AluNews - November 2008

VALCO sale to International Aluminium Partners generates heat in parliament.

Joy Online, Ghana - Oct 31, 2008

Members of Parliament are once again on a collision course over the intended 70 per cent sale of government shares in the Volta Aluminium company (VALCO).

The deal valued at $175 million is aimed at boosting the aluminium industry in the country, but first needs parliamentary ratification.

Similar to the GT/Vodafone deal, the minority in parliament have raised serious objections to the sale, accusing government of trying to bulldoze its way without due diligence.

To complicate an already controversial sale, parliament has only eleven days to go on recess.

Haruna Iddrisu, MP for Tamale South in an interview with Joy News’ Evans Mensah cited a clause in the sales agreement mandating the Volta River Authority to make power available to VALCO, something he claimed would not be in the interest of the nation.

According to him, the country was on the verge of experiencing another energy crisis if the deal was allowed to go through.

Haruna Iddrisu also called for an independent valuation of the assets of VALCO before carrying out with the sale.

"It is not for government to determine the value of VALCO, there must be independent valuation", he charged.

In response, Hon. Felix Owusu Agyapong, Minister of Energy says the minority's criticisms are misplaced and accused the minority of double standards.

"A year-and-half ago government decided to purchase 90% of shares in Valco. At that time people were telling government it was taking a bad decision throwing good money away. And quite recently government bought another 10% for $2 million making a total cost of $20 million. It is this we are selling 70% for 175 million. So only on that alone Government has done a good buy and sell."

"Ghana was not the owner of Valco, it was the NPP that made Ghana the owner of Valco if we are selling it at that price it is a bonus for Ghana."

According to him, there were other benefits such as the construction of railway lines from Accra to Kumasi, mining of Kibi bauxite and other benefits the nation would accrue from the sale.

He also dismissed claims that the sales agreement, if ratified would jeopardize the provision of energy to the country.

Listen to the interviews with Haruna Iddrisu and the Owusu Agyapong in the attached audio.

See Memorandum to Parliament from the Minister of Trade, Private Sector Development and President’s Special Initiatives.

Story by Nathan Gadugah

Details of the Sale:

Vale Will Cut Output as Iron-Ore, Metals Demand Slows (Update2)

Bloomberg - Oct 31, 2008

read the whole article

or just the paragraph below

Vale said it will reduce activities at its Valesul Aluminio SA aluminum unit in Santa Cruz, Rio de Janeiro state, because of high costs. The company said the plant will operate at 40 percent of normal annual capacity of 95,000 tons.

Agnelli said Valesul isn't ``viable'' at current aluminum prices and that Vale is assessing what to do with it.

Smelter Plans for Iceland’s Helguvík Reviewed

IcelandReview, Iceland - Oct 31, 2008

Leaders of Nordurál – Century Aluminum recently presented new plans to the government for the smelter in Helguvík, southwest Iceland, which is currently under construction, proposing voluminous greater capacity for aluminum production than originally planned.

The aluminum smelter is being constructed in four phases and production is scheduled to begin in 2010, Fréttabladid reports.

The original plans assumed that 150,000 tons of aluminum would be produced after the first phase and 250,000 tons after the second phase, leaving the possibility for greater production capacity open.

Árni Sigfússon, Mayor of Reykjanesbaer municipality where Helguvík is located, said that since the environmental impact assessment was undertaken with a 250,000-ton production in mind, a new assessment would be required for greater capacity.

However, according to the latest plans for the smelter, 90,000 tons of aluminum will be produced for each construction phase, so after the smelter is completed it would be capable of producing 360,000 tons of aluminum annually.

CEO of Nordurál Ragnar Gudmundsson did not want to comment on these new plans apart from saying that no decisions had been made.

Ground was broken for the smelter in Helguvík last June and construction work began this fall. Contractors in construction have been hit hard by the economic crisis and in the southwestern region of Sudurnes alone, 200 people have lost their jobs in construction.

However, no one involved in constructing the Helguvík smelter has been laid off and officials remain optimistic that they will be able to continue to fund operations in relation to the smelter.

ALCOA Inc. press release: Facts/Business Case For Cost Reduction Initiatives At ALCOA

Maryville Daily Times, TN - Oct 31, 2008

Earlier this month ALCOA outlined that it would be taking steps to reduce costs, conserve cash and exploring ways to adjust and align production with demand in light of an unprecedented fall in aluminum prices, softening demand in end markets, continued high input costs, and the ongoing financial and credit issues facing markets across the world.

Below are facts outlining the need to reduce costs at ALCOA.

-- We have been very successful in securing power MOU’s/agreements for the long-term future at many of the U.S. plants (Massena, Intalco, Wenatchee). And we are working on others. We are at different stages of the process on all, but we need help from the community, the workforce, and everyone to help make that happen.

-- We are cutting costs in the short term to sustain the U.S. system for the long term.

-- This action impacts every location across the U.S. system and will be phased in over the next 12 months. No one location accounts for the majority of the cuts. In fact, some of the reductions will be achieved through attrition.

-- This is part of a broader global effort – announced earlier -- to match production and costs to the current market environment, which has deteriorated rapidly.

-- In July, aluminum prices on the London Metal Exchange (LME) were approximately $3,300 a ton. Today, the price of aluminum on the LME is approximately $2,150 a ton.

-- The drop in prices during the 3rd quarter 2008 was among the biggest declines in the history of the industry.

-- It is projected that as a result of the high costs and low metal price, more than 1/3 of all smelters in the world are losing money. The recently idled ALCOA Smelter in Rockdale, Texas, was not profitable as a result of the overall market conditions and ongoing power supply issues there.

-- The longer-term view on aluminum continues to be strong – with consumption of aluminum still projected to nearly double by the year 2017. However, the short situation for many smelters in the world is one of survival.

-- As a result, ALCOA launched a series of cost reduction initiatives across all areas of our operations. We have tried to leave no stone unturned. Make no mistake…these cost reduction moves are critical to the future of the plant; we are looking to secure the future for more than 4,000 employees across the system.

-- We have gone to great lengths on these cost reduction efforts because we wanted to try as much as we can to minimize the impact on our people. As you know we never like to have cost reductions actually revert to job eliminations. Unfortunately, our cost reduction steps have not been enough and we will be making some targeted reductions at our smelter here involving salaried and hourly workers. We have shared that news with employees today.

-- Alcoa has been in business and a leader in the industry for 120 years. The overall market conditions will eventually return back to normal and we look forward to continuing our role as a leader in this community.

Should you have any questions, please contact Kevin Lowery at 412-553-1424 (office) or 724-422-7844 (mobile).

Two investors want in on Jamaica's march towards coal

Jamaica Gleaner, Jamaica - Oct 31, 2008

The Government's move towards coal as a source of energy has attracted interest from at least two sources, including the Chinese who are scouting investment opportunities in coal-powered co-generation facilities in Jamaica.

Energy Minister Clive Mullings told the Financial Gleaner that two sets of investors - one from China, the other already in operation here - have expressed interest in setting up coal-fired co-generation plants, mainly for the bauxite sector whose expansion is hinged on the sourcing of additional power.

"There is a meeting ... with Minister (Derrick) Smith and some investors from China to use coal in the bauxite industry," Mullings told the Financial Gleaner.

He said expressions of interest include Mincenco Limited, a subsidiary company of American company Century Aluminum Limited, which has a stake in the St Ann Bauxite Company.

Coal co-generation plant

Mincenco wants to set up a coal co-generation plant in St Ann, presumably to generate power for the bauxite plant at Discovery Bay that is partially owned by its parent.

Mullings could not provide details on the extent of the Chinese interest.

Permanent secretary in the Ministry of Mining and Telecom-munications, Marcia Forbes, declined to comment on the meetings, saying she was not at liberty to disclose information on the nature of the talks.

Forbes also sought to downplay the interest, telling the Financial Gleaner that there were investors in Jamaica every day exploring investment opportunities.

Jamaica is adding coal to its energy mix to help cut back on the US$2 billion oil bill that the country wracks up annually.

Mullings has said the programme will require investment of about US$300 million in the right infrastructure.

UC RUSAL suggests setting up metal reserve

RosBusinessConsulting, Russia - Oct 31, 2008

RBC, 31.10.2008, Moscow 09:54:09.UC RUSAL approached Russia's Deputy Prime Minister Alexei Kudrin with a proposal to create a strategic state metal reserve to give an impetus to the Russian processing industry and stabilize metal prices, RBC Daily wrote today. To shore up the aluminum market and prevent a fall in aluminum prices, the company suggested that intergovernmental agreements be signed with a number of countries to cut metals production by 10 percent for the next two years. The same idea is propounded in the letter of UC RUSAL's General Director Alexander Bulygin addressed to Alexei Kudrin offering steps to stem the crisis in the Russian metal processing industry. In his letter, Bulygin notes that due to the crisis, the Russian metals industry could be forced to lay off 1.2m people, lose RUB 1 trillion (approx. USD 37.68bn) in export proceeds from high value-added products, and fail to contribute RUB 200bn (approx. USD 7.54bn) in taxes to the federal budget.

UC RUSAL sees a state metals reserve as a way to stanch the crisis, as it will not only work to diversify government investment, but will also help stabilize metal prices.

Chalco to add 100,000-ton alumina capacity

China Knowledge Online, Singapore - Nov. 4, 2008

Aluminum Corp of China Co Ltd, the country's largest aluminum producer, Monday announced its 55%-owned unit Huayu Aluminum has signed an agreement with Huasheng Jiangquan Group to build an aluminum smelter in Shandong Province, market sources reported.

The plant, located at Linyi City and already under construction, is designed to have an annual capacity of 100,000 tons and scheduled to be operational in December this year, according to Chalco's filing with the Hong Kong Stock Exchange.

The total investment of the new plant will be RMB 420.09 million.

Upon the completion, Chalco's primary aluminum production capacity is expected to increase 100,000 tons.

The Chinese company said earlier that it would cut its output or partly suspend production in its facilities in Shandong, Henan, Liaoning and Inner Mongolia from Oct. 22, by 720,000 tons, due to the sharply decreased prices of aluminum and weakening demand.

Copyright © 2008

Zaporizhzhya Aluminous Industrial Complex closed down two productions

UNIAN News Agency, Ukraine - Nov. 3, 2008

RusAl holding, owner of the control share holding of the Zaporizhzhya Aluminous Industrial Complex (ZAlK OJSC), began to close down the electrolysis and aluminous productions of the enterprise.

According to ZAlK OJSC press-service, the productions are shut down because the government of Ukraine failed to make decision on allowing the enterprise to pay for electrical energy at a differentiated tariff, as it is done in the world.

"The decision has been discussed for three years already. However, the government has not made any decision as yet. As of today, the aluminum price has fallen to US $ 2000 for a ton making absolutely unprofitable the productions at ZAlK. In this situation, according to ZAlK director general Oleksander Kotyuk, the enterprise was forced to launch a gradual conservation of the production cycle, with a gradual closedown of technological facilities", the company’s press-service informed.

According to the press-service, 130 people will be sacked in the course of the first stage of the closedown.

$4billion integrated aluminum industry in Ghana - Kufuor

Modern Ghana, Ghana - Nov. 3, 2008


After listing a number of government's interventions that were promoting investment in the country, President Kufuor announced that Brazil and Norway were to partner Ghana in the development of a $4billion integrated aluminum industry "which has been a national dream since the first republic".

The project, which would have built-in plans for the generation of 4,000 megawatts of power, half of which would be put into the West Africa power Pool, was expected to employ about 4,000 Ghanaians.


Read the whole article at

Bauxite Resources snags Chinese funding and offtake

WA Business News (subscription), Australia - Nov 2, 2008

Bauxite Resources Limited, (ASX: BAU) has signed a Memorandum of Understanding with Chinese alumina producer, Shanxi Wusheng Aluminium Company Limited ("Shanxi Wusheng"), with the aim of finalising an agreement within three months to supply quality bulk bauxite Direct Shipping Ore (DSO) to China.

The core aim of the MOU is for the two companies to work together with a view to delivering the first shipment of ore within 12 months of signing a formal off-take agreement under the terms of the MOU.

BAU is to provide up to two million eight hundred thousand tonnes per annum of bauxite sourced from BAU’s extensive Darling Range tenements and shipped from a nominated port in Western Australia. The MOU also provides for funding of capital works to be arranged by the Chinese company for infrastructure repayable out of supplies of bauxite, as well as a direct equity investment by way of a placement of up to 15 million shares in BAU at a share price to be determined upon execution of the official contract.

Infrastructure Access

Long term Rail and Port infrastructure contracts are essential to the success of a Direct Shipping Ore (DSO) project. Due to the large areas covered by BRL’s tenements, access to a range of infrastructure options will be necessary to ensure cost effective delivery of material for shipping. Negotiations are currently underway to ensure all options to be pursued are viable and will be finalised by the end of 2008.

Bauxite ore is the primary raw material for refining into alumina, which is subsequently smelted creating aluminium.

First Look Comment by Andrew McCrea

Bauxite Australia is a very interesting early stage company. With the announcement of this MOU with Chinese alumina producer, Shanxi Wusheng Aluminium Company, some of the early stage risk is taken away for investors. BAU’s ground in the Darling Ranges is highly prospective for bauxite from historical workings, and with four other world class bauxite mines in the area. Access to funding and offtake is critical in the new financial world – as are low cost deposits with access to infrastructure.

Looming long term shortages of bauxite in China have led to the strength in the bauxite price, as China has been a net importer of bauxite in 2008. That said BAU is still early stage and share price volatility will remain high.

With $7m in cash, a strong China perspective, and an MOU for funding and offtake in hand, as early stage explorers go, Bauxite Australia offers better value for money on a medium to long-term time-frame than most.

Deripaska in Montenegro - between a rock and a hard place

The Guardian, Monday November 3 2008

The Russian oligarch's aluminium plant is turning out to be a money pitJ

John Hooper in Podgorica

Deripaska is not the only Russian to buy into Montenergo's economy.

Every move Oleg Deripaska makes as he struggles to cope with the devastating consequences of the financial crisis is being watched around the globe by his creditors, industrial rivals and - in Britain - swaths of the general public, intrigued by his links to the business secretary, Peter Mandelson, and the shadow chancellor, George Osborne.

Nowhere, though, is the Russian metals mogul under closer scrutiny than in the little Mediterranean republic of Montenegro, where one of his subsidiaries accounts for 14% of the country's GDP and more than half its exports. The Kombinat Aluminijuma Podgorica (KAP), an aluminium plant on the outskirts of the capital, exerts what Montenegro's economic development minister, Branimir Gvozdenovic, calls a "huge influence" on a nation with a smaller population than Leeds.

"Almost 3,000 people work at the plant itself and many smaller companies rely on it," he said. Nearly 1,000 more are employed at a bauxite mine that supplies KAP with its raw materials. Deripaska's Central European Aluminium Company (CEAC), which owns the plant and the mine, reckons that "counting household members, more than 50,000 people depend on KAP for their incomes" - almost one in 10 of Montenegro's estimated 680,000 population.

Yet ever since being sold to Vladimir Putin's favourite oligarch in a privatisation three years ago, KAP has been causing Deripaska headaches. As the storm broke over international financial markets this autumn, there were rumours that the Russians might be considering shutting KAP altogether.

A spokesman in Moscow told the Guardian this week that "currently, CEAC has no plans to cease all aluminium production at the plant". But he revealed for the first time that "in response to current metal prices and cost pressures, CEAC plans gradually to reduce output by up to 10%".

The rescheduling of maintenance programmes, together with what he called "other cost-reduction initiatives and some earlier unscheduled maintenance", would clip 20,000 tonnes off the plant's expected 2008 output of 120,000 tonnes. The announcement represented a drastic reversal of the company's strategy, which was to raise production in stages to 156,000 tonnes.

Deripaska's difficulties with his creditors are just the latest addition to a toxic mix that includes soaring energy costs, claims of deception and a widespread concern among Montenegrins that the Russians, who have already bought up large stretches of the coastline, are bent on colonising their country.

Scarcely had the bubbles gone out of the champagne poured to celebrate the KAP deal than Deripaska's people began to suspect they had been tricked. Their spokesman said that, in May 2006, six months after paying out €48.5m (Ł38m) for the state's holding, CEAC had sent the government a notice complaining of "breaches of representations and warranties" in the purchase agreement.

Dirty KAP

Among other things, the Russians complained that they had been told the 2004 accounts were in order and that the firm contained working capital. Post-merger due diligence showed this was "largely incorrect or inaccurate", the spokesman said. After failing to reach an agreement with the government, CEAC took its claim to a German arbitration tribunal in August.

Gvozdenovic pooh-poohs the idea that Deripaska's group - "one of the leaders in the aluminium industry" - could have been hoodwinked. "They had their offices in the plant before they became the owners of it," he said. "They were able to see all the documentation during the [privatisation] process. They were fully aware of the situation."

There have been claims in the local media that the Russians are trying to slide out of costly undertakings to clean up KAP, Europe's most delapidated aluminium facility. Thick black plumes of smoke rise from its chimneys, making it plain to holidaymakers arriving at the nearby airport that all is not quite as it should be in a nation that markets itself as the world's "first ecological state". Gvozdenovic would not comment other than to say that the purchase agreement had "precise guarantees for a programme of environmental protection and we require them to comply with those clauses".

Power struggle

CEAC says it has already spent €8.1m on two of the three stages in a €20m programme that, among other things, will eventually capture all but 1.5-2% of the gases emitted by the plant. But the Russians make no secret of the fact that they are sweating under the burden of increased electricity costs.

Two-thirds of the 1.9m megawatt-hours they need comes from the electricity utility at prices subsidised to the end of 2010, but which are nevertheless tied to rising aluminium prices. The rest has to be imported from abroad. By the end of last year, it was costing CEAC double the subsidised price and within a couple of years it could easily be another 25% higher, the company said.

Deripaska's group won a tender for Montenegro's only big coal-fired power station, but last year the purchase was blocked by parliament on grounds of national energy security. "As a result," said the company, "KAP is left without a long-term supply of competitively priced electricity."

One of the oligarch's favourite pastimes is to sail the vast yacht on which he hosted George Osborne and Peter Mandelson along Montenegro's heavenly coastline. But he must now rue the day he ventured inland.

Kaiser Aluminum 3Q Net Down On Derivatives Losses

Trading Markets (press release), CA - Tue. November 04, 2008

Kaiser Aluminum Corp.'s (KALU) third-quarter net income plunged as the company booked $43.8 million on a mark-to-market loss on derivative positions, mainly because of falling metal prices.

"We continued to experience solid demand for aerospace and defense products, but began to see the early trends of distributor de-stocking in our rod and bar business," said Chief Executive Jack A. Hockema.

The maker of fabricated-aluminum products reported a loss of $22.1 million, or $1.11 a share, down from $24.8 million, or $1.22 a share, a year earlier.

Excluding items, Kaiser earned $15.7 million, or 77 cents a share, in the

Sales rose slightly to $369.2 million from $366.7 million.

Analysts' estimates were for per-share earnings of 67 cents on revenue of $405 million, according to a poll by Thomson Reuters.

On July 1, Kaiser imposed surcharges on all new orders to cover higher energy costs, but it has reduced the surcharges as prices have fallen.

The company also has been raising its quarterly dividend after reinstating it in June 2007. Kaiser, founded in 1946, exited from Chapter 11 bankruptcy protection in July 2006.

Kaiser's shares were at $36.23, down 45 cents, or 1.2%, in after-hours trading.

Kiev May Take Over RusAl Plant

The Moscow Times, Russia - Wednesday, November 05

By Nadia Popova / Staff Writer

Ukraine may renationalize the Zaporozhsky aluminum plant, controlled by United Company RusAl, if it does not resume production and do more to modernize the facility, Fuel and Energy Minister Yury Prodan said Tuesday.

The Zaporozhsky plant, the only aluminum smelter in Ukraine, began suspending output this week, blaming the decision on unreasonably high electricity rates and falling aluminum prices.

"We demand that the owners of the plant efficiently manage the smelter, conduct the proper modernization and stick to its investment obligations instead of halting the production because of the lack of super profits," Prodan said in comments confirmed by spokesman Fent Di. "If the owners can't do it, they have to return the smelter to the state."

Di declined to comment on when the renationalization could take place or what legal mechanisms would be used.

No one at RusAl's office in Moscow was available for comment Tuesday, a state holiday, and company spokespeople did not answer their cell phones.

RusAl said Monday that it would lay off 130 workers at the plant, which produces 113,000 tons of aluminum per year and 265,000 tons of alumina.

"The local electricity tariffs are among the most expensive in the world and prohibitive for energy-intensive aluminum production," RusAl said in an e-mailed statement. "The unwillingness of the government to solve the issue of energy tariffs … as well as the slowing growth of global demand for aluminum are the main motives for the move."

Production at the plant will be suspended "until the tariffs issue is solved and the situation on global markets improves," the company said.

Electricity costs in Ukraine have increased greatly over the last two years and currently comprise 48 percent of the plant's costs, RusAl said. The smelter's debt for electricity supplies has reached 41 million hryvnas (around $7 million), Prodan said Tuesday.

The Zaporozhsky plant was privatized at the end of 2000. RusAl received a 97.5 percent stake last year after completing its merger with SUAL, which had previously controlled the smelter.

Rio Tinto bullish on mining prospects in India

Business Standard, India - November 04, 2008, 17:37 IST

Australian mining major Rio Tinto today said it was bullish on mining prospects in India and is looking into opportunities in eight states in the country.

"The company is exploring prospects in eight states," Rio Tinto India Managing Director Nik Senapati said.

To a query, he said the company was open to exploration of all minerals, including iron ore and bauxite, in India.

When asked, the company would be able to start mining operations, Senapati said he was hopeful that it would not take long.

The company has already lined up as investment of up to Rs 10,500 crore for setting up an alumina refinery and aluminium smelter in India.

It has also entered into an agreement with state-owned NMDC to explore domestic and international mineral reserves, primarily iron ore.

Rio Tinto is one of the several Australian mining companies participating in the International Mining & Machinery Exhibition (IMME) 2008 starting here tomorrow.

Kaiser: Anglesey To Be Back At Capacity By Yr-end

Trading Markets (press release), CA - November 05, 2008

LONDON, Nov 05, 2008

The Anglesey aluminum smelter in Wales is anticipated to return to full production by the end of the fourth quarter but a permanent shutdown is still being considered, Kaiser Aluminum Corp. (KALU) said Wednesday.

This is because the Wylfa power station in Anglesey, which supplies the 148,000 metric tons a year smelter, is slated to close in 2010, after the plant's contract with it expires next year.

"While Anglesey continues to pursue affordable power beyond the September 2009 contract expiration, it additionally is evaluating other strategic alternatives, including a potential facility shutdown," the company said. The smelter in Holyhead is owned 49% by Kaiser with the remainder held by diversified mining giant Rio Tinto PLC (RTP). Production was cut after a fire in June shut down one potline and reduced the second to two-thirds of capacity. Anglesey restarted production on the non-operating portion of the potlines at the smelter in late July, completed restart activities at the end of October with approximately 90% of the pots operating and expects to return the remaining pots to production by mid-December, Kaiser said.

"No assurances can be provided that Anglesey will be successful addressing the expiration of its current power contract, and the company continues to assess the recoverability of its investment in Anglesey as the facts and circumstances facing Anglesey continue to evolve," it said.

The company suspended dividend payments due to the fire in July and said it can give no assurance that Anglesey will declare dividends at any time in the foreseeable future.

This is due to the pending expiration of the current power contract, growing uncertainty over the smelter's future operation and challenges presented by Anglesey's potential exposure to higher pension contributions following recent declines in the value of the assets held by the Rio Tinto pension plan in which Anglesey participates.

"An ultimate shutdown of the operation would have no direct impact on the company's core fabricated products business," Kaiser noted.

Aluminum producers are currently cutting production due to falling global demand and a steep decline in London Metal Exchange prices. LME aluminum prices fell some 43% since their July peak of $3,380/ton to reach a low of $1,925/ton last week.

Earlier Wednesday, Kaiser said its third quarter operating results in its primary aluminum division were negatively impacted by approximately $20 million from the Anglesey outage, as well as $34.1 million of non-cash, non-run-rate mark-to-market losses on metal and currency derivative positions.

"Although we continue to remain bullish on aerospace and defense demand both in the near term and long term, the current credit crisis has heightened the risk of a global recession," said Jack Hockema, Kaiser President and Chief Executive. Noting that the markets are cyclical, Hockema said the company would "aggressively flex costs in response to changing market conditions."

"Additionally, we will continue to maintain a strong balance sheet and a prudent liquidity cushion to fund committed strategic investments and preserve our financial strength until we have further clarity on the future credit environment," he added.

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

Aluminum output cut unlikely to stop price fall

SteelGuru, India - November 07, 2008

BL reported that the sharp cut in global production, aluminum availability is expected to be in surplus till 2009. In the H1 of 2008, the metal was in surplus of 7.59 million tonnes leading to high inventory in the London Metal Exchange and sharp fall in prices.

With the current aluminum prices hovering at USD 2,050 a tonnes in LME about 75% of smelters in China, the US and Europe are operating well below their break even level of USD 2,500 a tonnes. Taking a cue from the sharp fall in prices, aluminum producers globally have decided to cut production by 6.79 million tonnes.

An analyst said that it is widely expected that the capacity of 1.5 million tonnes a year being added in China over the next 6 months may be delayed by a few months due to the global economic slowdown. The delay in capacity addition may not lead to a rise in aluminum prices as the demand has also fallen sharply.

China, the key demand driver for aluminum accounted for 32% of the global consumption in 2007 and 90% of the incremental aluminum consumption growth. Chinese aluminum consumption in the H1 of 2008 has grown 8% compared to 46% recorded in 2007.

Similar fall in demand from the realty and automobile sectors was witnessed in the US due to the recessionary trends. He said that "For instance, car production in the US is expected to down by 25% to 12 million a year against 16 million a year."

Mr Prasad Baji research analyst of Edelweiss said that barring China, aluminum consumption growth is static around 3%. US based Alcoa Inc expects aluminum consumption in North America to contract 5% in 2008 as automotive and construction sectors remain weak.

Globally, aluminum production has been adversely affected due to inadequate power supply. Electricity cost accounts for 35% to 40% of aluminum production cost.

According to International Aluminum Institute, world production growth in aluminum has slipped in first 8 months of 2008 to 6.7% from 12.3% growth in 2007. Aluminum production is energy intensive. Nearly 15,000 KWH is required to produce 1 tonnes of aluminum. Overall, at least 50% of global smelters depend upon coal based electricity grids to draw power for aluminum.

The acute shortage of thermal coal has resulted in long term contracts being settled at USD 125 a tonnes up by 125% from 2007. Coal on spot basis has touched a high of close to USD 200 a tonnes and has recently come down to USD 125 a tonnes against USD 95 a tonnes last year. This huge increase in coal prices has resulted in increasing electricity costs for aluminum smelters.

Further, coal supply in South Africa was affected due to heavy rains which prevented movement of coal. Over the years, China has closed down thousands of coal mines due to safety issues. On July 1st, China raised average electricity tariffs by 4.7% and in August further hiked on grid tariff by 5%. The increase in energy cost has raised the aluminum production cost by USD 400 a tonnes for Chinese producers.

Venezuela, Russia discuss 46 cooperation projects 2008-11-07

CARACAS, Nov. 6 (Xinhua) -- Venezuela and Russia discussed 46 cooperation agreements during the 5th High Level Intergovernmental Commission held here Thursday.

Venezuelan Vice President Ramon Carrizales and Russian Deputy Prime Minister Igor Sechin attended the meeting, which reviewed a series of initiatives to be signed by Venezuelan President Hugo Chavez and Russian President Dimitri Medvedev later this month.

Venezuelan Foreign Minister Nicolas Maduro said after the meeting that "the unipolar world is collapsing and finishing in all aspects, and the alliance with Russia is part of that effort to build a multipolar world."

Projects being discussed include, among others, the creation of a bi-national investment bank, the opening of a direct air route between Caracas and Moscow, the building of an aluminum plant, the construction of a gas platform off the Venezuela coast, plans for automobile production, and Venezuela's acquisition of Russian planes and ships.

The two countries also reached agreements on the development of outer space and the use of nuclear energy. Maduro said the two countries "will develop all what has to do with technology and satellite in the space," and will continue to work at using nuclear energy with peaceful means to generate alternative energy.

Sechin arrived in Venezuela Wednesday to prepare a third meeting within five months between the presidents of the two countries. During the first two occasions in July and September, President Chavez traveled to Russia.

Editor: Bi Mingxin

Chalco scales down production

Alibaba News Channel, NEW YORK - 7 Nov 2008

Editor: Sharon Li

ALUMINUM Corp of China Ltd, the nation's biggest producer of the metal, yesterday said it has idled 38 percent of its alumina capacity because of falling prices and demand.

Chalco, as the Beijing-based company is known, had shut 4.11 million metric tons of annual production capacity as of Wednesday, it said in a filing to the Hong Kong stock exchange. The company didn't say what the operating capacity was before the latest cut, according to Bloomberg News.

Chalco, Alcoa Inc and Rio Tinto Group are shutting smelters after the metal plunged by about a third in three months. The global credit crunch and the economic slowdown are curbing demand from manufacturers, car makers and builders.

The latest reduction is because of the "impact of aluminum production cuts and the low price of alumina," Chalco said in the statement. Two tons of alumina are needed to make one ton of aluminum.

Chalco fell 12 percent yesterday in Hong Kong trading to HK$2.86 (37 US cents), taking its loss this year to 82 percent. Its shares dropped 3 percent to 6.09 yuan (89 US cents) in Shanghai.

Bauxite Resources enters off-take deal

Your Metal News (press release), UK - Thursday, Nov 06, 2008

Perth-based Bauxite Resources Ltd has entered into an off-take agreement with a Chinese alumina producer to supply all of its entire requirements. Bauxite and Shanxi Wusheng Aluminium Company Ltd has entered into a memorandum of understanding whereby the former company will supply up to 2.8 million tonnes of bauxite each year. The bauxite will be sourced from the company's Darling Range tenements.

The deal also provides for funding of capital works to be arranged by Shanxi, and a direct equity investment through a placement of 15 million shares in Bauxite at a share price yet to be determined. Bauxite has agreed not to enter into any off-take deals with third parties for the next three months as both companies finalise details of the off-take and funding deals.

Perth-based bauxite explorer, Bauxite Resources Limited, has signed a Memorandum of Understanding with Chinese alumina producer, Shanxi Wusheng Aluminium Company Limited (Shanxi Wusheng), with the aim of finalising an agreement within three months to supply quality bulk bauxite Direct Shipping Ore (DSO) to China.

The core aim of the MOU is for the two companies to work together with a view to delivering the first shipment of ore within 12 months of signing a formal off-take agreement under the terms of the MOU. In the MOU with Shanxi Wusheng, BRL is to provide up to two million eight hundred thousand tonnes per annum of bauxite sourced from BRL's extensive Darling Range tenements and shipped from a nominated port in Western Australia.

The MOU also provides for funding of capital works to be arranged by the Chinese company for infrastructure repayable out of supplies of bauxite, as well as a direct equity investment by way of a placement of up to 15 million shares in BRL at a share price to be determined upon execution of the official contract.

BRL has agreed not to enter into any off-take agreements with other third parties for a period of three months, giving BRL and Shanxi Wusheng an exclusive period to finalise the details of the off-take and related capital and funding requirements. This three month exclusivity period does not affect negotiations relating to direct investment opportunities in BRL from third parties who may be interested in the long-term alumina refinery stage two option, currently being investigated by the Company.

Henry J. Kaiser, Entrepreneur

Hawaii Reporter, HI - 11/7/2008

Part 1 of 4

By Randal O'Toole

Check out the full article with lots of pictures

UPDATE 3-Ghana assembly clears VALCO sale; "buyers" say no

Reuters - Fri Nov 7, 2008 (Adds Vale also saying it has no plans to buy VALCO stake)

By Kwasi Kpodo

ACCRA, Nov 7 (Reuters) - Ghana's parliament approved a deal on Friday for the $175.5 million sale of 70 percent of aluminium smelter VALCO, but both foreign companies mentioned in the deal document denied they had any plans to buy the stake.

Ghana's trade ministry said in a memorandum to parliament that Norsk Hydro (NHY.OL: Quote, Profile, Research, Stock Buzz) and Companhia Vale do Rio Doce (Vale/CVRD) (VALE5.SA: Quote, Profile, Research, Stock Buzz) had agreed on Aug. 8 to buy the VALCO stake and invest $4.7 billion in Ghana's aluminium industry.

Three-month aluminium futures MAL3 have fallen by nearly a third since Aug. 8 and by over 40 percent since July highs.

Parliament approved the deal by acclamation but within hours both companies denied they were investing in buying into VALCO, which has been inactive since early 2007 due to power shortages.

"Hydro has no plans to make any investments in Ghana," Norway's Norsk Hydro spokesman Stefan Solberg said in Oslo.

"We have not signed any agreement. This is something we have looked at just like (we have looked at) other places in the world," Solberg said.

A spokeswoman for Brazil's Vale told Reuters in Sao Paolo that "there are no such plans for this."

Ghana government officials could not be reached for comment.

VALCO has capacity to produce 200,000 tonnes of aluminium a year, but has been shut since March 2007 due to power shortages caused by low water levels in the vast Volta hydropower dam.

Under the terms published by the Ministry, Vale and Norsk Hydro would pay an initial $25 million to Ghana's government, with the remainder due only once VALCO resumed production with two pot lines running and power guaranteed from the Volta dam.

The deal was cleared by acclamation without the need for a vote in parliament, despite opposition over recent days from some members of parliament who objected to some of the terms.

"It's a giveaway because we know it will take a pretty long time for VALCO to run two pot lines -- the reality is that we don't have the excess power to give VALCO now, if we go that way, we'll be plunging our country into darkness again," opposition National Democratic Congress (NDC) spokesperson Haruna Iddrisu told Reuters ahead of the vote.


VALCO was created in the 1960s after Ghana's independence from Britain in 1957. Ghana's government bought out Kaiser Aluminium's (KALU.OQ: Quote, Profile, Research, Stock Buzz) 90 percent stake in 2004 for $18 million.

The government bought the outstanding 10 percent stake in the company from U.S. aluminium maker Alcoa (AA.N: Quote, Profile, Research, Stock Buzz) last June for $2 million, saying it wanted to create an integrated aluminium industry including an alumina refinery.

Rio Tinto (RIO.AX: Quote, Profile, Research, Stock Buzz) mines bauxite in Ghana, but ships it abroad for refining. VALCO has always imported alumina from abroad to feed its potlines.

Among the investments specified in the text approved by parliament on Friday were bauxite mining operations at Kibi and Nyinahin and a new $2.5 billion, 2 million tonne/year alumina refinery in the port of Tema near Ghana's capital Accra.

It said the mines, alumina refinery, 1,200 megawatt power station and upgrade to the railway between the capital Accra and the second city Kumasi would be complete within six years.

Ghana, the world's second biggest cocoa grower and Africa's No. 2 gold miner, is keen to diversify its economy and expects to start pumping crude oil from offshore fields in late 2010.

The administration of President John Kufuor, who is due to stand down after elections in December, has pushed economic reforms. In August it sold a 70 percent stake in phone operator Ghana Telecom to Britain's Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz) for $900 million. (Additional reporting by Jorgen Frich and Aasa Christine Stoltz in Oslo and Roberto Samora in Sao Paulo; writing by Alistair Thomson, Editing by Jim Marshall)

Alcoa Working on Deal to Keep Workforce Busy

WCAX, VT - November 7, 2008

Massena, New York

A week after there was some bad economic news at the Alcoa aluminum plant in Massena, New York, now there is some good news.

They are close to a deal with the New York Power Authority that would require keeping at least 900 employees at the plant through 2043.

Last week Alcoa cut 100 jobs from its Massena plant, as part of a company-wide effort to reduce costs because of plummeting aluminum prices.

At long last, India's Lanjigarh alumina refinery gets locally mined bauxite

Mineweb, UK - Friday , 07 Nov 2008

After several years of protests and litigation, Vedanta has finally begun supplying locally mined bauxite to its Lajigarh alumina refinery.

Dorothy Kosich


India's Vedanta Resources says the Lanjigarh alumina refinery in the Kalahandi district of Orissa will begin to use bauxite from a nearby mine in the middle of calendar year 2009.

The announcement follows a long fight over the bauxite mining project at Lanjigarh in the Kalahandi District of Orissa, which was finally cleared by the India Supreme Court in August.

Local tribes and environmental activists had objected to mining in the nearby Niyamgiri hills to supply up to 3 million tonnes of alumina bauxite to the Lanjigarh refinery.

The anticipated mine life is 18 years.

People belonging to the Dongria Kondh tribe in the region are opposed to mining in the Niyamgiri hills because the tribe considers the mountain sacred. The Niyamgiri reserve forests are home to spotted deer, wild boar and leopards, which has some villagers concerned that mining will disturb the wildlife.

Vedanta subsidiary Sterlite Industries has been forced to bring in bauxite to the Lanjigarh alumina refinery from third-party cases while the case was ongoing in the Supreme Court. Alumina production capacity at Lanjigarh is 1.4 metric tons a year, although the company plans increase this to 5 million tonnes annually to supply the expansions at its Jharsuguda and Korba aluminum smelters.

Meanwhile, Vedanta announced Thursday that it may reduce its investment in India by US$5.1 billion, and cut production in response to falling metals prices and lower demand. Among those investment reductions may be the Lanjigarh refinery and the new bauxite mine.

In a statement, Vedanta said, "We have reviewed our capital expenditure programme and believe that we have the opportunity to reduce the announcement investment by USD 5.1 billion through various initiatives."

The company may reduce capex by 20% at the alumina, aluminum and zinc-lead expansion projects in India. A $2 billion investment at a power plant at Jharsuguda has also been deferred. Vedanta said it will also utilize temporary production cuts to help increase falling metals prices.

Tumbling Down .. The deconstruction of Northwest Aluminum nears completion

Dalles Chronicle, WA - 08-Nov-2008

By KATHY GRAY of The Chronicle

Sitting in her guard shack at Northwest Aluminum, Tommie Gilmore watches memories come tumbling down.

"It’s sad for me," she says. "I’ve worked here a long time — 16 years."

She’s one of six or seven longtime Northwest Aluminum employees who’ve stayed on as the 50-year-old factory has been gradually taken apart, bit by concrete, copper, iron and aluminum bit.

"Every time I see a building go down, it makes me think of who worked in there, and how much I miss them."

Gilmore checks in visitors and issues hard-hats where they’re needed to visit the deconstruction site.

Deryl Leonard expresses similar sentiments as he leads a tour around the site. He’s worked at Northwest Aluminum for most of 40 years, since he got out of high school in 1968.

"I’ll be here ‘til they tell me to go home," he says.

Leonard handles shipping and logistics for the massive demolition project, his office based at the on-site scales building.

"Everything that is going in or out has to be weighed and accounted for," he says. "You’re about to see the last remnants."

They look like more than remnants: Huge piles of steel, iron, concrete, brick and, of course, aluminum spread across the 90-acre factory site in various stages of sorting, reclamation, chopping, crunching and baling. But they are the remnants.

"Aluminum, for example, we’ve shipped out about one million pounds a month since last June. This is some of the last aluminum," he says, gesturing to a pile of thin aluminum bussing used in the pot rooms.

Nearby, Ken Freda and Ken Goodnight, two temporary employees, are working to salvage 27-pound brass gears that also came from the pot rooms. While dozens of people are working on the demolition site, only six or seven are Northwest Aluminum employees, most ex-supervisors who measure their time at the plant in decades.

The rest are employees of Envirocon, the contractor hired to take down the plant, or their subcontractors.

"We’re seeing the whole industry leaving the country," Leonard noted. "This contractor, it’s the third aluminum plant they’ve torn down." A few feet away sit what look like four rusting, irregular-shaped iron pools.

"Those are the bottoms of the cathodes — the bottom of the pots — the last four," Leonard says.

They’re being used to contain liquids like drained oil before it is shipped off to the landfill or other location.

Every component of the huge factory is looked at for potential salvage value, from the welders and cutting torches in the various shops around the plant to the metals and other materials that the buildings were made from.

Brass and aluminum aren’t the only metals being salvaged. High-value copper is also being pulled from the site, as is steel and stainless steel. Workers have been attacking the structures one piece at a time since June 2007; however, the changes have been most dramatic in recent weeks as the pot line buildings came tumbling down.

The five potline rooms are in various stages of destruction. E Room was the first to go and workings from the 12-foot-deep basement have all been removed. A Room has been torn down, but some of those workings still remain. B Room, the last to go, is halfway gone, but its basement parts are still in place.

Leonard expects B Room will be completely torn down within two weeks.

The demolition site drew attention from across town over the past week, when demolition work on the paste plant threw up huge clouds of carbon dust. The building was where petroleum coke and coal tar pitch were blended to make carbon for the anodes.

The work was stopped halfway through because of the dust and was due to resume after recent rains, with the hope the moisture would help settle the dust. All around the site, heavy equipment operators create a bustling atmosphere as they work on a variety of materials. Big dumptrucks carry materials back and forth across the site.

Bricks from an old furnace are delicately sorted by one machine.

Giant shears cut steel into 3 or 4-foot pieces ready to be shipped.

A pile of aluminum is gradually fed into a baler to ready it for salvage.

A loader dumps piles of drying agent in the old settling pond, which began to fill again as a result of recent rains.

A piece of machinery with massive mechanical jaws is munching big chunks of concrete from the buildings into tiny pieces that will be used as fill for the pot line basements, which will be brought up to ground level for redevelopment.

Though the concrete piles look massive, "it probably won’t be enough," Leonard says. The company is exploring other sources of fill for the big basements. The materials that are salvaged from the site are paying for the demolition work, but recent world events have occasionally interrupted or slowed that effort.

Most of the salvaged steel was being chipped out to be used in factories in China, Korea or Japan.

"We had to stop shipping during the Olympics, because they didn’t want to run their manufacturing plants," Leonard said, to minimize air pollution during the games. And recently, steel shipments have been halted altogether, waiting for steel prices to recover from the blows that have hit the global economy in recent weeks.

The silos that tower over where the pot lines once stood will be the last to go. Yet to be determined is whether they’ll use a big wrecking ball or use some of the big "munching" equipment to reach up and chew the silos down to the ground. Either way, the next couple of months should see those towers down as well. Leonard expects the site to be readied for new development by next spring.

Three primary structures will remain standing after the demolition is complete.

Tenneson Engineering has leased much of the office building for the next year. Development offices will also be housed there.

The water tower will stay because it ties in with the property’s three wells.

And the scales will remain because they might be useful to future tenants.

Throughout the process, demolition work at Northwest Aluminum has drawn many onlookers.

"People used to come and park along the road in back and watch for hours and hours," Leonard said.

Some retired employees come to the plant’s parking lot daily to watch the changes occur.

For most of half a century, the old aluminum plant was a source of livelihood for hundreds of local residents. It’s been hard, says Leonard, to see the plant slowly brought down.

Gilmore agrees. "I didn’t believe it would go down," she says, shaking her head. "No way."

Global economic crisis hits Alpart

Jamaica Observer, Jamaica - Monday, November 10, 2008

BY GARFIELD MYERS Editor-at-Large South/Central Bureau

MANDEVILLE, Manchester - Hit hard by the global economic crisis, Jamaica's largest alumina producer ALPART is now in "survival mode" and has put a long-planned modernisation programme on hold, says the company's managing director Alberto Fabrini.

"We have to go through 2009 in survival mode and then go for modernisation." Fabrini, a Brazilian, told members of the Manchester Chamber of Commerce and journalists at a regular meeting of the Chamber at the Golf View Hotel last Thursday.

"If we can survive, then again, if we can survive, we know how to upgrade the plant to be more competitive.," he added.

Fabrini later told the Observer that retrofitting and modernisation of the 40-year-old plant considered among the world's most inefficient in terms of energy consumption would cost about US$300-350 million "over a period of four, five years".

"If this is done when market conditions improved (the plant) would be much more competitive than we are now." he said.

Asked during the Chamber of Commerce forum whether Alpart - which made 150 jobs redundant a few months ago - was in danger of being closed down, Fabrini said that while the plant was currently at full capacity such a possibility could not be ruled out if the global situation continued to worsen.

"When you are in an industry like this all possibilities are possible but at this moment.we continue to operate at full capacity ." he said.

Fabrini sought to strike a more optimistic note when he spoke to the Observer: "As I have said we always investigate. all possibilities but what I can tell you is that at this moment there is no indication that this (closure) will happen.

"Our production is very good, we are exceeding our capacity at this moment. Our efficiency (relative to the standards at the plant) has also been very good. I can tell you at this moment there is nothing to indicate that Alpart can close or even decrease production at this moment," he said.

Fabrini said that while Alpart's operations were not currently profitable, it had built up a culture down the years of taking the good with the bad. "You have to think of the long term, there will be times when you are going to make money and there will be times when you not going to make any money. It's long term strategic plan. You can face the good times and make money but you can also face the bad times. the important thing is we have to be competitive, we have to be productive.," he said.

Similar hostile global economic conditions including a steep rise in the price of oil led to the shut down of the Alpart refinery in 1985-88, triggering an economic downturn for Manchester, St Elizabeth and the wider Jamaica.

Alpart, owned by the Russian aluminium giant UC Rusal (65 per cent) which bought majority stake last year and the Norwegian company Norsk Hydro (35 per cent) exports 1.65 million tonnes of alumina annually to Europe, China and the USA.

All told, the bauxite/alumina is said to have grossed US$1.3 billion in 2007 with retained earnings of US$583 million to the Jamaican economy.

Fabrini claimed on Friday that Alpart's operations pumped more than US$600 million into the economy annually with net earning to Jamaica of US$167 million "through taxes, levies, payroll, diesel oil (bought from the state run producer Petrojam) and local manufacturing".

Fabrini said inefficient oil consumption and falling aluminium prices were the main contributors to Alpart's problems. World aluminium price had dropped more than 30 per cent in three months.

He identified inefficient energy use as culprit number one - a problem which would only be resolved with modernisation.

(It is) a 40-year-old plant, when it was built oil cost us US$2 per barrel (so) it was not built for energy efficiency.," the Alpart boss said.

He assured his audience that ALPART remained committed to its social and environmental responsibilities and was deeply involved in community development.

Rio May Delay $11 Billion Saudi Aluminum Project (Update2)

Bloomberg - Nov. 10, 2008

By Anthony DiPaola

Rio Tinto Group, the world's second- biggest aluminum producer, is reviewing plans to build a smelter in Saudi Arabia and may delay the project by as much as a year.

``We're taking a step back to see how to optimize the project,'' Dick Evans, chief executive officer of Rio's Alcan unit, said in an interview at a conference in Dubai today. Rio and its partner, state-owned mining company Ma'aden, may find ``significant savings'' in the $11 billion budget, he said.

The world's largest producers of aluminum, iron ore and steel are cutting output and reviewing investment plans as the global economy slows and commodity prices decline. United Co. Rusal, the world's largest aluminum smelter, said last month that 75 percent of companies making the metal in China, Europe and the U.S. were unprofitable after the price plunged.

Costs for the Saudi project climbed from an initial estimate of $7 billion as raw-material and energy prices increased. London-based Rio sees an opportunity to cut building expenses now that commodity prices have dropped, Evans said.

Aluminum for delivery in three months fell 1.8 percent, to $1,995 a ton on the London Metal Exchange as of 9:41 a.m. local time. It has fallen 41 percent since trading at a record $3,380 a ton on July 11.

Rio also said today it will cut iron ore output from its mines in Western Australia by 10 percent in response to falling demand. Slowing economies have slashed steel demand, damped prices and made mills unprofitable in China, the biggest producer of the metal. Brazil's Cia. Vale do Rio Doce, the biggest producer of iron ore, began output cuts last month and doesn't expect a market recovery until next year.

Dubai Aluminum may cut 2009 output target of 1m tons

Tehran Times, Iran - Nov. 10, 2008

Dubai Aluminum Co., the United Arab Emirates aluminum producer building the world’s largest smelter, may cut a target to produce 1 million metric tons of aluminum next year because the global financial crisis is reducing demand.

"With these market conditions I think we have to revise it," Abdulla Kalban, chief executive officer of Dubai Aluminum, or Dubal, told reporters at a conference in Dubai on Monday.

Slowing economies have slashed steel demand, damped prices and made mills unprofitable in China, the biggest producer of the metal. Kalban, Norsk Hydro ASA Chief Executive Officer Eivind Reiten and Dick Evans, CEO of Rio Tinto Group’s Alcan Inc., all told the regional aluminum conference demand for the metal is weakening because of the world economic slowdown.

Dubal and its partners in the Emirates Aluminum project in Abu Dhabi are sticking with a plan to build a plant that will produce 700,000 tons of aluminum a year from 2010, Kalban said. A planned second phase to double output is being studied, he said.

Emirates Aluminum had put on hold the plant’s second-phase because of "tough market conditions," the London-based Middle East Economic Digest reported on Oct. 26.

Dubal’s smelter is producing about 20 percent less than full capacity after a power outage Nov. 2, Kalban said. It will take about six to eight weeks to restore full output of 960,000 tons, he said, adding no units were damaged and no one was injured.

Alcoa to immediately slash production by 15 percent

Pittsburgh Tribune-Review, PA - Tuesday, November 11, 2008

Alcoa Inc. said Monday it is cutting annual aluminum production by 15 percent immediately because of lower demand and the soft global economy.

Alcoa, which has its corporate center on Pittsburgh's North Shore, said the cutbacks will reduce annual production by 615,000 tons, which will cost the company a yet-to-be determined amount of money. The affect on jobs has not been determined, said spokesman Kevin Lowery.

"The industry is in a surplus and has experienced an unprecedented fall in aluminum prices over a very short period of time," said Bernt Reitan, Alcoa's president for global primary products

Alcoa said it was cutting 350,000 tons a year, including output from smelters in Ferndale, Wash., and Quebec. Alcoa had previously said it would curtail production of 265,000 metric tons at its Rockdale, Texas, plant.

Vietinbank to finance bauxite and aluminum project

SteelGuru, India - Tuesday, November 11, 2008

Vietnam News Agency reported that Vietnam Industry & Trade Bank will finance VND 1.2 trillion to the implementation of the country’s largest bauxite aluminum project in Central Highland Lam Dong province.

A credit contract was signed on November 8th 2008 between Vietinbank and the Vietnam Coal & Minerals Group, the project’s owner. This was part of a credit package worth VND 1.65 trillion that Vietinbank had agreed to extend to TKV. The bank also committed to provide more than VND 2 trillion for TKV's affiliates as well as for major coal projects.

Earlier, the Vietnam Bank for Foreign Trade and TKV signed a credit contract for the same purpose on October 10th 2008, bringing the combined banking loans to VND 2.4 trillion.

The 142 hectare Lam Dong bauxite aluminum complex, worth VND 7.79 trillion, is expected to put into operation in 2010, being capable of exploring 4 million tonnes of bauxite and producing 600,000 tonnes of aluminum per year.

TKV said that the group will need an additional USD 2.5 billion for developing its projects in the next 10 years.

Work on Sohar aluminum rolling mill to start in 2009

SteelGuru, India - November 11, 2008

It is reported that construction work on a major aluminum rolling mill utilizing hot metal from the Sohar Aluminum smelter is scheduled to commence at the Sohar Industrial Estate in the second quarter of 2009.

The project, involving a capital investment of around USD 325 million, is one of half a dozen aluminum based downstream ventures promoted by Takamul Investment Company SAOC. Takamul has joined hands with Gulf Aluminum Rolling Mill Company of Bahrain in the planned establishment of the aluminum rolling mill venture. Also backing the project is the Abu Dhabi Water and Electricity Authority.

Development of the project is envisaged in two phases, according to a senior representative of Takamul.

Mr Anil Kumar Bishnoi general manager Finance of Takamul stated at a business forum held at the Oman Chamber of Commerce and Industry recently that the project will boast a total capacity of 160,000 tonnes per year of aluminum general coil, foil and paint stock products. The output is primarily earmarked for markets in the Middle East and Europe.

Development of the rolling mill, which will come up in a dedicated Metals Park adjoining the smelter, follows the signing of a MoU by the project partners in September 2007, for the commissioning of a study into the feasibility of the project.

ZALK smelter resumption impossible for now - Mr Oleksandr

SteelGuru, India - November 11, 2008

Ukrainian Journal Staff cited Mr Oleksandr Kotiuk DG of ZALK as saying that the resumption of stable operations at Zaporizhia Aluminum Combine, the country's only aluminum smelter, is impossible in the present conditions without settling the issue of the differentiated tariff for electricity for the company, and also depends on the situation on the international aluminum market.

He said that the absence of a decision to give a differentiated tariff for electricity to the company, which has been discussed for three years, and the present situation with the price of aluminum, which has fallen to USD 2,000 per tonnes, has led to the unprofitably of production at ZALK. The combine, which has been deprived of circulating funds, cannot pay for electricity used in its production process.

An official said that Ukraine’s largest nuclear power plant, Zaporizhia, may be forced to shut down two of its six reactors in response to lower power demand from regional aluminum and steel makers. Official said that "we cannot exclude the situation when the power generator will have to stop two reactors."

Chalco cuts alumina price, mulls H-share buyback

China Knowledge Online, Singapore - Nov. 11, 2008

Aluminum Corp of China Ltd, the largest aluminum producer in the country, has cut the spot alumina price from RMB 2,900 and RMB 2,600 per ton and plans to buy back its H-shares, the Shanghai Securities News reported on Tuesday, citing the company's two separate statements.

The price cut, which took effect from Nov. 7, came after the company announced it had idled 38% of its annual alumina capacity and decided to cut alumina output due to the weakening demand last week.

The Beijing-based company also plans to buy back not more than 10% of all the outstanding H-shares. However, the buyback plan is still subject to the approvals from its shareholders and the State Administration of Foreign Exchange (SAFE).

Chalco's H-shares surged 18.97% to close at HK$3.45 on Monday.

Aluminum Loses Efficiency

Kommersant, Russia - Nov. 10, 2008

World prices for aluminum shed by over 30 percent from early September, having sunk to below $2,000 per a ton past week. With such prices, operation of better part of the plants in the world isn’t efficient, the analysts calculated. The biggest transnational producers declared intention to revise production programs. Higher efficiency keeps RUSAL afloat, but the analysts apprehend the decline in production should the prices fail to adjust.

Global prices for aluminum have shed by over 30 percent vs September prices. Not once, the prices sank below the psychological ceiling of $2,000 per a ton, when production at better part of the plants of Western Europe, the United States and China gets unprofitable.

The prices lowered to $1,950 per a ton past week and the three-month futures were traded at $2,010 per a ton. Aluminum recovered to between $2,011 per a ton and $2,402 per a ton on LME Friday but the price of Shanghai Metal Exchange was no more than $1,983.

According to Asmik Sardaryan from RUSAL, the company doesn’t intend to revise production targets for its Russia’s facilities and won’t change "the price policy," as over 80 percent of its product is exported to end users under the long-term contracts.

So far, RUSAL has frozen only the electrolysis and alumina production at Zaporozhie Aluminum Works and reduced by 10 percent the production at Montenegro’s Kombinat Aluminijuma Podgorica.

RUSAL monthly loses roughly $36 million in revenues on decline in the global aluminum prices, calculated Yuri Volov from the Bank of Moscow. According to Dmitry Baranov from Finam Management, the price for aluminum is steadily nearing the cut-off price (when the production loses efficiency). For RUSAL, that price is between $1,750 per a ton and $1,800 per a ton thanks to the higher efficiency of Russia’s facilities. "November will be probably the fluctuating month, but the price may begin to grow in December again," Baranov forecasted.

Worsley Alumina expansion on track: BHP

WA Business News (subscription), Australia - 11-November-08

by AAP & Russell Quinn

Billiton says the expansion of the Worsley Alumina refinery in WA's south west, worth more than $3 billion, is on-track despite financial and commodity market turmoil.

Worsley Alumina is a joint venture operation between BHP Billiton, Japan Alumina Associates and Sojitz Alumina, incorporating a bauxite mine, an alumina refinery and port facilities.

Alcoa today shelved the proposed expansion of the Wagerup alumina refinery in WA, which was expected to cost between $US3 billion and $US4 billion to construct.

"We are on budget and on schedule with the (Worsley) efficiency and growth expansion project," BHP Billiton spokesman Peter Ogden told AAP.

The expansion is expected to lift the capacity of the refinery from 3.5 million tonnes per annum to 4.6 million tonnes per annum from the first half of calendar 2011.

Mr Ogden said the company continued to target production at "100 per cent capacity" from Worsley.

Alcoa has also made a decision to immediately cut aluminium production by 350,000 metric tonnes per year, which follows on from an initial curtailment of 265,000 tonnes last month by the company.

This represents 15 per cent of the company's annualised output, or 615,000 tonnes.

Rio Tinto, the world's second largest aluminium producer, said a review of all the company's expansion projects was underway and no announcements had been made on future production cuts.

"As far as production is concerned we made an announcement on iron ore yesterday, we have not made an announcement on our aluminium product group," Rio Tinto spokeswoman Amanda Buckley told AAP.

Vale says had interest in Ghana but not in VALCO

Reuters - Tue Nov 11, 2008

SAO PAULO, Nov 11 (Reuters) - Brazilian mining giant Vale (VALE5.SA: Quote, Profile, Research, Stock Buzz)(RIO.N: Quote, Profile, Research, Stock Buzz) said on Tuesday it had commissioned Ghanaian aluminum maker VALCO to conduct a feasibility study into a bauxite mine and alumina refinery in the West African state.

But the firm said it had "no interest in taking part" in the restarting of VALCO aluminum smelter which has been shut down since March 2007 because of power shortages. Ghana's trade ministry said last week Vale wanted to buy a stake in VALCO.

In a brief statement, Vale said VALCO had approached it about participation in restarting the smelter after it had signed a memorandum of understanding for VALCO to conduct the feasibility study for the bauxite and alumina project.

"Vale has no interest in taking part in the reopening process of the aluminum smelter ... Concerning talks for the bauxite mine and alumina refinery project, the studies are yet to be concluded," the statement said.

Ghana's trade ministry said in a memo to parliament that both Vale and Norsk Hydro (NHY.OL: Quote, Profile, Research, Stock Buzz) had agreed on Aug. 8 to buy a 70 percent stake in VALCO and invest $4.7 billion in Ghana's aluminum industry.

Last Friday its parliament approved the sale of the stake in the state-owned aluminum smelter for $175.5 million, prompting both firms to issue swift denials they were planning to buy into it. [ID:nL7656685]

VALCO has capacity to produce 200,000 tonnes of aluminum a year, but has been shut since March 2007 due to power shortages caused by low water levels in the vast Volta hydroelectric dam.

VALCO was created in the 1960s after Ghana's independence from Britain in 1957. Ghana's government bought out Kaiser Aluminum's (KALU.OQ: Quote, Profile, Research, Stock Buzz) 90 percent stake in 2004 for $18 million. (Reporting by Peter Murphy; Editing by Christian Wiessner)

Alcoa to be sole supplier of Al Li alloy for NASA Ares 1

SteelGuru, India - November 12, 2008

Alcoa said that NASA has certified its Davenport facility as the only supplier in the US to produce aluminum lithium alloy 2195 thin plate for the Ares 1 crew launch vehicle.

Alcoa added that the Davenport plant will produce around 1 million pounds of the thin aluminum lithium material for this program. The Alcoa Technical Center near Pittsburgh is casting the aluminum lithium ingot and shipping it to Davenport where it is rolled into thin plate for additional fabrication.

Earlier in 2007, NASA awarded Alcoa a USD 18.5 million contract to develop the manufacturing capability and to supply the initial requirements of high performance aluminum lithium plate and ingot.

GCC sets big ambition in aluminum production

SteelGuru, India - November 12, 2008

Arabian Business reported that the GCC aluminum industry is set to produce 20% of global aluminum production by 2020.

The report quoted Mr Sheikh Hamdan bin Rashid al Maktoum deputy Ruler of Dubai & minister of Finance of UAE also chairman of Dubai Aluminum as saying that "A number of GCC countries are chalking out plans and feasibility studies to further develop the industry to play a pivotal role in their national industries towards this end, they are also pumping huge investment in the industry to boost their output capacity and sharpen its competitive edge at global markets."

He added that huge investment in the industry will sharpen the competitive edge of the region in global markets and present major opportunities for the future.

An integrated aluminum industry to be built in Ghana?

Joy Online, Ghana - Wednesday, 12 November 2008

Valco has been hit by some controversy

Over the past 50 years, and particularly since the 1983 structural adjustment programs, Ghana has been attempting to build a vertically integrated aluminum industry in order to transform its agriculture-based, extractive economy to an industrial one. An integrated aluminum industry is to serve as the catalyst for the transformation. A vertically integrated aluminum industry consists of mining, refining, smelting and fabrication with bauxite and cheap electricity as the key inputs.

The Kufuor administration is reportedly negotiating with the aluminum multinationals to build an integrated aluminum industry in Ghana. These efforts have culminated in the Ghana government purchasing from Kaiser Aluminum 90 percent shares in the Valco smelter with Alcoa having the remaining 10 percent shares. Ghana and Alcoa recently signed a memorandum of understanding (MOU) as partners to run the smelter. According to the MOU, the first step in the process to integrate the aluminum industry in Ghana would be to re-start the idled smelter, and the next step would be to develop an expedited feasibility study and timetable for setting up a refinery and bauxite mining, and the upgrading of rail transportation and other necessary infrastructure improvements.

This article examines the new moves being made to build an integrated aluminum industry in Ghana in order to provide other options to be considered to serve the Ghana’s best interests. First, brief background information is necessary to provide a context within which the options are discussed.


Ghana has vast deposits of high-grade bauxite at Awaso in the Western Region (presently mined by the Ghana Bauxite Company – 80% Alcan, 20% Ghana – with about 500,000 metric ton per year (mtpy) capacity, ranking as Africa’s third largest producer of bauxite) , and unexploited deposits at Nyinahin in Ashanti Region, and near Kibi in Eastern Region. Ghana has hydroelectric facilities at Akosombo and Kpong on the Volta River; and a nascent aluminum fabricating industry spearheaded by an intermediary, Aluworks with 20,000 ton per year (tpy) capacity. Thus Ghana is home of almost all major phases in aluminum processing, but not in an integrated form. While bauxite is exported to refineries in Scotland and Canada, alumina was imported from Jamaica and the US for the local smelter.

The desire to tap Ghana’s rich bauxite deposits and hydroelectric potency dates as far back as the 1920s when Ghana (then Gold Coast) was a British colony. During World War I bauxite was mined by British Aluminum in two mines, Ejuanema and Awaso, to supply the Allied forces with aluminum for the aircraft industry. With increased demand for the new strategic metal—aluminum—after World War I, the Gold Coast Geological Survey Department drew the colonial government’s attention to this industrial potential in Ghana. This was formulated as the Volta River Project (VRP).

However, right from its inception to the present, the Volta River Project has been a pawn that has been used to keep the country in neo-colonial state. The aluminum multinational corporations have, through their monopoly over capital and technology, frustrated Ghana’s effort to build a vertically integrated aluminum industry. At one point or the other, the aluminum multinational corporations have had the tacit, subtle or open support of their home governments who found the project an important tool for global geopolitics. In the Cold War atmosphere of the 1960s, for instance, the VRP was used by the US with the help of Britain in order to turn Nkrumah on a reasonable course and to counterbalance the perceived Ghana’s increasing close relations with the Soviet Bloc.

The VRP had been at the top of the Nkrumah’s government industrial plan for Ghana since 1951. In compromising by sacrificing Ghana’s shareholding interest in the smelter and foregoing the immediate building of a refinery, Nkrumah envisaged using the VRP to further his African Unity ambition—"we would be more than willing to share its benefits with our immediate neighbors within a common economic framework," Nkrumah declared. Nkrumah’s, as well as Ghana’s, dream of economic transformation was to be deferred as he was overthrown in 1966 in an alleged CIA-backed military coup. The military junta that assumed power—the National Liberation Council (NLC) scrapped Nkrumah’s industrial plans.

From the viewpoint of the U. S. government and Kaiser, the VRP scheme as carried out was a success. The US Government did not only provide loans to Ghana in building the Akosombo Dam and the hydroelectric project. It also provided bargain rate loans and guarantees to the aluminum multinationals in building the smelter and to protect the companies in case their assets in Ghana were to be nationalized as companies feared. Valco alone represented about 20 percent of the profits of Kaiser’s global operations, and the low-cost hydroelectricity from the Volta dam saved Kaiser over $100 million in operation cost alone since 1973 when OPEC took control over crude oil pricing. It is estimated that from its initial production year in 1967 when Valco operated at a loss of $670,031 to 1981, the smelter earned its owners a total of $146,650,685 in after tax profits. Then Valco’s Managing Director Ward B. Saunders in a reply to a critic wrote, "We take great pride in the Valco organization and the Ghanaian people who, through their efforts, make it the excellent enterprise it has become."

The VRP has not helped Ghana to industrialize either through the electricity aspect or the aluminum aspect. Neither has it helped transform the country’s agriculture through the irrigation and fisheries components of the original scheme. In 1966 when Nkrumah’s administration was overthrown, the International Monetary Fund (IMF) sent the Havard Development Advisory Service (DAS) team headed by Dr. Gustoph Papanek to Ghana. The team advised the NLC administration to cancel Nkrumah’s industrial projects that would have benefited from the cheap hydroelectricity. As a result, electric power surplus was created and Valco quickly expanded its smelter capacity to the point that the smelter alone at one point in time consumed about 70 percent of the hydroelectricity from Akosombo. Because of the vagaries of the weather and increased demand for electricity, Ghana has had to import crude oil to run a thermal plant near Takoradi to supplement the hydroelectric power.

Alcoa to build an integrated aluminum industry in Ghana?

It would be recalled on November 24, 2004 Alcoa announced that its affiliate (AWAC), Alcan and the Government of Guinea had signed a protocol for developing jointly a 1.5 million metric ton per year (mtpy) alumina refinery in Guinea. AWAC and Alcan each holds a 45 percent interest in Halco (Mining) Inc., which in turn is a 51 percent owner of Compagnie des Bauxites de Guinee (CBG) that currently mines bauxite for export from the Boke region in Guinea. Alcoa and Alcan intend to secure bauxite supplies to the refinery from CBG. Alumina production from this joint venture is expected to be on stream by 2008. The refinery will be operated by Alcoa.

On another front, the Jamaica Gleaner newspaper reported on July 14, 2005 that "The Board of Alcoa will on Friday [July 15, 2005] decide on a proposed US$1.24 billion expansion of the Jamalco bauxite refinery at Halse Hall, Clarendon. Alcoa’s management was speaking during a visit to the refinery on Tuesday [July 12, 2005] by Ghanaian President Jon Kufuor. Seventy-seven million U. S. dollars towards expanding production has already been granted and the overall expansion, expected to be completed 2008, will see production increase from 1.25 to 2.8 million tons per year. This follows from 2004 expansion from one million tons following a US$125 million investment."

The same company, Alcoa, that is expanding its business in Guinea and Jamaica, is promising to integrate the aluminum industry in Ghana. Analysts all agree that expanding an existing refinery, that is, brownfield expansion, reduces the investment cost per ton of alumina by as much as 40 percent. One wonders why will Alcoa want to undertake to build a new refinery, that is, a greenfield expansion in Ghana when it would be cheaper to undertake brownfield expansion in Guinea and/or Jamaica.

Alcoa stands to gain a market for its alumina in the short-term until a refinery to produce alumina from local bauxite is built in Ghana. Alcoa will secure a steady source of aluminum without building a new smelter from scratch. It will also benefit from technical, operational and technology transfer and other service fees. The company will off-take Ghana’s share of the aluminum to be produced. And "the final integrated industry agreement would make Alcoa the majority owner and operator of the total joint enterprise (mining, refining, and smelting projects) with significant participation by the Government."

A brief contemporary history of the aluminum industry

The history of the aluminum industry is that no third world country has been able to develop a vertically integrated aluminum industry—that is, no third world country has the mining, refining, smelting and fabrication vertically integrated. Where a third world country has the mining and refinery, the same company does not own the operation of each of the phases. Jamaica is a good example of such arrangement whereby Jamaica has the mining and refining, but no smelter. The mining and refinery are owned by different companies and/or different subsidiaries of the giant aluminum multinationals. The Guinea case described above is another example in point.

The North American aluminum industry has been a prime example of consolidation and global growth in recent years. The North American aluminum industry is dominated by the two sister companies – Alcoa and Alcan. Alcoa’s growth by acquisition in the last 10 years and its current tendency to replace North American capacity with overseas plants is evidence of the impact of commoditization on the aluminum market. Alcan’s absorption of Alusuisse and its acquisition of Pechiney SA of France is more of the same trend. The contraction in the number of players in the market is not cyclical—it is structural. The recognition that primary aluminum, and indeed many downstream aluminum products are commodities rather than products, is the key to the future of the business.

The key success factor in the aluminum industry is low cost production which requires access to cheap electric power. Smelting plants worldwide are sited in places where there is access to cheap electricity. It appears Alcoa wants the Valco smelter reactivated because of the possibility of securing on long term basis cheap power from VRA from the existing hydroelectric facility and potential cheap power from the West African Gas Pipeline Project. That may be the rationale why Alcoa seeks a final integrated industry agreement that would make Alcoa the majority owner and operator of the total joint venture.

Ghana has the Volta Dam hydro-electricity. However, electricity in Ghana is no longer cheap because of rising energy prices fueled by the rising crude oil prices and increased domestic consumption of electricity. The Volta Dam has also been plagued by incessant low water levels because of vagaries of the weather. One would recall the difficulty VRA had in trying to increase power tariff for Valco when VRA faced increasing operation costs because increasing cost of borrowing and as it added a thermal plant to make up for power shortfall because of low water levels on the Volta dam. Kaiser cited a long-standing agreement with VRA a reason for refusing to pay over 1.1 cents per kwH for its power.

The mistake Ghana made in the original Valco agreement in 1962 with Kaiser was in setting power tariff contingent on a lame promise by the aluminum multinationals to develop an integrated aluminum industry in Ghana. This mistake should not be repeated by the Kufuor administration. By reactivating the smelter before any concrete steps are put in place to build a refinery in Ghana may recreate the past scenario where the aluminum multinationals used the lame excuse of "prevailing market conditions in the aluminum industry" to frustrate the country in developing an integrated industry.

Options for building an integrated aluminum industry in Ghana or in the West African region?

If Ghana really wants an integrated aluminum industry in the country, Ghana should consider having a substantial share (35-45%) in the alumina refinery and increase its off-take of aluminum (up to 50%) from the smelter for its intermediary fabricating plant, Aluworks. This will enable Ghana to build on its small-scale aluminum fabrication industry. The share in the refinery is to facilitate Ghana securing its own source of alumina in order to build advanced factor advantages in the form of special skills and know-how that are particular to the industry. That will place Ghana in a more competitive advantage as it will gain a better understanding of the technology and the complexity of running an integrated aluminum industry. The increased off-take of aluminum from the smelter will facilitate the possibility of Ghana undertaking fabrication that will include casting, rolling, forging, drawing, or extruding—some of the ways in which aluminum can be used to make thousands of different finished products, from beverage cans to car engines and other automotive parts to jet aircraft. It will enable Aluworks to expand its product line and sales to markets in West Africa and the rest of the world. By expanding Aluworks’ capacity, more jobs will be created in the formal and informal sectors in wayside or cottage enterprises, and further down stream in the distributive trade. Such expansion will also facilitate the local human resource development of required skills and specialized knowledge and metallurgical research work in the country’s educational system. Although the aluminum industry as a whole is a very important industry for Ghana, there is no government or industry-sponsored research or training institution providing specific support for the industry. This anomaly in capacity building must be rectified if an integrated industry is to be developed.

As matter of fact, Ghana should envisage a local aluminum industry that will be linked with Ghana’s manganese industry. Although ranking far behind steel, the second most important metal in which manganese plays an important alloying role is aluminum. Aluminum-manganese alloys and aluminum-manganese-magnesium alloys, which have been sold under different trade names, have found applications in such diversified areas as kitchenware, roofing, car radiators and transportation. By far the most important use of aluminum-manganese alloys is for beverage cans, of which some 100 billion units are produced each year.

On the other hand, Ghana should seriously evaluate and pursue possibilities for an integrated aluminum industry in the West African region. One such possibility that must be considered now is the possibility of harnessing the bauxite and energy resources of the region. Ghana (mining, smelting and fabrication), Sierra Leone (mining), Guinea (mining and refining), Nigeria (smelting and fabrication) and Cameroon (smelting) have in place various phases for integrating the industry in the West African region. This existing structure of the aluminum industry in the region should be linked with the energy resources of the region. Ghana supplies electricity to Togo and Benin. Ghana, Togo, Benin and Nigeria will soon be linked by a natural gas pipeline. Chad and Cameroon are linked by a petroleum pipeline. Chad began pumping its first oil in July 2003 following the completion of the Chad-Cameroon pipeline. Chad ’s proven oil reserves are situated mainly in the Doba basin, near its border with the Central African Republic . The Doba basin’s three oil fields (Bolobo, Komé, and Miandoun) are estimated to contain reserves of 900 million barrels. A foreign consortium led by ExxonMobil (40% interest) is in charge of developing the Doba basin. Equatorial Guinea, Gabon and Angola, all with energy resources should be linked with aluminum resources of the sub-continent into building an integrated aluminum industry.

This option may not come of easily because of internecine problems within ECOWAS and other economic unions of the sub-continent. Cameroon, Chad, Gabon, Equatorial Guinea and Angola are not members of ECOWAS. Besides, the multinationals involved in the various countries in the aluminum and energy sectors will resist any attempt to shake off the neo-colonial structure they have put in place. Despite their pronouncements of seeking the economic development of impoverished and highly indebted poor countries of the West African region, oil-dependent western countries will rather maintain the status quo ante than fund the economic self-sustainable development of West Africa.

Irrigation and other options

Ghana needs to re-evaluate the original Volta River Project in order to develop the options of agricultural transformation through irrigation; fisheries; and lake transport to link Ghana and its neighbors to the north. Irrigation of the Accra and Afram Plains needs not draw water from the Volta Lake. Water from the Lake that flows freely into the sea can be harnessed for irrigation to transform the rain-fed agriculture in the country. It is estimated that well planned farming in the draw-down area around the Volta Lake alone can produce about a third of Ghana’s annual rice needs. Freshwater fisheries between the Adomi Bridge and the Sogakope Bridge alone can supply the country’s annual fish needs.

Another important option that must be carried out is the development of medium and small-scale hydroelectric projects on Pra, Tano, Ankobra, Todzi and other rivers of the country. The Pra, Tano and Ankobra Rivers are, for example, in the rain forest belt that has shorter dry season period than the rivers of the Volta-basin that are in the much drier savannah or sahel belt to the north. It is of strategic and security importance for a developing country like Ghana to ‘walk on two legs’ by not putting all its eggs in one basket in the form of a centralized power grid derived from large-scale hydro and thermal power plants. Large dams entail more security risks as they are easy targets virtually indefensible from either external or internal saboteurs. A decentralized power system is an insurance against power outages that could black-out the whole country. A decentralized power system has its political and economic advantages too. A decentralized power system should be considered in developing an electrified rapid rail system to link the more flat northern Ghana with neighboring countries.

Small-scale hydro-electric projects will facilitate small-scale industrial and agricultural projects in the rural areas. This will promote a more balanced economic development of the country as contrasted with present urban-centered development with its attendant problem of migration of the rural youth to the urban areas.

Which of these options will the Kufuor administration choose to pursue for a self-sustainable development of Ghana? Does he want to intensify Alcoa’s global presence in the aluminum industry by giving away Ghana’s bauxite and energy resources for a sop, or does he want to promote Ghana’s economic development take-off?

Author: Nana Adinkra []

Recession reports - Rio cuts NZ aluminum smelter output by 30%

SteelGuru, India - November 13, 2008

Reuters reported that aluminum production at Rio Tinto Limited's Tiwai Point smelter in New Zealand has been cut by the equivalent of about 280 tonnes per day due to equipment failure.

A company spokeswoman said that the smelter has capacity to produce up to 350,000 tonnes of aluminum annually but was already operating at a reduced rate of 315,000 tonnes prior to the failure of an electrical transformer.

She added that "We have shut one of the pot lines and are currently assessing the degree of damage to the transformer."

Lost production was estimated at around 8,500 tonnes on a monthly basis while the pot line was inoperable. The smelter has been running below capacity since May 2008 to help reduce demand on New Zealand's national electricity grid.

VALCO Deal Still Holds

Peace fm Online, Ghana - Wednesday, 12 November 2008 18:01

The Minister of Trade, Industry and Private Sector Development, Papa Owusu-Ankomah says he is astonished with report filed by Reuters News Agency which claimed that the deal involving the 70 per cent sale of Volta Aluminium Company (VALCO) was a fiasco. According to Reuters, both foreign companies, mentioned in the deal that was unanimously approved by parliament, had denied they had any plans to buy 70percent stake in VALCO.

Hon Owusu-Ankomah told The Chronicle that he was amazed with the publication, adding that such stories could mar the deal. He noted that the deal was between the Government of Ghana (GOG) and International Aluminium Partners which consists the Norwegian Company -Norsk Hydro and the Brazilian company -Companhia Vale do Rio Doce (CVRD).

The Trade Minister cautioned that the deal was very sensitive and that newspaper reports could force the consortium to back out from the deal. "My friend, we don’t want to lose this deal, it is a very sensitive matter," Hon Owusu-Ankomah elaborated. He indicated that officials were briefing a joint committee of parliament, which consisted of both members of the majority and minority on the level of the development of the agreement, which was recently signed.

He said, elsewhere such deals are shrouded in secrecy until it was sealed, but because the government wanted to be transparent, it sent the agreement to parliament and thereby making it public. He called on Ghanaians not to panic and that everything was under control. On Friday, Reuters quoted Norsk Hydro spokesman, Stefan Solberg as saying, " Norsk Hydro has no plans to make any investments in Ghana." "We have not signed any agreement. This is something we have looked at just like (we have looked at) other places in the world," Solberg said.

A spokeswoman for Brazil’s Vale told Reuters in Sao Paolo that "there are no such plans for this." CVRD (VALE) is the second largest mining company in the world and the largest producer of iron ore, with an asset base of US$165 billion, whilst Norsk Hydro Aluminium Company of Norway is the second largest integrated aluminium company in Europe. The consortium would take over 70 percent shares of VALCO for US$175.5million and they are expected to make an initial payment of US$25m within 15 working days of the execution of the agreement and upon approval by Parliament.

This initial amount would signify irrevocable commitment on the part of the consortium to pay the remaining amount. The agreement noted that the outstanding amount of US$150.5m must be paid within forty-five (45) days after the VALCO smelter has commenced production with two pot lines in normal operations, the execution of the transfer of shares by the Government and the delivery of the share certificate signed by VALCO in favour of the consortium. Government of Ghana is expected to represent and warrant to the consortium that the company shall not be nationalized at any time in the future.

In the event of such an action, the consortium would be paid an aggregated amount, being the total sum paid for the shares, plus the value of any additional shares purchased by the consortium at an interest rate of LIBOR plus 4% spread from the date of payment of the initial deposit, and acquisition of each additional share (s) to the date of nationalization. The Agreement would generate socio-economic benefits to the nation, some of which include the development of an integrated aluminium industry in the country, an investment with an estimated cost of US$4.7b.

Mining of Bauxite at Kibi and Nyinahin -$500m, development of a two-million tonne aluminium refinery plant at Tema -$2,500m, refurbishment of the rail line from Kumasi to Tema -$500m, 1200 megawatts power plant in Tema to be known as the Chemu Power -$1,200m, the extension of the production capacity of VALCO to be the largest aluminium smelter in Africa, with export earnings of over US$1.6billion annually, and finally the generation of about 9700 direct jobs and 42,000 indirect jobs. Meanwhile officials of the consortium still insist that they have not signed any agreement with either Valco or government.

Australia Government Backs Low-Emission Queensland Coal Pilot, France - Thursday November 13rd, 2008

CANBERRA -(Dow Jones)- Australia's Energy Minister Martin Ferguson Friday marked the official start of work on a pilot retrofit low-emission power station project in Queensland state that, if successful, may prove existing coal-fired power stations don't need to be dismantled to reduce greenhouse gas emissions.

The Callide Oxyfuel demonstration project in Biloela, Queensland, will retrofit an existing power station with technology that burns pulverized coal in a mixture of oxygen and recirculated waste gases to create a high concentration of carbon dioxide in the gases exiting the power station's boiler.

The carbon dioxide can then be captured, purified and compressed to liquid form - ready for transport to an underground storage site, rather than released into the Earth's atmosphere.

The technology has the potential to reduce emissions from a typical coal-fired power station by 90%, Ferguson said in a statement.

"This project will lay the foundation stone for the widespread deployment of low emission coal technology so essential for Australian power generation and for the millions of people across the world relying on coal," Ferguson said.

Six partners are collaborating on the A$206 million project, which is based at the Queensland state government-owned CS Energy's Callide A Power Station in central Queensland.

The project's partners are CS Energy; IHI Corp. (7013.TO), a Japanese technology manufacturer; Electric Power Development Co. Ltd. (9513.TO), or J-Power; Mitsui & Co. Ltd. (MITSY); Schlumberger Ltd. (SLB) - a global supplier of geosequestration technology to the oil and gas industry; and Xstrata PLC (XTA.LN), according to CS Energy's website.

The Australian federal government will put A$50 million toward the project, the Queensland state government has committed A$40 million and the Australian Coal Association's Coal 21 Fund will contribute A$68 million.

Australia, which uses coal for the majority of its power supplies, is due to start emissions trading by 2010 to help tackle global warming. The scheme will tax the nation's 1,000 biggest polluters, mainly from the power sector but also heavy emitters such as aluminum producers.

There are fears the trading plan will add to Australia's electricity prices, given its dependence on coal-fired energy, as well as affecting energy-intensive industries that can't pass on rising input costs to their international customers.

But the development of projects that capture and store carbon emissions, if successful, could help offset the cost of emissions trading for coal-fired energy operators.

"Despite the growth of renewable energy, coal will remain a major source of the world's energy for some decades and the International Energy Agency expects that, by 2030, coal will provide a higher proportion of the world's electricity than it does today," Ferguson said.

"Clearly, no serious response to climate change can ignore the need to reduce emissions from coal," he said.

Coal provides around 80% of Australia's total electricity and accounts for 32% of Australia's total carbon dioxide emissions.

-By Rachel Pannett, Dow Jones Newswires; 61-2-6208-0901;

Aluminum Prices Slide, MA - 11/13/2008

J.P. Morgan & Co. has cut its aluminum price forecast for the fourth quarter to $1.12/lb from the previous projection of $1.25. That puts the 2008 price outlook at $1.23, down from its earlier outlook of $1.32. Looking to 2009, the forecast is $1.09. Deutsche Bank analysts are even more bearish, forecasting a 2009 world aluminum ingot price average of 85˘.

Recession reports Alcoa suspends Wagerup refinery expansion

SteelGuru, India - November 15, 2008

AP reported that Alcoa Inc has suspended its expansion of the Wagerup alumina refinery in Western Australia and slashed its metal production as demand weakens due to the global credit crisis. The move by Alcoa follows decisions by Australian iron ore miners Rio Tinto Limited and Fortescue Metals Group Limited to cut their annual production by 10% due to weakening demand from China.

The 2.2 million tonnes expansion of the Wagerup refinery was expected to cost between USD 3 billion and USD 4 billion.

Mr Alan Cransberg MD of Alcoa of Australia said that it had been forced to reconsider the timing of capital projects due to unprecedented economic challenges. He added that "When market conditions improve, we will revisit implementation of the project."

Alcoa said that it would also immediately cut aluminum production by 386,000 tonnes per year, on top of the 292,000 tonnes in cuts the company previously announced. In total, the reductions represent 15% of the company's annual output.

Ormet plans to cut costs, improve aluminum output

Hemscott, UK - Nov 14, 2008

By Carole Vaporean

NEW YORK, Nov 14 (Reuters) - Closely held U.S. aluminum producer Ormet Corp cut its third quarter net loss to $7.6 million from a $19.6 million loss in the 2007

quarter, but higher anode costs outpaced the benefit of no longer having to pay some employee-related expenses or smelter restart costs.

Having come a long way towards boosting sales and income and cutting costs since 2005 when it idled its smelter after a bankruptcy filing, Ormet will

now focus on negotiating a long-term power deal, improving its smelter operations, cutting anode costs, completing its Burnside, Louisiana, land sale and selling the Burnside terminal.

'With our substantially committed metal position for the rest of this year and next, as well as the increased tolling fee for 2009, we can focus on our long-term energy contract and reducing carbon costs,' President and Chief Executive Officer Mike Tanchuk told investors and analysts on a call.

Ormet also reported third-quarter net sales from continuing operations of

$127.6 million, $125.3 million of which came from a tolling agreement with Swiss-based Glencore International.

Toll sales volume reached 66,675 tonnes and non-toll aluminum sales volume was 831 tonnes.

In the 2007 quarter, Ormet's revenues came to $122.0 million, with non-tolling aluminum revenue of $101.7 million. Sales volume was 40,188 tonnes of aluminum sow and 6,055 tonnes of billet sales. Ormet stopped producing billet

in Oct. 2007.

Despite a steep drop in aluminum prices, Ormet's tolling fee is fixed for

2008 and will increase 'quite a bit' in 2009, but does not vary with London Metal Exchange prices.

Under the tolling agreement, Ormet's smelting operation in Hannibal, Ohio

receives a fee for producing aluminum sow from alumina supplied by Glencore through 2009.

Tanchuk said Ormet had not foresee a $7.3 million, or 43 percent, increase in anode costs, which have since come down.

'We are seeing a reduction in anode prices and an easing of payment terms

going into the fourth quarter and continuing into 2009, due to falling oil prices and reduced anode demand,' said the CEO, adding that its supply will come

entirely from China.

Increased anode supply, lower demand, reduced raw materials costs have pushed anode costs downward and Ormet revised its 2008 supply contracts to reflect the price declines.

Ormet is currently negotiating 2009 anode supply contracts and estimates at least a $200 a tonne improvement in terms.

Mike Griffen, vice president operations, said all six potlines have been operating at an annualized run rate above 265,000 tonnes a year since August and

at a reduced failure rate, compared with five lines running in last year's quarter.

Through the quarter, Griffen said, Ormet relined 259 pots, including those that failed during the 2007 smelter restart and failures that occurred from normal operations in 2008.

The pot count increased by 99 to 1,019 cells over 2007 year end, and the 160 routine failures for the first nine months were fewer than the 179 forecast at the start of 2008.

The number of pots needing relining fell to 69 in the third quarter from 94 pots during the second quarter.

Griffen said the aluminum producer anticipates a 30 to 35 percent reduction in 2009 pot relinings.

Elsewhere, Tanchuk said, Ormet signed a $9 million contract for the sale of 300 acres of land at the Burnside operation. It expects to complete the deal by the end of November.

(Editing by Christian Wiessner)

Alcoa Chairman Alain Belda Honored By Asia Society for Environmental Leadership

MarketWatch - 11/14/2008

Alcoa announced today that Alcoa Chairman Alain Belda was honored by the Asia Society this week for his environmental leadership, including Alcoa's progress to reduce GHG emissions and address global warming.

In accepting the award, Mr. Belda said, "At Alcoa, we see global warming as the sustainability issue of our generation. To me, it is critical that it is part of our company culture and a core part of our business and corporate decision making."

Alcoa is a founding member of the U.S. Climate Action Partnership, which is seeking mandatory climate change legislation; the Carbon Disclosure Project; and a founding reporter of the Climate Registry. Alcoa has reduced GHG emissions by 33% from a base year of 1990, while increasing production of aluminum. The company invests in new technologies, such as the groundbreaking carbon capture technology, which delivers significant greenhouse benefits by locking up CO2 that is otherwise released into the atmosphere. Last year, Alcoa opened its first smelter in 20 years in Iceland powered by sustainable hydropower.

Alcoa's products help lightweight vehicles in the transportation industry, saving fuel and maintenance costs, and reducing emissions, and provide a sustainable solution for the building and construction industry, packaging and industrial products industries.

Mr. Belda was recognized as an environmental leader along with Dr. Rajendra Kumar Pachauri, director-general, The Energy and Resources Institute and Chairman of the Intergovernmental Panel on Climate Change, and Dr. Shi Zhengrong, Chairman and CEO of Suntech Power Holdings Co.

DJ Norsk Hydro Seeks M&A Opportunities From Financial Crisis -Report

Trading Markets (press release), CA - Fri. November 14, 2008; Posted: 04:48 AM

OSLO, Nov 14, 2008 (Dow Jones Commodities News via Comtex) -- NHYDY | Quote | Chart | News | PowerRating -- The chief executive of aluminum company Norsk Hydro ASA (NHY.OS) is looking at new acquisition opportunities stemming from the global financial meltdown, according to Norwegian financial daily Dagens Naeringsliv.

Eivind Reiten told DN: "We are debt free and have a solid balance sheet. Some people have criticized us for being too conservative, but now we're reaping the benefits."

"We see the international downturn as an opportunity to embark upon new growth initiatives," Reiten is reported as saying.

While he wouldn't go into details, he said the company is looking at growth opportunities across the aluminum, hydro power and solar energy sectors, DN reported. Reiten also predicted that up to now, the financial crisis has only just started to filter through to the real economy, and he expects to see significant further effects through the winter and spring.

Newspaper Web site:

-By Elizabeth Cowley, Dow Jones Newswires; +47 22 20 10 58;

Recession reports - Vimetco cuts aluminum output further

SteelGuru, India - November 17, 2008

Dutch aluminum producer Vimetco said that it will cut its production in China by a further 15,000 tonnes, in addition to the 80,000 tonnes announced in October 2008. It also said it may cut production in Romania by as much as 65,000 tonnes per annum in 2009, resulting in the group's total output being reduced by 160,000 tonnes per annum to about 515,000 tonnes.

In response to the fall in its share price in the last weeks, Vimetco said in a statement that its outlook remains unchanged. Vimetco's shares have fallen 75% since the close on October 23rd 2008 and were trading at 35 US cents.

It said that "Vimetco confirms that, although it has not remained unaffected by the recent financial crisis and slow down in the global economy, its funding profile remains sound and operational prospects are expected to remain stable. While we expect some fall out of higher cost producers, Vimetco should be better positioned to cope in these conditions due to greater efficiency, the integrated nature of operations and lower cost facilities than most existing aluminum operations in China."

Falling metal prices have forced a number of aluminum producers to cut output, reduce spending and put future projects on hold. US aluminum giant Alcoa Inc said that it had slashed a further 350,000 tonnes of aluminum making capacity worldwide. The cuts trail the 720,000 tonnes cutback by China's largest producer, Aluminum Corporation of China.

Three month aluminum prices on the London Metal Exchange rose to a record USD 3,380 per tonnes in July 2008 but have since dropped more than 40%.

Alumina Says Funding for Brazil Projects Less as Real Declines

Bloomberg - November 16, 2008

By Rebecca Keenan

Nov. 17 (Bloomberg) -- Alumina Ltd., partner in the world's biggest producer of the material used to make aluminum, said its funding requirements for a refinery expansion and a new mine in Brazil have been reduced by a decline in the local currency.

Expanding the Alumar refinery and developing the Juruti bauxite mine will begin in the middle of next year as scheduled, the Melbourne-based company said today in a statement to the Australian Stock Exchange. The Brazilian Real has declined 28 percent against the U.S. dollar since the beginning of July.

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

BPA subsidies for aluminum industry under siege

The Oregonian -, OR - Sunday November 16, 2008

by Ted Sickinger, The Oregonian

The latest chapter in the perennial battle over Bonneville Power Administration's power sales to aluminum companies is drawing to a noisy close.

The BPA is looking to sign 20-year contracts with customers in January.

And in a public comment period that closed last week, Oregon's governor, public utilities and ratepayers advocates from around the region blasted a proposal by the federal power marketing agency to provide electricity discounts of as much as $66 million annually to Alcoa Inc.'s smelter in Ferndale, Wash., until 2028.

The agency also proposed $33 million in annual subsidies for the Columbia Falls Aluminum Co. in Montana, though it's unclear whether that proposal will go forward.

BPA Chief Executive Stephen Wright said he will consider public comments in drafting final contracts with the smelters. When that contract is released in the next 60 days, the public will have another opportunity to comment.

The smelter subsidies, which could come in discounted power or monetary transfers, amount to about $140,000 a year for each guaranteed job at Alcoa.

Public utilities contend they'll end up paying for them in higher rates, which would force job losses among their own industrial customers that are struggling to get through the recession.

"We're not sure why, but it appears the BPA values the aluminum industry jobs more than they do other industries," said Mark Howe, a spokesman for the Oregon Trail Electric Consumers Cooperative, based in Baker City.

The proposal also comes when the BPA is preparing to sign 20-year contracts that will substantially reduce the system benefits going to residential customers of private utilities such as Portland General Electric and PacifiCorp, which make up 60 percent of the electricity demand in the region.

Alcoa has lobbied heavily and sued the BPA to maintain its historical access to cheap hydropower. It argues that the proposal provides only half the electricity needed to operate its Ferndale plant, while other industrial customers who have not been in the Northwest for nearly as long continue to have all their power needs met with BPA power as customers of public utilities.

Alcoa has committed to maintaining 480 jobs at its Intalco Works plant if it gets the power. It also argues that its $48 million payroll and operations directly and indirectly support more than 2,000 jobs in the Northwest.

"I really challenge people to stand back and look at this from a fairness and equity standpoint," said Mike Rousseau, manager of the Intalco plant. "We believe we have a right to this power."

Washington's governor and several members of its congressional delegation agree. They applauded the BPA proposal, saying it would "maintain family wage jobs while not placing a significant economic burden on other customers in the region."

Wright said he has felt no political pressure within the region, or from Washington, D.C., to reach a particular outcome. Rather, he said, he is looking to make the best policy decision for the Northwest.

"When you sit in a job like mine, you do think about the impact on real people," Wright said. "Even if it's a small positive impact, it's probably worth pursuing."

Controversy has swirled for years around the BPA's electricity sales to its so-called direct service industries, a group of energy-intensive industrial customers -- mostly aluminum companies -- that traditionally purchased all their power directly from the BPA.

The direct service industries' heavy demands provided financial viability for the BPA in its early years. Moreover, their contracts allowed the BPA to interrupt their service during periods of peak electricity use, giving the agency more flexibility to manage its overall demand.

Only three of the original 10 aluminum smelters that once dotted the Columbia basin remain today. Though Alcoa disagrees, most customers contend the BPA no longer has any statutory obligation to serve the smelters.

When the agency made big payments to the smelters during the 2001 energy crisis to buy back power, most of the smelters laid off their work forces and shut their plants for good. Most BPA customers figured that was the end of the direct service industries subsidies.

The BPA commissioned an economic study in 2006 that concluded there would be a short-term economic benefit to supplying cheap power to the aluminum companies.

The study concluded, however, that the benefit would be offset in the long term by other activities. In fact, the authors were so uncomfortable with their ability to predict the future of the aluminum industry that they essentially disavowed their conclusions at the public meeting called to discuss them.

"Even if you do this, it's not clear Alcoa is viable here," said Scott Corwin, executive director of the Public Power Council, an advocacy group that represents public utilities in Oregon and Washington.

Underscoring that debate, Alcoa announced 50 layoffs at the Intalco plant three weeks after the BPA power sale proposal was released in October because of the falling price of aluminum worldwide.

Ted Sickinger:

DJ Corus Signs MOU To Sell Aluminum Smelters To Klesch

Trading Markets (press release), CA - Mon. November 17, 2008

LONDON, Corus, the European arm of India-based Tata Steel Ltd. (500470.BY), said Monday it has signed a non-binding letter of intent, or memorandum of understanding, to sell two aluminum smelters to a unit of London-based Klesch & Co, one of the biggest private-equity firms in the metals industry.

The letter of intent concerns the disposal of two smelters located in Delfzijl, Netherlands and Voerde, Germany that have a combined production capacity of more than 200,000 metric tons of primary aluminum a year.

The non-binding letter of intent allows the two companies to start negotiations and due diligence. A final deal will only be reached once it has gained approval from both Corus and Klesch's board of directors. It is also subject to regulatory clearances.

Corus is Europe's second-largest steelmaker by volume and was acquired by Tata Steel last year. Corus sold its downstream aluminum extrusions and rolling business to Aleris in August 2006.

Company Web site:

-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328;

World largest aluminum smelter complex on schedule

SteelGuru, India - November 18, 2008

Meed reported that Mr Duncan Hedditch CEO of Emirates Aluminum has confirmed that UAE’s industrial flagship, the world’s largest single site aluminum smelter complex, is on schedule to produce hot metal by 2010.

Mr Hedditch said that "From the first ground breaking in May 2007 and the first concrete piling in January 2008, we have made outstanding progress and the latest achievement is the erection of the first Potroom Steel, which took place in October 2008. Phase one is on schedule to produce hot metal in 2010, and we are currently undertaking the pre feasibility survey for phase two."

Over 8 million man hours have already been worked on this ground breaking project, with over 7,000 people on site representing 12 contractors, plus EMAL staff. Upon completion, phase one of the smelter will bring 2,000 permanent jobs to Abu Dhabi, increasing to 3000 in phase two.

The finished smelter will be the largest in the world, producing 1.4 million tonnes of aluminum, an amount equivalent to 12,000 Airbus A380s once phase two is active. The EMAL smelter complex adds tangible value to the industrialization of the Abu Dhabi economy and its diversification beyond oil and gas, encouraging downstream opportunities and potential employment in the region.

China may reinstate aluminum profile export rebates

SteelGuru, India - November 18, 2008

Reuters reported that China is likely to reinstate tax rebates on exports of extruded aluminum profiles, widely used in the construction sector, as part of its latest move to boost exports.

China's cabinet, the State Council said it would increase tax rebates on exports of more than 3,770 items from December, the second batch announced in less than one month to bolster its flagging economy.

A manager at an aluminum fabricating plant in Nanhai city in Guangdong said "Aluminum profiles will be given back a rebate. The rebate may be 5% to 8%. He added that exports of aluminum rods might also be given a 5% tax rebate."

Industry sources said but the new rebates may not boost exports of aluminum profiles and rods in the coming months due to weak overseas demand dampened by the global financial crisis and recession fears. A manager at the international trade department of a large aluminum smelter said "Exports need overseas demand. Now, there is no such demand. The manager said he expected exports of aluminum products to remain low in the first quarter of next year.

China's exports of aluminum products in the first nine months of the year only grew 4.5% on the year, compared to a 50% rise for the full year 2007.

Alcoa - 50 Percent Income Drop Prompts Belt Tightening

Metal Center News, IL - November 18, 2008

Alcoa plans to halt all non-critical capital spending in the wake of a significant slowdown in the aluminum market. The Pittsburgh-based company’s income dropped more than 50 percent during the third quarter.

Alcoa reported third-quarter net income of $268 million, 51.7 percent off the same period in 2007. Results were off a similar amount from the second quarter.

Net sales for third-quarter 2008 totaled $7.2 billion, down slightly from $7.6 billion in the second quarter due to lower metal prices, seasonal downturns in Europe, and weak end markets, particularly the automotive sector. Revenues in third-quarter 2007 totaled $6.5 billion after excluding divested businesses.

"Recently, aluminum prices have fallen steeply and demand has softened further, while input costs remain high," said Klaus Kleinfeld, Alcoa president and CEO. "The resulting margin squeeze will have a greater impact going forward, but will be somewhat mitigated by the easing of energy prices and a stronger U.S. dollar. We will continue to manage our business to keep it competitive in a turbulent global environment."

The price drop was substantial. The LME aluminum price plunged nearly $1,000 per ton during the quarter, from a high of $3,271 on July 11 to a low of $2,377 on Sept. 30.

Alcoa has taken steps to control costs in the new environment, including the decision to suspend capital spending. Some projects, including expansions in Brazil’s San Luis and Juruti, will continue to completion, as slowing down at this point would result in millions in extra costs, Alcoa officials say.

The company also suspended its share repurchase program.

In September, Alcoa curtailed the remaining production at its Rockdale, Texas, aluminum smelter. The company had previously cut its production in half during an ongoing dispute with a local power company.

The quarterly report had a negative impact on Wall Street, as Alcoa shares declined $2 to $14.71. The stock actually rebounded from a $3.31 drop, which represented the company’s lowest point in more than 10 years.

The company’s compressed margins are attributable to several factors, Kleinfeld says, including liquidity issues in the developing financial crisis, weakening market fundamentals and inventory builds, and a stronger U.S. dollar. Meanwhile, some raw material costs continue to escalate while the full effect of lower energy prices has yet to be felt.

Among its business units, Alcoa had anticipated a decline in its flat-roll segment, though the drop was more than the expected seasonal decline due to deteriorating markets in North America and Europe. The company expects the current weakness to extend into the fourth quarter.

Kleinfeld says weakness was apparent in many of the key end-use markets, with North American auto production hitting a 15-year low, Class A trucks declining 13 percent in the traditionally strong third quarter and softening in the commercial building market.

The company’s engineered products and solutions group posted a record $101 million in net income during the quarter, though that mark was down 36 percent from the second quarter.

Despite the problems of the quarter, Kleinfeld is confident the company can navigate through the current economic upheaval.

"While we face volatile and uncertain markets today, longer-term trends will drive a rebound in global aluminum demand, and the forward market reflects underlying optimism on medium-term aluminum pricing," said Kleinfeld. "During difficult times, we will examine opportunities across the industry to improve our competitiveness, use every lever to improve profitability and position the company to deliver stronger value when demand improves."

N. American aluminum shipments down in year to Aug

Reuters - Tue Nov 18, 2008

NEW YORK, Demand for North American aluminum mill products in August fell 9.1 percent from August 2007, although August shipments were up 3.1 percent from the previous month, preliminary estimates of aluminum industry data show.

In its latest Aluminum Situation report, the Aluminum Association said August shipments fell to an estimated 1,961.1 million lbs from 2,156.7 million lbs in August 2007, but were higher than 1,893.8 million lbs shipped in July.

Demand for North American aluminum is measured as shipments from U.S. and Canadian producers plus imports.

Shipments for the first three quarters were down 5.7 percent at 15,729.3 million lbs from 16,675.8 million lbs in the 2007 period.

Demand for semi-fabricated, or mill, products fell 9.0 percent in August to 1,290.0 million lbs from 1,417.6 million lbs in August 2007, and lost 3.9 percent from 1,342.7 million lbs in July, the report said.

In its breakdown of U.S. and Canadian mill products, it said demand for aluminum sheet and plate fell 4.1 percent to 778.2 million lbs in August from 811.3 million lbs in August 2007, and dropped 4.6 percent from 815.5 million lbs in July.

Shipments of extruded products slid 16.9 percent to 289.2 million lbs in August from 348.1 million lbs a year earlier. They fell 3.2 percent from 298.9 million lbs in July.

August shipments of aluminum ingot for castings and other uses slipped 9.2 percent to 671.1 million lbs from 739.2 million lbs in August 2007, but jumped 21.8 percent from 551.1 million lbs in July, the report said.

U.S. and Canadian producer inventories declined by 4.6 percent in August to 2,928.1 million lbs from 3,070.5 in August 2007, but increased 1.8 percent from 2,877.4 million lbs in

The association said aluminum exports from the United States and Canada, excluding cross-border trade, tumbled 9.0 percent to 698.7 million lbs in August from 767.6 million lbs in July. Exports surged 23.7 percent over August 2007's 564.8 million lbs.

For the first three quarters, exports jumped 30.0 percent to 5,528.0 million lbs from 4,251.3 million lbs for the same period in 2007, the industry group said.

Total imports of aluminum ingot, scrap and mill products into the U.S. and Canada, minus cross-border trade, tumbled 20.2 percent in August to 270.7 million lbs from 339.1 million lbs in July, and slid 37.4 percent from 432.1 million lbs of aluminum imported in August 2007.

For the year through September, imports contracted by 18.4 percent to 2,627.6 million lbs from 3,220.2 million lbs for the same period in 2007.

The Aluminum Association's Index of Net New Orders of Aluminum Mill Products declined 3.2 percent in September to 92.2 from the August reading of 95.3. The orders index was down 4.4 percent from the September 2007 reading of 96.5. The report said the index's base of 100 equals the average month in 2001.

For flat rolled products, including can stock and foil, the September index lost 5.1 percent at 92.2 from 97.2 in August and was down 3.3 percent from 95.4 in September 2007.

September orders for extruded products gained 3.2 percent to 88.7 from August at 85.9, but slid 13.5 percent from 102.5 in September 2007. Orders for other mill products, including drawing stock, electrical conductor and forgings, were up 2.0 percent at 97.7 in September over August's 95.8 and up 2.0 percent from 95.8 in September 2007. (Reporting by Carole Vaporean; Editing by David Gregorio)

DJ Aleris To Idle Production At Richmond Aluminum Rolling Mill

Trading Markets (press release), CA - Tue. November 18, 2008

LONDON, U.S.-based Aleris International Inc. is to idle production at its aluminum rolling mill in Richmond, Virginia due to the continuing downturn in the North American building and construction industry, the company said Tuesday.

In February, Aleris announced that it idled all production for third parties at the Richmond site and that all remaining production would be used for internal requirements only.

Aleris will be ceasing all further production at the facility until industry conditions improve, it added.

The company didn't provide data as to how much the rolling mill had been producing ahead of the current full closure.

Aleris is the world's biggest manufacturer of recycled aluminum and the second largest extruded products maker in Europe.

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

Bauxite Resources MOU - Shandong Province needs Australian Minerals

Proactive Investors Australia, Australia - Wednesday, November 19, 2008

Bauxite Resources Limited, (ASX: BAU) has signed a Memorandum of Understanding (MOU) with the Chinese‐-?based Shandong Provincial Bureau of Geology and Mineral Resources ("SDGM").

Bauxite Resources would contribute its knowledge, expertise and experience together with access to its 54 Exploration Licences (ELs) in the Darling Range covering approximately 11,000 square kilometres and databases of historical workings, while SDGM would pay for and carry out its own drilling and exploration in return for earning an interest in all mineral resources discovered other than bauxite, of which BRL retains exclusive rights.

Chinese based Shandong Provincial Bureau of Geology and Mineral Resources ("SDGM") have a State sanctioned mandate to actively source a variety of minerals throughout the world to support China’s, and in particular the Shandong Provinces industries and economic growth.

The MOU essentially provides both parties with the framework to work together over the next three months to ascertain whether an agreement can be reached as to the suitable terms for a ‘farm in’ type arrangement.

Ms Zheng Jinlan, Director-General of Shandong Bureau of Geology & Minerals, said, "As one of the fastest growing economies in China, Shandong Province has an enormous requirement for minerals to support its increasing strong economy."

"One of the missions for this Bureau is to help find resources overseas for the factories in our province, including steel mills and alumina refineries. We have actually formed strong alliances with these companies and through this kind of alliance; we are able to raise funds for the future development of the resources we have found. Hence a win‐-?win situation for all parties," said Ms Zheng.

Earlier MOU signed by Bauxite Resources

Earlier this month Bauxite Resources signed an MOU with Chinese alumina producer Shanxi Wusheng Aluminium Company for the supply of up to 2.8 million tonnes per annum of Direct Shipping Ore (DSO) bauxite.

Bauxite is targeting a resource definition that will support an initial >2Mtpa DSO bauxite project in the highly prospective Darling Ranges, Western Australia. Darling Ranges is the largest producing alumina region in the world. This area supplies approximately 17.5% of the world’s alumina and is home to Alcoa’s (NYSE:AA) Huntly Mine, the largest producing bauxite mine in the world and the Pinjara Refinery the second largest refinery in the world.

Sector Snap: Aluminum companies struggling

Forbes (Associated Press) - 11.19.08

Shares of aluminum companies sank Wednesday after the spot price of the commodity closed near a three-year low and an analyst revised an estimate for Alcoa Inc. from a profit to a loss and downgraded another aluminum producer's shares.

JP Morgan analyst Michael F. Gambardella downgraded Century Aluminum Co. (nasdaq: CENX - news - people )'s stock to "Neutral" from "Overweight," saying he doesn't think the company will be able to cut costs rapidly enough to offset a recent, steep decline in aluminum prices.

The price of aluminum closed Monday at 86.35 cents per pound - an all-time record low for November and the lowest price since October 2005 - and ended Tuesday only slightly higher at 87.1 cents per pound.

The analyst slashed his 2009 earnings-per-share estimate for Century to 25 cents from $2.36, assuming an aluminum price of 97 cents per pound instead of a prior view of $1.09 per pound. Analysts polled by Thomson Reuters expect, on average, a profit of $2.19 per share.

Gambardella lowered his fourth-quarter 2008 earnings-per-share forecast to 25 cents from an earlier forecast of 56 cents. Analysts expect 29 cents per share.

Related Quotes

AA $8.16 -1.32

CENX $6.12 -2.62

AA $8.16 -1.32

KALU $18.79 -3.75

CENX $6.12 -2.62

"While the company's alumina costs for its North American smelters and power costs in Iceland should feel some relief as their supply contracts are linked to aluminum prices, we don't think they will decline enough to offset the rapid and steep decline in aluminum prices. While other raw material (carbon), natural gas, power (in the U.S.) and freight costs should decline over time, we think the timing will be still be more back-end loaded," Gambardella wrote in a client note.

Shares of Century plunged $2.39, or 27.4 percent, to $6.35 in afternoon trading.

RusAl's Venezuelan Deal

The Moscow Times, Russia - Thursday, November 20, 2008

United Company RusAl may set up a joint venture in Venezuela to make 750,000 tons a year of primary aluminum.

The venture with Venezuela's state-owned Venezolana de Guayana would produce the metal along with 1.4 million tons of alumina, Venezuela's Ministry of Basic Industries and Mining said Wednesday. (Bloomberg)

Henry J. Kaiser, Industrialist (Part 3)

By Randal O’Toole, 11/19/2008

For part 1, see "Henry J. Kaiser, Entrepreneur"

For part 2, see "Henry J. Kaiser, The War Years"

Cameroon alumina investors form joint venture

Reuters India, India - Wed Nov 19, 2008

YAOUNDE, Nov 19 (Reuters) - Three companies aiming to develop an alumina project in Cameroon have formally created a joint venture to manage the business, one of the partners said late on Tuesday.

Cameroon Alumina Limited (CAL) which aims to exploit a 1.2 billion tonne bauxite deposit in the central African country, comprises Dubai Aluminium (DUBAL) of the United Arab Emirates, India's Hindalco Industries (HALC.BO: Quote, Profile, Research) and U.S. firm Hydromine.

"The region from where the mineral will be extracted contains about 1.2 billion tonnes of bauxite," Hydromine's president Peter Brigger told a news briefing.

"CAL intends to produce 3-3.2 million tonnes a year throughout the mining period," he said.

The consortium intends to invest $5-6 billion in a bauxite mining and refinery project near Ngaoundere, around 400 km (250 miles) to the north of capital Yaounde, plus a railway line linking the complex to the port of Douala, some 600 km away.

Production may begin in 2013, Brigger said. The three firms had already signed deals covering supply of material from the project.

Bauxite is refined into alumina which is then smelted to make aluminium, an industrial metal whose benchmark price on the London Metal Exchange MAL3 hit a three-year low on Wednesday.

On Tuesday, Cameroon cut its 2009 economic growth forecast for 2009 to 4 percent from an earlier forecast of 6-6.5 percent, blaming the global financial crisis for lowering prices of the oil and metals it exports.

Prime Minister Ephraim Inoni previously indentified mining projects as key to Cameroon's growth, but metals prices have fallen sharply in recent months. [ID:nLI727720] (Reporting by Tansa Musa; Editing by Daniel Magnowski)

Point Comfort Alcoa Plant May Close

Houston Press, TX - Thu Nov 20, 2008 at 11:39:22 AM

Richard Connelly

The Alcoa plant in Point Comfort, about 125 miles from here, is a pretty massive operation: It can produce up to 2.3 million metric tons a year of alumina, which is the stuff from which aluminum is made.

Now it may be shutting down.

An Australian newspaper (an Australian company partners with Alcoa on its aluminum production) reported that it's likely falling aluminum prices and the general economic slump will force the company to shutter the plant:

In response to market conditions, there is every indication that AWAC will close in some of its higher cost production, most notably the Pt Comfort plant near Houston. This is a predictable and typical response to a market in critical oversupply. And, given Pt Comfort is probably already making a loss, one which has nil impact of Alumina's bottom line.

In response, company spokesman Kevin Lowery tells Hair Balls that nothing is planned. But it's not the world's fiercest denial.

"People can conjecture about things, but that doesn't mean they will come true," he says from company HQ in Pittsbugh.

Alcoa announced last month it was cutting production by 25 percent at Point Comfort.

Lowery says the key piece of equipment involved, a "digester," is expensive to operate. "We are looking at every digester across our whole system and we will make our adjustments accordingly, but we haven't come out with any further detail on that," he says.

The Alcoa plant is one of the biggest in the Point Comfort area, along with the Formosa plant.

With rumors swirling about the BASF plant in Freeport also possibly closing, it could be tough times coming for the locals who depend on those plants.

(We've asked Lowery for figures on how many people are employed at Point Comfort; we'll update when he gets back to us.)

Update: About 650 people work there, he says.

Vedanta company suspends mining

BBC News, UK - Thursday, 20 November 2008

By Thirumalai Manivannan, Editor, BBC Tamil service

An Indian subsidiary of the UK mining company Vedanta says it is suspending bauxite mining in the southern Indian state of Tamil Nadu.

The Madras Aluminium Company (Malco) mines bauxite in the Kolli hills some 400km (250 miles) from Madras (Chennai), the capital of Tamil Nadu.

Local environmentalists have filed a court case saying that Malco's mining lease has expired.

They say the mining is damaging the area's important biodiversity.

'No clearances'

The pressure group, Speak Out Salem, is seeking a ban on mining in the area.

"The company's lease to mine bauxite ran out in 1998 and it had applied for renewal of the lease," lawyer Nagasaila Suresh, who is representing Speak Out Salem, told the BBC Tamil service.

"The government gave the permission subject to the company obtaining other environmental clearances under four laws but the company did not get the clearances.

"It continued its mining activity without those clearances," Ms Suresh said.

She said the Kolli hills were an important ecosystem, with rare flora and fauna that had been badly damaged by the mining.

Malco told the BBC that it had "voluntarily decided to temporarily suspend" its mining operations in the Kolli hills area until formal clearance from the government had been received.

A company spokesman said in an e-mail that it had already applied for environmental clearance for mining operations at Kolli.

(AMM) Fall in Chinese anode tags help smelter margins: Ormet (subscription), UK - NEW YORK 20 November 2008

Ormet Corp., Hannibal, Ohio, said there has been a considerable fall in the pricing of Chinese aluminum anode, which has given some temporary relief to its smelter cost margins.

"There have been significant worldwide changes in the merchant anode market," Michael F. Tanchuk, Ormet's president and chief executive officer, said in a recent conference call. "We believe that 2008 and 2009 prices have softened due to aluminum smelter curtailment, the commissioning of a new Chinese anode production facility and a drop in crude price. In short, increased anode supply,...

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Jamaica warns of 'many' layoffs from meltdown, MI - 11/21/2008, 12:14 p.m. EST
The Associated Press
KINGSTON, Jamaica (AP) — Jamaica's unemployment rate is about to get worse.
The country already has had nearly 12 percent unemployment. Now the Labor Minister says companies have warned the government of many more layoffs in the coming months.
Pearnel Charles tells the Jamaica Gleaner newspaper that can't name the companies because workers have not been told.
The key bauxite industry is being hit hard by decreased demand for aluminum.
Charles said in the interview published Friday that he would meet with union leaders next week.
© 2008 Associated Press. All Rights Reserved

Henry J Kaiser articles in the Hawai Reporter:

Part 4 Hawaiian Booster

Part 5 The Legacy

I have all 5 articles as Word documents if anyone is interested


Recession reports - Rio Tinto cuts Lynemouth aluminum output
SteelGuru, India - November 24, 2008
Dow Jones reported that Rio Tinto has cut aluminum production at its 180,000 tonne Lynemouth smelter in northern England by a third at the beginning of November.
Mr Stefano Bertolli a company spokesman said that the cut is a reaction to lower aluminum prices and will also lower the smelter's consumption of power from the UK's power grid during winter. He said that "The reductions will ensure the smelter can run without interruption even if a grid failure occurred during the winter, a high consumption period."
The company will carry out maintenance work on the idled potlines.
Mr Bertolli added that no layoffs will be made.
He said that Rio plans to resume full production sometime in 2009, but has not chosen any date.

Update on EMAL Emirates Aluminum smelter project
SteelGuru, India - November 25, 2008
Menafn quoted Mr Duncan Hedditch CEO of Emirates Aluminum as saying that the first delivery to the custom built EMAL smelter currently under construction in Abu Dhabi has successfully received the first delivery of General Electric equipment at the Abu Dhabi Ports Company berthing dock in Al Taweelah.
The delivery of two 75 tonne combustion turbine exhaust gas diverters is the next step in achieving hot metal in 2010 and when the power plant is complete, it will be of the largest, single site combined cycle power plants in the world.
The construction dock in Al Taweelah was specially constructed for the EMAL complex by ADPC for the offloading of heavy and oversized equipment without the use of cranes. The berthing dock will receive more deliveries in the next few months, including 280 tonne combustion turbines and 220 tonne generators, as well as steam turbine equipment.
Mr Duncan Hedditch said that "This first successful delivery of equipment to the construction dock in Al Taweelah gives us confidence that all future deliveries to the EMAL smelter will be well supported by ADPC’s port facilities."
The EMAL 6 kilometer production facility in Taweelah, Abu Dhabi, is currently being built in two phases and is set to become the world's fifth largest aluminum producer. Phase one, currently on schedule to be completed by 2010 will have a production output of 700,000 tonnes. At full capacity, it will boast an output of 1.4 million tonnes of primary aluminum for the world's manufacturing, packaging and construction sectors.

China's primary aluminum imports up 16 pct year-on-year in first 10 months
Interfax China, China - November 24, 2008
Shanghai. November 24. INTERFAX-CHINA - China imported 10,431 tons of primary aluminum in October, up 120.3 percent on the previous month, while imports over the first 10 months of the year grew by 16.32 percent year-on-year to 101,705 tons, according to General Administration of Customs figures released on Nov. 24.

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Chinese co. plans $1B aluminum plant in Guyana
The Associated Press - 25-Nov-2008
GEORGETOWN, Guyana (AP) — A Chinese mining company says it will invest $1 billion to build an aluminum plant in southwest Guyana.
Bosai Minerals Group, a leading producer of calcined bauxite, expects to raise $700 million amid a global financial crisis with help from several Chinese banks. Managing Director Yaun Zihlun says Bosai will put up the remaining 30 percent.
Construction could start early next year but President Bharrat Jagdeo warned Tuesday that the global financial crisis could lead to delays.
The plant is expected to produce up to 1 million tons (900,000 metric tons) of bauxite a year. Calcined bauxite is used in aircraft and industrial construction.

BHP Abandons $66 Billion Rio Bid as Commodities Slump (Update3)
Bloomberg 25-Nov-2008
By Rebecca Keenan and Brett Foley
Nov. 25 (Bloomberg) -- BHP Billiton Ltd. abandoned its yearlong pursuit of Rio Tinto Group, blaming the rout in commodities prices and the credit-market squeeze for derailing the biggest hostile takeover.
Marius Kloppers, chief executive officer of the world's largest mining company, said the combination of $40 billion in new debt and regulatory hurdles made the $66 billion acquisition too risky at a time when the slowing global economy reduced demand for raw materials. The transaction was worth as much as $194 billion in May before metals prices slumped.
As recently as August, Kloppers was bullish on commodities and increasing demand from China, justifying his bid. After spending $450 million on the offer, he's confronting a 50 percent drop in copper prices and a 45 percent decline in oil as the world's biggest economies face their first simultaneous recessions since World War II.
``The withdrawal of the bid paints a very gloomy picture,'' Charles Cooper, an analyst at Evolution Securities Ltd. in London, wrote in a report. ``The outlook for commodities is set to remain weak, inventories will build and prices will fall, adversely affecting company earnings and valuations.''
Rio shares traded below the offer price since April as investors speculated the transaction would fail. Tumbling commodity prices led Brazil's Cia. Vale do Rio Doce to shelve its proposal to buy Switzerland's Xstrata Plc in March. Earlier this month, Russian steelmaker OAO Novolipetsk terminated an agreement to buy John Maneely Co. of the U.S.
Copper, Aluminum
Rio fell 900 pence, or 37 percent, to 1,550 pence at the close of London trading, valuing the company at 27.8 billion pounds ($42.7 billion). BHP, based in Melbourne, rose 7.2 percent to 1,051 pence.
BHP's retreat may be a blessing for Kloppers. Barclays Plc, which bid unsuccessfully for ABN Amro Holding NV last year, went on to buy the North American unit of bankrupt rival Lehman Brothers Holdings Inc. in September. Royal Bank of Scotland Group Plc, which bought part of ABN for 14.3 billion euros ($18.6 billion), is being bailed out by the U.K. government after the takeover increased its vulnerability amid mounting credit losses.
The combination of BHP and London-based Rio would have created a company that matched Vale as the world's largest iron ore producer. It would also have been the biggest producer of copper with about 9 percent of the market and the leader in aluminum with about 7 percent.
EU Probe
The European Commission started probing the deal in July on concern that BHP would control too much of the iron ore market. While BHP was figuring out what assets it would have to sell to gain approval, the Reuters/Jefferies CRB Index of 19 raw materials dropped 48 percent and credit markets froze, reducing the value of those properties.
``BHP needs to focus on existing operations and I think going into an economic downturn they need to batten down the hatches and generate as much cash flow as they can,'' said Jason Teh, who helps manage the equivalent of $5.7 billion at Investors Mutual Ltd. in Sydney. He holds BHP and Rio shares.
Aluminum is heading for its biggest annual slide in 17 years. Contract iron ore prices are forecast to decline in 2009, according to analysts at UBS AG and Goldman Sachs JBWere Pty. Coal is also predicted to fall.
Growth Strategy
``This is very difficult,'' Kloppers said today on a conference call from Melbourne. ``We have an obligation to look at these value creating investments, but also we have an obligation to stop them when the conditions have deteriorated.''
Rio said it noted BHP's decision and would continue its growth strategy. Rio has ``an exceptional portfolio of cash- generative assets and significant stand-alone growth opportunities,'' it said in a statement.
``I was expecting this,'' said Sajjan Jindal, managing director of JSW Steel Ltd., India's third-biggest producer. ``The steel industry has many players but there are few in iron ore, so it would have created a monopolistic market.''
The European Commission was going to require so-called ``remedies'' from BHP to allow the bid to proceed, Kloppers said. The offer is still ``live'' until the commission decides to block it, he said.
``Even if they do approve it without remedies, we would ask our shareholders to vote against the deal,'' he said.
Aluminum Drop
``We have concerns about the continued deterioration of the near term global economic conditions, the lack of any certainty as to the time it will take for conditions to improve and the risks that these issues imply for shareholder value,'' Don Argus, BHP's chairman, said today in a statement to the Australian stock exchange.
Credit-default swaps on BHP tumbled 130 basis points to 320, according to Citigroup Inc. prices at 7:45 a.m. in London. Contracts on Rio jumped 50 basis points to 800.
The swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a country or company fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline the opposite.
Aluminum Corp. of China, the largest shareholder in Rio, said BHP's dropped takeover bid would benefit Chinese steelmakers.
``This is definitely good news,'' Lu Youqing, vice president of the Beijing-based company, said today by phone. ``We respect BHP's decision.''
Chinalco, as the company is known, bought a 9 percent stake in Rio with Alcoa Inc. in February.
To contact the reporters on this story: Rebecca Keenan in Melbourne at; Brett Foley in London at

China to Benefit From BHP’s Dropped Bid for Rio Tinto (Update1)
Bloomberg 26-Nov-2008
By Helen Yuan
Nov. 26 (Bloomberg) -- China, the world’s largest iron ore consumer, will benefit from BHP Billiton Ltd.’s dropped bid for Rio Tinto Group as the failure to create a dominant supplier strengthens its ability to drive prices lower next year.
Chinese steelmakers, importers of $53 billion of iron ore, will gain from the competition between BHP and Rio Tinto, Shan Shanghua, secretary-in-general of the China Iron & Steel Association, said today in a phone interview.
Steelmakers including China’s Baosteel Group Corp. and Japan’s Nippon Steel Corp. have sought to have the bid blocked by regulators. The $66 billion combination of BHP and Rio would have created a company controlling more than a third of the iron ore market, and the biggest producer of copper and aluminum.
"Competition between BHP and Rio Tinto would be good to steelmakers especially at a time when the market is in oversupply," Shan said. "The takeover plan had been firmly objected by Chinese, Japanese and European steelmakers as it would create a monopoly in Australian ore."
Baoshan Iron & Steel Co., the traded unit of Baosteel, rose 3.5 percent to 5 yuan in Shanghai trading at 12:06 p.m. local time. Angang Steel Co., the second-largest Chinese steelmaker, gained 4.9 percent to 7.03 yuan in Shenzhen.
Prices Drop
Contract iron ore prices may halve next year as steel demand drops with the world economy tipping into recession, Australia and New Zealand Banking Group Ltd. said Nov. 17. China, the world’s largest consumer of iron ore, got 37 percent of its imports from Australia this year, analyst Hu Kai said.
The country bought $53 billion of iron ore in the first ten months of the year, twice as much as a year ago, according to customs. Rio Tinto and BHP are the world’s second-largest and third-largest iron ore suppliers.
The dropped bid would "benefit our price negotiations for next year," the steel association’s Shan said. "We haven’t started official talks yet."
Contract iron ore prices are normally set yearly, with new prices taking effect from April 1. Prices jumped as much as 97 this year, hurting steelmakers’ profit. BHP and Rio’s iron ore mines are mainly in Australia. Rio Tinto had announced a 10 percent output cut because of falling demand.
BHP Billiton, the world’s largest mining company, yesterday abandoned the stock offer for Rio as the purchase would have boosted debt exposure and it would have been difficult to sell assets, Chief Executive Officer Marius Kloppers said.
May Return
BHP may try bidding for London-based Rio when global economies recover, Angang Steel Co., China’s second-largest steelmaker said.
"It could only be a temporary decision by BHP because of the worsening market conditions," Fu Jihui, board secretary of Angang Steel. "China should reduce its reliance on imported iron ore through its steel industry consolidation."
China posted its slowest economic growth in five years in the third quarter. The government this month unveiled a 4 trillion yuan ($586 billion) stimulus package to revive growth.
To contact the reporter for this story: Helen Yuan in Shanghai at

Bosai Minerals, Guyana mull JV alumina plant
China Knowledge Online, Singapore - Nov. 27, 2008
China's Bosai Minerals and Guyana are considering building an aluminum oxide plant with an annual output of one million tons, sources reported.
The two sides have agreed to conduct a feasibility study on the joint venture, which is estimated to involve an investment of US$1 million.
The Chongqing-headquartered company will pay 30% for the construction of the new plant if the project is practicable after the study, with the remainder coming from bank loans, said Yuan Zhilun, managing director of Bosai.
Guyana will take 11% stake in the alumina plant, which is expected to be built in three years.
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Russian metals giant faces heat in Nigeria
Business Day, South Africa - 27 November 2008
John Helmer, Moscow Correspondent
FINANCIAL collapse inside Oleg Deripaska’s aluminium empire in Moscow is triggering fresh moves to oust his company from Nigeria and the Republic of Guinea.

A costly electricity failure at the Aluminium Smelter Company of Nigeria (Alscon) has paralysed operations there for several weeks, while a Nigerian Supreme Court challenge to the four-year-old Russian takeover of the plant is expected to be adjudicated before the end of next month.
A Nigerian National Assembly report recommended recently that the privatisation agreement for Alscon be revoked for failure on the part of Deripaska’s company to meet investment spending conditions.
In Guinea, a government move is under way to review the privatisation terms, according to which United Company Rusal, which is registered in Jersey and controlled from Moscow by Deripaska, took control over the Friguia alumina refinery, the Kindia bauxite mine, and other licences. Again, alleged failure to make good on capital spending and investment obligations is at issue.
Responding to local protests, the Guinean government is also seeking higher wage, social welfare and infrastructure payments from Rusal.
Deripaska — until recently reported to be Russia’s richest man — controls a 57% stake of Rusal, along with Basic Element, his wholly owned holding company, which controls both aluminium and other assets.
But Rusal remains unlisted, and issues no financial reports. Over the past year, Rusal has twice proved unable to sell publicly listed shares on the London and Hong Kong Stock Exchanges. An attempt to attract private Chinese investors also failed just over a month ago.

The Russian government has now dispatched auditors to check Rusal’s financial management. This follows a decision by the state development bank, Vnesheconombank, to issue a $4,5bn loan to prevent the forfeit of a 25% shareholding stake in mining company Norilsk Nickel, which Rusal acquired in April.
In Nigeria, the arrival in April 2007 of the new presidential administration of Umuru Musa Yar’Adua led to reviews of details of privatisation agreements signed by the former government.
The US embassy in Nigeria has told the Yar’Adua government that it was backing Reuben Jaja and his Los Angeles-based Bancorp Financial Investment Group (BFIG) in litigation to overturn Rusal’s takeover, on the grounds that BFIG had been the highest bidder, and that the award to Rusal was unlawful.
The core of BFIG’s case, Jaja has told Business Day, is that Rusal conditioned its takeover bid with a series of demands that were illegal under Nigeria’s privatisation law, but were granted to enable Rusal to take over the plant without making the required payments to the government; relieved the Rusal of the obligation to pay Alscon’s debts, mostly for power; required the government to pay for dredging the river used to ship raw materials and products in and out of the plant; fixed the supply of gas to the plant at a concessional price; and allowed Rusal to export the metal free of tariffs.
Rusal disputes BFIG’s claims.
Two accidents have also caused environmental damage.
Responding to the political challenge in Guinea, Rusal spokesman Vera Kurochkina said her company operated in "full conformity with the conditions of the agreement, with the legal co-ordination which has passed all stages with the government of Guinea, and in full conformity with the procedures in this country".

Vimetco Awarded Two Prospecting Permits for Bauxite Mine - 26 November 2008
Vimetco N.V. (LSE: VICO), the global, vertically integrated producer of primary and processed aluminium products, today announces that, on October 13th, 2008, the Minister of Mines and Geology in the Republic of Guinea issued to Vimetco two permits for bauxite prospection.
The permits cover a total area of 832 km2 located in the prefectures of Boffa, Fria and Dubreka in South Western Guinea and their issuance follows promising results from a reconnaissance permit issued to Vimetco by the ‘Direction Nationale des Mines’ earlier this year for the same area.
The permits allow Vimetco to prospect the area over a period of three years with a view to determining if there is sufficient quantity of metal grade bauxite to develop downstream operations.
The drilling programme is planned to start early 2009 and is expected to be completed by the end of the license period.
The Minister of Mines and Geology, Dr. Louncény Nabé said:
"Guinea is pleased to include Vimetco in its plans to develop the bauxite industry in Guinea. These prospecting permits are amongst the first ones that have been granted in a long time, in particular since I have taken office, which shows our confidence in Vimetco to develop the project."
Chief Executive Officer of Vimetco, Mr. Christian Wüst commented:
"The granting of these permits is a first step towards the development of a bauxite mine in Guinea and is in line with our strategy for the vertical integration of our aluminium business. "

Bauxite mining plans for Bua
Fiji Times, Fiji - Sunday, November 30, 2008
TALKS concerning the lease of a bauxite mining company that is expected to create 200 jobs at Nawailevu in Bua are continuing.
Chinese mining company XINFA AURUM is holding discussions with landowners and the Native Lands Trust Board on the use of about 160 hectares of land which is abound with about 2 million tonnes of bauxite.
Managing director Isireli Dagaga said discussions have continued with Fiji Pine, the current lease holders of the site that will be mined.
"We haven't completed talks with Fiji Pine but we are expecting that they would harvest their pine later this year so that we can get their lease," Mr Dagaga said.
Earlier, Fiji Pine general manager George Vuki confirmed pine trees would be harvested later this year. "We are willing to terminate our pine lease but we are also trying to establish how long they will hold on to their mining lease so that we can replant once they are finished," Mr Vuki said.
Mr Dagaga said they would begin work on the necessary infrastructures like access roads and buildings within the mine area site.
He said an environment impact assessment of the area to be mined has also been carried out.
"Probably the only delay that we are facing is that of the actual mine design which is being done in Australia so that should take some time," he said. "We expect to start mining before the end of next year."
The elements silica and alumina, which are found in bauxite, are used for manufacturing aluminum.
"Bauxite will be exported to China. This would be one of the major investments that could trigger greater developments in Bua. This would be good for Bua because bauxite has also been found in places like Nasarawaqa."

Stimulus package would not reverse China's aluminum market
SteelGuru, India - November 29, 2008
According to Galaxy Securities, Chinese government's economic stimulus package won't reverse the oversupply situation on current Chinese aluminum market.
An analyst with Securities Company said the stimulus package will mainly fuel aluminum demand in the power industry, which only makes up by 16% of the overall aluminum market in China.
According to Galaxy Securities, aluminum prices will gradually rebound to equal their costs in 2009 as output reduction goes further, but the prices won't go up significantly due to the overcapacity of electrolytic aluminum and weak demand on the market. There is great expectation on sliding profits of the aluminum industry because of soft demand in the downstream industries and aluminum companies may be further undervalued.
As the market goes down to the bottom, market valuation will rise back more quickly than their performance. As a result, Galaxy Securities suggest a defensive investment strategy and investment into processing companies and cheap valued companies.
Currently, evaluation of aluminum companies within and outside China have almost fallen to historic lows, while evaluation on Chinese domestic aluminum companies is much higher than that of the international comparable companies.

Russian Technologies Corp to conduct feasibility studies for JV development of Venezuelan mining (Pressemitteilung), Austria - 2008-11-28
According to a report published in the regional newspaper Nueva Prensa de Guayana, the Ministry of Basic Industries & Mining (Mibam) is seeking to enhance the processes of production and consolidation of its industrial processes in four cooperation agreements signed during the 5th Venezuela-Russia High Level Intergovernmental Commission held some two weeks ago to allow the Venezuelan Guayana Corporation (CVG) to strengthen its position in the mining sector, specifically in the south of Bolivar state.

VHeadline Venezuela News reports:
A Letter of Intent signed with the Russian Technologies Corp sets out terms and conditions to conduct a technical, economic and financial feasibility aimed at forming a joint venture for the development of the mining sector, and to improve working conditions and generate employment throughout the sector.
The RUSAL company is already forging ahead with a series
of multi-metal ore-processing and separation projects as defined by Mibam, and it conducting further exploration work in designated sectors to gain an overview of opportunities to exploit and develop new deposits for alloy production. The new joint venture also plans to install an integrated industrial complex to mine for bauxite, an alumina plant with a capacity of 1,400,000 metric tonnes per year and an aluminum plant with a capacity of 750,000 tonnes of primary aluminum per annum.
The CVG and Rusal are also set to conduct a feasibility study for the construction of a thermoelectric plant, as part of plans to enhance energy supplies to state-owned enterprises at Los Pijiguaos and Cabruta for the production of alumina and primary aluminum.
The creation of a Minera Venrus JV for the exploration, processing, storage and marketing of gold, as well as development and transfer of mining technology, construction and gold processing is one of the concepts reviewed in an agreement while another is for the CVG and RusCaolin to set up a joint operational venture (to be named Ciproca) for ceramics and related products in industrial units for the production of tiles, sanitary ware, crockery, ceramics and glazed stoneware and ceramic and water-based paints.
VHeadline Venzuela News

Bauxite mining plans for Bua
Fiji Times, Fiji - Sunday, November 30, 2008
TALKS concerning the lease of a bauxite mining company that is expected to create 200 jobs at Nawailevu in Bua are continuing.
Chinese mining company XINFA AURUM is holding discussions with landowners and the Native Lands Trust Board on the use of about 160 hectares of land which is abound with about 2 million tonnes of bauxite.
Managing director Isireli Dagaga said discussions have continued with Fiji Pine, the current lease holders of the site that will be mined.
"We haven't completed talks with Fiji Pine but we are expecting that they would harvest their pine later this year so that we can get their lease," Mr Dagaga said.
Earlier, Fiji Pine general manager George Vuki confirmed pine trees would be harvested later this year. "We are willing to terminate our pine lease but we are also trying to establish how long they will hold on to their mining lease so that we can replant once they are finished," Mr Vuki said.
Mr Dagaga said they would begin work on the necessary infrastructures like access roads and buildings within the mine area site.
He said an environment impact assessment of the area to be mined has also been carried out.
"Probably the only delay that we are facing is that of the actual mine design which is being done in Australia so that should take some time," he said. "We expect to start mining before the end of next year."
The elements silica and alumina, which are found in bauxite, are used for manufacturing aluminum.
"Bauxite will be exported to China. This would be one of the major investments that could trigger greater developments in Bua. This would be good for Bua because bauxite has also been found in places like Nasarawaqa."

Stimulus package would not reverse China's aluminum market
SteelGuru, India - November 29, 2008
According to Galaxy Securities, Chinese government's economic stimulus package won't reverse the oversupply situation on current Chinese aluminum market.
An analyst with Securities Company said the stimulus package will mainly fuel aluminum demand in the power industry, which only makes up by 16% of the overall aluminum market in China.
According to Galaxy Securities, aluminum prices will gradually rebound to equal their costs in 2009 as output reduction goes further, but the prices won't go up significantly due to the overcapacity of electrolytic aluminum and weak demand on the market. There is great expectation on sliding profits of the aluminum industry because of soft demand in the downstream industries and aluminum companies may be further undervalued.
As the market goes down to the bottom, market valuation will rise back more quickly than their performance. As a result, Galaxy Securities suggest a defensive investment strategy and investment into processing companies and cheap valued companies.
Currently, evaluation of aluminum companies within and outside China have almost fallen to historic lows, while evaluation on Chinese domestic aluminum companies is much higher than that of the international comparable companies.

Russian Technologies Corp to conduct feasibility studies for JV development of Venezuelan mining (Pressemitteilung), Austria - 2008-11-28
According to a report published in the regional newspaper Nueva Prensa de Guayana, the Ministry of Basic Industries & Mining (Mibam) is seeking to enhance the processes of production and consolidation of its industrial processes in four cooperation agreements signed during the 5th Venezuela-Russia High Level Intergovernmental Commission held some two weeks ago to allow the Venezuelan Guayana Corporation (CVG) to strengthen its position in the mining sector, specifically in the south of Bolivar state.

VHeadline Venezuela News reports:
A Letter of Intent signed with the Russian Technologies Corp sets out terms and conditions to conduct a technical, economic and financial feasibility aimed at forming a joint venture for the development of the mining sector, and to improve working conditions and generate employment throughout the sector.
The RUSAL company is already forging ahead with a series
of multi-metal ore-processing and separation projects as defined by Mibam, and it conducting further exploration work in designated sectors to gain an overview of opportunities to exploit and develop new deposits for alloy production. The new joint venture also plans to install an integrated industrial complex to mine for bauxite, an alumina plant with a capacity of 1,400,000 metric tonnes per year and an aluminum plant with a capacity of 750,000 tonnes of primary aluminum per annum.
The CVG and Rusal are also set to conduct a feasibility study for the construction of a thermoelectric plant, as part of plans to enhance energy supplies to state-owned enterprises at Los Pijiguaos and Cabruta for the production of alumina and primary aluminum.
The creation of a Minera Venrus JV for the exploration, processing, storage and marketing of gold, as well as development and transfer of mining technology, construction and gold processing is one of the concepts reviewed in an agreement while another is for the CVG and RusCaolin to set up a joint operational venture (to be named Ciproca) for ceramics and related products in industrial units for the production of tiles, sanitary ware, crockery, ceramics and glazed stoneware and ceramic and water-based paints.
VHeadline Venzuela News