AluNews - February 2006

Venezuela Gov’t to end aluminum exports

Daily Journal (subscription) Caracas, Thursday February 2,2006

Venezuela will gradually phase out exports of aluminum, wood and other raw materials, ending them altogether as early as 2012 in order to boost domestic production of processed materials, the mining minister said Wednesday.

"The objective is that we will not export even a gram of aluminum or a kilogram of wood," Mining Minister Víctor Alvarez told reporters.

"In 2012, 2013, we should be processing 100 percent of our raw materials, our basic products in this country," including aluminum, iron, aluminum oxide and wood, he said.

Alvarez declined to give details on how much the exports would be reduced each year and said President Hugo Chávez would make further announcements shortly.

Chávez has promised to reduce Venezuela’s heavy dependence on imports of food and other manufactured goods to make the country self-sufficient.

"Our goal is for Venezuela, in the next six years, to declare itself an industrialized country," Alvarez said. AP

Kaiser Aluminum Welcomes Back Thomas Gannon as VP of Marketing, Aerospace and Distribution Products

Business Wire (press release), CA February 01, 2006

FOOTHILL RANCH, Calif.--(BUSINESS WIRE)--Feb. 1, 2006--Kaiser Aluminum today announced the return of Thomas P. Gannon to the company as vice president of Marketing, Aerospace and Distribution Products. Gannon worked previously with Kaiser Aluminum from 1977 to 1999.

"Tom brings a great deal of knowledge and experience to the commercial team at Kaiser Aluminum," said Keith Harvey, vice president, Sales & Marketing, Aerospace & Distribution. "His addition will make our organization stronger as we pursue new growth opportunities and solidify our position in the marketplace."

Based out of Cleveland, Ohio, Mr. Gannon will report to Mr. Harvey and help lead the commercial efforts in the marketing of Kaiser Aluminum's sheet & plate, rod, bar, tube and soft alloy extrusion products globally.

Mr. Gannon first joined Kaiser Aluminum in 1977 and assumed progressively higher-level positions in sales and marketing management, primarily in the company's forgings and extrusions business. From 1999 to 2005, he worked at Alcan Corporation, first as automotive market director and then as vice president, managing the industrial products and automotive commercial effort for Alcan's North American rolled products division.

With the subsequent spin-off of the majority of Alcan's rolling assets into Novelis, Gannon continued as vice president and maintained the commercial responsibility for over 450 million pounds annually of rolled product sales.

Mr. Gannon is a recognized leader in the automotive aluminum industry, serving as chairman of the Aluminum Association's Automotive Executive Council. In this position, he leads the industry efforts to advance aluminum's penetration in the light vehicle segment.

Mr. Gannon earned a B.Sc. in Educational Communications from Ithaca College and an MBA from Gannon University. He brings to Kaiser Aluminum over 28 years of industry experience.

RusAl Chief Vies for Bigger Role in Sector

The Moscow Times, Russia Thursday, February 2, 2006. Issue 3344. Page 7.

Russian Aluminum aims to drive a necessary consolidation in Russia's nonferrous-metals sector, chief executive Alexander Bulygin said Wednesday.

Bulygin said that the global process of consolidation among base metals producers means the largest mining companies are getting larger and that "to compete with them, Russian companies will need to consolidate further," Dow Jones reported. "We intend to be an active part of this process," he added.

Bulygin did not specify which precise areas of the mining and metals sector his company intends to target, giving only a vague reference to base metals traded on international exchanges, Dow Jones reported.

He did rule out the steel sector as a target area, with aluminum prices fast outpacing steel prices in recent months, Dow Jones reported. Aluminum prices climbed to a 17-year high in London on Tuesday.

RusAl, controlled by billionaire Oleg Deripaska, makes about one-eighth of the world's aluminum and plans to invest $8 billion to produce 5 million tons of aluminum and 8 million tons of alumina a year by 2013, making it the world's biggest. Alumina, derived from bauxite, is used to make aluminum.

RusAl's 2005 revenue rose 13 percent to $6.1 billion on a 1.6 percent increase in metal sales by volume. Production of primary aluminum rose 1.6 percent to 2.7 million tons last year. Bulygin said the company would raise output only marginally this year, as expects its Khakassia smelter, in western Siberia, to produce for only about a month in 2006. The plant is currently nearing completion, Dow Jones reported.

The company has not made any decisions about an initial public offering, Bulygin said. However, he noted that he expects RusAl to nominate three independent directors to its board by May as part of a broader improvement in corporate governance at the firm.

Will Eastalco rule again?

Frederick News Post (subscription), MD February 1, 2006

Senator wants to help restart aluminum smelter

By Clifford G. Cumber, News-Post Staff

ANNAPOLIS -- One of the most powerful senators in Annapolis said this week he wants to help restart Alcoa Eastalco Works, the Adamstown aluminum smelter shut down late last year after a failure to negotiate a new energy contract.

Senate Finance Committee Chairman Mac Middleton, a Charles County Democrat concerned about the loss of the business and jobs, approached Frederick's two senators last week to discuss finding a way to reopen the plant.

On Friday, delegation members from Frederick County called for a meeting of state officials, the county and Eastalco.

The plant's closure cost over 600 jobs. Alcoa closed the smelter when a more than decade-old contract with Allegheny Power ran out and no power company could be found willing to offer preferential rates in a deregulated market.

Although discussions are preliminary, Mr. Middleton said Tuesday he favors a coal-powered generation plant next to the smelter, possibly expediting the regulatory process to permit and build it. He also said the state could match any property-tax credit offered by the county.

Power company Sempra already has plans for a natural gas-fired power plant on Eastalco land and is going through the state's approval process. The proposed plant has drawn criticism from neighbors wary of its environmental impact.

With escalating natural-gas prices and Sempra's construction timing, Eastalco would be unable to take advantage of the plant's energy production.

Any suggestion of a coal-fired plant is likely to spur strong community protest, as when Duke Energy planned to build a station in Point of Rocks. Ultimately, public outrage led Duke to withdraw its permit application from the state in November 2002.

Mr. Middleton said a package is in reach to help the smelter. But local help must be sought by Eastalco before anything can move forward, part of the reason Mr. Middleton approached Sens. Alex Mooney and David Brinkley, he said.

"It's too important to lose," Mr. Middleton said. "I think that it's in the best interest of the state that the locals step up to the plate with some support for and some expediting of the process, and financial support, for the state to partner with them."

Eastalco needs to seek that help from the county. Mr. Middleton said he would also like to see a commitment by Alcoa Inc., the smelter's parent company, for financial support.

"They've gotta get serious about it," Mr. Middleton said. "A lot of times you have these corporations that aren't Maryland-based that are making these decisions, and then you have a local company that can sometimes be left out there hanging. I agree that we need to have a firm commitment from headquarters that there's going to be some on-site generation.

"They're going to have to pony up some of the costs too. It can't just be local and state governments footing the whole bill," he said

Delegate Rick Weldon, who represents Adamstown, said Friday he will not sign on to any legislation if Alcoa refuses first to commit in writing to protect plant workers' jobs for at least 10 years.

"In terms of the General Assembly taking this extraordinary action to assist Alcoa, it makes it their obligation to commit to the taxpayers of the State of Maryland that these jobs are going to be held to a higher standard," Mr. Weldon said.

In a meeting Monday night, Mr. Brinkley told Eastalco representatives to approach the Frederick County Commissioners and bring them into the loop.

"I don't think Frederick County wants to read about it in the paper that the legislature passed a bill to salvage Eastalco and it comes at the expense of the county," Mr. Brinkley said.

Mr. Mooney told the Frederick delegation at their Friday meeting that Eastalco could propose decreasing to 200 the maximum number of days for the approval process, and increasing the maximum number of megawatts the plant can produce from 70 to 120, before the generating station is considered a large facility.

The changes would allow Eastalco to move quickly on building a plant that could produce enough energy to satisfy the smelter's needs. Before its power contract ended, Eastalco was the largest user of electricity in the state, using enough each year to power Baltimore City.

According to some delegates, the proposal will not play well with the legislature because it would increase the effect on the environment, while reducing the regulatory burden.

Delegate Galen Clagett, a Democrat, said the Japanese consortium who are Eastalco's part-owners with Alcoa did not want to dismantle the smelter, preferring instead to generate power on site.

Russians ponder aluminium plant

Australian, Australia February 02, 2006

Nigel Wilson, Energy writer

GIANT Russian aluminium company Rusal is considering building a greenfields aluminium smelter in Queensland - and aims to power it through its own generating capacity.

Chief executive Alexander Bulygin said preliminary studies had found that Queensland's combination of coal and alumina supplies could allow a greenfields smelter investment that relied on low energy costs.

Speaking from Moscow last night, Mr Bulygin declined to specify the investment or the time frame.

But it is understood Rusal has already had extensive discussions with Queensland's electricity-generating companies and with the PNG Gas Project owners.

Rusal said that its plans were independent of another Russian-backed group, Aldoga, which had halted plans to build an aluminium smelter at Gladstone.

Mr Bulgyin spoke after the privately owned Rusal, the world's third-largest aluminium group, reported record earnings for 2005.

He said Rusal's 2005 sales increased by 12.8 per cent to $US6.1 billion ($8 billion) compared with $US5.4 billion in 2004.

Rusal, which was formed in 2000 from aluminium companies in Russia and the former Soviet Union, accounts for 75 per cent of Russian aluminium output and 10 per cent of world production.

Its investment in the world's largest alumina refinery, Queensland Alumina at Gladstone, is the biggest Russian investment in Australia.

Releasing Rusal's production and financial results for 2005, Mr Bulygin said measures taken by the Chinese Government to curb primary aluminium production growth, as well as significant power and raw material limitations, would impede China's development as a net exporter.

"Therefore, Rusal believes that all these factors will contribute to further aluminium price increases," he said.

"Over the year the company expects aluminium demand to rise at a rate of 7 per cent and aluminium prices to be sustained at $US2200 to $US2500 a tonne, with the possibility of reaching the level of $US2700 to $US2900 a tonne."

The company's total investment tripled from $US524 million in 2004 to $US1.4 billion in 2005.

Aluminium production was up 1.6 per cent on the year to 2.7 million tonnes of primary aluminium. Alumina production increased 25.7 per cent to 3.89 million tonnes.

Mr Bulygin said four main factors were influencing the world aluminium market.

These were energy prices, the high cost of new production capacity, further closures of unprofitable smelters in Europe and the US, and aluminium production in China.

But he said the price of alumina was likely to fall this year from around $US500-550 a tonne and could be as low as $US350 a tonne in 2007.

Rusal is owned by one of Russia's so-called oligarchs, Oleg Deripaska, through his company Basic Element, Russia's largest asset management company for private equity funds.

€425-million, digitally controlled smelter power

Control Engineering, IL February 2, 2006

France-based Alstom has won a €425-million (about $511 million, as of Dec. 21, 2005) turnkey contract from Sohar Aluminium Co. It will construct a digitally controlled, 1,000 MW, gas-fired combined-cycle power plant in Sohar, Oman.

Contract scope covers engineering, supply, construction, and commissioning; as well as a 15-year service agreement—for the gas turbines, generators, and auxiliaries. Slated to commence in December 2005, the project is scheduled for a June 2008 completion.

The plant, supplying electricity to a new aluminum smelter, will comprise four, Alstom GT13E2 gas-turbines along with four, heat-recovery steam generators, two steam turbines, and six generators.

— Richard Phelps, senior editor, Control Engineering, richard.phelps@reedbusiness.com

© 2006, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

Rusal buys 77.5 pct stake in Nigeria's Alscon for 250 mln usd

Forbes 02.03.2006, 11:38 AM

MOSCOW (AFX) - Russian company Rusal, the world's third largest aluminium producer, said it has acquired 77.5 pct block of Aluminium Smelter Company of Nigeria (ALSCON) in Akwa Ibom from the Nigerian Bureau of Public Enterprises (BPE) for 250 mln usd.

The transaction will add almost 150,000 tonnes annually to Rusal's aluminium production capacity.

Included in the deal are a 193,000-tonne smelter, a port on the Imo River and a power-generating station.

MAN AG unit Ferrostaal and the government of Nigeria remain minority shareholders with 7.5 pct and 15 pct stakes respectively. The three shareholders plan to invest another 150 mln usd over the next three years to complete, refurbish and modernise Alscon.

In 2000, the smelter was brought to a standstill because of high production costs, inadequate gas supply, complicated marine access and lack of working capital. Once fully operational, the smelter could provide jobs to 1,800 people.

newsdesk@afxnews.com, jsa

Japan's Mitsui sees world aluminium shortfall of 156,000mt in 2006

Source: Platts Metals Place, UK Feb 03, 2006

The world will be short 156,000mt of aluminium in 2006 due to slow output growth on the back of smelter shutdowns in Europe and the US, Japanese trading house Mitsui & Co Metals said in its forecast report published Friday.

MCM projects worldwide aluminium output in 2006 to grow by 4.3% from 2005 to 33.1-mil mt. Demand is forecast to grow by 5.5% on-year to 33.3-mil mt.

On the supply side, smelter shutdowns and output cuts in the US and Europe would trigger a 2.6% decrease in supply in these regions this year. The reduced supply there, however, would be partially offset by output increases in the United Arab Emirates, India and China.

China is expected to produce 8.5-mil mt in 2006, up 8.3% on-year. Supply of alumina, one of the factors affecting China's aluminium output, is expected to be tight in the first half of 2006 but supply would rise on alumina output hikes at Worsley refinery in Australia and Alunorte refinery in Brazil.

Meanwhile, demand growth in Japan, Europe, the US, Oceania and "other western economies" is projected to grow by 2.8% on-year to 23.1-mil mt, Russia and former socialist economies at 5.2% to 2.1-mil mt, and Chinese demand to surge by 14.2% to 8.0-mil mt.

LME aluminium prices to fall in second half of 2006

MCM also forecast that aluminium prices on the London Metal Exchange will stay at high levels of $2,350-2,700/mt in H1 2006, little affected by changes in the LME stocks. The pressures for higher prices are output cuts in Europe and the US, China cutting aluminium exports, high crude prices and the US economy that drive speculative fund buying. LME prices in H2 would ease slightly to around $2,150-2,650/mt, after the demand peaks off after summer.

Meanwhile, premiums for aluminium imported to Japan are expected to move up in 2006. According to Platts assessments, premiums for good western grade aluminium for the current quarter were $55-58/mt CIF Japan over LME cash prices. MCM sees higher premiums due to possible reductions of supply from China and good western producers, and increased demand in Japan as the country's economy picks up.

Second quarter premiums are forecast at $55-65/mt CIF Japan, with third quarter premiums indicated at $55-75/mt, and fourth quarter levels at $50-85/mt.

Highveld honey-pot attracts Russian high-flies

Mineweb, South Africa '03-FEB-06 09:00' GMT © Mineweb 1997-2004

By: John Helmer

MOSCOW (Mineweb.com) -- What is it that is drawing Russians like Victor Vekselberg and Alisher Usmanov to South Africa?

In Russian villages, the peasants used to say that where there’s honey, there will always be flies. By that, they mean flies, not bees – raiders, not producers. For Vekselberg, manganese is the honey; for Usmanov, vanadium; both produce alloys vital to the production of steel. To those who have signed joint-venture or buy-sell agreements with the two Russians, and also those who have not, but have seen them descend on their assets nonetheless, Vekselberg and Usmanov are agile predators, whose drive is in their nasal instincts, and whose wings are their protection.

Mineweb has already told the story of Vekselberg’s fly-over pursuit of manganese in the South African Kalahari , cheered on in Pretoria by the deputy minister of minerals and energy, Lulu Xingwana, and recently endorsed by President Thabo Mbeki. He has appointed Vekselberg as a member of his board of international mining advisors.

Mbeki’s advisors did not warn him of Vekselberg’s latest legal problems: the first, a clash in Kiev six months ago over a mystery $25 million down-payment that was paid, then forfeited, for the Ukraine’s Nikopol manganese ferroalloy plant; the second, recent Russian court hearings and a London arbitration over contract violations in the trading of shares of Russia’s principal titanium plant.

In Kiev, Vekselberg met his match in the person of then prime minister Yulia Timoshenko, and her local steelmaking supporters. Nikopol, the largest ferro-manganese producer in the world, and the most important source of the alloy to the Russian steel industry, is going back to the Ukrainian government to sell to Ukrainian bidders. In the more recent titanium case, Vekselberg has been swatted by Vyacheslav Bresht, the entrepreneur who introduced the concept of Russian racketeering to the US courts, winning control thereby of VSMPO-Avisma, the dominant titanium producer for the international aerospace industry.

Vekselberg’s troubles in the US courts are about to become even worse, as the man whose oilfield he "stole" almost a decade ago, emerging victorious from the US federal appeals court, gets ready to press Vekselberg and his associates into sworn testimony, and trial.

On the ground, at the Kalahari manganese field, locals tell stories of helicopter landings of men from Vekselberg’s Renova group, who drop in to sniff their turf, and discuss management arrangements with locals, if any are interested. In Gabon, the Kalahari’s African rival in the production of manganese, there is talk of more helicopter landings, Renova concessions for manganese, and more promises. Asked what they are doing in Gabon, Renova’s leadership has told Mineweb in Moscow that they "prefer not to answer that question."

As metallurgists express its value, the purpose of cornering the world market in manganese, as Vekselberg has been trying to do, is to dictate its price, and hence its profit margin, to those who cannot do without it. The consumption of manganese is vital to steel production, directly at the pig-iron stage of manufacture, and indirectly, when the ore is upgraded to ferroalloys and metal. According to the US Geological Survey, "manganese has no satisfactory substitute in its major applications." According to the court record, and also his family’s gossip, Vekselberg has made a career out of dictating price terms, and he gets very sore-headed when someone else out-manoeuvres him on price and margin.

Vekselberg’s Russian assets are a group of aluminium smelters, alumina refineries, and bauxite mines. Apart from pending claims in the Russian courts against the smelter Vekselberg allegedly arranged to steal, the underlying value of these assets depends on the Russian government’s attitude towards the price of electricity, and of the gas used to generate it. If the state decides not to subsidize the price of these inputs for up to 20 years ahead, Vekselberg’s assets cannot make a profit, and he cannot borrow the project finance to develop them. Vekselberg’s big Russian problem, therefore – one he is unlikely to advise President Mbeki at their next advisory council session -- is that the state owned utilities, UES and Gazprom, may decide to share in the profit of the assets by taking equity in them, rather than granting Vekselberg the right to take the profit for himself. That would be quite a fly-swat, and Vekselberg’s Russian advisors do not hide their concern.

To hedge against this risk, Vekselberg should convert his Russian cash profit into non-Russian assets offshore. If those assets can then be used to produce cheaply, and export expensively into Russia, Vekselberg may be able to preserve the upperhand against his government.

In the case of ferromanganese, Russia cannot supply itself, and thus its strategic steelmaking enterprises are dependent on imports. In Soviet days, these were firmly under control in Georgia and the Ukraine. Today, Russia’s principal steelmaker Evraz – owned by Vekselberg’s sometime partner, Alexander Abramov – refuses to reveal where it buys its supplies from, terming the information a commercial secret. Other domestic steel and pipemakers say the same thing. But Russian trade statistics indicate that at least 85% of ferromanganese imports are Ukrainian. Poland contributes the next largest volume. The steelmakers estimate that the tonnage of manganese they need is equal to about 0.5% of their steel output. In 2004, Russian production was 54 million tons, and so the manganese requirement was about 2.7 million tons. For Russian steel output to expand, imports of ferromanganese must also grow. That’s what deposits in South Africa, and maybe Gabon, are for.

Vanadium is also an alloy for hardening steel. Most of the world’s reserves are in China, but South African reserves are almost as large, and SA mines produce more than their Chinese counterparts. Last year, about 18,000 tons were mined in SA, making 42% of the world total. China comes next with 14,500 tons, and Russia is third with 9,000 tons. As an alloy for steel, there are substitutes, such as manganese, titanium, tungsten, and columbium. But there is no substitute for vanadium in the titanium alloyed metal which the aerospace industry requires for its engines, and other sensitive components.

Russia’s principal source of vanadium is the iron-ore deposit known as Kachkanarsky. At present, that is controlled by Abramov and the Evraz group. The former owners of the combine are in court in the US, charging that they were robbed of the asset. Usmanov controls two of the largest iron-ore mines in Russia – Lebedinsky and Mikhailovsky – and also two steel mills, Nosta and Oskol.

Usmanov is a raider on his own behalf, and also on the behalf of others. His original moves into iron-ore and steel assets were directed by the Gazprom group, who converted mine and plant debts owed for fuel supply to Gazprom, into equity controlled by Gazprominvestholding and other companies. It was Usmanov’s job to manage the holding, and run the mines and plants. He did not own the controlling stakes by himself, at least not at the start. When Alexei Miller, an appointee of President Vladimir Putin, replaced the Gazprom leadership of Rem Vyakhirev, Usmanov faced the risk of losing control of the assets. He survived, and went on to take over the Nosta steelmill, whose previous owners had tried murdering each other, before they gave way to a man reputed to be employed by high-ranking federal police officers. Usmanov renamed the asset Ural Steel.

There is hardly a stone which Usmanov has lifted that Mineweb readers have not had the chance to measure. That is until this week, when Usmanov announced that his Metalloinvest group – for which he and a partner paid nearly $2 billion a year ago – is proposing to bid for Anglo American’s 79% stake in Highveld Steel & Vanadium Corporation. According to Usmanov’s spokesman, "We confirm our interest [in Highveld] and [confirm that Usmanov] was included in the short-list."

For those readers, who remember that Usmanov once portrayed his raid to seize a diamond-mining licence in northwestern Russia as a patriotic service to keep the Oppenheimer family from Russia’s national treasure, Usmanov’s offer to carry a very large suitcase of case over the threshold built by Ernest Oppenheimer will be amusing.

De Beers is currently pursuing Usmanov through the courts of the US and Sweden for defrauding its company, Archangel Diamond Corporation, of the right to mine the diamonds it had discovered in 1996 at the Grib pipe, in Arkhangelsk region. Usmanov no longer defends what he did, saying only that he has sold out his interest to another partner, Vagit Alekperov, controlling shareholder of LUKoil, Russia’s leading commercial oil producer.

If Usmanov wants to follow Vekselberg on to Mbeki’s advisory board, he may find SA officials whose attitude towards De Beers is quite similar. But for the Oppenheimers, as well as for the Anglo American and Highveld boards, the important issue today isn not Usmanov’s wit or patriotism, but whether his suitcase has all the cash he promises.

Highveld acknowledged this week that it has drawn up a list of bidders, but it is not identifying them. Usmanov has declared himself instead, and is the fourth to do so. The others include the Mittal group; the Indian steelmaker Tata; and the Kermas ferroalloy group, according to its London-based Croatian director, Danko Konchar. Kermas is connected to Russia through ownership of ferrochrome plants, but its principal business is largely hidden. Last year, Kermas arranged SA bank finance to buy Samancor Chrome for more than $430 million.

Usmanov’s spokesman was asked if he is intending to bid for Highveld alone or with partners. With the price of vanadium expected to stabilize this year, after the record burst in 2005, and Highveld announcing double profits for 2005, the value of the company is reputed to be between $1 billion and $1.6 billion. Usmanov’s bid is thus likely to cost him not less than $1 billion.

Usmanov’s power as the largest iron-ore producer in Russia does not generate free cash, or leveraging, equal to that figure, especially since this is not the only international billion-dollar offer for assets Usmanov is circulating in the international marketplace at the moment.

Bank sources report that, ever since he took over Metalloinvest’s Russian assets a year ago, Usmanov has been seeking long-term, large-scale foreign financing. In the deal to acquire Mikhailovsky, part of the cost was shouldered by Usmanov’s partner, Vassily Anisimov; he had sold his aluminium smelters to Vekselberg for about $500 million several years ago. Usmanov was probably obliged to provide about $500 million himself, and the remainder of the $2 billion purchase price was financed by the state-controlled Russian banking system, which agreed to take shares for security. International banks, with which Usmanov has been in negotiation, are reluctant to accept similar pledges. Also, Usmanov cannot be certain that his Gazprom friends, and the state banks, might still do to him what he and they once did to others – call in the debt, and replace him as the equity owner. It is, therefore, for the same tactical and strategic reasons that are driving Vekselberg into offshore manganese, that Usmanov is keen to move into Highveld vanadium. Funding the takeover is Usmanov’s immediate target.

His first attempt at creating an offshore asset base for himself was a failure in one sense, but a success in another. The largest source of Usmanov’s cash offer for Mikhailovsky last year was the proceeds of his raid on the Anglo-Dutch steelmaker Corus. Buying Corus shares when they were at historic lows, Usmanov’s Cyprus vehicle Gallagher acquired a stake of almost 14%. The Financial Times obliged by reporting Usmanov as Corus’s saviour, promoting his bid for a seat on the Corus board; a deal to supply semi-fabricated steel or iron-ore to Corus plants; and other demands.

But Corus did due diligence on the Russian, and rebuffed him. When Boris Ivanishvili, owner of Metalloinvest and Mikhailovsky, told Usmanov that he was not prepared to enter into a holding partnership with him, and demanded cash instead, Usmanov had to find it. He sold out of Corus at $614 million, realizing more than $300 million in pure profit. Oleg Deripaska, the aluminium oligarch, was briefly Usmanov’s partner in the takeover of the Nosta steelmill, but he also asked Usmanov to buy him out with cash.

In more recent days, Usmanov (and partners in an entity called OEMK-Invest) paid $400 million to Vladimir Lisin's steelmill Novolipetsk to buy back a 12% stake which the steelmaker had held in the Lebedinsky iron-ore plant to assure their iron-ore supplies to the mill. At the same time, Usmanov sold to Lisin a 25% stake in another iron-ore producer, KMA-Ruda . Lisin was restructuring to sell off minority stakes and gain majority control of KMA-Ruda. Usmanov, it can be calculated, had to raise about $350 million for the combined deal.

If Usmanov is bringing a suitcase to Highveld, he must find new cash to fill it. That is not how flies usually think of approaching the honey-pot.

Ministry fails to stave off strike at ALPART

Jamaica Observer, Jamaica Sat Feb 4, 2006

A shutdown of the island's largest alumina refinery is now imminent.

More than one thousand workers at Alumina Partners of Jamaica, ALPART, are getting ready to go on strike following Friday's failed meeting at the Ministry of Labour.

After meeting for seven hours, ALPART's management and officials of the National Workers Union left the Labour Ministry without a settlement.

NWU Vice-President Norman DaCosta has described the situation at ALPART as grave.

Mr. DaCosta has also taken issue with the absence of Labour Minister Horace Dalley and key ALPART officials at Friday's meeting.

The union says over the past 12 months it has been in negotiations with ALPART's management for an improved compensation package for various categories of workers.

However, it says there is no sign that an agreement will be signed soon.

And the industrial unrest at Alpart could spread to at least one other bauxite/alumina company.

The NWU on Friday night reported that workers at WINDALCO who are also in protracted wage negotiations are closely monitoring the situation.

The union says the workers stand ready to take action in solidarity with their colleagues at ALPART.

In addition, it says workers represented by the Union of Technical, Administrative and Supervisory Personnel, UTASP, have signalled that they will not pass the picket line when the strike at ALPART begins.

NWU serves strike notice on Alpart

Jamaica Observer, Jamaica - Friday Feb 2, 2006

Observer Reporter

MINISTER of Labour and Social Security, Horace Dalley last night invited the management of Alumina Partners (Alpart) and the National Workers Union (NWU) to an emergency meeting at his ministry today, to discuss a strike threat at the company's plant in St Elizabeth.

Dalley's intervention followed the issue of a 72-hour strike notice by the union after the breakdown of wage talks. The notice became effective at 5:00 pm yesterday.

Sources told the Observer that the Union of Technical, Administrative and Supervisory Personnel (UTASP), which represents the company's supervisors and clerks, has instructed its members will not pass the NWU picket line if the strike is effected.

NWU vice-president Norman DaCosta, in his letter yesterday to Alpart's general manager Darrel Harriman, said the parties have been in negotiations on a new collective agreement for the 1,250 hourly-paid production workers over the past year.

DaCosta said that the process was, "tedious and excruciatingly slow", and attributed this to what he described as the management's "positional bargaining mode".

The NWU vice-president claimed that a "groundswell of anguish" had built up at the plant, as the workers had become disenchanted and felt "a deep sense of betrayal" as despite the company's record performance and the high price of alumina this was not being reflected in their salaries.

The management made no public response yesterday to the union's claim, but informed the minister of the situation leading to Dalley's decision to call today's meeting.

e bauxite sector has been severely affected by industrial unrest since late last year, with strike notices being issued on several occasions to various plants.

However, on each occasion the ministry has intervened to curtail the strikes.

Cahya JV Smelter Wants Capacity Doubled

Yahoo! News Monday February 6, 8:49 AM

KUALA LUMPUR (Dow Jones)--A joint venture involving Malaysia's Cahya Mata Sarawak Bhd. (2852.KU) wants to double capacity at its proposed aluminum smelter in East Malaysia's Sarawak state to 2 million metric tonnes a year, the Star daily reports.

Cahya Mata, owned by the family of Sarawak Chief Minister Abdul Taib Mahmud, is proposing to build the smelter with Malaysia's Press Metal Bhd. (8869.KU) and China's Shandong Luneng Group Corp. and Sinohydro Corp., the paper said.

The Chinese parties will own 70% of the joint venture, while the Malaysian companies will hold the remaining 30%.

Other companies are also reportedly competing to build and operate the smelter, including publicity-shy tycoon Syed Mokhtar Albukhary, and Australia's Rio Tinto Group (RIO.AU).

The Cahya Mata joint venture has proposed to buy all the power that will be generated by the 2,400 megawatt Bakun hydroelectric dam now being built in Sarawak, the paper said. The plant will also use all the electricity from the 900 megawatt Murum Dam, also in the state, the report added.

Officials from Cahya Mata and Press Metal weren't immediately available for comment.

Newspaper Web site: http://www.thestar.com.my

-Kuala Lumpur bureau, Dow Jones Newswires; 603-2692-5254; djnews.kl@dowjones.com

-Edited by Alan Soughley

RusAl Buys Plant in Nigeria

The Moscow Times, Russia Monday, February 6, 2006. Issue 3346. Page 5.

By Yuriy Humber Staff Writer

Dima Beliakov / Bloomberg

Once in operation, Alscon will boost RusAl's production capacity 6 percent.

Russian Aluminum said Friday that it had signed a deal with the Nigerian government to buy a controlling 77.5 percent stake in Alscon, an aluminum plant, for $250 million.

The deal will boost RusAl's global production capacity by about 6 percent when the plant goes into full production, the company said.

"The acquisition is part of our strategy to boost aluminum production and strengthen RusAl's position as a global company," RusAl head Alexander Bulygin said Friday in a statement.

The Nigerian government holds a 7.5 percent stake and Ferrostaal, part of the German truckmaker MAN, holds 15 percent in the 193,000-ton capacity Alscon smelter.

Under the deal, RusAL adds 150,000 tons of aluminum and aluminum alloys to its existing capacity.

Included in the purchase price are a gas power-generating station and a port on the Imo River. The price also covers the cost of dredging the local riverbed to allow the passage of large 35,000-ton cargo ships, a RusAl spokeswoman said Friday.

In terms of additional investment, RusAl said it would spend, together with other shareholders, a combined $150 million to complete the last quarter of the plant's construction and modernize its facilities.

Alscon was built in 1997 but has stood idle since 2000 due to "high production costs, inadequate gas supply, and complicated marine access," RusAl said in the statement.

RusAl plans to start aluminum production at Alscon within six months, when the company's representatives will take their places on the board of the Nigerian smelter, a spokewoman said.

The plant will reach full capacity in 2007, she said. Supplies of bauxite and alumina, raw materials used to make aluminum, will come from RusAl's two mining operations in Guinea.

Alscon's management has already signed gas contracts with the Nigerian Gas Co.for supplies to its power plant, which will generate all of the plant's energy needs, the spokeswoman said.

Analysts said the Alscan purchase was relatively cheap, mainly because of Nigeria's difficult political and business climate. "In effect, RusAl paid $1,666 per ton of aluminum, which is considerably cheaper than the $2,500 per ton cost in their joint venture with SUAL in the Komi republic," said Denis Nushtayev, a metals analyst with brokerage Metropol.

"They got the discount price because of the political risks in Nigeria," he said.

The 150,000 tons RusAl will annually get from Alscon should boost the company's overall annual output by 6 percent, to 2.85 million tons, it said.

Given the current 18-year high on aluminum prices -- more than $2,500 per ton -- this is a good time to acquire and also build factories on greenfield sites, said Alexei Morozov, a metals analyst with investment bank UBS.

Last week, Bulygin said RusAL would spend $2.1 billion this year on expanding production, including $300 million on acquisitions.

Of the $2.1 billion, RusAl will spend $700 million on modernizing its existing plants, and channel up to $1 billion into greenfield construction, he said.

In the second half of this year, RusAl plans to start up its 300,000-ton smelter in the Siberian republic of Khakassia, with additional greenfield plants near Irkutsk and in Queensland, Australia, under review.

Separately, the Ukrainian government eased legislation to allow the Ukrainian Aluminum Company and the Nikolayevsky Alumina Plant, both owned by RusAl, to integrate with their parent company, RusAl said Friday.

'Building powerplant in Tajikistan is important'

IranMania News, Iran - Sunday, February 05, 2006 - ©2005 IranMania.com

LONDON, February 5 (IranMania) - Russian Ambassador to Tajikistan said that the construction of hydro electric powerplant - Sangtoudeh 2- by Iran in Tajikistan is important for Tajik economy, IRNA reported.

Ramezan Abdullatipov said that the plant will expedite electricity roduction in Tajikistan and lead to resolution of the region's energy shortages.

The completion on the project will also be impetus for Russian investors to expedite their economic project in the country.

Tehran and Moscow were instrumental in ending the civil war in Tajikistan and signing of the final document between the two warring parties, the ambassador underlined.

Although, the share of some countries and organizations were mentioned in their constructive role in the peace talks, but Iran and Russia played a more significant role in national reconciliation the of the country, he said.

About eight years ago following a devastating civil war in Tajikistan through Iran and Russian intervention and other nations a pace treaty was signed.

Abdullatipov also expressed his country's full support for Iran's peaceful nuclear programs.

He said that despite the ongoing hue and cry against Iran's nuclear activities, Russia would continue its cooperation with Tehran in accordance with previous agreements.

The volume of Iran-Tajikistan trade exchanges stood at $130 mln in 2005.

Iran exports mainly foodstuff and construction materials to Tajikistan and imports aluminum and cotton.

Iran has generously participated in Tajikistan's development through investment in the country, particularly in the construction of the Anzab tunnel and Sangtoudeh 2 power plant.

Cahya Mata unit expects to bag US$3b project

Business Times - Malaysia, Malaysia February 6 2006

By ZAIDI ISHAM ISMAIL

CMS Energy Sdn Bhd, a wholly-owned subsidiary of Cahya Mata Sarawak Bhd, is confident that the Government will approve its US$3 billion (about RM11 billion) proposal to build an aluminium smelter plant in Similajau, Sarawak.

CMS Energy director Henry Toyad said the country, and Sarawak in particular, stands to gain from the foreign direct investment injected by its consortium partners from China.

They are the Shandong Luneng Group Co Ltd, State Grid Corp of China and Sinohydro Corp, which are all state-owned.

The Shandong Luneng Group is part of the seven-member consortium building the 2,400-megawatt Bakun dam, slated for completion by end-2008.

"We have also received confirmation letters in secured funding from three China banks, which are the Bank of China, Exim Bank and the Construction Bank of China," Toyad told Business Times in Petaling Jaya.

To date, Cahya Mata Sarawak is the highest bidder for the project which is also eyed by Smelter Asia Sdn Bhd, linked to tycoon Tan Sri Syed Mokhtar Al-Bukhary, which put up a bid valued at RM8 billion.

Other companies jostling for the project include BHP Biliton Ltd/Mitsubishi, Rio Tinto Group (the world’s third-largest mining company) and Alcoa Inc, the world’s largest aluminium producer.

The Government has not officially announced any tenders for the smelter, but many companies have already made a pitch for the project.

Toyad said the country will benefit from the spin-off effects of the aluminium industry, valued at RM500 million to RM700 million a year, which will take up the entire power generated by Bakun as its energy source.

"At 2 US cent per kilowatt/hour, Bakun stands to earn an income of up to RM1.2 billion a year from selling electricity to us. This project will keep the Cahya Mata Sarawak group occupied for some time," said Toyad, who is also the group’s general manager for business development.

Infrastructure and banking group Cahya Mata Sarawak submitted its proposal to the Government last September, under which 70 per cent of the smelter will be jointly held by the entities from China and the remaining 30 per cent by Cahya Mata Sarawak and Press Metal Bhd.

"Once we get approval, construction can start right away and the plant will be ready by 2008 which coincides with the completion of the dam."

Toyad said 20 per cent of the US$3 billion cost, or US$600 million (about RM2.25 billion), will be for construction work such as cement and steel supply, fabrication and earthworks, while the remaining 80 per cent will be used to buy equipment.

Once ready, the smelter located 50km north of Bintulu port will be Malaysia’s first smelter which will buy the entire 2,400MW of

power to smelt aluminium from Sarawak Hydro Sdn Bhd, the owner of the Bakun dam.

Malaysia currently gets its aluminium supply by buying steel billets from Japan, South Korea, Taiwan and Singapore, which is then manufactured into aluminium products.

Sarawak Hydro is 90 per cent owned by the Finance Ministry, and 10 per cent by the Sarawak State Government.

Electricity is the best energy source for a smelter compared to gas and coal, whose prices are expensive and subject to market fluctuations.

The world consumes 30 million tonnes of aluminium a year, of which one-sixth is gobbled up in China alone in the form of construction materials, canned products, airplanes, automotive components and others.

China is venturing overseas to build smelters because it is three times

cheaper to run in Malaysia. The superpower is also closing down its own smelters due to the high energy cost and prefers to focus on other industries.

Bfig To Tackle Rusal In Us Court

Nigeria Daily Independent, Nigeria Sunday 5th, Februrary, 2006

Bassey Udo, Lagos

BFI Group, the American firm disqualified after being declared winner of the bid for Aluminium Smelter Company of Nigeria (ALSCON), Ikot Abasi, Akwa Ibom State, says it will tackle Russian Aluminium (RUSAL) in United States in a legal tussle to stall the execution of the Share Purchase Agreement (SPA) signed over the weekend with the Bureau of Public Enterprises (BPE).

RUSAL has been negotiating the SPA with the Federal Government since 2004 after the bid was halted abruptly following the controversial disqualification of BFIG after being declared winner by the National Council on Privatisation (NCP).

The company was alleged to have failed to pay the 10 per cent of the $410 million bid price it offered for the plant.

Under the terms of the deal, which was finally sealed last Friday, RUSAL is to pay $250 million for 77.5 per cent equity stake in the plant expected to add almost 150,000 tonnes annually to Russian’s aluminium production capacity.

Besides, it will take over the management of the $3.2 billion 193,000-tonne capacity smelter to ensure a "reduction, anode-producing and cast-house areas", development of a port on the Imo River and a power-generating station.

But, in a swift reaction yesterday from his base in the United States, BFIG’s Chief Executive, Dr. Rueben Jaja, dismissed any legal agreement between RUSAL and BPE, declaring that what is being touted "is a mockery of the Federal Government’s claim to transparency and anti-corruption".

Said Jaja in a telephone interview: "If the report is true that RUSAL and BPE have signed the SPA, this is exactly the legal moment we were waiting for. We will definitely fight RUSAL in court both in Nigeria and United States. The conduct of RUSAL is of serious concern and we are thoroughly aware of their activities in Uzbekistan, Ukraine, Guinean bauxite refinery and now Nigeria.

"If the condition of sale is true that they are to open an Escrow account in London for the payment of the agreed price, which is exactly the same request BFIG made and was denied, then we view it as a blatant discrimination and unfair treatment of an American company, headed by an indigene from the country’s oil-producing region, who committed his life’s savings, and gathered the best and brightest to resuscitate a non-performing asset of more than $3.2 billion, and was refused to perform within the agreement.

"It makes nonsense of any claim by government towards the economic empowerment of the indigenes of the region.

"We are determined to ensure that RUSAL does not get the plant. We are determined to fight it. We will do everything to ensure that RUSAL’s serious environmental record does not threaten the lives and ecology of the neighbouring communities there."

Aluminium congress seeks papers

Trade Arabia, Bahrain - Saturday, February 04, 2006

Florence, Italy

A major aluminium congress scheduled to be held in Florence in Italy next year has invited experts in the field to submit papers for presentation at the conference.

The main theme of Aluminium 2000, to be held from March 13-17, 2007, is "Automation for a new aluminium industry with new efficiency, quality, productivity and ecology."

The potential speakers are invited to submit a title for the proposed presentation before April 30, 2006, said a spokesman.

A 200-word abstract should be submitted to the Aluminium 2000 Technical Secretariat at Interall before June 30, 2006. If the abstract is selected, the author will be notified by July 31, 2006 and will be invited to submit a technical paper based on the approved abstract. Final technical papers are due not later than October 31, 2006. Each presentation will be limited to 20-25 minutes followed by a 5-10 minutes question and answer session, said the spokesman.

Other topics to be discussed by the congress include:

Markets & strategies: West & Emerging areas, The Role of Russia and China and India, producers of primary aluminium.

Foundry & innovation: Alloys, casting, equipment, heat treatment, machinery and plant engineering , melting, metal working, rolling technology, smelting technology.

The extrusion plant: Furnaces, billets, presses, downstream equipment, die design and manufacturing, automation, packaging.

Extrusion specialities: The "Small Lots" problem, architectural and non-architectural systems, hard and big profiles, metallurgy for high-speed extrusion, metallurgy for paint adhesion, conform processes, rollforming extrusion, handling equipment, automation, ovens, saws and shears.

Architecture & special uses: Building systems, curtain walls, design & construction, CAD/CAM, exterior & interior finishings, renewal and maintenance, windows & doors, new applications.

Transport & automotive industry: Product and process innovations, aeronautics, nautical, automotive, rail sectors, patents, computer technologies, mechanical processing, alloys, design and innovation.

Anodizing: Racking & jigging, pretreatment, mechanical & chemical etching, high-speed anodizing, hard anodizing, rectifiers, new dipping & electrocolouring colours, patterned effects, advances in sealing, vertical plants.

Coating: Powder & wet processes, pre-treatments, chrome-free products, high-performance polyesters, powder coil coating, small lots handling, vertical and horizontal plants, filiform and point defects, adhesion problems, new powder application methods.

Automation: The "Intelligent Plant", automatic extrusion, anodizing with automatic racking, fully automatic coating plants, automation in profile packing, automatic warehouse, Internet for aluminium technologies.

Environmental protection & recycling: Accident prevention, anti-pollution machinery, innovative plants, environmental technology, recovery and materials recycling, safety equipment, technology and processes, effluent and fumes treatment, water saving, zero discharge, ecological systems and equipment.

Measuring, testing and quality techniques: Certification, computerised technologies, measurement and control techniques, measurement instruments, quality management & control, testing, materials analysis.

Advanced applications & research: Materials handling, automation systems, new patents, new applications, aluminium and sportive equipment.

Congress participants will have the opportunity to visit innovative industrial plants, said the spokesman. More information can be obtained from www.aluminium2000.com-TradeArabia News Service

Alcoa exits race for Australian alumina concession

Metals Place, UK, 6 February 2006

At least two prospective bidders have pulled out of the race for an estimated US$1.5 billion bauxite and alumina concession in the remote Cape York region of northeastern Australia.

Alcoa World Alumina and Chemicals, a subsidiary of U.S.-based aluminium giant Alcoa Inc., and Anglo-Swiss miner Xstrata PLC confirmed Monday they won't bid for the Queensland state government's Aurukun concession.

"AWAC had an interest in bidding for Aurukun but I believe that's no longer the case," said Ken Dean, Chief Financial Officer of AWAC partner Alumina Ltd.

"It's all a question of valuation," he said when asked the reason for the withdrawal.

After receiving 10 expressions of interest, the Queensland state government said Monday it is evaluating provisional proposals submitted by the Jan. 30 deadline.

Declining to comment on how many bids were received, a state development department spokesman said the government is seeking advice from indigenous groups on the bids before releasing a shortlist of would-be concessionaires late February.

A spokeswoman for Xstrata's Brisbane-based copper division confirmed the company decided not to follow up on its initial expression of interest

BHP Billiton Ltd. declined to comment on its ongoing interest and Brazil's Companhia Vale do Rio Doce wasn't immediately available for comment.

Rio Tinto PLC subsidiary Comalco previously withdrew from the pre-bidding process.

Other companies to lodge expressions of interest were Aluminium Corp. of China Ltd., or Chalco, Mitsubishi Corp., Norway's Norsk Hydro ASA, Russia's Sual Group, India's Hindalco Industries, Canada's Alcan Inc. and InterTech Systems.

The state government is keen to get the mine and alumina refinery project back on track after reclaiming the Aurukun leases in 2004 from Alcan on the basis the company failed to act on a 1988 development deadline.

Some analysts said they weren't surprised by the withdrawals given question marks over the deposit's quality, potentially complex indigenous issues and the feasibility of building a US$1 billion refinery in current tight labor and equipment markets.

"About the only thing that's improved over time is the market" with alumina prices at multi-decade highs, said Michael Komesaroff, principal of Urandaline Investments, a Queensland-based consultancy specializing in Asian metals projects.

Komesaroff said the Russian and Chinese participants are the most likely candidates.

"They're emerging economies, their cost of capital is a lot lower so their hurdle rates for success are lower and they've got an autarchic resource mentality," he said.

Another Russian group, Rusal, which decided against joining the initial round of bidding for Aurukun, is keen to join the eventual winner as a joint venture partner, the Australian Financial Review newspaper reported Monday.

Last year Rusal acquired a 20% stake in the Queensland Alumina Refinery, joining Alcan and Comalco as joint owners of the facility.

Rusal is also reportedly interested in building a new 600,000 tons a year aluminium smelter in Queensland.

Brazil's CVRD Opts Out Of Australian Aurukun Bidding

Yahoo! News -Tuesday February 7, 7:07 AM

SYDNEY (Dow Jones)--Brazil's Companhia Vale do Rio Doce (RIO), or CVRD, has dropped out of the bidding process for an estimated US$1.5 billion bauxite and alumina concession in the remote Cape York region of northeastern Australia.

"We did not submit any proposal to the Queensland government for the (Aurukun) concessions," CVRD chief financial officer Fabio Barbosa said by email late Monday.

CVRD, the world's largest iron ore producer, is looking to build its base metal and coal presence and has set up an office in Queensland state capital Brisbane to chase opportunities in the region.

On Monday, Alcoa World Alumina & Chemicals, a unit of U.S.-based aluminum giant Alcoa Inc. (AA), said it also decided not to meet the state government's Jan. 30 deadline for lodging proposals.

CVRD and Alcoa join Anglo-Swiss miner Xstrata PLC (XTA.LN) and Rio Tinto PLC (RTP) on the sidelines of the bidding process.

A Queensland government spokesman said Monday it is evaluating proposals, although he wouldn't say how many had been received.

Authorities are due to release a shortlist of would-be concessionaires late this month after seeking advice from indigenous groups.

Other companies to lodge expressions of interest were BHP Billiton Ltd. (BHP); Aluminum Corp. of China Ltd. (ACH), or Chalco; Mitsubishi Corp. (8058.TO); Norway's Norsk Hydro ASA (NHY); Russia's Sual Group; India's Hindalco Industries (500440.BY); Canada's Alcan Inc. (AL); and InterTech Systems.

The state government is keen to get the mine and alumina refinery project back on track after reclaiming the Aurukun leases in 2004 from Alcan on the basis that the company failed to act on a 1988 development deadline.

Some analysts said they weren't surprised by the withdrawals given question marks over the deposit's quality, potentially complex indigenous issues and the feasibility of building a US$1 billion refinery in current tight labor and equipment markets.

Kaiser Aluminum Plan of Reorganization Confirmed by U.S. Bankruptcy Court

Business Wire (press release), CA February 06, 2006 04:48 PM

FOOTHILL RANCH, Calif.--(BUSINESS WIRE)--Feb. 6, 2006--Kaiser Aluminum today announced that the U.S. Bankruptcy Court for the District of Delaware has confirmed the company's second amended Plan of Reorganization (POR). The confirmation order must now be affirmed by the United States District Court before the company can emerge, and is also subject to appeal.

"We are very pleased by the ruling and it means that the finish line is within sight," said Jack Hockema, president and chief executive officer, Kaiser Aluminum. "We are hopeful that we can proceed quickly through the steps necessary for us to emerge before the end of the first quarter of 2006."

Added Hockema, "We will continue our present course as a globally competitive company with world class products and service, well positioned to best serve the needs of our customers. We also plan to emerge with a strong balance sheet that will provide financial strength to support the ability to grow in our key transportation and industrial markets."

In addition to U.S. District Court affirmation of the confirmation order, there are other conditions that must be satisfied before the company can emerge. These conditions and other information about the POR are included in the POR and disclosure statement, which the company has posted in the "Restructuring" section of its web site at www.kaiseraluminum.com.

The company's restructuring would resolve prepetition claims that are currently subject to compromise including retiree medical, pension, asbestos, and other tort, bond, and note claims.

The POR would result in the cancellation of the equity interests of current stockholders and the distribution of equity in the emerging company to creditors or creditor representatives. The majority of the new equity would be distributed to two voluntary employee benefit associations that were created in 2004 to provide medical benefits or funds to defray the cost of medical benefits for salaried and hourly retirees. Retiree medical plans existing at that time were cancelled.

All personal injury claims relating to both prepetition and future claims for asbestos, silica and coal tar pitch volatiles, and existing claims regarding noise-induced hearing loss, would be permanently resolved by the formation of certain trusts funded primarily by the company's rights to proceeds from certain of its insurance policies and the establishment of channeling injunctions that would permanently channel these liabilities away from the company and into the trusts.

More information is provided in the company's quarterly report on Form 10-Q for the quarterly period ended September 30, 2005.

NIGERIA: FG grants $143m subsidy to Rusal on ALSCON

African News Dimension, South Africa, Monday, 6 February 2006

A $143.8 million subsidy to complement the $250 million offered by Rusal Aluminum is to be provided by the Nigerian Federal Government through the Bureau of Public Enterprises (BPE), thus allowing the Russian company to buy a 77.5 -percent stake in ALSCON.

A $143.8 million subsidy to complement the $250 million offered by Rusal Aluminum is to be provided by the Federal Government through the Bureau of Public Enterprises (BPE), thus allowing the Russian company to buy a 77.5 -percent stake in ALSCON.

The subsidy brings the total price for the Aluminum Smelter Company to $393.8 million, of which Rusal will pay $250 million after various conditions have been met by the Federal Government.

The BPE has already signed a Share Purchase Agreement (SPA) with Rusal, thus giving ALSCON to the Russian firm for $250 million, but has been discreet in its comments on the subsidy as well as the conditions stipulated by the Russian company.

BUSINESSDAY has however learnt that the government agreed that Rusal pay $250million (about N33.250billion) for ALSCON while the $143.8 million subsidy has fueled speculation that the government might have set the reserve price at $393.8million (about N52.375billion).

The subsidy may cover the provision of gas and the dredging of Imo River which enabled Rusal to assume control of the aluminum company in December. A breakdown of the subsidies revealed that the government would supply gas to the Rusal-owned ALSCON for 20 years at a cost of $11.69million a year totaling $233.8million (N31.095billion).

The contract also indicates that the government will subsidise the dredging of Imo River, which will cost $160 million (about N21.280billion).

Presidential sources noted that "the financial section of the BPE-Rusal Share Purchase Agreement includes a purchase price of $250 million to be paid in two installments with two conditions".

"The first installment of $50 million would be paid within five business days after the Nigerian Government places all legal titles, licenses, permits, land ownerships, and 16 percent of ALSCON’s share into an account in London.

"The second installment of $200 million would be paid within 20 days after the completion of the dredging of the Imo River by a contractor to be nominated by Rusal. The river is licensed by the International Maritime Authority."

The sources said Rusal also requested a 20-year gas price moratorium in addition to an annual gas subsidy of $11.69 million.

However, BPE Director-General Irene Chigbue said the gas supply contract was between ALSCON and the Nigerian Gas Company (NGC), adding that the government would soon receive an estimate on dredging Imo River.

Chigbue said: "The gas supply contract is between ALSCON and NGC. We have asked surveyors to do an estimate of what it is going to cost to dredge the river. We are going to start now. We are going to advertise for a world-class company to dredge the Imo River.

"We are going to go through the due process. When that is concluded we will know how much we are going to offer a company to dredge the Imo River. We have not reached that stage yet."

She said the government would carry the cost of dredging the river since it was the state’s responsibility to provide the infrastructure. "The Imo River is the property of the government. It is like a highway. It is a mode of transportation. It is not the property of ALSCON."

She said the first transaction was aborted because things were not done properly.

"The first ALSCON sale transaction was aborted because things were done in a faulty manner. This is a new transaction. We did not advertise the new transaction. It was done on a willing buyer and willing seller basis.

"We have different methods of privatisation and one of them is through the willing buyer and willing seller concept. Most times when we have advertised it has not worked. Secondly there are very few operators in this sector. Even if we advertised again, the same companies as before would have come forward."

Chigbue went on to defend the transparency of the transaction: "Transparency is not necessary when advertising, as long as you get a price that is reasonable and as long as you have talked to the best in the world. So let us not pretend that advertising is the only thing that means transparency."

BFI Group bidded with Rusal for the acquisition of the government’s equity in ALSCON; BFI emerged the winner with an offer of $410 million in 2004. Rusal was disqualified for presenting a conditional bid of $205 million.

The ALSCON transaction was embroiled in controversy last year with a directive from President Olusegun Obasanjo that the Minister of Power and Steel, Liyel Imoke, and the then director-general of BPE, Julius Bala, negotiate with the disqualified Rusal instead of BFI.

At a meeting involving Imoke and BPE officials, the Russian company reduced its offer from $205 million to $160 million.

The reduction of the offer prompted the president to direct BPE to renew negotiations with BFI, which eventually failed. BFI then went to court to compel the BPE to sell the enterprise but lost the suit late last year. Badejo Ademuyiwa,

Source : Business Day (Lagos)

Non-nuclear plant the way to save Anglesey jobs, say Friends of the Earth

News Wales, UK 7/2/2006

As pressure mounts to extend the operation of the ageing Wylfa nuclear power station after 2010 to protect jobs on Anglesey, calls are being made to create new jobs in non-nuclear electricity generating technologies on the island.

This would help safeguard jobs at the power-hungry smelter at Anglesey Aluminium and create more jobs in maintenance and manufacture than a new highly automated nuclear power station would create, says Friends of the Earth Cymru.

The campaigners say that a combination of energy developments including marine current turbine devices off Anglesey's north coast, and a small combined heat and power (CHP) gas plant at Anglesey Aluminium would ensure security of supply and possibly relatively cheap electricity needed by the smelter. If marine turbine component manufacturing and maintenance facilities were created with Objective One aid and Assembly Government support then the long-term jobs created could readily surpass the jobs created in a new nuclear station.

Friends of the Earth Cymru campaigner Neil Crumpton said,

" Wylfa is likely to be closed down, and its 400 jobs lost, within ten years even if it does get an extension. So now is the time to develop new non-nuclear energy schemes and invest the last round of Objective One aid in developing a manufacturing and maintenance base on the island. This would be the best way to safeguard jobs at Anglesey Aluminium and create new jobs on the island.

" Even if a new nuclear programme were incentivised by Government a highly automated Wylfa B might only employ around 40 people and there are no guarantees that any cheap electricity deals would be cheaper than the alternatives. For example, a combination of marine current turbines off Anglesey's north coast, and a small on-site CHP gas plant at Anglesey Aluminium would provide security of supply to the smelter and plenty of jobs. We advise the public to be wary of anyone implying that nuclear electricity would be cheaper than the alternatives ."

And Liberal Democrat environ,ment spokesman said lack of an action plan was to blame for Wylfa woes.

Responding to reports that the closure of Wylfa power station in 2010 could mean the loss of over a 1,000 jobs, Mick Bates AM, environment spokesperson for the Welsh Liberal Democrats said:

" This Wylfa wake up call is only necessary because on this issue the Labour Assembly Government has been slumbering.

" There has been little, if any, forward planning. Wales is one of only three countries in the world that has a statutory commitment to sustainable development. That commitment is only worthwhile if government action and government planning takes account of sustainable development. The government has known for years that the possible closure of Wylfa would occur in 2010 - why hasn't there been an action plan deal with this?

"That action plan should have been based on real moves towards Wales and Anglesey being world-leaders on renewable energy. Sustainable development offers Wales an economic driver of huge potential. On Anglesey we already have a skilled workforce with great energy experience; this must be harnessed in achieving a richer, greener Wales.

"There is concern over the future of Anglesey Aluminium. And with good reason. They employ 540 people, which is vital to the economy of Ynys Mon. They get their electricity from Wylfa and are naturally concerned about their future when the station is closed. However, let us not forget that Wylfa has been closed before. When that happened Anglesey Aluminium received their power from the National Grid. In the long term they can generate energy from renewable resources around Anglesey. "

Coega smelter's construction in 2007?

Sunday Times, South Africa Tuesday February 07, 2006 15:05 - (SA)

By Justin Brown

The Industrial Development Corporation (IDC) says it is likely that the construction of the Coega aluminium smelter would begin - in conjunction with Canadian aluminium group Alcan - during 2007.

The IDC's Chief Financial Officer Gert Gouws said that the cost of the aluminium smelter was likely to be US$2.7 billion. Previous estimates had put the cost at between $2.2 and $2.5 billion dollars.

Alcan Has Loss on Asset Writedowns, Smelter Closings (Update5)

Bloomberg Feb. 7, 2006

Alcan Inc., the world's second- largest aluminum producer, said its fourth-quarter loss widened as costs to close packaging plants and smelters erased the benefit of higher aluminum prices.

The net loss was $363 million, compared with $346 million a year earlier, which include asset writedowns following the $5.24 billion purchase of Pechiney SA, Montreal-based Alcan said today in a statement. After payment of preferred dividends, the per- share loss widened to 98 cents from 93 cents. Sales fell 23 percent to $5.05 billion, reflecting the spinoff of Novelis Inc.

Chief Executive Officer Travis Engen has been closing plants as packaging profit fell 9.3 percent last year and will shut smelters in France and Switzerland because of high power costs. Excluding some expenses, profit rose to $205 million from $112 million, Alcan said.

``The encouraging thing is the primary business did quite well, suggesting that they are getting past the cost pressures and starting to reap the benefits of higher aluminum prices,'' said Lawrence Smith, an analyst with Toronto-based Blackmont Capital Inc. He rates Alcan a ``buy'' and doesn't own the stock.

Per-share profit, excluding some items and an 11 cent loss on derivative contracts, was 65 cents, Alcan said. On that basis, Smith forecast 60 cents, compared with the 56-cent average estimate of 19 analysts surveyed by Thomson Financial. Thomson wouldn't say whether estimates included one-time items.

Shares Rise

Shares of Alcan fell 78 cents, or 1.4 percent, to C$56.42 at 12:17 p.m. in Toronto Stock Exchange trading, after earlier rising as much as 3.6 percent to C$59.25. Before today, the stock had jumped 64 percent since reaching a two-year low on Oct. 6.

Alcan forecast a global supply deficit for aluminum this year, as demand growth for the metal used in cars, beverage cans and airplane outpaces gains in production. Aluminum demand will rise 4.9 percent, up from 4.5 percent last year, Alcan said.

Global aluminum output will fall short of demand by about 300,000 metric tons this year, up from a deficit of about 10,000 tons in 2005, as producers close high-cost smelters in the U.S. and Europe, Chief Operating Officer Richard B. Evans said on a conference call.

``These earnings really give analysts confidence that this company and the industry and the metal are well on the road to recovery and the outlook remains strong,'' said Timothy Ghriskey, chief investment officer of New York-based Solaris Asset Management, whose $1 billion portfolio includes Alcan stock.

Asset Writedowns

Asset writedowns and smelter closures erased the benefit of the aluminum rally during the quarter. Alcan reorganized its packaging business in Europe, closed the Steg and Lannemezan smelters in Europe and shut a cast-plate facility in Vernon, California, contributing to $533 million in after-tax costs.

``Longer-term, in our view the restructuring charges and asset writedowns are indicative of the challenges Alcan is facing with its downstream packaging business,'' Credit Suisse analysts David Gagliano and Richard Garchitorena said in a note to clients Jan. 27. ``This is not the end of the restructuring charges.''

Shipments of aluminum products fell 31 percent to 1.1 million metric tons from 1.59 million tons, reflecting a spinoff of Novelis, the rolled-products unit. The average selling price of the company's raw aluminum rose 3.5 percent to $2,092 a metric ton.

Aluminum Profit

Alcan's prices fell short of the gains on the London Metal Exchange, the largest market for aluminum. LME prices averaged $2,067.30 a ton during the quarter and reached a 17-year high of $2,670.10 yesterday, as producers shut high-cost smelters and economic growth spurred demand for metals.

Pretax profit from the company's businesses rose 5.3 percent to $738 million from $701 million, the company said.

``A lot of difficult decisions and management actions contributed to a strong performance, particularly in the face of the very, very sharp increase in raw-material prices, in particular our packaging business in the course of the year,'' Engen said today in an interview.

Earnings rose 80 percent in Alcan's primary aluminum business to $531 million, and fell 32 percent in the packaging unit to $107 million, the company said. The bauxite and alumina business had profit of $129 million, up 5.7 percent.

Alcan had 2005 sales of $20.3 billion compared with the record $26.2 billion for Pittsburgh-based Alcoa Inc., the biggest aluminum maker.

To contact the reporter on this story:

Doug Alexander in Toronto at dalexander3@bloomberg.net.

'Finish line' ahead for Kaiser....Judge approves reorganization plan

The Spokesman Review, WA February 7, 2006

John Stucke, Staff writer

A federal bankruptcy judge in Delaware approved Kaiser Aluminum Corp.'s reorganization plan Monday.

Though the company remains a few steps from exiting its protracted Chapter 11, CEO Jack Hockema said in a press release that the judge's ruling "means that the finish line is within sight."

Kaiser sought protection from creditors four years ago with debts of more than $3.1 billion, ranking it among the largest corporate failures in a dismal 2002.

Hockema has said the company will exit bankruptcy during the first part of this year. A specific date has not been set and the company still needs its bankruptcy plan blessed by a federal district judge to ensure it satisfies the company's weighty asbestos issues, which at one point were believed to affect about a quarter-million people. The company inherited much of its asbestos problems from operations that were discontinued decades ago.

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Though Kaiser's current stockholders will have their equity wiped out by the bankruptcy, the newly reorganized Kaiser will be listed on the Nasdaq exchange, said spokesman Geoff Mordock. A ticker symbol has not yet been selected.

Much of the new company's stock will be held by two trusts set up to fund union and salary benefit programs that Kaiser shed as part of its bankruptcy – a controversial maneuver that cut retiree medical plans and the retirement packages that current workers banked as part of their compensation packages.

The company hopes that with little debt and ample cash reserves, it can capitalize on growing demand for its aluminum sheet and plate that aircraft makers and engineering firms need.

The company is high on the prospects for its Trentwood rolling mill, the World War II-era factory in Spokane Valley that has been retrofitted to turn out high-grade products. The numbers of Steelworkers and management at the plant swelled during the past year and the company is spending $75 million on new equipment for the facility.

To get its reorganization plan confirmed, the company has shrunk significantly. It is no longer one of the largest metal concerns in the world, selling off bauxite mines, alumina refineries and aluminum smelters to repay banks and other creditors.

Kaiser does retain a 49 percent stake in a smelter in Wales. Other properties, such as the smelters in Mead and Tacoma, were sold.

The company also announced recently that its chief financial officer, Kerry Shiba, resigned after having a relationship with another employee that the company determined to be inappropriate.

Shiba's departure in late January was not related to Kaiser's financial statements, performance, condition or the company's internal controls, the company stated in a news release.

Shiba's duties will fall to three senior executives until a replacement is hired.

Alcoa seeks buyer for aerospace service unit in Hutchinson

Kansas.com, KS Wed, Feb. 08, 2006

Alcoa Inc. is seeking a buyer for its aerospace services business and the Hutchinson plant where between 40 and 60 people are employed.

Tim Wilkinson, an Alcoa spokesman based in Iowa, said workers were told Tuesday that prospective buyers would be visiting the plant over the next couple of weeks.

"There are several," he said. "And if they remain interested, then it could potentially be sold by the end of the first quarter."

Wilkinson said it's also possible the business might not be sold.

"Our strategy right now is to find a buyer," he said. "It would be speculation on what goes on past that."

Kevin Lowery, a spokesman at Alcoa's corporate headquarters in Pittsburgh, said the aerospace services business was created during an industry downturn. He said Alcoa plans to stay in the aerospace industry.

Wilkinson said the portion of the business that might be sold doesn't fit Alcoa's core business of making and selling metal. Hutchinson plant employees cut metal to meet customer needs.

Alcoa, the world's leading producer of primary aluminum and fabricated aluminum, also serves the aerospace, automotive, packaging and construction industries.

Employers' federation says bauxite workers' strike must cease

Jamaica Gleaner, Jamaica Wednesday | February 8, 2006

THE JAMAICA Employers' Federation (JEF) says hourly-paid workers at Aluminum Partners of Jamaica (Alpart) represented by the National Workers' Union (NWU) must stop their industrial action.

There are established industrial relation procedures supported by appropriate machinery and guiding regulations for resolving industrial disputes, a statement issued by JEF executive director Jacqueline Coke-Lloyd said yesterday.

SALARY IMPASSE

The current impasse over local level wage talks for the contract period starting in January of this year between the workers represented by the NWU and Alpart broke down at the local level. A three-day strike notice was served on February 2, to expire on February 5.

The talks broke down and the matter referred to the Industrial Disputes Tribunal (IDT). In these circumstances, while a strike notice was in effect, the IDT, can order that industrial action cease.

"While we are aware that there are some concerns as to whether or not the order was effectively served," the JSE stated, "to date, the strike is still in progress and all parties are fully aware of the order and its implication. We therefore demand that the union respect the role and functions of our dispute resolution machinery."

COME TO BARGAINING TABLE

The fragile nature of Jamaica's economy simply cannot afford to allow for the manipulation of the industrial relations climate, it said.

"We maintain that all disputes must come to the bargaining table. The bauxite industry, and by extension, the Jamaica economy cannot afford the impact of a destabilised bauxite industry."

The JEF demanded that the trade unions adopt "a more responsible approach in managing conflicts." It said, "In addition, we are insisting that the leadership of the Joint Confederation of Trade Unions, of which the NWU is a member, take appropriate action against its members who flout the law, thereby jeopardising current business, future investments and jobs."

Nigeria pays Rusal to take aluminium smelter!

Mineweb, South Africa 08-FEB-06 22:16 GMT © Mineweb 1997-2004

By: John Helmer

Oleg Deripaska, owner of Russian Aluminium (Rusal), the third largest aluminium producer in the world, was dressed informally in a turtleneck and sports jacket at the Davos conference last month. But while Deripaska was relaxed, his ’s Rusal officials were simultaneously finalizing a deal with the Nigerian government to take control of the Aluminium Smelter Company of Nigeria (ALSCON) for $50 million in down-payment, and $200 million payable sometime in the future. With smelter capacity at present of about 193,000 tons of aluminium, and taking into account that Rusal is buying 77.5% of the shares of the plant Rusal’s offer amounts to approximately $1,667 per capacity ton. This is 37% below the current London market price for the metal of $2,634.

New smelters generally cost $4,000 per ton to build, and so Rusal’s price for ALSCON is almost one-third the going rate. ALSCON is virtually new. Partially completed in 1997, it operated for just three years on a trial basis, and has stood idle since 2000, when a combination of inadequate and costly gas supplies, and difficult transportation access by river, made production impossibly costly to sustain. According to a document submitted by Rusal to the Nigerian government in April 2004, 25% of the plant’s planned production capacity remained to be installed and made operational. That documernt also reveals that the plant was ready enough to produce and sell enough aluminium within two years to pay off both Rusal’s acquisition offer and its proposed operational investment.

Rusal is also paying $160 million less than the rival bid from a US-Nigerian group, Bancorp Financial Investment Group (BFIG), which initially won the government’s privatization auction in May 2004 with an offer of $410 million.

According to Nigerian press reports of the latest transaction terms, the effective price of the smelter stake was actually set by the Nigerian government’s Bureau of Public Enterprises (BPE) at $393.8 million, but Rusal was able to secure government subsidies worth, at this point, $143.8 million. These comprise a subsidy, estimated by Business Day newspaper of Lagos, at $11.7 million per annum for gas to fuel the power plant for the smelter; a 20-year moratorium on increases in the gas price; and government funding of the cost of dredging the Imo River estimated at $160 million. The river, which is the key to access to and for the plant, is described by the BPE director-general Irene Chigbue as "like a highway. It is a mode of transportation. It is not the property of ALSCON."

Rusal spokesmen have refused to answer Mineweb’s questions about the transaction terms. These have been reported in Nigeria as limiting Rusal’s initial payment to $50 million, and making payment of the balance conditional on completion of river dredging and access. A company release, issued in Moscow, says only that "the $250 million purchase price will cover the purchase of the shares in ALSCON, as well as the dredging of the river. The company, together with Ferrostaal AG and the Government of Nigeria, also plans to invest an additional $150 million over the next three years to complete, refurbish and modernise ALSCON." Ferrostaal AG, a German concern, holds a 7.5% stake in the smelter company, while the government retains 15%. The inclusion of the German company and the Nigerian government as contributors to this investment is a major change in the financial offer which Rusal signed in its 2004 bid, and saves Rusal an unknown amount of money at the others’ expense.

The Nigerian smelter acquisition "is part of our strategy to boost aluminium production and strengthen RUSAL's position as a global company," the company cites its own CEO Alexander Bulygin. "With its technologies and expertise, RUSAL will ensure that ALSCON's products are highly competitive, transforming the smelter in a key driver behind the development of the Nigerian economy and our business in the region. Having now become one of the largest investors in Nigeria, we are ready to actively contribute to the industrial growth in the country."

Chigbue is quoted as saying that "the successful divestiture of ALSCON to one of the world's largest aluminium producers will send a strong signal to the international community and persuade those investors that are wavering to invest in Nigeria."

She omitted to reveal that the entire transaction could be invalidated shortly by a legal challenge, still pending in the federal Nigerian appeals court, filed by BFIG. The high bidder has accused BPE and Rusal of conspiring illegally to disqualify BFIG’s bid, after it had been declared the winner. While it waits for the appellate ruling, BFIG has also prepared a case for the US courts. It was in the US, BFIG says, that President Olusegun Obasanjo had personally assured BFIG’s leaders that he had not decided in advance to award the smelter to the Russian company. Accordingly, Reuben Jaja, BFIG’s chief executive, told Mineweb, BFIG lodged its qualifying payment, and proceeded with the bid. BFIG has named Ednan Agaev, the Russian lawyer, and a former Russian diplomat in Nigeria, as subsequently telling BFIG’s counsel there were no hard feelings towards BFIG on Rusal’s part, but that it had been promised the asset long before the formal bidding got under way.

According to a non-binding resolution of the Nigerian House of Representatives, issued on April 28, 2005, after a review of the bidding process by the parliamentary Committee on Privatization and Commercialisation, BFIG’s bid had been cancelled "without any valid or legal reason", while the action of BPE and the Nigerian presidency, taken in favour of Rusal’s offer, "amounts to corruption and fraud to the Nation."

The involvement of Nigeria’s President Obasanjo, directly, as well as through personal advisors and ministers, has been alleged by BFIG’s Jaja. One of his charges is that the special purpose vehicle, a British Virgin Islands-registed company called Dayson Holding, used by Rusal for its takeover of ALSCON, "could be fronting for some Nigerian special interests". Dayson, according to its technical submission of April 2004, was a wholly owned subsidiary of Rual Trade Limited, an offshore trading unit of the Rusal group. The document claimed that, if selected, Rusal could restart and complete the smelter within two years, at a cost of $130 million, plus $20 million in operating capital, and another $25 million in ancillary infrastructure and social costs. Alumina supplies were to be come from Rusal’s concession in Guinea.

Rusal also promised "to provide the plant with all the required financial resources to start production in the shortest possible time, including working capital and start-up costs."

In its pre-qualification, BFIG had identified its special purpose vehicle as including veterans of US aluminium producers, Alcoa and Reynolds, with Daewoo of South Korea acting as the marketing partner, to supply raw materials, and to take the finished goods on a trade finance facility of 180 days.

At the start of the first round of bidding in 2004, BPE officials told both companies that a bid bond of $1 million was required to qualify. The bidding rules, they were also told, required 10% of the winning price to be paid 15 working days after signing the share purchase agreement, with the balance to be paid 90 days thereafter. Rusal’s bid was rejected at first by BPE, because it offered only $5 million down, and $200 million, payable several years later, subject to conditions of gas supply and pricing, and river navigation and port certification, to be paid for by the government. It is unclear why Rusal promised, and the Nigerian government allowed, that it could "restart the plant in the shortest possible time in order to allow the plant to operate economically", and fund about $175 million in start-up, while at the same time its bid terms postponed the bulk of payment for the asset until well after it was already producing and selling several hundred thousand tons of metal.

According to BFIG , Rusal never paid its bid bond, while BFIG’s bond was paid, but not returned. Contract terms for the asset contest were rewritten by Nigerian officials, BFIG alleges, so that Rusal could win, with minimum commitment of its own cash.

Alleging a massive fraud, and corruption of the Nigerian government by Rusal, BFIG has responded to Rusal’s takeover announcement by reaffirming "BFIGroup’s legal right to sign an ALSCON S[hare] P[urchase] A[greement] is a matter officially in dispute before the Federal Appeals Court of Nigeria, hence such [Rusal] announcements are terribly inappropriate." The group added that "it will not give up its right to …complete its acquisition of ALSCON."

Eroding U.S. Industrial Base Comes With Price

Elites TV, TX 08-Feb-2006

The United States of America has historically enjoyed self-sufficiency in times of both war and peace but in order to better assess its present place in the world as concerns its military and economic strength, it is important to reflect on its foundation. There is daily talk from Wall Street to Capitol Hill with respect to spread sheets and global policy, but it perhaps falls short when it comes down to addressing the average U.S. wage earner, and how both will ultimately affect jobs and the country’s national security and defense.

It is important to note, that as our forefathers were fighting for independence from England during the Revolutionary War, seldom do we hear about the underlying and overwhelming task they endured in order to supply an army without an industrial base. In order for success, the Colonies depended upon France and the Netherlands for everything from blankets and clothing to gunpowder, muskets, munitions, and food. Benjamin Franklin bartered a deal with France to ship across the Atlantic Ocean by way of the Netherlands’ St. Eustatius Island, in order for George Washington and his troops to have the means to defend themselves.

In light of the French Revolution at the turn of the 18th century, when the Netherlands were seized by Napoleon and President John Adams came close to war with France, a primary U.S. ally just years earlier, self –sufficiency was the order of the day. In 1791, Alexander Hamilton, the first U.S. Secretary of the Treasury, was asked by President George Washington and the U.S. Congress to officially document U.S. policy on industrial and military self-sufficiency. It read, "Not only have the wealth, but the independence and security of a country, appear to be materially connected with the prosperity of manufactures. Every nation, with a view to those great objects, ought to endeavour to possess within itself all the essentials of national supply. These comprise the means of subsistence, habitation, clothing and defense. The possession of these is necessary to the perfection of the body politic: to the safety as well as to the welfare of the society."

The Industrial Revolution of the 19th century secured the U.S.policy of self-sufficiency, transforming it into a global power. Due to the strength of its industrialization the U.S. was able to defeat its enemies in World War I. With the advent of the automobile, which Henry Ford learned to mass-produce, weaponry and machinery produced for World War II benefited from the automobile factory. Production of Sherman tanks, Army jeeps, airplanes and PT boats evolved from such civilian U.S. factories. And in the 1950’s the industrial base was modernized for the Korean War effort.

The industrial base and manufacturing for the U.S. military were necessarily intertwined. But following the end of the Cold War there has been a deliberate decomposition of U.S. industry, unprecedented in American history. There are a number of factors which have contributed to U.S. dependence on foreign trade, primarily with India and China, which has not only led to millions of U.S. manufacturing and engineering jobs permanently lost, but paints a grim picture for the long term stability of the U.S. military supply line.

The dependence on foreign oil and the subsequent OPEC oil embargo in the 1970’s, the U.S. policy of deregulation of corporations of the 1980’s, the passage of the North American Free Trade Agreement (NAFTA) in 1994, and the World Trade Organization (WTO) in 2001 allowing China to become a member, collectively accelerated U.S. dependence on cheap labor offshore. Thus, dependency and reliance on suppliers from all over the world for military equipment and machinery components and parts, required for their manufacture, leaves the U.S. vulnerable.

The Defense Department runs a program called the Diminishing Manufacturing Sources and Materials Shortage (DMSMS) at the Tank Automotive and Armaments Command (TACOM). Its purpose is to identify shortages of parts, processes and materials necessary to procure for military buyers. A problem for military acquisitions has been procuring weapon system metal castings as a direct result of plant closings. The majority of castings now come from China and other third-world countries. Along with the foreign dependence on metal castings manufacture its research and development also followed the foundry industry offshore.

DMSMS program managers are aware that there are problems in finding sub-parts and components. Not only have replacement parts started to rapidly diminish, but the chemicals needed in their manufacture have as well. Without specific chemicals certain processes cannot be done. For example, there is only one company left in the U.S. that produces a roller cutter for armored plate or heavy steel which was an indirect consequence of supplying armor kits for U.S. Humvees in the War in Iraq. When the Pentagon learned there was an immediate need at the end of 2004, it called for expediency in their manufacture. Sadly, it took almost a year due to the limited facilities producing such.

Another issue arose when a foreign corporation purchased the only U.S. company which produced a chemical used for a common binder which secures windows and aluminum panels in aircraft. The company eventually folded when it could not meet Occupational Safety and Health Administration (OSHA) and Environmental Protection Agency (EPA) standards. Now the U.S. must depend on the company’s offshore subsidiaries.

Similarly, the bearing industry which produces ball-bearings, roller-bearings and anti-friction bearings is an endangered U.S. industry, key to the production of military gear and plays a part in homeland security. They are components necessary to produce electric motors for conveyor belts such as in factories, steel mills, in airports, in mining, and with the equipment used to manufacture automobiles. And bearings are critical to the mechanical components of major weapons systems. Losing bearings manufacturing to foreign shores directly impacts the capabilities of weapons manufacturing should there be a change in the geopolitical landscape and a cut-off from U.S. suppliers, whether through war, terrorism, or Mother Nature.

With the military build-up of China over the past decade by benefit of applying commercial technologies to military weaponry and its having become the largest offshore manufacturing base for U.S. corporations, the U.S. continues a delicate balancing act with a Communist nation as its biggest trade partner. With a U.S. trade deficit with China reaching over $200 billion in 2005, multi-national corporations, once U.S. companies operating in the U.S., are now just based in the U.S.

And with a demand by China for foreign direct investment as their incentive to buy U.S. products, companies like Boeing are acquiescing by not only building major portions of airplanes in China, but also creating Research and Development opportunities for Chinese engineers, in order to show its commitment. Intel and Microsoft have also followed suit with major investment in directly hiring engineers in China.

Endless conflicts of interest abound when it comes to foreign dependence in order for the U.S. to maintain its infrastructure, electrical grid, military weaponry and supplies, air travel and homeland security, to name a few. When smaller U.S. specialty industries vital to the industrial base become extinct on our shores, they now appear huge in a world where alliances are tenuous at best. A global economy at the expense of U.S. sovereignty, security and standard of living is something that the Colonists would not have stood for. They would have found another way. Maybe America still has time to do the same.

Diane M. Grassi

Keep N-plant or face jobs disaster

ic NorthWales, UK Feb 8 2006

By David Greenwood, Daily Post

HUNDREDS of young people could be forced to quit Anglesey to look for work if two of the island's biggest employers close in four years time.

That was the stark warning from council chiefs and company bosses who united to launch a major campaign to keep Wylfa nuclear power station open.

They want the station's life extended beyond 2010 when its two reactors are due to shut down.

Without guaranteed "cheap" electricity from Wylfa, the Anglesey Aluminium plant on the outskirts of Holyhead could close a year earlier.

more:

http://icnorthwales.icnetwork.co.uk/news/regionalnews/tm_objectid16678689&methodfull&siteid50142&headlinekeep-n-plant-or-face-jobs-disaster--name_page.html#story_continue

Foreign interest in Alcasa aluminium project continues

Source: Platts, Metals Place, UK 09 Feb, 2006

Despite the Venezuelan government's decision to change the shareholder scheme in building CVG-Alcasa's fifth potline, foreign transnationals remain interested in participating in the $685-mil project, Alcasa said Wednesday. "We have no reason to believe that companies such as [Swiss-based] Glencore, [France's] Pechiney and [the US'] Fluor Daniel are not still interested," an Alcasa official said. Glencore officials were not immediately available for comment.

Alcasa president Carlos Lang on Tuesday announced that the Puerto-Ordaz based smelter is moving ahead with plans to build the potline – to add 240,000mt/year to Alcasa's 210,000mt/year installed capacity – with state funds that are already available.

An Alcasa spokeswoman speculated that the government will actually assume more than the 51%-49% financing arrangement set forth by Lang, "and any deal with a foreign party will not involve repayment with metal as was envisioned before," she said.

During 2005, the Hugo Chavez government said it intended to change its policy regarding joint ventures with foreign firms, whereby the Venezuelan state would grab a majority share in the projects in order to provide more domestic employment opportunities and avail the use of Venezuelan technology.

Frantic efforts to prevent bauxite strike in St. Ann

radiojamaica.com, Jamaica Thu Feb 9, 2006

The management of St. Ann Jamaica Bauxite Partners, formerly Kaiser, and representatives of the University and Allied Workers Union (UAWU) are now trying to resolve an impasse.

The dispute is threatening to deteriorate into industrial action.

The UAWU has warned that more than 400 employees at the bauxite company are restive over the handling of production incentive payments.

The workers claim that the management has withheld more than $48 million from a productivity incentive scheme.

Officials of the Jamaica Bauxite Institute and the Ministry of Finance are also involved in Thursday's talks.

Unapologetic DaCosta welcomes normalcy at ALPART

RJR, Jamaica Thu Feb 9, 2006

Normality has started to return to the Alumina Partners of Jamaica (ALPART) plant in St. Elizabeth following Wednesday night's back to work agreement.

Thursday morning unionised workers at the plant decided to end their four day strike and accept an agreement which was hammered out during a marathon meeting on Wednesday.

Vice President of the National Workers Union, Norman DaCosta, says the workers are very pleased with the new contract which includes a 35 per cent wage increase over three years.

The three year deal is expected to cost ALPART just over five billion dollars.

In the meantime, Mr. DaCosta is unapologetic over his decision to ignore a back to work order issued by the Industrial Disputes Tribunal (IDT).

The union boss says his decision was in the best interest of the workers.

Minister of Labour Horace Dalley referred the ALPART dispute to the IDT on Sunday and the Tribunal ordered the workers to resume normal duties.

This was ignored, leaving the workers and the union leaders at risk of being arrested and charged.

However to date there has been no word from the Labour Ministry or the IDT if action will be taken against the persons who defied the back to work order.

Under Section 12 of the Labour and Industrial Disputes Act, the IDT has the power to order workers to end their strike action.

Russia-Nigeria aluminium deal ‘corrupt’

Business Day, South Africa -10 February 2006

John Helmer , Moscow Correspondent

MOSCOW — A privatisation deal to sell control of the Aluminium Smelter Company of Nigeria (Alscon) to Russian Aluminium (Rusal) has come under attack, with critics saying it will cost more to sell Alscon than Rusal owner Oleg Deripaska will pay.

Nigerian members of parliament have passed a resolution on the deal, which was announced last week and confirmed by Rusal, saying it "amounts to corruption and fraud to the nation".

President Olusegun Obasanjo and his personal advisers are directly involved in the scandal, according to the Nigerian-American company Bancorp Financial Investment Group (BFIG), whose high bid for Alscon was first accepted and then rejected by Nigerian government officials.

Nigeria’s Federal Appeals Court is reviewing a legal challenge by BFIG, which could cancel the Rusal deal.

US litigation is being prepared by Los Angeles-based BFIG, should the Nigerian court process decide to reject BFIG’s claim.

In all, according to a company statement, Rusal proposes to pay $50m as a down payment and $200m in instalments over several years, for a 77,5% stake in Alscon.

The government retains a 15% stake, while a German company, Ferrostaal, holds 7,5%.

According to BFIG spokesman Frank Scherer, the terms of the Alscon deal provide Rusal "far more in subsidies and allowances (by the Nigerian government) than the amount they proposed to pay for the entire industrial infrastructure complex.

The Alscon complex, which the Russian company is acquiring, includes a port, four townships, a 200-bed hospital, a water-treatment plant, fire-fighting facilities and a power plant of 540MW."

According to the nonbinding resolution of the Nigerian house of representatives issued last year after a review of the bidding process, BFIG’s bid to buy Alscon for $410m, payable in 90 days, plus $800m in investment, had been cancelled "without any valid or legal reason".

A technical bid submission by Rusal to the Nigerian government claimed that Rusal could restart and complete the smelter within two years, at a cost of $130m, plus $20m in operating capital and another $25m in ancillary infrastructure and social costs. Alumina supplies were to come from Rusal’s concession in Guinea.

The delayed payment terms accepted last week by the Nigerian government allow Rusal to produce and sell enough aluminium to cover the cost of both the asset purchase and the proposed investment. The costs to the Nigerian government include more than $160m for river dredging and more than $200m in subsidised gas prices to fuel the smelter’s power plant.

Alleging a massive fraud, and corruption of the Nigerian government by Rusal, BFIG responded to Rusal’s takeover announcement, saying:"BFIG’s legal right to sign an Alscon share purchase agreement is a matter officially in dispute before the Federal Appeals Court."

Nigeria has proceeded with the deal despite the court challenge and the recommendation of parliament.

New aluminium smelters, industry sources said, cost $4000 a ton to build. Rusal’s offer of $250m, with an average of $1667 a ton, is almost one-third the going rate. But Alscon is virtually a startup operation. Partially completed in 1997, it operated for just three years and has stood idle since 2000 when costly gas supplies and limited transportation access created debts and made production too costly to sustain.

Rusal’s move in Nigeria follows expansion of its bauxite mine and alumina refinery in the Republic of Guinea. There, according to UK High Court records, Rusal tried to influence politicians to deprive a local company of its service contract.

The UK court ordered Rusal to pay compensation. The Russians are attempting to build a self- sufficient bauxite, alumina and aluminium empire outside Russia in case its Russian assets are taken over by the Kremlin.

A media release on the deal highlights the benefits to Nigeria of technology transfer: "We are ready to actively contribute to the country’s industrial growth," the company says.

Another bauxite company under threat of industrial action

RJR, Jamaica Fri Feb 10, 2006

For the second time in a week a major player in the bauxite/alumina industry is being threatened with industrial action.

A five day ultimatum has been served on the management of the St. Ann Jamaica Bauxite Partners to settle a dispute involving the workers or prepare for a work stoppage.

The deadline was set by the University and Allied Workers Union Thursday during a meeting with officials of the Jamaica Bauxite Institute, JBI.

During the meeting, officials of the JBI reportedly agreed to consider the UAWU's demand that 48 million dollars deducted from a productivity incentive payment to 400 workers be refunded.

The JBI representatives said they would first have to consult with the Ministry of Finance before making a decision.

President of the UAWU, Lambert Brown, says the union has given the JBI and St. Ann Bauxite until early next week to reach a settlement.

The St. Ann Bauxite Company which was formerly known as Kaiser Jamaica is part owned by the Government.

This is the latest in a series of industrial relation problems that have beset the bauxite/alumina sector since late last year.

Earlier this week more than one thousand workers at ALPART went on strike. They returned to work Thursday.

Chairman of the Jamaica Bauxite Institute Dr. Carlton Davis has expressed concern that the recent spate of industrial action could place the sector in jeopardy.

ALSCON: Experts Allege Massive Rip Off In RUSAL Deal

Nigeria Daily Independent, Nigeria, Monday 13th, February, 2006

By Bassey Udo, Energy Editor

The terms of the recent Share Purchase Agreement (SPA) by the Bureau of Public Enterprises (BPE) with Russian Aluminium (RUSAL) for the sale of 77.5 percent stake in the $3.2 billion Aluminium Smelter Company of Nigeria (ALSCON), Ikot Abasi in Akwa Ibom State may have squeezed the Federal Government to part with hefty subsidies experts say is a massive rip off.

In 2004, BPE’s reserved price for the plant was pegged initially at $500 million before being scaled down to $400 million before the controversial bid, which saw BFIG group emerging winner before being disqualified in controversial circumstances.

Reserved price is the benchmark value set as the irreducible limit a privatization agency would be ready to dispose of a property on offer.

Indications are that the Federal Government may have been ripped off massively through the recent deal with RUSAL under which the BPE granted various juicy incentives it is not ready to make public.

Apart from the reserved price, which appears to have been plucked down to less than two-thirds of the 2004 value, industry sources put current valuation at about $4000 a ton to build new aluminium smelters.

Going by RUSAL’s $250 million offer, with ALSCON’s installed capacity at 193,000 tons per annum, the plant’s value under the deal appears to have to been dragged down below an average of $1667 a ton, almost one-third the going rate.

The three production train smelter complex completed in 1997 includes a port facility designed to provide route for raw material imports as well as export of finished products; four residential estates in the ALSCON Village; a 200-bed hospital; a water-treatment plant, fire-fighting facilities and a 540 mega watts (MW) independent power plant capable of providing uninterrupted electricity to the plant and adjoining communities.

The plant was at the verge of full operations start up when it was shut down in 2000 after less than three years of business following unresolved issues relating to gas supplies, inadequate working capital and transportation constraints posed by the lack of dredging of the Imo River access channel.

During the 2004 bid, BFIGroup, after a thorough technical evaluation of plant by a team of experts, including patent holders to the plant design (ALCOA), offered $410 million for the same plant, a whooping $160 million above the current offer by RUSAL, apart from additional $800million investment package in its development plan for expansion.

A technical bid submission by RUSAL to BPE indicated that the plant could be restarted and completed within two years at a cost of $130 million, plus $20 million in operating capital and another $25 million in ancillary infrastructure and social costs, with alumina supplies expected to come from its concession in Guinea.

Though BPE Director General, Mrs Irene Chigbue, last week feigned ignorance of the cost implications of the Russian deal, it was learnt that the SPA saddled on the Federal huge costs in subsidies covering more than $160 million for Imo River dredging and another $200 million for gas supplies to power the plant’s operations.

RUSAL is expected to make the payment of the offer in two installments with two conditions. The first $50 million, within five working days after all legal titles, licenses, permits, land ownerships, and 16 percent of ALSCON’s equity have been lodged in London escrow, and the balance $200 million, within 20 days after the completion of the dredging of the Imo River by a contractor to be nominated by RUSAL, which was also granted a 20-year gas price moratorium and an annual gas subsidy of $11.69 million.

BFIG’s Executive Vice President, Frank Scherer, said over the weekend that the terms of the deal provide RUSAL "far more in subsidies and allowances than the amount they proposed to pay for the entire industrial infrastructure complex".

Alleging a massive fraud and corruption by RUSAL of top government, BFIG said the ALSCON deal follows a pattern revealed in a December 2002 judgment, in which the Russian firm was indicted for attempting to influence top Guinean officials in its bid to buy over a stake in the Guinea Investment Company (GIC).

BFIG, which has since gone to court to contest its disqualification after being declared winner June 2004, is awaiting the outcome of the appeal it filed late last year against the ruling of an Abuja High Court that it had no valid contract with the BPE on ALSCON. Scherer reaffirmed BFIG’s unwillingness "to give up its right to sign an SPA in accordance with the ALSCON RFP and complete its acquisition of ALSCON", saying "BFIGroup’s rights were specifically set forth in the May 20, 2004 "Understandings/Agreements" negotiated, executed and re-affirmed by BPE, RUSAL, and BFIGroup".

Bauxite bid field narrows

Brisbane Courier Mail, Australia 13feb06

Richard Owen

THE Queensland Government's hope to create a buzz of competitive tension over the exclusive right to develop the massive bauxite resource at Aurukun on western Cape York has all but failed.

Just about all the big aluminium houses in the world ran the sliderule over the development potential.

Aluminium Corp of China (Chalco) has managed to make the numbers stack up – something US giant Alcoa Inc, Canadian rival Alcan, Norway's Hydro Aluminium, Anglo-Swiss miner Xstrata and Brazil's Companhia Vale do Rio Doce failed to do.

So the smart money is betting that Chalco will ultimately emerge as the only company to have lodged a conforming bid.

Rio Tinto's light metals arm Comalco and Russian producer Rusal did not even bother lodging an initial expression of interest, let alone waste time putting together a preliminary "preferred or optimal" bid before the January 30 deadline.

Other interested parties such as BHP Billiton, Japan's Mitsubishi, India's Hindalco, Russia's Sual and an unknown entity called InterTech Systems have yet to declare their hand.

The Government won't name the remaining bidders before announcing a shortlist later this month. Alcan – which lost the 2200km sq lease in 2004 when the Government seized back the 600 million tonne deposit – did not really need Aurukun's sub-optimal, third-tier bauxite resource anyway.

And neither did Comalco.

After all, they both had their large corporate feet on billions of tonnes of the stuff within other nearby mining leases on Cape York.

In fact, Alcan is now negotiating with Comalco to mine its Ely deposit just north of Weipa and considering development of its nearby Ducie-Wenlock deposit, together with a wharf and benefication plant, at a cost of up to $400 million.

Had the Aurukun deposit south of Weipa been left in Alcan's hands another 50 years may well have passed before any consideration was given to its development.

Bauxite is mined and then refined into alumina, which is smelted to make aluminium.

Hydro Aluminium vice-president Wenche Agerup told The Courier-Mail the company had prepared "detailed pre-feasibility studies for a bauxite mine at Aurukun and a greenfield alumina refinery" on Queensland's east coast.

"However, based on the results of the project, cost estimates and our financial modelling, Hydro has decided not to submit a conforming proposal according to the details and requirements set forth by the Queensland Government in the bid rules," she said in an e-mail.

Without a bidding war, the Queensland Government could well come under pressure to accept construction of a mine only in the first instance and to stretch out any timetable for development of a refinery and smelter.

Premier Peter Beattie conceded late last year that a "non-conforming" bid might end up being the "life-line" for Aurukun.

"Now I don't know that, but that could well be the case. It's a cost factor," he said.

Consequently the traditional owners' expectations may well have to be wound back as well.

The State Government made it clear from the outset that a "preferred" bid should encompass a mine dedicated "wholly or substantially" to feeding a new greenfield refinery in Queensland with an output of at least 600,000 tonnes a year.

An "optimal" configuration was defined as one which "includes at least a mine" and either a new alumina refinery with an annual output of less than 600,000 tonnes or an "expansion of existing alumina refining and/or aluminium smelting capacity" in Queensland.

Cynics might argue that the Aurukun exercise was almost tailor made for Chalco.

Chalco announced to all the world last year that its plan was based on a multibillion-dollar commitment to build an alumina refinery to process the bauxite either at Aurukun or at one of Queensland's port locations.

It would develop an aluminium smelter, too, if cheap enough power was available.

"Development of the PNG gas pipeline project could help the economics of a smelter," Chalco's Queensland representative Zhongxiu Liang said.

China is desperately short of bauxite and domestic policy has discouraged development of power-intensive industrial plants like aluminium smelters.

The Chinese ploughed through 14 million tonnes of alumina in 2004, half of it imported.

Of this two-thirds came from Australia – a factor which has made investment here appealing, along with the country's stable political system, rule of law and bilateral trade flows.

Alumina imports in 2005 were forecast at 7.5 million tonnes and Mr Liang said this level of growth was expected to continue, with Chalco accounting for 90 per cent of China's aluminium production.

"Chalco is the end user so the company will be committed to building this project as quickly as possible," he said.

The company also claims to have the technical edge to deal with Aurukun bauxite's high silica content as it is similar to China's.

"Chalco has a strong operational and financial capacity to deliver this project which fits with the company's development strategy to expand overseas," Mr Liang said.

Australia contains an estimated 22 per cent of the world's bauxite reserves and resources, ranking second after Guinea (in Africa) followed by Brazil, Jamaica and China.

Aluminium is used in everyday life in packaging, electrical goods, automotive and marine fabrication, and in lightweight structural applications in the building industry.

RICHARD EVANS CONFIRMED AS NEXT PRESIDENT AND CEO

CBC News, Canada Monday, February 13, 2006 3:17:00 PM EST

Press Release - ALCAN INC.

Montreal, Canada — L. Yves Fortier, Chairman of the Board of Directors of Alcan Inc. (NYSE, TSX: AL) is pleased to announce today that the Board has formally approved the appointment of Richard (Dick) Evans (58), Executive Vice President and Chief Operating Officer, as Alcan’s next President and Chief Executive Officer effective March 12. Mr. Evans succeeds Travis Engen (61), who is retiring. Mr. Evans remains a Director of the Board following his appointment in October 2005.

"With this formal approval, the Board has expressed its unanimous support for Dick Evans as Alcan’s next President and CEO," said Mr. Fortier. "We are certain that his extensive industry experience, deep knowledge of Alcan’s businesses and strategy, and leadership qualities will continue to strengthen the Company’s position as a global leader in aluminum and packaging," he added.

"Over the past five months, I have worked closely with Travis and my colleagues in ensuring a smooth leadership transition. I would like to personally thank Travis for his dedication and fortitude in shaping today’s Alcan and wish him all the best in his retirement," said Mr. Evans. "In the coming months, I intend to focus on outlining my strategy for the Company and continuing to build on the solid foundation that Alcan has developed over the past five years," concluded Mr. Evans.

Prior to his appointment as Chief Operating Officer, Mr. Evans has overseen all four of Alcan’s Business Groups at differing times: Bauxite and Alumina, Primary Metal, Engineered Products and Global Packaging; as well as, participating in the overall strategic governance of the Company and the integration of Pechiney, acquired by Alcan in 2003. Prior to taking on this role, Mr. Evans was based in Zurich, Switzerland and was responsible for Fabrication Europe, as well as, the global integration of Alcan and algroup following their combination in October 2000.

Mr. Evans has an extensive background in general and executive management with the aluminum industry. He joined Alcan Aluminium Limited in Montreal, in January 1997, as Senior Advisor, Corporate Development, following 27 years of US-based and international postings with the Kaiser Aluminum & Chemical Corporation. In July 1997, he was appointed Executive Vice President, Fabricated Products, North America and President of Alcan Aluminum Corporation; and, in March 1999, he was appointed President of Global Fabrication before relocating to Europe in October 2000.

Alcan is a multinational, market-driven company and a global leader in aluminum and packaging. With world-class operations in primary aluminum, fabricated aluminum as well as flexible and specialty packaging, aerospace applications, bauxite mining and alumina processing, today’s Alcan is well positioned to meet and exceed its customers' needs for innovative solutions and service. Alcan employs almost 70,000 people and has operating facilities in 55 countries and regions.

Ormet’s severence offer not satisfactory to Union

Marietta Times, OH Monday, February 13, 2006

HANNIBAL — After sporadic negotiations over the last two weeks between Ormet Corp. management and United Steelworkers leadership, representatives from the USW said Ormet’s severance offer to about 500 rolling mill workers was unsatisfactory.

This statement came after two days of negotiations last week and another day of negotiations Thursday involving the rolling mill portion of Ormet’s operation which are the Hannibal facilities in Mornoe County now owned by aluminum maker Aleris International Inc.

"The only thing I really want to say is that we’re (Ormet and the union) miles apart," said USW official Denny Longwell from the union hall in St. Clairsville. "They’re offering a lump sum of money to divide among the people. It’s not a large amount of money, considering they’re losing their livelihood."

Longwell said the most recent negotiations were know as "effects bargaining," during which the union tries to improve pensions, extend health care and establish a contact with the new company — in this case, Aleris — for pensioners in the future. But Longwell said Ormet has been uncooperative in the effects bargaining process.

"Ormet’s taken a position that they really don’t want to address these issues in a manner we think is fair for our people," he said.

Longwell also said that he is assuming the new owner has no intention of restarting operations at the rolling mill or talking with the USW.

"We have been engaged in futile efforts to get the new owner to sit down and talk to us, but they’re not returning our phone calls," he said. "Your guess is as good as mine."

Sual to cooperate with Alu Menziken Aerospace and Corus Aluminium.

Analytical Information Agency, Russia 13/02/2006

Sual Group, Alu Menziken Aerospace/UAC, as well as Corus Aluminium Rolled Products entered into cooperation agreement to exclusively develop and produce extruded and rolled products in Al-Li-alloys.

The companies have joined their research and development efforts to complement their manufacturing capabilities for these specific products.

Efforts will focus on the Aerospace market, where the three companies will develop new design solutions, using proprietary Al-Li-alloys, to provide highly efficient aircraft structures. The global Aerospace customers will benefit from the synergies in product and process developments of this technology alliance. Follow-up investments to increase capabilities and capacities are envisioned.

Sual Group is a vertically integrated business amongst the ten largest aluminium producers of the world. It comprises businesses involved in bauxite mining, alumina refining, primary aluminium production, silicon, semi-finished and finished aluminium products.

Sual works in close cooperation with VIAM, the major Russian research institute of aircraft materials in Moscow with a view to development new alloys and processes.

Alu Menziken Aerospace/UAC is a global supplier of hard alloy extrusions to the aircraft structures market. The company has built a niche in the aerospace market by specializing in the production of complex part geometries with extremely tight tolerances.

Corus Aluminum Rolled Products is a worldwide leading supplier of aluminum plate, sheet and coil to the aircraft, automotive and transportation market. The company has rolling mills in Germany, Belgium and Canada.

"AK&M", 13/02/2006 14:50

La Brea steelband gets $12,000 boost

Trinidad & Tobago Express, Trinidad and Tobago,Tuesday, February 14th 2006

La Brea Nightingales Steel Orchestra has received a $12,000 boost from ALUTRINT Ltd, a new company at the Union Industrial Estate in La Brea. ALUTRINT is 60 per cent majority-owned by Government and 40 per cent owned by Sural of Venezuela.

The company will operate an aluminium complex which includes a state-of-the-art smelter, a cable plant and a wire rod mill.

It is expected to begin production in 2008.

ALUTRINT's Public Affairs manager Clement James said that although his company had not begun operations yet, it was committed to the development of La Brea, especially youth development.

"Last year we sponsored the La Brea Community Football League to the tune of $30,000 and we are very pleased to assist another pillar of community life in La Brea. I was pleased to see a number of young people in the band and we hope to see many more in the near future. This part of the country has a rich history in sport and culture and ALUTRINT is committed to the social and economic development of the region."

Manager of La Brea Nightingales, Errol Joseph, received the cheque on behalf of the band and noted that it was one of the oldest steel orchestras in South Trinidad but the band had been suffering from a lack of financial support.

"We are very pleased that ALUTRINT has given us some assistance for the upcoming Carnival season. We hope this is the start of a long and successful relationship and that we can bring back the glory days of La Brea Nightingales Steel Orchestra."

Aluminium Giant to Phase out Outdated Electrolysis Technology

Slovenia Business Week, Slovenia, Feb 13, 2006

The manager of Slovenia's leading aluminium producer Talum, Danilo Toplek, has told Delo that the company would have to close down the outdated electrolysis B-based technology in line with the EU directive on ecological standards.

According to Toplek, Talum decided for this move due to the amount of money needed to renovate the old facility by the end of 2007. Meanwhile, the company's electrolysis C-based technology already operates in accordance with EU standards.

"Electrolysis B will be phased out in October, although some might think this move unreasonable, as aluminium has already reached a record price of US$ 2,400 on the market. Yet, we know its price will drop due to speculative investments by financial funds," Toplek told the daily Delo on Monday, 6 February.

He is aware that this closing will pose a huge problem, as Talum will thus produce 35,000 tonnes of pure aluminium a year less. This explains why the company decided to expand the existing electrolysis C-based technology, which many have protested against.

Toplek, who last week received a business excellence award 2005 from the Chamber of Commerce and Industry (CCIS), also outlined the company's results, saying that in 2005 Talum produced 158,000 tonnes of aluminium, about the same amount as the year before.

The Kidricevo-based company posted sales of SIT 62.3bn (EUR 260m) and 830m (EUR 3.46m) in net profit, which has met Talum's expectations, Toplek said, adding that 82% of the output was exported.

Source: Slovene Press Agency STA

Norsk Hydro to mull plant closures

Malaysia Sun, Malaysia Tuesday 14th February, 2006 (UPI)

Norway's Norsk Hydro will sell or close some of its aluminum plants to restore profitability in the struggling business.

While high energy prices boosted profits of the company's oil and gas divisions, it hurt its aluminum production business in the final quarter of last year, forcing a $175 million asset write-down, the Financial Times said Tuesday.

Businesses or factories where we cannot restore profitability to an acceptable level will be closed or sold, said Eivind Reiten, chief executive.

Carbonorca to invest US$312mn in expansion - Venezuela

BNamericas, Chile Tuesday, February 14, 2006 16:08 (GMT -0400)

Venezuelan carbon anode producer Carbonorca's 2006-2008 modernization plan calls for investing some US$312mn, company plant manager Palmiro Jiménez told BNamericas.

The plan includes two major projects, the first of which aims to upgrade equipment technology "to reduce the plant's contamination and improve product quality," Jiménez said.

Some US$50mn will be spent on the project's first stage and entails upgrading crushing equipment, installing dust and smoke capturing equipment, and eliminating noise at the crushing process.

The second project involves expanding the plant to increase production capacity to match the level of baked anodes to 605,000t/y by 2010 from the current 185,000t/y.

"To reach this level [of production] we estimate a US$262mn budget," he added.

Aluminum reducers Alcasa and Venalum each control 45% of Carbonorca, while state heavy industry holding company CVG holds 10%.

Carbonorca is based in Puerto Ordaz in eastern Venezuela and its carbon anodes are used in the aluminum reduction process.

By Harvey Beltrán, BNamericas.com

Refinery to use coal ash for alumina

The Standard, Hong Kong Wednesday, February 15, 2006

China is to build its first alumina refinery in Inner Mongolia, which uses coal ash instead of bauxite as the raw material, a company official and the top government planner said.

If successful, analysts said, the technology could help China, the world's top aluminum producer and consumer, overcome a huge shortage in alumina, the raw material for aluminum.

An Inner Mongolia Mengxi Group official said the refinery would have an annual capacity of 400,000 tonnes and would recover alumina from coal ash.

Construction, with total investment of 1.61 billion yuan (HK$1.55 billion), would start in May and operation of the first phase of 200,000 tonnes per year was likely before the end of 2007, he said.

Alumina and other by-products contained in coal ash are lost in landfills, and the refinery will make use of the waste from a nearby power plant, the National Development and Reform Commission said.

The power plant discharged 1.65 million tonnes of coal ash a year, it said on its Web site.

Analysts said the project, the country's first to use coal ash as its raw material, will help ease China's shortage of bauxite but it is still hard to say if it is economically viable in other areas due to different coal quality.

"The project is a first. We still need to see how it works after the plant is in operation," said Wang Feihong of metal consultancy firm Antaike Information. "But the cost should be higher than a refinery from bauxite."

Mengxi officials said the refinery could recover 300 kilograms of alumina from one tonne of coal ash.

Given the current alumina price of more than US$600 (HK$4,680) per tonne, Wang said the project should be economically viable. The silicon contained in the coal ash would be used by the company's cement plant.

China imported seven million tonnes of alumina, the semi-finished raw material to make aluminum, in 2005, a rise of 19.4 percent over a year. REUTERS

Alcan say declares force majeure on Gove alumina

Metro Toronto, Canada - Tuesday, February 14, 2006 10:24:16 AM ET

LONDON (Reuters) - Alcan Inc <AL.TO>, the world's second largest aluminum producer, has declared force majeure on alumina shipments from its two million tonne per year Gove refinery in Australia, the company said on Tuesday.

"We have declared force majeure on alumina shipments from Gove due to power outage. We are focused on restoring power to the affected boiler as early as Wednesday," an Alcan spokeswoman said.

"We advised our customers (of the force majeure). We do this as a matter of course in the event that the production impact is greater than expected," the spokeswoman said.

Spot alumina was trading around $630 a tonnes on the international market before the declaration, versus $330 in the first quarter of 2004.

"People are asking for material, but they are a little reluctant to pay higher numbers. Within a week they will pay up. They are already looking to pay $645 for material on a CIF China basis," one dealer said.

Govt mulling new policies for coke industry

www.chinaview.cn 2006-02-15 09:46:56

BEIJING, Feb. 15 -- China's top economic policy planning body yesterday said it would come up with a package of industry policies no later than April to further regulate the fragmented industry of coke, a raw material used to produce steel.

The new policies aim to enhance industry consolidation and eliminate old facilities that waste energy in sectors, which also include steel, calcium carbide and aluminium production.

Last year, the capacity of coke production exceeded demand by as much as 100 million tons.

Industry analysts said the new regulation, if carried out effectively, will help boost the coke prices because of a drop in production.

"We will introduce these regulatory policies soon after the parliament meets next month," an official in charge of industry policies from the National Development and Reform Commission (NDRC) yesterday told China Daily, asking not to be named.

China's parliament usually sits for one to two weeks annually, where officials and business leaders gather to canvass their opinions. The meeting starts from March 5 this year.

By the end of last year, China had 1,480 coke producers, boasting a total production capacity of 300 million tons, but the demand only stood at roughly 200 million tons, Hua Zugui, president of China Coal & Coke Holdings Ltd, said.

Still new coke facilities producing as much as 30 million tons are also being planned across the country, Hua said.

The over-capacity has led to plummeting coke prices, causing many coke producers in China to complain about losses due to squeezed margins.

An official from China Coal & Coke, who spoke on the condition of anonymity, said the FOB (Free on Board) price dropped to US$130 a ton from US$450 in 2004.

Coke producers, including China Coal & Coke, gathered in Beijing in December last year, calling for the government to tighten controls over the fragmented sector. They also talked about measures to raise coke prices, inside sources said, without elaborating.

As much as 80 per cent of coke production is used to make steel, another sector that industry authorities have vowed to cut production of.

Luo Bingsheng, vice-chairman of China Iron and Steel Association, last month said the country would get rid of old steel-making facilities with a capacity of 100 million tons within the next two years.

Hua predicted China's steel production was expected to be somewhere between 385 to 400 million tons this year, which would need up to 232.8 million tons of coke.

The NDRC official said the government is encouraging the set-up of large-scale coke producers, and closing small, inefficient workshops.

"By doing so, we aim to enhance the technologies and energy efficiency in the coke sector," the unnamed official said.

There will be many M&A (mergers and acquisitions) opportunities in the coke sector, boosted by the new policies, he said.

The policy planner last year introduced a series of regulations to lift the threshold for coke producers. The NDRC official yesterday said a major proportion of China's small coke producers had been shut down so far, accounting for about one-third of the country's total coke production.

He said the government is also encouraging large steel makers to acquire coke production facilities.

"It is not a major investment for a steel company, but the combination of the two sectors will have great synergy effects," the official said.

A senior analyst with the nation's think tank, the State Council Development Research Centre yesterday said the government should adopt more market measures such as fiscal policies, rather than the rigid government mandates, to effectively adjust the industrial structure.

"Last, but not least, the government should provide transparent the reliable industry information to steer new investment in a particular sector," the analyst said.

Overlapped investment in areas such as steel and coke, to a great extent, was caused by the government's lack of adequate information service, he added.

Corus Aluminium wins Airbus' Aluminium Supplier Award 2005

BNR Nieuwsradio, Netherlands 14 februari 2006 17:52

Corus' Aluminium Division is delighted to announce that it has received the Aluminium Supplier Award 2005 from Airbus.

Corus Aluminium Walzprodukte in Koblenz, Germany, which manufactures high value rolled products, is a major partner to the aerospace industry and to Airbus. The award follows the long-term supply contract signed last year during the Le Bourget Airshow where Airbus said: 'For us at Airbus, Corus Aluminium Koblenz, is a top performing partner and we are looking forward to continuous good co-operation.'

During todays ceremony at Corus Koblenz works, Martyn Brown, Airbus Vice President, said: Corus Aluminium in Koblenz was top on all performance criteria that Airbus is setting and the award is a logical result. We thank you for your outstanding performance.

Alfred Haszler, Managing Director of Corus Aluminium Rolled Products, commented: 'We are proud to have received this award which is confirmation of our excellent work for Airbus and for the aerospace industry in general.' Gerhard Buddenbaum, Division Director Aluminium, added: 'This award from Airbus is rewarding for all our people involved right from manufacturing through to R&D and sales and will stimulate them to do even better.'

Corus' Aluminium division is the fifth largest largest producer of rolled and extruded aluminium products in the world with a highly specialized range of products supplied to customers world-wide. Corus Aluminium Walzprodukte GmbH in Koblenz is one of the leading manufacturing companies of quality high value rolled products including coils, sheets and plates are produced for different applications in the aerospace, automotive, heat-exchanger, shipbuilding, tank and vessel construction, tool-making and mechanical engineering markets.

(c) Het Financieele Dagblad in samenwerking met Betten Beursmedia News (contact: webred@fd.nl/ 020-5928456)

SUAL, RusAl Could Join Forces

The Moscow Times, Russia Thursday, February 16, 2006. Issue 3354. Page 7.

Russia's second-largest aluminum producer, SUAL, hopes to find a strategic investor by the summer of 2006 and does not rule out a merger with the country's top producer of the metal, RusAl, said SUAL co-owner Viktor Vekselberg.

"We are in the process [of seeking a strategic partner], and, I believe, we will finish it by the summer," Vekselberg, who is also SUAL's board chairman, told reporters Wednesday.

He said SUAL expected a leading metals firm to become its potential investor, but declined to elaborate.

When asked about a possible merger with RusAl, the world's third- largest aluminum producer, Vekselberg said that SUAL was considering such an opportunity.

"If it brings us an advantage from the business point of view -- why not?"

"We consider mergers and acquisitions an important source of further growth and development for RusAl, and are studying various options," a RusAl spokeswoman said Wednesday, but did not elaborate further.

In June of last year, RusAl chief executive Alexander Bulygin said the company might consider merging with SUAL, but he denied any merger talks had taken place.

SUAL and RusAl are equal partners in a $1.2 billion project in Russia's Far North, Interfax reported.

Vekselberg also said on Wednesday that SUAL had terminated an agreement with British investment fund Fleming Family and Partners to form an international mining and smelting company.

He said the fund had not fulfilled its commitments "due to reasons that do not depend on us or on them."

Fleming Family and Partners officials were not immediately available for comment.

Kommersant quoted Vekselberg as saying SUAL had completed a buyback of 5 percent of shares of SUAL International from Fleming, thus unwinding the partnership. Fleming has been in talks to raise its stake in SUAL International to 23 percent.

Aton Brokerage said the reported breakup of the SUAL-Fleming partnership, struck in 2003, could open the door to an initial public offering of SUAL stock.

"The news could potentially be the catalyst needed to bring SUAL to the public markets, as now there is no nagging background question as to structure and pre-IPO shareholder composition," Aton said in its daily note.

(Reuters, Bloomberg, MT)

What price for SUAL?

Mineweb, South Africa '15-FEB-06 06:54' GMT © Mineweb 1997-2004

By: John Helmer

MOSCOW (Mineweb.com) -- It was one of the great moments in French history.

Napoleon Bonaparte had landed on French soil in March of 1815, after months of exile on the island of Elba. He was marching northwards to Paris to evict the Bourbon king, and reclaim power. During a pause in a small village, Napoleon asked a farmer why he was charging him such a high price for eggs, unless hens were scarce in the region. The farmer replied: "No, sire, but Emperors are."

In the northwestern Russian region of Komi, new bauxite mines are an expense Victor Vekselberg has little choice but to pay, if he wants to stay in business. But at some point in the next eighteen months or so, the concessions he is prepared to offer could make the entire project vulnerable to takeover by his fuel suppliers, the great state-owned electricity or gas companies of Russia – United Energy Systems (UES) and Gazprom.

To simplify matters, if you want to make aluminium metal, you must start with bauxite; refine it into alumina powder; and then apply vast amounts of electricity. In Komi, the electricity required to produce the metal out of powder is generated by burning natural gas. Since aluminium is a solid form of electricity, the only way to make a Vekselberg-sized profit out of selling the metal is to ensure that the electricity is cheap. The further away from the marketplace the metal smelter is located, adding transport cost, the cheaper the electricity must be.

Now Vekselberg’s production company Siberian Ural Aluminium (SUAL) is mostly a bauxite miner, and only secondarily an aluminium producer. According to the production results for 2005, which SUAL released late last month, the company produced 5.4 million tons of bauxite ore (up 6% from 2004); 2.3 million tons of alumina powder (up 11%); and 1.1 million tons of aluminium metal (up 13%). In sector terms, SUAL ranks in the top ten of the world. A privately owned company controlled by Vekselberg and his partner Len Blavatnik, there are no public releases of financial data to indicate the revenue value of SUAL’s three products, or their relative profitability. Since most of the bauxite is consumed in the refining stage, and most of the alumina electrolyzed into metal, transfer pricing between enterprises almost certainly concentrates profit at the primary metal or fabrication stages, when the metal is exported.

According to one of the few public statements of SUAL’s financial position, the CEO Brian Gilbertson told a London conference in April 2005 that consolidated revenues for 2004 were $2.3 billion; EBITDA was $400 million; and assets were valued at $2.8 billion. He did not say if SUAL’s offshore export operations were included in these consolidated results.

SUAL has been operating several bauxite mines at different locations. North-Ural Bauxite, in Sverdlovsk, central Russia, comprises six mines, and produces more than 3 million tons of bauxite per year. It has been in operation for almost 70 years. Middle Timan, located further north near the town of Ukhta, in the Komi republic, started operating as an open pit in 1997.

But the high cost of the infrastructure to support the mine has made expansion of output slow going. It took several years before SUAL realized that, if it relied on foreign financing, the 157-kilometre rail spur linking the mine to the main Vorkuta-Moscow railroad, would never be built. Without that, there was no point in mining at all. And so SUAL invested its own funds to complete the line. It is the first private railway built in Russia since the revolution.

Altogether, SUAL sources estimate they have invested $150 million to date in studying and proving the deposit; opening the pit; and starting production on its way to the metal smelters. Last year, Middle Timan produced about 1.8 million tons of ore. On SUAL’s design boards, the mine has reserves of 260 million tons, and annual production capacity of 6 million tons – that is, four times the current production level.

At this stage, the bauxite is consumed by SUAL’s own plants. But if the mine is to be fully developed, SUAL’s alumina and aluminium plants do not consume enough, and additional sources of demand must either be found, or built from scratch. SUAL’s initial plan was the latter, with the idea of establishing an alumina refinery at Sosnogorsk, with annual output capacity of 1.4 million tons. Estimated capital cost, about $1.2 billion.

Gilbertson has described the commercial logic: "Although SUAL is balanced throughout its bauxite-alumina-aluminum product chain, the Russian industry, in aggregate, is alumina short. Industry needs 7 M tons of alumina annually to produce 3.5 M tons of aluminium. However, domestic production is only 3.2 M tons, leaving a deficit of 3.8 M tons to be imported. The Komi project represents a significant step in improving the overall availability of alumina to the Russian industry." SUAL projections suggest that at full operating capacity, the Komi refinery could cut the import requirement for alumina by about a third.

Talks commenced with the French aluminium producer Pechiney – a specialist in building alumina refineries – with the idea that the two companies would operate a joint venture, and Pechiney would provide substantial financing, as well as operating technology. When Alcan merged with Pechiney, creating the second largest aluminium producer in the world, the Komi plan was shelved. SUAL then opened talks along similar lines with Alcoa, the world’s largest aluminium producer. But according to SUAL, Alcoa said that it could make no commitment to the project until SUAL could lock in the cost of electricity.

This is still the rub, and Gilberston has acknowledged it. "To date [April 2005], we have not managed to resolve the challenge of long-term, well-priced power, but the process continues." This explains why in April of 2005, Vekselberg agreed to sell half the project to his most serious domestic rival, Oleg Deripaska’s Russian Aluminium (Rusal) group. Deripaska paid about $75 million for the stake. The negotiations between the two groups had been protracted, and they followed an attempted share raid by Deripaska on one of Vekselberg’s smelters, which Vekselberg had foiled. Acknowledging the bad blood that had existed between them, Gilbertson described the Komi partnership as an "an important rapprochement in the Russian aluminium industry". For Deripaska, Vekselberg’s exit allowed Rusal to substitute domestically produced alumina for imports that are costly to land, and in the case of the Rusal-owned Nikolaev refinery in the Ukraine, may not be a reliable source of low-cost material in the long term. As Rusal CEO Alexander Bulyginm explained Rusal’s entry in the Komi project, it helps "tackle a key issue for the Russian aluminium industry to expand the raw material base".

Once this deal had been done, Middle Timan was dropped from SUAL’s balance-sheet. The principal lenders to the project, the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC), were obliged to re-evaluate the project risks they had assessed when SUAL was the sole proprietor, and the creditworthiness of Rusal. But when the EBRD reported last month that it had approved a loan consortium plan for a total financing of $150 million, it omitted to say anything at all about the power supply problem.

According to presentations by SUAL executives, between now and 2008, when the proposed alumina refinery should start to operate, financing of $720 million will be required from external lenders. The EBRD-IFC loan represents just 20% of the target.

When asked whether EBRD’s decision to lend indicates confidence that the power supply problem can be solved, EBRD’s response is equivocal. All the international bank and its syndicate have agreed to do so far, bank officials claim, is to lend for the expansion of the bauxite mine. The bauxite egg is valuable enough, without producing the alumina chicken.

When January’s approval by the EBRD and IFC was confirmed by Rusal in an announcement, Rusal treated the go-ahead as confirmation of "RUSAL's plan to enhance the company's corporate governance and financial disclosure". SUAL said nothing. But when asked to explain how SUAL views the prospects for an agreement on long-term electricity and gas tariffs, company sources are equivocal. They say the UES regional subsidiary which supplies power to the mine, and would supply power to the proposed alumina refinery, is prepared in principle to offer 20 to 25-year fixed tariffs, but in practice cannot do more than quote a price one year in advance. This is because, as UES and SUAL both acknowledge, Gazprom sets the tariff for fuel supply to UES. And Gazprom is not willing to agree to long-term fixed pricing.

What is conceded, therefore, is that there will be no fixed electricity tariff for long enough into the future to meet the SUAL and Rusal rate of return targets, or foreign lenders’ criteria -- unless UES and Gazprom say so. What is more, it is quite possible that UES and Gazprom, either unilaterally or together, may decide that, if the profitability of the Komi project depends on a subsidized price of gas and electricity, it would make sense for the suppliers to share in the profit of the venture. SUAL acknowledges that this could mean the acquisition of substantial equity in the Komi project; in short, a state-endorsed takeover.

As the Kremlin retrieves strategic control of Russia’s resource sector from the oligarchs who acquired it a decade ago, it is fear that prompted Vekselberg and Deripaska to bury the hatchet. Their Komi partnership is a common defence against a hostile state move, with promises of regional development for Komi, local jobs, and international lending guarantees erected as hurdles to a takeover, and inducements to UES and Gazprom to issue the profit subsidies, and satisfy their asset hunger elsewhere. Right now there is no telling what the outcome will be.

Romania: Alro Posts 1.618 bn RON Turnover for 2005

Reporter.gr, Greece 17:08 - 15 February 2006

Aluminium producer Alro Slatina posted a preliminary turnover of 1.618 billion RON for 2005, results that fall within the company's budgetary estimations, ACT Media news agency reports.

Alro posted a preliminary net profit of 118.22 million RON in 2005.

"Alro financial results fall within the company's budgetary estimations," said Marian Nastase, Vice-President of the Alro Slatina Administration Board.

Compared to 2005, the company met significant difficulties in its electricity and alumina supply, components that represent more than 70 percent of production costs.

The company's spending increased by 17.6 percent in 2005 as against 2004.

Alro continues its medium term investment programme destined to the production capacity upgrading, to 420,000 tonnes aluminium per year.

As such, the company plans to invest 500 million dollars in order to double its production capacity and concentrate upon big added value goods.

In the last three years, Alro invested 145 million dollars, mainly in the production lines upgrading and environment protection.

In 2005, the investments exceeded 25 million dollars.

The company paid taxes of some 100 million dollars to the state budget over 2002-2005.

For social programmes 1.3 million dollars were allocated.

Alro posted a turnover of approx. 500 million dollars in 2004.

Alro's gross operational revenues attained 401 million euros and the operational profit stood at 41.9 million euros.

Net profit was of 31.5 million euros.

Alro is the most important primary aluminium producer in Central and Eastern Europe and the sole aluminium and alloys based on aluminium producer in Romania.

Its installed production capacity is more than 260,000 tonnes annually.

Alro is a share company, listed on Bucharest Stock Exchange.

The European Union (Italy, Greece, Germany, France, Great Britain, Hungary etc.), Turkey and the Balkan states are the main markets for the aluminium produced at Alro.

The company also exports its products to the United States, Israel, South Korea and Saudi Arabia.

The company holds ISO 9001 certificate for quality management, its products being in line with quality standards for primary aluminium issued by London Metals Exchange - LME).

Source: ACT Media News Agency

Global Alumina and United States' African Development Foundation Partner to Increase Community and Enterprise Development in the Republic of Guinea

AllAfrica.com, Washington February 15, 2006

Global Alumina Corporation (Toronto)

Global Alumina Corporation (TSX: GLA.U) and the African Development Foundation (ADF), a public corporation of the Government of the United States of America, have entered into a five-year, strategic partnership to maximize the social and economic benefits of Global Alumina's proposed 2.8 million tonne per annum alumina refinery project in Guinea.

The objective of the partnership between Global Alumina and the ADF is to promote community development by stimulating the creation, growth and expansion of small and medium-sized indigenous enterprises in Guinea. Global Alumina and the ADF have agreed to contribute up to US$5 million each to fund approved initiatives over the course of the five-year program.

"We are committed to assisting the Republic of Guinea in its efforts to improve its citizens' quality of life by unlocking the country's most abundant and valuable natural resource," said Bruce Wrobel, Chairman and CEO of Global Alumina. "By collaborating with the ADF, who have been working in Guinea for more than 15 years and are deeply engaged in local communities throughout the country, we are ensuring that those Guineans directly impacted by our project, as well as those in the surrounding areas, are able to enhance the development of their communities and grow sustainable enterprises."

Recognized as a leader in the development field for its collaborative and participatory approach to community development, the African Development Foundation has provided funds in the form of development grants to support community-driven initiatives and to build Guinean-owned enterprises. The Foundation will partner with Global Alumina to provide financial and technical assistance to communities and small businesses in the region where Global Alumina is operating.

"The partnership between Global Alumina and the ADF will become a global case study demonstrating how companies should proceed with investments in Africa. Through our partnership, the impact of the development and operation of Global Alumina's alumina refinery will be felt far beyond the refinery site and into communities and cities throughout the Republic of Guinea," stated Nathaniel Fields, Vice President and CEO for Africa Operations, African Development Foundation. "Global Alumina should be congratulated for understanding that the best interests of shareholders can be served by ensuring that their project leads to an improved quality of life for all Guineans."

Global Alumina and the ADF expect to complete a program implementation document during the first quarter of 2006 that outlines the specific programs the partnership will be executing and the opportunities for Guineans to participate in the programs.

ABOUT AFRICAN DEVELOPMENT FOUNDATION

The African Development Foundation (ADF) is a United States Government agency dedicated to expanding access to economic opportunities in Africa. Over the past 20 years, ADF has funded 1,600 projects in support of African entrepreneurs and local African communities. For more information on ADF, its programs and its application guidelines, go to: www.adf.gov/funding.html.

ABOUT GLOBAL ALUMINA

Global Alumina Corporation is a company that intends to use the vast bauxite resources of Guinea to produce alumina for sale to the global aluminium industry. Global Alumina is positioned to be one of the largest companies focused solely on alumina production and sales, and offers an opportunity for socially responsible investing in a country that holds over one-third of the world's bauxite resources. Global Alumina is headquartered in Saint John, New Brunswick with operations in BokNi, Guinea and has administrative offices in New York, London, Montreal and Conakry, Guinea. For further information visit our website at www.globalalumina.com.

Romania: Swiss Co. Invests €6mn in Aluminium Facility

Reporter.gr, Greece 15:13 - 15 February 2006

Swiss company Alu Menziken Aerospace announced its intention to invest some six million euros in building an aluminium process facility, ACT Media news agency reports.

The company currently holds four facilities in Switzerland and the United States and it is about to build another one in Romania to be specialized in aluminium extrusion.

The aluminium will be used mainly to make spare parts for aircraft.

The investment will create some 250 jobs.

About 15-20 percent of the profit made in the first four years of activity will be reinvested.

Source: ACT Media News Agency

Norsk Hydro open to divesting all or parts of downstream aluminium ops

Forbes 02.15.2006, 03:41 AM

OSLO (AFX) - Norsk Hydro ASA is open to selling parts of or all its downstream aluminium operations, reported Norwegian daily Dagens Naeringsliv, citing Norsk Hydro CEO Eivind Reiten.

The report said Norsk Hydro opened up for a divestment at yesterday's presentation of its fourth quarter results, where Reiten said he would be 'pragmatic' if Norsk Hydro received an offer for the operations.

He also added that the relative importance of its downstream aluminium was likely to decrease.

'The likely result is that capital employed and the relative importance (of the aluminium downstream operation) will be reduced,' Reiten told the newspaper.

The comments come only weeks after Norsk Hydro announced it was splitting its aluminium operations into two units -- one for metals and one for products -- as part of a strategy to strengthen its upstream activities.

bente.bjorndal@afxnews.com , bb/lam

Alcoa Signs Agreement in Principle to Build World-Class Aluminum Smelter in Trinidad and Tobago

Finanzen.net, Germany 16.02.2006

Alcoa to Begin Environmental Impact Assessment

Alcoa (NYSE:AA) today announced that it has signed an Agreement in Principle with the Government of the Republic of Trinidadand Tobago to build a world-class 341,000 metric-tons-per-yearaluminum smelter (mtpy) in the Cap-de-Ville area in southwesternTrinidad. This agreement follows the signing of a Memorandum ofUnderstanding in May 2004 for participation by Alcoa in thedevelopment of an aluminum industry in Trinidad and Tobago.

Under the terms of the agreement, Alcoa will begin anenvironmental impact assessment (EIA) for the location in Cap-de-Villeas part of the company's commitment to sustainable developmentprinciples. The company will also complete detailed feasibilitystudies to determine the full scope and cost of the proposed project.

It is anticipated that Alcoa would build a 341,000 mtpy aluminumsmelter, an associated anode plant, and cast house. Project plans callfor the production of 240,000 mtpy of billet and forging stock, andalso include possible downstream facilities. The facilities would bepowered by a self-contained power plant fueled by natural gas. The newsmelter and related facilities are projected to cost approximately$1.5 billion.

Alcoa will hold 100% interest in the smelter with the Governmentof the Republic of Trinidad and Tobago an active partner in theprovision or facilitation of requisite infrastructure.

It is expected that upon completion, the smelter and associatedfacilities would permanently employ approximately 750 to 800 peopledirectly and indirectly through associated jobs in the region.

Construction would not begin until the completion of the EIA, andfinal approvals by Alcoa's Board of Directors and by the Government ofthe Republic of Trinidad and Tobago. First metal production would beexpected in late 2008. Employment during the two-year constructionperiod for the smelter is expected to average approximately 1,500additional jobs.

In making the announcement, Alcoa Chairman and CEO, Alain Belda,reaffirmed that the new Trinidad and Tobago smelter underlines Alcoa'sbelief in the future of the Caribbean region as a major supplier ofglobal alumina and aluminum markets.

"With the competitive and efficient energy source, the access toskilled labor, and efficient proximity to alumina supplies andcustomers, the Trinidad smelter will be ideally placed to compete forits share of the world market in primary aluminum," said Belda. "Italso creates a solid foundation for the development of an integratedaluminum industry to further diversify and strengthen the economy ofTrinidad and Tobago. In terms of technology, design, and environmentalperformance, this will be a world-class facility," added Belda.

The Trinidad and Tobago smelter would be Alcoa's third majorprimary products facility in the Caribbean basin. The company operatesa 1.25 million mtpy alumina refinery in Clarendon Jamaica, through aventure between Alcoa World Alumina and Chemicals (AWAC) -- a globalalliance between Alcoa and Alumina Ltd., with Alcoa holding 60 percent- and the government of Jamaica. Alcoa has plans for a 1.5 millionmtpy expansion of the Jamalco facility, bringing total capacity to 2.7million mtpy. And in Suriname, the company has bauxite mining, aluminarefining and hydropower facilities, including its recently expanded2.2 million mtpy Suralco alumina refinery in Paranam, jointly ownedthrough AWAC with BHP Billiton.

Alcoa has had operations in Trinidad and Tobago for more than 60years where its Tembladora Transfer Station loads approximately525,000 metric tons of alumina from Suriname for shipment throughoutthe world each year.

Alcoa is the world's leading producer and manager of primaryaluminum, fabricated aluminum and alumina facilities, and is active inall major aspects of the industry. Alcoa serves the aerospace,automotive, packaging, building and construction, commercialtransportation 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 marketsconsumer brands including Reynolds Wrap(R) foils and plastic wraps,Alcoa(R) wheels, and Baco(R) household wraps. Among its otherbusinesses are vinyl siding, closures, fastening systems, precisioncastings, and electrical distribution systems for cars and trucks. Thecompany has 129,000 employees in 42 countries and has twice been namedone of the top three most sustainable corporations in the world at theWorld Economic Forum in Davos, Switzerland.

More information can be found at www.alcoa.com

Alcoa to build smelter in Trinidad

Pittsburgh Business Times, PA 16-Feb-2006

Alcoa Inc. reached a deal in principle with the government of Trinidad and Tobago to build a smelter in southwestern Trinidad.

Alcoa said the smelter, which would produce about 341,000 metric tons of aluminum smelter annually, would cost $1.5 billion, with first metal production expected in late 2008.

Construction is pending completion of an environmental impact report and the approval of Alcoa's board and regulatory bodies.

Alcoa will fully own the smelter, while the government will partner with the company on infrastructure for the facility.

The company and the government signed a memorandum of understanding in May 2004 for Alcoa to help develop an aluminum industry in the island nation. The completed smelter is expected to create up to 800 jobs.

China's rising rich an 'opportunity'

Brisbane Courier Mail, Australia 17feb06

By Andrew Trounson

AUSTRALIAN miners may be making the most of China's rapid industrialisation, but in the longer run our food industry is also likely to be a winner as China's 1.3 billion people grow richer and demand the finer things in life, such as a glass of quality red or a barramundi fillet.

Melbourne Business School's Critical Issues Conference of business and bureaucratic heavyweights in Melbourne yesterday heard that as China's economic growth switches from heavy industry to services, opportunities will emerge in the financial services, telecommunications, education and retail sectors.

Deutsche Bank head of investment research Thomas Murphy believes Australia is well-positioned to expand its market opportunity in China beyond iron ore and coal.

"Opportunities in agriculture, forestry, fish and other food products - now collectively worth only about 15 per cent of Australia's total exports - will come into greater prominence as consumer wealth levels call for fine meats, seafood and wine," Mr Murphy said.

Retail market opportunities were also emerging in China and in India, perhaps the next major growth engine, he said. Supermarkets and convenience stores in India currently had just 2 per cent market penetration.

But as China's economic wealth grows, it is also seeking to invest directly to secure raw materials, and Australia is firmly on its radar. Chinese aluminium giant Chalco is among the final bidders to develop the Arukun bauxite deposit in Queensland.

"To meet the challenge of stable (raw material) supplies we believe the solution is to invest in countries with abundant bauxite resources, like Australia," Chalco chief Xiao Yaqing said.

BHP Billiton boss Chip Goodyear said this week that the populations of China and India regarded this century as "their century". But research by Mr Murphy shows that for China and India economic leadership isn't new. About 400 years ago, they accounted for over half the world's GDP and by 1820 China accounted for more than 30 per cent. But today, China accounts for only 4 per cent of world GDP and India 2 per cent, compared with 29 per cent for the US.

INTERVIEW: China's Chalco May Spend US$2.5B In Australia

TMCnet - Feb 16, 2006

By Matt Chambers Of DOW JONES NEWSWIRES

MELBOURNE, Feb 16, 2006 (Dow Jones Commodities News via Comtex) -- Predicting rural China will be the next big driver of metal demand, Aluminum Corp. of China (ACH), or Chalco, said it is keen to expand production with a mine, refinery and smelter in northeast Australia powered by Papua New Guinean gas.

Chalco, the world's second-biggest alumina producer, is one of only "a couple" of bidders in the running to mine the Aurukun bauxite deposit in Queensland state's remote Cape York region, with numbers whittled down from an original 10, Chairman Xiao Yaqing told Dow Jones Newswires Friday.

Analysts say developing a bauxite mine and alumina refinery at Aurukun could cost US$1.5 billion, but Xiao said if successful in Queensland state's sale of the deposit, Chalco's investment might include an aluminum smelter.

This could bring the cost of the whole project up to more than US$2.5 billion.

Xiao wouldn't give the value or mine size of Chalco's Aurukun bid, but Global Mining Research analyst Tony Robson said a 250,000 tons-a-year smelter could cost US$1.1 billion, based on the cost of a planned Trinidad and Tobago smelter announced Thursday by Alcoa Inc. (AA).

"There wouldn't be much point building a smelter any smaller than that and for a bauxite mine, alumina refinery and aluminium smelter, Chalco wouldn't get any change from US$2.5 billion," Robson said.

Xiao said a smelter is dependent on Exxon Mobil Corp.'s (XOM) planned Papua New Guinea gas project going ahead and at what cost it can supply fuel for power.

Chalco is seen as the front-runner to mine Aurukun after several big mining companies, including Rio Tinto PLC (RTP) and Alcoa, pulled out of the running.

While Aurukun's questionable quality, indigenous land issues and expense to develop amid shortages of labor and equipment are thought to have discouraged other bidders, Xiao said Chalco is still keen.

"The size of the deposit can support a reasonable scale of operation and the quality of the bauxite, which is high in silicon, falls into the category Chalco has expertise in," Xiao said through an interpreter. He said any development would cost well over US$1 billion.

Xiao said while China's aluminum demand growth will likely fall off slightly in coming years, his country's rural demand for metals will help keep global alumina prices at high levels for the next three to five years.

While it has dropped sharply in the past week, the aluminum price is still 36% higher than it was in June last year, mostly because of Chinese demand.

"Consumption in the past has been mainly in the industry sector in urban areas," Xiao said. "In China, two-thirds of the population is in the rural area and as these people get richer, there will be much more consumption.

"Secondly, the next 15 years will be the most critical phase for Chinese industrialization process," which will also drive further demand.

Aluminum demand growth has been about 1.6 times that of China's huge economic growth over the past 25 years, Xiao said. While he expects that to drop off slightly, he expects aluminum demand growth will stay higher than China's economic growth.

Xiao said he agreed with BHP Billiton (BHP) Chief Executive Chip Goodyear's comments this week that Chinese economic growth is set to stay above 8% in coming years.

Chalco presently has no mines outside of China, but is keen to become an international operator and expects to have production from Brazil and Vietnam before the five or so years it will take to get Aurukun up and running.

The drive to pursue alumina in other countries comes from China wanting to be less dependent on alumina imports and also a desire to improve Chalco's performance, Xiao said.

"The first driving force is the Chinese supply gap - about 50% of alumina needs to be imported," he said. "The second driving force is that the market today is a global market and companies needs to be globalized - that will also help us to benchmark international standards, find out the differences and improve them."

The Queensland Government took final bids for Aurukun on Jan. 30 after taking the deposit off Alcan Inc. (AL) in 2004 for failing to meet a development deadline. It plans to announce a shortlist in March and a winner in June.

As well as Rio Tinto and Alcoa, Xstrata PLC (XTA.LN) and Companhia Vale do Rio Doce (RIO) have both said they aren't interested in bidding for Aurukun after earlier expressing interest.

Chalco is the only serious bigger, with another bid, from BHP Billiton (BHP) "not meant to be much good," Metal Bulletin said Feb. 13, citing a Queensland government official it didn't name. Queensland has declined to say how many bids it received and officially denied Chalco is the only serious bidder.

Other companies which expressed interest last year are Mitsubishi Corp. (8058.TO), Norsk Hydro ASA (NHY), Russia's Sual Group, Hindalco Industries (500440.BY), Alcan and Intertech Systems.

Exxon Mobil and partners Oil Search (OSH.AU) and Australian Gas Light Co. (AGL.AU) are expected to approve the PNG Gas project and pipeline to Australia mid-2006.

-By Matt Chambers, Dow Jones Newswires;

61-3-9614-2662; matt.chambers@dowjones.com

-Edited by Paul Dekkers

UAE to build $6bn aluminium smelter

Peninsula On-line, Qatar 2/19/2006 , Reuters

ABU DHABI: The United Arab Emirates unveiled plans yesterday for a $6bn aluminium smelter complex as part of a strategic thrust into the red-hot global aluminium industry.

The smelter will start operations in 2010 and will eventually have an annual capacity of 1.2 million tonnes, making it the largest of its kind in the world, said Abdullah Kalban, chief executive of Dubai Aluminium Co Ltd, known as Dubal.

About 70 per cent of the venture will be financed through local and foreign borrowing, while the equity component will be shared by Dubai government-owned Dubal and Mubadala Development Co, the investment arm of the emirate of Abu Dhabi.

"This shows we are moving big-time into the global aluminium business and that defines our future strategy," Mubadala chief executive Khaldoon Mubarak told a news conference in Abu Dhabi.

Mubadala is one several UAE government-linked bodies making strategic investments to try to diversify an economy that relies heavily on energy exports.

Mubadala's investments include a 5 per cent stake in automaker Ferrari.

The energy-intensive aluminium industry is a key part of that diversification drive, especially with surging demand driving the prices for the metal up more than 40 per cent since September.

Last year Dubal took a 25 per cent stake in Canada's Global Alumina Corp and signed a $3.6bn deal with Larsen & Toubro to build plant in India.

Dubai, one of the seven emirates in the UAE federation, is already a major exporter of aluminium, accounting for around half the Middle East's 1.3-million-tonne output in 2004, according to the Dubai Chamber of Commerce.

Cheap gas

Kalban said the venture was looking to invest in the Middle East and North Africa, with low-cost energy supplies being a major consideration. The new smelter will sign a 25-30 year gas supply contract and have its own 2600 megawatt power plant.

The prospect of cheap gas supplies has other aluminium firms eyeing the Gulf, the world's biggest energy exporting region. India's National Aluminium Co Ltd has said it plans to set up a smelter in the Gulf by 2009-10.

The new UAE smelter complex will be located at Taweelah, half way between Abu Dhabi and Dubai, and the site of a $2.2bn port and industrial area.

The smelter's output will be shipped around the world to customers in the construction and auto industries, but Kalban said much of the production would likely be used in the Gulf, where record oil revenues are driving a construction boom.

"You have seen the growth here in the Middle East, especially in the UAE, so our end-users will be here," he said.

Tariffs on Gulf aluminium exports have been a key sticking point in trade talks between the European Union and the six Gulf Arab countries, but Kalban said that would be resolved in a trade agreement the two sides are expected to sign in May.

Mubarak said the new company would tap financing from international and local banks and would eventually consider a public share offering.

Alba net profit rises to $221 million

Trade Arabia, Bahrain Saturday, February 18, 2006

Manama

Aluminium Bahrain’s smelter has achieved a net profit of $221 million for its shareholders last year, Alba board of directors chairman Dr Mohammed Al Ghatam announced.

The company is expected to report greater profits in 2006 with the rising prices of aluminium in the international markets, he said.

'Dividends of $90 million were also distributed among the shareholders last year.

'In line with the international accounting standards followed by Alba, $165 million was allocated as reserves to cover possible fluctuations in the international prices of aluminium," he said.

Alba became the largest modern aluminium smelter in the world when it commissioned its newest reduction line, Line 5, in May last year. Line 5, the longest reduction line in the world, increases Alba's annual production capacity to more than 830,000 tonnes per annum.-TradeArabia News Service

Exiled Russian tycoon 'selling up'

Scotsman, United Kingdom - Feb 17, 2006

Boris Berezovsky, the self-exiled tycoon and one-time Kremlin insider, said that he is selling all his business assets to his long-standing Georgian partner in order to protect him from what he called "political pressure."

Berezovsky, who was an influential player under President Boris Yeltsin, became a bitter political opponent of Vladimir Putin when he was elected president in 2000. He left Russia for Britain, fleeing what he says were politically-motivated fraud charges.

Speaking from London, Berezovsky said his partner, Badri Patarkatsishvili, had approached him with the proposal after Berezovsky called for power in Russia to be "forcefully recaptured" in a radio interview in January.

The two businessmen are currently selecting a company to evaluate the assets, after which they would negotiate a price, he said.

"It is an initiative to safeguard my now former partner," he said.

Berezovsky gave no details of the possible price or the nature of his remaining assets, but noted that he began selling off his investments in 2000.

He alleges that billionaire Roman Abramovich - acting on Putin's behalf - forced him to sell his television, oil and aluminium assets at a knockdown price.

He and Patarkatsishvili received nearly 1 billion US dollars (Ł0.57 billion) for the shares, in an arrangement Berezovsky called "pure racketeering".

Under the agreement, Berezovsky will also sell his share in Kommersant, a business daily that is often critical of Putin's Kremlin.

He said that under Patarkatsishvili the paper would not soften its line, but denied he had ever used the paper as a "political weapon".

© Copyright Press Association Ltd 2006, All Rights Reserved.

Dubal signs $6b deals

Khaleej Times, United Arab Emirates - Feb 18, 2006

Y HASEEB HAIDER

ABU DHABI — Dubai Aluminium (Dubal), one of the world's largest aluminium producers, and Mubadala Development Company, yesterday signed a joint protocol (JP) and a joint development agreement (JDA) to take up several projects including a $6 billion smelter complex in Abu Dhabi.

The two landmark agreements, which also envisage to develop downstream projects besides harnessing overseas opportunities in the Gulf and Middle East, and North Africa region, were signed at a ceremony at the Emirates Palace Hotel.

General Shaikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, Chairman of Abu Dhabi Executive Council and Chairman of Mubadala Development, and Shaikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister for Finance and Industry, and Chairman of Dubal were also present on the occasion.

The JP was signed by Mohammed Al Bowardi, Vice-Chairman, MDC and Ahmed Humaid Al Tayer, Vice-Chairman, Dubal while the JDA was signed by Khaldoon Khalifa Al Mubarak, CEO, Mubadala Development, and Abdullah Jasim Kalban, CEO, Dubal.

Khalifa Al Mubarak said the JP would lay down the foundations for the two companies to develop projects in the aluminium industry and for joint exploration of business opportunities in upstream, production and marketing aspects of aluminium industry. Besides, it will also promote the development of downstream businesses.

He said that the JDA entails construction and operation of a more than $6 billion world class green-field aluminium smelter complex with 1.2-million tonne capacity a year and related facilities at Taweelah in Abu Dhabi. This will make it the largest single site aluminium smelter in the world.

The two entities will jointly develop, construct, own and operate the complex at the Khalifa Port and Industrial Zone in Taweelah, Mubarak said.

Abdullah Jassim Kalban said that the smelter will be developed in two phases and the first phase is expected to be operational in 2010. He said the plans are under way to establish a joint company with 50 per cent stake each for the two companies, to set the first project which will have 70 per cent debt financing while remaining would be equity. The national banks will finance the project.

He said the JP provides the basis for Mubadala Development and Dubal will explore various investment opportunities along the entire aluminium supply chain such as alumina production, investment in existing production capacity and joint development in green-field smelters in the Middle East and North Africa (MENA) region.

"We will tap every possibility of investment in the aluminium sector and other in which we have a competitive advantage, any where," he added. He said a joint steering committee has already been formed to look into the possible business opportunities and to study the creation of a UAE-based centre for excellence, research and development in aluminium industry.

Novel Heat Treatment Process Doubles Strength of Die Cast Aluminium Parts

Azom.com February 21st, 2006

High-pressure die-cast (HPDC) parts made of aluminium are now able to have their strength doubled through a novel heat treatment process invented by Australian light metals researchers.

While heat treatment is commonly used to strengthen wrought and other cast aluminium parts, it has previously not been practical for high-pressure die castings.

"Conventional heat treatment processes applied to HPDC components cause major blistering and distortion, that occurs when air bubbles trapped under pressure during casting expand as they are heated. This ruins the parts" says Dr Roger Lumley of the Commonwealth Scientific and Industrial Research Organisation (CSIRO)

"We have developed a heat treatment procedure that provides large strength improvements and an excellent surface finish, without blistering or distortion" he says.

Trials at the CSIRO’s laboratories have shown that the new heat treatment can at least double the strength of high-pressure die cast parts. This means parts need not be as heavy as they currently are to do the same task – a factor that is particularly important in the automotive industry where lighter cars use less fuel and have lower greenhouse gas emissions.

"A lot of these components are designed for their loads and basically the stronger the material, the lighter you can make the part," says Dr Lumley. "We would like to think that we could see a 30 per cent weight reduction compared to current aluminium castings".

"The die casting industry is very, very cost sensitive, and if you can use less metal per car part, you also save money".

"We’ve done trials on large batches of parts purchased from industry and developed treatments for those parts. That has gone really well. The trials show very few rejects due to heat treatment – in a recent batch of 575 parts, only one per cent of the parts were rejected due to blistering."

Dr Lumley says that while aluminium high pressure die casting worldwide is dominated by the automotive industry, other industries can use the new technique. Example applications include builders’ nail gun casings, and even door handles.

"Basically anything that requires cost effective mass production of fairly complex high strength aluminium castings can utilise this process," Dr Lumley says.

Dr Lumley says the new process could halve the cost of producing high-strength parts, which previously could only be made by alternate, more expensive manufacturing processes.

RUSAL, BPE Deal On ALSCON A Swindle, By Experts

Nigeria Daily Independent, Nigeria Tuesday 21st, February, 2006

Bassey Udo, Energy Editor

Aluminium industry experts around the world have continued to appraise the recent sale of the $3.2 billion Aluminium Smelter Company of Nigeria (ALSCON), Ikot Abasi in Akwa Ibom State to the Russian Aluminum (RUSAL) highlighting aspects that tend to suggest a massive swindle of the Federal Government.

Mineweb, the world’s foremost authority on the Mining industry, observed in its analysis that the terms of the recent Share Purchase Agreement (SPA) between the Bureau of Public Enterprises (BPE) and RUSAL for 77.5 percent stake in the smelter may have granted huge subsidies that may not, in the long run, be in the interest of the Federal Government.

For instance, the analysis pointed at the price BPE accepted from RUSAL and argued that the Federal Government may have incurred under the deal a loss of over $100 million as a mark off from the $400 million reserved price fixed during thecontroversial 2004 bid, which saw BFIGgroup, an American firm, emerging winner with a$410 million offer before it was disqualified in controversial circumstances.

Reserved price is the benchmark value set as the irreducible limit a privatization agency would be ready to disposed of a property on offer.

Going by RUSAL’s $250 million offer, the 193,000 tons per annum installed capacity plant, it noted, appears to have been massively devalued under the deal to below an average of $1667 a ton, almost one-third the going rate.

At current valuation of building a new aluminium smelter put at about $4000 a ton, indications, according to the analysts, are that RUSAL was made to take over the plant at less than two-thirds of the 2004 value.

The three production train smelter complex completed in 1997 includes a port facility designed to provide route for raw material imports as well as export of finished products; four residential estates in the ALSCON Village; a 200-bed hospital; a water-treatment plant, fire-fighting facilities and a 540 mega watts (MW) independent power plant capable of providing uninterrupted electricity to the plant and adjoining communities.

The plant was at the verge of full operations startup when it was shut down in 2000 after less than three years of business following unresolved issues relating to gas supplies, inadequate working capital and transportation constraints posed by the lack of dredging of the Imo River access channel.

During the 2004 bid, BFIGroup, after a thorough technical evaluation of plant by a team of experts, including patent holders to the plant design (ALCOA), offered $410 million for the same plant, a whooping $160 million above the current offer by RUSAL, apart from additional $800million investment package in its development plan for expansion.

A technical bid submission by RUSAL to BPE indicated that the plant could be restarted and completed within two years at a cost of $130 million, plus $20 million in operating capital and another $25 million in ancillary infrastructure and social costs, with alumina supplies expected to come from its concession in Guinea.

Though BPE Director General, Mrs Irene Chigbue, would not want to be dragged into any discussion on the cost implications of the Russian deal, it was learnt that the SPA saddles on the Federal huge costs in subsidies covering more than $160 million for Imo River dredging and another $200 million for gas supplies to power the plant’s operations.

RUSAL is expected to make the payment of its offer in two installments with two conditions: That the first $50 million be paid, within five working days after all legal titles, licenses, permits, land ownerships, and 16 percent of ALSCON’s equity have been lodged by the Federal Government in a London escrow, while the balance $200 million be paid within 20 days after the completion of the dredging of the Imo River by a contractor to be nominated by RUSAL, which was also granted a 20-year gas price moratorium and an annual gas subsidy of $11.69 million.

BFIG’s Executive Vice President, Frank Scherer, said over the weekend that the terms of the deal provide RUSAL "far more in subsidies and allowances than the amount they proposed to pay for the entire industrial infrastructure complex".

Alleging a massive fraud and corruption by RUSAL of top government, BFIG said the ALSCON deal follows a pattern revealed in a December 2002 judgment, in which the Russian firm was indicted for attempting to influence top Guinean officials in its bid to buy over a stake in the Guinea Investment Company (GIC).

BFIG, which has since gone to court to contest its disqualification after being declared winner June 2004, is awaiting the outcome of the appeal it filed late last year against the ruling of an Abuja High Court that it had no valid contract with the BPE on ALSCON. Scherer reaffirmed BFIG’s unwillingness "to give up its right to sign an SPA in accordance with the ALSCON RFP and complete its acquisition of ALSCON", saying "BFIGroup’s rights were specifically set forth in the May 20, 2004 "Understandings/Agreements" negotiated, executed and re-affirmed by BPE, RUSAL, and BFIGroup".

Welding in magnetic fields no longer an issue

Ferret, Australia 21 February 2006

BY EVERARD HUNDER

A COMPACT welding torch enhancement and a novel power supply have made some cracks in the age-old problem of how to weld in magnetic fields.

A team of researchers from CSIRO has come up with a superior welding system that should also improve worker safety and save time, energy and money.

Previously, powerful magnetic fields - such as those found in aluminium, copper and magnesium smelters - have played havoc with any work-involving arc welding. They make welding difficult and frustrating, often causing molten metal to fly anywhere but where it should go. This makes good welds very difficult to achieve.

At the moment, welders enclose the welding area in bulky metal shields, but these give the arc only limited protection and need a two-person team - one to do the welding and one to continually shift the shield. Sometimes a welding job has to wait until the strength of the magnetic field subsides or there is downtime in the plant operation.

CSIRO's novel enhanced torch turns the job into a one-person operation and works in magnetic fields that, at more than 400 gauss, are double the strength that industry can weld in now. CSIRO has initiated patent protection.

"In combining the torch enhancements and power source we built a superior welding system, and one that is flexible, easy to use and inexpensive," says project leader, Dr Voytek Mazur.

Dr Mazur says none of the existing power sources used for arc welding had actually been designed to operate in a magnetic field. Dr Mazur's team tested different power sources in magnetic fields and found the power supply configuration that worked best.

A high-speed video recording - of up to 36,000 frames per second - was the key to finding a solution. This gave the team a unique insight into the behaviour of the arc, droplet formation and molten metal in a magnetic field.

"The video revealed a droplet's extreme behaviour in strong magnetic fields which also depends on current and voltage waveform of different power sources," says Dr Mazur. "This became crucial factors when modelling the torch enhancements."

A commercial system is expected to be available soon.

CSIRO 08 8303 9172.

'If we had the electricity, we could go ahead with Mozal III and HillsideIII+'

Engineering News (press release), South Africa 22 Feb, 2006

The south-east coast of Africa, running from southern Moz-ambique down through South Africa, can well be designated the ‘aluminium coast’, with major smelters for the metal in full production at Maputo (Mozal), Richards Bay (Hillside and Bayside) and hopes for another to be established near Port Elizabeth (in the Coega Industrial Development Zone).

Between them, Hillside, Bayside and Mozal produce more than onemillion tons of aluminium a year.

Thanks to Hillside and Bayside, South Africa is today the eighth largest producer of aluminium in the world, even though all the alumina consumed by these smelters (and by Mozal) has to be imported.

Indeed, it is this need to import alumina and export the bulk of their production which required that all three smelters – and the proposed fourth, at Coega – be located at ports capable of handling large bulk carriers.

These smelters have also made aluminium South Africa’s largest nonferrous metals industry.

Hillside, Bayside and Mozal all supply primary aluminium – that is, aluminium metal in ingot form – to customers across the world.

Hillside also produces remelt merchant products and aluminium in t-bar form, while Bayside specialises in value-added products for downstream manufacturers, namely wire rod, extrusion billet, foundry alloy and rolling slab.

Hillside on its own can produce 670 000 t of aluminium a year, from two-and-a-half potlines, making it the largest aluminium smelter in the southern hemisphere.

Mozal produces more than 500 000 t of aluminium a year.

And global demand for aluminium, which is the world’s second most-used metal, continues to rise.

In 2001, global primary aluminium production stood, according to the International Aluminium Institute, at 20 551 000 t; in 2002, it was 21 199 000 t; in 2003, 21 935 000 t; in 2004, 22 592 000 t; and in 2005, 23 410 000 t.

In other words, the 2005 production was almost 14% higher than the 2001 production.

(By way of historical contrast, in 1900 the total global production of primary aluminium was one thousand tons – industrial production of the metal only started in 1886.) This increase is being driven by growth in all major markets – North America, Europe, and Japan, and, of course, particularly by China.

Australia’s Sydney-based independent economists company, AME Mineral Economics, late last year forecast that global aluminium consumption should grow at 4,8% a year for the next five years (that is, to 2011).

Apart from China, the Australians also identified India and Eastern Europe as fast-growing markets for the metal.

As for China, that country’s aluminium consumption stood at 2 000 000 t in 1995; in 2000 it was just over 3 000 000 t; in 2004 it had reached 6 000 000 t; and, last year (2005), it hit 7 000 000 t.

This was an increase of 16,66% year-on-year (2004/05) and of some 250% in ten years.

China’s share of global aluminium consumption was just over 10% in 1995; about 12,5% in 2000; 20% in 2004; and some 22,5% last year.

Little wonder then, that BHP Billiton group president for non- ferrous materials, Marius Kloppers, asserts "we like the aluminium bus-iness!".

Primary aluminium is produced on every continent, and most regions, of the world – Africa (Southern, West and North), America (both North and South), Asia, Europe, and Oceania (Australia and New Zealand).

African production of aluminium totalled 1 369 000 t in 2001; 1 372 000 t in 2002; 1 428 000 t in 2003; 1 711 000 t in 2004; and 1 739 000 t in 2005.

The bulk of this came from South Africa and Mozambique, with the rest coming from Cameroon, Egypt, Ghana, and Nigeria.

(Nigeria’s production capacity is believed to be around 190 000 t/y of aluminium, although actual production seems to be about 150 000 t/y; Egypt should achieve a capacity of 300 000 t this year with the conclusion of a major expansion programme; Cameroon’s production is about 90 000 t/y; Ghanaian production resumed in October last year after a three-year break caused by disputes over power supply rates.) Thus the ‘aluminium coast’ of south-east Africa contributed (in 2005) at least 60% of total African primary aluminium production and roughly 5% of the global production.

The world’s largest diversified mining group, BHP Billiton, is also the fifth-largest producer of primary aluminium, and owns 100% of Hillside and of Bayside, and 47% of Mozal.

It also holds 46% of the Alumar and 45,5% of the Valesul smelters, both of which are in Brazil.

Upstream, the group has equity in three alumina refineries – Worsley in Australia (86%-owned by BHP Billiton), Paranam in Surinam (45%) and Alumar in Brazil (36%).

Further upstream, it has shareholdings in three bauxite mines: 14,8% in MRN Trombetas in Brazil, 76% in Lelydorp III in Surinam, and 86% in Boddington in Australia.

"We think of our Southern African smelters as the heart of our aluminium business, especially Hillside and Mozal," says Kloppers "These are large, low-cost, attractive smelters and, unlike smelters elsewhere, they don’t have to buy their power on a day-to-day basis," he highlights.

This is very important, for primary aluminium smelting is a very energy- intensive and -dependent business.

"Aluminium is the ultimate proxy for energy," he says.

Or, to phrase it in terms of the industry joke, aluminium is congealed electricity.

Smelters need electricity 24/7/365, for about 30 years – uninterrupted- ly.

Should a smelter suffer a sustained power loss over a significant period of time, the aluminium will congeal in the pots on the potline; the only solution is to scrap the pots and replace them with new ones, at a cost of millions of dollars a pot.

Controlled, short, power losses are manageable, although never ideal.

"With energy prices moving higher, if you have good smelters with good feedstock supply, it’s an attractive business to be in," Kloppers states.

This all suggests a glittering future for the aluminium coast.

Indeed, South Africa’s Industrial Development Corporation (IDC) recently announced that it was likely that construction of a $2,7-billion aluminium smelter would start at Coega some time next year.

This smelter would, it is hoped, be built in conjunction with giant Canadian aluminium group Alcan, which is the world’s second-largest producer of primary aluminium and a technology leader in the industry.

The IDC, which already owns 24% of Mozal (the other shareholders being Japan’s Mitsubishi Corpor-ation with 25% and the government of Mozambique with 4%), plans also to be a shareholder in the proposed Coega smelter.

The Coega Development Corpor-ation already has a 120 ha site in the Coega Industrial Development Zone prepared for an aluminium smelter.

All the geotechnical studies have been done, and all the access roads built; it is expected that the actual smelter and its associated buildings and installations will occupy about 50 ha of the site.

Meanwhile, BHP Billiton has two expansion projects which are effect-ively "ready to go", as Kloppers phrases it.

These are Hillside III + and Mozal III.

Hillside III + would add half a potline to the existing two-and-a-half potlines, while Mozal III would add a third complete potline to the existing two.

But there is a problem.

"If we had the energy, we could go ahead with Mozal III and Hillside III +," assures BHP Billiton executive director Mike Salamon.

"But can we get the energy supply to make them happen?" queries Kloppers.

(Although Mozal is in Mozam-bique, it gets its power from South Africa.) "One potline uses about 450 MW of electricity, and the half potline at Hillside would need half of that, so we need about 650 MW to 700 MW in total to make these projects work," he explains.

And, reportedly, the proposed Coega smelter would need a further 1 300 MW.

To make all these projects possible, Eskom would have to guarantee a continuous supply of an extra 2 000 MW.

Yet Eskom is hard put to meet its current supply obligations.

"Eskom’s reserve margins are low," cites Salamon.

Lower electricity reserve margins mean higher risks for aluminium smelters.

BHP Billiton’s Southern African smelters, fearing ‘load shedding’ (effectively, emergency power cuts to prevent the overloading of the national grid), especially in the winter, have plans in place to handle such an eventuality without sustaining permanent damage.

These events do occur in terms of the company’s contracts with Eskom and are negotiated in terms of timing and impact.

"We can prioritise our power use within our plants, but I want to emphasise that Eskom is a responsible partner," affirms Kloppers.

That this concerns Alcan as much as BHP Billiton is clear; Eskom spokesperson Fani Zulu told Business Day early this month that "quite some ground has to be covered still," concerning negotiations between the Canadian group and the South African electricity utility about power for a Coega smelter.

Indeed, Die Burger newspaper actually described Eskom management as "scurrying around" trying to be able to meet Alcan’s demands for assured power.

It is also clear that, despite the optimistic IDC statements, Alcan has yet to commit itself to the Coega smelter project.

"Aluminium smelting requires electricity in large blocks, and Eskom is fully aware of this; Eskom is one of the best utilities on the planet, it has a very responsible attitude, and our working relationship with them is good – we work together to solve any problems that arise," stresses Kloppers.

The problem is that no one forecast the economic growth rate South Africa has achieved in recent years, and new power stations take about a decade to build.

"There are genuine constraints on Eskom’s side," he points out.

BHP Billiton does understand Eskom’s position, has good relations with the utility, and continuously negotiates with it.

The power utility has an about R250-billion capacity-expansion programme for the next 20 years.

Furthermore, the South African government wants 30% of new generating capacity to be built and operated by "independent power providers" (IPP – independent of Eskom, that is).

"We are a large buyer of power, and we pay our bills," highlights Salamon, "so we can underpin investment by IPPs in electrical generation; we don’t just buy peak electricity." "If something could be put together, concerning new independent power stations, we could be part of it – we’re interested in increasing our power supply for our African aluminium operations," he assures.

Eskom is busy recommissioning three mothballed power stations, and the first of these, Camden, began to supply power again last June.

All three should be in full oper-ation by 2011, adding 3 600 MW to Eskom’s capacity.

In total, the utility wants to add 5 000 MW to its capacity by 2011, at a cost of R84-billion.

In addition, by the end of next year there should be two IPP open-cycle gas-turbine power stations in operation in the Western Cape (at Atlantis, north of Cape Town, and at Mossel Bay), which will together add 1 050 MW to peak capacity.

But its is clear that restoring the power-generation margins that aluminium smelters require is some years away, not some months.

"We need long-term supply commitment at an economic rate – typically only 30% to 40% of what you spend on the life of an aluminium smelter (which can have a life of 30 years) is spent when you build it; the bulk is lifecycle costs and energy is a big part of them," elucidates Kloppers.

"You can’t build an aluminium smelter with only a seven-year electricity supply contract," he warns.

BHP Billiton recognises that it cannot again have with Eskom the sort of electricity supply contracts it signed for Hillside, Bayside and Mozal.

"Future deals with Eskom would have to be negotiated on a different basis – we want economic energy, not cheap energy," says Salamon.

"But, with regard to aluminium smelting, we still need a 30-year power-supply horizon," adds Kloppers.

"Until Southern Africa has sufficient excess electricity for major electricity-consuming industries like aluminium, we can’t have signficant expansion in this region," he concludes.

It is a pretty safe bet that Alcan management, who have been saying very little in public, are thinking in the same way.

Even with a growing world market.

RUSAL weighs aluminium smelter in Azerbaijan

Reuters Wednesday 22 February 2006, 7:58am EST

By Aleksandras Budrys and Lada Yevgrashina

MOSCOW/BAKU, Feb 22 (Reuters) - The world's third-largest aluminium producer, Russia's RUSAL, is weighing construction of an aluminium smelter in Azerbaijan with annual capacity of 300,000 tonnes, the company said on Wednesday.

Azerbaijan's First Deputy Prime Minister Abbas Abbasov told reporters in Baku earlier on Wednesday that RUSAL might invest $1 billion or more in building the plant.

"We are examining the possibility of building a 300,000-tonne aluminium smelter in Azerbaijan. A preliminary feasibility study has started and a final decision on the project will be taken depending on its results," RUSAL said in a statement issued to Reuters.

RUSAL's owner Oleg Deripaska, accompanying Russian President Vladimir Putin on a visit to Azerbaijan, earlier declined to comment.

Abbasov said Azerbaijan would have to import raw materials for the smelter as its own supplies were not enough. He added that a site for the smelter had yet to be chosen.

RUSAL plans to raise its output of primary aluminium to 5 million tonnes from the 2.76 million expected in 2006 by building or buying new smelting capacity.

The company this month signed a deal to buy a controlling stake in Nigerian aluminium smelter ALSCON, which has capacity of 193,000 tonnes a year.

Azerbaijan's sole aluminium smelter produces around 30,000 tonnes a year of the metal.

The country produces over 400,000 tonnes of alumina, an intermediate product from which aluminium is made, some two tonnes of which are needed to produce a tonne of the metal.

Hydro closures spark controversy

Aftenposten, Norway 22 Feb, 2006

Norwegian industrial concern Norsk Hydro is under pressure from labour unions and politicians alike, over a controversial reorganization that threatens employment in Norway's outlying districts.

Haakon Lie is among the latest to lash out at Hydro's restructuring plans.

Hydro may shut magnesium unit - 08.02.2006

Haakon Lie, the 100-year-old elder statesman from the Labour Party, joined the chorus of critics on Wednesday. Lie accused Hydro chief executive Eivind Reiten of letting down the citizens of Ĺrdal, where Hydro intends to cut production at its local smelter.

"It's the Norwegian society that has built up Hydro, and the company has had access to cheap energy sources," Lie told newspaper VG. "The workers have sweated on the floor in Ĺrdal and elsewhere in 40-degree heat. Now they (Hydro's management) just want... to turn the guys in Ĺrdal out into the street."

Lie was harshly critical of the management of a company that's nearly 44 percent state-owned, and the

Norsk Hydro Secures Electricity for Plant

Source: AFX, Metals Place, UK 23 Feb, 2006

Norsk Hydro secures power for Neuss aluminium plant for 2007-2008

Norsk Hydro ASA said it has secured all of the power needed for production at its German primary aluminium plant in Neuss for the years 2007 and 2008.

However, the company pointed out that it sees a need for a more predictable power price regime in Germany.

Norsk Hydro has been criticized by local politicians in Germany for closing down plants, and a newspaper report in October said the primary aluminium plant in Neuss was at risk if energy prices remain high in Germany.

The plant produces 223,000 tonnes of liquid primary aluminium per year, making it Germany's largest aluminium production facility.

Norsk Hydro added that it has sold 330,000 tonnes of primary aluminium forward on the London Metal Exchange at an average price of 2,250 usd per tonne, in total for 2007 and 2008.

This represents about 10 pct of the company's total expected primary aluminium production for the period.

Hydro confirmed on Wednesday that it intends to shut 22,000 tons per year of production capacity at its Hoyanger aluminium smelter in western Norway by March 1.

The pending closure is part of the broad restructuring of Hydro's aluminium operations, which rank as the third-largest in the world. The controversial restructuring includes looming shutdowns of 50,000 tons per year at the Ardal smelter and 120,000 tones at its Karmoy smelter by 2009.

Hydro is also closing two smelters in Germany, Stade and Hamburger Aluminium Werk (HAW), because of high energy costs. Meanwhile, the company plans to build a large smelter in Qatar.

CFAC says BPA deal needs some tweaking

Columbia Falls Hungry Horse News, MT Wednesday, Feb 22, 2006

By CHRIS PETERSON

Hungry Horse News

While a Bonneville Power Administration plan to subsidize power costs for aluminum plants could help the Columbia Falls Aluminum Company, a company spokesman said it needs some serious tweaking to actually work.

The company would like to see some accounting methods in the plan change, CFAC spokesman Haley Beaudry said Monday.

The BPA has come up with a plan to "monetize" power costs for aluminum plants in the Pacific Northwest. In short, it will pay out $59 million annually over three years to two aluminum producers - CFAC and Alcoa, to help lower those plants' power costs.

Of that $59 million, CFAC would see $14.7 million annually. The deal as it sets now, works like this: The market rate for wholesale power right now is about $58. The BPA money would allow CFAC to buy down power to about $46 a megawatt hour, assuming its running two potlines.

But the plant can't run two potlines and make a profit at $46, Beaudry noted. It needs power at $30 a megawatt hour, to run successfully, he said.

The plant could just keep the one potline it is running, which would amount to a subsidy of $24 a megawatt hour, but even then, it isn't enough, Beaudry noted. That still amounts to a wholesale cost of about $34 a megawatt hour, which is too high.

So what the company would like to see is an accounting method change, that would allow CFAC, at least on the books, to use more of the allocated funds in the first year, and then less in the next two years.

This would be a bookkeeping measure, Beaudry said.

"We don't want the money up front," he said.

But the company needs the flexibility to front load the expense in today's wholesale market.

However, Beaudry noted, the company believes that in the coming years, wholesale power prices will come down, as more power plants go on line.

The deal is also a "use it or lose it" proposition. Meaning that if the plant doesn't take the funds, they will simply go to another plant - supporting jobs in Washington and Oregon rather than here in Montana, he said.

Beaudry said the prospects of tweaking the deal appear to be good. BPA makes a final decision on the plan when it sets rates in July.

On the other side of the coin, the aluminum price right now is good, at about $1.20 per pound, according to prices posted on the London Metal Exchange. But the cost for raw materials and other expenses are higher as well, Beaudry noted.

The impact of the entire program is about 74 cents a month on the average residential customer.

Meanwhile, CFAC employs about 120 people and has a payroll of about $7.5 million locally.

CFAC is also looking for a long-term power supply, possibly by purchasing power directly from a plant, with BPA's help, Beaudry noted.

BPA spokesman Ed Mosey said change in the contract is possible.

"Until the rate process is done, (the contract) is not set in stone," he said.

But not everyone is accepting the idea of subsidizing aluminum plants.

Marilyn Showalter, executive director of the Public Power Council, which represents public utilities, said her organization is concerned about the deals. They are worried about the amount offered to aluminum companies, and the dangers of front loading.

If the benefits are front loaded, she said, there's the possibility of two things: The companies will simply ask for more funds if the power rates go up, or the companies will simply default, leaving other customers paying the bill.

She said the Council also had philosophical differences with the plan.

While the deals may save jobs at CFAC, "It costs jobs elsewhere."

"It works hardship on other plants with other employees."

China starts work on new 400,000mt/year alumina refinery in Henan

Source: Platts, Metals Place, UK 23 Feb, 2006

Construction work has started on phase one of a new alumina refinery in Henan province, officials from the power companies jointly developing the project told Platts Thursday. The first stage of the project is designed to have a capacity of 400,000mt/year.

The project, established as the new Henan Zhongmei Aluminium Works, has been planned since 2004, and is expected to have a maximum capacity of 1.2-mil mt/year once its three phases of 400,000mt/year each are completed. The project is a joint venture between power companies Yongmei Coal Group (70%), Dengfeng Power Plant Group (10%), and producer Henan Wuzhou Aluminium (20%).

Work on the Zhongmei project was originally expected to have started in 2004-2005. "But we had some funding issues to resolve, so the construction was delayed," an official from Dengfeng Power said. "We have settled the problems now and we just started construction officially on phase one on Feb 16," he added. An official from Yongmei Coal said: "We were slightly delayed but are on track now."

Phase one is expected to be completed within 13-15 months from the start of construction. "It should be ready for production by early 2007," the Dengfeng official said. "We are as yet uncertain when or if we will start phase two...that will depend on how the first phase works out when completed, and how market conditions are at the time," he added.

Phase one is expected to involve an investment of Yuan 1.5-bil ($186-mil), with total investment in the project expected to be about Yuan 4-bil.

Court thwarts Kitimat action

Globe and Mail, Canada 24 Feb 2006

GREG JOYCE Canadian Press

VANCOUVER -- The B.C. Court of Appeal has thwarted the District of Kitimat's attempts to prevent Alcan from selling power to B.C. Hydro from its hydroelectric complex in northwestern British Columbia.

The district had launched a legal action seeking to prevent the aluminum giant from selling power, citing an agreement with the province from 1950.

The district went to the appeal court after a decision against it last year in B.C. Supreme Court. It challenged the legality of B.C. government ministerial orders that allow Alcan to sell hydro power rather than use it to create local jobs.

Kitimat said the orders violated a decades-old agreement between Alcan and the province that gave Alcan power rights in exchange for helping boost economic development in the community.

But Alcan spokeswoman Colleen Nyce said the appeal court ruled the city has no standing to challenge the government order.

"Today's decision in the B.C. Court of Appeal came out in favour of Alcan, saying that the district of Kitimat does not have standing to challenge Alcan's compliance with the 1950 agreement between Alcan and the province," Ms. Nyce said.

Alcan has been selling hydroelectric power that it generates in the Kitimat area since 2001, even though parts of the giant aluminum smelter remain shut down.

Ms. Nyce said that despite the legal fight, Alcan wants to work with Kitimat.

"We hope now we can move forward in a positive direction, working on issues and initiatives with the people of Kitimat, with the district of Kitimat, with economic groups in the region to try to move the economy forward in a positive manner."

The three-person appeal court sided with Alcan unanimously in a judgment written by Chief Justice Lance Finch.

"In essence, Kitimat says that Alcan's sale of power to B.C. Hydro is illegal," Judge Finch wrote in summarizing the district's argument. "It says that under the legislation and the agreements with the province, the power produced at Kemano [generating facilities] must be used for aluminum production at Kitimat, or for other industries in the area."

But the court concluded that "Kitimat has not shown that any of its legal interests have been negatively affected by Alcan's conduct in the sense that it has no contract of its own that has been interfered with."

The court further ruled that "Kitimat cannot, in a petition against Alcan, assert a legal right to a certain population level at Kitimat, nor to have Alcan operate the smelter at a certain level of capacity, nor to a certain level of property values."

Last year, municipal and union leaders in the Kitimat area complained publicly about the permission given to Alcan to sell electricity from its Kemano dam, instead of devoting the power to production at the Kitimat aluminum smelter.

Dutch Firm: Azeri Aluminum Deal Terminated

The Moscow Times, Russia,Tuesday, February 28, 2006. Issue 3361. Page 5

BAKU, Azerbaijan -- Dutch firm Fondel Metal Participation said Monday that Azerbaijan's government had terminated an agreement for it to manage the country's only aluminum smelter and other aluminum assets.

Fondel said in a statement the government had ended the agreement earlier this month.

"We do not know the reasons," Peter Booster, one of Fondel's directors, said. "We have started the process of international arbitration."

Azerbaijan's First Deputy Prime Minister Abbas Abbasov declined to comment on the Dutch company's statement.

Last Wednesday, Abbasov said Russian Aluminum might invest $1 billion or more in building a new aluminum plant in Azerbaijan.

On Monday, he said RusAl could create 5,000 to 6,000 jobs "at the existing facilities." He declined to comment further.

RusAl denied it had any interest in the existing Azeri assets.

"The company has not demonstrated any interest toward the aluminum and alumina assets in Azerbaijan and does not consider them as objects for RusAl's business development in the republic," RusAl said in a statement issued to Reuters.

Rotterdam-based Fondel won a tender to manage the Azeraluminium firm for 25 years in 2000.

The deal includes the existing Sumgait smelter near the capital, Baku; the Ganja alumina plant 360 kilometers west of Baku; and an alunite raw material mine.

RusAl, the world's third-largest aluminium producer, said last week it was considering building an aluminum smelter in Azerbaijan with annual capacity of 300,000 tons.

Azerbaijan's sole aluminum smelter produces around 30,000 tons of the metal a year.

The country produces over 400,000 tons of alumina, an intermediate product from which aluminum is made.

RusAl is owned by billionaire Oleg Deripaska.

Azerbaijani authorities canceled contract with one of biggest investors

Regnum, Russia February 28, 2006

One of Azerbaijani biggest foreign investors, Dutch metallurgical Fondel Company, accused country’s authorities of canceling contract concluded for a 25-year term. According to the company’s press release, the Azerbaijani authorities continue "to attack local and foreign investors."

As Turan News Agency informs, the company signed the agreement with State Property’s Ministry of Azerbaijan Republic for 25 years in 2001, to operate joint stock Azeral Company, founded by state. The Company possesses aluminum plants in Sumgait and Gandzha. Fondel’s rights were recorded in appropriate agreement, signed on March 29, 2001, between the company and Azerbaijan government. The government handed Fondel over all rights to operate the company, including whole profit.

"Investing considerable sums and efforts, Fondel transformed two Azerbaijan industrial wrecks into country’s biggest exporters, after oil plants. At that period of time, Fondel created 3000 jobs in country’s economically most unfavorable regions. Till now, this work was considered by Azerbaijan political elite as example of investments into non-oil sphere," is pointed out in the press release.

"But, because of political intrigues during parliamentary elections in November 2005, the Azerbaijan state used all its forces, to press Fondel and other companies. Company’s employees were persecuted, the state interfered in routine activity and production sphere," is stressed in the press release.

Fondel argues that the government has been controlling Azeral since October 2005, breaching agreement, completed earlier. The government practically took upon itself resolving of all questions in Azeral, "misappropriating" finances, reserved for Fondel. Fondel’s executive officer Henk van Villen stated in this connection:" Expropriation of Fondel’s economic interests in Azeral became one more example of outrageous breaking of commercial agreements and international law in Azerbaijan."

In order to defend its interests, Fondel take all possible measures against Azerbaijan, including international arbitration, is said in the press release.

Thus, one more, big foreign investor accused Azerbaijan government of breaking signed agreements and actual robbery. Earlier, Dutch investors of Azpetrol Company did it, accusing Baku of share holding’s capturing at the cost of $300 million. It is noteworthy, that Fondel was invited to Azerbaijan by ex-Minister of Economic Development Farkhad Aliyev, arrested in October of last year, who was actual owner of Azpetrol. To all appearances, the expropriation of Fondel continues action to eliminate Farkhad Aliyev’s business partners and interests. Also, it remarkable, that canceling of Fondel’s contract was accompanied by statements of government’s officials, according to which, Russian RusAl Company will found an aluminum plan at the cost of $1 billion in Azerbaijan.

BHP Says Power Shortages May Delay African Aluminum Expansion

Bloomberg Feb. 28 2006

BHP Billiton, the world's biggest mining company, said plans to raise aluminum production by 750,000 metric tons a year in southern Africa may be delayed until it is assured of a reliable power supply.

BHP needs about an extra 675 megawatts of power to expand its Mozal smelter in Mozambique and its Hillside plant in South Africa's KwaZulu Natal province, BHP spokeswoman Bronwyn Wilkinson said by telephone from Johannesburg today.

``Those plans are in very, very early stages,'' Wilkinson said. ``We can't go ahead with those expansion plans until we have a reliable source of power. It's not a case of us saying we will walk away from our expansion plans.''

Business Report, a Johannesburg-based newspaper, reported earlier today that Melbourne-based BHP may halt its expansion plans because Eskom Holdings Ltd., South Africa's state power company, can't satisfy its power requirements

Global Alumina files technical report

Yahoo! News (press release) Tuesday February 28, 4:56 pm ET

TORONTO, Feb. 28 /PRNewswire-FirstCall/ - Global Alumina Corporation (TSX: GLA.U - News) announced today that it has filed a technical report dated February 23, 2006 and entitled "Global Alumina Refinery Project: Bauxite Resources, Reserves and Mine Plan (Republic of Guinea)" under its SEDAR reference page at www.sedar.com. The technical report was prepared for Guinea Alumina Corporation S.A., the Company's wholly-owned indirect subsidiary, by Butty Herinckx & Partners (Dominique L. Butty, Geologist; Rob. F. Herinckx, Mining Engineer). Mr. Butty and Mr. Herinckx are independent qualified persons for the purpose of National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Readers are encouraged to review the technical report in its entirety at www.sedar.com.

RUSAL in bauxite feasibility study at Bamia, Guyana

Source: Stabroek News

Metals Place, UK 28 February 2006

Russian aluminium company RUSAL began drilling for bauxite on February 19 at Bamia in Region Ten, kick-starting a feasibility study, President Bharrat Jagdeo announced during a recent visit to the region.

The President expressed optimism that the drilling would be successful and Guyana would have the much-needed investment, the Government Information Agency (GINA) reported.

"The feasibility study for the aluminium plant has started. If this is feasible after their work, we would have a US$1B investment, the biggest ever in the history of our country, here in Linden. They now have to prove that the reserve is there and the depth of the overburden, etc," Jagdeo is quoted by GINA as saying.

The feasibility study is being conducted by the company for the construction of a US$100M alumina plant.

The Government of Guyana and RUSAL signed a US$80M agreement for the privatisation of Aroaima Mining Company (AMC) in the Berbice River.

One of the features of the agreement, GINA said, is the sale of over two million tonnes of bauxite to the company over the next 20 years. RUSAL will formally take over the operations from March 30. The company will be investing US$60M of the US$80M in facilities for shipping and barging bauxite.

And the privatisation deal provides for the transfer of the bauxite business and some assets from AMC to RUSAL, while government will retain 10 percent holdings.

This revival of the Berbice bauxite operations is expected to help in the resurgence of the communities in the vicinity, providing employment and ancillary businesses.

VALCO, Aluworks sign pact on molten metal

Joy Online, Ghana Feb 28 2006

This means that Aluworks would no longer import the very expensive product from outside the country. An agreement to that effect has been signed between the two companies at a ceremony in Tema.

The Executive Chairman of VALCO, Dr Charles Mensa, and the Board Chairman of Aluworks, William Inkumsah, signed on behalf of their respective organisations.

Dr Mensa said VALCO produced 13,500 metric tonnes of aluminium from September to December, last year, when the plant was revived.

He said VALCO had targeted to produce 82,000 metric tonnes of aluminium products this year.

Dr Mensa said VALCO and Aluworks had been working together over the past years and added that this year the two organisations would further improve upon their relationship.

He said the expectation of the management of the two companies was that "as VALCO performs well, Aluworks also performs well under the partnership".

He said VALCO was considering integrating its smelter to the rolling mill of Aluworks.

For his part, Mr Inkumsah said during the closure of VALCO, Aluworks went through difficult times in procuring aluminium ingots.

He was very happy that the plant had been started and begun regular supplies from September last year.

He said since the plant was started, Aluworks had received 5,512 metric tonnes of molten metal and 1,019 metric tonnes of sows.

Mr Inkumsah said the regular supply would ensure smooth operations at Aluworks, as well as about 150 tertiary industries which depended on Aluworks’s flat products for conversion into roofing sheets, cookware and fabricated items, which employed more than 5,000 people in the country.

The Managing Director of Aluworks, Mr K. Venkataramana, said with the partnership Aluworks would benefit in so many ways, including delivery of raw materials on time, save energy costs by way of getting molten aluminium in addition to the inventory costs.

He said the restart of VALCO had provided a catalyst that would propel all the aluminium companies in the country into action.

He said there were about 3,000 end uses of aluminium.

Mr Venkataramana said extrusions, electrical cables, foil and foil laminates were the value-added items produced out of aluminium.

He added that the industry had to add value to the existing product mix and develop product line extension strategies to actualise the vision of the aluminium segment of the golden age of business in Ghana to create wealth and employment in the country.

The Managing Director of VALCO, Mr Seth Adjei, said in 2005 34 per cent of the total production of VALCO was sent to Aluworks and this year they had met the full demand for their raw materials.

He said other local companies that had expressed interest in setting up facilities that would consume aluminium produced by VALCO included Tropical Cable and Nexans.

Mr Adjei said VALCO had received enquiries from companies of other countries from the ECOWAS sub-region for the supply of metal.

He said they would take care of them only after satisfying all local demands.

He said while they waited for Ghanaian industries to come on board they were exporting the rest to Europe.

Source: Daily Graphic

VALCO targets production of 82,000 MT of aluminium

Gye Nyame Concord, Ghana Monday, 27 February 2006

Tema, Feb. 27, GNA -- The Volta Aluminium Company (VALCO), has targeted the production of 82,000 metric tons of aluminium this year as against 13,350 metric tons it produced when it started operations in September last year.

The Managing Director of the Company Mr. Seth Adjei, who disclosed this on Monday, indicated that 1,280,000 mega Watts of power was however, expected to be used for this year as against the National projection of 9,516,000 MWH by the Volta River Authority (VRA). He was speaking at the signing of a 'Metal Sales Agreement' between VALCO and Aluworks Limited for the former to supply the latter regularly with aluminium raw materials,

According to him 4,562 metric tons representing 34 percent of its total production in 2005 was sent to Aluworks whiles 1,960 metric tons of aluminium out of the expected 30,000 metric tons has so far been sent to Aluworks.

Mr William Inkumsah, Board Chairman of Aluworks Limited indicated that, the reopening of VALCO solved the difficulty Aluworks went through procuring aluminium ingots.

He further said from September 2005 to date, Aluworks has received 5,512 metric tons of molten metal and 1,019 metric tons of sows from VALCO adding that, the regular supply would ensure the smooth operations of Aluworks as well as about 150 tertiary industries depending on it for flat products for conversion.

According to Mr Kondagunta Venkataramana, Aluworks Managing Director, the restart of VALCO last year has provided a catalyst that would propel all the aluminium companies in the country into action. He said the industry has to add value to the existing product mix and develop products that would actualise the vision of the aluminium segment of the golden age of business in Ghana to create wealth and employment in the country.

Dr. Charles Mensa, Executive Chairman of VALCO stated that the signing of the agreement was the beginning of the full integrated aluminium industry.

Dr Mensa observed that the agreement would also signal to Ghanaians the realization of some of Dr Kwame Nkrumah's dream and the building of a stronger relationship between the two companies.