AluNews - February 2003

ESI Group Announces Intent to Acquire Calcom

Aim is to strengthen strategic position in the casting and the industrial metallurgy

Ten Links, CA - 30 Jan 2003

PARIS, France, January 30, 2003 - ESI Group (Euroclear 6584, Bloomberg ESI FP, Reuters ESIG.LN), a world leading solution provider in virtual prototyping and manufacturing, announces its intention to acquire Calcom. Calcom is a Swiss company specializing in digital simulation for casting and metallurgical industry applications. The company is the editor and European distributor of the calcosoft software product, and also markets the ProCAST software product in Europe.

The acquisition of Calcom is a strategic follow-up to the recent acquisition of ProCAST teams and software in November 2002. ESI Group views this acquisition as an additional step in its consolidation of a leading position in Virtual Manufacturing (VM) as a provider of simulation products for most material and metallurgical processes.

Calcom's privileged collaboration with the Swiss Federal Institute of Technology (EPFL) ensures that the most recent developments in metallurgy and computer science are transferred to its casting and metal forming applications. Agreements between EPFL and Calcom have been strengthened in order to ensure a long-term partnership.

With this acquisition, ESI Group strengthens the "metallurgical" dimension of its business which will eventually include ProCAST and PAM-CAST for casting simulation, calcosoft for continuous casting and ESI Group SYSWELD product for welding and heat treatment.

The complementary nature and the convergence of these various products will enable this specific division to develop and support new high value added 2G solutions, such as the simulation and optimization of assembly processes for mechanic-welded complex structures.

ESI Group metallurgical business unit will include close to 50 world experts and engineers and will entail significant economies of scale at the level of distribution, technical support and management. This should result in greater efficiency for fiscal year 2003.

Financial terms of the acquisition

The ProCAST acquisition was completed in late December 2002 and involved the intellectual property, assets and staff required to operate the software.

The ProCAST and Calcom acquisitions amount to approximately 4 million euros, paid entirely in cash. The two acquired companies generated sales of around 4.6 million euros in 2002. In accordance with agreements signed on December 24, 2002, ESI Group will consolidate Calcom's sales in the first quarter of 2003.

Alain de Rouvray, ESI Group's CEO, concluded: "Pursuing our selective acquisition strategy, we are delighted to welcome Calcom into our group. Current and future products resulting from the combination of Calcom and ESI Group, following the integration of ProCAST, will give ESI Group critical mass in casting manufacturing processes, and will complement our existing leadership in stamping and die design. This will allow us to develop a single, global solution for complex assembled products. Calcom's sales force and highly-skilled technical staff will strengthen ESI Group's business as a distributor and provider of high value added services."

About ESI Group

ESI Group is a pioneer and world leading provider of digital simulation software for prototyping and manufacturing processes that take into account the physics of materials. ESI Group has developed an entire suite of coherent, industry oriented applications to realistically simulate a product's behavior during testing, to fine tune the manufacturing processes in synergy with the desired product performance, and to evaluate the environment's impact on product usage. ESI Group's product portfolio, which has been industrially validated and combined in multi-trade value chains, represents a unique collaborative, virtual engineering solution, known as the Virtual Try-Out Space (VTOS), enabling a continuous improvement on the virtual prototype. By drastically reducing costs and development lead times, VTOS solutions offer major competitive advantages by progressively eliminating the need for physical prototypes. With revenues close to euros 43 million in fiscal year 2001, ESI Group (Nouveau Marché: Euronext Paris - Software - Euroclear 6584 - Bloomberg ESI FP - Reuters ESIG.LN) employs over 300 high-level specialists worldwide. The company and its global network of agents provide sales and technical support to customers in more than 30 countries. For more information, visit the ESI website - www.esi-group.com.

About Calcom

Calcom was founded in Lausanne in 1991. The company markets UES Software's ProCAST casting simulation product, along with its own calcosoft continuous casting product. Calcom has many prestigious industrial partners, including ABB, Alcan-Alusuisse, Assan, Corus, Doncasters, Elkem, General Motors, Howmet, Hydro-Aluminium, Hydro-Germany-VAW, Lamitref-MKM, PCC, Pechiney, Rolls-Royce, Snecma and Umicore. Calcom is also heavily involved in research projects, with academic partners such as EPFL, INPL, INPG, Sintef, TU Delft, and Uni Trondheim. Calcom has been awarded ISO9001 certification by SGS International Certification Services AG. In 2002, Calcom generated sales of CHF3.4m, mainly in Europe. Around three quarters of Calcom's revenue comes from distributing ProCAST and calcosoft software; the other quarter comes from services. Calcom has around 15 employees, and covers the European market using a network of agents and distributors.

For further information, visit Calcom's website at www.calcom.ch.

Shutdown Of Indal Smelter Unit Hangs In Balance

Financial Express, India ,Monday, February 03, 2003, Ajayan

Kochi, February 2: No decision has yet been taken on the shutting down of the smelter unit of the Indian Aluminium Company (Indal), a month after the grace period allowed to settle the power tariff issue.

The highly power-consuming company had towards the end of December announced that it would close down its smelter unit from December 1 and surrender the power consumed to the Kerala State Electricity Board (KSEB) totalling Rs 6.7 crore a month.

However, the state government cajoled it to continue production even after the deadline as preparations were then underway for the Global Investor Meet (GIM) in mid-January. The closure of the company owing to power crisis would, the government then must have believed, send wrong signals to probable investors to the state. The company withdrew the layoff notices issued to its staff on a government assurance that the issue would be settled in a month. However, sources in Indal said till date no communication had been received from the government.

The last hike in the power tariff had spelt disaster for the company forcing it to cough up Rs 6.7 crore. The smelter unit of the company needs as much as 20 million units a month, which is half the company’s total consumption. The power tariff hike in 1996 started making things sour for the company. After the 25 per cent hike in tariff the year before and last year’s hike by 50 paise per unit pushed up the power bill. Sources in Indal said that even before the last tariff hike, the monthly loss of the company was to the tune of Rs 1 crore.

The smelter unit produces 40 tonnes raw material aluminium to the extrusions unit. In the event of a smelter unit closure, the company proposed to source the raw material from its Hirakud plant.

Sources said discussions were on with the officials and the company pins its hope on the pre-GIM announcement by the state government that industries in the state could draw power on their own. However, nothing concrete has so far come out of that announcement. The company had a proposal to draw power from Orissa at Rs 2 per unit when it has to pay the KSEB Rs 3.40 presently.

The plan had been lying with KSEB for quite some time with the latter raising certain technical problems. It also had another proposal for a captive power plant.

With the government announcing, but still not implementing, the withdrawal of the power guideline to allow a company to use only 50 per cent of the power from its captive plant and surrender the rest to KSEB, Indal could go ahead with the proposal.

But all depends on how serious the government was in implementing the announcements which could be a pre-GIM exercise, fear sources in Indal.

Capral in $140m move

The Australian, Australia ,February 03, 2003

By James McCullough

AUSTRALIA'S largest aluminium extrusion company, Capral Aluminium, is close to finalising a $140 million deal to move its manufacturing base to Ipswich after a development brawl with the NSW Government.

The listed company was planning to establish a major manufacturing base on state-owned land at Campbelltown on Sydney's southwestern outskirts and the NSW Government had deemed the project to be "state significant".

The Carr Government had undertaken to issue necessary approvals promptly for the $140 million plant, but has delayed doing so in response to protests by local residents opposed to its construction nearby – prompting the company to seek alternatives.

Capral, which makes and distributes aluminium extrusions, wants the Government to approve the project despite the protests.

But Capral management now believes NSW government planning approvals to develop the 50,000sq m factory at Smeaton Range could be delayed until April.

Negotiations began in July last year and Capral, the old Alcan, went ahead and ordered $85 million worth of imported European equipment which it needs to install immediately on arrival to meet the company's strict production time frame in the June quarter.

Managing director Greg L'Estrange told the Australian Stock Exchange late last year that the company was pursuing opportunities to build the factory outside of NSW as a result of the uncertainty.

Hence the move to relocate to Queensland – canvassed among a range of alternative options including a move offshore.

Capral lodged a development application for Ipswich which has been approved. A company spokesman said the group planned to go ahead with the plan to build a $140 million facility which would employ up to 350 people.

"It is a major investment for Capral and we are certainly very close on moving" the company spokesman told The Courier-Mail yesterday.

A development application was lodged last week with the Ipswich City Council and Capral plans to move to Bremer Park on Ipswich's outskirts within months.

It's understood the forthcoming NSW election derailed the Carr Government's plans to push through the new facility, handing the Beattie Government an opportunity to lure the southerners north to Queensland.

The NSW Government has since initiated a commission of inquiry which begins hearings on February 12, although it is now doubtful the aluminium giant will remain in NSW.

The Capral spokesman said a final decision would be made before the end of March, but that the odds were now looking very much in Queensland's favour.

Capral already owns five aluminium extrusion plants around the country and is 40 per cent owned by Sir Ron Brierley's Guinness Peat Group.

Capral announced plans last August to build the world standard extrusion and finishing plant to significantly improve the company's margins over the longer term.

Capral's share price finished steady on Friday at $3.10.

Pechiney seeks partners in new African smelter

Financial Times (subscription), UK, By Peter Marsh

Published: February 4 2003 4:00 | Last Updated: February 4 2003 4:00

Pechiney, the French metals group, is seeking partners to fund a new €2bn ($2.2bn) aluminium smelter in South Africa while continuing to cut capacity at its domestic plants.

Jean-Pierre Rodier, Pechiney's chairman, said potential investors had shown interest in taking combined stakes totalling 55-65 per cent of the new smelter, with Pechiney owning the rest.

The French aluminium and packaging group intends to have the new smelter in operation by 2006. It will be based on a new technology developed in-house, which it says cuts capital costs of such plants by 15 per cent.

Mr Rodier said he hoped to license the technology behind the new plant, capable of producing 450,000 tonnes of aluminium a year, to other aluminium producers. These could include Alcoa of the US and Canada's Alcan, the two largest global producers.

The South African plant could have a total of up to seven investors, including Pechiney, Mr Rodier said. Other companies taking a stake could include financial and industrial groups, but no competitors.

Pechiney is planning the new plant - which will be in Coega, near Port Elizabeth, and will be its first smelter in South Africa - while trimming its French manufacturing operations to restrain costs. Costs of developing the new smelter technology are put at about $80m.

The company, which last week reported a €50m net loss for 2002, plans to axe up to 600 jobs in France this year through closing two factories and reducing output in others.

Roughly half the company's 35,000 employees work in France, where it has four out of its nine smelters worldwide. Pechiney is the world's fourth-biggest aluminium producer, behind Russian Aluminium (Rusal).

Mr Rodier said 2003 would "not be easy" even though he expected world aluminium demand to grow by about 3 per cent, with most of the extra consumption taking place in Asia. New capacity increases globally meant that prices would remain under pressure.

He said he expected little change in the price of unprocessed aluminium - about $1,350 a tonne during 2002, when it fell 9 per cent compared with 2001 - in the course of this year.

However, Mr Rodier said he expected Pechiney to receive a lift from improved sales of its rolled aluminium components for the aerospace industry, mainly due to higher orders from Airbus, the European airline group.

Bahrain parliament rejects loan accord

Gulf News, United Arab Emirates Bahrain |By Mohammed Almezel | 05-02-2003

In an unexpected move, the Bahraini parliament refused yesterday to pass a $500 million loan agreement, signed recently by the government and an international consortium to finance four local projects.

It is the first time the 40-member House of Deputies refused to endorse a government-introduced motion since the Islamists-dominated house election last October.

According to the agreement, signed late last year, the international consortium, comprising BNP-Paribas, International Solomon Brothers and City Group's Schroeder, Solomon, Smith Barney, would issue the $500 million government bonds on behalf of the Bahraini government.

Sheikh Ibrahim Al Khalifa, Undersecretary of Finance and National Economy, told the parliament the issue has been oversubscribed by more than $700 million.

He said $130 million of the $500 million would go to finance part of the $1.7 billion expansion project at Bahrain Aluminum (Alba); $85 million to modernise the Bahrain Petrol Company's (Bapco) refinery; $200 million for the construction of the new Formula 1 racing track; and the rest, over $80 million, would finance the development of a new resort town in the coastal area of Bandar Al Seef.

However, what was expected to be a routine session turned out to be a showdown during which Sheikh Ibrahim failed to convince the members, who received the draft agreement only two days ago, to endorse the loan. They voted down the motion by 26 to five. Thirty members attended yesterday's session.

The members said they needed to see detailed plans of these projects before they can approve the agreement.

"I am sure Sheikh Ibrahim is telling the truth, but how could the government expect us to endorse a $500 million loan in just two days?" asked MP Sheikh Adel Al Mawdah, leader of the Islamic Salafi group, Al Assalah Society.

"We need to see detailed and transparent plans that show where the money is going and how it will be spent," said another Islamist MP, Dr Saadi Mohammed.

Both the MPs, as well as other Islamic members, also protested the "un-Islamic nature of the deal".

The government should have borrowed the money from Islamic banks to avoid paying 'usury' (interests), they said.

The motion now goes to the appointed Shura Council, the upper house of the National Assembly. If the council, also with 40 members, endorses the agreement, as expected, then both chambers will sit together and have a final vote.

Earlier, the house approved two government introduced motions. The first involves a 15 million Kuwaiti dinar loan from the Kuwaiti Fund for Arab Economic Development to finance the expansion of the country's main power plant in Al Hidd.

The other is an amended law to raise the ceiling of government bonds from 600 million Bahraini dinars to 900 million.

Finally, the parliament decided to form a special panel to study the unemployment issue that would report its finding to the house in two months.

The Crown Prince, Sheikh Salman bin Hamad Al Khalifa, said last month the unemployment rate has reached 15 per cent among the local population and urged the private sector to make extra efforts to absorb the national workforce.

Minister of Labour and Social Affairs, Dr Majeed Al Alawi, told the parliament yesterday that he was doing all he can to find more jobs for the unemployed. "We are working day and night on this vital issue."

Meanwhile, a ministry report is being completed and will be submitted to the cabinet on February 16 and presented to the parliament for discussion.


12 Unions Join to Boost Political Power

Austin American Statesman, TX, By LEIGH STROPE

AP Labor Writer

WASHINGTON (AP)--Twelve labor unions representing workers in declining industries are banding together in an effort to increase their political and lobbying might.

The new AFL-CIO Industrial Union Council met Tuesday to demand that Congress deal with the nation's manufacturing crisis, which has hemorrhaged 1.9 million jobs in the last two years. Recent economic reports indicate the sector is showing slight improvements.

``Workers are fed up. They have been for some time,'' said Cecil Roberts, president of the United Mine Workers of America.

The council was formed last year after several industrial unions initially refused to support an AFL-CIO fee increase earmarked for politics. Those unions complained that the troubled industrial sector and loss of union jobs were not getting enough attention, and the money could be spent more productively.

More than 3,000 union members representing workers in steel, autos, textiles, machines and electronics spent Tuesday afternoon on Capitol Hill to press their case.

Chris Burgman, 45, a member of the International Brotherhood of Electrical Workers Local 2064 in Valdosta, Ga., said the North American Free Trade Agreement has not worked and has cost the U.S. work force too many jobs.

``A global economy to me should mean that we get some of the benefits,'' he said. ``We're making all the sacrifices while everybody else is benefiting.''

The unions want tax and trade policies that reward companies for staying in the United States and penalize those that relocate abroad. They also want aid for small and medium-sized manufacturers, more job training programs and increased investment in infrastructure and jobs.

The loss of manufacturing jobs has hurt America's middle class, union leaders said. Those jobs typically are union, offering good pay and benefits.

``Without industrial unions and industrial workers, we could never have built the most effective labor movement, the most productive economy and the strongest democracy in the history of the world,'' said AFL-CIO President John Sweeney.

The United Steelworkers of America is losing hundreds of members with several recently announced factory closings. Aluminum cookware maker Mirro Co. said last week it has tentatively decided to close its plant in Manitowoc, Wis. About 880 jobs would be lost. Another plant, Gates Rubber in Gatesburg, Ill., also plans to close, taking with it more than 300 union jobs.

``There's a tremendous sense of betrayal by the political system in Washington,'' said Leo Gerard, president of the steelworkers' union. ``They're struggling every day to make ends meet, to maintain their health care, while the administration is giving billions of dollars away.''

Many companies are closing U.S. operations and relocating to China. ``China is the new Mexico,'' said Edward Fire, president of the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers-Communications Workers of America. ``That's exactly what's happening. Who gets it in the neck is industrial workers.''


Smelter emissions below EPA limits

Victoria Spectator Observer Group, Australia 03 February2003

Portland Observer , By BILL MELDRUM

PORTLAND Aluminium smelter emissions for 2001/02 were all below Environmental Protection Authority limits.

The smelter increased the number of substances for which emissions are reported in the past financial year.

Portland Aluminium is one of 600 facilities across 67 industry sectors to report emissions to the National Pollutant Inventory for the year, and it reported emission data on eight substances Ñ two more than in 2000/01.

All emissions in Portland were below limits set by the Environment Protection Authority in Victoria. However, carbon monoxide, fluoride and polycyclic aromatic hydrocarbons emissions all increased.

Oxides of nitrogen, particulate matter and sulphur dioxide emissions all decreased Ñ and in the case of oxides of nitrogen, the decrease was by almost 60 per cent on the previous year.

EPA chairman Rob Joy said aluminium smelters were in the top 10 industrial emitters to air in Victoria, along with companies involved in electricity supply, petrochemical, motor vehicle and glass manufacturing sectors.

However, Mr Joy noted that while industry was an important contributor to environmental emissions, it was no longer the main villain when it came to emissions.

He said motor vehicles and home wood heaters were at least equally responsible for the major types of air emissions in urban areas.

Portland Aluminium operations manager Matt Pistner said the increase in reporting to the inventory provided the community with more information on emissions and on the company's record of meeting its environmental commitments.

"There has also been a change in reporting of many substances which previously only looked at emissions to air, and now take into account emissions to air, land and water," he said.

Emissions from Portland Aluminium for the 2002 financial year included:

Carbon monoxide 43 million kg Ñ up from the previous year's figure of 41 million kg (the EPA's limit is 48,027,000 kg).

Fluoride 150,000 kg Ñ up from the previous year's figure of 122,000 kg but below EPA limit of 220,000 kg.

Oxides of nitrogen 75,000 kg Ñ down from the previous year's figure of 175,000 kg (EPA limit is 255,000 kg).

Particulate matter (dust particles of less than one-tenth of a millimetre) 121,000 kg Ñ down from the previous year's figure of 200,000 kg (No EPA limit).

Polychlorinated dioxins and furans 0.00000004 kg Ñ these had not previously been reported on by the company, and the figure is a total and does not relate to individual compounds.

Polycyclic aromatic hydrocarbons 8000 kg Ñ up from the 2001 figure of 5000 kg (EPA limit is 8200 kg).

Sulphur dioxide 6,700,000 kg Ñ down from the previous year's figure of 6,900,000 kg (EPA limit is 9,198,000 kg).

Volatile organic compounds 10,000 kg Ñ it is the first time the compounds have been measured in Portland (EPA limit is 12,100 kg).

Mr Pistner said the company had installed the latest technology in fluoride monitoring equipment in late 2002, which would assist in reducing fluoride emissions by providing continuous real time data on emissions and allow the company to take immediate action if and when emissions increased.


Nordural expansion delayed by power supply ruling

Forbes, Reuters, 02.04.03, 8:50 AM ET

By Sigga Hagalin

COPENHAGEN, Feb 4 (Reuters) - Icelandic aluminium producer Nordural's plans to double its smelting capacity in 2005 are likely to be delayed by at least a year due to a governemnt ruling that changed its expected power supply arrangement.

Nordural, or Nordic Aluminium, a subsidiary of private-owned U.S. Columbia Ventures Corp., wanted to increase its capacity to 180,000 tonnes a year.

Power for the increased production was to come from a new, 70 MW hydropower facility of national power producer Landsvirkjun, which was to build a dam in the Icelandic highlands and inundate 29 square km to build a reservoir.

But the Landsvirkjun plans were been scrapped last week by the ministry of environment, which allowed only for a reservoir of three square km to save a nearby nature reserve.

"We can't be sure of our possibilities to use the changed plans until October or November this year," Landsvirkjun's press officer Thorsteinn Hilmarsson said. "We had expected to start in 2005, but this means it will be delayed until 2006, at least."

Ragnar Gudmundsson, Nordural's manager of finance and administration, told Reuters that the impact of the changes to the power supply plans was not immediately clear.

He said Nordural had planned to buy 47 percent of the power needed from Landsvirkjun, and the rest from two smaller power producers.

"We have to meet with Landsvirkjun and the other companies to find out how to continue," Gudmundsson said. "We still don't know if the changes will effect our plans."

Iceland has been courted by many aluminium producers in the last few years, mostly because of relatively low prices on hydropower and economic and political stability in the country.

However, the increase in heavy industry has caused controversy because of environmental damage.

Alcoa (nyse: AA - news - people), the world's largest aluminium producer, plans to sign agreements in February with the Icelandic government and Landsvirkjun about building a 332,000 tonne aluminium smelter in eastern Iceland.

Atlantsal, a Russian and Icelandic-owned producer, is interested in building a 360,000 tonne aluminium smelter and a two million tonne alumina refinery in Iceland by 2006.

Isal, a subsidiary of Alcan <AL.TO>, the world's number two aluminium producer, is contemplating to expand its smelter in the outskirts of Reykjavik to 460,000 tonnes per year from 170,000 tonnes per year by 2007.

Copyright 2003, Reuters News Service


Technip says wins $600 mln deal in S. Africa

Forbes, Reuters, 02.04.03, 12:42 PM ET

PARIS, Feb 4 (Reuters) - French energy services group Technip-Coflexip <TECF.PA> said on Tuesday it had won a $600 million contract to build an aluminium smelter in South Africa for French aluminium maker Pechiney <PECH.PA>.

The firm said in a statement the contract was a 50-50 joint venture with Bateman group, and that the smelter would be built at Coega near Port Elisabeth in South Africa and would produce 460,000 tonnes of aluminium per year.

Pechiney said earlier on Tuesday it was seeking partners to build the two billion euro South African plant as it shut plants and cuts capacity at home.

Copyright 2003, Reuters News Service


Ghana's gold dilemma

GhanaWeb, Ghana, Business News of Tuesday, 04 February 2003

The Ghanaian Government is agonising over whether to grant licenses to six mining companies which are ready to invest over $2bn or preserve the forest and help save the earth.

Over the past five years, only a handful of new mines have opened as against dozens in the early to mid 1990s.

Five of the prospective mining companies are interested in mining for gold, but the ore is located inside forest reserves.

One company, Newmont, which is based in Australia, would, alone, pump close to $500m into the ailing Ghanaian economy, even before mining starts, and create about 1,000 jobs directly.

Newmont has found gold in two locations; but one of them falls inside a forest reserve. The company says it wants both concessions or nothing.

Bauxite too

A sixth company, called Bhp Billiton, a Dutch firm, wants to explore for bauxite, the mineral from which aluminium is derived.

Billiton would invest about $1bn to establish an integrated mining and alumina processing industry.

Since independence, Ghana has been looking desperately for exactly such an investor to mine and process the prodigious volumes of bauxite which, minerals experts say, exist at Kyebi in the Eastern Region and Nyinahin in Ashanti.

But, again, the precious mineral lies buried inside forest reserves.

Currently, there are two companies involved in the bauxite and alumina processing business: one exports the raw bauxite, the other imports it semi-processed from Jamaica.

Eco-tourism

Last week, three ministers in charge of mines, forestry, and environment toured some of the reserves and met the local communities to help government to take a decision.

The Minerals Commission which regulates mining activities in the country favours licensing the companies to mine.

One official said small-scale artisans would invade the forest and mine, anyway, if the big companies, which are easier to identify, regulate, monitor and tax, are kept out.

Many ordinary people in the prospective mining towns, which are desperate for amenities and secure jobs, also want the mines.

But environmentalists say the forest reserves are too important for the survival of the earth and should not be tampered with.

Dr Solomon Quartey, a consultant, recommends eco-tourism - where visitors pay to visit the forest - as a means of creating jobs in the communities.

A billion dollars will not pour in in a hurry, he concedes, but the forest will not disappear in the near future either.


Russia's RusAl tightens grip on Guinea's bauxite

Forbes, Reuters, 02.04.03, 7:31 AM ET

By Saliou Samb

CONAKRY, Feb 4 (Reuters) - Russian Aluminium (RusAl), the world's second biggest producer of aluminium, has taken a majority stake in Guinea's Alumina Company (ACG), strengthening its hold on the West African country's bauxite mines.

A senior official at ACG told Reuters on Tuesday that the Russian company had recently acquired most of the 85 percent stake reserved for foreign investors. Guinea's government controls the remaining 15 percent.

"RusAl bought stakes from the holdings reserved to foreign investors. I cannot tell you how much it holds now, but it has a majority stake," the official said.

Guinea has 30 percent of the world's known reserves of bauxite, which is refined into alumina and then smelted into aluminium. It is the second biggest producer of bauxite after Australia.

Ties between Guinea and Russia have been strong since independence leader Sekou Toure turned against former colonial power France in favour of the then Soviet bloc. Military aid has cemented Moscow's links with Toure's successor Lansana Conte.

RusAl already manages one Guinean bauxite mine and plans to build a massive new one, as well as an alumina refinery, at the Dian-Dian concession. It is also mulling plans for a smelter to produce finished aluminium there.

By acquiring a majority stake in ACG, RusAl also gets to control a mine and refinery producing some 700,000 tonnes of alumina in Fria Kimbo, 160 km northeast of the capital Conakry.

RusAl officials in Guinea declined to comment on the ACG stake but said the company had struck a partnership deal with Reynolds Metals -- a division of Alcoa Inc (nyse: AA - news - people) -- to raise production at the Fria Kimbo refinery to 1.2 million tonnes.

Before the RusAl deal, Reynolds held a majority stake in ACG.

Created in 2000 from the merger of some of the former Soviet Union's biggest smelters, RusAl last year won a contract to run Guina's Societe de Bauxite de Kindia mine, whose production for the first six months of 2002 neared 845,000 tonnes.

RusAl has said it hopes to raise Kindia's annual output to 2.5 million tonnes -- a figure dwarfed by the 12 million tonnes RusAl hopes to produce per year at the Dian-Dian site. It hopes to put out 2.4 million tonnes of alumina from Dian-Dian when it reaches capacity as well as possibly smelting aluminium.

A separate $2.5 billion proposal by international consortium Guinean Alumina Products Company (GAPCO) for a 240,000 tonne aluminium smelter in Guinea is in limbo because 20 percent of the cost was to have come from collapsed energy trader Enron.

Guinea's boasts the world's biggest bauxite mine at Sangaredi, a joint venture between the government and the international Halco consortium, which includes companies from France and the United States as shareholders. It produces 14 million tonnes a year. (Reporting by Saliou Samb; Reuters Messaging: silvia.aloisi.reuters.com@reuters.net; e-mail:abidjan.newsroom@reuters.com; ++225 20219090))

Copyright 2003, Reuters News Service


Budget slaps BPA, dredging proposal

Oregonian, OR 02/04/03

JIM BARNETT and TOM DETZEL

WASHINGTON -- Spending on Northwest projects from highway construction to salmon recovery would grow slowly or be subject to delays or cuts under the 2004 budget proposed Monday by President Bush.

The budget -- often regarded as a political document, regardless of the party in power -- also contained some potentially ominous precedents for Northwest electricity consumers and businesses engaged in international trade.

One was a broadside at the Bonneville Power Administration, which the White House budget office accused of competing with private power sellers.

And the budget raises another hurdle for a $119 million plan to deepen the Columbia River shipping channel by continuing a policy of "no new starts" for construction projects by the U.S. Army Corps of Engineers.

The slap at the financially ailing BPA, which generates half the region's electricity, set off alarms in the Northwest congressional delegation.

"This is the strongest attack in a president's budget on BPA since Ronald Reagan was president," said Rep. Peter DeFazio, D-Ore., who vowed war against any effort to shift the BPA's decades-old mandate to sell federal power at cost.

The criticism of the BPA also drew fire from Sen. Patty Murray, D-Wash., who sits on the powerful Senate Appropriations Committee, and from Sen. Gordon Smith, R-Ore. A spokeswoman said Smith "will fight" any privatization effort.

The critique came as part of an Office of Management and Budget performance assessment of select agency programs that accompanied the budget.

The office complained that the BPA competes with the private sector when selling surplus power to California and asserted that taxpayers are subsidizing the agency through low-cost financing the BPA has obtained from the U.S. Treasury.

In addition, the BPA's main functions "could be performed under contract or through non-federal ownership of transmission lines and generation capacity" at the 29 dams that produce the bulk of its power, the budget office said.

Though the budget office said it was up to the BPA to recommend ways "to improve" its marketing and cost recovery, the BPA released a statement seeming to demur. "This is something the administration believes should be explored, but there will be no implementing initiatives any time in the near future," the BPA said

Ormet Plant Improves Injury Record in 2002

Wheeling News Register, WV,,Wednesday, February 05, 2003

Ormet's Hannibal Rolling Mill and Hannibal Reduction Plant dramatically reduced their work-related injury cases from 2001-02.

Work-related injured at the Hannibal Rolling Mill dropped 41 percent from 2001 while injuries in the Hannibal Reduction Plan dropped 38 percent.

"This safety record is in keeping with Ormet's goal of maintaining a safe working environment," said Jack Skidmore, Ormet Corporate Safety Director. "It is in strong part to the efforts of the union safety committee and the company's overall dedication to creating a safer work environment for all of the employees."

The Rolling Mill saw such records at 1 million man hours without a lost-time injury and an entire year without a lost-time injury in 2002.

These safety records are even more impressive when noted that the Hannibal Reduction Plant experienced a record increase in total net production of aluminum due primarily to the large anode implementation in all six potlines. In 2002, 573.8 million pounds of aluminum was produced; that compares with 567.4 million pounds produced in 2001, an improvement of 6.4 million pounds.

The Hannibal Rolling Mill also achieved exceptional safety ratings while simultaneously setting a record number of aluminum shipped. In 2002, total gross shipment was 385.5 million, an improvement of 26.9 million pounds of aluminum from 2001.

"We are proud of these outstanding achievements both Hannibal plants have made in 2002," said Mike Williams, president and COO of Ormet Corporation. "The aluminum industry is in dire straits right now, due primarily to low metal prices and high energy costs. These impressive records clearly demonstrate the determination and dedication of Ormet's workforce during trying times for this industry."

Ormet Corporation employs approximately 2,750 people at nine facilities in seven states. Headquartered in Wheeling, Ormet is a fully-integrated aluminum producer, supplying the fabrication, extrusion and conversion markets.

Bucking the trend

Metal foundry industry is ailing, but not West Coast Castings

Sarasota Herald-Tribune, FL, Wednesday, February 5

thomas.bender@heraldtribune.com , michael.braga@heraldtribune.com

MANATEE COUNTY -- Ted Boerger is one of the lucky few.

His Bradenton-based aluminum parts foundry, West Coast Castings Inc., has actually been growing in recent years.

Annual sales have increased from $800,000 in 1997 to $1.2 million today.

The company's payroll has swollen from 10 to 25 employees, and Boerger has been investing tens of thousands of dollars to expand production and provide additional services to his list of 100 customers.

Part of the reason for Boerger's success, however, is that other local foundries have been shutting down because of pressure from lower-cost foreign competitors.

"Our increased sales is the upside of industry consolidation," Boerger said.

This is not the best time to go in the business of turning molten aluminum into boat propellers, lawn mower parts, dental examination furniture and high-voltage switches for power plants.

Foundries in countries such as Mexico, Brazil, India and China are able to make the same parts for much less money because they can draw on cheap labor and do not have to deal with as many environmental regulations.

Under the watchful eyes of Ted and Sue Boerger, West Coast Castings' annual sales have jumped from $800,000 in 1997 to $1.2 million today.

As a result, there are now only about 2,600 foundries in the United States, down from about 3,300 a decade ago, according to the American Foundry Society in Des Plaines, Ill.

Iron and steel foundries have been hit harder than aluminum foundries. But the trend toward industry consolidation has been about the same.

In Florida, only about two dozen stand-alone aluminum foundries remain, Boerger said.

West Coast Castings itself is the result of mergers with three local rivals -- AlumiCraft, Turner's Foundry and Quality Cast.

Boerger, 51, an Ohio native and industrial engineer with a master's degree in business administration, bought West Coast Castings in 1997.

He was formerly the manager of Wagner Manufacturing Co.'s plant in Sidney, Ohio, which made cast iron frying pans and aluminium cookware.

Boerger and several other members of the plant's management team tried to buy the operation in 1995. But an industry competitor outbid them. So Boerger began searching trade magazines for another opportunity.

Leveraging money he held in his retirement fund, Boerger set up an Employee Stock Ownership Plan, or ESOP, got a bank loan from American Bank in Bradenton and bought West Coast from its owner, John Minor.

Boerger then revamped existing machinery, automated processes wherever possible and set up a Web site so customers could order parts online.

Those changes helped West Coast expand sales by about 4 percent in the first year. But in 1999, the company lost a major customer, and sales dropped by 15 percent.

Boerger made up for some of the loss by merging with Quality Cast, a foundry based in Duette. Then, last year, West Coast landed several new customers and sales took off again.

Boerger said his company has managed to survive by focusing on filling small orders that foreign companies have trouble mass producing.

"The customers that need us are not super-high volume customers. They may only need a couple hundred products a month," Boerger said.

He has tried to be as responsive to customers as possible so they think twice before turning to overseas suppliers.

"If there's a problem, we're close enough for them to come look at it," Boerger said.

To satisfy customer demands, Boerger has added machining equipment that permits West Coast to buff and grind edges off metal parts before shipping them out. He has also bought machines that make metal plates that form the imprints in the black sand into which the molten aluminum is poured.

Such vertical integration means West Coast Castings no longer has to employ another company to make its plates.

Boerger doesn't know how long these strategies will enable his company to prevail against relentless pressure from overseas.

But he enjoys the challenge.

"We're not getting rich in this thing," Boerger said. "I just like doing it."

Pechiney favours Coega for smelter

Business Day, South Africa, Thursday ,06 February 2003

FRENCH aluminium group Pechiney had chosen Coega as the only potential site for the first of a new generation of smelters, a company spokesman said yesterday.

This means that Australia and Canada which had also been potential sites for the $2bn investment are now off Pechiney's radar screen, and the chances of a firm decision in favour of the planned deepwater port and industrial development zone at Coega, in Eastern Cape, have risen considerably.

In another positive move, a 50-50 partnership between SA project facilitation group Bateman and French oilfields services and construction group Technip-Coflexip has been awarded a 600m contract to build and manage the smelter.

"For us and Pechiney, this is a very important step," Bateman

Nalco Due Diligence May Restart In June

Yahoo News, Thursday February 6, 11:22 AM

INDIA PRESS: NEW DELHI (Dow Jones)--The Indian government plans to restart the due diligence exercise for the sale of a 29.15% stake in state-owned National Aluminium Co. (P.NAL), or Nalco, in June, reports the Hindu Business Line, quoting unidentified government sources.

The newspaper says an internal target for the completion of due diligence has been set for the end of June, and the stake sale could be completed by September.

The Nalco stake sale ran into trouble after a plant visit from one interested bidder was halted by workers' groups in late October. The workers oppose the sale.

The government also plans to offer a 20% stake in Nalco through the issue of American Depositary Receipts and to sell a 10% stake in the local market.

The Indian government currently owns about 87% of Nalco.

Newspaper Web site: http://www.thehindubusinessline.com

-By Himendra Kumar; Dow Jones Newswires; 91-11-2461-9426; himendra.kumar@dowjones.com


Hindalco may resume Gurdari mining in 2 months

Times of India, India, REUTERS[ FRIDAY, FEBRUARY 07, 2003 ]

MUMBAI: Hindalco Industries is likely to resume operations at one of its bauxite mines in about two months, a company official said on Friday.

The company had stopped production in December at its Gurdari mine in the eastern state of Jharkhand after some unidentified people damaged its equipments.

"We are trying to step up security at the site," a company official said, adding it was also seeking help of the state government.

Hindalco had said in December that the temporary closure of Gurdari facility, which supplies about 10 per cent of the company's bauxite needs, would not impact its alumina refinery operations as it had sufficient inventory of the raw material.

Production at other mines were normal and could be increased to meet the company's requirements, they added.

The company owns several bauxite mines, mainly in northern and eastern India.

Hindalco is in the midst of expanding the capacity of its aluminium smelter at Renukoot in the northern state of Uttar Pradesh by 100,000 tonnes to 342,000 tonnes a year, which is likely to be completed by September.


Supply contracts move Pechiney closer to building smelter at Coega

Business Day, South Africa, Friday 07 February 2003

A DECISION to build the world's most advanced aluminium smelter at Coega came a lot closer yesterday with the news that Eskom and the SA Ports Authority have signed agreements with French firm Pechiney, which is leading the project.

A decision to proceed with the 2bn smelter would provide a major boost to the Coega deepwater port and industrial development zone project, and would help draw in other businesses.

Pechiney chairman JeanPierre Rodier recently underscored his company's commitment to siting the project at Coega, and to proceeding with the new smelter when he announced that while Pechiney planned to close some of its unproductive plants, the new smelter project remained a priority.

Pechiney had previously been looking at potential sites in Australia and Canada, but this week it became clear that SA was the only location being considered for the plant, which has already won approval through an environmental impact assessment.

"There are now agreements with Eskom and the Ports Authority, and just a few issues need to be ironed out in discussions with the Coega Development Corporation (CDC)," said an industry source.

Issues that Pechiney has sought to clarify include tariffs for electricity and port charges and penalty clauses in case the smelter is completed but not able to operate properly because of delays in upgrading the electricity supply and in providing the necessary port infrastructure.

It was announced this week that project facilitation group Bateman had won the $600m contract to build and operate the smelter, in partnership with French firm Technip-Coflexip.

"The Bateman team has worked very hard to secure the smelter project investment for SA," said CDC media relations executive Raymond Hartle.

"We're very happy with the progress being made in achieving the necessary milestones on the project, of which this is the latest and follows the awarding of the environmental permit at the end of last year. We have worked very well with the Pechiney negotiating team on the smelter project.

"We congratulate Bateman and Technip on their appointment to the project team and look forward to working with them to ensure the successful implementation of the smelter project," said Hartle.

A senior Pechiney team has been in SA this week to help advance negotiations on the project and its financing.

The Industrial Development Corporation and Eskom are expected to be involved in financing along with Pechiney, possibly Bateman, and empowerment group Sibumbene, which is headed by Denel chairman Sandile Zungu.

"There are also negotiations underway with German consortiums involved in the SA arms offset programme," the industry source said. "They are also being invited to invest in the new smelter."

Meanwhile, an application by Pechiney for a multi-million rand investment incentive from the trade and industry department is being processed, and is likely to win approval given government's strong desire to see Coega's anchor project proceed.

Eastalco to lay off up to 150 workers as part of cuts

Maryland Gazette Newspapers, MD - 06 Feb 2003

Alcoa Eastalco Works will lay off between 100 and 150 union and salaried workers as part of parent company Alcoa Inc.'s nationwide cost-cutting efforts.

Management and the union reached a "tentative agreement" Tuesday afternoon, said Chip Cook, president of United Steelworkers of America, Local 7886, the union representing about 550 Eastalco employees. Pending the layoffs, Eastalco has about 700 employees -- roughly 550 union workers and 150 salaried employees -- said Earl Robbins, manager of North American Public Strategy for Pittsburgh-based Alcoa.

The layoffs will affect all departments at the Buckeystown aluminum smelting plant, Cook said. The plant will have two special meetings this Tuesday to discuss employee concerns. The layoffs will take place over the next two to three weeks.

Alcoa has been hurt by a sagging aluminum market, according to company information.

"We know these actions are unsettling and difficult for our employees," Joe Kazadi, Eastalco manager, said in a statement. "But they are necessary for Eastalco and the employees who will remain to survive in today's aluminum manufacturing environment, and provide a sound financial basis upon which to operate the plant. Absent these actions and cost reduction initiatives Eastalco will have no choice but to close its doors."

Laid-off employees will receive a separation package including medical benefits and job placement assistance. Eastalco is working with the Maryland Department of Labor, Maryland Job Service, Frederick County Job Training Agency and the state's unemployment call center in Cumberland to assist fired workers.

Nationwide, Alcoa is laying off 8,000 employees at more than 70 sites. Alcoa recorded $95 million in special after-tax charge in the fourth quarter of 2002 to restructure operations of businesses serving the aerospace, automotive and industrial gas turbine markets, as well as the U.S. smelting system, according to Alcoa information. The after-tax charge includes costs for employee severance and asset rationalization.

For the fourth quarter of 2002, Alcoa reported a net loss of $223 million, or 27 cents per diluted share. Sales for the fourth quarter were $5.06 billion, compared to $5.10 billion in the same quarter of 2001. Sales for the year were $20.26 billion, compared to $22.50 billion in 2001. * *

Alcan Limits Risks in Volatile Aluminum Market

Morningstar Canada, Canada 7 Feb 03(3:02 PM)

By David Sinkman

NEW YORK (Reuters) - Alcan Inc.'s <AL.TO> <AL.N> Chief Executive Travis Engen loves the thrill of racing vintage sports cars, especially his 1953 unpainted aluminum-body Lotus, but when it comes to running the world's second-largest aluminum producer he is all about minimizing risk.

In his two years at the helm, the 58-year-old Engen has focused on improving Alcan's balance sheet and keeping a defensive stance on the potentially lucrative -- but more risky -- aerospace and telecommunication sectors.

This strategy has helped Alcan weather a storm that has roiled the aluminum industry in the past year, with no sign of a better climate in sight. Weak industrial demand, soft aluminum pricing and high energy costs have sent aluminum shares plummeting, in some cases to four-year lows.

Alcan shares have fallen 25 percent over the last year, less than the 42 percent drop in shares of the world's largest aluminum maker Alcoa Inc. <AA.N>. Stock in bankrupt Kaiser Aluminum Corp. <KLUCQ.OB>, North America's No. 3 producer, fell 90 percent.

That compares with a 23 percent decline in the broader Standard & Poor's 500 index <.SPX>.

Alcan, which controls 18 percent of the world's aluminum production capacity, has fared better than its rivals because of lower costs and a lack of exposure to the aerospace and telecommunications sectors.

With the bulk of its 2.2 million tonnes of primary smelting capacity nestled in the Canadian province of Quebec, where it has access to abundant, cheap power, Alcan's products are used in everything from soda cans to auto parts.

"Alcan's outperformance is driven by its more defensive nature," said Tony Lesiak, an analyst at HSBC Securities. "It is a low-cost producer and has access to cheap hydro-power."

STRATEGY SPURS HIGHER PROFIT

Analysts said Engen's low-risk strategy, which includes a low cost structure and a strong balance sheet, helped Montreal-based Alcan report a fourth-quarter profit, excluding items, of $124 million, up 68 percent from a year earlier.

In contrast, Alcoa reported a wider quarterly loss last month and unveiled plans to cut 8,000 jobs, or 6 percent of its work force, as it struggles with high energy costs and weakness in the aerospace and telecommunications sectors.

Some are skeptical about a quick turnaround in the aluminum sector because of the weak business conditions and high energy cots, as well as the volatile political situation in the Middle East which is curtailing capital spending.

"Aluminum demand won't start picking up until the factory bells start ringing again. That silence is not good news" for higher cost producers like Alcoa, said David Kerans, an analyst at Argus Research.

Aluminum producers such as Alcoa, Century Aluminum Co. <CENX.O> and Kaiser -- all heavily exposed to industrial activity and with high fixed costs -- are at a disadvantage in this environment, and that won't change anytime soon, he said.

In such a tough pricing environment, Alcan's defensive nature broadens its options, allowing it to either buy back shares at low prices, increase its dividend, or grow though acquisitions -- a rare position in such a gloomy environment.

"Despite the overall tough market, Alcan is sitting in a solid position because of its safe approach. This opens up a lot of possibilities moving forward, but the company has to be very careful because the sector is so cyclical, " said Lester Chin, an independent industry consultant.

Alcan "plans to grow selectively through acquisitions" that build on the company's strengths, Engen said in an interview.

The company continues to be interested in opportunities in the packaging, engineered products and primary metals sectors, he added but declined to provide a timetable for any moves.

Analysts said this wait-and-see approach makes sense, especially with surging production from China further clouding the outlook for the aluminum industry.

In such a tough market, Alcan's Engen said he is content with being the world's second-largest aluminum producer, as long as the company is the best at what it does.

"I don't think about this in terms of being the largest company, but being the best company in the business," he said.

Fondel Metal Company Does Not Meet Its Obligations on Investment

Baku Today, Azerbaijan, 08/02/2003 06:01

The launching of the overall cycle of electrolysis baths (168 units) at the Sumgayit Aluminum Factory of the Azerbaijan Aluminiumu oр?en joint-stock comр?any (OJSC) has failed the schedule again.

The remaining 84 baths were to be launched this month. But the contractors cannot manage to do that on time, and the work will last at least two months longer. The Tikinti Service Comр?any (the building unit of the local oil comр?any Azр?etrol Holding) is restoring the electrolysis baths.

A source at the factory told to Turan news agency that only a half of the baths worked there. After all the 168 baths are comр?letely restored, the factory will р?roduce 29,000 tons of р?rimary aluminum a year. According to the news, the Dutch comр?any Fondel Metal Particiр?ations B.V that has undertaken long-term management over Azerbaijan Aluminiumu OJSC does not meet its obligations either on the р?roduction in Ganja or on the р?roduction in Sumgayit. According to the contract signed between this comр?any and the Ministry of Economic Develoр?ment on 29 March 2001, the baths are to be restored within 14 months. The factory was to be rebuilt simultaneously.

They р?lanned to invest $17.5 million in the reconstruction of the electrolysis baths. The investment volume was to make $117 million in 2001-2002. This year, the investment of the comр?any was to reach $202 million including $122 million in the Sumgayit Aluminum Factory and $80 million in the Ganja Alumina Factory, according to Turan news agency. But according to the news, the investment of Fondel Metal had only grossed $30 million by the beginning of the year.

Azerbaijan Aluminiumu OJSC was established on 25 Aр?ril 2000. The comр?any includes the Sumgayit Aluminum Factory, the Ganja Alumina Factory and the Zeylik Aluminum-Mining Deр?artment. The decree of President Aliyev (30 March 2001) gave the OJSC to Fondel Metal for a 25-year management. The comр?any undertook to invest uр? to $1 billion in the OJSC. Aluminum LLC is the oр?erator of the Dutch comр?any.

Pechiney Says Still In Race For India's Nalco

Friday February 7, 7:06 PM

NEW DELHI (Dow Jones)--French aluminum giant Pechiney S.A. (PY) Friday affirmed its interest in bidding for a 29.15% stake in India's privatization candidate National Aluminium Co. (P.NAL), or Nalco.

"We are very much interested in Nalco and there is no reason to believe that we are reviewing our earlier decision to bid for the company," Pechiney's Paris-based spokeswoman Chrystele Ivins told Dow Jones Newswires.

Ivins' clarification came after Pechiney Chief Executive Jean-Pierre Rodier said the company "isn't on the acquisition trail this year (2003), which will be a year of integrating past acquisitions rather than further expansion."

Ivins said Pechiney believes the "Nalco disinvestment is going to take some time - it isn't going to happen in a hurry."

Ivins declined to comment on whether Rodier's statement means the Nalco sale won't happen in 2003.

Earlier in January, Indian media reports said Pechiney's interest in Nalco is waning following delays in the privatization process.

Factory visits, a part of the due diligence exercise, were suspended in October last year when a group of executives from potential domestic buyer, Hindalco Industries Ltd. (P.HDI), were prevented from entering Nalco's plants in southeastern Orissa state.

After the due diligence was halted, two companies, one each from China and the U.K., pulled out of the bidding process for Nalco.

Late last month, Russia's biggest aluminum maker Bratsk Aluminum Plant (R.BRA) said its shareholders have approved a resolution empowering the management to bid for the Indian government's stake in Nalco.

Alcoa Inc. (AA), Cia Vale de Rio Doce of Brazil, Alcan Inc. (AL), BHP Billiton Ltd. (BHP) and Aluminum Bahrain are also reportedly in the race for a stake in the state-owned smelter, which produces around 800,000 tons of alumina and 230,000 tons of primary aluminum a year.

- By Ashok Bhattacharjee; Dow Jones Newswires; 91 11 2461 9429; ashok.bhattacharjee@dowjones.com


PORTLAND: Bush has no plans to privatize Bonneville, official assures

Tacoma News Tribune, WA - 07 Feb 2003

The Associated Press

The Bush administration has no plans to privatize the Bonneville Power Administration despite Northwest lawmakers' concerns that language in the president's proposed budget suggests it, a top official says.

Mitch Daniels, director of the Office of Management and Budget, told Sen. Ron Wyden (D-Ore.) that there is "no such interest on our part."

But Daniels stopped short of declaring the BPA completely off limits, saying that "improvements are in order" at the federal agency that provides nearly half the Northwest's electricity.

Bonneville sells electricity from 29 federal dams and one nuclear plant to utilities in the Northwest at cost - a cheap price that critics claim amounts to an unfair subsidy because the hydroelectric system was built with low-interest loans from the U.S. Treasury.


LME slides in late trade, most metals end lower

Reuters, UK, Fri February 7, 2003 12:16 PM ET

.....................................

ALUMINIUM TIGHTNESS INCREASES

Aluminium closed under the $1,400 level after late sales, with final business at $1,398 a tonne, down $7. However, February tightness increased, pulling the cash/threes backwardation out to $7 by the close, compared with $3/5 indicated on Thursday.

Unusually thick ice at Russia's second largest sea port in terms of cargo turnover, St Petersburg on the Baltic Sea, has not caused major disruptions to the country's aluminium exports, producers said on Friday.

"All the delays have been within admissible levels, although above average," said Alexei Goncharov, a spokesman for the country's second largest aluminium producer SUAL. "We have honoured all our (supply) contracts."

..........................................


Aluminerie Alouette will reduce its greenhouse gas (GHG) emissions by 12%

Canada NewsWire (press release), CA SEPT-ILES, Quebec, Feb. 8 /CNW Telbec/ -

Aluminerie Alouette made a commitment toward the Québec Government, on a strictly voluntary basis, to reduce its greenhouse gas emissions.

Comparing to year 1995, the GHG emissions from its Quebec smelter,

already one of Canada's most environmentally friendly, will be reduced, in average, by 12%. The CO2 equivalent emissions will be lessened by more than 68 000 tonnes, from 557 000 it was in 1995, to less than 489 000 tonnes, in average per year for the 1996-2004 period.

Thanks to Alouette's state-of-the-art installations and to the rigour of

its follow-up process, the smelter has already one of the lowest GHG emission rate in the world. With this voluntary agreement, Alouette commits itself to do even better and intends to stay positioned as one of the most performing plants environmentally wise.

According to Mr. Johannes (Joe) H. Lombard, President and CEO of

Aluminerie Alouette, "It was very important to us to reduce the quantity of our emissions and we are proud today to announce that we have just ratified an agreement with the Environment Minister, André Boisclair, on a voluntary program for the reduction of GHG emissions."

Aluminerie Alouette is a consortium made up of five partners: Alcan

(40%), Austria Metall (20%), Marubeni (6.67%), Norsk Hydro (20%) and Quebec's Société générale de financement (13.33%). Aluminerie Alouette launched a $1.4 billion expansion project which will enable it to annually produce 550 000 tonnes as soon as 2006.

For further information: Nancy Ouellet, Director, Environment and

Laboratory, (418) 964-7441; Source : Aluminerie Alouette

Kaiser bankruptcy costs hit $24 million

The Spokesman-Review Sunday, February 9, 2003

Advisers charge top dollar to turn ailing firm around

Related stories

John Stucke,Staff writer

Nobody is supposed to win when a company can't pay its bills.

Yet 11 months into Kaiser Aluminum Corp.'s bankruptcy, the lawyers, accountants and advisers hired to pull the company out of its financial morass have charged their client more than $24 million, according to records filed in U.S. Bankruptcy Court in Delaware.

The highest paid professionals -- financial advisers at Lazard Freres & Co. LLC of New York -- have billed more than $900 an hour.

Many other firms have senior staff charging more than $400 an hour.

They bill by the tenth of an hour, or six-minute increments. When an accountant spent 18 minutes reviewing a calendar of events, he billed Kaiser $127.50.

He did this three different times in September, while another member of his staff charged Kaiser $212.50 for the half-hour he took reviewing his own timekeeper's entries of how much his firm would bill Kaiser.

Often, conference calls and meetings can cost thousands of dollars. Multiple lawyers from the same firm at the same meeting all bill Kaiser for the time.

On one business trip, a consultant asked Kaiser to reimburse him $35.72 for his dry cleaning. This expense, however, failed to pass muster with a fee auditor.

"We believe (the consultant) would show the same concern for personal hygiene if he were at home," wrote Warren Smith, who scrutinizes bills to deter overcharges.

A Louisiana law firm tried to charge $2,382 for the 14 hours, 24 minutes it took reviewing client lists to make sure representing Kaiser wouldn't pose a conflict of interest.

The fee auditor asked that those charges be dropped, too.

Kaiser is paying for plenty of other things: taxi and private sedan services bringing lawyers back and forth between meetings, hotels and airports; $20 Chinese take-out lunches from Hunan Express; $4.50 bottles of Evian spring water at hotel minibars; and pesky cell phone fees costing hundreds a month.

And then there are restaurants where some professionals enjoy dinners that cost more than $100 each, and airplane fares where some try to get the bankrupt company to pay extra to fly them first-class.

It's all starting to add up.

From February 2001 -- when Kaiser began missing debt payments and sought bankruptcy protection -- through December, its bill for professional fees surpassed $24.1 million.

Kaiser not only pays the cost of its lawyers, advisers and accountants, but picks up the tab of the professionals representing its many creditors -- banks, large vendors owed millions, the Steelworkers union and the thousands of people with asbestos claims.

That's standard practice in bankruptcy proceedings, Kaiser chief executive Jack Hockema said.

Instead of the costs waning, the two dozen law and accounting firms handling Kaiser's bankruptcy case recently submitted their billing expectations for the first six months of this year.

The cost: about $2.56 million a month, if approved by U.S. Bankruptcy Court Judge Judith K. Fitzgerald.

The fees are in line with other recent corporate bankruptcies, Hockema said.

Retailing giant Kmart paid more than $50 million to lawyers and advisers during its first year operating under bankruptcy. And Enron Corp.'s bankruptcy, unique perhaps because of its scope, complexity, size and criminal element, has cost $315 million during its first 13 months.

"Many folks find it somewhat ironic that bankruptcy is so expensive," Hockema said. He declined an interview but replied in writing to a list of questions.

He said Kaiser pays about 80 percent of the billed amount for professional services.

"One of our key objectives for successful emergence -- and for post-emergence growth -- is to improve our overall cost performance," Hockema said. "Indeed, that includes an effort to ensure that expenses are kept in line, and we have made significant progress in that respect.

"It will continue to be an area of focus."

Hockema said the company may be able to emerge from bankruptcy next year.

"I am reasonably confident in that time frame and, indeed, will continue to push for an aggressive pace," he said.

He declined to talk about which plants may be part of a restructured company or if Kaiser will still be an employer in Spokane.

Hockema took over as CEO in October 2001, moving up from his post as executive vice president about four months before big debt payments and tough business conditions chased Kaiser into bankruptcy.

Experts see fees as investment

Experts say that if lawyers and advisers can save the company, or at least satisfy most of Kaiser's $3.1 billion in debt and liabilities, the millions paid will be money well spent.

"Oftentimes, companies have been badly managed for years leading up to a bankruptcy," turnaround expert John Rizzardi said. "By the time these people are hired, companies are in an emergency room environment."

Rizzardi, president of the Turnaround Management Association and a director of the Seattle law firm Cairncross and Hempelmann, said it takes money to hire lawyers with enough expertise to meet with bankers owed millions. The firm is not involved in Kaiser's bankruptcy.

"High-powered lenders are not in the same mode of selling a new banking relationship when meeting with a company in bankruptcy," Rizzardi said. "They are highly suspicious and highly critical.

"They have the proverbial hand around the neck of the company and are searching for a reason to not squeeze."

Critics, though, say Kaiser's bankruptcy bills are excessive.

"I just don't know how to compare that with anything like $400 an hour," said Dan Russell, president of Steelworkers Local 329, which represents hundreds of laid-off union members at the Mead smelter.

When the smelter was running a little more than two years ago, Steelworkers earned $15.99 an hour to work over 1,700-degree pots of molten metal while wearing protective clothing and respirators.

"These guys were soaked with sweat and absolutely exhausted. This was the worst job in the smelter," Russell said.

The best paid Steelworkers -- guys like Russell, who started at Mead in 1969 -- earned less than $19 an hour.

Today, there are about five workers left at Mead. Things are so grim that employees have to use portable toilets rather than restrooms at the mothballed plant.

"You talk about spending $400 an hour for a lawyer, and the employees at Mead are forced to use basically a Honey Bucket," Russell said.

Frank Perch, the trial attorney representing the U.S. Trustees Office in Kaiser's bankruptcy proceedings, declined to comment on the case, as did other legal and accounting firms involved.

"We're just not comfortable offering comments or opinions outside the courtroom," Perch said. "Without carefully researching the statistics, I wouldn't be able to say if the fees in this bankruptcy are higher or lower than average, or even typical."

He added: "But this is a big case and fees are high in big cases."

The trustee's office has recommended some cost-saving measures. Fees are subject to a 20 percent reduction and professionals can only charge for coach airfares.

So a lawyer who's normal billing rate is $500 an hour for example, is instead paid $400.

Dinner is supposed to cost no more than $35 a night, and lawyers and advisers are asked to stay in hotel rooms that cost less than $250 a night, except in New York City.

Sometimes expenses, such as airplane tickets, hotel rooms and dining out, are questioned.

That was the case when financial advisers from the Los Angeles firm of Houlihan Lokey Howard & Zukin sought reimbursement for its people to stay in hotel rooms that cost in excess of $400 a night.

Fee auditor Smith asked the court to lower Houlihan's expense reimbursement.

`The best of the best'

The fees and expenses, rivaling the pay of many professional athletes, are necessary to ensure companies are getting good advice, said David Epstein, a Georgetown law professor and visiting scholar at the American Bankruptcy Institute.

"These are the best of the best. If there's any chance of turning around, these are the people," he said.

Even though the fees are high, Epstein said, "There's no comparison between what these guys make and the huge dollars made by personal injury lawyers."

But critics insist Kaiser has operated with disregard for the communities that built the company -- and its bankruptcy seems no different.

"This spending is excessive and ridiculous," said Peggy Green, president of the Steelworkers Organization of Active Retirees. The group has about 800 members in Spokane.

"You look at people making this kind of money and spending so much on hotels, and then see our members who are worried about Kaiser cutting out our medical plans," Green said. "It's wrong. But I guess that's why you become a lawyer. Why do they need so many?"

Hurwitz's part

There are fewer concerns among shareholders in the Kaiser bankruptcy because the single largest shareholder of Kaiser is Maxxam Corp. It owns about 62 percent of the company's common shares, which fetched about a nickel in over-the-counter trading Friday.

The Houston holding company is tightly controlled by financier Charles Hurwitz.

Critics have claimed for years that Hurwitz -- through Maxxam -- has been running the once-proud Kaiser into the ground while enriching himself since he bought the company in 1988.

They say he decoupled and sold valuable assets of the one-time diversified company. And they claim when Kaiser operated profitably, too much money went to Maxxam rather than being reinvested in aging plants and retiring weighty debts.

Fortune magazine in April 2001 included Maxxam in its Dirty Half-Dozen Hall of Shame, writing that its board was entrenched, clubby and blind to shareholder concerns.

Maxxam and Kaiser officials have steadfastly dismissed the criticism.

Kaiser listed debts and liabilities of about $3.1 billion versus assets of about $3.3 billion when it filed for Chapter 11 on Feb. 12, 2002.

It has since sold assets to help generate cash flow, Hockema said. The sales included a Tacoma aluminum smelter for $12.1 million; the Kaiser Center skyscraper in Oakland for $65.6 million; a specialized aluminum sheet coating machine at the Trentwood rolling mill for $15.8 million; and various other properties and equipment.

Robert Irelan, a former Kaiser vice president who now acts as spokesman for the Kaiser Aluminum Salaried Retirees Association, said the whole system needs fixing.

"I'm sure our members would take strong offense at those kinds of charges by attorneys and advisers," he said. "Nobody likes it, but the bottom line is they aren't uncommon."

Among Kaiser's first actions was to cut deeply the medical benefits of its 4,500 retired managers and their dependents.

Irelan said it's indicative of the bankruptcy problem.

"It comes down to a matter of fairness," he said. "I'm sad to say that the legal system doesn't recognize the rights of retirees the same way it recognizes creditors and bankruptcy handlers.

"We gave our lives to the company and are now dismissed. We believe the system is broken and needs fixing."

John Stucke can be reached at (509) 459-5419 or by e-mail at johnst@spokesman.com

Firm to boost planned multi-million dollar industrial plant

ABC Regional Online, Australia,Mon, Feb 10 2003 2:39 PM AEDT

The start date for a multi-million dollar industrial plant in Gladstone, in central Queensland, has been delayed because the company involved plans to make it bigger.

Queensland Premier Peter Beattie met the chief executive of Astral Calcining Corporation in Dubai last night.

The plant will produce high quality carbon for the manufacture of anodes used in aluminium smelting.

The Premier says the company now plans to spend an extra $40 million to double the capacity of the plant and instal new technology.

Instead of costing $180 million initially, it will now cost $200 million.

Mr Beattie says the environmental impact statement will need to be reassessed, but he expects the project to start early next year

Futures Trade Begins In Aluminium, Nickel

Indian Express, India, Sharad Mistry

Mumbai, February 9: Trading in futures of non-ferrous metals, and that too online, was kicked off for the first time in the country on the recently-set up Ahmedabad-based National Multi-commodity Exchange (NMCE) of India.

Traders from New Delhi and Kolkata participated last Thursday in this maiden trading in futures of aluminium ingots and nickel prime.

Futures trading in these two non-ferrous metals would help the user industry offer the benefit of price discovery, which till recently was based on prices prevailing in informal regional markets as well as on prices charged by producers. Also, because of the absence of any hedging and/or price discovery mechanism, the user industry, including importers and exporters, had the only option of following trends in futures trading on the London Metal Exchange (LME).

The trading in two non-ferrous metals on NMCE is part of a larger pool of some 35 commodities (with a total of 86 series), for which futures are now available for trading. These include sugar, cotton, gur, jute sacking, vanaspati soyabean and soyaoil, RBD palmolein and crude palm oil.

This makes NMCE the country’s first nationwide multi-commodity exchange, promised by Prime Minister Atal Bihari Vajpayee on August 15, 2002.NMCE managing director Kailash Gupta said, “We are happy to offer trading in futures of non-ferrous metals. This has added a new dimension to the truely nationwide multi-commodity exchange in the country. After consolidation in these products, we plan to offer trading in precious metals at a later date.”

“This is a welcome step for India and will help in better fixing of prices of these products,” said a top executive in one of the leading non-ferrous metals company. “While we are yet to study the specifications of various contracts, it would be better if the contracts are delivery-based and not cash-settled, for, then it may fall in the hands of cartel of a few speculators,” he added.

On the first day of trading, three monthly delivery contracts were offered for trading — March 15, 2003; April 15, 2003 and May 15, 2003. Each of the March 15 and April 15 contracts for aluminium ingots opened at Rs 93 per kg as against the Mumbai spot price of Rs 92 per kg, while the May 15 contract opened at Rs 94 per kg. These contracts closed at Rs 91.50 (March 15) Rs 92.00 (April 15) and Rs 92.50 (May 15) contracts. A total of 44, 22 and 22 tonnes were traded in each of these contracts.

On the other hand, LME rates on February 6 for high-grade aluminium were quoted at $1,401.50/1,402.50 per tonne, while the three-month contract was quoted at $1,398/1,399 per tonne.

No power at smelter could have bigger effects

Tacoma News Tribune, WA The Associated Press;

LONGVIEW - The possibility of cutting off power at the idled Longview Aluminum smelter is raising concerns about maintaining safety lights and environmental monitoring.

The Bonneville Power Administration is threatening to terminate its contract with Longview Aluminum, citing nearly $16.6 million in unpaid power bills. BPA says it may shut off power to the plant by the end of the month.

The smelter has long bought power directly from Bonneville. Virtually every other power user in the county gets its power from the Cowlitz Public Utility District.

The company declined to comment on the situation.

Among the agencies monitoring the issue are:

The Coast Guard, which requires the smelter to maintain navigation lights on its Columbia River pier.

The Federal Aviation Administration, which requires an aircraft warning light atop the crane at the smelter.

The state Department of Ecology, which requires the company to maintain electronic pollution-monitoring equipment.

Most of the outstanding power bill accumulated when the smelter signed a take-or-pay power contract with Bonneville in 2001, which obligated the company to pay for hundreds of megawatts whether it used them or not.

Longview Aluminum neither used the power nor paid for it, said Bonneville spokesman Mike Hansen.

Most of the tab was for power to run the smelting operation, but some was for general plant operations, including heat and lights in the office, sump pumps, security, and safety lighting.

Sump pumps drain part of the site and pump contaminated water into a settling pond, where it is treated before being discharged into the Columbia River. Without the pumps, storm water and leach water from an on-site landfill likely would flow into the river without treatment, said Eric Oie, the Department of Ecology worker responsible for monitoring environmental hazards there.

"They wouldn't be able to sample, so we wouldn't know what's going out," Oie said. "I understand BPA's position, but it's not without consequences."

The plant pier on the Columbia also is a concern, said Coast Guard chief warrant officer Bob Coster. "It's basically a hazard to navigation and they're required to mark it."

There's been talk of bringing in a portable generator, but Coster was dubious about that option for a critical navigation light.

"Generators run out of fuel, and they break down," he said.

Billiton's Hillside expansion advances

Business Day, South Africa, Tuesday 11 February 2003

The Hillside aluminium smelter, wholly owned by commodity giant BHP Billiton (BIL), on Monday celebrated the end of its initial civil and structural steel works and the commencement of the installation of mechanical, electrical and instrumentation equipment as part of a $449 million expansion project.

The smelter is situated in Richards Bay, Kwazulu-Natal, and construction on the expansion project began in April 2002 and will add a further 132,000 tonnes a year of primary aluminium capacity.

A roof wetting ceremony held at the site today marked progress in the construction of the expansion buildings and the commencement of the roofing of the potroom building.

To date the first 120 metres of the potline building at the north end of potrooms E and F is complete, including cladding, roof sheeting and roof ventilators.

BHP Billiton noted in a statement that the Hillside expansion is expected to deliver substantial socio-economic benefits to South Africa.

Construction-spend on the project is expected to channel more than R1.8-billion into the South African economy, of which 600 million rand will be spent in KwaZulu Natal. At present contracts have been to awarded 22 black economic empowerment companies to the commitment value of approximately R115-million.

The project team is planning to allocate 25 contracts to small and medium enterprises, of which 18 contracts have already been awarded to the commitment value of approximately R30-million.

The annual income to South Africa generated by the expansion (from the production of aluminium) will be more than R1.7-billion.

By the end of the project 2,400 construction work seekers will have been assessed and graded at a training centre established in Alton in conjunction with the Department of Labour, while approximately 1,000 will have been trained in various construction skills.

To date 1,664 people have been assessed and 373 trained.

Installation work in the potrooms will be facilitated by six large overhead travelling cranes to be erected at the job's outset.

On completion, the equipment will be tested and handed over to the operations team in readiness for the scheduled first production of aluminium towards the end of the first quarter of 2004, with full production expected by the end of the second quarter of 2004.

BPA rate increase could cost utilities

Puget Sound Business Journal, WA February 7, 2003

Steve Ernst Staff Writer

The Bonneville Power Administration is expected to announce Friday a 15 percent net increase in wholesale electricity rates.

The increase will raise $900 million over the next three years for the Portland-based power marketing agency, which is projecting a budget deficit of $1.2 billion through 2006. That deficit was largely incurred during the energy crisis, when power prices surged to unprecedented levels.

Bonneville's rate increase could siphon as much as $450 million out of the Northwest economy. Just a 1 percent increase in BPA rates removes between $20 million to $30 million from the Northwest economy, according to various reports and the BPA.

The rate structure includes a 25 percent increase in what's called the "safety-net" rate, an emergency financing mechanism, while lowering other charges by about 10 percent. That would leave an overall net increase of 15 percent, said sources familiar with the administration's plan.

The increase won't take effect until October and will have varying effects on local utilities, most of which were forced to raise their rates by more than 50 percent in the wake of the energy crisis.

Over the past two years, Bonneville's financial condition has been steadily eroding. Since 2000, the BPA has raised the rates it charges utilities and large industrial customers by about 50 percent and has been forced to tap into its cash reserves to cover its operating costs.

Now BPA's reserves have fallen from $800 million to $200 million. And for the second year in a row BPA is at risk of missing its $736 million debt payment to the U.S. Treasury.

Wholesale rates may rise again in the spring 2004. That's when many of the charges BPA plans to reduce are scheduled to rise again, sources say.

Through 29 dams on the Columbia River and one nuclear power plant, the BPA supplies roughly 60 percent of the electricity consumed in Washington state.

The rate increase will not be welcome news. The Northwest is already saddled with some of the highest unemployment rates in the country.

Hardest hit by the rate increase could be the Snohomish County Public Utility District, which receives roughly 80 percent of its power from the BPA.

The increase in wholesale power would cost the district about $10 million.

In the wake of the energy crisis, the Snohomish County PUD raised its rates by more than 50 percent. Because of the high rates and slumping local economy, a record 15,000 SnoPUD customers had their power disconnected in 2002.

Because of that, SnoPUD will raise rates only as a last resort, said Glenn McPherson, assistant general manager for finance.

"Our board will look at cutting our capital expenditures, and operations and maintenance costs even further," McPherson said. "We'll look to our reserves to see if we can absorb it, or consider borrowing money. As a last resort we'll look at adjusting our rates."

The utility has an operating reserve of about $60 million, McPherson said.

Tacoma Power receives about half of its power from the BPA. An overall increase of 15 percent in wholesale rates would mean a rate hike of about 3.5 percent for Tacoma customers, said Steve Klein, superintendent of Tacoma Power

"We are proposing an automatic rate adjustment," Klein said. "We have a rate case already under way and plan to put new rates in by March 31."

Tacoma was already considering increasing its rates by 5 percent to help meet a $25 million deficit expected over the next two years, Klein said.

Customers at Seattle City Light could see their bills increase by about 1 percent.

City Light receives only about a third of its power from BPA.

"We already have permission to pass the increase on to our customers, but we would talk with the mayor and the City Council before we did that," said Gary Zarker, superintendent of Seattle City Light.

City Light raised its rates by more than 50 percent in 2001 in reaction to having to buy power during the energy crisis.

Over the past two years, BPA has increased its rates by more than 50 percent as it tries to dig its way out of financial hole that was started in 2000 when it signed contracts to provide 3,000 megawatts of power that it could not generate.

The administration has since either had to buy power on the open market or pay customers not to take the power.

During the energy crisis, BPA bought $2.3 billion worth of power from power marketers. It is now trying to have several of those contracts overturned.

The BPA tried to save power by paying the aluminum industry $261 million not to use power.

The administration has also agreed to pay the region's investor-owned utilities, like Bellevue-based Puget Sound Energy, $1.4 billion not to take BPA power through 2006.

That's in addition to the $1.8 billion the investor-owned utilities will receive from BPA in accordance with the Northwest Power Act of 1980, which requires the BPA to pay those utilities' customers for their share of the federally financed hydroelectric system, said Ed Mosey, spokesperson for the BPA.

Meanwhile, BPA is cutting money from its salmon recovery budget and limiting money it invests in conservation and renewable energy programs.

The administration's financial position is expected to be eroded even further because of an expected drought this summer, which could limit revenues the BPA receives from sales of excess power.

"We've looked at every program and are doing everything we can short of folding up the tent and going out of business," Mosey said.

The rate increase will need to be approved by the Federal Energy Regulatory Commission.

Reach Steve Ernst at 206-447-8505 ext. 114 or sernst@bizjournals.com.

Alcan Inc. Declares Dividend

Canada NewsWire (press release),

MONTREAL, Feb. 10 /CNW Telbec/ - Alcan Inc. (NYSE, TSX : AL) today

announced a quarterly dividend of 15 cents, in U.S. funds, per Common Share,

payable on March 20, 2003, to shareholders of record at the close of business

on February 24, 2003. The announcement followed a meeting of Alcan's Board of Directors. There are currently approximately 321.4 million Common Shares outstanding.

Alcan is a multinational, market-driven company and a global leader in

aluminum and specialty packaging with 2002 revenues of US$12.5 billion. With world-class operations in primary aluminum, fabricated aluminum as well as flexible and specialty packaging, Alcan is well positioned to meet and exceed its customers' needs for innovative solutions and service. Alcan employs 48,000 people and has operating facilities in 38 countries.

Russian Metals, Mining Companies Create Lobby Committee

Yahoo News Monday February 10, 10:51 PM

MOSCOW (Dow Jones)--Russia's metals and mining companies Monday created a committee within the Trade and Industry Chamber, a state body which protects and lobbies the interests of different Russian industries locally and internationally.

The committee includes OAO GMK Norilsk Nickel (R.GMK), OAO Severstal (R.SEV), Russian Aluminum, SUAL-Holding, OAO Alrosa (R.AZR), Novolipetsk Metals Combine, Evrazholding, Urals Metals and Mining Co., or UGMK, and Magnitogorsk Metals Combine.

"We need a strong lobby because the industry is in a difficult situation: 50% of metal plants in Russia are loss- making and investing is difficult as foreign loans are expensive and local banks aren't developed enough to finance the industry's restructuring," said Andrei Kozitsin, the committee's chairman and president of UGMK.

The committee will have the right to introduce draft laws to parliament regarding the industry - tariffs, duties, taxes and problems of attracting investment.

It will also take part in the discussion of draft laws that have a direct effect on metals and mining, such as reforms of electricity, natural gas, land markets and the state railways monopoly.

"Metal companies use up 8% of all the domestic gas consumption, so it would make sense to organize a gradual, not drastic, price hike for metal companies when the gas market is liberalized," said Valery Yazov, a representative of a parliamentary committee for energy and transport.

One of the main issues discussed by the committee will be preparations for joining the World Trade Organization, Kozitsin said.

Company Web site: http://www.ugmk.ru

http://www.nornik.ru

http://www.rusal.ru

http://www.stal.ru

-By Anna Ivanova-Galitsina, Dow Jones Newswires; 7095-974-8055; anna.galitsina@dowjones.com

Argentine aluminum smelter Aluar posts Profits

BUENOS AIRES, Argentina, Feb 10 (Reuters) -

Argentine aluminum smelter Aluar <ALU.BA> on Monday posted the following

results for the six months ended Dec. 31, 2002.

Ordinary profit: 154.97 million pesos ($49 million)

Net worth : 1.63 billon pesos ($515.6 million)

NOTE: Aluar, listed on the MerVal <.MERV> index of leading

Argentine shares, gave no comparative figures.

Aluar, which relies significantly on exports for its

income, benefited from the Jan. 2002 currency devaluation. The

Argentine peso has slumped 70 percent against the dollar since

then to trade on Monday at 3.15/3.16 to the dollar <ARSB>.

Copyright 2003, Reuters News Service

VALCO takes Ghana to Court

GhanaWeb, Ghana Tuesday, 11 February 2003

The Volta Aluminium Company (VALCO) Limited has filed for arbitration at the International Chamber of Commerce (ICC) asking the government to extend the expired power agreement between it and the Volta River Authority for another 20 years. The company also insists on paying the tariffs specified in the original power contract which was signed in February 1962.

Attorney General and Minister for Justice, Nana Akuffo Addo told the ''Daily Graphic'' that VALCO filed for arbitration while negotiations were ongoing between it and the government. He said the Attorney General’s Department and solicitors of the VRA are working around the clock to respond to VALCO’s demands by next month.

He said provisions were made in the original agreement that any of the parties who felt aggrieved could file for arbitration. Nana Akuffo Addo described VALCO’s demands as unrealistic since the tariffs they want to pay are far below the cost of providing power in Ghana and also do not conform to the current energy situation in the country.

''The nature and terms of the original agreement do not satisfy national interest because what existed 41 years ago is far different from the situation today,'' he added.

Energy Minister early this year noted that ''it cost the VRA 6.5 cents /kWH to produce electricity from its system. The ordinary Ghanaian pays 7.8 cents/kWH. Until recently VALCO has been paying 1.1 cents/kWH and resisted efforts to make it to pay a more realistic price, reflecting current costs of producing powering Ghana''.

Noranda $700 million in hole after asset writedown, low metal prices

PAULA ARAB, Canadian Press

Montreal Gazette, Canada,Tuesday, February 11, 2003

TORONTO (CP) - Weak metal prices and a bad investment in a Quebec smelter led to a hefty $700-million loss at Noranda Inc. last year, and the mining giant's chief executive said Tuesday the outlook remains gloomy.

With the exception of nickel and copper, metal prices aren't likely to rise any time soon, predicted Derek Pannell. "We are braced for the challenging conditions of 2002 to continue into 2003 for at least the next few quarters," Pannell told a conference call.

While he said nickel fundamentals are "excellent" and prices are up, he was bearish about other metals such as zinc and aluminum, which he said are oversupplied in the market.

Copper fundamentals are slowly improving, though. Pannell said he expects a recovery in 2003 and a reduction in warehouse stocks.

We knew early last year that the market conditions were bad and would remain so for a while," said Pannell. "We took the steps we felt were required. We have (sought) improvements company-wide and we will continue to reduce costs and deliver efficiency improvements."

The Toronto-based miner cut its workforce by 12 per cent in the past 18 months and reduced its corporate staff by 30 per cent.

Despite the cost reductions, Noranda was hurt by major asset writedowns and was hit hard by weak base-metal prices, reporting a loss of $3.02 per share for the year, compared with a loss in 2001 of $92 million or 47 cents a share.

A writedown of $623 million in the fourth quarter resulted in a three-month net loss of $673 million, $2.84 a share, compared with a loss of $88 million, or 37 cents a share, in the year-earlier period.

The writedown was related to Magnola, the company's magnesium plant in Quebec which is to close "as soon as possible, probably by the end of the first quarter," said Pannell.

Noranda announced last month it would close the two-year-old smelter for at least a year. It blamed a rapid increase in low-cost magnesium exports from China. A further charge of $28 million after taxes will be taken in the current quarter.

"I would say in general everyone expected the results to be bad, and they were bad," said Lawrence Smith, a mining analyst with TD Newcrest in Toronto.

Chief financial officer Lars-Eric Johansson said fourth-quarter results also reflect a number of restructuring charges and costs associated with the integration of Noranda's copper plants with those of its Falconbridge Ltd. subsidiary.

And the bottom line was hurt by a strike that has been going on since June by 510 workers at the Horne copper smelter in Quebec, which reduced sales. The net impact of the strike was $25 million before tax for the year, and is running at about $2 million a month, Pannell told analysts.

No talks are scheduled in the dispute, whose main issues are wages and job security, but "I sense that we could be coming together soon," he said. "We are waiting to hear from the conciliator."

During the year, zinc prices fell 12 per cent, aluminum was down eight per cent and copper fell one per cent, the company said. Nickel prices somewhat offset those declines, rising by 14 per cent.

Long-term debt, a concern for some analysts, rose to $4.76 billion at year-end, up from $4.4 billion a year earlier.

"The vast majority of cost-cutting has been done now," said analyst Smith. "What they have to rely on now is improvement in the economy and improvement in metal prices."

Smith believes metal prices, on average, will rise in 2003 but likely won't be significantly higher than 2002 levels.

Noranda's earnings fell below his expectations because of larger-than-expected losses at American Racing Equipment - a non-core subsidiary Noranda is thinking about selling.

The aluminum automotive wheel producer in the United States, hurt from competitive pressures after discontinued supply reached the market, recorded a quarterly loss of $34 million, compared with a loss of $50 million in 2001.

Shares in Noranda (TSX:NRD), controlled by the Brascan conglomerate (TSX:BNN.A), fell 25 cents to close at $13.67 Tuesday on the Toronto Stock Exchange.

At those prices, now is a good time to invest in Noranda because of a dividend yield of between five and six per cent, said analyst Joe Hamilton of Dundee Securities.

"At these share prices you get a great dividend," he said, adding it is "pretty secure because keep in mind that Brascan owns about 40 per cent. The only way Brascan gets its money is through the dividend."

Noranda, with four dozen mining and metallurgical operations and projects in 17 countries, is one of the world's largest producers of zinc and nickel and a significant producer of copper, aluminum, lead, silver, gold, sulphuric acid and cobalt.

© Copyright 2003 The Canadian Press

BHP looks to boost aluminium smelting

Sunday Times, South Africa Wednesday, 12 Feb 2003

By Justin Brown

Global commodity giant BHP Billiton is looking to expand its aluminium smelting capacity as well as its output of alumina - the feedstock for aluminium, Miklos Salamon, president of BHP Billiton's aluminium division says.

He was speaking at a roof wetting function at the group's Hillside smelter.

BHP sees the global market for alumina or aluminium oxide strengthening due to growth in demand from the western world and China, where gross domestic product is growing at about 8% per annum.

BHP has six customer sector groups of which aluminium is one.

In its 2002 financial year, BHP produced 992,000 tons of aliminium at its smelters worldwide and 3.9 million tons of alumina.

The Hillside smelter is currently in the process of expanding its primary annual aluminium output from 510,000 tons to 640,000 tons, which should put it on course to be the world's third largest aluminium smelter.

However, it faces competition for this title from smelters in Dubai and Bahrain, which are currently being expanded. The two largest aluminium producers in the world are in the former Soviet Union.

At this stage BHP executives see Hillside's maximum annual production at 700,000 tons. A key-limiting factor is the environment at Richard Bay and particularly emissions levels.

BHP's Mozal smelter near Maputo in Mozambique is also in an expansion phase.

In addition to Hillside and Mozal, BHP has a third smelter - Bayside in Richards Bay.

Total BHP aluminium annual production in South Africa is 700,000 tons of which about 570,000 tons is exported and 130,000 tons is sold to Tongaat- Hulett's aluminium division in KwaZulu-Natal.

The group's main alumina interest is its Worsley mine in Western Australia. "BHP's current capital expenditure is being spent on the Mozal and Hillside expansions. Maybe there will be smaller expansion projects in the future such as a significant upgrading of the Bayside smelter down the road," Salamon added.

In South Africa BHP Billiton is looking at a range of projects in its coal division, he said.

"South Africa's recent Minerals and Petroleum Development Bill as well as BHP Billiton's adjunct empowerment partner are also being considered internally and is seen as an opportunity for the group in South Africa," Salamon said.

BHP's aluminium smelters do not form part of the Minerals and Petroleum Development Bill. However, the South African government is currently drafting a general "empowerment charter" to encompass the entire South African economy and therefore BHP's smelters will also have to comply with these requirements.

At its three aluminum smelters in southern Africa, BHP has already adopted "empowerment" strategies, particularly in the area of procurement, but in South Africa neither of its smelters has a black empowerment equity component

Erwin rules out more smelters

News24, South Africa 11/02/2003 09:52 - (SA)

Richards Bay - Trade and Industry Minister Alec Erwin has ruled out any additional smelters at Richards Bay, however, he says there are "four or five" major industrial projects in the pipeline involving ferro-alloys, mineral processing, agro-processing as well as aluminium linked projects.

Erwin was speaking at a roof wetting function at BHP Billiton's Hillside smelter on Monday.

"The key to the industrial development zone is environmental management. We want to avoid the environment in the area being overloaded. No more major smelters will be possible at Richards Bay," Erwin said.

"It is premature to make any announcements. One of the things that has to be done is that the highway between Empangeni and Richards Bay needs to be strengthened. We need to build a new bridge over the swamp area.

"Infrastructure is critical and we are speaking to the national roads agency," he added.

A key factor that the government was looking to improve was logistics, especially South Africa's rail systems and the ports, which are currently stretched.

As part of getting the ports working more efficiently, Erwin said the government was looking at a concession partner.

"The rail infrastructure currently has some bottlenecks," he added.

Erwin also said that the key economic advantages South Africa has in the global economy are its cheap energy supply, and good raw materials in the form especially of minerals and metals.

He said South Africa was currently fast tracking its energy needs and was in negotiations with Angola, the Democratic Republic of Congo and Mozambique. - I-Net Bridge

World Economy Key to Aluminum Outlook - Alcan CEO

Morningstar Canada, Canada, 11 Feb 03(5:40 PM) | E-mail Article to a Friend

By Robert Melnbardis

MONTREAL (Reuters) - Prospects for a rebound in the slumping global economy, not war in Iraq or growing Chinese metal exports, are key to determining the outlook for the aluminum market, Alcan Inc.'s <AL.TO> chief executive said on Tuesday.

"The major threat is really world GDP (gross domestic product) development," Travis Engen, president and chief executive of the world's second-largest aluminum maker, told reporters after a luncheon speech.

Engen said the risk of a U.S.-led war against Iraq would affect the world aluminum market only to the degree that military conflict dampens global economic growth.

"No real impact directly, but obviously, because aluminum is used in so many applications and touches virtually every element of the economy... anything which slows or retards the growth of the world economy is something we will see as impacting our business," he said.

Alcan expects western world demand for aluminum to grow by 3.3 percent in 2003, compared with an estimated growth rate of 3.2 percent last year and a 6.2 percent decline in 2001.

LITTLE IMPACT SEEN FROM CHINA EXPORTS

As for China, which last year became a net exporter of aluminum, raising concerns about adding to a surplus of the metal in world markets, Engen voiced little concern.

"We expect them to be a net exporter again this year, but not by much," Engen said.

"We think they will quickly go into shortage and be importing again, in part because of the internal growth, but also because of Chinese government policies to restrict and shut down some of the smaller scale smelters which are not economically efficient and are producing more pollutants than they should have," Engen said.

Alcan has aluminum composites operations in China, but no smelting capacity.

Last year, Alcan agreed to set up a joint venture with China's Qingtongxia Aluminum Co. (QXT) under which the Montreal-based company would acquire a 50 percent stake in a modern 130,000-tonne smelter slated for expansion. The proposed joint venture also gives Alcan the option to take up a 50 percent stake in the 150,000-tonne expansion.

"Discussions are quite active. We have been going through due diligence," Engen said. "They themselves have been doing site preparation on a new smelter location."

Beijing has already approved the expansion project and financing is being prepared, Engen added.

"We haven't formally committed to the project, but it's certainly something we have been doing a lot of work on and we'll be bringing it to our board for approval at a certain point," he said.

ALCAN HAS OPTIONS FOR CASH

Engen acknowledged that Alcan's balance sheet remains strong after reporting solid earnings in a difficult market for aluminum prices. Aside from deciding whether to dividend extra cash out to shareholders or buy back shares, the company will keep a lookout for possible acquisitions.

"We will continue to look at the opportunities we see on acquisitions, particularly in a depressed market," he said.

Engen said Alcan "has been doing all sorts of exploratory work" on National Aluminium Co. <NALU.BO>, India's No. 2 aluminum maker, which is state-owned and slated for privatization.

"I don't know how that's going to turn out because the essential issue is going to be what conditions does the Indian government have on the ownership stake," Engen said.

"You can appreciate that our interest is in having control of something," he said.

Last month, Indian government officials said they would be unable to carry out the planned sale of National Aluminium this fiscal year. Workers have opposed the privatization and in October prevented prospective bidders from completing due diligence visits.

Russia is another country Alcan is watching for possible acquisition targets, but the 101-year-old company has no immediate plans there, Engen said.

Alcan shares rose 24 Canadian cents at C$42.60 on the Toronto Stock Exchange on Tuesday and were up 17 cents at $27.86 on the New York Stock Exchange.

($1$1.53 Canadian)

Definitive Feasibility Study Commences at Alcan's Gove Alumina Refinery in Australia's Northern Territory

StockHouse Canada, Canada ,2/12/03

MONTREAL, Canada, Feb 12, 2003 /PRNewswire-FirstCall via COMTEX/ --

Alcan Inc. (NYSE, TSX: AL) today announced a definitive feasibility study, a significant step forward towards a potential expansion of its alumina production capacity at Alcan Gove. The proposed expansion would increase the capacity of the refinery from 2 million tonnes per year to 3.5 million tonnes per year using proprietary Alcan technology to increase operating efficiency.

'The proposed Gove expansion is a key part of our investment strategy to double Alcan's value every five years. It will provide Alcan with an overall alumina production cost that will be below the world average, and will have a very positive impact on environmental performance,'said Michael Hanley, president of Alcan's Bauxite, Alumina and Specialty Chemicals Group.

Preliminary engineering and environmental impact studies for the expansion have already commenced for a third production stage at Alcan's Gove refinery. The initiative is part of a strategy to profitably expand alumina production at facilities having advantaged cost positions.

Engineering studies and environmental approvals are expected by mid-2004. During this time, Alcan will work with the Australian government and local stakeholders to ensure that issues such as energy supply, infrastructure and land tenure for the expansion are addressed ahead of final project approval. The expansion should take three years, with increased capacity as early as 2007.

Alcan is a multinational, market-driven company and a global leader in aluminum and packaging with 2002 revenues of US$12.5 billion. With world-class operations in primary aluminum, fabricated aluminum as well as flexible and specialty packaging, Alcan is well positioned to meet and exceed its customers'needs for innovative solutions and service. Alcan employs 48,000 people and has operating facilities in 38 countries.

Statements made in this press release which describe the Company's intentions, expectations or predictions may be forward-looking statements within the meaning of securities laws. The Company cautions that, by their nature, forward-looking statements involve risk and uncertainty and that the Company's results could differ materially from those expressed or implied in such statements. Reference should be made to the most recent Form 10-Q for a summary of major risk factors.

INTERVIEW-Norsk Hydro CEO sees flat aluminum market in '03

Reuters, 02.12.03, 10:04 PM ET

By Carole Vaporean

NEW YORK, Feb 12 (Reuters) - Norwegian energy, metals and fertilizer group Norsk Hydro <NHY.OL> expects improved profitability in its aluminum business in 2003 from cost cutting and an acquisition, but sees no help from a flat aluminum market, its chief executive said on Wednesday.

Norsk Hydro President and Chief Executive Officer Eivind Reiten told Reuters in an interview that given the aluminum market outlook, he thinks the price of aluminum will not change much in 2003 from its current London Metal Exchange price around $1,400 a tonne.

"I do not believe we will see significant change, at least not at sustained higher levels, before we really see clear signs of stronger growth in the global economy," he said.

"If you ask me what's the range for this year, $1,300 to $1,500 (a tonne) would be what I'm thinking of," he added.

On Monday after the company reported fourth-quarter earnings, Hydro said it expected a flat performance from its aluminum business in 2003 based on a flat aluminum market.

Reiten said that Hydro Aluminum's order books show demand for the next several months. "What I'm saying is, it's pretty flat overall. It was encouraging in January, down a little bit in February. So, once again it's flat overall."

Norsk Hydro became the world's No. 3 aluminum producer when it bought the German company VAW last year.

Reiten said Hydro Aluminum also has some new investments in its smelter system under way that it will complete this year.

"When you look at our figures you will see that the profitability hurdle rates we are looking for are low for the group as a whole. Before we invest more we want to make sure that we rectify and bring what's already in the pipeline up to a good profitability," Reiten said.

"We are cutting costs, de-manning in the overall aluminum organization, harvesting synergies in marketing, support function, research and development -- that is really what we have to do more of, to make sure we take out overlapping functions and people, take out overhead costs," he added.

Reiten noted that Hydro already sold off the VAW packaging segment to Alcan <AL.TO>, "and we might also improve the portfolio a little bit more with what we have."

"The priority is to deliver not only as the leading European company when it comes to market position and volume, but also as a world-class performer in profitability."

He said some segments, like extrusion in Europe and precision tubing in the automobile sector, were strong.

"Whereas if you take the general extrusion in North America, it's still very low and flat. So, that leads me to say that overall we should not base ourselves on much help from the market for 2003 compared with 2002," Reiten said.

He said with new capacity coming online in 2003, and demand not growing fast enough to meet it, aluminum will not come close to his preferred $1,700-a-tonne level price.

"And I don't think that will be the case until we have really seen more growth in the overall economy," Reiten said.

While he refrained from offering an economic outlook, he noted that forecasters generally paint a picture of little improvement in 2003, and instead offer "hope" for 2005.

As for Hydro Aluminum's immediate priorities in a tough market environment, the chief executive said, "Priority No. 1 for us is to know the improvement targets and synergy harvesting that we promised in connection with this huge acquisition of the German aluminum company VAW."

Reiten said Hydro plans to increase its roughly 1.4 million to 1.5 million primary tonne output "somewhat" in 2003, with the increased capacity of a new smelter coming online this year.

"It will add about 66,000 to 67,000 tonnes of new capacity in 2003," he said.

As for growing the aluminum business through a partnership, he said, "We are not looking for a partner as such. Not as a change in the ownership."

Looking beyond aluminum to its other businesses, Reiten said that while Hydro has been able to develop all three business areas "nicely" on its own, "We are open to discuss changes if we come across good opportunities, which we cannot harvest fully on our own."

He said Hydro would "not forgo good opportunities for those industries just because we demand that they stay 100 percent Hydro-owned."

He said the company has committed to improving earnings and reiterated targets of 9.5 percent cash return on gross investment for 2003, up from about 9.0 percent in 2002.

"We use a return on gross investment as our measure. We delivered on the top of the range in 2002 and we are aiming at up to 9.5 percent for this year. That means a few million more in our earnings after tax, which is a considerable stretch given limited help from the markets," he said.

In the oil business, Reiten said there would be less exploration in 2003 than the heavy level of activity in 2002, but the decline would be due to logistics rather than a change in strategy.

Copyright 2003, Reuters News Service

IMF Holds Government to Ransom

AllAfrica.com, Africa - 11 Feb 2003

February 10, 2003

Kwesi Wrekon Obeng

Accra

Ghanaians must gear up for really harsh times ahead. The 94 per cent rise in fuel prices is but one of four policies the government has pledged to the International Monetary Fund (IMF) and World Bank to inflict on Ghanaians this year.

Government, as well as, donors insist that the relationship between the two parties is purely advisory. But the fact that Ghana currently does not have a programme with the IMF goes to confirm the contrary. Ghana failed to do as agreed with the IMF to freeze wages and get Ghanaians to pay for the full cost of utilities.

"There was a significant deviation," on the wage bill, the IMF resident representative in Ghana, Enrique De La Piedra told Public Agenda on Thursday.

It's precisely because Government of Ghana (GoG) failed to measure up to the benchmarks set up by the IMF that the country has not had a programme with the Fund since November 30, 2002.

Like a schoolboy, Ghana was asked to return to do its homework properly last week .

Has Ghana a choice? The answer is no and that is why the government struck a deal with the Fund when an IMF mission on a 10-day official visit to the country in late January 2003.

Inherent in the deal is keeping a tight lid on the national wage bill - in the face of worker's agitation for salary increases - pushing the public to pay the full cost of electricity, water and other utilities, and sell off the Ghana Commercial Bank (GCB), and the debt-ridden Tema Oil Refinery.

The fine details of the agreement are pretty sketchy but the IMF resident representative, Enrique G. De La Piedra told Public Agenda on Thursday that the broad framework of the agreement is in line with the government's drive to grow the faltering economy and eliminate waste.

The government concluded a preliminary deal with the IMF early last week on the country's macro-economic framework culminating in the Fund's pledge of $245 million concessional loan for a three-year period.

Hugh W. Bredenkamp, assistant director of the West Africa Division of the IMF, led the Fund's Mission to Ghana to discuss the country's macro-economic framework and to seal the Poverty Reduction and Growth Facility (PRGF) deal of $245 million for budgetary support.

But the Fund's resident representative, Enrique De La Perdra told Public Agenda that the IMF Board has not approved the concessional loan yet.

The Board will approve it in Washington in April by which time the Government of Ghana's 2003 budget which the Fund describes as "an appropriate budget" would have been presented to Parliament.

Truth is, the IMF Board will only approve the $245 million PGRF only if the budget reflects the stringent policies the government has promised the Fund. These are: reduce poverty, strengthen the Balance of Payment (BOP) and maintain an acceptable national growth - about five per cent, De La Piedra said.

To be disbursed in seven trunches, each disbursement would depend on how well the government sticks to commitments made to the Fund.

"That's how we (the IMF) can be sure that the Government of Ghana will implement the programme," De La Piedra said.

The government's hands are tied. The money from the deal is for specific things.

In the new arrangement awaiting approval, the IMF is again pushing government for reforms in the financial sector, in order to transform the climate for financial sector applications. One example is to encourage the setting up of private pension schemes to break SSNIT's monopoly to, presumably make money is available for long-term investments. Another is the development of credit reference agencies.

Meanwhile, the Fund asked the government to organise a mini Consultative Group to explain to other development partners what it intends to do.

There was, notably, no IMF position on utility rates being charged to the giant American aluminium company, Volta Aluminium (Valco), which is now under discussion.

Essentially, Valco consumes the bulk of electricity from the Volta River Authority (VRA) for nearly free. The poorest Ghanaian pays many times more than the price the aluminium giant pays for a unit of electricity.

Simply put, Valco is being charged substantially lower-than-market rates even after the expiration of the lower tariff arrangement with the government of Ghana following the construction of the Akosombo Dam.

It is intriguing that the IMF has strong positions on utility rates for individual customers, but not for multinational corporate ones

De La Piedra declined to comment on Valco. The government is negotiating with the aluminium company, he explained off.

Meantime, the joint IMF/World Bank boards have not approved the Ghana Poverty Reduction Strategy (GPRS). The Bank has demanded some changes to the GPRS beforeit takes the document to the joint boards.

The approval at that level is important, as it is that date which sets the timeline for meeting Highly Indebted Poor Countries (HIPC) conditionalities.


Russia raises primary aluminum output 2.9% in Jan

Interfax 13.02.2003 18:01:03

MOSCOW. Feb 13 (Interfax) - Russia produced 290,313 tonnes of primary aluminum in January 2003, up 2.9% year-on-year, Aluminum, a Moscow engineering and consulting firm, told Interfax.

Aluminum production in Russia, Ukraine and Tajikistan totaled 325,925 tonnes, up 2.6% year-on-year.

Production dropped 2.2% in Ukraine to 9,537, and 0.9% to 26,075 tonnes in Tajikistan.

Russia's is the world's number two primary aluminum producer and its number one exporter. Primary aluminum accounts for about 72% of Russia's aluminum exports. <>


Brazilian Firm Pulls Out Of Nalco Bidding

INDIA PRESS:Friday February 14, 11:21 AM

MUMBAI (Dow Jones)--Brazilian firm Companhia Vale do Rio Doce (E.VRD), has withdrawn its bid for a 29.15% stake in Indian state-owned National Aluminium Co. (P.NAL), or Nalco, the Times of India reports.

The company pulled out because of the delay in the privatization program, the report said.

The Indian government owns about 87% of Nalco and has announced that it will reduce its shareholding to 26% in three phases.

The report said the list of interested bidders include five international companies - Alcan Inc. (AL), Pechiney S.A. (F.PEH), Alcoa Inc. (AA), BHP (BHP) and Russian Aluminium Co. The Indian bidders include Hindalco Industries Ltd. (P.HDI) and Sterlite Industries (India) Ltd. (P.SLT).

Newspaper Web site: http://www.timesofindia.com

-By Dow Jones Newswires; 91-22-288-4212; djn.in@Dowjones.com

Norsk Hydro to shut 200,000 T aluminium output by 2009

Planet Ark, NY ,NORWAY: February 17, 2003

OSLO - Norwegian energy, metals and fertiliser group Norsk Hydro (NHY.OL) said last week it will shut down up to 200,000 tonnes of aluminium production - almost a quarter of its Norway capacity - at three plants unable to meet environmental norms.

A spokesman said more than 50,000 tonnes per year of capacity using the outdated Soederberg technology would be closed at Aardal and over 20,000 tonnes at Hoeyanger by the end of 2006, with a further 120,000 tonnes to be shut at Karmoey by end-2009.

He said the lifetime of the Soederberg line at the Karmoey plant could be extended to 2009 because environmental technology at that plant would keep total emissions within the allowed limits.

Norsk Hydro is the world's third biggest aluminium group and Europe's biggest, with a global primary aluminium capacity of about 1.4 million tonnes per year. The company also has other kinds of aluminium production at those plants, and spokesman Thomas Knutzen said it did not plan to close down operations other than those using the Soederberg technology.

The production lines using the outmoded technology employ about 600 workers out of a total of about 3,050 at the three units, and Knutzen said the company was currently in talks with unions on the uncertain future of those jobs. Knutzen said there had been no decision yet on whether to invest in replacing that capacity, but that current conditions were not favourable to reinvesting.

"Under the present conditions, we see it very unlikely that there will be new capacity investments in Norway - or Europe," Knutzen said. "But there is no decision not to build and there is no decision to modernise."

He said the closures would affect only part of the production at the three plants, as other production used more modern technology that complies with environmental regulations.

The Hoeyanger plant has total production capacity of 73,000 tonnes per year, Aardal capacity of just over 200,000 tonnes, and Karmoey 267,000 tonnes.

"In none of these locations are we talking about complete closure," Knutzen said "Hydro will remain in all of these communities.".

Norsk Hydro became Europe's biggest aluminium producer by acquiring VAW from German energy group E.ON (EONG.DE) in 2002.

RusAl in Smelter Talks

Moscow Times, Russia, Wednesday, Feb. 19, 2003. Page 6

NOVOSIBIRSK, Western Siberia (Reuters) -- A company building an aluminum smelter in eastern Siberia said Tuesday it was in talks with top primary aluminum producer Russian Aluminum to build a new smelter jointly.

"The talks are about a joint project for building a new plant," said Larisa Kulysheva, a spokeswoman for the Alyukom-Taishet smelter project.

A RusAl spokeswoman confirmed talks had started.

Alyukom-Invest started building the smelter in 2000 in the Irkutsk region with a planned design capacity of 250,000 metric tons per year. But it has been stalled since March 2002 because of a disagreement with the local utility, Irkutskenergo, over energy supplies.

Noranda to cut 125 jobs at Horne smelter in Quebec

Waterloo Record, Canada, Tuesday February 18, 2003 - 17:48:42 EST

ROUYN-NORANDA, Que. (CP) - Mining giant Noranda Inc. is cutting 125 jobs at its Horne copper smelter in Quebec, where workers have been on strike since last spring.

The metals giant announced Tuesday it had met with the union and told them it will cut 125 unionized jobs, reducing the workforce to 425 from 550, as part of its efforts to reduce costs. "In order for Noranda to make Horne profitable over the mid- and long-term, we need to take the necessary measures to reduce our overall operating costs in all sectors of the operation, including reducing manpower levels," said Mario Chapados, general manager of the smelter.

"The smelter's profitability will be impacted in 2003 by the exceptionally low treatment charges for copper, the Horne's main source of revenue, as well as from the reduction of concentrates coming from local sources in the region," he said in a release.

Since the beginning of the strike in June 2002, the company has received 15 per cent less to treat copper concentrate, Noranda (TSX:NRD) said.

The company said it presented its restructuring plan to the union "in hoping to establish a platform from which to resume negotiations with the union as soon as possible."

About 550 employees, members of Le syndicat des travailleurs de la Mine Noranda, have been on strike since June 18, 2002. During the strike, the smelter has been operated at reduced capacity by management and non-unionized workers.

Talks had broken off between Noranda and the some 550 workers at the smelter. The strike cost the company $25 million before tax last year and is running around $2 million a month.

In other developments, Noranda said it wants to increase revenues at the Horne smelter and plans to build a new recycling operation in Canada to supply the Quebec smelter with a new source of recyclable materials.

In addition, Noranda is planning to invest $10.3 million in exploration aimed at finding new copper-zinc deposits in Quebec this year. The investment is linked to new exploration subsidies announced by the Quebec government.

The moves come after the Toronto-based metals producer reported a $700 million loss last year, much of that from the writedown in the value of its magnesium smelter in Quebec, where the company is cutting hundreds of jobs. Noranda also lost $112 million from operations at its copper recycling business.

"Noranda needs to take the necessary short-term measures to return all of its business units to profitability," said Claude Ferron, a Noranda vice-president

"The Horne smelter is definitely a quality asset that can contribute to Noranda's profitability if it is able to reduce its operating costs and improve its economics."

Noranda (TSX:NRD) directly or through its Falconbridge unit, is one of the world's largest producers of zinc and nickel and is a significant producer of copper, primary and fabricated aluminum, lead, silver, gold, sulphuric acid and cobalt. Noranda is also a major recycler of secondary copper, nickel and precious metals.

Shares in Noranda closed up 22 cents at $13.90 in trading Tuesday on the Toronto Stock Exchange.

© The Canadian Press, 2003

Oslo bourse hits Orkla over Elkem stake

OSLO, Feb 19 (Reuters)

Wed February 19, 2003 08:26 AM ET

OSLO, Feb 19 (Reuters) - The Oslo bourse dealt a blow on Wednesday to a drive by Norwegian beer-to-media group Orkla ORK.OL to prevent U.S. aluminium giant Alcoa AA.N from gaining control of Norwegian metals maker Elkem ELK.OL .

The stock market's appeals board upheld a preliminary ruling from December saying that it considered holdings by Orkla and investment group Nordstjernen, which is partly controlled by Orkla, to be parts of the same stake.

Orkla owns about 39.4 percent of Elkem but the bourse ruled that it had reached 40 percent combined with Nordstjernen's 0.6 percent, the level at which a shareholder is obliged by law to make a takeover bid for the entire company.

Orkla said in a statement that it would sell enough shares -- at least 98 -- of the combined holdings of 19.7 million shares to return fractionally below the 40 percent threshold.

Orkla has previously said that it will not bid for Elkem.

"We regret the (bourse) decision but acknowledge it," Orkla legal director Karl Otto Tveter said in a statement.

"He said the bourse was creating "a new and tighter interpretation" of when shares formally owned by different groups should be lumped together.

Alcoa, the world's number one aluminium maker, owns 46.5 percent of Elkem.

It made a failed takeover offer for Elkem last year when it reached the 40 percent threshold and, having fulfilled the legal requirement for a bid, is now free to buy and sell whenever it wants.


NGOs Seek Int'l Protection for Patagonia

IPSnews.net, Uruguay , Alicia Sánchez

SANTIAGO, Feb 23 (IPS) - Environmentalists in Chile are pressing the government to seek UNESCO world heritage status for part of its southern Patagonia region, to protect the largely untouched wilderness in that area from the installation of aluminum smelters and other polluting industries.

Chile's Patagonia region, which is home to just 87,000 of the country's 16 million people, boasts a rich temperate rainforest ecosystem and important freshwater reserves, and remains one of the least polluted parts of the planet.

But that could change drastically if Canadian mining and minerals giant NORANDA is allowed to go ahead with its plans for a massive aluminum smelter and hydroelectric project, known as Alumysa, in the Aisen region, which forms part of Patagonia.

Alumysa's operations could destroy pristine lakes and more than 10,000 hectares of one of the last extensive temperate coastal rainforests in the Americas, while threatening a number of animal and plant species that are already endangered.

Since the 1970s, the United Nations Educational, Scientific and Cultural Organisation (UNESCO) has inscribed 730 properties -- including 563 cultural, 144 natural and 23 mixed -- of outstanding universal historical, scientific, artistic, aesthetic, archaeological or anthropological value in 125 countries on the World Heritage List.

Inscription on the list means the international community agrees to protect the properties against the threat of damage in a rapidly developing world.

The smeltering plant would be built four kms from Puerto Chacabuco, the main port of the Aisen region, located 14 kms from Puerto Aisen. It would also include six dams, three hydropower plants, a bridge, port facilities, 85 kms of power lines and 95 kms of roads.

Aluminum smeltering is the chemical process by which alumina (aluminum oxide) is produced from bauxite, the basic aluminum- bearing ore.

The 2.75 billion dollar project would be the largest private investment in the history of Chile, and by far the most ambitious industrial development in Patagonia.

NORANDA has a bad reputation among environmentalists. It has already been forced to pay two million dollars in compensation for damages to human health and the environment in the United States.

''Respected mining professionals have noted that NORANDA is notorious for not committing to the use of the latest generation technology that is necessary for minimising the environmental impacts of metals industries,'' according to Gary Hughes with the Native Forest Network, a U.S. environmental group.

''We are opposed to Alumysa,'' Jenia Jofré, director of the National Committee for the Defence of Flora and Fauna (CODEFF), Chile's oldest non-governmental environmental organisation, told IPS. ''But we also see this as an opportunity to set forth proposals for development initiatives based on eco-friendly sustainable tourism and organic agriculture.''

CODEFF has asked the government to determine which areas in Patagonia are in greatest need of protection, in order to nominate them for inclusion on the World Heritage List.

The list already includes the Rapa Nui National Park, on Chile's Easter Island in the Pacific ocean, which was made a World Heritage site in 1995, as well as 14 churches on the island of Chiloe, in southern Chile, which were added to the list in 2000 as ''outstanding examples of the successful fusion of European and indigenous cultural traditions to produce a unique form of wooden architecture.''

The central port of Valparaíso, located near the capital, was also nominated for World Heritage status two years ago.

''The idea is to generate sustainable development projects in the area that are competitive and have a strong local identity,'' said Jofré. ''In the framework of the free trade accords recently signed by Chile, Patagonia provides our country with the chance to offer a unique product to demanding markets like those of Europe.''

''In the eyes of the international market, Alumysa would turn Chile into a potential industrial dump or a 'sanctuary' for heavily polluting companies,'' according to a report by Juan Pablo Orrego, with the local Terram Foundation.

The Alumysa project in Patagonia ''would be a step backwards with respect to the primary productive phase in which Chile is bogged down, because the raw material -- bauxite or aluminum oxide -- that the smeltering plant would process does not exist in this country, and would have to be imported from Brazil, Jamaica or New Zealand,'' he argued.

NORANDA's declared interest in Chile arises from the huge hydropower potential of the water-rich area around Puerto Chacabuco, where the green forested Andean foothills sweep down to the sea.

But environmentalists complain that the dams that would be built would drown a vast expanse of temperate rainforest. They also say that other attractions, which the company does not publicly admit, are cheap local labour and lax enforcement of Chile's environmental regulations.

The local salmon industry is also opposed to the project, due to the risk of toxic emissions of fluorides and sulphides that would pollute the air and water. The plant would produce more than 600,000 tons of waste a year.

Salmon fish farms, tourism, and industrial and small-scale fishing provide around 20,000 jobs -- 20 times more than the total number Alumysa would offer -- in the area.

Puerto Chacabuco and Puerto Aisen draw tourists from the region and abroad, with boat services offering visitors day and overnight tours of the area's spectacular fjords.

The nearby Laguna San Rafael has already been declared a World Biosphere Reserve by UNESCO.

''We hope the authorities are capable of recognising the value of the biodiversity of this area as patrimony of Chile and the world, and of promoting possibilities of sustainable development for the region,'' said Jofré.

The environmental impact study was sent back to NORANDA for revision, and the company is currently drawing up a new report, due to be presented within the next few months.

Environmentalists around the world, including Friends of the Earth chapters in 68 countries, have declared their support for the local civil society groups that are working to defend the area and are opposed to the Alumysa plant as environmentally and economically unsustainable.

Several initiatives have been undertaken to protect other areas of Chile that are rich in biodiversity, the most controversial of which was the purchase of 17,000 hectares of temperate rainforest a decade ago by U.S. businessman Douglas Tompkins.

Although the Tompkins project had the backing of environmentalists, it was protested by business sectors, which raised doubts regarding his stated aim of preventing the forestland from being destroyed by logging companies. (END/2003)

Alba project to create 400 jobs

Gulf Daily News, Bahrain, Monday 24 February 2003

By SOMAN BABY, MANAMA

Alba's $1.7 billion (BD641 million) Potline 5 expansion will create 400 new jobs for Bahrainis and inject $520m into the Bahrain market, it was revealed last night.

The project when completed in early 2005 will make the smelter the largest in the world outside of Eastern Europe, said chief executive Bruce Hall.

"With well over 2,000 Bahraini workers on board, Alba has rightly attained the status of a prominent supporter of the local community," he told local contractors and suppliers who attended a reception hosted in their honour by Alba at the Bahrain Conference Centre, Crowne Plaza.

"The expansion project will create another 400 new jobs for Bahrainis.

Local contractors will also benefit from a $520 million spending budget allocated for the Bahrain market.

"These include $360m in bulk materials, local contracts and services, and $160m in labour."

The reception was held to highlight the opportunities that have been created for the Bahrain companies in the Line 5 project and to brief them on the strategies that will be implemented to ensure that the project is carried out to build a world-class smelter.

Mr Hall said contracts for the construction of a $350m power plant, as part of the expansion, would be awarded next month.

Talking about the training of Bahrainis in the project, Alba general manager - administration Mahmood Daylami said up to 4,000 project-related jobs would be created during the 25-month construction phase.

Permanent jobs will be created to operate Potline 5, with the recruitment of Bahrainis being at least to the existing level of nationalisation.

Alba currently employs 2,500 people, of whom 87 per cent are Bahrainis.

"Alba in partnership with the Labour and Social Affairs Ministry and the contractors will also financially support a project to train 2,000 Bahrainis as a labour pool for various construction jobs," said Mr Daylami.

The engineering, procurement, construction and management (EPCM) contract for the smelter expansion was awarded in July 2002 to Bechtel.

According to Bechtel's senior project manager Daniel Siouffi, the company is committed to employing local contractors and suppliers, and reinforcing Alba's responsibility in ensuring safety on-site and protecting the environment.

General manager-expansion project Niall M O'Byrne said no contractor would be allowed on site without an approved HSE (Health, Safety and Environment) Plan.

Financial penalty would be applied for poor safety compliance, he added.

"The project will make a difference to Bahrain's national economy," said Mr O'Byrne.

The new potline will add more than 300,000 tonnes per annum (tpa), an extra 60 per cent to the company's current capacity, taking the total primary aluminium produced by Alba to in excess of 800,000 tpa.

BHP Billiton To Continue Growing Its Presence In China

Yahoo News, Monday February 24, 9:40 AM

Sydney, Feb. 24 (Dow Jones) - Anglo-Australian resources giant BHP Billiton Ltd. said Monday that it will continue to grow its presence in China, not just selling commodities there but also moving to trading and owning products there.

It will focus on selling products such as iron ore, copper concentrate, alumina, nickel and high quality coking coals to China.

These are "areas we think they are short of," said company chief executive Chip Goodyear, adding that China will continue to affect global demand for commodities.

"It has a huge impact on demand for metals and bulk commodities...we see a significant infrastructure spending, primarily government-led, to continue to push up raw materials demand in that market," Goodyear said at a post-earnings briefing.

BHP also expects increased foreign direct investment into China in the last few years to continue, and be a significant driver in the World Trade Organization, particularly with the coming 2008 Olympics in Beijing and Shanghai Expo in 2010, he said.

BHP is "one of the largest resources sellers into China," with 30% of the company's alumina sales and 20% of iron ore sales ending up in that country in the last six months, he said.

During that period, the company sold about US$430 million of products to China, he added.

BHP, which has 60 staff in Beijing and Shanghai, has already benefited from rising spot alumina prices in China, he said.

BHP is also working on growing its operations in China, developing opportunities to trade and own products directly, he said, without elaborating. Traditionally, business in China is done through intermediaries.

In marketing, it also aims not just to move raw materials in, but to take intermediate products out, either to be sold internally or exported, he said.

"We've moved from doing business with China to doing business in China."

In addition, China's growth means it will also be buying intermediate products from neighboring countries such as South Korea, Taiwan and Japan, he said.

However, he cautioned that China's growth "will not be a straight line up to the right, there will be bumps on the way."

Goodyear was speaking at a teleconference after the company announced a 24% fall in bottom-line fiscal first half net profit to US$912 million from US$1.20 billion a year ago, hurt by adverse currency movements and lower thermal coal prices.

The bottom line is broadly in line with market expectations that had tipped a profit of around US$920 million.

Wong Chia Peck, Dow Jones Newswires, 612-8235-2957 chia-peck.wong@dowjones.com


Alcoa says abandons work on idled Intalco potline

Reuters, 02.24.03, 10:45 AM ET

NEW YORK, Feb 24 (Reuters) - Alcoa Inc. (nyse: AA - news - people) said Monday it stopped work on an idled third production line at its Intalco aluminum smelter in Ferndale, Washington, after a major area power supplier this month announced it may have to raise rates by up to 15 percent.

"We think that our North American -- primarily our U.S.-based primary smelting -- is not competitive on a cost basis and we have to take steps in order to make it competitive," an Alcoa spokesman said in a telephone interview. "We are completely focused on lowering costs in the smelting system, not increasing costs."

Intalco at full production has a nameplate capacity of 272,000 tonnes per year. It is currently producing at a rate of an estimated 180,000 tonnes with its two running potlines.

The Bonneville Power Administration, the biggest power provider in the U.S. Northwest, said on Feb 7 it may have to raise wholesale rates in October due to low hydro power supplies and the agency's poor financial condition.

Current contracts between regional aluminum companies and BPA account for about half of smelters' 2,800-megawatt power requirements. But at present low aluminum prices and above-market BPA rates, little smelter load can operate economically.

"From a global standpoint, we are looking at ways that we can bring our entire system down that cost curve," the Alcoa spokesman continued. "That's why you see us getting ready to build (a smelter) in Iceland and doing some things in other parts of the world where our costs are more competitive."

Alcoa has said in recent months that demand for aluminum was not strong enough for the company's curtailed smelters in the Pacific Northwest to restart after they closed two years ago when western electricity prices surged.

The Pittsburgh-based company is the world's largest producer of aluminum, supplying almost eight million tonnes of the light metal into a market that consumes about 25 million tonnes in such sectors as aerospace, automobiles, construction and packaging.

Aluminum prices on the London Metal Exchange on Monday were quoted at about $1,416 a tonne, down from highs scaled in 1995 above $2,100 a tonne.

Copyright 2003, Reuters News Service


Alcan Acquisition of VAW Packaging Approved

Azom.com, February 24th, 2003

Alcan have just been given approval by the European Commission to acquire VAW Packaging (FlexPac) from Norsk Hydro as reported previously.

The promptness of the response from the European Commission will allow Alcan to accelerate its plans for the acquisition. They hope to close the deal during the second quarter of this year.

VAW Packaging consists of 14 high quality packaging plants located in 8 different countries, employing some 5400 people. This will add to Alcan’s existing operations which have operations in 38 countries, and employ 48,000 people.