AluNews - February 2004

Kaiser Aluminum And USWA Outline Details Of Agreement In Principle

www.kaiseral.com 2-Feb-2004


HOUSTON, Texas, January 30, 2004 -- Kaiser Aluminum and the United Steelworkers of America (USWA) today summarized the details of an agreement in principle on the terms and conditions of certain modifications to their labor agreements covering several of the company's U.S. facilities. Among other things, the agreement modifies the company's obligations with respect to current and future pension and retiree medical benefits and addresses certain other matters.

The agreement is subject to ratification by union members, approvals by the company's board of directors, approval by the Bankruptcy Court, and certain other approvals. The agreement covers approximately 1,200 hourly employees at plants in Gramercy, Louisiana; Newark, Ohio; Tulsa, Oklahoma; Richmond, Virginia; and Trentwood and Mead, Washington. Major elements of the agreement include the following:

PENSION -- Active hourly employees will be covered under the Steelworkers Pension Trust (SPT); company contributions to the SPT will be based on $1 per employee per hour worked. In addition, the company will institute a defined contribution pension plan for active employees; company contributions to the defined contribution pension plan will range from $800 to $2400 per employee per year, depending on age and years of service. Existing USWA pension plans will be terminated and turned over to the Pension Benefit Guaranty Corporation (PBGC), if the Bankruptcy Court approves the company's separate request for termination of the existing plans. Current retirees will receive their future benefits from the PBGC.
RETIREE BENEFITS -- Current and future retirees and surviving spouses and their dependents will be provided with options for medical coverage if the Bankruptcy Court approves the termination of existing medical, life, and disability insurance programs. As a result of such termination, current retirees, surviving spouses, and their dependents who are not Medicare-eligible may elect COBRA coverage. Future retirees, and current retirees who decline COBRA coverage, may elect to receive benefits under a newly created Voluntary Employee Beneficiary Association (VEBA). Kaiser will fund the VEBA with a combination of cash, profit-sharing, and other consideration through December 31, 2012, subject to certain caps and limitations.
NLRB Case -- The parties have agreed to settle their case pending before the National Labor Relations Board, subject to the approval of the NLRB General Counsel and the Bankruptcy Court. Under the terms of the settlement, solely for purposes of determining distributions in connection with the reorganization, an unsecured pre-petition claim in the amount of $175 million will be allowed against the company's estate.
BOARD OF DIRECTORS -- Upon Kaiser's emergence from Chapter 11, the USWA will nominate four members of a 10-member board of directors.
NEUTRALITY -- The company agrees to adopt a position of neutrality regarding the unionization of any employees of the reorganized company.

Kaiser's President and Chief Executive Officer Jack A. Hockema said, "Kaiser's financial condition has imposed severe limits on what we were able to achieve for our active and retired employees -- and there is no doubt that this compromise will still involve significant sacrifice. However, our discussions with the USWA were positive and cooperative, and I believe all parties were eager to resolve these issues as fairly as possible. Although, as noted, the agreement is still subject to a number of approvals, we believe it represents yet another major step in our restructuring as we look forward to emerging from Chapter 11 by mid 2004."

USWA District Director David Foster said, "We believe this tentative agreement enables us to maintain an important level of health and pension benefits for active and retired members. Most importantly, an appropriate share of the future profits of the company will be dedicated toward creating a new health insurance program for our retired members. We are pleased to be part of the solution under difficult circumstances, and we look forward to working closely with Kaiser for the long-term success of the reorganized company."

Kaiser has been engaged in similar discussions on retiree benefits with other unions and with the Committee of Retired Salaried Employees.

Kaiser Aluminum & Chemical Corporation is a leading producer of fabricated aluminum products, alumina, and primary aluminum. It is the operating subsidiary of Kaiser Aluminum Corporation (OTCBB: KLUCQ).

The USWA represents 1.2 million working and retired members throughout the United States and Canada working together to improve jobs; to build a better future for families; and to promote fairness, justice and equality both on the job and in our societies.


Quebec Workers Seize Smelter

Infoshop News Monday February 02 2004 @ 07:07PM PST


Alcan CEO calls on unionized workers to open dialogue over seized plant
DAVID PADDON Canadian Press


TORONTO (CP) - The head of Alcan Inc. said Monday he's concerned about safety at one of the company's Quebec aluminum smelters, which has been taken over by unionized workers.

"You have to remember these are facilities that use very, very high levels of power, millions of amperes of electricity, molten metal," Travis Engen said after a speech to a Toronto business lunch.

While the unionized workers have done well operating the smelter at Jonquiere, Que., on their own since taking it over last week to protest plans to close it this spring, affecting 550 jobs, Alcan management is still responsible for the facility, he said.

"We're quite concerned about the potential for something which might breach our health-and-safety standards," Engen said.

But he added the company hasn't given any deadline to the workers, who are represented by an affiliate of the Canadian Auto Workers union.

"There will be some limits, obviously, because there are some raw materials required to produce aluminum. I would image the stocks of raw materials that are at hand are falling. But there's no deadline," Engen said.

Quebec's Labour Relations Board ruled late Friday that the workers' actions were illegal. On Saturday, thousands of people demonstrated against plans to close the plant 10 years earlier than expected.

Engen said the 60-year-old smelter, which had been slated to close in 2014 because its technology doesn't meet more stringent environmental standards, is being closed earlier because of the age of its workforce.

"We've been trying to find the right moment in time when, because of the natural evolution of the employment, that we'd have enough retirements to more than offset the job reductions so that people could be transferred and there would not be any layoffs," Engen said.

Alcan had been in discussions with union representatives before the company's announcement Jan. 22 that it plans to close the facility. But the workers' representatives have been unwilling to talk since then, he said.

"We remain open, interested, available. And would welcome whatever steps could be taken to open up a dialogue," Engen told reporters.

Alcan had started the closure process, which requires several weeks. But Rolland Poirier, the union local's general secretary, said in an interview the workers took over the plant last Tuesday "and stopped the closure process."

Poirier said Monday the mill's foremen are making inspections at the mill, which still runs 24 hours a day, "but the operating decisions are being made by the operators."

The last of the four potlines was to be closed at the start of April, Poirier said. He added that the Quebec government has named a mediator to try to resolve the dispute.

Although Alcan is rationalizing its global operations since the acquisition of Pechiney SA of France in December, Engen said the closure of the Jonquiere smelter was due to its aging technology and desire to avoid layoffs.

But Engen said he does expect layoffs will result from its takeover of Pechiney, particularly some of the functions at its Paris headquarters.

Montreal-based Alcan (TSX:AL) is the world's largest aluminum producer by revenue after its recent takeover of Pechiney, completed last month for $6.3 billion.



Swiss firm to start building Kazakh smelter in 2004

Interfax, Kazakhstan 02-feb-2004

Astana. (Interfax) - Switzerland's Corica AG starts to build an aluminum smelter near Pavlodar, Kazakhstan, in honor of a pledge made when it bought 31.76% of the Aluminum of Kazakhstan company, this year, Kambar Shalgimbayev, president of Kazakhstan State Development Bank (BRK), said.

Corica AG, which bought the shares in Aluminum of Kazakhstan for 3.2 billion tenge in April 2003, undertook to launch the first 60,000 tpy stage of the smelter by the end of 2007.

Shalgimbayev said BRK would provide about $100 million of the $300 million needed to build the smelter's first stage, and a foreign bank and Kazakhstan's Eurasian Industrial Association would provide the rest.

The smelter will be built in three stages over eight-to-ten years. Its capacity will be augmented to 120,000 tonnes during the second stage and to 240,000 tonnes during the third stage. Overall costs will be $800 million-$1.2 billion, Shalgimbayev said.

Aluminum of Kazakhstan is Kazakhstan's national bauxite and alumina company. It is one of the world's nine biggest alumina producers. The company raised alumina production 2.5% to 1.416 million tonnes in 2003.
The exchange rate was 139.41 tenge/$1 on February 2.


Manufacturers consider gas emissions

NZ City, New Zealand 3 February 2004

Future greenhouse gas emission targets subject of negotiations between Government and manufacturers

New Zealand Aluminium Smelters and Carter Holt Harvey are entering into negotiations with the Government over future greenhouse gas emission targets.

Exemptions are available to firms whose international competitiveness may be hurt by the new greenhouse gas emission standards due to come into force in 2008.

The new standards are required if New Zealand is to meet its obligations under the Kyoto Protocol on obligations.

Businesses given an exemption must move towards world best practice for gas emissions.


© 2004 NZCity, IRN


China alumina fears rise on Kaiser supplies move

Reuters, 02.03.04, 5:53 AM ET

By Nao Nakanishi

HONG KONG, Feb 3 (Reuters) - China, one of the world's largest aluminium producers, fears a further spike in alumina prices if Kaiser Aluminium Corp <KLUCQ.OB> succeeds to nullify low-priced supply deals in its efforts to emerge from bankruptcy.

"Alumina is already very tight in China," said one trader in Beijing. "If, all of a sudden, it (Kaiser) withdrew 400,000 tonnes of low-priced contracts from the market, the market can go in only one direction."

Traders said imported alumina was already quoted as high as $500 per tonne, CIF China, compared with around $450 before the start of the Lunar New Year holidays on January 22. It was $160 at the start of last year.

Kaiser said last Friday it had filed motions in the U.S. bankruptcy court in Delaware, seeking to reject or nullify alumina supply agreements covering at least 800,000 tonnes annually. It said this would enable it to sell elsewhere at higher prices and speed up its financial turnaround.

It said the deals include a contract with Swiss trading house Trafigura AG, one with Pechiney Trading Co, a unit of Canada's Alcan Inc <AL.TO>, and two with Unistar Holdings Inc, a distributor to Chinese aluminium producers.

Traders and industry sources estimated the contracts to China covered at least 400,000-500,000 tonnes, or nearly 10 percent of the China's total alumina imports in 2003.

"We are filing our objection to that motion to the court," said a source at one of the Chinese buyers of Kaiser alumina.

But other sources said Chinese buyers may not have a strong case against Kaiser as their contracts were unlikely to be directly with the U.S. firm. The contracts were also concluded after Kaiser filed for Chapter 11 in February, 2002, they said.

Asked about the contract details, the Chinese buyer said: "I can't describe it as not directly with Kaiser."

Higher prices would be an additional blow to many Chinese smelters, already struggling with power shortages and higher energy costs following rampant capacity increases over the past several years, the traders said.

Copyright 2004, Reuters News Service


Russia, Venezuela discuss trade, econ relations

ITAR-TASS, Russia 04.02.2004, 06.38

CARACAS, February 4 (Itar-Tass) - Russia's Deputy Prime Minister Vladimir Yakovlev ended his working visit to Venezuela by signing the final act on the results of talks with co-chairman of the intergovernmental Russian-Venezuelan high-level cooperation commission.

Yakovlev, who chairs the commission for Russia, signed the document together with Vice-President of this South American republic Jose Vicente Rangel.

The Russian official said at the news conference that a large group of business people in the Russian delegation he led, was interested in working on the Venezuelan market.

During the talks in Caracas, the parties reached an accord on building in Venezuela of an alumina factory by the Russian Aluminum company. About one billion dollars will be invested in the project.

Representatives of the Russian companies Energoprom and Silovye Mashiny displayed an interest in building a Venezuelan hydroelectric power plant.

During the talks with the Venezuelan leadership, the parties discussed cooperation in the field of aircraft industry, in particular the setting up of a joint airline on condition of Venezuela's buying Russian aircraft.

Trade and economic cooperation issues prevailed during Yakovlev's meetings with Venezuelan officials. There are many mutually advantageous projects in this sphere, but unfortunately, trade turnover remains very low at just 40 million dollars a year, Yakovlev said.

"We can come up with offers for each other, and we should work towards increasing trade turnover and expanding the range of goods," the Russian deputy prime minister said.


Alcan workers refuse to relinquish control of Quebec smelter, boost output

Canada.com, Canada Tuesday, February 03, 2004

ALLAN SWIFT Canadian Press

MONTREAL (CP) - Labour relations have taken a strange twist for multinational Alcan Inc. after a militant union in the heart of its massive operations in Quebec seized control of a large smelter the company had just decided to close.

The workers claim that operations at the aluminum plant 250 kilometres north of Quebec City have improved since they took charge a week ago. The union issued a release Tuesday claiming production at the Arvida refinery in Saguenay is higher than it was before workers took control, a few days after Alcan announced Jan. 22 that the smelter would close, ending 550 jobs.

The union, recently affiliated with the Canadian Auto Workers, crowed that the smelter has turned out 1,500 tonnes of aluminum since then, providing Alcan with some $2.25 million in sales.

"All this was done despite the manoeuvres of deliberate sabotage and non-collaboration by management," union president Claude Patry said.

"Go figure. The unionized workers want to run their factory and the bosses want to block production."

Alcan has said it will take back the plant and proceed with the closure, while the Quebec government has appointed a mediator, but so far it's clear the workers are in control.

The Quebec Labour Relations Board issued an ordinance to say some of the workers' actions are illegal and ordered them to give Alcan back control of its plant. The union, at its meeting Tuesday, defied the order and said it was considering suing Alcan.

The smelter workers have long-standing grievances that Montreal-based Alcan has never kept promises to provide secondary manufacturing in the Saguenay region as well as just shipping out ingots.

The four potlines of the Arvida smelter, producing 90,000 tonnes a year with the outdated Soderberg technology, are part of the Jonquiere complex, once the flagship of Alcan's worldwide aluminium smelters. Other potlines with a capacity of 163,000 tonnes will continue.

All of Alcan's Soderberg technology plants in Canada had been slated to close by 2015 in any case, because the method is inefficient and polluting.

Alcan says it decided to close Arvida immediately because it could take advantage of a slew of pending retirements and wouldn't have to make any layoffs.

That reason didn't sit well with the union, which claims Alcan has reneged on long-term pledges to maintain employment levels and install a new smelter.

Chief executive Travis Engen revealed the closure to Quebec Premier Jean Charest at last month's world economic forum in Davos, Switzerland, and Charest had to break the news, raising a furore back home.

A professor of industrial relations at Laval University says Alcan, knowing the militancy of its Quebec unions, blundered with the shutdown announcement.

"Alcan's strategic error was perhaps underestimating the reaction of the local population," said Paul-Andre Lapointe, who used to work at the Arvida smelter.

"It has mobilized the whole population. Political leaders at all levels and all parties have come together to denounce the company, which has not keep its moral promises with regards to maintaining jobs.

"There is a history of strong union militancy at Arvida. They won't give in easily."

Alcan spokesman Joseph Singerman insisted that "we have full control of the plant," but admitted some workers are ignoring instructions.

Singerman said the company wants to resolve the issue through dialogue. "But there is a point in time that they're going to run out of materials."

On the Toronto stock market Tuesday, Alcan shares (TSX:AL) rose 86 cents to $57.15.

© Copyright 2004 The Canadian Press

Meghan Houlihan, Greenpeace & the Alumysa project

http://www.gristmagazine.com/dispatches/houlihan020204.asp

Grist Magazine Monday, 02 Feb 2004

Meghan Houlihan is the renewable energy program director for the Northeast Sustainable Energy Association, based in Greenfield, Mass. She periodically abandons her desk job to work as a web editor aboard Greenpeace vessels.

PUERTO AISEN, Chile. Back in bucolic little Vermont -- my homeland -- I wouldn't need an alarm clock to wake me at 6:00 in the morning. But I'm in Chile, I'm reminded, as my eyes struggle to open just in time to see Chilean people only slightly younger than I am returning from a night of revelry. The window of my cabana reveals the sun just beginning to peek out from behind the mountains, and I have a long day ahead.

Before I explain how I came to be here, down in spectacular Puerto Aisen in Patagonia, I should, by way of introduction, describe a soccer game held several nights ago. A contingent of about 20 Greenpeace people came here early last week to get acquainted with the local community and begin dialogue about the Alumysa project, a series of hydroelectric dams and an aluminum plant proposed for this area. Brainchild of Noranda, a Canadian company that has left a trail of environmental destruction around the world, Alumysa would result in the flooding of more than 24,700 acres of ancient forest. The Alumysa smelter would produce approximately 1.5 million tons of gaseous and solid waste each year, including fluorides, cyanide, and arsenic. But as in many other parts of Chile, the economy here is quite poor, and the promise of jobs is difficult to resist.

So my Greenpeace colleagues, after meeting various community members and holding some soft demonstrations to generate discussion about Alumysa, found themselves challenged to a game of soccer by the local police. Now, Chileans take their soccer very seriously, and the young, energetic Greenpeace volunteers were no different. With great excitement they accepted, and the teams met one fateful evening for a mighty battle.

It was clear from the start that we were in deep trouble. The professional stripes of the police team uniforms stood in stark contrast to the grubby T-shirts donned by the Greenpeace contingent. The police team moved with the precision of a hawk approaching its prey, communicating in that unspoken way characteristic of longstanding relationships -- and expert players. The Greenpeace team, tireless, enthusiastic, and with the grace of a dog wearing a blindfold, held its own, scoring five goals, despite the fact that the police team had brought in a professional goalie ("foul!" we cried). The final score? Five to 30, a defeat of epic proportions.

The lesson? Some losses are okay.

So now we await the arrival of the Greenpeace ship Arctic Sunrise at Chacabuco, a nearby port, where we will begin a tour to draw attention to the plight of Chile's ancient forests. By this evening, I will be situated on the ship, where I will maintain a website to communicate to the public about our tour, and, of course, to keep you informed about other lessons learned during the week ahead.


Groupe Laperriere gets alumina deal in China

Toronto Star, Canada Feb. 3, 2004. 11:15 AM

MONTREAL — Groupe Laperriere & Verreault Inc. has been awarded an $8-million contract by Aluminum Corp. of China, the leading alumina producer in China, the company announced today.

Montreal-based GL&V will supply high-capacity filters, systems and engineering services for the expansion of the Shanxi alumina refinery.

Groupe Laperriere (TSX: GLV.B) employs 1,500 people designing, manufacturing and servicing equipment used by the pulp and paper industry, metal and ore processors and the environmental sector.

Canadian Press


Alcan plans $250-million in cost savings

The Globe and Mail, Canada Tuesday, February 3, 2004 - Page B5

CEO says benefits of Pechiney takeover 'will take about two years to achieve'

By SHIRLEY WON

TORONTO -- Alcan Inc. expects to have a detailed plan by the end of the first quarter on how to extract about $250-million (U.S.) in cost savings from its blockbuster takeover of Paris-based aluminum producer Pechiney SA, the chief executive officer of Alcan said yesterday.

"There probably will be layoffs but we are still in the middle of trying to identify what that would be," although cuts at the corporate level will occur in France as opposed to Canada, Travis Engen told reporters after a speech to the Canadian Club.

"We feel that we will be able to get some benefits in this current year, and the full measure of benefits will take about two years to achieve."

Alcan's $6.3-billion (Canadian) hostile takeover of Pechiney closed in December, vaulting the Montreal-based company to become the world's largest aluminum maker by sales, topping Pittsburgh-based Alcoa Inc. The acquisition doubles Alcan's size, making it a company with $25-billion (U.S.) in annual revenue and 88,000 employees in 63 countries.

But Mr. Engen said Alcan's decision announced just over a week ago to close its 63-year-old Jonquière aluminum smelter in the Saguenay region, and cut 550 jobs by the end of April, is triggered by environmental problems. The Jonquière operation is the most polluting and least energy efficient of its Quebec smelters and -- while it was set to be closed in 2014 -- the early closing was also precipitated by the rapid rise of the dollar, which has outstripped a recent rise in aluminum prices, Alcan has said.

While Alcan intends to cut those jobs by taking advantage of pending retirements and transfers to its operations in the Saguenay region, workers have been occupying that plant since last Tuesday after hearing about the closing.

The union has "not been willing to undertake discussions" but management is open to having a dialogue, Mr. Engen said.

Meanwhile, Alcan yesterday was one of 12 companies on the Toronto Stock Exchange to begin participating in the first phase of the expansion of the TSX to include dual currency trading in both Canadian and U.S. dollars. That move is aimed at wrestling cross-border business away from the New York Stock Exchange and the Nasdaq Stock Market.


US firm Bechtel to relocate to Brisbane

The Age, Australia February 4, 2004 - 4:06PM

One of the world's largest engineering firms Bechtel will relocate the global headquarters of its mining and metal business from the United States to Brisbane, Queensland Premier Peter Beattie says.

Bechtel, which already has a strong presence in Queensland, will move its mining and metals unit following a decision four years ago to relocate its Oceania head office from Melbourne to Brisbane.

"This is a fantastic coup for the Smart State and a great endorsement for Brisbane as one of the world's premier locations for business and industry," Mr Beattie said.

"It means great potential for jobs as Bechtel secures projects."

Mr Beattie said Bechtel's decision further underlines Brisbane's strategic importance for the global mining and engineering industries.

"We are on the doorstep to Asia, we are resource rich, and we offer a strong business environment," he said.

Queensland had not offered an incentive for the move from Denver, Colorado, to Brisbane, Mr Beattie said.

Bechtel, which employs more than 47,000 people around the world, has operated in Australia since 1954 and has been involved in projects including Century Zinc, WMC Fertilisers, the Millmerran power station, the Boyne Island aluminium smelter and currently, the Comalco Alumina refinery.


Alcoa dismisses Alumina takeover

Sydney Morning Herald, Australia February 4, 2004 - 12:30PM

Aluminium and alumina producer Alcoa has no plans to acquire its Australian listed partner Alumina, the Australian Financial Review reported.

Alcoa chief executive officer Alain Belda told the AFR that the group did not have its eyes on Alumina, but instead was concentrating on a rapid expansion of its alumina production capacity.

"We have no offer on the table on that (a takeover of Alcoa)," Mr Belda told the newspaper.

However, the newspaper said Mr Belda was "laying the groundwork" for a possible tilt on Alumina.

It said Mr Belda had met with Victorian premier Steve Bracks on Tuesday and was also planning to meet with Prime Minister John Howard and Western Australian Deputy Premier Eric Ripper and WA State Development Minister Clive Brown.


Kaiser Aluminum Reports On Results Of Court Hearing

www.kaiseral.com 2/4/04

HOUSTON, Texas, February 4, 2004 -- Kaiser Aluminum announced that, in a special hearing on February 2, the U.S. Bankruptcy Court for the District of Delaware conditionally approved the company's previously announced agreement in principle with the United Steelworkers of America (USWA), and the recently concluded agreements in principle with the 1114 Committee, which represents salaried retirees, and the International Association of Machinists (IAM), which represents hourly employees at two Kaiser locations, regarding certain pension and post-retirement benefits. The USWA and the IAM represent the vast majority of the company's U.S. hourly employees.

The agreements in principle are subject to various approvals, including ratification by union members, approval by the company's Board of Directors, and final approval by the Bankruptcy Court. The agreements are also conditioned upon the satisfactory resolution of certain intercompany claims.

Separately, the company continues to have discussions with four additional unions concerning pension and post-retirement benefits.

The agreements in principle conditionally approved by the Court provide for:

The termination of existing post-retirement benefit programs-- such as retiree medical -- for current and future retirees who are or were salaried employees, members of the USWA, and members of the IAM (as well as surviving spouses and dependents). Under the agreements in principle, these participants would be provided an opportunity for continued retiree medical coverage through COBRA or a proposed Voluntary Employee Beneficiary Association (VEBA). As previously disclosed, Kaiser would fund the VEBA with a combination of cash, profit-sharing, and other consideration, subject to certain caps and limits.
The termination of existing pension plans for current and future retirees represented by the USWA and IAM. Under the agreements in principle, active employees who are represented by the USWA and the IAM would be provided with an opportunity to participate in one or more replacement pension plans and/or defined contribution plans. The Court's conditional approval of this agreement in principle came in conjunction with a ruling that Kaiser has satisfied the criteria for distress termination of its U.S. hourly pension plans. Vested benefits under defined benefit pension plans are guaranteed by the PBGC, up to certain limits.

After all required approvals -- including final Court approval -- are obtained in connection with the agreements in principle, the company will advise participants of the termination dates for the post-retirement and pension benefit programs.

On a related matter, as previously reported, the pension plan for salaried employees was terminated by the Pension Benefit Guaranty Corporation on December 17, 2003. Kaiser expects that current salaried employees will be provided with an opportunity to participate in a replacement plan.

"These agreements in principle represent the best efforts of Kaiser and the other stakeholders to address this unfortunate situation and to provide employees and retirees with some level of ongoing coverage while at the same time helping Kaiser to advance toward a planned emergence from Chapter 11 at mid year," said Jack A. Hockema, president and chief executive officer.

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



How to interpret the rapid growth of China's aluminum industry

China Economic Net, China 4-feb-2004

How should we view the rapid growth of investment in China's electrolytic aluminum and aluminum oxide industries, and how are the prospects of the domestic and foreign aluminum markets? With these questions, Economic Daily's Yang Goumin had an interview with Mr. Guo Shengkun, general manager of Aluminum Corporation of China(CHINALCO).

Q: How is the current market situation for the aluminum industry and prospects of demand?

A: With regard to the development status of the global aluminum industry, we forecast that in 2004 world aluminum output will maintain relative steady growth. Driving force and increment of aluminum production and consumption come mainly from China.

In the first three years in the 21st century, China's aluminum industry stepped into a period of fast development. Production capacity of electrolytic aluminum topped 7 million tons at the end of 2003, more than doubling that in 2000. In 2001, China turned from a net importer of crude aluminum into a net exporter of crude aluminum, and remained the world's No.1 producer of crude aluminum for three consecutive years. With increasing influence on the international crude aluminum market, it has become focus of attention among people in the industry both at home and abroad.

Output of homemade aluminum oxide climbed from 4.29 million tons in 2000 to 6 million tons in 2003, with annual growth rate exceeding two-digit numbers. However, due to limited supply of bauxite resources in China and excessively rapid growth of production capacity of electrolytic aluminum, the domestic output falls short of market demand by a large margin. The gap needs to be filled in with imports, which are on the rise year by year.

Demand for electrolytic aluminum still shows a growing trend in China, and shortage of aluminum oxide continues to expand. It is expected that market price will remain high for some time to come. What is especially noteworthy is that reduced tariff rates, fierce market competition and aggregated contradiction between the supply and demand of electric power may cause massive reorganization and consolidation in the domestic electrolytic aluminum industry. Such reshuffling under the action of the market will make the output and price of electrolytic aluminum highly volatile. And such uncertainties may, in return, trigger dramatic changes in the output and price of aluminum oxide. Therefore, in 2004 price curve will be subject to numerous variables in the aluminum market, making it hard to predict accurately.

Q: Speaking of overheated investment in the aluminum industry, the focus of contradiction lies in electrolytic aluminum. How should we interpret the rapid growth of production capacity of electrolytic aluminum in recent years?

A: The rapid expansion of the production capacity of electrolytic aluminum in recent years, first of all, can be ascribed to the impetus given by market demand. Firstly, the recovery of the world economy has helped boost consumption level worldwide and market demand, providing favorable international market environment for the development of China's aluminum industry. Secondly, the sustained rapid growth of the Chinese economy has given an impetus to market demand for aluminum. As an essential material for the national economy, aluminum is highly related to other industries. At present, China is on the way to raising its per capita GDP from US$1,000 to US$3,000, with huge potential for economic development.

Another remarkable reason is that, stimulated by a number of factors like market demand and driven by their own interest, some investors blindly built production capacity of electrolytic aluminum in a big way, defying the requirements of State development planning, industry policy and statutes on environmental protection. As a result, overheated investment and duplicate construction surfaced in the aluminum industry. This is also an important reason why the production capacity of electrolytic aluminum has been growing too fast.

Q: Since the price of aluminum products stays high at present and market demand will continue to grow, why do we need to curb the overheated investment in this industry?

A: If the current momentum of duplicate construction in the electrolytic aluminum industry is not effectively checked, calculated at the present growth rate, there will be severe overcapacity in the industry, with production capacity topping 10 million tons. Overheated investment in the electrolytic aluminum industry will cause many negative consequences.

First of all, it intensifies irrationality of the industrial structure. In the past six years, the number of electrolytic aluminum enterprises soared from 70 to 138 in China, exceeding the sum of aluminum factories in all other countries. However, average enterprise size is below 40,000 tons, which is only one fifth of the world average size.

Secondly, raw materials of aluminum oxide are severely in short supply. Aluminum oxide is the main raw material in the production of electrolytic aluminum. On average it requires 2 tons of aluminum oxide to produce one ton of electrolytic aluminum. In 2003, for example, a production capacity of 7 million tons of electrolytic aluminum required 14 million tons of aluminum oxide. Output of homemade aluminum oxide was only 6 million tons, leaving a gap of 8 million tons. Thus, the industrial structure is very irrationally. By 2005, output of homemade aluminum oxide is expected to rise to 7.5 million tons at most, which can only meet a production capacity of 3.5 million tons of electrolytic aluminum. Staggering import of aluminum oxide into China has led to tight supply of aluminum oxide in the international market, triggering significant price hikes. Price of imported aluminum oxide has also skyrocketed from 1,900 yuan/ton in December 2003 to 4,200 yuan/ton now.

Thirdly, it intensifies the short supply of electric power in some areas. Electrolytic aluminum is a highly energy-consuming industry. With the rapid expansion of the production capacity of electrolytic aluminum, increase in power consumption has aggravated the tight supply of electric power in some areas. It is predicted by the State Development Planning Commission and State Electricity Regulatory Commission, China will still face considerable shortage of power supply in 2004, and the power supply situation will look more austere. This will cause major impact on highly energy-consuming industries like electrolytic aluminum.

Fourthly, reduction of profits puts the survival of aluminum enterprises at risk. Price hikes of raw materials like aluminum oxide and electricity charges have pushed up the cost of electrolytic aluminum products by a large margin. Calculated at the current price of imported aluminum oxide, producing electrolytic aluminum with electricity purchased from grids brings no profits. Some electrolytic aluminum enterprises started to operate at a loss. It can be predicted that as the production capacity of electrolytic aluminum continues to grow, more enterprises will suffer losses or even shut down.

Fifthly, it increases risks with bank loans. An electrolytic aluminum enterprise usually involves an investment of 6,000-10,000 yuan/ton. Thus, if one million tons of production capacity lies idle due to overcapacity, assets worth 6 billion-10 billion yuan will sediment. As enterprises finds it difficult to realize expected benefits and their loan-repaying capacity weakens, it is very likely that bank loans will turn into bad debts, aggravating loan risks.

Disorderly investment in aluminum oxide causes more worrying destruction to resources than duplicate construction of electrolytic aluminum does. Data shows that China's proven reserves of bauxite accounts for only 2.3 per cent of the world total. At present, however, its annual production of bauxite has reached 10 per cent of the world total production. Thus, there exists severe disequilibrium between the reserves and yield of bauxite in China. If disorderly investment and exploitation goes unchecked, and we fail to take all aspects into consideration and exercise timely regulation, allowing limited resources to be tapped in a disorderly manner, staggering waste of resources will result, and bauxite resources will be exhausted in no time. There were repeated bitter lessons in the history of nonferrous metals; we should draw ample warning.

Q: As the leading player in the aluminum industry, what does Chinalco do to curb the overheated investment and play a dominant role in fostering the healthy development of the industry?

A: Chinalco was set up pursuant to the State Council decision on adjusting the management system of the nonferrous industry, with some large-scale enterprises under the central government in the aluminum industry as main body. As a key state-owned enterprise, Chinalco must shoulder bravely the responsibility of guiding the sustainable and healthy development of the industry.

By pursuing the strategy of prioritizing aluminum oxide, Chinalco increased its production capacity of aluminum oxide by 40.5 per cent in the recent years, making contribution to alleviating the shortage in the domestic market. It has reduced investment in electrolytic aluminum. The increase in its production capacity of electrolytic aluminum takes up 1.4 per cent of the total increase in production capacity in China. As it takes up a reduced percentage in the country's total production capacity, the company made great efforts to curb the overcapacity trend in the industry, optimize the industrial structure and reduce operating risks for electrolytic aluminum enterprises. The company meets demand in the domestic market at a price 300 yuan to 500 yuan below import price per ton of aluminum oxide.

On January 6, CHALCO Aluminum Corporation of China Limited successfully completed placement of H shares on Hong Kong Stock Exchange, raising a net amount of HK$3,068 million. The funds raised are mainly devoted to building the third-stage project of its Shanxi sub-company with approval from the State. The project is built with a production capacity of 800,000 tons of aluminum oxide, and expected to be completed and put into production at the end of 2005. Then, the Shanxi sub-company's aggregate production capacity from 1.2 million tons to over 2 million tons, thereby playing an important role in easing the tight supply of aluminum oxide in China.

In addition, Chinalco will continue to follow up domestic M&A projects in the electrolytic aluminum industry and choose the right time to complete the M&A and reorganization of a few electrolytic aluminum enterprises this year. The aim is to boost electrolytic aluminum enterprises' competitiveness through industry consolidation.

This interview was originally published on Page 6 of the Economic Daily on January 17, 2004.


China to curb excessive investment in steel, aluminum, cement

People's Daily Online, China 4-feb-2004

Chinese Vice-Premier Zeng Peiyan called for concerted efforts to curb excessive investment in iron and steel, electrolytic aluminum and cement on Feb 4th.

Chinese Vice-Premier Zeng Peiyan called for concerted efforts to curb excessive investment in iron and steel, electrolytic aluminum and cement on Feb 4th.

China has become the biggest producer of those products in the world, with improved technology and equipment, but production facilities planned or under construction in those sectors have outstripped market demand due to excessive investment, said he.

Addressing a telecast national conference, the vice-premier said China's production capacity in those sectors have outpaced forecast market demands, while the sectors themselves are characterized by irrational production mix, high input of raw materials, low yields and severe industrial pollution.

Chinese leaders issued a similar warning last year.

The vice-premier urged local governments to investigate investment projects in those sectors, and report the results to the central government, which is scheduled to dispatch task forcesin the near future to selected areas to make sure its policies are implemented.

Central government departments and agencies, including the Ministry of Land and Resources, the People's Bank of China (the country's central bank) and the State Environmental Protection Administration, have taken measures to dampen excessive investment in those sectors, Zeng said.

China will resort to economic, legal and administrative measures to regulate investment in those sectors, meanwhile cautioning government departments against interference in investors' business, the vice-premier added.

He ordered the government departments concerned to improve the country's industrial policies regarding those sectors, and establish a mechanism to publish market information on such products and an early warning system to reduce excessive investment.

Source: Xinhua News Agency


RusAl in Venezuela

Moscow Times, Russia 4-jan-2004

MOSCOW (Bloomberg) -- Russian Aluminum agreed to build an alumina plant in Venezuela that may require about $1 billion of investment, Prime-Tass reported Wednesday, citing Russian Deputy Prime Minister Vladimir Yakovlev during his visit to Caracas, the Venezuelan capital.

Siloviye Mashiny and Energoprom also expressed interest in plans to upgrade a Venezuelan hydropower plant, Prime-Tass reported.

Russian Aluminum officials were not immediately available to comment on the report.



Hydro Aluminum to expand Floridian facility

Reuters, 02.05.04, 10:34 AM ET

NEW YORK, Feb 5 (Reuters) - Hydro Aluminum North America said Thursday it will spend $8.3 million to upgrade its casthouse for primary-quality aluminum billet in St. Augustine, Florida, as part of a larger capital investment program.

This will nearly double the facility's capacity to 60,000 tonnes per year, the company said.

The upgrade, part of a $100 million plan to build new or revamped aluminum remelt capacity in the United States, will take place during the second quarter of 2004 and will include the installation of new casting technology, additional metal filtering equipment and a new saw line.

Headquartered in Baltimore, Maryland, Hydro produces over 400,000 tonnes of primary quality billet with high recycled aluminum content at its North American facilities.

It is a unit of Norway's industrial group Norsk Hydro ASA <NHY.OL>,

Copyright 2004, Reuters News Service


Alcan Eyes Strong Alumina Mkt;Firm Fundamentals

Yahoo News Friday February 6, 9:42 AM

By Ray Brindal

Canberra, Feb. 6 (Dow Jones) - Canada-based aluminum producer Alcan Inc. expects a strong market for alumina to continue well into 2004 given the robust fundamentals underpinning the market, Richard Yank, president of the company's Pacific bauxite and alumina operations, said Friday.

He also said a decision about whether to expand production at the company's Gove alumina refinery is on schedule for mid-year.

And he said that in the wake of Alcan's takeover of French aluminum producer Pechiney late last year, Alcan is keen to develop the vast Aurukun bauxite deposit in northern Queensland state that is the subject of a legal dispute with the state government. Alumina is refined from bauxite.

Alcan is an integrated aluminum producer and fabricator, and packaging concern.

Yank didn't want to comment directly on or forecast alumina prices.

"For the moment, we're obviously optimistic that we're going to see a strong market," he told Dow Jones Newswires.

"As published spot prices would indicate, there's strong demand at the moment for alumina, driven by global growth in aluminum over the last few months after a couple of difficult years for the industry," he added.

The government's Australian Bureau of Agricultural and Resource Economics forecast in December that spot alumina prices would rise to average US$320 a metric ton in 2004 from an estimated US$271/ton in 2003 and an actual US$140/ton in 2002.

A major driver of alumina demand is China, which has been undergoing "tremendous growth" of its aluminum industry and is a "strong buyer of alumina," the main raw material for aluminum, Yank said.

Demand for alumina also has been fueled by a more general global economic recovery, he said.

"But I guess China, just because of the sheer volume, has been a bit of a standout in the last couple of years," he said.

The industry is responding to this with recent announcements of several brownfields project developments, he said.

ALUMINUM PRODUCTION ISN'T CONSTRAINED

Yank said he doesn't believe that tight supply of alumina is constraining aluminum production.

That said, he acknowledged that alumina prices are high, and that aluminum producers dependent on spot purchases of alumina are probably concerned at the moment.

Most major aluminum producers work on a mix of long-term alumina supply contracts, he said.

Turning to a proposed 50% expansion of Alcan's 1.8 million ton a year alumina refinery at Gove in the Northern Territory, Yank said feasibility studies on this proposal are proceeding well.

An environmental impact statement on the expansion proposal, a major step in the development process, will be issued next week, he said.

"We're still on track for a mid-2004 decision," he said.

Yank also said that having made financial closure on the takeover of Pechiney in December, Alcan now is getting "up to speed with a number of issues and opportunities within Pechiney."

This includes a legal dispute with the government over the tenement licenses covering the world-scale Aurukun bauxite deposit.

"Aurukun is obviously one we're tremendously interested in. It's an important resource, particularly with our growth strategy in bauxite/alumina," he said.

He couldn't say at this point whether the dispute will reach a negotiated resolution, with Alcan having already indicated a willingness to talk to the government, or if the dispute will be concluded in a court.

The issue is one "we'll be giving high priority to addressing," he said.

"Obviously Alcan would be interested in developing that resource and hopefully we can work with the Queensland government in finding a way forward," he said.

Ray Brindal, Dow Jones Newswires, 612 6208 0902 ray.brindal@dowjones.com


Corus tries to offload aluminium

The Guardian Friday February 6, 2004

David Gow

Corus, the Anglo-Dutch steel group, yesterday resurrected the prospect of a sale of its aluminium business to improve further its financial stability by
paring down debt.
Last year the Dutch supervisory board and works council, backed by the courts, blocked the €861m sale of the aluminium business to Pechiney, the French metals group, and prompted a renewed crisis at the group.

Pechiney has since been swallowed up by Alcan, leaving Alcoa and HydroAluminium, the former NorskHydro, as among the more likely bidders for the business.

Corus said it was "now entering the early stages of a process to consider actively the options for its aluminium business which may lead to discussions with third parties."

Officials said no talks were under way but insisted that discussions on Wednesday with the Dutch works council had been constructive. The council, they added, had shown a willingness to review all options. A works council spokesman, Frits van Wieringen, told Reuters a full sale was not realistic and could be blocked by competition authorities. Corus said his views were not shared by the entire body.

The aluminium business comprises thee units: primary (two smelters, in Holland and Germany), rolling and extrusions. Pechiney refused to buy the smelters in last year's abortive deal.

Yesterday's move is the latest by Philippe Varin, the chief executive brought in from Pechiney after the earlier debacle, to restore Corus to financial health after a £291m net share placement and new £1.2bn credit facility.


Alcan workers refuse to relinquish control of Quebec smelter

Axis of Logic, United States Feb 5, 2004, 11:14

By Allan Swift

February 3, 2004-Labour relations have taken a strange twist for multinational Alcan Inc. after a militant union in the heart of its massive operations in Quebec seized control of a large smelter the company had just decided to close.

The workers claim that operations at the aluminum plant 250 kilometres north of Quebec City have improved since they took charge a week ago. The union issued a release Tuesday claiming production at the Arvida refinery in Saguenay is higher than it was before workers took control, a few days after Alcan announced Jan. 22 that the smelter would close, ending 550 jobs.

The union, recently affiliated with the Canadian Auto Workers, crowed that the smelter has turned out 1,500 tonnes of aluminum since then, providing Alcan with some $2.25 million in sales.

"All this was done despite the manoeuvres of deliberate sabotage and non-collaboration by management," union president Claude Patry said.

"Go figure. The unionized workers want to run their factory and the bosses want to block production."

Alcan has said it will take back the plant and proceed with the closure, while the Quebec government has appointed a mediator, but so far it's clear the workers are in control.

The Quebec Labour Relations Board issued an ordinance to say some of the workers' actions are illegal and ordered them to give Alcan back control of its plant. The union, at its meeting Tuesday, defied the order and said it was considering suing Alcan.

The smelter workers have long-standing grievances that Montreal-based Alcan has never kept promises to provide secondary manufacturing in the Saguenay region as well as just shipping out ingots.

The four potlines of the Arvida smelter, producing 90,000 tonnes a year with the outdated Soderberg technology, are part of the Jonquiere complex, once the flagship of Alcan's worldwide aluminium smelters. Other potlines with a capacity of 163,000 tonnes will continue.

All of Alcan's Soderberg technology plants in Canada had been slated to close by 2015 in any case, because the method is inefficient and polluting.

Alcan says it decided to close Arvida immediately because it could take advantage of a slew of pending retirements and wouldn't have to make any layoffs.

That reason didn't sit well with the union, which claims Alcan has reneged on long-term pledges to maintain employment levels and install a new smelter.

Chief executive Travis Engen revealed the closure to Quebec Premier Jean Charest at last month's world economic forum in Davos, Switzerland, and Charest had to break the news, raising a furore back home.

A professor of industrial relations at Laval University says Alcan, knowing the militancy of its Quebec unions, blundered with the shutdown announcement.

"Alcan's strategic error was perhaps underestimating the reaction of the local population," said Paul-Andre Lapointe, who used to work at the Arvida smelter.

"It has mobilized the whole population. Political leaders at all levels and all parties have come together to denounce the company, which has not keep its moral promises with regards to maintaining jobs.

"There is a history of strong union militancy at Arvida. They won't give in easily."

Alcan spokesman Joseph Singerman insisted that "we have full control of the plant," but admitted some workers are ignoring instructions.

Singerman said the company wants to resolve the issue through dialogue. "But there is a point in time that they're going to run out of materials."

On the Toronto stock market Tuesday, Alcan shares (TSX:AL) rose 86 cents to $57.15.


76 jobs lost as HAE closes plant

The Scotsman, UK 5-feb-20004

NICK BEVENS BUSINESS EDITOR

SCOTTISH industry suffered another knock yesterday with the announcement of the planned closure of the Hydro Aluminium Extrusion plant in Sanquhar, in Dumfries-shire, with the loss of 76 jobs.

The Norwegian-owned company blamed an on-going reduction in their market over the past ten years.

Officials at the firm, the town’s largest employer, said last night they were in discussions with staff and unions and some workers may be offered re-location packages. But the most likely scenario is closure within five months.

Four other UK plants, in south Wales, Durham, Warwick and Gloucester, will also close.

Laurids Lauridsen, managing director of HAE, which has 500 staff across the UK, said: "The proposal reflects the ongoing need to adapt to changing market conditions to safeguard the future of our business."

According to industry figures provided by the company, the UK aluminium market is running at 60 per cent capacity. In the past few years, there has been a continued reduction in the number of plants, with leading industry names such as Alcoa and Sapa also reducing their sites and workforces.

HAE took control of the factory in 1987. It was opened in 1969 as Century Aluminium, and at its height it employed 250 staff.

Lauridsen added: "We are consulting with employees to ensure every possible avenue is explored. Should the proposal to close proceed, we would make every effort to find positions for the workforce at other plants in the UK and across the group."

Last week, Castleblair, the Dunfermline-based clothing group, unveiled plans to shut its two factories with the loss of nearly 500 jobs. The group confirmed its financial situation was desperate and that the jobs were being transferred to a plant in Turkey.




Boyle pleased with bankruptcy court's action

Martins Ferry Times Leader, OH 6-feb-2004

THE U.S. Bankruptcy Court for the Southern District of Ohio has granted interim approval of the Ormet Corp.'s $210 Million DIP financing facilities and other motions in support of customers, vendors and employees.

These approvals of the company's first-day motions represent an important initial step toward Ormet's goal of successfully completing its financial reorganization.
The first-day motions granted by the court allow Ormet and its subsidiaries (collectively, "Ormet") to, among other things, pay pre-petition wages, compensation and employee benefits, and continue Ormet's workers' compensation program and other insurance policies; obtain postpetition debtor-in-possession (DIP) financing; pay prepetition sales, use and franchise taxes; and retain various professional firms to advise and assist Ormet in connection with its bankruptcy reorganization, including O'Melveny & Myers LLP as legal adviser, and Crossroads, LLC as financial adviser.

Ormet owner, Chairman and Chief Executive Officer R. Emmett Boyle said, "We are pleased with the court's prompt approval of all of our 'first-day motions,' which will enable us to continue to operate, pay our employees, pay our vendors, and meet our commitments to our customers as we proceed with the reorganization process."

Ormet Corp. employs approximately 2,600 people through its subsidiaries, principally including Ormet Primary Aluminum Corp. and Ormet Aluminum Mill Products Corp. The company operates facilities in five states and produces high-quality aluminum products for the fabrication, extrusion and conversion markets.


West Virginia to challenge consent decree requiring sale of Alcan plant

CJAD, Canada February 6, 2004, EST.


CHARLESTON, W.Va. (AP) - West Virginia will challenge a proposed federal agreement that requires the sale of an aluminum plant to preserve competition in the aluminum industry, Gov. Bob Wise said Friday.


Alcan Inc. is in the process of buying the plant's parent, Pechiney Rolled Products. The U.S. Department of Justice's antitrust division filed a proposed consent decree in September that would require the Ravenswood plant's sale if the deal goes through.

The decree would resolve the agency's federal lawsuit to block the Canadian company's $4.6 billion US purchase of the France-based Pechiney. Alcan would have 120 days to sell the plant.

"We have been working for some time with Pechiney and have discovered that very few purchasers would be able to run the plant because of technical and quality complexities associated with aluminum production," Wise said.

Instead, Wise wants the consent decree modified so Alcan can continue operating the plant.

An Alcan spokesman declined to comment Friday since the issue is pending in court.

Officials at the Justice Department and the plant were not immediately available.

The West Virginia plant employs about 900 people and produces brazing sheet, an aluminum alloy used to produce radiators, oil coolers, heaters and air conditioning units for motor vehicles.

© The Canadian Press, 2004


Alcoa says Australia expansion approved

Bizjournals.com February 6, 2004

Alcoa Inc. said Friday the Australian government approved a $270 million expansion of a joint venture's alumina refinery.


Officials in Australia gave the necessary environmental approvals for the 600,000 metric ton per year expansion of Alcoa World Alumina and Chemicals' Pinjarra refinery, according to Pittsburgh-based Alcoa. That clears the way for construction work to begin in March with completion expected by the end of 2005.

Alcoa, the world's largest aluminum producer, owns 60 percent of Alcoa World Alumina and Chemicals. The remainder is owned by Alumina Ltd., of Australia.

Last November, Alcoa World Alumina and Chemicals completed an expansion of its Jamalco alumina refinery in Jamaica. The venture has also broken ground on an expansion of its Paranam alumina refinery in Suriname.



BUDGET: Import duties on aluminium ingots halved

GhanaWeb, Ghana

Accra, Feb. 5, GNA- The Government has proposed the reduction of import duties and removal of VAT on selected imported goods. These include the reduction of the 10 per cent import duty on Aluminium ingots to five per cent; the freezing of the payment on VAT on imported industrial raw materials; the removal of import duties on lumber and removal of VAT on irrigation pumps.
Mr Yaw Osafo-Maafo, who announced this when he presented the Government's Budget Statement to Parliament on Thursday proposed the removal of taxes on musical instruments and the removal of duty and VAT on imported inputs for fishing nets and fishing Ropes.
The Minister said the relief on industrial raw materials was in line with the to Government's vision of "Golden Age of Business".
"It is envisaged that this would mitigate the upfront cash flow problems faced by manufacturers associated with the VAT component of large imports of industrial raw materials," he explained.
He, however, noted that since some raw materials also double as finished products, the list of imported industrial raw materials qualified to be zero-rated under the Import VAT regime and the companies eligible for this special tax treatment shall be gazetted quarterly. The Finance Ministry and the Ministry of Trade, Industry and President's Special Initiatives (PSI) would ensure transparency and curtail abuses.
He said the removal of taxes on musical instruments would drive the development of local musicians and the music industry towards the promotion of our culture and tourism as well as social life. The holiday would cover musical instruments classified under Chapter 92 of the Harmonised Code and recording instruments, he said.



Kaiser/Maxxam should honor pensions

http://www.spokesmanreview.com/news/letters.asp?date020704&idl18252

The Spokesman-Review 2/7/04 Letters to the Editor

Joshua A Reiss (letter), please don't try to insult the intelligence of people in Spokane. By contract, Kaiser hourly workers worked for hourly wages and benefits and future retirement pensions and benefits.

Right now, the Hurwitzes and others in top management are getting their pensions, etc., but the hourly people are getting the 4-Hi rolling shaft. Kaiser/Maxxam should be made to liquidate all their assets to fund the hourly worker pensions. These are the people who built the company, not the worthless junk bond financiers at the top.

The bankruptcy court should redirect its efforts. Hourly pensions should be paid first per the negotiated contract, which should be honored. The last people who should be paid are management thieves. Pay them with worthless junk bonds.

And, if such pension agreements are not honored, just give us the addresses of Hurwitz and Reiss. When Pension Benefit Guarantee Corp. defaults, pensioners and their families, in lieu of cash payments due, can just move in with Hurwitz and Reiss' families.

But be warned, Hurwitz and Reiss will have to do their own dishes and chores _ even windows.

Patrick G. Marshall, Spokane, WA


Proposed tax breaks multiply in Legislature

kgw.com (subscription), OR 02/08/2004

By PAUL QUEARY / Associated Press

The state gives more than 500 different tax breaks on things as diverse as bull semen and country-club dues. And despite persistent calls to eliminate some of them to free up money for government services, lawmakers have proposed dozens more.

Lawmakers in both the House and the Senate have already voted to renew two tax breaks for the high-tech sector that are aimed at fostering research and development. Although the price tag — $100 million and up in future years — caused heartburn among defenders of hard-hit government programs, the vote to renew the breaks was lopsided in both chambers. A compromise between two competing versions is expected to become law.

Meanwhile, a bid to force deeper study of the hundreds of credits, deferrals and outright exemptions is likely to stall in the Republican-controlled Senate.

The prime argument for virtually every tax break is jobs — creating and maintaining a prosperous economy that provides well-paid employment for workers and abundant tax revenue for government.

"These plants can thrive if we give them a chance," Michael Tanchuk, northwest regional president for Alcoa Primary Metals, told the House Finance Committee during a recent hearing on a temporary, $5.7 million tax break aimed at saving jobs at aluminum smelters in Ferndale and Wenatchee. "The problem is we need some help. I've had to notify about 300 people that they've lost their jobs."

The incentive sponsored by Rep. Jeff Morris, D-Anacortes, is designed as a bridge to keep the smelters here until the price of electricity — a huge expense for smelters — comes down.

Morris figures there's no downside because without the incentive, the plants will close, and there won't be any tax revenue anyway. With it, they'll stay and pump tens of millions into the state's coffers.

But as the national and global economies become ever more competitive, bids for tax incentives often come with an implied threat: give us the money, or we'll take our business and our jobs elsewhere.

The aluminum plant proposal offers the perfect example. Washington was once a magnet for aluminum plants drawn by cheap electrical rates. Then came the West Coast power crisis. Bonneville Power Administration electrical rates went through the roof. Plants began closing as companies went in search of cheaper power.

"I can buy power cheaper near Washington, D.C., than I can in Washington state — and I just did," Tanchuk said.

The Finance Committee unanimously passed the smelter tax break bill on Thursday evening.

Lawmakers in both the Democratic House and the Republican Senate say the key to considering tax breaks is in evaluating whether they actually create or maintain jobs.

"At the end of the day what is it costing us to underwrite these jobs?" asked Senate Ways and Means Chairman Joe Zarelli, R-Ridgefield, a conservative who generally favors tax relief to help promote businesses. "There's got to be a real chance of maintaining what we have or creating new opportunities."

Meanwhile, labor unions and other liberal interests argue for fewer tax breaks, not more. From their perspective, every dollar in tax incentives is a dollar that isn't available for worthy government spending on health care and education.


 


Alcan net income jumps to US$143 million

The Age, Australia February 10, 2004 - 8:30AM

Alcan Inc. has reported a solid fourth quarter thanks to higher aluminum prices, with three-month net income rising to US$US143 million ($A186.77 million), compared with $US26 million a year earlier.

The second-biggest aluminum producer after Alcoa Inc. and largest by revenue after swallowing French producer Pechiney SA, said three-month revenue increased to $US3.51 billion from $US3.11 billion.

The results, which do not include Alcan's US$4.6 billion acquisition of Pechiney, showed net earnings per share of 44 US cents, up from 8 US cents.

Alcan said fourth-quarter operating earnings, excluding foreign currency balance sheet effects, were $US135 million. That's up by $US11 million or 9 per cent from the year-earlier period, as "benefits from higher metal prices were fully offset by the negative impact of the continuing decline of the US dollar," said president and CEO Travis Engen.

Full-year sales were US$13.64 billion, up from $US12.3 billion, with net earnings of US$167 million, down from US$374 million.

Engen said "overall it was a successful year but one marked by challenging external conditions including a soft economic environment, turbulent currency markets and cost pressures."

The falling US dollar resulted in currency translation losses of $US306 million for the year.

Engen said in a conference call the firm will put the focus this year on the integration of Pechiney, whose acquisition was just wrapped up last Friday.

"Dozens of integration teams are working today aimed at flushing out the synergies and opportunities," Engen said. "That work will go on several months, to be largely completed by end of the first quarter and we'll be well into the integration stage."



 


RusAl Planning $7Bln Expansion

Moscow Times, Russia Wednesday, Feb. 11, 2004. Page 7

Bloomberg Russian Aluminum, which makes one-eighth of the world's aluminum, plans to spend about $7 billion in the next 10 years to increase output by building new plants, making acquisitions and upgrading smelters.

The company may invest as much as $2 billion to buy new assets, another $4 billion to build new plants and $1 billion to upgrade existing facilities, Oleg Deripaska, Moscow-based RusAl's controlling shareholder, said on the company's web site.

"We need to create and keep advantages that would enable RusAl to win the competition with global aluminum giants," Deripaska said.

RusAl plans "to build and acquire new capacity in Russia's Irkutsk region, Kazakhstan, Tajikistan, India, Nigeria and Guinea," he said.

The plan is an extension of RusAl's earlier-announced program to spend $4 billion through 2010 on boosting production. Closely held last month said RusAl may sell Eurobonds in 2006 and offer shares to the public in 2007.

Alcan earnings surge despite currency loss

Toronto Star, Canada 10-feb-2004

Aluminum giant starts integration of Pechiney assets Workers to vote
on deal to end Quebec conflict

ALLAN SWIFT CANADIAN PRESS

MONTREAL—Alcan Inc. has its work cut out for the coming year as it decides where to invest and divest in its expanded empire, the chief executive said yesterday.

Travis Engen said Alcan, the world's largest aluminum maker by sales, is reviewing its 17 smelters and those of Pechiney SA, which it acquired on Friday.

It has 12 months to decide which of two rolling mills — one in France or one in Germany — it will sell due to antitrust provisions in the Pechiney takeover, and has four months to find a buyer for its Ravenswood plant in the United States. Smelters in Kitimat, B.C., and proposed smelters in South Africa are among those Alcan is studying to determine whether they will be replaced, expanded or discontinued.

"There is no schedule for coming to a conclusion, but obviously it's a high priority for us," Engen said in a conference call to discuss fourth-quarter results.

Engen also said an agreement reached with a union to end workers' control of an Alcan smelter at Saguenay, Que., will not change the company's plans to close the smelter.

"We have no option with respect to that. The technology is quite outdated," Engen said.

The smelter employs 550 workers but Alcan had said it could avoid layoffs in the shutdown because of many pending retirements.

The workers, who are affiliated with the Canadian Auto Workers union, have been operating the smelter on their own since late January to protest the company's decision. An agreement reached Sunday has to be ratified by the workers.

Alcan reported a solid fourth quarter thanks to higher aluminum prices. Net income rose to $143 million (U.S.), or 44 cents per share, from $26 million, or 8 cents per share, a year earlier.

On average, analysts expected Montreal-based Alcan to earn 40 cents a share, according to Thomson First Call.

Alcan, which reports its earnings in U.S. dollars, said its three-month revenue increased to $3.51 billion from $3.11 billion a year earlier, even though shipments fell by 3.4 per cent.

The company took an after-tax charge of $56 million, or 17 cents per share, for the effects of currency translations due to the weaker U.S. dollar.

The results do not include Alcan's acquisition of French-based Pechiney for 4 billion euros, or $6.7 billion (Canadian).

Full-year sales were $13.64 billion (U.S.), up from $12.3 billion a year earlier, and net earnings fell to $167 million from $374 million. The falling American dollar resulted in currency translation losses of $306 million for the year.

Thanks to continued cost cutting and higher aluminum prices, "we're well poised for a strong year in 2004," Engen said.

Because of the Pechiney merger, he did not provide outlook figures.

WITH FILES FROM REUTERS news agency



 


Ormet seeks bonuses for managers in Chapter 11 filing

Associated Press Fort Worth Star Telegram, TX Wed, Feb. 11, 2004

WHEELING, W.Va. - Bankrupt aluminum maker Ormet Corp. is seeking permission to award $2 million in bonuses to 38 managers expected to guide the company through Chapter 11 reorganization.

In documents filed with U.S. Bankruptcy Court in Columbus, Ohio, Wheeling-based Ormet also asked a judge to stop utility companies from shutting down service for unpaid bills.

Ormet sought protection from creditors Jan. 30, blaming low metal prices, weak demand, high energy costs and rising medical benefit costs.

The company has about 2,600 employees in five states. The reduction mill in Hannibal, Ohio, is the largest with about 1,136 employees, while the Hannibal rolling mill employs 633. Ormet also has divisions in Friendly, Burnside, La. and Jackson, Tenn.

Specialty Blanks Inc. is a subsidiary based in Terre Haute, Ind.

The plants remain in operation under a $210 million debtor-in-possession financing package.

Ormet argues the proposed bonuses are critical to keeping managers on board through the restructuring.

"The aluminum business requires a significant level of expertise, and the key employees are talented individuals who contribute specialized knowledge in their respective areas of expertise," the company's motion says. "In many instances, the key employees have developed valuable institutional knowledge and relationships with the debtors' customers, vendors and other employees."

Eight members of senior management would receive cash payments equal to half of their current salaries if a reorganization plan is approved or the company is sold.

Another 30 senior employees would receive three bonus payments equal to half their base salaries, with partial payments occurring four, eight and 12 months into the bankruptcy.

The company also wants to offer severance packages to those employees but did not disclose the cost.

Ormet is seeking protection from 39 utility providers, including Dominion East Ohio, Dominion Hope Gas and Energy Louisiana Corp. The three are fighting Ormet's motion to stop them from cutting off service.

Bankruptcy law allows utility companies to alter, deny or terminate service if "adequate assurance of payment" is not made within 20 days of an order granting relief. Ormet contends its debtor-in-possession financing and payment history should be considered adequate assurance.

Court records indicate utilities typically cost Ormet about $14 million per month.


Alcan to expand NT refinery

Sydney Morning Herald, Australia February 12, 2004 - 8:05AM

Alcan's proposed $1.5 billion alumina refinery expansion in the Northern Territory is moving closer to final approval, with an environmental report on the massive project completed.

The Canadian aluminum giant said it had submitted its Environmental Impact Statement (EIS) to the NT government.

"We are moving towards the final approval of the project in July of this year," Mr Sutherland said.

"To reach that milestone we need a number of major steps along the way, the first one of those is the environmental approval."

The EIS, which identifies potential impacts and management strategies of the project, will be available for public comment for two months, and will then be considered by the NT government.

Mr Sutherland said one of the key issues would be managing the huge increase in the workforce in the small community of Gove during the construction period.

Alcan Gove, which currently employs 1,100 will swell by a further 1200 during construction.

"We believe that we have identified some measures that can manage that impact," he said.

Mr Sutherland said there were also several positive environmental benefits identified from the expansion and future use of the greener fuel of gas.



Hydro to Modernize Another Remelt Plant

33Metalproducing 11-feb-2004

Aims to double capacity at St. Augustine

Hydro Aluminum N.A. has announced an $8.3-million improvement project for the cast house at its extrusion plant in St. Augustine, FL. The plant is among those Hydro absorbed through its parent company’s acquisition of VAW Aluminium in 2002. And, the improvement project is part of the organization’s ongoing modernization of its remelt operations to improve and standardize the quality of its billets.
The upgrade is scheduled to be carried out during second quarter of this year and will nearly double St. Augustine’s capability for converting aluminum scrap to about 120,000 metric tons/year. Hydro’s proprietary billet casting technology will be installed, new filtering systems will be added, and new billet-sawing systems will be added.

Hydro emphasizes that its remelt billets are “primary quality.” Along with two greenfield remelt plants installed since 2000, the group already has updated two other North American plants, and the total investment now amounts to $100 million since 2000. Its six remelt operations produce a combined 400,000 metric tons/year of billet.


China races to avert blackouts

http://www.iht.com/articles/129081.html

Bloomberg News Wednesday, February 11, 2004

Le-Min Lim and Xiao Yu
It plans to add 3 times New York's power capacity this year

BEIJING China's government plans to spend 200 billion yuan, or $24.2 billion, this year to build power plants that generate three times the electricity used by New York City, in an effort to stop blackouts, a development official said.
.
China will start 144 power stations this year, with 37 million kilowatts of capacity, and begin building plants to produce another 35 million kilowatts by 2006, Hao Weiping, an official at the National Development Reform Commission, said in an interview last month. At the end of 2003, China could generate 384.5 million kilowatts.
.
Blackouts caused closures at factories across two-thirds of the country last summer, including General Motors and SVA Group plants in Shanghai, as China failed to meet power demand from aluminum smelters, automakers and offices. Orders for new power equipment may bring a windfall for suppliers such as General Electric and Alstom.


RusAl to construct 2 plants to make primary aluminium and alumina.

Analytical Information Agency, Russia , 11/02/2004 17:47

Russian Aluminium (or RusAl) is intending to construct 2 new plants in 2005 to make primary aluminium and alumina, a source with the company said.

In 2004, RusAl will widen production facilities of its Guinea's works. $350 mln are to be invested over 3 years, alumina production will increase 2 fold to 1.4 mln tons.

Besides, RusAl will launch construction of the 2nd stage of Sayanogorsk Aluminium Works (project value is $750 mln) and will renew production facilities of Krasnoyarsk Aluminium Works ($270 mln). Both projects will be completed in 2006.

RusAl is one of the world's major maker of primary aluminium. It covers 75% Russia's market and 10% world's market of primary aluminium.



Russian courts Corus

The Guardian Wednesday February 11, 2004

Neil Hume

It happened at Chelsea, but could it happen at Corus? That was the question traders were wrestling with late yesterday as rumours of a bid for

the Anglo-Dutch steel group from a consortium led by Alisher Usmanov, the Russian metals tycoon, swept through the market.
Mr Usmanov, who controls iron and steel plants in the Ural mountains, is Corus's second biggest shareholder, having amassed a 10% holding over the past year.

It had been thought that Mr Usmanov would use his stake to push for a seat on the Corus board or to broker a deal whereby he would sell iron ore and semi-finished Russia steel to the company. But yesterday's talk had it that Mr Usmanov had teamed up with some of his wealthy Russian friends to mount a bid for the group.

According to sector specialists, this idea is not as fanciful as it sounds. Not only is Corus's balance sheet in better shape following its recent £300m fundraising, but a bidder could also help finance a takeover by selling Corus's Dutch aluminium business. In addition, there is scope to cut costs further, while putting semi-finished Russian steel through Corus's finishing plants could generate extra profit.

"He has obviously got some long-term plan for Corus, and if he isn't going to get a seat on the board the only way he can crystallise value is by taking a controlling stake," one analyst said.

Bucking the weak trend in the European steel sector, Corus shares closed unchanged at 40p after 63m had changed hands.


Pollution among state's worst

Warrnambool Standard, Australia - Feb 10, 2004

By EVE LAMB

PORTLAND produced the fourth highest level of pollutant emissions in Victoria last year, the newly-released National Pollutant Inventory shows.

Portland emitted a total 44,114,102 kilograms of measured substances for the year, the inventory shows Ð behind Traralgon (123,902,840), Morwell (69,081,895) and Moe (58,010,387).

Environment Protection Authority Victorian operations systems manager Geoff Latimer said that while the NPI measured polluting substances emitted in particular areas, this was not an accurate indicator of existing pollution levels as it was not clear how the substances had dispersed into the environment.

Portland Aluminium is required to report on 17 emitted compounds which are among the 90 reportable compounds on the NPI's reporting list.

"The NPI data tells us nothing about health issues," Mr Latimer said.

Portland Aluminium operations manager Matt Pistner said the company had set global targets to reduce emissions by 2020 and had already achieved many since 2000 including a 20 per cent reduction in volatile organic compounds.

Mr Pistner said the company aimed to reduce volatile organic compounds by a further 30 per cent by 2008.

Alcoa also aimed to reduce its nitrogen oxide emissions by 30 per cent by 2007 (with an 18 per cent reduction already achieved), its mercury emissions by 60 per cent by 2008, its sulphur dioxide emissions by 60 per cent by 2010, its landfill waste by 50 per cent by 2007 and its process water use by 60 per cent by 2008.

"The 2004 update shows we are reporting on some compounds for the first time for 2002\/2003," Mr Pistner said.

"We will continue to report accurately and transparently to the community on the nature of our operations."

He said Portland Aluminium's policy was to operate in a sustainable manner that respects the environment and the local community. Mr Latimer said the inventory acted like an emission scorecard with big industry which emitted beyond EPA thresholds legally required to report.

"It's one of the scorecards by which cleaner production methods can be measured," Mr Latimer said.

He said Dennington's milk processing plant was among the state's companies which had effectively reduced its release of substances, having reduced its particle emissions from combustion by 78 per cent and almost eliminated its sulphur dioxide and heavy metals emissions.


Costs mount in Kaiser bankruptcy

The Spokesman-Review 12-Feb-2004

Dire financial condition leaves only hard choices


John Stucke, Staff writer

It was two years ago today that Kaiser Aluminum Corp. filed for bankruptcy.

Since then, the company has paid outside lawyers and consultants $51 million to manage its reorganization. Whether it has worked will be determined in the next few months.

In company announcements, CEO Jack Hockema sticks to his prediction that Kaiser can emerge from bankruptcy by the middle of this year. But the company continues to cope with the flagging economy, poor business decisions and uncontrollable weather events. Since declaring bankruptcy, Kaiser has lost $800 million. A lawyer in the bankruptcy proceedings says Kaiser spends $10 million more a month than it takes in.

For the company, bankruptcy represents an opportunity to reclaim a legacy begun more than 50 years ago.

For workers and retires, it means painful cuts.

Today in Spokane and in other communities where Kaiser has factories, Steelworkers are voting on a deal to salvage at least a few benefits -- though not nearly enough to satisfy many who will be affected.

"We're going to lose most everything we worked for," said Jim Rogers, who retired from Kaiser's Mead smelter in 1983.

During 16 of his 31 years at Kaiser, Rogers toiled in a part of the factory where chemicals and electricity seared raw materials into molten metal. He feels betrayed that Kaiser now wants to wipe out most of his medical benefits and kick his pension to the federal government.

"It was my understanding that when I went to work out there in 1952 that we would be taken care of. Our retirement and benefits were supposed to be set in stone," he said. "It wasn't true and it kind of hurts. It isn't right."

Now in his later years, Rogers is worried about not having medical insurance for his wife Diana and himself.

"My heart muscles are weak and I'm living on pills," he said. "Here I am turning 75 years old and I'm starting to fall apart. Just when I start to really need (Kaiser) in my old age, they're leaving us. It don't seem right."

Right or wrong, Kaiser's dire financial condition leaves few choices.

Kaiser seeks to turn over its pension plans to the Pension Benefit Guaranty Corp., a federal agency that insures corporate retirement plans.

The other part of the plan would wipe out much of the medical benefits that retirees depend upon, but leave at least a small plan in place.

"As crappy as it is, I think most people realize the alternative is not better but worse," said Dave Carlson, president of Local 338, representing hundreds of Steelworkers at the Trentwood rolling mill.

He said without the deal Steelworkers stand to lose everything; Kaiser might be forced to sell off all its assets and disolve. Unless another aluminum manufacturer stepped in, that would be the final blow to the company's Spokane operations.

Judge Judith K. Fitzgerald of the U.S. Bankruptcy Court in Delaware called the deal "too rich," and doubted if a reorganized Kaiser could even sustain the drastically scaled-back benefit package.

"Given what the debtor's current cash flow and income structures are, I think I'm concerned about whether (Kaiser) can comply with this agreement," she said, according to a transcript of the hearing.

Two years into its reorganization effort, the company continues to lose millions of dollars.

A tally of monthly operating reports shows the Houston-based firm lost $417.8 million during 2003.

A lawyer representing Kaiser in the bankruptcy has said Kaiser spends $10 million more per month that it receives.

Part of the company's problems can be chalked up to poor timing.

In the past two years Kaiser has signed contracts to sell alumina for prices far lower than the raw material is now fetching on the open market.

Kaiser wants Judge Fitzgerald to reject four of the contracts so it can take advantage of booming prices. The tactic enrages buyers.

One Kaiser contract is with Unistar Holdings Inc., which acts as a middleman, buying alumina for Chinese companies.

Unistar president Anders-Ivar Olsen wrote in a letter that he is shocked by Kaiser's effort.

Olsen said Unistar is paying Kaiser about $22 million for about 126,000 metric tons of alumina during a five-month period of 2003 and 2004.

That averages out to about $174 a ton.

The problem is that alumina prices have since soared to about $450 a ton.

Selling at the going rate, Kaiser might have nearly tripled its money and reversed its miserable financial performance.

Kaiser's motion to invalidate the contracts with Unistar, Pechiney Trading Co., and other alumina buyers has prompted motions to appoint a trustee to oversee Kaiser's affairs. It also led to Unistar's motion to force Kaiser into Chapter 7 bankruptcy, where the court would order the sale of factories and other properties to pay off creditors.

Meanwhile, Kaiser has agreed to sell its refinery in Jamaica, where the alumina is produced, to Switzerland-based Glencore International AG for $165 million.

The deal is partly contingent on Kaiser's ability to shed the prior alumina contracts.

The alumina issue must be resolved before Kaiser can emerge from bankruptcy.

Kaiser may have a similar problem with its refinery in Gramercy, La. The company signed other contracts last year to sell alumina from that plant.

Century Aluminum Inc. disclosed in a financial filing that it has a favorable alumina pact with Kaiser signed in May 2003.

Although Century didn't disclose the price, alumina was selling for far less than current prices at the time the contract was signed.

When Kaiser sells the Gramercy refinery, Century expects its alumina contracts to be honored. If not, Century wrote, its cost for alumina "could increase substantially."

While some of Kaiser's business woes are self-inflicted, others appear beyond the company's control.

Kaiser's low-cost aluminum smelter in the African country of Ghana has been forced to curtail operations because of a severe drought. Conservation measures have slowed water releases through dams that power the smelter.

The smelter may be sold for as little as $35 million to the government of Ghana, which enforced the water conservation measures.

Despite the difficulties, Kaiser CEO Hockema continues to report progress. In his periodic updates to employees and customers he writes that Kaiser will climb out of bankruptcy by midyear.

Retired workers facing benefit cuts just want the company to fulfill the promises made a generation ago.

"This company is going to make it hard on us," said retiree Archie Bowman, a former millwright at Trentwood. "We just want the company to follow through on the promises they made.

"When you have a contract with someone, you're supposed to live up to it. What's happened here isn't fair."



Temporary tax relief may keep Intalco alive

The Western Front, WA February 13, 2004


by Lauren Fior

Vicki Henley, a union representative for Alcoa-Intalco Works aluminum smelter plant in Ferndale, said her job is a daily struggle for survival.

"(The energy prices) take away our job security because we don't know what could happen," Henley said.

Washington state legislators are in the process of reviewing House Bill 2339, which would provide temporary tax relief for the Washington aluminum smelter plants.

Rep. Doug Ericksen, R-Ferndale, said the bill is a tax package that includes $2.7 million in tax breaks that will sustain Intalco until 2006.

In a recent press release, Ericksen said the 2001 energy crisis forced most of the state's aluminum smelter plants that run on energy, including Intalco, to shut down. Ericksen said later that because of the energy crisis, the only aluminum smelter plants remaining in Washington are located in Ferndale and Wenatchee.

In 2006, Bonneville Power Administration will reconsider electricity prices with Intalco, Ericksen said.

"(Whatcom County) is in jeopardy of losing the plant," Sen. Dale Brandland, R-Bellingham, said. "If it does close, it is not likely it will re-open."

Brandland said Intalco has shrunk from 1,000 to 400 workers in the past few years.

"The tax initiative will help maintain production at the plant and continue employing its 400 workers," Brandland said.

He said aluminum plants are a major part of the industry.

"The bill will help Alcoa maintain production at its current rate," Brandland said.

He said Intalco is not planning to hire new workers after tax breaks - it is simply trying to stay open.

Ericksen said the cutoff day for state Senate and House committee decisions is March 1. By March 11, the Senate and House must pass or fail the bill.

Intalco lobbyist Sandi Swarthout said the bill passed the House of Representatives' two committees and is in its final stage of the Senate's second committee.

Ericksen said four actions will help Intalco to stay in business: locking in electric rates from BPA, introducing temporary tax breaks for aluminum companies, adopting regulatory business changes for Intalco and creating a long-term energy source at a reliable price.

"Smelters are very costly to run due to energy prices," Henley said.

High electricity prices are causing the company to produce at one-third of its capacity, Henley said.

"(The initiative) gives us a ray of hope," Henley said. "It gives us a lifeline until 2006 when BPA lowers their rates."

Ericksen said he preferred not to comment on whether Intalco would continue its relationship with BPA after 2006 because he does not have enough information regarding Intalco's future plans.

"Every legislator in the district has worked hard on this bill," Swarthout said.

She said the bill will be successful because of the legislators' bipartisan effort.

"On this issue most of them are in agreement," Swarthout said.

She said the legislators are working together and taking initiative. She also said she rarely sees so much interest in a bill from so many legislators.

Henley said she usually is not an advocate of tax-break initiatives, but she said this bill would not harm the community because the bill contains a sunset clause, meaning it is not permanent.

Ericksen said his incentive for sponsoring this bill is to keep families in Whatcom County working at Intalco.

"Tax breaks are a bridge to get us to where we can fight again," Ericksen said.


Tajikistan refutes reports on RUAL investment in tazaz

Interfax, Tajikistan 13-feb-2004

Tajikistan denies reports Russia's Russian Aluminum (RusAl) is investing in Tajik Aluminum Plant (TadAZ). RusAl said in late January it had helped modernize TadAZ and invested $45 million in working capital last year.

Presidential economics adviser Khaizullo Kholboboyev told reporters the statement was unfounded and said RusAl was a partner in product sales and nothing more.

He said foreign investors are very interested in the plant but the government will make a decision on the timing for its privatization.

Kholboboyev said the plant needs big investment. We suggest investors that want to come to TadAZ help the company reach design capacity by building the Rogun Hydroelectric Plant, since the shortage of electricity is interfering in this, he said.

TadAz production is increasing by 20,000 - 40,000 tonnes a year. But we have a long way to go to 517,000 tonnes (design capacity), he said.

The Tajik government in November 2003 passed a resolution to privatize large and strategic enterprises, including the Tajik Aluminum Plant, which should be privatized by 2007.

Tajik Aluminum Plant is the only aluminum producer in Central Asia.


Aluminium, copper hit fresh multi-year highs

Financial Times (subscription), UK February 15 2004

Kevin Morrison
Copper and aluminium prices hit fresh multi-year highs on Thursday as the metal markets interpreted Alan Greenspan's testimony to congress as bullish for capital spending and manufacturing, and therefore creating further optimism for future metal demand.

The three-month aluminium contract broke through the $1,700 a tonne level for the first time in four years, peaking at $1,707 in early morning trade on the London Metal Exchange.

The rise followed a report from the Aluminium Association, which said that the annual rate of US aluminium output dropped by 10.5 per cent in January from its year ago levels. The next key target for the aluminium price is $1,754 a tonne, which if broken would mark a 6 ½ year high.

The three-month copper price reached a new 7-1/2 year high building on the gains reached from the previous session. Copper peaked at $2,664 a tonne on the LME in early trade. The next key target for copper to reach is the May 1996 high of $2,715 a tonne, but remains well below the $3,000 level reached in 1995 before the Sumitomo copper trading scandal hit prices.


Spotlight on Comalco smelter's economics

New Zealand Herald, New Zealand 16.02.2004

By COLIN JAMES
The Government is doing a cost-benefit study on the value of aluminium producer Comalco to the economy and, says a well-placed source, initial work has indicated the smelter's net contribution is negative.

Comalco adds about $500 million to the economy by processing bauxite from Queensland into aluminium, almost all for export.

But it consumes a huge quantity of electricity - about as much as Meridian Energy's proposed Project Aqua on the lower Waitaki river is projected to generate.

Comalco hinted last year that it might shut up shop if looming electricity supply negotiations result in it paying too high a price for its energy.

But some ministers have begun to ask whether that would necessarily be a bad thing. By releasing Comalco's electricity (produced by Meridian at Manapouri) into the market, prices could be kept lower than they would otherwise be for all other users, helping other firms to keep themselves more internationally competitive.

Alternatively, Project Aqua might be delayed. It has run into fierce opposition from conservationists, recreational fishers and farmers wanting the water for irrigation, drawing both from the lower Waitaki and from Lake Tekapo, which feeds the Waitaki and Meridian's series of hydroelectric plants.

The Government has legislation before the House to redraw the allocation of the Waitaki catchment water and will then decide resource consents for Project Aqua and its competitors. Comalco is not alone in the spotlight. Methanex uses large quantities of gas, which could otherwise be used to make electricity.

Some in the industry say the real electricity issue is not generating capacity but fuel for the generators - water, wind, gas and coal.

An alternative for Comalco might be to build a dedicated coal-fired plant. But the economics of that would partly depend on how the Government viewed it under its Kyoto policy.



Exhibit follows life of Henry J. Kaiser in Oakland

Oakland Tribune, CA 15-Feb-2004

AN EXHIBITION on the life of Henry J. Kaiser and his impact on the modern economic and cultural landscape of America and the world is on view at the Oakland Museum of California's history level special gallery through Aug. 29. "Henry J. Kaiser: Think Big" consists of three sections with titles from Kaiser's own often-quoted homespun slogans. The first section, "Together We Build," traces the budding entrepreneur's early construction projects, beginning with road-building ventures in British Columbia in the 1920s, and dam and bridge projects in the 1930s. The 1940s saw "Hurry Up Henry," the "can-do industrialist," plunging into ship building on a grand scale, and transforming such communities as Richmond and Oakland, practically overnight. "Dare to Dream" outlines Kaiser's quest to develop and market innovative products (ranging from household appliances to affordable automobiles) as the country make the transition to a peace-time economy. His role as the developer of master-planned residential communities is also highlighted. Perhaps Kaiser's most enduring legacy, the Kaiser Permanente Medical Care Program -- an early version of an HMO -- is explored in the section "An Idea for the Entire Country." It includes a state-of-the-art maternity ward room, complete with "nursery drawer," installed along side a new mother's hospital bed. Born to German immigrants in upstate New York in 1882, Kaiser quit school at age 13 and never looked back, say library history room files. He got his start as a photograph supplies salesman and came West at age 23, where he became involved in road building, taking on contracts up and down the West Coast. In the early years, say the files, his wife, Bess, and two sons sometimes accompanied him on the road-building projects. On a swing through Oakland early in 1921, the family took stock of beautiful Lake Merritt, and the city's strategic location for rail, road and ship transport. Kaiser decided to make Oakland home base for his growing operations. Described as a "stout, balding, moon-faced individual with a brain sizzling with innovative ideas," Kaiser stood 6 feet tall and weighed 240 pounds. As the last of the so-called self-made American industrialists, he had a knack, say the files, for getting his own way. Directories reveal his first office (one room) was located in the Westlake Building on San Pablo across the plaza from City Hall. He later moved to the Latham Square Building on Telegraph, and then again to 1924 Broadway, across from the Capwell's Department Store. Throughout the 1940s and 1950s Kaiser managed his far-flung subsidiaries from his penthouse quarters on Broadway when not traveling -- something he did incessantly. Kaiser soon outgrew the 11-story Beaux Arts-style office building, and directed his agents to make an offer to the Sisters of Holy Names College, whose lushly landscaped7-acre campus facing Lake Merritt was up for sale. At 390 feet and 28 stories, the company headquarters building, designed by Los Angeles-based Welton Beckett and Associates, was said to be the largest commercial structure when it opened in September 1960. A dramatic example of the international style then popular for corporate buildings, the facade's glass curtain wall composed of gold aluminum alloy panels set in natural finish aluminum mullions, caused quite a stir in architectural circles when it was first unveiled. The frequently photographed building's image reflected in Lake Merritt's shimmering waters seems (as one architectural critic phrased it) "to cordially turn toward you" at every vantage point. The hospital/health care arm of Kaiser's conglomerate set up shop in the former Fabiola Hospital complex on Broadway and Moss Street (now MacArthur Boulevard) in 1942. Fabiola is listed as Oakland's first hospital, formed in 1876 by a group of women concerned the city was totally lacking in facilities for the injured poor (Fabiola comes from Roman times -- a noblewoman named Fabiola endowed a hospital for the poor, says history author Beth Bagwell). Kaiser Hospital construction teams remodeled and expanded the former Fabiola site, making use of Kaiser industry building materials, transforming it into the multi-building campus as it exists today. Henry J. Kaiser's energetic tenure on earth came to an end in 1967, when he died at age 85. In the early 1980s, city leaders opted to honor the man who had chosen Oakland for his home and his business headquarters and who had contributed to the community in so many ways by renaming the Municipal Auditorium (built in 1915) on the south end of the lake the Henry J. Kaiser Convention Center, following an extensive building retrofit and renovation. Now this public structure too serves as an enduring legacy to a true American visionary. Author Beth Bagwell's "Oakland The Story of a City," available at the Main Library History Room, contains more on the life and influence of Henry J. Kaiser. The Oakland Tours Program offers tours of the Kaiser Center roof top gardens. Call 238-3234 for additional information.

The Henry J. Kaiser Convention Center, 10 Tenth St., is the location for the West Coast Blues Hall of Fame Awards Show next Saturday from 7 to 11 p.m. Go to www.bayareabluessociety.net, or call (707) 647-3962 for more information.


Alcoa Interested in RusAl Plants

Moscow Times, Russia 16-feb-2004

Combined Reports Alcoa Inc., the world's biggest aluminum maker, held talks with the governors of Samara and Rostov regions about plans to buy stakes in aluminum-rolling plants there, Prime-Tass said, citing the Rostov government.

Alcoa chief executive officer Alain Belda met Rostov Governor Vladimir Chub Friday to discuss buying 85 percent of the Belaya Kalitva plant from Russian Aluminum, the governor's spokesman Kirill Zhitenev told the news service. Earlier, Belda held similar talks with Samara Governor Konstantin Titov, the agency said. RusAl has an aluminum-rolling plant in the Samara region.

Belda told Chub that Alcoa plans to reach an agreement with RusAl and gain support from the governments of Russia and the United States in about four months, the news service said.

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina. Alcoa accounts for 25 percent of the world market of primary aluminum.

(Bloomberg, MT)


Alcan Quebec smelter shut down back on schedule

Forbes Reuters, 02.16.04, 3:25 PM ET

MONTREAL (Reuters) - Alcan Inc.'s <AL.TO><AL.N.> plans to shut down an outdated Quebec aluminum smelter is back on track after union members agreed to work under management supervision, the company said on Monday.

Alcan unveiled the shutdown plan for its 90,000-tonne Arvida smelter in late January, but union members continued to make aluminum at the facility around the clock for almost two weeks, largely without management supervision.

On Friday, the Quebec government's labor relations board ordered the workers to return to normal working conditions and prohibited them from taking action to prevent the shutdown at the smelter at Jonquiere, about 250 kilometres north of Quebec City.

"Everything has returned to normal," Alcan spokesman Joseph Singerman said on Monday.

The 2,917 workers, members of the Canadian Auto Workers, Canada's largest union, were to meet Monday and Tuesday to discuss the government order and review the company offer on the closure.

Alcan said there will be no layoffs among the 550 workers affected and some will be allowed to retire six months early. It will also set aside C$20 million ($15 million) over three years for job creation.

Alcan, the world's largest aluminum maker by sales after its just-completed takeover of French rival Pechiney, said it wants to close the 60-year old plant because it uses outdated Soderberg smelting technology that has higher production costs and pollutes more than modern pre-bake methods.

Alcan wants to close one potline at Arivda immediately, another by April and the two others in April.

The closure will reduce Alcan's global primary aluminum production capacity by about 3 percent. The company will continue to produce another 163,000 tonnes of aluminum at Jonquiere using pre-bake technology.

Some 1.6 million tonnes of Alcan's 2.4 million tonnes of primary aluminum smelting capacity, excluding Pechiney assets, is located in the province of Quebec, which is rich in hydro-electric power.

Alcan has some 88,000 workers worldwide, not including those at Pechiney.

Alcan shares were up 65 Canadian cents at C$60.94 in Toronto Monday afternoon, and advanced 9 cents at $45.79 in New York.

($1$1.31 Canadian)

Copyright 2004, Reuters News Service


China facing alumina supply termination threat by Kaiser Aluminum Corp

Interfax, China 16-feb-2004

Shanghai. (Interfax-China) - Chinese aluminum smelters are fearing either shortening supplies or higher alumina prices in coming months, as a result of motions filed by US-based Kaiser Aluminum Corporation, a leading producer of fabricated aluminum products, alumina and primary aluminum, to the US Bankruptcy Court to terminate or invalidate annual supply agreements covering 800,000 tons of alumina.

As the world's largest aluminum producer, China is concerned that further price rising for its key aluminum production raw material, alumina, would severely impact margins if Kaiser's proposal to nullify its lower priced alumina supply agreements with Chinese smelters, first entered into at the beginning of 2003, are to be permitted by the US Bankruptcy Court.

As statistics show, the current quotation for imported alumina stands as high as USD 500 per ton in CIF terms, relative to USD 450 per ton just prior to Chinese New Year, while alumina price quotations stood at just USD 160 per ton early in 2003, giving price rises of well over 200% in just over twelve 12 months.

According to a press release by the American Bankruptcy Institute (ABI), Kaiser is attempting to survive under US Chapter 11 bankruptcy protection laws. The corporation has proposed to a bankruptcy court in Delaware, US, to cancel four alumina supply agreements. This would enable Kaiser to sell its alumina via other channels at much higher alumina prices than those contracted at the beginning of last year, thereby boosting its cash reserves to facilitate its internal financial makeover.

Kaiser's contracts cover four separate agreements; one with Swiss trading house, Trafigura AG, one with Pechiney Trading Co., a subsidiary of Alcan Inc. in Canada, and two with Unistar Holdings Inc., a trading firm representing China's aluminum smelters.

Three Chinese corporations, China Minmetals Nonferrous Metals Co. Ltd., Guangdong Metals Materials Company and Yunnan Aluminum Co. Ltd., are said to be importers of alumina supplied by Kaiser through Unistar.

According to PR officials from the Minmetals Aluminum Division, Chinese distributors and smelters have direct contracts with Unistar, rather than with Kaiser itself, who is only entitled to supply China alumina via Unistar.

The existing long-term distribution contracts between the Unistar and the Chinese smelters require Kaiser to supply 400,000-500,000 tons of alumina a year.

With the hearing to discuss Kaiser's proposal in the bankruptcy court scheduled for February 23, PR officials from Minmetals and Yunnan Aluminum have refused to disclose any further details about the issue, commenting that they have not yet been informed of any alumina shipment cancellation to China thus far.

As the agreement between Kaiser and Unistar illustrates, Kaiser reached its pact with Unistar in early 2003, under which Unistar would provide Minmetals with approximately 1.1 mln tons of Jamaican alumina in the period covering 2003-2007. A separate agreement between the two companies relates to Unistar agreeing to supply 105,000 tons of alumina to Guangdong Metals Materials Company in the 2003-2005 period and 100,000 tons of alumina to Yunnan Aluminum Co. Ltd. in the 2004-2005 period.

Minmetal officials said that Kaiser may excuse itself as a third party to the Chinese traders or smelters, since Kaiser had signed no direct written contract with the smelters themselves. They also said that Kaiser only has an agreement with Unistar, rather than an official signed contract, and therefore may be able to rescind on its obligations.

Minmetals officials also told Interfax that recent strong alumina price rises would impact most Chinese aluminum smelters this year, after significantly capacity boosts over recent years. They are also being impacted by severe power shortages across the country.


Vilsack honors Alcoa plant today

Quad City Times, IA 16-feb-2004

By Jennifer DeWitt

In the past 15 years, Alcoa Davenport Works has gone from the top of Iowa’s list of toxic air emitters to becoming one of the state’s environmental standouts.

The Riverdale, Iowa, plant, which produces aluminum sheet and plate products, has won the 2003 Governor’s Iowa Overall Environmental Excellence Award. The award will be presented by Gov. Tom Vilsack in ceremonies today in Des Moines. A total of 15 Iowa organizations and businesses will receive awards for their leadership and innovation in protecting Iowa’s natural resources.

Other Quad-City area winners, all receiving special recognition, are MidAmerican Energy Co., Davenport, and Monsanto Co., Muscatine, in the energy efficiency/renewable energy category; ReStore, Habitat for Humanity, Davenport, for waste management and Monsanto Co., air quality.

“We’re extremely honored to be given this recognition because it supports our corporate environmental value that we will protect the communities in which we do business,” said Mark Vrablec, Alcoa’s director of manufacturing.

The awards program recognizes environmental programs by organizations and businesses along with special project awards in water quality, air quality, waste management, habitat restor-ation/development and energy efficiency/renewable energy. The winners were selected from almost 70 applicants. The program is sponsored by the Governor’s Office, the Department of Natural Resources, the Department of Agriculture and Land Stewardship, the Department of Economic Development, the Department of education, the Department of Public Health and the Iowa Waste Reduction Center.

Alcoa was the only large business to earn the Overall Environmental Excellence Award.

Vrablec, who also heads the environmental lead team at the plant, credited the honor to the efforts of hundreds of employees as well as Alcoa’s Community Advisory Board made up of environmental groups, community leaders and elected officials, “who helped guide our efforts and gave us an annual report card on our progress over the past 15 years.”

Cindy McDermott, Alcoa’s communications manager and a member of the environmental team, said improving the environment now is part of the culture for the plant’s 2,200 employees.

“We live here too, and people want to do the right things,” she said. “They realize their children and grandchildren will inherit this environment.”

In 1988, the Davenport Works plant was first on the state’s list of toxic air emitters stemming from the amount of perchlorethylene it used to clean metal for customers. Today, it has reduced usage of the substance — which also is used by dry cleaners — by 89 percent through new equipment and procedures.

It was in the late 1980s, as these and other issues were being raised by environmental agencies, that Alcoa enhanced its environmental stance and made the commitment to be proactive rather than reactive.

With a $70 million investment over 10 years in Riverdale, Alcoa has addressed a host of historic issues, McDermott added.

Alcoa Davenport Work’s environmental programs also have extended outside its own operation. It has planted more than 7,000 trees throughout the Quad-Cities as part of Alcoa’s Ten Million Tree program. It also has facilitated the sponsorship of Chad Pregracke’s river cleanup projects and has worked with local environmentalists in creating 63 acres of wetlands at Nahant and Princeton marshes.

By improving the river’s water quality, a fishing advisory in Mississippi River Pool 15 has been lifted.

Its environmental leadership role has earned Alcoa several local and national awards. In addition, Alcoa Davenport Works has been awarded ISO 14001 certification, which certifies that its environmental management program meets certain standards and will help protect the Quad-City community. It is one of only 3,000 companies with the certification.

“The majority of the things we’ve done here are because we want to do the right thing not because they’re driven by regulations,” McDermott added.

Jennifer DeWitt can be reached at (563) 383-2318 or jdewitt@qctimes.com.


Alcoa said to be considering two Russian plants

Reuters, 02.17.04, 9:53 AM ET

MOSCOW (Reuters) - Alcoa Inc. is considering buying two plants from Russia's top aluminum firm, Russian Aluminium (RusAl), regional government officials said Tuesday.

Alcoa's Moscow office declined to comment. A spokeswoman for RusAl said only that her company was interested in cooperation with Alcoa.

"We are always open for cooperation with other parties, including Alcoa, on a number of subjects. It is the nature of our industry that the downstream activities are often undertaken in collaboration with others depending on their specializations and customer base," RusAl spokeswoman Eugenia Harrison said.

But a spokesman for the governor of Rostov region in southern Russia, said the governor last week had discussed with Alain Belda, Alcoa's chief executive officer, the possible acquisition of RusAl's Belaya Kalitva Metallurgical Plant.

"(Belda) estimated that reaching final agreement with RusAl and obtaining authorization from anti-trust bodies of both countries might take some four months," spokesman Kirill Zhitnev said.

An economy ministry official in the Samara region told Reuters that Belda also discussed with that region's governor last week the acquisition of RusAl's Samara Metallurgical plant.

"The talk was about the sale of the whole of RusAl's stake in Samara," the official, Gennady Anopriyenko, said.

The Samara plant, located in the Volga River region, is Russia's biggest producer and exporter of aluminum products. It produced 173,868 tons of products in 2003, down from 199,404 tons in 2002.

It was built in 1960, and its rated capacity is 450,000 tons a year.

The Belaya Kalitva plant, Russia's second-biggest maker of aluminum products, produced 41,430 tons of products in 2003, up from 38,447 tons in 2002. It was built in 1954.

Its annual production capacity is 120,000 tons.

RusAl owns 99.2 percent of Samara and 81.3 percent of Belaya Kalitva.

(Additional reporting by Aleksandras Budrys)

Copyright 2004, Reuters News Service


Kaiser Aluminum axes benefits

www.theargusonline.com February 17, 2004

Decision to cut medical and life insurance affects thousands of retirees, dependents

By Alec Rosenberg, BUSINESS WRITER

OAKLAND -- After working 30 years for Kaiser Aluminum, Oakland resident Karen Wessenberg retired in 2000, ready to reap the rewards of a pension and low-cost lifetime medical benefits, just like her mom, who worked 27 years for Kaiser.

But the 53-year-old Wessenberg took a new job last month to help pay for her health insurance, which has skyrocketed since Kaiser Aluminum filed for bankruptcy in February 2002.

It's only getting worse. Kaiser Aluminum & Chemical Corp., a company once synonymous with Oakland that is now based in Houston and trying to emerge from bankruptcy, has reached an agreement to cancel medical and life insurance benefits for all retirees May 31. The decision, announced Feb. 4, affects more than 11,000 hourly and salaried retired employees and dependents,

including about 700 salaried retirees who live in the Bay Area, mostly in the East Bay.

"It's a big hit," Wessenberg said. "We've referred to it as the second shoe falling."

As a salaried early retiree, Wessenberg and her husband initially paid a $35 monthly premium for medical benefits. Shortly after Kaiser Aluminum filed for bankruptcy, their monthly premium jumped to $350. In January, it rose to $600. Wessenberg, a former salaried benefits administrator with a $1,100 monthly pension, is making ends meet by working in sales at an insurance broker.

But many are too old to work, like her 77-year-old mom and dad, Castro Valley residents who receive home health care. Kaiser Aluminum currently picks up half of the $5,000 monthly tab, but that could change after May.

Wessenberg said retirees feel blindsided. "There are many people with pre-existing conditions and for those it is difficult to get coverage," she said.

Kaiser Aluminum was founded in 1946 in Oakland by Henry J. Kaiser, the progressive industrialist who also started separately owned Kaiser Permanente, the nation's largest nonprofit health maintenance organization. By 1980, Kaiser Aluminum had grown to 26,000 employees and net worth of $1.4 billion.

But the company racked up losses in the 1980s and was bought in 1988 by Charles Hurwitz and Maxxam Corp., owner of Pacific Lumber. Kaiser Aluminum had some profits in the 1990s, but the bankrupt firm has lost more than $1 billion since 2001. Kaiser Aluminum no longer has facilities in the Bay Area.

Kaiser Aluminum was spending about $60 million a year in retiree medical benefits, company spokesman Scott Lamb said.

"We're trying to restructure the company," Lamb said. "We simply do not have the ability to make those kind of payments."

Now with about 5,000 employees, Kaiser hopes to emerge from bankruptcy in mid-2004 and focus on its aluminum fabricating business.

Meanwhile, it will cancel medical benefits for retirees May 31, pending final approval by union members, the company's board and Bankruptcy Court. Kaiser will offer retirees new medical benefits at a lower level under a Voluntary Employee Beneficiary Association (VEBA), which depends on its profitability. Kaiser retirees also could opt for costly federal COBRA coverage.

Also, Kaiser plans to end its pension plan. The federal Pension Benefit Guaranty Corp. will help, but while older retirees can expect similar pension payments, recent retirees and current employees will likely take big cuts.

The unions and other employee groups agreed to the cuts because they realize the seriousness of Kaiser's "very unfortunate" situation, Lamb said.

"This is by no means a perfect solution," said Dave Foster, a United Steelworkers of America district director and union negotiator.

Kaiser employees and retirees are angry and frightened, Foster said. The VEBA offers hope, but it still would involve significant cutbacks, he said.

Foster has seen worse -- 300,000 of his union's retirees have lost health insurance in the last 18 months.

"It's a real indictment of the employer-based system of providing health insurance in this country when the company that was the foremost proponent of it, Kaiser, has been reduced to bankruptcy," Foster said.

Salaried retirees already have had two health insurance hikes, while hourly ones have continued so far without monthly premiums.

"It's a difficulty for everybody. It's a true hardship for a number of our retirees," said Bob Irelan, spokesman for the 4,600-member Kaiser Aluminum Salaried Retirees Association.

The association has told retirees about options such as Medigap, said Irelan, a former Kaiser vice president of public relations. Many members already dropped their Kaiser coverage because they couldn't afford it, he said.

Moraga resident Evo Alexandre, 71, ran Kaiser's information systems before retiring in 1986. His late father also worked for Kaiser and his mom receives Kaiser medical coverage -- at least until May.

"These people are older and really need the insurance," Alexandre said. "To see the whole thing collapse is disconcerting at best. You wonder if better managers were running the place, perhaps (benefits) would still be in place."


Power costs, dollar hurting Comalco

New Zealand Herald, New Zealand 19.02.2004

By BRIAN FALLOW
Aluminium producer Comalco is feeling the squeeze of rising power prices and the high dollar.

"We remain committed to the investment in New Zealand but we are hurting," Comalco chief financial officer Phillip Strachan told a media briefing yesterday.

Electricity costs for the Tiwai Point smelter had risen 50 per cent over the past three years, he said, and now represented 55 per cent of its operating (cash) costs.

The company buys 90 per cent of its power from Meridian Energy under a long-term contract which expires in 2012, and the rest on the spot market. But the contract price is also linked to the spot market price and that has been climbing.

The company does not disclose what it pays, but Ministry of Economic Development data for the year to March 2002 (the most recent in the public domain) put the average cost for the basic non-ferrous metals sector that year at just over 5c a kilowatt hour. The volumes involved make it clear that that sector's consumption is almost entirely accounted for by the smelter.

In the nearly two years since then the average spot price has continued to rise.

Strachan said that whereas five years ago Tiwai's electricity costs were among the cheapest 25 per cent of smelters worldwide, they were now among the most expensive 25 per cent.

Aluminium prices have been rising in US dollar terms, but Strachan said that last year they remained pretty flat when translated into New Zealand dollars.

As most of the smelter's costs were incurred in New Zealand or Australian dollars, the continuing appreciation of both currencies against the US dollar was having a "significant" impact on its margins when looked at, as its ultimate owners Rio Tinto Group did, in US dollar terms.

In calendar 2002 Comalco's 79.4 per cent of the Tiwai smelter (Sumitomo Chemical owns the rest) earned it a profit of $162 million, after tax of $85 million.

That year the smelter, 85 per cent of whose output is exported directly, produced $1.1 billion-worth of metal. It is of very high purity by international standards and commands a premium.

Comalco has yet to file accounts for the 2003 year with the Companies Office, but Statistics New Zealand trade data for 2003 puts exports of aluminium and aluminium articles at $931 million, down 16.4 per cent on 2002.

The spike in spot electricity prices in March last year caused the company to stop buying on the spot market and cost it 14,000 tonnes, worth $33 million, in lost output as a result. It still managed to increase production to 334,000 tonnes, up 507 tonnes on 2002.

Comalco's strategy for the smelter had switched from lifting output to optimising the efficiency with which electricity is used, Strachan said.

It has no plans to invest more capital in expanding the smelter, which at 33 years old is "middle-aged".

He said the company accepted Energy Minister Pete Hodgson's comment that no one in the Ministry of Economic Development or Treasury was aware of any national cost-benefit study of the smelter.

Strachan expressed concern about a lack of new investment in baseload electricity generation.

He said the Resource Management Act was a potential constraint on new investment, the Kyoto Protocol would put an impost on non-renewable energy sources, and the declining exploration for new natural gas fields was another worry.

Tiwai Pt smelter

* Owned by Rio Tinto subsidiary Comalco (79%) and Sumitomo Chemical (21%).

* Managed by Comalco.

* Main electricity supply: Manapouri hydro system, owned by Meridian Energy.

* Employs about 1000 people.

* Produced 334,000 tonnes of aluminium last year, worth about $1 billion.

* Product mostly exported to Japan and Southeast Asia.


Smelter closure 'won't end power shortages'

Stuff.co.nz, New Zealand 19 February 2004

By MARTA STEEMAN

A view that New Zealand would have no power shortages if the Tiwai Point aluminium smelter was not using 15 per cent of all electricity has been rejected by its owner Comalco as "short-sighted".

New Zealand's biggest energy user, the New Zealand Aluminium Smelter, 79 per cent owned by Comalco, will be fighting next year to rein in a substantial increase in its power bill when its negotiates a new power supply contract with Meridian Energy for the 10 years from 2012.

A media report this week suggesting a government agency's cost-benefit analysis on the smelter showed a negative contribution to the economy indicates the rhetoric before the negotiations has already started.

A spokesman for Energy Minister Pete Hodgson said the minister had been told no one in the Economic Development Ministry or the Treasury was aware of any cost-benefit study.

Brisbane-based Comalco chief financial officer John Strachan said yesterday that a suggestion New Zealand electricity shortages would disappear if the smelter was not operating was "a short-term solution".

"Any economy needs business to provide income and export revenue for balancing the books, so we argue that would be a short-sighted approach to the power situation in your country.

"And you'd find many people in Southland would be out of work," Mr Strachan said.

The smelter employs 960 full-time equivalent staff. Its exports of aluminium were $1 billion last year.

The amount of electricity it uses each day would provide power for about 700,000 homes.

"We still remain very committed to the investment in New Zealand," Mr Strachan said.

"But we are hurting through power prices and exchange rates."

However, he was hopeful of being able to influence policy to create a more transparent and better functioning market place with price determination.

Stronger regulation through the new Electricity Commission was a good step.

Last year Comalco NZ director Barbara Elliston said a move to generating power using liquefied natural gas could see Comalco quit New Zealand because the cost of electricity would be too high.

The smelter buys about 10 per cent of its power on the wholesale spot market and 90 per cent under long-term take or pay contracts with Meridian Energy.

The price for the 90 per cent was recalculated yearly and was linked to the movement in the spot price.

Mr Strachan said that in the past three years its power price had increased 50 per cent.

"So we are exposed to the spot price quite significantly in all of our power pricing."

Comalco would contribute $3.65 billion to the New Zealand economy from its start in 1971 to the end of its present power contract in 2012, he said. That included salaries, taxes and buying goods and services.



Hydro Aluminium Extrusions to close Sanquhar plant

www.Azom.com 18-feb-2004

Hydro Aluminium Extrusion UK will close its extrusion manufacturing facility in Sanquhar, Scotland, as a result of significant overcapacities in the UK market segment.

An agreement on the closure has now been reached with the employees and the redundancy package has been accepted. The agreement has been reached within a significantly shorter timescale than the legal maximum.

"This measure reflects the ongoing need to adapt to changing market conditions in order to safeguard our business for the future," says Jean-Claude Raimondi, president of Hydro Aluminium Extrusion.

The closure results from a particularly difficult period for all UK based extruders which has seen the number of working presses in the UK falling from 49 to 33 over the past 10 years. Other extrusion companies have already gone through a series of plant closures. The background is an economic climate for the UK manufacturing base which has seen manufacturing employment fall to a record low level.

Work will now start on liaising with customers on how the transfer of volume will take place to Hydro's two other extrusion sites in the UK (Bedwas and Birtley) by August 1 2004. Priority will be given to mitigating the impact on Sanquhar's 76 employees – offering relocation to other Hydro sites whereever practical and working with local organisations to offer re-employment and retraining support for those people unable to move with the company.

In addition to the extrusion plants in Bedwas, South Wales and Birtley, County Durham, Hydro Aluminium operates a fabrication facility in Warwick and a die manufacturing plant in Gloucester. Hydro is the leading European supplier of aluminium extrusions.



Danieli Fröhling Supplying Two Aluminum Process Lines

33Metalproducing 18-feb-2004

High-speed edge trimming, slitting lines for China’s Nanshan Group

Danieli Fröhling has announced its third contract from China in recent months -- a high-speed edge-trimming line and a slitting line for Nanshan Group.
According to Danieli the edge-trimming line will operate at up to 1,500 m/min., making it one of the fastest lines in the world. Strip dimensions will range from 0.15 to-2.0 mm thick, and 950 to 2100 mm wide. Maximum coil weights will be 30 metric tons, with O.D. of 2,800 mm.

Among the features of the line are a drum shear to perform high-speed cropping (up to 200 m/min); and an edge-trimming shear capable of automatic adjustment of the cutting gap, immersion, and cutting-head positioning.

The slitting line will process different can-stock and fin-stock alloys in strips ranging from 0.10 to 1.0 mm thick and 950 to 2,100 mm wide; and maximum coil weight up to 30 metric tons. It will cut up to 80 strips with minimum width of 10 mm.

Design features of the slitter include automatic knife immersion and axial tool clamping; a quick-slitting shear-change system (reducing conventional changing times by 50%); and a vacuum system to transport and break cut strips.

Both the lines will be controlled by a tailor-made automation system.



Alcoa Sells 10% Stake in Alscon

Azom.com 19-feb-2004

Alcoa has confirmed that it has sold its 10 percent stake in the Alscon smelter in Ikot Abasi, Nigeria to the Federal Government of Nigeria. Alcoa assumed the stake as part of its acquisition of Reynolds Metals. Terms of the agreement were not disclosed.

The Alscon smelter was 70 percent owned by the Federal Government and 20 percent held by Ferrostaal AG. Only a portion of the facility has ever been operated and has been idle since mid-1999.

The Bureau of Public Enterprises (BPE), an agency of the Nigerian government, is working to privatize Alscon.

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) foils and plastic wraps, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 120,000 employees in 41 countries.



World Bank provides $15m to improve operations of the ECG

GhanaWeb, Ghana 20-feb-2004

Nyinahin (Ash) Feb.20, GNA - The World Bank is providing 15 million dollars for improvement in the operations of the Electricity Company of Ghana (ECG) to enable the Company solve difficulties it is facing in power delivery to consumers.

Government is also securing additional 105 million dollars for the Company to enable it bring power distribution network in Ghana to acceptable levels.

President John Agyekum Kufuor announced these when he inaugurated an electrification project that would link Nyinahin and 23 other communities in the Atwima district to the National Electricity Grid at Nyinahin on Friday.

The project was financed by the Japanese government with a grant of 755 million Japanese Yen (about 6.3 million dollars) and Ghana government component of Eight Billion Cedis.

The project included the installation of a 33 kilovolt (kV) transmission line of about 60 kilometres, a booster station, transformers for power distribution and other related equipment. Since the commencement of the National Electrification Programme in 1989, the Japanese government has provided aid of about 40 million dollars for rural electrification projects in various parts of the country.

The Nyinahin project brings the total number of beneficiary communities of Japanese government assistance to 112, this is in addition to the significant financial support that the Japanese government is providing for infrastructure development in the country especially in the road sector.

President Kufuor said these projects were making significant changes in the social and economic lives of the beneficiary communities and Ghana was deeply obliged to Japan.

President Kufuor said the provision of electricity should help to unleash the economic potential of the area, which was endowed with significant natural resources.

He said the unavailability of electricity supply which had hitherto impeded the exploitation of mineral resources especially bauxite in the Nyinahin area had therefore been solved.

President Kufuor pledged government's commitment to continue to explore various options that would enable it develop an integrated aluminium complex where the bauxite mined could be refined into alumina and subsequently converted into aluminium for the local market and export. He said it was not only the bauxite industry that could be developed in the area but asked the people to galvanize and harness the known entrepreneurial potential associated with them to develop small and medium scale industries especially in agro-processing and woodwork to provide employment opportunities and create wealth.

President Kufuor said with the supply of the electricity, students' performance should improve significantly since they could now study in the night while improved service delivery must be the norm in health facilities.

"The district can now take advantage of the information and communication technology for development", he added.

Mrs Kazuko Asai, Japanese Ambassador in Ghana, said Japan attached great importance to the improvement of infrastructure in its assistance and this matched with the priority set out in the Ghana Poverty Reduction Strategy.

She said the successful completion of the project was a further testimony of good co-operation between Ghana and Japan in the area of economic and social development.

Mrs Asai said basic infrastructure such as electricity, potable water and feeder roads were essential elements for the rural areas to develop. She said, therefore, the project would enable all basic service providers to significantly improve their services in areas such as health, education and many others.

Mrs Asai added that" the timely improvement of such services is therefore highly expected from the service providers". She pledged Japan's commitment to support countries and communities that were committed to their own development agenda.


Rio's claim on bauxite challenged

The West Australian, Australia 20-feb-2004

By John Phaceas

MINING giant Rio Tinto is facing a battle to retain control of extensive bauxite deposits in the Kimberley about to be put under the microscope by State Development Minister Clive Brown.

Rio, which owns major aluminium producer Comalco, yesterday confirmed it was working to prepare a detailed planning strategy for the Mitchell Plateau deposits near Kalumburu by a February 29 deadline handed down by the minister.

But WestBusiness understands a potential rival, believed to be Queensland-based Aldoga Aluminium, has been lobbying the WA Government to strip the leases from Rio and its Mitchell Plateau partners, Alcoa and AngloGold.

Aldoga has no operating experience, but wants to build its own $3.8 billion aluminium smelter in Gladstone.

Discovered in 1966, the Mitchell Plateau deposits are estimated to contain more than 350 million tonnes of bauxite at an average grade of about 44 per cent alumina. Alcoa's bauxite deposits in the South-West average about 32 per cent alumina.

Under the "use it or lose it" principle cited by Queensland Premier Peter Beattie to strip French group Pechiney of its massive Arukun deposits in Queensland late last year, Aldoga is believed to be arguing that the Mitchell Plateau partners have deliberately sat on the project for more than 30 years.

Aldoga managing director John Benson did not return calls yesterday, but the company is also understood to have approached Rio about acquiring its 65.6 per cent interest in the leases, 100km south-west of Kalumburu.

Rio yesterday declined to comment on Aldoga, but said it would meet the minister's deadline.

"We are in the process of getting a detailed strategy document together for the minister," a Rio spokesman said, without elaborating on what the strategy might entail.

However, a senior industry source said the mining giant was determined to retain the leases even though all past evaluations of the remote project had been disappointing.

Numerous sources also confirmed that Aldoga had approached Rio about acquiring the lease before lobbying the State Government.

Minister Clive Brown was on leave and could not be contacted directly yesterday, but a spokesman for his office confirmed that a decision on the leases would be announced "shortly after he returns".

The spokesman declined to comment on whether Aldoga had been lobbying the Government, though the minister last month publicly acknowledged that a number of outside parties had expressed interest.

The minister has also been a vocal opponent of "land banking", where companies sit on resources but have no real plans for development.

Aldoga, which last month finalised $770 million "deferred payment facility" for its smelter with China's Nonferrous Metal Industry Foreign Engineering and Construction Co (NFC), has publicly declared its interest in bidding for the Arakun deposits.

Aldoga claims it will start construction of the smelter in June, but does not have its own supply of bauxite or alumina, and initially plans to source its needs from an existing alumina refinery.

Aldoga originally planned to build its smelter in NSW, and began a detailed feasibility study. But it then relocated the project to Queensland in 2001, after failing to win a $40 million subsidy on electricity charges from the NSW Government.
 


Sterlite may buy govt’s 49% stake in Balco

Financial Express, India February 24, 2004

Mansi Kapur, Reeba Zachariah in Mumbai
Sterlite Industries is looking at buying Bharat Aluminium Company from the government. Sterlite, which controls 51 per cent in the aluminium major, has a call option for the residual 49 per cent stake, which can be exercised after March 1.

Sterlite chairman Anil Agarwal told Business Standard, “We are planning to put forth a proposal to the Sterlite board on this issue as we are inclined to increase our stake in the company. However, no final decision has yet been taken. At the moment, we are in the process of evaluating various options.”

Sterlite had acquired 51 per cent stake in Balco from the government in 2001 at a consideration of Rs 551.5 crore.

The company had yet not decided on the method of raising funds for picking up the remaining stake in Balco, Agarwal said.

Sterlite has also lined up expansion plans for Balco. It is planning to invest around $800 million for the expansion project.

The existing one lakh tonne capacity at Balco’s Korba smelter will stand enhanced to 3.5 lakh tonne by March 2006.

Sterlite is also planning to set up a 1.4 million tonne alumina refining unit in Orissa. “We are looking at using 50 per cent of the alumina produced at the Orissa refinery for captive purposes. The alumina will be used for the expanded capacity at Balco’s Korba smelter,” Agarwal said.

The combined domestic market share of Balco and Madras Aluminium Company in which Sterlite holds an 80 per cent stake, is almost 21 per cent of aluminium sales.

Vedanta Resources, which holds around 60 per cent in Sterlite, has recently raised $1 billion at the London Stock Exchange through an initial public offering.

The proceeds from the IPO will be used to fund Sterlite’s expansion projects in group companies Balco, and Hindustan Zinc.



$7 million from smelter funds being sought

Longview Daily News, WA Feb 23, 2004 - 07:19:29 am PST

By Pat Forgey
Longview Aluminum may have paid as much as $7 million to companies that did no work for it, said Bill Brandt, a bankruptcy trustee overseeing the company's liquidation. Brandt said he's now trying to recover that money.

"Some of them, it's fairly clear to me, didn't work for Longview (Aluminum)," Brandt said last week.

Federal Bankruptcy Court Judge Eugene Wedoff took control of Longview Aluminum in August from owner Michael Lynch and placed the company in the hands of Brandt in an effort to recover as much money as possible for the plant's creditors. Last month Brandt gave up hope on the plant ever restarting and now plans to sell off its assets.

Brandt is sending out letters to several professional firms that Longview Aluminum paid prior to his appointment asking them what work they did and for whom they did it. Most appear to be law firms, but others included energy and other consulting firms.

The trustee's action raises further questions about whether Lynch used the assets of Longview Aluminum for noncompany purposes, while leaving the company saddled with debts, including for worker pensions.

Lynch was unavailable for comment Friday, but he earlier has denied the allegations. He said the only thing he took out of the company was a salary, which he described as a "pittance" for a company of that size.

Brandt is now questioning some of the legal bills that Lynch paid while he was in charge of Longview Aluminum, including paying multiple law firms hundreds of thousands of dollars each. Brandt said he suspects the legal work was for other Lynch-related companies, not Longview Aluminum.

Immediately after buying Longview Aluminum in 2001, Lynch shut it down and collected $225 million from the Bonneville Power Administration in exchange for not using power during the West Coast power crisis. Some of that money went to pay for the plant purchase and some went to its 950 workers, but questions remain about where the rest of the money went.

In May 2003, The Daily News reported that Lynch had been paying the chief financial officer at Scottsboro Aluminum in Alabama, another of Lynch's bankrupt companies, with a W-2 form that listed his employer as Longview Aluminum. The officer stated in a court filing that he'd never worked for Longview Aluminum.

Lynch at the time denied misspending any Longview Aluminum money.

In July 2002, The Daily News reported that one of Lynch's partners in the purchase of the Longview Aluminum smelter from Alcoa Inc. had sued Lynch. The partner, Dominic Forte, claimed in a Cook County Illinois Circuit Court filing that Lynch had "stripped" Longview Aluminum and another company they owned, Michigan Avenue Partners in Illinois, "of substantial assets by engaging in numerous acts of self dealing." Lynch denied the allegation.

Bob Cummins of the Chicago law firm Cummins and Cronin said it had received a request from Brandt, but he said his firm's work had been on behalf of Longview Aluminum and it would continue to work for the company now that Brandt controls it.

"We're in the process of being retained by the trustee," he said.

In other cases it may be more difficult to determine whether the payments were legitimate, Brandt said.

If the companies being questioned did work for Longview Aluminum, they'll have work product and records to prove it, he said.

"We want to see those records," Brandt said.

Brandt said that because he is now the official representative of Longview Aluminum, he had the right to demand any legal records produced on behalf of the company.

"If they say, 'You can't have them because we weren't really working for Longview (Aluminum),' then I say, 'Then give me back my money,' " he said.

Any money recovered for the estate will be used to pay the creditors, he said. Creditors include workers' pensions, the federal government and the Bonneville Power Administration. The amount of the claims is not yet known, but it is in the tens of millions of dollars.

Lynch said no decision has been made about whether any attempt would be made to get money directly from Lynch. If that is done, said Brandt, that would be because he believed Lynch owes Longview Aluminum money, not to punish Lynch.

"I know that a lot of people want to see Michael get his comeuppance, but that's not my job," he said.



Kaiser Aluminum Says La Duc And Bonn To Retire

www.alunews.com 23-feb-2004

Kerry A. Shiba Named Chief Financial Officer

HOUSTON, Texas, February 23, 2004 -- Kaiser Aluminum announced today the retirements of John T. La Duc, 60, Executive Vice President and Chief Financial Officer, and Joseph A. Bonn, 60, Executive Vice President, Corporate Development. The retirements were anticipated by contractual agreements and are effective as of March 31, 2004.

The company's board of directors has elected Kerry A. Shiba, 49, to succeed La Duc as Vice President and Chief Financial Officer, effective April 1, 2004. Shiba has served as the company's Vice President and Treasurer since February 2002. In his new position, he will retain the role of Treasurer.

Kaiser President and Chief Executive Officer Jack A. Hockema, said, "The board of directors and I thank John and Joe for their combined service of more than 70 years.

"As head of Corporate Development, Joe Bonn has been a key member of the team that analyzes and executes major transactions," said Hockema. "In that role, he has repeatedly helped to create value by applying his limitless store of industry knowledge and his ability to see opportunities where others do not. We are delighted that he has agreed to continue to consult with us as we move to conclude pending or potential sales of our commodity assets."

Hockema said, "As Chief Financial Officer, John La Duc consistently performed with an uncommonly effective blend of intelligence, integrity, and resourcefulness under often challenging conditions. I believe it's fair to say that he earned the respect of virtually everyone who worked with and for him."

Hockema added, "As much as we will miss John, we are fortunate to have someone of Kerry's ability to step into the role. During his time with Kaiser, and in particular since he was named treasurer in 2002, Kerry has demonstrated broad financial acumen while building strong relationships with key constituents such as the lenders under our DIP credit agreement, our insurers, and many of our important customers and suppliers. In his new position, we believe Kerry will have the opportunity to make significant contributions to Kaiser as we complete our restructuring and move toward our emergence from Chapter 11 at mid year."

Shiba joined Kaiser in 1998 as Vice President and Controller for Engineered Products and in January 2000 was named Vice President, Controller and Information Technology of Fabricated Products. Prior to joining Kaiser, he was with BF Goodrich Company for 16 years, where he held a number of progressively responsible positions in finance and planning. Before that, he had been with Ernst & Young. Shiba is a Certified Public Accountant. He holds a BA from Baldwin Wallace College.

Bonn began his career at Kaiser in 1967 and went on to hold a variety of operations, staff, and business unit management assignments at Kaiser facilities around the world. In 1987, he became the company's Director of Strategic Planning and, later the same year, was elected a corporate Vice President. He subsequently assumed additional responsibilities for corporate development, administration, and commodities marketing. He was named to his present position in 2001. He holds a BS degree from Rensselaer Polytechnic Institute and an MBA from Cornell University.

La Duc began his career at Kaiser in 1969 and held a succession of increasingly responsible positions in corporate finance, including Treasurer of International Operations, Assistant Treasurer, and Treasurer, before he was elected a corporate Vice President in 1989. He was named Chief Financial Officer in 1990 and elected Executive Vice President in 1998. La Duc earned a BS degree in engineering sciences from Purdue University and an MBA in finance from Stanford University.



Corus aluminium arm lures buyers

This is London, UK - 23 February 2004

Jim Armitage, Evening Standard
VENTURE capitalists including Carlyle Group, CVC and Blackstone are queuing up to bid in the £450m auction of Anglo-Dutch steel group Corus's aluminium assets.

Corus had agreed to sell the business to French rival Pechiney last year for about e700m (£469m) but the deal was blocked by employees on the firm's Dutch works council.

When the group raised the prospect of reheating the bid process earlier this month, the works council once again warned against a deal, claiming takeovers by other big aluminium players would run into monopoly problems.

With only five major aluminium producers left in the world, takeovers by a trade buyer would indeed struggle to gain regulatory approval. Sector giants Alcan and Alcoa would almost certainly be blocked.

However, venture capitalists would face no such issues, and are keen on getting their hands on the strong cashflows generated by the aluminium operation, which had a turnover approaching £1bn in 2002 and employs 5,750.

However, while a sale to a financial buyer would resolve their monopoly argument, it is still not clear whether Corus can persuade the members of the works council to allow it to sell the unit. Last year, the council said it was opposed to any sale of the business.

Carlyle has particularly broad experience in heavy industry. Recent deals have included buyouts of the Firth Rixson steel engineer and the Messer German welding business.


China heads into a new heavy industry era

China Economic Net, China 23-feb-2004


Private enterprises, the most dynamic sector in the Chinese economy, are also making preparations. EastHope Group has decided to set foot in the aluminium industry. In early 2002, it set up Shandong Xinfa Hope Aluminum Company. In September of that year, with an investment of RMB10 billion, it launched a 1-million-ton electrolytic aluminium project in Baotou; in June 2003, it started the Sanmenxia Aluminium Project in Henan with investment of RMB4.5 billion. Shanghai Fosun eyes iron and steel. After acquiring Nanjing Iron & Steel Co., Ltd., it started to invest to build Ningbo Jianlong Steel project along with Tangshan Jianlong Industrial Co., Ltd.
 


Plants fear power drain

Henderson Gleaner, KY February 24, 2004

By CHUCK STINNETT, Gleaner staff 831-8343 * cstinnett@thegleaner.com

Thousands of western Kentucky jobs could vanish in several years because a shortage of electricity might force the Alcan and Century aluminum smelters to shut down, officials from around the region were warned Monday.

The Alcan smelter near Sebree and the Century smelter in Hancock County consume vast amounts of power -- 840 megawatts of electricity, around the clock.

That's enough to run 10 cities the size of Henderson, Alcan consultant Allen Eyre told a gathering of some 40 officials.

But the smelters' existing contracts with LG&E Energy Marketing expire in 2010 and 2011, and there's no certainty that power will be available from LG&E or other sources afterward to keep them running.

That could put out of work some 1,510 workers at the two smelters who earn an average of nearly $45,000 per year, plus another 4,500 indirect jobs, Eyre warned.

Officials here have been meeting on the subject for a year or so. Because the smelter closings could affect so many people in so many counties, Henderson County Judge-executive Sandy Watkins on Monday gathered elected officials from 10 western Kentucky counties as well economic development agents, representatives of Alcan and Big Rivers Electric Corp. and others.

"I've got to get all the players in western Kentucky to understand we're in this together," Watkins said.

"We don't have a smelter" in Owensboro, Daviess County Judge-executive Reid Haire remarked. "But our citizens go to work at smelters in Henderson County, Warrick County (where Alcoa is located), Hancock County." The closure of two of those smelters would ripple through the Owensboro economy, he indicated.

"The only way you're going to solve your problem is to work together as a group to save your plant," Bob Arnold, executive director of the Kentucky Association of Counties, said.

Eyre outlined several possible solutions:

- Power provider Big Rivers could build a second coal-fired turbine-generator at its D.B. Wilson power plant in Ohio County.

However, another nearby project, Peabody Energy Corp.'s proposed Thoroughbred power plant in Muhlenberg County, already has secured an air quality permit, and Eyre said it's unlikely that environmental agencies would permit Big Rivers to build new generators, too.

- Big Rivers could gain access to power by buying a portion of the 1,500-megawatt (MW) Thoroughbred plant.

- The anticipated closing of the government's uranium enrichment plant at Paducah might free up 3,000 MW in the region.

- Big Rivers could negotiate to gain access to more electricity from the generating stations it has leased to LG&E subsidiary Western Kentucky Energy Corp.

But all of those solutions carry considerable risk for the parties, would cost lots of money -- and haven't been agreed to by anyone.

Some in attendance, such as Henderson community leader Dr. John Logan, expressed frustration that officials have been talking about the problem for a year, but still have no solution.

"Let's come back in 30 days with a plan," Logan urged. "I want to see something happen. I've got other things to do."

Others said the matter can't be resolved that fast.

"If you're looking for a plan to how to save the smelters in 30 to 60 days, we can't do it," Big Rivers President and CEO Mike Core said.

"We're working hard with Alcan and Century to come up with an answer that may not come out for a few months," Core said.

"Maybe 30 days is too short," Logan replied. "But if you don't set a goal, you'll never achieve it."

He said that as much as $500 million for clean coal technology in Kentucky could emerge from a U.S. Senate energy bill, and officials here should strive to secure those funds.

At Watkins' urging, several county officials indicated they would try to contribute some funds to hire a professional consultant to assist with the effort.

Further, the West Kentucky Corp., a regional economic development agency, agree to administer the effort, while several officials from around the region agreed to serve on a steering committee.

"We're going to bring this group together," Steve Zea, executive director of West Kentucky Corp., said, "to identify, criteria for providing low-enough-cost electricity to not only make the aluminum industry viable, but to keep western Kentucky competitive."


Alcan Sought as Partner for $1.9 Billion Oman Aluminum Smelter

Feb. 24 (Bloomberg) -- Alcan Inc., the world's biggest aluminum maker by sales, is being asked to take a minority stake in a $1.9 billion aluminum smelter the Omani government plans to build to help diversify its economy beyond oil.

Oman and its partner, the Abu Dhabi Electricity & Water Authority, plan to meet with Alcan next month for talks about the proposed 326,000 tons-a-year smelter at Sohar, 260 kilometers (160 miles) northwest of the capital, Muscat, said David Douglas, chief executive of the state-owned Oman Oil Co.

``We're looking to Alcan to take a significant stake in the project as we seek buyers for the aluminum,'' Douglas said in an interview at a conference in Muscat sponsored by the Middle East Economic Digest. Oman plans to start building the smelter in the third quarter of next year and complete it in 2007, he said.

Oman is seeking to emulate Bahrain and Dubai, which use their natural gas reserves to fuel plants that produce aluminum for export. Bahrain sells more than half its output to local companies that make sheeting and other products. Oman relies on oil for about 40 percent of its gross domestic product.

Oman scaled back the planned smelter from 530,000 tons a year to reduce the cost and because it would be difficult to sell all the output, Douglas said. Oman Oil is the domestic and overseas investment arm of the Omani government.

The government first considered the aluminum project in the mid-1990s, Douglas said.


To contact the reporter on this story:
James Cordahi in Musc, Oman, on, or at cherifcord@bloomberg.net

To contact the editor for this story:
Tim Coulter at tcoulter@bloomberg.net
Willy Morris at wmorris@bloomberg.net


Bagbin Accuses NPP Government of Collapsing Industries

AllAfrica.com, Africa February 24, 2004

Accra Mail (Accra)

Mr. Alban Bagbin, Minority Leader in Parliament has accused the New Patriotic Party (NPP) government of raising unemployment in the country.

He claimed that hitherto viable industries and factories in the country were collapsing thereby laying more workers off than employing.

The Minority Leader who was addressing the newly inaugurated Tertiary Institution Network of the National Democratic Congress (NDC) (TEIN) at the Wa Campus of the University of Development Studies (UDS) said with the coming to power of the NPP government Volta Aluminium Company (VALCO) and Kaiser Aluminium Company were collapsing.

He alleged that already over 4,000 workers of VALCO had been sent home while Kaiser Aluminium Company was selling its shares to "pack bag and baggage".


Mr. Bagbin also alleged that direct foreign investment was dwindling due to the bad economic policies, adding that, investors coming into the country had no track records in investments even in their own countries.

The Minority Leader accused the NPP of importing all categories of ammunition "apparently to cause mayhem during the elections if they do not win the 2004 general elections".



Alcoa Named ‘Most Admired’ by Fortune Magazine

CRSwire.com 2/25/04

Named Top Metals Company. Ranks Second Overall in Social Responsibility

(CSRwire) Pittsburgh, PA – Alcoa has been named one of Fortune Magazine’s “Most Admired Companies” in the leading business publication’s annual report on reputation, which goes on sale next month.

Fortune named Alcoa the “Most Admired Metals Company.” In the metals industry, Alcoa ranked first in each of eight key attributes measured by the magazine: innovativeness, employee talent, use of corporate assets, social responsibility, quality of management, financial soundness, long-term investment value and quality of products and services. This is the ninth consecutive year Alcoa was ranked the top metals company.

Among all companies in all industries, Alcoa ranked second in terms of social responsibility.

For its survey of 592 companies in 64 industries, Fortune asked approximately 10,000 executives, directors, and securities analysts to rate companies in their own industries on the eight criteria.

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap® foils and plastic wraps, Alcoa® wheels, and Baco® household wraps. Among its other businesses are vinyl siding, closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 120,000 employees in 41 countries. More information can be found at www.alcoa.com



In Today’s Court Hearing

www.kaiseral.com February 23, 2004

Monthly Update to Customers, Employees, Suppliers, and Friends of Kaiser Aluminum:

In Today’s Court Hearing

Two of the alumina supply agreements that are currently well below market prices came before the Court in today's hearing. We informed the Court that we had reached a settlement with a counter party on one of the agreements. After hearing argument, the Court ruled against Kaiser on the other agreement and upheld the contract. We disagree with the Court's ruling and will consider asking for reconsideration. Hearing on the other alumina motions was deferred until March 22. At our request, the Court also deferred its ruling on the proposed Alpart sale until the March 22 hearing.

Extension of Exclusivity

In the coming week, the company expects to file a motion to extend the period of exclusivity through June 30, 2004 (or April 30 for certain wholly owned subsidiaries). We believe this motion will be supported by the Unsecured Creditors’ Committee and others and that it is likely to be approved by the Court at either of the regularly scheduled hearings in March or April. As you may recall, the filing of the motion gives us an automatic extension until the Court can formally rule on our request.

Additional Progress on Resolving Pension/Retiree Issues

As previously announced, the Court held a special hearing on February 2 and approved, subject to union ratification and certain other conditions, the company’s agreements in principle – regarding pension and other post-retirement benefits – with the United Steelworkers of America (USWA), the International Association of Machinists (IAM), and the 1114 committee that represents salaried retirees. On February 13, the USWA announced that its members at six Kaiser locations (including most of our larger U.S. plants such as Trentwood and Gramercy) had ratified the agreements by a wide margin. While other approvals are being sought and must be obtained before these agreements become final, we are very pleased by the USWA’s ratification and, again, view the changes to these programs as difficult but necessary steps as we advance toward a planned emergence from Chapter 11 at midyear.

Replacement Retirement Plan for Salaried Employees

The company is in the advanced stages of designing a new retirement plan for salaried employees that we hope to implement within the next couple of months. This will be a defined contribution plan, meaning the company will make annual contributions to an employee’s retirement account. The Court has already approved in principle such a plan to replace the terminated KRP (just as it has approved replacement plans for hourly employees represented by the USWA and the IAM). We believe the plan will represent an attractive benefit for salaried employees.

Ownership of the Reorganized Kaiser: A Clarification

I'd like to clarify a statement that has appeared in several recent news reports regarding ownership of the reorganized Kaiser. I believe these news reports have been based on an inaccurate understanding of our agreement with the unions and the 1114 Committee regarding the proposed new VEBA(s) that will be created to provide retiree medical benefits to all of the retiree groups. In a nutshell, as our agreement is currently structured, these new VEBA(s) – not the USWA, as reported in some publications – would have an ownership position in the reorganized company.

Liquidity and Business Matters

Recent liquidity has remained at approximately $175 million. We are encouraged by firming order rates in our fabricated products business and the net positive impact of higher LME prices upon our alumina business. In addition, we continue to move forward on our previously announced Memorandum of Understanding to sell our interests in the 90%-owned Valco smelter to the Government of Ghana, which has made a required $7 million payment into escrow and is beginning due diligence as scheduled.

Jack A. Hockema
President and Chief Executive Officer


Aluminium of Greece

Kathimerini, Greece 02-25-04

Aluminium of Greece yesterday described a Kathimerini report that Canadian metallurgy group Alcan, the new owners of its parent company Pechiney, were considering delisting the firm from the Athens bourse, as “not corresponding to reality.” The company said it was not aware of any intention of the majority shareholder to initiate delisting procedures


Kaiser Aluminum Reaches Agreement To Sell Mead, Washington, Smelter

Buyer To Focus On Possible Restart Of Anode Operation

www.kaiseral.com

HOUSTON, Texas, February 26, 2004 -- As part of an ongoing cooperative effort with the United Steelworkers of America (USWA) to identify and implement a viable and mutually beneficial plan for the future of Kaiser Aluminum's curtailed aluminum smelter in Mead, Washington, the company today said it has reached an agreement to sell the facility and certain related technology to an affiliate of Columbia Ventures Corporation, CVB Northwest LLC, for cash proceeds of approximately $4 million and other related consideration regarding certain site-related liabilities.

Columbia Ventures Corporation (CVC), based in Vancouver, Washington, is an entrepreneurial firm with investments in aluminum manufacturing and telecommunications. "We believe there could be long-term opportunities for the Mead smelter that we hope will provide a number of jobs and substantial economic benefit for the community," said Kenneth D. Peterson, Chief Executive Officer of CVC. "Although there may be other potential opportunities at Mead, our intent is to focus on determining if we can reasonably restart the anode baking operation and sell those anodes to other affiliates of CVC and/or third parties. We will be discussing this with the USWA and hope to provide employment opportunities as part of this effort. Initially, we may also maintain an ability to operate at least two potlines -- or about 50,000 metric tonnes of capacity -- as swing capacity if and when we see a favorable combination of aluminum and power prices."

David Foster, USWA District Director, said, "CVC knows the region and the industry, and we look forward to working in partnership with this firm to bring near-term jobs and the potential for more with the possibility of a potline restart under the right business conditions. We also appreciate the effort expended by Kaiser to work with the USWA to find such a positive future for Mead."

Kaiser President and Chief Executive Officer Jack A. Hockema said, "Over the past year, we have engaged in a cooperative effort with the USWA and industry consultants to examine numerous options that might enable Mead to operate. We believe the transaction with CVC is the optimal solution to preserve Mead's ability to provide jobs and economic benefit for the local community. At the same time, the transaction will help Kaiser continue the momentum toward our stated goal of emerging from Chapter 11 in mid 2004."

Hockema said, "We value the deep roots that Kaiser has -- and will continue to have -- in Washington. In particular, our continuing operations at the Trentwood rolling mill and the Richland drawn tube facilities are unaffected by this announcement. Together, Trentwood and Richland have more than 500 active employees and are key suppliers in their respective business segments."

The transaction is subject to various approvals, including by Kaiser's Board of Directors and by the United States Bankruptcy Court for the District of Delaware, where Kaiser expects to file a related motion as soon as practical. Kaiser expects to request final approval for the transaction at the regularly scheduled Court hearing on April 26, 2004 and, assuming the requisite approvals and other conditions are met, would expect the transaction to close during the second quarter of 2004.

Under the agreement with CVC, Kaiser would retain ownership and responsibility for a closed site adjacent to the facility that was used historically for the storage of spent potliners. Through a cooperative agreement with the Washington State Department of Ecology, the Company completed substantial work in 2001 to further safeguard the closed site and surrounding properties. The company continues in active and cooperative discussions with the Washington State Department of Ecology and the U.S. Environmental Protection Agency to ensure the long-term success of this project.

The Mead, Washington, smelter began operating in 1942 and has an annual rated capacity of 200,000 metric tonnes in its current configuration. It has been curtailed since January 2001 and has fewer than 20 active employees, most of whom will be eligible for employment with CVC.

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



$1.4b Gladstone refinery on time: Comalco

Brisbane Courier Mail, Australia 27feb04

By Nathan Scholz
COMALCO chief executive Sam Walsh has pledged the company's $1.4 billion alumina refinery at Gladstone would be on time and budget with production expected by the end of the year.

But Mr Walsh ruled out planning for the 1.4 million tonne plant's upgrade to 4 million tonnes – to take advantage of unprecedented demand from China – before the current plant was running smoothly.

Speaking at a lunch for the Brisbane Mining Club, Mr Walsh said sales for the plant's output were largely sold including a 500,000 tonne a year, 30-year deal with a Norwegian company.

Mr Walsh said there was tremendous opportunity for Australia, the world's largest alumina exporter, to take advantage of a production lag in China, where demand had lifted 23 per cent but production had only increased 17 per cent.

Comalco was well placed because it was involved in all three stages of making aluminium – from digging up the bauxite to smelting the final metal.

The company's new bauxite mine at Weipa would boost production by 14 million tonnes a year, he said.

But Mr Walsh cautioned there were also challenges for the company, a subsidiary of Rio Tinto.

Like other resources companies the strength of the Australian dollar had impacted on revenues, although prices for Comalco's products had held up better than most.

He said he expected prices would peel back as Comalco's refinery came on stream, which would have the benefit of reducing the opportunity for others to get into the market.



RusAl to finish feasibility study for the works in Guinea.

Gateway 2 Russia, Russia 26 February 2004 14:49

Russian Aluminium (or RusAl) will make out by late 2004 a detailed feasibility study for the project to widen capacity and upgrade aluminous works in Guinea. Canadian Hatch and Russia's Aluminium & Magnesium Institute (member of RusAl holding) will take part.

Design, construction and provision activities will start early 2005.

With the project implemented, aluminous production of the works will increase 2 fold to 1.4 mln tons. $350 mln are to be invested over 3 years.

RusAl is one of the world's three leaders in primary aluminium production. It covers 75% Russia's primary aluminium market and 10% world's market.


Deripaska tries cashing out with ALCOA -- will Kremlin intervene?

Russia Journal, Russia February 26, 2004

By John Helmer Oleg Deripaska (ITAR-TASS)

Russian Aluminium (Rusal), Russia's leading producer of primary aluminium, is in talks with Alcoa, the world's top producer, to sell controlling stakes in two of its struggling downstream rolling units. Neither Rusal nor Alcoa is confirming any details of a transaction. But if it is implemented, it would give the American company its first Russian aluminium asset, and substantial control over the aluminium sheet required for many strategic Russian industries.

Just how strategic will become clear if President Vladimir Putin, hot on the heels of the oligarchs after dismissing Prime Minister Mikhail Kayanov, intervenes to let Deripaska know whether he will be allowed to cash out these assets to a powerful American buyer.

Industry sources also say it is unclear why Alcoa would buy into Russian plants that are struggling to make profit at a fraction of their plant capacity, in a domestic market that cannot absorb as much of their output as RusAl planners have been hoping for. Worse, from Alcoa's point of view, the sources say that buying the units Deripaska wants to sell would still leave Rusal in control of the metal supply on which the factories depend. The sources are skeptical that Alcoa is ready for that.

Kirill Zhitenev, spokesman for Governor Vladimir Chub of Rostov region, told TRJ there have been what he described as "preliminary negotiations between the governor and [Alcoa chief executive] Alain Belda about Alcoa's acquisition of the Joint-Stock Company Belaya Kalitva Metallurgical Plant, which is currently under full control of RusAl. The negotiations continue, and there is no final decision yet. The meeting [between Alcoa and the governor] was held at the initiative of RusAl." According to Zhitenev, the Belaya Kalitva plant is too specialized in supplying metal for the aviation and aerospace industry, which has been unprofitable in Russia, and for this reason is a candidate for divestment by Rusal. The source claimed that the proposal on the table is for Alcoa to acquire an 85% share of Rusal's stake in the plant, while Rusal would retain 15%. Rusal currently holds over 80% of the plant's shares.

Russia's aerospace industry has been in the doldrums since the end of the Soviet Union. Aviacor, the Samara-based builder of Tupolev aircraft, which Rusal's controlling shareholder, Oleg Deripaska, acquired in the 1990s, has been unable to revive its production lines or make profits. According to Zhitenev, at the meeting with the Rostov governor, the Alcoa CEO proposed that "if the deal were to take place Alcoa would bring new technologies, innovations and clearance for western certification of production."

Alcoa has been quietly assessing acquisition possibilities in the Russian aluminium sector for many years, but it has made no significant commitment of cash to date. Industry sources claim that in 1998-99, Alcoa was seeking to buy the Bratsk aluminium smelter, Russia's largest primary aluminium producer. Rusal acquired it instead in 2000. Earlier, a joint venture between Reynolds (now absorbed by Alcoa) and Deripaska's first aluminium company, Siberian Aluminium (Sibal), ended in controversy and recriminations.

Gennadiy Anopriyenko, a regional economic official, told TRJ he had been misquoted in media reports of the Alcoa-Rusal meeting in Rostov. It is also unclear what talks have been held on the sale of the Samara plant, which is the Samara region, and is not under the Rostov governor's control.

"I can confirm [there are] negotiations between Alcoa and RusAl about [possible acquisition] of the Samara Metallurgical Plant," Anopriyenko said, "but I can't tell you the economical part of the deal because I am not involved." He denied claiming that Rusal is offering its entire stake -- about 99% -- for sale to Alcoa. The Samara plant is one of the largest of its kind in the world, but it has fallen on hard times. In 2003 Rusal says the plant produced 173,868 tonnes of products, down from 199,404 tonnes in 2002. First constructed in 1960, its rated capacity is 450,000 tonnes a year. Reynolds has tried and failed to market Samara's products on world export markets, and it is unclear whether Alcoa is thinking of making a fresh attempt. The Belaya Kalitva plant produced 41,430 tonnes of products in 2003, up from 38,447 tonnes in 2002. It was built in 1954. Its annual production capacity is 120,000 tonnes.

Maxim Matveev, a metals analyst for Alfa Bank in Moscow, told TRJ: "It's not a secret that RusAl is looking for strategic partners within western aluminium companies. Alcoa is one of the likely ones. One of the variants for cooperation here is the sale of unprofitable assets." According to Matveyev, "domestic demand doesn't satisfy the production requirements. This is why these two factories have been nominated to be sold."


Bahrain's Alba doubles 2003 profits

MENAFN - 26/02/2004

(MENAFN) Aluminium Bahrain (Alba) said that it nearly doubled its net profits to $200 million in 2003 on stronger prices and slightly higher output, Reuters reported.

Alba, one of the biggest producers in the Middle East, had a total turnover of $800 million last year, half of it from domestic sales and the rest from exports.

In 2002, the company earned $756 million, with a net profit of $105 million on output of 517,000 tones from 527,000 tones last year.

Alba is 77 percent owned by Bahrain's government, 20 percent by Saudi Arabia and 3 percent by German group Breton Investments.




Kaiser sells smelter for $4 million

www.spokesmanreview.com Friday, February 27, 2004

New owner plans $15 million retrofit at Mead plant for anode manufacture


John Stucke Staff writer

Kaiser Aluminum Corp. has found a buyer for its sprawling Mead smelter, a deal that could breathe some life into a vestige of Spokane's industrial past.

The company agreed to sell the smelter to Columbia Ventures Corp. of Vancouver, Wash., for $4 million and other considerations, such as the assumption of some pollution cleanup at the site.

The small sum -- building a new smelter today would be a billion-dollar undertaking -- is an acknowledgment that Mead is a relic.

It was built in 1942 as a war plant. The airplanes born of Mead metal helped win World War II. The paychecks issued for the next six decades filled the pockets of generations and helped define Spokane as a regional center of manufacturing and commerce.

But Columbia Ventures wants to buy the plant to make carbon anodes, not aluminum. The anodes are specially made blocks of carbon that smelters use to conduct electricity through pots to help make aluminum.

Kenneth Peterson, CEO of Columbia Ventures, said his company operates a smelter in Iceland that needs such parts.

"That's our interest right now," he said in an interview Thursday.

Bringing Mead's anode operation online would cost about $15 million and take more than a year.

"Are we ready to go? No," he said. "There's a lot of stars that would have to align first."

Making aluminum is an even longer shot, although Peterson didn't rule it out.

Mired in bankruptcy, Kaiser severed its electricity contracts for the power-intensive smelter. Even with higher metal prices, startup and power costs have suppressed smelter restarts.

News of the sale stunned Steelworkers.

"We knew some people were here, but we didn't think they were doing much more than just having a look around, kicking the tires," said Dan Russell, president of Steelworkers Local 327.

When Kaiser closed the smelter in January 2001, hundreds of Steelworkers were left without jobs.

As recently as 1996, the Mead smelter employed 1,200 workers. Today about 13 union members work there, mostly gathering and loading raw materials for auction and performing basic maintenance.

If the sale is approved in bankruptcy court, Russell said Columbia Ventures would need dozens of workers to get anode production going. When running, about 30 workers and a maintenance crew of a half dozen might be all that's needed.

Seven years ago, Kaiser spent $54 million at Mead to modernize the furnaces used to make anodes. The expenditure was hailed as a commitment to Mead's future.

"I don't know what's all going to come of this, but hopefully it may mean that we'll have some jobs to offer people," Russell said.

Kaiser has been selling its aluminum smelters and other commodity operations during the past year to raise cash and slim down.

The company hopes to emerge from bankruptcy this year focused on making fabricated parts. Its Trentwood rolling mill has more than 500 employees and is considered an important piece of a reorganized Kaiser.

In a prepared statement, Kaiser CEO Jack Hockema called the Mead sale a good measure that could preserve the smelter's ability to operate for the economic good of Spokane.

"We value the deep roots that Kaiser has -- and will continue to have -- in Washington," he said.

Peterson mentioned his own Spokane connections. His grandparents lived in the city, and he still has cousins here.

"I like Spokane. Always have," he said. "I have to admit that I didn't ever foresee that something like this, though, would be coming down the pike."

Although Peterson didn't rule out using Mead to produce aluminum when prices are high, he said the glory days of the smelter are past.

"There's still some viable business to be done at the smelter, and we're going to try hard to make it," he said.

Kaiser will retain ownership and responsibility for a closed site adjacent to the smelter that was used as a dump. Chemicals from discarded equipment leached into the soil, making that site an environmental cleanup priority. Kaiser has worked with state and federal regulators on the pollution.

Peterson did not elaborate on the clean-up liabilities he may inherit with the smelter.

Recently, Kaiser has been selling parcels of its 1,200 acres smelter site to real estate developers. Much of the acreage sits far from the smelter and was never used. Instead, it was considered buffer property to keep development away from the plant.

But residential and commercial development have grown around the plant and the Mead acreage is now viewed as good building land.

The land deals, along with Kaiser's sale of raw materials and equipment at Mead, have been the most activity at the plant since the company idled operations so that it could sell its allotment of federal electricity during the 2000-01 power crunch.

Kaiser collected $460 million from those sales, sparking an outcry from critics who wanted the company to share its windfall. Other aluminum companies returned hundreds of millions of dollars to the Bonneville Power Administration.

The event poisoned Kaiser's relationship with the BPA and angered even some of the company's most ardent supporters.

The sale of Mead may help end the three-year saga in North Spokane, where Kaiser layoffs sent households into financial chaos and hardened resentments leftover from a 20-month labor dispute that ended in October 2000.


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


Ormet to Lay Off About 80 Workers

WTRF, WV Friday, February 27, 2004

A subsidiary of bankrupt aluminum maker Ormet Corporation says it will lay off about 80 workers at one of its two direct chill casting pits in Hannibal, Ohio.

Over the next three months, Ormet Primary Aluminum will cut production at the Hannibal Reduction Plant Cast House.

Ormet sought protection from creditors January 30th, blaming low metal prices, weak demand, high energy costs and rising health-care costs.

The company has about 2,600 employees in five states.

The Hannibal reduction mill is the largest with about 1,100 employees.


Alcoa, Alumina Sell Specialty Chemicals Ops For $342M

Yahoo News 27-feb-2004

PITTSBURGH (Dow Jones)--Alcoa Inc. (AA) and Australia's Alumina Ltd. (AWC) completed the sale of their joint venture's specialty chemicals business for about $342 million.

Alcoa and Alumina announced plans in November to sell Alcoa Specialty Chemicals to Rhone Capital LLC. The companies, however, didn't disclose the deal's terms at that time.

In a press release Friday, Alcoa said the $342 million sale price includes the assumption of debt and other unfunded obligations. Rhone Capital bought the operations together with Teachers' Merchant Bank, the private equity arm of the Ontario Teachers' Pension Plan.

Alcoa owns 60% of the Alumina joint venture, called Alcoa World Alumina & Chemicals. Alcoa, the world's largest aluminum maker, sold the specialty chemicals operations as part of a widespread plan announced in January 2003 to shed noncore business.

The specialty chemicals business has annual revenue of about $360 million and 11 operating facilities worldwide, with about 800 workers. Alcoa said the new owners plan to rename the business Almatis.

Company Web site: http://www.alcoa.com

-Kara Wetzel; Dow Jones Newswires; 201-938-5400


Smelters: Momentum builds to help save them

Evansville Courier & Press, United States February 27, 2004

The potentially bad news is that Henderson County's Alcan and Hancock County's Century aluminum smelters face future electricity shortages that could threaten to shut down both facilities within a few years.

The good news is that local and area government and utility officials and economic development representatives are exploring options to head off such a crisis when the smelters' contracts with LG&E Energy expire in 2010 and 2011.

A lot is at stake, as in 1,510 workers earning an average of $45,000 a year, as well as another 4,500 indirect jobs, according to Alcan consultant Allen Eyre.

Eyre was one of about 40 officials who met here earlier this week at the request of Henderson County Judge-executive Sandy Watkins, who has been a leader in mounting a regional thrust to deal with this issue.

"I've got to get all the players in western Kentucky to understand we're in this together," Watkins said. One of those who understands is Daviess County Judge-executive Reid Haire. "We don't have a smelter (in Daviess County)," he said. "But our citizens go to work at smelters in Henderson County, Warrick County (the site of Alcoa), Hancock County."

Meanwhile, Bob Arnold, executive director of the Kentucky Association of Counties, told the gathering: "The only way you're going to solve this problem is to work together as a group to save your plant."

Eyre presented several possible solutions that have been under study. Several are tied to power provider Big Rivers Electric and carry high costs as well as the risks associated with the utility industry. As an example, one possible solution is to build a new coal-fired generator at the D. B. Wilson power plant in Ohio County. But such a proposal conflicts with the Thoroughbred power plant proposed for nearby Muhlenberg County by Peabody Energy Corp., which has already secured an all-important air quality permit. Another possibility includes buying a portion of the Thoroughbred plant. And on it goes.

At present there is no concrete plan of action, but this week's meeting gave some momentum to the cause. West Kentucky Corp., a regional economic development agency, will administer the group's effort and Watkins said he will try to win funding support from area county officials for a professional consultant.

It's a complex issue with no easy fix, but the concerted effort to head off a major economic blow to the region raises expectations that the challenge will be met.


Dutch company expresses interest in Nyinahin Bauxite

GhanaWeb, Ghana

Accra, Feb. 27, GNA- Mrs Cecilia Bannerman, the Minister of Mines on Friday said a Dutch organisation, BHP Billiton, one of the largest mining companies has shown interest in the Nyinahin bauxite deposits in the Ashanti Region.

She said the company has applied for prospecting license for bauxite in both the Kibi bauxite area in Eastern region and Nyinahin. The Minister was in Parliament to answer a question by Mr. Akwasi Dante-Afriyie, NPP-Atwima Mponua, as to what plans the Ministry has to exploit the Nyinahin bauxite deposits.

Mrs Bannerman said the company "is currently carrying out the necessary environmental studies that will lead to the grant of an environmental permit and ultimately the prospecting licenses."

"This grant will enable BHP Billiton carry out the necessary exploration investigations for the project. Then, if the investigations prove successful, the company intends to spend over 2 billion US dollars over a period of 10 to 15 years on exploiting the bauxite, refining it into alumina and also developing the necessary infrastructure." The Minister said feasibility studies indicated that the production of alumina using the Nyinahin deposits as major raw materials was technically feasible.

She said investors who reviewed the project over the last two decades wanted to exploit the bauxite for use in their alumina refineries in their home countries.

"Since Independence, one of the government's policies for the mining sector has been to promote the development of an integrated aluminium industry."

"That is mining of the country's bauxite deposits, refining bauxite into alumina, smelting the alumina into primary aluminium and using it for manufacture of finished aluminium products in the country," the Minister explained.

Mr. Dante-Afriyie wanted to know which of the two bauxite areas Kibi and Nyinahin, had the largest deposits. The Minister said Nyinahin was the largest.


Japan Aluminium-Buyers, suppliers far apart at Q2 price talks

Reuters, 02.27.04, 2:51 AM ET

By Chikafumi Hodo

TOKYO, Feb 27 (Reuters) - Japanese aluminium buyers are holding onto hope for a better offer on second-quarter premiums, but suppliers have refused to budge, citing strong domestic demand, ensuring talks drag into a third week.

International suppliers of Western-grade aluminium like Alcoa Inc (nyse: AA - news - people) have offered premiums above $70 a tonne over the London Metal Exchange cash price for the quarter to June, traders said.

That is more than 30 percent above the $53-$54 premium agreed at term talks in December for the January-March quarter.

Suppliers continued to emphasise an expected rise in domestic demand based on brighter economic prospects in Japan and also cited shrinking availability from China and higher premiums in markets outside Japan and South Korea, the traders said.

Traders involved in the discussions said that as of Friday morning, buyers were still on the sidelines, hesitant to place solid bids.

Several buyers were rumoured to have raised their indications to around $65, and there were signs that bids could rise as high as $68, traders said.

"Producers are unwilling to lower the price to the level sought by buyers of around $65 because premiums everywhere, outside Japan and South Korea, are rising," a trader with a western aluminium supplier said.

"At the moment there are no firm bidders around. No buyer has been aggressive enough to clinch a deal by the end of the month," the trader said.

Some buyers, which will re-sell the metal and can pass higher premiums onto their customers, have been less aggressive than end-users in pursuing a lower price, traders said.

Industry sources close to the talks said a few suppliers were rumoured to have lowered their offers to below $70.

PROTRACTED TALKS

Japanese term buyers are now expecting the negotiations to drag into next week but users need to finalise an agreement by mid-March so that they can lift the metal on time in April.

"With freight costs rising, some buyers want to clinch a deal as soon as possible because it's getting more evident that prices will rise even if you keep on waiting," said a Japanese trader involved in the price talks.

"Spot market premiums reported in Japan have been rising sharply, to around $65 recently," the trader added.

In the past, premiums for the second quarter starting in April were settled by the end of February.

But term negotiations have been protracted in the past three quarters, traders said.

Japan is Asia's largest net importer of primary aluminium, with annual demand of roughly two million tonnes last year, setting a benchmark for physical aluminium prices in Asia.

Industry sources said Japan imports about 160,000 to 200,000 tonnes of aluminium per month. Of that about 80,000 tonnes, or about 40-50 percent, are imported through term contracts.

FEWER SUPPLIES?

Some buyers are worried they may receive less product in the second quarter if they continue to wait as suppliers may decide to allocate the light metal to Southeast Asia or to the United States where premiums have been rising recently.

In that case, Japanese end-users could be forced to make up the shortfall on the spot market, which could be even more expensive as prices remain strong.

Buyers also want to avoid a cut in volume as Japanese economic indicators suggest a pick-up in capital spending, which would boost demand for the metal.

Government data on Friday showed Japanese industrial output rose a seasonally adjusted 3.4 percent in January from a month earlier. Economists polled by Reuters had forecast, on average, a rise of 2.8 percent.

Earlier in the week data from the Japan Aluminium Association showed Japanese shipments of aluminium mill products in January rose 1.3 percent from a year earlier to 187,920 tonnes.

The association said robust demand in automobile, shipbuilding and electronics sectors helped boost demand.

Copyright 2004, Reuters News Service



Kaiser sells smelter for $4 million

www.spokesmanreview.com Friday, February 27, 2004

New owner plans $15 million retrofit at Mead plant for anode manufacture


John Stucke Staff writer

Kaiser Aluminum Corp. has found a buyer for its sprawling Mead smelter, a deal that could breathe some life into a vestige of Spokane's industrial past.

The company agreed to sell the smelter to Columbia Ventures Corp. of Vancouver, Wash., for $4 million and other considerations, such as the assumption of some pollution cleanup at the site.

The small sum -- building a new smelter today would be a billion-dollar undertaking -- is an acknowledgment that Mead is a relic.

It was built in 1942 as a war plant. The airplanes born of Mead metal helped win World War II. The paychecks issued for the next six decades filled the pockets of generations and helped define Spokane as a regional center of manufacturing and commerce.

But Columbia Ventures wants to buy the plant to make carbon anodes, not aluminum. The anodes are specially made blocks of carbon that smelters use to conduct electricity through pots to help make aluminum.

Kenneth Peterson, CEO of Columbia Ventures, said his company operates a smelter in Iceland that needs such parts.

"That's our interest right now," he said in an interview Thursday.

Bringing Mead's anode operation online would cost about $15 million and take more than a year.

"Are we ready to go? No," he said. "There's a lot of stars that would have to align first."

Making aluminum is an even longer shot, although Peterson didn't rule it out.

Mired in bankruptcy, Kaiser severed its electricity contracts for the power-intensive smelter. Even with higher metal prices, startup and power costs have suppressed smelter restarts.

News of the sale stunned Steelworkers.

"We knew some people were here, but we didn't think they were doing much more than just having a look around, kicking the tires," said Dan Russell, president of Steelworkers Local 327.

When Kaiser closed the smelter in January 2001, hundreds of Steelworkers were left without jobs.

As recently as 1996, the Mead smelter employed 1,200 workers. Today about 13 union members work there, mostly gathering and loading raw materials for auction and performing basic maintenance.

If the sale is approved in bankruptcy court, Russell said Columbia Ventures would need dozens of workers to get anode production going. When running, about 30 workers and a maintenance crew of a half dozen might be all that's needed.

Seven years ago, Kaiser spent $54 million at Mead to modernize the furnaces used to make anodes. The expenditure was hailed as a commitment to Mead's future.

"I don't know what's all going to come of this, but hopefully it may mean that we'll have some jobs to offer people," Russell said.

Kaiser has been selling its aluminum smelters and other commodity operations during the past year to raise cash and slim down.

The company hopes to emerge from bankruptcy this year focused on making fabricated parts. Its Trentwood rolling mill has more than 500 employees and is considered an important piece of a reorganized Kaiser.

In a prepared statement, Kaiser CEO Jack Hockema called the Mead sale a good measure that could preserve the smelter's ability to operate for the economic good of Spokane.

"We value the deep roots that Kaiser has -- and will continue to have -- in Washington," he said.

Peterson mentioned his own Spokane connections. His grandparents lived in the city, and he still has cousins here.

"I like Spokane. Always have," he said. "I have to admit that I didn't ever foresee that something like this, though, would be coming down the pike."

Although Peterson didn't rule out using Mead to produce aluminum when prices are high, he said the glory days of the smelter are past.

"There's still some viable business to be done at the smelter, and we're going to try hard to make it," he said.

Kaiser will retain ownership and responsibility for a closed site adjacent to the smelter that was used as a dump. Chemicals from discarded equipment leached into the soil, making that site an environmental cleanup priority. Kaiser has worked with state and federal regulators on the pollution.

Peterson did not elaborate on the clean-up liabilities he may inherit with the smelter.

Recently, Kaiser has been selling parcels of its 1,200 acres smelter site to real estate developers. Much of the acreage sits far from the smelter and was never used. Instead, it was considered buffer property to keep development away from the plant.

But residential and commercial development have grown around the plant and the Mead acreage is now viewed as good building land.

The land deals, along with Kaiser's sale of raw materials and equipment at Mead, have been the most activity at the plant since the company idled operations so that it could sell its allotment of federal electricity during the 2000-01 power crunch.

Kaiser collected $460 million from those sales, sparking an outcry from critics who wanted the company to share its windfall. Other aluminum companies returned hundreds of millions of dollars to the Bonneville Power Administration.

The event poisoned Kaiser's relationship with the BPA and angered even some of the company's most ardent supporters.

The sale of Mead may help end the three-year saga in North Spokane, where Kaiser layoffs sent households into financial chaos and hardened resentments leftover from a 20-month labor dispute that ended in October 2000.


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


Ormet to Lay Off About 80 Workers

WTRF, WV Friday, February 27, 2004

A subsidiary of bankrupt aluminum maker Ormet Corporation says it will lay off about 80 workers at one of its two direct chill casting pits in Hannibal, Ohio.

Over the next three months, Ormet Primary Aluminum will cut production at the Hannibal Reduction Plant Cast House.

Ormet sought protection from creditors January 30th, blaming low metal prices, weak demand, high energy costs and rising health-care costs.

The company has about 2,600 employees in five states.

The Hannibal reduction mill is the largest with about 1,100 employees.


Alcoa, Alumina Sell Specialty Chemicals Ops For $342M

Yahoo News 27-feb-2004

PITTSBURGH (Dow Jones)--Alcoa Inc. (AA) and Australia's Alumina Ltd. (AWC) completed the sale of their joint venture's specialty chemicals business for about $342 million.

Alcoa and Alumina announced plans in November to sell Alcoa Specialty Chemicals to Rhone Capital LLC. The companies, however, didn't disclose the deal's terms at that time.

In a press release Friday, Alcoa said the $342 million sale price includes the assumption of debt and other unfunded obligations. Rhone Capital bought the operations together with Teachers' Merchant Bank, the private equity arm of the Ontario Teachers' Pension Plan.

Alcoa owns 60% of the Alumina joint venture, called Alcoa World Alumina & Chemicals. Alcoa, the world's largest aluminum maker, sold the specialty chemicals operations as part of a widespread plan announced in January 2003 to shed noncore business.

The specialty chemicals business has annual revenue of about $360 million and 11 operating facilities worldwide, with about 800 workers. Alcoa said the new owners plan to rename the business Almatis.

Company Web site: http://www.alcoa.com

-Kara Wetzel; Dow Jones Newswires; 201-938-5400


Smelters: Momentum builds to help save them

Evansville Courier & Press, United States February 27, 2004

The potentially bad news is that Henderson County's Alcan and Hancock County's Century aluminum smelters face future electricity shortages that could threaten to shut down both facilities within a few years.

The good news is that local and area government and utility officials and economic development representatives are exploring options to head off such a crisis when the smelters' contracts with LG&E Energy expire in 2010 and 2011.

A lot is at stake, as in 1,510 workers earning an average of $45,000 a year, as well as another 4,500 indirect jobs, according to Alcan consultant Allen Eyre.

Eyre was one of about 40 officials who met here earlier this week at the request of Henderson County Judge-executive Sandy Watkins, who has been a leader in mounting a regional thrust to deal with this issue.

"I've got to get all the players in western Kentucky to understand we're in this together," Watkins said. One of those who understands is Daviess County Judge-executive Reid Haire. "We don't have a smelter (in Daviess County)," he said. "But our citizens go to work at smelters in Henderson County, Warrick County (the site of Alcoa), Hancock County."

Meanwhile, Bob Arnold, executive director of the Kentucky Association of Counties, told the gathering: "The only way you're going to solve this problem is to work together as a group to save your plant."

Eyre presented several possible solutions that have been under study. Several are tied to power provider Big Rivers Electric and carry high costs as well as the risks associated with the utility industry. As an example, one possible solution is to build a new coal-fired generator at the D. B. Wilson power plant in Ohio County. But such a proposal conflicts with the Thoroughbred power plant proposed for nearby Muhlenberg County by Peabody Energy Corp., which has already secured an all-important air quality permit. Another possibility includes buying a portion of the Thoroughbred plant. And on it goes.

At present there is no concrete plan of action, but this week's meeting gave some momentum to the cause. West Kentucky Corp., a regional economic development agency, will administer the group's effort and Watkins said he will try to win funding support from area county officials for a professional consultant.

It's a complex issue with no easy fix, but the concerted effort to head off a major economic blow to the region raises expectations that the challenge will be met.


Dutch company expresses interest in Nyinahin Bauxite

GhanaWeb, Ghana

Accra, Feb. 27, GNA- Mrs Cecilia Bannerman, the Minister of Mines on Friday said a Dutch organisation, BHP Billiton, one of the largest mining companies has shown interest in the Nyinahin bauxite deposits in the Ashanti Region.

She said the company has applied for prospecting license for bauxite in both the Kibi bauxite area in Eastern region and Nyinahin. The Minister was in Parliament to answer a question by Mr. Akwasi Dante-Afriyie, NPP-Atwima Mponua, as to what plans the Ministry has to exploit the Nyinahin bauxite deposits.

Mrs Bannerman said the company "is currently carrying out the necessary environmental studies that will lead to the grant of an environmental permit and ultimately the prospecting licenses."

"This grant will enable BHP Billiton carry out the necessary exploration investigations for the project. Then, if the investigations prove successful, the company intends to spend over 2 billion US dollars over a period of 10 to 15 years on exploiting the bauxite, refining it into alumina and also developing the necessary infrastructure." The Minister said feasibility studies indicated that the production of alumina using the Nyinahin deposits as major raw materials was technically feasible.

She said investors who reviewed the project over the last two decades wanted to exploit the bauxite for use in their alumina refineries in their home countries.

"Since Independence, one of the government's policies for the mining sector has been to promote the development of an integrated aluminium industry."

"That is mining of the country's bauxite deposits, refining bauxite into alumina, smelting the alumina into primary aluminium and using it for manufacture of finished aluminium products in the country," the Minister explained.

Mr. Dante-Afriyie wanted to know which of the two bauxite areas Kibi and Nyinahin, had the largest deposits. The Minister said Nyinahin was the largest.


Japan Aluminium-Buyers, suppliers far apart at Q2 price talks

Reuters, 02.27.04, 2:51 AM ET

By Chikafumi Hodo

TOKYO, Feb 27 (Reuters) - Japanese aluminium buyers are holding onto hope for a better offer on second-quarter premiums, but suppliers have refused to budge, citing strong domestic demand, ensuring talks drag into a third week.

International suppliers of Western-grade aluminium like Alcoa Inc (nyse: AA - news - people) have offered premiums above $70 a tonne over the London Metal Exchange cash price for the quarter to June, traders said.

That is more than 30 percent above the $53-$54 premium agreed at term talks in December for the January-March quarter.

Suppliers continued to emphasise an expected rise in domestic demand based on brighter economic prospects in Japan and also cited shrinking availability from China and higher premiums in markets outside Japan and South Korea, the traders said.

Traders involved in the discussions said that as of Friday morning, buyers were still on the sidelines, hesitant to place solid bids.

Several buyers were rumoured to have raised their indications to around $65, and there were signs that bids could rise as high as $68, traders said.

"Producers are unwilling to lower the price to the level sought by buyers of around $65 because premiums everywhere, outside Japan and South Korea, are rising," a trader with a western aluminium supplier said.

"At the moment there are no firm bidders around. No buyer has been aggressive enough to clinch a deal by the end of the month," the trader said.

Some buyers, which will re-sell the metal and can pass higher premiums onto their customers, have been less aggressive than end-users in pursuing a lower price, traders said.

Industry sources close to the talks said a few suppliers were rumoured to have lowered their offers to below $70.

PROTRACTED TALKS

Japanese term buyers are now expecting the negotiations to drag into next week but users need to finalise an agreement by mid-March so that they can lift the metal on time in April.

"With freight costs rising, some buyers want to clinch a deal as soon as possible because it's getting more evident that prices will rise even if you keep on waiting," said a Japanese trader involved in the price talks.

"Spot market premiums reported in Japan have been rising sharply, to around $65 recently," the trader added.

In the past, premiums for the second quarter starting in April were settled by the end of February.

But term negotiations have been protracted in the past three quarters, traders said.

Japan is Asia's largest net importer of primary aluminium, with annual demand of roughly two million tonnes last year, setting a benchmark for physical aluminium prices in Asia.

Industry sources said Japan imports about 160,000 to 200,000 tonnes of aluminium per month. Of that about 80,000 tonnes, or about 40-50 percent, are imported through term contracts.

FEWER SUPPLIES?

Some buyers are worried they may receive less product in the second quarter if they continue to wait as suppliers may decide to allocate the light metal to Southeast Asia or to the United States where premiums have been rising recently.

In that case, Japanese end-users could be forced to make up the shortfall on the spot market, which could be even more expensive as prices remain strong.

Buyers also want to avoid a cut in volume as Japanese economic indicators suggest a pick-up in capital spending, which would boost demand for the metal.

Government data on Friday showed Japanese industrial output rose a seasonally adjusted 3.4 percent in January from a month earlier. Economists polled by Reuters had forecast, on average, a rise of 2.8 percent.

Earlier in the week data from the Japan Aluminium Association showed Japanese shipments of aluminium mill products in January rose 1.3 percent from a year earlier to 187,920 tonnes.

The association said robust demand in automobile, shipbuilding and electronics sectors helped boost demand.

Copyright 2004, Reuters News Service