AluNews - December 2013

Emirates Extrusion to invest AED 13 million for new production line at Dubai plant

Zawya - December 29th, 2013,

Company reiterates focus on aluminium exports across Middle East and Africa amidst surging demand and construction boom Dubai, December 29, 2013: Emirates Extrusion Factory [EEF], a leading aluminium extrusion company in the UAE and a subsidiary of Masharie LLC - the private equity arm of Dubai Investments PJSC [DI], has announced plans to add a new production line at its aluminium extrusion plant in Techno Park, Dubai entailing an investment of AED 13 million.

The new line, to be added by mid-2014, will further augment the production capacity to 6,000 Metric Tonnes and will go a long way in bolstering the company's leadership in the sector. This new line will boost the production of wooden finish and powder-coated aluminium, which augurs well for EEF amidst surging demand due to the construction boom in the region.

The company, which reported annual turnover of AED 190 million in 2012, also unveiled plans to aggressively target the export markets in the wake of burgeoning construction activity across Saudi Arabia, Qatar, Oman, Yemen and Africa. EEF currently exports nearly 60-70% of its production to various countries across the Middle East and Africa.

Khalfan Al Suwaidi, EEF Managing Director, said: "The resurgence of the construction industry across the GCC and beyond is indeed good news for Emirates Extrusion, and we plan to cater to this inherent demand for extruded aluminium through our new production line. Construction takes a major chunk of our business - nearly 80%, with the rest being earmarked for industrial downstream projects. The new line will not only go a long way in escalating our overall output but also help us offer the most reliable aluminium profiles to the market."

He added: "At EEF, we will continue to focus on exports in the medium to long-term, as there is a huge demand for our products in growing markets across the GCC, the Middle East, Levant and Africa. We also expect increased demand from the local UAE market following Dubai's winning bid for Expo 2020, which reflects the immense growth potential on offer."

According to Frost & Sullivan, a leading business research & consulting firm, the UAE aluminium extrusion market is estimated to be in excess of 175,000 Metric Tonnes (MT) which amounts to approximately 35 per cent of the total Gulf Cooperation Council (GCC) demand, growing at a compounded annual growth rate [CAGR] of eight to nine per cent between 2011 and 17.

Since its establishment, EEF has grown to become one of the Middle East's market leaders in the development, commercialization and production of high-quality aluminium systems for architectural and non-architectural applications. The company offers an impressive range of premium-quality, energy-efficient extruded aluminum profiles. EEF offerings include windows, doors, and structural glazing, as well as partition grill, hand rail, and curtain wall systems.

About Emirates Extrusion Factory

Emirates Extrusion Factory LLC [EEF] was established in 1993 in Ajman, UAE where it has gained a renowned position over the years for being one of the most dynamic and innovative aluminum extrusion companies in the Middle East.

Aside from the primary extrusion production, Emirates Extrusion also provides a full-range of on-site services like powder coating, anodizing and thermal break under one roof. The company's aluminum profiles are supplied to various markets including architectural, consumer products, transportation and industrial products; and comply with BS, EN and ISO 9001 standards.

Second aluminium plant to be build in Kazakhstan

Tengri News - December 23th, 2013,

During a teleconference question and answer session with Pavlodar Olbast, President of Kazakhstan Nursultan Nazarbayev addressed the importance of developing the industrial sector in Kazakhstan. “Our industrialization has to follow the path towards processing the raw materials that we have. You are the pioneers of the processing. The is for you together with the Government to build the second plant with a capacity of 250 thousand tons of aluminum, similar to the one we already have,” the President said after resident of JSC Kazakhstan Electrolytic plant Almas Ibragimov reported that an aluminum plant with a capacity of 250 thousand tons per year had been built. The President nodded the start-up works in the anode unit of the plant.

“$300 million was invested into this large scale project. The plant produces 136 thousand baked anodes a year,” said the President of the company.

JSC Kazakhstan Electrolytic plan is currently the only manufacturer of aluminum in the country.

Rio Tinto reveals it will close Gove alumina refinery in Northern Territory by July

ABC News - December 20th, 2013,

Rio Tinto has revealed that its Gove alumina refinery in the Northern Territory will be closed by July next year, throwing more than 1,000 people out of work.

The mining giant today briefed its 1,400 refinery workers on the timeline for the shutdown.

In a statement, federal Industry Minister Ian Macfarlane said it would be business as usual at the refinery until February.

Rio Tinto will then start a planned and staged suspension of refinery operations until July.

Mr Macfarlane and Territory Chief Minister Adam Giles have both called on the big miner to release its social and economic study about the expected local impact of the closure to the public.

But Rio Tinto says its study is at a preliminary stage and a consultant is expanding the information to reflect community feedback.

Mr Macfarlane says senior officials from both governments will meet in Nhulunbuy soon.

So far, the Federal Government has directed community members to seek assistance through Centrelink services.

The people of Gove are calling for an assistance package similar to the one being offered to Holden workers in southern states.

More than 1,000 workers will lose their jobs when the refinery closes and the impact on Nhulunbuy, which has a population of about 4,000, will be severe.

Indopura to Start Building $500m Alumina Plant

The Jakarta Globe - December 19th, 2013,

Indopura Resources, a joint venture between companies from Indonesia, Singapore, and China, started the construction of its $500 million chemical grade alumina plant in Kubu, West Kalimantan, in an attempt to tap rich bauxite resources in the region.

Indonesia is seeking to reap more added value from its rich mineral resources, with a planned mineral ore export ban starting Jan. 14.

The government issued a ministerial decree banning exports of some raw minerals — including bauxite — that would require the country’s miners to process their mineral ore before exporting.

“We are committed to investing in bauxite refinery in West Kalimantan, which has bauxite deposits of about 4.3 billion tons,” M. Arief Winata, Indopura’s managing director told reporters in a ground-breaking ceremony on Wednesday.

Arief said the plant would sit on 224 hectares of land and be online by the end of 2017: “We will process the bauxite so that it can have an added value to Indonesia’s economy and provide 1,500 jobs.”

He added that the plant would be able to produce 1.2 million metric tons of CGA per year.

CGA is used in the production of refractories, abrasives, building materials, integrated circuit packaging and materials for liquid crystal displays.

The ore bauxite for Indopura’s plant will be supplied from a 27,000-hectare mining area owned by Laman Mining, in Ketapang, West Kalimantan.

Arief said the company had designed and planned the plant’s construction for about a year, including conducting a feasibility study. For engineering, procurement, and construction of the plant, Indopura is working with Northern Heavy Industries Group, China State Construction Engineering Corporation, Zhongtai Construction Group and the Northeastern University Engineering and Research Institute.

Aneka Tambang, Indopura’s joint state mining company, is completing its first CGA plant in Taya, West Kalimantan, and will start production in April next year.

Antam has been building the plant since June 2011 and it is intended to process the company’s bauxite reserves to produce up to 295,000 tons of CGA per year.

The Indonesian government announced the policy to tighten its grip exports of ore minerals ostensibly to increase the value of its natural resources by processing them locally.

Mining accounted for only 12 percent of the country’s gross domestic product in 2011.

Trimet acquires aluminum plants in France

TEC - The Evertiq Conference - December 18th, 2013,

Trimet Aluminium SE has acquired two production plants in France from Rio Tinto Alcan.

In July of this year, Trimet made a binding offer to take over and continue production at the aluminum plants in Saint-Jean-de-Maurienne and Castelsarrasin. The acquisition has now been approved by the national and European regulatory authorities. Alongside the main shareholder, Trimet Aluminium SE, the French energy provider EDF holds a minority stake in Trimet France SAS.

At both locations, some 500 employees produce high-quality aluminum wire, which is processed into electrical lines for the energy sector, among other uses, and into connectors for the automotive industry. By entering into this product segment, Trimet is expanding its product portfolio.

“There is great demand for aluminum wire in the European processing industry. By supplying complex alloys and customized solutions, we are strengthening our long-term core competence as a specialty supplier within this product group,” said Dr. Martin Iffert, CEO of Trimet Aluminium SE, who will manage the fortunes of Trimet France SAS as President of the company.

“The locations are perfectly compatible with Trimet's strategic direction, both in terms of the qualified employees and the technical level of the systems. On this basis, we will align the sophisticated products more closely to the needs of our customers,” he added.

Trimet completes purchase of Rio Tinto plants

Metal Bulletin Ltd - December 17th, 2013,

Trimet Aluminum AG has taken control of two former Rio Tinto Alcan Inc. production plants in France.

The Essen, Germany-based aluminum producer said Dec. 16 that the move came after it received regulatory approval for a deal signed in July.

The plants—in Saint-Jean-de-Maurienne and Castelsarrasin, France—make aluminum products used in the power transmission and automotive sectors, Trimet said.

The acquisition should give Trimet a presence in the aluminum wire market and boost its core business of supplying specialty products, chief executive officer Martin Iffert said.

Iffert is expected to become chief executive officer of Trimet France SAS, which is majority owned by Trimet and in which Paris-based Electricité de France SA (EDF) holds a minority stake, the company said.

Montreal-based Rio Tinto Alcan announced plans to dispose of the operations a year ago. The company has since confirmed that it is reorganizing its commercial businesses in the Americas and Europe, which sources have said comes in part because divestitures in both regions have left the company with a smaller footprint and fewer pounds of metal to sell.

Besides the sale of its French operations, Rio Tinto Alcan also has sold a smelter in Sebree, Ky., to Chicago-based Century Aluminum Co. and decided to halt work on a multibillion-dollar smelter project in Paraguay.

German company buys Burnside alumina refinery

The Advocate - December 17th, 2013,

Almatis, a German company, has purchased a Burnside alumina refinery out of bankruptcy.

Details of Almatis’ purchase of the refinery, which had been owned by Ormet Corp., were not disclosed. But in November, a U.S. bankruptcy court judge in Delaware approved Almatis’ $39 million bid to buy the plant. The plant manufactures the primary raw material used in aluminum production.

“Almatis is committed to make additional investments in the refinery to ensure its success as a dedicated specialty producer,” said Taco Gerbranda, Almatis’ chief executive officer.

“This is a major investment for the future of Almatis that will enable us to better manage and secure our long-term feedstock supply, and strengthen our ability to provide our customers with premium specialty alumina products.”

The Burnside refinery has an annual capacity of 500,000 metric tons per year. The plant has the capability to produce high-quality feedstocks, although it was established as a smelter-grade alumina producer.

Ormet filed for Chapter 11 bankruptcy protection in February. The company blamed its filing on a drop in the price of aluminum and rising power rates in Ohio, where it has an aluminum smelter that received alumina from Burnside.

Ormet had 213 people working at the Burnside refinery, according to an October filing in bankruptcy court. The plant was being kept in a “hot idle,” a state where it would be easy to return to production, during bankruptcy proceedings.

Ormet reopened the shuttered Burnside alumina plant in late 2011 after the plant had been closed for five years. The facility had closed because of falling demand, high natural gas prices and market forces. Then rising alumina prices and low natural gas costs made it worthwhile to reopen the Burnside plant. Ormet made a $21 million investment in the plant.

The Louisiana economic development department offered an incentive package that included a performance-based loan of $1.5 million and a 5 percent refundable tax credit for plant retention and modernization, worth about $1 million.

Mike Eades, president and CEO of the Ascension Economic Development Corp., said the news of the purchase of the Burnside refinery is “a nice Christmas present.”

“We’re happy to see the situation work out and that the plant will stay open,” Eades said. “A solid company has bought them.”

Advocate staff reporter David Mitchell contributed to this report.

Don’t Be Wowed By Alcoa Inc. on Aluminum Production Cuts

Metal Miner - December 17th, 2013,

Aluminum production is rising in Africa, China, the Arabian Gulf, Eastern and Central Europe and (this surprised us a little) North America, but it is falling in Oceania, South America, Western Europe and Asia (ex-China), according to FastMarkets. We continue our Aluminum Outlook 2014 from Part One here.

Collectively, production in the world ex-China totaled 17.06 million tons in the first eight months of the year period, down from 17.131 million tons in the same period of 2012 – all the net growth is in China, where production climbed to 15.841 million tons in the first eight months of the year from 14.541 million tons a year previously.

While on the subject of closing production, don’t be too wowed by statements from market leaders like Alcoa Inc. (NYSE: AA) talking about how much capacity they have closed – they may have closed plants in Europe and North America, but they have opened new plants in the Middle East.

FastMarkets notes that despite announcements of non-Chinese production cuts of 760,000 tons this year, more capacity is being added.

Omani minister opens $384.4m Sohar aluminium plant

ConstructionWeekOnline - December 17th, 2013,

A $384.4m aluminium rolling plant has been officially opened in Oman by the country's Minister of Oil and Gas HE Dr Mohammed al Rumhi.

Owned by Takamul Investment Co, the Oman Aluminium Rolling Company (OARC) plant has an annual capacity of 140,000 tonnes of multi-purpose aluminium sheets.

The inauguration ceremony was attended by Hilal al Kharusi, chairman of OARC; Buddy Stemple, CEO of OARC; and senior government officials and representatives of private-sector organisations.

Speaking at the event, Muscat Daily reported Kharusi as saying: “In line with the Royal Directives of His Majesty Sultan Qaboos bin Said that emphasis should be placed on diversifying the national economy and providing job opportunities to Omanis, this huge project will be a milestone in the Omani industrial sector and will bring in numerous benefits to the national economy.

"The official inauguration of the OARC plant today is just the beginning, and we are looking at reaching full plant operational capacity in the first quarter of 2014. We are committed to providing quality products of international standards.

"We also aspire to become a world-leader in rolled aluminium production following our plans to export processed aluminium to different countries overseas.

Highlighting the potential of the plant, Stemple told reporters: “We proudly unveil this high-scale project which is meant to not only meet the needs of the local market but to also be a major competitor in the regional and international markets.

"I am very proud to be part of this project, and I am looking forward to the commencement of our commercial operations. OARC is, without doubt, an Omani brand with international standards.”

Rio Tinto Shelves $4 Billion Aluminum Smelter Plan In Paraguay

Trefis - December 16th, 2013,

Rio Tinto (NYSE:RIO) has announced that it is shelving its plans to construct an aluminum smelter worth $4 billion in Paraguay. The company attributed its decision to poor market conditions in the aluminum segment. The decision doesn’t come as a surprise to us, considering that only a few days back the company announced massive spending cuts, especially in the aluminum business. [1]

The aluminum market is currently oversupplied and prices remain depressed with no upside in sight. Despite the announcement of a massive reduction in smelting capacities by major producers such as Alcoa and Rusal, the downward price trend continues.

We have a Trefis price estimate of $55 for Rio Tinto, which represents 6% upside to the current market price.

Why Has The Project Been Shelved?

Rio’s proposed aluminum smelter in Paraguay was supposed to be built at a cost of $4 billion. It would have been the company’s biggest aluminum smelter with a production capacity of 674,000 tonnes a year once completed in 2016. A number of factors may have driven Rio’s decision to shelve the project for now.

Aluminum prices have been on a downward trajectory for a long time now. The price has struggled to breach $1,850 per tonne on the London Metal Exchange (LME) for months. Producers like Alcoa and Rusal have announced smelting capacity cuts exceeding a million tonnes this year alone. Still, prices remain depressed due to an inventory overhang which is expected to persist for quite some time. Aluminum companies had expanded massively in the last few years on an expected increase in demand from China, but the country itself has built up substantial smelting capacities, leaving everyone else with a capacity overhang. ((LME Aluminum Prices, LME))

The weak aluminum market has been responsible for BHP Billiton’s decision to sell its 33.3% stake in Guinea Alumina, Vale’s decision to sell its 22% stake in Norsk Hydro and Chinalco’s decision to suspend its Malaysian smelter project. Rio Tinto too was looking for a buyer for its Pacific Aluminum division but was unsuccessful in getting the right price due to the weak market. It eventually decided to retain the business for the time being. ((Rio Tinto Moves Away From Paraguay, Daily Finance))

Given its failure in selling a loss-making business, it would have been shocking if Rio had gone ahead with pumping $4 billion into another aluminum smelter. After Sam Walsh took over as new CEO, the company has been very clear about letting returns to shareholders drive its business focus. To bring down its massive debt and maintain its credit rating, Rio has announced plans to cut spending dramatically over the next two years. The spending cuts will result in capital expenditures being reduced to $11 billion in 2014 and $8 billion in 2015. This represents a massive reduction from the peak spending levels of $17.6 billion in 2012. The bulk of the budgets will be spent on the iron ore and copper businesses, while cost reductions of $1 billion in the aluminum division are expected. ((Rio Tinto is delivering on its commitment to create greater value for shareholders, Rio Tinto Press Release))

Given the above, shelving the plan for a new smelter would definitely have been a foregone conclusion for the market.

Copper hits six-week high

Business Recorder - December 14th, 2013,

Copper touched a six-week peak on Friday in a sixth straight session of gains as nervous investors bought back short positions ahead of a US central bank meeting that could decide the fate of its monetary stimulus. Three-month copper on the London Metal Exchange closed up 0.4 percent at $7,255 a tonne, after touching a high of $7,265.25, its strongest since November 1.

The metal used in power and construction was trading 1.8 percent higher for the week but down 8.6 percent so far for the year. Many investors held short positions, betting on lower prices due to expectations for higher supply from mines in coming months, but some have been buying back those positions, a trader said.

Some shorts covered their positions after the copper price broke above its 200-day moving average (DMA), a key signal for investors who watch chart patterns. "The 200 DMA has always been important and even more if we stay above on a weekly close," the trader said.

Copper also got support after data showed US producer prices fell for a third straight month, pointing to scant inflation pressure that could give the Federal Reserve pause as it weighs the future of its monthly bond purchases. The focus next week will be on a Fed policy meeting on December 17-18 for any indications of when the central bank might begin reining in its massive monetary stimulus programme.

The stimulus programme has released more money into the economy and has been used to buy assets including commodities. "It is all about the taper and its timing, of course," said Anita Paluch, a strategist at Varengold Bank. Weighing on metals prices, however, was a slightly firmer dollar against a basket of currencies, following upbeat US retail sales data on Thursday and the smooth passage through the US House of Representatives of a budget deal to avoid a government shutdown.

A strong dollar makes commodities priced in the US unit more expensive for holders of other currencies. Tightening copper supplies supported the market. LME cash copper surged on Thursday to a $14.50 premium against the three-month contract, the highest since July 2012, before easing to $8 on Friday.

"We're definitely looking at this quarter and the first quarter of next year to be tighter than what the annual surplus would suggest," said Barclays analyst Sijin Cheng in Singapore. Metals also were supported by a planned ban on unprocessed ore exports from Indonesia, including aluminium, which ended 0.5 percent higher at $1,799 a tonne. "The aluminium market could be affected substantially in 2014 if Indonesia goes ahead with its proposed comprehensive ban on exports of unprocessed raw materials, given China's continuing reliance upon imports of bauxite from Indonesia," Natixis analyst Nic Brown said in a note.

Tin, also due to be hit by the Indonesia ban, was a strong performer, rising 1.1 percent to close at $22,750 a tonne. Lead climbed 1.1 percent to $2,150 a tonne, and nickel rose 0.6 percent to $14,095. Zinc, which failed to trade in closing rings, was last bid at $1,977, up 0.6 percent, after touching a six-week high of $1,978.75.

Oman Aluminium Rolling Co to be opened today

Muscat Daily News - December 14th, 2013,

Oman Aluminium Rolling Co LLC (OARC), one of the largest projects in the aluminium processing industry in the sultanate, is set to officially open on Sunday under the patronage of H E Dr Mohammed al Rumhi, Minister of Oil and Gas.

The official inauguration is scheduled to take place at the company’s headquarters in Sohar Industrial Estate and will be attended by many government officials and private-sector representatives.

Owned by Takamul Investment Co and built at a total cost of US$385mn, the OARC plant supplies alloys of processed aluminium to the local and export markets in the Middle East, Asia, Europe, Australia, North and South America. The project provides around 300 direct job opportunities to local residents, and has a current Omanisation percentage of 73 per cent, with 100 per cent Omanisation at the plant operations level.

OARC said it is committed to the best quality products and the highest levels of customer satisfaction.

EC clears Rio Tinto Alcan's sale of French aluminium plants

Platts - December 13th, 2013,

The European Commission said Friday it has approved Rio Tinto Alcan's planned sale of aluminium plants in France.

"The European Commission has approved under the EU Merger Regulation the acquisition of joint control over two aluminium production facilities located in France of the Rio Tinto Alcan group by the Trimet group of Germany and Electricite de France S.A. (EDF) of France,".

On July 13, Rio Tinto Alcan said it had received a binding offer for its St Jean-de-Maurienne aluminum smelter and its Castelsarrasin casting facility in France from German aluminum producer Trimet. The deal will bring in French state-controlled power firm EDF as a minority stakeholder.

Since 2009, Rio Tinto Alcan has closed or curtailed over 600,000 mt of aluminium capacity and sold a further 13 non-core businesses. It has raised more than $4.4 billion from its aluminum divestments over the period.

Trimet manufactures aluminium including extrusion billets, rolling ingots, remelting ingots, liquid aluminium and die-cast parts, trades aluminium products and scraps as well as copper products.

"The Commission concluded that the proposed acquisition would not raise competition concerns, in particular because the overlaps between the parties' activities are moderate," the EC said.

Rio Tinto puts off plans for Paraguay aluminum plant

Thomson Reuters - December 10th, 2013,

Giant global mining company Rio Tinto said on Tuesday it postponed studies related to a proposed $4 billion aluminum plant in Paraguay due to bad market conditions, putting what would be the country's biggest-ever foreign investment in jeopardy.

The plant would have been Rio Tinto's largest worldwide, with the capacity to produce 674,000 tons a year. It had been scheduled to start operating in 2016.

"This was a difficult decision to make, given that we have very much enjoyed the professionalism and collaboration of the Paraguayan authorities," the company's Canadian subsidiary Rio Tinto Alcan said in a statement. "Having said that, we cannot avoid the reality of current market conditions."

Finance minister German Rojas told Reuters that the decision was driven by the company's need to cut costs in the face of fragile world commodity prices, aluminum prices in particular.

"It would have been worse if the project had advanced further before having to be abandoned," Rojas said.

RI officially takes over Inalum ownership

The Jakarta Post - December 9th, 2013,

The Indonesian government today formally took over as owner of aluminium producer PT Indonesia Asahan Aluminium (Inalum), Southeast Asia’s only aluminum smelter, ending the 30-year management by a majority-Japanese consortium.

Indonesia and Japan signed the Asahan Project takeover agreement at the Industry Ministry in Jakarta, on Monday, Antara news agency reported.

The company’s takeover was planned to be completed on Oct. 31; but protracted negotiations had delayed the signing of the agreement.

Asahan Project is an Indonesia-Japan friendship partnership that will develop a hydroelectric plant (PLTA) in Toba Samosir regency and an aluminum smelting factory in Kuala Tanjung, Batu Bara regency, North Sumatra.

According to Asahan Project’s master agreement, Inalum’s operational period lasted for 30 years, starting from Nov. 1, 1983 to Oct. 31, 2013.

Inalum’s share ownership changed several times before the final agreement, in which 58.87 percent of shares belonged to Japanese investors and the remaining 41.13 percent were owned by the Indonesian government.

Inalum has an initial production capacity of 225,000 tons of aluminum ingot per year with electricity supplied from 640-megawatt-PLTA Asahan II. (ebf)

Indonesian gov't, Japanese consortium agree to terminate smelter contract

GlobalPost - December 9th, 2013,

Indonesian gov't, Japanese consortium agree to terminate smelter contract

JAKARTA, Dec. 9 (Xinhua) -- The Indonesian government and the Japanese consortium Nippon Asahan Aluminium (NAA) on Monday clinched a deal to terminate a contract that allows the latter to run PT Inalum (Indonesia Asahan Aluminium), thus paving the way for Indonesia to solely own the only aluminum smelter in the region.

A share transfer would be carried out on Dec. 19 in the State- owned Enterprises Ministry, when the NAA would hand all its stake in the smelter to the Indonesian government, Industry Minister Mohamad Suleman Hidayat said after the signing.

Under the management of Indonesia, the minister vowed to improve the performance of the firm.

"I would like to say to my colleague, the minister of state- owned enterprises, that it is our country's expectation that through your leadership, the vision to make PT Inalum a world class company producing high value-added aluminum downstream products and achieving an aluminum ingot production capacity of 470,000 tons by 2017 can be materialized," said Hidayat.

The takeover of the smelter is expected to smooth the government effort to add value of mineral ores before being shipped overseas, as the government aims to tap more revenue from the resource-rich country's mining sector.

Coordinating Minister for Economy Hatta Rajasa said after the signing that the smelter's assets price was set at 556.7 million U. S. dollars.

Indonesia and the Japanese side had cooperated in the Asahan projects in North Sumatra for 30 years.

Under the cooperation, the Indonesian government has 41.13 percent shares and the NAA 58.87 percent.

Massive investment will complete Kitimat smelter project

Journal of Commerce - December 9th, 2013,

Rio Tinto is planning to invest US$2.7 billion to complete the modernization of its aluminium smelter in Kitimat, B.C., while the company is cutting back on capital spending at projects around the world.

“For nearly 60 years, the smelter has been a major impetus for the economic development of northwest British Columbia,” said Jean Simon, president, primary metal, Rio Tinto Alcan.

“We are very proud to announce this US$2.7 billion investment to complete the modernization project. This is one of the largest private investments in B.C.’s history and it will ensure the sustainability of the aluminium business in Kitimat for decades to come.”

Rio Tinto announced on Dec. 1 that the US$3.3 billion Kitimat modernization project will be completed in 2014.

The project involves the demolition of several buildings on the site of the existing smelter and clearing space for a new plant.

The project began in 2011 and will create 2,500 jobs during the peak period of the construction phase.

When completed, the production capacity of the new smelter will increase by more than 48 per cent to about 420,000 tonnes per year.

The first production of metal is expected to come on stream in the first half of 2014 and ramp up over a nine month period.

“This project draws on two of our greatest competitive advantages – clean, self-generated hydropower and leading-edge AP smelting technology,” said Jacynthe Côté, chief executive of Rio Tinto Alcan.

“Once completed, Kitimat will be one of the most efficient and lowest-cost smelters in the world and will better position us to serve the rapidly growing demand for aluminium in the Asia-Pacific market.”

The modernized smelter will be powered exclusively by wholly-owned hydropower and use Rio Tinto Alcan’s proprietary AP40 smelting technology to reduce the smelter’s carbon dioxide emissions by about 50 per cent.

The completion of the modernization project is taking place at a time when the company is cutting back on capital spending around the world.

During an investor seminar in Sydney Australia on Dec. 3, Rio Tinto CEO Sam Walsh said total capital expenditure is forecast to be reduced to US$11 billion in 2014 and to around US$8 billion in 2015.

This is a 20 per cent reduction year-on-year.

“We have cut costs and are set to exceed our commitments made in February,” said Walsh.

“Operating costs are down $1.8 billion year to date compared to the same period last year and exploration and evaluation costs are more than $800 million lower.”

Total capital expenditure in 2013 is forecast to be less than $14 billion, which is a reduction of more than 20 per cent compared to 2012.

Rio Tinto has divested about US$3.3 billion worth of non-core assets in 2013, which has reduced employment by about 3,000 people.

In November, Rio Tinto suspended alumina production at Gove, Australia after determining the refinery is no longer a viable business in the current market environment.

Key factors influencing the decision were continuing low alumina prices, a high exchange rate and substantial after-tax losses for the refinery.

Rio Tinto Alcan’s aluminum smelter in Shawinigan, Que. also shut down production in November.

“From where I stand, we continue to see market fragility and volatility,” said Walsh.

“The impacts of decisions like quantitative easing and austerity programmes are still washing through markets around the world. But, it is a mixed story because despite this uncertainty, we are also seeing modest economic recovery.”

During the recent global financial crisis, Rio Tinto Alcan reviewed its capital expenditures and decided to move forward with the project, but investment was slowed down.

The challenging economic times provided Rio Tinto Alcan with an opportunity to reduce capital costs.

“Over the longer term, I remain optimistic about demand for our products,” Walsh said. “China’s urbanization will continue and the development of other economies as they continue to grow at pace, such as India, Vietnam, Indonesia, the Philippines, the Middle East, the former Soviet Union, South America and Africa, will also contribute to ongoing demand for our products.”

Cape Alumina shifts focus to Bauxite Hills

Journal of Commerce - December 6th, 2013,

Bauxite developer Cape Alumina told shareholders on Friday that its entire focus would now shift to the development of the Bauxite Hills mine and port project, in Queensland, after the state government effectively canned the company’s Pisolite Hills project.

In November, the state government announced plans to declare the Steve Irwin Wildlife Reserve and the Wenlock river on Cape York peninsula the region’s first-ever strategic environmental area, effectively killing the Pisolite Hills project.

The state’s decision also caused Cape Alumina to abandon a proposed merger with fellow-listed MetroCoal, which had been looking at developing Pisolite Hills.

Following a meeting with the state government this week, the Cape Alumina board has decided to shift its focus to the Bauxite Hills mine.

“The Queensland government committed to work with Cape Alumina during the finalisation of the Cape York regional plan to ensure that the true economic and environmental values associated with Cape Alumina’s Cape York bauxite tenements are fully understood,” said Cape Alumina MD Graeme Sherlock.

He noted, however, that while the overall meeting had been positive, the government and the company had “agreed to disagree” on several matters.

“If the government is serious about creating environmentally sustainable economic development on Cape York, then it will work cooperatively with us to advance the development of Bauxite Hills,” Sherlock said.

He again expressed his disappointment in the lack of fair warning given around the declaration of special status to the Steve Irwin Wildlife Reserve, saying that the company had not been warned in advance.

“All we have ever expected is a fair go, for due process to be allowed and, more importantly, for decisions to be based upon scientific rigour, not politics.

“We reserve the right to challenge the Queensland government’s decision, which will not be enacted until legislation is passed next year.”

Sherlock said that, in the meantime, the company would focus on Bauxite Hills.

“The company is confident that, with its remaining bauxite tenements, excluding the resources within the Steve Irwin Wildlife Reserve, it will be able to develop successful bauxite mines on Cape York in a sustainable and environmentally responsible manner, which will benefit its shareholders, the local communities and all of Queensland.”

A prefeasibility study has previously found that the Bauxite Hills mine could deliver five-million tonnes a year, over a life-of-mine of ten years. The study proposed that the Bauxite Hills mine would start production at 2.5-million tonnes a year of dry beneficiated bauxite, building to an output of five-million tonnes a year over a two-year period.

Capital costs for the project have been estimated at between A$234-million and A$250-million, depending on the time and development option chosen for the Bauxite Hills project, with operating costs estimated at between A$24/t and A$27/t.

Rio confirms suspension of Gove production

Gas Today - December 5th, 2013,

Rio Tinto will move to suspend production at the Gove alumina refinery, Northern Territory, and focus on its bauxite operations after determining it is no longer a viable business in the current market environment.

The company has said it will now work on the scope and phased timing of suspension and prepare for all potential outcomes over coming months.

Rio Tinto Chief Executive Sam Walsh said “It has been an extremely difficult decision and we recognise it will have a significant impact on our employees, the local community and the Northern Territory.

“We are working in partnership with the Northern Territory and Australian Governments, the broader community and Traditional Owners to identify initiatives to create new opportunities for the people of Nhulunbuy.”

Challenging market conditions from continuing low alumina prices, a high exchange rate and substantial after-tax losses for the company were cited as key factors in the decision.

There will be no immediate change to refinery operations, with suspension of production expected to start in the first quarter of 2014 and be phased during the year.

Mr Walsh told Rio Tinto’s investor seminar in Sydney on Tuesday that the company is committed to deliver shareholder value.

“I have set a clear direction for the business to reignite our passion for delivering greater value for shareholders,” Mr Walsh said.

“Our results so far show we are taking decisive action, making tough decisions and advancing at pace.”

Federal Minister for Industry Ian Macfarlane has said that the government is disappointed with Rio Tinto’s decision to suspend alumina production at the Gove refinery.

“I made the issue of sourcing a long-term gas supply for the Gove refinery a priority from my very first week as Minister, working with Northern Territory Chief Minister Adam Giles and visiting Nhulunbuy to speak with the local community,” Mr Macfarlane said.

“The Australian and Northern Territory governments have worked hard to find gas for Rio Tinto’s Gove refinery, and to undertake the due diligence required to guarantee the Katherine to Gove pipeline.

At a community meeting in Nhulunbuy in September I said I had been advised that the 300 PJ of gas Rio Tinto indicated was required over a ten year period could be sourced, and the Department of Industry was confident of securing another 100 PJ of gas.”

Image caption: The Gove alumina refinery, east of Darwin, Northern Territory.

BJP flays Vedanta, L&T bauxite deal

The Times of India - December 5th, 2013,

KORAPUT: The BJP has opposed the state government's attempt to consider bauxite supply from two mines in Rayagada's Kashipur block to refinery of Vedanta Aluminium Limited (VAL) at Kalahandi's Lanjigarh. The two mines have been allotted to Larsen and Toubro (L&T). In a memorandum, submitted to the district administration, the saffron party has urged the state government not to recommend the Centre to give mining lease (ML) to L&T. The party claimed that the company has failed to establish its end-use plant in Rayagada district. The party alleged that in 1991, L&T had obtained prospecting licence for Sijimali and Kutrumali mines to establish its refinery and smelter plant in the district. But after keeping the two mines for over two decades, the company is now trying to export minerals to VAL's facilities outside the district, the party added. "Locals had hoped that establishment of a refinery and a smelter plant in the region will strengthen their economic condition and develop the area. But, now as L&T has failed to establish its units, we demand before the state government not to recommend ML for the company," said BJP's state executive committee member Kaliram Majhi. Last week, Vedanta group chairman Anil Agrawal and L&T's executive chairman A M Naik had met chief minister Naveen Patnaik. The state government had assured bauxite for the VAL's refinery at Lanjigarh from the L&T's reserves at Sijimali and Kutrumali mines which have a combined deposit of 300 million tonne. Earlier, all the 12 gram sabhas held in July and August had rejected to Vedanta's plan to mine Niyamgiri for bauxite reserves. Mining officer (Koraput) Sailaja Prasad Nanda said the VAL had also applied for a bauxite mine spread over 313 hectare across Sarambai, Malipadar, Kutamal, Rogepadar and Kolonga villages in Kasipur block in 2010.

Rio struggling to negotiate gas deal

The Australian - December 3nd, 2013,

MINING giant Rio Tinto has admitted it is struggling to get Queensland gas sellers to the bargaining table in further evidence of a looming east coast gas shortage as $70 billion of LNG plants crank up at Gladstone from next year.

Rio's head of bauxite and alumina, Pat Fiore, said the company was not so much worried about prices that are predicted to double or triple as whether there will be any available gas when contracts roll off at its recently expanded gas-fired Yarwun alumina plant at Gladstone.

UAE firms, Guinea sign $5 billion bauxite deal

Business Recorder - December 2nd, 2013,

Abu Dhabi investment fund Mubadala and Dubai Aluminium (DUBAL) have signed a five-billion-dollar deal with Guinea that should secure resources for UAE aluminium makers, a statement said. The accord will see Guinea Alumina Corp, a joint venture owned by Mubadala and DUBAL, investing in the construction of a bauxite export mine in Sangaredi, in western Guinea, the government of Guinea said in a statement on November 25.

Guinea sits on almost half of the world's bauxite reserves and the Sangaredi mine is due to be operational by 2017.

A multi-user port in the West African nation will also be developed in Kamsar by 2017, while an alumina refinery with an initial capacity of 2 million tonnes per annum would be constructed and ready to operate in 2018.

"This agreement will deliver an estimated $5 billion of foreign investment into Guinea over the next eight years," said Guinea's Minister of Mines and Geology Mohamed Lamine Fofana.

"The development plan will create at peak 14,000 direct and indirect jobs and contribute substantially to Guinea's GDP," gross domestic product, he said.

The agreement was signed during the Guinean Partners and Investors Conference in Abu Dhabi.

DUBAL's chief executive officer Abdulla Kalban, who is also the chairman of GAC, said the agreement delivers on the "strategy to secure upstream resources within the aluminium value chain."

Mubadala and DUBAL took full control of Guinea's GAC in May after they jointly acquired 66.6 percent stake owned by BHP Billiton and Global Alumina. Previously, Mubadala and DUBAL held 8 percent and 25 percent of GAC's shares respectively.

Rio Tinto to suspend Gove production

Sky News - November 29th, 2013,

Mining giant Rio Tinto will suspend alumina production at its Gove refinery in the Northern Territory.

Fifteen hundred people are employed at the plant.

Rio Tinto says it will focus on its bauxite operations after determining the refinery is no longer a viable business in the current market environment.

Rio Tinto will now work on the scope and phased timing of the suspension, it said in a statement.

Rio chief executive Sam Walsh said it was a sad day for everyone associated with Gove and an extremely difficult decision that would have a significant impact on workers and the Northern Territory generally.

The refinery has been losing money for years due to long-depressed global aluminium prices and over-supply.

Both the federal and territory governments have offered subsidised gas to Rio and to take on the financial risk of a gas pipeline to prevent Friday's decision.

However Territory chief minister Adam Giles decided earlier this year to cut the amount of gas he was willing to subsidise for the refinery, prompting Rio to again review operations.

Mr Walsh said while all practical scenarios were considered it had not been possible to find a sustainable solution.

'There is nothing more the Northern Territory government could have done to help secure a long-term future for the refinery,' he said.

Key factors influencing the decision were continuing low alumina prices, a high exchange rate and substantial after-tax losses for the refinery despite considerable efforts to improve refinery performance during that time, he said. Rio said it was working to identify initiatives to create new opportunities for the people of Nhulunbuy, where a high number of indigenous people were employed.

He said he was committed to establishing a long-term plan for the remaining operations at Gove, the mine which had provided bauxite to then be refined into alumina.

The bauxite operations employs 350 people.