AluNews - March 2006

Alcoa eyes second Iceland plant: WSJ
BusinessWeek Wed Mar 1, 2006 1:46 AM ET
NEW YORK (Reuters) - Alcoa Inc (AA.N: Quote, Profile, Research), the world's largest aluminum producer, is considering building a second aluminum smelter in Iceland with an investment of at least $1 billion, the Wall Street Journal reported on Wednesday.
Citing company officials, the Journal said Alcoa could announce a preliminary deal on Wednesday with authorities in Iceland.
The project follows Alcoa's announcement last month that it would build a smelter in Trinidad, part of an effort to find sites where energy is cheaper amid increasing demand for aluminum.
Alcoa is interested in completing a second smelter in Iceland by 2010 with a capacity of 250,000 metric tons a year, the Journal reported. The company plans to conduct a feasibility study that could take at least a year to complete, but the Iceland project is not guaranteed, the report said.
Alcoa officials were not immediately available to comment on the report.
© Reuters 2006. All Rights Reserved.

Russian Firms Urged to Invest in Third World
TMCnet March 01, 2006
(The Moscow Times Via Thomson Dialog NewsEdge)
A World Bank agency on Wednesday urged Russia's richest companies to take advantage of the booming economy to invest in the world's poorest countries, and offered to help insure them against political risks.
"This is where you have a huge role to play, as you are growing tremendously quickly," said Yukiko Omura, executive vice president of the Multilateral Investment Guarantee Agency at a conference organized jointly with the Russian Union of Industrialists and Entrepreneurs, or RSPP.
With U.S. and European investors pulling out of some of the world's poorest economies, major developing countries such as Brazil, Russia, India and China -- the so-called BRIC countries -- can step in to help spur global economic growth, Omura said.
The MIGA presentation was a sign of how much the Russian economy has improved in recent years, RSPP president Alexander Shokhin told the conference.
Shokhin welcomed the MIGA initiative, noting that the state's insurance for exports through state-owned Roseximbank had only recently improved. Roseximbank "has started fulfilling its proper role only in the past two years," Shokhin said.
Recent investments by Russian companies in developing countries could signal a comeback to some of the Soviet Union's former spheres of influence, ranging from the CIS to Latin America and Africa, said Renova chairman Viktor Vekselberg, who heads RSPP's international committee.
Resource-rich South Africa was very attractive for Russian companies, Vekselberg told reporters on the sidelines of the conference. "Soon we will see Russian capital there," he said. Eastern Africa was another potential magnet for investment, he said, without elaborating.
Among CIS countries, Ukraine "will remain the priority," he said.
MIGA, which specializes in facilitating investments in high-risk, low-income countries and covering political risks from breach of contract to expropriation, until recently viewed Russia mostly as a risky destination for other countries' investments.
But as giants such as Russian Aluminum, Norilsk Nickel and Vneshtorgbank have moved to snap up foreign assets or establish operations abroad, MIGA is now also looking to Russia as a source of investments, not just a net recipient, conference participants said.
While foreign investments from Russia rose to $7.3 billion by the end of last year, the biggest destinations for Russian capital were not developing countries, but Cyprus, the Bahamas and the Netherlands, according to the State Statistics Service.
However, recent acquisitions by cash-rich Russian companies in Africa could signal a move to more adventurous foreign investments.
Last month, for example, RusAl bought an aluminum plant in Nigeria for $250 million, and steel billionaire Alisher Usmanov reportedly bid more than $1 billion to buy South African miner Highveld Steel & Vanadium.
Tajikistan is another destination where Russian companies are needed, Kristalina Georgiyeva, the World Bank representative in Russia, told the conference. The earnings of Tajik migrants in Russia account for 28 percent of Tajikistan gross domestic product, she said, citing a World Bank study.
"Instead of bringing people to jobs we can bring jobs to people," Georgiyeva said.

Aluminum Merger
The Moscow Times, Russia Thursday, March 2, 2006. Issue 3363. Page 6.
Russian Aluminum would consider a merger with SUAL Group, the country's second-largest maker of the metal.
"Nothing is decided and nothing is excluded," RusAl deputy chief executive Alexander Livshits said Wednesday when asked about a possible merger with Sual.
Interfax last month said SUAL owner Viktor Vekselberg was seeking a strategic investor and might be interested in a merger with RusAl, citing Vekselberg.
The two companies are equal partners in a $1.2 billion project in the Far North, Interfax said.
Vekselberg controls SUAL through his Renova holding, which also owns about one-eighth of TNK-BP. (Bloomberg)

Alcoa and Iceland propose site for new aluminum smelter in north Iceland
IcelandReview, Iceland 03/01/2006 | 17:47
Alcoa and the Icelandic government announced a location today to possibly build a $1-billion aluminum smelter in North Iceland. The proposed site is about 2 kilometers outside the town of Húsavík. The project would be Alcoa’s second aluminum smelter in Iceland.
The decision comes after an examination of three potential locations in Iceland, including sites near Skagafjördur and Akureyri. The Husavík location was chosen in part because of the area’s potential to use geothermal activity to supply energy for the smelter, according to Alcoa representative Jake Siewert.
"We don’t think there’s another aluminum plant in the world that’s powered exclusively by geothermal," says Siewert. "And that would make this really a first of its kind."
The smelter currently under construction in east Iceland will be powered by a hydro-electric dam built for this purpose.
If approved, ground would be broken outside Husavík around 2010. The smelter would generate 250,000 metric tons per year, smaller than Alcoa's 340,000 metric ton smelter being built today in east Iceland.
The low cost of energy in Iceland's emerging market economy make it attractive nation for global industrial companies like Alcoa and Alcan to set up largescale projects.
Last week, Alcoa also entered into an agreement with the government Trinidad and Tobago to build a $1.5-billion aluminum smelter. An environmental impact report of that project proposal is currently underway.
-- Krista Mahr

Ormet, Union Still Deadlocked
Wheeling News Register, WV Wednesday, March 01, 2006
By ADAM TOWNSEND Business Writer
Ormet Aluminum Corp offered striking United Steelworkers a contract Feb. 20 that was "unacceptable," according to union leadership.
Last week’s offer, which would affect reduction mill employees, was the most recent in the 15-month strike. Earlier in February, the USW rejected a severance package for employees of the rolling mill, a facility Ormet sold to Aleris International late in 2005.
"We were there about 15 minutes ... and, of course, Ormet gave us a proposal," said Loren Hartshorn, president of USW Local 5724.
"I’m really shocked that with aluminum at an all-time high that they would come in here asking for these concessions. It almost appears to me that they have no interest in running the plant."
Hartshorn said he saw no end in sight to the current labor dispute that began in November 2004.
"We’re still dealing with the same people we were 15 months ago, and they’re still postured in the same position that they were and we’re still postured in the same position," he said.
Ormet spokeswoman Linda Regelman said "it is a policy of ours to keep negotiations in negotiations," but she did say that the corporation had every intention of running the plant.
Ormet "has been very busy trying to secure an energy contract," she pointed out.
"Obviously they would not be going to all this trouble if they weren’t planning on restarting the plant."
Ormet filed a complaint with Public Utilities Commission of Ohio in August in order to access power directly from American Electric Power’s Ohio Power Co. pursuant to the existing rate structure for other large industrial customers, according to a prepared statement from the company issued at the time of the filing.
"We currently have access to electricity via the wholesale power market," said Ormet President and Chief Executive Officer Mike Williams in the August statement. "However, we would like to avoid the volatile nature of wholesale power prices and the various limitations on long-term fixed price contracts."
Regelman said Monday that PUCO officials ruled that the corporation had to file all its legal forms by the end of March. She said Ormet doesn’t expect a further ruling until sometime in May.
USW members and Ormet retirees attended the most recent PUCO hearing in Columbus to urge the commission to consider the labor dispute in their deliberations over the electricity contract. Union officials said the USW wasn’t in favor of the contract while Ormet continued to refuse the USW a contract offer acceptable to members.
USW representative Denny Longwell said earlier in February that the USW has not made contact with Aleris International Inc., the aluminum corporation to which Ormet sold its rolling mill facilities. Longwell said he assumes Aleris has no plans to reopen that facility because the company would not return union phone calls.
A spokeswoman for Aleris, Kim Pichanick, said she could not comment on whether Aleris plans to ever restart the Hannibal facility it now owns.
"We have communicated that we’re going to transfer selected equipment to our other rolling mills," Pichanick said. "We’re just at the beginning of the integration process, so we don’t have a picture of what that’s going to look like."
Ormet filed for reorganization under Chapter 11 of the Bankruptcy Code in January 2004 and submitted proposals to union Local 5760 requiring pension and health care cost concessions as part of the bankruptcy proceedings. In early November 2004, the bankruptcy court approved the proposals, and a confirmation hearing was set for Nov. 23, 2004. The union asked that Ormet postpone the confirmation hearing and refrain from implementing the proposals during contract negotiations. However, Ormet would not agree to postpone, according to court documents, and this led to the ongoing strike.

Excerpts from recent editorials from across Kentucky:
WKYT, KY,The Gleaner, Henderson Mar 1st, 2006
In an era when bipartisanship seems a forgotten concept in our state and national capitals, politicians from both sides of the aisle quickly came together in Frankfort to change state law in a manner that could save the Alcan and Century aluminum smelters _ and nearly 1,400 jobs _ in western Kentucky.
The change in law helps clear the way for Big Rivers Electric Corp. to guarantee the aluminum companies the huge amounts of electricity they need, at affordable rates, through the year 2023.
What House Bill 275 does is assure Big Rivers' creditors, including the federal government, that if the aluminum smelters should, heaven forbid, be forced to cease operations somewhere down the road, Big Rivers can legally sell the smelters' electricity to some other party outside the Big Rivers' system, such as to another electric utility. Before the change in law, co-ops such as Big Rivers were prohibited from selling more than 49 percent of their electricity outside their own system.
The change in the law is like an insurance policy for the federal Rural Utilities Service and other creditors that Big Rivers won't be stuck with hundreds of megawatts of generation capacity that it can't sell, possibly thrusting it back into financial insolvency _ which is a place no one wants Big Rivers to return.
Credit Henderson County Judge-Executive Sandy Watkins and other local and state officials who recognized that the smelters already were having difficulty buying affordable electricity on the open market _ and that by 2011, when their power supply contracts with E.On U.S. (formerly LG and E Energy Corp.) were to expire altogether, the aluminum companies might not have been able to locate enough electricity at prices that would allow them to compete globally.

Credit state Rep. Gross Lindsey of Henderson and Rep. Dwight Butler of Harned, who co-sponsored House Bill 275. Credit the state House of Representatives, which passed the measure 96-0.
Credit state Senate President David Williams, and Sens. Dorsey Ridley, Eddie Ballard and Robert Stivers and others, who shepherded along an identical version of the legislation that passed the Senate, 37-0.
Credit Gov. Ernie Fletcher, who signed the bill into law from his hospital room while recovering from complications from gallbladder surgery.
Credit E.On, Big Rivers and the smelters for working together earnestly and professionally on a deal that could _ subject to much more negotiation and the approval of government regulators _ return the smelters to the Big Rivers' power system, where they hopefully will keep 1,400 of western Kentucky's best jobs in place.
Democrats and Republicans don't always get along. Big Rivers and the aluminum smelters haven't always gotten along. Thank goodness when cooperation is needed most, wise men and women have come together to do the right thing.

Chinese firm to bid for bauxite deposit
Seven.com.au, Australia 02/03/06
Chinese aluminium company Chalco has won the right to develop lucrative bauxite deposits at Aurukun in far north Queensland.
Premier Peter Beattie told parliament on Thursday the Chinese company - the second largest alumina producer in the world - had beaten a field of 10 bidders to become the state's preferred tenderer for the deposit.
Chalco has been asked to submit a final tender by the end of May, which must include definite options for a refinery, expected to be built on the state's eastern coastline at Gladstone, Townsville or Bowen.
Mr Beattie said Chalco's expected $2.92 billion investment would be the single biggest in the state's history.
"We wanted more than just a mine," Mr Beattie said.
"We wanted to establish a partnership between the developer and the Aurukun indigenous community to provide long term economic and social benefits.
"What it means is thousands of construction jobs and hundreds of long-term jobs for regional Queenslanders and a solid income stream to help pay for essential services such as health, education and police."
The Queensland government has agreed to provide up to $300 million in common user infrastructure, to help kick-start the project.
The mine is expected to extract 7.5 million tonnes of bauxite each year to produce 2.1 million tonnes of alumina from the refinery.
Development rights to the lucrative deposit on Cape York's western coastline was opened up to international bidders following a controversial decision by the state government to strip the lease off previous owners Alcan.
The Canadian miner had inherited the lease after its take-over of French mining giant Pechiney in 2003.
Ten of the world's largest alumina producers, including BHP Billiton, Xstrata, Alcoa and Alcan, were initially interested in the leases but several pulled out of the process leading to speculation about the quality of the bauxite deposits.
But Chalco said it was not concerned by the speculation because it had the technology to process lower grade bauxite.
Chalco has committed to develop the Aurukun mine within five years.
Copyright © 2006 AAP

Aluminium chief raps high energy costs
ic Wales, United Kingdom Mar 1 2006
Rhodri Clark, Western Mail
THE boss of Wales' biggest electricity consumer has attacked European and UK energy policies for denting his factory's output.
In December Anglesey Aluminium cut production at its smelter near Holyhead because of high electricity prices.
From this month it will restore full production - but claims the additional output will not generate any profit because energy prices remain too high.
The smelter - which employs 570 people and supports a further 60 jobs in contracting companies - is crucial to the economy of a county which has some of the worst deprivation in Wales and the UK.
But Ron Douglas, managing director of Anglesey Aluminium, said some of the company's rivals in continental Europe were receiving unfair support from governments. He cited France as one country which was refusing to liberalise its energy markets.

Guinea strike halts CBG bauxite operations
Metro Toronto, Canada Thursday, March 02, 2006 1:29:39 PM ET
By Saliou Samb
CONAKRY (Reuters) - A general strike in Guinea has halted operations at Compagnie des Bauxites de Guinee (CBG) and may trim annual output which was initially seen as high as 15 million tonnes, a company source said on Thursday.
The strike was called by public service unions protesting over their wages and high inflation and has brought the capital Conakry and other parts of the country to a virtual standstill.
Many workers at mining companies part-owned by the government belong to the public service union and have observed the strike, although RUSAL said its 700,000 tonne/year alumina refinery was unaffected.
"Everything has been blocked since Tuesday. The trains and trucks are at a standstill ... we haven't even got fuel," said a senior employee at CBG, who declined to be identified.
CBG is majority owned by Halco, a joint venture of the world's top aluminum producers Alcoa <AA.N> and Alcan <AL.TO>.
"We got off to a start that could have allowed us to reach 15 million tonnes this year. Unfortunately this strike will call into question all our forecasts," the source told Reuters, declining to be identified.
Most of CBG's bauxite production, which was around 14 million tonnes last year, is exported in raw form although a proportion is refined locally into alumina, which is exported for further refining into finished aluminum.
Roughly two tonnes of alumina are needed to produce every tonne of finished aluminum.
The world's top two aluminum producers, Alcoa <AA.N> and Alcan <AL.TO> signed an agreement in November to build another alumina factory in Guinea's northwest Boke region with initial output of 1.5 million tonnes in 2008, rising to 3 million tonnes five years later.
BAUXITE PORT DESERTED
At the port of Kamsar, which handles CBG's bauxite exports and is the transit point for many of the essential supplies brought in from abroad, senior port executive Demba Toure said activities had ground to a halt since the strike started.
"There are no staff to unload the ships. I've never known a situation like it, it's very serious," Toure told Reuters.
At the Alumina Company of Guinea's 700,000-tonne Friguia refinery operated by Rouski Alumini (RUSAL), employees said many staff were observing the strike, but RUSAL's top official said production was normal.
"Our activities are continuing as usual," Anatoly Pantchenko, Guinea representative for Russian tycoon Oleg Deripaska's unlisted RUSAL group, told Reuters.
Pantchenko declined to give further details.
The refinery suffered a boiler explosion in February and has been running at reduced output of around 70 percent.
Guinea has a third of the world's known reserves of bauxite, the ore that is refined to alumina, and is the No. 2 bauxite producer after Australia.
RUSAL hopes to commission the first stage of a new unit that will raise Friguia's capacity to 1.5 million tonnes in 2009 and is looking at building a new refinery at the huge Dian-Dian deposit in northwest Guinea.
(c) Reuters 2006. All rights reserved.

INTERVIEW: Norsk Hydro Seeks Alumina Expansion -VP
Yahoo! News - Thursday March 2, 9:32 PM
By Ian Talley Of DOW JONES NEWSWIRES
OSLO (Dow Jones)--Norsk Hydro ASA (NHY) is seeking to expand its long-term alumina production capacity alongside its vision to grow its primary smelting capacity, the head of upstream operations told Dow Jones Newswires in an interview.
Hydro - one of the world's largest integrated aluminum companies - recently accelerated the restructuring of its aluminum division, saying it would aggressively review its downstream portfolio to sell and close unprofitable units and strengthen its upstream production position.
In the past year, the company has announced closures of several smelting units in high-cost Germany and Norway, signed alumina production expansion contracts in Brazil and is in the process of negotiating a doubling of its planned smelting capacity in Qatar, which has some of the lowest energy costs in the world.
Hydro surprised the market last month by saying it had negotiated a competitive power deal and a $2,250 a ton sales contract for its Neuss plant in Germany that would allow it to keep the 220,000-tons-a-year plant open for two more years.
By the end of the year, Hydro will close a total of 180,000 tons a year of smelting capacity in Germany and Norway and by 2009, an additional 340,000 tons a year of capacity will be shut down in those two countries.
And while Hydro has made clear that it is reviewing a number of potential smelting projects that would come online after 2009 - when the 500,000-tons-a-year Qatar smelter is due to come onstream - the company now says it is also reviewing equity investments in alumina and bauxite projects.
Bauxite ore is processed into alumina, which is then smelted into the primary aluminum metal.
We have also to strengthen our position in bauxite and alumina," said Jon-Harald Nilsen, executive vice president of Hydro's upstream metals division.
"As we are doing on the primary side, we are also looking at alternatives in the future in bauxite and alumina over and above what we've already made decisions on," he said.
"With increased production we need to have (long-term) commercial arrangements, increase our equity production, or a combination of the two," he said.
Since 1998, Hydro has steadily increased its equity and long-term contract position in alumina production, which is directly linked to bauxite-mining operations. Roughly 50% of the alumina used in its smelting will be covered by equity positions and long-term contracts, halving its exposure since 1998 to the high price of alumina on the spot market. That coverage will increase to around 70% by 2010, the company said.
"We believe this will lower costs and give us a good balance in terms of risk and flexibility for development," Nilsen said.
Hydro spokesman Thomas Knutzen said Hydro currently has a net long position in alumina, which means it can sell its excess alumina into a hot spot market.
Potential growth areas for alumina production are Guinea, Suriname, Venezuela and Australia, and India, Knutzen said.
Hydro also plans to increase the capacity at several of its remaining plants - including the 160,000-tons-a-year Kurri Kurri smelting plant in Australia - by increasing the amperage at the plant.
In terms of new smelting projects to come online post 2010, Nilsen said the company would not be participating in a new 500,000-tons-a-year Boguchanskaya smelter in Russia's Siberia. But he left open the possibility of joining Unified Energy System of Russia (EESR.RS) in building a $1 billion smelter near the eastern Siberian city of Khabarovsk.
In the world market, Nilsen said although China represents 50% of the global growth in primary aluminum consumption, he predicts a balanced supply-demand market for the next few years.
China has become a net exporter of primary aluminum but a net importer of scrap and manufactured aluminum products.
That has a net effect, and so "China has broadly been a positive contributor to the supply and demand balance."
"We think we'll see this fairly good balance for the years to come because we do not think that China will be a big net exporter, and we also see old capacity in high energy-cost areas will close," Nilsen said.

Alcoa announcement greeted with revelery and protests

IcelandReview, Iceland 03/02/2006 | 13:07
According to Fréttabladid, Alcoa's announcement yesterday of a feasibility study for a 250,000 ton aluminum smelter to be built near Húsavík starting as early as 2010 was greeted with "massive jubilation" by the residents of Húsavík. A number of people had assembled at the tavern Gamli Baukurinn and "celebrated enthusiastically" when they received news of the annoucement.
Concurrent with the announcement, Bernt Reitan of Alcoa and the Icelandic Minister of Trade and Commerce, Valgerdur Sverrisdóttir of the Progressive Party, signed a memorandum of understanding between Alcoa and Iceland relating to the feasibility study. According to the Wall Street Journal, the feasibility study "could take one year" and "doesn't guarantee" the smelter will be built in Iceland. "We feel very much at home" in Iceland, said Bernt Reitan to the Wall Street Journal.
In addition to serving as minister, Valgerdur Sverrisdóttir is the first member of parliament for north-eastern Iceland; her constituency includes Húsavík. According to Fréttabladid, she said that the smelter "presents a massive opportunity for northern Iceland, even if the impact will be the most at Húsavík." She expects additional jobs also to be created at nearby Akureyri and said that "transportation links between Akureyri and Húsavík must be improved." Valgerdur also said it was important to prioritize [economic] projects "in such a way the impact is positive, not negative."
The government has a great responsibility in that matter because it is, of course, entrusted with steering the nation's economy," she said. Therefore it was important to arrange [economic] projects "in such a manner that there is not too much going on at the same time," she said.
If built, the smelter at Húsavík will be Alcoa's second facility in Iceland. Alcoa is currently building an aluminum smelter at Reydarfjördur in eastern Iceland. The smelter at Reydarfjördur and the hydroelectric dam at Kárahnjúkar, which is being built to supply it, have been heavily criticized for their adverse economic and environmental impact.
Apart from the revelry at Húsavík, public reaction has been mixed.
The leader of the Social Democrats, Ingibjörg Sólrún Gísladóttir, said to Fréttabladid that it was "inopportune" to build three more smelters in Iceland, referring the the proposed new Alcoa smelter and two other expansion projects proposed by Alcan and Century Aluminum. Alcan and Century also operate smelters in Iceland, at Straumsvík near Hafnarfjordur and at Grundartangi close to Akranes.
Of the three proposed locations, Ingibjörg said building a smelter at Húsavík was the "least worst," taking into account "the employment conditions there."
"The government should receive the humiliation award," said Steingrímur J. Sigfússon, leader of the Left-Green Party, for "crawling on their knees in front of American aluminum moguls."
"The smelter won't put further pressure on the economy," said Prime Minister Halldór Ásgrímsson, chairman of the Progressives, "There is leeway for this smelter." He added that the planning for this decision had been "thorough. The memorandum was [an investment] for the future, and new projects must be undertaken shortly. Icelanders must make use of their energy resources," he said to Fréttabladid, and "make use of such opportunities as present themselves."
Arni Mathisen, Minister of Finance and member of parliament for the Independence Party, said the announcement of the feasibility study must be greeted with some caution since a final decision for building a smelter had not yet been made.
According to Fréttabladid, fifteen teenagers protesting the proposed new smelter forced their way into the offices of Alcoa in Reykjavík and behaved in an "unruly manner." An Alcoa spokesperson said in a statement "unfortunately the commotion was disruptive, and therefore police had to be summoned." A spokesperson for the protesters said the police had been "rough," but "not violent."
Fridrik Sophusson, CEO of Landsvirkjun, said to Fréttabladid that there was "plenty of supply" of electricity available for the new smelter.
According to Fréttabladid, the director of the University of Iceland's Institute for Economics, Tryggvi Thór Herbertsson, said at an event sponsored by Landsvirkjun that the effect of the current Alcoa smelter on the overheating of the Icelandic economy was "overrated" and blamed instead "lack of preparation in fiscal policy" and structural changes in the financial markets.
In the Icelandic parliament, Althingi, the chief whip of the Left-Greens, Ögmundur Jónasson, has requested a special session to discuss the proposed plans for the smelter at Húsavík.

Alcasa to reach installed aluminium capacity with help from Nalco
Metals Place, UK Platts 1 March 2006
Venezuela's CVG-Alcasa smelter intends to reach installed capacity of 210,000 mt/year in 2006 with technological aid from Australia's Nalco, Sintralcasa president Henry Arias told Platts Wednesday. "With a $10-million investment, it is expected that this year we will reach installed capacity, surpassing production of 186,000 mt/year in 2005," said Arias.
The technological improvements provided by Nalco will enable Alcasa to increase its potlines l and 11 production by 10,000 mt/year, and upgrades at potlines lll and lV will add another 15,000 mt/year to the projected total.
Nalco and an unnamed company from the People's Republic of China will also reportedly be investing to build Alcasa's ll.A potline, a $110 million project intended to raise the primary aluminium smelter's installed capacity by another 80,000 mt/year, or to around 300,000 mt/year, confirmed Arias.
However, this second project is "under study," he said, and its timetable is still undefined. Plans to build a 5th potline, to increase Alcasa's capacity to 450,000 mt/year with $680 million of government funds and using Venezuelan V-350 cell technology, is going forward as well, Arias said.

Chalco pitches US$2.2b alumina deal
www.chinaview.cn Xinhua, China - 2006-03-03 09:58:13
BEIJING, March 3 -- Aluminum Corp of China Ltd, the world's second-biggest aluminaproducer, is poised to make China's single largest investment in Australia as it seeks to ease shortages of materials used to make aircraft and car bodies.
The Chinese State-controlled company, known as Chalco, will submit a final bid by May to build a A$2.9 billion (US$2.2 billion) bauxite mine and refinery in Queensland, the State government said. The deposit has enough resources to produce aluminium for 2.5 million Boeing Co 747-400 aircraft.
Chinese companies including Chalco and CNOOC are scouring the world for raw materials because supplies can't meet the boom in demand for cars, homes and appliances in the world's fastest-growing economy. Chinese companies may invest as much as A$10 billion in Australia, which ranks among the world's top five producers of alumina, coal, bauxite and iron ore.
"China is industrializing and they have to source materials and power," Alfred Wong, who helps manage US$15 billion, including resources stocks at UOB Asset Management, said in Singapore.
Soaring Chinese demand has led to a 53 per cent rise in the price of alumina, a white powder used to make aluminium, in the past 12 months. Australia has 22 per cent of the world's proven reserves of bauxite, which is refined to make alumina, while China has only 2 per cent.
Shares of Chalco, which is 70 per cent owned by the Chinese Government and 8 per cent owned by Alcoa Inc, rose as much as 55 Hong Kong cents, or 6.8 per cent, to HK$8.70 on the Hong Kong Stock Exchange.
They traded at A$8.40 yesterday afternoon, taking their 12-month gain to 62 per cent.
Other Chinese investors in Australia include Sinosteel Corp and Beijing Shougang Co Sinosteel, China's second-largest iron ore trader, which last October signed an agreement to study the development of A$1.5 billion worth of iron ore projects in Western Australia with Midwest Corp.
Beijing Shougang, China's second-largest producer of construction steel, is paying A$120 million for a 50 per cent stake in Mt. Gibson Iron Ltd's A$715 million iron ore project.
If Chalco's proposal is accepted, it will be named "preferred developer" of the 650 million metric ton Aurukun bauxite deposit, Queensland Premier Peter Beattie said in a statement yesterday.
(Source: China Daily)

BHP Billiton denies power cuts may halt investment
Business Day, South Africa 02 March 2006
Rob Rose and Siseko Njobeni
PUBLIC Enterprises Minister Alec Erwin has warned BHP Billiton not to "negotiate its contracts with Eskom through the media", but the largest global resources company yesterday quashed suggestions that unreliable power supply may cause it to delay its investment plans in southern Africa.
Earlier this week, the London- and JSE-listed BHP Billiton said "early stage investigations indicate that, right now, there is not the power needed to expand the (Mozambican-based) Mozal smelter and (KwaZulu-Natal) Hillside plant".
BHP Billiton needs an extra 675MW of power to expand Mozal and Hillside to raise aluminium production by 750000 tons a year — power it cannot yet rely on getting from Eskom.
At a briefing on Tuesday, Erwin issued a warning to BHP Billiton, when he said: "I am sure BHP Billiton know enough not to negotiate their contracts with Eskom through the media".
He said Eskom was able to provide power to the private sector "and that includes BHP Billiton".
Erwin added that SA was one of few countries in the world that accommodated the power needs of aluminium smelter companies, while "other countries just say no".
Aluminium smelters are notoriously power-hungry and, by itself, Mozal already uses four times the average national electricity consumption of the rest of Mozambique. Even though aluminium prices are skirting 18-year highs, the cost and scale of power requirements for smelters has been a headache for aluminium producers worldwide.
BHP Billiton spokeswoman Bronwyn Wilkinson said yesterday that it was not a case of the company walking away from expansion plans in SA.
"But we do understand the situation that Eskom is in and we are not inclined to demand power from Eskom, given the capacity constraint it faces," she said.
Responding to Erwin, Wilkinson said BHP Billiton "does not negotiate its contracts through the media, and in fact we have an excellent relationship with Eskom".
Eskom also denied any rift between the two organisations.
Eskom spokesman Fani Zulu said that the power parastatal was negotiating with BHP Billiton, "and we have given the company the assurance that if it is looking at investing further in SA, we will be in a position to meet its needs".
Zulu also said that, notwithstanding recent "technical problems that compromised the quality of the supply", especially in Western Cape, Eskom could meet the needs of all foreign investors.
"For foreign investment purposes, Eskom is in a position to provide a reliable power supply at world competitive prices. We are one of the cheapest when it comes to electricity supply for industrial use," he said.
He said negotiations were taking place with companies such as BHP Billiton and Canadian firm Alcan, which is looking to build an aluminium smelter at the Coega Industrial Development Zone.

Alcoa World Alumina Says `Minimal' Impact in Guinea (Update1)
March 3 (Bloomberg)
Alcoa World Alumina LLC, which owns part of Guinea's largest bauxite plant, said there is ``minimal'' impact from a nationwide strike in the West African nation, and it has sufficient stockpiles for now to cover deliveries.
Bauxite producer Compagnie des Bauxites de Guinee, or CBG, is owned 49 percent by the Republic of Guinea and 51 percent by Halco Mining, in which Montreal-based Alcan Inc. and Alcoa World Alumina each have a 45 percent stake.
``So far the impact is minimal, but we will have to see what happens next week,'' Russell Williams, Alcoa World Alumina's vice president of mining, said in an interview at a Metal Bulletin bauxite and alumina conference in Amsterdam today. ``For now, shipments haven't been disrupted.''
A general strike called by public-service unions protesting wages and inflation has brought Guinea's capital Conakry and other parts of the country to a standstill, Reuters reported yesterday. Many workers at mining companies part owned by government belong to the unions and are observing the strike, Reuters said.
Williams declined to say how long the plant's stockpiles will last. Alcoa World Alumina is a joint venture of Alcoa Inc. and Australia's Alumina Ltd. Bauxite is refined into alumina, which is used to make aluminum.
CBG produces about 13 million metric tons of alumina a year, most of which is used to supply smelters owned by Pittsburgh- based Alcoa and Alcan, Williams said.
To contact the reporter on this story:
Doug Alexander in Toronto at dalexander3@bloomberg.net

Chinese Spot Alumina Prices Hit $650/Ton - Analyst
Yahoo! News - Friday March 3, 4:50 PM
LONDON (Dow Jones)--Australian-origin alumina imported into China has leapt in price to $650 a metric ton free on board in the past week, up from $620/ton FOB previously, according to analyst Jim Lennon of Macquarie Bank Friday.
Adding in freight, Lennon said imported prices are now $675/ton cost, insurance and freight main port, before allowing for port charges, the 5.5% import duty and 17% value added tax.
Allowing for these factors, spot import prices are equal to $833/ton, compared to $647/ton for the current Aluminum Corp. of China Ltd. (ACH), or Chalco, list price.
"The Chalco price is now at a record discount to imported prices, suggesting a substantial Chalco list price may soon be upon us," Lennon said.
Lennon attributed the strong growth of Chinese aluminum production as being a key contributor to the continuing tightness in the global alumina market. He noted that Chinese alumina imports surged to a record high in January to reach 780,000 tons, compared to an average of less than 600,000 tons in 2005.
"The data suggests that China's appetite for imported alumina continues unabated despite domestic alumina capacity increases, which are now expected to add around 2.2 million tons to Chinese alumina production this year," Lennon added.
Chalco's production is expected to increase by at least 700,000 tons this year, with another 1.5 million tons coming from non-Chalco refineries.
Of this, 700,000 tons will come from Shandong Chiping, 300,000 tons from British Kaiman in Henan province, 300,000 tons from the East Hope project, 80,000 tons from Henan Huiyuan, 80,000 tons from Chongqing Bosai, 30,000 tons from Shandong Luneng and 10,000 tons from other smaller refineries or refineries added at the year end.
"Although there has been or will be more than 6 million tons of new annual alumina capacity added over the 2005 and 2006 period, how quickly these new entrants can ramp up to full production is open to question," Lennon said.
He sited complex technology, concerns over bauxite supply, and investment required by the State Environment Protection Administration, who made the issue of "environment pollution" as their top priority" recently.


JLP wants JCTU intervention in WINDALCO/union quarrel

RJR, Jamaica - Fri Mar 3, 2006

Opposition Leader Bruce Golding has called on the Jamaica Confederation of Trade Unions to intervene in the dispute between the National Workers Union (NWU) and the management of West Indies Alumina Company (WINDALCO). Mr. Golding says the relationship between the management of the alumina company and the union has deteriorated to the level of betrayal.

The opposition leader says the situation could result in damage to the bauxite and alumina sector.

The relationship between the entities further deteriorated on Tuesday following claims by WINDALCO's management that NWU Vice President Norman DaCosta exposed his firearm and intimidated managerial personnel during wage talks.

Mr. DaCosta has since refuted the claims and has threatened to take legal action against the company.

He has also expressed outrage in response to a request that he should be barred from a meeting on Tuesday at the Ministry of Labour with the management of WINDALCO.

It is understood that the request was made by WINDALCO’s management.

Mr. DaCosta has made it clear that there will be no meeting if he is not present. He says he has the workers’ support.

SA 'must cut power'

News24, South Africa - 04/03/2006 07:53

Jan de Lange , Beeld

Cape Town - Eskom will launch a campaign next week to convince South Africans to consume less electricity because the margin between peak demand and supply will be the smallest in decades this coming winter.

The smaller margin will be intensified by the problems at Koeberg, which will be pumping less than half its normal supply into the network until the end of July.

Normally Koeberg supplies a little below 1 900 MW, but until the end of May it will generate only 600 MW and then raise it to 900 MW up to the end of July.

All the bigger role players in the electricity scene, Eskom excluded, such as big coal mines and large-scale buyers, have been predicting for the past two years that Eskom's ability to supply in peak demand would be exhausted by 2006.

The consternation that followed the power outages of the past fortnight in the Wstern Cape is, however, a timely warning to smaller consumers of what may be coming later this year, especially in the winter months.

Government has taken the blame

The looming power cuts would already have surfaced in 2005 but South Africa had a milder winter than normal and the issue was delayed.

Last year the peak demand - during an exceptionally warm winter - increased by 3.2% to 35 289 MW.

Eskom's total installed generating capacity is 39 154 MW, which includes 2 740 MW only available during peak demand periods and that can only be utilised for short periods, provided by turbine boosters, the hydro-electrical plants at the Gariep Dam and the Drakensberg and Western Cape pump schemes, which can only generate for a maximum 12 hour period.

This leaves 36 414 MW as basic electricity generating capacity from coal-fired power stations and Koeberg, the only nuclear plant.

To provide outage time for power stations requiring maintenance, and unexpected problems that may surface - such as at Koeberg lately - the electricity utility should have between 15% and 20% available in reserve.

Last year the margin dwindled to 9.8%.

The campaign launched by Eskom next week will be aimed at lowering the peak demand, such as the availability of five million low energy light bulbs to households in the Western Cape at subsidized prices, and R200M that will be spent by Eskom to install equipment for the centralised control of domestic geysers, also known as "ripple control".

The main electricity consumers pushing up the peak demand are BHP Billiton with its aluminium smelters in Richards Bay and Maputo, the Swiss commodity giant Xstrata, with 14 aluminium smelters in Mpumalanga and Northwest Province, and African Rainbow Minerals, with their smelters in Mpumalanga.

Eskom really can not be blamed for the crisis.

At an economic growth rate below 3% per year the available peak ability would only have been reached by 2008.

Procrastination on decisions regarding possible privatisation of certain Eskom sectors meant that no new construction for power stations had been initiated between 1999 and 2003.

"Government has accepted the responsibility that new power stations were not built in time," Alec Erwin, minister of public undertakings, said on Friday.

Aluminum's long history in Steel City

Pittsburgh Tribune-Review, PA Sunday, March 5, 2006

To learn how Pittsburgh became home to Alcoa, simply follow the money.

That's what Charles Martin Hall, a young inventor from Oberlin, Ohio, did in 1888 when he came to Pittsburgh in search of financial backers. He wanted money to commercially develop his discovery two years earlier of an inexpensive method of smelting aluminum.

Hall came to Pittsburgh after he was unable to find backers in his home state and was frustrated by his failure to make pure aluminum in test trials at a New York plant. He pitched his idea to Alfred E. Hunt, a metallurgist in charge of the Pittsburgh Testing Laboratory, which conducted chemical tests and analyses.

With $20,000 raised by Hunt and a small group of investors from the city's burgeoning steel industry, the Pittsburgh Reduction Co. was formed, according to a book Alcoa commissioned, "From Monopoly to Competition: The Transformations of Alcoa, 1888-1986."

Pittsburgh Reduction Co. began operating in a small building at 3200 Smallman St. in the Strip District. Within a year, its aluminum production began to outgrow the facility, despite expansions.

When the company needed more money in 1890, it turned to a Pittsburgh banking house, T. Mellon & Sons, which provided $25,000.

The Mellon bank, then led by Andrew W. and Richard B. Mellon, held real estate in Kensington, about 19 miles up the Allegheny River from Downtown. Mellon offered four acres of riverfront land to Pittsburgh Reduction Co., knowing the plant would attract workers whose need to live close by would create a demand for the property Mellon wanted to sell for housing.

The New Kensington, Westmoreland County, plant - the "New" was added because another town in Pennsylvania shared the name - manufactured aluminum cookware, light aluminum alloys and aluminum seals. The cookware was distributed through Alcoa's Wear-Ever Company in New Kensington.

This was the first plant where aluminum was used in consumer products, said Jim Thomas of New Kensington, an Alcoa history buff and a director of the Allegheny-Kiski Valley Historical Society in Tarentum. The industry so dominated the town that it became known as the "aluminum city."

The New Kensington plant also had the distinction of providing two Ohio brothers, Wilbur and Orville Wright, with aluminum parts for the engine they used on the airplane they flew in December 1903 along the shores of Kitty Hawk, N.C., Thomas said.

To generate the power it needed for the plant's smelting operations, Alcoa in 1917 took steam coal from a mine it owned along the Allegheny River in Tarentum, about three miles north of the plant, said Thomas, whose father worked at Alcoa's New Kensington plant. The coal mine, which the company operated until 1923, also supplied coal to Alcoa's plants in Niagara, N.Y., Detroit and Cleveland.

The company expanded its Alle-Kiski Valley operations with an aluminum foil mill in nearby Arnold, Westmoreland County.

The Aluminum Company of America, which became the firm's new name in 1907, opened a powder mill at Logan's Ferry in 1918. That plant would provide powder for explosives used in World War II, Thomas said.

Alcoa's operations in the region expanded during World War II, when the demand for aluminum for planes skyrocketed. The company operated aluminum forging plants in Canonsburg, Washington County, and New Castle, Lawrence County, which were geared to help the war effort. Those plants were owned by the War Defense Plants Corp., and closed after the war. Alcoa wasn't permitted to buy the plants, because it had been embroiled in a long antitrust battle with the Department of Justice over the government's desire to reduce the company's monopoly in the aluminum industry.

Almost from its beginning, Alcoa conducted research to discover commercially viable uses for what was considered a semi-precious metal. The company opened a research facility in New Kensington in 1929. By the early 1960s, Alcoa saw a need to expand and built its Technical Center in Upper Burrell, also in Westmoreland County. Employment at the technical center peaked at 1,500 in the mid-1980s and has fallen to about 750, including about 600 scientists.

Even as Alcoa expanded its operations across the United States and throughout the world, however, Pittsburgh remained its headquarters.

For many years, it maintained offices in the Gulf Tower, then the tallest building Downtown. But in the early 1950s, Alcoa wanted a headquarters building to display its product and built an all-aluminum building across from Mellon Square. The company moved from its signature building in 1998, to the Alcoa Corporate Center in the North Side.

Alcoa's Downtown holdings included another Pittsburgh landmark, the William Penn Hotel, which it sold in 1987.

Joe Napsha can be reached at jnapsha@tribweb.com or (412)-320-7908.

Comalco under pressure to help conserve hydro storage

Stuff.co.nz, New Zealand 06 March 2006

Meridian Energy has asked the country's largest power user, Comalco, to reduce power consumption at Bluff aluminium smelter to help conserve southern lakes water supplies.

Water storage in the region's hydro lakes has been affected by inflows, which have remained well below average for the last half of 2005 and the early part of 2006.

Meridian chief executive Keith Turner said "it makes much better sense to take gradual measures earlier than have to take more extreme and sudden steps later on, and this is the approach we have been discussing with Comalco".

Reservoir levels in some parts of South Island have dropped to 14 percent of full capacity.

Under its contract with Comalco, Meridian can ask the smelter to reduce production in times of power shortage to conserve storage in the South Island hydro lakes.

Comalco managing director Tom Campbell said it is better to "suffer some pain now than a great deal more pain later".

"It is clearly necessary for New Zealand to focus on conservation now and the smelter needs to be part of that," he said.

Monetising the energy reserves

Trinidad & Tobago Express, Trinidad and Tobago Monday, March 6th 2006

William Lucie-Smith

Trinidad and Tobago has been blessed with significant oil and gas reserves and not surprisingly there appears to be considerable debate about the use of those reserves, how long they will last, and how the revenue should be spent.

These oil and gas reserves are the real national patrimony and must be used very carefully. It is almost like cash in the bank that once spent will be gone forever. Two issues are uncertain. The first is how much oil and gas do we have that can be exploited at current and future prices. Economic reserves are those that can be produced at a profit and so for the same reservoir the actual quantity of reserves change as the price changes. Hence with the current spike in oil and gas price reserves that were previously uneconomic are now worth producing and consequently our proven reserves increase in size and value.

The second uncertainty is of course the value. Some of us are old enough to remember the oil price at US$2 a barrel back in 1970. This price rapidly increased in the "money is not the problem" era and peaked at about US$38 a barrel in the early 1980s. Oil prices then collapsed to as low as US$8 per barrel as Trinidad and Tobago was plunged into a financial crisis. It must be clear to all of us therefore that energy prices are unpredictable and cannot be assumed to increase indefinitely.

Truth is that these two major uncertainties are largely beyond our control. The current view of our government is that there is really no point leaving oil and gas in the ground and certainly at current prices we should try to maximise revenue from production and sales. This is a view that is hard to disagree with, but still of course requires planning as to what is the most valuable use of oil and gas to Trinidad and Tobago and how much should be used in what industry.

When the Point Lisas Estate was being built the Government gave significant incentives to foreign investors (and local investors) to build ammonia, urea and methanol plants. These incentives included tax holidays and subsidised gas. The first train of Atlantic LNG also received fiscal incentives.

The current demand for oil and gas and pricing suggests however that it would be extremely hard to justify any subsidy or fiscal incentives in the use of our energy resources. One key issue now is the best and most profitable use of the reserves and sustainability of the enterprises we build. The second key issue is how do we spend the money that is produced by the energy windfall in a way that is sustainable. i.e. we must exchange this asset for another of equal or greater value so that the wealth of the country does not diminish. This is easier said than done. After the first oil boom 1972-1982 Trinidad and Tobago was not in a position to withstand the downturn and quickly was forced to go to the IMF. We had saved nothing and still had excessive debts. That disaster must not be repeated.

It is the IMF view that our considerable windfall profits from energy must be conserved by large budget surpluses. The surpluses can then be invested to provide revenue if and when energy prices fall. There is a considerable body of opinion that believes some projects like the Tarouba stadium, new Carnival centres and extended gardens for the Prime Minister do not fall into that category (because they have little or no tangible return) and we are in grave danger of repeating the errors of the 1970s. It is possible to produce the energy reserves and save and invest the surplus in a way that will not inflate the economy and will protect us from any future setbacks.

Even more controversial than government spending is the utilisation of energy resources, and in particular the decision to go ahead with two aluminium smelters. There has been widespread concern expressed about the environmental impact of these smelters and their toxic waste.

It is not just from an environmental position that the Government must justify these plants but also from the position that it is the most productive and profitable use of our energy resources at this time. Quite frankly Alcoa, ALNG and other plants must now compete for our energy production and demonstrate that they will provide the greatest cash flow to the country at least cost. In the interests of transparency it is necessary that the Government provide the public with their energy plan and its economic justification. Experience has shown the Government does not believe it needs to listen to any Tom, Dick, Harry or businessman about how it spends our money so perhaps we need to ask louder.

Rusal Starts Preparation of Feasibility Study for Construction of Aluminum Plant

Baku Today, Azerbaijan 06/03/2006 23:35

Russian Aluminum JSC (RusAl) started preparation of the feasibility study of the project on construction of 300,000 tons aluminum plant in Azerbaijan, the press service of RusAl told Trend.

"Final decision on the location of the plant and amount of investments will be made as a result of estimation," the Company said.

The representative of the press service said that they did not consider possibility of establishment of production on the base of Azeraluminium.

According to Abbas Abbasov, the Azerbaijani first Vice-Primer, the total amount of investments for ensuring the operation of the plant, expansion of infrastructure and construction of power station will exceed $1bn. Raw materials will be delivered from Guinea due to lack of raw materials in the country.

The plans of the Russian Company include establishment of new modern aluminum and aluminous plants, power stations, as well as high-tech and enterprises for production of oil coke, construction elements and packing foil.

Alro invests in modern equipment

Bucharest Daily News, Romania Tuesday, March 7, 2006

Aluminum producer Alro Slatina will invest 25 million dollars in new equipment used in the production process.

"The equipment that needs to be replaced is more than 30 years old and is less efficient compared with modern gear," said the company's general director, Gheorghe Dobra.

The official said that Alro is negotiating with international companies for the acquisition of new equipment.

Company representatives estimate that Alro has invested 145 million dollars in the last few years.

Investments were meant to modernize the production lines and protect the environment.

The company reported a 552 million dollar turnover for 2005 and a net profit of 118 million dollars.

Russian A320 plan unveiled

Flight International 07/03/06

Manufacturer and Moscow prepare paperwork and look for suitable conversion site

Airbus is expected to decide in the next few months whether to set up a freighter conversion centre in partnership with Russia’s newly formed United Aircraft (UAC).

The manufacturer is working on a plan to convert ageing A320s being retired from passenger service to freighters.

"We have conceived this project specifically with Russia in mind, given an excess capacity at its aviation enterprises," says Airbus’s business development director in Moscow, Sergei Yermolayev, who expects the European manufacturer to make a decision in principle within the next few months.

A task force, which includes Russian government and industry representatives, has set about identifying a production facility and providing documentation for the project. Airbus senior vice-president industrial strategy Axel Krein indicates it could develop into a full risk-sharing partnership on future Airbus aircraft programmes. "I don’t rule out a joint venture on a parity basis," he says. "Potentially, Russia’s revenue could amount to $2 billion over the course of the project."

Until now, Dresden-based EADS-EFW has carried out the bulk of Airbus’s freighter conversions using its certificated modification for the A300 and A310.

EADS-EFW has long been thinking about a conversion programme for the narrowbody Airbus models, but has been awaiting the required market conditions and the signal from Airbus to go ahead.

Following a recent presidential decree, the Russian aerospace industry is facing consolidation under the UAC umbrella.

Krein believes UAC will be a natural partner to benefit from teaming with Airbus and says: "We want to co-operate not only in the freighter conversion project, but across a wide range of areas, with estimated earnings of $25 billion."

Airbus has recently placed an additional work package, worth $200 million, for a string of its aircraft models with NPO Irkut, Scientific Production and the Voronezh Aircraft Production Association.

On the procurement side, Russian titanium producer VSMPO will increase shipments of titanium semi-finished products, and Sual-Holding will begin supplying aluminium plates to Airbus.

Alcoa Announces Construction Completed and Production Started on Alumar Aluminum Smelter Expansion in Brazil

Business Wire (press release), CA March 07, 2006 04:45 PM US Eastern Timezone

NEW YORK & SAO LUIS, Brazil--(BUSINESS WIRE)--March 7, 2006--Alcoa (NYSE:AA) Chairman and CEO Alain Belda announced today that construction on the expansion of its Alumar smelter in Sao Luis, Maranhao, Brazil, has been completed and start-up of full production has begun. The expansion will add 63,000 mtpy of aluminum, bringing total capacity there to 433,000 mtpy. Mr. Belda made the announcement during his presentation on Alcoa's global growth strategy at Citigroup's Annual Global Industrial Manufacturing Conference in New York today. During his presentation, Mr. Belda said that consumption of aluminum products, both upstream and downstream, is expected to double over the next 14 years due to evolving demographics around the world.

The expansion of the Alumar smelter took place in two stages: 48 of the new pots were put into operation in November 2005 and the start up of the remaining 52 pots began today and is expected to be completed by the end of the month. The total expected incremental production in 2006 is approximately 50,000 metric tons. When the current expansion is fully operational, Alcoa will increase its stake in the Sao Luis aluminum production operation to 60%, representing approximately 264,000 mtpy.

"Alumar is recognized worldwide as one of the world's largest industrial complexes for producing alumina and aluminum, and it is one of the most modern smelters in the Alcoa system. This project was completed within the original timetable and budget and most importantly it was completed safely," said Alcoa Chairman and CEO Alain Belda.

A copy of Mr. Belda's presentation can be found at http://www.alcoa.com/global/en/investment/citigroup_gimc_06.asp

The expansion of the Alumar Consortium's aluminum plant is part of an overall investment plan Alcoa implemented for its primary metal production operations in Brazil, totaling US$1.6 billion and includes the expansion of the Sao Luis refinery and the creation of the Juruti bauxite mine.

For aluminum production, the Alumar consortium is formed by Alcoa (60%) and BHP Billiton (40%)

Aluminum Surpasses Iron as Second Most Used Automotive Material Worldwide

Yahoo! News (press release) Tuesday March 7, 9:44 am ET

Automakers increasingly turn to aluminum to improve fuel economy, safety and driving performance

- Aluminum is second behind steel as the most used automotive material - In North America, the aluminum content in passenger cars and trucks averages 319 lbs - Aluminum's cost/benefit value proposition continues to improve

DETROIT, March 7 /PRNewswire/ -- Global aluminum use in automotive applications continues to grow, according to a new report commissioned by The Aluminum Association, Inc., and when compared to use of other metals, aluminum has now exceeded iron to become the second most used automotive material worldwide. Highlights of the report were unveiled by executives from Alcoa and Novelis, leading aluminum manufacturers, during a press conference today.

"Aluminum penetration in the auto industry continues to surpass competing materials as leading automakers recognize the metal's value in boosting fuel economy, performance and safety, while reducing emissions. With today's sky high fuel prices, rising global warming concerns and increasing safety demands, aluminum is a proven solution today, with even greater promise for tomorrow," said Misha Riveros-Jacobson, president of advanced transportation systems for Alcoa.

Commissioned by the Auto & Light Truck Group (ALTG) of The Aluminum Association, Inc., and conducted by Ducker Worldwide, the study found that passenger vehicles in North America now contain an average of 319 pounds of aluminum representing a 16 percent increase from 2002 data, which now places aluminum second only to steel in automotive applications.

Also released today by the ALTG was a related value study on aluminum's costs and related benefits. While the metal's rising use confirms its cost benefit advantages in many applications today, the aluminum industry also documents the additional value and cost savings aluminum could offer as more of the metal is used in the future. The value study, conducted by IBIS Associates, reveals the potential for significant additional cost savings from secondary weight savings and associated cost reductions, which can significantly offset upfront materials costs.

"Aluminum's value is far reaching since it can safely reduce weight, which means automakers can downsize components accordingly and recoup those secondary cost savings," said Martha Brooks, chief operating officer for Novelis. "Consumers also can save money at the gas pump, as low weight vehicles using aluminum require less fuel to get around."

Release of these new studies is well timed, given the fact the National Highway Traffic Safety Administration will soon issue new fuel-economy standards for SUVs, pickups and minivans for Model Year 2008 through 2011. NHTSA's earlier draft rule proposed size-based standards, in part to encourage automakers to make even greater use of high strength, low weight materials like aluminum. NHTSA's effort is consistent with recent studies by the aluminum industry and others, which confirm the size of a vehicle -- not its weight -- is a better measure of a vehicle's safety. Therefore NHTSA's new fuel economy rule encourages even greater use of aluminum and similar materials in order to maintain or even increase vehicle size for safety, while reducing vehicle weight for improved fuel economy and reduced emissions.

"As the auto industry continues to innovate to meet consumer and government demands the world over, whether it's through hybrid engines, cleaner fuels, or simply making cars and trucks more fun to drive, aluminum will continue to help build better cars and trucks," summarized Stephen Larkin, president of The Aluminum Association, Inc. "Aluminum continues to provide solutions to the growing challenges of today and the future."

For more information, visit http://www.autoaluminum.org .

Koppers making a comeback

Pittsburgh Business Times - March 3, 2006

by Dan Reynolds

Fresh off an initial public offering, Koppers sets new growth course

Walt Turner of Koppers Holdings says the company will continue to focus on coal-based chemicals and the railroad industry. Top, rail fastening plates are preinstalled at Koppers’ Galesburg, Ill., plant before being shipped via railroad.

View Larger Koppers is back. Way back.

After enduring 18 years of rebuilding after being broken up in 1988, the Pittsburgh-based company is again trading its stock on Wall Street, has eclipsed the $1 billion mark in sales and is looking at strong growth potential in its core businesses. In addition, Koppers announced this month that it is coming out with a new carbon foam product.

"Going public on Feb. 1 was very exciting for a lot of people who are still working here and who had worked for the company back in 1988," said Walt Turner, the company's CEO who has been with Koppers since 1969.

With its roots in the early 20th century producing chemicals from the coke-making process, Koppers Holdings Inc. as it is now known, had built itself into a $2 billion company by 1988. A hostile takeover by British industrialist Brian Beazer took away 60 percent of the company and led to a management-led buyout of a remaining 20-percent chunk. The major pieces of what management kept, its carbon pitch used as a binder in the aluminum industry, and its treated railroad tie and utility pole segment, were the mature industries that Koppers used to build the company from about $425 million per year in sales in 1988 to $1 billion in 2005.

Those core businesses are now looking at a solid future, with the worldwide demand for aluminum expected to remain strong and the North American freight railroad industry running at capacity. "We are going to continue to focus on what we know best globally," Turner said.

Turner said what thrills him is that management was able to keep the Koppers name, keep the company in Pittsburgh and take that company public again. "It's been an exciting experience for myself as well as the employees of the company to become a billion-dollar company," he said.

With carbon pitch an essential element in the aluminum smelting process, Turner says continued growing demand for aluminum worldwide also is a good sign for Koppers.

Jim Southwood, president of Commodity Metals Management Inc., an aluminum industry consulting company based in Wexford, said demand for aluminum worldwide is at sustainable levels not seen since the 1970s. He said for the near future, aluminum sales are expected to increase by 5.5 percent per year worldwide. Driving those numbers is China, where Koppers already has one carbon pitch plant and is in negotiations to build another.

Although China also will have need for railroads to carry raw materials for its burgeoning industry, Turner said Koppers is not eyeing China as a growth area for its wooden railroad ties. He said railroads in China, South America and Europe depend more on concrete railroad ties because of the relative scarcity of wood in those areas. North America, with its vast forests, is a far more natural market for railroads using wooden ties, Turner said. Turner said Koppers does produce concrete railroad ties for commuter rail lines and other heavy load areas.

Turner said Koppers commands about 60 percent of the market in railroad ties for Class One railroads in North America. Class One railroads are major freight carriers such as CSX Transportation, Norfolk Southern Railway and Union Pacific Railroad with 2004 revenues exceeding $277 million.

High petroleum fuel costs and a driver shortage are discouraging North American transport by truck. And with a continuing strong U.S. economy that is consuming imported goods that need to be transported from seaside ports, the North American railroad industry is in need of more infrastructure to handle extra capacity.

"We are very optimistic, the industry is moving record volumes of freight,' said Tom White, a spokesman for the Association of American Railroads, a trade group based in Washington, D.C.

The Railroad Tie Association, a trade group based in Fayetteville, Ga., estimates that national demand for railroad ties is going to grow by almost 9 percent in 2006.

With its core segments looking solid, Koppers is using its knowledge of coal-based chemicals to roll out a carbon foam product this month. The foam is expected to have uses ranging from an industrial heat conductor, to sound-proof rooms and as a building block for fuel cells. Turner said he wouldn't give an estimate for how much revenue he expected the new product line to generate.

dreynolds@bizjournals.com | (412) 481-6397 x239

Alcoa Boosts Stake in Brazil Power Plant for Smelter (Update1)

March 8 (Bloomberg) --

Alcoa Inc., the world's biggest aluminum producer, increased its share of a Brazilian power plant project to secure more electricity for a smelter where the company has begun expanded metal output.

Alcoa increased its stake to 25.5 percent of the 1,087- megawatt Estreito hydropower project in northern Brazil after acquiring 6.4 percent of the venture from BHP Billiton Ltd., a partner in the Alumar aluminum smelter in Sao Luis, Maranhao. Terms of the transaction weren't disclosed.

A bigger stake in the power plant increases the amount of power for Alumar to 149 megawatts, Pittsburgh-based Alcoa said today in a statement. The company this week completed an expansion of the smelter, boosting capacity by 17 percent to 433,000 metric tons of aluminum a year. Alumar will be fully operational at the end of the month.

``This action continues our global energy strategy to secure low-cost, reliable energy supply and also increase power self-sufficiency for sustainable primary growth in Brazil,'' Alcoa Vice President Frank Feder said in the statement.

European aluminium firm ‘to shift’ production to Qatar

Peninsula On-line, Qatar 3/9/2006 2:6:18

by MOBIN PANDIT

Doha: A major aluminium manufacturer in Europe is transferring its production facilities to Qatar since energy is available in abundance here and at cheaper prices, says a visiting business journalist from the continent.

Aluminium's is an energy-intensive industry, so for the European manufacturer producing it here would make an immense difference to the economics of the project, points out Dr Rainer Hermann.

Demand for aluminium is growing worldwide due to its rising use in the automotive industry. Accent is on using aluminium to make cars lighter.

Dr Hermann, who speaks chaste Arabic, is Istanbul-based correspondent of Frankfurter Allgemeine, a prominent German newspaper. From Turkey, he has been covering the entire Middle East, including Iran, for a number of years now.

He was among the few foreign journalists who had covered Qatar's first electoral battle in early 1999 (elections to the Central Municipal Council).

In remarks to this newspaper, he said that the fact that Qatar was fast emerging as one of the world's leading natural gas suppliers, many energy-intensive industries were likely to set up operations here.

"Aluminium industry is just one of them." Dr Hermann said that in Germany, some 10 years ago no one knew of Dubai, but the situation had changed today with almost every German familiar with this commercial hub.

People know Qatar as an emerging venue for global conferences and wonder why most prominent world conventions are taking place here.

Dubai successfully promoted itself as a world commercial centre and is nothing beyond that, but looking ahead with vision Qatar is projecting itself not only as a business hub but also as a global diplomatic and intellectual centre.

"Dubai lacked this kind of political vision and I am sure over the next 15 to 20 years, Qatar will far overtake the emirate in all respects." Dubai promoted itself on the lines of Singapore.

Asked to elaborate what he meant by 'global diplomatic centre', the German scribe said: "A place where, for instance, Jews could meet Muslims for a dialogue to resolve their long-standing dispute".

During World War, Switzerland, for example, became such a neutral ground, he said.

The world needs secure and cheap energy and with immense natural gas reserves, Qatar is on its way to becoming a leading global supplier of gas in a few years since targeted export of liquefied natural gas (LNG) is 77 million tonnes per annum.

Apart from this, Qatar has plans to produce one million barrels a day (bpd) of gas-to-liquid (GTL) fuels over the next few years, as also raise its oil production to one million bpd.

Long-term plans include producing four million bpd of GTL fuels, to which Opec quotas would not apply since it is not conventional oil.

This would put Qatar in an enviable position in the world since it would emerge as the single most important energy supplier to the world, said Dr Hermann. "I am quite optimistic about Qatar's future."

Dr Hermann, who is doing a feature on Qatar, however, obliquely hinted that ministers in Qatar needed to be more accessible to foreign journalists and there was a need to cut red tape when it came to fixing a meeting with a minister for an interview.

Russian majors eye Indian ore

Financial Express, India Thursday, March 09, 2006 at 0000 hours IST

ANUPAMA AIRY & SUBHASH NARAYAN

NEW DEHI, MARCH 8: Russia’s leading metal companies Rusal and Magnitogorsk Iron and Steel Company (MMK) have zeroed in on India for big-ticket investments in the aluminium and steel sectors.

The $5.25 billion MMK is poised for billions of dollars in Orissa to set up a 10 million tonne greenfield steel plant. It has sought the Centre’s assistance for land procurement in the iron-ore rich state.

Alongside, Rusal, the $6.1 billion aluminium giant, has also evinced interest in investing in an aluminium venture in India. It is the world’s third largest primary aluminium producer, providing primary aluminium and value-added products in 50 countries. Rusal accounts for 75% of aluminium production in Russia and 10% globally.

These, coupled with the recently announced investments by South Korean steel major Posco in Orissa and London-based Mittal Steel in Jharkhand, will make India a hot investment destination for global steel and metal companies.

For the proposed 10 mtpa facility in Orissa, MMK is expected to pump in about $10 billion, based on the investment estimates of Posco and Mittal Steel in similar-sized steel plants in the country. While Posco has proposed a $12-billion investment for its 12 mtpa steel plant, Mittal Steel is planning to invest $10 billion for an equal capacity in Jharkhand.

A senior government official told FE that investments by the two Russian companies have been discussed at the highest levels. "Russian industry minister Victor Khristenko has discussed the proposals with Indian Prime Minister Manmohan Singh during the latter’s recent visit to Moscow. The main issue from the Russian side pertains to allotment of land. New Delhi has assured facilitation of these investments," the official said.

MMK is Russia’s largest steel company with total steel production of 11.38 million tonne. MMK’s revenues in 2005 was $5.25 billion while its profit before tax stood at $1.41 billion. Rusal’s revenues in 2005 increased 12.8% to $6.1 billion compared to $5.4 billion in 2004.

While Russian companies are investing over $20 billion annually in foreign countries, their investment in India is abysmally low at $120 million a year. Both India and Russia are keen to substantially increase the bilateral trade and investment. An indication to this effect was given by Russian economic development and trade minister German Gref who said the two countries need to expand their mutual trade from $2.9 billion registered in 2005 to $10 billion before 2010.

Gov't may repeal Dutch aluminum deal

AzerNews, Azerbaijan 09/03/2006 16:00

The Azerbaijani government has issued a warning to major Dutch aluminum producer Fondel Metal Participations BV, which maintains that the terms of its 25-year contract with the state on managing Azerbaijan Aluminum (Azeral) joint stock company have been violated.

Fondel said in a harshly-worded statement that the government suspended the agreement and that since late October, it has taken control over Azeral in a bid to "expropriate Fondel's economic interests". Officials have said, however, that the contract has not been revoked, urging the Dutch company to either observe its commitments or turn down the contract altogether. Economic Development Minister Heydar Babayev told a news conference Thursday that agreements with all companies failing to deliver on their obligations are subject to reconsideration.

Fondel has not replied to the government's appeal so far and said it would take the matter to court. "We are ready for such proceedings. But very unfortunately, certain provisions of the agreement are not in line with Azerbaijan's interests. For instance, it says that the investments made [by the company] so far should be reimbursed. But in fact, if you have not fully met your obligations, you cannot claim the invested funds back," the minister said. The Azeri state committee on property management said the investments made by Fondel in the local company are considerably below its obligations set forth by the existing agreement, a conclusion made during a scrutiny currently under way at Azeral. "Although Fondel Metal assumed a commitment to invest $200 million over three years, it has failed to do so over the past five years. At the same time, it has not fully met its obligations on the application of new technologies and environmental safety," the state committee said. Fondel has not given due attention to the warnings it received in this regard, it added. Minister Heydar Babayev said the government's demands put forth to Fondel should not be linked to Russian giant Russkiy Aluminiy's interest in entering Azerbaijan's market. He said, however, that the government generally welcomes the establishment of an aluminum plant in the country by the Russian company, but a decision on its operation would be made based on a conclusion to be drawn up by a special commission currently being set up. Babayev also said Russkiy Aluminiy is seeking to build an electric power plant in Azerbaijan, as aluminum production requires the use of a considerable bulk of electricity

Jaguar scraps aluminium plans

carnorama Friday, March 10, 2006

Jaguar, the lossmaking luxury carmaker, has shelved plans to build cars from a unified aluminium "architecture" because of financial constraints imposed by Ford Motor, its US owner. Lewis Booth, head of Ford’s London-based stable of luxury brands, said the company had delayed the plan, which was due to start with the replacement for the new S-Type executive saloon.

The delay is a blow to Jaguar, which aimed to use the single architecture to lower engineering costs for its expensive, but lightweight, aluminium XJ and XK, both low-volume vehicles. Jaguar also hoped to be freed from engineering constraints imposed by sharing underlying platforms with other Ford brands, moves demanded in the past by Ford to keep costs down.

Mr Booth said: "Given the current financial circumstances of Jaguar we have pretty tight reins on them. That may restrict us getting to the perfect architecture line-up as quickly as we might have liked but we need short-term improvements as well as planning for the long term."

The loss of the unified architecture is a sensitive topic for Jaguar, which has come under fire for basing some cars on models from other Ford-owned brands, compromising performance. The reputation of the S-Type was hit badly when it was launched because it shared a basic structure with the Lincoln LS, one of Ford’s US luxury cars, giving it soft steering and an ugly profile.

A subsequent overhaul has won praise from reviewers but Jaguar has struggled to shake off the damage to its image. The X-Type "baby Jag", Jaguar’s attempt to take on the BMW 3-Series, also suffered from its association with the Ford Mondeo, the mass-market car. But Jaguar insiders said the S-Type’s current steel structure, or "platform", would be updated rather than replaced.

Developing a platform typically costs upwards of $1bn, in addition to new production equipment. Ford invested £200m in robots and other equipment for Land Rover when the offroad brand began moving to a single platform.

Jaguar has promoted aluminium bodies as a key technology that offers lower weight, improved performance and better fuel efficiency.

Ford in December put £1.2bn into Jaguar to shore up its finances, just a year after the last capital increase. The company has closed one of its three British factories and increased prices in the US, with sales falling sharply as a result.

source: Financial Times

Russia's aluminium export up 21.4%.

Analytical Information Agency, Russia 09/03/2006

The revenue from Russia's aluminium export in January amounted to $439 million, up 30.2 percent or $337.1 million from the same period a year ago, the Federal Customs Service informed. The volume of export increased by 21.4 percent to 332.2 thousand tones from 273.6 thousand tones.

The shipment of nickel abroad for the reporting period amounted to 14.7 thousand tones, down 10.9 percent from the same period a year ago.

The export of refined copper raised 52.6 percent to 17.7 thousand tones from 11.6 thousand tones.

"AK&M", 09/03/2006 15:16

Indonesia wants Nalco to take over a smelter unit

Economic Times, India FRIDAY, MARCH 10, 2006 12:52:15 AM

RAKHI MAZUMDAR

KOLKATA: It could add a chapter to the global Indian takeover story. The government of Indonesia has made a formal request to National Aluminium Company (Nalco) to takeover a smelter in that country. The request was forwarded to the state-owned aluminium company through the Indian embassy in Indonesia.

"We have received a request from the Indonesian government to takeover and run a smelter in that country. It seems to be an interesting proposal. We are trying to find out more details on this, including the size of the unit," CR Pradhan, chairman and managing director (in-charge) of Nalco told ET.

The request has taken the blue chip aluminium major by surprise. The smelter unit is apparently located close to Kalimantan, home to one of the largest reserves of coal in Asia. This is expected to assure a constant supply of coal to the smelter.

Indonesia does not have adequate supplies of alumina to produce aluminium. This could be the reason behind the Indonesian government’s decision to relinquish ownership of the unit.

Nalco, on the other hand, is one of the largest exporters of alumina globally. It exports 1m tonne (mt) annually. After completion of its ongoing Rs 4,100-crore expansion programme by ’08-09, the company would have surplus alumina. Post-expansion, Nalco capacity is expected to touch 2.1 mt from the current 1.5 mt.

A team of senior Nalco officials are thus planning to visit Indonesia to ascertain full details of the unit. However, the department of mines has cautioned the public sector company that it needs to carefully consider the project before arriving at a final decision. The government’s view springs from the fact that there are a few Indian business ventures operating in Indonesia.

The government, however, has been encouraging Nalco to establish a presence abroad in order to convert its surplus alumina into aluminium. Following this, Nalco had shortlisted Qatar, Oman and Bahrain to set up a greenfield 4 lakh-tonne (ltpa) smelter at an estimated cost of Rs 15,000 crore.

Since countries in the Gulf region provide access to cheap electricity, which makes up 60% of the cost of smelting, the region offers an attractive choice for locating a smelter. Nalco has also engaged Engineers India as consultants.

In what amounts to a reversal of Nalco’s present export strategy, the department of mines has been urging the company to set a target of converting 80% of its surplus alumina into aluminium. The remaining 20% could be sold in the international market.

Erratic Power Supply: What Has Valco Got to Do With It?

Ghanaian Chronicle (Accra) March 9, 2006

EDITORIAL

Last Monday, March 6 2006, as the nation marked its 49th independence anniversary, it once more was time to take stock of our nation, counting our achievements, underlining the high and low points, and becoming more hopeful of a new year, especially it is our golden jubilee.

As for the low points in our history, the numerous military adventures and the marks they left on us never escape anybody. But even then there still are some who count some of those times as scoring some of the highest points in our national development, except for the high level of human rights abuses.

Every time that the achievements of this nation, since independence, come to be counted, one project that never escapes enumerators is the Akosombo Dam project, which has been the country's main source of electricity supply.

From the conception of the project, it became clear that there was the need for a guaranteed consumer and purchaser of the power to be produced; hence a long-term agreement with Volta Aluminium Company Limited (VALCO) to purchase power.

As the level of the Volta Lake dipped, at a time when national demand for power soared, the need to explore alternative ways of generating power and also take a critical look at the VALCO agreement became clear.

It was not surprising therefore that the state reviewed the amount of power allocated to VALCO, and also renegotiated for a review of the tariffs it paid for it.

VALCO has restarted operations, after its shut down and its principal shareholders withdrew from it and the Government of Ghana acquired its shares.

The terms of the current VALCO deal, regarding the level of power supply and tariff payments are still very uncertain.

With processes aimed at expanding the sources of the nation's power supply still afoot, questions agitating the minds of Ghanaians now include whether the current erratic power supply to Accra and other parts of the country has anything to do with the recommencement of VALCO operations.

Even though there have been attempts to explain the current provocative interruptions in electricity supply to consumers, the problem seem not to subside but rather goes from bad to worse.

The question therefore that needs to be answered is: what has the resumption of VALCO got to do with current rather high levels of interruptions in power supply?

South Africa still 'economy of choice' for energy-heavy mineral investments

Mining Weekly, South Africa March 9, 2006

South Africa remains an ‘economy of choice’ for energy-intensive minerals and metals investments, Public Enter-prises Minister Alec Erwin insists.

Responding to concerns that South Africa would no longer be in a position to provide the necessary electricity guarantees for large-scale metals-processing projects, particularly new East Coast aluminium smelter projects, Erwin said that South Africa was, in fact, one of a handful of countries that could still even contemplate such investments.

"With regard to particular companies wanting to expand, there are no problems in that. Let me also say that I don’t think there are many countries in the world that can even contemplate aluminium-smelter investments and, in many cases, countries say ‘no’ outright. So we are in a very fortunate position, because South Africa still remains an economy of choice for major energy users, and we do not envisage any difficulties in meeting those needs," Erwin said.

Responding directly to concerns raised by the world’s biggest mining company that prospects for expanding Hillside and Mozal might have been dampened by the current tightening of the electricity market, Erwin said: "I’m sure they don’t want to negotiate with Eskom in the media. But we would not enter any contractual negotiations if we were not confident that we could provide that electricity. In fact, the ability to provide the total system, including BHP Billiton, remains as good as it was. So we are not in a crisis posi-tion whatsoever with regard to BHP Billiton," Erwin averred.

Similarly, he added that government and Eskom would not have entered contractual negotiations with Alcan Aluminium if they felt it was unable to deliver. "Their requirements are around 2010, and we are quite confident that, not only can we meet that requirement, but that we can do it at the world’s most competitive price." Over the last decade and a half, Eskom and the government have successfully traded South Africa’s excess electricity capacity, which is now dwindling, to attract significant investments, most notably in aluminium and ferrochrome. In the case of aluminium, 30-year commodity-linked contracts were agreed to for the initial investments, which translated into, arguably, the best-priced power agreements anywhere in the world and underpinned the success of Hillside, in Kwazulu-Natal, and Mozal, in Maputo, Mozambique.

Government, however, had since prohibited Eskom from entering into new commodity-linked deals, given that they could cause ser-ious financial-statement volatility, with new accounting rules demanding that these so-called embedded derivatives be market-to-market yearly. It had since been decided that all large-scale energy users will get a one-size-fits-all volume-based incentive, which effecti- vely links the tariffs to the long-term costs of production of electricity – South Africa remains the lowest-cost producer of industrial power globally. This move was welcomed by critics of Eskom’s previous pricing policy, which they saw as an attempt to offset Eskom’s past inefficiencies in a way that could jeopardise future supply security as the demand-supply balance tightened, as it was currently doing.

Despite this tightening, Erwin was confident that South Africa was well positioned to meet the demands of the large minerals and metals investors. He said government and Eskom were in talks with BHP Billiton over expansions at Hillside and Mozal as well as regarding its energy requirements for the Corridor Sands heavy-minerals project in Mozambique. He also said that government and Eskom were "in the last stages of a very complex negotiation with Alcan".

"For any plant now wanting to scale up considerably, there will be a lead time, which we have factored into our planning processes," Erwin argued, adding that the Department of Minerals and Energy, the National Energy Regulator of South Africa and Eskom all had robust planning tools, which indicated that there was no security-of-supply crisis.

Nonetheless, he admitted that higher-than-anticipated demand growth had forced Eskom to recalibrate, accelerate and enlarge its current R84-billion investment programme, particularly with regard to the introduction of new base-load capacity.

"We planned off an excess-capacity base, and, as it became clear that this was being whittled away, we were forced to revise our view that the reserve levels would be reached in 2010. We will now reach that reserve position in 2008 or 2009 and have, therefore, begun fast-tracking the planning process, with Eskom working hard on its new generation plan." He also insisted that the system as a whole was not running out of electricity and that there was no planning problem at Eskom. "The areas of difficulty that we could experi- ence, depending on the severity of the winter, will be those during certain peak times and we will need to bring in the normal precautions." Eskom chairperson Valli Moosa echoed Erwin’s sentiments, describing as "spectacular" Eskom’s base-load investment plans, which he said would be made public soon.

"The base of our response revolves around the expansion of new generation capacity and the strengthening of the grid, and, in the course of this year, new announcements will be made. But I can say now that there will be announcements on major new spending, both on generation and on transmission, particularly a spectacular programme on base-load generation capacity, because that is what the country will need, especially with Asgisa," Moosa said, referring to government’s Accelerated and Shared Growth Initiative.

Alumina prices expected to come down

Metals Place, UK (Source: Purchasing) 09-Mar-2006

The world spot price for alumina, the key ingredient smelted into aluminium, is $650/metric ton these days because of tight supply. However, research analyst Daniel Roling at Merrill Lynch sees transaction prices beginning a decline next year – and expects spot prices will get closer in 2007 to the current contract price of $350.

Spot prices for alumina have moved steadily higher since the July 1999 explosion at a Gramercy refinery in Louisiana that took 1.2 million metric tons off the market. Within six months, spot prices of alumina more than doubled, to more than $400/ton, and have stayed on an upward path ever since.

With aluminium demand strong this year and new alumina capacity still only in the planning stages, 2006 looks set to remain a deficit year. "It's still a very, very tight market," says Macquarie Bank's Adam Rowley, pointing to 2005 deficit of 1 million tons.

"Producers have been operating at 100% capacity for several years and now, in some cases, they're struggling to maintain that, which is adding to the tightness."

However, Roling points out that top aluminium producers already have started expanding bauxite ore production capacity and now are building new alumina refineries.

Alcoa's chairman, Alain Belda, notes that consumption of aluminium is expected to grow three times faster between now and 2020 than in the last 20 years.

"We are in an unparalleled position to take advantage of this historic opportunity by expanding existing alumina operations through low-cost brownfield projects," Belda says.

Alcoa alone expects to boost annual alumina refining capacity by 40% to 20 million metric tons.

Corus puts 'for sale' sign on aluminium arm

The Observer, UK Sunday March 12, 2006

Oliver Morgan, industrial editor

Anglo-Dutch steelmaker Corus is expected to tell the City this week that it is looking to sell its aluminium business this year in a deal that could fetch £400m.

The move would be a coup for chief executive Philippe Varin after a previous attempt to sell it to Pechiney of France was foiled by opposition from Corus's Dutch directors in 2003.

It comes as speculation about the group's future intensifies amid rumours that Russian and American companies are eyeing it as a bid target. Analysts have pointed to Russian groups including NLMK, Severstahl and Evraz and America's US Steel as possible buyers. ThyssenKrupp of Germany has recently denied it is in talks to buy the group, but it is keeping a watching brief.

Corus is seen as a prime bid target as the global steel industry embarks on a round of consolidation, triggered by Indian tycoon Lakshmi Mittal's £12.6bn bid for European number one Arcelor, led by chief executive Guy Dollé. Mittal produces some 60 million tones of steel a year, while Arcelor makes 55 million, giving the combined business a total output of 115 million tonnes a year. Corus is currently the world's eighth-largest producer, turning out 19 million tonnes a year, and is seen as 'sub scale' in the carbon steel market.

Any merger or takeover deal would be eased by a successful sale of the aluminium arm, as it would demonstrate that the dysfunctional relationship between the UK and Dutch directors which led to the previous attempt being blocked in 2003 has been resolved.

Key members of the Dutch board, including its former chairman Leo Berndsen, who led the opposition to the Pechiney sale, have left the company, giving Varin greater control over corporate strategy.

Varin is keen to finalise a sale, as it would reduce debt and demonstrate to investors and potential bidders that board conflicts are a thing of the past. Potential bidders include Russians Sual and Roussal, led by oligarch Oleg Deripaska, who recently built up then sold down a stake in Corus. Others include Alcoa of the US and Novelis, the downstream business spun off from Canadian Alcan in 2005.

Varin himself has a strong incentive to sell Corus at a premium to its current 74p share price. He holds some 1.1 million Corus shares and is due to receive another tranche of 1.1 million in May.

Analysts and those close to the company believe that Corus could be taken over this year. One said: 'Will Corus be independent by 2007? All bets are off.'

Varin will unveil Corus's results for 2005 on Thursday. Analysts expect a £1bn profit on revenues of £10.2bn. However, most attention will be focused on Varin's view of prospects for the market. Expectations are for a depressed first quarter then recovery in prices through the rest of the year.

Corus declined to comment on its plans for a sale of its aluminium division.

Alcoa applies for aluminum smelter environ clearance - Trinidad & Tobago

BNamericas, Chile Monday, March 13, 2006 16:49 (GMT -0400)

Pittsburgh-based aluminum company Alcoa (NYSE: AA) has applied to the Environmental Management Authority (EMA) of Trinidad & Tobago's government for a certificate of environmental clearance for a proposed aluminum smelter in the Caribbean country.

The smelter would be located in southwest Trinidad's Cap-de-Ville area. "Lodgment of the application will result in development by the EMA of terms of reference for completion of a comprehensive environmental impact assessment (EIA) for the proposed facility," Alcoa said in a statement.

The 341,000t/y smelter and related facilities, including an anode plant and cast house, will require investment of roughly US$1.5bn. The plan is to produce 240,000t/y of billet and forging stock, and the project includes possible downstream facilities.

The complex is expected to take two years to build, with first metal production would be expected in late 2008.

Alcoa, the world's largest aluminum producer, said it would hold a 100% interest in the smelter, while the government would remain an active partner in the provision or facilitation of infrastructure.

BNamericas.com

New Alcan CEO Evans to Focus on Profit, Not M&A

Resource Investor, VA 13 Mar 2006 at 06:43 PM EST

By Allan Swift

MONTREAL (CP) -- Dick Evans, now the CEO of aluminum giant Alcan Inc. [TSX:AL; NYSE:AL], said Monday his focus will be on profit in 2006 and not the mergers, acquisitions and divestitures that characterized the tenure of his two predecessors.

Evans said in an interview the industry's fundamentals are at their best position in 10 years, and he expects the company's performance as well as its share price to improve this year despite a large loss Alcan declared in its fourth quarter.

Evans also said he believes the long-contemplated expansion of its smelter in Kitimat, B.C., will go forward, within a year or two.

Alcan acquired Algroup of Switzerland in 2000, Pechiney of France in 2004 and spun off its rolled products business into Novelis a year ago.

Evans, who has been at Alcan for nine years, was closely involved in the integrations and the sale of Novelis, and said the company has all but completed the integration and adaptations. They involved reducing the packaging operations to 150 facilities from 180 in the last 12 months.

''We're in a position now where we can focus more clearly on the bottom line; and I think we need to do that before we consider another major transaction,'' said the 58-year-old Evans, who's from the United States.

''Now having completed integrating Pechiney and getting the results, we have high expectations on the part of our shareholders and ourselves and there's a great deal of focus now on delivering on those expectations.''

After a long dry period, Alcan shares have had what an analyst calls ''a good run'' in the past six months, The shares were off 25 cents Monday, at C$49.43 on the Toronto Stock Exchange, compared with a low of C$34.86 during the past year.

Analyst Ian Howat of National Bank financial has a target on the stock of C$58.50.

The industry as a whole has strengthened with high prices and lower capacity. Evans said this is due to a slowdown in the growth of new capacity in China, and the closure of inefficient smelters in Europe, including two of Alcan's.

''The fundamentals right now are probably the best they've been 10 years,'' the CEO said.

As for Kitimat, Evans said it is ''highly probably'' Alcan will proceed with a modernization of that aging facility, after recent court cases appear to give Alcan clear title to its own power production there.

In addition to energy, the other outstanding issue is high construction costs at the remote site.

He said Alcan can use the experience gained at a smelter construction at Gove, Australia, where huge components were built in low-cost Malaysia and Thailand and shipped in.

''Certain aspects of pre-fabrication I think could be applied to Kitimat as well.''

The company announced on Monday a new management structure to coincide with Evans' arrival, including a 10-member executive committee, while his former position of chief operating officer has been eliminated.

The presidents of Alcan's four business groups - bauxite and alumina, primary metals, packaging and engineered products - will report directly to Evans.

Alcan has 65,000 employees and revenues of $20.3 billion in 2005.

Raised on a cattle ranch in Oregon, Evans spent 27 years at Kaiser Aluminum & Chemical Corp. before joining Alcan.

Alcan recently reported a loss of $361 million in the fourth quarter, mainly due to charges and writedowns.

© The Canadian Press 2006

SUAL Cools on South Africa

The Moscow Times, RussiaTuesday, March 14, 2006. Issue 3370. Page 6.

CAPE TOWN, South Africa -- SUAL Group is no longer interested in building an aluminum smelter in South Africa, as it is not assured of securing a cheap, reliable power supply, Business Times reported on Sunday, citing chief executive Brian Gilbertson.

South Africa has run short of electricity over past months, after the economy expanded quicker than expected and a loose bolt damaged the nation's sole nuclear facility. (Bloomberg)

Safety issues in focus - Bahrain

Bahrain Tribune - 13/03/2006

Safety issues in the global aluminium industry were discussed as experts gathered in Bahrain for a key meeting hosted by Aluminium Bahrain (Alba).

Officials representing the safety committee of the London-based International Aluminium Association (IAI) spoke about advances made in the field and their own contribution to the developments in addition to work on benchmarking international standards.

"This was a major event in our business and gave us an opportunity to not only showcase ourselves but also our country," said the Alba safety, health and environment manager Hasan Al Aradie who co-chaired deliberations with Willy Bjerke from Finland's Aluminiumindustriens Miljosekretariat. He said it was an occasion to exchange ideas, look at systems followed worldwide and implement them wherever possible.

"The key to the success of such operations all over the world is the companies' ability to look at the success of others and take advantage of their experiences." He said the meeting was a great success and as important for Bahrain as it was for visitors.

Bjerke said the meeting was an occasion to "walk along and share" the expertise of the best and biggest of the world's aluminium producers. "Alba, being one of the leading and most modern smelters in the world, was an appropriate choice to host the meeting. I am sure all delegates have come out the wiser after looking at each other's operations, particularly with regard to improving safety standards."

IAI is the global forum of aluminium producers dedicated to the development and wider use of aluminium as a competitive and uniquely valuable material.

IAI, in all its activities, supports the concept that aluminium is a material that lends itself to improving world living standards and developing a better and sustainable world environment. The association currently has 23 member companies with operations in 24 countries. At present, the membership is responsible for around three-fifths of world primary aluminium production.

Dolgarrog Aluminium on a Roll with David Brown Engineering

Process & Control Today, UK 13/03/2006

David Brown Engineering has brought its vast range of experience of drop-in solutions to bear in a cold mill upgrade which is an essential part of Dolgarrog Aluminium's multi-million pound investment programme. Dolgarrog Aluminium's business plan has delivered an evolution of the product mix requiring the rolling of harder and more demanding heat-treatable aluminium alloys for the aerospace industry. As a result David Brown is engineering a solution with new gearboxes designed to deliver increased power and torque yet occupy the same footprint as the existing gearboxes whilst minimising the installation downtime.

Installed in 1965, the original cold mill was designed for soft alloy production and an assessment performed in 2003 identified the potential increase in delivered mill power of 127%, from 660kW to 1500kW. This meant upgrading the gearboxes on all three primary drives: the un-coiler, mill stand and re-coiler. Three new David Brown units have been designed for mounting in the precise configuration of the original gearboxes, but incorporate technology that ensures they require less maintenance and are easier to maintain for whole life cost benefits.

Modelling predicts that the upgrade will result in a 20% increase in productivity and a 10% improvement in material yield. In addition the simultaneous installation of a modern AC drive, automatic gauge and flatness control combined with an improved roll coolant system will allow the mill to produce world quality strip rolled products.

Yet the upgrade not only addresses plant capability and product quality - another of the primary objectives was to build business sustainability by addressing the issue of key plant reliability. The existing gearboxes were estimated to be close to the exponential portion of the failure probability curve having completed some 1.6 x 1010 stress reversals after forty years of service. The new gearboxes are now in an advanced state of manufacture with the expectation that all will be delivered ahead of schedule for installation during the Christmas period 2005.

Commenting on the project, Hywel Thomas, Engineering Director at Dolgarrog Aluminium Limited said, "Following the impressive retrofit on the hot rolling mill back in 1999, I was pleased last year when David Brown won the new contract for the cold mill refit. The new boxes were successfully commissioned in our New Year shut-down period and now supply twice as much power from the same footprint as the original gearboxes. Using the same mountings meant it was a tight squeeze, but the new upgrade is proving to be a great success."

David Brown has a reputation for commitment as well as engineering expertise, regularly undertaking projects that involve 24/7 working to ensure that it can closely match the demanding and tight time schedules required by today's heavy process industries as they strive to minimise disruption and maximise production output. Many projects are undertaken with this in mind and this close understanding of customer needs enables David Brown to respond, even restoring plants to full working order after catastrophic failure, minimising downtime and consequential losses.

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Let's settle the bauxite wage talks

Jamaica Gleaner, Jamaica Tuesday | March 14, 2006

THE RAMBUNCTIOUS APPROACH to wage talks now taking place at Windalco, and the threat of industrial action issued and withdrawn at Jamalco last week, continue to keep the bauxite sector on edge as we consider the implications for the stability of an industry that is being sorely tested by the posturing and showmanship exhibited during the negotiations.

Since last year we have been unwilling spectators to a series of stop and start exchanges at all four local bauxite/alumina companies that play havoc with the complex technical processes and extended periods required for the shutdown and restart of their operations.

The roller coaster ride now being afforded to the companies in the name of wage negotiations is casting ominous shadows over the path forward for the future management and conduct of good and effective labour relations in the industry.

We find it difficult to understand how, with the precedent set by recent agreements with other companies for settling on a wage formula, the process could be so derailed at Windalco by what appears to be a bullish approach by the union that has swept the real issues off the table.

It is obvious that unless civility can be restored and any form of intimidation by the union be recessed, the meetings called for this week between the parties are likely to flounder, and the bargaining process towards a satisfactory settlement for the workers, further delayed. This must not be allowed to happen. Today's meeting must end with a clear direction on the way forward. This is too important a sector for labour issues to be left lingering.

It appears to us that the National Workers Union (NWU) has missed the quintessence of the naming of the Trade Union Institute in honour of the late Hugh Lawson Shearer. Mr. Shearer's legendary success as a negotiator was attributed to the mutual respect he shared with employers as much as his fearless and bold representation of workers, and the sophistication with which he conducted trade union business.

The shivers now running through the sector at the unnerving prospect of an industry deadlock are being felt not only locally, but also in alumina and investment circles all over the world.

We sincerely hope that the intervention of the Prime Minister-designate will bring reason to the table, and that a refreshing accord, built on mutual respect and one that is soundly aware of the importance and value of this industry to Jamaica, will be reached.

With the reluctance shown so far by the Minister of Labour to take corrective action, Mrs. Portia Simpson Miller will no doubt be moving to centre stage fully cognisant of similar roles played by her Prime Ministerial predecessors with their intimate knowledge of labour relations mores and practices.

The NWU's testy Vice-President Norman DaCosta may want to revisit the Hugh Lawson Trade Union Institute and remind himself of those basic principles.

THE OPINIONS ON THIS PAGE, EXCEPT FOR THE ABOVE, DO NOT NECESSARILY REFLECT THE VIEWS OF THE GLEANER.

Chalco, Seeking A$2.9 Bln Australian Mine, May Build Smelter

March 14 (Bloomberg)

Aluminum Corp. of China Ltd. may add an aluminum smelter to the A$2.9 billion ($2.1 billion) Australian bauxite and refinery project it proposes building should plans to supply cheaper power to Queensland state succeed.

``We are discussing the possibility of building an aluminum smelter with the government,'' Xiao Yaqing, chairman of Aluminum Corp., known as Chalco, said in an interview in Hong Kong today. ``The Australian government is working to obtain natural gas from Papua New Guinea by building a pipeline, and if we can get cheaper power there, we are interested to invest more.''

Chalco, the world's second-biggest alumina producer, plans to submit a final bid to the Queensland government by May to develop the Aurukun bauxite deposit in what would be China's largest single investment in Australia. Power accounts for between 30 percent and 40 percent of an aluminum smelter's costs, and higher electricity prices have cut profits at producers of the metal worldwide.

Alcan Inc. and Alcoa Inc. the world's two largest aluminum producers, have shut or plan to close smelters in Europe and the U.S. because of high electricity prices. Cheaper power will help Chalco's plans to develop Aurukun, which has deposits of 650 million metric tons, double the Chinese company's current reserves and enough to produce aluminum for 2.5 million Boeing Co. 747-400 aircraft.

Exxon Mobil Corp. and its partners propose building a 3,000- kilometer (1,864-mile) pipeline to bring gas from Papua New Guinea to eastern Australia. Exxon has been signing up customers including Comalco, Rio Tinto Group's alumina unit, to buy the gas. The pipeline may be expanded because of increased demand.

Controlling Stake

Beijing-based Chalco will use its own cash resources and seek bank loans to finance the project, Xiao said today. The company may also invite other Chinese companies to participate in the development, he said.

``The quality of the bauxite reserves is better than we have in China,'' Xiao said. ``We welcome other Chinese companies to participate in this project, but we must have a controlling stake.''

Chalco was one of 10 companies on an initial short-list to build the mine drawn up by the Queensland government last year. Alcoa, Alcan Inc. and Cia. Vale do Rio Doce said they pulled out of the bidding last month. BHP Billiton, Mitsubishi Corp. and Hindalco Industries Ltd. were among the other companies that expressed interest.

Queensland may provide infrastructure worth as much as A$300 million for the project. Chalco may mine 7.5 million tons of bauxite a year to produce 2.1 million tons of alumina, a white powder used to produce aluminum, annually, the state government said on March 2.

Brazil

Chinese companies including Chalco and Cnooc Ltd are scouring the world for raw materials because supplies aren't enough for booming demand for cars, homes and appliances in the world's fastest-growing major economy. China may invest as much as A$10 billion in Australia, which ranks among the world's top five producers of alumina, coal, bauxite and iron ore.

Chalco also plans to build a $1 billion alumina refinery with Vale in Brazil and has been studying the project with Rio de Janeiro-based Vale, the world's largest iron ore miner since 2004.

``We have reached consensus on pre-construction issues and finished feasibility studies,'' said Xiao. ``We are making final preparations for the start-up of construction and we aim to start building before the second-quarter this year,'' he said. The plant will take 3 years to build, and will have alumina capacity of 1.8 million tons in its first phase, according to Xiao.

Rising Chinese demand has led to a 53 percent rise in the price of alumina, a white powder used to make aluminum, in the past 12 months. Australia has 22 percent of the world's proven reserves of bauxite, which is refined to make alumina, while China has only 2 percent.

To contact the reporter on this story:

Xiao Yu in Beijing at yxiao@bloomberg.net

Jamaica Bauxite Institute Playing Critical Role

Government of Jamaica, Jamaica Information Service, Jamaica Tuesday, March 14, 2006

BY: IAN BOYNE

In 1953, one year after bauxite mining began in Jamaica, the Government could not convince the companies to increase the royalty from the paltry one shilling to two shillings per long dry ton of bauxite.

Robert Newton, the Government's Financial Secretary wrote in frustration at the time: "Facts mean money. At present only the bauxite companies know the facts and, therefore, we should hesitate before reaching any agreement with them until we are well-equipped to bargain as they are".

It was another way of saying, "information is power". When the 1956/57 bauxite negotiations came around, the Government was a little more equipped because it had contracted the services of an international consultant in the industry, Samuel Moment. The royalty moved to US$2.24 per ton and in 1966 reached only US$3.08. But afterwards, it declined right up to 1973.

Up to the conclusion of the pivotal 1974 negotiations, which led to the imposition of the controversial Bauxite Production Levy, Jamaica never received more than US$20 - combining royalty, taxes, local wages and purchases - for the 4.3 long tons of ore required to produce one short ton of aluminum ingot.

Yet by 1957 Jamaica was the largest bauxite producer in the world, accounting for 23 per cent of world output. It was a position Jamaica held until 1971 when it was overtaken by Australia.

Jamaica also became the world's fourth largest alumina producer, yet because the island did not develop its own expertise on the industry and did not have an institution looking after its vital interest, it failed to reap the commensurate benefits for the Jamaican people before the imposition of the levy and the crucial decision to establish a bauxite institute, which would be the repository of knowledge and expertise on the industry and which would advise the Government in its negotiations with and monitoring of the industry.

Before this, Jamaica was at the mercy of the bauxite companies and what they decided to disclose. What Jamaica was gaining directly from the bauxite industry was the meager royalty and tax on company profits.

But, as the late Hu Gentles explained in an article in the JBI Journal of November 1980, "since they (the bauxite companies) were not trading in bauxite and alumina, but transferring the products from Jamaica in its vertically integrated aluminum companies, the income of the wholly-owned local companies was whatever their parents chose to state as their margin over expenses. To overcome this difficulty, 'notional' values were put on the transferred commodities for Jamaican tax purposes. These notional values were largely determined by the companies themselves".

So, despite rising production of bauxite over the period 1970-1973, total receipts by the country actually declined. In 1972 the Government established a National Bauxite Commission consisting of specialists in tax, law, business, finance, diplomacy and earth sciences. The objective of the commission was to advise the Government on how best to increase the benefits of the industry to the country.

But Gentles put his finger on the problem the Government faced then: "It was quickly apparent that the data base for arriving at sound recommendations was inadequate. If the Government were to bargain with the aluminum companies with anything approaching comparable strength, it needed information of a kind and quantity it was never previously concerned with.

And it needed that sort of information continuously."

It became clear, therefore, that the country needed an institution with the technical expertise to guide the Government on the development of the industry in the national interest. Thus was born the Jamaica Bauxite Institute (JBI), which began its operations 1976. This year the JBI proudly celebrates 30 years of incalculable and invaluable service to the Jamaican people.

"When we began our work at the Bauxite Institute we had no idea what our bauxite reserves were. We previously had to rely on the estimates that the companies themselves gave us," informs Dr. Carlton Davis, the first Executive Director of the JBI and its current Chairman.

Indeed, after the research was done it was discovered that the facts about Jamaica's reserves were the very opposite of what the country was told. The island had 80 per cent commercial deposits of bauxite and 20 per cent non-commercial deposits, contrary to what the companies suggested.

Erwin Angus, who wrote the original paper setting out the case for a bauxite institute, says the existing bauxite companies would tell Government negotiators that much of the bauxite reserves were not really of high quality, that there were large deposits of bauxite in competitor countries and that substitutes to bauxite were being developed.

Mr. Angus chuckles as he recalls how the companies tried to exploit the country's ignorance of the industry, simply because the country had no institutional expertise or capacity to verify their claims.

"You see why a Jamaica Bauxite Institute was and is critical though," he asks rhetorically in an interview with JIS News, pointing out that "when we began to develop our own expertise, we could then go to the negotiating table armed with information and, therefore, able to extract the concessions we wanted".

The JBI was able to advise the Government on pricing, international bauxite trends, and bauxite reserves. "Before, we were isolated from what was happening in other countries and had no idea of reference pricing. They could tell us anything about the quality of our bauxite grade and we had no way to testing that. Now all that changed with the establishment of the Jamaica Bauxite Institute," says Mr. Angus, former Permanent Secretary in the Ministry of Mining and Natural Resources.

The man who played a pivotal role in the establishment of the JBI was distinguished Jamaican attorney-at-law, Pat Rousseau, a member of the legendary and brilliant bauxite negotiating team, whose work saw the country increasing its take from a ton of bauxite from US$2.01 per ton in 1973 to $12.21 one year later. It was Mr. Rousseau who pressed then Prime Minister, Michael Manley, to establish the JBI amidst considerable resistance from the civil service.

Mr. Rousseau says that before the establishment of the JBI, the bauxite portfolio was being handled by 12 departments and seven Ministries. "My idea was that there should be a one-stop shop where you had the expertise, the information etc., so you could negotiate efficiently," Mr. Rousseau tells JIS News. He points out that the establishment of the JBI also benefited the bauxite companies themselves, as they formerly had problems getting certain information scattered throughout the Government bureaucracy.

"Now they could sit with one team of persons who did not have to delay the negotiations while they checked with 12 departments and seven Ministries," Mr. Rousseau emphasizes. He goes on to stress that when the Government was going up against "well-appointed, well-funded and internationally-savvy negotiators" from the bauxite companies, if they did not have a permanent institution, which would be a source of knowledge, the country would be at a disadvantage.

He has high praise for persons such as the JBI Chairman and General Manager, Parris Lyew-Ayee, both of whom have been there from the beginning. Mr. Rousseau says both have made an enormous contribution to national development through their work at the institute. "They, along with the high-level team whom they lead at the JBI, have been invaluable to this country," he tells JIS News.

Mr. Rousseau says that he would later be "seated on the other side" as part of the negotiating team for Glencore and Alpart, "and I can attest to the high level of expertise and skills which exist at the JBI. I was very impressed. And the international negotiators were very impressed with the professionalism of the JBI team, too".

Former JBI Chairman and later Minister responsible for the JBI, Hugh Hart, another highly reputable lawyer, also attests to the high calibre of the expertise which exists at the JBI and the level of respect the professionals there command internationally. "These people are highly rated internationally. I can tell you that," he says in an interview.

With reference to JBI Chairman, Dr. Carlton Davis, the former Minister under the Edward Seaga Government says, "there is absolutely nobody in the world who knows as much about the bauxite industry as Carlton Davis. Jamaica does not understand what they have in Carlton Davis. He is in a class by himself. He's absolutely fantastic".

He also has high praise for Mr. Lyew-Ayee. "Parris also is an absolutely superb individual, a first-rate professional. Parris could be getting three times what he is getting from JBI, but he is totally committed to serving the public sector," Mr. Hart says.

He points out that the JBI is very confidential and that, "this is very important to the industry and a part of the reason why they are so respected".

Mr. Angus tells JIS News that if it were not for the existence of the JBI, Jamaica would be in a crisis when the bauxite sector went into recession in the 1980s and when several companies pulled out of Jamaica.

It was because of the expertise of the JBI why the Government could assume control of the companies and rebuild the industry to the point where the sector is now the second largest foreign exchange earner. Bauxite earnings have accelerated from US$300 million in 1978 to over US$900 million last year, with earnings projected to reach US$1 billion this year. Last year the country recorded its highest level of production since 1974.

"If we did not have the expertise and did not hone our skills in the industry we would not be having the kind of expansion we are having now," Dr. Davis tells JIS News.

Mr. Angus expresses the view that a company like Alcoa would not have come back to Jamaica, had the Government not been able to carry on the operations at Halse Hall. Alcoa has since announced the largest single investment in Jamaica's history, a US$1.3 billion plant expansion.

"Here at the JBI we have been fortunate to have a group of highly competent, highly committed professionals who are determined to serve their country to the very best of their ability," says Mr. Lyew-Ayee.

He notes that the company has, in the past, attracted such persons as the current Prime Minister of Barbados, Hon. Owen Arthur; Dr. Clement Jackson, former Director General of the National Planning Agency (now Planning Institute of Jamaica), the current head of the PIOJ, Dr. Wesley Hughes, as well as well-known consultant, Dr. Conrad Douglas.

Mr. Lyew-Ayee points out that the JBI's research station at its head office does bauxite testing for not only local bauxite companies and companies developing products for the bauxite/alumina industry, but for other bauxite-producing states. Countries like Ghana look to the JBI for guidance as to how to further develop their bauxite industry.

Among the main responsibilities of the JBI are the protection and monitoring of the country's bauxite reserves; the management of bauxite lands, including mined-out lands; research on the use of reclaimed bauxite lands; and the development of commercial, infrastructural and community projects involving the use of these lands.

The institute also monitors the environmental management of the industry and works closely with the companies to ensure that environmental best practice is maintained. In short, everything which impacts on the bauxite/alumina industry and which has implications for Jamaica's bauxite development falls under the purview of this most critical institution.

The economic literature has been stressing over the last few years the importance of institutions to national development, and the JBI is a primary example of the difference highly-efficient, professionally-run and technically competent institutions can make to a county's economic and social development.

2nd UPDATE: Chalco Eyes 2006 Capex Of Up To CNY10 Bln

Yahoo! News Tuesday March 14, 7:33 PM

(Updates with capital expenditure plans, product price expectations and closing share price)

By Joyce Li Of DOW JONES NEWSWIRES

HONG KONG (Dow Jones)--Aluminum Corp. of China Ltd. (ACH) is planning another huge capital outlay this year as it seeks to meet more of China's strong demand for alumina and aluminum.

The company, better known as Chalco, intends to spend up to CNY10 billion in 2006, after its capital expenditure last year totaled CNY8.42 billion.

Chief Executive Xiao Yaqing said Chalco's capital expenditure this year would be focused on raising the company's alumina production capacity and ramping up its merger and acquisition activity in the aluminum sector.

"Our capex for this year will be within CNY10 billion," Xiao said at a news conference. "We're in talks to buy more aluminum smelters, but the speed and number of acquisitions won't be as fast as that in the second half of last year."

As well as being China's sole producer of alumina, Chalco is China's largest manufacturer of aluminum by output. Alumina is the raw material used in the production of aluminum, a metal commonly used to make car bodies and window frames.

Analysts said Chalco, 8% owned by Alcoa Inc. (AA) of the U.S., may be seeking to mitigate the adverse impact of an expected peak in alumina prices in the second quarter by expanding its aluminum operations this year.

Xiao said that as well as seeking to boost its alumina production capacity to 12 million tons within three years, after a 29% increase in 2005 to 8.33 million tons, Chalco will boost its aluminum capacity to about 3 million metric tons in 2006 from 1.5 million tons last year.

Among its plans, Chalco aims to push ahead with the construction of two alumina plants in Chongqing in China's south-west, and Zunyi city in Guizhou province. It is also considering expanding its semi-finished aluminum production by buying some assets from its parent company, state-owned Chinalco, in the future.

Overseas, the company became the only candidate this month for the Aurukun alumina concession in Australia's Queensland state after submitting an A$2.92 billion provisional bid, and it signed a memorandum of understanding with Vietnam Charcoal Group in December to develop a bauxite mine in Vietnam.

It is also reviewing the feasibility of setting up a new alumina refinery in Brazil. The study could be completed early this year with the refinery starting operations in early 2009, the company said.

Chalco is also studying a three-year exploration plan of resources in Africa's New Guinea, Xiao said, without elaborating.

"For overseas projects, we're still at preliminary stages and we don't have the exact investment terms for these two years," he said.

Chalco, which issued CNY2 billion worth of bonds in May last year, said in a separate statement Tuesday it may issue up to CNY3 billion worth of short-term corporate bonds in China before the company's annual general meeting May 10.

At the meeting, Chalco will also seek shareholders' approval for another possible short-term corporate bond issue of up to CNY5 billion between this year's AGM and next year's AGM.

It will use the proceeds to repay debt and as working capital, including buying raw materials and importing alumina, the company said.

The bonds will be issued only to institutional investors in China's banking industry.

Share Price Down After Earnings

Chalco's Hong Kong-listed shares dropped 4.3% Tuesday to HK$7.85, having surged 80% during the past six months, after the company's 2005 earnings fell short of market expectations due to higher costs offsetting a stronger alumina price.

Chalco said Monday its net profit last year was CNY7.02 billion, up 9.9% from CNY6.39 billion in the previous year, but less than the average estimate of CNY7.3 billion in a Thomson Financial survey of 19 analysts.

The company's sales costs last year rose 15.4% to CNY24.82 billion, from CNY21.5 billion, due to higher raw material prices.

"The magnitude of the cost increase was quite large, affecting profit margins," Xiao said, adding cost increases this year wouldn't be as high due to better controls.

Xiao said he expects alumina prices to stay relatively high in 2006. Chalco's average selling price in 2005 was CNY3,268.32 a ton, up from CNY3,229.66 a ton in the previous year.

China's demand for alumina in 2005 rose 18.7% to 16.62 million tons, but local supply was only 8.51 million tons. The shortfall was filled by imports.

China also consumed 7.07 million tons of aluminum in 2005, 18% more than in the previous year, compared with a global increase in consumption of 5.9%.

The country's demand for aluminum this year is expected to rise to 8.2 million tons with prices seen between CNY18,000 and CNY22,000 a ton, Xiao said.

Don't Buy The Chinese ETF Hype [Adviser Soapbox]

Forbes 03.14.06, 6:00 AM ET

John Christy, Forbes International Investment Report

part of report omitted..... For the full report go to: http://www.forbes.com/newsletter/2006/03/13/china-fxi-christy-in_jc_0314soapbox_inl.html

If it's commodity exposure you seek, have a look at world-class miners such as BHP Billiton (nyse: BBL - news - people ) and Rio Tinto (nyse: RTP - news - people ), both of which are in my model portfolios. These companies are profiting from China's insatiable appetite for metals and minerals, but they are also globally diversified, so China isn't their only source of growth.

Bottom line: If you want to make money in China, you need to focus on the country's future. State-owned banks are not businesses of the future. Commodity producers may benefit from Chinese demand, but you can find great oil, aluminum and coal companies all over the world. The real story of China's market is about the emergence of the consumer class and the new entrepreneurs serving them. It's about capitalism taking root in a communist land.

SA denies energy problems to hit growth

Engineering News (press release), South Africa March 14, 2006

South Africa's government denied on Tuesday that it was facing a national energy crisis and refuted reports that recent power outages will harm investment and cut economic growth.

"There is not a national energy crisis, there is a tight reserve margin which we are addressing," Public Enterprises Minister Alec Erwin told legislators.

The country's main tourist city Cape Town has suffered weeks of debilitating blackouts following problems at nearby nuclear plant Koeberg, causing traffic chaos and forcing businesses to close doors. Industrial hub Johannesburg has also experienced intermittent power cuts.

The business community has estimated the blackouts have cost the economy hundreds of millions of rands and could jeopardise the government's goal of lifting annual growth to at least 6% by 2010.

The economy expanded by 4,9% in 2005 -- its highest level in more than two decades -- but higher growth is needed to cut widespread poverty and high unemployment of over 26%.

Analysts say the outages highlight the strain on the national grid as strong economic growth pushes peak demand to the current 37 000 MW capacity, prompting a scramble for new energy sources.

Erwin told parliament's energy and public enterprises committees government's plans to meet future demand would help accelerate economic growth and would be positive for investment.

Electricity utility Eskom would spend R84-billion over the next five years on maintenance, upgrading old plants and building new capacity, and an estimated $25-billion between 2010 and 2024 to almost double existing capacity.

"We contest very strongly, indeed, that this (situation) will curtail growth ... this build programme will have a massive positive impact on this economy and will sustain and drive the six percent growth rate," he said.

Erwin also refuted a Sunday newspaper report that Russian aluminium group, SUAL had shelved plans to build a smelter at Coega port on South Africa's southern coast because of concerns over power supply.

The company had not approached Eskom about needing electricity.

"We have told all parties, even though we haven't been approached by certain parties, that we will only negotiate one aluminium smelter at this point," he said.

South Africa has been in talks with Canada's Alcan for the past three years for the world's second biggest aluminium producer to set up a $2,5-billion, 660 000-ton smelter at Coega, near Port Elizabeth.

Alcan told Reuters in Montreal on Monday it was close to a decision on the investment.

"I think it's likely that within three to six months we could have all the key elements pulled together in the form of a term sheet, which would be the key financial elements," Alcan's new CEO Richard Evans said in an interview.

'Crown jewels' must be saved

ic NorthWales, UK Mar 14 2006

By David Greenwood, Daily Post

UNDER-threat Wylfa Nuclear Power Station and Anglesey Aluminium were last night hailed as the "crown jewels" of the island's economy by consultants brought in to spell out the impact of their feared closure.

The experts warned average wages on the island will drop by almost £1,000 a year if the two plants close.

More than 60 delegates, including Anglesey councillors and representatives from a host of business and environmental organisations, were told up to 1,500 jobs will be lost over three years from 2010.

And they were warned 10% of redundant workers will be forced to quit the island in a search for work.

They heard up to 30% could depend on Job Seekers Allowances for up to a year and 18% could still be claiming benefits after two years.

During an hour-long presentation at the Lastra Farm Hotel, near Amlwch, Peter Wood from consultants Tribal HCH said job losses would vary significantly across Anglesey.

Mr Wood said: "We are looking at the crown jewels of Anglesey."

He added: "For instance 2010 would see a significant rise in unemployment in Holyhead and the rest of west Anglesey west driven by 652 job losses at Anglesey Aluminium.

"North Anglesey would see a similarly large increase the following year because of redundancies at Wylfa," he added.

"The closures will reinforce already high unemployment rates in Holy-head and Amlwch and the losses are expected to double the number of areas on the island experiencing very high unemployment."

He said: "In addition to lost jobs and high unemployment, the closures are also likely to have a significant impact on average earnings.

"Wages and salaries earned by workers at Wylfa and Anglesey Aluminium are significantly higher than the Anglesey average.

"At Wylfa, they are £26,900 and at Anglesey Aluminium £32,700 - compared to the island average of just £19,700 which will fall to around £19,000."

He said the closures would see wages on the island drop by £41.5m.

Looking at economic strategy, he said: "In short we may be on a path of "managed decline" with the island set to lose ground.

"The economic effects are clear but a loss of economic vitality carries longer term, if less tangible threats, to quality of life on the island and to an important centre of Welsh language."

Yesterday's briefing was described as a "wake up" by Anglesey's council's deputy leader Gareth Winston Roberts.

And it sparked fresh calls for Wylfa to be given a lifespan extension and demands for a new nuclear power station on the island.

He said: "We have got to influence decisions at government level and not wait until they are made when it could be too late. It is a very serious situation."

Irish hit out over Dublin nuclear risk

COUNCILS on both sides of the Irish Sea have joined forces to oppose a new nuclear power station at Wylfa.

Local authorities in Ireland and Wales also vowed to petition any plans to extend the life of the current plant in Cemaes Bay.

And they backed the Irish government's bid to highlight the risks from a new reactor.

"The nearest large city to Wylfa is not in Wales or even England, but is Dublin, the capital of Ireland, just 60 miles away across the Irish Sea," said Tony McDermott, of South Dublin County Council.

"Keeping Wylfa open exposes Dublin and towns in the east of Ireland to unnecessary and unacceptable risks from pollution and accidents."

The Nuclear Free Local Authorities (NFLA) network in Wales and Ireland believes a new nuclear power station would pose obvious safety and security threats.

Anglesey council has voted to back a new reactor at Wylfa if the UK Government decides to build a new generation of nuclear power stations.

Councillor Peter Lloyd, from Neath-Port Talbot Council in Wales, and chairman of the Nuclear Free Local Authorities National Steering Committee, said: "There are worries about the economic impacts of closing the Wylfa nuclear power station for local businesses, and certainly no-one wants to see jobs go, but investment in renewables and energy-saving creates new employment opportunities."

Novelis To Cut 100 Jobs Following Restructuring Of European Operations

Trading Markets, CA Wednesday, March 15, 2006

(RTTNews) - Novelis Inc. (NVL, NVL.TO) said it will eliminate 100 jobs, as it is closing its production of plastic containers and manufactured sealing machines in its Ludenscheid and Ohle plants, located in Germany's Sauerland region.

The company also revealed additional actions in the restructuring of its European operations, with the sale of its aluminum rolling mill in Annecy, France to private equity firm American Industrial Acquisition Corp.

Novelis determined that the businesses it is exiting at Annecy, Ohle and Ludenscheid are unprofitable and are not consistent with its global portfolio strategy.

Novelis said it will record a pre-tax accounting charge of about $14 million in connection with the sale of the Annecy plant, and a pre-tax accounting charge in the $10 million to $12 million range for the restructuring of the Sauerland operations.

The company expects the implementation of these actions to complete by fiscal 2006 year-end.

Copyright(c) 2006 RealTimeTraders.com, Inc. All Rights Reserved

Global Alumina reports results for 2005

Metals Place, UK - 15 March 2006

Global Alumina Corporation announced Tuesday that the Company's Board of Directors has approved its financial and operating results for the fourth quarter and year- ended December 31, 2005.

Global Alumina targets the development of vast bauxite resources in 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.

Significant corporate milestones in 2005 included:

- an aggregate of $120 million received in 2005 in connection with the closing of equity investments; including warrants exercised after December 31, 2005, the total capital raised by the Company to date is approximately $244 million;

- conditional subscription agreements executed for an estimated total of $230 million (an estimated $180 million of equity and $50 million of convertible debt);

- the execution of an off-take agreement between Dubai Aluminium Company Limited, one of the largest single site aluminium smelters in the world, and Guinea Alumina Corporation, S.A., the Company's Guinean subsidiary, for 40% of the annual alumina production from the Company's proposed alumina refinery. The term of this off-take agreement is 20 years;

- approval of the Company's amended Basic Agreement for the development and construction of the proposed refinery by the Republic of Guinea's National Assembly and the subsequent decree promulgated by the President of the Republic of Guinea publishing the Basic Agreement as law;

- the election of David Suratgar, a global leader in infrastructure project finance, to the Board of Directors at the Company's 2005 shareholders meeting;

- the completion of significant clearing, dredging and landfill work at the Port of Kamsar and the commencement of construction of the main access roads to the refinery site and the pioneer camp which will house the initial construction workers required for the development of the project.

In addition, on January 19, 2006, Guinea Alumina Corporation S.A. executed an off-take agreement with Glencore International AG for 420,000 tonnes per annum, representing 14% of the annual alumina production from the proposed refinery. On January 23, 2006, the Government of the Republic of Guinea issued a decree delineating the geographic coordinates of the bauxite mining concession granted to Global Alumina.

Design capacity expansion of Guinea refinery

As a result of on-going engineering, the Corporation has determined to increase the initial capacity of the refinery by approximately 7% from 2.8 million tonnes per year to 3.0 million tonnes per year.

This change, coupled with anticipated cost increases for Project components, has led the Company to increase its preliminary estimate of the total cost of the Project from $2.45 billion to a range of $2.65 to $2.95 billion. The anticipated cost increases in Project components are due primarily to a combination of the severe shortage of materials, construction equipment and contractors as a result of significant unusual events around the world (for example, the Tsunami reconstruction, Iraq reconstruction, the Pakistani earthquake and the impact of hurricanes in the United States and Caribbean) and higher energy prices. The Corporation has not determined final cost estimates for completion of the Project and has not completed a final economic feasibility study of the Project.

"I am pleased with the significant milestones Global Alumina achieved in 2005 towards our goal of operating one of the lowest cost alumina refineries in the world," said Bruce Wrobel, Chairman and CEO of Global Alumina. "And while we are experiencing upward pressures to the capital costs of the alumina refinery as a result of the shortage of materials and equipment, due in part to the significant world-wide increase in investment in the natural resource sector, we believe that the impacts will be mitigated by increased revenue due to higher expected alumina pricing and the Company's decision to increase the planned output of the refinery to 3.0 million tonnes per year. In 2006, Global Alumina will build off 2005's momentum to continue to execute our aggressive timeline to construct the refinery."

Chinese power firm to build power station for India

Xinhua, China www.chinaview.cn 2006-03-15 17:52:57

JINAN, March 15 (Xinhuanet) -- SEPCO Electric Power Construction Corp. based in east China's Shandong Province recently signed a contract with Vedanta Aluminium Limited of India.

Under the contract, the Chinese company will build a 639-million-U.S. dollar coal-fired power station for the Indian company.

The project is the largest power station Chinese companies have ever built for India, sources with the Shandong firm said.

The project, located in Jharsuguda of the State of Orissa, India, will provide power to an aluminium plant the Indian company is planning to build.

The project will be built in two stages. The first stage involves five generating units, each with a generating capacity of 135,000 kw. Another four units will be built during the second stage, the sources said.

Corus sells aluminum assets for $998M

United Press International March 16, 2006

LONDON, March 16 (UPI) -- U.S.-based Aleris International is paying $998 million to buy the aluminum business of Britain's Corus steel company.

The purchase of Corus' downstream aluminum rolled products and extrusions business includes Corus' stakes in Canadian and Chinese joint ventures, the Telegraph said Thursday.

Corus will keep its smelting operations but supply Aleris under a long-term agreement.

© Copyright 2006 United Press International, Inc. All Rights Reserved

Eastalco backs power plant legislation

Frederick News Post (subscription), MD March 16, 2006

By Clifford G. Cumber News-Post Staff

ANNAPOLIS -- Legislation tailored to Alcoa Eastalco Works would partner the shuttered Adamstown aluminum smelter with the state to build a public-private power station that could allow the plant to reopen.

A bill from Delegate Galen Clagett, D-Frederick, would force the Maryland Public Service Commission, the body that regulates the state's utilities, to approve construction of a particular kind of electrical station within 200 days of an application.

The legislation applies to a 750- megawatt plant designed to serve a single consumer using at least 1.5 million kilowatts of electricity a year, essentially creating a power station for Eastalco's production needs. Smelting aluminum takes an enormous amount of electricity.

"They're the biggest user in the state and they use that much (power) each year," Mr. Clagett said. "It's their bill, really."

Companies building such power stations face a "significant" wait of 18 months or more on their applications, Eastalco plant manager Brian Dahlberg told members of the House Economic Matters Committee.

Mr. Clagett said the legislation has jump-started negotiations with the state that folded late last year, when the Maryland Department of Business and Economic Development backed away from Eastalco's request that Allegheny Power be forced to subsidize the plant's power costs.

"We never really got the state to participate," Mr. Clagett said. "Now we've got the state saying they will participate with Eastalco to build this plant."

The power plant could be built at Fells Point or Calvert Cliffs, away from Frederick County, avoiding a potentially brutal fight over siting.

Energy not used by Eastalco would supply other areas of the state, Mr. Clagett said. Alcoa would have to commit to operating Eastalco in Maryland for a set time as part of the contract to build the power station, he said.

Eastalco shut down in December after the plant failed to negotiate power rates as favorable as those in a special contract with Allegheny Power that terminated at the end of 2005. Alcoa, Eastalco's parent company, closed the plant at the cost of over 600 jobs.

Mr. Dahlberg said Alcoa is searching for alternatives to reopen the facility, including "the feasibility of Eastalco contracting for low-cost power from new clean-coal technology and promoting the construction of such a facility, in Maryland preferably."

Although Mr. Clagett's proposal would not solve Eastalco's power problem, it would "enable a more timely approval of an identified solution for Eastalco and other large industrial customers seeking to solve their high cost of energy through self-generation cost-based projects," he said, according to testimony filed with the committee.

Businesses struggling to operate because of higher power costs had limited time to find a solution before being forced out of the state.

The process currently allows for some discretion in setting time limits for the approval process," Mr. Dahlberg said, "but there is no requirement for the PSC to consider the economic hardship of the parties seeking relief through self-generation."

Aleris Signs Letter of Intent to Acquire Downstream Aluminum Business of Corus Group Plc

Black Enterprise, NY 2006-03-16

BEACHWOOD, Ohio, March 16 /PRNewswire-FirstCall/ -- Aleris International, Inc. today announced that it has entered into a non-binding letter of intent to acquire the $1.8 billion revenue downstream aluminum business of Corus Group plc.

The proposed transaction would include Corus' aluminum rolling and extrusion businesses but will not include Corus' primary aluminum smelters. Net cash consideration for the acquisition will be approximately 700 million euro (US $840 million), excluding the assumption of approximately 28 million euro of debt as well as certain other liabilities. The parties intend to enter into a binding agreement following Corus' consultations with the appropriate European employee works councils and trade unions as required by applicable labor laws. The acquisition would be subject to regulatory approvals, with the closing envisaged in the third quarter of 2006.

Steven J. Demetriou, Chairman and Chief Executive Officer of Aleris said, "The Corus businesses provide an outstanding opportunity to expand our global reach and enter new aluminum applications with superior technology and high value-added products including aircraft plate and sheet, automotive sheet and hard-alloy extrusions, among many others. In addition, we will have many new global customers and world-class research and development and manufacturing capabilities that we will utilize throughout our global operations. Aleris will be gaining a management team with deep industry experience and a technically oriented highly skilled work force. Our greater scale, broader product offering and geographic exposure should accelerate our growth and provide greater earnings diversity."

Aleris expects to fund the acquisition with a combination of debt and equity to provide the Company the optimum financial flexibility in the future. Aleris has received a joint commitment from Deutsche Bank AG and Citigroup Corporate and Investment Banking to provide all funding necessary to close the transaction.

The Company expects the proposed transaction to be accretive to earnings in the first twelve months following the acquisition. The Company's preliminary estimate of potential synergies resulting from the transaction is $25 million, which will be realized over the next two years. Principal areas of focus include metals and non-metals purchasing and manufacturing where the transfer of best practices and the implementation of Six Sigma and predictive maintenance capabilities should provide significant opportunities.

Under the terms of the letter of intent, Aleris would acquire the aluminum rolling and extrusion businesses of Corus' aluminum division while Corus will retain its two aluminum smelters in Delfzijl, Netherlands and Voerde, Germany. Aleris will execute a metal supply agreement with Corus for a portion of the expected aluminum requirements of the rolling and extrusion businesses. Corus' aluminum rolling business has facilities in Koblenz, Germany; Duffel, Belgium; and Cap-de-la-Madeleine and Toronto, Canada. The Koblenz rolling mill is one of the most specialized mills in the world with longstanding relationships with leading aerospace, commercial plate and brazing sheet customers worldwide. The extrusion business has facilities in Vogt, Bonn and Bitterfeld, Germany; Duffel, Belgium; and Tianjin, Peoples Republic of China. These Corus downstream aluminum businesses employ approximately 4600 employees.

For 2005, Aleris reported revenues of $2,429 million and net income of $74.3 million. We estimate that, in 2005, the Corus downstream aluminum businesses generated revenues of approximately 1,478 million euro (US $1,840 million).

Following completion of the proposed transaction, the combined company would have a total of approximately 8,800 employees and would operate 52 manufacturing locations in North America, South America, Europe and Asia.

Citigroup Corporate and Investment Banking acted as advisor to Aleris on the transaction.

Corus Dutch works council opposes sale of aluminium ops in present form

Forbes 03.16.2006, 03:51 AM

AMSTERDAM (AFX) - The works council of Corus Netherlands said it is against the proposed sale of some of the group's aluminium operations to Aleris International Inc, as was announced by Corus Group PLC earlier today.

The Anglo-Dutch steelmaker signed a letter of intent to sell its downstream aluminium rolled products and extrusions businesses, including its equity stakes in its Canadian and Chinese joint ventures, to Aleris International Inc for 826 mln eur.

Corus' smelting operations would remain within Corus and would supply

Aleris under a long-term agreement.

The works council said it wants an all-encompassing solution for the aluminium operations -- a split-up of the activities cannot be an option, as it is under the present proposal.

The works council also wants Aleris to detail the long-term plans it has for the aluminium operations, according to the council.

Corus is using the sale of the aluminium operations as a move to make the group more attractive in order to be able to participate in the current steel industry consolidation process, the works council said.

It noted that in the coming months it will draw up its own recommendation on the proposal.

Morgan Stanley forecasts drop in China's aluminium price

People's Daily Online, China - Mar 15, 2006

Morgan Stanley expects China's aluminium price to drop four percent this year, Wednesday's China Securities Journal reports.

The newspaper, citing a survey by Morgan Stanley, said the global market will face about 378,000 tons of oversupply of aluminium this year, a sharp contrast to last year's aluminium shortage.

Morgan Stanley said that the aluminium price is now at its highest and the producers should pay close attention to its production costs.

Sources from China's largest aluminium producer, China Aluminium Co., Ltd, said China is still in great need of aluminium this year to maintain rapid national economic growth, but the soaring cost of production and stiff market competition adds to the great pressure on the company.

The company's aluminium output in 2005 realized a growth of 13.2 percent from the previous year to 7.18 million tons, with an average price of 3,824 yuan (about 480 U.S. dollars) per ton, up 1.2 percent over the previous year, said China Aluminium.

Source: Xinhua

Bauxite dust settles - Windalco labour dispute brought to an end

Jamaica Gleaner Thursday | March 16, 2006

http://www.jamaica-gleaner.com/gleaner/20060316/lead/lead1.html

Ross Sheil, Staff Reporter

Prime Minister-designate Portia Simpson Miller and Michael Collins Managing Director of West Indies Alumina Company (Windalco), during a break from negotiations between the bauxite company and the National Workers Union at Jamaica House on Tuesday. - RUDOLPH BROWN/CHIEF PHOTOGRAPHER

ONE OF the bauxite industry's longest-running labour disputes was brought to an end yesterday with Prime Minister-designate Portia Simpson Miller's intervention and a more than 24-hour meeting with representatives of West Indies Alumina Company (Windalco) and the union representing its workers.

The often tense negotiations over workers' compensation at the bauxite company had been ongoing for 21 months and had threatened to break down in recent weeks.

After the Prime Minister-designate joined in negotiations on Saturday and Sunday, Mrs. Simpson Miller, members of the Windalco management and the National Workers Union (NWU) met for final discussions that began Wednesday morning and ended late yesterday afternoon.

Mrs. Simpson Miller told The Gleaner after the announcement of the settlement that she had no regrets about missing out on some sleep.

"This was so important that I felt that I had to get this right," she said at Jamaica House. "I have to get certain things right (as Prime Minister) and if it means that I have to make a sacrifice then I will certainly do so."

Michael Collins, Windalco managing director, NWU president Clive Dobson and Vice-President Norman DaCosta all praised her intervention in the negotiations which they said would have otherwise dragged on longer.

NO DISRUPTIONS

"We are very pleased and no doubt we would not have got the agreement without her," Collins told The Gleaner last night. He also praised the workers, stressing that the negotiations had not caused any disruptions at the plant.

He said the agreed compensation package would be put to Windalco's workers early next week for ratification before the official signing on Thursday morning.

Mr. DaCosta said the dispute had threatened to spread further into the industry.

He contended, however, that the settlement still left the workers' compensation package at pre-1998 levels in United States dollar terms. He added that he would begin collecting claims for the next three-year period in the next few months.

Chinese aluminium group to start investing in Brazil in 2007

Metals Place, UK 17 March 2006

China's largest producer of aluminium, Aluminium Corporation of China, plans to invest in Brazil from 2007 as part of an international expansion plan that includes Australia, Vietnam and Equatorial Guinea, the Chinese official press reported Wednesday.

"The development of these markets is still in a preliminary phase and operations will not begin before 2007," said Xiao Yaqing, director general of the Aluminium Corporation of China (Chalco) to China Daily.

Xiao said that Chalco had set aside US$1.24 billion for capital investment in 2006, which would be applied to buying aluminium production units.

Chalco, the world's second largest producer of aluminium oxide, said in January it had plans to build an aluminium refinery in Brazil, in partnership with mining company Companhia Vale do Rio Doce.

The Chinese company posted an increase in net profit for 2005 of around 10 percent, to US$871.1 million.

According to a Morgan Stanley report, results were around five percentage points below expectation, due to the increase in price of raw materials on the world market.

Chalco's investment in Brazil is expected to be around US$1 billion.

Chalco and Vale do Rio Doce will build a new production unit in Barcarena, some 40 kilometers from the city of Belém, in the state of Pará in northern Brazil.

Beijing's bear necessities

Australian, Australia March 18, 2006

Chinese state-owned companies buying Australian resource projects are just the first wave of a coming investment tide, writes Glenda Korporaal

WHEN China's Premier Wen Jiabao comes to Australia in two weeks, he will witness the signing ceremony for two new deals for Chinese investment in Australia with a potential value of close to $2 billion.

One is a feasibility study for two iron ore mines near Geraldton in Western Australia to be developed by Gindalbie Metals and An Steel, the second-largest steel mill in China.

It is similar to one struck last October between the giant Sinosteel Corp and Midwest Corp for feasibility studies on iron ore mines in WA's mid-west region, and could lead to an investment of $1 billion-plus.

But the other deal is the first of its kind, one that marries new Australian technology and resources-scale to China's production muscle and vast appetite for fuel.

Harbin Power Engineering Co and HRL, the research arm of the former Victorian Government-owned State Electricity Corporation, are developing a power station to pioneer HRL's new clean-coal technology.

It will see Harbin Power, China's largest manufacturer of power generation equipment, ship a $500 million 400 megawatt power station from China to Victoria's Latrobe Valley.

If it works, it could pave the way for new Australian technology to be used in China and other world markets, to reduce greenhouse gas emissions from power stations.

The two very different deals are the latest in increasing Chinese investment in Australia.

Flush with foreign exchange reserves of more than $100 billion, China is urging its corporations to invest strategically offshore.

"Chinese companies are expanding overseas enormously," says Melbourne lawyer Robin Chambers, of Chambers and Co, who was involved in negotiations for Chinese investment in the Channar iron ore mine in WA's Pilbara with Hamersley in the 80s.

"The strongest focus at the moment is in resources, and it is focussed on Australia."

Food, tourism, car parts and chemicals might also soon be on China's shopping list.

Although the numbers are still small, the Chinese are on the verge of becoming the "new Japanese" when it comes to snapping up positions in Australian resources.

Like the Japanese of the past, the big Chinese companies want a stake in the billions of dollars of resources they need to feed the blast furnaces which are supplying their rapid industrial development.

Australia - with its plentiful natural resources, developed technologies in key areas, stable pro-Beijing Government and a range of other investment opportunities - is a prime destination.

Chinese corporations are already scouting around for potential new uranium mine investments in Australia on the back of the deal, expected to be signed soon, to allow China to buy Australian uranium.

And in Queensland, Peter Beattie's Government is considering a potential $3 billion investment by the Chinese Aluminium Company to develop a bauxite deposit in Aurukun, Cape York.

If it goes ahead, it will be by far the biggest single Chinese investment in Australia.

In the proposed China-Australia free trade agreement, the Chinese are pushing for conditions like those the US got in its FTA with Australia, which removes the need for Foreign Investment Review Board approval for investment projects of up to $800 million (up from the current level of $50 million).

Chambers, who is on the board of the Sinosteel subsidiary which has a stake in the Channar project, was also involved in negotiations for four Chinese steel companies to take 40 per cent of the Wheelarra iron ore project in WA with BHP Billiton.

He says the problem is actually a lack of available investment opportunities for the big Chinese state-owned corporations.

The early mainland Chinese investment in Australia dates to the 1986 purchase of a stake in Victoria's Portland aluminium smelter by the giant China International Trust and Investment Corporation (CITIC).

This was hailed as one of the first major offshore investments following the Chinese Government's move to open its economy.

It was followed by the investment in the Channar iron ore mine, which involved negotiations between then prime minister Bob Hawke and Chinese leaders.

The official Australian Bureau of Statistics figures show Chinese investment in Australia is still small - only around $2 billion, making it the country's 17th-largest foreign investor. This is a mere fraction of $368 billion invested here by US interests, $281 billion held by UK interests and $44 billion invested by the Japanese.

But the official figures do not capture the true figures, with significant levels of Chinese offshore investment being done through Hong Kong (which has more than $23 billion worth of investment in Australia) and tax havens such as the Cayman Islands and the British Virgin Islands.

China's Ambassador to Australia, Madam Fu Ying, says many Chinese companies are watching the Chalco deal closely, for signs that they can work within the Australian regulatory framework for major projects.

The 16th Congress of the Chinese Communist Party in late 2002 officially decided to "encourage and support overseas investment by enterprises of all kinds".

In July 2004, China's commerce and foreign affairs ministries issued a list of approved countries and sectors for offshore investment. It included Australia.

While CITIC has an interest in Macarthur Coal's mines in Queensland, Chambers says the Chinese have almost missed the boat on buying into Australian coal mines.

But he predicts that uranium could be the next big thing for China, with its companies demanding a stake in new projects, in return for long-term purchasing deals, as in CNOOC's stake in the North West Shelf.

"I am aware of Chinese interests trying to find uranium projects in Australia," he says. "It's pretty obvious. You can see it happening", after the agreement allowing China to buy Aussie uranium is signed.

"There are going to be new uranium projects that will be desperately looking for Chinese partners to develop them," he says.

While Chinese investment in Australia has not had the same political backlash as Japanese investments of the 80s, investment in sensitive areas such as uranium mining could raise more difficult political issues.

One of the objections to the takeover bid for Unocal in the US by China oil company CNOOC last year was that the company was owned and financed by the state.

Investment by a state-owned Chinese company in uranium mining could raise similar issues.

Stuart Valentine, a former Australian diplomat who joined Mallesons's Hong Kong office recently, argues that China's offshore expansion is far more than just a hunger for raw materials.

It is part of a play by Chinese leaders to make China a major presence on the international stage.

"The Chinese leadership have decided it is time for China to move in a more measured way onto the international stage," Stuart Valentine said.

"This has been happening in politics and now also in business.

"The Chinese have huge corporations and they believe they should be leaders on the international stage, not just China."

In this context, the close political ties between Canberra and Beijing are an important factor in encouraging investment here.

While even the state-owned Chinese companies have increasing independence from politicians, they still need official approval for the foreign exchange to make the offshore investments.

Valentine says the current Chinese interest in Australian resources is only the beginning of a much broader interest in the Australian economy.

The 2004 list by the Chinese Ministries of Commerce and Foreign Affairs also has industries of interest in Australia such as fruit and vegetables, livestock breeding, cultivation of aquatic products, finance, trading, communications, research and development, telecommunications and tourism.

Invest Australia chief Garry Draffin says potential Chinese investors now represent one of the agency's major clients.

"Chinese companies are very rapidly moving up the technology curve," he said yesterday.

Draffin sees financial services and tourism as being other potential areas of Chinese investment here. "With more than a million Chinese tourists a year set to come here, investment will follow as sure as night follows day."

While the current Chinese interest is largely from the large state-owned enterprises, Valentine and Draffin say there is a growing interest from the smaller but growing number of private companies in China.

Not all Chinese investment in Australia has been a success.

CITIC has quietly disposed of its holdings in Metro Meat, which operated in South Australia and Western Australia, after losing more than $50 million. It is also reported to have lost about $25 million on an aluminium wheels project in Tasmania.

China's Chalco seeks overseas co-investors for Australia project - report

Forbes 03.19.2006, 08:10 PM

BEIJING (AFX) - Aluminum Corp of China (Chalco) is in talks with international mining firms to co-invest in a 17 bln hkd bauxite mining and refining project in Australia, the South China Morning Post reported, citing the company's chairman.

Chalco, the world's second-largest alumina producer is to submit a final offer by May for the mining rights of bauxite deposits at Aurukun in northern Queensland state, the report in the Hong Kong paper said.

'We are in preliminary discussions with many international mining companies,' chairman Xiao Yaqing said.

Chalco is seeking to invest in overseas bauxite resources as domestic reserves are small and contain impurities that are costly to siphon out while demand is growing fast.

The Aurukun project is estimated to contain about 560 mln tons of bauxite reserves, comparable to Chalco's current reserves of 580 mln tons, Xiao said.

(1 usd 7.8 hkd)

virginie.mangin@xinhuafinance.com

China Alumina output up

Shanghai Daily, China 2006-03-20

CHINA produced 1.77 million tons of alumina in the first two months of 2006, up 44 percent year on year, due partly to heavy domestic demand, according to the National Bureau of Statistics.

In February alone, the output of alumina, or aluminum oxide, jumped 48.3 percent to 881,700 tons. Despite the growth in alumina output in the two months, Chinese enterprises had to import alumina at a record high price of US$650 per ton.

Aleris Agrees to Buy Corus Aluminum Operations

33Metalproducing March 20, 2006

Rolling mills in Canada, Germany, Netherlands, plus extrusion plants

Aleris International Inc., the Ohio company formed by the merger of Commonwealth Aluminum and IMCO Recycling in 2004, has agreed to acquire the aluminum rolling and extrusion operations of Corus Group plc. Corus has been offering its aluminum division for sale for several years, but Alerisí agreement does not include two smelters in Delfzijl, the Netherlands, and Voerde, Germany.

Aleris agreed to pay $840 million and assume an estimated $34 million in debt for a rolling mill at Koblenz, Germany; Duffel, Belgium, and Cap-de-la-Madeleine, PQ. It also would take Corusí hard- and soft-alloy extrusion plants in Duffel, Tianjin, China, and Voegt Bitterfeld and Bonn, Germany.

The new properties offer Aleris a range of new product lines, including aircraft plate and sheet, and brazing sheet for heat exchangers, from the Koblenz mill. It also will get its first entry in the Chinese market.

The acquisition is subject to regulatory approvals, but Aleris and Corus state they expect to finalize the deal in the third quarter of 2006.

Steven J. Demetriou, chairman and CEO said, "The Corus businesses provide an outstanding opportunity to expand our global reach and enter new aluminum applications with superior technology and high value-added products including aircraft plate and sheet, automotive sheet and hard-alloy extrusions, among many others. In addition, we will have many new global customers and world-class research and development and manufacturing capabilities that we will utilize throughout our global operations. Aleris will be gaining a management team with deep industry experience and a technically oriented highly skilled work force. Our greater scale, broader product offering and geographic exposure should accelerate our growth and provide greater earnings diversity."

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

Hayes Lemmerz Closing Plant

WLNS, MI - March 20, 2006, 04:36 AM PST

The city of Huntington, Indiana stands to lose 185 jobs when wheel maker Hayes Lemmerz International closes its factory there this summer. The Huntington plant produces cast alloy aluminum wheels. It lost a contract with General Motors last month.

A Hayes Lemmerz spokeswoman says the Northville, Michigan-based company plans to close the plant no later than the end of July. Some Huntington employees already have transferred to plants in Wabash and in Gainesville, Georgia.

Russian Bauxite Timana boosts ore production by 70% in January-February 2006

Metals Place, UK 20 March 2006

The Ministry of Industry and Energy in Komi Region announced that the company Bauxite Timana, a unit of SUAL's subsidiary Komi Aluminium, increased bauxite production 1.7 times, to 414.3 thousand tons year-on-year.

In 2005 the company's bauxite production was 2.025 million tons, up 34.8% from 2004.

Bauxite Timana was granted a license to mine Sredne-Timanskoye bauxite deposit, with production started in 1998.

Bauxite Timana plans to produce about 3 million tons of bauxites in 2006, and to hike bauxite output from the Srende-Timanskoye deposit to 6 million tons by 2008.

Vietnam: State mining corporation to exploit bauxite in Lam Dong

Metals Place, UK 20 March 2006 Source: VNA

The Government has approved the Viet Nam Mineral Corporation's (VIMICO) proposal to be sole investor in the VND7.7 trillion (US$484 million) Lam Dong bauxite exploitation and processing project.

VIMICO, the country's largest mineral exploiter, said it had planned to borrow VND5.5 trillion from foreign bankers, VND1.2 trillion from the State Investment and Development Fund and VND500 billion from the Fund for Equitisation of State-owned Enterprises.

According to a source close to the corporation, Japanese Mitsui Group and Fortis Bank of Belgium are considering loans to the project.

Meanwhile, general director of the Viet Nam Bank for Investment and Development (BIDV), Tran Bac Ha, recently said his bank is also considering loaning funds to the project via the Viet Nam Investment Fund(VIF), a new fund co-founded by BIDV and US Viet Nam Partners LLC.

According to VIMICO, the first phase of the project, which includes infrastructure construction will commence in the first quarter of next year.

The major second phase, which will see construction of the bauxite processing plant, will start by the end of next year.

The bauxite exploitation and processing complex, scheduled for operation by the end of 2009, will have an annual production capacity of 1.7 million tonnes of bauxite and 600,000 tonnes of alumina.

According to the Ministry of Industry, the world's four biggest alumina importers, the US, Canada, Russia and China, import 14 million tonnes per year for transformation into aluminium.

Output from the Lam Dong project would be mostly for export, the ministry said.

Geological surveys indicate Viet Nam has more than 8 billion tonnes of raw bauxite material for alumina production, the fourth highest behind Australia, Guinea and Brazil.

The northern provinces of Cao Bang and Lang Son contain 120 million tonnes of bauxite deposits and 7.9 billion tonnes are situated in the central highland provinces, none of which have been exploited.

Larry misses aluminium plants

Finance24, South Africa 20/03/2006 10:24 AM

Sydney - Mining giant Rio Tinto said its aluminium and alumina-making operations in Australia's Queensland state were unaffected by a cyclone that ripped through part of the state earlier on Monday.

"There has been no damage as the operations are well south of the area impacted by the storm," a Rio Tinto spokesperson said.

Rio Tinto, the world's second biggest mining company, refines alumina and smelts aluminium in the Gladstone region of the state 450km north of Brisbane.

Cyclone Larry hit Australia's far northeast early on Monday near the tropical city of Cairns, with winds of up to 290km per hour uprooting trees, flattening crops and ripping off the roofs of houses.

Rio Tinto shares were up nearly 2% at A$72.64 in step with gains in the wider S&P/ASX 200 index.

Alcan selected as industry leader on Ceres climate change governance practices report

PR Newswire (press release), NY 3/21/06

MONTREAL, Canada, March 21 /PRNewswire-FirstCall/ - Alcan Inc. (NYSE,

TSX: AL) announced today that it has been selected as one of the top three companies overall and the leading company in the metals and mining industry in a Ceres investor coalition report that rates 100 global organizations on their governance practices for handling the risks and opportunities posed by global climate change.

"To be recognized from across a broad scope of industry as a leading company in addressing the challenges of climate change is a testament to the hard work the Company and its employees are doing in delivering concrete, tangible reductions in greenhouse gas (GHG) emissions across Alcan's approximately 430 sites," said Dick Evans, President and Chief Executive Officer, Alcan Inc. "Alcan is committed to embedding sustainability into its operations as part of the Company's strategy for long term competitiveness," he added.

In 2001, Alcan launched TARGET, a GHG reductions program and a key component of EHS FIRST: the Company's framework and mindset through which its commitment to putting environment, health and safety first is translated into recordable and measurable actions. Through TARGET, Alcan achieved 2.9 million

tonnes of GHG reductions from 2001 to 2004, while overall primary metal production increased by 40 percent. Alcan is evaluating new targets for 2006 and supports the goal of the aluminum industry to be carbon neutral by 2020 on a life-cycle basis.

Alcan is a member of various voluntary programs in all regions where it has major installations, including the EPA's Climate Leaders program in the United States and the International Emissions Trading Association (IETA). The Company has been active in advising governments on a national level for the U.K. and E.U. Emissions Trading Schemes, and also participates in the World Economic Forum's Global Greenhouse Gas Register.

Entitled "Corporate Governance & Climate Change: Making the Connection," the Ceres report evaluated companies according to a Climate Change Governance Checklist, consisting of 14 governance steps that companies can take to proactively address climate change.

"This report is the first comprehensive measurement of how 100 leading global companies are preparing and positioning themselves to face the challenges of climate change," said Mindy S. Lubber, President at Ceres.

"Through energy efficiency and innovative new-product development, Alcan is doing a great job tackling the risks and opportunities from this issue.

Company leaders and board members deserve special credit for putting well-functioning governance systems in place to meet this challenge," she added.

Ceres is a national network of investment funds, environmental organizations and other public interest groups in the USA, working to advance environmental stewardship on the part of businesses. Ceres also directs the Investor Network on Climate Risk (INCR), a two-year-old alliance of 50 institutional investors that collectively manage about US$3 trillion in assets.

India’s NALCO gets Indonesian smelter offer

Daily Times, Pakistan Wednesday, March 22, 2006

MUMBAI: National Aluminium Co. Ltd. (NALCO), India’s second-largest aluminium producer, has received an offer to manage a smelter in Indonesia, Chairman C. R. Pradhan said on Tuesday.

"A team may visit the site next month," Pradhan told Reuters in a telephone interview from New Delhi. He did not give details and it was not immediately clear whether NALCO would buy a stake in the smelter.

Pradhan said the offer came through the Indian embassy in Indonesia. NALCO was yet to get details of the Indonesian smelter’s production and expansion plans, he said.

Pradhan also said the company had completed an initial feasibility study to set up an aluminium smelter in the Middle East by 2009/10. The company was in talks with Qatar, Oman and Abu Dhabi, he said.

"We will discuss it with the (Indian) government and then propose a suitable action," he said.

Plans at home: Pradhan said the company was in talks with the state governments of Orissa and Andhra Pradesh for bauxite mining.

"The talks are going on. We are looking for only one. It will be either in Orissa or Andhra Pradesh," he added. Reuters

Feb world aluminium output down 193,000 tons: IAI

Metals Place, UK 21 March 2006 Source: Dow Jones

Total world aluminium output (excluding China) in February fell by 193,000 metric tons to 1.823 million tons, from a revised 2.016 million tons in January, according to figures released Monday by the International Aluminium Institute.

This was up 76,000 tons on in February 2005 production of 1.747 million tons.

China's aluminium production in February was 667,000 metric tons, down by 23,000 tons compared to January production, according to Consolidated IAI primary aluminium production report.

Global aluminium consumption to grow 5% in 2006: Abal

Metals Place, UK 21 March 2006 Source: Business News Americas

Worldwide aluminium consumption could expand by 5% this year compared to 2005 thanks to increasing demand from the US and China, Luis Carlos Loureiro Filho, president of Brazil's aluminium association Abal said in a press conference.

"Aluminium consumption [worldwide] last year came in at 32Mt," Loureiro said.

Moreover, Brazil's aluminium use is expected to grow 7.2% this year to 860,200t compared to 2005.

The country's aluminium industry is expected to receive US$7.5bn in investments within the next five years, "including in self-generating power projects," Loureiro said, adding that within five years roughly 50% of aluminium in Brazil could be produced using self-generated power.

Abal was founded in 1970 and boasts members such as the Brazilian subsidiary of US aluminium giant Alcoa and Votorantim's aluminium company CBA.

Bill speeds permitting for Eastalco

Business Gazette, MD Thursday, March 23, 2006

by Kevin M. Smith staff Writer

Clagett’s proposal designed to help Adamstown smelter reopen

Less than three months after shutting down operations at its Eastalco aluminum smelting facility in Adamstown — putting most of its 600 employees out of work — Alcoa’s best chance of reopening the plant may lie in the legislature.

Del. Galen R. Clagett (D–Dist. 3A) of Frederick has introduced legislation to expedite the permitting process for the company to build its own power generating facility.

The House Economic Matters Committee earlier this month reviewed two similar bills from Clagett, giving one of them an ‘‘unfavorable report" Monday. Clagett still has hopes for the second bill.

The bills, he said, condense ‘‘the whole process so that [permitting] happens a lot more quickly. It is a statewide bill, but today [due to the numbers involved] it addresses only Eastalco."

The proposal would shorten the period that the Public Service Commission has to approve an application for a new plant from a year to no more than 200 days, a little over six months.

‘‘It may be amended for more days," Clagett said. ‘‘If we can build the Empire State Building in 18 months, why can’t we" get through the permitting process more quickly?, he asked.

Alcoa closed the smelter — Maryland’s biggest consumer of electricity — in December after it failed to negotiate a more favorable contract with its longtime supplier, Allegheny Power.

The legislation would apply only to generators with a capacity of no more than 750 megawatts and are designed to provide electricity for a single customer that consumes at least 1.5 billion kilowatt hours per year. Currently, those limits would apply only to Eastalco.

If passed, the legislation would take effect Oct. 1.

Alcoa, which has moved its headquarters from Pittsburgh to New York, is awaiting Maryland officials’ reaction to its proposal to conduct a feasibility study on building a power plant, said spokesman Earl Robbins.

‘‘We talked to the state about the concept of a public-private partnership," Robbins said. The coal-fired plant would produce enough electricity to power the Eastalco smelter, with some left over to sell.

‘‘We proposed our concept to not only help Eastalco," but to help the state ‘‘alleviate congestion" on the electric grid, Robbins said.

Clagett said Sparrows Point in Baltimore County has been rumored as a location for the power plant. Robbins said the feasibility study would determine the location, which could be a distance from the smelter.

Building a power plant and reopening of smelter could take four years, Robbins said.

Del. Paul S. Stull (R-Dist. 4A) of Walkersville said he has not discussed or reviewed Clagett’s proposal in depth, but supports the idea.

The closure of Eastalco, Stull said, ‘‘had a lot of spin-off — by that I’m alluding to the trucks that hauled the aluminum. The [truckers] were usually private contractors."

The closing’s impact extended to about ‘‘1,500 people because of raw materials brought into" the Port of Baltimore, Clagett said.

A year ago, more than 640 workers earned an average of about $50,000 annually at the plant. Company officials said they faced an annual $70 million, or 82 percent, increase in power costs under Allegheny’s proposed contract. At the time, Alcoa was paying half the market rate, Allegheny officials said.

When Alcoa failed to work out a deal with Allegheny or any supplier, the company sought a legislative solution — a rate cap. But that proposal went nowhere.

Alcoa’s new strategy follows a suggestion made in October by Chris Foster, deputy secretary of the Maryland Department of Business and Economic Development.

Foster suggested that the company look to the state’s second largest electricity consumer for a model.

Mittal Steel in Sparrows Point produces 150 of the 250 megawatt hours it uses daily, Foster said. The company has its own on-site generator and a system that converts heat from the plant’s smelters into electricity. Eastalco used 350 megawatt hours a day.

‘‘Eastalco needs to look at what other large energy consumers are doing," Foster said.

ALSCON: BFIG Slams N406b Suit Against RUSAL

Nigeria Daily Independent, Nigeria Thursday 23rd, March, 2006

By Bassey Udo Energy Editor, Lagos

BFIGroup Corporation has taken a $2.8 billion (N406 billion) lawsuit in the United States to reclaim its mandate as the preferred buyer of the Aluminium Smelter Company of Nigeria (ALSCON).

The litigation, against Russian Aluminium (RUSAL), was filed in New York on March 16.

Joined are Bratsk Aluminium Plant, RUSAL America Corporation and Dayson Holding.

BFIG is accusing RUSAL of conspiring with the Nigerian authorities to illegally sell off 77.5 per cent stake in ALSCON, based in Ikot Abasi, Akwa Ibom State.

In 2004, BFIG emerged winner of the bid for the $3.2 billion plant with a $410 million offer, against RUSAL’s $205 million, but was disqualified by the Bureau of Public Enterprises (BPE).

Recently, the BPE signed a $250 million share purchase agreement (SPA) with RUSAL at the end of a year-long negotiations, which observers said were prejudicial to a court action instituted in Abuja by BFIG.

Though the court dismissed BFIG’s application late last year on grounds that it had no valid contract with the BPE to institute the case, the verdict on an appeal is pending.

A twist came three weeks ago when an Abuja High Court dismissed another application by the BPE for authority to confiscate the $1 million bond lodged by BFIG as part of conditions for the bid.

In the U.S. lawsuit, BFIG claimed it took part in the sale of ALSCON and offered to pay $410 million for the plant, compared with RUSAL’s initial offer of $205 million.

With that offer, BFIG said, the National Council on Privatisation (NCP) announced its name as the "preferable buyer", before it was disqualified soon after an "unlawful meeting" with representatives of RUSAL and the Presidency.

Others which it claimed attended the meeting included Minister of Power and Steel, Liyel Imoke, and the then BPE Director General, Julius Bala.

The outcome of the meeting, BFIG stated in the suit, was the "illegal adjustment" of the payment schedule spelt out in the bid documents and affirmed by all parties at the Technical Bids Conference organised by the BPE on May 20, 2004..

The bid rules stipulated that "10 per cent of the winning price be paid 15 working days after signing the share purchase agreement (SPA), with the balance to be paid 90 days thereafter".

However, the BPE, in its June 17, 2004 letter conveying its confirmation to the BFIG as bid winner, asked it to "pay 10 per cent of the bid sum within 15 days of the receipt of the letter".

Although the demand violated the terms of the preliminary contract, BFIG was excluded from the tender.

RUSAL, disqualified earlier for violating the terms, was recalled for fresh negotiations.

No date has been set for the hearing of the suit.

Alcoa requests Trini smelter site

Jamaica Gleaner, Jamaica Wednesday | March 22, 2006

PORT OF SPAIN (The Trinidad Guardian):

ALCOA SUBMITTED a certificate of environmental clearance (CEC) to the Environmental Management Agency for its proposed 341,000 metric tonne per year Chatham aluminium smelter last Thursday.

Highlights of the CEC application, which was signed by Alcoa executive Randy Overbey and local attorney Steve Myers, include:

The total proposed investment in the smelter, which will be 100 per cent Alcoa-owned, will be about US$1.5 billion. Construction is intended to begin in 2007 with production start date between late 2008 and early 2009.

The ownership of the 600 hectare land allocated for the Chatham industrial estate will remain with the National Energy Corporation. Only approximately 200 hectares of this total 600 hectares will be cleared for the smelter and associated facilities.

LAND TO BE LEASED

Only 200 hectares (494 acres) of the total estate will be leased to Alcoa and cleared for the construction and operation of the aluminium smelter and associated facilities; It will be left as natural vegetation or utilised for such purposes as conservation, advanced agriculture/horticulture, ecological education.

The remaining 400 hectares (988 acres) will be developed in keeping with the "smelter in the park" concept after consultation with appropriate government agencies and neighbouring communities. It will be left as natural vegetation or utilised for such purposes as conservation, advanced agriculture/horticulture, ecological education or beekeeping;

Alcoa proposes to construct a 341,000 mt (approximate) aluminium smelter, anode production facilities, and intermediate/downstream fabricating facility.

The aluminium smelter will utilise state-of-the-art air emission control systems, institute processes to reduce/eliminate process wastewater discharges and implement programmes to reduce/recycle/minimise solid waste generation and disposal. Ambient air quality will be monitored at site boundaries and publicly reported.

FLUORIDE EMISSIONS

For fluoride emissions, the level will be three times more stringent than the current US standard. Exposures will be controlled to levels that are safe for employee and community health and the environment.

A waste stream of spent potlining (SPL), from the aluminium smelting process, will be generated from about the fifth year of operation. It will not be landfilled in T&T. It will be reused/recycled utilising the best available technology at that time.

In the absence of a constructive process for recycling in T&T, spent potlining will be shipped out of the country for reprocessing elsewhere.

A natural gas fired power facility with the capacity to continuously supply approximately 580 MW of electricity to the smelting facility will also be constructed.

Separate CEC applications will be submitted for a port facility and power station which may require coastline stabilisation/alteration.

Novelis Invests $30M in Korean Plant

MSN Money March 23, 2006 09:34 AM ET

Novelis Inc., a manufacturer of aluminum products, on Thursday said it will spend $30 million during the next two years to expand production capacity at its plant in South Korea.

The company plans to improve its hot rolling mill and its single-stand cold rolling mill in its 68-percent plant in Yeongju. Novelis expects the improvements will lead to a 100,000 metric-ton increase in the plant's production capacity by 2008. Shipments in the Asian region were about 500,000 tons in 2004.

Related newsDow Climbs to Finish at New 5-Year High Interest Rates Mixed in Treasury Auction Wall Street Wonders About Riding the Rally

The Yeongju factory is a joint venture between Novelis, Taihan Electric Wire Co. Ltd., which owns 31 percent, and the Hyundai Group, which owns 1 percent.

Shares of the company fell 3 cents to $20.14 in morning trading on the New York Stock Exchange.

© 2006 The Associated Press.

Alcoa Locations Achieve Rare Accomplishment in Management System Certifications

Finanzen.net, Germany 23.03.2006 16:00:00

Two Alcoa Facilities Certified for Excellence in Environmental, Quality and Health & Safety

Alcoa (NYSE:AA) announced today that two of itsoperating locations have been certified for excellence inenvironmental, quality, and health and safety performance, achieving arare accomplishment in management system certifications globally.

Alcoa Fastening Systems plants in Tucson, Arizona and Carson,California have each been certified AS9100/ISO 9001 (quality), ISO140001 (environmental) and OHSAS 18001 (health and safety) by BSIManagement Systems, one of the world's largest management systemregistrars. The Carson and Tucson plants are the first within theglobal AFS business to achieve triple certifications.

"Earning these certificates demonstrates our commitment to ourcustomers, employees and the communities in which we operate," saidOlivier M. Jarrault, president, Alcoa Fastening Systems. "AFSemployees in Tucson and Carson should be commended for maintaininghigh standards to ensure strict adherence to our business system andprocesses, which results in quality products for our customers as wellas a safe environment in which to work and live."

The majority of Alcoa locations worldwide have achieved qualitymanagement and environmental management system certifications, withmore than 175 sites certified ISO 14001 and more than 200 sitescertified under the ISO 9001 standard

Norsk Hydro builds aluminum plant in Qatar

Monsters and Critics.com, UK Mar 24, 2006, 15:15 GMT

DOHA, Qatar (UPI) -- Norsk Hydro ASA and Qatar Petroleum are building a $1.5 billion aluminum smelting plant in the Persian Gulf emirate.

The companies` 50-50 joint venture, to be called Qatalum, will build the plant, including smelters, a cast house and a 1.35-megawatt natural gas power plant, the Gulf Daily News said Friday.

Construction of the complex is to begin in 2007, with an initial annual capacity of 585,000 metric tons of primary aluminium, which could be expanded to 1.2 million metric tons.

Output is expected in 2009.

Copyright 2006 by United Press International

Alunorte starts operations of 2nd expansion - Brazil

BNamericas, Chile Friday, March 24, 2006 14:57 (GMT -0400)

Brazil's Pará state-based alumina producer Alunorte has started operations of its second expansion project which will boost capacity to 4.4Mt/y from 2.5Mt/y.

Alunorte is now the world's largest alumina plant.

"The second expansion output is already sold and there have been negotiations regarding the selling of production from the third expansion," Reinaldo Castanheira, aluminum director with project owner CVRD told reporters in a press conference.

Castanheira was speaking during a ceremony at the plant site in Barcarena city.

Alunorte's third expansion, due to start operations in mid-2008, would boost output capacity to 6.3Mt/y. CVRD (NYSE: RIO) owns 57% of the alumina refinery, Norsk Hydro (NYSE: NHY) 34% and private Japanese and Brazilian companies holding the balance.

"There is no plan for a new expansion, although it could happen in the future," Alunorte president Ricardo Carvalho told BNamericas when asked about expansion beyond phase three.

Moreover, output expansions at aluminum producer Albras, near Alunorte's plant, hinge on energy supplies. "We do not have steady guarantees regarding energy at competitive prices and this would stop output expansion projects," CVRD CEO Roger Agnelli said during the conference.

"Albras has room to grow," Agnelli said, adding that CVRD could turn to aluminum projects in countries such as Mozambique and the Middle East.

CVRD (NYSE: RIO) owns 51% of Albras and Japanese investors the rest.

By Roberta Pregnaca, BNamericas.com

Alba achieves new production level

Gulf Daily News, Bahrain Saturday 25 March 2006

By MOHAMMED AL A'ALI

MANAMA: Alba has set a record after producing almost 750,000 metric tonnes of high grade aluminium. The record set last year, comes after the commission of Alba's newest reduction line, the longest in the world, in May last year, said Alba board of directors chairman Dr Mohammed Al Ghatam.

"Alba, now the largest modern smelter in the world, produced 749,987mt of primary aluminium last year," he said.

"This was above the planned production capacity and indicates that Alba is now well ahead of schedule to produce its full 830,000 tonne per annum (tpa) capacity this year."

Dr Al Ghatam also announced that the Alba Calciner had increased its annual production from 400,000 tonnes in 2004 to a record 530,000 tonnes of Calcined Petroleum Coke (CPC) in 2005.

"The increased production of the calcining plant has enabled Alba to comfortably meet all its smelter's growing CPC requirements and has allowed us to supplement revenues from metal sales by exporting more than 227,800 tonnes of CPC," he said.

"In addition to significantly increasing its annual production, the calciner plant has also been able to earn the highly regarded ISO 9001-2000 certification."


Operation of VALCO has helped our business

Crusading Guide, Ghana Friday, 24 March 2006

Accra, March 24, GNA - Aluworks, manufacturers of semi-finished aluminium products, said on Friday that the re-start in operations of the Volta Aluminium Company (VALCO) helped to make significant impact on the overall performance of the Company last year. Prior to the coming on stream of VALCO in September 2005, Aluworks had to import aluminium ingots from Switzerland.

Speaking at the "Facts behind the Figures Programme" on the Ghana Stock Exchange, Mr Kondagunta Venkataramana, Managing Director of Aluworks, said besides the increasing certainty of supply of aluminium, VALCO's reopening had positively reduced the cost of metal, energy costs as well as improved the cash flow of the Company. "We now do not need to pre-finance the imports nor keep large inventory as has been the case before the restart of operations of VALCO. In addition, VALCO supplies metal molten and sows, which require little energy for heating up," he told journalists and brokers on the Exchange.

Mr Venkataramana said despite the major challenge of soaring prices of aluminium, ranging between averages of 1,834 dollars per tonne in January 2005 to 2,250 dollars per tonne in December 2005 on the London Metal Exchange, the Company's performance remained resolute compared to 2004. Aluworks made a turnover of 478 billion cedis in 2005 compared to 458 billion cedis in 2004, an increase of 4.4 per cent.

Exports registered a hugely positive performance, going up from 166 billion cedis to 205 billion cedis, accounting for about 46 per cent of volumes. The export sales are also the highest since the inception of the plant. Nigeria, Togo, Benin, Burkina Faso and Cote d'Ivoire are the main destination of the Company's exports. Sales Volume, however, decreased from 19,497 tonnes to 17,647 tonnes due to sluggish local sales. The Company's production output for the year was 18,022 tonnes.

Profit after tax increased by nine per cent from 20.5 billion cedis in 2004 to 22.4 billion cedis in 2005. Mr Venkataramana said he was confident that the positive trend would continue with the recommencement of VALCO and said with a guaranteed metal supply both in molten condition and in form of sows, cost of sales would reduce by way of reduction in inventory costs and energy savings.

"We see next year's operations registering better results with the restart of VALCO and the benefits of strategies such as cost cutting exercises and global sourcing of spares and consumables already put in place will reduce operating cost and enable the Company mitigate the effects of the rising aluminium prices on the world market." There are plans for Colour Coating Line and the building of another cold rolling Mill to enhance the Company's capacity. The Company expects a production level of between 22 tonnes and 23 tonnes to meet both domestic and export orders.


Residents plan protest walk, service in area

Trinidad & Tobago Express, Trinidad and Tobago - Saturday, March 25th 2006

Chatham industrial estate, Phoolo Danny-Maharaj South Bureau

Residents of Chatham and surrounding areas plan to walk the one-mile route from Chatham Junction to Foodcrop Road to protest the proposed industrial estate in the area tomorrow.

Goomptie Singh, secretary of the Chatham/ Cap-de-Ville Environmental Protection Company and Cedros Peninsula United, said the group had sought police permission for the march several times.

Permission was eventually granted.

The procession is due to begin at 10 a.m. tomorrow.

Singh said residents were continuing their resistance to the estate, which is expected to include heavy industry and an aluminium smelter in the area, because of fears it could be a health and environmental hazard.

At the Foodcrop Road, Number 2, there will be an interfaith service and speakers will voice their opinion on the dangers of the smelter to the lives and livelihood of the residents.

In a statement on Thursday, the group said that the proposed 2,336-acre industrial estate was first scheduled to be 2,000 acres but was recently increased.

Singh expressed fears that placing the project in the area would adversely affect eight communities, several places of worship, the Chatham Government School, Community Centre, Youth Camp, Health Centre, two recreation grounds, cemeteries, the sea coast and sea beds as well as the fishing industry.


 

South residents in no danger, says PNM

Trinidad & Tobago Express, Trinidad and Tobago Monday, March 27th 2006

Darren Bahaw dbahaw@trinidadexpress.com

THE CONSTRUCTION of $2 billion aluminium smelter plants in South Trinidad will utilise the latest technology to preserve the environment and the State, through its various agencies, will insist that "only environmentally-friendly operations will be encouraged".

This assurance came yesterday from Ambassador Plenipotentiary John Donaldson, and Chairman of the People's National Movement (PNM), even as the public campaign against the establishment of the aluminium smelter plants in La Brea and near Point Fortin gained steam.

Donaldson, addressing members of the media at the end of the PNM's first ordinary General Council meeting, at Balisier House, Tranquillity Street, Port of Spain, said the PNM viewed the establishment of the two aluminium smelter plants along with three methanol plants and a iron manufacturing plant as "good news".

Construction of the six new plants, all affiliated with the energy sector, are scheduled to begin later this year and Government has already admitted that skilled labour will have to be imported to meet the demands of the construction boom.

"In respect of the environmental consequences of the new plants in Trinidad and Tobago, the example of similar developments taking place together and in the same locality of agricultural developments have been bought to the attention of the General Council," he said.

Adding that a perfect example could be found in neighbouring Brazil, where similar plants were constructed.

In other energy developments, Donaldson said the party's political leader, Prime Minister Patrick Manning, during a 45-minute presentation, informed the General Council, of the advances in the oil and gas sector.

He said Manning announced that at present some 850,000 barrels per day, equivalent of oil and gas are being produced and achieving high prices.

"The political leader made this statement in response to the view held by some people that the Government is moving too fast. They trying to do too much... in a short time. And indeed the Government is spending too much of the funds available to it at this point in time," he said.

Answering his critics, Donaldson said Manning told his audience that "the circumstances today is that there is unlikely to be as there have been in the 1980's a collapse of the prices of our energy products".

Smelter to bring jobs for La Brea

Trinidad & Tobago Express, Trinidad and Tobago Monday, March 27th 2006

ALUTRINT Ltd, operator of the proposed aluminium complex at La Brea, is moving swiftly to ensure that residents in the surrounding communities benefit significantly from the employment opportunities that will arise when construction is completed.

In an interview with the Express, Alutrint's Project Development Manager, Philip Julien said that Alutrint has taken a decision to establish a Technical Training Institute in La Brea. He added "We are forming a strategic alliance with the National Energy Skills Centre (NESC) to set up a training centre which will prepare residents and the wider community for employment when the complex becomes operational. We are also working with YTEPP to provide additional training opportunities for the community. The La Brea community is not only our geographic neighbour but it also one of our major partners and we want to ensure that the people from the area benefit as much as possible from our operations."

Julien emphasised that the local aluminium industry will provide more permanent jobs than most of the other energy sector projects and that the Alutrint complex will include a significant downstream component including a cable plant and a rod mill. He added, "these activities will lead to even more downstream opportunities especially in the manufacture of automotive parts. Another value that Alutrint will add to the country's natural gas chain is that while other energy-based industries may utilise about 7 million cubic feet of gas for every job created, we will use just 50,000 cubic feet of gas for every job created. In addition, when all the plants are completed, there will be about 1,000 permanent jobs available at Alutrint in La Brea with approximately 3,000 more jobs generated indirectly from spin-off industries and support services."

Don't bank on smelter closing, says Comalco

Stuff.co.nz, New Zealand 27 March 2006

It is a cop-out by the electricity industry to suggest uncertainty about the future of the aluminium smelter at Tiwai Pt is reason to defer making decisions about increasing New Zealand's power generation capacity, Comalco boss Tom Campbell says.

Comalco does not want to close the smelter and it is a mistake to place any reliance on that happening, he says.

Electricity Commission chairman Roy Hemmingway said last week that predicted power shortages from 2009 would be partially resolved if the smelter closed – a possibility if Comalco and Meridian could not agree on terms for a supply contract after 2012.

But Mr Campbell said the company had "no wish and certainly no intention" of closing the smelter in 2012. "It is a cop-out to suggest that Tiwai is somehow the obstacle which prevents the electricity industry sorting itself out."

He said the industry seemed to excel in passing the buck, but little else in the past few years.

"Yes, we do face uncertainty post-2012, but how many businesses in this country could be absolutely confident about their viability in seven years' time? We are no different.

"We would urge electricity industry leaders to act resolutely and collegially to resolve the obvious problems that the industry faces, before the lights do go out."

AdvertisementAdvertisementMr Hemmingway had said that if the smelter closed it would free up 5000 gigawatts of electricity a year, representing about six years of new load growth.

"Why would anybody build new generation to serve that period (2009 to 2012) knowing they are going to get a six-year surplus in 2012," he said.

Aluminium plant advances

Trade Arabia, Bahrain Sunday, March 26, 2006

Osla

Norwegian Norsk Hydro's plan to build one of the world's biggest aluminium smelters in Qatar took a step forward when Hydro and Qatar Petroleum sealed a joint venture, Hydro's aluminium chief said.

The 50/50 venture to build a 585,000-tonnes-per-year capacity smelter for a 2009 start-up to take advantage of Qatar's cheap energy firms up and slightly expands plans initially announced in December 2004.

'This is very important because what we did in December 2004 was to sign a more general agreemnt,' Hydro's aluminium boss Jon-Harald Nilsen told Reuters by telephone from Qatar.

'Now we have developed the detailed framework for carrying out the project and managing and operating the company,' he said.

The plans were adjusted from those announced earlier, with annual capacity climbing by 15,000 tonnes from 570,000 and the ownership of the joint venture simplified.

Hydro earlier said the smelter and associated power plant would cost around $3 billion to build. But the company did not give any new cost estimate on Thursday and said a final decision on whether to invest would come later this year.

Construction is expected to begin in mid-2007 with the first metal to be produced in the fourth quarter of 2009, said Norsk Hydro, which is the world's third biggest integrated aluminium group and Norway's Number 2 oil and gas producer.

Full output would be reached in mid-2010, Hydro said.

The plant could be expanded to an annual capacity of about 1.2 million tonnes, it said.

Nilsen declined to say how likely it was that the partners would go ahead with the bigger blueprint after the first phase.

Hydro and Qatar Petroleum (QP) agreed to establish a joint venture called Qatalum, which will build and operate the primary aluminium plant, consisting of a smelter, cast house and carbon plant, and a dedicated power plant, Hydro said.

The new deal simplified an earlier structure which would have involved three different companies with slightly different ownership stakes to own and operate the facilities.

The smelter will be driven with electricity from a 1,350 megawatt gas-fired power plant which will benefit from cheap Qatari gas, Norsk Hydro said.

'This project represents a key element in Hydro`s strategy to reposition our upstream aluminium business, expanding production in energy-rich parts of the world,' chief executive Eivind Reiten said in the statement.

New Head at RusAl's Unit

The Moscow Times, Russia, 27-mar-2006

Russian Aluminum has appointed the head of its alumina division, Steven Hodgson, as the new head of its representative office in Australia, the company said Monday in a statement.

He will focus on expanding the Queensland Alumina refinery, in which the aluminum producer holds a 20 percent stake, RusAl said.

Pavel Ovchinnikov, currently head of the Achinsk alumina complex, will succeed Hodgson as of April 3, the statement said. (MT)

Eskom mulls smelter interruptions as power squeeze bites

Mining Weekly, South Africa Mar, 27, 2006

Electricity utility Eskom will consider invoking the interruptability clauses it has with various energy-intensive clients, particularly those in the metals sector, as the reserve position between South Africa's winter peak and its installed power capacity continues to narrow.

At present, Eskom estimates the margin to be about 2 500 MW, but it is in the process of reviewing its plans in light of higher-than-anticipated demand as well as the six per cent growth target identified in South Africa's Accelerated and Shared Growth Initiative, Asgisa.

Eskom CEO Thulani Gcabashe is on record as saying that the utility will be able to meet its contractual obligations to its existing large users, as well as Canadian metals firm Alcan, should it decide to pursue a R12-billion aluminium-smelter project at the Coega industrial development zone in the Eastern Cape.

However, he has pointed out that some of South Africa's smelters ¬- most likely referring to those in the chrome and aluminium industries - operate under interruptible contract, which Eskom may consider enforcing to ensure security of supply.

"That is really part of the deal. They (the smelters) lived through the era of excess capacity without being interrupted, while having interruptible contracts. So it might be time to interrupt, but that is constrained by duration and frequency," Gcabashe states.

It is understood that the aluminium smelters, should they be interrupted, would require power to resume within three to four hours to avoid metal congealing in the pots. The net destructive effect on ferrochrome smelters is said to be potentially less deleterious, but only if the outages are planned.

It is unclear, though, whether BHP Billiton, which operates several potlines in Kwazulu-Natal, South Africa, and in Maputo, Mozambique, has been successful in transferring the bulk of these potential interruptions from the aluminium to the chrome industry. Should this be the case, the ferrochrome industry is likely to suffer the brunt of any planned interruptions, and will, therefore, be seeking close cooperation with the utility in a bid to limit asset and revenue damage. Interestingly, the mining giant recently sold its interest in Samancor Chrome to the Kermas group, in which International Mineral Resources is currently seeking to acquire a 32,5% interest at present.

Alcan investment decision imminent

Meanwhile, it has also emerged that, despite ongoing debate over the appropriateness of a new aluminium-smelter investment in light of South Africa's growing power squeeze, Alcan is close to making a decision on the proposed Coega smelter. It is understood that negotiations on the final electricity-tariff regime for the facility are at an advanced stage, with only notification of final agreement awaited by Eskom.

The 15% shareholder in the planned smelter, the State-owned Industrial Development Corporation (IDC), argues that the project continues to make sense for South Africa and that it is optimistic it will proceed.

CEO Geoffrey Qhena points out to Mining Weekly and Engineering News that the project, which has been scaled up to 720 000 t/y, will not be built in a single year, and that Eskom has factored the smelter build-up into its planning.

Eskom concurs, stating that it is confident of meeting its commitments to Alcan, particularly given that the plant will be built in phases - should construction start toward mid-2008, Alcan expects the smelter to be built, in at least two phases, over a 72- to 80-month timeframe.

Gcabashe suggests the decision now largely depends on what Alcan makes of Eskom's tariff offer.

It is believe that Alcan will receive a tariff based on the amortised cost base of the new-build programme, which could be between 20 cents and 30 cents a kilowatt-hour - this could not be confirmed, however. Hillside and Mozal, on the other hand, have more favourable tariffs, founded on South Africa's installed base, while their tariffs are also aligned to the ebb and flow of the aluminium price itself. However, Eskom's sole shareholder, the South African government, has made a policy decision to disallow any further commodity-linked deals, given that they now have to be accounted for as embedded derivatives and can, thus, cause material financial-statement volatility.

"I think it is still a worthwhile project. The timing is quite in order and has been planned for," Gcabashe told an investment conference at the beginning of March. However, he admitted that proposed expansions to BHP Billiton's Hillside and Mozal smelters had not been incorporated into Eskom's current planning.

Qhena agrees stating, philosophically, that "times change" and that the business case for the Coega smelter has, therefore, been aligned to South Africa's more constrained electricity position. "For us to be satisfied to proceed, we have to base the business plan on what Eskom is providing. If we base it on contracts of the past it would not be realistic," Qhena concludes.

Costs vs benefits

But there are still lingering doubts about the wisdom of pursuing an energy-heavy project such as the aluminium smelter given South Africa's generation constraints. Some feel it to be inappropriate, and suggest that it would be more beneficial if this scarce, well-costed resource were directed in support of other economic endeavours.

Industrial-policy expert Dr Zavareh Rustomjee, head of MEC Projects and former Department of Trade and Industry DG, believes the benefits still outweigh the costs to the economy as a whole, and more particularly for the Eastern Cape economy.

He admits that the value of having a new smelter investment is contentious, but says that, given that its power tariff is aligned to the amortised cost of generating that power, it is not really being subsidised and should offer positive developmental spin-off to the regions.

However, he says its developmental impact would be premised on Alcan offering the equivalent of an export parity price to downstream aluminium users, which he said was reportedly a precondition to it receiving the favourable power tariff from Eskom.

A similar demand was made of Saldanha Steel when it received the 37E accelerated depreciation incentive, but then owner Iscor, now Mittal Steel, reneged and priced on the basis of import parity pricing.

"I believe the net effect of a new aluminium smelter can be positive, provided that comparative advantages is translated through an export parity price commitment," Rustomjee explains.

Tax incentives for aluminium smelters extended through 2012

Metals Place, UK Source: Platts Mar 27, 2006

Washington governor Christine Gregoire gave final approval Thursday to a measure to extend business and operation tax incentives to state aluminium smelters.

During the 2001 energy crisis, the spiking costs of electricity caused most of the state's aluminium smelters to shut down. Many of these plants never reopened or have not resumed normal operations. Only about 1.5 million mt/year out of 1.8 million mt of primary aluminium is operating in the US Pacific Northwest.

As chair of the Technology, Energy and Communications Committee, Washington State Representative Jeff Morris (Democrat-Anacortes) worked with the industry and labour to keep aluminium plants open and jobs in Washington state. "Hundreds of Whatcom County [Washington] families depend on the Intalco plant for good paying jobs," said Morris, the legislation's prime sponsor, of Alcoa's 278,000 mt/year primary aluminium smelter. Only around one of the five potlines are currently operating at Intalco. "Current power rates are just too high and market conditions are too unstable for the plant to survive without these incentives," he said.

Under Morris's proposal, tax incentives put in place under the 2004 Aluminium Smelter Tax Program are extended to 2012. The measure received wide bipartisan support in both the House and Senate and was approved by Governor Gregoire during a bill signing ceremony at the Intalco plant in Ferndale, Washington.

RusAl in talks with Azerbaijan on plant construction

RIA Novosti, Russia 28/ 03/ 2006

BAKU, March 28 (RIA Novosti, Gerai Dadashev) - Azerbaijan's economics ministry and Russian metals giant RusAl have started talks on the construction of an aluminum plant in the Caucasus republic, the economics minister said Tuesday.

Geidar Babayev said the talks comprised a range of issues related to the $1-billion project, including the location of the plant, energy supply sources, raw materials and the cost of products.

"We have a positive attitude to the Russian company's proposal to open an aluminum plant in Azerbaijan," Babayev said earlier this month.

RusAl is among the world's top three aluminum and aluminum alloy producers. It exports its products to customers in 40 countries and accounts for 75% of the aluminum produced in Russia and 10% of global aluminum output. The company was established in March 2000, following the merger of some aluminum enterprises operating in former Soviet republics.

The proposal to build the aluminum plant, with an estimated annual capacity of 300,000 metric tons, comes in the wake of a row between Azerbaijan and Dutch company Fondel Metal, which signed a 25-year contract to revive aluminum production in the Caucasus republic in 2001, but which, authorities said, has failed to meet its investment obligations under the contract.

Babayev said the ministry was looking into the problem and that the contract would either be terminated or resumed when Fondel Metal had provided explanations.

In a recent news release, the Dutch company accused Azerbaijani authorities of plans to sever the contract.

"With significant capital investment and effort Fondel transformed two industrial ruins [aluminum plants] into Azerbaijan's largest exporter outside the oil industry," the company said. Fondel also said it had created more than 3,000 jobs in some of Azerbaijan's most economically deprived regions. The company accused the authorities of politically motivated actions in the run-up and aftermath of the November 2005 parliamentary elections, when the state began interfering in the daily operations of Fondel and other companies.

The Dutch company was invited to work in Azerbaijan by ex-Economic Development and Trade Minister Farkhad Aliyev, who was arrested in October 2005 on charges of an attempted coup and embezzlement.

Dry Cleaning by ALSTOM Technology Put into Operation at Krasnoyarsk Aluminum Plant

Financial Information Service(Registration), Russia - March 27, 2006

KRASNOYARSK, March 27. /FIS/. In the frame of a large-scale program of ecologic modernization, Krasnoyarsk Aluminum Plant in March starts operation testing of a dry cleaning facility using the ALSTOM technology. A total of 19 new 'dry' gas cleaners are to be constructed during production modernization until 2008, of which 15 will be made by the technology of the ALSTOM international concern: three - for the units with burnt anodes and 12 - for the units working by Soderberg technology.

China Chalco:Still In Talks With CVRD On JV Alumina Plant

Yahoo! News Tuesday March 28, 3:05 PM

SHANGHAI (Dow Jones)--The Aluminum Corp. of China (ACH), or Chalco, and Brazilian mining giant Companhia Vale do Rio Doce (RIO), or CVRD, remain in talks on the establishment of a joint-venture alumina plant in northern Brazil, Chalco officials said Tuesday.

Chalco was responding to recent talk that CVRD may rethink its plan to form a partnership with the Chinese company after the Chinese government expressed concerns over iron ore price talks and Chinese steel makers rejected further price hikes in 2006 iron ore prices.

Liu Qiang, Chalco's spokeswoman, said she wasn't aware of any changes in CVRD's plan to pursue the JV alumina plant.

CVRD is the world's largest iron ore producer and is one of the three mining companies that are currently in talks with China's Shanghai Baosteel Group Corp. on iron ore prices offered to Chinese steelmakers.

As reported, CVRD's chief executive officer Roger Agnelli said the Chinese government's attitude may prompt CVRD to reconsider its cooperation with Chinese companies, including the joint-venture alumina refinery to be built in northern Brazil's Para state.

The proposed plant is expected to have a startup capacity of 1.8 million metric tons of alumina a year.

Chalco is China's largest aluminum and alumina producer and has been expanding its raw material base in offshore markets over the past few years.

-Zhu Hui contributed to this article, Dow Jones Newswires; 86-21-6120-1200; hui.zhu@dowjones.com -Edited by Tracy Gan

Norway woos Russia, eyes Arctic gas riches

Peninsula On-line, Qatar 3/29/2006 1:41:4, Source ::: Reuters

NYHAMNA: Norway laid on the charm for Russian Prime Minister Mikhail Fradkov yesterday, calling the two countries natural energy partners ahead of Russia's decision on developing an Arctic Barents Sea gas field.

Norway's Statoil and Norsk Hydro are two of five foreign companies vying to partner Russia's Gazprom in the giant Shtokman project. The winners will be announced in the next few weeks.

Hydro, also the world's third largest integrated aluminium company, said too it was considering building a smelter in the Murmansk region – which would use gas from Shtokman.

"Norway and Russia are Europe's most important energy nations. That makes us natural partners," Hydro's Chief Executive Eivind Reiten said in a statement during Fradkov's visit to the Ormen Lange gas field off the central-west Norwegian coast.

Statoil's Chief Executive Helge Lund was not far behind in wooing Moscow. Russia is the world's number two oil exporter behind Saudi Arabia and Norway number three.

"Statoil wants Russia and Norway to work together to realise the potential for oil and gas activities in the Barents region," he said in a statement.

"Our joint knowledge and experience will be crucial if we are to tackle the challenges in tough, Arctic seas," he added.

Statoil is developing the Barents Sea Snoehvit field.

Norway's Prime Minister Jens Stoltenberg also accompanied Fradkov on his tour of Ormen Lange, which holds an estimated 375 billion cubic metres of gas but is still only about a tenth of the size of Shtokman.

"We shall show Norway's oil and gas industry at its very best and this is not difficult as it's very good," Stoltenberg told reporters at the site.

The other companies shortlisted as potential partners in Shtokman are Chevron, ConocoPhilips and Total.

Reiten also underlined that the Ormen Lange project was on time and on budget.

Discovered in 1997, the Ormen Lange offshore field is Norway's biggest current energy development with an estimated 375 billion cubic metres of gas and is due to start up in October 2007.

It will deliver gas to the UK through a 1,200km subsea pipeline and satisfy up to a fifth of Britain's gas need for years to come.

Hydro has an 18 per cent stake in Ormen Lange and Statoil 10.8 per cent.

Qatar Petroleum and Hydro Aluminium AS Sign Joint Venture

Webbolt Business News, Canada March 29, 2006, 18:46

By HS - Webbolt Newsroom

Doha - Qatar Petroleum and Hydro Aluminium AS have signed an agreement to form a joint venture for the development, construction and operation of the Qatalum aluminium plant in Qatar. The agreement marks an important step forward to build one of the world's largest and most competitive primary aluminium plants.

The joint venture agreement was signed in Qatar's capital Doha on Thursday by HE Abdullah Bin Hamad Al-Attiyah, Second Deputy Premier, Minister of Energy and Industry, Chairman of the Board of Directors and Managing Director of Qatar Petroleum, and Norsk Hydro President and CEO Eivind Reiten.

HE stated: "Qatar under the guidance of HH Sheikh Hamad Bin Khalifa Al Thani offers the best conditions for this kind of industrial development. The policy of the Government of Qatar is to broaden the industrial base of the country, ensuring the best environmental standards and working conditions. Qatar is an ideal location for serving growing aluminium markets in Asia, Europe and also North America. The vast gas resources of Qatar, combined with the country's ambition to diversify its industry, will ensure a long-term competitive aluminium plant."

"This project is an important step in Hydro's strategy to reposition its upstream aluminium business, said Eivind Reiten. "Qatalum will be an important contributor to improve Hydro's relative cost position in production of primary aluminium and to meet the future growth in demand."

The joint venture company Qatalum will be established to build and operate the primary aluminium plant - consisting of a smelter, a casthouse and a carbon plant - as well as a dedicated power plant. Qatar Petroleum and Hydro will each hold 50 percent of the new company. The plant is scheduled to start production in last quarter 2009. Full production is expected to be reached mid 2010.

The smelter will have an initial annual capacity of 585,000 tonnes of primary aluminium. The dedicated gas power plant has a planned installed capacity of 1,350 MW. The project, to be located in the Mesaieed Industrial City in Qatar, will be the largest initial phase greenfield aluminium smelter ever built.

The Qatalum project is based on strong strategic fundamentals. Qatar Petroleum is providing a unique combination of long-term competitive energy resources, an industrial infrastructure and proven record in developing mega capital venture projects.

About: Hydro is a leading integrated, global aluminium company, and a technology leader in the aluminium industry. Hydro brings more than 80 years of operational experience, leading positions in the aluminium metal products markets and strong record in the execution of large projects.

© Copyright 2006 - Webbolt Company Limited All rights reserved.

Venezuela bond update

Daily Journal (subscription), Venezuela 30-Mar-2006

PUERTO ORDAZ – Venezuela’s state aluminum company Venalum will change the quota system used to sell aluminum overseas and will also reduce exports of the product this year to favor local producers, the company’s president said Wednesday.

The country’s largest aluminum smelter is also renegotiating a four year contract to sell 90,000 metric tons of aluminum a year to its Japanese partners, Vena-lum President Isaías Suárez told Dow Jones Newswires.

Talks regarding a possible Japanese investment in Venalum’s expansion plans will begin later this year, he said.

Under a mandate of Ve-nezuelan President Hugo Chávez, the company, a unit of Corporación Venezolana de Guayana, or CVG, will reduce exports from 72% of sales to 50% in 2006. The company last year allocated only 28% of sales to local buyers, Suárez noted.

Venalum sold 444,000 metric tons of aluminum in 2005, company figures show. The company’s production goal is to exceed 440,000 this year, slightly less than last year.

The old "quota system will probably end during the second half of the year and a new mechanism will take its place," said Suárez. Under the new strategy, Venalum will follow Chávez’ policy of favoring a multipolar view of the world, where the U.S. has less dominance, when deciding which clients re-ceive particular sales allocations, he noted.

Countries in South America and in the Caribbean will get priority treatment in the allocation of aluminum sales, for example. Suárez warned, however, that the new allocation method is still being worked on.

By Raul Gallegos, Dow Jones Newswires

Surveillance Trial-Day 2

WTAP-TV, WV 30-Mar-2006

Todd Baucher

Current and former employees of Alcan Aluminum continued to take the stand today, in a civil suit trial involving its Pechiney rolled aluminum plant.

Two more witnesses said Thursday they did not give consent to have their conversations recorded by management at the Ravenswood plant.

A former employee said he spoke about the issue with security manager George Armstrong, after he learned the surveillance was going on.

"And I asked the question, 'are you not concerned about the privacy of all the employees who work for the facility?", said Jerry Lee McGee, a former security officer. "And he said he had permission from legal counsel to install the equipment."

McGee said in cross-examination he did not address the surveillance issue...when he submitted his resignation from the company in 2003. But he said, at the least, he was disappointed to find out it was going on.

"I can never trust the company again, or anybody affiliated with it," he testified.

17 people who were employees at the company say Pechiney monitored their workplace conversations between 2000 and 2003.

RusAl to Start Work on Smelter in 2006

The Moscow Times, Russia Friday, March 31, 2006. Issue 3383. Page 7.

By Yuriy Humber Staff Writer, Vedomosti

Alexander Bulygin

Russian Aluminum plans to start building the Boguchansky smelter later this year, part of a $6 billion combined metals and energy complex to be jointly owned and operated with HydroOGK, a unit of Unified Energy Systems.

The two companies will put up a combined $1.2 billion in funding for the complex, they said, adding that at least half the financing was to come from the state investment fund and loans from foreign banks.

The project, located in the Krasnoyarsk region, will be the world's biggest tie-up between a metals producer and an energy producer and is penciled in for a 2010 launch, HydroOGK managing director Vyachaslav Sinyugin said Thursday.

The complex, comprising a 600,000-ton capacity smelter and 3,000-megawatt hydroelectric power plant, is on the site of a half-completed power facility, which was started by the authorities 20 years ago.

"We have five greenfield smelter projects, averaging $800 million in cost, and more than 10 brownfield projects at $200 million average cost. But this is the priority project for RusAl," said Alexander Bulygin, CEO of RusAl.

Electricity accounts for about one-third of aluminum production costs, with sites for new aluminum plants traditionally chosen on the basis of cheap power sources being nearby.

Once fully up and running, the smelter will use only half of the plant's electricity.

The two companies, together with Krasnoyarsk authorities, Economic Development and Trade Ministry and Russian Railways, have worked on hammering out a final deal for more than 18 months. The board of state power utility UES, which fully owns HydroOGK, is set to give its final approval of the project Friday.

Over the past 20 years, Russia has pumped $500 million into the construction of the Boguchansky station, billed as Russia's largest hydroelectric station.

In terms of financing, loans from foreign banks are to bring in $2.5 billion, RusAl chief financial officer Vladislav Soloviyov said.

The loans would be repaid before 2020, based on the smelter reaching profitability by 2011 and the power plant by 2013, Soloviyov said.

The future profits of both the smelting facility and power plant will be split evenly between RusAl and HydroOGK, Soloviyov said.

In addition, $340 million is to come from the federal budget to create a flood zone for the station.

A total of $700 million is expected from the state investment fund for the energy network infrastructure and an additional $50 million for road building, Bulygin said.

The government has not yet announced who the beneficiaries of the investment fund will be.

"Boguchansky will in many ways resolve the energy deficits in the region," Sinyugin said.

"In any case, the state will retain ownership of all the infrastructure," Bulygin added.

"The completion of Boguchansky will be a boost for the energy utility and give them a guaranteed major client," said Dmitry Bulgakov, an energy analyst with Deutsche UFG.

"Essentially, if the energy market was liberalized, there'd be no need for such a partnership. They could raise the money themselves. As it stands, this works as a hybrid compromise," he said.

Although the Boguchansky project's ownership will be registered in Cyprus, all the project's taxes will be paid in Russia.

Cyprus was chosen due to inadequate property protection laws in Russia, the parties said. "We wanted the 200-page partnership document to be legally binding. Our advisers said the Russian laws would not be able to support this document," Bulygin said.

Romania: ALPROM Slatina Invests $30mn in Production Upgrade

Reporter.gr, Greece -17:07 - 30 March 2006

Aluminum producer ALPROM Slatina announced that it will invest $30 million in 2006 to purchase equipment and increase deliveries. "This year's investment program aims at the upgrading and increasing of production capacities for value added products, for which the demand is high abroad," said Gheorghe Dobra, general manager of ALRO, major shareholder in ALPROM, Bursa reports.

He said that their strategy is based on the increase in overall production, from 45,000 tonnes up to 120,000 tonnes by 2010.

ALPROM began diversifying its portfolio since it was privatized and managed to double production in the past three years.

Last year, the company launched a new series of aluminum profiles systems with low weight, which are meant for the manufacture of thermal insulating window frames.

ALPROM purchased equipment worth $9 million to set up a high capacity oven.

The ALRO - ALPROM - ALUM strategy aims at the increase of production for all the units in the group.

Alum will manufacture around 1 million tonnes of alumina per year, and ALRO's production will bf 420,000 tonnes over the next years, compared to 240,000 tonnes last year.

Source: Bursa

China's Qingtongxia inks alumina agreement with India's Ashapura

Source: Platts Metals Place, UK 30-Mar-2006

China's Qingtongxia Aluminium has signed a preliminary agreement with Indian minerals major Ashapura Minechem to jointly develop an alumina project in the state of Gujarat, company officials told Platts Thursday.

"We have signed a very preliminary agreement to work together on this project, and the relevant officials have now gone to the site for further studies and review," an official said. "We won't know of any progress details until they return," he added.

The project scale is planned at 1 million mt/year capacity of alumina, which would be constructed in two stages at an estimated cost of $600 million. "There is currently no timeframe for the project, we are awaiting for further studies to be completed first," a second official said. The companies are expected to hold 50% each in the venture.

India's Gujarat state is abundant in bauxite resources and reportedly has bauxite reserves of up to 45 million mt.

Meanwhile, Qingtongxia has targeted a higher aluminium ingot output of 430,000 mt in 2006 following the completion of expansion works at the end of 2005. The upgraded lines reached full capacity in February this year, lifting the company's total capacity to 430,000 mt/year.

Output in 2005 was around 100,000 mt as some of the production lines were shut down for the upgrade.

No EMA clearance to Alcoa yet

Trinidad & Tobago Express, Trinidad and Tobago Thursday, March 30th 2006

The Environmental Management Authority (EMA) has not granted a Certificate of Environmental Clearance (CEC) to Alcoa Inc, pending a request for further information.

Declaring Alcoa's submission as "incomplete", the EMA asked yesterday for further information "before any accurate determination and evaluation can be made".

On March 14 Alcoa submitted a CEC application for the establishment of a 341,000 tonnes per year aluminium smelter along with anode production facilities and an intermediate/downstream fabricating facility.

This is the second application for an aluminium smelter in the Cap-de-Ville/Chatham area after the National Energy Corporation withdrew the first one on March 8.

The EMA has requested additional information as basic as a map illustrating the specific location of the smelter as well as a scaled site plan which would outline site boundaries, and its position relative to neighbouring development and infrastructure. Additional geotechnical and geological information supporting the site's suitability also needs to be furnished.

Coming into effect in July 2001, the CEC process examined the environmental acceptability of a proposed activity, provided that all the conditions contained in the application are fulfilled.

SUAL to Invest $6Bln into Plants

St.Petersburg Times.ru, Russia Issue #1157(23), Friday, March 31, 2006

By Yuriy Humber, Staff Writer

MOSCOW — SUAL plans to pump $1 billion into factory upgrades and up to $5 billion into construction of new facilities in a bid to almost double aluminum production by 2013, company vice president Dmitry Yudin said Wednesday at a metals conference.

The world’s sixth-largest aluminum producer, which is controlled by billionaire Viktor Vekselberg through his Renova holding, will build one large 500,000-ton plant and several smaller operations that could raise the company’s annual production by 1 million tons to 2.04 million in five to seven years, Yudin said.

The company is currently in talks with utilities monopoly Unified Energy Systems, UES’s hydroelectric subsidiary HydroOGK and state nuclear power concern Rosenergoatom to secure long-term energy supplies at fixed prices. The outcome of the talks will determine the sites and timeline of the plans, Yudin said.

"We hope to start building the large plant in 2008," Yudin said on the sidelines of the conference. The site will be picked from eight locations, he said.

"Some of the smaller projects could start earlier. No one will invest in an aluminum factory without knowing the long-term energy tariffs," Yudin said.

The country’s two aluminum producers, SUAL and Russian Aluminum, see global demand for the metal rising, mainly due to China and India.

Russia is the world’s second-largest aluminum exporter after China, holding a 12 percent share of the global market, Victor Zhirnakov, deputy head of RusAl’s aluminum division, said at the conference. RusAl accounts for 75 percent of aluminum output in Russia.

RusAl and SUAL on Wednesday also did not rule out a merger, with talks between the two reportedly under way. "A merger will be possible when an agreement is reached among the shareholders," Zhirnakov said.

RusAl is wholly owned by Oleg Deripaska through his En+ energy holding. The two companies began cooperation this year on a Komi alumina mining project that has reserves estimated at 260 million tons.

After raw materials, which account for about half of aluminum’s production costs, energy ranks as the second-biggest expenditure. In the United States and Europe, a 150 percent hike in global energy tariffs over the last four years led to several factory closures in 2005.

A number of foreign producers, including Norway’s Norsk Hydro and U.S.-based Alcoa, are currently eyeing Russia as a place to set up primary aluminum-smelting operations, with both companies in talks with HydroOGK about energy tie-ups for factories in Siberia and northwest Russia.

In a bid to outpace its rivals, SUAL hopes it can also gain support from the state.

The company has appealed to the Regional Development Ministry and the governors of the Sverdlovsk, Chelyabinsk, Irkutsk and Khabarovsk regions, which SUAL has earmarked as potential locations for new factories, to lobby the government to introduce regulations allowing energy, transport and railway tariffs to be set for up to 25 years.

Denis Nushtayev, an analyst with Metropol, said the diversity of SUAL’s projects, in terms of both location and type of energy supply, was its greatest guarantee of success.

"The more choices, the higher the chances of realization," he said.

President says Coega smelter plans on track

The Herald Eastern Cape, South Africa 31-Mar-2006

By Patrick Cull Political Editor

NEGOTIATIONS with Canadian aluminium giant Alcan, which is considering building a multi-billion-rand smelter at Coega, are "on track", says President Thabo Mbeki.

He was replying to questions in the National Assembly yesterday on recent problems with the supply of electricity.

Mbeki said there were "very few countries in the world that can host a smelter of such capacity, and the fact that South Africa is being seriously considered indicates the degree of confidence that international investors have in our ability to provide sustainable, cost-effective electricity".

Mbeki dismissed media reports that another company, SUAL, had decided against any investment in South Africa because of the electricity supply problems.

Replying to a question from Independent Democrats member Lance Greyling , Mbeki said the government did not expect the outages experienced in the Western Cape to derail projections outlined in the Accelerated and Shared Growth Initiative for South Africa (Asgisa) programme.

"Business confidence remains high.The faster than expected economic growth has required that we accelerate our building plan, but it is expected that Eskom’s capital expenditure of R84-billion will have a massive positive impact on the economy, and should sustain and drive a six per cent growth rate."

He said Eskom was adding 1 050MW of peaking capacity through gas turbine plants, one at Mossel Bay and one at Atlantis.

"We have no evidence of there being an adverse impact on investment and accordingly the notion that there has been a rush away from investment in South Africa is not correct." Mbeki said that Western Cape premier Ebrahim Rasool was co-ordinating all relevant stakeholders in the Western Cape in a task force in co-operation with Eskom and Public Enterprises Minister Alec Erwin.

Responding to a further question by Greyling, who said that the ID was planning a class action against Eskom on behalf of affected businesses unless the government agreed to provide adequate compensation, Mbeki said he would contact Rasool and communicate the ID’s desire to assist in addressing the problem.

Eskom’s mega proposal for smelter’s electricity needs

The Herald Eastern Cape, South Africa 31-Mar-2006

By Guy Rogers Environment & Tourism Editor

ESKOM has proposed the construction of two new mega-power lines which it is hoping will cater for the electricity demand from the proposed aluminium smelter at Coega.

The planned twin transmission lines, each capable of carrying 765kv, will be routed from the Cape Corridor system near Victoria West in the Northern Cape to Grassridge sub-station, outside Port Elizabeth, a distance of about 500km.

Construction cost estimates have not been made available, but the figure could amount to several tens of million of rands a kilometre. The 2004 cost of the project that it is replacing – a single 400kv line from East London to Port Elizabeth – was R1,2-million a kilometre.

The announcement of the new project by Eskom’s consultant, Acer Africa, marks the first clarification of the much-debated question of how the government intends meeting the huge demands of the smelter, if the Alcan final EIA is approved and the multinational decides it wants to go ahead.

The scrapping of the 400kv project has delighted conservationists, who were battling against its routing through the Albany region game reserve hotspot north-east of PE.

But the proposed new lines, coupled to 50-metre-high towers and two 80m-wide servitudes and routed as they must be across Karoo and mountain farming and eco-tourism land, will likely throw up further questions around socio-economic and environmental costs, the Wilderness Foundation has warned.

The initial project to route a transmission line from Eros sub-station in southern KwaZulu Natal to Neptune sub-station in East London and down to Grassridge outside Port Elizabeth was controversial from the start when it was launched in 2004. This was not only because it was routed through a number of game reserves, but also because it was not factored into the environmental and financial assessment of the Coega IDZ.

Eskom has up to now denied a direct connection between the electricity project and the Coega IDZ, but Acer Africa confirmed yesterday that the 400kv line was based on the initial load forecast in the Port Elizabeth area "due to the development of the Coega IDZ".

On the latest announcement, Acer environmental consultant Bongi Shinga said: "The aim is that the lines will serve the growing demand in the PE area, but the greater load growth forecast does refer to the smelter."

The Cape Corridor is the southern end of an existing electricity distribution system based on coal-fired power from Mpumalanga. The system extends from Secunda through Bloemfontein, De Aar and then down to a proposed new sub-station, to be called Gamma, near Victoria West.

The corridor presently extends further down to the Western Cape but the proposal is that from Gamma the two new 765kv lines will be taken across to PE’s Grassridge, a direct distance of 460km.

Shinga said the EIA for the new project would be finished in February next year. A decision from the authorities might take "another month" but negotiations between Eskom and landowners will also have to be concluded before construction starts. Eskom’s aim is that the line must be ready to supply power by 2009, she said.

Alcan has proposed that construction of the plant could start in mid-2008 and would take 72-80 months, according to the latest correspondence to the provincial environment department.

Shinga said general study areas for the new project were still being identified and it was too early in the process to know if the route or route alternatives would affect the Addo Elephant National Park’s Karoo expansion zone or the Baviaanskloof Mega-Reserve – which includes a World Heritage Site.

Wilderness Foundation director Andrew Muir said he was delighted that the Albany region game reserves would now not be impacted. But the best solution for the province’s power needs in environmental and socio-economic terms is to build our own power generator at Coega, he said.