AluNews - December 2003

China's Copper, Aluminum Demand "Still Booming"-Macquarie

Yahoo News Monday December 1, 4:50 PM

Sydney, Dec. 1 (Dow Jones) - China's demand for copper and aluminum shows no signs of slowing, said Australia's Macquarie Bank, citing statistics on output of semi-fabricated products and apparent consumption.

Calling it "a good proxy for demand for metal", Macquarie noted that reported production of aluminum and copper semi-fabricated products rose 31% year-on-year and 28% year-on-year respectively in October. In both instances, this marked an improvement over the strong rates of growth already seen through the first nine months of 2003.

The bank added that apparent consumption of aluminum rose 27.6% year-on-year in October, while in the case of copper it climbed between 28.5% and 30%, depending on uncertainties over net changes in official stocks.

"The strength of Chinese aluminum demand this year has meant that China has not been as bearish an influence on the world aluminum industry as we had anticipated (since) the vast bulk of the massive increase in Chinese aluminum production has been absorbed by the domestic market," Macquarie said.

Nonetheless, China remains a growing net exporter of aluminum and a growing net importer of copper.

Macquarie also cited the price differential for copper and aluminum between the Shanghai Futures Exchange and the London Metal Exchange as an indicator of the state of the supply-demand balance for each metal in China.

While the differential on aluminum prices has narrowed in the past month, it "is still fairly wide", suggesting domestic supplies are tight, and that "Chinese net exports of aluminum will remain at a fairly low level for the next couple of months."

"In copper, the differential between Shanghai and LME prices has narrowed since the start of the month, and is, perhaps pointing to a slight slowdown in the rate of imports in the short term," Macquarie said.

Nicholas Sinclair, Dow Jones Newswires, 612-8235-2957


SA aluminum dumping harms industry: US

Business Day, South Africa, South Africa, 1 Dec 2003

WASHINGTON - A quasi judicial US trade body has ruled that alleged dumping of aluminum plate from South Africa is likely damaging the American industry.
The decision, carried unanimously by the six-member US International Trade Commission (ITC), could eventually lead to sanctions.

The ITC found there was a "reasonable indication" that dumping - selling aluminum plate for less than the price charged in South Africa or below the cost of production - had hurt US industry.

The ruling means the US Department of Commerce will press ahead with an antidumping investigation of aluminum plate imports from South Africa, with a decision due about March 24 next year.

US industry celebrated.

"The vote means that the ITC has found a 'reasonable indication' of injury, which has been our position in this case," said Alcoa Mill Products president Robert Wetherbee.

"We look forward to the continuation of the case and to presenting the facts necessary to secure an antidumping duty order against the imported product from South Africa. We believe the facts in this case clearly warrant such a finding."

Alcoa said the main South African exporter, Hulett Aluminium Ltd., had enormously expanded US sales by alleged dumping.

If the US Department of Commerce agrees that the aluminum has been dumped, the ITC will have a final investigation late next year to decide whether US industry has been harmed, a finding that could lead to antidumping duties.

AFP


China move to net aluminium importer hits prices

Reuters, 12.02.03, 11:10 AM ET

By Nick Trevethan and Lee Chyen Yee

LONDON/BEIJING, Dec 2 (Reuters) - Growing Chinese demand for aluminium and cuts in export rebates could boost global prices next year as the world's second biggest consumer of the metal moves closer to becoming a net importer rather than net exporter, analysts said.

Rising prices for alumina, the intermediate material that is smelted into aluminium, provide further upside pressure, they added.

"China will be a major force boosting global demand and that'll lift prices of metals such as aluminium," said Lu Haizhu, analyst at Star Futures in the southern city of Shenzhen.

"We have been painting a positive picture for aluminium and have a relatively upbeat forecast for the metal compared to some market participants next year," added analyst Ingrid Sternby of Barclays <BARC.L> Capital in London.

"We have raised our cash average price forecast for 2004 to $1,544 a tonne, five percent higher than our previous prices," she added.

This is in part fuelled by growing internal demand by the biggest aluminium consumer after the United States, which is mopping up growing production and changing China's aluminium trading position with the world.

"Our numbers show China as a net importer by 2006," Sternby said.

OUTPUT GROWING, CONSUMPTION TOO

China's aluminium output is expected to increase 800,000 tonnes to 6.1 million tonnes in 2004, while next year's demand is seen rising 13-14 percent from this year's 4.6-4.7 million tonnes, Chinese analysts said.

But Macquarie Equities' analyst Adam Rowley said domestic demand could be a lot higher than that, making China a net importer sooner than people think.

"If you look at demand so far this year it's up by 20 percent or so and next year could see another 20 percent increase. We could see over six million tonnes in demand," he said.

He expected Chinese production in 2004 to come in at around 6.4 million tonnes.

Reuters Metal Production Database (MPD) ( ) puts Chinese production at 6.5 million tonnes in 2004, rising to 7.5 million tonnes in 2005.

IMPACT OF REBATES

Barclays ' Sternby told Reuters one of the factors behind her higher price forecast was the expectation that Chinese exports would be lower next year as the government cuts rebate rates.

China's aluminium exports are seen falling next year, especially in the first half, as smelters watch closely how the government implements its plan to cut tax rebates for aluminium exports to eight percent from 15 percent, analysts said.

China was expected to remain a net exporter in 2004 but the outflow would decrease slightly to around 800,000 tonnes, Chinese analysts said.

Western analysts said this was a gross export figure and not a trade balance for the metal.

Both Rowley and analyst Nick Moore of JP Morgan saw Chinese net imports around 200,000 tonnes.

"However, there is a very wide spread in estimates. If you tinker with production and consumption numbers you can engineer a one million tonne swing," Moore said.

ALUMINA PRICES HIGHER

Another factor driving up global prices is the rising cost of alumina, which has a major impact on costs and profitability.

On Monday traders in Europe said alumina was selling for around $380 to $400 a tonne on the spot market.

"We are not as high as $450 at the moment, but we could see those levels in the future, especially if metal prices go higher," one trader said

"If alumina prices rise to $450 to $500 a tonne, then some of the newly-added capacity (in China) might not begin operations," Guo Jianjing, import and export manager at North Investment Co in Shenzhen said.

"Power and alumina make up 80 percent of Chinese smelters' production costs and it'll be too risky for new plants to start because they won't be able to make any profit," he added.

Sternby said strong alumina prices, problems with power availability and the change in export tax rebates could hit Chinese production and would certainly slow exports in 2004.

"The implication of stronger alumina prices is much more serious for Chinese smelters than power as they are operating under already tight margins," she said.

However higher prices could prove a white knight for marginal smelters, she added.

Copyright 2003, Reuters News Service


$332M RusAl Upgrade

Moscow Times, Russia 2 Dec 2003

MOSCOW (Bloomberg) -- Russian Aluminum, which makes one-eighth of the world's aluminum, said it plans to spend $332 million to boost output at two of its Siberian smelters by an average of 8.5 percent over the next four years.

RusAl and Hatch Group, a Canadian engineering company, completed a feasibility study for upgrading RusAl's Krasnoyarsk and Sayanogorsk plants, the aluminum maker said in a statement.

The planned upgrade is part of RusAl's $4 billion plan to boost production by two-fifths to about 3.6 million tons a year. RusAl, the world's second-biggest aluminum producer, behind Alcoa Inc., has been cutting costs and improving technologies.

"The programs are aimed to raise the smelters' efficiency," Valery Matviyenko, a RusAl production director, said in the statement.

Of the total, the company plans to spend $270 million in Krasnoyarsk to increase output there 9 percent to 989,000 metric tons of the metal by 2007. The investment in Sayanogorsk will total $62 million by 2006, bringing production 5.5 percent higher to 480,000 tons.

Hatch is also working on a project to build another, $700 million smelter in Sayanogorsk for RusAl, where it provides engineering, procurement and project management.


Alba share sale talks underway

Gulf Daily News, Bahrain, Wednesday 3 December 2003

TALKS are still underway to sell 26 per cent of Alba to an American company, MPs heard yesterday.

The government is negotiating with aluminium giant Alcoa, said Oil Minister Shaikh Isa bin Ali Al Khalifa. "Negotiations are now being carried by Finance and National Economy Minister Abdulla Saif, since his ministry is in charge of the company's shares in Alba," he said

The Cabinet approved the proposal in July, and in September an agreement of understanding was signed with Alcoa to come up with a suitable deal which suits both.

"Based on the deal, Alcoa will provide Alba with its requirements of alumina, the raw material needed for the production of aluminium," said Shaikh Isa. He was answering a question by Parliament services committee vice-chairman Shaikh Ali Mattar.

Takeover by Alcan is in homestretch

Evansville Courier & Press December 4, 2003

With Alcan Inc. controlling more than 90 percent of the shares in France-based Pechiney, the Montreal aluminum firm is taking steps toward an eventual merger of the companies.

Alcan said Wednesday that its top executives would dominate its executive committee and six business groups, with Travis Engen remaining as president and CEO.

Cynthia Carroll will remain as senior vice president for Alcan Primary Metal, which includes the Sebree smelter here.

One Pechiney executive, Christel Bories, would come on board as a senior vice president overseeing Alcan Packaging.

Alcan said Tuesday it had secured 92.21 percent of Pechiney shares as part of its takeover, which was rebuffed by the French company until Alcan sweetened its offer.

Alcan plans to reopen its tender offer in hopes of raising its stake to 95 percent, which would lead to Pechiney being delisted as an independently traded company.

The acquisition of Pechiney will make Alcan the world's largest aluminum company in terms of annual sales -- in part because of Pechiney's revenue from its large metal-trading business -- but it would rank second to Alcoa in aluminum production.


Three Pechiney officials to join Alcan's top ranks

Reuters, 12.03.03, 1:03 PM ET

MONTREAL, Dec 3 (Reuters) - Alcan Inc. <AL.TO> (nyse: AL - news - people) said on Wednesday that three senior officials from Pechiney <PECH.PA> will join its top ranks once the 4-billion euro ($4.8 billion, C$6.3 billion)) takeover of the French aluminum group is completed.

Pierre Vareille will join the office of the president, a four-person squad at the top of Alcan's executive structure, where he will oversee Pechiney's integration.

The packaging division will be led by 38-year-old Christel Bories, who had the same job at Pechiney. Alcan's current head of packaging, Armin Weinhold, will be her chief operating officer.

Jean-Dominique Senard, Pechiney's head of primary metal production, will move to supervise Alcan's primary metal production in Europe and Africa.

Vareille, Bories and Senard have all been named senior vice-presidents and part of Montreal-based Alcan's newly extended executive committee, which groups the 16 top officials in the company.

($10.83 euros) ($1$1.30 Canadian))

Copyright 2003, Reuters News Service


Pechiney Cape York reprieve

Brisbane Courier Mail, Australia 04dec03

By Nathan Scholz

FRENCH mining company Pechiney has won breathing space in its battle to hold a Cape York bauxite mining lease the Queeensland Government wants to put to tender.

The Government yesterday failed in its bid to force the miner to hand over its Aurukun lease without going to trial.

Instead Supreme Court Justice James Douglas said it would be "inappropriate" to determine the difficult issues related to 30 years of wrangling over the lease without hearing Pechiney's evidence. The decision means the two parties will square off in a Supreme Court trial early next year.

The Government had claimed Pechiney lost the right to mine an area rich with bauxite, the source of aluminium, because it failed to build an alumina refinery required under a special Act of Parliament.

The Act, which Sir Joh Bjelke Petersen's National government passed into law the day Gough Whitlam's Federal Labor government was thrown out of office, was supposed to be completed by 1983, a deadline later extended to 1988.

In yesterday's court action barrister Pat Keane, QC, for the Government, sought a declaration Pechiney had to immediately hand over the lease because the company's rights lapsed 15 years ago.

But Pechiney's barrister, David Jackson, QC, argued the case needed to go to trial because successive state governments had verbally assured the company it would not be forced to build a refinery while it was financially unviable.

Mr Jackson said it was inequitable for the Government to claim Pechiney had no right to the lease when it had been paying rent for the past 12 years.

He said Pechiney also had been actively involved in fighting the Wik people's native title claim over the area, which arose only after their rights were supposed to have lapsed.

The trial date will be fixed at a hearing later this month.

China Minmetals says pursuing Kaiser alumina

Reuters, 12.04.03, 10:25 PM ET

BEIJING, Dec 5 (Reuters) - State-owned China Minmetals Nonferrous Metals Co Ltd (Minmetals) is one of the bidders for Kaiser Aluminum Corp's <KLUCQ.OB> alumina assets, the group's vice president confirmed on Friday.

"Yes, we have joined the bidding," said Zhu Guang at the sidelines of an aluminium industry forum in Beijing.

Zhu did not comment on when the bidding process is expected to be completed. In a recent financial filing, Kaiser said it was possible that one or more of its various asset sales may occur during first-half 2004.

Kaiser Aluminum is evaluating several bids for its majority share in two alumina refineries and its interest in a bauxite mine in Jamaica and an aluminium smelter in Wales. The company, North America's third-largest aluminium producer, is looking to emerge from bankruptcy protection.

Kaiser is selling its 65-percent stake in Alumina Partners of Jamaica (Alpart); its 49-percent interest in Kaiser Jamaica Bauxite Co; its 49-percent share of Anglesey Aluminum Ltd in Wales; and its wholly-owned Gramercy refinery in the U.S.

Minmetals was previously identified by industry sources as one of the bidders for Kaiser's assets.

Other bidders for the 65-percent Alpart stake were earlier identified by the National Workers' Union in Jamaica, citing a statement from Alpart, as Texas-based Sherwin Alumina Co., a division of privately-held BPU Reynolds; a joint venture between Century Aluminum Co (nasdaq: CENX - news - people) and Toronto's Noranda Inc <NRD.TO>; Switzerland-based Glencore International AG; and Japan's Mitsubishi Corp <8058.T>.

Norway's Norsk Hydro ASA <NHY.OL> owns the other 35 percent of Alpart's bauxite mine and alumina refinery and has first right of refusal to buy Kaiser's stake.

Copyright 2003, Reuters News Service


Nalco to maximise income from alumina export

Business Standard, India December 5, 2003

Dillip Satapathy in Bhubaneswar

National Aluminium Company Limited (NALCO), the country’s leading exporter of alumina and aluminium, has concluded its long term contract negotiations with international buyers for export of around 0.75 million tonnes of alumina during the calendar year 2004.

According to sources, the company, taking advantage of the buoyant international alumina market, has been able to finalize the selling prices at the highest level of the contracted price bands. The export orders will be executed during January-December period of 2004.

Sources said, this is likely to result in higher realization of around Rs.30 crore during the last quarter of the current fiscal, and around Rs.85 crore in the first 3 quarters of the next fiscal at the prevailing levels of LME metal price.

Nalco targets to export about 9,00,000 tonnes of alumina during the current fiscal, against which 5,70,000 tonnes of alumina shipments have already taken place by November end, 2003.

Nalco owns and operates world’s 9th largest Alumina Refinery at Damanjodi in Orissa The installed capacity of the refinery is 15.75 lakh tonnes per annum.

According to C Venkataramana, chairman cum managing director of Nalco, the company aimed to achieve a turnover of Rs 3,500 crore during the current fiscal with a growth of eight per cent over the last fiscal.

Of this exports are expected to contribute about Rs 2000 crore. The company appears to be well on course to achieve this target as it recorded a revenue of Rs 650 crore during the first quarter of the current fiscal. The net profit of Nalco stood at Rs 521 crore in 2002-03.


CGI wraps up Alcan Packaging deal worth $10M US to support SAP applications

CBC News, Canada 12:33 AM EST Dec 06

MONTREAL (CP) - CGI Group Inc. has won another information technology services outsourcing contract with Alcan Inc., a 10-year arrangement valued at $10 million US.

The agreement announced Friday involves support for applications of software made by German-based SAP at the Alcan Packaging pharmaceutical and personal care division.

The announcement follows a $113-million-US deal announced Wednesday under which CGI (TSX:GIB.A) takes over all information technology operations at the aluminum maker's North American rolled products division.

In the latest arrangement, Alcan (TSX:AL) will be served from CGI's SAP centre in Montreal, which already supports 17,000 users of SAP business software in North America.

"Alcan continues to be a strategic account for CGI and we are happy to now be expanding into their packaging division." stated Michael Roach, president and chief operating officer of CGI, which is 29.9 per cent owned by BCE Inc.

"We are dedicated to assisting Alcan in their pursuit of business objectives by supplying quality and cost-effective solutions."

© The Canadian Press, 2003


Syed Mokhtar's huge smelter project hits snag

Business Times Singapore (subscription), Singapore December 6, 2003

Sources say Dubai partner pulling out of deal

By EDDIE TOH IN KUALA LUMPUR

CRACKS have appeared in Syed Mokhtar Al-Bukhary's US$2 billion aluminium smelter project in Sarawak, which will be powered by his Bakun dam project in the same state.

According to Reuters news service yesterday, state-owned Dubai Aluminium Company (Dubal) is not taking part in the venture - known as Smelter Asia - to churn out 500,000 tonnes of aluminium products a year.

'As of now, Dubal is not participating in the smelter,' a source told Reuters, without elaborating.

The source also said prominent businessman Mohamad Ali Alabbar - Syed Mokhtar's partner in the Sarawak projects and other deals in Malaysia - has been 'replaced' as vice-chairman of Dubal but remains a director.

Mr Alabbar could not be contacted at his Malaysian office yesterday. His Gulf International Investment Group (GIIG) is housed in Syed Mokhtar's office in KL, as they have equal shares in GIIG.

GIIG and Dubal set up a partnership to jointly undertake the aluminum smelter project last year. The shareholding structure was not disclosed.

Dubal's withdrawal could be a blow to Syed Mokhtar's plan to become one of the biggest aluminium and electricity players in the region.

GIIG is in the midst of taking over the ownership and development of Bakun, which will sell half of its power capacity of 2,400 megawatts to Smelter Asia when both projects are completed around 2007. It's not known if GIIG will proceed with its plan to take majority control of Bakun following Dubal's decision to give the aluminium project a miss.

GIIG said it had paid the deposit to buy a 60 per cent stake in Bakun from Malaysian Finance Ministry's Sarawak Hidro for RM945 million (S$427 million).

Syed Mokhtar also faces other teething problems in taking over Bakun, which has been fraught with difficulties since the project, on the Rejang River, was first mooted by the government in the 1960s.

Contractor Sime Darby has confirmed that the project, which involves flooding an area the size of Singapore, is facing a delay of six months.

The government revived the project, previously handled by businessman Ting Pek Khiing, two years ago after it was shelved during the 1997-98 recession.

Uncertainty over Mr Alabbar's control of Dubal could also cast a pall on his other ventures with Syed Mokhtar.

GIIG is raising RM1 billion to invest in Syed Mokhtar's array of projects in Malaysia and to look in at regional opportunities.

The Malaysian tycoon has been entrusted by former prime minister Mahathir Mohamad to develop a logistics hub in the southern state of Johor to rival Singapore.

Syed Mokhtar controls Senai Airport, Port of Tanjung Pelepas and Johor Port in Johor. He is also building a power plant and a bunker port in the same state.

In addition, his listed flagship Malaysia Mining Corporation and Gamuda have clinched the biggest job in the country - the RM14.5 billion contract to double-track the North-South Railway.


Brazil Alunorte alumina expansion delay 1 yr -CVRD

Reuters, 12.05.03, 2:19 PM ET

RIO DE JANEIRO, Brazil, Dec 5 (Reuters) - Expansion of the Alunorte alumina refinery in north Brazil has been delayed by a year and work can start no earlier than next March, Roger Agnelli, chief executive of Brazil's Cia Vale do Rio Doce (CVRD) said on Friday.

"It was a problem of environmental rules. We still need a license from Para state government. It's taking a long time and we now have to wait until the next dry season to get on with the work," Agnelli told reporters at a press luncheon.

He said that CVRD was waiting for Para state to fix a meeting.

"Meanwhile Australia and other countries are accelerating alumina projects to meet strong world demand," Agnelli noted.

Brazilian mining giant CVRD <VALE5.SA> (nyse: RIO - news - people), holds a 57 percent stake in Alunorte's refinery at Barcarena in Para.

The project, costing nearly $1 billion, will expand alumina output to 4.2 million tonnes per year by 2006, from 2.4 million tonnes in 2003.

It was suspended earlier this year due to the lack of an environmental permit to develop a new mine at Paragominas, 230 km from Alunorte, which will initially provide 4.5 million tonnes of bauxite a year as raw material for the refinery expansion.

"We are optimistic that we will get approval by March," Antonio Miguel Marques, CVRD's executive director of business development told Reuters.

He added that an environmental agency had cleared the mine but a political decision was now needed.

Copyright 2003, Reuters News Service


DCE Kicks Against Bauxite Mining

GhanaWeb, Ghana Friday, 05 December 2003

The East Akim District Chief Executive, Emmanuel Victor Asihene has called on prospective companies interested in investing in the Atiwa Forest reserve, Eastern Region, to consider options other than mining bauxite. He has therefore suggested the exploitation of timber resources in the forest in place of mining.

Mr Asihene told a group of investors from B.H.P. Billiton, Ghana that the people in the area have now resolved to leave bauxite mining for future generations when better technology for mining would have been developed.

This is because mining in the country has left most mining towns environmentally degraded, a situation that the people of Kibi want to avoid.

The DCE’s call comes just a week after the Okyehene expressed similar sentiments, which was condemned by Minerals Commission.

B.H.P Ghana, which is interested in bauxite mining, visited the area to assess the situation there and the future of the project. But Mr Asihene said the hopes of the people in the area to benefit from mining in the past have dwindled because they are now engaged in other viable economic projects.

The leader of the team, Mr. Riet, said the proposed investment was at the concept stage and the company had not yet been given a prospecting license to enter the area.

Foreign firms show interest in the $3.2 billion Al-Zubairah project in Saudi

MENAFN, Middle East - 08/12/2003

(MENAFN) - The Saudi Arabian Mining Company (Maaden) said that several foreign companies have expressed their interest in the SR12 billion ($3.2 billion) Al-Zubairah bauxite project in the Saudi Eastern Province, the Saudi Press Agency reported.

The company said in a statement that the bauxite project involves establishing a smelter and refinery for aluminum and alumina.

Maaden has already signed a financial consultancy agreement with Riyad Bank and the Australia and New Zealand Banking Group to conduct a detailed feasibility study of the Al-Zubairah project.

Preliminary studies have proved that the area between Qasim and Hail in the north has bauxite deposits of more than 126 million tons, 57 percent of which is alumina.

Maaden plans to extract 3.4 million tons of bauxite annually for the production of 620,000 tons of aluminum a year.

Energy-hungry China braces for power struggle as winter draws near

China Daily, China ( 2003-12-08 10:36)

From freezing shoppers in Shanghai to schoolchildren doing their homework by candlelight in Hunan, the Chinese are preparing for a winter season rendered cold and dark by frequent energy shortfalls.

China's economy is rumbling ahead, and power suppliers have great difficulties keeping up, with potentially dire consequences for an increasingly energy-dependent economy.

"The shortage will have a strong impact on the Chinese economy, no doubt about it," said Xiao Yunhan, an energy expert at the Chinese Academy of Science.

"Aluminum makers, who depend much on electricity, will suffer a lot while the impact to parts of the chemical industry will be disastrous," he said.

In one indication of how bad the situation is, officials in China's northeastern rust-belt have even had to buy power from impoverished North Korea (news - web sites) this year.

In China's largest city Shanghai, shopping malls and departments stores will turn off their central heating systems every day between 10:00 am and noon to avoid the peak daily power usage period.

The measure is meant to ease an expected power shortfall of two million kilowatts in the winter season resulting from coal supply shortages and a seasonal drought.

This is only the latest measure by the Shanghai authorities, who have also shut down all small fertilizer factories and drastically curbed the operations of energy-guzzling, low-added-value companies such as small steel plants.

To a certain extent, energy shortages are just part of the price China has to pay for becoming a richer society, analysts said.

"The economy is growing and people's lifestyle is changing," said Wei Zhihong, an energy researcher at Beijing's Tsinghua University.

"Many urban residents are moving from burning coal to using electricity, and that inevitably creates bottlenecks."

Nationwide, the energy demand has risen 15.6 percent so far this year from the same period in 2002, forcing 21 provinces to limit power consumption, up from 12 provinces last year.

No other place is worse hit at the moment than central China's Hunan province, where droughts have caused hydropower plants to reduce their production.

In the provincial capital of Changsha, the different districts are being forced to share the burden, having their power cut off every four days.

Many energy-dependent shops and production lines in the city have to close down temporarily during blackouts.

Chronic power shortages are likely to continue for at least another two years in some Chinese provinces, the state media have warned.

While the power shortage reflects rising demand for electricity, resulting from 8.5 percent economic growth this year, there are also decisive factors on the supply side, according to Xinhua.

The coal supply has shrunk because the government has stepped up efforts to shut down illegal coal mines after a series of fatal accidents this year.

This matters, because small and medium-sized coal mines -- the main targets in this campaign -- account for about 40 percent of total coal production in China.

Under mounting strain because of the coal shortage, seven large power companies recently appealed to the government about the severity of the situation, according to state media.

China will need a whopping 2.3 trillion dollars for investment in energy-related projects in the period until 2030, according to the International Energy Agency.

But at least China should learn from this year's energy shortage, according to Xiao from the Chinese Academy of Sciences.

"Construction in the energy sector has been ignored for a long time," he said. "On the contrary, we have paid too much attention to the hi-tech industry."


Aluminum Firms Face Tax Hikes

Moscow Times, Russia Tuesday, Dec. 9, 2003. Page 6

Reuters A government panel is scheduled to discuss Tuesday whether to scrap 5 percent tariffs on exports of aluminum and imports of intermediate product alumina, a panel source said on Monday.

But, the source said, some aluminum producers, which currently use the so-called tolling tax break, may be forced to start paying from Jan. 1 a 20 percent value-added tax on exported aluminum produced under the scheme.

"The scrapping of the two tariffs is on the agenda of tomorrow's meeting of the commission [for protective measures in foreign trade]," the source said.

The commission, responsible for drafting customs regulations, recommended the government abolish the two tariffs in March, and scrap the aluminum tolling tax breaks from Jan. 1.

Under the tolling regime, imports of raw materials -- bauxite ore and alumina -- and exports of produced aluminum, are free of tax.

A government resolution scrapping the tariffs has failed to appear, while the parliament has approved a new Customs Code, voting down an amendment that proposed abolishing tolling. The new code will become effective from Jan. 1.

But the commission source said that an incorrect formula used to describe the tolling operations in the Customs Code would not permit companies to use the tax break after Jan. 1.

To correct the formula, an amendment to the code has to be adopted by parliament.

A spokeswoman for the State Customs Committee said the customs intended to start collecting the VAT on exported aluminum exports from Jan. 1, but declined to comment further.


Aluminum maker Alufinal says turnover to top SKK 1 bn in 2003

Interfax, Slovakia 8 Dec 2003

Slovak aluminum producer Alufinal expects to turn out 9,300 tonnes of goods worth SKK 1.04 bn in 2003, Peter Ondro, spokesman for ZSNP, Alufinal's owner, told the CTK news agency.

Year-on-year production figures are not comparable as the firm's product and service portfolio has narrowed, according to Ondro.

Alufinal exports some 70 % of production, with the bulk of that going to Belgium, the Czech Republic, Germany and the Netherlands.

The firm invested some SKK 250,000 in 2003. Alufinal is one of ZSNP's 11 units. The company employs some 300 people.


Dubai ALUMINIUM Plant Pullout Could Boost Brunei Plan

Bru Direct, Brunei Darussalam, 8 Dec 2003

By CT Hj Mahmod

Bandar Seri Begawan - Brunei’s plan for Aluminium Smelting Plant in Sungai Liang, announced by BEDB earlier this year could possibly be the biggest smelting plant in the region as one major competitor’s partner– Dubai, has reportedly pulled out of a US$2 billion aluminium smelter project in Sarawak.

A report published the Business Times Singapore said that the state-owned Dubai Aluminium Company is not taking part in the venture – known as Smelter Asia, to churn out 500,000 tonnes of aluminium products a year.

“Dubai’s withdrawal could be a blow to Malaysia’s plan to become one of the biggest aluminium and electricity players in the region, reported The Business Times over the weekend.

According to observers this would augur well for Brunei’s projected smelting plant.

They also said that projected US$2.0 billion aluminium smelter in Sarawak, posed a competition to Brunei's US$1.5 billion Aluminium Smelting Plant.

For Brunei It is a part of the two-pronged strategy to attract Foreign Direct Investment to kick-start the Sultanate’s economy.

Brunei Economic Development Board (BEDB) signed a Memorandum of Understanding (MOU) with the world’s largest aluminium producers, Alco Inc, last September to carry out a 2-year feasible study.

The Brunei proposal follows on from the US group’s recent deals on a mix of low-cost hydroelectric and gas-fired power contracts to underpin new and expanded smelting capacity in Iceland, Bahrain and Canada.

The proposed Aluminium Smelting Plant is envisaged to have a production capacity of approximately 300,000 metric tons per year of primary aluminium requiring approximately 4300GWh/year or 500MW of power.

It is an integral part of the country’s plan to diversify the petroleum-based economy by encouraging downstream industries. -- Courtesy of Borneo Bulletin


Chalco draws up rosy blueprint

China Daily, China ( 2003-12-08 23:15)

Aluminium Corporation of China (Chalco), the nation's biggest alumina and aluminium producer, plans to quadruple its total assets, annual sales and profits by 2015 over the levels it produce in 2000.

The company says the increase in its total assets, annual sales and profits will jump to around 145 billion yuan (US$17.5 billion), 80 billion yuan (US$9.7 billion) and 7 billion yuan (US$845.4 billion) respectively by 2015, said Luo Tao, vice-president of Chalco.

"We will carry out a swift, low-cost and flexible development strategy to fulfil these targets and become an internationally competitive multinational firm,'' Luo said.

Chalco, which went public in Hong Kong and New York at the end of 2001, has set as a target reporting 23.7 billion yuan (US$2.9 billion) in sales and 1.82 billion yuan (US$219.8 million) in profits this year.

The company plans to invest 5.5 billion yuan (US$664.3 million) within the next two to three years to enhance production of alumina, which is in short supply on the domestic market, Luo said.

"We aim to increase our annual alumina output to more than 7 million tons in 2005 from 5.41 million tons last year,'' he said.

Luo predicted that China will have to import more than 7 million tons of alumina, or half of total domestic demand for the material, in 2005.

The nation's alumina imports will reach 5.3 million tons this year.

Chalco will expand its alumina imports and exports to reinforce its co-operation with foreign partners, Luo said.

The company operates a 50-50 alumina joint venture in Pingguo, Southwest China's Guangxi Zhuang Autonomous Region, with Alcoa of the United States, the world's largest aluminium maker.

Alcoa also bought Chalco's stake -- equal to 8 per cent of the Chinese company's initial public offering -- in Hong Kong and New York in 2001.

Chalco has also formed co-operative agreements with aluminium companies from Canada, France and Russia.

"We will establish our competitive advantages in exploring overseas aluminium resources,'' Luo said.

China encourages domestic companies to speed up aluminium exploration overseas to meet the fast-growing domestic demands.

The nation's total aluminium consumption will reach 170 million tons within the next two decades, according to China Nonferrous Metal Industry Association.

Chinese companies now have more than 10 planned projects for aluminium exploration in foreign countries, such as Australia, Viet Nam, India, Brazil and Jamaica, the association said.

"We will actively strive for favourable government policies concerning technical upgrades, power supplies, taxation, asset structure optimization and imports and exports in the name of our group company to improve our operational environment,'' Luo said.

The group, Aluminium Group Corp of China, was created this April with the Chalco at its core.

The group has 90 member companies across China.


Zhivilo companies seeking $700 mln from RusAl in Swedish court

Russia Journal, Russia Dec 08, 2003

SAINT PETERSBURG - Base Metal Trading SA and Alucoal are seeking approximately USD 700 million from Russian Aluminium (RusAl) in an action filed with the Arbitration Institute of the Stockholm Chamber of Trade (the Stockholm Arbitration Court). The complaining companies are considered close to the former owner of the Novokuznetsk Aluminium Plant (NkAZ), Mikhail Zhivilo. Information about the action was provided to a reporter for the Agency for Conflict Situations by Sergey Sokolov, managing director of the Moscow office of the Marks and Sokolov law firm, which is representing the complainants.

They are seeking compensation for losses that they say they suffered in the wake of the bankruptcy of NkAZ, when their contracts with the latter were abrogated, Sokolov said. He said Alucoal is seeking approximately USD 300 million from RusAl in a matter to be considered between mid-December and mid-January, with a decision expected thereafter. The Alucoal lawsuit has been underway about a year.

The amount sought by Base Metal Trading SA, which took its case to the Stockholm court at the end of September, has not been fully determined at this time. 'It will be around USD 300-400 million,' Sokolov said.

Until early 2000, the controlling interest in NkAZ was held by MIKOM, itself owned by the brothers Mikhail and Yury Zhivilo. On March 20, 2000, the Kemerov Arbitration Court decided, in a suit brought by Kuzbassenergo, to impose outside management on NkAZ. In the course of the bankruptcy proceedings, the enterprise passed into the hands of RusAl. Toward the end of 2000, Base Metal Trading SA, Base Metal Trading Ltd and Alucoal, all Zhivilo-controlled companies, brought suit in New York's Southern District Federal Court seeking USD 2.7 billion from RusAl. The complainants alleged that the accused illegally conspired to acquire control of NkAZ. In addition, they alleged that the accused were involved in organized criminal activities, including murder, racketeering, blackmail, extortion and unlawful threats. In March 2003 the Federal Court for New York's Southern District rejected the suit on the grounds that 'it [the New York court] was not the appropriate place to consider the dispute.' Sokolov said eight of the 10 complainants in that action plan to appeal the court's decision but that Base Metal Trading SA è Alucoal had 'decided to focus their efforts on the Stockholm proceeding.' /Rosbalt/

Aluminum Exports Rise

Moscow Times, Russia 9 Dec 2003

MOSCOW (Reuters) -- Aluminum exports outside the Commonwealth of Independent States rose 13 percent year-on-year to 2,589,600 tons in the first 10 months of 2003, the State Customs Committee said Tuesday.

In January-October 2002, the country exported 2,295,900 tons of aluminum outside the CIS.


Syed Mokhtar: Rail and smelter plans are on track

The Star, Malaysia 9 Dec 2003

TAN Sri Syed Mokhtar Albukhary said late on Monday his rail and smelter plans were both on track.

He told Reuters he had financial backers for a planned aluminium smelter in Sarawak, despite the exit of state-owned Dubai Aluminium Co (Dubal), and forecast work to start on a double-track rail contract next month.

“The smelter, as far as we're concerned, is going to happen,” he said in an interview.

Dubal withdrew last week from the 500,000-tonne-a-year US$2bil smelter, without giving reasons. The move prompted questions within the industry about the facility's viability.

Syed Mokhtar said there was no mystery to Dubal's withdrawal from the project, a move he said coincided with it pulling out of another smelter plan in Qatar.

“We do not have any hidden agenda. They cut off Qatar and they cut off Malaysia but we still have the Gulf investors in.

“The technology people are with us, it's just for us to choose whether it's American, Japanese or European.”

Syed Mokhtar has extensive business interests including ports, power stations, hotels, plantations and food trading ventures.

On the dual-rail track project, Syed Mokhtar said MMC-Gamuda won the project with a so-called cost plus proposal, billed as contractors' costs plus an agreed percentage profit fee, making it more transparent to the government.

“It's a cost plus. It's very high technology. We got it based on merit,” he said without offering more detail on the pricing.

“Our proposal is the best,” he said, adding that besides building the two stretches of rail, the work would link into the infrastructure and logistics hub he is building in Johor. – Reuters


Nalco capacity hike under review

Calcutta Telegraph, India

New Delhi, Dec. 9: The government is examining the proposal of National Aluminium Company (Nalco) for second phase of capacity expansion envisaging an investment of Rs 4091.5 crore, Lok Sabha was informed today. “Nalco has submitted a proposal for second phase expansion of capacities of its bauxite mines from 48 lakh tonnes per year to 63 lakh tonnes per year, alumina refinery from 15.7 lakh tonnes per year to 21 lakh tonnes per year, aluminium smelter from 3.45 lakh tonnes per year to 4.60 lakh tonnes per year and of captive power plant at a total investment of Rs 4091.5 crore,” minister of state for mines Ramesh Bais said in a written reply.

The investment would be financed through internal resources and commercial borrowings, he said.


Hindalco Eyes Expansion, Acquisitions

Financial Express, India

MUMBAI, DEC 9: Hindalco Industries, makers of non-ferrous metals, aims to expand its aluminium and copper capacity through expansion and acquisitions to attain global reach, its managing director said on Tuesday.

The company is the flagship of the Aditya Birla group and is the country’s top aluminium producer, with one of the world’s lowest cost structures in the business, and also accounts for nearly half of the country’s copper output.

“We are relatively small by global standards. Therefore it is important that we look at our size very carefully. We have definite ambitions to grow and we are in the process of evolving our plans,” Debu Bhattacharya told Reuters in an interview.

Hindalco’s aluminium smelter in Renukoot in Uttar Pradesh has an annual capacity of 345,000 tonne, which is scheduled to rise to 360,000 tonne by March ’05.

Its adjacent alumina refinery has a capacity of 660,000 tonne. Alumina is extracted from bauxite ore and used to make metal. Hindalco also controls country’s fourth largest aluminium producer Indian Aluminium Company with an annual output of nearly 70,000 tonne.

The two firms have a nearly 50 per cent domestic market share. Hindalco also has a JV with Canada’s Alcan Inc, called Utkal Alumina International Ltd, which is setting up a one million tonne alumina refinery in bauxite-rich Orissa.

— Reuters


Alcan to expand aluminium foil output in Germany

Reuters, 12.09.03, 9:15 AM ET

HAMBURG, Dec 9 (Reuters) - Canadian aluminium maker Alcan <AL.TO> said on Tuesday it is substantially expanding production of ultra-thin foils for packaging at its German plant Alcan Singen.

A 10.5 million euro ($12.85 million) project has been approved to expand production of thin foils at Singen from 25,000 tonnes annually to 40,000 tonnes by early 2005, Alcan Packaging spokesman Albert Klinkhammer told Reuters.

He said the project is needed as production of thin aluminium foils at Singen is close to capacity.

Foils are used by customers, including the pharmaceuticals industry, for tablet packs and for food-industry packaging including covering drink bottle necks. They are between 20,000th to an 80,000th of a mm thick.

"A thin foil production unit was put into operation in Singen in early 2003 and this will be expanded in phases up to 2005," he said.

Production would be centralised and automated allowing a substantial increase in output.

The Singen plant also has a wide range of other aluminium production including rolled and pressed products plus formats.

($10.8169 euro) Copyright 2003, Reuters News Service

RusAl in Nigeria

Moscow Times, Russia 10-Dec-2003

LAGOS, Nigeria (Reuters) -- Nigeria said Wednesday that it hopes to conclude the sale of its mothballed aluminum smelter early next year as it was about to remove remaining obstacles that had delayed the process.

An official of the Bureau for Public Enterprises said that Nigeria and two other shareholders of the Aluminum Smelting Company of Nigeria had agreed to sign a deal later this month voiding all agreements they had entered into.

Bids by Ferrostaal and Russian Aluminum, the plant's two suitors, would have been opened on Aug. 11 after several delays, but were held up by the remaining disagreements.

The smelter started production in 1997 and was shut in 1999 after producing only 40,000 tons of metal. Nigeria is hoping to recoup about $2.5 billion through the sale, approximately what it spent on building the plant.


BHP Billiton Hillside expansion commissioned

Sunday Times, South Africa Wednesday December 10, 2003 16:05 - (SA)

By Justin Brown

World number one resources group BHP Billiton (BIL) on Wednesday announced that the expansion project at its wholly- owned subsidiary Hillside Aluminium smelter at Richards Bay had reached full commissioning this week.

Approved in February 2002, the expansion of 132,000 tons per annum has raised Hillside's production to 670,000 tons per annum of primary ingots, rim alloy and t-bars.

Full production at the potline has been achieved in record time with construction to pot commissioning taking just over twenty months.

The total cost to completion is expected to be below the original budget of US$449 million.

Executive director and president of aluminium at BHP Billiton Mike Salamon said: "The Hillside 3 expansion project, like BHP Billiton's other southern African aluminium smelter projects before it, has been completed in record time and with an excellent safety performance. I congratulate the Hillside project and operations teams for this remarkable performance."

I-Net Bridge


China to cool hot sectors with green limits
www.chinaview.cn 2003-12-12 10:36:18

BEIJING, Dec. 12 (Xinhuanet) -- China is considering a massive campaign of environmental-impact assessment over enterprises in the overheating steel, aluminum and cement sectors, China Daily reported Friday.

The campaign is part of the State Council's soon-to-come package of measures to cool down excessive growth in these sectors,said Zhang Lijun, department director of the State Environment Protection Administration (SEPA).

"We will firmly close those enterprises that cannot meet the government's minimum pollution emission standards," Zhang was quoted as saying.

Since April this year, the National Development and Reform Commission has continually warned about the speed of growth in some industries concerning cars, steel, aluminum and cement that could have a serious economic impact.

Zhang revealed the information at Thursday's wrap-up ceremonies for a three-year pilot project of emissions trading between SEPA and the US Environmental Defense (EDF) organization.

Chief economist for the EDF Daniel J. Dudek said the practice can help industrial units tackle the nation's air pollution problems and deliver more information to its environmental protection decision-makers.

The pilot program between SEPA and Dudek's organization has been implemented in Shandong, Jiangsu, Shanxi and Henan provinces,Shanghai and Tianjin municipalities and Liuzhou City in the Guangxi Zhuang Autonomous Region with great success. Enditem


RusAl selects Achenbach to upgrade Armenal

Interfax, Armenia 11 Dec 2003

Moscow. (Interfax) - Russian Aluminum has selected Achenbach of Germany as its contractor in a project to upgrade the Armenal foil rolling plant in Armenia, which is part of RusAl.

The project aims to improve product range quality and increase the plant's profit margin by 50%, the company said in a press release. It is expected to take about nine months.

The program is preliminarily expected to cost $34 million. It will be carried out as part of RusAl investment commitments before the Armenian government.
After the upgrade, Armenal will produce 25,000 tonnes of foil a year.


China smelters to seek more alumina imports

Reuters, 12.11.03, 5:55 AM ET

By Polly Yam

HONG KONG, Dec 11 (Reuters) - Many of China's aluminium smelters will seek next year to import more of their key raw material, alumina, after securing insufficient from the country's dominant producer, Aluminum Corp of China Ltd (Chalco) <2600.HK>.

Industry sources said on Thursday increased Chinese purchasing would further strengthen the country's role in the volatile international spot alumina market. China is already the world's largest importer of alumina.

"Chalco cannot make all the smelters happy. It needs to be selective," a source at the state-controlled company said.

"Some smelters that used to rely on domestic supplies will have to start looking for imports next year," an industry source in Beijing added.

Chalco produces more than 90 percent of China's alumina. The country is expected to produce about 6.6 million tonnes of the raw material next year, against demand of 12 million to 13 million tonnes.

The huge supply shortfall has triggered many smelters in China to try to secure long-term contracts for alumina from Chalco because its prices are lower than those for spot imports.

In the Chinese domestic market, spot Australian alumina changed hands at more than 4,700 yuan a tonne, as supplied from warehouses in Chinese ports, against 3,300 yuan offered by Chalco for 2003 term contracts.

The main international suppliers of alumina to China include Alcoa World Alumina & Chemicals (AWAC). That company, a 60-40 global joint venture between Alcoa Inc (nyse: AA - news - people) of the U.S. and Australia's Alumina Ltd <AWC.AX>, operates three alumina refineries in Western Australia.

Comalco, the Australia-based aluminium unit of Rio Tinto Ltd/Plc <RIO.AX> <RIO.L>,is building a new refinery in Queensland and owns a stake in Queensland Alumina Ltd, operator of the world's largest refinery. Alcan Inc <AL.TO> and Pechiney <PECH.PA> are also shareholders in Queensland Alumina.

NEW SALES POLICY

Chalco has changed its 2004 domestic sales policy to focus on selected smelters, industry sources said.

Chalco officials told its customers in an annual sales meeting in late-November that, in principle, it would no longer supply alumina to smelters that owed money to it or did not follow government policy, sources who attended the meeting said.

Under the new policy, around 26 smelters that had previously received alumina from Chalco were not invited to the meeting and failed to get any allocations from Chalco, they said.

"Some smelters were told about the new policy and paid their debts to Chalco right away. But they still didn't get any alumina (for 2004)," an official for one large northern Chinese smelter said.

"But a few old and small smelters that are not competitive in the market have received allocations from Chalco. It's not clear how it works," he said.

"I think Chalco concentrates its supplies on smelters with which it has good relationships and those that bought alumina from Chalco even when the domestic market was bad," another smelter official said.

The Chalco official did not comment on this. But he said the company encouraged smelters to follow government policies that include closing down old plants and building modern smelters with Beijing's permission.

The government requires all smelters that use dirty and outdated Soederberg technology to close down before the end of 2005.

This could wipe out as much as 1.3 million tonnes of aluminium capacity in an industry that is rapidly expanding elsewhere.

While most industry officials welcomed such moves, some said Chalco's new policy might prompt outdated smelters to rebuild their plants with larger capacities than before.

They said the closure of many old smelters in the next two years would also create social problems.

"The closures will force thousands of workers out of their jobs and will reduce revenues to local governments," the source in Beijing said. "Local governments will try to keep them operating."

China's primary aluminium production is expected to rise to about 5.5 million tonnes this year.

Copyright 2003, Reuters News Service


Hydro Aluminium expands in China

E4engineering.com, UK 11 Dec 2003

Norway's Hydro Aluminium has announced plans to construct its first wholly owned automotive components plant in Suzhou, China to better serve customers in the country's growing automotive market. Total investment costs are estimated to be NOK 150 million (18 million Euros).
At the new site, Hydro will produce precision drawn tubing, multi-port extrusions (MPEs) and extruded tubular profiles used in automotive heat transfer applications. The company will also deliver other components from the plant.
Hydro will break ground in the first quarter of 2004 and install the plant's extrusion press by July. Production is scheduled to start in the third quarter of next year. The plant will create about 140 new jobs in Suzhou in first phase during 2004.
'As the technology leader in this area, we will deliver products with the same high quality and performance as those our customers use in vehicles manufactured in Europe and the United States,' said Jan Arne Rønningen, who heads Hydro's Precision Tubing business unit.
'Our Chinese customers have previously had to import some of these products, so they are very happy with our decision to manufacture them within the country.'
Although the plant will be Hydro's first fully owned automotive components plant in China, the company already serves the domestic precision tubing market from its nearby joint venture, Hydro Aluminium Wuxi. Hydro also operates a wholly owned magnesium alloys plant in Xi'an, and owns a 31.8 percent share of Suzhou Huasu Plastics Co Ltd.


Alcan to evaluate South African smelter project

Reuters, 12.12.03, 11:11 AM ET

MONTREAL (Reuters) - Alcan Inc. will evaluate Pechiney's plan to build one the world's biggest aluminum smelters in South Africa, but no decision will be taken until later next year, a spokesman said Friday.

The Canadian group will officially take control of Pechiney Monday and its top priority will be to dispose of assets it must sell to comply with antitrust regulations, Alcan spokesman Joseph Singerman said.

"Our priority going into the new year will be first of all to undertake commitments we have made with the European commission in terms of divestiture in flat-rolled products, then we will look at the list (of projects) that Pechiney has," he said.

Singerman said Alcan has begun to get access to Pechiney's documents, including feasibility and engineering studies on a half a billion tonne smelter at Coega in South Africa that would come into production in 2006.

Alcan will become the world's largest aluminum maker by revenues through its four-billion-euro ($4.7 billion) takeover of Pechiney, but any decision on adding production capacity would have to consider the current aluminum surplus glutting markets.

"We have to do our information gathering to make a good business decision," Singerman said.

European regulators required Alcan to sell within a year one of two rolling mills, either Pechiney's Neuf-Brisach plant in eastern France or its own 50 percent stake in AluNorf in Germany, and some smaller Pechiney mills.

U.S. antitrust authorities have also demanded that it dispose within four months of an aeronautical aluminum factory at Ravenswood, Virginia.

The merged company will have annual turnover of 25 billion euros and employ 80,000 people, rivaling U.S.-based Alcoa Inc. , the current world leader.

($1$1.32 Canadian)

Copyright 2003, Reuters News Service

Alcoa faces tariff fight of its own

Pittsburgh Business Times, PA - Dec 11, 2003

Claims South Africa firm dumping product
Christopher Davis
NORTH SIDE -- While much of the metals world focuses on President Bush's decision regarding the fate of steel tariffs, Alcoa Inc. is involved in a tariff battle of its own over aluminum plate products imported from South Africa.

The U.S. International Trade Commission voted unanimously this week to continue an investigation into dumping charges leveled by Alcoa against Hulett Aluminum Ltd. of South Africa. The ITC said in its ruling that there is "a reasonable indication" of injury resulting from the import of certain aluminum plate products, "allegedly sold in the United States at less than fair value."

Alcoa contends that Hulett exports aluminum alloy, flat-surface, rolled products to the United States at lower prices than it sells the material in its home market, eroding prices in the process.

Hulett denied the dumping allegation and contends that it controls less than 1.2 percent of the worldwide market for the aluminum plate and does not sell the product in South Africa. The company has said it will fight Alcoa's efforts to have a duty imposed.

Still, the ruling means the U.S. Department of Commerce will continue the investigation. The Commerce Department will make a preliminary determination on the matter to be forwarded to the ITC by the end of March 2004, according to the ITC.

North Side-based Alcoa, the world's largest aluminum manufacturer, filed the charges against Hulett in October. Kevin Lowery, an Alcoa spokesman, said it "is very encouraging" that the case is moving forward.

"We are anxious to continue to make the case to show that this has been an unfair practice," Mr. Lowery said. "When people don't follow the rules, they need to be held accountable for it."

The aluminum in question, so-called 6000 series plate, is used for general purpose engineering, tooling and die applications. Alcoa has said previously that Hulett expanded shipments of the aluminum plate to the United States in 2000 and has since captured a large share of the domestic market.

Hulett, when responding to Alcoa's initial complaint, said "the market segment cited by Alcoa in its anti-dumping petition constitutes less than 1 percent of the total United States market for aluminum rolled products." The company also contends that prices for the plate have fallen because of sagging demand in the aerospace industry -- a sector in which Alcoa is one of the world's dominant suppliers.

Whether the ITC ruling ultimately will result in duties levied on Hulett plate imported to the U.S. is unclear. Charles Bradford, an independent, New York-based metals industry analyst and president of Bradford Research, said the ITC decision "doesn't prove anything," in terms of whether the industry has truly been injured by the imported aluminum.

"Keep in mind that it's the U.S. International Trade Commission that makes a ruling," Mr. Bradford said. "That's about as one-sided, on a U.S. basis, as you can get."

He said the company or country that has a dumping complaint filed against it often "doesn't get serious" about mounting a defense until a final injury decision has been made. And, even after a final injury ruling is issued by the ITC, it can be appealed, he said.

"That's when a lot of these cases get tossed out," Mr. Bradford said.

MR. DAVIS may be contacted at cdavis@bizjournals.com.


Malco and Balco merger needs govt's nod: Sterlite
Moneycontrol.com, India 12 Dec 2003

The Sterlite Group has said that it will merge Malco with Balco, only after it gets the government's approval.

Vedanta's successful listing on the London Stock Exchange, LSE, has also resulted in speculation on whether the Sterlite Group will now restructure its operations. CMD Anil Agarwal told CNBC-TV18 that Madras Aluminium Company, Malco, will be merged with Bharat Aluminium Company, Balco, once it receives the government's approval.

“It does not make sense to have a standalone. We would like to merge it with Balco. All aluminium should be together, all metal should be together. Since government is still a partner, we are talking to the government whether it is possible to put everything together,” he said.

The company raised $1 billion through its IPO, to fund the group's projects. Agarwal said that the money will be used to fund projects of Hindustan Zinc, Balco, the aluminium plant in Orissa, and its copper project. "$400 mn in Hindustan Zinc, $800 million in Balco for its smelters...$800 million in Orissa, $100 million on the copper project," he said.

Earlier, Agarwal had said Sterlite is putting up an alumina refinery in Orissa, which has huge alumina reserves. "For the last 25 years, alumina was being produced in Russia, West Asia, and China, but now there is a global shortage," he said. He said that Vedanta, which is directly pumping money into Orissa, would give India an edge over others.

"Consumption has gone up. We have an edge being in India where aluminium capacity has not been built plus we have a plant for us. There is a global shortage for alumina for which we have the best bauxite in the world," he said.

Vedanta Resources officially listed on the LSE, on December 10. It debuted at 390 pence a share on December 5. It is the third largest initial public offer, IPO, in Europe this year.


Syed Mokhtar faces new aluminium smelter rival

Business Times Singapore (subscription), Singapore 13 Dec 2003

Unidentified group planning to build plant in Perak with similar capacity to tycoon's Sarawak smelter

By EDDIE TOH IN KUALA LUMPUR

Setback: Mr Syed Mokhtar's plans for the North-South Railway and Bakun dam have hit also snags in recent weeks
An unidentified foreign group has emerged with a proposal to build an aluminium smelter of similar capacity to Mr Syed Mokhtar's proposed smelter in Sarawak, which hangs in the balance pending the final green light for his Bakun dam takeover from new Prime Minister Abdullah Ahmad Badawi.

The unidentified consortium plans to invest RM9.3 billion (S$4.19 billion) to build a smelter and a power plant at the coastal town of Lumut in Perak, according to New Straits Times yesterday.

'We want to know their proposal and will discuss the plans further,' said Perak Chief Minister Tajol Rosli Ghazali.

He declined to identify the company but said it was a foreign-owned operation.

Another consortium called Masco Aluminium - comprising China, Hong Kong and US investors - had earlier wanted to build an aluminium smelter in Perak but was lured by the Johor state government.

Mr Tajol said Perak is ready to offer the same site to the new company, which is expected to produce 500,000 tonnes of aluminium annually.

The proposed capacity is similar to Mr Syed Mokhtar's US$2-billion smelter in Sarawak.

An industry executive said the project hinges on the businessman's successful takeover of a controlling stake in Bakun.

A single aluminium smelter with a capacity of 500,000 tonnes could easily turn Malaysia into a net exporter of the vital metal used in many industries. Malaysia imports about 200,000 tonnes of aluminium ingots each year.

According to a recent report, major importers of aluminium in the region include Japan (3.5 million tonnes a year), South Korea (700,000 tonnes) and China (500,000 tonnes).

Although there is no shortage of demand in the region, an analyst said the new projects in Malaysia could come on-stream earlier than Mr Syed Mokhtar's Smelter Asia.

And it's still unclear if Mr Syed Mokhtar's smelter could take off following a government review of some major projects that had been given the nod by former prime minister Mahathir Mohamad.

The new premier may not have given the final nod for the sale of the government's stake in Bakun to Mr Syed Mokhtar.

Mr Abdullah reportedly said on Thursday the government will 'monitor' Bakun and other expensive projects as priority should be given to health, education, agriculture and socio-economic projects under the Eighth Malaysia Plan.

The Prime Minister also indicated the RM14.5-billion North-South Railway project, which was awarded to Mr Syed Mokhtar's Malaysia Mining Corporation and Gamuda by the previous administration, is likely to be postponed.

Transport Minister Chan Kong Choy said yesterday the railway contract has not been revoked but reiterated that the Cabinet will make the final decision on the status of the project next week.

The expected shelving of the rail project is a blow to Mr Syed Mokhtar, who had earlier told a news agency the railway and the smelter projects were both on track despite the exit of partner Dubai Aluminium Co.


Watchdog to intervene in LME aluminium probe-FT

Reuters UK, Sun 14 December, 2003 23:32

LONDON (Reuters) - The Financial Services Authority is set to intervene in the London Metal Exchange's long-running probe into its aluminium contract next week, the Financial Times newspaper has reported.

The LME's investigation, announced in August, has looked at possible collusion between market participants, warehouse inventory levels, individual trading patterns and the price curve.

A spokesman for the FSA declined to comment on the report in the paper's Monday edition.

Representatives of the LME could not be reached late on Sunday.

Earlier this year, the Financial Services Authority said it could become involved in the LME's probe if there was evidence of market abuse.

The Financial Times said in its Web site edition that the FSA's intervention would come under its code of market conduct, which covers market abuse, insider trading and the manipulation of contracts.

The investigation is set against a backdrop of a long-running technical shortage of aluminium, which has seen high cash premiums, or backwardations, while warehouse stocks have ballooned to eight-year highs.


Johor Corp to conclude talks on smelting plant next year

The Star, Malaysia, 15 Dec 2003

By HASNI MOHD NASIR
JOHOR Corp Bhd expects to conclude by early next year its negotiations with Masco Aluminium Sdn Bhd on the setting up of a RM16bil aluminium smelting plant in the Tanjung Langsat Industrial Estate near Johor Baru.

Johor Corp chief executive officer Tan Sri Muhammad Ali Hashim said the corporation was working to meet the expectations of the Sino - US company including building a power plant and a dedicated jetty for the aluminium smelter's operations.

“Negotiations are still ongoing ... we are 50:50 on the outcome,” he told reporters after a press briefing in Kuala Lumpur yesterday on the corporation's business direction.

Ali said the aluminium smelter would take two years to be completed and should be ready for operation by 2007. The spillover benefits from the plant are tremendous for the Johor economy,” he said, noting that this single largest investment in the state in recent years was expected to create about 2,000 job opportunities.

On Johor Corp's financial performance, Ali said its results for the current year to Dec 31 should be slightly better than the RM224.7mil pre-tax profit it recorded last year. At group level, a pre-tax profit of RM433mil was posted for 2002.

Ali said the group was getting ready for the first redemption of its Islamic bonds of RM500mil in 2007. Johor Corp had converted RM3.38bil of debts into long-term Islamic papers in a restructuring brokered by the Corporate Debt Restructuring Committee last year.

“We will not be selling our strategic assets, but will add value to other assets and use them to pay holders of the bonds. This way, we can minimise the assets to be disposed of,” he said.

Ali said the corporation currently had debts totalling RM4.2bil and assets of about RM5.8bil.

“If we can grow the assets to say about RM6bil or RM7bil, then our gearing would be less, and the bankers would worry less,” he added.


State okays R2bn boost for Pechiney plant

Business Day, South Africa, South Africa 15 Dec 2003

By Patrick Cull
The government has approved R2-billion in industrial investment allowances for the R16-billion Pechiney aluminium smelter in terms of the Strategic Industrial Project programme. Trade and Industry Minister Alec Erwin has approved an allowance of:

R600-million each for the Pechiney pot line one and two plants.

R220-million for the Pechiney cast house project.

R600 million for the Pechiney anode plant project.
This is all for part of the multi-billion-rand aluminium smelter Pechiney is to build in the Coega Industrial Development Zone.


Mr Erwin has published his approval of the applications in the Government Gazette and in terms of the regulations these have been tabled in Parliament.

The four projects making up the smelter are expected to create more than 30 000 direct and indirect jobs.

The date for the start of commercial production has been put at October, 2005.

In its applications, Pechiney states that the each of the two pot line is expected to create 12 106 direct and indirect jobs. The cast house project is expected to create 1 967 direct and indirect jobs and the anode plant and estimated 5 654 direct and indirect jobs.

The Pechiney investment will be the biggest single foreign direct investment ever in South Africa.

The cost of the two pot line projects is put at R5,45-billion for buildings, plant and the machinery.

The cast house project will cost R440-million and the anode plant R1,27-billion.

The cost of the investment allowances to the taxpayer in terms of loss of potential national revenue is estimated at R606-million.

The SPI project incentives form part of the package that is offered to investors for projects that are considered to be of strategic importance.

In another development for the Coega project, Mintek, the government parastatal that specialises in minerals processing and metallurgical engineering industries, is involved in a pre-feasibility study that could see the construction of a ferro-nickel smelter in the IDZ and an investment in the region of R5-billion.

The nickel will be sourced from Cuba and South African Foreign Affairs Minister Nkosazana Dlamini-Zuma and Cuban Foreign Investment and Economic Co-operation Minister Marta Lomas signed an agreement two weeks ago, taking the project a step forward.

In terms of that agreement contained in a document entitled "The Way Forward", the ferro-nickel project will be taken "to the next level of development and commitment" that will see the pre-feasibility study carried out by Mintek with Bateman as the proposed engineering partner.

If a decision is taken to go ahead with the project, construction of the smelter will start early in 2005, with commercial operations getting under way towards the end of the following year.

The provision of affordable electricity is a key factor, as it is with the aluminium smelter. Eskom is currently putting in an additional R2-billion in electrical infrastructure in terms of an agreement with Pechiney.


Pechiney Board of Directors Changes Following Acquisition by Alcan

PRNewswire UK (press release), UK Tuesday 16 December 2003, 17:27 GMT

MONTREAL, Canada, December 16 /PRNewswire/ -- Alcan Inc. (NYSE, TSX: AL) today announced that the composition of Pechiney's Board of Directors was modified following Alcan's acquisition of control of Pechiney on December 15, 2003.

There are 12 members of Pechiney's new Board of Directors:

- Six new members were appointed today: Messrs. L. Yves Fortier (chairman of Alcan's Board of Directors), Travis Engen (president and chief executive officer, Alcan Inc.), Geoffery Merszei (executive vice president and chief financial officer, Alcan Inc.), Daniel Gagnier (senior vice president, Corporate and External Affairs, Alcan Inc.), David McAusland (senior vice president, Mergers and Acquisitions and chief legal officer, Alcan Inc.), and Madame Christine Morin-Postel (director, Alcan Inc.).

- Six existing Pechiney directors will remain on the Board: Messrs. Jean-Paul Jacamon, Yves Mansion, H. Onno Ruding, as well as three members previously appointed by the employees: Messrs. Gerard Bouvier, Antoine Nordberg and Tony Zanello.

Mr. Engen has also been appointed the chairman and chief executive officer of Pechiney


Alumina deal prises open China mining sector

Financial Times (subscription), UK December 19 2003

By Richard McGregor in Shanghai

Chalco, China's state-owned aluminium giant, has shaken off the stiffest challenge so far to its domestic monopoly on alumina in a dispute that foreshadows a growing role for private capital in China's long-closed mining sector.

According to China Metals, an industry newsletter, Chalco, which has a listed overseas arm, has agreed to take 30 per cent of the Sammenxia alumina project in Henan province, giving it a stake in a venture it has long campaigned to prevent going ahead.

Backed by the East Hope Group, which is headed by Liu Yongxing, one of China's wealthiest entrepreneurs, Sammenxia would have been the first private supplier of alumina, the raw material for aluminium.

But the compromise, if it goes ahead, will leave East Hope with a similar stake to Chalco and a foothold in the market which has been closed to it and other entrepreneurs.

"If one private player can come into the industry, then why not others?" said a mining consultant.

A Chalco official denied that any final agreement had been reached for it to take the 30 per cent stake but said the company had been in talks with East Hope.

Chalco has lobbied hard against the project, and also withheld the special technology needed to treat the bauxite to make the alumina and tried to prevent skilled technicians from working there.

Unable to kill the project altogether, Chalco has a double incentive to join it - to maintain its monopoly and control the pace of the project and its ability to price alumina in the China market.

Chalco recently snared a stake in another alumina start-up project in Guangxi for similar reasons.

China's rapid expansion in aluminium smelting capacity, up about 20-25 per cent this year, with an even bigger expansion planned for 2004 despite widespread power shortages, has left its producers chronically short of alumina.

As a result, the spot price of alumina has soared, up from $150 a tonne 18 months ago to $300 three months ago and nearly $450 (€375, £260) at the moment, says Jim Lennon of Macquarie Securities in London. This leaves many smaller Chinese smelters on the brink of closure.

East Hope's own smelter in inner Mongolia has been brought on stream slowly because of its problems in securing alumina.

Chalco also lobbied against the East Hope alumina project on the grounds that it would use bauxite from small, illegal mines which could damage the environment.

But, according to China Metals, East Hope countered that Chalco itself often bought bauxite from mines with poor environmental records.

"If Chalco can buy bauxite from a peasant, why can't we?" East Hope said.

The Aluminium Corp of China (Chalco), the nation's biggest alumina and aluminium producer, has launched an international engineering subsidiary, China Aluminium International Engineering Corporation Ltd (CHALIECO), yesterday in Beijing.

People's Daily Online, China 18 Dec 2003

Aiming at both domestic and international markets, the company will engage in engineering, consultancy and contracting for metal mines, metallurgy, aluminium and magnesium projects.

The company, which is formed on the base of two research and design institutions of Chalco, consolidates the engineering and consultancy strength of Chalco.

The two institutions have undertaken and accomplished the planning, consultation, engineering and project contracting for more that 30 light metal mines, six alumina refineries, 133 aluminium smelters, 43 magnesium and titanium smelters and 77 carbon product plants in China.

At yesterday's launch ceremony, Chalco also said it has raised the domestic price of alumina by 12.1 per cent to 3,700 yuan (US$447) a ton from 3,300 yuan(US$399) a ton.

It is the seventh time for Chalco to raise domestic alumina prices this year, because of the alumina supply shortfall and international price hikes.

Alumina is the raw material used in producing aluminium.

Chalco, which holds 60 per cent of the alumina supply in China, said the price of imported alumina has risen to from 4,200-4,500 yuan a ton, pushing domestic prices up.

The company estimated that the price of imported alumina will remain above 4,700 yuan per ton (US$440) until January.

The company also said the domestic alumina output is expected to rise to 5,8 million tons, while the overall demand will rise to 11.5 million tons.

As half of the demand is to be satisfied with imports, the lower domestic alumina prices have to rise in line with international prices, the company said.

The price hike of the raw materials and fuel, including bauxite, coal and alkali, has also contributed to the price rise, the company said.

Standard & Poor's Index has given nine China's enterprises the BBB grade, and Chalco is on the top of the list.


Sterlite plans rights issue

Business Line, India Mumbai , Dec. 18

STERLITE Industries (India) Ltd plans to issue equity shares to its existing shareholders on a rights basis. The board of directors would meet on December 24 to consider the issue, the company informed the stock exchanges on Thursday.

The announcement has evoked interest in market circles as it follows the recent IPO of Vedanta Resources, the holding company of Sterlite, which raised $1 billion from investors in the UK and the US. It has been listed on the London Stock Exchange. Vedanta holds 55 per cent of the Sterlite's equity through a wholly-owned subsidiary Twinstar Holdings.

"The rights issue is being planned to enable Vedanta to bring in part of the money raised by it through its recent issue," said a company official.

The money was essentially raised to finance the Sterlite group's expansion plans and a rights issue could be a best way to bring the funds into the company, the official said. It had recently announced expansion plans of group companies Balco and Hindustan Zinc.

The proposed issue of equity also assumes significance as the company had at one stage announced a buy back of shares that would have eventually led to its delisting had it been fully subscribed.

Even now, a section of the market thinks that the rights issue would be priced at a significantly higher level to discourage minority shareholders from taking part.

Sterlite shares rose to Rs 1,280.75 on the BSE on Thursday from Rs 1,256.75 on Wednesday.

The group's expansions include expanding the capacity of the Tuticorin copper smelter from 1.8 lakh tonnes per annum (tpa) to 3 lakh tpa of copper anode and commissioning of a 1.27-lakh tpa copper refinery in Tuticorin.

In the aluminium segment, the company plans to invest in two greenfield projects — a 2.5-lakh tpa aluminium smelter at the Korba complex and a one-million tpa alumina refinery in Orissa. The refinery is expected to enable the group to supply alumina to the new smelter at Korba, as also to access the export markets.

In the zinc segment, the company's principal expansion plans for Hindustan Zinc include expanding the capacity of its Rampura Agucha mine from 2 million tpa to 3.3 million tpa, Rajpura Dariba and Zawar mines to 1 million tpa and 1.25 million tpa, respectively, and construction of a new zinc smelter at Chanderiya to increase the production capacity by 1.7 lakh tonnes.


Kaiser Aluminum Signs MOU With Republic Of Ghana To Sell Its 90% Interest In Valco

www.kaiseral.com , 19 Dec 2003

HOUSTON, Texas, December 19, 2003 -- Kaiser Aluminum announced today that it has executed a Memorandum of Understanding (MOU) to sell its 90% interest in Volta Aluminium Company Limited (Valco), which owns and operates a primary aluminum smelter in Ghana, to the Republic of Ghana for consideration of between US$35 million and US$100 million, plus the assumption of all of Kaiser's related liabilities and obligations. The MOU contemplates that the transaction will close by April 30, 2004.

The consideration will be paid in 2004 and beyond. During 2004, assuming the US$35 million minimum consideration, the Republic of Ghana would pay US$7 million in cash to Kaiser and US$18 million in cash to Valco, thereby reducing Kaiser's funding to Valco. The remainder of the consideration (a minimum of US$10 million) will be paid in cash to Kaiser over a five-year period from the closing date. The Republic of Ghana's obligations to Kaiser will be guaranteed by the Bank of Ghana.

The transaction is subject to due diligence and a number of approvals, including by the President or Cabinet of the Republic of Ghana, the Parliament of Ghana, the Boards of Directors of Kaiser and of Valco, the U.S. Bankruptcy Court, and the lenders under Kaiser's Post-Petition Credit Agreement. In addition, the purchase by the Republic of Ghana is subject to Alcoa's right of first refusal pursuant to Valco's corporate governance requirements.

Under the terms of the MOU, upon the execution of the MOU and the payment by the Republic of Ghana of US$7 million into escrow, the parties will suspend the pending international arbitration. Upon the closing of the transaction, the parties will dismiss the arbitration with prejudice.

"Kaiser and Ghana have been friends and business partners for 40 years. Ghana's industrialization in large part began with Kaiser's commitment to the building of the Akosombo power facility. Kaiser is pleased that the transaction provides the opportunity for Valco's majority ownership and economic potential to be transferred to the people of Ghana," said Kaiser President and Chief Executive Officer Jack A. Hockema.


Kaiser Aluminum Reluctantly Agrees To Termination Of Salaried Employees Retirement Plan

www.kaiseral.com , 19 Dec 2003

HOUSTON, Texas, December 19, 2003 -- Kaiser Aluminum said that it has been notified by the Pension Benefit Guaranty Corporation (PBGC) that the PBGC intends to assume responsibility for the Kaiser Aluminum Salaried Employees Retirement Plan (KRP) as of December 17, 2003. After appropriate consultation with its advisors, the Unsecured Creditors' Committee, the Asbestos Claimants' Committee, and certain other constituents, the company has reluctantly agreed to the termination of the plan.

The company has stated since the inception of its Chapter 11 reorganization proceedings that pension obligations were one of the significant legacy factors that would have to be addressed during the reorganization process. Further, the company has stated that it did not expect to make any pension contributions in respect of its domestic pension plans during the pendency of the cases because it believes that virtually all of such amounts are pre-petition obligations. In addition, the company also has previously stated that termination of the pension plans was a possibility.

The PBGC action does not address seven other defined benefit plans sponsored by the company and thus does not resolve all the pertinent issues surrounding the company's material pension obligations. As previously disclosed, the company is discussing modification or termination of hourly retiree benefits pursuant to collective bargaining with the appropriate union representatives.

Kaiser Aluminum moves to sell Valco to Ghana gov't

Reuters, 12.19.03, 2:43 PM ET

NEW YORK, Dec 19 (Reuters) - Kaiser Aluminum Corp. <KLUCQ.OB> said Friday it expects to sell its 90-percent interest in the Volta Aluminium Co. (Valco) primary aluminum smelter in Ghana to the Republic of Ghana for between $35 million and $100 million by April 30, 2004.

Kaiser has executed a memorandum of understanding for the transaction, which a company spokesman said Kaiser sees as the first necessary step in completing the sale. The transaction would also include the assumption of all of Kaiser's liabilities and obligations related to Valco.

Kaiser on April 30 completely shut down Valco's primary aluminum production due to power shortages in Ghana, located in western Africa. The smelter has five potlines, or production lines, each with a 40,000 tonne capacity of output annually.

Because aluminum giant Alcoa Inc. (nyse: AA - news - people) owns 10 percent of Valco, the Republic of Ghana's purchase is subject to Alcoa's right of first refusal pursuant to Valco's corporate governance requirements, Kaiser said.

The memorandum of understanding specifies that the amount of the sale of Valco would be paid in 2004 and beyond.

During 2004, assuming the $35 million minimum amount, the Republic of Ghana would pay $7 million in cash to Kaiser and $18 million in cash to Valco, thereby reducing Kaiser's funding to Valco.

The rest, a minimum of $10 million, would be paid in cash to Kaiser over a five-year period from the closing date, Kaiser said.

The Republic of Ghana's obligations to Kaiser will be guaranteed by the Bank of Ghana, Kaiser added.

Valco's sale would be subject to due diligence and approvals by the President or Cabinet of the Republic of Ghana, the Parliament of Ghana, the boards of directors of Kaiser and of Valco, the U.S. Bankruptcy Court and the lenders under Kaiser's post-petition credit agreement, Kaiser said.

Copyright 2003, Reuters News Service


Aluminum giants Alcan, Alcoa gird for battle

National Post, Canada December 22, 2003

Canadian contender

TRAVIS ENGEN: Aiming at Goliath.
CREDIT: Paul Chiasson, The Canadian Press

Alcan Inc. has long dwelled in the shadows of Alcoa Inc., the king of all things aluminum.

From tinfoil and beer cans to the outer skins of jetliners, Alcoa has been the name to beat. But Alcan, based in Montreal and once a subsidiary of the other, is moving forcefully to close the gap.

By the end of this month, Alcan is slated to complete a US$4.8-billion acquisition of France-based Pechiney SA, a deal that should boost Alcan's revenues by nearly 80%, to US$23-billion, and transform the company from a distant No. 2 to a potent rival of Pittsburgh-based Alcoa.

Though it will still trail Alcoa based on production capacity, Alcan is poised to take the lead in revenue, the result of active metal-trading operations.

Alcan has picked a good time to bulk up. Thanks to surging demand from China and increased use of aluminum in other markets for making lighter automobiles, global production is likely to be strong for at least the next couple of years, experts say. Pricing, too, could well move up, after hitting its lowest level in nearly a decade in 2002.

All this has helped lift Alcan's stock 50% since July, to a recent US$46. And some close observers think the shares, traded on the New York Stock Exchange, still have plenty of upside. Greg Barnes, an analyst with investment firm Canaccord Capital in Toronto, recently raised his price target to US$53 from US$47.

Mr. Barnes says aluminum prices will soon rise by 5%, lifting producers' margins. In addition, he sees Alcan benefiting from increased diversification, especially in the consumer-products packaging market.

Earnings should hit US$2.57 next year, up from an estimated US$1.70 this year, according to the consensus forecast of Wall Street analysts.

That leaves the shares changing hands at about 18 times 2004 earnings -- lower than Alcoa's multiple of 21 times and about the same as the Standard & Poor's 500 composite index.

Alcan already is active in all main areas of the aluminum industry, including the mining of bauxite, the refining of bauxite into alumina (an oxide of aluminum), the "smelting" of primary aluminum from alumina, and the recycling of aluminum scraps. It also makes packaging for food, drugs and cosmetics, along with cable and other industrial products.

The Pechiney deal will give Alcan an especially strong position in high-growth packaging markets and in aluminum parts for cars and aircraft, says Travis Engen, Alcan president and chief executive.

The deal, which resulted from a hostile bid, has not been universally applauded. The French government, wary of foreign incursion, initially resisted the plan. And this month Moody's Investors Service downgraded Alcan's debt to Baa1, or low investment-grade, from A2, saying the acquisition would cause "a significant increase in debt." Standard & Poor's, saying the deal will increase Alcan's debt to 47.5% of capital from 33.5% at year-end 2002, has urged the company to cut US$2.5-billion in debt by 2006. Meanwhile, Alcan will have to take care to avoid the operational glitches that can plague any big merger.

Mr. Engen, 59, acknowledges the acquisition hasn't been easy but remains optimistic. "Our goal is to increase earnings per share by 15% a year," he says. That would more than double earnings per share over five years. To pull that off, Mr. Engen is counting heavily on a cost-cutting drive that could trim costs by several hundred millions of dollars a year. Debt reduction is also on tap, he says.

The earnings target is especially ambitious in an industry known for widely fluctuating financial performances. Alcan itself went through a rough patch just a few months ago, forcing the company to lower its earnings guidance for this year. For at least the next couple of years, however, conditions in the industry should be more favourable. Improving economies around the world seem sure to lift demand -- and the explosive growth of China is shaping up as a big boon for aluminum producers.

China accounts for nearly 20% of aluminum consumption worldwide, more than double its share of 10 years ago, says Robin Adams of Resource Strategies, a consulting arm of the London-based research firm CRU Group.

Automakers, meanwhile, are using more and more aluminum to reduce vehicle weight to meet new fuel-economy standards.

Some models from Audi and Jaguar feature aluminum for all of the frames and most of the body panels. Although the trend began with high-end cars, it's trickling down to others. Engine blocks, hoods and suspension components are increasingly made of aluminum in a range of cars.

In all, worldwide aluminum production is likely to climb 6.5% in each of the next two years, well above the historical growth rate of 3.5%, Mr. Adams says.

Mr. Engen is approaching the market with characteristic gusto. Mr. Engen, who unwinds by racing 1950s-vintage racing cars, took the wheel at Alcan three years ago after reshaping ITT Industries, a White Plains, N.Y., conglomerate.

He has pushed hard for diversification at Alcan. He snapped up a sizeable packaging business in Norway, for example, and entered a smelting joint venture in Brazil.

To capitalize on the China boom, he recently unveiled plans to make an initial investment of US$150-million for a 50% interest in a smelter being developed by some Chinese companies. The initial investment is planned to take place early next year, as soon as it wins Chinese government approval. Alcan also has options to invest in another smelter in China.

But dealmaking is only part of the plan. Mr. Engen is taking a hard look at operations, dumping underperforming units. Several were cut loose last year, including a specialty-chemicals business in Europe and molded-glass operations in North America and Asia. Such moves, Engen believes, have done a lot to set Alcan apart from competitors in the aluminum industry.

Going toe-to-toe with Alcoa won't be easy, however. The Pittsburgh company enjoys tremendous power and prestige around the world. It has lately been angling for a stake in the large but troubled aluminum industry in Russia. Like Alcan, it has seen its stock climb in recent months to a 52-week high.

In the early 20th century, the two companies operated as one, under the name Aluminum Co. of America. They separated through a series of restructurings and name changes and now, more than ever, find themselves in the role of fierce rivals.

But Mr. Engen is no stranger to competitive struggles. He owns no fewer than six racing cars and earlier this year fractured his leg while behind the wheel of one. With the leg now mended, he appears to be ready for his biggest race ever.

© National Post 2003


New Aluminum Forming Technology Announced

boerse.de (Pressemitteilung), Germany

BLOOMINGDALE, Ill., Dec. 22 /PRNewswire/ -- Bi-Link Metal Specialties has announced a new metal forming technology that produces results similar to a casting but with throughput similar to metal stampings. The new process, "HotForming" is able to produce sharp radii on key features. This offers the designer of covers some new options.

HotForming frees the designer from the old constraints and allows a much cleaner look. As an added bonus, it can also save overall cost, as an adhesive process is not required. The appearance item no longer looks like a "dressed up" piece of plastic, but like a precision metal part.

HotFormed aluminum covers coupled with anodized finishes produce a quality appearance item that cannot be duplicated in plastic. Anodized surfaces today can offer an incredible number of textures, colors and graphics. Virtually any color desired can be anodized and the surface can be glossy or etched. A properly anodized surface has the depth and beauty of a hand rubbed lacquer finish.

When the current finishes are mated with an expertly made housing/faceplate the results are visible to even the most disenfranchised consumer. An item with a premium anodized finish and aluminum covers has a look and feel of quality that is apparent from across a room. These are the finishes that triggers the "buy" response from consumers.

About Bi-Link

Bi-Link Metal Specialties is a global manufacturer of metal components and assemblies. With manufacturing facilities in the USA, Singapore, China, Europe and Malaysia, we're quickly becoming the premier international provider of functional and decorative items. Bi-Link Metal Specialties

CONTACT: Mike Cartwright, General Manager of Bi-Link Illinois,+1-630-858-5900, M_Cartwright@Bi-LinkIL.com

Web site: http://www.bi-link.com/


Golden Northwest Aluminum files for Chapter 11

Forbes, Reuters, 12.23.03, 9:49 AM ET

NEW YORK, Dec 23 (Reuters) - Golden Northwest Aluminum Inc., which had halted all primary production earlier this year because of high power costs, said it has filed for bankruptcy protection for its aluminum operations.

Owner and Chief Executive Brett Wilcox said the privately held company had been been in talks with its bondholders about restructuring its senior secured notes, which he said had been impossible to service during the curtailment.

"The company and its note holders agreed that the best way to complete the necessary restructuring of Golden Northwest's debt is to work within the Chapter 11 bankruptcy process," Wilcox said in a statement late on Monday.

"We expect our aluminum operations to emerge from Chapter 11 in 2004 with a sustainable debt structure that will allow us to restart operations" as soon as power becomes affordable for the company and aluminum prices improve, Wilcox said.

Golden Northwest owns two aluminum smelters with combined annual production capacity of 250,000 tonnes -- Goldendale Aluminum near Goldendale, Washington, and Northwest Aluminum in The Dalles, Oregon.

Golden Northwest curtailed most production in December 2000 because of high electricity prices in the area, and then halted all remaining production last March.

The company said it would continue to run its separate casting operation -- Northwest Aluminum Specialties -- and perform maintenance on the primary smelters in the hopes of restarting production in the future.

But in order to reopen the primary smelters, it was first necessary to restructure the company's debt and to obtain an affordable long-term power supply, Wilcox added.

He said Golden Northwest Aluminum was working with the Bonneville Power Administration, the U.S. power supplier in the region, and with Northwest Energy Development LLC, a separate power development company that he controls, to find new economical regional power generating resources.

Golden Northwest now employs 147 people in its specialty casting business and in maintaining the Goldendale and Northwest primary smelters.

At full operation, the smelters had employed more than 1,100 people.

Northwest Energy Development and its subsidiaries are not affected by the Golden Northwest Chapter 11 filing, the statement said.

Copyright 2003, Reuters News Service

Ormet To Lay Off 300

Wheeling Intelligencer, WV 23 Dec 2003

HANNIBAL - Reflecting the current imbalance between the market prices of aluminum and alumina, a situation created largely by an increase in Chinese primary aluminum production, Ormet announced today the temporary shutdown of two of its six potlines at the Hannibal Reduction Plant and the associated layoff of about 300 employees.

The layoffs, which include both hourly and salaried employees, will take effect Jan. 1, when the two potlines are scheduled to halt.
Ormet Chairman and Chief Executive Officer R. Emmett Boyle said he regrets the need for the layoffs, but the temporary shutdown is necessary to strengthen the company's financial position and improve its long-term viability as it continues to feel the effects of a multi-year recession in the U.S. aluminum industry.

Boyle added that the curtailments reflect very unusual market conditions caused, in part, by the rapid expansion of Chinese aluminum production that has doubled since 2000 with the shortage of alumina, a product necessary to make aluminum. Market conditions driven by the alumina shortage allow the company to minimize the impact of low aluminum prices by curtailing some aluminum production and increasing the sales of aluminum.

"Currently, alumina is in very short supply in the world, causing prices to soar," Boyle noted. "However, at the same time, aluminum prices, while rising a small percentage, have not reflected the meteoric rise of the price of alumina. The tough but sound business decision for Ormet is to reduce production of primary aluminum and sell the alumina that would have been consumed making the primary metal."

Officials with United Steelworkers of America Local 5724 were unavailable for comment this morning.

With its reduced production of primary aluminum, Ormet will purchase any additional aluminum required to maintain the production levels at its rolling mills to meet customer requirements.

Ormet has historically produced the alumina it uses to operate the Hannibal Reduction Plant at is Burnside, La., Alumina Plant. That facility, however, was temporarily curtailed in February 2001 when the price of alumina plummeted because of excess industry capacity.

At that time, Ormet officials found they could purchase alumina for far less than they could produce it at Burnside.

With the dramatic rise in alumina prices over the last six months, Ormet recently restarted the Burnside Alumina Plant in record time, resulting in the rehiring of 230 employees.

Ormet Corp., headquartered in Wheeling, employs about 2,600 people throughout its subsidiaries Ormet Primary Aluminum Corp. and Ormet Aluminum Mill Products Corp.

The company operates eight facilities in six states and produces aluminum products for the fabrication, extrusion and conversion markets.


China, US sign contracts on aluminum trade

China Daily, China ( 2003-12-23 14:37) (Xinhua)

The Chinese enterprise purchasing mission signed two contracts with US companies Monday on importing aluminum from the United States.

The contracts, with a total value of 320 million US dollars, were signed in Houston, Texas, by the Chinese mission organized by the Chamber of Commerce for Imports and Exports of Minerals and Chemical Products with US Gerald Metals Inc. and Sherwin Co.

Under the contracts, China will import 1.08 million tons of US aluminum within the coming years.

A Chinese government economic and trade delegation headed by Vice Minister of Commerce Liao Xiaoqi, which is currently visiting the United States, was present at the signing ceremony.

The Chinese government delegation said in a new release that these contracts were signed with a view to substantiating the consensus reached between Chinese Premier Wen Jiabao and US President George W. Bush during Premier Wen's recent visit to the United States.

The two sides agreed to further the Sino-US relationship of cooperation and strengthen their economic and trade ties, in particular to increase China's imports from the United States.

The news release said the Chinese government attaches great importance to economic and trade cooperation with the United States and is vigorously pushing for the steady and healthy development of economic and trade ties between the two countries.

The Chinese government also encourages enterprises' efforts to increase imports from the United States so as to reduce the trade deficit incurred by the US side.

It said the development of Sino-US economic and trade relations has brought tangible economic benefits to the people of both countries, thus constituting an important cornerstone for and providing a strong impetus to the development of relations between the two countries.

The Chinese enterprise purchasing mission also signed with US counterparts on Friday in Tampa, Florida, several contracts on China's import of fertilizers from the United States. The contracts totaled more 500 million dollars.


Rolling Mill deal set to close

Manitowoc Herald Times Reporter, WI Posted Dec. 27, 2003

By Neil Rhines
Herald Times Reporter

MANITOWOC — Local entrepreneur Tim Martinez said an agreement has been reached to purchase the Mirro plant at 2015 Mirro Drive from Newell Rubbermaid, for $4.5 million, and that the transaction will be completed on Tuesday.

Production began Nov. 7 in the aluminum rolling mill section of the million-square-foot facility.

Through a combination of major contributions by local investors, and state and federal money, the purchase was made with no bank debt.

“That’s very impressive,” Martinez said Friday.

According to Martinez, Phase 2 of the Koenig & Vits venture will begin just after the ink dries, and that applications for employment will be taken, beginning in January.

A total of 100 employees are needed for this phase, centered on aluminum rolling.

Former Mirro employees are especially encouraged to apply, he said.

Once the deal is signed and the mill is rolling smoothly, Martinez and others will begin to look at re-energizing other parts of the facility.

“That’s where the lion’s share of the staff will start getting hired back,” he said, adding that whichever portion of the facility is chosen next would be based on product demand.

The rolling mill is the only one of it’s kind in Wisconsin, and one of only a few in the country.

The plant has $2 million in test orders in January, and Newell-Rubbermaid agreed to buy $1 million of orders over the next 12 months, Martinez said.

The 26 employees currently working at the rolling mill could receive their first paychecks within the first two weeks of January, although many have decided to reinvest the money in company stock, Martinez said.

Employees will maintain between 60 and 80 percent ownership, making Koenig & Vits one of a few business entities in the area where employees have a substantial interest in the company, he said.

Stock prices will rise in January, and another partner will be named, Martinez said.

When Martinez began discussing the purchase eight months ago, he hoped to have things finalized by August. Deadlines passed due to various setbacks, but through what Martinez describes as a “great reception from the community, we’re taking charge of our own destiny. We’re not being timid about it.”


Neil Rhines: 920 686-2105 or Nrhines@htrnews.com


Smelter Asia to name new technology partner by June

New Straits Times, Malaysia 28 Dec 2003

By HAMISAH HAMID

SMELTER Asia Sdn Bhd, the developer of Malaysia’s first aluminium smelter, will identify a new technology partner in the next six months after Dubai Aluminium Co (Dubal) withdrew from the US$2 billion (US$1 RM3.80) project.

Gulf International Investment Group (GIIG) shareholder Mohamed Ali Alabbar said the company is currently considering the most suitable technology for the smelting plant in Sarawak.

He said the technical team is currently evaluating smelting technologies from companies in China and Australia.

“We’ll see who will give us the best technology, the best value and the technical support as well,” Alabbar said in an interview in Kuala Lumpur on Saturday.

Smelter Asia is a joint venture between GIIG Capital Sdn Bhd and West Asian investors.

GIIC, meanwhile, is an investment fund set up jointly by businessman Tan Sri Syed Mokhtar Al-Bukhary and Alabbar.

A few weeks ago, GIIG’s partner, Dubal, decided to pull out from the project due to changes in its investment policy.

Alabbar, former Dubal vice-chairman, said he is not rushing to find GIIC’s new technology partner as he is keen on getting a smelting technology that will contribute to cost-efficient construction of the plant.

“The evaluation will take time and we don’t want to rush and take the risk,” he said.

He said he is interested in the latest aluminium smelting technology that uses bigger smelting cells.

Smelter Asia, said to be the largest aluminium smelter in South-East Asia, will be built on a 200ha in Similajau, 58km from Bintulu.

It is scheduled for completion in 2007 and is expected to reach its full capacity of 500,000 tonnes per year in 2010.

Alabbar said investors from Australia and China have also expressed their interest to take part in the project.

“The main investors are already in, majority of them are from West Asia,” he said, adding that new investors may come aboard in a year’s time.

It is believed that Syed Mokhtar and Alabbar had invested RM100 million each in GIIC and are seeking for more funds.

Syed Mokhtar was recently quoted in a foreign wire report as saying that the cost of the smelter may be less than the projected US$2 billion, which would be met one third by GIIC and two thirds via project financing.

He had said that the company would seek a few options in the financial markets, including Islamic banking.

Alabbar said the production of the smelter will be according to schedule as the Bakun hydroelectric dam project is also on schedule. Both projects are expected to come onstream in September 2007.

He said actual works on the site of the dam are being carried out.

Smelter Asia plans to take up more than half of the power generated by the 2,400-megawatt Bakun dam.

Earlier this year, GIIC Capital bought 60 per cent of Sarawak Hidro Sdn Bhd, the Bakun dam project owner, construction overseer and eventual operator.

Alabbar said Smelter Asia will generate steady cash flow to Bakun dam as the smelter’s demand for energy is constant throughout the year.

He said for the past 12 months, the company had done a lot of ground works, including early engineering, layout, material cost, site condition and environmental studies.

The company is currently discussing several issues like power purchase agreement and site acquisition.

About 3,000 skilled jobs will be created by Smelter Asia, while another 4,000 to 5,000 workers are needed for the construction of the smelting plant.

The job opportunities could expand to 10,000 if the downstream manufacturing industries are included, he added.

Downstream activities include production of intermediate products like aluminium billets, slab, wire rod and continuous cast strip — to be supplied to end-users in sectors like transportation, automotive, construction and packaging.

The smelter, which will produce standard ingots and molten aluminium, will also become an anchor to the Similajau Heavy Industry Park.

According to Alabbar, half of Smelter Asia’s production in 2010 will be for domestic market, which currently consumes about 220,000 tonnes of aluminium ingots a year.

Meanwhile, between 250,000 and 300,000 tonnes of aluminium a year will be exported in 2010.

Japan, which currently consumes over 2 million tonnes of aluminium a year, is expected to be the main importer, followed by China. Other importing countries will be South Korea, Indonesia and Thailand.

World’s demand for aluminium currently grows at 2.5 per cent annually, and will pick up to 5 per cent until 2011.

Smelter Asia will source the raw material from Australia, Africa, South America and India.

Asked to comment on another proposed smelting plant in Perak of the same capacity as Smelter Asia, Alabbar said the market is open for competition.

“They should be given a chance as well, and we will be competing with other people anyway, it’s natural,” he said.

It was earlier reported that a foreign consortium has proposed to build an aluminium smelter and a power plant with RM9.3 million investment in Lumut.

Nduom Lauds Offer to sell VALCO to Ghana

http://www.ghanaweb.com/GhanaHomePage/economy/artikel.php?ID48938

GhanaWeb, Ghana Sunday, 28 December 2003

Dr. Paa Kwesi Nduom, Minister of Energy, on Saturday commended the decision by Kaiser Aluminium of the United States to sell its shares in VALCO to the government of Ghana, saying it was a "golden opportunity for the country." He said it would help Ghana to utilise her vast bauxite deposits to boost the economy, and also to provide employment opportunities for the people.
Dr. Nduom was inaugurating an electrification project for Ayensudu, a farming community in the Komenda-Edina-Eguafo- Abrem (KEEA) District of the Central Region, as part of the Rural Electrification Project. He reiterated the determination of the government to extend power to rural communities, to help stem poverty and urged the people to use the facility to generate more income to improve upon their living conditions.

Dr. Nduom, assured the people that government would not discriminate against any community in the provision of development projects, and urged them to pay their electricity bills promptly. On the 2004 elections, he appealed to them to help ensure that it was conducted peacefully.

Mr. Emmanuel Antwi-Darko, Director of Power at the Ministry of Energy, said government spent 20 to 30 million dollars annually, for the extension of electricity to the various communities, since the Rural Electrification Project was launched.

He said since 1991, a total of 2,000 communities had benefited from the project and that within the last six months, about 400 communities had been hooked to the national grid, while 1,000 others would also benefit by June next year.

The KEEA District Chief Executive, Nana Ato Arthur said other communities that had benefited from the project in the district, included Abayee, Dwaboo, Aboabo and Nyamebekyere, and advised the people to use electricity judiciously, to derive the maximum benefit. The chief of Ayensudu, Nana Affrakoh I, commended the government for extending the facility to the area and promised that it would be put to good use.

He appealed to the government to establish a police station in the town and also construct speed ramps to help curb the rampant accidents that had been occurring in the area.


Venezuela's Venalum sees 2003 output at 435,000 tns

Reuters, 12.29.03, 5:18 PM ET

CARACAS, Venezuela, Dec 29 (Reuters) - Venezuela's state-run aluminum smelter Venalum increased its year-end output forecast slightly to 435,000 tonnes after reaching 430,538 tonnes in output at the end of last week, officials said Monday.

"The year-end figure will be at 435,000 tonnes," Venalum President Lenin Berrueta said in a statement.

Venalum, with a nominal capacity of 430,000 tonnes annually, had earlier said it aimed to produce around 434,000 tonnes of primary aluminum this year. Last year the company set a production record of 436,558 tonnes.

Venalum, the largest smelter run by state industrial holding group Corporacion Venezolana de Guayana (CVG), produced an accumulated total of 396,474 tonnes in the first 11 months of this year compared with 397,428 tonnes output over the same period last year.

Venalum is 80 percent owned by a subsidiary of CVG, with 20 percent held by six Japanese companies -- Showa Denko KK <4004.T>, Kobe Steel Ltd. <5406.T>, Sumitomo Chemical Co. Ltd. <4005.T>, Mitsubishi Materials Corp <5711.T>, Mitsubishi Aluminum Co. Ltd. and Marubeni Corp. <8002.T>.

Copyright 2003, Reuters News Service


Permatech management buys company from Alcoa

Triad Business Journal, NC 29 Dec 2003

Paul Davis

Permatech Inc., a Graham-based company that makes equipment needed to produce aluminum, announced that its management team has bought the company from former parent company Alcoa Inc.

Joe Trettel of Graham and John Schneider of Concord are the new owners of the business. Financial terms of the deal were not disclosed, though Carolina Bank in Greensboro was the primary lender for the transaction.

The new owners were unavailable for immediate comment beyond the company's statement.

Sonny Wilburn, president of the Alamance County Area Chamber of Commerce, said Permatech will continue to make products for Alcoa. He said the ownership change also will allow the company to sell products to other companies.

"I'm excited about the opportunities that this brings to the community," Wilburn said. "This will allow them to expand their business."

Permatech said in its statement that annual sales are steadily growing and that it is "well on its way to becoming a $15 million operation." The company has 75 employees in Graham.

The company said the move ensures that those jobs will stay in Graham, adding that the status of those jobs would have been unclear if another firm has bought the operations from Alcoa.

The company also said it could add to its employment in Graham as business increases.

Permatech at one time looked at moving its operations from Graham to the North Carolina Industrial Center in Mebane, according to the Feb. 15-21, 2002, print edition of this newspaper. However, company officials later decided against such a move.

Despite the planned growth, Wilburn said Permatech will likely remain in Graham at this time.

Reach Paul Davis by phone at (336) 370-2916 or via e-mail at pdavis@bizjournals.com.

© 2003 American City Business Journals Inc.


SUAL set to sell some assets

RosBusinessConsulting, Russia 29 Dec 2003

RBC, 29.12.2003, Moscow 09:18:53. Shareholders of Russia's major aluminum producer SUAL will consider the issue of selling some assets that belong to SUAL's 75-percent subsidiary Komi-Aluminum at their extraordinary meeting today. Among the assets that are expected to be sold is a 154-kilometer railroad that was put into operation by SUAL in 2002. This is the only private railroad in Russia. It connects a bauxite field in the Komi republic to federal railroads.

The transfer of assets is aimed at simplifying managing of Komi- Aluminum. This project also envisages the construction of aluminum facilities totaling $2bn.

VALCO Deal Worth $100m

GhanaWeb, Ghana 29 December 2003

VALCO Deal Worth $100m

Kaiser Aluminium Corporation’s 90 per cent share in VALCO, which it intends to offload to the Government of Ghana, has been estimated at between $35 million and $100 million.

In addition, the government will take over all of Kaiser’s related liabilities and obligations. The remaining 10 per cent share is owned by Alcoa.

Accordingly, the government is to engage a team of advisors with financial, accounting and technical expertise to conduct due diligence on Kaiser’s interest and that of VALCO to enable the government to take the right decisions in the best interest of the country.

The transaction can provide the country with great opportunity to establish a comprehensive aluminium-based industry which includes increased bauxite mining, aluminium production and production of finished goods for domestic and industrial use.

An official statement issued in Accra said the team of experts was expected to complete its assignment by February next year. It is anticipated that the transfer of VALCO to the Republic if Ghana would be sealed by the end of April next year. “We are very optimistic that the transaction can help the country meet its long-term goals in terms of industrialization.” the statement said.

Meanwhile, an official document released by Kaiser in Huston, Texas, a copy of which is available to the Graphic, said the company and the Government of Ghana signed a memorandum of understanding (MOU) on Friday, December 19, 2003. The consideration of the value of the plant in Tema will be paid in 2004 and beyond.

The document states that assuming both parties settle on $35 million as the minimum consideration, Ghana would pay $7 million in cash to Kaiser and $18 million in cash to VALCO, thereby reducing Kaiser’s funding to VALCO.

The Government of Ghana would then pay the remaining $10 million in cash to Kaiser over a five year period from the closing date. The Republic of Ghana’s obligation to Kaiser, according to the document, will be guaranteed by the Bank of Ghana (BOG).

Kaiser, however, noted that the transaction was subject to due diligence and a number of approvals including the Cabinet and Parliament of the Republic of Ghana the boards of directors of Kaiser and VALCO ,the US Bankruptcy Court and the lenders under Kaiser’s Post-Petition Credit Agreement.

The purchase of VALCO is also subject to Alcoa’s right of first refusal, pursuant to VALCO’s corporate governance requirements. Upon the execution of the MOU and the pay out by the Republic of Ghana of $7 million into an escrow account, the parties will suspend the pending international arbitration. “Upon the closing of the transaction, the parties will dismiss the arbitratrion with prejudice,” the document stated.

Kaiser President and Chief Executive Officer, Jack A Hockema, was quoted as saying in Huston, Texas, that “Kaiser and Ghana have been friends and business partners for 40 years. Ghana’s industrialization, in large part, began with Kaiser’s commitment to the building of the Akosombo power facility. Kaiser is pleased that the transaction provides the opportuinity for VALCO’s majority ownership and economic potential to the people of Ghana.”

Industry and finance watchers have welcomed the transfer of VALCO to the government and expressed the optimism that it could provide Ghana with the great opportunity to establish a comprehensive aluminium based industry which will propel the government’s agenda of making the country a middle-income industrial nation by the year 2020.

They noted that apart from creating more employment opportunities through bauxite mining and processing, aluminium production and the production of finished goods for domestic and the international market, the take-over would enhance the salt industry which would provide a raw material base for alumina.

Source: Daily Graphic