AluNews - July 2004

Alumina Won't Participate Alongside Alcoa In Alba

Yahoo News Friday July 2, 9:35 AM

SYDNEY (Dow Jones)--Alumina Ltd. (AWC.AU) said Friday it decided not to participate with Alcoa Inc. (AA) in its proposed investment in the Alba aluminum smelter.

The Australian company said it had discussed with U.S.-based Alcoa the possibility of their Alcoa World Alumina & Chemicals joint venture buying a stake in Alba, also known as Aluminium Bahrain.

"Alumina Ltd. has decided not to pursue that option," the company said.

"We will continue our focus on alumina growth opportunities within AWAC, highlighted in recent announcements," Alumina chief executive John Marlay said.

Alumina said in September last year that Alcoa had entered into a memorandum of understanding with Bahrain "paving the way for Alcoa to acquire up to a 26% stake in Aluminium Bahrain (Alba), which operates an aluminium smelter in Bahrain."

Seeking growth opportunities, Alumina also said "the supply of alumina from AWAC refineries to the expanded Alba smelter is consistent with that strategy. Alumina Ltd. is also in discussions with Alcoa on AWAC's possible participation in the Alba equity transaction."


Kaiser Aluminum Completes Sale of Interests in Alpart

Business Wire (press release), CA July 01, 2004

HOUSTON--(BUSINESS WIRE)--July 1, 2004--Kaiser Aluminum has completed the previously announced sale of its interests in and related to the Alpart alumina refinery in Jamaica to Hydro Aluminium a.s. for a gross sales price of $315 million, subject to certain post-closing adjustments.


As previously disclosed, the company expects that proceeds from the sale will be held in escrow pending both amendment of the company's credit agreement and resolution of matters relating to intercompany claims, each of which will require U.S. Bankruptcy Court approval. The disposition of proceeds from the sale, including any distribution to the company for its use, ultimately will be determined by the Court. The company's Form 10-Q for the first quarter of 2004 includes a more detailed discussion of these matters.

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

Company press releases may contain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The company cautions that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary materially from those expressed or implied in the forward-looking statements as a result of various factors. Actual events could differ materially from those reflected in the forward-looking statements contained in this press release as a result of various factors.

Contacts : Kaiser Aluminum, Houston Scott Lamb, 713-332-4751


Alcoa to shift 130 jobs to India

Deepika, India Jun 01, 2004

New York, July 1 (UNI) The Aluminum Corporation of America, the world's largest producer of the metal, is considering eliminating about 130 jobs over the next year as it moves data processing work to India in a cost-cutting effort.

Up to 80 contractors and salaried workers at its North American Data Center in Upper Burrell, Westmoreland County, will be affected as well as about 40 salaried workers and 15 contractors who process accounts payable and receivable at the company's Business Services Center on the North Shore, 'The Pennsylvania' daily today quoted Alcoa as saying.

The jobs will be eliminated over the next 12 to 18 months because they could be performed better outside Pittsburgh, the company said.

When completed, the offshoring will cut Alcoa's regional work force by about 6 per cent.

Alcoa employs about 900 people at its North Shore office buildings and about 575 at its data and research centers in Upper Burrell as well as 300 contract workers at the Pittsburgh offices and another 300 in Upper Burrell.

Employees were informed of the decision in late May in an e-mail notice from Mr Rudolph Huber, Vice President of Global Business Services and Chief Information Officer, and Russell Porter Jr, who manages the affected functions in the region.

The decision was made after Alcoa completed a study on outsourcing.

''These types of strategic decisions are necessary for Alcoa to competitively meet our customer needs and to grow our business,'' The Post-Gazette said, citing the e-mail contents.

In December, Alcoa ended a three-year drive to cut costs by one billion dollars annually and embarked upon a new effort to generate another 1.2 billion dollars in annual efficiencies over the next three years.

Despite the severe criticism in America against offshoring of technology and other jobs, the phenomenon of jobs outsourcing to India and other low-cost, but highly efficient, countries continues unabated.

Currently, legislations in around 40 US states are under consideration to ban outsourcing of government jobs.


Russian government delays decision on Alcoa-Rusal deal

Russia Journal, Russia July 01, 2004

By John Helmer

MOSCOW - Russian government and regional agencies say that no decision has been reached yet on whether to approve or veto a proposed $200 million purchase by Alcoa of the Samara and Belaya Kalitva aluminium rolling-mills owned by Russian Aluminium (Rusal). June 30 was the deadline for the approvals announced in a joint press statement by Alcoa and Rusal, issued on May 6.

"The deal is still under review," Konstantin Dorokhin, spokesman for the Federal Anti-Monopoly Service (FAS) in Moscow, told The Russia Journal. "We don't have any new information on that matter. Our directorate is certain that it cannot give any statements before the conclusion or decision on the question." Kiril Zhitenev, a spokesman for the Rostov region, where the Belaya Kalitva plant is located, added: "While Moscow is silent, we can't tell you anything new."

The FAS was newly created a few weeks ago after its predecessor, the Ministry of Anti-Monopoly Policy, was abolished by President Vladimir Putin. The new agency, headed by Igor Artemiev, may be the lead federal government investigator, Dorokhin said. "We don't know who else will have to review the procedure." Other ministry officials say that the FAS will lead, but other ministries, including the security agencies, are likely to add their views before the government issues its decision on whether to approve or disapprove the proposed deal.

A Kremlin source has said that the Kremlin is aware of the Alcoa purchase, and is investigating the activities of Oleg Deripaska, controlling shareholder of Rusal. Deripaska runs Rusal through a Moscow-based holding company called Basic Element, and whose other interests include stakes in paper and pulp, auto building, electricity generation, and insurance.

In their deal announcement two months ago, Alcoa and Rusal said they had agreed on a sale and purchase of the Samara and Belaya Kalitva plants. Alcoa also said that the deal required Rusal to allocate supplies of primary aluminum to the mills, while semi-fabricates produced at the mjills would be made available to can production and other fabricating units Rusal retains.

Samara Metallurgical is one of the world's largest producers of aluminium semi-fabricates, sheet products, forgings and castings, with a design capacity of 800,000 tonnes per annum. In 1998 it was producing at just 10% of that capacity. Output was raised to 199,404 tonnes in 2002, but last year, Rusal admits, it fell by 13% to just under 174,000 tonnes. That is just 22% of capacity.

The Belaya Kalitva Metallurgical Plant is much smaller, with design capacity for 250,000 tons of rolled products. Production in 2003 was just 41,430 tons; that was up 8% on the 2002 result, but just 17% of capacity.

According to a website posting by Rusal's CEO, Alexander Boulygin, "this transaction arises from Rusal's strategy to focus on its strengths upstream, as a leading producer of primary aluminum and alloys."

Late in May, Russia's Accounting Chamber issued a report of its financial audit of the financial operations of the Chukotka region, whose governor is Roman Abramovich. Abramovich, who amassed a fortune through the Sibneft oil company, was a 50% stakeholder in Rusal until he sold a 25% bloc of shares to Deripaska last autumn.

According to the Accounting Chamber report, the Chukotka government has issued several hundred million dollars worth of tax privileges to a list of 22 enterprises. "In 2003," the report says, "the sum of foregone revenues in connection with the granting of tax privileges stipulated by the local legislation, has amounted to 13,7 billion roubles [about US$472 million]. Privileges have been given to 22 enterprises registered in Anadyr, including Trading House Aluminium, Open Company Billings, Trading House Russian Foil, Open Company Omolon, and a number of others. The specified enterprises did not conduct active economic activities in the territory of the district."

A search of Russian corporate registration files has turned up confirmation that Trading House Aluminium and Trading House Russian Foil were registered in Anadyr, in Chukotka. On October 19, 2001, the two companies are recorded as having founded a Moscow company, Russian Aluminium Finance LLC. All three companies are part of the Rusal group.

At the time, and until September 2003, Abramovich's holding company, Millhouse Capital, controlled 50% of the shares of the Rusal group, while Deripaska and his holding, Basic Element, controlled the other half. Each took substantial dividends from the after-tax profit of Rusal. Thus, if Abramovich's regional government issued savings on tax for the Rusal group, Abramovich could have benefitted personally from the concomitantly larger dividends Rusal paid him.

Andrei Belyaev, chief spokesman for the Accounting Chamber, says that he can confirm that in all, the tax privileges issued to all enterprises totaled Rb13.7 billion, but he said the Chamber report does not provide itemized amounts for the individually named companies. Asked specifically about the Rusal group companies, Belyaev said that tax relief was "detected in the schemes in which the 22 companies participated. We did not make conclusions about what money was washed away by whom. We just certify the fact of financial activity of these companies in Anadyr city without physical activity in the region."

John Mann, a spokesman for Abramovich, Millhouse Capital, and the Chukotka regional government, has issued the response that the Chukotka special tax zone legislation required that "investors who received tax breaks in accordance with [Chukotka] legislation were required to invest no less than 50% of their total tax savings in state projects in the region." Belyaev confirmed this is the legal requirement.

Arguing that the Chamber had found "no infractions of the law", Mann claimed that "as of January 1, 2004, [Chukotka] received more than 14 billion roubles (about $483 million) in investments under agreement signed with investors by the current administration." Belyaev disputes this: "the 14 billion number is not in the report. We don't have information about the value of such investments."

Rusal spokesmen Fred and Yevgeniya Harrison were asked to say what was the value of the tax privileges the group received through Chukotka; what business they did in the region; and what investments they have made in the region. They did not respond.

Independently, a Rusal source confirmed that the group's companies did not invest any money in Chukotka.

The Accounting Chamber auditors, Belyaev told The Russia Journal, are not able to itemize the value of the tax breaks issued to the beneficiary companies, nor the value of their spending in Chukotka, if any. "They did not examine the affairs or accounts of each enterprise."
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Alcan to take stake in Oman smelter project

The Globe and Mail, Canada Thursday, July 1, 2004 - Page B5

Alcan Inc. has agreed to take a 20-per-cent stake in a proposed 330,000-tonne aluminum smelter project in Sohar, Oman, the company said yesterday. Alcan also has the option of acquiring up to 60 per cent of a proposed 330,000-tonne second pot line at the plant. Construction of the smelter is expected to begin in the second half of 2005, with first metal production by the end of 2007, Alcan said. The company did not disclose financial terms of the agreement. Montreal-based Alcan signed the memorandum of understanding on the smelter project with Oman Oil Co. and the Abu Dhabi Water and Electricity Authority.


Investment will make JAMALCO most efficient of Alcoa's plants

Jamaica Observer, Jamaica Friday, July 02, 2004

Vivian Tyson, Observer staff reporter

WESTERN BUREAU- The J$41.1 billion that JAMALCO plans to invest in capacity expansion and efficiency improvement at its alumina refinery in Clarendon, will likely make that plant the most efficient in all of Alcoa's facilities globally, company executives say.

JAMALCO, owned jointly by Alcoa and the Jamaican government, and managed by Alcoa, will begin work on the expansion in 2005 with completion set for 2007. The company says it aims to complete the expansion at least six months ahead of schedule.

"...Our current goal is by 2005 to be third, and by 2007 at the end of the expansion, to be the best refinery in the Alcoa system globally," Jerome Maxwell, the managing director of JAMALCO told the Observer yesterday.

JAMALCO has, since 2003, been the fifth most efficiency alumina producer among the companies operated by Alcoa, the Jamaican plant having staged a dramatic improvement from 9th place in 1999, through a series of re-engineering.

Last year Alcoa announced that it would be undertaking the US$700 million investment in the Jamaican operation - one of the island's single largest commercial investments ever.

With the investment, JAMALCO's alumina refining capacity will double from the current 1.25 million metric tonnes per year, to 2.65 million tonnes. Some 1,500 skilled workers will be employed on the project.

Maxwell said that though the completion date was scheduled for 2007, the company would work towards finishing the project in eighteen months, so as to bring forward the timetable for JAMALCO to leapfrog the other production centres in terms of efficiency.

"Our goal is to complete well in advance of that so we can get to the market as fast as possible," he told the Observer during the interview in Montego Bay. "We would like to, just as in the previous expansion, finish anywhere between six months to a year ahead of schedule."

Maxwell explained that at the end of the expansion, JAMALCO would be able to convert 33 per cent more of each tonne of raw bauxite it mines, into alumina - the intermediary product that is smelted into aluminium. In fact, the Jamaican plant would operate with the highest alumina yield throughout Alcoa's system.

"The advantages we have on the others is that we gain in efficiencies in all the use in our raw material, and this expansion is based on yield - you get more out of the resources that you use," explained Maxwell. "So we tend to grow the yield from the plant so it makes it more efficient."

Alcoa's decision to invest in Jamaica was, in part, driven by the decision of the Patterson administrationto scrap the bauxite levy that was introduced by the Michael Manley administration of the 1970s as a means of guaranteeing Jamaica revenue from the industry. The levy was a charge on the production of the companies.

Patterson, following complaints from the bauxite companies, replaced the levy with a straight tax on their pre-taxation profits - the government therefore sharing some of the risks faced by these companies.

There was also an adjustment to the structure of the royalty paid for the bauxite - the industry's raw material.

The restructuring of the taxes followed the mid 1990s agreement between the government, the bauxite companies and trade unions to allow for more market-friendly labour practices in the sector.

Last year, Alcoa completed a US$115 million investment in the refinery which added 250,000 tonnes of alumina to its annual capacity. That expansion, coupled with the revised tax arrangements, lowered costs at the refinery by approximately 30 per cent.


Industry fears over EU scheme to cut greenhouse gases 'ill-founded'

Financial Times, UK July 2 2004 5:00

By Vanessa Houlder

Industry's fears about the competitiveness threat posed by the European Union's controversial emissions trading scheme are largely ill-founded, a study says today.

But one sector, aluminium, could be severely hit by electricity price rises expected under the scheme, which begins next January. Profits are likely to fall and smelters could close, according to the study by the Carbon Trust, a government-funded company that promotes emissions reductions.

It also warns that the lax attitude of other European governments to the scheme risks distorting competition for some sectors, notably steel. But most sectors will be able to pass on part of their increased marginal production costs to customers. The profitability of some industries, such as electricity, is likely to increase.

The scheme, the cornerstone of the EU's attempt to curb greenhouse gas emissions, requires governments to impose emission "caps" on large parts of industry. If a company's emissions exceeds its cap, it will be forced to purchase additional allowances.

But its direct impact is likely to be exceeded by its impact on electricity prices - which will affect all users. The sector, set to face a significant shortfall in its allowances, is likely to pass on extra costs to customers, raising electricity prices by about 10 per cent by 2012.



Kaiser Aluminum Completes Sale of Interests In Alpart

www.kaiseral.com Jul 2nd 2004


HOUSTON, Texas, July 1, 2004 - Kaiser Aluminum has completed the previously announced sale of its interests in and related to the Alpart alumina refinery in Jamaica to Hydro Aluminium a.s. for a gross sales price of $315 million, subject to certain post-closing adjustments.

As previously disclosed, the company expects that proceeds from the sale will be held in escrow pending both amendment of the company's credit agreement and resolution of matters relating to intercompany claims, each of which will require U.S. Bankruptcy Court approval. The disposition of proceeds from the sale, including any distribution to the company for its use, ultimately will be determined by the Court. The company's Form 10-Q for the first quarter of 2004 includes a more detailed discussion of these matters.



ALSCON: Pressure On NCP to Cancel BFIG Offer Rusal Owes $100m Judgement Debt

AllAfrica.com, Africa July 2, 2004

Eziuche Ubani And Cletus Akwaya
Abuja

There were strong indications in Abuja that some Presidency officials are putting pressure on the National Council on Privati-sation (NCP) to cancel the purchase of Aluminium Smel-ter Company of Nigeria (ALSCON) for what was described as adverse security and technical reports against the preferred core investor, BFIGroup of the United States.

"The Federal Government should not let such a company mess up a prized national asset like ALSCON," a Presidency source said. BFIG emerged the preferred core investor following the auction held on June 14 in Abuja. It submitted a final bid of $410 million.

The other bidder Rusal (Bratsk) Aluminium of Russia was disqualified for submitting conditional bid, a strategy the NCP has always disallowed.

The disqualification of Rusal, also said to be facing financial crisis over $100 million debt obligation in its international operation, paved the way for the victory of BFIG.

For the purpose of the ALSCON bid BFIG used a special purpose vehicle (SPV), a company known as Marintech Divino Group, with headquarters at 660 South Figueroa Street, Suite 1110 Los Angeles, California. One Dr Reuben Mietamuno Jaja, who is said to be former law enforcement official with California State Banking Commission, leads both companies.

Sources said in Abuja that some powerful Presidency officials are not very comfortable with the BFIGroup, citing lack of requisite competence to possess and run the plant.

"Considering the amount spent by the Federal Government to build the aluminium smelter plant, the government should not allow any sale that may jeopardize the strategic interests for which the plant was conceived," the source said.

In line with that, some presidency officials are said to be putting pressure on the NCP to invite Rusal back to negotiate with the Bureau for Public Enterprises (BPE). The rationale for the move, THISDAY gathered, is to ensure that regardless of the amount realized from the sale, the buyer should have the technical competence to run the business. The presidency officials are said to be making their point by using the transaction with SOLGAS, which took over the Ajaokuta Steel Complex, after dangling a huge purse before the government. Investigations by the Senate were to later reveal that the company did not have the know-how nor the portfolio it claimed to have. Coincidentally, BFIG acted as financial advisors to SOLGAS in the Ajaokuta transactions.

If the Rusal group returns to the transactions, it will be the second time it is doing so. Shortly after its disqualification, the Presidency, THISDAY gathered, directed the Russians to meet with the NCP for negotiations. Government is said to have done so after a background check on BFIG came to light. Rusal did not make much use of the opportunity, as it insisted on the conditions it posted at the auction earlier while reducing its bid offer.

Buoyed by that, the BPE wrote a letter to BFIG affirming its confirmation as the preferred bidder. But that has not assuaged the fears of some Presidency officials. Pressure is said to be mounted on the NCP to cancel the sale.

BPE officials, however, said they are unaware of any invitation to Rusal, As far as the sale of ALSCON is concerned, the matter is closed, according to Mr Charles Odenigbo, Head of Communications, Marketing and External Relations of the BPE. "If there is anything like that, may be somebody is flying a kite," he said. "It has not become policy where we are involved. Until it becomes policy issue, we at BPE do not know."

BPE dispelled insinuation that BFIG would not have passed the first stage of the bid process, had the agency conducted due diligence on the bidders.

"If you qualify from our evaluation of all the documents you are expected to submit, what is due diligence?" he asked. "We have a standard we follow for the past 12 years. We followed them."

He confirmed that there are misgivings about the sale to BFIG, which he said is part of the process, but wondered why people did not come forward if they had information on the company. "Why did people wait until the bids were opened? Why did people not raise these questions about other sales in the past?" Odenigbo asked.

The BFIG is listed by the BPE as a "capital source, investment and infrastructure development company based in Los Angeles California." It claimed it bidded for ALSCON with "Daewo International (America) Corporation. The group's net worth is put at $613 million, and over $500 million in private placement funds.

On its part, Rusal claims to be the second largest aluminium producer in the world with interests and facilities spread in places like Russia, Armenia, Romania, Guinea and Ukraine. These include four aluminium smelter companies, and alumna refineries. Rusal claims it employs 70,000 people in four continents, and earned no less than $4 billion in 2002.

Yet Rusal may be facing a financial crisis over debt obligations in its international operations.

One of such commitments is a judgement debt of $100m which a London court ordered it to pay to the Zug-based aluminium trader, Aldeco. The amount was ordered paid through its smelter unit, Krasnoyarsk Aluminium Plant for failure to honour a metal trade contract.

THISDAY checks revealed that the order, still pending since it was issued November 24, 2003 by Justice Jack of the Queens Bench Division of the High Court, resulted from moves by the Russian company to terminate a contract with its representatives in Guinea over a fee claim of $3.5 million.

According to the Russia Journal Daily in its edition of March 18, Rusal's Chief Executive Officer, Alexander Boulygin, received the "sharpest rebuke ever issued by a judge against Senior Rusal executives". The case in question involved Rusal scheme to gain control of the Friguia bauxite and alumnae complex in Guinea.

Three men - Karim Karijan, Safwat and Jack Nounou - operating under a name Tekron Resources, a Caribbean registered company, had been hired by Guinea Investment Company(GIC), then owners of Friguia refinery in November, 1999 to provide their services in " developing and procuring the execution and performance" of various provisions for the effective operation of the Friguia refinery.

When Rusal acquired the refinery in late 2002, it attempted to terminate the contract which was to have run for 25 years on grounds of non-performance, a claim it could not sustain before the court.

In the judgement copiously quoted by the Russian newspaper, the judge held that "on the evidence before me they (Rusal) have not only failed, but have secured indirect evidence that the government considers that Tekron behaved properly in its relations with the government."

The newspaper also reported that "contract revocation claims against Rusal, involving other metal trade agreements by its smelter units, are pending in Sweden, and other jurisdictions. Lawyers for the claimants say the unpaid fees and commissions total several million dollars.

Rusal in refusing to pay the money appealed against the case which is still pending in a London court.

The pending case, THISDAY checks revealed, is coming years after Rusal had in 2001 refused to pay for environmental pollution around its plant in Russia in a programme initiated by the government to resettle residents affected by pollution.

British Broadcasting Corpora-tion (BBC) had in a report on June 30, 2001 stated that Bratsk Aluminum Plant was emanating "a strong acid, hydrogen fluoride" from its 40-year old plant, adding that the gases had impact on the content of calcium in human bones and cause bronchitis.

It said the residents should have been relocated from the village in 1975 but the process began only in 1994. By 2001, 643 families had been resettled, the BBC report said.

Although the Russian Govern-ment had approved the resettlement programme to be financed equally by government and Rusal, the firm failed to meet its own side of the obligation, for lack of funds, the report added.

Considering the huge environmental problems associated with ALSCON, analysts who spoke with THISDAY doubted the willingness of Rusal to address the environmental issues had it emerged as the core investor in the plant.

"ALSCON requires a company that would take more than a passing interest in environmental issues as core investor otherwise it will draw the ire of the community," a member of the Ikot Abasi community told THISDAY on condition of anonymity.


Alcan signs into Sohar aluminium smelter project

Times of Oman, Oman, 2 Jul 2004

MUSCAT — Oman Oil Company (OOC) and Abu Dhabi Water and Electricity Authority (ADWEA) have announced the signing of a Memorandum of Understanding (MoU) with Alcan Inc. for the joint development of a proposed 330-kilotonnes per annum aluminium smelter project.

The venture which will be based in the Sohar industrial area, is 40 per cent owned by OOC, 40 per cent by ADWEA and 20 per cent by Alcan.

Alcan would also have the option to acquire up to 60 per cent of a planned second potline, which would produce an additional 330 kilotonnes per annum of aluminium. The agreement provides that Alcan would licence its AP30 smelter technology and take a substantial role in the construction and operation of the smelter.

“We are delighted that Alcan has decided to participate in the project, thus further complimenting the project’s shareholding group of ADWEA and OOC,” said Maqbool bin Ali Sultan, minister of commerce and industry and chairman of OOC. The project meets the Omani government’s objectives in diversifying the economy, creating job opportunities, encouraging foreign investment, and laying the foundation for future downstream industries.

“We are pleased to participate jointly with these two dynamic partners in a project of this nature and we are confident that it will be another milestone in project finance similar to all of our recent projects,” said Sheikh Diab bin Zayed Al Nahyan, chairman of the ADWEA.

“This project would offer Alcan an excellent opportunity to enhance its position as the leading low-cost aluminium producer and create further value for our shareholders,” said Cynthia Carroll, president and CEO of the Alcan primary metal group.

In addition, the project would utilise Alcan’s most advanced version of its highly efficient AP30 technology.

The project will have long-term access to the necessary infrastructure to operate the smelter as well as dedicated power supply on very competitive terms sufficient to meet the energy requirements of phases I and II of the smelter.

Other pertinent approvals have been achieved such as the location for the site of the project and the initial environmental approval, which was obtained on January 10, 2004 from the Ministry of Regional Municipalities, Environment and Water Resources. The land allocated for the project is 1.5 million square metres.

Project advisers include Citigroup as financial adviser. Subject to successful completion of the project agreements and financing arrangements, construction is expected to commence in the second half of 2005 and will result in first metal production by the end of 2007.

OOC is a 100 per cent owned company of the Sultanate of Oman. The company was created in 1992 to give the government another vehicle for pursuing investment opportunities in the energy sector both inside and outside Oman.

Through participation in energy and energy related projects, OOC plays a role in the Sultanate’s efforts to diversify the Omani economy and help generate Omani and foreign private sector investment. In Oman, OOC has interest in numerous projects that are either in operation, under construction or under development.

These include gas transmission, petroleum retailing, refining, petrochemicals and aluminium smelting. Outside Oman, OOC has interests in exploration and production, crude oil pipelines and petroleum product logistics.

Alcan is a multinational, market-driven company and a global leader in aluminium and packaging, as well as aluminium recycling. With world-class operations in primary aluminium, fabricated aluminium as wells as flexible and specialty packaging, aerospace applications, bauxite mining and alumina processing, today’s Alcan is even better positioned to meet and exceed its customers’ needs for innovative solutions and service. Alcan employs 88,000 people and has operating facilities in 63 countries.

In March 1998, ADWEA was established with the principal goal of managing and privatising the water and electricity sector in the Emirate of Abu Dhabi.

Since 1998, ADWEA has developed projects with a total installed electricity and water production capacity of 7100MW and 500 migd, through an aggressive IWPP programme.

Of these projects, two have been commissioned, two are near completion and the fifth is currently out for tender.

This highly successful IWPP programme was designed to attract foreign investors to build, own, and operate new or enhanced generation facilities. ADWEA is the 60 per cent shareholder in these projects and the foreign investor is granted a 40 per cent share of the ownership interest. — ONA


Still in the pipeline

Brisbane Courier Mail, Australia 03jul04

Richard Owen

PROMOTERS of the long-delayed Papua New Guinea to Australia gas pipeline planned to ignore conventional wisdom this week and agree to spend $100 million-plus on front-end engineering design in a calculated gamble that sales would follow.

However, the $3.5 billion Highlands Gas Project's majority owner, Oil Search, seems to be having as much trouble extracting a commitment from the joint venture to press on with FEED as it has rounding up enough customers.

The partners, including US oil giant and project operator ExxonMobil, were to have reached a decision on Tuesday, prompting Oil Search to seek a trading halt. But this was to prove a somewhat embarrassing false alarm. Later in the day the trading halt was removed on advice that the timing of the vote had drifted out a "few days".

The shares continued to creep up and hit an intra-day high of $A1.37 yesterday, but plunged 11˘ amid heavy turnover and closed 2˘ lower at $1.31 after Oil Search managing director Peter Botten again pricked the balloon of expectation.

"Following advice received from a potential buyer . . . on Tuesday morning and subsequent discussions, further time is now required for one gas buyer to complete its shareholder review and obtain approvals for a conditional agreement for purchase of gas," he said in a statement.

"The Highlands gas owners will remain in 'FEED ready' status, pending confirmation of this conditional agreement . . . (and) are working with the stakeholders involved to expedite the required shareholder approvals."

The mystery customer is understood to be Gladstone-based Queensland Alumina, which is expected to take about 20 petajoules a year after converting its coal-fired boilers to gas and lift committed total project demand to about 110 petajoules a year.

QAL's managing director Johann van Zyl, who has been negotiating on a 10-year contract since last November, yesterday confirmed that management had decided to go with PNG gas – subject to board approvals involving representatives from operator Alcan (41 per cent), Rio Tinto (39 per cent) and Kaiser Aluminium (20 per cent).

Approval could still take some time.

Oil Search's commercial manager Austin Miller reiterated yesterday that the project really needed a minimum customer commitment of 150 petajoules a year before construction could be given a green light. That's why Oil Search has been pressing its partners since February this year to commit to FEED in the hope of bridging the gap.

However, it now seems clear that the gap will be too great without QAL on board.

Such massive undertakings as the Highlands Gas Project usually advance to FEED only after adequate sales contracts have been locked in place to cover development and ongoing operating costs.

It's the epitome of good corporate governance and investment prudence to minimise the chances of visionary boards spending vast sums of shareholder funds on projects that have little or no hope of getting off the ground.

While the pipeline's economics can be made to stack up at comparatively cheap gas prices, signing up sufficient customers and volume to make the ambitious project fly has continued to prove problematic.

Akin to "herding grasshoppers", as one frustrated executive put it.

In fact Oil Search, with a 54.2 per cent majority stake after buying out Chevron Asiatic some 18 months ago, had secured sales contracts for the required 150 petajoules of gas a year only to lose them again due to uncertainty about the delivery date which has continued to drift ever since the idea was first floated in 1995.

Back then two competing consortiums were promoting pipelines from PNG to Queensland. Of course, commercial sense prevailed and in October 1996 the Pandora gas field joint venturer IPC and Chevron Asiatic agreed to pool their resources in a bid to develop a single 4000km pipeline to bring gas from PNG's Southern Highlands to Queensland.

The project subsequently became a cause celebre behind which the Beattie Government rallied in 1998 following the appointment of former Chevron consultant Ross Rolfe as director-general of the Department of State Development under then minister Jim Elder.

But despite the best efforts of all involved, big customers like QAL baulked at making a commitment while other potential new users like the Townsville baseload power station opted to rely on home-grown coal seam methane.

AGL also dealt the project a body blow back in December 2002 by signing up a fresh $4.5 billion supply portfolio with established Australian fields, including Bass Strait and the Cooper Basin.

Within months of AGL's move Chevron put its PNG interests up for sale, leaving the future of the pipeline project in the hands of operator ExxonMobil, which essentially opted to start again with a blank piece of paper.

The partners subsequently focused on locking in a crucial contract with Alcan to supply the Canadian aluminium giant's $1.5 billion Gove Peninsula alumina refinery expansion in the Northern Territory with 40 petajoules a year.

But rival Woodside won the 20-year contract which will be supplied from Western Australia's Blacktip gas field. So after almost a decade of political hype, corporate jawboning and old fashioned arm-twisting the joint venture partners see no other option but to lead potential customers by example through a commitment to fund FEED.

Preferred pipeliner AGL/Petronas has lined up as well, along with the Highlands Gas Project's minority partners Nippon Oil (3 per cent) and the PNG Government which has the remaining 3.8 per cent but holds a right to claw back up to 22.5 per cent.

It is hoped the commitment will invigorate the project and build up market confidence in a bid to satisfy an anticipated rise in demand from 2008.

ABN Amro Morgans resource analyst Chris Brown agreed that projects were normally advanced to FEED on the basis that they would proceed to development – not as a means of enhancing the likelihood of development.

"This whole thing is a boot-strapping exercise because if you don't build the project you don't get the customers, but if you don't have the customers you can't build the project," he said. "By moving to FEED they can then go to the customers and demonstrate that they are putting time, personnel, money and resources into the project."

Although moving to FEED had "advanced the likelihood of development" Mr Brown added that the final green light was "never certain until the study is completed and the contracts are in place".

But according to Mr Botten, the case for the project's development is compelling, given the potential for the national gas market to double from just less than 600 petajoules per annum at present to 1200 petajoules by 2028.

However, time must surely be running out for the project – its fate will now be determined within QAL's boardroom.




Smelting Plant Pins Hopes on Power Play

Washington Post, DC , Jul 3, 2004

Costs of Aluminum Business Prompt Move for Nearby Electricity Supplier
By Fredrick Kunkle
Washington Post Staff Writer
Sunday, July 4, 2004; Page C05

Joe Kazadi, the works manager at Alcoa's Eastalco smelter plant in Frederick County, holds a graph in his hands. The graph shows a jagged red line that represents the cost of smelting aluminum around the world, including at the Eastalco Aluminum Co.'s complex in the county.

The red line is climbing sharply, like the plotline of a dramatic story moving to its climax -- and, in a sense, that's what it is.

If Eastalco's costs continue growing, Alcoa might be tempted to shut the plant after more than 34 years of operation, Kazadi told reporters last week during a tour. Such a fate befell a North Carolina smelter whose place on the jagged red line was next to Eastalco's last year.

So among several strategies to help keep Eastalco profitable, its officials have teamed with a major utility to propose building a 600-megawatt power plant near Adamstown. The relationship that Eastalco and San Diego-based Sempra Energy Resources now envision would be as landlord and tenant. But Eastalco officials say that having a power plant next door to the smelting operation also offers the hope of a secure, profitable future. The single largest cost in smelting aluminum is electricity.

"We are fighting every day to stay alive," Kazadi said, adding that there are no immediate plans to close the plant or lay off employees, as the company did last year. He called the power plant "very crucial" for Eastalco's future.

"Having them around us gives us that level of comfort that we have, that hope for the future," Kazadi said. "We can't overplay the relationship. But we want them here."

The proposed power plant, however, has shaken the comfort level among people who live near Eastalco's 2,200-acre property in southern Frederick County. Although some say Eastalco has been a good neighbor, several residents also said that, no matter how clean the natural gas-fired power plant might be, it would still dump more pollution into an environment already dirtied by Eastalco and other heavy industries.

People who live in the vicinity of the smelter were already given the jitters by an Environmental Protection Agency report last month that showed -- erroneously, as it turns out -- that Eastalco's toxic emissions had nearly quintupled last year.

"Do we really need a [new] power plant there?" asked Rolan O. Clark, 65. Other residents noted that several smokestack industries do business in the vicinity, including Essroc Cement Corp. and Trans-Tech Inc. Just downstream on the Potomac River in Dickerson is an 853-megawatt power plant owned by Atlanta-based Mirant Corp.

Donald L. James, an Adamstown resident who opposes the plant and has set up a Web site, said he understands Eastalco's position. "From Alcoa's point of view, this makes perfect sense. If I were in their shoes, I would do it, too," he said. "I don't want the [aluminum] plant to go away. It's too many jobs. It's good for the community. They've been good to the community in the past."

But, James said, even if the power plant is built, neither Alcoa nor Eastalco can guarantee that the smelter plant would not close. James, 42, a network engineer for a government contractor, said he also worries that a new power plant could raise the noise level and pose a danger of possible explosions, along with the environmental concerns.

"My position is simple: Until it's proven to me that the plant is safe for my children and my neighbors, I will oppose it," James said.

Catoctin Power, a subsidiary of Sempra Energy Resources, filed its application with the Maryland Public Service Commission on Feb. 25 for a 600-megawatt plant about eight miles south of the city of Frederick. The plant would generate enough power to supply about 600,000 homes, according to the application. If approved, it would be built on 20 acres of leased property next to the Eastalco plant, which takes up about 400 acres of the company's property.

Sempra Energy Resources, a unit of Sempra Energy Corp., has told the Public Service Commission that Eastalco also has an option to purchase up to a 50 percent interest in the power plant. State and company officials said the Eastalco plant is Maryland's largest consumer of electricity, which is essential to the process of making aluminum.

The metal, which is used in everything from automobiles to windows to beverage cans, is refined from bauxite, a mineral mined in South America. Huge quantities of electricity are necessary to create an electrolytic reaction that separates the metal's atoms from oxygen molecules. At Eastalco, about 350 megawatts flow through the plant continuously -- about enough to light up Baltimore, Kazadi said.

Eastalco turns out about 190,000 metric tons of aluminum each year. The plant, which operates 24 hours a day, 365 days a year, has been producing aluminum since April 1, 1970, when it was known as Alumax, said Earl H. Robbins Jr., an Alcoa spokesman.

The company was purchased by Alcoa and a Japanese consortium in 1998 and now employs about 600 people. That represents a decline from about 700 last year, when the company was forced to lay off some employees, Kazadi said.

Eastalco is Frederick County's biggest manufacturer -- and one of its biggest polluters. Of the nine companies that must report under an EPA program, Eastalco discharges the most pollutants, EPA spokesman Bill Reilly said.

On June 23, the EPA released 2002 statistics for its Toxics Release Inventory (TRI) Program showing that Eastalco had introduced about 2.6 million pounds of toxic emissions -- aluminum, chromium, hydrogen fluoride and other chemicals -- into the air, water and land. That was up sharply from 564,970 pounds of all such emissions in 2001.

Ronald S. Flain, director of Eastalco's environmental and technical services, and Reilly said the company had mistakenly calculated that about 1.7 million pounds of hydrogen fluoride had been emitted, mostly into the air. In fact, Reilly said, the company wrongly included calcium fluoride -- which is not subject to reporting in the TRI inventory -- that had been disposed of on land.

Blain said that although the plant's biggest concern is the emission of hydrogen fluoride gas, more than 98 percent of what it produces of the gas is reduced through filters and scrubbers.

Although the current high price for aluminum has benefited Eastalco, the company's other concern remains the rising cost of power. Its East Coast location keeps the company within a day's drive from important customers, but the price of energy, water and labor continue to go up, company officials said.

"At this point, we're making money," Kazadi said. "But this is a time you have to position yourself for when the price goes back down."

The Frederick Board of County Commissioners has scheduled a public meeting for July 12 on the power plant proposal. Although the commissioners do not have the authority to approve or deny the proposal, the county government can make its views known to the Public Service Commission, which has the final say on the plant.


Alcan Faces Local Opposition From Indian Villagers, Star Says

Bloomberg Jul 3, 2004

July 3 (Bloomberg) -- Alcan Inc., the world's second-biggest aluminum maker, faces opposition from India's indigenous people over plans to build a C$1.4 billion ($1.06 billion) complex, the Toronto Star reported.

Alcan's planned refinery in Orissa state, which is southeast of New Delhi, would produce 1.5 million metric tons a year of alumina, a product used in the production of aluminum, the newspaper said.

The Adivasis tribes say they have been displaced for decades for mining and other projects, and that they would be moved for the Alcan refinery, the Star reported. Government officials said that the plans would displace about 150 families.

Alcan told the newspaper that the plant will create more than 1,000 jobs, with one position being promised to every tribal family, and that it will also build an employee health clinic there. The company also said it will not proceed with the refinery without ``broad support.''

(Toronto Star 7-3 A1) For the Toronto Star's Web site, see {TSTR <GO>}.

To contact the reporter on this story:
Sean B. Pasternak in Toronto at spasternak@bloomberg.net.

To contact the editor responsible for this story:
Erik Schatzker at eschatzker@bloomberg.net



Showdown for ex-BHP boss

Brisbane Courier Mail, Australia 05jul04

By John Waples

FORMER BHP Billiton chief executive Brian Gilbertson, who resigned from the big miner last year citing "irreconcilable differences", is again at the centre of a corporate storm.

The board of Vedanta, a London-listed mining company, will have a showdown today with Mr Gilbertson, who left BHP with a golden handshake of about $30 million.

It wants its chairman to explain the huge secret remuneration package he is negotiating to help steer a proposed pound stg. 2 billion flotation of Sual, a Russian mining group.

Mr Gilbertson is said to be close to signing a pay and performance deal that could touch pound stg. 50 million ($128 million) to head Russia's second-biggest aluminium producer and prepare it for a London flotation. He has quietly been advising the company since the start of the year.

Vedanta's board, which paid Mr Gilbertson a pound stg. 7 million "golden hello", demanded an explanation and believes the Sual job conflicts with his role as its chairman. Without adequate explanation, they could issue an ultimatum to turn down Sual or quit Vedanta.


Mr Gilbertson was wooed to Sual by Roddie Fleming, the Tory grandee and Geneva tax exile who, through his investment firm Fleming Family & Partners, holds a significant stake in the Russian company.

Without a big-hitting name it is feared that Sual will struggle to achieve a float and attract Western investors. Sual is chaired by Victor Vekselberg, but the City will be uncomfortable with a Russian oligarch heading a potential FTSE 100 company.

Mr Gilbertson, a South African and one of the biggest names in the mining industry, will claim that there is no conflict in holding senior positions in both camps. But Vedanta is furious it was not informed of his Sual role.

It is thought that Mr Gilbertson helped Sual recruit investment bank Credit Suisse First Boston to prepare it for flotation.

Sual could not say what role he would be given, but it could be either chairman or chief executive. His work at Sual emerged only via CSFB's pre-float marketing to institutional investors.

His year contract at Vedanta, which has extensive mining interests in India, expires this month.

But at an investor roadshow for US investors last week, where he was accompanied by Vedanta chief executive Anil Argawal, he made it clear that he wanted to stay.

Many investors who took part in the float did so on the back of Mr Gilbertson.

Since then they have been disappointed by the group's share price performance but comforted by his board presence.

From The Sunday Times in London



SUAL Eyes VAZ Unit

Moscow Times, Russia 5 Jul, 2004

MOSCOW (Reuters) -- SUAL is close to taking control of Ukraine's sole aluminum smelter by buying its parent company, a source close to the Ukrainian firm said Monday.

Zaporizhsky Alyuminievy Kombinat, or ZALK, is currently owned by AvtoVAZ-Invest, a branch of Russian carmaker AvtoVAZ, and has yearly production capacity of up to 110,000 tons of primary aluminum.

"We are talking about SUAL's purchase of a controlling stake or more in AvtoVAZ-Invest," the source said.

SUAL spokesman Alexei Prokhorov said Russia's second-largest aluminum producer was interested in the Ukrainian plant, but whether it could take control depended on the Ukrainian government.

"The question needs to be finalized with the relevant institutions in Ukraine," he said.

AvtoVAZ-Invest has a 68 percent stake in ZALK. The Ukrainian government owns 26 percent, and the remainder belongs to individual shareholders.



Hydro Completes Apart Alumina Refinery Transaction

Azom.com Posted July 5th, 2004

Hydro completed the acquisition of the 65 per cent interest in the Jamaican alumina refinery Alpart. According to an agreement signed May 25, 2004, Hydro immediately sold this interest on to the Switzerland based Glencore AG at identical terms.

These transactions will not generate any accounting effect for Hydro.

Hydro will remain a partner in Alpart with an interest of 35 per cent, which Hydro has held since the late 1980’s. Hydro’s annual alumina off-take from Alpart is approximately 570,000 tonnes, which is used in the company’s global primary aluminium production.


Aluminium smelter plan

Gulf Daily News, Bahrain 5 Jul, 2004

MUSCAT: Construction of a multi-million-dollar aluminium smelter project in Sohar will get under way in mid-2005 with production set to start in 2007, an official at the Oman Oil Company (OOC) said in remarks published yesterday.

The official at the state-owned firm, which holds a 40 per cent stake in the Sohar Aluminium Company, said the stage was set for construction to start in the second half of next year, followed by production two years later, according to the state-run Oman Daily Observer.



CVRD Will Start Consolidating ALBRAS

LCI, France 6 Jul, 2004

RIO DE JANEIRO, Brazil, July 6 /PRNewswire/ -- Companhia Vale do Rio Doce (CVRD) informs that it will start consolidating Albras Aluminio Brasileiro S.A. (Albras) under US GAAP (general accepted accounting principles in the United States of America) financial reporting, given that it received the necessary approval from PricewaterhouseCooopers, its independent auditor. Albras is a primary aluminum producer where CVRD holds a 51% stake. The consolidation will be reported as of January 1, 2004.

Such consolidation is in line with interpretation 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" (FIN 46), issued on January 2003, by the Financial Accounting Standards Board (FASB) of the USA and revised on December 2003 (FIN 46-R). FIN 46 describes when a company should consolidate in its financial statements the assets, liabilities and activities of a subsidiary, which is deemed to be a variable interest entity (VIE). The interpretation defines VIE and requires its consolidation if its shareholder absorbs most of its returns and/or expected losses.

Albras is one of the lowest cost smelters in the world and is one of the three largest smelters of the Americas. It is an important part of CVRD's investment in the aluminum product chain, composed by the production and marketing of bauxite (Mineracao Rio do Norte and, in the future, the Paragominas mine), alumina (Alunorte), primary aluminum (Albras) and aluminum products (Valesul), which characterizes the Company as an integrated producer. Such operations are gaining importance in CVRD's cash generation and, even without the consolidation of Albras, were responsible for 12.1% of its adjusted EBITDA in 1Q04.

The 2Q04 US GAAP financial statements, to be released on August 11, will already incorporate Albras consolidation. On that time, CVRD will also disclose its revised 1Q04 US GAAP financial statements considering the consolidation of Albras. Albras annual financial statements in US GAAP for 2003, 2002 and 2001 are available on CVRD's web site, http://www.cvrd.com.br, under the Investor Relations section.

In the document "Financial Statements US GAAP 03/31/04," filed by CVRD with the Securities and Exchange Commission (SEC) and with the Comissao de Valores Mobiliarios (Brazilian Securities Commission), and publicly released on May 12, 2004, some 1Q04 selected financial indicators of Albras can be found:

Net Operating Revenues US$ 153 million
EBITDA US$ 58 million
EBIT US$ 54 million
Net Earnings US$ 7 million
Total Debt US$ 319 million
Long Term Debt US$ 319 million


Albras' consolidation under CVRD's US GAAP financial statements allows the participants of the capital market to obtain a clearer evaluation of the performance of the Company, consequently increasing the transparency of its operations and results. Such action is part of a program developed by CVRD that includes efforts aimed at achieving operational simplification through the consolidation of its subsidiaries. In the last three years, 11 companies were consolidated into CVRD.

/Web site: http://www.cvrd.com.br /

Companhia Vale do Rio Doce S.A.



SUAL Lures Top Mining Executive

Moscow Times, Russia Wednesday, July 7, 2004. Page 5.

Combined Reports LONDON -- One of the mining industry's biggest deal-makers, Brian Gilbertson, moved Tuesday to the center of yet another major sector opportunity, this time with SUAL, Russia's second-largest aluminum producer.

SUAL confirmed it was in talks to hire Gilbertson, who helped create the world's largest mining group BHP Billiton, in an executive capacity soon after he quit as chairman of Indian metals group Vedanta Resources.

Gilbertson stepped down, by mutual consent, after the Vedanta board became uneasy about his role with SUAL, where he already serves as a holding company non-executive director.

SUAL needs up to $3 billion to develop three aluminum smelter projects in Russia and has been weighing up a flotation on a Western market as one of three strategic options. The others are raising debt or finding an industry partner.

SUAL is controlled by billionaire Viktor Vekselberg and partly owned by Britain's Fleming Family and Partners, a private group owned by the Scottish banking dynasty.

(Reuters, MT)


Mining boss's move tarnishes Ł2bn aluminium flotation

The Times (subscription), UK - July 07, 2004

By Peter Klinger

THE Ł2 billion flotation of the Russian aluminium smelter SUAL was thrown into doubt yesterday when a key consultant to the offer angered City supporters by resigning as chairman of Vedanta Resources less than eight months into the job.
Brian Gilbertson, who received a controversial Ł7.2 million “golden hello” to chair Vedanta last December, is to becomea non-executive director at SUAL and he could net up to $50 million (Ł27 million) if he leads the Russian company to the London stock market.

Mr Gilbertson is one of the City’s leading mining executives and is highly sought-after for his strategic thinking. However, analysts reacted furiously to his resignation from Vedanta and suggested that he would struggle to find institutional investors willing to support him.

Analysts expressed frustration that Mr Gilbertson had parted company with Vedanta so soon after its flotation last December, and with the share price languishing more than 25 per cent below the issue price. One mining analyst said last night: “He is tarnished goods — I think it’s going to be very difficult for SUAL.”

John Meyer, an analyst at Numis Securities, added that Mr Gilbertson’s reputation would suffer a bruising. “He was an important person who should have been there reporting to London institutions. To leave the company without a recognised successor was not well done.”

Michael Fowle, a former KPMG executive, has taken over from Mr Gilbertson at Vedanta.

SUAL is run by Victor Vekselberg, the Russian oligarch who hit the headlines earlier this year after buying the world’s biggest collection of Fabergé imperial Easter eggs for about $100 million.

SUAL is aiming for a Ł2 billion LSE listing but has not declared its float timetable.




Alcoa to Run Plant Despite the Strike; Remains Open to Discussions

Business Wire (press release), CA July 07, 2004 11:29

PITTSBURGH--(BUSINESS WIRE)--July 7, 2004--Alcoa today said it was prepared for the decision by the Syndicat des Employees de l'Aluminerie de Becancour at its ABI aluminum facility in Quebec to reject the company's final labor proposal. The company had planned for the possibility of a strike, and will continue to run the ABI smelter.


The company presented its final proposal earlier in the week, which included a wage increase of more than 11 percent over the next four years. "Our offer reinforces this workforce's position in the upper echelons of compensation and benefits," said Louis-Regis Tremblay, ABI president and general manager.

The company is open to working with the union to resolve this dispute, but will not change the fundamental terms of its proposal. While management at ABI will work to keep the plant running, the company has anticipated that there will be an impact on production. Given that the alumina market is currently in a deficit, the company is confident that any excess alumina would attract significant interest and be easily sold into the spot market. ABI is a 395,000 metric tons a year facility with three potlines.

ABI is one of 27 smelters within the Alcoa global smelting system. Alcoa's total worldwide capacity is approximately 4 million metric tons per year so Alcoa is confident it can keep the impact to customers at a minimal level.

The company will provide periodic updates on actual production and the status of negotiations, as details warrant



Good Aluminum Information site

http://www.world-aluminium.org/


Miners squeezed for WA bauxite decision

The West Australian, Australia

MARK DRUMMOND, CHIEF REPORTER

State Development Minister Clive Brown has increased the pressure on some of the world's biggest miners to develop the Mitchell Plateau bauxite deposits by inviting three international aluminium companies to look over the Kimberley project.

Documents obtained by WestBusiness have revealed that Mr Brown has invited Russian group Rusal, India's Indo Gulf Corporation and Aluminium Corporation of China (Chalco) to prepare reports on the viability of a mining and alumina refining project at Mitchell Plateau by December 31.

They join three Australian companies which have also expressed interest in the Mitchell Plateau deposits - Andrew Forrest's Fortescue Metals Group, Aldoga Aluminium and a joint venture between Intermin Resources and Red River Resources.

Aldoga has established a Perth office headed by former Lawrence government adviser Marcelle Anderson.

The documents confirm Mr Brown has extended until September 30, the time in which the Mitchell Plateau Bauxite Co - a joint venture between Rio Tinto, Alcoa World Wide Alumina and AngloGold - must comply with its 1971 State Agreement obligations by submitting a project development proposal.

As part of the process to test the broader market view of the project's viability, Mr Brown has told the six companies that Rio, Alcoa and AngloGold had agreed to grant third-party access to a data room containing geotechnical data and all information on beneficiation of the Mitchell Plateau bauxite.

Mr Brown has told the six companies that if a review being undertaken by Rio and its partners concluded that the Mitchell Plateau project was viable, the joint venture would be required to submit development proposals under the State Agreement.

"Otherwise, the intent of the State is that upon completion of preliminary investigations by third parties, it will consider its options for the development of the project in a timely fashion and decide on a process to select a preferred developer thereafter," he said.

A Rio spokesman confirmed the joint venture partners were complying with Mr Brown's requests.

They had commissioned independent consultants Worley Astron to prepare a report on the Mitchell Plateau project and were finalising confidentiality arrangements for access to the data room.

Mr Brown explained that WA needed to capitalise on strong international demand for resources like iron and alumina, particularly from China, which he said was creating a "once in 30 to 40 years opportunity" for the State.

"Where there is a State Agreement obligation on a company to come forward with a project that is capable of meeting this international demand, then the State is now looking to those companies to carry out their obligations under the State Agreement," Mr Brown told WestBusiness.

Intriguingly, two of the parties interested in Mitchell Plateau also have strong links with either the existing joint venturers or other prospective bidders.

Chalco, China's biggest aluminium producer in 2001 formed a strategic alliance with Alcoa to enter into a 50-50 joint venture at a major refinery and smelter in China.

Alcoa then also agreed to become a key strategic investor in Chalco's public float with a stake of around 8 per cent.

And Rusal is 25 per cent owned by Russian billionaire Roman Abramovich, who has separately been linked both to Aldoga Aluminium and one of its highest profile directors, Hong Kong-based tycoon Lee Ming Tee.

Aldoga holds several other bauxite tenements nearby in its own right, as the basis of a stand-alone bauxite and alumina refining project.


Alcoa profits up again on strong demand

Lancaster Newspapers, PA Jul 07, 2004 5:46 PM EST

By Charles Sheehan AP Business Writer

PITTSBURGH (AP) - Strong demand and a continuing rebound in aluminum prices drove Alcoa's net profits up 87 percent during the second quarter, the company reported Wednesday.


The world's largest aluminum producer reported a net income of $404 million, or 46 cents per share, for the three-month period that ended June 30, compared with $216 million, or 26 cents per share, during the same period last year.

Analysts surveyed by Thomson First Call had expected earnings of 47 cents a share.

Sales rose nearly 11 percent to $6.09 billion, compared with $5.49 billion, in the same period last year. Revenues for Alcoa are at the highest level since the fourth quarter of 2000.

"We are well positioned for the second half of the year and beyond," said Alain Belda, chairman and chief executive officer.

The Pittsburgh company was the beneficiary of improved demand in the commercial vehicle, construction and aerospace markets. Aluminum makers are getting better prices just as the packaging and construction sectors are getting a seasonal boost.

Growth in almost every segment of the North American market and strong sales in Asia offset a flat market in Europe, Alcoa said.

The results had been eagerly anticipated by Wall Street. Shares of Alcoa closed up 79 cents, or 2.5 percent, at $32.77 on the New York Stock Exchange before the company announced its results.

But despite nearly doubling its profits from a year ago, Alcoa shares fell 76 cents to $32.01 in after-hours trading.

It was unclear if investors were spooked by Alcoa's announcement Wednesday that it was placing $42 million into its environmental fund, principally for remediation at the Grasse River project in Massena, N.Y., where Alcoa has a plant.

"I do think the large charge for the environmental fund hampered the quarter a little, but top line and EPS were good," said Kirk Schmitt, an analyst with Victory Capital Management in Cleveland.

Net income during the first half of 2004 was $759 million, up from $367 million during the first half of 2003. Sales during the period were $11.79 billion, compared with $10.64 billion the year before.

"By keeping our focus on controlling costs and seizing opportunities for growth, we achieved our most profitable first-half performance ever," said Belda. He said there is more potential in the aerospace, industrial products, and commercial vehicle markets.

Alcoa said it continues to cut costs, realizing $52 million in annualized savings during the second quarter. The company said it is now realizing $160 million in annualized savings with a goal of reaching $1.2 billion in cost cuts over three years.

Alcoa employs 120,000 people in 40 countries and is the world's leading producer of primary aluminum and fabricated aluminum. Alcoa serves the aerospace, automotive, packaging and construction industries, and also produces Reynolds Wrap aluminum foil.


SUAL may issue Eurobonds

RosBusinessConsulting, Russia

RBC, 07.07.2004, Moscow 16:45:13.SUAL may issue $300m to $400m in Eurobonds in 2005, Iosif Bakaleynik, the Senior Vice President of the holding, declared at a conference devoted to integration of Russian businesses in the global economy. At the same time, the company does not refuse to make an IPO, he added. However, according to Bakaleynik, there are "no prerequisites" for this at present but he did not rule out the possibility of making an IPO in the fourth quarter of 2004.

SUAL Group is a vertically integrated company that ranks among the world's top ten aluminum producers.


Could It Be That Mr Aluminium Will Rescue Coega?

AllAfrica.com, Africa, 8 Jul 2004

COULD it be that Brian Gilbertson's move from Indian mining company Vedanta to Sual could have repercussions for SA?

It is a blind guess of course, but the pairing of a person who knows aluminium smelting in SA like the back of his hand and a company with a strong desire to expand internationally comes at an opportune moment for the faltering attempts by the Coega port development to attract a foreign aluminium punter.

Coega has spent the best part of two years trying to convince French aluminium company Pechiney to build a new smelter at the facility, which would provide it with an anchor tenant.

Pechiney seemed to be the ideal client since it provided the technology that is now being used at the many other successful aluminium plants in SA.

The developers seemed to be making some progress when Pechiney was bought by Canadian firm Alcan, which seems in no hurry to make up its mind on the issue. It has announced it will decide at the end of the year, and not June as it had previously said.

The company's concerns were apparently unrelated to the state of the aluminum market, because a day after making this announcement it decided to take up a 20% stake in a new aluminium smelter in Oman.

The trade and industry department was quick to point out the two projects were never competitors, and Coega's chances were still alive. But given the delays, even the ever-hopeful department must realise that Alcan is not really enthusiastic.

So what about Sual? It is the seventh-largest aluminum smelting company in the world. The company intends to grow. And it has just hired a person who knows what SA has to offer and who signed off on huge smelting investments in the region.

Russian businessman Vladimir Potanin's Norilsk Nickel has led the way by buying Anglo American's 20% stake in SA's Gold Fields for $1,16bn. With any luck, the trade and industry department is already brushing up on its Russian.


Alcoa Quebec Workers Strike After Rejecting Offer (Update5)

Bloomberg July 8, 2004 16:22 EDT

July 8 (Bloomberg) -- Alcoa Inc. workers at its smelter in Becancour, Quebec, walked off the job last night after rejecting what the aluminum maker said is its final contract offer.

``We met with management yesterday and when they came back to tell us their position hadn't changed, we went on strike,'' Clement Masse, president of the United Steelworkers of America Local 9700, said in a telephone interview. Alcoa hasn't contacted the union since the walkout began at 9 p.m. last night and workers are prepared to strike ``for as long as it takes to fight this fight,'' he said.

More than 88 percent of about 900 unionized workers at Becancour yesterday voted against Alcoa's proposal, which included an 11 percent wage increase over four years. Negotiations for a new contract began in April, and stumbling blocks include subcontracting and pension benefits, Masse said.

The walkout is the first since the Becancour plant opened in 1986. Alcoa, the world's biggest aluminum maker, owns 75 percent of the smelter and operates it. Alcan Inc. controls the rest and isn't involved in the labor talks. Between 100 and 150 non- unionized workers are running the plant during the strike, Alcoa spokesman Kevin Lowery said in a telephone interview from headquarters in Pittsburgh.

Operating at Capacity

Becancour has been operating at capacity to meet rising demand for aluminum worldwide. The plant will eventually have to cut production if the walkout drags on, Lowery said.

``If we could produce with only 125 people or so, we would have done that three years ago,'' he said. ``We are producing everything right now but we know that we won't be able to do it forever. We're going to try to run as much of the plant as we can for as long as we can.''

Masse said he expects output to be reduced soon.

``After a few days it will become very difficult for them to work,'' he said. ``There will be fatigue among the management ranks and production will suffer.''

The ABI smelter, located about 156 kilometers (97 miles) north of Montreal, has an annual production capacity of 395,000 metric tons. Normally, 1,076 people work in Becancour to produce raw aluminum, Alcoa said. The company employs about 5,000 people in Quebec out of a global workforce of 120,000.

Average Wages

On average, unionized workers at the smelter earn C$29 ($21.93) an hour, Masse said. An Alcoa press release said the average wage for unionized workers is C$30 an hour.

``Wages aren't the problem,'' Masse said. ``It's things like jobs, labor organization, replacement of retiring workers and subcontracting. There are big gaps on those issues.''

Alcoa said in a statement it is willing to work with the union to resolve its disputes, but will not change the ``fundamental terms'' of its proposal.

The company's share of the joint venture with Alcan is about 7.5 percent of its total annual aluminum-making capacity, which is about 4 million metric tons. In Canada, Alcoa has plants in 14 cities that can produce more than 1.3 million metric tons a year.

``With our network of 27 smelters around the world, we feel that we have enough capacity to meet demand,'' Alcoa spokesman Pierre Despres said in a telephone interview from Montreal.

Canadian Business

Alcoa last month dropped its C$1 billion plan to expand and upgrade its Quebec smelters in Baie-Comeau and Deschambault after failing to negotiate long-term energy-supply agreements with the provincial government. The company is in investment negotiations for four smelter projects outside North America where labor and electricity costs are cheaper.

Today Alcoa broke ground on a 322,000-ton-per-year project in Iceland, the first new smelter to be built by the company in 20 years. Projects in Trinidad, Bahrain, China, and Brunei would boost Alcoa's annual aluminum-making capacity by about 1.5 million tons.

The company late yesterday said its second-quarter profit almost doubled to $404 million as prices surged and high-margin sales to airplane and automobile makers grew. Sales rose 11 percent to $6.1 billion, its highest in three years.

Shares of Alcoa fell 22 cents to $32.55 by the 4 p.m. close of New York Stock Exchange composite trading. They have gained 26 percent in the past year. Shares of Montreal-based Alcan, the world's second-largest aluminum maker, fell 28 Canadian cents to C$54.37 in Toronto and have climbed 27 percent in the past year.

To contact the reporter for this story:
Frederic Tomesco in Montreal at tomesco@bloomberg.net.

To contact the editor responsible for this story:
Rob Urban at robprag@bloomberg.net.


Work begins on Alcoa smelter in Iceland

Pittsburgh Business Times, PA 8 Jul, 2004

Alcoa Inc. has broken ground on a $1.1 billion smelter in Iceland.

Pittsburgh-based Alcoa expects the 322,000 metric ton-per-year Fjardaal smelter in East Iceland to begin production in spring 2007. The facility is supposed to generate 450 full-time jobs, with another 300 positions in related industries.

Alcoa finalized plans to build the smelter in March 2003. Although environmentalists initially objected to the project, Alcoa made significant changes to its designs that included reducing original production-capacity targets. The company says Fjardaal will be among the most efficient and environmentally friendly smelters in the world.

Bechtel Group Inc., of San Francisco, is managing Fjardaal's construction in cooperation with Honnun, Rafhonnun VST, an Icelandic engineering consortium. Alcoa, the world's largest aluminum producer, said the project would create 1,800 jobs at the height of construction.

© 2004 American City Business Journals Inc.

China Minmetals Plans Bid for Canada's Noranda, Reuters Says

Bloomberg July 8, 2004

China Minmetals Nonferrous Metals Co., the state-owned metals trader, is preparing a multibillion-dollar bid for Noranda Inc. of Canada, Reuters reported, citing an unidentified person involved in the bidding.

Minmetals hired Citigroup Inc., based in New York and the world's biggest financial-services company, to advise on the bid, the news service said. It would challenge an offer by Brazil's Cia. Vale do Rio Doce, the world's largest iron-ore producer.

China's government is seeking to secure supplies of metals and other materials to meet surging demand after the economy grew 9.1 percent last year. Buying Noranda, now valued at C$6.8 billion ($5.1 billion) would give China copper, zinc and nickel mines in Chile, Peru, the U.S. and Canada.

``It's official Chinese policy to seek new sources of raw material supply,'' Tony Warwick-Ching, an analyst at consultant CRU International in London, said in an interview. Zhou Feng, a senior economist at Beijing-based Minmetals, couldn't be reached for comment.

A third unidentified company plans to bid for Toronto-based Noranda, Reuters cited the person as saying. Noranda, the world's third-largest zinc producer and ninth-biggest copper miner, said on June 16 it was reviewing offers to be acquired.

Jeremy Hughes, a Citigroup spokesman in London, couldn't immediately be reached for comment.


China interest in bauxite site

Brisbane Courier Mail, Australia 09jul04

By Liza Kappelle

CHINESE aluminium conglomerates have expressed interest in developing a rich bauxite site taken from its French lease holder, State Development and Innovation Minister Tony McGrady says.

Two months ago the State Government took away French company Pechiney's lease when it failed to start building an alumina refinery despite a 1988 expiry limit.

Mr McGrady told the Australian Journal of Mining's Australia-China metals and minerals conference in Sydney yesterday that the Government was exploring options to develop a fair process to allow the resource to go to global tender.

"Many inquiries for this deposit have already been received from around the world, including inquiries from several Chinese aluminium conglomerates," he said.

Federal Industry, Tourism and Resources Minister Ian Macfarlane told the conference China's rampant market would provide opportunities for Australian resource companies for some time.

The bullish Chinese market is here to stay for the interim, to the point that ABARE expects the real value of Australia's mineral exports to grow at an average of about 5.5 per cent from 2004 to 2015," Mr Macfarlane said. (The Australian Bureau of Agricultural and Resource Economics is the Government's chief commodities forecaster.)

This projection took into account recent Chinese Government moves to prevent overheating in sectors such as steel, aluminium, cement and property, Mr Macfarlane said. China's revised 2004 growth target of 7 per cent still provided "plenty of opportunities for Australian producers".

China's appetite for steel was not to be assuaged for some time, he said.

"Accommodation for an estimated 400 million people will have to be built over the next 20 years as the urbanisation rate climbs over 40 per cent."

China has eclipsed the US as Australia's second-biggest export destination after Japan.

One of the few risks to China's continued growth was pressure on electricity supplies, highlighting the importance of its gas and coal relationships with Australia.

The Federal Government is studying ways of increasing collaboration with China and a report on the feasibility of a free trade agreement is likely next year.



Strike Causes Alcoa to Cut Production

Forbes 07.09.2004, 06:00 PM

Alcoa Inc. said Friday that it will reduce production at its Becancour aluminum smelter to keep the plant open during an ongoing labor strike.

Workers at the Quebec facility went on strike Wednesday afternoon.

The company said it will reduce production from three potlines to two potlines on Saturday, thereby reducing production by 11,000 tonnes per month.

The company said it had planned for the possibility of a strike, and that this move was part of its contingency plan.

Alcoa said the reduction at the plant should have minimal impact on customers and the company.

The Becancour plant is one of 27 smelters that Alcoa owns worldwide, with a total capacity of 4 million metric tons per year.

Shares closed earlier down 13 cents, or less than a percent, at $32.42 on the New York Stock Exchange.


Alscon: BFIGroup Fails to Pay 10% Bid Price

AllAfrica.com, Africa July 9, 2004

Cletus Akwaya, Abuja

The core investor to the Aluminum Smelter Company of Nigeria (ALSCON), BFIGroup has defaulted in the payment yesterday of $41 million, representing 10 per cent of the bid price of $410 million.

Instead, the firm, which two weeks ago won the bid for 77.5 per cent of Federal Government shares in the Ikot Abasi, Akwa Ibom based smelter company has sought a two-week extension to enable it arrange for payment of the 10 per cent bid price.

BFIG will today, however, sign the share purchase agreement with the management of the Bureau of Public Enterprises (BPE) on behalf of the National Council on Privatisation (NCP).

THISDAY learnt last night that the request for extension of time was the high point of a meeting between President of the American corporation, Dr. Reuben Jaja, a Nigerian, with officials of the BPE in Abuja.

BFIGroup, which won the ALSCON bid June 14, was given 15 working days to pay 10 per cent of the bid price. The ground rules for the transaction also require the new core investor to pay the balance in full in another 90 working days thereafter.

Going by the deadline, BFIGroup had yesterday as the last 15th working day to pay $41 million, representing 10 per cent of the total bid price.

But a source close to BFIGroup told THISDAY yesterday that Jaja who arrived Abuja with a team of executives from his corporation has approached BPE for an extension of two weeks within which to pay the first instalment of 10 per cent.

In making the request, the source said Jaja complained of negative publicity from the Nigerian media, especially the aspects dealing with alleged plans by the Federal Government to replace the firm with Rusal Group of Russia as the core investor.

These reports, Jaja was quoted to have said, adversely affected BFIGroup's discussions with financiers from the US and Europe for financial support to the ALSCON acquisition process.

The source said the BFIGroup was confident that its request for extension of time would be granted. "It is not the first time we will be having a new core investor to a public enterprise being privatized ask for extension of time. We saw it in the NITEL transaction and indeed many others so BFIGroup is confident that this request will be granted," the source said.

THISDAY checks at the BPE also revealed that the privatisation agency which listened to BFIGroup's "passionate plea", asked the team to put the request in writing with the assurance that an approval will be given after due consultation.

In making the pledge to BFIGroup, BPE was said to have been satisfied by the payment plan presented by Jaja and his colleagues.

It was not clear whether BFIGroup had submitted the letter at press time but a press conference called by the company for 10. am today at the NICON HILTON Hotel was cancelled late yesterday night as the company's representatives said a crucial meeting with BPE had been scheduled for the same time where the share purchase agreement would be signed.

The signing ceremony had been postponed a few times to enable the core investor critically study all sections of the document before signing.

The share purchase agreement is expected to contain among other things the payment schedule for the core investor, especially the mode of payment, timing and designated bank.

It is also expected to contain provisions for post acquisition corporate conduct of the core investor and its relationship with the BPE, the Nigerian Government, other stakeholders in the plant, expansion and divestment processes, among others.



Judge gives Alcoa, Nootka 10 days to reach deal

Longview Daily News, WA Jul 09, 2004 - 11:44:25 pm PDT

A federal bankruptcy judge Friday gave two companies with an interest in the bankrupt Longview Aluminum smelter 10 days to reach an agreement that could bring a new employer and jobs to the site.

In his Chicago courtroom, U.S. Bankruptcy Court Judge Eugene R. Wedoff agreed to delay his decision on a plan to sell off the shuttered smelter's assets to Nootka Holdings, according to Daniel Zazove, an attorney representing court-appointed trustee Bill Brandt.

Alcoa, which owns the 500-acre site but not the plant or Longview Aluminum's other assets, filed a motion this week seeking a delay in the proceedings. Wedoff agreed to set the hearing over until July 20, Zazove said in a telephone interview.

The delay will give Nootka and Alcoa more time to work out differences that Brandt previously has said might include determining who will be responsible for cleaning up the site and who has the right to sell aluminum remaining there.

Nootka Holdings is a British Columbia company that wants the Longview site to import lime into the Northwest for industrial and agricultural customers, according to court documents.

Brandt, a Chicago businessman who was unavailable for comment this week, has said Nootka could employ a few hundred people on several shifts.

More than 900 people worked at the smelter before Alcoa bought it from Reynolds Metals Co. and sold it off to Michael Lynch and partners, who quickly sold off its power contract and shut the plant down.

Brandt is liquidating the bankrupt Longview Aluminum's assets to help pay off part of nearly $100 million owed to creditors. Nootka has put down $250,000 in earnest money and is offering $2.5 million for the smelter's ship-unloading equipment and other assets on the property.


CVRD eyes deal for Noranda

Business Report, Africa July 10, 2004

Rio De Janeiro - Brazilian mining giant Companhia Vale do Rio Doce (CVRD) is eyeing a three billion-dollar deal for a 52 percent stake in Canadian rival Noranda, the financial daily Valor reported Friday.

CVRD, the world's largest iron ore producer, would pay two billion dollars (US) in cash and the Sossego copper mine in the Amazon opened this month for the stake, the daily said.


CVRD officials had no comment on the report.

But Valor reported that China's Minmetals and Switzerland's Xstrata were also interested in the Canadian firm, which produces nickel, zinc, copper and aluminum in 17 countries.


New Insight Into Aluminium

Azom.com 10 Jul, 2004

http://www.esrf.fr/

Aluminium is a metal widely used in industry; therefore the more that is known about it, the more effectively it can be used. Researchers at Risř National Laboratory in Denmark and the European Synchrotron Radiation Facility (ESRF) in France have filmed in 3D the changes in the bulk of deformed aluminium after annealing. Thanks to the uniqueness of the synchrotron light at the ESRF, this kind of experiment could take place for the first time ever. The results give a new insight into this metal and contradict classical assumptions. They are published today in the journal Science.

Take a can. The aluminium that you see has been processed before having the shape of a cylinder. In a first stage, the aluminium is deformed. The energy is concentrated in its bulk. Then it goes through a process of annealing to get the shape of the can. In the annealing process, grains grow in the bulk. Up to now, there was a general assumption that the grains grow smoothly and in a regular shape. With the power of the X-rays at the ESRF, researchers have proved that the grains grow very irregularly. These changes of aluminium are of great importance for manufacturers in order to know how to process it to get certain properties, such as more strength.

The experiment is a real breakthrough in the field, since the previous studies on metals were in 2D and focused on the surface. The team has achieved measurements that go into the bulk, which has a very different structure than the surface. They followed the grain as it grew after annealing the metal. “Individual grains don’t behave like average and having a look at the local scale will help to create a better model”, explains Lawrence Margulies, one of the authors of the paper.

The in situ measurements were done using the 3D X-ray diffraction microscope at the ESRF. The sample had a pre-annealing period of one hour at 260°C. Afterwards, it was put in a furnace that rose the temperature from 270° C to 290°C. Researchers took 73 snapshots of the grain during almost 30 hours and made a movie where one can clearly see the irregular growth of the grain in a micrometre spatial resolution.

The technique developed at the ESRF is non-destructive and can also be used to determine the microstructures of other metals, ceramics or polymers in a spatial resolution of micrometres and a time resolution of minutes.



ALSCON: Govt terminates BFI bid

Vanguard, Nigeria Saturday, July 10, 2004


By Anayo Okoli, Awka

ABUJA: The Federal Government, yesterday, terminated a US group’s bid to acquire a majority stake in the ailing Aluminium Smelter Company of Nigeria (ALSCON) because of failure to pay up the initial 10-per cent deposit, an official statement said.

The Los Angeles-based BFI Group Corporation won the bid for government’s 77.5 percent equity in ALSCON on June 14 and was given until July 8 to pay the 10 per cent deposit of the bid sum of 410 million dollars.

The final payment was expected after 90 days.
Thursday, BFI Group applied for an extension of 10 working days to enable it pay up the deposit but the Nigerian Federal Government turned down the request, the statement from the nation’s privatisation agency, BPE, said.
“The consequence of that is that BFI Group has defaulted in payment and that marks the end of the transaction,” said the statement, signed by BPE’s Head of Communication and Marketing, Charles Odenigbo.

ALSCON is among dozens of corrupt and inefficient state-run firms Nigeria plans to sell under its slow-moving privatisation programme.
It was incorporated in 1989 as a major venture between the Nigerian government and Ferrostaal AG of Germany, with Reynolds Incorporated of the United States as a technical partner.

Corruption, underfunding and poor management forced ALSCON to halt production more than four years ago.
BFI Group is a capital resource investment and infrastructure development company.

Following the breakdown of the BFI Group deal, the Nigerian government said it would, in due course, announce how it intends to proceed with ALSCON’s privatisation.



Analyst skeptical of Noranda sale: 'We have been down this road before'

CBC News, Canada 01:29 AM EDT Jul 13, 2004

Nancy Carr

TORONTO (CP) - Almost four weeks and many media reports after Brascan Corp. announced it is entertaining offers for its 42 per cent stake in miner Noranda Inc., at least one analyst said Monday he is skeptical about a sale.

Merrill Lynch analyst Daniel Roling in New York said in a research report Monday that despite the rumours, Noranda "continues to be a standalone company." "With this in mind, right or wrong, we remain skeptical about the potential takeover of Noranda, as we have been down this road before," Roling's report said.

He noted that industry watchers have speculated for 20 years that Brascan, a conglomerate increasingly focused on power generation and real estate, would like to sell off its stake in Noranda, which produces copper, nickel, aluminum and zinc.

Brascan said in June it had had "several expressions of interest in the company from potential acquirers," but has not elaborated since then.

The leading contender, reports suggest, is Brazilian mining giant Companhia Vale do Rio Doce, or CVRD, which may be interested in buying Brascan's stake in Noranda to grow beyond its South American borders.

CVRD refuted a recent report that it had offered $2 billion US for Brascan's controlling stake in Noranda, for which Brascan wanted $3 billion US.

Noranda's copper-zinc mine in Peru and its smelter in Chile could be a good fit for CVRD, a massive iron ore producer, some analysts have said.

Anyone with a stake in Noranda would also have a part of Falconbridge Ltd. (TSX:FL), which is 59 per cent owned by Noranda, and has valuable Chilean copper operations.

China MinMetals, a private Chinese company, has also been rumoured to be interested in Noranda, as has Xstrata, a global miner headquartered in Switzerland.

Kerry Smith, an analyst with Haywood Securities in Toronto, said Monday that if Brascan succeeds in selling Noranda, it might be at a lower price than desired.

"I don't see any huge compelling reason for anybody to buy unless the price is right, so it could be an underbid," said Kerry, pointing out that several of Noranda's refining assets, such as the Falconbridge Kidd Creek smelter and copper mine and Noranda's Horne smelter in Quebec, are very poor performers.

"This could be one of those situations where the actual bid that comes is not a bid that anybody likes, except for Brascan because it gets them off their position."

Kerry added that a sale won't necessarily be completed any time soon, as he predicts the metals market, which has buoyed Noranda for the past several quarters, will last for some time yet.

"And let's face it, no big company is going to come in and make a hurried decision to buy this," Kerry said.

"They're going to go on their own schedule, their own timetable, and when they get to the point where they're comfortable, if it takes six months or 12 months, great.

"If they can never come to an arrangement, then they don't do it."

Shares in Noranda (TSX:NRD) closed down 15 cents Monday at $23 on the Toronto stock market.

Brascan (TSX:BNN.A) lost 14 cents at $37.25.

© The Canadian Press, 2004


Showa Denko Files Suit Against Venezuela's Venalum (Update1)

July 12, 2004 (Bloomberg)

Showa Denko K.K., a Japanese aluminum smelter and maker of plastics and resins, filed suit in Venezuela to overturn a decision that would diminish its voice in how its Venezuelan joint venture aluminum company is run.

The lawsuit seeks to declare invalid a decision made at a shareholders' meeting for CVG Venalum, Venezuela's largest aluminum smelter, Showa Denko said in a faxed press release. Showa Denko and five other Japanese companies have a 20 percent stake in CVG Venalum, while Corporacion Venezolana de Guayana, Venezuela's state-owned heavy industries company, owns the remaining 80 percent.

The lawsuit centers on a June 21 shareholders meeting when the Corporacion Venezolana scrapped a clause in Venalum's articles of incorporation that requires the approval of at least 81 percent of shareholders for decisions on such matters as mergers and capital increases or reductions, Showa Denko said. A Venalum spokesman declined to comment, saying the matter was before the company's lawyers.

The lawsuit comes two year after Corporacion Venezolana de Guayana's stopped shipments of aluminum to its Japanese shareholders after the expiration of an agreement that gave Showa Denko and its partners preferential prices for as much as 90,000 metric tons of aluminum a year.

The two sides reached a new supply agreement in November 2002, averting a possible collapse of the 26-year joint venture. The contract expires in March 2006.

The lawsuit also comes as Venalum starts talks to expand its output. The company, which is currently producing 430,000 tons of aluminum per year, may add a sixth and seventh production lines, the spokesman said.

Tokyo-based Showa Denko took the action on behalf of the five partners. They are Marubeni Corp., Kobe Steel Ltd., Sumitomo Chemical Co. Ltd., Mitsubishi Materials Corp., and Mitsubishi Aluminum Co. Ltd.

Venezuela produces about 3 percent of the world's aluminum.

To contact the reporter on this story:
Mari Murayama in Tokyo at at mmurayama@bloomberg.net

To contact the editor responsible for this story:
Peter Hannam at phannam@bloomberg.net
Last Updated: July 12, 2004 16:35 EDT


Alcoa's Valco 'PolitRicks'

GhanaWeb, Ghana 12 Jul, 2004

.... Anxiety Expressed Over Impending Deal
Government's decision to acquire the 90% shares in Valco offered by Kaiser Aluminum Corporation of the U.S.A., at a time when it is busy offloading its stake in essential services such as water, energy, health and education, has been received with mixed reaction among analysts, industry watchers and civil society groups. Some as a bold and prudent move has described the deal, expected to be concluded soon, on the part of government. But others see it as nothing short of a double standard in government's policy posture.

Information available to Public Agenda, indicate that the government of Ghana has come into an agreement with Alcoa, the 10% shareholder in Valco, to operate the plant.

Under the agreement, it is anticipated that Alcoa will increase its shareholding in Valco and explore the possibility of developing Ghana's bauxite deposits. The deal, according to analysts, must be the greatest news to Alcoa this year. The company, which has since 2001, cut back its production by over 600,000 tons yearly, representing approximately 15% of its global plant capacity, due to rising cost of energy, labour, environmental management, and plant maintenance, is set to seize the opportunity to revamp its fortunes.

Alcoa must have been chosen as the natural ally because it is an existing shareholder, and the company must have gleefully embraced the opportunity, because it offers among other things, a secured market for its alumina produced from its global operations,secured source of aluminium, including Ghana's share,subsidised power price for aluminium produced,cheap off take of the Valco shares off-loaded by Ghana, Management and Technology transfer fee.

For Ghana, the deal holds good promise for the re-engagement of about 1000 employees of Valco laid off, following the closure of the plant, zero freight cost on metal sold to the Aluworks factory, andspells good prospects for the development of an alumina refinery that will use Ghana's bauxite.

There is some disquiet among some civil society activists, however, over Alcoa's sincerity about the exploration of bauxite deposits in Ghana, and the development of local alumina refinery.

The fear is borne out of the experience with Kaiser. It is recalled that the exploration of Ghana's bauxite deposits at Kibi, and Nyinahini were part of the initial agreement with Kaiser. The latter failed to honour that part of the deal, but sought to use its supposed intent to do so, as a bargaining chip in its negotiations with the government of Ghana over power price, prior to the shut down of the factory.

Alcoa, the largest aluminium producing company in the world, which acquired the 10% shares of Reynolds Metals in Valco some four (4) years ago, has over the period, acquired deeper knowledge of the bauxite deposits in Ghana from the BASCOL Feasibility Report of 1975.

Notwithstanding all the information (BASCOL Report, etc.), Alcoa has carried out a feasibility report on the development of an alumina refinery in Guinea, using its Guinea's large, rich bauxite deposits.

Further to that, Alcoa has gone ahead, as is normal in the industry to sign a Memorandum of Understanding (MOU) with Alcan on May 13, 2004, to develop 1.5million tons of bauxite processing per annum in Guinea. The International Finance Corporation (IFC) of the World Bank Group has been invited to participate in the new Guinea Alumina Refinery Project. The IFC will provide funds and sanitise the country risk of Guinea.

Industry reports indicate that two-thirds of alumina produced worldwide is consumed by the producers and/or their subsidiaries. Alcoa supplies approximately 45% of the balance of alumina traded in the free market in the industry. Analysts are all in agreement that expanding an existing alumina refinery reduces the investment cost per ton of alumina by as much as 40%. For this reason, a completely new alumina refinery was last built in 1984. Increases in demand for alumina over the twenty(20) year period have been met exclusively by expansion in installed plant capacities. It is noteworthy that a new refinery is under construction currently in Australia. Alcoa certainly needs a market for the alumina it is churning out, and Valco offers just that opportunity.

The questions that have raised doubts about the sincerity of Alcoa in exploring Ghana's bauxite deposits, and which need answering are: Why would Alcoa invest in another alumina refinery in Ghana, whenthe company is developing a new one currently in Guinea? And when the global alumina plant capacity is limited by primary smelter demand?

Again, why would Alcoa embark on such an expensive programme, when it can expand the Guinea project at 40% savings on investment cost? And when the Guinean bauxite deposits are the largest and richest in the world, with the technology and trained personnel to do the job?

It does appear from Public Agenda investigations, that Alcoa's motive for entering into the agreement with the government of Ghana is to obtain subsidisedenergy from Ghana in the production of aluminium,and create a market for its alumina, currently traded in the market.

In the medium-term and long-term, Alcoa would secure the market for its new refinery under construction in Guinea.

Ghana would then undergo the same frustration it went through with Kaiser in the past. It is to be recalled, that Kaiser signed an agreement with Ghana in the 1960s to build an alumina refinery in Ghana, to feed the Valco smelter. But the company directly and indirectly frustrated such an investment simply because it supplied the Valco smelter with alumina from its plant in Jamaica.

Developing an alumina refinery in Ghana, will amount to maximising the country's net benefit from the whole deal. It will enhance the development and growth of the Salt,Caustic Soda,Plastic Granules, and Cassava Starch industries in the country. It will also facilitate the reconstruction and rehabilitation of the Tema/Accra-Kumasi - Nyinahin railway infrastructure, and could providedirect employment to over 200,000 people, andindirect employment to approximately 1(one) million people.

Experts say the programme would generate foreign exchange in excess of US$300million per year, and contribute about 10% to the GDP.

If the deal is sealed as it stands, Ghana will end up subsidizing Alcoa's electricity bill by US$40million a year. If added to this, Alcoa fails to develop a local alumina refinery, as Kaiser did, the country would have lost out miserably, and missed the opportunity for developing an integrated aluminium industry, with the capacity to inject some momentum into the country's national development strides.


Alcoa ups flat-rolled contract prices

Purchasing.com 7/12/2004

Alcoa Inc., the world's largest aluminum maker, has raised list prices by 5% on contract orders for 2000 and 7000 series sheet and plate product prices, by 10˘/lb and on 6000 series sheet and plate product prices. The price increases will be effective with orders received on or after July 8 or orders ready for shipment on and after Aug. 2, regardless of order entry date. Alcoa says all existing contracts confirmed before July 8 will be honored.

-Tom Stundza, executive editor



Alcan delay on refinery
South Australia Advertiser, Australia 13jul04

By Nigel Wilson

ALUMINIUM giant Alcan has delayed a decision on committing to the $1.5 billion Gove Alumina refinery expansion in the Northern Territory.

The company has also "de-linked" the start-up of the project from the $500 million development of the Blacktip gas field in the Joseph Bonaparte Gulf.

At the same time, the Territory's Northern Land Council has applied for Federal Government assistance to take equity in the $500 million pipeline that would bring gas from Blacktip, 250km southwest of Darwin, to Gove.

The delay is causing some concern in the Territory but project proponents say they hope the three developments will be operating in 2007.

Canadian-based Alcan bought Gove Alumina in December when it paid $US5 billion ($6.8 billion) for French rival Pechiney.

The planned expansion of Gove would result in its annual alumina output rising from about 2 million tonnes to 3.5 million tonnes.

Last month Alcan project director Ken Spicer told the NT Government the company expected a proposal on the Gove expansion to go to its main board in July.

But an Alcan spokesman yesterday said that timeframe had been abandoned.

He said the project team had yet to finalise numbers and, without firm costs, there was no basis on which to take the project to the company's board.

The spokesman said Alcan had accelerated the process of expanding Gove and there was now a project team of about 200 people working on the plan in Brisbane.

"I don't think the delay is going to be long. It might only be a month or so before we're ready to go before the board," the spokesman said.

On the current plan the expanded refinery will initially operate on oil.

This is because of delays in determining the precise route of the Trans Territory pipeline - a joint venture of Alcan and the Blacktip partners, Woodside and the Italian oil and gas group, ENI.

The spokesman said it was considered unlikely that Blacktip gas - which was Alcan's preferred fuel for the expansion - would be available in time for the plant's planned start-up.

"We're committed to gas for its environmental and cost benefits but we have used oil for 30 years at Gove so the lack of gas initially will not be a problem," he said.

Woodside moved quickly yesterday to again reject fears the Blacktip reserves were insufficient to meet its commitment to supply 40 petajoules of Blacktip gas each year to Gove.

"We continue to work to bring Blacktip gas on stream at the earliest opportunity within the timeframe dictated by Alcan," a Woodside spokesman said yesterday. "We should still be able to deliver by 2007."

Because of the Territory's wet season, a 30-member survey team only resumed work last week on defining a route for the 950km pipeline between Wadeye, where the Blacktip gas is planned to come onshore, and Gove.

Project sources confirmed yesterday negotiations were continuing over the the plan by the Northern Land Council to take equity in the pipeline.




Fluor Earns Work on Australia's Newest Alumina Refinery

PR Newswire (press release) Jul 12, 2004

ALISO VIEJO, Calif., July 12 /PRNewswire-FirstCall/ -- Fluor Corporation (NYSE: FLR) today announced that it has been contracted to provide asset management support services to Australia's newest alumina refinery with its joint venture partner Monadelphous Engineering Pty. Ltd. The contract value was not disclosed and was booked in Fluor's second quarter. The Fluor Monadelphous Services team will provide integrated maintenance and shutdown services for the Comalco Alumina Refinery (CAR) owned by Comalco Alumina Ltd. The duration of the contract is five years.
"We are really looking forward to combining the strengths of CAR and FMS in a positive relationship that will help us achieve a world-class refinery," said Maurice Schneider, Comalco superintendent of contract management.
The refinery, located on a greenfield site in Gladstone, Central Queensland, is planned for development in three stages and will operate using the Bayer process, the most economic means of producing alumina from bauxite.
The plant initially will produce nearly one and one-half million tons of alumina annually, which will be shipped to other sites for further processing into aluminum metal.
"This alliance is an example of true resource and systems integration," said Matthew Langmaid, general manager of Fluor's Operations & Maintenance group in Australia. "It is a rare example of pure alliance behavior, where we have removed all traditional barriers to cooperation and apply daily the
principles of openness, best for role, no duplication and sharing of best practice methods in everything we do."
FMS's services are designed to enable the refinery to effectively and efficiently manage its long-term reliability support, especially during times of peak workload, and provide an effective mechanism for supplying ongoing shutdown and routine maintenance support services.
FMS is a joint venture of Fluor Australia Pty. Ltd., and Monadelphous Engineering Pty. Ltd, a leading Australian engineering construction, maintenance and industrial services company with a long-term presence in the Gladstone community. Together FMS and CAR are committed to supporting the
development of local business and industry.
Monadelphous Engineering Pty. Ltd. is a subsidiary company of the Monadelphous Group which is a leading Australian engineering, construction, maintenance and industrial services company. The Monadelphous Group is a publicly listed company with a workforce of approximately 1,500 employees and has a local presence in Gladstone. For more information visit http://www.monadel.com.au.

Fluor Australia Pty. Ltd., is a unit of Fluor Corporation (NYSE:FLR).
Fluor provides services on a global basis in the fields of engineering,
procurement, construction, operations, maintenance and project management.
Headquartered in Aliso Viejo, Calif., Fluor is a FORTUNE 500 company with
revenues of nearly $9 billion in 2003. For more information, visit
http://www.fluor.com.

For further information please contact Media Relations, Jerry Holloway,
+1-949-349-7411, or Lisa Boyette, +1-949-349-3652, or Investor Relations, Lila
Churney, +1-949-349-3909, fax, +1-949-349-5375, all of Fluor Corporation.


Analyst skeptical of Noranda sale: 'We have been down this road before'

CBC News, Canada 01:29 AM EDT Jul 13, 2004

Nancy Carr

TORONTO (CP) - Almost four weeks and many media reports after Brascan Corp. announced it is entertaining offers for its 42 per cent stake in miner Noranda Inc., at least one analyst said Monday he is skeptical about a sale.

Merrill Lynch analyst Daniel Roling in New York said in a research report Monday that despite the rumours, Noranda "continues to be a standalone company." "With this in mind, right or wrong, we remain skeptical about the potential takeover of Noranda, as we have been down this road before," Roling's report said.

He noted that industry watchers have speculated for 20 years that Brascan, a conglomerate increasingly focused on power generation and real estate, would like to sell off its stake in Noranda, which produces copper, nickel, aluminum and zinc.

Brascan said in June it had had "several expressions of interest in the company from potential acquirers," but has not elaborated since then.

The leading contender, reports suggest, is Brazilian mining giant Companhia Vale do Rio Doce, or CVRD, which may be interested in buying Brascan's stake in Noranda to grow beyond its South American borders.

CVRD refuted a recent report that it had offered $2 billion US for Brascan's controlling stake in Noranda, for which Brascan wanted $3 billion US.

Noranda's copper-zinc mine in Peru and its smelter in Chile could be a good fit for CVRD, a massive iron ore producer, some analysts have said.

Anyone with a stake in Noranda would also have a part of Falconbridge Ltd. (TSX:FL), which is 59 per cent owned by Noranda, and has valuable Chilean copper operations.

China MinMetals, a private Chinese company, has also been rumoured to be interested in Noranda, as has Xstrata, a global miner headquartered in Switzerland.

Kerry Smith, an analyst with Haywood Securities in Toronto, said Monday that if Brascan succeeds in selling Noranda, it might be at a lower price than desired.

"I don't see any huge compelling reason for anybody to buy unless the price is right, so it could be an underbid," said Kerry, pointing out that several of Noranda's refining assets, such as the Falconbridge Kidd Creek smelter and copper mine and Noranda's Horne smelter in Quebec, are very poor performers.

"This could be one of those situations where the actual bid that comes is not a bid that anybody likes, except for Brascan because it gets them off their position."

Kerry added that a sale won't necessarily be completed any time soon, as he predicts the metals market, which has buoyed Noranda for the past several quarters, will last for some time yet.

"And let's face it, no big company is going to come in and make a hurried decision to buy this," Kerry said.

"They're going to go on their own schedule, their own timetable, and when they get to the point where they're comfortable, if it takes six months or 12 months, great.

"If they can never come to an arrangement, then they don't do it."

Shares in Noranda (TSX:NRD) closed down 15 cents Monday at $23 on the Toronto stock market.

Brascan (TSX:BNN.A) lost 14 cents at $37.25.

© The Canadian Press, 2004


Showa Denko Files Suit Against Venezuela's Venalum (Update1)

July 12, 2004 (Bloomberg)

Showa Denko K.K., a Japanese aluminum smelter and maker of plastics and resins, filed suit in Venezuela to overturn a decision that would diminish its voice in how its Venezuelan joint venture aluminum company is run.

The lawsuit seeks to declare invalid a decision made at a shareholders' meeting for CVG Venalum, Venezuela's largest aluminum smelter, Showa Denko said in a faxed press release. Showa Denko and five other Japanese companies have a 20 percent stake in CVG Venalum, while Corporacion Venezolana de Guayana, Venezuela's state-owned heavy industries company, owns the remaining 80 percent.

The lawsuit centers on a June 21 shareholders meeting when the Corporacion Venezolana scrapped a clause in Venalum's articles of incorporation that requires the approval of at least 81 percent of shareholders for decisions on such matters as mergers and capital increases or reductions, Showa Denko said. A Venalum spokesman declined to comment, saying the matter was before the company's lawyers.

The lawsuit comes two year after Corporacion Venezolana de Guayana's stopped shipments of aluminum to its Japanese shareholders after the expiration of an agreement that gave Showa Denko and its partners preferential prices for as much as 90,000 metric tons of aluminum a year.

The two sides reached a new supply agreement in November 2002, averting a possible collapse of the 26-year joint venture. The contract expires in March 2006.

The lawsuit also comes as Venalum starts talks to expand its output. The company, which is currently producing 430,000 tons of aluminum per year, may add a sixth and seventh production lines, the spokesman said.

Tokyo-based Showa Denko took the action on behalf of the five partners. They are Marubeni Corp., Kobe Steel Ltd., Sumitomo Chemical Co. Ltd., Mitsubishi Materials Corp., and Mitsubishi Aluminum Co. Ltd.

Venezuela produces about 3 percent of the world's aluminum.

To contact the reporter on this story:
Mari Murayama in Tokyo at at mmurayama@bloomberg.net

To contact the editor responsible for this story:
Peter Hannam at phannam@bloomberg.net
Last Updated: July 12, 2004 16:35 EDT


Alcoa's Valco 'PolitRicks'

GhanaWeb, Ghana 12 Jul, 2004

.... Anxiety Expressed Over Impending Deal
Government's decision to acquire the 90% shares in Valco offered by Kaiser Aluminum Corporation of the U.S.A., at a time when it is busy offloading its stake in essential services such as water, energy, health and education, has been received with mixed reaction among analysts, industry watchers and civil society groups. Some as a bold and prudent move has described the deal, expected to be concluded soon, on the part of government. But others see it as nothing short of a double standard in government's policy posture.

Information available to Public Agenda, indicate that the government of Ghana has come into an agreement with Alcoa, the 10% shareholder in Valco, to operate the plant.

Under the agreement, it is anticipated that Alcoa will increase its shareholding in Valco and explore the possibility of developing Ghana's bauxite deposits. The deal, according to analysts, must be the greatest news to Alcoa this year. The company, which has since 2001, cut back its production by over 600,000 tons yearly, representing approximately 15% of its global plant capacity, due to rising cost of energy, labour, environmental management, and plant maintenance, is set to seize the opportunity to revamp its fortunes.

Alcoa must have been chosen as the natural ally because it is an existing shareholder, and the company must have gleefully embraced the opportunity, because it offers among other things, a secured market for its alumina produced from its global operations,secured source of aluminium, including Ghana's share,subsidised power price for aluminium produced,cheap off take of the Valco shares off-loaded by Ghana, Management and Technology transfer fee.

For Ghana, the deal holds good promise for the re-engagement of about 1000 employees of Valco laid off, following the closure of the plant, zero freight cost on metal sold to the Aluworks factory, andspells good prospects for the development of an alumina refinery that will use Ghana's bauxite.

There is some disquiet among some civil society activists, however, over Alcoa's sincerity about the exploration of bauxite deposits in Ghana, and the development of local alumina refinery.

The fear is borne out of the experience with Kaiser. It is recalled that the exploration of Ghana's bauxite deposits at Kibi, and Nyinahini were part of the initial agreement with Kaiser. The latter failed to honour that part of the deal, but sought to use its supposed intent to do so, as a bargaining chip in its negotiations with the government of Ghana over power price, prior to the shut down of the factory.

Alcoa, the largest aluminium producing company in the world, which acquired the 10% shares of Reynolds Metals in Valco some four (4) years ago, has over the period, acquired deeper knowledge of the bauxite deposits in Ghana from the BASCOL Feasibility Report of 1975.

Notwithstanding all the information (BASCOL Report, etc.), Alcoa has carried out a feasibility report on the development of an alumina refinery in Guinea, using its Guinea's large, rich bauxite deposits.

Further to that, Alcoa has gone ahead, as is normal in the industry to sign a Memorandum of Understanding (MOU) with Alcan on May 13, 2004, to develop 1.5million tons of bauxite processing per annum in Guinea. The International Finance Corporation (IFC) of the World Bank Group has been invited to participate in the new Guinea Alumina Refinery Project. The IFC will provide funds and sanitise the country risk of Guinea.

Industry reports indicate that two-thirds of alumina produced worldwide is consumed by the producers and/or their subsidiaries. Alcoa supplies approximately 45% of the balance of alumina traded in the free market in the industry. Analysts are all in agreement that expanding an existing alumina refinery reduces the investment cost per ton of alumina by as much as 40%. For this reason, a completely new alumina refinery was last built in 1984. Increases in demand for alumina over the twenty(20) year period have been met exclusively by expansion in installed plant capacities. It is noteworthy that a new refinery is under construction currently in Australia. Alcoa certainly needs a market for the alumina it is churning out, and Valco offers just that opportunity.

The questions that have raised doubts about the sincerity of Alcoa in exploring Ghana's bauxite deposits, and which need answering are: Why would Alcoa invest in another alumina refinery in Ghana, whenthe company is developing a new one currently in Guinea? And when the global alumina plant capacity is limited by primary smelter demand?

Again, why would Alcoa embark on such an expensive programme, when it can expand the Guinea project at 40% savings on investment cost? And when the Guinean bauxite deposits are the largest and richest in the world, with the technology and trained personnel to do the job?

It does appear from Public Agenda investigations, that Alcoa's motive for entering into the agreement with the government of Ghana is to obtain subsidisedenergy from Ghana in the production of aluminium,and create a market for its alumina, currently traded in the market.

In the medium-term and long-term, Alcoa would secure the market for its new refinery under construction in Guinea.

Ghana would then undergo the same frustration it went through with Kaiser in the past. It is to be recalled, that Kaiser signed an agreement with Ghana in the 1960s to build an alumina refinery in Ghana, to feed the Valco smelter. But the company directly and indirectly frustrated such an investment simply because it supplied the Valco smelter with alumina from its plant in Jamaica.

Developing an alumina refinery in Ghana, will amount to maximising the country's net benefit from the whole deal. It will enhance the development and growth of the Salt,Caustic Soda,Plastic Granules, and Cassava Starch industries in the country. It will also facilitate the reconstruction and rehabilitation of the Tema/Accra-Kumasi - Nyinahin railway infrastructure, and could providedirect employment to over 200,000 people, andindirect employment to approximately 1(one) million people.

Experts say the programme would generate foreign exchange in excess of US$300million per year, and contribute about 10% to the GDP.

If the deal is sealed as it stands, Ghana will end up subsidizing Alcoa's electricity bill by US$40million a year. If added to this, Alcoa fails to develop a local alumina refinery, as Kaiser did, the country would have lost out miserably, and missed the opportunity for developing an integrated aluminium industry, with the capacity to inject some momentum into the country's national development strides.


Alcoa ups flat-rolled contract prices

Purchasing.com 7/12/2004

Alcoa Inc., the world's largest aluminum maker, has raised list prices by 5% on contract orders for 2000 and 7000 series sheet and plate product prices, by 10˘/lb and on 6000 series sheet and plate product prices. The price increases will be effective with orders received on or after July 8 or orders ready for shipment on and after Aug. 2, regardless of order entry date. Alcoa says all existing contracts confirmed before July 8 will be honored.

-Tom Stundza, executive editor


Alcan delay on refinery

South Australia Advertiser, Australia 13jul04

By Nigel Wilson

ALUMINIUM giant Alcan has delayed a decision on committing to the $1.5 billion Gove Alumina refinery expansion in the Northern Territory.

The company has also "de-linked" the start-up of the project from the $500 million development of the Blacktip gas field in the Joseph Bonaparte Gulf.

At the same time, the Territory's Northern Land Council has applied for Federal Government assistance to take equity in the $500 million pipeline that would bring gas from Blacktip, 250km southwest of Darwin, to Gove.

The delay is causing some concern in the Territory but project proponents say they hope the three developments will be operating in 2007.

Canadian-based Alcan bought Gove Alumina in December when it paid $US5 billion ($6.8 billion) for French rival Pechiney.

The planned expansion of Gove would result in its annual alumina output rising from about 2 million tonnes to 3.5 million tonnes.

Last month Alcan project director Ken Spicer told the NT Government the company expected a proposal on the Gove expansion to go to its main board in July.

But an Alcan spokesman yesterday said that timeframe had been abandoned.

He said the project team had yet to finalise numbers and, without firm costs, there was no basis on which to take the project to the company's board.

The spokesman said Alcan had accelerated the process of expanding Gove and there was now a project team of about 200 people working on the plan in Brisbane.

"I don't think the delay is going to be long. It might only be a month or so before we're ready to go before the board," the spokesman said.

On the current plan the expanded refinery will initially operate on oil.

This is because of delays in determining the precise route of the Trans Territory pipeline - a joint venture of Alcan and the Blacktip partners, Woodside and the Italian oil and gas group, ENI.

The spokesman said it was considered unlikely that Blacktip gas - which was Alcan's preferred fuel for the expansion - would be available in time for the plant's planned start-up.

"We're committed to gas for its environmental and cost benefits but we have used oil for 30 years at Gove so the lack of gas initially will not be a problem," he said.

Woodside moved quickly yesterday to again reject fears the Blacktip reserves were insufficient to meet its commitment to supply 40 petajoules of Blacktip gas each year to Gove.

"We continue to work to bring Blacktip gas on stream at the earliest opportunity within the timeframe dictated by Alcan," a Woodside spokesman said yesterday. "We should still be able to deliver by 2007."

Because of the Territory's wet season, a 30-member survey team only resumed work last week on defining a route for the 950km pipeline between Wadeye, where the Blacktip gas is planned to come onshore, and Gove.

Project sources confirmed yesterday negotiations were continuing over the the plan by the Northern Land Council to take equity in the pipeline.




Alcoa to cut production again

JBoston.com July 13, 2004

PITTSBURGH -- Alcoa Inc. will cut production by a third at a Quebec aluminum smelter that has been beset by labor problems for the past week, the company said Tuesday.

About 1,800 workers represented by the Syndicat des Employees de l'Aluminerie de Becancour went on strike

Alcoa will cut production at two potlines over the next three days, which would amount to a reduction of about 135,000 metric tons annually, the company said.

The Becancour aluminum smelter in Quebec is one of 27 smelters operated by Alcoa, which has a total smelting capacity of about 4 million metric tons per year worldwide.

"We're doing what we can to minimize the impact of this particular situation," said Alcoa spokesman, Kevin Lowery. "We put together a contingency plan once we knew there was a possibility of a strike at this facility."

Alcoa shares rose 2 cents to close at $32.19 in trading Tuesday on the New York Stock Exchange.


Alcoa Deal With RusAl Put on Hold

Moscow Times, Russia Wednesday, July 14, 2004. Page 5.

By Simon Ostrovsky Staff Writer

Anti-monopoly authorities have put the brakes on Russian Aluminum's sale of an estimated $250 million in industrial assets to Alcoa, the American conglomerate said Tuesday.

The Federal Anti-Monopoly Service has demanded additional information on Alcoa's business plan, the company said.

"We are in the process of supplying that information as we speak," Kevin Lowery, an Alcoa spokesman, said in a telephone interview from company headquarters in Pittsburgh.

RusAl, part of Oleg Deripaska's industrial empire, agreed in May to sell two production units, in Samara and Belaya Kalitva. The deal was expected to be closed by June 30, but anti-monopoly authorities have pushed back that date.

"We'd hoped to get it done sooner," said Alcoa spokesman Jake Siewert, speaking from New York. "It might take a while to sort out this issue."

Anti-monopoly authorities have also demanded information from RusAl, the domestic aluminum giant said.

"RusAl has supplied the anti-monopoly service with the information it requested," company spokeswoman Yevgenia Harrison said.

Anti-monopoly service spokes-woman Irina Kashylina said the service had "no comment" on the matter.

Analysts estimate the purchase to be worth $250 million. It must be approved by anti-monopoly authorities in the EU, the United States and Russia.

If it goes through, the deal would be one of the biggest acquisitions of a Russian industrial asset by a foreign firm.

The real reason for the deal's delay is that the government is jittery about selling foreigners a factory that produces aluminum used in fighter jets, Kommersant reported Tuesday, citing sources within the anti-monopoly service.

"The issue is being decided on the state level," the source was quoted as saying. "[The units] are world-class strategic assets."

The service denied the veracity of the report in a statement Tuesday.

"The Federal Anti-Monopoly Service did not give the press any information in relation to this affair," it said.

Alcoa spokesman Lowery called the Kommersant report "a complete fabrication."


Ecowas Declares Support for Bauxite Mining At Kibi-Atiwa - Minister
Ghanaian Chronicle (Accra), July 13, 2004
Joseph Coomson

THE MINISTER of Regional Cooperation and NEPAD, Dr. Konadu Apraku, has said that the Economic Community Of West African States (ECOWAS) has recommended that member states should jointly undertake the processing of the huge bauxite deposits in Kibi-Atewa and Nyinahin to supply raw materials for the Aluminum Smelting factory in Tema (VALCO) and the Aluminum Smelting Company at Ikot-Abasi, in Nigeria.

The Minister said this in a speech read on his behalf by the Chief Director of the ministry, Mr. James Quarshie, at the second day of the sixth West African International Mining and Power Conference in Accra last Thursday with the theme, "Integrating Mining into the Economies of West African States: pooling power-generating resources".

This statement has confirmed the suspicion that the government would go ahead to concession the Kibi-Atiwa deposit of bauxite on which the Atiwa Forest sits, even though the Okyenhene, Osagyefo Amoatia Ofori Panin II, has said that the cost benefits analysis does not support the mining of the bauxite deposit in his traditional area and that he will oppose any attempt by government to exploit it.

It is believed that the proposed $2 million investment to mine the Atiwa Range bauxite deposit would create employment and bring up the development of the area reducing poverty drastically.

Touching on regional cooperation, the Minister said despite the many regional protocols, agreements signed by heads of state in Africa and the spirited efforts that had been made in the past to facilitate trade, progress at integrating African economies had been very slow.

Dr. Apraku said Africa had not yielded the expected results, as the continent still remained the slowest growing region in the world contributing only one percent of World Trade.

According to the Minister, a World Bank Report prepared in the early 90s put the annual Gross Domestic Product (GDP) of the whole of Africa at US$135 billion, which was equivalent to the GDP of Belgium, a small European Nation of 10 million people.

"The trend has not changed significantly even today," Dr. Apraku stated.

Making known the reasons for the current situation, Dr. Konadu Apraku said that the weakness of institutions charged with the implementation of the regional integration process was one.

He continued, "The capacity for monitoring and executing agreements and protocols is weak at both the national and regional levels.

But we know that whatever good policies we put in place, we would not get the desired results if we do not implement these policies faithfully."

He recommended an efficient mechanism must, therefore, be put in place at the national level to ensure the speedy implementation of commonly agreed decisions.

He was, however, happy to note that some countries had already established national bodies for the planning, coordination and follow-up of the diverse decisions and measures taken at the regional level. Indeed, specific ministries of Regional Integration have been set up in countries like Nigeria, Niger, Benin, Cote d'Ivoire, Burkina Faso and Ghana.

He said these Integration Ministries were expected to coordinate the activities of all departments and agencies connected with the integration process in their countries.

They are to oversee the establishment and effective functioning of inter-ministerial committees, which should not just meet regularly, but also ensure that regional plans and objectives are integrated into the development plans and budgets of the various member states.

However, the minister said it appeared that efforts in human capital development had been marginalized, although human resource development and the building of administrative, technical and research capacities were fundamental in any strategy to promote regional cooperation.

The chairman of the Energy Commission, Mr. A. E Quayson, chaired the session.

The conference attracted all the big mining companies in the world, including AngloGold Ashanti, Newmont and Gold Fields and representatives from ECOWAS.

Speaking to The Business Chronicle, the Public Relations Manager of Gold Fields Ghana, Dr. Tony Aubynn said that the company's objectives for attending the conference had been met.


FG Aborts Privatisation of Alscon

AllAfrica.com, Africa July 13, 2004

Daily Champion (Lagos)

Lagos

THE Federal Government has aborted the privatisation of ALSCON following the inability of BFIG Group of America to meet the deadline for payment.

The company had up to midnight of July 5 to pay 10 per cent of the bid price but failed to do so.

BFIG had won the bid for the acquisition of 77.5 per cent Federal Government shares at the opening of the financial bids on June 14, with its 410-million-dollar offer.

The Bureau of Public Enterprises (BPE) conveyed the approval of the Federal Government to BFIG in a letter dated June 17.

The company was informed that it had 15 per cent of the bid price.

A statement issued from BPE said negotiations for execution of the Share Purchase Agreement (SPA) was postponed from June 18 to June 21 at the instance of BFIG.

"However, after the final agreement was reached following negotiations which held subsequently, BFIG was not available to sign the SPA", the statement said.

It noted that on July 8 BFIG applied for 10 working days extension to enable it to pay up the required sum, but that the application was turned down by the government.

"The consequence is that BFIG has defaulted in payment and that marks the end of the transaction", the statement said.

It added that the Federal Government would in due course announce how the privatisation of ALSCON would be consummated.

It would be recalled that RUSAL, the Russian aluminum group, which was the only competitor, was disqualified for submitting a "conditional bid".

Mr. Akin Kekere-Ekun, Chairman, Technical Committee of the National Council on Privatisation (NCP), who presided over the exercise, said then that RUSAL was disqualified because it submitted a conditional bid, which was against international law.

"Laws are made to be obeyed, you do not accept a conditional bid", he said.

He also said that BFIG which had offered 280 million dollars in the first round of the bidding, before jerking it up subsequently, could not be declared as the preferred bidder.

"This is because its revised bid price fell below the Council's reserve price for ALSCON", Kekere-Ekun.

He, however, said that BFIG was qualified to be taken to the NCP, which has the authority to either accept or reject its bid price.

If rejected, the enterprise would be readvertised for sale, Kekere-Ekun had said.

He also remarked that the success of any transaction depended on payment by the preferred bidder.


GAPCO Signs Multi-Year Partnership With Honeywell
PR Newswire (press release) July 13, 2004
Automation Project Will Enhance Operator Effectiveness, Optimize Performance
and Maximize Refinery's Uptime
TORONTO, July 13 /PRNewswire-FirstCall/ -- Global Alumina Products Corporation (GAPCO) (TSX Ven: GPC.U) announced today that the corporation has contracted Honeywell (NYSE: HON) to complete a multi-year automation project for GAPCO's proposed 2.8 million tonne per annum greenfield alumina refinery in the Boke region of Guinea, Africa. GAPCO and Honeywell will partner immediately to begin the development and design of a technology solution to deliver all of the automated control systems for the alumina refinery.
"Honeywell is the proven global leader in designing and constructing automation systems for refineries and we are pleased to add them to our growing list of partners," said Bruce Wrobel, CEO of GAPCO. "The partnership with Honeywell give us a first-to-market advantage and cements our 12 to 18
month lead over our competition." Under the terms of the agreement, Honeywell will handle all of GAPCO's automation needs. Specifically, it will provide the leading-edge process automation solution, Experion(TM) Process Knowledge System (PKS) and one of its principle applications, Business.FLEX(R). Honeywell's technology solutions will maximize the refinery's uptime, enhance operator effectiveness and optimize plant performance. In addition to PKS, Honeywell will develop a training simulator to train GAPCO operators on the specific control systems of the refinery in advance of operational start-up. "As global demand for aluminum continues to rise, it is essential for GAPCO to make the most of its resources," said Jack Bolick, President of Honeywell Process Solutions. "Honeywell has the experience and refining expertise to support GAPCO in its quest to be one of the world's lowest cost and highest quality alumina producers."

Staff Strike At Indal Likely To Hasten Kochi Plant Closure

Financial Express, India Thursday, July 15, 2004 at 2351 hours IST

KOCHI, JULY 14: The strike by the employees at Aditya Birla Group’s Indian Aluminum Company (Indal) could actually accelerate the plant’s closure. The group, it may be recalled, has been contemplating closure of its Kerala operations owing to a high power bill.

The ‘most untimely strike’, according to a section of the trade unions would be reason enough for closure. The July 19 meeting called by the state labour minister could not yield much given the run-up to the strike, they say. During the meeting called by the labour commissioner on June 24 it was suggested that a reconciliation meeting be convened before taking the extreme step but it was rejected outright by certain union leaders who felt the strike should lead the talks.

Come August 1, it will be a year since the company closed down its main operations, unable to bear the hiked power tariff. It closed down its smelter division on August 1, 2003, and surrendered 25 mw power to the Kerala State Electricity Board (KSEB). It closed down its carbon plant in October and was running its casting plant with material brought from outside and its extrusion plant.

As part of the closure of the main operations, the company had issued stay-home notices to 327 of its workers who continued to receive their salary at home. However, since July 1, workers at the extrusion plant decided to go on an indefinite strike demanding higher wages and entering into a new wage settlement which had been long due. With remaining miniscule operations also coming to a standstill, the management served ‘stay-at-home’ notices on 103 staff.

The company whose power bill accounted for 60 per cent of its production cost has been contemplating shutting down its Kerala operations ever since its attempts to draw power from outside have met with little success. The company had created history eight months ago when it received the Kerala electricity tariff regulatory commission’s nod to source power from outside. The order was received based on Indal’s talks with Power Trading Corporation which had then offered it power at Rs 2.50 per unit. Even after paying KSEB wheeling charges of 42 paise per unit, the total cost would have come to around Rs 2.93 per unit.

New findings by scientists demonstrate changes in the way aluminium is manufactured

Jobwerx, WA -July 14, 2004

Manufacturing News Center

Synopsis: New insight into aluminium

With a can, the aluminium being processed has the shape of a cylinder and is deformed. From the bulk form it goes through a process of annealing to get the shape of the can. The grains grow in bulk during the annealing process.

There was always an understanding that the grains grow smoothly and in a regular shape. The science team from Risř National Laboratory in Denmark and the ESRF in Grenoble, France, however have achieved measurements that go into the bulk, which has a very different structure than the surface. The experiment is a real breakthrough in the field, since previous studies on metals have tended to be in 2D, and focused just on the surface. Measurements were done using the 3D X-ray diffraction microscope at the ESRF.

The sample had a pre-annealing period of one hour at 260°C. Afterwards, it was put in a furnace that rose the temperature from 270° C to 290°C.

By identifying this new behaviour, aluminium processors and packagers can now work out how to best process the material to achieve certain properties, such as more strength. The experiment, say scientists, offers industry a new insight into this metal. The results have been published in the journal Science.

A movie was made by researchers where 73 snapshots were taken of the grain during almost 30 hours. One can clearly see the irregular growth of the grain in a micrometre spatial resolution.

The discovery is of importance to the food and beverage industry because usage of aluminium in packaging has been increasing in recent months.

The technique developed at the ESRF is non-destructive and can also be used to determine the microstructures of other metals, ceramics or polymers in a spatial resolution of micrometres and a time resolution of minutes.

In packaging, aluminum foil is essential for its characteristics of strength, formability and barrier properties. This makes it a formidable part of many flexible packaging and container applications.

Qld grabs bauxite reins

Brisbane Courier Mail, Australia 15jul04

By Richard Owen

THE Queensland Government plans to drill and prove up a the world-class bauxite resource at Aurukun, on Cape York Peninsula, itself rather than risk handing former leaseholder Alcan Inc any advantage over rival bidders.

A geologist has already been employed to start planning, but the costly exploration program could still take a year or more to complete given the wet season's intrusion and the need to negotiate access for drilling with the traditional Aboriginal land owners.

State Development Minister Tony McGrady, who has responsibility for taking the project forward, said no budget had been set for the taxpayer-funded exploration program."But we will recover the costs through the cash bid (for the mining lease)," he said."If it costs $15 million then obviously that would be chicken feed in the overall scheme of things."

Nevertheless, the move is highly unusual, and follows the controversial enactment of special legislation in May to revoke a mining lease over the $10 billion deposit which had been held for 28 years by Aluminium Pechiney Holdings – now a unit of Alcan.

Alcan, which inherited significant geological data on the 500 million tonne deposit from Pechiney, tried unsuccessfully to deter the Government by committing to spend $15 million on a fast-tracked feasibility study which was to have taken two years to complete.

The Government decided to press on to try to expedite development through an international tender process requiring all bidders to build a $1 billion-plus alumina refinery, as well as a mine, to process the bauxite.

But this would still have left Alcan in the box seat with data unavailable to other bidders, prompting the Government to undertake its own exploration work.

However, a highly placed industry source said the Government might have achieved a similar outcome at no expense by demanding that Alcan make the lease and all its exploration and feasibility data available to third parties if it then decided not to commit to development by an agreed date.

Premier Peter Beattie, who detailed the exploration plan and indicative tender time-table before departing on a trade mission to China, said Queensland wanted to optimise the economic, social and financial outcomes from development of the resource which could be worth more than $10 billion.

However, the Government held insufficient information about the deposit to enable interested parties to determine the value of the deposit, development opportunities and economic viability.

"The Government is therefore prepared to undertake a work program, in close consultation with industry and the traditional landowners, to prove up the quantity and quality of the resource," he said. "This approach will provide data that can reasonably be relied upon by bidders and avoid individual bidders having to undertake their own explorations prior to submitting a binding bid. The work program will involve drilling and assaying."

The bid process, expected to attract a number of offers from China and other nations, will start with a registration of interest later this year from credible industry participants who would then be invited to submit expressions of interest, demonstrating their technical and financial capability to develop the resource, and join an industry reference group.

"While this is likely to occur towards the end of the exploration program, a final decision on timing of a call for EOIs will be taken by government having regard to the considered views of the industry reference group," Mr Beattie said.

Some bidders would be shortlisted and asked for a detailed binding bid that could lead to an agreement to develop the resource.

"These agreements will document the rights and obligations of each party and will be binding on the parties," he said.

Stress fractures show in Alumina takeover

The Age, Australia July 15, 2004

By James Chessell ,Sydney

Ongoing concerns about the health of Chinese aluminium smelters continue to dog Alumina and are also expected to stifle the chance of a takeover bid for the Melbourne miner.

Alumina shares closed 10˘ lower yesterday at $5.37. The stock has slipped more than 3 per cent in the past week as alumina prices dropped to a seven-month low after Chinese smelters cut production because of electricity shortages.

The price of alumina has dropped 30 per cent in the past two months amid concerns about a combination of poor profitability at Chinese smelters and poor-quality product.

But other analysts suggest the market was too concerned about the short term.

"We reiterate our view that any Alumina share price weakness (driven by Chinese spot alumina market anecdotes) is a case of misinformation," said Deutsche Bank. "Continued strong Chinese demand growth for aluminium (is) positive for global aluminium prices and therefore for Alumina as a result of its alumina (contracts)."

The price falls follow lower than expected second-quarter earnings by aluminium giant and Alumina partner Alcoa, which led some analysts to moderate expectations of a strong first half for Alumina.

Earlier this week, Macquarie Equities cut its first-half earnings forecast by 12 per cent to $158 million. It expects $172 million in the second half. The broker's full-year forecasts of $330 million are slightly below the 2004 consensus estimate of $336 million.

Alumina's sole asset is a 40 per cent stake in the Alcoa World Alumina and Chemicals joint venture.


Military Concerns Derailing Alcoa Deal

Moscow Times, Russia Friday, July 16, 2004. Page 5.

By Maria Golovnina

Reuters Russia could take months to decide whether to let Alcoa take over the country's two biggest aluminum-fabricating plants because they may be making sensitive military materials, state and defense industry sources said Thursday.

When U.S.-based Alcoa, the world's biggest aluminum producer, announced in May that it would buy controlling stakes in RusAl's Samara and Belaya Kalitva plants, it had expected the deal to be done by June 30.

A Russian government source close to the case said it could take a long time, however, until a final decision is made.

"It's a sensitive issue. It might take months," the official said.

Alcoa said Russian authorities had asked it for more information about its business plan for the plants.

"This is going through the review process. ... We try like the dickens not to get ahead of the government agencies that are involved in this," said an Alcoa spokesman in the United States.

"We would like it to happen sooner rather than later, but we will continue to help facilitate the review process," he added, but provided no details on the review.

Russian media reported this week that the Federal Anti-Monopoly Service had frozen the sale, but the anti-monopoly body denied the reports. Alcoa said the deal was on track.

RusAl, Russia's biggest aluminum maker, said the June 30 date had always been a flexible deadline.

Russian defense industry executives, speaking on condition of anonymity, said that production at one or both of the plants was linked to air defense.

"We are talking about parts and certain important alloys used in military aviation," said a high-ranking official in one of Russia's biggest state-owned defense companies.

"There are fears among warplane makers that if the Americans get ahold of the plants, they might stop producing those materials altogether."

Alcoa said such fears were groundless.


State Guarantees $200M of SUAL's Komi Project

Moscow Times, Russia Friday, July 16, 2004. Page 5.

The government Thursday guaranteed $200 million for noncommercial risks of aluminum company SUAL's major construction project in the Arctic, showing its approval of the company's expansion plans.

SUAL needs $2.1 billion to finance the project in the Komi republic, including construction of a bauxite mine, aluminum refinery and a smelter.

SUAL is seeking a foreign partner for the project and started talks last September with Alcoa, the world's biggest aluminum maker. Paris-based Pechiney had discussed the Komi smelter with SUAL before Canada's Alcan bought the French company in February to form the world's No. 2 aluminum maker.

"The government should lend a hand to big investors," Finance Minister Alexei Kudrin told a news conference after a government meeting. "These are guarantees against noncommercial risks such as changes to legislation, terrorist acts or wars."

The government regularly provides guarantees to projects worth more than $500 million, Kudrin said. "Investors should be confident that the government will put its weight behind them in force majeure situations," he told reporters.

The guarantee was part of the government's foreign borrowing program for 2005.

SUAL's project includes boosting output at its huge Sredni Timan bauxite deposit to 6 million tons by 2008 from around 1 million tons in 2003.

It also envisages a new alumina refinery, due to open around 2008 with an annual capacity of 1.4 million tons of the intermediate product, and an aluminum smelter with annual capacity of up to 460,000 tons of aluminum per year.

SUAL, controlled by Renova, the holding company of billionaire Viktor Vekselberg, makes a quarter of Russia's aluminum as well as 63 percent of its alumina and 83 percent of its bauxite.


Alcoa plans talks to restart Wenatchee aluminum smelter

Oregonian, OR 15 Jul 2004

Alcoa Inc., the world's biggest aluminum producer, plans to hold talks with workers to restart its Wenatchee, Wash., smelter, idled for three years because of high power costs.

Talks were due to start Tuesday between officials from the Pittsburgh-based company and the unions, Alcoa spokesman Kevin Lowery said. He didn't say whether the smelter would reach capacity of 227,000 tons a year, about 0.8 percent of world production.

"Once we have a labor agreement, we will be in a better position to say where we are going," Lowery said.

Prices for aluminum, used to make aircraft, car bodies and beverage cans, are expected to rise 8 percent this year as stockpiles at warehouses monitored by the London Metal Exchange have fallen by a third, according to a median forecast of 16 analysts.

Alcoa closed the Wenatchee smelter in 2001 when a dry summer sent power prices to all-time highs, prompting the company to sell back its 150 megawatts of allocated electricity to the Bonneville Power Administration. Alcoa has negotiated a new power agreement with the Chelan County Public Utilities District and will get tax incentives from the state, Lowery said.

-- Bloomberg News

© 2004 The Oregonian.


Indian mineral deposits test miners

Wodonga Border Mail, Australia Fri, Jul 16, 2004

THE worlds largest diversified miner, BHP Billiton is in discussions with the Indian Government to access bauxite and alumina from its mineral rich eastern province.

BHP Billiton chief executive Mr Chip Goodyear yesterday said "interesting deposits" had been located in the countrys eastern state of Orissa.

But a group spokeswoman later said the eastern part of India had been identified by the group as a globally important mineral province.

"We have been in discussions with the government of Orissa for some time, however these are at a very early stage and no specific project can be announced," she said.

"We are using the same approach that was used at Mozal BHP Billitons part-owned aluminium smelter in Mozambique to ensure the highest business practices are followed."

Mr Goodyear told a business ethics conference in Melbourne yesterday the problem of accessing "hard to get at" deposits, like those at Orissa was going to become increasingly important for miners.


China bids for bauxite resources

The Australian, Australia July 16, 2004

By Andrew Fraser

CHINESE politicians have told the Queensland Government that Chinese companies will be bidding for the rights to develop the massive bauxite interests at Aurukun on Cape York.

French-based mining company Pechiney had held mining leases over the bauxite deposits since 1975, but it was stripped of them last year by the Queensland Government for failing to develop them.

Since then, Pechiney has been taken over by Canadian-based Alcoa, but the Queensland Government has pushed ahead with its plan to call for expressions of interest in developing the leases.

Only a few mining companies have the capability to mine the deposits. The "dark horse" has always been Chinese interests, which are keen to gain access to raw bauxite as demand in the country grows for light metals such as aluminium. Speaking from China last night, Queensland Premier Peter Beattie said the Minister for State Development, Zeng Peiyan, had told him China was interested in bidding for the rights to develop the resource.

He said a delegation from the China National Development Reform Commission, led by deputy director-general He Lianzhong and including vice-presidential executives from three of China's biggest resources groups, would come to Queensland next week to inspect the bauxite deposits as part of the surveillance process.

Mr Beattie also signed a three-year memorandum of understanding making Queensland and its resources sector a preferred destination for major Chinese investors.

Earlier this year analysts from Deutsche Bank claimed Chinese interests were more likely to pick up the bauxite deposits than any of the established cartels, mainly because the high price of alumina meant it was not in the interests of the major aluminium producers to chase access to the bauxite reserves. The briefing said "there is no clear rationale for BHP Billiton, Rio Tinto or AWAC to be interested in this deposit".

It said "a top-of-cycle greenfield bauxite-alumina expansion is not in the interests of these players".

The Queensland Government was strongly criticised by the Liberal Opposition in Queensland yesterday for getting "very close" to Chinese interests that wanted access to the deposits.

Russian exports of aluminum recover after end of tolling

Russia Journal, Russia July 16, 2004

By John Helmer

MOSCOW - Growth of Russian exports of aluminum has been faster this year than output at the smelters, or shipments through the main ports, according to the most recent data released by the Federal Statistics Agency. For the five months to May 31, Russia exported 1.7 million metric tons of aluminum to non-CIS countries, the agency -- also known by its Soviet-era acronym as Goskomstat -- said in a recent statement. This volume appears to have been 35 percent higher than in the same period of 2003, but this is not substantiated by either smelter production or port shipment figures.

The principal Russian aluminum producer, Russian Aluminum (Rusal), has yet to issue its first-half results; in the first quarter it reported that primary aluminium output grew by 6 percent to reach 665,000 tons. Siberian Ural Aluminium (SUAL) released its June 30 results this week, indicating that its output had grown by 4.3% to 459,200 tons. Most of this metal is exported, and as production of semi-fabricates and foil was falling at Rusal, export volume of primary metal looks certain to have risen, year on year. Stockpiles of aluminum were accumulated by Rusal in 2001-2002, and then exported in 2003, but there is no sign of similar stockpile exports this year.

At the main Russian ports for aluminum shipments, sources said they had seen evidence of growth, but nothing like the 35-percent figure issued by Goskomstat. At St.Petersburg, where a breakdown of non-ferrous metals is not yet available, port sources said that in the first five months of the year shipments of all metals jumped by 12 percent. At Tuapse, on the Black Sea, a source reports a dramatic increase in steel exports, but aluminum volumes rose more modestly by 8 to 10 percent in the five-month period. May shipments of aluminum were up an estimated 8-10% compared to the March and April volumes. At Novorossiysk, Russia's largest port on the Black Sea, a source said that aluminum exports in the first quarter were below normal, but that there has been a recent recovery. He estimates that shipments in June were 8 percent up on the May volume, and "now the situation is back to normal."

In the Russian fareast, Vanino, on the Sea of Okhotsk, is the main gateway for aluminum exports, and imports of alumina. Rusal uses the port to ship its primary aluminum to the west coast of the US, as well as China, Korea, and Japan. According to port sources, Rusal shipments fell in the first quarter of the year by between 4 and 5%, but they have been recovering since then. "I can't provide you exact numbers," the source said, "but we [now] see a stable growth in aluminium shipments - 4% we predict for this month, and it was 3% growth in June, and 2.6% in May." The month-on-month growth produced what another Vanino source said was a second quarter gain of 7 to 8%, compared to the same period of 2003.

Customs officials refuse to discuss the apparent discrepancy between the apparent surge in outflow of aluminum, the fall-off in the January quarter, and and the lesser rate of growth reported since then. Rusal sources confirm that the growth was smaller than the Customs and Goskomstat claims, but they refuse to explain it.

Industry sources believe that the discrepancy between the reported volume of exports, according to customs declarations, and the volume of shipments through the ports is explained by the new Russian counting rule, introduced by law on January 1. On that day, shipments abroad of Russian aluminium could no longer qualify for tax privileges under tolling contracts that had earlier classified the metal as belonging to a foreign owner during its processing at the smelter. Tolled metal was thus not counted as an export until this year, the sources explain. The sources also claim that most of the metal shipped abroad according to tolling contracts came from Rusal. When the new regulation on tolling came into effect on January 1, it now appears that the physical volume of aluminum transported through the ports of aluminum fell. But by the March and June quarters, this has resumed its growth in line with the climb in production at the smelters.

Chalco May Bid for Australian Bauxite Lease, Queensland Says

Bloomberg July 17 2004

Aluminum Corp. of China, the world's second-largest alumina refiner, may bid for the right to mine bauxite in Australia, the Queensland state government said, helping to secure supply of a metal used in China's expanding auto and construction industries.

Xiao Yaqing, chairman and chief executive of Aluminum Corp., known as Chalco, held talks yesterday in Beijing with Queensland Premier Peter Beattie on a lease at Aurukun in northeastern Australia, the Premier said in a statement. The Queensland government will invite initial bids for the lease later this year.

Chalco would be the latest Chinese company to buy into an Australian resource project to help meet increasing demand for raw materials. Shanghai Baosteel Group Corp., China's largest steelmaker, in 2001 formed a joint venture with a unit of Rio Tinto Plc to mine an iron ore deposit in Western Australia. China is the biggest consumer of alumina.

The Chinese are ``very interested in security of raw materials supply,'' said Greg Dean-Jones, an analyst at AME Mineral Economics in Sydney. ``Australia is an obvious target, it's the largest and probably most diverse of the Asia-Pacific market's natural resource centers.''

Chalco shares rose 4.5 percent yesterday after China's economic growth unexpectedly slowed to 9.6 percent in the second quarter from a year earlier, boosting optimism there may be less need for an interest rate rise that might cause a sudden economic slowdown.

One or two other Chinese companies may bid for the lease, Beattie said in a telephone interview from Beijing. Montreal- based Alcan Inc., the world's second-largest aluminum maker, may also make an offer, he said.

Cans, Cables And Aircraft

Chalco senior vice president Luo Jainchuan, who has been assigned to head the project team, will travel to Queensland next week as part of a delegation representing Chinese organizations with an interest in the Aurukun lease, Beattie said.

China's alumina demand may rise as much as 20 percent in the next five years, according to Chalco's Xiao. Chalco Chief Financial Officer Chen Jihua declined to comment today.

Aurukun, on Cape York peninsula, holds an estimated 500 million metric tons of bauxite, a raw material for alumina and aluminum, which is used to make cans, cables and aircraft. China last year produced 5.4 million tons of aluminum, a fifth of the world total, to meet domestic demand for car panels, window frames and other products.

Aluminum Smelter

Beattie met Thursday with China Nonferrous Metals Industry's Foreign Engineering and Construction Co., which is to supply technology and equipment to Aldoga Aluminium Smelter Pty's proposed A$2 billion ($1.5 billion) aluminum smelter in Queensland, Steve Bishop, a spokesman for Beattie, said in an interview. China Nonferrous is also interested in Aurukun, he said.

The Aurukun bauxite deposits were formerly held by Alcan, which acquired the right to the deposits when it bought France's Pechiney SA in December. The lease was revoked by the Queensland government this year after Pechiney didn't build a plant to refine the deposits.

The response from Chinese companies ``has been very positive, there is a considerable amount of interest,'' Beattie said. ``I've explained that they obviously have to win on their merits in the same way that anyone else has to.''

Coal Projects

Alumina prices have fallen to a seven-month low after China's aluminum smelters, the world's biggest users of the raw material, curbed production because of electricity shortages. About four tons of bauxite is refined to produce two tons of alumina, which is smelted to produce one ton of aluminum.

Beattie also held talks this week with China Huaneng Group, which last December agreed to buy half of the Australian business of InterGen, which owns stakes in two power plants in Queensland.

``They were very enthusiastic about their investment and asked if there are any other opportunities available for them,'' Bishop said. Huaneng is interested in investing in power plants and coal mining projects, he said.

To contact the reporter on this story:

Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net

To contact the editor responsible for this story:

David Tweed at dtweed@bloomberg.net.

Rain Calcining plans $29-m expansion programme

To set up greenfield project in Kuwait

Business Line, India

Hyderabad , July 16

RAIN Calcining Ltd (RCL), the Hyderabad-based Rs 333-crore calcined petroleum coke and power producer, has drawn up major growth plans involving a total capital outlay of $29 million which includes setting up a greenfield project in Kuwait and expansion of its calcinations facility in Visakhapatnam.

After completion of these projects, the company hopes to secure a place among the top five global calcining majors. At present, its key customer regions include Australia, South America, South Africa and West Asia.

A senior RCL official told Business Line that for the two new projects, the company has tied up for funds with three leading multilateral financial institutions - International Finance Corporation (IFC), Washington ($10 million), Nederlandse Financierings NV of Netherlands ($12 million) and Nordic Investment Bank of Finland ($7 million).

The company proposes to expand the capacity of its calcination plant at Visakhapatnam from three lakh tonnes per annum (tpa) to 4.8-lakh tpa by adding a rotary kiln, a waste heat recovery boiler and a flue gas scrubbing and particulate removal system.

The official said the board at its meeting on Thursday had also decided to upgrade the existing calciner. The expansion and modernisation will be completed in the first quarter of next year. The board has approved the proposal to set up a new greenfield calciner project in Kuwait with a consortium of leading Kuwait companies and the company's US-based foreign collaborator - Oxbow Carbon & Minerals LLC.

According to the official, this region has long been sought after for calciner industry expansion due to its access to exceptional quality raw material and its existing and fast expanding aluminium production.

The official said the construction rights for the 3.5-lakh tpa Kuwait calciner project were awarded to this consortium through a bid process administered by Kuwait Petroleum Corporation, which would provide the entire raw materials, especially high quality aluminium grade green petroleum coke, for the calciner project. The construction of this greenfield project is expected to begin in the first quarter of next year and will be completed in 18 months.

Hydro to Expand Italian Aluminium Rolling Mill

PR Newswire (press release)

OSLO, Norway, July 16 /PRNewswire/ -- Hydro will upgrade its aluminium rolling mill in Slim, Italy, to meet customer demand for high quality products. The investment will strengthen Hydro Aluminium in Southern Europe and the company's position as the leading supplier of aluminium rolled products in Europe.

The investments will expand HA Slim's capacity by roughly 10 per cent to approximately 90,000 tonnes per year, and strengthen its capabilities to supply value added products for the heat exchanger, packaging and construction markets, where Hydro has competitive advantages. A new cold rolling mill will be replacing an existing, old mill and at the same time the existing hot mill will be revamped and logistics will be improved. Total investments are estimated to euro 49 million (NOK 410 million). The project will be completed during third quarter of 2006. The revamp of the hot mill will be carried out during the summer shut downs to minimise loss of production.

Other parts of the plant in Slim, notably the casthouse, the foil mills and finishing equipment have been modernised in the past few years. This new investment completes the modernisation of the entire value chain in Slim. HA Slim today has some 550 employees.

"Hydro has a leadership position in the European market," states Svein Richard Brandtzfg, president of Hydro Aluminium Rolled Products. "Slim forms a significant part of our strategy to improve product mix and maintaining a major share of the Italian market, the second largest in Europe".

"This investment will foster Slim's current market position and at the same time allow us to participate in future market growth", says Brandtzfg.

Hydro is a leading energy and aluminium supplier operating in more than 40 countries. Hydro is one of the worlds leading producers of offshore oil and gas, the third largest aluminium global supplier. Hydro's 36,000 employees create value developing solutions enabling customers -- and local communities worldwide -- to become more viable.

Alcan Rules Out Bid for Entire Corus Aluminum Unit, Figaro Says

July 17 (Bloomberg)

Alcan Inc, the world's biggest aluminum maker, ``definitely'' doesn't want to buy all of Corus Group Plc's aluminum business, though it may be interested in some assets, Alcan Vice President Daniel Gagnier said, according to an interview in Le Figaro newspaper.

Alcan, whose headquarters are in Montreal, also sees many ``growth opportunities, both internal and external,'' for its Paris-based packaging division, Gagnier was cited as saying.

Alcan bought France's Pechiney SA for about $5.1 billion in February. The Canadian company has since said it wants to spin off most of the combined company's rolling-mill assets to focus on making metal for packaging, aerospace and cars.

To contact the reporter on this story:

Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story:

Justin Carrigan at jcarrigan@bloomberg.net

Last Updated: July 17, 2004 07:02 EDT

UPDATE 1-SUAL says Alcoa may take part in its Komi project

Reuters Sat Jul 17, 2004 11:16 AM ET

(New story, adds Alcoa, quotes)

By Denis Pinchuk

ST PETERSBURG, Russia, July 17 (Reuters) - U.S.-based Alcoa (AA.N: Quote, Profile, Research) may join Russia's SUAL in its $2.1 billion Komi aluminium project in northern Russia, SUAL's chairman said on Saturday.

Viktor Vekselberg, chairman of the board of directors of SUAL Holding, said Alcoa would most likely take part in building an aluminium smelter there rather than an alumina refinery.

"Alcoa won't take part in the alumina project," he said, adding that Alcoa's participation largely depended on SUAL's signing of long-term energy agreements with Russian suppliers.

"No (energy) agreements have been signed yet but we are currently involved in very productive talks and will settle this issue soon," Vekselberg told reporters.

Alcoa officials were not immediately available for comment.

SUAL, which has to settle the energy issue with national utility RAO UES (EESR.RTS: Quote, Profile, Research) , had said before it was in talks on the project with several western firms, including Alcoa.

The Komi project includes construction of a new alumina refinery, due to open around 2008 with annual capacity of 1.4 million tonnes of the intermediate product, and a smelter with annual capacity of 313,000-460,000 tonnes of aluminium per year.

The project also includes boosting output at SUAL's huge Sredni Timan bauxite deposit to six million tonnes by 2008 from around one million tonnes in 2003.

Vekselberg also said SUAL had no plans to issue Eurobonds in the near future to finance various projects.

SUAL is mulling various options including an initial public offering (IPO), a Eurobond issue and a strategic partnership.

But recent remarks by its top management had suggested SUAL preferred a Eurobond, and as soon as 2005.

"We think market conditions are unfavourable. We won't return to this question before autumn," he said.

He also said SUAL and Britain's Fleming Family and Partners, a private group owned by the Scottish banking dynasty, had finished work on setting up a global mining firm, SUAL International.

Last year, SUAL and FF&P announced plans to set up the company and possibly place some of its capital on a western exchange. Vekselberg said FF&P had about five percent in the venture with an option to raise the stake to 23 percent.

Earlier, SUAL announced it had hired one of the mining industry's biggest deal makers, Brian Gilbertson, as non-executive director of one of its holding companies to help better position itself to tap global capital markets.

© Reuters 2004. All Rights Reserved.


Kaiser Aluminum Gets OK For Refinery Sale, Bid Rules

The Associated Press, Times Picayune 7/19/2004, 4:54 p.m. CT

By CHRISTOPHER SCINTA

WASHINGTON (AP) — Kaiser Aluminum Corp. (KLUCQ) received bankruptcy court approval Monday to sell an alumina refinery in Gramercy, La., and a minority stake in a Jamaican bauxite mine to a joint venture between Century Aluminum Co. (CENX) and Noranda Aluminum Inc., a statement from the company said.

The U.S. Bankruptcy Court in Wilmington, Del., approved the deal at a hearing Monday, a letter from Chief Executive Jack Hockema to Kaiser customers employees and suppliers said.

As reported, the Century-Noranda venture offered $23 million for the operations and Kaiser didn't receive any competing bids that would have spurred an auction process. The Gramercy refinery, along the Mississippi River, processes bauxite into alumina at a rate of about 1.25 million metric tons a year, court papers said. Alumina is refined from bauxite and smelted into aluminum.

Hockema's letter said the company expects to close the transaction later in the third quarter.

The court also approved Monday bid procedures for the proposed sale of Houston-based Kaiser's stake in Australia's Queensland Alumina Ltd. that sets the minimum bid for that auction at $525 million, the letter provided to Dow Jones Newswires said.

Bids are due by Aug. 10, with an auction planned for Aug. 16, the letter said. Kaiser plans a reserve auction, meaning the seller asserts the right to pull the offered property off the table if a minimum price isn't met.

Under contracts involving the operation, Comalco had first rights to try to buy the Australian venture stake, once Kaiser Aluminum decided to sell, the company has said.

Kaiser has been selling off its commodities business in pieces over the last several months, recently completing the sale of its stake in Aluminum Partners of Jamaica to then-joint venture partner Norsk Hydro ASA (NHY) for $331 million.

Kaiser Aluminum listed assets of $3.3 billion and debts of $3.1 billion in its Chapter 11 bankruptcy petition. The company — a producer of fabricated aluminum products, alumina, and primary aluminum — blamed its financial difficulties on rising retiree and asbestos costs and a weak aluminum market.

Copyright 2004 The Associated Press.


Smelter on cards for Ngqura port project

Business Report, South Africa July 20, 2004

By Samantha Enslin

Port Elizabeth - The industrial development zone (IDZ) adjacent to the Port of Ngqura will have an aluminium smelter once finer details of the project have been worked out.

Alec Erwin, the minister of public enterprises, said yesterday at the inauguration of the Port of Ngqura's tidal basin: "In regards to the Alcan smelter we continue to negotiate on a reconfigured project. We will no longer be using AP 50 technology but will use AP 35 technology."

Alcan, the Canadian aluminium group, inherited the Ngqura smelter project after its acquisition of French group Pechiney, which first mooted the smelter near Port Elizabeth. Doubts have been raised as to whether Alcan would pursue this project in light of ventures it is pursuing elsewhere in the world.

"There will be a smelter in the IDZ, of that we are clear ... [but] we still have to absolutely clinch that smelter," Erwin said. "I am confident there will be a smelter."

He said talks with Pechiney and subsequently Alcan had been going on for three years.

The deep-water port of Ngqura, which will be operational in the third quarter of next year, is designed for 4 500 twenty-foot equivalent unit (TEU) vessels but can accommodate up to 6 500 TEU vessels. The port will be able to accommodate vessels up to 80 000 deadweight tonnage. The construction of the port has created 2 500 jobs.

Phase one of the Port of Ngqura will have five berths, of which two will be containers berths and three bulk cargo berths.

The Coega Development Corporation, the National Ports Authority (NPA) and the government are now hard at work to attract industry to the IDZ and cargo to the port in order to recoup the R3.2 billion investment.

To date no industry has signed up for space at the IDZ and the NPA is still in talks with various businesses to lease space at the port.

"We are speaking to a number of entities to take up areas in the port. There is space for liquid bulk and tank farms," said Siyabonga Gama, the chief executive of the NPA.

"We are planning to bring iron ore from Sishen as the Port of Saldanha can only take 38 million tons per annum. We are currently talking to Kumba," Gama said.

Railway lines are being upgraded to handle heavy cargo.

It has been decided that the liquid import facility at the Port Elizabeth port be moved to Ngqura. These are expected to be operational in 2008 while manganese will be relocated in the next two to three years.

Gama said it was a possibility that the private sector could be appointed to operate the terminal. "We will make a decision early next year."

The container terminal at Ngqura is being developed as a regional pivot port that will also serve as a transshipment hub for the east and west coasts of Africa.


Alcan expansion green light

Ninemsn, Australia Tue Jul 20 2004

Canadian aluminium giant Alcan has been given the environmental green light for its proposed $1.5 billion alumina refinery expansion in the Northern Territory - subject to tough conditions.

The NT government on Monday said it had placed stringent conditions on the massive expansion, including the development of a social impact study.

The decision follows a seven week public consultation period, with nine submissions received.

"The EIS (Environmental Impact Statement) and public comment were thoroughly reviewed by the Office of Environment and Heritage who prepared a comprehensive assessment report containing 29 recommendations," NT Environment Minister Marion Scrymgour said.

"The Office of Environment and Heritage has concluded that the environmental issues associated with the Alcan expansion have been adequately identified, and the expansion can be managed in a way that avoids unacceptable environmental impacts.

"After closely assessing the Environmental Impact Statement I am pleased to announce that Alcan's proposal can proceed subject to implementation of all commitments, safeguards and recommendations set in the EIS and assessment report."

Alcan wants to increase alumina production at the plant, at Gove in East Arnhem Land, from two million tonnes to 3.5 million tonnes per year.

The move is expected to create up to 1700 jobs during the three-year construction phase.

Ms Scrymgour said the strict conditions relate to the ongoing management of potential social impacts on surrounding areas, continued respect for the cultural heritage of the area's traditional owners, the Yolgnu, and ongoing environmental issues.

The recommendations have been passed onto NT Mines and Energy Minister Kon Vatskalis, who is responsible for regulating the Gove refinery.

"I expect these recommendations to be taken up in the Mining Management Plan which needs to be approved before the expansion can proceed," Ms Scrymgour said.

The board of Alcan is yet to grant final approval for the planned expansion.

©AAP 2004


$1b Alcoa expansion back in melting pot

Melbourne Herald Sun, Australia 20jul04

Danny Buttler

A CONTROVERSIAL expansion of Victoria's largest aluminium smelter is closer to reality with a heavyweight ministerial panel investigating the proposal.

State Treasurer John Brumby, Environment Minister John Thwaites and Energy Minister Theo Theophanous will meet within weeks to look at a possible $1 billion development plan at Alcoa's Portland smelter.

While any expansion would provide an economic boost to Victoria, the proposal for a third "potline" at the plant has raised concerns about an escalation of Victoria's greenhouse gas emissions.

Alcoa is Victoria's largest exporter, but relies on heavily subsidised electricity to feed its giant smelters.

An additional potline at Portland could increase annual production from 330,000 tonnes to more than 500,000 tonnes.

A State Government spokesman said the panel would closely investigate the development at the Portland plant.

"The environment would be a big consideration, as would the economic considerations," he said.

Environment Victoria and the State Opposition yesterday claimed any decision on expansion would test the Government's environmental credentials.

Darren Gladman from Environment Victoria said Alcoa already used up to 25 per cent of the state's power and would need to source additional power from greenhouse-friendly sources.

Opposition environment spokesman Phil Honeywood said any rise in greenhouse gas emissions would be a blow to the Government's credibility on its pledge to fight global warming.

Alcoa spokeswoman Paula Benson said any decision on developments at Alcoa would still be a long way off.

Alcoa to spend US$130m in Brazil

AP Jamaica Observer, Jamaica Wednesday, July 21, 2004

Alcoa Inc will spend US$130 million to increase capacity at its Alumar division aluminum smelting plant in northeastern Brazil, the company said yesterday.

Construction at the company's Sao Luis plant will start immediately and should be completed by the third quarter of 2005, increasing smelting capacity to 433,000 metric tons from 370,000 tons. Sao Luis is about 2,250 kilometres (1,400 miles) northeast of Sao Paulo.

Alcoa, the world's largest aluminum producer, also said it will decide later this year whether to spend US$350 million to develop the Juruti bauxite reserve in the jungle state of Para, about 2,450 kilometres (1,520 miles) north of Sao Paulo.

GAPCO Enhances Management Team With Addition of Three Industry Veterans

PR Newswire (press release) 7/20/04

Closes Acquisition of Aluminpro Aluminium Industry Professionals

TORONTO, July 20 /PRNewswire-FirstCall/ -- Global Alumina Products

Corporation ("GAPCO") (TSX-V: GPC.U), a company that proposes to produce alumina for sale to the global aluminum industry, announced today the appointment of three industry veterans to its senior management team. Bernie Cousineau will serve as President and Chief Operating Officer of GAPCO, Ian Porteous as Senior Vice President and Chief Technology Officer and Frank Donohue as Senior Vice President, Construction and Engineering.

"With Bernie and Ian's combined 70 years of aluminium industry experience and Frank's more than 30 years of power industry experience, GAPCO is establishing a senior management team who will ensure the company's success as it moves from developing to operating its 2.8 million tonne per annum greenfield alumina refinery in the Boke region of Guinea, Africa," said Bruce Wrobel, CEO of GAPCO. "The addition of these industry leaders underscores the significance of GAPCO's project." As GAPCO's President and Chief Operating Officer, Mr. Cousineau will be responsible for the oversight of the refinery development and future operations. Mr. Cousineau has more than 30 years of experience in the aluminum industry, and prior to joining Aluminpro he served as President and Chief Executive Officer of Alcan Jamaica, where he managed the integrated operations of two alumina refineries, two bauxite mines and the rail, port and related infrastructure. Mr. Cousineau also worked for six years as the plant manager of the Aughinish Alumina Refinery in Ireland, a refinery that processes bauxite from the CBG mine in Guinea. Ian Porteous, also an aluminum industry veteran, brings 40 years of aluminum industry experience to his new position of Senior Vice President and Chief Technology Officer. Prior to joining GAPCO, Mr. Porteous served as Alcan Inc.'s Vice President, Director of Technology for ten years where he was responsible for its global bauxite and alumina operations technology. Frank Donohue brings 33 years of industrial engineering and construction management experience to GAPCO. Prior to joining the Company, Mr. Donohue served for four years as the President of Power Professionals Ltd., an engineering and construction management consulting company providing services to several utilities such as Exelon and PSEG as well as independent construction developers such as Sithe Energies, GNPower and Marubeni. Prior to Power Professionals, Mr. Donohue was the Senior Vice President, Engineering and Construction at Sithe Energies, Inc., where he assisted in the development and led the engineering and construction oversight of many domestic and international large-scale power-generating facilities, including Independence Station in Oswego, NY and San Roque hydroelectric project in the Philippines.

Kaiser sale gets US court nod

Jamaica Observer, Jamaica - Jul 19, 2004

Noranda Inc, a copper and nickel company with investments in zinc and aluminum assets, and US-based Century Aluminum Company, yesterday announced that they had secured approval from a US bankcrupcy court for their May 17 agreement to purchase Kaiser's 49 per cent interest in Kaiser Jamaica in St Ann, as well as the Gramercy alumina refinery in Louisiana, for US$23 million.

Both firms each have a 50 per cent stake in St Ann Bauxite Limited, and Gramercy. The government of Jamaica owns 51 per cent of Kaiser's St Ann facility, which supplies bauxite to Gramercy.

The purchase will be made through their subsidiary companies and is subject to certain closing adjustments, the purchasers said in a joint release issued yesterday.

"This transaction secures long-term supplies of raw materials for our New Madrid, Missouri primary aluminium reduction facility and provides us with the benefits of a fully-integrated aluminum business, from bauxite all the way through to value-added foil products," said Noranda's president Bill Brooks.

Brooks said that Noranda, which is listed on the New York Stock Exchange, was pleased with the court's decision and was eager to implement its business plan with joint-venture partner Century.

Kaiser's 37 year-old mine in St Ann has an annual capacity of about four million tonnes.

Comalco, Alcan Mum On Kaiser's 20% Stake In Australia QAL

Yahoo News Wednesday July 21, 5:20 PM

SYDNEY (Dow Jones)--Both Comalco and Alcan Inc. (ALT) have thus far refused to indicate any definitive interest in a 20% stake in Queensland Alumina Ltd. held by Kaiser Aluminum Corp. (KLUCQ) of the U.S., their bankrupt joint venture partner in the Australian refinery.

Monday, a U.S. bankruptcy court approved Kaiser's proposed bid procedures for the sale of the stake, setting a minimum auction bid at US$525 million.

Bids are due by Aug. 10 with a reserve auction planned for Aug. 16, meaning the seller has the right to pull the offered asset off the table if a minimum bid isn't met.

Along with the stake owned by Kaiser, which filed for Chapter 11 bankruptcy protection in February, 2002, Canadian aluminum giant Alcan owns 41.4% of QAL while Comalco, a unit of Anglo-Australian resources house Rio Tinto (RTP), holds the remaining 38.6%.

"Alcan has expressed an interest in this asset in the past, but that doesn't mean that a decision has been made to participate in the auction," Richard Yank, President of Pacific operations of Alcan's bauxite and alumina group told Dow Jones Newswires.

"As an interested party, Alcan continues to monitor developments," he added.

"Any matters between the parties relating to sale process of the Kaiser stake in QAL are subject to confidentiality agreements," said a Comalco spokesman who declined to elaborate further on the Rio subsidiary's possible interest.

However, complicating the auction process is a right of first refusal held by Comalco on Kaiser's 20% stake, which the official confirmed.

"Kaiser cannot sell its stake in QAL without first offering it to Comalco," the Comalco spokesman said. "And if Comalco does not accept Kaiser's offer, Kaiser cannot sell its stake in QAL to anyone else on terms more favorable to the buyer than the terms upon which Kaiser offered it to Comalco," he added.

QAL, located at Gladstone in Queensland state, is the world's largest alumina refinery with annual production of about 3.7 million tons.

RusAl Revenues Jump

Moscow Times, Russia Thursday, July 22, 2004. Page 6.

MOSCOW (Reuters) -- RusAl said Wednesday that its first-half 2004 aluminum and alloys output rose by 5.1 percent year-on-year to 1.33 million tons from 1.27 million tons.

Exports of value-added casthouse products increased by 27 percent year-on-year, with North America and Asia as the main regions of growth. In North America and Asia, RusAl's exports increased by 96 percent and by 53 percent respectively.

RusAl's first-half revenue was $2.6 billion versus $2.1 billion in the same period last year due to a sharp increase of aluminum price and continued production growth. Full-year 2003 revenues totaled $4.5 billion.

Commonwealth to Take $15.2 Million Charge

Forbes 07.21.2004, 02:21 PM

Aluminum producer Commonwealth Industries Inc. reported Wednesday that it expects to record restructuring charges of $15.2 million in the second quarter, and said it expected to post losses of 30 cents to 35 cents per share in the second quarter.

The company said it expects to record $3.3 million in charges related to its planned acquisition by IMCO Recycling Inc., and $6.4 million in severance payments to its former chief executive officer and other executives who recently left the company.

Commonwealth also shut down its tube manufacturing plant in Kings Mountain, N.C., during the second quarter to focus on its core aluminum business, generating costs of $7.2 million from severance and inventory write-downs. The company will post $5.8 million in closure costs in the second quarter, with the balance expected to be recorded in the third quarter of this year. Commonwealth's sale of its Alflex unit to Southwire Co. for $60 million is expected to close July 31, and the company will record $3.3 million in after-tax expenses from the deal.

Without the above items, the company said it expects to report a loss in the range of 30 cents to 35 cents per share, including 28 cents in costs associated with mark-to-market adjustments of aluminum hedging transactions. As a result of these special charges, Commonwealth obtained an amendment to its credit agreement related to its financial covenants. Analysts surveyed by Thomson First Call expect Commonwealth to earn 12 cents per share in the second quarter, compared with a loss of 12 cents per share in the year-ago period.

Shares of Commonwealth fell 9 percent, or 99 cents, to $9.99 during midday trading on the Nasdaq National Stock Market.

China Spells Better Times Ahead For Aluminium

Australasian Investment review (subscription), Australia - July 21 2004

The combination of an anticipated shake-out of the Chinese aluminium smelter industry and ongoing strong end-user demand for the metal in China should push up the spot price for aluminium in the coming months and keep the global market in deficit for another two years, Deutsche Bank commodity analysts said in a recent study.

BHP Billiton (BHP) recently pointed out that the incremental Chinese smelter capacity would become a real threat to the sector’s global disciplined behaviour. Deutsche Bank now believes that the foot on the brake by the Chinese authorities will lead to the closure of many of the 130-plus Chinese smelters (more than in the rest of the world combined) who have grown under rather dubious financial and economic circumstances, are mostly subsidised by local governments and not necessarily governed by rational production logic.

But many of them are now feeling the pressure applied by financial constraints and the analysts anticipate more will end up in the red as Chinese authorities prepare to abandon the 8% VAT rebate on aluminium imports, further strengthening the shake out. The Chinese spot price for aluminium has fallen dramatically over the past months from a peak of US$676/t in January to (reportedly) US$420/t in July, but the analysts note this is still around 8% above what the metal is trading at on the London Metal Exchange (LME). As the current VAT rebate is costing the Chinese government Rmb300 billion (circa A$50 bn), the analysts believe this is unsustainable and the question now is how soon will the VAT rebate disappear.

The broker believes this will happen before year end and indicates it may possibly be as soon as during the coming few weeks.

According to the report, of the 147 Chinese smelters in operation at the end of May, just 67 (45%) were profitable. If the VAT rebate falls away, this number will drop even further, the analysts anticipate.

As more smelters fall into the red, the demand for alumina will drop and this will have a downward effect on spot pricing.

On top of this, it appears that Chinese smelters are still heavily plagued by electricity shortages. Even market leader Chalco has had to limit production at its Pingguo facility in Gueizhou because of this problem, the analysts point out. The problem is exacerbated due to coal supply problems, forcing smelters to accept rationed power through the grid.

Using data from mining and metal industry specialists Brook Hunt, the analysts now estimate the so-called integrated market accounts for 56% of the global aluminium market with the third party market accounting for 44%. Third party sales consist of long-term and spot price sales. The analysts estimate spot price sales account for 10.4% of total aluminium sales but 24% of third-party sales, implying long-term sales account for 89.6% of total Smelter Grade Aluminium (SGA) sales.

The broker believes that production expansions will catch up with demand in two years from now.

The anticipated developments should turn out positive for global aluminium producers, with the exception of the domestic Chinese players as they are faced with lower domestic prices and increased margin pressures, Deutsche Bank points out.

The analysts would advise astute investors with international leverage to take a long position in Australia based Alumina Ltd (AWC), for instance, and short positions in Chinese market leader Chalco on a 12 months’ view.

The broker expects contract aluminium prices to peak in 2005.

NCP divided over planned sale of ALSCON to Rusal

Daily Times of Nigeria, Nigeria Wednesday, July 21, 2004

GBENGA OGUNTIMEHIN, Abuja

THE controversy surrounding the sale of Aluminium Smelter Company of Nigeria (ALSCON) on Monday took a dramatic turn in Abuja as some members of the reconstituted National Council on Privatisation (NCP) kicked against the planned sale to Russia’s Rusal.

The crisis now rocking the council had its root in the allegation that some members were in support of BFI Group who made better offer for ALSCON while others were on Rusal’s side.

A member of the NCP who spoke with newsmen on the issue, released the letters listing payment conditions Rusal sent to the Director-General of BPE, Dr. Julius Bala dated April 19, and signed by Rusal’s chief executive officer, Alexander Bulygiu and one Aleh Staseu "acting on the basis of a power of attorney".

The first letter to BPE showed that the total amount of funds to be invested by Rusal in Nigerian economy would be about $390 million while Bulygiu’s letter admitted that it was aware of the terms of the request for proposal issued by the BPE to all potential investors that the bids must be submitted free of any conditions.

In the financial bid submitted, the Russians maintained that they intended to acquire at least 77.5 per cent of the outstanding shares of ALSCON subject to advance satisfaction of the following condition:

· Waiver by the BPE of the requirement to pay 10 per cent of bid value within 15 days and 90 per cent within 90 days of NCP’s decision to select a preferred bidder. For the avoidance of doubt, we intend to pay the offered upfront payment of $5 million only after all conditions listed in this letter of conditions have been satisfied and a share sales Purchase Agreements have been executed in an acceptable firm.

· ALSCON shall have no liabilities outstanding, i.e: All the liabilities of ALSCON (either current or long term) towards its shareholders (including but not limited to those specified in shareholders restructuring agreements signed with Ferrostal and Reynolds International. Inc.) to be either cancelled or fulfilled (fulfilment to be duly finalised). For avoidance of doubt, we shall purchase 77.5 per cent of the outstanding shares of ALSCON only after the shareholders restructuring is duly finalised and there are no outstanding liabilities towards shareholders or ALSCON related contracts having legal force with respect to shareholders.

It would be recalled that the chairman of the Technical Committee of the NCP, Mr. Akin Kekere-Ekun, in keeping with the rules of the privatisation programme, had promptly disqualified RUSAL from participating in the bidding process on June 14, when the financial bids for ALSCON were opened.

Kekere-Ekun had disqualified the Russians for submitting a conditional bid bond an arrangement which the privatisation exercise frowns at.


RusAL aims to produce 2.6m tonnes of aluminium

Business Report, Africa July 23, 2004

Moscow - RusAL, the biggest Russian alumium group, plans to produce 2.6 million tonnes of primary aluminium this year, a senior company executive Leonid Krylov has, the Interfax news agency reported on Friday.

RusAL, which ranks number three in world aluminium production, produced 2.588 million tonnes of primary aluminium and alloys last year.

The group intends to increase production of primary aluminium to five million tonnes in 2013, Krylov, who is deputy director in the aluminium division, said.


The increase would be achieved by developing current capacity, through acquisitions and through the construction of new factories.

The company would produce 3.1 million tonnes of alumina this year, rising to eight million tonnes in 2013.

RusAL produces 70 percent of aluminium produced in Russia and accounts for 10 percent of supplies to the world. - AFP


Alba to buy raw material from China

Bahrain Tribune - 23/07/2004 MENAFN, Middle East

Aluminium Bahrain (Alba) has signed a strategic agreement with China to help secure raw materials for its calciner, writes Mandeep Singh.
Under the five-year agreement, Alba will purchase 220,000 tonnes of green coke a year from the Chinese firm, Sinoway. It is Alba's first major contract with a Chinese supplier.
The agreement was signed by the Alba Chief Executive, Bruce Hall, and the Sinoway Chief Representative, Lio Tao.
Also present were the Alba Deputy Chief Executive - Commercial and Services, Ahmed Saleh Al Noaimi, the Alba Acting General Manager Central Services, Nezam Mohammed Noor, the Sinoway senior consultant, Xiao Yoren, the Alba Calciner and Marine Manager, Hameed Abbass, and the Alba head of commercial and raw materials supply, Esam Marhoon.
The Ambassador of the People's Republic of China in Bahrain, Wu Congyong, congratulated Alba and Sinoway on signing the agreement.
"The Government of Bahrain and the Peoples Republic of China have both sought to promote trade between the two countries and this major contract marks a significant step in the right direction," said Al Noaimi.
"The agreement is also of strategic significance to Alba as it secures about 25 per cent of the annual raw material requirements of our calciner for the next five years," he said.
Alba's Calciner plant, the only one of its kind in the Middle East, produces up to 450,000 metric tonnes of calcined coke a year. Calcined coke is the key ingredient used to produce the carbon anodes that complete the electrical cycle necessary to produce aluminium.
The calcined coke produced at the calciner fulfills all Alba's requirements and the surplus is exported to customers around the world to supplement revenue from metal sales. There has also been growing international interest in Alba's Calcined coke from new customers.
The Calciner is currently being upgraded to boost its annual production capacity to 600,000 metric tonnes by 2005.

Alcoa to cut jobs and won't reopen smelter

Seattle Post Intelligencer, WA Tuesday, July 27, 2004

Alcoa Inc. will cut 400 jobs and will not reopen an aluminum smelter in Washington because of a labor impasse, the company said yesterday. Alcoa will record a pretax charge of $20 million in the third quarter to pay for the layoffs, the company said.

Wenatchee Works in Central Washington was idled in July 2001 when aluminum prices fell and energy costs skyrocketed. With wholesale aluminum prices up more than 20 percent in the past year, the company had sought to reopen the plant but demanded concessions from workers. Workers have refused the make the concessions, including a contribution to health care plans that amounted to an average of $72 per month, company officials said.

Metallica gains access to bauxite

Australian Financial Review (subscription), Australia Jul 27 12:00 AAP

Metallica Minerals today said it had gained access to extensive bauxite deposits near Weipa and Aurukun on Queensland's Cape York Peninsula.

Brisbane-based Metallic said that through its wholly owned subsidiary Kingaroy Aluminium, it had tenured substantial bauxite deposits in the Wenlock River area 50 kilometres northeast of Weipa.

The company has also secured the exclusive rights to explore and develop potential bauxite deposits in the tenements held by local kaolin explorer Norkaya subsidiary of Sigma Resources.

Metallica said the combined Weipa tenements had the potential to host a world-class bauxite project and eventually could be of sufficient size to support an alumina plant.

Metallica chief executive Andrew Gillies said the company was excited about the Weipa bauxite project as the combined tenements covered extensive areas of mapped bauxite surrounding and along strike of the Comalco and Alcan bauxite mining leases.

"Most of the areas have not been explored since the mid-'70s, the market dynamics have changed considerably since then and we believe there is now an excellent opportunity to establish bauxite reserves, initially for sales of unprocessed bauxite ore, for direct shipping to domestic and Asian markets," Mr Gillies said.

"The world needs more bauxite and alumina projects and Australia is one of the best places to develop them."

Mr Gillies said that following feasibility studies, Metallica believed it may be in a position to establish an alumina plant near Weipa or Aurukun.

"There is no doubt that this project would be significantly enhanced by the development of the PNG gas pipeline," he said.

The company said land access agreements with the traditional landowners were expected to be in place before next year's dry season to enable exploration to commence.

Sigma-Norkay were focused on the exploration and development of a type of kaolin more leached and purified relative to the deposits at Weipa and Skardon river and were aiming for the high-priced paper coating market, Mr Gillies said.

Bauxite (aluminium ore) and kaolin are formed from the tropical weathering and leaching of the underlying sediments and are commonly associated with each other.

A partnership between the two companies would help reduce individual access, permitting and infrastructure cost and would benefit both companies, Mr Gillies said.

Alscon: FG Makes U-Turn, Appoints Rusal, Core Investor

AllAfrica.com, AfricaJuly 27, 2004

This Day (Lagos) Cletus Akwaya And Onyebuchi Ezigbo, Abuja

The Federal Government moved yesterday to end the lingering confusion over the privatisation of the Aluminum Smelter Company (ALSCON) Ikot-Abasi, as it announced Rusal (Bratsk) Aluminum of Russia as the new core investor for the plant.

Minister of Power and Steel, Senator Liyel Imoke, announced government's latest position on the privatisation of the plant while welcoming a 20-man Trade Delegation from the Russian Federation to his office.

The minister disclosed that officials of the firm and the Bureau for Public Enterprises (BPE) were presently going through the details of the contract and that "very soon the final deal would be struck."

Rusal was earlier disqualified for making a conditional bid June 14, when the financial bids for the multi-million naira plant were opened at the NICON-HILTON Hotel in Abuja.

The bid winners, BFIGroup of America led by a Nigerian, Dr. Reuben Jaja, was named core investor to take up 77.5 per cent Federal Government equity in the firm at the bid price of $410 million.

BFIGRoup, however, failed to pay 10 per cent of the bid price or $41 million as required by the payment guidelines within 15 days but rather requested for an extension of two weeks from July 8, when the deadline expired to enable it pay the money.

This request was turned down as the Federal Government cancelled the transaction July 9.

Indications that the Russian firm may return to ALSCON emerged barely 24 hours after BFIGRoup emerged as the bid winners in the transaction following reports that the Federal Government had asked a three-man team to re-open discussions with Rusal's representatives, who were about to leave the country.

The Russian firm, which offered $205 million in its disqualified bid, reportedly reviewed downward, the bid price to $160 million payable in two installments over a two-year period.

THISDAY had reported then that efforts by the Federal Government's team to get the Russians improve on their offer failed as the Rusal executives stood their ground.

Although Imoke did not give details of the on-going negotiations between BPE and the Rusal team, a source close to the privatisation agency hinted that the new core investors may have agreed on the initial bid offer of $205 million.

Imoke told the Russians that their coming to Nigeria was a welcome development, especially at this stage when the country is moving away from public sector controlled economy to a private sector-driven one.

He noted that the nation with a large population of 120 million has a huge demand on virtually everything, especially in terms of infrastructure to support development and the harnessing of the country's rich energy potentials.

"The country had in the last five years moved from the position of a pariah nation to become a beehive of investment attraction, recording very high inflow of investment capital to her economy," he said.

The leader of the Russian delegation, Mr. Valery Vozdvizhenskiy, said the group is on a five-day trade mission to the country to explore avenues for investment and cooperation in the areas of energy, oil and gas, as well as transportation, ship building and automobile industry.

"In course of our visit, we intend to hold discussions with Nigerian Government officials including the Nigerian National Petroleum Corporation (NNPC), National Electric Power Authority (NEPA), the Investment Promotion Commission and others with a view to signing agreements in various fields of cooperation," he said.

Vozdvizhenakiy said Russian investors would be interested in cooperating with Nigeria to develop the power sector by investing in electricity generation, construction of gas-powered stations (on Build-Operate and Transfer terms) and local manufacture of generation and transmission facilities.

Aluminum market leader Kęty looks to Eastern expansion for future

Warsaw Business Journal, Poland 27th July 2004

From Poland A.M.

Kęty, the stock-listed aluminum processing market leader in Poland, is not excluding the possibility of constructing a plant in Ukraine and purchasing regional competitors.

"We are analyzing our options. The decisions will be made before the year ends, then we will present a three-year strategy," said Kęty management board member Michał Malina. However, bourse analysts are more forthright. "Kęty's new plant will have annual sales of zł.70-80 million and should be launched by mid-2006," said Sylwia Jaokiewicz, from CDM Pekao SA. This investment would allow the company to bypass custom duties for exporting goods to Ukraine and Russia. Analysts suggest this is the only development option for the company, which holds a 50% stake in the aluminum products market and a 20% in the packaging sector. Potentially the firm could spend zł.400-550 million on the acquisition. (Puls Biznesu, pp. 1, 8, 10) M.M.

Air Liquide to supply to a major aluminium manufacturer in Australia

Chemie.de (press release), Germany 07/27/2004

Air Liquide Australia Limited has signed a 15-year contract with Comalco Aluminium Limited for the supply of oxygen and nitrogen to its Gladstone refinery in Queensland. Comalco is a subsidiary of the global mining group Rio Tinto.

Comalco is in the process of building Stage 1 of an AUD$1.4 billion (815MEUR) alumina refinery at Gladstone in Queensland with a capacity of 1.4 million tonnes pa. Comalco needs large quantities of oxygen and nitrogen for application in its refinery processes for the removal of organic compounds from the slurry and to improve product quality and productivity. Air Liquide will install a new air separation unit of 70 tonnes/day capacity to meet Comalco's needs as well as service other industrial customers in Central Queensland. This project is of great strategic importance to Air Liquide in Australia, as it now establishes its own air gas production source in Queensland.

This builds on the strong relationship which Air Liquide developed with another Rio Tinto subsidiary, HIsmelt, and the construction of a new 900 tonnes/day air separation unit at Kwinana in Western Australia due for commissioning in October later this year.

Four Killed in Aluminum Plant Blast

MOSNEWS, Russia 28.07.2004 15:56

An explosion at the Uralsky aluminum plant in the town of Kamensk-Uralsky, Sverdlovsk region, on Wednesday killed four people.

A huge cistern, with a capacity of 200 cubic meters, filled with a chemical mixture exploded during repair work in a workshop, ITAR-TASS news agency reported citing the security directorate of the plant. The four repair workers were standing on the cistern’s lid.

According to a preliminary version, hydrogen in the cistern ignited. A special commission is working at the scene to investigate the exact cause of the incident.

Alumina reaps pricing reward

The Australian, Australia - July 29, 2004

ALUMINA today reported a 41 per cent rise in interim net profit to $168 million, as its cashed on sharper raw material prices used in aluminum production.

Chief executive officer John Marlay said the result was excellent in the face of a higher Australian currency.

Melbourne-based Alumina said the first-half result was driven by higher prices and increased Alcoa World Alumina and Chemicals production of alumina, offset by higher Australian dollar exchange rates.

Alumina's share of AWAC equity profit after tax, excluding the – specialty chemical profit – was $153 million, an increase of 29 per cent over the previous half of 2003.

Alumina's sole asset is its 40 per cent stake in the AWAC joint venture with Alcoa Inc.

Including the speciality chemical sale after tax profit was $168 million - up 41 per cent higher.

Alumina said there was a very strong market outlook during the next three years for growth in alumina and aluminium, driven by demand from China.

Demand in the Western world, in particularly Japan and the United States, would grow by 5 per cent over three years, Mr Marlay said.

Demand out of China during this time would be double this, he said. Chinese demand would be driven by a robust economy and "quite strong" increase in demand for transport infrastructure, private and commercial construction and consumer durables.

"Over the next three years there is a need for additional capacity and (Alumina's joint venture) AWAC is well positioned to take advantage of that," Mr Marlay said.

The group said Aluminium prices continued to strengthen, with LME prices averaging $US76 a pound ($US67 in the previous half), yielding higher alumina realised prices for AWAC.

But partially offsetting higher prices was a stronger Australian dollar, which averaged US74c in the first half of 2004, against US69c in the previous half.

Alumina production was 7 per cent higher than the first half of 2003 at 6.772 million tonnes because of production capacity creep, Point Comfort at full capacity and increased production from the company's Jamaican expansion.

Mr Marlay said the 250,000 tonne expansion at Suriname and the 600,000 tonne efficiency upgrade at the Pinjarra refinery in Western Australia, were meeting or surpassing their progress milestones.

"AWAC has a pipeline of organic growth projects which can deliver solid growth at a relatively low capital cost," he said.

Studies are underway to significantly expand AWAC's global alumina refining network by more than 4 million tonnes.

A decision on the first of those projects was likely to be made in late 2004, with expenditure beginning in 2005.

Mr Marlay said AWAC had the potential to benefit from added demand by increasing its alumina production capacity by 4 million tonnes.

The increase would be through four potential brown field expansions at existing projects, costing a total of around $US2 billion.

Mr Marlay said decisions on the projects could be made in the second half of 2004.

Alumina chief financial officer Bob Davies said financing of the potential projects was still being discussed with Alcoa. However he said Alumina's preference would be to finance through a mixture of cash and debt.

Debt would be held through the AWAC joint venture, rather than Alumina, for tax benefits, Mr Davies said.

Dividends to shareholders would be constrained during this period of growth, the company said.

Directors declared a fully franked interim dividend of 10c per share share.

Au revoir to Reynolds Metals aluminum plant in Troutdale

Oregonian, OR Thursday, July 29, 2004

Since the 1940s, highway travelers near Troutdale have observed, in the air to the north, an overhead conveyor system with the giant words "Reynolds Metals" stenciled on its side. Look closely for one last time at this industrial landmark because it's about to disappear.

Reynolds Metals Co., often simply referred to as Reynolds Aluminum, no longer exists, and the Troutdale Reduction Plant is well into full demolishment.

When Alcoa acquired the company in 2000, the plant was quickly shut down, and the decision was made in 2003 to demolish it entirely. This was Reynolds' swing plant, the first to decrease production when the economy warranted, and the last to restart when things improved. Thus, the plant's technologies were slow to be updated and this lack of modernization throughout the years helped spell the plant's downfall.

Its purpose was to turn alumina ore, previously mined as bauxite, into molten aluminum and then cast it into ingots for further fabrication at other locations. It was an energy-intensive process requiring electricity to be passed through a semi-molten mixture. Many thought the process was that of melting something, but heat was mostly a byproduct.

The company was founded in 1928 by Richard S. Reynolds to supply foil for cigarette packaging, and he began building plants in 1940. A nearby Longview, Wash., plant was one of the first. The Troutdale plant was built for the U.S. government in 1941, one of several identical plants constructed to produce aluminum for military aircraft (Vancouver's Vanalco plant was a twin). After the war, Troutdale was leased to Reynolds in 1946 and purchased in 1949.

Many similar companies, attracted by the abundant and inexpensive source of hydroelectricity, located plants in the Northwest, and in the heydays of the '70s and '80s, more than one-third of U.S.-produced aluminum came from Oregon, Washington and Montana. Today, the economics are different and aluminum production in the United States is severely curtailed. Many plants, such as Troutdale, have been shuttered for good.

In the early days, the sparse east county area was heavily affected by the presence of the plant. Many homes on Halsey Street in Wood Village owe their beginnings to being a provider of housing for the aluminum workers. For much of its history, it was a family-run company, and that concept seemed to pervade its local employment because even today, it is easy to find residents in east county who had a friend or relative who once worked at the plant.

When a new high school was constructed in 1954, the local school board decided to name it after the largest contributor of taxes in the district, thus Reynolds High School (now Reynolds Middle School) was born.

Honored by this event, the president of the company flew into the Troutdale Airport from Virginia for the school's dedication and was greeted next to his DC-3 by the entire student body, including two Reynolds Lancers in shining armor on horseback -- a sight unimaginable today! He brought with him "Les Brown and His Band of Renown" for the gala celebration and began the award of an annual $6,000 scholarship, quite a sum of money in those days.

So while the widely recognized "Reynolds Wrap" will continue to be produced and carry the name, a company that was a large part of our national and local history is gone. Au revoir to Reynolds Metals Co. and their trademark "St. George and the Dragon." Even slayers of dragons get old and fade away.

Bob Griswold, 55, of Troutdale was hired by the Reynolds Metals Co. before he even finished his studies at Oregon State University. He worked as an engineer at the Troutdale plant for 31 years until it closed.


Alunorte takes $310m loan from syndicate of banks

Gringoes.com, Brazil

Săo Paulo, July 30 - Alunorte, the aluminum unit of Brazil´s mining giant Companhia Vale do Rio Doce (CVRD), has borrowed $310 million to invest in expansion plans, CVRD said Friday.

In a statement, CVRD said Alunorte plans to increase its annual production capacity by 1.8 million tonnes, to 4.2 million tonnes.

In all, the project is estimated at $582.7 million.

The ten-year loan was taken from a syndicate of banks comprising KfW, West LB AG, ING Bank N.V., ING-BHF Bank, DnB NOR Bank ASA and Nordic Investment Bank.

Alunorte expects to complete its expansion project by mid-2006.

Graziella Valenti

ALSCON: BFI Group stormsSenate, protests disqualification

Daily Times of Nigeria, Nigeria 30 Jul 2004

RICHARD IHEDIWA, Abuja

DISQUALIFIED preferred bidder for Aluminium Smelter Company of Nigeria (ALSCON), BFI Group yesterday stormed the Senate, insisting that it be allowed to acquire the company.

BFIG’s chief promoter, Dr. Reuben Jaja, told members of the Senate Committee on Privatisation at a parley in Abuja that his group beat its rival, Rusal Group, for the ALSCON bid, but was being edged out by certain interests at the Bureau of Public Enterprises (BPE).

Jaja, who said his group had committed over $3 million into the bidding process insisted that the company was still on the race as it has not been served any letter of disqualification by BPE.

BPE officials told the Senate Committee on Wednesday that BFI lost its bid winner status following their inability to pay the mandatory 10 per cent of the bid sum of N410 million within the stipulated 15 working days as well as the inability to sign the share purchase agreement within the stipulated time.

But BFIG promoter countered that yesterday and accused BPE Director-General of working against their interest and frustrating their readiness to pay within the stipulated time.

He accused, Bala, Minister of Power and Steel, Senator Liyel Imoke and the technical secretary of the National Council on Privatisation, Mr. Kekere-Ekun of discrimination against the DFIG for no just cause,.

Stating that his company was not to blame for not meeting the required time frame, Jaja told the committee that it was actually the BPE boss Dr. Julius Bala who tried to put off appointments scheduled within the time frame for the fulfilment of the requirements.

Jaja also accused BPE and NCP officials as well as Imoke of initiating a fresh discussion with Rusal Group whose $205 million bid was initially disqualified as they attached conditions to it.

Describing the scenario as a huge scam and a serious case of injustice and discrimination, Jaja appealed to the senate committee to stand up for the truth as Nigeria’s image abroad was being dented by the key players in the privatisation process.

Jaja, however, said his group had already appealed to President Olusegun Obasanjo and expressed optimism that the President would intervene in the matter as his anti-corruption stand was not in the doubt.

Speaking during the meeting, Senate Committee on Privatisation, Senator Isaiah Balat cautioned all the parties involved to handle the matter with care in order not to tarnish the improving image of the country in the international arena.

NALCO aluminium expansion seen over soon

Hindustan Times, India Reuters Mumbai, July 30

India's state-run National Aluminium Company Ltd has begun production at its expanded smelter and is close to getting a final Government nod for further capacity additions, its chairman and managing director SK Banerjee said on Friday.

NALCO, the country's second-largest aluminium maker, is in the midst of raising its aluminium capacity to 345,000 tonne a year from 230,000 tonne.

Half of the expansion project has already been completed, but the rest had been delayed as the company awaited Government approval to recruit new workers. NALCO has hired about 270 workers in the past months.

"Every day we are adding one to two pots in the production line and so far have raised the capacity to 330,000 tonne," Banerjee told Reuters.

"We hope to achieve the full capacity level by early September," he said in an interview.

The electrolytic pots are used to smelt alumina, an intermediate product extracted from bauxite ore, to produce aluminium metal. Nalco's smelter has a total 720 pots, all of which are expected to become operational in about a month.

Banerjee said the Union Environment Ministry this week cleared the company's plan to further boost production capacities, taking it closer to a final Government nod. The new project envisages an investment of about $800 million.

The company plans to raise its smelter capacity to 460,000 tonne from 345,000 tonne a year, alumina capacity to 2.1 million tonne from 1.575 million, bauxite mining capacity to 6.3 million tonne from 4.8 million and power generation to 1,200 megawatts from 960 MW.

"We have cleared the biggest hurdle a public sector company may face in getting a project approval," Banerjee said, referring to the ministry's environmental clearance.

The company has received permission from the Government's Public Investment Board.

"The matter will now be placed before the Cabinet Committee on Economic Affairs and, hopefully, we will get final permission in about a month," he said.

ALUMINA SALE

Banerjee said NALCO was considering selling about 30,000 tonne of alumina in the spot market during the quarter ending in September, but would take a final decision after evaluating its own requirements.

The company mainly sells its surplus alumina through long-term contracts, but sometimes taps the world spot market for its excess output.

It sold 30,000 tonne of alumina to Iran Aluminium Company in May and a similar amount to a Russian company in June.

NACLO plans to export 883,000-900,000 tonne of alumina and 165,000 tonne of aluminium in 2004-05 (April-March), against 945,000 tonne and 131,000 tonne respectively a year earlier, Banerjee said.

It aims to produce 320,000-330,000 tonne of aluminium and 1.58 million tonne of alumina in 2004-05, up from 298,000 tonne and 1.56 million tonne respectively in the previous year.


Wise: Ravenswood scored 'major victory'

Parkersburg News, WV 31 Jul 2004

By CURTIS JOHNSON

RAVENSWOOD - Another party will soon join the Pechiney-Alcan merger roundtable, scoring a "major victory" for West Virginia and northern Jackson County, according to West Virginia Gov. Bob Wise's office.

The governor's office announced U.S. District Judge Gladys Kessler granted a motion from the state Wednesday allowing it to "fully participate and be given full consideration in all matters" of the planned merger. Alcan purchased the Ravenswood plant during its September 2003 acquisition of Pechiney Rolled Products LLC.

Mark Whitley, director of the Jackson County Development Authority, said the announcement signaled good things for the Ravenswood plant and the community.

"I think the judge is saying, 'You know what, they are an affected party,'" he said.

"It allows us to have input," Whitley added. "I think the State of West Virginia has done an excellent job through its legal representation in pointing out to the court system that the ongoing operation of Alcan is critically important to Ravenswood and the state."

Wise reaffirmed the state does not oppose the merger between Alcan and Pechiney, but "adamantly" opposes the Justice Department's forced sale of the Ravenswood plant as a "precondition to allowing the merger."

"I firmly believe the sale to a third party would be devastating to the workforce at Ravenswood, the plant's retirees and the community," Wise said. "We will continue to wage aggressive opposition to the sale in our new role as a party by intervention in the ongoing litigation."

Alcan spokesman Anik Michaud said the decision does not concern her company.

"This is a matter between the State of West Virginia and the Department of Justice," she said in a Friday e-mail.

In the Justice Department's March 2004 memorandum opposing the state's motion, the department argued West Virginia has "no unconditional right to intervene," "should not be allowed to permissively intervene" and its specific objections "lack merit." It also mentions the then-proposed final judgment had already been agreed to by the defendants.

"The United States - not West Virginia - represents the nation's public interest in government antitrust cases," the memo states. "The court already has before it West Virginia's views on the proposed judgment. Further participation by West Virginia in this proceeding would serve only to delay the court's ruling on whether the proposed judgment is in the public interest."

Wise's delegation was in commute back from the Democratic National Convention in Boston Friday and unavailable for comment concerning any possible delay or what specific intervention the court decision will allow the state.

Kessler's Wednesday decision had also not been posted on the court's Web site as of Friday afternoon.

Kessler issued an "amended final judgment" in May, stating Alcan must complete its "spin-off" strategy or sell the Ravenswood plant by Nov. 22. The Justice Department may extend Alcan's deadline by 60 days.

That strategy calls for the company to spin off ''substantially all'' of its rolled products business held before the company's September 2003 acquisition of Pechiney Rolled Products LLC. Alcan would retain the Ravenswood plant, approximately 78,000 employees globally and approximately $20 billion in revenues, according to previous press releases.

In an earlier interview, Michaud said no decision has been made and it must gain clearance the company's stockholders. She expects Alcan executives to present those stockholders with a plan this fall.

''All we're doing right now is keeping our options open,'' she said.

The new company would become the ''world's largest aluminum-rolling business by revenue and production volume.'' It would be listed on the New York and Toronto stock exchanges and have approximately 10,000 employees worldwide.