AluNews - January 2007

Ruling puts smelter in limbo

Globe and Mail, Canada - 01-Jan-2007

Regulator rejects Alcan's power deal in B.C.


VANCOUVER -- A regulator's decision to reject a power sales agreement between aluminum giant Alcan Inc. and Crown-owned British Columbia Hydro and Power Authority has elated those who fought against the deal, but raises questions about whether Alcan will go ahead with a planned $2-billion smelter upgrade in Kitimat.

"That's obviously one concern," Mike Morton, press secretary for B.C. Premier Gordon Campbell, said yesterday, adding that the province is "disappointed" with the regulator's decision.

"But we're going to look at the decision and give full consideration to what our options are."

The British Columbia Utilities Commission said on Friday that it would not approve a long-term power agreement between Alcan and B.C. Hydro, saying the deal was not in the public interest and that B.C. Hydro should not have accepted the pricing provisions of the proposed agreement, which would have seen Alcan sell surplus electricity to the province.

B.C. Hydro and Alcan said Friday they were disappointed with the utility commission's decision but would not be making any decisions until the commission released its reasons, likely early this year.

When they filed the proposed deal with the regulator, B.C. Hydro and Alcan initially tried to keep some terms confidential for competitive reasons, but gave up that request after critics argued the deal should get a full hearing.

The proposed agreement included $111-million in lump sum payments to Alcan, to be paid in two instalments.

The power deal is an integral part of an upgrade that Alcan announced last August, when it said it would spend about $1.8-billion (U.S.) to boost capacity at its Kitimat plant in northwestern B.C.

At the time, Alcan said the project was conditional on several factors, including an agreement with B.C. Hydro.

Over the past few years, Kitimat Mayor Richard Wozney has spearheaded a fight against Alcan over the issue of power sales, maintaining that Alcan is selling surplus electricity at the expense of aluminum production and, in the process, breaking its agreement with the province over water rights.

In an interview yesterday, Mr. Wozney said there is a risk that Alcan could take its investment dollars elsewhere, but argued that the risks of the proposed power sales agreement were far greater.

"The bigger risk would have been if the [B.C. Utilities Commission] had approved the agreement. It would have meant a bigger disaster for our community because it was basically a power sales agreement," Mr. Wozney said.

The increased volume of electricity sales permitted under the deal, compared with a previous agreement, would have meant "the death knell for the aluminum industry in British Columbia and in particular in Kitimat," Mr. Wozney said.

Critics of the deal said it was negotiated without a competitive bidding process and gave Alcan an unfair advantage because it used prices based on new power projects, even though Alcan's generating plant in nearby Kemano -- operating since the 1950s -- churns out electricity at a much lower cost.

The cost of producing power at Kemano is about $5 (Canadian) a megawatt hour. The proposed agreement would have seen B.C. Hydro pay an average rate of $71 a megawatt hour.

B.C. Hydro argued the deal was a good one for ratepayers because it provided reliable power at fixed, competitive prices.

The utility currently has to import some power to meet the province's needs.

But one intervenor in the case maintained the deal was a heavy-handed attempt by the province to use ratepayers' money to encourage industrial development.

"This was an initiative that was driven by the Premier's office and was an industrial development strategy for the Kitimat area," said James Quail, executive director for the B.C. Public Interest Advocacy Centre, which represented ratepayers at the hearing before the commission.

"And it's simply not appropriate to load electricity rates with the cost of programs of that nature."

Utilities Commission orders can be appealed, but an appeal has a chance of success only if it can be shown that the commission made some serious error of law or in some way exceeded its jurisdiction, Mr. Quail said.

He added that he thought the prospects of an appeal were "very poor."

The deal

A long-term electricity-purchase agreement between Alcan Inc. and B.C. Hydro. It was a key element in Alcan's plans to invest $2-billion to upgrade its smelter in Kitimat (above).

The details

The proposed deal would have replaced an existing agreement between the two parties. Alcan generates electricity for its Kitimat aluminum smelter from a power plant in nearby Kemano and sells the surplus electricity to B.C. Hydro.

The terms

Featured prices of up to $71 a megawatt hour, comparable to prices paid to new power projects, even though the cost of electricity production at Kemano is much lower. It also included lump sum payments of $111-million to Alcan.

What happened

On Friday, the B.C. Utilities Commission nixed the agreement, saying it was not in the public interest and that B.C. Hydro should not have accepted the prices set out in the proposed deal.

What's next

Both B.C. Hydro and Alcan have said it's too early to say what their course of action will be, as the Utilities Commission has not yet issued reasons for its decision.

New delay for BHP on Guinea project

The West Australian, Australia 2nd January 2007, 9:30 WST

BHP Billiton is facing a second delay in its efforts to secure a one-third stake in an alumina refinery project in Guinea, West Africa.

In early November, BHP and joint venture partners Dubai Aluminium and Mubadala Development Company agreed to give Canada’s Global Alumina a $US100 million ($126 million) loan in return for exclusive negotiations to develop the refinery.

Under the agreement, BHP would own a one-third stake in the refinery and would manage the project on behalf of the venture partners. BHP has three exploration leases in Guinea but no bauxite mines.

The deal was to have been finalised by November 30, but just before the deadline a one-month extension was announced. At the time, Global Alumina had drawn down $US20 million of the loan and anticipated it would reach a formal agreement within one week. But Global Alumina late last week unveiled a second extension to January 12.

Global Alumina has now drawn down $US22 million of the loan.

Before the loan deal, the company had been facing a cash shortfall after Emirates International Investment Company pulled out of a $US50 million financing agreement.

The BHP-led joint venture’s right to exclusive negotiations is set to expire on March 31.


RUSAL subsidiary awaiting approval for new Berbice bauxite mines

Stabroek News, Guyana - Monday, January 1st 2007

The Bauxite Company of Guyana Inc (BCGI), in which Russian bauxite giant RUSAL has majority shareholding, has completed the Environmental and Social Impact Assessment for its new project at Kurubuka which could see the development of two open pit mines.

The Environmental Protection Agency (EPA) is now inviting the public to comment on it before a decision is made on whether to grant or deny an environmental permit.

According to the EPA, the public has a total of 60 days of the publication of the notice by which to make written submissions on the project. The notice appeared in the press on December 22. The new project comprises the development of two open pit mines at Kurubuka 22 (Kurubuka East and Kurubuka West). The Kurubuka 22 deposit is located immediately adjacent to the Berbice River and approximately 14.5 KM from the former Aroaima's crushing and drying facilities.

The Russian aluminium conglomerate RUSAL made an initial investment of US$20M in the bauxite operations in Berbice which it commenced in 2005.

According to documents lodged with the EPA, BCGI has identified its investment to be US$18.6M with a projected annual turnover of US$60.8M. The project is envisaged to produce three million metric tonnes of bauxite annually at 10,000 tonnes per day. The projected life of the project is twenty years - from 2008 to 2028.

The project is expected to create employment for approximately 75 persons, 20 during the mobilization phase, and 55 in the subsequent operation phase. "On a wider scale, the project is expected to bring economic and social benefits to the immediate and surrounding communities of Hururu, Kwakwani, Aroaima, Ituni and Linden by creating direct employment opportunities as well as social benefits," the EIA said.

It said too that the project is expected to utilize state-of-the-art machinery and equipment which will be sourced internationally and as part of the project implementation, training will be done for local staff to ensure technology transfer.

The EIA report, done by Environmental Management Consultants, said that gaseous emissions from vehicle exhausts and the power plant are unlikely to be a problem. It said too that generation of dust from road transportation on the haulage route may create some nuisance to some residents who extract timber or hunt near the project area and this, it said, will require management. The EIA said that dust and odour are unlikely to be a problem.

According to the EIA, the Scoping Study was completed in June 2006 and the findings are based upon information available at the time of the study and that subsequent investigations during the EIA have allowed refinement of these findings.


On ecology and conservation of the site, the EIA said that 22 Kurubuka is situated in a degraded landscape, comprising former timber extractions and secondary forest, and loss of the area is unlikely to be a problem.

The EIA said that clearance of virgin climax forest will be required in some parts of the mining areas and along much of the haulage route. "The ecological and conservation value of the forest is yet to be determined and the loss of habitat will affect biodiversity," the study said.

The EIA team also found that the area appears to host many fauna and avian species, which will be displaced or destroyed. "Although the forest will naturally re-vegetate, it is doubtful if the secondary forest will ever possess the ecological value of the existing primary forest," the study said. On the socio-economic and cultural impacts, the project will provide a continuous feed to the bauxite plant at Everton and Aroaima allowing production to continue. New employment opportunities for exploration workers and contractors will be created during exploration, construction and closure phases.

According to the executive summary of the EIA report, the East Kurubuka bauxite layer lies approximately 57.8 m below the surface and the West is approximately 38.1 m below the surface.

Describing the operation, the executive summary said that the topsoil will be removed by bulldozers and adequately stored for rehabilitation. The overburden will be stripped with excavators and loaded to haul trucks for disposal at the waste dump.

Once the overburden is removed, the bauxite will be mined by excavators and transported by haul trucks to the crushing plant and subsequent drying facilities. After drying, the bauxite will be loaded to barges for transportation to the trans-shipping point in Berbice River where it will be transferred to ocean going vessels.

Back in December 2004, the Government of Guyana and the former Aroaima Mining Company (AMC) entered into agreement with the subsidiaries of RUSAL, Bauxite and Alumina Mining Venture (BAMV) and the BCGI for the new company's shareholdings and a management contract for AMC.

RUSAL is exploring the development of an alumina plant in Linden, but this process will take years and substantial investment and a decision will not be known until completion of these studies. If the alumina venture were to be undertaken, it would represent an investment of US$1 billion or $200 billion. Rivalling the bauxite development in the Berbice area is Omai Bauxite Mining Inc (OBMI), which is in operation in Region Ten. At the moment, majority shareholding in OBMI is in the process of being sold to Chinese company Bosai Minerals Group Inc for a total of US$46M.

Cambior's stake in this company was recently purchased by IAMGOLD. Cambior had bought its 70% stake in the Linden bauxite operations for US$10M - US$5M in cash and US$5M in equipment. Cambior had projected its venture as a US$40M investment when OBMI was launched in December 2004. That company produces Refractory 'A' Super-calcined (RASC) bauxite as against BCGI which produces metallurgical bauxite.

When RUSAL and Cambior made their investments in Guyana, the industry for years had been suffering from high overburden costs, poor management, unreliability, falling international prices. The industry has over the years become a drain on the treasury with annual transfers being made to keep it going. (Johann Earle)

Alcan studying Kitimat smelter; BC Hydro supports energy deal for smelter (Alcan-BC)

Oilweek Magazine, Canada - Jan 2, 2007 2:46:00 PM MST

MONTREAL (CP) _ While Alcan (TSX:AL) is taking another look at plans to build its $2-billion Kitimat smelter after an unfavourable ruling on an energy supply agreement, BC Hydro said Tuesday it would still like the power deal to go ahead.

The B.C. Utilities Commission rejected the long-term energy supply agreement between Alcan and BC Hydro, saying it wasn‘t in the public interest.

BC Hydro spokeswoman Elisha Moreno said it‘s too soon to say if the agreement will be renegotiated because the utility is waiting for a written copy of the decision, released late last week.

"When we set up the agreement with Alcan, we were very happy with it,‘‘ Moreno said.

"It had a very good price. It had good reliable electricity. It was made in B.C. There was no reason to think there was anything wrong with that agreement.‘‘

British Columbia‘s Liberal government has already said it‘s disappointed with the decision so it‘s possible a solution will be found.

The B.C. Utilities Commission is expected to release its written reasons for the decision later this month. BC Hydro could ask the utilities commission for a "reconsideration‘‘ of the decision or any of the parties could appeal the decision to the British Columbia Court of Appeal.

Alcan said Tuesday that it‘s disappointed with the decision and will reconsider the project.

It will study the decision to "better understand the commission‘s rationale and to determine the potential impact on the feasibility and timing of the Kitimat modernization project,‘‘ CEO Michel Jacques said in a statement.

Alcan spokeswoman Anik Michaud said the company wants to know the reasons why the energy deal was rejected before it can say whether the deal could be renegotiated.

"We have to evaluate the impact of this decision,‘‘ Michaud said.

Alcan announced the revamp of the aging Kitimat smelter last summer. The company will cut the workforce to roughly 1,000 from about 1,550 as part of the plans to modernize and increase production to about 400,000 tonnes from 245,000 tonnes of aluminum.

"The plant desperately needs modernization,‘‘ Michaud said.

The company has said it hopes to make the job cuts through attrition and retirements.

The utilities commission said BC Hydro shouldn‘t have agreed to pricing provisions and the commission "does not accept BC Hydro‘s evidence regarding the value of the benefits to ratepayers of the agreement, commission secretary Robert Pellatt said in a letter.

Critics have said the deal was struck without competitive bidding and would see Alcan reap the same rates for its electricity as new projects, even though costs at its B.C. Kemano power plant are much lower.

Kitimat Mayor Richard Wozney said he believes that Alcan is more interested in selling hydroelectricity because it‘s more profitable than building a new smelter in his community.

"One of their conditions has fallen by the wayside, so are they going to go ahead? You‘d have to ask Alcan,‘‘ Wozney said.

Michaud said the Kitimat smelter is operating at 90 to 95 per cent capacity and added Alcan is bound by contract to sell surplus power to BC Hydro.

Approval by the B.C. Utilities Commission was one of three conditions set by Alcan for the final go-ahead of the Kitimat project.

The other two key conditions are environmental approval and a long-term labour agreement to ensure stability of the project.

A spokesman for B.C. Premier Gordon Campbell said on the weekend the government was disappointed by the regulatory decision blocking a power sales agreement with Alcan. Mike Morton said officials will review the decision and look at options.

One analyst said he believes the deal is now open to more negotiation.

"I guess my gut feeling at the end of the day is telling me they will come to an agreement of some kind because i doubt very much that the B.C. government wants Alcan out of the province,‘‘ said the analyst, who asked not to be named.

"However, it may delay the project somewhat.‘‘

Alcan shares closed at $56.29, down 49 cents, Tuesday on the Toronto Stock Exchange.

Aluar to open Puerto Madryn expansion in May - Argentina

BNamericas, Chile Tuesday, January 2, 2007 17:44 (GMT -0400)

Argentine aluminum producer Aluar (Buenos Aires: ALUA) will open its expansion project at the Puerto Madryn plant in Chubut province in May, a company executive told BNamericas.

"We expect to start up the electrolytic cells in the second quarter of this year and the rest of the installations in a sequential process," the executive said.

The 2-part expansion project focuses on incorporating 144 electrolytic cubes on two lines with 72 cubes each and increasing the intensity of the electric current to the existing cubes, said the executive.

"We will first begin operating the 144 cubes on the two new lines, lines 7 and 8, in May," the executive said. "It is a gradual startup. The cubes will be activated over a period of two or three months."

After this step, power will gradually be increased to the six existing lines, said the executive.


In 2Q07, the company also expects to begin receiving the gas agreed upon in a contract signed with Anglo-Argentine company Pan American Energy and Spain's Repsol YPF to start up the turbines of its new power generation equipment, the executive said.

The company received approval in June to build a nearly 60km pipeline to link the trunk pipeline with the Puerto Madryn aluminum plant, supplying 4Mm3/d of gas.

Expansion works at the Puerto Madryn plant came to US$650mn and are designed to increase Aluar's production capacity from 280,000t/y to some 400,000t/y.

Aluar, Argentina's largest aluminum producer, exports 85% of its production, mainly to the US, the EU and Asia.

The company is controlled by Argentina's Madanez Quintanilla family.

By Harvey Beltrán

Business News Americas

Chalco to buy three smelters from parent

Mining Magazine, UK - 02-Jan-2007

Chalco wants to consolidate its aluminium resources

Aluminium Corp of China Ltd (Chalco) is to purchase three aluminium smelters from its state-owned parent company after it concludes the buyout of two subsidiaries - aluminium smelter Lanzhou Aluminium and alumina maker Shandong Aluminium.

"Chalco will purchase Baotou Aluminium Co Ltd, Liancheng Aluminium Co Ltd and Tongchuan Xinguang Aluminium to boost its aluminium capacity," the company said in a statement.

The move from the world`s second-largest alumina maker is aimed at consolidating its primary aluminium operations in bauxite rich areas as quickly as possible prior to its planned listing on the Shanghai Stock Exchange.

Chalco is buying the two units in a Yu$8.2 billion (US$1 billion) deal after which it plans to list in Shanghai in favour of Hong Kong where it currently trades.

China aluminum output may be growing too fast

Reliable Plant Magazine, OK 03-Jan-2007

As with a range of resource and energy supply sectors in China, aluminum production presents something of a conundrum for the country’s power planning and regulatory National Development and Reform Commission (NDRC). In the last week of December 2006, the NDRC said that curbs are necessary to prevent aluminum production capacity from growing too fast amid surging international prices. The commission is watching a market situation where aluminum prices averaged more than $2,700 per ton in the fourth quarter of 2006 compared to a price of $2,100 per ton at the beginning of the year.

In the Chinese domestic market, the aluminum price increase to the equivalent (at a yuan conversion of CNY7.82: $1) of $2,685 to $2,813 per ton from $2,493 at the beginning of 2006. Alumina prices slumped to the equivalent of $306 per ton on the domestic market from $767 in the first half of the year, the NDRC reported. The fall in the feedstock price is encouraging more investment in production capacity as the profit margins increase. It is estimated that China’s alumina output may have topped 15 million tons in 2006, which represents an increase of 805 over 2005. In November, China lowered the import tariff on alumina from 5.5 percent to 3 percent, which has marginally lowered the import cost of the feedstock. The majority of Chinese alumina producers are on a small scale and use dated production techniques and have a production cost more than 50 percent higher than the global average.

On the London Metal Exchange, aluminum hit a record $3,275 per ton in May. Global supply growth is expected to be maintained at a rate of 6.5 percent in 2007 with China driving the margins with a 12 percent growth in production and a 14 percent growth in demand. The global aluminum surplus is expected to be at around 200,000 tons during the year.

At the same time, aluminum output is expected to have risen 17.8 percent in 2006 to 9.2 million tons and will increase a further 14 percent to 10.5 million tons in 2007. A 5 percent levy was put onto aluminum exports in January 2006 in an attempt to conserve domestic resources and this was raised to 15 percent in November.

The World Bureau of Metal Statistics reports that the world market carried a 328,000-ton surplus of aluminum in the period January to October 2006. Demand rose to 28.2 million tons which was an increase of 1.6 million tons on the 2005 figure. Global production was up 5.2 percent for the same period reaching an all time high of 2.91 million tons for the month of August.

Industrial Info Resources is a marketing information service company that has been doing business for more than 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing and energy-related industries throughout the world. Learn more by visiting

South Texas plant employee dies after inhaling hydrogen fluoride

KLTV, TX - 03-Jan-2007

POINT COMFORT, Texas A South Texas man has died after inhaling hydrogen fluoride gas while working in the chemical department of an Alcoa plant.

Alcoa officials identified the man today as 37-year-old John Dorton of Port Lavaca. Dorton came in contact with the gas yesterday while working in the area of the plant that makes aluminum fluoride, which is used in the production of aluminum. That's according to a news release.

Alcoa has begun an investigation and inspectors from the U-S Department of Labor's Mine Safety and Health Administration were at the plant in Point Comfort this afternoon.

Dorton was pronounced dead at a Houston hospital seven hours after exposure yesterday.

Copyright 2007 The Associated Press. All rights reserved.

As Demand Rises, Chlor-Alkali Industry Responds With Growth in Capacity - Wed, 03 Jan 2007 15:42:00 GMT | Author : Chemical Market Associates, Inc.

HOUSTON, Jan. 3 /PRNewswire/ -- Demand growth for chlorine in Asia, primarily China, will be the driving force for additional chlor-alkali capacity, reports Chemical Market Associates, Inc. (CMAI) in their recently completed 2007 World Chlor-Alkali Analysis. This annual analysis provides clients with a comprehensive outlook for global chlor-alkali markets for the period 2001-2011. Topics covered in this analysis include capacity, supply, demand, trade, prices, profitability, technology and production costs. Supply/demand information is also available in CMAI's new online Supply/Demand database and is updated twice per year. Clients will find this to be a necessary tool for their strategic business decisions.

What is the forecast for global chlorine capacity and demand for the next 5 years?

From 2001-2006, capacity in Northeast Asia increased by 7 million metric tons, while the rest of the world declined by almost 1 million metric tons. The real impact will be in the next five years as 9 million metric tons of capacity is scheduled to be brought on-stream globally, with almost 90 percent of the new capacity projected to be in Northeast Asia, specifically China. Chlorine demand in Northeast Asia is forecast to increase by five percent per year, compared to growth in the rest of the world of about one percent per year.

Which global regions will be key exporters of caustic soda?

Northeast Asia became the world's largest net exporter of caustic soda (aqueous and anhydrous) in 2005 with caustic soda exports increasing at a rate of over 11 percent from 2001-2006. This trend is forecast to continue for the next five years. The Middle East will grow its net caustic export position after the next major chlor-alkali capacity increase in 2010. Conversely, North America will reduce its net caustic export position, focusing on local regional markets.

Who will be the main importers of alumina?

The largest increase in net imports of alumina will be in Africa, as the region brings on-stream a large amount of aluminum smelting capacity during the forecast period. Southeast Asia and South America will supply the alumina to meet this new import demand. Northeast Asia's alumina imports increased steadily from 2001 to 2006, but new capacity in that region is expected to greatly reduce the region's dependency on imported alumina over the forecast period.

The 2007 World Chlor-Alkali Analysis is available in book or CD-ROM format. The study covers ten global regions and more than fifty countries and also includes supply/demand forecasts, technology analysis, trade, price forecasts as well as other issues that affect the chlor-alkali industry. Online Capacity and Supply/Demand databases create a full spectrum of analysis pertinent to these markets. For example: clients to the 2007 World Chlor- Alkali Analysis will have access to CMAI's online capacity database to look up

each plant site in China (and all other countries around the world) for 12 months.

CMAI is a petrochemical, plastics and fibers consulting firm that services a wide range of companies all over the world. Since 1979, CMAI's goal has been to provide accurate, timely consulting services for the worldwide industries that it covers. CMAI maintains offices in Houston, New York, London, Dubai, Dusseldorf, Singapore and Shanghai. Clients to CMAI services include chemical and oil companies, engineering & construction companies, forest products companies, mining & metals companies, banking and financial institutions, plastic converters, grocers/retailers, government agencies and trading companies.

Chemical Market Associates, Inc. Copyright © 2006 PR Newswire. All rights reserved.

North American Aluminum Alloy Stockpiles Jump Most in 3 Years

Bloomberg - January 3, 2007 04:20 EST

By Chanyaporn Chanjaroen

Jan. 3 (Bloomberg) -- North American special aluminum alloy stockpiles tracked by the London Metal Exchange jumped the most in more than three years.

The inventories increased 10,820 metric tons, or 8 percent, to 146,460 tons, the exchange said today in a daily report, the largest one-day gain since Jan. 21, 2003. P

North American special aluminum alloy for delivery in three months dropped $20, or 0.9 percent, to $2,245 a ton as of 9:08 a.m. London time.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at

Alcoa opens China aluminum sheet plant

Pittsburgh Business Times - 1:57 PM EST Thursdayby Dan Reynolds

Aluminum maker Alcoa Inc. this week opened its third aluminum sheet plant in China and expects capacity at the plant to be 50,000 metric tons per year, according to a company statement.

New York-based Alcoa (NYSE:AA), which maintains administrative offices in Pittsburgh, has had a presence in China since 1993, when it established its Alcoa Asia Ltd. office in Beijing.

The new plant is in Kunshan, a city of about 1 million located just outside of Shanghai in southeast China. The plant is being operated as a joint venture between Alcoa and Yenching Engraving. The formal name for the joint venture is Kunshan Aluminum Products Co. Ltd.

In addition to the plant at Kunshan, Alcoa has a hand in more than a dozen operations in China, including additional sheet metal facilities at Alcoa Bohai Aluminum Industries Company Inc. in Qinghuangdao and at its Alcoa Aluminum Products Ltd. facility in Shanghai. | (412) 481-6397

Guinea faces general strike

Mining Magazine, UK - 04-Jan-2007

President Conte`s health is deteriorating

Two of Guinea`s most powerful unions could strike from next week to protest against the government of President Lansana Conte - a move that could have an impact on the country`s bauxite, gold and diamond mining industries.

Guinea contains a third of the world`s reserves of bauxite, the raw material for aluminium, and mining remains the main source of government revenues. About US$123 million (R867 million) was generated last year by the mining sector.

Mineral resources represent 85% of Guinea’s exports, more than 25% of government revenues and 17% of gross domestic product - all of which could be threatened if a power vacuum develops.

Compagnie des Bauxites de Guinée (CBG) is the largest single producer of bauxite in the world and has produced over 260 Mt since opening in 1973. It is a 51%:49% partnership between the Government of Guinea and Halco, a venture that includes Alcan Inc and Alcoa Inc.

As well as being the world`s largest producer of bauxite, Guinea is also in the process of building aluminium refining capacity.

Key projects include Global Alumina Corp’s proposal for a 2.8 Mt/y alumina refinery at Sangarédi, east of Boké; an Alcoa/Alcan proposal for an alumina refinery at Kamsar, also in the region of Boké and Rusal’s proposal for an alumina refinery at Dian Dian.

In addition, there are world-class iron-ore deposits at Mt Simandou and Mt Nimba that have yet to be developed, by Rio Tinto plc and BHP Billiton plc respectively - all of which rely on a stable government infrastructure.

President Conte, despite ill health, is in charge of a country that is now politically stable and seemingly capable of surviving the transition of power, but the planned strike is the most overtly political yet and could have a similar impact to previous ones that have stirred up riots over basic goods and fuel prices and brought the country to a standstill.

The unions said the walkout, which calls for the whole country to go on strike from January 10, was to denounce President Conte`s "repeated violations" of the country`s basic laws and would continue until the rule of law was restored, said Reuters.

"We`re putting on the table all the demands both of our supporters and of the population at large," said one of the main union negotiators, Ousmane Souare, adding that "we`ve gone beyond the limit of what is acceptable."

Union leaders cited President Conte`s personal involvement in the December release of one of his former allies who had been arrested in a corruption probe, as well as the constant reorganisation of his cabinet which unions said undermined his credibility.

A stumbling economy, rampant corruption and a powerful but fractious military have raised fears of instability in a country once seen as a bulwark against wars in neighbouring Sierra Leone, Liberia and Ivory Coast.

The deteriorating health of President Conte, a reclusive diabetic in his seventies who seized power in a 1984 coup, has heightened nerves, raising the prospect of a dangerous power vacuum in the former French colony as rival factions compete to succeed him.

He personally secured the release of former ally and Guinea`s richest man, Mamadou Sylla, in December along with a former central bank deputy governor, an act which the unions said rode roughshod over state institutions.

In late December, he revised a cabinet reshuffle apparently under pressure from one of the rival political cliques vying to succeed him - the second time in the year that he had abruptly overturned his own cabinet reshuffle.

"There is no longer a State. You have the impression that when he signs certain documents he is not completely lucid. It`s a scandal," opposition spokesman Mamadou Ba said. "It`s shaming for our country." (January 4)

Mulanje bauxite mining awaits EIA

The Nation, Malawi, Malawi - 04 January 2007 - 05:50:24

by Taonga Sabola

Natural Resources and Environment Minister Henry Chimunthu Banda has said government is waiting for an Environmental Impact Assessment (EIA) report on bauxite mining at Central Africa’s highest mountain before the project can take off.

Chimunthu Banda said in an interview a South African company called Gondor Mining Company is currently working on the EIA which should be submitted to cabinet for scrutiny sometime this year.

Mulanje Mountain is believed to have enough bauxite deposits which can last for 43 years when mined at the rate of 125,000 metric tonnes per year.

Economic analysts believe Malawi stands to benefit from the mining of bauxite which is said to have a ready market in Mozambique where there is a huge aluminium plant. Aluminium is a product of bauxite.

With the country’s top foreign exchange earner tobacco, on a nose-diving trend over the past years experts believe it is high time government started hunting for an alternative and mining is believed to be one of them.

"We are waiting for the results which should be out mid next year and once the results are out government should be able to come up with a decision," said Chimunthu Banda.

He added that a number of companies have expressed interest to venture into the bauxite mining sector.

The mining of bauxite in Mulanje, which is the third highest peak in Africa, is expected to consume way over US$820 million (about K114.8 billion).

Some six years ago the bauxite project attracted the interest of investment giant Press Corporation Limited (PCL) before it withdrew its interest for undisclosed reasons.

The mining of bauxite at Mulanje has been facing resistance from environmentalists over the years who fear the project might eliminate 118 rare species of butterflies and affect the watershed.

In addition, the project is said to demand more power of about 230 megawatts which the country’s sole power supplier, the Electricity Supply Corporation of Malawi (Escom) cannot afford to provide at the moment. For the project to become a reality the country needs additional power which should be provided once the Malawi-Mozambique power interconnection deal is in place.

Environment preferred to profits from smelter?

IcelandReview, Iceland - 01/09/2007 | 11:08

The mayor of Reykjanesbaer, southwest Iceland, recently suggested that the planned smelter in Helguvík bay should be built in the nearby Gardur area and further away from Reykjanesbaer, despite a potential loss in profits.

The Mayor of Reykjanesbaer, Árni Sigfússon, told Fréttabladid that he had suggested this location because of environmental reasons. "It is further away from urban areas and further away from the road," he said.

Had the smelter been built closer to Reykjanesbaer, the town would have received tens of millions of krónur (ISK one million EUR 10,841, USD 14,114) in real estate taxes every year. But Sigfússon said protecting the area’s environment seems a better long-term decision.

Sigfússon added that despite losing the revenue from the real estate taxes, Reykjanesbaer will still profit from the smelter as it will employ about one thousand workers.

A contract regarding the smelter in Helguvík with aluminum company Nordurál has already been signed. It is scheduled to begin operating in 2010.

The town councils of Reykjanesbaer and Gardur will probably vote on Sigfússon’s suggestion next week.

Our manufacturers beat the odds to boom in global game

The Australian, Australia - Jan 8, 2007

Being a clever country is our comparative advantage as the competition increases, writes economics correspondent David Uren

IT is easy to sink into misery about the plight of Australian manufacturing. Employment is falling and profits of many listed manufacturers have been weak.

It is battling the Chinese juggernaut which deploys unthinkable economies of scale in its manufacturing industry. China's factories also enjoy cheap labour, subsidised energy, an undervalued currency and are rapidly raising their technological sophistication.

It is not just China. Global manufacturing is increasingly mobilised in production chains with no Australian link. Particularly throughout Asia, goods are being assembled from components made at multiple plants across different nations.

The recent strength of the Australian dollar looks like one more cruel blow to the hopes of the manufacturing industry.

Yet look at the export numbers, and a large swath of Australia's manufacturers are booming.

Take laser optical equipment for example. Export sales have risen by 82 per cent in the past 12 months to $69 million. Sales of railway engines and carriages rose by 73 per cent to $92 million. Our footwear and textile industry may be languishing, but exports of footwear and textile manufacturing equipment jumped by 56 per cent to $75 million.

These are small industries, but there are 25 of them that have achieved sales growth of 20 per cent or more in the past 12 months. It starts to add up. Not all are small. Scientific equipment exports totalled $833 million last year, up by a quarter from the previous year. Heavy engineering equipment exports rose by a similar amount, reaching $450 million.

Manufactured exports as a whole rose by 12 per cent last year, and 7 per cent in the previous year. This followed two years in which they had dropped.

The first wave of restructuring in the face of Chinese competition appears to have passed. Exports of textiles have fallen to trivial levels, and many lines of automotive components have entirely shifted offshore.

There are still some sectors struggling. Photographic film, which used to be a $360 million a year export market, dropped to $59 million last year. Exports of basic plastics are dropping at the rate of about a third a year.

Most worryingly, the biggest manufactured export, motor vehicles, slipped 4.3 per cent last year to just under $4 billion.

Could there be a second wave of restructuring to come? Treasury both thinks it likely and takes a hard-hearted view of the prospect. It believes the continuing growth of China and, possibly India, will require the shift of national resources away from manufacturing and towards the minerals industry.

The increase in Australia's average export prices resulting from demand for minerals, at a time when the cost of manufactured imports is falling, delivers an increase to national income which Treasury says is to be welcomed.

But this also pushes up the exchange rate, rendering other export and import competing industries less economic.

Treasury says any government intervention should be directed to helping individuals retrain or relocate.

In its submission to a parliamentary inquiry on the future of manufacturing exports, Treasury officials wrote: "Measures such as tariffs or subsidies, which protect firms that can no longer generate an economic return and impede the transition process, will provide only short-term benefit to manufacturers, while leading to higher prices for all businesses and consumers and long-term inefficiencies and rigidities, lowering standards of living."

Treasury has given some thought to the possibility that the resources boom may be short-lived and the currency may fall again.

"Once a factory is shifted overseas, or a contract lost, it may be difficult to expand manufactures or other non-resource exports again," Treasury says. But it says government is no better placed than firms and investors to second-guess the signals emanating from the market.

It is likely that most of the manufacturing exports doing well now will continue to thrive, as their point of competitive advantage is not primarily price.

Many global companies locate manufacturing in Australia because it is stable, with good supply of skilled labour and a healthy, although small, domestic market.

The second biggest manufactured exporter, pharmaceuticals, which has raised sales by 12 per cent to $3.4 billion in the past 12 months, is mostly selling prescription drugs that have been developed in their European or US research laboratories. Its Australian factories have been able to achieve world scale and productivity levels. Australia is a regional platform for their sales.

Despite its small size, Australia has scale relative to New Zealand, which takes 17 per cent of manufactured exports. It would not be economic to sell basic goods such as chemicals from Australia into Asia, but across the Tasman into New Zealand makes sense.

Some of Australia's manufactured exports make use of other resource endowments. Australia's bauxite supplies make it a logical place to make aluminium, but research breakthroughs have also made Australia's smelters among the world's most energy efficient.

However, most of the $27 billion export earnings from complex manufactured goods comes from a multitude of businesses with no obvious reason for locating here beyond the fact that smart people had good ideas and the ability to execute them.

Technology, design, marketing prowess and commitment to customer service are the sources of comparative advantage for most of Australia's manufacturing industry. These must be continually replenished to sustain a place in the world market.

Alcoa execs see strong 2007 aluminum demand

Washington Post, DC - Tuesday, January 9, 2007; 10:21 PM

By Carole Vaporean

NEW YORK (Reuters) - Alcoa Inc. (AA.N) expects higher alumina prices along with increased materials costs in the first quarter, but overall demand for aluminum, especially by the aerospace segment should stay strong in 2007, executives at the world's biggest aluminum producer said on Tuesday.

"We anticipate higher alumina pricing based on the current market and the approximate 60-day lag," Alcoa's chief financial officer Chuck McLane told analysts on a conference call.

But he added: "We expect continued strong demand in aerospace with productivity gains offsetting cost inflation within most of the underlying businesses."

Later in the call, Alain Belda, Alcoa chief executive officer, said he anticipates continued strong global aluminum demand growth in 2007. He repeated Alcoa's forecast for China's consumption to increase by 14 percent.

"That is probably conservative as it exceeded 17 percent in 2006," he said.

"We believe China will be balanced (in supply and demand) going forward and will not be a significant exporter of primary aluminum," he said.

Belda added that a solid 3 percent annual demand growth was expected outside of China, with gains of over 6 percent seen in the U.S. and more than 3 percent in Europe.

Moreover, the world will lose some U.S. and European production as deregulated energy markets have increased power rates to levels that are forcing some smelters to close.

"It will be challenging for new smelting construction in the West to keep pace with this demand growth. Therefore we believe the aluminum market will be balanced to potentially short over the coming years," said the chief executive.

Following release of the aluminum-maker's unexpectedly strong earnings results for both the fourth quarter and 2006, the executives said to expect increased alumina prices despite anticipated surpluses, because of likely refinery shut downs.

"For alumina, our supply/demand outlook does show a surplus for 2007, ranging from 1.5 to 3 million tonnes, depending on the ability of the Chinese to ramp up their new refinery capacity," said Belda.

Spot alumina prices fell sharply over the last year to current levels around $250 to $275 a ton. Belda said at least a third of the world's refineries lose money at those levels.

"These usually are the plants that are in the spot market (for alumina). My guess is that some of these old, high-cost plants will have to shut down," the CEO said.

He noted further that there should not be an alumina inventory overhang, because there is no place to store it.

Among primary aluminum sectors, both executives said to expect cuts in North American auto production, as well as seasonal declines in commercial building and construction in the first quarter of 2007.

Non-residential construction growth was seen slowing in North America and Asia, but still showing healthy growth of 6 percent and 12 percent, respectively.

Alcoa sees European construction rates of 3 to 4 percent.

Anticipation of tighter engine regulations in 2007 sparked a rash of prebuying of heavy trucks in 2006 that should result in a steep 40 to 50 percent decline in 2007.

In addition, Belda said Alcoa sees the trailer market flat to slightly off in 2007.

McLane said gains in market share in wheels, fasteners and some heavy trucks should offset some of the sharp drop.

Aerospace will be near historic highs for several years, with Airbus and Boeing (BA.N) expected to deliver a record 900 units in 2007.

"And we are well postitioned to take advantage of this continued strong market," said Belda.

In the flat-rolled products segment, McLane said costs associated with the fourth quarter shutdown of Alcoa's Swansea can sheet facility should continue through the first quarter.

IrkAZ to Launch the Fifth Phase of Electrolysis Production in 2007

Financial Information Service(Registration), Russia 10.01.07

IRKUTSK, January 10. /FIS/. The first startup complex of the fifth phase of electrolysis production at Irkutsk Aluminum Plant is to be launched in April this year. Commissioning of the whole project is scheduled for October. Upon commissioning of the new production aluminum output at IrkAZ will increase to 484.5 thousand tons from 294 thousand tons per annum.

Alcoa Announces Highest Income and Revenue in Company's History

Mineweb, South Africa '10-JAN-07 12:29' GMT © Mineweb 1997-2006

ALCOA 2006 Annual Highlights:

· Annual income from continuing operations of $2.2 billion, or $2.47 per diluted share; excluding restructuring and impairment charges, $2.5 billion, or $2.90, up 75 percent from 2005;

· Revenues at an all-time record of $30.4 billion, up 19 percent from 2005;

· Cash from operations second highest in company history, increased 53 percent to more than $2.5 billion;

· Return on capital at 13.2 percent, up 490 basis points from end of 2005;

· Debt-to-capital ratio within target range at 30.6 percent;

· Four of six segments had ATOI gains of 50 percent or more;

· Continued progress executing upstream and downstream growth projects, and managing portfolio.

4th Quarter 2006 Highlights:

· Income from continuing operations of $258 million, or $0.29; excluding restructuring and impairment charges, $644 million, or $0.74, up 179 percent from year-ago quarter and 20 percent sequentially;

· Revenues of $7.8 billion in the quarter;

· $1.3 billion of cash from operations, up 28 percent from a year ago and 78 percent sequentially;

· COGS as a percent of revenue decreased 60 basis points from sequential quarter to 78.2 percent.

Alcoa (NYSE:AA) today announced the best full year results in the company’s 118-year history. Annual income from continuing operations was $2.2 billion, or $2.47 per diluted share for 2006. After excluding the impact of previously announced restructuring and impairment charges, income from continuing operations was $2.5 billion, or $2.90, a 75 percent increase from 2005. Driven by higher metal prices and strong demand for aluminum in the aerospace, commercial transportation and commercial building markets, revenues for 2006 increased 19 percent to a record $30.4 billion.

"This year, top and bottom-line performance has been the best in our company’s history," said Alain Belda, Alcoa Chairman and CEO. "Revenues and income from continuing operations achieved record levels.

"Our management team took full advantage of the opportunities the market offered, driving revenue, mitigating costs, bringing new products and innovation to the market, expanding our global footprint and growing our customer base," said Belda. "We did this while continuing to invest in modernizing our existing plants and building new operations that will enable us to deliver strong results for years to come. We are delivering results now and investing in our future.

"As we enter 2007, market fundamentals remain strong. We will generate more than enough cash this year to fund our capital investment programs. We will continue to deliver strong results, invest in our future, and keep a strong balance sheet," said Belda. "And, we continue to manage our investment decisions and portfolio actions on the basis of contribution to profitable growth."

Fourth quarter income from continuing operations was $258 million, or $0.29, or $644 million, or $0.74, excluding restructuring and impairment charges. This was a 179 percent increase from the fourth quarter of 2005, and a 20 percent increase from the third quarter of 2006. In the fourth quarter, the company announced charges related to restructuring and the formation of a new joint venture for its soft alloy extrusion business and re-positioning of its downstream operations.

Net income for the fourth quarter 2006 was $359 million, or $0.41, including after-tax charges of $386 million, or $0.44, for the restructuring and impairment. This compares to $224 million, or $0.26, in the year ago quarter, and $537 million, or $0.61, in the third quarter of 2006. The gain on the sale of the Home Exteriors business in discontinued operations is included in the net income results.

Fourth quarter revenues increased 20 percent from a year ago to $7.8 billion. Cost of goods sold as a percent of revenue in the quarter decreased 60 basis points from the sequential quarter to 78.2 percent.

Taxes for the quarter were favorably impacted by the restructuring and impairment charges, one-time tax items totaling $69 million, or $0.08, and a lower annual operational rate as a result of income being earned in lower tax cost jurisdictions.

Cash Generation and Growth

Cash from operations in the fourth quarter 2006 was $1.3 billion, helping lower the company’s debt-to-capital ratio to 30.6 percent at year end, down from 32.8 percent in the third quarter. Debt-to-capital includes the impact of recording the unfunded OPEB/Pension liabilities required by FAS 87 and FAS 158 (which took effect at the end of the year) of $787 million. For the year, cash from operations was more than $2.5 billion, which was a 53 percent improvement from 2005 and the second best performance in company history.

As a result of management actions, the company’s return on capital at the end of the fourth quarter increased to 13.2 percent, up 490 basis points from the end of 2005. After excluding growth projects, the company’s return on capital for the year was 16.2 percent.

During 2006, the company’s primary products group completed a growth expansion at its Pinjarra alumina refinery in Australia (approximately 660,000 new tons), and will finish a smaller expansion at its refinery in Jamaica early this year (approximately 150,000 new tons). The expansion of the smelter at Sao Luis, Brazil was completed in March of 2006 (approximately 60,000 new tons), and a refinery expansion at Sao Luis (more than 1.1 million new tons for Alcoa) along with development of the new Juruti bauxite mine will be completed by late 2008. The Alcoa Fjardaal aluminum smelter in Iceland (344,000 new tons) is on-target to produce metal in the second quarter, with full production expected by the end of the year.

The flat-rolled products business is investing in expansion projects at Bohai and Kunshan in China, its Belaya Kalitva and Samara plants in Russia are expanding production, and US and European plants are making improvements to mix, quality and productivity. The engineered solutions business expanded its fastening operations with two new facilities in China, and made investments to ramp up production in aerospace castings. The packaging and consumer business opened a new facility in Bulgaria serving the consumer products market.

Segment and Other Results

(all comparisons on a sequential quarter basis, unless noted)

Alumina -- After-tax operating income ("ATOI") was $259 million, down $12 million from the previous quarter, but up 42% from the year-ago quarter. Production was down 3% sequentially with the continued Pinjarra ramp-up offset by a power outage in Pinjarra and reduction of production at Pt. Comfort. The quarter also experienced a negative impact from a stronger Australian dollar.

Primary -- ATOI was $480 million, up $134 million or 39% from the prior quarter and up 98% from the year-ago quarter. The ATOI increase resulted from higher LME prices and volumes offset by Iceland smelter start-up costs and higher carbon and pitch costs. Third-party realized prices increased $146 per ton, or 6 percent, to $2,766 per ton. Primary metal production for the quarter was 908 kmt, up 13 kmt sequentially. The company purchased approximately 100 kmt of primary metal for internal use as part of its strategy to sell value-added products.

Flat-Rolled Products -- ATOI for the segment was $62 million, up 29 percent from the prior quarter and flat from the year-ago quarter. The increase was primarily due to a favorable aerospace mix, recovery from the third quarter 2006 mill outages and tax benefits, offset by Swansea shutdown costs.

Extruded and End Products -- ATOI was $27 million, up 69 percent from the prior quarter. A favorable mix in the hard alloy extrusion business and tax benefits were the main reasons for the improvement. ATOI increased $29 million compared to the year-ago quarter.

Engineered Solutions -- ATOI of $73 million was a slight decline from the prior quarter but a 55 percent increase over the year-ago quarter. The negative impacts of the work stoppage at the Cleveland facility and the declining automotive market were offset by tax benefits.

Packaging & Consumer -- ATOI increased $2 million from the prior quarter and $6 million, or 30 percent, over the year-ago quarter. Seasonal strength in the Consumer business was offset by the typical seasonal decline in the Closures business as well as higher metal costs in the packaging businesses.

ATOI to Net Income Reconciliation

The largest variances in reconciling items were in the "Restructuring and other charges" and "Discontinued operations" line items. "Restructuring and other charges" records the after-tax impact of the previously announced restructuring charges including the impairment charges related to the formation of a joint venture for the company’s soft alloy extrusion business. "Discontinued operations" includes the gain on the sale of the Home Exteriors business.

Jamaica churns out record 15Mt bauxite in 2006 - Jamaica

BNamericas, Chile Tuesday, January 9, 2007 12:59 (GMT -0400)

Jamaica had a record 2006 in bauxite mining with 15Mt of output, surpassing the island's yearly production levels since 1974, a representative with the Jamaica Bauxite Institute confirmed to BNamericas.

The official added that the current surplus in the global bauxite market, mainly caused by China's 62% year-on-year jump in output to 12.7Mt for 2006, has caused alumina spot prices to slide to US$196/t at the close of the year.

Alumina is the refined form of bauxite ore, which is used to make aluminum.

Meanwhile, bauxite exports rose 12.6% to 4.6Mt in 2006, while alumina production edged up by 1% in the year to reach 4.1Mt due to a rise in productivity at the Jamalco refinery, owned jointly by US giant Alcoa (NYSE: AA) and the Jamaican government, the representative said.


Output in 2007 is expected to reach 4.2Mt of alumina, given Jamalco's Early Works project, which - set to start this year - is to add 150,000t of alumina to its current output, said the official, adding that Jamaica should churn out 5.1Mt of crude bauxite in 2007.

By Pablo Gaete

Creditors back Rusal aluminium merger 10/01/2007, France -

By Neil Merrett

10/01/2007 - A proposed merger between packaging and metals manufacturer Rusal, and wo of its major rivals has been given the go ahead by its creditors clearing the way for the group to become the world’s largest aluminium company.

By combining its operations with leading refiner Sual, and commodities supplier Glencore, the company hopes to become a fully sufficient aluminium company. This would allow it to oversee all levels of production from raw material, through to formulation of its products – which include foil and beverage cans.

The deal also extends Rusal's operations to over 70 countries, increasing its presence within the aluminium packaging industry.

The group announced earlier this week that it had been granted permission to modify it shareholder structure sufficiently to allow it to combine its operations with those Sual and Glencore.

The conglomerate, which will be re-branded as United Company Rusal would give Sual and Glencore's shareholders a 22 per cent and 12 per cent in the company respectively.

Rusal would be the majority shareholder owning 66 per cent controlling interest.

Speaking to when the deal was first proposed last November, Rusal's Vera Kurochkina explained that the merger of the three companies was an "ideal fit".

"Rusal brings great strength in primary aluminium production and advanced technology, Sual – the country's largest alumina refining capacities, while Glencore provides an international spread of bauxite and alumina assets. In one move, we have overcome the historic weakness of the Russian aluminium industry – lack of raw materials, such as bauxite and alumina," she said.

With the deal now supported by its financial backers, she added that the company would be a dominant force in the packaging and wider aluminium industry.

"The combining of Rusal and Sual creates a Russian national aluminium champion; the addition of Glencore's alumina assets transforms the new company into a truly global player," said Kurochkina.

Venalum aims for 441,000t aluminum output in 2007

BNamericas, Chile Friday, January 12, 2007 18:00 (GMT -0400)

Venezuelan aluminum reducer Venalum aims to reach output of 441,000t in 2007, the company reported.

"That is the goal we've outlined and I am sure we will reach it," Venalum president Isaías Suárez said in a statement.

The company will also make investments this year to install a third cylinder production unit to boost manufacturing by more than 50,000t, the statement said.


The reducer produced 438,927t of aluminum in 2006, exceeding its installed capacity of 430,000t/y for the fifth consecutive year.

The strong production resulted in record financial results for Venalum, including net profit of 232bn bolívares (nearly US$61mn) in 2006.

"Performance was extraordinary. These are milestones in the company's 28-year history," the executive said.

Output amounted to 435,937t of primary aluminum in 2005, down 3,618t from 439,555t in 2004.


The executive also said that by the end of 2007, Venalum expects to have the necessary authorization to build production line 6, currently in the engineering phase.

"There is already prior approval from the president of CVG [Corporación Venezolana de Guayana] to start processing permits for the necessary resources and in this way firmly launch the project into its construction phase," he said.

Line 6 is due to expand output to 715,000t/y.

Venalum is 80% owned by heavy industry holding CVG while the remainder belongs to a group of Japanese trading companies.

The reducer's plant is located in Puerto Ordaz in southeastern Bolívar state.

Hindalco may begin race for Alcan unit

Business Standard, India - Jan 11, 2007

BS Reporter / Mumbai January 12, 2007

The Aditya Birla group is seen in race for a unit of Canada-based aluminium major Alcan.

Sources in the know said Birla group company Hindalco was expected to bid for the Alcan unit shortly. The proposed bid would be part of the company’s ambitious plans to become one of the top 10 aluminium producers globally over five to six years, the sources said.

Although the details of the target unit could not be confirmed, it is estimated that it would carry a price tag of over $8 billion.

Alcan is into the bauxite and alumina, primary metals, engineered products and packaging businesses.

An Aditya Birla group spokesperson said: "As a policy, we don’t comment on speculation."

Analysts said Hindalco would have to face fierce competition from global majors to win the unit.

Hindalco has a long-standing relationship with Alcan. In fact, the company had acquired the Kolkata-based Indian Aluminium (Indal) six years ago by taking over the majority stake from Alcan. Later, the Birla group converted Indal into a closely held company by delisting its shares.

Hindalco has a joint venture with Alcan in Orissa – Utkal Alumina. The company is developing bauxite mines and is also setting up an alumina refinery with 1-1.5 million tonne capacity a year.

Alcan is among the top three producers of bauxite and alumina in the world. It owns, operates and has interests in seven bauxite mines and deposites in countries such as Australia, Brazil and Guinea. It has a footprint in 55 nations across the world. Its net sales stood at $20.3 billion in FY05.

Alcan to spend up to S58 million on headquarters in downtown Montreal

CBC News Monday, January 15, 2007 | 6:13 PM ET

Canadian Press: ROSS MAROWITS

MONTREAL (CP) - Alcan's (TSX:AL) decision to spend up to $58 million to expand and renovate its headquarters in Montreal solidifies Quebec's international economic prestige in the crucial aluminum business, provincial politicians said Monday.

Alcan has purchased a century-old Salvation Army church that will be preserved and incorporated into a development whose construction is scheduled to begin early this year and be completed by the end of 2009.

Alcan president Dick Evans announces the aluminum company will expand and renovate its headquarters. (CP PHOTO/Paul Chiasson) "We are very proud of the confidence that you are showing in Quebec. It's important to keep companies here that are part of such an important economic sector and one linked to the economic history of Quebec," Economic Development Minister Raymond Bachand said following the expansion announcement.

Alcan, one of the world's largest aluminum companies, controls 56 per cent of Quebec's total aluminum production. It employs 12,000 Quebecers and generates $2.5 billion in annual economic return for the province.

The expansion of its headquarters comes a quarter century after the company renovated old buildings on Sherbrooke Street to build its Maison Alcan headquarters.

Although the Quebec government isn't contributing funds to the expansion, maintaining the Montreal head office was part of negotiations that saw the province contribute $400 million to a $2.1-billion expansion of Alcan's operations in Saguenay, Que.

MONTREAL (CP) - Alcan's (TSX:AL) decision to spend up to $58 million to expand and renovate its headquarters in Montreal solidifies Quebec's international economic prestige in the crucial aluminum business, provincial politicians said Monday.

Alcan has purchased a century-old Salvation Army church that will be preserved and incorporated into a development whose construction is scheduled to begin early this year and be completed by the end of 2009.

Alcan president Dick Evans announces the aluminum company will expand and renovate its headquarters. (CP PHOTO/Paul Chiasson) "We are very proud of the confidence that you are showing in Quebec. It's important to keep companies here that are part of such an important economic sector and one linked to the economic history of Quebec," Economic Development Minister Raymond Bachand said following the expansion announcement.

Alcan, one of the world's largest aluminum companies, controls 56 per cent of Quebec's total aluminum production. It employs 12,000 Quebecers and generates $2.5 billion in annual economic return for the province.

The expansion of its headquarters comes a quarter century after the company renovated old buildings on Sherbrooke Street to build its Maison Alcan headquarters.

Although the Quebec government isn't contributing funds to the expansion, maintaining the Montreal head office was part of negotiations that saw the province contribute $400 million to a $2.1-billion expansion of Alcan's operations in Saguenay, Que.

Continue Article

"If the headquarters ever went elsewhere, there would be investment consequences for Alcan in Quebec, which is totally normal," said Premier Jean Charest.

The restriction won't prevent the company from being taken over, but it would force the new owners to honour certain commitments, the premier said.

Alcan CEO Dick Evans said he doesn't view the obligation as a "poison pill" to a takeover. But he added improvements in the company's financial performance over the past six months have dampened takeover talk.

"What we're doing here is consolidating our presence in Montreal," he said.

The building's modernization, which is expected to receive LEED environmental certification, could cut annual operating costs by 10 to 20 per cent.

(LEED, which stands for Leadership in Energy and Environmental Design, is a benchmark for the construction and operation of high-performance green buildings.)

Former CEO David Culver, who oversaw the construction of the headquarters in the early 1980s, said Montreal is the best location for global companies like Alcan.

"It's not the best city in the world to run a purely Canadian business, but it is the best city in the world to run a global company."

The Salvation Army will use the undisclosed millions of dollars from the sale of its property to refocus its mission in the city.

"The Salvation Army is planning to enhance its delivery of service through its churches, community and social services work in Montreal," Gilbert St.-Onge, Salvation Army divisional commander in Quebec, said in a statement.

Alcan, which has 65,000 employees in 61 countries and regions including 800 at the Montreal headquarters, posted revenues of US$20.3 billion in 2005.

Evans later told reporters that the company will review the controversial decision by a British Columbia regulator on electricity prices before deciding how to proceed with its planned expansion to the smelter in Kitimat, B.C.

"I'm still committed to make that modernization," he said. "So we have to find a route that is value accretive for our shareholders and good for the B.C. province and good for the community of Kitimat."

He also said the company is closely monitoring political unrest that has worsened over the past two months in Guinea. The company has bauxite operations it runs in a joint venture with Alcoa and the Guinea government.

Production is occasionally curtailed during strikes and demonstrations to ensure the 3,000 employees are protected.

"There could be some minor disruptions in our supply chain but I don't see that as cascading to being a major interruption in terms of smelters or anything of that nature," Evans said.

Protesters target Guinea`s bauxite industry

Mining Magazine, UK 16-Jan-2007

Protesters entered the offices of CGB

Police in Guinea have clashed with protesters who are threatening to bring the West African country`s bauxite industry to a halt as part of a union protest aimed at removing the country`s president.

Mineral resources, chiefly bauxite and gold, already represent 85% of Guinea’s exports, more than 25% of government revenues and 17% of gross domestic product - all of which could be threatened if a power vacuum develops.

Union and opposition leaders say President Conte, a reclusive diabetic in his 70s who seized power in a 1984 coup, has become increasingly erratic in his decisions and unfit to rule.

"Groups of vandals are burning tyres and smashing car windows. They`ve even tried to break into a police station to recover arms. We`ve been obliged to intervene and we`re controlling the situation at the moment," a senior Guinean police officer told Reuters.

Earlier, strike leaders said that unless a solution was found they would halt bauxite production on Thursday in the world`s biggest single exporter of the ore from which aluminium is extracted.

Signalling their intention to target the strategic bauxite sector, union representatives on Monday entered administrative offices of the national Compagnie des Bauxites de Guinee (CBG) and ordered employees to stop work.

"The union members came and called on everyone in the offices to leave ... they said if there`s no agreement between the state and the unions, the whole chain of production will be halted from Thursday onwards," a senior CBG official told Reuters.

But despite the administrative disruption, minimum industrial operations were being maintained at the mining centres of Kamsar and Fria.

CBG is operated by US aluminium giant Alcoa World Alumina through its Halco venture with Canada`s Alcan and privately-owned Dadco. Halco owns 51% of CBG with Guinea`s government holding the remaining stake.

The company produces just over 14 Mt of wet bauxite a year from its mine in the northern region of Boke, and exports some 13 Mt/y of dried bauxite. Guinea holds an estimated 25 Bt of bauxite resources, roughly a third of the world`s total. (January 15)

Social production Al plant construction to begin in Mar - Venezuela

BNamericas, Chile - Tuesday, January 16, 2007 18:47 (GMT -0400)

Construction works on Venezuela's so-called aluminum rolling and smelting social production company will kick off in March, state news agency ABN reported.

The plant, a subsidiary of national basic industries company Coniba, will have installed capacity of nearly 130,000t/y to be divided between 60,000t/y at the roller and 70,000t/y at the smelter. It will be built at Caicara del Orinoco in eastern Venezuela's Bolívar state.

The technical feasibility study is complete and earth works are starting in order to begin basic and detailed engineering, plant president César Ortiz was quoted as saying.

All the equipment will be installed for testing before end-2008 with a view to beginning operations in the first quarter of 2009, according to the executive.

Ortiz also said the new plant will manufacture soft aluminum sheets designed for the pharmaceutical and food industries as well as corrugated sheets and beams for construction.

Once domestic demand is met, the operation will export added-value products, mostly to Mercosur countries, the report said.

By Business News Americas staff reporters

Russia's antitrust agency approves asset merger in principle

RosBusinessConsulting, Russia -, 17.01.2007,

Moscow 17:28:10.The Federal Antimonopoly Service (FAS) has made a decision in principle on approving a deal to combine the aluminum and alumina assets of RUSAL, SUAL, and Glencore.

RUSAl's CEO Alexander Bulygin told a meeting at the FAS that an asset merger would ensure access to raw materials and make Russian companies more competitive on the global market thanks to investment concentration, as well as integration of technologies and know-how. He added that the combined company would become a global energy and metals corporation.

Guinea bauxite workers halt production

Mining Magazine, UK - 17-Jan-2007

CBG official: Bauxite production has been halted

Workers at Guinea`s national bauxite company, Compagnie des Bauxites de Guinee, have halted production at the Boké mine and Kamsar and Sangaredi facilities as national protests aimed at removing the country`s president escalate.

Mineral resources, chiefly bauxite and gold, already represent 85% of Guinea’s exports, more than 25% of government revenues and 17% of gross domestic product - all of which could be threatened if a power vacuum develops.

President Conte, who seized power in a 1984 coup, is accused of being unfit to rule. In a recent televised statement he said he would slash fuel prices, halt food exports, improve teachers` pay and tackle police corruption, but union leaders dismissed the offer at a stormy meeting in the capital Conakry and voted to step up their action with nationwide protests on Wednesday.

An official from CBG, which is operated by US aluminium giant Alcoa World Alumina through its Halco venture with Canada`s Alcan said: "The union leaders held a meeting with everybody...and told them to stop...and production has been halted."

The company, which is 51% owned by Halco and 49% owned by the Guinean Governement, produces just over 14 Mt of wet bauxite a year from its mine in the northern region of Boke, and exports some 13 Mt/y of dried bauxite. Guinea holds an estimated 25 Bt of bauxite resources, roughly a third of the world`s total.

Dick Evans, president and chief executive of Alcan, which employs 3,000 people in Guinea, downplayed the possible impact. He told Reuters: "There could be some minor disruptions in our supply chain, but I don`t see that cascading down to a major interruption in terms of smelters or anything of that nature." (January 17)

Alcan mulls China aluminum products joint venture

Reuters , Wed Jan 17, 2007 3:13pm ET

MONTREAL, Jan 17 (Reuters) - Alcan Inc. (AL.TO: Quote, Profile , Research) (AL.N: Quote, Profile , Research) is considering the possibility of investing in the aluminum engineered products business in China, the company said on Wednesday.

Alcan, the world's second-largest maker of primary aluminum, declined to offer details, but spokesman Alexander Christian indicated that the company's investments in the engineered products business tend to total only in the tens of millions of dollars.

By contrast, aluminum smelters costs hundreds of millions, if not billions of dollars to build.

Alcan's comment came after Chinese television suggested the Canadian company would invest in the city of Pingguo in southern Guangxi province, to build a plant making aluminum products.

That followed media reports from late last year in which government and company officials said Alcan was interested in a joint venture that would make some 110,000 tonnes of aluminum sheet annually.

Alcan has had businesses in China for several years.

In 2004, it paid $150 million for a 50 percent stake in the 150,000 tonne Qingtongxia Aluminum Group Co. smelter in the northwestern Ningxia Hui autonomous region.

Power cuts hit Billiton aluminium output

Mining Weekly, South Africa 19-Jan-2007

South African power outages have affected aluminium production at three smelters owned by mining giant BHP Billiton, the firm said on Friday.

The extent of production losses from reduced electricity at two operations in South Africa and one in Mozambique was so far unclear, spokeswomen Bronwyn Wilkinson said.

Aluminium smelters are among the biggest industrial users of power and state utility Eskom imposed limited interruptions on Thursday at the Hillside and Bayside operations in South Africa and Mozal in Mozambique.

"We wouldn't be able to quantify the production loss, we measure it over quite a long period and also we're in a closed period at the moment," she said.

Power cuts rippled across South Africa on Thursday, blacking out parts of major cities and spurring warnings from the state utility Eskom that unexpected shortages could extend into next week.

Eskom blamed the cuts on station maintenance and the shutdown of a unit at the country's only nuclear power plant.

Wilkinson had no immediate comment on whether power cuts would continue on Friday.

BHP Billiton, the world's largest diversified mining company, is the sixth biggest producer of primary aluminium.

During the quarter to end-September, Hillside produced 177 000 t, Bayside produced 49 000 t and the firm's attributable output at Mozal, of which Billiton owns 47%, was 67 000 t.

Guinea strike halts bauxite trains, slows shipments

Reuters Fri 19 Jan 2007 6:23 AM ET

By Saliou Samb

CONAKRY, Jan 19 (Reuters) - A general strike in Guinea has halted trains carrying bauxite for export to the port of Kamsar and reduced the number of ships loading at the port, a senior industry official said on Friday.

Guinea is the world's biggest exporter of bauxite, the ore from which aluminium is extracted. Major Canadian, U.S., Russian and South African mining companies have operations there.

"The trains have stopped. Activities are blocked at the Sangaredi mine. If in one week this situation is still continuing, we run the risk of exhausting our security stock (of mined bauxite at Kamsar)," the Compagnie des Bauxites de Guinee (CBG) official, who asked not to be named, told Reuters.

His comments reflected a growing impact on the West African country's strategic bauxite industry from the strike, which was launched last week by unions which say ageing President Lansana Conte is unfit to rule and should step aside from power.

The stoppage, now in its 10th day, has paralysed economic activity and triggered violent anti-government protests in Conakry and other towns. At least two people have been killed in clashes with police firing tear gas and warning shots.

The CBG official, who asked not to be named, said ships were still arriving at the bauxite port of Kamsar, northwest of Conakry, but the number being loaded was reduced by the strike.

CBG is run by Alcoa Inc. <AA.N> through its Halco venture with Canada's Alcan <AL.TO> and privately owned Dadco. Halco owns 51 percent of CBG. Guinea's government holds the rest.

An Alcoa spokesman has confirmed that some workers have joined the strike at CBG facilities but says it is too early to evaluate the overall impact on operations.

CBG produces just over 14 million tonnes of wet bauxite a year from its mine in the northern region of Boke, and exports some 13 million tonnes of dried bauxite per year.

Industry sources said operations at another Guinean mining town, Fria, where Russia's Rusal runs an alumina plant, had also been reduced to a minimum by the strike action.

Late on Tuesday, Conte offered some concessions to the strikers, saying he was ready to cut fuel prices, halt food exports and order foreign mining companies to domicile in Guinea their foreign currency assets.

The collapse of the Guinean franc has stoked soaring inflation, slashing the buying power of ordinary Guineans, most of whom live in poverty despite the country's mineral riches.

But strike leaders have dismissed Conte's offer as not sufficient and ordered protest marches in defiance of an official ban on public demonstrations.

Rusal-SUAL-Glencore aluminium merger still under investigation in Moscow

Mineweb, South Africa - '18-JAN-07 18:13' GMT © Mineweb 1997-2006

By: John Helmer

MOSCOW ( --Someone either jumped the gun in Moscow yesterday, or pointed the gun, in publishing an announcement that the Russian anti-trust agency has given its approval to the proposed merger of Russia's two aluminium producers, Russian Aluminium (Rusal) and SUAL, along with alumina refining assets of the Swiss-based Glencore.

Since the Federal Antimonopoly Service (FAS) told Mineweb on December 27 that its investigation of the merger proposal was a complex affair, and may be delayed for months, the announcement this week of the apparent FAS approval, quoting FAS chief Igor Artemyev, suggests that he and his subordinates had worked doggedly through the Christmas and New Year holiday period; and had then accelerated their announcement of approval for the benefit of the principal beneficiary of the deal, Oleg Deripaska, owner of Rusal.

Two Russian news agencies, Prime-Tass and RIA-Novosti, led with similar announcements of the approval, with apparently confirming quotes from the head of the FAS, Igor Artemyev. Associated Press followed, and English versions of the story followed in the general financial and industry media. All were in parallel with, or followed, the posting of an announcement on the Rusal website, in which Artemyev is quoted as saying: "We have made a decision in principle to approve of the deal and within two weeks we plan to complete the paperwork related to our final conclusion."

However, FAS told Mineweb this morning there has been a misunderstanding. Rusal had made a presentation of its plans to the FAS on January 16. There has been no decision on the part of the FAS to approve anything, because the Russian government has approved nothing, yet. According to the FAS spokesman, Elena Nagaichuk: "There was no approval -- just a presentation made. We are still working, and my comments on timing are still in force." Before the holiday break, Nagaichuk had told Mineweb: "Igor Artemyev is constantly and repeatedly saying that the review of this deal can be delayed. The main reason is that the deal is very complicated and according to current legislation we can delay the review by two months, and we may use it. I want to remind that documents were submitted in November."

Asked whether Artemyev had said what was been reported, Nagaichuk told Mineweb he had, but that he was speaking for himself. She cautioned that the FAS may recommend approving the merger, but the Russian government and Kremlin will decide the issue. Artemyev and FAS have been over-ruled on major deals in the past, and opposition from government ministers, as well as the presidential administration, can trigger lengthy negotiations over conditions for deal approval. Depending on the political sensitivities, these can take months.

At this point, "we have no strong opposition," Artemyev's spokesman told Mineweb, "but the final decision will be made only after consulting with the government which has not been done yet."

She hinted that an estimate of two weeks for the government and President Vladimir Putin to review the deal, and issue a decision is premature.

Who came down the chimney for Artemyev, and what was in his sack?

According to Rusal, Artemyev made the following comment on Rusal's presentation: "I think that the merger of the three companies will signify the emergence of Russia's first transnational corporation, a leader in the world's aluminium industry, which fulfils the globalization and consolidation trends in the world. This move will strengthen Russia's role as a fully-fledged participant in international economic integration and encourage growth of its influence on the global market."

What is missing from this apparent endorsement is the sign that Deripaska has been waiting for that Putin will allow him to register the merged company in a UK jurisdiction, and manage the company's trade and tax optimization schemes in the same fashion that Rusal has been doing since its creation.

Presidential candidate and deputy prime minister Dmitri Medvedev -- formerly, Putin's chief of staff -- is reported to be the government official supervising the merger. But Putin, whose opinion of Deripaska's operations is less well-known, will be the final arbiter.

In the merger proposal tabled to date, Deripaska would take a 66% stake in the new Rusal; Vekselberg and his group 22%, and Glencore 12%. Sources close to them report there are also private agreements between Deripaska and Vekselberg to vary their shares in the event litigation against either of them, or regulatory rulings, create problems for the merger, or its eventual shareholding sale in an IPO.

Russian industry sources believe that the FAS has been negotiating conditions for the deal approval, but what these are, or will be, is not known.

Deripaska and Vekselberg are hoping for regulatory clearance from Russia and the European Union to close the deal by April. An IPO has been proposed for the following year.

Meanwhile, in the Guinean capital of Conakry, Deripaska's operations are under pressure of a different sort, as bauxite miners and the country's union members mobilize to force Guinea's President Lansana Conte to step down. Conte has been an important Deripaska ally.

Guinea's bauxite is the country's principal source of government revenue, GNP, and export value. The biggest producer of bauxite in Guinea is the Halco joint venture of Alcoa, Alcan, and a company representing local interests. Rusal acquired control of the Kindia bauxite concession that had been first developed by the Soviet Union for supplying bauxite to the Nikolaev alumina refinery in the Ukraine. The Kindia concession was awarded to Rusal in 2001 for 25 years, and according to Rusal 4 to 5 vessels load bauxite and embark each month for Nikolaev. Kindia has current capacity to mine 3 million tonnes of bauxite per year.

In 2002, Rusal also acquired additional bauxite concessions with the Friguia alumina refinery for 22 years, starting in 2002. Rusal then sought to buy the asset outright. The Friguia refinery has a current capacity of 780,000 tonnes of alumina, and is one of Guinea's largest individual employers, with a payroll of 1,038. Rusal would like to double Friguia's alumina output.

Conte has been personally instrumental in Deripaska's fortunes in Guinea. Court testimony and evidence filed in a London High Court case in 2003 suggested how that relationship was conducted, and how it engendered local opposition. According to a Russian source, "Rusal depends on Conte very much. Rusal took part in organization of Conte's visit to Moscow, and then all the principal agreements were reached. Afterwards, Rusal thought about cooperation with the Chinese to explore the largest world bauxite deposit Dian-Dian, but this got stuck."

If Conte is ousted, housecleaning by his successors could reopen the concession and privatization agreements Rusal depends on in Conakry.

Federal agency takes in hand four Kaiser pension plans

Bloomberg News Jan. 20, 2007, 12:10AM


A Kaiser Aluminum Corp. subsidiary's underfunded pension plans covering almost 900 current and former employees were taken over by the Pension Benefit Guaranty Corp., a U.S. agency that protects worker retirement programs.

The four plans at Kaiser Aluminum & Chemical Co. have assets of $20.1 million to cover promised benefits totaling $29.6 million, the agency, which insures pensions of 44 million U.S. workers, said Friday.

"The agency expects to be liable for $2.7 million of the $9.5 million shortfall," said the agency, which became trustee of the plans Dec. 29.

Kaiser Aluminum emerged from bankruptcy protection in July after more than four years under court protection.

The agency took over the plans after a federal appeals court upheld a bankruptcy court ruling that the Foothill Ranch, Calif.-based company satisfied the legal test for ending the plans.

Kaiser, formerly controlled by Maxxam, once had its corporate headquarters in Houston.

Pacific Lumber placed in Chapter 11

The Spokesman Review, WA January 20, 2007

Maxxam also puts Scotia, other affiliates in Chapter `11

Maxxam Inc. placed its embattled Pacific Lumber Co. subsidiary into Chapter 11 bankruptcy to prevent bondholders from trying to foreclose on 200,000 acres of prime redwood forest in Northern California.

Maxxam also put Scotia Pacific Co. (known as Scopac), Britt Lumber Co. and three other affiliates of its forest products group into Chapter 11 Thursday in U.S. Bankruptcy Court in Corpus Christi, Texas. All the companies are controlled by Maxxam, a Houston-based conglomerate with assets of more than $1 billion. Maxxam is controlled by Texas tycoon Charles E. Hurwitz and also owned a controlling interest in Kaiser Aluminum Corp. before the metals maker went bankrupt and closed its big Mead smelter just north of Spokane several years ago.

Kaiser has since emerged from bankruptcy, is no longer affiliated with Hurwitz, and continues to run the Trentwood rolling mill in Spokane Valley.

Maxxam maintains financial interests in real estate development and horse racing. It did not file bankruptcy protection.

One of Maxxam's lumber companies, Scopac, owes bondholders $714 million and said it wouldn't be able to make a $27 million interest payment to bondholders due Saturday.

"Scopac currently has insufficient cash on hand" to pay the interest on its debts, said Gary L. Clark, chief financial officer of Scopac and Pacific Lumber, in court papers.

Failure to make the interest payment would have resulted in default and Scopac's bonds are secured by 200,000 acres of timberlands located in Humboldt County, Calif.

"Scopac commenced this Chapter 11 case to avoid foreclosure," and give the company time to restructure its debt, said Clark.

Weighed down by its heavy debt load and facing environmental lawsuits and regulatory restrictions over its logging operations in Northern California, Clark said Scopac is facing a cash shortfall for the foreseeable future.

"Without significant regulatory relief and accommodations, Scopac's future timber harvest levels over at least the next several years and cash flows from operations will be substantially below the minimum levels necessary to meet its obligations," said Clark.

Maxxam's forest products group, which includes Pacific Lumber, Scopac and Britt, had assets of $421 million, or 40 percent of Maxxam's total assets, according to the company's 2005 annual report, the last year available.

But the timber companies have lost money for years. The group posted a 2005 pretax loss of $70 million on net sales of $182 million, compared with a $49 million loss on sales of $202 million for the same period in 2004.

In November, Maxxam said it bailed out Pacific Lumber, loaning the company an undisclosed amount of cash, so it could cure a default under its credit agreement.

The timber companies have also been involved in a long-running dispute with the state of California over a 1999 debt-for-nature swap, where the company traded 5,600 acres of old-growth redwood timberland to federal government in exchange for $300 million plus 7700 acres of forest and the right to log the land.

Last month, Pacific Lumber and Scopac sued California in state court for failing to live up to the part of the deal and, in effect, preventing the companies from remaining "economically viable," court papers said.

Guinea strike, supply fears boost alumina prices

Reuters South Africa, Sat Jan 20, 2007 10:58 AM GMT

By Pratima Desai

LONDON (Reuters) - Alumina prices in Europe have risen this week on expectations of tighter supplies after a general strike in Guinea grounded trains carrying bauxite for export, traders said on Friday.

Guinea, in West Africa, is the world's biggest exporter of bauxite, which when refined becomes alumina -- the raw material used for making aluminium, the light metal used widely in cars, aircraft, buildings, packaging and consumer goods.

Traders estimate alumina prices are between $250 and $280 a tonne from $230 last week.

Still, excess supply has pushed alumina prices down more than 60 percent since June last year, and traders think the recovery could be brief.

"The main reason for the tight market is Guinea's (Compagnie des Bauxites de Guinee) CBG is on strike again," Yisha Xue, head of London-based China Metals said.

"Guinea supplies about 1 million tonnes of bauxite a month to Western alumina producers ... if those supplies are cut, alumina production will fall and the price will go up, at least in the short term."

The strike, which began last week, has halted trains carrying bauxite for export to the port of Kamsar and reduced the number of ships loading at the port. Major U.S., Russian and South African mining companies have operations in Guinea.

CBG is run by U.S.-based Alcoa Inc. through its Halco venture with Canada's Alcan and privately owned Dadco. Halco owns 51 percent of CBG. Guinea's government holds the rest.

An Alcoa spokesman has confirmed that some workers have joined the strike at CBG facilities but says it is too early to evaluate the overall impact on operations.

CBG produces just over 14 million tonnes of wet bauxite a year from its mine in the northern region of Boke, and exports some 13 million tonnes of dried bauxite per year.


"CBG is having a strike and that will have a huge impact on the whole market. It has a large impact on the big companies and that is why I think it will be solved relatively quickly," an alumina trader said.

"But I don't really see it sustained at those levels ... because the moment the market goes close to $350 then production that has been idled will be ramped up again."

Industry sources said operations at another Guinean mining town, Fria, where Russia's Rusal runs the Friguia bauxite and alumina complex, had also been reduced to a minimum by the strike action.

"I'm pretty sure the price will reach $300. The alumina market is extremely tight, I've not seen it as tight as this for a while," Xue said.

Much also depends on the aluminium price, which on the London Metal Exchange was trading at around $2,700 a tonne on Friday.

"If it stays around the $2,700 range people will produce whatever they can and the Chinese will start again and put more alumina out there," the trader said.

© Reuters 2007. All Rights Reserved.

Gulf States Seek to Dominate Global Aluminum Industry

The Seoul Times, South Korea Sunday, January 21, 2007

By Jamal Al Majaida

Gulf Arab oil producers are taking advantage of their mammoth energy wealth to intensify a drive to quadruple their aluminum output and lift their share of the global market to more than 10 percent in a few years.

The six Gulf Cooperation Council (GCC) countries, which supply a fifth of the global oil demand, have pumped in excess of $eight billion into aluminum industries and investments could nearly double by 2010 as new smelters are being constructed and the existing units are being expanded.

The expansions and new projects approved in 2005 and in the first half of 2006 will boost the region's aluminum production to 3.75 million tonnes, according to a report by the Doha-based Gulf Organisation for Industrial Consulting (GOIC), obtained from the UAE Ministry of Finance and Industry this week.

But with the approval of another major smelter in Abu Dhabi in late 2006, capacity will surpass four million tones and could reach five million tonnes in 2010 once the second phase of that smelter is implemented.

The GCC currently has two main aluminum plants in Dubai and Bahrain, with a combined production capacity of more than 1.5 million tonnes per year.

But both smelters have approved long term expansion programmes that could take their output to more than 2.5 million tonnes.

Another smelter will be built in Sohar, Oman, with an initial capacity of 330,000 tonnes per year, to be doubled to 660,000 tonnes in 2010.

In Saudi Arabia, Maaden company has plans to set up a 600,000-tonne smelter while the state-owned Qatar Petroleum has approved a project to build a smelter in Mesaieed industrial area as a joint venture with Hydro of Norway. It will have an initial output capacity of 570,000 tonnes and will be commissioned in 2009.

GCC states, which also include Kuwait, began setting up aluminum industries in early 1970s within a long-term industrialization drive designed to ease their heavy reliance on volatile oil export earnings.

The focus has been on export oriented and energy intensive projects given their massive oil and gas resources, which make aluminum and other industries among the most feasible projects in the world. Their location in the heart of a vast consumer market and the abundance of cheap labour is another advantage.

Heavy investments in manufacturing, exceeding $100 billion, have sharply boosted the sector's share of the gross domestic product but oil is still the dominant hard currency earner. From only 0.9 percent in 1975, the share of the GCC's aluminum production jumped to nearly five percent in 2005.

" A quantum leap is likely to take place during the next decade, raising the GCC's share to more than 10 percent by 2010 with the expansion of existing smelters and commissioning of new smelters, thus establishing the GCC region as a major player in global aluminum industry, " said GOIC, which was created in early 1990s to advise member states on non-oil manufacturing policies.

Its figures showed the GCC's total aluminum capital stood at $8.7 billion at the end of 2005, including nearly $5.7 billion in primary aluminum. The rest covered semi-finished products and finished products. The projects provided in excess of 71,000 jobs at the end of 2005, mostly expatriates.

It gave no figures for the costs of the new projects but industry sources put them at more than $six billion until 2010. The capital could sharply rise if Abu Dhabi carries out planned expansions in the long term with proposed total investment in the project standing at over $five billion.

Besides aluminum, GCC states have stepped up a drive to exploit their oil and gas reserves by expanding their petrochemical and refining facilities and building new units. More than $30 billion in public and private investments are expected to be pumped into the petrochemical sector in the next 10 years.

The petrochemicals sector is already by far the largest beneficiary of the GCC's industrialization programme, attracting investment of more than $61 billion out of the total manufacturing capital of nearly $103 billion at the end of 2005.

Alcan revises cost estimate to US$2.3B for Australia alumina refinery

News1130, Canada - 22-Jan-2007 - 6:39 am

MONTREAL (CP) - Alcan Inc. (TSX:AL) has again revised a cost estimate to expand and upgrade its Gove alumina refinery in northern Australia to US$2.3 billion and has delayed its startup date to the second quarter of 2007.

The major aluminum firm had initially pegged the cost to expand Gove at $1.5 billion, but that estimate was increased to about $1.9 billion last September. The increase reflects "progress in Q4 2006, additional tie-in requirements and weather-related delays," the Montreal company said Monday in a release.

"Despite extremely tight market conditions in Australia for labour and materials, the project will deliver positive results by significantly improving Alcan's cost position and capacity in alumina," stated Jacynthe Cote, president and CEO of Alcan's bauxite and alumina division.

"In addition to extremely challenging Australian market conditions, cost impacts include additional tie-in integration work that was determined necessary as the expansion neared completion, the appreciation of the Australian dollar, and severe weather conditions that resulted in late delivery of several large pre-assembled modules."

Alcan said the project is about 95 per cent complete, with estimated capital spending of US$400 million for 2007.

The refurbishments will increase the refinery's capacity to 3.8 million tonnes per year from about two million tonnes.

Guinea Strike Threatens Bauxite Exports

Voice of America 24 January 2007

By Phuong Tran , Dakar

While talks sputter to end Guinea's deadly two-week nationwide strike, the country's main export industry is starting to feel the effects. Guinea is the world's largest exporter of bauxite, the raw material used to make aluminum. Phuong Tran reports from VOA's West Africa bureau in Dakar on how the strike in Guinea is affecting the global aluminum market.

Before the strike started, several ore trains a day carried thousands of tons of bauxite from Compagnie des Bauxite de Guinee mines in the hills of Sangaredi to a processing plant at Kasmar. Cargo ships then took the bauxite to refining plants overseas to be turned into aluminum.

But some of the more than 2,500 workers at CBG have stopped trains carrying bauxite to the port as part of the nationwide strike.

Union leaders began the strike 15 days ago to protest what they call the erratic and corrupt rule of President Lansana Conte.

Compagnie des Bauxite de Guinee, known as CBG, is owned by the Guinean government and majority investor U.S.-based Halco Mining Incorporated. One of Halco's biggest shareholders is Alcoa World Alumina, also based in the United States.

Large rolls of aluminum are cooled before they get cut to order size at the Alcoa Warrick Operations in Newburgh, Indiana, April 2006

Alcoa's director of corporate communications, Kevin Lowery, says he is monitoring the situation.

"The general strike going on has obviously touched base with operations at CBG," he said. "Workers have participated in the work stoppage. People should understand that while this is a serious situation, this is the third strike in Guinea this year."

Previous strikes though ended quickly. Lowery says the company is waiting to see if it will need to go to a back-up plan.

"We may be able to start pieces of the operation back up with skeleton staff. It is a very fluid situation. The company has many contingency plans and if we need to implement them we can," he said.

A U.S.-based aluminum analyst does not see cause for alarm, even though some London traders reported this week that prices in Europe for alumina - a component of aluminum - have increased. He says that there is plenty of bauxite in the world to make aluminum.

The analyst did not want to be identified for this report, because he said he did not want to be perceived as affecting world prices.

He says that though the quality of Guinea's bauxite is the best, the strike would only affect prices slightly because bauxite is produced in other countries. He says other countries produce lots of bauxite, but have their own refineries and export less.

CBG has exclusive rights through 2038 to bauxite reserves and resources in the northwestern part of the country.

Protesters march during a demonstration, part of a general strike in Conakry, 22 Jan 2007

Some union leaders have vowed to continue the near-total work stoppage until President Conte cedes power, while others have expressed a willingness to explore alternatives that will break the stalemate.

The strikes turned deadly on Monday when a security crackdown on demonstrators left about 30 people dead.

What the newspapers say, Romania January 24, 2007

part of a longer article located at

Mighty professionals in the Romanian Intelligence Service (SRI) say they follow closely the moves Russian oligarch Oleg Deripaska and his "red right hand" Mikhail Tchernoy make on the Romanian market.

According to a SRI note, Tchernoy is connected to Deripaska and another controversial Russian businessman, Vitali Machitski and together they try to put their hands on the Romanian aluminum industry, Evenimentul Zilei reads.

Well, let's see. Tchernoy is also known as "the RAFO man", where RAFO is the second most important refinery in Romania, with a 17 years history of scandals, abuse, embezzlement, theft, accidents, mobsters, penal managers and so on.

What the SRI professionals fail to see is that the RINKO Group, owner of the US-based Marco Commerce Chamber, held on its turn by Russians connected with the Russian mogul Machitski, currently controls ALRO Slatina, Alprom Slatina and ALUM Tulcea, meaning the most important three aluminum plants in Romania.

Taxpayers may feel a bit weird to find out that SRI makes notes after newspapers ten-years old.

China's Chalco has no immediate plan to raise alumina price - official

Forbes, NY - Jan 23, 2007

BEIJING (XFN-ASIA) - Aluminum Corp of China Ltd (Chalco) has no immediate plan increase its alumina prices, a company spokesperson told XFN-Asia.

The spokeswoman was responding to a query about a media report that Chalco's domestic rivals have decided to raise their prices.

'We are unaware of moves by other refineries on the alumina price. Regardless, we have no immediate plans to make changes ourselves,' said Zhang Qing, Chalco's spokeswoman.

The South China Morning Post (other-otc: SCHPY.PK - news - people ) reported today that seven Chinese smelters were jointly raising their prices for the precursor to finished aluminum to between 2,900 and 3,300 yuan per ton, against 2,800 at the end of last week.

Chalco, China's largest alumina and aluminum maker, is planning to bring online new alumina capacity, having earlier this month won approval to build an alumina project with a capacity of 800,000 tons in Chongqing for 4.27 bln yuan, reports said.

Chalco is currently constructing another 800,000 ton capacity project in Guizhou in the south of China.

(1 usd 7.8 yuan)

Ormet Seeks New CEO

Wheeling Intelligencer, WV 25-Jan-2007


HANNIBAL — Ormet Corp. has begun a formal search for a new chief executive officer.

Ken Campbell, Ormet’s current CEO, will become the firm’s board chairman once his successor is named, officials noted in a recent news release.

Campbell, who has headed Ormet since April, admitted Thursday he had "no idea how to make aluminum." Instead, his role was to get the idled plant restarted.

Campbell accepted the post in the midst of a labor strike that lasted nearly two years. On Nov. 22, 2004, about 1,300 members of the United Steelworkers — Locals 5724 and 5760 — walked off the job at Ormet after the company failed to meet the union’s demands, which included postponing a hearing on Ormet’s plan for reorganization in U.S. Bankruptcy Court.

During the strike, Ormet sold its Hannibal Rolling Mill assets to Aleris International Inc. Aleris transferred selected equipment from the rolling mill to its other facilities, leaving the rolling mill nearly empty.

Under Campbell’s guidance, an agreement with Local 5724 was reached in July 2006. Although Campbell said Ormet has no plans to restart the rolling mill, the Hannibal Reduction Plant was restarted in December.

Campbell noted that changing leadership has been part of the plan for Ormet since he took over.

"It is important that we bring in someone with more operational perspective and industry experience, especially now that the smaller operations have re-started," Campbell said. "I will continue to provide leadership and strategic direction in my role as the company’s chairman.

Ormet is using the resources of a New York-based executive search firm to identify a pool of potential candidates.

Current plans call for the field of candidates to be narrowed by April, with Campbell’s successor to be named a short time later.

Currently, two of Ormet’s potlines are close to being fully operational. In addition, the company is actively selling aluminum as well as using it in its billet casting operation. All six potlines are expected to be operational sometime in the second quarter of this year. About 750 employees are now working in the plant.

Alcoa negotiating to build power plant in Maryland

Pittsburgh Tribune-Review, PA Friday, January 26, 2007

Alcoa Inc. is negotiating with Maryland and federal officials to build a power plant on U.S. Navy-owned land, with one-third of the output to operate the shuttered Eastalco aluminum smelter near Frederick, Md., the Frederick News-Post reported. The company in December shut Eastalco and let go some 600 employees after it couldn't negotiate a new agreement with its electricity provider, Allegheny Power. Alcoa is proposing a $1 billion, 900-megawatt coal-fired plant it would own, to be located on Navy land at the Indian Head Naval Surface Warfare Center in Charles County. Some 350 megawatts of power would be used to operate Eastalco, a portion of the plant's capacity would power the Naval base and the remainder would be sold into the power grid.

RUSAL Moves Up in the World

Stratfor January 25, 2007 23 55 GMT

Union workers in Guinea began demonstrating Jan. 10, demanding political and economic reforms, including the resignation of ailing and aged Guinean President Lansana Conte. The strike has continued despite Conte's Jan. 24 offer to name a new prime minister. Although the little African country is one that many people might not be able to pinpoint on a map, the protesting workers have managed to make quite a global impact by disrupting the world's second-largest producer of bauxite, the primary source of aluminum.

Guinea has three significant bauxite mining operations. The Russian Aluminum Group (RUSAL) controls the operations in Fria and Kindia that produce -- respectively, 2.8 million and 3 million metric tons of bauxite annually. The third operation, in Sangaredi, is controlled by U.S. company Alcoa and Canadian firm Alcan and produces 14 million metric tons of bauxite per year. The ongoing strikes halted output at the Alcoa-Alcan consortium-led operation but have not affected RUSAL's operations.

Guinea holds approximately 30 percent of the world's bauxite reserves and is second only to Australia in global production, so a major disruption in the country's production does not cause a ripple on the markets -- it causes a tremor. Consider that bauxite is the primary ore of alumina used to make aluminum. Aluminum is used in everything from aerospace and defense (most defense aircraft have 70 percent or more aluminum construction) to little everyday utilitarian goods. Thus, the production of aluminum -- one of the most widely used metals in the world -- is oddly dependent on the political fluctuations and disposition of a tiny African country and a few mining giants.

In response to the major strike disruptions, alumina prices spiked at $275 per ton Jan. 22, up from $230 the previous week on fears of tighter supply.

The uncertainty in the market caused by Guinea's internal political struggles underscores another layer of uncertainty in the market: RUSAL's position in the bauxite-aluminum industry. Russian mining giant RUSAL had the only operations in Guinea unaffected by the strikes, which helps -- and highlights -- Russian attempts to gain a controlling share of the global aluminum market.

Although RUSAL's bauxite production in Guinea is not even half that of Alcan and Alcoa's, the Russian firm has made notable gains over time by doing business the "Russian" way. For instance, after Conte visited the Kremlin in 2001, RUSAL gained Guinea's second-largest bauxite operation in an agreement that directly contradicted another commitment the Guinean government had made to Alcan and Alcoa that allowed the North American firms the right of first refusal over additional exploration. Basically, Guinea revoked Alcan and Alcoa's right to refuse a competing company entry in new explorations.

RUSAL's gains are not limited to Guinea; it also has tapped into Australia, the world's largest producer of bauxite. In April 2005, RUSAL took a 20 percent stake in Australia's Queensland Alumina Ltd., the world's largest alumina refiner, in a deal worth $401 million. The refinery produces alumina from bauxite. It was the company's first significant aluminum investment outside the former Soviet Union. RUSAL has since attempted to expand its interests in Australia, establishing a working group with the Queensland state government to develop power projects in June 2006 to competitively produce electric energy for the operation of aluminum production facilities.

RUSAL's biggest move in the industry is its recent merger with the SUAL Group and Swiss company Glencore International to create the United Company RUSAL. The new company jumped past Alcan and Alcoa to become the world's largest aluminum and alumina producer, producing 4 million tons of aluminum and 11 million tons of alumina annually.

The recent strikes affecting Guinea's bauxite production, along with RUSAL's moves, have added uncertainty to the bauxite-aluminum market. Considering RUSAL is benefiting from a strike that has paralyzed its competitors in the country that is the world's second-largest bauxite producer (and which happens to be Africa's most corrupt country, according to Transparency International's 2006 corruption index), the near future of bauxite production looks shaky. RUSAL has been making deliberate gains in the market for some time now, and considering the Russians' tendency to favor wielding power over others when it comes to commodities (such as Russia's energy shenanigans with Europe), the Guinea-RUSAL duo is not comforting.

Tajikistan accuses Russian aluminum giant Rusal of stalling power plant

New Anatolian, Turkey The Associated Press 25 January 2007

Tajikistan on Wednesday accused Russian aluminum giant OAO Rusal of stalling a US$1 billion (_790 million) hydroelectric plant project that is crucial for the impoverished ex-Soviet republic's economic future.

Rusal had failed to fulfill even "a single point" of the contract that it had signed in 2004 to complete the construction of the Rogun power plant, Energy Minister Sherali Gulov said.

He also said that President Emomali Rakhmonov had decided "to build this power station without (Rusal's) help." He did not elaborate, and it was unclear if the contract with Rusal had been annulled.

Rusal officials could not be immediately reached for comment.

Construction work on Rogun has been held up due to disagreements between Rusal and the Tajik government over the size of the dam on the Vakhsh River, 120 kilometers (75 miles) east of Dushanbe.

Tajikistan had long sought an investor to complete the dam, whose construction was interrupted by the 1992-97 civil war.

The plant's completion would allow Tajikistan to sell a growing amount of electricity to neighboring China, as well as to Pakistan and Afghanistan. Once completed, the plant will produce 13.4 billion kilowatt-hours a year, according to the Energy Ministry.

Tajikistan's steep, fast-running mountain rivers have an overall potential hydropower capacity of 527 billion kilowatt hours of electricity a year - the largest in the world, international experts estimate.

The sale of hydropower to neighboring countries would bring a substantial boon to the poor Central Asian nation that is racked by the massive flow of heroin from neighboring Afghanistan and rampant unemployment. An estimated 1 million of the country's 6 million people have left searching for jobs in Russia or other former Soviet republics.

Russia's Unified Energy Systems is involved in a US$480 million (euro363 million) project to complete another major hydroelectric plant in Tajikistan.

Novelis stock up 23 per cent on news about aluminum company's potential sale

Canada East Friday January 26th, 2007

ATLANTA (CP) - Shares in Novelis Inc. (TSX:NVL) soared by more than 23 per cent Friday after the aluminum products company said it's in discussions with "various parties" that could lead to a sale of the former Alcan Inc. (TSX:AL) division.

Atlanta-based Novelis said it was making the announcement in response to increased trading volume in its common stock, which has doubled in the last year.

Novelis shares rose US$8.28 to close at $43.93, a gain of 23.2 per cent, in trading of more than 881,000 shares on the TSX. The company, which also trades on Wall Street, rose $7.17 to close at $37.30 on the New York Stock Exchange, in trading of more than 9.6 million shares.

In its statement, Novelis said "there can be no assurance that any transaction will occur, or as to the timing of such a transaction," the company said in a release.

The company's statement came in the wake of a report in a major Indian newspaper that the Aditya Birla Group controlled by one of India's richest executives might try to acquire Novelis in a bid that could reach US$6 billion.

The Hindustan Times reported on its website that the Aditya Birla Group, a Mumbai-based company with operations in telecommunications, cement, metals, textiles and financial services, would soon make a bid for Novelis.

Billionaire Kumar Mangalam Birla, who controls the Birla Group, is chairman of Hindalco Industries Ltd., India's biggest aluminum maker.

Novelis manufactures aluminum sheet used in cars and construction, recycles aluminum cans and supplies industries ranging from auto and transportation to beverage, food packaging, machinery and printing. The company employs about 12,500 people in 11 countries and had a loss of US$170 million in the nine months ended Sept. 30.

It has been restructuring some operations to improve its finances in the wake of its spinoff by Alcan, the Montreal-based metals giant that is a major customer of Novelis.

Alcan was required to divest the Novelis operations to satisfy regulators' competition concerns after the Canadian company bought France's Pechiney SA in a multibillion-dollar takeover in early 2004.

In January 2005, Novelis agreed to sell about $1.4 billion in bonds as part of a $2.9 billion refinancing needed to repay loans from Alcan.

Production begins at aluminum processor

China Daily 2007-01-27 08:50

Zhaoqing, Guangdong: Production at the biggest aluminum processor in Asia formally began in this Guangdong city on Friday, securing the southern province's status as one of the world's most important centers for the manufacturing of finished aluminum products.

Located in the city's Dawang Industrial Development Zone, the facility is expected produce more than 350,000 metric tons of high quality aluminum this year.

Yet annual output is expected to double and reach more than 700,000 metric tons when the project's second phase is completed in the fourth quarter of 2007, making it one of the three largest aluminum production facilities in the world.

Covering 6.5 square kilometers, the facility was funded by Hong Kong-based Asia Aluminum Holdings Ltd at a cost of more than 8 billion yuan. It is less than 100 kilometers from Guangzhou, capital of Guangdong Province.

Kwong Wuichun, chairman of Asia Aluminum, said the project will have a bright future due to growing demand for aluminum products in both domestic and international markets.

Aluminum is widely used in industrial fabrication for automobiles, airplanes, building materials and a wide range of products used daily by people throughout the world.

"The project will help establish China as a major aluminum production base and one of the largest aluminum product suppliers in the world," Kwong said.

All 36 of the facility's automated production lines and major equipment, as well as technology, were imported from Germany, Italy, Japan and the United States, Kwong said.

In addition to aluminum production facilities, the project also includes a multi-function metal testing center and an aluminum mould processing center. Both are the largest in the world.

Part of Kaiser Aluminum site sold, records show

2TheAdvocate, LA Jan 26, 2007


The northern half of the old Kaiser Aluminum property in north Baton Rouge was sold Wednesday for $3.5 million, clerk of court records show.

The seller was Formosa Plastics Corp., which bought the Kaiser site in 2000. Formosa Plastics’ plant is on the south side of Kaiser.

Sales records list Cemus LLC as the buyer.

Tony DeMarco of NAI/Latter & Blum represented the buyers but declined to provide specifics on their identity, citing ongoing negotiations at the site.

Secretary of state records list Garry Lewis, Brenda Lewis and Cary Goss as members of Cemus, a company that filed incorporation papers on Jan. 11.

The Kaiser property is divided in half by U.S. 190. DeMarco said it was easier to sell as two separate parcels.

He said the 19.5-acre tract sold Wednesday includes several warehouses, 7,000 square feet of office space and a 92,250-square-foot bulk storage facility, one of the largest such structures in the area.

"It will be used for heavy industrial, but it won’t be a plant site," DeMarco said. "There’s a lot of industry coming into the area, because it’s moving away from the mouth of the Mississippi (River)."

Tony Lee with Formosa’s property management division at the company’s U.S. headquarters said the same buyer is negotiating for the remaining southern piece. Because of that, he also declined to provide specifics on the buyer.

Lee said the Kaiser plant has not been in operation since Formosa bought it more than six years ago.

He said Formosa had considered using the property for expansion, "but we never did."

Aurukun's bauxite boost

Courier Mail, Australia January 26, 2007 11:00pm

James McCullough

The world's second largest alumina producer is close to signing two crucial agreements on the way to getting Queensland government approval for the $3 billion Aurukun project.

Chalco late last year was given the go-ahead by the State Government to start a feasibility study on the plan to develop the giant bauxite deposits in the first major investment by a Chinese company in the Australian resources sector.

It's believed Chalco will soon sign an agreement with the indigenous communities at the Cape and also sign off on key commercial issues with the Government to advance the project.

A full-time working group has been holding negotiations with several of the Cape communities and they have been working through various issues using local lawyers.

A signoff on the land and commercial issues will give the project a major boost and clear the way for the eventual construction.

At the same time the Chinese giant, whose parent company turns over $US10 billion ($A12.9 billion) a year, has increased its staff on the ground in Brisbane, taking out half a floor at Waterfront Place with a staff of about a dozen working on Aurukun locally.

The next major hurdle will be an environmental impact study, a major issue for the refinery, and a feasibility study before any work can begin.

"I don't think the EIS will be a major issue," one analyst said. "Yes, it is a full-on mine in a remote area of Australia but Xstrata runs the old MIM copper refinery at Townsville, and then there is QAL's aluminium refinery at Gladstone."

A substantial site office and camp on the mine site is the next step but analysts point out that indigenous cultural and environmental work is essential before that phase can begin.

"The whole thing is edging closer to receiving the green light," one insider said, anticipating final signoff on the commercial and indigenous issues in the next fortnight.

The latest step comes amid a resources boom for the central and north coast of Queensland with Townsville, Gladstone and Bowen vying to become the site for the company's $1.3 billion alumina refinery.

The original plan put to the Government involved a mine and refinery likely to cost $3 billion, but it is understood the final Chalco bid also looks at the construction of a power station and smelter in the state.

"Given Chalco's commitment throughout the world, the possibility of a power station and smelter would not be out of the realm," an adviser close to the deal said yesterday.

The investment would be the largest by a Chinese company in Australia and would be a major boost to north Queensland employment and infrastructure.

It also comes amid growing cost blowouts for a number of new projects although Chalco says it is too early to discuss costs and projections in the Aurukun project.

It was revealed this week that costs at Alcan's Gove alumina refinery project will jump 53 per cent above original estimates to $US2.3 billion ($A2.9 billion) because of labour shortages, bad weather and currency changes.

The Alcan blowout followed heavyweights BHP Billiton and Rio Tinto announcing major cost overruns in trying to get projects operational in a resources boom.

Guinea gets back to work

TVNZ, New Zealand Jan 29, 2007

Guinea security forces scaled back their presence in the capital and shops re-opened on Sunday after unions reached a deal to end an 18-day general strike in the world's top bauxite exporter.

At least 60 people were killed during the strike in street clashes between security forces and protesters opposing ageing authoritarian President Lansana Conte, rights campaigners say.

Conte agreed to appoint a consensus prime minister with delegated powers to name a new government under a deal signed late on Saturday which also cut prices of fuel and rice in the impoverished West African state.

After a local deal between management and unions, mining resumed on Saturday at national bauxite company CBG, the world's top exporter of the aluminium ore and a major source of government revenue, where the general strike had halted exports.

"I think it's a good deal. The government had its back to the wall and knows it mustn't play around with the country's future. They know full well that if they delay, people will take to the streets and start breaking things again," said Seydouba Keita, a resident of the Dixinn suburb of the capital Conakry.

Union leaders warned the general strike was only suspended and could resume if the deal were not honoured.

"We are satisfied but we remain vigilant. If the government does not respect its commitments, there is no doubt that we are ready to resume the strike immediately," said Boubacar Biro Barry, one of the union leaders who organised the strike.

New premier expected within days

The strike was launched on January 10 to challenge the 23-year rule of Conte, a reclusive, chain-smoking diabetic in his 70s whom union leaders said was no longer fit to run the country.

Saturday's agreement, signed by the head of the Supreme Court and the National Assembly as well as union leaders and a representative of business leaders, formalised the appointment of a new consensus prime minister to take over the day-to-day operations of government.

Strike leaders have insisted the government propose an acceptable candidate to fill the post in the coming days.

"We are not going to get involved in the choice of prime minister, but we will continue to play our role as a counterbalance until the situation is completely resolved," said union negotiator Ousmane Souare.

The deal committed the government to prosecuting corruption, particularly two former Conte allies the president personally intervened to free from prison last month.

It also demanded all assets of foreign mining companies operating in Guinea - which include US aluminium giant Alcoa, Canada's Alcan and Russia's RUSAL - should be domiciled in the country, although it said this point would be negotiated with the future premier.

Bosai eyes US$1B refinery, smelter once US$46M bauxite shares deal approved

Stabroek News, Guyana - Sunday, January 28th 2007

By Nicosia Smith

Bosai Minerals Group Company Ltd has signalled its intention to invest US$1 billion in an alumina refinery and aluminium smelter, once the government approves the US$46M deal, which will give it a 70% stake in Omai Bauxite Mining Inc (OBMI).

After two weeks of discussions, Bosai representatives are leaving without the green light to become the 70% shareholder. A decision is expected by February 11.

The principals of the Chinese company had come here to discuss the deal after IAMGOLD, the Canadian company which owns the 70% stake, announced on December 19, 2006 that it had reached an agreement with Bosai, for the sale of OBMI and Omai Services Inc (OSI), a power company.

Director of International Development at Bosai Minerals, Bill Holroyd told Stabroek News yesterday: "We arrived here January 10, with our President Yuan Zhilun and expected to be quickly approved as the new OBMI shareholder... Instead [we] found ourselves in the middle of a disagreement between the shareholders relating to the Block 37 bauxite reserves."

The manager said Bosai had successfully gone through a lengthy bid process for the 70% share in OBMI and "our decision to leave is due to the fact that the government representative will be in Russia next week and [has requested] an extension to February 11, from the original date of January 22."

On Thursday, prior to leaving for Russia President Bharrat Jagdeo said government was seeking information from Bosai about its plans for Block 37, a mineral deposit that is part of OBMI's assets. The reason, he said, was "to see if they are going to use it the way we want it used."

The President said whichever company takes over OBMI, it would like to see that company move toward alumina production and even an aluminium refinery.

The government is also seeking assurances that safeguards will be put in place for the workers and that the operations will not be scaled down, thereby conferring an advantage on Bosai's bauxite producing companies in China.

While in Russia, President Jagdeo and Head of the Privatisation Unit,Winston Brassington the government representative in the negotiations with Bosai, plan to meet executives of the Russian bauxite company RUSAL. The President had said that they will discuss alumina production. RUSAL's subsidiary in Guyana is the Bauxite Company of Guyana Inc, which operates in the Berbice River. RUSAL had also but in a bid for OBMI but was not selected as the preferred bidder by IAMGOLD.

"One of the reasons that Bosai wants to invest in Linden is that we have plans to build an alumina refinery and an aluminium smelter, in two phases. These development plans have been summarized to the government and this is why Block 37 is so very important to our long-term plans," Holroyd said.

Of course, he said, an operation of this type must have cheap and reliable power "and this will be the biggest obstacle for any company having such plans." It was noted that a feasibility study for this type of operation usually takes up to three years, but is expected that the first phase will be operating during 2011. The total investment will be around US$1 billion, he said.

The second phase, which will see doubling capacity should be in operation by 2015. According to Holroyd, "when Bosai is approved by the government as the new shareholder, Bosai will be the largest supplier of refractory bauxite in the world - both as a producer (Guyana) and trader (China)."

Bosai believes that the local bauxite cannot presently compete against Chinese bauxite on price, but it will someday when Chinese prices increase to RASC levels. Chinese bauxite cannot compete technically against local RASC bauxite for special refractory brick applications and this provides a minimum production tonnage base, he said. Holroyd expects that the quality of Guyana bauxite will replace Chinese bauxite for welding rod applications, since the Chinese resources are depleting and mines have been closed.

"They [government] are using the same "due diligence", which BOSAI did when it visited and evaluated OBMI in September last year, "he said, adding "under the terms of the OBMI Partnership Agreement, the government has the 'right of first refusal' on any offer."

And he also agreed that the government must evaluate all options and decide what is best for the employees of OBMI and for the Guyana bauxite industry. "Of course, in order to exercise this right, the government must match the current bid price and pay IAMGOLD US$46 million," Holroyd said.

Bosai intends to expand the sales of the current products and to develop new ones, noting that work has already begun on this.

OBMI has a current work force of approximately 500 people and the Bosai representative said the company is committed toward being a reliable employer and will be "continuing all the good work which IAMGOLD /CAMBIOR has put into the company during the last 5 years. " Prior to Cambior (IAMGOLD bought out Cambior in November 2006) taking over OBMI officially in December 2004, it had invested in the then Linmine (now OBMI).

BOSAI is a privately-owned company and mines bauxite in south west China. Holroyd said this bauxite is principally metallurgical grade and is used for the production of alumina.

Why Different Is Better

Newsweek - Jan 29, 2007

The Incoming Ceo Of A Global Mining Company Says Being An Extroverted Outsider Has Helped Her Advance. Being A Woman Who Loved The Sciences Didn't Hurt, Either.

By Cynthia Carroll | NEWSWEEK

I couldn't say there was one defining moment of how I got to where I am today. But discussions about taking over as CEO of Anglo American came about after I met Sir Mark Moody-Stuart, the chairman of Anglo, at Davos in January 2006. I suppose I'm an extrovert. So I went over and introduced myself and then I said, "And what do you do?" So that was our introduction.

During high school, I was not very turned on by the sciences and thought I would pursue art history and languages. I attended Skidmore College in New York and, knowing that I would have to fulfill my one-year science requirement, I took geology my first semester. I went on for a second semester and then attended Princeton's summer field course in Red Lodge, Montana. This was a turning point, as it was clear I wanted to study geology. From there, I took chemistry, physics and math, enjoying the sciences more than anything else.

Throughout my career, I've worked in a male environment. First it was the oil industry, then the aluminum industry. When I took over as managing director of Canadian aluminum company Alcan's Aughinish Alumina business in Ireland, competitors and insiders thought Alcan was out of its mind to appoint a woman who had no alumina expertise, was young and not Irish. In my experience in male-dominated environments, I've learned that after a couple of months of being in the job, all that really goes away and performance is what matters. Not to sound too simplistic, but being a woman has never been a barrier or an issue for me. There were times when people thought I was too young or didn't have the background but I never believed anything to be insurmountable. In business, there are always challenges to deal with but you find ways to tackle them or different approaches to offset them.

At Anglo American, I suppose that I am even more different. When I returned from my last business trip, just after my appointment, my husband showed me a Web site listing the CVs of the former CEOs of Anglo. Clearly, I am not terribly similar. I am a woman and I am not South African. Being different may be a plus. I am bringing a new perspective to Anglo. I also believe that my appointment is a clear reflection of the progressiveness of the board of directors. They have taken a unique position in a historically conservative industry.

I do think that I am particularly strong at bringing together a global organization and working to motivate people. I subscribe, for example, to using the talent base in existence on the ground and working to get the most out of individuals. In the case of Alcan in China, we took the position as managing partner in a 50-50 joint venture of a 150,000-ton smelter to have four expats managing a facility of 1,200 people. Becoming more global in approach and mind-set is a key priority for Anglo to capitalize on its strengths throughout the world. In a given week, I might be in Asia, South Africa, Europe and the Middle East. This is something that I have experience with from my previous position. A few years ago, approximately 80 percent of Alcan's primary metal asset base was in Canada while today the assets are spread across 20 countries. We took positions in countries where we had no experience or presence, like Oman, China and South Africa.

My No. 1 objective as CEO at Anglo is to maximize shareholder value. We have one of the strongest project pipelines in the industry and I'll be looking to see how we can further grow our business. Anglo has a tremendous asset base, a motivated work force and a forward-looking board. I am thrilled to be taking over the helm during this exciting time.

Carroll is the incoming CEO of Anglo American, the worldwide mining and metals company.

China's Aluminium Production Will Increase 25% in 2007

Resource Investor, VA - 29 Jan 2007 at 08:57 AM EST

By David Harman

SHANGHAI (Interfax-China) -- China's electrolytic aluminium production in 2007 will increase 25% to 11.7 million tonnes, and both domestic and international aluminium prices will fall this year on over-production, a senior industry official said last Friday.

Domestic aluminium price will average around the RMB 18,000 ($2,312.55) mark in 2007, while the average spot price for alumina will average around the RMB 2,300 ($95.49) per tonne for the year on rising stockpiles, said Wen Xianjun, director of the aluminium branch of the China Nonferrous Metals Industry Association (CNMIA).

China's aluminium consumption is expected to grow by 25% to 10.8 million tonnes in 2007, and production of aluminium goods will hit 11 million tonnes, up 32%, Wen predicted.

The amount of alumina available will surge 42% to 27 million tonnes, while alumina production will increase 46% to 20 million tonnes in 2007.

Aluminium production capacity will climb 21% to 14.5 million tonnes.

China exported 1.212 million tonnes of aluminium in 2006, down 8.10% from last year, according to statistics released by the General Administration of Customs. Alumina imports fell 1.50% to 6.91 million tonnes in 2006.

Liu Defei, aluminium analyst with Antaike Information Co. Ltd agreed with Wen's prediction. "Although current alumina spot price is over RMB 3,000 ($ 385.43) a tonne, I doubt the price would stay at such level after the Spring Festival," he told Interfax on Monday.

Several domestic alumina producers expect Chalco to become a new force in influencing the market price, as they are the biggest manufacturers of alumina in China. Moreover, aluminium producers usually increase their stockpiles before the Spring Festival, driving up domestic demand temporarily, he added.

However, Chalco's alumina price still remains at RMB 2,400 ($ 308.34) a tonne or just slightly above the RMB 2,300 prediction for the year.

Aluminium is currently priced at $2,898 per tonne on LME.


These output projections are in line with latest, increased, forecasts and will not surprise the market. The domestic capacity for producing alumina now meets demand and imports have reflected this.

Bauxite on the other hand, whilst plentiful in proven reserves, is subject to huge import requirement. The tax rebate mechanism favours exports of finished products which underlines the fundamental change in this and other metal industries in China.

© Interfax-China 2007

This article comes from Interfax China Commodities Daily, a daily digest produced by Interfax News Agency in Mainland China. To receive 5 free copies of this, please e-mail

CBA aluminum plant becomes biggest in LatAm - Brazil

Bank News Americas, Chile - Tuesday, January 30, 2007 15:40 (GMT -0400)

Brazilian aluminum company CBA started operations on Tuesday (Jan 30) of its expanded primary aluminum plant after boosting capacity to 475,000t/y from 405,000t/y.

As a result, CBA now has the largest primary aluminum smelter in Latin America, behind Brazil's Albras and Venezuela's Venalum.

"The [expansion] is due to reach full operations in two months," CBA sales director Luís Carlos Loureiro Filho told reporters at the plant, located in Alumínio city, São Paulo state, without specifying how much was invested in the project.

CBA has invested a total of US$2.07bn in the last five years, of which 72% came from the company's own resources.

Meanwhile, the company plans a further expansion to about 600,000t/y, CBA president Antônio Ermírio de Moraes told reporters, without providing further details such as a timeline or capex.

"This [new] expansion is a matter of time. This is our plan," the company president said, adding the project hinges on power supply. "There is not enough power for aluminum [production]."

CBA, which also operates 18 hydroelectric plants, plans to install a new rolling mill, among other equipment, the sales director said.

The company is part of Brazilian conglomerate Votorantim.

RUSAL plans to up primary aluminum production by 200,000 t in 2007.

Analytical Information Agency, Russia 30/01/2007

RUSAL is going to up its production of primary aluminum by 200,000 t in 2007, the company's General Director Alexander Bulygin has told reporters.

According to him, today RUSAL's production volumes are limited by existing facilities of its enterprises. "Now we can expect the production to grow by some 1-2% in 2007 against last year. First of all, it will be due to the production of the Khakassky Smelter (150,000 t) and Nigerian smelter Alscon (50,000 t)," he said and added that Alscon was to receive its first alumina in 2007.

Mr. Bulygin also noted that the production of alumina could be increased by 100,000 t owing to the bauxite-alumina comlex Fria in Guinea.

Jagdeo holds talks with Putin, RUSAL owner

Stabroek News, Guyana Tuesday, January 30th 2007

President Bharrat Jagdeo yesterday held discussions with Russian President Vladimir Putin and RUSAL owner Oleg Deripaska at the Kremlin in Moscow, Russian news agency Itar-Tass said.

It quoted President Putin as saying that Russia is developing relations with both big and small states and he was happy that Russian businesses found opportunities to work in Guyana.

A high-placed official in the Kremlin administration told Itar-Tass that the two leaders were to consider interaction in the international arena and in the Latin American and Caribbean region. The parties were also to discuss the issues of "developing the political dialogue, stepping up trade and economic cooperation, repayment of Guyana's debt to Russia," among other issues.

"Special attention will be paid to interaction between the chambers of commerce and industry of the two countries, and prospects for cooperation between businesses," the Kremlin source told the news agency.

Last year, RUSAL purchased Aroaima Mining Company in Berbice for US$20 million and it has commenced geological surveys at the Moblissa-Bamia bauxite field at Linden. According to preliminary estimates, the aggregate reserves there may reach some 120 million tonnes of bauxite.

Meanwhile, Chinese company Bosai Minerals Group Ltd has laid a proposal on the table for a key bauxite asset at Linden. Bosai is willing to pay US$46 million for a 70% stake in Omai Bauxite Mining Inc (OBMI), as well as ownership of Omai Services Inc (OSI). RUSAL had also made a bid for OBMI but was not selected as the preferred bidder.

The government, a 30% shareholder in OBMI, has the "right of first refusal" in any sale of the OBMI assets. Director of International Development at Bosai Bill Holroyd, in an interview with this newspaper on Saturday, before leaving Guyana said the right of first refusal clause is written under the terms of the OBMI Partnership Agreement. If the government chooses to uphold this option it must match the US$46 million offer. The government has since asked for additional time to make its decision, and extended the deadline for completion of talks from January 22, to February 12.

"We arrived here January 10, with our President Yuan Zhilun and expected to be quickly approved as the new OBMI shareholder instead found ourselves in the middle of a disagreement between the shareholders relating to the Block 37 bauxite reserves," Holroyd had said.

President Jagdeo had also noted that the government would like the major ore body within the OBMI assets, Block 37, to be utilized for alumina production.

"One of the reasons that Bosai wants to invest in Linden is that we have plans to build an alumina refinery and aluminium smelter, in two phases. These development plans have been summarized to the government and this is why Block 37 is so very important to our long-term plans," Holroyd had said. In 2004 government sold the 70% stake in OBMI to the Canadian firm Cambior Inc. Cambior's gold and bauxite assets were then bought by IAMGOLD in November 2006 for over US$1 billion.

Holroyd had said Saturday that once the government gives its approval to the deal, among the plans is to build a US$1 billion alumina plant and aluminium refinery.

Before leaving for Russia, Jagdeo had indicated that he would hold talks with representatives of the Russian aluminium giant RUSAL on that company's plans for alumina production here.