AluNews - November 2004

State to Let Alcoa Buy RusAl Mills

Moscow Times (subscription), Russia Tuesday, November 2, 2004. Page 5.

Combined Reports Russia will approve Alcoa's takeover of the country's two biggest rolling mills from Russian Aluminum, but will continue to monitor the U.S. giant's dealings with Russian companies, officials said Monday.

"Our decision will be affirmative," Igor Artemyev, head of the Federal Anti-Monopoly Service, said in a statement.

When Alcoa, the world's biggest aluminum producer, announced it would buy controlling stakes in the Samara and Belaya Kalitva plants for an undisclosed sum, it had expected the deal to be done by June 30.

But approval was repeatedly delayed amid what some defense sources said was reluctance on the part of officials to sell factories linked to sensitive military equipment to a foreign company.

News agency Interfax quoted Andrei Tsyganov, deputy head of the Anti-Monopoly Service, as saying Russia would introduce "some restrictions" as to what Alcoa can do with the plants, such as setting prices.

He added that the agency would watch Alcoa's deals with Russian companies closely.

Tsyganov said it was important that Alcoa did not "abuse its dominating position" on the Russian market once it takes over the plants.

The technical approval of the deal is likely to be given as soon as next week, the statement said.

Neither the Anti-Monopoly Service nor RusAl gave details of the conditions when contacted by telephone in Moscow.

Samara is Russia's largest producer and exporter of aluminum products, with a capacity of 450,000 tons of aluminum per year. It produced 173,868 tons in 2003.

Belaya Kalitva is Russia's second-biggest aluminum fabrication plant, with annual production capacity of 120,000 tons. Built in the 1950s, it produced 41,430 tons of aluminum products in 2003.

Regulators in the U.S. and Europe already have approved the Alcoa's acquisition of the mills, which process refined aluminum into metal for products from beer cans to airplanes.

VALCO issues final cheques to employees

GhanaWeb, Ghana Tema, Nov. 1,2004

GNA - Atmosphere at the plant of the Volta Aluminium Company (VALCO) on Monday appeared very quiet as majority of the workers had started their leave following the take-over of the company by the government.

All the 255 workers have subsequently been issued with cheques for their end-of-service benefits totalling 10 million dollars, Dr Charles Mensah, Resident Director told newsmen at the plant.

Last Friday, parliament, voted for the approval of the agreement between the government and Kaiser Aluminium and Chemical Corporation. By the approval, government was now entitled to purchase 90 percent of the VALCO Limited from Kaiser Aluminium at the cost of 18 million dollars.

A visit to the plant showed that a skeleton staff were seen in the administration block and some at vantage points of the plant.

The Director, however, did not disclose how much each worker takes home but said the amount is according to the number of years served with the company.

He said 70 out of the 255 workers have been retained for the transition period to take up maintenance work and security services while the last of the ten expatriates leaves at the end of the month.

The Resident Director stressed that when the company comes into operation the redeployed workers would be given the priority for employment.

"We have trained them to become skilful so we would not leave them and take fresh hands", Dr Mensah assured the workers, saying that in view of that, management has taken their particulars for easy communication.

Dr Mensah said of the 18 million dollar sale, 10 million dollars was for payment of workers ESB, eight million dollars to pay salaries from January to October with a breakdown of 1.5 million dollars a month.

The Resident Director indicated that three companies, Aluminium Company of America (ALCOA), which currently has 10 percent shares, BHP Billtion of Australia and Ruseal Aluminium of Russia have expressed interest in taking over the company.

He said the interesting story about the companies coming in is the fact that they would purchase the raw materials from the country and process it within.

Dr Mensah described the "New VALCO" as a very potential venture since the raw material, being bauxite would be purchased from the country at Kibi and Nyinahini both in the Eastern Region, refined and smelter at the plant.

"With this, the government would be completing the three cycle vision that Dr Kwame Nkrumah, President of the first Republic had for the nation".

According to him there are about 700 million tonnes of deposits of bauxite available at Kibi and Nyinahini with which VALCO could utilise. He said since aluminium has several uses the issue should be seen in a broader perspective as national objective that would generate revenue for the nation.

On VALCO's assets, Dr Mensah said, while the hospital would be run on part-time basis for which the redeployed are still entitled to, items like the equipment and the VALCO Trust Fund would remain intact.

The secret ingredient for degassing aluminium & aluminium Alloys.

PR Leap (press release), CA November 01, 2004

Flussum Nitral C-19 Tablets.

(PRLEAP.COM) This action takes place with a minimum of fume emission and virtually complete absence of unpleasant odours.

These degassing tablets are anti pollution tablets which is very desirable these days.

The absence of toxic or harmful fumes is ESSENTIAL in foundries Eg The Backyard Foundry, where there may not be good ventilation, or where the neighbourhood prohibits the use of obnoxious materials.

Flussum Nitral C -19 tablets can be used to degas all types of aluminium (eccept magnesium alloys) and its many alloys for sand casting or when die-casting.

It is quite useful to degas aluminium in the larger holding furnaces of commercial operations.

The Degassing Method.

The Flussum Nitral C-19 Tablets are plunged into the melt at a temperature not exceeding 750 Deg C.

The tablet or small segment(depends on the size of the melt) is held down in the melt with a long handled tool with an inverted bell shaped dome which has several holes drilled through to allow

the gas to escape during the degassing operation.

The degass reaction is transmtted upm the degas bell tool handle, in some instances the reaction can continue for several minutes.

The metal temp needs to be monitored prior to completing the pour.

The required addition of Nitral C-19 depends on the degree of metal contamination of the melt. Dirty metal may require two or more additions of C-19.

One tablet weighing 50 Gms should be used for every 25 to 50 Kg of metal.

For the home foundry worker the tablets can be quite easily broken into small segments and stored in an air tight glass jar ready for use.

I have employed the use of Nitral C-19 tablets for many years in my home foundry with considerable success in degassing aluminium metal for pouring green sand moulds, and permanent

steel die casting moulds when gravity die-casting pistons.

After plunging the tablets or small segments into the melt, allow a couple of minutes for the reaction to end or settle, skim-off accumulated rubbish and quickly pour the metal.

If you have never bothered to degas molten aluminium before pouring you moulds, you will be amazed at the vast improvement in metal quality and the lack of porosity in the castings.

Porosity (pin holes) is quite common when melting & casting aluminium.

Melting Aluminium is a great way to start hobby foundry work, but it has it\'s problems when incorrect degassing & fluxing procedures are not carried out.

C-19 Nitral tablets can be bought at most foundry supply ware houses.

Australian suppliers:

Stallman & Company P/Ltd. 32 Perry Street Matraville NSW.

Or your nearest foundry supply house.

Dubal invests AED 70 million in conversion to liquid pitch

AME Info, United Arab Emirates 01 Nov 2004

Dubai Aluminium Company Limited (DUBAL), the largest single site smelter in the western world with an annual production capacity of 686,000 mt of primary aluminium, has announced plans of phasing out the use of solid pitch (also known as pencil pitch), from its sprawling Dubai-based premises and is set to begin its conversion process to liquid pitch, at an estimated cost of AED 70 million, starting 8th December.

Mr. Abdulmunim Binbrek, General Manager, Smelter Operations.

Coal tar pitch is used as a binder for petroleum coke in the manufacture of Pre-baked anodes, to be used in primary aluminium smelting. In order to meet the consumption rate of 80 – 90 kg of pitch per tonne of aluminium, DUBAL imports ~ 60,000 tones in a year.

"Over the past 25 years DUBAL has been using solid pitch and had to manage the handling process by ensuring the use of personal protective equipment (PPE) and protective clothing by those who handle the solid pitch. With the commissioning of the liquid pitch project, DUBAL will be in a position to ensure that the risk of dust exposure is fully eliminated," said Mr. Abdulmunim Binbrek, General Manager, Smelter Operations.

The transformation is certain to set another environmental milestone in the operations of the company, which has already recorded several benchmarks in the Environmental Best Practices. This facility will provide a cleaner and healthier working environment. With each phase of its multiple expansions, DUBAL continues to seek ways to enhance worker's health and the quality of the local environment.

The first shipment of liquid pitch will arrive at the reception terminal at DUBAL's dock in Jebel Ali Port, on the 8th December, 2004. The pitch will then be kept in two specifically adapted, heated and insulated storage silos maintained at a constant temperature of 200 C. Specially designed road tankers will then transport the liquid pitch to a reception facility at DUBAL Smelter.

"The whole process operates as a fully enclosed and sealed handling system. There is a built-in fume capture and treatment facility. The advantage of this contained system is that there is no possibility of either human exposure, or environmental pollution. Furthermore, DUBAL ensures that the disinvestment from solid to liquid pitch will meet, International standards and significantly improve working environment 'added Mr. Abdulmunim Binbrek.

Alro Aluminum Smelter's Chairman Among 3 Executives to Resign

Bloomberg 29 Oct 2004

By Bogdan Preda

Alro SA Chairman Alexander Krasner resigned, along with two other top executives at the company, the

biggest aluminum smelter in eastern Europe, without stating their reasons for leaving.

Alro's vice president Peter Braun said he, Krasner and Alro board member Sam Manaktala resigned as of yesterday.

Braun declined to comment on a report today in Ziarul Financiar daily that Alro executives would resign over a dispute with Vitali Machitski, the owner of Russia's Rosinvestneft industrial holding, whom the paper said financed Alro's purchase from Romania's government.

``There is no way back,'' Braun said in a phone interview in Bucharest. ``We're not prepared to comment on the reasons behind our resignations at this time.''

Romania in May 2002 sold Alro to Marco International Inc., a New York-based metals trading company, which has paid a total of almost $160 million to gain control of the Romanian smelter.

Braun declined to comment on Bucharest-based Ziarul Financiar's report that Marco owes Machitski money. The newspaper cited unidentified people familiar with the situation in today's report.

Marco in December 2002 also paid $14 million to buy a majority stake in Alprom SA, Alro's sister company, which makes semi-finished aluminum products.

Machitski's Rosinvestneft, also known as RINCO, counts BP Plc venture TNK-BP, Russia's third-largest oil producer, and OAO Yukos Oil Co., Russia's biggest oil exporter, among its strategic partners, according to Rosinvestneft's Web site.

Wenatchee smelter will restart early

Seattle Post Intelligencer, WA Wednesday, November 3, 2004

Chelan County PUD gives Alcoa a $13 million credit on power


WENATCHEE -- Alcoa Inc. will restart its Wenatchee Works aluminum smelter in December, three months earlier than anticipated, because of revenues from the sale of unused power, the company said this week.

An agreement with the Chelan County Public Utility District gives the aluminum maker a $13 million credit for power from the idle plant from October, November and December, plant manager Bob Wilt said.

The deal, an amendment to Alcoa's PUD power contract, is expected to be approved by PUD commissioners after a 10-day waiting period.

The plant has been closed for more than three years.

During that time, 390 plant employees continued to receive paychecks from sales of Alcoa's 23 percent portion of electricity from the PUD's Rocky Reach and Rock Island dams.

The plant won't require all of its PUD power for aluminum production until several months after startup, Wilt said, making the power available for sale.

Alcoa terminated the earlier power agreement Oct. 1, the same day a new labor agreement was reached with unions.

About 382 employees are now covered because of retirements and some workers taking other jobs, Wilt said.

The proposed amendment still requires Alcoa to use its PUD power exclusively at Wenatchee Works.

The deal also prohibits any employee layoffs during startup and orders Alcoa to repay the $13 million if the company doesn't have 1 1/2 aluminum-making pot lines operating by May.

Alcoa's Russian mill purchase cleared -- with conditions

Mineweb, South Africa '02-NOV-04 13:00' GMT © Mineweb 1997-2004

By: John Helmer

MOSCOW ( -- Russian Aluminium (Rusal) has scored two provisional victories in the past week, the first to sell to US aluminium leader Alcoa two aluminium rolling-mills for about $220 million; and the second to buy a 20% stake in Queensland Alumina Limited (QAL) for $401 million, plus assumption of $60 million in debt. Just how provisional these deals are for Rusal may not be clear for some time, while the Russian and Australian governments, and Rusal's rivals in Australia, complete their due diligence.

According to an announcement issued on November 1 by the Russia's Anti-Monopoly Service (FAS), a 6-month old bid by Alcoa to buy the Rusal plants in the Samara and Rostov regions has been approved. "Our decision will be positive," the statement quoted FAS head Igor Artemyev as saying. "We shall give our approval to Alcoa for the purchase of the Samara aluminum] plant and the Belokalitvenskoye association [Belaya-Kalitva Metallurgical Plant]. But we shall impose conditions of behaviour." Asked what conditions the FAS has decided on, Konstantin Dorokhin, the FAS spokesman, said these have not been finalized. "That will be decided and announced within a week," he said.

In a joint announcement on May 6, Alcoa and Rusal said that they had agreed on the sale and purchase of the two mills, Samara and Belaya Kalitva. Russian sources estimate the sale price at between $200 and $250 million, approximating one year of revenues for the two plants. "Closing, subject to government approvals, is expected to be completed by June 30," the Alcoa-Rusal statement claimed. An Alcoa source has said that in the proposed structure of the Rusal deal, the shares of the two Russian mills would be vested in a new corporate entity called Prime Alum, and the shares of the latter then sold to Alcoa. "Rusal has set up the shares in Prime Alum," the source said, "and we will be purchasing those shares. It is a legal technicality."

This structure could be modified by the Russian government to allow Alcoa to acquire a smaller shareholding, but whether Alcoa would accept that is uncertain. In recent moves in the power engineering, oil, and mineral sectors, the Kremlin has signaled that will not approve foreign takeovers of Russian companies that are judged to be strategic in their sectors. Because of the importance of aluminium supplies to Russia's defence industries, there has been speculation that defence-related production at the plants might have to be quarantined from the takeover, or Alcoa's stake reduced. Asked if among the deal conditions his agency will impose, the FAS may require any change in the shareholding structure to reduce Alcoa's stake from 100%, Dorokhin told Mineweb "for that decision we need a week, too. Next week our [agency] will finalize its decision and the restrictions list."

Earlier this year, initial FAS approval of a takeover of the Russian turbine manufacturer, Power Machines, by Siemens of Germany was modified by senior officials of the Russian government, and Siemens accepted a minority stake, instead of a controlling one. Alcoa spokesman Kevin Lowery told Mineweb last week "we have not been asked by the FAS or any other agency of the Russian government to revise the terms of our deal with Rusal."

Dorokhin was asked if Artemyev's approval, announced by FAS yesterday, had been cleared by the Prime Ministry. "It is already approved," he said. "We are speaking only after a meeting on the governmental level." The office of the Prime Minister was not available to confirm the terms and conditions.

A senior government source told Mineweb that the inter-ministerial meeting, at which FAS submitted its report on the Rusal-Alcoa deal, gave a "preliminary" approval. He said that this decision could be changed.

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

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

Twenty-four hours following Artemyev's statement, Rusal had not posted an official announcement of its own, confirming the Alcoa sale.

However, the Rusal website has confirmed that on October 28 the group made the winning bid for assets in QAL owned by the bankrupt Kaiser Aluminium of the US. Rusal outbid by $1 million Swiss trader Glencore. According to Rusal, "the successful bid provides for a base price of US$401 million in cash, subject to certain working capital adjustments, plus purchase of Kaiser’s alumina and bauxite inventories and the assumption of Kaiser’s obligations in respect of approximately US$60 million of QAL debt. Kaiser also will transfer its existing alumina sales contracts and other agreements relating to QAL to Rusal. Rusal said that the acquisition of this stake in QAL, the largest alumina refinery in the world, is an important step in RUSAL’s drive to enhance its self-sufficiency in raw material supplies." The US court supervising Kaiser's bankruptcy must certify the auction result at a hearing on November 8. Rusal also acknowledged that the deal would require "customary closing approvals including those by lenders and certain regulatory authorities. The transaction is targeted for a closing in the first quarter of 2005."

QAL's Gladstone alumina refinery is reported to be the largest in the world, with a maximum capacity of 3.65 million metric tons per annum. The principal shareholder in the plant is the Comalco unit of Rio Tinto, which has a 42% stake, and Alcan -- now the largest aluminium company in the world -- with 38%. Both shareholders must approve the Rusal bid in order for the deal to close. In addition, the Australian government will review the Russian stake before it issues its decision.

Alcoa Ends Bahrain Talks on Smelter, Official Says (Update1)

Bloomberg, United States Nov 2, 2004

Aluminum Bahrain Ltd. said Alcoa Inc., the world's largest aluminum producer, is no longer in talks to buy a stake in its 500,000-metric-ton Persian Gulf smelter.

Alcoa, based in Pittsburgh, had intended to invest in the plant to take advantage of low cost energy in the oil-rich Persian Gulf, while closing plants in North America because of high labor and raw material costs.

``To the best of my understanding there are no current talks going on,'' between Bahrain's government, which owns 77 percent of the plant, and Alcoa for the sale, Bruce Hall, Aluminium Bahrain's chief executive, said in an e-mailed statement.

An Alcoa spokesman didn't immediately return a call seeking comment.

Alcoa is competing with Alcan Inc, which bought France's Pechiney SA this year for $5 billion, to buy stakes in new smelting plants in Persian Gulf monarchies that benefit from low energy and labor costs. The United Arab Emirates and Bahrain are both expanding their existing plants, while Saudi Arabia and Oman are inviting foreign companies to invest in new smelters.

Aluminum, which is produced from bauxite ore, is used to make a wide range of products from drink cans to airplanes and motor engines. Prices for the metal have ``probably peaked'' as production increases in China, which controls 20 percent of world supply, outpace demand, according to a report published this month by Standard Chartered Plc.

Melbourne-based Alumina Ltd. pulled out of talks earlier this year to buy a stake in the Bahrain smelter through its partnership with Alcoa, known as Alcoa World Alumina & Chemicals.

Bechtel Group Inc., which built the Hoover Dam and the Bay Bridge linking San Fransisco with Oakland, is working on a $1.7 billion expansion of the Bahrain smelter that will increase aluminum output capacity by about 50 percent to 750,000 metric tons a year by 2005.

Century Aluminum Broadens Expansion Plans in Iceland

Business Wire (press release), CA November 03, 2004

MONTEREY, Calif.--(BUSINESS WIRE)--Nov. 3, 2004--Century Aluminum Company (Nasdaq:CENX) has announced plans to further increase primary aluminum capacity at its Nordural subsidiary's operations in Iceland.

The decision follows an agreement reached with Hitaveita Suournesja hf (Suournes Regional Heating) and Orkuveita Reykjavikur (Reykjavik Energy) for additional long-term supplies of electric power.

The current expansion project to add 90,000 metric tons per year (mtpy) of capacity is being increased by 32,000 mtpy which will raise the plant's total capacity to 212,000 mtpy by October 2006. The energy agreement includes power for an additional 8,000 mtpy of capacity that is subject to certain conditions, including the completion of a power transmission agreement. This would bring total capacity of the plant to 220,000 mtpy by late 2006. A decision on the additional 8,000 mtpy of capacity is expected in the next several months.

The 32,000 mtpy of added capacity is estimated to cost $106 million, bringing total cost for the expansion to 212,000 mtpy to approximately $454 million. The electric power for the expansion is being supplied by the two Icelandic companies from geothermal sources at rates indexed to the price of primary aluminum on the London Metal Exchange.

Following completion of the expansion, the Nordural plant will have all the infrastructure and support facilities necessary for further expansion to 260,000 mtpy. This expansion would be made at relatively low capital cost. Century is in discussions with Orkuveita Reykjavikur for electric power to support this further expansion.

The first 90,000 mtpy of the expansion is being financed through cash flow and Nordural bank financing. The financing is being arranged by Icelandic banks and is non-recourse to Century. The company is evaluating financing options for the added 32,000 mtpy of capacity.

The Nordural plant, located at Grundartangi near Reykjavik, now operates at a rate of 90,000 mtpy with 194 employees. The 122,000-mtpy expansion is expected to create approximately 160 new jobs.

Announcing the expansion plans, Century Chairman and Chief Executive Officer Craig A. Davis said:

"This expansion reflects our confidence in Iceland's business climate and our Nordural employees. It is also evidence of our commitment to grow in Iceland. We are especially pleased to be working with Hitaveita Suournesja and Orkuveita Reykjavikur. Their cooperation and responsiveness to our power needs has enabled us to scale up our expansion project at this timely juncture in the construction process."

Century owns 615,000 metric tons per year (mtpy) of primary aluminum capacity. The company owns and operates a 244,000-mtpy plant at Hawesville, KY, a 170,000-mtpy plant at Ravenswood, WV and a 90,000-mtpy plant at Grundartangi, Iceland. Century also owns a 49.67-percent interest in a 222,000-mtpy reduction plant at Mt. Holly, SC. Alcoa Inc. owns the remainder and is the operating partner. Century's corporate offices are located in Monterey, CA.

Henan's aluminum sector looking to downstream production

Interfax, Russia 03.11.2004 08:26:00 GMT

Shanghai. (Interfax-China) - Large aluminum enterprises in central China's Henan Province are planning to expand their business into the high-end aluminum product processing field. Most of these large aluminum companies are already active in the coal mining, power generation, alumina and electrolytic aluminum production sectors. Currently much of China's demand for aluminum foil products, especially for high value added products. Henan's aluminum makers told Interfax they see a huge market in developing high-end aluminum products and expect strong gains from entering downstream processing.

Liu Changgeng, the Deputy Head of Luoyang CNPT-Wanji Aluminum Fabrication Co., Ltd. (CNPT-WJ) in Luoyang city, Henan Province, told Interfax in an exclusive interview, "To upgrade and expand business coverage to the high-end product processing field is clearly a wise way for Henan's large aluminum enterprises to strengthen their competitiveness for the future. Because the large aluminum enterprises in Henan have advantages for developing a coal-power-electrolytic aluminum-processing business chain, since Henan possesses abundant coal resources, relatively rich bauxite reserves, surging electrolytic aluminum output, and the government's support in developing aluminum product possessing."

CNPT-WJ is a joint venture established by China Nonferrous Metals Processing Technology Co., Ltd., the Luoyang Nonferrous Metals Processing Technology Institute, which is under the supervision of Chalco, and the Luoyang Xin'an Power Group. It was set up in 2002 and is now conducting the phase one construction of a project with 150,000 aluminum processing capacity, which is due for completion in March next year. The company will broaden its processing operations to include aluminum foils used for packing, automobile production, and cables, while it is now mainly producing PS paint base and foils for air conditioners. It also owns a 470,000 kw heat power plant, which was originally owned by the Xin'an Power Group and an electrolytic aluminum plant with a 200,000 tons capacity. It plans to achieve a total of RMB 3 bln (USD 362.45 mln) sales income per annum and RMB 186 mln (USD 22.47 mln) of profit.

Liu said, "Henan's electrolytic aluminum production capacity has reached approximately 1.9 mln tons, making up over 1/4 of China's total capacity. However, the future of Henan's aluminum sector does not lie in the electrolytic aluminum field, but the aluminum processing field. Our customers are mainly from eastern and southeastern China, which have a great demand for deep-processed aluminum products. On the other hand, the government has been controlling electrolytic aluminum production, making downstream processing the right area to explore."

Many aluminum enterprises in Henan, including Longquan Aluminum Co., Ltd, Shunyuan Aluminum Industry Co., and Zhengzhou Aluminum Co., Ltd, plan to start 50,000 tons or even 100,000 tons aluminum product processing projects as part of their long term development strategies, according to Liu. However, the Chinese media has been reporting that this rush into the processing sector has led to pricing wars between producers in Henan, especially for low and medium quality products.

However, Liu said, "The disordered situation in Henan's aluminum processing area, which is similar to Guangdong's aluminum section product area in 1980s, is inevitable, as the sector is still developing. Now Guangdong has aluminum enterprises specialized in high, medium, or low grade products. Each level has credited brands, which guarantee quality and stable prices. I see Henan's future in Guangdong's history."

A spokesman with the Henan Branch of Chanlco surnamed Zhang told Interfax, "It has been widely proposed that the large aluminum companies in Henan should enter into the aluminum processing field. We also see that this move will be profitable. We have our own bauxite mine. The authorities have approved us to establish a large power plant. We have also switched an electrolytic aluminum plant to multi-type aluminum alloy production." "However, we have not entered the aluminum product processing field, since we are waiting for Chalco's approval. Yet our subsidiary the Changcheng Aluminum Industry Co., Ltd. is doing well in the field."

Zhang said, "The disordered situation in Henan's aluminum sector has become more severe over the past few years. It has caused considerable damage to the sector's development. The authorities should not only support the aluminum processing sector, but also make moves to restructure the whole sector. It is not a wise idea to take the situation as an 'inevitable' matter of course."

However, not all large enterprises in Henan plan to run coal, power, electrolytic aluminum, and processing business all together. An official with the Zhengzhou Aluminum Industry Co., Ltd., said, "We see little possibility to expand business to the upstream production, for any cost reductions it might yield are outweighed by the amount of investment it will require. We will enlarge our aluminum product output and upgrade our production technology, probably through cooperation with overseas companies."

Noranda Update on Negotiations with China Minmetals

Business Wire (press release), CA November 04, 2004 11:31 AM US Eastern Timezone

TORONTO--(BUSINESS WIRE)--Nov. 4, 2004--Noranda Inc. (NYSE:NRD) (TSX:NRD) announced today that exclusive negotiations with China Minmetals Corporation regarding the possible acquisition of 100% of the outstanding common shares of Noranda are continuing. As was previously announced, the price for the Noranda common shares is expected to be at a small premium to the share price of Noranda's common shares at the time of the September 24, 2004, announcement.

Noranda has granted Minmetals exclusivity to complete its due diligence and negotiate definitive agreements. Minmetals' proposal contemplates that the transaction would be completed by way of a plan of arrangement and voted on by all Noranda common shareholders.

The proposal is subject to a number of conditions including government approvals, successful completion of due diligence, negotiation and execution of definitive transaction and financing agreements.

Minmetals' preliminary proposal consists substantially of cash, as well as the distribution to shareholders of certain Noranda holdings, principally consisting of its aluminum business. Details of the terms of any final proposal will be disclosed upon signing of definitive agreements.

The preliminary proposal made by Minmetals is non-binding and there can be no assurance that a transaction will proceed.

Noranda is a leading copper and nickel company with investments in fully-integrated zinc and aluminum assets. The Company's primary focus is the identification and development of world-class copper and nickel mining deposits. It employs 15,000 people at its operations and offices in 18 countries and is listed on The New York Stock Exchange and The Toronto Stock Exchange (NRD). The company's web site can be found at

Economy-Guinea: Foreign Firms Scramble for Iron, Bauxite, Africa November 8, 2004

Inter Press Service (Johannesburg)

Saliou Samb, Conakry

Environmentalists have reacted with guarded caution to announcements of new plans to mine more bauxite and iron in Guinea. The plans were released after conclusion of the International Forum on the Mining Sector (FISM) held in this West African country last month.

Guinea Ecologie, the only non-governmental organisation (NGO) in Guinea working in this area, was not invited to the meeting, according officials.

"We were not at the FISM. Nevertheless, if all the practices the big mining companies have already agreed to abandon continue to hold, we'll have little reason for worry. If not, there will be obvious environmental problems," Mamadou Saliou Diallo, Guinea Ecologie's coordinator, told IPS. He admitted, though, that he is "concerned".

The meeting, held in the northeastern city of Boffa, about 130 kilometres from the Guinean capital Conakry, attracted multinational corporations such as Alcoa (the United States), Alcan (Canada), Rio Tinto (Britain) and EuroNimba with ambitious mining projects. It is hoped that these projects will stimulate Guinea's economy, which is cash-strapped but rich in natural resources.

Alcoa Guinea general-director, Ibrahima Danso told IPS that his company wants "to build a billion-dollar alumina refinery capable of processing 1.5 million metric tonnes per year in Kamsar, Boke," in the north of the country, about 300 kilometres from Conakry.

Alcoa and Alcan already own a bauxite plant in the Boke area. Known as the Guinea Bauxite Company (CBG), it is the world's biggest exporter of bauxite at 12 million tonnes a year.

Bauxite is the main ingredient needed to produce alumina, which is used in fabrication of aluminum metal.

"Once the bauxite is extracted from the substrata, teams of people go out and plant trees to restore the natural environment," claimed Bachir Diallo, assistant director of the Sangaredi mine (also in the Boke area), which also belongs to the Guinea Bauxite Company.

There are fears that if the companies use dynamite in the construction of their mines, they will disturb the ecology of the wildlife living in the targeted areas.

"Dynamiting frightens animals and drives them away. It's one of our primary concerns about mining projects. Take, for example, the viviparous toads of Mount Nimba, species which are unique to this southern region. They are unable to live outside of their natural environment," said Ibrahima Sory Conte, of Guinea Ecologie.

Global Alumina Corporation (GAC), based in New York, also plans to build a two-billion-dollar refinery with an annual capacity of 2.8 million tonnes in the Sangaredi area.

EuroNimba and Rio Tinto want to develop iron mining at Mount Nimba (which straddles the Guinea, Liberia and Cote d'Ivoire border) and in the Simandou Mountain Range. They plan to spend more than five billion dollars on this project.

The Simandou Range is a 100-kilometre-long mountain chain in Guinea's southeast. Rio Tinto has discovered deposits that it estimates contain one billion metric tons of exceptionally pure (66 percent) deposits of iron ore there.

EuroNimba and Rio Tinto have begun negotiations to construct a 1,000-kilometre rail link between the country's south and the deepwater port of Matakan, in the west, to transport the extracted minerals.

"Presently, we're trying to at least minimise environmental damage, because there's no such thing as zero risk," Saliou Diallo, of Guinea Ecologie, explained.

More than 40 percent of Guinea's people live below the poverty line of less than a dollar a day. In addition, only 16 percent of Guineans have access to electricity, according to figures released by the World Bank this year.

Mining company initiatives may be stymied by the country's poor electrical supply. Guinea is hoping that a 2.5-billion-dollar plan to build a dam on the Konkoure River will resolve that problem.

"We cannot take the chance of fumbling this opportunity at a time when we have to fulfil people's basic needs. In addition, the price of alumina and iron are looking quite good on the international market. We just hope that authorities are not just talking and that concrete plans materialise," said Jacqueline Soumah, a Conakry-based economist.

Since early 2004, steel prices have risen 40 percent, and are expected to rise another 20 percent by the end of the year. This is mostly due to strong demand from China, according to the Oct. 28 edition of "Les Echos", a daily newspaper published in France.

Rio Tinto has already requested and obtained a Rapid Evaluation Report from the NGO Conservation International indexing the more than 400 plant and animal species living along the Simandou Range.

"This area is our greatest concern, because it is home to species protected by international conventions," Diallo added.

With an annual production of 17 million tonnes, Guinea is second only to Australia, which produces 55 million tonnes, in bauxite production.

While Guinean bauxite production experienced a relative increase since 1974, rising from 7.6 million to 17 million tonnes by 2003, it has not really seen a parallel gain in the production of alumina. Alumina production rose from 0.64 million tonnes to only 0.67 tonnes during the same period, according to the Ministry of Mines.

Smelter project out of steam, Australia November 10, 2004

Richard Owen

QUEENSLAND'S much vaunted $2 billion Aldoga Aluminium Smelter project has been put on ice following a series of resignations and the jailing of a former director last week.

Aldoga's last vestige of credibility was stripped away when former Comalco smelting chief and company chairman Karl Stewart resigned 12 days ago after more than four years at the helm.

His departure comes after that of managing director and chief promoter John Benson.

The resignations also follow the jailing of former director Lee Ming Tee in Hong Kong last week.

The Beattie Government had been pinning its hopes on Aldoga's union of secretive resource barons from eastern Europe and the capital-rich and resource-hungry Chinese to provide impetus for the state's next major phase of economic growth.

However, a well placed bureaucratic source yesterday told The Courier-Mail the prevailing view within Government was the project was now "dead".

Nevertheless, a 30-year lease on the 248ha site – to the west of the industrial port city of Gladstone – complete with approvals to develop and operate a 570,000 tonne aluminium smelter, remains an attractive asset.

It may yet be sold to the winner of the Government's controversial tender for the Aurukun bauxite leases in far north Queensland.

Aldoga Aluminium Smelter Pty Ltd is now being run by industrial tycoon Azam Aslanov and his two sons, Amon and Furkat, who are all from Uzbekistan.

They represent British Virgin Islands entity Transal Holdings Ltd which owns 51 per cent of the Aldoga stock.

The remaining 49 per cent of Aldoga is held by a unit trust in which the New York-based trader Marco Group and the Industrial Union of Donbass from Ukraine each has an interest.

It is understood all these equity participants baulked at the prices being demanded for use of the Chinese technology, power and earthworks and had unsuccessfully sought to onsell the project in Europe.

As Aldoga's point man in China, Lee Ming Tee had been opening up doors at break-neck pace to help secure Chinese technology and debt financing.

However, the Malaysian billionaire and one-time scourge of the Australian stock market was jailed for one year by a Hong Kong court last Friday after pleading guilty to two charges of publishing false company accounts in the early 1990s.

In addition to the jail sentence, Ming, 64, was disqualified from acting as a company director in Hong Kong for four years.

He resigned from Aldoga's board a few weeks earlier.

His resignation appears to have been the trigger for the boardroom exodus although the terms of Aldoga's $700 million debt financing arrangement with China's Exim Bank had required the company to put in place $1.3 million of equity funding by the end of September – a deadline which was not met.

Mr Stewart, who was unavailable for comment yesterday, resigned a few days after project founder and managing director John Benson tendered his resignation. Another director Phillip Green, who sits on the board of Babcock & Brown, also resigned just days before the investment bank's spectacularly successful float on October 4.

Mr Benson is scheduled to return to Sydney tomorrow from China, where he has apparently been trying to negotiate a new debt facility.

Calls to the Aslanov family's Bellevue Hills residence and Transal office in Sydney for comment were unsuccessful.

Russian Alumina Giant Wants to Clean Up and Grow

Reuters, NY Thu Nov 11, 2004 12:51 PM ET

By Maria Golovnina

KRASNOTURINSK, Russia (Reuters) - The sprawling industrial complex of Bogoslovsk has been the mainstay of Russia's aluminum industry since it opened in the closing days of World War II.

Tucked in the remote foothills of the Urals mountains, the Bogoslovsk Aluminum Plant (BAZ) is Russia's top producer of alumina -- a key intermediate element in aluminum production.

BAZ, part of Russia's No. 2 aluminum company SUAL, is also one of the country's biggest producers of aluminum.

Its production growth and ambitious investment plans reflect the broader state of Russia's aluminum industry which has grown steadily since the late 1990s after recovering from a prolonged post-Soviet slump.

"BAZ wants to be bigger. Our aim is to expand and make production cleaner," said Anatoly Klatt, a senior production official.

A five-hour drive from regional center Yekaterinburg along a rough road cutting through dense woodland, BAZ was built in the early 1940s after geologists discovered huge deposits of raw material bauxite in the northern Urals.

BAZ produced about 1.08 million tonnes of alumina and 183,400 tonnes of aluminum in 2003, Klatt said.

By comparison, SUAL's total aluminum production was 889,928 tonnes last year.

BAZ seeks to further boost output of both aluminum and alumina and is considering building new aluminum plant nearby, officials said.

"Our development plan to 2010 includes introducing new production lines, new technology and making our work more efficient," Klatt said.

Sixty years after its launch, BAZ produces about three-fifths of Russia's alumina.

Other Russian alumina plants include Achinsk, which belongs to SUAL's domestic rival RUSAL, as well as SUAL's Urals and Pikalyovo plants.

With domestic producers seeking to ensure a steady flow of raw materials and decrease their dependence on bauxite imports, BAZ is an important part of SUAL's overall expansion strategy.

SUAL is already involved in a $2.1 billion project in Russia's northern Komi republic to build a new alumina plant and smelter, and boost output at its huge Sredni Timan bauxite deposit.


Klatt said SUAL was considering resuming construction of a second aluminum plant there, BAZ-2, which will have potential annual capacity of 300,000 tonnes of aluminum.

BAZ-2's projected alumina production is 700,000 tonnes, Klatt said.

If that comes to life, BAZ's combined output would rise to at least 1.5 million tonnes of alumina and 540,000 tonnes of aluminum, he added.

The Soviet government started building BAZ-2 in the 1970s but the project was mothballed during the economic stagnation of the early 1980s.

"Theoretically the project is indeed being discussed, but there is nothing concrete in the pipeline yet," Klatt said.

SUAL officials said the main obstacle to BAZ-2 was an electricity deficit in Sverdlovsk region, which does not have sufficient capacity to serve another energy-intensive facility.

Ecology is another concern for BAZ, which still used archaic Sodeberg technology

To reduce air pollution, BAZ introduced new gas purification systems in July and hopes to start gradually switching to the more ecology-friendly dry-anode system.

BAZ says it has cut noxious emissions by a third since 1987.

"This is one of Russia's oldest aluminum plants. Technology like this has become increasingly rare," said Viktor Chachshin, a senior refining unit official.

"It's not easy but we are working on it, and the dry-anode system is expected to be introduced here over the next three or so years." ($128.66 ruble)

© Reuters 2004. All Rights Reserved.

Alba marks new milestone

Gulf Daily News, Bahrain Thursday 11 November 2004

MANAMA: Alba's Line 5 project celebrated the handover of the first set of 42 assembled pots to Alba's existing operations - marking a significant milestone in the project's development.

The Line 5 project team commemorated the achievement with a ceremony at the project's smelter.

The handover of 42 pots was completed on schedule and provides the Line 5 operations team with additional preparation time for the pot start-up and first hot metal production next March, according to a company statement issued yesterday.

The total number of pots is expected to reach 336 by the time the project is completed. The pots are used to produce hot metal following an electrolysis process adopted in the AP-30 technology, which is considered to be the latest in the Aluminium industry.

"I would like to thank the Line 5 reduction team and the contractors for their hard work and effort in achieving such a milestone safely and on schedule," said Line 5 expansion project general manager Niall O'Byrne.

Aluminum enterprises see plummeting profit, but downstream production may help

Shanghai. (Interfax-China) - With increases in aluminum prices throughout 2004, most domestic electrolytic aluminum enterprises saw drops in profits over the first three quarters. However, the Xinjiang Joinworld Co., Ltd., which successfully transferred its business focus from electrolytic aluminum to the high value added aluminum products, performed well despite raw material price appreciation.

The Henan Jiaozuo Wanfang Group's principal business profit margin rate over the first three quarters sharply fell by 50.55% year on year, while Guanlu Co., Ltd., the Yunnan Aluminum Industry Co., Ltd., the Lanzhou Aluminum Co., Ltd., and the Henan Zhongfu Industry Co., Ltd. all saw decreases of around 30%, according to the companies' financial reports.

However, the Xinjiang Joinworld's principal business profit margin rate over the first three quarters fell slightly by only 2.45% to 36.7%, a full 20 percentage points above the next most profitable firm, Yunnan Aluminum.

see for the detailed financials.

Liu Ping, a spokeswoman of the Xinjiang Joinworld, told Interfax, "In order to minimize the impact of cost increases as a result of the alumina price appreciation, we transferred our business focus from electrolytic aluminum manufacturing to high value added aluminum products, such as refined aluminum, electronic aluminum foil, and aluminum foil electrodes. Now most of the electrolytic aluminum we produced is used in our aluminum foil production. Thus the increased raw material cost is covered by the increased sales of high value added products."

"We are also pay special attention to high-tech R&D. Besides our own research in the area, we are also in contact with Japan's Mitsui Mining & Smelting Co Ltd and the Sumitomo Metal Mining Co., Ltd. in view of technology cooperation." Liu added.

The head with the administration office of the Henan Jiaozuo Wanfang Group surnamed Zhang explained the reasons for the company's deficit. He said, "We decided to enlarge our electrolytic aluminum output early this year. However, the alumina price kept soaring and most of the alumina was imported, while the rest was provided by the domestic suppliers. Additionally, the loan interest rate rose over the first three quarters, which tightened our company's access to funding."

He further explained, "Although in theory the cost for raw materials could be largely cut down if a company produces both alumina and electrolytic aluminum, practically the expenditure on setting up a new alumina project is too much for an electrolytic aluminum enterprise like us to afford. For example, our current electrolytic aluminum output totals 200,000 tons per annum. Therefore were would need at least a 400,000 tons alumina project could manage to meet our downstream production. However, it is common sense that a 300,000 tons alumina project is a substantial undertaking even for a giant firm like Chalco."

When asked about whether Jiaozuo Wanfang would enter into the high value added aluminum products area, he said, "We are surely willing to expand our business to the downstream production, provided that low profits in electrolytic aluminum sector continue. However, we do not have any projects in ming, for the government is now quite strict with issuing approvals for aluminum projects, including the aluminum foil projects, which might also boost the electrolytic aluminum output."

Delay in Russian reform of metal pricing, tax rules

Mineweb, South Africa '12-NOV-04 14:00' GMT © Mineweb 1997-2004

By: John Helmer

MOSCOW ( -- A Finance Ministry official working on tax reforms affecting Russia's metal exporters told Mineweb Thursday that drafting the new legislation has been held up. "Regarding the legislative change," the official said, "everything is not as fast as you think it is. The Shatalov announcement was only the first push to change something."

On October 20, Deputy Finance Minister Sergei Shatalov announced publicly that the Russian government intends to toughen up transfer pricing rules, used by metals exporters to minimize their tax through reporting the sale of goods to related parties at below-market prices. Shatalov promised fast delivery to parliament of the legislative amendments.

His announcement has since been followed by confirmation from the tax authorities that they are probing Russian oil companies for evidence of illegal tax minimization schemes; and an announcement by TNK-BP, the fourth largest oil producer, that it has been served with a Rb2.4 billion ($84 million) back-tax claim for 2001. "It is just an adjustment to taxes paid," said Peter Henshaw, the company's vice president for communications and public affairs. "It is not a large amount, it is routine."

The Finance Ministry source told Mineweb that, according to the current law in force since 1999, transfer pricing is illegal and subject to penalty taxation when transfer pricing between related entities, or in foreign trade transactions, is found to differ from market pricing by more than 20 percent. "There is a 20 percent corridor over the market price after which the Finance Ministry starts to pay attention to the deal," the source said. This is confirmed by a recent Russian filing with the US Securities and Exchange Commission.

In the first-ever listing of a Russian metals company for a US share issue under regulation by the SEC, the Russian stainless steel, iron-ore and coal exporter Mechel admitted, through its US legal representatives, that Russian pricing schemes for international trade may be challenged by the Russian tax authorities, and lead to potentially large back-tax claims. Tax evasion in Russia is "widespread", the Mechel filing acknowledges, but enforcement of the tax rules is "selective". Russian transfer pricing rules, the company concedes, empower the tax authorities to impose additional tax on companies The rules, according to Mechel, "are vaguely drafted, leaving wide scope for interpretation by Russian tax authorities." Acknowledging the risk of a challenge, the prospectus says that "if such price adjustments are upheld by the Russian courts and implemented, our future financial results could be adversely affected. In addition, we could face significant losses associated with the assessed amount of prior tax under-paid and related interest and penalties."

Not only steel, but also non-ferrous metal exporters, including Russian Aluminium (Rusal), Siberian Ural Aluminium (SUAL), and Norilsk Nickel, could be targeted by the tax reform effort. A report to the cabinet by the Tax Ministry in September identified relatively low tax rates paid by Rusal, SUAL, Norilsk Nickel, and several steelmakers as having been effected by various pricing, tolling, and tax shelter schemes. The steel exporters tend to rely on transfer pricing, while the aluminium exporters use tolling. Both metal groups have set up elaborate corporate structures offshore that conceal the destination of cashflow, as well as shareholder control and beneficial ownership.

The Finance Ministry official told Mineweb that, in order to be legal and qualify for relief from Russian taxation, "tolling should be made between two separate companies which should be located in different countries." Governmernt officials are reluctant to interpret the law, and afraid to publicly identify the loopholes, let alone advocate closing them.. Asked if tolling in export-import operations is lawful between companies that are owned by the same Russian group, the official conceded this is forensic problem, telling Mineweb: "It is a very difficult question which I think should go to the General Prosecutor for detecting which companies are affiliated between each other. We are not able to answer that question." Pressure from the companies to preserve their tax benefits has been intense. A spokesman for Shatalov told Mineweb: "currently, we do not plan to add or change anything in the tolling legislation. This means [the law] will not be expanded, but it will not be cancelled."

Shatalov has said publicly that in the change of the regulations for transfer pricing, the Finance Ministry will broaden the legal definition of related-party links and transactions between companies currently controlled by the same shareholders or groups. He has estimated that losses to the budget from transfer pricing schemes amount to "billions of dollars." A year ago, when the State Duma was considering proposed legislation to curtail the tax benefits of tolling, a Duma deputy claimed that the budget losses due to tolling were at $115 million per annum. This was a conservative estimate.

Responding to reports of a government investigation of its tax payments, Rusal, Russia's largest aluminium producer and exporter, says that its offshore status legalizes the tax benefits it currently draws. "The Russian government is well aware that Rusal is the only Russian metals company whose revenues do not primarily come from the mining of Russian ore," company spokesman Yevgenia Harrison said in a prepared statement. "To a very large extent, we are processors of imported raw materials. Thus a relatively large portion of Rusal's value added is created outside of the Russian Federaton." Harrison claimed the Tax Ministry report of September was "a routine governmental report", adding that tolling is legal. "There was a debate about tolling in Russia," she said. "Today the situation is that, with some amendments, it has been decided that tolling remains in the national interest." In 2003, the government and members of parliament attempted to legislate an end to tolling, and offered to offset the tax increases to the exporters by eliminating the 5 percent export duty on the metal. But officials could not resolve differences in the interpretation of different laws, including the new customs code, which came into force on January 1.

According to a spokesman for Yury Vasiliev, who currently heads the State Duma tax subcommittee, "Since January, 1, 2004, tolling has been officially buried by the coming into force of the new Customs code which has cancelled this preferential mode of taxation. However, before implementation of the new code, the Ministry of Taxes unexpectedly dispatched a letter in which it is still allowed to [preserve] tolling operations. The letter is based on the legal collision which has arisen in connection with acceptance of the new Customs code." The conflict between the customs code and the tax code is still unresolved, he added.

RusAl Expansion

Moscow Times (subscription), Russia 14 Nov, 2004

MOSCOW (Bloomberg) -- Russian Aluminum, maker of about an eighth of the world's primary aluminum, will buy 60 percent of the Boksitogorsky alumina plant near St. Petersburg, Vedomosti reported Friday. The transaction should be completed by Dec. 27, Vedomosti reported, citing Boksitogorsky board chairman Lev Lybensky.

RusAl produced 2.3 million tons of alumina, a semi-finished product in the first nine months of the year, up 5.6 percent from a year ago. Output of bauxite, the ore used to make alumina, rose 16 percent to 3.6 million tons.

RusAl has said it would invest $7 billion in the next 10 years to boost output 36 percent and challenge Alcoa as the world's top producer.

Startup mining company Global Alumina loses $8.3M US in third quarter

CJAD, Canada 21:13 on November 17, 2004, EST.

SAINT JOHN (CP) - Global Alumina Products Corp. lost $8.3 million US in the third quarter as the startup company developed its plan to produce raw material for the global aluminium industry.

The company reported Wednesday it lost eight cents a share for the three months ended Sept. 30 as well as $15.3 million for the nine-month period. It reported no operating revenues for the periods or quarterly results for 2003. The company issues its financial results in U.S. dollars.

Last week, Global Alumina announced it plans to raise between $25 million US and $35 million US through a private financing expected to close by the end of the year.

Money raised from proposed private placement will be used to finance the next stage of development and construction of Global Alumina's 2.8 million tonne per annum alumina refinery in Conakry, Guinea.

Global Alumina, based in Saint John, N.B., wants to use the vast bauxite resources of Guinea, a west African country, to produce alumina for sale to global aluminum producers such as Alcan, Alcoa and others.

Alumina is a compound derived from bauxite which is used to make aluminum, a light industrial metal widely used in the packaging, aerospace and automotive industries.

Guinea holds more than one third of the world's resources of bauxite.

Though based in New Brunswick, Global Alumina has operations in Boke, Guinea and offices in New York, London, Montreal and Conakry, Guinea.

In trading on the Toronto Stock Exchange on Wednesday, Global Alumina shares (TSX:GPC.U) closed up four cents at $2.05.

The Canadian Press, 2004

Alcan's Smelter Verdict Drifts Into Next Year, Africa November 17, 2004

Business Day (Johannesburg)

Carli Lourens, Trade And Industry Editor, Johannesburg

CANADIAN aluminium producer Alcan would not decide by year-end whether to build a $2,2bn aluminium smelter in SA as expected.

Trade and industry department director-general Alistair Ruiters yesterday said that Alcan would probably only complete its technical assessment in the first quarter of next year.

SA has been waiting for more than three years to hear whether it would secure the smelter, which would represent the country's largest single foreign direct investment to date.

Alcan, which inherited the mooted project from Pechiney when it took over the French company last year, last year said that it would decide whether or not to pursue the project by June. It then said in July that it would decide by year-end.

I-Net Bridge yesterday reported that a "progress report" would be compiled by Alcan this week.

Ruiters said his continuing talks with Alcan officials were still "extremely positive".

The proposed site for the smelter is in the Coega industrial development zone, which is being developed at a cost of more than R6bn in Eastern Cape.

Government has to date not secured a single investor for the zone , which includes a deepwater port and has been ready for some time to receive its first tenants.

Meanwhile, it has been rumoured that Eskom has been ordered by Alcan to stop construction of electricity infrastructure dedicated to the proposed smelter at Coega. Eskom declined to comment.

Eskom started construction on the infrastructure late last year, in line with a contract that existed between the utility and Pechiney .

In terms of the contract, Pechiney would have had to pay penalties to Eskom for investments made by the utility in building the dedicated infrastructure in the event that the smelter project did not materialise.

Pechiney previously expected to take a 49% stake in the smelter, with Eskom and the Industrial Development Corporation each taking 12,5%. A stake would also have been reserved for a black sharehold

Alcan Inc. to conduct feasibility study for aluminum smelter in South Africa, Canada ,November 18, 2004

MONTREAL (CP) - Alcan Inc. says it will conduct a feasibility study for the construction of a new aluminum smelter in Coega, Eastern Cape Province, South Africa.

The project involved the South African government and its Industrial Development Corp., Montreal-based Alcan (TSX:AL) said Thursday. "Together, we are continuing to examine the best value-creating alternatives offered by the Coega aluminum smelter project," Cynthia Carroll, CEO of Alcan's primary-metal group.

"The focus of this new study will be the use of the highly efficient and advanced ... smelting technologies."

The study is scheduled to be completed by the middle of 2005.

If the project receives approval, construction could start as early as the end of 2005, with the first metal produced in 2008.

© The Canadian Press 2004

Hydro to Spend AUD$22.8m to Upgrade Australian Aluminum Casthouse 18 Nov 2004

Hydro will upgrade its aluminium casthouse in Kurri Kurri, Australia, to meet the strong growth in demand for value added products in the Asia Pacific market. The investment will enable the Hydro unit to supply up to 88,000 tonnes of foundry alloys and increase production of extrusion ingots up to 110,000 tonnes per year.

There is strong growth in the Asian aluminium foundry alloy market. In entering this market, Hydro will be able to build on its leading position in the high-end market segment in Europe.

Hydro has already developed a position in the extrusion ingot market in Asia, and the additional capacity from Kurri Kurri will be an important factor in further growth.

The main part of Hydro's project will be upgrading a casting centre in Kurri Kurri to a primary foundry alloys unit, which will make it possible to extend the product range beyond the present production of standard T-bars.

Concentration on the production of two product lines for primary foundry alloys and extrusion ingot will also bring about significant productivity gains. Simplification and automation will allow for a manning decrease of 64 man-years.

The capital expenditure for the upgrade will be 22.8 million Australian dollars (NOK 127.3 million). Project execution will start immediately and should be completed by the third quarter of 2006. In April this year, Hydro announced an upgrade of the potroom in Kurri Kurri to increase primary aluminium metal production and at the same time to reduce emissions significantly.

The potroom upgrade is estimated to cost 38 million Australian dollars (NOK 180 million) and will increase primary aluminium production by 6,800 tonnes to 160,000 tonnes. This project will be completed by November 2005.

"Our project in Kurri Kurri demonstrates how Hydro’s drive to optimize, combined with commercial innovation, enables us to develop the Kurri Kurri plant to become an important source for Hydro’s further growth in the Asian markets," comments Arvid Moss, senior vice president for Hydro's Metal Products sector.

"We have ambitious targets for marketing in Asia. We can build on Hydro’s position as the market leader in Europe and can offer the same commercial and technical support concepts that we have developed together with our customers in Europe."

Foreign equipment manufacturers assess China's aluminum industry

Interfax, Russia 19 Nov 2004

Shanghai. (Interfax-China) - With some of the world's leading aluminum production equipment manufacturers in Shanghai for the International Aluminum Exhibition 2004, their representatives shared their perspective on the challenges facing China's aluminum industry with Interfax. Although they emphasized different points, all pointed to the need to secure reliable supplies of alumina and predicted that the crisis the sector has been facing since the start of macro control is likely to ease in the coming months

Jean-Jacques Grunspan, engineer and the International Sales Manager with Brochot S.A., a Paris head quartered company engaged in engineering design, equipment building, and project construction active in China for over 15 years, told Interfax, "Although the electrolytic aluminum sector is undergoing large scale deficit, the aluminum sector as a whole is developing and will move forward rapidly in future." "However, the sector still has its own problems to insure long term and healthy development. First of all, the alumina supply, shortages of which would to choke the aluminum sector from the very beginning. Unfortunately, China's alumina supply largely depends on imports. Currently the alumina import price is USD 400/t to USD 450/t. It takes two tons alumina to make one ton of electrolytic alumina. The cost for alumina, let alone soaring power cost, depreciation of machinery, and staff salary, takes up as much as 50% of the electrolytic aluminum sales price, which is USD 1800/t. How can the electrolytic aluminum enterprises, including large and small ones make profit?"

As Interfax previously reported, almost all aluminum enterprises saw plummeting profit over the first three quarters, for example the Henan Jiaozuo Wanfang Group's principal business profit margin rate sharply fell by 50.55% year on year.

Grunspan suggested, "The Chinese enterprises together with the authorities could try to explore for more alumina resources in both China and overseas. India sells alumina at the price of USD 400/t, while the cost is only USD 85/t, thus we see the huge cost gap between imports and mining for yourself."

"Another important factor contributing to the cost hiking for the electrolytic aluminum enterprises is power price soaring. Long term power contract may help the companies, which, however, is probably the privilege of large state owned enterprises. Therefore, a mass merger trend is inevitable," Grunspan suggested.

"Moreover, the government also plays an important role in the sector. Many overseas businessmen and I are all quite surprised that an industry sector as a whole would react to one government policy so fast and dramatically. Last year a large number of companies plunged into the electrolytic aluminum field because of the government's policy. This year most of the enterprises which are concerned only with quick profits closed again following the government's policy shift. The Chinese enterprises should think over their business plan more carefully before rushing into one sector. On the other hand, it is advisable for the Chinese government to modify the policy as a signal arrow indicating an industry development trend instead of a sharp sword that wounds the sector seriously." Grunspan concluded.

Zhu Li, the Project Manager with the Davy Process Technology (Switzerland ) AG which produces the BUSS kneading machine told Interfax, "So far the domestic alumina supply is under Chalco's control. It raised the alumina price to RMB 4,330/t (USD 523.14/t) in October, while some of its subsidiaries have lifted the price to RMB 5,000/t (USD 604.08/t) to RMB 6,000/t (USD 724.90/t)."

"However, a number of alumina projects are under construction by private companies and will become operational next year, which will certainly bring more and more pressures on Chalco. On the other hand, the upstream alumina supply increasing will also galvanize the electrolytic aluminum field. I believe the electrolytic aluminum production will recover soon."

Wang Yuyuan, the General Manager with the Pyrotek Co., Ltd. Taiwan Branch, an international leading high temperature materials technology company, said, "Now the most profitable area of the aluminum sector is middle level aluminum products processing, then upstream alumina production. However, although the electrolytic aluminum sector's profit has sharply fallen at present, it will certainly bounce up since it is the source of the downstream production, which is actually supported by the authorities and is growing well."

Asians drive aluminium price

Wodonga Border Mail, Australia - Nov 15, 2004

CHINESE demand would drive aluminium prices higher in the short-term, before a rush of new capacity investment evened up the balance between supply and demand, according to an analysts report out yesterday.

Credit Suisse First Boston said it had upgraded next years aluminium price by one U.S. cent to US74c a pound following an in-house quarterly aluminium review.

The higher price is expected to put upward pressure on the earnings of Australias three big aluminium producers, Alumina, BHP Billiton and Rio Tinto.

The analysts said the upgrade was based on a market deficit forecast of 237,000 tonnes next year before increased production pushed aluminium stockpiles back into an expected surplus in 2006.

"While Chinese demand could soak up short-term supply additions, we expect a deceleration in consumption through 2005 reducing average aluminium prices to US74c a pound," the analysts said.

Five-year deal ends strike at Alcoa plant in Becancour, Que., CanadaMonday, November 22, 2004

BECANCOUR, Que. (CP) - Workers at an aluminum smelter ended their 4-month strike on Monday, accepting a five-year deal at a general meeting.

The 800 members of the Steelworkers Union of America accepted a settlement tabled by Labour Department negotiator Jean Beauchesne, the plant said in a news release. Workers will gradually return to the plant beginning on Thursday, said the statement.

"This conflict is finally over and we can all look forward to the long-term sustainability of our aluminum smelter," said plant president Louis-Regis Tremblay.

The workers walked off the job on July 7 in a dispute over job security, outsourcing and pensions. Alcoa managers operated the smelter, about 150 kilometres northeast of Montreal, at one-third of its annual capacity of 400,000 tonnes.

Pittsburgh-based Alcoa (NYSE:AA) owns 75 per cent the smelter, and Alcan of Montreal (TSX:AL) 25 per cent.

© The Canadian Press 2004


The last three aluminum smelters were included into SUAL, which enabled it to rise from the ninth to the sixth place in the international rating.

SUAL and Russian Aluminum acquired the largest alumina plants and aluminum smelters a few years ago. Only small companies remained independent. These were Pikalevsky Alumina, Volkhovsky Aluminum (belong to Metallurg holding) and Volgograd Aluminum (VgAZ). Even in 2000 it was clear that these companies will not avoid takeover because they did not have any prospect of independent development. However, their owners received a tempting prospect of playing on competition between Russian Aluminum and SUAL. That is why negotiations on division of undivided assets were drawn out for a long time.

SUAL-holding was the first to come to agreement with the major shareholders of these companies. In December 2002, SUAL signed an agreement on merger of aluminum assets with SevZapProm, managing company of Metallurg, and VgAZ (more than 80% of VgAZ and Metallurg shares belonged to the British company Aimet controlled in turn by businessman Alexander Bronshtein and his partners). The shareholders evidently chose SUAL due to closeness of this company to the international market of capital and rapid capitalization of assets. In any case, SUAL managed to begin real takeover of these assets and their integration into its structure only in 2004.

Only minority shareholders of acquired plants could potentially hinder accomplishment of the merger procedure. In the process of the merger of Metallurg with SUAL Russian Aluminum appeared in the ranks of minority shareholders. In November 2003, Russian Aluminum bought a state-owned 14.01% stake in Metallurg on an auction organized by the Russian Federal Property Fund. Situation developed in a similar way during takeover of the Nadvoitsky aluminum smelter (NAZ) by SUAL. In November 2002, Russian Aluminum bought a 32% stake in NAZ, which belonged to the sphere of interests of SUAL. After long negotiations between the aluminum holdings the stake was sold to SUAL. Analysts presumed that the sum of the deal exceeded the expenditures of Russian Aluminum on purchase of the stake in NAZ. It is possible that the wish to earn money on resale of shares interesting for the competitor has guided Russian Aluminum in acquisition of the state-owned stake in Metallurg. SUAL and Russian Aluminum finally managed to avoid a possible conflict. Russian Aluminum exchanged its shares of Metallurg for shares of SUAL and became a minority shareholder of the competitor.

Problems appeared also in relations with Moscow-based Ralco Co, minority shareholder of VgAZ. This company owns 6.95% of VgAZ shares and is going to hinder the process of integration of the smelter into SUAL. For this purpose Ralco wants to achieve invalidation of the decision on exchange of VgAZ shares for shares of SUAL. Representatives of SUAL are convinced that there are no serious obstacles for takeover of VgAZ.

Pikalevsky Alumina and Volkhovsky Aluminum have already become divisions of SUAL. It is expected that VgAZ will become a division of SUAL until the end of 2004. After inclusion of the aluminum assets of SevZapProm into the production chain of SUAL the share of the group in Russia's alumina production grew from 60% to 63% and the share in Russia's aluminum production grew from 20% to 26%. In the international rating of largest aluminum companies SUAL rose from the ninth to the seventh place or, after takeover of Pechiney by Alcan, it rose to the sixth place.

President Hugo Chavez Frias probes broader cooperation with Russia, IL - 22 Nov 2004

Venpres (Mario Hubert Garrido): President Hugo Chavez’s visit to Russia, November 25-26, will bolster bilateral ties and give way to an integral cooperation, said the Venezuelan ambassador to Moscow, Carlos Mendoza.

Mendoza indicated that Chavez’s agenda in Russia included a series of interviews with high-level officials and the signing of a pact that recognized cooperation between the two countries regarding several issues, in particular trade and energy agreements.

The Venezuelan ambassador made reference of a protocol between the Russian oil corporation Lukoil and Petroleos de Venezuela (PDVSA) on joint investments in oil-extraction technology. He also acknowledged that the status of both countries as major oil suppliers makes them aware of problems they share in common, but also of their common perspectives of the world market.

"Our industries have been operative for more than 100 years, and they need to be modernized, especially in the oil fields, so as to avoid its decline and deliveries of a crude oil that grows heavier each time," Mendoza said. "As far as we know, Russia will collaborate in the remodeling of 150 Venezuelan refineries during a five-year period, thus allowing us to overcome restrictions on the percentages of sulfur that are found on our national crude."

Mendoza also added that a US $1billion-deal had been reached with the Rusal aluminum firm. "We will supply to Moscow all the aluminum it needs to build up a plant to process 1 million tons of bauxite in Venezuela every year. The project will be conducted in association with the Venezuelan Guayana Corporation (CVG) group."

Mendoza maintained that both projects would prop up the existing bilateral commercial interchange to more rewarding levels, which today account for only US$40 million a year. These and other agreements, like the state-owned Gazprom’s bidding for transportation and processing of gas agreed upon in Caracas, were discussed during Vice President Jose Vicente Rangel’s visit last October.

Mendoza said Chavez will hold talks regarding the launching of a satellite as well as the completion of old agreements that contemplated the acquisition of 40 helicopters of the MI-17, MI26 and MI-35 types for both civilian and military purposes. Moscow has offered favorable prices as well as aircrafts of excellent quality, he said, adding that other Latin American countries such as Mexico, Colombia and Peru have acquired Russian military aircrafts in the past. Venezuela also seeks to purchase Russian-made, automatic assault rifles.

Mendoza, however, ruled out any Venezuelan-Russian-linked military build-up. He regarded the recent arm deals as a sovereign decision by the Venezuelan government as it also was willing to give a go ahead to several pending arm contracts with the US and some European governments. Chavez’ visit will serve as the basis of a broader intergovernmental relation at the United Nations and other major international forums.

The President will also address topics ranging from Venezuela’s endorsement of Russia’s membership at the World Trade Organization (WTO), to the fight on terrorism, drug-trafficking, and money laundering.

Russky Aluminy ready to take part in privatisation of Tajik plant

ITAR-TASS, Russia 22.11.2004, 16.54

DUSHANBE, November 22 (Itar-Tass) - The Russky Aluminy (Russian Aluminium or RUSAL) company is ready to participate in the privatisation of the Tajikistani aluminium plant, RUSAL Deputy Director General Alexander Livshits told journalists on Monday.

The Russian Aluminium’s investment programmes include the construction in the territory of the Tajikistani aluminium plant in the city of Tursunzade (some 60 kilometres west of the capital Dushanbe) of two large electrolysis shops with the yield capacity of 100,000 tonnes of aluminium a year.

The company is also planning to build a new aluminium production facility in the south of Tajikistan with the capacity of 200,000 tonnes of aluminium a year.

The sides are currently determining the place for the construction of the aluminium plant. Livshits also said that RUSAL has no information about when the process of denationalisation of the aluminium plant will begin.

In addition, Livshits stressed, the company intends to invest 500 million U.S. dollars in the completion of the construction of the Rogunsk hydropower plant on the Vakhsha River. The plant will provide with electricity the newly created aluminium facilities, and Tajikistan will export abroad part of the electric power.

RUSAL deputy director general said in conclusion that this is the largest investment project in Russia and in Central Asia. Its cost is exceeding 1.2 billion U.S. dollars.

The new production facility will make it possible to provide with jobs over 10,000 local residents.

New Aluminium Processing Technique Allows Complex Prototypes to be Produced in Two Days 23 Nov 2004

Producing one-off metal parts quickly for testing in cars or machinery has usually been the domain of plastics.

But two University of Queensland researchers have designed a new aluminium alloy and treatment process to turn aluminium powder into a specialised part in two days.

Polymers have traditionally been cheaper to make and easier to use for specialised test parts but have lacked metals’ strength and durability.

The alloy composition and process, created by UQ’s powder metallurgy unit head Professor Graham Schaffer and research fellow Dr Tim Sercombe, involves selective laser sintering (SLS) of a mix of aluminium and nylon powders.

SLS is one of about 20 methods of rapid prototyping, which produces the shape of the part.

"In all of these rapid prototyping technologies you build parts up, layer by layer," Professor Schaffer said.

"Free form fabrication or rapid manufacturing . . . is the direct transformation of a computer drawing into a finished, functional part without using tools or a die.

"You take a 3D (three dimensional) computer model and slice it in to virtual layers.

"Each layer is about 75 micrometers thick [less than a human hair] and you put those layers down sequentially, one on top of the other, and build the part that way, from the bottom up."

He said the shaped part was put in a furnace and reacted with nitrogen gas which created an aluminium nitride skeleton.

The part was then infiltrated with a second aluminium alloy to leave a strong, dense component.

The three-year UQ project was funded by Californian manufacturer 3D Systems and UK-based The Aluminium Powder Company and licenced to 3D Systems for commercialisation.

So far, parts up to 20 centimetres long have been made, including gears, pulleys, wheels and chess pieces.

Professor Schaffer said the system would probably be used to produce small, complicated shaped mechanical parts, but there was no size restraint.

"The key is that we can make very complicated shapes, very quickly.

"You send us a drawing of a part and we’ll put the part in a FedEx envelope and mail it back to you in two days.

"The market for aluminium parts is substantial because the automotive industry is one of the biggest users of rapid prototyping and they’re also one of the biggest users of aluminium."

Alcan to spin off rolled aluminum unit Dec. 22

CBC News, Canada - Wed, 24 Nov 2004 16:10:52 EST

MONTREAL - Alcan Inc's proposed launch of a separate rolled aluminum products company named Novelis will be put to a shareholder vote on Dec. 22.

Novelis would be the world's largest rolled aluminum company by volume, with 13,600 employees working in 38 factories and offices in 12 countries. Its pro-forma 2003 sales were $6.2 billion US, Alcan (TSX:AL)said.

Its products would range from drinks cans to automotive sheet, foil-stock, lithographic sheet, painted sheet, and industrial products.

"A very significant amount of work has gone into this project since our initial announcement in May and we are now ready to proceed," Alcan chief executive Travis Engen said Wednesday.

The spin-off of Novelis is designed to partly meet conditions imposed by competition watchdogs in the U.S. and Europe on Alcan's multi-billion dollar takeover of French aluminum firm Pechiney in 2003.

Alcan also said it has received commitments from financial institutions to raise approximately $2.8 billion in new bank and bond financing for Novelis.

Written by CBC News Online staff

Alcoa Inc. will build a 1.5 million metric ton alumina refinery in Guinea along with its affiliate, Alcan Inc.

Biloxi Sun Herald, MS 24 Nov 2004

The companies signed a protocol with the Republic of Guinea that sets the framework for the project, which will be negotiated over the next few months.

Production at the facility may begin as early as 2008, company officials said.

Alcoa and Alcan would market the alumina produced at the facility separately, Alcoa officials said.

Guinea has substantial deposits of bauxite, used to make alumina, the base material for aluminum

Alcoa is the world's largest aluminum producer, with 120,000 employees in 43 countries

Ecology fines Kaiser plant for river pollution

THE ASSOCIATED PRESS Wednesday, November 24, 2004

SPOKANE Valley, Wash. -- The state Department of Ecology has fined Kaiser Aluminum & Chemical Co. $40,000 for releasing dangerous PCBs into the Spokane River.

The civil penalty is the maximum the department can levy against Kaiser for four days of discharging polychlorinated biphenyls from its Trentwood rolling mill in late 2002 and early 2003.

The discharges of an estimated 143 pounds represent "harmful amounts" that are 1,000 times what the plant is allowed, Ecology officials said in their Nov. 15 order.

PCBs are manufactured chemical compounds that were once used in industry. They are carcinogenic. The U.S. Environmental Protection Agency banned commercial production of PCBs in 1979.

The PCBs discharged from the Trentwood plant far exceeded water-quality limits set to protect human health, said Jim Bellatty, manager of Ecology's regional water quality program.

Concentrations of PCBs at the aluminum rolling mill have been greatly reduced since the 2002 discharges, he noted.

Ecology's order requires Kaiser to determine where the PCBs are coming from and stop the releases. Kaiser also is required to improve its system for timely reporting of PCB monitoring results and step up its monitoring if PCB levels rise again.

Kaiser has 30 days to appeal the penalty to Ecology or to the state's Pollution Control Hearings Board. Kaiser has not decided whether it will appeal, spokesman Scott Lamb said.

Kaiser stopped using PCBs at Trentwood years ago and has spent more than $20 million to remediate PCB contamination, Lamb said.

"It is Kaiser's intention to work with Ecology in addressing the issues," he said.

Kaiser, which filed for Chapter 11 bankruptcy in February 2002, could be liable for an estimated $74 million in environmental costs at its closed Mead smelter and Trentwood rolling plant, according to documents filed in the bankruptcy case.

Information from: The Spokesman-Review,

Alcan and Alcoa sign protocol for alumina refinery in Republic of Guinea

CBC News, Canada 11:08 PM EST Nov 24

MONTREAL (CP) - Alcan Inc. and aluminum competitor Alcoa have signed a protocol of negotiation with the government of the Republic of Guinea to develop an alumina refinery in the west African nation.

The refinery will have an annual production of 1.5 million tonnes, according to a protocol announced Wednesday that sets out the framework for the project. A memorandum of understanding was announced last May.

Michael Hanley, chief executive of Alcan Bauxite and Alumina, said the large quantity and high quality of the bauxite reserves in Guinea "represents an attractive location for an alumina refinery and a potential value-maximizing growth opportunity for Alcan."

Alcan (TSX:AL) and Alcoa, through subsidiaries, each hold a 45 per cent interest in Halco Mining Inc., which in turn owns 51 per cent of CBG (Compagnie des Bauxites de Guinee). CBG currently mines bauxite for export in the Boke region of the country.

The government holds the remaining 49 per cent of CBG.

Plans call for a final investment decision to be made following completion of a detailed feasibility study within the next 12 months.

Production of alumina, which is refined into aluminum, could be expected by 2008.

© The Canadian Press, 2004

Mozal Safety Record 'Best in World', Africa November 24, 2004

Agencia de Informacao de Mocambique (Maputo)


The managing director of the MOZAL aluminium smelter on the outskirts of Maputo, Carlos Mesquita, on Tuesday declared that MOZAL's insistence on a "zero harm" policy towards safety at work and environmental issues has helped improve the company's production, allowing it to meet its targets.

Mesquita was speaking on Tuesday night during a ceremony at which prizes were awarded to companies contracted by MOZAL in various areas, and which had made an outstanding contribution to health, safety and the environment.

Mesquita said MOZAL's stress on the safety of its work force showed its commitment to a sound pattern of development. He claimed that no other aluminium smelter in the world can match MOZAL's safety record.

He recalled with pride MOZAL's ability to attain the indicator of a million man-hours without any accident. He thought it was a shame that the Mozambican public did not take pride in this sort of achievement.

In addition to paying higher wages than any other Mozambican industry, MOZAL is also one of the safest places in the country to work. Mesquita was annoyed at the continued ignorance, displayed by some in the media, as to the environmental precautions taken by the company. He recalled that when phase two of MOZAL was inaugurated in 2003, one journalist even suggested that MOZAL was responsible for drought in Maputo.

As for the rumours that, after five years of employment, a MOZAL worker is good for nothing else, because of continual exposure to high temperatures, Mesquita pointed out that it is the "pots" (the electrolytic furnaces) that must be changed after five years, and not the workers.

The furnaces operated at very high temperatures indeed - 960 degrees centigrade. But the workers are not inside the furnaces.

As AIM can testify from several visits to MOZAL, there are no abnormally high temperatures in the areas where people work.

The cooling systems work effectively, and the main determinant of the temperature in working areas is the heat of the sun, not of the furnaces. Mesquita invited reporters to visit MOZAL, and clarify any doubts as to the company's environmental and safety impact on the spot.

MOZAL is currently producing over half a million tonnes of aluminium ingots a year, all for export, which makes aluminium far an away the country's most important export commodity.

Alcan announces sweeping restructuring in Europe

Ottawa Business Journal, CanadaThu, Nov 25, 2004 9:00 AM EST

By Ottawa Business Journal Staff

Alcan Inc., the world's largest aluminium maker by revenue, said Thursday it will close three European plants, sell two and downsize four others as part of a restructuring that will cost about 520 jobs and create 40 new ones.

In a statement, the Montreal-based company cited "changing market conditions and business realities" following its US$6-billion acquisition last year of France's Pechiney SA. That deal made Alcan the largest player in its industry.

"In the normal course of business, Alcan continually reviews its portfolio based on changing economic and market conditions," president and CEO Travis Engen said in a statement.

"This proposed restructuring is necessary to ensure Alcan's competitiveness in the marketplace and to create favourable conditions for future growth and expansion."

The restructuring plan calls for the sale of high-purity operations in Froges and Mercus, France that are no longer considered core operations. Four other plants in France, Italy, the Czech Republic and Switzerland will be downsized. Three other plants in Flemalle, Belgium, Cruseilles, France, and Garbagnate, Italy, will be closed.

Lastly, Alcan said it will invest 22 million euros at its Issoire plant in France over the next two years to increase plate production capacity by 10 per cent in response to greater demand from the aerospace industry.

Alcan said talks are underway with staff at the targeted locations about how and when the cuts will be made.

The costs associated with the restructuring also remain unknown, though the company said they should be "within the scope of the expected overall Pechiney integration costs".

Alcan employs about 46,000 staff in Europe

Verbund plans to build 800 MW gas-fired power plant in Slovenia (subscription), Greece 12:56 - 25 November 2004 -

Austria’s largest power producer and transporter, Verbund, plans to build an 800 MW gas-fired power plant in Slovenia, the company said on Wednesday.

Verbund reached an agreement with Slovenian aluminium manufacturer TALUM and the country’s largest electricity supplier group, state-controlled Holding Slovenske Elektrarne (HSE), concerning the establishment of a joint Slovenian company for the planning and construction of the 800 MW plant on the TALUM site in Kidricevo.

It is expected that the output could supply both the domestic, and neighbouring Austrian and Italian markets. The joint venture would enable the partners to intensify their long-standing collaboration in Slovenia, Verbund said. Verbund has been present in Slovenia since June 2001 through APT Power Trading SL, the Ljubljana-based distribution channel of the group’s trading subsidiary, APT. HSE for its part was interested in increasing its production capacity.

In 2003, the group recorded a total external sales volume of 8.8 TWh of electricity based on total own production of 6.3 TWh. For state-controlled TALUM, there would be additional advantages as a result of the plant through the use of the infrastructure on the company site in Kidricevo, Verbund added. ADS

US$2.2bil alumina refinery part-owned by Aluminum Corp of China is being delayed

The Malaysia Star, Malaysia 25 Nov 2004


Construction of a US$2.2bil alumina refinery part-owned by Aluminum Corp of China is being delayed while awaiting government approval, an official involved in the project said yesterday.

He said that the first part of the refinery, with capacity of 1.6 million tonnes, would be built by the first half 2007, behind a previous schedule of second half 2006.

"Construction will be slower than we had expected. But we have not completely stopped the project, as design work is continuing," said the official for the city government in Bose, home of the project. – Reuters

Police: Ten pickets armed with knives, bats and clubs arrested at Ohio aluminum plant

North County Times, CA Associated Press 11/27/04

HANNIBAL, Ohio -- Ten striking factory workers armed with knives, bats and clubs were arrested after attempting to block vans entering an Ormet Corp. aluminum plant, police said.

The picketers were charged Friday with violating a court order requiring them to stay at least 2,000 feet away from the plant's entrance, Monroe County Sheriff Manifred Keylor said in a statement.

Additional charges of resisting arrest and assaulting law enforcement officers were pending, the statement said.

Police said they seized various weapons from the picketers, including a sledgehammer, an ax, knives, baseball bats and wooden clubs.

Danny Longwell, a local steelworkers union representative, said picketers blocked the vans because they believed they were carrying replacement workers into the plant on Friday. A call to the union seeking additional comment Saturday was not immediately returned.

But Ormet chief executive Mike Williams said Saturday the vans were carrying food, additional security personnel and one salaried worker, not replacement workers.

About 1,300 workers at two plants in Hannibal went on strike Monday against Ormet, which has sought U.S. Bankruptcy Court approval to void its labor agreements and impose new ones. The company is trying to cut $23 million in costs by freezing pension benefits, raising worker health plan contributions and changing work rules.

Union officials want the court to rule on its motion to have the company consider bids to buy the plants, which are located about 115 miles southeast of Columbus.

The situation outside the plants has been tense since the strike began. A truck was turned away Monday morning by crowds of picketers at the company gates and the driver of another truck was arrested after hitting a striker several hours later. The striker was treated at a hospital and released.

Wheeling, W.Va.-based Ormet has about 2,000 employees and plants in Ohio, West Virginia, Indiana and Louisiana. Workers are striking only at the two Hannibal plants.

DUBAL to invest massive AED 110 million on second phase of casthouse expansions

AME Info, United Arab Emirates 27 Nov 2004

DUBAL, the largest single site smelter in the western world and a leading producer of aluminium is investing in excess of AED 110 million in the second phase of its casthouse expansions, as part of a comprehensive initiative to add additional capacity to its existing facilities, at a cost of AED 380 million.

The second phase of the expansion is expected to complete no later than August, 2005, which will allow DUBAL to further its already considerable finished production capacity from a current 750,000 tones per year, to 850,000 tones per year.

"Most of the second phase's investments will go to acquiring and installing new equipment associated with DUBAL's already proficient casting operations. The new machinery will allow DUBAL to further its finished production capacity by 80,000 tones per year. This new investment is set to streamline DUBAL's entire casting operations, from the initial process of receiving molten metal to its final intended shape, prior to final packaged form," said Mr. Ibrahim Galadari, Manager, Casting Operations, DUBAL.

The investments will provide DUBAL with yet another state-of-the-art machinery and equipment for their casthouse 3 operations. They also include the construction of buildings and other civil structures, a water installation facility, a new power control room and a high-tech casting machine that will accelerate the rate of stacking and packaging of manufactured aluminium. Also, an environmentally secure monitoring system have been installed with the existing building part of phase 1 expansion, specifically designed for measuring the rate of gaseous/ particulate emissions into the atmosphere.

More recent investments involved the extending of DUBAL's casthouse 2. The installation of new equipment there lead to a substantial increase of a massive 130,000 tones per year, in DUBAL's overall production capacity. This was achieved at a cost of an immense AED 270 million. The completion of phase 1 and the projected investment in phase 2, together will ensure that DUBAL's cast houses will become the largest operation of its kind in the world.

"Because of the widely renowned purity of its potlines, DUBAL already manufactures a substantially superior quality of aluminium. The uniqueness of the phase 1 is that DUBAL have installed and acquired the largest heat treatment furnaces in the world to enable it to process the cast metal from its already commissioned casting facility through this," added Mr. Ibrahim Galadari.

RusAl Tax Break, IL 11/28/04

MOSCOW (Reuters) -- Russia will extend for another nine months from Nov. 29 a zero import tariff on alumina, an intermediate product for aluminum smelting, the government said Friday.

A 5 percent import tariff on alumina had been scrapped for nine months from the end of February to stimulate domestic producers.

RusAl, the world's No. 3 producer of primary aluminum, is Russia's major importer of alumina.

Trinidad Seeks an Alternative Economic Fuel

Los Angeles Times (subscription), CA - 11/28/04

The Caribbean nation, heavily reliant on its natural gas exports, is moving to develop other, sustainable industries before reserves run out.

By Carol J. Williams, Times Staff Writer

POINT LISAS, Trinidad and Tobago — Half a millennium ago, Spanish colonialists put this tiny Caribbean land on the international trade map by putting the indigenous Amerindians to work growing cocoa.

When the natives died and the beans withered, French settlers imported African slaves to plant cotton, a crop that never flourished on the hilly, tropical terrain.

By the beginning of the 19th century, it was the British ruling the two islands and luring indentured workers from India and China to tend sugar cane, which sustained the population until an oil boom in the 1970s.

Now running out of oil and dependent on natural gas that may last only another generation, Trinidad is taking steps to diversify its economy and break its long cycle of boom and bust.

When Prime Minister Patrick Manning penned a deal with Jamaica this month to trade cut-rate liquefied natural gas, or LNG, for alumina, the move signaled what analysts see as a promising approach to development: converting a finite resource into sustainable industries.

The agreement, which assures a steady supply of the key ingredient for producing aluminum, means Trinidad can move ahead with plans to build a smelter. The project would employ at least 3,000 during construction and create 700 jobs in production, chipping away at a 10% unemployment rate and perhaps at the nation's rampant crime, committed in part by idle and disenfranchised citizens.

"LNG might be producing 70% [of petroleum revenues], but it only employs about 200 people. KFC employs more people here," said Richard Dawe, a professor of petroleum engineering at the University of the West Indies.

The aluminum plant is just one of more than a dozen industrial projects on the drawing board to exact the most long-term benefit from Trinidad's rich reserves of natural gas, which until now has been extracted and sold, mostly to the United States, for quick profit.

"We need a better balance between revenue levels and employment levels," said Frank Look Kin, president of National Gas Co. of Trinidad and Tobago.

With job creation in mind, the state-owned company is negotiating with an array of private industries in hopes of settling them into the Union Estate industrial park, an 800-acre compound planned near the port of La Brea in southwestern Trinidad.

It's not that exporting LNG hasn't benefited the country. Signs of prosperity abound, from the housing estates springing up along wide highways to the sleek new office towers in Port of Spain rising from a forest of cranes. Trinidad's economy grew more than 13% last year and is predicted to expand an additional 7% this year — and maintain that rate for the foreseeable future, said Ronald Ramkissoon, chief economist for Republic Bank Ltd. in Trinidad.

But proven reserves of natural gas will last only 24 years at the currently planned rate of extraction. Industry stewards are in a race against time to create a more viable and diverse economy for the nation's 1.3 million people before the commodity runs out.

"One of the approaches to a wasting asset is that you save some part of that income for the day when you may not have it anymore," said Ramkissoon. He noted that the government had established a stabilization fund, through which oil and gas revenues above a certain level are invested for future generations.

Unlike oil exports, whose prices fluctuate with the market, LNG deliveries are typically made under long-term contracts, giving the supplying country a more reliable profit stream.

Plans in Trinidad include offering attractive energy packages to companies that make plastics and chemicals from gas and to firms that use those materials to produce consumer goods. Aluminum from the planned smelter could supply a plant that manufactures car parts or appliances. Investors are looking at creating a dishware factory to use the melamine that is a "downstream" product of natural gas, said Look of Natural Gas Co.

In the five years since Trinidad began exporting LNG, prices have more than tripled in the American market. Two additional plants have come on line, and a fourth is under construction that will allow Trinidad to increase U.S. exports while also tapping more fuel for its own industries. Currently, Look said, domestic producers use less than 1% of the gas extracted in Trinidad.

In addition to exports, Trinidad has used LNG byproducts to support nine ammonia plants, six methanol units, a urea production facility and an iron and steel complex.

Economic planners are weighing the pros and cons of building two natural gas pipelines for supplying Caribbean neighbors whose import needs are too small to justify the costly investment in LNG facilities. The undersea conduits that could link Trinidad with nine other islands, at a projected cost of $688 million, would provide a common energy system to ease the economic integration of the 15-member Caribbean Community, or Caricom, which is expected by the end of next year.

With an eye on the record world oil prices stifling the economies of Caribbean trading partners, Manning announced this month the creation of a special fund of up to $50 million "to cushion the harsh impact of such prices on the lives of the people of our region."

The Caricom region represents the second-most important export market for Trinidad after the United States.

"Stimulating the economic development and export capacity of Caricom increases the capability of the region to purchase goods manufactured in Trinidad and Tobago," Manning said, trumpeting what some analysts viewed as a charitable gesture toward poorer neighbors as a win-win proposition.

The deal signed with Jamaica involves construction of a $236-million re-gasification plant at the receiving port, a project that will employ thousands of construction workers in Jamaica and ensure access to fuel that will generate electricity for homes and for the plants that refine bauxite into alumina, Jamaica's most lucrative export.

Unlike oil, which can be stored and transported easily, natural gas isn't economical to ship. Before the LNG plants were built, natural gas encountered during oil extraction was regarded as a nuisance and usually burned off, Dawe noted.

"There are several large countries with many times the reserves we have, but Trinidad has an advantage in geography," Look said of competitors in Algeria, Venezuela, Qatar and Russia. Compared with Trinidad, Algeria has to pay twice as much to get its LNG to the East Coast of the United States; Qatar's costs are five times more.

According to the latest U.S. Energy Institute forecast, Trinidad has about 26 trillion cubic feet of national gas in proven reserves but could have as much as 90 trillion cubic feet in unexplored areas of its territorial waters. The forecast notes that political leaders will be challenged in their push for industrial development by rising international demand for natural gas, particularly from the United States.

The government in Port of Spain has stepped up the issuance of licenses for oil and gas exploration in hopes of finding further reserves to feed both growth engines: LNG exports and job-creating domestic industries.

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Ormet CEO Issues Statement

Wheeling News Register, WV 11/28/04

WHEELING-Mike Williams, chief executive officer of Ormet Corporation, is urging United Steelworkers of America members currently on strike at the company's Hannibal Reduction and Rolling Mill plants, to carefully consider the economic realities of Ormet's situation, and not continue on a path that could lead to a temporary curtailment at the two plants, the possible loss of jobs, and significant economic challenges for communities throughout the greater Ohio Valley.

In a statement issued this weekend, Williams said: "It is extremely unfortunate that inaccurate information has convinced some Ormet employees that only Ormet's unionized employees are being asked to make sacrifices to ensure the company's survival. Nothing could be further from the truth. In an effort to keep all better informed, here are the facts.

"Ormet is a company in bankruptcy, seeking to reorganize under Chapter 11. Without the proposed savings from the employees and retirees as outlined in our Plan of Reorganization, an eventual plant curtailment could become a certainty.

"The need to improve our cost structure is nowhere greater than in our two Hannibal facilities. Over the past three years, these facilities have suffered operating losses totaling more than $100 million. Faced with losses of this magnitude, many companies would have shut down the money-losing operations and left their workers out on the street. Ormet did not do that. The company's owners and managers have done, and continue to do, everything humanly possible to keep Ormet running and continue to provide jobs and benefits for its workers.

"It is simply not true that the sacrifices have all been on the backs of Ormet's unionized employees at the Hannibal plants. Ormet's salaried employees have continued to sacrifice over the last several years and have endured significant head count reductions, benefit cuts and wage freezes, just to name a few. And Ormet's salaried workers continue to make sacrifices to keep the company's Hannibal plants up and running. This includes, most recently, giving up Thanksgiving with their families and remaining locked in our Hannibal plants to keep them operating.

"The Plan of Reorganization that we are asking the Bankruptcy Court to confirm was carefully and thoughtfully developed to be fair to everyone concerned, including the 1,500 Ormet employees who are USWA members. For example, despite the skyrocketing cost of health care benefits, the company is not taking health care coverage away from its workers or retirees, but simply asking them to pay a modest monthly contribution, just as the salaried employees have been doing for over 10 years. And the largest Ormet creditor is prepared to put $30 million of its money at risk to recapitalize the company and keep Ormet open for business.

"The Plan of Reorganization is the best plan to preserve the company in the Ohio Valley, to preserve the jobs that Ormet represents, and to enable Ormet to continue to support the communities in which it operates through wages paid, through tax dollars we contribute, through the many non-Ormet jobs that only exist because Ormet exists.

"This Plan of Reorganization has been approved by an overwhelming majority of the company's creditors and we must all work together to confirm this plan and exit bankruptcy before it is too late," Williams concluded.

Ormet Corporation employs approximately 2,000 people through its subsidiaries, principally including Ormet Primary Aluminum Corporation and Ormet Aluminum Mill Products Corporation. The company operates facilities in four states and produces high-quality aluminum products for the fabrication, extrusion and conversion markets.

Beattie highlights China exports importance on refinery tour

ABC Regional Online, Australia Monday, 29 November 2004

The Queensland Premier says exports to China are very important to the state's resources industry.

Peter Beattie has visited the new Comalco alumina refinery at Gladstone, in central Queensland, which has just transported its first shipload of alumina to China.

Mr Beattie says China's demand for a range of resources is growing strongly.

He says China had been expected to become a major coal exporter, but it has had to concentrate on domestic use.

"Economic growth is so strong they're actually sucking in resources rather than exporting them to the world," he said.

"A few years ago the coal producers thought that Japan would be taking more coal from China and the prices would go down.

"Well, what's happened is China's needed so much coal they haven't been able to export, plus there are some issues about their transport links and the price of coal has gone up."

Comalco alumina refinery general manager Trevor Peters says there is strong demand for alumina from many areas in Australia and overseas.

"Within Comalco's own system and sending it to our smelters in Bell Bay in Tasmania and also NZAS [New Zealand Aluminium Smelters] in New Zealand," he said.

"We also have a large contract with a company which has smelters down in the Hunter Valley.

"Our first shipment, however, went to China, so our product will go to quite a different market in the world."

Ten Years of hard work for Smelter to win Business Ethics Award

Press Release: NZ Aluminium Smelters Monday, 29 November 2004, 9:46 am

New Zealand Aluminium Smelters (NZAS) was awarded the AUT Business Ethics Award for its "The Goal is Zero" safety programme at the Deloitte / Management Top 200 Awards 2004 last night.

Comalco Chief Operations Officer Tom Campbell is delighted that NZAS’ commitment to the health and safety of its employees has again been recognised. "Working with molten metal may be considered hazardous, but at NZAS we believe that all injuries and illnesses can be eliminated," said Mr Campbell. "Our goal is zero injuries and zero incidents.

"Commitment to the health and safety of our employees is the key driver of the NZAS culture and we set a demanding target of a 50 per cent improvement in safety performance each year.

"Ten years ago NZAS’ safety performance was only average by world standards. That was simply unacceptable. It has taken ten years of unending focus on safety, by the entire workforce at Tiwai to get to this point. Any injury at all is unacceptable and we are determined to truly reach our goal of zero."

Earlier this year the International Aluminium Institute rated NZAS as the Best Performer of 60 smelters worldwide in their annual Safety Performance Benchmarking exercise.

Tom Campbell, Comalco Chief Operations Officer, PH 0274 353 487 Brian Cooper, GM Operations PH 03 218 5442, or 027 2710 622

Notes for editors: NZAS is a joint venture owned by Comalco Limited (79.36 per cent) and Japan’s Sumitomo Chemical Co. Ltd (20.64%). NZAS produces 334,00 tonnes of aluminium per annum including the highest purity aluminium in the world. NZAS contributes an average net economic benefit of $121 million per annum to NZ and is a world leader in the aluminium industry in terms of production, efficiency and safety. NZAS is five star accredited by the National Occupational Safety Standards Association of Australia and participates in the ACC Partnership Programme at the highest level available.

Copyright (c) Scoop Media

Alba urges business leaders to join Global Compact - BAHRAIN

MENAFN, Middle East - Bahrain Tribune - 28/11/2004

The Aluminium Bahrain (Alba) Chief Executive, Bruce Hall, has reached out to key government officials and some of Bahrain's most influential business leaders with an invitation to join a world wide initiative to help develop and promote responsible corporate citizenship.

"The Global Compact, a United Nations (UN) initiative, seeks to advance responsible corporate citizenship so that business can be part of the solution to the challenges of globalisation," said Hall, speaking at an Environment and Metal Supply Conference that was hosted by Alba at the Ritz Carlton Hotel Bahrain and attended by representatives from Bahrain's aluminium industry, environment experts, senior government officials and market analysts.

"The idea is to use the power of collective action, through the Global Compact, to realise a more sustainable and inclusive global economy," he said.

"The initiative was launched four years ago by the UN Secretary General, Kofi Annan who challenged business leaders to promote and apply, within their own corporate domains, principles that protect labour rights, the environment and the community at large," he said. "In recognition its long-standing commitment to protecting the environment and serving the local community, Alba was invited by the UN to be one of the 50 inaugural members of the initiative," he said.

"The UN's Global Compact initiative has since proved a remarkable success but although membership has shot up to more than 1,500, there remains a very low level of activity from the Arab states and, other than the Alba instance, no activity at all from Bahrain," said Hall. "Alba has, since its inception, recognised its responsibilities in contributing towards the sustainable growth and development of Bahrain and our stakeholders. It's a corporate philosophy that is spelled out in our company vision and, in line with that vision, we set ourselves a target to meet with a dozen Bahrain-based companies to encourage them to join the Global Compact."

Also addressing the conference were Eirik A. Nordheim from the International Aluminium Institute (IAI) and James Salter, the Principal Metals Analyst, from Metal Bulletin Research.

Nordheim delivered a presentation in which he discussed the global aluminium industry and its sustainability. He explained the objectives that the IAI members had voluntarily committed to achieving and presented statistics to quantify their performance.

According to Nordheim, IAI members are on target to meet their objectives with emissions, for example, have dropped to less than 30 per cent of their 1990 levels.

Nordheim, who also discussed the global mass flow of aluminium, noted that, since 1888, 660 million metric tonnes of aluminium was produced and that three quarters of the aluminium ever made is still in productive use today.

In his presentation, Salter provided a global outlook for the aluminium market and analysed the demand and supply sides of the industry, before bringing them together to form some predictions for aluminium prices over the next year.

"We believe that, in 2005, aluminium prices will remain high and we expect a slight increase on the average for 2004," said Salter. "Although aluminium prices are unlikely to sustain a surge to even higher levels next year, there are good reasons to expect the market to remain strong and prices high," he said.

Alumina production and aluminum product processing sectors may be the next to overheat

Interfax, Russia 30 Nov 2004

Shanghai. Interfax-China - Industry insiders are worried that a new wave of over capacity and blind expansion could sweep through the alumina production and aluminum processing sectors. Many firms are entering these markets, especially as the central government's crackdown on the previously overheated electrolytic aluminum sector pushes companies to look for new opportunities. If unregulated, this rapid expansion may accelerate the depletion of China's limited bauxite reserves and create a glut of aluminum processing capacity.

Peng Fang, the Deputy Head of the Aluminum Section Products Factory of the Sanmenxia Tianyuan Aluminum Industry Group in Henan Province, told Interfax, "When facing large scale deficits, there are two ways for electrolytic aluminum enterprises to minimize financial losses and return to profitability. One is to expand into power generation or coal production as a way of cutting down costs, while the other is to shift to the alumina and aluminum product processing field. These two strategies have been widely adopted by many electrolytic aluminum producers and also by investors that were originally planning to invest in the electrolytic aluminum sector when it was still profitable."

Peng warned that since these strategies were fairly obvious, many companies were adopted them, threatening to create a new wave of blind expansion. In her analysis, "The situation in the upstream and downstream production sectors of the aluminum industry is now becoming like the electrolytic aluminum sector was several years ago, characterized by rapid expansion without long term planning, supervision, and administration. Now a large number of small and medium companies are jumping into a big wave of bauxite mining, alumina production, and mid level aluminum products processing."

Peng warned that this trend may have serious implications for the sustainable development of China's bauxite reserves. "This boom in alumina production has been directly triggered by the fact that around 50% of China's alumina supply is imported and Chalco is the only domestic alumina producer. It would certainly result in severe bauxite resource depletion, due to the widespread, unplanned bauxite mining and the fact that some of Chalco's bauxite supply is also purchased from independent small and medium sized mines," she warned.

There are a total of 19 alumina projects currently under construction or being planned, with a total capacity of 10 mln tons, which some have suggested would be a step towards breaking Chalco's monopoly.

Domestic bauxite reserves are predicted to have a maximum lifespan of only 20 years, provided that production and consumption remain at 2003 levels. For example, in order for Henan Province's bauxite supply to last at least 20 years, production should not exceed 5 mln tons per year. However, Henan's capacity would reach 7.25 mln tons if all projects currently being planned and constructed are brought on stream, according to the China Nonferrous Metals Industry Association (CNMIA).

Henan's bauxite reserves total 600 mln tons, while so far only 178 mln tons are minable, which can meet Henan's demand for ten years. By expanding prospecting and enhancing mining technologies, the life of the reserves could be lengthened by 5 to 10 years, according to the Henan Land and Resources Bureau.

On the other hand, the boom in aluminum product processing has also aroused the concern of insiders and experts. As of the end of 2003, China's aluminum products processing capacity amounted to 5 mln tons, while the figure would reach 10 mln tons if all new projects become operational.

Experts estimate that only five new hot rolled lines would result in over capacity, according to the CNMIA. However, there are 11 hot rolled production lines with a total capacity of 2.1 mln tons and 28 cold rolled production lines with 750,000 tons capacity are under construction. There are 25 casting lines with a total capacity of 210,000 tons and 30 four high cold rolling mills starting operation this year.

Wang Jinghai, director of the Luoyang Nonferrous Metal Processing Engineering Design Institute, said, "Currently the annual domestic consumption of aluminum plates and strips is around 1.5 mln tons, of which 300,000 tons are imported precise strips and foils. 2007's demand is predicted to be 2 mln tons and 2010 above 2.5 mln tons. However, the total capacity of aluminum strips, plates, and foils will reach 3.5 mln tons in two to three years, most of which are mid-level products. This glut of similar products will likely severely push down prices."

In fact market disorder and price wars have already appeared in the aluminum products processing field. Peng disclosed, "The extruded aluminum products field has been disrupted up by lots of small and medium enterprises. Now the aluminum plates, strips, and foil industry will be the next victim. The products produced by these new entrants are relatively low tech and will clearly be banned by the government in the future, just like the electrolytic aluminum projects adopted out-of-date technique and caused serious environmental problems."

When asked what could be done to prevent these sectors from ending up like the electrolytic aluminum industry, Peng said, "In Japan there are specific associations working for the macro-control of the various sectors. For example, the aluminum association sets the number of production lines for aluminum products processing. Other enterprises are not allowed to construct the same kind of production line but instead have their products processed, which effectively prevents overcapacity and drastic price competition."

But Peng was hesitant this strategy could work in China as well. "However, China's unique situation is very complicated, with much of the confusion caused by a huge number of small and medium companies together with local protectionism," she noted.

However, she argued that the central government's current strategy was inadequate, arguing that "Nevertheless, the government's immature policy always cracks down on one sector while completely opening up another, which attracts short-sighted, small and medium enterprises into a sector, and then later wipes them out with a new wave of regulations. For example this year's macro control policy on the electrolytic aluminum field, which idled approximately 1 mln tons capacity in Henan, wasted a substantial about of resources."

Instead of this cycle, she suggested that "It is advisable for the authorities to first restructure and merge the medium and small enterprises, to control the scale of investment from the very beginning."

Wang advised, "Competition solely based on capacity expansion and prices is not the future of the aluminum products processing field. Since China's relies on imports for almost all high-end aluminum products, domestic aluminum enterprises should develop this kind of products, with favorable prices, to replace imports."

Dream Gas And the Development Conundrum, Africa November 29, 2004

Public Agenda (Accra)

OPINION : Samuel Adu-Asare

Just recently, Ghana's parliament took the very important step of going ahead to ratify the Treaty and the Enabling legislation (Pipeline Bill) on the West African Gas Pipeline Project, in spite of public concerns about the contractual and legal implications of the deal.

It appeared the judgement of those in whose hands we have entrusted the destiny of this nation was clouded by the expectation that, with the passing of these legal documents, gas would be knocking at our doors as a cheaper option to crude oil, whose prices cannot be guaranteed. It probably might. But at a cost that, if we do not take full advantage of the available supply, might render Ghana the ultimate loser in the deal. The big question is: whether or not we are ready, and have planned to utilise it to our optimum benefit.

In order to meet our obligation for the next twenty years, it is required under the Treaty, to pay for the supplied gas whether it is put to maximum use or not. With the fold-up of VALCO, which hitherto was a major consumer of power, Ghana would likely be saddled with excess power from the WAGP project, in addition to its hydro power plants. And until a secondary market is well developed for the utilization of natural gas, it would be difficult for the VRA to fulfil effective payments to the commercial group. Under such terms, if an additional market is not found immediately in the sub-region, Ghana would be a loser.

The Milestone

The Futurists have predicted that, at the rate at which global economy is growing, natural resources, particularly crude oil, which reserves are depleting, cannot sustain the global economy within the next fifty years and beyond. In view of this, the OPEC states have taken a position, which suggests that with the least distortion in oil producing countries such as in Iraq, Russia, Nigeria or in Venezuela, global oil prices must be adjusted upwards to reflect a crisis situation. The implication for this is that governments and in particular those in developing countries such as Ghana, must necessary absorb the price shocks to the detriment of their economies.

Although the government has instituted a National Petroleum Tender Board (PTB) under its deregulation policy, not much has been forth coming from the PTB as far as initially applying the principles of price adjustment under the deregulation programme is concerned.

The opposition leadership is also not telling the masses the plain truth about the state of the economy with respect to the global oil crisis. At the current high rate of crude oil price, swinging between $40 and $50 per barrel, mounting platforms and saying that prices of petroleum products are too high in the country could be irresponsible. At this critical stage of our economic development, the masses cannot accept such cheap political talk. Petroleum prices sometimes have to be adjusted to relief government of the burden of excessive subsidies, which often create distortions in the economy.

With the inception of the WAGP project, Ghana can indeed, once again be assured within the next twenty years of some form of relatively cheaper source of fuel for development, as was in the case of the hydro power project at Akosombo. The socio-political and economic situation, within the sub-region suggests that, Ghana should organize its economy well and take advantage of the cheap gas under the WAGP project, to industrialise.

The critical challenge here is the advantages that we shall have with the availability of the abundant supply of electricity power and our vision on how to utilize the electricity generated for real economic growth within the next two decades as assured by the government.

Development of the Secondary Markets

Perhaps what the country should concern itself with after managing to swim out of the HIPC waters is to think of how best to harness the thermal electricity that would be generated at Aboadze for the economic development of the country.

It would be recalled that Ghana has had a very long history and tradition of planning for national development. Ghana was reputed to have completed the first development plan in the world i.e. the Guggisberg Plan in 1919. This was more of a public investment programme, than a comprehensive development plan but managed to provide the framework for the first efforts to develop the Gold Coast, up to 1926. This first plan for the country was developed by the colonial administration, without any participation from the people, and was implemented largely by the administrative service.

After this period, very little real development took place, until the independence movement provided the impetus for further development of the country. Beginning from the immediate post-independence era, the economic and social development of Ghana was guided by several planning processes. Among these were the 7-Year Development Plan of Dr. Kwame Nkrumah that began from (1963/64) to (1969/70).

Within this development programme was the objective of Osagyefo Dr. Kwame Nkruma 's dream of constructing the Akosombo hydro power plant, to drive the industrialisation programme for the country. The construction of the VALCO Aluminum Plant, which at that time, took half of the power generated, for the processing of imported alumina into aluminium, and the construction of the Tema industrial township, were made possible due to the policy of growing the economy at that point in time, with the availability of cheap hydro power. The seven-year development plan of Dr. Nkrumah provided an accelerated development programme for the country.

Availability and management of cheap power from hydro, thermal or other energy sources is the main propeller for driving the course of industrialisation towards the transformation of economies, with the view to improving the living conditions of people.

Today, the story is different. Kaiser/VALCO has folded up due to the higher tariff demands from hydro-power. With the inception of the WAGP and the expected abundance relatively cheaper source of power, the need to identify secondary markets i.e. industries and domestic applications to be developed to propel the country into a real middle income status, has become urgent. It is the expectation of well-meaning Ghanaians that the government came up with a development plan, targeting the maximum utilization of gas in the secondary market.

The NDC government is credited with the acceleration of electricity expansion in the country, through the National Electrification Scheme (NES). With the support of donors, about 45% or more of the country has so far had electricity extended to them. The government, it is believed, will continue to accelerate the expansion of electricity coverage in the country. It is important, however, that such an expansion programme, shifted emphasis from the utilization of energy for social needs, to the processing of Ghana's abundant natural resources. To a large extent, this will minimize the import dependency syndrome, particularly with regards to goods that can be produced or processed here, to boost foreign exchange earnings.

The West African Gas Pipeline Project when fully operationalised, would enable the Volta River Authority (VRA) to generate power more cheaply for the country's economic development. For the next twenty years, Ghana will relatively have a stable energy regime to accelerate her development. The right thing to do now will be to draw up a development programme, geared towards industrialising certain parts of the country, such as the Western region, Central, and the Northern parts of the country, where natural resources abounds, with the view to achieving a balanced regional development of the country.

Alumina domes canned

Tacoma News Tribune, WA November 30th, 2004 01:34 PM (PST)


Calloway Ross, Inc. workers dismantle two storage domes on Terminal 7 in the Port of Tacoma on Monday. The domes, used by Kaiser Aluminum to store alumina ore, were bought by Chinook Ventures, Inc. and will be reassembled elsewhere. The removal of the domes will make room for more container terminal storage.

Two Tacoma Tideflats landmarks, whose profiles resemble that of the Tacoma Dome, soon will disappear from a shipping terminal on the Sitcum Waterway.

Contractors are now disassembling two 11-story alumina ore storage domes in preparation for an expansion of the Port of Tacoma’s Terminal 7 container storage yard.

British Columbia businessman Barry Oliver of Chinook Ventures, Inc. bought the two structures. He plans to reassemble them in an undisclosed location to store lime. By selling the domes to Oliver, the port saved itself considerable demolition expense.

The Port of Tacoma built the two domes in 1966 to serve Kaiser Aluminum Corp.’s Tacoma smelter and other aluminum plants in the Northwest. From then until 2000, the aluminum company used the domes to protect alumina ore shipped in from Australia from moisture and wind before it was converted into aluminum.

A large crane unloaded the ore from ships and dumped that ore into a hopper. From that hopper, a conveyor system carried the ore to the south dome. Another conveyor system carried ore from the south dome to its north twin if the south dome was full.

The Tacoma Kaiser smelter closed in 2000 after rising power prices and declining aluminum demand made the smelter, opened in 1947, uneconomical. About 280 workers lost their jobs in the plant shutdown.

The Port of Tacoma bought the smelter near Fife and auctioned off some 6,000 tons of alumina ore still stored in the domes and on the smelter site. The port plans to level the smelter and use the land beneath it for port terminal expansion.

Vincent Brown, project engineer for the port’s Terminal 7 expansion project, said the removal of the domes will open up another 10 acres of land for use in the container terminal. Taiwan’s Yang Ming Marine Transport Corp. has signed a letter of intent to lease the renovated and expanded terminal from the port.

Contractors working for Oliver’s Chinook Ventures are removing the two domes’ elaborate system of conveyors and are beginning to carefully take apart the aluminum sheathing and wooden framework supporting it.

That sheathing and framework will be numbered and coded for reassembly on another site.

Brown said once the dome structure is removed, the port will demolish the 20-foot-high concrete walls supporting the domes and the concrete slab covering the bottom of the storage buildings.

Once the site is leveled, the area will be paved for a container storage area. Yang Ming is expected to occupy the renovated terminal in mid-summer 2005.

EDITORIAL: Speed Up Ressurrection Of VALCO

GhanaWeb, Ghana 30 Nov 2004

WHEN NEWS BROKE some months back that Kaiser Aluminium Corporation of America was no longer interested in operating the Volta Aluminium Company (VALCO), it seemed that the final nail had finally been driven into the coffin of the dream of the founding fathers for an industrialised Ghana.

That the gradual whittling away of the industrial master plan that began with the overthrow of the government of Osagyefo Dr. Kwame Nkrumah in 1966, when machinery imported for various factories were allowed to rust away at various sites across the country, had reached its zenith.

That gloom persisted for all true lovers of Ghana till a month ago when the news broke that the bidding process for the takeover of the VALCO was warming up to be very competitive, with three contending bids from the Aluminium Company of America (ALCOA), which already holds a 10 percent minority shares in the company, the BHP Billion of Australia, and Rusal Aluminium of Russia.

Dr. Charles Mensah, Resident Director of VALCO, who disclosed the state of the bidding process to a journalist, also said that the three "giants" of the global aluminium industry had indicated their readiness to fulfil the basic condition of establishing a bauxite refinery in Ghana to feed VALCO’s Tema smelter.

The news that the elusive bauxite refinery was a condition precedent for the winning of VALCO was most exciting.

How can a nation with abundant bauxite deposits at Nyinahin and Abuakwa import alumina from abroad to feed the VALCO smelter?

Now those bauxite fields can be exploited to provide employment and needed development for the mining streams that would come on stream, making it possible for us to claim that we have an aluminium industry in the country.

GYE NYAME CONCORD was therefore excited when the the Government of Ghana indicated that it had purchased the company. But that is where our excitement ends. We pray that those in charge of the purchase realise the need to quickly parcel out the plant to an efficient and effective management team out of either one of the three companies or a partner company to revive the once buoyant entity as planned. There should be no delay; there should be no reason to think that after purchasing the company for $18 million, we can and should attempt to run it as a state. Let us not deceive ourselves. We need it revamped as soon as possible by those who have done it before and know how to, and not by a nation that has consistently shown that it can’t manage almost anything – not even an airline or shipping company such as Ghana Airways or Black Star line. Those managing the sale process therefore deserve all the luck they need as Ghanaians expect that they would do their duty diligently, always keeping the national interest supreme.

Government to beat aluminium into new shape

Russia Journal, Russia - November 30, 2004 Posted: 08:40 Moscow time (04:40 GMT)

By John Helmer

The Accounting Chamber, Russia's independent state auditor, has announced that tolling contracts, which Russian aluminium companies use to reduce payment of Russian taxes for metal smelted in Russia and shipped abroad, are illegal if the same Russian group owns both the offshore tolling contractor, and the onshore company which processes the metal. "Our lawyers told me," Chamber spokesman Andrei Belayev told The Russia Journal, "that companies have to be legally separate to produce a tolling contract. Unfortunately, under the Russian legislation it's difficult to prove that an offshore company is a part of some Russian holding group. But if it is proved, the tolling contract becomes illegal." This is the strongest official Russian statement to date, challenging claims by Russian aluminium producers that their tolling contracts are lawful.

Just two groups produce all of Russia's aluminium -- Russian Aluminium (Rusal), controlled by Oleg Deripaska, and Siberian Ural Aluminium (SUAL), controlled by Victor Vekselberg and managed by Brian Gilbertson. Tolling schemes are used by both, but the majority of metal exported under tolling contracts comes from Rusal. According to a statement last month by Rusal spokesman Yevgenia Harrison, "the Russian government is well aware that Rusal is the only Russian metals company whose revenues do not primarily come from the mining of Russian ore. To a very large extent, we are processors of imported raw materials. Thus a relatively large portion of Rusal's value added is created outside of the Russian Federaton. As a major importer of raw material and a major exporter of processed product, Rusal complies with all applicable legal and tax requirements, securing the appropriate governmental tolling licences on each and every transaction. There was a debate about tolling in Russia, today the situation is that, with some amendments, it has been decided that tolling remains in the national interest."

In October, the Accounting Chamber reported the results of an investigation it had conducted of imports of alumina and other raw materials to three Russian smelters, and to Electrozinc. Belayev said the smelters were Bratsk, owned by Rusal, and two SUAL smelters, Uralsk and Nadvoitsk. The purpose of the investigation, according to the Chamber, was to determine whether, subsequent to the import of raw materials, the export of metal was eligible for rebate of value-added tax (VAT) or relief from export duties. The investigation did not probe the ownership of the offshore tolling contractors and the onshore tollees.

Currently, VAT is levied at 19%, while export duties have been levied at 5%.

In recent days, a senior Finance Ministry official told The Russia Journal that in order to be legal and qualify for relief from Russian taxation, "tolling should be made between two separate companies which should be located in different countries." Asked if tolling in export-import operations is lawful between companies that are owned by the same Russian group, the official said: "It's a very difficult question which I think should go to the General Prosecutor for detecting which companies are affiliated between each other. We are not able to answer that question."

A Russian industry source, who asked not to be identified by name, said that between 50% and 65% of Rusal's annual exports of aluminium are conducted under tolling contracts. Rusal does not disclose the volume or value of its export operations. The company does disclose aggregate production results, and has reported that in the first nine months of this year, "aluminium production showed 4% year-on-year growth to 2,001,732 tonnes." The industry source said that the volume of aluminium produced by Rusal under tolling contracts can be estimated from the volume of alumina, imported under tolling contracts, that is processed in Rusal's four smelters.

Rusal spokesman Harrison was asked to explain why the company does not release export data. She was also asked to say what value of Rusal's metal shipped abroad was subject to tolling contracts, and what the company estimates to be the value of the tax savings. She refused to respond. She also declined to say if the tolling contractors are separate from the Rusal group, according to the standard spelled out by the Accounting Chamber and Finance Ministry.

Harrison did say in her official release: "Today, the Russian government reports aluminium exports in two ways, at total market price and based on tolling value (ie, the value-added in Russia), which can add to the confusion about interpretation of data."

The profitability of aluminium exports for the offshore tolling contractor can be gauged from the large margin of difference between the price declared at Russian Customs for aluminium, as it leaves the country, and the price at which the same metal is declared at US Customs, when imported to the United States. The average price in the first half of 2004 for Russian aluminium imported to the US was $1,685 per metric ton. The average price of Russian aluminium exported from Russia in the same period was $1,262, a gap of $423 per ton. According to the US trade data, the US imported 524,455 tons in the period to July 31 of this year; most of this metal came from Rusal. The price gap is roughly equal to $222 million.

The industry source told The Russia Journal that by applying the average LME pricing for Rusal metal exported under tolling contracts, the taxable value protected from Russian taxation through tolling contracts could be between $600 and $800 million per annum. Harrison declined a request to comment on this calculation. A year ago, when the Russian State Duma was considering legislation to end tolling, deputies estimated that tolling tax relief for the aluminium exporters was costing the Russian treasury about $115 million per annum. Harrison also declined comment on that estimate.