AluNews - January 2003

Kaiser smelter fights another cut in power

Houston Chronicle, TX , 31 Dec 2002
Kaiser Aluminum says its 90 percent-owned aluminum smelter in Ghana is being hit by another reduction in electric power, effective today.

Citing lower water levels in a lake used to generate hydropower, the Volta River Authority said it will supply only enough power to operate about one and one-half potlines.

The smelter started 2002 with four potlines in use, but was cut back to three in March. Houston-based Kaiser said the smelter is fighting the cutback and also asking for damages. Mediation with the river authority and the government of Ghana begins Jan. 6.

Alcoa feels impact of corporate-level belt-tightening

Bettendorf News, IA

Seven days into 2002, the difficulties of parent company Alcoa Inc. were localized for more than 200 employees at Alcoa Davenport Works.

A total of 221 salaried and hourly workers received layoff notices. The downsizing eliminated approximately 9 percent of the local work force.

The day after the local layoffs were announced, the parent company reported its first losing quarter since 1994. Alcoa’s net income for 2001 was $908 million, compared to $1.484 billion in 2000.

During 2002, the company continued to feel the impact of the economic downturn after the Sept. 11, 2001, terrorist attacks.

In November, Davenport Works announced that 147 workers had decided to take early retirement or accept incentives to leave their jobs by the end of the year.

Alcoa Inc. continued to trim costs during the year. One of the local cost-cutting measures was a change in work scheduling for the ingot department. The change required union approval that wasn’t reached without a compromise.

Davenport Works did not cut back on its community involvement. Alcoa continued to sponsor the Jr. Bix race for youth up to age 12 and sponsored Reading Adventures, an event in September that drew thousands of young readers to the Mississippi Valley Fairgrounds.

— Craig Cooper

Appeals court reinstates aluminum-bat injury lawsuit

San Francisco Chronicle, CA ,January 1, 2003

A negligence lawsuit filed against the maker of an aluminum bat by a college pitcher who was injured by a line drive has been reinstated.

The California 2nd Court of Appeal on Dec. 19 revived the lawsuit by former Cal State Northridge pitcher Andrew Sanchez that had been dismissed by a Superior Court judge in favor of bat-maker Hillerich & Bradsby Co.

Sanchez was struck on the forehead on April 19, 1999, by a ball hit by a USC batter. An expert witness claimed the ball was moving at about 100 mph and that Sanchez had less than four-tenths of a second to react.

Sanchez was forced to drop out of school and was under the care of a neurologist for more than two years, his attorney, Alan Templeman, said yesterday. Sanchez has graduated from the Contra Costa County Sheriff's Academy and taken a job with the Pleasant Hill police force.

The lawsuit contends the Louisville Slugger "Air Attack 2" bat involved was "unsafe in both design and manufacture because the ball speed off the bat was significantly increased from the ball speed of wood or less powerful aluminum bats that had been used in past years."

Six months after the injury to Sanchez, the NCAA adopted standards intended to limit the speed of a baseball hit with a metal bat to 97 mph during a three-year study period.

Iran to set up first Metal Exchange Market

IRNA, Iran

Tehran, Jan 1, IRNA -- Iran is to set up a metals bourse in the capital city Tehran soon, said an Iranian official here on Sunday.

Industries and Mines Minister's advisor Ahmad Sadeqi said the articles of assiciation of the market has yet to undergo expert

investigation and the first phase of the project concerning aluminium trade is expected to cost rls 2.4 billion.

Sadeqi said the bourse would be set up to facilitate marketing of Iranian goods on international markets, especially those in the Middle

East.He said the scheme will be implemented according to the model of London's Metal Exchange (LME) and is consistent with Iranian

culture.

Pataki facing budget choices

Must fix deficit, but avoid business-crippling tax hikes

Middletown Times Herald Record, NY - 31 Dec 2002

By Matt Smith, Ottaway News Service, msottaway@aol.com

lbany - Not long ago, Gov. George Pataki breathed a large sigh of relief.

Alcoa Primary Metals, one of the world's leading aluminum manufacturers, announced it would keep its Massena plant open.

The decision was not painless. In order to keep the company in northern New York, it was forced to shed 110 workers. Still, the alternative would have been much worse. Had Alcoa shut its doors, 660 jobs would have been lost in an already stagnant upstate economy.

"I was very concerned," said Pataki, who personally involved himself in the effort to keep Alcoa in Massena.

Rather than close, the company decided to undergo a restructuring. But cementing the manufacturer's decision to remain in the North Country was a deal worked out by the Pataki administration under which Alcoa would receive from the state $7 million in incentives that will significantly reduce the company's operating costs in 2003.

Kaiser Aluminum's Valco plant in Ghana cuts output

Forbes, Reuters, 01.02.03, 11:17 AM ET

NEW YORK, Jan 2 (Reuters) - Kaiser Aluminum Corp. <KLUCQ.OB> said Thursday it began to curtail production at its 90-percent-owned Valco aluminum smelter in Ghana, due to a reduced power allocation for 2003, pending a meeting next week with the state-run power provider.

Kaiser said the power reduction from the Volta River Authority (VRA), effective Jan 1, would cut operation at the Volta Aluminum Company Ltd. smelter to between one-and-one-half and two potlines, from three potlines previously.

"We are in the process of taking the first line down, so we will be moving toward that lower line level," Kaiser spokesman Scott Lamb said.

"We already have gone from three lines to two lines and we are evaluating when and if we might need to go beyond that in light of the scheduled mediation for Monday," he said.

Valco, located in Tema, Ghana's main port, has five potlines each with an annual production capacity of about 40,000 tonnes. Valco ran four potlines in 2000 and 2001 but in March 2002 scaled down operations to three potlines as VRA cut its power allocation.

A Valco official in December quoted VRA as saying drought in the West African nation had significantly reduced the operating level of the Volta hydroelectric dam at Akosombo, northeast of the capital, Accra.

Kaiser Aluminum said in a Dec 31 statement that Valco objected to the 2002-2003 allocations and "intends to seek declaratory relief and the recovery of monetary damages in respect of the curtailments.

"Valco is scheduled to begin mediation with the VRA and the Government of Ghana on Jan. 6, 2003," the statement continued. "In addition, Valco and Kaiser have filed for arbitration with the International Chamber of Commerce in Paris against both the VRA and the Government of Ghana."

Houston, Texas-based Kaiser filed for Chapter 11 bankruptcy protection in early 2002 under pressure from a heavy debt load and low world aluminum prices.

Copyright 2003, Reuters News Service

CVG boasts of its 2002 achievements in Venezuela

Latin Trade ,01/03/2003 - Source: BNamericas

Venezuela's state heavy industry holding company CVG gave a positive assessment of its 2002 achievements, despite the impact of the general strike in the last month of the year when several operations suffered from natural gas shortages. CVG hailed a new production line for its Alcasa smelter is its "flagship" aluminum project of the year. Switzerland's Glencore, Pechiney of France and a US-Venezuelan consortium ACV, are competing to be awarded the US$600mn project. The new line, called Linea V, will be designed to produce 200,000t/y primary aluminum, almost doubling Alcasa's current capacity. "The winner of the Linea V project will be announced early January," an Alcasa spokesperson told BNamericas. Most of the extra production is destined for the local aluminum fabrication sector, according to CVG. Pechiney is already carrying out a US$230mn expansion at CVG's bauxite-alumina unit Bauxilum, which supplies Alcasa as well as CVG's larger Venalum aluminum smelter, for which the company is also planning an extra production line. GOLD FEVER Another CVG unit boasting of success in 2002 was its gold mining company, Minerva. A strict cost "rationalization" program enabled Minerven to slash its consumption of explosives, cyanide, drilling materials, electric power and labor costs by 30%, while boosting production by 26%, according to CVG.

Reynolds seeks tariff cover to reopen plant

ABS CBN News, Philippines, By LAWRENCE AGCAOILI, TODAY Reporter

Financially hammered Reynolds Philippines Corp. urged the government to extend tariff protection to the local aluminum industry so that it could find a “white knight” who would infuse fresh equity to enable the aluminum maker to reopen its mothballed plant in Dasmariņas, Cavite.

In a letter to Trade Undersecretary Tomas Aquino, Reynolds president and chief executive officer Jaime Gonzales said there is a need for the government to rehabilitate the company as well as the entire aluminum industry.

Gonzales said the tariff protection is crucial to be able to attract foreign investors who could infuse the much-needed capital to pursue a seven-year restructuring program.

“We are negotiating with foreign investors who require the restoration of tariff protection similar to the government commitment to investors of National Steel Corp. and similar companies,” he stressed.

Reynolds was forced to shut down its plant in Cavite over two years ago because of continuing losses it incurred from the accelerated reduction in tariff committed by the government to its treaty countries and the unabated and dubious entry of cheap imports.

The company underwent a major financial restructuring last year in which creditor banks, led by Land Bank of the Philippines, took a controlling stake in the aluminum maker after a debt to equity-swap arrangement with Profinda Holdings Corp., owned by businessman Antonio Garcia.

LandBank became the single biggest shareholder of Reynolds while Profinda Holdings became a minority shareholder together with partners All Asia Capital group and Marubeni Corp. of Japan.

In its petition to the Tariff Commission, Reynolds urged the government to maintain existing tariff slapped on imported aluminum products. Under the common effective preferential treatment (CEPT) scheme of the Asean Free Trade Area (AFTA), tariff on almost all products traded in the region were reduced to a range of 0 percent to 5 percent starting early this year.

Gonzales urged the tariff body to approve the request in its entirety to save the 650 workers of Reynolds who are out of work and the P2-billion exposure of LandBank, which is its largest shareholder.

Gonzales was forced to write Aquino after Garcia, who is now a minority shareholder, reportedly agreed to lower tariff on imported aluminum products as the Reynolds plant was already closed.

Reynolds was established in 1954 by American-owned Reynolds International Inc., primarily to manufacture and distribute aluminum sheets, foils and extruded sections used in packaging, container, construction, appliance manufacturing and vehicle manufacturing industries.

France's Pechiney Now Lukewarm On Nalco Stake

Tuesday January 7, 11:17 AM

NEW DELHI (Dow Jones)--French aluminum company, Pechiney SA, a potential buyer of the Indian government's stake in prime privatization candidate National Aluminium Co. (P.NAL), or Nalco, has said it is scaling down its interest in the Nalco stake, reports the Hindustan Times.

The paper, quoting a Pechiney letter to the advisers of the privatization process, said the French company "will step down from its level of high alert" until the resumption in the due diligence exercise for Nalco.

Around three months ago, the due diligence process was suspended after the executives of potential buyer and Nalco's private sector rival, Hindalco Industries Ltd. (P.HDI), were prevented from inspecting Nalco's plants in southeastern Orissa state by its employees.

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

Giant Aluminum Project Underway in North China

People's Daily Online, China

The Aluminum Corporation of China (Chinalco), the nation's leading producer, is investing 9.7 billionyuan (1.17 billion US dollars) into a capacity upgrading program at its branch in Shanxi province, north China.

The investment, believed to be the largest in China's aluminum industry, will fund the third construction phase of Shanxi Aluminum Corporation (Shalco), whose annual output will consist of two million tons of alumina and 280,000 tons of electrolytic aluminum products after completion.

The project is scheduled to be finished in about two years.

Shalco was founded in 1972 mainly to meet the rising domestic demand and its alumina turnout accounts for about one third of thenation's total.

As the nation's sole producer of alumina and the largest producer of primary aluminum, Chinalco was established as stock company in 2001 as a result of the restructuring of China's state-owned industries.

China is the world's second largest aluminum consumer. Primary aluminum is widely used in various fields of construction, packaging, power, consumer products and transportation

Venezuela Venalum-2: To Name $600M Contract Winner Jan 10

Yahoo Headlines , Monday January 6, 11:13 PM

CARACAS (Dow Jones)--December aluminum production at Venezuela's 80%-government-owned CVG-Industrie Venezolana de Aluminio, or CVG-Venalum, was a bit more than 37,400 tons, the best in the company's history, public affairs manager Leonardo Bezzara said Monday.

An ongoing 36-day-old strike general strike "had us worried for a little bit," but never shut production, Bezzara told Dow Jones Newswires in a telephone interview. Production during the year was a record 436,000 tons, he said.

Bezzara said a severe shortage of natural gas, due to the strike that began Dec. 2, shut production briefly at Bauxilum, the country's only supplier of alumina, the main raw material in aluminum production.

But Venalum has a constant 30-day supply of alumina in storage, while its sister aluminum producer Alcasa has a 10-day supply and Bauxilum, itself, had a 15-day supply, he said.

Gas supplies were returned to minimal required levels a few days after Bauxilum shut down, after an agreement was reached between the government and dissident managers at PdVSA Gas, the natural gas arm of state oil monopoly Petroleos de Venezuela SA (E.PVZ).

PdVSA officials agreed to maintain minimal gas levels because of the damage a total shut down would inflict on heavy industries in the region, Bezzara said.

Venalum, for instance, would take up to two years to restart if it ever shut down completely, he said.

That's because the company is currently operating 905 production cells, and a restart would have to be done at a maximum rate of two per day, he said.

The aluminum producers will likely be the last to suffer if there is a complete gas shut down because they don't use as much gas as do some of the other industries in the region, Bezzara said.

Venalum needs only about 6 million cubic feet per day of gas, Alcasa needs about 5 million cfpd, while Bauxilum needs about 50 million cfpd. Steel producer Sidor needs about 200 million cfpd, he said.

Japan's Showa Denko holds 7% in CVG-Venalum, Kobe Steel Ltd. (J.KOB) and Sumitomo Chemical Co. Ltd. (J.SUC) each hold 4%, Mitsubishi Materials Corp. (J.MMT) holds 3%, and Mitsubishi Aluminum Co. and Marubeni Corp. (J.MRB) each have 1%.

Venezuela Venalum-2: To Name $600M Contract Winner Jan 10

Venalum will name on Jan. 10 the company selected for a $600 million construction contract to build a fifth production line, the government's Venpres news agency reported.

French aluminum producer Pechiney SA (PY), Switzerland-based Glencore International (Z.GNC) and a Venezuelan-U.S. group named ACV-Fluor Daniels have submitted indications of interest in the deal, state mining and heavy industry holding company Corporacion Venezolana de Guayana, or CVG, has said.

The fifth line should add 200,000 metric tons in annual production capacity, approximately doubling current capacity in the first four lines, according to CVG information.

Venezuela is looking for so-called "strategic partners" to invest in sectors ranging from gold and diamond mining to iron, steel and aluminum production.

The first such deal was signed in 2001 by Pechiney which agreed to invest $208 million without retaining any equity in Bauxilum. Pechiney is being repaid its investment over a few years in the form of cheap Bauxilum-produced alumina.

Opposition leaders have said they won't lift the strike until President Hugo Chavez agrees to call elections in 30 days if he loses a Feb. 2 nonbinding vote on whether he should remain president.

Chavez has thus far maintained the constitution only requires him to accept the results of a possible recall referendum next August, the midpoint of his term.

Chavez's critics blame his left-leaning policies for country's deepening economic crisis with a likely 8% contraction in 2002, amid 17% unemployment, and 31% annualized inflation sparked by a 46% devaluation of the bolivar ($1VEB1403).

Chavez has said the problems are due to an "economic coup" led by his opponents.

CVG Website: http://www.cvg.com

-By Jehan Senaratna; Dow Jones Newswires;58212-564-1339; jehan.senaratna@dowjones.com

U.S.-led group ups stake in aluminium smelter Alro

Forbes, Reuters, 01.07.03, 10:42 AM ET

BUCHAREST, Jan 7 (Reuters) - The U.S.-led group which controls Romanian aluminium plant Alro<ALRO.BX>, one of Europe's biggest smelters, said on Tuesday it increased its ownership to 78 percent from 52, following a $30 million capital boost.

"The capital increase reflects our committment to further invest in Alro, to expand it," Peter Braun, Alro's vice president of the consortium, told Reuters.

Braun said the increase was carried out through an issue of 195.6 million new shares. Small shareholders hold 2.07 percent while the state maintains its 20 percent stake in Alro's $75 million capital.

ALRO was sold to a consortium comprising New York-based trader Marco International Inc, London-based Marco Acquisitions and local firm Conef SA in a $73 million deal signed last year.

Under the deal, the group pledged to inject the badly needed funds to help the smelter cope with a worsened global climate and improve raw material flows by purchasing alumina smelter BBG Alum.

The U.S.-led group plans to raise Alro's output to around 200,000 tonnes by the end of 2003 from 187,000 tonnes last year and possibly to merge its activities with rolling mill Alprom.

Copyright 2003, Reuters News Service

AP Signs Rs 17,204-cr Investment Deals

Financial Express, India -, Our Economic Bureau

Hyderabad January 7: Andhra Pradesh has closed 41 deals with foreign and Indian investors with an aggregate investment of Rs 17,204 crore during the ongoing Partnership Summit.

The MoUs, signed in the presence of the Andhra Pradesh chief minister N Chandrababu Naidu, include investment by companies from Singapore, the US, the UK and Australia apart from domestic corporates. The projects cover diversified sectors such as refinery, IT, mining, healthcare, agriculture, fisheries and manufacturing. While Trans Corp USA Inc has signed an MoU to set up a refinery with an investment of Rs 12,000 crore at Visakhapatnam, Tecumech has proposed an investment of Rs 50 crore for its expansion project in Hyderabad.

An aluminum smelting project costing Rs 2,400 crore is proposed to be set up at Visakhapatnam by Kapcol Aluminum Smelter, the ITC Paper proposed to expand the paper project in Khammam district with an investment of Rs 260 crore. Under biotechnology, Bio Genus India has signed letter of intent to set up Prawn Bio-Fertiliser and Ethanol plant in Kakinada with an investment of Rs 300 crore.

Blow for India aluminium sell-off

BBC, UK

Foreign investors are worried about the sell-off

India has dropped plans to sell a controlling stake in state-run National Aluminium Company (Nalco), the country's second-largest aluminium producer, before the end of the financial year in March.

"The strategic sale happening in the current year is not possible now," Reuters reported an unnamed disinvestment ministry official as saying.

No reason was given for the delay.

On Monday the Hindustan Times reported French aluminium company Pechiney's interest in Nalco was waning.

Three months ago workers at Nalco's plants in the south-eastern Orissa state prevented potential buyers from conducting due diligence by barring inspections of the facilities.

The latest postponement is another blow to India's struggling privatisation programme, which was trumpeted as the basis of reinvigorating Asia's third-largest economy.

Carving up the company

Workers and politicians oppose plans to sell off the company, fearing job cuts and because it is profitable.

The government planned to sell 29.15% to a strategic investor, which would take management control of the company.

A stake of 10% was also earmarked for domestic investors, 20% for a US rights issue and 2% was to be distributed to employees, leaving the Indian government with a 26% stake.

Apart from Pechiney, the world's second-largest aluminium producer, Russia's RusAl, Alcoa of the US, Switzerland's Glencore International had all expressed an interest.

In December the sale of stakes in Hindustan Petroleum and Bharat Petroleum were put off because of disagreements within the coalition government.

The government admitted that it would not hit its target of 120bn rupee ($2.5bn) worth of privatisations by the end of the financial year in March.

Nalco's shares fell up to 5.1% to 88.25 rupees on the Bombay Stock Exchange before recovering slightly.

Alcoa Loss Widens on Plans for Job Cuts, Asset Sales

Bloomberg.com 01/08 16:13, By James Gunsalus

Pittsburgh, Jan. 8 (Bloomberg) -- Alcoa Inc., hurt by falling aluminum prices, will cut 8,000 jobs and sell some packaging, chemicals and construction businesses. Shares of the biggest aluminum maker had their steepest decline in 16 months.

Costs for the reductions widened Alcoa's fourth-quarter net loss to $233 million, or 27 cents a share, from $142 million, or 17 cents, a year earlier. Sales fell less than 1 percent to $5.06 billion, Alcoa said in a statement.

The jobs, representing 6.3 percent of the workforce, will come mostly from units that supply makers of power-plant turbines and aircraft, industries that have canceled or delayed orders as the slumping economy hurt capital spending. The latest round of workforce cuts will complete Chief Executive Alain Belda's three- year cost-cutting plan of shedding $1 billion in annual expenses.

``Selling assets, getting debt down and setting up for an economic recovery makes a lot of sense,'' said John Fields, an analyst at Delaware Asset Management in Philadelphia. ``The shortfall is showing up where it should be -- in aerospace and power generation.'' His firm owned 3.92 million Alcoa shares as of September.

Costs for the job cuts totaled about $95 million with $221 million in related expenses, the company said. That brings expenses for reorganization in the past two years to at least $671 million. The company eliminated 10,000 jobs last year.

Unit-sale proceeds will be used to reduce debt. The company ended the year with 127,000 employees and long-term debt of $8.45 billion, which includes $85 million due within a year.

Goal Oriented

Belda had eliminated $600 million of the $1 billion targeted for savings. The businesses to be shed include the North American operations of Kawneer, a Norcross, Georgia-based maker of aluminum construction products used in high-rise buildings; Alcoa Packaging Machinery based in Englewood, Colorado; and the Southfield, Michigan, automotive division of Huck Fasteners, which makes bolts and rivets for cars.

Shares of Pittsburgh-based Alcoa fell $2.53, or 10 percent, to $21.85 at 4:03 p.m. in New York Stock Exchange composite trading. Alcoa, whose stock dropped 36 percent last year, was the first member in the Dow Jones Industrial Average to report fourth- quarter results. The stock fell as much as 11 percent, the biggest drop since October 1987.

The yield on Alcoa's 6 percent notes due 2012 rose 5 basis points to about 80 basis points more than benchmark U.S. Treasuries today, a sign investors see more risk in the company's debt. One basis point is 0.01 percentage point.

Diminished Expectations

Power-plant builders including Calpine Corp. and Duke Energy Corp. have canceled projects as a surge in new plants and slumping power demand created a glut of generating capacity. Calpine canceled $3 billion in turbine orders last year, and has been renegotiating other orders with General Electric Co., Siemens AG, and Toshiba Corp.

Sales of commercial airplanes have been crippled as U.S. airlines post record losses, with two filing for Chapter 11 bankruptcy protection. Deliveries by Boeing Co., the world's biggest aircraft manufacturer, fell 28 percent to 381 planes in 2002 from 2001. The company expects deliveries to fall another 25 percent this year.

Merrill Lynch analyst Daniel Roling downgraded the stock to ``neutral'' from ``buy'' and cut his 2003 and 2004 profit estimates. Roling lowered his earnings projection for this year to $1.50 a share from $1.70. In 2004, Alcoa will earn $1.70, Roling said, cutting his previous estimate of $2.05.

Cloudy Forecast

Analysts in a Thomson First Call survey predict 2003 earnings of $1.55. The First Call projection for 2004, an average of eight estimates, is $2.23.

``Oftentimes, when a company takes these kind of cost-cutting initiatives, it's about as hard evidence there is of a potential earnings disappointment in the future,'' said John Burger, who helps manage about $3 billion of bonds including Alcoa debt at Merrill Lynch Investment Managers.

The price of aluminum traded on the London Metal Exchange rose less than 1 percent last year to about $1,344 a metric ton and traded as low as $1,278 in October.

Increased Chinese production has hurt global aluminum prices and may thwart any increase. The Chinese government said last has said it plans to increase aluminum production and build new smelting factories.

Yankuang Group Co., a state-owned conglomerate with mining, construction and engineering research units, is building a plant to produce 140,000 metric tons a year in its first phase. Aluminum Corp. of China, the world's third-largest producer of the metal, said in September it would start building a 280,000 ton-a-year smelter this year.

Proportional Value

Every one-cent drop in the price of a pound of aluminum reduces Alcoa's annual earnings by about 6 cents a share, according to an estimate by Lehman Brothers analyst Peter Ward.

Businesses that have growth less than that of the U.S. economy or fail to ``deliver superior returns'' may be eliminated, Alcoa said in a statement. About 2,100 employees work at the units to be shed, spokesman Kevin Lowery said.

Alcoa will divest businesses that include some specialty chemicals, packaging equipment, architectural products and automotive fasteners, as well as foil plants in St. Louis and Russellville, Arkansas. These businesses generated $1.3 billion in sales last year, the company said.

Alcan Inc., based in Montreal, is the No. 2 aluminum producer.

(Alcoa's quarterly conference call with analysts is scheduled for Jan. 23 at 4 p.m. New York time and will be Webcast at http://www.alcoa.com)

Alcoa Inc. reports job cut of 8,000 as part of restructuring plan

Times Picayune, LA

PITTSBURGH (AP) -- Alcoa Inc. announced a fourth-quarter loss worse than analysts predicted Wednesday and said it will cut 8,000 jobs.

The world's largest aluminum producer said the job cuts will be mostly in Europe and South America. Alcoa ended the year with 127,000 employees.

The company had expected market losses in aerospace and other industries to flatten out, yet sales continued to slide.

For the quarter ended Dec. 31, the company lost $223 million, or 27 cents a share, compared with a loss of $142 million, or 17 cents a share. Revenue slipped to $5.06 billion from $5.10 billion a year earlier.

Analysts surveyed by Thomson First Call were expecting a profit of 25 cents a share. Shares of Alcoa fell $2.53, or 10.4 percent, closing at $21.85 on the New York Stock Exchange.

Alcoa to sell Jefferson County foil plant

St. Louis Business Journal, MO

Alcoa Inc. plans to sell its aluminum foil facility in the St. Louis area as part of a company-wide move to cut costs.

The St. Louis area facility is located at 8605 Herrington Court in Horine, Mo., in Jefferson County, about 30 miles south of St. Louis. The plant employs 260 workers, of which 50 are salaried, Kevin Lowery, spokesman for Alcoa, told the Business Journal. Lowery said the plant is operating as normal and will continue to manufacture foil products.

The company added that it has conducted a portfolio review of its business and the markets they serve with an eye toward weeding out underperforming assets. It said it would divest businesses in specialty chemicals and packaging equipment, architectural products and commodity automotive fasteners.

Some of those businesses include foil facilities in St. Louis and Russellville, Ark., and some fabrication operations in South America. The company markets consumer brands including Reynolds Wrap foils and plastic wraps, Alcoa wheels and Baco household wraps. It employs 127,000 employees in 38 countries.

The businesses generated about $1.3 billion in 2002, Alcoa said. Proceeds from the sales will be used primarily to reduce debt and to increase flexibility for future acquisitions.

Alcoa selling four Arkansas plants, pledges to keep them open

Posted on Wed, Jan. 08, 2003

Miami Herald, FL

CHUCK BARTELS

Associated Press

LITTLE ROCK - Alcoa Inc. announced Wednesday that it would sell Arkansas plants in Bauxite, Magnolia and Springdale, in addition to a Russellville facility that has been on the block since November.

The company pledged to keep the plants running until buyers can be found. The plants employ nearly 1,500 people.

Pittsburgh-based Alcoa announced Wednesday that it would shed 8,000 jobs companywide, and that it generated a greater-than-expected loss for its fourth quarter.

Mike Cooper, an Alcoa regional spokesman based in Round Rock, Texas, said the company is working with Gov. Mike Huckabee and the state Economic Development Department to keep the plants operating.

"This is not a plant shutdown notice," Cooper said. "This is a notice of intent to sell, and that we will continue to operate as we are.

"These are good plants with outstanding people. We will do what we have to support that until such time s a buyer is found."

Cooper said the company would work with any buyers to "support the employees at the location."

The Magnolia and Springdale plants make architecture products. The category includes a range of items, from stadium seating to scaffolding to interior products.

At Magnolia, where 625 people work, the plant makes bath enclosure systems, among other items. At Springdale, its 600 workers make window grid systems and other products, Cooper said.

The Bauxite plant makes specialty chemicals and employs 210 people.

The Russellville plant has 50 workers that make commercial foil for businesses such as restaurants.

The company also lists Arkansas plants in Arkadelphia, Hot Springs and Jones Mill.

Alcoa is the world's largest aluminum producer. The company said Wednesday it is cutting its global work force by about 6 percent.

Aluar operated at 98% of capacity in 2002

01/08/2003 - Source: BNamericas, Latin Trade

Argentine aluminum maker Aluar produced 98% of total installed capacity of 265,000t last year, company executive Salvador Cacace told BNamericas. Sales, including alloy products and other goods, came in at 269,000t, he said. The company, which operates a primary aluminum smelter in the southern city of Puerto Madryn, in Chubut province, produced 254,000t of the metal in 2001. It also made another 81,000t of manufactured and semi-manufactured aluminum products. Cacace said Aluar exported over 80% of its production in 2002, or more than 220,000t. Last year was generally positive for the company, he added, as it remained profitable and output levels complied with international contracts on time and to specifications.

The company was also up-to-date on capital and interest payments related to a 1997 expansion program, he said. "This allowed for an important part of the debt to be amortized in 2002," Cacace said. Aluar satisfied almost all the depressed domestic demand for aluminum last year, substituting for imports given the devalued local peso currency.

EXPECTATIONS FOR 2003: This year the company expects to keep output at about 2002 levels as supply contracts abroad have already covered most planned production. But Aluar will still be able to meet an expected rise in domestic demand, Cacace said. Aluar is expecting overall demand for aluminum products to pick up due to two factors. Firstly, some exporters see opportunities for product placement that did not exist a year ago, and secondly, import substitution on account of the weak peso is causing local manufacturers to look for raw materials at home rather than rely on expensive imports. "These two elements are motivating industrial output - exports and import substitution," the executive said. Aluar is owned 70% by the Madanez Quintanilla family and 25% by a range of private investors, while 5% of its shares are quoted on the Buenos Aires stock exchange. The company had been considering another expansion to take output up to some 400,000t/y.

Nalco's full expansion seen delayed

Times of India, India ,REUTERS[ WEDNESDAY, JANUARY 08, 2003 02:54:49 PM ]

MUMBAI: Country's second-largest aluminium maker Nalco will take more time to complete an expansion of its smelter due to a delay in the arrival of some machines and equipments, a top industry source said on Wednesday.

State-run National Aluminium Company or Nalco, which is raising its aluminium capacity by 50 per cent to 345,000 tonnes a year, is now likely to finish the project only by November, or a year later than earlier planned, he said.

The company has nearly finished half of the planned capacity addition, which would go on stream next month, he said.

Nalco officials, reached by Reuters, said they could not talk because of a privatisation process that is underway.

Government officials were not immediately available for a comment.

"The delay is mainly due to the failure of an Indian firm in supplying equipments for its new power plant on time," the source said on condition of anonymity.

Another industry source said Nalco's aluminium output would rise to 243,000 tonnes in the current year to March, from 232,000 tonnes in 2002. He forecast the output to reach 300,000 tonnes in 2004.

Exports are expected to top 150,000 tonnes in 2004, up from an estimated 120,000 tonnes in 2002/03, he said.

Kaiser/Valco Meditation Breaks Down

AllAfrica.com, Africa, Accra Mail (Accra), & GhanaWeb, Ghana

http://allafrica.com/stories/200301090346.html

http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID31347

January 10, 2003

Posted to the web January 9, 2003

Accra

The Ministry of Energy has announced that mediation with representatives of Kaiser Aluminum and Volta Aluminum Company (Valco), its Ghanaian subsidiary, which operates an aluminum smelter in Tema, Ghana has broken down. A press release from the Ministry said the government would soon announce the consequential actions following from the breakdown of mediation.

A high-powered Ghana government delegation led by the Minister of Energy Mr. Kan Dapaah, traveled to the US capital, Washington, DC for the mediation, which started on Monday, January 6, 2003 under the supervision of the eminent American Jurist, Judge Steven Schwebel, one time president of the International Court of Justice at the Hague, Holland.

Other members of Ghana delegation were the Nana Akufo Addo, Attorney General and Minister for Justice, Dr Charles Wereko Brobby, Chief Executive of the Volta River Authority, Mr. Alan Kyeremanten, Ghana's Ambassador to the US, and other officials together with its lawyers from the prestigious US law firm, Le Boeuf, Lamb, Greene & MaCrae.

Valco's operations in Ghana have in recent years been subsidized to the detriment of the commercial viability of the Volta River Authority and this situation, according to the Ministry of Energy, is no longer tenable. "After 35 years in Ghana, Valco continues to insist that it should be treated in a unique category and allowed to pay rates for power that are far below the cost of providing that power in Ghana. It costs the Volta River Authority 6.5 US cents/kWh to produce electricity from its system. The ordinary Ghanaian pays 7.8 US cents/kWh. Up till today, Valco has been paying 1.1 US cents/kWh and has resisted efforts make it pay a more realistic price reflecting the current costs of producing power in Ghana."

The release said the current level of the Volta Lake, which historically has been used to supply power to Valco, is so low that it can no longer meet Valco's power demands without posing significant threats to the safety and integrity of the Akosombo hydroelectric plant. Ghana's power system now comprises a significant thermal component because hydro energy is no longer sufficient to meet the needs of Ghana and Valco together. Today more than 65% of Ghana's power generation comes from thermal sources that burn light crude oil at great cost.

"Valco has failed to see the new realities and insists that power be sold to it today at rates that pretend that Ghana's power is produced exclusively from cheap hydro sources, as it was when it first started operations in Ghana about 35 years ago. The power contract between VRA and Valco, which regulates the sale of power to Valco, expired in 1997 and it has still not been possible to conclude the negotiations of new one."

The Mediation formed part of the attempts to reach a new agreement on a new power contract.

The release said Ghana recognizes Valco's role as long-term investor in Ghana and in this light was prepared to allow more time for the mediation to succeed, but regrettably, this was not possible.

Ghana's energy crisis hurts aluminium production

GhanaWeb, Ghana

As electricity gets increasingly scarce in Ghana, the country's main energy consumer, the US-owned Valco aluminium smelter, is obliged to curtail its production. The dispute over reduced power allocations could however end up in court.

The state-owned Volta River Authority (VRA), Ghana's principal energy producer, had to give a reduced power allocation for 2003 to its main client, the Valco aluminium smelter. The reason given was a drought in parts of Ghana, which had significantly reduced the operating level of the Volta hydroelectric dam at Akosombo. Electricity supply to private customers also has suffered during the last months and remains insecure for 2003.

The Texas-based Kaiser Aluminium Corporation, which owns 90 percent of the Valco smelter, in a statement says that the reduced power allocation would support "operation of approximately one-and-one-half potlines at Valco, as compared to Valco's current power allocation that supports the operation of three potlines. As a result, Valco has begun the process of reducing its line level."

Kaiser has objected to this 2003 allocation and to a previous 2002 power curtailment and intended to "seek declaratory relief and the recovery of monetary damages in respect of the curtailments," the corporation, which currently is filed for Chapter 11 bankruptcy protection, informed.

Valco was scheduled to begin mediation with the VRA and the government of Ghana today, Kaiser says. In addition, Valco and Kaiser had filed for arbitration with the International Chamber of Commerce in Paris against both the VRA and the government of Ghana.

Valco has five potlines each having an annual production capacity of approximately 40,000 metric tonnes. Valco operated approximately four potlines in 2000 and 2001. In March 2002, the facility reduced the number of operating potlines from four to three because the VRA reduced the power allocation to the facility.

Curiously, the establishment of the Valco smelter had been one of the prerequisites for the Volta River Project in Ghana, which led to the Volta hydroelectric dam and the VRA.

As the hydroelectric project was realised in the late 1950s, energy consumption in Ghana was too small to justify the project. Then-President Kwame Nkrumah personally convinced the US administration of President Dwight Eisenhower to use his influence to have Kaiser invest in an aluminium smelter in Ghana. Kaiser was and is one of the leading American aluminium producers.

The Volta hydroelectric power plant has since then provided the Valco smelter with very low priced energy - a necessity for aluminium production. During the last decade, however, a run-down electricity network and an ever-growing number of private and corporate consumers have made electricity to grow scarce in Ghana.

Source: afrol

Major Power Crises Imminent, VALCO THREATENED BY SHUT-DOWN

GhanaWeb, Ghana ,General News of Thursday, 09 January 2003

VRA DEPEND ON THERMAL PLANTS

The Volta Aluminium Company (VALCO) was expected to shut down two of its 20 pot-lines at the close of yesterday upon the demand of the Volta River Authority (VRA) whose hydro plant is operating at an unappreciable state as a result of the low water level of the dam.

According to the CHRONICLE, at least 600 of the present total workforce will be laid off.

Source: CHRONICLE

VALCO prepares workers minds for redundancy.

GhanaWeb, Ghana,General News of Thursday, 09 January 2003

Following the shut down of Line Four as a result of the reduction in power supply from the Volta River Authority (VRA) to Volta Aluminium Company (VALCO) on 31 December 2002, management of VALCO has initiated processes to reduce manpower requirements for a two-line operation.

The reduction exercise will be done in line with the provisions of VALCO Collective Bargaining Agreement and conditions of service for unionised and non-unionised employees, a VALCO source said on Wednesday.

The source told the Ghana News Agency (GNA) that VALCO had not yet identified any employee to be affected by the manpower reduction exercise. ''Management team is working on relevant details to ensure that the right things are done to give VALCO the best post-reduction organisation,'' the source noted.

''In line with this, an evaluation and force ranking process to be used will be based on merit, potential skills in current job, physical and mental ability to assume other jobs and conduct. Length of service will also play a role,'' the source said.

The source said, in the meantime, management is working with the union and other stakeholders to minimise the impact of the capacity and manpower reductions on employees and the company, having regard to the difficult cash flow situation of VALCO.

VALCO, that has 950 employees, reduced its workforce twice last year, March and October, because of low prices of aluminium in the world market coupled with reduction in operation capacity. The company is now working on two pot lines.

Alcoa: No Aluminum Cuts in Restructuring

ABC News, Jan. 9

— NEW YORK (Reuters) - Alcoa Inc. <AA.N>, the world's largest aluminum maker, said Thursday it had not identified any metal production curtailments in its sweeping restructuring that will eliminate 8,000 jobs and sell off struggling businesses.

Alcoa announced Wednesday it is seeking to cut costs and overhaul its business as aluminum prices have been pressured by oversupply and poor demand from companies that use the light metal in airplane parts and gas turbine components.

"If we were to announce any curtailment, that would be so explicit and we give the details of how much metric tonnes would be coming down," an Alcoa spokesman told Reuters.

As part of its restructuring, the Pittsburgh-based company will cut about 6 percent of its total work force. Most of the 8,000 job cuts will occur in 2003 and come from Alcoa's U.S. smelters and businesses serving the aerospace, gas turbine and automotive industries.

A weak U.S. economy and the Sept. 11 attacks are hurting big aluminum customers like airlines and utilities. Aluminum producers like Alcoa also are facing increasingly stiff competition from overseas producers, such as China.

Alcoa has responded by moving to streamline production and cut energy and labor expenses in a bid to improve profitability.

To account for its latest job cuts and restructuring, Alcoa took a fourth-quarter charge of $95 million.

"We have not given specifics about individual locations involved in the restructuring," the Alcoa spokesman said.

He added that Alcoa's operating costs at its U.S. smelting operations were not as competitive with other facilities within its worldwide system, and it sought to bring its domestic smelting costs down.

"Every facility has to be competitive. In the U.S., the only real business that we outlined in the restructuring was our smelting operations," he added.

Morgan Stanley metals analyst Wayne Atwell, who cut his 2003 earnings outlook on Alcoa on Thursday, said Alcoa was expected to divest certain units in special chemicals, architectural products, automotive fasteners, and foil and packaging equipment.

Three months aluminum <MAL3> on the London Metal Exchange traded at $1,360 a tonne, or about US$0.616 cents a lb, on Thursday, down from $1,754, or 80 cents a lb, in 2000.

Alcoa woes knock back Alumina

Daily Telegraph, Australia, 10jan03

SHARES in WMC spin-off Alumina Ltd fell almost 3 per cent yesterday after joint-venture partner Alcoa reported a bigger-than-expected quarterly loss overnight.

Alcoa, the world's largest aluminium producer, posted a fourth-quarter net loss of $US223 million ($389 million).

The US company has been hurt by weak worldwide aluminium demand and charges for a sweeping restructuring that will include 8000 job cuts and the sale of struggling businesses.

Alumina shares closed 14c weaker at $4.88.

Alumina is a global alumina producer and holds 40 per cent of Alcoa World Alumina and Chemicals.

A Sydney analyst said investors were bailing out of Alumina for fear of longer-term lower earnings at Alcoa.

"The only thing that Alumina makes money out of is from Alcoa's operations and their dividends . . . they don't generate any income from anything other than what Alcoa generates," he said.

SUAL Buys Smelter Off RusAl

Moscow Times, Russia, Friday, Jan. 10, 2003. Page 6

Reuters Russia's second-largest primary aluminum producer, SUAL, said Thursday it had agreed to buy sector leader Russian Aluminum's 32 percent interest in the Nadvoitsy smelter to take control of the plant.

SUAL spokesman Alexei Goncharov gave no further details of the deal.

RusAl was not immediately available for comment.

SUAL already owns 37 percent of Nadvoitsy, Russia's eighth-largest aluminum smelter located in Karelia on the Russian-Finnish border.

It also has a deal with another major shareholder, board chairman Alexei Bezrukov, to join forces to gain voting control of the plant with a joint 60 percent stake.

RusAl acquired its stake in Nadvoitsy last November.

The plant, built in 1954, produced around 74,000 metric tons of aluminum in 2002.

Nadvoitsk Aluminum Works board of directors elected.

Analytical Information Agency, Russia, 09/01/2003

Holders of Nadvoitsk Aluminum Works (NAZ, Karelia) elected their BOD at Jan. 9 extraordinary meeting, Sual Holding (60% stake) said.

The meeting was called as Sual competitor - Russian Aluminum (RusAl) - had gained 32% stake in the works.

As elected, 6 from 7 seats on the board of directors were taken by Sual reps.

Nadvoitsk Aluminum Works was established in 1954. Its project capacity is 67,000 tons of aluminum on year. 2001 aluminum production totalled 72,000 tons, making the works Russia's 8th primary aluminum maker.

Stock capital stands at 28.38 mln rbl; stock par is 0.5 rbl.

Oil Search Says Papua New Guinea Gas Pipeline Talks in `Advanced' Stage

By Jason Gale, Bloomberg Australia

Sydney, Jan. 10 (Bloomberg) -- Oil Search Ltd. said it's in advanced talks to sign more buyers for natural gas from its $3.5 billion Papua New Guinea pipeline, as it tries to make up for the loss last month of foundation customer Australian Gas Light Co.

Oil Search shares climbed 6.7 percent yesterday on talk it may sign Alcan Inc., the world's second-largest aluminum maker. After being asked by the Australian Stock Exchange to explain the jump in its share price, Oil Search said it was aware of reports Alcan may buy gas, but it wasn't appropriate to comment.

Exxon Mobil and its partners have so far signed provisional agreements with three customers in Queensland, Northern Territory and southeastern Australia for the gas. CS Energy Ltd., TXU Corp.'s Australian unit and M.I.M. Holdings Ltd. have agreed to buy as much as 75 petajoules a year in total.

The partners are in ``intense negotiations with a number of customers in Queensland, the Northern Territory and the southern states,'' said Oil Search, which owns 45 percent of the project, in the statement. ``These negotiations have reached an advanced stage with a number of customers. The company will continue its stated policy of announcing the signing of gas contracts and term sheets as and when they are signed.''

Oil Search shares, which gained 4 cents to 64 Australian cents yesterday, rose as much as 2 cents, or 3.1 percent, to 66 cents on the exchange today. The shares were unchanged at 64 cents at 12:05 p.m. Sydney time.

Domestic Suppliers

Australian Gas Light, which had earlier agreed to buy up to 40 petajoules a year of gas from the project, decided three weeks ago to buy the fuel instead from domestic suppliers. The pipeline needs between 100 and 150 petajoules a year of firm gas sales to proceed.

Alcan said in December it may buy 40 petajoules a year of gas for its aluminum refinery at Gove, Northern Territory. Alcan would use 25 petajoules at its existing refinery and a further 15 petajoules for a possible expansion of the plant, said David Sutherland, director of projects and technology at Alcan South Pacific. Sutherland couldn't be reached for comment today.

Rio Tinto Group's Comalco Ltd. unit said it's also talking about buying gas from the pipeline for a $750 million alumina plant it's building at Gladstone in Queensland. Comalco may buy gas together with Energex, a Queensland utility, analysts said.

Port Moresby, Papua New Guinea-based Oil Search said investor interest in energy stocks has increased following a rise in oil prices caused by heightened tensions in the Middle East and the prospect of a war with Iraq.

Ghana's Valco says cuts aluminium output further

Reuters, 01.10.03, 10:22 AM ET

By Kwaku Sakyi-Addo

ACCRA, Jan 10, (Reuters) - Aluminum production at the Volta Aluminium Company (Valco) in Ghana is down to a fifth of its 200,000 tonnes per year capacity following a reduction in power supply to the plant, the company said on Friday.

"We closed down one potline on December 31 and shut down another yesterday (Thursday)," Dave Thomas, Valco managing director, told Reuters on Friday.

"Prior to that we were operating three of our five potlines."

The cut comes as talks in the United States over tariffs between the Ghanaian government and Valco, a unit of U.S. firm Kaiser Aluminum Corp <KLUCQ.OB>, collapsed this week, according to a statement from the Ghanaian authorities on Friday.

Thomas said the state-run power producer Volta River Authority (VRA), gave them notice late last year of an impending power reduction necessitated by the low operating level of the Akosombo Dam, which supplies power to Valco.

"We have no idea how long this will go on for," he said.

Valco was established 35 years ago and is located at Tema, the main port and industrial city in the former British colony. It has been the VRA's single largest customer.

Valco's guarantee of power purchases at cheap rates facilitated the construction of the Volta Dam, a 912 megawatt hydro-electric plant at Akosombo, 100 km (63 miles) north-east of the capital.

Ghana said on Friday it wants Valco to pay more than the 1.1 cents per kilowatt hour (kWh) it currently pays, saying it cost 6.5 cents to produce one kWh of electricity.

The ordinary Ghanaian pays 7.8 cents per kWh. This situation is no longer tenable. Valco has resisted efforts to make it pay a more realistic price reflecting current costs of producing power in Ghana," said the government statement, which was signed by Energy Minister Albert Kan-Dapaah.

It said more than 65 per cent of Ghana's power came from thermal sources which used light crude oil as hydro-energy was no longer sufficient to meet the needs of both Ghana and Valco.

"Valco has failed to see the new realities, and insists that power be sold today at rates that pretend that Ghana's power is produced exclusively from cheap hydro sources as it was when it first started operations in Ghana 35 years ago," it said.

Thomas declined to comment on the collapse of negotiations in Washington earlier this week between the Ghanaian government and Kaiser Aluminum. Valco employs nearly one thousand people.

He would not say categorically if Valco would lay off staff: "We're in the process of evaluating our labour situation."

Copyright 2003, Reuters News Service

Alcoa board signs off on new aluminum smelter in Iceland

Miami Herald, FL, Associated Press

Posted on Fri, Jan. 10, 2003

PITTSBURGH - Alcoa Inc. Friday said it has approved building an aluminum smelter and power plant in Iceland, despite protests by environmentalists.

Alcoa, the world's largest aluminum producer, said the project will be completed in 2007 at a cost about $1.1 billion. The project still needs approval by the Icelandic government.

The facility is part of Alcoa's strategy to lower production costs. The Pittsburgh-based company said it will be re-evaluating the viability of its smelters in the United States, which rising energy and labor costs have made "less globally competitive."

In a press release Friday, Alcoa said the Iceland facility is being designed to be "the most environmentally friendly aluminum production facility in the world."

Last month, environmentalists protested outside Iceland's parliament against the project. They claim it will ruin one of Europe's last wildernesses, an area of glacial rivers, volcanoes and canyons populated by reindeer, whooper swans and pink-footed geese.

Alcoa has said it was working with conservationists to ensure that the environmental impact would be minimal.

The project involves damming two rivers to create a 22-square-mile reservoir above Vatnajokull, Europe's biggest glacier, in the Eastern Highlands. The power will be used to drive an aluminum smelter on the coast. The new facility will employ about 450 workers.

Alcoa and Icelandic Premier David Oddsson have said the project would help boost the economy in a declining area, adding 300 service-related jobs and more than 1,800 temporary construction jobs.

Alcoa decides to build 322,000 T Iceland smelter

Reuters AlertNet, UK ,10 Jan 2003 19:08

By Sigga Hagalin

COPENHAGEN, Jan 10 (Reuters) - Alcoa Inc., the world's biggest aluminium producer, said on Friday it would invest $1.1 billion in a 322,000 tonnes per year smelter in Iceland, a bigger facility than it had previously indicated.

The project has aroused strong opposition from local environmentalists including pop singer Bjork.

"The Fjardaal plant is an important element of Alcoa's growth strategy in primary metals," Alcoa Chief Executive Alain Belda said in a statement.

"Alcoa's Fjardaal aluminum facility is part of the most extensive single investment in the history of Iceland, and is scheduled to begin production in 2007," Alcoa said.

Construction of the smelter, expected to start in 2005, has met strong opposition from environmentalists and it still needs approval from Iceland's parliament.

A few hours earlier, the board of directors of Landsvirkjun, Iceland's national power producer, decided to give its chief executive permission to sign a 40-year contract with Alcoa's Icelandic subsidiary, Fjardaal sf., and commit to selling the firm 4,704 gigawatt hours of electricity.

The price of the power was confidential, Landsvirkjun said.

Next, Alcoa will sign contracts with Landsvirkjun, Iceland's Ministry of Industry and the municipal authorities at the construction site.

The deal will not be finalised until the beginning of February, when Iceland's parliament is to decide on whether to approve construction of the smelter.

The smelter has caused controversy in Iceland, mostly because of a giant hydropower plant Landsvirkjun plans to build in the Icelandic wilderness to power it.

The plant will dam two of the country's largest glacial rivers and turn valleys and canyons in the country's highlands into reservoirs.

POP DIVA BJORK ATTACKS PLAN

The environmentalists received an influential ally on Thursday, when Bjork criticized the construction plans in a letter to Iceland's largest newspaper, Morgunbladid, calling instead for a natural reserve in the area.

"We have the material for one of the world's most beautiful national parks sitting in our lap," Bjork said. "Dams serving aluminium smelters are selfish temporary solutions."

However, the smelter and the power plant are expected to have a great impact on Iceland's small economy.

The new smelter would nearly double aluminium smelter capacity in the North Atlantic island, where the abundant resources of geothermal energy and hydro-electricity have attracted metals producers to set up operations.

"As we explore new projects around the world, we will continue to reassess our existing smelting portfolio, particularly in the United States, where escalating energy and labor costs have made many smelters less globally competitive," CEO Belda said.

Iceland's Ministry of Finance said on Thursday it expected the combined construction of Alcoa's smelter and the expansion of another smelter in Western Iceland to boost Iceland's economic growth up to eight percent in the construction period, 2003-2006, compared with 0.25 percent in 2002.

Year-on-year inflation could also rise up to eight percent, compared with the current two percent, and unemployment would fall below one percent, compared with 2.8 percent in November 2002, according to the ministry.

Alcoa said the plant would offer some 450 jobs and generate 300 more in service-related industries as well as additional ones in the construction industry.

Chinalco '02 Pretax Profit Falls To CNY3.24B

CHINA PRESS: Yahoo News - 09 Jan 2003

BEIJING (Dow Jones)--Pretax profits for Aluminum Corp. of China, the world's third largest alumina refiner, dipped to 3.24 billion yuan ($1CNY8.28) in 2002 due to lower world prices, the China Daily reports.

The state-run company, known as Chinalco, is the parent of New York- and Hong Kong-listed Aluminum Corp. of China Ltd. (ACH), known as Chalco.

Chinalco Vice President Luo Tao attributed the slide in profitability in 2002 to a fall in aluminum prices to their lowest level since 1995. Higher prices for raw materials was also a contributing factor.

The report didn't provide a comparison with the 2001 pretax result, but Luo said the pretax profit achieved in 2002 followed "digesting negative elements worth CNY1.33 billion."

Chinalco reported 25% growth in net profits to CNY2.15 billion in 2001, despite a dismal world price for aluminum. The company's production of alumina rose 14% year on year to 5.4 million metric tons in 2002, while production of aluminum rose 4.5% on year to 742,000 tons, the report added.

Newspaper Web site: http://www.chinadaily.com.cn

Bauxite threat

Jamaica Gleaner, Jamaica

published: Saturday | January 11, 2003

Balford Henry, News Editor

JAMALCO SAID yesterday that it is still unable to determine the impact of the decision by parent company, Alcoa Inc., to accelerate cost reduction initiatives and cut some 8,000 jobs worldwide.

Alcoa said in a release on Wednesday that it planned to restructure its operations, globally, including those experiencing negligible growth particularly in Europe and South America, and that this would affect approximately 8,000 employees at over 70 of its operations, worldwide.

The specific operations to be affected were not named, but there are fears that Alcoa's local investment in Jamalco may suffer from the changes in terms of jobs, as well as the proposed US$115 million expansion at Jamalco, Clarendon.

"We are unable to determine the impact this will have on Jamalco's operations, as we are still awaiting information from our Corporate Office," a statement from the office of Jamalco's general manager, Jerome Maxwell, yesterday stated. Jamalco said that it would be in a better position to give details on Alcoa's proposals in the next few weeks.

Minister of Information, Senator Burchell Whiteman, said yesterday that he did not expect any problems in the short term, but that he could not speak to the long term effect as he had not been informed.

NWU vice-president, Norman DaCosta, suggested in a statement on Thursday that the decision was likely to Jamalco, "as the company will be under increased pressure to become more cost effective."

He said that although most of the job cuts would be in Europe and South America, Jamaica would not be immune from such adverse developments, "which is part of the global industry's process of rationalisation."

"We are particularly vulnerable, because none of the local alumina refineries are currently within the top 50 per cent of the world producers," he said.

But, Jamaica Bauxite Institute's (JBI) general manager, Parris Lyew-Ayee, said that, to the best of his knowledge, Alcoa had not changed its mind about the US$115 million expansion it had proposed in collaboration with the Jamaican government, its partner in Jamalco.

Last April, Prime Minister P.J. Patterson announced that his administration and Alcoa would jointly invest US$115 million in the Jamalco alumina refinery, under an agreement which also ended the 28-year-old bauxite levy. The agreement is for the Jamalco plant to be expanded by 250,000 tonnes, pushing its apacity from the current one million to 1.25 million tonnes.

Jamalco is a 50/50 partnership between Alcoa Inc. and the Government of Jamaica with Alcoa as the managing partner.

Alcoa was the first company with which the Government entered into negotiations to hammer an arrangement to end the controversial bauxite production levy. The levy was imposed by the Michael Manley administration in 1974, when bauxite production peaked at 15 million tonnes. Production dipped sharply after that and has only rebounded recently.

Alcoa Inc. of the US is the world's leading producer of primary aluminium and alumina and is active in all major aspects of the industry. However, sales for the fourth quarter were $5.06 billion compared to $5.10 billion in the same quarter of 2001. Sales for 2002 were US$20.26 billion, compared to US$22.50 billion for 2001.

It announced that certain businesses will be divested and the proceeds used primarily to reduce debt and increase flexibility for future growth opportunities in its core businesses.

Full details of the proposals are likely to be revealed when Alcoa has its next quarterly analyst meeting on January 23.

Kaiser cuts more at Valco:

Platts Metals Week * 13-Jan-2003 Kaiser cuts more at Valco: Kaiser Aluminum took another potline down last week at its 90%-owned Volta Aluminium Co Ltd (Valco) smelter in Ghana, cutting total aluminum output there to 40,000mt/year, after mediation with the Volta River Authority(VRA) was unsuccessful, said a Kaiser spokesman. But he said, "we still welcome the opportunity for additional discussion with the VRA." Only one line is operating out of a total of five lines at the 200,000mt/year smelter. In early December, Kaiser had three lines operating, but took one down on Dec 31 and the second on Jan 8. In late December, Kaiser was notified by the VRA of a reduced power allocation for 2003.

Kaiser won't restart Mead
Loss of 1,200 jobs and $750 million is permanent

www.spokesmanreview.com John Stucke ,Staff writer

Kaiser Aluminum Corp. has surrendered any hopes of restarting its Mead smelter.The financial cost: the permanent loss of 1,200 jobs and $750 million coursing through the regional economy.

Kaiser always sounded optimism during the past two years when asked whether Mead may restart. It kept a skeletal crew employed at the expansive smelter _ ready to pull the trigger on restart should aluminum prices bounce high enough to make Mead profitiable.

But today, CEO Jack Hockema said the company can no longer afford the wait, and will take an approximately $143 million write-down on the property.

``We had previously hoped that conditions would be right for at least a partial restart of Mead in the first quarter of 2003,'' Hockema said. ``But that does not apear to be likely.''

He didn't rule out that World War II era smelter may someday restart, but for now, Kaiser is unplugging.

Security guards, an engineer and an environmental manager will be the only ones reporting to work.

For the full story, see Tuesday's Spokesman-Review or Spokesmanreview.com.

Kaiser will mothball Mead smelter
www.krem.com 01/13/2003, Associated Press

Kaiser Aluminum said Monday it will mothball its smelter in suburban Mead, dashing hopes that the plant would reopen and employ some one thousand workers.

Kaiser has kept the plant in a standby status since January 2001, at a cost of $4 Million a year.

company president Jack Hockema says low prices for aluminum and high prices for electricity don't look like they will change soon.

He says the Mead smelter could be restarted if conditions improve.

Only about 25 Steelworkers were working at the smelter now.

Kaiser in mid-December also said it was selling a smaller smelter in Tacoma as the company struggles to emerge from Chapter 11 bankruptcy protection.

There is some good news if the plant closes. At least 30 more workers would qualify for early retirement.

Russian Aluminium to Build Can Plant in Leningrad

Rosbalt, Russia

Russia's Sberbank to Open Credit Line to Russian Aluminium to Build Can Plant in Leningrad Region

MOSCOW, January 13. The Savings Bank of Russia, called Sberbank for short, will open a USD 70 million credit line for a term of 5 years for the Russian Aluminium group to build an plant to produce aluminum cans in the town of Vsevolozhsk, the Leningrad Region. Russian Aluminum is already actively using the long-term loans previously issued to it by Sberbank.

The rated annual capacity of the new plant will amount to 1.7 billion 0.5 litre aluminum cans and 1.5 billion lids. Agreements for the supply of the principal equipment have been signed with the leading German and American manufacturers. Aluminum foil bands for cans will be produced by the Samara metallurgical Plant and partially imported. The consumers will include leading breweries in the north-western and central parts of Russia.

The joint stock Savings Bank of Russia was chartered on June 20, 1991. Its founder and principal stockholder (over 60%) is the Central Bank of the Russian Federation. Other stockholders include over 230,000 companies and individuals

Nigeria confronts aluminium smelter shareholders

Forbes, Reuters, 01.13.03, 8:19 AM ET

LONDON, Jan 13 (Reuters) - Nigeria is heading for a showdown with private shareholders in its shuttered aluminium smelter Alscon on January 21, a government spokesman said on Monday.

Its privatisation agency, the Bureau for Public Enterprises (BPE), is selling 51 percent out of its 70 percent stake in the Aluminium Smelter of Nigeria, and was due to appoint a preferred bidder earlier this month.

"We're having some problems with the other shareholders and we're going to try to solve them at an extraordinary general meeting," the spokesman told Reuters. "It looks as if the other shareholders want to block our new resolutions agreed for the sale."

He declined to reveal the nature of the resolutions or give details as to the objections, but said that the other shareholders had expressed worries about their future financial exposure.

The other shareholders are Ferrostaal AG, a unit of German trucks group MAN <MAN.G>, which has a 20 pct holding in Alscon, while 10 pct is held by world number one aluminium producer Alcoa (nyse: AA - news - people).

The two companies have a combined interest estimated at around 15 billion nairas ($117 million) in Alscon, while the Nigerian government has ploughed about 300 billion nairas (over $2.3 billion) into the plant since it was established in 1989, the BPE spokesman said.

The three suitors in the hunt for the 51 pct stake in the 193,000-tonnes-a-year smelter include Alcoa of the United States, Russian Aluminium (RusAl) and private Swiss-based Glencore International.

A spokesman at Ferrostaal declined to comment on the meeting next week but said that it was just a "nornal part of the procedure" in the privatisation process.

Nigeria's western creditors have previously criticised the smelter as a waste, and earlier plans to revive the plant, which was shuttered in June 1999, have failed.

The plant suffered a major setback in July 2002 when a deal with UK-based technical partner Billiton <BLT.L> collapsed.

Copyright 2003, Reuters News Service

The land Aluminum forgot By David Brooks

AMM.com - Top Stories - Jan. 10, 2003

NEW YORK, Jan. 10 -- For the first time ever last year, the United States produced less aluminum than its northern neighbor. The U.S. share of world production slipped to 15.46 percent in 2002 from 36.45 percent in 1980 as producers switched to new, lower-cost facilities. Just as Pittsburgh is no longer the epicenter of all things steel, so the Pacific Northwest may never recover from the smelter shutdowns forced upon it byrocketing power prices in 2001. But out of every downturn arises an opportunity. While the primary aluminum industry in the United States appears to be shrinking by the day, there are those who stand to benefit from the changing landscape. Foremost among the beneficiaries could be aluminum traders. U.S. aluminum consumption continues to trend upwards and, despite a couple of poor years, still was 500,000 tonnes greater in 2001 than it was in 1992. By comparison, U.S. production of primary aluminum tumbled by more than 1.3 million tonnes, leaving a supply deficit of about 2.5 million tonnes compared with just 500,000 tonnes in 1992. That deficit is expected to increase further over the next few years--and traders increasingly will be relied upon to bring the market into balance. Once upon a time, traders who imported struggled to compete with the big domestic producers; today, the playing field has been leveled. U.S. producers--notably Pittsburgh-based Alcoa Inc.--still produce huge quantities ofmetal. However, if they bring it into the United States they face the same handicaps in terms of freight costs as other importers. "It was always hard to compete when Alcoa was just 50 miles down the road from the consumers. I think the decline (of the U.S. industry) will create more opportunities for traders. A lot of what we do is importing from Russia, Australia and South America, and there are now greater opportunities to do that competitively," one U.S.-based trader told AMM. As domestic supplies diminish and imports increase, there inevitably will be an adjustment period for consumers as well as for traders and producers. Jim Walters, who sources metal for Hydro Aluminum's U.S. operations, said that consumers needed to look at where they were going to source material from in thefuture. "It's not that there won't be billet or ingot available," he said. "But they (consumers) shouldn't expect to be able to get it from the same domestic suppliers. We don't see the domestic smelter base growing." Consumers also might need to adjust to higher prices, or at least higher premiums. One of the key effects of the industry's migration away from the United States could be to increase premiums in the Midwest, according to traders. "That's a possibility, because you'll have less material with a naturalhome in the Midwest, so you'll have to ship it in, and that obviously has a cost," one trader said. Walters agreed with that assessment. "The more metal that comes in from outside (the United States), the greater the chance that premiums will go up," he said. But while regional premiums may be shaken up by the shift in production geography, London Metal Exchange aluminum prices are unlikely to be affected. "The global increase in production should keep prices down," a trade source said, adding that much of the new capacity would be low cost, which also should help restrain prices. Traders have not been the only beneficiaries. While some of the increase in imports is accounted for by overseas operations of the big North American producers, new players also have entered the game. For example, sources said that Russian Aluminium, the world's second-largest primary producer, shipped twice as much aluminum to the United States last year as it did in 2001, although actual figures were not available. "The competition is still stiff, but there are opportunities," one major international producer said. "It's still tough to compete in certain areas, particularly in the Northeast, because Alcoa and Alcan still have a major presence." Canadian heavyweight Alcan Inc. is based in Montreal. Despite their size and strength, even giants can be rattled in the current market. Last week, Alcoa announced a $233-million loss in the fourth quarter, with plans to slash 8,000 jobs and sell some non-core assets (AMM, Jan. 9). "Alcan is shipping a lot of their new Canadian output (from Alma in northern Quebec) to that region, which wasn't expected. But in other areas, there are better possibilities," the international producer said, noting that the Persian Gulf region, for example, offered opportunities. "The big integrated producers are now often buyers rather than sellers; in areas far away from their production it's possible to sell to them." Walters said that increasing imports would not be the sole solution to the U.S. aluminum deficit. "The changing market structure is something Hydro Aluminum (which has no primary U.S. capacity) has examined closely in recent years," he said. "Domestic supply is going to decline, or at least not keep up with consumption. So the gap will be made up by imports and secondary recovery. That's why we invested in two state-of-the art remelt plants," Walters said, explaining that the facilities in Hawesville (Kentucky) and Commerce (Texas) could produce primary-grade metal from secondary feed. "The energy consumption of the remelt facilities is far lower than that of primary smelters." When the new Commerce plant is up to full capacity, Hydro Aluminum will have 400,000 tonnes of aluminum production in the United States, all remelt. The increase in imports and secondary capacity should ensure that consumers facelimited problems securing supplies of ingot and billet. "Ingot is a global commodity. So, in theory, it wouldn't matter if there wasn't a tonne of primary capacity in the U.S.," analyst Lloyd O'Carroll said. Integrated producers, who consume more primary metal than anyone else, obviouslyare well placed to ensure their mills and presses continue to receive a smooth supply of metal. Some adjustments will be needed, however, analysts said. The likes of Alcoa will need to tweak its system, moving more metal around the globeand interacting with traders more than ever before. Independent rolling mills and extrusion producers also should be able to secure metal, even if they have to pay slightly higher premiums than in the past. Most observers believe, however, that increased premiums shouldn't impact the competitiveness of those who are forced to pay them, such as rolling mills and extrusion presses. "If Midwest premiums go up, it won't really impact the competitiveness of the mills because everyone is affected the same," Walters said. He added, however, that increased premiums would present a problem if prices rose to such an extentthat competing materials could make inroads into aluminum's markets. "But the premium is a small part of the overall price, and the long-term aluminum price (LME plus premium) should be competitive (with other materials) because of the scale advantages that the new smelters around the globe will bring," he said. While downstream industries don't expect to be greatly impacted by the decline of primary aluminum production in the United States, they are well aware that what's happened to the smelters could be a prelude to a similar pattern in theirown sectors. With time, as producers in developing countries improve their reliability and production standards, the competitive advantage held by U.S. downstream producers might also be eroded. Extrusion producers particularly are concerned. "We're already starting to see asimilar process of competition from abroad," a senior executive from one independent extrusion company told AMM. "We are in a niche market so we have some protection, but for those producing standard extrusion products, they are already seeing competition from China in particular. "The Chinese are selling at around 20 to 40 percent below where domestic producers can, so it's hard to compete," the extruder executive said. "They obviously have advantages in terms of labor costs, although squeezing out an extrusion isn't particularly labor intensive. They presumably pay similar amounts as we do for commodity aluminum, so the advantages must be in overhead and perhaps less-stringent environmental regulations." O'Carroll agreed that the domestic extrusion industry will come under increasingpressure from overseas competition. "There are certain standard items that you can do (overseas)," he said. "There are some Chinese extrusions coming in," adding that reliability of supply remained an issue for consumers. "A lot of thematerial comes in from China via (U.S. producer) Indalex (Aluminum Solutions Group, Bannockburn, Ill.). But Indalex can offer a guarantee that if there's a problem with the Chinese imports, they can supply you from their U.S. production. If you buy directly from China without a backstop, that's a risk." The independent extruder agreed that as large U.S. companies such as Indalex or Alcoa increase their presence overseas, concerns over reliability will be partially alleviated. "Consumers will feel more secure buying from China if Indalex or Alcoa is the producer," he said, adding that in the longer term more producers inevitably would relocate production to countries with lower production costs. "A lot of companies are evaluating the situation. Those that are big enough are going to do it because they know that if they don't, their competitors will." Although extruders are faced with increased international competition, rolling mills are in a more comfortable situation. While production of certain "standard" rolled products, such as can sheet, have begun to migrate out of the United States, examples of overseas mills like Samara and Garmco penetrating theU.S. market should remain the exception rather than the rule. "It's a totally different situation with mills," O'Carroll said. "Customers actually care whether you can deliver a coil in two days. These products aren't commodities, and consumers want things exactly how they ordered them." In addition, O'Carroll said that location was more vital for mills than it was for smelters. "You really need to be physically close to the customer," he said."The logistical aspects are so important. To make it work, you have to have large inventories close to market (in the United States), and that's expensive. Even if Alcoa is the supplier, it's still more difficult with production from overseas. Even Alcoa can't control what foreign governments do." By building relationships based on the promise of reliable service with customers and concentrating on niche products rather than commodity items, U.S. producers of aluminum products should continue to prosper in the years ahead, even if the output is predominantly rolled products and extrusions rather than billet and ingot. As one major international producer put it: "We have expansion plans for the U.S., which is a vital market. But we have no interest in primary smelter assetsin this country."

Alcoa board gives nod for $1B Iceland smelter

By Chris Evans AMM.com - Jan. 10, 2003 NEW YORK, Jan. 10 -- Alcoa Inc.'s board of directors has given the green light to the construction of a $1.1-billion smelter in eastern Iceland. Together with a power plant planned by national power company Landsvirkjun, the smelter is part of the most extensive single investment in Iceland's history, Alcoa said. The company said the Fjaroaal aluminum facility would begin production in 2007, producing 322,000 tonnes a year. The plant will produce 25-percent less than a smelter originally planned for the site by Norsk Hydro ASA, although it will be larger than the 295,000-tonne-per-year facility Alcoa signaled in July that it would build (AMM, July 22). Alcoa hinted that the Iceland project could lead to production cuts or shutdownsat existing facilities in the United States. "As we explore new projects around the world, we will continue to reassess our existing smelting portfolio, particularly in the United States, where escalatingenergy and labor costs have made many smelters less globally competitive," AlainBelda, Alcoa chairman and chief executive officer, said in a statement. "Across our entire primary metals portfolio, we are taking action to move our productionassets down the cost curve while maintaining return on capital targets." Last week, in announcing a $223-million fourth-quarter loss, the Pittsburgh-based company said it would ax 8,000 jobs and sell non-core assets (AMM, Jan. 9). A company spokesman declined to comment on exactly how much cheaper Fjaroaal would be to operate vs. U.S. smelters. He also refused to give a timetable for any potential shutdowns of U.S. smelting capacity, noting only that Alcoa would make "adjustments as market conditions warrant." In Iceland, the new smelter will provide about 450 jobs and generate approximately 300 additional indirect positions. Construction of the Fjaroaal aluminum plant is part of an overall economic plan by the Icelandic government to boost and diversify the local economy, which has seen declining employment and migration as traditional jobs in fisheries and farming declined. Fjaroaal, which means "Aluminum of the Fjords" in Icelandic, will be the most environmentally friendly production facility in the world, Alcoa claimed.

SUAL, Fleming to Join

Moscow Times, Russia, Wednesday, Jan. 15, 2003.

MOSCOW (MT) -- SUAL, Russia's second-largest producer of aluminum, is forming an international industrial group with London-based emerging market investing specialist Fleming Family, the companies said in a statement Tuesday.

SUAL president Viktor Vekselberg and Fleming Family managing director Roddy Fleming will sign an agreement to that effect on Wednesday, according to the statement.

Details of the partnership will be announced after the signing, SUAL spokesman Alexei Goncharov said.

British Government Supports Mozal Expansion

AllAfrica.com, Africa

January 14, 2003

Posted to the web January 14, 2003

London

The British Government has announced that it is to underwrite British investment in the expansion of the MOZAL aluminium smelter at Beluluane on the outskirts of Maputo.

The underwriting comes in the form of insurance against political risk provided by the Government's Export Credits Guarantee Department (ECGD). Through its Overseas Investment Insurance (OII), it will guarantee the safety of the British investment of 40 million pounds sterling (about 65 million US dollars) in the MOZAL expansion.

The investors are a syndicate of banks including Deutsche Bank, BNP Paribas and Societe Generale. The 40 million pounds sterling is to be put into the "Mozfund" which hopes to raise 155 million pounds sterling to buy inputs from South Africa for MOZAL-II. The insurance covers political risks in South Africa that could result in the non-repayment of the loan.

According to Britain's International Trade Minister, Baroness Symons "the MOZAL project has, to date, been a success story for Mozambique and the UK has played an important role through significant investment backed by ECGD".

MOZAL is being expanded to double its capacity to about half a million tonnes of aluminium ingots a year. At the current pace, the expansion will be completed in October 2003. It has been estimated that once finished, the smelter will increase Mozambique's gross domestic product by 7 percent.

MOZAL-II has the same shareholders as MOZAL-I, in the same proportions. BHP-Billiton is the largest shareholder with 47.11 percent. The Japanese company Mitsubishi holds 25 per cent, and the South African Industrial Development Corporation (IDC) holds 24.04 per cent.

The remaining 3.85 per cent belongs to the Mozambican state, and the government has negotiated funding from the European Investment Bank to ensure that it can pay for these shares. The government intends to sell off its MOZAL shares eventually to local investors.

VALCO Files For Arbitration Against Govt And VRA

GhanaWeb, Ghana 15 January 2003

The Volta Aluminium Company Limited (VALCO) has filed for arbitration with the International Chamber of Commerce in Paris against both the Volta River Authority and the Ghanaian government. This follows VALCO’s objection to the reduction in its power consumption by the VRA for 2003. The news item was carried on the website of Kaiser Aluminium, which owns 90% of VALCO.

VALCO has objected to the 2003 allocation and to a previous power curtailment and intends to seek declaratory relief and the recovery of monetary damages in respect of the curtailment.

A meeting scheduled between VALCO and the government of Ghana on January 6, this year broke down. A statement issued by the government of Ghana said VALCO is refusing to pay realistic wages for power. It said VALCO pays 1.1 cents per KW/h of power while the ordinary Ghanaian pays 7.8 cents per KW/h.

Bosnia aluminium plant sees record output in 2003

Reuters, 01.15.03, 8:16 AM ET

By Daria Sito-Sucic

MOSTAR, Bosnia, Jan 15 (Reuters) - Bosnia's aluminium smelter Aluminij Mostar, ownership of which is disputed by the government, reported record high output for last year and said it aimed to increase production to 107,000 tonnes in 2003.

But General Manager Mijo Brajkovic said increased output had not been matched by higher profit figures because of falling aluminium prices on world markets.

He declined to disclose the group's results during an annual company presentation in the southern town of Mostar on Tuesday, but said turnover amounted to 550 million Bosnian marka ($296 million) in 2002, of which exports accounted for 330 million.

Brajkovic said last year's output of 103,140 tonnes, the highest figure since the company started production in 1981, was achieved due to completed modernisation of its three divisions - the smelter, foundry and anode units.

"This is the highest output...in the history of Aluminij Mostar," he told reporters. In 2001, output was 95,600 tonnes.

The smelter accounts for roughly half of all exports of the Muslim-Croat federation, which makes up post-war Bosnia together with a Serb Republic. It sells its products to buyers in Germany, Switzerland, Italy, Croatia and the United States.

GERMAN INVESTMENT INTEREST

The modernisation of the plant was made possible due to a $70 million loan from Germany's West LB Panmure last year, secured through carmaking giant DaimlerChrysler AG <DCXGn.DE>.

Under a separate deal struck after Bosnia's 1992-95 war, DaimlerChrysler unit Debis International Trading supplies Aluminij with power in exchange for aluminium.

Brajkovic said the German government was interested in investing $250 million in building a new smelter and that Aluminij had agreed with DaimlerChrysler on a feasibility study.

He said the project should be presented to Bosnia's state presidency this week and the company would insist on subsidised electricity and also ask the federation government to stop disputing its privatisation.

Aluminij was owned by the state until the war broke out between Bosnia's Muslims, Croats and Serbs a decade ago. Mostar was scene of fierce fighting and the plant was heavily damaged.

After the conflict, the company distributed 64 percent of the shares to its mainly Bosnian Croat employees in compensation for unpaid wages.

It later sold a 12 percent stake to Croatia's TLM company, which invested $9 million in 1997, enabling the war-damaged operation to resume production. But the federation government says the privatisation was illegal and wants its stake back.

An arbitration body under World Bank supervision is expected to be set up soon to rule on the issue.

Aluminij says the state now holds 24 percent but Brajkovic made clear his view that the state's stake should fall still further, saying Aluminij had invested about 250 million marka in the company without any help from the authorities

"We do not expect that the state may have more than 10 percent of the shares," he said.

The company did not plan to rebuild its destroyed alumina plant becasue it was cheaper to import the material, he added.

($ 1.8596 Bosnian marka)

Copyright 2003, Reuters News Service

Alba to invest in expansion, upgrade projects

21 million dollars will be spent on the 11 projects

Middle East Online, UK, Last Updated 2003-01-16 11:02:42

Aluminum Bahrain approves 11 capital expenditure projects to ensure their market position in world.

MANAMA - Aluminum Bahrain (Alba) said Thursday it will spend 21 million dollars on a key expansion project and several other upgrades of potlines in a bid to become the world's third-largest aluminium producer.

Alba's board of directors approved 11 capital expenditure projects worth "21 million dollars to ensure that Alba remains a competitive and environment-friendly smelter well into the future," the company said in a statement.

The projects include increasing Alba's coke calcining plant capacity from 450,000 to 600,000 tonnes per annum (tpa) to maximize export revenue, it said.

Alba will also target improved efficiency by upgrading casting facilities, introducing a crane removal system for three potlines, and automating the monitoring of environmental emissions from the plant's reduction lines.

On the 1.7-billion-dollar expansion project that will increase production by 50 percent over the next three years, Alba chairman Sheikh Issa bin Ali al-Khalifa said: "Many of the essential elements are already in place.

"Originally set to be a 260,000 tpa potline, Alba management was able to improve on this by increasing the capacity to 307,000 tpa whilst remaining within the original approved budget," said Sheikh Issa, also Bahrain's oil minister.

He said that when the "Line 5 Project" comes on stream, Alba's contribution to the economy of Bahrain will rise to 300 million dollars from the current 200 million.

Construction work for the expansion will begin "very soon," added Alba chief executive officer Bruce Hall.

Alba, which produced 517,000 tonnes of hot metal in 2002, is 77-percent owned by the Bahraini government, 20 percent by the Saudi Arabian Public Investment Fund and three percent by the German group Breton Investments.

The company has lost its place as the Middle East's largest aluminium producer to Dubai Aluminium (DUBAL) in the United Arab Emirates, whose total output is 536,000 tpa.

DUBAL has unveiled an upgrade plan to boost capacity by 174,000 tpa and bring total capacity to 710,000 tpa by 2006

$75m Aluminium Cans project for Serbia

Financial Times (subscription), UK By Eric Jansson

Published: January 17 2003 4:00 | Last Updated: January 17 2003 4:00

Serbia has attracted its first big foreign greenfield investment since the fall of Slobodan Milosevic, the former Yugoslav president, in October 2000 and the launch of market reforms.

Ball Corporation, the US drinks can manufacturer, yesterday announced plans to build a $75m (Ģ47m) project in three phases on the outskirts of Belgrade. The government offered tax concessions and other perks in the deal. The factory will manufacture aluminium cans for the Balkan region, but may eventually also supply Russia, Ukraine and Georgia. Eric Jansson, Belgrade

Century Aluminum to build casthouse at Ravenswood

Reuters, 01.17.03, 1:38 PM ET

NEW YORK, Jan 17 (Reuters) - Century Aluminum Co. (nasdaq: CENX - news - people) will add its own casthouse to its Ravenswood, West Virginia smelter to process primary aluminum produced at the plant when necessary, a company spokesman said on Friday.

Once built, the casthouse will be able to cast into sow all of the 168,000 metric tonnes of annual output from the nearby smelter if necessary, the spokesman said.

Century's Ravenswood smelter is currently operating at capacity. But most of the output from the Ravenswood smelter is sent under contract to an adjoining casthouse owned by French aluminum maker Pechiney <PECH.PA>.

Century expects to be operating its own casthouse by the second quarter of this year. The company said the new casthouse will give it more flexibility and control over its casting requirements.

The Monterey, California-based company did not disclose the cost of constructing the new casthouse.

Copyright 2003, Reuters News Service

Construction work on Alba project to start soon

Gulf News, United Arab Emirates

Manama |By Mohammed Almezel | 17-01-2003

Aluminum Bahrain's (Alba's) intended $1.7 billion expansion will increase the smelter's contribution to the island's national economy by 50 per cent, the company chairman said.

Speaking after the board meeting, Sheikh Isa bin Ali Al Khalifa, Minister of Oil and Alba chairman , said Alba's Line 5 project will increase its contribution to the economy from $200 million to $300 million per annum.

The expansion, due for completion in February 2005, will make the smelter - with a current capacity of 520,000 tonnes per annum - the largest in the world outside of Eastern Europe, he said, adding that many of the essential elements are already in place.

"Originally set to be a 260,000 tpa potline, Alba was able to improve on this by increasing the capacity to 307,000 tpa whilst remaining within the original approved budget - a notable achievement."

Chief executive Bruce Hall said the construction work will begin 'very soon'.

Alba has appointed Bechtel as its engineering, procurement, construction and management (EPCM) contractor for the project. Bechtel will manage the various contracts and procurements of the Line 5 smelter to meet the programme and budget targets agreed between the two parties.

In a statement published yesterday, Alba officials said it has already secured $1.05 billion in loans from several banks and was negotiating for another $500 million. The rest of the financing, $150 million would be obtained form shareholders.

The Bahraini Government owns 77 per cent of the company while 20 per cent is owned Saudi Arabia's Sabic Industrial Investments, and 3 per cent by Breton Investments.

A decision was approved to spend $21 million to ensure that "Alba remains a competitive and environment-friendly smel-ter well into the future - in line with its five-year business plan," Hall said.

In addition, the board approved 11 capital expenditure projects, including a plan to increase Alba's coke calcining plant capacity from 450,000 to 600,000 tonnes per annum to maximise export revenue.

Loss of $100-million-US dispute not expected to hurt Alcan operations

CBC News, Canada 12:34 AM EST Jan 21

DAVID PADDON

TORONTO (CP) - Alcan Inc.'s loss of a $100-million-US Enron-related contractual dispute with B.C. Hydro is expected to hit the aluminum company's bottom line but not cause problems at its operations in British Columbia.

Montreal-based Alcan won't be appealing an arbitrator's ruling issued late Friday but a spokesman said Monday it remains to be determined how and when Alcan will repay Powerex, B.C. Hydro's electricity trading arm.

In the short term, the two companies have agreed no action will be taken for 30 days while they work out details of the repayment, which could be made in cash or electricity from Alcan's Kemano power complex, which primarily supplies its aluminum smelter in Kitimat, B.C.

"The smelter needs only so much power to run at capacity and the remainder of the power, whatever is surplus to our needs, can be sold," said Alcan spokesman Daniel Gagnier.

Kemano generates about 800 megawatts. The amount of power under dispute is 167 megawatts for the year 2002 and 81 megawatts annually for the next 12 years.

In the past, Alcan has occasionally had to curtail production at the smelter when water levels fell too low to adequately supply the hydroelectric power plant.

But a spokesman for the Canadian Auto Workers, which represents 1,200 Alcan employees in B.C., said water levels have been sufficient recently and operations have been running smoothly.

"I don't think it's (the ruling) going to have a negative impact," said CAW spokesman Hemi Mitic.

A survey of analysts by First Call/Thomson Financial suggests they expect Alcan, which reports its results in U.S. dollars, to have an operating profit of 44 cents per share in the three months ended Dec. 31 and earn $1.70 US per share in the 2002 financial year.

However, such estimates typically don't include one-time items, such as the $100-million-US charge that Alcan will take in the fourth quarter as a result of the arbitrator's ruling.

The dispute between Alcan and Powerex arose after the bankruptcy of Houston-based Enron Corp.

An Enron subsidiary had bought part of Alcan's contract to supply Powerex with electricity over a number of years but was unable to fulfil the obligation after the parent company's collapse.

The arbitrator chosen by Alcan and Powerex to mediate their dispute ruled that Alcan is liable for up to $100 million US of the obligations to Powerex.

National Bank Financial analyst Ian Howat said Monday he didn't expect the arbitrator's ruling will have a major impact on Alcan.

"I'm not too concerned about it," Howat said.

Not only is Alcan financially strong but it will likely be able to supply the electricity owed under the contract either from its own power plant or by buying it on the market, he added.

Alcan shares (TSX:AL) declined 75 cents to $47.75 Cdn Monday on the Toronto Stock Exchange.

In the first nine months of 2002, the world's second-biggest aluminum company had $9.4 billion US in revenues and net income of $348 million US. In comparison with the same period of 2001, revenues and earnings were down about three per cent, mainly due to lower aluminum prices.

However, Alcan has so far fared better than Alcoa, the world's biggest aluminum supplier, which announced Jan. 8 that it plans to cut 8,000 jobs this year - about six per cent of its global workforce - after losing $223 million US loss in the final quarter of 2002.

Alcoa to close British plant with loss of 120 jobs

NEPA News, PA January 21, 2003

U.S. aluminum giant Alcoa Inc. said Tuesday that it plans to close a British plant with the loss of 120 jobs as part of a previously-disclosed worldwide restructuring.

Alcoa, which is based in Pittsburgh, said overcapacity, a poor manufacturing climate, slow market growth and competition from imports led to the decision to shut the plant in Swansea, south Wales, which makes aluminum products for the transport and construction markets.

Earlier this month the company announced it was shedding 8,000 jobs, mostly in Europe and South America. The Swansea losses are among that number.

Alcoa said it would consult with employees' representatives before shutting the Swansea plant in June.

Andy Richards, a spokesman for the Transport and General Workers' Union, said the company had chosen Britain because of the stricter workplace legislation in other European countries.

"We were aware that Alcoa was looking at a closure, there is overcapacity worldwide," he said. "That was what led to the announcement that 8,000 jobs had to go worldwide last year.

"But the Swansea plant is the only one in Europe being closed and the company has operations in Germany, Holland, France and Spain. We believe that is because the exit costs for a large company are far lower in Britain."

Alcoa had 127,000 employees worldwide at the end of 2002.

The company reported $223 million in losses in the quarter that ended Dec. 31, 2002.

Alcan Posts a Fourth-Quarter Profit

but Falls Short of Wall Street Expectations

ABC News -The Associated Press

MONTREAL Jan. 21 —

Alcan Inc. said Tuesday that increased aluminum shipments, the strengthening euro and higher metal prices helped it swing to a fourth-quarter profit though it was short of Wall Street expectations.

The Montreal-based aluminum and specialty packaging maker posted net income of $26 million, or 8 cents a share, on revenue of $3.18 billion, compared with a loss of $356 million, or $1.11 a share, on revenue of $3.04 billion, a year earlier.

Excluding items and foreign currency balance sheet translation effects, the world's number two aluminum company said earnings would have been $124 million, or 38 cents a share.

Analysts were expecting 44 cents a share, according to Thomson First Call.

Last year, excluding items, earnings were $74 million, or 23 cents a share.

In the latest period, items included after-tax charges of $86 million related to a power contract dispute, as well as charges for closing facilities in Britain. They were partially offset by a gain on the sale of shares in Nippon Light Metal Company Ltd.

For the year, Alcan earned $374 million, or $1.14 a share, on revenue of $12.54 billion. In 2001, the company earned $2 million, or a loss of two cents a share, on revenue of $12.63 billion.

Alcan said total aluminum volume in the quarter was 9 percent higher than a year earlier.

The company expects first quarter earnings, excluding items, of 37 to 47 cents a share, and 2003 earnings of $1.80 to $2.20 a share. Analysts expect 53 cents a share for the quarter and $2.44 a share for the year, according to First Call.

New York Stock Exchange-listed Alcan shares traded Tuesday morning at $29.81, down $1.82, or 6 percent

Queensland is worth salt: Koreans

By Florence Chong

The Australian, Australia January 22, 2003

LG CHEM, the Korean chemicals group building a $330 million plastics plant in Queensland, plans to lift its total investment in the state to more than $1 billion.

LG Chem last month revealed plans to build a $330 million plant to make the plastic raw material ethylene di-chloride (EDC) in Gladstone, creating hundreds of jobs for the Queensland town.

Matthew Kang, Queensland's trade and investment commissioner in Seoul, said during the construction phase about 500 workers would be required. When production starts in 2005, about 100 to 150 skilled workers would be employed at the plant.

Mr Kang, who initiated the deal, told The Australian yesterday that the company has other investment plans which would ultimately lift the total investment to more than $1 billion as the company doubles the size of the plant and builds new facilities.

EDC, made from salt, is the base chemical used for producing vinyl chloride monomer (VCM), the raw material used in the manufacture of plastics.

No Ki Ho, chief executive officer and president of LG Chem, said the plant would be a joint venture with Cheetham Salt, Australia's largest salt producer, wholly owned by the listed Ridley Corporation, and a third party. LG Chem will own 80 per cent of the shares in the plant.

Mr Ho said the company chose Australia after several years of investigating possible locations around the world.

"Australia is one of the world's cheapest providers of electricity and salt, essential elements in producing EDC," he said.

Mr Ho said the plant was close to the Comalco alumina refinery and Queensland Alumina refinery - two of the world's biggest consumers of caustic soda.

Caustic soda is a by-product in the production of EDC. The new EDC plant, when it comes on line in 2005, will produce 300,000 tonnes of EDC, which will all be exported to Korea and China, where LG Chem has plants.

With its strategy of becoming the world's biggest plastic producer by 2010, LG Chem's demand for EDC would increase. Mr Ho said LG Chem was considering doubling the size of the Gladstone plant and also building a new VDM plant near the EDC plants.

Mr Kang said LC Chem was part of a family of 44 companies, some of which were also looking at investing offshore.

He said the state and federal governments could help to make Australia more attractive to overseas investors by helping to improve the infrastructure in areas like Gladstone.

ALSCON: More foreign firms join list of core investor seekers

Daily Times of Nigeria, Nigeria, Jan 22, 2003

AARON OSSAI, SEGUN OGUNGBILE, AYODELE ADEGBUYI

Two foreign firms have joined the list of core investors bidding for 51 per cent of the Federal Government’s equity in the Aluminium Smelter Company of Nigeria (ALSCON), Ikot Abasi, Akwa Ibom State, while the financial and accounting due diligence done on the company revealed that it is technically bankrupt.

The Bureau for Public Enterprises (BPE), which made this known in a statement on Monday, named the foreign firms as Ferrostaal AG of Germany and ALCAN Inc of Canada.

BPE said the firms would join three others, namely Russian Aluminium, Glencore Ag of Switzerland and ALCOA of America, which had earlier signified interest in ALSCON, to bid for the equity.

The bureau pointed out that another advertisement, besides the one that produced the initial three investors, had to be published on the company because of the “receipt of the privatisation advisers’ preliminary report and the need for financial restructuring of the company.”

According to the bureau, the financial due diligence showed that ALSCON was not only insolvent but technically bankrupt,” adding that “the balance sheet further showed that Federal Government financial exposure including equity, loans, grants, charges, budgetary subvention, fees, debts etc amounted to over N300 billion while that of the other shareholders (Ferrostaal Ag and Reynolds/ALCOA) is less than N15 billion.

“To address the disparity and make the balance sheet market-oriented and investor-friendly, the BPE advised the government on the need to write off infrastructural facilities including housing estate, access roads, reclamation, dredging and harbour in favour of the Federal Government of Nigeria, and convert the remaining debt (about N250 billion) to equity,” it added.

The bureau further disclosed that with the revelations from the due diligence report, the shareholding formula in the company would have to change.

The statement said: “It is therefore envisaged that this new structure will impact on the shareholding structure and likely move the Federal Government equity holding from the current 70 per cent to about 91.4 per cent, while Ferrostaal AG and ALCOA will move from 20 per cent and 10 per cent respectively to 6.77 per cent and 1.83 per cent in that order.”

Briton Named to Head SUAL

Moscow Times, Russia -Thursday, Jan. 23, 2003. Page 6

Reuters The country's second-largest aluminum firm, SUAL, which is to join up with a British bank to form a global mining concern, has named an official from mining giant BHP Billiton to head the company that owns its assets.

A SUAL statement said the board of SUAL Holding, the company that manages SUAL's 21 companies involved in the aluminum business, nominated Chris Norval as its president.

Earlier this month, SUAL announced a new international mining company — probably to be called SUAL International — created together with Fleming Family and Partners, a private group owned by the Scottish Fleming banking dynasty.

Directors of the new company said they would like to place some of its capital on a Western stock exchange in 2004.

Norval, who brought Billiton to the London Stock Exchange in a $1.5 billion 1997 initial public offering and was in charge of strategic planning at BHP Billiton, will also become the general director of SUAL International, the official owner of SUAL's assets.

The new company, which will be formed in the next six months, will include all existing SUAL enterprises plus FF&P's ferronickel project in Cuba and tantalum project in Mozambique.

A third partner in the venture will be the private Access Industries (Eurasia) company, which will contribute its coal mining assets in Kazakhstan.

SUAL produces 4.4 million metric tons of bauxite raw material, around two million tons of an intermediate product, alumina, and 840,000 tons of primary aluminum per year.

It says it owns assets worth $1.5 billion

BHP in pledge to South Africa

By Toby Reynolds

Daily Telegraph, Australia ,23jan03

BHP Billiton boss Chip Goodyear has reassured South Africa about its investment opportunities, despite a new minerals bill which has spooked many foreign investors.

"South Africa is a critical part of our overall asset base," Mr Goodyear said after meeting with President Thabo Mbeki and Trade Minister Alec Erwin in Pretoria.

"We see lots of opportunities to continue to find ways to invest here," said Mr Goodyear, who earlier this month took the helm of BHP Billiton after the shock departure of South African Brian Gilbertson.

South Africa's new mining charter, which aims to give blacks a bigger stake in the white-dominated industry - still the country's biggest private sector employer - rattled investors when it was first seen in a draft form last July.

A later watered-down version which recommended blacks should own 26 per cent of mining assets within 10 years was more calmly accepted by financial markets. But critics say it will continue to deter foreign investors.

The final details of the charter are currently being negotiated by industry, government, unions and investor groups.

Mr Goodyear said Billiton was "completely aligned" with the South African government in terms of the charter and its associated documents.

"Certainly there are various issues to work out, and we look forward to being a part of that process," he said.

Mr Erwin said the talks were meant to ensure that the BHP Billiton chief understood South Africa's views on investment.

"We really are pleased ... as we have come to know that we very much share the same views of what will have to happen in South Africa and in Africa," he said.

BHP Billiton's southern African business represents 20 per cent of net operating assets - Australia accounts for 35 per cent - and employs about 16,500 people.

The business includes its massive Mozal aluminium smelter in Mozambique and the Hillside smelter in South Africa.

Mr Goodyear said after the talks in Pretoria that he saw no major changes in the way BHP Billiton would do business following his appointment.

"In terms of basic strategy and structure, that maintains as it was before," he said.

"The team that put that (the merger of BHP and Billiton) together, did that 18 months ago with a big group of people and it is absolutely the right structure and strategy to move forward. There are no major changes we have there," he said.

Asked whether BHP Billiton was looking at any mergers or acquisitions, Mr Goodyear replied: "There is nothing big we are considering at the moment."

He added that changes in the value of South Africa's rand, which appreciated by nearly 40 per cent against the US dollar last year, would mostly affect the company on the balance sheet rather than materially.

India Hindalco/Copper -2: Group Consolidating Metal Ops

Yahoo News ,Friday January 24, 4:55 PM

MUMBAI (Dow Jones)--Indian aluminum producer Hindalco Industries Ltd. (P.DHI) Friday said its board of directors has approved the purchase of copper mines in Australia.

The company said it will pay A$79.8 million for Straits (Nifty) Ltd., which is owned by Straits Resources Ltd. (A.STS).

The mines have a total capacity for 27,500 tons a year of copper cathode.

The Aditya Birla group is in the process of consolidating its metal business under Hindalco.

The group is transferring Indo-Gulf Corp.'s (P.IGF) copper business to Hindalco.

-By Raghavendra Upadhyaya, Dow Jones Newswires; 91 22 22884212; raghavendra.upadhyaya@dowjones.com

Investors Needed For Kyebi Bauxite

GhanaWeb, Ghana Business News of Friday, 24 January 2003

The government is looking for a foreign investor to mine the Kyebi bauxite deposits which have an estimated 200-year life span.

This was announced by the Deputy Minister of Interior, Kwadwo Afram Asiedu at the People’s Assembly at Atibie in the Eastern Region.

He said, the government was concentrating more on the Kyebi deposits because of their projected longer life-span, as against those on the Kwahu Ridge which has an estimated life-span of 15 years.

Kaiser Mead aluminum shutdown no surprise to analysts

Platts Metals Week * 20-Jan-2003

London, New York-US producer Kaiser Aluminum's decision to indefinitely extend the curtailment of its mothballed Mead aluminum smelter in Washington state came as little surprise to the market, analysts said last week.

"It's obviously a fairly high-cost smelter, it hasn't operated since 2001 and most people would have anticipated it would stay down for a long time," said Macquarie Research analyst Adam Rowley. Few, if any, analysts would have factored in a potential restart at the 200,000mt/year capacity Mead plant into their near-term supply-demand projections.

"We've factored in an extra 200,000mt this year from the Pacific Northwest, but that's from plants that have already managed to restart-Goldendale and some of Alcoa's plants," said Standard Bank London analyst Robin Bhar.

Kaiser attributed the decision, having earlier looked at the possibility of a partial restart in the current quarter, to unattractive long-term power prices and weak aluminum prices-three-months aluminum on the LME is languishing

around $200/mt below the level in January 2001 when the Mead plant was mothballed, while power prices have been creeping back up.

"The trend last year seemed to be downward, and aluminium seemed to be rising, so Kaiser probably hoped that drawing a straight line between the two would offer a good margin in the first quarter, but it hasn't worked out that way,"

said Lawrence Eagles, analyst at Man Financial. Kaiser, which filed for Chapter 11 bankruptcy protection last February, was spending over $4-mil a year to keep the plant in readiness to restart. In addition, restart costs themselves would

work out at around $2-mil for each of the capacity smelter's eight potlines, the company said.

"Given the costs of maintaining it in its mothballed state and the likely cost of restarting it, I'm not surprised they've decided to pull down the shutters,"

said Prudential-Bache analyst Angus MacMillan.

Uncompetitive power prices have plagued aluminum smelters in the Pacific Northwest in recent years-only three of the nine smelters in the region are operating-and present a long-term threat to the future of the industry in the area, analysts said.

"The whole future of the smelters in the Pacific Northwest is called into question. I think the writing is on the wall for most if not all of them over the next few years," MacMillan said. "It makes sense to run these smelters if you have reasonable power rates and high aluminium prices, but not in the current cycle."

The Northwest Power Planning Council said last week that preliminary forecasts for Mid-Columbia spot market electricity prices for 2006 through 2025 are in

the $35-40/MWh range. Few of the region's aluminum smelters-which account for 40% of the US aluminum smelting capacity and 6-7% of world capacity-would likely be

able to afford to operate at that level, the NPPC said.

"It's very difficult to see how an awful lot of the facilities in that region will be anything other than swing producers in the coming years," Man Financial's Eagles said.

Kaiser last week announced that in conjunction with the indefinite curtailment of the Mead smelter, it expected to record in its results for the fourth quarter

of 2002 significant non-cash pre-tax charges to write down the carrying value of its Northwest smelter assets and to recognize the impact of pension and post-retirement obligations for hourly employees who had been on layoff

status and are to become eligible to elect early retirement beginning in the first quarter of 2003.

Jack A Hockema, president and CEO of Kaiser, said in a statement that "we had previously hoped that conditions would be right for at least a partial restart of Mead in the first quarter of 2003, but that does not appear to be likely.

If and when circumstances change, it is feasible that Mead could be restarted and ultimately generate positive cash flow. However, we are no longer in a position to maintain the Mead smelter in a state of readiness for potential restart,

as we have done since January 2001."

If Kaiser decides to spin off Mead, the United Steelworkers union would be interested in pursuing possible employee ownership of the plant, a USW official told Platts. "We're certainly going to keep all of our options open," said

Jim Woodward, a USW subdistrict director. "We would fight really hard to keep that asset from being sold out from beneath us . . . we think there's value in the facility." Among the options the USW would consider is arranging for an

employee buyout and ownership of Mead. But Woodward stressed the union does not know what Kaiser's plans are for Mead.

Meanwhile, Kaiser also announced last week that nine of its wholly owned subsidiaries filed voluntary petitions with the US Bankruptcy Court for the District of Delaware under Chapter 11 of the Federal Bankruptcy Code. It said the move was expected to have no impact on day-to-day operations.

The subsidiaries are (US unless otherwise noted): Alpart Jamaica Inc (not the Alpart alumina refinery); KAE Trading Inc; Kaiser Aluminum & Chemical Canada Investment Ltd (Canada); Kaiser Aluminum & Chemical of Canada Ltd (Canada);

Kaiser Bauxite Co (not the KJBC bauxite mining operation); Kaiser Center Properties; Kaiser Export Co; Kaiser Jamaica Corp; and Texada Mines Ltd (Canada).

"Financial liquidity remains strong and is further protected by the actions taken today," Hockema added. The voluntary filings were initiated to, among other things, protect the assets held by these subsidiaries against possible statutory liens that may arise from the Pension Benefit Guaranty Corp (PBGC) if Kaiser does not make a $15-mil contribution to its salaried pension plan by Jan 15, the company said. Kaiser and 16 of its subsidiaries originally filed Chapter 11 petitions in February and March of 2002; the nine subsidiaries listed

above were not included in the initial filing.

Coega in search of cutting edge technology for the IDZ

Cape Business News, South Africa

Government investment into the Coega IDZ infrastructure development amounts to R800 million, while electricity giant Eskom's investment into the entire project totals R1, 8 billion. The National Ports Authority's investment of at least R2, 4 billion is going into the development of the deepwater port

Alongside these investments is the commitment of an R18 billion private sector investment from the French aluminium ore giant, Pechiney, which has declared the Coega IDZ as their preferred site for a new generation aluminium smelter.

Quebec finance minister expects investments in mining and aluminium sectors.

CBC News, Canada, 12:52 AM EST Jan 27

DAVOS, Switzerland (CP) - Quebec is expecting to reach agreements on new investments in the mining and aluminium sectors in the next six to eight months, Finance Minister Pauline Marois said Sunday from the World Economic Forum in this Swiss resort.

"We will surely have some concrete results at this summit because we already have companies that have interests in Quebec and are ready to increase them," Marois said in a conference call with reporters. "But sometimes it's a good idea to wait until all the loose ends are tied up, as the saying goes, before we confirm anything."

The possibility that General Motors would take part in building a parts factory in Quebec's Saguenay region seems to be creating some excitement, but Marois preferred discretion on this issue as well.

"We have had several talks with GM, but I would rather not reveal what was discussed," Marois said. "We are working in the direction you are hoping for."

Marois confirmed that she met with Travis Engen, president of aluminium giant Alcan, to discuss new projects in the Saguenay region.


Romania Alro<ALRO.BX>to revise '03 aluminium output

Reuters, 01.27.03, 8:17 AM ET

BUCHAREST, Jan 27 (Reuters) - Romanian aluminium plant Alro <ALRO.BX>, one of Europe's biggest smelters, is expected to revise upwards its 2003 output by 15,000 tonnes to 215,000 due to a new production facility, a company official said on Monday.

Alro, which is Romania's sole producer of primary aluminium, is controlled by U.S.-led group Marco International and exports around 75 percent of its output to European markets.

"Output may rise to about 215,000 tonnes this year compared to 200,000 tonnes forecast initially," Andrei Mauthner, a member of Alro's board, told Reuters.

Copyright 2003, Reuters News Service

Lloyd's Register of Shipping issues Quality Certificate to Kamensk-Uralsk Metallurgic Plant.

Analytical Information Agency, Russia, 27/01/2003

Kamensk-Uralsk Metallurgic Plant (or KUMZ, Sual group) has received quality Certificate issued by the U.K. Lloyd's Register of Shipping, Sual press-service says.

In particular, slabs, profile and bars from alloys of 5xxx (5083, 5086, 5754) and 6xxx (6086, 6061, 6082, 6005Ā) series were certified.

Besides, KUMZ has International Quality Certificate given by German TUV Management Service and applies quality system under ISO 9001:2000.


Century Aluminum to buy rest of Kentucky plant

Reuters, 01.28.03, 4:58 PM ET

MONTEREY, Calif., Jan 28 (Reuters) - Century Aluminum Co. (nasdaq: CENX - news - people) said on Tuesday it agreed to buy the 20-percent stake in a Kentucky aluminum reduction plant that it does not already own from Glencore for $105 million, in a move to increase production.

The deal, which is subject to approval by Century's board, is expected to close during the second quarter of 2003 and will result in a pre-tax gain of about $35 million in the first quarter, the company said.

Century will incur about $35 million in debt from the deal.

To pay for the Hawesville, Kentucky aluminum reduction plant, Century will raise about $35 million of cash by capturing the above-market value of the final five years of a nine-year aluminum delivery contract with Glencore. Prices in the contract are fixed substantially above current market levels, the company said.

Century will also use $35 million in available cash and a six-year note payable to Glencore to buy the remaining stake in the aluminum plant, the company said.

Glencore owns about 42 percent of Century's common stock.

Copyright 2003, Reuters News Service


SUAL Boosts Output

Moscow Times, Russia Wednesday, Jan. 29, 2003. Page 6

MOSCOW (Reuters) -- Siberian-Urals Aluminum Co., or SUAL, the country's second-largest primary aluminum producer, increased its alumina and primary aluminum output last year, the company said Tuesday.

SUAL said in a statement its primary aluminum output rose 3.2 percent to 695,000 metric tons.

The data included output from SUAL's Bogoslovsk, Irkutsk, Kandalaksha, Nadvoitsy and Urals smelters, but did not take into account the Volgograd and Volkhov plants, which merged with SUAL at the end of 2002.

SUAL's production of alumina, an intermediate product for aluminum smelting, rose 2.9 percent year on year to 1.75 million tons.


BPA cuts Longview Aluminum contract

Oregonian, OR, 01/29/03

GAIL KINSEY HILL

Federal electricity marketer Bonneville Power Administration on Tuesday took the unprecedented action of terminating a five-year power contract with Longview Aluminum, a large industrial customer in Longview, Wash.

Overdue power bills of about $16.4 million prompted the action, the BPA said.

"They have not provided us with any assurances they're able to come up with the money to pay their bills," said Mark Miller, a BPA account executive.

The smelter hasn't operated since Michigan Avenue Partners of Chicago bought the facility from Alcoa in February 2001. But company officials had signed a contract with BPA for the delivery of 280 average megawatts annually through September 2006.

Under terms of the contract, BPA was able to resell the unused power on wholesale markets. But if market prices fell below BPA costs, the agency billed Longview for the loss.

Last year, the charge totaled $16.1 million, the BPA said. Longview racked up an additional $283,000 for about 2 average megawatts that the smelter used for general purposes, such as lighting.

Longview officials were not available to comment.

Many of the aluminum smelters in the Northwest have shut down, victims of high electricity prices, low aluminum prices and production overcapacity worldwide.


Pechiney Aluminium says mulls Auzat plant closure

Forbes, Reuters, 01.29.03, 10:54 AM ET

PARIS, Jan 29 (Reuters) - Pechiney Aluminium said on Wednesday it was studying the closure of its 44,000 tonne a year primary aluminum smelter Auzat plant in France's Pyrennees.

A spokesman said the plant was battling with problems of "small size, old technology and remote location".

The closure would result in the loss of 218 jobs, he added.

Copyright 2003, Reuters News Service


Boeing Shrugs Off Low Sales

Moscow Times, Russia ,Thursday, Jan. 30, 2003. Page 5

By Lyuba Pronina

Staff Writer

Aeroflot's decision to give Airbus the lion's share of its new orders and a global slump in aircraft demand has not dampened Boeing's spirits.

The U.S. aircraft manufacturer has called 2002 a good year for the company on the CIS market.

"Despite Aeroflot's decision, we still hold 80 percent of the CIS market for foreign jets," the president of Boeing in Russia and the Commonwealth of Independent States, Sergei Kravchenko, told reporters Tuesday.

Late last year, Aeroflot approved a multimillion-dollar deal to upgrade the 27 foreign jets in its 100-plus fleet. By 2005 the carrier will fly 18 new Airbus 319/320s and nine Boeing 767s.

At the moment, Aeroflot operates 11 Airbus 310s, 10 Boeing 737s, four 767s and two 777s.

"We are very disappointed by Aeroflot's decision; however, we respect their position. We're absolutely confident that our cooperation with Aeroflot will continue in many ways," Kravchenko said.

He said Boeing not only controls a larger share of the CIS market -- 72 aircraft against Airbus' 19 -- but it also has more models.

Last year, Boeing delivered two DC-10 cargo planes to Aeroflot and two 737s and two 767s to Transaero. Also three 737s went to Kazakhstan's Air Astana, one 767 to Ukraine's Aerosvit and one 737 to Georgia's Air Zena.

Kravchenko said this year Boeing expects Kyrgyzstan to receive a few 757s.

Boeing delivered a total of 381 aircraft worldwide last year, or 56 percent of global airplane deliveries. Rival Airbus delivered 303 jets last year.

Boeing signed contracts for aircraft worth $21.2 billion last year and expects to deliver between 250 and 300 jets this year, while Airbus received $24.3 billion in orders.

"The post Sept. 11 crisis has been protracted. Our expectations that it would soon be over were not justified," Kravchenko said, adding that he hopes by the end of this year there will be signs the industry is on its way to recovery.

The fall in aircraft orders lowered Boeing's need for titanium from Russia's Verkhnyaya Salda Metals Production Association, or VSMPO, according to the metals company. However, neither company would provide figures on titanium deliveries.

Boeing extended its contract with VSMPO last year for another five years and ordered more value-added products. VSMPO accounts for 25 percent of titanium deliveries for Boeing's commercial jets.

Kravchenko said Boeing is in talks with Russian Aluminum, but he did not say when a contract between the companies might be expected.

Boeing has continued to invest in its engineering center in Moscow, increasing its staff to 362 last year. Kravchenko said that at least one-third of 777s were designed in Moscow.

The aircraft manufacturer is also pursuing a joint project with Sukhoi and Ilyushin to develop a regional jet, Kravchenko said. The Russian Aviation and Space Agency is holding a tender to choose a designer in the first quarter.

Boeing's overall commitment to programs in Russia stands at $1.3 billion.


Alcan, CGI Group sign $170 million IT outsourcing deal

Toronto Star, Canada -Wed Jan 29, 2003

SAGUENAY, Que. (CP) — Aluminum giant Alcan Inc. has signed a 10-year information technology outsourcing deal with CGI Group Inc. valued at $170 million.

The deal was first announced last July and valued then at $200 million.

Under the final agreement signed today, CGI will manage Alcan's help desk operations and provide user support, data centre management services and electronic messaging systems to the big metals producer.

The contract covers Alcan's businesses in Quebec and British Columbia as well as some operations in the United States.

The contract will create 60 new jobs and maintain 100 existing jobs at CGI's application development and technology support centre in Saguenay, Que.

Alcan (TSX: AL) is one of the world's biggest producers of aluminum and specialty packaging, with 2002 revenues of $12.5 billion (U.S.). The company employs 48,000 people around the world, including 8,500 in Quebec. Its operations in the province include world headquarters in Montreal and more than 20 power, chemical, smelting and fabricating plants.

CGI (TSX: GIB.A) is one of the largest information technology services companies in North America, with more than 21,000 employees and annual revenues of $3 billion Cdn.


Alcan outlines Saguenay-Lac-Saint-Jean spending plans

Stockwatch (subscription), 2003-01-29 14:13 PT - News Release

Ms. Cynthia Carroll reports

ALCAN TO CREATE UP TO 420 NEW JOBS IN SAGUENAY-LAC-SAINT-JEAN

Alcan plans to further develop aluminum business opportunities and other value-added activities in Quebec. This initiative, along with two previously discussed projects, will in the short term create as many as 420 new jobs in the Saguenay-Lac-Saint-Jean region. The immediate job creation initiatives are as follows:

The company will build a new pot lining centre adjacent to its new Alma smelter. This project represents a total investment of $60-million. It will create up to 200 new jobs in connection with the lining requirements at the Alma complex.

Alcan has also confirmed a previously announced $170-million outsourcing contract to information technology services company CGI Group Inc. that will maintain 100 jobs and create 60 new jobs, also in Saguenay.

In addition, Alcan announced details of a new mission for Dubuc Works, in Saguenay, whereby it will become a global leader in bus bar (power conductor) production and fabrication and in a new generation of high value-added engineered cast products. This initiative was discussed in 2002. As a result of the $45-million contract to build bus bars for the Alouette smelter, there will be an immediate increase of 10 production jobs at Dubuc Works, plus an anticipated further 100 to 150 fabrication-related jobs associated with the Alouette bus bar production. Alcan will be seeking follow-up orders in the months to come.

"The investment in a new pot lining centre reconfirms Alcan's commitment to maintain and strengthen sustainable and competitive aluminum production and fabrication in Quebec, especially in the Saguenay-Lac-Saint-Jean region. These three initiatives are in line with Alcan's business strategy of maximizing value in all activities, while bringing significant benefits to the communities where we operate," said Cynthia Carroll, president of Alcan's primary metal group.


'Mozal II likely to be under budget'

Business Day, South Africa , 30 January 2003

Global resources group BHP Billiton said that production targets at the Mozal II aluminium project in Mozambique are in line with the revised schedule and cost trends to date indicate that the project will likely be completed under the project budget of $860-million.

BHP Billiton's share is $405 million.

The group added in its December quarter report on exploration and development activities that initial production is expected by the end of the second quarter 2003 and full production expected by the end of 2003.

At the end of December 2002, overall construction work had reached 79% and the civil, structural steel and cladding work was almost completed.

Installation of the main process equipment is progressing well and the pre-commissioning of various process systems has commenced.

BHP Billiton added that main construction work on the 130,000 tonne per annum Hillside III aluminium smelter project at Richards Bay commenced in April 2002 and at the end of December 2002 overall construction work has reached 36% completion.

The main civil works are nearing completion and steady progress is being made on structural steel erection and cladding.

Manufacture of process equipment is progressing on schedule.

First metal production from the new potline facilities is expected in the first quarter of 2004, in line with revised schedule, and full production is expected by the end of the second quarter 2004.

Expenditure to date remains in line with the budgeted $449 million, the group said.



The Bonneville Power Administration is ensnared in a financial sinkhole

By TOM DETZEL

THE OREGONIAN , 01/30/03

WASHINGTON

The bad news just keeps coming for the Bonneville Power Administration as it struggles to climb out of a chronic financial crisis.

During the past six months, the federal power-marketing agency that supplies nearly half the Northwest's electricity has struggled to pare back a $1.2 billion budget deficit only to have a meager winter snowpack add $250 million more to the problem.

The agency's utility customers, still smarting from rate surcharges that will reach 50 percent this spring, soon face the prospect of even higher rates that Stephen Wright, BPA administrator, is expected to propose as early as next week.

"We're not talking about a 1 or 2 percenter here," Wright said. "We're talking about a significant number."

- Precisely how significant, Wright would not say. But manycustomer groups are expecting a double-digit addition to the currentsurcharge, with some analysts estimating it could grow to 60 or 70percent.

The rate decision presents a delicate balancing test for Wright, a BPA veteran who managed the Washington, D.C., office for eight years and took over the agency's helm at the apex of the Western power crisis in November 2000.

Every 1 percent boost in the BPA's rate means a $20 million hit on the Northwest's economy. Wright will have to weigh the impact of a rate increase against Oregon's highest-in-the-nation jobless rate and longing for a regional recovery.

Yet the BPA's financial condition is so dire that the agency is at risk of running out of cash to operate. For the second year in a row, it might not be able to make a $736 million payment on debts owed to the U.S. Treasury.

How high to raise rates is as much a political decision as a financial one.

"This is such a precarious time," said Sen. Ron Wyden, D-Ore., who with other Northwest politicians has urged Wright to minimize the increase. "Just look at what people are faced with in schools and layoffs and the fact that agriculture is hit so hard."

BPA power -- drawn from 29 federal dams in the Columbia River system and one nuclear plant in Washington -- is sold at cost to the region's public and investor-owned utilities, aluminum companies and large irrigators.

Another BPA rate increase would accelerate a historic shift in the economics of Northwest power in the past two years.

Since the BPA's creation in the late 1930s, the region consistently had some of the lowest electricity costs nationwide, a big competitive advantage for backbone industries such as timber, aluminum, aircraft and high-tech.

But since the power crisis, the average cost of electricity has risen sharply. Oregon and Washington now rank solidly in the middle among states, according to statistics compiled by the U.S. Energy Information Administration.

Projected deficit mushrooms

Not since the early 1990s, when consecutive drought years sucked the agency's budget dry, has the BPA been in such severe financial straits:

-- The Bonneville Power Administration lost $337 million in 2001. It about broke even in 2002, but Wright maintains that the agency really lost more than $300 million that was masked by the accounting effects of an ongoing debt-restructuring program.

-- The agency's cash reserve shrank by $613 million in the past two years. With less than $200 million available to pay bills, the agency for the first time might have to tap a $250 million, short-term line of credit with the Treasury.

-- Last summer, the BPA said it faced a new, four-year budget deficit of $860 million and that quickly mushroomed to $1.2 billion.

After a series of regional meetings, the BPA essentially halved the deficit with budget cuts and an acknowledgment that some planned rate reductions in 2004-06 would have to be canceled.

Then the dry winter aggravated things. New water forecasts predict the BPA could lose $250 million it hoped to collect by selling surplus power in California. Normally, such sales help subsidize rates for Northwesterners.

Some analysts contend the BPA faces an even larger shortfall in revenues from surplus sales because of overly optimistic assumptions built into the agency's estimates through 2006, when its current rate period ends.

Using more realistic assumptions, they say, Wright might beconfronted with a $1 billion shortfall, even counting remedies the BPA hasannounced so far. That could peg the rate surcharge at 65 percentbeginning this fall. The higher surcharge would have to stay in placethree years unless the agency has above-average sales of surplus power.

New contracts, high prices

How did things get to this point?

There is no simple answer, but many BPA watchers point to a period three years ago, when the agency offered new contracts to its customers just as Western power prices began to explode in reaction to California's market cataclysm.

Utilities and industries that once considered buying at least some power on the open market scurried to the BPA, which had just set rates at $22 per megawatt-hour. The raging market was charging 10 or 20 times more.

By October 2000, the BPA signed contracts to provide 3,000 more megawatts of power than it could generate -- the equivalent of three Seattles. The agency would have to either buy that power at record prices or get customers to cut back.

It did both. By June 2001, the agency had cut deals to cover its needs, but at costs that guaranteed hefty rate surcharges through at least 2006.

The agency committed $261 million to the region's aluminum companies, most through 2003, rather than provide power under their contracts. Most plants in the region remain closed because of low aluminum and high power prices.

The BPA bought $2.3 billion worth of power from marketers such as Enron, paying up to $171 per megawatt-hour. Federal regulators have been asked to rescind the Enron deals, under which the BPA is paying about $200 million more than forecast market prices.

Finally, the BPA agreed to pay the region's eight investor-owned utilities $1.4 billion not to take most power deliveries they were due through 2006.

Those payments are on top of $1.8 billion the utilities will receive from the BPA under the 1980 Northwest Power Act, which requires the agency to share the benefits of federal power with residential and farm customers of private utilities.

The payments to investor-owned utilities are the subject of lawsuits and continuing hard feelings from the BPA's public utility customers. With most aluminum smelters shut down, public utilities cover the bulk of the BPA's costs.

A recent BPA study, in fact, found that three-fourths of the benefit from the Columbia River system is flowing to customers of investor-owned utilities. Puget Sound Energy and PacifiCorp, whose customers will collect up to $2.7 billion from the BPA through 2006, have some of the region's lowest bills.

"What it means to me, and you can see it, is that our customers are subsidizing their customers," said Dick Borges, general manager of the municipal utility in Canby, where residential rates are up 38 percent since 2001.

Companies fear ripple effect

Some are less eager to criticize the BPA's deals, noting that prices paid to the aluminum companies and private utilities were at a fraction of market rates at the time. And other Northwest utilities also bought into high-priced contracts.

"Any time you try to forecast power prices, it's a pure crap shoot," said Jerry Leone, manager of the Public Power Council. Still, she said, "publics are paying out a bunch of bucks right now, and Bonneville is hemorrhaging."

Northwest employers worry that another steep BPA rate increase could lead to a death spiral, where employers cut back, reducing BPA revenues further and requiring ever more increases to keep the agency afloat.

"There's no guarantee that if you increase your rates by 10 percent you're going to get a 10 percent increase in revenue," said Ken Canon, executive director of Industrial Customers of Northwest Utilities in Portland.

Canon, whose group includes Weyerhaeuser and Boeing, said industry surveys show the region has lost its competitive advantage in power rates. A group of his executives met with Wright this month, he said, and urged him to slash costs. "You need to cut to the bone, and then cut beyond that," he said.

Wright has pledged to look for more cuts, but his maneuvering room is limited. Advocates for the BPA's wildlife programs oppose cuts that could harm salmon runs protected under the Endangered Species Act. And cutting conservation and renewable energy could backfire by boosting long-term costs.

So utility and industrial customers are also pushing a financial strategy: urging Wright to capture proceeds from a debt-restructuring program that has allowed the BPA to prepay about $500 million in Treasury debts the past two years.

Another $315 million prepayment is scheduled this year. BPA customers want to capture that money for rates and get credit from the Treasury for past prepayments. The credits could reduce BPA obligations the next few years.

The BPA's debt to Treasury comes from two sources: $2.6 billion borrowed for transmission, conservation and renewable energy projects, plus another $4.6 billion for taxpayer funds that were used to build the Columbia River hydropower system.

Advance payments spur criticism

Political pressure to tap into the refinancing proceeds seems sure to rise.

"How can an agency that's hurting for money and about to raise rates because it's out of cash advance pay half a billion dollars of its mortgage?" asked Kevin Clark of Seattle City Light, one of the BPA's big customers.

But Wright said using refinancing to pay the BPA's expenses would be like taking out a second mortgage to buy groceries, "and in general that's not good fiscal policy."

The BPA also lives under a debt limit imposed by Congress. Prepaying debts allows more borrowing under the limit for new transmission lines and other investments that can keep rates low over the long term, Wright said.

Still, Wright said he hadn't ruled out the idea and would consider other financial tools that might help keep rates down.

Northwest members of Congress are watching the BPA closely. Both Wyden and Sen. Gordon Smith, R-Ore., said they are open to exploring prepayment credits from the Treasury. Wyden said Wright needs to show the region that he's "been pulling out all the stops to get savings" before boosting rates.

Randall Hardy, a former BPA administrator who steered the agency through financial hardships in the early 1990s, said it's clear that Wright faces a big problem, "and it's going to take a pretty hefty rate increase" to solve.

The hard part will be protecting the BPA while balancing the hardship on ratepayers, the economy and fish and wildlife obligations, he said.

"You just try to spread the pain as equally as possible, and then move on," Hardy said. "Paralysis is your biggest enemy here." Tom Detzel: 503-294-7604; tom.detzel@newhouse.com


Surging Chinese Metals Demand Seen As Plus For Miners

Yahoo News, Thursday January 30, 11:34 PM

By Lynne Olver

Of DOW JONES NEWSWIRES

VANCOUVER (Dow Jones)--The Canadian mining industry got a few reminders this week about China's sizeable influence as both a consumer and producer of metals.

On Tuesday, Noranda Inc. (NRD) said it was shutting down its new, 80%-owned Magnola magnesium plant in Quebec and is taking a C$630 million charge to 2002 results. Noranda, Toronto, said an unexpectedly big increase in Chinese production of magnesium put downward pressure on prices, so the plant will remain shut until magnesium pricing improves.

The same day, mining financier Robert Friedland, president and chief executive of Ivanhoe Capital Corp. and chairman of Ivanhoe Mines Ltd. (T.IVN), outlined to a Vancouver exploration audience why China is becoming the so-called workshop of the world, and why the implications are positive for the mining industry.

On Wednesday, Teck Cominco Ltd. (TEK.B) chairman Norman Keevil cited China's emergence as a major demand center for metals, such as zinc and copper, as one of several key industry trends that will be relevant for the next 20 years.

The long-term growth trend in global consumption of zinc and copper is about 1.5% and 2.5%, respectively. Assuming double-digit growth from China is augmented by strong demand from India, "growth in consumption of the major metals should be at least as strong as the long-term trend lines for the next decade or more, and could easily be higher," he said.

Keevil told reporters after a speech that his company isn't active in any Chinese mining projects but would like to be involved with Friedland's large Turquoise Hill (Oyu Tolgoi) copper-gold exploration project in Mongolia.

"So far, his aspirations and ours haven't matched, other than we would both like to be involved with each other," Keevil said, calling Turquoise Hill the biggest exploration play in the world and probably the next major copper-gold deposit to be developed.

Ivanhoe Mines is due to release a new resource estimate for Turquoise Hill by the end of January.

Costs In China Substantially Lower

Friedland is well-known in mining circles for selling the Voisey's Bay nickel project to Inco in 1996 for C$4.3 billion, among other endeavors. Aside from exploring in Mongolia, Ivanhoe Mines also has a large interest in Pacific Minerals Inc. (V.PMZ), a junior company actively exploring for gold and copper in China.

In his speech, Friedland didn't mention any of his Asian projects directly. Instead he noted that China has an enormous young population, with 18 million people entering the labor force every year, and it's fast becoming a consuming society.

Physical construction materials such as concrete and structural steel in China cost a fraction of what they cost in Australia, Europe or the U.S., he said. A new, integrated copper smelter was just built in Yunnan province for about US$130 million, but would have cost four or five times as much in Europe or the U.S., Friedland said.

There are 110 copper smelters in China, eight of them "world-class," and the smelters are "screaming for feed," hence the huge annual increases in Chinese imports of copper concentrate, Friedland said.

As for gold, individual Chinese investors can now own the precious metal, so there are 1.3 billion potential new buyers for gold, he said. "If that isn't bullish, I don't know what is," Friedland added.

China is a big player in all commodities, even in metals where it doesn't have indigenous sources, said David Davidson, a managing director with Beacon Group Advisors in Toronto.

Magnesium producers such as Noranda are getting "hammered" now because of Chinese supplies, the same way that many zinc producers were hammered by net Chinese exports in the late 1990s, Davidson noted. And the aluminum industry is concerned about China's recent turnaround from being a net importer of aluminum to a net exporter, Davidson noted.

But China's key economic advantages, including cheap power sources and cheap labor, are also prompting western companies, such as aluminum producers Alcoa Inc. (AA) and Alcan Inc. (AL), to look at investments there, Davidson said.

-Lynne Olver, Dow Jones Newswires; 604-669-1595

lynne.olver@dowjones.com


Pechiney to shut factories amid losses

PARIS, Jan 30 (AFP) - Pechiney, the global aluminium and packaging company, posted Thursday a net loss of EUR 50 million (USD 54 million) for 2002 and said it would shut factories this year to deal with a weak dollar and commodities market.

In 2001 the world's fourth largest aluminium group had made a profit of EUR 233 million.

The 2002 result was nonethelss deemed satisfactory by analysts, and Pechiney shares rose sharply in midday trade on the Paris stock exchange.

Restructuring could cost between EUR 50-70 million and involve the layoff of around 600 French workers this year, president Jean-Pierre Rodier told a news conference.

He said roughly 500 jobs had been cut in 2002, essentially in Britain, the United States and Italy.

Rodier did not give a forecast for 2003 results, but said "continued weakness of the dollar in 2003 will have an impact" on them.

A 10-cent decline in the dollar versus the euro translates into a EUR 103 million loss in the full-year operating margin, he indicated.

The company's earnings are also sensitive to the currently weak aluminium price with a USD 100 movement in the price per tonne having a EUR 90 million impact on the annual operating result, Rodier said.

For 2002, the group posted an operating profit of EUR 407 million, down from EUR 549 million a year earlier, on sales of EUR 11.909 billion, up from EUR 11.054 billion.

Earnings per share came to a negative EUR 0.66 compared with a profit of EUR 2.92 in 2001.

Pechiney shares nonetheless jumped 4.24 percent to EUR 27.26 in midday Paris trade, while the CAC 40 index of leading shares was up 2.13 percent overall.

Aurel Leven analyst Athmane Benzerroug said he maintains his "buy" rating on the stock, noting the company's plans to close loss-making activities is necessary given difficult market conditions, especially in the primary aluminium industry.


Pechiney sheds 600 jobs and closes factories

By Martin Arnold in Paris

Financial Times (subscription), UK Published: January 30 2003 12:16

Pechiney, the French aluminium group, on Thursday announced plans to cut as many as 600 jobs in France by closing two factories and scaling back several other sites as it struggles to cope with sluggish demand, falling prices and a weaker dollar.

Speaking after the company reported a net loss of €50m ($54.1m), Jean-Pierre Rodier, chief executive, said 2003 would be another difficult year" for Pechiney. He said it would entail "restructuring, and on some occasions the closing, of activities which are unable to demonstrate their viability".

He said several sites had already been identified as candidates for closure, including a loss-making primary aluminium smelter in the small Pyrenees village of Auzat. Its processing site at Aubagne near Marseilles and part of its Provins packaging plant near Paris were other candidates.

Pechiney's restructuring plan comes amid rising concern in France about the wave of redundancies likely to result from a number of factory closures announced in recent weeks, including those launched by Daewoo, Danone and Arcelor.

Jean-Pierre Raffarin, French prime minister, has responded by promising the government would work with local authorities to invest in an emergency plan to find new jobs for those who have been made redundant.

A Paris court this week opened a preliminary inquiry into the planned closure of Metaleurop Nord, a lead and zinc plant, which employs 830 staff. The closure has sparked a storm of protest in France, and President Jacques Chirac has accused the French group of flouting employee rights.

Mr Rodier denied there were parallels between Pechiney's planned closures and the controversial closure of Metaleurop Nord, and said it would help employees find jobs elsewhere in the group or at other companies.

However, since plans to close the Auzat site were presented to trades unions this week it has faced a volley of criticism from worker representatives and regional politicians, who have called on the government to intervene and accused the company of "stabbing its staff in the back".

Pechiney said the restructuring would lead to an exceptional restructuring charge of between €50m and €70m this year.

Mr Rodier said he expected 2003 would be "difficult because of uncertainties on the economic and geopolitical scenes, as well as the cautious attitude adopted by some of Pechiney's major customers".

The combination of continued pressure on the price of aluminium products and the negative impact of the weaker dollar dragged the company's full-year operating profits down from €549m to €407m, as sales rose 7.7 per cent to €11.91bn.

Mr Rodier warned that the falling dollar, against which the company does not hedge its exposure, would have a significant impact on operating income. He said that for every 10 cents the dollar fell against the euro €103m would be wiped off its operating profits.

Analysts said the results were better than expected and shares in Pechiney rose 4.4 per cent to €27.30 on Thursday.


Sarawak Aluminium Smelter One Of The World's Safest, Says Expert

Bernama, Malaysia,January 31 , 2003 12:59PM

KUALA LUMPUR, Jan 31 (Bernama) -- The RM7.6 billion state-of-the-art aluminium smelter to be set up in Semilanjau, Sarawak will be one of the world's safest as it will benefit from the latest technology in the industry, an international expert said Friday.

"The latest computerised control and fume treatment systems would be built into the Smelter Asia plant that will also employ the best health, safety and environment (HSE) practices from the very beginning," said Dr. Ken Home, a director of K Home Engineering Ltd that has been appointed as the smelter's project consultant.

He also added that Smelter Asia would be designed and operated in the same standards of those in America and Europe. K Home Engineering Ltd is a leading British management and engineering design specialist with operations in 10 countries in Asia, Europe, the Middle East and North and South America.

Dr. Home said fears that aluminium production would cause health and environmental problems were grossly exaggerated but the technological advances have made the process much cleaner and safer today.

He said many of the environmental concerns relating to smelter developments were caused by energy generation from fossil fuel power stations that emitted excessive amounts of CO2, sulphur oxides and nitrogen oxides.

"But these concerns do not arise with the Smelter Asia project as it uses a non-fossil fuel power source," he said after visiting the site of the proposed lant here Friday.

He said fluoride emissions from older smelters accumulated in vegetation and caused health problems for animals grazing close to the plant, but with modern fume treatment plants the risks had been reduced tremendously.

Dr. Home said emission levels at the Smelter Asia plant would be in line with the latest legislation from countries such as the United Kingdom, United States and Australia.

-- BERNAMA


Kaiser Aluminum Unit Appoints Director Of Customer Service

www.kaiseral.com

HOUSTON, Texas, January 31, 2003 - Kaiser Aluminum has named Marianne (Marti) Voss Morgan, 33, to the position of Director of Customer Service for the company's soft alloy extrusion products sold through distributors.

In this role, Morgan is responsible for the management of all customer service activities for the company's Single Point of Customer Contact (SPOCC) program, which is based at Kaiser's Bellwood, Virginia, soft alloy extrusion plant.

Before joining Kaiser Aluminum, Morgan was Manager of eBusiness for Reynolds Aluminum Supply Company (RASCO)/Integris Metals in Richmond, Virginia. Prior to that, she had held a variety of progressively responsible positions in materials management, eBusiness, and sales with RASCO since joining that organization in 1992. She had also previously held positions in procurement with Lockheed Martin and with the National Aeronautics and Space Administration.

FMorgan holds an MBA from Indiana University and a Bachelor of Science in Management from Clemson University.

Kaiser Aluminum Corporation (OTCBB:KLUCQ) is a leading producer of alumina, primary aluminum, and fabricated aluminum products.

F-947


Venezuela awards $650 mln aluminum project to group

Forbes, Reuters, 01.31.03, 4:58 PM ET

CARACAS, Venezuela, Jan 31 (Reuters) - Venezuela's state-owned aluminum smelter CVG-Alcasa said Friday it had chosen a consortium comprising Swiss-based Glencore International AG, Pechiney of France <PECH.PA> and U.S. construction firm Fluor Daniel (nyse: FLR - news - people) to build a fifth production line at the plant.

The $650 million Alacasa Line V project will more than double the smelter's existing output capacity to 450,000 tonnes a year from the existing 210,000 tonnes.

The announcement was made by Alcasa president Dixon Rosillon, the state industrial holding Corporacion Venezolana de Guayana (CVG), which operates the smelter, said in a statement sent to Reuters.

Copyright 2003, Reuters News Service


Job cuts at Eastalco plant

WHAG-TV, MD, January 31, 2003

FREDERICK, MD- Aluminum maker Alcoa said that it is cutting up to 150 jobs at its Eastalco plant in Frederick County. The cuts represent about 21 percent of the plant's work force of 700. Plant Manager Joe Kazadi said that the cuts include both hourly and salaried workers. The jobs are among 8,000 that Alcoa previously said it would eliminate worldwide to cut costs. The company said it has been hurt by lower aluminum prices and weak demand for its products.


'Rural Electrification Tops FG's Priority'

This Day, Nigeria, 30/01/2003 22:47:26 From Nneoma Ukeje-Eloagu in Abuja

Minister of State, Power and Steel, Dr Aliyu Modibbo Umar, pledged in Abuja yesterday that rural electrification projects, particularly constituency projects, which had either been abandoned or yet to be implemented would be accorded top priority by his ministry, this year.

The minister said the Aluminum Smelting Company (ALSCON) and the Ajaokuta Steel Complex (ASC) would receive special attention to determining the best course of action out of the present incompetent and ineffective operating conditions.

The newly appointed minister of state made the plan known in his maiden address to the management and staff of the ministry and its parastatal organisation during his assumption of office and formal presentation by the minister, Dr Olu Agunloye, who described the leadership of the ministry as " a team whose competence is not under any doubt".

Umar, who expressed his intention to "vigorously execute" the presidential mandate on constituency projects, also said he was "on a mission to stimulate the officials of the National Electric Power Authority (NEPA) into significantly improving on the present power supply in the country.

Umar said the short nature of his appointment not withstanding, "milestones which are imagined as unachievable in the next three or four months" can be achieved with the support and cooperation of all management and staff who only need to plug in 'unflinching determination to excel under those difficult circumstances that have made others to flounder".


Smelter high on pollution list

Warrnambool Standard, Australia, February 1, 2003

PORTLAND'S aluminium smelter is the third biggest industrial polluter in Victoria, but motor vehicles are the biggest overall single source of pollution, the new National Pollutant Inventory shows.

Released yesterday, the inventory ranks Portland Smelter Services third behind Loy Yang Power Management and National Power Australia Investments among the state's top 10 sources of industrial pollution.

But Portland Aluminium's operations manager Matt Pistner said the inventory showed the company had improved its reporting of emissions to the Australian community.

Mr Pistner said the inventory had increased the number of pollutant substances it reported on from 36 last year to 90 substances this year meaning that Portland now reported on an additional two substances.

"Globally Alcoa has clear goals for measuring progress towards achieving its 2020 strategic plan for cleaner air, better use of land and water and the protection of human health," he said.

Despite being ranked as the third worst industrial polluter, the Portland smelter had demonstrated a strong commitment to waste reduction, EPA state deputy chairman Rob Joy said.

Mr Joy said the smelter was doing well in complying with its EPA emission licence limit and its efforts to reduce waste.

The inventory notes that overall motor vehicles are the state's biggest pollution source contributing 43 per cent of total air pollutants, slightly more than industry's 42 per cent.

Mr Joy said the top 10 industrial emitters to air supplied services that Victorians demanded. ``People expect to have power at the flick of a switch, to be able to purchase new motor vehicles and fill them with fuel,'' he said.

Pollution from wood-burning heaters accounts for seven per cent of air emissions but in some regional areas can account for more than 60 per cent of air particle matter.

- Report: EVE LAMB