AluNews - September 2015

Century to continue operating two potlines at Kentucky operation

Mining Weekly - September 30th, 2015

Despite weak metal prices and a flood of low-priced exports from China, US primary aluminium producer Century Aluminum on Wednesday confirmed that it would continue running two potlines at its Hawesville, Kentucky smelter.

This rate represented about 40% of the plant's capacity from October 24 onwards and did not represent all the capacity Century announced in August it would idle.

A market glut amid slower-than-expected demand growth had dimmed aluminium spot prices over the last 12 months to trade near five-year lows.

The remaining operations at the Hawesville smelter would mainly produce high-purity aluminium and provide molten metal to local customers. The rate of continued production would be contingent on acceptable commercial conditions, including aluminium prices, product premiums and operating costs.

"Hawesville's ability to produce high-purity aluminium enables the smelter to produce a unique product that will hopefully allow the plant to survive, albeit at significantly reduced production levels, in today's market conditions," president and CEO Michael Bless commented.

He decried the fact that Hawesville's operations could not compete against the "improper export of unfairly-subsidised Chinese aluminium products".

"The continued expansion of Chinese aluminium capacity, coupled with the significant increase in unfairly-subsidised Chinese aluminium exports has caused the collapse in industry pricing and put this excellent plant in jeopardy. These issues must be addressed immediately," Bless stressed.

Century, which operated aluminium smelters and refineries in Iceland and the US, issued a new conditional federal Working Adjustment and Retraining Notification Act (WARN) notice to employees who would be impacted by continuing a two potline operation. The new WARN notice informed those employees that the remaining operation was expected to be curtailed if certain high-purity production levels were not achieved or if there was a material negative change in commercial circumstances. The previous WARN notice issued on August 25 remained in effect for the remaining employees.

Australia's first commercial diesel displacement solar plant starts operation

Rio Tinto - September 29th, 2015

First Solar, Inc. (NASDAQ: FSLR), Rio Tinto and the Australian Renewable Energy Agency (ARENA) today announced Australia's first commercial diesel displacement solar plant has successfully commenced commercial operation at a remote mine. The Weipa Solar Plant will generate electricity for Rio Tinto's Weipa bauxite mine, processing facilities and township on the Western Cape York Peninsula in Queensland, Australia.

Rio Tinto general manager, Weipa Operations, Gareth Manderson said "This power purchase arrangement is an opportunity to trial the introduction of an alternative power source such as a solar plant into a remote electrical network like the one here in Weipa.

"At peak output, the 1.7 megawatt (MW) capacity solar plant has the capacity to generate sufficient electricity to support up to 20 per cent of the township's daytime electricity demand."

"We expect the energy from the solar plant will help reduce the diesel usage at Weipa's power stations and save up to 600,000 litres of diesel each year. This will reduce Weipa's greenhouse gas emissions by around 1,600 tonnes per year, equivalent to removing around 700 cars."

The solar plant is expected to produce an average of 2800 megawatt hours of electricity per year. The electricity from the 18,000 advanced First Solar photovoltaic (PV) modules that have been connected to Rio Tinto's existing mini-grid will be purchased by Rio Tinto under a 15-year Power Purchase Agreement.

First Solar's FuelSmart™ solutions combine PV generation with a fossil fuel engine generator to provide optimal fuel savings while maintaining system reliability.

"It is already widely acknowledged that solar electricity is typically cheaper than diesel-powered electricity, particularly in remote locations," said Jack Curtis, First Solar's Regional Manager for Asia Pacific. "The significance of the Weipa Solar Plant is that it provides the opportunity to demonstrate that PV-diesel hybrid projects can also be as reliable as stand-alone diesel-powered generation."

"In recent years, attention has been focused on the technical challenges of high-penetration PV-diesel hybrids. At the Weipa Solar Plant, First Solar is seeking to deliver a reliable electricity supply without diverting capital costs away from Rio Tinto's critical mine operations. Proving this commercial model has the potential to be a watershed moment for the diesel hybrid application globally," said Mr Curtis.

ARENA CEO Ivor Frischknecht congratulated First Solar and Rio Tinto on achieving this Australian first, which has the potential to bolster the mining industry's confidence in renewable energy as a reliable off-grid power source.

"This is the first time a remote Australian mining operation has been supplied with power from solar PV on such a scale. The success of phase one is set to create a precedent for industry by demonstrating that solar PV is a viable option for powering off-grid locations, like mine sites, in Australia," Mr Frischknecht said.

"ARENA was pleased to provide an initial $3.5 million for this early mover project and up to $7.8 million is available for the second phase. Similar ARENA-supported projects now underway, or in the pipeline, will build on this landmark project to further prove the reliability of integrating renewable energy solutions in off-grid locations while helping to drive down costs and the need for subsidy."

Contingent on the success of phase one, the project partners have the option of entering into a second phase that would include a storage component. At 6.7MW, the expanded plant would have the potential to save approximately 2,300,000 litres of diesel on average each year, reducing Weipa's greenhouse gas emissions by around 6,100 tonnes per year.

Alcoa splitting into two companies

The Gleaner - September 29th, 2015

Alcoa will split into two independent companies, separating its bauxite, aluminium and casting operations from its engineering, transportation and global rolled products businesses.

The century-plus-old metals maker has been dealing with a downturn in its smelting business because of lower aluminium prices. The split will create one company focusing on upstream products, including aluminium. The other company will focus on engineered products, which includes the automotive and aerospace segments.

The split is part of a wider movement by companies to spin off units in a bid to boost shareholder value. Often, the strategy helps free the stronger part of a company's business from a weaker segment.

The aluminium and upstream products company will retain the Alcoa name. The name of the engineered products company has yet to be determined.

Alcoa Inc., which is based in New York with significant operations in Pittsburgh, expects the split to be complete by the second half of 2016. The company has been an industrial presence in the US economy for well over a century, dating its founding as the Pittsburgh Reduction Company in 1888.

"In the last few years, we have successfully transformed Alcoa to create two strong value engines that are now ready to pursue their own distinctive strategic directions," Chairman and CEO Klaus Kleinfeld said in a statement.

The company has been shifting its focus to its more profitable automotive and aerospace products, which also involve titanium. It has been shutting down unprofitable aluminium smelters as a surplus of the material on the market weighs down prices and profit.

Earlier this month, Alcoa broadened a partnership with Ford Motor Co. through the use of a stronger form of aluminium for auto body parts. It also spent about US$60 million to expand its three-dimensional manufacturing capabilities at a technical centre in the Pittsburgh area.

After the planned split, Kleinfeld will lead the as-yet unnamed company focusing on engineering products. Each company will have its own board of directors, and full management teams will be named in the months leading up to the split.

Several other companies have either split over the last year or plan to do so. eBay split off its payments unit, PayPal, into a separate company. Hewlett-Packard is in the process of splitting its slumping personal computing unit and its better-performing servers, software and consulting services unit. Gannett Company plans to split its weaker publishing unit from its digital and broadcasting unit.

Alcoa's shares rose 32 cents, or 3.5 per cent, to US$9.39 in morning trading Monday. Its shares are down 41 per cent so far this year.

Nalco to set up plants in Gujarat, Odisha

DNA - September 27th, 2015

Aiming to make Nalco a global player in mining, metal and energy sectors, its CMD T K Chand said the company will focus on increasing production, expansion and modernisation of plants besides diversification of products.

Referring to new projects, the CMD said Nalco is now looking beyond its existing operations with a view to achieve a new level of corporate distinction.

Chand said, besides other projects, the company is pursuing to set up a alumina refinery in Gujarat with a capacity of 0.5 MTPA.

Detailed Project Report (DPR) for the refinery has been prepared and the company is in discussion with GMDC for the availability of bauxite for the project, he said while addressing shareholders at the company's Annual General Meeting here.

Similarly, the company has formed a joint venture with Nuclear Power Corporation of India Ltd, namely 'NPCIL- Nalco Power Company Ltd' (NNPCL) for establishment of Kakrapar Atomic Power Station (KAPS) 3&4, he said.

Chand added that Nalco also plans to set up a 2.7 lakh TPA caustic soda plant along with a 100MW captive power plant at Dahej in Gujarat at an estimated investment of Rs 1,789 crore in joint venture with Gujarat Alkalies and Chemicals, for which a jv-cum-share holder's agreement was signed in June, this year.

Nalco has also revived the MoU with Indian Rare Earths Limited in July, 2014 for development of a 1 lakh tpa titanium slag project at Chhatrapur in Odisha in a jv mode.

Pre-feasibility Report for this is being prepared, he said.

"Happy that Nalco has got the much-awaited allocation of Utkal D and E Blocks", Chand said on the sidelines of the AGM adding that the company is looking forward for consent of Odisha government for allocation of Pottangi Mines in Koraput district so that Alumina Refinery Project of Rs 5,500 crore can immediately be started.

Further, Nalco in association with Odisha government is planning to set up an aluminium park in Angul District of the state for downstream units.

A Smelter and Power Complex at a cost of Rs 22,000 crore have been envisaged to come up at Sundargarh, Odisha.

Some preliminary clearances have been obtained and Nalco has applied for single window clearance from Odisha government, the CMD said.

Nalco is exploring the opportunity to set up a greenfield aluminium smelter in a country where energy would be available at a competitive price.

Based on a study carried out by consultants two countries have been identified to pursue further, Chand said.

The company also plans to set up of 5th Stream of 1 mtpa capacity in existing Alumina Refinery at Damanjodi at an estimated investment of Rs 5,540 crore. The project is envisaged with medium pressure digestion technology. Sourcing of the Bauxite is planned from Pottangi Mines, for which matter is being pursued with Odisha government, he said.

However, while awaiting clearance for the same, pre-project activities have been started considering sourcing of Bauxite from existing Panchpatmali deposits.

Hindalco looks at new ways to cut costs

Business Standard Private Ltd - September 26th, 2015

Company has cut aluminium output by up to 10% at its oldest Hirakud facility as it ramps up output at two new and more cost efficient plants

Hindalco Industries, the country's largest aluminium maker, has cut aluminium production by up to 10% at its Hirakud facility in Odisha, mainly due to a declining trend in global aluminium prices amid high power and fuel costs.

The production cut by the Aditya Birla Group company has come at a time when smelter capacities worldwide have been reduced by a third. Domestically, Bharat Aluminium Co (BALCO), part of Anil Agarwal-led Vedanta Ltd, has started the process of closing down its rolling mill unit at Korba in Chhattisgarh.

"One line at the Hirakud smelter facility has been shut, which could be a production cut of about 5-10 per cent," a company official told Business Standard. "Though we expect global aluminium prices to bounce in coming months, we continue to review the situation at Hirakud," he added without divulging more details.

Aluminium price hit a six-year low of $1,475 per tonne last month. Prices, along with their premiums, have tumbled significantly in the last few months, largely due to concerns over weakening demand and an economic slowdown in China, the largest consumer of the lightweight metal. Global aluminium prices, currently hovering at about $1,600 per tonne on the London Metal Exchange, are expected to move upward hereon due to supply cuts following shutting of capacities by global smelters.

Meanwhile, analysts say the company's decision is in the right direction, but they are not fully convinced about immediate gains therefrom.

"Looking at current aluminium prices, Hirakud may have been making losses and so it makes sense to cut output," said Giriraj Daga, senior analyst with SKS Capital & Research. "Its a move in the right direction and would make more sense if they sell alumina directly in the market instead of producing aluminium," he added.

Hirakud is a much older plant, using an older technology. Due to this, the cost of production per tonne at this plant would be at least $150-$200/tonne (Rs 10,000-Rs 13,200 per tonne) higher compared to the new smelters 'Aditya' and 'Mahan', said analysts.

That's not all. During ramp-ups at new smelters, the initial cost of power is usually about 13-14 per cent higher than plants that are producing normally, since the new plants are in the process of stabilising. Due to this, Hindalco has seen its power & fuel costs zoom in the first quarter of FY16 by a good 45 per cent to Rs 1,644 crore from the corresponding period last year.

Hindalco produced 264,000 tonne aluminium in June quarter as against 190,000 tonne in the corresponding period last year consequent to the ongoing ramp-up at Mahan and Aditya smelters, the company had said in its earnings release.

"Aditya and Mahan smelters must have added to the total production of the company but definitely at higher cost," said an analyst with a local brokerage.

Also, before de-allocation of coal mines, Hindalco enjoyed captive coal supply from its Talabira-I coal mine in Odisha. Following re-allocation, a Supreme Court order in September last year, the company has a captive source of just about 30 per cent of its total coal requirement, which however is also costlier than the earlier captive coal. The balance 70 per cent requirement has to be sourced via imports, e-auctioning and through linkages which has also increased its power & fuel costs significantly in last few months. The company has a total coal requirement of 15 million tonne.

Hindalco's Hirakud facility is the company's oldest plant set up in 1959. Currently, the smelter capacity there stands at 161,400 tonne per annum. Apart from the Hirakud facility, the company runs a fully-integrated plant at Renukoot in Uttar Pradesh and has recently ramped up 360,000 tonne capacity Mahan smelter in Madhya Pradesh. Its Aditya smelter-power plant complex, another 360,000 tonne capacity, has also completed 55 per cent of ramp up and is likely to be operational this fiscal.

"Even if there are more production cuts, it will surely not be at Mahan or Aditya smelters as these plants are young and hence more efficient and so their cost structures only enhance company's cost competitiveness," said the company source. "Both these smelters produce premium quality products and will sell at premium price in the market, hence no cuts are likely at these plants at all," he added.

Analysts, however, are not sure if the moves will really lead to gains and say higher reliance on non-captive coal will continue to keep cost of production higher for the company which may also lead to delay of ramp-ups or production at the young smelters.

Global aluminium prices should at least be at $1,900 per tonne for a domestic aluminium producer to have its smelters ramped up and running at full capacity, they said.

Apart from weak fundamentals, high debt is also another issue Hindalco has been dealing with due to the capex is has incurred in the recent past. However, off-late, the company got average maturity of its local-currency project loans extended by 10 years thus giving the aluminium producer some breathing space going ahead. As on March 2015, Hindalco Industries standalone debt stands at Rs 29,000 crore, while consolidated debt is at Rs 68,467 crore.

Aluminum demand to rise to 78 million tonnes by 2025 -Rio Tinto

Thomson Reuters - September 22nd, 2015

Global aluminum demand will rise by 24 million tonnes to 78 million tonnes annually by 2025, a Rio Tinto executive said at an industry conference on Tuesday, though market fundamentals will continue to force further capacity closures.

"Demand for our products is clearly healthy. The issue we face is excessive supply," Alfredo Barrios, Rio Tinto's chief executive for aluminum, said at Metal Bulletin's International Aluminum conference in Vancouver, adding that the aluminum market should return to balance in the next five years.

Production cuts to boost aluminium prices

The Hindu Business Line. - September 20th, 2015

Reports of China slashing output have led to a bounce from a six-year low

Aluminium prices, which had tumbled to a six-year low last month, are getting a breather from the possibility of production cuts in China.

Spot aluminium prices on the London Metal Exchange (LME) fell to a low of $1,475 per tonne on August 24, a six-year low. In the domestic market, the aluminium futures contract traded on the Multi Commodity Exchange (MCX) fell to ?99.45 per kg on the same day. The MCX futures contract moves in tandem with the LME spot price.

Concerns of weak demand and global slowdown, especially in China, the largest consumer of the metal, dragged the prices lower. But news of production cuts has helped the metal's prices recover.

According to the China Nonferrous Metals Industry Association, the country is expected to cut output approximately by 2.4 million tonnes in the coming months. China accounts for more than half of the world's aluminium output. Reports also suggest that three major aluminium producers from the US would cut production by 1.09 million tonnes, which is about 65 per cent of the total output from the US.

The sharp 9.5 per cent rise in the spot price from the August low has eased the downside pressure for the metal. On the charts, there is a strong likelihood of the price extending its rise in the coming weeks.

Medium-term view

The reversal in the LME spot aluminium price from $1,475 has happened from an important long-term support. Currently, the price is at $1,615. The price action on the chart suggests strength in the recent rally. Immediate support is at $1,565 and there is no immediate danger of any further fall in the price as long as it trades above this level. A rise to $1,700 looks likely in the coming weeks. A further break above $1,700 will open the doors for the next target of $1,800.

The bullish outlook will get negated if the price falls below $1,565. This will increase the chances of revisiting $1,500. A break below $1,500 can drag the price lower to $1,480 and $1,465 thereafter.

On the domestic front, the MCX Aluminium futures contract is currently at ?106.55 per kg. It has been trading in a broad sideways range between ?100 and ?130 since 2011. Within this range, the contract recorded a high of ?1,125.6 in May this year and fell to test the lower end of the range last month. The contract then formed a base around ?100 by consolidating in a narrow range of ?100 and ?103 for about four weeks.

The strong breakout above ?103 in the first week and the sharp 5 per cent rally in the last three weeks have reduced the threat of the contract falling below ?100. The recent price reversal suggests that the broad ?100-130 sideways range remains intact. A rise to ?118 and ?120 looks likely in the coming weeks over the medium term. A strong break above ?120 can take the contract further higher to ?130.

The outlook will turn bearish only if the contract records a break and a decisive weekly close below the psychological support level of ?100. Such a break will open the doors for a fresh fall to ?95 and ?90.

Short-term view

The strong gap-up opening on August 31 has turned the short-term outlook bullish for the contract. It eased the downside pressure and came as a big relief for the strong downtrend that was in place since May. The 21-day moving average at ?105 is a key support for the contract. While the contract remains above this support, a rise to test the 200-day moving average resistance at ?111 is possible in the coming days.

A further break above this hurdle can take it higher to ?115 and ?116 in the short term.

The contract will come under pressure if it declines below the 21-day moving average support. Such a fall can drag the contract lower to ?103 in the short term.

Alcoa Inc (NYSE:AA) to Terminate Operations at Suriname Refinery

Journal Transcript - September 15th, 2015

Alcoa Inc (NYSE:AA) announced that it will shut down operations at the Suriname refinery due to the decreasing supply of bauxite.

The company has been struggling to maintain its operational capacity, and the low supply is taking a toll on the firm's performance. According to Alcoa Inc.'s Global Primary Products' President Bob Wilt, the increasingly unfavorable markets are making it hard for the firm to maintain operations. The company's share performance has also been affected. Shares dropped yesterday from 1.61% to $9.49.

To avoid further losses, the company has decided that halting the operations at the Suralco refinery in Suriname is a good call. The firm will terminate the operations by November 30. It is not clear whether the refinery will be reopened in the future once the company and the economy are back on track. Alcoa has been limiting its refining capacity as aluminium prices remain low. The firm has been placing more focus on automotive and aerospace products.

The Suralco refinery receives an annual refining supply of 2.2 million metric tons. The company had to restrict the capacity to 443,000 metric tons in addition to the 876,000 tonnes that had already been kept aside. The company has been holding talks with the Suriname government since October 2014 to discuss the way forward following the sensitive nature of the situation.

Alcoa Inc (NYSE:AA) is currently facing restructuring charges that analysts have estimated to be between $65 million to $75 million. In terms of shares, the charges translate to 5 cents to 6 cents per share. The company's head offices are based in New York. Alcoa deals with fabricated aluminium, primary aluminium and alumina worldwide.

Alcoa scored a C+ from TheStreet Ratings team. According to the team, the company has its strengths and weaknesses, and there is not much evidence to support a positive or negative performance. The revenues have been on an upward trend and so have been the returns on equity. However, the cash flow has been decreasing.

Vedanta arm Balco puts 1k staff on notice

Business Standard Private Ltd. - September 14th, 2015

The closure comes in the backdrop of a crash in global aluminium prices and the prohibitive cost of coal to run power plants

Bharat Aluminium Company Limited (Balco), a subsidiary of Vedanta , has started the closure procedure for its sheet-rolling division and foundry at Korba in Chhattisgarh. The shutdown of the rolling division is part of a restructuring exercise by Balco, which will result in loss of around 1,000 direct and indirect jobs, the company said.

It issued the information to the Chhattisgarh's labour secretary, the BSE and National Stock Exchange. "Balco has sought permission from the Government of India to close the unit by December 8. The closure will be as per the provisions laid down in The Industrial Disputes Act, 1947," it said.

"The closure of the rolling mill is in the backdrop of a crash in global aluminium prices and the prohibitive cost of coal to run our power plants. Worldwide, there has been a fall in energy cost but for Balco, the absence of linkage coal and regulatory issue for starting our coal mines is making operations economically unviable," said Ramesh Nair, chief executive, Balco.

Although aluminium prices have plunged globally in the past few months, power costs are rising in India, making the cost of production unviable for primary aluminium manufacturers. To operate at peak capacity, Balco requires 30,000 million tonnes (mt) of coal. While the coal auctions have benefited the company in terms of allocation, the new block will meet only 10 per cent of the peak capacity.

Aluminium prices in the global market have fallen sharply from $2,200 a tonne at the beginning of 2015 to $1,600 in the current month, making exports unviable. In India, cheap aluminium from China and West Asia has shrunk the market share of domestic aluminium producers, who are already struggling with rise in input cost.

A staggering 55 per cent of domestic aluminium consumption is met through imports, forcing domestic players to operate at only 50 per cent of their installed capacity.

"Due to non-availability of bauxite and coal, the two basic raw materials used in the aluminium and power complex, Balco is now sitting on idle capacity. The company's current coal requirement of 15,000 mt to operate its power plants is being met partly by auctioned coal and partly by imports," said the company.

The Chotia Coal Mines, which the company bagged in the recent auction, is yet to be operational due to pending government clearances.

"The new 1,200-Mw power project, which was given clearance recently, is also struggling due to paucity of coal. On aluminium front, lack of local bauxite and dependency on imported costly raw material is making the company's produce non-competitive in the market," the company added.

Chinalco, Shenhua to build alumina plant in Hebei

The Economic Times - September 14th, 2015

Aluminum Corp of China and Shenhua Group plan to build a 4 million tonne-a-year alumina project in the northern Chinese province of Hebei in partnership with the provincial government, a media report said on Monday.

State-owned Aluminum Corp of China (Chinalco) is China's biggest integrated aluminium group, while Shenhua is the country's top coal producer.

The three parties have agreed to build the alumina project at Huanghua port in Cangzhou city, according to a newspaper report posted on the city government's website on Monday.

The first phase of the 10 billion yuan ($1.6 billion) project is expected to be completed in 2016, with 2 million tonnes of annual capacity, it said.

The report did not give details of the share in the project that would be held by each of the three parties. Officials at Chinalco and Shenhua were not immediately available for comment.

The new alumina plant is set to increase capacity in China, the world's top alumina producer with an annual operating production capacity of 56 million tonnes in July, according to government figures.

Bauxite is refined into alumina and then smelted to produce aluminium metal.

Prices of aluminium have fallen more than 10 per cent so far this year in international markets, weighed by abundant supplies.

Chinalco's listed arm Chalco operates most of the group's alumina and primary aluminium facilities.

The alumina plant in Huanghua port would be fed by imported bauxite, which would be transported by conveyer-belt from the port to the alumina plant, according to a media report.

The plant would boost demand for bauxite in China, which is already the world's biggest buyer of the ore. Malaysia and Australia are the country's two top suppliers.

Vedanta Aluminium goes on workforce reduction, cost cuts

The Economic Times - September 10th, 2015

Mining giant Vedanta Resources has resorted to "aggressive cost reduction" and "workforce reduction" in its aluminium segment amid subdued and volatile market conditions globally.

The Anil Agarwal-led mining conglomerate said sharp rise in Chinese exports has led to a short-term market saturation and the cost of the metal in global market suggests that over 50 per cent of the world capacity is at loss, based on current prices at the LME ( London Metal Exchange) plus premium.

Vedanta is taking bold decisions in the current low price environment. A disciplined approach towards smelter ramp-up in light of current market volatility, it said in a statement.

The ramp up of the first line of the 312 kilo tonne capacity at Jharsuguda will commence in the second quarter (July-September) this fiscal, it added.

The London-based minerals major further said the start up of additional pots is on hold and it is shutting down its rolling business at Balco.

The firm has also resorted to partial capacity reduction at its Lanjigarh Alumina refinery, it said in a presentation.

To deal with the current market conditions, Vedanta said it has resorted to "aggressive cost reduction drive through operational efficiency, workforce reduction, product mix optimisation, procurement and synergies across locations."

It added that the industry body Aluminium Association of India is engaging with Indian government on increasing import duty in light of surging imports

Vedanta said it will "...continue to focus on optimising assets, maintaining positive free cash flow and delivery of strategic priorities" through a "series of initiatives to reduce costs, maintain financial strength and complete debt refinancing well in advance."

Last month, Vedanta Aluminium said it had started the closure process of one of its production stream, which would lead to the Lanjigarh facility's output declining to half and impacting up to 2,000 jobs.

The mining giant attributed the closure to the collapse in aluminium prices and lack of bauxite availability from Odisha.

Vedanta Resources' Indian arm Vedanta Ltd last month also announced that aluminium prices globally had collapsed in the past few months and the current indications were that the trend would continue.

As per Aluminium Association of India data, in last three years, LME prices have come down by 35 per cent to USD 1,660 per tonne in June, 2015 from a peak of USD 2,555 a tonne in June 2011.

Shares of Vedanta Ltd today fell by 0.20 per cent to settle at Rs 99.65 apiece on the BSE.

Nalco spurts on plan to invest Rs 30,000 crore in Odisha state

Live Mint - September 9th, 2015

National Aluminium Company is currently trading at Rs. 34.50, up by 0.60 points or 1.77% from its previous closing of Rs. 33.90 on the BSE.

The scrip opened at Rs. 34.50 and has touched a high and low of Rs. 34.90 and Rs. 34.15 respectively. So far 86236 shares were traded on the counter.

The BSE group 'A' stock of face value Rs. 5 has touched a 52 week high of Rs. 68.80 on 19-Sep-2014 and a 52 week low of Rs. 28.00 on 25-Aug-2015.

Last one week high and low of the scrip stood at Rs. 34.35 and Rs. 31.35 respectively. The current market cap of the company is Rs. 8852.81 crore.

The promoters holding in the company stood at 80.93 % while Institutions and Non-Institutions held 12.99 % and 6.08 % respectively.

National Aluminium Company (Nalco), an aluminium major, will invest Rs 30,000 crore in state of Odisha, which has unveiled a new industrial policy aimed at attracting investments worth Rs 1,73,000 crore.

Nalco has the largest integrated alumina-aluminium complex of Asia. Its integrated operations cover the entire aluminium production value chain from mining bauxite, refining alumina, smelting aluminium, captive power generation to a strong logistic network in terms of rail & port facilities, coal mining and handling plant to support its operations and to become one of the most cost-efficient aluminium companies across the globe.

The company has reported a fall of 39.69% in its net profit at Rs 163.44 crore for the quarter ended June 30, 2015 as compared to Rs 270.99 crore for the same quarter in the previous year. The company's total income has decreased by 13.28% to Rs 1622.03 crore for the quarter under review, from Rs 1870.4 crore for the corresponding quarter of the previous year.

Nalco to invest Rs 30k crore in Odisha for capacity expansion - September 8th, 2015

This comes at a time when global metal market is witnessing a slowdown

Aluminium major Nalco on Tuesday said it would invest Rs 30,000 crore in Odisha over next few years to expand production capacity and create more job opportunities in the state. The announcement comes at a time when global metal market is witnessing a slowdown with sharp fall in prices while the domestic aluminium industry is witnessing erosion of margins in wake of an onslaught of cheap imports.

The rough phase of the industry has also forced private sector metal major Vedanta Resources to initiate the process to shutdown its one-million tonne a year alumina refinery at Lanjigarh in Odisha.

"Out of the prospective investors in Odisha, Nalco is in a position to invest to the tune of Rs 30,000 crore," Nalco chairman and managing director T K Chand said in Bhubaneshwar addressing a banking event. Chand was reacting to the new industrial policy announced by Odisha that has eased processes and offered sops to attract investments worth Rs 1,73,000 crore. Nalco's investment plan encompasses expansion - both brownfield and greenfield, diversification into energy and non-ferrous metal sectors, backward integration, merger and acquisition.

It comes at a time when Centre is looking at increased investments from public sector enterprises to improve the investment climate in the country and generate demand that will help the economy recover from the present phase of slowdown. Prime minister Narendra Modi, who met top industry leaders of the country on Tuesday to take stock of the industrial climate emerging in the country, wants state-run companies to be drivers of growth in the difficult period of slowdown. Out of the proposed investment, about Rs 6000 crore will go towards capacity expansion that will involve setting up a one million tonne alumina refinery at Damanjodi in the state. This is the first major expansion in the state run aluminium company in step with the Modi government's Make in India campaign. Nalco is also looking at diversifying into renewable energy with plans to set up a 100mw wind power project with an investment of about Rs 700 crore. There is also an investment plan of about Rs 6000 crore for setting up an alumina refinery in Gujarat while about Rs 16,000 crore would go towards a 0.5 million tonne smelter plant and a 1260mw power plant in Odisha. Nalco investment plan comes at a time when capacity utilisation by the domestic industry has fallen to 50 per cent with production touching just 2 mt in financial year 2014-15 though 4.1 mt of installed capacity exists.

Vedanta hopes to ramp up aluminium production after interim OERC order

The Economic Times - September 7th, 2015

Even as it warns of a possible shutdown of its Kalahandi refinery in Odisha in the face of raw material issues and sliding global aluminium prices, Vedanta hopes to step up metal production at its Jharsuguda smelter.

This has been made possible by an interim order of the Odisha Electricity Regulatory Commission (OERC), which allowed the company to use for now a fourth of capacity from its 2,400 megawatt independent power plant (IPP) at Jharsuguda without paying cross subsidy - this subsidy is payable when power is bought from an IPP in Odisha.

"A few formalities remain to be completed with the state and regulators before we can ramp up smelter production from 0.5 to 0.8 million tonne," said Abhijit Pati, chief executive of Vedanta's aluminium business.

Meanwhile, rival Hindalco IndustriesBSE -3.05 % has agreed to sell Vedanta surplus alumina from its 1.5 mt Utkal refinery in Raygada. To start with, Vedanta will get 8-10 rakes, or 25,000 tonnes, of alumina from Utkal Alumina. Commissioned in 2013, Utkal Alumina is fed by bauxite from its captive Baphlimalli mine, which has environment clearance for mining 8.5 mt of ore a year. To produce one mt of aluminium, two mt of alumina is needed and for that six mt of bauxite is required.

Vedanta has been trying to convince state-run National Aluminum Company, which exports about one million tonnes of alumina from its Koraput plant, to let it buy the raw material at a premium. Nalco remains unmoved, exporting bauxite from the very port from where Vedanta imports ore to run its next door Lanjigarh refinery.

Vedanta Resources Chief Executive Tom Albanese, who met Odisha Chief Minister Naveen Patnaik and senior government officials on Friday, said the state government understood that it wasn't just about securing bauxite anymore, but doing so urgently. Albanese also pushed the idea of an aluminium park in Jharsuguda to which Vedanta could commit metal. Albanese said he believes the future for Odisha, whose bauxite discovered in the 1970s promised to change global aluminium order, should be "bauxite to alumina, alumina to aluminium, aluminium to auto components".

Vedanta's smelting business, which has been cash positive till recently, consists of two smelteRs While running one at 0.5 mt capacity, it has been unable to operationalise another 1.25 mt smelter that has SEZ status due to power issues. Smelting is power intensive - power accounts for half the cost of making aluminium.

The company has long been pleading not to be burdened by the cross subsidy cost and to allow it to use power from the IPP by treating it as captive.

With surplus power from another 1,215 mw captive power plant, Vedanta had managed to operationalise 70 pots at the second smelter at Jharsuguda. The interim OERC order can, state permitting, let it operationalise the entire production line of 336 pot, increasing alumina production potentially by 60%.

On August 26, Vedanta announced a "gradual closure" of its one mt refinery, which has been struggling with regulatory issues to find captive bauxite for a decade. Aluminium prices have fallen to $1,600 a tonne on the London Metal Exchange from $1,900 in January. Spot prices of alumina are $282-290 a tonne. Lack of captive bauxite handicaps Vedanta from fighting sliding metal price. It has already shut a processing plant of unit Bharat Aluminium Company at Korba in Chhattisgarh. Vedanta now says it may be forced to do the same at Lanjigarh, Kalahandi, as well.

China Guizhou Discovers Huge Bauxite Deposit

SMM - September 6th, 2015

Guizhou Geological Bureau recently discovered a huge bauxite deposit in Qingzhen City, Reserves of the deposit are as high as 19.84 million tonnes, the media added.

Vedanta to ramp up aluminium output at Odisha plant by 60%

Business Standard Private Ltd. - September 4th, 2015

In a move that could be seen as a paradox to Vedanta's move to shut down its Lanjigarh alumina refinery in the backdrop fall in global aluminium prices and lack of bauxite linkage, the company has initiated the process of stepping up aluminium production at its Jharsuguda smelter in Odisha.

The company, over the next six months, plans to ramp up aluminium production at Jharsuguda facility from 0.5 million tonne to 0.8 million tonne per annum.

"We had decided to shut down the alumina refinery as present operational costs sans bauxite linkage are unviable. But in case of aluminium, there was a positive cash flow till last month. Though the metal prices have dipped further, we can still produce aluminium at Jharsuguda at a cost which is about same as the selling price", said Abhijit Pati, CEO (aluminium), Vedanta Ltd.

At Jharsuguda, Vedanta had installed two smelters at an investment of Rs 25,000 core with combined annual capacity of 1.75 million tonne, representing the largest single location aluminium facility in the world.

While it is currently operating one smelter of 0.5 million tonne per annum (mtpa) capacity, the second unit of 1.25 mtpa, which had SEZ status, was lying idle for last couple of years due to dispute with the state government over access to power for the unit.

The company was asked to draw power for the unit from its own power plant (a 2400 Mw station having independent power producer status located in the same complex) by paying cross subsidy charges that substantially pushed up the power rate, which accounts for nearly 50 per cent of the aluminium production cost.

Recently, the Odisha Electricity Regulatory Commission (OERC), in an interim relief has waived off the cross subsidy charges, spurring the company's decision to rev up the idle second smelter.

Already, 70 aluminium making pots of one production line of the smelter have been made operational through drawal of surplus power from the captive power plant (CPP) of the first smelter. Now with the OERC's interim relief, we plan to fully operationalize one of the four production lines of the smelter which will enhance our aluminium production capacity at Jharsuguda from 0.5 mtpa to 0.8 mtpa over next six months, Pati said.

"In the process, we can reduce fixed cost burden of the idle smelter and accrue depreciation benefits", he added.

With the Lanjigarh alumina refinery of the company, which is running at reduced capacity due to bauxite shortage, unable to meet the raw material need of the smelter, the company is currently importing alumina from places like South Africa and Australia to convert it to aluminium.

The cost of production of aluminium at Jharsuguda works out to 1700 dollars per tonne which is the same as LME (London Metal Exchange) price of 1600 dollar per tonne plus 100 dollar premium it fetches. The imported alumina is costing us 360 dollar per tonne including port handling and freight charges. With cost optimisation at Lanjigarh and Jharsuguda and slight improvement in LME metal prices over next one year, the smelter operation can be viable, Pati said.

Odisha Mining Corporation to fast track bauxite mining to rescue Vedanta refinery

Business Standard Private Ltd. - September 2nd, 2015

In its bid to rescue Vedanta's alumina refinery at Lanjigarh, the Odisha government has put its mining PSU Odisha Mining Corporation (OMC) on the job to start mining from Karlapat mines at the earliest.

Timelines have been set to achieve different critical milestones to commence bauxite mining from Karlapat which has 153 million tonne of proven reserve and 54 million tonne probable reserve. OMC aims to start mining activity from the mine from December 2016.

"OMC has already applied for mining lease (ML) on 1800 hectares over Karlapat. The PSU has also set a mining plan of extracting five million tonne per annum of bauxite. The mining plan would soon be sent to the Indian Bureau of Mines (IBM) for approval.", said a senior government official.

The Centre, in March this year, had decided to allocate the Karlapat deposits to the state run miner following a request from the state government to reserve the mines in favour of the PSU.

The state government had sought reservation of the bauxite mines for 30 years, arguing that it will ensure fair and equitable distribution of the raw material.