AluNews - September 2004

Strike Slows Metals Exports From St. Petersburg

Moscow Times, Russia Thursday, September 2, 2004. Page 5.

Combined Reports LONDON -- Metal shipments from St. Petersburg are being delayed because of industrial action, metal traders and shipping agents said Wednesday, though stevedoring companies denied any slowdown.

"There is some kind of go-slow going on in St. Petersburg. I think it's mostly affecting aluminum shipments," one European physical aluminum trader said.

"Delays seem to be about a month long. A lot of metal is being stocked up around there," he said.

Freight shipments began bypassing St. Petersburg for ports in neighboring Baltic states in July, when dockers demanded that the port's new owner, steel major Novolipetsk, increase their salaries.

Novolipetsk, which also bought the port's First, Second and Fourth Stevedoring companies, refused. The standoff has resulted in more than 100 companies, including ship owners and shipping agents, each losing thousands of dollars per day, local business daily Delovoi Peterburg reported last week.

"The port is not willing to compromise with the dockers, and we are experiencing huge losses due to broken terms of delivery. But we can understand the port -- the dockers' wages are already higher than average and cannot be raised," a shipping agent told the paper.

A British trader said Wednesday that a parcel of nickel he had booked through St. Petersburg for arrival mid-August had been delayed by at least two weeks.

"First and Second Stevedoring Companies load and discharge ships in the seaport and at the moment perform their job according to official daily rates -- very slowly," a shipping agency source in St. Petersburg said.

However, the stevedoring companies denied there had been delays in metals exports.

"We load planned cargos of aluminum, there have been no delays nor lower volumes," said the executive director of the First Stevedoring Co. at the port, Vladimir Krasheninnikov.

"We have loaded all [aluminum and nickel] we planned for July and August and we expect to load all the metal in accordance with the plan in September," said Stanislav Zhemchuzhin, deputy director of the Second Stevedoring Co.

A second European trader said he doubted delays were as long as a month.

"A month's delay is equivalent to about 150,000 tons of metal. There have seen some slowdowns, but they are not problematic," he said.

Novolipetsk was not immediately available for comment.

The port loaded 768,000 tons of non-ferrous metals in the first seven months of 2004 versus 901,800 in the same period last year.

(MT, Reuters)

Ormet Cuts Upper Jobs

Wheeling Intelligencer, WV 02-Sep-2004

By APRIL LEIFFER

Ormet Primary Aluminum Corp. has eliminated 20 percent of its corporate staff this week as part of its plan of reorganization the company filed with the United States Bankruptcy Court for the Southern District of Ohio.

Ormet officials filed the plan with the hopes of completing its financial reorganization and emerging from Chapter 11 bankruptcy by the end of the year, said Debra Boger, vice president of administrative services.

"As part of that plan, there are several cost reductions and activities that need to take place throughout the company," she explained. "There was a reduction in corporate overhead costs. There were some job eliminations in our corporate staff departments. We reduced the head count there by 20 percent."

A statement from the company released Thursday noted that the plan provides for the continued operation of the company's manufacturing units and, upon approval and implementation of the plan, will give equity ownership to the company's current creditors.

Under the proposed plan, MatlinPatterson Asset Management, a New York-based private equity fund, will make a $30 million investment in the company to support the plan. As a result of this investment, as well as its ownership of pre-petition debt, MatlinPatterson will become the company's largest shareholder.

"Developing a financial reorganization plan for a company as large and complex as Ormet in just seven months is quite an accomplishment," said R. Emmett Boyle, chairman and chief executive officer. "It required extraordinary effort and skill on the part of many people including our restructuring team, Ormet management as well as all Ormet employees. This progress has only been possible with the loyalty and support of our customers and vendors, who have continued to buy from us and ship to us throughout the process."

Boyle said the filing of the plan is a major step forward in the restructuring process. "I remain confident that we will successfully complete that process as planned by the end of the year and emerge from Chapter 11 as a company well-positioned strategically, operationally and financially for long-term survival, strength and success," he said.

Ruth E. Ford, a principal at Xroads Solutions Group and Ormet's chief restructuring officer, said the effectiveness and speed with which the process has moved are "remarkable."

In addition to creditor and court approval of its reorganization plan, Ormet's current priorities include negotiating new labor agreements with the United Steelworkers of America at the company's two major operating facilities in Hannibal.

Boger said the company has been in negotiations with USWA Local 5724, which represents the Hannibal Reduction Plant, and Local 5760, which represents the Hannibal Rolling Mill, for about three weeks.

"We reached a tentative agreement on all local issues for the rolling mill," Boger said. "We have a tentative agreement for the majority of local issues at the reduction plant. We went to negotiations (Wednesday) with the understanding that we would begin to talk about economic issues. Last March the company provided to the unions economic proposals that did entail some concessions in the areas of health care and retirements."

She added that when USWA officials met with the company, the union presented a new 40-page document of non-economic proposals.

"We're very concerned, and we voiced our concern to the union," Boger said. "These delays in addressing the economics are cauing us great concern because they're critical to the future of the company. We'll be available when they (union officials) are ready."

Robert Barr, acting chairman of the grievance committee for Local 5724, said Thursday that because the union has not agreed on all the non-economic proposals, it is important to resolve those issues.

Barr said the USWA has scheduled a meeting for 8:30 a.m. today in Pittsburgh with Ormet officials.

Ormet files reorganization plan in bankruptcy court

Reuters Thu Sep 2, 2004 11:43 AM ET

NEW YORK, Sept 2 (Reuters) - Aluminum producer Ormet Corp. said on Thursday it filed a reorganization plan in U.S. bankruptcy court that, if approved, would keep its operations running and give equity ownership to its current creditors.

Privately held Ormet also said it remained on track to emerge from Chapter 11 bankruptcy protection by the end of the year.

Ormet Corp. filed for Chapter 11 on Jan. 30, 2004, along with subsidiaries Ormet Primary Aluminum Corp. and Ormet Aluminum Mill Products Corp., saying rising medical benefit costs, low aluminum prices and weak demand had prevented it from meeting debt payments.

Under the proposed reorganization plan, which was filed with the U.S. Bankruptcy Court for the Southern District of Ohio, New York-based private equity fund MatlinPatterson Asset Management would invest $30 million in the company, Ormet said in a statement.

With the payment and its ownership of pre-petition debt, MatlinPatterson would become the company's largest shareholder.

In addition to creditor and court approval of its plan, Ormet's priorities are negotiating new labor agreements with the United Steelworkers of America union at its two plants in Hannibal, Ohio, and "addressing" rising energy costs, it said.

Ormet Corp, which is based in Wheeling, West Virginia, employs about 2,200 people in five states, where it operates primary and downstream aluminum plants.

© Reuters 2004. All Rights Reserved.

NEW PRODUCTION RECORD IN THE ALUMINIJ MOSTAR

FENA, Bosnia and Herzegovina 02.09.2004 (14:42)

MOSTAR, Sep 2 (FENA) – In August the "Aluminij" d.d. company Mostar produced more than 10,000 tons of specialised aluminium products and aluminium alloys, which is a record output in the history of this company. It goes without saying that with this production the plan for August was greatly exceeded.

"This is the result of the introduction of new technologies, constant education and training of our workers, and of the responsible and disciplined approach of the employees to their jobs" – it is said in a statement issued by the Company on this occasion.

The plan for this year amounts to 114,000 tons of aluminium and aluminium alloys. The people in the Aluminij hope that this plan will be topped, too.

Nalco May Get Nod For Capacity Addition

Financial Express, India Saturday, September04, 2004

NEW DELHI, SEPT 3: The government is likely to approve state-run National Aluminium Company Ltd’s (Nalco) $1 billion proposal to sharply raise its smelting, mining and refining capacities, a government official said on Friday.

Nalco, India’s second-largest aluminium maker, plans to raise its aluminium smelting capacity to 460,000 tonne from 345,000 tonne a year, alumina capacity to 2.1 million tonne from 1.575 million, bauxite mining to 6.3 million tonne from 4.8 million and power generation to 1,200 megawatts from 960 mw.

"The proposal has been cleared by other concerned ministries and will soon be sent for cabinet approval," an official from the ministry of coal, mines and minerals indicated.

The project, which envisages an investment of Rs 50 billion, has been approved by the environment and the mines ministries and the Public Investment Board, he stated, adding that the government was expected to clear the proposal.

The company is on an expansion mode to take advantage of its huge bauxite mines and low production cost and rising domestic demand and strong metal prices. Demand for non-ferrous metals is expected to remain strong in the country because of the expanding automobile and construction sectors.

India’s economy is seen growing by at least six per cent in the year to March 2005 against 8.2 per cent in the previous year.

NALCO has already raised the capacity of its aluminium smelter to 345,000 tonne a year from 230,000 tonne and is looking for the government’s nod to further boost capacity. The company started production at its expanded smelter in July.

It plans to produce 320,000-330,000 tonne of aluminium and 1.58 million tonne of alumina in 2004-05, up from 298,000 tonne and 1.56 million tonne respectively in the previous year, company officials observed. It aims to export 883,000-900,000 tonne of alumina and 165,000 tonne of aluminium in 2004-05, against 945,000 tonne and 131,000 tonne respectively a year earlier.

The government is looking to encourage foreign participation in India’s mining sector. The official said 56 foreign companies from 20 countries were working in India in the ferrous and non-ferrous metals and mining sector. "We want more and more people to come here," he said, adding the government will not restrict foreign companies’ from entering.

"The liberalisation process is going to continue and there will be no rollback in the policies," the official said. According to the National Mineral Policy, announced in 1993, the government will also promote foreign investment in mining joint ventures with domestic companies.

—Reuters

Alcoa smelter strike suggests Quebec's aluminum advantage may be over

National Post (subscription), Canada September 5, 2004

Allan Swift, Canadian Press

MONTREAL (CP) - A strike at a large Alcoa Inc. aluminum refinery suggests there is an evolution going on in Quebec's aluminum industry, which used to be based on cheap energy.

As the strike by 800 workers at the Becancour, Que., refinery enters its third month, there is no indication the two sides are any closer together.

On Friday the Steelworkers union said the owners - Alcoa and Alcan Inc. - have agreed to meet "as soon as possible" with the designated conciliator. The union said it met with Alcoa executives Friday in Pittsburgh after meeting Wednesday with Alcan, owner of 25 per cent of the Becancour smelter.

With low aluminum prices, Alcoa seems in no hurry to re-open two potlines closed since July 7, while keeping the third one operating with about 100 salaried employees. Becancour has a capacity of 400,000 tonnes a year.

Earlier this year Alcoa walked away from a $1-billion modernization and expansion of its Baie-Comeau, Que., smelter after it could not get an attractive energy offer for the expansion part.

Also last week, Alcan warned 1,200 workers at an alumina plant in Saguenay, Que., it will have to cut costs or it may close the plant by 2007.

Alcoa spokesman Kevin Lowery said that just as negotiations with the Quebec government over Baie-Comeau collapsed, the world's largest aluminum company signed a memorandum of understanding to build a new smelter in natural gas-rich Trinidad.

Alcoa is also in the midst of building a smelter in Iceland, its first project built from scratch in 20 years. That tiny island-country is building a hydroelectric facility to supply the smelter, using glacier runoff.

Since early in the 20th century Quebec has attracted many aluminum and other smelters, and the well-paying jobs that go with them, thanks to its abundance of cheap hydroelectric resources. Energy makes up about 25 per cent of a smelter's operating costs.

But consultant Marcel Cote said the golden days are over, as the cheapest resources have been exploited and power contracts have been locked up at low rates to industrial users.

"The aluminum industry in Quebec is going to change a lot due to those influences," said Cote, head of Montreal business consulting company Groupe Secor. "There's no doubt that the industry can find places in the world where energy is cheaper."

Cote said Hydro-Quebec has exhausted resources it could build at two cents a kilowatt hour. New, marginal sites and other forms of electricity cost six to eight cents to produce.

Existing Quebec producers will continue to produce and to invest in their smelters, he said, but "there won't be any expansion of the aluminum industry in Quebec, in the short term at least."

Cote predicts Alcoa will come back and reach an agreement to modernize its aging plant at Baie-Comeau, and even expand it.

"Alcoa will never walk away from electricity at 2 cents a kilowatt hour; they're not stupid," Cote said.

Norsk Hydro Looks Outside Europe to Make Aluminum, Car Parts

Bloomberg September 6, 2004 03:46 EDT

Norsk Hydro ASA, Europe's largest aluminum maker, plans to build smelters outside the region to reduce its electricity costs and will expand production of automobile parts in China next year.

``There could be more stress on capacity in Europe due to higher power prices,'' Arvid Moss, president of metal products, said Friday during a presentation by the Oslo-based company in Tonder, Denmark. ``We are looking at options elsewhere.''

Norsk Hydro, the world's fourth-largest aluminum producer, is looking in the Middle East, South America and Africa, Moss said. It may build a smelter in Qatar, where the company owns a 25 percent stake in Qatar Fertilizer Co., said Edward Westlake, analyst at Credit Suisse First Boston in London.

``They clearly have to lower their power costs,'' David Stedman, an analyst at Daiwa Securities in London, said in an interview. Power accounts for about 40 percent of the cost of making aluminum.

Moss declined to disclosed additional details.

Norsk Hydro also plans to expand its semi-fabricated business, which supplies more than 100,000 types of rolled and extruded aluminum shapes and tubes. Extrusions are used in auto parts, window frames and furniture. Rolled sheet is turned into panels for household appliances.

China Parts

The company next year will open near Shanghai a replica of its precision-tubing plant in Tonder, Denmark, Dieter Braun, president of Norsk Hydro's automotive sector, said in an interview. The company supplies 60 percent of precision tubes used in Volkswagen AG's Polo cars.

Norsk Hydro said it will sell components to auto-parts makers such as Calsonic Kansei Corp., Behr Gmbh & Co., Delphi Components Inc., Denso Corp., Valeo SA and Visteon Corp., which supply Wolfsburg, Germany-based Volkswagen and General Motors Corp., based in Detroit.

The company already makes auto tubing in the Shanghai area through its Hydro Aluminum Wuxi joint venture. It also manufactures magnesium alloys in Xian, China, and owns about 32 percent of Suzhou Huasu Plastics Co.

``Automakers are taking the first- and second-tier suppliers with them to China,'' said David Thomas, analyst at Commerzbank in London. ``Hydro has to get in there first to stay competitive.''

Norsk Hydro expects that European carmakers will start using more aluminum in auto frames as the addition of features such as ABS brakes and air bags adds weight. Aluminum has been mostly restricted to luxury vehicles because it sells for about three times as much as steel.

``Heavier materials will be replaced with lighter materials,'' Braun said. ``That will drive products from steel to aluminum.''

To contact the reporter on this story:

Matthew Craze in Tonder, Denmark, at mcraze@bloomberg.net.

To contact the editor responsible for this story:

Stephen Farr at sfarr@bloomberg.net

Tony McCabe, International Aluminium Industry Veteran, Joins Global Alumina Products Corporation

PR Newswire (press release) 09/07/04

GAPCO adds former BHP Billiton Project Manager to its Management Team TORONTO, Sept. 7 /PRNewswire-FirstCall/ -- Global Alumina Products Corporation ("GAPCO") (TSX-V: GPC.U), a company that proposes to produce alumina for sale to the global aluminum industry, is pleased to announce the immediate appointment of Tony McCabe as Senior Vice President, Project Director of Boke Alumina Corporation. Tony McCabe is an international aluminium industry veteran who has spent 24 years working around the world for Alcan International, Billiton, and most recently BHP Billiton.

Tony's responsibilities at GAPCO will include the management and oversight of the development of GAPCO's proposed alumina refinery and associated port, township, and rail upgrades.

"Tony's extensive experience in planning, building, and managing alumina projects around the world will be invaluable as GAPCO aggressively pushes forward with construction of our alumina refinery in Guinea," said Bruce Wrobel, Chairman and CEO of GAPCO. "With his experience from two Greenfield project start-ups in Aughinish and Alunorte, Tony will ensure that industry best practices are used during the construction and startup of our refinery."

Most recently, Tony spent six years as BHP Billiton Aluminium's International Project Manager where he was responsible for developing expansion opportunities at all BHP Billiton's alumina plants as well as Greenfield project development in several countries in Africa and Asia. He was on the steering committee of the recent Worsley expansion, which was the largest brownfield expansion ever undertaken, and became part of the owners' team during construction. Tony was also involved in carrying out due diligence on several new business opportunities in Venezuela, Australia and India.

Prior to BHP, Tony worked in an operational capacity in plants in Jamaica and Aughinish in a plant maintenance role. He was also the key focal point at Aughinish for implementing Alcan's Full Business Potential Strategy in the early 1990's. He also spent two years seconded to Alcan's corporate headquarters working on international projects and setting up common technical mechanical standards for all of Alcan's alumina refineries.

"I wanted to be part of building an alumina refinery that will not only transform the industry but provide meaningful development assistance to a country," said Tony McCabe. "I look forward to leveraging my experience and global contact network to ensure GAPCO is able to build one of the world's lowest cost, industry leading alumina refineries."

Tony McCabe completed a Masters in Project Management in the University of Limerick in addition to his Bachelor of Mechanical Engineering (Hons.) from University College Dublin.

Mitsui to spin off copper, aluminum ore sales business

Japan Today, Japan Thursday, September 9, 2004 at 04:33 JST

TOKYO — Mitsui & Co said Wednesday it will spin off its copper and aluminum sales business, effective Nov 1, and transfer it to a wholly owned subsidiary to be established in Tokyo on the same day.

The spinoff is aimed at streamlining the business which is currently conducted by Mitsui and its U.S. and British subsidiaries, as well as two affiliated companies, the major trading house said. (Kyodo News)

Alcoa, Quebec union to resume talks tomorrow

The Globe and Mail, Canada Wednesday, September 8, 2004 - Page B9 Reuters News Agency

MONTREAL -- Alcoa Inc. and the union representing about 800 striking workers at its Bécancour, Que., aluminum smelter, will resume contract talks tomorrow, but the company will not submit a new offer, an Alcoa spokesman said yesterday.

The strike over pensions, outsourcing and job security began on July 7. Both sides decided to resume talks after union leaders from the Syndicats des employes de l'aluminerie de Bécancour went to Pittsburgh to meet Alcoa management last week.

"We are going to go into this to discuss the situation. It will not be about putting in a new negotiating proposal," Alcoa spokesman Kevin Lowery said.

"We will be happy to discuss aspects of the proposal that we have put forth but that is the basis on which the discussions will take place," he said.

Union spokesmen were not immediately available to comment.

Alcoa has closed two of the smelter's three potlines since the strike began, cutting annual production at the smelter to 135,000 tonnes from 400,000.

The smelter's 25-per-cent owner, Alcan Inc., has declared force majeure on its contracts from the plant, located about 150 kilometres northeast of Montreal.

Alcoa said it would use its global aluminum production to meet its contract obligations from Bécancour.

Alcoa's shares closed up 22 cents (U.S.) to $33.07 on the New York Stock Exchange.

Mitsui to spin off copper, aluminum ore sales business

Japan Today, Japan Thursday, September 9, 2004 at 04:33 JST

TOKYO — Mitsui & Co said Wednesday it will spin off its copper and aluminum sales business, effective Nov 1, and transfer it to a wholly owned subsidiary to be established in Tokyo on the same day.

The spinoff is aimed at streamlining the business which is currently conducted by Mitsui and its U.S. and British subsidiaries, as well as two affiliated companies, the major trading house said. (Kyodo News)

Alcoa, Quebec union to resume talks tomorrow

The Globe and Mail, Canada Wednesday, September 8, 2004 - Page B9 Reuters News Agency

MONTREAL -- Alcoa Inc. and the union representing about 800 striking workers at its Bécancour, Que., aluminum smelter, will resume contract talks tomorrow, but the company will not submit a new offer, an Alcoa spokesman said yesterday.

The strike over pensions, outsourcing and job security began on July 7. Both sides decided to resume talks after union leaders from the Syndicats des employes de l'aluminerie de Bécancour went to Pittsburgh to meet Alcoa management last week.

"We are going to go into this to discuss the situation. It will not be about putting in a new negotiating proposal," Alcoa spokesman Kevin Lowery said.

"We will be happy to discuss aspects of the proposal that we have put forth but that is the basis on which the discussions will take place," he said.

Union spokesmen were not immediately available to comment.

Alcoa has closed two of the smelter's three potlines since the strike began, cutting annual production at the smelter to 135,000 tonnes from 400,000.

The smelter's 25-per-cent owner, Alcan Inc., has declared force majeure on its contracts from the plant, located about 150 kilometres northeast of Montreal.

Alcoa said it would use its global aluminum production to meet its contract obligations from Bécancour.

Alcoa's shares closed up 22 cents (U.S.) to $33.07 on the New York Stock Exchange.

Mitsui to spin off copper, aluminum ore sales business

Japan Today, Japan Thursday, September 9, 2004 at 04:33 JST

TOKYO — Mitsui & Co said Wednesday it will spin off its copper and aluminum sales business, effective Nov 1, and transfer it to a wholly owned subsidiary to be established in Tokyo on the same day.

The spinoff is aimed at streamlining the business which is currently conducted by Mitsui and its U.S. and British subsidiaries, as well as two affiliated companies, the major trading house said. (Kyodo News)

Alcoa, Quebec union to resume talks tomorrow

The Globe and Mail, Canada Wednesday, September 8, 2004 - Page B9 Reuters News Agency

MONTREAL -- Alcoa Inc. and the union representing about 800 striking workers at its Bécancour, Que., aluminum smelter, will resume contract talks tomorrow, but the company will not submit a new offer, an Alcoa spokesman said yesterday.

The strike over pensions, outsourcing and job security began on July 7. Both sides decided to resume talks after union leaders from the Syndicats des employes de l'aluminerie de Bécancour went to Pittsburgh to meet Alcoa management last week.

"We are going to go into this to discuss the situation. It will not be about putting in a new negotiating proposal," Alcoa spokesman Kevin Lowery said.

"We will be happy to discuss aspects of the proposal that we have put forth but that is the basis on which the discussions will take place," he said.

Union spokesmen were not immediately available to comment.

Alcoa has closed two of the smelter's three potlines since the strike began, cutting annual production at the smelter to 135,000 tonnes from 400,000.

The smelter's 25-per-cent owner, Alcan Inc., has declared force majeure on its contracts from the plant, located about 150 kilometres northeast of Montreal.

Alcoa said it would use its global aluminum production to meet its contract obligations from Bécancour.

Alcoa's shares closed up 22 cents (U.S.) to $33.07 on the New York Stock Exchange.

Alcan to Spend $1.3 Bln on Australian Alumina Plant (Update3)

Sept. 9, 2004 (Bloomberg)

Alcan Inc., the world's second-largest aluminum company, said it will spend $1.3 billion to expand its alumina-refining capacity in Gove, Australia, by 81 percent to meet rising demand from Asian smelters.

The project will boost the plant's capacity to 3.8 million tons a year from 2.1 million, Montreal-based Alcan said in a statement. The company's overall capacity to make alumina, the main ingredient in aluminum, will increase by almost 30 percent.

Alcan is expanding in low-cost manufacturing regions to meet rising global demand for aluminum, mainly in China. The company had delayed its decision on the Gove refinery expansion for more than a month to consider details of the project. Alcan expects world demand for raw aluminum to grow by 8.3 percent this year, outstripping world supply by 590,000 tons.

Work at Gove will start by the end of the year and should be completed by 2007, Alcan said. The project will employ as many as 1,700 people during construction and add 120 jobs at the plant when the expansion is finished, it said.

Last year, Alcan had 4.36 million metric tons of alumina- refining capacity with plants in Canada, Brazil and Australia. In August it posted record quarterly profit of $331 million on higher prices, currency gains and acquisitions.

The price of aluminum traded on the London Metal Exchange has risen 20 percent to $1,695 a ton in the past year. Prices are being boosted by high demand in China as that country's electricity shortage limits domestic production.

Alumina, which is refined from bauxite and smelted to make aluminum, has risen 12 percent to $320 a ton, according to Metal Bulletin, which tracks metal prices. Four tons of bauxite makes 2 tons of alumina, which makes 1 ton of aluminum.

Shares of Alcan rose 8 Canadian cents to C$57.58 ($44.69) in Toronto Stock Exchange trading. They have climbed 17 percent in the past year.

Alcoa Inc. is the world's largest aluminum maker.

To contact the reporter on this story:

James Gunsalus in Princeton at jgunsalus@bloomberg.net.

To contact the editor responsible for this story:

Rob Urban at robprag@bloomberg.net.

Last Updated: September 9, 2004 16:26 EDT

Labor impasse, hurricane and closed plants a drag on Alcoa profits

NEPA News, PA September 09, 2004

By CHARLES SHEEHAN, AP Business Writer, The Associated Press

Labor problems and plant closings are expected to drag down third-quarter profits for Alcoa Inc., the company said Thursday.

The company issued earnings per share guidance of 30 cents to 35 cents after the close of the New York Stock Exchange.

Analysts surveyed by Thomson First Call had expected earnings of 52 cents a share.

"While we are not pleased with the short-term impact the labor issues have had on our bottom line, our actions are aimed at enhanced global competitiveness of our North American operations," said Alain Belda, chief executive officer. "That is the best long-term job protection we can offer all of our employees."

Alcoa announced in July that it would cut 400 jobs and would not reopen the Wenatchee Works smelter in Washington state due to a labor impasse. Alcoa said then it would record a pretax charge of $20 million in the third quarter to pay for the layoffs.

In the same month, Alcoa cut production by a third at a Quebec aluminum smelter that has been beset by labor problems. About 1,800 workers represented by the Syndicat des Employees de l'Aluminerie de Becancour went on strike July 7.

Also during July, Alcoa said it would take a $7 million charge to close an automotive components plant in Ohio due to overcapacity.

The Northwood plant, just outside of Toledo, will be shuttered by the end of the year.

Alcoa has shut down operations at a Jamaican refinery in anticipation of Hurricane Ivan. The effect of the temporary closure of the Jamalco plant, with 1.25 million metric tons of capacity, is not known, company officials said.

Market softness in the automotive, packaging and European end markets is also having a negative effect on earnings, as well as higher input costs, particularly energy in Europe and North America.

Analysts said they have not had time to review the statement released by Alcoa, and would not comment.

Rusal asks for state support

Putinru.com, Russia 09 September 2004 16:20

The aluminum industry should become the driving force of Russia's economy, as there are no other sectors capable of doing so. Rusal experts pledge to explain this idea to Mr. Fradkov and ask the state for cheap electricity and assistance in acquiring foreign assets.

Vedomosti has obtained a Rusal report "On the role of the state in increasing competitiveness of the Russian economy." In particular, it cites Pavel Shatsky, acting director of Rusal's energy department, as saying, "We are raising the issue of state control over pricing policy on the electric power market and the possibility of long-term fixed tariffs for new energy consuming plants."

"Before introducing privileged tariffs, it is important to understand who will cover energy companies' expenses," a representative of Russia's Unified Energy Systems (UES) argues. However, Anton Danilov-Danilyan, ex-chief of the economic department of the presidential administration, believes that attracting investment in the construction of power generating units is a better solution than fixing tariffs, as it will naturally cut the prices.

Officials differed on Rusal's initiatives. Andrei Deineko, head of the metallurgy department of the Ministry of Energy and Industry, believes that tariff policy could be optimized in a bid to support the aluminum industry. However, a representative of the Ministry of Economic Development and Trade described the report as "blatant lobbying."

Rusal is the world's third largest aluminum company, controlling 70% of primary aluminum production in Russia. In 2003, Rusal plants produced 2.58 million tons of aluminum yielding the holding $4.5 billion in profits.

Sverdlovsk governor, Tajik president talk aluminum cooperation

Interfax, Tajikistan 09 Sep 2004

Yekaterinburg. (Interfax) - The Sverdlovsk region's governor, Eduard Rossel, and Emomali Rahmonov, the president of Tajikistan, discussed cooperation between SUAL, Russia's second biggest aluminum company, and Tajikistan's Tadaz aluminum smelter at a meeting in Dushanbe, Rossel's press office said.

The cooperation may begin with SUAL's Bogoslovsk and Uralsky plants supplying alumina to Tadaz, the press office said.

Tadaz may increase output of pre-baked nodes for its own needs and for SUAL's smelters, the press office said.

Tadaz, which the Tajik government is planning to privatize, earlier said it regarded SUAL as a strategic partner and potential shareholder.

Alumina shipments from the Nikolayev refinery in Ukraine, which is controlled by RusAl, Russia's biggest aluminum company, are becoming too expensive as the alumina has to be shipped via Kazakhstan and Uzbekistan, a Tadaz representative said.

"SUAL is advantageous from the geographical point of view, it would cost less to transport alumina from the Urals," the Tadaz source said.

Tadaz stopped buying alumina from the Pavlodar refinery in Kazakhstan back in 2002.

Alexei Prokohorov, SUAL's public relations manager, earlier told Interfax that SUAL was supplying alumina and other types of raw material to Tadaz, "but the volumes of these supplies cannot be described as significant." "We are interested in developing cooperation, but it is too early at this stage to talk in detail," he said.

Russian governor wants Tajik cooperation in aluminium production

Source: Tajik Television first channel, Dushanbe, in Tajik 1530 gmt 8 Sep 04

Excerpt from report by Tajik television on 8 September

[Presenter in Tajik] Russian Sverdlovsk Region Governor Eduard Rossel has said the following about the results of his talks with Tajik President Emomali Rahmonov.

[Rossel in Russian] The first issue we discussed relates to the aluminium industry in Tajikistan. We have received an offer. We have made the offer and passed it on to the [Tajik] Ministry of Economy. The offer is to fully supply the [Tajik] aluminium plant with alumina. The Sual [a global aluminium company] has 100-per cent capacity to satisfy the demands of the aluminium plant using its raw material. This is the first thing.

Second, we have discovered bauxite deposits in the Komi Republic and the Sual holding decided to set up an alumina plant and a plant of raw aluminium there. Now we have made the following offer - to consider [changes tack] perhaps - if the Tajik president agrees - not to build an aluminium plant in the Komi Republic but to set up a joint venture and to reconstruct and carry out a technical refurbishment of the aluminium plant here, and step up its production capacity to 500,000 kg of raw aluminium, and to carry out a full modernization there, using the up-to-date technology which we have introduced in our region.

[Passage omitted: Rossel has offered to set up a joint venture to mend spare parts for train compartments in Tajikistan]

RusAl Wants to Set Up Multinational Corporation

MOSNEWS, Russia 09.09.2004 12:32 MSK (GMT +3), Updated: 12:32 MSK

Russia’s largest and world’s third largest aluminium producer Russian Aluminium (RusAl) plans to set up a multinational corporation with headquarters in Russia, the company’s General Director Andrei Fedorov, quoted by Prime-Tass economic news agency, told a briefing on Wednesday, September 8.

RusAl, which owns mines in Guinea and an alumina refinery in Ukraine, is in the process of buying an alumina plant in Jamaica and also plans to acquire alumina assets in Australia. The company’s General Director also said that the RusAl plans to invest $2 billion to $3 billion in the construction of two or three unspecified plants over the next few years. Fedorov additionally voiced RusAl’s overall readiness to invest as much as $8 billion in Russia’s economy over the next ten years.

Russian Aluminium was established in March 2000 from a merger of a number of the largest smelters and aluminium producers located in the CIS. The company’s two shareholders are business tycoon Oleg Deripaska and the Governor of Chukotka Autonomous region and owner of Chelsea Football Club Roman Abramovich who hold 75 percent and 25 percent of the shares respectively.

Alcoa Begins Environment Impact Assessment For Proposed Aluminum Smelter in Trinidad and Tobago

PRESSI.COM 09/10/2004

PITTSBURGH Sept. 10, 2004--Alcoa (NYSE:AA) today announced the start of an environmental impact assessment under terms of reference established by the Trinidad and Tobago Environmental Authority (EMA) for a potential aluminum smelter at LaBrea, located in southwest Trinidad.

This follows the signing in May this year by Alcoa and the Government of the Republic of Trinidad and Tobago a memorandum of understanding (MOU) for a state-of-the-art, low emission smelter with a capacity of at least 250,000 metric tons per year. The feasibility study resulting from the MOU is expected to be completed late this year. If the study results are positive, the project will be presented to the Board of Alcoa and the Government of Trinidad and Tobago for an investment decision early in 2005.

Alcoa has repeated its promise to consult widely within the community as the environmental assessment proceeds, and has engaged local company, Ecoengineering Consultants Limited, to assist and guide Alcoa in completing the requirements laid down by the EMA.

In making the announcement Randy Overbey, Alcoa's President, Primary Metals Development, said that Alcoa and its government partner, the National Energy Corporation, welcomed the Environmental Management Authority's requirement for a full environmental impact assessment.

"We would not contemplate building and operating any facility, and we would not expect any community to welcome us, until we were confident that the site is appropriate, we could operate safely, and without causing harm to people's health or the adjacent environment. The EIA is essential for that confidence.

"Communication and community consultation is an important part of the EIA process and we have already been working with community leaders to help us understand how best to provide information and answer questions people might have. We'll continue with that work as the EIA process unfolds," he said.

Overbey also said that he was pleased that a local environmental engineering and science firm had competed successfully for the consultancy work associated with the EIA process. "Their expertise and local knowledge will be most valuable in assuring the thoroughness of the environmental assessment. It's also pleasing to see this proposal beginning to generate local employment and business opportunity even at this stage, while we are still working through the feasibility of building a smelter at LaBrea," said Overbey.

About Alcoa

Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) foils and plastic wraps, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 120,000 employees in 41 countries and has been a member of the Dow Jones Industrial Average for 45 years and the Dow Jones Sustainability Indexes since 2001. More information can be found at www.alcoa.com.

This material has been produced by Alcoa Inc.. It is delivered by Pressi.com in its original form.

A crisis company no longer: Corus to show its mettle with a £140m profit

Independent, UK 12 September 2004

Thanks to rising prices, and the success of its restructuring, the steelmaker has defied the doomsayers. Clayton Hirst reports

After racking up losses of nearly £1bn since its creation, sacking 10,000 workers and spending most of its four years in turmoil, Corus will this week do what some thought was impossible - announce a profit.

On Thursday, the Anglo-Dutch steelmaker is expected to reveal an operating profit of around £140m for the first six months of the year. This compares with a dismal £41m loss for the same period last year, when some commentators predicted that the British side of the business might not survive long enough to announce another set of results.

There are two forces behind Corus's change in fortune. In the past six months the worldwide price of steel has soared, largely on the back of surging demand from China. This has helped to reduce overcapacity in the steel market - a problem that has dogged companies like Corus for years.

Analysts believe that the rise in steel prices will hold up for the rest of the year, and Corus is predicted to make full-year profits of around £340m.

The company's profit is also self-made. In May 2003, Frenchman Philippe Varin took over as chief executive and quickly devised a £250m restructuring programme, dubbed "Restoring Success". When he arrived at the company, formed through the merger of the old British Steel and the Dutch steel group Hoogovens, it was in a mess. Corus had been wounded by aborted mergers, infighting between the British and Dutch sides of the business, inefficient practices and a poor customer service record.

Having sorted out Corus's balance sheet with a new £1.3bn working-capital facility and a £291m rights issue, Mr Varin has started to turn his attention to some of the fundamental problems besetting the business. A £680m cost-cutting drive is now under way, and relations between the British and Dutch parts of the business have improved. But he still has a long way to go before Corus is on a par with its more efficient and focused continental rivals.

One hurdle is the sale of its operations in Teesside, which employs 2,000 people. Centred on the Redcar furnace, the plant produces 3.4 million tons of steel slabs a year.

On Thursday, Mr Varin will reveal that Corus is in discussions with a number of parties over the sale of up to 75 per cent of the Teesside facility, which analysts believe could fetch £70m to £90m. The interested parties are understood to include Duferco, a Swiss-Italian steelmaker and trader; CSN, a Brazilian steel producer; and Sumi- tomo Metals of Japan.

Of the three, Duferco has been making the most positive noises, saying last week that it may make an offer by the middle of next month.

Corus is also trying to sell its aluminium business, which analysts estimate is worth up to £600m. Because of the size of the operation, Corus is making slower progress on the sale. But Norsk Hydro, Alcoa of the US and Alcan of Canada have been cited as possible bidders.

Corus's recent improvement in fortunes has temporarily silenced one of its biggest critics, Alisher Usmanov, the Russian steel magnate. In March, Mr Usmanov, who is the largest shareholder in Corus, with a 13.4 per cent stake, attempted to oust the company's chairman, James Leng. The coup failed, but a spokesman for Mr Usmanov claimed that he was still keen to see changes.

He said: "We will still press for a new independent non-executive director and continue to talk to the company and its shareholders."

He added that Mr Usmanov was concerned that Corus's board lacked sufficient "international experience".

A crisis company no longer: Corus to show its mettle with a £140m profit

Independent, UK 12 September 2004

Thanks to rising prices, and the success of its restructuring, the steelmaker has defied the doomsayers. Clayton Hirst reports

After racking up losses of nearly £1bn since its creation, sacking 10,000 workers and spending most of its four years in turmoil, Corus will this week do what some thought was impossible - announce a profit.

On Thursday, the Anglo-Dutch steelmaker is expected to reveal an operating profit of around £140m for the first six months of the year. This compares with a dismal £41m loss for the same period last year, when some commentators predicted that the British side of the business might not survive long enough to announce another set of results.

There are two forces behind Corus's change in fortune. In the past six months the worldwide price of steel has soared, largely on the back of surging demand from China. This has helped to reduce overcapacity in the steel market - a problem that has dogged companies like Corus for years.

Analysts believe that the rise in steel prices will hold up for the rest of the year, and Corus is predicted to make full-year profits of around £340m.

The company's profit is also self-made. In May 2003, Frenchman Philippe Varin took over as chief executive and quickly devised a £250m restructuring programme, dubbed "Restoring Success". When he arrived at the company, formed through the merger of the old British Steel and the Dutch steel group Hoogovens, it was in a mess. Corus had been wounded by aborted mergers, infighting between the British and Dutch sides of the business, inefficient practices and a poor customer service record.

Having sorted out Corus's balance sheet with a new £1.3bn working-capital facility and a £291m rights issue, Mr Varin has started to turn his attention to some of the fundamental problems besetting the business. A £680m cost-cutting drive is now under way, and relations between the British and Dutch parts of the business have improved. But he still has a long way to go before Corus is on a par with its more efficient and focused continental rivals.

One hurdle is the sale of its operations in Teesside, which employs 2,000 people. Centred on the Redcar furnace, the plant produces 3.4 million tons of steel slabs a year.

On Thursday, Mr Varin will reveal that Corus is in discussions with a number of parties over the sale of up to 75 per cent of the Teesside facility, which analysts believe could fetch £70m to £90m. The interested parties are understood to include Duferco, a Swiss-Italian steelmaker and trader; CSN, a Brazilian steel producer; and Sumi- tomo Metals of Japan.

Of the three, Duferco has been making the most positive noises, saying last week that it may make an offer by the middle of next month.

Corus is also trying to sell its aluminium business, which analysts estimate is worth up to £600m. Because of the size of the operation, Corus is making slower progress on the sale. But Norsk Hydro, Alcoa of the US and Alcan of Canada have been cited as possible bidders.

Corus's recent improvement in fortunes has temporarily silenced one of its biggest critics, Alisher Usmanov, the Russian steel magnate. In March, Mr Usmanov, who is the largest shareholder in Corus, with a 13.4 per cent stake, attempted to oust the company's chairman, James Leng. The coup failed, but a spokesman for Mr Usmanov claimed that he was still keen to see changes.

He said: "We will still press for a new independent non-executive director and continue to talk to the company and its shareholders."

He added that Mr Usmanov was concerned that Corus's board lacked sufficient "international experience".

Alcan Selects MES for Smelter

33Metalproducing 14Sep2004

I/Gear implementing two-phase application for Sebree

I/Gear Corp., Louisville, has granted a license to Alcan Aluminum Corp. Primary Metals division group for its I/Gear DTU and I/Gear WebFramework software products. These will be adopted by Alcan’s ingot-casting operation at Sebree, KY.

Alcan chose I/Gear to automate the manufacturing systems at Sebree. "I/Gear's technology is at the core of Sebree's Manufacturing Execution System (MES). Phase I provided Alcan with production monitoring including: escalation notification, process alarms, product genealogy and integration of quality data. In addition, I/Gear is being used as a tool for Alcan's Lean Six-Sigma Continuous Improvement initiative. Phase II is presently under design," Brad Ditter, senior engineer/green belt, Alcan.

I/Gear Inc. produces software for various customer needs, with a common approach to connectivity, data transport, and data presentation. According to president Don Korfhage, "Alcan represents another distinguished, global enterprise that has elected to utilize I/Gear's suite of products to greatly enhance their plant floor and enterprise automation."

by Metal Producing & Process (MPPstaff@penton.com)

SUAL to Bid for Montenegro Metals Giant

Moscow Times, Russia Tuesday, September 14, 2004. Page 6.

Bloomberg SUAL Group, Russia's second-largest aluminum producer, will bid for Kombinat Aluminijuma Podgorica, an aluminum maker that accounts for half of Montenegro's industrial output.

"The SUAL Group has submitted an expression of interest in KAP and is looking forward to receiving further information," SUAL's Moscow-based spokesman, Maxim Titov, said in a telephone interview.

The government will sell a 65 percent stake in the smelter with BNP Paribas as adviser. The deadline for bids is Dec. 1, Titov said.

Built in 1971, KAP is Montenegro's largest employer with 2,850 workers, according to the European Bank for Reconstruction and Development. The bank paid the government 3 million euros ($3.6 million) last September to hire advisers for the sale.

KAP produced 120,000 tons of aluminum in 2003 and 240,000 tons of alumina. After an investor is chosen for the company, its aluminum output may rise to as much as 150,000 tons per year and alumina output may double.

The company owes about $130 million to Glencore International, which managed the company between 1998 and 2000, and to Standard Bank Group Ltd. and the Montenegrin company Vectra. It also owes $110 million to the Montenegrin government and the Paris Club of creditor nations.

KAP's bauxite mines at Niksic are included in the privatization. Facilities producing aluminum products such as billet and foil will be sold separately.

SUAL makes two-thirds of Russia's bauxite and a quarter of its aluminum. Last year, it produced 890,000 tons of aluminum, 2 million of alumina and 4.4 million of bauxite.

Cambior to invest US$10M in Guyana mining venture

Canadian Press Montreal Gazette, Canada September 13, 2004

MONTREAL -- Cambior Inc. is investing $10 million US to acquire a 70 per cent stake in Omai Bauxite Mining Inc., with the government of Guyana retaining 30 per cent.

The move is part of the government's privatization of certain assets of Linden Mining Enterprises Ltd., a bauxite operation. Open-pit bauxite mining started over 80 years ago in the Linden area, 100 kilometres the south of Guyana's capital city, Georgetown.

Montreal-based Cambior said Monday the government of Guyana will contribute the processing plant and service facilities, leases and prospecting licences in the area, as well as the Montgomery mine, with reserves of 62 million tonnes of bauxite _ the clay-like material containing alumina.

Cambior's $10-million-US investment is half in cash and half in mine equipment transfers from Omai Gold Mines Ltd.

Omai Bauxite Mining has also received a commitment for a $10-million US credit line from a Caribbean financial institution.

"As part of the agreement, both shareholders have agreed to reinvest all free cash flows during the initial five years of operation to expand the operation into other non-metallurgical products, as well into metallurgical bauxite (for aluminum production) based on market conditions,'' Cambior said in a release.

"Cambior has received expressions of interest from large clients for both metallurgical and non-metallurgical products.''

The company said the initial investment will permit refurbishing of the process plant to increase capacity at least 100 per cent, improvement of storage and port infrastructure, construction of a new mine mobile equipment shop and construction of a direct-haulage road and expansion of a tailings pond, in addition to expansion of the mine fleet.

Cambior's deal with the government shows a sharp reversal from poor relations resulting from toxic tailings pollution blamed on its Omai Gold operation.

Cambior also said Monday that its Rosebel mine in Suriname has rapidly exceeded its designed ore production capacity of 14,000 tonnes per day. After some adjustments, the mine, which began commercial production in February, reached a record average daily output of 17,200 tonnes a day.

The increased production means Cambior's gold production for 2004 is now estimated to be 260,000 ounces, compared with the original target of 245,000.

Shares in Cambior (TSX:CBJ) traded down 12 cents at $3.77 Monday

on the Toronto stock market.

© The Canadian Press 2004

Future Shock

33Metalproducing 14Sep2004

The similarities between aluminum and steel are not coincidental, and the impulse toward globalization will have a similar effect.

There is something troubling going on in the aluminum sector that has me wondering about the future structure of that industry, and perhaps of another one, too. I emphasize that it’s not a bad time to be producing aluminum: demand is strong and supply levels are just right for producers to level premiums on the buyers of various products.

The problem is that most of the competitors in the industry are withdrawing into safe niches, choosing to compete on different scales and leaving the leading producer — Alcoa — to take the greater risks. Another result is that consumers endure greater supply complications and inflationary pressures resulting from a more fragmented market.

Right now, the aluminum industry in North America is really two companies, Alcoa and Alcan, plus a field of others that occupy certain niches. Some are ingot producers, some are rolled products producers, some are extruders, some are mix and match, but none covers the breadth of activities as the two giants. Soon, Alcan plans to split its global operations along the divide between primary and rolled products, and leave Alcoa as the sole powerhouse.

Looking out globally, the circumstance is only slightly different. Hydro Aluminium and RusAl are integrated across the whole production chain but do not even come close to Alcoa’s output total and global footprint.

Now, it’s not my intent to criticize any of these companies particularly, but rather to call attention to what is becoming of this market. It’s not the standard critique of the globalization trend; because of the importance and location of raw materials the aluminum industry has been effectively globalized for decades.

Rather, what’s happening is a kind of strategic retreat from regions and market segments where the challenge appears too steep. The alternative to retreat, often, is innovation, a strategy too few aluminum companies have adopted in the past decade.

A more pragmatic view of these developments might show that the aluminum industry is evolving into a separate markets: raw materials suppliers, semi-finished products producers, fabricators, consumer products producers, etc. That’s a reasonable tact for investors and strategic planners, but it’s not entirely realistic.

Automakers and other large buyers don’t want to work with a single source for basic materials; they want choices. In negotiations, governments, power suppliers, and labor unions will assume an industry standard in costs and liabilities, even where none exists. Even now, unions are using the background of steady demand to test aluminum producers’ willingness to keep operations running steadily.

Perhaps it’s simplistic to expect a neatly organized market where all the players have a rough approximation in scope and scale. No doubt there’s a role to be played by producers who supply primary ingot and nothing more. Hydro Aluminum has contrived a credible presence as a billet and extrusion producer, and the prospectus for the Imco-Commonwealth organization is also promising. But, let’s be clear that what we are evolving toward is not an "industry."

About 10 years ago I wrote a column in which I drew a connection between the outflow of aluminum ingots from the chaotic former Soviet Union into Western markets, and my concern that the global steel market faced a similar dilemma. I got some criticism for what was, to be honest, a facile argument, but it gave me no satisfaction to see that global meltdown happen a few years later.

Steel today is a much more sound and stable industry than it was then and it, too, is thriving on solid demand. But, the similarities between the market dynamics in aluminum and steel are not coincidental, and the impulse toward globalization will have a similar effect. Some producers will grow, others will shrink, and the "industry" will become ... something else.

by (rbrooks@penton.com)

Copyright © 2004 Penton Media, Inc.

Sual open to 'sensible' opportunity at Coega

Business Report, South Africa September 13, 2004

By Nicky Smith

Johannesburg - Privately owned Russian aluminium company Sual Holdings would consider a smelter at Coega "if a sensible opportunity" presented itself, Sual's chief executive, Brian Gilbertson, said last week"Firstly, you would have to be sure it was in the interests of the shareholders. They are there to make money," he said.

"[But] I think what would make it interesting is that Sual has a particular technology which is a set of large pots ... The design of the pot and the technology used is critical in efficiency and for environmental reasons.

"Sual is running these pots and testing them." Sual, which is Russia's second-largest aluminium producer, produced about 900 000 tons of aluminium last year.

A smelter at Coega has been touted for the better part of the past decade. In the late 1990s it was going to be a zinc smelter. Gilbertson was linked to the development of that smelter when he was head of Billiton.

Asked whether he thought Coega would ever have a smelter, Gilbertson said: "You put smelters where the power is cheap ... I think Coega has the last tranche of cheap power."

He said questions that needed to be asked about investment in an aluminium smelter were whether it could be financed and had alumina supplies.

"I'm not here to build Coega, I'm here to run Sual. But if there was a sensible opportunity ... Sual would look at it."

Anik Michaud, a spokesperson for Alcan, said the company expected to be in a position to make an announcement on the possible investment in a $2 billion aluminium smelter at Coega.

Alcan and Pechiney merged in July last year. The merger put a spoke in the wheel of the Pechiney investment, which had practically been given the go-ahead.

New Extrusion Press at Hydro’s Polish Plant Expected to Double Capacity

Azom.com 14Sep2004

The Hydro Aluminium Chrzanow plant, established in 1996 with the installation of an 1,800 tonne extrusion press, has approximately 110 employees and serves the Polish market as well as the markets in the neighbouring countries.

The approved investment totals EUR 11 million (NOK 93 million) including additional equipment. The new facility will be ready for production by the end of the third quarter in 2005.

"This investment opens up new market opportunities and growth potential both locally and in cooperation with other aluminium extrusion sales organizations, as the manufacturing cost ambition is benchmark for the industry," says Johnny Undeli, executive vice president Extrusion North.

"This project has a strong and clear strategic fit with our future ambitions," Undeli continues. "We expect this part of Europe to have a strong growth within extrusion, the employees in the Chrzanow plant have already shown that they can handle such an investment."

"We expect to produce over 26,000 tonnes of extrusion annually, which is more than double of our present capacity," adds Richard Elliott, managing director of the Chrzanow plant. "We expect to add some 50 employees in our plant and the investment will also influence employment opportunities with our local suppliers. This is a valuable contribution for this part of Poland with a fairly high unemployment rate."

Alcan gets inquiries for rolled-products unit it has promised to shareholders

Canada.com, Canada September 15, 2004

MONTREAL (CP) - Even though aluminum giant Alcan Inc. has promised to spin off its rolled-products division to its shareholders by year-end, the company revealed Wednesday it is reviewing unsolicited expressions of interest from outside buyers.

"We received some unsolicited offers, and we would be remiss if we didn't evaluate them," Alcan spokeswoman Anik Michaud said in an interview. "It's not surprising because the industry can see that there's great value to these assets."

Alcan said it is still on track for the spinoff announced last May. It has named the proposed new company's top executives and declared that it will be based in Montreal.

A preliminary prospectus is to come out soon, followed by a meeting of shareholders to approve the transfer.

Alcan issued a statement after the New York Post reported Wednesday the company was considering selling the rolled-products business in a deal that could raise $5 billion US.

The Post said Alcan was privately soliciting interest from private equity firms including Blackstone Group and Kohlberg Kravis Roberts & Co. in a bidding process that expired Tuesday, although Alcan denied it was looking for offers.

"This is a first-rate business," Travis Engen, Alcan's president and chief executive, said in a statement, referring to the division which makes metal for beverage cans, car parts and foils.

"Not surprisingly we have received unsolicited inquiries from a number of interested parties. Although some of these expressions of interest are being studied, Alcan remains committed to the spinoff as an outstanding value-creation proposition for its shareholders."

Analyst Chuck Bradford of Research Inc. in New York said Alcan is free to entertain outside bids despite its plan for a spinoff, and could probably get a better price.

Bradford said spinoffs are typically done at a 10 per cent discount to the company's book value, but selling control to a single group can fetch a premium as high as 20 per cent.

On the other hand, the hedge funds mentioned by the Post "are not noted for overpaying; they usually want to buy at a discount."

The new rolled-products company would be the world leader in its sector, with annual sales of $6 billion and 10,000 employees, mainly in Europe and North America.

Bradford said they are "first-rate assets," while noting that the market for beverage cans was down in Europe this summer due to rainy weather.

Alcan (TSX:AL) is one of the world's biggest aluminum producers, with 88,000 employees in 63 countries.

© The Canadian Press 2004

650 million DHS investment shows DUBAL's commitment to worker safety and environmental concerns

AME Info, United Arab Emirates, 15 Sep 2004

Within the last three years, DUBAL has invested approximately in excess of AED 650 million on various environmental projects and protection equipment within its massive smelter operations area.

By any standards, these are recognized as major projects that have had a substantial impact on worker safety and also have markedly improved the local environment.

"We, at DUBAL," said Mr. Mohammed Al Ghurair, Managing Director, DUBAL, "are committed to maintaining the highest standards of worker safety and environmental care and believe our practices must be at par with the best in the world. Had DUBAL not been proactive in its environmental and safety-first policies," he added, "it would have been difficult to establish and develop the residential and tourism community within three kilometers of DUBAL's operations."

One of the major concerns to DUBAL is to measure and control hazards in the working environment to ensure that there is no negative effect on human health. For this, DUBAL has its own occupational health and hygiene department (OHH). "Employees exposures are carefully measured and monitored. Personal protection equipment ensures protection from any harmful elements, as employee health is then reassured through periodic health surveillance," said Shawqi Hamdan Sajwani, Manager Environment, Health and Safety, DUBAL "significant investment has been made in areas where the health and hygiene risk were considered high, these include automatic pot demolition facility, automatic hot butt cleaning facility etc." added Shawqi Hamdan Sajwani.

Amongst the various projects initiated by the Aluminum giant is the installment of low NOx burners for gas turbines, which not only ensure that air quality is within the required local legislation, but also fall well below internationally recommended limits. The Smelter operation have been upgraded the five existing fume treatment plants, which have improved emission levels and enables DUBAL to launch preventive actions against any foreseeable adverse impacts. The installation of the Hot Butt cleaning facility has also eliminated employee exposure to fluoride and contaminated dust during anode cleaning.

Other measures include a new state-of-the-art, technologically-efficient fume treatment plants for the Kestrel project, an automated Pot Dig-out facility which eliminates undesired employee's exposures, a Potline roof HF monitoring systems, which improve efficiencies in the processing of HF emissions. Finally, DUBAL has installed three state-of-the-art stations for air monitoring, that measure the impact of DUBAL's operations on ambient air quality.

"In all cases," said Mohammed Al Ghurair," where exposures have been classified as unacceptable, attempts have been made to eliminate exposures rather than just controls. The recent expansions provided an opportunity to install the latest available technology and it goes without saying that Environmental protection and safety issues were on top of our list of priorities." DUBAL's Environmental Management System is certified to ISO 14001, the standards require that all activities are subject to external and internal audits, and to date, this year two external and nineteen internal audits have been conducted, so that constant improvement in the site area is always encouraged.

DUBAL's philosophy to enhance safety is based on proactive measures. These activities include risk assessment, hazard identification and elimination, safety inspections and meetings, tool box talks, safety tours by managers and Chief Executive Officer and near miss reporting. "Employee safety is of prime concern to us," Mohammed Al Ghurair said, "and safety management goes well beyond the conventional concept of training and awareness. DUBAL aims at behavior change to create safe work areas."

DUBAL has also recently introduced the Permit to Work (PTW) Nisoft software to further enhance its safety performance. In line with IAI benchmark safety level measures, which cover 90% of the aluminum producers worldwide, DUBAL currently ranks amongst the best in prevention of industrial accidents. "All contractors are required to meet DUBAL's safety standards before commencing work on site," said Mohammed Al Ghurair. "To ensure compliance, DUBAL plays a pivotal role in contractor education and training."

Other initiatives by DUBAL are the organization of the Corporate Sustainability Management seminar in association with the Institute of Management Development (IMD) at Lausanne, Switzerland, which led to the international conference on Corporate Sustainability, held in Dubai during April of this year. Also at the backing of DUBAL, the Emirates Environmental Group formed a Corporate Responsibility Forum, which conducts regular workshops on the subject. Other major events sponsored by DUBAL include the Dubai Municipality 555 program, the UNESCO regional recycle project and sponsorship of EEG activities.

"All our investments into safety-first and environmental projects," said Mohammed Al Ghurair, "are allocated only after very careful scrutiny. It is DUBAL's foremost intention to maximize the impact on community benefits, worker safety and environmental protection of sound operational practices.

Power Company to Export Electricity to China — Governor

MOSNEWS, Russia 15.09.2004 14:52 MSK

Russia’s second largest power utility Irkutskenergo plans to export up to 18 billion kilowatt-hours (KWh) of electricity to China, the governor of Irkutsk region, Boris Govorin, told the Baikal Economic Forum on Wednesday, September 15.

According to data provided by Govorin, the company has the capacity to generate up to 20 billion KWh of surplus electricity per year, and this surplus can be exported. Irkutskenergo intends to build a 2,600-kilomete long power transmission line to China. The power line may also be used for export of electricity to neighboring Mongolia, the governor added.

Irkutskenergo’s main shareholders are the Russian government, which holds 40 percent, and the country’s two major aluminium producers — RusAl and SUAL.

Lift truck tailored to foundry application

Ferret, Australia - Sep 14, 2004

TYCO Environment Systems has commissioned a tailored Crown lift truck to replace an old machine in the most challenging sector of its manufacturing plant.

Tyco turned to Crown to meet its updated lift truck needs in transporting molten aluminium from furnace to moulds and presses.

The requirements - which Crown met with a modified CGC18S LPG powered lift truck - included rotating forks, a tight turning circle to manoeuvre around the factory, ease of handling and ergonomic controls, good operator visibility, and solid rubber tyres.

As drivers are often carrying heavy loads, oil-cooled disc brakes - a unique system from Crown - allows the same foot pressure to be used whether the lift truck is fully laden or empty.

Overall braking consistency is maintained regardless of how quickly the vehicle is moving.

With 200 employees at its Milperra plant, Tyco Environment Systems manufactures air valves for dust collection and pollution control monitoring systems that are predominantly exported to markets in the USA, Europe and Asia Pacific.

Tyco purchasing manager Chris Symonds said the requirementshad to function reliably over two shifts a day, seven days a week.

"About 80% of our business is for export markets and hence our lift truck needs to avoid unscheduled maintenance for us to service this client base," Mr Symondssaid.

"Our operators are handling 250kg loads of molten aluminium - potentially a very dangerous substance - hence the safety aspects of the Crown CGC18S were of paramount importance.

"We needed significant lift capacity and special fork attachments to safely lift a cauldron full of molten aluminium at 400°C, carry it to various positions around the factory, and rotate this cauldron so as to pour the molten stock where and when required before it has cooled."

Mr Symonds said Tyco manufacturing plants had world class safety standards so it was important that the lift truck met this requirement without compromising operator comfort or control for the operator.

"The ability of the Crown unit to negotiate a tight turning circle has given us a major handling advantage as any extra space is valuable when handling molten metal.

"Just as importantly, in some sections of this compound the Crown CGC18S comes close to the heat of furnaces, hence we required Crown to replace pneumatic tyres with solid rubber wheels to negate any potential problems.

"The unit even has a safety flashlight to make it more obvious to personnel and a reverse beeper for when it travels in reverse," he added.

Crown Equipment's CGC Series of lift trucks has a rugged design to meet demands of constant loading and unloading of heavy equipment.

Available in large capacity petrol/LPG and diesel engines, models in this series have plenty of power but do not sacrifice fuel efficiency.

With oil-cooled disc brake options, dual element air cleaners and powershift transmissions it can provide long lasting performance even in harsh, dusty conditions.

Capacities range from 1500kg to 15,000kg and lift heights up to 7.5 metres. Optional solid, cushioned tyres - such as those implemented at Tyco - are suitable for outdoor or indoor operation where a high level of stability and manoeuvrability is essential.

Stubby head length can be up to 300mm shorter than other types of lift trucks and greater capacities at high lift heights provide greater warehouse versatility.

New eco-friendly gas engines and catalytic converter options reduce harmful emissions.

SA in talks with Brazil over Coega

Business Day, South Africa, South Africa 16 Sep 2004

By Justin Brown

The South African government has been in talks with Brazil's CVRD regarding possible involvement of the group in the Coega aluminium smelter, Industrial Development Corporation (IDC) CEO Dr Khaya Ngqula said in Johannesburg on Thursday.

Canadian aluminium producer Alcan remains the lead promoter of the project and Alcan had previously been in talks with CVRD regarding taking a stake in the aluminium smelter, Ngqula said.

There are likely to be two international resources company investors in the smelter, he said.

Both CVRD and Alcan have aluminium smelting interests in other parts of the world.

Alcan had previously said it would make a decision about its involvement with the Coega smelter by the end of 2004.

The IDC is also looking at getting involved in the facilitating and financing of the Moatize coal project in Mozambique and the heavy minerals deposits owned by Australia's WMC called Corridor Sands.

IDC Chief Operating Officer, Gert Gouws told I-Net Bridge that the IDC could facilitate about $200 million in financing for the Moatize coal project and $100 million for the Corridor Sands project.

In the coming years, the key four projects for the IDC would be the Coega aluminium smelter and the Northern Cape iron ore reserves, while outside South Africa it would be the Moatize coal and the Corridor Sands projects.

The IDC was working closely with Kumba Resources (KMB) and Anglo American (AGL), which has a 66.7% stake in Kumba, to improve Kumba's export capacity and create jobs, Gouws said.

Kumba's key interests are its iron ore mines in the Northern Cape.

Private equity firms consider bids for Canadian Alcan

AltAssets 16/09/2004

A number of private equity firms including Blackstone and Kohlberg Kravis Roberts are believed to be considering bids of between $4bn and $5bn for the rolled products business of Canadian aluminium manufacturer Alcan.

Other buy-out firms expected to bid include Apollo Advisors, Bain Capital, Madison Dearborn Partners, Ripplewood Holdings and Permira.

Alcan's rolled products unit makes the metal for the beverage can, car parts, and foil industries and with annual revenues of $6.4bn is the biggest aluminium rolled products company in the world.

Alcan announced that it was planning to spin off the unit in May this year in order to address regulatory concerns about the company's 2003 purchase of French aluminium maker Pechiney.

Copyright © 2004 AltAssets

New leadership for Alcoa Primary Metals

Pittsburgh Business Times, PA 17 Sep 2004

Pittsburgh-based Alcoa Inc. said that effective immediately Alan Cransberg has been promoted to president, Alcoa Primary Metals North America, with responsibility for Alcoa's 13 primary aluminum smelters in the U.S. and Canada.

Previously, Mr. Cransberg, 45, had been president of Alcoa Primary Metals USA. He will be located in Alcoa's New York office. Mr. Cransberg replaces Bernt Reitan, who held the position before being promoted to oversee worldwide smelting operations.

Succeeding Mr. Cransberg as president, Primary Metals USA is Geoffrey Cromer, 47, who is currently location manager at Alcoa's Rockdale, Texas, operations. Mr. Cromer will relocate to Knoxville, Tenn.

Alcoa Primary Metals is North America's largest integrated producer of primary aluminum.

© 2004 American City Business Journals Inc.

Ormet, Union Battle

Wheeling News Register, WV 17 Sep 2004 Compiled by Staff

Ormet Corporation officials today said the "tone and rhetoric" of steelworkers' claims that the company is not bargaining in good faith are "counter-productive to saving the jobs of the workers" at the aluminum maker plant in Hannibal.

United Steelworkers of America Local 5724, representing Ormet's Reduction Plant, have been without a contract since July 31. Local 5760, representing the company's Rolling Mill, have been without a contract since Aug. 31.

Ormet, meanwhile, filed for Chapter 11 bankruptcy earlier this year.

On Sept. 2, Ormet filed a reorganization plan in the U.S. Bankruptcy Court for the Southern District of Ohio.

The plan must be approved by both the court and Ormet's creditors.

In a full-page advertisement in today's News-Register, the United Steelworkers of America addressed a letter to Ormet Chief Executive Officer R. Emmett Boyle. The letter states that Ormet's plan of reorganization indicates "the plan is a radical destruction of the labor and retiree insurance agreements with the Steelworkers Union."

The reorganization plan, which calls for continuing operation of Ormet's manufacturing units, also would transfer ownership to the company's creditors.

According to a company statement, the New York-based private equity fund MatlinPatterson Asset Management will combine its pre-filing debt with an additional investment of $30 million to become the company's largest shareholder.

The steelworkers also maintain that since March 2004 when Ormet first presented its demands, the union "repeatedly" tried to dissuade Boyle from following "this confrontational and self-defeating approach."

In its message to Boyle, the steelworkers union said that if Boyle attempts to implement terms and conditions of employment based upon the company's current proposal, "an immediate work stoppage" would occur at Ormet. The union claims Ormet's plan of reorganization is a "sham" and its disclosure statement "a work of fiction."

Today, Ormet officials refute the steelworkers' claims. Company vice president, administrative services Debra Boger said, "The fact is that, despite its assertions to the contrary, the union has consistently failed to bargain in good faith and to pursue a constructive path to reorganizing the company."

She continued, "If the United Steelworkers really wants to serve the best interest of its members, it will abandon its public posturing and stonewalling tactics and sit down at the bargaining table to negotiate terms of a new labor agreement."

Bogers also said that on March 11, Ormet presented the steelworkers with proposals to modify the Reduction Plant and Rolling Mill contracts that left wages unchanged but requested certain concessions to allow the company to survive in the face of rising energy and other costs of production. She said for five months the company urgently requested the union to come to the table to discuss the proposals. She said some five dozen boxes of materials documenting the financial basis of the proposals were made available for review.

"The union repeatedly refused to do so, and United Steelworkers District 1 Director David R. McCall, the principal signer of the letter, said on many occasions that the union would not bargain until it had a plan of reorganization before it. It is ironic, then, that the union is now criticizing the company for putting forward a plan of reorganization that embodies the March 11 proposals," Boger added.

USWA District 1 Director David McCall said in his letter to Boyle that "you have picked a fight you cannot win. But it is a fight that we will finish."

Sterlite assured large bauxite mining leases (LEAD, correcting para two) :

123Bharath.com, India Sep 17, 2004

The Chhattisgarh government has assured the Sterlite group of enough bauxite-rich areas on lease to assist the Rs.73.27 billion ($1.6 billion) group become a major player in the aluminium sector.

Chief Minister Raman Singh and Sterlite chairman Anil Agrawal met over dinner in London earlier this week and discussed in detail Sterlite's involvement and investment in Chhattisgarh.

"Sterlite group has been working on a major expansion plan at Korba and obviously need a huge bauxite-mining lease. I am planning to offer the bauxite-dominated belt of Sarguja and Kawardha districts to the group," Singh told IANS over telephone from London Friday.

The group has 51 per cent control over the Korba-based Bharat Aluminium Company (Balco) and is fast executing a Rs. 40 billion ($ 863 million) expansion plan to become India's number one aluminium producer by 2006.

Balco already has a mining lease of 639.169 hectares till July 2, 2012 in Mainpat in Sarguja district of Chhattisgarh.

Chhattisgarh State Industrial Development Corporation (CSIDC) managing director Shailesh Pathak, who is a part of the chief minister's four-member visiting team, said Agarwal has expressed keen desire to invest enough money in the metal and mining sector in the state.

On its part, "Sterlite has promised to assist the Chhattisgarh government in setting up an Aluminium Park," he added.

The Sterlite group needs the additional lease in its plans to install a new smelter unit with pre-baked technology provided by Guiang Aluminium and Magnesium Research and Development Institute of China. This would increase its production to 350,000 tonnes from its present capacity of 100,000 tonnes a year.

Bauxite/alumina sector optimistic

Jamaica Observer, Jamaica, Sunday, September 19, 2004

Jamaica's bauxite/alumina industry is pushing to get its production back to maximum levels after Hurricane Ivan, which caused plants to close for several days and damaged transportation infrastructure.

"If things can get back quickly, we can catch up on production or come in just behind (last year's output)," said Parris Leyow-Ayee, the executive director of the Jamaica Bauxite Institute (JBI), the agency that oversees the industry.

Last year, Jamaica mined 13.4 million tonnes of bauxite, most of it refined into the 3.8 million tonnes of alumina produced in 2003. The industry was hoping to surpass those figures this year, counting substantially on demand for metal in the world's recovering economies and in robust China.

However, the Alpart alumina refinery in Nain, St Elizabeth will not open until this week, meaning that it has lost more than a week's production time.

Alpart, now majority owned by Glencore - after its purchase of the 65 per cent share formerly owned by Kaiser Aluminium - still has problems. A section of its loading pier at Port Kaiser in St Elizabeth was damaged and in need of repair, forcing the company to seek temporary shipping arrangements. The pier will be operational this week.

WINDALCO's refinery at Ewarton, St Catherine resumed operations last week, but its plant at Kirkvine, Manchester still had problems at the weekend with its power generating system and control room.

However, WINDALCO's conveyor system and ship-loading equipment at Port Esquivel remained functional, giving it the capacity to export without disruption.

Jamalco's refinery at Hayes, Clarendon received relatively minor damage from the hurricane, but its conveyor belt system and a significant length of the loading pier at Rocky Point was severely damaged, requiring several weeks to repair.

Jamalco will, in the meantime, ship alumina from Port Esquivel.

Kaiser Jamaica Bauxite Company (KJBC), most of whose operations are on the north coast in Discovery Bay, resumed production two days after the storm.

Balco fights time, odds

Indian Express, India Tuesday, September 21, 2004 at 0149 hours IST

Declaration that Centre would divest its 49 pc stake in Balco has workers’ unions agitated

ASHWANI SHARMA

BALCONAGAR (KORBA), SEPT 20: The 400-acre site where Bharat Aluminum Company Limited’s (Balco) expansion plant is coming up is buzzing with activity. Over 2,000 people, including 70-odd Chinese professionals, are at work round the clock here. Even half a dozen mishaps — three of which were fatal — in the last three months failed to stop work even for a day.

The 39-year old aluminum giant is racing against time to meet its goal to become India’s Number One aluminium producer.

The 2.5 lakh-tonne expansion plant, as targeted, will go into trial production as early as December. Final commissioning of the plant will take place nine months later, increasing Balco’s annual capacity from one lakh tonne to 3.5 lakh tonnes.

Currently Balco’s only competitors in the aluminum sector are Hindalco — a unit of the Birla Group — and state-run NALCO. Till three years ago, Sterlite Industries — Balco’s new owner — was not even sure if the existing plant ‘shut down after 76-day strike of the Balco unions’ would be revived.

After posting Rs 67-crore net profit last year — despite clearing Rs 120 crore VRS burden — Balco’s next target is to become the Number 1 aluminium producer in India by 2006.

Under the Rs 6,500-crore expansion drawn two years ago, Balco proposes to capitalise on its location in Chhattisgarh, which has the country’s largest bauxite and coal reserves. The company has gone a step ahead and set up an alumina refinery unit at Lanjigarh, Kalahandi district, Orissa. Managing Director T.L. Palani Kumar, who visited the plant last week, said: ‘‘In the past two years, we concentrated on expansion plans and selected the world’s best technologies. Orders for machinery worth Rs 4,000 crore have been placed. Over Rs 2,000 crore been invested on the ground. Things are going as planned and we plan to hit the market next year.’’

For the first time, Balco has selected two Chinese companies — GAMI and SEPCO — for installing machinery at its one-kilometer-long smelter shed.

But the Prime Minister’s declaration that the Centre would sell the remaining 49 per cent of Balco shares has sparked resentment among unions. The Balco Bachao Sangrah Samiti has sent a memorandum to PM in this regard. The workers also staged a demonstration the day the Balco MD visited the plant.

Kumar says the government, as per the disinvestment deal, is legally bound to allot the remaining shares to the Sterlite Industries.

GAPCO and Ministry of Mines and Geology Agree in Principle to Terms of Basic Agreement for GAPCO'S Alumina Refinery

PR Newswire (press release)

TORONTO, Sept. 20 /PRNewswire-FirstCall/ -- Global Alumina Products

Corporation (GAPCO) (TSX-V: GPC.U) and the Ministry of Mines and Geology of

the Republic of Guinea jointly announce that they have agreed in principle to

the terms of a Basic Agreement regarding the development of GAPCO's proposed

2.8 million tonne per annum refinery in the Sangaredi region of the Republic

of Guinea.

The Agreement, which includes a mining concession, is being submitted for

approval by the government and will then be submitted for ratification by the

National Assembly to become effective as required by the laws of the Republic

of Guinea.

Alcoa Presents UltrAlloy 6020 at Aluminium 2004 World Trade Fair and Convention in Germany

Business Wire (press release), CA September 20, 2004 01:40 PM US Eastern Timezone

PITTSBURGH--(BUSINESS WIRE)--Sept. 20, 2004--Alcoa (NYSE:AA) announced today that the Aluminium 2004 World Trade Fair and Convention in Essen, Germany will include a presentation of Alcoa's UltrAlloy(R) 6020, which removes lead from aluminum precision machined parts, increases machining productivity and boosts machine shop competitiveness.

The presentation by Alcoa Global Cold Finished Products will take place between 9 a.m. and noon on Wednesday, September 22 in one of the conference halls. Aluminum industry members will be presenting their product and service portfolios at the trade show, which more than 600 exhibitors from 38 countries are expected to attend.

While there has been a significant movement to eliminate lead and lead-containing products in the U.S. and abroad over the last 20 years, lead removal has been a dilemma for the majority of parts manufacturers. Since the 1980s, the U.S. Environmental Protection Agency (EPA) has helped to phased out lead in gasoline, reduced lead in drinking water, reduced lead in industrial air pollution and banned or limited lead used in consumer products, including residential paint. Like the EPA, the European Union is also looking to greatly reduce lead contamination in the environment.

Alcoa's UltrAlloy(R) 6020 alloy solved the dilemma for the metals industry. Alcoa removed the lead as an alloying element and developed an alloy that has an A rating for machinability. UltrAlloy(R) 6020 is a 6XXX alloy with all of the inherent six series advantages: corrosion resistance, joinability, anodizability, etc. that provides machined chips comparable to 2011 commonly recognized as the benchmark for aluminum alloy machinability.

Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) foils and plastic wraps, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 120,000 employees in 42 countries and has been a member of the Dow Jones Industrial Average for 45 years and the Dow Jones Sustainability Indexes since 2001. More information can be found at www.alcoa.com

NALCO BAUXITE MINE ADOPTS POLLUTION CONTROL MEASURES

Press Information Bureau (press release), India 20 Sep 2004

Panchpatmali bauxite deposit, Koraput of National Aluminium Company Limited (NALCO), Orissa, is the one amongst a series of bauxite deposits which were discovered in the East Coast region of India in early 1960s. It put India in the 5th position in the world's bauxite map with a total bauxite reserve over two billion tonnes. The mine is certified to ISO-14001 environment management standard since 1996.

The mine has taken all possible measures for air quality management. Ambient air quality is monitored every month at five locations. Dust suppression in the haul roads is carried out with water sprinkling system at ROM hopper and dry fog system is adopted at transfer points of crusher and conveyor system. Wet drilling system and hydro cyclones is carried out in all blast hole drills. Employees are provided with personal protective equipment. Delay detonator and well-designed blasting pattern is developed and maximum use of ripper dozer in place of blasting is undertaken.

After complete exploitation of bauxite, the overburden from advancing face is dumped for backfilling and leveled up, followed by top dressing with a layer of topsoil before plantation. Plant species for afforestation in reclaimed area is being selected on the basis of their adaptability to the physical and climatic conditions. Plantation of about 342 hectares within surface right areas and 262 hectares outside surface right areas with 15,17,769 trees of more than 70 difference species has been carried out.

Aluminium prices to ease: ABARE

Sydney Morning Herald (subscription), Australia September 20, 2004 - 12:59PM

World aluminium prices are expected to ease in the remainder of 2004 and into 2005 as consumption growth slows and production increases, the nation's chief commodities forecaster says.

The Australian Bureau of Agricultural and Resource Economics said the growth in world aluminium demand was expected to slow in the short term in line with a weaker world economic outlook.

ABARE has forecast aluminium prices to average around $US1660 a tonne in 2004 and $US1610 a tonne in 2005.

ABARE said world stockpiles remained at high levels providing a barrier to strong upside price movements.

World aluminium production is expected to rise 4.1 per cent to 18.9 million tonnes in 2004 and to 30.085 million tonnes in 2005.

Meanwhile ABARE said world aluminium consumption was forecast to increase 3.2 per cent to 20.075 million tonnes in 2004 and 30.01 million tonnes in 2005.

Australian production should increase 3.4 per cent to 1.88 million tonnes in 2004 and 1.943 million tonnes in 2005.

Export volumes in 2004 are forecast to increase 3.7 per cent to 1.546 million tonnes with increased metal prices pushing the value of exports up 13.2 per cent to $3.435 billion.

This is expected to increase to 1.603 million tonnes worth $3.887 billion in 2005, ABARE said.

It said world markets were led by China which accounted for 80 per cent of the world aluminium consumption increase in the first five months of 2004.

The country has also become a major aluminium producer and is expected to be a net exporter of aluminium in 2004.

ABARE said that despite electricity shortages, aluminium production in China continued to grow strongly in 2004, expanding by about 23 per cent year on year in the first seven months of 2004 to 3.65 million tones.

Aluminium production growth in China should slow in the remainder of 2004 as power constraints increasingly affected production, ABARE said.

"On the assumption that there will be an increase in electricity capacity and reliability next year as well as a reduction in alumina input costs, China's aluminium production is forecast to increase by over nine per cent in 2005 to 6.8 million tonnes," ABARE said.

© 2004 AAP

Alcan Bids to Equip Saudi Aluminum Plant, Saudi Official Says

Sept. 21 (Bloomberg)

Alcan Inc., the world's second- largest aluminum maker, is bidding for a contract to supply smelting technology for a $3 billion aluminum plant in Saudi Arabia, a project official said.

Montreal-based Alcan is expected to submit an updated bid tomorrow, incorporating technology gained in its purchase of French rival Pechiney SA in February, a spokesman for the Saudi Arabian Mining Co. said in a telephone interview from Riyadh.

The Saudi state-owned mining company, known as Ma'aden, must purchase the smelting technology before it can decide on the exact capacity of the plant and invite bids for construction contracts, said the spokesman, who asked not to be identified by name.

Saudi Arabia, where per capita income has fallen by two thirds to less than $9,000 in the last two decades, is trying to diversify its economy away from oil and develop industries to create jobs for its expanding population, which is expected to double by 2020, according to government reports.

Alcan was not immediately available to comment.

The smelter, Saudi Arabia's first, will be able to produce at least 500,000 metric tons a year of aluminum, the Ma'aden official said. The country will seek bids ``within days'' from foreign companies to build a $900 million power plant, that would be connected to the smelters, with a minimum output of 1,500 megawatts, he said.

To contact the reporter on this story:

Andy Critchlow in Dubai on at acritchlow1@bloomberg.net

To contact the editor responsible for this story:

Tim Coulter at at tcoulter@bloomberg.net

Russians seen keenest on Montenegrin aluminium firm

Planet Ark, NY - September 22, 2004

OSLO - Russian aluminium groups Sual and Rusal are the likeliest buyers of Montenegro's aluminium smelter KAP based on the interest shown so far in the privatisation sale, a KAP executive said yesterday.

Montenegro is offering a 65.4 percent stake in Kombinat Aluminijuma Podgorica (KAP), which would be the first major privatisation move in Montenegro since October 2002.

By the end of this week the Montenegrin privatisation agency is expected to narrow down the list of prospective buyers from eight to four or five.

"I am expecting Sual or Rusal (to be the buyer)," KAP's market analyst Goran Djukanovic told Reuters on the sidelines of a Metal Bulletin aluminium conference in Oslo. Djukanovic works as a senior adviser to KAP's top management.

Djukanovic said that he based his view on the degree of interest shown by the prospective bidders, not on knowledge about the preferences of the privatisation agency. He said Sual had been especially active, visiting KAP several times.

"Rusal has also visited, but not as often as Sual," Djukanovic said.

A week ago the privatisation agency said that eight buyers had shown an interest in buying KAP, which has an ingot smelter which aims to produce 120,000 tonnes this year, a 240,000 tonnes alumina refinery and related government-owned bauxite mines.

KAP accounts for half of Montenegro's industrial output and 80 percent of exports.

"Buying KAP is not just buying a company - it is (like) buying half of Montenegro," Djukanovic told the conference.

STRATEGIC PARTNER

Besides the Russian groups, the interested companies are Swiss-based commodities trader Glencore, Indian firm Vedanta Resources (VED.L: Quote, Profile, Research) , Germany's BAGR group, Austrian firm A-TEC, Monenegro's Vectra and Lithuania's Ukio Banko Investicine Grupe (UAB). Final bids are to be submitted by December 1.

Montenegro has said it wants a strategic partner with 2003 aluminium production of at least 120,000 tonnes or annual sales of at least 165 million euros. Financial investors could qualify only if they manage funds of at least 300 million euros.

The government has said it wants a buyer ready to invest at least 100 million euros to upgrade and develop the plant and improve its standard of environmental protection.

Djukanovic said it was clear that KAP would not be sold for cash, but for a commitment to invest and to assume debts to the Montengrin government, Vectra and international debt-holders.

The government has said that the buyer of KAP could also purchase the government's minority stake in a bauxite mine and get a concession to exploit bauxite ore to be processed only by KAP. Bauxite, which is refined into alumina, is the main raw material for aluminium.

Djukanovic said he believed that Montenegro's bauxite reserves, which he estimated at 70-80 million tonnes, would be the main attraction for investors in KAP which has 30-year-old production technology.

Story by John Acher

REUTERS NEWS SERVICE

Update on former Kaiser Aluminum Mead Employee Randy Nichols:

Software provider books first international sale

Journal of Business, Spokane, September 16, 2004

By Richard Ripley

A small Spokane company that develops Internet-based business software has made its first international sale and says it is adding three staff employees and possibly will add three more before long.

The company, Pentad Systems LLC, made the sale two weeks ago to West Arm Truck Lines of Castlegar, British Columbia, says Randy Nichols, Pentad’s president and one of its three owners.

The software West Arm bought enables it to image freight documents and put them on the Internet so its customers can track their shipments, Nichols says.

Pentad, launched in May 2003, has nine employees already and is in the process of hiring three more as a result of the transaction with West Arm, Nichols says. The fledgling company had revenues of $250,000 last year. Within the next four months, it hopes to hit revenue levels that would give it annual sales of $500,000 to $600,000, and if it would sustain that rate of growth, it would be within reach of a goal it set two months ago of becoming a multimillion-dollar company by July 2005, Nichols says.

"I’m working on a huge client in Kingman Ariz.," he says. "I’m very close to signing that." Also, he learned last week that Pentad had gotten a contract to provide software to Spokane Industries Inc. here.

Pentad offers 25 different software programs to business customers, who can license the company’s computer code and run it internally on their own web servers, out the code on their web sites, or have a Web-hosting company their Web sites and Pentad’s code, Nichols says.

The programs cover such things as managing human resources, payroll, time and attendance, and equipment maintenance, and includes a customer relationship management program, Nichols says.

Recently, Pentad integrated its Time Collection System with the computer software of Terry’s Truck Center Inc., which is located at 6223 E. Mallon, Says Tarrah Homen, corporate secretary at Terry’s.

"No longer do we spend countless hours calculating employees’ time and assigning labor on job tickets," Homen says. "For the first time, we are able to control our labor costs and focus on productivity and quality control for our customers."

Terry’s Truck Center repairs semis, truck trailers, and motor homes and does diesel performance upgrades on diesel pickups. It employs 19 people, has been in business for 16 years, and is exploring using other Pentad programs, Homen says.

All of Pentad’s software is meant to be used via the Internet or corporate intranets. Nichols says he tells customers, "There’s only two costs that you need to worry about: the initial configuration, and the monthly licensing fee." When companies deploy new systems, they often incur such expenses as paying for computer hardware, training, and software upgrades, and those costs can be repetitive, he adds.

Pentad also provides software that helps companies offer surplus assets for sale.

"Most companies have $20,000 to $250,000 worth of equipment and no way of getting rid of it," Nichols says. Pentad’s software puts a "See what we have for sale button" on a company’s Web site, he says.

Nichols helped Commercial Development Co. of St; Louis, inventory the recoverable assets it’s selling from the idled Kaiser Mead Work’s aluminum smelter here, which Commercial bought from Kaiser Aluminum & Chemical Corp. in June. Nichols, who worked for Kaiser for 22 years, managed the 300-person Carbon department, which produced anodes for aluminum smelting, before he left the company.

At Kaiser, Nichols created software to use in managing his department, and it helped him cut his workload to seven to eight hours a day, compared to 12 to 14 hours a day for most of the Kaiser department managers. He installed his software at Kaiser’s plant in Ghana, Africa, which employed him for six months to work on those systems after he learned in January 2003 that his position at Kaiser Mead would be eliminated.

Nichols launched Pentad with Jeff Bosma and Mark Barnes, two executives with Fast Way Freight System Inc., of Spokane, who still work for that company. Each man has a one-third ownership interest in Pentad, a limited liability company.

Nichols says that if Pentad’s customers like and continue to use its software, that results in significant residual, or ongoing, monthly income from licensing fees.

"Residual income is huge to me, having gone through the experience of having a severance package and having a retirement and losing it in Kaiser’s bankruptcy," he says.

In July, Pentad put in place a growth plan that stemmed from work done by students at Gonzaga University’s School of Business, who looked at how to help Pentad grow, Nichols says. The students’ recommendations included adding a customer-service representative, an operations manager, and the company has filled one of those positions and is in the process of filling the other, Nichols says. He says he might continue to handle the company’s marketing himself, but is adding a third new employee, who will write computer code for the company’s systems.

Alcan Bids to Equip Saudi Aluminum Plant, Saudi Official Says

Sept. 21 (Bloomberg)

Alcan Inc., the world's second- largest aluminum maker, is bidding for a contract to supply smelting technology for a $3 billion aluminum plant in Saudi Arabia, a project official said.

Montreal-based Alcan is expected to submit an updated bid tomorrow, incorporating technology gained in its purchase of French rival Pechiney SA in February, a spokesman for the Saudi Arabian Mining Co. said in a telephone interview from Riyadh.

The Saudi state-owned mining company, known as Ma'aden, must purchase the smelting technology before it can decide on the exact capacity of the plant and invite bids for construction contracts, said the spokesman, who asked not to be identified by name.

Saudi Arabia, where per capita income has fallen by two thirds to less than $9,000 in the last two decades, is trying to diversify its economy away from oil and develop industries to create jobs for its expanding population, which is expected to double by 2020, according to government reports.

Alcan was not immediately available to comment.

The smelter, Saudi Arabia's first, will be able to produce at least 500,000 metric tons a year of aluminum, the Ma'aden official said. The country will seek bids ``within days'' from foreign companies to build a $900 million power plant, that would be connected to the smelters, with a minimum output of 1,500 megawatts, he said.

To contact the reporter on this story:

Andy Critchlow in Dubai on at acritchlow1@bloomberg.net

To contact the editor responsible for this story:

Tim Coulter at at tcoulter@bloomberg.net

Russians seen keenest on Montenegrin aluminium firm

Planet Ark, NY - September 22, 2004

OSLO - Russian aluminium groups Sual and Rusal are the likeliest buyers of Montenegro's aluminium smelter KAP based on the interest shown so far in the privatisation sale, a KAP executive said yesterday.

Montenegro is offering a 65.4 percent stake in Kombinat Aluminijuma Podgorica (KAP), which would be the first major privatisation move in Montenegro since October 2002.

By the end of this week the Montenegrin privatisation agency is expected to narrow down the list of prospective buyers from eight to four or five.

"I am expecting Sual or Rusal (to be the buyer)," KAP's market analyst Goran Djukanovic told Reuters on the sidelines of a Metal Bulletin aluminium conference in Oslo. Djukanovic works as a senior adviser to KAP's top management.

Djukanovic said that he based his view on the degree of interest shown by the prospective bidders, not on knowledge about the preferences of the privatisation agency. He said Sual had been especially active, visiting KAP several times.

"Rusal has also visited, but not as often as Sual," Djukanovic said.

A week ago the privatisation agency said that eight buyers had shown an interest in buying KAP, which has an ingot smelter which aims to produce 120,000 tonnes this year, a 240,000 tonnes alumina refinery and related government-owned bauxite mines.

KAP accounts for half of Montenegro's industrial output and 80 percent of exports.

"Buying KAP is not just buying a company - it is (like) buying half of Montenegro," Djukanovic told the conference.

STRATEGIC PARTNER

Besides the Russian groups, the interested companies are Swiss-based commodities trader Glencore, Indian firm Vedanta Resources (VED.L: Quote, Profile, Research) , Germany's BAGR group, Austrian firm A-TEC, Monenegro's Vectra and Lithuania's Ukio Banko Investicine Grupe (UAB). Final bids are to be submitted by December 1.

Montenegro has said it wants a strategic partner with 2003 aluminium production of at least 120,000 tonnes or annual sales of at least 165 million euros. Financial investors could qualify only if they manage funds of at least 300 million euros.

The government has said it wants a buyer ready to invest at least 100 million euros to upgrade and develop the plant and improve its standard of environmental protection.

Djukanovic said it was clear that KAP would not be sold for cash, but for a commitment to invest and to assume debts to the Montengrin government, Vectra and international debt-holders.

The government has said that the buyer of KAP could also purchase the government's minority stake in a bauxite mine and get a concession to exploit bauxite ore to be processed only by KAP. Bauxite, which is refined into alumina, is the main raw material for aluminium.

Djukanovic said he believed that Montenegro's bauxite reserves, which he estimated at 70-80 million tonnes, would be the main attraction for investors in KAP which has 30-year-old production technology.

Story by John Acher

REUTERS NEWS SERVICE

Update on former Kaiser Aluminum Mead Employee Randy Nichols:

Software provider books first international sale

Journal of Business, Spokane, September 16, 2004

By Richard Ripley

A small Spokane company that develops Internet-based business software has made its first international sale and says it is adding three staff employees and possibly will add three more before long.

The company, Pentad Systems LLC, made the sale two weeks ago to West Arm Truck Lines of Castlegar, British Columbia, says Randy Nichols, Pentad’s president and one of its three owners.

The software West Arm bought enables it to image freight documents and put them on the Internet so its customers can track their shipments, Nichols says.

Pentad, launched in May 2003, has nine employees already and is in the process of hiring three more as a result of the transaction with West Arm, Nichols says. The fledgling company had revenues of $250,000 last year. Within the next four months, it hopes to hit revenue levels that would give it annual sales of $500,000 to $600,000, and if it would sustain that rate of growth, it would be within reach of a goal it set two months ago of becoming a multimillion-dollar company by July 2005, Nichols says.

"I’m working on a huge client in Kingman Ariz.," he says. "I’m very close to signing that." Also, he learned last week that Pentad had gotten a contract to provide software to Spokane Industries Inc. here.

Pentad offers 25 different software programs to business customers, who can license the company’s computer code and run it internally on their own web servers, out the code on their web sites, or have a Web-hosting company their Web sites and Pentad’s code, Nichols says.

The programs cover such things as managing human resources, payroll, time and attendance, and equipment maintenance, and includes a customer relationship management program, Nichols says.

Recently, Pentad integrated its Time Collection System with the computer software of Terry’s Truck Center Inc., which is located at 6223 E. Mallon, Says Tarrah Homen, corporate secretary at Terry’s.

"No longer do we spend countless hours calculating employees’ time and assigning labor on job tickets," Homen says. "For the first time, we are able to control our labor costs and focus on productivity and quality control for our customers."

Terry’s Truck Center repairs semis, truck trailers, and motor homes and does diesel performance upgrades on diesel pickups. It employs 19 people, has been in business for 16 years, and is exploring using other Pentad programs, Homen says.

All of Pentad’s software is meant to be used via the Internet or corporate intranets. Nichols says he tells customers, "There’s only two costs that you need to worry about: the initial configuration, and the monthly licensing fee." When companies deploy new systems, they often incur such expenses as paying for computer hardware, training, and software upgrades, and those costs can be repetitive, he adds.

Pentad also provides software that helps companies offer surplus assets for sale.

"Most companies have $20,000 to $250,000 worth of equipment and no way of getting rid of it," Nichols says. Pentad’s software puts a "See what we have for sale button" on a company’s Web site, he says.

Nichols helped Commercial Development Co. of St; Louis, inventory the recoverable assets it’s selling from the idled Kaiser Mead Work’s aluminum smelter here, which Commercial bought from Kaiser Aluminum & Chemical Corp. in June. Nichols, who worked for Kaiser for 22 years, managed the 300-person Carbon department, which produced anodes for aluminum smelting, before he left the company.

At Kaiser, Nichols created software to use in managing his department, and it helped him cut his workload to seven to eight hours a day, compared to 12 to 14 hours a day for most of the Kaiser department managers. He installed his software at Kaiser’s plant in Ghana, Africa, which employed him for six months to work on those systems after he learned in January 2003 that his position at Kaiser Mead would be eliminated.

Nichols launched Pentad with Jeff Bosma and Mark Barnes, two executives with Fast Way Freight System Inc., of Spokane, who still work for that company. Each man has a one-third ownership interest in Pentad, a limited liability company.

Nichols says that if Pentad’s customers like and continue to use its software, that results in significant residual, or ongoing, monthly income from licensing fees.

"Residual income is huge to me, having gone through the experience of having a severance package and having a retirement and losing it in Kaiser’s bankruptcy," he says.

In July, Pentad put in place a growth plan that stemmed from work done by students at Gonzaga University’s School of Business, who looked at how to help Pentad grow, Nichols says. The students’ recommendations included adding a customer-service representative, an operations manager, and the company has filled one of those positions and is in the process of filling the other, Nichols says. He says he might continue to handle the company’s marketing himself, but is adding a third new employee, who will write computer code for the company’s systems.


 

Alcan spinoff firm to be called Novelis

Toronto Star, Canada, 22 Sep 2004

MONTREAL (CP) — Novelis will be the new name of Alcan Inc.'s rolled products division, the company announced today as it moved ahead on the spinoff of the $6-billion (U.S.) business scheduled for year-end.

The name is grounded in three concepts: "novel," "velocity" and "precision," Brian Sturgell, designated chief executive of Novelis, said in a release.

"First and foremost, our name will represent our new approach to the business, the opportunity for change, and our emphasis on speed to market and precise performance," Sturgell said.

Alcan is to release within a week a preliminary prospectus to its shareholders explaining how the spinoff will take place.

While Alcan plans to distribute all the shares of Novelis to Alcan shareholders, it revealed last week that it is considering unsolicited offers from hedge funds looking to buy the rolled-products business.

Pending government and shareholder approvals, Novelis is to begin operating as an independent firm on Jan. 1, becoming the world's largest aluminum rolled products company, based on 2003 revenue of $6.2 billion US and production volume.

Its products are used in vehicles, aircraft, beverage and food cans, construction and industrial products, household foil and lithographic products.

An analyst said prospects look good for both the parent company and Novelis.

"Rolled products has never been the most profitable part of the aluminum business," said Chuck Bradford of Research Inc. in New York.

He noted that Alcan's smelter operations are more profitable, but also more dependent on world prices.

"Right now, where we are in the cycle it's good for the smelting side, and I think it's going to get better. We've had some pretty substantial reductions in inventories."

However, Bradford said the outlook is also good for rolled products. For example, the aerospace sector appears poised to recover and it uses large quantities of aluminum. Alcan is a preferred supplier on the Airbus A380 jumbo jet program, he noted.

"That could be pretty exciting over the next couple of years," Bradford said.

Novelis will also be the world's largest recycler of aluminum beverage cans.

Alcan CEO Travis Engen said when the spinoff was announced in May that it would allow Alcan management to focus on two divisions instead of three — smelting and packaging.

The spinoff would also resolve a competitive issue, allowing Alcan (TSX: AL) to keep some large rolled products mills acquired with the takeover last year of Paris-based Pechiney Group — plants it would otherwise have been forced by authorities to divest.

Shares of Novelis are to be listed on the New York and Toronto stock exchanges.

Novelis, with 38 factories in 12 countries and over 13,000 employees, will have its legal domicile in Canada, but its executive office will be in the United States.

SUAL H1 net profit over 2.4 bln rbl.

Gateway 2 Russia, Russia 22 September 2004 11:23

Siberian-Ural Aluminium Co. (or SUAL) posted over 2.4 bln rbl as the H1 net profit, sources with the company told AK&M.

6-month revenues surpassed 17.9 bln rbl.

The company attributes such profit growth to the higher stock exchange prices for primary aluminum, core product of the group. Besides, the company completely gave up processing of foreign raw materials provided under the 'goods made on commission term'.

SUAL Group is a vertically integrated company, one of the world's major aluminium producers. It unites the company involved in bauxite, alumina, silicon, aluminium semi-finished and ready-product production.

Bogoslovsky Aluminium Works, Ural Aluminium Works, Irkut Aluminium Works, Kandalakshsky Aluminium Works, Nadvoitsky Aluminium Works are members of SUAL Group.

Rio Tinto Aluminium CEO to leave board

The Age, Australia September 23, 2004 - 9:29AM

Miner Rio Tinto Ltd chief executive of its aluminium division Oscar Groeneveld will stand down from the boards of Rio Tinto plc and Rio Tinto Ltd, the company said.

The move is effective October 1, 2004.

Rio Tinto said following Mr Groeneveld's relocation to Brisbane, as announced on July 21, 2004, his departure would align his position with that of other Rio Tinto product group chief executives.

"Mr Groeneveld has made a very valuable contribution to the board and, with other product group chief executives, will continue to contribute to its discussions and deliberations," the company said.

© 2004 AAP

VAW Carbon Fined $500,000 for role in International Price-Fixing Conspiracy

Industry Canada (press release), Canada

OTTAWA, September 22, 2004 - The Competition Bureau announced today that VAW Carbon pleaded guilty and was fined $500,000 by the Federal Court of Canada for its role in an international conspiracy to fix the price of cathode blocks. The conspiracy lessened competition in the Canadian market for the products, which are used principally in the production of primary aluminium.

"This conviction demonstrates the Bureau's resolve to hold foreign firms accountable for their participation in anti-competitive agreements that affect Canadians," said Richard Taylor, Acting Senior Deputy Commissioner of Competition. "The Competition Bureau will continue to aggressively pursue international cartels that affect our economy."

German-based VAW Carbon was a member of an international cartel that agreed to implement and maintain price increases relating to the sale and supply of cathode blocks in Canada and elsewhere. Between 1996 and 1997, VAW Carbon was one of a limited number of companies engaged in the production, manufacture, distribution, sale and supply of this product throughout the world.

Cathode blocks are commonly used in the production of primary aluminium. They are manufactured from carbon material which has unique properties, including corrosion-resistance and superior electric current conductivity. Canada is the world's third largest producer of primary aluminium, after the United States and Russia.

The Competition Bureau is an independent law enforcement agency that promotes and maintains fair competition so that all Canadians can benefit from competitive prices, product choice and quality service. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

For media enquiries, please contact:

Eric Glaude

Communications Advisor

Communications Branch

(819) 953-9760

For general enquiries, please contact:

Information Centre

Competition Bureau

(819) 997-4282

1-800-348-5358

870 million USD bauxite project

Viet Nam News Agency, Vietnam 09/22/2004 -- 22:13(GMT+7)

Ha Noi, Sept. 22 (VNA) - A 870 million USD project to excavate 1 million tonnes of aluminium a year from a bauxite ore mine in central highlands Dac Nong province is being built.

A feasibility study of the project is being carried out by the Vietnamese Industry Ministry and the China Aluminium Corporation. It will be presented to the Government by the end of this year.

A feasibility study for a railway route transporting aluminium from Dac Nong to Thi Vai in southern Ba Ria-Vung Tau province has been completed. The 306km railway route with 32 stations and six tunnels will be built at a cost of around 544 million USD.

According to the Industry Ministry, Dac Nong province is expected to have bauxite ore deposits of around 5.4 billion tonnes.-Enditem

7 Bahrain firms to take part in Germany aluminium show

MENAFN, Middle East - Bahrain Tribune - 22/09/2004

Bahrain will join five other national pavilions from China, France, India, the Netherlands and the USA at Aluminium 2004 - The 5th Aluminium World Trade Fair & Conference - which opens today at the Exhibition Centre Essen, Germany.

Seven Bahraini companies are represented at Essen, including Aluminium Bahrain (Alba), Bahrain Convention & Exhibition Bureau (BCEB), Balexco, Garmco and Midal Cables. First-time participants include the Economic Development Board (EDB) and Quality Wires.

Kadem Esa Al Saeed, Acting General Manager of BCEB, is the head of Bahrain's official delegation to Germany while coordinating the participation of the Bahraini companies at Aluminium 2004 is Mohammed Al Hulaibi, Project Manager BCEB.

With approximately 600 exhibitors and an estimated 13,000 visitors from over 40 countries, Aluminium 2004 is the pivotal global showcase for suppliers of raw material, semi-finished and finished products, surface treatment and producers of machinery, plant and equipment for aluminium processing and manufacturing.

"This is the fourth time for Bahrain to participate in the Essen event," said Ebrahim Hubail, Marketing Manager at BCEB. "Bahrain's participation in events such as the aluminium show in Germany is intended to promote the Kingdom's key industries throughout the world. These trade shows provide opportunities for Bahraini delegates to develop new contacts, share experiences with other exhibitors and visitors, and benefit from the know-how of seasoned representatives."

Alba's Senior Public Relations Officer Jamal Al Oraifi said: "Alba takes pride in participating in global events such as Aluminium Essen since these shows give Bahrain the opportunity to raise its profile as one of the largest and most efficient aluminium smelters in the world."

Kaiser Aluminum Gets $400 Mln Bid for Queensland Alumina Stake

Bloomberg, United States Sept. 23 2004

Kaiser Aluminum Corp., which sought bankruptcy protection in 2002 to deal with asbestos liabilities, said it got a $400 million bid for its stake in an Australian alumina refinery and will auction off its interest next month.

Houston-based Kaiser Aluminum had canceled the auction for its 20 percent stake in the refinery last month after saying it received no ``qualified bids.'' The company said in a statement today that it now has two sufficient bids, including one for $400 million from Glencore AG.

``The submission of Glencore's qualified bid ensures that an auction will take place,'' Kaiser officials said in the statement. The auction is set for Oct. 28, according to court papers.

Kaiser Aluminum sought bankruptcy protection because of asbestos-related lawsuits and falling profits caused by a slump in demand for aluminum by automakers and plane-makers. It listed $3.3 billion in assets and $3.1 billion in liabilities.

Glencore is a unit of Glencore International AG, a closely held Swiss commodities trader that owns alumina refineries in Ireland, Italy and Jamaica. Alumina is the raw material used to make aluminum.

The company also received a $308 million bid for the Australian refinery stake from Comalco Aluminum Ltd., officials said. Since Comalco's offer preceded Glencore's, Comalco is entitled to an $11 million breakup fee if it's outbid, Kaiser Aluminum officials said.

Comalco, a unit of the Rio Tinto Group, already owns 38.6 percent of Queensland Alumina and has a pre-emptive right to buy Kaiser Aluminum's stake, according to court papers.

Comalco officials said that Kaiser Aluminum's original $525 million asking price was too high, the Australian Financial Review reported last month.

To contact the reporter on this story:

Jef Feeley in Wilmington, Delaware jfeeley@Bloomberg.net.

To contact the editor responsible for this story:

Patrick Oster at poster@bloomberg.net.

Bid For Kaiser's Queensland Stake Subject To Auction

Yahoo News Friday September 24, 1:26 AM

By Christopher Scinta Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--Kaiser Aluminum Corp. (KLUCQ) said it has two separate agreements to sell its stake in the world's largest alumina refinery in Australia for up to $400 million.

Houston-based Kaiser said a $308 million offer from the Comalco unit of Rio Tinto PLC (RTP) will serve as the base bid at an auction of Kaiser's 20% stake in the refinery, known as Queensland Alumina Ltd., according to court papers filed Thursday with the U.S. Bankruptcy Court in Wilmington, Del.

Queensland, rated to produce 3.65 million metric tons of alumina a year, is 38.6% owned by Comalco and 41.4% owned by Canadian aluminum company Alcan Inc. (AL).

Houston-based Kaiser attempted to sell its Queensland stake through an auction earlier this year but didn't receive any offers after setting the minimum bid at $525 million. When it didn't receive any bids, Kaiser began negotiating with Comalco and Glencore AG (GNC.YY) to take a lead bidding position at a lower price for a future auction, court papers said. Although Glencore offered more money, Comalco, which as a QAL joint-venture partner holds a right to match any bid for Kaiser's stake, gained the lead bidding spot because of fears of delays in closing the sale. If it is outbid at auction, Kaiser will pay the company an $11 million breakup fee, the court filing said.

However, the court papers also said Kaiser has a deal with Glencore that would have the Swiss company submit a higher bid of $400 million if the sale stays on a certain timetable. Under the Bankruptcy Code, which Kaiser sought creditor protection under in 2002, it is common for a sale of assets to be subject to higher and better offers at auction to ensure the highest return for creditors.

A Kaiser spokesman declined to comment on the court filings and said the company would issue a statement shortly. A hearing on the proposed bidding procedures hasn't been set, but Kaiser has asked the court to put approval of the bid agreement on a fast track. A hearing on approval of the overall sale is scheduled for November.

Kaiser said in its court filing that bids on its QAL stake must be submitted by Oct. 25 to its attorneys and financial advisers and must be for at least $321 million, subject to adjustment.

Bidders must make a deposit of $40 million to participate in the auction. The auction is scheduled for Oct. 28 in New York, with subsequent bids coming in $1 million increments, court papers said. A hearing to approve the sale to the highest bidder is planned for Nov. 8 in Pittsburgh.

Kaiser, which said last month it is unlikely to exit Chapter 11 before the first half of 2005, has been selling its commodity operations, including a stake in a Jamaican refinery and bauxite mine and an alumina refinery in Gramercy, La.

In a separate filing Monday, Kaiser asked for approval to move ahead with the sale of its 90% stake in a large alumina smelter in Ghana to the government of that country for $18 million. Kaiser said in court papers it had to close the facility last year after Ghana curtailed the amount of power it delivered to the smelter, resulting in losses of $56.5 million.

In December, Kaiser agreed to sell the operation to the Ghanaian government for $35 million to $100 million, subject to due diligence, court papers said. However, that deal didn't close and Ghana sought changes, which resulted in the deal being amended to cut the sale price to $18 million.

Kaiser hasn't been able to find another buyer interested in the smelter because of the power supply issues, and based on past negotiations with Ghana, the company believes the agreement is the best it can do, court papers said.

A hearing on the Ghana sale is scheduled for Monday. Kaiser Aluminum listed assets of $3.3 billion and debts of $3.1 billion in its Chapter 11 bankruptcy petition. The company, which produces fabricated aluminum products, alumina and primary aluminum, blamed itsfinancial difficulties on rising retiree and asbestos costs as well as a weak

aluminum market.

-By Christopher Scinta; Dow Jones Newswires; 202-862-3541;

chris.scinta@dowjones.com

Kaiser files motions on refinery sales

Houston Business Journal, TX 23 Sep 2004

Houston-based Kaiser Aluminum announced Thursday that it has filed separate motions with the U.S. Bankruptcy Court concerning the potential sale of its interests in an alumina refinery in Australia and an aluminum smelter in Ghana.

The court has agreed to the company's request to shorten the response time, setting the response date for Sept. 24 at 5:00 p.m. The court will rule on the motions on Sept. 27.

The sale involves the Queensland Alumina Ltd. refinery in Australia and the Volta Aluminum Company Ltd. refinery in Ghana.

Kaiser would sell its interests in the Queensland refinery to Comalco Aluminium Limited, one of the other current owners of QAL, for $308 million in cash plus purchase of Kaiser's alumina and bauxite inventories, and the assumption of Kaiser's $60 million of QAL debt.

Separately, Kaiser has entered into an agreement with Glencore AG whereby Glencore has agreed to submit an auction bid for the QAL interests, including a base price of $400 million in cash plus the other payments and adjustments.

The submission of Glencore's bid ensures than an auction will take place.

Kaiser's motion on Valco calls for the sale of the company's interests in Valco to the Government of Ghana.

Kaiser, a producer of fabricated aluminum products, alumina and primary aluminum, is working to emerge from Chapter 11 bankruptcy.

© 2004 American City Business Journals Inc.

Ormet asks bankruptcy court to allow contract modifications

Centre Daily Times, PA 23 Sep 2004

MARK WILLIAMS, Associated Press

COLUMBUS, Ohio - Bankrupt aluminum maker Ormet Corp. has asked a bankruptcy court for permission to break labor contracts with workers at two eastern Ohio plants to get concessions that it says are vital for the company's survival.

The union representing 1,500 workers at the plants in Hannibal said it would go on strike if the changes are made without negotiations.

On Wednesday, the company asked the U.S. Bankruptcy Court in Columbus to allow modifications to the contracts because the union refuses to negotiate a new deal. The company said bankruptcy rules allow courts to reject or modify a labor contract if it is necessary to complete the reorganization.

The company wants to freeze workers' pension benefits, to require them to pay up to $90 a month toward health insurance and to change work rules, Debbie Boger, Ormet's vice president of administrative services, said on Thursday.

"Our financial forecast with the plan of reorganization makes it very clear that without $23 million in employee and retiree cost reductions, our financial plan doesn't work going forward," she said.

The privately held company sought protection from creditors on Jan. 30, blaming low metal prices, weak demand, high energy costs and rising medical benefit costs. The company employs about 2,000 workers in four states.

The United Steelworkers of America, which represents workers at both plants in the Ohio River town about 115 miles southeast of Columbus, believes concessions are unnecessary.

"Our goal is to save the company, but in a different way," said Denny Longwell, a union staff representative.

Longwell would not discuss what kinds of ideas the union has and says union leaders and lawyers are collecting financial information that has been slow in coming from the company.

Boger said the company has been waiting for a counter proposal from the union.

Longwell said the company demands would lower the workers' standard of living while changes in work rules and allowing the company to hire outside contractors to do work could mean lost jobs.

Workers at both plants are working under expired contracts. The company has said it is not asking workers, whose average salary is about $15 an hour, to take pay cuts.

The company also wants to make changes in vacation scheduling and shifts and is offering a bonus plan.

Boger said the extremely high cost of natural gas and electricity is one reason why concessions are needed. She said the cost of electricity will go up as much as 30 percent, or $30 million to $50 million, next year.

The company submitted its reorganization plan to the court Sept. 2 and said it hopes to come out of bankruptcy by the end of the year. A hearing on the company's labor proposal is set for Oct. 6.

Alcan to spin off aluminum rolled products, recycling unit

Waste News, OH - Sept. 23 2004

Alcan Inc. will spin off its aluminum rolled products business, which includes its recycling operations, into a publicly traded company called Novelis.

Novelis will begin operating as an independent company Jan. 1, pending government and shareholder approval. The company will be the world´s largest aluminum beverage can recycler, said Brian Sturgell, CEO of Montreal-based Alcan. It will supply aluminum sheet products to the automotive and transportation, beverage and food can, construction and industrial product, foil and lithographic industries.

It will operate 38 facilities in 12 countries and had pro forma revenue of $6.2 billion in 2003.

BPA power supply forecast reflects uncertainty

Bend.com, OR 23 Sep 2004 Reference Code: AR-18148

Administrator says region 'can't afford to be complacent'

September 23 - PORTLAND - Does the Pacific Northwest have adequate electricity supplies? That depends largely on how much power from new plants is sold here or shipped outside the region, the Bonneville Power Administration’s annual forecast of electricity supply shows.

BPA Administrator Steve Wright said the region "can’t afford to be complacent" and should continue to focus on providing adequate energy infrastructure, including new generators, transmission lines and energy efficiency. BPA’s "White Book" analysis shows that the supply of energy will meet regional needs for the next four or five years but only if owners of power from new generators sell it here in the region.

"The forecast assumes about 3,400 average megawatts of independent power generation sold here in the Northwest to serve our regional loads," Wright said. "But independent producers can sell their power elsewhere. If supplies get tight on the West Coast, the Northwest could potentially see supply shortages and price volatility."

BPA is currently engaged in major transmission upgrades. The Kangley-Echo Lake project was completed last year in the Seattle area, and the Grand Coulee-Bell project in northeastern Washington is now under construction. The federal system comprises more than 15,000 miles of high voltage power lines – 80 percent of the regional grid. BPA is also making investments in federal hydropower facilities and in energy efficiency.

The White Book projects region wide loads and resources and those of BPA independently. BPA’s energy demand obligations are expected to overtake BPA’s supply as early as 2009. The region as a whole would need additional supplies by 2011. Both dates assume that all power from independent producers stays in the Pacific Northwest.

How much power BPA will provide to aluminum companies and utilities influences BPA’s load-resource balance. If demand exceeds federal generating capability, BPA would have to purchase power in the market.

Wright said BPA and the Northwest Power and Conservation Council are now discussing issues surrounding BPA’s post-2006 service with regional utilities, industries, consumers and environmental groups. Current power rates and some contracts expire in 2006.

BPA provides about 44 percent of the region’s firm energy supply. The agency’s White Book forecast is constructed from BPA’s own data, direct submittals to BPA and information supplied by utilities to the Pacific Northwest Utilities Conference Committee. This White Book is based on data collected through March 2004.

BFIG battles BPE in court over ALSCON

Vanguard, Nigeria Thursday, September 23, 2004

By IseOluwa Ige

ABUJA — A Federal high court sitting in Abuja yesterday said it has jurisdiction to hear a suit filed by a consortium of American companies and aluminium industry professionals, BFI Group Corporation of America seeking to stop the Bureau of Public Enterprises from embarking on a fresh privatization of Aluminum Smelter Company of Nigeria Plc.

The high court judge, Justice Jonah Adah who started sitting on the matter yesterday fixed October 7 this year for examination of triable issues in the case. Although trial was expected to begin yesterday, BPE was absent in court because the hearing date issued on it (BPE) bore September 23, this year instead of yesterday’s date.

The mix up made the presiding judge to fix a fresh hearing date in the matter. It would be recalled that BFI Group Corporation of America did bid for the purchase of 77.5 per cent equity of ALSCON with another company, RUSAL, a Russian Group.

The bid was reviewed alongside its competitor by a 10-man professionals from the Technical Committee of the BPE before BFI Group was returned as winner of the bidding exercise on June 14, this year with its bid price of $410 million.

A certificate confirming same was issued to BFI Group shortly after but not within 48 hours promised, asking it to pay 10% of the price within 15 working days of receiving the confirmation letter

But BFIG on July 9, this year lost its bid to take over the 77.5 per cent shares of government in the Aluminum Smelter Company of Nigeria, Ikot Abasi, due to its non-payment of the 10 per cent bid price (about $41 million) for the aluminum company.

According to the American based company, it could not pay the said 10% bid price because a certificate confirming its winning the bidding exercise was not immediately issued to it.

Apart from losing the take over of government shares in ALSCON, it also lost the sum of $1 million (about N133 million) being the bid bond it submitted to the Bureau of Public Enterprises for ALSCON.

Following collapse of negotiations between BFI Group and BPE on ALSCON, it ran to court to compel the Federal Government to conclude the sale of Aluminum Smelter Company of Nigeria Plc to it. In the suit filed against BPE, the BFI Group specifically asked for 13 declaratory orders

Read more at http://www.vanguardngr.com/articles/2002/nationalx/nr323092004.html

Process to make aluminium stronger

Ferret, Australia 24 September 2004

By bill stephens

CSIRO scientists have discovered a new process which could soon lead to the production of aluminium cars and planes that get stronger the longer they are left to 'bake' in the sun.

Dr Roger Lumley of CSIRO Elaborately Transformed Metals (CETM) says the new process involves curing, or age-hardening, aluminium to a point where the curing process can be completed by exposure to sunlight rather than in a furnace.

The discovery arises from CSIRO's work in light alloys and advanced metals.

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

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

"We have developed two heat treatments using our new knowledge both of which overcome the age-old problem of either increasing the strength of aluminium, and reducing its fracture toughness, or vice versa,'' Dr Lumley said.

"Aluminium alloys used in the automotive, building and aerospace industries are typically age-hardened, that is they are strengthened after their initial formation by a curing process, or aged at high temperatures in a large furnace."

This method produces a range of curing times for aluminium alloys. For example the most common treatment, which gives the strongest alloys, is called T6.

To generate the tensile properties required for structural applications T6-treated aluminium alloy is typically aged for 6-8 hours at 150-170°C.

"CSIRO's T6i4 heat treatment significantly reduces the time of high temperature aging to about an hour, and uses Australia's warm climate to complete the process," Dr Lumley said.

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

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

According to CETM's Industry Manager, Barrie Finnin, even better results can be achieved using CSIRO's T6i6 process, where, after several hours of secondary aging at ambient temperature, the material is again subjected to high temperature aging.

"This can provide significant improvements to mechanical properties over the T6i4 treatment," Finnin said.

"A likely application for our T6i6 process would be for aircraft skins and other aerospace applications, or any application where weight reduction and high strength are paramount."

Both T6i4 and T6i6 offer considerable savings in time and energy over conventional techniques, and in most cases requires no additional equipment.

Dr Lumley says the secret of the CSIRO discovery is all to do with the microstructure of aluminium alloys.

"What you end up with in the new process is a finer structure, engineered at the nano-scale, in a way that translates into mechanical property improvements," he says.

CSIRO says the potential spin-offs of the new processes for industry are enormous. Not only can aluminium alloy producers boost the strength of their product while making considerable energy cost savings, but the processes also allow a faster turnaround time in producing finished components and may even lead to reduced furnace sizes.

The technology, which is protected by a series of international patent applications, is now in the proving-out stage and is being evaluated by Forgecast Australia - a manufacturer of non-ferrous metal components for global markets with facilities in Mitcham, Victoria and Tijuana, Mexico.

"Commercial applications are starting to build industry confidence in our innovation, which should encourage further use of aluminium alloys," Finnin said.

Forgecast's General Manager, Jim Kealy, says the T6i6 technology could provide a competitive advantage, particularly where the improvement in properties fulfill a specific customer need.

More information contact Barrie Finnin on 03 9662 7870.

Nation Making Moves To Buy VALCO

GhanaWeb, Ghana - 23 Sep 2004

Prez Kufuor

The government has expressed interest and made a commitment to buy the Volta Aluminium Company (VALCO).

The Kaiser Aluminium Corporation, which owns 90 per cent of VALCO, has offered to sell its interest in the company at the minimum cost of $35 million.

President J.A .Kufuor, who announced this at a durbar of chiefs and people of Tema yesterday said the government had carried out related studies into the offer and had declared its commitment to buy the offer.

Responding to concerns expressed by Nii Adjei Kraku II, Tema Mantse, about the future of VALCO, President Kufuor said " VALCO is not going to die; the government is preparing to gain maximum benefit from VALCO than ever before."

President Kufuor said within a matter of weeks the government would come out with a plan for the future of VALCO, which he described as a national asset. He, however, indicated that the government’s role in the future of VALCO would be strategic, instead of running the day-to-day operations of the company. Kaiser has already executed a memorandum of understanding for the transaction, which is a first step in completing the sale of VALCO.

The memorandum of understanding specifies that the payment of the amount for the sale of VALCO will be spread over a period beginning from 2004. Assuming Ghana decides to buy the company at the minimum offer of $35 million, the country is expected to pay $7million in cash to Kaiser and $18 million in cash to VALCO. The rest of the money will be paid in cash to Kaiser over a five-year period from the closing date of the offer.

The sale transaction will also include the assumption of Kaiser’s liabilities and obligations related to VALCO.

The sale of VALCO is subject to the diligence and approval by the President or Cabinet of Ghana, Parliament, boards of directors of Kaiser and VALCO and the US Bankruptcy Court.

President Kufuor said the new unity spirit which was emerging among the various Ga chiefs and communities must be harnessed productively to tackle some of the development and social problems in the country. He said problems, such as bad town and country planning, urban poverty, unemployment, poor sanitation, drug abuse, the menace of land-guards and even buglary and armed robbery, which are characteristic of modern cities, including Accra and Tema, should engage the attention of the chiefs and landlords in the metropolis.

Underscoring the strategic importance of Tema, the President said the government was executing the necessary infrastructure development programmes to modernise the Tema, the port city and its surroundings to support a modern cosmopolitan economy.

He announced that the rehabilitation of the Accra-Tema railway had begun and the development of the container terminal at the Tema Harbour would be completed next year.

Apart from the various projects, including road construction, drains, supply of potable water and electricity, being executed by the government, President Kufuor said projects such as the construction of the sea defence wall to secure the land for the people of Sakumono, Tema Manhean and Kpone were being pursued.

He the government was determined to sustain the modernisation programme to make the Tema city the preferred investors’ destination that it was meant to be . He said expressed the hope that the commencement of the West Africa Gas Pipe-line would create additional job opportunities for the people in the Tema area.

Responding to appeal by the Tema Mantse for the release of stool stands acquired by the state but which had not been used, President Kufuor recalled the assurance he gave two weeks ago at the grand durbar of chiefs and people of Ga, to climax this year’s Homowo festival that the government would hold the necessary consultations with those concerned about the land issue and come up with a good decision that would be pleasing to all.

On the forthcoming elections, President Kufuor reiterated the government’s commitment to free and fair elections and advised politicians to avoid the use of the abusive language in their campaigns since such a practice could betray their commitment to free and fair elections.

Nii Kraku II commended the government for the numerous development projects it had embarked on in the Tema municipal area.

Mr Samuel Ashong Narh, Tema Municipal Chief Executive, elaborated on a number of projects being carried out by the municipal assembly to develop the municipal area, saying that environmental sanitation had remained one of the top priorities of the assembly

China Minmetals Begins Talks to Buy Canada's Noranda (Update5)

Sept. 24 (Bloomberg)

Noranda Inc., Canada's biggest mining company, began exclusive talks on a takeover proposal from China Minmetals Corp., a state-owned producer and trader seeking new sources of nickel, copper and zinc.

China Minmetals would pay a ``small premium'' and spin off Noranda's aluminum unit, the Toronto-based company said in a statement. Noranda fell 46 cents, or 2 percent, to C$22.14 ($17.36) on the Toronto Stock Exchange, valuing the company at about C$6.57 billion.

Noranda said it reviewed ``a number of proposals'' from others. Minmetals probably won out because it was willing to pay more for metal-producing assets to meet China's surging demand for raw materials needed to make appliances, cars and new buildings, said Barry Allan, a metals analyst with Research Capital Corp. in Toronto.

``They're very aggressive,'' Allan said. China has ``not had success cooling demand for commodities.''

Noranda didn't disclose the bids it rejected. Brazil's Cia, Vale do Rio Doce, the world's biggest iron-ore producer, was among those that presented proposals, Carlos Lessa, president of Brazil's development bank, a controlling shareholder of Vale, said in an interview last month. Vale shares rose 89 centavos to 59.49 reals.

Noranda shareholders would get cash and shares in a new company that will hold and operate the aluminum unit, spokesman Denis Couture said. The business, which includes a smelter, four rolling mills in the U.S. and a wheel-manufacturing plant, accounted for 15 percent of Noranda's revenue last year.

Largest Shareholder

The exclusive talks between Noranda and China Minmetals include Noranda's biggest shareholder Brascan Corp., which has a 42 percent stake.

Brascan Chief Executive Bruce Flatt has said for three years he wanted to sell the Noranda stake and focus on power-generation and real estate investments that provide a stable and predictable cash flow. Noranda's metal business is cyclical, with commodity prices fluctuating as economies grow and decline.

Brascan, which in May acquired 71 power plants in New York for $900 million, plans to spend the proceeds from the sale of Noranda on real estate and other power-generation plants, Flatt said in a telephone interview.

Flatt has ``done a good job of not selling'' the Noranda stake ``a couple of years ago when the pressure was on to sell it,'' said Jim Hall, who helps manage the equivalent of $1.3 billion at Calgary's Mawer Investment Management Inc., including about 300,000 Brascan shares. ``He said: `I think we can get a better price.' And he has. He's been right about that.''

Noranda's Rally

Noranda shares had traded as low as C$11.71 in May 2003. The shares surged 57 percent in the past year as the prices of base metals, such as zinc, nickel and copper, rose to multiyear highs.

Copper, which is used in electrical wiring and plumbing pipes, had its biggest weekly gain in eight weeks. The most active contract for December futures rose 4.3 percent this week to $1.3575 a pound on the Comex division of the New York Mercantile Exchange.

Copper has risen 64 percent in the past year. Nickel, which is used in stainless steel, gained 42 percent.

Chinese economic growth has fueled demand for the metals as supplies were constrained by a lack of new production. The International Copper Study Group expects a gap between mine output and copper demand of 701,000 tons this year.

``We actually think the metals markets are going to be strong for a sustained period here but we're sticking to our strategy and feel it's the right time to do something like this,'' Flatt said.

Chinese companies in need of new metal supplies have been calling Canadian analysts seeking advice, Research Capital's Allan said.

``I've had two calls and I know other analysts have had similar calls,'' he said. ``It's not about what equity should I buy as a good investment, but how do I get metal?''

Noranda also has a 60 percent stake in Falconbridge Ltd., the world's third-biggest nickel producer. Minmetals may offer to acquire the remaining stake in Falconbridge, Canaccord Capital Corp. analyst Greg Barnes said.

To contact the reporter on this story:

Joe Schneider in Toronto at

or jschneider5@bloomberg.net.

To contact the editor responsible for this story:

Steve Stroth at sstroth@bloomberg.net.

Glencore keen to buy Queensland Alumina

Brisbane Courier Mail, Australia - 25sep04

Scott Murdoch

A MAJOR holding in Queensland Alumina Ltd (QAL) looks set to finally be sold, with Rio Tinto's Comalco and Swiss group Glencore emerging as the likely buyers of the $US400 million ($560 million) stake.

The 20 per cent share owned by Kaiser Aluminium, a US-headquartered commodities outfit currently in bankruptcy proceedings, has been offered for sale to assist in removing itself from Chapter 11 status.

QAL, which owns and operates the Gladstone refinery, is currently held by Alcan (41 per cent), Rio Tinto (39 per cent) and Kaiser (20 per cent). But its future ownership has been the subject of intense speculation.

Comalco has offered a base amount of $US308 million to be paid in addition to buying $US60 million worth of debt and $US10 million of surplus alumina and bauxite.

If successful, QAL is likely to sign up a crucial buyer of gas from the Papua New Guinea's Highlands Gas Project, as Comalco has already flagged its support for the project.

However, the Australian-based group's offer appears to have already been trumped by Glencore which has offered $US400 million in cash in a bid to expand its Queensland footprint. Glencore retains an interest in Xstrata, which took over MIM last year and has coal interests here as well.

However, both offers are well below an estimation by brokers ABN Amro which last year valued the stake at $US454 million based on the $US489 million Rio Tinto paid for an additional 8 per cent share in 2001.

Kaiser, which has been in Chapter 11 since last year, said the transaction would be put to an auction process on October 28.

Kaiser is also selling the Volta Aluminium Co in Ghana and bidders for both assets can lodge tenders up until October 25.

"If no competing bids are received the company would expect, subject to court approval, to name Glencore as the successful bidder," the company said.

Kaiser said it expected to finalise the deals by November 8.

Comalco chief financial officer Phillip Strachan said the group was keen to expand on its current 39 per cent holding in QAL.

However, if successful and its stake goes to 59 per cent Comalco will not obtain management rights to the refinery.

"As an existing participant we will always be keen to increase our interest," Mr Strachan said.

"We are not going to disclose whether we could possibly increase the offer. The bid is what we've already made."

Mr Strachan said the purchase price would be paid through corporate funding which is already in place. However, he would not reveal whether Comalco was confident it would secure the stake, which it could through the auction process.

If it did, the transaction would provide a beneficial boost to the PNG gas pipeline and its proponent Oil Search.

Comalco has already signalled it would buy gas from the country but development of the pipeline has been delayed because of a lack of firm contracts.

Having QAL as a customer would be a major signing for the project and could help it attract further support.

Mining analyst Stephen Bartrop, from southern broker Fat Prophet, said Rio Tinto would be keen to expand its exposure to alumina.

Chinese Firm Is In Talks For Noranda

Australian Financial Review, Australia Sep 27 11:58

China Minmetals Corp is in exclusive talks to acquire Canadian mining concern Noranda in what would be one of China's largest acquisitions of a foreign company.

The potential deal likely carries a price tag of more than $US5 billion ($7 billion) and signals the ambition China has in parlaying its economic strength into major takeovers on the international stage.

Representatives of both Noranda and China Minmetals said that no deal had been reached yet. Noranda said its aluminum operations would not be included in any China Minmetals deal, and instead would be distributed to Noranda's shareholders.

Noranda officials were confident China Minmetals could finance the acquisition through Chinese financial institutions, according to a person familiar with the situation

State-owned China Minmetals popped up as a rumoured suitor for Noranda during the northern summer. Noranda put itself up for sale earlier this year, spurred by 42 per cent shareholder Brascan Corp, a Toronto power and real-estate conglomerate, to seek an to exit the mining industry.

China Minmetals is the country's second-largest firm in terms of overseas operations, with 44 subsidiaries in 17 countries and regions.

Noranda is a pillar of the Canadian mining industry, with roots going back 75 years. It is a major producer of copper, nickel, zinc and aluminum, with major mines in Canada, Chile and elsewhere and a 59 per cent stake in Toronto nickel producer Falconbridge.

Noranda shares have soared more than 65 per cent over the past year amid strong metals prices and the company's search for an acquirer.

But Noranda investors are miffed the Toronto company said Minmetals would pay only "a small premium" over Noranda's recent share price.

Shares of Noranda fell 2 per cent to $C22.14 ($24.30, a drop of 46¢ on Friday on the Toronto Stock Exchange. qr

"This is disappointing," particularly since Noranda might be sold for less than its estimated net asset value, said Diana Racanelli, vice-president of equity research with money manager and major Noranda shareholder TAL Global Asset Management in Toronto. What's more, "there's no certainty" a deal will be completed.

Sweeter offer for Noranda not expected

The Globe and Mail (subscription), Canada 26 Sep 2004

By JOHN SAUNDERS

Now that Noranda Inc. has suggested what it may be worth, analysts doubt that anyone will bid a lot more for it than the Chinese state enterprise dickering with the Toronto-based company and its controlling shareholder, Brascan Corp.

Victor Lazarovici, who watches the base-metals business from Manhattan for BMO Nesbitt Burns Inc., thinks competing bids may emerge.

"I don't think it's over," he said Sunday, "but it's hard to see how much more upside there is, given the fact that Brascan and Noranda's board are willing to accept something close to the current share price."

He pointed to Friday's announcement that Noranda has begun exclusive talks with China Minmetals Corp. on a possible cash-and-paper deal at "a small premium to the recent trading level of Noranda's common shares." The stock (NRD:TSX) closed on Friday at $22.14.

Mr. Lazarovici mused that "small is an adjective that doesn't mean anything. We don't know if that's 5 per cent or 10 per cent or 20 per cent."

"Some might say that 40 per cent is reasonable and anything below that is small. We don't know," Mr. Lazarovici said.

"But I think the signal from the sellers is we'll take the current market plus a little bit as opposed to plus a lot. If that implies that their asking price has come down enough to encourage people who weren't going to bid before, you may get some bids coming out."

His list of possible bidders included Brazil's Companhia Vale do Rio Doce (better known as CVRD), Australia's WMC Resources Ltd., Switzerland's Xstrata PLC, Anglo American Corp. of South Africa Ltd., Inco Ltd. of Toronto, Phelps Dodge Corp. of Phoenix and Teck Cominco Ltd. of Vancouver. He judged that the last three could not afford cash bids and would have to offer stock. He ruled out bids by metals giants BHP Billiton Ltd. of Australia and Rio Tinto PLC of Britain on grounds that Noranda would not fit into their strategies.

Not everyone was so optimistic.

Ian Howat, who follows the industry from Toronto for National Bank Financial Inc., doubted that even CVRD, once seen as Noranda's leading pursuer, will up the ante. "I don't believe so," he said. "I don't think there'll be another bid."

Nor was he certain the Chinese will get Noranda. "They're in the driver's seat. Whether they actually end up doing a deal or not, I think, is still a wait-and-see."

Whatever happens, it may make for interesting cultural contrasts as Toronto business chiefs bargain with a company that reports directly to the Working Committee for Large Enterprises under the Central Committee of the Communist Party of China. There is little doubt that a deal potentially worth more than $6.6-billion would smooth philosophical differences, even if the sellers were to be paid partly with orphaned Noranda assets.

Mr. Lazarovici, speaking from his home outside New York City, said that the biggest question marks around the Chinese deal involve a proposed spinout of unwanted assets, mainly Noranda's aluminum business. Shareholders would receive stock in a new company holding those assets along with their yet-to-be-specified cash payment. As Mr. Lazarovici saw it, this leaves an opening for other bidders.

"By spinning out assets, you create uncertainty for the people getting the shares of the spinout. Cash is the most certain thing available, so if somebody can come up with an all-cash bid, no spinouts or conditions or whatever, that's clearly superior."

He wondered what else might be spun out and how much debt would go with the spinout. "With about $4-billion [U.S.] of consolidated debt on the Noranda balance sheet, they could give you $1-billion worth of assets and $1-billion of debt, in which case you get zero value. So you don't know what you're getting ... until they announce it."

Alcoa Backs Out of Plan to Join $2.1Bln SUAL Project in Komi

Moscow Times, Russia Monday, September 27, 2004. Page 8.

YEKATERINBURG -- U.S. metals giant Alcoa, the world's biggest aluminum maker, has refused to take part in SUAL's $2.1 billion project in the Far North because SUAL failed to secure a long-term power source, SUAL chairman Viktor Vekselberg said Friday.

SUAL had previously said Alcoa was likely to take part in the project in Komi, provided that SUAL signed all the necessary long-term energy agreements with local power suppliers.

"Alcoa refused because we have not been able to settle the power supply issue," Vekselberg told reporters in the Urals city of Yekaterinburg.

Alcoa officials were not immediately available for comment.

SUAL, which has to settle the energy issue with national utility Unified Energy Systems, had said it is in talks on the project with several Western firms.

Power constitutes about 40 percent of the cost of making aluminum, while alumina is another 40 percent.

The Komi project includes construction of a new alumina refinery, due to open around 2008, and a smelter.

The project also includes boosting annual output from SUAL's huge Sredny Timan bauxite deposit to 6 million tons by 2008 from around 1 million tons in 2003.

SUAL said in August that it had secured $150 million in loans from banks including BNP Paribas and the European Bank for Reconstruction and Development to help finance the project.

The EBRD and the International Finance Corporation, the World Bank's private financing arm, each offered $45 million.

Barclays Bank, BNP Paribas, ING, Societe Generale and Standard Bank London arranged the remaining $60 million.

RUSAL TO SET UP TRANSNATIONAL CORPORATION

Putinru.com, Russia 27 September 2004 13:09

Russian Aluminum, or RusAl, intends to set up a transnational corporation, the company's director for working with the government Andrei Fyodorov announced at a briefing on Wednesday.

RusAl plans a transnational holding with intensified international expansion, Fyodorov said. The company is looking at acquiring raw material assets in Australia, in particular, and already has bauxite mines in Guinea and the Nikolayev aluminum plant in Ukraine.

"The company is creating a world network on all continents where business is profitable," he said.

Regarding the cost of setting up this corporation, Fyodorov said his company has to build two or three plants costing $2-$3 billion.

If things go well in the next decade, RusAl is ready to invest $8 billion in Russia's economy, which the company thinks will allow it to create 13,500 new jobs.

Russian Aluminum is one of the world's top three producers of primary aluminum. It accounts for more than 70% of Russia's and around 10% of the world's production of this metal. Stockholders in Basic Element own 75% of the stock in RusAl, stockholders in oil company Sibneft the other 25%.

Source: Interfax

Kaiser Aluminum gets extra month for reorg plan

Reuters Mon Sep 27, 2004 04:37 PM ET

NEW YORK, Sept 27 (Reuters) - Kaiser Aluminum Corp. (KLUCQ.OB: Quote, Profile, Research) on Monday said a bankruptcy judge granted it an extension through October 25 of its exclusive right to file a reorganization plan.

The Houston-based company said the U.S. bankruptcy court in Delaware approved the extension at the company's regular monthly hearing, and that the extension applies to all Kaiser debtor entities.

Kaiser has been selling some of its businesses to speed a financial turnaround. It filed for Chapter 11 bankruptcy protection in February 2002, and has had numerous extensions to its initial 120-day exclusivity agreement. The exclusivity period is intended to prevent potential disgruntled creditors from filing competing plans.

© Reuters 2004. All Rights Reserved.

Court OKs Kaiser Aluminum Australia Refinery Bid Rules

Yahoo News Tuesday September 28, 3:34 AM

WILMINGTON, Del. (Dow Jones)--Kaiser Aluminum Corp. (KLUCQ) got approval Monday for bid rules to govern an Oct. 28 bankruptcy court auction of its stake in an Australian alumina refinery.

U.S. Bankruptcy Judge Judith Fitzgerald signed off on agreements that line up two bidders for Kaiser Aluminum's 20% equity stake in the Queensland Alumina Ltd. refinery.

ADVERTISEMENT

The Comalco unit of Rio Tinto PLC (RTP) won stalking-horse rights that allow it to open the bidding at $308 million.

Comalco has also agreed to take on $60 million in debt Kaiser owes on the refinery, and pay an additional $12 million for inventory and other assets connected to the operation.

Fitzgerald also approved a second auction-related agreement, a pact under which Glencore AG (GNC.YY) has agreed to bid $400 million for the Queensland Alumina shares - $92 million more than Comalco's offer.

Glencore is in line for nearly $7.7 million in fees when it submits its bid.

Comalco will get an $11 million breakup fee if it is beaten at the auction, the rules say.

Alcan's new Novelis to have $2.8 billion of debt (UPDATE 2)

Reuters Tue Sep 28, 2004 10:08 PM ET

Adds details from prospectus; figures in U.S. dollars unless noted)

By Robert Mallards

MONTREAL, Sept 28 (Reuters) - The new aluminum rolled products company to be spun off from Alcan Inc. (AL.TO: Quote, Profile, Research) will assume $2.8 billion of debt, according to a prospectus filed on Tuesday with Canadian and U.S. securities regulators.

In a statement, Montreal-based Alcan said it plans to hold a conference call on Wednesday morning with financial analysts regarding the unit, named Novelis. The unit will have estimated annual sales of some $6 billion, making it the world's largest rolled products company.

Novelis expects to incur $90 million of costs relating to its separation from Alcan, after which it will be a wholly independent company, it said in the prospectus. It expects to assume $2.8 billion of debt and enter into revolving credit facilities of $500 million.

In the prospectus, Novelis said it earned $114 million in the six months ended June 30, a 52 percent increase from a profit of $75 million a year earlier. Sales rose 19 percent to $3.7 billion from $3.1 billion.

Based in Canada, with an executive office in the United States, Novelis will operate on four continents, with 38 operating facilities in 12 countries and 13,600 employees, Alcan said.

It would be the biggest beverage-can sheet producer worldwide and a key supplier for the automotive and aluminum foil industries.

"We will be the only company of our size and scope focused solely on aluminum rolled products markets and customers and capable of supplying technically sophisticated solutions throughout all of our operating regions," Brian Sturgell, the chief executive officer of Novelis, said in a statement.

Earlier this month, Alcan, second to Alcoa Inc. (AA.N: Quote, Profile, Research) in primary production of aluminum, said that while proceeding with the planned spinoff it was examining offers to buy Novelis.

Alcan refused to identify the prospective bidders, but media reports said U.S. private equity firms Blackstone Group, Kohlberg Kravis Roberts & Co. and Bain Capital could be interested.

The spinoff is aimed largely at satisfying antitrust requirements in the United States and Europe stemming from Alcan's acquisition late last year of French rival Pechiney.

Alcan wants to keep two former Pechiney rolling facilities -- Neuf-Brisach in France and Ravenswood in West Virginia. The latter is a key supplier to aircraft makers such as Europe's Airbus (EAD.PA: Quote, Profile, Research) and its U.S. counterpart Boeing Co. (BA.N: Quote, Profile, Research) .

Alcan's stake in the massive Norf-Gottingen-Nachterstedt rolling facilities in Germany will be folded into the new company, along with the Oswego rolling mill in New York state.

The proposed spinoff must receive court and Alcan shareholder approval and be cleared by antitrust regulators. Alcan plans to issue a management proxy circular on the spinoff for a shareholders meeting to be held in the fourth quarter.

Novelis is expected to begin operations as an independent company on Jan. 1, 2005, Alcan said.

Alcan shares rose C$2.95, or 5.2 percent, to C$60.11 in Toronto and advanced $2.21 to $47.24 on the New York Stock Exchange on Tuesday.

($1$1.28 Canadian)

© Reuters 2004. All Rights Reserved.

SUAL Loses strategic partner

Mineweb, South Africa '28-SEP-04 16:00' GMT © Mineweb 1997-2004

By: John Helmer

MOSCOW (Mineweb.com) -- In a disappointment to Siberian Ural Aluminum (SUAL), Russia's leading bauxite and alumina producer, Alcoa of the US has withdrawn from a proposed alumina refinery and aluminum smelter project in the Komi republic of northwestern Russia. SUAL's holding company chairman Victor Vekselberg made the announcement on Friday.

The rebuff by the world's leading aluminium producer comes at an awkward time for South African dealmaker Brian Gilbertson, who was recently engaged by Vekselberg to find a foreign equity partner for SUAL, into which Vekselberg might either swap his Russian shares for foreign-listed ones or attempt to leverage his Russian assets to buy a foreign company. According to SUAL spokesman Bill Spears Alcoa may be replaced by another major international aluminium producer, possibly even Gilbertson's alma mater, BHP Billiton. "The door to negotiations remains open with Alcan, which also has technology that could be of interest to the project," Spears told Mineweb. "SUAL is also talking with other prospective partners," he added, "although I cannot specify which ones for commercial reasons."

Vekselberg has been actively lobbying high South African government officials for months since his visit to SA in February. For this effort, Vekselberg has been using his US-listed corporate vehicle Renova, rather than the Russian holding, SUAL. Unless he can quickly find a substitute for Alcoa, much of the promise of this lobbying effort, which has targeted several senior ministry officials in Pretoria, may be lost. During the February visit, when Vekselberg was invited by the SA Ministry of Foreign Affairs, an uncorroborated source also claims that Vekselberg and Gilbertson tabled a corporate offer to Tony Trahar, CEO of Anglo American, who reportedly rejected it.

The timing of Alcoa's move against SUAL is a further indication that foreign aluminium companies view the Russian aluminium sector -- dominated by just two men, Vekselberg and Oleg Deripaska, controlling shareholder of Russian Aluminium (Rusal) -- as vulnerable to attack by the Kremlin for a similar pattern of corporate tax misfeasance that has destroyed the Yukos oil company, and landed its principal shareholders in a Moscow prison. Confidential data gathered by the federal Tax Ministry in a report, sent to the prime minister on September 6, implicates both SUAL and Rusal in what official sources claim were tax evasion schemes, using transfer pricing, tolling, and tax shelters. a spokesman for Russian prime minister Mikhail Fradkov told Mineweb, the report is under study, but no results are ready for release.

In July Vekselberg had said he was confident that Alcoa would commit to SUAL's $2.1 billion refinery and smelter project, which has been planned to take bauxite from the new Timan mine, which SUAL has been developing in northwestern Russia. The projected capacity of the alumina refinery is 1.4 million metric tons; that of the smelter, 500,000 tons. According to SUAL, once the refinery and smelter are under way, output of bauxite from the Timan mine would be raised from 1 million tons per annum at present, to about 6 million tons. But without a refinery and smelter, expansion of the mine is unlikely to go ahead. SUAL claims it has so far invested about $150 million in getting the project under way.

Alcoa is the third potential partner to withdraw from negotiations for the project. Rusal and Pechiney preceded Alcoa. In May, an Alcoa source had told Mineweb, at the same time the US company was announcing its intention to buy aluminum rolling-mills in Samara and Rostov regions from Rusal, Alcoa hinted that it was reluctant to commit to both the SUAL and Rusal projects at the same time. The Alcoa source implied that the Rusal deal, which has been estimated to cost much less at about $220 million, enjoyed a higher priority with the Alcoa management. However, despite a June deadline announced by Alcoa, the Kremlin has so far refused to approve the sale of the rolling mills. Sources in Moscow told Mineweb this week that the approval is "stuck", suggesting that the Kremlin is refusing to approve the sale, without declaring as much. This rebuff to Alcoa may have encouraged the US firm to judge Vekselberg's project negatively and to suspend all plans to enter Russia for the time being.

Alcoa is refusing to comment on either deal for the time being. According to SUAL and Moscow industry sources, the reason for Alcoa's withdrawal from the Komi project is that neither supplier of energy to the project, United Energy Systems, Russia's electricity utility, nor Gazprom, the state gas supplier, would agree to lock in a fixed supply tariff for up to 25 years. "Failure to settle a partnership with Alcoa for this project will delay its implementation and could increase SUAL's financial leverage," Alfa-Bank metals analyst Maxim Matveyev said on Monday. "The market should not be surprised by this development."

Igor Balobuev, a Gazprom spokesman, told Mineweb that the SUAL proposal "was economically ineffective, and Gazprom was not able to accept it." He added that Gazprom's regional fuel supply unit is "a potentially growing enterprise and cannot be limited with such long-term fixed limits, such as large volume supplies at non-market prices." In recent weeks, the management of Gazprom, a Kremlin-directed enterprise and Russia's largest company, has made it increasingly clear that it will not agree to sweetheart gas supply deals with Russian metal producers, and have threatened to cut off gas supplies unless higher tariffs are accepted, and paid promptly.

Last month, SUAL announced that it had won backing for loans of up to $90 million for the Komi project from the European Bank for Reconstruction and Development and the World Bank's International Finance Corporation. The two multilateral lenders had committed to financing of $45 million each, for a nine-year term, with additional loans of $60 million to be raised from a syndicate of commercial lenders for a shorter term at 3.25 percent over LIBOR. Spears told Mineweb that this financing "remains available to draw down, and is/was never dependent on Alcoa." He explained that about $100 million of the loan "will be used to finance phase I of the project, which foresees brownfield bauxite mine expansion. The funds will be channeled into equipment and machinery, expansion of the railway, automation of blending, hoisting and loading facilities etc. The remainder will be used to finance the bankable feasibility study and preliminary activities for the prospective construction of the alumina refinery in Sosnogorsk (phase II of the project)."

China's electrolytic aluminum sector remains optimistic despite hard times

Interfax, China 28-Sep-2004

Shanghai. (Interfax-China) - Since the Chinese central government launched macro control policy to check the growth of the electrolytic aluminum sector in the first half of 2004, the over heated development of the sector has been held back. A large number of electrolytic aluminum enterprises, especially smaller ones with out-of-date equipment have been forced to close. The slowdown has caused a sharp decline in demand for alumina, which is the major raw material for electrolytic aluminum production. However, despite these problems, insiders told Interfax they are optimistic about the future of the aluminum sector.

A total of 38 electrolytic aluminum producers are running deficits, according to statistics from the National Bureau of Statistics (NBS). However, according to reports in the Chinese media that over 80% of the enterprises in the sector are in the black. Planned projects with approximately 1.47 mln tons of output were stopped in H1, while the projects with a total capacity of 900,000 tons were suspended. China produced 3.6 mln tons of electrolytic aluminum in H1, sharply falling 14% compared with the same period last year. It is predicted that the growth rate of the electrolytic aluminum output this year would fall by 8% year on year, according to the NBS.

The rapid cooling of the electrolytic aluminum sector has pulled down alumina prices. Prices have already dropped from RMB 4,300/t (USD 519.51/t) to RMB 3,750/t (USD 453.06/t). Shandong Aluminum Industry, a major alumina provider located in Shandong Province, recently raised the factory price of its alumina to RMB 3,950/t (USD 477.22/t). However, a spokeswoman with Shandong Aluminum who wished to remain anonymous told Interfax "The RMB 200/t (USD 24.16) increase does not help a lot. It is generally predicted that the price will not go higher for the rest of this year. Although we have fulfilled our goals in the third quarter, we do not see promising prospects in the fourth."

An analyst with the Huaxia Stock Research Institute surnamed Zhang told Interfax, "The alumina price jumped because Jamaica, which produces 20% of China's imported alumina, was struck severely by hurricanes. On the other hand, the central government does not appear likely to relax the macro control in the sector, thus we see little space for further price appreciation of alumina."

Although the macro control policy has pushed many small electrolytic aluminum makers in to bankruptcy or badly shaken their position, the survivors remained supportive of the macro control policy and are optimistic about the future of the sector.

An official with the Yunnan Aluminum Industry Co., Ltd. surnamed Liu told Interfax China's aluminum sector had been rapidly developing over the past few years thanks to the government's supportive policies. However, he said it is not proper to say China is an international leader in the sector, since its production technology and the product quality are far from the overseas rivals, even though China' accounted for 20% of the world's last year.

China's electrolytic aluminum sector consists of many small producers with weak competitiveness that are mainly concerned with short-term profit, causing disorderly competition in the sector. Moreover, most of these companies lack funds for R&D, which causes the redundant production of poor quality products and consumes a large amount of raw materials, according to Liu.

On the other hand, China has become more and more reliant on the international market for raw materials. Additionally, most exports products are low value added, so Chinese firms earn a relatively small part of the final finished product price. Liu commented that, "It is an enlightened decision to restructure the sector by eliminating small enterprises. The move has obviously taken effect, because the resources that were previously consumed by the small firms are now available for large producers with better administration methods and stronger global competitiveness. These large companies are also more willing to spend more money on R&D and environmental protection."

China Development Bank May Finance Minmetals' Bid for Noranda

Sept. 29, 2004 (Bloomberg)

China Development Bank, which funds many of the nation's state-sponsored projects, said it may finance China Minmetals Corp.'s bid for Canada's biggest mining company, Noranda Inc., valued at as much as $5 billion.

``We are willing to provide a variety of financial support, including loans, to Minmetals,'' said Du Runping, deputy head of the Beijing-based lender's international finance bureau. ``We haven't got final confirmation from other banks that they will also finance the deal.''

Minmetals and Noranda are in exclusive talks on the takeover proposal, the two companies said in a statement Sept. 27. Minmetals, one of the country's largest metal producers and traders, is seeking new sources of nickel, copper and zinc. It would pay a ``small premium'' and spin off Noranda's aluminum unit, the Toronto-based company said in a statement.

Minmetals teamed up with Baoshan Iron & Steel co., Citic Investment Corp., Jiangxi Copper Co., and Taiyuan Iron & Steel Co., in a bid to take over Noranda, the South China Morning Post reported Sept. 27. The possible partners declined to comment.

``Just how much Minmetals will need has yet to be sorted out as Minmetals is still investigating the value of the assets it plans to buy,'' Du said. ``There may be a few domestic and foreign banks involved given the size of the deal.''

Du declined to speculate on which other banks may also take part in any lending.

To contact the reporter for this story:

Helen Yuan in Shanghai at hyuan@bloomberg.net.

To contact the editor responsible for this story:

Reinie Booysen in Singapore at rbooysen@bloomberg.net.

INTERVIEW: India Hindalco To Hike Alumina Capacity - 3

Yahoo News - Wednesday September 29, 4:22 PM

By M. V. Ramsurya Of DOW JONES NEWSWIRES

MUMBAI (Dow Jones)--Hindalco Industries Ltd. (500440.BY), India's diversified metals producer, plans to expand its production capacities in aluminum, alumina and copper over the next three years to meet rising demand, a senior company executive said Wednesday.

"While our main aim is to capitalize on the demand for alumina, we are also expanding our aluminum and copper capacities to meet growing demand," Chief Financial Officer R.K. Kasliwal told Dow Jones Newswires in an interview.

Hindalco plans to expand its alumina capacity to 1.84 million metric tons a year from the existing 1.09 million tons in three years, said Kasliwal.

Alumina is a key raw material used in making aluminum.

Kasliwal said the alumina expansion will be carried out at its three units at Muri, Belgaum and Renukoot. The Muri unit will be ramped up to 500,000 tons a year and the Belgaum unit to 650,000 tons/year, while the alumina capacity at Renukoot will be increased to 700,000 tons/year.

"We believe demand for alumina is growing quite fast, especially in Asia, where there is a deficit of about 8 million tons," he said, adding that demand for alumina is estimated to grow at a rate of 14% in the next financial year.

After the expansion, Hindalco will have "about 800,000 tons of alumina a year for exports," said Kasliwal. Hindalco currently exports about 250,000 tons of alumina a year.

Hindalco is also pushing ahead with a joint venture with Canadian metal giant Alcan Inc. (AL.T). Called Utkal Alumina, Hindalco holds 55%, while Alcan has 45%.

"Utkal Alumina will have an initial capacity of 1 million tons a year, which can be expanded to 1.5 million tons," said Kasliwal. He didn't offer a timeframe for the expansion.

Hindalco, India's largest aluminum producer, also plans to expand its aluminum capacity at Renukoot to 360,000 tons a year from the current 345,000 tons in two years time.

Kasliwal said he estimated demand for aluminum to grow at about 8% in the coming fiscal year. It is currently growing at about 6% a year.

Kasliwal said since refining alumina into the metal aluminum consumes electricity, Hindalco plans to expand its captive power plant at Hirakud, in the eastern state of Orissa, to 167 megawatts, from the current 67 MW.

In copper, Hindalco sees great export opportunity.

"We plan to double our copper capacity from 250,000 tons a year to 500,000 tons, by the later part of next fiscal year," he said.

Most of the demand for copper will come from Asia, where there is a deficit of about 2.7 million tons/year, said Kasliwal.

In a bid to meet the increased demand for copper concentrate - the main raw material for making copper - Hindalco has plans to acquire copper mines.

"We would ideally like 40% of the concentrate to come from our own mines and another 45% through long-term contracts. The rest can be bought in the spot market," he said.

Hindalco bought two copper mines - Nifty Copper Mines and Mount Gordon - in Australia last year, to meet its concentrate requirements.

Last month, Hindalco signed a copper concentrate supply contract with an unnamed Brazilian company. Hindalco will get 100,000 tons of copper concentrate a year under this contract for the next 12 years, said Kasliwal.

The entire production capacities program is scheduled to cost Hindalco about 35 billion rupees, or about $758.3 million.

"A major part of the cost will be funded from internal accruals," he said.

Hindalco currently has a cash flow of about INR15 billion ($325 million). "Since the expansion is spread over three years, we can go to the market to raise debt when the market is good," said Kasliwal.

Hindalco expects demand for copper to come mainly from overseas markets. "The domestic growth in copper is lower compared to international demand," he said, adding that local demand for copper is growing at about 3%-4% a year.

Rio Tinto gets six months grace on Mitchell bauxite

The West Australian, Australia 29 Sep 2004

JOHN PHACEAS

State Development Minister Clive Brown has given a Rio Tinto-led consortium six months more to weigh up the development potential of vast bauxite deposits on the Mitchell Plateau in the Kimberley.

A 30-year State Agreement to develop a mine and alumina refinery for the deposits, 100km south-west of Kalumburu, is due to expire this year.

After several other companies expressed interest in the deposits, in April Mr Brown gave the partners until today, September 30, to outline development plans or prove the project was uneconomic. Other prospective developers were also asked to submit proposals by today.

Two weeks ago, Rio Tinto subsidiary Comalco, which heads the three-way joint venture with Alcoa and AngloGold, ruled out any immediate development after an independent study declared the project uneconomic. Though higher grade than Alcoa's deposits in the South-West, elevated levels of contaminants and the project's remoteness would increase processing costs significantly.

But Mr Brown yesterday agreed to the partners' request for more time, extending their rights until April 30, mainly to give other parties more time to weigh up the project.

Interested companies include Russia's Rusal, India's Indo Gulf Corporation, Aluminium Corporation of China, Aldoga Aluminium, Fortescue Metals Group, Hancock Prospecting, Intermin Resources and Red River Resources.

© 2004 West Australian Newspapers Limited

Russian Aluminium under tax investigation

Mineweb, South Africa '30-SEP-04 12:48' GMT © Mineweb 1997-2004

By: John Helmer

MOSCOW (Mineweb.com) -- Russian Aluminium (Rusal), the leading Russian primary aluminum producer controlled by Oleg Deripaska, is under official investigation for tax optimization practices which, according to an official government source in Moscow, cut the group's tax payments in 2003 to just 2 percent of its declared sales revenues. By contrast, Russian oil company Yukos, whose principal shareholders are in prison facing trial on charges of fraud, forgery and tax evasion, paid 38 percent of its annual sales revenues on tax in 2002, and again in 2003. LUKoil, another major Russian oil producer, claims its tax payments for 2003 amounted to 24 percent of sales revenues.

Rusal, which does not disclose detailed financial information, claims its sales revenues for 2002 and 2003 amounted to $4 billion and $4.5 billion, respectively. Rusal executives did not reveal the tax problem at an investor briefing in New York last week, when they predicted agreement from a group of international banks to lend $800 million. If the Kremlin decides to seek repayment of past-due taxes at the Yukos level, Rusal could face a potential tax liability of $3 billion for the two years, before interest and penalties.

A report on tax payments by Russian metal companies, including Rusal, was recently compiled by the federal Tax Ministry, and delivered early this month to the Russian prime ministry. According to Sergei Kazakov, a spokesman for Prime Minister Mikhail Fradkov, "the report was created at the request of Prime Minister Fradkov's staff, and was sent there for study. After the staff has carefully studied it, they will decide what governmental structures could be interested, and what to do next." The report has not yet been distributed. A spokesman for the Federal Security Service said: "Our economic crime department did not confirm receiving such a report from the Tax Ministry."

According to the Tax Ministry report, tax payments in 2003 by Norilsk Nickel, Russia's leading producer of nickel, copper and platinum group metals, amounted to 19 percent of sales revenues. A Norilsk Nickel spokesman told Mineweb: ""We have heard about the report passed to the prime ministry, but I can confirm that no governmental structures made any official claims to the company."

Severstal, one of Russia's largest steelmakers, was identified in the report as having paid taxes at between 12 and 14 percent of revenues. Two other steelmakers, Magnitogorsk and Novolipetsk, were identified as having paid taxes at rates of 12 percent and 13 percent, respectively.

According to the text of the report, Rusal was able to minimize its tax payments through the use of tolling schemes -- contracts for supply and processing of raw materials between Rusal smelters and offshore companies -- and through a regional tax-relief scheme operated through companies registered in the fareastern region of Chukotka. The region's governor, Roman Abramovich, was a 50-percent shareholding partner of Deripaska in Rusal until he sold the latter a 25-percent block of stock a year ago. Rusal executives claim that Deripaska is close to negotiating a deal with Abramovich and his holding company, Millhouse, for the purchase of the remaining 25 percent stake.

Abramovich's administration of Chukotka's public finances was investigated by the independent state auditor, the Accounting Chamber, earlier this year. A summary of the report by the Chamber, issued in May, revealed companies, linked to Rusal, among 22 corporate beneficiaries of several hundred million dollars in estimated tax benefits. A search of Russian corporate registration files turned up confirmation that Trading House Aluminium and Trading House Russian Foil were registered in Anadyr, in Chukotka. On October 19, 2001, the two companies are recorded as having founded a Moscow company, Russian Aluminium Finance LLC. All three companies are part of the Rusal group. The Chamber spokesman, Andrei Belayev, told Mineweb this week: "It is now clear that Rusal was using tax-optimization schemes in the Chukotka region, but it is difficult to give the exact number of the tax underpayments."

Although Rusal spokesmen brief industry analysts, they have declined to respond to press questions about the Chukotka scheme, or the latest Tax Ministry investigation. Rusal also does not publicly disclose detailed trade data, except to say that just over 80 percent of annual sales revenues are earned by "sales outside the Russian Federation" [website release].

Western industry investigations of Rusal's aluminium trade have been focusing on several unexplained anomalies in the data for Rusal's aluminium exports. According to one investigation, conducted in London, there appears to have been an unexplained change in the first quarter of 2004 in the volumes of primary aluminium traded by Rual, a trader associated with the group, and Wainfleet Consultadores, a company reported to be doing business in Madeira, Portugal. Litigation involving Rusal in the US uncovered a large number of trading companies, registered in several tax-haven locations from the Caribbean to Gibraltar, and elsewhere, through which Rusal's aluminium passes on its way to final destination. During this transit, lawyers claim, legal title to the aluminium changes.

There are also large, unexplained anomalies in Russian customs data for exports of primary aluminium (commodity code 7601) to the US, and the corresponding data for US imports of Russian aluminium. According to the Russian data, Russian aluminium exports in 2003 totaled $1.408 billion; the corresponding tonnage figure is unavailable. Data released by the US International Trade Commission for the same year show imports of Russian primary aluminium totaled 657,000 metric tons for a value of $950 million. Russia was second only to Canada as the supplier of aluminium to the US. But the US value is $458 million below the declared Russian value. Industry experts in London told Mineweb that they believe this may reflect changes of origin in the metal, once it leaves Russia according to tolling contracts and the registration of trading companies.

The picture is dramatically different for this year's trade. In the first seven months of 2004, US imports of primary aluminium from Russia totaled 524,455 metric tons, and were valued at $883 million. The average price was $1,685 per ton, which is close to the international marker, the LME average for the period. Official Russian data obtained for the same period do not reveal the tonnage, but the declared value was $383.2 million. The discrepancy in value is almost half a billion dollars.

Russia customs sources provide volume data for the six-month period to June 30, 2004. Russian exports to the US were 180,163 tons, for a declared value of $228 million. The average price is $1,262/ton.

Calculating volume by the month, the US appears to have imported 150 percent more Russian aluminium than the Russian data disclose. The average US value per ton is 34 percent higher than the figure declared to Russian customs.

According to a source at the State Customs Committee in Moscow, part of the distortion in US import data has been caused by the use of tolling contracts, which changed the apparent place of origin of Russian entering the US. However, he noted that tolling for Russian exports of aluminium ended by January 1 of this year.

Rusal and a second Russian producer of aluminium, Siberian Ural Aluminum (SUAL), export to the US. Data provided by SUAL indicate that its sales to the US comprise roughly 20 percent of the total Russian sales, with the balance accounted for by Rusal.