AluNews - December 2007

Alucasa to boost output to 2,000t/m in 2008 - Venezuela

Business News Americas, Chile - Monday, December 3, 2007

Venezuelan aluminum company Alucasa aims to reach installed capacity of 2,000t/m in 2008 thanks to investments in upgrades it plans to carry out next year, an Alucasa executive told BNamericas.

Alucasa currently produces 1,700-1,800t/m of aluminum processed as thin finished products, the company's quality control manager Alejandro de la Vega said.

To reach the goal, Alucasa anticipates investments in the coming year of roughly 4.3bn bolívares (US$1.9mn) in technological, environmental and social upgrades, he said.

"We hope to reach capacity after we carry out the upgrades," he added.

Output reached 15,800t in 2005.


The company recently received ISO 14001-2004 environmental certification after several years of preparation, the executive said.

"Since we sell to international markets, many of our clients requested an environmental management system and now this certification guarantees that we are working to improve the environment," he said.

The executive also believes certification will help the company attract more clients and save on energy in the form of electricity and gas, as well as other inputs, "which saves on costs and expenses and will benefit the company's finances," he said.

Alucasa, a subsidiary of state heavy industry holding company CVG, produces thinly rolled aluminum products for consumer and industrial use and exports to countries in Europe as well as Mexico, Peru, Ecuador and Colombia. Its plant is located in northern Venezuela's Carabobo state.

By Harvey Beltrán Business News Americas

UAE's RAKIA plans $2 billion aluminium smelter in Andhra Pradesh

Economic Times, India - 3 Dec, 2007

NEW DELHI: Ras-Al-Khaimah Investment Authority (RAKIA), a provincial investment company of UAE, today said it would investment $2 billion to set up an aluminium smelter in Andhra Pradesh.

RAKIA officials, who signed a contract with the Andhra Pradesh Mineral Development Authority for bauxite reserves to feed the facility in Visakhapatnam, said that the plant would come up in the next two and a half years.

"We are looking at building a 1.5 million tons per annum capacity plant for extracting alumina and 3.5 lakh tons facility for aluminium," RAKIA CEO Khattar Massad said here.

The UAE company would require land of 1,100 acres of land the project and the Andhra Pradesh Industrial Development Authority was already in the process of buying land.

Massad said: "The investment would be funded through internal accruals and debt. There are presently no partners in the project, but we might look at partnering someone in the near future."

Chelan PUD, Alcoa reach deal on power

Seattle Post Intelligencer - THE ASSOCIATED PRESS 04 Dec 2007

WENATCHEE, Wash. -- Commissioners of the Chelan County Public Utility District have approved a contract that will give Alcoa Inc. a share of the power output from Rocky Reach and Rock Island dams.

Alcoa officials say the 17-year contract will expand production, add 60 jobs and secure the future of the Wenatchee Works aluminum smelter.

The agreement will take effect in October 2011 and expire in October 2028. It gives Alcoa a roughly 25 percent share of the output from the two dams. In exchange, Alcoa pays the same share of the dams' operations, maintenance and debt, even if it doesn't use all the power.

Under the contract, Alcoa will pay $17.5 million when the contract is signed and will pay additional penalties if it shuts down before 2028. Alcoa locks in about 267 megawatts of power at an average price of $30 per megawatt hour at a time when world power prices are hovering around $66 per megawatt hour.

Both the PUD and Alcoa would be barred from selling the power on the wholesale market.

Opponents had urged the PUD to take a hard look at the proposal to ensure it didn't overly favor Alcoa.

Commissioner Werner Janssen voted against the contract after insisting that commissioners and the public should have had more time to study the deal.

"Even though I want Alcoa to stay and thrive and increase production, I feel this is too important a decision to do in a rush," Janssen said.

Others disagreed.

"Do we owe it to them to give them the power for nothing? No," PUD commission President Norm Gutzwiler said. "But we're not giving it to them for nothing. They're paying their fair share."

Commissioners approved the contract on a 4-1 vote Monday night.

The deal secures Alcoa's existing 390 jobs, the company said. Alcoa also will add a third potline after the new contract goes into effect and is expected to create about 60 new jobs, at wages that average around $19 per hour plus benefits, according to an Alcoa analysis from 2004.

Information from: The Wenatchee World,

Chinese Steelmakers Study Bid for Rio to Counter BHP (Update10)

Bloomberg 04 Dec 2007

By Helen Yuan

Chinese steelmakers, the largest buyers of iron ore, and the government are studying a joint bid for Rio Tinto Group to counter a $134 billion offer from BHP Billiton Ltd.

``It's an issue being discussed by top-level officials,'' said Chen Hanyu, a director at the resources office of Beijing- based Shougang Corp., the nation's ninth-largest steelmaker. Members of the China Iron and Steel Association have held talks, Vice Chairman Qi Xiangdong said in a telephone interview.

The steel mills want to block BHP's offer because the deal would give the world's biggest mining company control of almost half the Asian market for iron ore. Rio's London shares are trading at a 14 percent premium to BHP's all-share proposal, indicating investors expect a higher offer. Any acquisition by China would dwarf Cnooc Ltd.'s failed $18.5 billion bid for Unocal Corp., rejected by U.S. lawmakers in 2005.

``There are clear strategic reasons why they would consider'' a bid, Angus Gluskie, who helps manage the equivalent of $500 million at White Funds Management, including shares of London-based Rio and BHP, said in Sydney. Australia's newly elected Labor Party government may oppose such a transaction, he said.

Baoshan Iron & Steel Co., the listed unit of China's largest steelmaker, rose 5.2 percent to close at 15.53 yuan in Shanghai.

Rio, the world's third-largest miner, gained 72 pence, or 1.3 percent, to close at 5,515 pence on the London Stock Exchange. Seven of the eight other stocks in the Bloomberg Europe Metals & Mining Index dropped. Rio has more than doubled this year in London.

China's Acquisitions

China has been scouring the world for resources. Aluminum Corp. of China bought Peru Copper Inc. for $860 million in August, Anshan Iron & Steel Group in September agreed to a A$1.8 billion ($1.6 billion) Australian iron-ore joint venture, and Cnooc last year spent $2.7 billion buying Nigerian oil fields.

A bid ``is pretty positive for China's steelmakers,'' said Yan Ji, an investment manager at HSBC Jintrust Fund Management Co. in Shanghai. ``The control of raw material costs makes sense.''

Baosteel Group Corp., the nation's largest steelmaker, and domestic rivals are studying a bid, the 21st Century Business Herald said today, citing Baosteel Chairman Xu Lejiang. Fan Shunbiao, a spokesman for Baosteel, said he's not aware of any talks on a bid. Amanda Buckley, a Melbourne-based spokeswoman for Rio, declined to comment today. Samantha Evans, a Melbourne-based spokeswoman for BHP, also declined to comment.

``Chinese steelmakers, if united, are capable of making such a bid,'' said Lu Yizhen, who helps manage $640 million at Citic Prudential Fund Management Co, in Shanghai. ``It's also likely that steelmakers want to influence the shares of Rio, blocking BHP's bid.''

Financial Ability

Chen Bin, director of the industrial department of the National Development and Reform Commission, which supervises China's steel industry, said the commission isn't involved in any Rio bid proposal.

``A few of the biggest steelmakers in China and the central government may team up for the bid,'' Shougang's Chen said today in an interview. Chinese steelmakers have the financial ability to bid for Rio and are awaiting for a decision from the government, Zhao Kun, vice president of Baosteel, in charge of merger and acquisitions, said Nov. 26.

A five-year increase in metal prices has spurred about $185 billion of bids in the industry in the past year, according to data compiled by Bloomberg. In September, China created a sovereign wealth fund, China Investment Corp., with $200 billion to seek investments to improve returns on its $1.46 trillion of reserves.

More Acquisitive

The investment fund last week denied a report in the China Business Journal that it may bid for Rio.

``It's almost an open secret that China wants to secure more overseas resources assets,'' said William Fong, who helps manage $6.8 billion of Asian equities at Baring Asset Management Asia Ltd., in Hong Kong. ``BHP's bid for Rio is probably a trigger.''

Chinese companies have grown more acquisitive. The Industrial and Commercial Bank of China Ltd. is buying a 20 percent stake in Africa's largest lender Standard Bank Group Ltd. for 36.7 billion rand ($5.4 billion), the country's largest overseas purchase. Ping An Insurance (Group) Co. last month bought a 4.2 percent stake in Fortis, Belgium's largest financial services company.

Australia's previous coalition government blocked Royal Dutch/Shell Group's proposed takeover of Woodside Petroleum Ltd. in 2001. Cnooc, China's third-largest oil producer, was blocked from buying Unocal Corp. in 2005 by U.S. lawmakers.

New Round

``There has always been a strong nationalistic viewpoint held by the Labor Party that supports Australian ownership of its resources,'' said White Funds' Gluskie.

Rio's Chief Executive Officer Tom Albanese has told investors BHP's three-for-one stock proposal undervalues his company.

BHP and Rio would together control 38 percent of the global seaborne iron ore trade, according to the Australia & New Zealand Banking Group Ltd., rivaling the largest producer Cia. Vale do Rio Doce.

``Chinese steelmakers are so fragmented, putting them in a weaker position when negotiating with giant iron ore suppliers,'' Helen Wang, a Shanghai-based analyst at DBS Vickers Hong Kong Ltd., said by phone today.

To contact the reporter for this story: Helen Yuan in Shanghai at

Alcoa to boost recycling

Pittsburgh Tribune-Review, PA 06 DEc 2007

Alcoa Inc. said Thursday it plans to expand its aluminum recycling capability by 50 percent with the opening of a new $22 million project at its can reclamation facility in Tennessee. Improvements include a new crusher and delacquering furnace, supporting building enclosures, utilities and environmental systems. Alcoa expects the expansion to be completed over the next 12 to 18 months. Alcoa expects to recycle nearly 14 billion aluminum cans this year. Separately, the Alcoa Technical Center in Upper Burrell, Westmoreland County, received a $398,520 grant from the federal Department of Energy to support development of a low-cost solar power system.

Alcoa Applauds U.S. House of Representatives for Passage of New Vehicle Fuel Efficiency...

Reuters -Thu Dec 6, 2007

Alcoa Applauds U.S. House of Representatives for Passage of New Vehicle Fuel Efficiency Standards

NEW YORK--(Business Wire)--Alcoa (NYSE:AA) announced today it applauded the U.S. House of

Representatives for passing new vehicle fuel efficiency standards

incorporated in the energy bill. The bill would require 35 miles per

gallon fuel average for new domestic vehicles, including SUVs, by 2020

- a 40 percent increase from current corporate average fuel-economy

(CAFE) standards.

"Lightweight materials, such as aluminum, play a critical role in

making vehicles safer, cleaner and more fuel efficient," said Kevin

Kramer, president, Alcoa Wheel Products, who oversees Alcoa's

Automotive Market Sector Team. "Light weighting represents one of the

most viable options available to carmakers worldwide as they seek to

improve the fuel efficiency and environmental performance of their


The use of aluminum for vehicle lightweighting can deliver a

substantial reduction in CO2 and other emissions over the life of the

car through fuel savings, even allowing for the CO2 generated by the

initial production of aluminum. Each pound of aluminum replacing two

pounds of iron or steel in a car can save a net 20 pounds of CO2

emissions over the typical lifetime of a vehicle. Since 1990,

increased use of aluminum in the world's vehicles has avoided burning

84 billion liters of gasoline and more than one billion metric tons of

greenhouse gas emissions.

"In fact, it is projected that the growing use of aluminum in the

transportation market will help make the aluminum industry greenhouse

gas neutral by 2025," said Kramer.

Alcoa's support for the proposed CAFE standards is consistent with

its leadership in addressing climate change. Since 1990, Alcoa has

reduced its greenhouse gas emissions by 25 percent. The company also

is a founding member of the United States Climate Action Partnership

and the Global Roundtable on Climate Change.

Rio Tinto's Albanese Says BHP Offer `Dead in Water' (Update3)

Bloomberg - Dec. 6 (Bloomberg)

By Dale Crofts

Rio Tinto Group Chief Executive Officer Tom Albanese said BHP Billiton Ltd.'s unsolicited $133.7 billion takeover offer is ``dead in the water'' after his company rejected the bid for undervaluing Rio's assets and prospects.

``BHP presented an incomplete proposal, which our board took seriously,'' Albanese said today in an interview from New York, where he's seeking investor support for plans to keep the company independent. ``We rejected it on the basis of value. As far as we are concerned, the deal is now dead in the water.''

BHP, the world's largest mining company, offered three of its shares for each Rio share in a bid to create a company that would control about a third of the iron-ore market and become the world's largest supplier of energy coal, copper and aluminum. Rio's London shares are trading at an 11 percent premium to the offer, signaling investors may be expecting a higher bid.

``An all-share offer is so tenuous in terms of where this might play out if we are at the top of the commodities cycle,'' said Leo Larkin, a metals and mining analyst at Standard & Poor's in New York. ``Rio has to put its best foot forward and talk themselves up as a bargaining maneuver.''

Rio fell 137 pence, or 2.4 percent, to 5,583 pence in London. The London-traded shares have gained 5.4 percent since Nov. 8, the day BHP announced the bid.

Chinese Bid

Albanese declined to comment on a report that Chinese steelmakers and the country's government are studying a joint bid for Rio to block BHP's offer because the acquisition would give the combined company control of almost half of Asia's iron-ore market.

A five-year gain in metal prices has spurred about $185 billion of bids in the industry in the past year, according to Bloomberg data. In September, China created a $200 billion investment fund, China Investment Corp., to improve returns on the nation's $1.46 trillion of reserves.

Rio isn't interested in counter-bidding for BHP in a so- called Pacman defense because such a maneuver wouldn't benefit Rio shareholders, Albanese said today, referring to the 1980s video game where the main character turned around to eat its ghost pursuers after swallowing a special pill.

``Our principal objective is to create value for shareholders,'' Albanese said. ``I cannot conceive of a scenario where a Pacman defense creates value for Rio Tinto shareholders.''

Albanese said his relationship with BHP counterpart Marius Kloppers is ``good.'' He declined to comment on whether he spoke to Kloppers in the past week.

Rio's Defensive Plans

Last month Albanese outlined plans, including developing mines in Australia and Guinea, to triple the company's iron-ore output to more than 600 million tons a year. Rio is also increasing its dividend 30 percent and said it may sell as much as $30 billion of assets in an attempt to repel BHP.

``The BHP proposal has acted as the catalyst for the true value of Rio's assets to be recognized,'' Austock analyst Tim Gerrard said in a Dec. 3 note. ``Buy-side and sell-side, ourselves included, have had to reappraise the significance of Rio's undeveloped projects in the light of BHP's approach and the continuation of strong commodity prices.''

BHP CEO Kloppers said merging its operations and infrastructure with Rio would yield annual savings and revenue gains of $3.7 billion.

Rio bought Alcan Inc. for $38.1 billion in October to become the world's largest aluminum producer. Cost savings from the acquisition may be $940 million, about 50 percent more than first expected, the company has said.

To contact the reporter on this story: Dale Crofts in Chicago at .

Bauxite Resources granted two explorations licences at Muchea project

Mineweb, UK -Thursday , 06 Dec 2007

Recently-listed Australian bauxite explorer, Bauxite Resources Limited (ASX: BAU - "Bauxite"), is set to expand its exploration focus, today announcing the granting of two additional Exploration Licences (EL's) at the Company's Muchea Project and the application for an additional four exploration licenses in the Darling Ranges of Western Australia - A region that produces approximately 17 % of the world's alumina.

The two additional granted tenements bring Bauxite's total granted ground holding at the Muchea Project to 499 kms2 or 49,900 hectares.

Chairman of Bauxite Resources, Mr Luke Atkins, said the granting of the two tenements and the four additional license applications represented the first phase in a planned expansion of the Company's ground position in the Darling Ranges.

"Bauxite Resources now has three granted Exploration Licences at the Muchea Project and has an additional 26 licences currently under application," he said. "The Company's aim is to build a significant exploration portfolio in this highly prospective region, with a view to developing a sustainable bauxite/alumina industry to tap into the increased demand associated with China's development."


The Muchea Project covers part of the Darling Range ground that was previously explored in the 1960's and 70s by CSR, Hancock, Wright and Pacminex and proceeded to a State Agreement. During that time, in excess of $2m was spent investigating the potential for the Muchea bauxite material to support an alumina refinery. The feasibility work included extensive and high-quality drilling programs, metallurgical testwork, resource estimations, and plant feasibility, which in today's terms would be in the vicinity of $50m .The Muchea Project covers ground that extends beyond these previously explored areas which are reported to contain bauxitic laterite.

The Company's has two further assets, the first being the South Darling Range Project - which includes freehold ground adjacent to the Willowdale Mine and Alcoa's Huntley Mine, (Huntley being the largest bauxite mine in the world) and areas surrounding Alcoa's mineral lease area.

The second asset is the 1,765km˛ Kimberley Bauxite Project, which is adjacent to the bauxite exploration areas of the Mitchell Plateau and Cape Bougainville, areas which contain some of the largest known bauxite deposits in the world.

Bauxite/Alumina Market

Australia currently produces over 40% of the world's bauxite and in combination with Guinea, contains approximately 50% of the world's reserves. The primary use of bauxite is in the production of aluminium which is derived from alumina, a processed form of bauxite.

Over the past five years the substantial increase in world demand for aluminium has seen alumina production running at close to full capacity. This demand, led by China, has resulted in a reduction of world alumina stockpiles and a corresponding strong increase in the spot price for aluminium which, for the first eight months of 2007 averaged US$2,740 a tonne, nearly 7 per cent higher than the 2006 average price of US$2,570 a tonne.

In the same five year period, there has also been a noticeable consolidation within the aluminium industry evidenced with the many takeovers including Alumax, Inespal, Alpix and Reynolds by Alcoa and more recently, the US$38.1 billion takeover of Alcan by global mining giant, Rio Tinto.

The above economic factors, in combination with the fact that the Company's tenements are in close proximity to established infrastructure, - including ports, rail, road networks and alumina refineries - represents the possibility for Bauxite Resources to re-visit the early alumina refinery studies and to investigate the potential for early cash flow from the direct shipping of bauxite ore.

India's Nalco to sign agreement with Indonesian govt

Reuters - Fri Dec 7, 2007

JAKARTA, Dec 8 (Reuters) - India's state-run National Aluminium Co Ltd (NALU.BO: Quote, Profile, Research) plans to sign a Memorandum of Understanding in January with the Indonesian government to build a smelter on Sumatra island, a senior official at the Industry Ministry said late on Friday.

For the initial phase, the company plans to build an aluminium smelter in South Sumatra province with a capacity of 250,000 tonnes a year, said I Putu Suryawirawan, director of metal industry at the Industry Ministry.

The smelter's capacity will be doubled to 500,000 tonnes a year which will need a total investment of $3 billion, he added.

"After signing the MoU, Nalco will conduct a feasibility study on the project," said Suryawirawan.

He added alumina, raw material for the smelter, will be supplied by Nalco's parent company in India.

Nalco's project would be another fresh investment in aluminium processing in the country.

Besides the aluminium smelter, Nalco plans to build a coal-fired power plant which can generate a total of 750 megawatts of electricity from the plant's 3 units.

The power plant will need coal supplies of 4.5 million tonnes per year, Suryawirawan said.

Nalco owns bauxite mine with annual production of 4.8 million tonnes per year and alumina processing with output of 1.575 million tonnes per year.

The company also owns an aluminium smelter, producing 345,000 tonnes of aluminium. (Reporting by Yayat Supriatna, writing by Fitri Wulandari; editing by Sugita Katyal)

Alcoa to clean PCB-tainted river shoreline

The Columbian, WA - Friday, December 07, 2007

BY ERIK ROBINSON, Columbian staff writer

A PCB-tainted stretch of Columbia River shoreline will be cleaned to the highest level that's technically feasible, state regulators announced Thursday.

Alcoa will have to dredge up and haul away a huge volume of sediment. Department of Ecology officials said the company will remove tainted sediment as deep as 3 feet from a "hot spot" of pollution that measures roughly 2 acres in size - about 300 by 350 feet.

Alcoa, which opened its Vancouver aluminum smelter in 1940, isn't disputing the state's requirement.

"It's probably one of the most conservative cleanup standards ever issued by the state," said Mark Stiffler, Alcoa's director of asset planning and management in Pittsburgh. "Given the conditions that we have in this issue, it's a standard that we can achieve."

The 1,800-foot-long polluted stretch of shoreline fronts the defunct Alcoa smelter in Vancouver. Even though the state had been aware that polychlorinated biphenyls tainted the river since 1997, it had yet to force a cleanup of the suspected carcinogen.

Then, earlier this year, researchers with the Army Corps of Engineers discovered alarmingly high levels of PCBs in the tissue of a common type of clam living in the area near Alcoa. At 3,500 parts per billion, the level of PCBs in clams taken from the Alcoa shoreline measured higher than any collected in Portland's notoriously polluted lower Willamette River.

The discovery, and subsequent media attention, caught the attention of Gov. Chris Gregoire, who last month directed the state Department of Ecology to accelerate cleanup of the site.

The hot spot includes PCB concentrations as high as 300,000 parts per billion, while contamination in the broader area of shoreline ranges between 100 to 1,000 ppb. The state will require Alcoa to remove as much as 95 percent of PCB contamination, enough to leave no more than 98 ppb of residual contamination.

"It's based on the most protective level we can get," said Chance Asher, a supervisor in the agency's toxics cleanup program. All the removed sediment will be hauled away aboard barges and replaced with clean sediment dredged out of other areas of the river.

A health threat

State officials said the company has been cooperative.

"We now have an accelerated schedule to make sure we're in the river next year," said Carol Kraege, manager of the agency's industrial section. "They want to get the cleanup done."

Alcoa also will dig up and dispose of all clams on the site, to minimize the chance of anyone harvesting them directly - or allowing them to be consumed by other aquatic life. PCBs tend to concentrate in long-lived creatures at the top of the food chain, such as sturgeon.

The substance, historically used as an electrical lubricant, has been banned from production in the U.S. since the 1970s because of negative health effects.

Research shows long-term exposure to PCBs causes cancer and other health problems. The longer and greater the exposure, the greater the risk. Toxicologists say health problems can crop up with exposure to PCBs through the food web, such as by eating sturgeon, which devour the clams, shell and all. Federal health researchers have also raised concern about the pollutant slowing behavioral and neurological development in babies born to women eating PCB-contaminated fish.

part of full article

Energy company preaches restraint on natural gas projects - Audit puts 12-year life on reserves

Jamaica Gleaner, Jamaica - Friday | December 7, 2007

Linda Hutchinson-Jafar, Business Writer

Chairman and chief executive officer of BP Trinidad and Tobago, Robert Riley, is pressing for restraint on new natural gas projects, saying the depleting reserves require the country to hold back on drilling plans.

"We have to exercise restraint, because we cannot allow growth to so drive us that we get so far ahead of exploration potential that we have projects but no gas," Riley said in Port-of-Spain.

Multinational energy companies and domestic gas users have a difference of opinion over gas pricing for local companies and how best to maximise revenues from the export of natural gas.

With production costs increasing due to inflation and more difficulty in finding gas, Riley said it was vital to realise the best possible price to get the natural gas to market, suggesting that Henry Hub should be the reference point.

Depleting rapidly

A January 2007 audit from Houston-based Ryder Scott shows that the country's gas reserves are depleting rapidly and suggests more discoveries are needed quickly to sustain the expanded gas needs of the country.

"Trinidad has neither stranded gas nor low-priced gas anymore," said Riley. The Ryder Scott report indicated that natural gas reserves declined by more than 3 trillion cubic feet (tcf) over a two-year period, from 2005 to 2007.

Based on a production rate of 4.5 billion cubic feet per day, the gas will last only 12 more years unless new discoveries are made.

The country's '3P' or proved, possible and probable reserves were estimated at 31.04 tcf, down from the 34.87 tcf identified in 2005.

Proved reserves in 2007 totalled 17.05 tcf, possible was placed at another 6.23 tcf, and probable at 7.76 tcf.

Port-of-Spain has since reviewed proposed energy projects categorised under two listings to be shelved until the reserve ratio improves.

The A-list projects which represent combined investments running close to US$9 billion include the Alutrint Aluminum Smelter, Alcoa Smelter, Essar Steel and Westlake Ethylene Complex, and First UAN.

Government's own plans for an LNG Train X - separate from the mega Atlantic LNG line - are also in cold storage for the time being.

Trinidad currently has a daily gas production rate of 3.9 billion cubic feet, with 59 per cent being allocated to LNG production and 41 per cent to the domestic market, which is dominated by ammonia and methanol production.

Additional sources needed

By 2016, daily natural gas production is estimated to increase to 5.9 bcf, split 53 per cent LNG and 47 per cent to the domestic market.

To meet its own contractual obligations, BPTT's main challenge in the medium to long term is finding additional resources every year to sustain its 500,000 barrels of oil equivalent a day output.

"The challenge being to put one trillion cubic feet of gas behind the pipe every year going forward because that's what we have to replace as a business," said Riley.

BPTT can comfortably maintain the 500,000 barrels up to 2011 with its Mango and Cashima platforms delivering additional resources, said the CEO.

BPTT, a subsidiary of BP plc, has mapped out a plan to scoop additional resources from the mature Columbus basin, one of the most prospective regions of the country's acreage.

It has created what it calls a mega-merge, which has accumulated 40 years of data including chemical and seismic information to guide the recovery of resources in the Columbus basin.

"We believe we understand the extent of the basin; we have a fairly good idea of the size," said Riley, adding that BPTT was expecting no big hits.

"We will find gas, but we will not find anything in the sort of large numbers that we used to find in the last decade or so," he said.

"The conversation around exploration, therefore, changes, merely from exploring to exploring somewhat with a lot more appraisal to prove up and pull through the 'yet to find' - the possible and probable resources. We are, therefore, tending to what people call in the industry, the plateau phase of the growth life cycle, and the transition from growth to the sustained mode."

Rusal Invests N17.5bn in ALSCON

This Day (subscription), Nigeria 12.09.2007

From Onwuka Nzeshi in Abuja

Core investors in the Aluminum Smelter Company of Nigeria (Alscon) Ikot Abasi, Akwa Ibom state are to inject additional N17. 5 billion ($150 million is to facilitate the completion of the rehabilitation of the company and commencement of production.

The additional fund which is to be provided by aluminum producing giant Rusal, its partner, Ferrostaal AG and the Federal Government will be pooled together over the next three years.

Rusal's Chief Executive, Alexander Bulygin, said the company will inject high class technology and expertise that will transform the firm into one of a market leader in the sub region.

"With its technology and expertise, Rusal will ensure that ALSCON products are highly competitive, transforming the smelter into a key driver behind the development of the Nigerian economy and our business in the region", he said.

He said the acquisition of Alscon through the privatisation exercise is part of Rusal’s strategy to boost aluminum production in the country and West African sub region.

The investors also plan to reposition the company through raising the production capacity of the plant to about 150,000 tonnes annually and pushing its product to the global market and ensuring that ALSCON products were exported into the highly competitive market using Rusal’s existing and potential channels worldwide.

Rusal had won the bid exercise supervised by the Bureau of Public Enterprises as core investor in the company. The Russian firm, had following the successful bid signed a Share Purchase Agreement (SPA) to acquire majority stake in the company located in Akwa Ibom State . It acquired 77.5 percent shares in the company, while Ferrostaal AG and the Federal Government as minority shareholders hold 7.5 percent and 15 per cent respectively.

Rio Seeks to Force BHP to Make Formal Takeover Bid (Update4)

Bloomberg Dec. 11 , 2007

By Jesse Riseborough and Madelene Pearson

Rio Tinto Group, the world's third- largest mining company, asked U.K. regulators to force BHP Billiton Ltd. to turn its $139 billion takeover proposal into a formal bid or drop the offer.

The request to the U.K. Takeover Panel will set a deadline for BHP to formalize its position, London-based Rio Tinto said today in a statement. BHP, the world's biggest mining company, still wants to engage with Rio Tinto, Melbourne-based BHP spokeswoman Samantha Evans said.

BHP may be forced to desist from any approach for six months unless it accedes to a request from the Takeover Panel, Rio said. BHP wants to create a company that would be the biggest producer of energy coal, copper and aluminum, an effort that Rio's Chief Executive Officer Tom Albanese said is ``dead in the water.''

``It puts a bit of pressure on BHP to put up or shut up,'' said Steven Robinson, senior investment manager with Alleron Investment Management in Sydney, which manages A$1.2 billion ($1.1 billion) including BHP and Rio stock. ``This is a bit of a distraction for management at Rio. If nothing is going to come of it they really want to get on with running the business.''

Rio fell 20 cents, or 0.1 percent, to A$146.50 at the 4:10 p.m. Sydney time close on the Australian Stock Exchange. BHP rose 1.4 percent to A$44.20. That values its offer at a 9.5 percent discount to the current Rio share price. Both companies' shares trade in Sydney and London.

BHP Committed

``This a matter for the takeover panel and it's inappropriate for us to comment further while they consider the matter,'' BHP's Evans said today by phone. ``We remain committed to what we believe is a logical and compelling proposal and we would like Rio Tinto to engage with us.''

Rio won't comment further on matters before the panel, Melbourne-based spokeswoman Amanda Buckley said today.

BHP ``will consider what has been suggested by Rio Tinto but it won't change them from their overall plan which is to continue to market the company and the attraction of the merger,'' Peter Rudd, an analyst at Carroll, Pike & Piercy Pty, which manages A$850 million ($756 million), said today in an interview in Melbourne. A higher offer ``would be one alternative,'' he said.

Iron Ore

Rio's Albanese last month said BHP's proposal undervalues the company's assets and growth prospects, which include plans to more than triple output of iron ore to more than 600 million metric tons a year. Rio may sell as much as $30 billion of assets in an attempt to repel BHP.

BHP Chief Executive Officer Marius Kloppers has been meeting with shareholders around the world and customers in China, Korea and Japan, to sell the deal. BHP announced the proposal on Nov. 8 after Rio directors rejected it.

The company has held talks with Rio shareholders about the proposed offer without making a formal bid. BHP may walk away from the deal if the Rio Tinto board does not recommend it, Charlie Aitken, head of institutional dealing at Southern Cross Equities, said in a research note Dec. 4.

To contact the reporters on this story: Jesse Riseborough in Melbourne at Madelene Pearson in Melbourne on

Value chains and power: the end of vehicle manufacturer dominance?

Automotive World 10 December, 2007

By Dr Peter Wells

The proposed merger of BHP and Rio Tinto is yet another example of value chain restructuring in the auto industry, a trend that might diminish the power wielded by OEMs

article is available only to subscribers

Blackstone Break-Up Bid for Rio Tinto Could Undo Alcan Merger

Seeking Alpha, NY -: December 11, 2007

Shares of Rio Tinto Plc (RTP) were up nearly 2% in London trading and more in New York after the Daily Telegraph reported that The Blackstone Group (BX) is putting together a group that includes a Chinese sovereign wealth fund to make a break-up bid for the miner.

A takeover offer from rival Anglo-Australian miner BHP Billiton Plc (BHP) was rejected by Rio earlier this year.

The newspaper said Blackstone is already believed to have hired lawyers to make the offer, and is in discussions with bankers.

By breaking up Rio completely, the company’s merger with Canadian aluminum giant Alcan (AL) would also have to be undone.

Global Alumina's stock sinks after discussions end without sale, Canada 2007-12-11

SAINT JOHN, N.B. - Shares in Global Alumina Corp. (TSX:GLA.U) fell 22 per cent Tuesday as the company announced that sale discussions with an unidentified party had ended without a deal.

After a trading halt, Global Alumina shares were down 53 cents at US$1.87. Its stock traded in U.S. dollars.

"The parties have not agreed to extend the (sales talks) exclusivity period," Saint John-based Global Alumina said in a release.

"The company does not intend to make any further announcements regarding any further negotiations unless an agreement is reached."

Global Alumina and its joint-venture partners are developing an alumina refinery in the bauxite-rich region of the Republic of Guinea. Its partners are subsidiary Global Alumina International Ltd., BHP Billiton, Dubai Aluminium Co. and Mubadala Development Co.

On Oct. 18, Global Alumina announced it was in talks for a possible sale with an undisclosed suitor, sending its stock sharply higher that day.

"Any agreement to proceed with a potential transaction would be subject to the prospective buyer's undertaking an extensive due-diligence review of the company, only after which could the offer price be determined," the firm said at that time.

Kazakhstan Aluminum Plant Opens

The Moscow Times, Russia Thursday, December 13, 2007. Issue 3806. Page 6.


PAVLODAR, Kazakhstan -- Kazakh metals major Eurasian Natural Resources opened a $900 million aluminum smelter on Wednesday, the country's first, which it expects will hit full capacity of 250,000 tons per year by 2011.

ENRC, with a market capitalization of $13.8 billion, is one of Kazakhstan's largest companies, accounting for about 4 percent of the Central Asian country's gross domestic product.

The official opening of Kazakhstan Aluminum Smelter two years after the first brick was laid is part of the country's efforts to diversify its economy away from oil and gas.

"We are not only producing and selling raw materials. We are turning into a country which makes competitive products," Kazakh President Nursultan Nazarbayev said at the smelter's opening ceremony in the northeastern city of Pavlodar.

ENRC, which raised more than $2.7 billion this month floating about 20 percent of its stock in London, says most of the aluminum produced at the smelter will be exported. It has not specified target markets.

Kazakhstan Aluminum Smelter has initial production capacity of 62,500 tons per year. Output is scheduled to rise to 125,000 tons in 2008 and to 250,000 tons per year by 2011.

ENRC's shareholders include copper producer Kazakhmys, which said in a statement on Wednesday that its stake had fallen to 14.6 percent from 18.8 percent after ENRC's IPO.

The Kazakh government's stake was also diluted from its pre-IPO level of 24.8 percent. The rest of the nontraded stock is controlled by metals magnates Alexander Mashkevich, Alijan Ibragimov and Patokh Shodiyev.

Metals and mining industry targets energy assets

Reuters Wed Dec 12, 2007

LONDON (Reuters) - Being a metals tycoon puts you in the front line in the hunt for the earth's dwindling energy resources.

Even multi-billion dollar profits can be dented by rocketing energy costs while building mines and smelters in ever-more remote corners of the globe highlights the dependence on power supplies.

So it's not surprising that Lakshmi Mittal and Oleg Deripaska, two of the world's richest men, are ploughing money made on soaring metals prices into energy assets to gain greater control over sky-high fuel costs and diversify their fortunes.

Access to cheap Siberian hydropower helped former nuclear physicist Deripaska make United Company RUSAL the world's top maker of aluminum, the most energy-intensive metal to produce. RUSAL now plans to build nuclear power plants in Russia.

ArcelorMittal (MTP.PA: Quote, Profile, Research) (ISPA.AS: Quote, Profile, Research), the world's largest steel producer, has also shown signs of interest in investing in nuclear power. Meanwhile, the Mittal family's holding company is pouring cash into oil, electricity and gas.

"Energy costs for the industry are significant. It makes a lot of sense to control your energy sources," said Ernst & Young's Partner in Charge for Global Mining and Metals, Michael Lynch-Bell.

Rio Tinto's (RIO.L: Quote, Profile, Research) (RIO.AX: Quote, Profile, Research) $38.1 billion takeover of Alcan this year, smelter plans by BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research) in the Democratic Republic of Congo and Norsk Hydro (NHY.OL: Quote, Profile, Research) in Qatar are all investments driven by aluminum's reliance on power, which makes up 30 to 40 percent of manufacturing costs.

One of Alcan's key attractions was a deal with Quebec ensuring inexpensive hydroelectricity. Alcoa (AA.N: Quote, Profile, Research), seen as vulnerable after it lost out on Alcan to Rio, has failed to draw suitors partly due to its high-cost North American smelters.

"For any of the big consumers of power, future energy supplies are a growing concern. They can be held to ransom. To build a captive power plant for an aluminum smelter makes perfect sense," a metals and mining banker said.

BHP, the world's largest diversified mining company, is studying plans for a $3 billion aluminum smelter powered by hydroelectricity from the Congo River while Norsk Hydro has a $4.8 billion project to build a smelter and gas-fired power plant in Qatar with Qatar Petroleum.

U.S. and European aluminum smelters -- accounting for about 8 percent of current world capacity -- are seen closing by 2011, to be replaced by capacity in the Middle East, Russia, Iceland and South America, Fitch Ratings said in a report.

"Previously a lot of industries were sited where there was surplus electricity. Aluminum smelters would go there to suck up the surplus, but those days are over," Mark Fraser of natural resources consultant CRU Strategies said.

The Middle East, with its plentiful oil and gas supplies, has also attracted projects for other energy-intensive metals such as direct reduced iron and silicon metal, he added.


Energy is less vital for steel but enough of a worry for Arcelor Mittal in Belgium to say it would consider co-investing in any new nuclear power built.

The steel maker also emerged last month on a shortlist of companies bidding to build new reactors at Romania's nuclear power plant. It recently gained coal mining rights in India and is believed by industry sources to have looked at Russian coal assets auctioned in October.

Billionaire Mittal is devoting some of his personal fortune to energy as well. He has a stake in a new oil refinery in India, interests in oil and gas in Turkmenistan, Syria and Nigeria and has pledged $1.1 billion for oil, power and liquefied natural gas projects in Bangladesh.

"He likes the fact that the end game in energy as much as in raw materials is to have control of supply. If you control supply then it makes a very attractive business proposition," a steel executive said.

"Another factor is that Mittal has synergistic experience from steel because of dealing in emerging markets, dealing with governments, dealing in a broadly commodities-based industry. He knows how oil and gas could work," he added.

Brazilian mining giant CVRD (VALE5.SA: Quote, Profile, Research) is another example. Driven by concern about rising gas prices it has bought natural gas licenses and has a joint venture with Royal Dutch Shell (RDSa.L: Quote, Profile, Research) to prospect Brazilian fields.

Metals and mining experts say it could work the other way too, with cash-rich energy companies diversifying into the booming commodities industry as it continues to consolidate.

"It's a scramble for resources and very much driven by the fact that these companies have a lot of cash in hand. We could see energy and other industries trying to take part," said Magnus Ericsson, Chairman of research firm Raw Materials Group.

(With additional reporting by Karen Norton in London)

Kaiser Aluminum Announces Appointment of Senior Vice President - Corporate Development and Appointment of Additional Officers

Business Wire (press release), CA - 12 Dec 2007

FOOTHILL RANCH, Calif.--(BUSINESS WIRE)--Kaiser Aluminum (NASDAQ:KALU), today announced that John Barneson has been named Senior Vice President – Corporate Development and will be responsible for the company’s external growth initiatives. Mr. Barneson previously served as the company’s Senior Vice President and Chief Administrative Officer.

"John has extensive operational and executive-level expertise in virtually every aspect of our businesses and strategy," said Jack A. Hockema, president and CEO of Kaiser Aluminum. "External growth is a key strategic initiative for the company as we move forward, and this move will allow John to focus his efforts on exploring opportunities that will complement our product portfolio and deliver long-term stockholder value."

The company also announced the following appointments:

John M. Donnan as Senior Vice President, General Counsel and Secretary. Mr. Donnan will be assuming responsibility for oversight of a number of areas previously managed by Mr. Barneson relating primarily to regulatory and compliance functions. He joined the company in 1993 and was appointed Vice President, General Counsel and Secretary in 2005.

James E. McAuliffe as Senior Vice President – Human Resources. Mr. McAuliffe joined the company in 1998 as Vice President of Human Resources for the company’s fabricating business and has more than 25 years of experience in leadership roles in human resources at the corporate and divisional levels of large multinational public companies including Rexam, Allied Signal and J.P. Industries.

Lynton J. Rowsell as Vice President and Chief Accounting Officer. Mr. Rowsell joined the company in 2006 as director of external reporting and assumed the Chief Accounting Officer position in 2007. Prior to joining the company, he was employed by GeoLogistics, a freight forwarding company with revenues of approximately $2 billion. From 1999 to 2006, he held several positions of increasing responsibility, most recently as a senior manager at Ernst & Young.

"These gentlemen reflect the depth and quality of the company’s management talent and our confidence in their ability to assume roles of increasing responsibility," added Hockema.

BHP Studies `Next Steps' in Takeover Approach to Rio (Update5)

Bloomberg - Dec. 12, 2007

By Jesse Riseborough and Brett Foley

BHP Billiton Ltd., the world's biggest mining company, is studying the ``next steps'' in its takeover approach for Rio Tinto Group, which continues to reject talks on the $138 billion proposal.

BHP Chief Executive Officer Marius Kloppers is ``mystified'' as to why Rio's board hasn't agreed to discuss the offer, he told reporters today on a conference call in London. He declined to expand on BHP's next move.

Rio, the world's third-largest miner, asked U.K. regulators yesterday to force Melbourne-based BHP to formalize its position. BHP wants to create a company that would be the biggest producer of energy coal, copper and aluminum, an effort that Rio CEO Tom Albanese said is ``dead in the water.''

``The size of the transaction mitigates against something very hostile,'' said Shaun Giacomo, who helps manage $1 billion at SG Asset Management Pte. in Singapore. ``You would kind of want their cooperation if you were going to sign a $200 billion check.''

BHP fell 2 pence to close at 1,670 pence on the London Stock Exchange. Rio dropped 23 pence, or 0.4 percent, to 5,657 pence, a premium of 10.4 percent to BHP's three-for-one all-share offer, indicating investors expect a higher bid.

Bid Deadline

BHP is in early stage talks with the U.K. Takeover Panel and has yet to make a submission on any bid, Kloppers said. Rio's request to the panel will set a deadline for BHP to make an offer and it may be forced to desist from any approach for six months unless it accedes to the panel's request, Rio said yesterday.

``We are a disciplined company, we are a patient company; we will take a decision, if any, in due course when the time comes for that,'' Kloppers said. ``Generations of management have worked on this. We have obviously crystallized something very interesting which the market has received very well but there is no sense of urgency.''

BHP is under pressure to increase its offer from some shareholders. Perennial Investment Partners Ltd., Argo Investments Ltd. and Baker Steel Capital Managers LLP say the three-for-one stock offer is too low. BHP needs to come back with a bid of 3.9 shares for every Rio share to get Rio to engage, Austock Securities Ltd. said Dec. 3.

``I don't get the sense they would have gone this far to walk away,'' SG Asset Management's Giacomo said.

Copper Expansion

BHP said it made a presentation to investors today after shareholders asked for more detail on the outlook and relative performance of both companies. BHP said it has more than doubled the copper and uranium capacity of its Olympic Dam project in Australia. The mine may be ``the world's best ore body'' and has the potential for further expansion, Kloppers said in an analyst presentation in London.

Olympic Dam will be extended in three stages to increase annual copper output to 730,000 metric tons, uranium production to 19,000 tons and gold to 800,000 ounces, Kloppers said. He didn't give costs. BHP said in its 2007 annual report it was considering expanding the project to 500,000 tons of copper, from 215,000 tons currently.

The company is also studying doubling production at the Cerro Matoso nickel project in Colombia, Kloppers said. BHP has delivered better market value, earnings per share, dividends, production and shareholder return growth compared with Rio, it said today in its presentation.

`Unrepresentative Periods'

The presentation ``ignores Rio Tinto's long-run value which was the basis the board rejected BHP's three-for-one share proposal,'' Melbourne-based Rio spokeswoman Amanda Buckley said today by phone. ``This statement today is all about selecting unrepresentative periods for comparison rather than really addressing the value point.''

Rio's Albanese last month said BHP's proposal undervalues the company's assets and growth prospects, which include plans to more than triple output of iron ore to more than 600 million tons a year. Rio may sell as much as $30 billion of assets in an attempt to repel BHP.

To contact the reporters on this story: Jesse Riseborough in Melbourne at ; Brett Foley in London at

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    Argentina's Aluar Seeks $150 Million Loan to Expand (Update1)

    Bloomberg Dec. 14, 2007

    By Guillermo Parra-Bernal

    Dec. 14 (Bloomberg) -- Aluar Aluminio Argentino SAIC, the only Argentine aluminum producer, plans to borrow $150 million in a senior, secured term loan to pay for expansion plans, a person with knowledge of the deal said.
    Aluar is expected to pay 1.15 percentage points over the three-month London interbank offered rate, said the person, who declined to be named because terms of the loan are private. Libor, a benchmark for borrowing, is currently set at 4.966 percent.
    The projects for which the Buenos Aires-based company is seeking funding will double output capacity, primarily for export, the person said. Aluar, which this year may produce 450,000 tons of aluminum compared with 270,000 tons in 2005, pledged in October to spend as much as $3.5 billion on a smelter and hydroelectric dam in the southern province of Santa Cruz.
    Aluar is seeking the funds for 3 1/2 years from banks led by France's Calyon, the investment-banking unit of Credit Agricole SA, and JPMorgan Chase & Co., the person said.
    Aluar, which has operations in the Patagonian province of Chubut, completed an $850 million expansion of its Puerto Madryn aluminum smelter in September. It also has plans to invest $400 million more to add an additional 105,000 tons a year to output by 2009, Chairman Javier Madanes said in October.
    Aluminum prices have risen more than 170 percent since June 2005 amid increased demand in Asia, the U.S. and Europe to make auto parts, appliances and beverage cans.
    The loan will be secured by receivables, and the banks involved with the financing plan to take it for syndication at the start of 2008, the person said. The company, through a spokesman, declined to comment.
    Aluar was unchanged at 5.95 pesos at 10:10 a.m. New York time today on the Buenos Aires Stock Exchange. They have gained 42 percent this year, valuing the company at about 7.9 billion Argentine pesos ($2.5 billion).
    To contact the reporter on this story: Guillermo Parra-Bernal in Sao Paulo at

    Stemming Climate Change

    The Moscow Times Monday, December 17, 2007. Issue 3808. Page 11.

    By Brook Horowitz

    At the United Nations Conference on Climate Change that has just concluded in Bali, the world's governments agreed to begin two years of negotiations to replace for the Kyoto Protocol on greenhouse gas emissions. But the tensions between the United States and China over who takes on obligations for emissions will make a solution hard to come by between now and 2009. In the absence of global leadership by the two largest producers of greenhouse gases, could there be a role for Russia, the third-largest producer?
    Environmental issues have not traditionally been high on the agenda in Russia. Moscow ratified the Kyoto Protocol, but there is little incentive for Russia to reduce emissions, which were based on the country's 1990 industrial production levels -- very high compared with the ensuing years of post-Soviet decline. Some cities have been rated amongst the world's most polluted. Furthermore, with low domestic energy prices, consumers lack motivation to save energy.
    But change is afoot. Russian companies, faced by the challenge of rapidly increasing demand, are investing in more efficient, environmentally friendly technologies. For example, TNK-BP is planning to invest more than $1.5 billion over the next five years to develop associated gas production. RusAl, the world's largest aluminum producer, is investing in energy-saving technologies in its new plant in Taishet near Irkutsk.

    International banks funding large projects in Russia are influencing corporate behavior by being ready to refuse finance to companies that present an environmental risk. The European Bank for Reconstruction and Development, with its strategy to promote sustainable energy, focuses project finance on developing renewable sources such as last year's investment into Gidro OGK's reconstruction of hydroelectric plants.
    Attitudes are changing too. A recent survey of Russian companies by the World Wildlife Fund showed considerable commitment to the introduction of environmental management systems and standards such as ISO 14001. Consultations with local communities and nongovernmental organizations on environmental concerns by companies such as Unified Energy System are becoming more commonplace. Environmental lobbying can sometimes work, as was shown in 2006 by the rerouting of Transneft's pipeline away from Lake Baikal. Recently President Vladimir Putin even reminded the head of the Sochi Olympic corporation to make sure that environmental issues were properly dealt with during the 2014 Games.
    For Russia, climate change presents a host of untapped opportunities. The country has scientists capable of participating in the development of clean technologies. For example, there is groundbreaking work in producing nuclear energy more safely than with traditional methods, and Russian scientists are working on hydrogen technology and nanotechnology, both important in renewable energy. This research could be in fierce demand in both the developed and developing worlds, challenged by how to make clean energy cost-effective and how to reduce emissions without adversely slowing economic growth.
    Companies are in fact ready to take action on environmental issues even if the law and public opinion do not necessarily force them to. As elsewhere, they can exert far more influence by taking a position rather than by waiting for an environmental disaster to happen or for governments to decide for them.
    If business and governments, both in Russia and abroad, could encourage these new trends and make the most of the competitive advantages of industry and science, there could be real benefits for Russia and the world. Inside the country, such an approach would resurrect research and development that has been underfunded over the past 15 years, and encourage diversification of the economy into high-tech industries.
    Over the next two years of negotiations following the Bali conference, Russia, as the only member of the Group of Eight that is also a rapidly industrializing nation, could make a positive impact by leading the commitment to radically cut emissions post-2012. A Russia actively contributing to solving climate change would help diffuse many of the current tensions in the international energy dialogue and accelerate the long-term diversification of global energy sources and the introduction of energy-saving technologies -- two critical components of global energy security.
    Russia would thereby position itself as a country not only safeguarding its national interests, but it could also make a significant contribution to the sustainable development of the world for decades to come.

    Brook Horowitz is executive director of the International Business Leaders Forum in Russia.

  • Chalco raises spot alumina price by 10.53 pct to $569 per ton
  • (subscription), China - 17 Dec 2007
  • By Ida Chen
  • Shanghai. December 18. INTERFAX-CHINA - The Aluminum Corporation of China Co. Ltd. (Chalco), China's largest alumina and aluminum producer, today announced that it has raised its alumina spot price by 10.53 percent to RMB 4,200 ($569.11) per ton.
  • The price rise is due to tight alumina supply in both the domestic and global markets, as well as a high alumina CIF price at around $470 per ton, Chalco said.
  • Prior to Chalco's decision to raise the alumina spot price, more than 10 non-Chalco alumina producers raised alumina spot prices to RMB 4,200 ($569.11) per ton last Thursday.
  • "We predict that the current tight supply in the domestic alumina market will end after the Spring Festival [in early February], since the phenomenon was created by increased demand from downstream aluminum smelters and tight transportation capacity in anticipation of the Spring Festival," a Beijing Antaike analyst, who asked to remain anonymous, told Interfax today.
  • The alumina price hike is also a result of rising imported bauxite prices and freight rates, the analyst said.
  • "Chinese alumina smelters aren't rushing to lift prices again because they need to wait and see what the reaction from the aluminum smelting sector will be, as alumina prices have been lifted several times this year, from a low of RMB 3,100 ($420.05) a ton to the current price of RMB 4,200 ($569.11) a ton," said Shan Guibin, a senior analyst with China Commodity Marketplace (CCM), a Beijing commodity market service provider.
  • He warned that an excessive hike in alumina prices would probably force aluminum smelters to reduce production in the future.
  • "Although the price of alumina is increasing significantly, the aluminum futures price has recently fluctuated at a comparatively low level, between RMB 17,500 ($2,371.27) and RMB 18,000 ($2,439.02) a ton, at the Shanghai Futures Exchange. Aluminum demand is relatively stable but domestic supplies are increasing as new capacities come online, which limits the space for aluminum prices to move," said a sales official with Shanxi Huaze Aluminum & Electricity Co. Ltd., a mid-sized aluminum smelter.
  • The company has signed a long-term alumina contract with Chalco, with a fixed price that is 17 percent of the average monthly aluminum futures price on the Shanghai Futures Exchange.
  • According to market rumors, the Chinese central government may cancel the alumina import tax from the current 3 percent in January of next year, with the intention of encouraging alumina imports and putting pressure on the domestic market.
  • "Because they expect this policy to be enacted, some importers are stockpiling imported alumina and are holding off on Customs clearance in Chinese ports to sell it in the domestic market later. There are at least 300,000 tons of alumina stockpile waiting in Qingdao and Lianyungang ports right now," Shan with CCM said.
  • Shan said he is concerned that a drastic increase in deliveries into the domestic market from those ports at the beginning of next year would substantially have an impact on the alumina price.
  • China to Continue to Restrain Investment in New Copper and Aluminium Smelting Projects
  • Resource Investor, VA - 17 Dec 2007
  • By Ida Chen
  • SHANGHAI (Interfax-China) -- The Chinese government will continue to restrain investment in new copper and aluminium smelting projects in a bid to curb high energy consumption, according to the National Development and Reform Commission's 2007 industry structure adjustment guidelines released last Friday.
  • The country will limit investment in crude copper smelting projects with annual production capacity under 100,000 tonnes. Also, new crude copper smelting projects that consume more than 550 kilograms of standard coal per tonne of copper produced and copper refining projects that consume than 250 kilograms of standard coal per tonne of copper produced, will have investment limited.
  • The NDRC will also continue to control investment in new alumina projects that consume less than 800,000 tonnes of domestic bauxite per annum or 600,000 tonnes of imported bauxite per annum. Furthermore, the NDRC will restrain investment in new secondary aluminium projects that have an annual production capacity of less than 50,000 tonnes and aluminium fabrication projects with annual capacity below 100,000 tonnes.
  • In addition, the guidelines state that China will not be encouraging investment in hot-rolled strip (below 800 millimetres in width) projects, galvanized sheet projects that have less than 250,000 tonnes of annual production capacity, or colour-coated plate projects with less than 100,000 tonnes of annual capacity.
  • To further curb fast growth in Chinese aluminium production capacity, the NDRC also said that aluminium smelting plants using pre-baked cells below 100 kiloamps must shut down by the end of 2008.
  • The NDRC is also halting secondary lead projects with annual production capacity below 100,000 tonnes.
  • Ormet starts sixth line, sees full capacity in 2007
  • Reuters Wed Dec 19, 2007
  • NEW YORK, Dec 19 (Reuters) - Ormet Corp. (ORMT.PK: Quote, Profile, Research), a closely held U.S. aluminum producer based in Hannibal, Ohio, restarted the last of six potlines at its smelter on Nov. 28, and anticipates a full pot count in the line by the end of 2007, Chief Executive Officer Mike Tanchuk said on Wednesday.
  • The line restart is currently 65 percent complete. At full capacity Hannibal produces 260,000 tonnes of aluminum a year.
  • Tanchuk said work continues on bringing the other potlines up to full capacity as well. November's average count came to 768 operating pots compared with 1,032 total pots.
  • Tanchuk joined James Riley, chief financial officer, on a conference call and told analysts Ormet lost $19.6 million on revenues of $130.5 million in the third quarter ending September 30. Riley said 2006 comparisons were not meaningful.
  • Ormet's smelter was idled in 2005 following a bankruptcy filing and a prolonged labor strike. Last December, under new management, the smelter restarted its first potline and has since refocused operations and gradually restarted its lines.
  • Asked by an analyst whether the company is gearing itself up to be sold, company executives said Ormet was focused on getting the Hannibal plant fully operational and reducing costs.
  • "When that is in place, the board will make a decision. What we're saying is that now is not the time," said Riley.
  • Riley reported third quarter aluminum sow sales at $101.7 million or 78 percent of total sales, with billet sales of $19.1 million or 15 percent. The rest of the quarterly revenues came from selling bauxite.
  • For the first nine months, Ormet sold $213 million of sow for 60 percent of total sales with billet accounting for $77.9 million or 22 pct of nine month sales. Sales of excess alumina and bauxite earlier in the year made up the rest of sales.
  • Ormet curtailed its billet operation on Oct. 17, and Riley said the company will increase sow sales for the rest of 2007.
  • For the year through November, Hannibal produced 142,824 tonnes of molten metal, less than anticipated earlier in the year because of the delay in restarting the sixth potline.
  • In August, Ormet said damage to its alumina supplier's facility in Jamaica from Hurricane Dean curtailed deliveries to the Hannibal smelter and delayed the potline start up.
  • Its 2008 alumina contracts are in place with about half given to each of two suppliers. With a uniform source for the raw material, quality should improve, Tanchuk said.
  • Ormet also set 2008 anode contracts at adequate quantities of 166,000 tonnes, but with significant price pressures.
  • "It is realistic that we could see the cost rise by as much as $32 million per year over current costs," the CEO said.
  • "Some current contracts are not being honored by suppliers because of the rapid increase in petroleum coke prices in China and high anode demand from smelter start-ups. We are working hard to find ways to reduce this unacceptable cost increase both short and long term," the executive added.
  • Ormet set metal sales agreements for 98 percent of its 2008 metal units and agreed to sell about 50 percent of its higher purity aluminum in 2009.
  • "Having agreements in place provides a platform for us to put hedges in place, which we support. We are watching the market daily and will execute them when the price meets appropriate thresholds for 2008 and 2009," said CFO Riley.
  • To cut costs, executives said they were working with their power supplier and the Ohio legislature to cut its electricity rate and were reviewing ways to cut holding costs or to sell its facility in Burnside, Louisiana, among other measures. (Reporting by Carole Vaporean; editing by Carol Bishopric)
  • Alcoa sells packaging business to N. Zealand firm
  • AFP 21-Dec-2007
  • NEW YORK (AFP) — US aluminum giant Alcoa announced Friday it has agreed to sell its packaging and consumer operations to New Zealand's Rank Group Limited for 2.7 billion dollars in cash.
  • "The transaction is expected to be completed by the end of the first quarter 2008," Alcoa said in a statement.
  • Alcoa's packaging and consumer businesses represented about 10 percent of its revenues last year, raking in about 3.2 billion dollars, the company said. It also generated 95 million dollars in after-tax operating income.
  • The businesses being sold include Consumer Products, a manufacturer of the Reynolds Wrap aluminum and plastic foil brand.
  • The sale also includes Closure Systems International, which manufactures plastic and aluminum packaging closures and capping equipment for foods, drinks and personal care products.
  • Alcoa is also selling Flexible Packaging, which manufactures packaging materials for the pharmaceutical, food and beverage, tobacco and industrial markets; and Reynolds Food Packaging, makers of stock and custom products for supermarkets, and the food service, food processor and agricultural industries.
  • The packaging businesses being ceded by Alcoa to Rank Group employ about 10,000 people in 22 countries.
  • Alcoa had said in October that, following a "strategic review," it was preparing to sell its packaging and consumer operations as part of a wide-ranging reorganization.
  • The US metals giant said then that it had "received strong indications from strategic buyers" for the packaging and consumer businesses.
  • The October announcement came weeks after Alcoa announced it was selling its stake in Aluminum Corporation of China Limited (Chalco).
  • Rank is owned by reclusive billionaire Graeme Hart, 52, New Zealand's richest man. Hart has a personal fortune estimated by local media at 2.7 billion New Zealand dollars (2.05 billion US).
  • Hart, who left school at 16, worked variously as a tow-truck driver and panel beater before branching into business, primarily buying and turning around under-performing companies.
  • In recent years he has focused on the paper packing sector, turning Rank Group into the world's second biggest operator in the paper products field.
  • Acquisitions in the past year include Blue Ridge Paper Products Inc in North Carolina, and Swiss company SIG Holding AG -- which ranks second only to a Swedish company, Tetra Laval, in the global beverage carton market.
  • Hart likes to stay out of the public limelight, but in a rare interview he has talked of a lack of interest in making money for its own sake, and described his wealth as a "by-product" of what he does.
  • Alcoa, state reach 30-year power deal to ensure jobs, investment
  • Newsday, NY - December 21, 2007
  • MASSENA, N.Y. (AP) _ Alcoa Inc. will invest $600 million in its Massena smelter operations and preserve at least 900 jobs through 2043 in a deal for 30 years of low-cost power from the state, Gov. Eliot Spitzer said Friday.
  • "The loss of Alcoa would have crippled the local economy, and this agreement ensures that these important jobs will remain in New York state for years to come," said Spitzer, who announced the agreement during a visit to the northern New York plant.
  • The company also will contribute $10 million to an economic development trust to help spur more growth in the region, he said.
  • "We can finally breathe a sigh of relief and look to the future," said Larry Richards, president of United Steelworkers Union Local 420A, one of the two unions that represent the plant's approximately 1,200 workers.
  • Alcoa is the largest employer in rural St. Lawrence County, contributing an estimated $250 million annually to the local economy. The Massena operations are the longest continually operating aluminum facility in the world.
  • Under the agreement, the New York Power Authority will continue to supply Alcoa with low-cost hydroelectric power from its Franklin D. Roosevelt-St. Lawrence Power Project for 30 years. The Alcoa power accounts for approximately 60 percent of the power plant's generating output, Spitzer said.
  • In return, Alcoa will invest approximately $600 million for the major overhaul of its Massena East smelter. The company pledged to maintain a total employment level of between 1,065 and a minimum of 900 jobs over the term of the 30-year contract.
  • Alcoa and NYPA's current 30-year agreement expires in 2013, which is when the new agreement would take effect. The agreement includes an option to extend the contract for another 10 years.
  • Alcoa also agreed to set up a $10 million "North Country Economic Development Fund" to be jointly administered by NYPA and Empire State Development Corp. Spitzer said the money would be used exclusively for creating jobs and capital investments in the region, including the counties of St. Lawrence, Franklin, Essex, Jefferson, Lewis, Hamilton and Herkimer.
  • Because of the agreement, "the economic future of the region has been anchored for decades to come," said state Sen. James Wright.
  • Spitzer was joined in the announcement by Bernt Reitan, Alcoa's Executive vice president, and Frank McCullough Jr., NYPA chairman.
  • Negotiations on the contract started in early 2006. At one point, Alcoa threatened that it would leave Massena to pursue other investments. The aluminum maker said it did not want to invest a half-billion dollars upgrading its smelters if it did not have a contract in place.
  • Additionally, the agreement for the first time allows the NYPA to share in Alcoa's profits when aluminum prices are high by linking electricity prices to the price of aluminum. Also, the NYPA may proportionately reduce the power allocation if employment levels fall below agreed to levels.
  • Alcoa is the world's leading producer of primary and fabricated aluminum, serving customers in the automotive, transportation, aerospace and industrial distribution markets.
  • In October, Alcoa set all-time records for revenue, earnings, earnings per share and cash from operations for the first three quarters of the year. It reported year-to-date earnings of $23.36 billion.
  • BHP Must Make Formal Rio Bid by Feb. 6, Panel Says (Update1)
  • Bloomberg - Dec. 21, 2007
  • By Brett Foley
  • Dec. 21 (Bloomberg) -- BHP Billiton Ltd., the world's largest mining company, must make a formal takeover bid for rival Rio Tinto Group by Feb. 6 or give up its offer, the U.K.'s Takeover Panel said.
  • BHP must bid by 5 p.m. that day or walk away until six months from when it announces its decision, the panel said today in a statement distributed by the Regulatory News Service.
  • London-based Rio, the world's third-biggest mining company, asked the panel on Dec. 10 to force BHP to formalize its bid, currently worth $123 billion. Rio Chief Executive Officer Tom Albanese said the previous week that the proposed takeover was ``dead in the water'' after his board rejected the offer and refused to engage in talks.
  • Melbourne-based BHP unveiled its plans Nov. 8, seeking to create a business with a third of the world's iron-ore market and more energy coal, copper and aluminum than any of its rivals.
  • BHP ``is considering its options in light of the deadline,'' the company said in a statement ``There can be no assurance that BHP Billiton will progress its proposal.''
  • ``Our shareholders deserve to have certainty and therefore we welcome the panel's decision,'' Rio Chairman Paul Skinner said in a statement.
  • Iron Ore
  • BHP's CEO Marius Kloppers said on Dec. 12 his company had delivered better growth and returns to shareholders than Rio in the past five years and outlined a proposal to expand its Olympic Dam and Pilbara iron-ore assets in Australia. The Takeover Panel had contacted BHP and the company was preparing a response, he said.
  • Albanese last month said BHP's offer undervalued the company's assets and growth prospects, which include plans to more than triple output of iron ore to in excess of 600 million metric tons a year. Rio may sell as much as $30 billion of assets in a strategy aimed at repelling the takeover bid.
  • To contact the reporter on this story: Brett Foley in London at .
  • Russians eye China to produce aluminum
  • China Internet Information Center, China - 29-dec-2007
  • Russia's United Co Rusal, the world's leading aluminum producer, said it hopes to bank on China's push for sustainable development to further expand in the nation.
  • Rusal plans to increase its presence in China in "the near future" and is currently in negotiation on further partnerships of existing capacities, a spokesman said.
  • Rusal's only manufacturing operation in China is a 15,000 ton-a-year plant it acquired in Shanxi Province for cathode blocks, to supply its aluminum smelters in Russia. The Moscow-based company had announced it would double its Chinese cathode capacity.
  • Highest priority
  • The energy-intensive aluminum industry is one of the areas with highest environmental priority for Chinese government, which has set a goal to cut energy intensity by 20 percent and discharges of major pollutants by 10 percent over the five years to 2010.
  • China has raised the threshold in the aluminum sector to curb overcapacity and promote energy and resource conservation. It has announced plans to erase preferential power tariffs for the sector.
  • "This trend in the country's development is completely in line with the key principle of Rusal's operations in every region," the spokesman told Shanghai Daily.
  • He added that significant change in environmental impact cannot be achieved without sizable and continued investment in research and development.
  • China is the world's largest consumer of aluminum, used to make aircraft and beverage cans, and industry officials have said it may become a net importer of the lightweight metal from 2009. The fact only makes China's strategic goal to transfer the sector to a modern technological base more vital, the press official said.
  • Halt to growth
  • A slowdown in Chinese aluminum production growth due to shutdowns of small inefficient smelters and increasing energy costs could make opportunities brought by Rusal more luring, he added.
  • The historical reality is that Russia's aluminum industry, similar to China, had an extensive heritage of production facilities that required modernization.
  • (Shanghai Daily December 29, 2007)
  • Power dam paying dividends in U.S.
  • Standard Freeholder, Canada - December 29, 2007
  • Posted By Kevin Lajoie
  • The U.S. portion of the Moses-Saunders power dam will supply low-cost power to the Alcoa plants in Massena, N.Y. for 30 years as part of a new deal aimed at preserving jobs in the border community.
  • In return for the cheap power, the aluminum giant will spend $600 million on a major overhaul of its Massena East smelter. Alcoa has also pledged to maintain a minimum of 900 jobs between its two Massena plants for the length of the 30-year agreement, which will take effect in 2013. The plants currently employ about 1,200 people. As part of the deal, Alcoa has also agreed to set up a $10-million "North Country Economic Development Fund" that will target job creation and capital investment in northern New York.
  • New York Governor Eliot Spitzer said the deal demonstrates "the significant value of low-cost hydropower for economic development purposes."
  • "The loss of Alcoa would have crippled the local economy, and this agreement ensures these important jobs will remain in New York State for years to come," said Spitzer, who announced the deal during a Dec. 21 visit to Massena.
  • The agreement in Massena offers a much different picture than the situation here on the Canadian side. The power generated from the Canadian portion of the Moses-Saunders dam goes into the overall Ontario power grid, and it doesn't even supply power to Cornwall. Domtar and BASF were customers of the Ontario grid, but the rest of Cornwall is supplied by Cornwall Electric, which buys power from Hydro Quebec.
  • High energy costs was one of the factors identified by Domtar in its decision to close its Cornwall mill. Provincial government officials said they had presented Domtar with an opportunity to set up a co-generation plant at the mill which would have allowed the plant to generate its own electricity, thereby reducing costs. According to the province, the company turned away. A Domtar official later said a co-generation plant wouldn't have been enough on its own to keep the struggling mill afloat.
  • Some politicians, such as Ontario NDP leader Howard Hampton, have been lobbying for lower industrial hydro rates for several years now.
  • Clive Marin, a local author who wrote a history on Cornwall and S, D and G from 1945 to 1978 with his wife Frances, said Cornwall never yielded the full benefits that were expected to come from the massive St. Lawrence Seaway and Power Project.
  • "There was a general belief (at the time) Cornwall would benefit from cheap power. That never materialized," Marin said.
  • The cheap power afforded to industry isn't the only benefit the Massena area derives from the power dam. As part of a 2003 relicensing process for the power dam on the U.S. side, Massena and surrounding communities now receive an annual payment of $2 million from a special "Community Enhancement Fund" set up by the New York Power Authority (NYPA). The $2-million payment will be made in each year of the new licence's 50-year term.
  • What's more, NYPA is in the midst of conveying surplus lands from the power project to municipalities and private landowners in and around Massena. The lands are being transferred to municipalities at no cost, while residents have the chance to buy parcels adjoining their properties for fair market value. As of early December, some 379 acres of the roughly 600 acres of land offered by NYPA had been transferred. The proceeds of the land sales will be reinvested in the affected communities.
  • On this side of the river, city officials have been lobbying for several years now for a more equitable funding arrangement for the power dam.
  • Currently, the city receives about $250,000 each year as a payment-in-lieu (PIL) of taxes for the power dam. However, the facility is assessed at $101 million, and if it were to pay taxes based on its assessed value, the city would stand to receive some $7.6 million a year.
  • Despite numerous meetings with provincial officials over the last several years, little progress has been made on the issue.
  • At one point in 2005, Coun. Mark MacDonald had grown so frustrated with the situation that he travelled to Queen's Park on his own in hopes of getting some answers from cabinet ministers.
  • He also suggested Cornwall take drastic measures such as blocking Highway 401 or removing provincial flags in the city in order to get the province's attention.
  • MacDonald was later censured by council for his actions, but he still feels more needs to be done.
  • "I'm still of the opinion we haven't done enough (to get a better deal)," he said on Friday.
  • As for land, most of the shoreline between Cornwall and Morrisburg - which was altered by the Seaway project - is publicly-owned and managed by the St. Lawrence Parks Commission, a provincial agency. The parks commission manages more than 7,000 acres of parkland, campgrounds and tourism facilities from Kingston to the Quebec border. A recent consultant's report recommended the commission should sell 287 acres of its "non-core" lands, but no action has been taken as of yet.
  • Entire villages were flooded and more than 6,500 people between Cornwall and Iroquois were displaced in the 1950's to make way for the Seaway and power project.
  • Former Cornwall mayor Phil Poirier said while the Seaway project was necessary, there has been little direct benefit - aside from the construction period of the Seaway - for the Cornwall area.
  • "We paid a big price and if you look at it today, we're not even getting our fair share of revenues or taxes," said Poirier, who met with numerous authorities to discuss the issue during his time in office. "All those years we've been deprived of what should have been reasonable tax assessment and millions (of dollars). Did we get shortchanged?
  • "You don't have to be a rocket scientist to figure that out."
  • Aside from the financial aspect, Poirier said the area lost a great deal of local culture and heritage with the Seaway project.
  • "What value is that? It's priceless," he said.
  • The question of how municipalities like Cornwall are compensated for power dams is being looked at as part of a larger review of provincial-municipal services. The review, to be completed in the spring, will look at how services are delivered and funded by municipalities and the Ontario government.
  • Local MPP Jim Brownell has previously said he believes the current funding arrangement for the power dam is unfair.
  • "I still think there's a good chunk of money owing to the City of Cornwall," Brownell said in September.