AluNews - May 2016

Alba Cuts US$500 MM from Line 6 Budget

Aluminium Insider - May 31st, 2016

Aluminium Bahrain B.S.C. (Alba) announced last weekend that it has been forced to cut US$500 million out of the CAPEX associated with its Line 6 project. The Bahrain-based smelter laid the blame at the feet of the late drop in global crude oil prices.

Alba's initial Bankable Feasibility Study called for a CAPEX of US$3.5 billion in order to finance construction of the plant's sixth pot line and Power Station 5.

"We are pleased to arrive at a lower CAPEX as that will reduce the debt burden when financing the construction of the sixth pot line and Power Station 5," explained Alba's Chief Executive Officer Tim Murray. "The Project hasbeen gaining, recently, significant momentum and our Line 6 team is gearing-up on all fronts."

Despite the announced cut in CAPEX, Alba says the project remains on schedule to begin production in early January 2019. The firm says that it is exploring different financing options at the present time for the project.

The project will boost Alba's production capacity by 514,000 metric tons per annum when it comes online, making it the largest single- site smelter in the world. The total capacity will be over 1.45 million metric tons when fully ramped up. The project is key to allowing Alba to continue its marketing strategy of maintaining its core presence in the GCC, according to Murray. It will also help Alba leverage its global sales offices to directly market the additional aluminium produced to meet the growing international demand for the commodity.

Aluminium Bahrain B.S.C., or simply Alba, is one of the largest industrial companies in the Middle East and is one of the top 10 largest aluminium producers in the world. Originally incorporated in 1968, the company is basedin Bahrain and 87% of its total workforce is Bahraini nationals. It began operations in 1971 with a 120,000 metric ton annual capacity. Modernization bumped the output up to 450,000 metric tons in 1992. In the spring of 2005, Alba opened Line 5, raising output by 860,000 metric tons per year. Maximum output for the smelter is in the neighborhood of 1.2 million metric tons per year.

Alcoa Portland smelter under threat of closure as power subsidy axed by Victorian Government

ABC News - May 30th, 2016

The end of a decades-long power subsidy is threatening the future of Portland's smelter, putting at risk the Victorian coastal community's economy.

The fixed 20-year subsidy between the Victorian Government and global aluminium producer Alcoa seems unlikely to continue after November, with Treasurer Tim Pallas ruling out "open-ended engagements" with the company.

Enacted in the late 1980s by then-Labor premier John Cain, the subsidy was designed to provide electricity to both the Portland and now-defunct Point Henry smelters at a price linked to the world price of aluminium.

Mr Pallas said the subsidy had come at a significant cost to successive Victorian budgets.

"If you look back at the time the arrangements were struck, it would have been seen that the level of liability the state was incurring was a reasonable one," he said.

"But those numbers have grown so substantially that it was a subsidy well in excess of $100 million on some occasions."

Mr Pallas said although the Government would not maintain the existing arrangements, it would work alongside the company and consider other assistance measures.

Aluminium Bahrain cuts capital cost of expansion project by $500m

Arabian Business - May 29th, 2016

Aluminium Bahrain, owner of one of the world's largest smelters, said on Sunday the global drop in oil prices has cut the projected capital cost of its Line 6 expansion by $500 million to a total of $3 billion.

The Line 6 project is expected to boost Alba's annual output by 540,000 tonnes to 1.5 million tonnes a year with "first hot metal" due to flow in early January 2019.

"Following our ongoing review in response to the lower oil prices and the commodity market's soft conditions, the capex has significantly shrunk to approximately $3 billion," a statement by the company said.

The firm also said it was continuing to explore different possibilities for the structuring and financing of the project.

"We are pleased to arrive at a lower capex as that will reduce the debt burden when financing the construction of the sixth pot line and Power Station 5," Chief Executive Tim Murray said in the statement.

Nalco, IMIDRO sign pact to set up aluminum smelter in Iran

Money Control - May 24th, 2016

Aluminium firm Nalco and Iranian Mines & Mining Industries Development & Renovation Organisation (IMIDRO) signed an MoU to jointly explore the possibility of setting up an aluminium smelter in Iran.

The Odisha-based Nalco will supply alumina from its refinery in India to the smelter in Iran.

The pact also envisages tolling arrangement with existing smelters in Iran for producing aluminium from alumina supplied by Nalco, inter alia.

"Nalco looks forward to using the low-cost gas-based energy available in Iran for conversion of its surplus alumina, presently exported to international markets, to bring in value-addition and scale up value chain," Nalco CMD T K Chand said.

Under the provision of the pact, a joint taskforce comprising Nalco and IMIDRO experts, will be constituted to work out the details.

The pact was signed between CMD, Nalco and Vice Chairman, Planning Board, Iran, today in Tehran in presence of the Prime Minister of India and the President of Iran.

China's First Overseas Alumina Production Starts in Indonesia

CRI English - May 21st, 2016

A Chinese-invested smeltery was officially put into production on Saturday in Indonesia.

The smeltery, invested by China Hongqiao Group Limited and Winning Investment (HK) Company Limited, is the first giant aluminum oxide project that Chinese companies have invested in overseas.

The two Chinese companies jointly signed the cooperation agreements with Indonesia-based PT Cita Mineral Investindo Tbk on the aluminum oxide project and supporting facilities on October 3, 2013, when Chinese President Xi Jinping paid a state visit to Indonesia.

The production line is part of the 2 million-tonne-a-year smelting plant with a total investment of 1 to 1.5 billion U.S. dollars which is operated by PT Well Harvest Winning Alumina Refinery, a joint venture which Hongqiao holds a 56 percent stake.

The factory, integrated with a self-produced power plant and seaport in West Kalimantan Province's Ketapang Regency, processes local bauxite into alumina, a material for production of aluminium.

Indonesia, the world's main nickel ore exporter and supplier of bauxite, banned raw ore export in early 2014 to encourage the building of smelters and shift exports from raw materials to higher-value products.

Hong Kong listed Hongqiao aims to produce 6 million tonnes of aluminium by the end of 2016, from 5.19 million tonnes last year. Hongqiao enjoys a much lower production costs than its rivals as it has its own power plants, in-house upstream materials and other production facilities.

Bell Bay Aluminium to Return to Full Capacity Sooner Than Expected

Aluminium Insider - May 21st, 2016

Bell Bay Aluminium's General Manager said this week that his firm is glad to be ramping up to full production capacity now that power rationing is over. An extended outage at Basslink, the high-voltage direct current (HVDC) cable link connecting the Loy Yang Power Station, Victoria to the George Town substation in northern Tasmania, and a record drought led to energy shortages and an agreement among major industrial energy consumers to limit their electricity usage.

Tasmanian Electro Metallurgical Coal (TEMCO) and Bell Bay Aluminium are both expected to return to full production in four or five weeks.

According to BBA general manager Ray Mostogl, above-average rainfall in recent weeks has been the factor that broke up the energy logjam and brought energy supplies up to previous levels.

"The rainfall has been what we've all been hoping for. We're delighted to be ramping up about a month earlier than we first planned," explained Mostogl.

"The process of returning to full production will take us around five weeks as we bring our plant safely back online and back up to target production."

Tasmania's energy crisis has taken a toll on Bell Bay Aluminium. Last month Mostogl told an Australian Senate committee that the energy shortage has cost the firm A$22 million (US$15.88 million­) and a great deal of goodwilldue to its failure in filling some orders.

Stephen Davy, Hydro Tasmania's CEO, indicated that Tasmania is expected to have record rainfall this month. This unprecedented rainfall would aid the firm in coming to an agreement with other Tasmanian concerns to cease energy rationing sooner than planned.

"We're extremely grateful to our major customers for the contribution they've made to helping Tasmania cope with the recent energy challenge," Davy said.

According to Hydro, dam levels have risen 3.9% in one week, bringing them to 20% of capacity. No word has been given regarding the reason for the outage of the Basslink cable. According to the operator, the cable is slated to return to service in the middle of next month provided that the weather does not become an issue.

Vedanta targets 1.5 million tonnes of aluminium production this fiscal

The Economic Times - May 20th, 2016

BHUBANESHWAR: Metals and mining major Vedanta Resources plans to ramp up aluminium production from Jharsuguda and Korba smelters of Bharat Aluminium Co to 1.5 million tonnes from 0.9 mt this financial year, a top official said.

Abhijit Pati, chief executive officer (aluminium) at Vedanta Ltd, said the company is undertaking this on the back of a favourable order from Odisha power regulator , allowing it to use 1800 mw of the 2400 mw power it produces at its Jharsuguda Special Economic Zone (SEZ) without paying a cross-subsidy cost. Power from one 600 mw unit goes to the state grid.

The issue of high power cost from its own plant due to cross-subsidy had forced the company to keep two lines, or almost 1.25 mtpa capacity, idle for almost three years. The company produced 0.5 mt from a single line last fiscal. It plans to produce 0.9 mt from Jharsuguda this fiscal, Pati said.

Aluminium prices have stabilised at $1,529-1,559 per tonne on the London Metal Exchange. Vedanta's costs are currently around $1,450-1,500 a tonne, add a maximum premium of $100 per tonne, and a thin margin remains. The struggle to manage costs will have captive bauxite supply from the state government," Pati told ET. "But unless we ramp up volume, interest costs will remain high and fixed costs wont come down." he added.

Vedanta's hopes to secure captive bauxite supply for its Lanjigarh refinery in the state was dashed with the Supreme Court refusing to allow Odisha government to mine Niyamgiri bauxite deposit.

Low bauxite prices, however, are helping the company manage without captive supply for its refinery in Odisha. State-owned Orissa Mining Corporation is working to develop other bauxite deposits, but these may take years to develop.

Meanwhile, Vedanta awaits clearance and legislation to develop laterite blocks with low grade alumina content.

Global Aluminium Production Down by 1.5% in Q1

Aluminium Insider - May 20th, 2016

According to numbers recently released by the International Aluminium Institute (IAI), worldwide aluminium production for the first four months of 2016 fell by 1.5% year-on-year, totaling a global production of 18.1 million metric tons.

In its report, the IAI indicates that the reason for the global decline is largely due to production cuts continued by the People's Republic of China, following up on their pledge made in December to cut capacity. China's output for the quarter fell 7.6% to 9.74 million metric tons. This drop continues a downward trend reported on last month by the IAI, which described an output drop of 461,000 metric tons year-on-year in the months between December and February, inclusive.

In December, smelters in China agreed to eliminate half a million metric tons by the end of the month, and not to add to production in the coming year as well. The cuts represent about twelve percent of the Middle Kingdom's yearly output of aluminium, but cuts were offset slightly by two million metric tons of new activity for the year. China Hongqiao independently announced a cut in production of 250,000 metric tons in December as well, representing about six percent of the smelter's total output. Hongqiao walked back the cuts later in March, however, when it announced that it would expand capacity to six million metric tons per annum, or sixteen percent, by the end of 2016, depending on market conditions.

Also making an impact was a concurrent drop in production in North America. Output fell 7.9% in the quarter, dropping tonnage to 1.37 million metric tons.

In contrast, ex-China production was up year-on-year by 14.5% to 1.1 million tons in the quarter.

Overall average daily output grew slightly, up by 0.6% in the first quarter, bumping the number up to 157,400 metric tons per day.

Iran Seeks US$10 Billion to Revive Domestic Aluminium Industry

Aluminium Insider - May 16th, 2016

The government of the Islamic Republic of Iran is in search of a US$10 billion investment to help it kick-start its domestic aluminium industry. Experts expect the industry to export over sixty percent of production, tapping into the growing global demand for the versatile metal.

"The government of President Hassan Rouhani has decided to revive aluminum projects including the one in Guinea," said Mohammad Aghajanlou, director of the mineral industries department of state-owned Iranian Mines and Mining Industries Development and Renovation Organization. "Import of bauxite into Iran via large ship is much more economical compared to what it was 20 years ago."

Although the political will exists to invigorate the domestic aluminium industry, the raw materials are not quite as available. That and an overall lack of electrical generation has limited Iran's output of the metal to 350,000 metric tons a year, which is below the domestic capacity of 470,000 metric tons. The current push to ramp up the country's aluminium production would put its capacity at 1.5 million metric tons in ten years, according to Mehdi Karbasian, managing director of Iranian Mines and Mining Industries Development and Renovation Organization.

The cornerstone in Iran's plan is the development of a bauxite mine in West Africa's Guinea. The 50/50 partnership between the two governments has thus far failed to yield any results in a quarter century, however. Iran's government recently engaged German firm DMT GmbH to advise them how to move the mine towards production, and a recommendation from the consultant is expected this fall.

"The mine in Guinea has more than 500 million tons of bauxite, but it's far from the sea and there is a need for rails to be put in place," Karbasian said. "We are weak when it comes to bauxite reserves."

Ultimately Iran intends to build a pipeline from inland mines to a port, replacing what sparse infrastructure for transporting the ore there is at present. The bauxite would be crushed and mixed with water before insertion into the pipeline to the coast, explained Aghajanlou.

Iran seeks $10bn investment for aluminium expansion

Trade Arabia - May 15th, 2016

Iran's miners are seeking investments worth $10 billion to address the issue of shortage of bauxite and electricity affecting the domestic aluminium industry, said a report.

Iran's current production of 350,000 metric tonnes a year is below capacity of 470,000 tonnes due to of a shortage of bauxite and electricity, Mehdi Karbasian, managing director of the state-owned Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO), was quoted as saying in an Iran Business News report, citing Bloomberg.

He added that with additional investment, Iran could boost output to 1.5 million tonnes by 2025.

Domestic aluminium production has been held back because a 25-year effort to develop a bauxite mine in Guinea has still not reached production.

A 50-50 partnership with the Guinean government has been renewed for another 25 years, with Iran now awaiting a consultant's recommendation by September on how to make the mine operational, added the report.

Restarting China aluminium plants may slow prices, warns Rusal

Business Day Live - May 11th, 2016

SHANGHAI — Russian aluminium giant Rusal warned against Chinese smelters restarting plants to keep from undermining prices that have retreated from this year's highs as Chinese producers consider launching a fund to deal with the layoffs from closures.

Global aluminium prices that rebounded to nine-month highs last month have enticed some Chinese smelters — that closed in the past year amid overcapacity in the sector — to resume production. But while analysts say the restarts have been slow, producers fear they could weigh on prices again.

Chinese producers should continue to keep their discipline towards production to "ensure gradual improvement in prices and profitability", Rusal's deputy CE, Oleg Mukhamedshin, told an industry conference on Tuesday.

There had been instances in the past when Chinese smelters restarted output as prices bounced to make immediate profits, but it has turned out that is not helpful to prices, said Mr Mukhamedshin.

Aluminium on the London Metal Exchange was trading at $1,566.50 a tonne on Tuesday, down from this year's peak of $1,686 reached on April 29.

China's aluminium producers pledged to shut 4.6-million tonnes per year of capacity, or about 10% of smelting, amid plunging prices for the metal.

Chinese producers were looking at establishing a fund to help companies that have shut and to cope with the big swings in futures prices, said Wen Xianjun, vice-chairman of China Nonferrous Metals Industry Association, at the industry conference.

"The recent volatility in futures is not favourable for industry players. And we are considering to set up a fund to battle big futures market swings and for smelters that have closed and have to deal with layoffs," said Mr Wen.

The association will lead the co-ordination among the smelters who they hope will provide the capital for the fund, said Mr Wen.

He also said while restarts and investment in new capacities would be limited, he saw demand growth outpacing supply.

Aluminium consumption in China is set to grow by 7%-10% a year over the next five years and hit 44-million tonnes by 2020, Aluminium Corporation of China president Ao Hong said.

Indonesia also on Nalcos radar to set up aluminium smelter

Indiatoday - May 10th, 2016

New Delhi, May 10 (PTI) Aluminium maker Nalco is also scouting for locations in Indonesia to set up a five lakh tonnes per annum smelter as it eyes to rationalise cost of operations and cater to the expected rise in demand.

The government had earlier hired consultants to scout for locations for establishing a five lakh tonnes greenfield aluminium smelter and a power plant, where energy is available at competitive prices, a source said.

"Based on the study conducted by the consultants, Nalco has identified Oman and Indonesia. Iran is another country that has come up after the US lifted sanctions against it. Nalco CMD T K Chand also met top Iranian officials last month over this," the source added.

A senior government official confirmed the development, saying the government has now commissioned a detailed study for all the three countries including on the long-term prices (at least 10 years) for gas that can be offered.

Another point is that all the three countries are closer to India in terms of shipping routes and bauxite from mines in India can be shipped to the plant locations in these countries at competitive logistics cost, he added.

Indonesia, among the top 10 gas producing nations with an estimated output of 74 billion cubic meters, has the third largest gas reserves in Asia Pacific (after Australia and China), accounting for about 1.5 per cent ofthe total global gas reserves, the official said.

Last month, Chand met Irans Mines and Mining Industries Development and Renovation Organisation head Mehdi Karbasian in Tehran on setting up a five lakh tonnes per annum aluminium plant in the country through a joint venture (JV).

The state-owned firm is looking at the feasibility of setting up such a plant in the Chabahar Free Trade Zone (FTZ) in the Islamic nation.

It takes around USD 1,500-1,700 to produce one tonne of aluminium, with alumina and power accounting for 40 per cent each of the cost and raw materials and others contributing the remaining 20 per cent.

The Navratna firm and Irans Industries Ministry has set up a task force to deliberate on the proposed smelter and gas-based power plant and come out with a feasibility report by July this year. PTI RNK ABK

Balco to Implement Modernization Plan to Increase Output to 1 MTPA

Aluminium Insider - May 3rd, 2016

Citing a rally in the worldwide aluminium market, India's Bharat Aluminium Company Limited (Balco) announced plans last week to boost production to one million metric tons per annum. The firm, which is a subsidiary of Vedanta Resources plc, has put off the production increase, which was planned for 2013.

The proposal is for Balco to modernize and expand the facility located in Chhattisgarh's Korba district. Vedanta's Chairman Anil Agarwal visited the facility earlier last week for the first time after becoming the majority stakeholder in 2001 and subsequently told company officials to restart the program and implement modernization at once.

"The company would be investing Rs 10,000 crore (US$1.5 billion) for the expansion plan," a Balco spokesperson told the media. The spokesperson elaborated by saying that the existing facilities would be dismantled and a new plant with modern technology would be assembled in its place. The new facilities would increase existing capacity to 1 million metric tons per annum.

At the present time, Balco has a production capacity of 575,000 metric tons per annum, but the plant is unable to run at full capacity due to power constraints. In a separate, earlier transaction, the firm is assembling a 1200 mW power plant to alleviate power issues. Balco obtained the nearby Chotia coal mine via auction to power the new plant.

In addition to the plans already mentioned, Balco is exploring the purchase of bauxite mines in Madhya Pradesh and Chhattisgarh. The mines the firm is operating at present will supply its operations for only another three years.

Balco was founded as a state-owned company ("public-sector undertaking") in 1965. It began production of aluminium nine years later. The firm was entirely state owned until 2001, when it divested 51% of its stock to Sterlite Industries India Limited. The Indian government continues to hold a 49% stake in the company.