AluNews - August 2005

VALCO starts work

GhanaWeb, Ghana Aug 01,2005

Tema, Aug 01, GNA - The Volta Aluminium Company (VALCO) has started work in preparation towards the smelting of alumina into aluminium by the end of the year.

Subsequently, it has recalled 431 of its ex-employees of all categories from the lowest to management and would continue with the recall when necessary, Mr Dan Acheampong, Director of Human Resources and Administration, told the Ghana News Agency in an interview on Monday.

He said work is going on at all the seven major departments of the plant but much of the work is concentrated at the Maintenance and Cell (Pot) line.

''The response of the ex-employees to the recall is so overwhelming that taking on fresh people would not be necessary for now.'' "We have therefore not hired new hands because we have skilful and competent old hands who already know the work and can go through the process easily".

The New VALCO is in partnership with Aluminium Company of America.

Vietnam eyes foreign investment in bauxite exploration

People's Daily Online, China 01-Aug-2005

Vietnam is encouraging the UK- Australian BHP Billiton, one of the world's 4th largest bauxite mining and aluminum producers, to apply for license on bauxite exploration in the country's central highlands province of Dac Nong.

The group is expected to invest 40 million US dollars in the initial exploration phase before spending 1.6 billion dollars on a mining and refinery project with an anticipated capacity of 1.5 million tons of alumina per annum if the bauxite reserve proves commercially viable, local newspaper Vietnam Investment Review reported Monday.

Vietnam wants to quickly establish bauxite mining and refinery projects in the central highlands provinces of Lam Dong and Dac Nong to produce alumina, the raw material used for aluminum production, the report said.

According to initial findings by Vietnam's Industry Ministry, the country has more than 8 billion tons of bauxite ores, including 7.9 billion tons in the central highlands region and some southern provinces, and 120 million tons in northern mountainous provinces of Cao Bang and Lang Son.

Dac Nong alone has an estimated bauxite reserve of 2.7 billion tons, but none of them have been mined.

Source: Xinhua

Venezuela tries the worker-managed route

International Herald Tribune, France WEDNESDAY, AUGUST 3, 2005

By Brian Ellsworth The New York Times

PUERTO ORDAZ, Venezuela For 20 years, Pedro Gómez felt like he was just part of the machinery at his job at Aluminio del Caroní, a state-owned aluminum company in an industrial zone where the Caroní and Orinoco rivers converge in southeastern Venezuela.

Gómez, 51, a casting table operator who shovels molten aluminum down a channel from an industrial oven into a cast that makes 3.6-meter, or 12-foot, billets, says management never listened to his complaints about corrupt contractors or shoddy equipment.

But things have changed. Management is now heeding his request for a new casting table, he said, and will allow him to help determine the company's 2006 budget. This April, he was permitted to vote along with the company's other 2,700 workers to elect some of Alcasa's 19 managers and two of its five corporate directors. Most of the candidates were drawn from the rank and file.

"The managers and the workers are running this business together," Gómez said above the din of rumbling forklifts and humming industrial fans, sweat dripping down his face from the heat of the casting house. "It gives us new motivation to work hard."

While worker-managed businesses have been the dream of the world's socialists, in Venezuela they may become a reality. Using tottering companies as the entry point, Venezuela is offering financial incentives in exchange for implementing "co-management," in which workers are decision makers, in some cases even owners, of businesses across the country. The plan essentially casts the state in the role of rescuer. Four state-owned companies - another aluminum plant in addition to Alcasa, a coal plant and a power plant - have begun the programs. But incentives like cheap credit and debt writedowns from the government have also enticed more than 100 private, small and medium-size companies to adopt worker management models. Twenty-three of those have agreed to hand over between 10 percent and 49 percent of their shares to employees.

Driving the campaign is President Hugo Chávez, who has promised to reverse the historical dominance of Venezuela's $64 billion oil industry over the economy by revitalizing sectors like textiles and paper, reducing reliance on imports and creating jobs at the same time - a task he believes is best left to workers.

The worker management campaign comes as Chávez has embraced socialism in a political project that promises to roll back the free-market policies implemented in Latin America throughout the 1990s.

"This is a new organizational culture," says Alcasa's president, Carlos Lanz, 62, a Marxist former guerrilla with no background in aluminum who most recently developed educational programs in rural Venezuela. "The workers are operating as a collective rather than receiving orders from a group of experts."

Despite the enthusiasm of Alcasa's workers, the company's balance sheet leaves little room for optimism. Alcasa has lost money for years, posting a $90 million loss in 2004, and this year's budget indicates that the company could lose as much as $59 million as outdated technology and foreign competition continue to take a toll. A planned $650 million investment by the Swiss commodities trading company Glencore, aimed at doubling Alcasa's output, has been suspended.

Critics say state involvement in co-managed businesses will likely create uncompetitive enterprises, much like the sluggish state-owned companies that survived throughout the 1970s and 1980s on government subsidies. It is also unlikely to bring about the diversification from oil that Chávez is seeking.

"Since the discovery of oil in Venezuela, businesses have lived from the transfer of oil revenue, but have never produced sustainable economic activity that didn't depend on oil," said Orlando Ochoa, an opposition-affiliated economist who is a professor at Andrés Bello Catholic University in Caracas. "Chávez is now insisting that co-management can resolve this problem, which is simply naďve."

Since the program began this year, the government has spent at least $25 million to revive bankrupt and failing private enterprises. Chávez has said he would expropriate as many as 700 bankrupt companies and others that are working below capacity.

Here at Alcasa, in the industrial city of Puerto Ordaz in Venezuela's sweltering southeastern savanna, Lanz speaks more comfortably about Latin American currents of Marxism than about aluminum production. Lanz served seven years in jail for the 1976 abduction of the American glass industry executive William Niehaus, who was held for three and a half years.

But workers also point to changes in the workplace that they say will make the company run smoother. Johnny Viera, a 35-year-old maintenance worker in Alcasa's stamping plant, along with his 300 co-workers, participate in roundtables that make recommendations to management, a process that recently allowed him to quickly purchase $5,000 worth of wrenches, drills and screwdrivers.

It is too soon to say what the outcome of the worker management program will be, but workers seem optimistic. "This is the workers' opportunity to improve this company's performance," said Estalin Orta, 42, a recently elected manager of Alcasa's casting plant, chatting in an air-conditioned office above the din of the manufacturing operations below. "And we've started at a company that has had serious financial problems - so no one can say we took the easy road."

Nigeria to invest 360 million dollars to expand gas production

People's Daily Online, China 03 Aug 2005

The Nigerian government is planning to invest 360 million US dollars for expanding its gas sector to meet the development of the national economy, local newspaper Vanguard reported Wednesday.

Funsho Kupolokun, group managing director of the state-run Nigerian National Petroleum Corporation (NNPC) was quoted as saying that the expansion scheme was aimed at meeting the gas requirement of the Aluminum Smelter Company of Nigeria (ALSCON) in southern Nigeria, which is expected to resume production soon, and some other metal companies.

"The government has resolved to bring ALSCON and other metal companies back on stream through privatization, hence, huge investment in the company," Kupolokun said.

"Under the incoming management which has the attribute of an outstanding investment record, it is my belief that ALSCON will realize its full potentials, provide employment opportunities, generate foreign exchange and meet the local demand for aluminum," he added.

According to the group managing director, the NNPC will meet the gas requirement of ALSCON from 8 billion cubic feet (bcf) in 2006 to 50 bcf in 2010 and as such is committing the sum of 160 million dollars to develop the needed infrastructure.

The NNPC is also planning another 200 million dollar investment through the Joint Venture partnership between the NNPC and the Shell Petroleum Development Company to satisfy ALSCON's ultimate demand of over 100 million standard cubic feet per day (MMscf/d) with a start-up intake of 20 MMscf/d.

Nigeria, the largest oil producer in Africa or the sixth largest oil exporter in the world with a daily crude output of over 2.5 million barrels, is more of a gas producer than an oil- rich nation with gas reserves running into about 160 trillion cubic feet.

Source: Xinhua

Coke export of Shanxi province accounts for 48 pct of global coke trade

People's Daily Online, China 03-Aug-2005

North China's Shanxi Province, a leading coal production base, now exports 48 percent of the coke traded in the international market, said Vice Governor Song Beishan of Shanxi Province here Wednesday.

Song made the remark at a press conference for an international trade fair to be held in Shanxi in October this year. Its coke production represents 42 percent of the national total, and its coke exports account for 80 percent of China's coke exports, he said.

Shanxi holds 30 percent of the nation's proved reserves and output of coal, handling over 70 percent of the total inter-provincial coal shipments, he said.

Due to the price hike of energy and raw materials in the international market, Shanxi, blessed with rich mineral resources including coal, iron, aluminum and magnesium, has become more attractive to foreign business people, he said.

In the first half of this year, the contracted volume of foreign direct investment in Shanxi reached 420 million US dollars, with 120 million US dollars actually used.

A spate of multi-national corporations have in recent years settled in Shanxi Province, including Taiwan's Foxconn, BOC Gases, Yangcheng Power Plant, Shanxi International Casting and Wal-Mart.

The Shanxi Investment and Trade Fair 2005 is scheduled to be held on Oct. 28, 2005 in Taiyuan, capital city of the province, Song said. Last year, some 150 overseas business people from 28 countries and regions attended the fair, signing contracts with 30.99 billion yuan involved, according to the organizing committee.

Overseas investors will find plenty of business opportunities in Shanxi's energy industry, metal industry, chemical and pharmaceutical industry, new material industry, farm product processing industry, tourism industry and entertainment industry, Song said.

Source: Xinhua

China aluminium smelter aims high despite risks

Daily Times, Pakistan 03-Aug-2005

HONG KONG: Privately owned Zhangjiang Aluminium in Hubei aims high despite Beijing’s measures to cool the energy-intensive industry and the losses incurred by some other smelters.

Zhangjiang months ago completed construction of a 140,000-tonne-per-year aluminium smelter in Yichang city, the home of the Three Gorges hydroelectric dam, and aims to more than double the smelter’s capacity to 300,000 tonnes by 2008, company officials said on Wednesday.

Zhangjiang has started production up to 70,000-tonne capacity at the smelter, which the officials said aligned with Beijing’s current policy.

"We will consider the government’s macro controls on aluminium and the market situation before starting up the remaining 70,000-tonne capacity," an official said.

Another official said Zhangjiang would start the second 70,000-tonnes of output later this month.

Beijing since 2003 has been trying to rein in the aluminium industry to relieve electricity shortages by raising power fees and other measures.

But China’s aluminium production still rose 18 percent from a year ago to 3.4 million tonnes in the first half this year.

As part of this push to cool the industry, the government is widely expected over the coming weeks to end a tax break for imports of alumina, a white powder that smelters turn into aluminium for use in the auto, packaging and building sectors.

Ending the tax break will raise production costs of aluminium smelters given China is the largest buyer of spot alumina, importing about half of its alumina. reuters

State selects firm to advise Alcoa on power use

Associated Press Centre Daily Times, PA Thu, Aug. 04, 2005

FREDERICK, Md. - The state will award a $10,500 contract to South River Consulting LLC to help Alcoa Inc. find a solution to the rising electricity costs that threaten to close the company's Eastalco Works aluminum smelting plant near Frederick, officials of the Department of Business and Economic Development said Monday.

The Baltimore firm was the only bidder for the job, said Debi Chronister, the agency's procurement manager.

DBED officials said earlier this week that even if the plant closes, eliminating 639 jobs, they hope to use the consultant's findings to help other businesses deal with rising energy costs in Maryland's deregulated electricity market.

South River, an independent energy adviser, helps clients plan and implement energy procurement strategies, according to its World Wide Web site. The firm's clients include International Steel Group's plant at Sparrows Point near Baltimore and the Maryland Stadium Authority.

Eastalco spokesman Earl H. Robbins Jr. told the Frederick Rotary Club on Wednesday that if Pittsburgh-based Alcoa can't agree with Allegheny Energy Inc. on electricity rates by Oct. 15, the plant will start shutting down. His comments appeared to extend by six weeks a Sept. 1 decision deadline mentioned last month by plant manager Brian Dahlberg.

The plant's current rate agreement with Allegheny, based in Greensburg, Pa., expires Dec. 31. Unless Alcoa finds another cut-rate supplier for the plant, it would have to buy electricity at market rates that company officials have said would boost the plant's power costs by as much as 83 percent.

Dahlberg said last month that Eastalco officials had talked to 17 power companies without finding an acceptable rate.

Robbins said the company still hopes to make a deal with Allegheny.

"We are not asking Allegheny Energy to take a loss. We are willing to pay more, but not 83 percent more," he said.

Australia's Alumina to restart Valco aluminium smelter in Ghana

Forbes 08.04.2005, 11:06 PM

SYDNEY (AFX) - Alumina Ltd said its 60 pct partner in the Alcoa World Alumina Chemical joint venture (AWAC), Alcoa Inc, has finalised agreements with the government of the Republic of Ghana to restart the Valco aluminum smelter.

The AWAC announcement said it plans to restart the smelter to produce 120,000 metric tons per year (mtpy).

The joint venture said it anticipates that the restart will be be implemented in the first quarter of 2006, at an initial production rate of about 10,000 mtpy.

According to the agreement, the Government of Ghana will own and manage the smelter, receiving technical, operational and commercial support from AWAC.

The announcement said AWAC will be the distributor for Valco's export sales of metal produced at the smelter. Alumina, the key raw material for aluminum production, will be supplied via an interim supply agreement between AWAC and Valco.

Costs for the restart, estimated at 20 mln usd, will be funded by debt financing obtained by Valco.

The announcement added that AWAC and the Government of Ghana are continuing discussions to develop an aluminum industry in Ghana that will include bauxite mining, alumina refining, aluminum production, and rail transportation infrastructure upgrades.

paul.daniel@xfn.com

Alumina's Venture Expansion Plans May Cost $2 Billion to 2008

Aug. 5 (Bloomberg)

Alumina Ltd., which owns 40 percent of the world's biggest alumina producer, said today the venture's next two expansion projects in Brazil and Australia could cost $2 billion over the next three years.

Alumina's share of the spending would be about $800 million, Chief Executive John Marlay said. Melbourne-based Alumina gets all its earnings from the Alcoa World Alumina & Chemicals, or AWAC, joint venture with Alcoa Inc., which is expanding global production capacity to meet rising Chinese demand.

``We're confident with the cash generation from AWAC, which has no debt, and our strong balance sheet that we can fund the capacity expansion and continue to pay dividends,'' said Marlay today in an interview.

The joint venture aims to add more than 5 million tons of capacity in Australia, Brazil, Jamaica and West Africa as the prices of alumina rises with aluminum prices. The price of aluminum on the London Metal Exchange has averaged 9.8 percent higher in the first half from a year ago.

The venture could decide by the end of the year on investing in its Alumar plant in Brazil and Wagerup in Western Australia. Two tons of alumina makes a ton of aluminum, which is used in auto parts, window frames, drink cans and aircraft. The joint venture's alumina production is sold under long-term contracts at prices which are linked to aluminum prices.

Profit Forecast

Alumina yesterday said first-half profit fell 2 percent as rising costs and stagnant production prevented the company from taking advantage of higher prices. It also said full-year profit would at least match last year. Under new accounting standards, the company had full-year net profit of A$316.4 million ($244 million) last year.

``We actually think that earnings will be better than A$316 million,'' said Marlay. ``The biggest thing that will influence it will be metal prices and the Australian dollar exchange rate.''

The venture is facing ``continuing pressure'' on costs with oil prices trading between $50 a barrel and $60 a barrel, and would need to offset the higher costs, Marlay said.

To contact the reporter on this story:

Tan Hwee Ann in Melbourne at hatan@bloomberg.net;

Catherine Yang in Hong Kong at cyyang@bloomberg.net

UPDATE 1-Alcoa, Ghana to re-start Valco smelter in Q1 2006

Reuters Thu Aug 4, 2005 1:10 PM ET

NEW YORK, Aug 4 (Reuters) - Alcoa Inc. (AA.N: Quote, Profile, Research), the world's No. 1 aluminum producer, finalized agreements to restart the 200,000 tonne-per-year Valco aluminum smelter in Tema, Ghana, the company said on Thursday.

The restart is expected by first quarter of 2006.

In a press release, Alcoa said plans are already underway to restart three potlines at Valco, representing 120,000 tonnes per year. They said they plan to start the facility at a production rate of about 10,000 tonnes per month.

The two parties are continuing to discuss previously announced plans to develop an integrated aluminum industry in Ghana that would include bauxite mining, alumina refining, aluminum production, and railroad infrastructure upgrades.

Those plans were outlined in a memorandum of understanding signed in January 2005.

Alcoa estimated start-up costs at $20 million, to be funded by debt financing obtained by Valco.

According to the restart agreement, Ghana will be the managing owner of the smelter and will receive technical, operational, and commercial support from Alcoa.

Alcoa will serve as Valco's exclusive distributor for export sales of metal produced at the smelter.

Alcoa has said in the past that it holds a 10 percent stake in the venture, although it did not specify exact ownership divisions in Thursday's announcement.

Alcoa said it will participate in Ghana's bauxite and alumina operations through its Alcoa World Alumina and Chemicals (AWAC) global enterprise, which is 60 percent owned by Alcoa and 40 percent owned by Alumina Ltd. (AWC.AX: Quote, Profile, Research) of Australia.

Alumina, the raw material for producing aluminum, will be supplied through an interim supply agreement between AWAC and Valco.

Valco will be powered by Volta River Authority energy supplies.

Valco's chairman Charles Mensah said as recently as July 1 that the aluminum smelter would restart in the first week of July. Alcoa maintained all along that no start date would be set until jointly announced by the company and the Ghanian government.

© Reuters 2005. All Rights Reserved.

Alcoa, Government of the Republic of Ghana Agree to Re-Start Valco Smelter

Business Wire (press release), CA August 04, 2005 09:30 AM US Eastern Timezone

NEW YORK & ACCRA, Ghana--(BUSINESS WIRE)--Aug. 4, 2005--Alcoa (NYSE:AA) and the Government of the Republic of Ghana today announced they have finalized agreements to re-start the Valco aluminum smelter in Tema, Ghana.

Plans are already underway to re-start 3 potlines at Valco representing 120,000 metric tons per year (mtpy). The parties anticipate that the re-start will be implemented in the first quarter of 2006 at which time production at the facility is expected to be approximately 10,000 metric tons a month.

Alcoa and the Government are continuing discussions to develop an integrated aluminum industry in Ghana that would include bauxite mining, alumina refining, aluminum production, and rail transportation infrastructure upgrades, as outlined in their memorandum of understanding signed in January 2005. Alcoa's participation in the bauxite and alumina operations in Ghana will be through its Alcoa World Alumina and Chemicals (AWAC) global enterprise, which is 60 percent owned by Alcoa and 40 percent owned by Alumina Limited of Australia.

According to the re-start agreements, Ghana will be the managing owner of the smelter and will receive technical, operational and commercial support from Alcoa. In addition, Alcoa will serve as Valco's exclusive distributor for export sales of metal produced at the smelter. Alumina, the key raw material for aluminum production, will be supplied via an interim supply agreement between AWAC and Valco. Power for the smelter will be supplied by the Volta River Authority ("VRA"). Costs for the re-start, estimated at USD $20 Million, will be funded by debt financing obtained by Valco.

Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) foils and plastic wraps, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 131,000 employees in 43 countries and has been a member of the Dow Jones Industrial Average for 45 years and the Dow Jones Sustainability Indexes since 2001. More information can be found at www.alcoa.com

Commodity prices to fall

Bloomberg Metals Place, UK

Commodity prices may fall as much as 49 per cent during the next two years, led by alumina and cobalt, as miners increase supply, according to a poll of brokerages and research companies by Australia's Access Economics.

Of 20 metals and minerals analysed, only ilmenite is likely to rise between now and June 2007, and the rest would fall, said Canberra-based Access Economics, which polled 11 analysts from firms including Citigroup and Deutsche Bank.

BHP Billiton, Rio Tinto Group and Anglo American plan to spend $20.9 billion over the next three years on expansion after prices of copper and iron ore rose to a record. The Reuters-CRB Futures Index, which tracks commodities such as oil, copper and soybeans, in March rose to its highest since 1980 as China's economic growth fuelled consumption.

"The fundamentals now seem to point to modestly weakening commodity demand growth and rather more importantly for prices, strengthening supply growth," said Access Economics.

"The consensus forecast is therefore for prices to fall for most commodities between now and mid-2007."

Demand may slow because of weaker economic expansion in Europe, Japan and South America, the report says.

The price of alumina, a semi-finished material used to make aluminium, will lead declines with a 49 per cent plunge to $221.08 a tonne in the next two years, according to the average estimate from the Access poll.

Aluminum output pace set to slow

The Standard, Hong Kong August 8, 2005

Aluminum output in China, the world's biggest producer, will grow this year at the slowest pace in five years because of higher power prices and government measures to curb investment and exports.

Output may rise 10 percent to 7.4 million metric tons from 6.7 million tons last year, said Wang Gongmin, deputy chairman of the China Nonferrous Metals Industry Association.

Production is well short of output capacity, which will rise to 9.5 million tons this year.

World prices of aluminum gained 22 percent last year, prompting mainland companies to increase capacity to produce the metal used in cars, buildings and beverage cans.

Earnings have been squeezed this year by higher costs for electricity and alumina, a white powder used to make aluminum, new export taxes and a 4 percent decline in metal prices.

About two-thirds of aluminum smelters lost money in the first half, said Wang, forecasting more smelters may lose money in the second half.

Lanzhou Aluminum, the second-biggest publicly traded firm in the sector, said July 23 that first-half profit dropped 42 percent because of increased material and power prices. BLOOMBERG

Bauxite hunt takes Chalco to Guangxi

The Standard, Hong Kong August 8, 2005

Grace Lam

The Aluminium Corporation of China (Chalco), the country's biggest alumina producer, said it plans to increase its investment and inject 701 million yuan (HK$672 million) into a joint venture company to finance an alumina project in Guangxi.

The joint venture company, Guangxi Huayin Aluminium, is engaged in the exploration for bauxite and the production and sales of alumina and related products. Established in 2003, it was 33 percent owned by Chalco, 33 percent by China Minmetals Non-ferrous Metals, the country's largest metals and mineral products trader, and the remainder by Guangxi Investment Group.

Chalco said in a stock exchange statement that while the State Development and Reform Commission approved in May and July that the joint venture be allowed to establish and carry out an alumina facility in Guangxi with an estimated initial annual production capacity of 1.6 million tonnes, it has entered into an agreement with its two partners to increase the total investment in the company from 10 million yuan to as much as 8.49 billion yuan to carry out the project. Shareholders will contribute 25 percent of the total investment proportionate to their equity interests as registered capital in three payments in 2005, 2006 and 2007. Chalco, China Minmetals and Guangxi Investment will each contribute 701 million yuan, 701 million yuan and 721.5 million yuan respectively. Guangxi Huayin will make up the difference between the total investment and the registered capital by way of external financing such as bank loans.

Chalco has already made the first payment of 116.85 million yuan on August 4 using its internal resources and intends to satisfy future capital contribution in yuan using its internal resources.

Chalco said it believes the investment and capital contribution in the joint venture are in its interest, given that it can indirectly tap the abundant bauxite reserves in the Guixi region, expand its alumina production capacity and thus increase its market share in the country. Guangxi Huayin is the largest aluminum enterprise in terms of one-off capital investment and development in the mainland.

grace.lam@singtaonewscorp.com

Chalco to Expand Chinese Alumina Production

RedNova.com, TX Sunday, 7 August 2005

A Chinese aluminum maker was given the go-ahead by the government for a major expansion at one of its plants. China's National Development and Reform Company granted permission to Aluminium Corp. of China (Chalco) to add 700 kt/a (770,000 stpy) of alumina production to its Henan plant in central China.

Chalco said the expansion should be completed near the end of this year. It would increase capacity at the Henan plant to 2 Mt/a (2.2 million stpy) from the current 1.3 Mt/a (1.4 million stpy).

In addition to the Henan expansion, Chalco is also planning to increase production at its plant in Shanxi. The company plans to add 800 kt/a (880,000 stpy) of capacity to the plant by the end of 2005. This would increase the plant's capacity to 2 Mt/a (2.2 million stpy).

Chalco said China's alumina consumption during the first quarter of 2005 was 3.4 Mt (3.7 million st). Domestic output, though, was 1.88 Mt (2.07 million st).

"Domestic alumina is still in deficit," Chalco said. "We have to catch hold of this opportunity." And, despite the government's restrictions on China's aluminum industry, Chalco has the support of the government. A Shanghai-based analyst agreed. He said the government always gives priority to Chalco. "The government also hopes to organize the alumina sector by means of Chalco, given that it is a competitive and established company," he said.

Copyright Society for Mining, Metallurgy, and Exploration, Inc. Jul 2005

Source: Mining Engineering

Sheikh Hamdan approves 100,000 tonnes capacity expansion plan for Dubai Aluminium Company

AME Info, United Arab Emirates Sunday, August 07 - 2005 at 11:26 GMT+4

United Arab Emirates: Sunday, August 07 - 2005 at 11:26 GMT+4

His Highness Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister for Finance and Industry and Chairman of Dubai Aluminium Company (DUBAL), today approved a massive capacity expansion project for DUBAL costing over AED1 billion (US$284 million) for the existing smelter to meet the ever-growing customer demand for its high quality metal.

His Highness Sheikh Hamdan said: "The global ranking of Dubai and the UAE as major investment destinations is because of the government's progressive and business-oriented policy initiatives. DUBAL's strategic expansion programmes are only a reflection of these government policies. DUBAL's current expansion project will act as a stimulant to inject more dynamism to the industry in the region. Consequently, it will make Dubai, the UAE and the region a major powerhouse in the global aluminium industry."

The expansion project at DUBAL, which houses one of the world's largest smelters, will see the aluminium giant add an additional annual capacity of 100,000 tonnes of hot metal, raising its total hot metal production capacity to 861,000 tonnes per year. Currently, with 120 pots in Potline-7 fully commissioned, DUBAL's total production capacity will reach 761,000 tonnes per annum by the end of 2005.

This project is Phase-I of a three-phased expansion plan which forms part of DUBAL's long-term strategy. This project will also ensure that DUBAL is correctly positioned in its path towards medium-term and long-term growth.

His Highness Sheikh Hamdan in his directives has reiterated environmental protection should be a key area which DUBAL has to constantly focus on. A state-of-the-art technology fume treatment system at a cost of AED110 million (US$30 million) will be installed as part of this expansion. An environment impact study is currently being conducted to give recommendations in this aspect.

HE Ahmed Humaid Al Tayer, Vice-Chairman, Board of Directors, DUBAL said: "The additional capacity expansion of 100,000 tonnes will decisively entrench the company in a commanding position from which it can easily handle the burgeoning demand requirements in the region and beyond."

"For DUBAL, it is imperative to maintain its current dominant position and explore areas for its growth trajectory. We are looking at nearby regions to strengthen our market base. Thus, DUBAL's risk diversification efforts will ensure that we maintain our international position as a major and serious player in size and market penetration," said HE Mr. Al Tayer.

Construction on the DUBAL expansion project is expected to begin during the third quarter of 2005. It is scheduled for completion by the fourth quarter of 2006. In effect, the current expansion will result in 13% additional hot metal production a year. The internal rate of return works out to around 16% a year and the pay back period is expected to be 6 years.

It is pertinent to note that DUBAL's Potline-7 expansion project was completed in a record time of 14 months and resulted in saving nearly US$ 30 million from the budgeted cost.

Mr. Abdullah J. M. Kalban, Chief Executive Officer, DUBAL, said: "DUBAL will use its own in-house-developed D20 technology for the expansion project. The project will add 128 cells more to the recently completed Potline-7, bringing the total to 248 cells. Potline-7 currently has 120 cells, which went fully operational recently. Plans are also afoot to add another 36 cells to Potline-9, which was completed in 2003, once again bringing the total cells for this Potline to 248."

Mr. Kalban observed: "The prominent feature of DUBAL's in-house cell reduction technology is its ability to reduce operational cost, making the expansion more efficient. This technology already has a proven track-record in DUBAL and we will be utilizing our current available capabilities to maximize our assets."

"The benefit of this lucrative expansion project will continue to make DUBAL one of the lowest and the most cost-effective aluminium producers in the world. This is why we can proudly say that we continue to enjoy the benefits of economies of scale. The feasibility study conducted for the expansion also estimated substantial cost saving," added Mr. Kalban.

'One of the main reasons behind the expansion project is our continuous desire to provide the highest levels of support to our customers and to meet their ever-growing demand for high quality products,' Mr. Kalban remarked.

For DUBAL the most notable contribution to the expansion project will come from a team of UAE nationals, who will be leading and supervising all aspects of this major endeavor. It is worth mentioning that the UAE nationals had played a significant role in the recent commissioning of Potline-7, which was completed ahead of schedule and well below the budgeted cost.

Also, keeping in line with the directives of His Highness Sheikh Hamdan, DUBAL plans to award over 40% of this project to local contractors. This is expected to result in a ripple effect with more job creation and revenue that will benefit the local economy, strengthening the manufacturing base of the country.

"The Gulf region will be a key player in the future towards supplying primary aluminium to the world and is estimated to contribute 11% of worldwide production. We are quite confident that the fresh expansion project will serve to further elevate the standing of Dubai and the UAE as a whole," Mr. Kalban pointed out.

Alcoa awakens

Source: Barron's Online Metals Place, UK

http://metalsplace.com/metalsnews/?a1882

While shares of companies like Phelps Dodge, Inco and NuCor have been roaring ahead – thanks mainly to China's brisk demand for metals – quotes for Alcoa, Alcan, Century Aluminum and Kaiser Aluminum have been sinking steadily, the result of overcapacity in the industry and rising production costs.

Pittsburgh-based Alcoa, the king of aluminium, has been hit especially hard. Its shares have plunged 20% from their 52-week high last November, to a recent 28.

The aluminium market, however, may be taking a turn for the better. Customers' inventories have been falling sharply, some rivals have shuttered operations and pricing has been firming. And Alcoa, with annual sales of $26 billion, looks better positioned than many investors may realize. It has been pursuing a broad range of growth initiatives around the world, from acquiring new plants in Russia to expanding a low-cost alumina refinery in Australia, while at the same time trimming overhead.

All things considered, the stock looks strikingly cheap. It's changing hands at about 16 times estimated earnings for this year, below the Standard & Poor's 500 index's multiple of 17 and far below the company's own average of 28 over the past five years. The price is also attractive compared to book value (1.8 times) and sales (0.98 times), and the stock yields a decent 2.13%.

If improvement in the aluminium market and in Alcoa's operations continues, the shares could climb by 25% over the next 12 months.

The company is seeing growing demand in such key markets as the U.S., China, Brazil, South Korea, Russia, and India.

Alcoa, a component of the Dow Jones industrials, is already gaining some fresh attention from Wall Street. On July 7, the company reported a 14% jump in second-quarter earnings – the second quarter in a row with results matching or beating Wall Street's expectations. The next day the shares climbed 4.2%, helping lift the entire market. The stock rose again last week on signs of strengthened consumer spending, which portends greater demand for aluminium.

The company, which makes Reynolds Wrap foil, Dura-Bright car wheels, and Spout Pouch beverage containers, is involved in virtually all aspects of aluminium – from mining the raw-material bauxite to producing the finished metal. It has mining, smelting and manufacturing operations in 43 countries.

While sales have doubled over the past 10 years, profits have lagged, with analysts citing a lack of clear business strategy and tardiness in diversifying globally. Over the past five years, in fact, profits have fallen by an annualized 6%. The stock, as a result, is now trading at just about the same level as five years go.

Rising energy prices have been a big problem, because aluminium production requires tremendous amounts of electricity. Prices for certain chemicals used in smelting – the extraction of metal concentrates found in ore – have been surging as well.

As a result of those pressures, along with environmental restrictions imposed by the Kyoto accords, some companies in the U.S. and Europe have begun curtailing production. By some estimates, as much as one-fourth of European smelting capacity will be shut down in the second half of this year.

That, or course, is good news for the remaining smelters. The tightening of supply, along with strengthening demand, is helping aluminium producers work through a huge glut. The world's aluminium surplus has been halved since 2002, to 355,000 metric tons, and is still shrinking, according Merrill Lynch. Prices for aluminium will probably average 85 cents a pound for this year, up from 78 cents in 2004, according to consensus projections.

Consumption in Alcoa's key markets – China, Brazil, South Korea, Russia, India and the U.S. – is strong and growing, the company's chief financial officer, Rick Kelson, tells Barron's. He's especially upbeat about the company's business of supplying commercial aircraft makers.

"The aerospace market is exploding," he says. "Business is back to levels before 9/11. The big aircraft manufacturers like Airbus Industries and Boeing are projecting that they are going to be building a lot of aircraft. And regional aircraft makers in Canada, China and Brazil are projecting vigorous growth in the next few years." He adds, "About 95% of everything flying has a proprietary Alcoa alloy on it."

Kelson also sees increasing business in providing forged aluminium wheels for trucks, trailers and buses; seasonal improvement in providing products for packaging, building and construction; and benefits from a recovery among U.S. auto companies like Ford and GM.

"These are all very strong markets at this point in time and are still gaining in their respective cycles," he adds.

Acquisitions clearly have strengthened the company's reach in global businesses like packaging, extruding, flat rolled products and transportation. Consider the $257 million investment earlier this year in two plants in Russia.

"It may take three to five years before they are a significant part of our business," Kelson says, "but they will give us greater flexibility to take advantage of low-cost opportunities. The Russian facilities will be very important to our future."

In all, Alcoa has more than a dozen on-going or planned expansion projects in raw materials and aluminium around the world, including a new smelter in Iceland and expansion of an alumina refinery in Jamaica.

The company's balance sheet is in good shape to support still more expansion, following a $2 billion reduction in net debt. Long-term debt now stands at about 25% of total capital, down from 42% in 2002.

At the same time, the company is keeping a close eye on costs. Alcoa expects to shave $190 million off its operating overhead this year, mainly by the elimination of 6,500 jobs, or about 5% of its worldwide total, and various plant closings and consolidations. It has budgeted $1.2 billion in cost savings by the end of 2006.

Little wonder that savvy investors and analysts are increasingly excited about Alcoa.

"What people don't understand about Alcoa is that it is not the same company it was five years ago and could experience a possible bull run over the next couple years," says John Buckingham, president of Al Frank Asset Management, who holds the stock and says he is a buyer through 30. "You'll see the company get rewarded as the earnings start to come in."

Adds John Hill, an analyst with Citigroup's Smith Barney unit: "Alcoa is one of the few major metal and mining names capable of delivering high-margin growth every year from 2005 to 2008." Hill has a 12-month price target of 35 on the stock but believes the real value of the stock long-term is around 45. (That would match the all-time high set in 2001.)

Of course, any unexpected downturn in the world economy, a precipitous dip in pricing or a sudden burst of new capacity, could dash this bullish scenario. China, in particular, is a wild card: The country is not only a major consumer of alumina but an aggressive low-cost producer of the finished metal.

But the logic behind the bull case does look compelling. Analyst Anthony B. Rizzuto Jr. of Bear Stearns, who believes the stock could move as high as 37 by the end of this year, wrote in a recent report: "Management is becoming more aggressive on the cost-savings front and the company remains on track with its growth initiatives."

And then there's the stock price. "Alcoa is currently trading well-below historical one-year forward multiples," says analyst David Gagliano with CS First Boston in New York, who believes the stock will "outperform" the market over the next 12 months, perhaps touching 34.

Without question, the best thing for the stock would be a couple more quarters of strong results. What are the odds of that? Alcoa, notorious for not giving earnings guidance, is mum on the matter.

But Alain Belda, Alcoa chairman and chief executive officer, certainly sounded upbeat in a recent letter to shareholders about second-quarter results. "We achieved the highest quarterly income and revenues in Alcoa history," he wrote. "We delivered strong results and took necessary steps to restructure, control costs and lay the framework for solid performance over the long term."

In fact, the future of this metals giant could be considerably better than solid. Long-suffering shareholders have good reason to hope so.

http://metalsplace.com/metalsnews/?a1882

High electricity prices in Europe threaten the future of two Alcan smelters

CJAD, Canada August 8, 2005, EST.

MONTREAL (CP) - High electricity prices could result in the closure of two of Alcan's European smelters, one in France and the other in Switzerland, the company warned Monday after reporting sharply lower profits.

The world's second-largest aluminum producer is also in discussions to find a power supply for a smelter in the Netherlands, a more modern operation formerly owned by French rival Pechiney that isn't expected to be closed at this point.

"Electricity rates in Europe across the board have been going up quite rapidly, following oil and gas prices," executive vice-president Dick Evans said in a conference call to discuss second-quarter results.

"I'm sure that it's not gone unnoticed that there have been other smelters in Europe from other producers that have been announcing in the last several months the likelihood of significant closures."

The Lannemezan smelter in France, a small smelter that has older technology with "environmental issues," and a plant in Steg, Switzerland, have power contracts that will expire in the coming months, Evans said.

There are discussions with power suppliers for the plants and there are also discussions with employees at the French plant and the community because of the possible closure, Evans said.

The smelting situation in Europe is difficult with the higher electricity rates, but Evans said 80 per cent of Alcan's capacity there is under long-term contracts at reasonable rates.

In its financial results, Alcan announced its second-quarter profit dropped to $191 million US, from $331 million US a year earlier, hurt by losses at non-core businesses that have been sold.

Net income for the quarter ended June 30 amounted to 52 cents a share, versus 89 cents per share a year ago, the Montreal-based company (TSX:AL) reported.

Income from continuing operations dropped to $208 million US from $285 million US. The firm reports in U.S. dollars.

CEO Travis Engen said the second-quarter results "reflect our steady progress against industry-wide cost pressures."

"Operating results for three out of four business groups improved sequentially and, in fact, reached a record level in packaging."

Merrill Lynch analyst Daniel Roling called the results "quite positive" due to higher aluminum prices, increased volumes and cost savings.

Cost savings from Pechiney are on track to meet the year-end target of $360 million, Roling said in a note, agreeing with Alcan executives' outlook on synergies by the end of 2005.

Alcan also said seasonal impacts are likely to affect third-quarter results.

On a positive note, the aluminium giant has benefited from an upswing in the aerospace industry over the last two years.

"We are, of course, a particularly important supplier to Airbus and our demand from Airbus has been quite strong and looking out for the next couple of years will continue to be quite strong," Evans said.

He noted solid order backlogs from an Alcan plant in France and another in West Virginia.

Results from discontinued operations in the second quarter of included the Pechiney Electrometallurgie ferro-alloy business, which was sold in June 2005, as well as the copper trading business and certain non-core engineered products operations.

Collectively, discontinued operations recorded an after-tax loss of $17 million US, compared with a profit of $46 million in the year-ago quarter.

Alcan's shares closed at $41.10, up $1.10, on the Toronto Stock Exchange.

The Canadian Press, 2005

Tax breaks abolished on alumina

The Standard, Hong Kong August 9, 2005

China will abolish a preferential tax policy on alumina imports from August 22 and impose an 8 percent duty and 17 percent value-added tax on all alumina imports.

''We have officially released this notice to the public today,'' said an official Monday at the Ministry of Commerce's department of import and export of electromechanical products.

Aluminum smelting is highly power-intensive, with electricity accounting for about 30 percent of total production costs.

Currently, Beijing allows around 20 of 152 smelters to import alumina duty free if the end-product is exported.

In the first half, imports rose 29 percent year on year to hit 3.67 million tonnes, according to latest customs figures. Around 30 percent of China's alumina imports come in duty free.

Analysts said the reason for the stricter measure on imports must be part of efforts to cool the overheating sector.

China, a key supplier of aluminum worldwide, is widely expected to see a 50 percent slump in exports in the second half compared with the first due to tighter industry policies, analysts said. In the first half, exports rose 21.5 percent year on year to 769,476 tonnes.

Production is set to hit a record 7.5 million tonnes this year, up 14 percent from 6.56 million tonnes in 2004.DOW JONES NEWSWIRES

Alcan says in no rush to decide on Coega project

Reuters South Africa, South Africa Mon Aug 8, 2005

MONTREAL (Reuters) - Alcan Inc. is taking its time to decide whether to proceed with the $2.5 billion Coega aluminum smelter project in South Africa, the Canadian company's chief executive said on Monday.

Travis Engen said Alcan could make a decision this year on the long-delayed 660,000-tonne Coega smelter project, but the company is not in a rush.

"On the Coega project, there's been some progress, but there's still a fair amount of work to be done before that can be taken to a point of decision," Engen told Reuters.

"This is a very, very big commitment by anybody who will be involved, so the urgency is to get it right."

In mid-July, the South African government's Industrial Development Corporation said it was ready to take a 15 percent stake in Coega because it was confident Alcan would go ahead with the project.

Alcan, the world's second-largest maker of primary aluminum, inherited Coega when it took over French rival Pechiney in 2003.

South African power utility Eskom Ltd. has also agreed to take a stake in Coega and reports have said Russian aluminum producer SUAL is interested.

If Alcan decides to proceed with Coega, located about 20 km (12 miles) from the southern city of Port Elizabeth, construction could begin at the end of 2005 with the first metal being produced in 2008, according to industry estimates.

© Reuters 2005. All Rights Reserved.

RUSAL Appoints New Managing Director of Novokuznetsk Aluminum Smelter

Russia Newswire, Russia 09-Aug-2005

In brief

MOSCOW (RNWire) – RUSAL, a top three global aluminum producer, has today announced the appointment of Sergey Yermak as Managing Director of the Novokuznetsk Aluminum Smelter. Yermak succeeds Viktor Zhirnakov, who was appointed RUSAL Head of Aluminum Division in July.

In full

MOSCOW (RNWire) – RUSAL, a top three global aluminum producer, has today announced the appointment of Sergey Yermak as Managing Director of the Novokuznetsk Aluminum Smelter. Yermak succeeds Viktor Zhirnakov, who was appointed RUSAL Head of Aluminum Division in July.

In his new role, Sergey Yermak is responsible for assessing the prospects of further plant modernization and expansion, as well as for maximizing opportunities to advance the smelter’s technological processes. He will lead the Novokuznetsk Aluminum Smelter’s ongoing effort to raise production efficiency, introduce modern management systems and reduce environmental impact.

Yermak has more than 20 years of professional experience in the aluminum industry and started his career as a cell operator. His most recent role was as Director for Electrolysis at the Novokuznetsk Smelter where, following Zhirnakov’s appointment as RUSAL Head of Aluminum Division in July, he now becomes Managing Director.

Biography

Born in 1959 in the town of Prokopievka, Kemerovo Region, Sergey Yermak has worked at the Novokuznetsk Aluminum Smelter throughout his professional career. After graduating from the Siberia Metallurgical Institute in 1981, he joined the smelter as a cell operator in the first potroom. Within a year he was promoted to foreman, and then, senior foreman of the reduction area. The smelter’s Chief Metallurgist since 1994, Yermak was appointed Director for Electrolysis in April 2000.

About RUSAL

RUSAL (www.rusal.com) is a global No. 3 primary aluminum producer, headquartered in Moscow. Established in March 2000 through a merger of several largest aluminum smelters and alumina refineries, RUSAL now accounts for 75% of aluminum production in Russia and 10% internationally. RUSAL is a vertically integrated company with a full production cycle, including upstream and downstream, production of primary aluminum, semi products and value-added casthouse products.

About Novokuznetsk Aluminum Smelter:

Novokuznetsk Aluminum Smelter, commissioned in 1943 and part of RUSAL since 2000, produces 305,000 tons of aluminum annually. The smelter’s quality management system has been awarded the ISO 9001 certification. It is currently in the process of introducing the environmental management system in line with the international ISO 14001 standard.

Aluminium output pace set to slow

Metals Place, UK - Bloomberg 08-Aug-20005

Aluminium output in China, the world's biggest producer, will grow this year at the slowest pace in five years because of higher power prices and government measures to curb investment and exports.

Output may rise 10 percent to 7.4 million metric tons from 6.7 million tons last year, said Wang Gongmin, deputy chairman of the China Nonferrous Metals Industry Association.

Production is well short of output capacity, which will rise to 9.5 million tons this year.

World prices of aluminium gained 22 percent last year, prompting mainland companies to increase capacity to produce the metal used in cars, buildings and beverage cans.

Earnings have been squeezed this year by higher costs for electricity and alumina, a white powder used to make aluminium, new export taxes and a 4 percent decline in metal prices.

About two-thirds of aluminium smelters lost money in the first half, said Wang, forecasting more smelters may lose money in the second half.

Lanzhou Aluminum, the second-biggest publicly traded firm in the sector, said July 23 that first-half profit dropped 42 percent because of increased material and power prices.

Recovering Kaiser Aluminum Wraps Up Move to OC

RedNova.com, TX Wednesday, 10 August 2005, 03:01 CDT

Kaiser Aluminum Corp., a big but troubled company, has moved its headquarters to Foothill Ranch.

The company, which is working through bankruptcy reorganization, completed its move from Houston about a month ago after setting up shop here earlier this year.

Kaiser is one of the country's older aluminum companies and had $940 million in sales last year. The company, which entered Chapter 11 bankruptcy in 2002, recently filed a reorganization plan and hopes to emerge by year's end.

Hockema: rose to lead company during bankruptcy

The Foothill Ranch headquarters, which employs about 40 people, handles financial, legal, administrative and some marketing duties for Kaiser. The company has about a dozen plants, including in Los Angeles, Arizona, Texas, Washington and Canada.

So why base an aluminum company in Orange County?

Laguna Niguel already was home to Kaiser's fabricated products division. Jack Hockema, who became Kaiser's chief executive around the time of the bankruptcy, led the division.

It made sense to move to OC, where Hockema and other executives had risen to the top of the company during the bankruptcy process, he said.

As part of the transition, the company moved from Laguna Niguel to the Foothill Ranch site, which is about three times as large.

"What we're emerging with is basically a fabricated products business, which was headquartered here," Hockema said.

During this bankruptcy process, Kaiser sold off most of its commodity businesses, including refineries and smelters. The moves shrunk the company's yearly sales by about half.

Now Kaiser is focusing on more profitable fabricated aluminum products that go into commercial airlines, autos and industrial equipment, Hockema said.

Sales could grow at least 6% to $1 billion by the end of this year, according to Hockema.

Getting to this point has been hard, he said, not only because of Kaiser's bankruptcy, but amid difficult times for the industry.

"This last recession went down more sharply than normally," Hockema said. "It was a grueling, grinding recession in our business."

Kaiser filed for bankruptcy as low prices and slow sales played out. The company also struggled under increasingly burdensome asbestos litigation and expanding pension and retiree costs.

Executives decided a bankruptcy would give the company some breathing room while they drew up a new plan.

The company had hoped to emerge from bankruptcy as early as the third quarter of last year. But last summer Kaiser pushed back the target to this year.

Negotiations to resolve pension and retiree benefits had dragged on longer than expected-as did the sale of some businesses.

The entire process was more complicated than expected, even to lawyers who had dealt with myriad bankruptcies in the past, Hockema said.

Kaiser plant: company could see sales of $1 billion this year

By spring, Kaiser wrapped up its last plant sale.

Late last month, the company said it had a reorganization plan that would hand shares to its creditors.

All former shareholders-including corporate raider Charles Hurwitz's Maxxam Inc. of Houston, which has a 62% stake-will receive no compensation, according to Hockema.

Things are getting better. In the first quarter, Kaiser went from a net loss of $60 million a year ago to a profit of $8 million as sales jumped 25% to $281 million.

The company recently signed a pact to supply Airbus SAS with heat- treated aluminum sheet and plate through 2011.

Copyright CBJ, L. P. Jul 11-Jul 17, 2005

Source: Orange County Business Journal

Canada’s Alcan assessing Coega

Business Day, South Africa 10-Aug-2005

Canadian aluminium group Alcan has a very long list of projects that it is looking at, with the "most active" being the expansion of the Gove alumina refinery in Australia, the building of an aluminium smelter in Oman and then the proposed Coega smelter on the Eastern Cape seaboard, says CE Travis Engen.

Alcan was currently assessing Coega from a value perspective and was working to ensure it had the right external partners, Engen added during an investor conference call.

In mid-July, Industrial Development Corporation (IDC) said it was confident that the 660,000 tons per annum Coega aluminium smelter would be developed along with Alcan.

The IDC said it was likely to take a 15% stake in the smelter as compared to 12.5% previously.

The project was also likely to draw about $2,5bn in investment as compared to $2,2bn previously estimated, the IDC said.

It was also likely that the Alcan board could take a decision on the project in October 2005, IDC President and Chief Executive Officer Geoffrey Qhena said.

Alcan took over the Coega project when it acquired French group Pechiney in 2003.

Alcan has operations in primary aluminum, fabricated aluminum as well as flexible and specialty packaging, aerospace applications, bauxite mining and alumina processing.

The group employs almost 70,000 people and has operating facilities in 55 countries and regions.

Dubai Aluminum buys 25% stake in Canada's Global Alumina, part of US$200M deal

CJAD, Canada August 11, 2005, EST.

TORONTO (CP) - Dubai Aluminium Co. will buy a 25 per cent stake in Toronto-based Global Alumina Corp. as part of a planned $200-million-US investment that will help the Canadian firm develop a major metal refinery project in Africa.

Global Alumina (TSX:GLA.U) announced Thursday it had struck an agreement with Dubai Aluminium, or Dubal, in which the Middle Eastern firm will eventually buy up to $200 million US worth of shares in the Canadian company.

Initially, Dubai will buy 10 million shares at $2 US each, with more purchases planned.

The Dubai company owns and operates the largest single aluminium smelter in the western world and will help back development, financing and construction of Global Alumina's 2.8 million tonne per year alumina refinery in Boke, Guinea.

That project is slated for completion by 2009.

"It is quite fitting that Dubai Aluminium becomes Global Alumina's first strategic equity partner," said Bruce Wrobel, chairman and CEO of the Canadian company.

"Dubal, armed with an intelligent business plan, competitive energy resources and a talented management team, went from a concept to completion of one of the largest and lowest-cost aluminium smelters in the world in a relatively short period of time. We look forward to tapping into that wealth of experience ..."

"Dubal's financial commitment, as well as Dubal's intent to purchase a substantial percentage of our alumina production for a minimum period of 20 years, moves Global Alumina one major step closer to meeting our financial and commercial objectives for this year."

The closing of the transaction is subject to certain conditions, including regulatory and shareholder approval.

Before a trading halt Thursday morning, Global Alumna shares were listed at $1.42 Cdn.

The Canadian Press, 2005

Chapter 11 protection is sought by Asarco

Seattle Times, United States 11-Aug-2005

HARLEY SOLTES / THE SEATTLE TIMES

A bankruptcy filing by Asarco may jeopardize a $1 billion U.S. toxic-cleanup program that includes a former Asarco smelter site in Everett and one in Tacoma at Ruston.

TUCSON, Ariz. — Mining giant Asarco filed for bankruptcy protection yesterday, possibly putting into doubt the future of $1 billion in toxic cleanups across the country, including at former smelter sites in Tacoma and Everett.

The Arizona-based company, on the hook for a $32 million cleanup of sediments at its old aluminum and copper smelter in Tacoma at Ruston, along Commencement Bay, filed for Chapter 11 protection in federal court in Texas. The company also owes about $5 million to clean 350 to 700 residential yards in the area of the smelter.

Federal officials yesterday said it's too soon to say how the bankruptcy filing might affect Asarco's environmental responsibilities, which stretch across 25 communities in a dozen states.

"I don't know if anybody anywhere knows the answer to that yet," said Mark McIntyre, spokesman for the Environmental Protection Agency.

The 107-year-old company has struggled financially for several years. It was hurt by falling copper prices in 2002. Then the company was hit with 95,000 personal-injury claims for asbestos use. Then the company faced striking workers across the Southwest after seeking wage freezes.

The company's decision to file was partially driven by environmental liabilities, said Daniel Tellechea, the company's president and chief executive officer.

The move comes two years after the Justice Department forced Asarco to set up a $100 million pollution trust fund after it accused Asarco's parent company of stripping it of assets and sticking taxpayers with its cleanup tab. That trust is guaranteed regardless of the bankruptcy.

"Right now in Tacoma we're capping a landfill, and most of that is being paid for from the trust," said Kevin Rochlin, EPA project manager. "Yard cleanups are a little less clear, because part of that comes from the company itself."

The company also is trying to sell the smelter property, which would help pay for continued cleanup.

"In Tacoma, I'm optimistic: We are probably in a better position than most of the Asarco sites, because we have that incredibly valuable property," Rochlin said. "In Everett, I'm not as optimistic."

There, the company is responsible for up to $4 million in cleanup, but "most of that has been coming not from the trust but from Asarco itself," he said.

Copyright © 2005 The Seattle Times Company

EUROPE'S LOW-CARBON DIET & GLOBAL WARMING

National Center for Policy Analysis, France Friday, August 12, 2005

The European Union's carbon-trading scheme is a failure on two fronts. It has significantly raised energy costs, and EU CO2 output has almost certainly risen rather than fallen. And this is all before round two of the Kyoto agreement, which calls for even deeper cuts and greater penalties, says Dan Lewis, director of environmental affairs for the Stockholm Network.

Carbon trading made more sense 10 years ago, when natural gas was inexpensive and abundant. For as long as gas cost less than coal, carbon mitigation could be achieved on the cheap. However, as the environmental and economic benefits of gas became clear, a supply bottleneck developed. The result was that last year, throughout Europe, the price of coal fell below that of gas. Because coal typically creates two to three times more carbon dioxide than natural gas, this meant higher emissions, explains Lewis.

According to a recent research report by UBS, a banking group, CO2 costs are now the key driver of electricity prices on the Continent.

In Germany, for instance, they are to blame for a 15 percent rise in electricity prices since the start of carbon trading last December, to 39 euros per megawatt-hour (MWh) for 2006 from 34 euros MWh.

The report also notes that "a further 2 euros to 4 euros MWh is yet to be priced in."

In the meantime, energy-intensive industries, such as aluminum and steel, are likely to consider closing down plants and relocating outside the EU to countries where emissions compliance costs are lower. Perhaps then a reduction in CO2 would ensue, but at what cost in prosperity and jobs?

What's more, the reduction would only occur in Europe: Emissions would simply rise in places -- say, China or India -- where those plants relocated. The overall picture would be unchanged, says Lewis.

Source: Dan Lewis, "Europe's Low-Carbon Diet," Wall Street Journal, August 10, 2005.

For text (subscription required):

http://online.wsj.com/article/0,,SB112362250704009045,00.html

For more on Global Warming: Impacts and Responses:

http://eteam.ncpa.org/policy/Global_Warming/Impacts_and_Responses/

CFAC plant turns 50

Daily Inter Lake, MT Sunday, Aug 14, 2005 - 10:20:01 am PDT

By GEORGE KINGSON

On Friday, aluminum turned to gold when Columbia Falls Aluminum Co. had its 50th anniversary.

It was, however, a bittersweet day without party or celebration.

"We're sort of in financial straits right now, and we don't have a lot of discretionary money floating around," CFAC general manager Steve Knight said.

Gone is the company's position as the county's biggest employer (it once employed more than 1,200 people). Today, with 150 employees, CFAC is holding down 15th place on the list -- in a tie with Target Corp.

On Aug. 12, 1955, the plant first went on line two miles northeast of Columbia Falls near Teakettle Mountain. Construction costs totaled $65 million -- $20 million over budget -- for the plant owned by Anaconda Copper Mining Co.

Production at Anaconda started with two potlines -- potlines being the workhorses of the aluminum industry. Through an electrochemical process, potlines convert alumina -- the raw material of aluminum -- into molten aluminum. Two pounds of alumina are required to produce one pound of aluminum.

"A potline is a series of electrochemical cells called 'pots' that are hooked together electrically," Knight said. "When you pass electricity through the molten bath in these pots, the alumina is dissolved."

Oxygen is then emitted, and what remains in the pot is aluminum.

During the first year, 67,500 tons were produced. The plant later added three more potlines. At the height of its success, the Columbia Falls plant was producing 180,000 tons of aluminum annually.

The facility has changed hands several times over the years. Atlantic Richfield Co. purchased Anaconda during 1977, becoming CFAC's second owner. When ARCO began divesting itself of its metals interests, Montana Aluminum Investors Corp. bought CFAC in 1985.

During 1999, the plant was acquired by Glencore International AG, a metals-trading firm and the current owners. According to its corporate publications, the Swiss company focuses "on the production, sourcing and marketing of metals and minerals, energy products and agricultural products."

Not all the plant's years have been mellow ones.

When former ARCO officer Brack Duker purchased the plant under the name of Montana Aluminum Investors Corp. during 1985, ARCO had been threatening to close the facility because of the high cost of operation and materials. Duker picked up CFAC for the bargain price of $1 -- plus $3 million for the inventory.

Duker's reorganization plan for the company involved cutting the work force and wages in exchange for a 50-50 profit-sharing plan. This system worked well initially, but, by 1992, employees had filed several class-action lawsuits claiming they were receiving only one-third of the total pie -- not the promised half.

The lawsuits were settled during 1998 for $97 million.

During early 2001, the entire plant was idled for the first time in its history. When it returned to line 13 months later, it ran three potlines, according to Haley Beaudry, CFAC's manager of external affairs. That dwindled to a single potline during March 2003.

There are two major costs involved in manufacturing aluminum: power and alumina, the raw material. Both elements are now "quite expensive," Knight said.

The cost of power has been an ongoing problem for CFAC because the manufacturing process is extremely power dependent.

Beaudry said CFAC's relationship with Bonneville Power Administration historically has been conducted in five-year contracts. The current contract ends September 30, 2006.

"Bonneville has come out with a record of decisions of what they're going to do," Knight said. "If you get inside that decision, we believe what they're going to do is offer us financial assistance, such that we go buy power on the open market and they'll then buy down the price of that. But they'll buy down only so far -- only to the rate they're selling to utilities -- so it really depends on what their rate turns out to be and what the market price is."

For the next 12 months, CFAC will buy power directly from Bonneville, which will allow the firm to operate only one potline, Knight said. Purchasing power from a different vendor is currently not an option because of the expense.

In terms of alumina -- the second major manufacturing cost -- the bulk of it is shipped in from Asia. Beaudry said its price has risen "drastically" during the past three years.

"The Chinese have built a lot of aluminum plants, and they need this material to run their own plants," he said. "The worldwide demand for alumina is much higher than the supply."

Aluminum -- the finished product -- is considered a commodity and is traded daily on the London Metal Exchange. Its selling price is governed by world market conditions.

Knight said that 100 percent of the aluminum CFAC produces is sold to Glencore, which then resells it. Glencore tells CFAC where to ship the finished product.

"We work all the time to try to increase production," Beaudry said. "But we're subject to the market conditions.

"Because we've made so many improvements and upgrades here, I believe we've got the most efficient plant of its kind in the world."

Reporter George Kingson may be reached at 758-4438 or by e-mail at gkingson@dailyinterlake.com.

Kaiser Aluminum profit soars on Australia sale gain

Reuters Mon Aug 15, 2005 5:18 PM ET

NEW YORK, Aug 15 (Reuters) - Kaiser Aluminum (KLUCQ.OB: Quote, Profile, Research) said on Monday that second-quarter net profit soared, mostly on a gain of $365.6 million from the sale of its interest in Australia's Queensland Alumina Ltd.

Net income was $361.7 million, or $4.54 per share, compared with $24.2 million, or 30 cents per share, in the same quarter last year, the Foothill Ranch, California-based company said.

Kaiser, which said it could possibly emerge from Chapter 11 bankruptcy protection in the fourth quarter, reported a loss from continuing operations of $6.6 million, or 8 cents per share, in the quarter, compared with a loss from continuing operations of $14.8 million, or 19 cents per share, in the second quarter of 2004.

© Reuters 2005. All Rights Reserved.

Xstrata PLC of Switzerland pays $2B for chunk of Canada's Falconbridge

CBC Toronto, Canada 11:38 PM EDT Aug 15, 2005

MARIA BABBAGE AND TARA PERKINS

TORONTO (CP) - Swiss mining giant Xstrata PLC is buying Brascan Corp.'s 19.9 per cent stake in Falconbridge Ltd. for $2 billion Cdn and setting the stage for a possible takeover of the Toronto base-metals miner.

Falconbridge is still basking in the afterglow of its June merger with Noranda Inc., which created a Canadian mining heavyweight with about $12 billion US in assets, 16,000 employees and nickel, copper, zinc and aluminum operations scattered around the globe.

On Monday, Xstrata chief executive Mick Davis said that by picking up the 19.9 per cent interest in Falconbridge, "it puts us in a position that, should it be appropriate for us to want to make an offer for the rest of the shares to minority shareholders at some point in time, we can do that in an environment where it's unlikely we'll face any interlope or interference."

He added that "we don't intend to be a long-term shareholder with a minority interest in the company."

Davis said the Swiss company had been shopping around Noranda last year, but was precluded from making a move because of the share structure of Noranda and Falconbridge at the time.

Brascan (TSX:BNN.LV.A) said the transaction will result in a pre-tax gain of about $750 million US in the third quarter.

Xstrata is paying Brascan $28 Cdn per share for Falconbridge, below last Friday's closing stock price. But shares in Falconbridge (TSX:FAL.LV) rose 62 cents - about 2.2 per cent - to $29 in Monday morning trading on the Toronto Stock Exchange.

Brascan shares were up 68 cents to $46.55.

Brascan CEO Bruce Flatt had said previously that the Toronto-based conglomerate would sell its stake at some point, as it looks to exit the mining sector, in favour of less cyclical sectors like property, power and infrastructure.

However, Xstrata's Davis told analysts on a conference call that Brascan asked for $375 million US of the price to be paid in convertible debentures of Xstrata. In addition, Brascan retains $570 US worth of Falconbridge junior preferred shares.

Brascan's profit for the three months ended June 30 tripled to $610 million US, boosted by a $448-million gain on its investment in Falconbridge, as the merger wrapped up. Brascan owned more than 40 per cent of Noranda and had ended up with just under 20 per cent of the newly merged entity.

Davis told analysts Xstrata started talking to Brascan only days before pulling the deal together last Friday.

Xstrata was recently outbid by BHP Billiton Ltd. for Australian copper and uranium firm WMC Resources. And last month, Toronto-based Inco, the world's second-largest nickel producer, saw its shares get a boost after an Australian newspaper reported that Xstrata was considering a takeover bid.

Davis emphasized Monday that Xstrata has "a number of options with which to create value," and a takeover offer for Falconbridge isn't inevitable.

"While the combination of Xstrata and Falconbridge, we think would make a very powerful entity within the mining world, we basically have set ourselves in a position where in the fullness of time we can make decisions which I think add the most value to Xstrata shareholders," he said.

When asked directly whether Xstrata plans to take over the firm in the near future, Davis said he could not comment.

"Well, I don't think they're buying this to hold a 20 per cent stake," said Greg Barnes, a Toronto-based analyst with Canaccord Capital. "Obviously, they have bigger things in mind."

If a takeover is in the works, it would probably happen more than nine months from now, he added. If they do it sooner at a higher share price than the current market value, Xstrata would have to pay Brascan the difference.

"With a 20 per cent stake, they're pretty much in the driver's seat. But the minority shareholders - or the other shareholders - won't accept less than market value for the company," Barnes said.

Xstrata said it will benefit from Falconbridge's zinc and aluminium businesses and from increased geographic diversification. The acquisition doesn't oblige Xstrata to make any offer to the other shareholders of Falconbridge, the firm added.

That obligation can be triggered after a 20 per cent stake is acquired.

Xstrata is a global mining group, listed on the London and Swiss stock exchanges. The group is based in Zug, Switzerland, and has a market capitalization of more than $14 billion US, with about 24,000 employees in Australia, South Africa, Spain, Germany, Argentina, Peru and the United Kingdom.

In late July, Falconbridge reported earnings of $202 million US in the second quarter, nearly double its profits of $108 million US a year earlier after completion of its merger with Noranda.

Late last year, Noranda broke off talks about a possible takeover by Chinese state-owned China Minmetals.

On Monday, Falconbridge spokesman Denis Couture declined to comment, saying the decision "was made by a shareholder in a private transaction to sell its stake to another company. We have no say, no approval.

"It doesn't change the way we are going to manage our company...It's business as usual."

After the announcement, UBS Investment Research analyst Brian MacArthur upgraded Falconbridge shares from "neutral" to "buy."

© The Canadian Press, 2005

Alcan tries for cheaper power

Sunday Times, South Africa - Tuesday August 16, 2005 11:44 - (SA)

By Patrick Cull

Canadian aluminium producer Alcan is attempting to negotiate new electricity contracts at three European smelters, but the industry situation in Europe is "quite difficult" due to fast-rising power rates, according to a senior company executive.

Alcan executive vice-president, Richard Evans recently told Dow Jones that "electricity rates in Europe across the board had been going up rapidly, following oil and gas prices".

His comments come at a time when Alcan has been involved in negotiations with Eskom about the supply of electricity to the proposed smelter to be constructed in the Coega Industrial Development Zone.

Eskom has presented a set of proposals to the Canadian company.

Evans told Dow Jones that more than 80 percent of Alcan's smelting capacity in Europe had longer-term electricity contracts at "reasonable" rates.

But the Montreal-based company is talking to power suppliers about its small Lannemezan smelter in France, the Steg smelter in Switzerland, and a larger 85 percent-owned smelter in Vlissingen, the Netherlands.

Lannemezan's power contract expires early next year, and the smelter has relatively old technology with "environmental issues", Evans said. In addition to discussions with electricity suppliers, Alcan is talking to Lannemezan employees and the local community about the "potential implications" of its closure, he added. Lannemezan has an annual capacity of 50,000 metric tons.

At Steg, which has a capacity of 44,000 metric tons, the power-supply contract expires at the end of 2005.

The modern smelter in Vlissingen, Netherlands, is cash-positive and there is no need to close it in the current environment, Evans said, but Alcan is in discussions to try to find an acceptable power-supply arrangement.

With deregulated power markets in Europe, there are opportunities to buy electricity from more than one source, but that isn't simple to do because smelters need large blocks of electricity over a long period, Evans said. The smelter at Vlissingen can produce more than 200,000 tons of primary aluminium a year.

Other producers have said smelter closings are likely due to rising power costs in Europe; some industry observers have estimated that 600,000 to 900,000 metric tons of European smelting capacity could shut in the coming years, as companies shift production to lower-cost, energy-rich regions.

Alcan, for example, has a 20 percent stake in a proposed new smelter in Sohar, Oman. Its partners in the 330,000-ton a year smelter project are Oman Oil Company and Abu Dhabi Water and Electricity Authority.

Alcan is still studying the Coega smelter project in South Africa, which it inherited when it acquired French aluminium producer Pechiney SA and a decision is expected at the end of this year.

The Herald

Kyrgyz Power Industry to Go to Russians

Kommersant, Russia Aug. 16, 2005

Kyrgyz President Kurmanbek Bakiev called for transferring the license to operate the republic’s energy sector to "influential Russian companies", Reuters reported yesterday. RAO UES is among the first to seek the control over the country’s hydro energy assets. Oleg Deripaska’s Bazela may also display interest.

Water power plants in Kyrgyzstan annually produce 14 billion kW per hour, the energy being consumed mainly within the country with a small part exported to Russia and China. The water resources of the Kyrgyzstan exceed the country’s needs ten-fold.

Kurmanbek Bakiev assumed the office on Sunday to make a ringing political declaration the following day. "I have made a decision. I think we should give away the license to operate the energy sector. There are very influential Russian companies that promise to put everything in order within a year," Reuters quotes Bakiev as saying. The president accounts this move for large-scale embezzlement and corruption in the industry. Three of four distributing energy companies in the country incurred massive losses, according last year’s results. Experts of the International Monetary Fund and the World Bank also insist on the transfer of the license to private companies.

RAO UES of Russia is the main claimant for Kyrgyzstan’s hydrogenation assets. The Russian Energy Systems have been negotiating the completion of the construction of two water energy plants on the river of Naryn since this winter. The company’s press service said they are interested in the hydro energy market of Kyrgyzstan but the Kyrgyz government has not come out with any proposal for them so far. Oleg Deripaska, head of Bazela, is known to be interested in the country too. His company planned to build an aluminum smelter near the water energy plant in the Naryn. The company would not comment on the situation yesterday, though.

In spite of Kyrgyz president’s sympathy towards Russian investors, the issue of the holder of the license will be settled at the open tender. The sources at the Kyrgyz government underline that any companies, not only Russian, may win the auction.

Russian Article as of Aug. 16, 2005

Carbonorca concerned about Venalum carbon plant - Venezuela

BusinessWeek Wednesday, August 17, 2005 16:32 (GMT -0400)

Venezuelan carbon anode maker Carbonorca is concerned about government plans to expand aluminum reducer Venalum's carbon plant, which could lead to a loss of Carbonorca's market share.

"It's widely known Venalum's line V expansion project will include a carbon plant... and this move could impact labor stability and lead to the eventual shutdown of Carbonorca in the short term," a Carbonorca official told BNamericas.

"This is moving forward despite earlier agreements that all carbon projects should be developed by Carbonorca, which was created specifically to supply carbon anodes to [aluminum reducer] Alcasa and Venalum and other aluminum sector projects," he added.

But the issue is not as urgent as some think. "As part of the in-house development policy, the idea is to expand Carbonorca to supply Venalum and Alcasa instead of Venalum," Carbonorca plant manager Carmelo Bermúdez said.

The official also said that if the plant expansion is completed at Venalum, Carbonorca would still have market share with Alcasa and potential export clients.

Carbonorca's carbon anodes used in the aluminum reduction process are supplied to Alcasa and Venalum, both subsidiaries of state heavy industry holding company CVG.

But Carbonorca workers at protesting and demanding prompt response from the government over the issue.

"I hope this is resolved in the short term because workers can lead actions that could affect the public and of course the company's operations," the official said.

CARBONORCA EXPANSION

Carbonorca announced in February this year it would start the plant's expansion project to increase output of green anodes to 580,000t from 140,000t.

"We have not advanced with this issue. We called for bids from technology providers and developers and they were submitted to the ministry. That's what has happened so far," Bermúdez said.

The expansion project seeks to meet the future anode supply needs of Alcasa and Venalum, which are also carrying out expansions due to be finished this year.

The company's plans were to start working on all administrative aspects related to the project in the second quarter, including the selection of technology and financing to begin construction in 2006.

But contract revisions by the mining and basic industry ministry (Mibam) have hindered the process.

Carbonorca is based in Puerto Ordaz in eastern Venezuela and its carbon anodes are used in the aluminum reduction process. The company expects to close the year with 180,000t green anode output, shipping 170,000t baked anodes to Alcasa and Venalum.

State heavy industry holding company CVG holds 10% of Carbonorca, Alcasa has 45% and Venalum the remaining 45%.

By Harvey Beltrán BNamericas.com


Aluminum smelters add little to Iceland's bottom line

IcelandReview, Iceland 08/18/2005 | 10:56

In its Tuesday daily bulletin, KB-bank says that the benefit that Iceland derives from aluminum smelters is small. The bank supports this view by claiming that the electricity is sold at close to cost and the rate of return for hydroelectric dams is low. It also says that the economical impact is overstated in the local discourse.

Ásgeir Jónsson, an economist at KB-bank says that this year it is more difficult to build the smelters and they constitute a massive investment. After the smelters start operations they do not make much use of local factors of production because the aluminum is imported. Ásgeir points out that at the aluminum smelter in Reydarfjordur there are between 400 - 500 jobs which is a small number compared to the 150,000 jobs in Iceland. He says that the benefit is primarily local [where the aluminum smelter is located]. KB-bank estimates that the benefit is ISK 8 billion value added in the east of Iceland. He explains that this is a substantial addition to the economy in east Iceland but the effect is small on the economy as a whole.

KB-bank says the low overall benefit is caused by low electricity prices that are close to cost, and this is reflected in the low rate of return of the state power company, Landsvirkjun, and the low rate of return that Landsvirkjun demands from its hydroelectric power plants.


A large aluminium complex will be built in Semnan

Metals Place, UK Source: MehrNews.com 18-Aug-2005

A large aluminium complex will soon be built in this mid-eastern province.

The factory will have an annual production capacity of 720,000 tons and is to be built by Semnan's Industries and Mines Organization. The project, which is estimated to cost $5b, will cover some 1,000 hectares of land.

The complex will annually produce 330,000 tons of aluminium ingots, 100,000 tons of aluminium sheets and foils and 70,000 tons of die cast aluminium components. Upon completion, the project will create 10,000 jobs.

China’s alumina imports may decline

Daily Times, Pakistan Saturday, August 20, 2005

HONG KONG: China in the second half will add at least 2.15 million tonnes of alumina capacity, trimming import demand of the world’s largest spot buyer and potentially weighing down world prices, industry officials said on Friday.

The new capacity to be completed in the second half will raise China’s alumina capacity by about 30 percent to at least 9.7 million tonnes by the end of this year, from about 7.1 million tonnes last year. Two refineries of state controlled Aluminum Corp. of China Ltd., the country’s dominant producer, would add combined capacity of 1.5 million tonnes of alumina, from which aluminium is made.

Two new refineries in Henan with a total capacity of 650,000 tonnes a year would also be completed by December. "We are going to start production in October," an official of Aluminum Corp. said, referring to the 700,000-tonne-per-year new facility at its Zhengzhou refinery in Henan.

He said the company’s other refinery, Zhongzhou, in Henan had expanded capacity by 400,000 tonnes in March. Aluminum Corp.’s refinery in Shanxi was running a trial at its new 800,000-tonne-a-year facility, another official said. Aluminum Corp. forecast its alumina capacity would rise to 8.5 million tonnes by the end of this year, with production set to hit 7.2 million tonnes — up 7.7 percent from last year.

China consumes about a fifth of the world’s aluminium and imports about half of its alumina. It imported 25.8 percent more alumina from a year ago to 4.24 million tonnes in the first seven months.

Strong demand from China has pushed up world prices for spot alumina 14 percent so far this month to about $500 a tonne to Chinese ports.

New comers: Privately owned Hui Yuan Chemicals was about to complete building of a 300,000-tonne-per-year alumina refinery in Pingdingshan city in Henan, a senior executive said. "We are improving the facility to meet government’s environment requirements," he said.

The state environment bureau in April asked Hui Yuan to stop building the 1.5 billion-yuan ($185 million) worth refinery, saying the project did not meet its requirements. The executive said Hui Yuan had received the approval from the bureau on Aug. 9 after improving the design of the refinery.

Also in Henan, the first phase of a 1.05 million-tonne-a-year alumina refinery in Mianchi was scheduled to complete in December, a source close to the project said. Privately-held East Hope Group directly owns a 75 percent stake in the Mianchi refinery, which will be built in three equal phases, after buying a 24-percent stake from aluminium producer, Henan Mianchi Zhongmai Aluminum and Electricity.

"We are in the process of transferring the stake," an official for Mianchi Zhongmai said. Mianchi Zhongmai had wanted to give up its entire holding to help Aluminum Corp. take a majority stake in the project, but industry officials said East Hope wanted to maintain a majority stake, triggering the bigger player to pull out.

East Hope’s Hong Kong-based subsidiary holds 13 percent of the project and US-based trading house Gerald Group has 12 percent, the officials said. China produced 4.67 million tonnes of alumina in the first seven months this year, up 17.5 percent from a year ago. reuters

China alumina cap to add 2.15 million tonnes in H2

Reuters South Africa, South Africa Fri Aug 19, 2005 10:53 AM GMT

By Polly Yam

HONG KONG (Reuters) - China in the second half will add at least 2.15 million tonnes of alumina capacity, trimming import demand of the world's largest spot buyer and potentially weighing down world prices, industry officials said on Friday.

The new capacity to be completed in the second half will raise China's alumina capacity by about 30 percent to at least 9.7 million tonnes by the end of this year, from about 7.1 million tonnes last year.

Two refineries of state controlled Aluminum Corp. of China Ltd., the country's dominant producer, would add combined capacity of 1.5 million tonnes of alumina, from which aluminium is made.

Two new refineries in Henan with a total capacity of 650,000 tonnes a year would also be completed by December.

"We are going to start production in October," an official of Aluminum Corp. said, referring to the 700,000-tonne-per-year new facility at its Zhengzhou refinery in Henan.

He said the company's other refinery, Zhongzhou, in Henan had expanded capacity by 400,000 tonnes in March.

Aluminum Corp.'s refinery in Shanxi was running a trial at its new 800,000-tonne-a-year facility, another official said.

Aluminum Corp. forecast its alumina capacity would rise to 8.5 million tonnes by the end of this year, with production set to hit 7.2 million tonnes -- up 7.7 percent from last year.

China consumes about a fifth of the world's aluminium and imports about half of its alumina. It imported 25.8 percent more alumina from a year ago to 4.24 million tonnes in the first seven months.

Strong demand from China has pushed up world prices for spot alumina 14 percent so far this month to about $500 a tonne to Chinese ports.

NEWCOMERS

Privately owned Hui Yuan Chemicals was about to complete building of a 300,000-tonne-per-year alumina refinery in Pingdingshan city in Henan, a senior executive said.

"We are improving the facility to meet government's environment requirements," he said.

The state environment bureau in April asked Hui Yuan to stop building the 1.5 billion-yuan worth refinery, saying the project did not meet its requirements.

The executive said Hui Yuan had received the approval from the bureau on August 9 after improving the design of the refinery.

Also in Henan, the first phase of a 1.05 million-tonne-a-year alumina refinery in Mianchi was scheduled to complete in December, a source close to the project said.

Privately-held East Hope Group directly owns a 75 percent stake in the Mianchi refinery, which will be built in three equal phases, after buying a 24-percent stake from aluminium producer, Henan Mianchi Zhongmai Aluminum and Electricity.

"We are in the process of transferring the stake," an official for Mianchi Zhongmai said.

Mianchi Zhongmai had wanted to give up its entire holding to help Aluminum Corp. take a majority stake in the project, but industry officials said East Hope wanted to maintain a majority stake, triggering the bigger player to pull out.

East Hope's Hong Kong-based subsidiary holds 13 percent of the project and U.S.-based trading house Gerald Group has 12 percent, the officials said.

China produced 4.67 million tonnes of alumina in the first seven months this year, up 17.5 percent from a year ago. The output was 7.02 million tonnes last year.

© Reuters 2005. All Rights Reserved.

Norsk Hydro May Agree in Next Month to Buy German Casting House

Aug. 19 (Bloomberg)

Norsk Hydro ASA, the world's fourth- largest aluminum producer, may agree in the next month to take over a casting house at its partly owned Hamburger Aluminium-Werke GmbH smelter, which is being closed because of high power prices.

Hydro is in talks with its partners at the Hamburg smelter to buy the rest of the casting unit, said Michael Peter Steffen, a Norsk Hydro spokesman. Oslo-based Hydro, Alcoa Inc. and Austria Metall AG each own a third of the smelter and the casting house.

``We haven't reached an agreement yet and still have to negotiate on price and conditions,'' Steffen said today in an interview. ``The negotiations should be done in the next month.''

Hydro decided in June to shut two German aluminum smelters, including the plant in Hamburg and another in Stade, as surging electricity costs made it unprofitable to keep them open. The casting house in Hamburg is used to make rolling ingots out of liquid aluminum. The ingots are then used at a nearby rolling aluminum mill belonging to Hydro, Steffen said.

``We would be able to secure a better future for the rolling mill by taking over the casting house,'' Steffen said. Norsk Hydro has already requested approval from German competition authorities to take over the casting house, named Altenwerder Aluminium- Giesserei.

About 100 workers from the smelter's 450 employees would be able to keep working at the casting house should Hydro take over the business, Steffen said. The smelter was scheduled to be closed by the end of this year, though ``it will probably take a bit longer,'' Steffen said, without being more specific.

Norsk Hydro may also consider bids for the smelter, Steffen said.

To contact the reporter on this story:

Bunny Nooryani in Oslo at bnooryani@bloomberg.net

Last Updated: August 19, 2005 04:27 EDT

DUBAL commissions region's first Dh100m. multipurpose casting machine

WAM - Emirates News Agency, United Arab Emirates Aug 21, 2005 - 07:00

DUBAI 21 August, 2005 (WAM)--Dubai Aluminium Company DUBAL, internationally recognized as one of the major aluminum producers, recently commissioned the Dh.100-million Casthouse-3 machinery in collaboration with the Italian major "Properzi".

DUBAL is the first company in the region to install and commission such state-of-the-art machinery."This initiative is in line with the directives given by Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister for Finance and Industry and Chairman of DUBAL, with an eye on the company's long-term prospects. This is part of DUBAL's constant endeavor to offer products that suit the specifications of the end-users," said Yousuf Abdulla Bastaki, DUBAL's Senior Project Manager.

With the successful installation of this ingot casting machine, Casthouse-3 will enjoy a production capacity of 80,000 tones a year of hot metal in different alloys that meet individual requirements of customers in Asia, Europe and North America.

DUBAL also has reserved the option to buy two more such casting machines from the Italian company.

Casthouse plays a critical role in aluminium production by converting molten aluminum to saleable product. DUBAL casting is a combination of continuous and batch processes and operates 24 hours a day with a variety of more than 200 different products and a total annual casting capability of over 1 million mt.

Bastaki added: "This capital investment will add value to DUBAL operations and will enable the company to offer different products for industrial end-use. The focus of this project is also flexibility in designing products for various customers even though automobile manufacturers worldwide are the main end-users." Installation project of this Italian cast machine started a year ago and was completed on July 25, 2005. The state-of-the-art machine enables high quality production from the initial extraction of the raw material, through its molten process, to the aluminum's final packaged form.

"As part of the project, an environmentally secure monitoring system, specifically designed for measuring the rate of gas emissions in the entire Casthouse-3, was installed. The project was inaugurated only after conducting pre-commissioning checks to obtain safety clearance. The entire exercise was completed with zero-incidents," remarked Mr. Bastaki.

WAM - Emirates News Agency, United Arab Emirates -

The right fit for T&T?

Trinidad & Tobago Express, Trinidad and Tobago Tuesday, August 23rd 2005

Julian Kenny

Most readers will have seen the newspaper pullout announcing the arrival of Alutrint Ltd. This firm is a joint venture between Government and the Venezuelan firm of Sural. What few will have seen is a letter that went out to the "stakeholders" requesting comments on the draft terms of reference issued by the Environmental Management Authority by an environmental consulting firm (with which I am no longer associated) retained by the National Energy Corporation on behalf of Alutrint Ltd.

But both the letter inviting stakeholders and the centre page pullout however include the phrase-"The right fit for T&T." Does the NEC therefore suggest that there may be other proposals such as the Alcoa one that are the wrong fit? A total of 125,000 tonnes per year to be devoted entirely to downstream industries as opposed to 341,000 tonnes per year to be exported as ingots. And the downstream industries are supposedly rod mills, bar, wire and cable plants and car parts.

Assuming that both plants go ahead there will be about 466,000 tonnes of aluminium ingots produced in the country, all from imported alumina (aluminium oxide) and, depending on the Government's arrangements with Alcoa that remain obscure, much if not all of this will go to downstream industries.

Question 1. What is our annual consumption of aluminium? My guess is that the bulk production of the downstream industry will be for export, mainly as rod, bar, wire and cable and hopefully car wheels.

Question 2. Given the fact that aluminium smelting produces wastes such a toxic pot liners (Mr Overbey stated that Alcoa was not certain of what it would do with the spent potliners) was the option of importing aluminium ingots for use in manufacture of rod, bar, wire and cable ever considered?

Question 3. Exactly where will the downstream industries be sited?

But these are not the only questions. Looking at the Alcoa application for a Certificate of Environmental Clearance and the Terms of Reference of the Alutrint Environmental Impact Assessment, so many others arise. Applications for CECs are essentially on a form. Terms of reference, or TORs, for Environmental Impact Assessments or EIAs, follow a template. As the Environmental Management Authority is bound by its Act to keep a full administrative record of proceedings available to the public, anyone can access details. There are, however, certain limitations on what may be accessed by the public, quite rightly so, such as for example details of industrial processes that are company intellectual property.

Similarly, TORs may always be consulted by the public, as well as the actual EIAs submitted. And I assure readers the EMA is scrupulously above board in meeting its obligations to the public. It is thus a relief to all that the EMA has issued a formal statement on the issue of the smelters. One does have to read between the lines as names are not given of the applicants, although in both cases the official record that is available to the public will show the applications are being made jointly by state companies and two foreign companies.

But there are a few points worth noting. First, Mr Manning was reported to have announced at the post-Cabinet meeting of July 7 that the smelter would go ahead. This is, of course, highly improper, given the fact that the legal body responsible, the EMA, states in its advertisement that no approval has yet been given nor, and this is most important, has the full complement of environmental information necessary for pronouncement of applications for CECs at Union or Cap de Ville.

What is particularly disturbing is that Alcoa's application is either evasive or incomplete, with some boxes in the form answered "to be determined". Of particular interest are the answers concerning chemicals used and wastes to be produced. The form asks about the use of hazardous materials. The answer-"gasoline and diesel"! The question of waste disposal-"to be determined"! The question of project area to be cleared-"to be determined"! And so it goes. The state company, I assume, being party to the application, thinks that as the Government has already decided that the smelter will go ahead, treats the application with undisguised indifference, if not contempt.

But this is not all. The TOR for the proposed Union Estate aluminium smelter determined by the EMA requires the applicant to describe inter alia impacts on habitat use, impacts on sensitive species, impacts on changes in the health of flora and fauna, impacts on changes in quantities and types of species and impacts on aquatic ecology! This is a bizarre request for environmental information. Note that the estate has already undergone the full CEC and EIA process and has already been cleared of vegetation and levelled. Flora and fauna long gone!

Costs for Aluminum Corp increase in 1st half

China Daily, China (Reuters) - Aug 23, 2005

By Loretta Ng and Wing-Gar Cheng (Bloomberg News)

Updated: 2005-08-24 09:25

Aluminum Corp of China Ltd (Chalco), the world's second-biggest producer of alumina, said manufacturing costs rose by nearly 1 billion yuan (US$123 million) in the first half, eroding profit that grew the slowest in two years.

Costs rose as China's economy grew 9.5 per cent in the first half, causing electricity demand to soar and coal prices to rise to records in March. The country uses coal to fire 67 per cent of its power plants.

"Electricity costs rose by more than 300 million yuan (US$37 million) from a year ago," Chairman and Chief Executive Officer Xiao Yaqing said yesterday in Hong Kong. "We've tried our best to overcome costs of coal, electricity and transportation."

China's aluminum output this year will grow at the slowest pace in five years as the government restricts investments and exports and raises electricity rates. Power makes up 30 per cent of the production costs at Chalco, the nation's biggest producer of the light metal for cars, aircraft and drink cans.

Chalco reported a less-than-expected 1.7 per cent growth in first-half profit to 3.55 billion yuan (US$438 million). A Bloomberg survey of five analysts had a median estimate of 3.7 billion yuan (US$456.79 million). The company's shares yesterday declined as much as 3.9 per cent to HK$4.325.

"Normally, profits should have fallen, but we worked hard by increasing output and implementing tighter cost controls to ensure profits rose, not fell," Xiao said.

Chalco boosted alumina output to benefit from rising prices for the semi-processed material used to make aluminum. Alumina accounted for 97 per cent of the operating profit in the first-half, with the rest coming from the light metal, according to the company's earnings statement.

Alumina prices reached US$450 a ton in May and traded at US$430 on August 17, according to the UK-based Metal Bulletin Plc. Prices reached 10-year highs of US$480 a ton in May 2004. A shortage of the white powder will ensure prices stay high, Xiao said.

"Alumina prices should stay at high levels during the second half and through next year," Xiao said. "Our 4,330 yuan-a-ton selling price should be maintained, given the 50 per cent supply shortage."

NALCO draws up plans for Gulf smelter

Financial Express, India - Wednesday, August 24, 2005

NEW DELHI, AUGUST, 24: India's second largest aluminium producer, National Aluminium Co Ltd, plans to set up a 250,000 to 300,000 tonne aluminium smelter in a Gulf country by 2009-10, the firm's chairman said on Wednesday.

State-owned NALCO is already in the midst of a $1-billion project to boost the capacity of its aluminium smelter in the eastern state of Orissa by 115,000 tonnes from 345,000 tonnes.

It is also raising alumina production capacity to 2.1 million tonnes from 1.575 million, bauxite mining to 6.3 million tonnes from 4.8 million and power generation to 1,200 megawatts from 960 MW.

"We hope to set up the smelter by 2009 or 2010, by that time time our expansion at home will be over and we will have surplus alumina to supply for the smelter in the Middle East," C.R. Pradhan told Reuters in an interview.

He said NALCO was in talks with Qatar, Oman and Abu Dhabi for its aluminium smelter. "We have not yet finalised but all three are positive."

The company was looking for a government-to-government deal and not one with a private party. "We have already awarded a feasibility study which should be over in the next four months," he said by telephone from the company's headquarters in Orissa.

NALCO plans to double the capacity of the aluminium smelter at a later stage, he said.

Pradhan said he expected global aluminium prices to firm to $1,900 a tonne by December from about $1,850 a tonne because of tighter global supplies.

"Companies are cutting down aluminium production but demand is going up, so prices will increase further."

Several companies, mainly in the United States and western Europe, have said they are cutting output or closing facilities because of high electricity prices.

But China is upping output and global aluminium production in July rose to 2.01 million tonnes from 1.94 million in June, according to the International Aluminium Institute.

Pradhan said NALCO will issue a tender in September to sell 30,000 tonnes of alumina. "We will float a tender some time in September and the alumina will be shipped out in October."

NALCO awarded a 30,000-tonne alumina export tender last month to an international trading firm at $453 a tonne free on board basis.

The firm is expected to produce around 1.575 million tonnes of alumina in the year to March 2006, the same level as last year. Alumina exports this year are also expected to be flat at 900,000 tonnes.

NALCO, which was facing a coal shortage, has made up for production losses in the first quarter itself. "There was a problem for 10 to 15 days but we made it up as we sourced power from outside," the official said.

The company needs around 7 million tonnes of coal to run its two captive power plants but it gets only 4.86 million tonnes from domestic sources. "Coal shortage has eased now as we are using imported coal."

India's second largest aluminium producer, National Aluminium Co Ltd, plans to set up a 250,000 to 300,000 tonne aluminium smelter in a Gulf country by 2009-10, the firm's chairman said on Wednesday.

State-owned NALCO is already in the midst of a $1-billion project to boost the capacity of its aluminium smelter in the eastern state of Orissa by 115,000 tonnes from 345,000 tonnes.

It is also raising alumina production capacity to 2.1 million tonnes from 1.575 million, bauxite mining to 6.3 million tonnes from 4.8 million and power generation to 1,200 megawatts from 960 MW.

"We hope to set up the smelter by 2009 or 2010, by that time time our expansion at home will be over and we will have surplus alumina to supply for the smelter in the Middle East," C.R. Pradhan told Reuters in an interview.

He said NALCO was in talks with Qatar, Oman and Abu Dhabi for its aluminium smelter. "We have not yet finalised but all three are positive."

The company was looking for a government-to-government deal and not one with a private party. "We have already awarded a feasibility study which should be over in the next four months," he said by telephone from the company's headquarters in Orissa.

NALCO plans to double the capacity of the aluminium smelter at a later stage, he said.

Pradhan said he expected global aluminium prices to firm to $1,900 a tonne by December from about $1,850 a tonne because of tighter global supplies.

"Companies are cutting down aluminium production but demand is going up, so prices will increase further."

Several companies, mainly in the United States and western Europe, have said they are cutting output or closing facilities because of high electricity prices.

But China is upping output and global aluminium production in July rose to 2.01 million tonnes from 1.94 million in June, according to the International Aluminium Institute.

Pradhan said NALCO will issue a tender in September to sell 30,000 tonnes of alumina. "We will float a tender some time in September and the alumina will be shipped out in October."

NALCO awarded a 30,000-tonne alumina export tender last month to an international trading firm at $453 a tonne free on board basis.

The firm is expected to produce around 1.575 million tonnes of alumina in the year to March 2006, the same level as last year. Alumina exports this year are also expected to be flat at 900,000 tonnes.

NALCO, which was facing a coal shortage, has made up for production losses in the first quarter itself. "There was a problem for 10 to 15 days but we made it up as we sourced power from outside," the official said.

The company needs around 7 million tonnes of coal to run its two captive power plants but it gets only 4.86 million tonnes from domestic sources. "Coal shortage has eased now as we are using imported coal."

Power plant, aluminum works in Krasnoyarsk needs $1.8 billion to build

RIA Novosti, Russia 16:32 | 25/ 08/ 2005

BOCHAROV RUCHEI (Sochi), August 25 (RIA Novosti) - About $1.8 billion has to be invested in the construction of a hydro power plant and an aluminum works in the Krasnoyarsk Region of East Siberia, aluminum magnate Oleg Deripaska told President Vladimir Putin.

Deripaska, the board of directors chairman of Bazovy Element, a large managing company, said building all relevant facilities in the region would require about $4.5 billion.

Bazovy Element and Unified Energy System Co., Russia's electricity giant, had agreed on the former's participation in the construction of the power plant in Boguchany, Deripaska said.

Deripaska said the Economic Development and Trade Ministry and the Krasnoyarsk regional administration had agreed on a program for the region's development.

"This is not merely about building a power plant and lines that will be linked to the unified energy systems, but about developing the whole region's infrastructure," he said.

Deripaska said the company planned to build a railroad and develop timber reserves and was also considering building a pulp and paper plant.

BHP Billiton eyes Alumar expansion decision end-2005 - Brazil

Business News Americas, Chile Thursday, August 25, 2005 17:00 (GMT -0400)

Anglo-Australian natural resources group BHP Billiton (NYSE: BHP) expects to make a decision on the US$1.11bn Alumar alumina refinery expansion in Brazil at the end of 2005, a company spokeswoman told BNamericas.

"It is in feasibility [studies] and things can change but the intention is for the expansion to go to the board at the end of the year," said BHP Billiton spokesperson Tracey Whitehead.

The Alumar refinery in Sao Luis in northern Brazil's Maranhao state is a joint venture between BHP Billiton (36%), US aluminum giant Alcoa (35.1%), Canada's Alcan (10%) and Abalco (18.9%).

BHP Billiton's share of investment in the refinery would be less than US$400mn, the company reported with its fiscal year 2005 results.

The expansion project consists of adding 2Mt/y capacity at the Alumar refinery, the region's largest, taking production from the current 1.3Mt/y to 3.3Mt/y.

BHP Billiton also holds 46.3% in the Alumar aluminum smelter, the region's second largest, which has current capacity of 380,000t/y.

Guangxi bauxite venture secures 7.3b yuan loan

The Standard, Hong Kong August 26, 2005

Tim LeeMaster

A joint venture that includes two of China's largest metals companies secured a 7.3 billion yuan (HK$7.0 billion) loan from six mainland banks, the Ministry of Commerce said.

The venture, Guangxi Huayin Aluminum, was formed by Aluminium Corp of China, the world's second-largest producer of alumina, and China Minmentals, the country's largest state-owned metals trader, to explore for and mine bauxite in the southwestern province of Guangxi, which borders Vietnam. About four pounds of bauxite, a clay-like ore, are needed to produce one pound of aluminum.

Banks funding the loan include China Development Bank, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank, Bank of Communications and Bank of China, the ministry said without providing pricing details.

Hong Kong-listed Chalco said earlier this month the three partners in the venture, which also includes Guangxi Investment Group, would boost their investment in Guangxi Huayin to as much as 8.49 billion yuan from the initial 10 million yuan. The three would contribute a total of 2.1 billion yuan, split almost equally among them, while Guangxi Huayin would raise the rest through bank financing, Chalco said in a stock exchange statement.

China's fast-growing economy is suffering an acute shortage of most raw materials. including aluminum, which is used in everything from cars to soda cans.

Chalco, which aims to double its bauxite reserves to 600 million tons over the next three years, is seeking acquisitions overseas. The company received a US$2 billion (HK$15.6 billion) line of credit in May from China's Export-Import Bank, a government-owned policy bank that finances foreign trade, to help fund its overseas expansion.

Chalco and Brazil's Companhia Vale de Rio Doce have signed an agreement to open an alumina refinery in northern Brazil by 2007, at a cost of US$1 billion. In May, the company also said it plans to take a 51 percent stake in a US$1.5 billion joint venture in Vietnam that plans to exploit bauxite reserves estimated at 2.67 million tons in the southern province of Dak Nong.

The company also has its eyes on the Aurukun bauxite deposit on Cape York Peninsula in the Australian state of Queensland. More than 90 percent of the world's bauxite comes from the tropical regions of Australia, West Africa and Brazil. tim.leemaster@singtaonewscorp.com

Russian firm to build hydropower plant in Tajikistan

RIA Novosti, Russia 17:34 | 25/ 08/ 2005

BOCHAROV RUCHEI (the president's Black Sea residence) - Russian holding company Bazovy Element signed a memorandum on the construction of a hydropower plant and an aluminum plant in Tajikistan, a company official said.

At a meeting with President Vladimir Putin Thursday, Oleg Deripaska, head of Bazovy Element's board of directors, said the project to build the Ragunskaya hydropower plant would require about $1.2 billion, and the reconstruction of the old aluminum plant and construction of a new one, about $600 million.

Deripaska also owns Russky Aluminium (RusAl), one of the world's aluminum giants.

Bazovy Element wants share package of aluminum plant in Montenegro

RIA Novosti, Russia 16:26 | 25/ 08/ 2005

BOCHAROV RUCHEI (SOCHI), August 25 (RIA Novosti) - The board chairman of Russia's biggest private investment fund managing company said Thursday he hoped Montenegro would transfer a package of shares of an aluminum plant there before the year's end.

Bazovy Element's Oleg Deripaska said at a meeting with Russian President Vladimir Putin the company had won a tender to privatize the aluminum plant in Montenegro and terms are now being coordinated.

Bazovy Element, founded in 2001, specializes in strategic investment in promising sectors of the Russian economy. The assets of funds managed by Bazovy Element are focused in different economy sectors like non-ferrous metallurgy, the coal output and mineral resource industry, the automotive industry, the timber industry, the power industry, finance and insurance, the aviation industry and agriculture.

Deripaska briefs Putin on development of Bazovy Element

ITAR-TASS, Russia 25.08.2005, 15.08

SOCHI, August 25 (Itar-Tass) - CEO of the Bazovy Element Group Oleg Deripaska informed President Vladimir Putin on development of the projects of this group in Tajikistan.

"We signed a memorandum in Tajikistan on the construction of the Ragun hydropower plant, enlargement of the Tajik aluminum plant and construction of a new plant," Deripaska emphasized.

"We have made good progress, finished the technical coordination and calculations that were made by German specialists," he pointed out. "After the state technical expertise we will launch the construction already in November 2005," Deripaska remarked.

Speaking on the aluminum plant, he noted that the production volume was restored at the plant and the drafting of the project on its upgrading and the production of additional lines is closing to an end.

The president asked Deripaska to specify the volume of investments. Deripaska noted that about 1.2 billion dollars were assigned for the construction of the hydropower plant, another 600 million dollars for upgrading the aluminum plant and the construction of a new plant.

Deripaska stressed favorable conditions that the Tajik authorities provided. "The republic’s government even prompts us to more active actions," he indicated. The same approach is practiced for other Russian companies. "There is no discrimination against them," Deripaska noted.

Putin also asked about competition. "We offered the best terms, and the Tajik government has taken the decision to work with us," the Bazovy Element CEO said.

U.S. company, RusAl, interested in building aluminum plant

Ukrainian Journal (subscription), NY Aug. 24, 2005

KIEV, Aug. 24 – An unnamed company with U.S. investment has joined Russian Aluminum (RusAl) company in taking an interest in participating in the construction of an aluminum plant in Ukraine.

The second bidder has submitted its proposals to an ad-hoc group set up by the Cabinet of Ministers under the aluminum plant construction project, Raisa Lahodiuk, the head of the National Electricity Regulatory Commission's power rate setting department, told Interfax-Ukraine.

Kandalaksha Aluminium Smelter Completes Second Potline Air Emission Purification Facility

Azom.com 26th August 2005

The Kandalaksha Aluminium Smelter, a part of SUAL Group, completed the second phase of its air emissions purification system. The company has invested USD 20 million in the project.

This powerful scrubbing equipment suppresses hazardous fluoride emissions by 99%. It is the largest and most modern air emissions purification facility for side-worked Soderberg potlines in Russia and the CIS. The aluminium reduction cell air emissions are purified with modern hydrogen fluoride absorption technology, called «dry scrubbing». Alumina is used as a absorbing agent.

KAZ-SUAL cut the atmospheric impact by more than one-half after the equipment was installed. Apart from the positive impact on the environment, dry scrubbing purification allows for reduced consumption of the main electrolytic raw materials.

The dry scrubbing system has been developed by OAO VAMI. The construction of the first phase started in 1999. In 2000, KAZ was incorporated into SUAL, and in 2002 the first phase of gas purification facilities was launched. Soon afterwards, KAZ began building the second phase.

Following a strategy to minimize pollutants in production, SUAL Group studied the feasibility of modernising smelters in 2005 — 2009 to reduce the atmospheric impact. As a result, the total environmental impact will be reduced by two-thirds.

‘The construction of modern gas purification facilities at Kandalaksha Aluminium Smelter follows our modernisation strategy,' SUAL Holding President Brian Gilbertson highlighted. ‘SUAL Group is committed to advancing our technologies and equipment so that they meet the highest international environmental and industrial standards.'

‘The completion of this project has allowed us to enhance environmental safety and cost efficiency,' said KAZ General Director Valery Shamshev. ‘Dry scrubbing technology significantly reduces emissions and the consumption of raw materials such as alumina and aluminium fluoride.'

http://www.sual.com/

Alcasa, C-Holding to install Al processing plant – Venezuela

Business News Americas 24 August 2005

"We estimate a 30-day timeline to create a technical commission with specialists from both companies performing all initial feasibility procedures," an Alcasa official told BNamericas.

The plant will aim to meet demand from Venezuela's automobile and aeronautics industry and will be near Alcasa in the Matanzas industrial area of Puerto Ordaz in eastern Venezuela's Guayana region.

The deal resulted from the Swiss-Venezuela business round held in Caracas last week when some 10 bilateral agreements were signed to benefit both countries.

The new plant will be supplied by aluminium produced from Alcasa's ongoing technology upgrade, modernization and expansion plan.

"Many of the aeronautic products use rolled products, while ingots or cylinders will be used for automobile parts," the official said.

CVG owns 92% of the company, with the remaining 8% belonging to US company Alcoa. Alcasa has installed capacity of 210,000t/y but is in the process of expanding to 450,000t/y.

Aluminum tycoon seeking billions in public investment

RIA Novosti, Russia 14:32 | 26/ 08/ 2005

MOSCOW, August 26 (RIA Novosti) -A high-profile Russian tycoon is seeking billions in public investment to finance a number of private infrastructure projects, a leading business newspaper reported Friday.

Vedomosti wrote that Oleg Deripaska, a core shareholder in the aluminum company Rusal and the industrial holding Basic Element, is petitioning to have the projects financed with money from the government's investment fund.

Russia's fifth richest man, whose personal fortune is estimated by the Forbes magazine at $3.3 billion, met Thursday with President Vladimir Putin to discuss some of the projects Rusal is currently involved with, specifically the Boguchansk hydroelectric power station, in the eastern Russian province of Krasnoyarsk. Deripaska said Rusal would need an additional $1.8 billion to complete that facility and to build an aluminum smelter, in cooperation with the electricity giant Unified Energy Systems (UES).

Russia's 2006 federal budget allows for $2.46 billion to be spent on major projects. With the selection criteria and modes of funding yet to be identified, business heavyweights are already vying for a slice of that financial pie.

A source close to the Krasnoyarsk authorities told Vedomosti that regional government officials and Rusal are currently negotiating with Economics Minister German Gref the possibility of financing the project with money from the government's investment fund.

"We'd like money from the fund to be spent on infrastructure, resettlement of people from flooded areas surrounding the hydroelectric station and construction of railroads and highways," the source said.

The costs are estimated at a total of $2-2.5 billion, so $500 million will have to be put in annually over a span of four to five years.

A source close to Deripaska put the prospective investment at $2 billion. "That's not about state supporting private business," he said. "The infrastructure [facilities] will end up with the state or state-owned companies."

A Kremlin official confirmed to Vedomosti that the president had endorsed the state's involvement in Deripaska-initiated projects.

The tycoon has every chance to break the seal on the fund, pointed out Sergei Gurin, Vice President of the Russian School of Economics. The idea of creating the fund has been under discussion for about a year now, but not a single worthy project has been proposed over that period, the academic said.

Alcasa mulls installing Al extrusion plant - Venezuela

Business News Americas, Chile - Friday, August 26, 2005 18:18 (GMT -0400)

Venezuelan aluminum reducer Alcasa is analyzing the possibility of installing an aluminum extrusion plant to diversify production, the company said in a statement.

The initiative is part of the plan to advance downstream development in municipalities in the Guayana region where the reducer operates, according to the statement.

The plant proposal will be presented this week. Swiss-US consortium Gerald Metals will serve as project consultant for themes related to technical issues, machinery and financing.

Alcasa and Gerald Metals will present investment officials from China a financing proposal given that the Asian country has expressed interest in providing financial assistance to Alcasa.

The Alcasa plant is 92% owned by state holding company CVG, while the 8% balance is property of US aluminum company Alcoa (NYSE: AA).

Alcasa has an installed capacity of 210,000t/y but is expanding to 450,000t/y.

Lloyd's to pay $137 million to Kaiser in asbestos cases

Royal Gazette, Bermuda Aug 26, 2005

HOUSTON (Bloomberg) – Kaiser Aluminum Corp. said underwriters with the Lloyd's of London insurance market agreed to pay $137 million to the company under policies covering the costs of asbestos lawsuits.

The settlement, which requires bankruptcy court approval, will release the underwriters from further liability, Houston-based Kaiser said in a filing with the US Securities and Exchange Commission.

Kaiser, a maker of aluminium products with about 2,000 employees, said in June it expects to exit Chapter 11 bankruptcy in the fourth quarter. The company sought protection from creditors in February 2002 in part because it faced more than 120,000 asbestos-related claims.

Asbestos, formerly used as a building material and insulator, is blamed for lung cancer and other lung diseases in people who inhaled the fibres for several years.

Jennifer Culley, a spokeswoman for Lloyd's in London said she couldn't immediately comment. Thor Valdmanis, a spokesman for Lloyd's in New York didn't immediately return a call seeking comment.

Ravenswood Plant Faces Walkout

WBOY-TV, WV 8/26/2005 08:49 AM

Union members at Pechiney Rolled Products will vote Friday on a contract proposal.

Story by The Associated Press

If union members at Pechiney Rolled Products in Ravenswood don't approve a new contract Friday, a strike could be imminent.

Tim Dean with the United Steelworkers of America said the union has been told by the company that bargaining is over, which amounts to a strike authorization.

Dean says if the majority of the 850 members of Local 5668 don't accept the contract, the union could issue a 48-hour strike notice or the company and union could go back to the table to negotiate.

With around 1,100 workers, Pechiney is Jackson County's largest employer. But a strike would also affect nearby Century Aluminum, the county's second-largest private employer with about 700 people.

Pechiney accounts for about 80 percent of Century's business.

Century sells its molten metal to Pechiney, which then rolls it into finished aluminum products like sheets or coils.

Now, Century takes molten metal to Pechiney, but if workers strike, then Century would have to put the metal into another form to sell it, which would cost more money.

The union and Alcan, the Canadian company that owns Pechiney, began negotiating on April 25. The contract expired in May.

Copyright 2005 Associated Press

China smelters see alumina price down, uncut output

Reuters South Africa, South Africa Fri Aug 26, 2005 8:18 AM GMT

By Polly Yam

HONG KONG (Reuters) - Loss-making aluminium smelters in China are unlikely to cut production this year because they expect prices of their main raw material, alumina, to fall next year, industry officials said on Friday.

But they said the forecast was encouraging some large smelters to add new capacity, making China's alumina demand even stronger and pushing up world prices in the near term.

Chinese smelters were paying around $500 a tonne to import alumina, up 13.6 percent from late July, traders said. The price was expected to rise further due to strong demand from China and a limited availability of spot cargoes.

"Smelters will not cut production. Why? Because alumina prices are expected to fall in 6 to 9 months," a manager for one large smelter in Henan said.

Moreover, the high cost of restarting aluminium production lines were discouraging shutdowns.

Alumina, a white powder from which aluminium is made, typically accounts for about 50 percent of smelters' production costs in China. The country is the world's largest buyer of spot alumina and imports about half of its alumina consumption.

China imported 4.24 million tonnes of alumina in the first seven months of this year, up 25.7 percent from a year ago, and it produced 4.7 million tonnes, up 17.5 percent.

Since 2003, energy hungry China has imposed measures to cool its power-intensive aluminium industry, using taxes measures, credit curbs and higher power fees.

From August 22, Beijing removed a tax provision, under which smelters imported alumina duty-free as long as they exported their finished product. In January it had ended an 8 percent tax rebate and imposed a 5 percent tax on aluminium exports.

The measures and high alumina prices have hit many smelters.

Fifty-six out of 87 operating aluminium plants in China made a loss in the first half of this year, the State Development and Reform Commission said in late July.

But China remained a major supplier of aluminium in Asia, with production rising 18 percent from a year ago to 4 million tonnes in the first seven months of this year.

Prices of spot aluminium have hovered around 16,400 yuan a tonne so far this month, while many smelters' production costs are over 16,500 yuan a tonne.

ALUMINA

In the previous two months, Chinese smelters reduced alumina purchases as they awaited details of the tax provision, and now they hold low inventories of the raw material, traders said.

Although the tax provision ended, permits already approved by Beijing are allowed to run their course. Industry officials said Beijing had issued permits for about 500,000 tonnes of alumina imports, allowing selected smelters to increase imports.

Prices for duty-paid imported alumina have risen 5.1 percent from late July to 5,100 yuan a tonne. Aluminum Corp. of China Ltd., the country's dominant alumina producer, has keep its spot price for 2005 contracts at 4,330 yuan so far this year.

But China's alumina prices could fall next year because of rising domestic production and higher availability in the world market, the officials said.

In the second half of 2005, China's alumina capacity will add more than 2.15 million tonnes, with alumina producers encouraged by high profits. This will boost China's capacity to at least 9.7 million tonnes by the end of the year, up 37 percent from a year ago.

The officials said China also had hidden alumina capacity of 300,000 to 400,000 tonnes scattered in small counties.

Chinese smelters were counting on additional world supply of alumina, which might be created if smelters in Europe failed to secure enough electricity and cut their aluminium production, they said.

Between 500,000 and one million tonnes per year of Europe's 4.4 million tonnes per year aluminium production capacity could face closure as long-term electricity contracts expire, Barclays Capital analyst Ingrid Sternby said in June.

© Reuters 2005. All Rights Reserved.

Union Loses in Ormet Appeal for Reorganization

Wheeling News Register, WV Aug 26, 2005

By ADAM TOWNSEND

A spokeswoman for Ormet Aluminum Corp. confirmed Thursday that the U.S. Bankruptcy Court in Columbus ruled against the United Steel Workers Association's appeal of Ormet's reorganization plan.

The union, which represents the striking employees of Ormet's Burnside Alumina and Hannibal rolling facilities, filed two separate claims in June related to reductions in retiree benefit plans.

According to Ormet's most recent quarterly report, the USWA filed two separate claims against the company's 1113 reorganization plan accepted by the bankruptcy court.

"One claim totaled $6.3 million and was specifically related to previous changes in retiree benefit programs that the company implemented on January 1, 2003," the document states. "The second claim totaled $177 million and was specifically related to the future changes in retiree medical obligations based on the new program of payments to the Voluntary Employee Benefit Association for the Hannibal hourly retirees."

Ormet spokeswoman Linda Regelman confirmed the decision Thursday afternoon.

"The bottom line is that the judge ruled that the company exited bankruptcy because of the 1113," she said. "If it would unravel at this point, it would force the company into liquidation."

Regelman said that there are no talks currently scheduled between the USWA and the Ormet management.

She said there is a specific amount of money by which the company must reduce its costs, and she accused the union of refusing to take that into consideration during negotiations.

"The union is well aware of that amount," she said. "What they are doing is that they are not coming to the bargaining table with proposals that recognize that number."

Union representative Denny Longwell could not be reached for comment today, but said last week that the most recent talks almost a month ago were unproductive.

The current strike began in November of last year and is continuing. Picketers are at the Ormet plants in Hannibal 24 hours a day in six-hour shifts.

The USWA also filed unfair labor practices charges against the company in April of this year concerning changes the reorganization plan made to the collective bargaining agreement, but the National Labor Relations Board dismissed those charges on July 31.

SUAL Group to obtain revenue at the rate of US$2.3 bln for the year 2005.

Analytical Information Agency, Russia Aug 26, 2005

SUAL Group plans to obtain revenue at the rate of US$2.3 billion for the year 2005, the Vice-President of SUAL-Holding Evgeny Olkhovik reported to journalists.

For the year 2004, the Company's revenue made up US$2.3 billion.

The production of aluminium will raise up to 1 million tones, the alumina output - up to 2.5 million tones.

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.

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.

Within the Group's investment project portfolio is Komi Aluminium. The project foresees the development, construction and operation of a modern bauxite, alumina and aluminium complex in the Komi Republic, that will be based on the Middle Timan Bauxite deposit, the largest such resource in Eurasia. The design capacity of the complex is 6.0 million tonnes of bauxite, 1.4 million tonnes of alumina and 300,000-500,000 tonnes of primary aluminium per annum. Realisation of the Komi project will considerably reduce the dependency of Russia's aluminium industry on external raw material supplies.

Alba to add six line its smelting group

Bahrain News Agency, Bahrain 27 08, 2005

Manama, Aug. 27 (BNA) Alba to add the sixth smelting line to its smelting group which produces currently 830,000 tons annually.

Alba will start the first steps of this huge project following the official announcement of the fifth grid next September. Alba Deputy Chief Executive Mahmoud Al-Dailamy said that the sixth line will be cheaper than the fifth line which costs 1.7 billion US dollars and will meet the growing needs of aluminum at the local, regional and international markets.

SUAL Bauxite Mine

The Moscow Times, Russia Monday, August 29, 2005. Issue 3240. Page 6.

The country's second-largest aluminum producer, SUAL, said Friday that it had commissioned a new 1,400-meter-deep bauxite mine at its Sevuralboksitruda mining complex in the Northern Urals. The mine, Novo-Kalinskaya, is meant to compensate for falling output at two other local mines with depleted resources. The two old mines produced 800,000 tons of bauxite per year. Novo-Kalinskaya is expected to produce 170,000 tons of bauxite until the end of 2005 and will eventually reach the level of output of the old mines, the statement said. (Reuters)

INTERVIEW:Australia Aldoga To Approve Aluminum Proj Soon

Yahoo News Tuesday August 30, 12:08 PM

By James Attwood Of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)--Australia's Aldoga Aluminium Smelter Pty. Ltd. has given preliminary approval to engineering studies undertaken by its Chinese partners for the A$1.5 billion smelter on Australia's northeastern coast.

Aldoga, controlled by U.K.-headquartered Anegada Metals Corp., expects to issue final approval of the studies in the coming weeks, Managing Director John Benson told Dow Jones Newswires in an interview Tuesday.

"Our engineering staff signed off in the last 24 hours (so) it has been accepted in principle, but we'll know between now and Sept. 10-11 if it satisfies all (our) requirements," said Benson, adding he is due to arrive in China Wednesday.

Final approval of the engineering studies would be the first major step forward in the long-delayed project, since it signed agreements in late 2003 with China Nonferrous Metal Industry's Foreign Engineering & Construction Co. (000758.SZ) to supply equipment, technology and engineering.

The agreement, inked ahead of a scheduled June 2004 construction start, also secured Aldoga a deferred payment of A$771 million from the Export-Import Bank of China.

Benson previously attributed the delays to his company's decision to revise, and ultimately go back to, an original configuration of 420,000 metric tons a year.

Some industry watchers say the holdup had more to do with a battle between Chinese technocrats eager to see homegrown equipment and technology used in the west and hard-nosed local economists who question the A$1.5 billion project's feasibility.

Speculation has also linked the delays to Aluminum Corporation of China Ltd.'s (ACH) participation in the Queensland government's bidding process for a concession to develop the Aurukun bauxite deposit.

Expects Financing By Year-End

Final approval of the engineering studies in the coming weeks would allow financing for the project to be in place by the year-end and construction to start early next year, with first output slated for two years later, Benson said. The plant can ramp up to full capacity a year after that.

"We're not too far off schedule," he said.

As the costs of materials and labor in Australia soar and other projects face cost blowouts and delays, Aldoga is looking to take advantage of cost savings from sourcing much of the engineering and equipment from China.

"But certainly we are not forging ahead with the smelter on the basis that we have some global competitive advantage in capital or labor," Benson said.

"There are other reasons why we believe a A$1.5 billion investment at this time is appropriate in Australia," he said, adding those included lower sovereign risk and proximity to ever growing markets to the north.

He said the project's off-take is assured with the Chinese keen to take it all.

Higher Power Costs Could Be An Issue

But analysts have raised questions over the smelter's running costs given Queensland's electricity prices of around A$32 a megawatt hour.

Benson confirmed Aldoga has a contract with Queensland government-owned provider CS Energy, "so power is one thing that's stable at this stage - we're not contemplating any change."

He said the project is enthused by recent developments that appear to boost the chances of Papua New Guinean gas arriving to Queensland state because of the possible implications for CS Energy and flow through to Aldoga.

Aldoga sister company Metallica Minerals Ltd. (MLM.AU) plans to study the feasibility of building a A$1 billion-plus alumina plant in Queensland, which could be a potential direct customer of the PNG gas pipeline.

If it goes ahead, Metallica's alumina project could feed the Aldoga aluminum smelter, making the two projects complementary.

Pechiney Rolled Products extends labour contract offer

Metals Place, UK Aug 30, 2005

48-hour strike notice withdrawn at Ravenswood plant

Pechiney Rolled Products, LLC., a wholly- owned subsidiary of Alcan Inc., announced today that it will extend its current labour contract offer to the United Steelworkers (USW) Local 5668 at the Ravenswood, West Virginia, aluminium rolling mill until September 3.

Pechiney Rolled Products has also today received notice from USW Local 5668 that the union will withdraw the 48-hour strike notice it delivered on Saturday, August 27.

Additionally, the USW Local 5668 has informed Pechiney Rolled Products that the union will call its employees back to vote again on the offer on Friday, September 2.

The Ravenswood plant is one of the largest aluminium rolling mills in the world and produces high quality aluminium plate, coil and sheet products for the aerospace, aeronautical and transportation industries.

Rusal may process aluminum scrap

Interfax Russia, Russia Aug 31 2005 5:32PM

MOSCOW. Aug 31 (Interfax) -Rusal may start processing aluminum scrap, Vera Kurochkina, The Russian aluminum giant's media relations manager, told Interfax.

"We're thinking of increasing secondary aluminum processing, but it's too soon to talk of specific projects," Kurochkina said.

Rusal, one of the world's top three aluminum producers, currently processes its own aluminum waste at the Resal plant in Samara.

RusAl Eyeing More Assets

The Moscow Times, Thursday, September 1, 2005. Issue 3243. Page 7.

Reuters

Aluminum giant RusAl is in talks to acquire a number of secondary aluminum production assets in Russia as part of a government plan to consolidate the sector, media reported on Wednesday.

Kommersant quoted market sources as saying RusAl, the world's No. 3 primary aluminum producer, was currently talking to scrap companies in southern Russia, near St. Petersburg and in the Far East.

A RusAl spokeswoman confirmed the company's broad interest in the scrap sector but declined to give details.

"It's too early to talk about any concrete projects at this stage," she said.

Kommersant quoted sources as saying the plan had full government support. RusAl is controlled by Oleg Deripaska, who is believed to have close ties with President Vladimir Putin. Deripaska met Putin at his summer residence last week.

"It's almost a real government project," one source said. "RusAl has received government officials' nod to buy secondary aluminum producers in exchange for a promise to make that market more transparent and force out criminal gangs."

The source said RusAl could buy a number of scrap companies with a total processing capacity of about 100,000 tons by the end of the year. The source added RusAl wanted to raise scrap production to 400,000 tons in two to three years, grabbing 60 percent of the Russian market.

Labour discontent said growing at bauxite companies

Jamaica Observer, Jamaica Wednesday, August 31, 2005

LABOUR discontent has been growing within the bauxite/alumina industry over the past two months, with two companies - Alpart (Alumina Partners) in Nain, St Elizabeth and Windalco in St Catherine - both threatened by industrial action.

There was a four-hour work stoppage at Nain on Monday by both hourly-paid workers represented by the National Workers Union (NWU) and supervisors represented by the Union of Technical, Administrative and Supervisory Personnel (UTASP). The stoppage was triggered by the failure of the unions and the management to reach agreement on a new labour contract.

Sources told the Observer that an offer of 22 per cent over three years from the management has been rejected by the unions. The unions both want a two-year contract with a 25 per cent increase in the first year and an additional 20 per cent in the second year. The previous contract expired in December.

"But, we're not inflexible," NWU vice-president Norman DaCosta said yesterday. He said that under the bauxite/alumina Memorandum of Understanding (MOU) the workers have held strain since 2001 when the plant's previous owner, Kaiser, went into bankruptcy and eventually sold its 65 per cent share in the company to Glencore AG.

A meeting between the unions and the management scheduled for yesterday was postponed at the request of the management. Another meeting is expected to be scheduled later this week.

At WINDALCO (West Indies Alumina Company) the management has offered a 25 per cent increase over three years, but the NWU, which represents those workers, is insisting on a two-year contract.

The matter was referred to the Ministry of Labour and a meeting held there last month. They agreed to resume local level negotiations, but those talks broke down after the union demanded that the company disclose its production costs per tonne.

They agreed to a two-week break in the negotiations to deal with an outstanding dispute over payment for sick leave. The break ends September sixth and the talks are expected to resume on September seventh at the Ministry of Labour and Social Security.

Swiss metal firm, Glencore International AG, one of the world's largest supplier of a wide range of commodities and raw materials to industrial consumers, owns 93 per cent of WINDALCO while the Jamaican government owns the other seven per cent. Glencore also owns 65 per cent of Alpart, while Hydro, the third largest integrated aluminium supplier in the world, owns the other 35 per cent.

Jamaica has not escaped Katrina's wrath

Jamaica Observer, Jamaica Wednesday, August 31, 2005

Dennis Morrison

Officials of the relevant US Federal disaster agencies and state and city bodies in Louisiana, Mississippi and Alabama are now mounting relief and rescue operations in the areas devastated by the belligerent hurricane Katrina. Preliminary assessments, which are very tentative, suggest the need for perhaps the most massive reconstruction programme ever to be undertaken in the USA in response to a natural disaster.

We in Jamaica can empathise with the suffering of those affected, having in recent times experienced hurricanes Gilbert and Ivan. As a matter of fact, we have hardly gone through a year in the last five years without sustaining major damage from flooding and hurricanes.

The difference, as my son who is in North Carolina pointed out, however, is that in our case this kind of damage leads to loss of output, inflation pressures and slippage in economic growth targets, while in the USA, which has easy access to the capital to finance reconstruction efforts, it serves as an economic booster. Nevertheless, with the disruption caused by Katrina to oil production in the Gulf of Mexico, which is home to the largest segment of US domestic oil production, the effects of the hurricane damage could well set back the US economy. These effects will likely be felt in terms of output and increased price inflation, and the impact of that on consumer spending.

Though Jamaica was not in the path of Katrina, we will feel the squeeze through higher oil prices and the further negative consumer sentiment about leisure travel for the months of September and October in the southern USA and the Caribbean. Preliminary reports are that the Gramercy alumina plant in Louisiana, which uses Jamaican bauxite, has suffered minimal damage, but in the weeks ahead production, movements of raw materials and output will depend on conditions on the Mississippi River. We indeed live in a global village where the production systems and financial and other markets are all intertwined.

The dislocation of oil production in the Gulf of Mexico follows that caused by hurricane Ivan in September 2004 and comes at a time when there is a tight demand and supply balance in world oil markets. Unlike former times when OPEC could boost production to meet temporary shortfalls, oil producers are now running flat out, including Saudi Arabia, which was formerly the swing producer. The result is that almost every disruption or uncertainty provokes sharp movements in prices, to the point where market psychology sometimes overrides the fundamentals.

In this situation, oil prices are likely to remain volatile even if the US strategic reserves are tapped. Gasoline prices in particular will be driven up with the closure of refinery capacity in the US Gulf states, notwithstanding that the driving season in the US is coming to an end and demand and prices would normally trend downwards during this time of the year. This means that Jamaican motorists must be prepared to manage their consumption in a way to meet increased price pressures over which we have no control.

They, however, seem determined to buck the tide as there is apparently no let-up in consumption, even as the price of 90-octane gasoline has gone over $50 per litre.

With the signing of the PetroCaribe Agreement last week, we can at least look forward to a lessening of the pressure on the foreign exchange market as Venezuela will supply up to 21,000 barrels per day of crude oil on concessional terms that will allow for a sizeable part of the bill to be converted into long-term loans. The arrangement does not make possible a reduction in gasoline prices, since we will be charged the full market price for shipments, and this should be understood by all. It is the postponement of payment which is the real benefit, and the conversion of part of the bill to loans provides resources for long-term development projects which we could not otherwise finance and especially, at interest rates which are highly concessional. This opportunity must be seized as there is the urgent need to fortify our coastal areas, train our rivers and undertake vital reconstruction work to our infrastructure that has been damaged by successive hurricanes since 2002.

The events of this year's hurricane season are reminding us how much more work we must all do to make the Jamaican economy less vulnerable to shocks, whether due to natural disasters, or otherwise. In the field of energy this requires broadening of supply arrangements and diversification of sources, and equally important, conservation and measures to radically improve efficiency in use.