AluNews - May 2004

Shareholder proposals voted down at Alcoa meeting

TRIBUNE-REVIEW Saturday, May 1, 2004

By Dave Copeland

Shareholder proposals to cap Alcoa Inc. executive severance payments and to conduct a study comparing wages between top executives and the company's lowest-paid workers were voted down at the aluminum maker's annual meeting Friday.
Following the meeting at Carnegie Music Hall, Oakland, Alcoa Chairman and Chief Executive Alain J.P. Belda fielded questions, many from workers upset about the company's push over the past few years to move work overseas to take advantage of low-cost labor and energy markets.

"We make decisions to restart based on economic factors. We don't want to go reopen a plant and in three months, six months or nine months then find we have to shut it down again," Belda said when asked if the company planned to resume production at its plant in Wenatchee, Wash. "At the moment, the economic functions of the plant do not justify restarting it."

The Wenatchee plant stopped producing aluminum last year. About 320 employees still work at the plant, and power produced there is sold directly into the energy market.

The plant is a casualty of Alcoa's new business strategy. The company bills itself as a global corporation, and as it has grown, it has moved aluminum production overseas to take advantage of lower energy and labor costs.

For shareholders, the benefits are obvious. Alcoa's return on shareholder value was 49 percent last year, in a year in which aluminum prices increased 24 percent. The average shareholder return among the companies that make up the Standard & Poor's 500 index was 31 percent.

"I think the company is very well positioned at the moment," Belda said.

In other business, shareholders re-elected Belda, Nissan Motor Co. Ltd. Chief Executive Carlos Ghosn, former Lucent Technologies Inc. Chairman and Chief Executive Henry B. Schacht and nonprofit consultant Franklin A. Thomas to three-year terms on the board of directors.


Dave Copeland can be reached at dcopeland@tribweb.com or (412) 320-7922.


Indal to strengthen operating base

Sify, India Sunday, 02 May , 2004, 08:41

Considering that both domestic and international aluminium markets will show positive signs of demand growth in the months ahead, Indian Aluminium Company Ltd (Indal), a wholly-owned subsidiary of the Aditya Birla group, has decided to move ahead with plans to strengthen its operating base through capacity expansion, mobilisation of key resources and improvement in product quality with wider range and applications.

Indal feels the surge in domestic economic growth should impact positively on aluminium consumption in the country primarily by end-use segments such as building, packaging and automobiles.

The first phase of policy initiatives with regard to expansion programme has been completed since Indal became a part of the Aditya Birla group. The policy forms part of a long-term strategy to improve the company's competitive positioning and launch Indal on a sustainable growth path. However, the second phase of expansion programme will be finalised shortly.

According to an Indal source, the alumina segment will attract top priority in its expansion plan.

In fact, this segment already registered its highest ever sales and profits with both price and volume driving the company's growth in top and bottom line.

The company's alumina refineries at Belgaum in Karnataka and Muri in Bihar clocked record production totalling about 4,92,000 tonnes in 2003-04 compared to the previous year's production of about 4,67,000 tonnes. Domestic sales of alumina at 1,25,561 tonnes were appreciably higher by 16 per cent compared to 1,08,086 tonnes. Overall export volumes rose four per cent at about 2,54,00 tonnes, reaching new global customers through direct marketing with successful inroads made into the US and Chinese markets.

The company's virgin metal production went up by 28 per cent to 65,000 tonnes (51,233 tonnes), on the back of a record output from its expanded Hirakud smelter in Orissa.

Both the sheet rolling plants at Belur in West Bengal and Taloja in Maharashtra together increased output by 21 per cent to 77,869 tonnes (64,505 tonnes) with higher efficiencies from Belur and better consumption norms.

Domestic sales volume at 49,167 tonnes was 29 per cent higher than the previous year (38,203 tonnes). A record 19,246 tonnes of sheet was exported, registering an increase of 19 per cent over the previous year (16,141 tonnes).

The company recorded a satisfactory performance in segments like extruded products despite the de-energisation of its Alupuram smelter in Kerala and consequent cost of freight on metals from Hirakud.

Since a strategy focussing on volume and value countered the external challenges of metal price hikes and capacity overhang in the domestic market, the annual output from the Alupuram extrusions unit was restricted to about 9,450 tonnes compared to about 9,800 tonnes last year.

Although domestic sales were a shade lower than last year at 8,526 tonnes (8,799 tonnes), the company managed to increase exports by 32 per cent at 999 tonnes (755 tonnes).



Alcoa Expands Extruded Bar Product Line

CHICAGO--(BUSINESS WIRE)--May 4, 2004--Alcoa Engineered Products (AEP), innovation leader in the aluminum industry, is introducing ACC-U-BAR, a premium, high-performance extruded square and rectangular bar product. AEP announced today that it will add ACC-U-BAR to its family of branded bar products. ACC-U-BAR will be available in the 3rd quarter of 2004. AEP is a leading supplier of extruded aluminum products to the distribution, commercial transportation, industrial and consumer markets.


ACC-U-BAR was developed for applications requiring tighter tolerances and reduced twist such as the telecom and manifold bar markets. ACC-U-BAR features superior machinability and straightness and represents the next generation of precision bar products for AEP. "Expanding the AEP family of tight tolerance, superior machining, branded products was in direct response to our customer's need for improved productivity and reduced waste in machining operations," said Jay Grissom, Product Manager. "Interest in ACC-U-BAR has already exceeded our expectations."

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. The company has 120,000 employees in 41 countries. More information can be found at www.alcoa.com

Contacts


Alcoa Engineered Products
Susan DeFalco, 570-385-8841


When China brakes, the world slows

MSN Money - May 3, 2004

Insatiable demand for raw materials and a huge, cheap labor force give a relatively small economy enormous influence. Here’s how China affects us all.

By Jim Jubak

Here’s a trend few investors would have predicted even a few short years ago: China just thinks about slowing its torrid economic growth, and the world’s financial markets go into a tailspin.

Case in point: On April 28, Chinese banks reported they would go on a three-day lending moratorium on government orders. The same day, the Reuters news service ran an interview with the premier of China, who promised very strong action to rein in excessive growth. In the United States, shares of companies selling iron ore, aluminum, nickel and copper to China tanked on fears that the Chinese were about to stop buying the raw materials that fuel their economy.

The damage didn’t stop there, either. The next day, shares of shipping companies sank on fears that a cooling Chinese economy would have less need for the services of oil tankers, container ships and bulk freighters.

That’s a lot of global clout for an economy that is, after all, still only about a tenth the size of the U.S. economy. If you believe the official figures, not necessarily a good idea -- especially not in the case of China -- U.S. GDP is about $11.4 trillion in current dollars. China’s GDP is about $1.4 trillion in U.S. dollars. How is it that we’re living in a world where the words of Wen Jiabao, the current Chinese premier and hardly a household name even in his own country, carry more weight in the financial markets than those of Federal Reserve Chairman Alan Greenspan?

The simplistic answer is sheer size. You’ve probably got your own favorite tidbit about how even a minor shift in the individual behavior of China’s estimated 1.3 billion people can change the global economy. Here’s my current favorite from an estimate by the Chicago agricultural forecasting firm AgResource: If every person in China consumed one more tablespoon of soybean oil annually, world trade in soybean oil would double.

A make-or-break influence
So, how did China become the pivot point in the world economic and financial systems? The answer is leverage. The internal structure of the Chinese economy has combined with current global economic conditions to give China even more global impact than its huge population already warrants.

I can count five ways that leverage gives China a make-or-break influence over the global economy.

China’s economy is labor light and commodity heavy. This might seen counterintuitive, since half of the stories you read these days are about the effect of China’s cheap labor force on U.S. manufacturing. But precisely because Chinese labor is so cheap, it makes up a very small percentage of the cost of goods produced there compared with the cost of the commodities used to make those goods.

In the United States, raw materials might make up about 10% of the cost of the finished goods and services churned out by the U.S. economy. Labor accounts for as much as 65%.


BHP Billiton Approve US$192m Alumina Development

Azom.com 4-Apr-2004

BHP Billiton today announced the approval of the US$192 million (US$165 million BHP Billiton share) Worsley Alumina Development Capital Projects (DCP) in Australia.

DCP is designed to take advantage of latent capacity in the plant through a series of 28 packages of work. These include additions to the precipitation circuit, additional bauxite residue washing and disposal facilities plus utilities and electrical infrastructure upgrades.

The result will be an increase in alumina production of 250,000 tonnes per annum (215,000 tonnes per annum BHP Billiton share) to a capacity of 3.5 million tonnes per annum (3.01 million tonnes per annum BHP Billiton share). Commissioning and completion of DCP is expected by the first quarter of calendar year 2006 with the resulting production ramp-up to be achieved by the end of the second quarter of calendar year 2006.

President Aluminium, Alex Vanselow said: "The project is a rapid response to meet the strong and growing demand for alumina. The DCP offers attractive economic returns and a solid platform for future expansions at Worsley."



Alcoa seeks input to Australia expansion

Pittsburgh Business Times, PA 5-May-2004

Alcoa Inc. is soliciting public comment in Australia concerning the prospect of expanding an alumina refinery in the western part of the country.


Wayne Osborn, managing director of Alcoa World Alumina Australia, which runs the refinery in Wagerup, said any expansion of the facility would meet health an environmental expectations.

"We will be conducting detailed health risk and environmental assessments," he said. "We want the community in (the) surrounding region fully engaged and fully informed on all aspects of this project and will be consulting with a comprehensive stakeholder group on the best process in which to achieve this."

Pittsburgh-based Alcoa, the world's largest aluminum company, is considering adding a third production unit at the Wagerup refinery. It is one of several options the company is considering worldwide to meet expected increases in demand for alumina, the raw material for aluminum, by the end of 2007.

According to Mr. Osborn, Alcoa would spend around 1.5 billion Australian dollars, or roughly $1.1 billion, on the expansion. The larger refinery would generate export revenue of about 17 billion Australian dollars over its production life, and hire another 150 workers.

Alcoa says it has made a "major effort" and spent considerable sums to reduce emissions from the Wagerup refinery in recent years in response to community concerns.

"We have been working in good faith with the local community to restore confidence and strengthen the future prospects of the community and the region," Mr. Osborn said.

© 2004 American City Business Journals Inc.



Alcoa to Buy Into 2 RusAl Plants

Moscow Times, Russia Friday, May. 7, 2004. Page 5

Reuters NEW YORK -- Alcoa has agreed to buy stakes in two facilities from Russia's top aluminum producer, RusAl, in a deal that will expand the company's Russian business, the world's No. 1 aluminum producer said on Thursday.

Pittsburgh-based Alcoa said it will buy RusAl's controlling interests in two fabricating facilities in Samara and Belaya Kalitva.

Terms of the deal -- expected to be completed by June 30 -- are not being disclosed at this time, according to a statement from Alcoa.

RusAl, which accounts for about 10 percent of global primary aluminum output, said it is doing the deal in order to focus on producing primary aluminum and alloys.

In addition, Alcoa and RusAl are striking long-term arrangements to supply metal to the two plants and for Samara to continue supplying can stock and other products to RusAl.

Separately, the two companies are also entering a long-term alumina supply arrangement.


Alcoa to Purchase Rusal's Samara and Belaya Kalitva Facilities, Expanding Alcoa's Russian Presence

The Scotsman, UK

NEW YORK – (BUSINESS WIRE) – May 6, 2004 – Alcoa (NYSE:AA) and RUSAL today announced an agreement in principle under which Alcoa will purchase RUSAL’s controlling interests in two fabricating facilities in Samara and Belaya Kalitva in the Russian Federation. Terms of the transaction are not being disclosed at this time. Closing, subject to government approvals, is expected to be completed by June 30.

As part of Alcoa, the two fabricating facilities will serve not only the domestic Russian market but will also focus on global customers in Europe, Asia and the Americas.

“This acquisition is part of our plan to continue to profitably grow our company by expanding our global footprint,“ said Alain Belda, Alcoa Chairman and CEO. “This initiative expands our business in Russia and positions us to better serve customers throughout the world.”

The parties are also entering into long-term arrangements for the supply of metal to the two plants and for Samara to continue its supply of can stock and other products to RUSAL affiliates. Separately the parties are also entering into a long-term alumina supply arrangement.

RUSAL CEO Alexander Bulygin said, “This transaction arises from RUSAL’s strategy to focus on its strengths upstream, as a leading producer of primary aluminum and alloys. While we saw much promise in these two plants, we felt that to truly prosper they needed to be part of a company with a strong international downstream customer base.

“We are delighted to be entering into a working relationship with Alcoa in Russia,“ Bulygin said. “We welcome Alcoa and regard this transaction as a vote of confidence in the future of Russia’s economy. We believe that the plants will flourish under these new arrangements, enhancing and strengthening the regional economies in Samara and Rostov.”

“The strong product breadth and unique capabilities of these plants – along with their very capable workforce – will enable us to integrate these facilities over time and strengthen our downstream businesses,“ said Belda. “Adding these assets will support our growth opportunities in the commercial transportation, aerospace, automotive and packaging markets,“ Belda continued.

“We have a proven track record of taking fabricating assets – such as those in Hungary, Spain and Italy – integrating them into Alcoa, and putting them in a strong position to grow profitably,“ said Belda. “These countries have provided additional growth opportunities to Alcoa once we began operating in them and we look forward to the chance to grow further in Russia in the future. We plan to invest capital as well as technology and know how (such as the Alcoa Business System) to strengthen the ability of these plants to compete in the world market. We look forward to participating in a vibrant and growing Russian market as well as giving our existing customers outside of Russia a broader range of products.”

Samara and Belaya Kalitva Facility Overview

The Samara facility is located about 500 miles southeast of Moscow. It features cast house, flat rolled products, extrusion, and forging capabilities and serves customers in many markets, including transportation, packaging, and industrial products. The facility includes forging and extrusion presses, and has sheet rolling and coating capabilities similar to Alcoa’s large plants in the U.S. The plant’s production and quality control systems have been ISO 9001/9002 certified and is preparing for the ISO 14001 certification in Ecological Management.

The Belaya Kalitva facility is located about 500 miles south of Moscow. The facility also features cast house, flat rolled products, extrusions, tubes, and forgings capabilities. The Belaya Kalitva facility has specialized plate rolling and finishing equipment that will complement and increase the present supply position. With Alcoa technology and management systems, the plant will eventually earn the right to produce products for major customers in the west. The plant is ISO 9001 certified and is preparing for the ISO 14001 certification in Ecological Management.

The two facilities will join Alcoa’s flat rolled products manufacturing system with operations in the U.S., Europe, Australia, China, and Brazil; the company’s extrusion facilities in the U.S., Europe, Brazil, and China; and its wheels and forged products system with facilities in the U.S., Mexico, Japan and Europe. The facilities will become part of the Alcoa Europe organization.


CONTACT: Alcoa

Investor Contact, William F. Oplinger, 212-836-2674

Media Contact, Kevin G. Lowery, 412-553-1424

or

RUSAL

Eugenia Harrison, + 7 095 720 5170


Alcoa's $1.5bn plan for Wagerup

The Australian, Australia May 07, 2004

By Nigel Wilson
ONE of the world's largest alumina smelters will emerge from a proposed $1.5 billion expansion of the Wagerup refinery in Western Australia.

The expansion, involving a third production train, would take Wagerup's annual output from around 2.3 million tonnes to between 4.2 million and 4.5 million tonnes.

Alumina Limited and Alcoa of Australia, which combined form the Alcoa World Alumina and Chemicals alliance, said yesterday they were undertaking comprehensive public consultations about a third production unit at Wagerup, south of Perth.

The announcement came only a day after BHP Billiton disclosed approval had been given for a $US192 million ($263 million) program to expand the Worsley refinery, also south of Perth, by 250,000 tonnes a year to an annual capacity of 3.5 million tonnes by the second quarter of 2006.

Both expansions are driven by rapidly rising Chinese demand for alumina and aluminium.

AWAC said any Wagerup expansion would meet world-class health guidelines and address community expectations on health and the environment.

The Wagerup refinery in recent years has been subject to community, government and media scrutiny on emissions, particularly odour, even though the international alumina giant says its emission levels are well within national and international guidelines.

AWAC managing director Wayne Osborn said: "We will be conducting detailed health risk and environmental assessments to ensure the plant maintains its superior, world-class environmental performance."

He added the expansion would be an opportunity to create more jobs, growth and business opportunities with about 150 permanent new Alcoa jobs and about 3000 direct and indirect jobs.

AWAC said the expansion would increase export revenues to about $17 billion over the life of the project.

Adding a third production unit to the Wagerup refinery is one of several options Alcoa is looking at worldwide to meet a predicted increase in world alumina demand towards the end of 2007. The company is currently spending $440 million on measures to lift the capacity of its Pinjara refinery by 600,000 tonnes a year to a nominal capacity of around 4.1 million tonnes.

Earlier this year Mr Osborn told an alumina and aluminium summit in Sydney that China was pivotal to the market for both alumina and aluminium.

Western Australia's State Development minister, Clive Brown, said the proposed Wagerup expansion would have massive economic benefits for WA, adding more than $550 million a year in export earnings and boosting government royalties by $10 million a year.



Indal gets nod for phase-II expansion

Walletwatch, India - May 5, 2004

Indian Aluminium Company Ltd's (Indal) second phase expansion programme, entailing an investment of about Rs 2,000 crore, has been approved by the company's board. The proposed expansion programme is to be completed by 2007.

Under the expansion scheme, this wholly-owned Aditya Birla group subsidiary will primarily increase its virgin metal production capacity along with matching expansion of its alumina refineries and captive power generation. The objective of the programme is to make it a metal surplus company even after satisfying its own metal requirement for manufacturing various fabricated products.

While confirming the development, an Indal source said that a total of about Rs 1,400 crore would be invested to expand its alumina refinery capacities at Muri in Bihar from 1,10,000 tonnes to 5,00,000 tonnes and at Belgaum in Karnataka from 3,40,000 tonnes to 5,50,000 tonnes per annum. Whereas, an investment of about Rs.600 crore would be made towards expansion of its smelter capacity at Hirakud in Orissa from 65,000 tonnes to 1,00,000 tonnes per annum and also to increase generation capacity from its captive power plant from 167.5 MW to 267.5 MW.

As has been planned, the smelter's capacity will be increased by shifting " idle pots" from the company's closed smelting operations at Belgaum and Alupuram in Kerala. If things go smoothly, the company may augment smelting capacity even to the level of 1,40,000 tonnes, thereby making it a metal surplus company to the extent of 40,000 per annum. It may noted that the company's own metal requirement is about 1,00,000 tonnes, which, at present is being met partly by converting its alumina into metal from Hindalco Industries' smelter at Renukoot in Uttar Pradesh.

The Indal source said that the company had no plans to expand production capacity of its fabricated products because the capacity already created appeared to be in excess of the requirements of the domestic market due to lack of buyer support for value added quality products. In fact, the same fabricated items produced by small and medium scale units utilising recycled metal were available at reduced rates because there was no compulsion to maintain quality.

The investment earmarked for the second phase would be met partly from internal sources and partly from loans on the basis of 40:60 debt equity ratio.

Incidentally, the first phase of the expansion programme has been completed since Indal became a part of the Aditya Birla group. As a result, on the back of a record output from the expanded Hirakud smelter, the company's virgin metal production went up by 28 per cent to 65,000 tonnes in the 2003-04 fiscal from 51,233 tonnes in 2002-03.



Restructuring at Hydro's Aluminium Plants in Norway

SOURCE Norsk Hydro ASA Web Site: http://www.hydro.com

OSLO, Norway, May 7 /PRNewswire-FirstCall/ -- Hydro is preparing an
extensive restructuring programme for its Norwegian aluminium plants to ensure continued profitable operations. Annual operating costs will be reduced by NOK 350 - 400 million, with production remaining at the present level.
Estimates show that this may involve a reduction of up to 800 man-years. The restructuring process will be completed early next year. Hydro's board decided today to submit the restructuring programme for final approval in Hydro's corporate assembly. The employee representatives emphasized that they agree on the need for restructuring but that they do not agree on the de-manning figure presented.
Hydro is one of the three leading aluminium companies in the world, with considerable production capacity in Norway. However, the Norwegian aluminium plants have been through a period with weak financial results in recent years.
"Aluminium production in Norway is a focus area for Hydro, and we will do everything we can to ensure that the Norwegian operations remain competitive in the international arena," says President and CEO Eivind Reiten. "However comparisons with both international and other Norwegian metal plants show that productivity is too low in our plants. A large portion of the costs involved in primary aluminium production are linked to the international markets and electricity prices. The measures we now implement are absolutely necessary to safeguard the basis for continued profitable operations of the aluminium plants in Hoyanger, Ardal, Karmoy and Sunndalsora.
"I regret the difficulties this restructuring will cause our employees and each of the local communities affected," continues Reiten. "We will do all we can to ensure that the negative impact is limited. We are aware of the particular challenges in Hoyanger and Ardal, and have already started proactive work to support industrial developments in this area."
Around 3,400 people are employed in Hydro's metal production in Norway
today. The cost reductions will affect all Hydro's metal production sites in Norway. Manning will be reduced by around 20-25 percent.
In addition, manning reductions have to be carried out in Hoyanger and
Ardal by the end of 2006, due to the phasing out of the oldest lines. The
Soderberg lines will be phased out in order to comply with international
requirements.
The cost of realizing the restructuring programme is estimated at
NOK 800 million. Most of this will be charged to the accounts in 2004. The
corporate assembly will consider the proposal on 13 May.
The plan behind the restructure is a rapid establishment of a new and more efficient organization for the future operation of aluminium production. In addition, a separate organization will be set up with responsibility for transferring employees to other positions in Hydro, helping to establish new jobs outside of Hydro and setting up early retirement and severance pay arrangements during the transition stage. The project will draw on all the expertise and experience Hydro has gained from previous challenging processes that have been well managed. With this in view, the temporary organization will be made up of local support units coordinated by central project management. There will be continued collaboration with the employees' organizations on the practical implementation of the manning reductions within the set frameworks.
Hydro hopes to be able to find new jobs for a certain number of the
redundant employees either in Hydro or in new opportunities arising from the business developments that are underway, mainly in Hoyanger and Ardal.
The scope of the restructuring programme is based on an extensive analysis of the current and future competitive situation, manning levels and operating costs in Hydro's metal production, compared with our competitors. Productivity is low in comparison with competitors both in Norway and in other countries, in terms of kroner per tonne as well as tonne per employee. The restructuring work will begin immediately and shall be completed by 1 April 2005.
"Hydro will strive to carry out the process in a responsible way and in continued close dialogue with the company's employees and the local communities affected. The changes will be implemented without reducing production, or lowering our stringent requirements for health, safety and environment. We will endeavour to ensure that as many people as possible find alternative work, and that the manning reduction is realized as far as possible through voluntary agreements. However we cannot guarantee that there will be no dismissals," says President and CEO Reiten.
Hydro produced 1,473,000 tonnes of primary aluminium in 2003, of which
850,000 tonnes were produced in Norway. This represents an increase of 200,000 tonnes from 1993. Hydro is a leading energy and aluminium company with operations in more than 40 countries. Hydro is one of the world's leading offshore producers of oil and gas, and the third largest supplier of aluminium. A total of 36,000 employees create value through developing products that benefit customers and local communities all over the world.


Contact Thomas Knutzen Tor Steinum
Telephone +47 22539115 (+47) 22 53 27 31
Cellular +47 90612359 (+47) 95 08 39 33
E-mail Thomas.Knutzen@hydro.com Tor.Steinum@hydro.com


Norsk Hydro ASA
Bygdoy alle 2
N-0240 Oslo
Norway
Telephone: (+47) 22 53 81 00
Fax: (+47) 22 53 27 25
http://www.hydro.com



Nalco sells 30000T alumina to Iran firm

Sify, India Friday, 07 May , 2004, 11:06

State-run National Aluminium Company (NALCO) sold this week 30,000 tonnes of alumina to Iran Aluminium Company (IRALCO), a top official of the company told Reuters on Friday.

NALCO, Asia's largest alumina producer, finalised the tender at $462.5 per tonne FOB (free on board) and the commodity will be shipped in the third week of this month, the official said.

India's second-largest aluminium producer plans to invite another tender in June to sell 30,000 tonnes of alumina, an intermediate product, he said.

NALCO is expected to produce 1.58 million tonnes of alumina in 2004/05 (April-March), up from 1.56 million tonnes a year ago. It also aims to export 875,000 to 900,000 tonnes of alumina in the current fiscal year, mostly through long-term contracts.

Copyright 2004 Reuters Limited.
 


BPA faces fresh round of scrutiny

Spokesman-Review May 9, 2004

Power-cost advantage under review, Bert Caldwell says.


Bert caldwell
The Spokesman-Review

Northwest officials this week will renew their reassessment of the Bonneville Power Administration's role as the region's main source of electricity. The agency sells power from federal dams in the Columbia River Basin. There's only so much to go around and, as the region so painfully learned in 2000, bad things happen when there is not enough.

If you are a ratepayer of almost any of the area's utilities -- members of the Inland Power & Light and Kootenai Electric cooperatives are among
the lucky exceptions -- your much higher bills are a monthly reminder of the consequences.

Last June, the governors of Washington, Idaho, Montana and Oregon asked Bonneville and the Northwest Power and Conservation Council to consider how a repeat could be avoided. At a council meeting in Walla Walla Wednesday and Thursday, council members will review and adopt their recommendations for changes at Bonneville, which will factor them into a separate review that gets under way in June. Findings are expected in the fall.

What happened in 2000?

Council forecasters had alerted the region to the high probability there would not be enough electricity to go around if drought ravaged the rivers and hydrogenation projects that provide so much of our power. No one responded. Despite the threat, electricity prices remained so low there was no economic incentive for Bonneville, individual utilities or independent power producers to build new generating plants. And memories remained of the last time shortages loomed, in the 1970s. The Washington Public Power Supply System undertook the construction of five nuclear power plants, a plan so poorly conceived and executed it precipitated the biggest municipal bond default in history. Only one unit was completed. And debt created during that fiasco raised Bonneville's rates.

By the mid-1990s, some Bonneville customers were finding better deals in the wholesale electricity markets, and were taking them. But they returned to Bonneville in droves when shortages hit in 2000, and the agency was forced to spend billions of dollars buying electricity for them.

Few were happy with Bonneville's performance. No one has been happy with the subsequent 40 percent-plus wholesale rate increases. Hence new calls for changes that have been in the wind since 1996.

The council recommends Bonneville sell only the electricity the federal dams and the one completed WPPSS nuclear plant can generate, about 10,000 megawatts. Those resources remain relatively inexpensive. Customers would lock up their share by signing 20-year contracts instead of the existing five- or 10-year deals. Demand over and above what Bonneville can provide would be met with newer generating facilities -- be they natural gas, coal or wind-powered -- none of which are as cheap. Utilities, singly or in groups, would have to build their own plants or buy from an independent supplier, and bear the cost themselves.

A somewhat similar plan called “the slice” is partially in place. Bonneville Administrator Steve Wright supports the concept. But as he and the council point out, the transition will be complicated by lingering disputes and the difficulties of forging new relationships. Earlier efforts to get a reassessment of Bonneville under way were frustrated by the agency's ongoing struggles to get its finances in order.

Also, public utilities and private utilities have skirmished over just how much Bonneville electricity residential customers of private utilities like Avista were entitled to by law. That litigation continues, but the time to move on has come.

The council stressed that the sooner 20-year contracts can be put in place, the sooner utilities can start anticipating what resources they will need to satisfy future demand for power, including the use of conservation and renewables.

Tom Karier, Eastern Washington's representative on the council, says the goal is one everyone in the Northwest can embrace; restoring the power-cost advantage the Northwest historically enjoyed over other regions of the country. Too many businesses have closed in the last few years because that edge was lost.

He notes Washington has already improved its ranking among the states, rising to ninth from 14th. Still a ways from its former position among the top three. Electricity prices will never again be what they were in the late 1990s, he says, but neither will the price of gasoline.

Many issues remain. What power can be allotted to the region's few remaining aluminum smelters, and for how long? How can customers be sure Bonneville controls its costs once they are locked into long-term contracts? What can customers annexed by utilities served by Bonneville expect to receive, and at what cost? And Bonneville must still determine rates for the 2006-2011 period.

There is no immediate threat the region will run out of power, although the early runoff bodes badly for hydrogenation this summer. Some utilities, Avista for one, have built new generation plants to assure adequate supplies.

The council will soon release new estimates of the region's future power requirements. Repositioning Bonneville will help assure the Northwest's needs are met without a repeat of the 2000-2001 calamity.



Source: Kaiser to deal away stake in Valco for $18M

Houston Business Journal, TX 10 May 2004

A government source told Reuters on Monday that Houston-based Kaiser Aluminum has inked a deal to sell its 90 percent stake in the Volta Aluminum Co. (Valco) smelter in Ghana to the West African state for $18 million.


The move could lead to a joint venture between Ghana and Alcoa, the world's biggest aluminum producer, which may now increase its 10 percent stake and exploit the country's extensive bauxite deposits, industry sources said.

They said the government would consider giving Alcoa a majority stake in Valco, which has an ingot production capacity of 200,000 metric tons a year. It may also hand them management of the business.

Kaiser is selling its stake after filing for protection from creditors in February 2002.

© 2004 American City Business Journals Inc.


Lawmakers Applaud Alcoa Land Deal

WVLT, TN 5/10/2004 5:04pm

Kevin Anton of Alcoa Power says the deal keeps 2,000 jobs in East Tennessee.

A vital part of Blount County's economy has been preserved along with 10,000 acres of land in the Smokies.

That's because Alcoa Power Generating, Inc. signed a critical agreement Monday to renew its license to operate four dams and swap 10,000 acres of land to the Smokies for the public to enjoy. Had the electric company and aluminum manufacturer not agreed to the deal, part of the operation may have been shut down and some of its 2,000 workers idled. "The economic impact on the community is nearly $400 million a year, but without an agreement like we have [now], those jobs would be at risk," says Kevin Anton of Alcoa Power.

U.S. Sen. Lamar Alexander, (R) Tennessee, and U.S. Rep. John Duncan, Jr., (R) Tennessee, applaud the deal.

Congress has yet to approve the agreement. If it does, Alcoa Power won't have to worry about renewing its license for another 40 years.


Global Alumina Products Corporation (GAPCO) to Present Alumina Project Details to the Mineral Resources Analysts Group (MRAG)

PR Newswire (press release)

NEW YORK, May 10 /PRNewswire/ -- Bruce Wrobel, Chairman and CEO of Global Alumina Products Corporation, a company that will produce alumina for sale to the global aluminum industry, will be presenting the details of the Company's US$2 billion alumina refinery project in Boke, Guinea to the Minerals Resources Analysts Group (MRAG) in Toronto, Ontario this afternoon. MRAG is an association of top tier financial analysts who focus on the mineral and mining market sector. In today's presentation, Wrobel will outline GAPCO's plan to build an alumina refinery that possesses economies of scale and is situated in a bauxite-rich area of Guinea, a country containing one-third of the world's economically recoverable bauxite resources. GAPCO expects to be one of the world's lowest cost producers of alumina when its 2.8 million tonne refinery commences production in 2008, and has captured the attention of the mineral and metal industry amidst a severe shortage of alumina supply in the global market.
"GAPCO's aggressive and agile management style has enabled the company to accelerate the refinery project's schedule and places the company in an excellent position to take advantage of this niche market in the midst of strong demand due to a global alumina shortage," stated Bruce Wrobel, Chairman
and CEO of GAPCO. "Spot prices of alumina have risen dramatically from US$ 160 per tonne in 2002 to unprecedented levels reaching highs in excess of over US$ 500 per tonne in 2004. The rise has led to tremendous interest in our project and I am pleased to have this opportunity to review our completed milestones and project schedule with MRAG." GAPCO has retained RBC Capital Markets and CGMI, Citi Global Markets, Inc. to help raise financing for this US$2 billion project. The company is currently focused on completing the design and starting construction of its first refinery.


Goa Carbon unit bags Rs369mn order from Nalco 5/10/2004 1:02:45 PM IST

India Info Online, FL -may 10, 2004

Paradeep Carbon Ltd (PCL), a 100% subsidiary of Goa Carbon Ltd. (GCL), has won an annual order from National Aluminium Company (NALCO) to supply 30,000 MT of CPC, worth Rs369.15mn. Goa Carbon (GCL) is a part of the Dempo Group and is also the second largest manufacturer of Calcined Petroleum Coke (CPC) in the country.

The order will be executed from PCL’s plant at Paradeep, Orissa and the finished material (CPC) will be supplied to Nalco’s smelter located at Angul, also in Orissa. The order will occupy about 25% capacity of the Paradeep plant and will be executed within a timeframe of one-year.

PCL has been a regular supplier to Nalco. In 2002, PCL supplied 15,000 MT, in 2003 the quantity was increased to 21,000 MT and now it has won a tender for 30,000 MT. This annual increase in order inflow reflects Nalco’s confidence in PCL’s product quality.

"We are happy to receive such a large order from Nalco. We would like to attribute the increase in order quantity over previous year to our product quality and ability to meet delivery schedule. Our well-timed acquisitions are helping us meet the growing demand. It will also go a long way in improving our financial performance in the years to come," commented Shrinivas Dempo, Executive Chairman, GCL, on the occasion.

The quality of Goa Carbon's product has been well accepted by the end users both in India and overseas. Some of the domestic customers include Nalco, Hindalco, Indal, Malco, Balco, etc. Apart from Aluminium Pechiney, France, with whom GCL has a long-term supply agreement, the company exports CPC to countries like Australia, Egypt, Dubai, Kuwait, Iran, Saudi Arabia, Singapore, Malaysia, Indonesia, Thailand, South Africa, Russia, Wales and England. Â



Govt to buy Valco for $18M

GhanaWeb, Ghana Tuesday, 11 May 2004

A government source told Reuters on Monday that Houston-based Kaiser Aluminum has inked a deal to sell its 90 percent stake in the Volta Aluminum Co. (Valco) smelter in Ghana to the West African state for $18 million.

The move could lead to a joint venture between Ghana and Alcoa, the world's biggest aluminum producer, which may now increase its 10 percent stake and exploit the country's extensive bauxite deposits, industry sources said.

They said the government would consider giving Alcoa a majority stake in Valco, which has an ingot production capacity of 200,000 metric tons a year. It may also hand them management of the business.

Kaiser is selling its stake after filing for protection from creditors in February 2002.


Giants Lock Horns for Siberian Power

Moscow Times, Russia, 12 May 2004


The owners of the country's two largest hydro plants are facing challenges to their share structures in a fight for control over power generation in Siberia.

But while there are indications the legal dispute surrounding the Sayano-Shushensk dam may be dropped, the Federal Anti-Monopoly Service is pushing ahead to review the sale of a majority stake in the Krasnoyarsk hydropower plant.

Khakasia, the Siberian republic which wants the privatization of Unified Energy Systems' Sayano-Shushensk hydro plant reversed, is ready to drop legal action in return for a cut in power tariffs, Vedomosti reported Wednesday.

News at the end of April that the government wanted to take back direct control of the Sayano-Shushensk plant hit shares in state-controlled power monopoly UES and raised fears of creeping renationalization.

The government quickly rowed back from the decision, which followed a successful legal challenge by the president of Khakasia, Alexei Lebed, against the dam's 1993 privatization.

Vedomosti quoted a spokesman for Lebed saying that a settlement could be reached with UES.

"In the peace agreement, conditions will be set determining long-term tariffs for power delivered by UES to customers in Khakasia," the paper quoted the spokesman as saying.

But the newspaper also quoted UES as saying no deal was possible.

"We do not see a possibility of reaching a peace agreement, because we consider the privatization of Sayano-Shushensk to have been absolutely legal," UES spokesman Andrei Yegorov told the newspaper.

Sayano-Shushensk, the country's largest hydroelectric installation, has one major client, a smelter owned by top aluminum producer RusAl, which uses about 70 percent of its electricity.

Khakasia's president successfully sued earlier this year to overturn the deal that transferred the dam from state control to UES after a court upheld that the republic was not consulted. UES plans to appeal to the Supreme Arbitration Court.

Sayano-Shushensk is 79 percent owned by UES, which charges that if the dam is seized from its balance sheet, the state stake in UES will decrease from 53 percent to under 51 percent, and UES will be owed compensation from the budget.

Meanwhile, RusAl's control of the Krasnoyarsk hydropower station is under scrutiny by the anti-monopoly service, which is considering canceling last year's sale of a majority stake in the generator to a RusAl affiliate, Interfax reported.

The anti-monopoly service will review on June 21 last year's sale of a 53.28 percent stake in the Krasnoyarsk plant to Cyprus-based Helington Commodities, Interfax reported Wednesday from Krasnoyarsk, citing Oleg Kharchenko, deputy head of the service's South Siberia division.

Helington "did not get approval from the anti-monopoly authorities" before the purchase, Kharchenko was quoted as saying. "It is possible the ministry will rule to cancel the deal."

The review is part of an investigation into Helington that started May 6 at the request of Krasnoyarskenergo, which owns a 25.06 percent stake in the plant and is a unit of UES, according to Interfax.

UES last month said it will not let RusAl gain full control of the Krasnoyarsk plant. Basic Element, which controls RusAl and the Krasnoyarsk station, has said it wants to merge the Krasnoyarsk generator with the nearby Boguchansk hydropower plant.

(Reuters, Bloomberg)


Australian law kills Alcan bauxite hopes

FROM CANADIAN PRESS Toronto Star, Canada May 12, 2004. 10:48 AM

MONTREAL — The state government of Queensland has passed a law revoking the right of Montreal-based Alcan Inc. to mine a bauxite reserve in Australia.

Alcan said today it is "extremely disappointed" by the law, introduced last month, which effectively kills Alcan's efforts to retain the mining rights through the courts.

The government said Alcan lost its rights to the reserves by not proceeding to develop them within the required timetable.

Alcan inherited the mining rights from Pechiney, which it took over last year.

The Queensland government is going to open the vast Aurukun bauxite reserves to bids from other developers, and Alcan said it will evaluate the possibility of making a bid.

"We are troubled that our rights to the Aurukun leases have been legislated away," Michael Hanley, president of Alcan's bauxite and alumina group, said in a statement.

"The fact that the government reverted to legislation as a means to enforce its position is a clear recognition of the validity of our rights and the defence that we were prepared to mount before the courts."

The Queensland government granted Pechiney rights to the bauxite deposits in 1975 but Pechiney did not move to develop them.

Bauxite is the natural mineral used to produce powdered alumina, which is then turned into aluminum


Honeywell to Implement Manufacturing Execution System for Aluminium Bahrain

Process & Control Today, UK 12 May 2004

Honeywell (NYSE: HON) Process Solutions today announced it has received a multi-million dollar order from Aluminium Bahrain (ALBA) to provide a Manufacturing Execution System (MES) for the company's Potline-5 expansion project. ALBA was impressed with Honeywell's message, which focused on ALBA business processes and people - and how Honeywell's integrated information technology could complement those two elements and unlock substantial economic benefits. Honeywell focused on the customer need to solve "business problems" at their facilities (i.e. improve production efficiency, optimize business operations, track progress).

Honeywell was recognized as understanding ALBA's business processes, or workflows, and demonstrating an objective of not just installing applications but optimizing these business processes.

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 supply chain for three Line 5 plants being Carbon, Reduction and Casthouse, as well as two upstream supply sectors being Power and Calciner.

" 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 that this project will lead to productivity improvements at our site and help us realize our goal of being one of the lowest cost producers." said Peter Cowie, ALBA's General Manager Line 5 Operations.

Anton Rossouw, Project Manager of the MES implementation said "The integrated standard products offers 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 program. 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 recognize the critical need for user participation as they will become the owners." The Manager BMS for Alba said " The implementation of the new MES systems fills the gap between our control systems and SAP systems and establishes a fully integrated system that will provide management with reliable information and support the KPI management approach. I am confident that the team will deliver an outcome that will exceed expectations and establish a system foundation that we could roll back to the existing Alba organization in due course."

ALBA joins a growing number of mining and metals customers that use Honeywell Business.FLEX* PKS* solutions to effectively manage their businesses. In order to provide a fully integrated and functional solution for ALBA, the project includes the implementation and integration of the Business.FLEX* PKS* solution suite to SAP.

"This is a key project win for Honeywell, representing another milestone in our chain of successes in the Metals, Minerals and Mining Sector," said Jerry Walker, Vice President and General Manager of Honeywell Process Solutions EMEA. "We see this as a rapidly developing and high investment sector and this project will reinforce Honeywell's reputation and leadership in delivering information technology solutions to the process industries."

To better serve ALBA, Honeywell has partnered with the AST Group of South Africa, who will provide domain expertise in aluminum smelting and consulting services for the SAP scope of the project. AST is the market leader for such services in South Africa and has worked with Honeywell in the past.

The project is expected to be completed in March 2005.

For more information about Process Solutions, access www.acs.honeywell.com

Honeywell Process Solutions
Avenue du Bourget 3
1140 Brussels, Belgium
32-2-728-2369


UES Rejects Offer to Settle Dam Dispute Out of Court

MOSNEWS, Russia 12.05.2004

The government of the Siberian region of Khakasia, which has been in the news in recent months after a claim that the Sayano-Shushenskaya hydro dam, the largest in the country, was privatized illegally in 1993, has announced that it is ready to withdraw its suit from the Arbitration Court and to settle the issue peacefully.

The Vedomosti business daily reported that the regional authorities came up with a peaceful settlement proposal. The gist of the settlement is that the power monopoly Unified Energy System (UES) will continue supplying the region with electricity at low internal tariffs.

The Sayano-Shushenskaya hydro power station (GES) is the largest in Russia. When the hydro dam was privatized in 1993 the government of Khakasia did not become a shareholder in the company, receiving instead the right to buy energy for internal use in the republic at a minimal price. The majority of power consumed in Khakasia (75 percent) goes to the Sayani aluminium plant which is controlled by Russia’s largest aluminium producer Rusal. However, the federal government announced that in 2004 the region will have to cease buying energy at such low tariffs.

Following this announcement the regional government filed a suit in the regional Arbitration Court to declare the privatization invalid. As MosNews has already reported, the Arbitration Court ruled in Khakasia’s favor, and following the decision the federal government ordered that the hydro dam be seized from UES and returned to the state. The order was immediately denounced as the start of de-privatization in Russian and hit the headlines at the end of April. The power monopoly announced its intention to appeal the regional court’s decision in the Supreme Arbitration Court of Russia and has until 12 June to do so.

The story acquired a new twist today when the press service of Khakasia’s governor Alexei Lebed announced that the region is ready to withdraw its claim and to settle the issue in a voluntary agreement with UES. The essence of the agreement is that Khakasia and the end users of electrical energy which are located on its territory will receive a permanent right to receive energy from Sayano-Shushenskaya GES in sufficient amounts and on special tariff conditions.

However, the power monopoly says the offer is unacceptable. “We see no possibility for a peaceful settlement because we consider the privatization of Sayano-Shushenskaya GES absolutely legal,” said the head of the media relations department at UES. He also added that the state should not agree to these conditions because it would be tantamount to admitting that the privatization of the hydro dam was illegal. The opinion of the UES representative was seconded by an unnamed government official, who also told the newspaper that as long as court proceedings are not over the power monopoly should not rush into anything.



Energy deal keeps Brazil Albras smelter competitive

Reuters, 05.13.04, 7:36 PM ET

RIO DE JANEIRO, Brazil, May 13 (Reuters) - Brazil's largest primary aluminum smelter, Aluminio Brasileiro SA (Albras), will keep its competitive edge in the global aluminum market due to favorable pricing of a new energy supply contract, majority owner CVRD said on Thursday.

"But we have no plans for the time being to expand the smelter's capacity," Companhia Vale do Rio Doce's investor relations director Roberto Castello Branco told a news briefing.

CVRD <VALE5.SA> (nyse: RIO - news - people) holds a 51 percent stake in the smelter, which produced 432,000 tonnes of primary aluminum last year, mainly for export. The remaining 49 percent is held by Japan's Nippon Amazon Aluminum.

Under the new energy supply contract signed this week, state energy utility Eletronorte will supply Albras with electrical energy at a base price of 53 reais per MWh (slightly over $17), subject to premiums when LME primary aluminum prices rise over $1,450 a tonne.

Castello Branco described the contract, valid for 20 years, as in line with average international energy prices for aluminum smelters.

The contract dispels fears about possible price fluctuations or shortages the smelter could suffer in coming years. "The contract is extremely important both for Albras and Eletronorte," he said.

Castello Branco however stressed that CVRD will continue to focus on developing upstream bauxite and alumina in the aluminum supply chain.

CVRD is a partner in the Alunorte alumina refinery which is expanding capacity to 4.2 million tonnes a year by 2006, and will also develop the 4.5 million tonnes a year Paragominas bauxite mine, he said.

Copyright 2004, Reuters News Service


Alcan and Alcoa to study building an alumina refinery in Guinea, West Africa

CBC News, Canada May 13, 2004, EST.

MONTREAL (CP) - Rivals Alcan Inc. and Alcoa Inc. have agreed to study the possibility of jointly developing a large alumina refinery in the Republic of Guinea, West Africa.

The companies, who jointly own a bauxite mining company in Guinea, said Thursday they will immediately begin to assess the feasibility of developing a refinery with an annual production capacity of 1.5 million metric tonnes.

The study is expected to be completed by mid-2005, and alumina production could be expected by early 2008. The refinery, which would be operated by Pittsburgh-based Alcoa, would be capable of expansion.

Each of the companies holds a 43 per cent interest in Halco Mining Inc., which is 51 per cent owner of Compagnie des Bauxites de Guinee (CBG).

The government of the Republic of Guinea holds the remaining 49 per cent of CBG.

Derived from the mineral bauxite, alumina is the base material from which aluminum is made.

"Given the substantial quantity and the high quality of bauxite reserves, Alcan and Alcoa believe Guinea represents an attractive location for an alumina refinery," the companies said in a statement.

"In addition, the long-standing involvement of Alcoa and Alcan in CBG (mining company) places them in a uniquely favourable position to develop such a project."

Earlier this week the state government of Queensland, Australia, passed a law stripping Alcan of its rights to exploit a large bauxite reserve in that country.

Montreal-based Alcan (TSX:AL) inherited the rights through its acquisition of Pechiney SA last year, but Pechiney had not proceeded to develop the site it was granted rights to in 1975.

Exploitation rights to the Australian minesite will be put up for sale in a bidding process.

© The Canadian Press, 2004


Global Alumina Products Corporation (GAPCO) Acquires Aluminpro - The World's Leading Aluminium Consulting Group

NEW YORK, May 13 /PRNewswire/ -- Global Alumina Products Corporation (GAPCO), a company that will produce alumina for sale to the global aluminum industry, announced today that it has agreed to acquire Aluminpro Aluminium Industry Professionals Inc., the world's leading consulting group specialized in the upstream aluminum industry (bauxite, alumina, smelting and power).
"The decision by Aluminpro's global aluminum industry leaders to partner with GAPCO is a tremendous endorsement of our project," said Bruce Wrobel, Chairman and CEO of GAPCO. "GAPCO will now have access to the most significant pools of bauxite and alumina expertise in the world. The depth and breadth of Aluminpro's senior professionals' global expertise, knowledge and skills will ensure that our Guinea alumina refinery is not only the world's lowest cost producer but also that its construction begins in the second quarter of 2005 and that production commences in 2008."
Aluminpro's professionals have over 750 years of combined experience in the industry and include world-leaders such as: Bernard (Bernie) Cousineau, former President and CEO, Alcan Jamaica; Bryan Hiscox, former Principal Scientist, Alcan International; Paul Dixon, former Senior Alumina Consultant,
Alcan International; Alistair Beck, former Director General, CBG (Guinea); B.J. Foster, former VP and GM Engineering & Technology, Kaiser Aluminium; Michael Barr, former Technical Specialist, Kaiser Aluminium; David Donaldson, former President, Alcan Shipping Services Ltd.; Bryan Osborne, Independent Consulting Geologist; Philip Fournet, former Environmental Manager, Kaiser; Frank McGravie, former VP Metal Marketing & Sales, Alcan; John McLean, former VP and GM, Reynolds Australia Alumina; Michael Kawczak, former Engineering Project Specialist, Alcan International; and Brian Sawyer, former Associate Director of Raw Materials, Alcan Aluminium.
Ian Porteous, Aluminpro's Chairman and President, added "The combination of Aluminpro's engineering and operating knowledge and GAPCO's financial expertise and deep relationships with the Government of Guinea has resulted in the creation of an industry-leading management team."
Dramatic rises in the spot market price of alumina to over US$ 500 per tonne in 2004 has led to increased interest in alumina projects across the globe. When complete, the 2.8 million tonne per year greenfield alumina refinery is projected to be one of the world's lowest cost producers.
Montreal-based Aluminpro will operate as a wholly owned subsidiary of GAPCO. While many of Aluminpro's senior professionals will be dedicated to GAPCO's Guinea refinery project at various stages, Aluminpro will continue to serve its clients and grow its business in the aluminum industry.


JCorp and Masco ironing out details on US$4b plant

The Star, Malaysia 13 May 2004

BY ZAZALI MUSA IN TANJUNG LANGSAT, JOHOR
JOHOR Corp (JCorp) is still in negotiations with Masco Aluminium Ltd, which has agreed in principle to set up a US$4bil aluminium smelting plant in Johor, on the details.

JCorp chief executive officer Tan Sri Muhammad Ali Hashim said JCorp was confident of clinching the deal, given the progress of the talks.

“It is only a matter of time before both parties sit together and sign the papers,'' he told a press conference yesterday.

The main investor in the plant is Charus Development, which is a consortium of investors from China.

Ali was speaking after the opening of the RM12.6mil Tanjung Langsat Bridge by Entrepreneurial and Cooperative Development Minister Datuk Mohamed Khaled Nordin.

He said JCorp subsidiary TPM Technopark Sdn Bhd, which developed industrial estates in Johor, had been in discussion with Masco since late last year.

He said it was normal for parties negotiating huge investments to take time in finalising the deals as it would also involve other parties, including utility companies and government agencies.

The construction of the plant, he noted, could start almost immediately upon signing the agreement and would take at least four years to complete.

Ali said the smelting plant complex would require at least 840 acres and TPM Technopark had identified a suitable location.

“We can even provide 1,000 acres if they want and we are willing to build jetties or a dedicated port for the project,'' he added.

Ali said the consortium's management team visited Pasir Gudang and Tanjung Langsat industrial estates and had chosen the latter.

He said that due to the large scale of the project, Tanjung Langsat was picked as vast tract of undeveloped land was still available there.

Ali said the plant, with the capacity to smelt 820,000 tonnes of aluminium yearly, could provide more than 2,000 jobs and business opportunities for small and medium-scale industries.




Alumina alliance ponders $1.5bn investment in west Africa

The Age, Australia May 15, 2004

By Barry FitzGerald Resources Editor
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The global alumina alliance of Alcoa and the Melbourne-based Alumina, AWAC, is teaming up with Canada's Alcan to investigate building a $US1 billion ($A1.5 billion) alumina refinery in Guinea, west Africa.

The development opportunity is a response to tight supply in alumina markets caused by continuing double-digit growth in demand for the key aluminium raw material from China to feed its infrastructure boom.

The Alcoa-managed AWAC had identified Guinea as a growth option among other opportunities around the world, including heavy investment in its Western Australian operations, which is now under way.

But the signing of a memorandum of understanding with Alcan to assess the feasibility of a joint development (it would produce 1.5 million tonnes of alumina annually) indicates an intention to move quickly in Guinea.

AWAC is 60 per cent owned by Alcoa and 40 per cent by Alumina. AWAC and Alcan each own a 43 per cent interest in Halco, the majority owner of the 49 per cent government-owned Bauxites de Guinee, the group that mines bauxite (the key raw material for alumina) in the Boke region of Guinea.

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Guinea has a vital interest in building a value-adding industry for its bauxite resources while AWAC and Alcan believe the country "represents an attractive location for an alumina refinery". First production would be possible in 2008.

Analysts said yesterday that the willingness of AWAC and Alcan to consider a big investment in Guinea contained a pointed message for the governments of Queensland and WA.

The Queensland Government recently revoked Alcan's rights to the Aurukun bauxite leases, citing the "use it or lose" override to security of tenure. The WA Government is also believed to be considering doing the same to the Comalco-led consortium that holds the Mitchell Plateau bauxite leases in the state's far north.

In both cases, private interests backed by Chinese partners are expected to make a pitch that they would proceed immediately with bauxite alumina developments and should therefore become the new owners of the undeveloped bauxite leases.

Analysts said that while it was not the intent of AWAC and Alcan to send any message to the state governments with their Guinea announcement, it was clear that Australia's status as preferred destination for alumina investment faced increased competition from other countries.

Shares in Alumina fell 2¢ to $5.08 yesterday in what was a generally weaker market for resources stocks.

Alcoa shares closed steady at $46.40. Alumina shares were 2¢ softer at $5.08.


Construction of alumina complex to begin in Komi this year

ITAR-TASS, Russia 14.05.2004

MOSCOW, May 14 (Itar-Tass) - Russia’s biggest investment project, the alumina and aluminium complex (Komi Aluminium) is to be implemented in the Komi Republic of the Russian Federation. Work on its construction is expected to begin already at the end of this year, Komi Leader Vladimir Torlopov told a press conference at Itar-Tass on Friday.

More than 1.5 billion U.S. dollars of investments are needed to launch alumina and later aluminium production in the republic. According to Torlopov: “This will be a fundamentally new type of enterprise as regards technology and some economic aspects.”



Kaiser Aluminum Signs Agreement To Sell Its Interests In An Alumina Refinery And Related Bauxite Mining Operation

www.kaiseral.com May 17, 2004

HOUSTON, Texas, May 17, 2004 -- Kaiser Aluminum announced today that, pending certain conditions outlined below, it has signed an agreement to sell its Gramercy, Louisiana, alumina refinery and its related 49% interest in the Kaiser Jamaica Bauxite Mining operation (KJBC) to a newly formed joint venture between Century Aluminum Company and Noranda Inc. Under the terms of the agreement, the Government of Jamaica will retain its 51% interest in KJBC.

Prior to any sale of its interests in Gramercy and KJBC, Kaiser may conduct an auction for the assets, under direction of the U.S. Bankruptcy Court for the District of Delaware. The company has requested the Court to rule on bidding procedures for any such auction at the regularly scheduled monthly hearing on June 21, 2004. If such procedures are approved and, subsequently, if any qualified bids are received, an auction would be conducted, and the Court would be expected to rule on the winning bid at the regular monthly hearing on July 19, 2004.

KJBC mines bauxite, approximately two-thirds of which is used by Gramercy to produce alumina, with the balance sold to a third party. Approximately 75-80% of Gramercy’s output is, in turn, supplied under long-term contracts to aluminum smelters owned by Century and Noranda.

Under the terms of the transaction, Kaiser would receive cash proceeds of approximately $23 million, a substantial portion of which may be used to satisfy transaction-related costs and obligations.

"We believe this transaction benefits the interests of all concerned parties," said Jack A. Hockema, president and chief executive officer of Kaiser Aluminum. "For Kaiser, it represents another significant step forward in our restructuring process as we continue to shift our focus to the company’s fabricated products operations. For the buyers, it represents a strategic move to control the long-term supply of a critical feedstock. For employees, civic, and governmental organizations in Louisiana and Jamaica, it provides assurance of continued operation of assets that generate significant economic value."

Hockema added, "We extend our profound gratitude to the employees and government officials in Louisiana and Jamaica who have contributed so much for so many years to Kaiser’s efforts at these facilities."

The transaction is subject to various approvals, as more fully discussed in Kaiser’s Form 10-K for 2003. In particular, Kaiser is working with the lenders under its Post-Petition Credit Agreement to obtain an amendment to the Credit Agreement that, among other things, would permit the sale of the company’s interests in and related to Gramercy and KJBC.

The Gramercy refinery began producing alumina in 1959; it has approximately 500 employees and an annual rated capacity of 1.25 million metric tonnes. Kaiser began its involvement in bauxite mining in Jamaica in 1950; today, KJBC has approximately 600 employees and an annual production capacity of approximately 4.5 million metric tonnes of bauxite.

Century Aluminum Company (NASDAQ: CENX) owns 615,000 metric tons of annual primary aluminum capacity. The company owns and operates plants at Hawesville, KY, Ravenswood, WV and Grundartangi, Iceland. It also owns a 49.67-percent interest in a plant at Mt. Holly, SC. Century’s corporate offices are located in Monterey, CA.

Noranda Inc. (NYSE: NRD) is one of the world's largest producers of zinc and nickel and a significant producer of copper, primary and fabricated aluminum, lead, silver, gold, sulphuric acid, and cobalt. Noranda is also a major recycler of secondary copper, nickel and precious metals.


Kaiser to sell Louisiana refinery, stake in Jamaica refinery

Bizjournals.com 5/17/04

Kaiser Aluminum has agreed to sell its Gramercy, La., alumina refinery and its related 49 percent stake in the Kaiser Jamaica Bauxite Mining operation for $23 million to a joint venture between Century Aluminum Co. and Noranda Inc.


Under the terms of the agreement, the government of Jamaica will retain its 51 percent stake in Kaiser Jamaica Bauxite Mining.

Prior to any sale of its interests in the assets, Kaiser may conduct an auction for them, under direction of the U.S. Bankruptcy Court for the District of Delaware. The company has requested the court to rule on bidding procedures for any such auction at the regularly scheduled monthly hearing on June 21.

Kaiser has been dealing away assets and stakes in other assets as part of a series of steps to emerge from bankruptcy by the middle of this year. Kaiser filed for Chapter 11 bankruptcy protection from creditors in February 2002.

The Jamaica facility mines bauxite, approximately two-thirds of which is used by Gramercy to produce alumina, with the balance sold to a third party. About 75 percent to 80 percent of Gramercy's output is, in turn, supplied under long-term contracts to aluminum smelters owned by Century and Noranda.



UPDATE 2-Kaiser loss narrows; closer to end of Ch.11

Reuters Mon May 17, 2004 05:51 PM ET

(Updates with sale of refinery; more details, quotes)
NEW YORK, May 17 (Reuters) - Kaiser Aluminum Corp. (KLUCQ.OB: Quote, Profile, Research) reported a narrower first-quarter loss on Monday and said it will sell a Louisiana alumina refinery, its latest step toward emerging from bankruptcy as early as the third quarter.

The Houston-based company, which filed for bankruptcy in February 2002, said higher alumina and primary aluminum prices, as well as a $33 million pretax charge to write down the value of its Valco smelter in Ghana, helped its bottom line.

Kaiser said its first-quarter loss was $64.0 million, or 80 cents per share, compared with a loss of $65.1 million, or 81 cents a share, in the same quarter last year.

Sales rose 8 percent to $367.6 million, but results were hurt by costs from pensions and retiree health-care benefits. Most of these costs will be reduced or eliminated through its restructuring, Kaiser said.

"Although Kaiser's operating loss in the first quarter of 2004 was essentially the same as that of the prior year period -- primarily due to the Valco-related charge -- the company's underlying operating results improved markedly in relation to the year-ago period," said Jack Hockema, president and chief executive officer

He said the improvement was mainly attributable to increased prices for alumina and primary aluminum and lower depreciation in the alumina business unit.

Hockema said Kaiser's progress in its Chapter 11 bankruptcy case was speeding up after the company reached agreements on retiree medical coverage with certain unions.

"We intend to maintain this pace so that we can emerge as early as late in the third quarter of this year," he said.

Later, the company announced it signed an agreement to sell its Gramercy, Louisiana, alumina refinery and its related 49 percent interest in the Kaiser Jamaica Bauxite Mining operation (KJBC) to a newly formed joint venture between Century Aluminum Co. (CENX.O: Quote, Profile, Research) and Canada's Noranda Inc. (NRD.TO: Quote, Profile, Research) Inc. The Jamaican government will retain its 51 percent interest in KJBC.

Under terms of the transaction, Kaiser would receive cash proceeds of approximately $23 million, a substantial portion of which may be used to satisfy transaction-related costs and obligations, it said.

"We believe this transaction benefits the interests of all concerned parties," said Hockema. "For Kaiser, it represents another significant step forward in our restructuring process as we continue to shift our focus to the company's fabricated products operations."

Kaiser's stock, which trades over the counter, was down 1 cent, or 11.8 percent.


© Reuters 2004. All Rights Reserved.


Brazil's Alumar seeks energy for aluminum expansion

Reuters, 05.17.04, 10:33 AM ET

SAO PAULO, Brazil, May 17 (Reuters) - Brazil's Alumar smelter, co-owned by Alcoa Inc. (nyse: AA - news - people) and BHP Billiton <BHP.AX>, will hold an auction on Friday to purchase energy to supply its aluminum output expansion, a paper reported on Monday.

Alumar will hold a long-term tender to buy 820 megawatt hours to supply power for a plan to increase aluminum output by 60,000 tonnes annually from the Sao Luis-based smelter, which now has a yearly capacity of 370,000 tonnes, the Gazeta Mercantil financial daily said.

Alumar is currently the second largest consumer of Eletronorte, sapping up 662 MWh from the state energy utility but its current contract, signed in the early 1980s, expires on June 30.

An Alumar representative was not immediately available to comment.

This is part of a broader $1.4 billion plan by Alcoa to expand operations in Brazil.

Copyright 2004, Reuters News Service


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

www.kaiseral.com May 18, 2004

In Today’s Court Hearing

The Court approved two key items:

The sale of the Mead, Washington, facility to an affiliate of Commercial Development Corporation. We expect the transaction to close during the second quarter.
An extension of the period of exclusivity through June 30, 2004.
Liquidity

The company’s recent liquidity continues to be adequate.

Jack A. Hockema
President and Chief Executive Officer


Change of Heart

WTAP News 17 May 2004

Denise Alex

Alcan Incorporated is now hoping to keep the Pechiney aluminum rolling mill in Jackson County.

After Alcan's recent purchase of France-based Pechiney, the U.S. Justice Department said Alcan could not keep the Ravenswood Mill, which employs more than 900 people.

Justice Department officials said the decision was necessary to preserve competition for brazing sheet, an aluminum alloy, but Tuesday Alcan announced plans to spin off the rolled aluminum products businesses it held before making the purchase.

Officials with the Montreal-based company say the changes should bring the company into compliance with the antitrust requirements. They say it will also allow Alcan to focus on growing its bauxite and alumina businesses, primary aluminum operations and on packaging and engineered products.

The planned spinoff to Alcan's shareholders includes the company's rolling mill in Fairmont, which employs about 155 people.

The facilities being spun off have 10,000 employees and generate more than $6 billion dollars in annual revenue. The proposal still needs approvals from regulators, Alcan shareholders and the board of directors.


Alcan Seeks New Antitrust Pact to Keep Ravenswood (Update4)

May 18 (Bloomberg) -- Alcan Inc., the world's second-largest aluminum maker, is seeking to renegotiate terms of an agreement reached with antitrust regulators to win approval of its 4 billion euro ($4.8 billion) purchase of France's Pechiney SA in February.

Alcan Chief Executive Travis Engen wants to keep assets he agreed to divest -- Pechiney's Ravenswood, West Virginia, rolling mill, a supplier to Airbus SAS and Boeing Co.; and a French mill that serves European automakers. Instead, he plans to spin off most of the company's rolling-mill assets and focus on developing low- cost alumina and primary aluminum as well as specialty packaging, aerospace and engineered products.

``We don't think a rejection of the plan is likely at all,'' Engen said on a conference call. ``We've had close examinations of antitrust issues. We think this is something with precedence and expect it to be approved by regulators. This transaction may have some alternative solutions in dealing with the U.S. regulations.''

U.S. Justice Department spokeswoman Gina Talamona didn't return calls seeking comment on the proposal.

Ravenswood, which makes aluminum skins for jetliner wings and fuselages, will benefit from a pickup in commercial-aircraft orders. Last week, Airbus said it is seeing signs of recovery as some airlines move up delivery dates of ordered aircraft. Last month, Boeing boosted its 2004 and 2005 profit forecasts because it now expects to deliver more aircraft next year.

Ups and Downs

``Ravenswood has a large aerospace market and we are coming out of a down cycle in aerospace,'' said metals analyst Mark Parr an analyst at KeyBanc Capital Markets. ``If we are at the beginning of an upturn in aerospace, it could move up for another five years.''

Alcan, based in Montreal, was required to divest the Ravenswood mill because some non-aerospace products made there are also produced at its mill in Oswego, New York, allowing it to potentially dominate the market in those products, which weren't named. The mill also makes wing parts and fuselages for Airbus and Boeing, the two largest commercial-aircraft makers.

Until the new plan is approved, Ravenswood remains for sale, Engen said.

Alcan shares rose C$1.68, or 3.3 percent, to C$53.18 on the Toronto Stock Exchange. They have fallen 12 percent this year.

Antitrust Laws

The new company will have annual sales of $6 billion and about 10,000 employees. Alcan will have $20 billion in revenue and 78,000 workers after the spinoff, which it expects to complete by year's end. Aluminum rolled products include aluminum sheet, used in the construction and the automotive industries, aluminum beverage cans and foil.

Alcan's takeover of Pechiney was approved by antitrust authorities in the U.S. and Europe after the company agreed to sell Ravenswood and either its Neuf Brisach plant in France or Dorf plant in Germany to comply with regulations.

The Neuf Brisach and Ravenswood plants will remain part of Alcan in the spinoff plan. It would also keep three other rolling mills that serve aerospace, automotive and foil customers.

``They're keeping a lot of their engineering mills, where they clearly see research and development potential,'' said Raju Daswani, head of research & consultancy at Metal Bulletin Research. ``Clearly they've segmented aerospace as an industry worth pursuing.''

Brian Sturgell, 54, who has been with Alcan for 15 years, will become chief executive officer of the new company. Ted Newall, 68, an Alcan board member since 1986, will be chairman. The company, yet to be named, will be based in Canada and run from Cleveland. It will be listed on the New York and Toronto stock exchanges, the company said in a statement.

Debt

Alcan plans to shift much of its debt to the new company, where it will be refinanced, improving Alcan's credit profile, the company said.

Including the purchase of Pechiney, Alcan had total debt of $9.76 billion last year, almost double what it was in 2002. Alcan has a rating of A- from Standard & Poor's and a Baa1 rating from Moody's Investors Service. Executives are scheduled to meet with both in coming months to discuss ratings improvement for Alcan and a new rating for the spinoff, Chief Financial Officer Geoffery Merszei said on the call.

``The spinoff will accelerate the reduction of debt and we expect a positive response to the structure of the new company,'' he said. ``The rating of the new company will be determined in the next few months as we consult with the credit rating agencies.''

Merszei wouldn't say what the respective debt loads would be after the companies were split.


To contact the reporters on this story:
Matthew Craze at mcraze@bloomberg.net;
James
Gunsalus in Princeton at jgunsalus@bloomberg.net.

To contact the editor responsible for this story:
Rob Urban at robprag@bloomberg.net.
Last Updated: May 18, 2004 16:22 EDT


Chalco, Gaining From Alumina Price, May Buy Customers (Update1)

Bloomberg May 19

Aluminum Corp. of China, the nation's biggest maker of aluminum and supplier of half the raw material used to make the lightweight metal, said it's in talks to buy assets from customers weakened by soaring raw material costs.

Chalco, as the company is known, is in talks with companies including Lanzhou Aluminum Co. to add between 200,000 and 300,000 tons of capacity this year, Zhang Qing, Chalco's investor relations manager, said by telephone.

Profit halved last year at Lanzhou, China's third-biggest aluminum maker, on rising costs. Chalco was less affected by last year's 46 percent rise in the price of alumina, which is smelted into aluminum. Alumina accounted for more than 80 percent of Chalco's profit last year, from 44 percent a year earlier.

``It's a good time for Chalco to buy smaller smelters, which are having a terrible time, as they have more bargaining power,'' said Liu Yang, managing director at Atlantis Investment Management, who oversees $1.8 billion of assets, including Chalco shares. ``It's just a matter of timing and how low they can drive the price.''

Chalco's Hong Kong-listed shares rose as much as 8.9 percent to HK$3.975. The stock almost tripled in the past year.

Baotou Aluminum Co., owned by Chalco's parent, is also among companies in talks to sell assets, Zhang said.

Chalco said it is involved in $1.9 billion in projects to boost output of aluminum in the world's largest market and fastest-growing of the seven biggest economies. It is expanding aluminum capacity at a time its monopoly position as an alumina producer is under threat and overseas rivals such as Alcoa Inc., Alcan Inc and Rio Tinto Plc plan to increase production.

Monopoly Over

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 remains by far the leading supplier. Chalco plans to produce 6.5 million tons of alumina this year, supplying half the nation's needs, Zhang said. Most of the rest will be imported, he said.

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.

Lanzhou Aluminum's purchases of alumina rose 68 percent last year as it sought to meet surging demand from power equipment manufacturers, automakers and drinks cans companies. Lanzhou buys alumina from Chalco.

Twenty percent of Chinese smelters have closed or cut output because of shortage of alumina and rising power costs, Wang Feihong, an analyst at research group Beijing Antaike Information Development Co., said in March. Local smelters with a combined capacity of 5 million metric tons may be shut down by the end of this year, he said.

Growth of aluminum production may slow down by 50,000 tons to 6 million tons this year, from a increase of 1 million a year earlier, Antaike said on its Web site.

``It might not be a good time for the merger to take place as prices of aluminum are affected by the government's curbs on over-investment,'' said Geoffrey Cheng, a Hong Kong- based analyst at Daiwa Institute of Research.


To contact the reporter on this story:
Xiao Yu in Beijing at yxiao@bloomberg.net

To contact the editor responsible for this story:
Peter Langan at plangan@bloomberg.net


Alcan spinoff to include Kentucky, Indiana facilities

Louisville Business First, KY May 17, 2004

Alcan Inc. (NYSE: AL) plans to spin off to shareholders its rolled aluminum products businesses, including three Kentucky facilities and one in Indiana, according to a news release from the Montreal-based company.


The new company, to be named later, would be the world's largest aluminum rolling business by revenue, according to the release. Alcan's plants in Louisville, Logan and Berea, Ky., and Terre Haute, Ind., would be included in the spinoff.

The Louisville facility is located at 1430 S. 13th St. and has 125 employees, according to the most recent Kentucky Manufacturers Directory, produced by Harris InfoSource.

The spinoff company is expected to generate $6 billion in revenue and have about 10,000 employees worldwide. It will be based in Canada and have executive offices in the United States, but more specific plans were not provided.

Brian W. Sturgel will be CEO of the company, which will produce beverage cans, automotive sheet, foil stock, lithographic sheet, painted sheet and industrial products.

Alcan expects to complete the transaction before the end of the year, contingent upon regulatory and shareholder approval.

© 2004 American City Business Journals Inc.


UAE to build 350,000 tpy aluminum smelter in Turkmenistan

Interfax, Turkmenistan 17 May 2004
Ashgabat. (Interfax) - The United Arab Emirates will finance the construction of a 350,000 tpy aluminum smelter in Turkmenistan, Turkmenistan's Energy and Industry Ministry told Interfax.

Turkmenistan's government signed a protocol of intent on the smelter with the UAE president's office on May 14.

The smelter will produce enough aluminum to meet Turkmenistan's own needs and for exports to countries from the region.

The UAE will finance the design, equipment supplies and construction for the smelter and market the Turkmen aluminum abroad.

UAE specialists will shortly start a feasibility study. They will also train local staff, including management personnel.

The complex will produce primary aluminum and alumina from locally mined alunite.

Turkmenistan will be able to provide the smelter with energy thanks to its "huge natural gas reserves," the ministry said. The Mary hydro plant will supply the smelter with electricity.

Plans to build what would be Turkmenistan's first metallurgical plant were first tabled in 1993. The raw material will be sourced at the Zyulpikar alunite field in the Serakh district in southern Turkmenistan.


Rusal pays big Aldeco award

Russia Journal, Russia May 18, 2004

By John Helmer

MOSCOW - Adeco’s claim over Krasnoyarsk Aluminium Plant (KraZ), the second biggest aluminium producer in Russia, has been settled through an affiliate of Russian Aluminium (Rusal), which owns the smelter, according to Adeco officials.

Brian Jenkins, who heads Aldeco, said Tuesday: "Aldeco's claim has been settled. We came to an agreement with an affiliate of Rusal, whereby our claim was assigned to the affiliate."

The announcement confirms that negotiations to end the Rusal default in payment of a Swiss arbitration award of approximately $105 million have now concluded. Jenkins did not identify the amount of the payment.

Aldeco traded aluminium with KraZ until the smelter was taken over by the Rusal group of shareholders, led by Oleg Deripaska and Roman Abramovich, in 2000. KraZ was then consolidated in Rusal, although quarterly financial reports by the smelter unit continued to be filed by KraZ to the Federal Securities Commission in Moscow. A filing by KraZ of second quarter results dated July 30, 2003 - appearing on the commission's Russian language website - revealed a note by KraZ that Aldeco had won a Zurich arbitration tribunal award totaling $99,436,254, plus 5 percent interest since August 16, 2000. According to the KraZ filing, Aldeco had not claimed payment. Aldeco denied that.

The trader told The Russia Journal last November that it was "the beneficiary of an Arbitral Award, issued in August 2002, against KraZ. KraZ is under the ownership, management and control of Russian Aluminium (Rusal). The award was issued by a distinguished international arbitral tribunal constituted in Zurich under the auspices of the Zurich Chamber of Commerce and followed lengthy proceedings between Aldeco and KraZ. KraZ participated fully in all aspects of the arbitration proceedings and expressly accepted that the tribunal had proper jurisdiction to hear the dispute. Following notification of the award, KraZ appealed the award to the Swiss Federal Supreme Court, the highest Court in Switzerland, but the appeal was dismissed by the court in December 2002. The Arbitral Award therefore remains final and binding on KraZ".

The trader also said "the note to KraZ's accounts stating that Aldeco AG has not claimed the amount due under the Award is incorrect. The Award became final and immediately payable by KraZ upon dismissal of the appeal by the Swiss Federal Supreme Court. Moreover, KraZ was formally requested, by Aldeco, to pay the amount due under the award, as well as an amount due under the Judgement of the Swiss Federal Supreme Court, by notice to KraZ's duly appointed Swiss attorney-at-law in December 2002".

Rusal spokesmen refused to acknowledge the payment default at the time, or since.
 


Alcoa's Badin Works Honored for 30 Years of Outstanding Safety Performance

Business Wire (press release), CA May 19, 2004

BADIN, N.C.--(BUSINESS WIRE)--May 19, 2004--Alcoa's Badin Works in Badin, N.C., was recently honored by the NC Department of Labor for its outstanding workplace safety performance for the past 30 years.


The plant received the Outstanding Work in Accident Prevention Award from Dept. of Labor Commissioner Cherie K. Berry for maintaining a Total Disabling Incidence Rate for 30 consecutive years that is at least 50% below the state average incidence rate for companies in the same Standard Industrial Classification. Of the more than 200,000 businesses in North Carolina, Alcoa is one of only 15 companies to have achieved such a record of safety performance.

"The achievement Alcoa has made in its safety performance is quite simply, remarkable," said Commissioner Berry. "With more than four million workers and 200,000 businesses in North Carolina, the most effective injury deterrent we have is those employers like Alcoa, and their employees who recognize that safety begins with them."

According to Plant Manager Tommy Gibson, the credit for the success goes to the employees. "Alcoa has an extremely strong focus on health and safety, but our employees made this award possible," said Gibson. "They are truly dedicated to working safely, and watching out for each other on the job."

Alcoa Badin Works is an anode manufacturing and ingot casting facility. The plant has been a part of the Badin community since 1919 and employs 140 people.


BPA: conservation has Portland-sized savings


Bend.com news Posted: Wednesday, May 19, 2004 12:38 PM

Reference Code: PR-15623

May 19 - PORTLAND - The Bonneville Power Administration on Wednesday released an updated assessment of energy conservation it has funded in the Northwest. The analysis shows additional savings of 57 average megawatts in 2003, bringing the adjusted total to 805 average megawatts since BPA’s efforts began in 1982.

“In addition to the direct acquisition of conservation, BPA has promoted the adoption of more energy-efficient building codes (residential and commercial) in Washington and Oregon, and has supported the adoption of residential and commercial Model Conservation Standards,” BPA reported in “The Red Book,” an annual report of conservation data.

Each year, BPA works with the Northwest Power Planning Council to set targets for acquiring energy savings. The agency’s customer utilities receive a credit on their wholesale power bills for investments that reduce consumption. BPA also promotes consumer lifestyle products and standards such as lighting and appliance efficiency.

“Conservation is still a bargain – well under current market prices of between $35 and $40 per megawatt hour if BPA had to go out and buy the energy to meet its customers’ needs,” said Mike Weedall, BPA’s vice president for energy efficiency. “And this doesn’t take into account the environmental benefits.”

Conservation avoids the burning of fossil fuels to produce electricity. The services required to deliver it also promote local employment.

Megawatts of savings are expressed in savings during the first year the program is in place. Many measures, such as improvements in home weatherization and commercial lighting, remain in effect for many years. BPA periodically adjusts the regional total to reflect changes in conditions.

For example, this year BPA adjusted savings from aluminum plant efficiency measures to zero because depressed market conditions have caused Northwest plants to close or curtail production. Savings from more stringent residential energy codes will not be counted from 2003 forward because it is likely that codes would have reached current standards by now.

The savings include energy that would have been expended had the codes not been adopted. In 2004, BPA has set an objective of acquiring 40 average megawatts of efficiency (without codes and standards).


Kaiser's Mead smelter sale gets nod but no restart

Reuters, 05.19.04, 12:02 PM ET

By Zach Howard

NEW YORK, May 19 (Reuters) - Bankrupt Kaiser Aluminum Corp. <KLUCQ.OB> said Wednesday it won court approval to sell an idled smelter in Washington state to Commercial Development Co. Inc., an asset management firm that does not intend to restart primary aluminum production at the plant.

The Bankruptcy Court for the District of Delaware approved the plant's sale in a hearing Tuesday, Jack A. Hockema, Kaiser's president and chief executive, said in a note to customers, suppliers and employees.

Terms were for cash proceeds of around $7.4 million, a spokesman for Kaiser Aluminum told Reuters.

A spokesman for Commercial Development Co. said his company did not intend to restart the smelter at the plant in Mead, Washington, which had an annual production capacity of 200,000 tonnes of aluminum.

The 62-year-old smelter has been idle since January 2001 due to the high cost of energy relative to metal prices.

Houston-based Kaiser, which filed for Chapter 11 bankruptcy protection in February 2002, has been selling off some of its businesses in order to speed up a financial turnaround. It expects the Mead sale to close during the current quarter.

An official for Commercial Development said the company was analyzing options for the smelter, including dismantling it, turning most of the buildings into warehouses, manufacturing facilities or possibly a distribution center.

"The cost of energy in the region is too high as far as the production of aluminum is concerned," said Randy Jostes, director of acquisitions. "We do not see the facility remaining in operation as an aluminum smelter."

But, he added, Commercial Development, which is based in St. Louis, Missouri, is hopeful it will find a buyer for baked anodes that can be produced at Mead, allowing its carbon bake facility to operate. Anodes are an intermediate step in making primary aluminum.

"There is a potential on the worldwide market to find a buyer for baked anodes, but at this time we have not found one," he added.

Kaiser Aluminum has said its fabricating business is the core around which it is reorganizing.

Hockema also said in the note that Kaiser got court approval for an extension of its exclusive right to file a plan of reorganization through June 30.

Kaiser has had numerous extensions to its initial 120-day exclusivity agreement since February 2002.

Hockema added that Kaiser's liquidity continued to be adequate.

The next regular monthly court hearing for Kaiser is scheduled for May 24, when the court is seen considering approval of certain agreements regarding retiree benefits with some North American labor unions.

Copyright 2004, Reuters News Service


BFI, Nigerians Abroad to Buy ALSCON

This Day (Lagos) May 19, 2004

Onyebuchi Ezigbo
Abuja

Nigerian investors in America and Europe have expressed interest in taken over the ownership and operations of the Aluminum Smelter Company of Nigeria (ALSCON) in Ikot Abasi, Akwa Ibom State.

Operating under a consortium known as BFI Group, the Nigerians say they are putting a strong bid to take over the ownership and operations of ALSCON located in Ikot Abasi, Akwa Ibom State.


The Group's president, Dr. Reuben Mietamuno Jaja told newsmen in Abuja shortly on arrival into the country for the formal opening of the bids by the Bureau for Public Enterprises (BPE), the BFI has the best assemblage of aluminum industry specialists to run the company.

He said the group is bringing together former Reynolds, Alcoa, ALCAN and other professionals with wide knowledge and international experience in upstream aluminum industry, who were instrumental for invention, including research, development and commercialization of the aluminum smelter technology y deployed in ALSCON.

According to him, Reynolds had until September, 2001 when it pulled out as technical partner to ALSCON after transferring an updated Pre-brake cell production technology to the company, been in charge of the production and marketing of finished metals.

He said that ALCOA another member of the group, also worked with Ferrostal AG of |Germany in the conceptualization and construction of the multi-billion Naira plant.

Jaja said that the strategy of the group would focus on Ingot production and other businesses critical to the effective utilization of the plant as well as the empowerment of the immediate community.


Montenegro to sell aluminium smelter by October

Reuters, 05.19.04, 1:05 PM ET

BELGRADE, May 19 (Reuters) - Montenegro said on Wednesday it planned to complete privatisation of its sole aluminium producer Kombinat Aluminijuma Podgorica by October this year KAP, accounting for a half of Montenegrin industrial output, is the country's largest exporter, generating 80 percent of the nation's exports. With more than 2,700 workers, it is the second largest employer in the republic of some 650,000 people.

The government, which has hired BNP Paribas <BNPP.PA> as financial adviser, plans to put on sale 65.53 percent of KAP's equity in the course of the summer, Montenegrin Economy Minister Darko Uskokovic told an investor forum.

"The precondition for the privatisation is to set the price of electricity and we are close to resolve the problem. We also know how to restructure the old debts, so I expect by June 15 we will have completed the preparations," he said.

"Then a pre-qualification bid will follow and then the real tender. By October, I hope that we will complete the privatisation of the smelter," Uskokovic added.

The 32-year old KAP plans to produce 120,000 tonnes of aluminium in 2004 -- above its installed capacity of 102,000 tonnes -- and further cut production costs of an average $1,349 per tonne in 2003.

The company owes $130 million to Swiss-based metals-to-grains trader Glencore, Standard Bank London and Vectra, a Montenegrin firm that built an anode plant there in 2000 and manages it under a seven-year contract.

It also owes $55 million to the state.

Local media say that Russia's SUAL, Glencore, Norsk Hydro <NHY.OL> of Norway, Canada's Alcan <AL.TO>, U.S. major Alcoa (nyse: AA - news - people) and Russian firm Rusal have shown interest in KAP.

Copyright 2004, Reuters News Service



US Alcoa intending to acquire RusAl`s established Prime-Alum.

Gateway 2 Russia, Russia 20 May 2004

US Alcoa is intending to acquire ZAO Prime Alum (Moscow) and OOO RAMP. The respective information could be obtained from the Bundeskartellamt web-site.

No target stake is disclosed.
As informed, ZAO Prime Alum was set up by RusAl with the stock capital of 7.5 bln rbl. The issue and the placement report were sealed with the FSC on May 14, 2004. The issue consists of 75.19 mln common stocks with 100 rbl par each; registered number is 1-01-65014-K.

Prime Alum and RAMP are involved in producing aluminium semi-finished product.

Besides, RusAl has recently agreed with Alcoa to sell its 2 rolled metal works - Samara Metal Works and Belokalitvenksy Metal Production Association (Rostov Region).




Alcoa to Cut About 2,300 Jobs in Mexico

Springfield News Sun, OH May 21, 2004

PITTSBURGH (AP)--More than 2,300 workers in Mexico will lose their jobs as Alcoa restructures its Alcoa Fujikura Ltd. Automotive division to stay competitive in light of reduced production, the aluminum giant said Friday.

The Pittsburgh-based company will permanently cut 1,050 of 4,464 jobs at its Piedras Negras operation, and 1,300 of 4,139 jobs in Torreon in June. The cuts represent 9.6 percent of the division's work force in Mexico.

The plants make electrical systems and other products for Alcoa's North American light and heavy vehicle markets.

Employees will be offered unspecified severance packages, along with help in finding other jobs, Alcoa said.

``This difficult decision is the result of the competitive conditions of the global market, and the actions in Piedras Negras and Torreon are necessary to adjust AFL capacity to better match demand,'' said Jose Alvarado, the vice president of AFL Automotive-Mexico.

Last summer, Alcoa cut 1,700 jobs at its Ciudad Acuna operation, and 2,550 in Torreon.

AFL Automotive employs about 24,000 people in Mexico. Alcoa has about 120,000 in 41 countries.


China's Chinalco eyes aluminium projects in Guinea

Reuters, 05.21.04, 1:45 PM ET

By Saliou Samb

CONAKRY, May 21 (Reuters) - China Aluminium Group (Chinalco) is eyeing projects in Guinea to exploit the West African country's vast bauxite reserves, a government official said on Friday.

"On the express instructions of Guinea's head of state, we have received this delegation from Chinalco to see what we can do to revitalise the bauxite sector," Mines Minister Alpha Mady Soumah told Guinea's state radio.

The radio said Chinalco, China's biggest aluminium producer, was looking specifically at building an aluminium factory in the former French colony, which holds more than a third of the world's bauxite reserves.

Chinalco is parent of Hong Kong-listed Chalco <2600.HK>.

The arrival of the Chinese delegation comes as Russian and North American aluminium giants press ahead with their own projects to exploit Guinea's bauxite, an ore which is refined into alumina and then smelted into aluminium.

Strong demand and tight supplies have boosted prices of alumina to more than $500 per tonne this year from $160 in late 2002, sparking renewed interest in alumina projects.

Meanwhile China's rapidly expanding economy is expected to boost its demand for imported alumina to 17 million tonnes per year by 2010 from four million tonnes now.

Guinea's relations with China date back to 1958 when the West African country's ties with France were severed. China bought more than 5.5 million tonnes of bauxite from Guinea last year, nearly half its annual exports.

North American and Russian firms are also jostling to get major alumina projects off the ground in Guinea.

Last week Alcan Inc. <AL.TO> and Alcoa Inc. (nyse: AA - news - people) signed a memorandum of understanding to assess the feasibility of a 1.5 million-tonne a year alumina factory in Guinea, which could be up and running by early 2008.

New York-based GAPCO (Guinea Aluminium Products Corp.) Ltd is planning a 2.6 million tonne-per-year alumina refinery while Russian Aluminium (RusAl), the world's second biggest aluminium producer, is planning to build an alumina refinery, deep-water port and railway at the massive Dian-Dian bauxite deposit.

Copyright 2004, Reuters News Service


State Considers Changes At Coega

AllAfrica.com, Africa Business Day (Johannesburg) May 21, 2004

Carli Lourens, Johannesburg

GOVERNMENT has revealed that it is considering a possible reconfiguration of the mooted $2,2bn aluminium smelter at Coega to attract other investors should Canadian group Alcan decide not to pursue the project.

Rumours were rife this week that the project was slipping away from SA, following new Trade and Industry Minister Mandisi Mpahlwa and director-general Alistair Ruiters' meeting with Alcan officials.

There were suggestions that the R606m tax concession earmarked for the project as a sweetener last year had been put back into government's budget.

The department would not comment on this yesterday.

The aluminium project would represent SA's largest single investment to date. It would also validate government's multibillion rand development of the Coega industrial zone to boost the depressed Eastern Cape economy.

Lionel October, the department's deputy director-general, confirmed that a meeting between Mpahlwa, Ruiters and Alcan officials took place.

But he could not say what the outcome was.

Alcan, which took over French rival Pechiney last year, was in the process of consolidating the project plans of the two companies. The exercise would see the less profitable prospects cancelled.

The resignations last month of Raymond Hartle and Eugene Heeger as executive managers at Coega Development Corporation so close to Alcan's decision have also raised questions.



One dam mistake after another leaves $4.4bn bill

Sydney Morning Herald, Australia May 22, 2004

It's an engineering icon that came unstuck. Hamish McDonald surveys the damage on the Yellow River.

The dam here is a mass of weathered concrete, rusting steel fixtures, and old-fashioned power pylons, set in a narrow valley of tawny rock. Ticket-sellers and souvenir shop staff spring to life when a rare foreign visitor joins a small number of Chinese sightseers paying to walk across the top.

When the Sanmenxia dam was completed in 1960, after three years in construction under Soviet supervision, it was hailed as a symbol of the new revolutionary China and its image printed on the country's banknotes. The first dam on the Yellow River, it signalled man's impending triumph over a nature that regularly brought floods to millions of villagers.

Now, there is debate about whether the dam should be opened and the river waters allowed to run free. The hydro-electric plant that now hums below the dam should be written off, and a nearby aluminium refinery supplied with power from cheaper thermal sources.

This argument is put by Professor Zhang Guangdou, the 92-year-old doyen of China's hydraulic engineers, who said recently on national television that the dam should be pulled down before it caused more flooding upstream. He is backed by Shaanxi province, which has been menaced by flood waters backing up the Wei River, a tributary that joins the Yellow River just above the dam, as far as the historic city of Xian.

"Sanmenxia was a mistake," said Professor Zhang, revealing that other Chinese experts had doubts about the project but were silenced because of reverence for Soviet leadership. One eminent hydrologist who attacked the project, Professor Huang Wanli, was denounced as a "rightist" and sent off for years of hard labour. He died in 2000 at the age of 90.

The problem is the massive silt load of the Yellow River, 60 times greater than that of the Mississippi, from the soft earth found in the region upstream. Within four years of opening, the dam had lost 40 per cent of its water storage capacity because of silt, and its Soviet- built turbines were clogged.

Beijing began remedial work that is still going on.

Now the dam has less than 10 per cent of its original storage capacity, and its spare capacity to hold water in the late summer flood season is relatively insignificant. The 400,000 villagers who were evicted and transferred to bleak Ningxia and Inner Mongolia are wondering about the sacrifice they have made, as are upstream farmers whose land has been spoiled by salt flushed up by a rising water table.

The hillsides around the reservoir remain a picture of hardship, of tiny wheat fields on the ridges and terraces of an eroded landscape, of houses that are mostly caves in cliff-faces fronted with a brick facade. The dam's powerhouse generates only about 25 megawatts, compared to the 1160 megawatts planned by the Soviet experts.

Sanmenxia has become a case study in what can go wrong in a big dam; how dubious the claimed benefits are in some cases.

It was cited in the vain opposition to the vastly bigger Three Gorges Dam on the Yangtse River, whose reservoir is now said to be turning into a toxic mix of human and industrial waste.

It is also used to argue against the new Xiluodu project on the Jinsha River, which is China's next largest dam, where many thousands of villagers have been violently evicted this year.

According to a spokesman of Leibo village, who brought their grievances to Beijing last month, local officials have seized land not needed for the dam.

Perhaps because of this, China's hugely powerful hydro-electric establishment is refusing to accept that Sanmenxia was a mistake. It managed to water down a Shaanxi resolution calling for the dam to be demolished.

The Ministry of Water Resources has just announced a "comprehensive" scheme to flush away sediments and shore up the Wei River embankments, at a cost of 25.31 billion yuan ($4.4 billion) between now and 2010.

Sanmenxia is proving a costly socialist icon.


Foreign investors join row over UES

Financial Times, UK - May 21, 2004

By Arkady Ostrovsky in Moscow

A group of foreign shareholders in Unified Energy System, Russia's electricity monopoly, have written to president Vladimir Putin, demanding that his government clarifies its position in a row involving the country's largest hydro-electric power station.


The move follows a decision by an arbitration court in Western Siberia effectively to de-privatise the giant Sayano-Shushenskaya hydro-electric plant. Some government officials have since renounced nationalisation of the station but shareholders remain nervous about its future.

In a letter obtained by the FT, the shareholders asked for a meeting with the head of Mr Putin's administration to discuss the issue.

The complaint to the president also attacks Russian Aluminium (RusAl), the country's largest aluminium producer - controlled by Oleg Deripaska, a powerful business tycoon - alleging that his company is behind attempts to reverse the privatisation.

According to the shareholders, RusAl consumes 70 per cent of all electricity in the republic of Khakassia where the plant is situated. "Although formally it is Khakassia which is suing to reverse the privatisation ... the true protagonist is ... clear. Russian Aluminium is attempting to win for itself dirt-cheap electricity under the cover of Khakassia," the letter says.

RusAl said on Thursday: "Our only interest is in long-term supply of electricity since our business is highly dependent on energy consumption.

"With regard to the Sayansk dam, this is a matter between UES and the government of Khakassia."

The accusation by UES shareholders comes at a time of nervousness among foreign investors about the safety of property rights in Russia and coincides with a wide-scale attack on Russian oil company Yukos. Foreign shareholders warn such situations tarnish Russia's image in capital markets.



Kaiser gets OK to sell Mead plant

Spokesman-Review, May 20, 2004

Deal is part of company effort to emerge from bankruptcy

John Stucke, Staff writer

Kaiser Aluminum Corp. said it has received Bankruptcy Court permission to sell its Mead smelter to a St. Louis company for about $7.4 million.

Kaiser also announced that it intends to sell a big refinery in Gramercy, La., for $23 million – a fraction of the cost the company spent rebuilding the plant during the last several years.

The sales are part of Kaiser's strategy to reorganize under Chapter 11 bankruptcy protection.

Also this week, Kaiser reported that it lost $64 million during the first three months of the year.

Commercial Development Co. Inc. bought the idled Mead smelter with plans to rehabilitate the property for use as a small manufacturing park or temporary warehouse space.

CDC does not plan to restart the smelter, which last operated in December 2000.

Selling the alumina refinery in Gramercy nearly completes the company's asset sales.

Earlier this year the company struck deals to sell a bauxite mine and alumina refin
ery in Jamaica for $295 million, as well as its large smelter in the African nation of Ghana for $18 million. Money from the sales will help satisfy some of Kaiser's debt and give the company capital as it attempts to operate as a viable company this fall.

In the case of Gramercy, a business partnership between Century Aluminum Co. and Canadian firm Noranda Inc. submitted the $23 million bid, although the refinery will likely be subject to auction.

The two companies already buy up to 80 percent of Gramercy's alumina output under long-term contracts.

The $23 million for Gramercy is relatively cheap considering Kaiser spent $275 million rebuilding the refinery after it was damaged by an explosion in 1999.

A company spokesman said Gramercy is fueled by natural gas, an expensive power source that may have driven down the price of the refinery. Although the price of alumina has soared, Kaiser has not been able to take full advantage of the increase because of contracts that set prices for years into the future.

Once Kaiser's reorganization is complete, it likely will look much different than the influential firm that employed thousands in Spokane for five decades and rose to become one of the world's largest aluminum companies.

Rather than making aluminum, a much smaller Kaiser will stick with making and selling fabricated aluminum parts, the company has said.

Among its factories should be the Trentwood rolling mill, where several hundred employees manufacture specialized aluminum sheet for aircraft makers such as Boeing.

Kaiser's efforts to emerge from bankruptcy have been hampered by a stubborn economic recovery that's boosting commodity prices, but hasn't translated into higher margins on the sale of fabricated parts.

CEO Jack Hockema said the company has cut costs and boosted sales by 8 percent, although it hasn't yet found a profitable mix.

In a press release announcing Kaiser's first-quarter performance, Hockema said the company's core business does hold promise.

The $64 million loss, or 80 cents per share, compares with a loss of $65.1 million, or 81 cents per share, during the same three months of 2003.

The losses were compounded by what Hockema called “legacy related expenses” which include retiree medical benefits and pension costs for hourly workers.

Such expenses for Kaiser will be eliminated later this year because of a deal the company struck with its unions that drastically cuts benefits.

Kaiser has until June 30 to file its plan of reorganization.

At a glance
Smelter buyer
Commercial Development Co. Inc., bought the idled Mead smelter with plans to rehabilitate the property for use as a small manufacturing park or turn it into a temporary warehouse.




Vale, Chalco May Build $1 Bln Alumina Plant in Brazil

May 23 (Bloomberg)


By Michael Smith

Cia. Vale do Rio Doce, the world's biggest iron-ore producer, may build a $1 billion alumina plant in northern Brazil with Aluminum Corp. of China Ltd., part of its effort to tap rising Asian demand.

The project, near Vale's existing alumina plant in the city of Belem, would start production in 2007, with a capacity of 1.8 million metric tons a year. It would be supplied with bauxite from Vale's Paragominas mine. The two companies will make a final decision this year.

``This would make us one of the biggest alumina producers in the world,'' Chief Executive Officer Roger Agnelli told reporters in Beijing. He is part of a business delegation traveling with Brazilian President Luiz Inacio Lula da Silva.

Vale, based in Rio de Janeiro, is trying to boost production of iron ore and other minerals, spurred by rising orders from Chinese steel and aluminum makers. It will spend about $2 billion to boost production and improve ports and railways this year to meet demand from China.

Agnelli also said Vale plans to spend $300 million buying 25 percent stakes in coal mines operated by Youngchen Group, to the south of Beijing, and Yamkung Group, in China's eastern Shandong province.

Vale will take $200 million of coal a year from the Chinese mines to supply steel companies and its own iron ore pellet plants in Brazil.


To contact the reporter on this story:
Michael Smith in Beijing at mssmith@bloomberg.net

To contact the editor responsible for this story:
Stephen Farr in London sfarr@bloomberg.net
Last Updated: May 23, 2004 09:49 EDT


Aluminium smelter for Trinidad and Tobago

Trinidad & Tobago Express, Trinidad and Tobago Monday, May 24th 2004

By Curtis Rampersad

After years of negotiations between two different administrations and several foreign investors, Government will today take what may be the penultimate step in establishing a multi-million dollar aluminium smelter in Trinidad and Tobago.

Prime Minister Patrick Manning will this morning sign a Memorandum of Understanding on behalf of Government with a foreign group in a ceremony at the Hilton Trinidad.

A statement from the Ministry of Energy said the MOU will "form the basis for the establishment of an aluminium industry in Trinidad and Tobago".

It did not name the foreign group which will sign the MOU.

Earlier this month, Energy Minister Eric Williams confirmed to the Express that discussions had deepened between Government and a major foreign investor for the construction of a smelter in Trinidad.

This came amidst news that several multinationals were interested in establishing downstream facilities such as a ethylene facility and another ammonia plant.


Vedanta runs into unexpected difficulties

Financial Times, UK May 23 2004

By Rebecca Bream and Khozem Merchant in Mumbai

The ambitious growth plans of Vedanta, the Indian metals group that listed in London last year, have been threatened by the unexpected election result in India the company admitted on Friday.


Naresh Chandra, Vedanta's newly-appointed non-executive director and a former Indian home secretary, told analysts from Morgan Stanley that the new Congress Party government was likely to slow India's privatisation process. He said the new government would only privatise loss-making enterprises.

Privatisation was one issue that delayed the formation of the new government, which has now said that it will only sell state assets "selectively".

Vedanta owns substantial copper, zinc and aluminium assets in India through its subsidiaries Sterlite Industries and Madras Aluminium Company. Vedanta had been keen to grow through new acquisitions. Potential targets included state aluminium group Nalco and Hindustan Copper, which were been slated for privatisation by the previous Indian government.

One comfort for Sterlite is that the regional government of mineral rich Orissa in eastern India, where the company has its bauxite assets, was re-elected. That government had approved a lease for Sterlite's $800m bauxite mining and alumina project. The defeated opposition party had threated to investigate the award of all leases by the previous administration.

Protests against Sterlite continued earlier this month with marches to the headquarters of the state governor, demanding all mining leases awarded by the previous government be rescinded.

Six weeks ago the company took a group of analysts from global investment banks on a tour of Orissa. Analysts were told Sterlite hoped to win a further mining licence, according to a banker familiar with the visit.

"It seems likely the main source of Vedanta's growth up to this point will have dried up. This is a longer-term strategic setback for the company," said Paul McTaggart, metals and mining analyst at Morgan Stanley.



RUSH HOUR - Frantic bidding as Alpart deadline nears

Jamaica Gleaner, Jamaica: Tuesday | May 25, 2004

By Claude Mills, Staff Reporter

THE BIDDING rivalry between overseas interests to gain control of Alpart (Alumina Partners of Jamaica) is shaping into a bruising acquisition battle.

The Gleaner has learned that there is now an 11th hour move by Norway-based Norsk-Hydro and Swiss trader Glencore Interna-tional which have joined forces in order to gain control of Alpart before the May 26 deadline for change of ownership runs out.

This move would effectively bar Russian Aluminium (RusAL), one of the world's leading aluminium producers, from acquiring Kaiser's stake in Alpart. The company accounts for 75 per cent of Russia's primary aluminium output and 10 per cent of the global primary aluminium output.

Kaiser currently owns a 65 per cent share in Alpart, the alumina refinery and bauxite mining venture based at Nain, St. Elizabeth. Hydro Aluminium owns the rest of the Alpart shares.

Last week, Hydro had indicated that it intended to exercise its pre-emptive rights to acquire Alpart as it stepped up its stake in the acquisition fray. On hearing the news, RusAL reacted immediately by filing an emergency motion with the U.S. Bankruptcy Court in Delaware for an order to stay Kaiser from selling to Hydro until RusAL's pending appeal against Hydro's pre-emptive rights is heard.

However, the acquisition battle is turning into a dogfight as insiders have indicated that RusAl is also willing to up its initial US$295 million offer.

"The committee of Kaiser's unsecured creditors are behind RusAl all the way," Norman DaCosta, vice-president and deputy island supervisor of the National Workers Union, said yesterday.

"The committee (members) were the ones who filed the motion in the U.S. bankruptcy court of Delaware to terminate the previous agreement with Glencore to sell the assets for US$165 million, and they are behind RusAl all the way."

A leading producer of fabricated aluminum products, alumina, and primary aluminum, Kaiser is attempting to reorganise its operations and emerge from Chapter 11 bankruptcy protection. In March, the U.S. Bankruptcy Court for the District of Delaware ordered that an auction be conducted to determine the winning bidder.

On April 20, 2004, at a Court approved auction in New York, RusAL emerged over Glencore as the successful bidder for Kaiser's stake in Alpart with a winning bid of US$295 million, which exceeded the expectations of most observers.

Two weeks ago, Steve Hodgson, RusAL's deputy general director, remarked in a meeting that 'Glencore had given its blessings to RusAL'.


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

www.kaiseral.com 5/24/04

In Today’s Court Hearing

The Court approved:

Recently signed agreements with two unions (PACE and the ICWU) concerning the modification of retiree benefits and the replacement of those benefits with medical coverage under COBRA or under a newly formed Voluntary Employee Beneficiary Association (VEBA).
Recent modifications to the previously approved retiree benefit agreements with the USWA, IAM, and the Committee that represents salaried retirees. Generally, the modifications will result in modest monthly advances to the VEBA beginning in June 2004 and continuing until Kaiser’s emergence from reorganization, as more fully discussed in Kaiser’s Form 10-Q for the first quarter of 2004. Any funding provided under these terms will reduce the $36 million VEBA contribution that is to be paid at emergence, subject to certain conditions.
Kaiser Wins Extrusion Technology Award

The company’s fabricated products business, which will form the core of the restructured Kaiser Aluminum, continues to demonstrate leadership in application engineering. In the most recent example of this, Kaiser received first prize in the Transportation category of the ET Foundation’s International Aluminum Extrusion Design Competition. The award was announced on May 19 at the Eighth International Aluminum Extrusion Technology Seminar and Exposition in Orlando, Florida. The competition honors original and innovative ideas by design and manufacturing professionals and students from around the world. Kaiser received the prize for its work on an aluminum extruded automotive suspension link for a limousine manufactured by one of the big-three automakers. The component has higher tensile strength, better fatigue properties, equivalent or improved durability performance, and overall lower cost than the steel component it replaced. The new suspension link also offers the customary benefits of aluminum: corrosion resistance, high strength-to-weight ratio, low tooling costs, and the ability to meet demanding tolerances and complex shape requirements. Congratulations go to the team at Kaiser’s London, Ontario, plant.

Liquidity

As I reported in my update letter of May 18, the company’s recent liquidity continues to be adequate.

Jack A. Hockema
President and Chief Executive Officer


Alcoa inks smelter deal in Trinidad

CBS MarketWatch: 10:03 AM ET May 24, 2004

By Michael Baron, CBS.MarketWatch.com

The Pittsburgh-based Dow component expects the project to cost more than $1 billion. The arrangement calls for the manufacture of a state-of-the-art, low emission smelter with a capacity of at least 250,000 metric tons per year in Trinidad.

Alcoa (AA: news, chart, profile) will take at least a 60 percent ownership stake in the smelter, with the government assuming the rest. Alcoa plans to take the lead in management and operation of the smelter, and it will have a right to 60 percent of the metal produced with the government having the rest with the commitment to make the metal available to downstream investors.

The parties now plan to work on finalization of the project plans with an eye towards a definitive agreement and final investment decision by early 2005. Alcoa and the government would each fund their proportional share of the investment.

Alcoa estimates the smelter would permanently employ about 575 people upon completion.

Alcoa stock rose 87 cents, or 3 percent, to $30.35.

Michael Baron is a reporter for CBS.MarketWatch.com based in New York.


Brazil's CVRD Deepens Ties, Signs New Accords With China

DOW JONES NEWSWIRES Tuesday May 25, 6:46 AM

By Andrea Welsh

SAO PAULO (Dow Jones)--Brazilian mining company CVRD, or Companhia Vale do Rio Doce SA (RIO), signed a fresh round of accords with Chinese clients Monday, advancing its strategy to forge long-term relationships with buyers for its iron ore and bauxite output.

For months, big Chinese steelmakers like Shanghai Baosteel Group and China Steel Corporation have been signing long-term delivery contracts to buy CVRD's iron ore, which, along with coal, is a main ingredient for making steel. But CVRD took matters one step further Monday, inking framework agreements to develop billion-dollar joint ventures with Chinese partners while on a trade mission in Beijing led by Brazil's President Luiz Inacio Lula da Silva.

Brazil, a major exporter of commodities ranging from metals like iron ore and steel to agricultural products like soy and beef, is eager to win clients in China's huge market, especially at a time when China's fast-growing economy is lifting commodity prices around the world.

CVRD, as the world's biggest exporter of iron ore, has been especially adept at taking advantage of booming Chinese demand to cement long-term relationships with international clients and even develop mining operations overseas.

Perhaps the most immediately significant accord CVRD signed Monday was a framework agreement to build a $1 billion alumina refinery in Northeastern Brazil with the Aluminum Corporation of China Ltd. (ACH), or Chalco, the largest alumina and aluminum producer in China.

Chalco joins a host of global aluminum titans trying to stake claims to South American and Caribbean bauxite deposits, as limited supplies and strong demand boost prices along the aluminum product chain. Bauxite is used to make alumina, a white powder that is then used to make primary aluminum. Relatively low energy costs make Latin America an attractive place to operate.

For CVRD, the Chalco agreement means it finally has the guaranteed client it needs to further develop its aluminum business, part of a long-term goal to diversify its mining base. The company's aluminum business currently accounts for just under 15% of revenue compared with more than 70% for iron.

"The agreement with Chalco was the missing link," said Marcelo Kayath, an analyst with CSFB in Sao Paulo. "CVRD has gigantic bauxite reserves in Northern Brazil and it needs to find a secure outlet."

CVRD and Chalco hope to bring their shared ABC Alumina refinery online in 2007 at a start-up capacity of 1.8 million metric tons of alumina per year, a spokeswoman for CVRD said. The plant could later be expanded to a capacity of up to 7.2 millions tons of alumina per year.

Meantime, CVRD strengthened its already close ties Monday with Baosteel, the biggest steelmaker in China. The pair inked an accord to jointly produce hard anthracite coal in the Hunan Province along with China's Yongcheng Coal & Electricity Group. CVRD would bring its share of the coal back to Brazil and sell it to local iron ore clients.

If the project goes forward, it will mark CVRD's entry into the coal mining business and also deepen a relationship with Baosteel that already involves plans to build a shared $1.5 billion steel slab plant on the Northeastern Coast of Brazil.

Meantime, Chief Executive Roger Agnelli said in Beijing Sunday that CVRD and Baosteel also plan to sign a framework agreement to build a $1.5 billion lead plant in Brazil.

Shipping ore from Brazil to China is far more costly than shipping from some other big minerals producers like Australia. However, the idea of producing intermediary products locally - refining bauxite to alumina and iron ore to steel slabs - seems to be extremely appealing to Chinese companies. Brazil's richest iron ore and bauxite deposits are located on the edge of the Amazon near the state of Para, just a train ride from ports along the Northeastern Coast. Those ports, in turn, are just a few days by boat from the Panama Canal.

The ABC Refinery being planned by CVRD and China's Chalco would be built in Para, not far from CVRD's existing Alunorte alumina refinery. CVRD is expanding Alunorte and already mines bauxite at the jointly owned Mineracao Rio do Norte, or MRN, property in western Para and plans to start extracting more from its new Paragominas mine in late 2006. The Brazilian miner also forged a relationship with Guyana's Aroaima Mining Company in March, agreeing to buy bauxite from the state company and participate in studies aimed at increasing its bauxite output.

The ABC alumina refinery would cost an estimated $1 billion in initial investment. That would cover building costs for the refinery itself as well as transportation infrastructure needed to carry bauxite to the plant and alumina to port, said a CVRD spokeswoman.

CVRD should have no trouble keeping electricity costs down after signing a power supply contract with Brazil's Eletronorte a month ago, according to CSFB's Kayath. Rising energy costs led the world's biggest aluminum company, Alcoa Inc. (AA), to drop plans to build a new Brazilian aluminum smelter earlier this year. Alcoa is now planning to build a $1 billion smelter just to the north of Brazil in Trinidad.

- By Andrea Welsh, Dow Jones Newswires; 5511.3145.1481; andrea.welsh@dowjones.com


Eletronorte wins Brazil Alumar power deal - Alcoa

Reuters, 05.24.04, 4:23 PM ET

RIO DE JANEIRO, Brazil, May 24 (Reuters) - State-owned energy utility Eletronorte won a contract to supply the Alumar aluminum smelter in northeast Brazil with electricity to the end of 2024, an Alcoa Inc. (nyse: AA - news - people) official said on Monday.

The official said that the contact was announced by Alcoa on Friday at its U.S.-based headquarters in Pittsburgh.

The world's biggest aluminum producer said that Eletronorte, part of federal power holding Eletrobras <ELET6.SA>, will supply electric power to the 370,000 tonnes a year Alumar smelter at Sao Luis in Maranhao state.

Alumar is 54 percent owned by Alcoa, with BHP Billiton Ltd/Plc <BHP.AX><BLT.L> owning the balance.

"In addition to supplying the Alumar facility, the new contract will place Alcoa in a position to consider its future expansion opportunities in Brazil," Alcoa said in the statement.

Alcoa did not release pricing details, saying only that the contract will be finalised in coming weeks.

Early this month, Eletronorte won a 7.5 billion reais ($2.5 billion) contract to supply electricity for 20 years to aluminum producer Albras, a subsidiary of Companhia Vale do Rio Doce <VALE5.SA> (nyse: RIO - news - people).

Albras, which is 49 percent owned by Japanese consortium Nippon Aluminum Company, produced 440,000 tonnes of primary aluminum in 2003.

Copyright 2004, Reuters News Service


Iran, Germany to Boost Cooperation in Aluminum Sector

Merh News Agency, Iran

TEHRAN May 24 (MNA) -– The Director General of the German Fitz Company met with Mines and Industries Minister Es’haq Jahangiri. In the meeting, the two sides investigated the possible routes to boost mining cooperation between Iran and the German company.
They discussed the establishment of a power plant in Iran and ways to expedite the Almahdi Aluminum Project currently under way in Bandar Abbas Province. The mines and industries ministry will support Fitz Company to accelerate the development of this project.

Commenting on the achievements of Fitz Company in Iran, Jahangiri said that in the Fourth Five-Year Development Plan financing has been projected for the expansion of industrial sectors including the aluminum industry. Fitz Company would have an opportunity to buy shares in Iran’s aluminum industry sector.

The Fitz Company Director General explained his company’s objectives and potential for expanding mining cooperation with Iran. Low energy prices and a cheap labor force are among the major advantages that will guarantee the success of the Almahdi Aluminum Project he concluded



China cuts aluminum smelting capacity by 5.71 pct

http://www.afxpress.com Wednesday, May 26, 2004


BEIJING (AFX-ASIA) - China shut down 5.71 pct of the country's aluminum smelting capacity in the first four months of this year as part of efforts to contain over-investment in the red-hot sector, the South China Morning Post reported, citing an official from Aluminium Corp of China Ltd (Chalco)

The Hong Kong-based newspaper quoted Liu Qiang, company secretary for Chalco, as saying that 400,000 tons of aluminum production capacity based on outdated and polluting technology had been shut down

An additional 800,000 to 900,000 tons of capacity based on the same technology remains in the market but is expected to be closed in two years, Liu told investors during a teleconference. China had aluminum capacity of about 7 mln tons at the end of last year, Liu added

However, Liu said up to 1 mln tons of new capacity based on the cleaner and more energy efficient "pre-baked cell" technology would come on stream in the next 18 months

Aluminum smelting is an energy-intensive industry. Power accounts for 35 pct of Chalco's aluminum operating costs, the paper said. Seventy pct of China's power is provided by coal and pollution has become a big problem. In an attempt to curb investment and improve the efficiency of the sector, banks have been told not to lend to small-scale, energy-inefficient aluminum projects that churn out low-quality products, the paper said

Promoters of new aluminum projects must now self-fund at least 35 pct of costs, up from 25 pct previously, the paper added. Liu said Chalco had lowered its projection of the mainland's aluminum production volume this year to less than 6.1 mln ton from 6.3 mln tons

She said China would still be short of domestic alumina supplies as demand was expected to be 13.1 mln tons this year, compared with domestic production of 6.5 mln tons, suggesting about 6.6 mln tons would need to be imported. "Based on the figures so far, we expect imports for the whole year to be about five million tons, which will be short of demand," she said. Liu said the government had not imposed measures to control the growth of alumina refining capacity. Chalco plans to expand its alumina refining capacity from last year's 5.95 m tons to 8.5 mln tons by the end of next year, the paper said. It plans to boost aluminum smelting capacity from last year's 850,000 tons to 1.33 mln tons by the end of next year, and will acquire 200,000 to 300,000 tons of smelting capacity from competitors, the paper added

allison.jackson@xinhuafinance.com amj/ng For more information and to contact AFX: www.afxnews.com and www.afxpress.com


RusAl ups offer for Alpart as bidding war heats up

Jamaica Observer, Jamaica Wednesday, May 26, 2004

Observer Business Reporter

Russian Aluminium (RusAl) yesterday announced a US$21.2-million or a seven per cent hike on its original US$295 million offer for Kaiser's 65 per cent stake in Alpart, the Nain, St Elizabeth-based alumina refinery.

RusAl's decision followed Monday's decision by Norwegian company, Norsk Hydro, which holds 35 per cent of Alpart, to exercise its pre-eventive right to purchase, a move that would have scuttled Kaiser's decision to sell to the Russian firm.

Kaiser, seeking to emerge from Chapter 11 bankruptcy protection, has been selling off assets and last week agreed to the sale of its 49 per cent stake in the St Ann-based Kaiser Jamaica Bauxite Company, in which the Jamaican government is its partner.

RusAl, which has been aggressively expanding internationally, had in addition to its offer for the Kaiser stake in the refinery, agreed to pay another US$11.2 million in lieu of forward selling arrangements of alumina.

But Norsk Hydro joined the fray with a bid of US$316 million, under an arrangement in which it would sell its acquisition to Glencore, the firm that two years ago bought Alcan's two alumina refineries in Jamaica.

The issue is now before the US bankruptcy court in Delaware.

Norsk Hydro said it has decided to sell to Glencore because the agreement would allow for improved operations and cost synergies through the optimisation of bauxite reserves between Alpart and its West Indies Alumina Co (Windalco) plants at Kirkvine and Ewarton.

These plants have a combined capacity of 1.25 million tonnes, roughly equivalent to Alpart's.


Prospects look good for aluminium industry

Jamaica Observer, Jamaica Wednesday, May 26, 2004

Dennis Morrison

There are strong indications that in the last six to nine months the world aluminium industry has been gathering momentum, as reflected in the prices of aluminium and alumina. Many people would be aware by now that the economic boom in China is a major factor, driving commodity markets for oil, but would be less aware of the impact on the aluminium industry. The fact is, however, that China has emerged in the last couple years as not only the fastest growing market for aluminium, but has virtually outstripped the USA as the world's leading producer and consumer. Its massive infrastructure development programme that has been spiked by the preparations for the 2008 World Olympics has pushed that country to breakneck speed in terms of its appetite for aluminium.

Available data also shows that the rest of the world is picking up speed as well, with Japan appearing to be on its way out of a decade and a half of economic recession. The US economy is at last seeing increased activity in its manufacturing sector, which will eventually boost aluminium consumption in that country. And since the USA, Japan and Europe are closely linked as growth poles of the world economy, we can expect that Europe will see an upturn in economic activity before long. The common threat, of course, is the continuing increase in the price of oil, which could spark inflationary pressures and retard economic expansion.

For the foreseeable future, it does appear that the aluminium industry will remain buoyant, giving Jamaica an opportunity to revitalise and modernise the local bauxite industry to make it more competitive for the long term. Movement in this direction is already evident and the news of the strong competition for Kaiser's share of the Alpart alumina plant is indicative of the strengthening of the world industry that has taken place since the second half of 2003. It was not too long ago that that plant was seen as being in the category of least attractive facilities among the world's alumina plants, despite the scope that it has for being expanded at costs that would give a good return on investment. With the prospect of a new owner who will have a stronger financial position than Kaiser, there is now the opportunity for its modernisation, especially in energy use, and expansion. This was my position last year when the news came of Kaiser's intention to sell its stake in the plant and, given the turnaround in the world industry, I am more convinced of that position at this stage.

Even as the negotiations have been going on for the sale of Kaiser's share of Alpart, the local industry has been gathering pace in terms of both investment and production.
Last year was a record year for alumina output and for investment and that momentum has continued into the new year. For the first four months, alumina output went up by 11.8 per cent, while total bauxite production increased by 10.5 per cent, so that we are on course for another record year. This is taking place the same time that prices are improving. More production capacity is urgently needed, locally and internationally, as alumina plants are running at record high levels of capacity utilisation. In Jamaica, we achieved operating rates at our alumina plants of 100 per cent for the first four months, and no slackening is in sight.

In this regard, the new US $690-million JAMALCO expansion cannot happen too early, and the attitude of the investors would have been buoyed by the fact that the recent 250,000-tonne expansion at the plant was completed on time and within budget. As has been pointed out by the prime minister and the minister of development, preparations are under way for the requisite environmental and bauxite reserves issues to be dealt with expeditiously. When completed, that investment will further modernise the Jamalco plant and put it among the top ranks of world alumina facilities. Together with what the new owners at Alpart are likely to do to enhance that plant, this expansion will do much to strengthen the local industry, but it is essential that we use the earnings wisely this time around, as emphasised by the cabinet secretary.

The other major foreign exchange-earning industry, tourism, is also showing strong momentum, having recorded growth of 7 per cent in stop-over visitor arrivals in the first quarter of the year, an increase of nearly 18 per cent for the month of April, and growth of 7.8 per cent for the first three weeks of May. What the PIOJ is seeing as buoyant conditions in the distribution sector is, no doubt, being stimulated by these increased visitor arrivals. Expectations are that we will have a strong performance up to the end of August, laying the basis for another good year, if marketing and promotion activity is properly funded. At least from these two industries the prospects are very encouraging, and it should be possible for us to exceed growth of over three per cent this calendar year, barring any external or internal shocks.


Hydro Seeks Improved Operations and Cost Synergies in Jamaican Alumina-deal

PR Newswire (press release)

OSLO, Norway, May 25 /PRNewswire-FirstCall/ -- Hydro has today decided to exercise its right to acquire a 65 per cent interest in the Jamaican alumina refinery Alpart and sell this interest on to Switzerland based Glencore AG in a deal that will enhance value creation through improved operations and cost synergies.
As a part of its chapter 11 reorganisation, Kaiser has entered into an agreement to sell its 65 per cent interest in Alpart to the Russian company RUSAL. According to the Alpart Partnership agreement, Hydro has the right of first refusal on this transaction. Hydro has today decided to exercise this right. Simultaneously Hydro has agreed to sell this interest on to Glencore on identical terms and conditions. This transaction will not generate any accounting gain or loss for Hydro. Hydro has held 35 per cent of Alpart since the late 1980's, and Hydro's annual off-take is approximately 550,000 tonnes of alumina.
In terms of the agreement with Glencore, Alpart will change from being operated by a managing partner, to having an independent management. This will enhance management focus and contribute to strengthen the recent positive trends in Alpart. Both owners will be active participants in the Board of Directors.
Furthermore the agreement contemplates an optimisation of bauxite reserves between Alpart and Windalco, an alumina refining company in Jamaica, 93 per cent owned by Glencore. The balance, seven per cent, is held by the Government of Jamaica.
Hydro and Glencore have also entered into a Memorandum of Understanding, committing the parties to explore the possibility of a closer cooperation and utilisation of synergies between Alpart and Windalco. Windalco has an annual production of approximately 1.25 million tonnes of alumina.
Any optimisation of bauxite mining activities, as well as the changes in ownership in Alpart, will be subject to approval by the Jamaican government.
"Hydro believes the agreement with Glencore holds a strong industrial logic that will create value for the companies involved and enhance the position of the Jamaican bauxite and alumina industry," says Jon-Harald Nilsen, Executive Vice President of Hydro and head of the company's aluminium operations.
Alumina is the key raw material for the production of primary aluminium. In addition to Alpart, Hydro holds a 34 per cent interest in the Brazilian alumina refinery Alunorte which after the completion of the ongoing expansion will give Hydro the right to an off-take of approximately 1.4 million tonnes of alumina.
Hydro last year had a production of 1,470,000 tonnes of primary aluminium in its seven fully owned and five part owned plants in Europe, Australia and Canada. Approximately. 3 mill.tonnes of alumina is needed for the production of this metal volume. The primary production volume will over the next few years increase due to completion of expansion projects in Norway and Canada.


Alcoa Wants a Stake in RusAl’s Prime-Alum

MOSNEWS, Russia - May 21, 2004

The major international aluminium manufacturer Alcoa Inc intends to acquire a stake in Prime-Alum, a wholly owned subsidiary of Russia’s largest aluminium producer Russian Aluminium (RusAl).

RusAl established Prime-Alum on May 14. The company’s charter capital is set at 7.519 billion rubles ($259 million). Prime-Alum will focus on production of aluminium semi-finished products and profiles. Alcoa submitted a request to acquire a stake in the new company on the same day as it was established. The international major is also interested in a stake in Samara Metallurgical Plant which is also a part of RusAl. Additionally, as MosNews reported, on May 6 Alcoa agreed to buy two Russian smelters from RusAl. The deal highlighted RusAl’s intention to focus on upstream production and Alcoa’s strategy to increase its worldwide presence.

Alcoa is the world’s leading producer of primary aluminium, fabricated aluminium and alumina. The company accounts for 25 percent of the world’s market of primary aluminium and for 40 percent of the market of aluminium silicates. The company supplies materials to the defense and aerospace industries.

RusAl accounts for 75 percent of Russia’s primary aluminium output and for 10 percent of global primary aluminium output. Basic Element holding headed by RusAl CEO Oleg Deripaska holds a 75 percent stake in RusAl. The remaining 25 percent of shares belong to the companies controlled by business tycoon Roman Abramovich.



Alcan: Justice Dept. OKs Spin-Off Plan

Springfield News Sun, OH May 26, 2004

MONTREAL (AP)--Aluminum producer Alcan Inc. said the U.S. Department of Justice approved Alcan's plan to spin off its rolling operations as an alternative to divesting a West Virginia plant to avoid antitrust violations.

Alcan last year agreed to separate its competing businesses in order to acquire French aluminum company Pechiney for $4.7 billion. The company was ordered to divest a rolling mill in Ravenswood, W.Va., as part of the merger, but last week proposed the spin-off as a solution.

The company also agreed with the European Commission to separate ownership and control of rolling facilities in Europe, and said the amended plan satisfies that agreement as well.

The Department of Justice filed an amended judgment in federal court. Alcan has 180 days to divest the West Virginia plant or complete the separation of its businesses.

Shares of Alcan fell 30 cents to $39.50 during late-afternoon trading on the New York Stock Exchange.


Kaiser dumped PCBs in river in 2002.

Spokesman-Review May 26, 2004

Nearly 11 pounds of toxins released from Trentwood plant, records show.


Karen Dorn Steele Staff writer

Kaiser Aluminum & Chemical Corp.'s Trentwood plant violated its state discharge permit in 2002 by discharging nearly 11 pounds of dangerous PCBs to the Spokane River – already the most PCB-polluted river in the state.

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

PCBs are banned industrial chemicals that accumulate in the tis
sues of fish. They are a suspected human carcinogen and can also cause chloracne, jaundice and liver damage in high doses.

The recent PCB discharges, which had not been made public before, are summarized in a March 17, 2004, inspection report obtained from the Washington Department of Ecology under the state Open Public Records Act. Kaiser's state discharge permit allows no PCBs to be released to the river.

The state didn't receive a report about the five days of violations in 2002 from Kaiser for several months after they occurred, said Ecology spokeswoman Jani Gilbert. Ecology is investigating the cause of the releases and is considering enforcement action of up to $10,000 per violation. If the U.S. Environmental Protection Agency gets involved, the fines could be more than double that, she added.

Patrick Blau, Kaiser Trentwood's environmental manager who met with Ecology inspectors in March, said he hadn't seen their inspection report and couldn't discuss it. “Corporate policy is to direct the media to the PR folks in Houston,” Blau said.

“We had a (PCB) spike in December 2002 – we reported that. Subsequent to that, we have been in compliance with our permits,” said Kaiser spokesman Scott Lamb. He declined further comment about the PCB discharges on the advice of Kaiser's attorneys.

Kaiser no longer stores or uses PCBs at Trentwood. It has cleaned up PCB contamination in its casting and remelt areas and has relined its sewage treatment lagoon. But the ongoing PCB contamination remains a touchy issue for the company.

On April 3, a corporate memo from Kaiser's Houston headquarters was posted at the Trentwood rolling mill, warning plant workers to talk to a company lawyer before answering any outside investigators' questions about environmental contamination.

Edward Houff, Kaiser's general counsel in Houston, said in the memo that the company had learned that “one or more” agencies were investigating its environmental operations.

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

A February 2004 Kaiser report shows some of the site's groundwater samples are contaminated by PCBs at twice the state cleanup standard.

Ecology's March 2004 inspection report sheds new light on ongoing PCB problems in the effluent collection system at the aluminum factory.

During their inspection, Ecology investigators zeroed in on “extremely high effluent PCB values” documented from the fall of 2002 to the spring of 2003. The report says Kaiser's Blau had proprietary company data and charts the state hadn't seen. The charts showed large jumps in PCB concentrations in “004 south,” an outfall pipe to a wastewater treatment lagoon that contains cooling water from rolled aluminum products and storm water, the report says.

In the report, Ecology inspector Ken Merrill said he requested a copy of the PCB data for the outfall pipes. Blau replied that he wasn't authorized to give the information to the state inspectors. Blau also said he'd documented high PCB levels near manhole No. 20 on the site.

When the inspectors asked whether Kaiser had taken additional steps to control PCBs from the outfall, Blau said “there had been no further clean-up attempt of 004 per corporate directions,” according to the inspection report.

Federal limits for toxic discharges from the end of an industrial pipe call for no more than 170 picograms per liter of PCBs – a minuscule amount – to be discharged to a river in an industrial “mixing zone” which further dilutes the chemicals. A picogram is a trillionth of a gram.

Kaiser's worst 2002 permit violations came from outfall 001, a pipe in the Spokane River. On five occasions in 2002, PCBs ranged from 2.3 million picograms per liter to more than 48 million. The Dec. 16 discharge alone put 6.8 pounds of PCBs into the river.

The high PCB discharges would have been more worrisome in the summer, but they came in the winter when people weren't swimming or fishing in the river near Kaiser, Gilbert said.

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

Ecology monitored some Kaiser effluents to the river from 1994 to 2001. They show loads to the river between 0 and 2.3 grams of PCBs per day. Ecology is conducting a cleanup plan, called a Total Maximum Daily Load, for PCBs in the Spokane River.

Historic sources of PCBs include Kaiser, the Spokane Industrial Park, Inland Empire Paper Co. and the Liberty Lake and Spokane wastewater treatment plants.


Alcoa, aluminum and allegiances

The Globe and Mail, Canada Wednesday, May 26, 2004 - Page B2

By KONRAD YAKABUSKI

For three months until mid-May, the city of Pittsburgh was the site of an unprecedented celebration of Quebec culture. The best of the province's ballet, modern dance, chamber music, circus acts and cinema graced the marquees of the city's cultural venues. For 12 weeks, Steeltown got a taste of style Québécois.

The Quebec Festival was made possible, as the saying goes, through the generous support of Pittsburgh-based Alcoa. It seems awfully nice of the world's largest producer of primary aluminum to have subsidized an otherwise commercially unviable venture. But then again, it was the least the company -- which chalked up a $938-million (U.S.) profit in 2003 -- could do considering the subsidies it is seeking in return for another venture of dubious viability.

Alcoa and the Quebec Liberal government are days away from a make-or-break decision on the future of the huge Baie-Comeau aluminum smelter. The previous Parti Québécois administration, after losing a by-election in the region in 2002, had agreed last year to grant Alcoa a $170-million (Canadian) interest-free loan, a stable supply of 175 megawatts of essentially below-cost electricity, and a 10-year holiday from provincial taxes.

In exchange, Alcoa was to spend $1.1-billion to upgrade the smelter's oldest phases -- which are technologically backward and date from the late fifties -- and expand the facility's overall capacity by a quarter to about 550,000 tonnes of primary aluminum annually. The government aid package was estimated at $100,000 annually for each job maintained over a 10-year period. Of course, the modernization, once completed in 2009, would improve productivity, rendering 250 of the smelter's 1,726 workers redundant. But without it, the plant would be further doomed.

This is the unsavoury situation Jean Charest's government faced last year when it came to power promising an end to the interventionism-as-extreme-sport of its predecessors, Péquiste and Liberal alike. How could it make good on that pledge when the province's entire industrial development apparatus had been built on the notion that the state had not only a role, but a central role, to play in fostering economic growth? There was bound to be a heck of a lot of institutional resistance to a newcomer suggesting the industrial policy wonks inside the bureaucracy had it wrong.

Mr. Charest's first step was courageous. He told Alcoa to take a hike and, when it was ready, to come back to the bargaining table with a more realistic proposition for upgrading the Baie-Comeau facility and expanding another Alcoa smelter in Deschambault. In regard to the latter project, the PQ under Bernard Landry had promised Alcoa a $260-million interest-free loan, 500 MW of cheap power and yet another tax holiday in exchange for a doubling of the plant's capacity by 2013.

Alcoa responded in January by suspending work on the Baie-Comeau upgrade. "We can't put money into a significant project like this without having some certainty as to what the actual project will be," an Alcoa spokesman said.

The Charest government's resolve has seemed to soften as quickly as its support in the polls. When 20,000 people signed a petition this month summoning the government to strike a deal with Alcoa, the die was all but cast.

Last week, the Charest government tabled a new offer: a $100-million (U.S.) interest-free loan and a guaranteed supply of low-cost electricity for 50 years with rates rising no more than the rate of inflation.

The government is asking in return that Alcoa create 500 jobs in Quebec in a value-added area, such as an aluminum parts factory. The deal still works out to about $60,000 a year for every job saved over the decade. And that's without mentioning the coming talks on Deschambault.

What's more, the government is offering to provide electricity Quebec hasn't got at prices it can't afford to charge. Hydro-Québec will be a net importer of power this year, and for at least a few years to come, until new capacity is operational. Those new power plants, whether hydro or natural gas-fired, will produce electricity at least twice the cost of 3.6 cents (Canadian) per kilowatt-hour that the government is offering to charge Alcoa. Quebec consumers will pay for the difference through higher hydro bills.

What's clear in all of this is that the Quebec government, despite last year's changing of the guard, is clinging to an outdated notion that Hydro-Québec can be used to lure power-addicted aluminum smelters to the province. And it continues to buckle under the "blackmail of these energy thieves," as Le Devoir editorialist Jean-Robert Sansfaçon recently put it.

Alcoa would be crazy to refuse the government's latest offer. But in the name of economic sanity, Mr. Charest should at least secretly hope it does.

konrad@sympatico.ca


RusAl to Keep Fighting for Jamaican Plant

MOSNEWS, Russia 26.05.2004 14:27

Russia’s largest aluminium producer RusAl found itself facing an obstacle which may prevent it from purchasing a 65-percent stake in the Jamaican alumina plant Alpart. The shares went up for sale earlier this year when Kaiser Aluminium, one of two Alpart owners, was declared bankrupt.

The creditors announced an auction for the shares, and the Russian company took part offering $295 million for the stake. RusAl competed for Alpart shares with Swiss Glencore International, but easily won, because Glencore offered only $160 million for the stake.

Later the price offered by RusAl went up to $306.2 million because the Russian aluminium producer offered to buy out obligations for 50,000 tons of alumina that Alpart was supposed to supply to its customers. On April 26 Bankruptcy Court of Delaware approved the deal between RusAl and Kaiser Aluminium about the sale of 65 percent of Alpart shares for $306.2 million. The deal could not be called complete, though, because for a month after the approval Alpart’s second owner Norwegian Norsk Hydro, which holds a 35 percent stake could use its priority right for the purchase of remaining shares.

Yesterday Norsk Hydro announced its intention to use this right and to buy 65 percent of Alpart’s shares for a price that was approved by the court. Right after the purchase Norsk plans to sell the shares to Glencore International.

However RusAl already announced that it won’t give up on the deal. The Russian company said that it is ready to up the price by another $10 million addressed both Kaiser Aluminium and the company’s creditors with this new offer. RusAl hopes that the creditors and the Bankruptcy Court will support its claim, because in the end the higher price for Alpart stake is in the interest of the creditors.

The experts, questioned by Vedomosti business daily said that the final price for the stake in Jamaican alumina plant may go up to $400 million or even exceed this figure. But even in this case RusAl is likely to pursue the deal, because currently Alpart is the only alumina plant up for sale, the company is facing a shortage of alumina, and the world prices for this raw material are very high.


Jinxed NALCO not to be privatised: Soren

The Hindu, India

New Delhi, May 26. (PTI): Reflecting the anti-privatisation stance of the United Progressive Alliance (UPA), the new Coal and Mines Minister Shibu Soren, today said a 'firm no' to the privatisation of aluminium major NALCO.

"There is no need for the privatisation of NALCO as everything is working properly," Soren told PTI in an interview.

Asked whether he would reverse the decision of the previous NDA Government to privatise the profit-making company, the Minister said "jab sarkar hi wapas ho gai hai toh ab kya wapas karne ke liye rah gaya hai (when the government has been voted out than what was left)," he said.

The policy of the previous government to sell out the profit-making units were not in good taste and the wrong policies have to be stopped, he said.

"To destroy or sell result-oriented units was not a good thing to happen," the JMM supremo said.

The NDA Government had in 2002 decided to privatise NALCO by disinvesting 60 per cent stake which faced stiff opposition from Orissa Chief Minister Naveen Patnaik.

Following the resentment, former Prime Minister Atal Bihari Vajpayee, decided against pursuing the sale of the PSU.



Kaiser debtors seek to reopen auction for Alpart

Reuters Thu May 27, 2004 06:09 PM ET

By Carole Vaporean

NEW YORK, May 27 (Reuters) - Kaiser Aluminum Corp.'s (KLUCQ.OB: Quote, Profile, Research) debtors filed a motion in U.S. bankruptcy court for the District of Delaware on Thursday to reopen the auction process for the Alpart alumina plant in Jamaica, according to court documents.

The emergency motion asks the court to set aside its April 26 sale order for Alpart and to reopen the auction at a June 1 hearing already scheduled on the case or by June 4 at the latest. The motion said the creditors believe the highest price for the assets has not yet been achieved.

As part of its plan to emerge from bankruptcy, Kaiser has been selling off some assets, including the 1.5 million tonne per year Alpart alumina mine and refinery, a plant that supplies the key raw material for aluminium production.

Houston-based Kaiser filed for Chapter 11 bankruptcy protection in February 2002. A Kaiser spokesman said the company offered no further comment on the latest legal development beyond the court papers.

On Tuesday, Norway's Norsk Hydro (NHY.OL: Quote, Profile, Research) , the world's third biggest integrated aluminium group, blocked Russian aluminum giant RUSAL's plan to take control of the Jamaican alumina facility, saying it would exercise its right to the 65 percent stake owned by Kaiser and resell it to Swiss metals trader Glencore AG.

The debtors said on Thursday that they were asking for consideration on an emergency basis because they must enter a purchase agreement with Norsk Hydro by June 9, as part of the terms of Hydro's right of first refusal to buy the remaining stake in Alpart.

On April 26, the bankruptcy court authorized Kaiser's creditors to enter an agreement to sell their interests in Alumina Partners of Jamaica, or Alpart, to Rusal through RUAL Trade Limited.

Rusal had sweetened its bid for Alpart on Tuesday by $10 million to $316.2 million.

Later that day, Norsk Hydro said it would pay $295 million plus an a additional $11.2 million after contract adjustments.

The Norwegian energy and metals group owns 35 percent of Alpart, and said it was entitled by a partnership with co-owner Kaiser Aluminium to intervene in any change of ownership by matching an outsider's bid.

Rusal then filed a motion with a U.S. court to halt the sale to Norsk Hydro pending a challenge of the original right of first refusal.

The debtors motion filed On Thursday asked the court to set aside the April 26 sale order to RUAL and to open the auction process again for Alpart assets.

Because the debtors had originally entered an agreement to sell Alpart to Glencore, Thursday's motion argued that Hydro's agreement to resell the alumina facility to Glencore gave the appearance that the highest bid was not reached and that Glencore would have matched the winning bid at auction.


© Reuters 2004. All Rights Reserved.


Court gives Alcan option of keeping West Virginia plant

WSTM-TV, NY 5/27/04 4:48 p.m.

(Charleston, West Virginia-AP) -- Alcan Incorporated will be allowed to keep an aluminum rolling mill in West Virginia if it gives up plants in Fairmont and Oswego, New York.
A federal judge in Washington D-C has confirmed an agreement between the Montreal-based aluminum company and the U-S Justice Department.
When Alcan bought French aluminum producer Pechiney (PESH'-ihn-nay) in 2003, it ended up with more than 40 percent of the brazing sheet market. Since Pittsburgh-based Alcoa controls a similar amount, the two companies dominate the market.
Alcan was facing a federal antitrust order to sell the Ravenswood plant, which was part of Pechiney, to make the market more competitive.
Alcan has proposed putting its Fairmont and Oswego rolling mills into an independent company that would also include its European complex.
The Justice Department agrees that would keep the brazing sheet market viable.
(Copyright 2004 by The Associated Press. All Rights Reserved.)


FACTBOX-Recent expansions in global aluminium sector

Reuters, 05.27.04, 11:19 AM ET

LONDON, May 27 (Reuters) -

Russia's top aluminium producer RUSAL and a unit of Kazakh Eurasian Industrial Association (EIA) said on Thursday they plan to build an aluminium smelter and alumina refinery in Kazakhstan for $3 billion.

Construction of the 500,000 tonne smelter and the 1.5 million tonne refinery will start 1-1/2 years after the partners register their joint venture in the summer, although the exact location of the plants has yet to be decided.

The plan is believed to take advantage of higher aluminium prices on the London Metal Exchange (LME) and lower power costs in the energy-rich areas.

Major producers have been trying to raise output both for refined metal and raw materials, alumina and bauxite, since late last year, while Chinese producers have been considering cutting output or delaying expansion plans due to a combination of Beijing's restrictions on investment projects in the aluminium sector, rising raw material and energy prices and power shortages in the country.

Three-month LME aluminium hit an 8-1/2-year peak of $1,845 a tonne on April 20 on declining stocks and healthy demand amid a lack of major mine development in the past years.

Tight supplies and strong demand have also boosted prices of alumina to more than $500 per tonne this year from $160 in late 2002, sparking renewed interest in alumina projects.

Bauxite is an ore which is refined into alumina and then smelted into aluminium. Around two tonnes of alumina are required to produce a single tonne of aluminium.

Following are recent developments in the global aluminium sector;

May 27 - Russia's top aluminium producer RUSAL and a unit of Kazakh Eurasian Industrial Association (EIA) plan to build an aluminium smelter and alumina refinery in Kazakhstan for $3 billion.

May 24 - Alcoa Inc (nyse: AA - news - people), the world's top aluminium producer, plans to build a $1 billion aluminium smelter in Trinidad that will take advantage of the Caribbean island's natural gas reserves to produce the metal at a lower cost.

May 24 - Companhia Vale do Rio Doce <VALE3.SA> (CVRD) signed a framework agreement with Aluminium Corp of China Ltd. (Chalco) to build an alumina refinery in Brazil. CVRD said that the agreement will cost around $1 billion in an initial phase and produce 1.8 million tonnes a year of alumina when it opens, due in 2007.

May 13 - The world's top two aluminium producers, Alcan Inc <AL.TO> and Alcoa Inc said they had signed a memorandum of understanding to assess the feasibility of a 1.5 million-tonne a year alumina factory in Guinea, which could be up and running by early 2008.

May 12 - China's power-hungry aluminium smelters may close between 800,000 and 1.0 million tonnes of capacity this year, under pressure from increased power fees and the withdrawal of power subsidies, according to industry officials. Aluminium smelters had taken the brunt of higher power charges introduced from May 1 by a government keen to rein in breakneck expansion in a sector where capacity threatens to outstrip production by 1.8 million tonnes this year.

May 06 - An Alcoa-led joint venture said it was studying a $1.1 billion expansion of alumina output at its Australian Wagerup refinery, joining rival BHP Billiton Ltd Plc in upping production to keep pace with demand in China.

April 22 - United Arab Emirates (UAE) aluminium producer Dubai Aluminium (DUBAL) may expand smelter capacity beyond an announced 761,000 tonnes if necessary, a company official said. Earlier this week DUBAL announced it would expand capacity at the Jebel Ali smelter to 761,000 tonnes from 686,000. DUBAL had consistently added capacity since the smelter opened in 1979.

March 19 - Iran's state-run aluminium sector is targeting a 40 percent increase in production to 250,000 tonnes a year over the next 12 months as the first of many planned expansion schemes comes on stream, said Mostafa Badkoubei, communications director for state-owned Iran Aluminium Company. Blessed with cheap power resources from abundant oil and gas reserves, Iran is hoping to raise its primary aluminium output to one million tonnes a year by 2010.

March 5 - New York-based GAPCO (Guinea Aluminium Products Corp) Ltd is planning a 2.6 million tonne-per-year alumina refinery while Russian Aluminium (RusAl), the world's second biggest aluminium producer, is planning to build an alumina refinery, deep-water port and railway at the massive Dian-Dian bauxite deposit.

March 5 - Alcoa Inc hopes to more than double production of alumina at sites in Brazil and Jamaica in projects costing about $1.35 billion. Alcoa, responding to growing consumption of aluminum, whose uses run the gamut from cars to construction to aerospace, seeks to raise production capacity at two refineries by a total of about 3.4 million tonnes a year, Bernt Reitan, head of Alcoa 's primary metals business, said.

March 3 - Aluminum Corp of China Ltd's Pingguo plant has cut aluminium production by more than one-third because of power shortages in China's drought-stricken southwestern region of Guangxi, a plant official said. The Chalco official said the plant had closed more than 100 pots since December, out of nearly 300 pots installed in its sole aluminium smelter. The smelter produced almost 140,000 tonnes of aluminium last year, surpassing its design capacity of 125,000 tonnes per year, he said. It accounted for about 18 percent of Chalco's output in 2003.

Feb 27 - China has closed about 350,000 tonnes of aluminium capacity, covering 25 smelters, in the last four months, due to a severe shortage of power and raw materials, state-controlled Beijing Antaike Information Development said. But its capacity would still rise to nearly 9 million tonnes by end-2004 from 8.3 million tonnes at the end of 2003.

Feb 19 - Russia's second largest aluminium producer, SUAL, said it planned to build a second unit at its Kandalaksha smelter with an annual capacity of around 230,000 tonnes of aluminium and alloys per year. The plant, built in 1951 in the Murmansk region in the Arctic, produced 71,280 tonnes of aluminium last year. The new facility would have an estimated capacity of just under 300,000 tonnes per annum.

Jan 26 - Egypt Aluminium's plan to boost production by 50 percent to 300,000 tonnes a year is ahead of schedule by two years, an official at the plant's state holding company Metallurgical Industries said. Egypt Aluminium, the country's only primary aluminium producer, had planned to fully modernise its nine potlines by 2007, but that target has changed.

Copyright 2004, Reuters News Service


City of Stamps to Take Aluminum Companies to Court

KATV, AR - Thursday May 27, 2004 9:16am

Texarkana (AP) - A trial is to start June 14th in which the city of Stamps is suing three aluminum companies over lingering environmental concerns.

The city hopes to force the companies to clean up property the city says remains damaged from the now-defunct Red River Aluminum processing plant.

The city is seeking an order to compel Alcoa Incorporated, Alumax Incorporated and Reynolds Metal Company to clean up the site.

The city wants salt cake removed from the ground and groundwater filtered for impurities. The city also wants dilapidated buildings razed and equipment removed.

The aluminum plant closed in 1998 after failing repeatedly to comply with the federal Environmental Protection Agency's requirements.


Alcan reviews plans for Coega smelter

Business Report, Africa May 27, 2004

By Edward West

Cape Town - Alcan, the Canadian aluminium group, was reviewing the plans and costs associated with setting up a multibillion-rand aluminium smelter at the Coega harbour project and it anticipated making a decision towards the end of July, Joseph Singeman, the media spokesperson for the group, said yesterday.

He was interviewed after Alcan announced that it had signed a memorandum of understanding, in a joint venture with Alcoa World Alumina, to assess the feasibility of developing a 1.5 million ton a year alumina refinery in the Republic of Guinea, west Africa.

Alcan and Alcoa would undertake a detailed feasibility study to assess the various aspects of the project. This study is expected to be completed by mid-2005 and alumina production could be expected by early 2008.

Singeman said the possibility of developing this plant would not affect the assessment of the Coega plant, mainly because the plant in Guinea was an alumina refinery operation while the aluminium plant being developed in Coega was essentially being developed by Alcan's primary metals division. Alumina is used as a raw material for the envisaged smelter at Coega.


Vuyelwa Vika, spokesperson for the Coega Development Corporation, said talks between Alcan and the government about the smelter project were continuing.

Alcan operates in about 63 countries. It inherited the Coega project after its acquisition of French aluminium group Pechiney, which first mooted the project smelter near Port Elizabeth.
Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina, and is active in all major aspects of the industry.

One of the main reasons Alcan is considering a smelter at Coega is the availability of low-cost power and Eskom is planning a R2.3 billion upgrade of its electricity supply services to the proposed Coega industrial development zone (IDZ).

It emerged earlier this year that preliminary talks had also been held with Eskom about the feasibility of a gas-fired power station being built at the IDZ.

The last power station in the Eastern Cape, a coal-fired plant operated by the Port Elizabeth municipality, was mothballed more than a decade ago.


RusAl to Build Two Plants in Kazakhstan Worth $3Bln

MOSNEWS, Russia 27.05.2004 14:23

Russia’s largest aluminium producer RusAl and the Eurasian Financial-Industrial Company will build two plants in Kazakhstan worth $3 billion. One of the plants will be an aluminium smelter with a projected annual output capacity of 500,000 tons. The second plant will be an alumina refinery and its projected annual output capacity is estimated at 1.5 million tons.

To carry out the project RusAl will establish the Eurasian Aluminium Company. The company’s ownership structure will be joint stock and it will be registered in Kazakhstan. It is expected that RusAl and Eurasian Financial-Industrial will own equal shares in the new company.



Manning wants alumina plant for Guyana

Economic Times, India - May 26, 2004

By Curtis Williams

Two days after the signing of a Memorandum of Understanding for the construction of the country's first aluminium smelter, Prime Minister Patrick Manning yesterday told a breakfast meeting that the plant's capacity was likely to be doubled and that government wanted as a condition of further aluminium expansion the construction of an alumina plant in Guyana.

Manning told a breakfast meeting organised by the ruling PNM at Crowne Plaza Hotel that Trinidad and Tobago had taken a decision that it will not be importing bauxite for its aluminium plant and would only buy alumina. He said this effectively meant Guyana would be left out and only Jamaica and Suriname will benefit from the move as a result he wanted to encourage the construction of an alumina plant in the South American Caricom state.

"I said to the chairman of Alcoa that we see ourselves as having a responsibility for the Caribbean ...and we would like to put as a condition for aluminium expansion in Trinidad the construction of alumina facilities in Guyana and his answer was he will examine it," Manning told the breakfast seminar.

Manning said he had been assured by Alcoa's management that they will be willing to consider doubling the capacity of the proposed 250,000 metric tonnes per annum smelter plant if they can get additional cheap natural gas for electricity generation which is crucial for the competitive production of aluminium.

Manning who in the breakfast meeting was referred to as the "Energy Prime Minister" said he had spoken with the Chief Executive Officer of the BP group, Lord John Browne of Madingley who had assured him that BP will be willing to make available gas at a price which could accommodate an expanded aluminium smelter.

The Prime Minister said the MOU for the construction of the smelter was a significant point in the country's history and he praised the Express editorial for recognising its importance.

In a wide ranging address Manning told the breakfast that in the second quarter of next year two major energy companies were expected to drill a major well off the East coast.

Manning did not identify the companies but the Express has confirmed that they are EOG resources and BP.

Manning said it is believed that the field contains between 2.5 and 6 trillion cubic feet of natural gas and the well will cost in the vicinity of US $40 million to drill.

The Prime Minister also blasted the former UNC government for not utilising the Labidco Estate saying it had cost the country over half a billion dollars.
 


Ormet says work on Ohio River locks will force temporary shutdown

Associated Press Charlotte Observer (subscription), NC Fri, May. 28, 2004

WHEELING, W.Va. - Ormet Corp. said Friday it is closing a potline at one of its aluminum plants in Ohio for at least three months because of repair work at one of the nation's busiest inland locks.

The four potlines at the Hannibal, Ohio mill depend on daily shipments of alumina by barge from an Ormet plant in Burnside, La., the company said in a news release.

Those shipments will be disrupted when the U.S. Army Corps of Engineers halts traffic along the Ohio River for repairs to the McAlpine locks near Louisville, Ky. The shutdown is scheduled to last 14 days in August at the lock through which barges laden with more than 140,000 tons of commodities pass daily.

As a result of the shutdown, an estimated 130 hourly and salaried Ormet employees will be laid off for at least three months, said Laurie Leonard, director of corporate communications for Ormet.

The potline will be closed immediately in an attempt to stockpile alumina for the other three potlines before the river closure halts all shipments, Leonard said.

Ormet will decide whether to restart the potline once the river reopens.

A potline is the basic manufacturing unit of a metals plant, where the ore is melted at high temperatures so it can be poured into molds.


Alcoa In Alumina “Politrcks” In Ghana

GhanaWeb, Ghana Friday, 28 May 2004

The Government of Ghana has taken the bold and prudent decision to acquire the 90% shares in Valco offered by Kaiser Aluminum Corporation of the U.S.A. The news bulletin indicated that the government of Ghana has come into an agreement with Alcoa, the 10% shareholder in Valco, to operate the plant. Under the agreement it is anticipated that Alcoa will:
i) increase its shareholding in Valco and
ii) explore the possibility of developing the bauxite deposits in Ghana.

This deal must be the greatest news to Alcoa this year. Since the year 2001, Alcoa has idled/curtailed its production capacity by over 600,000 tons per year representing approximately 15% of its global plant capacity. The reasons for such a major policy decision of capacity curtailment are:

i) high energy costs
ii) high labour costs
iii) high environmental management costs
iv) high maintenance costs

The agreement with Alcoa may seem to indicate that the Company (Alcoa) was chosen as the natural ally because it is an existing shareholder. However, one may ask the first question: What are the benefits to be derived by Alcoa and the people of Ghana under the agreement?

ALCOA
i) market for alumina

ii) secured source of aluminium – including Ghana’s share

iii) subsidised power price for aluminium produced

iv) cheap offtake of the Valco shares off-loaded by Ghana

v) Management/Technology transfer fee

GHANA
i) re-engagement of about 1000 employees of Valco

ii) no freight cost on metal sold to the Aluworks factory

iii) development of Alumina Refinery that will use Ghana bauxite

The second question is: How sincere is Alcoa about ‘exploring the development of bauxite deposits in Ghana’?

It is recalled that Kaiser, when in disagreement with the government of Ghana over power price, also expressed a similar intention. Alcoa is the largest aluminium producing company in the world. The Company therefore employs top class geologists for its business who already know Ghana’s bauxite quality and the economics of developing an alumina refinery here compared to other countries with world class deposits. Alcoa, which acquired the 10% shares of Reynolds Metals in Valco some four (4) years ago, has also acquired deeper knowledge of the bauxite deposits in Ghana from the BASCOL Feasibility Report of 1975.

Notwithstanding all the information (BASCOL Report, etc.), Alcoa has carried out a Feasibility Report on the development of an Alumina Refinery in Guinea using its (Guinea’s) large, rich bauxite deposits.

Further to that, Alcoa has gone ahead (as is normal in the industry) to sign a Memorandum of Understanding (MOU) with Alcan – on 10th May,2004 -to develop 1.5million tons per annum Alumina Refinery in Guinea to process the bauxite deposits of that country. The International Finance Corporation (IFC) of the World Bank Group has been invited to participate in the new Guinea Alumina Refinery Project. The IFC will provide funds and ‘sanitise’ the country risk of Guinea.

Industry reports indicate that two-thirds (2/3) of alumina produced worldwide is consumed by the producers and/or their subsidiaries. Alcoa also supplies approximately 45% of the balance of alumina traded in the free market in the industry. Analysts are all in agreement that expanding an existing Alumina Refinery reduces the investment cost per ton of alumina by as much as 40%. For this reason, a completely new Alumina Refinery was last built in 1984. Increases in demand for alumina over the twenty(20) year period have been met exclusively by expansion in installed plant capacities. It is noteworthy that a new Refinery is under construction currently in Australia.

The third question which requires serious consideration is: ‘Why would Alcoa build a new Alumina Refinery in Ghana when:

i) the Company is developing a new one currently in Guinea?

ii) the global alumina plant capacity is limited by primary smelter demand?

iii) it can expand the Guinea project at 40% saving on investment cost?

iv) the Guinea bauxite deposits are the largest and richest in the world?

v) Guinea already has the technology and trained personnel to engage?

It does appear from the above that Alcoa’s motive for entering into the agreement with the government of Ghana is to create a market for its alumina currently traded in the market. In the medium-term and long-term, it would secure the market for the new Refinery to be built in Guinea. Ghana would then undergo the same frustration we went through with Kaiser in the past. For the benefit of the younger generation, Kaiser signed an agreement with Ghana in the 1960’s to build an Alumina Refinery (in Ghana) to feed the Valco smelter. But what happened is now history as the Company directly and indirectly frustrated such an investment simply because it supplied the Valco smelter with alumina from its plant in Jamaica.

One may want to know what our country stands to lose if the Alumina Refinery is not developed in Ghana.? Let me answer by giving some of the benefits that would be derived by the country from the development of an Alumina Refinery in Ghana:

i) Salt project development

ii) Caustic Soda production

iii) Plastic Granules production

iv) Cassava Starch production

v) Reconstruction/Rehabilitation of Tema/Accra-Kumasi–Nyinahin railway

vi) Titanium Dioxide production

vii) Direct employment of over 200,000 people

viii) Indirect employment of approximately 1(one) million people

ix) Taxes and Royalties

x) Foreign exchange generation of over US$300million per year.

xi) Contribute about 10% to the GDP

The fourth question is: ‘Should the country (Ghana) lose all these benefits and in addition subsidise the energy price (by approximately US$40million per year) for a large multinational like Alcoa?’

Let’s not forget that due to high energy cost in the USA, Alcoa has curtailed 15% of its global primary aluminium installed capacity.

It is my considered opinion that Alcoa as the Operator and/or Manager and/or majority shareholder of the Valco smelter, when acquired by the government of Ghana, would not be in the interest of our dear nation.

THE DEVELOPMENT OF AN ALUMINA REFINERY BASED ON GHANA BAUXITE DEPOSITS AT NYINAHIN AND KIBI WOULD THEN BE KILLED FOREVER.

Let us not push ourselves into the trap of Alcoa only to cry foul tomorrow. We will not be able to get out of the alumina “politricks” if we fall into the trap.

We should buy time and search for an appropriate partner who would develop the Alumina Refinery in Ghana. This is our time to develop an integrated aluminium industry in Ghana.

LONG LIVE GHANA OUR MOTHERLAND


George Abban,
Adelaide House,
London Bridge, EC4R 9HN
U.K.

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.

Source: Abban, George



Aluminium counters weather selling spree

Business Line, India Kolkata , May 28

Jayanta Mallick

THE aluminium counters today withstood the selling onslaught in the stock market. According to analysts, the steady LME prices for aluminium since March have provided strong clue to the earnings for the domestic outfits.

Dealers said that though there had been a general scramble by traders and operators to exit from industrials today, aluminium stocks did better than most.

Hindalco and Sterlite Industries prices, which came down from their intra-day peaks, closed higher. Nalco and Malco finished marginally lower after seeing substantially higher tops. Nalco saw improved volumes. Analysts pointed out that in March LME prices of aluminium (ingot) saw the recent peak of $1,723 per tonne. The April average price was $1,676 a tonne and in May, so far, the LME prices moved between $1,580 and $1,650. "If this trend continues, domestic players like Nalco and Hindalco, who are considered globally lowest cost producers of aluminium, would make super profits this fiscal," felt Mr Kunal Bose, a commodity analyst.

A top corporate portfolio manager said that Nalco, being a pure player in aluminium, is best placed among the domestic manufacturers to reap the price benefit. In the case of Hindalco, its business mix is 52 per cent for copper and 48 per cent in aluminium. Globally ruling low rate of conversion price (TCRC) has kept the copper operation much less remunerative.

Sterlite (it holds 51 per cent Balco) is also a mixed bag of aluminium, copper and zinc. Malco, an outfit from the Anil Agarwal stable, has vastly improved its financials through higher capacity utilisation and cost reduction. It has copper and zinc in its basket.

Going by the international consumption and supply trends, experts feel the aluminium prices are likely to remain steady this fiscal. If the 7 to 8 per cent GDP growth rate projection was realised, the growth in consumption in the domestic market might see at least a similar trend, if not more, during 2004-05.


RusAl launches agencies in Singapore and Tokyo.

Analytical Information Agency, Russia 28/05/2004

RusAl has announced it is widening its foreign trading chain and opens new offices in RUSAL Asia in Singapore and RUSAL Japan in Tokyo, RusAl said.

Earlier, the company opened trading agencies in the USA and Germany.

RusAl is amid 3 world's primary aluminium makers with 10% share on the international and 75% on Russia's markets. 2003 earnings stood at $4.5 bln.



Chalco sees higher output

Daily Times, Pakistan -29 May 2004

SHANGHAI: Aluminum Corp of China Ltd (Chalco), the world’s second-largest alumina producer, expects to raise its alumina output by 23 percent to eight million tonnes in 2005, a company official said.
China is trying to cut back expansion of aluminium as part of measures to cool its economy, but the country has a huge deficit of alumina, the main raw material. It imported 1.8 million tonnes of alumina in January-April, nearly half of its requirement.
Chalco, the dominant alumina producer in China, said in late March its alumina production would rise 7.4 percent to 6.5 million tonnes this year from 6.05 million tonnes last year.
“Falling aluminium prices are putting pressure on alumina,” Chalco’s senior vice president Luo Jianchuan said late on Friday during a derivatives market forum in Shanghai hosted by the Shanghai Futures Exchange.
Another Chalco official said the company had cut its spot price of alumina from Saturday to 4,800 yuan ($579.7) a tonne from 5,300 yuan, following a slide in imported prices. It kept its term price at 4,300 yuan, unchanged since March 11.
The price of imported alumina in Chinese ports had fallen to 4,700 yuan to 4,800 yuan a tonne, versus 5,300 yuan to 5,500 yuan in late April, traders said.
The Shanghai June aluminium, the base for the spot price, closed at 15,700 yuan a tonne on Friday from above 18,000 yuan in mid-April.
Luo said he expected the supply of aluminium to fall in the second half of this year due to reduced production from smelters, which suffered losses when the price of the metal was between 16,000 yuan and 17,000 yuan a tonne.
Still, Chalco expects China’s aluminium production to reach 6.36 million tonnes this year from 5.56 million tonnes last year when the output rose by about 1 million tonnes from the previous year.
Luo said Chalco expected the country’s aluminium capacity to reach 10.68 million tonnes this year. He said 6.31 million tonnes were operating, while 1.096 million tonnes of new capacity had been built but haven’t started production.
Industry officials estimate the capacity last year was 8.34 million tonnes.
Kang Yi, director of the China Nonferrous Metals Association, said China’s measures to curb over-investment have stopped or delayed construction of 2.37 million tonnes of aluminium capacity since mid 2003. Aluminium is one of the sectors, along with steel, cement and property, being targeted by the government to curb excessive investment.
In April, Beijing imposed restrictions on bank loans to back up earlier measures to rein in its economy, which grew 9.8 percent between the first quarters of 2003 and 2004. —Reuters


Alcan plan satisfies U.S. Department of Justice

Parkersburg News, WV - 29 May 2004

By CURTIS JOHNSON


RAVENSWOOD - The filing of one amendment in federal court has provided a since of relief and security for about 950 jobs at the Ravenswood's Pechiney aluminum plant.

Alcan Inc., the plant's parent company, announced it has joined the United States Department of Justice in filing an "Amended Final Judgment," in the U.S. District Court of Washington, D.C. The "final" amendment recognizes Alcan's proposal to spin-off the "substantially all" of its rolled products business held before the company's September 2003 acquisition of Pechiney Rolled Products LLC.
When Alcan bought French aluminum producer Pechiney in 2003, it ended up with more than 40 percent of the brazing sheet market. Since Pittsburgh-based Alcoa Inc. controls a similar amount, the two companies effectively control the market.

Local representatives inside the Ravenswood plant deferred all questions to Alcan's headquarters in Montreal Friday.

"The strategic basis for the spin-off ensures that both Alcan and the new rolling company are well-positioned to succeed," said Travis Engen, president and chief executive officer of Alcan, Inc. "This initiative also addresses our divestiture obligations with the European Commission and introduces an alternative solution to our U.S. divestiture obligations."

Ravenswood Mayor Clair Roseberry told the Associated Press the best option for the community would be for Alcan to keep the Ravenswood plant.

"I think it ensures that it will be operated, because I think Alcan has the ability to operate it," he said.

According to the amendment, Alcan has 180 days to complete the sell of the Ravenswood plant or the spin-off.

The Justice Department may also extend Alcan's deadline by 60 days .

"Either the sale of the Ravenswood or the execution of the proposed spin-off will satisfy the Amended Final Judgment," the press release states. "Alcan also agreed to continue operating the Ravenswood business separately."

An earlier Alcan press release states that the new company created by the spin-off will rank as the "world's largest aluminum rolling business by revenue and production volume." It will be listed on the New York and Toronto stock exchanges and have approximately 10,000 employees worldwide.

The on-going Alcan, in which the Ravenswood plant would remain part of, would retain approximately 78,000 employees globally with estimated revenues of $20 billion.


Alcoa to invest $1.4 billion in Brazil-report

Forbes Reuters, 05.30.04, 1:07 PM ET

SAO PAULO, Brazil, May 30 (Reuters) - Alcoa Inc. (nyse: AA - news - people), the world's biggest producer of aluminum, plans to invest $1.4 billion in Brazil over the next four years after securing a contract that guarantees it power, the group's Latin America chief was quoted as saying.

Josemar Verillo, president of Alcoa Latin America, told this week's edition of Istoe magazine the investments were made possible after its Alumar aluminum smelter in northeastern Brazil secured a 20-year electricity contract from state-owned power utility Eletronorte two weeks ago.

"With that guarantee, we will initiate a series of projects that will total $1.4 billion in four years," Verillo was quoted as saying.

Alumar is 54 percent owned by Alcoa, with BHP Billiton Ltd/Plc <BHP.AX><BLT.L> owning the balance.

Istoe said the investments included an expansion of its Sao Luis smelter that will double capacity and a project to mine bauxite, the raw material for aluminum.

Later in the article, Verillo is quoted as saying investments could reach as high as $5 billion as a result of the Eletronorte deal, although he does not lay out a time frame for the spending.

No one was immediately available at Alcoa's office in Brazil for comment.

Copyright 2004, Reuters News Service


Aluminium smelter good for Jamaica

Jamaica Observer, Jamaica Sunday, May 30, 2004

The joint venture agreement, announced by the Trinidad and Tobago Government and the Aluminium Company of America (Alcoa), to build an aluminium smelter in Trinidad and Tobago is, on the face of it, good news for Jamaica.

In some respects, the smelter, if it gets done - and we have no reasons to believe that it will not - is more like a victory for Jamaica. For while Jamaica is not yet a direct player in the deal, it comes close to something that Kingston has pushed for the better part of three decades.

In the mid-1970s, the Michael Manley Government, in keeping with the Administration's credo of regionalism, proposed a jointly-owned aluminium smelter undertaking with Trinidad that would marry that country's abundance of energy - which makes it cheap - and Jamaica's substantial resource of high quality bauxite.
Those negotiations foundered on Manley's expansive notions of regionalism and commitment to Third World solidarity.

At the same time, Jamaica was negotiating with Trinidad and Tobago, the Manley Administration was talking separately with the Venezuelan Administration of Carlos Andres Perez and Mexican administrations spanning the presidencies of Luis Echeverria and Jose Lopez Portillo. The proposal was for an alumina refinery/smelter project, similarly utlising those countries' abundant energy and Jamaica's bauxite.

The so-called JAVAMEX (Jamaica, Venezuela, Mexico) project didn't take off. The world began to change in the late 1970s on the promoters South-South co-operation. The shift was typified, for instance, with the failure of the Mexican summit that was to have advanced the Brandt Report.
Manley's expansiveness also had another unintended and unfortunate result. It helped to scupper his smelter idea between Kingston and Port of Spain.

Trinidad and Tobago supposedly had reservations about Jamaica's capacity to handle simultaneous projects with its Caribbean Community (Caricom) partner and with Venezuela and Mexico. Manley's insistence that it could happen didn't matter.
But perhaps the more fundamental issue was Eric Williams's suspicion of the Latin Americans, particularly the Venezuelans - Trinidad and Tobago's neighbours, who were advancing initiatives in the Caribbean. Be wary of the "new imperialists", Williams warned.

In the end, neither project survived the initial pre-feasibilities, not even when Jamaica and Trinidad and Tobago revisited the issue in the early 1990s.
Circumstances have changed substantially, though, in recent years, which should enhance Jamaica/ Trinidad co-operation and the potential for the smelter.

Indeed, it is of interest that prior to the Alcoa/Trinidad and Tobago smelter announcement, Alcoa had disclosed its plan for a US$960-million project to approximately double the 1.25-million tonne capacity of the Jamalco alumina refinery it owns with the Jamaican Government. That plant was recently upgraded by 250,000 tonnes.
World demand for metals, especially in fast-growing China, helped drive these investments, as it has the smelter proposal for Trinidad and Tobago.

Once this smelter is built, sharing common Alcoa ownership with the Jamalco refinery, it seems to us that Jamaica is a natural source of alumina for its kilns. Indeed, recent efforts in Jamaica to improve efficiency and make changes in the tax regime have made Jamaican alumina plants far more competitive than in the past. And there will be no closer significant supplier of alumina to a Trinidadian smelter than Jamaica.

There is another point to consider. Caricom's move to a single market and economy should allow for national treatment in all areas of pricing, which should force the Community to advance regimes for critical commodities. The process should enhance regional competitiveness.

All of this suggests to us that Jamaica, especially at the private sector level, should be beating the doors of Alcoa and the Trinidad and Tobago Government for a piece of the action on the smelter. The Jamaican Government, too, must begin dialogue with Port of Spain, understanding that the Alcoa project is in this country's strategic and economic interest.



Brunei seeks foreign help to diversify economy

Daily Yomiuri, Japan 31 May 2004

Yukihisa Nakatsu / Yomiuri Shimbun Correspondent

As Brunei marks its 20th anniversary of independence from Britain, the oil-rich Islamic country has begun to expand its petroleum-based economy.

"We want to change our image from that of just an oil country," said Lim Hong Hin, adviser to the chairman of the Brunei Economic Development Board, explaining the country's reason for trying to attract foreign investment to promote new industries.

Brunei's plan is two-pronged. First, the country will build an international seaport on an offshore island as a base for the flow of goods to and from Southeast Asia.

Second, a huge industrial park will be built on the west coast to attract large-scale aluminum refining plants and other factories.

Brunei is a small country of about 340,000 people with a gross domestic product of about 13,000 dollars per person, largely financed by petroleum income.

The country has the second-largest GDP per capita in the region, behind Singapore.

Even though Brunei is a monarchy, Hassanal Bolkiah, the nation's sultan and prime minister, has supported a strong welfare policy under which people do not pay income taxes, but are given free education and health care.

In a U.S. economic magazine, the sultan has been listed as the world's richest man.

However, the country relies too heavily on oil, which accounts for 90 percent of its exports and 40 percent of its GDP.

This creates an irregular workforce, with 70 percent of Bruneis employed by the government. In private companies, meanwhile, 70 percent of employees are foreign workers.

The official unemployment rate has been set at about 5 percent, but the real figure is believed to be at least double that. Social unrest within the country has caused anxiety, prompting calls for more jobs by expanding the economy through structural reform.