AluNews - April 2005

Aluminum maker exits Chapter 11

Associated Press, Columbus Ledger-Enquirer, GA Fri, Apr. 01, 2005

COLUMBUS, Ohio - Aluminum maker Ormet Corp. announced Friday it emerged from bankruptcy, giving the company approval to sharply increase retirees' health insurance costs to save money the company says it needs to survive.

As part of the plan approved by the U.S. Bankruptcy Court for the Southern District of Ohio, the company has been cleared to break labor contracts, reorganize its debt and forgo selling two plants.

Last November, workers at two plants in Hannibal went on strike because of the company's plans to break their labor contracts.

In an interview with The Associated Press, Ormet Chief Executive Officer Michael Williams said he would "like to have the employees back," but without them the company is meeting its production goals.

An attorney representing the United Steelworkers of America said he did not expect Friday's announcement to affect continuing negotiations with striking workers.

"We're not certain that this really changes anything," said David Jury, assistant general counsel for the union.

Management and union representatives met Friday and plan to meet again next week. Under the new plan, representatives from each side in the dispute have to meet at least twice a week.

Ormet has said it needs $5 million in savings from its projected $15 million in 2005 retiree health costs. That is a portion of a total $23 million in savings the company has said it needs.

The company, based in Wheeling, W. Va., has about 2,200 employees and operations in Ohio, West Virginia, Indiana and Louisiana.

Kaiser Aluminum Completes Sale of Interests in QAL

Business Wire (press release), CA April 01, 2005 12:24 PM

FOOTHILL RANCH, Calif.--(BUSINESS WIRE)--April 1, 2005--Kaiser Aluminum said it has completed the previously announced sale of its 20% interest in and related to Queensland Alumina Limited (QAL), which owns and operates an alumina refinery in Australia, to Rusal for $401 million in cash, subject to certain working capital adjustments, plus Rusal's purchase of Kaiser's alumina and bauxite inventories and the assumption of Kaiser's obligations in respect of approximately $60 million of QAL debt. Kaiser also transferred its existing alumina sales contracts and other agreements relating to QAL to Rusal.

As previously disclosed, the vast majority of the value realized in respect of the company's interests in and related to QAL is likely to be for the benefit of holders of Kaiser's publicly traded notes and the Pension Benefit Guaranty Corporation.

Kaiser's Form 10-K for 2004 provides additional detail on the transaction.

Trentwood rebounds amid Kaiser losses

Spokesman-Review April 1, 2005

Strong aluminum demand spurs renewed hiring

John Stucke, Staff writer

Kaiser Aluminum Corp. lost $746.8 million last year amid bankruptcy write-downs and the surrender of benefit plans including those for pensions and retiree medical coverage.

There was some good news: sales of fabricated aluminum rose sharply as evidenced by renewed hiring at the Trentwood rolling mill.

With 500 employees and strong demand for aluminum sheet used to make aircraft, Trentwood has rebounded from the recession and remains a dominant manufacturing employer in Spokane.

"Trentwood is seeing some very good market conditions," Kaiser spokesman Scott Lamb said after the release of the company's 2004 financial statement.

Kaiser, which has moved its headquarters from Houston, Texas, to Orange County, Calif., plans to emerge from its Chapter 11 bankruptcy during the last half of the year, later than the company anticipated.

A plan of reorganization and an accompanying disclosure statement should be released within a matter of months.

Kaiser's big year-end loss is the latest in a string of massive bankruptcy-related red ink that the company has reported. In 2003, Kaiser posted a loss of $788.3 million.

If the company survives bankruptcy, it will look very different than the powerful metals firm with far-flung operations in many parts of the world.

By the time crippling debts matured and the aluminum market turned south, the company had liabilities of $3.1 billion versus assets it assumed were worth $3.3 billion.

Many of those assets turned out to be worth a fraction of their book value. For example, the Mead and Tacoma smelters were carried on Kaiser's books as a $160 million asset, but sold for about $20 million in two separate transactions.

And the company's Gramercy, La., alumina refinery, which Kaiser spent more than $275 million rebuilding after a 1999 explosion, has been sold for $23 million.

Yet the company has had success selling properties, including bauxite mines and alumina plants in Jamaica, and it anticipates a favorable price for its ownership stake in an alumina refinery in Australia.

The sales are part of Kaiser's strategy to leave the commodities end of the aluminum business and instead focus on making and selling fabricated aluminum.

Bechtel bags Sohar smelter EPCM contract

Times of Oman, Oman 02-Apr-2005

By Palazhi Ashok Kumar

MUSCAT — America’s Bechtel is understood to have bagged the prestigious Sohar smelter project’s engineering, procurement and construction management (EPCM) contract.

Sources said world’s leading engineering, procurement and construction management firms Bechtel of the US and SNC-Lavalin of Canada were in the final race for the EPCM contract.

Subsequently, Bechtel had been chosen as the preferred bidder for the job.

The project will produce 325-kilo tonne per annum of aluminium smelter.

"Our first project in the region, in 1943, was a 200,000 barrels-per-day refinery in Bahrain. Since then, we have worked in nearly every country in the Middle East.

Two of our signature projects were the Trans-Arabian Pipeline and Jubail Industrial City (where we have worked for some 30 years).

"After the Gulf War in 1991, we mobilised an international force of more than 16,000 workers to put out 650 wellhead fires in Kuwait and coordinated the effort to clean up the 11 million barrels of oil that spilled from wells sabotaged by Iraqi forces," Bechtel sources told Times Business.

Bechtel’s current projects include the Iraq infrastructure reconstruction project, expansion of King Abdulaziz International Airport in Saudi Arabia; a huge liquefied natural gas project at Idku, Egypt; and a major smelter expansion project by Aluminum Bahrain.

Oman Oil Company and Abu Dhabi Water and Electricity Authority hold 40 per cent stakes each in the equity of Sohar Aluminium Company and Canada’s Alcan owns 20 per cent.

A shareholders’ agreement was signed in Abu Dhbai in February this year by Maqbool bin Ali Sultan, minister of commerce and industry and the chairman of Oman Oil Company; Sheikh Dhiab bin Zayed Al Nahyan, chairman of the Abu Dhabi Water and Electricity Authority; and Cynthia Carroll, president and chief executive officer of Alcan Primary Metal Group.

The EPCM contract will cover the construction of a single potline with a capacity of approximately 330,000 tonnes per annum. The project is based on the most advanced and highly efficient Pechiney-AP30 technology developed by Canada’s Alcan Inc.

Alcan also has the option of acquiring up to 60 per cent of a planned second potline for an additional 330kilotonnes per annum of aluminum. The agreement provides that Alcan would license its Pechiney AP30 smelter technology and take a leading role in the construction and operation of the smelter project.

The project will have long-term access to a dedicated power supply on competitive terms and in a quantity sufficient to meet the energy requirements of the first and second phases of the smelter project. The EPCM contract excludes the proposed captive power plant and the contract for the same will be awarded separately. The power plant is expected to be one of the biggest of its kind in the region.

Sohar Aluminum Company will establish the first production line and an associated gas operated power plant with a capacity of 800MW to supply the project with electricity. Subject to successful completion of the project agreements and financing arrangements metal production is expected to commence by the end of 2007 or early 2008.

Bechtel engineers, technicians, and craftspeople have for more than 60 years supported the efforts of Middle East nations to improve the lives and well being of their populations through industrialization and development programs. Work has ranged from refineries, long-distance pipelines, and oil handling facilities to railroads, highways, airports, piers, temporary dwellings, and permanent, fully integrated industrial towns.

Kaiser retirees, ex-workers invited to meet with federal pension insurer

Spokesman-Review April 2, 2005

Compiled from staff and wire reports

Kaiser Aluminum retirees and former workers covered by the company's hourly or salaried pension plans can meet next week with officials of the Pension Benefit Guaranty Corp.

Representatives of the PBGC will hold meetings at 10 a.m. and again at 7 p.m. Tuesday at the Best Western Hotel in Coeur d'Alene.

Similar meetings will be held in Spokane at the Red Lion Hotel at the Park during the following two days. They are scheduled at 1 p.m. and 7 p.m. Wednesday, and 10 a.m. and 7 p.m. Thursday.

The meetings are scheduled to last an hour.

PBGC representatives will explain the federal program and answer questions.

The federal pension insurer has taken over Kaiser's pension plans, which cover more than 15,000 workers. Benefit payments to retirees have continued uninterrupted.

Kaiser, which is attempting to emerge from bankruptcy protection later this year, surrendered its plans after they became under-funded by $595 million.

For more information, call 1-800-400-7242. For callers with hearing impairments, more information is available at 1-800-877-8339; ask to be connected to 1-800-400-7242.

New Music Group with an "Old" name!

Russian giant eyes growth

Brisbane Courier Mail, Australia 04apr05

James McCullough

ONE of the world's largest alumina producers, Rusal, has completed a $600 million Queensland investment that will provide a solid Australian foothold from which it is keen to expand.

Rusal, which has now established a national head office in Brisbane, has finalised the acquisition of 20 per cent of Queensland Alumina Ltd, the world's largest alumina refinery, from Kaiser Aluminum.

The move follows Rusal's winning bid during the auction of the QAL stake in October last year. Rusal chief executive Alexander Bulygin said the completion of the QAL transaction represented the largest investment by a Russian company in Australia.

"For Rusal, the acquisition will make a major contribution to our access to raw materials," he said.

Mr Bulygin said expansion of Rusal's raw material sources was a key strategic priority.

To that end QAL, along with the purchase of the Boksitogorsk refinery finalised in December, would increase the group's alumina production by more than a quarter over the 2004 output of 3.14 million tonnes.

Rusal Australia managing director Duncan Hedditch described the move as pleasing, stressing it gave the group a solid Queensland base from which to seek further investments in Australia.

Rusal is also actively pursuing the interest it had registered with the Queensland Government in acquiring rights to develop the Aurukun bauxite deposit in far north Queensland.

"This represents a further significant opportunity to add to Rusal's raw material supply resource," Mr Hedditch said.

Under the terms of the QAL deal, Rusal is paying $US401 million ($518 million) in cash for the QAL stake, subject to certain working capital adjustments.

Rusal will purchase Kaiser's alumina and bauxite inventories and assume Kaiser's obligations in respect of about $US60 million of QAL debt. Kaiser also will transfer its existing alumina sales contracts and other agreements relating to QAL to Rusal.

The transaction previously received the approval of the US Bankruptcy Court for the District of Delaware. Alcan holds a 41.6 per cent stake in QAL and 38.6 per cent in Comalco.

Rusal accounts for three-quarters of Russia's primary aluminium output and 10 per cent of global primary aluminium output.

$300-500 million Duqm port project underway

Times of Oman, Oman 03-Mar-2005

By Palazhi Ashok Kumar , Our Special Correspondent

MUSCAT — The government is going ahead with its plan to develop a world-class commercial port at Duqm in Al Wusta.

"The plan is underway, and the project is well on stream," Sheikh Mohammed bin Abdullah bin Isa Al Harthi, minister of transport and communications, told Times Business.

Royal Haskoning of the Netherlands, in association with Lebanon’s Khatib & Alami, is designing the proposed port and shipyard project.

The port will have facilities to handle ultra-large crude carriers.

The actual cost of the project cannot be estimated now. Sources said though the initial feasibility study had estimated a cost of more than $260 million for the commercial port and dry dock, it is expected to cost at least $500 million as the scope of developing the port now will include a township, and probably an airport. One of Korea’s leading shipbuilding and marine engineering company is understood be exploring the scope of operating a ship repair yard and a shipbuilding unit at the port.

The country’s modern port development began in 1974 by establishing Port Sultan Qaboos in Muscat. Port development took a new turn with the establishment of a new industrial port at Sohar. The container terminal at Salalah Port first began operating in November 1998.

The Sohar port project is designed to serve gas-based enterprises, including hydrocarbon industries, heavy and other industries that depend on gas for generating electricity.

Sohar Port’s first phase includes the proposed aluminium smelter project, a refinery, methanol project, etc. The EPCM contract for the aluminium smelter has already been awarded to America’s Bechtel, the world-renowned engineering and procurement and management firm. A port at Khasab in Musandam was established in 1983.

In 2001, the fishing port in the wilayat of Shinas had been converted into a commercial harbour to serve domestic trade in the north Batinah region.

Oman, which has a GDP of more than $24 billion is in the process of signing a free trade agreement with the United States, and economic reforms in Oman is exhibiting signs of sustainable social development.

"The country’s integration into the world economy is visible with the increased economic activity and the government’s initiatives to enhance the human capital and accomplish growth. Infrastructure is an integral part of the development of any country.

"The forthcoming capital and labour-intensive projects are expected to offer enormous job opportunities for nationals. Oman has a huge pool of entrepreneurs who are ready to invest, produce, and hire workers. Foreign investors’ faith is seen improving," industry experts opine.

L&T plans Rs 5,000 cr alumina project

Indian Express, India Tuesday, April 05, 2005 at 0033 hours IST


MUMBAI, APRIL 4: With the metal industry witnessing an unprecedented boom, more players are entering the field with mega investment plans. Engineering and construction company Larsen & Toubro Ltd (L&T) has entered into an understanding with Dubai Aluminium Company Ltd (DUBAL) to set up an integrated bauxite mining cum alumina refinery project in Orissa at an estimated cost of Rs 5,000 crore.

This follows the plan of Aditya Birla firm Hindalco Industries Ltd to set up an aluminium smelter plant in Jharkhand at a cost of Rs 7,800 crore.

Earlier, the Vedanta group has announced Rs 15,000 crore project in Orissa. While Vedanta’s projects have already started work on the ground, Hindalco is a late entrant, say industry analysts. The project involves setting up of a 1.4 million tonne per annum (MTPA) world class alumina refinery, bauxite mine and associated infrastructure, including a captive power plant, port facility, township and other utilities, L&T said here.

L&T already has development rights to bauxite deposits and prospecting in Orissa and the refinery is expected to be commissioned in 2009, it said. The project would be based on latest technology and would incorporate state-of-the-art environment control systems, it said. L&T CMD A.M. Naik said the proposed JV with DUBAL is in line with company’s objective of setting up large projects in alliance with world leaders and reflects its desire to increase business with UAE. ‘‘This will provide L&T’s engineering & construction division a opportunity to execute a project valued over Rs 3,000 crore.’’

Russia's SUAL keen on S.Africa ally project - report

Reuters South Africa, South Africa Mon April 4, 2005 12:22 PM GMT+02:00

JOHANNESBURG (Reuters) - Russia's second largest aluminium producer SUAL has talked to South African officials about reviving the proposed $2 billion Coega aluminium smelter, Business Day newspaper said on Monday.

The South Africa financial daily said SUAL president Brian Gilbertson, former head of BHP Billiton and renowned as a dealmaker, has proposed SUAL as a possible partner in the South African project, which has been stalled for months.

France's Pechiney had agreed to be the lead investor on the proposed 660,000-tonne smelter with a 49 percent stake, but when Pechiney was acquired by Canada's Alcan in late 2003, the project was put on hold.

Alcan said last November it planned to complete a feasibility study on the project by the second quarter of 2005.

Business Day quoted Gilbertson, a South African, as saying SUAL was keen to be involved in the Coega project, located 20 km from the southern city of Port Elizabeth.

"The answer is yes. We have a new technology, which we think could match or exceed the best in the world," he said.

"We also have production skills. SUAL has been producing aluminium for 50 years. We have the financing capacity and, in principle, if the project were attractive, we'd be prepared to look at it."

The newspaper said Gilbertson met South Africa's trade and industry minister and the Industrial Development Corporation, which is expected to take a share in the project.

Neither Gilbertson nor officials from SUAL and the South African government were immediately available for comment.

SUAL said on Friday it had launched a new test facility of six pre-baked anode electrolysis cells with an increased amperage of 300 kiloamps at its Urals smelter.

Alcan said last November the focus of the new feasibility study would be the use of Pechiney's AP30 or AP35 smelting technologies, which cut capital expenditure, have higher productivity and produce fewer emissions

Gilbertson may save stalled Coega project

Business Day, South Africa, South Africa 04-Apr-2005

John Fraser Resources Editor

VETERAN deal maker Brian Gilbertson emerged at the weekend as a potential white knight to save the $2,2bn Coega aluminium smelter project.

Gilbertson is well placed to take over the stalled project, as he runs Russian aluminium group SUAL, which has both the resources and the technology to make a success of the Coega project.

The lead investor and technology supplier to the smelter project had been Pechiney of France, but a major spanner was thrown in the works when Pechiney was taken over by Alcan of Canada, which has so far failed to commit to Coega.

The planned smelter is seen as the anchor project for the Coega Industrial Development Zone (IDZ), which is dear to government because of high unemployment in the African National Congress’ Eastern Cape stronghold.

Gilbertson not only runs an aluminium company which could rescue the project, but he also has an intimate knowledge of the aluminium industry in SA, having headed BHP-Billiton, which was responsible for building smelters at Richards Bay, and for the Mozal smelters in Mozambique.

He said at the weekend that he had approached both Trade and Industry Minister Mandisi Mpahlwa and the Industrial Development Corporation (IDC) to discuss the possibilities at Coega.

SUAL is busy running a pilot plant to test new Russian aluminium technology, which Gilbertson believes will be as good as that of Pechiney.

"This will, without a doubt open possibilities and create new potential for the Russian aluminium industry," Gilbertson said last week.

When contacted at the weekend to ask whether SUAL would be interested in the Coega project, he replied: "The answer is yes. We have a new technology, which we think could match or exceed the best in the world.

"We also have production skills — SUAL has been producing aluminium for 50 years. We have the financing capacity and, in principle, if the project were attractive, we'd be prepared to look at it."

Gilbertson said that he had said as much to Mpahlwa when the two last met.

He said it would normally take three years from the time of signing up to a smelter project to the pouring of the first metal.

However, he observed that the Coega smelter project "would not start from nowhere" as a lot of preparatory work had been completed by Pechiney.

Gilbertson said that a major determinant for any aluminium smelter project was a cheap power supply, and he recalled that both the Hillside smelter at Richards Bay and the Mozal projects had been launched when power was abundant in SA.

He said that for the Coega smelter to go ahead, there would need to be a supply of electricity "on attractive terms".

"You also look for nonhostile tax treatment, but as the smelter would be sited in an industrial development zone it shouldn’t be an issue."

Energy is a major input in aluminium production, to the extent that aluminium production is seen by many as a way of converting SA coal into an exportabe product.

Eskom has undertaken to upgrade the grid supplying electricity to Port Elizabeth and Coega, and had agreed a favourable tariff structure for Pechiney.

Gilbertson said his preference would be to use new Russian technology for the Coega smelter, but failing that, if he agreed to the project, he would be prepared to consider Pechiney or Chinese GAMI technology.

He said that SUAL would seek other investors for the Coega smelter project, if it were to go ahead, and the involvement of the IDC "would be critical — as it was for Mozal".

There would also be an empowerment partner, and he said that Incwala resources — a South African empowerment group which was launched last year which he chairs — "would be ideal".

"It is a financially robust company and fully empowered," Gilbertson said.

Alcan Still Studying Coega, No Comment on SUAL

Metro Toronto, Canada Tuesday, April 05, 2005 2:29:46 PM ET

VANCOUVER, British Columbia (Reuters) - Alcan Inc. <AL.TO> said on Tuesday it is pressing ahead with a feasibility study on the proposed $2 billion Coega aluminum smelter in South Africa, but declined to comment on a report that a Russian investor was interested in the project.

South Africa's Business Day newspaper reported that SUAL, Russia's second largest aluminum producer, has talked to South African officials about reviving the venture, which has been stalled for months as Alcan assesses it.

The paper on Monday quoted SUAL president Brian Gilbertson, a South African, as saying SUAL was keen to be involved in the proposed 660,000-tonne smelter, located 20 km (12.5 miles) from the southern city of Port Elizabeth.

France's Pechiney had agreed to be the lead investor on the smelter with a 49 percent stake, but the project was put on hold when Pechiney was acquired by Montreal-based Alcan in late 2003.

Alcan said in November it planned to complete a feasibility study on the project by the second quarter of 2005.

"(The study is) making progress...They are within where they wanted to be," Alcan spokesman Alexander Christen said.

He could not say if the results of the study would be announced with Alcan's first quarter results on May 9.

Christen said he did not know if Alcan had had any talks with SUAL and that it was Alcan's policy not to comment on the affairs of other companies.

Mozal Refutes Environmental Claims, Africa April 5, 2005

Paul Fauvet Maputo Agencia de Informacao de Mocambique (Maputo)

The management of Mozambique's largest factory, the MOZAL aluminium smelter at Beluluane, on the outskirts of Maputo, on Tuesday refuted point by point the claims that the smelter is a threat to the environment and to the health of its workforce.

At the latest of its six-monthly "Meetings with interested and affected parties", MOZAL distributed a leaflet that takes apart these claims, some of which have attained the status of Maputo urban legends.

Perhaps the most alarming is the claim that anyone who goes to work at MOZAL can expect to live no longer than five years.

The MOZAL leaflet states that it is the linings of the electrolytic furnaces ("pots") that must be replaced every five years - not the people who are working them.

"MOZAL staff live as normally as anyone else", the leaflet states. "The fact that someone works at MOZAL does not make him different from other people, or expose him to risks different from those faced by other workers".

Indeed, MOZAL workers are likely to be healthier than those of other industries. Anyone who visits the smelter (and the participants of Tuesday's meeting were given a tour) is struck by the heavy emphasis on health and safety. All workers are obliged to wear protective clothing. including helmets, and, where appropriate, face masks, goggles and ear plugs.

MOZAL has also developed an anti-malaria programme which was recently praised, by the "New York Times", as one of the best in the world, and the incidence of malaria has declined sharply among the MOZAL workforce.

The company also runs a vigorous HIV/AIDS campaign, and free condoms can be obtained at any MOZAL washroom.

One of the claims most frequently made is that MOZAL pollutes the Matola river. In fact, there is an impoundment dam that works as a buffer between the factory and the river. All liquid run-off from MOZAL enters the dam.

According to MOZAL managing director, Carlos Mesquita, water is only discharged from the dam into the river when it is within the permissible international and national limit for fluoride, the only significant pollutant.

That limit is 20 parts per million (ppm) of fluoride.

MOZAL's own monitoring shows that the level of fluoride in water entering the river has never reached 20 ppm: in 2003 it was 14.5 ppm, in 2004 16 ppm, and in February of this year it was 15.6 ppm.

A glance at the impoundment dam shows that the water cannot be a danger to river environments. For the dam has attracted wildlife: it has aquatic plants, fish, and a population of amphibians and birds.

MOZAL points out that there have been lengthy studies since 1981 at the South African port of Richards Bay, to assess the impact of the Bayside aluminium smelter. Bayside is an older, less efficient smelter than MOZAL, which produces much more fluoride in its effluent.

Yet there is no evidence of any fluoride build-up in the wildlife of the Richards Bay harbour - no sign of fluoride accumulation in fish backbones or in plankton.

The rumour mill also alleges that MOZAL is responsible for drought in Maputo province. Perhaps the best answer to this is that the worst drought in southern Mozambique in living memory occurred in 1992 - eight years before MOZAL began production.

The claim about drought seems to derive from a misunderstanding about the high temperatures required to reduce the raw material, alumina (aluminium oxide), into aluminium. The electrolytic furnaces do indeed operate at a temperature of 960 degrees centigrade. Some people have jumped to the absurd conclusion that the workers are working in temperatures of 960 degrees, oblivious of the fact that anyone exposed to such temperatures would be instantly vaporised.

The high temperatures occur only inside the furnaces - and the workers are not inside the furnaces. As the MOZAL leaflet patiently puts it "It's the same when we boil water in a kettle inside our houses. The water must reach a temperature of 100 degrees, but that doesn't mean that our kitchen is at 100 degrees". The main determinant of how hot it is at MOZAL is the sun, as anyone who has walked around the factory can testify.

As for MOZAL ruining agricultural production in the vicinity, the company argues that precisely the opposite has happened. MOZAL ploughs about three million dollars a year into the MOZAL Community Development Association, and the association has helped farmers raise their production.

Before MOZAL began, the average agricultural production of a Beluluane peasant household was a mere 300 kilos of crops a year.

But in 2000 this rose to 1,500 kilos a year, and in 2001 to 1,900 kilos.

Subsequently production did decline - MOZAL blames this on a dry spell across southern Africa in 2002. "MOZAL has no power to stop the rain", the leaflet says. "On the contrary, MOZAL supports activities that depend on rainfall".

One of the wilder stories that appeared recently in some of the press was that alumina somehow gets into the atmosphere and causes fevers and other ailments.

But alumina is not a gas. Mesquita remarked that, if MOZAL really was belching aluminium oxide into the Beluluane air, then the whole area surrounding the factory would be covered with a white powder.

MOZAL has Gas Treatment and Fume Treatment Centres that clean up the real emissions before they are released into the atmosphere. The main pollutant associated with aluminium production is fluoride, and the limit is one kilo of fluoride per tonne of aluminium. According to Custodio Judiao, of the MOZAL Health, Safety and Environment Department, the smelter's emissions are nowhere near this limit. The average for 2004 was 0.39 kilos of fluoride per tonne of aluminium. In January, the figure went up to 0.46 kilos, and in February down to 0.38 kilos.

The figures are not just MOZAL's. The smelter's environmental performance has been exhaustively audited - by the Mozambican Environment Ministry, by the World Bank, by the company's major shareholder, BHP-Billiton, and by the independent Bureau Veritas Quality International (BVQI). It was the BVQI audit that was determinant in MOZAL obtaining the prized ISO 14001 certificate - a standard that has not been granted to any other Mozambican factory.

Quite apart from the scientific evidence, there is also the evidence of one's own eyes. MOZAL is green. The factory grounds have plenty of open spaces, and they all contain grass, shrubs and trees. As Tuesday's guests drove round the premises, they could see more trees being planted. Outside the factory, wild plant life grows in profusion.

None of this vegetation would stand much chance of survival, if the smelter were, as its opponents claim, pumping out deadly toxins day and night.

Coega, Sual in Talks On Investment, Africa April 5, 2005

Business Day (Johannesburg)

Larry Claasen

THE Coega Development Corporation says it has had talks with Russian aluminium producer SUAL over the possibility of investing in the Coega industrial development zone near Port Elizabeth.

The confirmation follows a report in Business Day yesterday that SUAL CEO Brian Gilbertson, was considering erecting an aluminium smelter at Coega and had spoken to Trade and Industry Minister Mandisi Mpahlwa on the matter and the Industrial Development Corporation (IDC).

News that SUAL is thinking about putting up an aluminium smelter at Coega follows lengthy consideration by Canadian group Alcan on whether to erect a smelter of its own there.

The Coega Development Corporation said it had met with representatives from SUAL in the course of the investment-promotion activities and discussions it frequently held with various investors as part of its marketing drive.

The corporation said all discussions held with investors were confidential. It did reveal, however that it had met with SUAL twice - once in London and a second time in Port Elizabeth, including for a site tour.

The bid to get an aluminium smelter built at Coega has been a lengthy one. While French group Pechiney had initially agreed to use its world class technology to bring the sophisticated smelter to SA, its subsequent takeover by Alcan has drawn out the process.

Alcan launched a fresh feasibility study into the construction of an aluminium smelter last November as it was considering different technology to that included in the original plans by Pechiney.

The new study would be completed in the second quarter of this year. Alcan said if the project received the go-ahead, construction could possibly start as early as the end of this year, with the first metal to be produced in 2008.

The Alcan smelter may produce up to 660000 tons of aluminium a year.

Gilbertson said at the weekend that SUAL was testing new technology that would rival that of Pechiney. Gilbertson was keen to demonstrate SUAL's technology, and said that "if the (Coega) project is attractive, we would be prepared to look at it".

Gilbertson has extensive knowledge of the aluminium industry in SA. He was CEO of BHP Billiton, which was responsible for building smelters at Richards Bay, and for the Mozal smelters in Mozambique.

IDC executive vice-president for marketing and corporate affairs Neo Sowazi said the deal with Alcan was the only one on the table and negotiations with the Canadian group were continuing.

The IDC is expected to take a 12,5% stake in the smelter if Alcan goes ahead with the project.

While the Coega Development Corporation has long waited for a large aluminium smelter to be built, it maintained that the viability of the project was not dependent on an "anchor" tenant. With more than 60 potential investors in a variety of industrial sectors, the aluminium smelter project could not be referred to as an "anchor" project

Comalco’s Gladstone refinery ready ahead of time

Ferret, Australia 7 April 2005

The $1.5bn Comalco Alumina Refinery has officially opened in Gladstone, Queensland.

The 100% Rio Tinto-owned refinery, which will produce 1.4Mt of smelter grade alumina each year, was completed three months ahead of schedule and on budget.

Speaking at the opening, Comalco CEO Oscar Groeneveld, praised the cooperative effort by governments, indigenous and community leaders, suppliers, customers and employees.

"The state is already home to a large portion of our business including the Weipa bauxite mine, which was recently expanded to supply bauxite to this new refinery," Groeneveld said.

He said he was impressed with the way the local community and local industry had embraced the project.

"Not only was the project finished on time and on budget, it also delivered a safety record that has set new benchmarks for a project of this size," Groeneveld said.

Alumina from the new refinery will be used at Comalco’s smelters in Australia and NZ and sold to a range of export customers. This included Norsk Hydro, which signed a 26-year alumina supply agreement with Comalco for 500,000tpa of alumina.

A similar amount has been allocated to meet growing demand for imported alumina from major customers within the Chinese aluminium industry.

At the peak of construction, there were 2150 people employed on the Gladstone site, 70% of whom came from the Gladstone region.

Alcoa's Profit Declines 27% on Costs to Fire Workers (Update3)

April 6 (Bloomberg)

Alcoa Inc., the world's biggest aluminum maker, said first-quarter profit fell 27 percent because of costs to fire workers and to sell a stake in a Norwegian metals company.

Net income declined to $260 million, or 30 cents a share, from $355 million, or 41 cents, a year earlier, Pittsburgh-based Alcoa today said in a statement. Revenue climbed almost 13 percent to $6.29 billion from $5.59 billion.

Chief Executive Alain Belda plans to fire 2,000 workers this year after costs surged for caustic soda, fuel and electricity used at refineries and aluminum smelters. The expense of $25 million to shed jobs eroded gains from aluminum prices that reached a 10-year high in March as demand in China soared.

Rising costs are forcing Alcoa ``to go back and review everything in a more fundamental way,'' said Lloyd O'Carroll, an analyst for BB&T Capital markets. He has a ``buy'' on Alcoa's stock, which he said he owns.

Shares of Alcoa rose 77 cents, or 2.6 percent, to $30.75 at 5:57 p.m. in New York, after the close of regular U.S. trading. The stock is down 16 percent from a year earlier.

Profit excluding discontinued businesses and other items, which doesn't follow generally accepted accounting principles, was 40 cents a share in the first quarter. The company was expected to earn 39 cents, the average estimate of 17 analysts surveyed by Thomson Financial.

`Slightly Positive'

``All in all it was slightly positive'' compared with forecasts, said Brian Hicks, fund manager for U.S. Global Investors Inc. ``The last three quarters they haven't been able to do that.''

The excluded items, which totaled 10 cents a share, included the cost to fire workers, a $39 million tax-related loss from the sale of a stake of Norwegian aluminum company Elkem ASA of Norway, $12 million related to the acquisition of Russian fabricating plants in Samara and Belaya Kalitva.

``We're doing everything that we know how to do,'' Chief Financial Officer Richard Kelson said in a conference call with analysts and investors. ``There will be some more restructuring in the second quarter. We fully expect to offset the cost increases.''

The company's goal is to cut annual costs by $1.2 billion by the end of next year.

Higher Prices

Alcoa's average price for raw aluminum rose 15 percent to 93 cents a pound. Shipments rose less than 1 percent to 1.29 million metric tons. Profit in the primary metals business rose 17 percent to $225 million on a 24 percent rise in sales to $1.09 billion.

Profit in Alcoa's alumina business rose 27 percent to $161 million on a 9.1 percent rise in sales to $505 million.

Global demand for aluminum will exceed production by 500,000 metric tons this year, Alcoa said. The deficit will narrow to 100,000 tons next year and disappear in 2007. Global demand for alumina, which Alcoa sells to other aluminum makers, will exceed supply by 400,000 tons this year, 200,000 next year and 100,000 in 2007, the company said.

To take advantage of higher aluminum prices, the company resumed aluminum production at three plants in Washington state and New York. Resuming output at the plants cost $5 million and contributed 43,000 metric tons in the quarter, Alcoa said.

Prices Remain High

In the current quarter, Alcoa expects alumina and metal prices to ``remain high,'' according to an analyst presentation on the company's web site. Demand from aircraft and automakers also are ``strong,'' except for declining production from General Motors Corp. and Ford Motor Co. Energy, chemical and resin costs will continue to hurt profit, the company said.

``Overall the market conditions in the second quarter are positive,'' Kelson said. ``We see continued strength in the aerospace market and in commercial transportation, with truck and trailer segments performing well.''

Sales to automakers represents 11 percent of the company's sales, Kelson said.

Chinese aluminum demand climbed 18 percent last year to 5.97 million metric tons, driving up costs of the chemicals and fuels used to make the metal, as that nation's economy surged, said O'Carroll. China's factory production fueled a gross domestic product that rose 9.5 percent last year, the largest increase among major nations.

The country's growth helped the aluminum price on the London Metals Exchange to high a 10-year high of $2,033 a metric ton. Aluminum demand is driven by the manufacture of car engines, beer and soft-drink cans, communication cables, aircraft, and windows and doors to build homes.

New Plants

Alcoa's spending to build new plants and maintain the current operations may be $2.5 billion in 2006 and 2007, matching the expected total for this year, said Bernt Reitan, Alcoa's executive vice president in charge of the company's raw aluminum business.

Alcoa plans to invest $1.5 billion on new projects this year, including a refinery in Australia and a new aluminum plant in Iceland. The remaining $1 billion is for maintenance.

``We have a pretty aggressive growth plant and I think we will continue to invest at the current levels,'' Reitan said on the conference call.

On Jan. 10, Belda, 61, said he expects the cost of caustic soda, used in alumina refineries, to rise 80 percent and the cost of alloying materials and fuel oil to rise 15 to 20 percent, resulting in a $390 million increase in raw material costs this year. That would be on top of a $125 million rise in energy prices and another $70 million in other items.

The company said today that it saved $15 million in the quarter, or $60 million on an annual basis toward Belda's goal beyond rising materials and energy costs. The workforce reduction is expected to reduce annual costs by $45 million.

Belda said he plans make production and purchasing more efficient and lower administrative expenses to counter rising costs.

To contact the reporter on this story:

Darrell Hassler in Chicago at

To contact the editor responsible for this story:

Steve Stroth at

Riedhammer Acquires Open-type Anode Baking Technology

PR Web (press release), WA April 6, 2005

This German company has now become the world’s only producer of both open and closed-type anode baking furnaces

(PRWEB) April 6, 2005 -- Riedhammer, a German company (of which 90% is held by Sacmi) specialized in closed-type anode and cathode baking furnaces, has obtained approval from the European Community for the acquisition of open-type technology from Alcan Alesa Engineering Ltd (which has installed dozens of furnaces all over then world), a division of the Alcan multinational, the world’s second largest producer of primary aluminium. Acquisition of this technology makes Riedhammer the only producer in the world capable of meeting the full needs of those operating in the primary aluminium industry and offering both open and closed-type furnaces for the baking of first class anodes. Worldwide, about 30% of furnaces already feature Alesa or Riedhammer technology. Today Riedhammer, a subsidiary of the Sacmi group (total sales € 862 million and 3,180 employees on 31-12-2003), is steadily upgrading its flexibility and competitiveness in the execution of anode and cathode "turnkey" firing systems.

Recent fluctuations in the demand for aluminium meant that the market was in need of an independent supplier also as regards open-type technology. Riedhammer, thanks to strategic and financial support from the Sacmi Group, has decided to take up this challenge. It aims to dialogue with all market players so they can make full use of Riedhammer’s 50 years’ of experience, its top-class, specialised industrial organisation and its direct presence in over 35 countries.

According to estimates from forecasting institutes international demand for aluminium is set to grow by 4% in 2005. On the supply side, the increase is expected to be around 5.7%, yet will still fail to bridge the world aluminium output shortfall, which, in 2005, should be around 200 thousand tons. Riedhammer, with over 6,000 kilns installed in different industries all over the world, has been producing ceramic firing systems since 1924. This historical German brand, in addition to being specialised in the baking of anodes, cathodes and carbon electrodes, is the market leader in industrial firing processes that range from ceramic (sanitaryware and tableware) to technical ceramic (refractories, insulators, electronic components) and recycling (batteries, non-ferrous metals).

Riedhammer GmbH


Klingenhofstr. 72

D-90411 NŘrnberg

Telefon: (0911) 52 18-0

Telefax: (0911) 52 18-231

Managing Directors:

Peter Riedhammer, Stefano Lanzoni, Carlo Marzi

e-mail: e-mail protected from spam bots

RusAl in Montenegro

Moscow Times, Russia 07-Apr-2005

Russian Aluminum, which makes about one-eighth of the world's primary aluminum, won a tender for a 65 percent stake in Kombinat Aluminijuma Podgorica, an aluminum maker that accounts for half of Montenegro's industrial output, Interfax reported.

RusAl will pay 48.5 million euros ($62.7 million) for the smelter and invest 55 million euros, Interfax said.

KAP produced 120,000 tons of aluminum in 2003 and 240,000 tons of alumina. Its aluminum output has the potential to rise to as much as 150,000 tons per year and alumina output may double. (Bloomberg)

Hindalco Plans 110 Bln Rupee Aluminum Plant in Orissa (Update1)

April 8 (Bloomberg)

Hindalco Industries Ltd., India's biggest non-ferrous metals producer, plans to build a 110 billion rupee ($2.5 billion) aluminum plant complex in eastern India to meet growing demand.

The proposed 260,000-metric-ton smelter, 1-million-ton alumina refinery and a 650-megawatt power plant will be based in the eastern state of Orissa, Mumbai-based Hindalco said in a statement today. It didn't give a timeframe or funding details.

Rising demand from China pushed up global aluminum prices to a record, prompting producers to build new plants. Sales in India of the metal, used in cars and beverage cans, will grow 8 percent this year, Goldman Sachs JB Pty forecast in a March 22 report, after the economy last year expanded the most in 15 years.

Hindalco will compete with Vedanta Resources Plc., Alcan Inc., Dubai Aluminium Co. and other rivals that are planning to set up plants in Orissa, which has 71 percent of the nation's 1,600 million ton reserves of bauxite, used to make aluminum.

India's bauxite deposits are the fifth-largest in the world, according to National Aluminium Co., India's second-largest aluminum maker.

Aluminum for delivery in three months on the London Metal Exchange fell 0.4 percent today to $1,946 a ton as of 3:23 p.m. London time. The price has gained 12 percent in the past year. It traded at a 10-year high of $2,016 on March 11.

In December, Hindalco began work on a separate $1.1 billion alumina plant in Orissa, in a venture with Canada-based Alcan Inc. The 1.5 million ton-a-year alumina plant was first proposed 12 years ago and delayed mainly due to opposition by tribal communities that would be left homeless.

Two tons of alumina, a white powder refined from bauxite, are needed to smelt a ton of aluminum.

Last month, the company said it plans to build a 78 billion rupee aluminum smelter in the neighboring eastern state of Jharkhand.

To contact the reporter on this story:

Debarati Roy in Mumbai at

To contact the editor responsible for this story:

Peter Langan at

Russian aims to be biggest in aluminium

Brisbane Courier Mail, Australia 11apr05

By Nigel Wilson

RUSSIAN Aluminium, the world's third-largest aluminium group, plans to be No1 by 2012 and believes Australia will play an important part in its multi-billion-dollar growth path.

In an interview in Moscow, chief executive officer Alexander Bulygin said Rusal's recent $US401 million ($520 million) purchase of a 20 per cent stake in Queensland Alumina was part of a worldwide search for alumina resources to underpin its rapidly expanding aluminium business.

Rusal is one of a number of companies taking part in the Queensland Government's search for a preferred bidder for the Aurukun bauxite leases on Cape York which two years ago it stripped from French group Pechiney, which has since been taken over by Alcan.

Mr Bulygin said he expected a decision from Brisbane by September. While Rusal's preference was to have total control of the bauxite resource, he hinted it could enter a joint venture with another aluminium major such as Alcan or Alcoa.

The intense Russian interest in Aurukun may cause some problems for the Queensland Government, which has been actively encouraging the Chinese through the Aluminium Corp of China to become involved in the effort to have the Aurukun resource developed after three decades of neglect.

Mr Bulygin said Rusal had been introduced to the Queensland Government by entrepreneurs associated with the Aldoga aluminium smelter at Gladstone. It is understood Aldoga is not involved in any plans for Aurukun.

Mr Bulygin said the company's strength was its ownership of vast amounts of cheap Russian hydro-electricity, which allowed it to offset the cost of importing materials such as alumina over long distances either from within Russia or from places such as South America, Africa or Australia.

Mr Bulygin said Rusal, if it won the Aurukun tender, would most likely fuel its on-site refinery through coal-fired electricity.

Nigel Wilson was invited to Moscow by Rusal

Anode Milling Machines Posted 12th April 2005

Anodes are the single biggest consumable cost in a primary aluminium smelter; maximising anode lifetime can lead to substantial economies.

A common problem in deteriorating anode performance is the formation of spikes or mushrooms on the underside, causing reduced current efficiency and cell instability.

Often, anodes are needlessly thrown away when they develop this characteristic, wasting resources that could otherwise have been used to increase production. Stimir offers a solution to this problem - the Anode Milling Machine.

Stimir's Anode Milling Machines mill away irregularities in partially used anodes, improving their profile and extending their usable life. Defective anodes are pulled from the pots and milled whilst still hot, then returned again to the original stall. Alternatively, anodes can be cooled and milled cold.

Stimir offers two basic designs – a static machine installed in a fixed location, and a trailer-mounted mobile machine.

Both variations comprise a complete anode milling facility and can operate in both fully automatic and manual modes. If total control over the process is desired, each level of the procedure can be wholly manually manipulated. The user interface is a colour touch screen. Scrap carbon is collected in a container located under the machine.

Stimir hf. is a solution provider to the primary aluminium industry, with particular focus on the Rodding Plant. All aspects of design and fabrication are undertaken at Stimir’s own facilities, ensuring total quality control and on-time delivery.

SUAL Takes Voskhod to the West

Kommersant, Russia 12-Apr-2005

The holding needs a strategic investor for its aluminum smelter project

by Maria Molina

Brian Gilbertson, the president of OAO SUAL Holding, announced at the Russian Economic Forum in London yesterday that the company has plans to construct an aluminum smelter with a capacity of nearly 1 million metric tons per year (the Voskhod project) within five to seven years. Gilbertson is convinced that this project can be realized only with a strategic foreign partner. Judging from the asset operations the holding is planning to carry out in the near future, the first step towards expanding aluminum production will be SUAL's placement of an IPO on Western stock markets.

In his speech at the Russian Economic Forum in London, Gilbertson first of all officially named SUAL's beneficiaries. They are "a small group of private investors", two of whom – Viktor Vekselberg, the owner of Renova, and Leonard Blavatnik, the owner of Access Industries – own controlling interests. Then he talked about strategic business development plans. It was clear from them why Gilbertson began his speech by introducing the principal co-owners – nearly all of SUAL's plans assume a search for a strategic investor.

We remind our readers that the holding already announced its intentions to place an IPO on the London Stock Exchange last year. Chris Norval, Gilbertson's predecessor as president of SUAL, was doing the preparatory work for it (Norval left SUAL in July of last year). SUAL plans to take the first step towards an IPO in the area of energy supply, since the cost of electricity currently makes up close to 30 percent of aluminum production costs. Therefore, in order to attract investors, the holding must guarantee transparency of its structures, especially in power-generation assets under its control.

Yesterday Gilbertson announced two key agreements in this area. The first was the signing of a memorandum of purchase of 28 percent of the shares in Territorial Generating Company (TGK) 9 from Integrated Energy Systems. Second, an agreement between SUAL and Access Industries to merge aluminum and coal assets into a unified company for delivering coal to electric power stations controlled by SUAL. "Our partnership applies to coal production and sales in Ekibastuz [Kazakhstan]," Gilbertson said. According to Kommersant's information, Vekselberg will still have the principal share package in the combined company.

"There will actually be two different businesses with their own presidents within a common group," Gilbertson explained to Kommersant. "The present management will retain control of the company," In his words, the budget, finance, and information divisions will be merged. Evidently, the transfer of share packages to the assets of a single structure will make the group more attractive for future investors. An agreement on a deal has already been reached, but in order to conclude it, the partners must obtain the consent of "interested government bodies" of Kazakhstan and Russia.

It is still unclear who will be SUAL's partner. But at the same time, the holding's president has named the project requiring a major foreign investor, namely the construction of an aluminum smelter with a capacity of 1 million metric tons that may be started within five to seven years. "I believe in the effectiveness of partnership in the industry. The projects need substantial investments, as well as management experience," Gilbertson said. In his words, one major international producer has already expressed interest in this project. He refused to give Kommersant its name. We note that Norsk Hydro, for example could become an investor; the company has announced its intentions to expand aluminum production in Russia [Hydro refused to comment yesterday].

The group is looking for land for the smelter in Russia or the CIS. However, its choice will be influenced by whether the aluminum holding's representatives will be able to get an agreement on cheap energy supplies. We recall that the lack of such an agreement has already forced the Canadian company Alcan and the American Alcoa to turn down participation in a joint project with SUAL for an alumina and aluminum complex in the Komi Republic. If SUAL cannot get low electricity rates, Gilbertson does not rule out the possibility of starting an aluminum project in South Africa, where Renova already has strategic mining interests. "Our decision will depend on the cost of electricity," the president of SUAL told Kommersant.


RIA Novosti, Russia MOSCOW, April 12

A major European oil and gas producer, Norway's Norsk Hydro, has long been keen on operating in Russia. Its president and chief executive officer, Eivind Reiten, spoke of the company's plans in his interview with the Vedomosti daily.

According to Reiten, Russia could use Norsk hydro as a possible place to house a primary aluminum plant.

At present, the company cooperates with Russian Aluminum that supplies it with its own products that Norsk Hydro sells on the European and American markets.

Last year, Gazprom announced that it could team up with Norsk Hydro on developing the Shtokman gas field. According to Reiten, he has regularly seen top managers of Gazprom. Norsk Hydro has been considering various concepts of developing the Shtokman field for a long time. One of the early concepts provided for a platform to be set up on the shelf. Now the company ponders a different approach that makes provision for underwater gas field development and transporting gas to the shore via a pipeline. Gas treatment facilities are to be built on shore. The company is going to export liquefied natural gas to the United States once the gas field starts yielding gas.

Asked about the share in the Shtokman field Norsk Hydro would like to get, Reiten mentioned 15%.

According to him, proceeding from the cost of the first stage, estimated at $8-10 billion, Norsk Hydro is ready to provide 15% of investment in the project.

The company is calm as regards the initiative of the Russian Ministry of Natural Resources to restrict foreigners' participation in the companies developing strategic deposits to minority shares.

"We have never sought to dominate any Russian project, therefore, this will not affect us," the Norsk Hydro president said.

The company produced 28.5 million tons of oil and 852 million cu.m of natural gas in 2004. It ranks third in producing aluminum and aluminum products. In 2004, Norsk Hydro's operating revenues totaled 18.9 billion euros, with its profit standing at 1.5 billion euros. Its capitalization equaled $21.4 billion as of April 11, 2004.

Gilbertson forecasts a growing Russian future

Mineweb, South Africa - '12-APR-05 10:00' GMT © Mineweb 1997-2004

By: Gareth Tredway

JOHANNESBURG ( -- Brian Gilbertson has optimistic plans for aluminium in Russia and for his own company, SUAL. Speaking at the Russian Economic Forum in London on Tuesday, Gilbertson, chief executive of SUAL, laid out his plans for the smaller of Russia’s two aluminium producers.

It has only been nine months since Gilbertson took charge at the company but the man most famous for his role in the creation of the world’s largest mining house, BHP Billiton, has already noted five industry trends in Russia that he says will produce a mining giant able to compete for global leadership in the industry.

First of these five trends is Renewal. Gilbertson says that Russian companies are tightly held by a small number of shareholders that are all trying to build better and stronger enterprises.

"They recognise that many of the production facilities are old, and in need of upgrading and replacement to meet modern environmental and production efficiency standards."

SUAL itself has three projects, which are undergoing the renewal process. First aims is to double the company's existing aluminium smelting capacity from the current 1 million tons per annum over the next 5 to 7 years. Gilbertson says the long-term availability of cheap power will determine the smelters’ location. Already Gilbertson says he has proposed to South Africa’s Minister of Trade and Industry that SUAL participate in the country’s Coega project.

The 1.4 million ton per annum Komi project, which is expected to get the "go ahead" this month, is aimed at supplying the deficit of alumina into Russia every year. "Industry needs 7 million tons of alumina annually to produce 3.5 million tons of aluminium," says Gilbertson, "Domestic production is only 3.2 million tons, leaving a deficit of 3.8 million tons."

Gilbertson says his company is very close to signing a Memorandum of Understanding (MoU) with Rusal, Russia's biggest aluminium producer on the Komi project. "In my judgement, this partnership represents an important 'rapprochement' in the Russian aluminium industry, and offers much potential for future cooperation between the two producers."

Second in the trends list is Consolidation. "There are of course major mining companies in Russia, with Norilsk and Rusal immediately in mind, but the consolidation process that characterized the emergence of the Western resource majors has yet to be played out."

Gilbertson says that while the ‘Renewal’ process will increase SUAL’s size, there are also consolidation opportunities. Termed: "SUAL’s first step along this path," Gilbertson announced a MoU – yet non-binding - to acquire a 28% stake in TGK-9, a company which combines a variety of heat and electricity generating assets. "This vertical integration into an important energy source hedges a risk in SUAL’s aluminium production, namely the uncertainty arising from energy sector reforms in Russia."

Partnerships was the third trend. Along with the near-signed MoU with Rusal Gilbertson says the opportunity also exists for local or international partners on the new smelter project and other major ventures.

"This is well established practice internationally, where compatible partners undertake major projects together, sharing risks, pooling skills and experience, to the benefit of all."

Fourth is Diversification. "Ten to 15 years ago, large institutional investors in the West wanted "pure plays", or single commodity companies, and even single geography companies, from which he investor could mix and watch his ideal portfolio. Today, the global majors are all diversified by commodity and country."

SUAL has taken two steps towards diversification, according to Gilbertson. First, the purchase of 69% in ZALK, an alumina-aluminium complex in the Ukraine and SUAL’s first acquisition outside of the Russian Federation. Second are the company’s advanced discussions, according to Gilbertson, with Access Industries, to merge SUAL with the natural resource group’s coal interests.

"These interests involve the mining and marketing of coal at one of the world’s largest open-pit coal mines, located in the Republic of Kazakhstan. Proven reserves are almost 500 million tons."

The final trend is International Valuations. "Often, assets that are not well known in the Western capital markets, particularly in developing countries, are accorded low valuations despite being of high quality."

Gilbertson says that, in 2003, when he was involved in the listing of Vedanta Resources, a company then owning only Indian assets, the share saw a massive re-rating of over 6 times as the underlying assets were logically structured, and sound financing and good governance were put in place.

"I do not think we should expect re-ratings of this magnitude in every instance, but I do think that there is considerable value yet to be released from Russian resources assets."

Alcan CEO says Kitimat smelter must compete with rest of company for upgrade

CBC News, Canada 02:05 AM EDT Apr 14


VANCOUVER (CP) - Alcan Inc.'s smelter in northern B.C. must compete with the global aluminum company's other operations for money to fund an expansion or upgrade, Alcan's chief executive said Wednesday.

"We have to make sure that the investments that are made in our company are the best investments choices that we have, we do not have unlimited funds," Alcan CEO Travis Engen said following a luncheon speech to the Vancouver Board of Trade.

"So each one of our sites and locations around the world, which are manned by people who are very enthusiastic and very proud of their accomplishments, have to compete in a global context for other opportunities within the company."

Alcan has faced calls from Kitimat, B.C., to upgrade and expand the smelter in the shrinking northern community. Responding to a question from the audience about plans for the metals plant, Engen said the company has a "significant asset" in the smelter and associated power plant.

"There are at least a half a dozen different alternatives that we've explored specifically on this and we've looked on them with great rigour three or four times a year," Engen said.

Outside the hotel where Engen spoke, about a dozen people held a protest with signs calling on both the province and Alcan to do more for Kitimat.

Holding a sign that read "Don't Sell Us Out," Gord Lechner, a worker at the Alcan smelter for 15 years, said the Kitimat plant is in desperate need of an upgrade if it's going to remain competitive.

"We're working in a 50-year-old smelter using technology from the 1940s," Lechner said.

"They've closed down smelters using the same type of technology."

Alcan has faced criticism from Kitimat and groups supporting public power that accuse the company of choosing to reduce smelter production so it can increase sales of electricity at high spot prices.

Smelting light-weight aluminum metal from alumina powder takes great amounts of electricity.

"They're making more money from power sales than they are from smelting aluminum," said Kitimat Mayor Richard Wozney, who attended the lunch of about 190 business leaders.

Alcan (TSX:AL) became the world's largest primary aluminum producer with the acquisition of France's Pechiney group for $6.3 billion in 2003.

Engen said the global aluminum market appears to be growing with increased demand from China and that county's limited ability to produce the shiny metal.

"We think China will be a net importer of aluminum, perhaps by the end of this year, but certainly next year," he said.

© The Canadian Press, 2005

Alcan workers at Kitimat, B.C., refuse to smelt alumina from Orissa, India

CBC News, Canada 02:12 AM EDT Apr 14

MONTREAL (CP) - Employees at two of Alcan Inc.'s major smelting operations in Canada are joining resistance to the company's proposed mining project in the Kashipur region of India's eastern state of Orissa.

Workers represented by the Canadian Auto Workers through Local 2301 in Kitimat, B.C., and the affiliated Syndicat national des employes de l'aluminium in Arvida, Que., now have passed resolutions supporting local Indian opposition to the mining.

A Montreal-based group called Alcan't in India, which has been organizing protests against the Kashipur project, said in a release Tuesday that another demonstration is planned for Alcan's annual meeting April 28 in Montreal.

A resolution recently passed by CAW Local 2301 says workers at the smelting facility will "refuse to smelt any alumina shipped to B.C. from Alcan' s eventual operations in Orissa."

For more than a decade, tribal people in Kashipur have been fighting against plans for a billion-dollar bauxite extraction and alumina refining project. Alcan (TSX:AL) owns 45 per cent of the joint venture, called Utkal Alumina International Ltd.

© The Canadian Press, 2005

Russia’s Sual Cancels London IPO, Cites Kremlin Policies

MOSNEWS, Russia 13.04.2005 13:42 MSK (GMT +3),

Russia’s second largest aluminium producer Sual decided to cancel its planned London IPO in order to avoid upsetting the Kremlin administration. The news was reported on Wednesday, April 13, by The Financial Times.

The company’s CEO Brian Gilbertson, who joined Sual last year, gave a speech at the Russian Economic Forum in London. In his speech Gilbertson said: "Minerals are close to the heart of a nation. This is the case not only in Russia, but in most mineral rich countries. No Government likes the idea of strategic resources being ’exploited’ by foreigners… Sual recognizes and respects these national sensitivities. We will therefore seek to develop our strategic opportunities as a partner of the state, and with our feet firmly rooted in the soil of Russia and the CIS."

Northern B.C. Town Takes on Alcan in Second Lawsuit

Metro Toronto, Canada Thursday, April 14, 2005 7:04:44 PM ET

By Nicole Mordant

VANCOUVER, British Columbia (Reuters) - The town of Kitimat, British Columbia, launched its second lawsuit in two years on Thursday to try to stop aluminum giant Alcan Inc. from selling electricity to the United States.

The northern coastal town says the nearby Kemano hydroelectric plant was allowed to be built to provide power to Alcan's Kitimat aluminum smelter and not to export power. It has asked the British Columbia Supreme Court to rule that two provincial government orders that have given Alcan permission to export power from the Kemano plant are illegal.

The town argues that the government overstepped its authority with the 1997 and 2002 orders, as the sale of power violates a 1950 agreement with British Columbia that gave Alcan access to inexpensive hydroelectricity in return for building and operating the aluminum smelter.

The original agreement led to the establishment of the town of Kitimat on Canada's Pacific Coast. Nearly half the town's population of 12,000 is directly or indirectly dependent on the smelting complex for their livelihood.

At its peak, the plant employed 2,500 but that has dropped to below 2,000. Kitimat Mayor Rick Wozney blames the job cuts on the power sales, which he says make "hundreds of millions of dollars in profit" for Montreal-based Alcan, the world's No. 2 aluminum company.

"By rescinding those orders, Alcan will be forced to do what it is supposed to be doing -- smelting more aluminum and creating more industry and opportunity in British Columbia," Wozney said.

Alcan said it had not seen Kitimat's latest petition and, in any event, that it was not its place to comment as the new suit is against the British Columbia government.

Alcan chief executive Travis Engen said on Wednesday the company has a "very strong interest" in expanding the Kitimat smelter, but that such an investment would have to be weighed against others. Now was the time to decide on expansions with aluminum prices near decade highs, he said.

Wozney was in Vancouver to file the suit. About 25 anti-Alcan protesters joined him outside the court building, one with a placard that read: "Alcan's laughing all the way to the bank".

In January, the B.C. Supreme Court dismissed a similar suit filed in 2004 by Kitimat against Alcan on grounds that the town did not have legal standing to sue the firm over the sale of electricity.

Alcan's stock price ended down C$1.31, or 3 percent, at C$43.20 on a day when all base metal shares slumped.

($1$1.24 Canadian)

Alcan CEO says hasn't talked to SUAL about smelter

Reuters South Africa, South Africa Thu April 14, 2005 8:11 AM GMT+02:00

VANCOUVER, British Columbia (Reuters) - Alcan Inc.'s chief executive said on Wednesday he has not spoken with a Russian investor who is reportedly interested in the Coega aluminum smelter, a $2 billion project in South Africa that Alcan is deciding whether to develop.

A South African newspaper reported this month that SUAL, Russia's second-largest aluminum producer, had talked to South African officials about reviving the proposed 660,000-tonne smelter project, which has been stalled for months as Alcan assesses it.

"I don't know really what (SUAL's) true interest would be ... I talk to (SUAL president Brian Gilbertson) all the time but not about this," Alcan chief executive Travis Engen said.

Engen said the feasibility study for the project, located 20 km (13 miles) from the southern city of Port Elizabeth, should be out in the second quarter, although it won't be synchronized with Alcan's quarterly results slated for May 9.

Montreal-based Alcan's involvement with Coega stems from its 2003 acquisition of France's Pechiney, which had agreed to be lead investor with a 49 percent stake.

Alcan is the world's second-biggest producer of primary aluminum. It also makes a vast range of aluminum products.

Speaking to an audience in Vancouver, British Columbia, Engen said Alcan's top priority this year is to complete the integration of Pechiney, the smaller rival it bought 16 months ago for 4 billion euros.

RUSAL Reports Strong Growth in Alloys in Q1 2005 Results

Russia Newswire, Russia Moscow, April 14

In brief

RUSAL, one of the world’s leading aluminium producers, today announced first quarter 2005 results marked by significant growth in value-added casthouse products. Alloy production increased by more than 25%, year-on-year, and reached 165,000 tonnes during the period. This progress is in line with RUSAL’s strategic objective of reaching a 50% share for value-added aluminium products in total output by 2013.

In full

Moscow, April 14 (RNWire) – RUSAL, one of the world’s leading aluminium producers, today announced first quarter 2005 results marked by significant growth in value-added casthouse products. Alloy production increased by more than 25%, year-on-year, and reached 165,000 tonnes during the period. This progress is in line with RUSAL’s strategic objective of reaching a 50% share for value-added aluminium products in total output by 2013.

In Q1 2005, RUSAL raised the production of extruded alloy – used mostly for the manufacture of building structures – to 25,000 tonnes achieving a 111% growth year on year. Rolling ingot output increased by 29% and amounted to 78,736 tonnes with the share of foil-quality ingots going from 0.2% to 20.5% and totalling 16,133 tonnes. The production of casting alloys, which are used in the machine building and automotive industries, posted a 10% growth reaching 38,159 tonnes. This is a result of RUSAL’s measures to step up alloy production – a strategy that will allow the company to better serve the individual needs of its customers and increase the proportion of end users in its customer base. End users currently account for 65% of RUSAL’s total sales.

Alexander Bulygin, RUSAL Chief Executive, said, "We are seeing our emphasis on alloys gathering momentum across the group now, and creating value both for RUSAL and for our customers. Virtually by definition, it means we are working ever more closely with our customers, as we collaborate with them in the specification and production of metals with the exact properties they require."

RUSAL’s Sayanogorsk Smelter achieved the most impressive Q1 2005 results in alloy output producing 62,900 tonnes of alloys, a 50% share of the plant’s commercial production. Krasnoyarsk Smelter showed the best alloy production growth rate, posting a 51% increase in alloy output to 34,500 tonnes over the first three months of the year. Bratsk Smelter increased alloy production by 29% to 56,653 tonnes, while Novokuznetsk and Sayanogorsk Smelters each posted 14% alloy output growth and produced 10,939 tonnes and 62,928 tonnes respectively.

Q1 aluminium output totalled 668,418 tonnes, a 0.6% increase year on year. This result is due to a number of technological upgrades implemented by RUSAL, including programmes to raise electrical current intensity and efficiency, extend cell lifespan, improve assembly procedures and make constructive changes to the production equipment.

With the addition of Boksitogorsk Alumina Refinery and the expansion of Nikolaev Alumina Refinery’s capacity to 1.3 million tonnes per year, RUSAL has made further progress in achieving self-sufficiency in raw materials. In the first three months of 2005, the company attained a 2.2% (17,300 tonne) year-on-year alumina production growth. As part of the program to expand its raw material base, RUSAL is also implementing a project to boost Achinsk Alumina Refinery’s capacity to 1.11 million tonnes per year and completing a feasibility study on further expansion of the Refinery’s production capacity to 1.2 million tonnes of alumina per year. A feasibility study to increase the output capacity of Nikolaev Alumina Refinery to 1.6 million tonnes per year is also under way.

Q1 bauxite production dropped by 3% year on year due to the scheduled modernization of energy supply equipment at the upstream units. The planned reduction in bauxite production will be compensated within the next three months.

RUSAL Reports Q1 2005 Results Page 2 of 2

Production (in tonnes ) Q1 2005 Q1 2004 YoY Change

Bauxite 1,195,764 1,237,616 - 3%

Alumina 800,292 783,009 2.2%

Primary aluminium and value-added casthouse products 668,418 664,837 0.6%

Value-added casthouse products (alone) 165,012 131,357 25.6%

Foil* 9,497.911 9,531.160 - 0.3%

Aluminium beverage cans and lids 5,304** 4,330 22.5%

* Reduction due to temporary closure of the ARMENAL Foil Mill as of Q2 2004 for modernization.

** Increase in beverage can production is a result of bringing the first line of ROSTAR-Vsevolzhsk to design capacity.

Q1 2005 Highlights

RUSAL completed its $401 million purchase of a 20% stake in Queensland Alumina Limited (QAL), Australia, from Kaiser Aluminium

RUSAL commissioned a banking feasibility study to construct the first line of Rogunsk Hydro Electrical Plant in the Republic of Tajikistan, contracting Lahmeyer International to conduct the study.

RUSAL opened two new representative offices in the Arkhangelsk Region, in the cities of Arkhangelsk and Plesetsk.

RUSAL signed an €8 million agreement with ALSTOM to deliver twelve dry gas scrubbing units to RUSAL's Krasnoyarsk smelter.

Sayanogorsk Smelter began testing of a €2-million casting conveyer manufactured by France’s Brochot.

RUSAL’s draft environmental impact evaluation for a planned smelter in the Irkutsk Region was approved following public hearings.

A new structural division – Control Directorate – was established, with responsibilities for cost control and efficiency evaluation.

The deadline passed for Siberian students’ applications to participate in RUSAL’s second public initiatives competition, entitled ‘100 Best Projects’. The company also initiated a similar competition in Ukraine – 10 Best Projects – to support public initiatives among students in Grades 6-10.


RUSAL ( is the third largest primary aluminium producer in the world, formed in March 2000 from the merger of a number of the largest smelters and other aluminium producers located in the CIS. The Company accounts for 75% of Russia’s primary aluminium output and 10% of the global primary aluminium output. RUSAL is a fully vertically integrated company with a complete production cycle from bauxite mining and the production of raw materials, to the production of primary metal, semi-products and aluminium-based end products. RUSAL is headquartered in Moscow.

Montenegro to Sell Aluminum Producer

Forbes 04.15.2005, 12:53 PM

Montenegro's government announced Friday it will sell a majority stake in the tiny republic's main aluminum producer, KAP, to a subsidiary of Russian Aluminum, or Rusal.

After weeks of negotiations, representatives of Rusal, the third biggest aluminum producer in the world, agreed that their Cyprus-based subsidiary Salomon Enterprises will buy 65.4 percent of KAP for euro48.5 million (US$62.68 million).

"The government's negotiating team has managed to significantly improve all elements from Rusal's initial offer," said Vice Premier Branimir Gvozdenovic without elaborating on the original offer.

Rusal's Salomon Enterprises has also agreed to invest a further euro55 million (US$71 million) in Montenegro's ailing aluminum producer over the next five years, said Montenegro's state commission for tenders.

A final signing of the deal is expected next month, Gvozdenovic said, adding it would take place after a likely approval by the republic's Council for Privatization.

He also announced that the buyer would also provide another euro20 million (US$25.8 million) for "an ecological program" to rectify pollution levels from KAP's decades-old facilities.

Montenegro would retain the right to discontinue the contract if the buyer causes an "unjustified decrease of production to less than 50 percent" of the output, Gvozdenovic added.

KAP's output in 2004 was 121,000 tons of aluminum.

Much of the KAP production has been exported, accounting for more than half of all exports from the tiny republic.

Montenegro and Serbia form the loose alliance that replaced Yugoslavia after its breakup.

Slovenia: Alro Slatina increases share capital (subscription), Greece 11:08 - 15 April 2005

Alro Slatina, Central and Eastern Europe's largest primary aluminum maker, is considering increasing its share capital by 52.45 million euros to 110.3 million euros, Ziarul Financiar reports on Thursday.

The company has now a share capital of 57.8 million euros. The capital will be increased by the issue of some 382.9 million shares, which will be submitted for subscription to all shareholders registered on May 17, 2005, in direct proportion to their stake.

The capital increase decision will be put to the vote of the General Shareholders' Meeting scheduled for April 30, 2005.

Alro Slatina is now owned by US trading company Marco International, which accounts for 76.08 percent of shares. The main minority shareholders are the State Assets Realisation Agency (16.7 percent) and Conef, also owned by Marco International, (1.74 percent).

Alro Slatina produces primary aluminum, as well as aluminum cables and bars. The Alro output stood at 215,000 tonnes of aluminum in 2004, on the increase by 6 percent from 2003. The company intends this year to increase production by 9 percent.

Most of the output goes to foreign markets, with exports accounting for 80 percent of overall sales. Main export markets are Greece, Italy, Germany, Spain, Slovenia and Hungary.

Ormet Contract Proposal, OH - Apr 14, 2005

MONROE COUNTY, OH -- They have been on strike for months, but now a contract proposal has been made to union workers at Ormet Aluminum in Monroe County.

Thursday, Ronnie Blatt with the U-S-W-A told News 9 that his union has rejected the contract proposal.

Blatt says the contract for the Reduction Plant would not freeze pensions, but it would include a reduction in retiree benefits.

He also says the company also wants to contract out certain jobs, which he says will wipe-out many jobs. "We could possibly loose 400 people over and above the reduction we already gave...we believe this is a major step backwards, it proves they are not negotiation in good faith."

Blatt says that the Rolling Mill plant also received a similar proposal.

He says their proposal would contract out an estimated 250 more jobs.

The Ormet Corporation has not released a statement.

Friday, Ormet responded saying, "The company says the latest offer would reduce a modest number of maintenance jobs at the reduction plant and rolling mill."

Siberian power play

Melbourne Herald Sun, Australia16apr05

John Beveridge

AT the foot of the vaulting Sayan mountains in southern Siberia lies the impressive148 metre-high Sayano-Sushenskaya dam, surrounded by snow.

As you approach the dam, past a scenic little red electric tram, there is a deep rumbling you can feel through your feet.

The reason for the vibration is a massive hydro-electric system that can produce as much power as the entire La Trobe valley series of coal burning power stations in Victoria.

It is this 6.4 gigawatts of green power – and others like it – that lie behind a rapid increase in Russian investment in Australia.

Because the electrical power is produced by the Yennisey River through a hydro-scheme, the nearby Sayanogorsk aluminium smelter and foil mill is one of the most competitive, efficient and greenhouse gas friendly in the world.

Processed alumina is fed into smelting cells and pot rooms where it is slowly turned into molten aluminium as enough electricity to ruin any nearby mechanical watch is applied through baked anodes.

Later, the molten aluminium is transported in giant cauldrons from where it can be turned into a variety of ingots, sheets, alloys, anodes and cast cylindrical ingots bigger than power poles.

Before long, alumina from Queensland will be joining product from Europe and Africa as smelter owner Rusal's purchase of 20 per cent of Queensland Alumina takes effect.

In the longer term, much more Australian bauxite might be refined into alumina and even smelted into aluminium in Australia as Rusal continues to diversify its supply lines and smelting capacity out of Russia.

Perhaps surprisingly, world class research and development into smelting technology is flourishing in Siberia's icy climes.

After a lot of testing and modifications, Sayanogorsk is dramatically ramping up the amount of electrical power used in its smelting cells to well above what other smelters use.

That new technology will be used in the 1.2 kilometre long expansion of the smelter, which is one of the biggest industrial projects being undertaken in Russia.

Pollution controls at Sayanogorsk use state-of-the-art gas scrubbing technology which means virtually negligible amounts of the pollutant fluoride are being detected in the surrounding areas.

Together with two other giant hydro-powered Siberian smelters – Krasnoyarsk and Bratsk – the once sleepy and overstaffed Russian aluminium industry looks set to become a world beater.

The writer travelled to Russia courtesy of Rusal.

Alcan's Europe smelters hurt by energy costs

Financial Times, UK - April 18 2005 03:00

By Peggy Hollinger in Paris

Alcan, one of the world's leading producers of aluminium, might be forced to close 20 per cent of its smelting capacity in Europe as the industry reels under the impact of high energy prices and the strong euro.

"We have a number of smelters in Europe that are relatively modern, with competitive energy contracts, but there are some older ones and those will be challenged," said Richard Evans, executive vice-president of Alcan, the Canadian group that acquired France's Pechiney last year.

Alcan expects that three out of its nine European smelters - representing 20 per cent of its European capacity of 1m tonnes a year - would be forced to close or change function when their energy contracts end.

Europe's smelting industry was also struggling with the strong euro, which had increased Alcan's European costs by "30 per cent in local terms", Mr Evans said.

"The euro has had a far bigger impact [on costs] in the last three or four years than anything to do with social plans."

Despite high aluminium prices, energy costs and the euro were "putting tremendous pressure on France and Germany and forcing delocalisation," he said.

"Europe's smelting base is under attack from costs and this could have a major impact on jobs. It devalues the capital that has been invested." Mr Evans's warnings will cause alarm as policymakers struggle to spur growth and stem the tide of companies relocating to lower-cost economies.

The issue of "delocalisation" is particularly sensitive in France, where fears of free market reforms are running high and threaten a rejection of the European constitution in the May 29 referendum.

However, policymakers' efforts have been hindered by record oil and gas prices and an ever-declining dollar, which has left euro exporters at a disadvantage in dollar-denominated markets.

Europe has 32 aluminium smelters, and the industry in the EU accounted for some 200,000 jobs before European enlargement.

In February, the European Aluminium Association lobbied the EU Commission to act on high energy prices, warning that up to half of Europe's smelters could close within five years.

The Kyoto accords have put even more cost pressure on the energy intensive aluminium industry.

Although Kyoto does not apply to aluminium smelting, which produces carbon dioxide, it does cover the energy needed to transform alumina into metal.

Mr Evans insisted that Alcan continued to invest in Europe and 85 per cent of the group's energy needs were covered by long-term contracts.

Nevertheless, the growing shift of aluminium users to lower-cost countries meant that smelting operations would have to follow, he added.

Alcan is one of several energy-intensive companies looking at taking a stake in France's next-generation nuclear power project - the European Pressurised Water reactor in Normandy - in an effort to secure access to low-cost energy.

Alcan Refutes Financial Times' Headline

PR Newswire (press release)

MONTREAL, Canada, April 18 /PRNewswire-FirstCall/ - Alcan Inc. (NYSE, TSX: AL) announced today that the Financial Times' April 18 report on Alcan's smelting operations in Europe erroneously stated that Alcan is cutting 20 percent of its smelting capacity.

"It is true that energy costs currently pose challenges for some of our smelters, but it is premature to conclude that these smelters will close," said Richard B. Evans, Executive Vice President of Alcan Inc. who was interviewed by the newspaper on April 15, 2005. "The aluminum industry as a whole is affected by long-term power costs and fluctuations in the euro.

However, this goes beyond the industry and impacts all energy-intensive sectors. For Alcan's part, most of our capacity in Europe has a secure medium to long term energy supply," he added.

Alcan operates nine smelters in Europe, of which approximately 80 percent of the total capacity is covered by medium to long term power contracts.

Alcan is a multinational, market-driven company and a global leader in aluminum and packaging, as well as aluminum recycling. With world-class operations in primary aluminum, fabricated aluminum as well as flexible and specialty packaging, aerospace applications, bauxite mining and alumina processing, today's Alcan is well positioned to meet and exceed its customers'

needs for innovative solutions and service. Alcan employs 70,000 people and has operating facilities in 55 countries and regions.


SUAL Project on Hold

Moscow Times, Russia 19-Apr-2005

The country's No. 2 aluminum producer, SUAL, has put on hold a feasibility study to build an aluminum smelter that is part of a $2.1 billion project in northern Russia, it said Monday.

SUAL said in remarks that the main reason behind the move was to give the company more time to work out ways to secure long-term energy supply contracts with local suppliers for the energy-intensive Komi Aluminum project.

At the same time, the company said construction of the smelter was still on SUAL's agenda as it presses ahead with talks with Unified Energy Systems and Gazprom on the issue. (Reuters)

From one crucible to the next

The Spokesman-Review April 19, 2005

Bert Caldwell

The faint pulse of the Pacific Northwest's aluminum industry strengthened somewhat last week.

Golden Northwest Aluminum, owner of smelters at The Dalles, Ore., and Goldendale, Wash., emerged from bankruptcy. To what remains uncertain, but for former owner Brett Wilcox, approval of a reorganization plan at least preserves what he says has been a cause as much as a business since he bought The Dalles plant 19 years ago.

A businessman would have cashed out a long time ago.

The region's aluminum industry was flat on its back in the mid-1980s. Aluminum prices had tumbled, and the Bonneville Power Administration was increasing electricity prices to reflect the cost of the Northwest's disastrous adventure in nuclear power. When long-time smelter operators like Martin-Marietta and Anaconda wanted out, entrepreneurs like Wilcox purchased plants for a song and, when aluminum markets rebounded later in the decade, minted money. Times were challenging through most of the 1990s, but Wilcox added Goldendale to his holdings in 1996.

The 2000-2001 energy crisis put an end to the good times for smelter operators and, for companies like Kaiser Aluminum Corp., an end to smelting, period. At more than 3 cents per kilowatt-hour, electricity was just too expensive to keep aging Northwest smelters competitive with newer plants in China, Bahrain and Iceland. Only three of 10 smelters operate today, none at full capacity. Kaiser's Tacoma and Mead smelters have been scrapped.

Neither Golden Northwest smelter has operated since March 2003. In December 2003, the company filed bankruptcy. "We went through incredibly good times and, with the power crisis, incredibly bad," Wilcox says.

Reorganization wiped out all Wilcox's equity in the old Golden Northwest, but he has reinvested with the new ownership, mostly creditors who exchanged debt for equity. No longer the chief executive, Wilcox remains as a consultant on many issues, just not day-to-day operations.

"It's actually kind of a relief," says Wilcox, whose efforts to sustain operations at The Dalles and Goldendale sometimes raised the eyebrows of his competitors. For example, he explored the possibility the company build its own wind or natural gas generation plant as an alternative to Bonneville, or at least as a resource he could use to trade for electricity other Bonneville customers no longer wanted to share. Golden Northwest has a permit for a natural gas generator, but with fuel prices high Wilcox acknowledges that Bonneville is the only hope for the smelters for the time being.

"The industry has to get enough electricity from Bonneville to keep a base load of production," he says. When aluminum prices improve and cheaper natural gas brings generation costs down, smelter operators can buy additional power on the open market they can use to start more potlines.

Bonneville may not have much to give, and what it has to give may be out of the reach of Golden Northwest. Northwest smelters used 3,600 megawatts of power at full capacity. Bonneville has been suggesting perhaps 600 megawatts will be available after September 2006. Not only do the public utilities that buy most of Bonneville's power object to that figure, competitor Alcoa wants to know why a company that still owes the agency millions of dollars should be allowed to get back in line.

Wilcox says some consideration should be given to smelters in rural areas, where they once provided the best-paying jobs around. Golden Northwest kept its 1,000-plus workers at full salary for more than two years after it shut down in December 2000, he notes, and helped arrange payment for retraining that has enabled workers to find new careers as nurses, mechanics and computer operators.

"It's worked out well for a lot of them," says Wilcox, who adds that Golden Northwest has endured not due just to his own efforts, but to that of employees who have made sacrifices to get the company to where it is today. Some owned preferred stock in the company rendered worthless by the bankruptcy.

Wilcox, 51, equates his personal losses with those of his employees. "I don't know why I should be exempt from that," he says.

Although the bankruptcy was resolved relatively quickly — Kaiser filed in February 2002 and has yet to file a reorganization plan — Wilcox bemoans the expense of a process not geared for swift outcomes.

"We got through because the important thing was survival," Wilcox says. "The ability to survive depends on the will to survive."

China smelters cut alumina imports, sensing shift

Reuters South Africa, South Africa Tue April 19, 2005 8:35 AM GMT+02:00

By Polly Yam

HONG KONG (Reuters) - Chinese smelters are slowing imports of spot alumina ahead of an expected government move to raise import prices on as much as 30 percent of the country's imported alumina, smelter and trade sources said on Tuesday.

Facing severe power shortages, Chinese authorities are looking to rein in energy-intensive industries, such as the production of aluminium.

China is the world's top importer for spot alumina, which is the raw ingredient for the light-weight metal.

Sources said authorities were considering scrapping tolling and processing provisions, in which smelters import alumina duty free before paying export duties when shipping the finished product abroad.

They would then make smelters pay a standard 8 percent tariff alumina imports and a 17 percent value-added tax, currently applicable to non-tolling and processing business.

With smelters anticipating the move in the near future, imports are drying up, and as China does not allow trading of futures contracts for alumina, spot prices are seen bearing the brunt of the uncertainty.

"We are afraid the price is going to fall soon," a manager for one smelter in the north said. "We want to wait and see."

He said the smelter had sought a spot shipment for 30,000 tonnes of alumina and had already delayed the purchase.

The sources said some smelters were using small lots of imported alumina in Chinese ports to keep production steady, while other smelters had received term alumina imports.

Smelters did not want to commit spot imports because they were concerned the government may alter the provisions after the alumina had been purchased but before they had produced and shipped the metal.

"It's hard to say when the government will do it...and the only thing smelters can do now is wait," said a source for one smelter in the south.


Other smelter sources said recently high alumina prices have been forcing many aluminium plants to operate at a loss, making it difficult for them make new alumina purchases.

"Many smelters do not have enough money to import whole shipment of 20,000 to 30,000 tonnes," an alumina supplier said.

High power fees in China, which does not have enough electricity to support its fast-growing economy, added production costs to smelters, they said.

A dip in international aluminium prices, used to price smelters' exports, had also led to a fall in alumina imports.

Aluminium hit a 10-year high of $2,016 a tonne on March 11, but the three-month London Metal Exchange price has retreated to just above $1,860 a tonne in Tuesday morning.

China's alumina imports rose 45 percent to 1.74 million tonnes in the first three months this year compared with the same period last year, about half of its consumption in the quarter.

Major alumina suppliers to China include Rio Tinto, BHP Billiton and Alcoa Inc.

Traders said spot alumina had changed hands between $480 and $485 per tonne to Chinese ports, against $475 to $480 in early April.

Prices for imported alumina already in Chinese ports were trading at 4,900 to 4,950 yuan a tonne, against 4,850 yuan two weeks ago.

Aluminum Corp. of China Ltd., the country's dominant alumina producer, has kept prices for 2005 contracts at 4,330 yuan a tonne this year.

Separately, traders said reduced production at the Gramercy refinery in the United States would not affect the global supply as the expected output reduction was small.

Gramercy's part owner Century Aluminum Co. said on Monday a caustic soda tank spill would curb 24,000 tonnes of output over the course of the year at the 1.2 million-tonne refinery.

"The problem is when it can be back to normal," a trader for a large Chinese trading house said.

Some thoughts about aluminium

Metals Place, UK 19-Apr-2005

Source: Australasian Investment Review

Despite positive factors such as tighter physical markets and alumina supply constraints setting positive conditions, commodity experts at GSJB Were would argue that the aluminium price has not responded the way it should have done thus far, with the metal lagging behind the other metals and displaying less volatility.

As a result, GSJB Were suggests aluminium should be considered a more defensive commodity play, one where if Chinese exports continue it will be difficult to achieve significant price rises.

The broker notes movements in the AUD/USD exchange rate have outpaced aluminium price movements and caused margins to lag, a situation it suggests is likely to continue longer-term, resulting in lower returns from aluminium than for most other commodities.

This in turn is likely to flow through to alumina, as the alumina contract pricing mechanism links the price to the aluminium price.

This leads the broker to suggest industry players must look more aggressively at this link, as if the mechanism remains in place, and based on the broker's current aluminium price forecasts, alumina is not an attractive re-investment proposition.

The broker concedes the situation may change, but the level of exports from China remain the key.

While price forecasts suggest aluminium is structurally weak compared to other commodities the broker doesn't believe China has any structural advantage in the industry, so any reversal in its exports due to its power and alumina shortages could produce a more attractive pricing environment.

However, in absence of this the broker suggests there is currently little reason for companies to reinvest in their aluminium businesses or to spend on greenfield alumina projects, at least until the price linkage mechanism between aluminium and alumina is addressed.

The good news here is some gains are being made, with the broker noting both Alcoa and Alcan recently settled on 14% increases in the contract link rate, up from the historical average of 12.5%. GSJBW also believes that BHP Billiton's (BHP) attempt to challenge pricing in iron ore could flow through to alumina and aluminium, especially if margins continue to come under pressure.

Such moves could in fact have a stronger than anticipated impact, as while the broker's forecast prices for alumina don't support industry investment or expansion, the current spot prices, which are above forecasts, certainly do.

And, as the broker notes, the stronger for longer pricing theme in commodities has only been forecast after short-term prices have significantly exceeded expectations.

Minister denies Kosovo, Russian firm close to signing deal on power plant

Text of report by Salie Gajtani: "Russians want 'Kosova B'", published by Kosovo Albanian newspaper Koha Ditore on 19 April

Prishtina [Pristina], 18 April: The Kosova [Kosovo] Ministry of Energy and Mines has refuted Podgorica media allegations that Russian company RUSAL, which will soon become the main shareholder of the Podgorica Aluminium Complex (KAP), is about to reach an agreement with Kosovar authorities on leasing for several years the "Kosova B" thermal power plant.

Energy and Mines Minister Ethem Ceku told Koha Ditore that it is not true that the Russian company is close to signing an agreement on Kosova's power plants. He said had had been informed by AKM [Kosovo Trust Agency] about a visit by a Russian company to Kosova, and that its representatives met with AKM and KEK [Kosovo Electricity Corporation] officials, but he explained that during those meetings they had only mentioned the possibility of investing in "Kosova A", and nothing was discussed about the conditions or modalities of possible investments.

"I have information that nothing was promised to the Russian company," Minister Ceku said. According to him, the company is interested in buying the Ferronikeli [mine and factory in central Kosovo] operation and power plant in the same way that four other companies are, because, he explained, electricity supplies entail 30 per cent of Ferronikeli's costs.

But according to the Podgorica daily Republika , the Russians are on the verge of signing an agreement with Kosovar authorities. Moreover, the daily said that the Russians are willing to build two new plants at "Kosova B" and in this way they would resolve KAP's power supply problem after 2009, when they will not have the right to use electricity in Montenegro at the standard price.

The newspaper explained that good long-distance power lines existed between the power plants in Kosova and Montenegro since the time of the former SFRY [Social Federal Republic of Yugoslavia]; through these lines the company in Montenegro would get a cheap supply of power. Vojin Djukanovic, member of the KAP Board of Directors, was quoted as saying that he had specific information about the plans of the new buyers of the company. He believes that the Russians "will most likely ask for concessions in the 'Kosova B' power plant for several consecutive years." He noted that the electricity from power plants in Kosova is expensive for the KAP, but the situation would change with the construction of a new plant.

Source: Koha Ditore, Pristina, in Albanian 19 Apr 05 p 1

EIL bags expansion project from NALCO

Sify, India Tuesday, 19 April , 2005, 19:24

New Delhi: Weathering international competition, Engineers India Ltd has bagged the second-phase expansion contract from National Aluminium Company Ltd (NALCO).

EIL, South Asia's leading design and consultancy organisation, will work for four years on engineering, procurement, construction supervision and project management services in the second phase expansion of bauxite mines, Alumina Refinery and Aluminium Smelter against international competition.

EIL had provided similar services for the original project as well as the first phase of expansion. The second phase is expected to be completed in stages by mid-2009.

The expansion will result in enhancement of capacity from 4.8 MMTPA to 6.3 MMTPA for bauxite mines, from 1.575 MMTPA to 2.1 MMTPA Alumina Refinery by addition of 4th steam and from 0.345 Million TPA to 0.460 million TPA for Aluminium Smelter by addition of 4th pot line.

Kitimat sues Alcan

Georgia Straight, Canada: 21-Apr-2005

By stanley tromp

The District of Kitimat is suing Alcan Inc. and the B.C. government for not reinvesting Alcan’s foreign hydroelectric-power sales profits into the local community. In a lawsuit filed in B.C. Supreme Court on April 14, Kitimat mayor Richard Wozney seeks a declaration that the power generated by Alcan at its hydroelectric-generation facilities at Kemano can only be used for the enhancement of the aluminum industry in B.C. and the promotion of the District of Kitimat and industries in the district.

To do otherwise, he claims, violates the 1949 Industrial Development Act—precursor to a 1950 agreement between the B.C. government and Alcan—and water licences granted Alcan by the B.C. government in 1950 and 1997.

In 2002, the B.C. government approved a deal by Alcan to sell Kemano power to the United States through a BC Hydro subsidiary, Powerex. At the same time, Alcan announced it reduced its production lines at Kitimat Works by 50 percent. Out of 1,900 employees, it fired 40 staff and cut 200 more by early retirement and attrition.

Mayor Wozney claims that as a result of the government letting Alcan sell outside, for other purposes than enhancing the aluminum industry, Kitimat’s population, property values, tax base, overall local business, and residential vacancies declined. Alcan had not filed a statement of defence by the Straight’s deadline.

Metallica Minerals signs bauxite deal

Sydney Morning Herald (subscription), Australia April 21, 2005 - 7:36PM

Metallica Minerals has signed a memorandum of understanding with Aldoga Minerals Pty Ltd and its major shareholder to develop bauxite deposits in the Cape York and Kimberley regions.

Metallica holds around 800 square kilometres of government mapped bauxite deposits in the world-class Weipa-Aurukun bauxite province on Cape York through its wholly-owned subsidiary Cape Alumina Pty Ltd.

Under the deal, Anegada will make a placement of $1.86 million into Metallica at an issue price of 20 cents a share for 9.3 million Metallica shares.

It will also make a placement of $200,000 to Cape Alumina for 10 per cent of its issued share capital.

Cape Alumina will acquire 100 per cent of Aldoga in exchange for 40 per cent of Cape's issued capital, after which Cape would be equally owned by Metallica and Anegada.

Aldoga has completed a scoping study over identified bauxite deposits in the Kimberley region of Western Australia.

The group has strong associations with alumina and aluminium companies including Aldoga Aluminium Smelter Pty Ltd, which plans to build an aluminium smelter near Gladstone in Queensland.

It also has an agreement with China Nonferrous Metal Industry to fiance and develop bauxite mining and alumina refining operations, subject to feasibility studies.

Metallica and Anegada plan to list Cape Alumina on the Australian Stock Exchange within the next 12 months.

They hope to define at least 300 million tonnes of bauxite suitable for direct shipping to alumina plants in Australia and overseas, and also to underwrite development of an alumina refinery.

Metallica shares were trading one cent higher at 20 cents by 1533 AEST.

© 2005 AAP

Alcoa defends cost-cutting as sign of the times

Pittsburgh Post Gazette, PA Saturday, April 23, 2005

By Len Boselovic, Pittsburgh Post-Gazette

Alcoa shareholders received a lesson in global competition yesterday as union members clashed with Chairman and Chief Executive Officer Alain Belda at the aluminum maker's annual meeting at the Westin Convention Center, Downtown.

United Steelworkers union members at Alcoa's Cressona plant in Schuylkill County complained about concessions on health care and other issues the company has sought during 15 months of contract talks.

One worker charged that despite Alcoa's vaunted cost-cutting regimen, Belda made enough last year to provide basic health-care benefits for 4,600 workers or pension benefits for 8,000. "It doesn't seem to be like we are reducing and controlling costs," the worker said.

Belda, who was paid $6.3 million last year, emphasized that Alcoa must be competitive globally. All over the world, people are willing to work "with less rules, less problems, less costs ... and that's what we're dealing with," particularly at U.S. plants, he said.

"Everyday you wake up, there's somebody out there saying 'I want your job.' That's true for me. That's true for you," Belda said.

Alcoa, which employs about 131,000 in 43 countries, announced plans last month to eliminate 2,000 jobs over the next 12 months.

Belda warned several times that failure to address cost issues could put Alcoa in the same position as General Motors. The carmaker, which pays more than $5 billion annually for health-care costs, this week reported a first-quarter loss of $1.1 billion.

On other topics, Belda said Alcoa did not plan to increase its 15-cent-per-share quarterly dividend.

The meeting also featured a standing ovation for former Alcoa chairman Paul H. O'Neill, who made his first appearance at a shareholders meeting since retiring at the end of 2000.

AmerenUE Set to Serve as Noranda Aluminum's Long-Term Electricity Supplier Through First-of-Its-Kind Arrangement

PR Newswire (press release)

ST. LOUIS, April 22 /PRNewswire-FirstCall/ -- AmerenUE -- Missouri's largest electric company has received all regulatory approvals that will allow the company to deliver electricity to Noranda Aluminum, Inc., the state's largest consumer of electricity. AmerenUE has presented its notice of intent to serve Noranda, with service to begin on June 1. In October 2004, AmerenUE announced that through a first-of-its-kind agreement, Noranda Aluminum, Inc. had chosen the utility company as the electricity supplier for its plant at New Madrid, Mo. AmerenUE is a subsidiary of St. Louis-based Ameren Corporation (NYSE: AEE). The transaction marks AmerenUE's largest single tariffed contract. The two companies signed a letter of intent in 2004 outlining the terms of a multi-year agreement to supply Noranda's primary aluminum smelter in Southeast Missouri. In March 2005, the Missouri Public Service Commission granted authority for AmerenUE to extend its Missouri service territory to include the area where the Noranda facility is located.

"We are pleased to have the opportunity to serve Noranda -- a company that has been a leading employer in this region for more than 30 years," says Gary L. Rainwater, chairman, president and chief executive officer of Ameren Corporation.

"Securing a long-term, cost effective contract with a reliable supplier of electricity is fundamental to our future success and we are very pleased to be a partner with AmerenUE, a Missouri-based company," stated Keith Gregston, president and general manager of Noranda Aluminum - Primary Division.

One of two key conditions for completion of the transaction was final regulatory approval for the transfer of certain of AmerenUE's Illinois electric distribution and transmission assets and natural gas distribution assets, along with related personnel to another subsidiary -- Springfield, Ill.-based AmerenCIPS. The other condition was the transfer of the non rate-regulated, Illinois-based combustion turbine generating units at Kinmundy and Pinckneyville to the Missouri-based, rate-regulated operations of AmerenUE. The transfer of AmerenUE-Illinois utility properties has been approved by the Illinois Commerce Commission (ICC), the Missouri Public Service Commission (MoPSC), the Federal Energy Regulatory Commission (FERC) and the Securities and Exchange Commission (SEC). The transfer of the generating assets, with a total capacity of 550 megawatts, received approval from the FERC and the SEC.

The acquisition of the 550 megawatts of combustion turbine units helps ensure AmerenUE's ability to cost-effectively supply Noranda's electric load requirements and completes a commitment in AmerenUE's 2002 Missouri electric rate case settlement to make certain generating capacity investments prior to June 30, 2006.

Noranda Aluminum, Inc. is a major U.S. entity in the international group of operating companies headed by Noranda Incorporated of Toronto, Canada.

Formed in 1968, Noranda Aluminum marked the Noranda Group's entry into the North American primary aluminum producing industry. The aluminum reduction plant, located five miles south of the city of New Madrid on the west bank of the Mississippi River, employs 1,100 people with an annual payroll of $57 million. It has an annual production capacity of 250,000 metric tonnes of aluminum and incorporates the most advanced environmental control technology.

The facility provides major economic support and stability to a 10-county region of Southeast Missouri and requires as much electrical power as the city of Springfield, Mo.

AmerenUE is the largest electric utility in Missouri and the state's third largest supplier of natural gas. With assets of more than $17 billion, the utility company's parent company -- Ameren Corporation, through its subsidiaries, serves 2.3 million electric customers and 900,000 natural gas customers in a 64,000-square-mile area of Missouri and Illinois.

SOURCE Ameren Corporation

Web Site:

SUAL announced production results for Q1, 2005.

Analytical Information Agency, Russia 22/04/2005 13:22

SUAL Group, one of the world's top ten aluminium producers, announced the production results for the first quarter to 31 March 2005.

Total volume of bauxite mined by the Group's enterprises for the first three months of 2005 was 1.15 million tonnes, thus demonstrating a decrease of 5.4 per cent compared to the results of Q1 of the previous year. Decrease in output is due to depletion of bauxite reserves at mines 16-16 bis and 15-15 bis and in Ivdel mines of OAO SUBR. The bauxite output is planned to be levelled up by putting into operation the Novo-Kalyinskaya mine in the end of Q2 2005. SUBR bauxite undersupply is partially compensated by output increase at the Middle Timan mine, which showed production growth by 16.1 per cent over the first quarter of 2004.

Alumina production in Q1 2005 constituted 511.000 tonnes, a decrease of 0.9 per cent on production in Q1 2004 is due to temporary reduction in bauxite mining.

First-quarter production of primary aluminium increased by 0.3% on the year to 229,200 tonnes.

Silicon production increased by 15.1% on the year to 16,200 tonnes. The growth in silicon output reflects the increased demand in the domestic market.

The output of the Group's downstream businesses in 2005 continues to grow significantly due to effective internal and external marketing policies, strengthening management systems and the development of equipment. The production of rolled and semi-finished products at Kamensk-Uralsky Metallurgical increased by 18.7% on the year to 21,426 tonnes. Meanwhile, Ural Foil increased foil and aluminium strip production by 18.3% on the year to 3,742 tonnes. Total output at Demidovsky Consumer Goods amounted to 774 tonnes in Q1 2005. A 8.2 per cent production decrease over the same period of 2004 is related to the restructuring of the commodity basket in favour of the value-added products. As a result the reduction of production volumes has been accompanied by growth of production value.

The output of cable products in Q1 2005 was at 9,743 tonnes, up 9.3% on the year.

SUAL Group is a fully vertically integrated aluminium company that ranks amongst the world's top ten aluminium producers. It comprises 19 businesses that are located in nine Russian regions and are involved in the production of bauxite, alumina, primary aluminium, silicon, semi-finished and finished aluminium products. The Group's revenue for the year ended 31 December 2003 was US$1.7 billion. It has some 62,000 employees.

Annually, SUAL Group mines some 4.4 million tonnes of bauxite, refines more than 2 million tonnes of alumina, and produces some 890,000 tonnes of primary aluminium. It also produces more than 50,000 tonnes of silicon per annum, as well as a range of aluminium-fabricated products (including metal structures, foil, cable, cookware etc).

The Siberian-Urals Aluminium Company (SUAL) was formed in 1996 by a merger between the Irkutsk and Ural Aluminium smelters. At that time, SUAL Group incorporated only nine aluminium enterprises. Since then, SUAL has grown through a series of acquisitions that have improved its operating efficiency, while ensuring it produces sufficient raw materials to meet the Group's evolving production needs.

SUAL Holding, the management company for SUAL Group, was established in September 2000 to improve co-ordination between its businesses, shape its long-term development strategy and apply a unified investment policy.

In 2002, SUAL Group began consolidating its results from Nadvoitsy Aluminium and from SevZapProm, including the Volkhov and Volgograd Aluminium Smelters and the Pikalevo Alumina Refinery

"AK&M", 22/04/2005 13:22

In the aluminium power play, water works

Age (subscription), Australia April 23, 2005

By Philip Hopkins

The dam wall climbs 250 metres high, straddling the mighty Yenisey River surging below, as a few snowflakes flutter. The Sayano-Shushenskaya hydro power station in southern Siberia produces 6000 megawatts of electricity - as much as Victoria's coal-fired power stations in the Latrobe Valley - and powers the Russian Aluminium (Rusal) Sayanogorsk aluminium smelter, the most modern in Russia.

The Siberian electricity sells for just $9 per megawatt hour - between a third and a quarter of the cost of average power in Australia. Its low cost has already helped make Rusal the world's third-biggest aluminium company. Australia is now integral to its global strategy.

Rusal has snared 20 per cent of the QAL alumina smelter at Gladstone in Queensland, and now aims to win control of a massive bauxite lease at Aurukun in north Queensland. Its competitors are the cream of the world's aluminium industry.

"Hydro is the key, the most efficient and cheapest source of energy," said Rusal's chief executive, Alexander Bulygin, in Moscow during an interview with Australian journalists.

"Our weakness is a lack of a market, and not enough raw materials, particularly alumina. These are our key challenges, and Australia is helping us in both areas."

Rusal has appointed one of its top executives, Duncan Hedditch, as managing director of Brisbane-based Rusal Australia. Mr Hedditch, an Australian aluminium industry veteran, was hired three years ago to modernise Rusal's management (see accompanying story).

Rusal, formed in 2000, is 75 per cent-owned by oligarch Oleg Deripaska, who is also one of three members on Russia's APEC advisory business council.

Mr Bulygin said Rusal would consider a partial listing in London in 2007 if it needed funds to drive its ambitious strategy to be the world's top aluminium producer by 2012. This will involve doubling its aluminium capacity to 5 million tonnes, and lifting alumina production from the current 3.14 million tonnes to 8 million tonnes.

SUAL and RUSAL to sign an agreement in respect of the Komi Aluminium Project.

Analytical Information Agency, Russia 22/04/2005 11:26

JSC SUAL and JSC Russian Aluminium (RUSAL) intend to sign an agreement in respect of the Komi Aluminium Project within the next few days.

One of the most ambitious projects ever considered within the Russian aluminium industry is the Komi Aluminium Project.

The companies aim to create an internationally competitive, vertically integrated aluminium complex - Komi Aluminium - near the city of Ukhta in the Komi Republic 1,200 km north-east of Moscow.

The project involves the development, construction, and operation of a modern bauxite, alumina and aluminium complex. This will use the extensive and accessible SUAL owned Timan Bauxite reserves 270 kilometres north-west of the proposed Ukhta complex. The Middle Timan bauxite mine is already connected to the federal rail network by a 157 kilometre railway line recently built and owned by SUAL. The mine has extensive reserves and represents a key element within SUAL's alumina production strategy.

The complex has the potential to produce, annually, up to 6.0 million tonnes of bauxite, 1.4 million tonnes of alumina, 300,000-500,000 tonnes of primary aluminium.

The complex would also provide a 50 percent increase in total Russian alumina production to 4.5 million tones, increase the Russian aluminium industry's use of domestic raw materials from 40 percent to between 70-80 percent and considerable tax revenue.

With the complex's significant resource potential and the railway's annual freight capacity of 8 million tonnes, it has the potential to become the largest resource base for aluminium production in Eurasia.

SUAL Group is a fully vertically integrated aluminium company that ranks amongst the world's top ten aluminium producers. It comprises 19 businesses that are located in nine Russian regions and are involved in the production of bauxite, alumina, primary aluminium, silicon, semi-finished and finished aluminium products. The Group's revenue for the year ended 31 December 2003 was USD 1.7 billion.* It has some 62,000 employees.

Annually, SUAL Group mines some 4.4 million tonnes of bauxite, refines more than 2 million tonnes of alumina, and produces some 890,000 tonnes of primary aluminium. It also produces more than 50,000 tonnes of silicon per annum, as well as a range of aluminium-fabricated products (including metal structures, foil, cable, cookware etc).

The Siberian-Urals Aluminium Company (SUAL) was formed in 1996 by a merger between the Irkutsk and Ural Aluminium smelters. At that time, SUAL Group incorporated only nine aluminium enterprises. Since then, SUAL has grown through a series of acquisitions that have improved its operating efficiency, while ensuring it produces sufficient raw materials to meet the Group's evolving production needs.

RUSAL is one of the world's fastest-growing and most dynamic companies, producing primary aluminium and alloys for an expanding and demanding customer base world-wide. Company's highly trained staff employ the latest technologies in the constant drive to meet customers' needs.

"AK&M", 22/04/2005 11:26

SUAL Output Inches Up

SUAL Group, the country's second-biggest aluminum producer, said first-quarter aluminum output was little changed as the depletion of some of its bauxite mines reduced production of the raw material.

SUAL's primary aluminum production grew 0.3 percent to 229,200 tons, compared with the year-ago period, the company said in a statement. Bauxite output fell 5.4 percent to 1.15 million tons and production of alumina declined 0.9 percent to 511,000 tons, the company said.

SUAL plans to restore bauxite output by starting operations at the Novo-Kalyinskaya mine at the end of June, the company said. Silicon output rose 15 percent to 16,200 tons. (Bloomberg)

Rio Eyes Smelter 2005/04/23

Mining giant Rio Tinto may team up with a Malaysian construction and financial services group, to build a $US2 billion ( $A2.6 billion) aluminium smelter on the island of borneo.

RusAl, SUAL Join to Boost Aluminum Output

Moscow Times, Russia Tuesday, April 26, 2005. Issue 3154. Page

Combined Reports

The $1.2 billion agreement with SUAL is part of RusAl's quest to become the world's top producer of aluminum.

Russia's two aluminum producers RusAl and SUAL said on Monday they had reached a deal on equal partnership in SUAL's major project in the Komi republic in the Northwest Federal District.

"RusAl and SUAL, joining their efforts for the first time, are creating a serious platform for strengthening the position of the Russian aluminum sector in the international arena," a joint RusAl and SUAL statement quoted RusAl CEO Alexander Bulygin as saying.

"It is a major step forward in the consolidation of the Russian aluminum industry that creates new possibilities for further cooperation between two major Russian aluminum producers," added SUAL Holding president Brian Gilbertson.

The Komi project involves boosting output of raw material at SUAL's Sredny Timan bauxite deposit to over 6 million tons in 2008 from 1.5 million now, as well as building a 1.4 million ton refinery of intermediate product alumina in 2008.

It also includes building a smelter with an annual capacity of 300,000 to 500,000 tons, a project which has been frozen by SUAL and was not mentioned in the statement.

The total project was initially valued at $2.1 billion, but the statement said that under the deal -- without the smelter -- each partner would bear half the $1.2 billion investment.

"The investments are meant for the development of the raw materials base and building the refinery," RusAl spokeswoman Vera Kurochkina said. "At the current stage, RusAl does not participate in the aluminum part of the project but has the right to take part.

"A feasibility study to build the smelter has been put on hold until the key issue of long-term energy supplies is resolved," a SUAL spokeswoman said. "As soon as this issue is resolved, we will be ready for talks with all potential participants in the project, including RusAl."

SUAL has held talks with Alcoa, the world's top aluminum producer, on involvement in the smelting part of the project. Last September SUAL said Alcoa pulled out of the project, but later both companies said the talks continued.

"There is perfect logic in this partnership," said Maxim Matveyev, senior equity analyst at Alfa Bank. "SUAL failed to attract a Western major as a partner and doesn't want the project to stall, while RusAl needs the alumina."

Alumina prices surged by two-thirds in the past two years to about $450 per ton, according to Metal Bulletin data. China, the world's biggest aluminum-producing nation, is importing more of the material to supply an industry that expanded 19 percent last year.

RusAl, which aims to become the world's top aluminum producer, is seeking to cut dependence on external supplies of alumina. It produced 2.7 million tons of aluminum in 2004, but only 3.1 million tons of alumina, roughly two tons of which are needed to produce one ton of the metal.

RusAl is expanding its alumina refineries in Russia, Ukraine and Guinea and plans to build new ones at home and in neighboring Kazakhstan. It has also purchased a stake in Australia's Queensland and Russia's Boksitogorsk refineries.

SUAL, which last year produced 923,800 tons of aluminum and 2 million tons of alumina, has said it was looking for a strategic partner in the Komi project, but was ready to proceed with it independently.

SUAL has also said it was seeking a $600 million loan from the European Bank for Reconstruction and Development and the International Finance Corporation for the second stage of the project after receiving $150 million for the first stage.

The SUAL spokeswoman said SUAL was continuing loan talks with the EBRD and IFC on the basis of RusAl's equal participation in the project. She also said RusAl would have an equal share with SUAL in all assets involved in the project.

RusAl is owned by billionaire Oleg Deripaska. SUAL is controlled by another tycoon, Viktor Vekselberg, and a U.S. businessman of Russian origin, Len Blavatnik.

(Reuters, Bloomberg)

Hydro Plan Irks Scientists

St Petersburg Times, Russia, Russia 25-Apr-2005

By Vladimir Kovalev STAFF WRITER

Finnish and Karelian scientists are worried by the Karelian regional government's plans to resume construction of the Beloporozhskaya hydro-electric station, which would flood architectural monuments.

Construction of the power plant was frozen in the 1980s because of a lack of funding.

Local media quoted Vyacheslav Orfinsky, a Karelian academic, as saying that the dam would mean the destruction of the Karelian people's culture, especially in relation to the ancient village of Panozero, which would disappear under water.

"A unique cultural tendency that combines Karelian and Russian elements has been forming here over several centuries," news agency Regnum quoted him saying last week. "This is the only Northern Karelian village displaying historical planning of settlements. However, in a rush to get an unclear economic advantage, the government of Karelia is ready to flood or to relocate this world memorial to a different place, which is the same as if it was demolished."

Panozero is located near Kem River, which will be flooded if the power plant is built. It is included in a list of 100 international architectural monuments that are under threat of being destroyed, the academic said.

"Following international agreements signed with a range of cultural foundations in Europe and the United States with the aim of protecting Panozero, money has been allocated to renovate the village; the plans of Karelian authorities to resume construction of the Beloporozhskaya power plant can only result in outrage and indignation," he said.

In February, Karelia's Governor Sergei Katanandov said that Unified Energy Systems is ready to resume construction of the 120 megawatt hydro-electric station, which will require an investment of up to $100 million. The financing could come not only from UES, but also from well-known electricity consumers aluminium group SUAL holding and steelmaker Severstal.

"UES is going to cooperate in order to finish construction of the Beloporozhskaya plant," Katanandov said. "There's also an interest for this project from our aluminum producers and the Kostomuksha aluminum production plant. So far we are in a process of negotiations."

Neither Karelian government officials responsible for the project, nor UES, or Karelenergo, the regional power supplier could be reached for comment Monday.

An expert group advised the Karelian branch of the Press and Culture Ministry on April 15 that the village should be saved, but officials have not taken any action on the recommendation.

"The opinion of the experts was that the village should be protected," Vladimir Dybin, head of the branch that is responsible for the protection and use of monuments of history and culture, said Monday in a telephone interview.

"The resolution was filed and sent to the Karelian government republic," he added. "I cannot guess what the next step will be.

The plans have also called the same sharp reaction from Finnish ethnographers, who have warned Karelian authorities of negative consequences if the dam is built.

"The flooding of Panozero [village] would result in an international scandal," Interfax quoted Markku Nieminen, ethnographer at the Finnish cultural foundation Yminkeko, as saying.

"[If] Karelian authorities do not reconsider their plans for the Beloporozhskaya power plant, the European Union will review its plans to support Karelian culture because investments in renovation of the village have came from European structures, including Finnish ones, and even from U.S. cultural foundations," Nieminen said.

The Karelian authorities' plans came as a big surprise for Finnish scientists because UES management had promised them that to protect the village there would be no construction in the area.

"We have received a letter on this matter signed by [UES head Anatoly] Chubais. The death of Panozero would be a most powerful blow to the international image of Russia as a cultural country," Nieminen said.

The local and international scientists said they would ask UNESCO to put Panozero on its World Heritage List.

Hydro Decides to Retain H°yanger 26th April 2005

Although negotiations have continued for some time with the Canadian company Timminco on a possible transfer of the metal plant in H°yanger, Hydro's management have now concluded that from a holistic perspective, the best for Hydro, the employees and the local community is that Hydro continues as owner of the H°yanger aluminium plant.

Hydro will not continue with negotiations on a possible sale of Hydro Aluminium H°yanger.

Hydro has laid weight on clarifying whether a future expansion and modernization of the aluminium plant would have been feasible for possible future owners, but at no point in the negotiations have Timminco, or any other parties, been willing to commit themselves to carrying out such a modernization or expansion.

The negotiations that have been carried out indicate that any sale of the metal plant in H°yanger in line with the terms that were attainable would have implied a significant loss for Hydro.

Furthermore, significant operational improvements at H°yanger have been achieved through substantial efforts from employees and management.

Hydro has taken the initiative for comprehensive business development in H°yanger after the company decided not to modernize the metal plant. Hydro will continue this work which has already resulted in the establishment of new businesses which, in local terms, has generated a significant number of jobs in H°yanger. Hydro is determined to cooperate with any participants in the business development initiatives to create as many new jobs as possible in H°yanger.

The aluminium plant in H°yanger commenced production in 1918 and is the oldest aluminium work in Norway. H°yanger became part of Hydro in the merger with ┼SV in 1986. Hydro has 220 employees in H°yanger. The metal plant produces primary aluminium supplied as sheet ingots through Hydro’s international market system, or as liquid metal to the Fundo alloy wheel factory. In 2004, H°yanger produced some 75,500 tonnes of primary aluminium and 82,200 tonnes of sheet ingot.

Wind out of Bracks' sails

Townsville Bulletin, Australia 26apr05

A KEY Labor Party committee has questioned the continued expansion of wind power in Victoria.

The powerful economics, innovation and industrial development committee has called into question the cost-effectiveness and variability of wind power.

It also questions the power cross subsidy for aluminium producer Alcoa, which it estimates costs electricity consumers up to $500 million a year.

On wind power, it notes the Bracks Government has set a target of up to 1000 megawatts from wind turbines by 2006.

"Wind energy is currently 62 per cent more expensive than brown coal-generated electricity," it says. And critics also objected to wind turbines on aesthetic grounds.

Noranda holders back merger

Globe and Mail, Canada Canadian Press April 26, 2005 Updated at 1:35 PM EST

TORONTO — Noranda Inc. shareholders have cleared the way for the consolidation of Falconbridge Inc., approving an issue of preferred shares and voting 99 per cent in favour of the new corporate name, NorandaFalconbridge Inc.

Ahead of its impending merger with Falconbridge, already 58.8 per cent owned by Noranda, the international base-metal producer said Tuesday its first-quarter earnings were up 16 per cent from a year earlier to $176-million (U.S.).

Reporting just before its annual meeting, Toronto-based Noranda, which keeps its books in U.S. dollars, said January-March earnings were worth 57 cents per share.

That beat expectations of 54 cents per share among analysts surveyed by Thomson One and was up from year-ago net income of $152-million or 49 cents per share.

Revenue rose 20 per cent to $1.97-billion from $1.65-billion, thanks to high metal prices and solid production.

“Overall, we feel that the fundamentals for base metals are positive,” CEO Derek Pannell told stockholders.

“Strong growth rates, particularly from China and India, will support demand. New supply, though needed, will be restricted by the longer lead times required to bring new mines on stream.”

Shareholder approval of the new $1.25-billion series of preferred shares enables Brascan Corp., the Toronto conglomerate which owns 41 per cent of Noranda, to convert its equity stake into preferred stock.

Depending on how many other investors exchange their Noranda common stock for the preferred shares, Brascan will own 16 to 26 per cent of NorandaFalconbridge. It will have five of 17 seats on the board of the combined entity, compared with seven of 13 Noranda directors.

The offer to Falconbridge minority investors of 1.77 shares of Noranda for each share of Falconbridge expires May 5.

The combined company will have annual sales over $7-billion, 80 per cent from nickel and copper but also including one-billion pounds of zinc and 250,000 tonnes of aluminum.

“The combined NorandaFalconbridge will have an impressive array for brownfield and greenfield growth opportunities that can be controlled and sequenced to match its financial capacity and the growing world metal demand,” Mr. Pannell said.

“The challenge faced by the industry is to add new supply to keep up with demand. We feel that this will be particularly difficult for nickel and copper due to the high barriers to entry and the complexities involved with building and commissioning new greenfield resources.”

Speaking to reporters after the meeting, Mr. Pannell noted that in addition to technical, environmental and regulatory complications, a new copper mine costs at least $1-billion with no return for half a decade.

Mr. Pannell said new copper mines would be uneconomic at a copper price under 90 cents per pound, compared with the current level of over $1.50 — and he said lower prices for metals in general are inevitable but not likely in the near future.

“The cyclicality hasn't changed,” Mr. Pannell told reporters. “I think this is going to be a particularly long cycle, just because there's been such underinvestment for so long .... We're sort of three, maybe four years out before we have major new supplies coming on.”

In addition to voting 99 per cent in favour of the preferred shares and the new name, the meeting voted 92 per cent for increasing the number of shares available for employee stock-option plans by five-million to 18-million.

A shareholder proposal to increase the number of directors unrelated to management or Brascan was voted down by 86 per cent.

Controls on aluminum slow Chalco expansion 2005-04-28 10:14:57 Xinhua, China

BEIJING, April 28 -- China's Luoyang Xinan Electrical Power Group, looking to sell part of its Wanji Aluminum Co. subsidiary to Aluminum Corp. of China Ltd. (Chalco), is worried government reining in of the energy-intensive aluminum industry will hamper an agreement.

A senior executive of Luoyang said progress toward a deal to sell a majority stake in Wanji to Chalco had been slow since mid-2004. The company had expected to sign an agreement by the end of last year.

í░It's about Chalco. We did not have any progress in the past year,í▒ the executive said.

The two parties signed a letter of intent in 2003 and Chalco sent a team to carry out a feasibility study at Wanji in May last year.

In the past year, the Chinese Government has imposed measures, including credit curbs, higher power fees and taxes, to cut output of aluminum as part of an effort to ease power shortages.

China, the world's seventh-largest economy which expanded 9.5 percent in the first quarter, was hit by its worst power crunch in two decades last year. This year it could have a power shortfall by as much as 23,000 megawatts, according to official predictions.

With high power costs coupled with strong prices for alumina from which aluminum is made, many smelters in China are operating at a loss and some operators are shopping for a buyer.

Despite harsh market conditions, the Luoyang executive said the power group which provided all electricity Wanji needed would not sell the subsidiary at a lower price.

Chalco, 8 percent owned by U.S. giant Alcoa Inc., has agreed to pay US$92.7 million for a 28 percent stake in Lanzhou Aluminum Co. Ltd., which produced 155,000 tons of aluminum ingot and 43,100 tons of aluminum products last year.

(Source: Shenzhen Daily/Agencies)

Ukraine Starts Grabbing Russian Assets

RIA Novosti, Russia 27-Apr-2005

Despite earlier reassurances from Ukrainian President Viktor Yushchenko, Russian businesses seem to be losing assets in Ukraine, Vedomosti reported.

A Kiev court has ruled that a 68% stake in the Zaporozhye Aluminum Plant, recently acquired by Russia's second-largest aluminum group SUAL, has to be returned to the state.

The tender for the 68% in the Zaporozhye-based smelter was held in late 2000. Ukraine's Supreme Arbitration Court eventually barred its first winner, KrAZ, who paid over $100 million for the stake, from taking possession of it in January 2001. After that, the plant went to Russian AvtoVAZ-Invest for $69.5 million.

Last year, SUAL came to the plant, taking three out of nine seats on the supervisory board and propelling its man, Nikolai Lukin, to chairmanship. In April, SUAL President Brian Gilbertson admitted his company had procured 69% of Zaporozhye's shares by buying 95% in AvtoVAZ-Invest that controlled 68.01% in the Ukrainian asset.

However, a business court in Kiev Tuesday ruled that the sale of 68.01% in Zaporozhye from the state to AvtoVAZ-Invest should be cancelled, citing the buyer's failure to fulfill the investment commitments, and the plant should be returned to the state.

SUAL points the finger at KrAZ, the unsuccessful rival who has since repeatedly sued the winner for allegedly rigging the tender. According to AvtoVAZ-Invest, the attack might be due to allegations that part of the 68-% stake is in effect controlled by embattled Viktor Pinchuk, former President Leonid Kuchma's son-in-law.

According to Konstantin Bondarenko, director of the Ukrainian Institute for National Strategy, SUAL is in for a long battle because, regardless of whatever lawsuits are filed, the situation cannot be resolved until next spring's parliamentary elections.

VALCO to start operations in July

GhanaWeb, Ghana Wednesday, 27 April 2005

Tema, April 27, GNA - The Volta Aluminium Company (VALCO) is expecting a 30 million-dollar grant from the Aluminium Company of America (ALCOA) for the purchase of raw materials and some equipment to start operations in July.

Dr Charles Mensah, the Resident Director of the Company, said this when nine European Union ambassadors toured the company on Tuesday. He expressed regret about the closure of the company and said it was a great loss to the county's economy.

During the Good Friday fire disaster at the PSC Tema Shipyard, over 500 metres of VALCO's conveyor belt was destroyed.

Dr Mensah said 2 billion dollars' investment was needed to build an aluminium refinery and operate a bauxite mine as well as the construction of a railway line from Kibi to Tema to facilitate the mining of bauxite.

The project, to be completed within two years, will employ over 3,500 people and a further 1,500 will be needed to keep it running after completion.

He said VALCO was still in talk with the Volta River Authority (VRA) about pricing of power and expressed the hope that the company would stay within the industrial average of between 25mls to 35mls. Speaking about the future of the VALCO, he said that would depend on whether VALCO would be able to build its own power plant using gas without depending on VRA for power and this he would be after the construction of the West African Gas Pipeline.

The EU, Dr Mensah said, has been Ghana's largest trading partners and would welcome every support they will offer the Company to restart in July.

Commenting on the staff strength to restart VALCO, the Human Resource Manager, Dr Ben Agbai, said it was untrue that some officials are taking huge sums from former employees of the company with the promise to give them back their jobs.

Queensland Alumina to boost refinery, Australia April 29, 2005

By Richard Owen

QUEENSLAND Alumina has dusted off plans for a $1 billion expansion of its Gladstone refinery.

The move follows the purchase of a 20 per cent stake in the QAL joint venture by Russian giant Rusal from bankrupt US company Kaiser Aluminium.

QAL's proposed expansion may prove an attractive consolation prize if it proves uneconomic to develop a new refinery on Cape York to process bauxite from the Aurukun leases, now being offered for sale by the Queensland Government.

Rusal paid $600 million for a one-fifth stake in what is the world's biggest alumina plant, but it has yet to secure a local source of bauxite.

QAL's other owners are Alcan with 41.6 per cent and Rio Tinto subsidiary Comalco, which has a 38.6 per cent operating stake and supplies or mines most of the bauxite processed at the plant.

Alcan's head of Australian operations Richard Yank said yesterday a detailed pre-feasibility study to boost QAL's annual output by 1.4 million tonnes to 5.2 million tonnes was shelved two years ago when Kaiser went broke.

"It then became too complicated so we decided the time wasn't right to push forward with it until we had clarity on ownership, which we now have," he said after addressing a packed Brisbane Mining Club lunch.

"We haven't had a board meeting yet with Rusal, which will be coming up in May, but generally if you look at what Rusal has been saying they are interested in growing their business and they have a need for alumina so I suspect they will be interested in revisiting that opportunity."

Both Rusal and Alcan, which is also pressing ahead with a $2 billion expansion of its Gove alumina refinery to 3.8 million tonnes, are among 13 companies interested in bidding for the Aurukun bauxite leases.

The deposit was stripped from Alcan's grasp last year by the State Government which has insisted on development of an adjoining alumina refinery.

Mr Yank said any such commitment would be particularly reliant on access to attractively priced energy such as gas from PNG and a favourable exchange rate.

Comalco's new refinery being commissioned at Gladstone had been the first greenfield plant built for 20 years, he noted, and the $US750 million ($A964 million) cost had been locked in when the exchange was down 50 per cent from today's at US52?.

The Chinese government-backed entity Chalco, Rusal, Alcan and Alcoa are considered the most serious of the 13 contenders now having separate meetings with Queensland Government bureaucrats and technical advisers.

Representatives from Chalco met the government team on Wednesday to be briefed on the results of a recent drilling program and to outline their own needs in order to make a commitment, while Rusal was slotted in yesterday and Alcan today.

Drilling results suggest the quality of the 500 million tonne Aurukun deposit is as good as what's now left within Comalco's prime leases.

Mr Yank said Alcan was committed to making a "very competitive bid" for Aurukun which he considered more attractive than other higher quality bauxite prospects in places like Venezuela and New Guinea due to issues such as sovereign risk.

There was "no direct nexus" between QAL's proposed expansion and a bid for Aurukun.

"But obviously in looking at a major expansion Alcan, so too Rusal, would need to have a secure supply position for bauxite," Mr Yank said.

"Aurukun would potentially provide that, but we're also in the process of doing more detailed exploration or drilling work on the central part of our Ely reserves on Cape York."

Rusal could not be reached for comment yesterday.

Alcan names new CEO of bauxite group; Activists denounce India project

CBC News, Canada 12:41 AM EDT Apr 29


MONTREAL (CP) - Alcan Inc. announced Thursday a new chief executive of its bauxite and alumina division, a business under fire from social activists for a major bauxite mine proposed for India.

Jacynthe Cote, 47, was introduced to shareholders at the annual meeting, where activists threw questions and accusations at CEO Travis Engen, both for the India project and over Alcan's intentions at Kitimat, B.C.

Spokeswoman Anna Malla accused Alcan and Engen of colluding with local forces, of oppressing local Indian peoples who they say are against the bauxite mining project in the province of Orissa.

"You have not secured the people's consent," Malla charged, saying the issue is hurting Alcan's worldwide reputation.

Alcan would own 45 per cent of the joint mining venture, with an Indian industrial group holding 55 per cent.

Engen admitted that the project "is very troubled," which included a protest in 2000 in which people were killed.

Pre-development work has been going on for about 12 years on the project, Engen said, involving local people and authorities. He said it is under environmental review and requires proof that there is local support.

"We'll only proceed when we have answers to all these fundamental questions," Engen said later to reporters.

A delegation from Kitimat, B.C., including Mayor Rick Wosney, repeated their demands that Alcan invest in its old smelter at that town, and accused the company of selling energy from its dam there to the United States.

"Alcan is making huge profits selling off Canadian resources," Wosney said.

Engen said the Kitimat refinery is operating at 92 per cent of its capacity, while Alcan has a contractual obligation to sell surplus power to BC Hydro.

A union delegation from the Sagueney region in Quebec also demanded more investments in that region, where Alcan has most of its Canadian smelting capacity.

Engen replied that the company has 22 smelters in the world, many requiring expansions and modernizations. "Every local management team thinks theirs is the best on the planet," Engen quipped.

He noted that of the nine smelters in Europe, three are facing energy supply issues as growing residential demand is starting to compete for power available for industries.

Cote, also named senior vice-president of Alcan, succeeds Michael Hanley, 39, who has taken on the role as chief financial officer on an interim basis and remains executive vice-president.

Cote, a chemist, joined Alcan in 1988, and has held a number of management positions in Quebec and England.

The bauxite and alumina group has 5,000 employees and sales of about $1.5 billion. It operates eight bauxite mines and 14 alumina plants in 10 countries, with a concentration in Australia.

Alumina, the basis for aluminum, is extracted from bauxite ore.

Cote will also oversee a $1.3-billion expansion for its Gove alumina refinery in Australia announced last fall.

The group is also proposing a large alumina refinery in the Republic of Guinea, as well as the controversial joint ventre bauxite mine in India.

Engen said Alcan is well ahead of its plan to capture synergies from the acquisition of Pechiney in late 2003. He said Alcan remains on track to reach the full run rate target of $360 million a year by the end of 2005.

He said growth in worldwide demand for primary aluminum is expected to moderate this year from 2004 levels, but demand is expected to exceed supply.

World demand is expected to grow by four per cent in 2005, compared with 9.6 per cent in 2004.

© The Canadian Press, 2005

Global Alumina and Dubai Aluminium Announce Equity and Off-Take MOU

PR Newswire (press release)

DUBAL to Acquire 25% of Global Alumina's Outstanding Shares and 25% of Its Alumina Production

TORONTO, April 28 /PRNewswire-FirstCall/ -- Global Alumina Products Corporation (Global Alumina) (TSX: GPC.U) and Dubai Aluminium Company, Ltd (DUBAL) today announced that they have entered into a Memorandum of Understanding whereby DUBAL would make a substantial investment in Global Alumina. The investment would be by way of share subscriptions and would result in DUBAL ultimately owning 25% of the outstanding shares of Global Alumina.

In addition, DUBAL and Guinea Alumina Corporation S.A., a wholly owned subsidiary of Global Alumina (Guinea Alumina), would simultaneously enter into a long term purchase and sale agreement for 25% of the annual production from Guinea Alumina's proposed refinery.

"We are extremely pleased with the prospect of having DUBAL as a major, strategic shareholder in Global Alumina. DUBAL is recognized as one of the most efficient and well managed aluminum companies in the world and it's active participation in the development and implementation of the project will significantly increase the likelihood of success for the project," stated Bruce Wrobel, Chairman and Chief Executive Officer of Global Alumina.

"DUBAL is delighted to be entering into an association with Global Alumina Products Corporation, with a view to establishing an alumina refinery in Guinea. DUBAL's involvement in this project will be in line with its strategic objective of upstream integration to achieve security over raw material supply and to develop a major presence in the aluminium industry," said Abdulla Kalban, CEO of DUBAL.

DUBAL and Global Alumina are finalizing the details of the two agreements which will be submitted to their respective Boards for approval. Once approved the agreement with respect to DUBAL's investment in Global Alumina will be submitted to the Toronto Stock Exchange and Global Alumina's shareholders for approval. The equity investment is also conditional upon the ratification by the Guinean National Assembly of the Basic Agreement between Global Alumina and the Government of Guinea and securing commitments for the balance of equity required to fund completion of its refinery project in Guinea. The Basic Agreement grants Global Alumina a mining concession for the exploitation of bauxite and the right to construct, operate and maintain an alumina refinery in Guinea.

SOURCE Global Alumina Products Corporation

Web Site:

Construction of 6 large aluminum projects halted 2005-04-28 20:11:11

BEIJING, April 28 (Xinhuanet) -- China's State Environmental Protection Administration (SEPA) has halted the construction of six aluminum plants in China for violating the country's environmental impact assessment law, a SEPA official said here Thursday.

The six projects were put to construction without submitting environmental impact assessment (EIA) reports for approval, seriously violating environmental law, said Zhu Xiangxing, director of SEPA's Environmental Impact Assessment Department.

The projects include five alumina plants with annual production capacity between 300,000 to 400,000 tons in central and Henan and Shanxi provinces, and one electrolyzed aluminum plant in Shanxi.

Zhu said SEPA had ordered the six plants to submit EIA reports for approval within a required period of time, and that it would only approve those that "can make rational use of resources and install pollution control facilities."

The move falls in line with the country's macro-control measures aimed at halting repeated constructions in some sectors and reining in the overheating economy, Zhu said.

The output of electrolyzed aluminum in China has been surging in recent years. In 2001, its output stood at only 3.43 million tons, but the figure jumped to 6.70 million tons in 2004, far exceeding domestic demand.

Used as raw materials for producing electrolyzed aluminum, demand for alumina has also been sharply rising.

Alcoa angling for more power

Melbourne Herald Sun, Australia 29apr05

John Beveridge

VICTORIA could miss out on a $1.2 billion aluminium investment and billions of dollars in export income as the State Government debates future power generation needs.

Alcoa has been negotiating with the Government for more than three years over a major expansion of its aluminium smelters at Point Henry and Portland.

However, the looming shortage of baseload power and the raging environmental debate over any further expansion of Victoria's brown coal power generation have added obstacles to Alcoa's expansion.

A high-powered Cabinet sub-committee of Treasurer John Brumby, Environment Minister John Thwaites and Energy Minister Theo Theophanous are in regular contact with Alcoa about the project.

Generation company sources yesterday confirmed that Alcoa had been negotiating with them direct in an effort to get a substantial long-term power contract for a third potline at Portland.

They said the Government's apparent agreement with this week's panel decision to allow International Power's Hazelwood power station to expand its coal mine and remain open until 2031 was a positive sign.

But even with Hazelwood open, Victoria will need extra generating capacity in the next few years just to meet baseload demands.

And the proposed Portland expansion would marry neatly with the need for another power station.

"It is no secret that the company would like to expand Portland if it can get access to power at globally competitive prices," Alcoa spokeswoman Paula Benson said last night.

"Discussions with the government are going on but there won't be anything to announce for a long time," she said.

Ms Benson said that to go ahead, the proposed $1.2 billion smelter expansion would also have to compete favourably with other Alcoa projects around the world.

Alcoa's Victorian smelters are operating near capacity as it tries to meet strong world demand.

One of the options to provide extra power is Origin Energy's proposal to build a $1 billion natural gas power station near Mortlake.

Origin has already started the approval process for the 1000 megawatt gas/steam turbine plant, which would be built next to the high-voltage transmission lines that carry power from the Latrobe Valley to the Portland smelter.

The same lines also carry surplus power into South Australia.

Unlike most gas power plants, the Mortlake one would be designed to provide baseline power as well as extra power for peak times such as hot days when air-conditioners are switched on.

The proposed Mortlake power station is only 100km from Port Campbell, where the gas from Origin's Casino field will come ashore.

However, gas-powered electricity is much more expensive to produce than brown coal power, and industry sources were sceptical it could be produced cheaply enough to satisfy Alcoa.

"You can speak to any of the generators in Victoria. Power prices have not been increasing enough to justify the cost of building a new power station," said one source, who did not want to be named.

Alcoa's current power needs are met from the coal-fired Loy Yang B under a contract expiring in 2016.

Mr Brumby has said there will not be any extension to that agreement, which includes a controversial power subsidy.

The size of that subsidy has been hotly debated, with a secret Labor Party Energy Policy committee report -- revealed in the Herald Sun this week -- claiming it was up to $500 million a year.

Other estimates put the subsidy much lower at about $120 million.

A spokesman for Energy Minister Theo Theophanous could not be reached for comment.

Alumina shares closed down 10c or 1.7 per cent at $5.77.

Aluminium giant to shed jobs in WA

ABC Regional Online, Australia Thursday, April 28, 2005. 4:36pm (AEST)

Alcoa has announced it is shedding nearly 30 positions at its Perth office and moving them to India.

The company is restructuring its administration in Western Australia and will reduce the number of positions at its Booragoon headquarters by more than half.

Twenty-seven positions, including jobs in finance, IT and human resources, will be outsourced to India.

Alcoa says a further 60 jobs will be moved to the Peel region, where it is expanding its operations, and 20 staff will be relocated to a new office in the Perth CBD.

Tom Adams from Alcoa says the company will work closely with those staff affected to redeploy them to other areas of the company.

"They are slightly saddened by if you like the Booragoon but they understand that for Alcoa to remain competitive and to grow in this state and create jobs for the future and bring significant funds into the state that we need to remain competitive and we need to continue to look at things such as this restructure," he said.

Alcan comes under fire by activists

Globe and Mail, CanadaFriday, April 29, 2005 Updated at 5:11 AM EST


From Friday's Globe and Mail

Montreal — Alcan Inc.'s image as a socially responsible corporation was challenged at the annual meeting yesterday by activists, workers and municipal politicians angry about overseas expansion plans, job losses and the company's sale of surplus electricity.

The marathon shareholders' meeting included a battery of tough questions about a controversial megaproject in India, Alcan's commitment to job creation in Quebec and the company's practice of selling electricity from its British Columbia operations.

Sarah Heiberg, of the Alcan't India Solidarity Campaign, said Alcan's good name has been tarnished by the way it has been defending the massive joint-venture project in the Kashipur region of India against protests that have led to a repressive and sometimes violent police crackdown.

Alcan's president and chief executive officer Travis Engen told Ms. Heiberg and other members of her group that the Montreal-based company won't proceed with the project -- under study for more than 12 years -- unless it concludes that all environmental, social and political issues have been addressed to everyone's satisfaction.

Richard Wozney, the Mayor of Kitimat, B.C., said Alcan is hurting the community -- and not helping its image -- by "making huge profits selling off" hydroelectric power from the Kitimat area, instead of using the power to create local jobs.

The District of Kitimat alleges that Alcan has broken its contractual obligations by selling the electricity, derived from generous water rights granted by the province, rather than using it to power new industry in the area.

Alcan, the world's second-biggest producer of primary aluminum, sells power to an agency of British Columbia Hydro and Power Authority in an arrangement that is perfectly legal, Mr. Engen responded.

Claude Patry, a union leader from Quebec's Saguenay region, where Alcan has a long history, asked when a decision would be made on the possible expansion of the Alma facility.

Alcan came under fire earlier this year when it announced the permanent shutdown of its historic Arvida smelter in the Saguenay area.

That closing, coupled with Alcan's growing tendency to expand in distant places such as South Africa and China, has fuelled criticism from unions and non-governmental organizations that the company has abandoned Canada.

Mr. Engen said after the meeting that so-called corporate social responsibility is looming ever larger on the company's agenda.

"One area that's been increasingly important for us to understand is the interface with civil society," in contrast to the more traditional dealings with customers, suppliers and governments, he said.

"It's the growth of the last few years of civil society representatives, which presents opportunities and dilemmas."

Alcan has stuck its neck out billing itself as a socially responsible corporation and must now walk the talk, he added.

"When you stand at a certain point and talk about your aspirations, you're held to the standard of what you just said. When you seem to be falling short, you're then subject to criticism."

In his speech to shareholders, Mr. Engen said Alcan, in 2004, concentrated on the integration of French rival Pechiney SA, acquired for about $6-billion in late 2003, and the spinoff of its rolled products division

Unions Not Happy With Ormet Plan

Wheeling News Register, WV , 30-Apr-2005


United Steelworkers of America locals representing workers at Ormet Corp.'s reduction plant and rolling mill at Hannibal are not pleased with a new plan for retirees' health care coverage, a union spokesman said.

The Wheeling-based aluminum manufacturer announced the new plan Friday. The plan was approved by a U.S. Bankruptcy Court judge at Columbus, Ohio, as part of the company's plan of reorganization and will become effective Wednesday, June 1.

Ronnie Blatt, chairman of the USWA Local 5724 grievance committee, said he fears retirees will not be able to handle the increased monthly premiums on their modest pensions.

According to a union news release issued Friday, the new premium costs will range from $56.38 per month per person to $183 per month per person for Medicare-eligible retirees. Those retirees not yet eligible for Medicare will face monthly premiums of up to $750 for family coverage.

"In many cases their costs will be more than what the retiree or surviving spouse will receive on their pension check," the news release states.

Lisa Riedel, vice president and general manager of human resources at Ormet, said Friday that more than 2,000 union and non-union retirees are currently receiving medical coverage from the corporation.

"Ormet is going to contribute $8 million annually to (the Voluntary Employee Beneficiary Association) for this plan," Riedel said.

She would not reveal what the company paid for retirees' medical coverage prior to the new plan. Blatt claimed the company currently pays around $13 million annually for the coverage.

According to a prepared statement from Ormet, retirees will have their choice of several coverage options being administered by two providers - the Health Plan of the Upper Ohio Valley and Mountain State Blue Cross Blue Shield. Informational packets are being sent to retirees outlining the new plan. Informational meetings for retirees are planned for the week of May 9.

"We went through an arduous process to find the most cost-efficient, yet comprehensive coverage for our retirees," Ormet Chief Executive Officer Michael Williams said in a release. "We are pleased to offer several health plan options in a time when many companies within our industry have provided coverage at significantly higher prices or have eliminated health care coverage all together."

Williams continued by stating that "although retiree-made medical contributions are not the ideal, a fully funded program is not possible in the current economic climate."

"For people that are pre-Medicare eligible, this is going to hit them hard," said Blatt.

Some of those workers who have retired from the Hannibal facility at age 55 with 30 years of service "may still have kids in college," Blatt said. The plan will be "devastating" to retirees on a fixed income.

"I don't know how they're going to make it," Blatt said of retirees.

USWA Local 5760 grievance committee member Bill Covert called the new plan a "disgrace" to retirees.

"A lot of these retirees are only drawing $300-$400 a month," Covert said. "There's just no way we can see that they can absorb that cost."

Retirees began paying monthly premiums in 2002, Covert said, which ranged from $30 to $60.

Ormet and USWA representatives are scheduled to re-enter negotiations Wednesday on pending labor issues, Covert added.