AluNews - September 2003

China's Minmetals mulls buying Kaiser alumina assets-source

Reuters, UK Mon September 1, 2003 05:22 AM ET

HONG KONG, Sept 1 (Reuters) - State-owned China Minmetals Nonferrous Metals Co Ltd is looking at buying Kaiser Aluminium's KLUCQ.OB alumina assets, including those in Jamaica, an industry source said on Monday.
The source said Minmetals was one of the six companies conducting due diligence for the Jamaican assets of Kaiser, which filed for protection from creditors in February 2002.

The industry source was attending an international conference in Hong Kong organised by Metal Events Ltd in London.

The Chinese metals trading company, which has been hit by a global shortage in alumina following the country's expansion in aluminium production, is also considering buying Kaiser's Gramercy alumina plant in Texas, the source said.

No Minmetals officials were immediately available for comment.

Kaiser, North America's third-largest aluminium producer, said in May it was looking at selling some bauxite mining operations, alumina refineries and aluminium smelters to help it emerge from bankruptcy protection.


Noranda puts off aluminum smelter in Chile's Patagonia region

Company cites economic factors but environmentalists claim victory

The Gazette , Tuesday, September 02, 2003 MICHELLE LALONDE

Noranda Inc. has put on ice a proposed aluminum smelter in the pristine Patagonia region of Chile, blaming a lack of investors and a prolonged downturn in world aluminum markets.

While Noranda says the decision was purely economic, environmental groups in Canada and Chile claim victory.

They contend the mining and metals giant withdrew the project from Chile's environmental impact assessment process because it could not pass muster.

The $2.75-billion Alumysa project would have made Aysén, a city of 20,000 people in the middle of Patagonia, home to a huge aluminum smelter, plus the three hydroelectric dams and transmission lines required to power it.

A delegation of Chilean activists and politicians travelled to Ottawa and Montreal in March to meet members of Parliament and Noranda union leaders to denounce the project.

Noranda's operations in Quebec include a copper and precious metals refinery in Montreal East, and the Horne copper smelter in Rouyn-Noranda.

"It is a surrender, because Noranda knew the project would be rejected," Fernando Dougnac, a spokesperson for the Aysén Alliance Reserve of Life, said.

Noranda spokesperson Dale Coffin said the project has not been cancelled, but activities related to it have been "temporarily suspended."

"It boils down to the global economy still not being favourable to a lot of base metals, including aluminum," Coffin said.

"We have been working on identifying potential investors (in the Alumysa project) and that has not gone (well)."

The company said the project would have created 8,100 construction jobs and 1,100 permanent jobs in the impoverished region. But critics said more permanent jobs could be created by exploiting the region's potential for ecotourism and fisheries.

"Patagonia is just stunningly beautiful, and to put an aluminum smelter there would totally destroy the environment, the potential for tourism and the salmon fishery," said Mel Quevillon of MiningWatch Canada, an Ottawa watchdog group.

Quevillon said she expects the project to resurface eventually, but believes that opposition from Chilean politicians, the salmon farming industry and environmental groups will grow in the meantime.

mlalonde@thegazette.canwest.com

© Copyright 2003 Montreal Gazette


Russia's Vanino port up for grabs
Asia Times Online, Hong Kong 02 Sep 2003 By John Helmer

MOSCOW - An expected move by the Russian government to lift the security designation on the far-eastern port of Vanino, and release the state shareholding for sale, is attracting interest among Russia's aluminum exporters that ship to North American and Asian markets from Vanino.

Other likely bidders include the national logistics operator, Severstaltrans, and Industrial Investors, the group that controls Russia's principal Asian maritime operator, Far Eastern Shipping Co (FESCO).

Interest in the Vanino sale is a fresh sign that Russia's far-east maritime ports and shipping companies are beginning to emerge from the decade-long doldrums that followed the collapse of the Soviet Union's trading relations with Asia. Asset stripping and corrupt privatizations have largely dominated the management of the sector until recently.

At this stage, government sources told Asia Times Online, the cabinet has not yet decided on the full list of maritime properties to be privatized next year, nor has the State Duma approved the government's recommendations. In addition to Vanino, a recommendation from the State Property Ministry also lists state shareholdings for possible sale at Novorossiysk (Black Sea), Vladivostok and Vostochny ports (Sea of Japan), FESCO, and the Moscow River Shipping Co.

In the past, shareholding control of Vanino port has been retained by the federal government because of the port's importance for the sea link with Sakhalin Island. Interest is sharpening in the Russian far eastern ports as the Sakhalin offshore oilfield projects begin to come on stream, generating a tide of both exports and imports, and an expected regional commercial boom.

A maritime-industry source told Asia Times Online that both the 55 percent stake in Vanino and the 19.8 percent stake in Vladivostok-based FESCO "are very interesting. If I was the owner of FESCO, I would buy both." Oleg Rumyantsev, spokesman for Industrial Investors, which took control of FESCO a year ago and has begun to generate healthy profits at Russia's third-ranked shipping company, told ATol that his group "is currently studying the situation regarding the potential privatization of assets in the transportation sector". But Rumyantsev added that it is too early to comment on particular assets that may be up for sale.

Vanino is the key Russian outlet for shipments of Russian aluminum to Asia and the United States, as well as the receiving port for Indian and Australian alumina for Siberian-based smelters of the Russian Aluminum (Rusal) group. The port is thus a vital link in the trading strategy of Rusal, which is reported by industry sources already to control the commercial operator handling aluminum and alumina at Vanino. If the government goes ahead with privatization of the port, Rusal would be well positioned to bid, industry sources said.

Vanino port's marketing department said that while control of the port is in state hands, the aluminum-alumina complex is part of the port and subordinate to its management. Last year, Vanino transported about 560,000 tonnes of aluminum for Rusal to clients in Asia and the US; after Alcoa, Rusal is the largest producer of aluminum in the world. This year, according to the same source, a similar volume of aluminum shipments is expected.

Leonid Sabirov, general director of Trans Vanino Cargo, says his privately owned company manages both aluminum and alumina shipments through the port for Rusal. He explained that his company leases a state-owned berth from the port authority, but directly owns loading equipment and storage bunkers for alumina imports. He said the facility was designed with a capacity to transport up to 1.2 million tonnes of alumina, but for the moment, annual volume is about 430,000 tonnes. Sabirov told ATol that he hopes to up this throughput to 500,000 tonnes for 2004. He declined to identify Trans Vanino's shareholders, or confirm whether these are connected to Rusal, which he identified as "only a client". A Rusal spokesman was reluctant to comment.

A source at the Vanino port company said that, in addition to the 55 percent state shareholding, 4.6 percent of the port shares are owned by companies, and 40.4 percent are owned by individuals. Information on who are the major individual shareholders and what blocs of shares they now own is not disclosed. A source in the company told ATol it is likely that the shares of the port will be acquired by some large investors, probably those who have or may have cargoes going through Vanino. At the moment, the source said, the main cargo specializations of the port are aluminum, alumina and timber cargoes. "As the experience of other ports in the far east demonstrates," the source said, "large companies that have their own cargo flows going through the far-eastern ports are interested in acquiring shareholding control of the ports, because then transportation of their cargoes through these ports works to their additional benefit."

Anna Vostrukhova, spokesperson for Severstaltrans, said that until the government makes the formal decision on what stakes it will privatize, it is too early to comment. Severstaltrans, which is linked to Severstal, Russia's second-largest steel exporter, has already built a network of shareholdings and other stakes in St Petersburg, Ust-Luga, Novorossiysk, Olya, Vladivostok and Vostochny. Compared with Vanino, she added, "we would be more interested in the 20 percent state shareholding of Vostochny port, if it is offered for sale".

At Nakhodka, another of Russia's far-eastern ports, industry sources have told Asia Times Online that the Alians oil company has bought up additional shares, and now has almost 66 percent of the port. A commercial Chinese bid to gain control of a couple of minor Russian ports close to the Chinese border was rebuffed by local interests early in the year.

(Copyright 2003 Asia Times Online Co, Ltd. All rights reserved.

Aisin Seiki Establishes Aluminum Extrusion Company in North America

Japan Corporate News, Japan 02 Sep 2003

Tokyo (JCNN) - Aisin Seiki (TSE: 7259) announced September 2 that Aisin Holdings of America established a new company to produce aluminum extrusion products in Illinois on July 23.

Capitalized at $5.1 million, Aisin Light Metals is the wholly owned subsidiary of Aisin Seiki's US holding company and is the 15th production company of the Aisin Group in North America.

The new company will make aluminum bumpers, antilock brake system (ABS) body cases, and other aluminum extrusion products.

The manufacturing subsidiary is aiming for sales of $20 million in 2006.

Visit Aisin Seiki Co. Ltd at www.aisin.co.jp

Copyright © 2003 JCNN. A division of Japan Corporate News Network. All rights reserved.

Monessen Coke plant not closing

Monessen Valley Independent, PA Wednesday, September 3, 2003

There are no plans to close the Monessen coke plant operated by Koppers Inc.

Gregory D. Sofranko/ The Valley Independent

Like Mark Twain's premature obituary, reports about the pending demise of the Monessen coke plant are greatly exaggerated, Koppers Steel officials report.
"The Monessen coke plant is very much alive," said Paul Furiga, a spokesman for Koppers Inc., which has operated the facility since 1995.

In fact, Furiga said, the company is in the process of making some $2 million worth of improvements to the complex.

Furiga's comments came on the heels of a statement made by Carnegie Mellon University professor David Lewis during a meeting Thursday in Monessen. At that session, attended by leaders from numerous area communities, Lewis quoted Monessen Mayor John DeLuca as telling him he did not think the coke plant would be operating much longer.


Mt. Holly Aluminum Reduction Plant Sets 10-Year Power Contract

Business Wire (press release)

MONTEREY, Calif.--(BUSINESS WIRE)--Sept. 5, 2003--Century Aluminum Company (Nasdaq:CENX) announced that South Carolina Public Service Authority (Santee Cooper) will continue to supply electric power to the aluminum reduction plant at Mt. Holly, SC until 2015 under the terms of a new 10-year contract. Century owns 49.67 percent of the plant. The remainder is owned by Alcoa Mt. Holly, the plant's operating partner. The current power contract is scheduled to end in 2005. Terms were not disclosed.
The Mt. Holly reduction plant has capacity to produce 222,000 metric tons of primary aluminum a year.

Santee Cooper, South Carolina's state-owned electric and water utility, serves 136,000 residential and commercial customers in Berkeley, Georgetown and Horry counties. The utility is the source of power for the state's 20 electric cooperatives, serving approximately 615,000 customers. Santee Cooper also serves the municipal utilities in Bamberg and Georgetown, and the Charleston Air Force Base.

Century owns 525,000 metric tons per year (mtpy) of primary aluminum capacity. In addition to its interest in the Mt. Holly plant, Century owns and operates the 170,000-mtpy plant at Ravenswood, WV and the 244,000-mtpy plant at Hawesville, KY. Century's headquarters are located in Monterey, CA.

Contacts :
Century Aluminum Company
A. T. Posti, 831-642-9364

USWA Slams Alcoa for Ignoring Shareholders on “Golden Parachutes”

CRSwire.com 09/05/2003

Action Sought, Pay Practices Questioned

(CSRwire) PITTSBURGH, PA - The United Steelworkers of America (USWA) sent Alcoa (NYSE:AA) CEO Alain Belda a strongly-worded letter expressing concern about the company’s apparent failure to heed the will of Alcoa shareholders expressed in a shareholder resolution requiring that any agreement on "golden parachutes" be submitted to them for approval, and strongly encouraging him to instruct Alcoa’s Board of Directors to quit delaying on the matter.

Alcoa announced at its April 11 annual meeting that shareholders had approved a proposal relating to grossly excessive executive severance agreements, commonly known as golden parachutes. The proposal urged Alcoa’s Board of Directors to seek shareholder approval for future severance agreements with senior executives that provide benefits in an amount exceeding 2.99 times the sum of the executive’s base salary plus bonus. Despite the company recommending a vote against the proposal, 65% of votes were cast in its favor.

“Basically, Alcoa shareholders decided that they cannot trust Alcoa’s Board of Directors to look after their interests,” said USWA Vice President Andrew Palm, who co-signed the letter to Belda on behalf of over 13,500 USWA members working for Alcoa. “Based on our dealings with this company, we believe that’s a wise decision. Alcoa executives and directors clearly look out for each other, but they are often oblivious to the interests of employees and other stakeholders.”

The letter to Belda cites recent Alcoa pay practices as a reason why shareholders voted to reign in the company’s Board. For instance, a severance plan for senior executives adopted by Alcoa in 2002 provides the executives with a cash payment exceeding three times annual salary, continuation of benefits for three years, accelerated vesting of stock options and even reimbursement of taxes on plan proceeds. Also, Belda received $24.8 million in total compensation in 2002, despite Alcoa stock losing 34.6% of its value. This earned Alcoa and Belda mention in a Fortune Magazine cover story on excessive CEO pay titled “Have They No Shame?”

“Alcoa should be ashamed,” said Special Assistant to the President and head of the USWA Aluminum, Brick and Glass Division John Murphy, “and not only because of its Enron-style executive pay. It’s been months since Alcoa shareholders, through a democratic process, called on Alcoa to cede some control over executive severance pay. Alcoa taking no action on this matter is consistent with the company’s authoritarian management style and raises troubling questions about Alcoa’s corporate governance.”

The letter to Belda was copied to Alcoa Directors, nearly 2,000 of its top shareholders, the Council of Institutional Investors and the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO). AFL-CIO sponsored the resolution and it was presented at Alcoa’s annual meeting by USWA. The letter can be viewed at www.uswa.org/pdf/Letter_to_Belda.pdf .


Charges of favouritism over dam project

Australian Financial Review, Australia Sep 08

Malaysian businessman Syed Mokhtar al-Bukhary is poised to take over the country's Bakun hydro-electric dam project in Sarawak state on the island of Borneo.

GIIG Capital, a private company controlled by Mr Syed Mokhtar, signed a preliminary agreement on Saturday with Malaysia's Finance Ministry to acquire as much as 60per cent of Sarawak Hidro, the main operator of the Bakun project, according to government officials.

But senior administration figures are quietly criticising the deal, saying it favours Mr Syed Mokhtar at the government's expense.

The Bakun project is the latest in a string of business deals by 52-year-old Mr Syed Mokhtar, a confidant of Prime Minister Mahathir Mohamad who has emerged as one of Malaysia's most influential businessmen in the past two years.

Among other things, he holds controlling interests in listed companies such as Malaysia Mining, a cash-rich infrastructure concern, and Pernas International Holdings, a previously state-owned hotel and manufacturing group. He also controls two power-generation concerns and owns stakes in two sugar-refining businesses.

The Sarawak Hidro stake GIIG plans to buy is valued at 945.4million ringgit ($387 million). But the company won't have to pay up straightaway. Under the agreement, GIIG will first acquire 10 per cent of the equity interest it intends to buy, then raise its equity stake to 60 per cent over the next four years.

The agreement also allows GIIG to divest itself of half its holdings to an investor approved by the government once the project is completed in 2007. The government will retain 40 per cent of Sarawak Hidro.

GIIG "is getting control of a huge project and paying little upfront", says one government official. He asserts that other preferential treatment accorded to GIIG includes long payback periods on loans Sarawak Hidro owes the government and state backing for GIIG to secure funding to build the hydro-electric dam, which GIIG estimates will cost 4.5 billion ringgit.

Mr Syed Mokhtar was not available on Thursday for comment. Executives close to him defend the deal. They say delays in the project have prompted Dubai Aluminium to review its plans for a Sarawak smelter. They also say that the new agreement includes a guarantee by Mr Syed Mokhtar to complete the project by 2007 to ensure that the smelter plan remains on track.

Associates also argue that further delays in building Bakun could cause long-term environmental problems in the upper reaches of Sarawak's Rejang River, where the dam will be located.

Bakun's completion would enhance Mr Syed Mokhtar's position as Malaysia's largest power generator after national utility Tenaga Nasional.


Aust outsourcer grabs Alcoa business

By Staff writers, ZDNet Australia 09 September 2003
Australian information technology outsourcer Kaz Group has announced a three-year deal with aluminium giant Alcoa.
The new deal will see Kaz provide Alcoa with mainframe and technical support in addition to the application development and support services it already provides. The new services will boost Alcoa's spend on Kaz' services to AU$5 million this year.

The deal -- secured after what Kaz termed an "an extensive and highly competitive tender process" involving several tech outsourcing companies -- entrenches the Australian outsourcer's position within Alcoa, who operates the largest integrated bauxite mining/alumina refining/aluminium smelting system in the world.

Kaz Group recently talked down corporate contracts and was eager to point out that 58 percent of its revenue was now coming from government contracts.

While the corporate market for information technology services remained subdued, "the government sector remains strong and now accounts for 58 percent of revenues," the company said earlier this month.

Kaz has had a very busy year, restructuring the company into three separate divisions, Kaz Technology Services, Kaz Business Services, and Kaz Software Services. That task included integrating acquired businesses Aspect Computing, Ausdata, and Australian Administration Services (AAS) into those three streams.

The recent re-structure cost the company $3.5 million.

The last year has seen KAZ's share price swing between a low of $0.11 a share up to it's 52 week high a year ago of $0.295. It's currently trading 3 cents shy of that figure at $0.265.

Natalie Hambly contributed to this report.

Garmco plans $10m expansion
Gulf Daily News, Bahrain Thursday 11 September 2003
MANAMA: A total of $10 million (BD3.78m) is being spent on developments at the Gulf Aluminium Rolling Mill Company (Garmco), announced the company yesterday. The aim is to increase its competitiveness, reduce costs and increase the aluminium rolling mill's annual capacity from 125,000 to 145,000 tonnes.

The funds will be spent on industrial hardware and processes, including new slab heating furnace and extension of hot mill tables.

Garmco is also investing in its staff to enhance their ability to efficiently produce a quality product, said the statement.

Ongoing Career Development Programmes (CDPs) are implemented at the on-site training facility in mechanical, industrial process, operation and technical applications.

Three employees are also being sent to the UK for a one-year course, which will provide them with aluminium engineering and manufacturing skills.

"At Garmco, we anticipate that our employees provide the highest quality aluminium possible," said administration manager Adel Hamad.

"To do this, we are constantly upgrading their skills and investing in our infrastructure," he explained.

Garmco has also teamed up with both Bahrain University and the Bahrain Training Institute to develop specialised quality control and metallurgy programmes.

This will ensure the continuation of a highly skilled workforce to man both the company and the industry in the future.



Balco unit faces shutdown
Plant has just week’s bauxite stock as cops stop trucks from ferrying bauxite
Indian Express, India Ashwani Sharma

Raipur, September 10: Flaunting a Rs 750-crore expansion plan over the past year as a sign of its improved ties with Chief minister Ajit Jogi, the Bharat Aluminium Company Limited (Balco) has run into fresh trouble with Chhattisgarh now.

The trouble this time is not related to workers’ unrest, but the supply of bauxite — a key raw material for aluminium manufacture. This has come about since bauxite mines in Sarguja district have remained shut for the last 15 days. Also, over 400 trucks engaged in transporting bauxite have stopped plying.

The district administration accuses Balco of overloading trucks, resulting in huge loss to the exchequer. ‘‘We are working out the exact loss, which could run into several crores over the past some months,’’ said Sarguja SP K. Babu Rao.

Balco requires about 1,600 to 1,700 tonnes of bauxite daily for the plant to run at full capacity. It was only a few months ago that Balco’s new owner Sterlite was able to put the plant back to its capacity after the 2001 workers’ strike against the PSU’s privatisation. The non-supply of bauxite to the plant has pressed panic buttons for the Balco management now lobbying for Jogi’s intervention — which would mean the return of bad days for the Sterlite group.

‘‘Currently, we are left with only a week’s stock. If the bauxite supply is not resumed within next few days, the plant will eventually face closure. Imagine the extent of national loss in that case?’’ says Balco chief spokesman Deepak Pachhpore.

The district administration is not ready for compromise. ‘‘Trucks which are supposed to load 10 tonnes have been ferrying 18 to 20 tonnes. Apart for tax evasion, its impact on the roads is far more serious. There is public outcry about roads being damaged because of overloaded trucks,’’ alleges the Sarguja SP.

Police have ordered transport companies and Balco to submit all details of the bauxite transportation over the last six months. First, the cases under Motor Vehicle Act will be filed and later the Mining Department will be asked to re-examine records to work out penalties on excess loads.

‘‘Simultaneously, we will work out criminal culpability of the company officials and transporters,’’ says Rao.

The police is not willing to allow bauxite to be transported until Balco pays the penalty. The company, however, has been pleading for permitting truck movement. ‘‘We are not running way and ready to provide whatever details are required by the police,’’ says the Balco spokesman.


Aluminum Giants Alcan and Pechiney Agree to Merge

New York Times , By JOHN TAGLIABUE

PARIS, Sept. 12 — Alcan, the world's second-largest aluminum company, won the support of Pechiney of France today for a $4.5 billion merger that will form the world's largest aluminum company by revenue.

Alcan, based in Montreal, made a complex cash-and-stock offer that Pechiney said valued its stock at as much as 48.50 euros a share ($54.36), or about 4 billion euros ($4.5 billion). Alcan's offer is worth 47.5 euros, 24.60 euros of that in cash, for each Pechiney share, plus a bonus of 1 euro if Alcan obtains more than 95 percent of the outstanding shares.

Alcan, which made its first bid in July, agreed to this price after Pechiney's chief executive, Jean-Pierre Rodier, rebuffed a second takeover offer last week of 47 euros a share, terming it inadequate.

Alcan's chief executive, Travis Engen, has spent considerable time in Europe this summer discussing the possible deal with Mr. Rodier; price was the sticking point.

At a hastily convened meeting, Pechiney's board voted to recommend the latest offer, saying that it "constitutes the best value alternative available to Pechiney shareholders."

Pechiney's shares closed up 0.39 euro in Paris, less than 1 percent, to 46.65 euros, and Alcan was up in New York $2.25, or 6.4 percent, at $37.24.

An analyst at Merrill Lynch in London, Russell Skirrow, shifted his recommendation on Pechiney from neutral to sell.

While Alcan shareholders would "reap the benefits of the cost and revenue synergies from the deal," Mr. Skirrow wrote in a note to clients, Pechiney shareholders faced possible antitrust complications in Europe and partial payment in Alcan stock, which he called a "high-risk strategy."

If the deal is completed, the combined companies would have annual revenue of almost $24 billion and 88,000 employees around the world, creating a huge global competitor for Alcoa, the world's oldest and until now largest aluminum company, which had revenue last year of $20.3 billion.

But the combined aluminum production of Alcan and Pechiney would lag behind that of Alcoa, which is based in Pittsburgh. The new entity would have a total production of 3.3 million metric tons, compared with 3.5 million metric tons at Alcoa last year.

Alcan's takeover of Pechiney comes as the aluminum industry is struggling to emerge from a slump that has lasted almost two years. Oversupply has forced prices for raw aluminum and finished products down, while inventories have climbed, as aluminum users scale back purchases because of a generally slow global economy. Aluminum prices are about $1,600 a ton, down from a peak of $2,200 in 1995.

The slide in price and demand has already prompted several takeovers and mergers.

Last year, the Norwegian conglomerate Norsk Hydro, Europe's largest aluminum company, spent 3.1 billion euros to acquire the VAW aluminum unit of the German utility E.ON; in 2000, Alcoa paid $5.8 billion to merge with the Reynolds Metal Company.

Today's deal brings together companies that were at the heart of efforts in 1999 to achieve a three-way merger of Alcan, Pechiney and the aluminum division of the big Swiss conglomerate Alusuisse Lonza, known as Algroup.

When that merger deal was blocked by European antitrust regulators, Alcan went on by itself to acquire Algroup. Today's deal to add Pechiney would complete the original plan.

Alcan executives have said they expect that combining the two companies will produce around $250 million in cost savings, a number that some analysts have said is too low. The executives also said that they expected antitrust problems to be minimal.

Last week, the French government ruled it would not block the deal, even though Pechiney is a major supplier to French military contractors and supplies roughly half the needs of the Airbus aircraft group. European antitrust authorities are expected to rule on the deal by Sept. 29.

The principal benefits to the combined companies, said David Kerans, an analyst at Argus Research in New York, would come from economies of scale, merged research and development, and increased power to deal with large customers.

The principal challenge, he said, would be for Alcoa, since "it is not clear to me that any reduction of capacity is going to be produced."

Alcan gave assurances in July that it was willing to sell its interests in one of two rolling mills in Germany and eastern France if the European Union antitrust authorities require it.

An unwillingness to do so scuttled the three-way merger plan three years ago. But Mr. Kerans said such divestitures were not crucial to the success of the merger.

Other problem areas would be minimal. Pechiney's main attractions are its highly regarded aluminum smelting technology and a strong position in the aerospace market, where it is a major supplier to both Airbus and Boeing.

Mr. Engen, Alcan's chief executive, said Pechiney's decision to accept the latest offer "confirms a long-held view that this combination of Alcan and Pechiney presents the strongest industrial and business opportunity for Pechiney stakeholders."

Pechiney's board, in its statement, said: "The board of directors is pleased that this combination would allow Pechiney's employees to contribute to a global leader in aluminum and packaging activities."

The offer will be presented by Tuesday to European and American stock market officials and antitrust regulators, the statement from Alcan said.


Alcoa set to benefit from Alcan-Pechiney deal

Reuters, UK - Fri September 12, 2003 02:16 PM ET By Carolyn Koo

NEW YORK, Sept 12 (Reuters) - The combination of Alcan Inc. AL.TO and Pechiney PECH.PA will displace Alcoa Inc. AA.N as the world's largest aluminum producer by sales, but the U.S. company is still likely to benefit from the deal as assets come on the market and a worldwide supply glut is reduced.

Pittsburgh-based Alcoa, like its rivals in the industry, has suffered from overcapacity, and too much production chasing too little demand for its products worldwide. As a result, aluminum prices have stayed depressed.

However, there are expectations that Montreal-based Alcan's $4.48 billion takeover of France's Pechiney, announced on Friday, would result in the shuttering of some aluminum smelters within nine months of the deal's close, leading to shrinking production.

"There are some redundant operations between the two companies. You could probably see some smelter capacity come off line," said Chris Olin, an analyst at Longbow Research who has "market perform" ratings on both Alcoa and Alcan. He does not own shares in either company.

"It balances out the supply-demand equilibrium and helps stabilize LME (London Metal Exchange) aluminum ingot prices over the long term."

Alcoa itself may temporarily cut production at a Washington aluminum smelter, known as Intalco, on Sept. 30 because of higher power costs. At the same time, it is building a $1.1 billion plant in Iceland with a capacity of 322,000 metric tons a year.

"The U.S. smelters are higher cost and the opportunities to expand capacity in Canada and build the smelter in Iceland will lower their cost position," said Lloyd O'Carroll, an analyst at BB&T Capital Markets, who has a "buy" on Alcoa and a "strong buy" on Alcan. He does not own shares of either company.

"When you're dealing with a commodity, there's nothing more important than cost."

Three-month aluminum prices closed at $1,411 per tonne on the London Metal Exchange on Friday. They have improved modestly but are still nearly 20 percent off a long-term high reached in January 2000.

ASSET SALES

O'Carroll also noted that Alcoa could have a chance at some choice assets, should European antitrust regulators approve the Alcan-Pechiney deal on Sept. 29.

Depending on which assets regulators order Alcan to divest, "Alcoa could be the natural buyer and it is possible that Alcoa could get some assets at a relatively cheap price," he said.

Alcan and Pechiney will sell around $250 million to $300 million of assets, including some rolling assets in Europe and U.S. mills, according to a person familiar with the deal.

Of great interest is Alcan's 50 percent-owned Norf rolling mill in Germany and Pechiney's Neuf Bisach.

"Those compete with each other and is likely to be an antitrust issue. One or the other of them will likely be sold," O'Carroll said, adding that Alcoa and Norway's Norsk Hydro ASA NHY.OL , which owns the other half of Norf, are likely buyers.

"If Alcoa wound up buying one of those two rolling mills at a better than longer term value price, then that would clearly be a plus."


Alcoa shareholders to approve certain severance agreements

Dayton Business Journal, OH 9/12/03

Alcoa Inc. said Friday it will seek, under certain conditions, shareholder approval of severance agreements for senior executives.

Pittsburgh-based Alcoa said directors adopted the policy to have shareholders approve severance agreements with senior executive officers when those agreements would result in payments exceeding 2.99 times the executives' salary and bonus.

Alcoa said the policy resulted from discussions that began after its last shareholder meeting, in April. A majority of the shareholders who cast votes during the meeting -- but not a majority of the shares voted -- approved a resolution requesting the board to consider such a policy.

Alcoa said severance agreements with senior executive officers must still be approved by the board's compensation and benefits committee.

The committee, which is composed entirely of outside directors, has not approved a severance package for senior executive officers that exceeded 2.99 times salary and bonus in the past, Alcoa said.

In addition, the company declared a regular cash dividend of 15 cents per common share, payable Nov. 25 to shareholders of record as of Nov. 7.

Alcoa, the world's largest aluminum producer, employs 450 people through its local operations in Sidney.

© 2003 American City Business Journals Inc


Rusal to invest $30 mln to widen aluminium band production.

Gateway 2 Russia, Russia, 12 September 2003 15:40

Russian Aluminium, or Rusal, will invest around $30 mln to widen aluminium band production to make cans on Samara Metallurgic Works. Rusal said its investment committee has approved of the 2nd stage of the project.

When the 2nd stage is implemented, Samara Metallurgic Works will make at least 120,000 tons of can band on year (vs. 30,000 tons after the 1st stage), the width will grow to 1,850 mm vs. max. 1,560 mm made today.

Siemens, SMS-DEMAG and VAI Cosim also take part in the project.


Alcoa shareholders will get vote on "golden parachutes"

Doylestown Intelligencer, PA, The Associated Press 9/13/03
PITTSBURGH - Alcoa shareholders could be pulling the strings of their executives' golden parachutes, under a plan that will let shareholders vote on some large severance packages.

Alcoa shareholders were given the right to vote on severance packages for executives, if the package equals more than 2.99 times the executive's annual pay and bonus, under an agreement approved by the company Friday.

The move comes after union officials and shareholders criticized severance deals given to Chairman and Chief Executive Officer Alain Belda and other executives last year.

Belda volunteered for a 20 percent salary cut last year, receiving $2 million in salary and bonus in 2002. Including gains from stock options, Belda earned $5.8 million last year.

The new policy won't affect Belda and other executives whose so-called "golden parachutes" call for them to receive three times their annual salary, incentive pay and other benefits if they lose their jobs in a takeover, but will affect all severance packages offered from now on.

"The board listens to shareholders," Alcoa spokesman Kevin Lowery said.

But the shareholder who pushed for the change said Alcoa officials didn't listen closely enough.

Brandon Rees, a research analyst in the AFL-CIO's Office of Investment, said the aluminum giant should either let shareholders retroactively vote on the current severance packages given to Belda and the others, or reduce the payouts to conform with the new policy.

"Anything less than that is not sufficient to address shareholder concerns," Rees said. "This issue is not dead."

Rees said 65 percent of Alcoa shareholders voted to approve the new policy. Hewlett-Packard and Tyco International have also adopted the severance guidelines, which the AFL-CIO pitched to Alcoa at the company's annual meeting in April, Rees said.

Alcoa officials opposed the plan, saying it wasn't practical to involve shareholders in designing severance plans.

But the labor organization convinced shareholders by arguing that the 2002 severance plan "is excessive and unnecessary given the high levels of compensation and retirement benefits awarded to company executives."



Pechiney chairman says he'll step down if Canadian rival Alcan takes over

CBC News, Canada, 11:06 PM EDT Sep 13
Alcan president Travis Engen at a news conference on April 24. (CP/Paul Chiasson)
PARIS (AP) - The chairman of French aluminum company Pechiney SA said he will step down if a takeover bid by Canadian rival Alcan Inc. is successful.

Jean-Pierre Rodier said in an interview published Saturday that he planned to continue running the group if Pechiney shareholders reject Alcan's $6 billion Cdn bid.

"But if Alcan takes control, I will leave, as there can't be two bosses for one group," Rodier was quoted as saying in Le Monde newspaper.

On Friday, Pechiney endorsed the takeover offer from Alcan after two months of negotiations. The deal would create a company with some $23 billion US in annual sales and compete with U.S.-based Alcoa for position as the world's biggest aluminum company. Pechiney's board had rejected two offers from Alcan since early July before accepting the latest cash and stock bid and recommending it to Pechiney shareholders.

The planned link-up has yet to overcome a significant hurdle, as the European Union's anti-trust authorities must approve the operation. A decision is expected Sept. 29.

© The Canadian Press, 2003


But, can it top Alcoa profits?
Montreal Gazette, Canada JAY BRYAN Saturday, September 13, 2003
Now that Alcan boss Travis Engen has achieved the impressive feat of turning his Montreal company into the world's largest aluminum company, he can turn his efforts to an even more important goal: Making it the world's most profitable.

Alcoa, a Pittsburgh-based rival, was nearly twice Alcan's size until Europe's biggest producer, Pechiney of France, succumbed yesterday to Engen's two-month-old hostile takeover bid. Now Alcan has leapfrogged it.

However, Alcoa remains far ahead of Alcan in a more important measure: Profitability. Although the gap has begun to narrow in the past couple of years, Alcoa's return on capital has historically been twice that of Alcan, observes Lloyd O'Carroll, chief economist and aluminum analyst at BB&T Capital Markets in Richmond, Va.

But there is at least a chance the Pechiney deal could be a key to closing this gap. That's particularly true because many analysts judge that Alcan escaped the so-called winner's curse, when an acquiring company becomes so focused on winning its prey that it pays too much.

Such overpayments go a long way toward explaining why most takeovers fail to produce a benefit for shareholders.

"If you overpay for an asset, you never get out from under," O'Carroll suggests.

O'Carroll thinks the Pechiney deal was cheap enough to boost Alcan's profitability within the next year or so.

If he's right, Engen managed to nearly double his company's size at a reasonable price, positioning Alcan nicely to exploit the upturn in aluminum demand many expect to accompany the nascent global economic recovery.

But short-term profitability is far from the only challenge Alcan faces. In the longer run, Engen must meld the bureaucratic culture of a proud French company with the increasingly entrepreneurial one he's trying to nurture at Alcan. It will not be an easy task.

The people at Pechiney have much to be proud of. While they aren't renowned marketers like Alcoa, they might be the global aluminum industry's best engineers. "Every new smelter in the world uses their technology," O'Carroll said. "They are cutting-edge."

This creates an even more exciting prospect than the near-term bump to profitability Alcan will get from buying an asset at a good price.

During the next several years, it has the potential to marry the world's most efficient smelting technology with the unusually cheap power Alcan enjoys because of Canada's abundant hydroelectricity. The resulting cost advantage would be a potent competitive weapon in a business where one company's ingot is, after all, indistinguishable from another's.

Of course, this potential will be realized only if Pechiney's superb engineering talent remains and continues to be productive.

That's a fairly big if in a world where corporate takeovers are often carried out with much the same sensitivity as a medieval siege, with the vanquished company regarded more as an object of plunder than a valued partner.

However, Alcan's recent record isn't bad. Its last big takeover, of a Swiss producer, was integrated smoothly.

If Engen can pull off the same trick with Pechiney, Alcan might hope to boast one day that it's not only the world's biggest aluminum company, but more important, the most profitable.

jbryan@thegazette.canwest.com

© Copyright 2003 Montreal Gazette

Alcan deal could be good news for Kitimat: union head

Takeover of French rival makes corporation the industry leader

Vancouver Sun, Canada Saturday, September 13, 2003

METALS INDUSTRY I Alcan Inc.'s $4.5-billion US takeover of a French rival could be good news for 1,400 smelter workers in Kitimat, a union official said Friday.

Canadian Auto Workers local 2301 president Rick Belmont said the acquisition of France's Pechiney SA gives Alcan access to proprietary technology that could be used to upgrade the aging Kitimat aluminum smelter and build a modern plant alongside.

Based on last year's combined sales of $24 billion, the deal makes Montreal-based Alcan the global industry leader in terms of sales revenue.

Prior to the deal Alcan was number two while Pechiney was fourth. U.S.A.-based Alcoa was number one.

"Hopefully it's a positive note for us. We'd like to see a huge expansion here and they've always talked about the Pechiney technology they'd have to purchase," Belmont said.

He said the deal could lead to stable, or even improved, job prospects for Kitimat workers.

Alcan has trimmed more than 200 jobs at the 49-year-old smelter and a recent report on the Kitimat district economy said Alcan and other local heavy industries require sustained investment to keep them competitive.

"Pechiney is part of Alcan now, so they'd be buying the technology off themselves," Belmont said.

"I will be optimistic about it. Hopefully this will make the technology accessible at little or no cost and make it cheaper to do that expansion here."

Kitimat district manager Trafford Hall was less optimistic. He noted that Pechiney is already committed to a number of costly projects which could mean less money for investment in Kitimat.

He's also concerned that Alcan could use its cheap hydro resource in Kitimat to subsidize projects in other jurisdictions where the price of electricity is higher.

Kitimat's big three industries -- aluminum, methanol and forest products -- play a disproportionately large role in the province's economy but cannot be expected to maintain that role without major infusions of cash, said a report released earlier this month by Alcan.

Alcan shares soared to a 52-week high Friday, buoyed by news that the board of Pechiney is endorsing the takeover.

It was Alcan's third bid for Pechiney.

The Paris company recommends acceptance of Alcan's sweetened bid, calling it the best available option for shareholders.

The merger, which still requires shareholder and regulatory approvals, would combine Alcan's 54,000 employees with 34,000 at Pechiney.

"Having carefully considered the terms of Alcan's new offer, and in light of the long-recognized industrial logic of a Pechiney-Alcan combination ... the board of directors of Pechiney has determined that such a new offer constitutes the best value alternative available to Pechiney shareholders," Pechiney said in a release.

Alcan shares surged in value Friday on news of the agreement.

In trading on the Toronto Stock Exchange, Alcan shares (TSX:AL) rose $4.64, or 9.63 per cent, to $52.83 in heavy trading of 4.9 million shares.

Under the cash-and-stock bid, Alcan offered 47.5 euros per share in cash and Alcan stock, plus one euro in cash per share if at least 95 per cent of Pechiney shares are tendered to the offer.

At the higher price, the deal values Pechiney at just over four billion euros, or about $6.18 billion Cdn based on the French company's 82.6 million outstanding shares.

Alcan's 1999 bid for Pechiney failed amid antitrust objections. Now, with world metals prices low and no other serious rivals bidding for Pechiney, Alcan may win the French company with an offer that would have been considered far too low just a few years ago.

Analysts reacted warmly to the deal, saying the combination of Pechiney's technology and Alcan's low-cost supply of electricity creates a powerhouse in smelting and one of the world's most flexible packaging companies.

"I think it's strategically quite powerful for Alcan," Lloyd O'Carroll, an analyst with BB&T Capital Markets, said from Richmond, Va.

Alcan's Quebec-based employees were less upbeat than their counterparts in Kitimat.

With Alcan failing to provide details of the deal, unionized employees in Quebec fear that they and communities that rely on Alcan may ultimately be affected by Pechiney's commitment to protect French jobs.

"It's a little troubling because we have old mills in Quebec," Jacques Proulx, president of the local aluminum workers' union, said from Saguenay, Que.

The merger gives Alcan inroads into major new markets for the lightweight metal, especially in the aerospace sector.

Pechiney is a major supplier to jet makers Boeing Co. and Airbus and is a leader in metals technology.

© Copyright 2003 Vancouver Sun

RusAl Demoted to No. 3

Moscow Times, Russia Monday, Sep. 15, 2003. Page 5

It took months, but Canadian aluminum giant Alcan, the world's No. 3 producer, on Friday finally won over the board of No. 4 Pechiney of France with a takeover bid of $4.5 billion.

The merger will create the world's largest aluminum group by revenues and No. 2 by output.

The deal pushes Russian Aluminum down a notch to No. 3 in terms of output, and has further implications for the company, as it boosts the clout of Pechiney, the partner of its main competitor SUAL.

SUAL, the world's No. 7 largest aluminum producer, announced a 60-40 joint venture with Pechiney in April to build a $2.1 billion aluminum facility in Komi republic in northern Russia.

Combined, Alcan and Pechiney last year saw sales of $23.7 billion, a total that eclipses U.S.-based industry leader Alcoa, at $20.3 billion.

The two have a combined staff of 88,000, less than Alcoa's 127,000 but more than RusAl's 70,000.

Alcoa last year controlled some 13 percent of world aluminum production, followed by RusAl with 9.5 percent, Alcan with 8.6 percent and Pechiney with roughly 5 percent.

European antitrust regulators will rule on whether to approve the merger on Sept. 29.

The merger may reduce volumes of metal traded on the London Metal Exchange, but bring with it price stability, analysts said Friday. Aluminum prices have declined for three consecutive years on the London Metal Exchange.

Aluminum makers have been combining to help cut costs as global production reaches record levels.

"My initial reaction is that I expect some natural synergies would slow down business on the exchange, but I am unsure by how much at this stage," Barclays Capital analyst Ingrid Sternby said.

"Overall I would regard consolidation in the aluminum industry and the increasing concentration among the top five producers as helpful," she added.

Sternby said the combined company would have capacity to produce 3.35 million metric tons of primary metal annually, just shy of Alcoa's 4.06 million tons, yet more than RusAl's 2.36 million tons.

(MT, Reuters, Bloomberg)


Aluminium major Alcoa to buy 26pc stake in Alba

Gulf Daily News, Bahrain, Tuesday 16 September 2003 ,By HISHAM ALAWI

MANAMA:

Bahrain yesterday paved the way for new industrial partnerships with foreign investors.It signed a memorandum of understanding (MoU) with aluminum giant Alcoa, which clears the path for the US-based company to buy up to a 26 per cent stake in the Alba smelter.Alba is currently undergoing a $1.7 billion expansion (due for completion in 2005) to create a fifth line, which will take its production capacity to 819,000 metric tonnes per year, making it the largest aluminium smelter in the world outside Eastern Europe.

The MoU will accelerate plans for an additional expansion, a sixth line, which would increase annual production capacity by a further 307,000 tonnes.

The MOU was signed by Oil Minister and Alba chairman Shaikh Isa bin Ali Al Khalifa and Alcoa executive vice-president John Pizzey, who is also president of Alcoa Primary Products, at the Ritz-Carlton Bahrain Hotel and Spa.

Present at the signing ceremony were Finance and National Economy Minister Abdulla Saif, Finance and National Economy Under-Secretary Shaikh Ibrahim bin Khalifa Al Khalifa and other officials.

Shaikh Isa said the deal would be a boost to the national economy.

"This MoU provides benefits and opportunities for both Alcoa and Alba, ensuring the continuous supply of high quality alumina," he said.

"Alcoa has been working with Alba for many year in different projects, which makes this memorandum a feasible partnership."

Shaikh Isa said the MoU would draw other investors to set up partnerships with the various companies in Bahrain.

"We are proud of this partnership, which will open new horizons for a variety of projects which will be announced shortly," he said.

Prime Minister Shaikh Khalifa bin Salman Al Khalifa received Mr Pizzey prior to the signing of the MoU, praising the efforts exerted by both parties in setting up such a partnership, said Shaikh Isa.

Mr Saif said Alcoa was one of the renowned companies in the field of aluminium and the partnership was a great asset to the country.

"This will with no doubt be a great push forward for Bahrain's economy," said Mr Saif.

"In addition to that, the transfer of technology and information to and from both sides will also enhance the standards available."

Mr Pizzey said that Alcoa was delighted to strengthen its partnership with Alba and Bahrain and that this was a good start.

"It is truly an honour for Alcoa to sign this important memorandum, which will definitely be a fruitful for both parties," he said.

"Regardless of the offers received by our company from other companies, we found Alba as the most suitable and fulfilling to our criteria."


SOEs to hire top executives

EastDay.com, China 15 Sep 03

Six major Chinese state-owned enterprises are to recruit senior executives from home and abroad from mid-September, the first such move to improve their personnel structure.

Sources with the State Assets Supervision and Administration Commission, under the State Council, said yesterday that seven positions, ranging from deputy general manager to chief accountant, are up for grabs.

China Unicom Corp Ltd, one of the country's leading telecommunications operators, plans to recruit two deputy general managers while the Aluminum Corp of China Ltd, the country's sole aluminum producer, and Sinotrans, a major logistics dealer, each hope to hire a deputy general manager.

The State Development and Investment Corp, an infrastructure investor, and China Energy Conservation Investment Corp Ltd, the only state corporation for energy-efficiency and environmental projects, each plan to recruit a chief accountant.

China Unicom is a listed firm on the New York and Hong Kong bourses and Sinotrans is publicly listed in Hong Kong.

Of the candidates, all require Chinese citizenship except the deputy general manager with Sinotrans, SASAC, the department responsible for the recruitment, announced.

A SASAC recruitment team, headed by deputy director Li Yizhong, has been set up and the process is scheduled to end in late December.

The move represents "an attempt to use market-oriented channels to improve managerial mechanisms under the market economy," the announcement said.

"The open recruitment is expected to advance the selection mechanism in SOEs and give impetus to personnel reform in SOEs," Li said.

"The gap between Chinese SOEs and multinational corporations is mainly the gap in personnel selection," SASAC Director Li Rongrong once said.


SUAL in Balkan Talks

Moscow Times, Russia 15 Sep 03

BELGRADE, Serbia and Montenegro (Reuters) -- No. 2 aluminum firm SUAL has talked to the Montenegrin government about the possible acquisition of aluminum plant Kombinat Aluminiuma Podgorica, or KAP, the company's general manager said Monday, confirming earlier reports.

Mihailo Banjevic said SUAL board member Vladimir Kremer last week discussed with Montenegrin Prime Minister Milo Djukanovic the possible purchase of KAP, during Foreign Minister Igor Ivanov's visit to Serbia and Montenegro.

"Kremer also visited KAP and informed the management of SUAL's interest in the company," he said.

Montenegro plans to sell a majority 65.53 percent stake in KAP, its sole alumina and aluminum plant, which uses French Pechiney technology, with installed annual output capacity of 280,000 tons of alumina and 102,000 tons of aluminum.

Last month, local media quoted industry sources saying Glencore, Pechiney, Norsk Hydro of Norway, Canada's Alcan, U.S. major Alcoa and Russian firm RusAl were also interested in KAP.


Venezuela's Venalum sees 2003 output at 434,000 tns

Reuters, 09.15.03, 5:06 PM ET

CARACAS, Venezuela, Sept 15 (Reuters) - Venezuela's state-run aluminum smelter Venalum aims to produce around 434,000 tonnes of primary aluminum this year as output dips slightly from the record production of 436,558 tonnes last year, a plant official said Monday.

"We've budgeted to go above capacity. We're producing according to the budgeted plan," the spokesman told Reuters.

Venalum, the largest smelter operated by state industrial holding Corporacion Venezolana de Guayana (CVG) in south-east Bolivar state, produced an accumulated output of 288,081 tonnes in the first eight months of this year, down from 289,415 tonnes produced over the same period last year.

The plant has a nominal capacity of 430,000 tonnes a year.

Venezuela's smaller Alcasa smelter produced 14,809 tonnes in August compared with 15,222 tonnes a month earlier, a spokeswoman for the plant said. Its eight-month accumulated output reached 114,514 tonnes.

Venalum produced 36,757 tonnes in August, down from 36,916 tonnes produced last August.

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

Copyright 2003, Reuters News Service


Coega uncertainty after Pechiney move

IAfrica South African News, South Africa Posted Mon, 15 Sep 2003

The Coega Industrial Development Zone in the Eastern Cape is once again facing uncertainty, following the decision by French group Pechiney, an anchor tenant, to accept a hostile takeover bid by Canadian aluminium group Alcan.

According to Business Report, Coega officials said it was "business as usual" at the Coega site near Port Elizabeth, despite the news.

There was a "remote" possibility that Alcan would not take up where Pechiney left off, but construction of the deep-water port will continue, as if the $1.7-billion smelter was going ahead, Coega spokesperson Raymond Hartle told Business Report.

He added that the Coega Development Corporation welcomed the developments, as it was a step towards resolving the bid, to the benefit of all parties.

Pechiney on Friday accepted the 48.5 euro per share offer by Alcan, valuing Pechiney at just over €4-billion, AFP reported.



Big China aluminium deal gets go-ahead

Star, Malaysia Wednesday September 17, 2003

HONG KONG: A planned joint venture by the world’s two largest aluminium groups to operate a plant at Pingguo in China has been given a boost by a provincial government decision to allow them to buy a power plant, an industry source said.

Aluminum Corporation of China Ltd (Chalco) and Alcoa International (Asia) Ltd plan to form a 50:50 joint venture at Chalco’s facility at Pingguo, one of the most efficient alumina and aluminium production sites in China.

Pingguo has the capacity to produce 130,000 tonnes of aluminium a year and 800,000 tonnes of alumina, the raw material used to make aluminium.

“The provincial government last month agreed that the venture, if it is formed, will be allowed to buy a local power plant,” said the source in the south-western province of Guangxi, where the plant is located.

“It can reduce Pingguo’s power fees,” he said, without giving details of the power source or purchase terms.

China has been expanding its aluminium production capacity to meet demand from its metals-hungry economy, but power shortages have threatened expansion plans and delayed the start-up of some new plants.

The timetable for forming the joint venture between Chalco and Alcoa had been pushed back to October–December this year from 2002 as the companies sought to finalise commercial terms and obtain the necessary government approvals. – Reuters


Alcoa seeks more control over industry wild card _ energy

Montgomery County Record, PA 16 Sep 2003
By CHARLES SHEEHAN The Associated Press
PITTSBURGH - Alcoa Inc. has hammered away at the internal costs of making aluminum for years and this week took another step toward controlling one of the industry's biggest wild cards - energy.

Alcoa said it will acquire a 26 percent equity stake in Alba, a company in the Kingdom of Bahrain that powers its 512,000-metric-ton-capacity smelter with the byproducts of the company's own oil operations.

It is the latest in a series of transactions for the world's largest aluminum producer, a move intended to pin down slippery energy costs.

Alcoa is not alone.

The company's announcement came just days after French aluminum producer Pechiney endorsed a $4.4 billion buyout offer from Canada's Alcan Inc.

Alcan, which already produces 62 percent of its own energy through hydroelectric power, will benefit substantially from Pechiney's fuel cell technology, said Alcan spokesman Joseph Singerman.

The acquisition would mean $250 million in annualized savings for Alcan, Singerman said.

The deal, if approved by regulators, would mean Alcan's annual sales could leap to around $23 billion, just ahead of Alcoa's $20.3 billion in yearly revenue. Alcoa would still be the world's largest aluminum producer.

Analysts and industry experts say that the hunt for cheap power is taking aluminum producers to all ends of the earth to compete.

"It is a major theme within the aluminum industry, to find access to power," said Tony Lesiak, an analyst with HSBC. "It's difficult to do business in North America on that basis."

Alcan has major interests in Iceland along with Alcoa, which has a $1.1 billion smelter in the works there.

"You have a global surge for good energy pricing and reliability," said Robin King, spokesman for the Aluminum Association, an industry group. "Companies are looking for all the right matches for industrial capacity, such as in Iceland."

While Alcoa's $82.4 million attempt to gain a controlling stake in a Norwegian metals group failed late last year, the company last month announced it had increased its holdings in Brazil, Argentina, Chile, Uruguay, Peru, Colombia and Venezuela. In July, Alcoa announced the expansion of a plant in Australia.

Meanwhile, Alcoa said that plans to shut down its Intalco smelter in Ferndale, Wash., because of a planned rate increase, are on track for October.

Aluminum companies are seeking protection from energy price swings by maintaining plants in several locations worldwide, analysts say.

"We are hedging ourselves because it gives us flexibility," said Alcoa spokesman Kevin Lowery. "Having a more global footprint gives us that flexibility and falls in line with what we have said for a long time. These plants must not only compete with plants outside of the country, but also with each other."

The company recently approved a 10-year power supply agreement for its Mount Holly smelter in South Carolina.

Alcoa has scoured operations for excess costs, realizing $1.1 billion in annualized savings in 2000 following a two-year cost-cutting program. Despite another $872 million in annualized savings by the second quarter of this year and stronger sales, earnings fell by 7 percent.

"All of those moves are completely about lowering our position on the global cost curve," Lowery said. "Less expensive power, wherever that is, means we make aluminum less expensively."


Alumina eyes Bahrain smelter

The Age, Australia September 17, 2003

By Barry FitzGerald Resources Editor

Melbourne-based Alumina is considering coat-tailing Alcoa of the US into a $US840 million ($A1.26 billion) acquisition of a 26 per cent stake in the fast-growing Alba aluminium smelter in Bahrain.

While the Alba equity deal is Alcoa's, the US group has started separate talks with Alumina on the "possible participation" of AWAC, the global alumina business owned 60 per cent by Alcoa and 40 per cent by Alumina.

Should the 26 per cent Alba stake end up in AWAC, Alumina's indirect 10.4 per cent interest in the $US3.23 billion Bahrain smelter would have a value of about $US336 million.

But of more immediate importance to Alumina is the fact that the Alba deal comes with a continuation of its long-term alumina supply "arrangement" with AWAC. That comes as Alba is lifting its aluminium output by 307,000 tonnes a year and accelerating plans for another 307,000 tonnes-a-year increase.

The planned expansions will more than double Alba's output from the present 512,000 tonnes-a-year capacity to a massive 1.12 million tonnes a year. The planned expansions will require additional alumina supplies, the main raw material used in aluminum metal production.

The need for an extra 1.2 million tonnes a year of alumina from the AWAC system raises the prospect that AWAC will need to begin planning for production increases at its global system of alumina refineries, the best of which are in Western Australia.

AWAC has already pushed the button on a 600,000 tonne-a-year expansion at the Pinjarra refinery that is costing $400 million. That expansion was a response to the surge in demand from China, where aluminium metal consumption is booming.

AWAC has more than 3 million tonnes of low-cost expansion potential within its global spread of alumina refineries, including scope for additional plants at Pinjarra and Wagerup, a sister plant in WA.

But planning for an expansion of Wagerup has been caught up in a heated debate about the existing project's effect on local residents. AWAC insists there will be no expansion until it has the broad support of the local community and government.

While the Alba deal and the booming demand from China augur well for the expansion potential of AWAC's WA alumina refineries, the same cannot be said for the expansion potential of the Alcoa-managed Portland aluminium smelter in western Victoria.

Alcoa has expressed an interest in expanding the 330,000 tonnes-a-year smelter, but only when a long-term and competitive power supply can be secured. But the window of opportunity now looks to have been closed off given the Alba deal (the smelter there is based on cheap gas-fired power), Alcoa's Canadian aluminium metal expansion plans (cheap hydro-power) and its new Iceland project (cheap hydro-power).

Final agreements on the equity stake in Alba are expected to be concluded by mid-2004. Alumina chief financial officer Bob Davies said yesterday there was a long way to go before the group decided on its participation.

He said any involvement for Alumina would have to make strategic and commercial sense. Alumina was "demerged" from WMC's nickel, copper and fertiliser business last year. The demerger had the aim of introducing transparency into the value of WMC's stake in AWAC following what the group considered was a low bid for the company by Alcoa in 2001.


Qatar aluminium plant to go on stream by end 2006
MENAFN, Africa , The Peninsula - 17/09/2003
Doha: Qatar has the infrastructure required to support the highly energy-intensive primary aluminium smelter, United Development Company (UDC) Project Director David J Kjos said yesterday.

Kjos, in his presentation to the Fourth International Conference on Oil, Gas and Petrochemicals, said the project is well underway through its partnership of UDC, Qatar's largest private sector shareholding company and Dubai Aluminium Company Limited (Dubal), wholly owned by the government of Dubai.

The first metal will be available during the fourth quarter of 2006, while the aluminium smelter is expected to be fully commissioned in the second half of 2007, he said.

He noted that aluminium smelting is a large, global industry with a total market value of approximately $39bn and total demand of 26-27 million tonnes per year.

It is estimated that 6-8 million tonnes of new primary aluminium capacity will be required over the period from 2007-2020, equivalent to 12-16 new world scale smelters (500,000 mtpa), he said.

He added that Qatar is considered to be one of the best global locations for the construction of a new primary aluminium smelter project. It has demonstrated its commitment to an open economic policy that has proved highly successful in attracting significant private sector and international investment in the development of infrastructure and industrialisation of the country.

Reinforced by its low sovereign risk and attractive fiscal policies, Qatar has become a highly regarded credit in the financial markets, he said.

He said the Qatar aluminium smelter project will contribute significant investment to the local economy, strengthen the existing industrial infrastructure, create new career opportunities for Qatar nationals, expand and diversify Qatar's mix of exported goods.

Last May, UDC and Dubal entered into joint venture to build, own and operate a primary aluminium smelter at Ras Laffan. The smelter will initially produce 516,000 metric tonnes a year of aluminium with the potential to expand phases to over 1,000,000 metric tonnes a year.


US East Coast aluminum plants gear up for hurricane

Forbes, Reuters, 09.17.03, 12:48 PM ET By Zach Howard

NEW YORK, Sept 17 (Reuters) - Alcoa Inc. (nyse: AA - news - people) and Century Aluminum Co. (nasdaq: AA - news - people) were gearing up for Hurricane Isabel on Wednesday.

The severe storm was churning toward the North Carolina coast, threatening heavy rains and winds of 110 miles per hour (mph) when it makes its expected landfall Thursday morning. Isabel is on a course that would put its eye over North Carolina before moving north through Virginia.

Alcoa's facilities within possible striking distance of Isabel are the Badin, N.C., smelter, its majority-owned and operated Mt. Holly smelter in South Carolina, and its Eastalco smelter in Frederick, Maryland, according to Alcoa spokesman Kevin Lowery.

"All of our facilities worldwide have procedures that they go through as something like this comes up. The first phase is to protect safety and the secondary piece would be to protect assets," he said.

Aluminum producers try to avoid taking smelters offline and restarting production lines later whenever possible because this process is extremely costly and slow.

Mt. Holly, which is minority-owned by Century Aluminum Co., produces 222,000 tonnes of metal per year, according to the Reuters Metals Production Database. Eastalco makes 177,000 tonnes of aluminum annually.

The 115,000-tonne-per-year Badin, N.C., smelter has been on temporary curtailment since mid-2002 due to high energy and labor costs, Alcoa said.

Century Aluminum's 168,000-tonne-per-year Ravenswood, West Virginia, primary smelter is not thought to be in the storm's path, a Century spokesman said.

"We don't anticipate any problems because mountains separate Ravenswood from the Coast, and a hurricane would likely end up as rainfall that far west," said spokesman Al Posti.

"We do have contingency plans for a number of different scenarios, but we don't expect them to be necessary in this particular case," he added.

The governors of Virginia and North Carolina have declared a state of emergency, enabling them to mobilize workers and activate the National Guard.

The Reuters Metals Production Database (MPD) product is available to users of Reuters 3000 Xtra using the URL: http://mpd.session.rservices.com

Copyright 2003, Reuters News Service


Rapid Process Shapes Aluminum

Technology Research News September 17, 2003

One key to making inexpensive metal parts is being able to quickly manufacture intricate shapes. Rapid prototyping processes are routinely used for plastics and some metals, but aluminum has proved elusive.

Aluminum is tricky because it conducts heat very quickly and is also highly reflective, making it difficult to turn powdered aluminum to liquid with lasers.

Researchers from the University of Queensland in Australia have come up with a rapid manufacturing process for aluminum that infiltrates an aluminum alloy powder with a liquid aluminum alloy.

The process paves the way for fast, inexpensive manufacturing of aluminum prototypes and parts. Objects made using the process have the same properties as ordinary cast aluminum, but can contain more complex shapes and smaller features, according to the researchers.

The process is similar to the rapid prototyping method used for steel, which infiltrates steel power with bronze. The process also adapts rapid prototyping methods for manufacturing parts from computer-generated designs.

The trick to adapting these methods to aluminum was first forming an object using a combination of aluminum powder and resin. At the start of the infiltration process the heat burns off the resin but hardens the powder in time to hold the object's shape.

The system could be ready for commercial use in one or two years, according to the researchers. The work appeared in the August 29 issue of Science.


EBRD approves loan for Montenegro plant advisor

Reuters, 09.17.03, 11:51 AM ET

BELGRADE, Sept 17 (Reuters) - The European Bank for Reconstruction and Development (EBRD) [EBRD.UL] said on Wednesday it had approved a loan to finance an advisor to help Montenegro sell its alumina and aluminium plant Kombinat Aluminijuma Podgorica KAP.

In July, Montenegro's government called for expressions of interest for a financial adviser for the planned sale of the country's main exporter.

It then applied for a three million euro ($3.37 million) loan from the EBRD to be used to appoint a privatisation adviser.

"The Board of Directors yesterday approved the 3.0 million euros loan for financial advisor for the privatisation of KAP," said the head of the EBRD Belgrade office Dragica Pilipovic-Chaffey.

"We hope the deal with Montenegro's Agency (for Privatisation and Restructuring of Economy) will be signed by the end of next week," she told Reuters.

Pilipovic-Chaffey said the Agency had informed them that five firms had already been shortlisted for the job.

Montenegro plans to sell a majority 65.53 percent stake in the KAP smelter, which has technology from French aluminium producer Pechiney <PECH.PA> and installed annual output capacity of 280,000 tonnes of alumina and 102,000 tonnes of aluminium.

The remaining 34.47 percent of the company is held by former and current KAP employees.

KAP currently produces 10,000 tonnes of aluminium each month, with a plan to reach 120,000 tonnes, or 18,000 tonnes above the installed capacity, by the end of the year. Last year, it produced 116,000 tonnes. Its exports stood at $155 million.

Last week, Russia's second largest aluminium firm SUAL held talks with Montenegro's government on purchase of KAP.

According to local media reports, Swiss-based commodities trader Glencore, Pechiney, Norsk Hydro <NHY.OL> of Norway, Canada's Alcan <AL.TO>, U.S. major Alcoa (nyse: AA - news - people) and Russian Rusal were also interested in KAP.

($1.8905 Euro)

Copyright 2003, Reuters News Service


Hatch wins major Russian assignment, will add two potlines to RUSAL smelter

Canada NewsWire (press release), Canada

TORONTO, Sept. 17 /CNW/ - Hatch Ltd. has signed a contract with RUSAL,
the Russian aluminium producer, to expand RUSAL's Sayanogorsk Aluminium Smelter from four potlines to six. The added potlines will house 384 electrolytic production cells to increase the smelter's production by 270,000 tpa of primary aluminium products.
Hatch, with corporate headquarters in Mississauga, Canada, near Toronto, is one of the world's largest metallurgical-process consulting, design, and project and construction management firms.
"RUSAL is a relatively young organisation with a depth of skills and assets, and is serious about expanding its operations to compete on a world scale," says Graham Morrey, Hatch's Managing Director for Europe, and Hatch's prime driver for recent aluminium assignments in Russia.
Construction at Sayanogorsk is scheduled to start in 2004 and end in 2006.
"The RUSAL assignment is the latest of six aluminium contracts in Russia this year, and is a gratifying evidence of our drive to provide our aluminium clients with a value-added suite of technical and management services in addition to excellence in Project Delivery," says Hatch's Global Managing Director for Light Metals, Robert Francki.
Hatch's Light Metals Business Unit, which covers bauxite mining, alumina refining, aluminium smelting and finishing, has seen significant growth in the past three years in Asia, Australia, Canada, South Africa, and the U.S., working on assignments with the world's major aluminium producers.
Early last year, Hatch's Chairman and CEO Ron Nolan joined Canadian Prime Minister Jean Chretien and the Team Canada Trade Mission to investigate opportunities in Russia, and the company is now seeing the results of initiating those inroads into Russian industry.
"We have had operations in Moscow for several years, and we're now seeing a significant payback in substantial Russian assignments," says Kurt Strobele, Hatch's President and Chief Operating Officer.
Canadian-based Hatch is a leading global provider of consulting, engineering, project management and IT services to the metals industry with 4400 employees deployed across Africa, the Americas, Asia, Australasia and Europe. Hatch, founded in 1955, is noted for for its ability to implement novel and challenging technologies, and to optimize conventional metallurgical processes.

Bharat Aluminium raises Rs 10 bn for expansion

Hindustan Times, India Reuters , Mumbai, September 17

Bharat Aluminium Company Ltd (Balco) has raised Rs 10 billion through a syndicated loan to fund its expansion plan, the arranger to the issue said in a statement late on Tuesday.
The loan has a final maturity of six years and will be repaid in 12 equal quarterly instalments, starting at the end of 39 months. But details on the pricing of the loan was not available.

ABN Amro Securities was the sole arranger to the issue, which witnessed participation from 18 banks and financial institutions.

"This is the largest loan syndication transaction in India this (calendar) year, and amongst the most widely participated deals ever," ABN Amro Bank's country head, financial markets, Vishnu Deuskar was quoted in the statement as saying.

A Sterlite group company, Balco, plans to implement a modernisation and expansion programme of its smelter at Korba in Chattisgarh state.

The company has proposed to increase its smelter capacity from 105,000 tonne per annum to 350,000 tonne, along with an increase in captive power plant capacity.

Norsk Hydro to shut 70,000 tpa aluminium end-2006

Reuters, 09.18.03, 4:46 PM ET

OSLO, Sept 18 (Reuters) - Norwegian energy, metals and
fertilizers group Norsk Hydro <NHY.OL> said on Thursday that it
would close about 70,000 tonnes per year of aging aluminum production at two plants from end-2006, axing about 330 jobs.

Hydro, the world's No.3 integrated aluminum producer, said
that it had decided against making upgrades to the Hoeyanger
and Aardal plants where the oldest lines will have to close by
the end of 2006 because they have failed to reach emissions
targets set by the Norwegian Pollution Authority.

"We have undertaken an extensive assessment of the
situation at our Hoeyanger and Aardal plants and concluded that
the costs would be too high, given the competitive situation
globally for primary aluminum Hydro's chief executive Eivind
Reiten said in a statement.

Previous Hydro figures indicate that the closures would
affect about 50,000 tonnes of capacity with outdated technology
at Aardal and 20,000 tonnes at Hoeyanger.

Hydro said once the outdated parts of the plants were
closed, Hoeyanger will have an annual capacity of 54,000 tonnes
primary aluminum while Aardal would produce 172,000 tonnes.

The closures would cost about 120 Hydro jobs in Hoeyanger
and 210 in Aardal, the company said.

Hydro has said in the past that it plans to close a further
120,000 tonnes of capacity due to similar obsolete technology
at its Karmoey plant in Norway by end-2009.

Copyright 2003, Reuters News Service


China's first private alumina plant launches in Chongqing - smashing Chalco monopoly

Interfax, China 18.09.2003 08:25:00 GMT

Shanghai. (Interfax-China) - Chongqing Nanchuan Minerals Development (Group) Co. Ltd. (Nanchuan Minerals), launched Phase I of its alumina plant on September 13, marking a historical entry point into the production of alumina for both the company and for the province of Sichuan, the company's PR director, Xie Shengmin, announced to Interfax. It is also the first time alumina has been produced by a Chinese company, other than the largely state-owned Aluminum Corporation of China (Chalco).

However, according to local officials, further expansions are not a fait accompli for the company.

The project's Phase I, involving a total investment of RMB 250 mln (USD 30.19 mln), is expecting to generate 70,000 tons of capacity and RMB 200 mln (USD 24.16 mln) in revenues annually.

"The first phase of our alumina project began construction in December 2001 and was brought on stream after 21 months," Xie said.

Xie also noted, "The project's Phase II, with an annual design capacity of 80,000 tons, is expecting to commence construction shortly and is scheduled to be completed by the end of next year, lifting capacity to 150,000 tons per annum."

According to Xie, a further Phase III expansion of the project, to 350,000 tons, is planned. To make this final expansion a reality, the company recently signed an agreement of investment intentions with Sichuan Lixin Investment Co. Ltd., a large investment company which holds stakes in two publicly listed companies, Shanghai-listed Sichuan Xichang Power Joint Stock and Shenzhen-listed Zhaohua Science & Technology Group.

"The agreement specifies that the two parties will equally share a total investment of RMB 1 bln (USD 120.77 mln), although the specific investment schedule is still unknown," added Xie.

However an official with the Chongqing Municipal Planning Commission was unable to confirm to Interfax whether the company's Phase II and III would be given the go-ahead.

The official, surnamed Hu, from the Industrial Investment Department of the Commission said, "Nanchuan Minerals is a private company, under the jurisdiction of the Chongqing Municipality, rather than the State Government. Any further expansion moves by the company must be in strict compliance with the overall planning objectives of the City."

Hu did however emphasize, "It is of great importance and significance that private Chinese companies, such as East Hope and Nanchuan Minerals, begin their march into the field of alumina production, to minimize China's large and growing supply gap."

The East Hope Group, a company established by Liu Yong Xing, reportedly China's richest private entrepreneur (according to Forbes Magazine), announced in June its plans to also enter the alumina market by the end of 2004, with a RMB 4.59 bln (USD 555 mln), 300,000-ton alumina plant located in central China's Henan Province.

To date, via its monopoly producer, Chalco, China has only been capable of meeting around 60% or 5.4 mln tons of its domestic requirements, with the remaining 40% or 4.5 mln tons, being imported, largely from Australia. This year the supply gap is expected to amount to around 5.2 mln tons. Operating six plants across the country, Chalco also has several expansions in train, with plans to grow to 7 mln tons a year within a few years.

"The State and the Chongqing Municipal Government gave their full support to the Nanchuan project, classifying it as a key development for Chongqing," noted Hu. "However we should take the overall industrial development of the City into consideration and our specialists are discussing how Nanchuan's Phase II and III expansions can be re-arranged."

As Hu stated, Chongqing Government will either call on Nanchuan Minerals to postpone its Phase II expansion or encourage the company to aim for a larger project, such as a 500,000-tpa size, rather than the two currently planned smaller expansions of 80,000-tpa and a further 350,000-tpa.

"Whatever decision the Chongqing Government finalizes will not only contribute to China's domestic market but also promote Chongqing's aluminum industry," Hu concluded. "The project is now under consideration by our specialists and a conclusion will be released early next year."

According to Hu, there are many investors keen to support and invest in a larger 500,000-tpa expansion project because they foresee a bright future for the alumina production sector.

Chongqing ranks sixth in China for its bauxite reserves, behind Shanxi, Guangxi, Henan, Guizhou and Shandong.

Nanchuan Minerals, based at Nanchuan City in southwest China's Chongqing Municipality, with rich bauxite resources, is the first private company capable of producing alumina in China. The company exports its major products, including bauxite, ferrosilicon and coke, to North America, Europe, Japan and India. It expects to generate USD 45 mln in foreign exchange through its exports and more than RMB 800 mln (USD 96.62 mln) in revenues by the end of 2003, and achieve RMB 1.5 bln (USD 181.16 mln) in revenues by 2005.


Amicus to fight closure of Hydro Aluminium Automotive in Leeds

Thursday 18 September 2003, 13:19 GMT Thursday 18 September 2003

London, September 18 /PRNewswire/ -- Amicus the UK's largest Private Sector union today (18/09/03) following a mass meeting of its members vows to fight the closure of Hydro Aluminium Automotive and the transfer of jobs to Hungary.

The company made the announcement today that it intends on closing the plant in Leeds with the loss of over 600 skilled jobs. Hydro Aluminium intend on beginning shedding jobs mid 2004 and finally closing the plant by mid 2005.

Amicus have started the process of fighting the closure by holding a very well attended mass meeting at the site with union members understandably shocked but resolute in their determination to save the plant and their Jobs.

The closure is yet another example of British manufacturing suffering from the ills of weak employment laws that allows companies to sack British workers far too easily.

Amicus has been campaigning with both local and national government to get equal treatment in relation to Redundancy laws with our European neighbours.

A change in policy by the government would make it far more difficult for employers to make this type of announcement, without first consulting the recognised trade union. They would also need to investigate the social impact of such an announcement on the local community that relies on plants such at Hydro Aluminium for employment.

As part of the unions campaign Amicus is organising a demonstration in support of Manufacturing at the Labour Party Conference on 29th September at 2pm. Shop stewards and members of the union from this plant will be will be travelling down to the demonstration in Bournemouth.

Dick Croft, Amicus Regional Officer said,

"For far too long employers have been able to sack British workers because of weak employment laws in this country. Today's announcement by Hydro is another prime example of this.

"We will be fighting this closure and the export of our jobs to Hungary by any means that is available to us. We will be putting our case to the company and at the same time lobbying the Government during the Amicus demonstration at Labour Party conference on 29th September."

Distributed by PR Newswire on behalf of Amicus

Big Money: Power decisions in Malaysia

The Edge Daily, Malaysia 18 Sep 2003, By P Gunasegaram

As compelling as the logic seems to be at first glance, there are many complications on second thoughts. When the Bakun hydroelectric plant is completed, there will be 2400mw of power coming onstream, more than Sabah and Sarawak can use. And there is no undersea cable to the peninsula.
So why not set up an energy-guzzling aluminium smelter, Smelter Asia, to absorb the tremendous power surge just as it comes onstream, which will provide some 3,000 jobs as well?
There's a huge investment outlay of US$2.1 billion, or RM8 billion, and production of 500,000 tonnes of aluminium a year eventually, of which half will be exported and the other half will meet local needs. Sales could be as much as RM2.5 billion, about half for export, gaining valuable foreign exchange through exports and reducing imports.
As sexy as the proposals look, there are complications - serious ones. First, is it really desirable to have that aluminium smelter here? Second, even if it is, should Tan Sri Syed Mokhtar Al-Bukhary be the key person pushing both Bakun and Smelter Asia? And third, is the government giving away too much?
The cost of building Bakun is expensive at RM4.5 billion. Electricity generated costs little but the increase in supply comes in large spurts. Other ways of doing it, instead of taking capacity rapidly up to 2,400mw, may be to go for smaller capacity with provision to increase later. That could have avoided the current situation where it is necessary to find a huge energy user to justify the dam.
Alternatives would be not to develop Bakun at all, or to scale it down to a number of smaller hydroelectric projects. That would have been more acceptable in terms of environmental and other considerations.
Putting up a smelter would mean that a substantial portion of capacity (up to 1,000mw) goes to it or over 40 per cent of capacity. The smelter becomes so important that there might be further bending backwards to make sure it is profitable. That's not an unlikely situation, given that steel producers set up in the 1980s industrialisation drive still enjoy tariff protection.
A single aluminium smelter, which absorbs over 40 per cent of Bakun's capacity and produces twice the nation's requirements for aluminium, is perhaps too much dependence. What happens if this project fails as so many heavy industrialisation projects have in the past?
Aluminium is, after all, a commodity-like product and it is entirely possible there can be gluts in the future. We all know what happens then: local consumers of aluminium will have to pay higher prices. Perhaps it may be better to leave it to others to produce aluminium and for us to buy from the cheapest producers. That's what lessons we have had with steel seem to indicate. To protect local steel producers, tariff barriers have been placed to the detriment of steel users, needlessly raising the cost of raw materials for industry.
Why Syed Mokhtar? With the latest agreement, he becomes by far the largest power (as in electricity) broker in the country besides having a slew of other interests in construction and ports, and now a massive aluminium-smelting venture. Isn't that too much for one man to handle? And isn't there a conflict when he is both purchaser and producer of electricity?
Heaping some more on an already full plate just means that the food spills on to the floor - wastage in other words. By now, we should have learnt our lesson on that. Remember Tan Sri Halim Saad, remember Tan Sri Tajudin Ramli? And Syed Mokhtar has amassed more in lesser time than these two.
Clearly, concessions have been given. For just 1.0 per cent of the purchase price of RM945 million for a 60 per cent stake in Sarawak Hidro, the company undertaking the Bakun project, Syed Mokhtar gains control of the company. And he has favourable terms (see story on Page 1) to pay for his equity stake in stages.
The government has sunk RM1.2 billion into the project already and converted over RM500 million of this into a very long-term soft loan, which benefits Sarawak Hidro. For the amount injected, the government could have continued to fully own Sarawak Hidro and obtain financing to complete the project. Power purchase contracts could be negotiated on an arm's length basis, not necessarily to Smelter Asia but to any other aluminium smelter or power user.
It must be remembered that Syed Mokhtar recently sold his private interests in an independent power project to listed Malakoff at over RM800 million, most of which will have translated into almost pure profit for him because not much capital expenditure had been undertaken yet - essentially, Syed Mokhtar was selling a franchise.
But now, Syed Mokhtar has the privilege of buying into Sarawak Hidro, based on project cost and the debt-equity split. He is not paying for the franchise - all he is doing is buying into equity at par.
The government, the owner of Sarawak Hidro, gets no premium for the project and is effectively helping to fund Syed Mokhtar's equity purchase by deferring payment while effectively handing over control. What's more, it continues to bear the risk for the project through guarantees for financing.
All told, the arrangements are a good deal for Syed Mokhtar… but not for the rest of us.

Mediator called for Ormet talks

Martins Ferry Times Leader, OH, 9/19/03

A FEDERAL mediator will be called in to aid in the resumption of negotiations between the company and United Steelworkers of America Local 5724 members.

Talks were held between the company and union officials this week under an extension of a labor pact that had expired Aug. 31. The extension expired Friday at noon.
Michael S. Williams, Ormet president and chief operating officer, said that while the task of scheduling negotiations is turned over to a federal mediator, the company expects the union workforce to continue their regular work schedules without any labor disruptions.

"I am amazed that after all the communications we had with the workforce and the local union committee prior to the negotiations and all the documentation we have provided the international union about the plight of the American aluminum industry as well as the difficult economic conditions for Ormet, that there appears to be significant lack of concern on the part of all those with whom I have attempted to negotiate," Williams said. "The union negotiating committee has offered to extend and continue working under the terms of the 1999 contract," said Ron Blatt, chairman of the grievance committee for Local 5724, representing workers at the Reduction Plant. "The company is demanding major concessions which they claim are essential to the restructuring of Ormet's financial status, but (the company) hasn't provided any information to the union concerning savings or the impact our sacrifices would make. We will continue to work and we are available to negotiate with Ormet an agreement that is fair to the company and its employees."

Williams said the company has offered a fair and equitable proposal to the union in light of the extremely difficult hardships facing Ormet today. The company has asked the union to contribute modestly to their healthcare costs and to accept a three-tiered prescription drug program. These are contributions similar to one accepted by steelworkers at Ormet's Burnside (La.) Alumina Plant, Bens Run Recycling Facility in Friendly, W. Va., and Jackson (Tenn.) Coated and Foil Division.

According to a press release from Ormet, the company has not asked for a wage cut in these negotiations. It has offered a metal price bonus program that would pay quarterly bonuses when the London Metal Exchange cash price for aluminum is at 70 cents and above. Williams said this would provide workers the quickest way to benefit from higher aluminum selling prices when the market turns around.

The company also is seeking certain indefinite modifications in the pension plan.

"Right now Ormet is under tremendous burden as we in the U.S. aluminium industry face our most difficult period in history," Williams said. "Aluminum plants all over the country are closing. Depressed industry conditions and escalating healthcare costs have battered Ormet. As testament to this, we have provided the Steelworkers International Union and its advisors hundreds of pages verifying Ormet's financial position and how the depressed market has affected the company."

Williams said the company is willing and ready to continue negotiations as the direction of the federal mediator.

Blatt said no new talks are scheduled at this time


Alcoa's E. Coast smelters unaffected by Isabel

Forbes, Reuters, 09.19.03, 11:58 AM ET

NEW YORK, Sept 19 (Reuters) - Aluminum giant Alcoa Inc. (nyse: AA - news - people) said Friday its key aluminum smelting operations on the U.S. East Coast were not affected overnight by severe weather from Hurricane Isabel.

"We haven't had any problems at any of our operating locations," said Alcoa spokesman Kevin Lowery. "Production was not affected."

Primary smelters including the Badin, North Carolina, plant, the company's majority-owned and operated Mt. Holly smelter in South Carolina, and its Eastalco smelter in Frederick, Maryland, had geared up for the storm this week.

All plants had contingency plans in place to minimize Isabel's impact, Alcoa said.

Isabel, weakened to a tropical storm, moved inland on Friday leaving in its wake 13 dead, 4.5 million homes and businesses without power from the Carolinas to New York, and the U.S. capital shut down for a second day.

It cut a path of destruction on Thursday through the North Carolina and Virginia shorelines with winds of up to 100 mph (160 kph) but weakened as it sideswiped Washington, D.C.

Mt. Holly, which is minority-owned by Century Aluminum Co. (nasdaq: CENX - news - people) produces 222,000 tonnes of metal per year. Eastalco makes 177,000 tonnes of aluminum annually.

The 115,000-tonne-per-year Badin, N.C., smelter has been on temporary curtailment since mid-2002 due to high energy and labor costs, Alcoa said.

Copyright 2003, Reuters News Service


Intalco sees huge tax break

Bellingham Herald, WA 9/20/03

Ferndale smelter's fiscal woes result in lower assessment

Kari Shaw, The Bellingham Herald

The high cost of electricity in the Northwest and low cost of aluminum worldwide have undercut the value of the Alcoa Intalco Works aluminum plant near Ferndale by more than $35 million, according to the Whatcom County Assessor's Office.

That will cut a sizeable chunk out of Intalco's annual $1.6 million property tax bill, but would have only a tiny effect on Alcoa's decision on whether to close the embattled plant, said Intalco spokeswoman Mellani Hughes.

The tax decision came the same day the Bonneville Power Administration announced it had not settled an outstanding lawsuit and would have to raise electrical rates 2.2 percent, at least temporarily.

Alcoa officials have said they would close the plant if BPA raises rates, because the cost of power would be too high to keep it running.

"It really all boils down to the power situation," Hughes said. "They really are two separate issues."

Assessor Keith Willnauer and Alcoa officials agreed on the $85 million "assessment roll correction" late Thursday afternoon after months of negotiating the value of the plant.

Willnauer had assessed the 232-acre complex at $120 million for this year; Alcoa officials argued in January that market conditions had rendered the plant worthless.

Since Intalco already has paid its tax bill for 2003 and the new assessment applies to this year's bill, Willnauer said the company would receive a refund. The amount of the refund has not been released.

It was unclear Friday how the re-assessment would affect funding for Ferndale schools, Whatcom County Fire District No. 7 and other taxing districts.

Willnauer said market conditions were a major part of the decision to lower the assessment.

"The things that were very critical to the outcome all had to do with correctly considering the increasing power cost and decreasing price of aluminum in the world market," Willnauer said.

The new tax assessment was not based on any speculation or suggestion about whether Alcoa will close the plant, Willnauer said.

"This negotiation does not have any settlement about the plant's future," he said, other than what the company will pay in annual taxes until Intalco is re-assessed in 2006.

Over the course of the last year, Willnauer has considered three assessment scenarios for the plant:

The original assessment done in 2002, placing the value of the land at $3 million and the improvements and buildings at $117 million. That assessment was based on the property continuing as an aluminum smelter.

The counter proposal by Alcoa, placing the value of the land and buildings at zero. Alcoa officials argued that the value of the plant should be based on what a willing buyer would pay; they reasoned no one would pay money for Intalco now.

The third is Thursday's agreed-upon adjustment, keeping the original land value at $3 million and dropping the value of the buildings to $82 million.

In its tax appeal filed in January, Intalco officials argued that shutting the plant down and cleaning it up would cost more than keeping it open.

What the lower assessment will mean for local taxing districts is unknown. Whatcom County's road fund, for example, got $253,000 from Intalco this year; Fire District No. 7 got $120,000.

The Ferndale School District, by far the biggest beneficiary, counts on the plant for 6.25 percent of its valuation, which meant about $375,000 for its general fund and another $199,000 for its debt-service fund this year.

Ferndale Superintendent Roger Lehnert said Friday that it was too early to know what the effect of the new assessment would mean for the district.

"There are all sorts of things that have to be considered and I won't know until next week" what the long-term effect would be, he said. "The most important thing from our perspective is the plant stays open."

Willnauer said each taxing district would have to decide how to recover the lost revenue in the next few years or opt to go without it.

Reach Kari Shaw at kari.shaw@bellinghamherald.com or call 715-2290.


Ashanti strategist for VRA
Accra Mail, Ghana Tuesday, September 23, 2003
Encouraged by the resignation of the Chief Executive of Volta River Authority, the government has swiftly appointed Kweku Andoh Awotwi, Managing Director, Strategic Planning & New Business Development for Ashanti Goldfields Company, as the chairman of the management team of VRA.
Dr Ives Wereko Brobby, VRA Chief Executive resigned his post last week, together with his Deputy Director of Operations & Engineering, Jabesh Amissah-Atta.

In his letter of resignation, Dr Wireko-Brobbey thanked the President for "giving me the opportunity to serve as CEO for the past two years" and rejected allegations made against him by VRA both junior and senior staff.

Mr Andoh Antwi joined Ashanti in September 1998 and prior to joining the company, he was a Manager of Business Planning for the Primary Aluminum business unit of US's Kaiser Aluminum & Chemical Company in Pleasanton, California, where he worked for eight years. He also had a stint for four years as an electrical engineer with ITT and GE/RCA respectively, also in the United States.

Noted for his attention to details and passion for efficiency at all levels, at Ashanti Mr Awotwi work involves helping in the formulatation and implementation of overall corporate strategy; and he has led the execution of a number of business development transactions; negotiates the company's electric power requirements in Ghana; and acts as the company's investor and public relations spokesperson from time to time, a source in the company said.

Mr. Awotwi is a member of the board of Ashanti's subsidiaries in Ghana, Guinea, Tanzania, and Zimbabwe. He is also currently serving as the Acting President of the Ghana Chamber of Mines.

Mr. Awotwi has an MBA from the Stanford Graduate School of Business, Stanford, California, and a B.SC in electrical engineering and political science from Yale University in New Haven, Connecticut.


Aluminium Supply Gap in US Offers Opportunity

AllAfrica.com, Africa September 23, 2003

Business Day (Johannesburg)

Nicola Jenvey, Kwazulu-Natal Correspondent, Durban

The 1,6-million ton gap in the US aluminium market caused by the closure of smelters on the Pacific northwest offered BHP Billiton an opportunity to boost its exposure in the US, president and chief operating officer Mahomed Seedat said yesterday.

This followed his comments to the international Metal Bulletin conference that despite the challenges in southern Africa, the region offered the aluminium industry sound businesses capable of competing on the world stage.

He hoped bringing the conference to Africa for the first time in its 18-year history would pave the way for downstream aluminium companies to invest in the region.

Industrial Development Corporation metals, transport and machinery strategic business unit head Jan Weys echoed these sentiments, saying Zambia, the Democratic Republic of Congo, Namibia and Botswana had untapped metal reserves and downstream opportunities.

However, Seedat would not be drawn on the effect the proposed Pechiney aluminium smelter at Coega would have on the local and southern African market dynamics. He said that while the declining aluminium price demanded smelter costs decrease 2% to 3% a year, there remained a growing demand for aluminium .

BHP Billiton did not have a significant share of the US market and hoped to secure an unspecified percentage of the newly opened market shortage.

The group's southern African smelters, Hillside and Bayside in Richards Bay and Mozal in Mozambique, produce 7% of the world's aluminium .


SUAL Offers Alcoa $2Bln Project

Moscow Times, Russia Wednesday, Sep. 24, 2003. Page 7

Domestic No. 2 aluminum producer SUAL said Tuesday it has invited the world's top maker of the metal, the United States' Alcoa Inc., to take part in a $2.1 billion aluminum project in northern Russia.

"We have not yet reached any agreements with Alcoa," SUAL's co-owner and board chairman Viktor Vekselberg told reporters. "I hope some results may be reached by winter or by Christmas."

SUAL is involved in the Komi Aluminum project in the republic of Komi, where it controls the Sredny Timan bauxite deposit with proven reserves of 250 million tons of the raw material.

The project includes increasing annual output at the deposit to 6.5 million tons of bauxite over the next few years from the current 1.0 million.

It also involves building a refinery for alumina, an intermediate product for aluminum smelting, with 1.4 million tons of annual capacity, and an aluminum smelter with an annual capacity of up to 500,000 tons.

In April, French metals giant Pechiney SA and SUAL announced plans to set up a joint venture to build the Komi facility. SUAL said it was ready to offer a 35 percent to 40 percent stake in the project to Pechiney.

But Vekselberg said talks with Pechiney had come to a standstill as the French company faced a takeover by Canadian aluminum maker Alcan.

"And we do not have time to wait. Whoever we reach an agreement with, we will start the project in line with an earlier adopted timetable," Vekselberg said.

He added that in case an agreement was reached with Alcoa, the stakes of the two companies in the project could be divided on an equal basis.

Vladimir Kremer, general director of the Komi Aluminum project, told reporters he expected a feasibility study for the alumina and aluminum plants to be ready by July 2004, and the building of the facilities to be completed in December 2007.

In June, the World Bank's investment arm, the International Finance Corp., and the European Bank for Reconstruction and Development agreed to grant SUAL a loan of up to $90 million to finance the first stage of the project.

SUAL manages 21 subsidiary companies involved in the aluminum business. It produced around 2 million tons of alumina and 865,000 tons of primary aluminum last year.

Kevin Lowery, an Alcoa spokesman in Pittsburgh, would neither confirm nor deny that was in talks with SUAL, nor whether it had any general interest in doing business in Russia.

"All I can say is that it is our goal to continue to lower the company's position on the global cost curve, and we will look at all opportunities that will allow us to do this," he said. (Reuters, MT)


Alcoa in talks on investing in Russia aluminum mill

Associated Press Miami Herald, FL Tue, Sep. 23, 2003

MOSCOW - Alcoa Inc., the world's largest aluminum producer, has started talks with Russian aluminum group ZAO SUAL Holdings on taking a stake in its planned $2 billion mill in Komi in northwestern Russia, a SUAL spokesman said Tuesday.

Alcoa Chief Executive Alain Belda met Tuesday with SUAL's chairman and controlling shareholder, Viktor Vekselberg, Deputy Prime Minister Boris Alyoshin and the governor of the autonomous republic of Komi to discuss a possible participation.

"We are interested in Alcoa's participation," Vekselberg said after the meeting. "We expect an agreement with Alcoa may be signed by the end of the year or the beginning of next year."

SUAL said it was interested in a technically advanced partner, and would be prepared to sell up to a 49.9 percent stake.

Kevin Lowery, a spokesman for Pittsburgh-based Alcoa, confirmed that the company met with officials to discuss a potential deal on the Komi mill. He declined to comment on details, however, including whether Alcoa may agree to take an equity stake in the mill.

The Komi project will include Russia's largest mine for aluminum ore, a refinery and a smelter.

The talks with Alcoa began after the breakdown of negotiations with French aluminum and packaging company Pechiney SA, which earlier signed a memorandum of understanding with SUAL on cooperation in the project.

SUAL said any agreement signed with Alcoa in the near future would probably depend on a feasibility study now being done by a consultant.

Preliminary results are expected around January and full results will be ready by July.

Alcoa has been pursuing projects in countries such as Iceland and Brazil to lower costs, while curtailing operations in the United States.


Alcoa to spend $83M on new mine

Dayton Business Journal, OH 9/23/03

Alcoa Inc. says it is spending $83 million to develop a mine in central Texas to produce coal for its nearby power plant and aluminum smelter in Rockdale.


All permits for the mine have been approved and construction is under way, the company said Tuesday.

The mine, in Bastrop and Lee counties, is expected to be in full production by the first quarter of fiscal 2005, Alcoa spokesman Kevin Lowery says. The mine will employ about 200 people, but those jobs will be shifted from other operations in Rockdale.

Three Oaks Mine, along with the power from other sources, will provide fuel for Rockdale's power generation station for about 35 years, according to the company.

Alcoa's Rockdale operations employ about 1,200 people. The NASA space shuttle program relies on the Rockdale operations as its sole provider of aluminum powder for solid rocket propellants.

Pittsburgh-based Alcoa is the world's largest producer of aluminum and also the parent company of Alcoa Home Exteriors, which employs 450 people in Sidney.

© 2003 American City Business Journals Inc

ARCADIS Wins Large Project in Brazil

ARNHEM, The Netherlands--(BUSINESS WIRE)--Sept. 23, 2003--ARCADIS (Nasdaq: ARCAF; Euronext: ARCAD) today announced that a consortium led by its Brazilian subsidiary, ARCADIS Logos Engenharia S.A. (LOGOS), was awarded a contract by Alumina do Norte do Brasil S.A. (ALUNORTE), to execute management support services for a second expansion of its aluminum production facility near the City of Belem, in the State of Para, in northern Brazil. The contract will be worth approximately US$ 9 million to LOGOS. The other consortium company is Aker Kvaerner.
The Alunorte facility currently produces 2.4 million tonnes per year of aluminum, after having completed its first major expansion in early 2003. The scope of this second expansion project includes installation of production lines 4 and 5 for an additional 1.8 million tonnes of production per year, taking the plant up to a total annual capacity of 4.2 million tonnes.

The US$ 600 million expansion project will be completed in mid-2006. During that period the consortium, led by LOGOS, will develop a strategic plan for implementation of the project and give overall managerial support. The consortium will also plan and control progress in the project, deliver engineering and design coordination, support procurement and provide construction inspection services.

As a worldwide player, Aker Kvaerner E&C, which holds 25% of the consortium, will bring technical expertise to the project as well as provide the AKMS System - the integrated project management software developed and applied on similar projects.

"We are very pleased to be partnering with Aker Kvaerner to participate in Alunorte's aluminum refinery expansion program," said Fernando Cattapan, Business Development Vice President, LOGOS Group. "Our team provides a strong combination for project management and project controls expertise for this important project."

Alumina do Norte do Brasil S.A. (ALUNORTE), is a private company formed by a group of strategic partners including Companhia Vale do Rio Doce (CVRD), Norsk Hydro, a Japanese consortium, and Cia Brasileira de Aluminio (CBA).

ARCADIS is a leading, global, knowledge-driven service provider, active in the fields of infrastructure, buildings, environment and communications. With client success central to our total business approach, we fulfill project or program needs from concept to completion and beyond. Together, we generate EUR 850 million in annual revenues. There are 8,500 of us, results-oriented people, continually investing in our skills to maximize value while creating viable solutions that assure your success.


Alcoa studies Brunei aluminium smelter project

Reuters, 09.22.03, 11:05 PM ET

BANDAR SERI BEGAWAN, Sept 23 (Reuters) - Alcoa Inc. (nyse: AA - news - people) will sign an agreement on Thursday to study the feasibility of setting up an aluminium smelter in oil- and gas-rich Brunei, government officials said.

The proposed smelter is part of the sultanate's plan to diversify its petroleum-based economy by encouraging downstream industries, said John Perry, chief executive officer of Brunei Economic Development Board.

U.S.-based Alcoa is one of the world's largest aluminium producers.

Perry said the memorandum of understanding between Alcoa and the Brunei agency would help both parties determine the overall concept of the smelter.

He said the MOU would also detail the conditions necessary before making a final investment decision. He gave no details on the completion date of the study or the size of the plant.

Copyright 2003, Reuters News Service



New chairman outlines his vision for VRA

Ghanaian Chronicle, Ghana 24-Sep-2003
By Raymond Archer & Joseph Coomson

Dr. Paa Kwesi Nduom, Minister of Energy, on Monday confirmed the resignation of Dr. Charles Wereko-Brobby as Chief Executive Officer of the Volta River Authority (VRA) but remained silent on the findings of his committee saying that, the only copy of the report, which used to be with him, was now lying quietly in the bosom of President Agyekum Kufuor.

The Energy Minister, a successful businessman noted and respected as a man of principles, however, warned that the government would without any hesitation take action against anybody who was indicted for acting in a manner contrary to the prescribed rules and general practice of the VRA and also against the law.

Dr. Nduom avoided answers to specific questions as to whether the final report of his enquiry made adverse findings or exonerated the outgoing VRA chief, who stepped aside during Dr. Nduom’s committee of enquiry and bowed out after the committee filed its final report on the desk of the Energy Minister.

The Chronicle has gathered that VRA staff at the Aboadze Thermal Plant in Takoradi resumed wearing red bands with inscriptions that called on the Minister to make his findings public while their counterparts in Accra were said to be jubilating over the exit of Dr. Wereko-Brobby, the man they insisted on calling a “terror” and a “dictator.”

Dr. Nduom confirmed that the Chief Executive, and his Deputy in charge of Engineering and Operations, Mr. Jabesh Amissah-Arthur had resigned, an action, which government accepted with regrets.

In a carefully crafted speech, Dr. Nduom said, “Government does not expect to receive resignation letters from any other member of management”.

The Minister quoted Dr. Wereko Brobby’s resignation letter as stating that, he was bowing out of office “as a means of paving the way for peace in the affairs of the Authority” whilst Mr. Amissah-Arthur was quoted as saying he was leaving to “make it possible for government to carry out the changes anticipated in the management with greater confidence”.

The Energy minister noted that as part of the reforms of the Authority, the VRA Act was being revised to make it more relevant to the modern environment and to ensure the ability of the Board to control the activities of the Chief Executive and the management.

In a related development the Chairman of the newly appointed management committee of the Volta River Authority (VRA), Mr. Kweku Andoh Awortwi has said that he would turn the fortunes of the VRA for the better in consultation with the committee members and the workers.

He said with his accumulated experience and professional skills he hoped to make the authority what it ought to have been. “I will not under estimate the problems of VRA but I will hold the bull by the horn”, he told The Chronicle in an interview on Sunday following the announcement of his appointment.

Mr. Awortwi’s management team takes over from Dr. Wereko-Brobby and Mr. Amissah- Arthur, who resigned as Chief Executive and deputy Chief Executive respectively in the wake of a protracted labour dispute. The workers demanded Dr. Wereko-Brobby’s removal after leveling a number of charges against him.

The government responded by appointing a ministerial committee to look into the charges and although, according to the committee’s findings, Dr. Wereko-Brobby had been cleared of the charges, the workers had insisted that the report be published. This had not been done before Dr. Wereko-Brobby tendered his resignation.

Mr. Awortwi, an MBA, has been seconded from the Ashanti Goldfield Company (AGC) where he was the Strategic Planning Manager. He said although he was not abreast with all that was happening at the VRA, he was being briefed.

He was grateful to the President for entrusting into “my care one of the biggest entities in the country” and hoped he would not disappoint him.

Mr. Awortwi, who doubled as the Acting Managing Director - Public Affairs of AGC, joined Ashanti in September 1998.

“There (Ashanti) he helps formulate and implement overall corporate strategy for AGC; leads in the execution of a number of business development transactions; negotiates the company’s electric power requirements in Ghana; and acts as the company’s investor and public relations spokesperson from time to time,” a source at Ashanti said.

Prior to joining Ashanti, he was Manager of Business Planning for the Primary Aluminum Business Unit of Kaiser Aluminum & Chemical Company in Pleasanton, California, where he worked for eight years. He also worked for four years as an electrical engineer with ITT and GE/RCA, also in the United States.

An MBA from the Stanford Graduate School of Business, California, and a B.S in electrical engineering and political science from Yale University in New Haven, Connecticut, Mr. Awortwi is a member of the board of Ashanti’s subsidiaries in Ghana, Guinea, Tanzania, and Zimbabwe. He is also currently serving as the Acting President of the Ghana Chamber of Mines.

With the appointment of the new management team, the president also dissolved the board of directors of the VRA and suspended the director of engineering, planning and design, Mr. Evans Appiah, the director of sales, Mr. Charles Darko and the director of engineering, design and construction, Mr. Kweku Arkurst. They are to serve a six-month probation after serving their suspensions.

An official statement said the board was dissolved to facilitate the restructuring of the authority as well as to review its laws in order to halt the decline in the power sector project planning and implementation.

The non-functioning of the Strategic Reserve Plant (SRP), delay in the functioning of $110 million Osagyefo Power Barge, the continuing management of VRA without due regard to the worsening technical and financial problems and the excessive power given to the CEO and the authority, were given as some of the reasons for the dissolution of the board.

The relationship between the workers and the CEO became strained to the extent that workers were apparently prepared to cut power supply if he was reinstated.

Some workers of VRA were in a jubilant mood on Monday morning when The Chronicle visited the head office with some wearing white dresses, which symbolized victory after the news of Dr Wereko-Brobby’s resignation filtered through. The elated workers said they saw “Tarzan’s” exit coming when the president summoned the two to his office last week before their resignation.

“The real jubilation would begin today”, one worker stated. “We think Mr. Awortwi would be a very good material for the position because he is tested and proven to be what he is”. They said they would support the new management to uplift the image of VRA.


Abramovich $3bn firesale could lead to exit from Russia

Guardian, UK Thursday September 25, 2003

Chelsea owner may buy top Canadian hockey team

Kevin O'Flynn in Moscow

Roman Abramovich, billionaire owner of Chelsea football club, has sealed a multi-billion dollar payoff by selling one of his major companies, a move that may mark his exit from Russia, it emerged yesterday.
The tycoon is believed to have sold a 50% stake in Russian Aluminium, the world's second biggest producer of the metal. The respected Russian financial newspaper Vedomosti reported that he would reap from $2.5bn to $3bn (£1.5-1.8bn) from the sale.

Millhouse Capital, the holding company that manages his assets, refused to comment.

Rumours have long circulated that Mr Abramovich was preparing a firesale of his Russian assets as a prelude to getting his money, and possibly himself, out of the country.

Analysts say he may be moving his money because of fears of a government-led clampdown on the oligarchs who profited hugely in the often corrupt privatisation deals of the 1990s, and have faced increasingly hostile inquiries in the last few months.

What he will do with the cash is another question.

"He is a boy who wants to enjoy himself. He's got all his money, and now he has decided to buy a lot of toys," said Sergei Markov, a Kremlin-connected political analyst.

Leaking of the deal came the same day Mr Abramovich was linked to another sporting buy. The Canadian press reported that he was in negotiations to buy the National Hockey League club, Vancouver Canucks. Last month, Russia's sports minister, Vyacheslav Fetisiov, once a legendary NHL player himself, suggested that, instead of buying football clubs, one of Russia's super rich businessmen should scoop up an NHL club and make it Russia's representative. "It wouldn't hurt to have our own, wholly Russian team in the National Hockey League. It would stir up more interest," he said.

Few though will be happy if some of Mr Abramovich's billions do not find their way back to Russia. "Possibly he will buy footballers until he gets old," Vedomosti wrote. "But it will be very strange if [he] doesn't create a huge charitable foundation for the country which has helped him enter the list of the richest people on the planet."

By next spring, Vedomosti reported, Mr Abramovich is planning to also sell off a 37.5% stake in Ruspromavto, which owns Russia's second biggest car maker. He is further likely to receive a lion's share of $3bn (£2bn) when his oil company Sibneft merges with Yukos, another oil giant, later this year.

Attacking oil tycoons is an easy vote winner in Russia. It has parliamentary elections in December and a presidential election next March. The fear, for some, is that the attacks are part of a future partial redistribution of property conducted by groups vying for power in the Kremlin, or an attempt to quell those such as Yukos chief Mikhail Khodorkovsky, who anger the Kremlin by funding opposition parties.

"These guys can read the political tea leaves better than anyone else," said James Fenkner, head of research at Troika Dialog brokerage, "They're looking for an exit not an entrance. It's telling."


Harsco's Heckett MultiServ Division Signs 10-Year Agreement to Process Aluminum By-Products in Norway
HARRISBURG, Pa., Sept. 24, 2003 (PRIMEZONE) -- Worldwide industrial services and products company Harsco Corporation (NYSE:HSC) announced today that its Heckett MultiServ division has entered into a follow-on 10-year agreement in Norway to process aluminum by-products on behalf of Hydro Aluminium, the world's third largest producer of aluminum. The agreement extends and expands a 13-year relationship between the two parties.

Heckett MultiServ will enhance its existing aluminum dross processing facility at Karmoy, Norway, which has the capacity to treat up to 60,000 tons of secondary materials. The products will be recycled back into the production of new aluminum and other industrial uses by Hydro Aluminium and its clients. Heckett MultiServ does not take ownership of the materials.

Heckett MultiServ Division President Geoffrey D. H. Butler said the agreement reflects Harsco's corporate-wide Six Sigma initiatives for improved operating efficiencies and lower costs and is expected to sustain current revenues at a level totaling in excess of $75 million over its duration under more favorable commercial terms. The agreement, underway this month, is also expected to generate increased Economic Value Added (EVA(r)) benefit on Harsco's behalf.

Harsco Corporation is a diversified industrial services and products company employing approximately 17,500 people in more than 40 countries of operation. Harsco's market-leading businesses provide mill services, access services, gas and fluid control products, and other infrastructure products and services to customers worldwide. Additional information about Harsco, including its Heckett MultiServ division, can be found at www.harsco.com


World pops in to see SA's aluminium sector

Business Day, South Africa 24 Sep 2003

By Justin Brown
For the first time, an international aluminium conference has taken place in South Africa - due to the growing standing of the country as a primary aluminium producer.

More than 400 delegates from around the world attended a three-day meeting in Durban this week.

Many of the delegates said they were impressed with South Africa's Hillside smelter, which is one of the most advanced in the world and more automated than labour-intensive plants in the US.

"South Africa is playing a significant role in primary aluminium production. On the demand side, there is a lot of scope for increased consumption of the metal in South Africa. However, right now, much of the aluminium produced in the country is for the export market," said Standard Bank London analyst Robin Bhar.

The staging of the conference in South Africa by organisers Metal Bulletin plc was appropriate at a time when the southern African region accounts for around 7% of global output and a fourth smelter led by French group Pechiney is set to be built at the port of Coega.

At present southern Africa has three aluminium smelters - the Bayside and Hillside smelters at Richards Bay and the Mozal smelter near Maputo in Mozambique.

Pechiney representative Jean-Paul Aussel indicated at the conference that the Coega smelter remains on track despite the bid by Canadian aluminium group Alcan for Pechiney, which is set to take a 49% stake in the smelter.

Current plans for the Coega smelter see construction beginning in the second half of 2004, but before construction starts finance needs to be arranged, most of which is likely to come from South Africa, Aussel said.

Coega's aluminium output is likely to begin in early 2006.

Once the Coega smelter is up and running it would take southern Africa's annual aluminium output to close to 1.85 million tons, making the region a significant contributor to global output, which is expected to reach over 27 million tons per annum by the end of 2003.

The South African government is essentially the key to getting the Coega smelter off the ground in order to boost economic growth in the country.

During the conference it came to light that the Mozal smelter has had a significant positive impact on the economy of Mozamibique.

Mozal created 9,000 jobs during its construction and is adding US$105 million per annum to the Mozambican economy, while providing foreign exchange earnings of $125 million. In addition, the country's exports have increased from $220 million (consisting mainly of prawns and cashew nuts) to over $1billion.

The Mozal project has allowed Mozambique to optimise the Cahora Bassa hydroelectric power plant, to initiate a 'mega project', kick start the country's economy and fight poverty, Mozal General Manager Peter Wilshaw said at the conference.

"Mozal also allowed the Mozambique government to demonstrate to the world that the country is open for business," Wilshaw added.

On the international front, conference speakers also focused on China, now the world's seventh largest economy, where very strong growth in output of aluminium is expected to continue for the foreseeable future.

For the 2003 year, China's aluminium output is set to climb to 5.3 million tons, up from 5.1 million tons 20 years ago.

China's demand for aluminium has had a significant impact on a key input in the production of aluminium - alumina - with the price doubling over the past year and the market for the commodity is expected to remain tight through to 2007.

Russia - another topic at the conference - currently has 12% of the global aluminium market, down from 17% in 1990.

The Russia aluminium market is dominated by two players - RUSAL, the world's second largest producer behind US group Alcoa, and SUAL.

Like South Africa, Russia has cheap electricity, which is a key input in the energy-sapping production of aluminium.



Qld Govt considers mine lease renewal

ABC Online, Australia 25 Sep 2003

Queensland Natural Resources Minister Stephen Robertson says Queensland's interests will underpin the decision on whether to renew an aluminium company's lease over bauxite deposits on Cape York, which could have flow-on effects for Gladstone's aluminium industries.

French company Pechiney has held the lease in Aurukun, in the state's far north, since the 1970s.

The Government says the company has not lived up to one of the conditions in the lease, to develop the deposits.

Cabinet will decide on the issue in the next few weeks.

Mr Robertson says it is about giving Queenslanders the best return for the resource.

"What's called the Pechiney lease is a significant world class deposit of bauxite, so it's not something that the Queensland Government, as custodian of the people's natural resources, would give away lightly," he said.

"We want to maximise the return to the people of Queensland in the future."


Alumina expansion likely if Alcoa builds in Brunei

Sydney Morning Herald, Australia September 26, 2003 By Barry FitzGerald

Shaping up . . .a new smelter would need 600,000 tonnes of alumina a year. Photo: Jessica Hromas

Alcoa's out-of-America strategy for its aluminium smelting business has led it to consider building a $US1.2 billion ($1.7 billion) smelter in energy-rich but job-poor Brunei, raising the prospect of more expansions at its West Australian joint venture with Alumina Ltd.

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

The Brunei proposal envisages an initial 300,000 tonnes-a-year smelter. It would require raw materials supply of 600,000 tonnes a year of alumina, best supplied by the WA alumina business, owned 60 per cent by Alcoa and 40 per cent by Melbourne's Alumina.

Alcoa will carry out the study in two phases over 24 months, beginning in the fourth quarter this year.

"Alcoa is always exploring ways we can both build our business and lower our position on the global cost curve in terms of primary aluminium production," said the president of Alcoa's primary development group, Mike Baltzell. "This feasibility study is a natural extension of that work."

Earlier this month Alcoa announced plans to acquire a 26 per cent stake, worth about $US840 million, in the fast-growing Alba aluminium smelter in Bahrain.

While the Alba equity deal was Alcoa's, the US group started separate talks with Alumina on its "possible participation".

Should the Alba stake end up in the Alcoa/Alumina joint venture, Alumina's indirect 10.4 per cent interest in the $US3.23 billion Bahrain smelter would have a value of about $US336 million.

The Alba deal came with long-term alumina supply arrangements. Alba plans to more than double its metal output, forcing the need for an extra 1.2 million tonnes a year of alumina.


Alcan takes its time on Coega smelter

Business Report, Africa September 25, 2003

By Quentin Wray and Samantha Enslin

Johannesburg - Alcan, the world's number-two aluminium producer, based in Canada, this week poured cold water over any hopes it would make a quick decision on the $1.7 billion smelter destined for the Coega industrial development zone near Port Elizabeth.

Alcan recently won board approval for its e3.4 billion (about R27.9 billion) takeover of Pechiney, but still needs French regulatory and shareholder approval for the deal.

Joseph Singerman, the company's spokesperson, said it would take until the end of November or even December to get these finalised.

At the time of the takeover bid in July, Pechiney seemed poised to sign a deal with the Coega Development Corporation, which manages the zone. The deal would have resulted in construction of its new-generation, 460 000 ton-a-year AP50 smelter starting next year.

The first metal was set to be delivered in 2006 and the smelter was to have been running at full capacity by 2007.

Singerman said it was "much too early to begin commenting on specific [Pechiney] projects", especially since Alcan had not had access to its economic and feasibility studies.

Once the takeover was finalised, he said, Alcan would closely evaluate all of Pechiney's projects, including Coega, and the final decision would be based on the political environment, other stakeholders, potential revenues and market issues.

But he conceded that Coega provided an interesting opportunity for the new AP50 smelter technology developed by Pechiney, which Alcan would then own.

Singerman said Coega was "one opportunity for maximising value and profitable growth".

It was also "one of the options and alternatives going forward ... but there are other projects being looked at by Pechiney and Alcan".

But Pechiney said this week that the future of the Coega smelter did not just rest with Alcan.

Jean-Paul Aussel, Pechiney's business unit director for Coega, said at the Metal Bulletin 18th International Aluminium Conference that his "project team is putting everything into overcoming problems.

"Some people don't trust the project, which has put brakes on negotiations. The team and Pechiney are bent on delivering the project because the community of the Nelson Mandela Metropole are relying on it."

Aussel said that in order to finalise the start of construction, scheduled for the second half of next year, the financing of the project needed to be finalised in good time.

He said the issue now was raising the debt portion which would be internationally syndicated.

"We are working on a ratio of 40 percent equity, 60 percent debt. But we are flexible," Aussel said.

He would not say who would lead manage the debt syndication.

Pechiney was set to take a 49 percent stake in the smelter while the other 51 percent of equity would be made up of the Industrial Development Corporation and Eskom (who have said they would take a combined 25 percent stake), Israeli businessman Benny Steinmetz, and Sibumbene, a black economic empowerment consortium headed up by Denel chairman Sandile Zungu.



Alcoa awards $20M contract for Troutdale cleanup

Bizjournals.com 9/26/03

Alcoa Inc. has awarded a California company a $20 million cleanup contract at its former Troutdale aluminum smelting facility.

The contract, with Pasadena, Calif.-based Tetra Tech Inc. (Nasdaq: TTEK) is scheduled to be completed in April 2005.

As prime contractor, Tetra Tech will manage the decontamination and demolition of 25 acres of buildings, including more than 110 separate buildings and structures. The demolition effort will recover 10,000 tons of raw materials for re-use by other Alcoa plants, and will recycle more than 32,000 tons of steel, copper and aluminum.

The plant, which is on the national Superfund list, will be the first aluminum smelter in the Northwest to be demolished.

The federal government built the smelting operation in 1941 for the war effort. Once the plant and the surrounding 715 acres have been remediated, there is potential for redevelopment of the site.


Alcoa Postpones Shutdown of Intalco Smelter;

Uncertainty on Power Rate Clouds Plant's Future

Business Wire (press release) September 26, 2003

PITTSBURGH--(BUSINESS WIRE)--Sept. 26, 2003--Alcoa (NYSE:AA) announced today that it had postponed a final decision on curtailing production at its Ferndale, Washington ("Intalco") aluminum smelter. The Bonneville Power Administration ("BPA") has scheduled a rate hike for October 1, 2003, that would increase costs at the plant.
Elected officials and others in the region are still working to mitigate the rate increase. Given that work, the company is prepared to wait until October 15th to make a decision on the plant's future.

"Over the past few years, BPA rates have risen sharply, making the Intalco plant less competitive globally," said Bernt Reitan, President of Alcoa Primary Metals. "Given uncertainty about the rate increase, we must continue to prepare for a shut-down. But in fairness to our employees and the community, we will wait another two weeks so there is more certainty about the costs before making a decision."

Production and Energy at Intalco

Alcoa is currently running two pot-lines at the Intalco plant with approximately 110,000 metric tons per year of production. Alcoa's interim power supply agreement with BPA is scheduled to expire on September 30, 2003. In the future, Alcoa may adjust production at Intalco as market conditions warrant. Alcoa owns 61 percent of the Intalco facility with the remainder owned by a Japanese consortium.


Adelaide forges path for welding R&D

Dial Infolink Manufacturing, Australia, 26 Sep 2003

The 'City of Churches' might soon also be known as the 'City of Welding Innovation'. Jamie Wade reports.

ADELAIDE is forging a path in welding R&D following a recent groundbreaking process in high-speed welding, and in application of an established, but innovative technique for industry that uses friction to create a seamless weld.

The Cooperative Research Centre (CRC) for Welded Structures is spearheading the work with Australian scientists recently producing a new high-speed welding technology said to slash hours from traditional joining of corrosion-resistant metals. The CRC has also been conducting R&D at Adelaide University in Friction Stir Welding (FSW) - a relatively new process that produces high-quality butt or lap welds.

High-Speed Welding

The CRC and CSIRO Elaborately Transformed Metals developed the keyhole welding process at Woodville in Adelaide, South Australia.

CSIRO's Dr Ted Summerville said it was a breakthrough, a high-quality solution to the limited penetration of conventional TIG welding.

"The new process combines high welding currents and novel torch design to give a process that can punch through 12mm plate with ease.

"A keyhole is formed in the molten metal produced by the arc, and this keyhole then anchors to both the front and root faces of the plate, rendering it very stable. This, and the fact that the arc gases can now pass cleanly through the material, make the process highly reproducible and very robust.

"A feature of keyhole welding is the square edge plate preparation, which minimises joint preparation and filler material consumption," he said.

Another key feature is its ability to complete joints in a single pass.

"This reduction in the number of weld passes lowers the risks of weld contamination, and can significantly increase productivity, especially when the materials are thicker than about 5mm," Dr Summerville said.

"These are major bonuses when welding corrosion-resistant metals such as stainless steel and titanium."

According to Dr Summerville this new process can be used for welding all types of stainless steel, C-Mn steel and titanium alloys. Single pass welding speeds vary with the thickness being welded, for example 12 mm plate is typically welded at 300mm/minute, 8mm plate at 500mm/minute and 3mm plate at 1000mm/minute.

"Welding stainless steel and titanium, which previously took hours, can now be automated and completed in minutes," Dr Summerville said.

Keyhole welding is easily implemented as the process uses a conventional GTAW power supply capable of delivering 500-1000A.

Licenses for keyhole welding technology are being offered in Australia.

Friction Stir Welding

Professor Valerie Linton, who heads CRC's work in FSW at the University of Adelaide, told Manufacturers' Monthly FSW technology offered exciting opportunities in applications where a seamless join in metal - particularly light metals - would be advantageous.

FSW uses a non-consumable rotating tool, which moves along the joint between two components to produce high-quality butt or lap welds. The FSW tool generally has a profiled pin and a shoulder with a larger diameter than that of the pin. The pin length is similar to the required weld depth. The pin is traversed along the joint line while the shoulder is in intimate contact with the top surface of the workpiece to avoid expelling softened material and provide consolidation.

FSW was invented and patented in 1991 at The Welding Institute (TWI) in the UK. It is now used in industry for joining aluminium and copper alloys and has been demonstrated in laboratory experiments for metals with higher melting points such as steel and titanium. Adelaide University is licensed by TWI to use FSW and has built or modified several machines.

According to TWI, one company in Sydney uses FSW to produce high-quality aluminium wheels for sport and racing cars, while a small shipyard in Cairns used FSW to produce the bow section of an aluminium ship.

"We have demonstrated the process for joining 1mm to 50mm thick sections in aluminium or copper, and for up to 25mm thick steel plates," TWI technology manager - friction and forge welding, Dave Nicholas, said.

"TWI now has a Swedish-made laboratory SuperStir machine from ESAB, onto which 8 x 5 x 1m large prototype components can be clamped. Welding of a whole double-decker bus side panel is, for example, possible and welding of large fuselage or wing structures for the prototypes of the next generation of aircraft," Nicholas said.

CRC for Welded Structures 02 4252 8889.

26 September 2003

GCC Insights: Bahrain poised to become major force in aluminium

Gulf News, United Arab Emirates 28-09-2003

By Jasim Ali, Special to Gulf News

Authorities in Bahrain seemed determined to consolidate the country's position as one of the leading producers of aluminium in the world. This follows press reports that aluminium giant Alcoa of the US plans to acquire a strategic stake at Aluminium Bahrain (Alba).

A memorandum of understanding grants Alcoa the option to purchase a 26 per cent stake at Alba. The MoU allows for the addition of the sixth potline at the Bahraini smelter capable of producing 307,000 tonnes per year (t/y).

The final agreement including an arrangement for the Alcoa supplying alumina to Alba could be concluded by mid-2004. Currently, the Bahraini government owns 77 per cent of Alba while 20 per cent is owned Saudi Arabia's Sabic Industrial Investments and three per cent by Breton Investments Germany. Notwithstanding the proposed changes, the government would maintain the majority 51 per cent ownership at Alba.

The new industrial partnership marks the latest in a series of moves by Alba aimed at enhancing its market potential. Already, Alba is in the midst of the fifth plotline expansion by adding 307,000 t/y to the existing 512,000 t/y production level. Due be completed in February 2005, the 819,000 t/y capacity would make the smelter the biggest in the world outside Eastern Europe.

The fifth potline is being expanded at the cost of $1.7 billion, a significant amount since it represents about 20 per cent of Bahrain's gross domestic product. Financing was arranged through a mixture of equity and debt. Of this, $155 millio was to be provided by the three shareholders on a pro-rata basis.

Also, Alba has secured $1.25 billion finance package through four tranches involving a $500 million commercial credit, a $300 million syndicated metals-linked facility, a $250 million syndicated Islamically-structured facility and a $200 million local-currency denominated bond. A fifth tranche of $300 million was being arranged by international export guarantee credits agencies.

International firms have gained the main contracts for the expansion. Bechtel of the US won the engineering, procurement, construction and management contract. Alstom Power of France was awarded the job of generating 655 megawatts to meet power requirements.

Saudi-based Zamil Steel won the contract for the fabrication, supply and erection of structural steel buildings. However, several local firms have won subcontract packages including the civil and structural steel foundation works.

The aluminium industry largely controls Bahrain's manufacturing sector. Manufacturing boasts about 12 per cent of the GDP. Aluminium exports account for an estimated 15 per cent of total exports, and for almost 50 per cent of non-oil exports. Alba alone employs 2,500 people, of whom 90 per cent are Bahrainis and the fifth potline expansion would help create some 2,000 new jobs.

Key objective

Finding new jobs fulfills a key objective namely addressing unemployment, which stands at 15 per cent. Some 18,000 locals are jobless.

Output from the smelter has led to the development of several downstream projects. For example, Bahrain Atomisers International (BAI) produces 7,000 t/y of aluminium powder.
Middle East Aluminium Cable (Midal) has a capacity of 55,000 t/y of aluminium cables. The Bahrain Aluminium Extrusion Company (Balexco) produces some 21,000 t/y of extruded products. All get supplies from Alba.

Earlier in 2002, production began at the 450,000-t/y coke-calcinating plant, built at a cost of $400 million. Alba plans to use 250,000 t/y and export the remainder. The company used to import calcined coke from the US and Argentina.

In 1999, primarily to enhance efficiency, Alba took over the Bahrain-Saudi Aluminium Marketing Co. (Balco), which had formerly provided Alba's marketing services.

Clearly, Bahrain is poised to become a force to be reckoned with in the aluminium world despite the fact that the country lacks alumina, the raw material. The aluminium industry represents one of the few successful industrial undertakings in Bahrain. Maybe, Bahrain needs more companies like Alba.

The writer is assistant professor, College of Business Administration, University of Bahrain

Australia's WMC Appoints Pizzey, McGregor To Board

Yahoo News Tuesday September 30, 8:24 AM

MELBOURNE (Dow Jones)--Australian diversified miner WMC Resources Ltd. (A.WMR) said Tuesday it appointed to its board John Pizzey and Graeme McGregor.

Pizzey, 58, is an executive vice president of U.S. aluminum major Alcoa Inc. (AA), where he heads the Primary Products Group comprising alumina refineries and primary aluminum smelters.

He is also chairman of the London Metal Exchange, deputy chairman of ION Ltd. (A.ION) and a director of Amcor Ltd. (A.AMC).

McGregor, 64, is a former director of finance at BHP Ltd., now BHP Billiton Ltd. (BHP).


Alcoa Executive Vice President and Group President Primary Product John Pizzey to Retire; Bernt Reitan Named Successor

Business Wire (press release) September 29, 2003 04:00

PITTSBURGH--(BUSINESS WIRE)--Sept. 29, 2003--Alcoa (NYSE:AA) announced today that Alcoa Executive Vice President and Group President of Primary Products G. John Pizzey, 58, is retiring from the company early next year. Mr. Pizzey's successor is Bernt Reitan, 55, currently vice president of Alcoa and president of Primary Metals, who has overall responsibility for the company's North American primary metals strategy. Mr. Reitan, who together with Pizzey has played a key role in implementing the company's growth and cost reduction strategies in primary metals, will also become chairman of Alcoa of Australia Ltd.
"Thanks in no small part to John's vision and his highly developed executive skills, the breadth of Alcoa's mining, refining and smelting assets today are unrivaled anywhere in the world. His counsel and leadership have been invaluable as we strengthened our position as the world's largest and most profitable aluminum business. Under John's direction, we have improved the performance of our plants, added new, lower-cost capacity through greenfield and brownfield projects or via acquisitions, and strengthened our mining and refining operations. His common sense and deep knowledge of the business will be missed," said Alcoa Chairman and CEO Alain Belda.

"We are also extremely fortunate at Alcoa to have the expertise and experience that Bernt brings to this key role," Mr. Belda continued. "Bernt has an exceptional record of success in driving profitable growth. With his experience and success running our global alumina business and the primary metals division, Bernt has the global vision that is critical to success in his new job. With his energy, we can expand our global footprint, improve productivity, deploy the best technology and help our customers succeed."

Biographical information follows:

Bernt Reitan

Bernt Reitan was named to his most recent position as vice president of Primary Metals for Alcoa in 2003 with responsibility for the company's smelting facilities worldwide. During Bernt's short tenure at primary metals, the U.S. smelters have lowered their production cost by $50 a ton through June 2003.

Mr. Reitan joined Alcoa in 2000 as general manager of Alcoa World Chemicals Europe, and named president of Alcoa World Chemicals on Jan 1, 2001. He was named president of Alcoa World Alumina and Chemicals and elected a vice president of Alcoa in July 2001 when he assumed global accountability for Alcoa's alumina business.

Prior to joining Alcoa, Mr. Reitan held a series of leadership positions with Elkem in Norway over a 20-year period. Among his assignments: plant manager Rodsand magnetite mine (1980-83), general manager Elkem Chemicals Ltd. in England (1983-84), plant manager Fiskaa silicon plant (1985-87), and business unit manager ferro alloys division (1987). He also was a member of corporate management at Elkem ASA from 1987, serving as senior vice president Materials and Technology and managing director Elkem Aluminium ANS (50% Elkem/50% Alcoa) from 1988 until June 2000.

From 1972 to 1979 he held civil engineering positions in Norway (Stavanger and Lillehammer).

Mr. Reitan, who was born in Norway, has a master's degree in civil engineering from Technical University Trondheim.

He has served on the boards of a number of industry associations including the International Primary Aluminium Institute, the European Aluminium Association, the Norwegian Employers Federation, the Norwegian Process and Manufacturing Association, and he was chairman of the board of the Norwegian Metallurgical Industry's Association from 1990-92. His corporate board memberships include Arkwright Insurance Inc.'s international advisory board; Hunsfos A/S, a Norwegian paper company; Raufoss A/S, automotive parts and defense products; and he was chairman of the board of Norzink A/S (1995-2000), a zinc and aluminum fluoride producer owned 50/50 by Rio Tinto and Boliden.

John Pizzey

G. John Pizzey was responsible for the strategic and technical management of Alcoa's alumina refineries and primary aluminum smelters worldwide and associated businesses, such as metal purchasing, trading and transportation since 2000. He has been an executive vice president of Alcoa since 2001.

Mr. Pizzey joined Alcoa in Australia in 1970 as an applications engineer. He held various sales and product management positions there until 1988 when he was appointed to the board of Alcoa of Australia as executive director, Victorian Operations and managing director of Portland Smelter Services. In 1994, John moved to the United States and became president of the bauxite and alumina business unit then one year later he was named president of the primary metals business unit. He was elected a vice president of Alcoa in 1996, president Alcoa World Alumina in 1998, and took on additional responsibility for chemicals in 1999. During John's tenure in the U.S., Alcoa's capacity in aluminum production doubled, and its capacity in alumina increased 37 percent.

Mr. Pizzey is chairman of Alcoa of Australia Ltd., and is a member of the board of directors of Amcor Ltd and the Alcoa Foundation. He is deputy chairman of ION Ltd. and serves as chairman of the London Metal Exchange PLC and the International Aluminium Institute.

He holds a bachelor's degree in chemical engineering from Melbourne University and a Fellowship Diploma of Management from the Royal Melbourne Institute of Technology. He was born July 28, 1945, in Melbourne, Victoria, Australia.

Alcoa smelter shutdown hinges on BPA talks

Portland Business Journal, OR 9/29/03

Alcoa Inc. said it will postpone for two weeks a decision to suspend production at the Intalco aluminum smelter in Ferndale, Wash., as discussions continue with the Portland-based Bonneville Power Administration over a rate increase.


Alcoa had planned to shutter the smelter on Oct. 1, when BPA plans to increase the electric rates the company pays under an expiring private contract. But Alcoa said it will postpone the shutdown until Oct. 15 to accommodate discussions among elected officials and others that could mitigate the rate hike.

Bernt Reitan, president of Alcoa Primary Metals, said the company is continuing to prepare to shut down the smelter, an action that would affect 615 jobs.

"But in fairness to our employees and the community, we will wait another two weeks so there is more certainty about the costs before making a decision," he said.

Reitan said rates charged by the BPA "have risen sharply." Pittsburgh-based Alcoa, the world's largest aluminum producer, has a supply contract with BPA that expires Tuesday.

Alcoa said rising electric rates will push costs at the Ferndale smelter too high for the facility to be competitive. Alcoa presently operates two production lines there with a total capacity of roughly 110,000 metric tons per year.

Alcoa owns 61 percent of the Intalco smelter, with the remainder owned by a Japanese consortium.


Almexa keeping aluminum production on hold in Mexico

09/29/2003 - Source: BNamericas

Mexico's Almexa Aluminio has no immediate plans to restart primary aluminum operations at its Aluder plant in Veracruz state, having stopped production there in August, plant manager Manuel Oreza told BNamericas. Lost aluminum production will total roughly 44,000t/y, meaning halting operations will lead to a 420mn peso (about US$39mn) writedown in parent company Grupo Carso's book value of the assets.
The low price of aluminum, coupled with high electric power costs, necessitated the shutdown, Oreza said, adding: "Finding a realistic energy price is key, because the price of aluminum is always in flux." However, Almexa is not negotiating price reductions with state power company CFE. Aluminum is currently trading at around US$1,400/t compared with over US$1,700/t early 2001. Grupo Carso is controlled by the family of Mexican tycoon Carlos Slim, and is considered the largest industrial conglomerate in the country. This year's revenues are forecast at US$5.1bn.


Future of Aluminum Plant Uncertain

WOWK, WV September 29, 2003

900 Jobs In Jeopardy

The future is uncertain for workers at a local aluminum plant. Pechiney's Ravenswood plant could go on the market if a proposed agreement goes through.

Alcan Incorporated wants to purchase "Pechiney S-A"...if that happens, then Pechiney's rolling mill in Ravenswood would be sold.

The agreement was filed today in U-S District Court in Washington, D-C. There is a 60 day comment period. The Ravenswood plant employs about 950 people and had about 100 million dollars in sales last year.


Pechiney signals S.Africa's Coega smelter to go ahead

Forbes, Reuters, 09.30.03, 1:01 PM ET

JOHANNESBURG, Sept 30 (Reuters) - French aluminum firm Pechiney <PECH.PA>, which has accepted a bid from Canada's Alcan <AL.TO>, has signalled that its Coega smelter project in South Africa will go ahead despite the changes, a South African minister said on Tuesday.

Public Enteprises Minister Jeff Radebe said in a statement that Pechiney had informed the South African government of its intention to ask state power utility Eskom to begin construction of the power supply network for the aluminum smelter.

"It is an important message," Radebe said.

Pechiney -- which had committed to a 49 percent stake in the Coega smelter -- signed a long-term power supply contract with Eskom in December last year.

Doubts had persisted on whether the original timeframe for the project would be kept. The 460,000 tonnes per year smelter was due to have cast its first metal in 2006 and reach full capacity in 2007.

Analysts say the next key message on the smelter must come from Alcan, which would say when and under what terms the project will go ahead.

Others with stakes in Coega are Eskom and state-owned financier Industrial Development Corporation (IDC), both at 12.5 percent, with the balance divided between an unidentified black-led group and Steinmeitz Group, owned by an Israeli business figure.

IDC said earlier this month a delay of three to six months was expected but it believed Alcan would come on board.

Copyright 2003, Reuters News Service


Malaysia Smelter Asia/Bakun: Dam Completion By 2007

Yahoo News Tuesday September 30, 5:31 PM

KUALA LUMPUR (Dow Jones)--Smelter Asia Sdn. Bhd., which is building a $2 billion aluminum smelting plant in east Malaysia's Sarawak state, intends to buy up to half the power output of the Bakun hydroelectric dam, a statement from Smelter Asia said Tuesday.

"When fully operational, the smelter will guarantee the purchase of up to 1,000 megawatts," the company said.

The aluminum smelter - which will have maximum production capacity of 500,000 metric tons of aluminum a year - will be ready in 2007, the statement added.

Smelter Asia is a joint venture between Dubai Aluminum Co. and the Gulf International Investment Group, in which Malaysian tycoon Syed Mokhtar Albukhary has an equity stake.

The statement also said Syed Mokhtar, who is reportedly buying 60% of Bakun dam operator Sarawak Hidro Sdn. Bhd., has guaranteed that the 9 billion ringgit ($1MYR3.80) hydroelectric dam will be completed by 2007.

The dam project, which has been a controversial project since it was proposed in the mid-1990s, was shelved in 1997 due to the Asian financial crisis, but was revived in 2001.

Originally estimated to cost about MYR15 billion, the dam was criticized due to the environmental impact of building such a massive project in Sarawak's rainforest.

Bakun will charge Smelter Asia power tariffs of MYR0.09 to MYR0.17 a kilowatt-hour, the statement said.

In recent years, Syed Mokhtar has emerged as one of Malaysia's most influential businessmen with interests in power, manufacturing and construction as well as a successful port at Tanjung Pelepas in southern Johor state, a serious rival to Singapore.

Syed Mokhtar also controls Malaysian Mining Corp. (P.MNN), which in turn controls Malaysia's largest independent power producer Malakoff Bhd. (P.MKF).