AluNews - October 2013

WIKA Consortium Build Alumina Plant

4-Traders - October 31st, 2013,

Recently, WIKA Consortium with Minister of Energy and Mineral Resources Jero Wacik and Minister of State Owned Enterprises Dahlan Iskan had inaugurated the largest Alumina Processing Plant in South East Asia located in Tayan Sub-district, Sanggau District, Monday (28/10). Capacity Production of plant is 300,000 MTY and equipped with a power plant 2 x 12 MW and a boiler whose capacity 2 x 75 MW.

The ICA- Chemical Grade Alumina project has a total contract of USD 328.9 million with a portion of WIKA is USD 174.9 million (include BTG / Energy Site). In this project WIKA build Water Site, Jetty Site, Administration Building Site, and partly Alumina Site.

Alumina refinery by AWAC & Ma’aden to start production in Q1 2014

Metal Bulletin Ltd. - October 31st, 2013,

Australia’s Alumina Ltd expects Saudi Arabia’s 1.8 million alumina refinery to start production in the fourth quarter of 2014, manager corporate strategy and development Andrew Wood told delegates at Metal Bulletin’s 3rd Asian bauxite and alumina conference.

"Our joint venture with Ma’aden – 4 million bauxite mine and 1.8-million tonnes alumina refinery is progressing well and is going to deliver first alumina in the fourth quarter of 2014,” he said.

Alumina’s strategy is to invest worldwide in bauxite mining, alumina refining and selected aluminium-smelting operations through its 40% ownership of Alcoa World Alumina & Chemicals (AWAC), the world’s largest alumina business. Alcoa owns the remaining 60% stake in Awac.

AWAC has a 25.1% stake in the mine and refinery jv project in Saudi Arabia with Ma’aden.

"We are watching the Indonesia situation carefully,” Wood told Metal Bulletin on the sidelines of the conference, adding that the company was interested in investing in Indonesia but was looking for more clarity as to how the Indonesian ban on export of minerals from 2014 plays out.

The West Kalimantan region of Indonesia will need infrastructure including, road, ports, energy plants to be able to attract more investment from the downstream industry, he added.

Aluminum giant Alcoa struggles with power for its three smelters in Canada - October 30th, 2013,

U.S. Aluminum giant Alcoa (NYSE:AA) may need to close all three of its smelters in the province of Quebec, Canada, as electricity supply cost for the plants is expected to jump 60%, TVA network reported late Tuesday (in French).

According the news outlet, Alcoa issued a 12-month notice to Hydro-Québec, which puts and end to its electricity contract for Bécancour, Baie-Comeau and Déschambault.

The miner, which swung to a third-quarter profit earlier this month, has been receiving power there at a discount price. But as of Jan. 1, 2015, the annual electricity bill will go up from 350 million to $570 million.

Together the plants employ a total of 3,300 people.

The news comes on the heels of a report that says this year, for the first time in a decade, mining investment in Quebec is expected to decline.

Republican Gov. John Kasich criticized over layoffs at Ohio aluminum plant

WCPO Cincinnati - October 29th, 2013,

What was once the largest private employer in its region is now Ohio's largest industrial layoff of the year.

Republican Gov. John Kasich is facing criticism over the indefinite shuttering of Ormet Corp., an aluminum smelting giant along the Ohio River and the onetime largest customer of American Electric Power. About 1,000 workers -- mostly unionized steelworkers -- are out of work.

State utility regulators recently rejected key portions of Ormet's proposal for dealing with hefty electric costs as it struggles against bankruptcy.

The company and its union fault Kasich for not intervening passionately enough in Ormet's case before the Public Utilities Commission. Governors appoint the board, but it acts independently.

Other observers say Ormet was doomed by the economic realities of huge power requirements and historically low metal prices.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Nanshan Aluminum Confirms Intention of Building Plant in Indonesia

CHINA SECURITIES JOURNAL - October 28th, 2013,

Under the impact of rising virgin aluminum prices, Nanshan Aluminum announced on October 22 that considering the bauxite export restriction of Indonesia to China, the company intends to build factories in Indonesia to insure supply and is conducting preliminary research. But the feasibility of the project and the content of construction work are yet confirmed. Some foreign media reported that Nanshan Aluminum plans is looking to building a comprehensive aluminum plant with $ 5 billion in Bintan, Indonesia. The plant, to be completed in three years, will produce alumina ingots with local bauxite. The annual production capacity of aluminium oxide will be 2.1 million tons and that of alumina ingots will be 530,000 tons.

The first half of 2013 has witnessed expanding difference between Shanghai aluminum futures and LME Aluminum, which amounted to 310 USD after tax in June, posing great pressure on the profitability of Nanshan's aluminum export. According to the company's interim report, its operating income and net profit in the first half were 7.242 billion yuan and 313 million yuan, down 2.15% and 19.44% respectively. Therefore, the successful implementation of the project, as is believed, will ease the supply problem faced by Nanshan and gradually improve the profitability of its export products. As the company pushes forward its fund-raising project, a 220,000-ton rail transport project, and releases its new productivity, cold rolling and aluminum material will feature the company's future growth.

Rare Earth Elements Plant to be Operational by Next Week

The Jakarta Post - October 25th, 2013,

Aluminum producer PT Indonesian Asahan Aluminum (Inalum), which the government plans to take over from its Japanese shareholders, is expected to be the main buyer of alumina to be produced by local smelters, an official says.

The director for minerals at the Directorate General for Minerals and Coal at the Energy and Mineral Resources Ministry, Dede Ida Suhendra, said smelters to be built by state-owned Jakarta listed PT Aneka Tambang (Antam) and privately listed firm PT Cita Mineral Investindo, would supply material to Inalum. “Until the smelters are finished, Inalum will be allowed to import the material needed,” Dede said on Thursday.

At present, Inalum imports all the raw material it needs for the production of aluminum ingots.

Antam and Cita are building smelters to process bauxite into alumina — the material used to produce aluminum.

Cita held the groundbreaking ceremony for its US$1 billion smelter in Ketapang, West Kalimantan, in July. The company and the China Hongqiao Group Ltd. have established a joint venture called PT Well Harvest Winning to operate the smelter. The construction of the smelter, which will have a production capacity of 1 million tons a year, is expected to be completed by 2016.

Cita earlier announced that it would sell its aluminum to Inalum and export the excess.

Meanwhile, Antam may need longer to build its smelter. The company is still working to find a partner to work on its 1.2 million-ton smelter grade alumina (SGA) plant, which will be located in Mempawah, West Kalimantan. The construction of the plant, which is expected to cost $1.4 billion to $1.5 billion, is expected to begin the end of next year or early 2015 at the latest.

Antam president director Tato Miraza said that partners in the smelting project would be allowed to hold a 30 to 35 percent stake in the plant.

Tato said on Thursday that Inalum would be the potential buyer of the alumina which would be produced by the company’s alumina plant in West Kalimantan, which would have production capacity of about 1.2 million tons a year.

Inalum needs between 500,000 and 600,000 tons of alumina a year

Inalum, which was established in 1976, is 41.12 percent owned by the Indonesian government and 58.88 percent by NAA, a consortium of 12 Japanese companies, including Sumitomo Chemical Co. Ltd., Sumitomo Shoji Kaisha Ltd., Mitsui Aluminium Co. Ltd. and Mitsubishi Corporation. The contract to manage and operate the company expires on Oct. 31.The government has rejected the Japanese shareholder’s request to extend its contract to retain ownership in Inalum. Despite the Japanese firm’s threat to take the case to international arbitrage, the government is standing firm in its intention to take over Inalum and make it a state-owned enterprise.

Ormet in 'advanced discussions' to sell alumina refinery

Platts - October 24th, 2013,

Bankrupt US aluminum producer Ormet is in "advanced discussions" about selling its 540,000 mt/year alumina refinery in Burnside, Louisiana, which is currently idled, and a deal is expected soon, CEO Michael Tanchuk told Platts Thursday.

Citing a confidentiality agreement, Tanchuk said in an interview he could not identify the refinery's prospective purchaser yet. Asked to comment on talk the would-be buyer is a chemical company, he said: "It's a possibility."

A final sale decision should come "fairly soon," he said, probably in a matter of days or a week or two.

Tanchuk confirmed the refinery is expected to resume producing alumina once the sale closes. "If we can complete the sale, it's a good step for the community, the plant and the people" in the Burnside area, he said.

Ormet no longer needs the refinery after shutting the final two potlines at its 260,000 mt/year smelter in Hannibal, Ohio, earlier in October.

The closure of the smelter followed the Ohio Public Utilities Commission's October 2 approval of only a portion of the electricity rate relief Ormet said was necessary to keep Hannibal open.

Tanchuk said, however, a sale of the refinery does not mean the smelter will never reopen.

"Believe me, look at the history of smelters," he said. "There have been smelters closed around the country" that reopened with a new source of alumina. "No doors have been closed. This is simply a transaction related to Burnside."

The refinery, which earlier this year had been operating at about one-third capacity, has totally ceased alumina production, he said, adding, "the plant is in idle mode at this time."

But the company interested in buying the refinery has "a good business plan" and could easily and quickly resume operations, he said.

The refinery has about 250 employees.

Rare Earth Elements Plant to be Operational by Next Week

Jamaica Information Service - October 24th, 2013,

The multi-million dollar Rare Earth Elements Pilot Plant located on the grounds of the Jamaica Bauxite Institute (JBI) in Hope Gardens, St. Andrew, has been completed and is slated to be fully operational by the end of next week.

This was disclosed by Minister of Science, Technology, Energy and Mining (STEM), Hon. Phillip Paulwell, following the official opening and a tour of the $500 million facility on October 23.

The state-of-the-art pilot plant was established through a partnership between the JBI and Japan-based Nippon Light Metal (NLM), for the extraction of rare earth elements from bauxite residueand to determine the scope of a commercial rare earth elements extraction venture in Jamaica.

Ground was broken for the facility in early February this year, while construction was completed in September. Commissioning of the pilot plant is now underway and should be completed by the end of this month, when the full scale pilot will commence.

Mr. Paulwell noted that despite a number of setbacks, he is pleased to see that the plant has been completed “in very good time”.

He said he was “extremely impressed” with the scope of work that has been done at the facility, noting that it represents a substantial investment in Jamaica and in the overall project.

“We have tremendous hopes for the realisation of a fully commercialised project and we believe that this pilot plant will prove it,” he stated.

Executive Director, JBI, Parris A. Lyew-Ayee, informed that the commercial stage of the project is scheduled to commence by February of next year.

“We are in the commissioning process and we hope by the end of next week the commissioning will be successfully completed. Then we go into the actual pilot stage, which will go through to February or early March next year,” he stated.

He said the pilot phase will determine the feasibility of the project and the scope of the commercialization prospects.

“We have always identified the rare earth in our bauxite; the trick was always ‘how do you make money from it? How do you extract it?’ This is what this project is about and this is why we have to keep it very, very close to our chest, because we want to get the maximum out of this,” he said.

Mr. Lyew-Ayee informed that very strict security measures have been put in place at the facility to ensure the integrity of the project, particularly as it regards guarding intellectual property rights.

“Rare earth is a very valuable product and there are other processes of extracting the elements from different types of rocks and sources. However, the extraction of rare earth from red mud has never been done on any commercial basis. What we are doing here is a first and everything must be prototyped,” he explained.

“As such, the sensitivity of the project is very important for us, because there is competition out there which would like to get in on the action and we have to protect our partners and ourselves,” he stated further.

In the meantime, Mr. Lyew-Ayee reiterated that all operations at the plant will be carried out with the greatest care to ensure that the natural environment is not affected.

“For this project, we have gone through to ensure that we have met all the regulations and have obtained all the permits from the National Environment and Planning Agency (NEPA), the Kingston and St. Andrew Corporation (KSAC) and the fire department,” he assured.

He noted that all the necessary permits are in order and the site has undergone regular “surprise checks” from the NEPA, “which we have passed with flying colours each time”.

Operations Manager, NLM, Tsuyoshi Kawarasaki, said his team is pleased to be working with Jamaica on this project.

He informed that one of the main reasons the company chose Jamaican bauxite is due to the fact that Jamaican red mud is of excellent quality when compared to other such elements across the globe.

He further noted that Nippon has confirmed high concentrations of rare earth elements in Jamaica’s red mud deposits, and that those elements can be extracted efficiently.

NLM is a publicly traded aluminium supplier headquartered in Tokyo with annual revenues of over US$7 billion and more than 10,000 employees.

SOE ministry to take over Inalum from Japan

ANTARA News - October 23th, 2013,

The House of Representatives agreed on Tuesday to hand over PT Inalum`s management to the State-Owned Enterprises (SOE) Ministry following the government`s decision to acquire it after three years of negotiations with the Japanese government.

The House made the decision in its joint meeting with all parties, as the government decided not to extend the expired contract of PT Inalum, an aluminum joint venture between Indonesia and Japan in which Indonesia held 41.13 percent of the company`s shares and Japan owned 58.87 percent.

"House Commission VI and the government agree to hand over the management of Inalum to the State-Owned Enterprises Ministry based on the law," Commission VI Chairman Airlangga Hartarto said when reading a statement at the conclusion of the joint meeting with Industry Minister MS Hidayat and SOE Minister Dahlan Iskan, at the Parliament building here on Tuesday night.

The meeting was also attended by Head of the Government Development and Finance Comptroller (BPKP) Mardiasmo and North Sumatra Governor Gatot Pujo Nogroho.

The House agreed to the results of negotiations carried out by The Asahan Project Negotiation Team, formed by the President in 2010.

"We hope the takeover process will be smooth so that the government will own 100 percent of PT Inalum`s stake beginning November 1, 2013," Hartarto said, referring to the contract of the joint venture firm, which will expire on October 31, 2013.

PT Indonesia Asahan Aluminium (Inalum) manufactures aluminum in Asahan, North Sumatra, with an annual production capacity of 230,000 - 240,000 tons.

The project began operating on January 6, 1976 based upon an agreement signed on July 7, 1975 and set to expire on October 31, 2013.

Japan, with 12 private Japanese firms in the joint venture, is the majority shareholder through Nippon Asahan Aluminium (NAA).

Fifty percent of NAA shares are controlled by the Japan Bank for International Cooperation (JBIC), which represents the Japanese government, while the remaining 50 percent are owned by private Japanese firms such as Sumitomo Chemical Company Ltd, Sumitomo Shoi Kaisha Ltd, and Nippon Light Metal Co Ltd.

The House also agreed to transfer shares to Japan on behalf of the Indonesian government, based upon the results of the Indonesian negotiating team as contained in the Master Agreement with Japanese NAA.

Industry Minister MS Hidayat said he appreciated the House Commission VI`s endorsement of the agreement reached by the negotiating team with the Japanese side.

"We hope all processes that have to be passed in the takeover of Inalum would proceed smoothly, based on plans, so that Inalum would be managed well," noted Hidayat.

Last year, then-Finance Minister Agus Martowardojo, who is now governor of the central bank, Bank Indonesia (BI), said that Japan`s Nippon Asahan Aluminium should no longer extend its cooperation contract. Moreover, Indonesia suffered losses during the 22 year cooperation.

PT Inalum reported a profit of US$12 million in 2010, while its debt burden reached US$70 million, according to Hj Meilizar Latif, a member of North Sumatra`s Legislative Assembly (DPRD), last year.

The Indonesian government has chosen not to extend the contract and is prepared to pay some US$424 million to Japan to control all Inalum shares. However, both sides still have different estimates of the value of Inalum assets.

Differences occur because NAA Japan, shareholder of PT Inalum, calculated the revaluation of assets, while the government, through the Finance and Development Comptroller, or BPKP, does not recognize revaluation.

Now the government has proposed a new book value calculation of US$558 million for acquiring the 58.87 percent stake that has to be paid to Nippon Asahan Aluminium Ltd.

The US$558 million value was based upon the audit of the BPKP, worth US$424 million plus an asset revaluation assessment worth US$134 million, according to Chief Economic Minister Hatta Rajasa.

Based on this agreement, the Inalum takeover process must be finished on October 31, 2013, at the latest.

Rajasa said that the new value being proposed by Indonesia was lower than NAA`s book value of US$626 million, but much higher than that of the BPKP, which totaled US$424 million.

"The revaluation has been going on, so that the value increases to US$558 million. Both sides will discuss this in the next two days," the coordinating minister for economic affairs added.

Rajasa said that there were still five work days to finish the deal, including the fund transfer based upon agreements reached with the NAA side. Thus, the takeover process is expected to be finished through consensus without the need to go to the arbitration court.

In the meantime, Industry Minister MS Hidayat said that the US$558 million value was the final bid for Indonesia to offer in the next one to two days.

"The Indonesian government is inclined to settle the problem without going through the arbitration process. Although we have not reached a final deal, we still do not want to settle it on the arbitration table," he said.

After that, Hidayat said, both sides are expected to sign a document on the termination of the work contract between Indonesia and Japan at the Inalum office.

"We hope the signing of the termination of the contract would be attended by representatives of the 12 stakeholder companies," the minister stated.

Meanwhile, before the House decided to hand over the management of Inalum to the ministry of state-enterprises, SOE Minister Dahlan Iskan said last week that he would not speculate on the make-up of the future management of PT Inalum, after it is taken over by Indonesia on November 1, 2013.

"I will follow (whatever decision it will be made). It is up to the government whether it will be made into a state-owned company or put under the ministry of finance," he said, after attending a coordination meeting on food resilience at the office of the coordinating minister of economic affairs last Wednesday.

Dahlan also declined to elaborate, when asked whether the government might later choose to turn Inalum into a state-owned company under his management.

He expressed confidence that by November 1, 2013 PT Inalum would return to Indonesia. Inalum is the only aluminum plant in Southeast Asia that has complete smelting facilities.

Vedanta Aluminium aims to triple capacity

Reuters - October 21th, 2013,

(Reuters) - Vedanta Aluminium will triple its capacity by 2015 to 2.3 million tonnes to cater for an expected surge in demand in India, its managing director said, even though its inability to source enough alumina at home has forced it to import the raw material.

The company, a unit of London-listed Vedanta Resources Plc (VED.L), has been importing more than 1 million tonnes of alumina per year because plans to mine bauxite to feed its alumina refinery are on hold while the authorities look at opposition from people in the eastern state of Odisha.

Vedanta Aluminium's need for alumina, produced by refining bauxite, would nearly triple to 4.5 million tonnes in three years as it adds smelting capacity, Managing Director Sushil Kumar Roongta told Reuters.

"We'll have to continue importing alumina till my refinery starts operating at full capacity," said Roongta, referring to the 1-million-tonne-a-year alumina refinery that has been shut several times due to unavailability of bauxite.

"Vedanta's overall alumina demand is growing and is going to grow," he said in an interview in his Delhi office.

The company is also seeking to buy alumina from state-owned National Aluminium Co Ltd (Nalco) (NALU.NS), India's largest alumina exporter, which ships out nearly the same amount as Vedanta Aluminium imports.

Nalco has so far refused to sell alumina at home, saying it was against company policy. Indeed, it was looking to raise alumina exports by 40 percent to 1.4 million tonnes this fiscal year, its production chief said in August.

Vedanta Aluminium officials say Nalco could effectively earn $40-$50 more per tonne of alumina by supplying to Vedanta instead of exporting, mainly on account of lower charges for logistics and port handling.

Nalco sold 30,000 tonnes of alumina at about $335 per tonne on a free-on-board basis to a Dubai-based buyer in June. The company awarded a tender to the Iran Aluminium Co in August to sell 30,000 tonnes of alumina, sources have said.

"While the country experiences an alumina deficit, the Middle Eastern smelters are benefiting from (Nalco's exports)," Barclays analysts wrote in a recent note.

"Nalco as an independent company should be free to decide its marketing strategy, but it adds another item to the list of contradictions of the Indian metals and mining universe," the analysts wrote.

Despite raw material shortages, Vedanta Aluminium is keen to add capacity based on expected aluminium demand in India.

The country's aluminium consumption is likely to rise to 5 million tonnes per year by 2015 from 1.6 million tonnes now, according to the mines ministry. India's per capita consumption of aluminium is 1.2 kg against the world average of 7-8 kg.

"Our expansion is not contingent upon what Nalco does," Roongta said.

Chinese Firm Puts Up $5b For Bintan Bauxite Smelter

The Jakarta Globe - October 18th, 2013,

China’s Shandong Nanshan Aluminum had allocated at least $5 billion to build a facility to process bauxite in Bintan, Riau Islands, Industry Minister M.S. Hidayat has announced.

“They already started the project with a purchase of 1,000 hectares of land,” the minister said after a meeting with the company’s president on Wednesday. “They will also build a port there,” he added.

Shandong Nanshan Aluminum president Song Jianbo said construction began earlier this month and would be completed within three years. The Chinese company is partnering with local firm Mitra Karsa Utama on the project, he added.

“The local partner controls 5 percent of the project,” Song said, adding that the investment would be spread over five years.

The smelter will be able to produce 2.1 million metric tons of alumina and 570,000 metric tons of ingots.

Much of this output will be for export, but Song declined to elaborate on how much would be allocated for domestic consumption. “We have to assess our needs first before we do that,” he said.

Indonesia supplied 80 percent of China’s bauxite imports in 2011.

Chinese companies are investing more in Indonesia after regulators passed rules that will bar the export of raw resources.

On Sept. 28, senior Energy and Mineral Resources Ministry official Thamrin Sihite said that the export restrictions, set to take effect in January, would be suspended for firms that committed to building a smelter.

Thamrin equivocated as to how regulators might try to secure financial backing for companies’ promises.

Indonesia currently has just one aluminum smelter. Indonesia Asahan Aluminium’s (Inalum) North Sumatra facility produces 250,000 metric tons of aluminum ingots annually, 60 percent of which is exported to Japan.

According to Thamrin, of the 125 plans for smelters announced by investors, 97 have made very limited progress. Total investment for these smelters should amount to $16.82 billion, Thamrin said.

China has been a prodigious producer of aluminum for the last five years, despite a global supply glut. Experts say China now has the world’s best aluminum production technology and highest-quality smelters. These energy-intensive facilities are overwhelmingly powered by coal in China. It is likely the Riau smelter will be similarly fueled, although this remains unclear.

Bosnia government mediates to help Aluminij avoid closure

Reuters - October 18th, 2013,

* Government asks utility to unfreeze Aluminij's accounts

* Final decision on debt settlement on Oct. 23-minister

Oct 18 (Reuters) - Bosnia's regional government said on Friday it had made proposals to help aluminium smelter Aluminij Mostar settle a debt to state-run power utility EPHZHB and stave off the company's closure.

Aluminij, a mainstay of Bosnia's economy, began to shut down its smelter on Tuesday after Mostar-based EPHZHB froze its bank accounts in a dispute over a 40 million Bosnian marka (20 million euro) debt owed for power deliveries.

Like other smelters, Aluminij Mostar has suffered from a 30 percent fall in the price of the metal in the last 2-1/2 years caused by oversupply as well as by high power prices.

The government of Bosnia's autonomous Muslim-Croat federation, where the smelter is located, said it had proposed to EPHZHB to unfreeze Aluminij's accounts and to enable it to continue production.

Federation Energy Minister Eldar Trhulj said the government and Aluminij had come up with two proposals for settling the debt and that EPHZHB had promised to choose one of them at an urgent session of its managing board.

"The final agreement on the issue should be reached by the Oct. 23 government session," Trhulj told state radio.

The smelter accounts for more than a quarter of Bosnia's national output and the government already saved it from collapse in June by taking a 44 percent stake and promising further subsidies.

Small shareholders also hold a 44 percent stake in the firm and the Croatian government the remaining 12 percent.

The company employs 900 people directly in the region of the southern town of Mostar and thousands more indirectly and it produces around 160,000 tonnes of aluminium a year.

The government of the Muslim-Croat Federation owns 98 percent of the utility EPHZHB.

Since the end of its war in the 1990s, Bosnia has been made up of two autonomous entities - the Muslim-Croat Federation and the Serb Republic - under a weak central government.

UC RUSAL Announces Interim Results Of Aluminium Output Reduction Programme

Packaging Europe News - October 18th, 2013,

As of 17th October, aluminium production has been mothballed at the Volgograd (VgAZ), Urals (UAZ), and Volkhov (VAZ) aluminium smelters, as well as at the first phase of Novokuznetsk (NkAZ) smelter and at ALSCON smelter in Nigeria. In addition, aluminium production has been mothballed at the Bogoslovsk (BAZ) smelter potrooms 2, 3, 4, 5 (potroom 1 was shut down in 2011) and at the Nadvoitsy (NAZ) smelter potrooms 1, 2 (potroom 3 was shut down in 2012).

Output decrease in 2013 at the above-mentioned facilities will amount to 247,009 tonnes, and will result in an output decrease of 516,062 tonnes in 2014.

Thanks to various measures taken by RUSAL, such as amperage reduction, production volume at the Sayanogorsk (SAZ), Irkutsk (IrkAZ), Novokuznetsk (second phase) and Khakass (KhaZ) aluminium smelters has decreased. Output reduction in 2013 at these smelters will amount to 77,724 tonnes with an expected effect of 131,442 tonnes in 2014.

As a result of the output reduction programme, RUSAL has already cut aluminium production by 324,733 tonnes, or 8% of 2012 production volume, with an effect of 647,504 tonnes, or 15% of 2012 production volume, in 2014. These measures have allowed the Company to realize savings of USD40 per tonne in cash cost of aluminium.

‘RUSAL continues to react to the current market conditions and may consider further actions to improve its cost position in the industry,’ commented Vladislav Soloviev, RUSAL’s First Deputy CEO.

Also, due to the prevailing market conditions, investors of the BEMO project have taken the decision to delay the start of the commissioning of the Boguchansky smelter until mid-2014.

New foam control technology for alumina processing

The Jakarta Post - October 18th, 2013,

The Indonesian government will go ahead with its plan to take over North Sumatra-based aluminum producer PT Indonesian Asahan Aluminium (Inalum), despite an arbitration threat from Japanese shareholders, Coordinating Minister for the Economy Hatta Rajasa said.

According to Hatta, the government had yet to decide whether it would allow local administrations to acquire a stake in Inalum, which would become a state-owned company after the contract allowing a Japanese consortium to manage and operate the company expired on Oct. 31.

“It has been decided that Inalum will officially become a state-owned company on Nov. 1,” Hatta said after a meeting at his office on Thursday.

The meeting, which focused on PT Inalum’s acquisition, was attended by the State-Owned Enterprises Minister Dahlan Iskan, the Finance Minister Chatib Basri and the Industry Minister MS Hidayat.

Hatta acknowledged that the takeover plan would occur, although the government had still not reached an agreement with Japanese consortium Nippon Asahan Aluminum (NAA) on the value of PT Inalum’s assets.

According to an audit by the state auditor Development and Finance Controller (BPKP), the value of Inalum’s total assets reached US$424 million. According to the Japanese consortium’s calculations, however, the company’s assets amounted to $626 million. Minister of Industry MS Hidayat said the government would insist on using BPKP’s calculation when it took over NAA’s shares in Inalum.

The Japanese consortium, which owns an almost 60 percent stake in Inalum, said earlier that it would go to an international arbiter if the Indonesian government refused to use its appraisal of the firm’s total assets.

Hidayat added that the government would also invite the North Sumatra administration to be involved in a future meeting with NAA because the company was located in the province.

But he said that the government had not decided whether the provincial administration would take a stake in the company.

Previously, local administrations from 10 regencies and cities located near PT Inalum’s industrial complex said they had reached an agreement to join forces to obtain a portion of Inalum’s shares after the central government had completed its takeover of the company.

Inalum, which was established in 1976, is 41.12 percent owned by the Indonesian government and 58.88 percent owned by NAA, a consortium of 12 Japanese companies, including Sumitomo Chemical Co. Ltd., Sumitomo Shoji Kaisha Ltd., Mitsui Aluminium Co. Ltd. and Mitsubishi Corporation. (tam)

Inalum will soon become state owned company

The AJM Online - October 17th, 2013,

Available for either hot-end or cold-end applications, and developed to prevent the formation and stabilisation of foam in the critical parts of the Bayer process circuit, the new antifoam technology complements the company’s proven trihydrate flocculant technology and is designed to avert the problem of foam before it occurs.

Extensive laboratory testing has indicated no detrimental side-effects on the Bayer process with the use of this compound, Nalco says.

“Evidence has shown that the application of antifoam assists trihydrate classification efficiency through reduced foam presence. Additionally, reduced foam on the surface of hydrate classification vessels means less fine hydrate lost to digestion.” Trials by the company have demonstrated that new antifoam disperses easily throughout the liquor and prevents any subsequent formation of foam.

“It is effective in reducing foaming across all areas of the process including precipitator trains, launders, hydrate classifiers, red mud washing circuits and residue disposal sites.”

Nalco says the new compound offers improved flow control, a reduction in unwanted solids carryover in classification, improved temperature control, and the prevention of unwanted precipitation of contaminants, particularly in drying foam.

“It is low odour, low irritant and, unlike many other products used as antifoams, is not classified as a Dangerous Good,” Nalco adds. “An improved viscosity makes it significantly easier to pump and provides for easy clean-up of any spills.”

Shandong allots $5b for smelter construction

The Jakarta Post - October 17th, 2013,

Shandong Nanshan Aluminium Co. Ltd., China’s second-largest aluminum product maker, will invest up to US$5 billion for the construction of mineral processing facilities this year in Indonesia, a key supplier of metal ore to China.

“We’re building a smelter on Bintan Island, Riau province, that will process bauxite into aluminum. Construction began in early October and we expect to finish by October 2016,” Shandong Nanshan Aluminium chairman Song Jianbo told reporters after a meeting with Industry Minister MS Hidayat on Wednesday.

The bauxite to supply the smelter would be collected from various mines in Riau, Jianbo said, adding that the smelter was expected to produce 2.1 million tons of alumina and 570,000 tons of ingots per year.

“We plan to export the alumina to various countries such as China, the US and Japan. The alumina will also be used in Indonesia,” he said.

Jianbo said, however, that he had not determined how much alumina would be exported and how much would be allocated for domestic use.

“We have to assess our needs first before we do that,” he said.

According to Jianbo, his company has partnered with PT Mitra Karsa Utama for the construction of the smelter. “Our local partner has a 5 percent share in this project,” he said.

Indonesia supplied 80 percent of China’s bauxite imports in 2011.

As of now, Indonesia only has one aluminum smelter operated by PT Indonesia Asahan Aluminum (Inalum) in North Sumatra, which annually produces 250,000 tons of aluminum ingots, 60 percent of which is exported to Japan.

The Energy and Mineral Resources Ministry’s director general for coal and minerals, Thamrin Sihite, was quoted by in late September as saying that 125 companies had expressed interest in building mineral smelters in 2014.

Right now, a number of mining experts are evaluating proposals that were submitted by the companies.

Meanwhile, construction of an aluminum smelter by PT Well Harvest Winning Alumina Refinery, a joint venture between PT Harita Group and China Hongqiao, started in July 2013 in Ketapang, West Kalimantan.

The alumina smelting grade produced by the smelter will be used to supply raw material needs for the Inalum smelter.

The demand for alumina smelting grade has reached about 500,000 tons a year. (ogi)

Alcoa suspends output from part of Saudi smelter

Mining Weekly - October 16th, 2013,

TORONTO ( – US-based aluminium producer had temporarily stopped output from one of the two aluminium potlines at the Ma’aden-Alcoa joint venture, which is in the start-up phase.

The company on Wednesday said the potline was stopped after a period of pot instability.

The joint venture (JV), which comprises Alcoa and Saudi Arabian Mining, was actively working to restore the potline at the $10.8-billion facility, and was expected to be back online between the first and second quarter of 2014.

Alcoa said its customers were not expected to be impacted as output from the second potline was being ramped up, and would now be accelerated.

There was no impact to any other part of the JV project, including the mine, refinery and rolling mill, which all remained on schedule.

Novelis completes South Korean expansion

Recycling International - October 16th, 2013,

South Korea: Major aluminium recycler Novelis has fulfilled a two-year, US$ 400 million mission in South Korea to increase its annual sheet production capacity in the region by more than 50% to 1 million tonnes.

Novelis opened a new aluminium recycling and casting centre at its Yeongju facility in October last year; this is the largest aluminium beverage can recycling hub in Asia and has the capacity to produce 265 000 tonnes of sheet ingot. The Yeongju centre is one of a series of recycling and casting expansion projects launched by Novelis over the past two years to increase its recycling and casting capacity to 2.1 million tonnes globally by 2015.

'Investing further in Korea has been a key element in the company’s global strategy,' says Novelis’ president and ceo Phil Martens. Asia is the largest and fastest-growing region in the world for aluminium, he stresses, and 'expansion allows us to maintain leadership in this dynamic region across key markets such as beverage cans, consumer electronics and automobiles'.

Novelis began the expansion of its rolling and recycling facilities in 2011 to meet the rising demand for flat-rolled aluminium in high value-added products in Asia. The demand for aluminium in the Asian automotive market is expected to exceed the 25% compound annual growth rate projected globally over the next five years, as more vehicle manufacturers move to build lighter, more fuel-efficient vehicles.

Chalco Guizhou Puts 500,000-tpy Maiba Bauxite Mine into Full Operation

Shanghai Metal Market - October 15th, 2013,

Aluminum Corporation of China Ltd (Chalco)’s Guizhou branch put its Maiba bauxite mine, which has a designed capacity of 500,000 tpy, into full operation this month.

Maiba mine’s operation can be seen as ``milestone’’ for Chalco Guizhou to move from open-pit mining to underground mining, the industry information provider reported over the weekend.

With a total investment of 430 million yuan ($70 million), Chalco Guizhou’s began construction of the Maiba bauxite mine in August 2007. It is expected to benefit China’s largest aluminium producer with a higher percentage of self-supplied ores and lower alumina production costs.

Rs 15,000 cr alumina project to come up near Mundra: Minister

The Economic Times - October 14th, 2013,

VADODARA: An alumina plant and aluminium smelter project worth Rs 15,000 crore would be set up near Mundra in Kutch district of Gujarat, Union Minister of State for Mines Dinsha Patel said today.

"The plant will come up near Mundra in Kutch district of Gujarat. It is a joint venture between National Aluminium Company Ltd (Nalco), a PSU with the Gujarat Mineral Development Corporation (GMDC)," Patel told PTI over phone.

"I had discussed this project with Gujarat chief minister Narendra Modi and he had instructed the GMDC to speed up the process," he said.

The minister expressed hope that this project would get its nod from the Gujarat cabinet soon and that the foundation stone of this project would be laid in a month.

According to him, Nalco would have 51 per cent equity, while the GMDC will hold the remaining.

"Earlier, the GMDC was willing to hold only 26 per cent equity in the project and wanted the Centre to make more investment," he noted.

Rs 6,000 crore are required for the initial investment into the project, which will be raised to about Rs 15,000 crore at a later stage, Patel said.

According to Patel, some other companies like Hindalco, JSW Aluminium and Adani group had also evinced interest in the project, though Nalco emerged as the sole qualified final bidder for the proposed plant.

The project is for one million tonne alumina and 0.5 million tonne aluminium smelter. GMDC will supply bauxite for the project from its group of mines in Kutch.

In 2005, the Gujarat government had signed an MoU with Ashapura Group to set up the plant and smelter unit in Kutch. However, the government did not extend the MoU, following which GMDC invited EOIs for the project in 2010.

Aluminium smelting is a process of extracting aluminium from alumina. While, alumina is extracted from the ore bauxite by means of a process at an alumina refinery.

GDA - Gesamtverband der Aluminiumindustrie e.V. : IKB: In 2013 Aluminium production worldwide rise to more than 46 million tonnes

4-Traders - October 14th, 2013,

In the production of primary aluminium IKB Deutsche Industriebank, Düsseldorf, Germany, expects global growth to more than 46 million tonnes for 2013. The IKB presents this assessment in its current report on price trends for commodities in October 2013.

According to the IKB, primary aluminium production until the end of August 2013 was strongly defined by expansion in China (+10 %), which compensated for declines in other regions. Warehouse stocks at the LME last amounted to almost 5.4 million tonnes, and those at the SHFE roughly 0.23 million tonnes. Investors had expanded their contracts by around 30% in expectation of price increases. However, warehouse stocks would limit the potential for price increases, according to the IKB.

Also according the IKB, world commodities experienced a slight increase over time (+0.3 %). Because of a slight upward revaluation of the euro there was sideways movement in the domestic currency. Especially in the first half of September, there was much concern in the markets about possible military intervention in Syria. However, over coming weeks the international commodity markets will be watching developments in the USA. If the budget freeze goes on, it could mean a dip in purchasing power and a drop in private consumption, which could especially affect crude oil sales. But since temporary insolvency also threatens the USA mid-October, if no lasting solution to the budget dispute is found, this could also put pressure on important industrial commodities, despite an improvement in the overall economic conditions, according to the IKB.

Alcoa slump makes grim news for Geelong

The Australian - October 10th, 2013,

ALCOA'S miserable earnings from its global fleet of aluminium smelters in the September quarter has raised fresh concerns over the future of the loss-making Point Henry smelter at Geelong and its 500 local jobs.

In an earnings call in the US on the third-quarter result, Alcoa chairman and chief executive Klaus Kleinfeld told analysts that despite already having idled 16 per cent of its high-cost global smelting capacity, Alcoa would continue to look at ways to reduce its exposure to higher-cost operations.

Point Henry is one of the oldest smelters in the Alcoa network and was saved from closure in June last year only when the federal and state governments handed over a combined $44 million of taxpayers' money.

The $44m injection came with a promise from Alcoa to keep the smelter going for two years. That commitment expires in June next year, with Industry Minister Ian Macfarlane telling The Australian two weeks ago that he expected "Alcoa will come and ask for money at some stage".

"We will have to consider it on its merit," he said.

The likely call on the minister comes as Mr Macfarlane works at saving Holden from closure, as well as keeping open Rio Tinto's Gove alumina refinery in the Northern Territory.

Analysts are expecting a renewed and sharper focus on the future of Alcoa's high-cost operations such as Point Henry following the start-up of the Ma'aden joint venture in Saudi Arabia. The 740,000-tonne-a-year smelter is almost four times the size of Point Henry and is expected to be the lowest-cost producer in the world.

Analysts say its start-up could trigger a new wave of "optimisation" of the Alcoa fleet of smelters.

The prolonged slump in aluminium prices has had a telling impact on industry profitability, or lack of it. Alcoa reported net income of $US120m ($127m) (excluding special items) for the third quarter, which was well ahead of expectations. But the primary metal business was again a laggard, contributing after-tax operating income of only $US8m.

There was some good news in that figure in that in the preceding June quarter the contribution from the primary metal business was a loss of $US32m. Alcoa said that reflected productivity gains and foreign exchange effects offsetting lower metal prices.

The Alcoa result does not provide a direct see-through for the likely profit results of the ASX-listed Alumina, Alcoa's 40 per cent partner in the global alumina business AWAC, which also owns the Point Henry smelter and 55 per cent of the bigger and more modern Portland smelter in western Victoria. Local analysts nevertheless have had a stab at what Alcoa's result, particularly what it says about AWAC, might mean for Alumina. Credit Suisse estimated that Alumina's share of the earnings was $US20m, down from $US26m in the June quarter.

More important from a cashflow stance is dividends paid by AWAC. Alumina said it had received a third fully franked dividend of $US25m last month, which was on top of a similar-sized payment received on July 1.

Total dividends from AWAC for 2013 stands at $US79m, placing the company in a comfortable position given debt now stands at only $US153m.

Alumina was not required to contribute any new capital to AWAC, or provide any further equity contributions to the bauxite-alumina component of the Ma'aden project in the third quarter.

Vedanta's Jharsuguda aluminium smelter lies idle even without protests

Business Standard Ltd - October 9th, 2013,

The woes of Vedanta, which has invested Rs 45,000 crore in the aluminium and power sectors in Odisha, is not limited to the denial of bauxite from the Niyamgiri hills for its Lanjigarh refinery alone.

While all the attention is focused on the agitations against bauxite mining at Niyamgiri, another high-value investment of the company, a 1.25-million-tonne aluminium smelter of Vedanta Aluminium (now Sesa Sterlite Ltd) at Jharsuguda, has suffered for the last two years thanks to the reluctance of the state government to grant it special economic zone (SEZ) benefits.

The work on this smelter, built as an SEZ unit at a cost of Rs 25,000 crore, was completed in 2011.

Sources said the combined loss to the company because of stunted operations of the Lanjigarh refinery due to lack of adequate bauxite and non-operation of the SEZ smelter unit at Jharsuguda stands at a whopping Rs 6,000 to Rs 7,000 crore in the last two years.

Govt's reluctance
The reason for not starting the operation of the smelter is the reluctance of the Odisha government to grant the deemed distribution licensee status to the company according to the provisions of the SEZ Act to enable it to draw and use power from its own power plant at concessional rates.

Without the deemed licensee status, the company would have to spend Rs 2.40 extra for each unit of power it consumes, which it fears, would render the project unviable.

"While the normal tariff for aluminium industries is Rs 4.60 a unit, the same comes down to Rs 2.20 a unit for a deemed distribution licensee," pointed out a senior official of the company.

Section 49 of the SEZ Act, 2005, stipulates that SEZs can act as deemed distribution licensee under the. Electricity Act, 2003. "But when we sought this status from the state government, we were denied the facility", he added.

Interestingly, the Odisha government had recommended the grant of SEZ tag to the unit in 2008, on the basis of which the Centre had accorded it sector-specific SEZ status in February 2009.

When contacted, a senior state official said, "As of now, the aluminium smelter is the only unit in the Vedanta's SEZ complex. So, the energy producer and the consumer being the same entity in this case, the deemed distribution facility cannot be extended to the company." This stand of the state government has also been upheld by the Odisha Electricity Regulatory Commission and the Appellate Tribunal for Electricity when the company approached these for a grievance redressal. The company now plans to move the Odisha High Court on the issue. The Jharsuguda facility, apart from the 1.25-million-tonne aluminium smelter with SEZ tag, houses a 0.5 million tonne aluminium smelter and 1,215 Mw captive power complex and a 2,400-Mw coal-fired power plant with Independent Power Producer (IPP) status.

Meanwhile, the company was mulling to convert its 2,400-Mw IPP into a captive power plant (CPP) of its SEZ smelter to get around the legal hurdle to operate the unit. But this plan has also been thwarted with the Odisha government recently deciding not to allow conversion of IPPs into CPPs.

Aluminum Producer Mulls $811 Million Refinery: Corporate India

Bloomberg - October 7th, 2013,

National Aluminium Co. (NACL), India’s biggest state-owned producer, may invest 50 billion rupees ($811 million) to boost its alumina refining capacity and revive earnings that are forecast to slide to a three-year low.

The company will enhance its annual ability to process alumina by 43 percent to 3.3 million tons over the next two years, and will export any surplus, Chairman Ansuman Das said in an interview. The planned expansion is the second in three years to benefit from higher margins offered by alumina, a white powder derived from the ore bauxite, as prices of the end product aluminum slump.

“We’ll take a decision to set up a new alumina line by December,” Das said. “Lower metal prices have made selling alumina more lucrative.”

Nalco, as National Aluminium is known, has shuttered a third of its 460,000 metric tons smelter because of a coal shortage and lower aluminum prices, causing earnings to decline in five of the last six years. Profit margin from alumina sales was 45 percent in the year ended March 31, while the lightweight metal used to make beverage cans and aircraft parts fetched no more than 6 percent.

The metal fell 7 percent on the London Metal Exchange since April 1, making large smelting capacities across the globe unprofitable.

Gujarat Venture

Nalco is also seeking to form a venture with Gujarat Mineral Development Corp. to set up another 1 million ton refinery in the western state, Das said. The company will hold a 51 percent stake, while Gujarat Mineral has evinced interest for 26 percent, he said.

Nalco’s profit is set to drop 8 percent in the year ending March 31, according to the median of 17 analyst estimates compiled by Bloomberg. Net income fell 30 percent to 5.9 billion rupees last fiscal year. Net income in the quarter ended June 30 declined 28 percent to 1.6 billion rupees.

Shares of the company based in Bhubaneswar in the eastern state of Odisha fell as much as 1.2 percent to 33.05 rupees and traded at 33.20 rupees as of 9:34 a.m. in Mumbai. The stock has slipped 32 percent this year compared with a 1.6 percent gain in the benchmark S&P BSE Sensex (SENSEX) index of Indian stocks.

Alumina production may rise 17 percent to more than 2.1 million tons this fiscal year, while metal output may slide as much as 24 percent from last year’s 403,384 tons, Das said.

Indonesia Curbs

Nalco will benefit should Indonesia, one of the world’s largest producers of bauxite that exported 66 percent of its output this year, curb overseas sales of the ore. The southeast Asian nation’s move to block outbound shipments of unprocessed ore in 2014 may raise prices of alumina and costs for global aluminum producers, Bloomberg Industries analysts Kenneth Hoffman and Andrew Cosgrove said in a report on Oct. 2.

Nalco decided to scrap plans for a $4 billion project to build a 500,000 ton aluminum smelter, power plant and coal mine in Indonesia, Das said, without giving details. The venture with the Indonesian government, which was announced in June 2008, got delayed after the company failed to secure a supply accord with MEC Coal Pte for the project in Kalimantan province.

The company expects aluminum premiums to fall starting next fiscal year if the London Metal Exchange’s proposed rule changes take effect starting April 1, increasing supplies in the spot market, Das said. Premiums are paid by the buyers on top of the exchange’s prices for immediate delivery.

Global Glut

About 66 percent of aluminum producers would be losing money because of declining premiums should the LME approve rules to cut waiting times at its warehouses, JPMorgan Chase & Co. said in a report e-mailed on Aug. 30. About 60 percent of the industry is losing money even with higher premiums, according to that report.

“While the outlook on prices is uncertain, I believe current levels are the bottom,” Das said. “There is a surplus in the global market, which is weighing on prices.”

Aluminum stockpiles total about 14 million tons, including 5.36 million tons in warehouses monitored by the LME, according to Edinburgh-based researcher Wood Mackenzie Ltd. As much as 80 percent of the inventory is tied up in financing transactions, and unavailable to consumers, Societe Generale SA estimates.

Global aluminum costs were inflated by $3 billion in the past year through “unfair” rules that allow Goldman Sachs Group Inc., JPMorgan and other warehouse owners to slow deliveries, Tim Weiner, a global risk manager at Chicago-based MillerCoors LLC.

The next phase: Kaiser’s Mead smelting plant undergoes demolition

The Spokesman-Review - October 6th, 2013,

Thousands of people drew paychecks from the sprawling Kaiser Aluminum smelter in north Spokane during its more than 50 years of operation.

The California company that bought the Mead site last year is about a third of the way through a project to put people to work on the property again, this time as a new business and industrial park.

Rather than renovating the several dozen dusty and dirt-caked buildings on the 170-acre property, owner New Mill Capital LLC is tearing down nearly everything and starting from scratch.

New Mill Capital is a division of Industrial Realty Group, a California company that specializes in buying and converting distressed sites.

In 2000, for example, IRG bought the vacant, 3,000-acre McClellan Air Force Base near Sacramento. After cleanup and renovation, the former military base provides space for 240 small companies employing 14,000 people.

IRG Vice President Tom Messmer thinks the Kaiser site in Mead can produce similar, though smaller, results. But it won’t happen quickly, he cautioned.

New Mill, which specializes in salvage and demolition, is spending $2 million in the first phase of the project to tear down 18 buildings, including all 16 pot line buildings where aluminum ingots were produced between 1943 and 2000.

Another $2 million will be spent during a second phase, tearing down another 22 buildings.

When the demolition is finished in late 2014, a small fraction of the former Kaiser buildings – about 150,000 square feet in five structures – will be left standing. When New Mill started demolition, there was about 1.5 million square feet of space in buildings on the Mead site.

After demolition is complete, IRG will take over redevelopment of the site. Messmer said a realistic goal is that new companies will be moving in within five years. In 10 years he expects nearly all of the Mead property to be under lease or being developed.

Much of the cleanup cost is for handling and removing tons of hazardous materials from the site – asbestos- and PCB-coated galvanized steel walls and thousands of square feet of building surfaces covered in lead paint.

Still needed at the site are updated utility services, such as electricity, water and sewer. Less urgent but also important, Messmer said, is the eventual completion of the North Spokane Corridor to provide a direct connection to Interstate 90.

Once transportation access improves, Messmer and others say the Mead site might become a challenger to the area’s No. 1 business and industrial park in Spokane Valley.

Aluminum smelter opened for war effort

Kaiser’s Mead smelter is a gritty relic of the nation’s rapid buildup of production capacity during World War II.

Because Spokane was far from the coast and safe from potential Japanese attack, the government footed the bill to construct the smelter on isolated land in north Spokane. For additional protection, the smelter was sited about 10 miles away from the aluminum rolling mill built at the same time in Trentwood in Spokane Valley.

Those plants, like several others on the West Coast, contributed to a massive U.S. effort to build bombers and other airplanes with high-quality aluminum.

When the war ended, the government ruled that Alcoa, the original plant operator, would likely establish a monopoly on aluminum if it was allowed to continue running too many plants.

So, in a government bid process, Kaiser Aluminum & Chemical Corp. bought the Trentwood and Mead operations. At its heyday in the 1960s, the company had 2,100 workers at the Mead plant.

In December 2000, fresh off a bitter, two-year labor dispute, Kaiser shut down the Mead plant after concluding it was more profitable to resell the electricity the plant consumed than continue to smelt aluminum. About 400 workers were laid off at the time. Kaiser continues to operate the rolling mill in Trentwood.

In 2004, St. Louis-based Commercial Development Company Inc. (CDC) bought the land for $7.4 million and began to remove all the usable copper and other metals for resale on the scrap market.

After that, the Mead property sat unused and shuttered, looking for a new owner. One reason buyers were scarce, according to area brokers, was the site’s environmental problems related to leftover waste piles and buildings laced with toxic chemicals.

IRG researched the site and concluded the smelter had a future if the hazardous materials could be removed and the land prepared for future growth; the company bought it in 2012 for $1.5 million.

Like CDC, IRG bought the smelter property without the 50-acre adjoining section of land that’s been declared a federal Superfund site. Located north of the smelter, the Superfund site is a 128,000-ton pile of smelting wastes containing cyanide and fluoride, which have leached into the underlying soils and groundwater. State environmental regulators continue to monitor that site, funded by a trust set up by Kaiser.

Messmer, of IRG, said a key factor in concluding the deal was discovering the ceilings and roofs of the buildings were not coated with asbestos, which would have upped the cleanup cost by at least $2 million.

“Because of the advantages the site has, having a heavy-industrial (zoning) designation and with lots of available space and extensive rail service from BNSF, we believe this property is unique in the Spokane area,” Messmer said.

Since taking over, IRG has worked with state environmental and regional air-quality agencies, making sure the site work complies with regulations, he said.

Later this month Messmer and other IRG managers will start the process of getting electrical power and water and sewer connections from Avista Utilities and Spokane County.

A Kaiser survivor faces change

Ken Hoff, 61, worked at the Kaiser Mead smelter plant from 1977 until it closed in 2000. He was a pot line laborer, electrician and supervisor in the buildings that made carbon rods for the production of aluminum ingots.

He returned to the site in 2004 when CDC bought the plant. That company hired Hoff to help remove and sell valuable copper and other metals.

After New Mill Capital/IRG took over the property, Hoff became site manager, overseeing the planned demolition and removal of hazardous waste.

Hoff said he’s convinced the long-term goal – to transform the smelter site into a dynamic industrial zone – will succeed. But the job sometimes leads to moments of personal regret.

“It’s pained me dearly to see the old plant shut down and scrapped out,” Hoff said. “Even though the process will mean this (site) could create jobs, it’s hard. It’s hardest to be tearing down some areas where I worked and areas I actually helped build.”

One of his jobs is to find buyers for still-useful or recyclable items; many of the remaining steel girders and supports, for example, are likely headed to China.

Already sold from the site are pieces of industrial machinery, machine shop equipment, tools, office furniture, ladders, old lighting fixtures, transformers, doors and even signs from around the plant.

He’s trying to find a buyer for a huge pile of bricks coated with lead paint.

“I’ll find someone. There’s always someone to buy stuff like that. It just may take some time,” Hoff said.

Brownfields are risky to redevelop

The Mead smelter project is a brownfield site, in the jargon of urban planning. That means it had an industrial use and may have some history of contamination.

A 425-acre parcel of undeveloped land north of the smelter, still owned by Kaiser Aluminum, is considered a greenfield site – open property. Kaiser spokesman Bob Burke said the company will likely look for a developer to take over the property and convert it into a mix of retail and commercial parcels.

Brownfield conversions typically follow the ups and downs of the commercial real estate market, said Robert Colangelo, a Chicago business owner and former editor of a magazine and website dedicated to brownfield activities.

Colangelo said he’s watched some of the projects IRG has taken on, but he’s not familiar with the Mead site. “The IRG owners and partners are very reputable. They have expertise in this area,” he said.

“What matters is how much demand the local area will produce for (the Mead location),” Colangelo said.

Even so, brownfield development is high-risk, he said.

“Brownfield conversions are more risky than traditional real estate development because of their complexity,” he said.

Mike Livingston, a real estate broker representing IRG, believes the Mead site will compete well in Spokane, especially with the Spokane Business & Industrial Park in Spokane Valley.

The Valley park has more than 40 buildings with 92 percent occupancy, according to marketing director Dean Stuart.

Livingston said, “The business park (on Sullivan Road) is out of land and can only offer what already exists.” The Mead site will offer the option of building custom-designed, state-of-the-art manufacturing buildings not available now, he added.

But Mark Pinch, a broker at Spokane’s NAI Black, said he believes the former Kaiser site’s location might work against it, even if the North Spokane Corridor is finished.

Pinch predicts that most large business expansion will occur along the Interstate 90 corridor from Post Falls to the West Plains, rather than in north Spokane County. The lure of inexpensive West Plains property and the airport will be key incentives encouraging that growth, Pinch said.

Joe Tortorelli, a consultant who’s worked on development projects across Spokane County, notes the former smelter site has a critical BNSF rail line for hauling large equipment in and out of the property.

“There really aren’t that many ‘full-service’ heavy industrial zones in the county,” Tortorelli said. “If this project is well-capitalized, it could offer the full package and be a major success.”

Century Aluminum Is A Promising Icelandic Jewel

Value Walk - October 4th, 2013,

Sometimes smaller is better, and in comparison to its larger peer, Alcoa Inc (NYSE:AA), Century Aluminum Co (NASDAQ:CENX) appears to be the best company.

Right now, Century Aluminum Co (NASDAQ:CENX)’s most attractive quality is its discount to book value. However, the company also has some interesting assets and future growth plans.

Century Aluminum Co (NASDAQ:CENX) has five main production facilities, one under construction and two carbon cathode/anode manufacturing facilities. The firms, a leading aluminum production facility, is located in Iceland and the new facility under construction is also located in Iceland.

Icelandic facility is actually a jewel in the company’s crown
Century Aluminum Co (NASDAQ:CENX)’s Icelandic facility is actually a jewel in the company’s crown. The plant cost $1 billion to construct but has generated sales in the region of $1 billion during the past two years. Moreover, the facility gets its power from geothermal and hydro power sources, which cuts costs and pushes the average cash cost per ton of aluminum produced to a level 17 percent below the cash cost per ton of production for the company’s U.S.-based facilities.

In addition, this relatively low cost aluminum production in Iceland allowed the company to realize profit margins of 20 percent per tonne of aluminum produced for its Icelandic facility, based on LME average sales figures. In comparison, Alcoa Inc (NYSE:AA) only realized a 12 percent profit margin on its production per ton of aluminum produced during the quarter.

Century Aluminum is in the process of upgrading
What’s more, Century Aluminum Co (NASDAQ:CENX) is in the process of upgrading its existing Icelandic plant, already its largest production facility, to increase production by 20 percent. Furthermore, as I have already mentioned, a new aluminum production facility is already under construction within Iceland, which should add an additionally 360k metric tonnes to company production when completed; a 35 percent increase from current levels. Another low-cost production facility in Iceland should boost Century’s standing as a globally competitive aluminum producer.

Strong balance sheet
Unlike many other resource companies, Century Aluminum Co (NASDAQ:CENX) has a strong balance sheet and its current discount to book value offers some real value.

For a start, debt is low, the company’s total debt stands at $256 million but $127 million in cash reduces net debt to $129 million. With assets of $1.85 billion this give a net debt to asset ratio of 7 percent. Current assets cover current liabilities 1.9x however, the bulk of current assets are inventory so the quick ratio falls to 1.1x. Still, current assets including inventory only just fall short of covering all current liabilities and long-term debt put together. Total assets cover total liabilities 2.1x, which gives a net asset value per share of $10.92, 34.3 percent above current levels.

That said, earnings have been negative for four of the last five quarters and two of the last four years. Nonetheless, Century has been cash-flow-positive for two of the last four quarters and two of the last four years, which is consider to be more important and a more telling indicator of the company’s profitability.

Century Aluminum’s low cost production and plans for expansion
So overall, Century Aluminum Co (NASDAQ:CENX)’s low cost production and plans for expansion are highly appealing qualities. Additionally, the company’s strong balance sheet and cash generation reinforce the company’s appeal. With Century’s stock currently trading at a 34 percent discount to the net asset value per share, Century could be a risk worth taking.

Ormet says shutting Ohio aluminum smelter immediately

Reuters - October 4th, 2013,

Ormet Corp will immediately close its 270,000-tonne-per-year aluminum smelter in Hannibal, Ohio, a casualty of historically low metal prices and "uncontrollable" power costs, the company said on Friday.

The move follows a ruling on Wednesday by the Public Utilities Commission of Ohio (PUCO), which approved some major changes to Ormet's power contract with energy supplier American Electric Power Co Inc.

The state power regulator listed a number of conditions, including requiring the company, which filed for bankruptcy protection in February, to employ at least 650 full-time workers through 2018.

Under those terms, costs would have increased by some $108 million next year, rather than falling by $54 million as outlined in Ormet's plan.

"Due to the decision, Ormet cannot emerge from bankruptcy and must immediately shut down operations," Ormet said in a statement.

Hannibal, which uses as much energy as the city of Pittsburgh, is one of the smaller plants in the global aluminum market, but it is the region's largest employer and Ohio's largest energy user.

This closure will affect about 600 people, Ormet said.

Securing a new power deal was the final hurdle in he company's efforts to emerge from Chapter 11 protection, although it will still be unprofitable unless aluminum prices also recover, management has said previously.

London Metal Exchange prices are languishing close to or below the cost of production for many makers.

Aluminum producers, including Rusal OAO and Alcoa Inc have cut output to reduce the excess, which could be as high as 10 million tonnes, analysts said.

Ormet's suspension might provide some support to prices in the United States, but it is unlikely to make a big dent in the 40-million-tonne-per-year market.

The smelter is currently producing about 90,000 tonnes per year. The plant has a total of six potlines with an annual capacity of about 270,000 tonnes per year.

Ormet would not reopen the plant unless it secured lower-priced power and aluminum prices recovered, the company said.

Aluminum prices on the London Metal Exchange are around $1,850 per tonne, below the cost of production for a large portion of the global smelting capacity.

The company also has an alumina refinery in Burnside, Louisiana, which feeds the smelter. The status of the refinery was not known.

International company to invest $4Bn in construction of alumina production complex in Batken news agency - October 2st, 2013,

nternational Company plans to invest about $4 billion in the construction of alumina production complex at Zardalek deposit in Batken province.

The executive director of Matrass Mining Group international company in Kyrgyzstan Azad Mikhailov stated at the meeting with the Plenipotentiary Representative of the Government in Batken province Zhenish Razakov, Spokesman for the Representative Mamadzhan Berdishev informed.

According to him, the planned enterprise can process about a million of tones of ore per year. “Approximately 5,000 people will be engaged in the enterprise’s construction and its operation,” Azad Mikhailov said.

He also noted that during the construction process, Matrass Mining Group company will make a choice in favor of wasteless, resource-conserving, ecologically save and cost-effective technology.

The head of the province Zhenish Razakov noted that the enterprise’s construction will not only reduce unemployment rate, but also play an important role in social and economic development of the region. It will serve an example for other foreign investors,” Zhenish Razakov stated.

According to preliminary data of Matrass Mining Group, the explored reserves of aluminum ore at Zardalek deposit make up more than 5 billion tones.

US firm touts 'clean' aluminium production method

Financial News - October 1st, 2013,

Massachuetts USA-based technology commercialisation specialist Infinium said it has made an advance in aluminium production using its patented Pure Oxygen Anode technology offering advantages over century-old technology used throughout the world.

Infinium was founded in 2008 and commercialises technology at MIT and Boston University.

The firm also said that in recognition of these advantages, the Department of Energy´s ARPA-E office (ARPA-E) and the Massachusetts Clean Energy Center (MassCEC) are providing grant funding to support Infinium´s development and commercialisation of this technology.

Infinium said that its Pure Oxygen Anodes separates the metal production chamber from anode gases. Infinium anodes eliminate corrosive and toxic anode gas contamination, and are able to reduce cell energy losses by 60% or more, and eliminate the cost, energy, and emissions of graphite anode production, the firm said.

The company said it has identified key advantages of its technology in aluminium production as virtually eliminating CO2 emissions, which currently create 7-10 lb CO2 for every lb of aluminum produced, enabling 3x-5x higher production output per footprint and reducing the cost by halving the energy required and eliminating the need for consumable graphite anodes.

Rusal signs agreement to convert western Russian smelters

Metal Bulletin Ltd. - September 30th, 2013,

United Co Rusal will convert its loss-making Russian aluminium smelters to the production of vehicle components as well as rolled and cable products, it said on Monday September 30.

To fund the transformation, Rusal has signed a memorandum of intent with state-owned development bank Vnesheconombank (VEB). New production facilities will be constructed at the Bogoslovsk, Urals, Nadvoitsy, Kandalaksha, Volkhov and Volgograd aluminium smelters, all part of Rusal’s Aluminium Division West. New facilities are also feasible at Rusal’s other Russian sites. Rusal's Volkhov smelter Finished goods will be supplied to the Russian market, where Russian and foreign carmakers have commitments to boost...

It’s critical for Nalco to set up a second smelter: CMD Anshuman Das

The Economic Times - September 30th, 2013,

National Aluminium CompanyBSE 0.78 % (Nalco), the country's third-largest aluminium producer, is facing a tough challenge to maintain its position. With global aluminium prices hovering at a low of around $1,800 per tonne on the benchmark London Metal Exchange (LME), Nalco's realisations have been hit, though the recent rupee depreciation has come as a breather.

While it has a 2-million tonne of alumina capacity, Nalco desperately needs to set up a facility to convert this alumina into high-value aluminium metal. Nalco is thus seriously looking to set up a smelter project abroad to expand metal capacity, even as the company's plan for a 0.5-million tonne unit at Sundergarh hinges on allocation of captive coal block.

Anshuman Das, Nalco's chairman and managing director, shared the company's plans and his outlook on the aluminium sector at large in a detailed chat in Bhubaneswar recently. Edited excerpts:

How crucial is your need to set up new smelter capacity? You are pursuing plans for a smelter-cum-power project in Sundergarh? What if it does not come up on time?

Anshuman Das: It is critical for Nalco to set up a 0.5 mt smelter capacity to use surplus alumina. But our plans for a second smelter at Sundergarh are vitally linked to getting an allocation for a captive coal mine. Smelting is energy-intensive and unless we have the coal for generation of power, we can't move ahead with the project. Hence, we are working on alternative plans simultaneously, in case the Sundergarh project fails to come up on time.

How much surplus alumina do you have?

Anshuman Das: We produce 2 mt of alumina, out of which we use 0.8 mt. The rest of it is surplus.

What is your plan B?

Anshuman Das: We are seriously looking at setting up a smelter project abroad, if the Sundergarh project does not happen on time. For this, we have zeroed-in on certain countries such as Indonesia, Malaysia and possibly Vietnam in South Asia and the Gulf region, mainly due to availability of cheaper energy sources and their proximity to India. We are also in the process of appointing a top consultant, who will help us in assessing various geo-political risks involved in setting up greenfield projects in these countries. The consultant will basically do the job of hand holding in the initial stages of the project.

Nalco had outlined a corporate plan in 2009. With delays in the timeline of various projects envisaged earlier, are you reviewing it?

Anshuman Das: Yes. Our plan for an overseas project in case Sundergarh does not come up on time is one part of it. We are also reviewing other aspects of the corporate plan. We are taking a hard look at where we have grown and where we have not, in the last four years. We will not stick to the same projects in case they fail to maintain a timeline.

Which projects look possible in future?

Anshuman Das: Two projects that look possible in the near future include a. 5,500-crore greenfield alumina refinery of one mt capacity in Gujarat in joint venture with Gujarat Mineral Development Corporation (GMDC) and adding a fifth stream at Nalco's Damanjodi facility that will add another one million tonne of alumina refining capacity at an investment of. 5,000 crore.

The Damnajodi expansion is also subject to avialability of Nalco obtaining lease for Pottangi bauxite mines in Odisha. If big-ticket projects remain stuck, Nalco will take up a number of small-ticket projects, in the range of. 300-500 crore each, to keep up the momentum. There are three such projects in the pipeline. This include, a 14 MW wind power project, another backward integration project to produce caustic soda, a key input where prices are going up and a joint venture plant with Power Grid Corpopration to manufacture aluminium conductors. The latter project with PGCIL is estimated to have a high internal rate of return of almost 70%.

How do you see the domestic aluminium sector?

Anshuman Das: The two drivers for the domestic industry will be construction and automobiles. In construction, aluminium is gaining as a substitute for wood and its aesthetic value are also proven. In transportation, the thrust on fuel efficiency has given way to demand for lighter cars glob ally. Hence, the use of aluminium in the auto sector will only grow.

Prices have suffered historic lows this year. What is your outlook on global aluminium prices going forward?

Anshuman Das: Prices can't go below the level of $1,800 per tonne simply due to cost push factors and there will be resistance if prices breach $1,750 level. We estimate it to improve around Q4 of this year to around $1,850 per tonne. In 2014, the forecast is prices could reach $1,900 to $2,000 per tonne.

on Plan B

Anshuman Das: We are seriously looking at setting up a smelter project abroad, if the Sundergarh project does not happen on time. We have zeroed in on Indonesia, Malaysia and possibly Vietnam in South Asia, and the Gulf region, mainly due to availability of cheaper energy sources and their proximity to India

on Global Outlook

Anshuman Das: Prices can't go below the level of $1,800 per tonne simply due to cost push factors and there will be resistance if prices breach the $1,750 level. We estimate them to improve around Q4 to around $1,850 per tonne. In 2014, the forecast is prices could reach $1,900 to $2,000 per tonne.

Nalco rejected Request to Sell Surplus Alumina to Vedanta

Jagran Josh - September 29th, 2013,

Aluminium major NALCO on 28 September 2013 rejected a request to sell surplus alumina to bauxite starved Vedanta for its smelter at Jharsuguda. It stated that it was against the Navaratna PSU's policy to supply it in domestic market. As per the policy adopted by Nalco's board, the company does not sell either bauxite or alumina to other companies in the domestic market.

Vedanta had recently sought the Odisha state government's intervention to impress upon Nalco to sell its surplus alumina for its smelter at Jharsuguda. Stating that Nalco was exporting surplus alumina of over one million ton a year, Vedanta suggested that the diversion of this surplus alumina for VAL’s alumina smelter will generate extra revenue for NALCO at around Rs 200 crore annually over and above its export realization, thus helping improve its financial balance sheet.

As VAL's (Vedanta Aluminum Limited) refinery at Lanjigarh in Kalahandi district is running at a depleted capacity of 30-40 percent on outsourced bauxite from states such as Gujarat, Chhattisgarh and Jharkhand, this has been hurting alumina availability for its smelter plants. VAL has two smelters at Jharsuguda. The 0.5-million ton per annum (mtpa) smelter plant, supported by a 1215 Mw captive power plant, produces downstream products such as wire rods and billets. This unit was in operation and meeting its alumina requirement through imports.

The other smelting facility of 1.2 mtpa capacity was installed as a special economic zone (SEZ) unit. This was yet to be commissioned due to non-availability of alumina. Overall performance of VAL’s smelter was hit after Lanjigarh refinery faced shutdown between 5 December 2012 and 11 July 2013 as bauxite sources dried up.

Rusal involved in development of dry cargo port

The Aluminium International Today - September 27th, 2013,

UC Rusal, the Government of Krasnodar Territory and the Ministry of Transportation of the Russian Federation have agreed to join forces to build the Taman Dry Cargo Port.

The main role of the port will be the transhipment of aluminium and alloys and the chief goal of the project will be the development of a deep water port on the Taman Peninsula.

The deal between the three parties will be signed at the Xll International Investment Forum Sochi – 2013.

For Rusal, the project will create an alternative to existing port capacity at Azov and Black Sea ports at Novorossiysk and Temryuk, from where the company exports its metal.

The project fits in with Rusal’s long-term strategy to reduce operating costs and ensure transport security through ‘logistics optimisation’.

Vladislav Soloviev, Rusal’s first deputy CEO, said that Rusal was eager to take part in the project because of its appealing principles. “It will allow the company to form one of the most effective ports in the South of Russia and, as a result, provide shippers with a controlled quality of stevedoring,” he said.

Cargo turnover at the new port is estimated to be 95Mt/yr and construction will start towards the end of 2013 or early 2014. It is expected to be completed by 2020.