after studying the market situation. Investment figures have not yet been decided," Zhang added.

Nalco could gain from taking greater risk

Business Standard, India - Jul 6, 2008


Kunal Bose / Mumbai July 07, 2008, 0:15 IST

As is commonly the practice of government undertakings in this country, National Aluminium Company (Nalco), owning Asia's largest integrated aluminium complex, would rather err on the side of caution than take the risk of selling most of its surplus alumina, the smelter feedstock, in the world spot market by inviting tenders for lots.

This is in spite of the fact that in the last five years, alumina spot prices ruled a lot higher than what Nalco could realise from term contract sales.

For the last lot sold a few days ago, Nalco got an FOB price of $457.57 a tonne in what turned out to be a keenly contested bid. We learn that Aluminium Baharin, which has long-term alumina supply arrangements with Alcan and now owned by Rio Tinto, put in the second highest bid for the Nalco lot at $455 a tonne.

The keenly contested bid goes to prove that alumina prices are finding support at rising levels because of supply crunch.

Chinese slump

According to Nalco Marketing Director P K Parida, the earlier three alumina sales in this financial year were done at $403.09, $427.77 and $425 a tonne. Interestingly, the underlying sentiment of the world market for alumina has remained bullish in spite of Chinese imports in the first four months of 2008 falling 300,000 tonnes to 1.7 million tonnes over the corresponding period of 2007.

The fall in Chinese alumina imports should be seen in the context of several white metal producing provinces ? particularly Sichuan and Guizhou had to contend with severe snowstorms and coal-fired power outages hitting smelter operation.

Reaching alumina to the smelters became an issue as railway wagons were primarily used for moving food and other essential items to snowstorm-hit areas.

Trade officials say the production will be back to the normal level soon. Even then, in some parts of the country, as the "urgent electricity use scheme" remains in force, aluminium smelters do not get all the power that they need. All the negative factors combined could see the Chinese primary aluminium production falling as much as 600,000 tonnes this year over the 2007 output of 12.572 million tonnes.

This will, no doubt, translate into China importing less alumina. Alumina exporters like Nalco will also have to take into account that the Chiping Guangxi alumina refinery of 1.6 million tonnes capacity in China will be ready for production in the next few months. The country's largest aluminium producer, Chalco, is also to commission a bauxite mine-cum-alumina refinery in Nanchuan by 2008-end.

Bright future

In spite of it owning poor-quality bauxite, China is seeking greater self-reliance in alumina. Many refineries in China depend on imported bauxite, notwithstanding the difficult logistics and high freight element.

The last few years have seen China growing both alumina refining and metal smelting capacity at an astonishing speed. Parida informs that since March 2004, China's alumina capacity has risen from 7 million tonnes to 24 million tonnes and metal capacity from 5 million tonnes to 15 million tonnes.

Much to the surprise of the industry in India, where the minimum gestation is four years, a greenfield refinery is built in China in 12 months and a smelter in 18 months, says Nalco Executive Director P K Padhi.

Trade officials think the market has already discounted the prospect of China doing with lower imports of alumina this year. London-based CRU International says, "Alumina prices will remain firm in the coming months. At the same time, rising cost pressures will act as a platform to provide support to prices."

It is only natural that refineries will be seeking compensation for cost rises on account of fuel, power and freight. At the same time, as CRU points out, the general tightness in supply has taken bauxite prices to $40 a tonne ( FOB India).

Delivered bauxite cargoes from India to China are costing up to $80 a tonne CIF. As for China receiving the mineral from Australia and Indonesia, the CIF cost ranges from $63 to $73 a tonne.

Trade sources say while Chinese smelters to the extent that they don't have linkages to captive alumina supplies will be paying up to $515 a tonne for locally-made alumina.

The imported stuff could cost anything between $554 and $561 a tonne. Nalco chairman C R Pradhan has reasons to be mighty happy with the world alumina price behaviour since his company annually exports about 800,000 tonnes of alumina.

It is another story that Nalco could earn a lot more revenue and profits had it been making greater use of the spot market. One wonders if the Navaratna status that the government has now accorded to Nalco will whet the risk-taking appetite of the PSU and lead it to sell a much bigger portion of the exportable alumina on spot basis.

The subject assumes special importance in the light of Nalco's alumina surplus rising to 1.2 million tonnes by early next year on completion of the second phase of expansion.

Chinese Firm To Build Power Plant For VALCO

Peace fm Online, Ghana - Tuesday, 08 July 2008

A delegation from China’s Datang Company Limited on Friday visited the Volta Aluminuim Company (Valco) plant here to commence negotiations towards the construction of a 1,200 megawatts power plant for the aluminuim smelter. The eight-member delegation, was conducted round the plant by Dr Charles Mensa, Chief Executive Officer of VALCO.

China Datang Company Limited is one of the foreign strategic partners that Valco has contracted to assist it realise Ghana’s integrated aluminium industrialisation goals. The 1,200 megawatts plant, to be powered by coal is estimated to cost about 1.2 billion dollars. Strategic Partners from China, India, Norway and Brazil are also helping Valco to put up the plant.

During an encounter with the media after the tour, Dr Mensa said the first phase of the power plant project, estimated to produce 600 megawatts of power would start in October this year. He said the whole project would take 24 months to complete adding that since all the five potlines at Valco required only 350 megawatts for full production, the surplus power will be fed into the national grid.

The second phase, Dr Mensa said is expected to produce additional 600 megawatts to feed the bauxite mines and the alumina refinery at Nyinahin and Kyebi. The excess power would be exported to Togo, Benin and Burkina Faso. Dr Mensa said the construction of the power plant for Valco will mark the commencement of the realisation of the integrated aluminium industry and the country’s industrialisation process. He therefore called on Ghanaians to support Valco in that endeavour.

The plant will be built on a 200-acre land near the aluminium smelter. Nii Adjei Kraku II, Tema Mantse, congratulated management of Valco for its unrelenting efforts to revive the company which had to shut down due to unavailability of power as a result of low level of water in the Volta lake. He pledged the full support of the Tema Traditional Council for the success of the project.

Alcoa Trims Growth Forecast For 2008 Aluminum Demand - July 08, 2008: 06:23 PM EST

Alcoa Inc. (AA) has trimmed its forecast for 2008 growth in worldwide aluminum consumption to 7.9% from 8.5%, although the company described the global aluminum market as "robust" overall.

"Global supply and demand are essentially in balance," Chief Financial Officer Chuck McLane told analysts on a post-earnings conference call Tuesday. "Aluminum prices have continued to show strength."

Still, Chief Executive Klaus Kleinfeld said Alcoa's aluminum markets in North America "are declining significantly this year," led by slow demand in the automotive and heavy truck sectors. He also called some markets in Europe " sluggish."

Aluminum consumption in China is expected to remain strong, although Alcoa trimmed its outlook for the country because of disruptions from the recent earthquake. Kleinfeld said Alcoa now expects consumption in China to be up 20% this year, a solid growth rate but off from a previous expectation of 24%.

Regardless, Kleinfeld was upbeat overall, and he reiterated Alcoa's prior forecast for worldwide aluminum consumption to grow 6% annually over the next decade, about even with the previous decade.

Alcoa said in January that it expected worldwide aluminum consumption to grow 9.6% in 2008, but it cut the forecast to 8.5% in April. The 7.9% growth forecast Tuesday marks the second time Alcoa has trimmed the estimate.

Century Aluminum cancels fixed-price contracts - July 08, 2008: 11:58 AM EST

NEW YORK (Associated Press) - Century Aluminum Co. said Tuesday it will pay $1.7 billion in cash and securities to its largest shareholder to cancel fixed-price sales contracts that keep it from taking advantage of the metal's record high pricing.

Part of the payment entails a large increase in the number of Century Aluminum's shares outstanding. The company's stock tumbled $8.79, or 14.4 percent, to $52.36 at midday.

In November 2004 and again in June 2005, Century agreed to pay Switzerland's Glencore International AG the difference between a monthly set price for aluminum and the higher market price; likewise Glencore agreed to pay Century if the market price was below the monthly set price. Glencore holds a 28.5 percent stake in Century Aluminum, according to Capital IQ.

Since agreeing to the so-called forward sales contracts with Glencore, the price of aluminum has soared, closing Monday at a record $3,327 a ton.

Glencore's consideration for canceling the contracts includes securities and cash. It will accept $730.2 million in cash, comprised of $225 million of Century's cash on hand and a $505.2 million deferred settlement agreement that carries an adjustable interest rate.

Glencore also will accept $978.4 million in 160,000 shares of nonvoting convertible preferred stock that pays no dividend unless Century were to pay a dividend on its common stock. The new shares are convertible into Century common stock at a 1-to-100 ratio, representing 16 million underlying shares of common stock.

On March 31, the company had about 41 million shares outstanding.

In addition, to help finance the buyout of Glencore's sales contracts Century will issue 6.5 million new common shares, plus 975,000 shares to underwriters for overallotments. Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Inc. are joint bookrunners for the offering.

Columbia Falls Aluminum expects 124 layoffs

Associated Press - July 8, 2008

COLUMBIA FALLS, Mont. (AP) - Columbia Falls Aluminum expects to lay off about 125 hourly workers when it shuts down a pot line later this month.

Soaring power prices are the main reason that CFAC officials announced a curtailment in aluminum production at the plant this spring. The company gave a 60-day notice of pending layoffs on May 21 and plans to start laying people off over an 11-day period starting on July 21.

CFAC spokesman Haley Beaudry says salaried workers will also be laid off.

Beaudry says shutting down one pot line can leave between 120 and 160 people out of work.

Beaudry says when the layoff decision was made in May, electricity had been predicted to be near $100 per megawatt hour by August. But one quote Monday morning put national markets at $110 per megawatt hour.

Those laid off will be eligible for 26 weeks of unemployment benefits. It's unclear how long the layoff will last.

Information from: Daily Inter Lake,

Rio Tinto Alcan enters deal with Bechtel

The Gazette (Montreal), Canada - Wednesday, July 9, 2008

Robert Gibbens , The Gazette

Rio Tinto Alcan said today Bechtel will engineer and manage construction of the $2.5 billion U.S. modernization and expansion of its Kitimat smelter in Northern British Columbia under a contract worth $200 million U.S. Bechtel, which has already done the project's feasibility study, will have construction site offices in Kitimat, while the engineering will be done at its Vancouver and Montreal offices. Kitimat's annual aluminum ingot capacity will rise by 40 per cent to 400,000 tonnes by 2011 and its environmental performance will improve significantly.

Production restarting at Welsh aluminum smelter

Forbes, NY - Associated Press 07.09.08

FOOTHILL RANCH, Calif. - Aluminum products maker Kaiser Aluminum Corp. said Wednesday it is restarting production at a fire-damaged Welsh smelter.

On June 12 a transformer fire cut power at the facility owned by Anglesey Aluminum Metal Ltd., in which Kaiser holds a 49 percent stake. London-based Rio Tinto PLC is Kaiser's operating partner in the facility.

The fire, which cut output to about a third of the plant's 145,000 ton per year capacity, did not affect the smelter's core fabricated products business. There were no injuries or environmental damage from the fire.

Kaiser said Wednesday workers are restarting production on the nonoperating portion of the first of two lines. Anglesey expects production on the first line to be fully restored by the end of July or early August.

Anglesey also expects to begin restarting the second line in August with full production on that line coming about 12 to 16 weeks later.

Shares of Kaiser rose 74 cents to $51.48 in morning trading, while American Depositary Shares of Rio Tinto rose $8.11 to $428.74

Environment Minister Holds Meeting on Smelters

IcelandReview, Iceland - 09/07/2008

Minister of the Environment Thórunn Sveinbjarnardóttir called her fellow party members in the Social Democrats to a meeting yesterday to discuss their declarations of support for aluminum smelters, which are not compatible with the party’s policy on climate issues.

Before the elections in May 2007, the Social Democrats claimed there was only room for one small aluminum smelter in addition to the others within the Icelandic provision on greenhouse gas emissions, 24 Stundir reports.

Yet some ministers from the Social Democrats, including Minister of Transport Kristján Möller, have declared their support for planned aluminum smelters in Bakki near Húsavík in northeast Iceland and in Helguvík on Reykjanes peninsula in southwest Iceland.

Ground has already been broken for the Helguvík smelter and recently Minister of Industry Össur Skarphédinsson, also from the Social Democrats, signed a new declaration of intent with Alcoa in regards to the smelter planned in Bakki. The Social Democrats have been subject to harsh criticism as a consequence.

Sveinbjarnardóttir called the meeting to discuss what the Social Democrats, who are part of the current coalition government with the Independence Party, could do to avoid breaching their own policy on climate issues. This was confirmed by her assistant, but 24 Stundir was unable to reach the minister.

Aluminum hit record prices as China slashes output

MarketWatch - July 10, 2008

By Joyce Koh

NEW YORK (MarketWatch) -- Aluminum prices shot up to their highest-ever level after China's top 20 aluminum producers said they will cut output by up to 10% in order to save energy and help the country cope with power outages and higher costs.

Aluminum for delivery in three months rose as high as $3380 a metric ton a new record high. The metal closed at 3,222.50, up 6%, on the London Metal Exchange. Aluminum already rallied 39% so far this year due to earlier supply disruptions in China and South Africa.

The move helped boost the shares of aluminum producers, including those of U.S. giant Alcoa Inc. (AA:alcoa inc com

China's largest aluminum producer, and its peers -- which together produce over 70% of the country's aluminum output -- signed an accord today to curb supply by 5-10% , according to media reports.

That equates to a maximum output cut of 400,000 tons in the second half of the year for China, the world's largest aluminum producer. The cut is expected to save 5.8 billion kilowatt-hours of electricity, the China Nonferrous Metals Industry Association said in a statement, without elaborating on how long the cuts will last for.

The government-backed association made the announcement against the backdrop of China's problematic power situation and comes as the Beijing Olympic Games draws near.

The 20 companies "also call for other producers in the country to cut output, showing support for the Beijing Olympic Games and creating an easier market condition for the industry," the association said in the statement.

Jump in aluminum prices

China's move Thursday is the latest in a series of attempts by the country to curb production in its aluminum industry, in an attempt to curb energy use ahead of the Beijing Olympics this summer.

"China is very much in the public eye in the run-up to the games, and the last thing it wants is there not to be enough energy and fuel during the Olympics."

— Rachel Ziemba, RGE Monitor

Authorities eliminated preferential power rates to smelters in January this year, and have also been cutting rebates for aluminum end-products over the years.

"What is driving a lot of policies in China right now is the Olympics," said Rachel Ziemba, RGE Monitor's lead analyst for oil exporting economies and China. "China is very much in the public eye in the run-up to the games, and the last thing it wants is there not to be enough energy and fuel during the Olympics."

However, market watchers say it is also important to look at how China handles the situation in the long term.

"Today's move illustrates some of the ways the Chinese economy works and the challenge of shifting towards a market-driven economy," said Ziemba. "It is not really based on individual producers, but also affected by how the government tries to move and shift the market."

She said China still needs to address longer-term issues like how to strengthen its power infrastructure, shift to more efficient production ways and deal with the massive state subsidies for its heavy industries.

In a research note Thursday, MF Global said that "while today's price reaction may be justified, the situation is very fluid, and may not necessarily be sustainable given the uncertainty about the time-line of the reductions, and more importantly how demand, exports, and duties, all play out against this production decrease."

Summer Blackouts in China

Even as China grapples with escalating energy costs, rations its power usage and suffers from power outages, it continues to produce and export more aluminum -- a light metal that requires significant power to produce.

It requires about 15,000 kilowatts of energy to produce 1 ton of aluminum, and production costs have risen 72% over the last five years, according to Barclays Capital research.

Some regions in China will see blackouts this summer, China's State Electricity Regulatory Commission told China Daily. The gap between power supply and demand would be 16 gigawatts during the summer, according to the commission.

Meanwhile, China's aluminum output this year is expected to rise from last year's 12.6 million tons. The country's exports of aluminum and alloys have jumped 43% to 123,538 tons in June from a month earlier - the highest since August 2006.

"The fundamentals are playing out as expected, as higher coal prices constrain production," said Gayle Berry, a London-based commodities analyst at Barclays Capital.

"We think these cut-backs in production will be a long term issue, and is not going to last for only a few weeks. They will continue to categorize the market going forward and could intensify in nature," she said.

Berry expects another big move in aluminum prices, reaching $3,650 per ton in the third quarter and $4,000 in the fourth quarter.

Already, China's aluminum products companies, especially smaller ones, have been operating under capacity since May, according to a CBI China's survey on 36 aluminum product firms reported in Chinese media Thursday.

The research company said while the operation rate of large firms is comparatively stable, that of smaller companies have fallen remarkably. The rate of medium-sized enterprises declined 13% from 98%, and small-sized enterprises slid 19% to 61% since April.

Joyce Koh is a MarketWatch intern in New York.

U.S. aluminum companies gain as China cuts back

Calgary Herald, Canada - Friday, July 11, 2008

Metals - Alcoa Inc. and Century Aluminum Co., the two largest U.S. aluminum producers, gained after Chinese companies agreed to cut output by as much as 10 per cent, sending prices for the metal to a record high.

Alcoa, based in New York, climbed $3.06, or 9.7 per cent, to $34.60 in composite trading on the New York Stock Exchange. The shares have fallen 5.3 per cent this year. Monterey, Calif.- based Century rose $5.64, or 10 per cent, to $62.55 on the Nasdaq stock market.

Aluminum Corp. of China Ltd. and 19 of its peers signed an agreement today to curb supply by five to 10 per cent, the China Nonferrous Metals Industry Association said in a statement. The companies agreed to the measure to help alleviate a sixth year of power shortages in the country.

****Alcoa's second-quarter profit was better than expected after rising aluminum prices offset higher costs for raw materials.

Bechtel Signs $200 Million Agreement for Kitimat Modernization Project

MarketWatch - July 11, 2008

SAN FRANCISCO, CA, Jul 11, 2008 (MARKET WIRE via COMTEX) -- Bechtel today announced it signed a $200 million engineering, procurement, and construction management agreement with Rio Tinto Alcan for the Kitimat Smelter modernization project in Kitimat, British Columbia.

"Bechtel is honored to be selected for this project," said Andy Greig, president of Bechtel Mining & Metals. "This is an exciting opportunity for us and we look forward to being a part of Rio Tinto plans for the future."

"Rio Tinto Alcan is pleased to announce the signing of this contract, one more critical step towards the realization of the Kitimat project. Bechtel brings together a unique combination of expertise, world-wide presence, and project experience," said Jacynthe Cote, president and chief executive officer, Primary Metal, Rio Tinto Alcan.

The proposed $2.5 billion Kitimat Modernization Project would increase production capacity at the smelter by 40 percent, taking it up to 400,000 tons per year and increase Rio Tinto annual global primary aluminum production capacity by more than 3 percent. This will make Kitimat not only one of Rio Tinto largest wholly owned smelters, but also one of the three largest in North America. Kitimat's aluminum production capacity will increase by 125,000 tons using clean and renewable hydroelectric power from the Kemano power station and also reduce greenhouse gas emissions by more than 40 percent per year. First metal from the modernized smelter is expected in 2011.

Suriname announces establishment of new aluminum company

Caribbean Net News, Cayman Islands - Tuesday, July 15, 2008

By Ivan Cairo, Caribbean Net News Suriname Correspondent, Email:

PARAMARIBO, Suriname; Officials here have disclosed that the Suriname government is set to establish a new state-owned aluminum company aimed at advancing the industry. The announcement came during a press conference of the Council of Ministers headed by vice president Ram Sardjoe.

Minister of Natural Resources and Energy, Gregory Rusland, noted that he presented a proposal to the government to establish the entity. However the Council of Ministers has yet to sanction these plans.

Rusland further explained that he is opting for a new company, which would partner with either BHP-Billiton or Alcoa/Suralco or with both multinationals together to develop the bauxite deposits in the Bakhuys Mountains in West-Suriname.

The Suriname government is aiming for an integrated aluminum industry in West Suriname, including hydro-power facilities and a smelter. Negotiations with the joint-venture partners BHP-Billiton and Alcoa/Suralco have so far failed to produce an agreement on this issue.

According to the minister the two mining companies seem only interested in mining the bauxite in West Suriname for processing in the Paranam refinery several hundred miles east.

"We are not abandoning our aspirations to establish an integrated aluminum industry in West-Suriname, while at the same time keeping the Paranam refinery in operations," Rusland said in an invited comment.

Asked whether the government could finance the establishment of its own aluminum company, the minister disclosed that production of the West Suriname deposits will cost some US$800 million.

"The intention is that Suriname comes in with the bauxite deposits and infrastructure and the partner with the required capital," said the official.

He further disclosed that an international consultancy bureau is currently making an assessment of the existing infrastructure in the mining area, including roads and bridges, a rail track and port facilities.

"All these assets represent a certain capital value and that will be our contribution in this venture," said Rusland.

The government is aiming at signing an agreement for development of the West Suriname project as soon as possible, since current deposits in East Suriname will be depleted by 2010.

While the government is still engaged in talks with BHP-Billiton and Alcoa/Suralco, it is also entering in talks with other interested parties, as months of negotiations with these companies have not produced any positive results.

So far only BHP-Billiton has presented a proposal to the government. The China Aluminum Company has indicated a possible interest in taking part in the West Suriname project but parties have not entered into talks as yet.

Just last week, a delegation from Swiss company, Glencore International AG, visited Suriname to discuss possible investments in the bauxite industry.

While he welcomed the company's interest, vice president Sardjoe noticed that the government is not only looking at financial benefits for the country if it is to enter into an agreement with foreign investors. The government is also focusing at the reliability of its partners, sustainability and continuity, he argued.

"Glencore has many possibilities to offer. We must examine now how to match these with our needs," said the vice president.

Rusal, Saudi Arabia in Talks on Construction of Energy Metals Complex, OR - Monday, July 14, 2008 8:52 PM

MOSCOW. July 14 (Interfax) - United Company RUSAL (UC RUSAL) is holding talks on an energy and metals complex to be built jointly with Saudi Arabian state-owned company Maadin, according to a statement released in Moscow ahead of the visit by Saudi Arabia National Security Council's Secretary-General Prince Bandar bin Sultan bin Abdul Aziz Al Saud.

The project will involve the construction of an aluminum plant with a capacity of 600,000 tons of primary aluminum per year and a 1,500-megawatt thermal power station fuelled by heavy oil.

Neftegazexport, Zarubezhneft and Globalstroy-Engineering are also probing opportunities for establishing relations with Saudi partners.

(c) 2008 Daily News Bulletin; Moscow - English. Provided by ProQuest Information and Learning. All rights Reserved.

China, Japan in Vietnam's $460 million alumina deal

Reuters UK, UK - Tue Jul 15, 2008

HANOI, July 15 (Reuters) - Vinacomin, Vietnam's largest coal producer, has signed a contract with a Chinese company to build a $460 million alumina plant in the Central Highlands, the Hanoi government said.

Vinacomin signed an Engineering, Procurement and Construction (EPC) deal with China Aluminium International Engineering Co (Chalieco) on Sunday, and Chalieco would build the plant within two years, the statement issued late on Monday said.

The alumina plant, projected to turn out 600,000 tonnes of alumina a year, is part of the bauxite and aluminium complex in the central highland province of Lam Dong, 300 kilometres (190 miles) northeast of Ho Chi Minh City.

Vietnam began building in 2006 its first bauxite and alumina complex, the $490 million Tan Rai plant, but a lack of money and domestic power shortages forced the plant developers to skip aluminium production in the complex.

Chalieco is the engineering arm of Aluminium Corp of China Ltd (Chalco) (2600.HK: Quote, Profile, Research), China's largest nonferrous metal company.

Chalieco has placed an order with Marubeni Corp (8002.T: Quote, Profile, Research), under which the Japanese firm would support and provide advice on legal and procurement issues on the project, which is due for completion in 2010, Marubeni said in a statement on Tuesday.

Vinacomin would start negotiations in the fourth quarter for another EPC contract to build the Nhan Co alumina plant in the same Lam Dong complex, also to produce 600,000 tonnes of alumina per year, Vinacomin Chairman Doan Van Kien was quoted in the government statement as saying.

Vietnam's bauxite ore reserves are estimated at between 5.6 billion and 8.3 billion tonnes, the world's third-largest after Guinea and Australia and mostly unmined.

Bauxite is the raw material used for making alumina, a white powder for producing aluminium.

Vietnam has said it needed 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, most of them in the Central Highlands coffee belt.

In May, the government said it would allow Alcoa Inc (AA.N: Quote, Profile, Research) to own up to 40 percent of a major alumina mining and refining project in the central highland province of Dak Nong [ID:nSP155046]. (Additional reporting by Miho Yoshikawa in TOKYO) (Editing by Ben Tan)

Two Bauxite Companies Seeking to Expand Operations

Government of Jamaica, Jamaica Information Service, Jamaica - Tuesday, July 15, 2008


State Minister in the Ministry of Mining and Telecommunications, Laurence Broderick, has informed that at least two companies are seeking to expand their operations in light of increased usage of alumina in manufacturing and other activities globally.

The companies, West Indies Alumina Company (Windalco), and Alumina Partners of Jamaica (ALPART), are currently conducting the necessary studies to guide possible expansion, he informed.

Mr. Broderick was making his contribution to the 2008/09 Sectoral Debate in the House on July 9.

"In light of a global move towards reducing the weight of automobiles, to meet the more stringent mileage requirements in various jurisdictions, aluminium use has spiked. Aluminium is the second most used material behind steel in the automobile industry.(and) continues to make inroads in other applications, notably building construction and power transmission lines," he said.

"The evidence therefore, suggests that global demand for alumina will remain relatively strong, in spite of expected downturns in some of the major economies," the State Minister explained.

To this end, Mr. Broderick said the local companies are seeking to expand their operations, adding that Windalco's and ALPART's efforts should get off the ground, "once the energy issue is resolved."

On another matter, he cited the need for a review of the tripartite bauxite and alumina sector Memorandum of Understanding (MoU).

He pointed out that there were numerous challenges which the sector faced, particularly over the past year, and there is a need to sustain stability and productivity in the industry.

The MoU is an agreement signed in 1998 between the bauxite and alumina companies, trade unions representing workers, and the Government.

The State Minister said that the primary aims of the review must be the fine-tuning of the objectives and mechanisms and, most importantly, responding to local and global developments occurring over the past decade.

"Failure to do so could have negative consequences on the sector's competitiveness, especially in light of the escalating production costs," the State Minister warned.

Mr. Broderick noted that the productivity incentive scheme, which, among other things, incorporates high level worker participation in operational decisions impacting productivity, "remains in place at all companies."

"By encouraging active worker participation, these schemes have served to lift the morale, generate efficiencies and cost savings, and enhance output and promote all round productivity," he informed.

Australia scheme to compensate big carbon emitters, Spain - 16/07/2008

CANBERRA (Reuters) - Australia on Wednesday unveiled plans for one of the world's biggest carbon trading schemes, including measures to protect motorists and large companies from higher costs which drew the ire of green activists.

The centre-left government, which swept to victory last year on the back of fury among working voters at rising prices under conservative rule, released an options paper for how emissions trading is likely to work from July 1, 2010.

"The effect of putting a price on carbon will be profound," Climate Change Minister Penny Wong said in a television address. "Placing a limit and a price on pollution will change the things we produce, the way we produce them, and the things we buy."

Australia is the world's biggest per-head polluter, with each person producing five times more emissions than the average in China.

The government's plan aims to curb carbon emissions by forcing 1,000 of Australia's biggest-polluting firms, including global miners BHP Billiton and Rio Tinto to buy permits placing a cost on emissions.

The regime would cover 75 percent of emissions in the A$1 trillion ($980 billion) economy, with the inclusion of fuel from the 2010 start and hard-to-measure agricultural emissions from 2015, the government said.

But with officials predicting the scheme could add 0.9 percent to consumer prices in its first year, the proposals also pose deep political risks for Prime Minister Kevin Rudd in an economy already battling inflation at 16-year highs.

To ward off a ballot backlash in late 2010, after trading comes into force, Wong said low-earners would be buffered from inevitable price hikes through tax breaks and welfare.

Motorists angered by soaring fuel pump prices, already up by 30 percent in recent months as world oil prices soared to new highs, would be mollified by "cent-for-cent" fuel tax cuts to balance emission price hikes, to be reviewed every three years.

With Treasury officials estimating on Wednesday that the sale of permits could net government as much as A$20 billion, big polluting energy firms would receive up to 30 percent of total permits free of charge, including agriculture, the government said.

The largest polluters, producing more than 2,000 tonnes of carbon emissions per A$1 million of revenue, would initially pay for only 10 percent of their total emissions. Companies producing between 1,500-2,000 tonnes would pay for 40 percent of emissions.

Assistance would taper off with time to allow companies to replace dirty technology with cleaner production methods, the report said.

Other energy-intensive firms like cement and aluminum manufacturers exposed to cheap competitors in Asia would also receive grants from a new Climate Change Action Fund to be set up with the proceeds of emission permit sales.


Environmental critics accused Rudd of capitulating to the big polluting "greenhouse mafia" by compensating "dirty" energy firms after the government's top climate adviser two weeks ago recommended against assistance.

"All this proposed ETS does is prop up dirty industries, such as coal-fired electricity generation, allowing them to maintain the status quo. It will result in nothing more than paper shuffling," Greenpeace Climate spokesman Simon Roz said.

Climate experts said the scheme could be a model for Asia and fuse with an eventual global emissions trading system.

"What is good is that the coverage is broad. Unfortunately some parts of the science are crudely handled, and this matters in terms of its effectiveness," said Barry Brook, Director of the Research Institute for Climate Change and Sustainability at Adelaide University.

The report did not say what Australia's overall emissions cap should be or put a price on carbon emissions apart from a working assumption of A$20 a tonne, used for inflation impact estimates.

Emissions trade around the report's release indicated a soft start to the scheme in 2010, with initial prices starting at A$19-A$20 a tonne, but "speculative" buyers offering A$16, said Gary Cox, Manager of Environmental Derivatives at the Newedge Group in Sydney, which brokered one of six deals.

A Singapore-based carbon broker said the report contained no major surprises, but pointed to a broader scheme than in Europe, where 100 percent of emission allowances had been allocated free against only 30 percent in Australia.

The government is to release hard Treasury figures setting the market price in October ahead of laws to go to parliament in late 2008 setting up the emissions scheme.


(Editing by Jerry Norton)

(; Reuters Messaging:, +612 6273 3700))

Alcoa, PUD tie knot through 2028

The Wenatchee World Online, WA - July 15, 2008

Alcoa and Chelan County PUD sign a power agreement Monday that will supply the Wenatchee Works smelter with low-cost PUD power from 2011 to 2028. Seated, from left, Rich Riazzi, PUD general manager; John Thuestad, Alcoa president of Global Primary Products; and Marc Pereira, Alcoa vice president of energy.

WENATCHEE — The haggling's over. The contract's signed. Whew!

Alcoa on Monday got enough cheap Chelan County PUD power to expand local aluminum production through 2028.

Alcoa's Wenatchee Works smelter and the community got an unexpected benefit — the commitment of a top Alcoa executive to better ensure the smelter's future by modernizing its aging equipment.

"I am going to support that we start developing the plant technically," John Thuestad, president of Alcoa's Global Primary Products, told commissioners Monday. "You have my commitment to that ... to work together

Thuestad, based in New York, attended Monday's PUD commission meeting with a host of visiting and resident Alcoa officials, including Wenatchee Works plant manager Stefan Vogt and union council president Jo Keyser.

Thuestad's comments fill a gap identified by some critics of the contract — that the PUD is guaranteeing to supply the power, but Alcoa has never made a reciprocal guarantee to keep the plant open.

A new 17-year contract approved Monday between the Chelan County PUD and Alcoa will supply the Wenatchee Works aluminum smelter with enough low-cost electricity to add a third potline of production.

Wenatchee Works employs 409 union and nonunion workers.

When the new 17-year power contract begins in late 2011, the smelter will add a third "pot" or production line and between 60 and 80 jobs.

"There are no guarantees. On the other hand ... the key is having long-term power," Thuestad said after adding his signature to three of the four documents that make up the new power deal. A fourth document will come later.

Thuestad said modernization will mean more automated processes at Wenatchee Works, along with increased safety and less physical work.

He said an Alcoa team will visit Wenatchee Works in September to begin studying how to modernize the plant, which produced its first metal in 1952 and continues to use the same technology. Two expansions in the 1960s increased the plant's output.

Under the new contract, Wenatchee Works will receive the equivalent of 26 percent of the power generated at Rock Island and Rocky Reach dams. The PUD can supply the power from any source.

In exchange, Alcoa will pay 26 percent of the costs to produce that power, including dam improvements.

Carol Wardell, PUD chief counsel and leader of the utility's contract-negotiating team, said talks with Alcoa began in earnest in about 2005.

Commissioners approved the basic terms of the contract in December. On Monday they endorsed the final contract, including some amendments that came about through public discussion.

Among the changes was an increase in power costs to Alcoa if the company decides to increase production beyond its existing two potlines before the new contract begins in late 2011.

Under the original agreement, Alcoa would pay the PUD's average industrial rate of about $19 per average megawatt of power used. The final agreement obliges Alcoa to pay the higher, current market rate for this power.

Christine Pratt: 665-1173

Aleris workers refuse to accept plant closing

The Gazette (Montreal), Canada - 15-Jul-2008

The union representing 350 employees at the Aleris International Inc. aluminum products plant kept picketing yesterday, refusing to accept the plant's closing. The Beachwood, Ohio, company announced immediately after its 11:59 p.m. deadline Friday the "permanent closing" saying the labour dispute caused it "permanent and irreparable damage." Gilles Dubuc, regional president of the Confédération des syndicats nationaux, said Aleris may have advised U.S. authorities of the closing, but did not file the necessary notice with Quebec's Labour Department. The workers rejected by 80 per cent an Aleris offer calling for a 10-per-cent reduction in wages and benefits and 110 job cuts. Dubuc said if the company tries to remove equipment from the plant, "They will have to drive over us."

UC RusAl aluminum output in H1 2008 up by 7.8% YoY

SteelGuru, India - July 17, 2008

RIA Novosti reported that Russia's United Company RusAl increased its aluminum production by 7.8% YoY to 2.196 million tonnes in the first half of 2008.

UC RusAl established in March 2007 through a merger of Russian aluminum giants RusAl and SUAL and Swiss Glencore's alumina assets, said its alumina output had increased 1.4% to 5.6 million tonnes. Silicon production grew 9.3% to 31,093 tonnes.

UC RusAl produced 9.045 million tonnes of bauxites in the reporting period, a 6.5% growth against the first half of 2007. Total revenues grew by 14% YoY to USD 8 billion. Revenues from sales on the Russian market increased by 16.2% to USD 1.8 billion and outside Russia by 13% to USD 6.2 billion.

UC RusAl accounts for approximately 12% and 15% of global production of aluminum and alumina respectively. The company sells its products in 70 countries worldwide and employs 100,000 people in 19 countries.

Alcan CEO "highly confident" modernization will go ahead, Canada - July 15, 2008

Rio Tinto Alcan’s (RTA) $2.5 billion smelter in Kitimat technically still needs approval from Rio’s board of directors.

But RTA CEO Dick Evans made it clear last Wednesday that is just a formality.

Evans was in Kitimat to announce the awarding of a $200 million engineering, procurement, construction and management contract to the Bechtel Corporation out of San Francisco.

"We would not award a $200 million contract unless we were highly confident that we were going to go ahead - which we are," he told the crowd packed into the RTA community office in the City Centre Mall.

Praising "the entire team" for having reached what he described as "a major milestone", Evans singled out Paul Henning in particular for "sticking to it when things looked dark" - a reference to the B.C. Utilities Commission rejection of the first power sales deal between then-Alcan and B.C. Hydro.

Recalling all three pre-conditions for the modernization - a long term contract with the union, environmental approvals and a power sales deal with B.C. Hydro - had been met, he said higher aluminum prices had improved the attractiveness of the project.

And the performance at Kitimat Works had also improved to the extent it was now running at its best efficiency in a very long time.

Although the project would not be going to the Rio board for approval until October, Evans assured his audience no time would be lost in terms of achieving the targeted start up date for the new plant.

"The pace that we’re on has no room for taking a nap," he said.

"We’re in a go mode."

He pointed out that prior to the announcement RTA had already pre-approved $70 million of preparatory work and said there would be some acceleration now that the Bechtel contract had been awarded.

Look for more details on the modernization plans in Friday’s issue of The Northern Connector.

UC RUSAL continues environmental upgrade of its smelters

SteelGuru, India - July 18, 2008

UC RUSAL, the world’s largest aluminum and alumina producer, has announced the commissioning of a dry scrubber at its Volgograd Aluminum Smelter.

The installation, which cost the company over USD 12 million is the key element of the modernization program on this production site and is able to treat 99.5% of the total emissions level.

According to the release, the hourly pass through capacity of the new dry gas scrubber is over 250,000 square meters of gas and dust which are emitted by the reduction cells. The new unit manufactured by a Canadian contractor ensures that the minimal amount of noxious emissions go out of the chimneys or roof louvers and will replace 15 old foam scrubbers at the smelter. The new technology, which is widely used worldwide, is focused on one of the qualities of alumina, the key raw material for the smelting operations, allowing to adsorb fluorides and tarry substance. Almost 100% of the pollutants are contained and the fluorinated alumina is returned back to the process.

The release added that as part of this modernization program at VgAZ which was designed to enhance its environmental performance, all the cells have been converted to dry anodes, new filters were installed. Together with the recent commissioning of the new solid wastes storage, there are plans to redesign the jet ventilation by 2009.

The reduction of the environmental impact is a key priority for UC RUSAL. Since 2000, the production sites, which today are part of the UC RUSAL Group, have spent over USD 1 billion on their environmental initiatives. In 2007-2013, UC RUSAL will invest approximately USD 1.4 billion in a comprehensive environmental improvement program, which has been presented by the company to its aluminum smelters with the view of bringing down significantly the emissions level and provide for increased production efficiency. The program will cover the two world’s largest aluminum smelters in Bratsk and Krasnoyarsk and also smaller production facilities of the company located in Irkutsk, Novokuznetsk, Bogoslovsk and Uralsk where the company’s engineers are currently converting the process at some production areas to the pre-bake anode technology. As a result of these efforts by 2015, the company intends to reduce the emissions by 35%.

In 2007 UC RUSAL signed a memorandum of understanding with the United Nations Development Program to step up the joint efforts aimed at a greenhouse gas emissions reduction, thus becoming the first Russian company to join the UNDP for the purpose of creating a global network of the projects focused to pursue one goal which is to prevent the threat of the global warming.

Chalieco to build an alumina plant in Vietnam

SteelGuru, India - July 18, 2008

Vietnam government declared that Chalieco had signed cooperation agreement with Vinacomin, the largest nickel producer in Vietnam to jointly invest in building an alumina plant in Central Highlands, Vietnam. It is learned that the annual production of the alumina project is expected to reach 600,000 tonnes.

The cooperation consists of three projects, including the design of alumina plant, equipment purchases and engineering construction. Chalieco planned to finish the alumina plant within two years.

The alumina resources reservation is expected to reach 5.8 billion tonnes to 6.3 billion tonnes, the third largest after Guinea and Australia. The Vietnamese government expressed that the major project of alumina and alumina refining plant with will be finished before 2025 to develop extensive and great alumina resources in Central Highlands of Vietnam. Previously, the Vietnamese government had announced to have 40% shares of bauxite and alumina project of Nhan Co managed by Alcoa Inc of US, which located at Dak Nong.

Chalieco is a subsidiary of Chalco, the most powerful and the only international engineering cooperation that has independent intellectual property rights and technology in Chinese aluminum industry.

Guinea To Replace Alcoa Management At Bauxite Miner CBG

Reuters July 18, 2008: 09:40 AM EST

LONDON -(Dow Jones)- The government of Guinea has appointed an interim management committee to take over the running of the world's top bauxite exporter, Guinea's CBG, from U.S. aluminum company Alcoa Inc. (AA), according to a Reuters report Friday.

The committee will run Compagnie des Bauxites de Guinee until March 2009, the government said in a statement released Friday after a cabinet meeting Thursday, Reuters reported.

"Regarding the contract for management assistance, it is necessary to choose a new partner after the transitional period," it said.

-By Melanie Burton, Dow Jones Newswires; +44 (0)20 7842 9412; melanie.burton@

Alcoa Says Guinea Talks Won't Lead to Stake Reduction (Update1)

July 18 (Bloomberg)

By Dale Crofts

Alcoa Inc., the world's third-largest aluminum company, said it doesn't expect to have its stake in the world's largest bauxite miner cut or changed because of talks with Guinea about the project's management.

Discussions with the government about the Compagnie des Bauxites de Guinee venture are focused on how to best operate the mine and won't result in Alcoa having a smaller stake or supply agreement, Alcoa spokesman Kevin Lowery said today by telephone.

An interim management committee will take over from Alcoa and run the CBG, as the bauxite-mining company is known, until March 2009, Reuters reported today, citing a statement issued by the West African country's government.

Alcoa and London-based Rio Tinto Group each control 45 percent of Halco Mining, which owns 51 percent of Compagnie des Bauxites de Guinee and has the exclusive right to mine bauxite in Guinea's Sangaredi plateau. Guinea owns the other 49 percent of the venture.

Guinea has one-third of the world's reserve of bauxite, found mostly in tropical and subtropical countries and used to make aluminum. The port in Kamsar is used for drying bauxite and shipping it to refineries worldwide. About four to five tons of bauxite yield about two tons of alumina and one ton of aluminum.

Christina Mills, a spokeswoman with Rio Tinto in London, declined to comment immediately.

To contact the reporter on this story: Dale Crofts in Chicago at

Aluminum Giant Attracts Praise for Protecting the Environment

NewsBlaze, CA -July 18, 2008

By Andrzej Zwaniecki

This article is the fourth in a series on sustainable manufacturing.

Alcoa Incorporated, the leading global producer of aluminum and aluminum products, is to the environmental movement what a teacher's pet is to teachers.

The company, which operates in 44 countries, is consistently praised, honored and recognized in other ways as one of the world's top companies for practicing responsible environmental stewardship. Alcoa's "2020 Strategic Framework for Sustainability" sets ambitious goals, and the company has achieved some goals well ahead of the schedule.

Experts say that Alcoa does everything an exemplary sustainable manufacturer should do: reduces use of resources, reuses some products and materials, recycles materials that cannot be reused and constantly rethinks industrial processes.

For example, Alcoa uses increasingly lighter, more flexible packaging that is reusable, recyclable or compostable. It recycles more than half of aluminum beverage cans in North America. (By 2015, it hopes to increase that share to three-quarters.) Recycling aluminum saves 95 percent of the energy needed to make new metal.

The company strives to make products in key markets friendlier to the environment. For example, its Dura-Bright wheel improves fuel efficiency, eliminates cleaning products and extends tire and brake life, bringing down customer costs.

Alcoa believes that embracing sustainability - efforts to make products without harming the environment or using up scarce resources - will ultimately help its bottom line.

"We believe that addressing sustainability will make us a better company, and a better company becomes a company of choice for governments and communities," Anita Roper, Alcoa's director of sustainability, told The Journal of Record. "This designation leads to better access to land, markets, capital, resources and people."

The company views suppliers, customers, employees, shareholders and communities in which it operates as its key stakeholders. But it puts more emphasis than many other corporations on the welfare of communities that host its plants.

When Alcoa plans major business expansion in the midst of a community, Roper said, the company engages in a dialogue that "helps [us] understand [residents'] expectations and also helps them understand us."

The approach allows Alcoa to address critical issues early in project design and operation and helps it enhance environmental performance, avoid unintended social problems and create better working conditions.

When the company took a plan to upgrade its refinery in Pinjarra, Western Australia, to the community, locals asked Alcoa to place the next residue storage area away from the township. By granting this request and making other improvements, the company incurred higher up-front costs but it won long-term acceptance.

In another country, Iceland, Alcoa encountered apprehension from environmentally conscious residents of Reydarfjordur when, in the early 2000s, it announced a plan to locate in the economically depressed area a new smelter powered by a hydroelectric station constructed for its exclusive use.

As a result of unusual cooperation with local stakeholders, who were invited to form an advisory group, "the tremendous construction ... has gone very smoothly, whether you look at employer's safety, environmental matters or communication with the society," Helga J nsd ttir, mayor of the nearby town of Fjardabyggd, told Supply Chain Management Review magazine.

The smelter is considered one of the safest, most efficient and environmentally friendly facilities of its kind in the world. The project has made many companies that worked on it more sensitive to health, safety and environmental issues.

Some of the most ardent environmentalists remain unpersuaded that the new smelter is a good thing for the area. But many locals agree with Dav Baldursson, a Christian minister who served on the advisory committee, when he says, "These projects have given us renewed hope for the future of our community."

More information on Alcoa's sustainability strategy ( ) can be found on the company's Web site.

Source: U.S. Department of State

Indian mountain tribe battle British mining giant, United Kingdom - 19/07/2008

By Rahul Bedi in New Delhi and David Litterick

One of the world's most remote hill tribes will learn next week whether it faces being evicted from its forest homeland to make way for an opencast bauxite mine run by one of Britain's biggest listed companies.

The battle pits Vedanta Resources, one of the largest mining companies in the world, against the Dongria Kondh, an 8,000-strong tribe in the Indian region of Orissa.

The Kondh is one of India's most isolated tribes. It believes in witch doctors and animal sacrifices, and worship the mountains and forests they inhabit.

Vedanta wants to open a massive, opencast mine in their territory to produce bauxite, the chief source of aluminium.

The tribe claims this will not only irreversibly destroy their revered mountain, but also a huge swathe of surrounding jungle, one of the last remaining forests in the entire drought-prone region, which is one of India's poorest.

The mountain is also the source of the Bansadhara river and a proposed elephant reserve, and is vital to ensure drinking water and irrigation for surrounding areas.

"Niyam Raja is our god," said Jitu Jakeskia, a Kondh activist, referring to the Niyamgiri mountains.

"It is the most important temple for the Kondh people and that is why we worship nature and have to protect it."

Others have vowed to take up arms against anyone setting foot on their land. The battle has now reached India's Supreme Court, which will decide next week whether Sterlite, a Vedanta subsidiary, can proceed with the project.

Vedanta argues that the area involved is a tiny fraction of the Kondh's traditional lands, and will be returned to its natural condition once the mining is over.

It has also pledged to bring health care, sanitation and education to an area where many die of preventable diseases, and where tribe members have in the past sold their babies to buy food.

The company claims its investment could drag thousands out of poverty. A spokesman said Vedanta had already built schools, roads, a medical centre and a hospital in the region, and taught farmers how to increase their yields.

He said Vedanta, which is controlled by the London-based billionaire Anil Agarwal, had received awards for its sustainable development programmes.

"Vedanta is committed to managing its business in a socially responsible manner," he added. "The management of environmental, employee, health and safety and community issues in respect of our operations is central to the success of our business."

The project was originally planned by the Orissa state government, which granted the mining permit to Vedanta.

Survival International, a pressure group, has urged Vedanta's UK shareholders – including Coutts Bank, Standard Life, Abbey, HSBC and Middlesbrough and Wolverhampton councils, – to "disinvest unless Vedanta abandons its plans".

Norway has already excluded the company from its national pension fund investments, due to what they claim is "an unacceptable risk of complicity in ... severe environmental damage and systematic human rights violations".

Chalieco to build alumina plant in Vietnam

SteelGuru, India - July 20, 2008

It is reported that Chalieco had signed cooperation agreement with Vinacomin, the largest nickel producer in Vietnam to jointly invest USD 4.6 billion in building an alumina plant at Central Highlands in Vietnam.

As per report, the cooperation consists of three projects, including the design of alumina plant, equipment purchases and engineering construction. Chalieco planned to finish the alumina plant within two years. The annual production of the alumina project is expected to reach 600,000 tonnes.

Chalieco is a subsidiary of Chalco, the most powerful and the only international engineering cooperation that has independent intellectual property rights and technology in Chinese aluminum industry.

The alumina resources reservation is expected to reach 5.8 billion tonne to 6.3 billion tonnes, the third largest after Guinea and Australia. The Vietnamese government expressed that the major project of alumina and alumina refining plant with an investment of USD 15.6 billion will be finished before 2025 to develop extensive and great alumina resources in Central Highlands of Vietnam.

Alumina Says Brazil Expansion Costs Gain on Currency (Update2)

Bloomberg - July 20, 2008

By Jesse Riseborough and Rebecca Keenan

July 21 (Bloomberg) -- Alumina Ltd., partner in the biggest producer of the material used to make aluminum, expects the venture's share of expansion costs in Brazil to rise 48 percent on rising materials and labor prices and local currency gains.

Alumina and partner Alcoa Inc.'s share of expanding the Alumar refinery and developing the Juruti bauxite mine may be as much as $3.7 billion, the Melbourne-based company said today in a statement. That's up from a $2.5 billion estimate in January.

A global mining boom has stoked competition for skilled workers and raised prices for equipment and contractors at a time of record fuel costs. Goldman Sachs Group Inc. raised its aluminum price forecasts by as much as 21 percent this month after China, the world's biggest producer, announced output cuts.

``The whole cost curve for a lot of commodities has just gone up so much and it is going to be a barrier to new supply,'' Peter Arden, an analyst at Ord Minnett Ltd., said today by phone from Melbourne. ``More significant in some ways is that they are still going ahead with it. They are not deterred by it. The outlook for aluminum still looks pretty bright.''

Alumina rose as much as 15 cents, or 3.3 percent, to A$4.68 and traded at A$4.66 at 1:15 p.m. Sydney time on the Australian stock exchange. The stock earlier fell as much as 5.1 percent.

Global Alumina Corp., the developer of an alumina refinery in Guinea with BHP Billiton Ltd., raised its cost estimate for the project by 11 percent to $4.78 billion in March because of a weaker dollar and higher construction expenses.

`Very Disappointed'

Alcoa owns 60 percent of the Alcoa World Alumina & Chemical venture and Alumina owns the balance. The venture produces one quarter of the world's alumina, which is refined into aluminum.

The rise in the Brazilian real is also hurting the developments, Alumina's Chief Executive Officer John Bevan said in the statement to the exchange. Brazil's currency has gained 12 percent this year, the biggest advance among the 16 most-traded currencies against the dollar.

``We are very disappointed with the increases in estimated cost of these projects to a total (Alumina and Alcoa) share of up to $3.7 billion,'' he said in the statement. The total share was previously $2.5 billion.

The company will evaluate funding options for the expansion during this half of the year and has so far committed $400 million from an existing loan, it said. Alumina may seek to sell more bonds to cover the cost increase, Ord Minnett's Arden said.

Alumina said in November it may sell as much as A$1 billion in bonds to fund growth. It sold $350 million of bonds in May to fund output expansion and refinance existing debt.

The Alumar refinery expansion will boost capacity to 3.5 million metric tons a year, and is due to be completed by mid-2009, Alumina said. The Juruti mine will initially supply 2.6 million tons of bauxite annually to the Alumar refinery, it said. The first shipment is expected in the third quarter next year.

The cost of Alumar may rise to $1.62 billion, from the January estimate of $1.3 billion and Juruti to $2 billion, from $1.2 billion, it said.

To contact the reporter on this story: Rebecca Keenan in Melbourne at; Jesse Riseborough in Melbourne at

NALCO to import coal to avoid reducing output

SteelGuru, India - Jul 19, 2008

BS reported that National Aluminum Company, which had cut production last month because of coal shortage, plans to import 100,000 tonnes of fuel to prevent another disruption at a time when prices of the aluminum are record high.

Mr C R Pradhan chairman of NALCO said that the company will purchase thermal coal from countries including Indonesia in two months. He said that "Shutting down operations will create problems, which we want to avoid at any cost. By importing, we can avoid the troubles that we encountered earlier."

Production at National Aluminum fell 30% for six days in June after supplies from Coal India to its 960 MW power plant were disrupted by a strike.

Alumina on shelf - for how long?

The Age, Australia - July 21, 2008

Barry Fitzgerald

ALCOA chairman Alain Belda is getting on in years. The 40-year company man has turned 65 and if his thoughts haven't turned to retirement, there are many others doing it for him.

Belda held the dual role of chairman and chief executive of the US aluminium giant from 2001. Earlier this year he passed on the CEO baton but held on to the chairmanship, for the time being at least.

Belda has since joined the IBM board, which, along with his directorship in Citigroup, gives company watchers the impression that his planning for retirement from Alcoa is well under way.

Why should this market care that Belda is about to ride off into the sunset? There are good historical reasons why it should, particularly when it comes to Southbank-based Alumina.

Alumina is the 40% partner in the Alcoa-managed AWAC global alumina alliance. It is a collection of the world's best or near-best bauxite/alumina assets, with a couple of aluminium smelters in Victoria thrown in for good measure.

Alcoa has long wanted to have full control of AWAC. We know this because Belda made a takeover approach in 2001 for the group that held the AWAC interest at the time. It was also the group that had been Alcoa's trusted partner since the 1960s, WMC.

Encouraged by WMC to bid, Belda first offered to pay $9.75 a share for all of WMC. And in October of 2001 it was increased to $10.20 a share. Belda thought that he had a deal and flew back to the US. But WMC chief Hugh Morgan had other ideas.

Morgan decided there would be more value to be had by "demerging" WMC into two vehicles - one holding the AWAC interest (Alumina) and the other holding WMC's Olympic Dam copper/uranium mine and its nickel interests (WMC Resources, acquired by BHP Billiton in 2005).

Morgan wanted to introduce some competitive tension into any takeover of WMC. Because of Alcoa's control of AWAC and AWAC's restrictive joint-venture rights, competitive tension in a WMC takeover was not possible.

Morgan's theory was that, with the demerger into Alumina and WMC Resources, Alcoa would still need to bid at an endorsed level for Alumina while the BHPs and Xstratas of the world could compete for WMC Resources, as they did in 2005.

Funny thing is that Alumina is still sitting out there. That is despite it being Alcoa's only chance at securing big-bang growth in alumina without it running foul of global antitrust regulators.

That Alcoa has not come calling is all to do with Belda. He is said to have been livid with the behaviour of the Australians back in 2001 and vowed that he would not be back for a second look. But once he moves on, it could well be a case of game on.

That makes the recent trashing of Alumina's share price all the more interesting. On Friday it was again looking friendless at $4.53 a share for a market capitalisation of $5.2 billion.

That's an interesting figure. If you wanted to replicate Alumina's share of AWAC's 2007 production - 5.72 million tonnes of alumina and 155,000 tonnes of aluminium - it would cost you about $6.6 billion.

So after its share price beating, Alumina is trading at less than replacement value by some $1.4 billion. It is a point that would not be lost on Alcoa, particularly after it was done over by Rio Tinto in last year's battle for Canada's Alcan.

Whether or not Alumina is left on the shelf by Alcoa remains to be seen. What is more certain is that Alumina is finding plenty of support among brokers at its current price, down more than 30% since May.

There are short-term concerns about the impact of the Varanus Island gas explosion on supplies to AWAC's West Australian alumina operations, and cost pressures for labour and other key inputs have continued. Other investors might have fretted over Climate Change Minister Penny Wong's plan for an emissions trading scheme and its long-run impact on the aluminium sector. They need not have worried, although it is clear no new aluminium smelters will be built in Australia. Best to send our alumina to China for them to smelt it into higher-value aluminium, minus carbon penalties.

The more certain impacts of the Varanus Island incident and other cost pressures are reflected in expectations that Alumina's calendar 2008 profit will be well short of the 2007 profit of $436 million. Expectations for 2008 range from $135 million (UBS) to $273 million (Goldman Sachs JBWere).

Because of varying commodity and exchange rate assumptions, it all gets a bit woolly when it comes to 2009 and 2010. For what it's worth, the expectations for 2009 range from $157 million (ABN Amro) to $594 million (UBS) while for 2010 it is a range from $131 million (ABN Amro) to $1.07 billion (UBS).

What investors are supposed to make of that lot is anybody's guess. The only agreement seems to be that the 2007 profit of $436 million - announced seven months ago - was in fact $436 million. That's not true. All expect Alumina to be maintaining annual dividend of a 24˘ a share (5.2% prospective yield) out until 2010.

There is also good consensus that aluminium could be one of the better-performing metals in the next year or two, even with the expectations of lower global economic growth.

That's because of the forced cutbacks in production in South Africa and China due to power shortages. A laggard in the five-year bull run in mineral commodities between 2003 and 2008, aluminium has been relatively strong in recent weeks while the rest of the pack have got decidedly weaker.

After marching to $US1.40 a pound, aluminium is back at a one-month low of $US1.35 a pound. That's up from the 2007 average of $1.21 a pound. But the US exchange rate has wiped out the price benefit.

NALCO sells 30,000 tonnes of alumina

SteelGuru, India - July 23, 2008

It is reported that India’s National Aluminum Company sold 30,000 tonnes of alumina in a spot tender.

The price was settled at USD 458.6 per tonne on fob basis. The cargo will be shipped to Hong Kong based Noble Resources. Nalco also sold 30,000 tonnes of alumina at USD 457.57 per tonne in last month.

The company has planned to invest almost USD 10 billion to build aluminum smelters and power plants in Indonesia, South Africa and Iran over next five years.

Chalco halts some output at Shanxi ventures on power

SteelGuru, India - July 23, 2008

Bloomberg reported that Aluminum Corp of China Ltd may lose 30,000 tonnes of output after it halted some capacity at two ventures in Shanxi province because of a power shortage.

According to the report, Chalco's two Shanxi ventures were forced to halt production cells because of reduced power supplies. Power supplies look to remain tight in the coming months. Chalco didn't specify how long the cuts will last.

Chalco said in a statement that Shanxi Huaze Aluminum & Power Co suspended 25% of its 280,000 tonne annual capacity as of July 18th, and Shanxi Huasheng Aluminum Co stopped 22% of its 220,000 tonne capacity.

Mr Li Rong an analyst at Great Wall Futures Co said that the estimated loss is too small to ease a supply glut in China. He said that aluminum futures in London may have priced in a bigger production loss.

Aluminum jumped to a record USD 3,380.15 per tonne on July 11th after China's producers pledged to cut output by as much as 10% through September to help ease a nationwide power shortfall. The pledge came after the Shanxi government cut power to smelters, forcing Chalco and others to reduce production.

Chinalco orders three ingot scalpers

SteelGuru, India - July 23, 2008

SMS Meer has announced that Aluminum Corporation of China Chinalco China has placed an order with SMS Meer for the supply of three scalpers for aluminum ingots. The ingot scalpers will be employed in Chinalco Chinese aluminum rolling mills and are designed to meet the specific requirements of each mill, namely for the production of film and strip and for sheet production for the aviation and aerospace industry.

According to the release, the scalpers will be installed upstream of the hot rolling mill to remove the oxide skin and metallurgical impurities from the outer surface of the ingots. Scalping is performed in two steps, with the ingots being rotated by 180 ° between the scalping steps. The scalpers are equipped with a horizontal scalping head for the main surfaces and two edge scalping heads for the side surfaces of the aluminum ingots.

The released added that the use of the integrated edge scalper reduces the percentage of trimming scrap in the subsequent hot rolling process and at the same time prevents soiling of the work rolls in the hot mill. The ingot scalper is characterized by its high rigidity to guarantee the surface qualities in the μ? range even with hard aluminum alloys.

SMS Meer is to supply the complete engineering for the associated transport system with roller tables, the drum type turn over device and the chip exhaust system. The exhausted scalping chips are broken into short pieces by a chip breaker from SMS Meer and can be melted down again. The scalpers are scheduled to go into operation at the end of 2009.

Iran to double aluminum production capacity by March ’09, Iran -

TEHRAN, July 23 (MNA) – Iran’s aluminum production capacity will be doubled by the end of the current Iranian calendar year (March 20, 2009), Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) managing director stated here on Wednesday.

According to IRINN, Harati Nik said by launching aluminum production plants in the cities of Arak and Bandar Abbas, 240,000 tons will be added to the country’s annual aluminum production capacity, reaching up to 500,000 tons a year.

Hungarian Aluminum acquires 10-year concession to in Montenegro

Budapest Business Journal, Hungary - 24 Jul 2008

bbj.huMAL Hungarian Aluminum has acquired 10-year concession rights for an undisclosed price to conduct bauxite exploration and extraction operations in a 17.4-square-kilometer area of western Montenegro.

MAL Chairman Lajos Tolnay told the business daily Vilaggazdaság that the concession will enable the company to supply its aluminum-oxide plant in Ajka (W Hungary) with bauxite extracted exclusively from MAL mines.

Világgazdaság reported that MAL expects to extract 150,000 tons of bauxite annually from the concession beginning in 2010. There are 350,000 tons of known bauxite reserves at the concession, while MAL will begin exploration for up to 2 million – 4 million more tons of bauxite in the area, the newspaper wrote. MAL will invest €2 million at the Montenegro concession for its extraction operations, while the concession contract stipulates that the company spend €15.6 million on bauxite exploration in the region, according to Világgazdaság.

MAL has been present in Montenegro since 2004, while other major Hungarian companies such as OTP Bank, Magyar Telekom and Hunguest Hotels are currently operate in the country. Hungary was the biggest foreign investor in Montenegro in both 2005 and 2006. (MTI – Econews)

Russia’s ZALK may suspend money-losing aluminum plant operation

Ukrainian Journal (subscription), NY - FRIDAY, JULY 25, 2008

Journal Staff Report

ZAPORIZHIA, July 22 – The Russian Aluminum company, also known as RusAl, says Zaporizhia Aluminum Plant, also known as ZALK, may suspend work because of its unprofitable operation.

At a meeting with Zaporizhia Mayor Yevhen Kartashov, RusAl Deputy Director for international and special projects Aleksandr Livshits said the Russian company considers it more advantageous to stop ZALK than to work at a loss, the mayor's office reported on Tuesday.

The rest of the story is available to subscribers only.

Rio calls Abu Dhabi smelter plan ‘dead’ as UAE curbs gas supplies

Gulf Times, Qatar - - Saturday, 26 July, 2008

CHICAGO: Rio Tinto Group, the world’s second-largest aluminum company, said a planned $3bn smelter in Abu Dhabi is "dead" after the United Arab Emirates decided to use its natural gas in more-profitable industries.

Middle Eastern nations are using their gas in the chemical, fertiliser and liquefied-natural-gas industries to benefit more from their reserves, said Dick Evans, chief executive officer of Rio Tinto’s aluminum unit. The shift is reducing supplies available to the energy-intensive aluminum industry, he said.

"Abu Dhabi smelter is for all practical purposes dead at this point, and we don’t see it coming back," Evans, 60, said in a July 22 interview. "That’s because of this policy shift and how the emirates are seeing the use of their gas."

Rio spokesman Nick Cobban said on May 28 that the project was "on hold" while the government reviewed its energy requirements.

Abu Dhabi Basic Industries Corp chief operating officer Jim White said in October the smelter there would be able to produce about 700,000 tonnes a year at a cost of $3bn.

Rio Tinto earlier this year delayed plans to build a $2.7bn smelter in Coega, South Africa, because state-owned utility Eskom Holdings couldn’t guarantee power supplies for the facility’s estimated 720,000 metric tonnes of annual production.

Aluminum prices have risen 24% this year, in part because of supply disruptions in South Africa and China.

"We’ve seen capacity come out of the system, and demand remains strong," Tim Ghriskey, chief investment officer at Solaris Asset Management, said in an interview on Wednesday. "Fundamentally, we are extremely bullish on aluminum. We have seen production cutbacks in a number of geographies."

Rio’s shares have declined 4.1% this year.

Rio Tinto’s aluminum venture in Saudi Arabia with state-owned metals producer Ma’aden will be fuelled with heavy oil rather than natural gas, Evans said. Ma’aden finance vice-president Abdullah al-Fallaj said in May that natural gas is "too valuable" to use at the $2bn plant that will power the smelter.

Power accounts for about a third of the cost of producing aluminum, and companies including Rio Tinto have closed smelters in Europe and North America after they were unable to secure cheap supplies.

Analysts had expected increased smelter construction in the Middle East because of the region’s abundant gas supplies that could be used to generate power.

The company is "likely" to close a 148,000-tonne smelter in Anglesey, Wales, if it can’t secure a new power contract when its present agreement expires in September 2009. That follows the closing of similar plants in Switzerland and France.

Rio is talking with Libya and Algeria because these countries still have available gas supplies. Evans told analysts in March that growth opportunities in smelting were "shifting to the Middle East, where there is excess energy."

"The Middle Eastern situation changed dramatically in the last 12 months," Evans said this week.

Aluminum demand is likely to increase about 9% this year and double by 2020, requiring about 80 new smelters able to produce 400,000 tonnes each, according to Alcoa Inc By 2020, Asia will consume as much aluminum as the world does today.

Reduced opportunities abroad are forcing Rio Tinto Alcan to accelerate Canadian projects, including boosting production at the Alma smelter in Quebec to about 570,000 metric tonnes a year from about 400,000 tons, Evans said.

Aluminum prices have reverted to contango, meaning the price of future deliveries is higher than that for near-month contracts. The market is pricing in the recognition that finding power supplies is difficult, Evans said.

"That’s been the big shift, the shift in realisation that large blocks of electricity are difficult and expensive to come by," Evans said. "The forward market has responded quite strongly."

Aluminum could rise as high as $4,000 a tonne as early as next year because of supply disruptions and China’s possible switch to a net importer of the metal, Evans said.

China tripled export taxes in 2006 to 15% and removed a rebate on exports of some aluminum products to slow the expansion of smelters. The country produces a third of the world’s aluminum.

Aluminum companies in China, which produces more of the metal than any other nation, agreed July 10 to cut output by as much as 10% to ease a power shortage, sending the metal to a record $3,380.15 a tonne in London the next day.

The reductions may help alleviate a sixth year of power shortages in the world’s fourth- largest economy and curb Chinese aluminum exports that jumped 43% in June. – Bloomberg

Wagstaff plans big addition at plant in Valley

Spokane Journal of Business, WA - 25-Jun-2008

Manufacturer here says revenues on track to jump 25 percent or more in ’08

By Kim Crompton

Wagstaff Inc., the 62-year-old Spokane Valley maker of equipment for the aluminum-casting industry, plans to construct a large office-building addition to accommodate strong recent growth, says Paul May, its CEO.

Due partly to surging international sales, Wagstaff is on track to increase its revenues by 25 percent or more this year over last year, and next year is "lining up very strong already," May says.

"The market for manufacturing equipment is strong, particularly for exporting," he says, adding that the weak U.S. dollar is contributing to that rising demand by making equipment built here much more of a bargain to prospective customers overseas.

As of last week, Wagstaff employed about 385 workers, 312 of them here, up sharply from 309 employees overall, 260 of them here, just last October. May says, though, that the planned office building project is needed more to alleviate current cramped quarters than to provide space for possible additional hirees.

"We’re very crowded," he says. "I don’t anticipate it will be needed for a lot more hiring."

The 32,000-square-foot addition will be a two-story structure with a basement and will be constructed at the west end of Wagstaff’s current 12,000-square-foot office building, which is one of five structures on the company’s 14-acre site at 3910 N. Flora, just east of the Spokane Business & Industrial Park.

Wagstaff’s complex there includes about 102,000 square feet of manufacturing space in three buildings, a 14,400-square-foot research-and-development building, and the office building, which adjoins its largest manufacturing building. The company expanded last year into a newly constructed building that gave it about 30,000 square feet of additional manufacturing space. It also operates a 57,000-square-foot plant in Hebron, Ky.

Wagstaff hopes to begin building the office addition as soon as it can obtain a permit from the city of Spokane Valley, and would like to have the structure’s shell completed before winter arrives, May says. He declines to divulge the estimated cost of the project.

Bernardo-Wills Architects PC, of Spokane, designed the project, and Vandervert Construction Inc., of Spokane, is expected to be the general contractor.

One of the underlying reasons for Wagstaff’s recent strong growth is that aluminum prices continue to be high, May says. They were up to about $1.50 a pound last week, or well over double the roughly 60 cents the metal was fetching five years ago, and have spiked to all-time highs a couple of times this month following an announcement that China’s largest smelters would cut production by as much as 10 percent due to power shortages.

Wagstaff doesn’t disclose its revenues, but May says they’ve grown by about one-third over the last three years. He said last fall that he expected them to rise 8 percent to 10 percent this year, so the actual growth to date has been more than double that forecast.

Analysts have said they expect the aluminum market to remain strong until 2015, if not longer, due mostly to rising global demand for the versatile metal in some of the world’s larger, developing countries.

Wagstaff’s main focus is providing the machinery, technology, and related services that enable aluminum producers to transform the metal from its molten form into solid shapes safely while using what’s called "direct chill" casting.

The company manufactures everything from molds and casting machines to the automation systems—including computer hardware and software—used to operate the machines, then helps oversee installation of the systems.

The "direct chill" casting process uses water to chill the molten aluminum shortly after it has been poured, so it solidifies quickly into the desired shapes—either cylindrical "billets," also called rounds, or "ingots," also called slabs. The water doesn’t contact the metal while it’s still a liquid, but rather cools the molds through which the molten aluminum passes, then the water coats the solidified hot metal to cool it further. The billets and ingots later are rolled or extruded to create products.

Export customers now account for about 80 percent of Wagstaff’s revenues, up from 20 percent in the early 1980s, and the company now serves customers in more than 50 countries, including such companies as Alcoa Inc., Alcan Inc., Novelis Inc., and Kaiser Aluminum Corp.

Contact Kim Crompton at (509) 344-1263 or via e-mail at

Vimetco acquires bauxite mine in Sierra Leone

Mineweb, UK - Friday , 25 Jul 2008

Amsterdam/Zurich, 25 July 2008: Vimetco N.V. (LSE: VICO), the global producer of primary and processed aluminium products, today announces the acquisition of the whole of the issued share capital of Global Aluminium Limited from Titanium Resources Group Ltd. The acquisition, which is due to complete today, is for a consideration of USD 40 million in cash, which includes working capital of approximately USD 4.2 million and the assumption of a loan of approximately USD 10 million, subject to adjustments for working capital and a contingency payment of USD 500,000.

Global Aluminium's main subsidiary, Sierra Mineral Holdings I, Ltd (SML), owns an operating bauxite mine under a mining lease with the Government of Sierra Leone, which occupies 322 square kilometres in the south of Sierra Leone. SML contains a resource base of approximately 31 million tonnes of bauxite and currently produces around 1.2 million tonnes per annum for export. In addition, further reserves have been identified and exploration work is underway.

Vimetco's acquisition of its first bauxite mining asset represents further progress towards its goal of achieving full vertical integration. The Group already owns an alumina refinery in Romania through its Alum subsidiary, where an extensive modernisation programme is proposed and which supplied alumina to Vimetco's aluminium smelter at Alro in Slatina, Romania.

The acquisition provides Vimetco with the opportunity to bring bauxite supply in-house and control costs against a market of rising commodity prices. In addition, it provides a platform from which to capitalise on further resource and alumina refinery development opportunities in Sierra Leone, which are currently under consideration.

SML first operated from 1963 to 1995 and was then shut down for ten years before restarting in 2006. SML is operated by PW Mining International, a full service contract mining company which operates throughout Africa. Sale of bauxite is via off-take agreements which run until Q3 2009.

Dr. Alhaji Abuakaar Jalloh, Sierra Leone's Minister of Mineral Resources, said:

"We are delighted to welcome Vimetco as a strategic investor who is determined to develop not only the extraction of bauxite but also intends to add value to the country by considering further value addition in the form of alumina production."

Christian Wüst, Chief Executive Officer, commented:

"We are extremely pleased to have completed the acquisition of this bauxite mine in Sierra Leone on such favourable terms. Whilst bauxite is abundantly available, opportunities to acquire such mineral assets are few and far between. The acquisition supports our growth strategy and takes us a step closer towards achieving our goal of full vertical integration. By bringing ore production in house, we are well positioned to take advantage of multiple opportunities for further resource and refinery development projects in the region, as well as being able to control commodity costs and supply, all of which will reinforce our position as a leading aluminium producer."

For further information please contact: Simona Gambini Tel +41 (0) 43 299 69 24 Head of Corporate Communications & Investor Relations

About Vimetco

Vimetco N.V. is a global, vertically integrated producer of primary and processed aluminium products with major production assets in Romania and China, a holding company in The Netherlands and a management unit located in Switzerland. Vimetco NV controls an aluminium production capacity of 680,000 tonnes pa and employs some 11,000 staff. Vimetco's shares are listed on the London Stock Exchange.

China aluminum smelter in talks to sell to Alcoa

Reuters India, India - 19 Mon Jul 28, 2008

By Polly Yam

HONG KONG (Reuters) - U.S. aluminum giant Alcoa Inc (AA.N: Quote, Profile, Research) is in talks to buy its first smelter in China, marking a rare foreign incursion into the world's biggest aluminum sector as hopes fade for its joint venture with Chalco, the top Chinese producer of the metal.

The move suggests Alcoa is determined to build a market position in China's aluminum smelting sector, with or without Aluminum Corp of China Ltd (Chalco) (2600.HK: Quote, Profile, Research)(601600.SS: Quote, Profile, Research).

Talks to buy into and expand the smelter in Panzhihua in southwestern Sichuan province moved forward when senior Alcoa executives visited last week. Alcoa had first approached the parent of Ming Zhu Aluminium to buy the smelter in 2003.

"The talks have entered into detail," an executive at the Ming Zhu smelter in Panzhihua told Reuters, without elaborating on the price or timing of a final deal.

Alcoa would invest in a hydropower plant and expand the capacity of the smelter to 200,000-300,000 tonnes in an investment that would cost well over 1 billion yuan ($146.6 million).

"We want Alcoa to come in," the executive said.

Alcoa had been stymied in efforts to invest in an alumina and aluminum joint venture with Chalco, and last year sold off its 7 percent stake in that company.

However, the two did partner in buying a share of Rio Tinto (RIO.L: Quote, Profile, Research)(RIO.AX: Quote, Profile, Research), the world's largest aluminum producer after it took over Alcan, to try and block a takeover by BHP Billiton (BHP.AX: Quote, Profile, Research)(BLT.L: Quote, Profile, Research).

"The market should not be surprised by Alcoa's move. When Alcoa sold Chalco's shares last year, the move indicated the end of the joint venture," said Daiwa Securities analyst Geoffrey Cheng.

"The stake sale gave an option to Alcoa to look for alternative ways to build market position in China."

Alcoa spokesman Kevin Lowery would not confirm the company's interest in the smelter, but said it was Alcoa's "job to be looking for growth opportunities across the world."

"We do that every single day," he said.

The target smelter is designed to have 100,000 tonnes of annual aluminum smelting capacity, but so far has installed production pots only for 10,000 tonnes due to lack of funds from its parent, a Guangzhou-based air conditioner manufacturer, investment officials for the Panzhihua government said.

"The total investment for the smelter was planned for 1.1 billion yuan," a director at the Panzhihua government's investment office said. "But the company so far has injected only about 200 million yuan."

The smelter enjoys preferential fees for hydropower, but will lose that benefit if it does not reach its designed capacity of 100,000 tonnes, he said. China is restricting preferential power fees to encourage economies of scale and force smaller, inefficient plants to shut.

Alcoa had offered about 100 million yuan to buy the smelter last year, but had been rejected, said another investment official of the Panzhihua government.


Alcoa has invested heavily in downstream plants in China, building five aluminum fabricating plants for the production of sheets, plate, foil, auto components, aerospace and commercial fastening systems, according to its website (

Controlling aluminum smelting capacity in China could secure supply of the metal to the plants and reduce costs.

But an agreement to buy half of Chalco's Pingguo project, which at the time had capacity of 130,000 tonnes of aluminum and 800,000 tonnes of alumina, repeatedly stalled over disagreements over power pricing and other matters. Pingguo's capacity has since more than doubled.

Chalco, the world's third-largest alumina producer, was not keen to sell a stake in a bauxite mine that it considered its best resource at a time when Chinese companies were scouring the world for mineral deposits.

When Alcoa sold its stake in Chalco in September for a handsome return of $1.8 billion, that left it free to seek other partners in the smelting business.

It is already behind Alcan, which has a joint venture with provincial-owned Qingtongxia Aluminium Group in Ningxia.

($1 6.82 yuan)

(Additional reporting by Michael Erman in New York; Editing by Lisa Von Ahn)

Russian nuclear corp. plans 4GW plant in Far East

RIA Novosti, Russia - 26/ 07/ 2008

VLADIVOSTOK, July 26 (RIA Novosti) - Russian state nuclear power corporation Rosatom plans to work with aluminum giant UC RusAl to build a 4GW nuclear plant and an aluminum factory in the Far East, a Rosatom subsidiary said on Saturday.

"We have prepared package of proposals for the construction in the Primorye Territory of a nuclear power plant an aluminum plant with production capacity of 600,000 metric tons," said Alexei Kalinin, vice director of Atomenergomash, a supplier of equipment for nuclear plants.

The official, addressing the Pacific Economic Congress in Vladivostok, said some of the power plant's output would supply the aluminum facility, and the remainder will be exported to China and North and South Korea.

To implement the project, "the region's network infrastructure will have to be developed" and "agreements would have to be signed with interested countries," he said.

Rio Tinto Stalls $3 Billion Abu Dhabi Aluminum Smelter As Gas Feed Moves to Other Industries, an Industrial Info News Alert

Posted on: Tuesday, 29 July 2008

Researched by Industrial Info Resources (Sugar Land, Texas) -- As more projects for gas-fired power plants are announced in the Middle East, the gas resource, which once seemed abundant and readily available, has now become a key factor in the viability of industrial projects and development plans. At a time when three new power projects have been announced, Rio Tinto (NYSE:RTP) (London) has canceled or, at best, postponed a $3 billion aluminum smelter planned for Abu Dhabi, as an official policy shift has given priority for natural gas feeds to other industrial applications such as chemicals, fertilizers and liquefied natural gas. In Jordan, Korea Electric Power Corporation (NYSE:KEP) (Seoul, South Korea) has been awarded selected bidder status by Jordan's government to build a 373-MW gas-fired power plant in Al Quatrana. The cancellation of the 700,000-ton-per-year Abu Dhabi smelter does not mean that Rio Tinto is backing off of new projects in the Middle East or elsewhere when the power-supply-production equation can be balanced. According to report by Alcoa (NYSE:AA) (Pittsburgh, Pennsylvania), with a 24% increase in aluminum prices in 2008, demand is forecast to double by 2020, which will require 80 new smelters each with an average production capacity of 400,000 tons per year.

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Vimetco completes upgrade of Alro aluminium mill

Reuters - Tue Jul 29, 2008

LONDON, July 29 (Reuters) - Netherlands-based aluminium company Vimetco (VICOq.L: Quote, Profile, Research) has finished the upgrade of its Alro cold rolling mill in Romania, doubling its processing capacity, the firm said in a statement on Tuesday.

"The revamping of the cold rolling mill marks an important step in increasing the capacity of our flat rolled products operations in Slatina, Romania," Vimetco said in a press release.

The company has invested $4.8 million to modernise the unit in Slatina. The work has boosted capacity to 36,000 tonnes per year (tpy) and Vimetco said it would also improve the quality of flat rolled products, such as sheets and coils.

The plant had been running at full capacity since the end of April, the firm said.

Last week, the company said it had a acquired a bauxite mine in Sierra Leone.

Vimetco has some 680,000 tpy of aluminium smelting capacity in Romania and China.

(Reporting by Karen Norton; Editing by Michael Roddy)

ABB wins $113m smelter order in India

Power Engineering Magazine, OK - 29 July 2008

ABB has won orders worth $113m from Vedanta Aluminum Limited to provide automation and power products, systems and solutions for a greenfield expansion of an aluminum smelter plant in Jharsuguda, in the eastern state of Orissa, India.

ABB will design, supply, build and 24 sets of high-power diode rectifier systems for four aluminum pot lines.

"ABB automation and electrical systems will become the manufacturing backbone of this smelter plant," said Tom Sjoekvist, head of ABB's Automation Products division. "The combination of standard ABB products and systems and our primary metal and minerals expertise creates an unbeatable offering for customers in terms of productivity, reliability and energy efficiency."

The expansion will double the smelter's production capacity of aluminum ingots, rods and rolled products.

ABB's scope of supply also includes a new 400/220-kilovolt (kV) switchyard to supply the new smelter plant with reliable power, as well as a high-performance process control system with fiber optic current sensors, as well as an ABB MicroSCADA control system for the power distribution network , substation switching bays, power and station transformers.

ABB has already supplied rectifier systems for phase one of the Jharsuguda plant expansion in 2007-08. When phase two is complete in 2009, Vedanta's total aluminum smelting capacity will be approximately 1.7m tons per annum (tpa), making it one of the largest integrated aluminum producers in the world.

Aleris Rolled and Extruded Products Europe Announces Price Increases

MarketWatch - July 30, 2008

NEUHAUSEN AM RHEINFALL, Switzerland, July 30, 2008 /PRNewswire via COMTEX/ -- Aleris Rolled and Extruded Products Europe announced today the following price increases:

5% on all 2xxx and 7xxx plate products for aerospace applications

8% on conversion prices for coil coat applications

6% on conversion prices for all other rolled products regarding transactions denominated in Euros and 25% on conversion prices for all other rolled products regarding transactions denominated in United States Dollars

4% on all extruded products

The price increases are in response to increased costs for energy, transport, materials and other items and is effective immediately for all new orders and contracts booked on or after July 30, 2008, that are not covered by existing contractual agreements.

Aleris Rolled and Extruded Products Europe is a global leader in high-quality aluminum products for aircraft & aerospace, automotive and industrial applications with production facilities in Koblenz, Bonn, Vogt, Bitterfeld, Germany and Duffel, Belgium. Aleris Rolled and Extruded Products Europe is a business unit of Aleris International Inc. a global leader in aluminum rolled products and extrusions, aluminum recycling and specification alloy production. Headquartered in Beachwood, Ohio, USA, Aleris operates 47 production facilities in North America, Europe, South America and Asia, and employs approximately 8,800 employees. For more information about Aleris, please visit our Web site at or


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GE Energy gets $500 million UAE aluminum plant contract

MarketWatch - July 30, 2008

By Michael Kitchen

NEW YORK (MarketWatch) -- GE Energy, a unit of General Electric Co. said Wednesday it had received a contract of more than US$500 million to supply equipment to power the Emirates Aluminum production facility. The site is located in the United Arab Emirates and is to be run under a joint venture between Dubai Aluminum Co. and Mubadala Development Co., GE said.

RNCOS Releases a New Report- US Aluminum Market Analysis

MediaSyndicate (press release) - 30-Jul-2008

RNCOS has recently added a new Market Research Report titled, "US Aluminum Market Analysis" to its report gallery. The report is an elaborate study of the aluminum market in the US. It rationally discusses the past and current performance of the market and looks into its future prospects. This report helps the clients to analyze the trends and the developments in the US aluminum market vis-a-vis the global scenario.

The US aluminum industry depends on a variety of economic factors and its future performance is difficult to predict. The forecast given in this report is not based on a complex economic model, but is intended as a guide to the direction in which the market is likely to move.

For our research purpose, the market has been defined in terms of primary aluminum production.

Market Analysis

In terms of both its positive economic and environmental impact, the aluminum industry remains one of the most significant success stories nationally as well as internationally. Due to its benefit, the aluminum industry will shine in future. The global consumption of aluminum products, both upstream and downstream, is expected to double by 2020 annually.

The aluminum industry of the US is the world's largest single producer of primary aluminum. The US industry operates over 300 plants in 35 states, produces more than 23 Billion pounds of metal annually, and employs over 145,000 people with an annual payroll of about US$ 5 Billion. Aluminum is one of the few products and industries left in America that truly impacts every community in the country, either through physical plants and facilities, recycling, heavy industry, or consumption of consumer goods.

Key Findings

- By volume, the US aluminum industry is projected to grow by 210,000 Metric Tons (nearly 9%) during 2007-2011, attributed to enhanced energy supply capacity, new cost efficient production technologies and government support.

- Market demand is largely fueled by the need for aluminum by various industry sectors, particularly transport and packaging sector.

- The aluminum consumption market is highly relied on imported aluminum.

- Aluminum is chiefly imported from a number of countries, such as Canada, Russia, China and Mexico, where the cost of production is relatively less. This makes imported aluminum cost effective, thereby posing a significant challenge for the domestic producers.

- Positive outlook for the construction industry in the US will definitely boost revenue growth of the aluminum industry.

- The industry offers huge opportunities for production equipment manufacturers as it is projected to enlarge its production to meet out domestic consumption demand.

- In spite of the lowering demand from automobile market, aluminum use in automobiles will continue to grow as aluminum content per vehicle is increasing.

Key Players

This section provides an overview of the key facts and financial position of players like Alcoa Inc., Alcan Inc., Century Aluminum Company, Aleris International Inc. and Novelis Inc.

Key Issues & Facts Analyzed

- What are the trends in the US aluminum market with respect to market value, production, consumption, price etc?

- What is import and export situation of aluminum in the country?

- What is the cost of energy and labor in various US states?

- What are the various avenues for growth for aluminum industry in the US?

- What are the challenges associated with this industry?

Research Methodology Used

Information Sources

Information has been sourced from books, newspapers, trade journals, and white papers, industry portals, government agencies, trade associations, monitoring industry news and developments, and through access to more than 3000 paid databases.

Analysis Methods

The analysis method includes ratio analysis, historical trend analysis, linear regression analysis using software tools, judgmental forecasting, and cause and effect analysis.

About RNCOS:

RNCOS, incorporated in the year 2002, is an industry research firm. It has a team of industry experts who analyze data collected from credible sources. They provide industry insights and analysis that helps corporations to take timely and accurate business decision in today's globally competitive environment.

For more information visit:

China's Chalco cuts alumina price 8.6 pct on overcapacity - UPDATE

Xinhua Newsfeed 31-Jul-2008

BEIJING (XFN-ASIA) - Aluminum Corp of China Ltd (Chalco) said it cut the spot price of alumina by 8.6 pct to 3,200 yuan per ton with immediate effect as overcapacity continues to depress prices of the main raw material used in the production of finished aluminum.

This marks the second cut since June.

"Alumina capacity has grown at a faster rate over the past year, so this pressures selling prices. Strong supplies are forcing us to lower spot selling prices, and the market made the decision for us," investor relations manager Zhang Qing told XFN-Asia.

The industry is under severe margin pressure, so further cuts in the price of alumina would be hard to digest, she said.

"The 3,200 yuan (per ton) level is already near ex-mine prices for some smaller producers, with profit margins very tight at this price," Zhang said.

Margins in the finished aluminum smelting business are not much healthier.

"Inflation has really hit electrolytic aluminum profits as well, with upstream costs for electricity and coal rising strongly," Zhang added.

On June 3 Chalco cut the alumina spot price by 16.7 pct to 3,500 yuan per ton.

At 11.09 am, shares of Chalco were down 5.24 pct at 7.6 hkd. (1 usd 7.8 hkd; 6.8 yuan)

Kaiser Aluminum releases August surcharges tied to higher fuel prices - July 31, 2008: 12:10 PM EST

NEW YORK (Associated Press) - Aluminum products maker Kaiser Aluminum Corp. announced its surcharges Thursday on shipments to help cover higher energy costs.

The energy surcharge for August shipments of fabricated products will be 4.8 cents per pound for 6xxx alloys and 6.6 cents per pound for all other alloys.

The charges, which are updated monthly, are tied to indices from the Department of Energy.