AluNews - December 2011

Aluminium likely to remain volatile in first half of 2012

Business Standard - 31-Dec-2011

However, demand from Japan and the EU to provide some breather in H2.Aluminium is likely to remain volatile in 2012. Intensifying economic concerns, coupled with the euro zone debt woes may keep the metal under pressure in the first half. In the second half, however, the light base metal is set to get support from a possible recovery in manufacturing and infrastructure sectors.The metal market experienced paradigm shift of production centre as its output headed towards the eastern side of the globe due to rise in power costs leading to closures by smelters in the US and Europe. Alumina prices treaded higher during first half of 2011, even though Chinese and global production increased due to re-stocking activity. However, stocks in LME hit a record high above 4.71 million tonnes in May, backed by turbulence in Europe and the US which impacted the trend later in the year.“However, China is set to adopt a path of monetary loosening policy in 2012 to avoid hard landing of its economy which may prop up prices coupled with the renewal in demand from Japan, once manufacturing activity recommences. The transportation sector will be the single largest end-use market for aluminum demand. Despite high inventories of aluminum in warehouses, the demand growth and looming supply issues in China may push prices northward in the second half of 2012,” said Jayant Manglik, president, retail distribution, Religare SAccording to the World Bureau of Metal Statistics (WBMS), global primary aluminum consumption rose 5.2 per cent year-on-year to 28.1 million tonnes between January-August this year. Consumption in China during the first eight months of this year rose 6.2 per cent, while growth in Germany during the same period rose by a whopping 15 per cent.China accounts for a whopping 40 per cent share in global aluminum consumption and the EIU expects growth in the country to slow to 6 per cent in 2011 as compared with a rise of 10.5 per cent in 2010. Economic prospects for China look weak considering the tight lending market scenario, weak demand for cars and a grim global economic scenario.Japan which accounts for five percent of world consumption is expected to witness a slowdown on the back of problems in the manufacturing supply chain after the earthquake and tsunami that struck the nation in March'11.India, accounts for four per cent of global aluminum demand, witnessed a decline of 10.5 percent year-on-year between January-August. EIU expects a decline in Indian aluminum consumption by around five per cent. But in 2012 and 2013, demand is forecast to rise around nine per cent. Producers including Hindalco and Nalco are set to see a turnaround in sales in the second half of 2012. The stocks of Hindalco and Nalco fell 12 per cent and five per cent to close at Rs 115.5 and Rs 50.50 respectively in 2011.“Rising inventories coupled with a comfortable supply-side scenario is expected to act as a negative factor for aluminum in the coming year. But with improvement in the US economic scenario and expected decline in interest rates in China, sharp downside in prices will be cushioned in the second-half of the year,” said Naveen Mathur, associate director, Angel Broking.Aluminum prices on the LME slumped by more than 20 per cent, with major downside pressure seen in October and November. Average monthly prices of the metal slipped from $2687 a tonnes in April to $2058 a tonnes in December translating thereby at Rs 119 a kg and Rs 108 a kg in rupee term.“The metal may see more production cuts in future before balancing out in the long run. Further fall in price can not be ruled out. Since the price is below productions costs, the fall could be slow with volatile fluctuations. In rupee terms aluminum prices could average at Rs 95 per kg for the first half of 2012,” said Atul Shah, chief operating officer, Emkay Commotrade. crisis may cause what he called a “cyclical panic” in commodity markets that could prompt smaller aluminum customers to cut orders.

Quebec smelter workers reject contract offer

Financial Post - 30-Dec-2011

Workers at Rio Tinto Group’s aluminum smelter in Alma, Quebec have rejected the company’s final offer for a new labour deal, setting the stage for a possible strike or walkout as early as Jan. 1.A government-appointed mediator who had been trying to broker an agreement for several months called the parties to a meeting Friday afternoon to try to salvage a last-minute solution before the current collective agreement expires Saturday night.But observers said a compromise was unlikely. Negotiators for the company and the union have failed to agree on conditions related to subcontracting work.“This could be a long labour stoppage,” said Gilles Bergeron, an economist at the Université du Québec in Chicoutimi. “Without a clearer sense of aluminum industry demand over the next year, both sides will dig in.”The Alma facility is the largest and most modern of Rio Tinto’s four aluminum smelters in the Saguenay region, with an annual production capacity of 434,000 tons of primary aluminum per year.Prices for the metal used to make soda cans and airliners have dropped 28% since reaching a 2011 high of $2,797 per metric ton in May.Oleg Deripaska, chief executive of United Co. Rusal, the world’s biggest aluminum producer, said Dec. 16 that the euro currency crisis may cause what he called a “cyclical panic” in commodity markets that could prompt smaller aluminum customers to cut orders.

Guinea's Mines Ministry Seeks Consultants to Fix Bauxite Price

BusinessWeek -  30-Dec-2011Dec.

30 (Bloomberg) -- Guinea’s mines ministry issued a call for consultants for its plan to establish a market price for sales of bauxite, according to a tender published on West African nation wants to set a “selling price of bauxite applicable to companies in Guinea,” the Conakry-based ministry said in the notice. The policy is in line with the country’s new mining code, according to the notice.United Co. Rusal, Rio Tinto Plc and Alcoa Inc. operate in Guinea, the world’s biggest exporter of bauxite.To contact the reporter on this story: Ougna Camara in Conakry at ocamara@bloomberg.netTo contact the editor responsible for this story: Emily Bowers at

Cost Of Storing LME Aluminum In Detroit To Jump 10% From April

NASDAQ - 30-Dec-2011

Warehouses up cost of storing LME aluminum in Detroit by 10% from April--New LME rules on warehouse deliveries also take effect from April--Goldman Sachs subsidiary, Metro, owns lion share of Detroit-stored aluminum--Glencore's Pacorini owns all warehouses in second-largest LME aluminum storage location, in Vlissingen, the Netherlands(Adds details from paragraph 5.) LONDON -(Dow Jones)- The cost of storing aluminum in London Metal Exchange- approved warehouses in Detroit has soared by nearly 10% following the exchange's decision to force a Goldman Sachs Group Inc. (GS) subsidiary to double the rate at which it delivers metal out of its facilities there.The new rent of 45 cents a ton of aluminum will be effective from April 1, the same date as rules stating that warehousing firms must lift the minimum daily delivery rate to 3,000 tons for any warehouse holding more than 900,000 tons of metal come into effect. LME members were notified of the increase in a notice earlier Friday.The LME's warehousing system has been in the spotlight through 2011 after concerns were raised over delays in accessing aluminum in the U.S., prompting the exchange this summer to raise the minimum amount of metal that must be delivered out of warehouses every day.When the new rules were announced in July, there was only one company in the LME's network of approved warehousing firms that had over 900,000 tons of metal in one location: Metro International Trade Services, owned by Goldman Sachs.The queues to secure aluminum stored at Metro's Detroit facilities reached eight months earlier this year. The queues haven't vanished: over a quarter of the aluminum held in the LME's warehousing system is stored in Detroit--1.3 million tons, out of a total 4.97 million tons. Warehouses owned by Metro store over 900,000 tons of this. It would take 600 days, or 120 working weeks, to deliver out 900,000 tons.The remainder of aluminum in Detroit is stored in facilities owned by Glencore International's (GLEN.LN) Pacorini Metals and Noble Group Ltd.'s (N21.SG) Worldwide Warehouse Solutions.But now Glencore's Pacorini has over 900,000 tons in its facilities in Vlissingen in the Netherlands, where rent will also rise by 10% to 45 cents a day from April. It's a massive increase since the start of the year, when aluminum stocks there totaled just 62,250 tons.Storage capacity in Vlissingen is set to rise further because Pacorini is building a series of new sheds there on land adjacent to a port that was previously leased by Geneva-based Klesch Group. Not all the facilities are expected to be used for aluminum, however, nor all to be used by Pacorini.The critical mass of having more metal in these warehouses means Glencore can afford to pay more to attract fresh metal, allowing it to compete with Metro and have greater influence over European premiums, industry participants say.Goldman Sachs wasn't immediately available for comment and Glencore declined to comment.At the same time, Metro has increased the cost of loading metal out from Detroit by 9% or $3 a ton to $35.95/ton. The loading out cost in Vlissingen has risen by 3.5 euros or 16% to EUR26/ton.The LME doesn't set the rates charged for rent or handling--they are negotiated between the warehouse and its clients. Warehousing firms have argued that upping the delivery out rate will cost more: due to size and weight factors, a truck can carry around just 20 tons of aluminum.But some industry traders and merchants say that both costs are already vastly in excess of non-LME storage costs, and that the further increase isn't justified. -By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413; andrea.hotter@

Fresh Allegations Emerge in RICO Lawsuit Against Alcoa

Wall Street Journal (blog) - 30-Dec-2011

Aluminum maker Alcoa paid $5 million in bribes to the former chief executive of Bahrain’s state-owned aluminum company and tens of millions of dollars in bribes to a former Bahrain official as part of scheme to land contracts at inflated prices, according to new allegations in a long-running racketeering lawsuit.Simon Dawson/Bloomberg NewsDocuments filed late Wednesday in federal court in Pittsburgh also allege that Alcoa allowed shell companies owned by Canadian businessman Victor Dahdaleh to masquerade as Alcoa subsidiaries.That way Alcoa could sell alumina, an ingredient used to make aluminum, to the shell companies at inflated prices. The shell companies, in turn, sold the overpriced alumina to the state-owned company, Aluminum Bahrain, which was apparently none the wiser, according to the documents.Alcoa also used the shell companies to funnel bribes to Aluminum Bahrain executives and Bahrain government officials, in return for helping secure the contracts at the inflated prices, including by providing competing bid information to Dahdaleh, the documents allege.Read more at WSJ’s Law Blog.

Australian alumina stays unchanged on week amid holiday lull

Platts - 30-Dec-2011

Platts alumina price benchmark closed the year at $305/mt FOB Australia, unchanged on the week, but down $10/mt from a month ago.Although a number of participants said they did not think the market was far from slipping below $300/mt, China has lately been a stabilizing force, with several parties expressing potential demand for February shipments at around $300/mt.China's costlier domestic alumina cargoes and yuan-denominated trade financing rates have been fueling interest in imported alumina, sources said. But most Chinese participants have refrained from placing actual bids in the last week, saying the seller should name its price first. Others were nervous about the aluminium outlook which held them back. The Australian alumina market may seem attractive now but there is a chance prices may fall further if LME aluminium experienced more turmoil, they said.Extremely weak global aluminium margins have been a concern for some time, and smelters were constantly evaluating production plans. China has idled over 2 million mt/year of smelting capacity due to negative margins, including 630,000 mt/year in December, the China Economic Information Center -- a unit of the official Xinhua news agency -- said in a report at the weekend. More cutbacks can be expected if aluminium prices fail to rebound, the report said. Alumina margins have not been rosy either, but were generally not as poor as aluminium, market participants said. Platts Chinese domestic alumina assessment at Yuan 2,650/mt ($420/mt) ex-works Henan would have equated to $325/mt in import parity terms, after taking into account Yuan 80/mt in domestic handling costs, the day's yuan-dollar exchange rate, 17% in VAT and $23/mt in freight for 30,000 mt from Western Australia to Qingdao in northern China, for shipment in February. Ship owners were divided over what they would consider a reasonable freight rate for February. One put the market at $22-22.50/mt while another quoted $23.50-24/mt. The first source said there was a recent prompt fixture done at $18-19/mt. The other valued the prompt market at $22-22.50/mt.

China's Guangxi Yinhai Aluminium mulls cutbacks in weak market

Platts - 29-Dec-2011

Singapore (Platts)--29Dec2011/409 am EST/909 GMTChina's Guangxi Yinhai Aluminium is mulling further cutbacks in its smelter operations in the near term as weak market conditions prevail, a company source said Thursday. "We may even shut down operations totally, it all depends. Management is reviewing it now and a decision is likely to be made in January before Lunar New Year," he said. "Talk is that power issues will continue through the first half of next year and metal prices remain weak. Many smelters have been operating at a loss for a while now, so it's not just us; other smelters are also considering cutbacks," he added. Guangxi Yinhai operates two smelters in South China with a combined primary aluminum smelting capacity of 450,000 mt/year. It has cut back about 50% of total capacity since September after receiving notice of power cuts in the region in August. "If we cut further or shut down, it would likely happen before Lunar New Year, since it's the holidays anyway. If we decide to shut down completely, then that could last anywhere from six months to a year," the source said. With the earlier cuts, the producer is expected to reach an overall actual output of about 370,000 mt in 2011, which is in line with output in 2010, but down from an earlier targeted 420,000 mt for 2011.

Vimetco Says China Huadian, Minmetals Bid to Build Power Plant

BusinessWeek - 28 December 2011

Dec. 28 (Bloomberg) -- Vimetco NV, a maker of aluminum products, said seven companies including China Huadian Engineering Co., Minmetals Engineering Co. and Siemens AG placed bids to build a 250-megawatt power plant in Romania.Vimetco expects to announce the winner by the end of the first quarter, it said today in a statement.The project at the Alum Tulcea complex has financial support from the European Bank for Reconstruction and Development and commercial banks, the Amsterdam-based company said.To contact the reporter on this story: Amanda Jordan in London at ajordan11@bloomberg.netTo contact the editor responsible for this story: Amanda Jordan at

 Settlement between RUSAL and antimonopoly watchdog approved

RAPSI - 28-Dec-2011

MOSCOW, December 28 - RAPSI, Natalia Belova. A court has approved a settlement between a subsidiary of RUSAL, the worlds largest aluminum producer, and the antimonopoly watchdog in connection with price manipulation in the wholesale energy market, the Russian Legal Information Agency (RAPSI/ reported on Wednesday.The Moscow Commercial Court has terminated proceedings in the lawsuit filed by RUSAL Krasnoyarsk Aluminium Smelter challenging the watchdogs decision. The aluminum smelter withdrew its lawsuit and acknowledged several violations of the antitrust laws.The antimonopoly service decided in March that RUSAL's subsidiaries had manipulated prices in the wholesale electricity market.The watchdog ruled that RUSAL abused its dominant position in the wholesale energy market and had stifled competition.RUSAL is one of the leaders in the global aluminum industry, accounting for 10% of global aluminum production.

Press Release: Emal, Dubal sign technology license agreement

MEED (subscription) (press release) - 28 December 2011

The licensing by Dubai Aluminium (DUBAL) of its in-house developed and proprietary DX+ Technology to Emirates Aluminium Company Limited (EMAL) has been formalized through the signature of a contractual agreement between the two companies. In effect, DX+ Technology has been specified for and will be installed in EMAL Phase II - which comprises an additional 444-cell potline within EMAL's existing smelter premises in Al Taweelah, Abu Dhabi.

Alcoa names Tomas Sigurdsson to exec post

Pittsburgh Business Times - 27-Dec-2011

Sigurdsson takes the place of Marcos Ramos, now president of Alcoa Global Primary Products in Latin American and the Caribbean. Sigurdsson's promotion is effective Jan. 1. "As a fully integrated aluminum company in Europe, representing and coordinating Alcoa's wide array of primary, rolling and downstream businesses is an important role," said Alcoa Chairman and CEO Klaus Kleinfeld in a prepared statement. "Tomas is the idea leader to take on that vital task."Sigurdsson was managing director, Alcoa Fjardaál. No replacement has been named yet for that position, Alcoa said.Sigurdsson started working for Alcoa in 2004. Before that, he worked for Nordurál, Hönnun Ltd. Consulting Engineers and the Icelandic Public Road Administration.

200 Million USD Loan for Landsvirkjun Power Company

IcelandReview - 27-Dec-2011

Landsvirkjun, the power company, has taken a loan of USD 200 million (ISK 25 billion) on the international market. The company sells the majority of its electricity to industrial users such as aluminum smelters. This is the first such loan an Icelandic company has taken since October 2008. The loan is a revolving credit loan for three years with a possible two-year extension. According to the terms of the loan, Landsvirkjun can take out and pay back funds according to its needs.By taking the loan Landsvirkjun has finished refinancing a similar loan that was to be paid by December 2012. The loan is a multibank loan arranged by Barclays Capital, Citigroup and SEB. Other participating banks include Arion Bank, JP Morgan, UBS, Landsbankinn and Íslandsbanki.According to Landsvirkjun, the purpose of the loan is to ensure that Landsvirkjun has access to funds should other sources of financing temporarily dry up.

Nigeria: Country to Produce 100000 Tons of Aluminium Annually - 27-Dec-2011

Nigeria is targeting producing 100,000 tons of aluminium annually starting from 2013, Minister of Mines and Steel Development Musa Sada has said.Sada said while inaugurating a committee that would facilitate the production of aluminium and aluminium products that the country is expected to "meet the production target of 100,000 tons of aluminium per annum by year 2013 in line with the target set for the ministry in the Transformation Agenda of the President."The committee was inaugurated after a meeting between officials of the ministry and representatives of UC Rusal Aluminium Smelter Company, Ikot Abasi, to liaise with the company to achieve the objective.At the meeting, Sada reiterated the need for the company to keep the ministry abreast of its operations and draw the ministry's attention to whatever challenges it encounters in its operations."We should have a sustained dialogue. If we have a sustained dialogue, we will be able to assist your company to work very well because the Ministry is helping to supervise and oversee your operations. If there are problems, they have to be solved through dialogue and necessary actions to enable the company succeed in its production," he said.Earlier, leader of the UC Rusal delegation Mr. Vitaliy Kuznetsov said the essence of their visit was to seek the assistance of the ministry in addressing the challenges posed to their smooth operations.Mr. Mikhail Kosarev who made a presentation on behalf of the company disclosed that the company invested a total of N15 billion between 2007 and the first six months in 2011.He said that since 2007 the company had produced more than 40,000 tons of aluminium, a sizeable proportion of which it exports to the international market.

DUBAL power expansion project honoured in US

Zawya (registration) (press release) - 26-Dec-2011

New GTX Cogeneration Plant has enhanced sustainability by increasing power generation efficiency and reducing industrial gas emissionsDubai, United Arab Emirates: The innovative thinking and quest for operating efficiency through continuous improvement at Dubai Aluminium (DUBAL) has again been recognised on the international stage. DUBAL's unique GTX project, which was presented by Tayeb M M H Al Awadhi (Vice President: Power & Desalination) at Power-Gen Asia, held in Singapore during 2010, has won the Project of the Year 2011 "Honourable Mention Best Gas-Fired Project" at the Power-Gen International 2011 conference, held recently in Las Vegas, USA.To appreciate the significance of the award requires an understanding of the GTX project, its origins and the role it plays. The project's setting is as important. In this regard, DUBAL is one of the largest single-site aluminium smelters in the world (producing more than 1 million metric tonnes of hot metal per annum). The smelter complex includes a 2,350 megawatt (MW) power station (at 30˚?C), a water desalination plant and a large carbon plant. The power station is designed to provide both electricity to the smelter reduction process and saturated steam to the water desalination plant. The present average aluminium smelting power demand is about 1,900 MW, amply covered by the generation capacity of the power plant.Back in 2006 (i.e. prior to the GTX project), the DUBAL power plant comprised 22 Gas Turbines and 7 Steam Turbines. The average generation capacity of 2,115 MW met the    1,750 MW average demand of the site at that stage. The plant configuration fulfilled the continuous load supply requirement with sufficient spare generation capacity to cover the loss of the highest generating unit while one large unit was on planned maintenance outage. The annual average station efficiency was 43 per cent, with three to four Frame 9B Gas Turbines being required to meet the plant's power and water demand.An analysis of the planned extensions of DUBAL's existing potlines indicated that the electricity generation requirements within the DUBAL complex would rise to about 1,850 MW by 2010. A feasibility study, conducted in 2006, showed that DUBAL's reserve capacity would not be sufficient to cover the additional power demand. Furthermore, the complex would have to rely on less-efficient machines, which had already partially completed their asset lifetime. It was clear that an increase in the installed generation capacity of the DUBAL Power Plant complex was needed.The same feasibility study showed that the annual average generation efficiency of the DUBAL Power Plant complex could be improved by installing a GTX Cogeneration Plant; and that the annual fuel consumption for power generation purposes could be reduced by about 4 per cent. The expected partial operation of the proposed GTX Cogeneration Plant on distillate oil due to possible gas shortages in summer further improved the profitability of the project.Given these benefits, the project was given the go-ahead - with the primary objective of implementing a GTX Cogeneration Plant being to mprove the power generation efficiency and decrease the environmental impact of the DUBAL Power Plant complex. This would be achieved by integrating the proposed GTX Cogeneration Plant into the existing DUBAL Power Plant infrastructure, thus enabling better fuel utilisation by increasing the efficiency of electricity generation and water production within the complex; and minimising industrial gas emissions, specifically oxides of nitrogen (NOx) and carbon dioxide (CO2). A secondary objective was to increase the total power generation capacity of the DUBAL Power Plant by leveraging the ability of a GTX Cogeneration Plant to raise the installed generation capacity.Unlike a conventional Combined Cycle Power Plant (CCCP), DUBAL's GTX project entailed installing one large state-of-the-art Gas Turbine and one dual pressure Heat Recovery Steam Generator; and then supplying the steam heat energy to three existing Frame 9E Steam Turbines and the water desalination plant. The GTX Co-generation Cycle is designed to work in three modes: Additional steam heat energy to operate the existing Steam Turbines on peak load;Additional steam heat energy to replace one existing Heat Recovery Steam Generator; or Steam heat energy to the water desalination plant. In essence, the new technology and new process concept is not only capable of accommodating the increase in power production and steam management, but is also more flexible to accommodate the downtime and maintenance requirements resulting from operating the existing Steam Turbines on peak load.By enhancing the Steam Turbine output to peak operation, or replacing an existing Steam Generator while on maintenance, the GTX plant has enabled an annual average increase in overall fuel free Steam Turbine output of over 50 MW while the surplus steam directed to desalination plant produces additional water. Accordingly, the annual average station efficiency rose from 43 per cent to 44.5 per cent.Moreover, the new GTX block has introduced 220 MW of reserve capacity, which has been utilized to increase the load carrying demand by 150 MW while the spare 70 MW has reduced demand for one Frame 9B Gas Turbine. Switching-off one Frame 9B unit has resulted in gas savings of about 15 mscfd, and a concomitant reduction in CO2 emissions of 300,000 tonnes per annum. The GTX project, which cost US$183 million, is the first of its kind in scale and application, as integration with CCPP and desalination has never been done before. It's also a first in the aluminium industry, where no similar GTX projects are known.

UC RUSAL Nikolaev Alumina Refinery Hits Record Production In 2011

India - 26-Dec-2011

UC RUSAL's, the world's largest aluminium producer, Nikolaev alumina refinery has delivered a record annual production level of 1.6 million tonnes of alumina during 2011. The output increase in 2011 was also made possible through implementation of RUSAL's Production System, raising equipment utilization ratio by 2.6% in 2011 as compared to 2010.This is one of the most notable achievements in the refinery's 31-years history. In last 11 years, the refinery has constantly extended its production volumes culminating in record levels this year.These record levels were reached following a USD350 million CAPEX programme that has been undertaken at the refinery since 2000, resulting in significant upgrades to the refinery's facilities. In particular, the lime-burning kiln has been reconstructed with its conversion to heating gas, fifth calcination kiln has been built and the captive power plant has been reconstructed.In 2010, the Nikolaev alumina refinery produced 1.534 million tonnes of alumina, with a 1.57 million tonnes total production capacity.

Emirates Aluminium could seek $3bn for expansion - 25-Dec-2011

Emirates Aluminium Co, building the world’s biggest aluminum smelter, may seek $3bn for the Abu Dhabi project, two people with knowledge of the matter said.Funding will be split between export credit agencies and commercial banks, the people said, declining to be identified because the deals are yet to be completed. Emirates Aluminium is owned by Mubadala Development Co. and Dubai Aluminium Co.“We are working with shareholders to finalise the funding structure,” Emirates Aluminium chief executive officer Saeed Al Mazrooei told reporters last week in Abu Dhabi. “There are still many options to decide from,” he said, declining to elaborate.Arabian Gulf countries are investing in petrochemicals and metals output to diversify their economies away from crude oil and benefit from cheap power and gas prices. Energy accounts for 30 to 40 percent of aluminum smelting costs, according to Brook Hunt, a London-based unit of Wood Mackenzie Consultants Ltd.

Barclays Capitals' metals bets turn sour

The Australian - 23-Dec-2011

BARCLAYS Capital, the investment banking division of Barclays Bank, has run up significant losses trading base metals this year after a series of bets it made on copper, nickel and aluminium turned sour, people familiar with the situation told Dow Jones Newswires yesterday. Barclays declined to comment on the alleged losses, which traders at the London Metal Exchange familiar with Barclays Capital's trading positions said could amount to as much as $US500 million. The losses come as the investment banking arms of global banks remain under scrutiny for running risky practices, some of which helped cause the global financial crisis. In Britain, the government this week announced it would require British banks like Barclays to ringfence their retail banking operations from investment banking so taxpayers are protected from potential losses caused by riskier trading. The British government had to bail out several banks during the crisis, although Barclays managed to secure private sector funds to bolster its balance sheet and avoided a government cash injection. The people familiar with the situation said it's been an extremely tough year for Barclays' base metals trading desk, with losses mounting steadily over a period of months. Bets on differences in prices of London Metal Exchange contracts went against them, exacerbated by the sharp fall in prices that followed a sustained rally earlier this year, the people said. The problems started earlier this year with copper trading, with large positions in the price differences between the two front-month contracts accounting for the majority of the losses, people familiar with the matter said. Although these positions were in-the-money a year ago, the market has since gone in the other direction, forcing Barclays to close the positions earlier this year at significant loss, these people added. Barclays also made large losses in nickel earlier this year, though the most recent problems have been in aluminium, after it took a bet the difference in price between the February and March contract would widen, the people familiar with the situation said. Brokers estimate the bank has already lost around $US80m exiting that position since the decision to close the trade out was made. The company has been unravelling a number of trading positions this week, traders and brokers said. The company is now scrutinising the performance of its base metals trading team, which is run in London by Iain MacRae. A shake-up of the team is expected to follow, with casualties expected to include Mr MacRae as well as metals trader Christian Saunders, known in the industry as 'Nelson', the people familiar with the matter said. Neither Mr MacRae nor Mr Saunders were immediately available for comment. But the bank won't close its base metals trading desk nor scale back in other related areas in which it is active, such as metal financing, these people said. There's no suggestion of wrongdoing or illegal trading that would require an external investigation by the regulator. It has been a tricky week for banks and traders active in base metals. Last week, Credit Agricole said it was closing its commodities trading business while US commodity producer and trading house Cargill said last week it has cut 125 jobs in its metals, energy and transport desks worldwide. Barclays' losses come at a time when it has been beefing up its activities in the physical trading arena. The bank has for a long time been a large player in financing metal, but has been boosting its smaller operations related to the physical movement of metal, particularly in Asia. The growth in its physical business comes as Barclays teams up in a joint venture to warehouse metals with steel trader Metalloyd and an individual investor, Alex Gunn. The firm, Erus Metals, was recently approved as a LME warehouse. Barclays Capital has been a category one ring dealing member of the London Metal Exchange since May 1997 and is traditionally a high volume participant in base metals futures and options trading. It also owns a 2.3 per cent stake in the LME. It offers a full LME service, including market making of options, floor broking, and order routing capability for the three-month and LME mini contracts to the exchange's electronic trading system through its own BARX platform. In more bad news for Barclays Capital yesterday, the US Financial Industry Regulatory Authority said it had fined the investment bank $US3m for misrepresenting delinquency data and inadequate supervision when issuing residential subprime mortgage securitisations. A Barclays Capital representative declined to comment

RUSAL Completes Field Trials for Nanoceramic Coating - 23-Dec-2011

ItN Nanovation, a portfolio company of Nanostart, has announced that its nanocoating product dubbed Nanocomp Metcast has successfully passed field trials conducted by IRKAZ, RUSAL’s aluminum smelter located in Irkutsk, and experts at the Engineering and Technology Center of RUSAL.Nanocomp Metcast are advanced nanoceramic coatings custom-developed for the casting machinery. The novel nanocoatings extend the maintenance intervals of casting conveyors and increase the operating life of molds, which in turn improves the efficiency of the casting process in a more economical way.At present, experts at RUSAL and ItN Nanovation are exploring the possibilities of the industrial-scale use of Nanocomp Metcast, the aluminium smelters of RUSAL, making RUSAL to become the first company in Russia to utilize the nanocoatings of ItN Nanovation. RUSAL can also become a part of an important list of international metallurgy companies including AMAG Casting based in Austria, Konzelmann Metallschmelzwerke based in Germany, EMAL based in United Arab Emirates, Talum based in Slovenia, Hydro based in Norway, Qatalum based in Qatar, and Nordural based in Iceland.UC RUSAL is the largest manufacturer of aluminum in the world, representing roughly 10% of the worldwide production of alumina and 10% of aluminum in the fiscal year 2010. ItN Nanovation is the Germany-based nanotechnology company developing advanced ceramic products, including coatings and filter systems for industrial customers. The company’s nanoceramic coatings find applications as catalytic and protective coatings in a broad array of industries, including coal-fired power stations, aluminum foundries and ovens.

Innovative Application Leading to US Aluminum Industry Growth

SBWire (press release) - 23-Dec-2011

Primary aluminum industry is projected to grow at a CAGR of 19% during 2011-2013, says RNCOS in its latest research report.

Eti Aluminyum

Business Excellence Magazine - 22-Dec-2011

Eti Aluminyum of Turkey has the rare distinction of possessing one of a very small number of fully integrated facilities in the world. General manager Mehmet Arkan talks to Julia Smith about the company’s capabilities and plans.One issue that never confronts the aluminium industry is a shortage of raw metal. Aluminium is the most common metal in the earth’s crust and it makes up about eight per cent by weight of the earth's solid surface. It is remarkable for its low weight-to-strength ratio—the weight of aluminium is only a third that of steel—and for its ability to resist corrosion. Moreover, aluminium is easy to shape and form and it enjoys the bonus of being 100 per cent recyclable.Although aluminium has only been in commercial production for just over a century, it has become the world’s second most used metal after steel. Despite its relatively late entrance to the industrial world, there are a myriad of applications in transportation, aerospace, packaging, electrical applications, medicine and the construction of homes and furniture.Turkey is home to Eti Aluminyum, one of a very small elite group of integrated aluminium producers. Strategically, Turkey is an excellent location and the company services customers located around the globe taking in North and South America, Africa, Europe and the Far East, as well as meeting approximately 15 per cent of Turkey’s domestic demand.Eti Aluminyum was originally established in 1962 by the Turkish government, passing into the private sector when it was acquired in 2005 by the Turkish construction, energy and mining group Cengiz Holding. This was a critical landmark in the company’s history, as all of its workers and engineers had the right to transfer to other state-managed enterprises and almost the entire workforce departed. Only 15 experienced engineers opted to stay with the company. One of them was Mehmet Arkan and he and his colleagues faced a mighty up skilling and training task. Arkan, who is currently the plant’s general manager, believes one of the team’s most notable achievements was the smoothness of the final handover which was accomplished in just three months without any major problems.Eti Aluminyum is Turkey’s only producer of liquid aluminium and it is the country’s only fully integrated producer which takes in untreated ore downstream and then has the capacity to fulfil every process requirement to the finished product. The company has its own bauxite ore mines located just 20 kilometres away from the factory and this is the starting point of its operations—the chemistry of aluminium means it is always found combined in other minerals, most frequently bauxite ore.“Our level of integration gives us the advantage of better control of raw material quality, cost and supply. We need to hold only minimal raw material stocks and it is easier to forecast raw material and final product costs,” states Arkan.  However, there are disadvantages too. “There are more inputs and factors affecting our profitability in this style of operation. As we have seen recently, energy costs have spiralled and so have some vital raw material costs like caustic soda, petroleum coke, natural gas, and electricity. In addition, to manage such a highly integrated plant with its many processes requires a bigger and more complex organisation. Today more than 1,300 people work here.” Producing aluminium is an energy-intensive process and many plants have been bought to the brink by rising energy costs—it is estimated that around a third of plants around the world are operating at a loss—but the company has avoided the full impact of these increases by using its own hydro-electric power plant.The plant has the capacity to process 460,000 tonnes of bauxite ore each year and currently produces 60,000 tons of aluminium per annum. There is also an on-site casting facility with a capacity of 75,000 tons a year. Eti Aluminyum produces primary and cast aluminium products as well as wet and dry aluminium hydroxide, calcined alumina and a small quantity of high Mg-alloyed plates. The aluminium hydroxide product is used by aluminium sulphate, poly aluminium chloride (PAC), zeolite and other special hydrate producers. The metallurgical alumina product is used mainly by the smelter department internally as well as by refractory, ceramic and other special alumina producers. The casting products consist of re-melt ingot, alloyed and non-alloyed ingots, billets and slabs. Here, re-melt ingots are used by billet and slab producers while the alloyed and non-alloyed ingots are used by piston producers, cable manufacturers, etc. Billets are used by extrusion producers and slabs are used internally by the rolling plant. “The high Mg-alloyed plates we produce are typically used by machinery builders, ship builders and the defence industry,” Arkan explains.Since privatisation, modernisation of the legacy of ageing plant has been a key priority. “Our existing facilities have mostly been in operation since 1973 or about 40 years. Modernisation is necessary in order to increase equipment and process efficiency, plant productivity, to improve work conditions and safety and to reduce emissions,” he says.“Ideally we would like to see a modernisation programme that takes in the smelters, green anode plant, anode baking, alumina handling or conveying, and power supply and rectifier substation, but the predicted overall investment cost is very high and the payback time, of around 10 years, is too long.”  As an alternative, the company has been working with Elkem-Alcoa of Norway to equip five existing Soederberg pots with point feeders and a new control system using dry anode instead of wet anode paste. Elkem-Alcoa was behind the new, more efficient design, but in a pilot phase, the cathode and anode shells were manufactured in Eti Aluminyum’s own workshop. Once the results of the trial are known, the design will hopefully be extended throughout the plant. “We plan to increase our annual production output to 75,000 tons over the next two years to meet strong global demand and this process improvement should make a major contribution to reaching that goal,” he adds.

Dubal CEO: No immediate bond plans, open to M&A

Reuters Africa - 22-Dec-2011

ABU DHABI Dec 22 (Reuters) - Dubai Aluminium (Dubal) has no immediate plans to issue bonds, its chief executive officer told Reuters on Thursday."For the time being, I don't see it. Maybe if things start to materialise on some of our projects then it's possible," Abdulla Kalban said on the sidelines on a conference.Dubai's ruler issued a decree last month to help Dubal become more competitive by being able to engage in investments outside the country and issue bonds.Kalban also said the company would be open to potential acquisitions, but declined to offer any further details."This is possible. Our offices are already there in different parts of the world," he said.Dubal is one of Dubai's profitable assets and is valued at $7 billion. Its net profit for 2010 more than doubled to 2.13 billion dirhams ($580 million). (Reporting by Praveen Menon; Writing by David French; Editing by Sitaraman Shankar)

Azerbaijan's Detal to export alumina from Ganja plant early 2012

Platts - 22-Dec-2011

Sydney (Platts)--22Dec2011/223 am EST/723 GMTAzerbaijan's Det AL Group, or Detal, has started producing alumina from its long-idled refinery in Ganja, with exports expected early 2012, a company official said Wednesday. The 450,000 mt/year refinery has been newly retrofitted to convert its output from floury to sandy alumina, she said. The unit was taken offline in early 2009 due to the global financial crisis. Detal began first production last month at a new 100,000 mt/year aluminium smelter at Ganja. The plant is expected to turn out 50,000 mt during its first 12 months of operation, the source had said earlier.Detal's has another 60,000 mt/year aluminium smelter at Sumgait which has been offline since 2009. The source told Platts in late November that Detal intended to restart the smelter despite weak global aluminium margins. "The intention is that Ganja Alumina Refinery shall support Ganja Aluminium Smelter and Sumgait Aluminium Smelter -- whenever it becomes operational -- and shall have some output for export," she said Wednesday. Noble Group announced in 2008 that it had signed a contract with Detal giving the Hong Kong-based trader the right to market all of the output from the Ganja smelter.--Joanna Lim,

Novelis expands Brazil plant, renovates Kennesaw facility

Marietta Daily Journal - 22-Dec-2011

ATLANTA — Officials from Atlanta-based Novelis Inc., the world’s largest producer of rolled aluminum, announced on Wednesday that it is spending $50 million on its South American operations to install a coating line to supplement the area’s growing demand for aluminum cans.A spokesman also said the company has begun renovations on its Kennesaw facility and is still on schedule to open the research and development center sometime in the middle of next year.Spokesman Neil Hirsch said the company is spending $50 million for a single piece of equipment that will be used in product finishing at its operations facility in Pindamonhangaba, Brazil. The company is already in the midst of a $300 million expansion to the plant for its rolling mill and a $32 million expansion of its aluminum recycling capacity.“This investment will help round out our can sheet offering for our customers in the region and allow us to keep pace with the surging demand for our products,” said Marco Palmieri, senior vice president of Novelis Inc. and president of Novelis South America. “The new line will allow us to increase our capacity to meet customer demand while shortening delivery lead times.”Hirsch said Novelis executives are predicting that the demand for aluminum beverage cans in the South American region will grow by 7 percent a year until 2020, because of the area’s growing population. The plant is already fully operational, Hirsch said, but with the new additions, the Brazil plant will have the capacity to process 100,000 metric tons of aluminum sheet per year.Also Wednesday, Hirsch said the research and development center planned for Kennesaw is still on track to open sometime around the middle of next year, though he would not comment on a specific target date. Previous reports stated the facility would open sometime in the summer.“We have started renovations on the facility to retrofit it for our needs,” Hirsch said of the 160,000-square-foot office building the company is leasing at 1950 Vaughn Road in Kennesaw, near Barrett and Cobb parkways. “That is progressing on schedule, and began late this year. That also includes equipping the facility with equipment from existing facilities, which will start next year.”Hirsch said the company is hiring for new positions at the Kennesaw facility, which are mainly tech and scientist positions. Hirsch said the company is looking to hire about 50 new employees and has an undisclosed number of workers who are currently housed in the company’s Chicago and Kingston, Ontario, plants who have opted to relocate to Kennesaw. The company previously reported that the facility would house 150 jobs.The job listings are posted on the company’s website, www.novelis.comHirsch said the Kennesaw center would be the global headquarters for research and development, “so we’ll be looking at new technology, product improvements and enhancements. We’ll be looking to enhance products that exist today and analyzing customer demand.”Hirsch said company executives would begin meeting after the new year to finalize move-in plans.Last December, the company accepted $1.1 million in personal property tax abatements offered by the Cobb County government, which were used to help lure the firm to the county.The company continues to grow, as it reported $10.6 billion in revenues in fiscal year 2011, which ended March 2011, compared to $8.7 billion in revenues during fiscal year 2010. The company operates in 11 countries and has nearly 11,000 employees.Novelis is a subsidiary of Hindalco Industries Limited (BSE: HINDALCO), one of Asia’s largest integrated producers of aluminum and a leading copper producer. Hindalco is a flagship company of the Aditya Birla Group, a multinational conglomerate based in Mumbai, India.

World Primary Aluminium Production Increased By 5.6% In Jan-Nov 2011

India - 21-Dec-2011

The World primary Aluminium production increased by 5.6% in Jan-Nov 2011 period. The percentage of increase in the primary Aluminium production is set to decline in coming days considering the falling prices of the Aluminium in futures in international markets that is making the life of producers bit more difficult. Total reported primary Aluminium production was at 23.46 million tons in Jan-Nov 2011 as compared to 22.16 million tons in Jan-Nov 2010. A marginal rise of 1.4% was noted in the Asian region. The total primary Aluminium production in Asia stood at 2.37 million tons during the first 11 months of the year compared to 2.28 million tons during same period last year. The rise of Aluminium in East and central Europe was also marginal, with a rise of 61000 tons. Aluminium production in African region was up by 3.3% to 1.64 million tons in Jan-Nov 2011 as against 1.59 million tons in Jan-Nov 2010.Gulf region contributed the highest production in the world. The total production of Gulf countries was 3.15 million tons in Jan-Nov 2011, up 28.5% from 2.45 million tons in Jan-Nov 2010. China primary Aluminium production was 16.28 million tons in Jan-Nov 2011. The production was up by 9.4% from 14.88 million tons in the first 11 months of 2010

Senate cancels sale of Daily Times, ALSCON and seven others

Moment Nigerian Newspapers - 21-Dec-2011

The Senate yesterday rescinded the sale of Daily Times Nigeria plc, the Aluminium Smelter Company of Nigeria ALSCON, Transcorp Hilton Hotel, and six other public enterprises formerly owned by the Federal Government. This followed the Senate’s approval of 45 recommendations of the ad hoc committee that investigated the privatisation and commercialisation of public enterprises by the Bureau of Public Enterprises (BPE) from 1999 to date.The enterprises which sales were rescinded are: the Aluminium Smelter Company of Nigeria (ALSCON), Delta Steel Company, Aladja, Jos Steel Rolling Mills and Transcorp Hilton Hotel, Abuja.Others include: Sheraton Hotel and Towers, Abuja, Abuja International Hotels Limited (Nicon Luxury Hotel), Daily Times Nigeria Plc, Sunti Sugar Company and Bacita Sugar Company.

Evans targets stability at Constellium (subscription) - 21-Dec-2011

Downstream aluminum producer Constellium is making progress in its search for a new chief executive officer and expects to name a permanent replacement by the second quarter of next year, interim chairman and chief executive officer Richard B. Evans told AMM. “The board unanimously came to me and asked if I would consider this interim role because of the impending departure of Christel. The request of my colleagues prompted me to do it,” Evans said of the decision to accept the temporary post, noting that the stint should only last a few months.“I think we will probably be able to find and announce a permanent CEO definitely by the second quarter (of) 2012,” he said in an interview with AMM. In his temporary role, Evans said his No. 1 priority is to stabilize the organization, which has been through a rocky couple of months following the departures of Bories and chief financial officer James Gelly, as well as a change on the board of directors. Gelly left mid-November and has been temporarily replaced by Tom White,...

RUSAL faces tough choices over ALSCON acquisition

BusinessDay - 21-Dec-2011

All is not looking good for RUSAL, a Russian firm that acquired the multi million naira Aluminium Smelter Company (ALSCON) in Ikot Abasi, Akwa Ibom State.The company appears to be in a fix over mounting challenges and unresolved issues relating to its acquisition of Nigeria ’s only smelter plant.A check by Businessday in Uyo, the Akwa Ibom State capital, showed that the company was considering various options, while awaiting the report of the Senate investigation into the privatisation exercise in which RUSAL was alleged to have paid an amount considered below the market value of the plant, to acquire ALSCON.Furthermore, the company’s predicament seems to be compounded by its inability to assume full production, due to shortage of gas supply, in addition to the non commencement of the dredging of the Imo River , to aid the importation and exportation of raw materials and finished products respectively.The company is also facing labour crisis among its workforce who are demanding the payment of severance benefits amounting to N5 billion, having given the management of the plant repeated ultimatums, following which they say they would down tools and shut down the plant.According to a check by Businessday in August, one of the companies that bided for the acquisition of ALSCON, the BFI group of America, is claiming that the Bureau of Public Enterprises (BPE) fraudulently sold the company to RUSAL, against its own rules.In a document made available to the media, Reuben Jaja, head of the BFI group, alleged that the administration of former president Olusegun Obasanjo had predetermined to sell ALSCON to RUSAL.“RUSAL failed to provide a required $1 million bid bond complying with government rules for participating in the ALSCON bid process, yet RUSAL was still allowed to bid,’’ Jaja said in the statement.The BPE has however denied any wrongdoing, saying BFI failed to pay the required 10 percent bid price within the 15 working-day stipulation.But the director of public and government relations of the company in Nigeria , Albert Dyabin, in a telephone interview, denied that the company was considering pulling out of Nigeria, maintaining that it was committed to working at ALSCON.“I do not know where you got the information, we are working and committed to working at ALSCON, our biggest challenge remains the gas issue which is being addressed, Dyabin said.The company acquired majority stake in ALSCON in 2007 and had planned to attain full capacity of 197,000 tons per annum, in 2010, envisaging an investment of $300 million in the modernisation of the smelter, including the dredging of the Imo River.But this has yet to be achieved, four years after it acquired the plant, limiting the capacity of the plant to create 1,900 jobs, and generate about 20,000 related jobs in Akwa Ibom State from small and medium businesses supporting the smelter and the development of basic social infrastructure in the host community.Though the Akwa Ibom State government says it has completed a 69-kilometre pipeline from Uquo in Esit Eket Local Government Area, to Ikot Abasi, to deliver gas to ALSCON under a public private partnership with Septa Energy, at a cost of $33 million, observers say another sticky point remains the unresolved issue of appropriate gas pricing.Analysts say the quick resolution of the contending issues affecting the smelter would determine the readiness of the company to continue in Nigeria and “implement its strategic goal of creating a full production cycle in Western Africa, as well as once again proving the company’s ability to develop business in five continents.’

Goldman Sees More Cuts in China Aluminum Output

Wall Street Journal - 20-Dec-2011

By ANDREA HOTTER LONDON—The decline in aluminum prices has already led to production cutbacks in China and will likely lead to more, providing a mildly

Suriname 'bauxite industry languishing'

Stabroek News - 20-Dec-2011

(de Ware Tijd) PARAMARIBO – Natural Resources Minister Jim Hok is sad about the bauxite industry’s languishing existence. ‘When this Administration came to office employment in the sector was dropping, the smelter had been closed, and in fact the bauxite industry is dying.’ Despite the dark prospects for Suralco, Hok considers it necessary that his ministry breathes new life into the industry. The American multinational celebrated its 95th birthday yesterday. Suralco seems to be at a crucial point in its existence, while there is an urge to safeguard bauxite operations in Suriname. Operations have dropped to a low level; mines are almost depleted and the government is urging for revision of the Brokopondo Agreement. ‘Our policy is not aid but trade,’ says Hok, who hopes soon there will be positive prospects for both Suralco and the nation. The Suriname Bauxite Company, later to be renamed Suralco, was established some years after the abolition of slavery. The industry boomed while plantations were gradually deteriorating. World War II was especially a booming period when the Allied air-fleet was built from aluminum made from Surinamese bauxite. The profitable years justified the Brokopondo Agreement, a hydro-electric dam in exchange for concessions. In his address to Parliament last September, President Bouterse pointed out that the agreement needs revising, arguing that Suriname is still presented a large electricity bill, while after 50 years Suriname should own the electricity generated at the dam. The President claimed that due to the halted operations, Suralco cost more than it generates. In order to keep its refinery at Paranam operational, Suralco had to cut down mining operations in Suriname and incidentally import bauxite from Brazil. To keep production going until 2024 the company has casts its eyes on the Naussau Range. Eventually plans to mine in the Bakhuys mountain range will be polished. The project was frozen when partner BHP Biliton terminated its operations in Suriname. Managing director Peter de Wit, in his New Year address for 2011, had promised a rosy future, stating that Alcoa had been in Suriname for almost 100 years and had plans to continue for yet another 100 years. De Wit announced his resignation for private reasons after 16 years with the company. He served three years a managing director.

Tajik aluminium plant sees 2012 output up at 332500 T

Reuters Africa - 20-Dec-2011

DUSHANBE Dec 20 (Reuters) - Tajikistan Aluminium Company (TALCO), the largest producer of the metal in Central Asia, plans to boost output to 332,500 tonnes of primary aluminium in 2012 from this year's expected 275,000 tonnes, a source close to the company's management said on Tuesday.Last year TALCO's output fell by 2.9 percent year-on-year to 348,850 tonnes. (Reporting by Roman Kozhevnikov; Writing by Dmitry Solovyov)

Bankrupt aluminium maker ZALCO looks for buyer

Reuters - 19-Dec-2011

* The plant employed 500 people* ZALCO is owned by private industrial group KleschBy Silvia Antonioli and Melanie BurtonLONDON, Dec 19 (Reuters) - Dutch primary aluminium producer ZALCO is looking for a buyer to restart its plant, which was shut on Friday due to lack of funds after the company filed for bankruptcy last week, an official receiver said.The plant employed 500 people."The company filed for bankruptcy last Tuesday, and on Friday we decided to shut down the plant due to lack of funds; we couldn't pay the energy bills," Ernst Butterman, one of the two official receivers, told Reuters in a phone interview on Monday."We decided to have a controlled shutdown of the plant while looking for a buyer."Last Wednesday the receivers held a meeting with the plant's electricity suppliers to try and keep the power supply going, but by Friday its funds were used up and the plant had to shut down, Butterman added.The receivers are now hoping to find a buyer for the plant, which is based in Vlissingen, the Netherlands. It had produced about 230,000 tonnes of aluminium extrusion billets and rolling slabs per year.The company also produced about 100,000 tonnes of anodes per year for its own processes and for third parties.Zalco's production facilities include two furnaces for producing anodes, 512 electrolysis baths for making primary aluminium and two recycling furnaces, 10 preparation furnaces and four homogenisation furnaces for end products, according to its website.ZALCO is owned by Geneva-based private industrial group Klesch. (Editing by Jane Baird)

Operating Cost of Aluminium

Press Information Bureau, Government of India  (press release) - 19-Dec-2011

The primary producers endeavour to reduce their operating cost through a slew of measures like reducing power consumption by adopting energy conservation methods, modernization of equipments, increase in current efficiency, reducing fallen anodes in smelter, improving productivity of workers, etc. As energy cost is substantial in aluminium smelting, all the primary producers of aluminium have been brought under the ambit of a new initiative launched by the Government of India for energy conservation and assigned a target to reduce specific energy consumption from its base line value within a defined period i.e 2010-11 to 2013-14, to be monitored by the Bureau of Energy Efficiency(Ministry of Power). Besides, the Government also reviews from time to time the rates of various duties including import duty on raw materials required for production of aluminium, reduction in transmission loss, allocation of coal blocks and/or linkage coal to the extent possible, with the objective of reducing the overall operating cost of primary aluminium producers. The increase in the operating cost during the last one year is mainly due to the following:- (i) Increase in prices of major raw materials and energy inputs viz Calcined Petroleum Coke, Coal Tar Pitch, Aluminium Flouride, Caustic soda, Fuel oil, etc. (ii) Increase in transportation costs. (iii) Increase in the price of coal by the Coal Companies. (iv) Increase in employee remuneration and benefits due to high inflation rate and increased cost of living/ pay revision, etc. This information was given by the Minister of State for Mines (Independent Charge) Shri Dinsha Patel in a written reply to a question in Rajya Sabha today. 

Rumors swirl around Century Aluminum reopening

Daily Mail - Charleston - 19-Dec-2011

CHARLESTON, W.Va. - Rumors are building in Jackson County that, after a nearly three-year shutdown, Century Aluminum is beginning to work toward restarting its Ravenswood smelting plant. More than 650 people lost their jobs when the company shut down the almost 50-year-old aluminum smelter at the height of the global recession in February 2009. Only a handful of people now work doing basic maintenance at the shuttered plant. While company officials have said they continue to work on the issues that could lead to a potential restart of the plant, many of those affected by the shutdown have felt those statements were nothing more than lip service. However, following recent changes in company leadership and gradual improvements in the global economy, that attitude is beginning to change. Some who have dealt with the handful of workers left at the plant say they feel the company is starting to take a more active role in lining things up to turn the aluminum potlines back on at the plant. "People have gotten wind that something's going on," Ravenswood Mayor Lucy Harbert said. "And that's what I'm hearing: They are really working on it."Recently, the neighboring Constellium aluminum rolling mill recalled 25 laid-off workers and restored employees who had been working 32 hours a week to full 40-hour workweeks ahead of new production trials at that plant. Since the Constellium plant was the chief customer of the Century smelter, which supplied it with raw, molten aluminum, the move has helped fuel the restart speculation. The company has consistently said three factors would have to be addressed before any potential restart could occur - a more flexible power contract, a new labor agreement, and improvements that would help ensure the plant could remain profitable. The plant was Appalachian Power's biggest customer, representing 10 percent of their overall power consumption. When the Century plant shut down, it meant the power company had a smaller customer base to work with, and fewer customers over which to spread cost and rate increases. Appalachian Power spokeswoman Jeri Matheney said power company officials reach out to Century Aluminum counterparts on a regular basis. While she said there have been no new developments, they have heard the same things people in Jackson County have been hearing as well. "We've been hearing those rumors and we'd certainly like to see them come back," Matheney said. "It's in everyone's best interest."Century Aluminum spokesman Mike Dildine last week reaffirmed the company's commitment to restarting the plant. "We continue to believe that restarting the Ravenswood smelter is in the best interest of all of our stakeholders," Dildine said. "In order for the restart to occur, we are addressing three areas: improving the plant's competitive cost structure (in all areas), gaining a flexible and competitive energy contract, (and) achieving an enabling labor agreement."The subtle change in that statement from previous ones was the absence of the word "potential" in front of restart. Dildine wouldn't offer specific details, but said the company is discussing issues with state and federal leaders. One of the key stumbling blocks in that arena is Century's decision last year to end health benefits for retirees. Retirees have consistently protested the decision and have gained support from political leaders, who say any talks of a restart must include restoration of those benefits. U.S. Sen. Jay Rockefeller, D-W.Va., has played an active role behind the scenes in setting up meetings for retirees with federal labor officials, as well as communicating with company leaders."I have a long history with this plant, and most of the families in Jackson County do too," Rockefeller said in an emailed statement Friday. "It's difficult to overstate the importance of getting it reopened, getting people back to work and making sure that retirees and active workers have proper health care and benefits."Rockefeller has said he not only wants to make sure those retirees have their benefits restored, but also wants to make sure labor regulations are modified to prevent the situation from happening at other companies in the future.

Key study on aluminium sector probed

Gulf Daily News -  18-Dec-2011

MANAMA: Executives from the smelters and major downstream aluminium organisations in the Gulf met in Dubai to discuss a study especially produced by the GAC on the aluminium industry. The study investigated the market, short- and long-term prospects, application and influence of the economic situation around the world such as the Chinese market, European economic situation and the influence of other emerging countries. A study commissioned by the GAC was carried out by Harbor Intelligence, a consulting firm that deals in aluminium industry analysis, outlook and forecasts. A full day of discussion was aimed at the industry building future plans based on factual relevant information.

China ready to participate in development projects of Markazi ...

Islamic Republic News Agency - 17-Dec-2011

Arak, Markazi Province, Dec 17, IRNA – China ambassador to Tehran said his country is ready to participate in implementation of development projects of Markazi Province in Iran.Yu Hong Yang, heading a delegation, met with senior officials of the province on Saturday afternoon and said that Chinese government, in case of getting acquainted with development projects of the province, can pave road for investment and technological transformation.He also called for coordination work so that one of China provinces would become sister with Markazi province.Yu stressed that regarding industrial and agricultural capacities and abilities of Markazi province, it should achieve its real stance in the country.He pointed out that Iranian and Chinese statesmen intend to facilitate and increase bilateral relations.The ambassador said that provinces have key roles in strengthening ties between countries, so economic, cultural and social exchanges between different provinces of the two countries should be expanded.He called for cooperation in petrochemical, refinery, steel, wagon manufacturing, machinery, and aluminum projects adding that to reach the final result, continuation of negotiation and strengthening of bilateral communication have an important role.The two countries had a trade exchange level of 29 billion and 400 million dollars in year 2010 and it is predicted that the figure will reach 40 billion dollars in 2011.Markazi province exported one hundred million dollars to China in the past two years which has been mainly petrochemical products, aluminum billet and Combine machinery.

India's NALCO offers $38/T discount across products

Reuters Africa - 17-Dec-2011

BHUBANESHWAR, India Dec 17 (Reuters) - India's state-run National Aluminium Co or NALCO has offered a discount of 2,000 rupees ($37.9) per tonne across all products in the domestic market.It raised prices by 2,500 rupees a tonne early this month.The move was prompted by changes in London Metal Exchange (LME) rates, Ansuman Das, commercial director at NALCO, told Reuters on Saturday.The company has not revised the basic prices but has only offered a discount effective Friday until Dec. 31, he said.($1 = 52.7 rupees) (Reporting by Jatindra Dash; Editing by John Stonestreet)

Aluminij" DD Mostar concludes contract worth 6 mln Euros

EMportal - 16-Dec-2011

Representatives of “Aluminj “d.d. Mostar company signed with Austrian company Hertwich Engineering Contract for the implementation of the project to modernize the remaining part of the production process in its "Foundry".According to the statement issued by the Public Relations Office of "Aluminij" d.d. Mostar, the contract is worth six million euros, and is intended for the purchase and installation of casting furnaces with capacity of 50 tons and a new line of small casting alloy ingots, weighing 6-8 kg, for which there is an exceptional need at the metal market.Improving of production in the foundry in Mostar, which the world's leading experts include among the six most modern in the world, is a part of the Work Plan of "Aluminj" for the current year, in which emphasis is placed on investment in new projects using other people's resources under more favorable conditions."The Austrian company Hertwich Engineering is among the world's leading manufacturers of casting furnaces and ovens for the homogenization of the line for the horizontal casting and ingot casting line. It is the most modern equipment on the market, and the project will be completed by December next year, so we shall start commercial production of ingots of European standards even in January 2013, "said executive director for technical operations and development of " Aluminj” Mostar , Željko Boras."Shaken by recession, 'Aluminium' was not been able to independently take out this project, so we signed a contract with our longtime partner Swiss Glencore, which sees its exceptional interest in this project.Satisfied with the achieved, Executive Director for Economic and Financial Affairs of "Aluminij" company ,Mladen Galic ,said that thanks to Glencore "Aluminum" in Zurich concluded a deal with a new partner, the Swedish company Scandinavian Steel AB, from which it will buy 1,800 tons of silicon in the course of 2012, by 17 percent less than the price which the "Aluminum" used to pay for the raw material.

Rusal develops aluminium alloys for higher-capacity power lines

Platts - 16-Dec-2011

Russia's Rusal said Friday it has developed new technology to produce aluminium alloys for heavy-duty electric cables capable of transmitting 1.5 times more electricity than modern power transmission lines. Developed jointly with Siberian Federal University, the alloys contain rare earth metals and transition materials, the aluminium producer said. The project received RUR 110 million (3.46 million) in funding last year from the Ministry of Education and Science. Rusal said planned to invest a further RUR 114.75 million in the project, to launch a new production line at the Irkutsk aluminium smelter in 2012-2013. "It is planned that the equipment developed and tested jointly with SFU will be used to launch a new wire rod production line with a capacity of 10,000 mt per annum, as well as an automated process control system," Rusal technical director Viktor Mann said in a statement.This unique equipment is able to produce special wire rod for cables with very high mechanical characteristics. We plan to install such equipment to produce these high-tech and competitive products at the Irkutsk aluminium smelter first with the Bratsk and other Rusal smelters following," he added. Rusal said it was in talks with cable makers in Moscow and Tomsk for the sale of its new products, and samples have been sent to Moscow for testing.The invention will significantly reduce energy and metal consumption, said Nickolay Dovzhenko, director of SFU's oil and gas division. "At the same time, efficiency of production of several types of alloys using this equipment will be much higher as compared when competitors' equipment is used. Also, the introduced equipment requires fewer personnel to operate," he said. The project has received about thirty patents, he added.  --Joanna Lim,

Alcan owners say no viable offers made to save smelter from closure

Journal Live - 16-Dec-2011

A formal consultation period on the proposed closure of Northumberland’s biggest private sector employer has been extended – but there is still no sign of a potential saviour emerging.Rio Tinto Alcan announced a month ago that it intends to close its 512-job aluminium smelter at Lynemouth and sell the nearby power station where a further 111 people work.Yesterday it emerged the company has agreed with union officials representing the workforce the consultation on the closure plan will be extended by two weeks, taking it to the end of February.However, Rio Tinto made it clear it has not received any viable offers from third parties interested in buying the smelter.The smelter continued to operate at less than half its normal capacity yesterday after Tuesday night’s major power failure, which left the power station unable to supply it with electricity for several hours.One of the two production lines has been lost – with no current plans to restore it – and the other is operating at only 75% of capacity, while efforts continue to stabilise the operation.Earlier this week the GMB union launched a Save Our Smelter (SOS) campaign which calls on employees, local residents, businesses and other organisations in the region to sign a petition and display SOS posters to show the strength of public feeling behind calls for the plant to continue.The GMB will present the petition to the Government early in the new year, and ask coalition ministers to step in and help avoid the closure of the smelter.Yesterday Rio Tinto Alcan corporate affairs director, John McCabe, said the company would prefer to sell the smelter than close it, but that depended on a viable offer being tabled.“We have agreed with the union to extend the 90-day consultation by two weeks, but as of today we don’t have a credible third party interest in the smelter in front of us.“No one has come forward with a sustainable business plan that would see the plant operating into the future and continue employment. The site has been marketed among the global industry but no one has been able to demonstrate how they would acquire the smelter and run it sustainably in the interests of the workforce and local community.“If somebody can show us a sustainable business plan, we would be happy to speak to them.”Mr McCabe said investigations were continuing into the cause of Tuesday’s night’s operational malfunction at the power station. “We have completely lost one of our two pot lines, and only 123 pots are now operational out of a total of 352. That is not something that can be cheaply fixed, so it is not something we are working on,” he added.Wansbeck MP Ian Lavery was due to meet Energy Secretary Chris Huhne this week to discuss potential Government support for efforts to save the Lynemouth operation, but it was cancelled and will be re-scheduled.Mr Lavery has questioned Rio Tinto Alcan’s commitment to keeping the smelter open, and has urged the company to reveal details of potential buyers.

Rusal's CEO Says Currency Crisis May Reduce Aluminum Demand

Bloomberg - 15-Dec-2011

United Co. Rusal (486), the world’s largest aluminum producer, said the euro currency crisis may cause a “cyclical panic” in commodity markets, prompting a decline in metal demand from smaller producers.A concern for the industry is “how quickly the euro goes down and what’s the transition mechanism in China,” Rusal Chief Executive Officer Oleg Deripaska said in Bloomberg TV interview. Rusal is concerned that small customers may be affected more than larger companies and that they will reduce orders next year, Deripaska said. Declining aluminum prices help create a “healthy environment” to close the gap between oversupply and demand, Deripaska said. Falling prices have forced the closure of about 3 million tons of capacity so far, “helping create a healthier environment,” he said. Prices won’t fall to $1,300 a ton, seen after the global financial crisis, he said. “That’s impossible,” he said. To contact the reporter on this story: Firat Kayakiran in London at To contact the editor responsible for this story: John Viljoen at

Al rejects media reports of plans to skip interest payments on ...

RIA Novosti - 15-Dec-2011

Russian aluminum giant RusAl rejected media reports on Thursday that it intended to ask its creditors to allow it to skip interest payments on its loans next year.“RusAl officially states that the company has never approached its lenders to allow it to skip interest payments on loans,” RusAl said in a statement.Russian business daily Vedomosti reported on Thursday that RusAl had asked creditors for a twelve-month grace period on its loans next year, saying the company might be unable to service its debt, if world aluminum prices continued falling.Vedomosti quoted Metropol investment company analyst Sergei Filchenkov as saying that RusAl has to pay around $980 million in interest in 2012 and the company may face difficulties next year as world aluminum prices have plunged by 28 percent from this year's record high on May 3 to $1,974 per ton, almost to the level of the company's production cost.

Power loss damages Rio UK aluminium smelter

Reuters Africa - 15-Dec-2011

LONDON Dec 15 (Reuters) - A power cut this week at Rio Tinto Alcan's Lynemouth aluminium smelter in northeastern England has knocked out one of the plant's production lines and partially curtailed the other, a company spokesman said on Thursday.Loss of power in the energy-intensive aluminium smelting process becomes critical beyond 5 to 6 hours as metal solidifies in the pots."Because we went as long as we did without power, we're now left with one of our two operating lines completely out of production," said John McCabe, corporate affairs director, Alcan Aluminium UK Limited.Power initially was lost at the Lynemouth power station, which supplies electricity to the smelter, late on Tuesday evening. It was restored, but only temporarily until around 0800 GMT on Wednesday.McCabe said the focus on Wednesday had been to stabilise the operation, which has the capacity to produce 175,000 tonnes a year of primary aluminium. Last year it produced 145,000 tonnes.The company had managed to recover three-quarters of the other pot line, Line 1."Essentially our production process is made up of 352 pots. Of that we've got 123 that are operational the others are no longer in operation.Last month, Rio Tinto, one of the world's top producers of aluminium, said it was set to close the Lynemouth smelter as rising energy costs put pressure on margins.A consultation process on the closure is in progress and due to continue to the end of February. McCabe said the recent problems would not affect that schedule"As far as the future of those pots are concerned we are where we are in the consultation period. No decision has been taken whether or not efforts will be made to restart those pots.""But certainly at this time we're not actively involved in doing that."Customers would not be affected by the lost production at the plant."We are in contact with our customers and customer demand will be met by the company because the contracts we have are held by the company rather than individual sites. Customers will receive the metal that they demand in the normal way."The cause of the loss of power was under investigation and yet to be established.

RusAl asks creditors to ease terms of loan repayment - paper

RIA Novosti - 15-Dec-2011

Russian aluminum giant RusAl has asked creditors for a twelve-month grace period on its principal loan repayment next year, as the company may be unable to service its debt if world aluminum prices continue falling, Vedomosti business daily said on Thursday."The company is discussing a more flexible approach to calculate covenants, including the introduction of a period when they are not tested," a source close to RusAl's shareholders told Vedomosti, adding however that the company had no problems with its debt service and interest payment.RusAl's debt amounted to $11.47 billion as of September 30, 2011. In October, RusAl struck a deal with its creditors that included Sberbank, VTB Bank, Gazprombank, the Royal Bank of Scotland, ING, Nordea and Unicredit to restructure its gigantic liabilities.This year, however, RusAl has to pay around $980 million in interest, Metropol investment company analyst Sergei Filchenkov said.The aluminum giant faces great difficulties in its debt service as world aluminum prices have plunged by 28 percent from this year's record high on May 3 to $1,974 per ton, almost to the level of the company's production cost, currently at $2,000 per ton, he said.Two banking sources in creditor banks told the paper that the creditors were unlikely to grant a grace period to the aluminum giant but could consider a lower interest rate on loan repayment.

Kurri Kurri smelter may cut production

Australian Mining - 15-Dec-2011

The Kurri Kurri smelter may cut production as workers refuse to delay a pay rise for a year.It comes as the smelter, run by Hyrdo, is set to slash around 50 jobs, around 10% of its work force.Union reps will meet with Hydro CEO Alberto Fabrini as the company struggles against falling aluminium prices, contract problems and the carbon tax, the Newcastle Herald reports.Australian Workers Union secretary Richard Downie said a ballot had been held, rejecting the company's call for a pay rise delay until October 2012.Following the dismissal of Hydro's request, the refiner put forward another of options for the upcoming year.According to the Herald, the unions says these options include a partial  or total closure of one of Kurri Kurri's three potlines, or not putting pots back into service if they are removed for maintenance.Fabrini dismissed the statements as "speculative".However, he did reiterate Hydro's dismal financial situation."Unfavourable currency and decreasing global aluminium prices are things we need to mitigate to secure the smelter's viability," Fabrini said."We also have an unsolved situation over long-term power contracts for the smelter."The smelter has reportedly lost about $20 million in the last few years.

Abu Dhabi plans aluminium value addition

Zawya (registration) - 15-Dec-2011

ABU DHABI - Abu Dhabi realised one goal of its economic diversification policy on Wednesday by announcing a unique project to convert the aluminium raw materials into high-end auto parts and engineering goods by using hot liquid form of the metal produced at its Taweelah smelter. For this purpose, Taweelah Extrusion Company, or Talex, has been set up to execute the project. The firm, jointly owned by Dubai Extrusion of Al Ghurair Group and Abu Dhabi Basic Industries, plans Dh735 million investment in the project to be set up at the Khalifa Industrial Zone Abu Dhabi, or Kizad, in Taweelah.Dubai Extrusion is already having a strong presence in the automobile industry for the last several years. Other end-products will include electrical and solar equipments, road furniture, architectural and industrial materials. The development was announced on Wednesday when Khalifa Industrial Zone Abu Dhabi (Kizad) signed a long-term ground development lease agreement with Talex, which will run the production facility at Kizad's aluminium cluster, alongside Emirates Aluminium (Emal).

Power cut hits smelter

New Post Leader - 14-Dec-2011

PRODUCTION was halted at an aluminium plant after a power cut.An investigation has been launched after Lynemouth Power Station lost all power shortly before midnight on Tuesday, December 13.As a result, there was no power supply available for the nearby Rio Tinto Alcan aluminium smelter.A spokesman for the smelter said there was no injuries to any employees and no environmental damage caused by the incident, which happened during the course of normal operational activity.Partial power was restored at 2am the following day, but lost again a short time later, and by 8am, some power was restored to the site.The spokesman added: “The incident has left Line 2 of Lynemouth Smelter out of operation and Rio Tinto Alcan personnel are working to stabilise Line 1 at the plant.“Rio Tinto Alcan has launched its full emergency procedures in response to the incident.”Bosses at Rio Tinto recently announced plans to close the aluminium smelter, with the loss of 550 jobs.

Aleris to Add Capability for Production of Lightweight Aluminum ...

MFRTech (press release) - 13-Dec-2011

CLEVELAND, -- Aleris has announced that it will build a specialized casting facility for aluminum-lithium plate and sheet products. The facility will be built at its Koblenz, Germany plant and will expand the company's ability to meet the needs of the aerospace market.Aluminum-lithium alloys enable aircraft manufacturers to increase fuel efficiency through the weight reduction provided by aluminum while maintaining strength, and corrosion and fatigue resistance.  Additionally, aluminum's infinite recyclability provides a compelling sustainability benefit.The new facility will be able to cast full-scale ingots for trials as well as for serial production of aluminum-lithium products. The unique design of the facility also will facilitate the development of new "conventional" alloys to provide customers with the most advanced and sustainable solutions.  The company expects to begin production in the new casting facility in the first quarter of 2013."Aleris is a recognized leader in alloy development and production. The caster is an important enhancement of our capabilities, particularly for producing aluminum-lithium alloys to reduce weight and fuel consumption in aircraft," said Roeland Baan, Aleris executive vice president and chief executive officer, Europe and Asia.  "Adding this new caster also strengthens our research and development capabilities by enabling more sophisticated alloy development and the production of full-size trial products for any new alloy."

REFILE-Marubeni sees global aluminium deficit in 2013

Reuters - 13-Dec-2011

(Fixes link to factbox)* Sees 357,000 T aluminium supply shortage in 2013* Growth in capacity expansion slows in China, emerging mkts* Sees China mkt in 500,000 T deficit in 2013* Sees LME 3-mth median price $2,800 in 2013, vs 2011 $2,400TOKYO, Dec 13 (Reuters) - The global aluminium market will swing into a deficit of 357,000 tonnes in 2013 with the Chinese market dipping into a wider deficit of 500,000 tonnes during the year, as supply growth from China, Middle East and other emerging economies will slow, Marubeni Corp, said on Tuesday.Marubeni, Japan's fifth-biggest trading company, expects the three-month LME aluminium price to start rising in the middle of 2012 in anticipation of the easing of a supply glut, with the median price rising to $2,800 a tonne in 2013, up from an estimated $2,400 in 2011. The benchmark aluminium price now hovers at around $2,030 on the London Metal Exchange.Marubeni expects the European debt woes to ease off early next year."A rapid expansion of smelter capacity in China, the Middle East and India will cause a supply glut in 2012," Takeshi Kondo, general manager at Marubeni, said in the company's presentation of its annual outlook on the market. "But electricity and other issues will restrain capacity expansion in China, helping to tighten the market."Marubeni expects term aluminium premiums, the amount Japanese buyers pay above LME cash prices, to range from $110-135 in 2013, rising from the $110-130 range in 2012 with a recovery of the global economy.Marubeni expects global aluminium demand to grow 7.3 percent both in 2012 and 2013, but supply to rise 7 percent in 2012 followed by a 5.1 percent gain in 2013.In China alone, the market will see a deficit of 10,000 tonnes in 2011, with the deficit widening to 50,000 tonnes in 2011 and to 500,000 tonnes in 2013, Marubeni said.Japanese trading houses are boosting investment in aluminium smelting facilities, betting on steady demand growth in Asia.Marubeni said last month it would spend about $180 million to double its stake in Aluminerie Alouette, North America's biggest aluminium smelter, to 13.33 percent to tap growing demand in emerging economies.Sumitomo Corp, Japan's No.3 trading house, also plans to boost its aluminium business in Asia as its Malaysian aluminium affiliate Press Metal plans to double its annual capacity to 240,000 tonnes by 2014. (Reporting by Yuko Inoue; Editing by Michael Watson)

Long haul for aluminium

Business Standard - 13-Dec-2011

Much to the relief of aluminium producers, the white metal has not stayed for long below the psychologically unsettling level of $2,000 a tonne when 30 per cent of smelting capacity is found in the red zone. At no point in current weeks, however, did the scene come anywhere close to the scare that visited the industry at the height of the ruinous 2008-09 recession, when, for weeks, aluminium sold at below $1,500 a tonne, with demand plunging and inventories piling up.This, however, is of little comfort for the industry across the globe, braced for much lower earnings in the three months to end in December than in the first three quarters of 2011. Since the third week of last month, aluminium may have recovered $150 to $2,150 a tonne, but this is way below the peak of $2,800 a tonne seen in May. Commodities in general remain in the grip of a bear market and no one knows when there is going to be a strong recovery in demand, which alone can lift prices. In this environment, stockists and actual users of aluminium are only to be expected to keep their inventories low. The same is happening with steel.While at prevailing rates only the more efficient producers are breaking even or making some profits, the world aluminium industry, which is reliant on power to the extent of around one-third of its capacity, has to contend with rising energy cost. This is particularly true of China, accounting of two of every five units of global aluminium consumption. According to research agency Brook Hunt, energy alone has a share of 30 to 40 per cent of aluminium smelting cost. If the metal further gets hammered in the market and people have come to accept further gyrations in the context of possibilities of the euro zone plunging into recession and forecasts by the likes of Union Bank of Switzerland that commodities per se will continue to be found in a “difficult environment” in 2012, people will stay wary of holding on to aluminium shares.No wonder, shares of Hindalco and Nalco have lost considerable ground. Similarly Aluminium Corporation of China fell close to 40 per cent in Hong Kong trading this year. Anglo-Australian Rio Tinto conceded as much as 25 per cent value in London trading in the same period, thanks mainly to its ownership of very large aluminium assets. The world’s leading aluminium producer, Alcoa, has not fared any better at the bourse. To make a guess as to when aluminium will be back to the May level or how soon Hindalco will return to its 52-week high level will be throwing a dice. Who will not agree with Rio Tinto CEO Alcan Jacynthe Cote that “each commodity has its moment in the sun and in the shadow”? It is not only aluminium but a whole lot of other metals and minerals are now under dark clouds. Jacynthe says there will be an “upside for aluminium in future,” without giving hints as to when the metal will start shining.As for now, the aluminium division of Rio is resigned to second half earnings “well below those of the first half.” Like Hindalco in a major expansion mode, Rio is investing $3.3 billion to rebuild and expand its Kitimat smelter in Canada to 420,000-tonne capacity. The smelter, to be run on hydroelectricity is to cut its emission intensity by half. The ambition is to make Kitimat one of the world’s lowest cost smelters, so that it fits with the Rio strategy of margin improvement across its ‘struggling’ aluminium division. While Rio is trying to put life in its aluminium business by focusing on good assets as it attempts exiting high cost operations, Indian industry officials are keeping an eye on the outcome of BHP Billiton’s ongoing review of its aluminium portfolio, which is a mix of some wholly-owned assets and a string of joint ventures. They say the review may result in BHP either selling all or some of its aluminium/alumina assets. Indian business houses have a demonstrable appetite for foreign acquisitions. According to officials here, in case BHP decides to move out of aluminium, the existing partners will stand a better chance to acquire the assets.In the face of global aluminium capacity overhang and the euro zone crisis starting to impact metal demand outside Europe, the producers are reacting in two ways – postponement of restart of smelters idled earlier and shuttering of high cost smelters. Leading European aluminium maker Hydro has said it will consider recommissioning its Sundal smelter in Norway only when the market behaves better. At the same time, speculation is there that Chinese producers have curtailed yearly production by about 1.5 million tonnes. The market must have taken a cue that the rumoured Chinese move would to some extent take care of industry overcapacity. A Morgan Stanley official says the world is seeing a reassuring “disciplined approach from producers in balancing supply and demand.” But aluminium price rebound will call for more than a disciplined supply position to a “strong recovery in demand.”

Emal to Invest $3.8 Bln in Second Expansion Phase, Alrroya Says

Bloomberg - 12-Dec-2011

Emirates Aluminium Co., based in Abu Dhabi, plans to invest $3.8 billion in an expansion program as it aims to become the largest smelter in the world, Alrroya reported, citing Chief Executive Officer Saeed Al Mazrooei. A first expansion phase was completed several months ago. Work has begun on the second, for which German companies have been awarded contracts worth $184 million, Al Mazrooei said. Emal’s current output stands at 750,000 tons annually; it will increase to 800,000 tons by the end of 2012 and to 1.4 million tons when the second phase is completed in 2014, the executive told Alrroya.

MHM Metals to locate $25 million facility in Russellville, create ...

The Lane Report - 12-Dec-2011

RUSSELLVILLE, Ky. (Dec. 12, 2011) – MHM Metals has chosen to locate its new manufacturing operation in Russellville, company officials, community leaders, Governor Steve Beshear said today. The company, which will do business under the name Alreco, plans to purchase the former ITW building, which will result in 30 new jobs and a more than $25.1 million investment in the Commonwealth.“As one of the top aluminum producing states, the aluminum industry in Kentucky is a critical piece of the industrial landscape, employing more than 13,000 Kentuckians,” Beshear said. “Global companies such as MHM Metals continue to find the Commonwealth to be the ideal place to do business and this more than $25 million investment is further proof of our success. We welcome MHM Metals’ new manufacturing facility and the 30 jobs it will create.”Australian-based MHM Metals processes aluminum salt cake and aluminum black dross, which are by-products of the secondary aluminum industry. More than 2 billion pounds of these products is produced within the U.S. each year, largely disposed of in landfills.MHM Metals’ exclusive technology allows the company to produce its product through an environmentally sound process that eliminates any materials going to a landfill. The new plant is expected to be operational by the first quarter of 2013.“Alreco has assessed several sites throughout the U.S. and chose Russellville, Kentucky as the preferred location for a leading-edge facility that will process by-products from aluminum recycling that previously had to be disposed in landfills,” said Ben Mead, director of MHM Metals Limited. “After proving the technology in Australia, this will be the first U.S. plant that efficiently recovers all the component commodities for re-use, with nothing going to landfill. This has substantial benefits for the aluminum industry, the environment and will generate direct and indirect jobs.”Kentucky is home to more than 120 aluminum-related facilities in all, including, Logan Aluminum in Russellville, Aleris Rolled Products in Lewisport, Gibbs Die Casting Corp. in Henderson, Century Aluminum of Kentucky in Hawesville, Aisin Automotive Casting in London, Cardinal Aluminum Company in Louisville, and many more.To encourage the MHM Metals to locate its facility in Russellville, the Kentucky Economic Development Finance Authority preliminarily approved the company for tax incentives up to $825,000 through the Kentucky Business Investment Program. The performance-based incentive allows the company to keep a portion of its investment over the term of the agreement through corporate income tax credits and wage assessments by meeting job and investment targets.“MHM Metals is a welcome addition to the business landscape in Logan County,” said Sen. Joey Pendleton, of Hopkinsville. “These 30 new jobs will provide a boost to the local economy and new opportunities for the workforce. Thank you to Gov. Beshear on his efforts to provide jobs and opportunities for the citizens of Logan County.”“I am proud to see MHM Metals become part of our Logan County business community,” said Rep. Martha Jane King, of Lewisburg. “Their investment in recyclable aluminum technology will only add to the prominent position Logan County plays in the aluminum industry. Congratulations to MHM Metals, and our local and state officials for their teamwork to help bring new business and jobs to our county.”“The city of Russellville and its citizens are delighted that MHM Metals has chosen Russellville for the location of their industrial facility,” said Russellville Mayor Mark Stratton. “It is a privilege for our city to be the selection site for this economic growth and opportunity.”“This is an exciting time for Russellville and Logan County,” said Logan Chick, Logan County Judge-Executive. “We are pleased to hear that MHM Metals chose Logan County to locate one of their manufacturing plants. We feel MHM Metals will be a natural fit and asset to our community. The Logan County Economic Development team, along with the Industrial Development Authority, has work diligently, and now this is a time of celebration. Welcome to Logan County, MHM Metals.” “TVA congratulates MHM Metals on their decision to locate in Russellville, Kentucky,” said TVA Senior Vice President of Economic Development John Bradley. “TVA and Pennyrile Rural Electric Cooperative are privileged to partner with the Commonwealth of Kentucky and Logan Economic Alliance for Development (LEAD) to assist MHM as they grow in Logan County.”For more information on MHM Metals, visit

Iralco Asks LME to Explain Decision Not to Accept its Aluminum

BusinessWeek - 12-Dec-2011

Dec. 12 (Bloomberg) -- Iranian Aluminium Co. is trying to establish why the London Metal Exchange said it won’t accept the company’s brand of aluminum for delivery to warehouses approved by the bourse.The company’s product won’t be taken from Jan. 6, the LME said in a notice to members on Dec. 9. If warrants are canceled on or after that date, it won’t be possible to place the metal back on warrant, either with the same warehouse company or another warehouse company, according to the notice. Warrants are documents entitling holders to take possession of metal at an LME-approved warehouse.The LME “hasn’t told us why it happened,” Hassan Mousavi, Iranian Aluminium Co.’s director of commercial affairs, said today by phone from Tehran. “We are in talks to see what the reason is.”Iran is under four sets of United Nations economic and financial sanctions as well as additional measures imposed by the European Union and the U.S., which seek to increase pressure on the country over its nuclear program. The U.S. and its allies say the country intends to develop nuclear weapons, while Iran says its program is purely civilian.Iranian Aluminium is privately owned and will be sending documents to the LME to clarify its ownership, Mousavi said. The quality of the company’s aluminum isn’t an issue, he added.“The quality is standard and the LME doesn’t have a problem with the quality, our customers are satisfied,” Mousavi said.The company, which has its warehouse in the central city of Arak and offices in Tehran, produces 120,000 metric tons of aluminum a year, according to its website. Its shares are sold on the Tehran Stock Exchange, according to the TSE website.Miriam Heywood, a spokeswoman for the LME, today declined to comment.--With assistance from Agnieszka Troszkiewicz in London. Editors: John Deane, Nicholas LarkinTo contact the reporter on this story: Ladane Nasseri in Tehran at lnasseri@bloomberg.netTo contact the editors responsible for this story: Andrew J. Barden at; Claudia Carpenter at

Guinea bauxite woes a warning

The Australian - 12-Dec-2011

AS Rio Tinto and Vale weigh their proposed multi-billion-dollar investments in new iron ore projects in the West African nation of Guinea, they would be well served to take a close look at the pain being felt in the nation's bauxite industry. Up until this year, Guinea's well-established bauxite industry had been on to a good thing, pumping out bauxite and alumina for the European market and planning major expansions.That picture has since changed dramatically. An overhaul of the Guinea mining code -- carried out with the input of legendary fund manager George Soros -- has left the country's bauxite industry contemplating a future of razor-thin margins. The expansions that were being considered now look increasingly unlikely and some appear to have been pulled altogether.The same mining code review appears to have delivered a regime that will allow for handsome profits from the nation's rich but to date unexploited iron ore resources. But the bauxite producers smarting from the Guinean government's tax overhaul are warning the country's iron ore developers to expect similarly harsh treatment once their projects are up and running.The new mining code, handed down in September, mandates for the nationalisation of a 15 per cent stake in mining projects, with the government to also hold an option to buy up to another 20 per cent. Royalties have been increased, while custom duties have jumped from 5.6 per cent to 10 per cent.Aleksey Gordymov, the director of commercial markets for the world's largest aluminium company, Rusal, has provided arguably the most comprehensive breakdown on the impact of the changes in Guinea. Numbers revealed by Gordymov at a recent conference in Singapore suggest a new tax regime that will leave the country's bauxite producers in a very marginal position. Rusal's estimates suggest Guinea's royalties on bauxite will rise to $US14.45 a tonne, up from $US1 to $US3 a tonne.Based on Rusal's numbers, about 36 per cent of the revenue from each tonne of bauxite will go to the Guinea government. Only an estimated 6 per cent will be profit, with the rest being swallowed by production costs.The geographical position of Guinea leaves Europe and US as only real markets for its bauxite. Taking into account the new taxes and freight costs, Guinean bauxite will, on Rusal's projections, become substantially more expensive than other sources.According to Gordymov, it will even be cheaper to import bauxite from Australia to Europe than it is from Guinea. "Due to new taxes, Guinean bauxite becomes totally uncompetitive," Gordymov says.BHP Billiton and its partners in the proposed $US5.2 billion ($5.1bn) Sangaredi alumina project in Guinea have all but stopped in their tracks, with BHP formally deferring a decision to approve the development. Besides the modest outlook for bauxite and alumina, concerns over Guinea's sovereign risk profile is are likely to have also played a part in the deferral decision.According to Rusal's numbers, the skinny 6 per cent take for the bauxite miners and the 36 per cent that will wind up in royalties contrasts to the only 5 per cent of iron ore revenue that will be lost to royalties. Around 71 per cent of iron ore revenues will represent profit.While the iron ore miners look like clear winners, the bauxite miners point to their own experience as an example of what could await Guinea's iron ore industry once it matures. "The new code is a challenge for the mining industry and a warning bell for investors," Gordymov said.The mining code review was carried out without consultation with the mining sector, with the apparent exception of Rio Tinto.Earlier this year, Rio Tinto and its partner in the $US10bn Simandou development, Chinalco of China, negotiated their own terms for Simandou while the code review was being done.Rio paid the Guinea government a $700 million "settlement payment" to strike the tax regime over Simandou, with the company announcing the deal on Good Friday. The Simandou partners will still have to hand a free 15 per cent stake to the Guinea government and sell them up to another 20 per cent. The Good Friday announcement also stated that the parties had agreed the terms would not be affected by any changes introduced by the Guinea government "as a result of its existing review, or any future reviews".One industry analyst who has watched the recent bauxite royalty machinations said: "You would be looking in the longer term for a significant hike to iron ore royalties, no doubt."Rio's ongoing investment in Guinea in the face of such a difficult regulatory environment underscores the potential of the Simandou project. Rio was previously stripped of half of the Simandou stake by the government, which on-sold the stake to an Israeli diamond dealer and, later, Vale. With the region touted as another potential Pilbara, it's easy to see why the big iron ore companies are so active in the country.Complicating the situation is the fact that both Rio and Vale can grow their iron ore production much more cheaply by expanding their existing operations in Australia and Brazil respectively. But the last thing the pair would want would be for their Chinese customers to get their hands on the projects and develop them quickly. According to those watching the situation closely, this leaves Rio and Vale playing a game where they develop the projects at the slowest pace acceptable to the Guinea government, but not a day faster.The Guinea government wants to see its resources exploited as quickly as possible, but under a taxation regime that provides maximum benefit to its people.Unfortunately, with investment in the bauxite industry drying up, it may have gone too far with one of its core resources. Rio and Vale will be hoping the government doesn't make the same mistake with iron ore.

Chart Check: Hindalco Vs Aluminium prices over last 11 yrs - 12-Dec-2011

Hindalco is Asia's largest integrated primary producer of aluminium. Bauxite and power cost are two key components for aluminium producers.

Chancellor too late to save Britain's alumium smelters - 11-Dec-2011

George Osborne was robust in his defence of measures to provide tax relief for energy-intensive industries. He told MPs in his Autumn Statement: “We are not going to save the planet by shutting down our steel mills, aluminium smelters and paper manufacturers.Chancellor, the smelters have already disappeared. Well, almost. At one stage, Britain had three smelters producing more than 300,000 tonnes a year of material that seems permanently tagged as “the metal of tomorrow”.The first, at Invergordon, closed 30 years ago after an unsuccessful struggle by what was then British Aluminium (BA) to demonstrate the Highlands was capable of supporting big business as well as smaller hydro-powered smelters.The second, at Anglesey, originally operated by RTZ (now Rio Tinto) and Kaiser, closed two years ago after failing to re-negotiate a “cheap” power contract.An announcement about the closure of the third, at Lynemouth, Northumbria, came a month before the Chancellor delivered his Autumn Statement.The Lynemouth closure brings down the curtain on the last of Harold Wilson’s “white heat” interventions, while the aluminium industry has undergone radical structural changes in the period. BA is history and Rio Tinto is now a global player with its takeover of Alcan. Rio Tinto Alcan said climate change programmes, higher energy prices and EU and UK carbon taxes, upped costs by £46m a year and killed the plant.So the industrial sun has almost set on what started as a political and industrial initiative by Labour in 1968 to add a considerable production dimension to aluminium and provide a fillip for regional policy and the balance of payments. There were generous grants, industrial allowances and “cheap” energy contracts linked to nuclear power for Invergordon and Anglesey, and coal for Lynemouth.Forty years on, the smelters are now industrial relics, regarded as an economic failure and a classic example of a Government attempt to pick winners that backfired.Niall MacKenzie, head of the Institute for Innovation Studies at the University of Wales, says the venture was doomed from the start because of the heavy reliance on subsidies, compounded by blunders by electricity generators and management shortcomings.The Wilson administration hoped the “white heat” of new technology would generate a new industrial revolution and an interventionist Government would bring industry into the 20th century. The reality was that the National Plan was pulped and the Industrial Reorganisation Corporation’s attempts to create world-class businesses promised much but delivered little.The smelters were seen as an opportunity to help change the perennial balance of payment problems and to provide a boost for a young industry, jobs and regional development.The problem with aluminium is its energy usage. Turning alumina into metal requires enormous power and represented about 20pc of production costs at the time. Britain could not offer cheap electricity to bridge the competitive gap. Or could it?Enter nuclear power. Britain was leading the world with the civil application of nuclear power that promised cheap electricity. Linking nuclear output with the smelters was seen as cost-effective. Invergordon’s power contract was linked to the Hunterston B plant in Ayrshire and Anglesey to the nearby Wylfa station.The Government had set its sights on supporting two 100,000-tonne smelters, selecting BA and RTZ. Alcan was furious at being ignored and mounted a campaign that culminated in a cheap coal deal with Lord Robens, chairman of the National Coal Board, who was fighting against nuclear power.Alcan ended up building its smelter and a coal-fired power station at the Lynemouth pit that provided its fuel.The smelters made their production debut in the early 1970s in a tough market. BA hit trouble early when the cheap energy contract turned out not to be cheap because of delays with the nuclear programme.Dr MacKenzie says the smelter got to the stage where it was “too expensive to run as a viable operation”.He blames BA for poor judgment over the contract, the Scottish generating boards for inflexibility and the Government for not taking a more active role in contract negotiations. Invergordon had a short and expensive life, closing in 1981 at a cost of £381m to the taxpayer.Anglesey, the biggest single user of electricity in Britain, enjoyed more productive and profitable years, although the power contract proved a headache due to costly delays in building Wylfa. But the closure of Wylfa and the problems in producing a replacement contract that did not upset Brussels proved a journey too far.Alcan ended with the best deal, with coal from local, now exhausted pits. It was said to be still profitable when the decision was taken to close the plant, but energy, accounting for around 30pc of production costs, has taxed it out of business.The aluminium industry may have shrunk but it has benefited from the smelter contribution and is now back where it started, with a small Highlands production base at Lochaber.Back in 1907, Highland smelters produced a third of the world’s aluminium output. Now it is less than 1pc of western European production.

Qatar set to tap gas-to-solids energy source

Peninsula On-line -  11-Dec-2011

DOHA: After emerging as the world’s top exporter of liquefied natural gas (LNG) and the world’s GTL (gas-to-liquids) capital, Qatar is all set to tap another innovative energy source, gas-to-solids (GTS).As part of the strategy, Qatalum, the state-of-the-art aluminium smelter, is taking the lead in producing GTS in the form of aluminium, in line with Qatar’s long-term economic diversification strategy.  Aluminium, is, thus, poised to emerge as Qatar’s newest energy-related industry.Qatalum recently made a mark at the coveted and just concluded 20th World Petroleum Congress (WPC) with its presence.The WPC, which ran from December 4 to 8 is considered one of the industry’s premier events, and attracted more than 5,000 participants from around the worldThis energy is now being channelled in a new direction – gas-to-solids, in the form of aluminium. And this is being accomplished through Qatalum.Speaking of Qatar’s newest energy-related industry, Qatalum CEO Tom Petter Johansen said, “Aluminium has a notably positive economic effect locally, regionally and internationally, as it is used in a wide variety of sectors, such as construction, transport and marine industries. GCC countries are rich in the raw materials required to produce aluminium, which also lowers the production cost in the region significantly.”

Deal clears way for red mud cleanup Alumina and a lawsuit The ...

Virgin Islands Daily News - 10-Dec-2011

The final alumina defendant, Century Aluminum, was released from the lawsuit last month after ... which is a by-product of producing alumina from bauxite.

Putin leans on aluminium oligarchs

Financial Times (blog) - 09-Dec-2011

Vladimir Putin may be facing a wave of protests in the streets of Moscow, but he does not appear to have lost his grip on Russia’s powerful oligarchs.Not for the first time the Russian prime minister has intervened in the aluminium industry,  ordering a company to keep an aged smelter going even though economics might dictate otherwise. This is pure Putin – no market liberal but a man with his finger on the popular pulse.At a meeting on Tuesday with his political supporters, Putin was told that a smelter owned by Oleg Deripaska’s UC Rusal metals group (HKG:486) was struggling to pay high electricity costs and could be shut down threatening the livelihoods of thousands of workers.Built in the Sverdlovsk region in the Urals Mountains during the Stalin era, Bogoslovsk is not the shiniest jewel in Rusal’s industrial crown. It’s been churning out aluminium for more than 67 years.Age is not the only problem. Russian energy prices have been soaring on the back of sweeping electricity reforms and Bogoslovsk has been struggling to pay the bills. Viktor Vekselberg, the oligarch who controls  the local electricity plant via his KES holding company,  has not been inclined to reduce energy costs for Bogoslovsk even though he is also a shareholder in Rusal.However, even if it is not particularly profitable, the smelter is critical to Sverdlovsk region, providing jobs  for more than 3,000 workers and supplying raw materials to local car manufacturing, packaging  and chemical industries.Within hours Putin moved to ensure the smelter stayed open. He ordered KES to sell the local utility to Rusal to help the company lower energy costs at the smelterAnd to prevent any squabbling among the oligarchs he said a foreign auditor should be called in to evaluate the cost of the transaction.While Putin’s solution might not suit Deripaska, he knows who is boss. At the height of the financial crisis in 2009, Putin ordered the oligarch to reopen an alumina plant in a remote town in north-western Russia where hungry workers had taken to the streets to protest about lost jobs.

IRW-Press: First Bauxite Corp.: First Bauxite Corporation ...

OfficialWire (press release) - 09-Dec-2011

F - News) ('First Bauxite' or the 'Company') is pleased to announce that as its next major step in developing the Bonasika refractory bauxite mine into a

Work restarts at Guinea CBG after 48 hours strike

Reuters - 09-Dec-2011

Dec 9 (Reuters) - Normal operations have restarted at Guinea CBG after workers downed tools at the Alcoa , Rio Tinto and Guinean government bauxite joint venture over wage negotiations, CBG's director general said on Friday.Kemoko Toure said employees had decided to go on a general strike demanding better wages and living conditions after rejecting management's proposals during annual wage negotiations."Work has restarted this morning after a 48 hours strike. We reached an accord with the unions," Toure told Reuters.Minimum service was maintained during the strike and bauxite export were not affected, said an employee who requested not to be named.CBG is 51 percent owned by Halco Mining, a joint venture between Rio Tinto, Alcoa and Dadco Mining, while the Guinean government owns the other 49 percent.It is the world's single largest bauxite export company. CBG exported a record 13.7 million tonnes of the aluminum ore bauxite in 2008, the latest year for which data is available.

Stability expected in bauxite sector in 2012

Jamaica Gleaner - 09-Dec-2011

Noranda Jamaica Bauxite Company predicts a stable 2012 amid a rise in its St Ann-based bauxite sales which went up 27 per cent to US$115 million (J$9.8 billion) in the nine months to September this year.The prediction is based on forward orders from customers, says the company's management, on the heels of a sector battered by the economic downturn which cut sector jobs and productivity."While the company's customers remain cautious in their 2012 forecasts, preliminary indications are that North American consumption conditions are stable," the management said. "As such, the company expects 2012 demand to be similar to 2011 levels in key product groups such as value-added primary aluminium, flat-rolled products, alumina and bauxite," according to the company in its financials published last month.Noranda mines bauxite from its plant in Jamaica and then processes it at its Gramercy Aluminium plant in the United States."Within the recent environment of global economic uncertainty, the company has observed that demand patterns remain stable across the integrated business and the rate of raw material input costs inflation has slowed," it added."Noranda's third-quarter results continued our trend of solid performance, despite uncertainty in global economic activity and lower aluminium prices," said Layle 'Kip' Smith, Noranda's president and chief executive officer.Over the nine-month period, the group's net profit increased by 60 per cent to US$230.8 million, compared with year-earlier levels."Our ability to improve our results against this challenging backdrop underscores our ability to create value across the commodity cycle through our strategy of integration, cost independence from the London Metal Exchange and our focus on productivity and growth," Smith added.Noranda reported third-quarter 2011 net income of US$30.8 million, compared to net income of US$25.2 million for third-quarter 2010. Excluding special items, net income totalled $14.5 million, a 65 per cent increase compared to third-quarter 2010 of US$8.8 million.Concession to mineNoranda has a concession from the Government of Jamaica to mine bauxite until 2030. The company and the Jamaican Government formed Noranda Jamaica Bauxite Partnership to conduct local mining operations, with the Government owning 51 per cent and Noranda the remainder.Jamaica accounts for 6.5 per cent of the world's bauxite reserves, according to a recent United States geological survey. The bauxite-alumina sector earned the third-highest foreign exchange for the island at US$531.5 million in exports for 2010. Remittances and tourism, respectively, earn the highest for the island.However, Jamaica appears on track to better 2010's earnings, with alumina exports at US$293.2 million and an additional US$68.4 million from bauxite over the first six months of 2011. The numbers reflected improved half-year performance of 73 per cent for alumina and 10 per cent for bauxite, according to latest balance of payment statistics published by the Bank of

IES Holding agrees to sell power plant to Rusal (Part 2)

Cogeneration & On-Site Power Production Magazine - 09-Dec-2011

IES Holding agrees to sell power plant to Rusal (Part 2)IES Holding has signed a deal to sell the Bogoslovsk combined heat and power plant to aluminum giant UC Rusal, Russian Prime Minister Vladimir Putin said."They have agreed that IES and Rusal will sign a separate agreement on the terms of this power plant's sale to Rusal," Putin said during a meeting devoted to issues at the Bogoslovsk aluminum works and Taganrog automobile plant.The decision ought to make it possible to modernize the power plant itself, he said.IES Holding chief Viktor Vekselberg said Ernst & Young would perform an independent valuation of the plant to determine its sale price.Putin also said the Inter-District Grid Company Holding (IDGC Holding) would hand the grid that serves the Bogoslovsk smelter over to the Federal Grid Company (RTS: FGC) (RTS: FEES).That way, he said, the smelter would not have to bear costs related to electricity supply infrastructure."There's 1.5 km, as far as I'm aware, and the costs won't be high," Putin said."It's a special regulation in this case, but it's justified and needed if we want to preserve the enterprise," he said.Officials of the Sverdlovsk region's administration said in the middle of November that Rusal intended to close pothouses at the smelter because aluminum production was unprofitable there. Rusal said it was not shutting the cells down but switching off hydrolysis baths on a trial basis.Rusal said in a statement on December 8 that the agreement reached by the Sverdlovsk regional administration, IES, FGC, IDGC Holding, Industry and Trade Ministry and Energy Ministry meant that the smelter could sign a direct electricity supply contract with the FGC from January 1, 2012.Rusal will purchase the Bogoslovsk Power Plant from IES Holding including rights on the 230MW Novobogoslovsk Power Plant capacity allocation contracts project, allowing the company to create a leading energy and metals and mining complex in Urals Region.Rusal agreed to focus on bringing the smelter to break-even and over the next five years, and will upgrade the Bogoslovsk aluminium smelter's production facilities, providing production rates no lower than in 2011 levels whilst increasing the smelter's energy efficiency, bringing it in-line with modern technology.Rusal said it had always acknowledged the energy tariff problems and continues to remain confident that this will not result in staff redundancies or the closure of the Bogoslovsk smelter. The smelter continues to be operational, the company said.Rusal said it was "satisfied with the results of the Government Commission session dedicated to analysis of the situation at the Bogoslovsk aluminium smelter and development prospects of the whole Urals aluminium production cluster. The Company has always emphasized that the key condition for stable operations of aluminium smelters is energy supply tariff enabling competitive production."The Bogoslovsk smelter produces both aluminum and alumina. It produced 113,000 tonnes of aluminum or 2.8% of Rusal's entire output in 2010, and 990,000 tonnes of alumina, or 12.6%. It has 2,000 employees.

Rusal Seeks Deal With Glencore as Sual Opposes, Kommersant Says

Bloomberg - 08-Dec-2011

United Co. Rusal’s (486) board approved a seven-to-10 year contract with Glencore International Plc in November to sell half of its aluminum through a trader, overriding the objections of a shareholder, Kommersant reported today, citing people it didn’t identify. Sual Partners, a company controlled by Victor Vekselberg and Leonid Blavatnik that holds 15.8 percent of the aluminum producer, tried to veto the deal, the Moscow-based newspaper said. Oleg Deripaska’s En+ Group Ltd., which owns 47.4 percent of Rusal, ignored Sual’s move in violation of a 2007 shareholder agreement that if one party vetoes all others will follow, according to the report. Mikhail Prokhorov’s Onexim Group, which holds 17 percent of Rusal, voted against the Glencore deal in accordance with the shareholders pact, Kommersant said. A contract has not been signed yet, and the parties will try to resolve the conflict according to internal procedures, Kommersant said. To contact the reporter on this story: Yuliya

India, US aluminium associations sign MoU

MSN India - 08-Dec-2011

Hyderabad, Dec 8 (IANS) The Aluminium Association of India and its US counterpart, The Aluminium Association, Thursday signed a Memorandum of Understanding (MoU) for technology and knowledge sharing.The MoU signed on the last day of the sixth tth International Conference on Aluminium (INCAL 2011) here is expected to facilitate the growth of the aluminium sector in India.K.S.S. Murthy, Honorary General Secretary, AAI and Charles D. Johnson, Jr. Vice-president (environment, health & safety), The Aluminium Association (TAA) signed the MoU.The MoU will facilitate exchanging of information on effective recycling programsin the transportation, packaging and building and construction markets; and promote Aluminium as sustainable material in the three markets.The US is the fourth largest producer of aluminium and second largest consumer in the world while India is the eighth largest producer and fifth largest consumer.The gap, however, is very wide in terms per person consumption of Aluminium. While per person consumption of Aluminium in the US is 22.3 kg, in India it is 1.8 kg.Organisers said the three-day INCAL 2011 was a huge success with participants, especially those from top aluminium markets, such as the US, China and Japan, expressing satisfaction over the outcome of the deliberations on promoting aluminium.

China, Brazil and India to drive aluminium demand

Business Standard - 09-Dec-2011

With China, Brazil and India becoming the growth centres for aluminium-based products, the demand for primary aluminium is set to reach 75 million tonne by 2020, according the International Aluminium Institute (IAI), a UK-based global forum of aluminium producers.In 2010, the production of primary aluminium reached 40 million tonne. In addition to this, 10 million tonne of the metal came from recycling industrial scrap material and another 10 million tonne was produced by recycling aluminium. The production of primary aluminium has doubled in the last two decades, according to a statement issued here by the organisers of the ongoing International Conference on Aluminium.“The current supply of aluminium is 60 million tonne of which 20 million tonne is from recycling. However, these 20 million tonne will remain stagnant and reduce over the years There is a strong demand for primary aluminium from China, Brazil and India as construction, electrification and manufacturing sectors are growing at a healthy rate,” said Chris Bayliss, director of global projects, IAI.China continues to remain the top aluminium producer and consumer in the world. The demand for aluminium reached the highest in India last year with an 11 per cent growth rate, as per person consumption here is among the lowest in the world.However, there are concerns relating to producing 75 million tonne primary metal by 2020 as capacity addition was very poor for the last few years. “China had initially decided to cap the smelting capacity because of various reasons. But now we hear that they will reverse that decision to increase smelting capacity significantly. Only Chinese have the capability to add smelting capacity in quick time,” Bayliss said.The IAI expects additional smelting capacity to be added in Western Africa (5 million tonne) and India (2 million tonne) in the next five years. The supply of bauxite, the primary mineral for producing aluminium, is another cause for concern. Australia supplies the bulk of bauxite along with China and Indonesia.“Indonesia may not be in a position to supply bauxite to China as it has mega plans for smelting aluminium locally to meet the domestic demand. That can be a problem unless China finds new sources of bauxite,” the IAI said.

Mideast aluminium smelting to fill demand gap

Reuters Africa -  08-Dec-2011

* Middle East benefits from low cost energy* High cost, low metal prices force closures elsewhereBy Susan ThomasLONDON, Dec 8 (Reuters) - Aluminium from the Middle East, where output capacity will double by 2015 powered by cheaper energy, will feed growing long term demand as smelters elsewhere fall by the wayside, hit by high power costs and a weaker market for the metal.Smelter capacity in No.1 user China will continue to rise rapidly in coming years, but as time wears on it will be less able to satisfy its vast domestic needs.In the near term, meanwhile, capacity could be lost in other parts of the world, perhaps permanently in some instances, as high power costs and low prices erode profits for a large chunk of the energy-intensive industry.Electricity accounts on average for around 40 percent of the cost of producing the metal used in transport and packaging."The Middle East is a major production hub for aluminium and will continue to be an important production hub for aluminium," a metals industry source said."They have a reliable source of energy to power the smelters. That's one of the major reasons why they built these projects in the region, and also the keen interest of governments there to diversify the uses for the energy they have and to create employment as well."Beyond the current global economic woes consumption of the metal is set to grow at a healthy clip.By the end of the decade it will reach over 70.0 million tonnes, compared with around 41.0 million tonnes last year.But before then, aluminium prices have fallen almost 25 percent since May, and 37 percent since a record high $3,380 per tonne in 2008 to around $2,130 per tonne now, below many producers' break-even levels.As much as half of the global industry is losing money at current prices and a number of producers are likely to respond by curbing output.High cost and ageing smelters in parts of Europe and the United States without favourable power deals look particularly vulnerable.Global miner Rio Tinto has already said it plans to close its Lynemouth smelter in Britain.New smelter capacity increasingly will have to come from elsewhere. Cue the Middle East, which will step in to help fill any gaps."Outside of China, probably most of the large greenfield smelters taking place in the world have been in the Middle East," the metals industry source said.The region is expected to double its primary aluminium output to 5.0 million tonnes by 2015. Its five smelters will be joined by a sixth in 2013, and other expansions are on the drawing board.DEMAND WOBBLES TEMPORARYDespite current economic fragility, overall global demand is still holding up, although at lower levels, driven by the need for the metal used in aerospace, building and cars, particularly in China; a boon for low-cost producers."Demand is increasing and is still good overall, despite signs of slowdown in Europe," said Laurent Schmitt, chief executive of Aluminium Bahrain (Alba), which owns the world's fourth-largest aluminium smelter."But we have very healthy Middle East and North Africa demand. Asia is on the high side as well," he told Reuters.Despite any near term worries, China will continue to propel demand higher in coming years.While annual demand growth in China may slow, it will still rise by an average 8.7 percent between 2011 and 2015, a director at a state-backed industry association said recently.And by the end of the decade China will need more than it can produce."By 2020...China will be the biggest consumer and producer, but will be net importers by then, and that is where the most of the potential for expansion is," Mahmood Daylami, the general secretary of the Gulf Aluminum Council (GAC), told Reuters.Middle Eastern producers are ready to rise to the challenge.The capacity increases over the next 20 years will make up around 10-15 percent of the 28 million tonnes per year needed, according to Macquarie."The Middle East might not make the whole shortfall," Daylami said, "but it will make up a significant amount."The cheap natural gas prices that have fuelled energy intensive Middle East smelters are no longer certain, but they are likely to remain a fraction of prices in Europe, China or North America.Bahrain said in September it will increase natural gas prices for Alba, one of its biggest consumers, as gas demand grows rapidly in the Gulf oil producing country."These smelters tend to be among the most cost competitive smelters in the world," the industry source said. "So even if the energy price did go up they'd still be competitive."(Additional reporting by Karen Norton, editing by William Hardy)

Chalco's Alumina Price Cut May Squeeze Earnings, BOCOM Says

BusinessWeek - 08-Dec-2011

Dec. 8 (Bloomberg) -- Aluminum Corp. of China Ltd.’s cut of alumina prices may reduce its profit by about 300 million yuan ($47 million) a year, BOCOM International Holdings Co. said.The nation’s biggest producer of aluminum, also known as Chalco, set its alumina price at 2,800 yuan per metric ton, according to a statement posted on the company’s website. That’s the first adjustment since March when the company raised prices to 3,000 yuan, and the first price cut since July last year, according to data compiled by Bloomberg.“The price cut would squeeze profits as the company’s margin is already thin,” BOCOM analyst Luo Rongjin said today in an e-mail. The cut was made on Nov. 28, he said. Shen Hui, a spokeswoman for Chalco, did not answer calls to her mobile phone.Alumina, a white powder used to make aluminum, accounted for more than 70 percent of Chalco’s profit last year as the smelter struggled to break even in the metal unit, Luo said. Aluminum prices in London have slumped 25 percent from a record in May to $2,088 a ton as of 4:54 p.m. Shanghai time today amid concerns that the European sovereign-debt crisis and a slowdown in the U.S. economy may curb demand for commodities.BOCOM’s Luo cut his estimate for Chalco earnings this calendar year to about 0.07 yuan per share from 0.08 yuan following the alumina price cut, he said. Earnings per share may be 0.091 yuan according to the median of 13 analyst estimates compiled by Bloomberg. The company posted earnings of 778 million yuan, or 0.06 yuan a share, for 2010.--Helen Yuan. Editors: Rebecca Keenan, Ryan WooTo contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.netTo contact the editor responsible for this story: Rebecca Keenan at

EPA Wants New Rules for Aluminum Plant Smoke

Courthouse News Service - 08-Dec-2011

WASHINGTON (CN) - Emissions of carbonyl sulfide and polycyclic organic matter like benzo[a]pyrene from aluminum reduction plants would be regulated for the first time under new rules proposed by the Environmental Protection Agency.Carbonyl sulfide is the smelly stuff in some cheeses and cooked cabbages, and is the most abundant naturally occurring sulfur compound. In extremely high concentrations it can cause convulsions and paralyze the lungs. Benzo[a]pyrene is highly carcinogenic and is most often encountered in tobacco smoke.Under the new rules, facilities will have to use the best available technology to limit emissions of the two substances, typically using dry scrubbers to filter out emissions from the plant.In addition, the agency proposes changes to the start-up, shut-down and restart routines of the facilities to reduce the emissions of the toxins.The public has until Jan. 20 to comment on the proposed rules

BHP Billiton To Keep Aluminum, Nickel Units Lean - Report (press release) -  08-Dec-2011

MELBOURNE -(Dow Jones)- BHP Billiton Ltd. (BHP) will run its struggling aluminum and nickel operations in Western Australia, southern Africa and Latin America as leanly as possible, and doesn't plan to extend the billions of dollars in planned capital investment to those commodities, the Age newspaper reported Thursday."It's tough in the aluminum business," the paper quoted Chief Executive Marius Kloppers as saying. "And nickel is a lot tougher. We've just got to make sure that we focus on...the existing assets and make them generate as much cash as we can."But the two divisions wouldn't be sold, according to Kloppers, unlike the diamond business in Canada currently under review.

Environment ministry halts Vedanta Aluminium's Lanjigarh plan

Economic Times - 07-Dec-2011

BHUBANESWAR: Anil Agarwal-owned Vedanta Aluminium's bid to expand its refinery capacity at Lanjigarh in Odisha's Kalahandi district appears to have run into a legal hurdle with the environment ministry putting on hold the terms of reference for the expansion till the disposal of the Odisha High Court judgement. Even as the high court reserved its judgment on the review petition filed by Vedanta Aluminum, the ministry issued the notice putting on hold the terms which are necessary to conduct an environment impact assessment, vital for a government approval. "It is proposed that the issuance of the terms of reference be kept in abeyance till the disposal of the review petition by the high court of Odisha, Cuttack," the MoEF notice said. Vedanta Aluminum president Mukesh Kumar said he was surprised to have received the letter at a time when the high court judgment was reserved. "We went to the high court for reviewing its earlier order for more clarity on the office memorandum dated November 16, 2010, to qualify for the amnesty. The court has "inadvertently left unanswered" its plea to be considered under the MoEF's notice. Earlier, the environment ministry had allowed amnesty to Jindal Power's Tamnar project and others. Meanwhile, the Vedanta Aluminum president has made it clear that the ministry was wrong in considering its application as a fresh application for issuance of TOR. "Although our covering letter dated July 22, 2011 ... clearly states that our request was only to grant environmental clearance under office memorandum dated November 16, 2010, by restarting the process from where it was stopped earlier, it appears from the letter dated December 1, 2011, that you are considering our application as a fresh application," the letter said.

Hindalco investing $5 billion to double capacity

NDTV - 06-Dec-2011

Hindalco Industries, a Aditya Birla group company, has plans to double its capacities with an investment outlay of over $5 billion.Hindalco Industries, a Aditya Birla group company, has plans to double its capacities with an investment outlay of over $5 billion, a top official of the company said today.The company aims to more than double its capacity from the current levels in the next four-five years, Hindalco Industries Ltd Managing Director D Bhattacharya told reporters here."There are many fund raising options available. It could be debt, project financing, bonds, local or external commercial borrowings. Once the project comes to fusion, then we look for the funds."We are investing $5 billion right now and it could be another $5 billion," Bhattacharya said on the sidelines of INCAL-2011, a three-day event on the Aluminium sector."Without coal blocks, we will not put up a power plant. Without a power plant, we will not put up our smelter. So, the starting point is bauxite mine and then coal mine. If we get these two, we will certainly go ahead (with expansion)," he added.The country's largest Aluminium producer with annual capacity of 7.5 lakh tonne is in the process of expanding its Uttar Pradesh and Odisha plants.It is also setting up three greenfield facilities one in Maharashtra and two in Jharkhand.Bhattacharya said the company's 3.6 lakh tonne annual capacity plant in Madhya Pradesh is expected to commence production in 3 to 5 weeks.He said as there were delays in obtaining forest clearances for its coal blocks meant for power plants, the company decided to buy coal from other sources.To a query, he said the company will use some of the plants closed down by Novelis, which was acquired by Hindalco with a mix of 30 per cent old and 70 per cent new machinery.

Aluminium majors expect LME prices to move up

Hindu Business Line - 06-Dec-2011

Hyderabad, Dec. 6:  Indian aluminium majors are hopeful that the price of the metal on the London Metal Exchange (LME) may rise in the coming weeks as Euro zone leaders gear up to align their positions on centralised control of the euro zone budgets to fire-fight the debt crisis.After being on a steady decline for around the previous six months, aluminium prices gained $120 a tonne in the last three days in the wake of some positive signals from the euro zone. “The price of the metal tumbled from $2,700 a tonne in mid-April to below $2,000 in the October-November period. If there is no fresh crisis, we see the metal price on the LME being on a recovery phase,” Mr B.L. Bagra, NALCO's Chairman and Managing Director, told newspersons on the sidelines of the International Conference on Aluminium, here.Sharing a similar view , Mr D. Bhattacharya, Managing Director of Hindalco, also indicated the price of the metal on the LME “will look better” in the coming weeks.Margins under pressure Mr Bagra however said globally margins of aluminium producers will remain under pressure, due to the persisting spiral in energy costs. “Today, one-third of the existing capacity worldwide is operating on losses. On this count, India is better placed, as cost of alumina is comparatively lower,” he pointed out.The three major Indian aluminium producers—Hindalco, Nalco and the London-listed Vedanta—have lined up ambitious expansion plans, expecting India, together with China, to lead in aluminium production in the next decade. “The aluminium growth rate in India is expected to be 11 per cent up to 2016, higher than that of China at 10 per cent,” Mr Bhattacharya said.While Hindalco is doubling its existing capacity with an investment of about $10 billion by 2016, Vedanta is executing a Rs 60,000-crore expansion plan to add about 1.6 mt of fresh capacity to its existing 775,000 tonnes. Nalco is setting up a Greenfield unit of five lakh tonne capacity at a cost of Rs 16,000 crore, apart from another Rs 6,000 crore to add one mt of alumina capacity.“We have already spent 75 per cent of the capex of Rs 60,000 crore. We expect our new smelters to start production next fiscal and reach full capacity in less than two years,” Mr S.K. Roongta, Vedanta's Managing Director, said.All the three producers are heavily banking on the Government's nod to allocate coal blocks, which could make aluminium production profitable at the desired level. “We will be looking at coal assets, once the policy initiative is in place,” Mr Roongta

Vedanta expanding its smelting capacity to 2.5 million tonnes

Economic Times - 06-Dec-2011

HYDERABAD: Vedanta Aluminium Ltd, an associate company of the globally-diversified metals and mining group Vedanta Resources PLC, hopes to complete its ambitious Rs 60,000 crore smelting capacity expansion project by the next fiscal, a top official said here today. The smelting capacity will be raised to 2.5 million tonnes per annum, from around 1.6 million tonnes at present, Managing Director of Vedanta Aluminium S K Roongta said. "We are already through with spending 75 per cent of the total investment (Rs 60,000 crore) outlay for the expansion. "We hope to complete all the pending works soon and enhance smelting capacity to 2.5 million tonnes per annum by next fiscal (2012-13)," Roongta told reporters on the sidelines of the 6th International Conference on Aluminium ( INCAL) which began here. Apart from spending on large smelters, the investment has been undertaken for setting up captive power plants at two locations in Orissa, he said. Replying to a query, he said the primary concern for all Aluminium producers of the country is the delay in auctioning the coal blocks. "We hope that the auctioning of the coal blocks takes place at the earliest. In the meantime, we will evaluate all options of sourcing coal to expand our smelting capacity," Roongta added. According to him, it is economically unviable and unfeasible for Indian companies to import coal. "We can mine coal at the cheapest rate in the world -- $ 10 per tonne through surface mining, and $ 35 per tonne through underground mining. These are still the cheapest rates. "If we import coal, companies have to pay for the ocean freight; port handling charges and inland transportation, a model, which is not sustainable for the companies as well as the country in the long term", he observed. Vedanta Aluminium is part of a consortium of six firms, which have been allocated a coal block with an estimated reserve of 645 million tonnes. Roongta hoped that the issues relating to Bauxite mining are resolved at the earliest.

Bauxite buys from open market adding to costs, says SK Roongta, MD, Vedanta Aluminum  03-Dec-2011

Metal tycoon Anil Agarwal committed to invest about Rs 60,000 crore for building Vedanta Aluminum - the aim was for a 2.4 mt plant which is almost equal to the total aluminum consumed in India. But a ban on bauxite mining and government denial to expand its alumina refinery, have upset Vedanta's plans.To make matters worse, rising energy costs and a slowing demand have also led the unlisted VAL to post a $25-million loss in the September quarter. VAL MD SK Roongta , who has come in from SAIL after spending close to four decades with the steelmaker, tells ET the company is now close to getting alternate supplies of bauxite and will apply afresh for the refinery expansion to grow the aluminum business. Excerpts: Vedanta Aluminium's fiscal second quarter performance has been dismal given the huge focus and the large plans the group has for the metal? What is your opinion? Despite a 7% increase in production during the first half of the fiscal year, our overall cost of production was adversely affected by unfortunate pot outage at our Jharsugda unit in June and also due to higher input costs. However, we have restored many pots back in operation and are steadily improving our efficiency parameters. What is the status of Vedanta's aluminium's business now as globally the industry is hit by rising costs and erosion in demand? We set up the alumina refinery at Lanjigarh based on the assurance and an MoU that bauxite would be made available to us by Odisha Mining Corporation. Unfortunately we are still awaiting resolution of environment and legal issues. As a result, we have to buy bauxite from the open market from places as far as Gujarat and Madhya Pradesh, which has resulted in significant logistics costs. Vedanta Aluminium is fully committed to meet its obligations in respect of environment protection, community development and tribal rights. We need steady supply of domestic coal. Presently the actual linkage coal is much lower than that assured by the government. So, we are not able to run our power plants at optimum level. We are next to abundant coal reserves in the Mahanadi coal basin and hope the government will take a comprehensive look at the coal scenario and will find solutions. Vedanta said it will cut costs by $400 a tonne and also trim expenses at Balco. How will this be done? There are two new major projects on anvil at Balco. The first of 4X300 mw power units would go on stream in Q3 FY 2012 and the other unit will be progressively commissioned thereafter. The new 325,000-tonne smelter would start production in the first half of the year 2012. We are hopeful of starting captive coal mining at Balco in FY2013. At VAL, we are concentrating on improving our operational efficiencies, in line with global standards. There are plans to bring down energy costs and optimise logistics costs by commissioning new infrastructure projects. This, together with commercial production of two more power units of 600mw units in the second half will improve our performance. 

UC RUSAL completes VAS redesign

SteelGuru - 03-Dec-2011

UC RUSAL announced the completion of redesigning of the Volkhov aluminum smelter and the increase of its production capacity as a result of redesign. Total investment to the project amounted to USD 3 million.VAS completed the installation of new equipment in the cast house enabling the smelter to start a large scale production of alloys and increase the casting capacity from 24,000 tonne per annum to 32,000 tonne per annum. The share of alloys in the smelter’s production will grow up to 96%. Automotive and aerospace industries will be main consumers of the alloys produced. The smelter will also produce grade A356.2 aluminum alloy used in cast automotive wheels production.The upgraded cast house includes 20 tonne holding furnace with a mixer to prepare alloys, a conveyor with an ingot stacker for standard ingot production, a filtration facility, a traveling degassing and fluxing facility and an automatic control system. The installation was carried out by German contractor Jasper GmbH and Russian Centerenergotsvetmet Company.The upgraded cast house will start production on December 31st 2011 just before the smelter’s anniversary. VAS, the oldest aluminium smelter in Russia will mark 80 years of operations in 2012 making it an anniversary of the country’s national aluminum industry.Mr Alexey Arnautov UC RUSAL’s Aluminum Division West Director said that”Now we are carrying out a comprehensive redesign program for production of value added products within Aluminum Division West. The sales price of special alloys is on average USD 200 per tonne higher than the price of common A7 grade aluminum. I find it remarkable that VAS, the pioneer of Russian aluminum industry is the first RUSAL smelter to completely switch to alloys-only production. We are very pleased that VAS has got new development perspectives just before its 80-year anniversary. RUSAL is currently negotiating with several major companies to start auto components production in Volkhov to consume VAS-produced alloys.”

BHP reviews future of aluminium unit

Sydney Morning Herald - 03-Dec-2011

The 25 per cent slide in aluminium prices since April is forcing some interesting responses from the two biggest miners, BHP Billiton and Rio Tinto.Industry speculation has grown that BHP has the future of its aluminium interests under review, not unlike the formally announced situation at its Canadian diamond operations, which could lead to the ''potential sale of all or part'' of that business.The difference is that the diamond review was announced to the market while there has been no official word from BHP on the speculated aluminium review.BHP is traditionally loath to exit an entire portfolio business because once out it is difficult to re-establish the position. Industry sources nevertheless believe an aluminium review is in progress.Like the diamond review, the sale of part or all of the aluminium division would be in keeping with BHP's strategy of focusing on large, long-life and expandable assets, ideally those with double-digit returns.BHP owns 40 per cent of the Alcoa-operated Alumar smelter in Brazil, 86 per cent of the Boddington bauxite mine and Worsley alumina refinery joint venture with Japan Alumina and Sojitz in Western Australia, 47.1 per cent of the modern Mozal smelter in Mozambique along with Mitsubishi Corporation and Industrial Development Corporation of South Africa. Existing partners would be the obvious buyers in any sale. BHP also wholly owns the Hillside and Bayside smelters in South Africa.Current aluminium prices of US93.8¢ a pound represent a recovery in recent days from prices below US90¢ a pound - a price at which as much as 40 per cent of the global market struggles to break even. It is against that backdrop that Rio said on Monday that at current aluminium prices, the earnings of the division were expected to be ''around break-even in the second half of 2011''.''The short-term outlook remains challenging as the industry experiences higher input costs and lower London Metal Exchange prices,'' Rio said. Rio's response has been the previously announced sale of 13 under-performing aluminium assets, mostly Australian smelting assets. But yesterday Rio confirmed a go-ahead for the $US3.3 billion modernisation and expansion of its Kitimat smelter in British Columbia.The smelter's production lift of 48 per cent to 420,000 tonnes a year ranks as one of the most expensive (per annual tonne of new capacity) of all time.Rio is essentially making another big bet - the last was its ill-timed $US38 billion acquisition of Canadian aluminium producer Alcan in 2007 - that aluminium does have a bright future.The modernised and expanded Kitimat will be one of the world's lowest-cost producers but Rio will still need aluminium prices to improve to generate a decent return on the investment.

Deripaska has picked up a stun gun

RusBusinessNews - 03-Dec-2011

The decision to shut down the electrolytic production process at Bogoslov Aluminum Plant in the Sverdlovsk region could be seen as the beginning of the end for UC RUSAL. The company is mired in debt, its revenues and operating margin are declining, and the financial statements of its biggest companies have been labeled as classified. Challenging times await the co-owner of this aluminum empire, Oleg Deripaska. In the near future, the Russian prosecutor general's office could launch an investigation into his alleged ties to the Russian mafia in Europe.What's happening to the profits?The company's financial statements indicate that things are not going well. Analysts from Veles Capital emphasize that UC RUSAL's net profit for the first nine months of 2011 (according to IFRS) decreased by 14.7% - which amounts to as much as $1.2 billion. The company's operating profit decreased by 8% in the third quarter - which comes to as much as $555 million, and revenue fell by 5% - up to $3,126 million.As these problems have developed, the company has been increasingly forced to borrow money. In early November, 2011, UC RUSAL received a syndicated loan of $4.75 billion, secured by its blocking stake in factories in Bratsk, Krasnoyarsk, Sayanogorsk, and Novokuznetsk, as well as the Siberian-Urals Aluminum Company, all of which belong to the holding company. Much of this money will go toward paying off current liabilities. Russian analysts are unable to objectively assess how indebted the company is or whether it has a financial future. According to The Moscow Post, reporting statements from JSC Krasnoyarsk Aluminum Plant, JSC Achinsk Alumina Refinery, and several other manufacturing assets are not being made public.Soon, however, the Russian prosecutor general may begin a close examination of the financial postings from the RUSAL group. On Nov. 15, 2011, The website cited a story in the newspaper El Mundo, describing how a judge in the Spanish National Court, Fernando Andreu, asked Russian authorities to begin an investigation into the alleged ties between aluminum magnate Oleg Deripaska and the Russian mafia in Europe. According to, the judge hopes that an investigation will be carried out in Russia, because "it was in that country that the illegal activities of the Izmaylovskaya criminal organization were founded, formed, and carried out. It was in Russia that the orders were given and plans were made to launder money".The Spanish judge found that Deripaska and his partners had received revenue from several Russian companies between 2001 and 2005. The court papers mention that the businessmen had established control over these companies "by means of racketeering, fraud, and murder". The money they received was legitimized through the company Vera Metalúrgica, S.A. Fernando Andreu has asked the Russian authorities to inform him of their decision, so that if they refuse to proceed he may resume his own investigation.Radio Liberty quoted Deripaska's representatives, who reject the accusations against their employer, "It is clear that the Spanish investigation does not and could not have any evidence of any illegal activity by Mr. Deripaska. We are confident that the relevant Russian authorities will uphold this position and end this misunderstanding".However, according to, the Russian prosecutor general's office has already expressed an interest in the investigation underway in Spain and is prepared to shoulder this challenging task.Total cost-cuttingWith the storms raging all around it, UC RUSAL has been forced to make cuts. The company has focused on lowering its electric bill. The first significant step was shutting down the electrolytic production process at Bogoslov Aluminum Plant. Oleg Deripaska is not satisfied with the price of electricity in the Sverdlovsk region, which is twice the national average in Russia.In mid-November there was a wave of closures of electrolysis baths at Bogoslov Aluminum Plant. All 130 baths are expected to cease operations within 4-6 weeks. Some of the workers who have lost their jobs will be transferred to more modern facilities that are fitted with gas-treatment equipment, while others will be shifted to alumina production. The owners will give a few the opportunity to move to similar businesses owned by the company but located in other regions of Russia.UC RUSAL's management has officially stated that aluminum production at the plant is hugely unprofitable. The production cost for a ton of materials is $700 above the price on the London Metal Exchange. The losses are the result of continuous increases in the rates for electricity in the Sverdlovsk region, which increased by a third in 2011 and will go up another 8% next year. Bogoslov Aluminum Plant currently pays twice as much for its electricity as do RUSAL's factories in Siberia, and 150% more than the costs incurred by the company's aluminum plant in Sweden. Insiders claim that the owners of the metallurgical company were upset with a regional government that permitted a market for electricity to develop that fleeced the biggest energy users. The response to that charge was swift. Governor Alexander Misharin rejected the accusations of inaction and implied that it was time for a change in the management at UC RUSAL overseeing the development of the Urals aluminum plant. He thinks that the high production costs are the result of poor quality control at Bogoslov Aluminum Plant. Aleksandr Petrov, the deputy chairman of the government of the Sverdlovsk region, continued with this theme when he suggested that UC RUSAL build their own generating capacity in the region and undertake a complete reconstruction of the plant, investing in an increase in the value-added of its aluminum products.The metallurgists fought back. Oleg Deripaska's team believed that the advice to modernize RUSAL's facilities merely showed the unwillingness of Aleksandr Misharin's government to resolve the Sverdlovksk region's increasing number of problems related to electricity supplies. "There is no question that we support the development of a cluster of aluminum producers in the Urals. But we would also like to point out that the production of primary aluminum and its alloys is a completely different type of business than the production of high-value-added products. RUSAL's businesses are not involved in downstream production. That is not a core business for our company", claimed RUSAL's representatives. RUSAL's Chinese campaignThe cost of electricity per ton of aluminum produced in Russia is among the lowest in the world, only $390 compared to $700 in Eastern Europe and $590 in Latin America. China has the most expensive electricity (accounting for $1,000 of the production cost of a ton of metal), but paradoxically it is in the Middle Kingdom that UC RUSAL has acquired two cathode plants.China is developing rapidly and it lacks the manufacturing resources to meet its own need for aluminum, which is why the "winged" metal there costs more than on the London Exchange. And sizable profits make it possible for the company to ignore the cost of electricity. For this reason, the owner of the largest stake in UC RUSAL, Oleg Deripaska, is making a pragmatic decision - to close his unprofitable plant in the Urals and move that money to China. He plans to significantly expand his presence in that country, buying a 33% stake in a subsidiary of the Chinese state-owned corporation Norinco, which sells primary aluminum on the Chinese and Southeast Asian markets.Who will pay for the renovations?But the owners of the metallurgical company look vulnerable in their dispute with the authorities of the Sverdlovsk region. According to Aleksandr Tatarkin, the director of the Institute of Economics of the Urals branch of the Russian Academy of Sciences, the issue of renovating Bogoslov Aluminum Plant dates back to the Soviet era. A few decades ago, it became clear that it was necessary to build a new factory, because the outdated plant consumes too many resources. The reserve of raw materials for the Urals aluminum plant also needs an overhaul. Production from the bauxite mine in the North Urals owned by UC RUSAL is unsatisfactory in quality, price, and volume. The company is paying for the cost of transporting bauxite (the raw material from which alumina is produced), bringing it to the Sverdlovsk region from other areas. And Bogoslov Aluminum Plant is currently the third largest producer of alumina in Russia, so the plant must be writing checks with lots of zeros.Experts agree that there is a certain logic to UC RUSAL's actions, but they cannot understand why the company does not want to recycle aluminum in the Urals. According to the metallurgists' own data, recycling requires only 5% of the energy used to produce aluminum from alumina. Although UC RUSAL's profits are diminishing, they should still be able to renovate their factories and produce higher-value-added products. But no mention is being made of investing or modernizing their facilities.It is possible that the federal budget may end up paying to renovate Bogoslov Aluminum Plant. Russian Prime Minister Vladimir Putin previously announced the extension of a program that supports cities closely tied to a single manufacturer, and Bogoslov Aluminum Plant is the economic backbone of the town of Krasnoturinsk. If there is a dramatic drop in production at the plant, it might well be given assistance from the federal coffers.Political blackmailThis industrial conflict in the northern Sverdlovsk region occurred on the eve of the elections for deputies to the Russian Duma, and not long before the presidential race. The federal authorities entrusted Gov. Aleksandr Misharin with the task of providing the ruling party with the votes it needed. But meanwhile, UC RUSAL's actions are inciting the anger of the region's residents. There was a demonstration in Krasnoturinsk last week, and pickets were organized in the city.As acknowledged by Vladimir Mashkov, the chairman of the Sverdlovsk regional Duma's committee on industrial policy, the possibility of partially shutting down production at Bogoslov Aluminum Plant is under discussion elsewhere in the region. "I think the managers of Bogoslov Aluminum Plant needed to come to the negotiating table on a regular basis to resolve all their issues without stirring up conflict", he claims.Local politicians are convinced that it was no accident that the "demise" of the electrolytic production process at Bogoslov Aluminum Plant was announced right before the elections. Andrei Alshevskikh, the head of the Communist Party fraction in the Sverdlovsk regional Duma, claims, "Gov. Misharin will get down on his knees before the owners of UC RUSAL, in order to put off a decision on the issue until the spring of 2012, after the elections".UC RUSAL is already seeing the first payoff from the pressure it exerted. Anatoly Sukhov, the vice speaker of the Sverdlovsk regional Duma, claimed that the authorities have begun negotiating to bring down the price of electricity for Bogoslov Aluminum Plant. According to him, the regional government has prepared several drafts of a resolution to this effect.But Aleksandr Misharin did not pass up the chance to ask Dmitry Medvedev for help curbing Oleg Deripaska when the Russian president was visiting Ekaterinburg the other day. The head of state nodded approvingly and forwarded his request to the government. It is the ministers in Putin's cabinet, after all, that are the experts in managing Russian oligarchs.Konstantin Dzhultaev and Vladimir Terletsky

Rio Tinto spends extra $2.7b on smelter

Sydney Morning Herald - 02-Dec-2011

Mining giant Rio Tinto will invest an additional $US2.7 billion ($2.65 billion) modernising its aluminium smelter in British Columbia, Canada.The $US3.3 billion project will be completed in 2014. The Kitimat smelter’s production capacity will rise by more than 48 per cent to about 420,000 tonnes per yearIt would also dramatically reduce its cost curve and cut greenhouse gas emissions by about half, said Jacynthe Cote, chief executive of Rio Tinto Alcan.Rio Tinto is in the process of selling many of its aluminium assets, including all of its Australian smelters and its troubled Gove bauxite mine in the Northern Territory.It said at an analysts briefing this week that it expected the division to break even in the second half of 2011, compared to a $US1.4 billion underlying earnings result in the first half.The company also announced on Friday that it had completed the sale of its Colowyo thermal coal mine in western Colorado, in the US, to Western Fuels-Colorado LLC.It is the last of its US thermal coal mines to be sold.The company said that since 2008 it had completed more than 20 divestments, with total gross proceeds of more than $US11 billion.

Gulf set to become aluminum powerhouse 02-Dec-2011

DUBAI: The aluminum industry in the GCC is on the brink of becoming a leading global contributor, according to a new publication issued by Deloitte Middle East. The report titled "GCC: Tomorrow's Aluminum Powerhouse" pointed out that the UAE, Oman, Bahrain, and Qatar are all home to some of the largest aluminum smelters in the world. Five smelters exist in the GCC today with a combined production capacity of just under 3.6 million tons. Their cumulative contribution to total global production in 2010 was estimated at seven percent, said the report. Considering the fact that Maaden, a sixth smelter in Saudi Arabia, is set to become operational by 2013 while Emal's robust expansion is scheduled for completion by 2014, the GCC is poised to become a primary aluminum production powerhouse with the expectation that the region will contribute to over 13 percent of the world's aluminum production by 2013."Given the affordability of power and labor in the GCC region, the local aluminum industry as a whole is conducive to investment," said Mahmood Daylami, secretary general of the Gulf Aluminum Council, (GAC). "Increasing costs is becoming critical for more and more primary producers around the globe, and therefore the Gulf presents a viable and attractive venue for investment in aluminum production across the entire industry's value chain. Furthermore, the GCC smelters are evaluating and studying future expansion plans to increase their global production contribution to a cumulative capacity estimated at 7 million tons per annum by 2020."According to the Deloitte publication, the downstream aluminum industry within the GCC can be said to be underdeveloped, and therefore ripe for investment, with an estimated 20 percent of locally produced primary aluminum is consumed within the GCC and 50 percent of locally utilized aluminum is processed further in secondary production and exported to international markets.The Deloitte publication also points out that another significant opportunity exists to develop the aluminum recycling activity in the region. The cost advantages for industrial activity in the region coupled with increasing support and encouragement for investment in downstream aluminum operations create an attractive opportunity for investment."Although the regional aluminum industry is not without its challenges, its close proximity to end-user markets both throughout the Middle East and Europe is a strong advantage," said Firas Eid, Consulting partner at Deloitte Middle East. "Additionally, strong economic growth across the GCC, particularly in aluminum-intensive industries, the most notable of which is construction, will further fuel the region's growth in aluminum production and solidify the region as a global leader and pioneer in the industry."

Orbite aims for 2014 startup

Montreal Gazette - 01-Dec-2011

Orbite Aluminae Inc., with an ambition to supply Quebec aluminum smelters with half their intermediate alumina material by 2020, will soon freeze the design of its planned commercial process plant and target a 2013-2014 startup, CEO Richard Boudreault said Wednesday.Orbite plans to convert albuminous clays mined from the Grande Vallée region in the Gaspé into high-grade alumina by its own patented hydrochloric acid separation process. The acid is 99 per cent recyclable and tests have shown the ore contains other valuable metals."I've been working on this project for six years and this week's positive scoping study is a big step forward," Boudreault, a physicist by training, told analysts. "We're shaking up the pilot processing plant at Cap Chat, testing for those parts that could go bang in the night."Orbite is talking energy with Hydro-Québec and others, continuing processtesting with European partners and refining recovery rates. The full "bankable" feasibility study comes in the first half of 2012.The scoping study, produced by consultants Genivar Inc., estimates the Grande Vallée open-pit mine has a resource of almost one billion tonnes of clay grading an average 23 per cent alumina for conversion into the intermediate material for aluminum smelting. It can compete with imported bauxite because of proximity, low-cost mining and high-quality ore.The commercial plant would have annual capacity of 540,000 tonnes of alumina, 190,000 tonnes of iron and 1.2 million tonnes of highquality silica, plus rare metals for the electronics industries

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