AluNews - June 2008

Saudi Arabia:Maaden and Rio Tinto aluminium venture to cost USD7.53 bln more than expected

Stockhouse, Canada - 6/01/2008

Saudi Arabian Mining Co (Maaden) said an aluminium venture it is developing with Rio Tinto will cost $530 million more than expected, or 28.24 billion riyals ($7.53 billion), because of higher prices.

The companies may also expand the project's planned capacity, adding to costs further, state-owned Maaden said in a statement received late on Wednesday. It was not more specific.

A delay in awarding contracts for the construction of an electricity generating plant to power the project will not affect the overall schedule, it said.

The higher price is 'taking into account projected inflation and other costs,' Maaden said without being more specific. The company, which is looking to raise 9.25 billion riyals in July in the Middle East's biggest mining IPO, said in April last year that the project would cost 26.25 billion riyals.

Across the oil-exporting Gulf, companies have been raising their forecasts for the cost of projects, leading to delays and, in some case, cancellations.

The region is booming on record oil prices, fuelling demand for contractors, labour and materials, compounded by higher global prices for goods such as steel. 'Finalisation of contracts for the construction of the power plant has been delayed. However, this will not cause any delays to the overall schedule for the project,' Maaden said. The project involves building a 1,400 megawatt oil fired plant, an alumina refinery with capacity of 1.4 million tonnes per year and an aluminium smelter with capacity of 720,000 per tonnes year, according to Maaden's April 2007 statement, when it agreed to develop the project with Alcan.

Rio Tinto subsequently bought Alcan. 'Recently conducted studies have determined that it is feasible to increase the production capacities of both alumina and aluminium,' Maaden said, without being more specific. 'These increased production capacities, together with updated capital costs estimate, will lead to an upward revision of project costs,' it said. On its website, Maaden says it could add another 1.4 million tonnes per year of capacity to the alumina refinery. Alumina is semi-processed bauxite - the raw mineral - used to make aluminium.

Saudi Arabia is the world's largest holder of crude oil supplies. Energy is the single biggest cost in making aluminium.

Aqeel Al-Onazi, a Maaden corporate communications official identified in the statement, could not immediately be reached for comment. Thursday and Friday are the weekend in Saudi Arabia.

Source: Arabian Business go to topprint

Maaden to launch debt syndication for aluminium smelter by year end

MEED, United Arab Emirates - 03 June 2008 13:34 GMT

Author: Matthew Martin

The project finance debt on the $8bn Maaden aluminium complex is expected to be launched to the banking market before the end of the year, according to sources close to the deal.

The deal is expected to involve debt finance of $4-5bn. The project involves the construction of an aluminium refinery, a smelter and a power station at the Az Zabirah bauxite mine, in the north of Saudi Arabia.

An initial public offering of 40 per cent of the project company is also expected to occur later this year, which is intended to raise $2.47bn.

JP Morgan is advising the company on the share sale, while Riyad Bank and Standard Chartered are acting as financial advisers for the project finance.

Author: Matthew Martin. Senior Gulf Correspondent, Dubai

Rio's "good news" on suspending smelter work

Mining MX, South Africa - 03 Jun 2008

Michael Coulson

Amid all the bad news in South Africa – surging consumer and retail price inflation, deteriorating business confidence, plunging motor vehicle sales and a ballooning trade deficit – let’s at least take solace in the best news of the week: Rio Tinto has "suspended work" on its aluminium smelter at Coega.

"Suspended" looks like an understatement. Rio has said that 200 people were working on Coega, including 60 in South Africa; that team will be reduced to about seven. I won’t be surprised if natural attrition trims that number to about six; or about five; or about. . .

Rio says it "may resuscitate" the project in three or four years. Well, we shall see. After all, in three or four years Rio may well not still be in existence as an independent company: on the same day it announced the Coega delay, BHP Billiton took the next steps in its formal bid for Rio.

And it’s not as if Rio has turned bearish on aluminium. In the same investor presentation last week that broke news of the Coega delay, it referred to plans to spend $1bn on expanding its Alma facility in Quebec, while next month production will start at the Sohar smelter in Oman, of which Rio is managing partner, and has a 20% equity stake.

With capacity of 360,000 tonnes per annum, this will be the largest potline in the world and be among the 10% lowest cost producers. A second potline is already being considered.

So the Coega decision is a direct consequence of South Africa’s inability to guarantee that Eskom will honour the electricity supply contract it so eagerly signed a couple of years ago.

Rio Tinto’s reassurance that Coega remains in its plans sounds like flannel, to me. Eskom is already warning us that power shortages will continue until at least 2013, which is already beyond the "three or four year" nominal delay. If I were involved in Rio’s strategic planning, I would be putting Coega firmly on the back burner.

And for South Africa, that won’t be a bad thing. Aluminium smelters were a great way of absorbing spare generating capacity when it was available. I can remember at the time wondering idly what would happen when there was no more spare capacity and being reassured that I shouldn’t worry, Eskom’s continuuing expansion programme would ensure that this would never happen.

Well, we all know what happened to that.

The fact is that aluminium smelters, especially in a country with no supplies of the raw material, bauxite – which is one of the few minerals lacking in our rich resource base – are simply a way of exporting electricity. They don’t create many jobs, and the capital investment per job is enormous.

They were a luxury we could afford in the 1980s, but are now expensive white elephants that absorb capital and power that could much more productively employed elsewhere. In terms of power alone, an aluminium smelter consumes as much electricity as a medium-sized town.

Ironically, that’s the point that the unnamed senior Standard Bank executive – widely thought to be chairman Derek Cooper -- made at a high-level get-together that caused BHP Billiton, owner of the Hillside smelter, to threaten to pull its R2.4bn-a-year business from the bank.

BHP Billiton called the executive’s remarks "reckless, provocative and irresponsible." Well, they may have been provocative, but in the circumstances I would call them neither reckless nor irresponsible, and the spirit behind them is justified by Rio’s decision.

This intemperate threat has now been withdrawn after Standard ate humble pie – and perhaps after BHP Billiton contemplated the dislocation to its business that firing Standard would have entailed. Happily, it’s all turned out to be a storm in a teacup, in which if anything it’s BHP Billiton that did its image more harm.

Nalco lines up Rs 40k cr expansion

Sify, India - Thursday, 05 June , 2008, 09:36

Promit Mukherjee/ DNA MONEY

National Aluminium Company Ltd (Nalco), conferred with the navratna status by the government on Wednesday, has announced a Rs 40,000 crore spend till 2012 to expand capacity.

Nalco will increase its bauxite mining capacity to around 90 lakh tonnes, alumina refining to 30 lakh tonnes, aluminium smelting to 6.3 lakh tonnes and power generation to 1,700 mw per annum by the end of its third phase of expansion, in 2012, a release stated.

Among the greenfield projects planned is a mining and refinery complex in Andhra Pradesh, which would soak up Rs 7,000 crore. The bauxite mine's capacity will be 42 lakh tonnes, while the refinery will have a capacity of 14 lakh tonnes.

In Orissa, the company will set up a smelter and power complex in Ib valley in Jharsuguda district with an investment of Rs 8,500 crore. The project envisages a 5 lakh tonne smelter and a 1,260 mw coal-based power plant.

Nalco has signed an agreement with Bharat Earth Movers Ltd for production of aluminium rail wagons and will set up a cement plant based on fly ash with Shree Cement and the Cement Manufacturing Company at Angul at a cost of Rs 300 crore.

The company plans to set up several facilities overseas, too.

It will invest Rs 14,000 crore to set up a 5 lakh tonnes-a-year smelter and a 1,250 mw captive power plant in Indonesia over the next five years.

In South Africa, it will spend Rs 16,000 crore for a smelter and power plant.

In Iran, it will build a 3.1 lakh tonnes-a-year smelter at a cost of Rs 8,000 crore.

Nalco eyes Tajikistan, Congo for investment in smelters, Thailand - June 5th, 2008 - 11:26 am

Bhubaneswar, June 5 (IANS) National Aluminium Co Ltd (Nalco), India’s second biggest producer of aluminium, Thursday said it is exploring the possibility of investing in smelters in Tajikistan and Congo. The company, which is also planning to set up smelter and power projects in Indonesia, South Africa and Iran, said it is eying Tajikistan and Congo because hydel power is cheaply available in those countries.

"We may go to Tajikistan and Congo to invest in smelters," Nalco chairman and managing director C.R. Pradhan said.

"A lot of hydel power is cheaply available there and we find that they are not able to manage it. Tajikistan has already written to us and we are exploring the possibility of investing there and in Congo," he said.

Incorporated in 1981 as a public sector enterprise, Nalco is one of Asia’s largest integrated aluminium complexes, encompassing bauxite mining, alumina refining, aluminium smelting and casting, power generation, rail and port operations.

Commissioned in 1985-87, Nalco has emerged as a star performer in the production and export of alumina and, more significantly, in propelling self-sustained growth.

While its registered office is in Bhubaneswar, its plants are located at Damanjodi in Orissa’s southern district of Koraput and in Angul district.

The company, which is a flagship public sector undertaking of the ministry of mines, was granted Navratna status by the central government last month.

The Navratna status is conferred on select central public sector enterprises (CPSEs) when they become significant players in the economic development of the country.

The Navratna status has enabled Nalco to enjoy more managerial powers and commercial autonomy to chart its own course in the world market.

In order to emerge as a company of global repute, the company Wednesday said it has drawn up ambitious growth plans to invest around Rs.400 billion in the next five years on its various expansion projects both in India and abroad.

Earlier this year, Nalco signed a deal with Indonesia to set up a 500,000-tonne smelter and a 1,250 MW captive power plant in that country. Nalco plans to invest around Rs.140 billion in this greenfield project.

Nalco is also exploring the possibility of setting up a smelter and power plant in South Africa at an investment of around Rs.160 billion. In Iran, a 310,000 tonne smelter has been planned.

Nalco is not only planning several projects abroad but also is planning brownfield and greenfield growth projects within the country, Pradhan said.

Alcoa President and CEO Klaus Kleinfeld Presenting at UBS Global Basic Materials Conference (Pressemitteilung), Austria -2008-06-05

UBS Global Basic Materials Conference - Alcoa President and CEO Klaus Kleinfeld will speak at the UBS Global Basic Materials Conference on Thursday, June 12, 2008, at 1 p.m. London time (8 a.m. EDT). Mr. Kleinfeld will discuss Alcoa's strategic initiatives and priorities.

His remarks will be webcast at Slides used during the presentation will

be available in the Investor section of Alcoa's website, prior to the presentation. A replay will also be available on following the presentation.

© Business Wire 2008

Rio Tinto's Saudi Smelter to Start by 2012, Arab News Reports

June 5, 2008 (Bloomberg)

Rio Tinto Group expects to produce aluminum from its planned smelter in Saudi Arabia by late 2011 or early 2012, the company's Chief Executive Tom Albanese was cited as saying by Arab News.

The first stage of the project, developed in a joint venture with state-owned Saudi Arabian Mining Co., will produce 740,000 tons of aluminum, Albanese said, according to the newspaper.

To contact the reporter on this story: Shaji Mathew in Dubai at

Saudi Arabia: Ma'aden builds aluminium industry from scratch

Euromoney Magazine, UK -June 2008

Alcoa: Last Man Standing

Barron's -MONDAY, JUNE 9, 2008


Alcoa's stock doesn't reflect the bright prospects for the world's largest aluminum producer, given that worldwide demand for the metal is rising. And if Alcoa agrees to a takeover, the shares will really be on a roll.

ALCOA MAY BE THE BIGGEST prize in the consolidating global mining industry.

Shares of the world's largest aluminum company (ticker: AA) have badly trailed those of international miners BHP Billiton (BHP), Rio Tinto (RTP), Companhia Vale do Rio Doce (RIO) and Xstrata (XTA.London) during the commodity bull market of recent years. Alcoa shares, at 40, have risen 70% since the end of 2002 while BHP is up 632%.

Alcoa's smelters, like the one in Iceland shown here, produce 10% of the world's aluminum. Demand for the metal is rising 6% a year globally, boosting prices.

At year-end 2002, Alcoa was the biggest miner, ranked by market value. At $33 billion now, its market capitalization doesn't crack the top 10. Australia's BHP is tops at $225 billion and it could hit $400 billion if its hostile takeover bid for No. 3 Rio Tinto succeeds.

Several mining giants, including Xstrata, have expressed interest in expanding into aluminum, and Alcoa is the only sizable independent Western aluminum company left, following Rio Tinto's $43 billion purchase of Canada's Alcan last year. Worldwide demand for aluminum is rising 6% annually, powered by Asia's expanding economies; China alone consumes 37% of global output.

Aluminum prices, sleepy in recent years, are up 20% in 2008, to $1.30 a pound. Prices could go even higher -- perhaps hitting $2 by early 2009 -- thanks to tightening supplies of bauxite, the key raw material for aluminum production, and rising costs for electricity, which is critical to making the metal.

Alcoa now is valued at a reasonable 13 times projected 2008 profits of $3 a share and 10 times estimated 2009 profits of $3.80. John Hill, a mining analyst at Citigroup, sees aluminum averaging $2 a pound in 2009, boosting Alcoa's profits to $4.79 a share. Hill has a price target of 50 on the shares. In a takeover, Alcoa might fetch $60, based on its scarcity value and Alcan's deal price.

Alcoa's managers, led by Chairman Alain Belda and new CEO Klaus Kleinfeld, have shown little interest in selling. A hostile offer would be difficult because Alcoa is incorporated in Pennsylvania, whose laws favor targets of unfriendly offers. Skeptics note that there have been periodic takeover rumors, but nothing has materialized.

Aluminum demand is growing because the metal is lightweight, recyclable and cheaper than copper. In a client note last month, Citi's Hill wrote that Alcoa has these acquisition attributes: "a defining global franchise...lack of a controlling shareholder, growth potential from properties that would be difficult to duplicate and a non-Himalayan stock chart."

Table: Mining LaggardAnnual aluminum demand rose to 38 million tons in 2007 from 22 million in 1998. But prices have not kept pace with other metals largely because of the huge growth in Chinese smelter capacity. Chinese producers, however, are being squeezed by higher costs for alumina and electricity. Alumina -- refined bauxite -- is converted into aluminum in electricity-hungry smelters.

A well-positioned Alcoa produces 20% of the world's bauxite and alumina, and more than 10% of the globe's aluminum. Alcoa has irreplaceable assets -- mines, refineries and smelters -- on several continents. It also is one of the most environmentally conscious miners.

Alcoa should get 80% of its profits this year from alumina and aluminum production. Investors have been disappointed by the performance of Alcoa's aluminum fabrication and consumer units. It has been exiting some of these businesses, recently selling its consumer division, including Reynolds Wrap, for $2.7 billion.

Belda, 64, has an imperious reputation on Wall Street. The Moroccan-born executive, a career Alcoa employee, was CEO from 1999 until last month. Some suspect that Alcoa moved its headquarters to New York in 2000 because the cosmopolitan Belda wanted out of Pittsburgh, its longtime home. Alcoa now has 60 employees in its Park Avenue office, versus 1,400 in Pittsburgh. The company says a New York presence is important for a global miner.

The Bottom Line:

Based on its business fundamentals, Alcoa could see its shares, recently around 40, jump 25% in a year. If it becomes a takeover target, the upside is closer to 50%.The Street was puzzled by Alcoa's decision to invest $1.2 billion alongside China's aluminum leader, Chinalco, for a 9% stake in Rio Tinto this year. Alcoa paid a 20% premium for the stake, and that didn't sit well with some investors, who would have preferred that it buy back more of its own shares. Alcoa said the investment was attractive and important for fostering its relationship with Chinalco. The suspicion, however, is that Alcoa wants to get a piece of Rio Tinto's Alcan assets if BHP acquires Rio Tinto.

In another dubious move, Alcoa this year added ex-Merrill Lynch CEO Stan O'Neal to its board. Merrill's disastrous performance led to his ouster in 2007.

Alcoa looks appealing, based on aluminum fundamentals or takeover potential. As an underperformer in a hot sector, it might even lure someone like Carl Icahn, the activist investor who prefers companies whose merits can be summarized on the back of an envelope.

Chalco starts operation of alumina project in Guangxi

SteelGuru, India - June 09, 2008

Interfax China quoted China Nonferrous Metals Industry Association said Chalco Guangxi Company Ltd a subsidiary of dual Shanghai and Hong Kong listed Aluminum Corporation of China Company Limited kicked off trial operations at an 880,000 tonne alumina project earlier this week.

The project started construction in December 2005 with total investment of CNY 4.62 billion. It is scheduled to be fully operational by the end of June raising Chalco Guangxi's total alumina capacity up to 1.8 million tonnes per annum.

According to the report the project located in Pingguo County of the Guangxi Zhuang Autonomous Region consisting of two production lines is designed to produce a total of 880,000 tonnes of alumina per annum.

Guangxi Huayin Aluminum Company Limited a joint venture between Chalco and China Minmetals Corp located in Debao county of Guangxi, will fully commission a 1.6 million tonne alumina project on June 18th 2008.

RusAl to spend $300mln on terminals at northwest Russian port

RIA Novosti, Russia - 08/ 06/ 2008

MOSCOW, June 8 (RIA Novosti) - United Company RusAl will spend over $300 million on building two terminals at a port in northwestern Russia to supply aluminum products and alumina to world markets, the company said on Sunday.

UC RusAl became the world's largest aluminum producer after a March 2007 merger between RusAl, rival Sual, and Swiss Glencore's alumina assets.

On Sunday, UC RusAl and Ust-Luga Company, which is building a sea merchant port at Ust-Luga in the Gulf of Finland outside St. Petersburg, signed a memorandum on implementing a project to build the terminals, RusAl said in a statement.

"The project will be RusAl's first step toward implementing a program to create its own specialized port capacity to enable the efficient transshipment of raw materials and finished products, in view of the company's plans to boost output," RusAl said.

Under the document, the parties intend to bring the terminals into operation by 2011, with initial handling volumes of 2.5 million metric tons of alumina and 2 million metric tons of aluminum per year. The capacity of both terminals is expected to rise to 4.5 million metric tons of alumina and 3.5 million metric tons of aluminum annually, the statement said.


Eurasia Daily Monitor, DC - Jun 6, 2008

By Roman Kupchinsky

Romania’s important aluminum industry has long held an attraction for Russian companies. Two years ago their efforts came to the attention of the Romanian Intelligence Service (Serviciului Român de Informaţt?ii), the SRI, which viewed these initiatives with growing concern.

A 2006 memo from the SRI stated that Russian oligarch Oleg Deripaska had made an attempt to take over the entire Romanian aluminum industry, when the state-owned aluminum enterprises Alro Slatina, Alprom Slatina and Alum Tulcea became slated for privatization by the government of Adrian Nastase.

Deripaska, however, failed to win the tenders. The Romanian aluminum companies, Alum Tulcea and Alro Slatina, were sold to the Marco group, established by the controversial commodities trader Marc Rich and later acquired by the Russian/Israeli magnate Vitaliy Machitski.

The SRI memo notes that the Marco Group is controlled Conef Energy SRL, which in turn is owned by Nonef SA, also a part of the Marco Group. Conef acts as an intermediary in the purchase of gas from Gazprom. The SRI claimed that Machitsky owned 99.97 percent of Conef.

The Romanian dealings of Conef do not appear to be totally innocent. Machitsky attempted to keep his 2002 bid to buy ARLO Slatina hidden behind a web of off-shore companies he controlled. His lawyer, David Lee Sherman, explained this by saying, “It would be better to negotiate with the Romanian government through a U.S. or Israeli connection, rather than a Russian company, because of the perceived antipathy of Romanians to Russians.”

Machitsky and his former partner, Alexander Krasner, according to a 2005 transcript of the proceedings in the Queens Bench Division, a commercial court in London, conceived a plan drafted by Machitsky which they referred to by its Russian name as the “Vostok Plan,” or the “Eastern Plan.”

The "strategic objective" of the “Vostok Plan” was defined as the creation of a vertically integrated operation that would give the men power over everything from a plant producing raw materials (SC Alum SA, which Machitski's enterprises acquired), to a power plant, to a plant producing primary products (ALRO) to a plant for manufacturing products out of the primary products (Alprom of Romania). The plan also detailed the participants and their strategy including lobbying people in positions of political influence, the head of consulting banks and the state privatization agency.

The Romanians were concerned that Machitsky had not only acquired ownership in the country’s aluminum industry but apparently controlled a substantial percentage of Romania’s gas imports from Russia.

On April 2, 2007, Gazpromexport, Gazprom’s foreign trading subsidiary headed by Alexander Medvedev, signed a contract with Conef to sell Romania up to 2 billion cubic meters of gas annually from 2010 to 2030. Under the contract the aggregate supply volume would reach 42 billion cubic meters.

In April 2007 Gazprom signed long term gas supply contracts with three Romanian gas companies--Romgaz, Transgaz and Conef. The contracts provide Gazprom with long-term access to gas shipping facilities in Romania. At this time Gazprom also agreed to increase gas deliveries to the Alro Slatina aluminum plant owned by Machitski’s Marco Group. The price Gazprom charged Conef for this gas was classified a “commercial secret.”

Since becoming President of Romania in May 2007, Traian Basescu has issued several warnings about the Russian expansion into Romania. His main target has been Gazprom: “Gazprom is more efficient than the Red Army in making Europe dependant on Russian resources,” Basescu stated last year.

Basescu has often indicated his support for energy projects that bypass Russia, pointing to reports from analysts that European gas imports will grow from the present 525 billion cubic meters (bcm) to 740 bcm by 2030. However, recent estimates indicate that the EU has taken significant steps toward diversifying its gas supplies, and Norway is now poised to become the EU’s largest provider of gas. This, along with rising LNG imports from North Africa and growing Russian domestic consumption, might negate Gazprom’s dreams of controlling the European gas market.

The Romanian gas market could well feel a financial impact from this development. First and foremost it stands to lose millions of dollars in transit fees for Russian gas transiting its territory to Greece and Turkey.

Machitsky’s Conef, on the other hand, seems poised to take advantage of the allegedly sweetheart deal it struck with Gazprom and will be able to produce aluminum below the costs of other European manufacturers in the coming years.

The question that remains unanswered is why did Gazpromexport agree to this separate deal? Is there a backroom agreement between Gazprom management that Conef will sell them the Romanian aluminum business in the near future?

Can the Romanian government prevent such a maneuver?

(“Evenimentul Zilei,” January 26, 2007;, April 14; Krasner v. Machitski and others Queen’s Bench Division (Commercial Court) [2005] EWHC 1787; Kommersant; RIA Novosti, Central Europe Digest).

Kaiser sets buyback, raises dividend
MarketWatch - June 9, 2008
By Michelle Donley
NEW YORK (MarketWatch) -- Kaiser Aluminum Corp. (KALU:KALU)said Monday that its board has approved the repurchase of up to $75 million of the company's common stock. The Foothill Ranch, Calif-.based producer of fabricated aluminum also declared a quarterly dividend of 24 cents a share, which is a 33% increase over the prior quarter's payout. The dividend is payable Aug. 15 to shareholders of record at the close of business July 25. Shares of Kaiser closed Friday at $64.10.

MHI Wins Order from Iceland for Five Geothermal Power Generation Plants, 225 MW in Total; Cumulative Worldwide Orders to MHI Now Exceed 100 Units
Japan Corporate News (press release), Japan - June 10, 2008
Tokyo, June 10, 2008 - (JCN Newswire) - Mitsubishi Heavy Industries, Ltd. (MHI), in a consortium with Balcke-Durr GmbH, a German engineering company, has received a turnkey order from Reykjavik Energy (Orkuveita Reykjavikur) of Iceland, to build five 45 MW (megawatt) geothermal power plants, 225 MW in total, in the suburbs of Reykjavik, the nation's capital.
Deliveries of the plants will begin in October 2010 and be completed by February 2012. MHI has previously received several orders for geothermal plants for Iceland and the latest order brings the total number of the plants to the country to 15, collectively providing 565 MW in power generation capacity. The new order also takes MHI's cumulative geothermal plant orders worldwide beyond the 100-unit mark.
The five geothermal plants newly ordered will be built in a geothermal field approximately 30 kilometers east of Reykjavik. As the government of Iceland is planning to invite aluminum refineries to this area, industrial-use electricity is expected to be in short supply in the future. The new power plants are intended to provide electricity to newly building refineries.
The steam turbines for the plants on order will be manufactured by MHI's Nagasaki Shipyard and Machinery Works, generators will be made by Mitsubishi Electric Corporation, and Balcke-Durr will fabricate cooling equipment. Mitsubishi Corporation is handling the trade particulars.
Iceland is located along the fissure where the Earth's crust separates into the Eurasian and North American plates, and as a country of numerous volcanoes, Iceland is well suited to use of geothermal energy. Iceland generates nearly all its electricity from renewable energy and uses virtually no fossil fuels such as coal and oil. Because water is available in abundant supply, the country generates 80% of its electricity by hydropower, and most of the remainder is produced by geothermal power.
Outside Japan, to date MHI has received orders and delivered geothermal power plants to many countries worldwide. Their collective power output, including those on order, exceeds 2,700 MW. On the strength of these proven achievements and the company's expertise in this area, MHI will now further fortify its global marketing activities for geothermal power plants as a clean energy resource that does not emit CO2, in addition to its promotion of plants that rely on other natural energy sources such as wind power, hydropower and solar energy.

Vedanta to Invest $20 Billion to Expand in India, FT Reports
Bloomberg June 10, 2008
By Debarati Roy
Vedanta Resources Plc plans to invest $20 billion in the next four years to expand power generation and metal production in India, the Financial Times reported, citing chairman Anil Agarwal.
Vedanta plans to spend $8.8 billion to raising production of zinc, copper and aluminum to 1 million metric tons each, the newspaper said. Vedanta also plants to raise iron ore production capacity at its Sesa Goa Ltd. unit to 25 million tons annually.
The company plans to invest about $10 billion on power plants to generate 10,000 megawatts of electricity, the report said. Vedanta could achieve that growth by expanding production rather than acquiring assets, the report cited Agarwal as saying.
Vedanta had earlier said it plans to invest $12.5 billion by 2012 to raise power generation and metal production.
To contact the reporter for this story: Debarati Roy in Mumbai at

New Aluminum Smelter in Helguvík
IcelandReview, Iceland - 09/06/2008
The constructing of a new aluminum smelter in Helguvík has begun. The ground was broken on Saturday, and the first pot room is supposed to be ready in 2010. A handful of protestors gathered, but they where promptly removed by the police.
The smelter will have a production capacity of 150.000 tons pr. year and is expected to begin smelting in 2010. The Nordurál company which runs the smelter has still to file for a license for the smelter as well as permission for emission of greenhouse gases. Morgunbladid reports.
A group of protestors gatherhed up in Helguvík on Saturday to protest the smelter, the protestors claimed that the smelter will be polluting and would prevent tourism in the area. Three of them were taken away by the police.
Members of the government as well as members of the town council in Sudurnes, where Helguvík is located said that the smelter would be a big advantage for the towns near Helguvík. 'This means around 1000 well paid jobs here in Sudurnes […] this is extremely significant for us' Árni Sigfússon, the major of Reykjanesbær said.

Alcoa of Australia declares force majeure

Reuters - Tue Jun 10, 2008

NEW YORK, June 10 (Reuters) - Aluminum producer Alcoa Inc (AA.N: Quote, Profile, Research) declared a "force majeure" on Tuesday because of gas supply disruptions from an explosion in Australia and said its second-quarter profit would be 2 cents to 3 cents lower per share as a result.

Alcoa of Australia, which is 60 percent owned by U.S. based Alcoa and 40 percent owned by Alumina Ltd (AWC.AX: Quote, Profile, Research), notified customers it was declaring "force majeure" on its supply contracts for alumina, the raw material it uses in its smelters to produce aluminum. Under "force majeure," certain conditions of a contract may be suspended.

The action follows an explosion at Apache Energy's (APA.N: Quote, Profile, Research) Varanus Island facility of Western Australia, the complete shutdown of Apache's gas production operations there and a declaration of "force majeure" by Apache to all customers.

Alcoa of Australia is still receiving gas from its other supplier, but the full extent to which alumina production will be affected is uncertain, the company said.

The financial impact on Alcoa second-quarter results is expected to be between 2 cents and 3 cents per share, Alcoa said. (Reporting by Steve James; Editing by Toni Reinhold)

Aluminum Export Beats Fish

IcelandReview, Iceland - 12/06/2008 | 12:09

Iceland’s estimated export income for 2008 suggests that the export of aluminum will exceed fish as the largest export of the country.

The estimated export value of aluminum for 2008 is 165 billion ISK (2.1 billion USD). That is twice the income of last year. Exports in the fishing industry are estimated to total around 130 billion ISK (1.6 billionUSD) so the aluminum export will be 45 percent of Iceland’s export, with sea products sinking to 36 percent. Morgunbladid reports.

In 2002, the aluminum export was 19 percent of total exports and sea products 63 percent. The country’s largest aluminum smelter, Fjardarál in Reydarfjördur, became operational in 2002.

The efficiency of Icelandic aluminum smelters increased by 70 percent from 2007 to 2008. Both the smelters in Grundartangi and Straumsvík increased their smelting capacity and Fjardarál smelter, which had been under construction, was ready to smelt at its maximum capacity. In 2012 when the smelter in Helguvík is scheduled to be operational, the total aluminum production is supposed to be over one million tons of aluminum.

Since it is suggested that imports will decline in 2008, a continuing increase in aluminum export will have a positive impact on Iceland’s trade deficit in 2008.

Alcoa gets 40% share of Vietnamese joint venture, MA 6/12/2008

By Tom Stundza

Vietnamese Prime Minister Nguyen Tan Dung has allowed Vinacomin, the Southeast Asian country's largest mining firm, to sell Alcoa of the U.S. a 40% stake in a joint venture to produce 600,000 metric tons of alumina a year from the central region. Alumina is the raw material used in aluminum production.

The prime minister has permitted Vinacomin to hold a 51% stake in the joint venture and offer 9% to other domestic investors. The government will get a 10% royalty on net profit each year the alumina joint venture is in operation.

To help speed up alumina production in the central region, which has an estimated 5.5 billion tons of bauxite ore, the government has also allowed Vinacomin to offer a 20% stake in another alumina joint venture to China's Yunnan Metallurgy Group.

Chinalco to Start Constructing Australian Project Next Year

RedOrbit, TX - Friday, 13 June 2008, 12:00 CDT

Chinalco to start constructing Australian project next year

BEIJING, June 12 (Xinhua) -- Aluminum Corp of China (Chinalco), one of the world's leading producers of both aluminum and alumina, said Thursday it hoped to begin construction of the Aurukun bauxite mining project in Australia's northeastern state of Queensland at the end of 2009.

With a planned investment of 3 billion Australian dollars (about 2.8 billion U.S. dollars), the mining project, owned by Chinalco's aluminum subsidiary Aluminum Corporation of China Limited (Chalco), is the largest investment deal by a Chinese company in Australia.

A feasibility study on the bauxite project was started at the end of last year. It was expected to last for about two years, during which an environment evaluation would also be finished, said an official with the Chalco overseas development department.

Chinalco signed a mining agreement with the government of Queensland in March 2007. It then signed an agreement on land use with the natives of the Aurukun community in May that year. With the two agreements, the company won the mining license issued by Queensland in September.

Gina Castelain, a native of Aurukun who visited Chinalco with a delegation from the community, said the project would not only increase jobs and training opportunities for locals, but would also promote business development in the community.

Xiao Yaqing, Chinalco general manager, said the Aurukun project would be open to any co-investor interested in the project during its financing process before the construction.

The Aurukun bauxite resources amounts to about 420 million tons. Chinalco plans to build a bauxite mine capable of realizing 10 million tons annually and an alumina plant with a production capacity of 2.1 million tons annually, a Chinalco source said. The company also pledged environmental protection and energy conservation.

Overseas mining resources are important for Chinalco, which has shifted its development strategy to become a diversified international mineral company.

China is now the world's largest aluminum-products maker and consumer. The country's bauxite mine resources, however, only account for two percent of the global total.

(c) 2008 Xinhua News Agency - CEIS

Chinese firms seeking to buy assets shift focus to Europe

Chinese companies seeking to buy assets abroad may be shifting their focus to Europe because political concerns are more muted on the continent than in the United States, bankers said yesterday at a Beijing conference on mergers.

"The next big chunk in mergers and acquisitions is in China and Europe," said Bank of China's Vice President Zhu Min. "People are still looking for technology before they look for markets and distribution."

Zhu's comment underscores the push by Chinese companies, including closely held Fanerdun Group, to put up factories and trade centers in Europe to sell consumer goods ranging from clothing to electronic appliances and toys. Ping An Insurance (Group) Co, China's second-largest insurer, agreed to buy half of the asset management unit of Brussels-based Fortis in March.

China's government, grappling to contain the world's largest foreign-currency reserves, which soared to a record US$1.68 trillion on March 31, has been prodding state-owned companies, including oil explorer CNOOC Ltd and smelter Aluminum Corp of China Ltd, to buy oil fields and mines abroad to feed industrial demand in the fourth-largest major global economy.

CNOOC may shift its attention to Africa and the Middle East, Chief Financial Officer Yang Hua said at a Shanghai forum on November 1, after the company's August 2005 attempt to buy California-based Unocal Corp was blocked by US lawmakers.

"The political backlash over CNOOC's Unocal acquisition was totally unexpected," said Goldman Sachs Group Inc's China Investing Banking President Cai Jinyong.

"Chinese companies will continue to look at overseas targets, but the success rate won't be very high because of the political and execution risks."

Former American Treasury Secretary John Snow called abandoned deals by CNOOC and DP World, owned by the Dubai government, to invest in the US "aberrations."

DP World forsook its bid to buy US ports after a 2006 congressional outcry.

"They don't reflect the mainstream of our behavior," Snow, now chairman of Cerberus Capital Management LP, the US$21-billion New York-based buyout firm, said at the Beijing conference yesterday.

Snow advised that to avoid political obstacles, Chinese companies looking to invest in the US should visit the congressmen and senators in the states where their target investments are located.

(Shanghai Daily June 13, 2008)

No dividend for Aluworks shareholders

The Statesman Online, Ghana 13/06/2008

Adu Koranteng

Shareholders of Aluworks, yesterday, unhappily walked out of the Fiesta Royal Hotel in Accra, after the Board of Directors of the company announced they would not be entitled to dividends for the 2007 financial year as the company was experiencing deep financial and operational crises.

The Board of Directors cited the unstable conditions in the country's manufacturing sector, high cost of production, the energy crises, high cost of imported materials and the shutting down of Valco smelting plant which used to serve the company with refined materials, as the main challenges that have hindered its success in the stipulated financial year.

Even though the company recorded a turnover of about GH¢52 million, a 6% increase against the previous year's record of GH¢49 million, the gains were overshadowed by what officials termed high operational cost.

The company, for the first time in 15 years, recorded a loss of GH¢4.40million cedis out of which GH¢1.81million was used for a redundancy exercise to promote efficient and cost effective operations. As part of the redundancy exercise, some 88 workers of the company were relieved of their posts to save the company from generating more operational losses.

The Managing Director of the company, Emmanuel Sarkodie, in an interview with The Statesman, assured that in spite of the severe challenges experienced last year they were likely to make amends in the 2008 fiscal year and further generate enough profit to expand their scope of operation.

However, these challenges are temporary and could never force the closure of the company due to the enormous demand for aluminum products in the 21st century. This, he said, gives much hope for capacity and operational build ups for continuous attainment of operational success.

Already, some "painful" measures aimed at sustaining their operation, reducing cost of production and creating value addition for profitability had already been taken and hoped those measures would go a long way to improve their performance in the open market, he told this paper.

He noted that the importation of inferior aluminum products from China and India has made the local market in which it supplies 60% of its produce unfavourable and called on government to intervene to save the situation.

The Board Chairman of the company, William Ekroo Inkumsah, at the Annual General Meeting said notwithstanding the disappointing results for the year under review, they would continue with their coil coating line and the second Cold Mill projects to help the company to increase its production and sales tonnages so as to improve gains.

The chairman lamented that the fiscal policy in the country in its present state has been favouring the importation of semi finished aluminum materials such as coils and disc from China and India.

He said based on this, the management of Aluworks in consultation with the Association of Ghana Industries has submitted a letter to the Ministry of Trade and Industry to lobby government to effect a policy change to favour local manufacturing industries in the country.

As part of the proposal, Aluworks also requested government to remove the 5% tariff on primary aluminum ingots it imports. He said as a result, government has initiated the formation of a Tariff Advisory Board to recommend new tariffs which will aim at addressing unfair trade practices.

West Australia Says Gas Crisis Costing `Hundreds of Millions'

June 13 (Bloomberg) --

By Jason Scott

Western Australia's natural gas supply crisis is set to cost ``hundreds and hundreds of millions of dollars,'' Premier Alan Carpenter said.

The state government has no plans to invoke emergency powers to take over gas supplies, Carpenter told reporters today at a briefing in Perth. A report into the explosion on Apache Corp.'s Varanus Island site off the northwest coast will be made public, he said.

Alcoa Inc., the world's third-largest aluminum producer, and companies including Minara Resources Ltd. and Rio Tinto Group were left with reduced power supplies after the June 3 blast at the Apache plant slashed the state's natural gas supplies by 30 percent. BHP Billiton Ltd. is bringing forward a planned four-month rebuild of a nickel smelter furnace and will reallocate gas supplies to its Worsley alumina refinery.

Partial resumption of deliveries from Apache's Varanus Island plant in the state's northwest will take about two months, the Houston-based company said June 6.

The government of Western Australia convened an emergency meeting in Perth on June 8 to discuss the crisis with about 20 companies including BHP, Rio Tinto and Alcoa.

Companies involved in energy infrastructure are receiving the first rights to the energy supplies, Carpenter said June 10.

To contact the reporter on this story: Jason Scott in Perth at

RNCOS Releases a New Report - European Aluminium Market Analysis

Delhi, India, June 13, 2008 --( RNCOS has recently added a new Market Research Report titled, "European Aluminium Market Analysis" to its report gallery. The report reviews Europe’s aluminium industry in context of the global aluminium industry. The analysis of the European aluminium industry is done by taking five countries into consideration based on their production and consumption level, economic stability, and future growth prospects.

The European aluminium industry was ranked the biggest aluminium producer worldwide in 2007, making it a vital region for the global aluminium industry. As per the report, the European aluminium industry, after experiencing a slump in 2006, bounced back in 2007.

Western Europe was the leading primary aluminium producing region in 2006, but the trend reversed in 2007 and Central & Eastern Europe emerged as the top primary aluminium producer. This region is expected to dominate the future primary aluminium production and export, while Western Europe is projected to take the shape of major consumer.

Key Findings

- Primary aluminium consumption of Germany is likely to cross 2 Million Metric Tons by the end of 2011 at a CAGR of around 2%.

- Expansion of new bauxite mines is expected to drive the primary aluminium production in France at a CAGR of around 1.55% during the forecasted period (2008-2011).

- Increasing income is likely to boost the European home building industry, which in turn will be a reason for high aluminium consumption during 2008-2011.

- Container and packaging industry, which is an aluminium consuming industry, is projected to surge at a CAGR of over 2% during the period 2008-2012 in Europe.

- Russia is anticipated to be a major aluminium exporter in coming years with exports of around 3.7 Million Metric Tons by 2012 end.

Key Issues & Facts Analyzed

- What are the trends in the European aluminium market with respect to production, consumption, and production capacity etc?

- What are the trends followed in different European countries?

- What are the success factors of the aluminium industry in Europe?

Key Players

This section provides the overview, key facts, and financials of major players in the European aluminium industry, including Alcoa Inc., Rio Tinto Alcan, BHP Billiton, Rusal and Norsk Hydro.

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 over 3000 paid databases.

Analysis Methods

The analysis methods include 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:

Improvement effort to make Hawesville plant safer, more efficient

Trading Markets (press release), CA - Saturday, June 14, 2008

Century Aluminum in Hawesville is in the middle of a capital-improvement campaign that will increase aluminum output, reduce cost and improve safety and environmental performance.

In a campaign that will last from 2008-10, Century Aluminum will invest $80 million in its Hawesville and Ravenswood, W. Va., plants, according to the company's annual report, said Michael Dildine, director of corporate relations.

Most of the money will be spent in the Hawesville plant at 1627 Kentucky 271 N. Dildine declined to comment on the exact amount.

The biggest upgrade will be to the plant's rectifying equipment, which transforms the power in the plant, Dildine said.

By doing that, Century Aluminum will significantly increase its aluminum production and improve its energy efficiency, he said.

Upgrading the 38-year-old rectifier will allow the plant to operate at higher amperage levels and will upgrade the anode size and anode assemblies, Dildine said in an e-mail.

The larger anodes will enable to process to run at a higher amperage rate and lower voltage, which produces more pounds of aluminum at a lower energy consumption, he said.

The anodes are made at the plant. They are used to transfer electricity into the reduction cell, which is where the aluminum is made, said Dave Whitmore, manufacturing manager for the Hawesville facility.

By 2011, Century Aluminum is going to be producing more aluminum with more energy efficiency, Dildine said.

The company has similar objectives for the work it's doing at its West Virginia plant, he said.

There is also funding in the capital-improvement campaign for safety and environmental issues.

The Hawesville plant has worked 1.7 million work hours without a loss-time accident and has had just one loss-time accident in 3.2 million work hours, Dildine said.

Matt Powell, the plant manager in Hawesville, and his team have made safety a priority, Dildine said. Powell was in a meeting Thursday afternoon and unavailable for comment, Dildine said.

Century Aluminum is a major energy user and is looking at ways to cut energy usage because it's good for the environment and the community, Dildine said. It will also save the company money, he said.

The Hawesville plant has 775 employees and has a primary aluminum capacity of 244,000 metric tons a year, according to its Web site. The capital-improvement campaign will not create any new jobs, Dildine said.

Shandong to improve aluminum fabrication capacity by 2012

SteelGuru, India - June 16, 2008

Interfax China reported that China's eastern Shandong Province, a major aluminum producing region plans to optimize the structure of its local aluminum industry so as to boost its capacity to produce high value added products by 2012.

Under the government's plan 70% of Shandong produced alumina and 100% of its primary aluminum output is to be processed locally by 2012. The province's capacity to produce high value added aluminum products such as aluminum plate, foil and industrial aluminum profile, is also to expand to account for more than 60% of total local aluminum fabrication capacity.

The government said technological upgrades and product development in the aluminum fabrication sector will be encouraged by government policies, while capacity expansion projects for alumina and primary aluminum will be strictly controlled.

According to the report projects that manufacture aluminum products for aviation, aerospace, transportation, packaging, home appliance and military uses will be given priority for development.

Furthermore, local alumina producers will be encouraged to develop overseas bauxite mineral deposits or sign long term supply contracts with international mining companies in order to alleviate bauxite shortages in the province. At present, more than 80% of the bauxite fed to Shandong's alumina producers each year is imported.

In 2007, Shandong produced 6.36 million tonnes of alumina 1.22 million tonnes of primary aluminum and 1.63 million tonnes of aluminum product.

Rio to Finish $2.3 Billion Gove Expansion in 2009 (Update1)

June 16 (Bloomberg)

By Jesse Riseborough and Brett Foley

Rio Tinto Group, the world's third- largest mining company, said the $2.3 billion expansion of its Gove alumina refinery in Australia's Queensland state will be completed by the end of 2009.

Following the expansion, the refinery will have annual production capacity of between 3.4 million and 3.8 million metric tons of alumina, Steve Hodgson, president of bauxite and alumina for London-based Rio, said today in a slide presentation to the Australian stock exchange. Alumina is a raw material used to make aluminum.

Rio will commence a study in the second half on increasing output at its Queensland Alumina Ltd. refinery in Australia to 4.2 million tons a year. Rio's share of production at Queensland Alumina, in which it has an 80 percent stake, is 3.1 million tons, according to the presentation.

The study will include a proposal to introduce gas and a so- called cogeneration facility at Queensland Alumina, Hodgson said. Cogeneration power stations supply both electricity and heat to customers.

Russia's United Co. Rusal, the world's largest aluminum producer, owns 20 percent of Queensland Alumina.

To contact the reporters on this story: Jesse Riseborough in Melbourne at; Brett Foley in London at

Is aluminium boom viable in long run?

Emirates Business 24/7, United Arab Emirates - Tuesday, June 17, 2008

By David Robertson

A couple of hundred years ago aluminium was considered more valuable than gold and in a display of outrageous "bling" Napoleon III used the metal for his finest tableware.

Aluminium is still used for tableware but the metal is now cheap and plentiful and is used to build everything from aircraft to automobiles and air- conditioning ducts. The change from precious to everyday metal came in 1886 when two chemists called Hall and Héroult separately but at the same time found a process that could make aluminium.

Much like the refining of gold, the Hall-Héroult process is absurdly convoluted and it is hard to believe that anyone (let alone two people) could have stumbled across it.

First bauxite, which occurs naturally in the ground, must be refined into alumina and this is then put into a furnace that has vast quantities of electricity zapped through it to make aluminium. About four tonnes of bauxite will produce two tonnes of alumina and then one tonne of aluminium.

At the end of the smelting process, you are left with an incredibly lightweight material that is a good conductor of electricity and a poor conductor of heat, which is why most of your pots and pans will be made of aluminium.

However, this metal is becoming increasingly expensive to make – not because the raw materials have become rarer or harder to mine but because the energy used in the smelting process has risen dramatically in price. Aluminium is sometimes referred to as "solid electricity" because the process by which it is made consumes so much power – a large smelter consumes as much power as a city. Oman's new smelter, called Sohar, has 360 furnaces, or pots, and each one consumes enough electricity to power 1,000 homes but will produce only about three tonnes of metal a day.

Given the rapid increases in oil, gas and coal prices recently it is no surprise that the aluminium industry is suffering. Power costs have risen by 50 per cent in the past five years and are expected to rise even faster this year and next.

This is forcing the aluminium industry to reconsider where it locates smelters and proposed projects, particularly in the Middle East, are already being dropped.

Abu Dhabi Basic Industries Corporation (Adbic) said a couple of months ago that it was putting on hold plans to build the $5 billion (Dh18.35bn) Ruwais smelter because of a shortage of gas. Natural gas is the favoured way to power smelters in the Middle East because it is the cleanest and most efficient way to generate electricity but Abu Dhabi has limited domestic supplies. It would rather use its gas to pump out oil given prices at $140 a barrel and it is switching the power stations that produce electricity for domestic consumption to imported coal to conserve even more gas. Rio Tinto, the world's second largest mining company, said last week that its proposed Abu Dhabi project was also effectively on the backburner and it was instead looking to areas such as Algeria and Libya. Both of these countries have natural gas reserves and low domestic power use, which would leave plenty of spare energy to power a smelter.

Such a plan would also allow these countries to create industrial jobs from their gas reserves rather than simply exporting the raw product, which creates lots of money but no jobs.

Similar thinking led to the establishment of Dubai Aluminium (Dubal) and Aluminium Bahrain (Alba) at the end of the 1970s and early 1980s. Dubal is now one of the largest aluminium producers in the world and will make an estimated 950,000 tonnes of the metal this year. It is also a significant contributor to Dubai's economy and is held up as an example of how the region is diversifying away from reliance on hydrocarbons.

Dubal has big expansion plans and hopes to challenge the global leaders by the middle of the next decade. It is proposing building an $8bn smelter in partnership with Abu Dhabi's Mubadala, which will be called Emirates Aluminium and be located at Taweelah. This would be the largest smelter in the world with a capacity of about 1.4 million tonnes a year, but surely this project must now be in doubt.

Indeed, Dubal and Alba must now be wondering about the future of their existing facilities. Does it still make sense for Dubal's dedicated Jebel Ali power station to be feeding its smelter with electricity generated from imported gas when the price of that gas has risen so dramatically?

According to analyst assessments, Dubal is right in the middle of the global cost curve for producing aluminium. Rio Tinto and Rusal, the Russian aluminium giant, are the most efficient – largely because they have access to cheap hydroelectric power in Canada and Siberia respectively.

The most expensive producers are the Chinese, who use coal-fired power stations to feed their smelters. Rising coal prices and competing demand from the country's rapidly growing cities has forced the government to rethink whether it wants the aluminium industry to be a priority. As a result, Chinese production is already declining and high costs could force even more smelters out of business.

Rising energy costs will also move Dubal further along the cost curve, making it comparatively less efficient than the hydro-backed schemes. On the upside, reduced Chinese capacity combined with continued strong demand for the metal is expected to force up prices by about 33 per cent to $4,000 a tonne in the next couple of years. This means that even if Dubal's cost of production rises it is likely to still be making a handsome profit for its owner, the Government of Dubai.

But there is an opportunity cost that Dubai must consider, as Abu Dhabi has done. Dubai's electricity capacity is limited so would it not be better for the Jebel Ali power station to be feeding the rapidly growing city rather than an increasingly cost-inefficient smelter?

My view is that we should be careful how we use limited energy supplies. Having just visited Rio Tinto's smelters in Quebec and having also seen Rusal's operation in Siberia it seems obvious that aluminium smelting can only be ecologically and financially efficient when the vast quantities of energy required do not impinge on everyday human power consumption.

The case for Dubal's expansion in the UAE and even its continued existence is increasingly hard to justify with energy prices as high as they are.

David Robertson is business correspondent of The Times of London.

No slowing the Chinese dragon

Melbourne Herald Sun, Australia - June 17, 2008 12:00am

Robert MacDonald

CHINESE giant Chalco is keen to make more investments in Australia, potentially involving "a large amount of money".

"We've been thinking about whether we can extend our operations into the downstream," the chairman of China's largest aluminium producer, Xiao Yaqing said during a recent interview with BusinessDaily at the company's Beijing headquarters.

This could potentially include using clean coal technology to produce low-carbon power to support an aluminium smelter.

"Our broad direction is downstream. However, we will evaluate all sorts of investment opportunities," he said.

The size of any new investment would depend on its ability to generate profits and the willingness of financiers to lend money, Mr Xiao said through an interpreter.

"If they can provide us with finance, we can surely invest with a large amount of money," he said.

But the first priority of the company, whose parent, Chinalco and US aluminium producer Alcoa jointly bought a 12 per cent stake in Rio Tinto early this year, is completing its $40 million dollar feasibility study into a bauxite mine, plant and port at Aurukun and an alumina refinery at an as-yet unnamed Queensland port, but probably Bowen.

He said Chalco's definition of of good investment was that "first of all it should generate good returns".

Chalco is a majority state owned company but also has shares listed on the Hong Kong, New York and Shanghai stock exchange, which means the company is "accountable to our shareholders", Mr Xiao said.

"If there is no commercial return, then it is not possible for us."

Mr Xiao said he recognised Australians were sensitive to connections between Chinese state-owned companies and their companies.

But he believes more government-to-government communications would "help Australians to understand conditions in China.'

"In a competitive industry like the mining industry, where Chinalco operates, the government is only a shareholder.

''It does not interfere in the day-to-day operations of our company," Mr Xiao said.

China to raise aluminum exports after Guangdong floods

Reuters - Tue Jun 17, 2008

By Polly Yam

HONG KONG (Reuters) - Floods in China's southern Guangdong province and tightening power supply are weakening domestic demand for aluminum, spurring smelters to raise exports, traders and industry sources said on Tuesday.

Guangdong is an aluminum fabricating base in China, the world's top consumer and producer of aluminum. Any unexpected move in exports could drive global prices.

Weak domestic prices are spurring exporters to sell alloyed ingots and billets at low prices, traders said.

"Firms are very keen to export alloyed ingots. One Korean company has contracted 10,000 tonnes per month and an Western trading house got 6,000 tonnes a month," said a trader at an international trading house said.

Chinese aluminum alloy ingot is being offered at nearly flat to cash LME aluminum prices in Asia, compared with spot premiums of about $90 a tonne over the cash price for Western grade primary metal.

China's exports of primary and alloyed aluminum surged 22 percent on the month to 86,669 tonnes in May, according to Customs data. Most of it was believed to be alloyed ingot which does not carry export tax, while primary metal carries 15 percent tax.

Floods in Guangdong, already struggling with power supply problems, were adding pressure on the aluminum market, said a manager at a fabricating plant in Nanhai city, home to dozens of aluminum window and door frame manufacturing plants.

"The flooding should affect aluminum demand. Roads are blocked and purchases of products have been delayed," a manager at a fabricating plant in Nanhai said.

Downpours have affected many cities in Guangdong this month. Guangdong officials warned of a "black June" as high tides, rain and two converging swollen rivers threatened levees, Xinhua news agency said.

"Fabricators are cutting buying of aluminum. Heavy rain should be affecting house building," a trader in Nanhai said.

Aluminum demand growth has fallen in past few months as Beijing's credit tightness reduced fabricators' cash to buy the metal, traders and aluminum smelter officials said.

The country's weak exports of aluminum-contained products such as bicycles and of semi-finished aluminum products have also slowed the growth.

Fabricators in Nanhai have suffered reduced voltage three times a week since March and used diesel-powered generators to keep up production.

But the fabricators are no longer able to maintain production after local authorities stopped them using such generators from last week, the fabricator manager said. He added this would cut fabricators' demand further.

Benchmark three-month aluminum on the London Metal Exchange has risen 24 percent this year to $2,981 per tonne on Tuesday.

But the three-month Shanghai aluminum contract, currently September, is only up 5 percent at 19,005 yuan.

($16.8914 yuan)

UC RusAl to increase aluminum supplies to Asia by 2015

RIA Novosti, Russia - 17/ 06/ 2008

MOSCOW, June 17 (RIA Novosti) - United Company RusAl, the world's largest aluminum producer, plans to increase supplies to Asia and cut exports to North America and Europe by 2015, the company's marketing and sales director said on Tuesday.

Peter Finnimore said RusAl's Asian supplies will account for 34% of the total by 2015, up from 19% in 2007. North America's share is planned to be slashed to 8% by 2015 from 10% in 2007.

Europe, whose share currently stands at 49%, will receive up to 35% of exports by 2015, and RusAl will slightly reduce its exports to Russia and the CIS from 23% to 22%.

RusAl plans to export 23% of its aluminum to Asia, 10% to North America, 45% to Europe and 22% to Russia and the CIS in 2008, Finnimore said.

The official said the company also intended to increase aluminum output by 60% against 2007 to 6.7 million metric tons by 2015.

RusAl is also considering developing business in Australia and Africa, Finnimore said, however the company has no specific projects planned for the regions as yet.

UC RusAl became the world's largest aluminum producer after a March 2007 merger between RusAl, rival Sual, and Swiss Glencore's alumina assets.

Rio to spend $1bn to boost bauxite output

Financial Times, UK - June 18 2008

By Rebecca Bream

Rio Tinto is looking at spending $1bn (£510m) to expand its Australian bauxite production and take advantage of strong growth in demand for aluminium.

The mining group is the world's largest producer of bauxite, which is refined to become alumina then smelted to make aluminium. Its biggest bauxite mine is the Weipa mine in northern Queensland, which accounts for 18.2m tonnes of its total annual output of 32m tonnes.

Dick Evans, head of Rio Tinto Alcan, said last week that the group was talking to Chinalco of China about co-operating on the development of new bauxite mines near Weipa.

The development of Weipa is crucial to the success of Rio's aluminium business, which is one of the three main planks, along with promotion of its iron ore and copper activities, of its defence against a $167bn hostile takeover attempt by BHP Billiton, the world's largest mining company.

Chinalco is Rio's largest shareholder having bought 9 per cent of the group's shares in a surprise move in January, and plans to spend several billion dollars developing the Arukun bauxite deposit just south of Rio's Weipa concession.

Mr Evans said the talks with Chinalco about working together on Weipa and Arukun started before Chinalco's raid on Rio's shares.

"We have had some talks, they have been ongoing for months," he said. "We are open to doing something co-operatively."

Mr Evans said no deal had yet been struck, but agreements could include forming a joint venture to develop new bauxite mines and sharing port facilities.

Separately, The Australian newspaper reported yesterday that Chinalco may increase its stake in Rio Tinto.

Xiao Yaqing, Chinalco president, was quoted as saying: "If conditions are favourable, we probably will consider the possibility of doing something."

Analysts said that further stakebuilding in Rio by Chinalco was more likely than the rumoured purchase of BHP Billiton shares by Chinese steel companies.

Copyright The Financial Times Limited 2008

Global Alumina eyes 2011 Guinea launch, United Arab Emirates - 23 Tuesday, 17 June 2008

by Alistair Thomson

GUINEA PLANS: Global Alumina Corp's 3.3 million tonne per year alumina plant in Guinea is on track to open in 2011. (Getty Images)Canadian-listed Global Alumina Corp's 3.3 million tonne per year alumina plant in Guinea is on track to open in 2011 and should be approved "shortly" by the joint venture's development board, a senior director said.

Global Alumina owns 33.3 percent of what it says is the "largest ever greenfield alumina refinery project" and will be in the cheapest 10 percent of world alumina production.

Guinea is the world's top bauxite exporter with around a third of all known reserves of the aluminium ore.

BHP Billiton, the world's biggest mining group, owns a 33.3 percent stake, and the remaining third is shared by Dubai Aluminium (Dubal) and Abu Dhabi's state-owned Mubadala Development Company, a diversified holding company.

Chief Financial Officer Michael Cella told Reuters in an interview at the weekend that the project was on track to start producing alumina in September 2011.

"Assuming that the joint venture board does come back and ultimately approve the development plan, then the basis of the capital cost estimate that's out in the public [domain] right now and the schedule that's out right now would be affirmed."

Global Alumina raised its cost projections for building the refinery by 35 percent in January, to $4.3 billion dollars, and said the first shipments would not happen until September 2011, two years later than previously expected. The news sent the company's shares to a 9-month intraday low of $1.20.

The shares were down 1 cent at $1.60 in Monday trade.

Cella said the rising costs were behind the company's decision to start negotiations to sell the company.

"If the development plan, which I do expect it will be, gets approved shortly... by the end of the year we would have to raise maybe $200 million," he said.

Asked if he thought a deal to sell the company could be reached before then he replied: "I think it is possible, yes."

Each joint venture partner is guaranteed a share of alumina production equivalent to their share in the project.

Global Alumina has already signed contracts to sell 85-90 percent of its third - around 40 percent of the share going to partner Dubal for its aluminium smelter in Dubai, Cella said.

Another 35-40 percent was being sold to unlisted commodities trading company Glencore, he said.

Bauxite is refined into alumina, then smelted into aluminium metal in a process that uses huge amounts of electricity.

In the 1990s Global Alumina initially looked into the possibility of smelting in Guinea but ruled it out, partly due to the country's limited hydropower potential.

Guinean bauxite is cheaper to mine than most because it lies near the surface, and cheaper to process because of its purity.

But under the rule of authoritarian President Lansana Conte, who seized power in a military coup in 1984, the country is regarded as chronically unstable. An April report by consultancy group McKinsey classed it "high-risk". (Reuters)

Another Good Source for Daily News about the Worldwide Aluminum Industry:

Check out Aluminium Brasil Aluminium News (provided by LexisNexis)

If you no longer need this emailed "Alunews" please let me know

Fire in Anglesey smelter power transformer

RedOrbit, TX - 06/18/08

Kaiser Aluminum (KALU) announces that on June 12 Anglesey Aluminium Metal Ltd., 49% owned by KALU, suffered a significant failure in the rectifier yard that resulted in a localized fire in one of the power transformers. Some capacity has been taken off line for safety and operational reasons. The smelter is currently operating at 1/3 of its total capacity of 145,000 tons, and it is not yet clear how long it will take to restore full production.

No plans to axe jobs at Anglesey Aluminium

Daily Post, UK - 06/18/08

STAFF at an aluminium smelter which suffered a major fire last week will find out today how they will be affected by the blaze.

Key meetings will take place at the Anglesey Aluminium Metals plant near Holyhead, said managing director David Bloor.

While one of the two production lines, pot line 2, remains out of action the other will be restored to full capacity within the next three weeks

Firefighters were called to the smelter last Thursday night after fire broke out in a transformer.

Since the blaze production at the plant, which is jointly owned by Rio Tinto and Kaiser Aluminum and Chemical Corporation, has been cut to a third while an investigations are carried out.

Mr Bloor said: "Pot line 1 is operational and running at about half capacity at present.

"We will restore it to full capacity production within the next two to three weeks. Pot line 2 is not operational and before that can be restored we need to understand why the transformer failed.

"The transformer is extensively damaged and from our point of view is a vital piece of kit.

"We have to ensure it is safe to switch it back on again and that process may take time."

The 540 employees at the plant will learn today how the blaze has affected them but there are no plans at present to reduce the numbers..

Mr Bloor added: "Staff have been re-deployed to other duties. We are taking advantage of training and maintenance windows that were simply not available to us this time last week. We are getting the plant painted and tidied and looking good.

"Staff will be advised of our plans at meetings today but there are no plans to reduce the workforce."

Customers had been advised of the plant’s current difficulties, he said.

He said: "We are in close contact with our customers regarding the reduction in production capacity."

The transformer ignited 40,000 litres of oil and the burning fuel sent clouds of black smoke pouring from the plant, which then swept across the A55 and neighbouring roads.

Fire crews from Holyhead, Rhosneigr and Caernarfon spent three hours tackling the blaze with foam and water.

Police officers were drafted in to close minor roads and direct traffic on the A55 as fire crews fought the blaze in the 132 kilowatt transformer.

No one was injured in the blaze.


‘Race against time’ to save Anglesey Aluminium

Daily Post, UK - Jun 14, 2008

Owen R Hughes

THE FULL effect of a blaze at Anglesey Aluminium was revealed last night as it emerged the plant came within minutes of a critical shutdown.

Bosses confirmed the power was cut off for four hours during the inferno on Thursday night – putting the entire production operation, which employs 500 workers on the island, at risk.

The situation was close to disaster as extended loss of power to the smelter could have dealt a fatal blow to the plant, causing aluminum to solidify in the smelter pots.

Anglesey Aluminium managing director David Bloor yesterday described a "race against time" to get the smelter back up and running.

He said it would take days to assess the full extent of the damage at the site, which employs 500 island workers.

Production will continue at a reduced one-third capacity over the weekend, and there are no guarantees of a quick fix.

It emerged that the power stoppage saw temperatures drop below the 900 degrees Celsius needed to keep the smelter process running.

The scale of the damage could leave a hefty repair bill – although managers last night said they had escaped the worst case scenario of a complete shut-down.

This could have put a question mark over Anglesey Aluminium’s future, which is already in the balance with the failure to secure a power deal beyond 2009.

Anglesey Aluminium managing director David Bloor said: "We are now assessing the effect that shutting off the power for four hours will have and the long term consequences. That is an ongoing investigation and at this stage we do not know the answers. The issue now is getting the plant operational.

"The power had to go off to both pot lines for four hours between 7.15pm and 11.15pm. It was a race against time, that is right at the limit and we are now assessing the damage having the power off has done.

"It is a painstaking process. We will do this bit by bit over the next few days and the recovery will continue.

"We will see where we stand then. Each pot needs to checked before we can evaluate the damage."

The fire broke out on Thursday evening in a 132 kilovolt transformer supplying the works and spread to 40,000 litres of transformer oil.

Five fire engines and one foam carrier from Caernarfon were used to contain the blaze, which saw think smoke billow over the A55 at Holyhead.

Mr Bloor said: "The power had to be shut off to make the area safe so that the fire could be tackled.

"We had to put health and safety first. Water, foam and electricity are not a good mix.

"The earliest time we could restore power was four hours later."

The plant began operating in 1971 and employs more than 500 workers but its future has been in doubt as its power deal with Wylfa nuclear power station ends next year.

Island MP Albert Owen said: "This was a serious incident that was managed well. This just highlights the importance of a continuous supply of electricity to the plant."

Deputy first minister AM Ieuan Wyn Jones said: "I was very concerned to hear about the fire at Anglesey Aluminium. My department has been in close contact with the company, and I was glad that they were able to confirm that no-one was injured during the incident.

"The main concern now is to ensure that the company can resume full operations at the earliest opportunity.

"It is too early to speculate on what impact the fire will have on production at the plant, but officials from my department are working closely with the company to ensure any disruption is minimised."

Vital links

Pots are large carbon or graphite lined steel containers arranged in lines and heated to a temperature of 900 centigrade in which alumina, an intermediate raw material derived from bauxite, is reduced to aluminum metal.

Anglesey Aluminium has two pot lines, each running 158 pots.

The plant uses around 13% of Wales’ total energy consumption and last year it produced 148,000 metric tons of primary aluminum.

It is owned by the Rio Tinto Group and Kaiser Aluminum and Chemical Corp.

The plant produces finished products that include 500 kilogram ingot, extrusion billet and rolling ingot aluminium.

The company has an annual turnover of £130 million.

Scrubbers going online at Alcoa

Warrick Publishing, IN - June 18, 2008

By Nathan Blackford - Warrick Publishing Online

Alcoa’s $500 million project to limit harmful emissions from its Warrick County aluminum smelting and rolling facility is nearing completion. Work started on the new environmental controls in 2005 and should be complete by the end of this year.

"This is a significant investment to reduce emissions well beyond anything required by regulation while increasing the global competitiveness of the Warrick Operations," said G. Royce Haws, Primary Metals Location Manager, in a press release. "It is a strong demonstration of Alcoa’s commitment to sustainability and to the future of Warrick Operations. It is securing jobs at Alcoa, increasing work for the area’s construction industry, and significantly contributing to a cleaner local environment. The benefits to the region are immense."

The project has involved the installation of Wet Flue Gas Desulphurization technology — known as scrubbers — at the power plant for Alcoa Warrick Operations. The plant includes four generating units, and each of those must be connected individually to the new scrubbers.

The first generating unit to be connected to the scrubbers — unit number two — was taken off-line in April, then put back into service on May 26. Now, unit number three is off-line, and will be connected to the scrubbers when it goes back into service sometime in July.

"Once you bring up the unit with the scrubbers working, you cannot work the unit without the scrubber," said Alcoa Spokesperson Sally Rideout-Lambert. "As long as unit two operates, it will be a scrubbed unit."

According to Alcoa, the new scrubbers will reduce Hydrochloric Acid emissions by 99 percent, Sulfur Dioxide by 98 percent, Mercury by 60 percent, Sulfuric Acid by 50 percent, and particulate matter by 49 percent.

"We are just very excited to see all of the work culminating," said Lambert. "We are nearing the end, and we know the benefits to our business, to the local environment, and the regional economy."

Chalco partly-owned alumina plant starts full run

Reuters - Wed Jun 18, 2008

Polly Yam

HONG KONG, June 18 (Reuters) - Guangxi Huayin Aluminum, 33 percent-owned by Aluminum Corp of China Ltd (2600.HK: Quote, Profile, Research) (601600.SS: Quote, Profile, Research), started full operations at a 1.6 million tonne-a-year alumina refinery this month, local government officials said.

Increased output will add pressure on an already weak domestic alumina market, which spurred Chalco to slash spot prices 17 percent this month in its first such reduction since December.

Government officials in Guangxi Autonomous Region said the Huayin capacity was only the first phase of a planned 3.2 million tonnes alumina complex in Debao county in Baise city.

The construction of the second phase, with equal capacity, would depend on shareholders of Huayin, an official at Baise's development and reform office said.

"The second phase is on our agenda. But it is not up to us when the construction will start," the official told Reuters on Wednesday.

An official at Debao's alumina administrative office said the local government wanted construction of the second phase to start as soon as possible to help improve the local economy.

The first phase cost Huayin more than 8.3 billion yuan ($1.21 billion), he said.

Chalco's investor relations manager, Zhang Qing, said the firm had not made a decision on the building of the second phase.

"We will make a decision according to the market situation," Zhang said. Chalco is the world's third-largest alumina producer.

As well as Chalco, Huayin is owned 33 percent by Minmetals Resources Ltd (1208.HK: Quote, Profile, Research) and 34 percent by Guangxi Investment Group Co Ltd, an arm of the Guangxi government in which Chalco's ex-chairman, Guo Shengkun, is a top leader.

Chalco last month started production at a 100-percent owned 440,000-tonne alumina facility in Baise city, and will begin operations at another facility with the same capacity next week, boosting designed alumina capacity at its Pingguo plant to 1.78 million tonnes a year.

Huayin's possible building of the second phase may fuel competition to the Pingguo plant, Daiwa Securities' Geoffrey Cheng said.

"Chalco already has nearly 2 million tonnes of alumina capacity at the Pingguo plant. Is it necessary to build another 1.6 million tonnes of alumina capacity as a competitor to Pingguo?" Cheng said. "And, it does not even own 100 percent of that capacity."

"From the business angle, Chalco should consider whether the extra alumina can be digested by nearby smelters," Cheng said. ($16.8818 yuan) (Editing by Michael Urquhart

Guinea's 'largest ever' Greenfield alumina refinery now to produce in 2011

Mineweb, UK - Wednesday , 18 Jun 2008

Author: Alistair Thomson

Project Delay

Global Alumina’s $4 bn plus Guinean alumina refinery is now not expected to commence production until September 2011 – some two years behind its original schedule.

DAKAR (Reuters) -

Canadian-listed Global Alumina Corp's 3.3 million tonne/year alumina plant in Guinea is on track to open in 2011 and should be approved "shortly" by the joint venture's development board, a senior director said.

Global Alumina owns 33.3 percent of what it says is the "largest ever greenfield alumina refinery project" and will be in the cheapest 10 percent of world alumina production.

Guinea is the world's top bauxite exporter with around a third of all known reserves of the aluminium ore.

BHP Billiton , the world's biggest mining croup, owns a 33.3 percent stake, and the remaining third is shared by Dubai Aluminium (Dubal) and Abu Dhabi's state-owned Mubadala Development Company, a diversified holding company.

Chief Financial Officer Michael Cella told Reuters in an interview at the weekend that the project was on track to start producing alumina in September 2011.

"Assuming that the joint venture board does come back and ultimately approve the development plan, then the basis of the capital cost estimate that's out in the public (domain) right now and the schedule that's out right now would be affirmed."

Global Alumina raised its cost projections for building the refinery by 35 percent in January, to $4.3 billion dollars, and said the first shipments would not happen until September 2011, two years later than previously expected. The news sent the company's shares to a 9-month intraday low of $1.20.

The shares were down 1 cent at $1.60 in Monday trade.

Cella said the rising costs were behind the company's decision to start negotiations to sell the company.

"If the development plan, which I do expect it will be, gets approved shortly ... by the end of the year we would have to raise maybe $200 million," he said.

Asked if he thought a deal to sell the company could be reached before then he replied: "I think it is possible, yes."


Each joint venture partner is guaranteed a share of alumina production equivalent to their share in the project.

Global Alumina has already signed contracts to sell 85-90 percent of its third -- around 40 percent of the share going to partner Dubal for its aluminium smelter in Dubai, Cella said.

Another 35-40 percent was being sold to unlisted commodities trading company Glencore [GLEN.UL], he said.

Bauxite is refined into alumina, then smelted into aluminium metal in a process that uses huge amounts of electricity.

In the 1990s Global Alumina initially looked into the possibility of smelting in Guinea but ruled it out, partly due to the country's limited hydropower potential.

Guinean bauxite is cheaper to mine than most because it lies near the surface, and cheaper to process because of its purity.

But under the rule of authoritarian President Lansana Conte, who seized power in a military coup in 1984, the country is regarded as chronically unstable. An April report by consultancy group McKinsey classed it "high-risk".

Government officials have queried other big mining projects like Rio Tinto's $6 billion Simandou iron ore mine, but Cella and Global Alumina President Graham Morrey played down the risk. Company bankers who were visiting Guinea last month when soldiers staged a pay mutiny were not put off, they said.

© Reuters 2008. All Rights Reserved.

Alcoa to curb production at Texas smelter - June 19, 2008

Alcoa to temporarily halt production at Texas smelter, lay off 250, due to power supply issues

NEW YORK (Associated Press) - Aluminum producer Alcoa Inc. said Thursday it would temporarily idle half of the production at its Rockdale, Texas, smelter due to power supply issues.

Three of the plants six operating potlines, representing about 120,000 metric tons per year of production, will shut down immediately.

The company said it has been experiencing ongoing supply interruptions, and that local market energy costs have jumped to as much as $2,000 to $4,000 per megawatt hour during peak hours.

About 250 workers will be laid off because of the shutdown.

Shares slipped 3 cents to $39.07 in late-afternoon trading.

DJ Anglesey Aluminum Output Cut To Last About 3 Months-Rio Tinto

Trading Markets (press release), CA - Thursday, June 19, 2008

The U.K.'s Anglesey aluminum smelter is expected to operate at about one third of its production capacity for around three months due to a fire in one of the power transformers, a spokesman for its joint owner Rio Tinto PLC (RIO.LN) told Dow Jones Newswires Thursday.

"We are continuing to investigate the cause of the fire and are working to restore full production as soon as possible, which we estimate to be about three months," Nick Cobban said.

Anglesey, which is located in Holyhead, North Wales, has an annual production capacity of 145,000 metric tons. Rio Tinto has a 51% stake in the plant with U.S. aluminum producer Kaiser Aluminum & Chemical Corporation (KALU) owning the remaining 49%.

According to Cobban, there are two potlines at the plant - one is operating at approximately two thirds capacity and the other is shut down. The curtailment is for safety and operational reasons while the company works to restore stability.

Anglesey is one of the largest suppliers of aluminum metal in the U.K.

-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413;

Risk, infrastructure limit Africa aluminium growth

Reuters, Thursday June 19 2008 *

By Alistair Thomson

Power shortages, risk limit African capacity growth

* Demand for bauxite seen rising 70 percent by 2015

* Infrastructure investment costs rising, projects delayed

DAKAR, June 19 (Reuters) - Blackouts and delays to big new projects across Africa are hampering aluminium makers keen to cash in on rising metal prices driven by surging Asian demand.

Africa boasts some of the biggest, purest bauxite deposits and could harness more hydropower to smelt it into aluminium.

"There is huge potential," Benedikt Zeumer, of consultancy McKinsey, told Reuters. "If the operations are well developed, it (Africa) should be lower-cost in terms of production than the average in the world, comparable with Australia and Brazil."

McKinsey predicts soaring aluminium demand, with shortages and high costs pushing up prices in coming years.

"The aluminium industry faces a paradigm shift, from an abundance of resources to scarcity of supply," the report said.

Even if all mooted mining expansions go ahead, capacity will still fall short of the 70 percent increase in bauxite supply needed to meet rising world demand by 2015, McKinsey said.

"I'm an adherent to the super cycle: I think it exists, and it's in its infancy," said Deutsche Bank analyst Joel Crane.

"Africa is essential in the future. There are huge (metals) reserves and relatively speaking they should be -- on paper -- more economical to pull out. However, that will require huge investment as well as risk that producers will have to take on.

"The diversified miners are saying there is really no place on earth they wouldn't take on, which was not the case a few years ago," Crane said by phone from New York.


Infrastructure costs are huge and growing, while the credit crunch and cautious markets have complicated capital raising.

Global Alumina upped the cost of a 3.3 million tonne/year refinery in Guinea by 35 percent in January to $4.3 billion and pushed the start-up date back two years. The company is now seeking a buyer, in part to avoid raising more capital.

Electricity shortages in coal-rich South Africa, which long had a surplus of the world's cheapest power, forced Rio Tinto to shelve plans for a new smelter. BHP Billiton cut output in the country, Africa's top aluminium smelter.

"I talk to people who say 'We won't go in unless we get a minimum 15-20 year guaranteed (power) supply. That's the problem with South Africa, that's why Rio pulled out," Crane said.

With power costs making up 25-45 percent of a smelter's costs depending on location, Equatorial Africa's powerful rivers have smelter planners brimming with enthusiasm. "There are always people with the dream of using the hydropower potential of the Democratic Republic of Congo," McKinsey's Zeumer said.

BHP Billiton, the world's biggest mining group, signed last year with Congo to build a $3 billion, 800,000 tonne/year aluminium smelter. But it will depend on the planned Inga III hydropower station on the Congo river, which will take years.

Low water levels in Ghana's Volta dam forced the 200,000 tonne/year Valco smelter to close indefinitely last year.

"People are really looking to the Middle East to put up refineries," Deutsche's Crane said.


Guinea, Africa's top bauxite miner with 30 percent of global reserves lying near the surface in a pure form that is cheap to refine, is the promised land of Africa's aluminium industry.

China smelts over one third of the world's aluminium but needs bauxite, and has snapped up Guinean bauxite mining rights.

But political instability and a lack of readily available power and other infrastructure make Guinea a flawed paradise.

Global Alumina initially considered building a smelter alongside its huge planned alumina refinery there, but dismissed the idea partly because of limited hydropower potential.

Equally unnerving is the risk to big investments as rival power groups vie for influence over President Lansana Conte, a diabetic in his 70s who took power in a coup in 1984. Soldiers and police have both staged bloody mutinies in the past month.

Guinea's government is reviewing mining contracts and said in April RUSAL risked losing its 527,000 tonnes/year Friguia alumina refinery over a contractual dispute. The Russian company said its contracts were legal and it was not notified directly.

Last week, an official in Conte's office queried Rio Tinto's $6 billion Simandou iron ore concession, one of the world's biggest, though the company said there were no grounds to do so.

"The requirements you look for to invest in a mine are long-term sustainability, long-term ownership, the stability of the contract made, avoiding renegotiations," Zeumer said.

"It's an investment for 20-30 years at least -- if you need to build a railway, you can't have it paid back in two years."

For FACTBOX on aluminium in Africa click [ID:nL17103039] (For full Reuters Africa coverage and to have your say on the top issues, visit: (Additional reporting by Karen Norton, James Macharia, Tansa Musa and Kwasi Kpodo; Editing by Pascal Fletcher)

Ghana Government Says Plans To Integrate Country's Aluminum Sector - June 20, 2008: 11:55 AM EST

ACCRA, Ghana -(Dow Jones)- The purchase by the Ghanaian government of the remaining 10% stake in the Volta Aluminum Co., or Valco, is part of a plan to develop and integrate aluminum production in the country, a government spokesman told Dow Jones Newswires.

"The purchase of the shares by the government is part of a plan to integrate bauxite mining and the production of aluminum in the country," Frank Agyekum, deputy minister for information, said.

A statement earlier said that the $2 million purchase of 428 ordinary shares in Valco from U.S. aluminum producer Alcoa Inc. (AA) has been completed. The government has proposed a concept of an integrated aluminum industry in which the country's bauxite will be mined, refined and processed to near-end or end products in Ghana, the statement said.

The concept is also linked to the railway system in Ghana, which depends largely on the transport of bauxite for sustainability.

Four metric tons of bauxite makes two tons of alumina, which makes roughly one ton of aluminum metal.

The Valco aluminum smelter in Tema takes its power from the Volta River Authority but drought conditions in Ghana have for many years created problems with energy supplies. This has seen the smelter closed at times, but it was last restarted at reduced capacity in 2005.

Valco has five potlines with a capacity to produce around 200,000 metric tons annually.

-By Francis Kokutse, contributing to Dow Jones Newswires, Accra, Ghana; Tel: 00-233-246952248

Alcoa seeks power supplies to save Texas smelter

Reuters - Fri Jun 20, 2008

Alcoa Inc (AA.N: Quote, Profile, Research) is talking to anyone who can help secure a reliable supply of low-cost power for its Rockdale, Texas, aluminum smelter after temporarily idling half of the facility's production on Thursday, an Alcoa spokesman said Friday.

"The next step is to consider the viability of running the facility at half power. That may not be cost effective and may not be good for the viability of the facility," Alcoa spokesman Kevin Lowery said.

Alcoa said it is having problems with the reliability of the on-site power generating unit, Sandow Unit 4, run by generating company Luminant, and the high cost of buying replacement power in the market.

Luminant, however, said it "strongly disagrees" with Alcoa's effort to cast Luminant as the cause for Alcoa's decision to cut production and jobs at Rockdale.

"Simply put, it appears Alcoa does not like the terms of a mutually agreed, long-standing contractual arrangement for power to its facility. Instead, Alcoa apparently would like Luminant to provide power to it at below market prices and prices lower than those provided in the contract," Luminant said in a statement.

On Thursday, Alcoa said it would idle three of Rockdale's six operating potlines immediately and start the process of laying-off about 250 people at the plant. The idled potlines represent about 120,000 metric tons per year of production.

Alcoa said it planned to maintain output at the remaining three potlines using power from a long-term contract.


Since the beginning of the year, the 545-megawatt Sandow 4 unit has shut about eight times.

Luminant said it has contractually supplied power to Alcoa, and that contract includes a provision that mitigates the impact on Alcoa of buying from other suppliers when the Sandow plant is not producing power.

"One third of the cost of making aluminum is the power cost," Alcoa's Lowery said, explaining, "You need three things - long-term, reliable, globally competitive power to keep a smelter running 24 hours a day, seven days a week, 365 days a year. Any disruption is a disaster."

Lowery said Alcoa lost significant funds at Rockdale but could not discuss the numbers. He said the company would include the numbers in its second-quarter results in July.

As for when Rockdale would return to full output, Lowery said it depended on when the company found a reliable, competitively priced source of power.

The five-year average price for power in ERCOT during June is $63 per megawatt hour, but recently power has been trading closer to $125 due in part to unplanned generator outages and problems integrating the region's numerous wind turbines into the grid. ERCOT covers much of the state of Texas.

The Sandow station, which entered service in 1981, is located near Rockdale in Milam County about 130 miles northwest of Houston.

Luminant is a subsidiary of Energy Future Holdings Corp of Dallas, the former TXU Corp, now that TXU has completed a transformation into a privately held company.

Lowery noted Alcoa did not have problems with the old TXU. (Reporting by Scott DiSavino; Editing by Christian Wiessner)

New bauxite mine and alumina refinery for Ghana as it buys Alcoa stake in VALCO

Reuters - Saturday , 21 Jun 2008

The Ghanaian government says it is buying Alcoa's 10 percent stake in the VALCO aluminium smelter and plans new bauxite mine and alumina refinery to feed it.

Author: Kwasi Kpodo

ACCRA (Reuters) -

Ghana's government has bought Alcoa's stake in the inactive 200,000 tonne/year VALCO aluminium smelter and plans to relaunch the industry with a new bauxite mine and alumina refinery, a deputy minister said on Friday.

The government paid Alcoa $2 million for its 10 percent stake in VALCO, whose smelter has been shut since March 2007 due to low water levels in the Volta dam which powers it.

The deal, giving the African state full ownership of VALCO, was concluded on Thursday, the presidency said in a statement.

"The Government has proposed a concept of an integrated aluminium industry in which the country's bauxite will be mined, refined and processed to near-end or end products here in Ghana," the statement said.

Bauxite is first refined into alumina, then transformed into metal in an energy-intensive smelting process.

Deputy Energy Minister Kwame Twumasi Ampofo said the government planned a new bauxite mine and alumina refinery.

"We are about to have on stream an additional bauxite mine at Kibi ... in the next one year or so, as a vital and integral part of the industry, that would include alumina refining, aluminium production, and enhancing the railway sector."

"We have already taken some major steps on the bauxite project, which is the reason why the government decided to fully own Valco," Ampofo said.

Rio Tinto, which mines 1 million tonnes of bauxite a year from Ghana's only active bauxite operation, exports the ore directly overseas for refining.


The VALCO smelter was built in the years following the former Gold Coast's independence from Britain in 1957 and has been repeatedly shut down due to unreliable power supply from the Volta dam, one of the biggest man-made lakes in the world.

"It had quite a roller coaster ride," Alcoa spokesman Kevin Lowery said by phone from Pittsburgh in the United States.

"Electricity is on average about one third of the cost of making aluminium across the whole industry ... when it comes to electricity you need three things: long-term, reliable, globally competitive power ... that was the issue," he said.

VALCO Executive Chairman Charles Mensah told Reuters this week there was "no news" on when the smelter might reopen.

But Ampofo said the government planned to restart VALCO within the next year or so using a combination of power from Lake Volta's Akasombo hydropower station and thermic energy fired by Nigerian gas from the planned West Africa Gas Pipeline.

The cross-border pipeline's opening has been repeatedly delayed and is now expected in the next couple of months.

"Currently, the government's energy plans should be able to give us enough power in the coming years so we wouldn't have to go through what happened to us in 2006," he said. That year saw some of the most acute power shortages in Ghana's history.

VALCO would smelt imported alumina, as it did previously, until the bauxite mine and refinery were ready, he said.

The smelter would be refitted to achieve optimum output, he said. "Some work will soon begin in the next few days."

© Reuters 2008. All Rights Reserved.

Kaiser Aluminum Announces $19 Million Expansion at Jackson, Tenn. Facility

Business Wire (press release), CA - 23-Jun-2008

Increases Capacity at Company’s "Tennalum" Facility to Meet Customer Demand for Cold-Finished Rod, Bar and Related Products

Investment Includes Addition of an Extrusion Press, Heat Treat Furnace and Drawbench

$263 Million of Total Investment since 2005 in Company’s Organic Growth Initiatives

FOOTHILL RANCH, Calif.--(BUSINESS WIRE)--Kaiser Aluminum (NASDAQ:KALU) today announced that its Board of Directors has approved a $19 million expansion at its Tennalum facility in Jackson, Tenn., to increase capacity and capabilities through the addition of an extrusion press, heat treat furnace, drawbench and other ancillary equipment.

The expansion will add capacity to meet anticipated future demand for cold-finished rod, bar and related products. The Tennalum project is expected to be completed and production-ready by the end of 2009.

"Tennalum is a world-class facility that exemplifies Kaiser Aluminum’s Best In Class reputation and provides an excellent platform for expansion," said Jack A. Hockema, president, chairman and CEO of Kaiser Aluminum. "By investing in additional growth at the facility, we’ll continue to leverage our technical expertise and a long, proven history as the preferred supplier to our service center, aerospace and other customers with a wide range of high-quality fabricated aluminum products."

Since 2005, Kaiser Aluminum has announced $263 million of total investment in its organic growth initiatives, which include a $139 million expansion of heat treat plate capacity and capabilities for aerospace applications and a $91 million program to significantly improve the capabilities and efficiencies of rod, bar and tube operations.

Kaiser Aluminum, headquartered in Foothill Ranch, Calif., is a leading producer of fabricated aluminum products, serving customers worldwide with highly-engineered solutions for aerospace and high-strength, general engineering, and custom automotive and industrial applications. The company’s North American facilities annually produce more than 500 million pounds of value-added sheet, plate, extrusions, forgings, rod, bar and tube products, adhering to traditions of quality, innovation and service that have been key components of our culture since the company was founded in 1946. The company’s stock is included in the Russell 2000® index. For more information, please visit

New furnace allows Alcoa to separate good metal from waste, eliminates need to send material out

Evansville Courier & Press (subscription), IN Tuesday, June 24, 2008

By Dan Shaw (Contact)

By using a new furnace to extract aluminum from waste product, Alcoa hopes to save millions of dollars a year.

The rotating furnace heats up dross, which is waste from making aluminum ingots, and allows Alcoa to draw more aluminum from the dross. This process helps them to recycle more aluminum and allows Alcoa to do more in house rather than having to outsource part of the process. It cost $11 million dollars to construct and processed its first charge on June 5, 2008.

The rotating furnace began operating earlier this month at Alcoa's Warrick Operation. Looking like a gigantic cement mixer, the machine can extract usable metal from the waste or "dross" formed when the company makes massive ingots of aluminum alloys.

Previously, Alcoa had sent the dross to other plants for that purpose.

"We will do it ourselves rather than paying someone else," said Ann Whitty, vice president and general manager of the Alcoa rigid packaging division.

Alcoa also saves money because it no longer has to transport the dross great distances. And the aluminum now can be extracted before the material has had a chance to cool, preventing the need for reheating.

The rotary furnace can hold about 25,000 pounds of dross at a time, heating the material to about 1,450 degrees. Inside, a salt is mixed with the dross, helping to separate good metal from any that has become oxidized.

About half of what comes out will be aluminum, to be returned to the plant.

The furnace then will rotate before pouring out the remaining material, composed largely of salt cakes.

Those will be sent to other plants to have even more aluminum extracted.

The furnace also can be used to remove aluminum from pieces of scrap metal that have been covered with a coating to give the metal a particular color or other property.

When coated scrap is heated, it often releases pollutants and factories are required to have equipment to mitigate those emissions.

John Martin, ingot manager, said the furnace, by running through eight cycles a day, can handle all of the four million pounds of dross the Warrick operation produces each month. It also takes in a large part of the coated metal and workers are tweaking the process in hopes of making that amount larger.

The new furnace cost Alcoa about $11 million. Alcoa officials expect it will save the company enough money to pay for itself within two years.

About 270 employees work in the ingot department.

Alcoa Venture Lands Vietnam Deal to Study, Develop Refinery Projects

Wall Street Journal - June 25, 2008; Page B3


SINGAPORE -- Alcoa World Alumina & Chemicals, a venture between Alcoa Inc. and Australia's Alumina Ltd., signed a cooperation agreement with Vietnam's state-owned mining company to develop a 600,000-metric-ton alumina refinery and will conduct a feasibility study for a separate bauxite and alumina refinery project, the company said.

The agreement is a breakthrough in a drawn-out effort by foreign mining companies to gain access to Vietnam's rich bauxite deposits, which some estimate to hold between two billion and eight billion metric tons, roughly 5% of world reserves. It also stands to give Alcoa a bigger foothold in Asia, one of the biggest consuming regions in the world.

"It's moving us forward," said Kenneth Wisnoski, president of Alcoa's global primary products. "This is a pretty encouraging step."

The cooperation agreement gives AWAC -- which is 60%-owned by Pittsburgh-based Alcoa and 40%-owned by Alumina Ltd. -- the right to purchase a 40% stake in a joint stock company that owns the Nhan Co bauxite mine and the 600,000-ton alumina refinery after conducting due diligence. Vietnam National Coal Mineral Industries Group will hold a majority stake at 51%, and the Vietnamese public will be offered a 9% shareholding.

AWAC will also conduct a feasibility study on the Gia Nghia bauxite mine and alumina refinery project, which Alcoa is projecting would produce between one million and 1.5 million tons of alumina a year in its first stage.

Bauxite is the raw material for alumina, which is the raw material for aluminum.

Alcoa hasn't made an estimate of bauxite reserves yet for the Gia Nghia deposit, but it believes from initial tests that the reserves are substantial, Mr. Wisnoski said. "It is a fairly large reserve. We've done sampling and the bauxite [quality] is very good."

The cooperation agreement follows quickly upon a directive in May from Vietnamese Prime Minister Nguyen Tan Dung that gave Vinacomin permission to offer Alcoa a 40% stake in a domestic joint venture.

Write to Matthew Walls at

Alcoa's Belda calls for G8 to lead on climate change

Reliable Plant Magazine, OK - 24-Jun-2008

Author: RP news wires

Alcoa chairman Alain Belda joined 99 global business leaders last week in calling for the Group of 8 (G8) leaders to take the lead on climate change and to commit to halving emissions of greenhouse gases by 2050. The set of policy recommendations were given to Japan Prime Minister Yasuo Fukuda, executive chairman of the World Economic Forum, in advance of the G8 summit scheduled for July 7-9 in Hokkaido, Japan. The executives also requested that a successor treaty to the Kyoto Protocol involve all major economies including the U.S., China and India to make it effective.

Belda is a member of the steering board of the World Business Council for Sustainable Development which guided development of the CEO statement for the G-8.

"We know we must address climate change. We may not have sorted out every detail, but we are willing to take a leadership position and embrace open dialogue. … That will get us all to our common goals of protecting our world for future generations," Belda said.

Alcoa is the world leader in the production and management of primary aluminum, fabricated aluminum and alumina combined, through its active and growing participation in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components including flat-rolled products, hard alloy extrusions, and forgings, Alcoa also markets Alcoa wheels, fastening systems, precision and investment castings, and building systems. The company has 97,000 employees in 34 countries.

Aluminum to hit record highs as energy costs climb

Reuters - Wed Jun 25, 2008

CHICAGO, June 25 (Reuters) - Rising smelter input costs mostly due to soaring energy prices will drive aluminum prices to record highs, possibly this year, economists said at an industry gathering this week.

Growing aluminum demand from China and narrowing inventories in terms of weeks of consumption will further fuel price gains through the end of the decade, they said.

China's rapid urbanization and rising per capita wealth have boosted demand for the lightweight metal, used in products ranging from power lines, cars, food and beverage packaging, and construction.

Demand from China could be strong enough to overcome a drag from the United States and Europe, where demand growth has been relatively flat.

"China's structural demand boom and a restrained supply have unleashed an upward trend in aluminum output and capex (capital expenditure) costs that is far from over," said Harbor Intelligence analyst Jorge Vazquez.

Aluminum prices tend to average close to the marginal cost of production, he said.

Aluminum MAL3 rose above $3,100 a tonne this week, just short of the record high of $3,310 set in May 2006.

Analysts with Harbor intelligence said aluminum prices could remain range bound between $2,875 and $3,200 per tonne in the near term but begin rising toward $3,300 by the end of the year and nearly $4,000 a year later.


Current global aluminum demand growth of nearly 8 percent a year has outpaced historical trends amid soaring demand from the developing world, mostly China, which accounts for about a third of global consumption.

China also is the largest aluminum-producing nation, but power constraints are driving up output costs and slowing the industry's growth rate in the world's most populous country.

"The growth in Chinese smelter output in the second half of the year will not meet consensus expectations. We don't think you're going to see 15 million tonnes of aluminum production in China this year," said Gayle Berry, associate director of commodities research at Barclays Capital.

Energy accounts for between a third and 45 percent of the cost of producing aluminum. U.S. crude oil prices are up nearly 40 percent since the start of 2008.

"Aluminum prices react to oil prices with a lag of 10 to 12 months. So, if you see oil prices reaching new highs that means aluminum prices will tend to reach new highs in the next 10 to 12 months," Harbor's Vazquez said.

Economists also predicted a supply deficit of aluminum this year, which should lead to much higher average prices.

"Whether it's six months from now or 12 months from now, higher prices are coming. Unless we see a dramatic 50 percent drop in the price of oil, you're going to see higher aluminum prices next year," said Mark Bodner, CEO of MB Consulting and former UC Rusal aluminum sales director.

"I can comfortably say I see $4,000 a tonne longer term for aluminum." (Reporting by Karl Plume; Editing by David Gregorio)

DJ Chalco In Deadlock With Saudi Partner On Aluminum Proj-Report

Trading Markets (press release), CA - Wednesday, June 25, 2008

Aluminum Corp. of China Ltd. (ACH), or Chalco, has reached a deadlock in its latest talks with Saudi Arabia on a $4.5 billion aluminum smelter project, the 21st Century Business Herald reported Thursday, citing an unnamed company official.

The Chalco official said negotiation representatives had failed to achieve expected progress in determining project details, and the company will work with the Saudi Arabian government to sort out a plan.

Chalco, Malaysia's MMC Corp. (2194.KU) and Saudi Arabia's Saudi Binladin Group have signed a framework agreement to build an aluminum smelter with an annual production capacity of 1 million metric tons and a power plant with a capacity of 1,860 megawatts in Saudi Arabia's Jazan Economic City.

Chalco planned to use its own alumina produced in China, and the plant's aluminum output is expected to be exported back to China, said the official.

Chalco wasn't immediately available for comment.

Newspaper Web site:

-By China Bureau, Dow Jones Newswires; 8621 6120-1200;

No power, no smelter

Globe and Mail, Canada - June 25, 2008


Rio Tinto Alcan and the Canadians planning to build a power-hungry $2.7-billion (U.S.) aluminum smelter in South Africa have put their plans on the cold back burner amid the country's severe electricity crisis

From Thursday's Globe and Mail

JOHANNESBURG — — The lights are back on, but there's nobody home: That's the assessment for Rio Tinto Alcan's [RTP-N]proposed $2.7-billion (U.S.) investment in South Africa.

All but five of the Canadians brought in to work on the aluminum smelter have packed up and gone home, as the project, which was to have been the largest industrial investment in Africa and would have created 1,000 jobs, looks set to be the biggest casualty of South Africa's power crisis.

The national energy parastatal Eskom announced earlier this month that it was lifting a moratorium on new connections and had suspended scheduled "load shedding" (blackouts), while industry was receiving 95 per cent of its power quota. This comes after a months-long period of reduced supply, caused by a series of monumentally poor planning decisions, which has punched a hole in the country's economic growth projections.

But at the same time, Eskom chief executive officer Jacob Maroga said there was no surplus power on the grid to meet large new demands, and the company is providing no indication of when it may have that margin to serve new industrial customers — and that includes the proposed aluminum smelter at Coega in the Eastern Cape, which was meant to have broken ground in the coming weeks.

Rio Tinto

South Africa's ruling African National Congress (ANC) insists that the smelter will eventually be built — the deal with Alcan, eight years in the making, was meant to bring a much-needed anchor tenant to the Coega Industrial Development Zone, a flagship project in the ANC's job-creation platform.

Rio Tinto Alcan has drastically reduced its operations at the Coega site to focus on other projects.

"Until the situation in South Africa regarding energy stabilizes, we have put it on the back burner," company spokesman Stefano Bertolli said in an interview. "It is still on our radar, it's just moved farther down than we expected."

The government has formed a task force with the company to look at when the smelter might be built.

Yet most analysts in South Africa say it shouldn't take that task force long to reach their conclusion on the right time: Never.

"I can't see it happening ever — there's no objective economic reason for them coming to South Africa in future," said Anton Eberhard, an expert on the country's energy supply and professor at the University of Cape Town Graduate School of Business.

"It's all very nice having the cheapest electricity in the world, but that's irrelevant if you don't have any electricity at all."

Proceeding with the smelter — at a time when mines are threatening mass layoffs because of unreliable power supply, and voters can't plug in the kettle for a cup of tea — would be a risky political move by government, with national elections coming early next year.

While the terms of Alcan's deal with Eskom have not been made public, it is widely understood here that the power company guaranteed the smelter electricity at a price far below even South Africa's legendarily cheap power rates.

All of this leads to a few crucial questions: How did the South African government — the continental leader in governance, the guardian of the economy that produces a third of sub-Saharan Africa's economic output — mess up so badly? How did the growth-obsessed government of Thabo Mbeki it fail to notice the country didn't have enough electricity to keep toasters running, let alone to fuel an aluminum smelter, one of the most power-hungry forms of industry on earth?

And then there's this one: How is it that Alcan did not see it either?

Alcan negotiated a sweetheart deal for electricity, but somehow missed that Eskom had no capacity to supply it, even when everyone from anti-poverty activists to environmentalists to engineering experts were warning of the power problem. In fact, a 1998 government-commissioned report warned that without added capacity, the country would face critical shortages by 2007.

But Alcan was given assurances Eskom could supply the power, Mr. Bertolli said. "We wouldn't commit to something unless we were certain that the power was going to be there."

South Africa's power crisis became glaringly obvious in January: The lights had already been going out at intersections and shopping malls for several days when on Jan. 25 the government announced that it was forcing mines — the backbone of the national economy — to cease operations.

It was nearly a week before the mines were fully functional again, and losses were estimated at one billion rand ($128.6-million) a day. The electricity crisis as a whole is set to shave at least two percentage points off of South Africa's 6-per-cent growth projections for the year.

Some blame lies with Eskom: Demand for electricity has been growing steadily, due to what was a surging economy and a massive electrification program to reach poor people — the government has doubled the number of residential household customers since the end of apartheid in 1994.

But Eskom let coal reserves (coal-fired electricity provides 90 per cent of energy here) dwindle to just a couple of days' worth. Then, in January, it rained heavily, producing wet, unburnable coal. At the same time, the company was months behind on crucial maintenance.

The larger failure was the ANC's: The government was determined to privatize the energy sector, and in 2001 ordered Eskom not to build new generating capacity. But the price of electricity here was so cheap that no private generator saw South Africa as a worthwhile investment. So as demand grew, Eskom mothballed old plants, and no one built anything new.

Prof. Eberhard speculated that the government was blinded by Eskom's history as a top-notch utility — in 2001, for example, the Financial Times of London named it Power Company of the Year.

This reflects both the lack of experience in government of the post-apartheid rulers (who had to make the crucial energy decisions just two years after the transition to democracy) and the short time horizons of all politicians, he said.

The smelter's future is set to be complicated by the proposed BHP Billiton Ltd. takeover of Rio Tinto. Australia-based BHP already operates three aluminum smelters in South Africa, which have seen their output cut by the power crisis.

For now, both the government and Rio Tinto Alcan insist the project will go ahead.

Nimrod Zalk, director of industry policy for the Department of Trade and Industry, said last week that while the government would be more circumspect about making such deals in future, this contract would have to be honoured. Eskom's Mr. Maroga has said the same thing.

But many people here say the government in fact has little choice but to pay Alcan off and end the project. The company has put an estimated $50-million (U.S.) into the site so far, but it may decide it is more cost effective to walk away than wait around for Eskom.

The bauxite and alumina used in the smelter would have to be imported, regardless, and if the energy source is cheaper elsewhere, then Alcan has little reason to stay in South Africa, Prof. Eberhard said.

"We will no longer be the cheapest provider of electricity in the world," he said. "The marginal price of new power is much higher for us than, say, gas in Qatar or hydro in Congo, and we can't afford to give them a subsidized price."

With files from reporter Andy Hoffman in Toronto

EU fines aluminum fluoride companies $7.74M

Forbes Associated Press 06.25.08

BRUSSELS, Belgium - European regulators fined five companies that produce aluminum fluoride $7.74 million for collusion on Wednesday.

The European Commission said the companies agreed in 2000 to fix worldwide target prices and divide markets. Norwegian company Boliden Odda received immunity from EU antitrust authorities because it blew the whistle on the cartel, the commission said in a statement.

Aluminum fluoride is used to lower the smelting temperature of aluminum, reducing energy consumption in the process.

The commission said the companies met in July 2000 in Milan, Italy, and agreed on a worldwide target price increase and division of markets. It said the cartel lasted until the end of 2000. Due to the short duration of the cartel and the size of the market, the commission said the fines were relatively low.

The fines were imposed on Fluorsid SpA of Italy, Switzerland's Minmet Financing Company SA, Societe des Industries Chimique du Fluor (nyse: FLR - news - people ) from Tunisia, and two Mexican firms: Industrial Quimica de Mexico SA de CV and Q.B. Industrias SAB de CV.

Copyright 2008 Associated Press.

India, Myanmar sign $84 million loan deals

Associated Press 06.25.08, 4:13 AM ET

YANGON, Myanmar - India agreed to provide Myanmar with US$84 million in loans and credits to build power transmission lines and an aluminum plant, state media said Wednesday.

Four agreements related to the loans were signed Tuesday during the visit to Myanmar by India's Minister of State for Commerce and Power Shri Jairam Ramesh, the New Light of Myanmar newspaper said.

The agreements covered a loan of US$64 million to finance three power transmission lines and a US$20 million credit line to build an aluminum wire plant.

Myanmar is making a push to develop its hydroelectric potential, with India, China and Thailand the biggest foreign investors.

The two countries also signed an agreement to facilitate banking. India is one of Myanmar's major trading partners, with the balance of trade consistently in favor of Myanmar.

Relations between the two nations, which share an 830-mile (1,330 kilometer) border, turned cold when Myanmar's military took power in 1988 by suppressing pro-democracy demonstrations. Ties have improved significantly since 2000 with mutual visits by government leaders.

The second-highest ranking member of Myanmar's ruling junta, Vice Senior Gen. Maung Aye, visited India in April to witness the signing of a US$120 million project to upgrade waterways and highways along Myanmar's Kaladan river and develop the port of Sittway in northwestern Myanmar.

Copyright 2008 Associated Press

Bowen in the lead to score $2b alumina refinery

ABC Online, Australia - Jun 25, 2008

The Queensland Government says Bowen in the state's north is now the frontrunner for a $2 billion alumina refinery.

Premier Anna Bligh has signed a memorandum of understanding (MOU) with Chinese resources firm Chalco to investigate the project at Abbott Point, using bauxite from Aurukun.

Ms Bligh says progress has been made but a final decision has not.

"I stress there's more work to do but this is a real opportunity for Bowen," she said.

She said Townsville, Gladstone and Bowen are the three sites being investigated by the company, but at this stage Bowen is the frontrunner.

"This whole project is still subject to an extensive feasibility study which is now underway but Bowen is the most preferred site by the company," she said.

The Member for Whitsunday, Jan Jarratt, says the progress is promising and that the region's lobbying is starting to pay off.

"The Bowen area comes one step closer to securing this really important industry," she said.

"I'm being a little parochial but I do think this puts Bowen out in front in this race well and truly now."

A final decision on the project is expected at the end of 2009.

China to build aluminum smelter in Trinidad

International Herald Tribune, France - June 27, 2008

PORT-OF-SPAIN, Trinidad: China will help build a US$400 million aluminum smelter in Trinidad's southern region, according to the leader of the Caribbean island.

Prime Minister Patrick Manning did not say when construction would start or how many tons of aluminum would be produced yearly.

Trinidad would run the factory using its vast resources of natural gas, Manning said late Wednesday.

The country is the leading supplier of liquid natural gas to the U.S. and the second-largest energy producer on the Caribbean Sea after nearby Venezuela.

The smelter would be built close to Pitch Lake, the world's largest natural asphalt reservoir. It would help boost production of aluminum, one of Trinidad's main commodities, Manning said.

Environmentalists who successfully lobbied against another smelter two years ago have filed an injunction against the project.

The factory would be located roughly 20 miles (32 kilometers) from where U.S.-based Alcoa Inc. had planned to build a US$1.5 billion smelter. Manning rejected its plans based on complaints from local residents about air and water pollution.

The smelter would be one of more than a dozen Chinese-funded projects in Trinidad, including a university campus, a cultural center and several high-rise government buildings.

Iceland and Alcoa Sign New Declaration of Intent

IcelandReview, Iceland -26/06/2008

Minister of Industry Össur Skarphédinsson will meet the assistant director of US aluminum company Alcoa today to sign a new declaration of intent on the planned aluminum smelter at Bakki near Húsavík in northeast Iceland.

"A declaration of intent from May 2006 is being updated," Skarphédinsson’s assistant Einar Karl Haraldsson told Fréttabladid. In the last declaration of intent an annual 250,000-ton aluminum production and an annual 400-megawatt energy usage was agreed on.

Alcoa has not completed the projects listed in the last declaration of intent. "They are only beginning with an environmental impact assessment and a feasibility study has not been completed either. Therefore it is natural to extend [the declaration of intent]," Haraldsson reasoned.

Prime Minister Geir H. Haarde said in an interview with Dow Jones yesterday, that in light of Iceland’s current difficult economic situation, authorities are be more likely to approve a new Alcoa smelter now than before. The price of aluminum is currently skyrocketing.

Skarphédinsson would not comment on the issue. Before the general election in May 2007, his party, the Social Democrats, expressed their view that all heavy industry projects in Iceland should be put on hold for up to five years.

Rich Angola plans 3 mln t/yr Bissau bauxite mine, UK - (Reuters), Thursday June 26 2008

By Pascal Fletcher

BISSAU, June 26 (Reuters) - Angola is developing a $500 million project to mine 3-million tones of bauxite a year in Guinea-Bissau in a regional investment foray by sub-Saharan Africa's No. 2 oil producer, officials in Bissau said.

The mine would be the single biggest foreign investment in one of the world's poorest states, with a history of political instability since independence from Portugal in 1974.

Angola Bauxite, part-owned by the Angolan state, paid an up-front fee of $13 million to Guinea-Bissau in September for a leased mining concession in the southeastern Boe region.

Guinea-Bissau officials say the Boe deposits are a continuation across the thickly forested border of huge bauxite reserves in neighbouring Guinea, the world's leading exporter of bauxite, the ore from which aluminium is made.

The Angolan company will seek to develop reserves in Guinea-Bissau calculated at 110 million tonnes, containing 44 percent aluminium oxide, according to studies carried out in the early 1980s by a Soviet firm, Technoexport.

Plans include a new deep water port on the Buba river.

"It will be a total investment of around $500 million and will include exploitation of bauxite, and construction of the port of Buba and a railway and road linking Boe and Buba," Guinea-Bissau's Infrastructure Minister Rui Araujo told Reuters.

"We can say that the actions have started, we're at a preliminary phase, the studies are being done," he said.

A Brazilian company, Asperbras, had helped with the studies.

Precise start-up dates still have to be defined. A potential second phase of the project foresaw building an alumina plant to process bauxite in Guinea-Bissau, local mines officials said. For the moment, Angola is the only investor, but Araujo said Guinea-Bissau could seek additional partners for the project.

Araujo said Guinea-Bissau was also looking to construct a hydroelectric dam at Saltinho to provide energy for the project.

Rising aluminium demand in Asia has pushed up prices and given new impetus to bauxite mining projects. McKinsey consultants say new mines currently planned will be insufficient to meet a a 70 percent rise in bauxite demand by 2015.


Foreign diplomats in Bissau said Angola's investment -- unusual for the fast growing African economy better known for exporting oil and diamonds -- had political overtones.

They said Angola, by far the most resource-rich of the Portuguese-speaking African nations, was looking to project its political influence on the continent at a time when it was enjoying windfall profits from high world oil prices.

"Angola wants to invest its excess liquidity and also to have political prestige," one Bissau-based African diplomat, who asked not to be named, told Reuters.

The diplomats said poorer undeveloped Guinea-Bissau was a logical target for Angola's investment ambitions.

Angolan President Jose Eduardo dos Santos' interest in Guinea-Bissau also acknowledged a historical debt -- when troops from then apartheid South Africa threatened newly-independent Angola's capital Luanda in 1975, Guinea-Bissau's PAIGC government sent soldiers to help defend it.

Another diplomat in Bissau said the cash-strapped goverment used the $13 million up-front concession lease fee paid by Angola to fill a hold in the state budget.

Dos Santos invited Guinea-Bissau's President Joao Bernardo "Nino" Vieira and powerful armed forces chief General Batista Tagme Na Wai for talks in Luanda this month in what diplomats said was an initiative to iron out differences between the two.

"Angola is also very interested in political stability here (in Guinea-Bissau)," the second diplomat said. (For full Reuters Africa coverage and to have your say on the top issues, visit: (Editing by Alistair Thomson and Peter Blackburn)

Kaiser Aluminum to add energy surcharge for orders, effective July 1

Forbes - 06.30.08, 9:29 AM ET

NEW YORK (Thomson Financial) - Kaiser Aluminum Monday said it would add an energy surcharge for all orders of fabricated aluminum products, effective July 1.

The company said the decision was to reduce exposure to gas, electricity and fuel costs.

The amount of the surcharge will be based on a calculation tied to indexes provided by the Department of Energy. It will be updated on a monthly basis.

Shares of Kaiser closed Friday at $54.96. The stock is down 31% since the start of the year.

Ryan Vlastelica

Novelis Start Producing Multi-Alloy Aluminum Sheet in Korea - June 30th, 2008

Novelis Korea Limited announced that it has successfully completed the installation of Novelis Fusion(TM) technology at its plant in Ulsan, South Korea, and has begun commercial production of multi-alloy aluminum sheet products. This is Novelis' second application of its proprietary technology following the ground-breaking launch at its plant in Oswego, New York in 2006. This is also Novelis' second major investment in South Korea this year after the completion of a US$30 million expansion of its aluminum rolling mill in Yeongju last March.

Novelis Fusion(TM) is a unique solidification technology that produces aluminum sheet ingots with multiple layers of different alloys. These "multi-alloy" ingots are then rolled into premium sheet products with previously unattainable combinations of attributes such as high strength and superior surface quality.

Installing the technology in the Ulsan plant involved reconfiguring the existing ingot casting facility, known as the Universal Casting Shop. As its name implies, the casting shop has a flexible configuration which can be easily adapted to different casting technologies, making the conversion to Novelis Fusion(TM) rapid and cost-efficient. The casting facility is now producing both Netcast(TM) shape-cast products for automotive parts and Novelis Fusion(TM) ingots for sheet products.

The initial opportunity for Novelis Fusion(TM) sheet products in the Korean marketplace is to replace the conventional clad aluminum products used in heat exchanger applications. Novelis has already begun to supply brazing sheet to Korean customers that previously relied on imports, and the company expects to continue to increase its market share in the Asian market.

"With Novelis Fusion technology, we are now capable of offering a full range of high-quality brazing sheet and fin stock products for heat exchangers," said Bill Herr, Ulsan Plant Manager. "This will support our continued effort to deliver innovation for our customers."

"We are excited about the new opportunities that Novelis Fusion will open up for customers in Asia," added Jacquie Bartlett, Vice President Sales & Marketing. "Beyond the heat exchanger market, this new technology will add momentum to our initiatives to develop high-value products with our customers and to enter new markets."

Based on positive response from customers, the company is rolling out its Novelis Fusion(TM) technology worldwide. Projects are under way to also install the technology in Europe and South America, which will provide global coverage to all major markets. Customer interest is high in markets such as automotive, architecture and household appliances.