AluNews - June 2004

Rio Tinto Still Positive On Alumina, Aluminum - Analysts

Yahoo News Tuesday June 1, 6:05 PM

Sydney, June 1 (Dow Jones) - Anglo-Australian mining giant Rio Tinto Ltd. (RIO.AU) remains upbeat about the alumina and aluminum market, analysts from several global brokerages said following an investor visit to the company's operations in Queensland state Monday.

Despite a recent easing in the surging spot price of alumina, Rio told analysts that it expects the market to remain tight at least over the next two to three years, underpinned more so by robust demand, rather than supply-side considerations.

"Importantly, we believe this could see prices remain higher over this period," CSFB said in its report.

In particular, Rio noted that China's alumina imports would grow from 5.6 million tons last year to more than 6 million tons in 2004.

"Rio Tinto mentioned that 50% of China's alumina growth needs are met by imports, but expected this percentage to increase going forward as domestic bauxite reserves were of poor quality," UBS said.

Mined bauxite is refined into alumina which is then smelted into aluminum.

On aluminum, Rio expects China to remain a net exporter, but at a modest 300,000-500,000 tons per annum level, UBS added.

The company told analysts it expects Chinese aluminum demand growth to come in at 10%-15% annually over the next five years, notwithstanding recent government measures designed to slow the country's economy.

According to Citigroup Smith Barney and UBS, Rio estimates that currently, somewhere between 1 million and 2 million tons of Chinese aluminum smelting capacity is idled due to high spot alumina prices and a shortage of electrical power.

Last year, Rio Tinto sold 500,000 tons of alumina to Chinese interests, all of it on a spot basis.

The company assured analysts that the ongoing expansion of its Weipa bauxite operation in northern Queensland, which is adding a second mining and processing site to take capacity from 12 million to 16.5 million tons per year, is on schedule and within budget.

Commissioning is expected in October, with the additional capacity earmarked to supply Rio's 1.4 million-ton-per-annum Comalco Alumina Refinery, currently under construction at Gladstone in Queensland.

The company told analysts that this project was also on time and within budget, with its first alumina shipments expected in the first quarter of 2005.


Alcoa to outsource 130 local jobs to India

Pittsburgh Post Gazette, PA Wednesday, June 02, 2004

By Len Boselovic, Pittsburgh Post-Gazette

Alcoa plans to eliminate about 130 jobs locally over the next year or so, as the aluminum producer moves data processing jobs to India in order to reduce costs.

The company said 70 to 80 contractors and salaried employees at its North American Data Center in Upper Burrell, Westmoreland County, will be affected as well as about 40 salaried employees and 15 contractors who process accounts payable and receivable at the company's Business Services Center on the North Shore. The jobs will be eliminated over the next 12 to 18 months because they can be performed more efficiently outside of Pittsburgh, Alcoa said.

When completed, the outsourcing will reduce Alcoa's regional work force by approximately 6 percent. The company employs about 900 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 last week in an e-mailed note from Rudolph Huber, vice president of Global Business Services and chief information officer, and Russell Porter Jr., who manages the affected functions in the region. It was made after Alcoa completed a study of outsourcing, the practice of moving computer-related jobs overseas where labor is cheaper.

"These types of strategic decisions are necessary for Alcoa to competitively meet our customer needs and to grow our business," Huber and Porter wrote.

In December, the company completed a three-year campaign to cut costs by $1 billion annually and embarked on a new effort to generate another $1.2 billion in annual efficiencies over the next three years.



Kaiser Aluminum Says U.S. Bankruptcy Court Affirms Termination Of Retiree Benefits; Alternative Coverage Provided Through Cobra And Veba To Take Effect June 1; Creditors Retain Certain Rights Pending Finalization Of Intercompany Settlement

www.kaiseral.com Jun 1st 2004

HOUSTON, Texas, June 1, 2004 -- Kaiser Aluminum said that, in a hearing today, the U.S. Bankruptcy Court for the District of Delaware issued a ruling that has the net effect of confirming the previously announced May 31 termination date of certain existing retiree benefit programs such as medical coverage and life insurance.

Union and salaried retirees whose benefits are terminated are being provided with alternative benefits under COBRA or newly formed Voluntary Employee Beneficiary Associations (VEBAs).

Such changes were previously agreed with the United Steelworkers of America (USWA), certain other unions, and the committee representing the interests of salaried retirees.

At the same time, the Court also ruled today that the Unsecured Creditors' Committee (UCC) would have the right to direct the company to terminate those agreements if Kaiser and the UCC have not signed -- and filed a Court motion requesting approval of -- a separate Intercompany Settlement by June 30, 2004. As more fully discussed in Kaiser's Form 10-Q for the first quarter of 2004, the Intercompany Settlement is intended to resolve prepetition and postpetition intercompany claims.



RAO UES seeking to legally execute investments to complete construction of Boguchansk GES.

Gateway 2 Russia, Russia 01 June 2004 15:13

RAO UES will make another attempt in July to legally execute its investments in completing construction of Boguchansk GES (Krasnoyarsk Region). To this effect, RAO UES has initiated the EGM of GES to be held on July 12, according to the documents of Boguchansk GES.

Early April, GES minors banned funds acceptance from RAO UES to complete GES construction this year.

To-date RAO UES and GES have entered into 13 supplementary agreements. 400 mln rbl were planned to be allocated from RAO investment program this year in exchange for the title of RAO UES for the launched facilities.

RAO UES said around $1 bln are to be invested to complete GES construction.

RAO UES is for attracting private investors, however, Russian Aluminium holders (block stake in Boguchansk GES) are proposing to raise funds by releasing additional stocks of Krasnoyarsk GES where Russian Aluminium affiliated companies have around 70% stocks.



Rusal Commence Feasibility Study for 600kt Smelter

Azom.com June 2nd, 2004

RUSAL, one of the world’s leading aluminium producers, today announced the commencement of a feasibility study for the construction of a new aluminium smelter in the Irkutsk region. Bechtel Corporation, a U.S.-based global engineering and construction company, will carry out the study.

Commenting on the project, Valery Matvienko, RUSAL’s Deputy General Director, aluminium business, said: “We are pleased that RUSAL’s largest expansion project to-date, and our first greenfield project, has begun. This is a major step in our expansion drive that will let us capitalize on the favorable forecasts for the global aluminium market. Bechtel’s expertise will ensure that the design of the new plant will comply with international technological and environmental standards.”

The feasibility study is to be completed by January 2005. The new 600,000-tonnes-per-annum smelter will be located on a recently chosen site in the Irkutsk region, between Taishet and Talaya. According to preliminary estimates, construction of the smelter will start in 2006 and be completed by 2009. The plan is for the smelter to apply the RA-300 technology developed by RUSAL’s Engineering and Technological Center specialists last year. A 5-kilometre railway line will be built to connect the site with the rail station in Taishet.

The plant will be designed to be the most modern aluminium smelter in Russia, meeting international environmental standards and applying best technological practices. The project will be one of the largest investments in Russia’s aluminium sector, and will create hundreds of construction jobs in the Irkutsk region and Eastern Siberia, helping fuel economic growth.


Quebec still hopes to reach new deal with Alcoa on delayed smelter expansion

Canadian Press Wednesday, June 02, 2004

MONTREAL (CP) - Quebec still hopes to a reach new deal with Alcoa Inc. on a delayed $1-billion smelter expansion, the minister responsible for the proposed development said Wednesday.

"We are aware of the importance of this project, not only for the workers, the company and the region, but for all of Quebec," Pierre Corbeil, acting minister of natural resources, said in Quebec's National Assembly.

"And we are also very confident of reaching a win-win solution in this file," Corbeil added.

Corbel said discussions are continuing with Alcoa, even if the latest deadline set by U.S.-based Alcoa, the world's biggest aluminum company, has long since passed.

Construction on the expansion at Baie-Comeau on Quebec's North Shore was suspended in January after the Liberal government refused to respect commitments made at the end of 2002 by the previous Parti Quebecois government.

Corbeil did not say what the negotiations are stalled on, and Alcoa did not return calls. The holdup is apparently over the energy question, with Alcoa looking for a long term price.

Reports Wednesday, citing anonymous sources, that Alcoa sent a "final" offer to the government this week. Alcoa, as part of its job-creation commitments, offered to build an anode manufacturing plant employing 100 people, although Premier Jean Charest said in May he wanted 500 secondary manufacturing jobs as part of the deal.

Reports say Quebec is hesitating to provide Alcoa better energy terms than the province has already signed with other smelters, such as Alouette.

Former premier Bernard Landry had promised Alcoa a 10-year tax holiday along with a no-interest loan of $170 million to help replace the old Soderberg potlines dating from the 1950s with less polluting technology.

The Parti Quebecois government had also committed to provide the company with a block of 175 megawatts of electricity at the preferential rate for large energy users.

In return, Alcoa promised to maintain 1,500 jobs at Baie-Comeau, which currently employs about 1,800.

The upgrade would expand the capacity of the smelter to 547,000 tonnes a year from 437,000 tonnes.

© Copyright 2004 The Canadian Press


Aldoga names $3.8b smelter builder

ABC Regional Online, Australia Thursday, 3 June 2004

Aldoga Aluminium has chosen the company that will build its $3.8 billion smelter near Gladstone in central Queensland.

Then construction phase will be a major boost to the region's employment.

The $65 million contract, said to be the largest in Australia, has gone to Multiplex Engineering.

Managing director Don Lewis says the company plans to subcontract much of the work which will benefit the local construction industry.

Up to 200 jobs will be created during the bulk earthworks phase, while more than 1,500 people will be involved in the construction.

Aldoga's managing director John Benson says this is the next substantial stage in the project.


Metal that grows stronger in the sun

Ferret, Australia, 3 June 2004

CSIRO scientists have discovered a process that could lead to the production of aluminium cars and planes that get stronger as they bake in the sun.

Dr Roger Lumley of CSIRO Elaborately Transformed Metals says the new process involves age-hardening aluminium to a point where the process can be completed by exposure to sunlight rather than in a furnace. The discovery arises from CSIRO's work in light alloys and advanced metals.

"We found in the course of this work that if the high-temperature aging process used to strengthen aluminium components, such as castings or motor vehicle body panels, is interrupted, and the material is allowed to undergo secondary aging at ambient temperature, the material became 20% tougher" Lumley said.

At the same time, the total-energy-to-rupture point can also be extended by up to 800%, resulting in safer cars with crumple zones able to absorb much more energy as they deform or rupture on impact.

"Significantly it means aluminium car body panels, for example, can be assembled and painted, (the baking cycle used to harden the paint adds to the process) and they will continue to strengthen in the sun.”

"The process would continue, albeit at a slower rate, for the life of the vehicle" Lumley said.



Kaiser Aluminum Says U.S. Bankruptcy Court Rules On Sale Of Alpart

www.kaiseral.com 03-May-2004

HOUSTON, Texas, June 3, 2004 -- Kaiser Aluminum said that, in a special hearing that concluded today, the U.S. Bankruptcy Court for the District of Delaware ruled that the company should proceed with the sale of its interests in and related to the Alpart alumina refinery in Jamaica to Hydro Aluminium a.s. in accordance with Hydro's previously announced exercise of its right of first refusal under the Alpart partnership agreement.

As disclosed in Kaiser's Form 10-Q for the first quarter of 2004, the base purchase price is $295 million plus certain adjustments, which are expected to be in the range of $20 million. The transaction is expected to result in a gross sales price in the range of $315 million and a pre-tax gain of approximately $100 million.

The company is currently working with the lenders under the Post-Petition Credit Agreement for an amendment that would, among other things, authorize the sale of the company's interests in Alpart and certain other commodity assets. In the interim, Kaiser Aluminum has obtained a waiver under this Credit Agreement that, among other things, permits the sale of the company's interests in Alpart. The company currently expects that the proceeds from the sale will be held in escrow pending the completion and approval by the Court of the amendment to the Credit Agreement and the Intercompany Agreement.

Based on the Court order, Kaiser intends to proceed expeditiously toward a closing within the next several weeks. However, no assurances can be given in this regard.



Norsk Hydro to get Kaiser's stake in Alpart

Ruling by US bankruptcy court

Jamaica Observer Friday, June 04, 2004

A US bankruptcy court in Delaware ruled yesterday that Kaiser Aluminum should proceed with the sale of its 65 per cent stake in the Alpart alumina refinery in Nain, St Elizabeth to Hydro Aluminium, a subsidiary of Norsk Hydro, the Norwegian energy firm that is the junior partner in the venture.

The company is currently working with the lenders under the Post-Petition Credit Agreement for an amendment that would, among other things, authorise the sale of the company's interests in Alpart and certain other commodity assets," Kaiser said in a statement announcing the court's ruling. "In the interim, Kaiser Aluminum has obtained a waiver under this Credit Agreement that, among other things, permits the sale of the company's interests in Alpart," it added.

Yesterday's ruling appeared to have ended the bid by Russian Aluminium (RusAl) to acquire Kaiser's holding in Alpart (Alumina Partners) and a substantial foothold in Jamaica's bauxite/alumina industry.

Kaiser, seeking to emerge from Chapter 11 bankruptcy protection in the United States, has been selling off assets and initially accepted RusAl's US$295 million offer for its just under two-thirds stake in Alpart.

But Norsk Hydro invoked its pre-emptive right to purchase the asset, matched RuAl's offer plus another US$20 for adjustments, including contracts for the forward sale of alumina.


Kaiser Jamaica Bauxite's loading facility at Discovery Bay, St Ann.
"The transaction is expected to result in a gross sale price in the range of $315 million and a pre-tax gain of approximately $100 million," Kaiser said in its statement.

Norsk Hydro has already announced that on acquiring the Kaiser holding it would on-sell the 65 per cent to Glencore, the Swiss trading firm that owns two West Indies Alumina Company (WINDALCO) refineries, at Kirkvine and Ewarton, which it bought from Alcan. These two refineries have a combined capacity of 1.25 million tonnes of alumina per annum, roughly the same output as Alpart.

Norsk Hydro said that the deal with Glencore would allow for greater efficiencies through joint mining between Alpart and WINDALCO and other cost-saving operational synergies.

However, after Norsk Hydro's move, RusAl announced a US$21.2 million increase in its offer, but according to Kaiser the court ruled that it should proceed with the sale to Hydro Aluminium "in accordance with Hydro's previously announced exercise of its right of first refusal under the Alpart partnership agreement".

Kaiser also announced last week that it had agreed to sell its 49 per cent stake in Discovery Bay-based Kaiser Jamaica Bauxite Company (KJBC) to two US metals firms.

The Jamaican government owns 51 per cent of the mining company which has a capacity to produce four million tonnes of bauxite ore annually. This ore is shipped to a Kaiser-owned alumina refinery at Gramercy, Louisiana, which is part of a bundled sales deal with KJBC.


Alcoa's Australian Ops Eye Expansion

AUSTRALIA PRESS Friday June 4, 6:15 AM :

SYDNEY (Dow Jones)--Alcoa Inc.'s (AA) Australian subsidiary is considering a major expansion of its Portland aluminum smelter in western Victoria state, reports the Australian Financial Review Friday.

Alcoa's vice president and group president of its primary products, Bernt Reitan, said the company expects to make a decision within the next few weeks on whether to proceed to the next stage of the project's evaluation, which is likely to cost more than US$550 million.


Under the expansion plans being considered, Alcoa may add up to 200,000 tons of aluminum. The Victoria smelter currently uses 600 megawatts of electricity annually to produce more than 352,000 tons of aluminum.

Newspaper Web site: http://www.afr.com.au


Aluminum maker ZSNP to invest SKK 540 mln in production facility to meet rising demand

Interfax, Slovakia 3rd May 2004

Slovak aluminum producer ZSNP Ziar nad Hronom will invest SKK 540 mln in its Zlievaren foundry in order to meet rising demand for castings, the firm's CEO Peter Ondro told the CTK news agency.

The firm is expecting increased demand in party from the Hyundai/Kia carmaker, which is building a production plant near Zilina in Central Slovakia. Shareholders must still approve the planned investment.

ZSNP supplies parts to a variety of carmakers, including Volkswagen, Audi and Ford. Its Foundry subsidiary makes castings for the Czech carmaker Skoda Auto (SA).

The financial firm Penta acquired ZSNP last year. The firm has carried out an extensive restructuring program and was granted an SKK 1.38 bn syndicated loan by Citibank last year.

ZSNP, Slovakia's second biggest producer of aluminum, cut its loss to SKK 10 mln in 2003, down from a loss of SKK 2.5 bn. The firm has reduced its staff by half to 1,400.


Guyana's president stops in Trinidad to promote investment

Associated Press, Myrtle Beach Sun News, SC Fri, Jun. 04, 2004

PORT-OF-SPAIN, Trinidad - Guyana's president met with officials in Trinidad on Friday to promote investment in the South American country's bauxite and lumber industries.

Guyanese President Bharrat Jagdeo said he wants his country to supply alumina for a new aluminum smelter to be constructed in Trinidad by Pittsburgh-based aluminum giant Alcoa Inc.

Guyana has a large supply of bauxite, which is used to make alumina, the base material for aluminum.

Alcoa has said it will announce construction dates for the new smelter when financing arrangement are finalized in January. Construction is expected to take about two years, officials said.

Jagdeo, who is in this Caribbean nation for a three-day visit, was scheduled to meet with Trinidadian Prime Minister Patrick Manning and business officials late Friday.

Guyana's promotional investment tour has also visited Antigua, Barbados and Suriname and plans to travel to Toronto next week.


On Volta Aluminium Company (VALCO),

GhanaWeb, Ghana 4th Jun 2004

http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID59122

President Kufuor said the Government was currently in deep discussions with investors on how to fully seize and maximize the benefits that might arise from the Management's closure offer to Ghana, which the Government considered to be a worth-while investment.

He said the Government was looking for the investment of capital and technical expertise because with proper management Ghana would be able to have a fully integrated aluminium production industry.

"This may be the one great opportunity which will help provide the quantum leap from a per capita income of 400 dollars to 1,000 dollars which is our medium term target", he said.



Alcoa employees use work ethic to serve community

Spokesman-Review June 6, 2004

Manufacturing good will

Marco Martinez The Wenatchee World

WENATCHEE, Wash. -- The gritty sweat-and-work ethic that helped power Alcoa's Wenatchee Works plant has not been wasted in the nearly three years the smelter has been idle.

Instead of making aluminum, about 300 Alcoa employees have put in more than 100,000 hours of community service work. More than 150 nonprofit agencies, schools and governments have benefited.

Alcoa workers have built park restrooms and retaining walls, planted trees and flowers, taught in schools, served food to
the needy, painted offices, maintained Little League baseball fields, cleaned fire hydrants and installed computer servers.

“I've seen evidence of their work just about everywhere in the nonprofit community,” said James Benham, executive director of Mission Vista Inc., an agency that operates two residential facilities for the developmentally disabled.

Alcoa is essentially subsidizing the work. Under a deal with the Chelan County PUD, the utility is selling Alcoa's share of power produced at Rocky Reach Dam in exchange for the company guaranteeing jobs at the plant. Since the employees are still collecting a paycheck, they must either show up to do maintenance or other work at the smelter or community service work, said Alcoa spokesman Jim Baxter.

The program may be the only one of its kind in the country -- perhaps ever.

Stephen Jordan, director of the U.S. Chamber of Commerce's Center for Corporate Citizenship, said he has never heard of such a large-scale corporate community service effort. Some large corporations allow as many as a dozen employees to work for nonprofit groups for up to one year and still collect a paycheck. Alcoa's program goes way beyond that, he said.

“It's pretty remarkable,” Jordan said from his Washington, D.C., office.

Some, like Benham, have likened Alcoa's campaign to a smaller version of the Civilian Conservation Corps (CCC). The Great Depression-era relief program put 3 million able-bodied, but unemployed, men to work constructing thousands of roads, parks, bridges, trails and ranger stations.

Like the CCC projects, the public benefits from the work done by Alcoa employees. The government agencies, nonprofit groups and schools have not paid for any of the work.

Jo Keyser, president of the Wenatchee Aluminum Trades Council, the umbrella organization for the Alcoa plant's five unions, said union members have enjoyed the community work.

“Every one of them that goes out there absolutely loves it,” Keyser said. “It's helping us learn more about the community.”

The arrangement is a “very creative way” for Alcoa to keep its trained work force intact and do public good, said William Basl, executive director of the state Commission on National and Community Service, which oversees the AmeriCorps program in this state.

Both Alcoa and the PUD deserve credit for reaching a deal at a time when it looked like the aluminum plant would close and all workers would be laid off, said Dianne Cornell, executive director of the United Way of Chelan and Douglas Counties.

“They were certainly able to make lemonade out of lemons,” Cornell said. “Instead of sitting back and waiting for something to happen, they mobilized and were able to make a positive out of a negative.”

Benham said Alcoa employees aren't simply extra muscle and hands to throw at projects, but instead a skilled work force. A retaining wall they built at a residential home was professional-quality work, he said.

“These are multi-talented people with skills ranging from drywall to concrete to electrical work,” he said. “It's obvious that they bring a lot of skills to this community.”

Not all the jobs Alcoans have tackled, though, involve skill. Some projects also have been of the back-breaking variety.

Nick Fox, a Stemilt Irrigation District board member, said Alcoa workers spent three months last summer clearing trees and bushes along the Lily Lake dam face and equalization reservoir. Anywhere from two to eight people volunteered on any given day, he said. The work also included clearing and cutting brush along more than three miles of system pipeline.

“Those guys volunteered for very physical, very hard work,” Fox said. “You couldn't believe they were volunteers for as hard as they worked. I have nothing but praise for them.”

At Ohme Gardens County Park north of Wenatchee, Alcoa workers did nursery work, planted new vegetation and made signs last year, said Mike Short, garden administrator. As many as a dozen volunteers showed up on some days to do work the park could not afford to pay for, he said.

“With those volunteers, we saved a couple of years worth of work,” Short said. “It was stuff that was going to get done eventually, but it would have been a while before we got around to it. It was invaluable.”

When Kenroy Elementary School in East Wenatchee had two volunteers last school year, Principal Bob Busk put them to work in first-grade classrooms.

“We didn't want to use them to install things or do maintenance,” he said. “We asked them to listen to kids read, help kids practice their math and lend a hand with art projects.”

Of course, the service work done by Alcoa employees would not have been accomplished if the Wenatchee Works plant was still producing aluminum ingots.

What happens if and when the plant restarts or shuts down permanently?

“When we get called to start making aluminum again, the paint brushes get put down almost immediately and people go back to work making aluminum,” Baxter said. “But I don't think the community service will stop entirely. There are (Alcoa) people who are being paid right now to do that service work, but you find some of them out there working on Saturdays. They're not getting paid a nickel to do it, but they're out there doing it.”



Dubal produces seven millionth tonne

Khaleej Times, United Arab Emirates - Jun 5, 2004

DUBAI - After 25 years of operations, the UAE aluminium producer Dubai Aluminium Company Limited, (Dubal) is consolidating its position as one of the largest primary aluminium producers in the world touching a total capacity of seven million tonnes of cast aluminium, disclosed Mohammed Al Ghurair, Managing Director, Dubal.


Speaking on the occasion of producing the seven millionth tonne, Al Ghurair said, "Dubal's multi-billion-dollar, state-of-the-art smelter complex comprises seven potlines, a 1,645 megawatt power station, a large carbon plant, two casthouses, a 30-million gallon per day desalination plant.

"We also have large laboratories and research facilities with port and storage facilities that help storing the production before final exportation to the targeted destinations.

"Dubal serves 229 valued customers in 42 countries worldwide. Its key markets are Far East, Europe, the Asean region, the Middle East and Mediterranean region and the US." He pointed out that , from the start we have been implementing expansion plans and going from good to better.

Earlier in April the company has announced that it would expand capacity at the Jebel Ali smelter to 761,000 tonnes from 686,000, he added. "Dubal is has been consistently increasing capacity since the smelter opened in 1979. Now the smelter's six potlines are operating at full capacity with the seventh potline recently installed to increase the total capacity. It has reported increase in demand for its premium aluminium products from all over the world." Abdulla Kalban, Director of operations commented: "The dedicated effort by our employees and the great support we get from Dubai Government are the reason behind the volume of achievement."

He said: "We are dedicated to consolidate Dubal position as a leader of manufacturing primary aluminium and become the largest contributor to the UAE's growing economy. Dubal has twice won the Dubai Quality Award in the production and manufacturing sector. In 1996-2000 it was certified to the international quality standards ISO 9001, QS 9000 and ISO 14001.

The company is still negotiating with the European Union regarding the six per cent carbon tax imposed on aluminium imports, the matter is still pending with the UAE and other AGCC aluminium manufacturers making a lot of efforts to resolve the matter with the EU.

Despite the fact that European Union markets are in need of primary aluminium, the EU political leaders are yet to look into the matter and come with a final resolution.



Alcoa Opens Aerospace Center Shanghai Manufacturing News Center


Jobwerx, United States CHICAGO--June 8, 2004

CHICAGO--June 8, 2004--Alcoa announced yestrday its Alcoa Mill Products business has opened the Alcoa Aerospace Center (AAC) Shanghai, which will supply aerospace material with value-added services to aerospace customers in China and the Asia Pacific region.

AAC Shanghai expands on the series of service centers Alcoa has established in Europe and North America to support Alcoa's aerospace customers. It will be capable of providing just-in-time deliveries, exact quantities and value-added services such as cut-to-size, kitting, and other processing services requested by customers. AAC Shanghai will be housed in the 40,000 sq. ft. (3,716 sq. meters) Alcoa Warehouse Services Shanghai Limited facility located in the Wai Gao Qiao Free Trade Zone area near Shanghai, China.


Commonwealth Industries Agrees to Sell Alflex Electrical Products Unit

PR Newswire (press release) June 07, 2004

LOUISVILLE, Ky.--(BUSINESS WIRE)--June 7, 2004--Commonwealth Industries, Inc. (NASDAQ/NM:CMIN) today announced the sale of its subsidiary Alflex, a leading manufacturer of electrical products with operations in California and North Carolina, to Southwire Company, for a cash purchase price of approximately $60 million. Alflex employs approximately 310 people and had revenues of $100.7 million in fiscal year 2003. Proceeds from the sale will be used to primarily pay down debt and for other corporate purposes.


"Today's divestiture marks a significant strategic step for Commonwealth," said the Company's President and Chief Executive Officer, Mark Kaminski. "We determined that by focusing on our materials recycling and aluminum sheet business we can better position the Company for future success, and this divestiture furthers our dedication of achieving this goal. Looking ahead, we intend to build on Commonwealth Aluminum's strong market share and brand equity.

"We will be focusing on our core competency - leveraging recycled materials and providing our customers with innovative products and service in the materials business," Kaminski continued. "Unique in our industry, we have been building our technical skills and developing creative solutions and new products for our customers. Concentrating our efforts on materials recycling and aluminum sheet production and partnering with our customers to better understand new and existing end market applications for our products provides Commonwealth with significant growth opportunities."

Closing of the sale is subject to the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other conditions standard to these transactions. The sale is expected to close on or before July 30, 2004.

"Despite a weak commercial construction marketplace, the Alflex team has made significant operational and commercial improvements over the last few years. Through Lean Enterprise initiatives, they have eliminated supply chain waste and reduced expenses throughout the organization, and coupled with a company-wide effort to broaden the product and solution offerings, have positioned the Company to benefit from the improving economic environment. These improvements have had a positive impact on the value of Alflex. We thank the Alflex team for their efforts and contributions and wish them continued success in the future," Kaminski concluded.

At closing, Commonwealth Aluminum and Southwire will enter into a multiple year aluminum strip supply agreement. Under the agreement, Commonwealth will continue to supply narrow width aluminum coil to Southwire.

A technology leader, Southwire Company is a major wire and cable provider in North America, manufacturing building wire and cable, MC cable, cord products, utility cable products, industrial power cable, copper and aluminum rod, and continuous casting technology. Southwire is a fifty-four year old, privately held company based in Carrollton, Georgia.


Alcoa's Russian deal under government review

Russia Journal, Russia June 07, 2004

By John Helmer

MOSCOW - Alcoa's bid to buy two downstream aluminium-rolling mills from Russian Aluminium (Rusal) is under parallel investigation by the Federal Anti-Monopoly Service (FAS) of the Russian government, and also by anti-trust authorities in Germany.

The Kremlin has also begun investigating the broad-ranging activities of Rusal's controlling shareholder, Oleg Deripaska; while multi-million dollar tax breaks issued to Rusal companies through the Chukotka region have been revealed by the Russian state auditor, the Accounting Chamber.

Konstantin Dorokhin, spokesman for FAS, confirmed that the transaction documents for the Alcoa deal had been received at his agency, and are now under investigation. "Currently we cannot give details about the investigation, or the review procedures, because this is against service rules. Nobody can be informed about the details before that will finish." 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 judges its value to be relatively small. The source said that a Kremlin investigation is under way of the broader range of activities of Deripaska, who 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 a joint announcement on May 6, 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.

Russian media reports and industry sources suggest that the transaction price is between $200 million and $250 million. An Alcoa source declined to confirm that.

Alcoa and Rusal also announced last month that their transaction is subject to Russian government and regional approvals, which will be sought by June 30. Vladimir Pervakov, deputy chief of the Samara region's Natural Resource Ministry, said: "Unfortunately, we are not in the sale [review] procedure. It should be accepted by the federal authorities, I think the Federal Anti-Monopoly Service. We have no fresh information on what’s happening now.” Kiril Zhitenev, an official of the Rostov regional administration, said he had been to the Belaya Kalitva plant recently where he reported "there are no changes on the production.” He added that the regional government is not informed about the deal review.

An Alcoa source has confirmed that his company has filed for approval of the transaction with the German government's anti-trust agency. "It is part of the overall anti-trust process," he said.

He also confirmed that the transaction has been structured so that the shares of the two Russian mills will be vested in a new corporate entity called Prime Alum, and the shares of the latter then sold to Alcoa. "Rusal has set up the shares in Prime Alum," the Alcoa source said, "and we will be purchasing those shares. It is a legal technicality."

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 last month, Russia's Accounting Chamber -- the independent state auditor comparable to the US General Accounting Office -- 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."


RusAl Reacts Angrily to UES Allegations

MOSNEWS, Russia : 07.06.2004

Marina Pustilnik

In an official statement issued on Monday, June 7, Russia’s largest aluminium producer Russian Aluminium (RusAl), which on Friday was accused by UES Chairman Anatoly Chubais of meddling in the power sector’s reform, denied all the allegations and criticized the power monopoly’s approach to reform.

As MosNews reported on June 4, Anatoly Chubais, chairman of state-owned power monopoly Unified Energy System said that the company’s reform and with it all of broader initiatives to make over Russia’s power system are being hampered by UES’ minority shareholders. Chubais named RusAl as the major culprit, virtually accusing the aluminium producer of putting its interests above those of the power monopoly, in which it is a shareholder.

The statement released by RusAl says: “While it is true that RusAl’s shareholders have invested in the electricity sector, RusAl is not and has never been a shareholder in UES. However, RusAl is one of the largest electricity users in Russia, directly and indirectly consuming about ten percent of Russia’s electric power output. Precisely because of this we are eagerly watching the electricity reforms being implemented by UES management, and seek to understand where they will lead: on the one hand, to more transparency, cost reduction, more investment for development and a stable and long-term tariff policy; or, on the other hand, merely to increased tariffs for all consumer groups including both residents and industry.”

Further in the document RusAl strongly criticizes UES management for a lack of “concrete action” on establishing new power capacities. The power monopoly is also accused of “relying entirely on the blunt and inefficient instrument of increased tariffs and subscriber fees to build the company’s capital investment budget”.

Such a strongly-worded statement by RusAl, which is controlled by business tycoon Oleg Deripaska, marks a direct change from the past, when Russia’s large business preferred to solve its conflicts behind closed doors. It also exemplifies a difference between different types of Russian businessmen. Some like Anatoly Chubais and Vladimir Potanin, owner of the Norilsk Nickel mining giant, position themselves as state-minded, while others like Deripaska, who earlier criticized the government’s economic policies, are more “independent”. Whether such independence holds negative consequences for Deripaska and RusAl remains to be seen.

Background

Despite the official statement by RusAl about not owning any energy assets which currently make up the structure of UES, the aluminium producer is being “tongue-in-cheek” about the issue. 75 percent of RusAl’s shares are owned by the Basic Element holding chaired by Oleg Deripaska. Basic Element also holds a blocking stake in the Krasnoyarsk-based Boguchansk hydro power plant and a 70 percent stake in the Krasnoyarsk hydro power plant. The holding proposed the idea of merging these two plants, but the idea was not supported by UES. RusAl is also the largest consumer of electricity produced by the Sayano-Shushenskaya hydro power station located in the Republic of Khakassia. When the agreement, according to which RusAl received energy at a minimum price was terminated, RusAl backed the regional authorities in their attempt to declare the 1993 privatization of the asset invalid. Currently Sayano-Shushenskaya hydro plant is subject to a fierce privatization dispute.

Unified Energy System is currently in the midst of a reform of Russia’s power sector, which is to see all power traded on the wholesale market at non-regulated prices starting 2006 and the establishment of ten wholesale generating companies (OGKs).


Hydro could become Gazprom's partner in the Shtokman field

Norway Post, Norway 5. Juni 2004

Alexey Miller, the top executive of the Russian oil company Gazprom indicated in a meeting with Hydro's President and CEO, Eivind Reiten (photo), that Hydro could be one of the most important partners in the Shtokman gas field, on the Russian side of the Barents Sea.

It has been agreed that a work group shall now draw up a proposal for the concrete agreements on Hydro's possible participation in the development of the Shtokman field.

"This is very pleasing for Hydro and for Norwegian offshore expertise as a whole. Hydro is now seeing the results of its long-term engagement in oil and gas activities in Russia," says Eivind Reiten, President and CEO in Hydro.

The head of Gazprom, Alexey Miller, underlined at the meeting that Hydro could be one of the most important partners in the development of the gas field, on the basis of Hydro's unique technological position and its experience of offshore production and the transportation of gas from offshore fields.

"This is a recognition of Hydro's expertise after 30 years on the Norwegian continental shelf, and not least Hydro's technological project expertise from the Ormen Lange field development, which we hope to transfer and expand in the development of Shtokman together with Gazprom. There is potential here for reducing the cost estimate for the development by 30 percent," Reiten points out.

"Gazprom seems to feel that Hydro can contribute to an efficient development of Shtokman, but it must be underlined that there are a number of questions that need to be clarified, such as the progress plan for the development, ownership stakes and other conditions," Reiten stated.

The Shtokman gas field is one of the largest in the world, localized in the deep water continental shelf on the Russian side of the Barents Sea, around 500 kilometres from Murmansk.

Hydro is a Fortune 500 energy and aluminium supplier operating in more than 40 countries.

According to a company statement, Hydro is a leading offshore producer of oil and gas, the world's third-largest aluminium supplier and a leader in the development of renewable energy sources, and with 36,000 employees world-wide.

(HUGIN)

Rolleiv Solholm



AST, Honeywell implement multimillion-rand project for Aluminium Bahrain

ITWeb, South Africa 8 June 2004

[Johannesburg, 8 June 2004] - The AST Group and Honeywell Process Solutions have been awarded a multimillion-dollar order from Aluminium Bahrain (ALBA) to provide a manufacturing execution system (MES) for the company's Line 5 expansion project.

ALBA is currently undergoing a plant expansion to increase production from 530 000 to 840 000 tonnes per annum with the construction of a new Potline-5. The MES will provide the new plant with state-of-the-art information technology to streamline data handling and enhance decision-making processes across the value chain for Line 5 plants comprising Carbon, Reduction and Casthouse, as well as two upstream supply sectors being Power and Calciner.

The AST Group of SA has previously partnered with Honeywell to deliver consulting services for defining the MES and for implementing a total integrated production solution to ALBA. AST provides MES domain expertise in aluminium smelting and also enterprise resource planning (ERP) consulting which will provide value-added services to the supply of the MES in which AST is the market leader for such services in SA. These are supplied by AST's IPS and ERP Solutions divisions.

"The combination of Honeywell's state-of-the-art technology and Aluminium Smelter focused implementation team was the most cost-effective solution to help ALBA achieve its business vision. We firmly believe this project will lead to productivity improvements at our site and help us realise our goal of being one of the lowest cost producers," said Peter Cowie, ALBA's General Manager, Line 5 Operations.

Both AST and Honeywell are providing skilled MES resources to the joint project which will be managed as one team together with a BMS team from ALBA for delivering the MES using the Bussiness.Flex product suite of Honeywell and the production modules of SAP R/3 as the technology baselines.

Anton Rossouw, Project Engineer of the MES implementation, said: "The integrated standard products offer ALBA a lowest total cost of ownership when set against the classic bespoke solutions of the past. Our challenge now is to meet the business expectations within a very tight schedule set by the Line 5 commissioning programme. To achieve this we have assembled a strong team and merged the ALBA team with the Honeywell-AST team. The ALBA team members are directly linked to the business managers to ensure that two-way communications take place throughout the project. We recognise the critical need for user participation as they will become the owners."

The project is expected to be completed in March 2005.
 


UES Retains Russia's Biggest Dam

Moscow Times, Russia 09 Jun 2004

Reuters A Siberian region that won a court case to renationalize Russia's biggest dam has agreed to drop its demands, a regional official said Wednesday.

The government of the Khakasia republic earlier this year won a case contesting a 1993 deal that transferred the Sayano-Shushensk dam from state control to national power utility UES, because the region was not consulted.

Deputy Prime Minister Alexander Zhukov sent a letter to Economic Development and Trade Minister German Gref asking him to obey the order and transfer ownership to the state.

The news hit UES stock and triggered fears it could be the start of a renationalization process.

Khakasia agreed to drop its demands during a meeting between the republic's president, Alexei Lebed, Gref and UES CEO Anatoly Chubais, the spokeswoman said.

UES will, in turn, cancel its recent decision to re-register the dam from Khakasia to the neighboring Krasnoyarsk region. Russian companies pay taxes to the budgets of regions where they are registered.

"They have agreed that there will be no re-registration," Kobets said.

Sayano-Shushensk station has one big consumer -- a giant smelter owned by RusAl, one of the world's top aluminum producers, which takes about 75 percent of its electricity at prices lower than elsewhere in Russia.

Kobets said Khakasia would prepare documents within a week to oblige the Sayano-Shushensk dam to pay a water tax not only to Khakasia budget, but also to neighboring regions Krasnoyarsk and Tuva.

Gref has promised that a rise in electricity prices, part of Russia's electricity sector reform, will take place more gradually in Khakasia than in other regions.



Aluminum alloys to account for 100% Sayanogorsk output by 2007.

Gateway 2 Russia, Russia 09 June 2004 18:08

Sayanogorsk Aluminium Works will produce only aluminium alloys, reaching 491.5 ths tons by 2007, Oleg Burkatsky, executive director of the enterprise, said Tuesday.

To this effect, the company is implementing 3 projects. The first project (implemented in tandem with Hydro Aluminium) sets forth cylindrical bar production. The capacity is expected at 160 ths tons on year. The second project provides for foil bar production (70-80 ths on year). The third project provides for thousands group alloy production (for automobile industry, up to 100 ths tons).

The works produced 459 ths tons of aluminium in 2003, alloys accounted for 33%.


Alcan Announces Senior Management Team for New Rolled Products Company

PR Newswire (press release)

MONTREAL, June 9 /PRNewswire-FirstCall/ - Following Alcan's May 18, 2004
announcement of its intention to pursue a spin-off to its shareholders of
substantially all of the rolled products businesses held by Alcan prior to its
acquisition of Pechiney, Alcan Inc. (NYSE, TSX: AL) today announced the
prospective management team for the new rolled products company.
"I am extremely excited about working with this initial team of talented
individuals as we form this new company. Their experience, enthusiasm and
knowledge of our businesses will create an excellent foundation from which to
build and further enhance the performance of this world leading rolled
products company," said Brian W. Sturgell, who was named to become chief
executive officer of the new company at the time of the announcement and who
is currently an executive vice president, Alcan Inc.
The new company will be managed as one global rolling business with four
(4) regional business groups (Asia, North America, South American and Europe).
The members of the new company's executive management team will report
directly to Brian W. Sturgell. The individuals and their roles in the new
company are as follows:

MARTHA BROOKS, 45, currently president and chief executive officer of
Alcan's Rolled Products Americas and Asia business group will become chief
operating officer of the new rolled products company.

GEOFFREY BATT, 56, a former vice president and financial controller of
Alcan's Rolled Products Americas and Asia business group with over 29 years
experience, will become chief financial officer.

PIERRE ARSENEAULT, 48, who until recently lead the integration efforts
between Alcan and Pechiney and was previously president, Rolled Products,
North America, and previous to this, president, Light Gauge Products, North
America and South East Asia. He will assume responsibilities for strategic
planning and IT for the new rolled products company.

DAVID GODSELL, 48, currently vice president, human resources for Alcan's
Rolled Products Americas and Asia business group will be responsible for human
resources and EHS for the new rolled products company.

BRENDA PULLEY, 46, currently vice president, corporate affairs and
government relations will assume responsibilities for corporate affairs and
communications within the new rolled products company.
Reporting to Martha Brooks in her role as chief operating officer will be
the four regional leaders:

CHRIS BARK-JONES, 57, currently president and chief executive officer of
Alcan's Rolled Products Europe business group will assume the leadership for
Europe.

KEVIN GREENAWALT, 47, currently president, Rolled Products North America
will assume leadership for North America.

JACK MORRISON, 52, currently president, Rolled Products Asia will assume
leadership for Asia.

TADEU NARDOCCI, 46, currently president, Rolled Products South America
will assume leadership for South America.

While a number of significant decisions have been made, a number of the
key positions are not yet filled and will be announced in due course.
The new rolled products company will be a world-leader with revenues of
over US$6 billion. Following all regulatory approvals, the new company is
expected to be established in Q4 2004. The structure and appointments
announced today are provisional and will become effective once the transaction
is final and the two companies become independent.



RusAl expects $4.5bn in revenues

RosBusinessConsulting, Russia 09.06.2004,

Moscow 15:57:04.RusAl has announced that its revenue for this year will reach $4.5bn. Earlier RusAl Financial Director Vladislav Solovyov announced that RusAl expected a decrease in revenues for this year from $4.5bn to $4.2bn for 2003. According to him, the company will disclose its results after making a decision on the possibility of an IPO (2006-2007) or when issuing Eurobonds (2005). The issue will be worth at least $300m, Solovyov added. But the final decision on the necessity of the issue is not made as yet, he stressed. Currently the company is attracting loans and uses its equity capital to provide financing for its investment programs. RusAl's loan portfolio totals $2.2bn, the interest rates on it average 7.8-8 percent. RusAl is in negotiations with the European Bank for Reconstruction and Development to attract a bank loan to finance the construction of the Sayanogorsk aluminum smelter. The second stage of the construction is estimated at $780m. The company is now negotiating with rating agencies on the possible assignment of credit ratings. RusAl expects its rating to be consistent with Russia's sovereign rating.
--------------------------------------------------------------------------------
Corrected: Russian Aluminium (RusAl) sees its 2004 earnings 7% dn on year to $4.2 bln, RusAl Financial Director V. Soloviev said corrected to RusAl is intending to maintain 2004 earnings in line with a year earlier - at $4.5 bln, the press service said.

The corrected information is given below.
Russian Aluminium (RusAl) is willing to maintain its earnings in line with a year earlier - at $4.5 bln, the press service said.

Aluminium production will equal 2.6 mln tons, similar to a year earlier, alumina output - 2.8 mln tons (vs. 3 mln in 2003). Alumina production will widen to 6 mln tons by 2009, aluminium product output will rise to 3.8 mln tons.



BHP, Rio prey on Alcan

The Australian, Australia June 10, 2004

By Andrew Trounson

CANADA'S Alcan, the world's second-biggest aluminium company, is being tipped as a takeover target for predators such as Rio Tinto, BHP Billiton and Britain's Anglo American.

Last month, Alcan announced a plan to spin off its aluminium rolled products business in a move to appease competition regulators in the US and Europe following its E4 billion takeover of French rival Pechiney late last year.

Analysts believe the restructured Alcan - focused on aluminium smelting, alumina refining and bauxite mining - could be a tempting target for the likes of Rio Tinto and BHP, which have been expanding their own aluminium and alumina capacity.

"A simplified and streamlined Alcan presents a more compelling target," Deutsche Bank resources analyst John MacKinnon said.

"We expect a successful demerger by Alcan will open the door for further consolidation and raise the possibility for the first trans-Atlantic merger in the United Kingdom mining sector."

Rio and BHP are listed in London as well as Australia.

Rio would appear to be well placed to pursue a takeover of Alcan, having taken advantage of the recent boom in commodities prices to offload a swag of non-core assets.

At BHP, it is thought former chief executive Brian Gilbertson investigated a takeover of Alcan. Under current chief executive Chip Goodyear, however, the company has been more focused on delivering in its pipeline of new projects.

In Australia, Alcan operates the Gove alumina refinery in the Northern Territory. In Queensland, the state Government controversially seized Alcan's Aurukun bauxite tenements in frustration at the lack of a mine development



Vedanta seeks partners for $1bn refinery

Financial Times, UK - June 9 2004 22:29

By Khozem Merchant in Mumbai

Vedanta, the London-listed minerals company, has invited international minerals companies to acquire a minority stake in its $1bn alumina refining project in India, said Anil Agarwal, chief executive.


He did not name the potential bidders but people close to the deal said BHP Billiton of Australia, South African coal-miner Xtrata, Pechiney of France, Canada's Alcan, and Alcoa of the US are among at least six companies that have been approached.

Vedanta is also thought to have targeted companies in China, where demand for alumina - the intermediate material that is refined into aluminium - is strong.

Vedanta favours selling a small stake to an end-user of alumina, which could also be awarded a long-term contract to buy part of the refinery's output, Mr Agarwal said. But two separate deals - one for a stake sale and another for the output - have not been ruled out.

"The crucial thing is to gain a long-term contract [with an end-user]," Mr Agarwal told the FT. Talks could be completed within two months. Mr Agarwal dismissed the idea of a stake-holder being given a seat on the board of Vedanta, the holding company for the group's mineral assets in India. The stake-holder might gain a seat on Vedanta Alumina, the unit that manages the refinery.

Construction of the refinery - the jewel of the group's $2bn capital investments in India - should be completed by 2009. Vedanta requires 60 per cent of the refinery's 1.4m tonne annual output; the balance would be sold to the stake-holder under the new deal.

"This is a way of sharing risk," said a person familiar with Vedanta's plans, who added that the alumina would be sold at market prices but "the appeal is to secure long-term supplies at a time of rising demand".

Analysts point out that Vedanta's search for a partner for its refinery comes less than a month after the election of a new Indian government that is opposed to privatisation. Many of the recipients of Vedanta's letter had expressed interest in bidding for Nalco, India's largest aluminium company, whose privatisation has been all but abandoned by the new government. "India remains an attractive minerals market and Vedanta's offer is a way of getting in," said an analyst in Mumbai.

Vedanta raised $1bn in an initial offering last year but it has been overshadowed by accusations of governance problems. The company appointed Brian Gilbertson, formerly of BHP, and others, but to little avail. Vedanta's share price is down by about 30 per cent from its issue price.



Russian Aluminum Company to Expand to Kazakhstan

Times of Central Asia (subscription), Kyrgyzstan, June 11, 2004

By Dinara Sarsenova, TCA contributor, TCA

ALMATY (TCA). According to the press service of Kazakhstan's Eurasian Industrial Association (EIA), there will be two alumina plants in Kazakhstan - the already existing AO Alyuminiy Kazakhstana in Pavlodar and a new alumina plant to be constructed in cooperation with Russia's Russky Alyuminiy - in addition to two other aluminum plants - EIA's cooperative projects with Russky Alyuminiy and Switzerland's Corica.

Corica AG, which holds 31.76% of Alyuminiy Kazakhstana, has already begun the construction of an aluminum plant. Russky Alyuminiy plans to build an alumina plant and an aluminum plant in Kazakhstan.

The international aluminum market expects a deficit of 400,000 tons in 2005. According to Reuters, Chinese aluminum producers announced the intention to lower production, due to government restrictions imposed on investment projects in the aluminum sector, growing prices for energy sources, and regular electricity supply failures. According to analysts, the international demand for aluminum grows by 8%-9% a year, and has already reached 30 million tons. In the next 10 years the demand would grow by 5% annually.

However, experts think that Russky Alyuminiy's intention to build two plants in Kazakhstan before 2010 (the projects do not even have feasibility studies) seems spontaneous.

Before coming to Kazakhstan, Russky Alyuminiy tried to expand abroad. This year the Russian company tried to buy 65% of Jamaica's Alpart alumina plant from Kaiser Aluminium, to raise its own alumina supply to 80% of the company's need.

Russky Alyuminiy also tried to gain control of India's NALCO, competing with the world's leading companies in this sphere (Alcoa, Alcan, Pechiney, BHP Billiton, and Glencore International).

Russky Alyuminiy also promised to load the Tajik Aluminum Plant working at 20% of its capacity. The Russian side offered the scheme- "debt payment in exchange for investment." Tajikistan's US $300 million debt before Russia was rescheduled in 2002. The project, however, requires investment in hydroelectric power plants supplying electric energy to the Tajik Aluminum Plant. Tajikistan's Sangtude hydroelectric power plant needs US $420 million and the Rogun power plant US $1.3 billion in investments.

Commenting on Russky Alyuminiy's deal with Kazakhstan's EIA, the chief of the EIA press service said the companies have only signed a memorandum, and it's too early to talk about the energy sources required for the two future plants and the preparation of feasibility studies for the projects. He only suggested that Kazakhstan's Ekibastuz coal basin could provide the required energy.

Last week news agency AK&M reported that 100% of Russky Alyuminiy stocks have been transferred into nominal holding by the Soyuz commercial bank. The company administration did not comment on the reasons for the change of its capital structure. Analysts think this step would mean a future complete or partial change of Russky Alyuminiy's owners. Alcoa is considered a potential buyer for Russky Alyuminiy.


Chalco to boost alumina output by a third

Financial Times, UK June 11 2004 5:00

By Enid Tsui in Hong Kong

The chief executive of Aluminum Corp of China (Chalco), the country's largest producer of the metal, said yesterday the company would boost alumina output by a third next year, despite government measures to curb over-investment in aluminium production.


The company, which last month said it would invest in a $1bn refinery with CVRD in Brazil, would continue to benefit from a shortage in China of alumina, the basic raw material for aluminium, said Xiao Qaqing, who took over as chairman and chief executive this week.

Beijing's measures, including a ban on bank loans for the building of large aluminium plants, were necessary for the sustainability of the country's overall aluminium production industry, he said.

But even with the measures, demand for alumina would remain robust. Chalco, which has an effective monopoly over alumina production in China, was currently able to meet only half of domestic demand, justifying further investment in the sector.

The Hong Kong and New York-listed company, which raised HK$3bn (US$385m) in a January share placement, is maintaining its March forecast of a 7 per cent growth in alumina output this year to 6.5m tonnes.

It is aiming for a significant jump in capacity next year, when output should reach 8.5m tonnes. Chalco's net profit was Rmb3.6bn (US$43.7m) last year on turnover of Rmb23.2bn.

However, Joshua Chen, chief financial officer, said Chalco would not invest in new facilities for producing primary aluminium products and would look to acquisitions for growth in that area.

Chalco is in talks with Chinese, Australian and Vietnamese producers. Mr Xiang confirmed reports that Chalco was negotiating to acquire a majority stake in Lanzhou Aluminium, one of the country's largest producers, but did not give further details.

Mr Chen said this year's profit margin would match or exceed last year's 35 per cent, as prices remained high. The average price for alumina rose from Rmb2,800 a tonne last year to Rmb3,500 in April.

The share price of the company, in which Alcoa of the US owns an 8 per cent stake, closed at HK$4.10 yesterday.


RusAl to Buy Kazakh Plant to Supply Its $3Bln Smelter

Moscow Times, Russia Friday, June 11, 2004. Page 7

Bloomberg Russian Aluminum plans to buy a power plant in Kazakhstan to supply factories that the company is building in the former Soviet republic for $3 billion, RusAl's controlling owner, Oleg Deripaska, said.

"We chose Kazakhstan for a smelter because of the country's cheap power," Deripaska, who owns 75 percent of RusAl through holding company Basic Element, told reporters.

RusAl and the Eurasian Financial Industrial Co., a group that owns shares in Kazakh natural-resource companies and banks, agreed to build an ore-processing refinery and a smelter able to produce 500,000 tons of aluminum, he said.

RusAl, which makes an eighth of the world's aluminum, plans to increase output by 37 percent by 2010 to catch up with world No. 1 Alcoa Inc. as prices rise amid surging demand for the metal, used in products from beer cans and kitchen foil to airplanes and space shuttles.

Millhouse Capital, controlled by billionaire Roman Abramovich, owns 25 percent of RusAl.

Deripaska did not say how much the power plant in Kazakhstan may cost or whether Basic Element alone would own the generator.

Alcoa last month agreed to buy controlling stakes in RusAl's aluminum-rolling plants in Samara and Belaya Kalitva.

RusAl's owners do not plan to sell stakes in any of the Russian company's smelters of primary aluminum to Alcoa, he said.

Basic Element boosted its RusAl stake to 75 percent in October when it bought a quarter of the company from Abramovich's Millhouse for an undisclosed price.

Basic Element has the first right to buy the rest of Millhouse's stake until October 2008, Deripaska said, adding that he does not have immediate plans to buy out Millhouse's RusAl stake and is not in talks with Abramovich.



Global Alumina Products Corporation (GAPCO) CEO Bruce Wrobel to Present at CRU Group Aluminium Conference

Yahoo News (press release) Friday June 11, 2:28 pm ET

Press Release Source: Global Alumina Products Corporation

NEW YORK, June 11 /PRNewswire/ -- Bruce Wrobel, Chairman and Chief Executive Officer of Global Alumina Products Corporation (GAPCO), will be presenting at CRU Group's 9th World Aluminium Conference being held in New York, New York. His presentation, "Boke Alumina Refinery: Breaking Ground in Guinea," will focus on the details of GAPCO's development of a US$ 2 billion alumina refinery project in Boke, Guinea. The refinery, which is designed to have an initial capacity of 2.8 million tones per annum, is expected to commence production in 2008.

Presentation materials will be available on the Investor Relations section of the Web site or upon request.

ABOUT GAPCO

Global Alumina Products Corporation (GAPCO) is a company that intends to use the vast bauxite resources of the Republic of Guinea to produce alumina for sale to the global aluminum industry. GAPCO is positioned to be one of largest companies focused solely on alumina production and sales, and offers an opportunity for socially responsible investing in a country that holds over one-third of the world's bauxite resources. GAPCO is headquartered in Saint John, New Brunswick with operations in Boke, Guinea and has administrative offices in New York, London, Montreal and Conakry, Guinea. For more information please visit http://www.globalalumina.com.




Dubal to increase smelter capacity - UAE

MENAFN, Middle East Khaleej Times - 13/06/2004

DUBAI - Dubai Aluminium Company Limited (DUBAL), one of the largest non-oil contributors to the economy of Dubai and also one of the largest single site aluminium smelter in the western world, held a ceremony at its aluminium's smelter complex in Jebel Ali, to mark the company's latest expansion project, Potline-7 worth Dh748.7 million.


The new project will add 75,000 metric tonnes of primary aluminium per year, and increase the total smelter capacity from the present 686,000 to 761,000 metric tonnes per year.

Mohammed Al Ghurair, managing director of Dubal, said: "Dubal's success over the years can be attributed to the vision and leadership of our Chairman, Shaikh Hamdan bin Rashid Al Maktoum, who directed us to undertake this new expansion project which will contribute significantly to the national economy. This is the fifth project in Dubal's growth and development.''

According to Abdullah Kalban, director of operations, "Management of the project has been entrusted to SNC Lavalin Europe BV and is scheduled for completion during the last quarter of 2005.''

The operation of the new line will be supervised by a team of Dubal's UAE nationals.


BHP, Anglo Amer Silent On S Africa Aluminum Invest Talk

Yahoo News 6/15/04

JOHANNESBURG (Dow Jones)--Global resource giants BHP-Billiton PLC (BHP) and Anglo American PLC (AAUK) have both declined to comment on a local press report concerning their possible interest in developing an aluminum smelter at Coega on South Africa's east coast.

Johannesburg's Business Day newspaper Monday said the South African government has approached BHP-Billiton and Brazilian base metal group CRVD to invest in the proposed smelter.

It also cited an unnamed analyst as saying Anglo American could be interested in getting into aluminum.

Spokesmen for the Coega Development Corp. or the government weren't immediately available for comment.

Speculation about other possible investors in the project comes shortly before Canadian group Alcan Inc. (AL) is expected to announce whether it will proceed with an anchor investment in the $2.2 billion project.

Alcan said last month it would make a decision in late June or early July.

Alcan has been assessing its involvement in the project over the past few months since acquiring Pechiney of France, which had earlier entered discussions with the South African government about an investment at Coega, a port and industrial development zone being built from scratch.

Commenting on Business Day's report, BHP-Billiton spokesman Michael Campbell said: "The market is rife with speculation and rumor, but we're not going to comment."

BHP-Billiton already produces about 1.4 million tons of aluminum annually from its Mozal smelter in Mozambique and its Hillside and Bayside smelters in South Africa.

"We have indicated that we are investigating brownfields expansion opportunities at these projects," Campbell said.

This suggests the group is more disposed toward expanding its existing facilities than to investing in a new site.

In the late 1990s, Billiton, prior to merging with BHP, did consider a zinc refinery at Coega with Japan's Mitsui, but this idea came to nothing.

Meanwhile, Anglo American's Marion Duncan also said the company wouldn't comment on speculation.

The company has never officially said it would like to become involved in the aluminum production industry.

Two state-owned entities, the Industrial Development Corporation and power utility Eskom have each committed to taking a 12.5% stake in the smelter project.

When first mooted in 2002, Pechiney was eyeing a 49% stake an annual aluminum production of 460,000 metric tons.



Analysts cut forecasts for 2004 prices key metals

Purchasing.com, United States June 14, 2004


Nonferrous metals analysts at Morgan Stanley in New York and analyst Peter Blight of UBS in London have cut their forecasts for 2004 prices of copper, aluminum and nickel. They say slower growth in China, a higher U.S. dollar and rising interest rates is cooling the speculative frenzy that had driven raw materials through the roof.
London Metal Exchange copper averaged $1.26/lb through May (versus 81¢/lb for all of 2003) while aluminum was 75¢ (vs. 65¢) and nickel was $6.17 (vs. $4.37). Morgan Stanley analysts cut their LME average spot copper to $1.26/lb from $1.35 earlier, aluminum to 75¢ from 78¢ and nickel to $6 from $7. Meanwhile, Blight has dropped his estimate for aluminum to 78¢ from 84¢ cents, lowered copper to $1.28 from $1.44 and cut nickel to $5.89 from $7.20.The prices earlier this year were driven sharply higher by speculators, who have since pulled out of the market, sending prices down off their peaks. "We now know that price increases in January and February were exaggerated more than we realized at the time by speculative buying," says Blight. "The departure of speculators from metals markets removes the potential for prices to reach the peaks we had previously estimated for" the third quarter of 2004. Also, concerns that the China metals demand boom could turn into a bust have mounted in recent months, as inflation has perked up and worries have grown about the bad loans estimated to make up 20% to 40% cent of China's banking sector. Chinese authorities have been trying to engineer a soft landing by reining in bank lending to the most overheated sectors, stoking forecasts that demand for metals and other commodities will continue slowing. ADVERTISEMENT

© 2004, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.


Global Alumina Products Corporation Announces Listing on TSX Venture Exchange

PR Newswire (press release)

NEW YORK, June 14 /PRNewswire-FirstCall/ -- Global Alumina Products
Corporation ("GAPCO") (TSX VEN: GPC.U), formerly PL Internet Inc. ("PLI"),
announces that it has received final acceptance of the listing of its common
shares on Tier 1 of the TSX Venture Exchange. Effective at the opening of
trading on June 15, 2004, GAPCO's common shares will commence trading on the
TSX Venture Exchange under the symbol "GPC.U". Trading of GAPCO common shares
will be quoted in U.S. dollars. The number of GAPCO common shares outstanding
is 102,159,623 (136,169,623 on a fully diluted basis; GAPCO has issued
33 million warrants and has granted 1,010,000 stock options).
On May 28, 2004, GAPCO announced the completion of a business combination,
which was approved by the shareholders of PLI, Severrin Limited and GAPCO
(Guinea Aluminum Products Corporation) Ltd. In addition, the PLI shareholders
approved GAPCO's by-laws and elected the following persons to GAPCO's board of
directors: Bruce Wrobel (Chairman), Michael Cella, Bernard Cousineau, Alan
Gayer, Kunihiko Hisgashi, Masumi Kakinoki and Karim Karjian. GAPCO's officers
are Bruce Wrobel, Chairman and Chief Executive Officer; Bernard Cousineau,
President and Chief Operating Officer; Michael Cella, Senior Vice President,
Chief Financial Officer and Secretary; Ian Porteous, Senior Vice President and
Chief Technology Officer; and Frank Donohue, Senior Vice President of
Construction and Engineering.
On May 27, 2004, GAPCO granted an aggregate of 1,010,000 stock options
pursuant to its stock option plan, which plan has been approved by its
shareholders. All such stock options have an exercise price of US $1.50 and a
term of five years. Of the 1,010,000 stock options that were granted, an
aggregate of 375,000 were granted to the following officers and directors:
250,000 to Michael Cella; 75,000 to Bernard Cousineau; and 50,000 to Ian
Porteous. An aggregate of 635,000 options were granted to other GAPCO
employees.
GAPCO is near completion of its acquisition of Aluminpro Aluminium
Industry Professionals Inc. ("Aluminpro"), one of the world's leading
consulting groups specialized in the upstream aluminum industry (bauxite,
alumina, smelting and power). Aluminpro's professionals bring to GAPCO over
750 years of combined experience in the industry. In connection with this
acquisition, GAPCO expects to issue an additional 500,000 common shares and
250,000 warrants. A pre-closing was completed on June 3, 2004, at which time
US $500,000, the cash portion of the consideration, was paid to the Aluminpro
shareholders. The issue of these common shares and warrants will be completed
once regulatory approval is received.
Certain shareholders of GAPCO have agreed to place some or all of their
GAPCO shares into escrow under the TSX Venture Exchange's Tier 1 value
security escrow agreement. A total of 31,880,000 GAPCO shares have been
placed into escrow and will be released over a period of 18 months from the
date of the TSX Venture Exchange bulletin announcing the listing of GAPCO's
shares.
GAPCO continues to make progress in the development of its alumina
refinery project in Guinea. Negotiations of the Concession Agreement with the
Government of Guinea are proceeding satisfactorily and GAPCO is scheduled to
meet with Guinea's Minister of Mines and Geology on June 19 and 20 to further
its negotiations. GAPCO expects that the Government of Guinea will extend its
Memorandum of Understanding, which currently expires on June 30, 2004, to
allow negotiations to continue. If the Concession Agreement is not finalized,
or the Memorandum of Understanding is not extended, by June 30, 2004, GAPCO
would have no formal arrangements in place with the Government of Guinea.
GAPCO's environmental consultants are currently in the field preparing the
environmental impact assessment studies and a preliminary study of the port
facilities area will be submitted to the Government of Guinea during the week
of June 13, 2004. GAPCO has collected bauxite samples from the intended
supply plateaus and begun testing for processability, filtration and
comminution of the bauxite. To date, GAPCO's engineering consultants, The
Hatch Group, have maintained their expected schedule, recently publishing the
designs for the refinery process flows and the mass and energy balance.
GAPCO faces a number of risks, including the following: GAPCO is a
development stage company; GAPCO's success is contingent on completing certain
agreements with the Government of Guinea; GAPCO's business is subject to
fluctuations in the aluminum and alumina markets; GAPCO's success is
contingent on the economic viability of its alumina refinery project; GAPCO
will require additional financing in order to fund construction of its alumina
refinery project; and GAPCO faces competition from other aluminum and alumina
industry participants. Further information about these and other risk
factors, and about GAPCO, is contained in the management information circular
of PLI dated April 2, 2004, a copy of which can be obtained on SEDAR at
http://www.sedar.com .

ABOUT GAPCO
Global Alumina Products Corporation (GAPCO) is a company that intends to
use the vast bauxite resources of Guinea to produce alumina for sale to the
global aluminum industry. GAPCO is positioned to be one of the largest
companies focused solely on alumina production and sales, and offers an
opportunity for socially responsible investing in a country that holds over
one-third of the world's bauxite resources. GAPCO is headquartered in Saint
John, New Brunswick with operations in Boke, Guinea and has administrative
offices in New York, London, Montreal and Conakry, Guinea. For further
information visit our website at http://www.globalalumina.com .

This press release includes certain "forward-looking statements". All
statements, other than statements of historical fact, included herein,
including without limitation statements regarding future plans, goals and
objectives of GAPCO, are forward-looking statements that involve a number of
risks and uncertainties. There can be no assurance that such statements will
prove to be accurate and actual results and future events could differ
materially from those anticipated in such statements. Accordingly, readers
are cautioned to not place undue reliance upon the forward-looking statements
included herein.

For further information, please contact:
Janice Miller Michael Cella
GCI Group GAPCO
P: 212-537-8051 P: 212-223-6750
E: jmiller@gcigroup.com E: cella@gapcoltd.com

The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.


SOURCE Global Alumina Products Corporation
Web Site: http://www.globalalumina.com


ALSCON: FG Cautioned on Investors' Integrity

This Day, Nigeria, 15 Jun 2004

From Onyebuchi Ezigbo in Abuja

As the final phase of the privatisation of Aluminum Smelter Company of Nigeria (ALSCON), in Ikot, Abasi opens today, the Federal Government has been called upon to take a second look at the integrity of the two pre-qualified bidders, especially as it concerns their financial base.

A man who described himself as a "concerned Nigerian" and an indigene of Ikot Abasi in Akwa Ibom State, Mr. Okon Inyang made the call in a statement in Abuja at the weekend.

Inyang urged the Federal Government not to let ALSCON fall into the hands of any investor that is ill-prepared and lacks the needed resources and whose corporate orientation is alien to global best practices in terms of corporate transparency, accountability, good record of corporate governance, a sense of social responsibility and managerial capacity.

Inyang alleged that one of the pre-qualified bidders who had been involved in business deals in Eastern Europe was recently involved in a messy deal with an aluminum producing company in Guinea, which ended up in a London Court late last year.

According to him, the said investor was taken to court for its inability to keep to the investment agreement and refusal to pay $3.5 million fee for acquiring a controlling interest in the Guinean Company.

"We are worried that one of the bidders has shown early signs that it is ill-prepared to buy and manage ALSCON successfully because it has been unable to pay up the required deposit for the expression of interest in the exercise", he said.

He observed that from the on-going broad public policy reforms of the Obasanjo administration, it is clear that government intends to engender Nigeria's speedy industrial take off.

This, he maintained, presupposes that all interest groups should cast aside sentiments and ensure that a core investor with the necessary technological ability, the cash as well as the experience to provide ALSCON with the right road-map to success.

However, Bureau for Public Enterprises (BPE) said it has received pre-qualification fees from the companies.

BPE's spokesman, Mr. Charles Odenigbo, at the weekend assured that everything has been done to sensitise the bidders proposals at the evaluation stage and that today's financial bidding will proceed as scheduled.



BFIG, Nigerian Consortium, Wins ALSCON Bid

AllAfrica.com, Africa June 15, 2004

With the last minute disqualification of Russian firm Rusal (Bratsk) Aluminum, BFIG, a consortium owned largely by Nigerians based in the United States emerged bid winners of the Aluminum Smelter Company of Nigeria (ALSCON) Ikot Abasi, Akwa Ibom State. It won the bid with an offer of $410 million for 77.5 per cent equity in the company.

Also, Folio Communications Limited chaired by Dr. Chidi Amuta, former Mana-ging Director of the rested Post Express Newspapers emerged the preferred bidder of the Daily Times of Nigeria (DTN) Plc with a bid price of N1.25 billion.

Yesterday's opening of the bids for the two government enterprises was a tension soaked event as bidders schemed to outwit one another at the Nicon Hilton Hotel venue of the event aired live by television and radio networks.

The ceremony chaired by Mr. Akin Kekere-Ekun, Managing Director of Habib (Nigeria) Bank and Chairman, Technical Sub-committee of the National Council on Privatisation (NCP) was witnessed by Minister of Power and Steel, Senator Liyel Imoke, Chairman, Senate Committee on National Planning, Senator Udoma Udo Udoma, former Chairman of the House Committee on Commer-cialisation and Privatisation, Nze Chidi Duru, and other corporate executives within and outside the country.

The BFIG consortium won ALSCON in the second round of bidding, having made an initial offer of $280 million when its bid document was opened.

Kekere-Ekun, who was dissatisfied with the initial offer, directed the bidders to take 30 minutes break to come up with a better price.

"We know what has been expended on ALSCON, there is a reserve price and you are all expected to go and substantially renew your prices," he told the bidders.

Before handing down the directive to BFIG, Kekere-Ekun had opened the bid documents of Rusal Group, the Russian Consortium, which had offered to pay $5 million of the total bid price in the first instance while promising to pay the balance upon the execution of share purchase agreement.

Kekere-Ekun, however, declared, "Based on what I know, this bid is conditional and not qualified." Accordingly, he said Rusal need not make a second offer since it was disqualified on the ground rule, which makes conditional offer an offence.

In the second round, BFIG submitted a revised bid price of $410 million, and the announcement was greeted with a deafening ovation from the audience.

The chairman in acknowledging BFIG as the bid winners said the $410 million offer fell short of the reserve price for ALSCON and therefore will be referred to the NCP for consideration.

"At the end of the day payment is the important thing. For now BFI is the winner but this (price) is still lower than the reserved price but it qualifies them to be taken to NCP for consideration. For me I will be a happy man the day payment is made," he added.

The DTN bid, which followed ALSCON's, was an ironic twist as Folio Communications came from an initial weak position to emerge as the preferred core investor for the newspaper company incorporated in 1932.

When the bid documents were first opened, Folio Communications made an offer of N233 million for 96.05 per cent equity in the company. The second bidders, Mindsprings Communications Limited offered N852 million for the shares.

But when the two companies returned from the 30 minutes break to present their revised bid prices, Folio raised the stakes to N1.25 billion to beat Mindsprings' N1.051 billion to emerge the preferred bidder in the transaction.

"Given the revised bid I declare Folio Communications Limited as the preferred bidder for DTN and Mindsprings Communications as reserved bidder. Both of them have crossed the reserved bidders' price and will be referred to NCP. We will give them time to pay, if they don't pay we will go back to the reserved bid," he said.

Kekere-Ekun explained that the result of the exercise will be referred to NCP, which will make a decision within 48 hours.

The Chairman had in a speech before the commencement of the exercise said six companies initially indicated interest in DTN. Among them were Management firm, Mayoral Limited, Folio Communications Limited, Mindsprings Communications Limited, Rotrama Company, Johnnic Communications Ltd of South Africa, and Patike Communications Ltd.

He said, however, that after evaluation and due diligence some of the companies eased out either for failure to comply with the conditions set or voluntarily withdrew thus paving way for the last two companies, which took part in yesterday's exercise.

Minister of Power and Steel, Imoke, who watched the transaction, said that he was impressed with the exercise and looked forward to the rehabilitation of ALSCON.

"I am very pleased that at least we have qualified bidders, technically qualified and obviously financially qualified. I understand there is a reserved price, I am not privileged to know, but I think the bid price of $410 million is substantially higher than $280 million that was initially put in," he said.

He said Kekere-Ekun used his discretion to disqualify Rusal for making a conditional bid.

Managing Director of BFIG, Dr. Reuben Jaja, thanked the Nigerian government for the transparent conduct of the transaction, saying it was a testimony that his company could compete with any multinational company.

"We will do all within our power to bring our American friends to rehabilitate and bring that plant back to work," he added. He also said that with former staff of the World Bank and other reputable international financial institutions in its employ, the company could very easily access funds to finance its operations.

Jaja said the offer of $410 million was reasonable when viewed against the background that BFIGroup would have to dredge the river to facilitate production, the cost of which would eventually add up to surpass whatever is the reserve price.

Hon. Chidi Duru, who said he is a member of the Folio Communications, the preferred bidders in DTN, disclosed that the company plans to inject N800 million into the operations of the publishing outfit to bring it back to profitability.

Duru assured that folio was capable of paying the N1.25 billion bid price as the credibility of members of the company was enough for banks to offer the desired support.

Kekere-Ekun in a chat with newsmen after the event said the disqualification of Rusal would not in any way affect the Federal Government's drive for foreign investment.

"It cannot because the Federal government of Nigeria is operating by laws and those laws are to be obeyed by local citizens and by international citizens and the laws are not Nigerian laws but international laws which must be obeyed by international bidders," he said.

He said the bid had to be disqualified because it was conditional bid. "We do not accept conditional bids. The law is made by men for men and must be followed; they know it they are international bidders all over the world."



Metallurg Subsidiaries to Become Part of SUAL

Azom.com, 15 Jun 2004

OAO SUAL, part of SUAL Group, one of the world's top ten aluminium producers and the Volkhov Aluminium and Pikalevo Alumina subsidiaries of OAO Metallurg, have begun the process of merging their assets. By the end of 2004, it is anticipated that Volkhov Aluminium and Pikalevo Alumina will be fully incorporated within OAO SUAL.

Following extraordinary shareholder meetings of both OAO SUAL and OAO Metallurg, votes representing over 99.9 per cent of shares in both companies were cast in favour of incorporation. To finalise the incorporation of these companies, a joint general meeting of their shareholders will be held to complete the necessary legal arrangements.

The Volkhov and Volgograd aluminium smelters, together with Pikalevo Alumina, were integrated with the production operations of SUAL Group in 2002, following an agreement to merge the aluminium assets managed by the SevZapProm company with those of OAO SUAL. At that time, it was decided to convert shares in Volkhov Aluminium and Pikalevo Alumina (OAO Metallurg) into those of OAO SUAL.



The Aluminium Company of Egypt unveils major technology upgrade

AME Info, United Arab Emirates, 15 Jun 2004

Sun Microsystems today announced that The Aluminium Company of Egypt (EgyptAlum), one of the world's most important producers of primary and rolling aluminium, has deployed an integrated solution incorporating software applications and Sun hardware, as part of a major initiative to rationalize operations at two sites.

The installation has taken place at two of EgyptAlum's key locations: the Nag Hammady Primary smelter plant, which lies 100 kilometres north of Luxor, and its Cairo head office. With a total project value estimated at several million US Dollars, it is among the largest enterprise resource planning (ERP) projects to have taken place in Egypt's manufacturing sector for more than two years.

'This implementation reflects EgyptAlum's determination to implement technology that develops our competitive edge and hones our performance. Sixty percent of our current production is exported, mainly to Europe, so it's essential that all our processes are designed and managed according to international standards using the appropriate hardware and software,' said Mostafa El Kadi, IT Sector Manager at EgyptAlum.

The implementation is based upon a core application of Oracle's E-Business Suite, an ERP platform, and the Solaris Operating System, Sun fire servers and extended storage facilities from Sun Microsystems.

'We have been working with Sun on the new architecture for a year, resulting in an implementation combining high availability with scalability. The new system makes day-to-day tasks easier and faster to administer, while its configuration provides extensive backup and storage facilities, ensuring that important information is securely stored and managed, and widely accessible,' added El Kadi.

'The integrated solution provides EgyptAlum with a robust business solution that will support its ambitious growth and development plans,' said Hani Abdel-Aziz, Sun Account Manager. 'Take together, the combination of best-of-breed technology equips the company to effectively share information between its administration and production arms, while reducing its administrative and operational costs.'

The Oracle E-Business Suite gives EgyptAlum a high level of financial and accounting control to managers in the company, and provides them with fast, online access to key financial metrics. By enabling employees to directly access such mission-critical information, the company is streamlining its business processes and reducing costs.

Commenting on the potential benefits for the company, Atef Helmy, managing director of Oracle Egypt, said: 'At Oracle, we recognize that manufacturers can derive significant business benefits by integrating business solutions within their technology infrastructure. EgyptAlum stands to streamline core business processes significantly by deploying this implementation.'

A key component of the implementation is the Sun Solaris Operating System, which enables EgyptAlum to monitor and manage mission critical operations, while the hardware infrastructure is augmented by Sun cluster software. Backup and storage are managed by a Sun-based Storage Area Network.

'EgyptAlum is one of the region's most professionally managed and successful companies, and their decision to deploy this implementation demonstrates the company's commitment to continuous improvement and innovation,' said Amar Wadjih, regional manager MENA, Sun Microsystems.

The contract was awarded after an intensive period of competition for the deal involving major industry players, including IBM and Siemens. Sun's reputation for providing reliable solutions, combined with strong professional support for customers within Egypt, was a key factor in its ability to close the deal.

Sun's reseller partner in the deployment was Raya Integration, which specializes in the implementation of advanced integrated systems in a range of sectors, and which has particular experience in the manufacturing sector.

'We're delighted to be part of the team supporting EgyptAlum's major technology upgrade,' said Khaled Zaki, business unit manager, Raya Integration. 'This implementation will ensure the company maintains its competitive edge.'

Raya worked together with Sun channel development partner Tech Access, which provided technical and logistical support at every stage of the implementation. Both companies will be involved in the ongoing provision of professional and technical services for EgyptAlum.

'This implementation is being supported by strong technology partnerships at every stage of the process, including the top-end technology combination of Oracle software and Sun Microsystems hardware, through to fully-integrated ongoing support from Raya and Tech Access,' said Tarek Hindi, Egypt country manager, Tech Access.




Chalco Buys Lanzhou Aluminium in China Merger Drive (Update3)

Bloomberg June 17, 2004

Aluminum Corp. of China Ltd., the nation's biggest maker of the metal, agreed to buy 29 percent of Lanzhou Aluminium Corp. as the government reins in expansion by merging its biggest producers and closing older plants.

State-controlled Aluminum Corp., known as Chalco, will be the largest shareholder after the government in Lanzhou Aluminium, the nation's third-biggest producer, Beijing-based Chalco said in a statement. The price hasn't been set, it said. The stake was worth about $120 million at yesterday's close.

Chalco's purchase follows the government's promise to clamp down on investment in industries including aluminum, steel and automaking to slow inflation. China has said it will close smaller producers and encourage the bigger companies to merge to prevent growth driving up demand and prices of raw materials.

``Chalco's acquisition of smaller rivals is just what the government wants to see -- a structural shakeout of the aluminum sector,'' said Zhou Ming, a Shanghai-based analyst with Guotai Junan Securities Co. ``Twenty-nine percent is enough to give Chalco control over decision making at Lanzhou.''

Shares of Chalco fell as much as 5.6 percent this year and were trading 4.4 percent lower at HK$3.85 at 12:16 p.m. in Hong Kong. The stock has shed 35 percent this year. Lanzhou Aluminium shares, down a fifth this year, were 1.6 percent lower at 6.23 yuan at 11:30 a.m. in Shanghai.

Consolidation

Chalco is buying a bigger share of China's aluminum industry after demand for the lightweight metal, used in cars and drinks cans, rose 23 percent last year. Chalco is also in talks with Shandong Nanshan Industry & Commerce Co., a textiles maker turned smelter, the company said last month.

China's government is concerned that over-investment in aluminum smelters will lead to excess capacity, plunging prices and a rise in bad loans at the nation's banks as smelters fail to repay debt. The government is also concerned about the power consumption of the aluminum industry, which threatens to exacerbate electricity shortages this year.

Last year, China's aluminum smelters used 4 percent of the nation's power, according to China's Non-Ferrous Metals Association. One ton of aluminum uses up 15 megawatt hours of power, it says. Of China's 8.3 million tons a year of aluminum capacity last year, 1.16 million tons has been idled as alumina prices soared and power costs doubled, the association said.

Lanzhou today said it won government approval to build three power stations at a cost of 4 billion yuan and combined capacity of 900 megawatts. The plants won't be completed until 2006, Antaike's Wang said, adding that Lanzhou's operations are near to abundant sources of coal.

Squeezed

Chalco's rivals have been squeezed by soaring raw material and power costs, making them vulnerable to takeovers.

Profit at Lanzhou halved last year on a 46 percent rise in the price of alumina, which is refined from bauxite and then smelted into aluminum. Chalco made 80 percent of its profit last year from selling alumina, up from 44 percent in 2002.

Lanzhou Aluminium produced 209,000 metric tons of aluminum last year, Chalco's statement said. That's more than a third of Chalco's 2003 output of 745,000 tons.

Lanzhou has 86,000 tons of outdated capacity it wants to phase out, said Wang Feihong, an analyst with Beijing Antaike Information Co. It may close 55,000 tons of that by July, he said.

Chalco's aluminum capacity will reach 1.64 million tons next year, Luo Jianchuan, deputy chief executive officer, said last month. Of that increase, 700,000 tons will come from acquisitions.

Strategy

Chalco, which supplies about half China's alumina, the semi-refined material used to make aluminum, is expanding aluminum capacity as its dominance over the nation's alumina supply wanes and overseas rivals such as Alcoa Inc., Alcan Inc and Rio Tinto Plc plan to increase production.

``The purchase is in line with Chalco's strategy to build an integrated operation, and won't affect its costs much judging from their current financials,'' said Pauline Dan, who helps manage $350 million at IG Investment (H.K.) Ltd.

Chalco was the sole producer of alumina in China until this year, when a number of smaller refineries including Chongqing Bosai Mining (Group) Co. started production. Still, it supplies about half China's needs.

Rio Tinto has said it plans to complete the Comalco Alumina Refinery in Australia in 2005 and send much of the 3.5 million tons of yearly production to China.

Alcoa Inc. and Alcan Inc., the world's No. 1 and No. 2 aluminum makers, are working on a venture to build a refinery in the Republic of Guinea that will produce as much as 1.5 million tons of alumina each year by 2008.

Chalco plans to increase alumina capacity 34 percent to 8 million tons in 2005 from 5.95 million tons last year.

Chalco will pay cash for the stake, Lanzhou Aluminium said in a statement to the Shanghai Stock Exchange.

``What really matters is the final price,'' IG's Dan said.


To contact the reporter on this story:
Rob Delaney in Beijing at robdelaney@bloomberg.net. and Xiao Yu at

To contact the editor responsible for this story:
Reinie Booysen at rbooysen@bloomberg.net.


Noranda reviews potential buyers

Toronto Star, Canada 17 Jun, 2004

Miner's stock soars 9.4%, valuing entire firm at $7 billion

Brazilian company said to be interested in Brascan's stake

Brascan Corp. may be nearing a deal to sell its controlling stake in metal giant Noranda Inc., rumoured to be the subject of a takeover bid by Brazil's Companhia Vale do Rio Doce SA, or CVRD.

Noranda shares soared 9.4 per cent or $2.07 to close at $24.06 in Toronto yesterday, valuing Brascan' s 42 per cent stake at about $3 billion and the entire company at about $7 billion.

But a CVRD spokesperson described reports of its takeover plan as speculation, adding that the Brazilian company is constantly on the watch for acquisitions. The company's shares slumped 2.5 per cent on reports of the bid. Late yesterday, CVRD said in a statement there are no deals in the works at the moment.

Noranda said yesterday it is looking at ways to "maximize shareholder value" after receiving several expressions of interest in the company from potential buyers. It has formed a special committee of its board to review the offers and hired CIBC World Markets as financial adviser.

Noranda said it has no time- table for a review of its options, but a special committee of its board "will act diligently."

Brascan CEO Bruce Flatt confirmed the holding company "is supportive" of Noranda's move. Brascan has said it wants to sell its non-core assets to focus on its main real estate, power and asset-management business.

Brascan could be bowing out at a high.

"The base metals industry has been benefiting from a resurgence of interest given the return to normal pricing for base metals," Flatt observed in a statement.

"As we look forward, increased Chinese demand for commodities, lack of supply additions and ongoing consolidation in the base metals industry provide an opportune environment to review our options in order to maximize value for Brascan and all Noranda shareholders."

Noranda is a major copper and nickel company with investments in zinc and aluminum. It owns 59 per cent of nickel miner Falconbridge Ltd.

CVRD is a giant iron ore producer. The deal, if it transpires, would be CVRD's biggest acquisition yet and among the biggest in Latin America.

It wasn't clear whether CVRD would be interested in buying only Brascan's stake in Noranda or going after the whole company.

"If you believe what's coming out of Brazil, it seems like they're just talking about Brascan's stake right now, but I don't see that as the end game at all," said Canaccord Capital analyst Greg Barnes, who speculated the Brazilian firm would eventually try to buy Noranda entirely. "It makes no sense for CVRD to take a portfolio investment approach to Noranda."

Analysts agreed that with metal prices soaring, now is the time to make deals in the sector.

"We're seeing people that are more comfortable with their outlook, more comfortable with their commodity prices, more comfortable with their balance sheets, more comfortable with their view of the world and the fact that commodity prices could stay high for a little while longer," said an analyst who did not want to be named.

He said CVRD was rumoured to have been looking at Noranda last year, but the company was "uncomfortable with Noranda's debt level" at the time.

Australia's BHP Billiton Group, one of the world's biggest mining companies, would be another obvious bidder for Noranda. Analysts also mentioned Rio Tinto PLC, Anglo American PLC, Norilsk Nickel Mining or even a big gold company as potential bidders.

"It's very possible that CVRD is the stalking horse to get other people to come out of the woodwork," said the unnamed analyst, speculating who else might make a bid for Noranda.

"It's possible that somebody else might be interested and when they see a deal going down, the pressure is on."

One fund manager says a sale of the company would likely please long-time Noranda shareholders, who had seen no capital gains over a 22-year period. They've also seen Noranda's book value fall nearly by half, said Pat McHugh, senior portfolio manager at MFC Global Investment Management in Toronto.

"Perhaps there are some companies that do need to be taken over."

He said Noranda's share price at the end of 1982 was $22.60, and book value was about $20 a share. That compares to an intra-day high of $24.99 yesterday and current book value of about $11 a share, McHugh said.

Other than dividends, Noranda has done little for shareholders in "the last twenty-odd years."

A sale of Noranda to a Brazilian company would be an interesting historical twist: Brascan was founded as Brazilian Traction, Light and Power Co. Ltd. in 1899 by a group of Canadian engineers and investors.

Brascan shares rose 5.6 per cent in Toronto yesterday, hitting a new 52-week high of $37.55, up $1.98.

from the star's wire services

BFI Group to Inject $300m in ALSCON

AllAfrica.com, Africa June 16, 2004

This Day (Lagos)

Cletus Akwaya, Abuja

BFIGroup, the company that won the bid to take over 77.5 per cent equity in the Aluminium Smelter Company of Nigeria (ALSCON) Monday, plans to invest about $300million in the Ikot Abasi -based plant to return it to full operations. The consortium is owned by US-based Nigerians with Dr Reuben Jaja, as President and Chief Executive Officer (CEO).

The National Council on Privatisation (NCP) may today, however, confirm BFI Group as preferred bidders although the $410 million bid price fell below the reserve price.

BFIGroup's business plan obtained exclusively by THISDAY show that though the consortium would actually require $250 million to revitalise ALSCON which stopped production since 1999, it has nevertheless secured a $300 milion facility from Daewoo Interna-tional (American) Corporation .

Details of the technical work to be undertaken by the would be investors include "installation of three multipurpose pot tending cranes, two side loading trucks for anode tarnsportation, one beam raising system, 108 pot shells, 108 complete superstructures, materials for 216 complete cell linings, cold ramming paste for 108 cell linings, bus bar for 108 pots, and 108 cell micro-processors."

"Upon our review of the key cost elements with regard to the operations of the company raw material needs of the company, labour costs, overhead with regard to all the profit centres, including power, our technology and management board has concluded that ALSCON will require an infusion of approximately $250 million to activate operations. Consequetly, we have made arrangements for the procurement of raw materials with a credit of more than $300 million," the business plan document said in part.

Under the plan submitted to the Bureau of Public Enterprises (BPE), BFI Group plans to run the different units of ALSCON as semi-autonomous units with the designation of "profit centres" for the 10 units.These include aluminium plant management, power generation, gas processing, harbour and marines services, estate management, medical services, water treatment and production, laboartory research and bauxite exploration, industrial security and freighting and training and industrial education.

THISDAY checks in Abuja yesterday, however, revealed that the NCP may approve the bid today although the $410 million bid price offered by BFI Group did not meet the reserve price.

It was learnt that rather than allow the plant shut since 1999 to lie waste, government had thought it better to sell it at the price offered by BFIgroup.

Also, the Federal Government was said to be mindful of the wrong signals the cancellation of the bid might send to the international investment community especially after disqualification of Rusal (Bratsk), the Russian firm which also bidded at the last minute.



It was also learnt that BFIGroup had made presentations to all key stakeholders including the President and other key government functionaries to convince them of their capability outside of the BPE guidelines.

Chairman of the NCP, Vice Presient Atiku Abubakar, a source told THISDAY, would issue approval BFI Group as the preferred bidders tomorrow so the consortium could make payment in line with negotiations reached with the BPE.


Aluminum recycler, producer to merge

Dallas Morning News (subscription), TX Thursday, June 17, 2004

IMCO's former CEO has been working on $176 million deal

By CRAYTON HARRISON / The Dallas Morning News

IMCO Recycling Inc.'s $176 million merger with aluminum producer Commonwealth Industries Inc., announced Thursday, solves the mystery of whatever happened to Don Ingram.

Mr. Ingram, a longtime Dallas businessman, resigned as chief executive of Irving-based IMCO in April, and the company would only say that he left because of a "leadership change." He was replaced at the time by an interim CEO.

On Thursday, Mr. Ingram said he had been working for months on the stock-swap acquisition of Commonwealth and had already helped identify IMCO's future CEO.

When his contract expired in April, it made sense for Mr. Ingram to go ahead and step down, but the company couldn't talk publicly about a merger that wasn't yet announced.

What Mr. Ingram and other IMCO and Commonwealth executives were planning, they said Thursday, was a mutually beneficial merger that would consolidate two important parts of the aluminum business.

IMCO recycles aluminum and zinc and sells the metals to producers, including Kentucky-based Commonwealth, which processes the aluminum into sheet metal for vehicles, construction and more.

Now the companies, with nearly $2 billion in combined annual sales, will be able to combine their 34 factories to push aluminum all the way through its life cycle, "from aluminum scrap to finished sheet," said Steven Demetriou, Commonwealth's CEO, who will lead the combined company.

Mr. Demetriou, 45, took the helm at Commonwealth only last week, replacing Mark Kaminski. Executives from both companies had participated in his selection, knowing they were looking for a CEO for their merged company.

IMCO chief executive Richard Kerr, who replaced Mr. Ingram in April, will become president of the combined company's recycling and alloy division.

Under the terms of the merger, Commonwealth shareholders will receive 0.815 shares of IMCO for each Commonwealth share.

Those terms valued Commonwealth stock at $10.95 a share based on IMCO's closing price Wednesday. IMCO shares fell $1.42 to $12.01 Thursday, while Commonwealth shares rose 86 cents to $9.46.

IMCO shareholders will own about 54 percent of the combined company, executives said. The transaction, which must win regulatory approval, is expected to close by the fourth quarter.

Before then, the companies will decide on a new name and will pick the location of their combined headquarters.

Mr. Ingram said he didn't know where that would be.

"I would think the headquarters would be in Dallas for a lengthy time. It's a good place to travel out of," he said. "But it depends on the direction the company goes in the future."

E-mail charrison@dallasnews.com



FG u-turns on ALSCON; dumps BFIG, invites bid losers Rusal

Vanguard, Nigeria Friday, June 18, 2004

By Emma Ujah

ABUJA — President Olusegun Obasanjo may have stopped the on-going sale of the Aluminum Smelter Company of Nigeria (ALSCON) to the winner of the bid, BFIG of America which offered $410 million for 77.5 per cent equity in the company.

Presidency sources said that the presidency rejected the recommendation of the National Council on Privatisation (NCP), headed by the Vice President, Alhaji Atiku Abubakar and directed that Rusal, the Russian company which had been disqualified by the NCP technical committee for presenting a conditional bid take up the company.

Rusal had offered a bid price of $205 million for the 77.5 per cent stake in the multi-billion naira company but had its bid rejected on Monday at the bid-opening ceremony for giving conditions on which it would pay the offer.

Chairman of the NCP Technical committee, Mr. Akin Kekere-Ekun, told the Rusal group publicly that their conditional bid was in contravention of international bidding process and as such disqualified.

But impeccable sources disclosed in Abuja, yesterday that, in line with President Obasanjo’s directive, BFIG was dropped and Rusal which team was already getting ready to fly back home on Tuesday was stopped and asked to meet the Minister of Power and Steel, Senator Liyel Imoke for negotiations.

Although Senator Imoke is a member of the NCP and ALSCON is under his ministry’’s supervision, he is neither the Chairman of the Technical Committee of the NCP nor a staff of the BPE and as such, ordinarily, shouldn’t be the one to lead negotiations on any privatization transaction.

It was reliably gathered that on the orders of the president, Mr. Kekere-Ekun, the BPE Director-General (D-G), Dr. Julius Bala and a few top presidency officials joined the minister and the Rusal team for negotiations.

Mr. Kekere-Ekun who has tried to maintain a principled stance since assuming the chairmanship of the NCP Technical Committee five years ago, told the Russians and the minister that they must be joking and that he would have nothing to do with their negotiation. He was said to have also told them that he was there, in the first place, only as a sign of respect for the president who had asked him to attend the meeting.

His position, it was learnt, was that the negotiation with Rusal was baseless, given the fact that the group had been disqualified on technical grounds. At this point, the minister is was learnt, made spirited efforts to get the Russians to review their bid price up-wards but to no avail. The, Russians, sources said, told the minister in clear terms that the team had better take their offer or leave but that under no circumstances would they increase their offer.

The meeting was said to have ended with all parties leaving either in anger and or in humiliation. Senator Imoke was said to have promptly reported the outcome of the meeting to the president who immediately asked that Dr. Bala be connected to him. The subject of call between the president and Bala, it was learnt was that he (Bala) must reach Mr Kekere-Ekun immediately and dissuade him from any action that might embarrass the government over the issue. Kekere-Ekun had in an interview with this paper, in 2001, threatened to resign his appointment should anyone try to tele-guide his committee.

Meanwhile, the BFIG team, yesterday, expressed surprise at the turn of events on core investor sale transactions, as they had waited in vain, for the NCP and BPE to invite them to commence negotiations. They said that there were still waiting to hear from the Presidency and that in spite of the development, they were still prepared to take over as core investor in ALSCON as according to them, they believed in that company and that they had the capacity to mobilise the bid price and pay within stipulated time.



Local Alcan to Change Name as Part of Large Restructuring

Oswego County Business Magazine, NY 17 Jun 2004

by Dola L. Deloff

Alcan is spinning off its rolled products businesses in North America, Europe, Asia and South America. The new company, to be named, will include the plant in Oswego.

"Employee benefits such as vacations, pensions, and savings plans will be unaffected by the creation of the new company," said Buddy Stemple, plant works manager.

The spin-off, deemed necessary because of Alcan's acquisition of the French company Pechiney, will create the world's largest aluminum business with 10,000 employees and $6.4 billion in annual revenue. The Pechiney company had been purchased for $6.3 billion, and antitrust regulators in Canada and authorities in the U.S. had told Alcan to divest itself of at least one plant. The spin-off, rather than a sale, will allow Alcan and the new company to keep all the assets, and Alcan will be avoiding excess taxes, according to an Alcan spokesperson.

"The new company," Stemple said, "will focus specifically on the rolling business and allow us to operate as an independent business."

Alcan is a multinational, market-driven, recognized leader in aluminum and packaging, as well as aluminum recycling. With operations in primary aluminum, fabricated aluminum as well as flexible and specialty packaging, aerospace applications, bauxite mining and lumina processing, Alcan is well positioned to meet and exceed its customers' needs for innovative solutions and service, Alcan John Mosher said.

Stemple said he is satisfied with the plan. "This will benefit our customers and significantly increase our options regarding how we pursue enhancing value for the new company," the works manager said. "I consider this move positive for the future success of our Value Center and for the Oswego Works."

Alcan employs 88,000 people in 63 countries around the world. The Oswego plant employs approximately 700 workers. A company spokesperson said that the transaction, barring any difficulties, should be completed by the end of the year.


Ormet Decides to Sell Its Tennessee Division

Wheeling News Register, WV - 17 Jun 2004


WHEELING - Ormet Aluminum Mill Products Corp. has announced it is filing a motion with the U. S. Bankruptcy Court for the Southern District of Ohio seeking permission to sell its Jackson Coated and Foil Division in Jackson, Tennessee.

Selling the Jackson facility is a part of the company's plan to enhance its financial performance by shifting its strategic and operational focus to higher-margin products. Ormet has asked the court to approve the sale of the Jackson facility since the company already has received several inquiries from others interested in purchasing the plant and/or property. Ormet has requested a bid deadline of July 26, with the court-supervised auction to take place July 29.
Before reaching the decision to sell the Jackson facility, the company had considered the matter in great detail. While the decision was based on the business strategy of focusing on higher-margin products, the decision was quickened by the previously announced approaching closure of the Ohio River at McAlpine Lock and Dam for two weeks in August.

The Jackson facility employs about 175 people and manufactures high-quality coated aluminum sheet and foil for architectural, recreational and appliance products, as well as for the electronics and packaging industries. If the company is unable to find an acceptable buyer, it plans to curtail the Jackson operations by the end of the year.

Ormet Chairman and Chief Executive Officer R. Emmett Boyle said the planned sale will strengthen the business because it will free up resources at its rolling mill in Hannibal, Ohio. The rolling mill currently provides the Jackson division with flat-rolled metal.

"In recent months, we have experienced greater demand from Ormet customers for our higher-end goods, such as lithographic sheet and tread products, which we produce at the Hannibal Mill. With the sale of the Jackson facility, we will be better able to focus Ormet's resources on increasing production of the more value-added product lines our customers want, and thus benefit from those premium sales," said Boyle.

Boyle added that after assessing the product lines, the company came to the decision that the Jackson product mix does not contribute sufficiently to the profitability of Ormet.

"While it is never easy to divest part of a business, Ormet will ultimately be a stronger, more secure company delivering the quality and value our customers have come to expect," said Boyle.

Ormet continues to operate successfully and employs about 2,000 people through its several subsidiaries. The company has facilities in five states and produces aluminum products for the fabrication, extrusion and conversion markets.


Chalco widens reach as Beijing reins in industry

Xiao Yu Bloomberg News Thursday, June 17, 2004

BEIJING Aluminum Corp. of China, the nation's biggest maker of the metal, said Thursday that it had agreed to buy 29 percent of Lanzhou Aluminum as the government reins in expansion by merging its biggest producers and closing older plants.
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The state-controlled Aluminum Corp. of China, known as Chalco, will be the largest shareholder after the government in Lanzhou Aluminum, the nation's third-biggest producer, Beijing-based Chalco said. The price has not been set, it said. The stake was worth about $120 million at the close of trading Wednesday.
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Chalco's purchase follows the government's promise to clamp down on investment in aluminum, steel and automaking to slow inflation.
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China has said it will close smaller producers and encourage the bigger companies to merge to dampen growth that is driving up demand for and prices of raw materials.
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"Chalco's acquisition of smaller rivals is just what the government wants to see - a structural shakeout of the aluminum sector," said Zhou Ming, a Shanghai-based analyst with Guotai Junan Securities. "Twenty-nine percent is enough to give Chalco control over decision making at Lanzhou."
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Chalco is buying a bigger share of China's aluminum industry after demand for the lightweight metal, used in cars and drinks cans, rose 23 percent last year. Chalco is also in talks with Shandong Nanshan Industry Commerce, a textiles maker turned smelter, the company said last month.
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China's government is concerned that over-investment in aluminum smelters will lead to excess capacity, plunging prices and a rise in bad loans at the nation's banks as smelters fail to repay debt. The government is also concerned about the power consumption of the aluminum industry, which threatens to exacerbate electricity shortages this year.
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Last year, China's aluminum smelters used 4 percent of the nation's power, according to the Non-Ferrous Metals Association. Producing one ton of aluminum uses up 15 megawatt hours of power, it says. Of China's 8.3 million tons a year of aluminum capacity last year, 1.16 million tons has been idled as alumina prices soared and power costs doubled, the association said.
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Lanzhou on Thursday said it had won government approval to build three power stations at a cost of 4 billion yuan for a combined capacity of 900 megawatts.
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Chalco's rivals have been squeezed by soaring raw material and power costs, making them vulnerable to takeovers.
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Profit at Lanzhou halved last year on a 46 percent rise in the price of alumina, which is refined from bauxite and then smelted into aluminum. Chalco made 80 percent of its profit last year from selling alumina, up from 44 percent in 2002.
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Lanzhou Aluminum produced 209,000 metric tons of aluminum last year, Chalco said, which was more than a third of Chalco's 2003 output of 745,000 tons.
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Chalco, which supplies about half of China's alumina, is expanding aluminum capacity as its dominance over the nation's alumina supply wanes and overseas rivals such as Alcoa, Alcan and Rio Tinto plan to increase production.
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"The purchase is in line with Chalco's strategy to build an integrated operation, and won't affect its costs much judging from their current financials," said Pauline Dan, a manager at IG Investment (H.K.).
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Chalco was the sole producer of alumina in China until this year, when a number of smaller refineries including Chongqing Bosai Mining (Group) started production. Still, it supplies about half of China's needs.
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Chalco will pay cash for the stake, Lanzhou Aluminum said in a statement to the Shanghai stock exchange.

Copyright © 2004 the International Herald Tribune All Rights Reserved


Little interest in Coega from mining majors

Business Day, South Africa, 17 Jun 2004

By Justin Brown
Global diversified mining majors BHP Billiton (BIL), Anglo American (Anglo, AGL) and Brazil's Companhia Vale do Rio Doce (CVRD), have at this stage indicated little or no interest in getting involved in South Africa's Coega industrial development zone.

A proposed $2.2 billion aluminium smelter has been expected to anchor the Coega project with Canadian aluminium group Alcan set to make a vital decision in June or early July regarding its involvement.

To date Coega hasn't been able to get any investors to sign on the dotted line and participate in Coega.

However, the South African National Ports Authority is currently in the process of spending R3.2 billion on building the Coega deep-water port, and French engineering group Alstom has a R200 million contract to put in place bulk electricity infrastructure.

In addition, a total of 316 million rand is budgeted for new as well as improved road infrastructure.

"I have checked with our board of directors and up to now CVRD has not been contacted by the South African government about this issue (of investing in Coega)."

"Maybe they might have the intention to talk to us, but they haven't done that yet," CVRD international media officer Patricia Malavez told I-Net Bridge from Rio de Janeiro, Brazil, regarding any invitations received by the South Africa government to participate in Coega.

CVRD is the one of the world's largest diversified mining groups and is the world's number one iron ore miner and exporter.

Outside iron ore, CVRD has interests in aluminium smelting and bauxite mining, logistics and electricity. The group's other mining interests include manganese and ferro-alloys, copper, potash, kaolin and gold.

In southern Africa, CVRD in June 2003 signed an agreement with South Africa's Industrial Development Corporation and steel group Iscor (ISC) to undertake a pre-feasibility study for the extraction of coal deposits in Moatize in Mozambique.

At this stage, Coega doesn't offer BHP Billiton (BIL) any new opportunities, spokesperson for BHP Billiton in South Africa Michael Campbell told I-Net Bridge.

In southern Africa, BHP Billiton has interests in aluminium smelting, manganese as well as chrome mining, coal mining and the production of manganese and chrome alloys.

BHP Billiton already owns the Hillside and Bayside smelters in South Africa and has a 47% stake in the Mozal smelter in Mozambique.

At this stage BHP Billiton is considering possible brown fields expansions at the Hillside and Mozal smelters, Campbell said.

The group has no green field aluminium project on the drawing board and has previously said the earliest it may consider starting such a project would be 2008.

BHP Billiton has recently entered into the Western Complex coal joint venture with Anglo in Mpumalanga.

Coal from this project is likely to move along the existing rail line that links the Mpumalanga coalfields and the Richards Bay Coal Terminal, Campbell said.

BHP Billiton's established route for exporting its chrome products is through the port of Richards Bay while manganese products are exported via the port of Port Elizabeth.

Finally, BHP Billiton is involved in a joint venture with Rio Tinto at the Richards Bay Minerals, which mines heavy minerals.

The last time BHP Billiton considered Coega was in the late 1990s, when the then Billiton, prior to merging with BHP in June 2001, considered a zinc refinery in conjunction with Japan's Mitsui at Coega.

However, the Asian crisis in 1998 put paid to the idea, with the zinc market having failed to recover, and neither Billiton nor its successor BHP Billiton has shown any further interest in Coega since.

"Anglo American declines to comment," Anglo spokesperson Anne Dunn told I-Net Bridge regarding questions about whether any of Anglo's divisions had considered making an investment at Coega either currently or in the past.

Anglo may use the port of Coega in the future as Kumba Resources (KMB), in which Anglo has a 66.7%, has looked into the possibility of exporting part of its iron ore via Coega.

At present, Kumba is exporting all of its iron ore via the port of Saldahna.

In South Africa, Anglo has interests in gold, platinum, pulp and paper, diamonds, base metals, industrial metals and ferrous metals like iron ore.


Alcoa to Move Ahead With $1.16 Bln Brazil Expansion (Update3)

June 18 (Bloomberg)

Alcoa Inc., the world's biggest aluminum maker, said it will move ahead with a $1.16 billion plan to expand its aluminum operations in Brazil after signing a 20- year power agreement with regional power producer Eletronorte.

The investment includes $680 million to more than double alumina-refining capacity and $130 million to increase its smelting capacity by about a third at the Alumar facility in Sao Luis, Brazil, a joint venture with BHP Billiton Plc. Alcoa also is considering investing $350 million to develop a bauxite reserve, the Pittsburgh-based company said in a statement.

Alcoa owns 54 percent of the Alumar smelter, located on Brazil's northern coast, and 35 percent of the facility's alumina- refining capacity. Chief Executive Alain Belda, 60, is expanding smelting and alumina-refining capacity in low-cost countries including Brazil, Iceland and Jamaica to take advantage of global demand, which is expected to outstrip supply this year.

``They are covering their bases,'' said Kirk Schmitt, an analyst at Victory Capital Management in Cleveland, which owns 800,000 Alcoa shares. ``The more projects they have going, the more leverage they have in negotiating and they can move forward where they can get the best rates and economies.''

`No Logic'

Under its agreement with Eletronorte, a unit of Brazil's largest power generator Centrais Eletricas Brasileiras SA or Eletrobras, Alcoa will buy as much as 500 megawatts of hydroelectric power a year. Alcoa spokesman Kevin Lowery declined to disclose specifics of the contract.

Alcoa had shelved its Brazilian expansion plans in January, saying that the country's new electricity authority could hinder investment returns. Since then, it began discussions to build a smelter in Trinidad and halted expansion plans at two Quebec smelters because of power-supply disagreements with the provincial government. Negotiations with Quebec are continuing.

``If you can't get a long-term power agreement there is no logic in going forward on investments this big,'' Schmitt said.

Electricity is the largest cost in making aluminum. To make 1 ton of aluminum it takes at lease 13.5 megawatt-hours of electricity -- enough to power 10,800 U.S. homes for an hour.

Prices Climbing

The price of aluminum traded on the London Metal Exchange has risen 20 percent in the past year to $1,708.30 a ton, spurred by growing demand from China and an improving global economy, analysts said. Worldwide aluminum demand this year is expected to increase 8 percent while production and supply is seen rising 6 percent. Alumina has risen 63 percent to $457.50 a ton, according to Metal Bulletin, which tracks metal prices.

Expanding the Alumar smelter would raise Alcoa's capacity at the facility to 262,000 metric tons per year and Alumar's total capacity by 17 percent to 433,000 tons. A final decision is expected in the third quarter of this year and production would start in the third quarter of 2005, Alcoa said.

Alcoa also will proceed with plans to expand Alumar's alumina refinery by 2 million tons a year to 3.3 million tons, shared among itself, London-based BHP and Montreal-based Alcan Inc., the second-largest aluminum maker. A final decision to move forward with construction will be made by the end of the year, with work likely completed by early 2007, Alcoa said.

Bauxite Reserve

A decision on whether to develop the Juruti bauxite reserve in Brazil will be made by the end of this year as well, Alcoa said. Bauxite is mined and refined to make alumina, which is then smelted and made into aluminum. It takes 4 tons of bauxite to make 2 tons of alumina, which make 1 ton of aluminum.

Alcoa last year had about 14 million tons of alumina- refining capacity worldwide and about 4 million tons of smelting capacity, according to a regulatory filing. The company has cut production at plants in Washington and New York because of high electricity rates.

Last month, Alcoa said it is considering building a $1 billion smelter in Trinidad to take advantage of the Caribbean nation's cheaper electricity. A final decision is expected by early next year. The company also plans to build a $1 billion smelter in Iceland next year.

Alcoa already has an alumina refinery in Jamaica, a major source of bauxite, as well as mining operations in the South American country of Suriname.

The company's shares rose $1.23, or 3.9 percent, to $32.53 in New York Stock Exchange composite trading. They have fallen 14 percent this year.


To contact the reporter on this story:
James Gunsalus in Princeton at jgunsalus@bloomberg.net.

To contact the editor responsible for this story:
Rob Urban at robprag@bloomberg.net.
Last Updated: June 18, 2004 16:19 EDT

©2004 Bloomberg L.P. All rights reserved.


Norsk Hydro to close British aluminum plant; 580 jobs to be lost

Canada East, Canada Jun 18, 2004

OSLO (AP) - Norsk Hydro said Friday it will close an engine plant in Britain by early 2005 and move its production to Hungary, eliminating 580 jobs.

The Oslo-based petroleum and light metals manufacturer said the plant in Leeds would be closed in a bid to improve its competitiveness with other companies. The plant, HA Motorcast, makes aluminum cylinder heads for the British automotive industry but hasn't been able to drum up more business to increase its sales and profit.

Norsk Hydro said the plant would likely be closed at the end of 2004 or in early 2005.

Most of the workers will be let go during the second half of this year.

Production will be shifted to Gvoer, Hungary.

Norsk Hydro, with about 36,000 employees, has operations in more than 40 countries.


ALSCON: Confusion as Obasanjo rejects BFI

Daily Times of Nigeria, Nigeria Jun 18, 2004

gbenga oguntimehin, abuja

CONFUSION now trails the sale of Aluminium Smelter Company of Nigeria (ALSCON) as President Olusegun Obasanjo has reportedly refused to approve BFI Group of the United States as the company’s preferred bidder.

The Bureau of Public Enterprises (BPE) had written to the Chairman of the National Council on Privatisation, Vice-President Atiku Abubakar, for his consent on the preferred bidder.

Sources claimed the President cancelled the preferred bid of BFI Group because of his earlier promise to Russia’s President Vladmir Putin that ALSCON would be given to Rusal Bratsk Aluminium of Russia.

Obasanjo then directed Power and Steel Minister, Senator Liyel Imoke, to start negotiations with Rusal of Russia while Imoke also direc-ted BPE to call Akin Kekere-Ekun chairman of the Technical committee of CNP for the negotiation.

However, at the negotiations, according to sources, Rusal now decided to pay $160 million as against a conditional bid to $205 million offered for ALSCON earlier.

Efforts to get the management of Rusal to increase their offer proved abortive as they insisted on paying $160 million for acquisition of 77.5 per cent government shares in ALSCON.

Kekere-Ekun, however, showed his annoyance by walking out of the negotiation meeting, saying “if not because of the President’s directive, I am not in a position to mess up myself in any transactions.”

Power and Steel Minister, the source said, pleaded with officials of Rusal but they insisted on the new payment of $160 million.

However, the matter had gone back to the President for his comment.

Sources as at press time last night said government was contemplating reversing to BFI Group as United States Government had vehemently protested the cancellation of BFI Group, through the U.S. Department of commerce.

It said the cancellation was not in good order and did not portray Nigeria’s business transactions as transparent.

With government’s interest in Rusal acquiring ALSCON and cancellation of BFI Group of America, sources said the measure had rubbished the image of the country, particularly as it relates to transparency and tackling corruption as Nigeria just last week reached an agreement with the G.8 to cooperate in the areas of transparency and fighting corruption.

The money spent in conducting the 10 month old ALSCON transaction may now go down the drain since the BPE took loans from World Bank to see through the transactions.

Part of the money sourced from World Bank was used to pay legal advisers, financial advisers, technical consultants and other payments, which also include money expended on live television coverage.

Meanwhile, Obasanjo had also stopped the investor sale of the Mint and ordered a re-start of the bidding process.

He also intervened in the Africbank shares, ordering the BPE to adopt initial public offer (IPO) option as against the investor sale adopted by the Bureau.

The N8 billion already collected by BPE from eight investors had been refunded with interests.



Farmers shocked as toxic waste plant gets boost

Online.ie, Ireland 2004-06-20 15:50:01+01

Farmers expressed shock today at a decision which will lead to a massive rise in the amount of toxic waste deposited near their lands in Co Limerick.

The Aughinish Alumina plant in Askeaton, which extracts material used to create aluminium, is to increase production by 250,000 tons annually.

This will create more waste products (toxic salt cake and red mud) to add to the existing 100 hectare red mud stack.

Locals were outraged that the 62 million euro (£41 million) contract was awarded by the Aughinish owners, Glencore International, to the Worley Group in Australia, without any consultation.

Dust has blown from the stack in the past and, according to the Environmental Protection Agency, ground water pollution from caustic contamination is a continuous problem on the site.

The Cappagh Farmers' Support Group, which represents farmers in the Askeaton area, said the announcement was a total shock.

"We have heard nothing about this," said chairman Pat Geoghan.

The group has been attempting unsuccessfully for the last three months to get a Dail committee to investigate the red mud stack beside the Aughinish plant.

"The Government should not allow this expansion before they deal with the problems that are already there," said Mr Geoghan.

The Environmental Protection Agency (EPA), which monitors dust, air and surface water emissions from the mud stack, was not informed by Aughinish Alumina of its decision to expand production, although a spokeswoman said the company was permitted to increase production under its licence.

"They wouldn't have had to let us know. There is no requirement for public notification," she said.
Sinn Féin TD Arthur Morgan said the silence surrounding the decision was very worrying.

"Normally we would expect politicians to make a grand announcement, but in this case it seems to have been hushed up. It raises the concerns among local people and I fully share those concerns," he said.

The Sinn Féin Environment spokesman said he would continue to press for the issue to be investigated by the Dail Environmental Committee.

Aughinish Alumina is required to rehabilitate the mud stack under the licence granted by the EPA. However, attempts to grow vegetation on the surface have not succeeded so far. A system of water sprinklers is used to keep the red dust down.

The EPA said emissions from the mud stack were monitored each month by its inspectors and by Aughinish Alumina, and that the inspections showed compliance with the factory's integrated pollution control licence.

Aughinish Alumina was unable to be contacted.



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

www.kaiseral.com June 21, 2004

In Today’s Court Hearing

The most noteworthy item was approval of a motion that describes bidding procedures regarding the previously announced sale of the Gramercy, Louisiana, facility to a joint venture of Century and Noranda. The bidding procedures would come into play only if the company receives at least one competing qualified bid by July 6. If so, Kaiser would then conduct an auction on July 8. We would then expect the Court to rule on the winning bid at the regularly scheduled hearing on July 19.

Motion Filed on Potential Sale of QAL Interest

On June 18, the company filed a motion with the Court that describes the process for the potential sale of Kaiser's interest in the QAL alumina refinery in Australia. The motion is subject to Court approval and no assurances can be given on the outcome.

Liquidity

The company’s recent liquidity continues to be adequate.

Jack A. Hockema
President and Chief Executive Officer


Kaiser Aluminum Subordinated Noteholders Form Committee

Business Wire (press release), CA June 21, 2004 01:07 PM

NEW YORK--(BUSINESS WIRE)--June 21, 2004--In connection with the Kaiser Aluminum Corporation chapter 11 proceedings in Delaware, the Ad Hoc Committee of Kaiser Aluminum Senior Subordinated Noteholders has formed to discuss certain issues of mutual interest. Other Senior Subordinated Noteholders who might have an interest in joining the discussions should contact the Ad Hoc Committee's counsel, Evan Flaschen at Bingham McCutchen LLP, (860) 240-2723.
Contacts


Bingham McCutchen LLP
Hank Shafran, 617-951-8193
hank.shafran@bingham.com



FERC needs to follow Snohomish PUD's lead

Seattle Times, WA 6/21/04

By Kate Riley, Seattle Times editorial columnist

Snohomish County Public Utility District is proving to be a fierce warrior in the battle to win justice for itself and other utilities that were victimized by Enron's predation.
With the public airing of tapes the Everett-based PUD pried from a reluctant U.S. Department of Justice, the utility has shown the world that Enron employees played Western energy markets with the same wild-eyed zeal and giddiness a teenager might attack a game at the video arcade. They joked about cheating "Grandma Millie," that their lies were only marketing techniques, and of wanting to go to jail "only once."

But this was no game and Enron's winnings were at the expense of the West, which one California study estimated lost $35 billion in productivity and 589,000 jobs in 2000-01.

The Federal Energy Regulatory Commission deserves some blame for not imposing price caps during the energy crisis when it was clear generating plants were shut down to send prices soaring even higher. Also, it is confounding that FERC's own staff tried quashing the PUD's subpoena for the tapes, which effectively put the utility in the position of fighting for the right to do what the regulator should have been doing itself.

The PUD's tapes add an extra dollop of outrage on top of the already established record of market manipulation. Even pure-market ideologues have to admit the lesson of Enron and other predators shows that markets sometimes need disciplining.

That's what new Commissioner Joe Kelliher argues. One of four Republicans on the four-member commission, Kelliher describes Enron as a corrupt company and concedes FERC should have acted sooner to impose price caps.

But he also wants Congress to give the commission more civil and criminal enforcement authority by amending the 74-year-old Federal Power Act. Kelliher endorsed one of U.S. Sen. Maria Cantwell's amendments to do just that. Unfortunately, the amendment, which was added to an agriculture appropriations bill and passed handily by the Senate, was stripped in conference committee with the House.

"Maybe in 1935, the law made sense; it does not make sense now," said Kelliher. He notes that other market regulatory commissions, such as the Securities and Exchange Commission and the Commodity Futures Trading Commission, have authority to impose strict civil penalties.

"If you're convicted of commodities fraud, you can't ever sell commodities again," he said. "But you could sell electricity."

Kelliher's reform-minded talk is little consolation to Snohomish PUD, which is being sued for $122 million by Enron's bankruptcy trustee for canceling a contract that clearly was made under fraudulent conditions.

While FERC revoked Enron's authority to sell electricity in June 2003, the bankrupt company was already out of business.

"It's as if you punish someone for robbing a bank by telling them they can't go into a bank in the future," said Al Aldrich of the Snohomish PUD. "Doesn't that scare you as a consumer?"

The PUD, along with Cantwell and Reps. Jay Inslee and Rick Larsen, is pushing FERC to move the effective date back to early 2000, when the market manipulation clearly began. That would justify the utility's case for not having to pay Enron the $122 million — or about $420 for the average PUD household. It also could have repercussions for other utilities in similar situations throughout the West.

Snohomish PUD seems to have gotten FERC's attention, at least. The commission signaled Thursday it would consider this new, stunning evidence in pending cases.

While that's a promising sign, the agency still has something to prove, especially to the West. Justice will come with refunds and relief from long-term contracts.

The energy crisis shut down aluminum companies in Washington state and hurt the bottom lines of businesses that used to enjoy the most affordable rates in the nation. Is it any wonder the Northwest economic recovery has lagged the nation as the region's energy customers continue to pay rates as much as 50 percent higher than before the crisis.

Inslee and Cantwell last week valiantly pushed the Snohomish PUD's case in press conferences, floor debate and with the Bush administration. Confoundingly, Democrats seem to be pitching their fits without their Republican colleagues.

Energy justice should not be a partisan issue, since Democrats and Republicans alike are paying higher rates.

That's why FERC's actions in the next few months are so important. The battle for justice for Enron's victims should not be pre-empted by election-year politics or even the ideological differences of energy legislation.

On Enron's mischief, there is only right and wrong. FERC should act.

Kate Riley's column appears regularly on editorial pages of The Times. Her e-mail address is kriley@seattletimes.com





The end of the worker as hero (sale of the Yakhont hotel in Krasnoyarsk)

Guardian, UK - Wednesday June 23, 2004

The free market reigns at a huge aluminium smelting plant in eastern Siberia

Terry Macalister in Krasnoyarsk, eastern Siberia

One of the more positive symbols of the Soviet era is to be consigned to history with the sale of the Yakhont hotel in Krasnoyarsk. The sevenfloor building on Telmana Street is being disposed of by the giant local aluminium smelting business owned by oligarch Oleg Deripaska's Rusal group. The plant, which is the second biggest of its kind in the world, was once the pride of Soviet industrialisation and its workers were treated as heroes.
The Yakhont hotel was originally established as a kind of sanatorium to cater for the aluminium plant's staff. Soviet workers were able to buy and save vouchers so they could spend a couple of weeks recuperating there. The state-owned smelter employed its own army of doctors, nurses and dentists to look after its employees who had to endure the dangerous dust and extreme temperatures of the plant.

One local resident, who asked not to be named, said as a child she remembers the Yakhont - named after a local precious stone - being seen as a great treat by smelter workers if only because it served up three good meals a day. "These were the days of the Soviet worker ideal and those at the aluminium smelter were valued very highly both by employers and neighbours," she explained.

When privatisation hit the smelter, which now produces 930,000 tonnes of aluminium a year, the Yakhont premises were turned into a 68-room commercial hotel.

Now it offers rooms at about $40 (£22) a night but is not considered "core" business by Rusal which has also dismantled the rest of the smelter's social infrastructure.

This included its own a bakery, a laundry and even a farm with pigs and chickens. In Soviet times the smelter was forced to produce aluminium pots and pans for the domestic kitchen but now it tends to stick to aluminium ingots.

These are shipped all over the world - including to Britain - where they are used for a variety of purposes including the construction of planes and cars.

Jobs are also being cut at the Krasnoyarsk aluminium smelter with the original workforce being cut from 10,000 to 6,700 in the last year alone.

And at the plant yesterday its managing director, Duncan Hedditch, said he was hoping to drive down the number of staff to below 5,000.

The tough Australian plant boss said he hoped to reach that in three to four years. "These guys [pointing to his Russian senior staff beside him] will probably shoot me for (saying) it." But he says there is no great unemployment in this mineral- rich part of Russia and he is keen to raise wages to keep the staff he needs.

Mr Hedditch is also unapologetic about dismantling what have become sideline businesses, such as the hotel. He says the plant must restructure and outsource all but its essential business to ensure competitiveness in a global market.

"We have changed from a command economy to a market economy. The problem of the command economy is that there was not enough attention paid to the customer. In the past you worked to a plan, now you work for the customer," he said. The plant may still have a sculpture dedicated to Lenin outside its offices, but the ideology inside is strictly free market.

Mr Deripaska, who also owns a small stake in UK steel group Corus, is expanding productivity and output at Krasnoyarsk. It is also investing $270m to modernise the plant and reduce its noxious emissions.

Russia has not signed up to the Kyoto treaty on climate change - yet - but still Mr Hedditch says his plant faces tough regulations that he is trying to follow.

Aluminium smelting is a dirty business and the Siberian facility, which produces 3% of the world's total aluminium, consumes nearly half a million tonnes of carbon every year.

Inside a series of vast hangar-like buildings huge furnaces rage and help workers to ensure temperatures outside the plant of up to 30C in winter. Andrei Baranov, 40, was one of those staff toiling away yesterday, dressed head to toe in black with a helmet and visor. In what looks like a scene from a mixture of science fiction and Dickens, he is raking 960C ash from below the coal-black smelters.

This mountain of a man describes the job as his "calling" and says he would not want another job, but then he earns $800 a month, much more than the $250 average in Russia. "I work here so I must be content," says the personification of the Stakhanovite Soviet ideal who now earns his crust from capitalism.



BasEl: RusAl Worth Up to $10Bln

Moscow Times, Russia , 23 Jun 2004

Bloomberg Russian Aluminum is valued at between $8 billion and $10 billion by its owners, who are preparing to offer investors shares in the world's third-largest producer of the metal, David Geovanis, managing director at Basic Element, which controls three-quarters of the company, said Wednesday.

Billionaires Roman Abramovich and Oleg Deripaska pooled their aluminum plants into RusAl in March 2000. Deripaska's Basic Element, or BasEl, usually keeps investments for five to seven years, Geovanis told an investment conference in Moscow.

"Our goal is to sell out eventually," Geovanis said. "RusAl will be first to be taken public."

RusAl, which makes one-eighth of the world's aluminum, is striving to become the world's largest producer of the metal by spending as much as $7 billion in a decade to build new plants and upgrade mills. Pittsburgh-based Alcoa, the world's top aluminum producer, is worth $27.8 billion at current market prices.

Aluminum accounts for some $4.5 billion of BasEl's approximate $8.3 billion annual revenue, Geovanis said. Automotive operations come second, bringing in $2 billion a year, and its insurance and electricity-generating businesses bring about $500 million each, he said.


Tobian Metals plant sold

St. Joseph Herald Palladium, MI 23 Jun 2004

By MICHAEL ELIASOHN / H-P Business Writer

BENTON HARBOR -- The former Alreco Metals/Tobian Metals plant has been sold, and the person who arranged the sale is optimistic the transaction will result in new jobs.

Robert Winters, owner of Winters-Associates Realty in St. Joseph, said the buyer is Riverside Partners LLC of Holland, which plans to improve the property and then sell all or part of it. The purchase took place June 16.
There are two buildings and some vacant land on the site along Paw Paw Avenue on the city's north side.

"I'm kind of excited about these people buying the property," he said.

Winters said Riverside may keep part of the property for its own use and sell the rest, or sell it all. Another possibility is turning the buildings into industrial condominiums; that is, the users would buy the space they use, but other areas, such as the truck scale, parking lot and office space would be shared.

Riverside Partners was formed specifically for the transaction, but the owners are "engaged in a variety of manufacturing and investment properties," Winters said.


As for the next step, he said, "We've got four prospects for the property," and he's seeking more. "I suspect something will happen fairly soon."

Winters wouldn't name the owners of Riverside Partners or the four prospective buyers.

He said some of the four are local and some are interested in buying all of the property and some only want part. All are interested in using it for manufacturing or storage. If the latter, "storage would be a small part of the property (used)." None wants to resume aluminum smeltering, its former use.

The property totals 32.67 acres. The manufacturing building, built in the 1960s, has about 187,000 square feet. A maintenance building, built about 1990, has about 31,500 square feet.

There are also two vacant parcels - 16 acres in the northwest corner and 2.6 acres in the southwest corner. The factory buildings and parking lot are in Benton Harbor; the vacant parcels are in Benton Township. All the property is zoned for heavy industry, Winters said.

He said 4,000 cubic yards of aluminum dross, also called salt cake waste, has to be removed. The dross is the unusable byproduct from Tobian's melting of scrap aluminum into blocks for sale to die casters and foundries.

The other major work required, Winters said, is replacing 75 percent of the roof over the manufacturing building. The steel roof is coated with a material containing asbestos.

"I don't know how long it will take (to clean up)," he said.

Winters said the smaller building is in "great shape."

The original owner of the property, Michigan Standard Alloys, operated the smelter there from 1965 to 1979. Winters, who was MSA treasurer, arranged the sale to Alreco Metals Co., which operated there from 1982 to 1993, when it sold the business to FFS Inc. FFS closed in December 1995.

Tobian Metals, now bankrupt, smelted there from August 1998 to October 2001.

Winters, as court-appointed receiver for the property, handled the sale to Riverside Partners. He said the proceeds - he wouldn't say how much - go to the first mortgage holder, 1st Source Bank. Asked if the amount was enough to pay off Tobian Metals' debt to the South Bend bank, he replied, "Not even close."

Winters said Riverside Partners has paid $65,000 in back property taxes owed by Tobian Metals to Benton Harbor.

He said companies locating on the property are eligible for Renaissance Zone benefits - no real or personal property or single business taxes through December 2011.

"The Renaissance Zone tax benefits are unbelievable for a buyer," he said.

Winters, who worked for Michigan Standard Alloys for 17 years, said he remembers when it had 400 employees.

"Hopefully it will become a productive economic entity (again)," he said of the property, while standing outside the gate Tuesday afternoon.

"That's what we're striving for anyway. The community needs jobs."


Exclusive: NFC's Vietnamese alumina project talks in stalemate

Interfax, China 23 Jun 2004

Shanghai. (Interfax-China) - The Sino-Vietnamese alumina project negotiations between the Vietnamese and Chinese governments, which have lasted for some 3 years, are currently at standstill. The reason for the deadlock is that China's alumina monopoly, Aluminum Corporation of China (Chaclo) requested a 50% share of the potentially lucrative project from the former project initiator, China Nonferrous Metal Industry's Foreign Engineering & Construction Co. Ltd. (NFC).

A senior official with NFC, the Shenzhen-listed subsidiary of the state nonferrous metal giant, China Nonferrous Metal Group, disclosed to Interfax, "Before Chalco's presumptuous request for a 50% interest in the project to the National Development and Reform Commission (NDRC), our talks with the Vietnamese government on the alumina project were going pretty well with all the key terms of the deal close to finalization of an agreement." The official wishes to remain anonymous.

He further complained, "Chalco, relying on its unchallenged position in China's domestic alumina industry, is always taking it for granted that it should surely have a presence in any of China's huge alumina projects." "However", he continued, "Chalco's advantages are only confined to domestic market, not the global market, where NFC has a much more favorable position due to its expertise and experiences amassed following 20 years of presence in overseas nonferrous metal projects engineering and construction."

He said, "After Chalco's participation in the project, Chalco has been dominating the Chinese negotiation delegation, which led to the stalemate, and (talks have) even retrogressed in some particular key terms which had previously been clarified after NFC's three-years of tactful talks with the Vietnamese government."

Asked whether the project will be aborted, the official answered, "It is hard to say, but is also possible that one day, the negotiation will be successfully pushed though", while adding, "NFC itself, based on its consolidated and long-established relationship with the Vietnamese government, will proceed with its alumina project expansion in Vietnam in the future, no matter how the deal might go..."

NFC's Vietnamese alumina project is based in the Dak Nong region of Vietnam. According to the official, the project was originally planned to create an annual alumina productive capacity of 1 mln tons, which was then raised to 2 mln tons after Chalco's recommendation. Before the deal was almost concluded, NFC scheduled to commence construction in 2006 and begin exporting the alumina produced at the Dak Nong alumina project from 2009. The project was originally estimated to cost USD 1.1 bln, including USD 500 mln for railway and port construction to be undertaken by China Railway Group.

"Chalco should have the self-awareness and a sense of danger now, because the 'anti-monopoly law' has been already formulated for final approval of the State Council, which is expected to be promulgated within this year" "When the law comes into effect, Chalco's monopoly will ultimately break up."

According to the official, Chalco currently controls 80% of China's domestic alumina projects, which is expected to be diluted to 60% by the end of this year, following the start of operations of two new private alumna projects in the country.


About Chinese power and VAT - June 23 2004

Australasian Investment review (subscription), Australia 23Jun2004

Government investment restrictions and persistent power shortages are currently plaguing Chinese aluminium output and that will be to the benefit of the metal’s international price, GSJB Were experts said this week in a general update on the sector.


In an earlier update, a few months ago, the experts stated that Chinese production in 2004 would be limited to 5.9 million tonnes, from 6.3 million tonnes in 2003, mainly because of an anticipated shortage of alumina, which is used to produce aluminium. This time they believe they can stick to that forecast, even if the reasons behind the drop have changed.


So far this year, the analysts understand that at least 750,000 tonnes of annual smelter capacity has been either closed or suspended in China. This includes a number of Soderberg smelters that, for environmental reasons, they would not expect to reopen. It also includes production curtailments at some of the large and more modern smelters, including a 30% cut in output at Chalco’s 145,000tpy flagship smelter at Pinguo, the report states.


Government measures to limit investment in aluminium smelting capacity add to the expectation that China will be a small net importer of the metal in 2004 compared with a net import of 369,000 tonnes in 2003.


Meanwhile, the market is anxiously awaiting a decision from the Chinese government about whether or not to reduce or eliminate the VAT rebate for exporters of aluminium. VAT is currently set at 15%, with an 8% rebate available to exporters of metal.


GSJBW believes that if a rebate reduction is announced, the market will see a sharp surge in aluminium exports ahead of the implementation date, followed by a sharp contraction.



Will a new foreign takeover wave gut Toronto's head office core?

The Globe and Mail, Canada Thursday, June 24, 2004 - Page B2


By ERIC REGULY
Last autumn, when Manulife agreed to buy John Hancock for $11-billion (U.S.), investment bankers wept with joy and economic nationalists trembled with fear.

After a lull of two years or so, the mergers and acquisitions game was evidently back. The Manulife-Hancock deal was an aberration. How long before the Americans launched a retaliatory takeover strike on Canadian soil?

But nothing happened. No one went after companies in the financial services sector. Oddly, no big deals hit the resources sector, where oil and natural gas and mining companies were suddenly the hottest things since dot-com stocks, circa 1998. The first half of 2004 ranked as a genuine M&A bore-fest.

Now look at what's happening. Last week, it appeared that Companhia Vale do Rio Doce (CVRD), a large Brazilian iron ore company, was on the verge of making an offer for Noranda, the mining and smelting company that controls Falconbridge, one of the world's biggest nickel players. It's an open secret that Brascan, Noranda's parent, has been shopping the Noranda-Falconbridge combo for some time. There is some speculation Inco could be next.

Meanwhile, a family feud at Molson, Canada's oldest brewer, erupted into the public domain. No shortage of analysts and investors think the rift will be healed though a sale. Coors, Molson's partner in the United States, is one logical suitor, although any of the giant brewers that own the international beer industry could swallow the Canadian company in one gulp.

Is this the start of a takeover wave that could eliminate another layer of big Canadian companies? It's impossible to say, of course, because the acquisition-minded generally don't reveal their intentions.

But the conditions seem right for deal making. In M&A land, lulls rarely last long.

The resources industry is the best place to look for action. Noranda and Falconbridge will probably land in CVRD's lap, in spite of CVRD's protests to the contrary. Brascan no longer wants the two smelly brutes and would be happy to unload them during the upswing in the resources cycle. Bay Street deal makers say competing bids are unlikely, and it's a matter of Brascan and CVRD settling on a price.

If Noranda and Falconbridge, why not Inco? Every few years, Inco gets caught in a wave of takeover speculation that ends up going nowhere. A few years ago, though, Inco was unloved. It had overpaid for Labrador's massive Voisey's Bay nickel deposit, and the Goro deposit in New Caledonia, while promising, was going nowhere. Its shares were in the tank. Now it is one the Toronto Stock Exchange's stars, with a one-year return of more than 70 per cent. Nickel prices are propelling the shares. Yesterday, a pound of nickel sold for $6.95. A year ago it was $4.

You could well argue that Inco and other base metal companies are too expensive, that the time to buy them was two or three years ago, even one year ago, before the shares took off. But mining companies that want to expand don't necessarily think that way. When commodity prices are down, their shares, and hence their acquisition currency, are down too. The challenge they face is to stay alive and avoid firing employees, not scouring the planet for a buying opportunity.

If you believe that a nickel surplus won't return soon because China and other rapidly developing economies will take every pound on offer, Inco may not be too expensive. Nickel demand and GDP growth go hand in hand. In 2003, China alone accounted for 17 per cent in the overall increase of world GDP. China's GDP per capita has doubled since the mid-1990s.

The sale of Noranda, Falconbridge and Inco might make shareholders happy, but it would cut a swath though the TSX and downtown Toronto, where their head offices are located. Together, the three companies make up 11.2 per cent of the weighting of the TSX's so-called materials index. This index, in turn, ranks as the third-largest component of the TSX's composite index, just behind the energy index.

The TSX is heavily weighted toward the financial services sector. But it prides itself on being home to some of the world's largest resources names, from EnCana and Alcan to Barrick and Inco. How it would reinvent itself with the loss of some of these names is an open question. Ditto for downtown Toronto. Look at what happened to Vancouver a few years ago, when the takeover of MacMillan Bloedel and a few other large companies hollowed out its commercial core.

There is little sign the financial services sector will get swamped with takeovers. That could change after the federal election. The banks, notably CIBC and Royal, would like to see the government end its ban on cross-pillar mergers. This would, for instance, allow Royal and Sun Life to get together to form a banking, insurance and wealth management colossus.

Canada needs all the big head offices it can get. If it can't attract new ones, the next best option is keeping the ones it has. The most powerful defence against takeovers is a fully valued share price, the result of solid management, efficient operations and a high return on capital.

Alcan, the world's second-largest aluminum producer, is not considered a takeover target because no potential buyer can figure out how to make the company perform better than it already is. Canada needs more companies managed like Alcan.


 

ALSCON: How Rusal, Russian Firm, Got Disqualified

AllAfrica.com, Africa June 25, 2004

This Day (Lagos), Cletus Akwaya, Abuja

Fresh facts emerged yesterday on why Rusal, the Russian firm that bidded for the Aluminum Smelting Company of Nigeria (ALSCON)Ikot Abasi, was disqualified June 14.

Representatives of the Russian firm, a highly placed presidency source maintained, were conned by a top government official close to the privatisation process.

The unsuspecting Russians, THISDAY gathered had approached the official for "technical assistance" to enable them make a successful bid on the eve of the transaction. But rather appropriately guide the Rusal team, the official conversant with the existing privatisation rules allegedly misled the Russians when he advised that they make a conditional bid of $250 million.

THISDAY was told that the Russians had proposed to pay only $5 million upon emergence as preferred core investor and the balance in installments. THISDAY could not establish whether the motive for the ill-advice was to give BFIGroup an upper hand or to stop Rusal for other reasons.

But the official was alleged to have convinced the Russians that a conditional bid, if accepted, would enable them put the plant into full operations before paying fully for the shares.

However, Mr. Akin Kekere-Ekun, Chairman of the Technical Committee of the National Council on Privatisation (NCP) who opened the bids disqualified the company. Kekere-Ekun explained then that NCP does not accept conditional bids and therefore Rusal would not be allowed to go to the next round of the bidding session.

An American firm, BFIGroup which went into the second round as the sole bidder made an offer of $410 million to emerge eventual winners.

But an enraged President Olusegun Obasanjo who got wind of the development was said to have directed Kekere-Ekun, Minister of Power and Steel, Senator Liyel Imoke and Director General, Bureau of Public Enterprises(BPE), Dr.Julius Bala to re-open discussions with the Russians. The negotiations, however, collapsed when Rusal reviewed downward, its offer of $250 million to $160 million including the $100 million dredging the Imo river.

Meanwhile, ALSCON is owing the Nigeria Gas Company (NGC) close to N1 billion.

THISDAY checks revealed that the money owed NGC was accumulated debt incurred by ALSCON for gas supplies for the power plant and other operational activities in the plant over time.

Audited accounts of ALSCON for 2003 sighted by THISDAY showed the debt is among other liabilities such as pension and debts to other supplies all of which run into millions of naira.


New Russia shakes off the old chains

Telegraph.co.uk, UK 26.06/2004

http://www.telegraph.co.uk/money/main.jhtml?xml/money/2004/06/26/ccruss26.xml&sSheet/money/2004/06/26/ixcoms.html

Portion about Krasnoyarsk only:

The chill wind of capitalism has had a jarring effect on a country that was used to jobs for life. Managers at Krasnoyarsk Aluminium Smelter, the second-biggest aluminium plant in the world, have cut 2,300 jobs in a year.

Duncan Hedditch, the plant's Australian managing director, says: "We have had to explain to people that the most important person in their lives is not their boss but the customer."

Still, the efficiency savings have allowed Rusal, the plant's owner, which is 75pc controlled by Russian oligarch Oleg Deripaska, to plan to spend $270m over the next three years upgrading the plant's ageing equipment.

The most remarkable aspect of this entrepreneurial activity is that it often succeeds despite heavy-handed interference from a federal government that can appear to have remained unchanged since Soviet times.


$10b splurge on resources plan


The West Australian, Australia 25 Jun 2004

STEVE PENNELLS - STATE POLITICAL EDITOR

EXCLUSIVE

The State Government is piecing together a $10 billion master-plan for WA's resources industry that would underpin the single biggest investment splurge since the development of the North-West Shelf gas project three decades ago.

The proposal involves the Government giving the go-ahead to two of the most environmentally-contentious projects in the State - the Gorgon gas plant on Barrow Island and the expansion of Alcoa's Wagerup alumina refinery in the South-West.

The integrated development would be underpinned by the construction of a $1 billion-plus, 1600km gas pipeline that would run parallel to the existing Dampier-to-Bunbury line. The fourth and most ambitious piece of the Government's jigsaw involves building a $4 billion aluminium smelter, most likely at Kemerton. But while preliminary studies show such a smelter could be feasible, it is considered the least likely of the projects to come to fruition.

The Government has already given in-principle approval to the development of the Gorgon gasfield and the construction of a connected processing plant on the environmentally-sensitive Barrow Island.

Under the current plan, all the Gorgon gas would be exported as LNG. But an expanded Wagerup refinery, which is expected to win in-principle approval from the Government in August, would help justify the cost of building a second pipeline.

This would enable some of the Gorgon gas to be brought to Perth, overcoming the energy shortages which have been blamed for Perth's power crises. State Development Minister Clive Brown confirmed the plan yesterday, saying it was one of the most strategically-important decisions the Gallop Government would make.

But the revelation will infuriate green groups - which have waged lengthy battles to stop Barrow Island and Wagerup - and looks set to define the environmental ground for the coming State election.

All the projects contained in the plan still need to pass environmental checks but Mr Brown has backed each publicly and is discussing them privately as the framework for a series of proposed resource and infrastructure developments, some of which have not been made public.

The Government has just finished buying land alongside the Dampier-Bunbury natural gas pipeline to smooth the way for the construction of a second pipeline.

The West Australian understands that under the Government's plan the pipeline would be funded privately, possibly by AlintaGas, and would service a possible aluminium smelter and gas-fired power station at Kemerton, near Bunbury. Other possible locations are Maitland, Karratha or Boodarie, near Port Hedland.

Alcoa hinted at one part of the move yesterday, saying it had talks with Gorgon partners about supplying the expanded Wagerup facility.

Executive director of finance and business services Bill Reid said Alcoa would start serious discussions about its requirements in the middle of next year and that would be "pretty consistent with the timing of Gorgon".

© 2004 West Australian Newspapers Limited


BALCO to buy 25,000 tons of alumina 6/25/2004 11:21:44 AM IST

India Info Online, FL Jun 25, 2004

Bharat Aluminium Company Ltd. (BALCO) plans to buy 25,000 tons of alumina and is looking for sandy metallurgical grade calcined alumina. The last date for submitting proposals is July 15.

Part of Sterlite Industries Ltd., BALCO is in the process of raising the capacity of its aluminium smelter to 345,000 tons a year from 100,000 tons.

BALCO is also increasing the alumina refinery to 220,000 tons from 180,000 tons. The capacity expansion work is likely to be complete in 2005.

Sterlite Industries is planning to acquire the Government's remaining 49% stake in BALCO, the unlisted PSU aluminium major it had picked up from three years ago.

The Anil Aggarwal-promoted Sterlite Industries had acquired a 51% stake in BALCO for Rs5.51bn in 2001. As per the shareholders' agreement signed by Sterlite and the NDA Government, the Centre is bound to sell its residual stake in BALCO to the metals major.

The Call option matured in March this year, and Sterlite exercised the option almost immediately, but the Mines Ministry is yet to start the process of valuation of the Government's residual holding.
 


Kaiser retirees feeling the pinch

Spokesman-Review June 26, 2004

Uncertainty about health care has many worried
John Stucke, Staff writer

Judy Carter is frustrated.

She spent 24 years in Kaiser Aluminum Corp.'s Trentwood rolling mill driving forklifts and other machinery with the understanding that when she retired, her pension check would be modest — she receives about $622 a month — but at least she wouldn't have to worry about paying for health insurance.

All of that has changed. Now Carter and perhaps as many as 4,000 Steelworkers and their spouses in the Spokane region can be counted among those experiencing one of the most worrisome financial predicaments facing Americans: losing their health insurance later in life.

With Kaiser in bankruptcy, the Steelworkers union agreed to deep benefit cuts to help the company reorganize. Gone is the company's generous health insurance coverage, leaving retirees such as Carter to enroll in alternative coverage such as COBRA.

The agreement left Kaiser retirees older than 65 dependent on Medicare, but created a special trust to help offset the high price of prescription drugs.

For retirees between 55 and 65 years old, the deal bounces them onto a COBRA plan, for which they must pay 100 percent of the premium. To offset the cost, the government allows a tax credit, essentially subsidizing 65 percent of that amount.

The agreement was a far cry from the full-paid health insurance benefit retired Steelworkers had enjoyed, but at least it was something, said Peggy Green, president of the Steelworkers Organization of Active Retirees, or SOAR.

As part of the agreement, Kaiser's pension plans would be surrendered to the federal government's Pension Benefit Guaranty Corp., which insures corporate retirement plans.

While the union and Kaiser hammered out the deal last winter, the PBGC has so far declined to take over Kaiser's six remaining pension plans, which, by some estimates, are several hundred million dollars in arrears.

The PBGC's financial situation already is dire. The agency reported last month that it had a $9.7 billion deficit so far this year as big American companies fold and force the agency to take over pension plans of thousands of affected workers.

Its refusal to assume Kaiser's pension debts now threatens to gum up the entire agreement and potentially cost Steelworker retirees hundreds of dollars a month for insurance, union members say. To qualify for the 65 percent tax credit for health insurance, recipients must be collecting a pension check from the PBGC.

"This whole thing is frustrating and frightening," Carter said. "We could be left with lots of people with no insurance. That can have a real ripple effect in a town like Spokane."

Although the PBGC declined to comment about the Kaiser plan, Dave Foster, district director for the Steelworker's union, said recently that the agency told him the workers were getting "too rich of a deal."

He said officials from the union, Kaiser and the PBGC are scheduled to meet Monday and Tuesday to discuss the deal.

The union has already enlisted support from seven U.S. senators, who drafted a letter urging the PBGC to quickly take over Kaiser's pension plans.

If the agency declines, the agreement could be scrapped and Kaiser's delicate bankruptcy reorganization could be thrown into disarray, Foster said.

The company plans to emerge from Chapter 11 bankruptcy protection this year.


Smelter proposal 'too crazy to be real'

ABC Online, Australia 26 Jun 2004


An alliance of environmental and community groups says a proposal for a $4 billion aluminium smelter in south-western Western Australia is so crazy it must be a stunt.

The smelter forms part of the State Government's master plan for the future of the resources industry in Western Australia.

The Alumina Action Alliance, made up of environmental and community groups, says the project would be environmentally devastating to an area that is already burdened with four alumina refineries.

Convenor Neil Bartholomaeus says it also makes no economic sense because the public would have to subsidise the plant's huge energy requirements.

"Its energy requirements would be massive and the south-west is very short of energy supplies," he said.

He says the announcement is out of the blue.

"One can only assume it's a stunt to prove that the State Government can deliver development to the West Australian community but it would be an horrendous impact on the environment and the economy," he said.

State Development Minister Clive Brown says the claim that taxpayers will have to subsidise the project is ludicrous and the overall criticism of the proposal premature.

"Whenever you come forward with these ideas there's always a million and one reasons why something can't happen and that's even before the matter's been considered in detail," he said.

Mr Brown says the criticism is a sign that some people in Western Australia still believe in a basket weaving-led recovery.

"Those of us who live in the real world have to understand that we need a strong economy to provide the jobs that people need," he said.

"We're not about to see a basket weaving-led recovery any time soon."



SUAL in Qatar

Moscow Times, Russia 27 Jun 2004

MOSCOW (Bloomberg) -- SUAL Group, Russia's second-largest aluminum producer, may build an aluminum plant in Qatar, Vedomosti reported Friday, citing company chairman Viktor Vekselberg.

SUAL may take part in a venture to build the plant, expected to cost $2.5 billion and to smelt 516,000 tons per year of the metal, the paper said. Qatar is looking for participants in the venture, it said.



Alcoa axes $1-billion Quebec expansion

The Globe and Mail, Canada, 6/28/04

Montreal — Alcoa Inc., the world's largest aluminum producer, said Monday that it plans to cancel a $1-billion expansion of its smelter on Quebec's remote North Shore after talks with the Quebec government over energy supply and tax breaks broke down.

The project was suspended in January as the two sides sat down to try to hammer out a new pact for the long-term supply of energy to the aluminum giant. The Liberal government of Jean Charest said at the time that it wanted to revise the terms agreed to by the previous Parti Québécois administration, including tax breaks and preferential rates on electricity from state-owned Hydro-Québec.

“We could not reach agreement on a formula that would have ensured long-term affordable energy for the Baie-Comeau modernization project,” Jean-Pierre Gilardeau, president of Alcoa Canada's primary metals unit, said in a statement.

“With energy representing more than 30 per cent of our operating costs, we simply cannot invest a billion dollars in a project with the risk that energy prices will rise considerably over the life of the project,” he said.

“Over 40 years, even with only moderate increases, energy would represent a 10-billion-dollar cost.”

The decision is a huge blow to employment prospects in the job-starved region. It also represents a major reversal of a decades-long tradition in Quebec of offering generous incentives to the private sector in return for job creation.

The expansion, including a major refurbishment calling for replacement of outdated and polluting 1950s-era technology, was to create 6,000 direct and indirect jobs over an eight-year period, with the new plant operational by 2010. The Baie-Comeau facility now employs about 1,800.

Alcoa employs a total of about 5,000 people at its three Quebec smelters, as well as transformation plants.

The company has been spearheading growth outside North America, including projects in Iceland, Trinidad, Brazil, Bahrain, Brunei, China and Australia.

Pittsburgh-based Alcoa said Monday that the existing operations will remain open until at least 2010, “as long as environmental requirements, energy availability and market conditions will allow.” The company said it's too early to say how many layoffs could result from the closing.

Also cancelled are plans to expand and upgrade a separate smelter facility at Deschambault.

The expansion of the smelter at Baie-Comeau was announced with great fanfare in December, 2002, by the Parti Québécois government of Bernard Landry as a major job creation project for the region.

The expansion would have boosted aluminum production at Baie-Comeau by 25 per cent to 547,000 tonnes from 437,000.

Alcoa has a third smelter in Bécancour, Que. It is a 75-per-cent-owned joint venture with rival Alcan Inc. of Montreal.

Under terms first reached with the Parti Québécois government, Alcoa was to be eligible for a 10-year tax break and a $170-million interest-free loan.

Hydro-Québec was to have provided 175 megawatts of power.

Alcoa shares closed down 62 cents (U.S.) to $32.87 on the New York Stock Exchange Monday.


GAPCO Extends Guinean MOU

PR Newswire (press release), 28 Jun 2004

TORONTO, June 28 /PRNewswire-FirstCall/ -- Global Alumina Products
Corporation (GAPCO) (TSX VEN: GPC.U) and the Ministry of Mines and Geology of
the Republic of Guinea jointly announce the extension of the term of their
Memorandum of Understanding (MOU) regarding the development of GAPCO's
proposed 2.8 mtpa alumina refinery. The MOU, which was due to expire at the
end of June 2004, has now been extended to the end of December, 2004. The MOU
will be replaced with a definitive Investment Agreement.
"Based upon the significant progress made to date and the continuing close
co-operation between GAPCO and the Ministry of Mines and Geology, we are
pleased to confirm that the parties agreed to extend the term of the MOU.
This extension will permit the parties to complete the various technical
studies necessary to finalize the definitive Investment Agreement," states his
Excellency Dr. Alpha Mady Soumah, Minister of Mines and Geology. His
Excellency added, "the Government's ability to provide a long-term secure
supply of high-quality bauxite to GAPCO, together with the investment
incentives made available by the Government of Guinea, are examples of what
the Government can bring to the future transformation of Guinea's vast bauxite
resources into higher quality alumina."
"GAPCO is pleased with the support and cooperation we are receiving from
the Ministry of Mines and Geology," said Bruce Wrobel, CEO of GAPCO.
"Guinea's long experience of mining of bauxite and the production of alumina
is proving extremely helpful to our efforts to finalize the pre-construction
efforts surrounding this exciting project. We look forward to continuing our
close relationship with the Government of Guinea through development,
construction and ultimately the long-term operation of the alumina refinery."

The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.

SOURCE Global Alumina Products Corporation
Web Site: http://www.globalalumina.com


Alcoa affiliate buys more of Guinea firm

Pittsburgh Business Times, PA 28 Jun 2004

Alcoa World Alumina paid nearly $6 million to boost its stake in Halco (Mining) Inc. in the Republic of Guinea.


Alcoa World Alumina, majority owned by Pittsburgh-based Alcoa Inc., paid around $5.88 million to increase its stake in Halco to 45 percent from 43 percent.

The other major owner of Halco, Montreal-based aluminum producer Alcan Inc., also paid roughly $5.88 million to increase its stake from 43 percent to 45 percent.

The transactions were described Monday by Alcoa, which owns 60 percent of Alcoa World Alumina. Australia's Alumina Ltd. owns the remaining 40 percent.

Alcoa World Alumina and Alcan bought their stakes in Halco from Comalco Ltd., a provider of aluminum in Australia and New Zealand, according to Alcoa.

For its part, Halco owns 51 percent of Compagnie des Bauxites de Guinee, or CBG, a bauxite miner in the Boke region of Guinea. The government of Guinea owns the remaining share of CBG.

Alcoa World Alumina, Alcan and others buy bauxite, the source of alumina, for their own uses. Alumina is aluminum's raw ingredient.

In May, Alcoa and Alcan said they agreed to develop a 1.5 million-ton-per-year alumina refinery in Guinea. Studies are under way on the project, and production is expected to begin early in 2008, Alcoa said on Monday. The cost has not been disclosed.

© 2004 American City Business Journals Inc.


Aluminum of Kazakhstan net profits soar 89% in 2003

Interfax, Kazakhstan 28 Jun 2004

Almaty. (Interfax) - Aluminum of Kazakhstan saw its 2003 net profits soar 89% to 3.772 billion tenge from 1.992 billion tenge in 2002, the company's financial report says.

The company, located the country's northern Pavlodar region, sold product worth 31.02 billion tenge last year against 29.1 billion tenge the year before, while sales costs came to 22.345 billion tenge against 20.402 billion tenge.

Aluminum of Kazakhstan ended 2003 with 27.1 billion tenge in own capital, compared to 23.45 billion tenge one year earlier. Company charter capital remained at 5.835 billion tenge.

Company assets were worth 33.7 billion tenge at the end of last year, against 31.1 billion tenge at the end of 2002.

Company obligations during the reporting period contracted by 1.1 billion tenge due to accounts payable being cut by 1.7 billion tenge, but with increases in borrowings (including leasing) of 486.6 million tenge and other obligations of 92.3 million tenge.


Hydro Sell German Alumina Business

Azom.com June 29th, 2004

Hydro has entered into an agreement to sell its German based alumina business. This consists of a 50 per cent share in Aluminium Oxid Stade GmbH (AOS), the related chemical grade alumina business and the dedicated bauxite supply source represented by Hydro's 10 per cent share in Halco (Mining) Inc.

The Dadco Group, which owns the remaining 50 per cent of AOS, has purchased these operations for a consideration of approximately NOK 750 million. In addition, Dadco will assume all financial, commercial and all other obligations related to the business. The transaction will not result in any significant gain or loss for Hydro.

Dadco is a privately owned investment, manufacturing and trading group; its founding company was established in 1915.

AOS is an alumina refinery located in Stade, near Hamburg in Northern Germany with a total capacity of 850,000 tonnes of alumina. About half of Hydro’s share of alumina is chemical grade alumina used in a variety of applications in the chemical and other industries, which are non-core to Hydro’s aluminium activities. Halco (Mining) Inc. owns 51 per cent of CBG, one of the largest bauxite mines in the world located in Guinea. Other shareholders in Halco are Alcoa and Alcan.

AOS will continue to produce alumina to supply Hydro’s wholly owned primary aluminium unit in Stade and Hamburger Aluminium-Werk, in which Hydro has a 33 per cent shareholding, through a long term supply agreement with Dadco, thereby securing a long-term industrial solution for all parties.


Charest critical of Alcoa plant closure


Montreal Gazette, Canada Tuesday, June 29, 2004


Premier Jean Charest has stated that he deplores aluminum giant Alcoa's decision to partially close their Baie-Comeau factory.

Charest has nonetheless invited Alcoa heads to resume negotiations with the government and hopefully save the hundreds of jobs endangered by Alcoa's decision.

The Premier had previously been in negotiations with the Pittsburgh-based aluminum company regarding a request to lower electricity prices. They were not able to come to an agreement.

The Premier has stated that he doesn't understand why a profitable factory would close down and leave the area only to continue production elsewhere.

Charest has said that he wishes to reach an agreement on the issue, but not at any cost.

© NTR 2004


Alcan to Complete its Review of South African Smelter Project by Year’s End

Azom.com 29 Jun 2004

Following a recent meeting between Alcan officials and a South African delegation, the parties are continuing to examine the best value-creating alternatives offered by the aluminum smelter project in Coega, South Africa.

"We are working with our partners to find ways to maximize value for all stakeholders involved in the Coega smelter project," said Cynthia Carroll, President and CEO of Alcan’s Primary Metal Group.

As part of this review, the optimal technological solution will be selected among the leading Pechiney AP30/AP50 smelting systems.

Depending on the chosen configuration, the Coega smelter project could produce up to 660 kilotonnes of aluminum per annum. Construction could start as early as the end of 2005 with the first metal produced in 2008. The proposed site is located on the coast of South Africa in the Coega Industrial Zone.

"We welcome this development and are looking forward to working together to achieve these objectives," said Alec Erwin, Minister of Public Enterprises, South Africa.


Showa Denko K.K. (SDK) to Modify Aluminum Business Structure

Investor's Business Daily (subscription) Jun 29, 2004

Tokyo, Japan, Jun 29, 2004 (JCN Newswire via COMTEX) -- Showa Denko K.K. (TSE: 4004; "SDK") is going to change part of the structure of its aluminum business on July 1 to improve production capability and R&D functions.

Specifically, the Extrusion Division and the Aluminum Specialty Products Division will be merged to create a new unit, the Extrusions/Specialty Products Division. This will enable integrated production of aluminum cylinders for laser beam printers-the main product of the Aluminum Specialty Products Division-using extruded tubes supplied by the Extrusion Division. As a result of the integration, SDK will further improve the quality of the aluminum cylinders for printers.

Furthermore, R&D functions of the Aluminum Sector will be improved, as the newly organized Aluminum Technology Center will take control of the die, melting and casting technologies common to the Aluminum Sector.

SDK is progressing with establishment of the market-oriented way of thinking and pursuit of synergies through nurturing the interconnections of inorganic/aluminum and organic chemical technologies. Based on this management policy, SDK will continue enhancing the production efficiency and development capability to ensure the highest product quality for our customers.



Alcoa workers' high kidney cancer rate

Geelong Advertiser, Australia Wednesday, June 30

BERNIE SLATTERY

KIDNEY cancer rates are higher among Alcoa's Victorian workers than in the general populace.
A study of 4396 male workers at Alcoa's Geelong and Portland smelters has found that 14 suffered kidney cancer. Researchers expected half that figure to correlate with the general population.

The latest research from Healthwise, a study to gauge links between employee health and working at Alcoa going back to 1984, also shows that the incidence of stomach cancer among Victorian Alcoa workers was higher than the general population.

And the mortality rate from prostate cancer among Victorian production workers was higher than the general national figure.

Alcoa's occupational physician, Dr Michael Donoghue, said the findings would prompt further in-depth investigation.

Despite the disturbing cancer findings, the study by researchers from Monash University and the University of Western Australia found a lower risk of early death among Alcoa employees than the general population.

It found that mortality rates for all four major categories of death - circulatory disease, respiratory disease, cancer and injury/trauma - were lower among Alcoa workers than in the general population.

It also found the total incidence of cancer in past and present Alcoa employees was lower than the general population.

Dr Donoghue said the research showed that on the whole Alcoa employees were healthier than the general population.

``But (it) also raises a number of finds that we wish to see followed up with further investigation,'' he said.

While some studies showed that occupations such as aluminium smelting, coke oven work and oil refining attracted a greater risk of kidney cancer, Dr Donoghue said other studies had reported no increase in these risks.

``Smoking has consistently been found to increase the risk of kidney cancer and further analyses of cancer incidence in relation to duration of employment, workplace exposure and smoking may clarify whether there is an occupational or lifestyle cause for this result and the researchers will be prioritising this finding for further investigation.''

He was not surprised the study found high mortality rates and incidence of asbestos-linked cancer.

``Mesothelioma is almost always caused by asbestos exposure and like many companies in the 1960s and 70s, Alcoa used asbestos in the early operation of the Point Henry smelter and rolling mill and it is likely that these cases relate to occupational exposure at Alcoa.''




Alcan to take 20% stake in Oman smelter project

Toronto Star, Canada Jun. 30, 2004

MONTREAL (CP) — Aluminum giant Alcan Inc. has signed a deal to take a 20 per cent stake in the development of a proposed aluminum smelter in Oman. Financial terms of the deal were not released.

The Montreal-based company said Wednesday it has signed a deal with the Oman Oil Company and the Abu Dhabi Water and Electricity Authority for a stake in the proposed project, which is expected to have a capacity of 330 kilotonnes per year.

Alcan also said it has the option of acquiring up to 60 per cent of a planned second potline for an additional 330 kilotonnes per annum of aluminum.

The deal provides that Alcan would license its smelter technology and take a leading role in the construction and operation of the smelter.


ALSCON: BFIGroup to Pay $41m July 8

AllAfrica.com, Africa This Day (Lagos), June 30, 2004

Cletus Akwaya, Abuja

BFIGroup, the new core investor to the Aluminum Smelter Company of Nigeria (ALSCON) Ikot Abasi, Akwa-Ibom state may commence payment for the company 's shares July 8, with an initial payment of $41 million.

The amount represents 10 per cent of the bid price of $410 million offered by the American company for 77.5 per cent Federal Government equity in the aluminum plant.

A source close to BFIGroup told THISDAY yesterday in Abuja that the payment will be made to the Bureau of Public Enterprises (BPE) by BFIGroup's team led by Dr. Reuben Jaja, President and Dr. Babacar Ndiaye, past President of the African Development Bank (ADB) and a member of the company, both of who will lead a delegation of the BFIGroup to Nigeria to make the payment.

The planned payment, it was learnt, is in line with the ground rules of the transaction outlined by the BPE which stipulate that a new core investor would pay 10 per cent of the approved bid price within 15 days of being named core investor by the National Council on Privatisation (NCP) while the balance will be paid in the next 90 working days there after.

Details of the payment schedule are among other issues contained in the share purchase agreement due be signed between BFIGroup and BPE.

It was also learnt that BFIGroup would be required to dredge the Imo river which wills provide harbour and maritime services to the plant among other issues.

The signing has been delayed due to the core investor's alleged request to properly study the contents of the agreement before singing, a source at the BPE explained.

BFIGroup won the bid to take over controlling interest in ALSCON June 14, when the financial bids were opened by the technical committee of the National Council on Privatisation(NCP) in Abuja. The second bidders, Rusal(Bratsk) Aluminum of Russia was however, disqualified for making a conditional bid of $205 million.

The conditional bid was to pay the money in installments upon execution of the share purchase agreement , a situation Mr. Akin Kekere-Ekun, Chairman of the committee said ran foul of the rules already made available to the bidders long before the ceremony.



Alcoa, Airbus to partner

Quad City Times, IA 6/30/04

By Jennifer DeWitt

Development of the world’s largest airplane by the European Airbus company is translating into a strong future for Alcoa’s Davenport Works, the plant’s 2,100 employees and the Quad-City community and economy.
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With more than 250 employees on hand Tuesday, as well as a contingent of area business, economic development, local and state government leaders, company officials celebrated the partnership between Airbus and Alcoa’s plant in Riverdale, Iowa, that eventually will give flight to the Airbus A380, the world’s largest commercial aircraft. The 550-passenger aircraft will utilize a full twin-deck design and offer amenities not seen before in a commercial aircraft.
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“We’re here to celebrate today. The A380 is going to be the flagship of the 21st century,” Airbus North American chairman Allan McArtor told the packed house inside the Alcoa
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Learning Center. “Airbus could not build the A380 without the significant support of American aerospace companies.”
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Although Alcoa — through the Davenport Works and some of its other facilities — is not the only U.S. supplier for the landmark project, Alcoa aluminum and its work can be found from the nose to the tail of the plane. The Davenport Works’ contributions include the wing plates and fuselage skin, the largest ever produced at the Quad-City plant.
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“Every new aircraft presents a series of unique technical challenges,” said Bob Wetherbee, the Alcoa Mill Products president. “To meet these challenges, we have developed more new Alcoa alloys and products than any other aircraft in our 100 years of aviation history.”
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But Alcoa’s role is much more than that of a traditional supplier, McArtor said. “Alcoa is one of our critical suppliers. They have been with us for a long time and developed a relationship with Airbus. … We rely on each other.
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“With Alcoa, we give them challenges and they come to us with engineering solutions, state-of-the-art (solutions) that no one else can do,” he said, adding that Alcoa is unique in not only providing what will be the largest wing in the world but also its Alcoa Fastening Systems producing the 1 million fasteners, or bolts, that will be used on each plane.
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In addition to Alcoa Mill Products, which includes the Davenport Works, Alcoa’s other aerospace businesses include: Alcoa Europe Rolled Products, Alcoa Fastening Systems, Alcoa Engineered Products, Alcoa Wheel and Forged Products, Latin American Rolled Products and Alcoa Howmet Castings. The businesses supply Airbus as well as the rest of the aerospace industry with aluminum sheet and plate, extrusions, fasteners, forgings, structural castings and propulsion components such as turbine blades.
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Employment for a long time
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“This is a very unique project because very few models of new planes get introduced,” Wetherbee said. “This is the largest plane ever made and the largest that may ever be made.”
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For many Davenport Works employees, the A380 is the largest plane they have been part of since the Boeing 747, which was first introduced in the 1960s, he said. Some of the most senior employees may even remember the Boeing 737.
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But with Airbus expecting to produce the plane for the next 30 or 40 years, “it means a lot of the work for these people will be this plane,” David Venz, the vice president of Airbus North America, said of Alcoa employees. “If you started working at Alcoa today, your whole career could match (the production of) this airplane.”
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In fact, the Davenport Works is counting on the project’s growth to drive its own. “We have added nearly 100 jobs in the last few months to meet increasing demand for our products,” Wetherbee said. “Helping Airbus meet the demanding A380 range, operating and cost targets also helps to sustain the more than 2,100 jobs we now have at this location.”
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Over the past year, he added, 200 new employees have been hired at the Riverdale plant, including 100 recent hires. The boost in employment has “allowed us to leverage the expansion we added about Sept. 11 (2001).”
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The project, which added aerospace capacity to Davenport Works, was purposely slowed down after the terrorist attacks caused an immediate decline in air travel that still has airlines struggling to recover. The expansion was completed and became operational in 2003, about a year later than first expected.
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But with a large number of retirements expected in the coming years and “with this type of growth, we’ll have to (add more jobs). If we do things right with the A380, it could provide employment for a long time here,” Wetherbee said.
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‘In-sourcing’ in the U.S.
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In addition to celebrating Alcoa’s role, Airbus officials also illustrated the European company’s commitment to the U.S. aerospace industry.
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“The A380 is going to create a lot of jobs, not only for the next generation of Alcoa employees, but for those in many other companies as well,” McArtor said, adding that 50 percent of the components and systems on the A380 are from U.S. firms.
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The first A380 is in production at factories across Europe. It is slated for testing in 2005 and delivery to the first customer, Singapore Airlines, in 2006.
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“Airbus spends more than $5 billion annually in the United States, which equates to around $15 million a day,” he said. The investment, he added, supports more than 100,000 U.S. aerospace jobs.
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“While out-sourcing is an issue for so many today, Airbus is delighted to be among those companies who are ‘in-sourcing’ high-technology jobs,” he said. “We also are value-sourcing. We go where the best product is and the best value. That leads us to the U.S. and Alcoa.”
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Airbus’ investment will increase as the A380 moves into full production. McArtor said production probably will begin slowly, one a month, then two per month and eventually three a month.
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Wetherbee said Davenport Works will produce and ship enough metal for six of the planes this year and “it will ramp up next year.”
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Currently, the A380 project is just a small part of Alcoa’s aerospace revenues, he said. “But by 2007, it could be 30 to 40 percent of Mill Products’ aerospace business.”
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Already — without one plane built — Airbus has firm orders for 129 of the aircraft, McArtor said, calling it one of the most successful new launches in history.
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The A380, an $11 billion development project for Airbus, will continue to fuel its competition with Boeing. Last year, for the first time, Airbus outdid its rival in the number of planes sold and delivered, he said, adding, “We expect it to be a 50-50 market.”
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Nonetheless, to go from having none of the market to 50 percent in three decades is an accomplishment the company is proud of, he said.
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Job security
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Many of the Alcoa employees who produce the aluminum that will become the A380 say they are equally proud to be part of the project.
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“It signifies that there is a future for Alcoa Davenport Works,” said Reggie Reed, a 27-year employee.
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“A lot of times you come to work and you don’t know (the future) with all the plant closings,” added Reed, who works in the roll shop. “It’s been a lot of years since we’ve had something this big.”
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Ronald Sumrall, another 27-year employee, agreed. An employee in the ingot plant, he is proud to be at the front end of the production cycle. When he sees the final product leave the plant, he knows “we took it from a bunch of nothing and turned it into a solid.”
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During the ceremony, Penny Brown, representing her fellow Alcoa workers, presented McArtor with a paper scroll signed by the Davenport Works employees “who have a hand in making Airbus products everyday.”
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“We’re very excited to be on board the A380,” she said.

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


Hydro To Build Aluminium Surface Treatment and Processing Plant in Russia

Azom.com 30 Jun 2004

Through its Finnish subsidiary Hydro Aluminium Salko OY, Hydro Aluminium Profiler AS (HAP) is to build a surface treatment and processing plant in Russia, 30 km northwest of St. Petersburg.

”This new facility is part of our strategy and our desire to establish our presence in the Russian market. This market is growing rapidly and has great development potentials,” says Johnny Undeli, head of Hydro Aluminium Extrusion North. “This will help us to establish our presence in the market, and by doing so, help us to develop and grow in this important market.”

“With this investment, Hydro Aluminium Profiler is following its long-term strategy to increase its share of finished products in the sale of extrusions for development projects, together with our customers,” says Trond Sandberg, managing director of Hydro Aluminium Profiler.

Together with the continuous improvement of quality and supply reliability, this establishment will make Hydro Aluminium Profiler an attractive partner in the market. Russian activities will be based on the experiences gained from the operation of the Finnish processing activities.

Many of the Extrusion sector’s customers, as well as customers of Hydro Aluminium Profiler, have already set up activities in the Russian market or are planning to do so. With the establishment of this new plant and with its local market presence, Hydro Aluminium Profiler will be able to provide local customers with more comprehensive services.

”We would like to hear from customers who are interested in cooperating with us in the Russian market,” says Atle Larsen, marketing manager in Hydro Aluminium Profiler. “Our ambition is to be able to offer customized fabricated solutions, adjusted as far as possible to our customers’ local needs.”

The St. Petersburg area is one of the strongest growth areas in Russia, with among other things, lots of building and construction activities. Hydro Aluminium Profiler will be in a good position to provide the market with qualified and competitive fabrication of aluminium extrusions.

Hydro Aluminium Profiler’s Russian plant will be operated and managed by a local workforce that has insight in local market conditions, culture and language. Part of the workforce is already participating in an intensive training programme at Hydro Aluminium Profiler’s Finnish facility at Forssa.

Conventional and modern equipment for the fabrication of extrusions will be installed in the new plant, as well as a coating line. Production is estimated to start during the second quarter of 2005.