AluNews - April 2004

Wise guys - Five years after taking over plant, officials say efficiency much improved

Times Daily, AL - 01-Apr-2004

By Todd Twilley Staff Writer

It's been five years since an end of one era and the beginning of another in the Shoals. - Five years ago today, Wise Alloys took over operation of the Reynolds Metals Co. plant that produced metal to fight wars and send men to the moon, while being a cornerstone of the area's industrial base for more than five decades.

Since that time, Wise employment has fallen from 1,600 to less than 1,000.

Still, Wise officials say the company has maintained the image of providing high-quality products with a highly skilled labor force.

In fact, they say the operation has flourished, noting production at the plant is at its highest point of efficiency ever.

J. Phil Tays, senior vice president of manufacturing at the Wise plant, says a lot of changes have occurred in the last five years.

"We've made a lot of improvements in process capability, significant gains in production and in our per man-hour rate," Tays says.

Wise, which remains one of the largest employers in Colbert County, produces soft aluminum can stock, which is coils of sheet aluminum that is shipped to customers and turned into finished beverage cans.

Tays credits improved reliability through maintenance, improvements in process control and employee training with the plant's ability to produce more with fewer people.

"Our previous company had somewhat overstaffed this facility and was operating at a higher level of employees in the workplace," Tays says.

One senior staff member at Wise said recently that there was a reason Reynolds was losing money at the time of the purchase, making reference to the staffing issues.

Reynolds officials had already decided in late 1998 to close the plant if a buyer could not be found. Wise became that buyer, practically at the last minute.

"Losing that operation could have had a critical impact on the whole Shoals community," said Muscle Shoals Mayor David Bradford, whose father retired from Reynolds. "That plant has been an important part of the Shoals community for a long, long time.

"It's not as large as it was under Reynolds, in terms of employees but Wise still has a tremendously positive impact on our area.""

Bradford said Wise has been a good community citizen by being active in local projects.

There have been some bumps in the road for Wise during the five-year ride.

Some of the new procedures took a while to catch on. Quality became a concern for management and customers at one point. That issue, however, has been brought under control, company officials said.

And, as expected, employee reductions caused moral problems along the way, even from within the ranks. Early retirement incentives were used to reduce the work force, but some the company's best young workers were lost in the shuffle when some of the older workers opted to keep working rather than to accept the incentives.

Organized labor resisted the reductions. They paint a somewhat different picture of their relationship with the Maryland-based company.

In January 2003, Wise and the United Steelworkers Union of America Local 200 reached a contract agreement after almost seven months of negotiations.

Ernie Kilpatrick, president of the union, says pay is better for its members since Wise began operating the facility.

He said the relationship between labor and management, however, remains strained since the contract negotiations, which were heated at times.

"There probably had to be changes for Wise to be successful," Kilpatrick admits. "I'm proud Wise bought the plant."

Kilpatrick says Wise went too far with its job cuts, making many workers do two or three jobs and creating an unsafe working environment.

Kilpatrick says labor has some problems at the facility and feels the company is not honoring some portions of the contract.

"People are not nearly as happy with their jobs as they were a few years ago," he said. "The jobs cuts, they could handle a lot of that, but couldn't handle them trying to take seniority away from them, and they're not treated with respect in some situations."

Lance Blackstock, president of the North Alabama Building and Trades Council, also paints a different picture.

"I have never seen a company in all my years go from a good company to probably the most anti-employee company I've ever been associated with," he says. "There are hundreds of grievances out there. They are bringing in new people, inexperienced supervisors."

Blackstock said the company has reneged on many things it agreed to in the 2002 contract.

"We are having to rearbitrate or renegotiate everything they agreed to," he said.

Tays says that when Wise took over, it examined the cost and sales and productivity.

The company then worked to balance work force with workload and concentrated on efficiency.

Wise restructured $190 million of its debt in 2002 and improved quality and production has attracted attention from new customers.

Kilpatrick has faith the company is on firm footing after making the jobs cuts, saying the company should be making money.

About 30 percent of Wise's incoming material is from used beverage containers. That has stayed steady over the last five years, Tays says, thanks in part to Wise Alloys' sister company, Wise Recycling. Tays says the sister company is one of the largest direct-from-the-public collectors in the United States.

"It supports a network of neighborhood collection centers," he says.

Key customers for Wise's product are Ball Corp., Crown Cork & Seal Co., Rexam Beverage Cans America and Commonwealth Industries Inc.

Tays worked with Reynolds for 30 years prior to Wise's purchase of the facility. He sees one significant difference in how the company operates.

"We're able to make decisions much quicker," he says. "Results can be gotten much quicker than with previous ownership. That affects so many things, costs of operation, quality or safety. Having the ability to make decisions at the plant is one of the major advantages."

Tays said the company has shown its critics that said it couldn't succeed, that it can. "Wise is certainly looking forward to the next five years," he said.

Todd Twilley can be reached at 740-5728 or

Suriname's Energy Co signs US$13 mn deal with Indian firms

Press Trust of India PARAMARIBO, Suriname, April 1

Suriname's State Energy Company has signed a US$13 million deal with two India-based companies to build a major power line from a hydroelectric dam to the capital, officials said.

The money for the new line was provided through a loan from India's government, the energy firm said in a statement.

The deal was signed Tuesday by the State Energy Company and the two companies, Larson & Toubro Ltd. And PEC Ltd., the Suriname company said.

The line will transport electricity from the Afobakka dam to the area of Paramaribo, the South American country's capital some 100 kilometers to the north, the company said.

The line will be constructed to meet the growing power demands of both industry and households in and around the capital, State Energy Company general manager Oemer Chiragally told local ATV Television.

The current power line, built in the 1960s when the dam was brought into operation, is insufficient to cover the current demand, officials say.

To fill the gap the State Energy Company is forced to use old diesel generators, which often break down, causing blackouts in the former Dutch colony of 440,000 people. It will take three years to install the new line, Chiragally said.

The dam, owned by the aluminum-and bauxite-producing company Suralco, provides surplus power to the state authority, serving some 100,000 people in the capital and surrounding areas.

Comalco Focuses On Energy Efficiency

Reuters 02/04/2004 01:47 PM,,3762-3227971,00.html

Aluminium warlords at war again

Russia Journal, Russia April 02, 2004

By John Helmer

MOSCOW - The Faberge Easter eggs, which Viktor Vekselberg has bought from Forbes in New York and is bringing back to Russia as his peace offering to the Kremlin, may also come in useful as pacifiers, now that Vekselberg has gone to war again with fellow aluminium oligarch, Oleg Deripaska.

After appearing to agree to a no-raiding pledge a year ago, Siberian Ural Aluminum (SUAL), owned by Vekselberg, and Russian Aluminum (Rusal), owned by Deripaska, have clashed anew. This time the fight -- similar to the last one in late 2002 -- is over shareholding control of the aluminium sector's tidbits, the Volkhov aluminium smelter and the Pikalevo alumina refinery.

Maxim Titov, spokesman for SUAL, said that recently Rusal had outbid SUAL for a 14 percent state owned shareholding in OAO Metallurg, a Russian company which owns Volkhov and Pikalevo. Titov acknowledged there is a conflict between SUAL and Rusal over the 14 percent share sale, but he declined to say at what price Deripaska had bested Vekselberg for the shares.

The unexpected share raid is embarrassing for Vekselberg because, without the shares, he cannot claim that SUAL has 100 percentownership of its assets, and without that credibility, he cannot go to the international markets with his plea to investors to cash him out of SUAL. Who would give Vekselberg a billion dollars for assets he doesn't control tightly enough to prevent his most deadly rival from capturing?

The answer to this question has been so troublesome that Chris Norval, head of Vekselberg's foreign flotation venture SUAL International, has made himself unavailable to answer questions for a year now. Behind the scenes, he has commissioned South African mining consultants, SRK, to do a new inventory of SUAL assets, as if to freshen them up, after financial advisor Fleming Family & Partners, has spent an unsuccessful year trying to market them.

Titov has also confirmed that a shareholder meeting called in St. Petersburg a few days ago, failed to proceed, because of the conflict between the two groups. Rusal is seeking a seat on the board of Metallurg. SUAL blocked the shareholders from meeting on a technicality.

The Volkhov smelter, in the Leningrad region, is the oldest, and smallest, of Russia's primary aluminium producers. It was first constructed in 1932, but it has been upgraded as recently as 1999, and has annual output capacity of 50,000 tons per annum. Production in 2003 was 22,600 tons. That figure is just 3 percent of SUAL's metal production for the year.

It is even more minuscule compared to Rusal's production numbers -- just 0.9 percent

The Pikalevo refinery, also in the Leningrad region, was started at the same time. But operations were postponed because of the German invasion until 1959. It is the smallest of Russia's refineries, and last year turned out 249,130 tons of alumina, the vital raw material for producing aluminium metal. Pikalevo alumina comprised 12 percent of SUAL's output. To Rusal, however, which is starved for alumina produced in Russia, Pikalevo represents almost one-quarter of what Rusal is able to produce for itself.

With local partners, SUAL owns about 80 percent of the shares in the two production units. It has been aiming to consolidate full control of the units, and make them wholly-owned subsidiaries of the SUAL group. The Rusal acquisition badly frustrates that plan. It also puts potential pressure on SUAL to make its alumina available to Rusal at prices that are more attractive than the imports Rusal is also obliged to depend on.

Deripaska has made raids against Vekselberg before, less for raw material gains, and more to sabotage SUAL's corporate consolidation plans, and greenmail Vekselberg into paying a high price to be left alone.

In January 2003 SUAL declared victory over Rusal, following a three-month long contest over a 32 percent shareholding in the Nadvoitsk smelter. Alexei Goncharov told me at the time that SUAL had reached an agreement to buy the shareholding, which Rusal had acquired from two Nadvoitsk directors in October of 2002. He confirmed that the fight over Nadvoitsk had been a bitter one.

In November of 2002, Gulzhan Moldazhanova claimed Rusal wanted to buy into Nadvoitsk in order to have a source of aluminium close to consumers in the remote northwestern wastes of Karelia. Moldazhanova was at the time Rusal's director for corporate development. Nowadays she manages Rusal's cashflow and corporate lending programme from a seat at Basic Element, Deripaska's holding company. In the weeks that followed her remarks, Rusal spokesman Yevgeny Ivanov attacked SUAL in the press for withholding aluminium claimed by Rusal as shareholder; SUAL denied the charge, and criticized Rusal's media tactics.

Nadvoitsk produces just 76,000 tons of aluminum.

SUAL hinted at the time that Deripaska's raid was a violation of a gentleman's agreement between Vekselberg and Deripaska that neither man would attack each other's aluminium business. Deripaska, the Vekselberg group suggested, was no gentleman. But neither group has ever admitted how much the raid cost Deripaska, nor how much Vekselberg paid to make it go away.

Asked if SUAL plans to buy out the Rusal stake in Volkhov and Pikalevo, Titov says he cannot "comment on how this situation will be solved." Rusal's Moscow office refused to say anything

Hydro Completes Update at RusAl Casthouse

33Metalproducing 3rd April, 2004

First phase of technology-marketing agreement

Hydro Aluminium and Russian Aluminium have completed the upgrade to the casthouse at RusAl’s Sayanogorsk Works. They say the project increases aluminum billet output their by more than 100%, from 30,000 to 80,000 metric tons/year.
Following an agreement between the two companies in July 2002, Hydro supplied its proprietary HyCast technology to modernize the cast house and increase its range of alloys. A new aluminum-refining system and casting station were installed. Now, Sayanogorsk will be broadening its product mix and Hydro’s marketing organization will sell the extrusion billets. "The upgrade is part of our strategy to raise value-added aluminium output from our smelters," a RusAl spokesman said.

A second stage for the Hydro/RusAl agreement calls for the casthouse to be expanded further for a rated capacity of 160,000 metric tons/year by 2005, but that project has not been completely defined, according to Hydro.

"The Sayanogorsk casthouse will be an important source for Hydro Aluminium in serving the increasing market needs in Asia and North America for high-quality extrusion ingots," said Hydro’s head of extrusion ingot sales, Harald Aasheim.

by Metal Producing & Process (

Ambient fluoride sampler

Dial Infolink Manufacturing, Australia 2 April 2004

LEAR Siegler Australasia has developed an ambient fluoride sampler which complies with AS3580.13.2 1992.

The method calls for two types of fluoride sampling; gaseous and acid-soluble particulate. This can be achieved by using double filter paper sampling as per the standard.

With the aid of a Tecora Bravo H2 constant flow sampler and a specially made Teflon dual filter paper holder, Lear Siegler can offer a package to fully comply with the Australian Standard.

The unit comes in an environmental enclosure and can be made to suit the specific needs of our customers.

Various industries emit fluorides such as aluminium smelters, steel works, power stations, brick tile manufacturers, and superphosphate manufacturers.

Fluoride is the most Phytotoxic of the recognised air pollutants. Gaseous and particulate fluoride have differing Phytotoxicities and therefore must both be collected.

The two types of fluoride also affect plants and animals differently.

Alcan "overweight"

New Ratings Monday, April 05, 2004 7:03:02 AM ET
Lehman Brothers

NEW YORK, April 5 (New Ratings) – Analyst Peter D Ward of Lehman Brothers reiterates his "overweight" rating on Alcan (AL).

In a research note published on April 2, the analyst mentions that the increased power and spot alumina prices would limit alcan’s smelting capacity growth. The high cost smelting capacity in North America would continue to be flat until aluminum prices rise substantially or marginal alumina prices significantly decline, the analyst says.

© 2004 New Ratings

Alcan, Rivals Talk to Qatar About $2.5 Billion Aluminum Project

April 5 (Bloomberg) -- Alcan Inc., the world's second- biggest aluminum company, is talking to Qatar's United Development Co. about licensing Alcan technology so the Persian Gulf company can build a $2.5 billion smelter project.

United Development wants to identify by June the technology it will use so it can to conduct a feasibility study, then invite companies as early as December to bid to build the plant, said David Kjos, the project director.

``We're convinced there is a market for our aluminum, especially in China and in the U.S., where smelting is becoming increasingly uneconomic,'' Kjos said by telephone from Qatar, the site of the world's third-largest reserves of natural gas. Fuel accounts for as much as 40 percent of the cost of producing aluminum.

Bahrain and the United Arab Emirates, the only aluminum producers in the Persian Gulf, are expanding capacity to take advantage of the region's supply of natural gas. With Alcoa Inc. and other Western producers considering projects outside their home regions to lower costs, Saudi Arabia and Oman also plan to build smelters.

Alcoa, the world's biggest aluminum maker, has agreed in principal to buy as much as 26 percent of state-owned Aluminum Bahrain for about $600 million, Bruce Hall, the chief executive of the Arab company, said in an interview in September. That would be the first purchase by a foreign company of a stake in a smelter in the Persian Gulf, which is home to four of the biggest holders of natural gas.

United Development Plans

United Development which was set up in 1999 as Qatar's largest private company, according to its Web site, plans to develop a plant that can produce as much as 620,000 tons a year for completion in the second half of 2007, Kjos said. United Development, is also talking to other providers of smelter technology besides Alcan, he said, without identifying them.

The company had a joint-venture agreement with Dubai Aluminium Co., which collapsed in December. It's now talking to other companies and investors about taking a stake in the project, Kjos said. He wouldn't give details.

``Not just plentiful supplies but cheap supplies of Qatari gas will make us very competitive,'' Kjos said.

To contact the reporter on this story:
James Cordahi, in Dubai on, or at

To contact the editor on this story:
Tim Coulter at
Willy Morris at

Higher Aluminum Prices Lift Alcoa Results

New York Times, NY April 7, 2004, Reuters

Alcoa Inc., the world's largest aluminum producer, said after the market closed yesterday that earnings for the quarter rose sharply on higher aluminum prices. Still, shares of Alcoa fell in after-hours trading as the company's earnings from continuing operations failed to meet some analysts' expectations.

The company, the first component in the Dow Jones industrial average to report first-quarter earnings, said net income rose to $355 million, or 41 cents a share, from $151 million, or 17 cents a share, a year ago.

Alcoa said income from continuing operations for the quarter was $350 million, or 40 cents a share, compared with $195 million, or 23 cents, a year ago.

The company, based in Pittsburgh, said that the first quarter benefited from a $58 million after-tax gain on the sale of its chemicals business, but that half of that was offset by higher costs from a customer bankruptcy, litigation settlements and restructuring. Reuters Research said that excluding the net gain, Alcoa posted results of 34 cents a share, which is below the 41 cents a share expected by Wall Street.

Revenue for the quarter climbed 11 percent from a year ago, to $5.7 billion.

After the announcement, Alcoa shares dropped by as much as $1.37 in after-hours trading. The shares had closed at $36.50, up 61 cents.

Kaiser Aluminum Signs Agreement With Rual Trade Limited

HOUSTON, Texas, April 7, 2004 - In advance of an auction approved by the U.S. Bankruptcy Court for the District of Delaware, Kaiser Aluminum has signed a "stalking horse" agreement to sell its interests in and related to Alpart, a partnership that owns bauxite mining operations and an alumina refinery in Jamaica, to Rual Trade Limited, a member of RUSAL Group, for $215 million.

The auction will be conducted on April 20, with qualifying bids due by April 15. Kaiser expects the Court to rule on the winning bid at the regularly scheduled monthly hearing on April 26.

Under Alpart's existing partnership arrangement, Hydro Aluminium a.s., which currently owns the remaining 35% of Alpart, retains the right - for 30 days following Kaiser's receipt of Court approval of any sale transaction - to elect to purchase Kaiser's interests at the price specified in any agreement approved by the Court.

As previously disclosed, any sale of Kaiser's interest in Alpart is subject to a number of approvals, including approvals by the Court and the lenders under Kaiser's Post-Petition Credit Agreement, as more fully discussed in the company's Form 10-K for 2003.

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

PCB probe hits Kaiser 07-apr-2004

Memo urges workers to talk to lawyer first about Trentwood pollution

Karen Dorn Steele, Staff writer

Kaiser Aluminum & Chemical Corp. is warning its workers that they might want to talk to a company lawyer before answering outside investigators' questions about environmental contamination at Trentwood.

The April 3 memo to "all Trentwood employees" was obtained late Monday by The Spokesman-Review. Edward F. Houff, Kaiser's general counsel in Houston, sent the memo to the Spokane plant.

Kaiser "has learned that one or more law enforcement agencies may be investigating the company's
environmental operations," the memo says.

"While law enforcement officials have the right to ask to speak with any of our employees, you have the right to choose whether you will agree to answer an investigator's questions."

State officials confirmed Tuesday that the Trentwood inquiry involves PCBs, dangerous industrial chemicals detected in groundwater under the plant.

The groundwater is part of the Spokane-Rathdrum Prairie Aquifer -- Spokane's sole source of drinking water. The aquifer under Trentwood also mixes with the Spokane River in the summer.

Kaiser has retained Seattle attorney John Wolfe to advise employees on their legal rights, according to the memo.

The financial stakes are high for Kaiser, now in Chapter 11 bankruptcy. Kaiser reached a settlement in U.S. Bankruptcy Court last year that keeps it on the hook for up to $74 million in groundwater cleanup costs at Trentwood and the shuttered Mead smelter.

"We are concerned about the river," said John Roland of the Washington Department of Ecology.

Ecology's wastewater staff also conducted a Trentwood site visit in March. Kaiser has a permit to discharge industrial wastewater to the river and has been working to reduce PCB levels in the discharge.

A new Kaiser report, dated Feb. 25, shows some of the site's groundwater samples are contaminated by PCBs at twice the state cleanup standard.

"There are detectable PCBs in the groundwater," said Teresita Bala, an Ecology environmental engineer who's reviewing Kaiser's data.

Kaiser performed additional well monitoring in March, and Ecology is awaiting those results, Bala said.

Patrick Blau, Kaiser Trentwood's environmental manager, referred questions about Kaiser's memo to the company's Houston headquarters.

"I can't comment on any aspect of the investigation," said Kaiser spokesman Scott Lamb. He said Kaiser sent the memo "to make sure employees were aware of the investigation and knew they had the option" to talk to a lawyer.

Dave Carlson, president of the United Steelworkers of America Local 338 at Trentwood, said he was called at home Saturday by Kaiser Trentwood's industrial relations director about the memo from Houston.

He was told the company would post the memo inside the rolling mill and at the gates where Kaiser's 375 union workers enter the plant.

Lawyers at the Steelworkers' international headquarters "told us we shouldn't be too concerned about using Kaiser's lawyers. They said that as long as we were truthful, we'd be in fine shape," Carlson said.

"We have no plans to use their lawyers, but that's up to the individual worker," he added.

It's the first time in his 30-year Kaiser career that company officials have sent such a memo, Carlson said. "The company is being very quiet about what's going on," he added.

Carlson said he's seen contractors drilling holes in the floors inside the casting department and in the remelt area, where furnaces that melt aluminum are located.

Workers have also drilled a well by the wastewater treatment plant, he said.

Another Trentwood worker, who asked not to be identified, said company officials began their annual "state of the plant" meeting in March with a warning that all information discussed was confidential and couldn't even be shared with family members.

"In the past, the state of the plant information was always public. I feel very uncomfortable about this," the worker said.

After high-level negotiations last year with the Justice Department and the states of California, Rhode Island and Washington, Kaiser settled its environmental liabilities in U.S. Bankruptcy Court in Delaware. Kaiser filed for Chapter 11 reorganization in February 2002.

The settlement keeps Kaiser responsible for tainted groundwater at Mead and Trentwood, plus PCBs released into the Spokane River and lodged six miles downstream behind Upriver Dam.

Those big environmental cleanups are still being negotiated and may cost as much as $74 million, according to a Washington state claim filed last fall in Kaiser's bankruptcy.

The bankruptcy "completely messes up how we usually go about cleanup," while Kaiser is still refining the extent of the PCB problem at Trentwood, Ecology's Roland said.

Kaiser's intent is to emerge from Chapter 11 bankruptcy and retain the Trentwood rolling mill, Lamb said.

In March 2001, the Washington Department of Health labeled the Spokane River the worst PCB-polluted freshwater stream in Washington.

Besides Kaiser, potentially liable parties include Avista Corp., whose subsidiary Pentzer Corp. owned the Spokane industrial park until 1996, and the Liberty Lake Sewer District.

The 2001 health advisory warned people to avoid or strictly limit consumption of fish caught behind Upriver Dam because of high levels of PCBs.

PCBs, first manufactured in 1929, are a suspected human carcinogen and can also cause chloracne, jaundice and liver damage.

They were used as insulating fluid for electrical transformers and for some hydraulic systems. U.S. production of PCBs was banned in 1997 after evidence surfaced that they concentrate in the food chain.

Karen Dorn Steele can be reached at 459 5462, or by e-mail at

RusAl foil mill, Achenbach to ink contract soon

Interfax, Armenia 07-apr-2004

Yerevan. (Interfax) - Russian aluminum giant RusAl's Armenal foil mill in Armenia will sign a contract with Germany's Achenbach for the mill's modernization towards the end of April.

The project will cost up to 40 million euros and local contractors will be hired for some of the work, said Georgy Avetikian, Armenal's general director.
A group of Achenbach specialists visited Yerevan early March to start preparations for the upgrade.

VALCO constructs 345 million cedi sanitary for Tema Manhean

GhanaWeb, Ghana Tema, April 7,

GNA - The Volta Aluminium Company (VALCO) will continue to render social services to Ghanaians should the company come under new administration, Mr Charles H. Mason, Director of Human Resources and Administration of VALCO said on Tuesday.

He said VALCO would be revived to become strong and viable as before and that it would continue to assist in improving the lives of the communities, especially those in its immediate surroundings.

Mr Mason was speaking at the commissioning of a 20-seater toilet facility constructed by the company for the community at Tema Manhean on Tuesday. The facility, valued at 345 million cedis, brings to three the number of such projects provided by VALCO for the town.

The first was in November 2001, followed by another in October 2002. The company spent a cumulative total of 900 million cedis on the three facilities, meant to check indiscriminate defecation along the Chemu Lagoon and in nearby bushes, as well as keep the beaches clean. Mr Mason entreated the communities to take proper care of the facilities through constant maintenance.

Nii Dortey Abotsi, Presiding Member of the Tema Municipal Assembly (TMA) expressed the Assembly's gratitude to the company and said stringent measures would be adopted to main the facilities.

For example, he said, those who contravene bye-laws on sanitation would be punished.

He said plans were advanced to develop beaches along the Tema area.

Alcoa Talks With Rusal About Russia Plants

Atlanta Journal Constitution, GA 08-apr-2004

PITTSBURGH (AP)--Alcoa Inc. is in talks with Russia's largest aluminum maker regarding two Russian rolling mills, the Pittsburgh-based aluminum giant said Thursday.

Alcoa said it has been in discussions with Rusal over the Samara Metallurgical Plant in the Volga River region and the Belaya Kalitva Metallurgical Plant in the Rostov-on-Don region.

No other details about the discussions were being released, Alcoa spokesman Kevin Lowery said.

Samara employs 7,500 and currently produces 450,000 metric tons of aluminum a year, which accounts for 40 percent of Russia's semifinished products, according to Rusal's Web site. Belaya Kalitva is Rusal's second largest producer of aluminum semifinished products and has a capacity of 120,000 metric tons.

Alcoa currently operates a packaging business in Russia but has no aluminum holdings, Lowery said.

In trading on the New York Stock Exchange, Alcoa shares fell 79 cents to close at $33.86.

Sale likely ends smelting era at Mead

Spokane-Review 09-04-2004

With top bid of $7.4 million, St. Louis company plans cleanup, resale of some buildings

John Stucke, Staff writer

A St. Louis company with a reputation for demolishing and rehabilitating polluted industrial properties will pay $7.4million for Kaiser Aluminum Corp.'s Mead smelter.

Steelworkers, pared to seven active employees at the massive factory, held out little hope that Thursday's smelter auction will mean more jobs for union members.

Commercial Development Company Inc. will attempt to restart a small part of the smelter that makes carbon anodes. But smelting aluminum is likely a practice
of the past, said Randy Jostes, Commercial's director of acquisitions.

Instead, the company plans a cleanup of decades of pollution at the plant before selling the property or leasing the buildings to small manufacturers.

Commercial outbid Vancouver, Wash.-based Columbia Ventures Corp., which announced in late February that it was willing to pay $4million for the smelter.

Controlled by Kenneth Peterson, Columbia Ventures planned to restart the plant's carbon-bake unit, which makes special anodes that are used to conduct electricity through smelter pots.

Although Jostes said Commercial is interested in making anodes, the company's top priority is solving Mead's environmental problems.

Jostes estimated cleanup costs ranging between $6million and $25million.

"We think we can abate the environmental problems, reposition the property and put it back on the market," Jostes said.

If Kaiser's bankruptcy judge approves the sale at an April 26 hearing, Commercial would begin work on the property soon.

Dan Russell, president of Steelworkers Local 329, said Commercial's takeover of the smelter doesn't bode well for jobs.

"Some of us, including some Kaiser managers, hoped the other company would buy it because at least they had a plan to restart the carbon bake," Russell said.

Steelworkers, he said, have largely lost hope that Mead will ever rebound.

"We feel like we've been punched and kicked for years," he said. "A lot of us just don't care anymore."

Besides the loss of more than 1,000 jobs in the past few years, Steelworkers and retirees have had their medical plans deeply cut and pension plans altered.

Kaiser is attempting to emerge from bankruptcy later this year and cut benefits to workers and retirees to save money and shed burdensome financial liabilities.

Jostes said buildings won't be demolished right away, but some at the expansive site will have to come down.

He said the Mead plant has asbestos components that must be removed.

Also, smelting byproducts contaminated groundwater at the site. Washington state is seeking $22million from Kaiser to remove rubble and clean up groundwater polluted by PCBs.

Commercial has been in business for 20 years. It is owned by brothers Mike and Tom Roberts.

According to Jostes, Mead is the first aluminum site they've purchased.

The federal government built the smelter in 1942 as part of the industrial arsenal that turned out fighter planes and warships.

At the end of World War II the smelter was sold as a surplus plant. A second sale put the smelter in the hands of industrialist Henry J. Kaiser.

The smelter was a steady performer for five decades, supplying molten aluminum to the Trentwood rolling mill.

The smelter helped define north Spokane for decades, with thousands of jobs that paid enough for workers to own homes, raise families and retire comfortably.

Until the late 1990s, Mead was among 10 smelters in the Northwest pouring 40 percent of the nation's aluminum. The companies were a potent economic and political force that -- along with Boeing Co. -- had the highest blue-collar payroll in the region.

But manipulation of the West Coast's electricity markets wiped out the cheap power advantage of the smelters.

Since then, all of the Northwest smelters have been idled.

Commercial owns many old industrial sites once used by the likes of General Motors Corp., Caterpillar Corp. and Kraft General Foods.

According to company information, Commercial sometimes keeps buildings intact and leases them for manufacturing or warehousing. Other times the properties are demolished, cleaned and redeveloped.

Jostes said the company has more than 100 million square feet under roofs at various factory sites around the country.

Power council recommends changes to boost Bonneville stability

By Associated Press Apr 09, 2004 - 08:36:07 am PDT

Panel suggests BPA changes

Salem Statesman Journal, OR April 9, 2004

Staff, news services
The Northwest Power and Conservation Council on Thursday recommended that the Bonneville Power Administration return to long-term contracts to help stabilize regional energy prices that skyrocketed during the Enron scandal and the California deregulation failure three years ago.

In a draft proposal released Thursday, the four-state council recommended that the BPA return to 20-year contracts with its main customers to ensure lower rates. Most of the current contracts are 10-year contracts that expire in 2011 but include some five-year contracts with aluminum companies, traditionally heavy users of electricity.

The council also recommended different rates for the relatively cheap hydropower produced at the 31 federal dams in the Bonneville system and the higher-cost power from newer sources, including natural gas turbines.

BPA deal meets goal at big cost

Oregonian, OR - 04/11/04

A $1.8 billion BPA program to reduce the aluminum industry's electricity use leads to mixed results


LONGVIEW, Wash. -- Michael Lynch, an ambitious Chicago industrialist, arrived in this gritty river town in February 2001, the new owner of the aluminum smelter that for 60 years had been a mainstay of the Cowlitz County, Wash., economy.

Lynch immediately closed the plant, throwing more than 900 employees out of work. His company filed for bankruptcy two years later, and creditors who accused him of dishonesty and incompetence ousted him from control of the company last July.

Lynch's foray into Pacific Northwest aluminum was made possible by the Portland-based Bonneville Power Administration. For shutting his company down and letting Bonneville sell the energy it would have used, his company received $226 million from the resulting sales.

The region's four other aluminum companies cut similar deals with Bonneville, a Portland-based federal power marketing agency, during the power crisis of 2000-2001. By the time the money stopped flowing last October, the aluminum makers' total take had reached more than $1.8 billion.

The program accomplished Bonneville's primary goal -- reducing regional energy use by more than 15 percent at a time of drought and power shortages. But, the payments came at a time when the BPA faced its own financial crisis and raised its rates by 45 percent, resulting in painful, double-digit rate increases for many Northwest households and businesses. And the deals ultimately played out in some unexpected ways.

The electricity buyback program was plagued by these problems:

While the BPA said at the time that the payments were intended to ensure the stability of the aluminum plants, eight of the Northwest's 10 smelters remain closed, three of the five companies are bankrupt and thousands of jobs appear to be permanently eliminated.

Not a single aluminum company has yet used the millions of dollars it received to build or find alternative power sources that would end its reliance on Bonneville, another key justification for the BPA payments.

Kaiser Aluminum and Chemical, which operated the smelter in Mead, Wash., ignored BPA pleas that it share a portion of the proceeds of the energy payments with workers and pocketed the entire $467.3 million it received. The company went bankrupt in 2002.

Six months after he bought the Longview smelter and began receiving the BPA bounty, Lynch's empire of aluminum factories also crashed into bankruptcy amid charges of fraudulent accounting. A bankruptcy trustee said he is investigating charges Lynch improperly used millions of the dollars of BPA proceeds.

The story of how those payments came together illustrates the complex demands on Bonneville, which markets power generated by federally owned dams in the Northwest, to equitably distribute the region's electricity. It also shows the political clout a handful of aluminum companies have enjoyed with the agency.

BPA officials say the deals with the aluminum companies reduced power demand by 15 percent or more at a time the region faced a critical shortage. Paying the companies to shut down saved the BPA hundreds of millions of dollars, because it otherwise would have had to buy expensive electricity on the open market and sell it to the aluminum companies at a tenth of the cost, officials say. Plus, at BPA insistence, a good deal of the money went to workers displaced by the smelter shutdowns.

"I don't regret any of the decisions," said Steven Wright, BPA chief executive. "This power crisis was unprecedented and unanticipated. I think we did a good job under the circumstances."

Other industry sources say the program was abused. "Some of the companies got greedy, they took advantage of the situation," said Randy Hardy, a former BPA administrator.

The deals' origins

The windfall payments have their roots in the sweeping deregulation of the power industry of the mid-1990s. Deregulation brought alternative sources of wholesale power to the market that by 1995 were cheaper than Bonneville's.

Alarmed that it could lose aluminum companies as customers, the BPA agreed to write new, more beneficial contracts for the 1996-2001 time period. Among other things, those contracts, which drew lawsuits from some Bonneville customers, gave the companies the unprecedented option to shut down and resell their electricity.

The concessions seemed relatively innocuous until the power crisis of 2000-2001. Without warning in May 2000, wholesale power prices soared from $25 per megawatt-hour to more than $250 per megawatt-hour.

The crisis contributed to the Northwest's descent into a stubborn recession.

Most electricity users suffered big rate increases. Bonneville, which reports to the Department of Energy, raised rates to public utilities it serves by 45 percent in October 2001. But the region's five electricity-gobbling aluminum companies reaped eye-popping nine-figure paydays, in most cases $350 million or more. Longview Aluminum received the smallest allotment -- $226 million.

Bonneville officials knew the arrangement with the aluminum companies could pose a political problem, Wright said. The shutdowns would put thousands of aluminum company employees out of work. Plus, the specter of private companies enjoying fat paydays while most other Northwest power users suffered could prove unpopular.

So the agency put several conditions on the money.

Bonneville inserted language into its contracts with most of the aluminum companies listing the acceptable uses of the money. The agency expected the companies to assist workers displaced by the shutdowns and to pay local taxes and any penalties for canceling raw supply contracts.

And, perhaps most important, the companies were to use the money to build their own power plants or otherwise secure alternative energy contracts that would end their reliance on the agency.

Golden Northwest's offer

Brett Wilcox, founder and CEO of Golden Northwest, was the first to reach agreement with Bonneville in December 2000. Agency officials hoped to make the deal a model for the rest of the companies.

As the sole Northwest-based aluminum company owner, Wilcox was more attuned to the politics inside Bonneville. He volunteered to send about $98.4 million of the $421 million his company received back to the agency, though he was not contractually bound to do so. He also spent another $106.1 million to pay workers and suppliers and meet other shutdown costs.

Wilcox says he used another $175 million to build a complex of windmills in Sherman County and to develop two gas-fired plants in Goldendale, Wash., and Clatskanie. He's since sold off the wind farm and his efforts to get the new gas-fired plants built have been hamstrung by the company's deteriorating financial position.

Wilcox took Golden into Chapter 11 bankruptcy in December, 2003. He says he still intends to get the Clatskanie power plant built and also to eventually restart the company's smelters in The Dalles and Goldendale.

Alcoa and Columbia Falls also sent a good deal of the money they received to their workers, though how much is unclear. Alcoa is still paying about 390 workers of its idled Wenatchee, Wash., smelter, though that money is coming not from its $350 million in Bonneville proceeds but from $62 million Alcoa is getting in power sales arranged by the Chelan Public Utility District in Washington.

Alcoa and Glencore, Columbia Falls' parent company, refused to account for how they spent the Bonneville money. Bonneville also declined to divulge details of the two companies' expenditures.

The deals with Kaiser and Longview, both of which like Golden have since sought bankruptcy protection, have proved the most controversial.

Kaiser's refusal

Kaiser refused to comply with almost all of Bonneville's conditions. It ruled out a power plant as a financial loser and also was the only recipient of the power money that declined to share any of the $467.3 million it received in energy proceeds with its workers.

Bonneville officials were livid. "BPA is disappointed that Kaiser appears more interested in retaining windfall profits at the expense of Northwest ratepayers rather than negotiate a mutually beneficial agreement," the agency stated in a Jan. 31, 2001, internal memo.

The United Steel Workers of America, which represented most of the 1,100 Kaiser employees at Mead, demanded that Bonneville audit Kaiser's use of the money.

Kaiser wouldn't budge.

Company spokesman Scott Lamb said Kaiser complied with the terms of its workers' union contract, supplementing its displaced workers' unemployment checks for two years so that they received compensation equal to 70 percent of their salaries. "We continued to pay Northwest smelter folks according to the contract," Lamb said.

Kaiser says it spent the bulk of the power money on various capital expenditures, including the rebuilding of its Gramercy alumina refining plant in Louisiana, which had been damaged in an explosion.

On Feb. 12, 2002, less than a year after enjoying its enormous payday, Kaiser filed for Chapter 11 bankruptcy. It announced this month that it will sell its Mead smelter, near Spokane, for $7.4 million, less than 2 percent of what it got in power payments.

Longview's false hope

At first, Lynch played good cop to Kaiser's bad cop.

The former Chicago real estate broker-turned aluminum magnate promised to comply with any and all of Bonneville's requirements, vowing to, among other things, end the smelter's reliance on BPA electricity by 2006.

Bonneville eagerly introduced Lynch at a March 1, 2001, news conference. Wright said ratepayers, smelter employees, even Columbia River salmon would benefit from the Longview shutdown.

The biggest winner was Lynch.

BPA insiders and Randy Hardy, the former BPA administrator who consulted for Lynch, say he could not have bought the smelter without the Bonneville payments. He used between $140 million and $150 million of the energy sale proceeds to repay a lender who provided the initial cash for his smelter purchase. He also sent about $32 million to the plant's more than 900 displaced workers, leaving him at least $44 million. Lynch says that money went toward expenses such as professional fees, plant maintenance and an unsuccessful attempt to build a power plant.

Lynch pledged to employees and their union that he would restart the facility by April 2002. He told Bonneville he had hired a subsidiary of Enron to launch development of the power plant.

Lynch's financial problems

Lynch didn't have much time to savor his new ownership of the Longview smelter.

In August 2001, unpaid creditors forced another of Lynch's aluminum companies in Scottsboro, Ala., into bankruptcy. Days later, Lynch took another company, McCook Metals, into bankruptcy after the company was accused by its lead lender of accounting fraud.

Dominic Forte, a former partner of Lynch's, sued him in August 2002, alleging Lynch had stripped the assets of Longview for his personal gain.

In March 2003, Longview Aluminum became the third Lynch company to go bankrupt. The company reported total assets of $3.08 million against debts of more than $65 million.

Creditors were aghast. They wondered publicly how Longview, which had never operated a day under Lynch's tenure, could have blown through the more than $30 million in energy proceeds they reckoned the company had remaining from the initial $226 million after payments to his lenders and workers.

"The fact that the debtor has disposed of more than $32 million in the two-year period from the date of Longview's purchase . . . is not only disturbing, but also unfathomable," wrote Lawrence Landgraff, an attorney for the Pension Benefit Guaranty Corp.

The Steel Workers sued Lynch and Longview and asked Bonneville once again to audit Lynch's use of the power money. U.S. Bankruptcy Judge Eugene Wedoff ousted Lynch in July 2003, and appointed a trustee to take control of the estate. Wedoff had earlier done the same in the McCook bankruptcy.

William Brandt, a Chicago lawyer appointed as Longview's bankruptcy trustee, said he intends to review Lynch's use of about $20 million of the Bonneville proceeds.

Among other things, Brandt is tracking between $7 million and $9 million Longview sent to a phalanx of lawyers, accountants, public relations firms and engineers during Lynch's short tenure. Brandt said it's unclear whether the professionals' work benefited Longview or Lynch personally or another Lynch company.

Lynch admits he spent $7 million or more on professionals. But the expenditures were appropriate and proper, he said. To preserve Longview, he argues, he also had to try to save McCook. Some of the money also went to lawyers pursuing Lynch's claims against Alcoa, which he claims conspired with his former law firm and others to put him out of business.

"I want to be known as a straight-up, ethical businessman," Lynch said. "I've talked to Brandt, I've told him "bring it on, file a lawsuit.' I'm willing to talk in front of a congressional committee or a federal judge."

Questions remain

BPA officials were unfamiliar with the claims against Lynch. They said their reviews of Longview's use of the money, as well as Kaiser's, were "truncated" by the company's bankruptcies.

In any case, Bonneville had limited recourse under the contracts. The agreements gave Bonneville the right to withhold electricity if the companies refused to comply with the agency's terms. But that proved an empty threat to Kaiser and Longview, which have said they will never again operate their smelters.

Steve Oliver, a BPA vice president, said it remains unclear whether Kaiser and Longview complied with the terms of their power agreements. The agency has determined that Alcoa, Columbia Falls and Golden Northwest have spent their share of the power jackpot appropriately, he said.

Oliver said the BPA deserves credit for trying to restrict the companies use of the money. "We really pushed our legal and contractual rights to the limit to create these benefits for ratepayers, employees and to keep these companies viable in the region," he said.

Still, BPA spokesman Ed Mosey acknowledged that the program bore some undesired results. "You had a guy like Lynch who lined his pockets largely due to serendipity."

Today, Bonneville is waiting in line with the three bankrupt aluminum companies' other creditors in hopes of collecting nearly $140 million the agency claims it is owed.

Jeff Manning: 503-294-7606;

Koenig & Vits Shut Down, Seeks Buyer

WBAY, WI - 13-apr-2004

Manitowoc's mayor hopes a buyer will take over the newly-founded Koenig & Vits aluminum company.

Mayor Kevin Crawford met Tuesday with executives of Orion Energy Systems, based in nearby Plymouth. Orion wants to buy Koenig & Vits, which was established in the former Mirro plant where hundreds of people lost their jobs when Mirro closed down.

Mayor Crawford says Koenig & Vits needs an influx of capital. The plant is shut down right now because it cannot pay its gas bill.

Tredegar shuts 110-job Aurora, Ont., extrusion site; shifts work to Pickering

Canadian Press Tuesday, April 13, 2004

TORONTO (CP) - U.S.-based Tredegar Corp. is closing an aluminum extrusion plant in Aurora, north of Toronto, leaving 110 people without jobs by next Jan. 31.

Tredegar, a global maker of plastic films and aluminum extrusions headquartered in Richmond, Va., said Tuesday that the Aurora plant's work will be shifted to other Ontario sites.

The William L. Bonnell extrusions subsidiary intends to move its largest press in Aurora to its facility in Pickering, east of Toronto, where $8 million US is to be spent upgrading the press and enlarging the facility.

The consolidation is expected to reduce operating costs by $2 million US a year.

Tredegar said it will take shutdown-related charges of $11.8 million US - $7.6 million or 20 cents per share after taxes.

"We're continuing to experience excess capacity and pricing pressure from domestic and foreign competitors," stated Bonnell president Albert Butler.

"Consolidating our Canadian plants should improve customer service, reduce costs and boost profitability."

The Bonnell subsidiary, with its head office in Newnan, Ga., produces aluminum extrusions for construction, transportation, electrical, machinery and consumer durables applications.

In addition to the Aurora and Pickering factories, it has plants in Richmond Hill and Woodbridge, Ont., and Ste-Therese, Que., as well as in Georgia, Tennessee and Indiana, employing a total of 1,600 people and generating 2003 sales of $355 million US.

In making Tuesday's announcement, Tredegar noted that the aluminum extrusions sector "is a cyclical business that is highly dependent on the economic conditions of its end-use markets in the U.S. and Canada" and "is under increasing domestic and foreign competitive pressures, including a growing presence of Chinese imports."

© Copyright 2004 The Canadian Press

Koenig & Vits workers want sale

Manitowoc Herald Times Reporter, WI - Apr. 13, 2004

WPS idles plant; potential buyer wants Martinez out
Herald Times Reporter

MANITOWOC — Two employees and the prospective buyer of Koenig & Vits want its founder, Tim Martinez, to sell his majority interest immediately.

Production at the plant was interrupted Thursday when Wisconsin Public Service turned off the plant’s gas supply. Plant employees indicate Koenig & Vits owes WPS more than $400,000 in overdue charges at the Mirro Drive aluminum rolling mill.

“We can’t afford to lose our customers. Our melting furnaces are shut down,” said Mike Wergin, shipping/receiving clerk. “The orders are there, the work is there. But we can’t run the plant without supplies and utilities.”

Coining press operator Dennis Lehman agreed. “We can’t melt the metal we’ve got. At one time Tim said, ‘We can only go up.’

“But that’s not true. With the gas shut off, we’re going in the wrong direction in terms of this company succeeding,” said Lehman, who, like Wergin, also owns shares in the company that bought the plant from Newell Rubbermaid last December.

Plymouth-based Orion Energy Systems President Neal Verfuerth echoed the employees’ words, and urged Martinez to close the sale.

“Do the right thing. Be somebody that will be a catalyst in getting this deal done, not an impediment,” said the businessman who has indicated his intent to invest some $20 million into Koenig & Vits in the form of equity and debt financing capital.

Reached via phone on the road back to Wisconsin from a family vacation to Florida, Martinez said the deal is “on track … the reality is it is scheduled to happen before the end of the month. There’s no reason for me to substantially change the direction of the company.”

He said Orion’s offer was unsolicited and if the deal is not concluded there are other companies that have expressed interest.

Verfuerth said he paid Koenig & Vits’ health insurance premium on the last day of its grace period before termination.

Martinez said the premium was paid with escrow funds from Orion that “were placed on deposit and could be used as operating capital.”

Martinez also has claimed the sale of the company was under duress, Wergin said. The claim could slow or block the sale. Verfuerth told employees last Thursday that the Wisconsin Department of Commerce cannot sign off on the deal until Martinez drops the claim, Wergin said.

“It was good we had a three-day weekend to cool off. You are messing with a lot of peoples’ lives here,” Wergin said. “They had the rug taken out from under them with Mirro and Newell.”

Wergin and Verfuerth said Koenig & Vits only can earn their customers’ trust and respect by producing product on time.

Martinez said he has assessed the risk of an idled plant but added that two weeks of down time is acceptable in an industry in which customers often face 16 weeks from order to delivery.

“I personally am more concerned about the people that work there, having one more loop in the rollercoaster they’ve been on,” Verfuerth said.

“Tim has three different responsibilities and roles. He is the only director of the corporation and has a fiduciary responsibility to the shareholders in this capacity,” he said.

“He is also the chief executive officer and a shareholder,” Verfuerth said. “There is an obligation to the other shareholders to do the right thing, a moral and ethical obligation. We want to close this deal.”

Today, Verfuerth will be meeting in Madison with Department of Commerce officials, along with city of Manitowoc Mayor Kevin Crawford and city planner David Less.

“We want to bring the state up to date with everything going on with Koenig & Vits and clarify what Orion’s plans are for the Mirro Drive facility,” Less said.

Wergin said another meeting may occur today: Martinez with some or all of Koenig & Vits’ current workforce of 40 employees.

“I don’t know if he shows up on the floor tomorrow what may or may not happen,” Wergin said. “Tim can walk away a very rich man, having the prestige of having started (Koenig & Vits) … but is that going to happen?”

A shareholders meeting is set for 6 p.m. Friday, Wergin said.

“It ought to be real interesting because Orion is an investor, I’m an investor, Jerry Meyer and Jim Ross (former company president and plant manager suing Martinez for back pay and stock) are investors. We’re all entitled to be there.”

Charlie Mathews: 686-2969 or

Russian, Iranian firms may invest in Alumina plant

Miami Herald, FL Tue, Apr. 13, 2004

From Herald Wire Services

Venezuela's state heavy industries corporation said it is in talks with Russian and Iranian companies to build a $700 million plant to produce alumina, used to make aluminum.

Corporacion Venezolana de Guayana Vice President Armando Ramon Madero said in an interview with the Venpres state news agency that the company would likely take a stake in the plant, which would be located in Caicara in the southeast state of Bolivar.

Madero didn't name the potential investors or how much alumina the plant would produce each year. Russia's OAO Russian Aluminum, which makes about an eighth of the world's aluminum, said in February it was considering investing in a Venezuelan alumina plant.

Venezuela is counting on foreign companies to help it develop its aluminum industry. The country earlier signed a $208 million contract with France's Pechiney SA to boost production of bauxite, which is the feedstock for alumina.

Alcoa to close Texas plant, lay off 175

Pittsburgh Business Times, PA 14-apr-2004

Alcoa Mill Products on Wednesday said it will shut down a 350,000-square-foot aluminum plant in South San Antonio, Texas, with plans to lay off 175 people by year's end.

Alcoa Mill Products, a unit of Pittsburgh-based Alcoa Inc., has decided to idle the factory because of poor market conditions. The mill produces rolled aluminum sheets for the building and construction industry, and formed-container products for the food industry.

Mike Cooper, a spokesman for Alcoa Mill Products, said San Antonio workers produce a variety of metal items, such as the starting stock for rain gutters, fin stock used in radiators and air conditioning units and pie plates.

"We deeply regret this decision because of the impact to our employees," said Tom Jones, manager of Alcoa San Antonio Works. "Despite the excellent efforts, we have simply not been able to compete profitably in the market segments most suited to the mills configuration."

The company will try to create a smooth transition for affected employees, including working with the Texas Workforce Commission to provide outplacement services.

Alcoa Mill Products will continue to run the plant until this fall in order to meet customer commitments. It will begin to transfer work to other Alcoa facilities in Davenport, Iowa; Texarkana, Texas; and Lancaster, Pa., later this year.

"There are no anticipated layoffs until September," Mr. Cooper said.

While it may be possible for Alcoa Mill Products to restart production at the plant if market conditions improve, company officials don't expect that to happen anytime soon.

"We will continually review market conditions," Mr. Cooper said. But he added, "We cannot see anything happening in the near term."

Before Alcoa Mill Products bought the San Antonio facility, employees there produced metal cans for the beverage industry.

Alcoa, the world's largest aluminum producer, purchased the plant from Golden, Colo.-based ACX Technologies Inc., a former affiliate of the Adolph Coors Co., for $41 million in 1999. Golden Aluminum Co. built the plant in 1993 before its acquisition by ACX.

2004 American City Business Journals Inc.

Retired Kaiser CFO takes up same post with Foster Wheeler

Houston Business Journal, TX 14-apr-2004

Foster Wheeler Ltd. said Wednesday it has hired John La Duc as chief financial officer two weeks after La Duc retired as CFO of Kaiser Aluminum Inc.

Brian Ferraioli, who has served as acting CFO since Jan. 30, will continue in his position as vice president and controller of Foster Wheeler.

Kaiser had tapped Treasurer Kerry Shiba to succeed La Duc when the company announced his plans to retire in February.

Foster Wheeler, based in Bermuda with operation headquarters in Hamilton, N.J., is a provider of design, engineering, construction and other services.

Kaiser, based in Houston, is a producer of fabricated aluminum products, alumina and primary aluminum.

© 2004 American City Business Journals Inc.

Aluminium futures hit highs

Sydney Morning Herald, Australia April 15, 2004 - 8:30AM

In LONDON, three month aluminium futures hit their highest since October 1995 on the London Metal Exchange (LME) on Wednesday afternoon as fund buying and upbeat fundamentals triggered buy stops.

Aluminium peaked at $1,794 a tonne during Wednesday's kerb trade, before settling at $1,791. It closed on Tuesday at $1,749.

Traders said a mix of buyers led by funds had driven the price up to the previous high of $1,775, and then hit buy stops taking the market even higher.

Analysts said funds were driving the metal towards a technical target of $1,900 a tonne spurred by indications that demand for the metal was likely to be strong.

Traders also noted LME warehouse inventories had fallen more or less in a straight line from 1.40 million tonnes IN LATE February to 1.18 million on Wednesday.

They thought much of the metal was heading into eastern Europe to avoid a European Union import duty levied when 10 new countries, including Hungary and Poland join the bloc in May.

Tin went untraded, but was indicated higher at $8,750/800 from $8,450 at Tuesday's kerb

Alcoa to Shutter San Antonio Plant

By Associated Press

New York Newsday, United States April 15, 2004, 4:49 PM EDT

SAN ANTONIO -- Aluminum giant Alcoa Inc. will shut down its plant in San Antonio later this year, eliminating 175 jobs.

The layoffs will begin in September, and the plant will cease operations by year's end because of a glut of rolled aluminum on the market, Alcoa said this week.

Alcoa officials told the San Antonio Express-News that production could resume if market conditions change, though that scenario appears unlikely.

"Despite the excellent efforts, we have simply not been able to compete profitably in the market segments most suited to the mill's configuration," plant manager Tom L. Jones said.

The 14-year-old San Antonio plant makes aluminum for a variety of uses, including radiators, rain gutters and air conditioners.

Work will be transferred to other Alcoa facilities in Texarkana, Davenport, Iowa, and Lancaster, Pa. Alcoa is based in Pittsburgh.

$1.2Bln Hydro Project

Moscow Times, Russia 15-Apr-2004

MOSCOW (Bloomberg) -- Owners of No. 2 aluminum maker SUAL are offering to help Unified Energy Systems build a $1.2 billion hydroelectric plant in exchange for a stake in the project, Vedomosti reported Thursday.

KES, owned by SUAL's controlling shareholder, Renova, proposes to cooperate in construction of the Boguchansk plant, designed to produce 3,000 megawatts of electricity, KES general director Mikhail Slobodin told the paper.

KES's proposal comes as SUAL competes with larger Russian Aluminum for power supplies needed to power new smelters, analysts said, according to Vedomosti.

UES currently has 65 percent of the Boguchansk project, and Basic Element, which controls RusAl, has 25 percent, Vedomosti said. UES and Basic Element are in a dispute over financing for the plant, the newspaper said.

Alba set to boost GNP by 12% with Line 5 project - Bahrain

MENAFN, Middle East Bahrain Tribune - 15/04/2004

Alba's contribution to the GNP is expected to increase to 12 per cent from the present eight, following the completion of the $1.7 billion Line 5 project, the administration, carbon and casthouse general manager, Mahmood Al Daylami, has said.
He told the Tribune that the Line 5 project was expected to be ready and operational by 2005 to help boost production which was 527,000 metric tones in 2003 and would create more jobs for Bahrainis. "About 50 per cent of production is sold in the Bahrain market. Another 20 per cent is exported to the Far East, 18 per cent to the GCC states and seven per cent to South East Asia."
Al Daylami expressed optimism that sales to the US might increase with the signing of the Free Trade agreement. Sales to Europe have been low because the EU charges six per cent tariff.
"The increased production capacity will enable us to meet the increasing world demand for aluminum. But we remain focused on the Asian market," he said.
Al Daylami said that at present the Gulf was producing every year one million tonnes of aluminum of the 28 million tonnes of world production.
"The demand for aluminum increases by three per cent a year and that is why Bahrain and the UAE embarked on expansion projects to produce an additional 300 tonnes each. There are also plans for increasing production in Oman, Qatar, and Saudi Arabia."
The Gulf states are a strong competitor in the world aluminum market and the expansion projects in Bahrain and the UAE are expected to boost the region's production by 600 tonnes in the next two years, he said.
Al Daylami said that the aluminum industry in the region was not impacted by the turbulent political situation in the region in recent years. The finance for the Line 5 project - 90 per cent loans - was secured in 1990 during the Iraq-Kuwait crisis and the final agreement for the project was signed in recent weeks.
"The Middle East has proved to be a strong centre for the development of the aluminum industry with Egypt, Bahrain, and the UAE having record success. That is why the industry has focused on this part of the world as a developing market."
Al Daylami said that energy, human resources and infrastructure are available in the region to develop the industry and attract investors.
The downstream factories in the aluminium sector felt the impact of the political turbulence indicating that the region had only attracted one per cent of the world investment. "The situation in Iraq and Palestine impacted investment. Yet, the region has proven to be a stable environment and a stable Middle East will encourage more investors to come forward and invest in various projects."
Al Daylami said that the 11th International Arab Aluminium Conference (arabal 2004) being hosted by Alba at the Ritz-Carlton Bahrain Hotel & Spa on April 19-21, was one of the three most important conferences for the industry.
"The uniqueness of arabal 2004 comes from the fact it is strategy related. That is why speakers and participants are top level executives and decision-makers who shape the industry's future," he said. Al Daylami said that the biennial conference did not aim to fix prices but to provide an opportunity to senior executives to have business meetings and sign contracts.
Thirteen top executives from the global aluminum industry and more than 400 delegates are expected at the conference, which will be held under the patronage of the Prime Minister, Shaikh Khalifa bin Salman Al Khalifa.
The conference theme is 'Critical Issues, Global Trends and Drivers' focussing on issues related to global growth and strategy, power generation, marketing trends for industry, downstream products and expansion, among others. The director, chairman and chief executive officer of the Aluminium Company of America, (Alcoa), Alain Belda, will be the keynote speaker.
Al Daylami said that Alba had spent over BD400 million to protect the environment and would spend another BD60 million in the next five years for the same purpose.
"Spending on protecting the environment has no financial return for us, but we are committed to its protection for the community," Al Daylami said. Alba's strategic plan commits the smelter to annual ten per cent reduction in non-recycled waste leaving the plant. Last year the company reduced the non-recycled waste by 20 per cent.
Al Daylami said that Alba was working on increasing production and reducing operational costs through cost-saving methods to be more competitive. In 2003, Alba saved BD512,146 by adopting 23 cost-saving suggestions from employees.

Profits Squeezed

Bloomberg 15Apr-2004

Lanzhou Aluminium Co., China's second-largest aluminum producer by output, said on March 24 that it would fire workers or lower wages because an increase in power rates had raised its costs by 57 million yuan, equivalent to a third of its 2002 profit and about 3.1 percent of its total sales that year.

UDC planning to set up smelter plant - Qatar

MENAFN, Middle East - Apr 13, 2004 The Peninsula - 13/04/2004

Doha: United Development Company (UDC) expects to designate by May this year an international company to build its aluminium smelter plant with production slated for the last quarter of 2007, UDC chairman Hussain Ibrahim Al Fardan said at the annual general meeting (AGM) of shareholders yesterday.

Outlining the company's performance in 2003, Hussain Al Fardan told the AGM that UDC was in final stages of negotiations with international providers of smelter technology to develop the plant.

The company had a joint-venture agreement with Dubai Aluminium Company (Dubal) which had collapsed late last year.

Hussain Al Fardan also announced that a financial advisor would be appointed by April 19 and a legal advisor on April 20.

Talking of the other achievements of the company last year, he said agreements with Qatar Petroleum for the project to produce 100,000 tonnes per year of Linear Alkyl Benzene (LAB), has almost been completed.

UDC is to contribute 20 per cent of the total cost of the project, which is estimated at $300m, he said.

Hussain Al Fardan also referred to the $2.5bn 'Pearl of the Gulf' man-made island project off the Doha coast that was launched this month, one year after the agreement to develop the island was signed with the Qatar government.

He said the island, the largest private investment project in the Middle East, has already received requests from individuals and corporate investors seeking properties although sales would not begin before May this year.

The island will house some 30,000 people in over 7,600 house units to be located in ten exclusive housing areas, three luxury hotels, four marinas providing mooring for over 700 boats as well as 60,000 sq metres of retail and luxury restaurant space, he said.

UDC also established last year the Qatar Dredging Company in cooperation with the Qatar government and Dredging International, which has begun work on the 'Pearl of the Gulf' island project and is expected to undertake other projects in Qatar and elsewhere in the Middle East.

Another UDC achievement is the establishment of Qatar Cool early last year in cooperation with the National Central Cooling Company (Tabreed). An agreement is to be signed with Commercialbank on April 19 to provide cooling services.

Besides, the company has contributed 10 per cent of the urea-formadhelyde project that is being operated by Qafco and started operations late last year.

UDC recorded a net profit of QR9.7m in 2003 from QR226,000 in 2002, increasing by QR9.5m. Shareholders equity rose to QR539.78m in 2003 from QR129.79m.

Alcoa Products All Over Airbus A380 Super Jumbo Airliner 16-Apr-2004

Perhaps the best recognition of a team's work is when a customer cites its efforts. According to Airbus, "Alcoa sought - and won - a strategic position on the A380® by applying its integrated product approach.

"Alcoa applied all of its aviation industry experience to the A380 program, developing new alloys specifically for the 555-seat aircraft as part of the largest development program ever undertaken by the metals manufacturer."

The A380 features more new Alcoa materials and products than any other aircraft on which the company has been involved. Alcoa products are literally used from nose to tail, beginning with forward landing gear support structure to forgings for the horizontal and vertical stabilizers.

Working closely with Airbus's design team, Alcoa Fastening Systems developed the XPL® Lockbolt with a titanium collar that is both strong enough to handle the wing's great size and compatible with the composite and aluminum materials it has to link. As a result, the A380 will use about one million Alcoa Lockbolts on every aircraft.

A new, highly damage-tolerant alloy called A6013 HDT is used for the A380 fuselage skins, while the largest die forgings ever made by Alcoa will serve as the aircraft's 21-ft.-long x 6-ft.-wide wing spars.

On the A380's upper wing, skins measuring up to 112 ft. in length are being produced from A7055 alloy, and Alcoa is manufacturing lower wing skins with the A2024 HDT alloy that also provides high damage-tolerant qualities.

Strong Chinese demand lifts aluminium

Financial Times, UK -April 16 2004 17:47

By Kevin Morrison
Aluminium prices reached a fresh 8 year high on Friday for the second consecutive day as hedge funds were attracted to the metal following strong demand in China at a time that both Chinese and north American aluminium output is falling.

Brokers said there was also an element of aluminium prices catching up with other base metals, as aluminium has lagged far behind copper, nickel, lead, zinc and tin on fears of overproduction in China following a rapid expansion of capacity in recent years, a trend that boosted stockpiles of the metal last year.

That view is changing as power shortages and a doubling to $500 a tonne for the price of alumina, the main raw material for the manufacture of aluminium, curtail Chinese output. Higher alumina costs have also reduced north American output.

Aluminium closed $21 higher at $1,827 a tonne at the close of open outcry trading on the London Metal Exchange, capping a rise of more than 10 per cent in the past three weeks.Over that period, other base metals have traded flat or declined as their strong run over the past 16 months looked to consolidate.

Aluminium is also benefiting from a substitution of copper and steel for aluminium, a result of a near doubling in the price of both metals since the start of last year, whereas aluminium has only risen a mere 35 per cent over the same period.

Goldman Sachs forecasts aluminium demand to outstrip supply by 200,000 tonnes this year, which may help to ease the global stockpiles of more than 1.2m tonnes, and it expects demand to outpace output well into next year.

Jan Rommer, base metals analyst at Natexis Metals, said hedge funds are very attracted to aluminium because it is the biggest market of all the base metals, making it easier for investors to move in and out of positions relatively smoothly. An exercise that is not so straightforward in the smaller tin and nickel markets.

"I think we could see aluminium up as high as $1,900, at the moment you have producers selling and funds buying and so it is a one way street," Mr Rommer said.

Chinese demand for metals remains robust following a 19.4 per cent rise in industrial production year on year to the end of March. The US Aluminum Association said this week total aluminium orders were up almost 27 per cent last month, even though US industrial output eased in March.

Aurukun in the melting pot

Brisbane Courier Mail, Australia 17apr04

Richard Owen
GLOBAL aluminium giant Alcan hopes to convince the Queensland Government not to revoke its Aurukun bauxite lease near Weipa by offering to fund a $15 million feasibility study on the viability of building a $1 billion alumina refinery there.

Alcan inherited the lease as a result of its hostile takeover last year of French rival Pechiney which had sat on the 500 million tonne resource since 1975 and failed to develop a mine and refinery on the site by 1988 as agreed to under Queensland legislation.

However, by the time Alcan took control the Queensland Government had already marched Pechiney off to court after the company refused to surrender the lease so international expressions of interest could be called to expedite development.

Alcan now fears the Queensland Government may be about to abandon the court action and pass legislation during the upcoming Parliamentary session to revoke the lease and ride out inevitable industry concern about the impact on perceptions of heightened sovereign risk.

Alcan's president for Pacific operations Richard Yank said yesterday he had not had a response since putting the feasibility study proposal to Premier Peter Beattie earlier this month.

"Our understanding is that the Government's real interest is in moving forward with the development of Aurukun effectively and quickly to get benefits from that resource," he told The Courier-Mail.

"We believe we've put a credible proposal forward that allows them to achieve that objective and given the size of the investments we're considering then long-term security of the resource is of concern and it would be disappointing if the Government were to legislate (to revoke the lease)."

Despite concerns that the matter was likely to be brought to a head before Cabinet next week with a view to fast-tracking a resolution with legislation, the Government was not commenting.

A spokesman for Mines Minister Stephen Robertson said the Government had made it clear to Pechiney from the outset that a legislative solution was one of the options available.

"We don't comment on matters which may or may not be the subject of future Cabinet deliberations but as far as the minister is concerned it's still a matter which is before the courts," the spokesman said.

Alcan has a 41.4 per cent majority interest in Queensland Alumina Ltd's Gladstone refinery and employs a staff of 200 at its Brisbane regional headquarters.

Mr Yank stressed the Government was being presented with a "sure thing" from a leading global industry player with a proven track record from commercial, environmental and community perspectives, and the financial backing to make a project happen.

"We hope the Government will give serious consideration to our proposal," he said.

"Taking the lease out to tender is akin to throwing $15 million away, increasing the time frame for development of the resource and reducing the opportunity to understand the true value and potential."

The matter is scheduled for another hearing before the Queensland Supreme Court in August.

Yank frets new law will end Arukun aspiration


April 17, 2004

THE Aurukun aluminium deposit at the centre of a battle between the Queensland Government and Pechiney has now claimed aluminium giant Alcan.

The global behemoth hopes to convince the Queenslaqnd Government not to revoke its Aurukun bauxite lease near Weipa by offering to fund a $15 million feasibility study on the viability of building a $1 billion alumina refinery there.

Alcan inherited the lease as a result of its hostile takeover last year of French rival Pechiney which had sat on the 500 million tonne resource since 1975 and failed to develop a mine and refinery on the site by 1988 as agreed to under Queensland legislation set up by the Joh Bjelke-Petersen regime.

However, by the time Alcan took control last year the Queensland Government had already marched Pechiney off to court after the company refused to surrender the lease so that international expressions of interest could be called to speed development.

However, Alcan fears the Queensland Government may be about to abandon the court action and pass legislation in the coming Parliamentary session to revoke the lease and ride out inevitable industry concern about the impact on perceptions of heightened sovereign risk.

Alcan's president for Pacific operations Richard Yank said yesterday he had not had a response since putting the feasibility study proposal to Premier Peter Beattie earlier this month.

"Our understanding is that the government's real interest is in moving forward with the development of Aurukun effectively and quickly to get benefits from that resource.

"We believe we've put a credible proposal forward that allows them to achieve that objective and given the size of the investments we're considering then long term security of the resource is of concern and it would be disappointing if the government were to legislate (to revoke the lease)."

Mr Yank believed Alcan's position of strength within both the global aluminium industry and Queensland made the company a "natural partner of choice".

Mr Yank stressed that the proposal represented a "sure thing" for the Government – from a leading global industry player which has a proven track record from commercial, environmental and community perspectives, and the financial backing to make a project happen.

"Taking the lease out to tender is akin to throwing $15 million away, increasing the timeframe for development of the resource and reducing the opportunity to understand the true value and potential."

Despite concerns that the matter was likely to be brought to a head before Cabinet next week with a view to fast tracking a resolution with legislation the government was not commenting.

A spokesman for Queensland mines minister Stephen Robertson said the government had made it clear to Pechiney from the outset that a legislative solution was one of the options available.

"We don't comment on matters which may or may not be the subject of future Cabinet deliberations but as far as the Minister is concerned it is still a matter which is before the courts," he said.

The matter is scheduled for another hearing before the Queensland Supreme Court in August.

Corus forced to bring rebel back on board
Guardian, UK - Apr 15, 2004
David Gow
Corus, the Anglo-Dutch steel group, will today accede to the demands of Alisher Usmanov, the Russian metals mogul and its second largest shareholder, to appoint a new Dutch director to its board.
Mr Usmanov wants next week's annual meeting to approve the selection of Adrianus van der Velden as a non-executive director - more than three years after he quit the board in a row over strategy.

The Russian entrepreneur this week raised his stake in Corus to 13.4% and, according to his UK representative, is a long term investor who could take his holding up to 20%.

Farhad Moshiri, who runs the London office of Mr Usmanov's Cyprus-based Gallagher Holdings, said Mr van der Velden, a "major figure in Dutch business", would add steel expertise to the board and help to integrate the Dutch and British operations.

Mr van der Velden ran Corus's strip operations and sat on the board from the firm's creation via the merger of British Steel with Hoogovens in October 1999 to September 2000. He criticised its strategy of using the Dutch business to prop up the heavily loss-making UK operation.

The clash between the Dutch and UK arms of Corus last year brought the group to the brink of collapse when the Dutch board, backed by the courts, threw out a 650m deal to sell the lucrative aluminium operation to Pechiney in France.

Mr Usmanov was introduced to Mr van der Velden by another Dutch ex-director, Oliver van Rijn. The Russian supports the efforts of Philippe Varin, chief executive, to unify Corus and raise City money via last year's 291m share placing to invest in the UK restructuring - paving the way for Mr van der Velden's return. "Anglo-Dutch mergers take a long time to gel and Mr Varin has done a great job," Mr Moshiri said, pointing to the appointment of Rauke Henstra as head of the strip division, covering IJmuiden and Port Talbot.

His adviser said that the Russian entrepreneur has a long term strategy to use his investment in Corus, which specialised in flat steel products, to hedge his operations in long products. Mr Moshiri dismissed suggestions that Mr Usmanov wanted to sell iron ore to Corus. "There's no merit in doing that when Russian and Chinese demand can hardly be met and transport costs are so high. Brazil is better."

He also ruled out an approach to buy out Corus's Tees-side plant which makes steel slabs and could be sold or put into a joint venture in 2006.

Smelter's pier attracts potential buyer

Longview Daily News, WAApr 16, 2004

By Pat Forgey
Just days before an auction of Longview Aluminum's equipment is scheduled to begin next week, a buyer for part of the plant has emerged, the bankrupt company's court-appointed trustee said Friday.

It's not the smelter the buyer wants, however, but the plant's pier, sophisticated ship-unloading equipment and storage facilities to use in importing a mineral product and possibly doing some basic processing of it, said Bill Brandt, a Chicago businessman appointed to oversee the liquidation of the smelter that once employed 900 workers.

"It might offer some employment base for Longview, an industrial use creating jobs," he said.

Brandt declined to identify the company or the commodity, but said it could continue industrial use of the property and bring new jobs to Longview. He declined to say how many, but acknowledged that it would be far fewer than the smelter. The buyer would not use the potlines, he said.

"It may be we take down the aluminum smelting lines, but a lot of the other infrastructure stays up," he said.

The pier Reynolds once used to import alumina has long been viewed by local economic development officials, who hope to see the plant site redeveloped, as one of its prime attributes. Getting environmental permits for new structures in the river is increasingly difficult, they say.

Brandt said he is willing to pull the shipping-related items from the auction scheduled to start Tuesday, but only if the potential buyer puts up some money.

"He may be only a few days away from putting a deposit down," he said.

The United Steelworkers of America, which represents the plant's workers, has been hoping a buyer for the entire plant would emerge to operate it, but that hope is getting ever more faint as the auction approaches and plant equipment and raw materials are sold off.

Jobs at a new importing and processing facility would be welcome, especially for former aluminum workers, said Gaylan Prescott, staff representative of the United Steelworkers of America in Longview.

"We have a number of highly qualified people able to run that unloader and manage those tanks," he said.

Brandt cautioned that the deal still would be complicated to put together.

"The devil will be in the details," he said.

When Alcoa Inc. took over Reynolds Metals in 2000 and sold the smelter to Michael Lynch's Longview Aluminum LLC in 2001, it retained ownership of the 500-acre plant site and leased it to Lynch. Parts of the site are contaminated from years of metal production there, and retaining ownership of the land ensured Alcoa would be able to supervise the cleanup for which it remains legally responsible.

For a deal to happen "Alcoa will have to be a participant in it," Brandt said.

For Brandt to sell off the shipping equipment from the Longview Aluminum estate for use there, the new buyer would have to have a lease from Alcoa.

Brandt said he thought it would be in Alcoa's interest to have a new user of the property. "There's substantial upside to Alcoa," he said.

If the site remains in industrial use, state environmental officials are not likely to require an immediate, expensive cleanup, he said.

"A lot of the potential remedial issues they have they'll likely be able to, in fact, put off almost indefinitely," he said.

Dubai Aluminium to boost production capacity to 761,000 tpa

Channel News Asia, Singapore 17-Apr-2004

DUBAI : Dubai Aluminium Company Limited (DUBAL) announced a new expansion of production capacity to 761,000 tonnes per annum (tpa) in a bid to consolidate its position as one of the world's lowest cost producers.

"This expansion will continue to elevate DUBAL's position as one of the world's largest single site smelters and a major player in the aluminium industry," said DUBAL vice chairman Ahmed al-Tayer.

"The expansion will continue to consolidate DUBAL's position as one of the lowest cost producers of primary aluminium in the world," a company statement added.

Canadian engineering and construction giant SNC Lavalin has been engaged for the Engineering Procurement and Construction Management Services (EPCM) for the project, the statement said, without giving further details.

The Dubai government-owned smelter reported in January record production of 560,000 tonnes and sales of 616,000 tonnes for 2003. Output climbed five percent and sales seven percent over 2002.

The Middle East's largest aluminium producer had previously announced that it was working to boost total capacity to 710,000 tonnes per annum by 2006, but the latest statement gave no timeframe for the 761,000 figure.

"Economy of scale combined with tight control of costs is a key for success or even survival in today's aluminium smelting business," managing director Mohammad al-Ghurair said Saturday.

DUBAL, the single largest non-oil industrial enterprise in the United Arab Emirates federation contributing 6.5 percent of Dubai's gross domestic product, employs more than 2,700 skilled people, and says it is among the 20 lowest cost aluminium producers in the world.

RusAl Suit Rejected

Moscow Times, Russia 18-Apr-2004

MOSCOW (Bloomberg) -- Russian Aluminum, the world's third-largest producer of the metal, said arbitrators in Sweden rejected a $325 million claim by rival Alucoal that accused RusAl of unlawfully acquiring one of its aluminum smelters.

The panel from Stockholm's Chamber of Commerce decided it had no jurisdiction in the case, Moscow-based RusAl said in a statement. Alucoal, based in Cyprus, alleged that RusAl used bankruptcy proceedings to illegally gain control of the Novokuzketsk smelter in Siberia, Russia's fifth-largest.

Bidders eye smelter's remnants

Longview Daily News, WA Apr 19, 2004

By Pat Forgey

Aluminum from the Reynolds Metals Co. smelter in Longview helped win World War II and provided jobs for hundreds of local families over the years.

That is all gone now, and soon so will the equipment that workers used to make that aluminum.

Starting Tuesday, an auctioneer will begin selling off that equipment to pay off bankrupt Longview Aluminum's creditors.

Professional auction firm Dovebid Inc. has been working for weeks preparing the plant's equipment for auction. In some cases, they've hired former aluminum workers to tag the sale items, said plant manage Lou Locke.

The auction will run from Tuesday through Thursday, and be held at the Kelso Red Lion and over the internet at The auction begins at 8 a.m. Bidders can view the merchandise at the plant site Monday.

Potential buyers have come from around the world and neighboring industrial plants, hoping to go home with equipment ranging from the Schwinn bicycles employees used to get around the 500-acre site to potlines to wastewater treatment facilities.

Berkley Tack, a Rainier blacksmith, said he's interested in bidding on some of the plant's shop equipment, and hopes that as much of the equipment as possible will stay in the area.

"I've seen stuff go to places it shouldn't and get scrapped," he said.

Other potential local buyers range from small fabrication shops on Kelso's Talley Way to Kalama's Steelscape Inc.

The auction will be the last nail in the coffin for the smelter. Former Longview Aluminum owner Michael Lynch lost control of the smelter last year. A bankruptcy trustee has sold off the plant's stocks of equipment and raw materials to raise money to pay ongoing costs. Millions of dollars worth of alumina, the raw material from which aluminum is made, and chemicals, and aluminum ingots also have been sold.

Bankruptcy trustee Bill Brandt said he tried hard to find a buyer for the plant, but given current aluminum and power prices, the plant simply isn't competitive, he said. Brandt said his trustee firm, Development Specialists Inc., contacted every company in the metals industry that might have been able to operate the plant. Though several looked at it closely, there were no takers, he said.

Brandt now hopes to raise as much as $5 million at the auction, but that won't pay all of Longview Aluminum's outstanding unsecured creditors, which Brandt estimated at nearing $100 million.

"I still think the auction may raise a lot of money," said Brandt.

A potential buyer for some parts of the plant, including ship-unloading equipment and silos, appeared recently. Brandt said if a deal is reached to purchase those items for use on site by a new company, they'll be pulled from the auction.

The money raised will be used to pay off creditors, and will likely be enough to pay debts incurred since the bankruptcy filing. Those debts have top priority, according to the court, and include costs for power, legal fees, and other expenses. Remaining money will go toward unpaid taxes and wage claims, but many creditors will get little, said Brandt.

The Expert 200: The Metal Industry in Russia

Gateway 2 Russia, Russia - 19-Apr-2004

.....In non-ferrous metallurgy, the slight increase of aluminum output (1.2% versus 2001) was fully cancelled out by a decline in world prices for this commodity

BD39m savings to boost production

Gulf Daily News, Bahrain Tuesday 20 April 2004

A SAVING of $104 million (BD39.312m) has been made in the construction of Alba's Line 5 Expansion project, it was announced yesterday.

Alba and main contractor Bechtel signed a contract of addendum declaring the saving, which was made known following a new estimation of project costs.

The contract was signed by Alba chairman and Oil Minister Shaikh Isa bin Ali Al Khalifa and Bechtel Group president and chief executive officer Adrian Zaccaria on the sidelines of the 11th International Arab Aluminium Conference (Arabal 2004).

These savings will be used to accommodate enhancements of the project - including the installation of 48 additional reduction cells within the approved existing budget, leading to a 17 per cent increase in production capacity.

Engineering work being carried out by Bechtel is now over 85pc complete and construction is approximately 30pc complete, according to a statement issued yesterday.

"These savings are due to design enhancement and project delivery efficiencies introduced by the Alba-Bechtel project team," said Mr Zaccaria, who added that the project should be ready for start-up in March next year.

The $1.7 billion Line 5 Expansion will increase Alba's annual aluminium production by 307,000 tonnes every year.

The figure currently stands at 526,000 tonnes-a-year and the expansion will make it the largest smelter in the world outside Eastern Europe.

Meanwhile, Alba chief executive Bruce Hall praised staff for exceeding five million man-hours without a lost time accident.

"This is an extraordinary achievement exceeding international standards and is a milestone of which we are very proud," said Mr Hall.

"There are now more than 3,500 workers on the project."

In addition, Shaikh Isa said that 350 people have so far benefited from a scheme which intends to train 800 unemployed Bahrainis in specialist construction skills.

The scheme, called Training for Bahrain, is being carried out by Alba in association with the Labour and Social Affairs Ministry and Bechtel.

"All those trained have since been employed by contractors working mainly on the Line 5 project and, in some cases, have started their own business."

Capral Aluminium makes $4.3m loss

Ferret, Australia 20 April 2004

Capral Aluminium has blamed delays and costs associated with the restructuring process for a net loss after tax of $4.3m for the year.

The aluminium extruded products manufacturer’s revenue from operating activities was $382.3m. This is down 13.2% compared to 2002. The company shipped 74,510 tonnes, 8.4% down on the previous year. The rising price of aluminium hit revenue, along with destocking by major fabricator and distributor customers and the appreciation of the dollar.

In a statement to be presented to the company’s AGM today, chairman John Crabb said that production costs were twice what the company needed to attain to be considered a low cost producer. Crabb said that a “complete re-engineering of the company” was underway. He acknowledged delays along the way, but claimed that “ by consolidating our manufacturing and warehousing facilities, investing in the very latest technology, and adopting more streamlined systems, processes, and procedures” the company would become profitable.

SNC-Lavalin Wins Contract to Expand Aluminum Plant in Dubai

April 18 (Bloomberg) -- SNC-Lavalin Group Inc., Canada's biggest engineering and construction company, won a contract in Dubai to expand an aluminum plant after the Persian Gulf emirate accelerated plans to boost its capacity.

SNC will add almost 11 percent more capacity to Dubai Aluminium Co., the world's No. 10 producer of the metal, by 2005, said Nader Mohammed, the company's general manager for corporate services. Capacity will be 761,000 tons a years, compared with 686,000 tons now, Mohammed said in a telephone interview in the United Arab Emirates.

In 2002, Dubal, as the company is known, had planned to expand capacity by a third to 710,000 tons a year by 2006 at a cost of about $800 million.

``We're looking to meet more demand from our customers in Europe and the U.S.,'' Mohammed said, without giving details. Mohammed wouldn't explain the change in the expansion program.

Bahrain and the United Arab Emirates, the only aluminum producers in the Persian Gulf, are expanding capacity to take advantage of the region's supply of natural gas. With Alcoa Inc. and other Western producers considering projects outside their home regions to lower costs, Saudi Arabia and Oman also plan to build smelters.

Alcoa, the world's biggest aluminum maker, has agreed in principal to buy as much as 26 percent of state-owned Aluminum Bahrain for about $600 million, Bruce Hall, chief executive of the Arab company, said in an interview in September. That would be the first purchase by a foreign company of a stake in a smelter in the Persian Gulf, which is home to four of the biggest holders of natural gas.

To contact the reporter on this story:
James Cordahi, in Dubai on, or at

To contact the editor of this story:
Mark Rohner at

Alcoa & Chalco Receive Joint Venture Approval 20-Apr-2004

Alcoa Inc and Aluminum Corporation of China Limited (Chalco) announced today that they have received approval from the China National Development and Reform Commission (NDRC) to proceed with formation of their proposed joint venture at the Pingguo Aluminum facility in the Guangxi Zhang Autonomous Region, in South China.

When Alcoa participated as the strategic investor in Chalco's global public offering and listing on the New York Stock Exchange and The Stock Exchange of Hong Kong in December 2001, the parties agreed to form a 50/50 joint venture at Chalco's facility at Pingguo. This facility is one of the most efficient alumina and aluminum production facilities in China. Pingguo's current alumina refining capacity is 850,000 metric tons per year (mtpy) and the capacity of the aluminum smelter is 135,000-mtpy. The proposed joint venture will be beneficial to both Alcoa and Chalco.

The parties have committed to growth at Pingguo over the next few years. Under the terms of the NDRC approval, these growth projects will be submitted for regulatory approval after formation of the joint venture.

Preparations to form the joint venture, including arrangements to support the existing and future requirements for electrical energy and completion of the joint venture agreements, have substantially progressed. Alcoa and Chalco expect to receive final regulatory approvals within China by the end of 2004. No U.S. regulatory approvals are required.

Alcoa willing to swap land for new dam license

Fort Worth Star Telegram (subscription), TX 20-Apr-20004

KNOXVILLE, Tenn. - U.S. Sen. Lamar Alexander has filed a bill that would approve Alcoa's plan to get a new license for its hydroelectric dams, while transfering land from the company to the Great Smoky Mountains National Park.

The Tennessee Nature Conservancy also would get a permanent easement for 6,000 acres of land and an option to buy it under the plan contained in the bill the Tennessee Republican filed on Monday.

Pittsburgh-based Alcoa, the world's largest aluminum producer, has a plant located in Blount County near the park that employs 2,000 workers.

Alcoa has applied for a new 40-year license from the Federal Electric Regulatory Commission to operate four dams it has owned since 1913 on the Little Tennessee River near the Smokies. The license expires next year.

Alcoa officials, conservationists and local residents started discussing the plan for a land swap in exchange for support of the license renewal seven years ago, Alexander said.

"This is a textbook example of how a major American company can work with communities and conservation organizations to help Americans keep a high standard of living as well as conserve the environment," Alexander said.

Under the plan, the Smokies would get 186 acres of "biologically sensitive" land that Alcoa currently owns and the Smokies would give Alcoa 100 acres of flooded land in the park.

After the swap, Alcoa will grant a permanent easement on 6,000 acres of land located in Blount County and Swain County in North Carolina to the Tennessee Nature Conservancy. The conservancy will have the option to buy the land, which it could sell to the park.

The bill would authorize the federal government to buy the 6,000 acres and add it to the park.

Alcoa also will grant a 40-year easement on 4,000 more acres along the Calderwood Reservoir to the Tennessee Nature Conservancy to be used for outdoor recreation.

Alcoa, the Smokies, Eastern Band of Cherokee Indians, the Nature Conservancy and the National Parks Conservation Association, among other groups, have given their support to the bill.

Alcan Inc. protests Australian moves on Aurukun bauxite reserve rights

CBC News, Canada 08:42 PM EDT Apr 20

MONTREAL (CP) - Alcan Inc. said Tuesday it feels "extreme disappointment and concern" over the Queensland government's plan to pass legislation that will strip the Montreal-based firm's rights to the Aurukun bauxite reserves in Australia.

"Alcan holds good legal title to the Aurukun lease and we believe in our right to retain it," Michael Hanley, president of Alcan's bauxite and alumina group, said in a release.

"The Aurukun lease is an important strategic asset for Alcan."

The company said the Queensland government's intends to bypass legal proceedings in which Alcan was preparing to file a defence.

Alcan acquired control over the Aurukun bauxite reserves with the December 2003 completion of its acquisition of French-based Pechiney SA, inheriting a complex legal case over rights to the reserves.

"The government seems focused on developing the Aurukun reserves and the construction of a new alumina refinery," said Richard Yank, president of Alcan's Pacific bauxite and alumina operations.

"This focus is consistent with Alcan's own agenda, which makes the government's legislative intent all the more curious."

Earlier this month, Alcan offered an immediate commitment of $15 million Aus to complete a study on the economic viability of a bauxite mine and alumina refinery on the Aurukun land, Yank said.

"We have received no response from the government to our offer and are very surprised, given its attractiveness for Queensland."

Alcan (TSX:AL) has been in Queensland since 1965. It was a founding partner in Queensland Alumina Ltd., the world's largest alumina refinery, and now holds a 41.4 per cent share.

Alcan's holdings in Australia also include its ownership of the Gove bauxite mine and alumina refinery in the Northern Territory; a 51 per cent stake in the New South Wales Tomago aluminum smelter; and two bauxite deposits in Queensland - Ely/Ducie-Wenlock and Aurukun.

It also has research-and-development and engineering headquarters in Queensland.

© The Canadian Press, 2004

Alcan to Decide in June on $2 Billion S. Africa Plant (Update1)

April 20 (Bloomberg) --

Alcan Inc., the world's second- largest producer of aluminum, will decide in June whether to build a $2 billion smelter in South Africa, which has pledged long-term supplies of energy for the plant.

Alcan, based in Montreal, is considering building the factory at the planned port of Coega in South Africa's Eastern Cape province, a project that France's Pechiney SA started before Alcan bought it in February. Coega, which is expected to start up next year, has yet to attract investors to its industrial park.

South Africa, through state-owned power company Eskom Holdings Ltd. and the Industrial Development Corp., has promised to support the project through power supplies and by taking a 25 percent stake in the 460,000-metric-ton-a-year smelter. South Africa needs to attract foreign investment to cut a 28.2 percent unemployment rate.

``It's quite a unique opportunity because of the potential long-term power contract and the commitment of the government to support it with infrastructure,'' Richard Evans, Alcan's executive vice president, said in an interview in Bahrain. The Persian Gulf monarchy is hosting a three-day aluminum conference that began on Monday.

Power Supplies

South Africa attracted $600 million in foreign direct investment last year, the World Bank said in a report. That's 19 percent less than it won in 2002 and about a third of the investment attracted by Angola.

The smelter would add to South Africa's aluminum production from two smelters run by BHP Billiton in the eastern port of Richards Bay, which import bauxite from Australia to take advantage of South Africa's power supplies. Electricity accounts for about a third of the cost of making aluminum.

The decline of the dollar against the rand has raised Alcan's cost of building the plant, Evans said, without giving details. The rand has gained 83 percent against the dollar since 2001, the biggest gain out of 61 currencies monitored by Bloomberg.

Alcan will next month complete a study on how it plans to merge its operations with those of Pechiney, Evans said.

To contact the reporter on this story:
James Cordahi in Bahrain on at

To contact the editor for this story:
Tim Coulter in London on at

Australian State Plan To Cancel Bauxite Lease Riles Indus

Yahoo News Tuesday April 20, 2:53 PM

Canberra, April 20 (Dow Jones) - A mining lobby in Australia's Queensland state has sharply criticized a state government plan to cancel a lease on a world-scale bauxite deposit held by globalized aluminum producer and packaging concern Alcan Inc. (AL).

Alcan and industry services and lobby Queensland Resources Council expressed strong disappointment and disapproval after the government introduced special legislation to parliament to cancel the Aurukun lease, pre- empting an action before the state's Supreme Court.

"Use by the government of its legislative power to override the process introduces a level of political risk to mining investment not usually associated with Queensland or Australia," the council said in a statement.

The council has consistently stressed a need for certainty if the resources sector is to continue to have confidence in investment in the state, it said.

Alcan said the government's decision has "far-reaching policy implications and could have serious ramifications for the mining industry in Australia."

Alcan said it acquired control of the Aurukun lease as a result of the completion of the acquisition of French aluminum producer Pechiney SA in December 2003, when it inherited a complex legal case with Queensland over its rights to the lease.

Richard Yank, Alcan's president of bauxite and alumina operations in the Pacific, said that earlier in April, the company offered an immediate commitment of A$15 million to fast-track a feasibility study for a mine based on the 500 million metric ton Aurukun deposit.

The government's plans to develop the Aurukun bauxite resources seem consistent with Alcan's agenda, he said.

Stephen Robertson, Queensland's mines and energy minister, said the legislation will repeal the Aurukun Associates Agreement Act 1975 and cancel a mining lease covering the bauxite deposit, thereby rendering futile Alcan's challenge in the state's Supreme Court.

"I want to stress that the government's action today is in no way indicative of sovereign risk, and the mining industry can be assured this is a special case related only to the Aurukun Associates Agreement Act 1975," he told parliament.

"We are taking this action so the state - on behalf of Queensland taxpayers - can optimize the utilization of the Aurukun resources and pursue the associated multibillion dollar investment opportunities," he said.

Global alumina prices have jumped sharply over the past year, reflecting production restrictions and increased demand.

In the next three to five years, Queensland has an opportunity to attract global interest in the Aurukun minerals, which includes kaolin and, in particular, the bauxite resources, he said.

"We believe Pechiney has had ample opportunity over the past 28 years to develop the Aurukun resource, and its inactivity has been a grave disappointment and concern to the government," he said.

Queensland announced in October 2003 it intended calling for international expressions of interest to develop the "globally significant" Aurukun bauxite deposit, he said.

"These deposits would be highly attractive to the world aluminum industry," he said.

Kaiser Aluminum Announces Rusal As Successful Bidder For Alpart Interests 21-Apr-2004

HOUSTON, Texas, April 21, 2004 - Kaiser Aluminum announced that RUSAL was the successful bidder for Kaiser’s interests in and related to Alpart, a partnership that owns bauxite mining operations and an alumina refinery in Jamaica, with an offer providing a base purchase price of $295 million prior to certain adjustments.

Kaiser made the determination in consultation with the Unsecured Creditors Committee and others at the conclusion of yesterday’s auction, which had been ordered by the U.S. Bankruptcy Court for the District of Delaware.

Kaiser’s agreement to sell its interests in Alpart is subject to the conditions cited below. Kaiser expects the Court to rule on the agreement on April 26. The company has targeted a closing date on the transaction near the end of the second quarter of 2004.

As previously disclosed, under Alpart’s existing partnership arrangement, Hydro Aluminium a.s., which currently owns the remaining 35% of Alpart, retains the right - for 30 days following Kaiser’s receipt of Court approval of any sale transaction - to elect to purchase Kaiser’s interests at the price specified in any agreement approved by the Court.

As discussed more fully in its Form 10-K for 2003, Kaiser is working with the lenders under its Post-Petition Credit Agreement to obtain an amendment to the Credit Agreement that, among other things, would permit the sale of the company’s interests in and related to Alpart.

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

Ormet Union Workers Hope to Negotiate New Contract

Wheeling News Register, WV 21-Apr-2004


Ormet Aluminum Corp. workers represented by the United Steel Workers of America may strike in the near future if union and company officials cannot negotiate a "fair contract," according to USWA Local 5724 President Loren Hartshorn.

Officials from USWA Local No. 5724, which represents the Hannibal Reduction Plant, and Local 5760, which represents the Hannibal Rolling Mill, met Monday with District 1 Director Dave McCall as well as International USWA officials Dan Winslow, Ron Bloom and Denny Longwell. The negotiating committees from both locals and both executive boards also were in attendance. Representing the retirees' interests were Kenny Cozart, president of Local 5724 Retiree's Club, and Kenny Crawford, president of Local 5760 Retiree's Club.
The purpose of the meeting was to inform the elected officials of both local unions on the status of Ormet's filing of Chapter 11 bankruptcy protection. They also discussed strategy on the pending contract negotiations.

Both unions will be entering the upcoming talks as a joint venture because solidarity is the foundation of all unions, USWA officials noted. Hartshorn said today he is unsure exactly when the negotiations will begin because McCall must first gather sufficient information concerning Ormet's restructuring plan.

Ormet Director of Corporate Communications Laurie Leonard said today the company is waiting for the unions to send in possible meeting dates.

"We want to sit down with the international and the unions and hammer out a negotiation face to face," she noted. "We have asked for dates to meet, and we are still waiting to receive those."

Hartshorn also pointed out that the three main objectives for the USWA are to preserve the benefits of retirees, to ensure that Ormet remains a long-term viable entity and to see that the standard of living for the active employees remains status quo.

"We want a fair contract that's good for both the company and our employees," Hartshorn added. "We're willing to sit down and negotiate and do what we can to get through the bankruptcy."

According to Hartshorn, Ormet chairman and chief executive officer R. Emmet Boyle has threatened both local unions with Section 1113 of the U.S. Bankruptcy Code, which means that Boyle will present concessionary proposals to reject both current labor agreements. If both local unions do not settle on a contract within the near future, Hartshorn added, Boyle will petition the bankruptcy courts to approve a new contract.

"The federal courts have the authority to put in place whatever (Boyle) petitions the courts for," Harthshorn said. "If he goes to the courts for (Section) 1113, we have no choice but to strike. We cannot sit around and let him petition the courts."

However, Leonard noted, "Section 1113 ... places a time frame around the labor negotiations to ensure that intensive efforts are made to settle contracts quickly. This is done because it's very vital for a company in Chapter 11 to have collective bargaining agreements in place in order to successfully complete their reorganization.

"It is a very detailed process that has several steps to make sure contract negotiations are attempted on every reasonable level," she added. "And, that is what Ormet wants to do. We want to sit down with the union and negotiate a fair contract."

USWA Local 5724 at Ormet's Reduction plant is currently working under a contract extension that is set to expire May 15, 2004, while the contract for the Rolling Mill, represented by Local 5760, expires Aug. 31, 2004.

Bidders snap up smelter commodities at auction

Longview Daily News, WA Apr 21, 2004 - 07:20:54 am PDT

By Pat Forgey
Work rigs from around the Northwest filled the parking lot of the Kelso Red Lion on Tuesday morning as hundreds of bidders hoped to scrounge up good deals from the tragedy that was Longview Aluminum.

Dovebid, Inc. auctioneers began disposing of the plant's equipment to raise money for the bankruptcy trustee to pay off its creditors.

About 350 bidders registered to attend in person and 100 more were ready to place bids over the Internet. On a big screen in the ballroom, pictures of the nearly 4,000 auction items were shown as bidders shouted out dollar amounts.

The audience members appeared to know what they were bidding on, with attire leaning towards hickory shirts and ball caps.

At one point Dovebid CEO Ross Dove instructed a well-dressed young assistant to lose his tie.

"When you have an audience with more guys in ball caps than without them, take off your tie," he told him.

Bidders appeared willing to pay top dollar for what they wanted. Audience members muttered "unbelievable," when a big pipe wrench went for $200, but for Longview Aluminum trustee Bill Brandt, that's good news.

"They're doing very, very well," he said.

Jerry Coleman of Salem came to buy electrical equipment for Transformer Technologies. He said there can be good deals at auctions. "Sometimes you get them, and sometimes you bid too much. I try not to do that too often," he said.

Brandt's hoping to see big bids to raise money to pay Longview Aluminum's creditors, and said that it now appears the estate will have enough money available to pay some tax and wage claims.

While the first day of the three-day auction appeared to go well, Brandt said it was difficult to predict how much it would bring. Some key items, including a ship-unloading system, will be sold with a "reserve." That means a prospective buyer would enter a bid, but Brandt could later sell it to someone else instead.

That's important to Brandt, who is trying to sell Longview Aluminum's ship-unloading equipment and storage silos to a company that wants to import minerals across the plant's wharf. If Brandt can make that deal happen within the 30-day reserve period, the as-yet-unnamed buyer would get the unloading system instead of the auction bidder.

Dovebid, Inc., the company handling the auction, is based in San Francisco, but has offices around the world. It recently handled part of the Enron Corp. estate, selling off the bankrupt company's crooked "E" sign from its corporate headquarters for $44,000, according to the Houston Chronicle.

Auctioneers, including Ross Dove, worked hard to cajole the best possible bids out of the buyers, while moving the auction along Tuesday.

Bidders in a packed Red Lion ballroom were occasionally outbid by "Don in Winlock" or "Clyde in Astoria" who were following the process over the Internet and bidding by phone.

Dove used that to his advantage.

"You don't want this stuff to go to California, guys," he told the local bidders. "You want to keep this stuff in Washington. Where's your patriotic pride?" he said.

Alcan May Decide on 26% Stake in $1.9 Billion Smelter in Oman

April 21 (Bloomberg)

Alcan Inc., the world's No. 2 aluminum producer, may decide to take a 26 percent stake in a $1.9 billion smelter project in Oman as early as May, as the Persian Gulf monarchy seeks to capitalize on its gas reserves.

Alcan, based in Montreal, may join the state-owned Oman Oil Co. and the Abu Dhabi Water & Electricity Authority of the United Arab Emirates in the 326,000-ton-a-year project, Oman's first planned aluminum plant, said Richard Black, Oman Oil's smelter project director.

``With a partner like Alcan it would be easier to finance the project with the banks,'' Black said in an interview in Bahrain, which is hosting a three-day aluminum conference that ends today. The smelter will cost as much as $1.5 billion to build and an associated power station the remainder, Black said.

Alcan and U.S.-based Alcoa, the world's No. 1 aluminum producer, are competing to find cheaper ways of producing the metal and are considering developing smelters in countries such as Bahrain, South Africa and Iceland where energy costs may be more competitive than in North America.

An Alcan investment in Oman would be the company's first in the Persian Gulf, which is home to four of the world's largest holders of natural gas after Russia. Energy accounts between 20 percent and 50 percent of the cost of producing aluminum.

Alcoa is negotiating with Aluminum Bahrain, one of two Persian Gulf monarchy producers, for a 26 percent stake in the Arab company.

Alba, as the company is known, is seeking more secure access to the semi-processed material, alumina, which is used to make aluminum. Alcoa has been supplying Alba with alumina since the Bahraini plant started operations 33 years ago. It would be Alcoa's first investment in the Gulf.

Alcan may decide on taking a stake of ``less than a third'' in the Omani project in June, Richard Evans, executive vice president for Alcan, said in an interview in Bahrain on Monday.

To contact the reporter on this story:
James Cordahi in Bahrain on at

To contact the editor for this story:
Tim Coulter in London on at

Chalco says Alcoa venture to include bauxite

Reuters, 04.21.04, 5:05 AM ET

HONG KONG, April 21 (Reuters) - Aluminum Corp of China Ltd (Chalco) <2600.HK> will include mining rights to its bauxite reserves as part of its recently approved landmark joint venture with U.S. giant Alcoa Inc (nyse: AA - news - people) in southwest China, a company official said on Wednesday.

The mine at Pingguo in the Guangxi autonomous region could support annual production of 850,000 tonnes of alumina, the key raw material for producing aluminium, for the next 30 years, a Chalco official in Beijing said.

Chalco and Alcoa said on Wednesday they had received approval from China's National Development and Reform Commission (NDRC) for their proposed 50:50 joint venture at Chalco's Pingguo refinery and smelter.

The Pingguo plant has capacity to produce 135,000 tonnes of aluminium and 850,000 tonnes of alumina, which is refined from bauxite.

Chalco said, under the terms of the NDRC's approval, projects to increase alumina and aluminium capacity at Pingguo would be submitted for government approval after the establishment of the joint venture.

Chalco said it and Alcoa expected to establish the joint venture by the end of 2004. The two companies agreed in December 2001 to set up the venture.

"We will keep looking for new bauxite reserves," the Chalco official said when asked whether the life of the existing bauxite mine would be reduced if the joint venture were to expand alumina capacity.

Chalco said the registered capital of the joint venture would be 3.64 billion yuan (US$440 million). Chalco would contribute 50 percent of the capital by way of evaluated assets at Pingguo and Alcoa would contribute the other half in cash, Chalco said.

Chalco's share price stood at HK$5.25 by 0756 GMT on Wednesday, down HK$0.25 from Tuesday's close.

($18.2769 yuan)

Copyright 2004, Reuters News Service

Corus, Aiming for Profit, Faces `Distraction' of Board Dispute

April 21 (Bloomberg)

Corus Group Plc's second-largest shareholder, Russian millionaire Alisher Usmanov, plans to seek a vote tomorrow on his board nominee, a campaign that management says is distracting Europe's third-biggest steelmaker as it seeks to end losses totaling 2.5 billion pounds ($4.5 billion).

Usmanov, who has boosted his stake five times this year to 13.4 percent, proposes Adrianus van der Velden, the former head of Corus's strip-steel unit, join the board when shareholders meet in London. Corus has urged investors to reject the ``unwelcome distraction.'' Usmanov's stake is valued at 241 million pounds.

``The market has accepted that it's not of clear benefit to other shareholders,'' said Andrew Kelly, assistant director at SVM Asset Management in Edinburgh, Scotland, which manages 850 million pounds in shares, including Corus. ``While this stake building has been going on, the share price hasn't particularly moved ahead.''

Corus shares have gained less than 1 percent since Jan. 22, when the 50-year-old Usmanov increased his stake for the first time this year. They have surged fourfold in the past year as new Chief Executive Philippe Varin began restructuring Corus.

Usmanov, who runs the investment arm of Russian natural-gas producer OAO Gazprom, will need support from holders of a majority of Corus shares to get Van der Velden onto the 11-member board. Chairman Jim Leng, 58, said last week he will canvass shareholders before the meeting, when they can register their vote with him.

Brandes Investment Partners LP, Corus's largest shareholder with a 15.2 percent stake, didn't return a phone call seeking comment. Usmanov has support from Oleg Deripaska, who controls OAO Russian Aluminium, the world's third-largest aluminum producer, and holds less than 3 percent of Corus.

Iron Ore

Usmanov has talked with Corus about supplying iron ore from companies he controls in Russia, Varin said last week in a conference call prompted by the board proposal. Usmanov, a Russian citizen who was born in Uzbekistan, owns majority stakes in Russia's Lebidinsky Iron Ore Mine, Nosta Steel and Oskolsky Special Steel, and 35 percent of Alinogorsky Iron Ore Mine.

``We believe board members should be working in the interests of all shareholders rather than individuals,'' Leng said during the conference call. Corus accused Usmanov on Monday of giving ``contradictory'' information about his intentions.

Gallagher Holdings Ltd., Usmanov's Cyprus-based investment vehicle, said on Friday that Van der Velden is independent of Usmanov. A month earlier, in a filing to the U.S. Securities and Exchange Commission, Gallagher said Usmanov favored ``cooperation'' between Corus and his steel-related businesses.

``There is no chance I will sell iron ore to Corus from my plants for the foreseeable future,'' Usmanov said this week. Iron ore sells for more in Russia now, he said.

Dutch Tensions

Van der Velden would help ease tension between the company's profitable Dutch unit and money-losing British plants, Gallagher said. Former Chief Executive Tony Pedder resigned in March 2003 after losing a court case aimed at overturning Dutch workers' opposition to Corus's plans to sell its aluminum business.

The Dutch Central Works Council has refused to meet Usmanov, saying he should talk to the board in London. It won't comment on the board plan, spokesman Frits van Wieringen said. Corus this month appointed Dutchman Rauke Henstra to head the strip products unit, its biggest division.

Corus was created by the combination of British Steel Plc and the Netherlands' Royal Hoogovens NV. It will employ 49,100 people at the end of this year, down from 66,000 in 1999.

Corus shares closed yesterday at 41.5 pence in London, giving the company a market value of 1.8 billion pounds. Arcelor SA, based in Luxembourg, and LNM Group, based in the Netherlands, are Europe's two largest steelmakers.

Stake Building

Usmanov started building his stake around the time of Pedder's resignation, when Corus shares fell to a record low of less than 4 pence and the company's bonds traded at less than half their face value.

Varin, who took over in May, strengthened Corus's finances by selling 307 million pounds of new stock last year to pay for restructuring in the U.K. and renewing the company's credit line. About one-third of Corus's top 50 managers have changed in the past year. The cost of insuring Corus debt has cheapened.

Its credit-default swaps, which pay out in the event of the company failing to make bond or loan payments, trade at about 505,000 euros, down from a high of 1.5 million euros in October and the past year's average of about 843,000 euros. That's the average cost to insure 10 million euros of debt for five years.

``We think there's further upside,'' said Peter Lowery, an assistant fund manager at Investec Asset Management Ltd. in London, who holds Corus shares in the 58 million-pound Investec U.K. Value Fund. ``It relies heavily on the benefits of the restructuring.''

To contact the reporter on this story:
Stuart Wallace in London, or

To contact the editor on this story:
Stephen Farr at

Alumina steels for growth

Brisbane Courier Mail, Australia 22apr04

By Andrew Trounson
WHEN it was spun off from WMC in late 2002, Alumina was tipped to be a yield stock and takeover target for aluminium giant Alcoa.

But the message to shareholders yesterday was that the company was focused on growth in the face of strong alumina demand, and there had been no discussions with Alcoa, which would now have to pay a premium price to buy Alumina given the market conditions.

Alumina is a key feedstock in aluminium production, with prices at an eight-year high.

Alumina's sole asset is its 40 per cent stake in its Alcoa World Alumina and Chemical joint venture with Alcoa, and chief executive John Marlay told the annual general meeting in Melbourne yesterday that the operations had the expansion potential to add 6 million tonnes to annual production in the next few years,

In addition to already announced expansions, Mr Marlay detailed further expansion opportunities on which decisions will be made in the next year or so.

These include growth in Australia, Brazil and Jamaica.

Mr Marlay said: "We have a high degree of confidence about the market outlook and that provides the conditions for positive decisions on these investments if they stack up."

One of the costs of funding the Pinjarra refinery expansion in Western Australia is that dividends from AWAC will fall in the short term, but chairman Don Morley said the company intends to maintain a dividend payout ratio similar to the 97 per cent paid last year. Mr Marlay said talks were continuing with Alcoa on AWAC's participation in Alcoa's joint venture with Chinese alumina/aluminium maker Chalco. Alcoa expects to have regulatory approval for the Chalco venture by the end of the year.

Under the AWAC alliance, bauxite and alumina investments by either party must be tipped into AWAC, but Chalco also comprises aluminium production.

Natural gas most valuable resource for smelters - Bahrain

Bahrain Tribune - 21/04/2004

The most obvious way smelters contribute to the economy in the Gulf is by adding value to one of the region's most valuable resources - natural gas - the chief executive officer of Dubai Aluminium Company Ltd. (Dubal) said yesterday, writes Mandeep Singh.
J. Boardman, speaking on "Vision to Reality," at Arabal 2004, the 11th International Arab Aluminium Conference, said this point is well known but they need to look at some other key factors in this part of the world.
"We're all here because we're stakeholders in the future of the Arab aluminium industry," he said, "and by the time we're through, we hope that we'll all have an even greater appreciation for the vital role our industry has played and should continue to play in this region." The CEO said when businesses such as smelters are successful they support economic growth and diversification by creating demand for accompanying products and services.
"In the case of Dubal and Aluminium Bahrain, local entrepreneurs have responded enthusiastically to such opportunity, and many supply side businesses have emerged as a consequence." Boardman said, for example, there are fabricators, engineering companies and maintenance facilities.
"Some of these which have supported us are now manufacturing for smelters elsewhere as a result of the experience gained." He said it was maintained that Dubal's - and likewise our host Alba's - success is remarkable, given the overall economic environment in which it's occurred.
"But I believe vision, a good plan, commitment, focus and skilled people can achieve almost anything." Boardman said their smelters are highly profitable with annual revenues approaching millions of dollars. "Dubal, in fact, is one of the lowest cost smelters in the world." He said profitability and viability are essential for any business to survive. So is the continuous struggle for greater efficiency, better quality, productivity and lower operating costs. "Improving technology, environmental performance and process optimisation have been, and will continue to be, areas of challenge for Dubal and all other smelters generally."
Speaking about the future of his company, Boardman said the smelter will sell 730,000 metric tonnes of value-added products to over 225 customers in more than 40 countries. Besides the smelter, the plant includes a 1,450-megawatt power station, a large carbon plant, two casthouses, a 30-million-gallon-per-day desalination plant, fully equipped laboratories, port and storage facilities, maintenance areas and administration buildings."
He said smelters such as Dubal and Alba provide a nucleus around which to develop other manufacturing and support industries and services, upstream into such activities as petcoke and downstream, into aluminium-processing industries, extrusions and the like. "No matter where they're located, smelters also create good jobs for the local community. Dubal and Alba are no exception.
"As we've seen, this industry stimulates economic growth and diversification. It enhances the image of the region on the world stage. It creates opportunities for GCC nationals." "This is added value that one doesn't see in the financial statements, added valued that means much more to regional developing economies than it would to developed markets in which we compete."
He said now is the time to take that contribution one step further to fully realise the vision of those who first established this industry in the Gulf.

Kurri's $19m Hydro boost

Maitland Mercury, Australia Wednesday, 21 April 2004

By Alan Hardie
A massive $19 million will be spent directly in Maitland and the region when the Hydro upgrade at Kurri takes effect.

Some money is already being channelled into the region with some engineering firms reaping benefits.

The sums earned by Maitland firms – and those in Kurri too – should reach their peaks in November, Kurri's Hydro Aluminium chief executive officer Trevor Coombe revealed yesterday.

News of the development was unveiled by Hydro – with a total of $38 million to be spent on upgrading its Kurri plant.

The new plans will also see its aluminium output increased dramatically by 6800 tonnes.

And the emission of gases from the plant will also be decreased substantially – by fully exploiting present technology.

The new work involves upgrading the plant's Potline 1, using existing technology and experience already acquired by Hydro, the company says.

"Due to investments and technology, emissions of dust, fluorides and greenhouse gas will be reduced by 50 to 95 per cent," Mr Coombe said.

"Of the $38 million earmarked for this upgrading, about half of it - $19 million - will be spent in Maitland, Kurri and the rest of the Hunter region," Mr Coombe said.

"There will be an immediate affect on the surrounding area and we envisage much of the engineering work needed will be carried out by companies in Maitland and Kurri.

"All the equipment we need will be procured locally - and this is starting now," Mr Coombe said.

"The work should hit its peak in the next 12 months - probably around November, when the areas should see the full benefit."

Mr Coombe said many local construction firms should also benefit, though he did not see them taking on new workers.

"We have been able to use technology such as point feeders and pot control systems - the technology is up there with the best," he said.

"This will improve our environmental operations.

"We also plan substantial improvement of safety performance by eliminating a number of higher risk tasks."

Maitland mayor Peter Blackmore hailed the upgrading plans as a sign of the company's confidence in the Lower Hunter.

"The company would not spend that amount of money if it did not have confidence in the Lower Hunter," Cr Blackmore said. "It's upgrading of technology is very important and the company employs a lot of people who live in Maitland.

"Hydro Aluminium has also been involved in sponsorship for a lot of organisations in the Lower Hunter.

"It is in the neighbourhood and is a very active community member."

NASA's Patented High-Strength Aluminum Alloy Makes Outboard Motors Quiter and Cleaner 222-Apr-2004

A NASA invention that can make outboard engines quieter, cleaner, gives better fuel mileage and increased durability has been adapted for commercial use by a major international corporation.

The Boats and Outboard Engines Division at Bombardier Recreational Products (BRP) of Sturtevant, Wis. - has begun using NASA's patented High-Strength Aluminum Alloy for pistons in its new Evinrude* E-TEC* outboard engine line.

The alloy, developed at NASA's Marshall Space Flight Center in Huntsville, Ala., is used in a new piston design that reduces the so-called "slapping" sound when pistons slide up and down in the engine's cylinder. The alloy can greatly improve piston durability because it is two and half times stronger than conventional cast aluminum pistons at high temperature and can be produced with a material cost of less than $1 per pound. It exhibits dramatic strength at temperatures as high as 500 to 700 degrees Fahrenheit.

Engineers working on BRP's Evinrude E-TEC engine also saw environmental advantages from the alloy; it would help the new engines comply with California Air Resources Board emissions standards-some of the most stringent in the United States.

It was simply a matter of searching the information highway. BRP met with NASA in April 2002, after seeing an ad on the Internet for a high-strength aluminum alloy. The prototypes were complete by July, and the final product was ready in February 2003. "We worked very closely with NASA to refine the details," said Bob Young, vice president of product development for BRP. "The demands of the outboard engine are more significant than any other engine NASA had encountered, even those in the auto industry. The team from NASA was on the fast-track, learned all the intricacies and delivered an outstanding product."

Development of the NASA High-Strength Aluminum Alloy began seven years ago when a major automobile manufacturer approached NASA seeking a solution to reduce the costs of aluminum engine pistons, as well as to lower engine emissions. NASA was also interested in developing an alloy with higher strength and wear-resistance at elevated temperatures, for aerospace applications. So, in this case "necessity as the mother of invention" was a motivator from two directions and the Partnership for Next Generation Vehicles was born.

Jonathan Lee, a structural materials engineer in the Marshall Center's Materials, Processes and Manufacturing Department, and co-inventor PoShou Chen, a scientist with Morgan Research Corp., in Huntsville, tackled the project. The result was discovery of what would become the basis for a new aluminum alloy, MSFC-398 or NASA High-Strength Aluminum Alloy. The NASA Technology Transfer Partnership introduced it during the 2001 National Manufacturing Week show in Chicago.

Evinrude's outboard engine piston is the result of more than a year of intensive work between the company's piston casting vendor and NASA's inventors to learn about and refine the process of casting the new alloy.

"Having a proper mixture of the alloy's composition with the correct heat treatment process are two crucial steps to create this alloy for high temperature applications," said Lee. "The team at Bombardier Recreational Products worked hard with the casting vendor and NASA inventors to perfect the casting of pistons, learn and repeat the process, and bring its product to market. Chen and I are honored to see something we invented being used in a commercial product in a very rapid pace. We still have to pinch ourselves occasionally to realize that BRP's commercialization effort for this alloy has become a reality. It's happened so quickly."

"The usual cycle for developing this type of technology, from the research stage to the development phase, and finally into a commercial product phase may take several years and more than a $1 million investment," Lee said. In this case, it has occurred in less than four years at a fraction of the cost.

The Evinrude E-TEC outboard engine line uses pistons made with the NASA High-Strength Alloy in its mid-power range of recreational boating in its current 40-90 horsepower engine offering.

BRP projects it will manufacture several hundred thousand pistons for outboard motors using the NASA High-Strength Aluminum Alloy over the next several years.

"The weak link in any two-cycle engine has always been the piston, due to the high operating temperatures. The strength of this piston is stronger than anything we ever used or ever seen," said Young. "It's now at least double the strength of the previous alloys and within our rigorous testing schedule, we have yet to see an alloy-related piston failure."

The license agreement between BRP and NASA was signed in July 2003. The Research Triangle Institute in Raleigh, N.C., a contractor to NASA, working with Marshall's Technology Transfer Department, played a key role in bringing the parties together. The Institute offers research and development in areas ranging from health and environmental protection, education and training, economic and social development and advanced technology.

"This is another outstanding example of NASA's Innovative Technology Transfer Partnerships program at work with a variety of industries to move the benefits of aerospace technology to the public and private sector while supporting NASA's goal of improving life on Earth," said Sammy Nabors, commercial technology lead in the Marshall Center's Technology Transfer Department. Nabors predicts many other uses for the alloy in the future, as well, as additional commercial licensing agreements.

For more information on Aluminum Alloys

For more information on the Marshall Center's Technology Transfer program,

Kaiser to sell Jamaican refinery

Spokesman-Review 22-Apr-2004

Influx of cash won’t help retirees, Steelworkers

John Stucke, Staff writer

Kaiser Aluminum Corp. will sell its 65 percent stake in a Jamaican alumina refinery and an adjacent bauxite mining operation to Russian Aluminum (RUSAL) for $295 million.

Yet the money will not fortify the company or ease the financial problems facing Kaiser retirees and Steelworkers.

Instead, the money from the Jamaican property, called Alpart, was pledged to bondholders and banks holding hundreds of millions of dollars of Kaiser's debt.

The huge claims Steelworkers hold ag
ainst Kaiser would have to be satisfied by Kaiser's sale of American assets, which are worth a fraction of its overseas properties.

For example, the Mead smelter is selling for about $7 million to a St. Louis company.

An alumina refinery in Gramercy, La., which Kaiser had carried on its financial books as a $375 million asset, will likely attract a $20 million bid, spokesman Scott Lamb has said.

Kaiser plans to emerge from bankruptcy within a year.

If successful, the company will be dramatically downsized into a business that makes and sells fabricated aluminum products such as the sheet metal made at the Trentwood rolling mill.

Kaiser does not plan to own or operate plants that expose the company to fluctuations in commodity prices such as those for alumina and aluminum.

A federal bankruptcy judge will rule on Kaiser's sale of Alpart next week.

The remaining 35 percent stake in Alpart is owned by Hydro Aluminum, based in Norway.

Chalco 1Q Alumina Output +16.5% On Yr;Avg Sale Price +46%

Yahoo News 22-Apr-2004

HONG KONG (Dow Jones)--Aluminum Corp. of China Ltd. (ACH) said Thursday its alumina production volume rose 16.5% on year in the first quarter, while its alumina average selling price jumped 46%.

In the three months ended March 31, the company, widely known as Chalco, produced 1.62 million metric tons of alumina. The average selling price was 3,584 yuan (US$1CNY8.28) per ton during the period.

Chalco, China's only producer of alumina, sold 1.166 million tons of the material to clients not related to the company during the quarter, an increase of 12% on year.

Meanwhile, the company produced 180,000 tons of aluminum during the period, 0.9% less compared with the first quarter of 2003.

The average selling price for primary aluminum was 17% higher at CNY16,422 per ton, while primary aluminum sales, in the form of ingots, fell 9% to 159,400 tons.

The drop in sales volume was attributed to tight transportation conditions, the company said.

Late March, Chalco said it expected alumina production to rise 7.4% to 6.5 million tons in 2004, and its average selling price to increase 45%.

The company raised its domestic alumina spot price to CNY4,300 per ton from CNY3,700 in early March, its first price hike this year.

Alcan to do well in 2004, says CEO; refuses to commit to Kitimat expansion
Canadian Press National Post (subscription), Canada Thursday, April 22, 2004
MONTREAL (CP) - Aluminum giant Alcan Inc. expects to do well in 2004 thanks to better metal prices, higher demand from China and fewer smelter expansions, chief executive Travis Engen told the annual meeting Thursday.

Engen said that for the first time in three years, there should be a reduction in total worldwide inventories, which normally pushes up prices for the light metal. Aluminum prices have been trading at seven or eight-year highs, although have slipped recently amid fears of higher interest rates.

Engen said the company is renewing its year-over-year growth target of at least 15 per cent in operating earnings per share, as well as a minimum of $400 million US in free cash flow.

With the acquisition of Pechiney SA of France completed at the end of 2003, Engen said the company is now in a position to start making other decisions such as smelter expansions and to take advantage of improving markets.

However, Engen was unable to reassure two representatives from the shrinking community of Kitimat, B.C., who asked when Alcan would keep its commitment to expand its smelter there.

Alcan signed a water rights renewal agreement in 1997, with a commitment to expand its existing smelter. But Kitimat Coun. Gerd Gottschling told the meeting Alcan appears to be more interested in selling its excess power from its hydroelectric operations there than in producing aluminum.

However, Gottschling admitted Alcan can get a better return on its hydro investment by selling the power at a time of growing energy demands.

But he said the Montreal-based company is "breaking the contract it has with the people of B.C." to create jobs and refine aluminum with the public water resource.

The Kitimat smelter has an operating capacity of 275,000 tonnes a year. Gottschling said Alcan promised in 1997 as part of a renewed water agreement to expand this to 550,000 to 600,000 tonnes.

Engen said Alcan is committed to smelting aluminum at Kitimat, but the expansion is conditional on aluminum markets, and the company has to take into account its worldwide refining needs.

"We're a global industry; we have to remain competitive."

Alcan became the world's largest primary aluminum producer with the Pechiney acquisition for $6.3 billion, completed last December.

Engen said the integration of Pechiney is going well, with 500 people working full time on the process. While Alcan has said it expects to achieve annual synergies of $250 million US within two years, Engen said there will be an update on this next month.

Alcan has 88,000 employees and some 300 operating facilities in more than 60 countries.

Executives also faced questions from two shareholders representing activists opposed to a proposed bauxite mine and smelter in a remote area of India, in which Alcan would have a 45-per-cent interest.

On Tuesday the government of Queensland, Australia, announced it will introduce legislation to strip Alcan's rights to the large Aurukun bauxite reserves, claiming the company had not respected a timetable to begin exploiting the mineral.

Although the legislation would circumvent the courts, Engen said the case is not over and could be appealed to a federal court that could override the state legislation.

Alcan common shares on the Toronto stock market (TSX:AL) gained $1.34 to $58.94.

Siberian Urals Aluminum Co. (or Sual) is willing to take over Metallurg.

Analytical Information Agency, Russia - Apr 20, 2004

Sual holders will consider the issue at May 31 EGM.

Book close day was Apr. 14, 2004.
Sual holders voted against Metallurg's take-over may sell their stocks at 17.71 rbl each.

Metallurg holders will also convene their EGM to seal the merger.
Metallurg has 1,072,924 rbl in stock capital. Sual-Holding controls over 80%.

On Nov. 27, 2003, Russian Aluminum (RusAl) acquired 14% stocks of Metallurg at the RFFI action for 237 mln rbl.

Coega smelter at risk as Alcan eyes Oman

Sunday Times, South Africa Thursday April 22, 2004 11:27 - (SA)

By Sicelo Fayo

South Africa's bid for a multi-billion rand investment by Canadian group Alcan in the modern aluminium smelter at Coega could be undermined by a similar bid from the Persian Gulf.

Alcan – the world's No 2 aluminum producer – was considering taking a 26% equity stake in a $1.9-billion (R12.4- billion) smelter project in Oman as early as next month, as the Persian Gulf monarchy was seeking to capitalise on its gas reserves.

The report also said Alcan, along with other aluminum producers, was talking to Saudi Arabia about helping develop that country's first aluminum project at a cost of more than $5-billion.

The reports yesterday came a day ahead of Alcan shareholders' annual meeting today at the Centre Mont-Royal in Montreal, chaired by Travis Engen, president and ceo of the group.

Alcan's apparent investment interest in an aluminium smelter in Oman, also re-emerged yesterday only 24 hours after the Canadian multi-national investor said it would only decide in June on its possible investment in a similar smelter at Coega.

Media eports indicated that Alcan, which took over French aluminium group, Pechiney – the initial proponents of the Coega Project investment – late last year, was carefully weighing its investment options between South Africa and Oman.

The Canadian company could not be reached for comment yesterday.

Nevertheless, on Tuesday, the Canadian company's vice-president, Richard Evans, was said to have made "encouraging remarks" about the Coega project while at a conference in Bahrain.

He was reported to have described the planned Coega project aluminium smelter as "quite a unique opportunity because of the potential long-term power contract and the commitment of the government to support it with infrastructure".

Trade and Industry Minister Alec Erwin met the Alcan group only last month to convince them to proceed with building the smelter. The South African government has, through its parastatals, committed to spend about R8-billion on infrastructure for the Coega project.

This includes R3,2-billion on the port on Ngqura, R2-billion on the Coega IDZ infrastructure and R2.2-billion on a power upgrade by Eskom.

Following his meeting with Alcan, Erwin said he remained confident about the merits of the company's plan to build the world’s most sophisticated smelter.

He said he fully understood the need for Alcan to review the potential Coega investment after acquiring Pechiney last year.

"If they say yes there will be no major delay," he said.

However, it emerged yesterday that oil and gas-rich Oman, in the Persian Gulf, was also bidding strongly for Alcan's investment in an aluminium smelter.

Oman's economy is undergoing a similar transformation process to South Africa's, with state institutions being privatised and its markets liberalised following its joining of the World Trade Organisation four years ago.

In order to reduce unemployment, the Oman government was reported to be trying to replace expatriate workers with local workers and expanding investment and trade opportunities through the development of its gas resources.

Meanwhile, Alcan yesterday threatened to pull the plug on some of its investments in Australia after the Queensland government announced plans to pass a law that would strip the company of a bauxite reserve in the north of the state.

Alcan recently acquired control over the Aurukun bauxite reserves in Queensland as a result of its takeover of Pechiney in December.

China credit curbs hammer aluminium prices

Reuters, 04.22.04, 3:45 AM ET

Polly Yam

HONG KONG, April 22 (Reuters) - China's domestic aluminium prices have tumbled this week as smelters rush to sell metal in the wake of Beijing's latest measures to cool down sizzling economic growth, traders said on Thursday.

They said smelters were selling aluminium on the Shanghai Futures Exchange as some banks prepared to chop or cancel trade financing, which had previously allowed the producers to hold metal in anticipation of higher prices.

"We rushed to sell a few thousand tonnes in Shanghai on Monday," an official for one aluminium smelter said, adding the trade finance cuts would trigger smelters to speed up sales in a bid to get cash, even if they could only sell at a low price.

China has raised bank reserve requirements three times in the past seven months, making less money available for lending, as it looks to slow economic growth to a more manageable seven percent this year from 9.1 percent in 2003.

Smelter sources said they had received verbal notices from some Chinese banks that their existing credit lines could be cut or reduced at any time and any extra credits on these lines would be cancelled before April 25.

Demand for aluminium was also dampened by reduced bank lending to the property sector, a big consumer of aluminium products, traders said.


Futures dealers in Shanghai said some players had liquidated their positions on copper and aluminium contracts in Shanghai, due to the reduced credits from banks.

Although many smelters had sold aluminium in Shanghai over the past few weeks, the price of the exchange's contracts had been strong until this week because a few Chinese funds were holding large long positions on the expectation of higher prices supported by increasing production costs, dealers said.

Smelters had delivered a large amount of metal to warehouses in Shanghai and Nanhai, a major fabricating centre in the southern province of Guangdong, traders said.

They estimated about 250,000 tonnes of aluminium were sitting in warehouses in the two cities, including 119,118 tonnes reported in the Shanghai Futures Exchange's registered warehouses as of April 15.

Smelter sources said many producers had also built stocks at home as a result of a shortage of transportation. "I would say all stocks together totalled about 400,000 tonnes," one said.

In the domestic market, aluminium for prompt delivery was trading at 17,300 to 17,550 yuan a tonne on Thursday, versus above 18,000 yuan on Monday, traders said.

They said buying demand had weakened as buyers expected prices to fall further.

Fabricator sources said power supply in Nanhai had increased from earlier in the year but that many plants that sold to the domestic market were operating below capacity.

Most Shanghai aluminium contracts fell to their daily limit-downs in early trade on Thursday, having also fallen their maximum three-percent level on Wednesday. The most active contract, October, fell 600 yuan to 18,040 yuan in the morning session on Thursday.

Benchmark three-month London Metal Exchange aluminium extended its falls to stand at $1,705/1,715 a tonne by 0650 GMT on Thursday. It fell $117 to $1,720 in London on Wednesday. (US$18.2769 yuan)

Copyright 2004, Reuters News Service

Century is considering acquiring Kaiser's Gramercy alumina facility.

Reuters, 04.23.04, 3:10 PM ET

TEXT-S&P revises Century Aluminum outlook

(The following statement was released by the rating agency)

NEW YORK, April 23 - Standard & Poor's Ratings Services said today it revised its outlook on Century Aluminum Co. to stable from negative, and affirmed its 'BB-' corporate credit, senior secured bank loan and senior secured notes ratings. Total debt at Monterey, Calif.-based Century was about $345 million at Dec. 31, 2003.

"The outlook revision reflects an expected improvement in Century's financial performance as a result of higher aluminum prices and better industry fundamentals," said Standard & Poor's credit analyst Paul Vastola.

The ratings on Century reflect its exposure to the cyclical aluminum industry, its high cost position as a primary aluminum producer, limited product diversity, and its somewhat aggressive financial profile. These factors offset currently favorable conditions in the aluminum industry, a relatively low free cash flow break-even aluminum price and its fair liquidity position.

With about 525,000 metric tons per year of primary aluminum capacity, Century is a distant third in the production of primary aluminum in North America, after market leaders Alcoa Inc. and Alcan Inc. The aluminum industry is highly cyclical and subject to volatile commodity prices. The price of aluminum has improved to about 78 cents a pound currently, from a low of 58 cents per pound in early 2003. The price increase is due to strong Chinese demand, a weak U.S. dollar, and reduced supply levels due to the limited supply of alumina--the key raw material for producing aluminum. The price of aluminum may weaken from current levels as demand from China may wane somewhat, but is expected to remain above 72 cents per pound through 2004 as supply levels will likely remain tight.

Unlike its integrated rivals, Century currently does not own any alumina operations. To reduce its exposure to volatile market conditions, Century sources all its alumina through favorable long-term supply contracts based on a percentage of the London Metal Exchange (LME) aluminum price, which provides margin protection for approximately 25% of the company's production. In addition, more than 50% of Century's total production benefits from molten aluminum off-take agreements with neighboring customers that provide freight and casting savings. The company's two alumina suppliers, Glencore International AG and Kaiser Aluminum & Chemical Corp., each supply about half of Century's requirements.

Standard & Poor's is concerned about the viability of supply from Kaiser, as it has been operating under bankruptcy protection since February 2002. Despite bankruptcy court approval and Kaiser ability to honor the supply agreement to date (the agreement expires in 2008), it is possible that Kaiser may not emerge from bankruptcy or find a successor for its operations. This heightens the risk of supply disruptions and increased costs for Century. However, Century is considering acquiring Kaiser's Gramercy alumina facility.

Alcan sees bright year ahead

Montreal Gazette, Canada 23-Apr-2004

At annual meeting, critics challenge firm's boast of good corporate citizenship

The Gazette; CP contributed to this report

Confident, and citing industry accolades for its performance during "a very turbulent" but profitable 2003, Alcan Inc. is forecasting similar riches in 2004.

"We aim to double the value of the company every five years," Alcan president and CEO Travis Engen told the annual meeting of the Montreal-based giant yesterday.

Alcan posted a profit of $167 million U.S. for 2003.

The meeting's theme - Actions Speak Louder Than Words - was picked up by critics who challenged Alcan's boast of good corporate citizenship during a lively question period that included mention of "betrayed" employees, allegations of broken promises and villagers killed in India during protests against a proposed mining venture.

During his speech and in his responses to critics, Engen focused on maximizing value while continuing Alcan's "stellar performance" in sustainability and corporate governance.

He renewed Alcan's year-over-year growth target of at least 15 per cent in operating earnings per share as well as a minimum of $400 million in free cash flow.

The world's second-largest aluminum producer, which acquired France's Pechiney SA in 2003, is to post first-quarter results on May 6.

Strong demand around the world for aluminum, particularly from China, will help, Engen said.

For the first time in three years, there will be a reduction in total worldwide inventories, said Engen, who pegged worldwide supply of the light metal at about two per cent below anticipated demand.

Adding to the glow, Alcan might beat anticipated cost savings of $250 million in connection with its purchase of Pechiney, Engen said.

About 15 members of the Alcan't in India project, some pounding drums, and five Alcan employees from Quebec's Jonquiere region, where 550 jobs have been lost with the closing of the Arvida smelter, protested outside the downtown conference centre on Mansfield St.

Members of each group popped up during question period, which also featured a Pechiney union representative who asked that jobs in France be maintained.

In his response, Engen noted that the Arvida smelter, about 60 years old, uses outdated Soderberg technology.

"We do not anticipate laying off people" at the Jonquiere complex, Engen said. Rather, there will be "changes of employment" and retirements over the coming months, he said.

Engen was also quizzed by two B.C. officials about the Kitimat smelter and a water licence acquired with the promise of local jobs through an expanded smelter.

Kitimat city councillor Gerd Gottschling told shareholders that Alcan has cut back aluminum production there "so it can illegally sell power and put people out of work."

Although Alcan can get a better return on its hydro investment by selling power, a 1997 agreement required Alcan to expand the smelter, said Gottschling, adding that the dispute is now before the B.C. courts.

Alcan's position is that it does pay for the water resource, has an obligation to supply some power to the provincial utility and has - as Engen stressed to reporters - a corporate strategy to "maximize value."

But he also noted that the Kitimat smelter is well positioned to serve the needs of Asia.

Shareholders were told by two speakers that a proposed bauxite mine and alumina refinery in the Kashipur region of India has translated into the "severe repression" of area residents said to oppose the mine. Three villagers were killed when police fired on a crowd during an anti-mine meeting.

Alcan chairperson Yves Fortier described the joint venture as "still in the project stage."

Given that the life of any mining operation there would range from 20 to 50 years, Alcan knows that its huge investment could only succeed with the support of the local community, Engen said.

© The Gazette (Montreal) 2004

Budimex to pump $20 mln into Kyrgyzstan smelter project

Interfax, Kyrgyzstan 23-Apr-2004

Bishkek. (Interfax) - Poland's Budimex is prepared to pump $20 million into the construction of Kyrgyzstan's first aluminum smelter as early as the second half of this year, Anvar Tursunov, head of the State Architecture and Construction Commission, told Interfax.

Tursunov said Budimex intended to sign a contract on the smelter, to be built in the Jalalabad region on the border with Tajikistan, which had already agreed to supply raw material for the smelter.

He did not say what the smelter's capacity would be or when it would be built.

Plant ready to roll

Manitowoc Herald Times Reporter, WI 23-Apr-2004

Gas back on, production to resume
By Charlie Mathews
Herald Times Reporter

MANITOWOC — Koenig & Vits hot mill operator Roger Kubichka is ready to get back to making coil aluminum.

“My lawn has never looked better. The cars are washed and waxed. The bird feeders are full for the cardinals and morning doves. But I’d rather be at work,” Kubichka said.

He’s been off since April 12, when Wisconsin Public Service cut off gas to the Mirro Drive plant, making it impossible to operate the furnaces and get scalloped ingots ready to get pressed into thin aluminum coil for shipment.

“Operationally, it’s full speed ahead,” said Koenig & Vits founder and majority shareholder Tim Martinez Thursday afternoon, after WPS restored gas service.

“We’ve got about 1.5 million pounds that we want to get out to our customers ASAP,” Martinez said.

He said lost time would be made up by employees working longer and more shifts.

The utility had filed suit against Koenig & Vits last week, claiming $430,024 owed.

Filed suit

Manitowoc Public Utilities had delivered delinquent notices to Koenig & Vits for payment of electric bills, but has not shut off service.

Today is payday and shipping clerk Mike Wergin expects a paycheck.

Wergin said he has been one of only seven hourly workers at the plant, besides salaried staff.

“My understanding (from Koenig & Vits management) is Orion has approved releasing money out of the escrow account to cover Friday’s payroll,” he said.

Plymouth-based Orion Energy Systems has indicated its intent to invest some $20 million to purchase Martinez’s majority interest, as well as provide equity infusion, buy Newell Rubbermaid’s preferred stock, cover operating losses to date, and secure loans for working capital.

An exclusive purchase agreement expires the end of the month. Martinez would not comment on the continuing negotiations.

David Less, planner for the city of Manitowoc, said a conference call was scheduled for today with municipal officials, Orion executives and state Department of Commerce staff.

Commerce has review rights on the proposed majority shares buyout because of its $1 million block grant, administered through the city, that helped Koenig & Vits purchase the plant from Newell-Rubbermaid last December for $4.5 million.

“We have a closing plan for April 29. It’s imminent unless there is something I don’t know about. There’s a lot of moving parts to this deal,” Neal Verfuerth, Orion’s president, said Thursday.

Charlie Mathews: 686-2969; or

Smelter strike averted

Portland Observer, Australia 21 April2004


A MASS strike of production workers at Portland Aluminium was averted yesterday morning when Australian Workers Union members and management agreed on key aspects of a new enterprise bargain agreement.

Union national secretary Bill Shorten said members had indicated they were willing to take protected industrial action if no agreement was reached.

Key aspects of the agreement which lasts until January 2006 include:

A four per cent wage increase this year;

A 0.5 per cent increase in superannuation contributions;

A 4.5 per cent wage increase from February 2005;

An additional week of unpaid leave.
It is believed negotiations between the two parties had become heated in recent weeks with Portland Aluminium's parent company threatening to close the plant.

Mr Shorten described the agreement reached between members and management as being competitive within the aluminium industry.

Negotiations between the parties have been ongoing for several months.

Members had been seeking extra annual leave a claim the company had rejected from day one of negotiations before both parties reached the compromise of an extra week's leave to be unpaid.

Portland Aluminium operations manager Matthew Pistner said negotiations with the union had resulted in an agreement that both parties have worked on for the long-term viability of the operation.

"The global aluminium industry is a particularly tough business and Portland Aluminum needs to have agreements in place that best manage costs while continuing to drive improvements," he said.

"I believe that we have taken the shared opportunity with the AWU to work on an outcome for the long-term sustainability of this business."

He said Portland Aluminium operated in a highly-competitive global market that constantly placed pressure on costs.

"Our decisions must result in lower costs while maintaining or improving the high level commitment we have towards the health and safety of our employees, our impact on the environment and the well-being of the community in which we operate," he said.

Dubal says further expansion possible

Khaleej Times, United Arab Emirates (REUTERS) 23 April 2004

BRESCIA (Italy) - The UAE aluminium producer Dubai Aluminium (Dubal) may expand smelter capacity beyond an announced 761,000 tonnes if necessary, a company official said at an industry event.

"Dubal is always open to opportunities. From the start we have been increasing from one expansion to another," the official said at the METEF aluminium exhibition in Brescia in Italy yesterday.

Earlier this week Dubal announced it would expand capacity at the Jebel Ali smelter to 761,000 tonnes from 686,000.

Officials said Dubal had consistently added capacity since the smelter opened in 1979.

Primary aluminium production is energy-intensive, and Dubal is located near plentiful power supplies and also incorporates a water desalination plant.

The latest upgrade means that all seven potlines will be operating at full capacity - the seventh was added in September 2003.

"We are working on the logistics of the expansion. This will consolidate our position as one of the biggest producers in the world and one with the lowest costs," the official said.

"Dubal has over 220 customers in some 40 countries, and produces high-quality aluminium ingots and extrusion billets. Average metal quality is 99.91 per cent purity, above the London Metal Exchange (LME) minimum specification of 99.70 per cent.

"We produce value-added products - not standard - which fetch a premium in the market," the official said

Swiss co. starts building aluminum smelter in Kazakhstan

Interfax, Kazakhstan 26-Apr-2004

Almaty. (Interfax) - Switzerland's Corica AG has started to lay the foundations and communications for an aluminum smelter in Kazakhstan's Pavlodar region, spending $3.4 million on the project to date.

Corica, which owns 31.76% of bauxite and alumina producer Aluminum of Kazakhstan, plans to start work on the smelter proper and related infrastructure in May, Eurasian Industrial Association (EIA), which includes Aluminum of Kazakhstan, said in a press release.

The 240,000 tpy smelter, which will be built in three stages, will cost $851.2 million overall.

Corica is building the smelter in fulfillment of a pledge it made when buying its stake in Aluminum of Kazakhstan from the Kazakh government in April last year.

Aluworks now relies on imported aluminium ingots

GhanaWeb, Ghana

Accra, April 26, GNA - Aluworks, aluminium products manufacturer, now relies on BHP Billiton Marketing AG of Switzerland for the supply of aluminium ingots following the closure of the Volta Aluminium Company (VALCO).

Speaking at the Facts behind the Figures programme on the Ghana Stock Exchange, Mr Kondagunta Venkataramana, Managing Director of the Company, said the problem of metal supply that affected the Company's production last year following the closure of VALCO had been firmly resolved.

Billiton has been contracted to supply 2,500 metric tons of metal monthly for processing, he said, adding that with the steady flow of raw materials and favourable Government measures of reduction of import duty on ingots from 10 per cent to five per cent and zero rating of VAT on imported raw material, the Company would make improved margins and be in a position to pay good dividends to shareholders.

He said the Company was embarking on a vigorous export drive in member states of the Economic Community of West African States (ECOWAS) to widen its geographic spread and to increase the volume of its export. Mr Venkataramana said Aluworks had targeted to export 50 per cent of its products by the end of 2004, adding that at the end of March it had attained 41 per cent export volume up from the previous year figure of 36 per cent.

In line with this vision, the Company has carried out a survey in Burkina Faso, Sierra Leone and Libya to assess the demand for its products.

"The demand for our products in Nigeria, our largest export market, is on the increase, prompting Qualitec Industries Limited of Nigeria, a major export customer, to acquire a five per cent stake in Aluworks," the Managing Director said.

Mr Venkataramana said there were also plans for the Company to maximize shareholders value by implementing projects for downstream products such as colour-coated coils for the building industries and Aluminium foil for packaging industries.

The Company is also focusing on cutting down its operational costs by 20 per cent as a further means of enhancing its operations. Aluworks produced 4,585 metric tons of aluminium coils, discs and sheets as at March 2004 compared to 4,002 metric tons for the same period last year. 26 April 04

Source: GNA

Aluminium output up 18 pc during 2003-04

Business Line, India 26-Apr-2004

New Delhi: Domestic aluminium production climbed 18.56 per cent to 8,17,298 tonnes during fiscal 2003-04, up from 6,89,297 tonnes during the previous year.

A V Birla group flagship company Hindalco produced over 3,24,000 tonnes during the period while public sector Nalco produced 2,98,208 tonnes, according to official figures released here.

Sterlite group-controlled Balco produced 97,269 tonnes while Malco and Indal produced 32,624 tonnes and 65,063 tonnes respectively.

The production during March 2004 was 70,164 tonnes. - PTI

Emissions taxes would kill industry

Melbourne Herald Sun, Australia - Apr 25, 2004

Geoff Easdown

A NEW state tax that would force up power and gas costs is being considered by the Bracks Government.

The move would be a major blow according to the Victorian power industry.
The impost, billed as a carbon tax on greenhouse emissions, would cost LaTrobe Valley power generators at least $325 million a year, sources claim.

The tax is on an agenda being canvassed by a firm of consultants working for two state government departments.

The Departments of Infrastructure, and the Department of Sustainability and the Environment commissioned the Allen Consulting Group to argue the case to affected stakeholders.

Allen has already told a number of affected industries the key part of the project involves seeking feedback on critical elements which include carbon prices and "the impact a future carbon price risk would have on energy sector investment."

As one senior power industry figure hit back saying: "read that as how many industries will leave the state if a carbon tax is introduced.

"And I don't mean to NSW or Queensland, I mean South Korea, Taiwan and China," the industrialist said.

The same source said the tax figure canvassed by Allen's was $5 a tonne which would amount to $325 million annually on the 65 million tonnes of carbon dioxide LaTrobe Valley power generators pump out each year.

Victoria is the manufacturing heartland of Australia with major aluminium smelters, automotive plants, petroleum and chemicals plants -- based on competitively priced electricity sourced from a 500-year resource of brown coal.

Any carbon price signal injected into the economy would add to the cost of generating electricity in Victoria and remove the competitive advantage Victoria has over other States, especially NSW, and many other countries.

NSW power costs, based on black coal, are significantly higher than Victoria's but, while brown coal is low-cost, it is a high emitter of carbon dioxide -- the cost of carbon therefore driving Victorian power costs towards NSW and beyond, depending on the carbon price.

Allen's executive director Jon Stanford confirmed that his firm had been commissioned by the government, that a carbon tax was on the agenda, but it "was the least likely option."

Monthly Update to Customers, Employees, Suppliers, and Friends of Kaiser Aluminum: April 26, 2004

In Today’s Court Hearing

The Court approved the company’s agreement to sell its interests in Alpart to RUSAL for a base price of $295 million, subject to certain adjustments and the approvals and conditions that we cited in our press release of April 21.

The agenda for today’s hearing originally included a number of other matters, such as approval of the Mead sale and the extension of exclusivity. However, because of scheduling issues unrelated to our case, the Court deferred ruling on these matters to a newly scheduled hearing on May 18. In addition, the Court also will hold its regularly scheduled monthly hearing on May 24.

Outlook and Liquidity

We have seen indications of improving demand in our fabricating business, and recent liquidity has remained adequate. We look forward to the completion of our restructuring and to our emergence from Chapter 11 as primarily a fabricated products company.

Jack A. Hockema
President and Chief Executive Officer

Century Aluminum Completes Acquisition and Financing of Iceland Aluminum Plant

Business Wire (press release) 27-Apr-2004

MONTEREY, Calif.--(BUSINESS WIRE)--April 27, 2004--Century Aluminum Company (Nasdaq:CENX) has completed the acquisition of Nordural Aluminium hf from Columbia Ventures Corporation. Nordural owns a 90,000-metric-ton-per-year (mtpy) primary aluminum plant at Grundartangi, Iceland. An expansion is planned that will double the plant's capacity to 180,000 mtpy by 2006. Century assumed operating and management control of the facility today.

Century acquired Nordural for $150 million, subject to specified purchase price adjustments. Nordural also has long-term project debt of approximately $190 million. Century paid an additional $25 million to CVC in recognition of the start of the expansion.

To finance the acquisition, Century recently completed a registered public offering of 9,000,000 shares of its common stock at a per-share price of $24.50. Century received proceeds of approximately $209 million from the offering, net of underwriting discounts and commissions. An additional 500,000 shares were sold by Century's pension plans. Proceeds from the sale of these shares were paid to the pension plans.

Century now owns 615,000 metric tons per year (mtpy) of primary aluminum capacity. In addition to the Nordural plant, which it acquired today, the company owns and operates a 244,000-mtpy plant at Hawesville, KY and a 170,000-mtpy plant at Ravenswood, WV. Century also owns a 49.67-percent interest in a 222,000-mtpy reduction plant at Mt. Holly, SC. Alcoa Inc. owns the remainder and is the operating partner. Century's corporate offices are located in Monterey, CA.

Century's press releases may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Century has based these forward-looking statements on current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions and readers are cautioned that actual results could differ materially and, therefore, they should not place undue reliance on any forward-looking statements. Century does not undertake, and specifically disclaims, any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date such forward-looking statements are made.

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

Calpers reverses stand on Alcoa proxy votes

Reuters, 04.27.04, 5:06 PM ET

SAN FRANCISCO, April 27 (Reuters) - Calpers, the biggest U.S. pension fund, said on Tuesday it reversed its decision to withhold proxy votes against the full board of Alcoa Inc. (nyse: AA - news - people) after Alcoa pointed out that it had put into effect a shareholder-approved plan to limit golden parachutes.

The $166 billion California Public Employees' Retirement System said Monday it would withhold proxy votes for Alcoa and 10 other companies in its corporate governance campaign.

Alcoa, the world's biggest aluminum maker, said last September it implemented a program proposed by the AFL-CIO and passed by shareholders to limit severance packages for top executives to 2.99 times salary and bonus.

Any severance package beyond that limit would go to a vote of shareholders.

"Alcoa made Calpers aware of the implementation Tuesday morning and they changed their position," said Alcoa spokesman Kevin Lowery.

Brad Pacheco, a spokesman for Calpers, said "We didn't have an updated source. We have just corrected that and spoke with Alcoa and got it straight."

Calpers, however, said it would withhold proxy votes for Alcoa director Henry Schacht, who chairs the board's audit committee, because the committee has failed to submit the auditor to shareholder ratification.

Copyright 2004, Reuters News Service

RusAl Completes Purchase of Jamaican Plant

MOSNEWS, Russia 27.04.2004 15:30 MSK (GMT +3)

Russian Aluminium (Rusal), the world’s second largest producer of aluminium announced that it paid $306.2 million for a 65-percent stake in the Jamaica-based bauxite and alumina refinery Alpart. As MosNews wrote in March, the Alpart stake was up for sale through auction after the Kaiser Aluminium Group, the previous owner of the shares was declared bankrupt.

Rusal competed for the 65 percent stake with Glencore International. However, Glencore offered only $160 million for the shares, while Rusal said that it was ready to offer $237 million. Later the figure was raised to $294.7 million, but the final price that the Russian company had to pay ended up being even higher. The additional $11.5 million that was added to the price tag was due to an agreement reached with Kaiser’s creditors who gave up their rights to an existing supply contract for 50,000 tons of alumina.

The deal between Rusal and Kaiser Aluminum now has to be approved by the Jamaican courts. For 30 days after the court’s approval, Norsk Hydro, which owns the remaining 35 percent of Alpart’s shares will have the priority right to buy the other 65 percent of the shares. However, this possibility seems highly unlikely as the Norwegian company has expressed no plans to do so.

If the deal is finally concluded, this will highlight Rusal’s efforts to make itself self-sufficient in alumina. The sharp price increase for this resource, which took place over the last 18 months, has seriously threatened to squeeze Rusal’s margins. And while the $300 million price tag is considerably higher than the originally planned $237 million, the Alpart purchase is still seen as a good deal for Rusal by industry analysts.

Chileans Ask Noranda and Shareholders to Abandon Plans for Destructive Aluminum Smelter

CNW Telbec (Communiqus de presse), Canada 27-Apr-2004

450 international signatories to letter demand protection for pristine Patagonia

TORONTO, April 26 /CNW Telbec/ - Today at Noranda's (NRD-TSX) Annual General Meeting, Chilean citizens whose lands will be flooded if an Noranda smelter and hydro-electric dams get built delivered heartfelt pleas for the mining giant to abandon all plans for their construction. Currently, the
'Alumysa' project environmental impact assessment is on hold but Noranda has refused to permanently cancel its plans for the proposed project to be located in the heart of pristine Patagonia, Chile.
The Chilean people, who traveled thousands of kilometers to attend Noranda's AGM, presented Noranda CEO Derek Pannell with a letter signed by 450 conservation groups and individuals from Chile, Canada and the United States supporting their request to 'Can Alumysa'.
"Our communities do not want this project," said Reinaldo Barrientos, who lives in the Aysen region where the smelter is proposed for construction. "We have repeatedly asked Noranda officials to permanently cancel the project and since they are refusing to listen, we have had to travel all this way to make our voices heard."
If accepted, the Alumysa project will result in the flooding of 10,000 hectares of land, and produce 1.5-million tones of solid and gaseous waste each year, irreparably damaging pristine areas of Chile's natural environment. The construction of Alumysa involves six dams, three hydro-electric installations, access roads, power lines and the smelter itself.
"It is not enough to just temporarily suspend this project when it would have such devastating impacts on what is one of the most beautiful and ecologically important areas on the planet," said Rodrigo Herrera of Greenpeace Chile. "Noranda must commit to abandon Alumysa entirely. The project is bad for the environment and it's bad for business." Added Juan Pablo Orrego, international coordinator of the Aysen Life Reserve Alliance, "We have been asking ourselves why is Noranda targeting Patagonia and Chile? We do not see any justification for this type of development, especially in such an ecologically sensitive area. Opposition to this destructive project both at home and in North America is so strong that if Noranda proceeds, it would be an incredibly bad investment decision. A copy of the latest Greenpeace report on Noranda can be downloaded from:

For further information: Richard Brooks, Greenpeace Forests Campaigner,
(416) 573-7209 (cell.) or Kim Kerridge, Greenpeace Canada, (647) 221-9169

Zhukov Orders Seizure of UES Dam in Khakasia

Moscow Times, Russia 28-Apr-2004

By Melissa Akin
Reuters The government has ordered the seizure of a massive Siberian hydro dam from the state-controlled power monopoly Unified Energy System, a move UES decried as the start of de-privatization.

"Please ensure the property of Sayano-Shushenskaya Hydro is transferred into state property in accordance with the ruling of the East Siberian Federal Arbitration Court," Deputy Prime Minister Alexander Zhukov said in an April 23 letter to Economic Development and Trade Minister German Gref, who is in charge of state property.

The letter was obtained by Reuters on Wednesday.

Sayano-Shushenskaya has one big consumer, a giant smelter owned by Russian Aluminum, which uses about 75 percent of its electricity.

The governor of Khakasia, the region where the smelter and the dam are located, successfully sued earlier this year to overturn the 1993 deal that transferred the dam from state control to UES. Governor Alexei Lebed protested that the region was not consulted in the deal, in a violation of its rights.

"This is the beginning of de-privatization," a UES spokesman said.

The specter of nationalization has stalked the stock market since the government presented a $3.5 billion tax bill to Yukos.

Gref's deputy Andrei Sharonov told reporters that the seizure of the hydro dam would set a major precedent. "We would have to think through the mechanisms first," he said.

UES will appeal to the High Arbitration Court, and Sharonov said that would likely put the previous court decision, and Zhukov's order, on hold.

Sayano-Shushenskaya is 79 percent owned by UES, which charges that if the massive dam is seized from its balance sheet by the government, the state stake in UES will decrease from 53 percent to under 51 percent, and UES will be owed compensation from the budget.

"UES has minority shareholders, and this is their property, too," Sharonov said. "We would like to minimize risks and negative consequences for minority shareholders, and for the entrepreneurial climate in Russia."

Alcoa upgrading Auburn factory

Fort Wayne Journal Gazette, IN 28-Apr-2004

GM engine project to add equipment, 57 jobs

By Urvaksh Karkaria

The Journal Gazette

Alcoa plans to invest $6.9 million in new equipment at its Auburn plant and create nearly 60 jobs, Greg Chandler, spokesman with Indiana Department of Commerce, said Tuesday.

The investment will allow the company to make a new product – a newly designed aluminum engine cradle that will be used in two General Motors Corp. vehicles, Alcoa spokesman Michael Belwood said Tuesday.

The company will receive a more than $634,000 incentives package from state and local governments, which includes workforce training grants, economic development tax credits and a tax abatement, Chandler said.

Early estimates had pegged the investment at $3.8 million, Belwood said. The company had also expected to add about 80 jobs.

“As the project progressed and our negotiations with the customer were refined, the project shaped up (differently),” he said.

The plant, at 1101 Oren Drive, employs more than 300 currently and makes aluminum automotive parts. Pittsburgh-based Alcoa ranked 86th on the 2004 Fortune 500 list and had revenues of $21.7 billion last year.

The 57 mostly production jobs will pay an average of about $13 an hour, Chandler said.

Production of the new product is expected to begin in the second half of this year, Belwood said.

“This plant has a history of producing high-quality aluminum parts and has been successful in producing previous models of the aluminum engine cradle,” Belwood said.

Auburn Mayor Norman Yoder said Alcoa is an important corporate citizen, and he welcomed the news.

“Anytime a plant modernizes and upgrades and automates and is fortunate enough to land a new product line, that’s a lasting thing,” he said. “It’s good for the community.”

Alcan seeks 277 Pechiney job cuts in France-source

Reuters, 04.28.04, 7:36 AM ET

PARIS, April 28 (Reuters) - Canadian aluminium maker Alcan <AL.TO> wants to cut 277 jobs at Pechiney sites in France, a labour union source said on Wednesday.

Alcan bought its French rival for $5.1 billion earlier this year, forming the world's largest aluminium maker by sales.

Alcan on Tuesday raised its estimated cost savings from the deal by 44 percent to $360 million from a previous $250 million target given last July.

Copyright 2004, Reuters News Service

RUSAL Demonstrates Steady Growth Amid Rising Global Demand

RUSAL, one of the world’s leading aluminium producers, today announced continued growth across all main product lines. Primary aluminium production showed a 6% year-on-year growth to 664 966 tonnes, mainly a result of the company’s continuing efforts to introduce best practices at its production facilities.

MOSCOW, RUSSIA (PRWEB) April 28, 2004 –- RUSAL, one of the world’s leading aluminium producers, today announced continued growth across all main product lines. Primary aluminium production showed a 6% year-on-year growth to 664 966 tonnes, mainly a result of the company’s continuing efforts to introduce best practices at its production facilities.

During the quarter, RUSAL continued to focus on steady growth that will allow the company to accommodate soaring global demand. The company carried on its modernisation drive as well as continued to streamline its structure – all aimed to achieve further operational efficiency. Following its market-driven strategy, RUSAL continued its upgrading initiatives designed to raise the share of alloys and other value added products in the aluminium division’s mix. These type of products showed a 32% year-on-year growth for the quarter.

Commenting on the results, Alexander Boulygine, CEO, said: “In this quarter our focus continued to be both on growth and efficiency and our results demonstrate that commitment. Taken together with a major restructuring and management realignment, we are now prepared to embark on a new phase -- expansion. This is happening at a time when the market is displaying remarkable strength.”

Mr. Boulygine underlined the progress made in the company’s restructuring programme. RUSAL reorganized into a divisional structure with two new divisions created – alumina and aluminium. “The new structure,” Mr. Boulygine said, “will help to ensure that RUSAL remains competitive at each stage of the value chain by having clear profit centers and improved accountability of managers.”

Substantial progress has been made in the company’s drive to strengthen its raw material base. The feasibility study for the expansion of Friguia refinery in Guinea to 1.4 mln tonnes commenced during the quarter. The $350 mln project is to be completed within three years. Upgrade programmes continued at Nikolayev and Achinsk alumina refineries.

“We are focused on increasing production of bauxites and alumina,” Mr. Boulygine said. “At the same time, though our own raw material supplies do not yet cover our growing needs, we were practically unaffected by current unfavorable market conditions for alumina due to long-term supply contracts we sought following 2001, when managers anticipated the potential squeeze in the alumina market arising from rising Chinese demand.”

During the quarter, RUSAL continued streamlining its technological base. This included introducing a more efficient project structure at VAMI (All-Russia Aluminium and Magnesium Institute) acquired last year, which will facilitate the institute’s integration into RUSAL. VAMI is cooperating with RUSAL’s Engineering and Technological Center on modernisation and expansion projects, such as the comprehensive modernisation of Krasnoyarsk and Sayanogorsk smelters.

Increasing the output of value-added casthouse products and comprehensive modernisation of casthouse areas at all aluminium smelters continued. The first stage of RUSAL’s joint project with Norwegian Hydro Aluminium for production of extrusion ingots, completed during the quarter, has tripled the Sayanogorsk smelter’s annual billet capacity to 80 000 tonnes. One of the important achievements was the introduction of A380.1-grade alloy designed mainly for the Northern American automotive industry.

Other highlights

As part of the significant modernisation of the casthouse areas of the smelters, the new casting complex is capable of producing an added 35,000 tonnes of alloys per year were added at Krasnoyarsk smelter.

Krasnoyarsk Aluminium Smelter received the ISO 14001 environmental management system certification.

Works on the transition of Krasnoyarsk, Bratsk and Novokuznetsk smelters to dry anode technology continued. Substantial progress had been made on Bratsk smelter where 8 pot rooms are now switched to dry anode technology.

Earth works started on a $10 mln. project at the Friguia refinery in Guinea where RUSAL is upgrading the heat station providing electricity and heat to the refinery and the town.

RUSAL began introducing lean production methods at its plants. Experimental business units have been created at all smelters.

RUSAL’s $750 mln Sayanogorsk Smelter Expansion Project is proceeding successfully, and the first major contracts have already been awarded for fabrication and supply of pot tending assemblies and transfer gantry cranes.

Nikolayev Alumina Refinery production capacity was raised to 1.3 bln. tonnes annually.

Hindalco reconsiders Indal merger option

Rediff, India April 28, 2004 09:15 IST

Mansi Kapur & Rakesh Sharma in Mumbai |

The Aditya Birla group is reconsidering the merger of Indal with Hindalco. Hindalco had earlier ruled out the possibility of a merger between the two companies on account of a high stamp duty cost.

Hindalco currently owns 96.3 per cent in Indal, while around 2.6 per cent is held by the Indian public and the rest with others including institutions. Indal was delisted from the bourses after the group made an open offer to acquire the remaining stake.

If the two group companies are merged in the near future, it could create a Rs 7,800 crore (Rs 78 billion)-plus monolith. While Hindalco's capacity to produce aluminium metal is 340,000 tonne per annum, Indal's capacity is being expanded to 65,000 tonne per annum.

Company sources said, "The merger is the next logical step. It is certainly on the company's radar. However, no formal decision has been taken in this regard. This also may not happen soon as Hindalco has just announced expansion plans for its copper division."

Sources also indicated that the merger will materialise based on the cost- benefit analysis, which is currently being discussed. Industry analysts estimate the cost of the merger around Rs 100 crore (Rs 1 billion).

Indal is the group's downstream aluminium-producing arm that Hindalco, acquired from Canadian major Alcan in March 2000. The company's strength is alumina chemicals and downstream products that complement Hindalco's dominance in primary metals.

Hindalco has announced a capacity expansion project to double its copper capacity to 500,000 tonne per annum, while Indal is also looking at capex in the current year.

Hindalco currently has total reserves of over Rs 6,000, of which Rs 1,200 crore (Rs 12 billion) would be utilised for the copper expansion. Hindalco has also raised $50 million through the external commercial borrowing route to augment the financing of it capex plans.

Copper, Aluminum Extend Decline on China Slowdown Concerns

April 29 (Bloomberg) -- Copper and aluminum prices fell to their lowest in at least a month, extending yesterday's declines, after China signaled it would slow the economy in the world's fastest-growing market for the metals.

Prices of copper, aluminum and other raw materials have risen too rapidly, Chinese Premier Wen Jiabao told Reuters. The government wants to slow economic growth to less than 8 percent this year from 9.1 percent last year, after a boom in building, electronics and auto output pushed prices of copper, aluminum and steel to their highest in at least eight years in March.

``Chinese growth was a pillar of high base metal prices and the introduction of credit controls has unnerved the market,'' said Adam Beamond, a dealer at client sales at N.M. Rothschild & Sons (Australia) Ltd. in Sydney.

Copper futures in New York fell as much as 1.3 percent to $1.1615 a pound, adding to yesterday's 5 percent decline. The futures are 17 percent down from their eight-year closing high on March 1. Copper for October delivery in Shanghai, the most active contract, fell 540 yuan, or 2.2 percent, to 23,600 yuan ($2,859) a metric ton. Aluminum in Shanghai fell 1.9 percent to 16,860 yuan from yesterday's 17,190 yuan.

China's Bank of Communications Ltd., Shenzhen Development Bank and Shanghai Pudong Development Bank yesterday said they halted lending until May 1, the start of a weeklong holiday in China, as the government tightens controls on lending. China Central Bank vice-governor Wu Xiaoling called for banks to cooperate with curbs on credit, forecasting growth will slow to less than 8 percent this year.


China tried to slow steel use by reducing the amount companies can borrow for steel projects from 75 percent of the value to 60 percent, state-run television said yesterday, citing China's State Council.

``With China accounting for about 25 percent of global demand for copper, 19 percent for aluminium and 20 percent for nickel, any slowing in the country's voracious appetite for metals could have an adverse impact on supply/demand and prices,'' Robin Bhar, a base metals analyst at Standard Bank in London, said in an e-mailed report.

Australia's BHP Billiton, the world's biggest miner, and South Korea's Posco, the nation's biggest steelmaker, led Asian stocks lower on concerns Chinese demand will slow.


Shares of BHP Billiton, which mined 6.5 percent of the world's copper ore last year, fell as much as 3.4 percent to an 11-week low of A$11.52 on the Australian Stock Exchange. They traded at A$11.57 at 1:49 p.m. Sydney time. Posco, South Korea's biggest steelmaker, shed 9,500 won, or 6.1 percent, to 146,500.

Shares of London-based Rio Tinto Group, which owns 30 percent of Chile's Escondida copper mine, the world's largest, fell as much as 3 percent to a seven-month low of A$32.16. WMC Resources, whose Olympic Dam mine in South Australia contains the world's eighth-largest copper reserve, dropped as much as 5.1 percent, to A$4.68.

Jiangxi Copper Co., China's biggest copper producer, fell as much as 8.1 percent. The stock has fallen 13 percent in the past week. China Aluminum Corp., the nation's biggest aluminum maker, fell as much as 8.6 percent.

Shares of Phelps Dodge Corp., the world's biggest publicly traded copper miner and refiner, yesterday fell $1.99, or 2.9 percent, to $66.89 in New York Stock Exchange composite trading, the lowest closing price since Dec. 10. Grupo Mexico SA, the world's third-biggest copper refiner, yesterday fell 3.17 pesos, or 8.5 percent, to 34.14 pesos.

Finding Support

``If you have tightness in borrowing in China, you may hurt a whole bunch of commodities because the Chinese have been buyers of base metals, oil and gold,'' said George Gero, senior vice president at Legg Mason Wood Walker Inc. in New York.

Copper for July delivery on the Comex division of the New York Mercantile Exchange was trading 0.6 percent lower at $1.1700 a pound at 8:40 a.m. in London.

Gold was caught in the fallout from the slide in other metals, with futures extending yesterday's 3.3 percent loss, their biggest since Jan. 29.

``Whilst the fall in base metals should not have affected the precious metals to such an extent, the ferocity of the fall, particularly in copper, prompted some stop loss selling in gold which soon turned into a rout as the price fell from $392 to $384 in 10 minutes,'' Martin Mayne, Rothschild's associate director of client sales said in an e-mailed report.

Gold for June delivery on the Comex division of the New York Mercantile Exchange fell as much as $3.80, or 1 percent to $382.10 an ounce. The contract, which fell $13.20 to $385.90 yesterday, traded at $383.40 an ounce at 2:06 p.m. in Sydney.

To contact the reporter on this story: Matt Chambers in Sydney at

To contact the editor of this story: Peter Langan at
1514 or

Indal to boost its refining capacity

Sify, India Thursday, 29 April , 2004, 18:02

Indal plans to sharply raise its refining and smelting capacity to boost its share in domestic and global markets, a company official said on Thursday.

Indian Aluminium Co (Indal), which currently accounts for about eight percent of India's aluminium output, plans to more than quadruple the annual capacity of its Muri alumina refinery in eastern Jharkhand state to 500,000 tonnes from 110,000 tonnes.

The company, a subsidiary of India's largest aluminium producer Hindalco Industries Ltd, plans to increase the capacity of its Hirakud aluminium smelter in the eastern state of Orissa by 54 percent to 100,000 tonnes.

It has also decided to further increase its power generation capacity at Hirakud to 267 megawatts. The current expansion to 167 MW from 67 MW will be over by May 2005.

"The company's board (of directors) approved these plans last week and we hope to complete the expansions by June 2006," the official, who declined to be identified, told Reuters.

The expansion will help Indal take advantage of aluminium prices that hit a 6-½ year high of $1,775 a tonne on the benchmark London Metal Exchange in mid-February, and to meet domestic demand in an economy that grew a spectacular 10.4 percent in the October-December quarter of 2003.

He said the board also approved a plan to expand Indal's Belgaum alumina refinery in the southern state of Karnataka to 650,000 tonnes a year from 340,000 tonnes, but the project will be started only if it gets new bauxite mines from the government.

"We have applied to the government for getting mining rights in neighbouring Maharashtra state," he said, adding the mining block Indal is looking at contains about 20 million tonnes of bauxite reserves.


Indal was likely to get environmental clearance soon from the Orissa government to raise the capacity of the Hirakud smelter by shifting remaining equipment from an idle unit and improving efficiency, the official said.

"We are very close to getting government approval, which is a simple administrative exercise for granting permission to existing units to expand at the same site," the official said.

Indal plans to shift 142 electrolytic pots from its Belgaum smelter to Hirakud, which will hike the capacity to about 85,000 tonnes a year from 65,000 tonnes. Another capacity addition of 15,000 tonnes would come from adding more equipment and improving the efficiency of the smelter, the official said.

Indal doubled the Hirakud smelter's capacity in 2002 to 57,200 tonnes by shifting half the 400 pots from the Belgaum plant, which was closed in 1995.

The unit had become unviable due to the high cost of power supplied by the regional government. It transferred a further 58 pots in October 2003.

The pots are used to smelt alumina, an intermediate product extracted from bauxite ore, to produce aluminium metal.

Indal produced 65,405 tonnes of aluminium and 492,375 tonnes of alumina in the year ended in March, up from 51,233 tonnes and 467,999 tonnes respectively in the previous year. It exported about 160,000 tonnes of alumina in 2003/04.v

Copyright 2004 Reuters Limited

MFC Bancorp Ltd. Acquires Maw Mansfelder Aluminiumwerke GmbH

PR Newswire (press release)

NEW YORK, April 29 /PRNewswire-FirstCall/ -- MFC Bancorp Ltd.
(Nasdaq: MXBIF; Frankfurt Stock Exchange: MFC GR) announced today that, through its wholly-owned subsidiary, Blake International Limited, it has acquired AWP Aluminium Walzprodukt GmbH, a private company based in Berlin, Germany ("AWP"), whose principal asset is an aluminium rolling mill operation, MAW Mansfelder Aluminiumwerke GmbH ("MAW"), located in Hettstedt, Germany.
MFC acquired 100% of the shares of AWP from Interalum Aluminium Rolling Mills Holding Ltd., a private, London-based holding company, pursuant to a share purchase agreement entered into in February 2004. Interalum had approached MFC to seek support in a restructuring of AWP. After first
restructuring the debt of AWP, MFC subsequently acquired AWP's share capital.
MFC now seeks to enhance the value MAW, by providing working capital to increase production.
MFC President Michael J. Smith commented, "This acquisition is further evidence of MFC's increasing activities in the raw materials markets. In particular, we believe that MAW is one of the components in the continuing expansion of our commodities trading business."

About MAW Mansfelder Aluminiumwerke GmbH MAW Mansfelder Aluminiumwerke GmbH operates an aluminium-rolling mill located in Hettstedt, Germany, with 70 employees. MAW products include cold-rolled foil stock used for the production of aluminium foil, as well as finished products based on cold-rolled sheets. In 2003 MAW produced a total of over 19,000 tons of rolled aluminium, which MFC believes is well below the plant's full operating capacity. MAW production generated sales in 2003 of US$33.5 million.

Votorantim Aluminum Unit Invests $100 Mln, Valor Says

April 30 (Bloomberg)

By Dan Shirai

Cia. Brasileira de Aluminio, a unit of Votorantim Group SA and Brazil's biggest aluminum maker, plans to invest $100 million to expand its flat and rolled aluminum production capacity by 70 percent, Valor Economico reported, citing Votorantim's chairman, Antonio Ermirio de Moraes.

Production of rolled and flat aluminum will increase to 170,000 tons, from 100,000, and sheet aluminum production will rise to 60,000 tons, from 46,000, the newspaper said.

CBA, which accounts for one quarter of Brazil's aluminum output, sells half of its yearly production overseas, Valor reported. Moraes said he would prefer to have to export only 20 or 25 percent, but that internal demand for aluminum is still low, the paper said.

For the newspaper's Web site, click on {BRVA <GO>}

To contact the reporter for this story:
Dan Shirai in New York at

To contact the editor for this story:
Laura Zelenko at at

RPT-China restarts aluminium capacity on power rise

Forbes, Reuters, 04.30.04, 1:21 AM ET

By Polly Yam

HONG KONG, April 30 (Reuters) - Several Chinese aluminium smelters have started or restarted production as power supply to the country's southern provinces has begun to flow more freely, industry officials said on Friday.

They said power supply in the provinces of Hunan, Guizhou, Yunnan and Sichuan had increased since early April because a rise in rainfall had allowed hydroelectric plants to generate more electricity for the power-hungry aluminium sector.

"We have been operating more than 80 percent of our capacity in April," said an official for a small smelter in Guizhou, adding that the plant had operated at below 60 percent between mid-February and the end of March due to the power shortage.

China's sizzling economy, which expanded 9.7 percent in the year through the January-March quarter, has increased energy consumption nationwide and led to power shortages since the end of last year.

"Some smelters quietly restarted production after receiving more power," said another smelter official.

But Aluminum Corp of China Ltd (Chalco)'s <2600.HK> Pingguo plant in Guangxi is not one of them. Power supply to Guangxi has not improved, officials in the southwestern region of China said.

The Pingguo plant -- site of a proposed 50:50 joint venture between Chalco and U.S. giant Alcoa Inc (nyse: AA - news - people) -- has capacity to produce 135,000 tonnes of aluminium, but cut production by more than one-third from December due to the energy shortage.


Industry officials said Yunnan Aluminium Co was considering starting production at its new 70,000-tonne-per-year facility, which it finished building a few months ago.

They said Yunnan was expanding the same facility to 200,000 tonnes by the end of this year, boosting total annual capacity to 300,000 tonnes.

State-controlled analyst group Beijing Antaike Information Development said last week it estimated around 600,000 tonnes a year of aluminium capacity had been closed between December and mid-April due to China's shortages of power and alumina, the key material for aluminium production.

But in the first quarter this year, China still managed to produce 1.52 million tonnes of aluminium, up 24.6 percent on the same quarter last year, official data showed.

China's aluminium output would jump 19 percent to 6.6 million tonnes this year but some 1.8 million tonnes of capacity would be idle, Merrill Lynch said in a report last month.

China's State Development and Planning Commission said in a report released in mid-April that 23 provinces and cities, mostly in the south, had suffered power shortages in the first quarter.

In the same period, China generated 479.4 billion kilowatt hours of electricity, of which 45.6 billion was hydroelectric, the report said.

The shortages could rise again in the summer, when power consumption increases, the commission said in the report.

"The most important factor to smelters is power supply. Even though supply of alumina is tight, we still can buy it. But you cannot buy the power if there's none there," said the second smelter official.

About 15,000 kilowatt hours (kwH) was needed to make a tonne of aluminium, officials said.

Chalco, also China's dominant alumina producer, expects the country's alumina demand to reach 12.8 million tonnes in 2004. Imports would total 6.3 million tonnes versus 5.6 million last year, Chalco said.

Copyright 2004, Reuters News Service

China halts steel, aluminium, cement approvals in latest cooling bid

Channel News Asia, Singapore 30-Apr-2004

Xinhua news agency said the council, China's cabinet, in addition wants the process of converting farmland for use in infrastructure projects to end "to curb the investment craze in some industries and to ensure the smooth operation of the national economy".

The orders are the latest in a string of administrative measures by central authorities to try to calm soaring investment by local government which is contributing to over-heating and over-investment in some sectors.

The efforts to curb economic growth, which Premier Wen Jiabao said this week would be "forceful", have rattled neighboring countries that depend on China's booming economy, which grew 9.7 percent in the first quarter.

Financial markets across Asia have slumped, while sentiment has been dampened globally.

Xinhua reported in February that the State Council had dispatched working groups to various parts of the country to investigate the "investment landscape".

In its report, the state-run news agency said the top decision making body had recently issued a circular requiring all localities and departments to kick off examinations of most investment projects in fixed assets under construction or to be built.

Projects banned by national policies or conflicting with laws and regulations on land management should be halted, it said.

Those which did not comply with environmental protection regulations, urban construction blueprints, approval procedures or loan policies should be suspended.

The government has been trying to cool investment for the past eight months through a variety of measures, including curbing bank lending and issuing administrative orders for clamp downs on inefficient and duplicated projects.

Most recently, the government reportedly ordered commercial banks to stop new lending activities ahead of the May 1 Labour Day holidays, a move interpreted by the markets as preparation for an interest rate hike.

The Hong Kong-based South China Morning Post Friday said that the government has already agreed on a 50 basis point rise in lending rates.

Despite the warnings, investment to start projects or expand capacity in the areas of steel, aluminum and cement is still growing rapidly, as evidenced by a 43 percent jump in fixed-asset investment in the first quarter.

Morgan Stanley's chief Asia economist Andy Xie said that even a draconian clampdown on investment would probably not be enough to avoid a hard landing, but welcomed the government intervention.

"The overshooting of China's investment cycle has become so big that it threatens the country's stability. If China's leadership were not to take resolute actions, the national economy would spin out of control," he said.

"This is certainly the right moment to show who are in charge of the country."