AluNews - June 2003

Russian energy monopoly agrees break-up plan

Financial Times (subscription), UK June 1 2003 20:33

By Arkady Ostrovsky in Moscow

After three years of intense political fighting among Russia's financial and industrial groups, shareholders in Unified Energy System have agreed the mechanism for breaking up the country's electricity monopoly.

The board, including state representatives and foreign minority shareholders, has unanimously approved the long-delayed plan to allow private shareholders to swap their stakes in UES on a pro rata basis for shares in wholesale private generating companies.

The government, which controls 52.5 per cent of UES, will not participate in the swap and will concentrate its holding in the transmission system, which will remain in state hands.

"The fight for the restructuring plan is over. The market and the business community have accepted the logic and mechanism of the UES restructuring. Now there is no way back," Anatoly Chubais, head of UES, said in an interview. The plan, which rules out any cash sales of generating assets, was a compromise between minority shareholders and the management of the company led by Mr Chubais.

"This is the most significant restructuring of a natural monopoly in Russia - which, for a long time, has been a barred territory for reformers," said Al Breach, chief economist at Brunswick UBS Warburg, a Moscow-based brokerage. "It sets a precedent and a benchmark for the restructuring of Gazprom, Russia's gas monopoly, and the railway monopoly."

In a rare moment of unity, minority shareholders who fought a fierce battle against Mr Chubais praised him for listening to their arguments. David Herne, a minority shareholder and a former independent director of the board of UES, said: "This is a sensible and coherent plan, which in effect liquidates the company to its shareholders."

The plan has been welcomed by the market, with the UES share price rallying about 40 per cent over the past two weeks.

New UES board members elected at the annual general meeting on Friday include two representatives of MDM group, which controls the biggest share of coal production in Russia, as well as a representative of Basic Element, a company owned by Rusal, Russia's aluminium giant.

"These are no longer portfolio investors who are only interested in the share price, nor are they yet strategic investors committed to put money into building new generation capacities," Mr Chubais said. He said it was crucial to attract foreign strategic investors into the company in order to prevent further concentration of assets in the hands of few groups.

Japanese steelmaker to build $32.7 million aluminum material plant in U.S.

Miami Herald, FL Associated Press 6/2/03

TOKYO - Kobe Steel, a major Japanese steelmaker, is building a $32.7 million plant in Kentucky to produce an aluminum material used in making parts for car suspensions.

Production of aluminum forgings at the new plant in Bowling Green will start in June 2005, company spokesman Gary Tsuchida said Monday.

The company plans to join with other Japanese companies in the effort, although it has still not decided on the partners, Tsuchida said.

However, officials in Kentucky said a pair of Japanese trading firms - Mitsui & Company Ltd. and Toyota Tsusho Corp. - will own 25 percent and 15 percent of the venture, respectively.

In Kentucky, Economic Development Secretary Gene Strong said the plant and an office building would occupy about 33 acres of the South Central Industrial Park in Bowling Green.

In negotiating to get the plant, the state agreed to pay for worker training, Strong said. The amount is still to be determined, he said. The company also would qualify for a corporate income tax credit of up to $3.8 million per year, he said.

Gov. Paul Patton, who leaves for Japan on Wednesday, said Kobe's decision is a positive reflection on "the work ethic of the Kentucky worker."

"With our quality workforce and our central location, Kentucky has become the location of choice for many of the best companies in the world," Patton said.

Aluminum forgings are a lightweight material made of pressed metal. Demand for lighter parts is increasing among automakers because cars have been growing heavier as they are fitted with more safety features and options.

Kobe Steel expects annual sales at the new plant to reach $25 million by its second year. It will employ 78 workers.

Bowling Green has become an attractive place for automotive businesses because of its central location, said Raja Bhattacharya, assistant director of the Office of Global Business and Entrepreneurship at Western Kentucky University.

"There are almost 60 to 65 automotive assemblers less than a day's drive from Bowling Green, Kentucky," he said. "Logistically, I think we are very well-positioned."

The new joint venture, called Kobe Aluminum Automotive Products, plans to market its products to both U.S. automakers and Japanese automakers in the United States, Tsuchida said.

Longview Aluminum to submit reorg plan in July

Reuters, 06.05.03, 5:13 PM ET

NEW YORK, June 5 (Reuters) - Privately held Longview Aluminum said on Thursday it was granted until the first week of July to submit its reorganization plan to the U.S. court in Illinois that is overseeing its bankruptcy.

Longview in March 2003 decided that filing for Chapter 11 bankruptcy protection and a reorganization would be its best path to guarding its assets and restarting its idled aluminum smelter in Longview, Washington.

"We are working on the reorganization plans now and when we present them to the court, we will be talking about them publicly," said a Longview Aluminum spokeswoman.

A judge at the U.S. Bankruptcy Court for the Northeastern District of Illinois, Eastern Division, has set the deadline for July 2 for Longview to present its plan.

The Longview smelter, which has an annual production capacity of 204,000 metric tons of metal, has been shut since February 2001 when Longview agreed to sell contracted power back to a federal marketing agency amid a West Coast energy shortage.

Longview had anticipated reopening the plant last year, but a lack of a new labor agreement and high energy costs prevented this, it said.

Alcoa Inc (nyse: AA - news - people), the world's largest aluminum company, sold the Longview smelter to Chicago-based investment group Michigan Avenue Partners in 2001 as part of a court-ordered divestiture after Alcoa took it over from Reynolds Metals Co.

Copyright 2003, Reuters News Service

Alcoa Plans to Invest $2.7 Bln in Brazil by 2011 (Update4)

June 5 (Bloomberg) -- Alcoa Inc., the world's biggest aluminum maker, plans to spend $2.7 billion (7.7 billion reals) in Brazil over the next seven to eight years on new a smelter and power generators, doubling capacity in that country and cutting production costs, Chief Executive Alain Belda said.

``Our focus for growth will be on Brazil and China,'' Belda said. ``We want to keep operating our plants without having to worry about energy,'' Belda told reporters during a tour of the company's Pocos de Caldas, Brazil, plant.

Alcoa, based in Pittsburgh, plans to build a smelter with a capacity of 400,000 to 500,000 metric tons a year, he said. Alcoa also plans to spend $6 billion to $7 billion worldwide from 2004 to 2010 for factories and hydroelectric plants to run them.

The Brazil investments may protect Alcoa from a repeat of its 15 percent cut in production after Brazil's government rationed power in 2001. Belda, who had previously disclosed the expansion plans, wants to take advantage of Brazil's supplies of bauxite, the raw material for aluminum, and cheaper electricity that would be produced by the proposed power plants.

``It makes sense that if you have cheap access to power and good labor rates, two of the biggest costs in aluminum making, that you move there,'' said HSBC Securities analyst Tony Lesiak who rates Alcoa shares a ``hold'' and said he doesn't own them.

Alcoa is shifting output to outside the U.S., including Brazil, Canada, China and Iceland, where power is cheaper. The company's smelters in Canada, for example, run on electricity that costs as much as two-thirds less than plants in Texas and Oregon.

Shares of Alcoa fell 14 cents to $25.84 as of 4:01 p.m. in New York Stock Exchange composite trading. They have fallen 23 percent in the past year.


American manufacturers, including Alcoa and Caterpillar Inc., hope to profit from Brazil's 174 million consumers, the Western Hemisphere's largest market after the U.S. The country has experienced slow economic growth and tight credit markets while its currency has strengthened 24 percent against the dollar since the beginning of the year. In 2001 and 2002, foreign companies invested $39.1 billion in Brazil.

Alcoa's Pocos de Caldas plant produces 50 percent of its own energy needs, Belda said. Alcoa aims to generate all of its energy with the new plants, he said. It currently produces 25 percent of its energy needs.

The company's Brazil investments include expansion of its Alumar smelter in the northern Maranhao state and power plants in the northeast and south. The investments would double Alcoa's aluminum-making capacity in that country, most of which would be exported, Belda said. Brazil accounts for about 5 percent of Alcoa's worldwide sales.

``This kind of investment takes them back to their roots as a raw-aluminum supplier and balances some of the investments they've made in industries like aerospace and power generation markets,'' Lesiak said.

Belda, a Brazilian citizen born in Morocco, said Alcoa has presented its investment plan to Brazil's president, and is awaiting environment licenses and approval from energy regulators.

During the past two years, the average price of aluminum traded on the London Metal Exchange has dropped about 4 percent. A 1-cent drop in the price of a pound of aluminum reduces Alcoa's annual earnings by about 5 cents to 8 cents a share, according to reports from Lehman Brothers and HSBC Securities.

Alcan Cable to close by mid-August

Bay St. Louis Sea Coast Echo, TX 6/5/03


More than a hundred people found out Tuesday that their jobs would cease to exist within two months at Alcan Cable in Bay St. Louis.

Alcan Inc. announced its decision to close the facility by Aug. 15 because it will "consolidate its cable production facilities to improve the performance of its cable business."

"This decision is difficult, but has been made necessary by the prolonged poor market conditions and over-capacity in the cable market," said Ian Hewett, president of Alcan Cable, in a press release. "Moving forward, Alcan will focus production at its four remaining cable facilities and continue to provide high quality cable products and service to our customers."

Pat Persico, manager of corporate communications and media relations at Alcan, conducted a press conference Tuesday.

"This decision is not a reflection on the Bay St. Louis employees," she said. Persico said the Bay St. Louis facility was chosen because its line can be absorbed by Alcan’s other facilities.

In order to help its Bay St. Louis employees adjust, Persico said Alcan has established a severance program and an on-site out-placement center.

She said the company will also offer a limited number of job opportunities within its other facilities.

Counselors arrived Tuesday to begin the process of helping the 116 employees through this transition. Of the 116 employees, 92 are on hourly pay and 24 are on salary. The average labor wage, Persico said, is approximately $16 an hour, not including benefits.

Persico said Alcan will offer employees a 10-hour class, which provides training in resume development, job seeking, financial planning and interviewing.

The classes will be broken up into two-hour classes per shift per week. There are four 12-hour shifts at the Bay St. Louis facility.

Persico said Alcan has postponed production this week until Friday to help accommodate time for the counselors.

Alcan Cable, which is based in Atlanta, Ga., is a division of Alcan Aluminum Corporation.

Pechiney to Buy Mexico's Novacel for $90 Mln to Boost Packaging

June 5 (Bloomberg) -- Pechiney SA, the world's fourth-biggest aluminum producer, agreed to buy Mexico's Novacel for $90 million as it seeks to boost its packaging business.

The Paris-based company plans to complete the acquisition of the maker of elastic packaging by this summer, it said in a faxed statement. Guadalajara-based Novacel had sales last year of $110 million and employs about 1,000 workers, Pechiney said.

The French company has been closing unprofitable plants as lower demand for its aluminum, used in everything from beer cans to airplanes, and higher production push down prices.

Orissa govt, Sterlite to ink MoU today

Dillip Satapathy in Bhubaneswar

Business Standard, India Published : June 7, 2003

The Orissa government will sign a memorandum of understanding with Sterlite Industries tomorrow for setting up of a Rs 4,000 crore alumina refinery project at Lanjigarh in Orissa.

The foundation stone of the project is scheduled to be laid by the chief minister Naveen Patnaik on Sunday. The proposed venture, having refining capacity of one million tonne of alumina per annum, is expected to be completed in 36 months.

Sterlite is also front runner in the bid to take over public sector Nalco, which has been put on the block for privatisation by the government. The proposal to set up an alumina refinery and a smelter in Orissa by the Sterlite group was originally mooted in 1996. However, the project was since hanging fire.

Now, work on the project has gained momentum following the company’s decision to expand the smelter capacity of Balco from one lakh tonne to 3.5 lakh tonne at an estimated cost of Rs 5,000 crore.

With the company not having enough alumina capacity to support the smelter expansion, the Orissa alumina refinery project has become vital link in the backward linkage of the company’s operation.

Besides, the company also intends to make the best of the current boom in alumina prices whose spot price is hovering over 200 dollars per tonne in the international market.

Though the company had asked for transfer of bauxite mining lease at Lanjigarh standing in the name of Orissa Mining Corporation (OMC), sources said, such transfer is unlikely to happen soon because of the view of the government that any proposal for transfer of mining lease should be considered only after substantive physical and financial investment by the company in the project.

Meanwhile, pending the transfer of mining lease in the name of the company, Sterlite is expected to operate the mines in a joint venture arrangement with OMC.

The Lanjigarh bauxite mines patch is estimated to contain 73 million tonne of bauxite with 46 per cent aluminium content.

Romanian-Russian Business Center to Open in Bucharest

Rosbalt, Russia MOSCOW, June 7.

Romanian President Ion Iliescu and Director of the Union of Industrialists and Businesspeople (RUIB) Arkady Volsky will open a Romanian-Russian business center in Bucharest on June 9. The RUIB told Rosbalt that the creation of the center was called on to stimulate trade and economic cooperation between Romania and Russia, and develop contacts among businesspeople in both countries.

The RUIB said that the opening of the center corresponds to the run up of the Romanian president's visit to Russia in the beginning of July 2003. During the visit both sides will sign a basic agreement of cooperation. Volsky said that the Romanian market could be attractive for Russian companies specializing in the areas of energy, automobiles, oil refineries, and high technology. At the present time only large business interests represent Russia in Romania: Lukoil, Russian Aluminum, Gazprom and United Automakers Factories.

RusAl in Sierra Leone

Moscow Times, Russia June 8, 2003

FREETOWN, Sierra Leone (AFP) -- Russian Aluminum, or RusAl, the world's No. 2 primary aluminum producer, has put together an investment project for a bauxite mine in southern Sierra Leone, officials at the west African country's Mineral Resources Ministry said Friday.

Officials said plans call for the project to be realized through the framework of developing strategic cooperation between the government of Sierra Leone and RusAl.

RusAl's assets in Guinea include the Bauxite Co. of Kindia, where annual mining capacity is 2.5 million metric tons.

World Power Emerges From the Taiga

Moscow Times, Russia Tuesday, Jun. 10, 2003. Page 7

By Samantha Shields, Reuters, Oleg Korolyov / Vedomosti

KRASNOYARSK, Western Siberia -- Sergei Andrushenko has worked at the gigantic Krasnoyarsk Aluminum Smelter, or KrAZ, in a remote part of Siberia for 22 years.

"It used to stink unbelievably badly and you'd come home from work at night completely black. It was hard work and very bad for you, but now it's much better," he said.

The production workshops at KrAZ, a five-hour flight from Moscow, still smell like sulfur and the taiga -- a belt of coniferous trees -- that surrounds the city is dramatically green and warm for only a few short months of the year.

During the long winter temperatures drop to minus 30 degrees Celsius and at the height of summer clouds of mosquitoes and ticks carrying encephalitis are a scourge.

"Our logistics are lousy, we're about as far from the market as you can get and that with the climate means this is not an easy smelter to run," said Duncan Hedditch, who left Australia's Comalco to become managing director of KrAZ a little more than a year ago.

Hedditch was lured to Siberia by Russian Aluminum, the company set up in a wave of mergers in 2000 that now accounts for 10 percent of the world's primary aluminum production and 75 percent of Russian domestic output.

RusAl, 50-50 owned by tycoon Oleg Deripaska and the majority shareholders of oil firm Sibneft, namely Chukotka Governor Roman Abramovich, emerged the victor from the chaos of the 1990s when the struggle for control of Russia's aluminum led to bankruptcy, political intrigue and criminal proceedings on contract killings.

It now owns four of the world's biggest aluminum smelters; mines producing alumina, the raw material for aluminum, in Guinea, Ukraine, Russia and Romania; and fabrication plants in Russia and Armenia.

Deripaska executives talk of an initial public offering of RusAl shares in coming years.

Hedditch wants to push production at KrAZ toward 1 million metric tons per year, and RusAl has ambitious plans to overtake America's Alcoa to become the world's top primary aluminum producer by 2012.

"The first task RusAl faces is getting the right number of people working for the organization," he said on a tour of the KrAZ territory.

Old-style Soviet slogans like "The Strength of the Collective Is in the Discipline of Labor" vie for space on plant walls with newer, free-market friendly ones like "Russian Aluminum Is Russia's Success on the World Market."

The communist legacy of a region's major employer being responsible for everything from nursery schools to production to sports centers still dogs the smelter.

KrAZ now has 9,000 employees, down from the 13,000 it had a few years ago but still well above 6,000, Hedditch's target for efficient operations.

Hedditch said the drop would be achieved by spinning off noncore service industries.

"We're moving employees from our operations to contractors," he said.

Cleaning up production and efficiency at the smelter, which was originally slated to be built 30 kilometers from the town but ended up right on its edge, is also a priority.

One new set of equipment, known as a scrubber, for cleaning the gas produced during production is already in operation, and eventually identical equipment will replace the old plant at each of the smelter's 24 production lines.

"The new system captures hydrogen fluoride and puts it back into the production process," Hedditch said, adding that the new gas cleaning system captures 99.8 percent of escaping gases where the old one caught only 58 percent.

It takes vast amounts of electricity to make aluminum, and KrAZ gets its supply from the Krasnoyarsk Hydroelectric Plant, 51 percent owned by Deripaska's investment vehicle, on the powerful Yenisei River.

The Achinsk Alumina Refinery, rescued from bankruptcy by RusAl, supplies KrAZ with 1 million tons of its raw material per year.

Both are located close to KrAZ.

"Before RusAl, sourcing raw materials was a real problem because all the smelters were working independently," Hedditch said.

"Now there is a lot more stability."

Standing in a warehouse surrounded by shiny T-shaped ingots of aluminum, he said KrAZ's remote location would always be a problem.

"It costs us extra just to get the aluminum to the ships in St. Petersburg or Vladivostok," he said.

Consortium to build Alcoa plant

Pittsburgh Post Gazette, PA 6/9/03

Alcoa selected Bechtel and an Icelandic engineering consortium to design and build a $1 billion primary aluminum plant in eastern Iceland. Design work is scheduled to begin this year, and the project is expected to be completed in the second half of 2007.

Venezuela woos Iran on possible alumina investment

Reuters, 06.09.03, 1:41 PM ET

CARACAS, Venezuela, June 9 (Reuters) - Venezuela, responding to Iranian interest in buying its bauxite, has proposed setting up a joint-venture alumina plant on Venezuela's Orinoco river, state industrial holding company CVG said on Monday.

A spokeswoman for the company, Corporacion Venezolana de Guayana, told Reuters its President, Francisco Rangel, outlined the proposal to Iran's government and aluminum industry during a visit to the Gulf state at the end of May.

"The Iranians want to buy bauxite, but (Rangel) explained to them that CVG doesn't want to just sell bauxite," the spokeswoman said. CVG operates Venezuela's state-run aluminum industry located in mineral-rich southeastern Bolivar state.

The spokeswoman said Rangel had made clear CVG was only interested in selling bauxite through a strategic alliance with Iran, involving setting up a joint venture in Venezuela to produce alumina which could be shipped to Iran for smelting.

"The idea is that the Iranians make the investment in the plant, and then they would be paid back through production," the spokeswoman said.

CVG had identified a possible site for the proposed plant at Caicara on the Orinoco river, which would make it easier to transport bauxite from Venezuela's huge Pijiguaos mines.

It was not immediately clear what response Rangel had obtained in Iran to his proposal. Iranian embassy officials in Caracas were not immediately available for comment.

According to CVG, Iran has plans to increase its installed primary aluminum production capacity to more than one million tonnes in the next 10 years from the current 140,000 tonnes. It is looking for fresh sources of raw material to do this.

Venezuela's fiercely nationalist left-wing president, Hugo Chavez, has made clear his government does not simply want to export raw materials. He says he prefers forming alliances with major foreign producers to develop value-added processing, smelting and manufacturing ventures inside Venezuela.

As examples of this kind of preferred association, the CVG spokeswoman mentioned existing contracts with Swiss-based Glencore International AG and France's Pechiney <PECH.PA>.

Glencore is leading a consortium in a $650 million project to build a fifth production line at CVG's Alcasa smelter.

Pechiney is proceeding with a $210 million project to expand production at an alumina plant operated by CVG-Bauxilum to 2.2 million tonnes a year from 1.6 million tonnes.

CVG is seeking foreign partners to participate in an ambitious expansion plan that foresees increasing its primary aluminum output capacity by more than 400,000 tonnes to more than one million tonnes at the end of the decade.

Since Chavez, a populist former paratrooper, was elected in late 1998, the world's No. 5 oil exporter Venezuela has moved to strengthen ties with states seen as hostile by the United States, such as Iran, Libya, Cuba and previously Iraq, when it was ruled by the now toppled Saddam Hussein.

This has irritated Washington, although the United States remains the single biggest buyer of Venezuelan oil.

Copyright 2003, Reuters News Service

Nigeria to select aluminium smelter buyer in July

Reuters, 06.09.03, 8:41 AM ET

LAGOS, June 9 (Reuters) - Nigeria will select its preferred buyer for the mothballed Aluminium Smelter Company of Nigeria (Alscon) in July, four years after it was shut down, a public enterprises official said on Monday.

Joe Anichebe, spokesman for Nigeria's Bureau of Public Enterprises (BPE), told Reuters that three companies had been shortlisted to purchase a 51 percent stake in the state-owned firm.

They are Germany's Ferrostaal, a unit of German trucks group MAN <MANG.DE>, the world's largest producer Alcoa of the U.S. (nyse: AA - news - people), and Russian Aluminium.

"The date for the submission of bids is June 30 and bids will be opened on July 8," said Anichebe, adding the buyer would be chosen that day.

Currently, the Nigerian government holds 90 percent of Alscon, Ferostaal 7.5 percent and Alcoa 2.5 percent.

The Nigerian government's stake was increased from 70 percent earlier this year, at the expense of its two private sector partners, to compensate for debt owed it by the company. The restructuring followed an audit which deemed the smelter "insolvent and technically bankrupt".

It is estimated that the government is looking to recoup through the sell-off roughly what it spent building the troubled plant - around $2.5 billion.

The smelter opened in late 1997 and shut in mid-1999 after producing just 40,000 tonnes of metal, although capacity is put at 193,000 tonnes a year.

The government missed an earlier deadline of December 23 last year to privatise Alscon.

Copyright 2003, Reuters News Service

Sterlite plans $250 mn UK listing

Rediff, India June 09, 2003 11:32 IST

Sterlite Industries plans to float up to 25 per cent stake in the company on the London Stock Exchange within the next two months, raising around $250 million.

The issue will value Sterlite at $1 billion and will be the most significant fund-raising in the London market this year.

The group, which is being advised by HSBC and JP Morgan, decided on Friday to go ahead with the flotation despite there having been no main market listings in London since last year.

Sterlite will be the first Indian metals company to have its primary listing in the UK.

Anil Agarwal, founder of Sterlite and owner of around 80 per cent stake, believes the company will achieve a higher valuation here than it does in India and that the business will benefit from having a better profile.

Sterlite is highly acquisitive and aims to become the largest non-ferrous metals group with sales of $5 billion by 2005.

The company has played a leading role in the Centre's sale of metals assets, prompting speculation that it could use the money raised in London to launch a bid for Nalco, the state-owned aluminium group due to be privatised later this year.

In March last year, Sterlite paid Rs 445 crore for a 26 per cent stake in Hindustan Zinc, a state-owned metals group.

BHP-Billiton to mine bauxite and produce alumina at El Palmar

Venezuela Electronic News, Venezuela June 10, 2003

Venezuelan Guayana Corporation (CVG) officials say the state-owned heavy industry conglomerate intends to free up a large bauxite deposit in which BHP-Billiton has shown an interest to mine bauxite and produce alumina.

CVG president, Major General (ret.) Francisco Rangel Gomez says the CVG had had to rescind a dormant exploration contract held by British Delta Minerals before the El Palmar deposit could be offered but that Delta Minerals had held the contract for more than a decade without carrying out any work on the property.

In a curious parallel with procedure on the Las Cristinas gold mine project in El Callao, where Placer Dome's work contract was irrevocably rescinded last year, Rangel Gomez says "what we have is a lack of contract compliance ... nothing was done for 12 years!"

"Without any doubt we will be making a decision before the year is out," Rangel Gomez said, pointing out that the CVG has total autonomy from the President of Venezuela to handle all mining contracts in Venezuela's Guayana region. The CVG is currently in negotiations with Delta Minerals to end the contract, in full compliance with their obligations and Venezuelan law.

BHP-Billiton had asked to participate in the El Palmar development with an initial investment of US$1.3 billion for the construction of a bauxite mine and an alumina plant which could be expanded to include a primary aluminum smelter, with an increased total investment estimated at $4.3 billion.

CVG mining director Armando John says El Palmar contains bauxite reserves estimated at 150 million tonnes. The CVG has drawn up a new national aluminum development plant focused on a primary aluminum output goal of three million tonnes comparable with Venezuela's total annual aluminum output at just over 607,000 tonnes.

CVG Alcasa has just signed a $650 million aluminum smelter project with Swiss-based Glencore International AG consortium to build a fifth production line to double capacity to 450,000 tonnes.

Russian Firm Bids for Alscon, Africa 10 Jun 2003

Daily Trust (Abuja) Suleiman Mohammed

A Russian firm, Russian Aluminum, yesterday declared its interest to invest in the moribund Aluminum Smelter Company, Ikot Abasi, just as Vice President Atiku Abubakar assured of government's determination to create a level playing field for competition.

The Russian firm, which got the support of the Russian authority to bid for the smelter company, said it has the potentials to reform the Nigerian company-ALSCON.

Russian Ambassador in Nigeria, Gennady Lyitcher, who paid a courtesy call on Vice President Atiku Abubakar to lobby for the firm, said the company possesses the necessary technical know-how and experience to be core investors of the plant.

Vice President Atiku Abubakar in a response told the Russian envoy that government would not impair the bid of any group, but would rather ensure a high competitive exercise.

Atiku also recalled the excellent relationship, which had existed between Nigeria and Russia, spanning over decades, and expressed the hope that the relation would continue.

Vice President Atiku Abubakar said government was much interested in the information of the ailing smelter company, hence, would not deter prospective investors in the aluminum industry.

The Aluminum Smelter Company, Ikot Abasi has been grounded over the years due to what government described as negligence of previous administrations.

Construction of Komi Aluminium factory to begin in first half of 2004

Pravda, Russia 10 Jun 2003

General Director of Komi Aluminium Vladimir Kremer, First Deputy of the Head of the Komi Republic Nikolai Levitsky and Regional State Speaker Ivan Kulakov made an inspection of the site for the new aluminium factory in Pechora yesterday.

As a Rosbalt correspondent was informed by the press office of the Komi administration, three sites were originally selected as possible locations for the factory but the site close to the Pechora power station was judged the most suitable. The project will not involve the pulling down of any residential buildings. There is access to the site by a dirt track but there are also plans to provide access by rail. According to the press office construction will begin in the first half of 2004.

The official delegation is also planning to visit the Pechora power station to discuss the price of electricity for the factory and there are also plans to meet the city leaders.

Aluminium production in Komi is one of the largest investment projects in Russia.

US aluminum orders up in May but still low-analyst

Reuters, 06.11.03, 2:57 PM ET

NEW YORK, June 11 (Reuters) - The Aluminum Association's latest figures show U.S. aluminum orders for all categories rose a seasonally adjusted 19 percent in May over month-earlier figures, according to BB&T Capital Markets' research report citing the data on Wednesday.

Excluding volatile can sheet, orders were up 9 percent over April on an adjusted basis, the report said.

"The increase is a welcome sign of relief for the industry, although the level of orders remain low," BB&T said.

It said March and April orders had fallen to levels near cycle lows, indicating little recovery in downstream aluminum markets.

"We view the (aluminum) data with cautious optimism for aluminum companies with downstream U.S. exposure," BB&T said, citing Alcoa Inc. (nyse: AA - news - people), Alcan Inc. (nyse: AA - news - people), Tredegar Corp. (nyse: AA - news - people), Commonwealth Industries Inc. (nasdaq: AA - news - people), IMCO Recycling Inc. (nyse: AA - news - people), and Pechiney (nyse: AA - news - people) <PECH.PA> as examples.

BB&T added that it viewed the orders data as most positive for Tredegar because orders for extruded shapes, the only product that Tredegar produces, rose to their highest level in a year.

Of the companies BB&T cited, it said, French metals producer Pechiney benefited the least because of its relatively minor U.S. exposure.

"If in fact, the U.S. economy is going to experience a second half recovery, which we think it will, then the upturn in orders in May will likely prove to be the start of a meaningful uptrend," BB&T's analysis said.

The main risk to its view, it added, would be that the U.S. economy musters only a brief growth spurt, before returning to a more stagnant pace.

Venalum expansion program anticipates annual production increase to 3,000 tonnes

Venezuela Electronic News, Venezuela Wednesday, June 11, 2003
By: David Coleman

Venezuelan Guayana Corporation (CVG) aluminum producing subsidiary Venalum is expecting annual production to increase to 3,000 tonnes in an expansion program just announced from CVG HQ in Puerto Ordaz. The National Aluminum Development initiative forms part of the construction of Train 6 at Venalum and Train 5 at CVG Alcasa, included in plans for the construction of further processing plants in southeastern Bolivar State ... the new trains have an already installed capacity of 200,000 tonnes per annum but Venalum's capacity will increase to 600,000 tonnes and Alcasa to 410,000 under program details just made public.

Venezuela is attempting to secure its competitive position in world aluminum markets where it aims to achieve 6th position up from a current 10th in world rankings.

CVG Venalum is celebrating its 25th anniversary of productive operations with a 2002 balance of 17.304 billion bolivares (±US$10.8 million) and record production of 436,558 tonnes thanks to stable operations and increased foreign investment which has helped increase production, lowering costs and gaining wider sales.

Venalum is a producer of primary aluminum in joint venture with 20% partner Japanese Showa Denko

Alcasa in 92% CVG-owned in partnership with US Alcoa.

Most Japan 3Q Aluminum Premiums At $68-$71/MT, Down Vs 2Q
Wednesday June 11, 12:35 PM
Singapore, June 11 (OsterDowJones) - Almost all negotiations for Japan's third-quarter premiums for aluminum are over, with most settled at $68-$71 a metric ton, traders told Dow Jones Newswires Wednesday.

One of the first deals concluded with a big Australia-based producer was set at $73/ton, but the premiums drifted lower as the negotiations stretched over most of May and early June, traders said.

The $68-$73/ton range is down from the $74-$75/ton settled during the second quarter, but higher than the $65-$70/ton that many initially expected.

All premiums are quoted to the London Metal Exchange cash price on a cost, insurance and freight basis at the main Japanese ports.

That some buyers couldn't manage to depress the premiums to the mid-$60 levels could mean that Japan's aluminum demand isn't as weak as originally thought, said some traders.

Judging from the backwardation on the LME aluminum futures, buyers could "theoretically" claim a discount of more than $20/ton from the second quarter's $74-$75/ton, said a Tokyo-based trader with a big Japanese trading house.

He was referring to the backwardation between the July date and three-month contract, which at 0400 GMT Wednesday was $20.50/ton.

A week ago, the backwardation flared up to $30/ton.

At 0400 GMT, three-month aluminum was quoted at $1,388.50/ton, and cash at $1,399.90/ton.

Backwardation occurs when the nearby contracts are priced higher than the distant ones, usually indicating that nearby supply is tighter.

But most trade participants argue that the LME aluminum backwardation is technically inspired, thereby complicating premium negotiations and making it expensive for traders to roll over their short positions.

Thus, these traders could have insisted on premium cuts of more than $20/ton, said the trader.

However, aluminum demand in Japan "is still quite strong, that's why buyers have to take metal physically to deliver to consumers," he said.

According to the Japan Aluminum Association, the country's aluminum consumption over the first quarter grew 8.4% to 1.01 million tons from a year ago, due mainly to higher demand from the transportation sector.

"We couldn't achieve any lower number than $70/ton," said the trader.

Another Tokyo-based trader concurred that most of the deals were settled in the range of $70-$71/ton.

However, a third trader, together with a buyer from an extrusion firm, said most of the deals were concluded at $68-$70/ton.

Wong Chia Peck, OsterDowJones, 65-6415-4082;

RM13 bln aluminium plant to break even in nine years

The Edge Daily, Malaysia By Thomas Soon, 10.49am Jun 11, 2003

Masco Aluminium Sdn Bhd, which is setting up a RM13 billion aluminium smelter plant in northern Perak, is confident of breaking even within eight to nine years from its first rollout.

"If the (aluminium) market is good, we expect to get back our money in six to seven years," Masco chairman Edward Wong Wing Cheong tells in an interview.

"But the target is eight to nine years. We would not miss that," he says. The ground breaking for the smelter plant at the Lumut Port Industrial Park in Perak is scheduled for August.

Wong, who from Hong Kong and has a 50 per cent stake in Masco, says the company has targeted a profit margin of between 15 per cent and 25 per cent. He adds that the aluminium produced would be of "LME quality" - LME being London Metal Exchange.

The aluminium smelter plant will also have a dedicated coal-fired power plant comprising seven 300MW units.

Wong says three of the 300MW units would be operational at any one time, while the other two would be used for standbys during maintenance and breakdowns of the three running units.

He says electricity will initially constitute between 35 per cent and 36 per cent of total production cost, while aluminium will make up about 29 per cent. Wong hopes to reduce that of electricity to about 26 per cent when the plant is running smoothly.

"The plant will be competitive," he says, adding its production cost at between US$1,000 and US$1,100 per tonne would be one of the lowest in the world against about US$1,300 in Europe and America and US$1,350 in China.

Wong expects the plant, which will have a maximum capacity of 720,000 tonnes, to roll out its first ingots by October 2005. Masco expects annual production to reach 250,000 tonnes in 2006, 450,000 tonnes in 2007 and 690,000 tonnes in 2008. Malaysia now imports 200,000 tonnes annually.

Wong says Masco would first cater for the country's need before exporting the rest. "Who will be able to compete with my price (locally)?" he asks rhetorically.

"Aluminium is the future metal of the world," said Wong, adding that he strongly believes that aluminium would be a replacement for many of the existing materials such as wood.

As it is, he says countries such as Japan, South Korea, China, Thailand, the Philippines, Taiwan, and Indonesia are now short of six million tonnes of aluminium.

Wong says the power plant would require between 4.6 million and 4.8 million tonnes of coal that would be imported and shipped via the Lumut Port.

The smelter plant itself will require 1.3 to 1.4 million tonnes of alumina per annum, which would be imported from Switzerland and Australia.

Its alumina supplier in Switzerland, Glencore International AG, will also be a buyer of its aluminium ingots. Wong says Glencore trades about US$45 billion of the metal a year.

"We already have standby buyers to buy all our products," says Wong.

Masco's smelter plant turnkey contractor is China Metallurgical Equipment Corporation, employing the 300kA technology from Shengyang Aluminium and Magnesium Engineering and Research Institute. The smelter management will come under United Kingdom's Kaiser Engineers.

The power consultant and management are UK's PowerGen and Australia's Eraring Energy.

New aluminium alloy reduces risk of aircraft brake failure

Cordis News, EU Date: 2003-06-11

A Franco-German Eureka project has developed a new aluminium alloy able to better withstand the heat produced when an aircraft brakes.

An aircraft's wheels and breaks can become extremely hot as the plane's kinetic energy is transformed into heat on the runway by brake pads, and then transferred to the surrounding components. The wheel, tyres, piston and metal housing of the brakes are all susceptible to sudden and intense heat, making the fear of brake failure very real.

The new alloy can tolerate temperatures 15 per cent higher than other aluminium alloys.

The new alloy is now being marketed by French partner and manufacturing company Messier-Bugatti, while Otto Fuchs KG, the German partner, are exploring new markets for the alloy, such as impellers, parts for vacuum pumps and chemical centrifuges.

For further information, please visit:

Composites over metal for 7E7

Boeing chooses material for proposed new airplane


The metal debate is officially over at The Boeing Co., with the company announcing yesterday that it would use mostly advanced composites, as opposed to traditional aluminum, to build its proposed 7E7 jet.

The 7E7, projected to be in operation by 2008, will use graphite strengthened with epoxy resin as the main material, Boeing said. The wings will include a combination of titanium and graphite.

Boeing is making a series of decisions about a plane that would be its first new model since the 777 was introduced in 1995. It plans to build the airplane with a far smaller work force, as few as 800 to 1,200 worker, who will essentially snap together large-scale parts at a final assembly site.

Company executives had been leaning toward using advanced composites in the 7E7 because Boeing wants to make the plane lighter so it will use 20 percent less fuel per seat than current jetliners. Makers of commercial aircraft are using composites as they become less costly, said Paul Nisbet, analyst for JSA Research. "They're lighter and they're stronger," he said.

Boeing hasn't officially decided to build the 7E7, promoted as a more efficient model than today's jetliners, but it has already begun assembling a network of suppliers. The company still must get approval from its board of directors later this year to begin seeking orders from airlines.

But company personnel are already working with regulators at the Federal Aviation Administration on a jetliner that would contain more composites, industry sources said earlier this year.

And Boeing is developing sensors that it would embed in the 7E7 to check on the strength of a plane's structure.

Boeing jetliners already contain some composites, as the company makes limited use of the material on larger parts such as wings and fuselages. Composites are also used to manufacture the 777 horizontal and vertical tails.

Advanced composites are gaining popularity among jet manufacturers because the materials are light and strong. But the structures are more costly to manufacture.

Aluminum is cheaper to use, but it is heavier. About 11 percent of Boeing's last model, the 777, was made of composite materials. The company didn't say how much of the 7E7 would be made from composites.

Boeing plans a news conference to discuss the 7E7 next week at the Paris Air Show.

The 7E7 will have about 250 seats, the size of a 767, and will be able to make non- stop flights of as long as 9,000 miles.

In related news, the Senate approved legislation yesterday that would create a center dedicated to researching advanced aviation materials.

Although Sen. Maria Cantwell, D-Wash., is pushing the idea, there is no guarantee that the center, if approved by Congress, would be built in Washington state.

Alba plans to further boost aluminum output

MENAFN - 13/06/2003

Alba plans to further increase its aluminum production by 23,000 tonnes a year, which will result from a BD 21.25 million ($56.4 million) expansion for the smelter's Reduction Line 4, Gulf Daily News reported.

The daily said that the expansion will involve building 24 new pots to extend Alba's Reduction Line 4 and generating additional power to meet the extra requirement, indicating that the board of directors approved plans as well to spend BD24.5 million to help protect the environment.

The daily added that the plans involve retrofitting all six gas turbines in Alba's Power station 3 and replacing existing control systems to lower waste emissions and help control environmental pollution.

Quebec budget's cuts to business subsidies threatens Alcoa smelter project

CBC News, Canada Jun 13, 2003

QUEBEC (CP) - Faced with a threatened reduction in business subsidies, the world's largest aluminum company said Thursday it was prepared to negotiate with the Quebec government to save its $1 billion Alcoa smelter expansion near the provincial capital. "We are most interested and ready to explore diligently various terms that might make this project acceptable for the Quebec government and therefore help us achieve our common objectives," Jean-Pierre Gilardeau, president of Alcoa Canada Primary Metals, said in a news release. The project was slated to increase the plant's production capacity to 570,000 from 250,000 tonnes per year.

The offer to negotiate came after the new Liberal government promised in its budget Thursday to save $800 million by reducing business subsidies.

"Regarding the Deschambault aluminum smelter, we have decided not to go through with the project in its present form, as it is not in line with our objectives," Liberal Finance Minister Yves Seguin said in delivering his first budget.

On the eve of calling the provincial election in April, former Parti Quebecois premier Bernard Landry announced a deal that would give Alcoa preferential hydroelectricity rates, a tax break for 10 years and an interest-free loan of up to $260 million.

Landry said at the time that the project would help place Quebec's abundant hydroelectricity as a cornerstone of the province's economic development. Massive amounts of electricity are needed to produce aluminum.

The Deschambault smelter, on the shore of the St. Lawrence River near Quebec City, has about 550 workers. The operation was bought by Alcoa from Alumax in 1998.

The expansion was expected to create 6,500 direct and indirect jobs during the construction period, plus at least 1,250 jobs in the Quebec aluminum processing industry. Work on the plant wasn't expected to begin until 2006, with production set to begin in 2008 and full expansion by 2013.

The Liberals, which criticized the deal during the election campaign, said slashing business subsidies are part of its effort to redefine the role of government.

In December 2002, Alcoa also announced a $1 billion investment to modernize its Baie-Comeau aluminum smelter.

This project was also eligible for a 10-year tax break from the government and a $170-million interest-free loan.

Alcoa has one smelter and one aluminum rod plant in Becancour, one smelter in Deschambault and another one in Baie-Comeau.

The company has more than 6,000 employees and owns 19 smelters, plants and facilities.

International Effort Results in New Tool to Calculate Greenhouse Gas Emissions from Aluminium Smelters Jun 12, 2003

(CSRwire) LONDON, UK, WASHINGTON, DC and GENEVA, Switzerland – The International Aluminium Institute (IAI), in association with the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI), today announced the development of new tools for calculating greenhouse gas emissions from primary aluminium production. These calculation methods will serve as a simple unified industry approach to greenhouse gas emissions accounting.

"The new Aluminium Sector Greenhouse Gas Protocol will help to improve still further on the reliability and consistency of the calculation and reporting of Greenhouse Gases throughout the aluminium sector," said Robert Chase, Secretary General of IAI. "It will be of value for internal company use as well as for reporting to the public and to specific audiences such as governments and special interest groups."

IAI and its member companies, with the support of the US EPA, began developing the Aluminium Sector Greenhouse Gas Protocol in early 2002. It is based on protocols previously developed by WRI and the WBCSD, and was peer reviewed and endorsed as conforming to their model, the Greenhouse Gas (GHG) Protocol (

"This process provides a model for other industry associations developing sector-specific greenhouse gas calculation tools," said Jonathan Lash, WRI president. "We look forward to other industry sectors collaborating with the GHG Protocol in the future to expand this international accounting standard."

It is hoped that governments and other organizations will see the Protocol and the tools as the appropriate method for calculating greenhouse gas emissions for primary aluminium production worldwide. Other industry sectors, including cement and forest and paper, have recently adopted similar methodologies utilizing the GHG Protocol to calculate total industry as well as factor specific emissions.

IAI has carried out annual global perflourocarbon (PFC) emission surveys since the 1990s, when it was discovered that PFCs, intermittent products of the aluminium production process, contributed to global warming. In the decade from 1990-2000, survey results showed that industry respondents had successfully reduced their total PFC emissions by approximately 46%, despite a 36% increase in production over that decade.

IAI's 2001 survey shows continuing improvement with an industry-wide 70% reduction in average PFC emissions per tonne since 1990. Some 65% of the world's aluminium smelter capacity took part in the survey.

"For years, IAI has led the aluminium sector in responding to the environmental threat posed by PFCs," said Björn Stigson, WBCSD president. "I believe this new tool will serve as an important example given the current global debate on corporate transparency and reporting."

The International Aluminum Institute's Aluminium Sector Greenhouse Gas Protocol is accessible at

The International Aluminium Institute (IAI) ( is the worldwide association for the primary aluminium industry. IAI currently has 24 Member companies representing every region of the world including Russia and China. The Member companies are responsible for more than 75% of world primary aluminium production. The IAI seeks to promote globally a wider understanding of the Industry's activities and its responsible approach on questions of environmental protection, social issues, public health and safety in the workplace.

The World Business Council for Sustainable Development ( is a coalition of 160 international companies united by a shared commitment to sustainable development via the three pillars of economic growth, environmental protection, and social equity. Its members are drawn from more than 35 countries and 20 major industrial sectors. It benefits from a global network of 40 national and regional business councils and partner organizations involving some 1,000 business leaders globally.

The World Resources Institute ( is an environmental research and policy organization that creates solutions to protect the Earth and improve people's lives.

Norsk Hydro to unveil aluminium deal Friday

OSLO, June 12 (Reuters) - Norwegian energy, metals and fertilisers group Norsk Hydro <NHY.OL> said on Thursday that it would unveil a new deal to strengthen its aluminium division on Friday.

It said that Jon-Harald Nilsen, head of its aluminium unit, would present a "wide-ranging international deal which will further strengthen Hydro Aluminium's position as one of the leading world aluminium companies."

It said Nilsen would speak at a news conference at 1100 GMT in Oslo.

Comalco signs massive alumina contract with Norsk Hydro

ABC Regional Online, Australia, Saturday, 14 June 2003

Norwegian company Norsk Hydro says it has signed one of the largest contracts in the history of the aluminium industry to supply its smelter operations in Australia.

The contract with Australian company Comalco secures 500,000 tonnes of alumina a year for 25 years from 2006.

No financial details have been disclosed.

Norsk Hydro wants the alumina for its operations in New South Wales, which include its wholly-owned aluminium smelter at Kurri Kurri and another part-owned smelter at Tomago.

Comalco is to supply the alumina for the contract from its refinery operations in Gladstone, Queensland.

Alcoa setback puts Alumina in frame

By Barry FitzGerald with Bloomberg

Sydney Morning Herald, Australia June 16 2003

A glitch for Alcoa in its Canadian expansion plans has got the local market wondering if the US alumina/aluminium group might turn its attention to its partner in the global AWAC alumina business, Alumina Ltd.

Quebec's Government has told Alcoa that it will revise plans to give the group tax breaks for a $C1 billion ($1.12 billion) project to more than double capacity at a smelter in Deschambault.

Alcoa and the provincial government agreed to a plan in March that would bring about 700 jobs to the Canadian region in exchange for discounted electricity, tax breaks and an interest-free loan. But Quebec's Finance Minister, Yves Seguin, last week said that the province had "decided not to go through with the project in the present form, as it is not in line with our objectives".

"We've been in discussions with them for a several weeks now and it is still in discussion," Alcoa spokesman Kevin Lowery said.

The Deschambault setback was linked by analysts to heavy speculative local trading in Alumina on Friday. About 11.4 million shares or more than twice its daily average changed hands. The high-yielding stock ended the day 9c, or 2.1 per cent, higher at $4.28 for a total market capitalisation of $4.8 billion.

Because of anti-trust concerns, the acquisition of Alumina, the 40 per cent partner in the Alcoa managed AWAC, is Alcoa's only big-bang growth opportunity in the alumina business.

Alcoa flagged its interest in moving to outright ownership of AWAC in 2001 when it bid $10.20 a share for WMC, its 40-year partner in the business.

The bid was rejected and led to WMC demerging into WMC Resources (copper, nickel and fertilisers) and Alumina (the AWAC interest).

Alcoa's chairman and chief executive, Alain Belda, told a US analysts' briefing in March that Alumina would be "nice to have but it is not something that I need to do".

He said the company was not looking at Alumina "at the moment", leaving the door open for an eventual return, just as Alumina itself suspects will be the case.

"Fundamentally, we just cannot stay as we are, the risk being Alcoa returning at a time of its choosing," WMC's former chief executive, Hugh Morgan, said at the time of demerger. "Alcoa has clearly demonstrated their interest and they will be back."

Alcoa has been making more aluminum outside the US to save electricity and labour costs and stem a two-year profit decline. Power accounts for about 40 per cent of production costs, and the March agreement was the second time Quebec offered cheaper power in return for a plant expansion.

Rate Hike Spells Trouble For Ferndale Aluminum Plant

KOMO, WA June 16, 2003

By Bryan Johnson

FERNDALE - Alcoa says a proposed 5 percent rate increase by Bonneville Power will add to already too-high electric bills and will force them to take a close look at least temporarily curtailing operation of its Intalco Works Facility near Ferndale.

Mike Panchuk, the company's Northwest president, told KOMO 4 News that the power costs now are doubled what they used to be just three years ago. He says Northwest power costs are now higher than the costs on the East Coast, in the South, and in Canada.

He says only the fact that the Ferndale facility is the most efficient in the Alcoa system has it allowed it to continue to operate. Alcoa had been hoping that Bonneville would lower rather than raise its rates and Panchcuk says Alcoa will have to make a tough decision by the end of the September if Bonneville doesn't change its mind about a rate increase.

"You'd have to be dead not to be scared," said Vicki Henley, the chief shop steward of workers at the Ferndale plant. She noted that the aluminum plant had been restarted only last year. "You can't turn an aluminum plant on and off like a wall light switch," she said.

She added that she worries if the facility is put on temporary curtailment, it will never be restarted.

In the 1980s, 11,200 people worked in the aluminum industry in Washington State. Because of the high cost of power, many facilities have been put on curtailment and total employment is now roughly 1,000

SUAL Pechora Upgrade

Moscow Times, Russia Tuesday, Jun. 17, 2003. Page 6

MOSCOW (Reuters) -- No. 2 aluminum producer SUAL will invest up to $50 million in upgrading a utility to supply power to an aluminum project in the country's north, SUAL said Monday.

SUAL will participate in the overhaul of the Pechora power plant, a subsidiary of national utility Unified Energy Systems, which in return will secure most of its output for SUAL, the aluminum company said in a statement.

SUAL is involved in a $2.1 billion project that includes building a refinery for alumina, an intermediate product for aluminum smelting, with 1.4 million metric tons of annual capacity, and an aluminum smelter capable of handling 300,000 tons to 500,000 tons per year.

SUAL plans to start building the facility in 2003 in the northern Komi region, where it controls the Sredny Timan bauxite deposit with proven reserves of 250 million tons of the raw material.

Nalco team stopped at Bhubaneswar airport, India Monday, June 16, 2003 (Bhubaneswar):

A team of bidding agents and banking consultants, who were to study disinvestment prospects of aluminum giant NALCO, were stopped at Bhubaneswar airport by trade union activists and opposition parties.

Members of the NALCO employees union were among the protestors, who were prevented from doing any damage by a large contingent of security personnel around the airport.

However, the team of consultants did not come out of the airport. Police told the protestors that the team had cancelled its visit.

NALCO employees union will hold a protest rally outside the NALCO corporate office in Bhubaneswar at 10 am tomorrow to register their protest against the disinvestment move.

However, it is still not clear whether the team of consultants have left Bhubaneswar or are still in the city.

U.S. steel, aluminum industries increasingly linked to China

Pittsburgh Post Gazette, PA Wednesday, June 18, 2003

By Len Boselovic, Post-Gazette Staff Writer

The double-digit growth of China's steel and aluminum industries can be a double-edged sword for their U.S. competitors.

There's no doubt that China's voracious appetite for metals can be beneficial for companies here. That's what happened in 2002, when strong Chinese demand for steel helped resurrect U.S. steel prices stuck at 20-year lows. The extra orders soaked up steel that normally would have been U.S. bound. It also created some temporary export business for U.S. producers.

But just a few years earlier, the reverse happened. In mid-1998, when Asia's economic ills diverted a wave of cheap steel imports from China to the United States, domestic prices plunged to 20-year lows. The flood was one of the factors behind the wave of bankruptcies that has swept the U.S. steel industry since then.

China's phenomenal demand also affects prices producers in other countries pay for iron ore, scrap, alumina and other raw materials. Weirton Steel says one reason why coke, a baked coal that's used as a fuel in steelmaking, costs $10 more this year is because Chinese steelmakers are using more, but producing and exporting less. The bankrupt West Virginia steelmaker estimates the higher price could increase its operating costs by $12 million this year.

"For a long time, the U.S. steel market drove the world. Now it's the U.S. and China -- and China's even more important than the U.S.," says John Anton of Global Insight, a Washington, D.C. consulting firm. "They probably have at least another decade of increases to go."

The development of China's metals industry has been breathtaking. Steel production has doubled over the last decade to 182 million metric tons last year, nearly double U.S. steel production. Through April, China steelmakers produced 65.7 million metric tons, up 19 percent from the same period last year, according to the International Iron and Steel Institute.

The story's the same in aluminum. China produced 2 million metric tons of the metal in 1997, 2.8 million in 2000 and 4.3 million last year. BB&T Capital Markets metals analyst Lloyd O'Carroll forecasts output of 5.7 million metric tons next year.

"One should expect double-digit demand growth [in China] in steel, aluminum, copper ... probably for the next decade," O'Carroll says.

Much of the growth stems from the fact that China's in the early stage of economic development, so demand for cars, appliances and other goods made from metals will grow much faster there than it will in more developed countries. China's population only magnifies the impact.

The rapid growth of the Chinese metals market is "phenomenal," says James Southwood, president of Commodity Metals Management, a Pittsburgh consulting firm. "We think it's going to slow down significantly in 2004, but slow down means it goes from 30 percent [growth] to 15 percent."

Given China's frenetic pace, there are big problems when supply and demand get out of whack. Independent metals analyst Charles Bradford says Chinese customers imported about 29 million metric tons of steel last year, an increase of 40 percent. The pace of import growth is even stronger this year, with China importing 12.9 million metric tons of steel through April. But the import surge has outpaced steel demand there, one reason why global steel prices have begun to slip, Bradford says.

The episode illustrates fears that if the SARS virus, political unrest or other factors apply the brakes to China's growth, the steel, aluminum and other metals it is producing in increasingly large numbers will have to be exported, raising the specter of depressed prices that ravaged U.S. steelmakers in recent years.

"They [U.S. producers] get a little nervous thinking about that," says Duquesne University business school professor James Burnham, who specializes in trade issues.

But slumping steel and aluminum producers would be doing even worse if China didn't provide a floor for prices.

"The world is fortunate that China's demand has grown faster than supply," says Richard McLaughlin of Hatch Beddows & Co., a metals industry consultant.

Allegheny Technologies is one of the few U.S. metals producers on the ground in China.

The Pittsburgh company owns a 60 percent stake in Shanghai STAL Precision Stainless Steel. Baosteel, China's largest steel producer, owns the other 40 percent. The venture went into production in mid-2000 and produces thin-gauge stainless used in cellular phones, hose clamps, gaskets and other products. President and Chief Executive Office Jim Murdy says Allegheny got into the venture in order to follow customers who were establishing manufacturing plants in China.

On the aluminum front, Alcoa -- either on its own or through joint ventures -- produces aluminum foil, plastic bottle caps and other products in China. It also owns eight percent of Aluminum Corp. of China, or Chalco, the country's largest aluminum producer. The two companies are negotiating a joint venture that would double the output of Chalco's Pingguo plant. They expect to formalize the venture this year.

For Alcoa Chairman and Chief Executive Alain Belda, who has cut back domestic production because of high power costs, it's a matter of producing where the costs are lowest.

"It's indifferent for us where the metal comes from," he says. "The idea is: redeploy assets and get the costs down."

Belda's strategy leads to the ultimate China question: what will the country's burgeoning industrial might mean for U.S. manufacturers and their workers? Critics fear the 2.3 million U.S. manufacturing jobs eliminated since 2000 is a sign of things to come. They say Chinese manufacturers are unfairly advantaged because they pay lower wages and aren't burdened with the pension, health-care, environmental, legal and other costs encumbering U.S. manufacturers. Unfair trade and the traditionally strong U.S. dollar also put U.S. manufacturers at a disadvantage, critics say.

U.S. labor leaders, who only a few years ago were worried about union jobs being exported to Mexico, now worry about losing out to China.

"China is the 800-pound gorilla trying to get into your bathtub," says United Steelworkers union President Leo W. Gerard. "America for sure and others are going to get rolled over by China."

Montenegro Seeks Foreign Investment

Voice of America 17 Jun 2003, 15:54 UTC

Barry Wood, Budva, Montenegro

The government of Montenegro is making a big push to attract foreign investors to the country, which earlier this year joined Serbia in a new, and looser, federation.

Montenegrin Prime Minister Milo Djukanovic said the situation in his country has dramatically improved in the past 12 months. He told prospective investors that relations with Serbia are excellent, and that the entire western Balkans region is moving towards closer integration with the European Union.

Mr. Djukanovic said that after several false starts, Montenegro is determined to privatize the large state-controlled enterprises and banks that dominate its stagnant economy. He said the giant KAP aluminum plant, the commercial banks, and major resort hotels will be privatized by the end of this year.

Many of the more than 100 representatives of multi-national companies attending an investors' conference say they are impressed with the government's position and apparent seriousness. In the past, the Montenegrin government refused to cede control of local firms to outsiders.

Both IBM and Siemens said they are hopeful about the prospects for Serbia and Montenegro.

Other companies view Montenegro as a means of entering the larger, more important Serbian market. The most immediate prospects for investment are the coastal hotels, which are mostly still state controlled and badly in need of modernization.

The telecommunications sector, also badly in need of modernization, is likely to attract investment.

Business leaders are quick to point out the region's continuing economic fragility and vulnerability to political setbacks. One said Serbia has lost several important investors because of the assassination of reformist Prime Minister Zoran Djindjic last March. A renewal of violence in Macedonia or Kosovo would also be a major setback.

While integration with Europe is the stated goal, practical roadblocks are often in the way. Even now it is difficult or impossible, for technical and political reasons, to drive a rental car from the nearby Croatian resort of Dubrovnik into Montenegro.

MOZAL 'Number One Smelter in the World'

Agencia de Informacao de Mocambique (Maputo), Africa June 17, 2003


The expansion of the MOZAL aluminium smelter on the outskirts of Maputo has outpaced similar smelters in countries such as France, Canada and Australia, in terms of schedule, Phil Hynes, project manager for the expansion announced at a MOZAL public meeting in Maputo on Tuesday, The expansion of MOZAL will double its capacity, so that the smelter will produce 506,000 tonnes of aluminium ingots a year.

Hynes said that the first metal was produced at the expansion on 7 April - just 21.5 months after the project had been approved by the shareholders. This meant that the expansion was five and a half months ahead of schedule.

Very little construction work remains to be done, and MOZAL hopes to inaugurate officially the expansion in October.

"Commissioning is proceeding very well, and all the equipment is working within specifications", said Hynes.

One logical result of saving time is saving money. The expansion is now expected to come in well under its initial budget of 860 million US dollars - though Hynes warned it was still too early to put a figure on the savings made.

While the total amount spent is less than expected, the amount spent on goods and services from Mozambican suppliers is more than predicted. The initial estimate was that the expansion would spend 80 million dollars within Mozambique: but Hynes said that so far 88 million dollars of purchases have been made from Mozambican companies, As for the workforce on the construction site, over two thirds are Mozambican. "68 per cent of the 16 million man-hours worked on the site have been worked by Mozambicans", said Hynes.

"At the peak there were 3,300 Mozambican workers on the site".

MOZAL trained 3,136 individuals, of whom 83 per cent secured jobs on the expansion project.

As for industrial relations, there were no strikes at all on the construction site. "No time was lost because of industrial action", said Hynes. He believed the relationship forged with the National Union of Building, Timber and Mining Workers (SINTICIM) "is a model that any country in the world would do well to copy".

"We have been able to work with the government and the trade unions in a very constructive manner. It's a win-win situation", he said. "The work force have put a serious effort into industrial peace, and we have maintained an environment where everybody is treated fairly".

"This is currently the number one performing smelter in the world, and Mozambicans should be proud of this", declared Hynes.

MOZAL, he added, proved beyond doubt that "Mozambique provides an environment in which it is competitive to undertake a large capital project".

Companies Going Global One Step at a Time

Moscow Times, Russia Thursday, Jun. 19, 2003. Page 13

By Torrey Clark Staff Writer

They came with a much-needed cash infusion and an in-kind contribution, offering an ailing company hope for the future. They navigated the bureaucratic jungle and now have a prized asset in the bag.

The elusive foreign investor in Russia? No. Norilsk Nickel's multimillion dollar purchase of Montana-based Stillwater -- cleared this week by shareholders and regulators in both countries -- which marks the single largest cross-border acquisition of a public company by a Russian company as well as a new phase of economic internationalization.

Cash-rich Russian companies, many of whom are finding fewer options in their industries at home, are now actively searching abroad for assets. Over the past three years, Russian companies have expanded beyond the border into former Soviet republics and Central and Eastern Europe, Africa and Asia, and even the West.

The move also highlights a difference between pre-crash Russia and today's Russia, in which the financial-industrial tycoons have transformed cash-cow subsidiaries into transparent, streamlined industry leaders that extol improved corporate governance and value creation.

"Years ago people were asking if there would ever be a Russian company on the New York Stock Exchange, and now we have several," said Leonid Rozhetskin, deputy chairman of Norilsk's management board. "Today we can talk about subsidiaries of Russian companies on the NYSE."

Alcoa sets its sights on lighter, less expensive planes

Pittsburgh Business Times, PA 6/18/03

Alcoa Inc. described an endeavor Wednesday to reduce the weight of aircraft by 20 percent, while lowering the cost of aircraft components by the same amount over the next 20 years.

The Pittsburgh-based company, the world's largest aluminum producer, intends to use a building-block approach to phase in the Alcoa 20-20 initiative. Besides aluminum, Alcoa produces parts for the aerospace, transportation and commercial equipment markets, among other products.

The company unveiled the 20-20 initiative at the Paris Air Show in Le Bourget, France. It said the lightweight parts could be used to retrofit existing aircraft and to build next-generation airliners.

Lighter planes would burn less fuel, which would be a clear benefit to cash-strapped airlines. Less expensive components would mean cheaper planes, and they would be a boon to aircraft manufacturers looking to keep their order books full, as well as to the airlines.

William Christopher, president of Alcoa's aerospace, automotive and commercial transportation business group, told reporters in France that the 20-20 initiative has two objectives.

"The first," he said, "is to shift current thinking about the cost and weight performance of metallics. The second is to develop new generations of innovative metallic structures that will help our customers" get away from traditional manufacturing techniques.

Alcoa said prototype development of 20-20 components is well advanced, and it showed several examples at the Paris Air Show. The first components are being offered to aircraft builders and airlines for early applications in cargo and passenger jets.

The idea behind the building-block approach is to first use the new materials on smaller structures that can be installed on planes and evaluated.

"This significantly improves the probability of success and reduces the risks associated with implementing" the new products, Mr. Christopher said.

Bigger components in broader applications can be phased in over the two-decade lifespan of the 20-20 initiative, allowing manufacturers to make a phased transition with fewer bugs and issues.

Among the components on display in France was a prototype fuselage skin made from a new aluminum alloy and produced with advanced welding and forming techniques. Alcoa, of the North Shore, said the skin is lighter, stronger and more resistance to corrosion than existing aluminum skins.

The new alloy also is compatible with an advanced, automated laser welding process that eliminates the need for many the individual fasteners.

Pechiney Consolidates its Position as Preferred Supplier for Aerospace

Paris Air Show 2003

PARIS--(BUSINESS WIRE)--June 19, 2003--

The Pechiney Group, which is present at the Paris Air Show through its Aerospace, Transport & Industry Division, recently implemented an original process to consolidate its position as a benchmark supplier for the aerospace industry.

A new, more international and more customer-focused sales organization has been set up.

R&D expenditure ($100 million since 1995, of which 50% to develop new alloys) increases constantly. In addition, our "R&D Accelerators" action results in more upstream cooperation with customers and reduces time to market.

In manufacturing, significant capital expenditure has enabled the Group to increase its production capacity and offer very wide products (over 32 meters) for new programs such as the Airbus A380.

New services have been successfully offered to major customers, including pre-cut and surfaced products, a turnings recycling center and end-to-end supply chain management.

Finally, through its "Declic" program, Pechiney has set up the resources needed to become the industry benchmark in terms of schedule reliability and supply chain management.

All these new projects were launched in the framework of the Pechiney Continuous Improvement System and are supported by an ambitious performance improvement program in the Group's plants.

Pierre Vareille, Pechiney Aluminum Conversion Sector President and Aerospace, Transport & Industry Division Executive Vice-President, stated, "Aluminum has unique advantages and remains aircraft manufacturers' first-choice material. The market launch of new alloys, higher aluminum tonnage in the most modern aircraft, together with recent progress in machining, will consolidate aluminum's leadership in this industry. Thanks to several decades of experience and the extension of its offering with new services, Pechiney is no longer a raw materials suppliers but a provider of solutions. The Group now has a unique position in this high-tech market. Our ambition is to enable manufacturers to make cheaper, higher-performing aircraft and, in this way, contribute to the long-term growth of the aerospace market."

The Aerospace, Transport & Industry (ATI) Division is comprised of production of rolled aluminum plate for air, land and sea transport (excluding automotive) and industry, as well as production of hard alloy extrusions. ATI is the joint world leader in heavy-gauge plate and profiles for aerospace and has significant positions with all aircraft makers, particularly Airbus and Boeing. In 2002, the Division achieved turnover of EUR973 million and sales of 281,000 metric tons. It employs 3,600 people on 8 production sites, of which 4 in France, 3 in the United States and 1 in the United Kingdom.

ATI belongs to Pechiney's Aluminum Conversion Sector, which achieved sales of EUR2.6 billion in 2002. With presence in 6 countries, it employs approximately 8,000 people on 25 production sites.

Ecologists Believe Russia Is Not Ready for Foreign Investments

Rosbalt, 19/06/2003, 18:06

SAINT PETERSBURG, June 19. Russia is not ready to receive investments from the West. This is because there is still no control over ecological legislation in our country, the public have no say in taking important decisions and all facilities being built on foreign investments will be dangerous for the environment and the health of the population. This was announced by Oleg Bodrov, head of an environmental protection organisation in Russia called Green world, at a press conference today. He added that when building such facilities public opinion and control over ecological legislation should be as paramount as they are in the western countries which are providing the investment.

For example, he said that the opinions of about 100 thousand local people have been ignored in negotiations over the construction of the Sosnovy Bor aluminium plant.

The aluminium plant will be constructed in three stages near the town of Sosnovy Bor in the Leningrad Region. After the third stage of construction has been completed in 2008 the plant will have an annual production capacity of 360 thousand tonnes. About USD one billion is being invested in the project by US company Alutech.

China To Be World's Largest Aluminum Consumer By 07-Abare

Singapore, June 23 (OsterDowJones) - Rapid growth in manufacturing activity and infrastructure construction in China means it will surpass the U.S. as the world's largest aluminum consumer by 2007, the Australian Bureau of Agricultural and Resource Economics said in its latest forecast issued Monday.

The agency, also known as Abare, forecasts China to account for a significant proportion of the increase in global aluminum demand over the medium term.

Abare said China's consumption of primary aluminum will rise at an average annual rate of 7% to around 6.6 million metric tons in 2008.

In comparison, aluminum demand in the U.S. is projected to grow at an annual average rate of less than 2% to reach 6 million tons in 2008, driven by increasing usage in the automobile, construction and packaging industries, Abare said.

Globally, Abare forecasts primary aluminum demand to rise by 5% to 25.9 million tons in 2003, and another 5% to 27.2 million tons in 2004.

Beyond 2004, aluminum consumption is forecast to grow at an average annual rate of 3% to around 31 million tons in 2008, Abare said.

Turning to production, Abare sees growth slowing slightly by 3% to 26.5 million tons in 2003, from a 5% growth in 2002.

Much of the slowing in aggregate production reflects expected production cuts in the U.S. in reaction to high energy costs and the stoppage of output expansion as producers try to reduce stocks accumulated in 2002, Abare said.

Global output growth is likely to accelerate, rising by over 4% to 27.6 million tons,as some refurbished and new smelter capacity begin to operate, with most of this coming from China, Africa and the Middle East, Abare said.

China To Contribute To World Production Growth As Well

A significant proportion of new capacity is in China, where the government is investigating measures to reduce the number of projects that proceed to development, the agency said.

"Despite the current policy uncertainties in China, it is expected to account for a large proportion of the world's new aluminum production capacity over the medium term," it said.

It forecasts China's production to rise by an average of 5.4% a year to 6.3 million tons in 2008, whereas global production is forecast to grow an average of just over 3% a year to 31 million tons.

Forecasting the London Metal Exchange spot aluminum price to be relatively flat during the second half of 2003, Abare projects the price to average $1,386/ton for the year, up 2.5% from 2002.

As production is forecast to exceed demand in 2004, stocks are likely to build up and pressure prices to fall by 3% to average to around $1,340/ton, Abare said.

Turning to alumina, the feedstock for aluminum, Abare said the current support for prices will subside in 2004.

The lack of capacity expansion at a time of demand growth is expected to push the average alumina price 25% higher to around $197/ton in 2003, Abare said.

However, during 2003, significant new capacity will start to come on line in Brazil, Jamaica and China.

Thus, in 2004, alumina prices are forecast to stay unchanged from 2003 levels, said Abare.

In 2007, Australian alumina production capacity is likely to rise, especially from the 1.5 million-ton expansion at the Nabalco refinery and the 1.3 million-ton expansion at the Queensland Alumina Ltd. refinery, said Abare.

In the nearer term, Abare forecasts Australia's alumina production to rise 0.73% to 16.47 million tons in the next fiscal year ending June 30, 2004 from 16.42 million tons in the current year ending June 30, 2003

Aluminium group to ditch Brazil power concession

Reuters, 06.24.03, 5:57 PM ET

RIO DE JANEIRO, Brazil, June 24 (Reuters) - A consortium of Brazilian and foreign aluminium producers is planning to relinquish a concession for a big hydroelectric plant in Brazil due to problems with obtaining an environment license, one of the firms involved said on Tuesday.

The decision, hailed by environmentalists, yet again underscores the problems faced by the Brazilian power sector, which suffered from economically-damaging mandatory rationing in 2001 and 2002 largely due to bad planning.

Brazil's mining giant Cia Vale do Rio Doce (CVRD) <VALE5.SA> (nyse: RIO - news - people) said the group, which also comprises U.S. aluminium maker Alcoa (nyse: RIO - news - people), Anglo-Australian BHP Billiton <BHP.AX> and local firms Votorantim and Camargo Correa, no longer planned to build the Santa Isabel plant.

Now, the consortium hopes to negotiate with the government's electricity market watchdog Aneel the refund of some $40 million in deposits guaranteeing concession rights. CVRD press service provided no further comment.

The 1,087 MW plant on the Araguaia river that was supposed to start working in 2009 after an estimated investment of $800 million, is the biggest hydroelectric project of 35 licensed in Brazil in the past three years.

The group bought the concession in 2001, as the companies, which produce aluminium and other metals in a process that requires a lot of electric power, sought their own power generation in order to avoid future power supply problems in Brazil.

Environmentalists said the project would have flooded 93 square miles (240 square km) of land including a number of archeological sites, threatened rare river dolphins and turtles and 20 fish species found only on the Araguaia, harmed wetlands ecosystems and displaced 6,800 people.

But the government's environmental agency Ibama demanded that the Araguaia be left completely intact by the new plant.

"It's the first concrete sign that the new Brazilian government of Luiz Inacio Lula da Silva will demand that new dams meet more rigid environmental and social standards," Glenn Switkes of International Rivers Network that works to protect endangered river systems, said in a statement.

The statement said a number of other projects, including one by Alcoa and Billiton, were tied up in licensing difficulties. Officials with both companies declined comment.

Starting from next year, all new hydroelectric concessions will be offered only after Ibama's approval.

Brazil's power sector has an excess of electricity as Brazilians stuck to conservation habits after the end of rationing, but experts are warning the country needs to build new plants, be it hydroelectric or gas-fired, to provide for economic growth and preempt shortages in the future.

Apart from environmental licensing, a lack of clear regulations for the sector scares off investors. The government is expected to come up with a new set of rules in July.

Copyright 2003, Reuters News Service

MALCO to raise aluminium capacity by 14 pc

REUTERS[ WEDNESDAY, JUNE 25, 2003 03:30:49 AM ]

MUMBAI: India's fifth-largest aluminium maker Madras Aluminium Company plans to expand the capacity of its smelter by 14 percent in the current fiscal year to March by removing bottlenecks, a group company official said on Tuesday.

MALCO will raise the capacity of its aluminium smelter, located in Tamil Nadu, to 40,000 tonnes a year from 35,000 tonnes, C V Krishnan, chief executive officer (metals) of Sterlite Industries Ltd, told Reuters.

MALCO is a subsidiary of Sterlite, which makes diversified products ranging from optical fibre to base-metals.

"There are no plans now (to raise the capacity) beyond this," Krishnan said.

MALCO had only recently added 5,000 tonnes to its 30,000 tonnes capacity by modernising and improving efficiencies, he said.

The company also owns a 75 MW power plant to provide electricity to the smelter.

Kiev Threatens to Renationalize RusAl Plant

Moscow Times, Russia, Thursday, Jun. 26, 2003. Page 5

Reuters KIEV -- Ukrainsky Aluminum, owner of Ukraine's only alumina plant, on Wednesday rejected government accusations that it had failed to meet investment obligations and said it would oppose attempts to renationalize its stake.

Mykhailo Chechetov, head of the State Property Fund, was quoted as saying Tuesday that the government was considering court proceedings against Ukrainsky Aluminum to renationalize its 30 percent stake in the plant, Mykolayivsky Hlynozemny Zavod.

Ukrainsky Aluminum, a subsidiary of Russian giant Russian Aluminum, bought the stake in Mykolayivsky in 2000 for $101 million. The two firms later increased their stakes in the plant to become majority shareholders.

The investor promised to build a new aluminum smelter and repay the plant's debts.

"Ukrainsky Aluminum may address the court with proceedings against the State Property Fund to prove that the company is meeting all its investment obligations," it said in a statement.

Analysts and investment bankers say the dispute could deter foreign investors and harm the government's reform credentials.

Chechetov said at a meeting of a parliamentary commission on privatization that he was unhappy with the way Ukrainsky Aluminum was implementing investment obligations and would try to return the plant to the state, local news agencies reported.

Ukrainsky Aluminum denied it had failed to meet its targets.

Workers recalled at Ravenswood plant

Charleston Gazette, WV , June 26, 2003

RAVENSWOOD — Pechiney Rolled Products LLC has recalled about half of the 98 hourly workers it laid off late last year due to increased customer demand.

“Recalls will continue when and if production needs dictate,” said Polly Moles, a spokeswoman for the company.

The French-owned company laid off the workers at its Ravenswood aluminum plant between October and December as part of a restructuring plan. In mid-December, members of United Steelworkers Local 5668 approved a new contract that runs through May 2005.

Recently, Pechiney hired three new executives for the Ravenswood plant: Steven M. Abelman, president and chief executive officer; James R. Guillow, vice president of human resources; and John H. Ferguson, chief financial officer.

Moles said the three executives have “extensive management and leadership experience in manufacturing environments that will benefit Pechiney Rolled Products overall operations.”

Pechiney is a subsidiary of Paris-based Pechiney SA, one of the world’s largest aluminum producers with 34,500 workers in 51 countries.

EU Reaches Climate Emissions Trading Breakthrough

Environment News

STRASBOURG, France, June 25, 2003 (ENS) - Governments and Members of the European Parliament have clinched a deal to create a climate emissions trading system for the European Union. The agreement removes any doubt that the scheme to trade emissions allowances will become a reality from 2005.

The law setting up the system is now set to enter force at the end of this year. First national emission allowance allocation plans will be due from EU member states the following March.

The deal is based on compromise proposals, tabled on Monday by EU member state diplomats, following voting in the European Parliament's Environment Committee earlier this month.

Rapporteur MEP and lead negotiator Jorge Moreira da Silva was unavailable today, but other parliamentary sources said the package had been backed by all the assembly's political groups.

The parliament should now approve the text at its second reading during a plenary session in Strasbourg next week. The European Council of Ministers will then formally accept the amendments.
Reaction has been swift. Chris Davies of the Liberals said the early deal was a "vital step" in maintaining the EU's credibility on climate issues.

Green Alexander de Roo said the move would now "put pressure on the Russian Duma" to ratify the Kyoto Protocol which would bring the treaty into force. There had been fears that failure to compromise with the council before the summer would jeopardize the protocol's start date.

The Kyoto Protocol is an international treaty under the UN Framework Convention on Climate Change (UNFCCC). It requires 37 industrialized countries to reduce their emission of six greenhouse gases an average of 5.2 percent of 1990 emissions during the five year period 2008-2012.

The rules for entry into force of the Kyoto Protocol require 55 countries that are Parties to the UNFCCC to ratify the protocol, including enough of the 37 industrialized countries to account for 55 percent of that group’s carbon dioxide emissions in 1990.

European Green Party MEP Alexander de Roo of the Netherlands is vice chairman of the parliamentary Committee on the Environment, Public Health and Consumer Policy. (Photo courtesy Groenlinks)
Countries accounting for 43.9 percent of the 1990 emissions have now ratified the protocol. A Russian ratification would push the emissions percentage above the required 55 percent.
Under the terms of the climate emissions trading accord agreed today, EU member states will not be subject to a quantitative cap on the amount of allowances they can distribute, contrary to the European Parliament's original demands.

Instead the member states will have to hand out "no more than is likely to be needed" for the "strict application" of the national emissions allocation plans.

For the initial 2005-2008 trial period, this must be "consistent with a path towards achieving or over achieving" Kyoto Protocol targets.

Auctioning of emissions allowances remains voluntary, against parliament's earlier insistence on the guaranteed sale of at least a small portion. During the initial period, up to five percent may be auctioned, with 10 percent from 2008. There is a promise of harmonized EU auctioning of allowances "after 2012."

Concessions won by the parliament include limitation of an opt out clause during the initial phase to individual installations rather than whole industry sectors.

Inclusion of other sectors and other greenhouse gases beyond carbon dioxide remains optional, though there is a stronger commitment for the addition of the chemicals, aluminium and transport sectors when the European Commission reviews the law at the end of next year.

The prospect of linking the Kyoto Protocol's flexible mechanism credits to the trading scheme remains, though softened with language insisting this should be "supplemental" to domestic actions taken within the industrialized countries governed by the protocol.

{Published in cooperation with ENDS Environment Daily, Europe's choice for environmental news. Environmental Data Services Ltd, London. Email:}

Nalco Seeks Nod For Huge Brownfield Expansion

Indian Express, India, Suresh Nair

Mumbai, June 25: National Aluminium Company Ltd (Nalco) has applied to the Public Investment Board (PIB), seeking approval for its second brownfield expansion project with a total outlay of Rs 5,000 crore. The proposal has been mooted even as the first brownfield expansion of a similar size is to be completed by the third quarter of the current fiscal.

It, however, remains unclear whether the government would allow the second brownfield capacity expansion project to start before the disinvestment, a Nalco official said. The government is expected to start disinvestment of Nalco by an initial domestic issue of 10 per cent in the first stage and 20 per cent through American depositary receipts (ADRs) in the second stage. This would be followed by a strategic sale of the remaining 29.15 per cent in the third stage, thus bringing down the government equity to 26 per cent.

With the second brown-field expansion, Nalco will be one of the largest integrated aluminium producers in the world.

As per plan, smelter capacity is to be raised by another 1.15 lakh tonne per annum, alumina refinery by 5.25 lakh tonne per annum, power plant by 120 MW and an increase in mining by 12 million tonne.

The expansion is expected to be funded largely through internal accruals.

The second brown-field expansion will increase Nalco’s total smelter capacity to 4.6 lakh tonne, alumina production capacity to 21 lakh tonne and bauxite mining capacity to 60 million tonne. Under the second brown-field expansion, another plant of 120 mw is proposed to be added, taking the total power generation to 1080 mw.

The first capacity expansion is almost 80 per cent complete, said the Nalco official. The smelter capacity has already been increased by 60,000 tonne from 2.3 lakh tonne and will eventually reach a capacity of 3.45 lakh tonne by end of the third quarter of the current fiscal, said the official.

The alumina refining capacity has already been expanded with the capacity reaching 15.75 lakh tonne per annum.

Dump found for unwanted dross

The Southland Times, New Zealand 26 June 2003 By JULIE ASHER

After being unwanted for more than a decade, 10,000 tonnes of dross stored in P&O warehouses in Bluff looks set to find a new home – on site at the New Zealand Aluminium Smelter's Tiwai Point site where it came from.

Smelter manager of technical development David Bloor said yesterday a three-way partnership between NZAS, P&O and the Environment Ministry could see the dross finally laid to rest.

NZAS will apply for a resource consent from Environment Southland to put the dross in an extended landfill on its Tiwai site.

If the consent was granted P&O would pay to have the dross trucked from its warehouses in Bluff's main street to Tiwai, Mr Bloor said.

The ministry involvement was an indemnity should the dross ever have to be removed from the Tiwai landfill.

Bluff Community Board chairman Rex Powley was delighted: "You can imagine how I feel ...

absolutely over the moon. The board is absolutely thrilled and appreciative of all the parties that have bought this to fruition."

The dross was owned by Haysom Industries' subsidiary company, Southland Metal Recovery, which extracted aluminium from the waste product in a 24-hour operation at a factory in Prestonville, Invercargill.

In December 1991 the factory closed suddenly and the saga of what to do with the 10,000 tonnes of dross began.

It was dumped in the Bluff warehouses without residents' or P&O's knowledge.

Mr Bloor said under the new agreement no one would take ownership of it.

The disposal of the dross depended on resource consent being approved, he said.

It would be the end of the year before the dross actually moved if consent was given.

There would public consultation as part of the resource consent application, Mr Bloor said.

Dross, now produced in smaller amounts because of better production methods, is shipped to Auckland and Sydney where the residual aluminium is extracted and the leftover put in landfill.

Mr Powley has plans for when the dross was finally moved: "When the last lorry load goes out we will be standing there with a bottle of champagne."

Pechiney smelter negotiations in final stage

Business Report, Africa, June 25, 2003, By Sapa

Port Elizabeth - Negotiations to secure the advanced Pechiney French aluminium smelter for the Coega Industrial Development Zone (IDZ) outside Port Elizabeth have entered "the final straight", the Coega Development Corporation (CDC) said on Wednesday.

The CDC expected to sign a contract finalising Pechiney's investment within the next few months, chief executive officer Pepi Silinga said in a statement.

"The respective negotiating teams are drilling down into the levels of detail required to ensure that the interests of all parties are met, so that the best deal is secured for the IDZ, for the region, as well as for South Africa as a whole," Silinga said.

If the deal goes ahead, the $2 billion (about R15 billion) Pechiney smelter will be the biggest investment in the metallurgical cluster in the IDZ. So far it is the biggest prospective deal in the IDZ.

The CDC said it had set up a multi-disciplinary team to meet Pechiney's requirements for world-class infrastructure and services.

"Over the past three years we have been able to bring together a highly professional team with vast experience of mega-projects in South African and internationally.

"Negotiating the Pechiney investment is a hugely challenging exercise but we are confident that the team, together with the systems we have put in place, will be up to the challenge," Silinga said.

The CDC was not, however, relying on Pechiney as the only major investor in the zone, and it was intensifying its marketing programme to attract other investors to the area

"The CDC is engaged in a number of initiatives to market Coega as the investment destination of choice within South Africa. This includes meeting with potential investors in the automotive and textile industries in Europe and elsewhere," he said.

"There is no doubt that our strategy of looking at a basket of investment opportunities rather than focusing on a single investor, has been the right one in attracting industries to the IDZ."

Negotiations were underway with other big and small investors and many of them had conducted site visits and asked for more information, CDC spokeswoman Vukelwa Vika told Sapa.

The second biggest prospective investor in the project after Pechiney was looking at an outlay of some $150 million (about R1,16 billion), Vika said.

The Coega project incorporates a 12 000-hectare IDZ and a R2,5-billion deep water port at the mouth of the Coega River, about 20 kilometers east of Port Elizabeth, with the CDC responsible for the establishment of R800 million in initial infrastructure at the site.

The initial investment by the National Ports Authority, the CDC itself and the government in the project came to a total of around R5 billion, Vika said. - Sapa

Weirton Steel President, CEO [John Walker] Resigns

Austin American Statesman, TX 6/26/03 By VICKI SMITH, Associated Press Writer

The president and CEO of bankrupt West Virginia's Weirton Steel Corp. resigned Thursday, saying the time is right for a career change after his replacement is named.

John Walker has served as president since March 2000. He was named Weirton Steel's chief executive in January 2001. Walker said he is confident the nation's sixth-largest integrated steel maker and No. 2 producer of tin is moving in the right direction and will emerge from bankruptcy.

Walker, 45, declined to discuss his plans, but said he's ``got something lined up.''

``I've had opportunities that I've passed over, and I thought it was time to go try my hand in something a little bit different,'' he said.

Last year, Walker rejected an offer to become CEO of Illinois-based UAL Corp., the parent of United Airlines.

The company, which has about 3,500 employees, filed for Chapter 11 bankruptcy protection May 19 after racking up more than $700 million in losses over five years.

In its filing, Weirton Steel said it had about $654.5 million in assets and about $1.41 billion in debts as of March 31. More than half the debt is owed to retirees in pensions, health care and other benefits.

The company is now operating under a $225 million debtor-in-possession financing package while it reorganizes.

Walker's resignation comes after a month of unrelenting criticism from the Independent Steelworkers Union, which opposed the bankruptcy filing.

``I had made a decision a while ago that I wanted to try to go do something else, and my commitment to the board and to the company was that I was not going to do anything to harm the company's possibility of succeeding.

``I believe in this place,'' Walker said. ``But it's been a very long three years.''

Walker, a native of Corning, N.Y., joined Weirton Steel in 1988 as an executive assistant to the president, hired away from a Pittsburgh consulting firm.

He gradually worked his way up to vice president of operations, before leaving in 1996 for Kaiser Aluminum Corp. in Spokane, Wash., where he eventually became president of the flat-rolled products division.

Last year, he received $395,004 in salary and $645,107 in ``other annual compensation,'' according to a filing with the U.S. Securities and Exchange Commission.

For the past three years, Walker struggled to keep Weirton Steel afloat, laying off workers, securing loans and renegotiating concessionary labor contracts as foreign competition increased and financial losses mounted.

Despite his recent criticism, ISU President Mark Glyptis praised Walker's tenure and said he wished the CEO had decided to stay on. Labor and management have kept the company out of bankruptcy far longer than industry analysts had expected by collaborating, Glyptis said.

Since 1997, when low-priced foreign imports began flooding the U.S. market, some three dozen domestic steelmakers have filed for bankruptcy, and some have shut down.

West Virginia's No. 2 producer, Wheeling-Pittsburgh Steel Corp., is poised to emerge from two and a half years of bankruptcy shelter by Monday.

Aluminium works announces further layoffs

Slovak Spectator, Slovakia 27Jun03

The Závod SNP aluminium works in the central Slovak town of Žiar nad Hronom has announced 578 redundancies for August. This is the second round of layoffs this year at the plant, which was bought by financial speculators Penta Group last November.

The vice-chairman of the board of directors and Penta Group representative Jozef Spirko said that the cutbacks were necessary because the outgoings for the plant were too high given the current level of orders.

Currently, 2,037 people work at Závod SNP.

China-India trade meagre but growing

Economic Times, India - Jun 26, 2003

REUTERS[ THURSDAY, JUNE 19, 2003 04:20:06 PM ]

BEIJING: Trade between the world's two most populous countries is a meagre $5 billion a year, but that is growing fast as China and India find they can complement each other in everything from software to auto parts.

Whereas a decade ago, the Asian neighbours exchanged goods and services worth just $300 million a year, now a single deal can be worth that much.

A $230 million deal between China's Shandong Power and India's third-biggest aluminium maker, Bharat Aluminium Co (Balco), was witnessed in April.

The contract, said by Chinese officials to be the largest construction project involving the countries, calls for Shandong to build a four-turbine power plant for energy-thirsty Balco.

"India's electric power market is attractive to Chinese construction firms because of the country's low power consumption level, which has great potential to improve," said Shandong Power's project manager for the deal, who only gave his surname as Yin.

Challenging year ahead for smelter

Victoria Spectator Observer Group, Australia 25 June2003


FALLING aluminium prices and the state of the exchange rate could make next year a challenging one for Portland Aluminium budget-wise, Operations Manager Matt Pistner said this week.

Mr Pistner's comments followed the release earlier this month of figures for the Australian mineral and energy sector in the March quarter.

The statistics showed that both lower export volumes and lower export unit returns were recorded for aluminium.

Mr Pistner said that the aluminium market had recorded a decline of 2.7 per cent over the past 20 years, which was subject to fluctuations in the short term.

This long term decline meant the smelter had to continually examine ways of increasing productivity while still keeping costs down, he said.

"It's imperative we look at ways to reduce waste to reduce cost - everything we do is to make every tonne of aluminium as cheaply as we can within our values," he said.

"We're working towards more tonnes for the same sort of investment, while still working within our values."

Increased revenue was being sought by improving the purity of the metal being produced to attract a premium price, he said.

Operators, staff and contractors at the plant will also work together to increase productivity.

"We're looking for ways to deliver maintenance and peoples time in an efficient manner so our productivity is optimised and waste is minimised," he said.

Mr Pistner said that he was unsure whether the current quarter would see an aluminium price rise.

"I would hope for one but I can't speculate," he said.

Mr Pistner said that although the falling prices were a concern the good news for the plant was that it was relatively modern and therefore had fewer waste issues than some older plants.

"Our number one job is to provide a safe work place and protect the environment," Mr Pistner said.

Capral expects $5 million loss for 2003

Dial Infolink Manufacturing, Australia 30 Jun 2003

Aluminium materials supplier Capral Aluminium expects a loss of about $5m this year.

"Based on the current trends and strength of the market, it is anticipated that the year will result in a loss of approximately $5m," the company said in a statement.

Capral reported a 2002 net profit of $7.1m, compared to a $100,000 net profit in 2001.

Capral reiterated that 2003 would be a year of transition for the company, with the benefits of investment in new plant and business systems not starting to flow until 2004.

"To date we are on track to have our business systems and the new industrial plant at Campbellfield operational by the end of 2003," the company said.

"Bremer Park, Queensland, is progressing, with the facility anticipated to be operational in the first half of 2004.

"This is marginally behind the anticipated timing as we reach final agreements with the developer and the builder."

Capral said redundancy costs associated with the business improvement were around $8m, with half of the costs projected to occur in 2003.

In its annual report Capral said 2003 would be a year of transition as it closed some plants and facilities and replaced them with more labour-efficient oper