AluNews - August 2008

Aluar orders ultrasonic inspection station

SteelGuru, India - August 02, 2008

Argentina’s Aluar Aluminio Argentino has placed an order with Austria Hertwich Engineering a company of the SMS group for the supply and commissioning of an ultrasonic inspection station. Delivery is scheduled for the end of July 2008.

The new linear UT equipment is to be integrated into the roller table line of an existing HE continuous homogenizing plant.

The ultrasonic inspection station is designed to automatically inspect cast logs for center cracks and inclusions over the log length. Log diameters range from 144mm to 400 mm.

Aluar already successfully operates the following equipment from HE: Two continuous homogenizing and sawing plants, one ultrasonic inspection system, a universal rotary tilting furnace and two horizontal casting machines.

Billet saw plant commissioned at Noranda Aluminum

SteelGuru, India - August 02, 2008

USA based Noranda Aluminum Inc together with Australia Hertwich Engineering, Austria successfully commissioned the supplied billet saw plant in April 2008.

The billet saw plant comprises two entry magazines, the billet saw line, stacking equipment for short and long billets, marking equipment, PET strapping and weighing stations. Operation is fully automated. Billets up to 406 mm in diameter can be processed.

For maximum flexibility, short and long billets can be cut out of the same log and then stacked simultaneously by two dedicated stackers. At an integrated log rotation station upstream of the saw, surface faults can be identified for the saw to automatically remove faulty log sections into scrap containers or onto a dedicated exit table (logs cut in half).

Peak short billet production is 300 billets per hour.

GE Energy to supply $500 million power equipment to EMAL Abu Dhabi facility

Energy Business Review - 2nd August 2008

GE Energy has received a $500 million contract to supply equipment for the Emirates Aluminum production facility near Al Taweelah, in the emirate of Abu Dhabi. This facility is claimed to be the world's largest aluminum processing complex at a single site.

Using natural gas as its primary fuel, the power plant will feature GE Energy's Frame 9FA gas turbines, C7 steam turbines, heat recovery steam generators and condensers.

When the first phase of the project is complete, the site will have an installed capacity of more than 2,000MW of electricity to be used in the production of 700,000 tons of aluminum per annum.

Canadian engineering and project management company SNC-Lavalin and Australian professional services firm Worley Parsons have formed a joint partnership to serve as the engineering, procurement and construction management contractors for the project.

Joseph Anis, GE Energy's region executive for the Middle East, said: "Over the past year we have seen a growing number of opportunities in the Middle East and worldwide where we can apply our gas turbine technology for projects where the power is primarily used by our customers for industrial processes. The Emirates Aluminum (EMAL) project illustrates our ongoing commitment to supply gas turbines with the reliability and flexibility to meet the demands of these applications."

Saudi Maaden nears deal on $500 mln soda JV: report

Reuters UK, UK - Sun Aug 3, 2008 8:53am BST

RIYADH (Reuters) - Saudi Arabian Mining Co 1211.SE (Maaden) is close to reaching a deal with Sahara Petrochemical Co 2260.SE to set up a caustic soda joint venture in the kingdom, its chief executive said in press remarks on Sunday.

Maaden wants the 50-50 joint venture to supply a planned 740,000 tonnes-per-year aluminum smelter that will be jointly developed with Rio Tinto (RIO.L: Quote, Profile, Research) at a total cost of $10.55 billion, Alrai quoted Abdullah al-Dabbagh as saying.

Alumina is produced by treating bauxite ore with caustic soda.

"The cost of the project is between $400 million and $500 million, and we have initially signed a preliminary agreement to study this project, now we reached the final economic study of the project," al-Dabbagh said.

(Writing by Souhail Karam, Editing by Ola Galal)

Mytilneos unit inks USD 2 billion deal with Swiss Glencore

SteelGuru, India - August 05, 2008

It is reported that Aluminum SA, a wholly owned subsidiary of Mytilineos, has signed an over USD 2 billion agreement with Swiss Glencore which involves the sale to the Swiss metallurgical the alumina produced by Aluminum SA during the next 10 years.

Mr Mytilineos chairman of Mytilneos group said that "The strategy of our Group is steadily focused on outwardness and cooperation at various levels with large international players in the areas of our activities. The 10 year alumina supply agreement that has been signed with one of the biggest companies in the world shows the continuing confidence of the largest international firms in the prospects of the metallurgy and mining sector of the Group, and also demonstrates that industrial and export activities, when pursued correctly and responsibly, can bear fruits for our Group, for our employees and for our shareholders, as well as for the Greek economy."

Alumina is the intermediate product in the process of obtaining aluminum from bauxite. Alumina production utilizes 80% of Greek bauxites and 20% of bauxites of specific qualities, which will be supplied by Glencore E under a separate agreement.

China likely to impose tax on aluminum alloy exports in H2 - analyst

Interfax China, China - August 05, 2008

Shanghai. - China may impose tariffs to control aluminum alloy exports before the end of 2008, after overseas shipments of such products surged in the first half of this year, an analyst told Interfax on Aug. 4.

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Dubai Aluminum Planning More Than $14 Billion in Investments, an Industrial Info News Alert

MarketWatch - Aug. 4, 2008

SUGAR LAND, TX, Aug 04, 2008 (MARKET WIRE via COMTEX) -- Researched by Industrial Info Resources (Sugar Land, Texas) -- Dubai Aluminum Company Limited (Dubal) (Dubai, United Arab Emirates), the seventh largest primary aluminum producer in the world, is edging up to fifth position with plans for investments of more than $14 billion. Worldwide demand for aluminum increased from 28 million tons in 1990 to more than 40 million tons in 2006, and that figure is estimated to rise to 65 million tons by 2020. The main drivers behind the increase are the transportation, construction, electronics and aerospace industries. As part of Dubal's investment strategy, Mubadala Development and a Dubal subsidiary, Emirates Aluminum, began construction on the first phase of an aluminum smelter complex with a 2,000-megawatt waste-heat-fired power station in the industrial city of Al Taweelah. SNC-Lavalin (CA:SNC: news, chart, profile) (Montreal, Quebec) was awarded the engineering contract, and GE Energy (GE:General Electric Company was awarded the $500 million equipment contract for the power plant. The company is also planning investments in upstream industries, brownfield expansions, greenfield projects and joint-venture partnerships with companies, including Sonatrach and Larsen & Toubro (BOM:500510) (Mumbai, India).

For details, view the entire article by subscribing to Industrial Info's Premium Industry News at http://www.industrialinfo.com/showNews.jsp?newsitemID136351, or browse other breaking industrial news stories at www.industrialinfo.com.

Richest Russian oligarch loses round

Globe and Mail, Canada - August 4, 2008

ERIC REGULY

ROME -- Oleg Deripaska is not used to setbacks.

He has been extraordinarily successful since he won the so-called aluminum wars in the 1990s. He is Russia's richest man and is said to be Prime Minister Vladimir Putin's favourite oligarch. Through his holding company, Basic Element, Mr. Deripaska controls $45-billion (U.S.) of assets, among them UC Rusal, the world's biggest aluminum producer, and 18 per cent of Canadian auto parts maker Magna International Inc.

But setbacks are suddenly what he faces. His effort to merge Rusal and MMC Norilsk Nickel, the biggest nickel maker on the planet, to create a global rival to Australia's BHP Billiton Ltd. and Britain's Rio Tinto PLC is hitting land mines. Turns out some rival oligarchs, none of them known for sweet demeanours, have similar designs on the Russian mining company.

Potentially worse is the Michael Cherney affair. Mr. Cherney, a Ukrainian-born Israeli citizen of considerable wealth, intrigue and aggression, has gone from ally to foe. While the younger Mr. Deripaska is wealthier, better connected and the savvier businessman, it is Mr. Cherney who is winning the slugfest. Proof came last month when Mr. Justice Christopher Clarke, of Britain's Royal Court of Justice, gave Mr. Cherney the right to use British courts instead of Russian ones to try to extract billions from Mr. Deripaska. Mr. Cherney claims he owns 20 per cent of Rusal and wants his booty.

For Mr. Deripaska, the Cherney affair could be damaging. If the case does go ahead in Britain, Mr. Cherney's legal Rottweilers would be sure to hang out all the aluminum wars' dirtiest laundry. The business deals that propelled Mr. Deripaska from struggling nuclear physics student to oligarch could be examined. Until the case is resolved, Rusal's efforts to list on a stock market may be hampered. So may be Mr. Deripaska's plan to unite Rusal and Norilsk.

By any legal standard, Mr. Cherney's victory is unusual, for neither man resides in Britain nor has any significant business interests there. Judge Clarke's ruling reflects his belief that Mr. Cherney made a "good arguable case" that he had little chance of a fair trial in the messy Russian legal system, and that he might even get assassinated there.

The basic outline of the dispute is fairly simple. Both men had considerable aluminum interests; Mr. Cherney claims he was Mr. Deripaska's partner in an aluminum company called SibAl. Early this decade, the various tycoons who owned aluminum assets agreed to merge those assets, including SibAl, to create an aluminum supergiant. Mr. Cherney claims his partnership with Mr. Deripaska gave him 20 per cent of the new company, Rusal.

In 2001, the two met in London's Lanesborough Hotel to hammer out an agreement. Mr. Deripaska paid $250-million to Mr. Cherney: this is not in dispute. But Mr. Cherney claims Mr. Deripaska also agreed to hold Mr. Cherney's Rusal stake in trust. He wants to be paid for the value of the stake. Mr. Deripaska says there was no deal beyond the $250-million payment. A "fact sheet" produced by Basic Element says: "This amount was a final payment to end Mr. Cherney's interference in Mr. Deripaska's business. Mr. Deripaska denies that there was any agreement to pay further amounts to Mr. Cherney."

Judge Clarke's ruling gives no opinion on the merits of either side's interpretation of the agreement. It only allows the case to be heard in Britain. That means any agreement reached at in the London hotel would be subject to British law. Mr. Deripaska's legal team notes that Russian law does not even recognize the notion of beneficial ownership or trust.

Mr. Cherney's lawyers were brilliant, convincing the judge that Russia's legal system lacks credibility. The implication was that Mr. Deripaska could use his considerable influence to get the judgment he wants. Judge Clarke said as much. In his ruling, he said, "There is significant risk that Mr. Cherney will not obtain in Russia a trial unaffected by improper interference by state actors and that substantial justice may not be done." The judge said he was persuaded the risks "inherent in a trial in Russia (assassination, arrest on trumped up charges and lack of a fair trial) are sufficient to make England the forum in which the case can most suitably be tried."

Never mind that Mr. Cherney's lawyers argued in 2000 and again in 2004 that cases against him in the American courts should be tried in Russia. Or that Judge Clarke's ruling contains numerous paragraphs about Mr. Cherney's "alleged criminality," including his use of false passports and his detention by Swiss police in 1994 for using a false identity (Mr. Cherney has been convicted of no crime).

Mr. Deripaska, of course, is appealing the decision.

Mary Kirwan, an Irish lawyer with extensive litigation experience in Canada, believes he has a good chance of winning the appeal.

"This may be an example of judicial overreaching," she says. "The U.S. appeal courts have found that Russia is an adequate judicial forum, despite various shortcomings. Judge Clarke may also have drawn conclusions about O.D.'s [Mr. Deripaska's] credibility that were against the weight of the evidence. A foreign defendant in this type of application is entitled to a scrupulously fair hearing."

It would have been a miracle if Mr. Deripaska's rise to a position of incredible wealth and power by age 40 had hit no speed bumps. But he just hit a big one in the form of Mr. Cherney. The success, or lack thereof, of Mr. Deripaska's appeal could determine whether Russia's top oligarch can keep building on his momentum.

Goa Carbon plans to invest INR 700 crore for expansions

SteelGuru, India - Aug 3, 2008

ET reported that Dempo Group’s calcined petroleum coke maker Goa Carbon is mulling to invest INR 700 crore mainly to set up a Greenfield plant and enhance Paradeep plant capacity.

As per report, Goa Carbon also plans to invest additional INR 200 crore to put up 18 MW power plant across its three operating facilities in Paradeep, Bilaspur & Goa and increase capacity of its Paredeep plant to 220,000 tonne per annum from 100,000 tonne per annum now.

Mr Srinivas Dempo chairman of Dempo Group told reporters that "The Greenfield plant will come up either in Gujarat or in Orissa with an annual Calcined Petroleum Coke capacity of 350,000 to 500,000 tonne. Along with a 50MW power generation facility, the total outlay in the plant will be around INR 500 crore."

Mr Dempo said that the company has tentatively identified two locations in Orissa and Gujarat for the project but yet to zero in on one. It, however will be port based.

Mr Dempo said that though there is no demand supply mismatch in the domestic market but globally the gap is in the range of two million tonne per annum.

Calcined Petroleum Coke is a pure form of carbon used for making anodes for aluminum smelting. It is also used as a source of carbon for the steel industry. Green petroleum coke is used as raw material for producing CPC.

Macquarie China Commodities Weekly - Special report

Mineweb, UK - Monday , 04 Aug 2008

There has been much discussion in recent months about the potentially bullish influence that China could have on the world aluminium market in the future. That bullish effect centres around China becoming a net importer of aluminium due to continuing strong demand growth and the emergence of constraints on supply growth. Up until now, those constraints have clearly not existed. The purpose of this report is to examine whether this is changing.

Our firm view is that there is still an enormous amount of supply growth planned in China, and even though power costs have risen in recent months, we have seen very little change in producers' plans to add capacity. In order to examine the motivation of the producers who are building this capacity, we conducted a series of meetings with producers at which their expansion plans and the economics of aluminium smelting in China were examined in detail. These discussions form the core of this report.

Our main conclusions are that capacity and production growth will remain strong over the next few years and that producers are successfully navigating their way around the hurdles (coal/electricity availability and costs, government regulation, bauxite/alumina). According to our analysis, there are about 5.8mtpa new aluminium smelting projects under construction to be finished by the end of 2009. In addition, there are another 2.4mtpa planned or proposed projects to be developed by domestic smelters before the end of the decade.

Why build smelters in China? - low capex and short lead-times

China's aluminium industry is extremely competitive in terms of its low capex costs and resulting very quick payback period compared with aluminium smelters elsewhere in the world. This is the key driving force behind the rapid ramp-up of Chinese aluminium production in recent years.

High cash costs are the Achilles heel

Although low capex is a major advantage, high cash costs are the major disadvantage for Chinese smelters. Although smelters elsewhere in the world are built in locations where they will benefit from cheap power (often hydro- or gas-powered) at well-below general industrial rates, the vast bulk of Chinese smelters utilise coal as their main power source and will be paying market rates for their coal, if not for their electricity. According to our calculations, the highest cost of production (in Shandong province) ranges from Rmb17,500-18,000/t ($2,574-2,647/t), VAT included.

Analyst Certification: The views expressed in this research accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd ABN 94 122 169 279 (AFSL No. 318062 )(‘Macquarie') and its related entities (‘the Macquarie group') and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.

Maaden nears deal on $500m soda plan

Saudi Gazette, Saudi Arabia - Wednesday, 06 August 2008

RIYADH - Saudi Arabian Mining Co (Maaden) is close to reaching a deal with Sahara Petrochemical Co to set up a caustic soda joint venture in the kingdom, its chief executive said in press remarks over the weekend.

Maaden wants the 50-50 joint venture to supply a planned 740,000 tons-per-year aluminum smelter that will be jointly developed with Rio Tinto at a total cost of $10.55 billion, Alrai quoted Abdullah Al-Dabbagh as saying.

Alumina is produced by treating bauxite ore with caustic soda.

"The cost of the project is between $400 million and $500 million, and we have initially signed a preliminary agreement to study this project, now we reached the final economic study of the project," Al-Dabbagh said.

Earlier, Maaden said it will borrow about SR30 billion ($8 billion) in the third quarter of 2009 to fund a planned aluminum plant in the Kingdom, a Kuwaiti newspaper quoted its CEO as saying.

The loan will be "international and in conformity with Islamic regulations", Kuwait’s Al-Rai newspaper quoted Al-Dabbagh.

The funds will help finance a planned 740,000 tons per year aluminum smelter at a total cost of $10.55 billion.

"We will not need any financing for our projects until the end of the year (2008)," he said without giving more details.

Rio Tinto Alcan will hold 49 percent of AlumCo, the joint venture company that will operate the plant.

The estimated cost of the project has risen 40 percent due to the rise in contracting costs as well as domestic rise in the cost of labor and also to a 14 percent increase in the planned plant’s production capacity, Maaden said earlier.

It was the second time Maaden revised up the project’s cost which it raised in May to $7.53 billion from $7 billion. - Reuters

Kaiser Aluminum profit misses Wall St targets

Reuters - Wed Aug 6, 2008

LOS ANGELES, Aug 6 (Reuters) - Kaiser Aluminum Corp (KALU.O: Quote, Profile, Research, Stock Buzz), a producer of fabricated aluminum products, on Wednesday posted a lower net profit, missing Wall Street forecasts, due to escalating energy related costs and operating inefficiencies.

Net income fell to $22.8 million, or $1.12 per share, in the second quarter ended June 30, from $34.7 million, or $1.71 per share, a year earlier.

Sales rose 7 percent to $413.5 million from $385.1 million in the year-ago quarter, reflecting rises in shipments from the company's fabricated products business and prices in its primary aluminum segment.

Analysts, on average, had expected net earnings of $1.14 per share on revenue of $433.7 million for the quarter, according to Reuters Estimates.

Chief Executive Jack Hockema said in a statement that the company expects strong overall shipment trends to continue through the second half of 2008, driven by strong aerospace and defense demand for heat treat plate and other products.

Hockema said a weakness in domestic automotive demand will be offset by the company's new automotive program and export opportunities.

Shares of Kaiser Aluminum dropped 37 cents in after-hours trade on Wednesday after closing up 0.9 percent at $50.62 in regular trade on Nasdaq.

(Reporting by Gina Keating, editing by Richard Chang)

China's Aluminum Smelters Cut Output, Exceed Target (Update2)

US-China Today, CA - 06 Aug 2008

By Xiao Yu

Aug. 6 (Bloomberg) -- China's aluminum smelters, the largest in the world, cut production by more than 10 percent and will limit output until the end of the year because of power shortages and weak export demand, an industry official said.

Producers have exceeded reductions agreed last month and will extend the accord by three months, Wen Xianjun, deputy chairman of China Nonferrous Metal Industry Association, said today in a phone interview. Prices of the metal rose today.

Aluminum jumped to a record last month on China's production cut, aimed at helping the world's fourth-largest economy combat a sixth year of power shortages. Higher gas prices have curbed output globally, with producers scuttling expansion plans in Abu Dhabi and Bahrain.

``The worst time for Chinese aluminum smelters is yet to come,'' Wang Feng, a Shanghai-based analyst with Everbright Securities Co., said by phone today. ``Demand is extremely bad and the production cuts may last longer than expected.''

Aluminum for three month delivery rose as much as 0.9 percent to $2,925 a ton, and traded at $2,925 on the London Metal Exchange at 11:31 a.m. London time. The metal is used to make beverage cans and parts in cars and planes.

Wen didn't say how much the smelters cut output. The 10 percent reduction accord equates to about 3 percent of the nation's production last year. China produced 12.6 million tons of the metal in 2007. Global production was 38 million tons, according to Citigroup Inc.

Worsening Situation

``The power situation is worsening,'' Wen said from Beijing. Higher electricity rates and weakening demand have made some smelters unprofitable, he said. Power accounts for between 30 percent and 40 percent of the costs of an aluminum smelter.

Smelters in Henan, China's largest aluminum-making province with a capacity of 3 million tons, and Guizhou are becoming unprofitable because of costlier power, said Wan Ling, a Beijing-based analyst at research body CRU International Ltd.

China is grappling with power shortages caused by economic growth that averaged more than 10 percent annually in the past 5 years. Government control of power prices means utilities can't afford to buy enough coal. Aggravating the shortfall, the government has shut thousands of small and unsafe coal mines.

Everbright's Wang cut his China aluminum production estimates by 7.1 percent to 14.3 million tons for this year. Demand may grow less than 10 percent, from last year's almost 40 percent, he said.

Scuttled Projects

Rio Tinto Group, the world's second-largest aluminum producer, said July 22 that a $3 billion project in Abu Dhabi was ``dead'' because the United Arab Emirates decided not to use its gas supplies to generate power for smelters. In February, Manama-based Aluminium Corp. of Bahrain said it shelved a plan to increase capacity by 39 percent to 1.2 million tons because of insufficient gas supplies.

A 16 percent jump in natural-gas prices, used by electricity providers in the Persian Gulf, has persuaded governments in the region to shift the fuel to production of liquefied natural gas instead of aluminum.

The canceled Mideast smelters would have increased world supplies by 2.8 percent. Even with those projects production wouldn't have kept pace with global demand that is growing at 9 percent a year, twice the rate of the world's economy. Citigroup and Deutsche Bank AG predict a supply deficit through 2010. Barclays Capital estimates a 70 percent jump in the average aluminum price through 2009.

Power Shortages

A South African electricity shortage has also curbed smelting this year. BHP Billiton Ltd. cut production at two smelters in the country and a plant in neighboring Mozambique.

State Grid Corp. of China, the nation's biggest power distributor, today warned of ``widespread'' blackouts in Shandong province because of insufficient coal supplies.

China's Hubei province, which has the world's largest hydropower station, has started rationing electricity.

To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net.

Environment Minister’s Smelter Decision under Fire

IcelandReview, Iceland - 06/08/2008

The Althingi parliament’s environment committee will review Minister of the Environment Thórunn Sveinbjarnardóttir’s decision to have the entire aluminum smelter project at Bakki near Húsavík in north Iceland undergo a joint environmental impact assessment.

MP for the Social Democrats and chairman of the environment committee Helgi Hjörvar agreed to assemble the committee and discuss the controversial move made by the minister after receiving a proposal on the matter from Höskuldur Thórhallsson, the Progressive Party’s representative on the committee, 24 Stundir reports.

"At first sight it seems to me that [the decision] does not fall under middle course and equality regulations when a decision was recently made regarding another aluminum smelter, the smelter in Helguvík," Thórhallsson said.

Ground has been broken for a planned aluminum smelter in Helguvík on Reykjanes peninsula, southwest Iceland, and Minister Sveinbjarnardóttir decided that an overall environmental impact assessment for both the smelter and the related power plants would not be necessary in that case.

However, Sveinbjarnardóttir decided last week that such an assessment would be necessary in the case of Bakki and has consequently been subject to harsh criticism.

Rio Tinto plans to set up alumina unit in Gujarat

Economic Times, India - 7 Aug, 2008

NEW DELHI: After acquiring Canadian aluminium maker Alcan last year, global mining major Rio Tinto is all set to enter Indian manufacturing space. The $30-billion Australian mining group, which owns the world’s largest aluminium producer Rio Tinto Alcan, has decided to set up a greenfield alumina facility in Gujarat.

According to sources, Rio Tinto Alcan will be setting up a 12,000-tonne activated alumina facility in the country with an initial investment of close to $35 million. Globally, Rio Tinto group has interests in copper, uranium, diamond, energy products and gold, besides aluminium and iron ore.

For the proposed project, Rio Tinto Alcan B&A, the Canadian arm of Rio Tinto group, would set up a wholly-owned subsidiary in India. It may route its investments either directly or indirectly through its affiliates and group companies. The activated alumina manufactured at the new facility would cater to diverse set of applications including water treatment, oil & petrochemicals and other processing industries.

However, the subsidiary would not undertake any mining activities, though it could look at supplying speciality alumina and other allied products in the domestic market in future. The domestic demand for activated alumina is met through imports currently.

Rio Tinto Alcan was formed after Rio Tinto bought Alcan for $38.1 billion in July last year. With the acquisition, Rio Tinto has become the world’s largest producer of aluminium and bauxite and the fourth-largest producer of alumina.

In the past, Alcan had entered into technical knowhow agreement with various Indian companies including Hindalco, Nalco, JSW Aluminium and Utkal Alumina. These technology arrangements involved transfer of technology for setting up a manufacturing facility to produce alumina. Alumina serves as a raw material for aluminium.

In India, Rio Tinto is currently engaged in the business of exploring minerals and rendering technical consultancy and management support services relating to exploration to its group and other companies.

Shandong Xinfa Aluminum May Have to Cut Production (Update1)

By Li Xiaowei

Aug. 8 (Bloomberg) -- Shandong Xinfa Aluminum and Electricity Group, China's fourth-largest aluminum maker, may have to cut output as a shortage of coal threatens to disrupt power supplies, according to a company executive.

There is a possibility the company can't get enough coal and is forced to shut aluminum cells, although it's extremely costly to do so, Fan Liangong, head of Xinfa's power generation department, said by phone from Chiping, Shandong province today.

Aluminum jumped to a record last month after China's producers agreed to cut output in an attempt to ease a sixth year of power shortages in the world's fourth-largest economy. Like many of its competitors in the eastern province, Xinfa generates its own power to make the energy-intensive metal.

``We're doing all our best to ensure power supplies to our aluminum plants'' which have been running normally so far, Fan said. ``It's very hard to buy coal.''

Shandong Xinfa's annual electricity generation capacity is 8 billion kilowatt hours while its aluminum production capacity is 560,000 metric tons, according to its Web site. A coal shortage has exacerbated power supplies in China, which gets 80 percent of its power supplies from coal-fired generators.

Every city in Shandong, the country's second-largest aluminum producing province, has been ordered by the provincial government to either cut power consumption or suspend production at energy-intensive factories, Shandong Electric said Aug. 6

``For us, the real threat is coal,'' said Fan. The government order ``has little to do with us because we don't use the state grid power,'' he added.

To contact the reporter on this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net

Alcoa raises product prices to defray input costs

Reuters - Fri Aug 8, 2008

NEW YORK, Aug 8 (Reuters) - Alcoa Inc. (AA.N: Quote, Profile, Research, Stock Buzz) said it informed customers on Friday about price increases for products in both its Alcoa Mill Products group and its Alcoa Materials Management group because of higher input costs.

Alcoa Materials said it increased premiums for new business booked as of Aug. 18, raising primary aluminum foundry casting alloy premiums by 50 to 75 percent. It also lifted primary aluminum billet alloy premiums by 20 percent.

The Alcoa group said it raised premiums in response to higher costs for alloying agents, energy, and logistics.

The mill products group sent a letter informing North American Rolled Products customers of a 3 cents per lb conversion increase for common alloy non-heat-treated sheet and coil products, effective with new orders placed on or after Aug. 11, and with shipments scheduled on or after October 1.

Products included in the increase are all 1xxx/3xxx/5xxx series alloys and 6xxx O/F temper for coil and flat sheet.

All existing orders and firm agreements confirmed before Aug. 11 will be honored at current prices, the aluminum producer added.

(Reporting by Carole Vaporean; Editing by David Gregorio)

Sterlite Industries welcomes SC order RSS

KalingaTimes, India - 08-Aug-2008

KalingaTimes Correspondent

Bhubaneswar, Aug 8: Sterlite Industries (India) Limited, a Vedanta Group company, on Friday welcomed the Supreme Court order approving the bauxite mining project in Niyamgiri hills in Kalahandi district of Odisha.

"We are happy that the project has been approved. We are committed to implementing the project in accordance with the guidelines and safeguards laid down by the Supreme Court," said C.V. Krishnan, Head–Business Development, Sterlite Industries ( India ) Limited.

"The bauxite mining project along with the alumina refinery in Kalahandi will bring significant employment and economic livelihood for the local people and overall development for the region," Krishnan said in a statement issued to the media.

Meanwhile, former Union Minister and president Green Kalahandi Bhakta Charan Das termed the Supreme Court's approval to the mining project as "unfortunate and a defeat of nature and humanism".

The agitation against mining of Niyamgiri hills will continue in the days to come, Das said in a statement.

Green Kalahandi has been strongly opposing the proposed mining of Niyamgiri hills for extraction of bauxite for use in the alumina refinery of Vedanta Aluminium Limited.

The organisation was of the view that mining in Niyamgiri hills will affect the livelihood sources of the Dongria and Jharnia Kondh tribals living in the area and adversely affect the ecology of the region.

Alcoa seeking Sichuan aluminum smelter - Report

SteelGuru, India - August 10, 2008

Interfax China reported that US based Alcoa Inc is in acquisition talks with Panzhihua Pearl Aluminum Co Ltd an aluminum smelter in China's southwestern Sichuan Province with an annual output of 50,000 tonnes.

An official with the foreign investment department of the Panzhihua City government said that "Alcoa wishes to acquire a controlling stake in Panzhihua Pearl Aluminum, and the two companies have recently reached some initial agreements on the acquisition."

According to the official, a delegate of Alcoa visited Panzhihua Pearl Aluminum last week and held talks with the company and local government officials to discuss the possibility of a merger.

The official said "This is not the first time that Alcoa visited the company. Although the two companies are still in negotiations over further cooperation details, we hope the deal can be settled as soon as possible. Alcoa visited the company several times in 2006 regarding a potential acquisition, according to the Panzhihua government."

The project which is located in the Vanadium and Titanium Hi-tech Zone, in Panzhihua City, Panzhihua Pearl Aluminum commenced operation of a 50,000 tonne aluminum smelting project in April this year.

According to the official the project represents the first phase of a two phase project, which is to have an annual production capacity to 100,000 tonnes of primary aluminum.

According to Panzhihua government information the company suspended construction on the first-phase 50,000 ton project in 2003 due to funding problems, after staring construction in early 2002. The two phase 100,000 tonne project requires total investment of CNY 1.2 billion.

A Bullish Middle East Aluminum Industry

Monday, 11 August 2008, 09:01 CDT

Researched by Industrial Info Resources (Sugar Land, Texas) -- High energy costs are cutting the bottom line of many companies, especially energy-intensive industrial sectors such as the aluminum production industry. Energy costs account for one-third of aluminum production costs, and naturally, aluminum producers gravitate toward areas where there is a cheap supply of natural gas. The Middle East is fast becoming the destination of choice, causing the aluminum industry in the area to grow into a multi-billion dollar industry. Aluminum (mostly metal castings) is used in vehicles for hundreds of automotive components ranging from wheels to engines. Automobile manufacturers such as General Motors (NYSE:GM), Ford Motor Company (NYSE:F), Nissan Motor Company (NASDAQ:NASNY), BMW AG, Chrysler and Audi AG (FRANKFURT:NSU) are taking great strides in incorporating more aluminum products. These manufactures obtain their feedstock from the aluminum producers who are now investing heavily in the Middle East.

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DJ UPDATE:Rusal: Boguchanskaya Energy, Aluminum To Start In 2010

Trading Markets (press release), CA - Monday, August 11, 2008

LONDON, Aug 11, 2008 (Dow Jones Commodities News via Comtex) -- HYOGL | Quote | Chart | News | PowerRating -- (Adds more details.)

Russian aluminum giant United Company Rusal said Monday that its joint hydropower and aluminum smelter operation with Russian renewable energy company RusHydro is on track to begin by late 2010 and be at full capacity by 2012.

The construction of the 3,000 megawatt Boguchanskaya hydropower plant and the 600,000 metric ton a year Boguchansky aluminum smelter in the Krasnoyarsk region are underway in line with the companies' business plans, Rusal said.

Since the beginning of the project both companies have invested over $1.8 billion, and by the end of 2008 that investment is expected to reach $2.6 billion.

By the end of the year, most of the aluminum smelter facilities will be built, the company said. The construction plan also includes a new railway station and tracks, construction of which will start later this year.

The hydropower plant will feed the aluminum smelter, ands Rusal said it will also provide electricity for the territory near the Lower Angara River. In the first half of 2009, the project team will proceed with placing orders for electrical equipment for the hydropower plant, Rusal said. So far 65% of the investment has been spent on construction works.

-By Devon Maylie, Dow Jones Newswires; +44 (0)20 7842 9483; devon.maylie@dowjones.com

Chalco says no plan to expand Guangxi alumina JV

Reuters - Mon Aug 11, 2008

HONG KONG, Aug 11 (Reuters) - Aluminum Corp of China Ltd (Chalco) (2600.HK: Quote, Profile, Research) (601600.SS: Quote, Profile, Research) has no plan to expand alumina capacity at a joint venture in Guangxi because of high building costs and low alumina prices, investor relations manager Zhang Qing said on Monday.

The comments came despite the Guangxi government requesting the partners of Huayin Aluminum, which is 33-percent owned by Chalco, to double alumina capacity at the joint venture to 3.2 million tonnes.

(Reporting by Polly Yam; editing by Jonathan Hopfner)

© Thomson Reuters 2008 All rights reserved

Bharat Forge Commissions India’s Largest Commercial Open Forging Press

Machinist.in, India - Monday, 11 August 2008

Written by Ganesh

4000T open die press will produce open die forgings ranging up to 70 tons

Pune: Bharat Forge, the flagship company of the USD 2.4 billion Kalyani Group and a leading global supplier of forged and machined components today announced the commissioning of India’s largest commercial open forging press at its Mundhwa facility in Pune.

The facility was inaugurated at the hands of Mr Azeez Khan, Principal Secretary, Industries, Government of Maharashtra and Ms Rajlaxmi Bhosale, Hon’ble Mayor of Pune.

The new facility which is a large 4000T open die press will produce ingots ranging up to 70 tons and will primarily cater to the Wind Energy, Oil & Gas, Steel, Power, Gear, Cement Ship building, Pressure Vessel, Petrochemical & Sugar Industry. Shafts for the Wind Energy & Power Generation sector, Well Heads & X-mas Tree parts for the Oil & Gas Industry and Pinion Shafts, Gear blanks etc. for the Capital Goods sector are some of the parts that will be manufactured at this new facility.

Nalco all set for 3.1-lakh-tonne Iran project, names consultant

Financial Express, India - Tuesday , August 12, 2008

Dilip Bisoi

National Aluminium Company Ltd (Nalco), India’s second largest producer of aluminium, has initiated the process of appointing consultants for its projects. The company proposes to set up an alumina refinery in Andhra Pradesh and an aluminium smelter and a captive power plant in Orissa, besides two smelter complexes abroad.

Nalco has selected MN Dastur to act as a consultant for its project in Iran. Between Fata Hunter of Italy and MN Dastur, the company has chosen the latter. However, Nalco’s initial attempt to select a consultant was hardly successful with only one company responding to its first tender. The lukewarm response was widely believed to be a fall out of the US sanction on Iran.

Nalco is proposing to set up a 3.1 lakh tonne smelter project in Iran with an investment of Rs 4,000 crore. The company has signed an MoU for firming up a joint venture with ALPHA, an Iran-based company where the Kerman Development Organisation (KDO) is a major partner.

MN Dastur, who is also Nalco’s consultant for the project in Indonesia, has recommended the Tanjung Api-Api site in that country for the company’s Rs 14,000 crore smelter project. It also proposes to set up a 5 lakh tonne smelter and a 1250mw captive plant in Indonesia.

The Navaratna aluminium behemoth is also exploring opportunities in South Africa and a few other countries.

"Though we are scouting for opportunities in several foreign countries, the surplus alumina we have will allow us to go for only two smelters abroad," said chairman-cum-managing director CR Pradhan. As of now, the chairman said, project proposals in Indonesia and Iran are moving faster than those in other countries. In the domestic front, Nalco has started the process of appointing consultants for projects in Orissa and Andhra Pradesh. The company has floated tenders for appointment of a consultant to prepare the DPR (detailed project report) for its proposed Rs 16,500 crore smelter-cum-power plant project.

The Orissa government’s single window committee has cleared the project for which Engineering India Ltd prepared the pre-feasibility report.

Nalco, which also plans to set up facilities for bauxite mining and alumina refinery in Andhara Pradesh, has engaged Mineral Exploration Corp Ltd, a government of India company, for preparing detailed prospecting drilling (DPD) of two bauxite mines–Gudem and KR Konda--in the neighbouring state.

The mines promise a total deposit of 90 million tonne of quality bauxite equivalent to Nalco’s Panchpatmali mines in Orissa. The company is proposing to set up a 4.2 million tonne bauxite and a 1.4 million tonne alumina refinery projects in Andhra Pradesh at an investment of Rs 7,000 crore.

Carbon clamp ‘threatens Alcoa jobs’

The West Australian, Australia - 12th August 2008, 7:15 WST

One of Australia’s biggest unions has called for alumina refineries to be given free permits for 90 per cent of their greenhouse gases under an emissions trading scheme, warning 1000 jobs could be at risk at Alcoa in Kwinana.

Australian Workers Union national secretary Paul Howes said the Kwinana to Bunbury region would be one of the worst affected areas in the country if the carbon compensation scheme failed to adequately level the playing field with international competitors.

In WA yesterday on a national tour of Australia’s emissions centres, he said the region was the second most vulnerable area after Gladstone, Queensland, because it contained high-emitting industries such as alumina refineries, bauxite mines, the timber sector and some steel and cement producers.

He said Alcoa’s Kwinana refinery was particularly vulnerable because it relied on old technology. He said free permits to cover 90 per cent of existing emissions and any future expansions were needed to secure jobs.

Other industries such as cement and LNG production also deserved high levels of compensation, though the union had not yet developed a sector by sector breakdown.

The AWU will submit a paper to the Federal Government, which is yet to decide on compensation under the ETS, due to be introduced in 2010.

Mr Howes said the national focus of the ETS debate had so far been on mining towns, but he claimed regional centres such as Kwinana and Bunbury were more vulnerable because their industries supported entire townships rather than the fly-in, flyout workforces which dominated the North-West. He said failure to protect industries would not only lead to job losses from production moving offshore but also be counterproductive to environmental goals.

"The Australian aluminium industry is leading the world in terms of low emissions and we have to recognise that every time aluminium is made in Australia it has 50 per cent lower emissions than China," Mr Howes said. "We have to recognise that if we introduce an ETS we will not be operating on a level playing field with competitors such as India, China and Brazil."

KIM MACDONALD

Saudi Arabia's new gold mine

CNNMoney.com - August 12, 2008

By Barney Gimbel, writer

Forget oil. Prospectors are looking to strike it rich off of gold - the shiny kind.

The Saudi government is planning four new cities to serve its exploding population and make its economy less dependent on oil.

A new generation of fortune hunters is seeking riches under the sands of Saudi Arabia.

But this time they're searching for gold - the shiny kind, not the black, liquid variety - and potentially even more lucrative metals and minerals. "Gold, copper, phosphate, bauxite - this place could be the next Canada or Australia," says Inés Scotland, CEO of Citadel Resource Group, an Australian company that is mining copper in the kingdom. "The geology here is fantastic."

Prospectors have been extracting gold in Arabia for more than 3,000 years - some say King Solomon's riches came from here - but the Saudi government only recently opened up the land for large-scale commercial exploration and production.

"Saudi Arabia is the size of a small continent," says Abdallah Dab-bagh, CEO of the state-run mining company, Ma'aden (whose name means "minerals" in Arabic). "But if you look at the amount of exploration drilling that has been done here from 1945 until today, it's the equivalent of what happens in Canada in one year."

When the company was founded in 1997, only one gold mine was in operation. A decade later Ma'aden - the government took half the company public in July to the tune of $2.5 billion - has five gold mines and two multibillion-dollar projects in the development and planning stages.

Ma'aden's $5.5 billion endeavor promises to make the kingdom the world's largest exporter of diammonium phosphate, a fertilizer.

The company is also finalizing a $10.5 billion deal with Rio Tinto Alcan (RTP) to mine bauxite and build a refinery, smelter, and power station to become a major aluminum exporter.

Driving the government's mining push are job creation and diversifying an economy fueled overwhelmingly by petrodollars. Experts say bauxite and phosphate will generate huge new profits for the Saudis, and not just because their supplies of those minerals are prodigious. The country also has a special advantage.

"The value in those minerals isn't captured from digging it out of the ground," says Peter Searle, a geologist with consultancy CRU International. "It's captured by processing them."

And turning bauxite into aluminum, as it happens, requires an enormous amount of energy. That, as we all know, shouldn't be a problem for the Saudis.

Global Alumina posts second quarter loss of US$1.9 million

The Canadian Press August 12, 2008

TORONTO - Global Alumina Corp. (TSX:GLA.U), a company developing an alumina refinery in the west African country of Guinea, says it lost US$1.9 million in the second quarter, compared with a net profit of $84.3 million for the same 2007 period.

Global Alumina Corp. said Tuesday it lost one cent a share for the three months ended June 30, compared with a net profit of 41 cents a share for the same 2007 period.

The company, which has no metals sales yet, reports in U.S. dollars.

Global Alumina and its joint venture partners are developing a 3.6 million tonne a year alumina refinery located in the bauxite-rich region of Guinea. The company's joint venture partners are BHP Billiton, Dubai Aluminium Co. Ltd. and Mubadala Development Co.

Alumina is a fine powder produced from bauxite and is used to smelt aluminum metal.

Bauxite project offers jobs in Bua

Fiji Times, Fiji - Wednesday, August 13, 2008

THERESA RALOGAIVAU

ABOUT 200 jobs will be created at Nawailevu in Bua once a bauxite mining company begins operations there next year.

The Chinese mining company XINFA AURUM is talking with landowners and the NLTB for the proposed use of about 160 hectares of land which is supposed to contain about two million tonnes of bauxite.

Managing director Isireli Dagaga said they held positive talks with Fiji Pine, the current lease holders of the site which will be mined.

"They have agreed to release their lease once they harvest their pine," Mr Dagaga said.

"But we would also have to secure the consent for lease for the access roads to the mining area.

"We are also securing a mining lease for the actual 70 hectares that will be mined."

He refused to speculate on the value of the bauxite.

"I can't reveal anything like that at this stage," he said.

Fiji Pine general manager George Vuki said the pine trees would be harvested later this year.

"We are willing to terminate our pine lease but we're also trying to establish how long they will hold on to their mining lease so that we can replant once they are finished," Mr Vuki said.

The elements silica and alumina, which are found in bauxite, are used for the manufacture of aluminium.

"The bauxite will be exported to China," Mr Dagaga said.

"This would be a major investment that could trigger greater developments in Bua.

"This would be good for Bua because bauxite has also been found in places like Nasarawaqa."

Rusal to resume huge alumina project

Barents Observer, Russia - 2008-08-12

Regional authorities in the Komi Republic rejoice as an agreement over gas deliveries to the huge Komi Aluminium project was signed with Gazprom last week. The agreement secures resumed development of the project, the biggest of its kind in Russia ever. The plant will create 10,000 new jobs.

Aluminium major Rusal has over the last year unsuccessfully negotiated with Gazprom over necessary deliveries to the Komi Aluminium project. An agreement with Gazprom was only signed last week, and then with the assistance of the regional government in the Komi Republic.

The agreement now opens for resumed construction at the site. When finished, the plant will produce an annual 1,4 million tons of alumina and increase Russian domestic production of the raw material with 40 percent, RIA Novosti reports.

A new agreement between the regional Komi government and Gazprom secures sufficient gas deliveries to Rusal’s huge alumina project in the region.

-The fact that Valerii Golubyov, the representative of Gazprom, supports the republic’s position makes us very happy, Governor Vladimir Torlopov says. –I believe this is this year’s biggest event in our republic, he adds.

Negotiations betweek Rusal and Gazprom has been deadlocked for more than a year. Now, the construction of the plant might restart in 2009, RIA Novosti writes.

-For us this project is gigantic, Governor Torlopov underlines. –It will completely change the industrial structure of the region, he adds.

The bauxite reserves of the Sredne-Pechora deposit are estimated to 240 million tons. The project is believes to create as many as 10,000 new jobs. Investments are estimated to more than 1,5 billion USD.

Nalco to rope in consultant for Rs 16,000 cr aluminium project

Business Standard, India - August 12, 2008

Country's second largest aluminium producer National Aluminium Company Ltd will soon rope in a consultant to undertake the detailed project report for its Rs 16,000 crore-proposed aluminium smelter and captive power plant in Orissa.

The Bhubaneswar-based company has already invited proposals from consultants to prepare the detailed project report for the greenfield aluminium smelter and 1,260 Mw captive power unit to be set up at the Jharsuguda district of Orissa.

The proposed 0.5 million tonnes per annum capacity aluminium smelter would come up in two phases of 0.25 million tonnes each, a senior Nalco official said.

He said, the company has sought the state's approval for providing land and water for the proposed project, which is likely to fructify in about five years span.

Nalco would need about 1,000 acres of land for setting up the aluminium smelter and power plant.

Its water requirement would be pegged at about 1.2 lakh cubic metre per day.

To meet energy and other raw material requirements of the smelter, Nalco plans to procure thermal coal from Mahanadi Coalfields and alumina from its Damanjodi refinery.

In the first phase, Nalco's annual alumina requirement would be 0.5 million tonnes whereas for running the smelter at full capacity, it would need 1 million tonnes of alumina.

At present, Nalco produces about 3.5 lakh tonnes of aluminium and 1.6 million tonnes of alumina per annum.

Within six months, however, the company plans to scale up its aluminium production to 4.6 lakh tonnes and that of alumina to 2.1 million tonnes.

The aluminium major intends to export part of the metal produced from the proposed smelter through Vishakhapatnam port, where it has a dedicated berth and port facilities.

Chalco Guangxi has no plans to expand alumina capacity in near future - official

Interfax China, China - 13-Aug-2008

Shanghai. August 13. INTERFAX-CHINA - Chalco Guangxi Co. Ltd., a subsidiary of the Aluminum Corporation of China Co. Ltd. (Chalco), the country's largest alumina producer, will not expand alumina production capacity in the near future, an official from the company told Interfax on Aug. 12.

China to increase tax on coke and aluminum exports

SteelGuru, India - August 16, 2008

Bloomberg reported that China, the world's largest aluminum producer, will impose a tax on exports of the metal's alloys to curb over-investment in energy intensive industries.

The Ministry of Finance said in a statement that duties on shipments of aluminum alloy will be temporarily set at 15% effective from August 20th 2008. Export taxes on coking coal and coke will be increased.

The ministry said the tax may curb aluminum alloy exports, boosting aluminum prices, which jumped to a record last month after some Chinese producers agreed to cut output to help the world's fourth- largest economy combat a sixth year of power shortages.

Mr Wan Ling analyst with CRU International Ltd said "The rate of increase is higher than we expected. This will further depress a sluggish domestic market, but will help LME prices.''

The statement said, without saying how long the taxes will be in place taxes on coke exports will be raised to 40% from 25% while the rate on coking coal will be lifted to 10% from 5%. The ministry also imposed a 10% tax on metabituminous coal.

Brazil's Vale opens world's biggest aluminum refinery

1 day ago

BARCARENA, Brazil (AFP) — Brazil's mining giant Vale on Thursday opened the world's biggest aluminum refinery here and announced 20 billion dollars of investment in the region to boost output of several metals.

The refinery, in the northern Brazilian town of Barcarena, will provide seven percent of global aluminum production, with annual output of 6.26 million tons, the company said.

This year will see five billion dollars invested in the state of Para, where the refinery is located, with another 15 billion dollars following over the next four years, Vale said.

The extra money is part of an overall investment envelope of 59 billion dollars the company has come up with, financed in part by an 11.5-billion-dollar injection of funds from a share sell-off last month.

Vale intends to expand operations in iron, bauxite, aluminum, copper, nickel, logistics and energy generation with the cash.

"Fifty-six percent of new jobs created by Vale in the world will be in Para," said the company.

It explained that, of the 60,000 hires it will make between now and 2012, 47,000 will be in Brazil -- and 33,400 will be in Para, doubling the company's workforce in the state. Vale currently has 154,700 employees worldwide.

Vale is the second biggest miner in the world after Anglo-Australian group BHP Billiton, and is the top producer of iron ore.

It brought in a record 12 billion dollars in profit last year, buoyed by demand in emerging markets, especially China.

Vale has invested 41 billion dollars over the past five years -- half of that going to buying foreign companies and the other half to production, research and realizing projects.

Hosted by Copyright © 2008 AFP. All rights reserved.

DJ Brazil Miner Vale: Studies Alumina Unit JV With Norsk Hydro

Trading Markets (press release), CA - Aug 14, 2008

SAO PAULO, Aug 14, 2008 (Dow Jones Commodities News Select via Comtex) -- NHYDY | Quote | Chart | News | PowerRating -- Brazilian mining giant Companhia Vale do Rio Doce (RIO), or Vale, is studying a joint venture with Norwegian aluminum company Norsk Hydro ASA (NHYDY) to construct an alumina unit in northern Brazil, a Vale executive said Thursday.

"We are studying this new plant with Norsk and will discuss the details later today," said Vale Chief Executive Roger Agnelli, speaking at an event in Para state, where the new unit would be situated.

Earlier Thursday, Vale announced a plan to invest $5 billion in a steel complex in Para. The plan involves investments of $3.3 billion in the steel mill itself, which will have an annual capacity of 2.5 million metric tons and will start operations in 2013. In addition, it will invest $898 million in building a 600-megawatt thermoelectric plant in the region.

"Vale intensified its focus on organic growth in recent years through a series of investments along these lines," said Agnelli.

The investments in Para state are part of a larger investment program worth $59 billion though 2012.

-By Rogerio Jelmayer, Dow Jones Newswires; 55-11-2847 4521; rogerio.jelmayer@dowjones.com

Miners’ dismal reputation

Latinamerica Press 8/13/2008

Ethical violations abound among world’s top mineral producers.

Some of the world’s largest mining companies active in Latin America have the world’s worst reputation among mineral producers for poor community relations and environmental violations.

The Swiss consultant group Covalence SA said in a report published July 24 on the mining industry that US-based Newmont Mining, Canada’s Barrick Gold and the British company Anglo American topped the list.

Newmont is the majority stakeholder in the Yanacocha gold mine, the largest in Latin America, in Cajamarca, Peru. In 2004, the local population protested successfully to block the company’s plan to explore for gold on Cerro Quilish, an important source of subterranean water. Four years earlier, the company spilled mercury in the nearby village of Choropampa, causing serious health problems to the community.

Barrick, the world’s third-largest gold producer, is developing the controversial Pascua-Lama project on the Chilean-Argentine border. A giant deposit, Pascua-Lama is located in the fertile Huasco River Valley. Barrick plans to drill below three glaciers, an important water source for three rivers that feed into the valley, which would contaminate them with waste water, putting local agriculture at risk.

Anglo American extracts coal in Colombia’s Cerrejón mine in a joint project with Australia’s BHP Billiton and Swiss miner Xstrata.

The project, in Guajira Colombia, is under fire for allegedly forcing the disappearance of the Afro-Colombian town of Tabaco, to take over their lands. The companies are also accused of causing environmental and health damage and harming the farmlands.

But US aluminum producer Alcoa and Anglo-Australian copper miner Rio Tinto have the best ethical reputation, the report found.

Rio cuts Australia alumina output, no aluminium impact (UPDATE 2)

Forbes, NY -08.15.08

SYDNEY, Aug 15 (Reuters) - Rio Tinto Ltd <RIO.AX> <RIO.L> has sharply reduced output at its Yarwun alumina refinery in Australia after a blocked pipeline was discovered, but did not see any impact to aluminium production.

The outage, which began on July 29, would last until the end of August, company spokeswoman Diane Collier said on Friday.

The refinery normally yields 4,000 tonnes of alumina per day, or 1.4 million tonnes annually. It is located near Rio's Boyne Island aluminium smelter, which churns out a half-million tonnes of aluminium each year.

It takes roughly two tonnes of powder-like alumina, derived from bauxite, to make 1 tonne of aluminium.

Some alumina production was still going ahead while repairs were being made, according to Collier, without elaborating.

'We are running at partial capacity,' she said

She said Rio was able to meet all of its alumina sales commitments by tapping its other refineries, buying alumina from outside sources and drawing on its own stockpiles.

'There will be no impact on aluminium production,' Collier said, adding there had been no declaration of force majeure.

Force majeure is invoked by companies when circumstances beyond their control mean they cannot meet orders.

'I wouldn't expect much of an impact in world alumina markets from this, particularly given just about all the commodity markets are more focused on demand than supply right now,' Mark Pervan, senior commodities strategist for Australia & New Zealand Bank said.

Alumina has been consistently selling for around 15 percent of the London Metal Exchange aluminium price <MAL3>, currently $2,765 per tonne, Pervan said.

Rio, which is fighting a $123 billion hostile takeover from rival BHP Billiton Ltd <BHP.AX> <BLT.L>, a larger diversified mining house that also operates alumina refineries, declined to comment on the cost of the outage.

The refinery was built in 2004 at a cost of $1.5 billion.

In July 2007, Rio announced it would spend $1.8 billion to more than double annual production to 3.4 million tonnes by 2011. Rio also holds a majority stake in the nearby Queensland Alumina Ltd (QAL) refinery, one of the largest alumina refineries in the world. Russian aluminium maker Rusal holds a minority interest.

Global miners eye riches of the sub Sahara - Report

SteelGuru, India - August 17, 2008

It is reported that some Australian miners are preparing to spend up to USD 20 billion to develop new projects in sub Saharan Africa.

BHP Billiton and Rio Tinto are leading the way. The global miners have a combined USD 6.1 billion invested in operating mines in the region and are looking to spend billions more on projects such as Rio's USD 6 billion Simandou iron ore project in Guinea and BHP's proposed USD 3 billion aluminum smelter in the Democratic Republic of Congo.

Mr Roger Donnelly chief economist of Australia's Export Finance & Insurance Corporation said that "Something of a boom in Australian activity is on. All previous booms have passed Africa by. The investment climates have been too hard."

Mr Donnelly and co author Mr Benjamin Ford said in the Lowy Institute report that "That an iron ore deposit in a remote corner of Guinea, a remote country most Australians would have difficulty finding on the map could influence the prospects for a takeover that would represent a major consolidation in the international mining industry was certainly a situation no one would have predicted 5 years ago."

The Lowy Institute report noted that Australia only maintained diplomatic posts in Commonwealth or former Commonwealth countries in Africa and lacked representation in many top mining investment destinations such as Guinea, Zambia and Mozambique.

It added that aid programs by the Chinese government, such as a USD 9.25 billion loan pledged to the Democratic Republic of Congo in return for access to resources, were making it tougher for some Western companies to remain competitive.

RusAl sues LUKoil for disruption of supplies

SteelGuru, India - August 17, 2008

RIA Novosti reported that RusAl, the world's largest aluminum producer, has filed a suit against oil company LUKoil for the disruption of oil coke supplies.

RusAl said "LUKoil has unilaterally almost halved oil coke supplies to RusAl's largest aluminum plants since April 2008, failing to meet its obligations under long-term contracts. It said under a contract signed between the two Russian companies in 2006, LUKoil undertook to supply oil coke to RusAl until April 2011 for the production of anode paste and anodes. However, in April, LUKoil curtailed shipments while selling oil coke to other customers. At the same time, RusAl has honored its obligations.

RusAl said "As LUKoil disrupted its contractual obligations and its representatives are not willing to enter into a constructive dialogue, UC RusAl believes that the only possible way to resolve the situation and ensure the contract is fulfilled in full is to take legal action."

LUKoil has not yet commented on RusAl's statement.

An oligarch's Montenegro miasma

Globe and Mail, Canada - 18-Aug-2008

Russian billionaire Oleg Deripaska has no choice but to turn around his money-losing aluminum maker KAP in Montenegro, a country important to his homeland

PODGORICA, MONTENEGRO — Oleg Deripaska didn't become Russia's richest man by making mistakes. But an investment in tiny Montenegro got the better of him, proving that even business-savvy oligarchs can stumble.

The chairman and owner of Basic Element, Russia's biggest industrial and resources group, Mr. Deripaska is a remarkable success story.

Basic Element's hundreds of holdings include Rusal, the world's biggest aluminum maker, 18 per cent of Canadian auto parts maker Magna International and 25 per cent of Norilsk, the biggest nickel producer.

Last year, his company reported revenue of $26.8-billion (U.S.) and assets of $45-billion.

Basic Element's literature barely mentions KAP, which was bought in a privatization in 2005 for €48.5-million ($75.8-million Canadian). It does not say that the alumina and aluminum maker is losing money.

Nor does it say that KAP is engaged in a nasty battle over electricity with the Montenegrin government and that its very survival is an open question.

While not every one of his holdings is profitable, Basic Element admits that KAP is the only investment outside of Russia that is in trouble.

To be sure, KAP is a minor player in the Deripaska empire, but it is a high-profile investment – it is responsible for about half of Montenegro's export earnings – in a country that is becoming the Mediterranean outpost of the Russian elite. Montenegro is full of Russian tourists, Russian millionaires and billionaires who arrive in superyachts, and Russian hotel and construction companies that are plastering the coastline with Monaco-style developments.

KAP's failure, in short, could hand Mr. Deripaska a large dose of bad PR in both Russia and Montenegro. It would prove that Russia's most successful businessman is capable of making terrible decisions. It would inflict an enormous amount of damage on a small, struggling country and potentially sour relations with Russia.

Basic Element has no choice but to try to save KAP. But how?

When Basic Element bought KAP three years ago, the company knew that KAP and the bauxite mines were in trouble. But the purchase made sense at the time, says communications director Konstanin Panin. Aluminum demand was growing and some smelters had shut down, crunching supply and raising prices. KAP itself, he said, had an "obvious competitive edge" because it had easy access to an Adriatic port and its own bauxite supply.

Electricity – consumed in vast amounts by aluminum production and the key to profitability in the industry – was the only issue. "We planned to find a way to ensure a stable electricity supply at a reasonable price," Mr. Panin said.

Instead, however, electricity prices were sent soaring by rising commodity prices and a lack of generating capacity in a country with a reviving economy – Montenegro has one coal burner. KAP's old, energy-sucking technology only made a bad situation worse.

Generally speaking, aluminum smelters get into trouble when 30 per cent or more of their operating costs go to electricity; KAP's figure is 42 per cent. KAP lost about €2.3-million last year and could easily lose more as electricity prices climb. "Every ton is a loss for us," said Joe Kazadi, the American hired last year to be KAP's executive director.

KAP was a successful company for most of its life. When it was built, it used the latest technology from France's Pechiney SA aluminum company. A nearby bauxite mine, which was also bought by Basic Element, gave it scads of aluminum ore. It became Montenegro's biggest single employer, with some 4,000 workers in the mines and the smelter.

Now, the bauxite mine is a mess too, mostly because of a glut of workers. The operation is losing about €15-million a year and the strong union means labour costs can't come down easily. The CEO of the mine, Igor Kisenkov, thinks strikes or lockouts are inevitable. "We have 1,200 people here and we need 400," he says.

Add it all up and Mr. Deripaska's investment in Montenegro is losing almost €20-million a year.

The first step in the attempted rescue effort came when Mr. Deripaska decided KAP could use some hard-nosed American management.

Enter Mr. Kazadi, 52, a career aluminum guy from Maryland. He answered Basic Element's call for a Montenegrin Mr. Fix-It in late 2007. He had spent more than 20 years in various positions at Alcan, the Canadian aluminum company now owned by Rio Tinto. They included technical director of Alcan Europe and seven years at the old Reynolds aluminum plant in Baie-Comeau, Que.

Mr. Kazadi is amiable and quick with a smile, but has a tough side that appealed to Basic Element. One of his last jobs before joining KAP was closing Alcoa's Eastalco smelter in Maryland in late 2005. About 600 employees were thrown out of work. Eastalco, like KAP, was a victim of soaring electricity prices. Shortly after he started at KAP, he fired five smelter workers for having started an allegedly illegal wildcat strike. They were the first firings since the factory opened in 1971, when Montenegro was part of Yugoslavia.

An ambitious campaign to cut costs, bring down employment and upgrade the technology is in place and is working, buying KAP some time. But Mr. Kazadi is still hampered by the main problem, the electricity supply.

In the spring of 2006, a Basic Element company won the tender to privatize the coal plant of the state-owned electricity producer, which would have enabled Basic Element to double the plant's generating capacity and sell the electricity to KAP and any other consumer in the land.

Then came a parliamentary election, and the new coalition government, under pressure from the Opposition, lost the political will to hand the country's power station to the man who also owned the country's biggest industry (Mr. Deripaska is also a significant investor in Porto Montenegro, the €270-million superyacht marina being built by Barrick Gold chairman Peter Munk in Montenegro's Bay of Kotor).

Basic Element is still trying to buy the power plant, but is not getting its hopes up. In the meantime, it is scouring the Balkans for alternative supplies of electricity, perhaps hydro power, to keep KAP alive.

Mr. Kazadi will not deny that Basic Element has given serious consideration to closing or selling the aluminum operations. "All these things are possible," he says.

As KAP's financial health deteriorates, Mr. Deripaska must regret the purchase of the aluminum business.

He isn't commenting, but one executive who knows him thinks Vladimir Putin, Russia's Prime Minister and former president, urged him to build a presence in Montenegro to secure Russia's economic and political interests in the Adriatic part of the Balkans. Montenegro is one of the few countries in the region that welcomes Russian investment and visitors. Russians do not need visas to go there.

The theory just may have some truth. It's an open secret that Mr. Deripaska and Mr. Putin are close to each other; Mr. Deripaska has been called Mr. Putin's "favourite oligarch."

But if loyalty was part of the reason for making the KAP investment, it came at a price. Closing the smelter risks political disaster for Mr. Deripaska and might sour relations between Montenegro and Russia. Selling it would be difficult unless an electricity solution were found. None is, at least in the short term.

It looks like Mr. Deripaska will have to endure KAP's losses, and a slight blow to his ego, for some time.

DJ BHP CEO: S Africa Aluminum Smelting Capacity Unlikely To Grow

Trading Markets (press release), CA - Monday, August 18, 2008

LONDON, Aug 18, 2008 Continuing power constraints in South Africa mean no new aluminum smelting capacity is likely there for at least a decade, BHP Billiton Ltd. (BHP) Chief Executive Marius Kloppers said Monday.

"I cannot see any scenario where in the foreseeable future there is going to be any smelter construction in southern Africa," Kloppers told reporters.

Power shortages in South Africa have forced miners to reduce production.

BHP Billiton, the main smelter operating in South Africa, has had electricity supply cut to 90% of normal capacity, while Rio Tinto PLC (RTP) has put on hold its long-planned $3 billion Coega aluminum smelter.

"There is going to be no (additional) power for a long time," Kloppers said.

"That means that on our existing smelters...capacity curtailment is probably going to continue," he added.

Kloppers said he didn't expect any incremental smelting capacity expansion for at least the next decade.

Company Web site: www.bhpbilliton.com

-By Jeffrey Sparshott, Dow Jones Newswires; +44 (0)207 842 9347; jeffrey.sparshott@dowjones.com

Ghana receives USD 200 million offer for VALCO stake

SteelGuru, India - August 19, 2008

Reuters quoted Mr John Kufuor President of Ghana as saying that his country had received offers in excess of USD 200 million for a partnership role in the 200,000 tonnes per year VALCO aluminum smelter.

Mr Kufuor said that "As I speak with you now, VALCO is attracting international offers of over USD 200 million. We bought VALCO two years ago at USD 20 million, now we are selling only part of it for 200 and in addition will be earning interest that we never had in the past."

It may be noted that Ghana bought back the final 10% of VALCO from Alcoa in June 2008 for USD 2 million, having previously paid Kaiser Aluminum USD 18 million for its 90% share in the smelter, which has been inactive since March 2007 due to power shortages. Ghana plans to re launch the industry with a new mine and alumina refinery with the aim of mining, refining and processing bauxite in country.

Superior to close Pittsburg plant

Pittsburg Morning Sun, KS - Aug 19, 2008 @ 09:40 AM

PITTSBURG — Superior Industries International, Inc., announced today that it will close its manufacturing facility in Pittsburg effective Dec. 19. The facility is the city’s second top employer — No. 1 among manufacturers.

In a release, the company announced that it has completed its review of strategic initiatives to reduce costs and balance its manufacturing capacity in the face of reduced demand for SUVs and light trucks. Based on this review, the company said that it will undertake two significant actions.

In the first of these actions, the company will close its Pittsburg facility which will result in a reduction of force of approximately 600 employees. The company expects to incur severance and related costs as a result of this plant closure of approximately $1.8 million over the next six months. Asset impairment charges related to closing the facility have yet to be determined, but will be recorded in the current quarter ending September 30. At July 27, 2008, the net book value of manufacturing equipment at the Pittsburg location was approximately $13.2 million.

"Obviously we are disappointed," said Mark Turnbull, Pittsburg economic development director. "It is not unexpected with the condition of the United States automobile industry, and the part in that process that Superior plays. It’s a blow to our economy, and frankly, it’s a blow to our city."

Pittsburg won’t be the only area hit by Superior’s struggles. In addition, the company has cancelled 90 open positions and will lay off an additional 65 employees. The cost of severance related to this additional layoff is estimated to be $296,000.

Together, these two actions will result in a reduction of 755 positions, or 29% of superior’s U.S. work force.

"Superior’s goal is to prosper not just survive as we work through one of the most challenging periods in the history of our industry. The essential actions announced today will enable us to maintain our strong leadership position now and well into the future, and to maintain our financial flexibility y protecting our cash-rich, debt-free balance sheet," said Chairman, CEO, and President Steven Borick.

"We are acutely sensitive to the impact of these difficult but necessary actions on our employees, and we are taking a variety of steps to help ease the transition," Borick added.

Superior supplies aluminum wheels to Ford, General Motors, Chrysler, Audi, BMW, Fiat, Jaguar, Land Rover, Mazda, Mercedes Benz, Mitsubishi, Nissan, Subaru, Suzuki, Toyota, Volkswagen and Volvo.

BHP Billiton values Rio Tinto smelters

Melbourne Herald Sun, Australia - August 20, 2008

Felicity Williams

BHP Billiton may hold on to some of Rio Tinto's aluminium smelters if the mining giant's $140 billion bid for its rival succeeds, according to one of the company's top executives.

The news comes after Chinalco and Alcoa seized a 9 per cent stake in Rio earlier this year, fuelling speculation the aluminium giants want the miner's smelting business for themselves.

But BHP chief financial officer Alex Vanselow yesterday hinted that BHP wanted to keep the Canadian aluminium smelters Rio picked up through its $US38 billion acquisition of Alcan last year.

The hydro-powered assets are highly coveted because aluminium smelting is one of the most energy-intensive industrial activities in the world and can only be done profitably when there is a secure, low-cost electricity source nearby.

"On the downstream side, Rio Tinto Alcan has some excellent power positions and they are attractive under any scenario," Mr Vanselow said. "The Rio aluminium portfolio is a very good one."

His comments are likely to come as a surprise to the market, given BHP's oft-stated strategy of focusing on "upstream, large, long-life, low-cost" assets.

In business, the word "upstream" is used to describe assets that are early in the production process, such as mines, while "downstream" refers to operations that are closer to the end, such as smelters and refineries.

In addition to Rio's Canadian aluminium smelting assets, Mr Vanselow also singled out the miner's Gove alumina refinery in the Northern Territory and Aurukun bauxite project in North Queensland as "very attractive".

While aluminium and nickel were more exposed to a short-term slowdown in Chinese economic growth, the long-term outlook for both metals was strong, Mr Vanselow added.

BHP's 3.4-for-one all-share offer for Rio is before the European competition authority, whose decision is expected in December.

Rio has repeatedly rejected the bid on the grounds that it significantly undervalues its business.

BHP fell $1.60 to $37 and Rio lost $4.37 to $111.33.

Bauxite refinery to be constructed in Tema

Ghana News Agency, Ghana - August 21, 2008

Tema, GNA - Feasibility studies have been completed for the construction of bauxite refinery plant in Tema for the production of alumina

as part of measures to integrate the aluminium industry.

Ghana currently exports bauxite to the Western countries where it is refined into alumina which the Volta Aluminium Company (VALCO) then buys and imports into the country as a raw material for the production.

Mr. Emmanuel Lartey, Managing Director of the plant revealed this when he led the Convention People's Party (CPP) Presidential Candidate, Dr Paa Kwesi Ndoum to tour the plant.

Mr. Lartey said the plant, when constructed would enable Ghana to add value to its bauxite deposits as well as save money spent on the importation of alumina.

He said VALCO needs 400,000 metric tonnes of alumina to produce 200,000 metric tonnes of aluminium from the five plants annually to feed the country's aluminium industries.

The Managing Director stated that it was the wish of VALCO that the country would control the entire process of producing aluminium consumer products which include the mining of bauxite, its refining into alumina, aluminium and casting into moulds and billets and finally to the production of cooking utensils and roofing sheets among others.

He said VALCO, which has a total workforce of 1,200 was closed down in 2007 due to the unavailability of power to run the plant, adding that, 500 employees have been recalled to prepare the plant to start full operations by the end of the year.

Mr. Lartey further said the company is operating on two of its plants to produce anodes which would be used as electrical conductors to power the potlines for the smelting of aluminium at the start of full operations noting that the production of anodes do not require electricity as it uses gas and fuel.

He noted that talks were underway for VALCO to build its own electricity plant to feed the factory with the 350 mega watts power needed to sustain its operations.

Dr Ndoum before the tour said the CPP was using VALCO as a beginning point to tour other companies especially those established by Ghana's first President, Dr Kwame Nkrumah.

He noted that the visit would help the party assess VALCO's present situation as well as help them formulate measures that would help in the implementation of Dr Nkrumah's vision of VALCO becoming an integral part of the Volta River Project to promote industralisation.

He expressed satisfaction that the company was being managed by Ghanaians and called on foreign investors to desist from buying the country's assets but should rather enter into partnership with the Ghanaian experts as "we can do what others are doing even do it better."

GNA

Alcoa `Optimistic' Aluminum Prices Will Rise on Power (Update2)

Bloomberg - August 21, 2008

By Dale Crofts and Stewart Bailey

Aug. 21 (Bloomberg) -- Alcoa Inc. Chief Executive Officer Klaus Kleinfeld said he's ``very optimistic'' aluminum prices will rise in the next five years as producers encounter difficulty finding enough power to meet demand for the metal.

Chinese demand for aluminum will climb again after the Beijing Olympic Games are finished and a ``strongly managed ramp- down'' of the country's industrial activity ends, Kleinfeld said yesterday in an interview in New York, where Alcoa is based. China, the world's fastest-growing major economy, will become a net importer of aluminum as use increases, he said.

Alcoa and rivals including United Co. Rusal, the world's largest aluminum producer, are battling higher prices for the electricity that powers their smelters. While those costs curtail production growth, wealthier populations in China, India, Russia and other emerging markets are driving demand for the metal used in beverage cans, cars and aircraft.

``I have not met anybody who in the long term is not assuming there will be a real issue of undersupply in the market,'' said Kleinfeld, 50. ``Energy is one of the rarest commodities. It will be very, very difficult to bring new capacity on line and even to sustain old capacity.''

Alcoa, the world's third-largest aluminum producer, estimates that demand will increase about 9 percent this year and double by 2020, requiring about 80 new smelters able to forge 400,000 metric tons each. By 2020, Asia will consume as much aluminum as the world does today, the company projects.

Power Costs

Power accounts for about a third of the cost of producing aluminum. Alcoa made an unsolicited takeover attempt last May for Canadian rival Alcan Inc., in part to capture that company's low- cost hydropower supplies in the Canadian province of Quebec. The company was instead bought by Rio Tinto Group for $38.1 billion.

Aluminum for delivery in three months on the London Metal Exchange rose $87, or 3.1 percent, to $2,850 a metric ton today. The metal has declined 16 percent from a record $3,380.15 on July 11.

Aluminum has lagged behind other metals traded on the LME. The metal had an average annual return of 15 percent in the five years through July, trailing the 35 percent average yearly gain for copper and 33 percent for lead.

Rio Tinto, the world's second-largest producer, last month scrapped a smelter project in Abu Dhabi that would have produced 700,000 tons a year after the United Arab Emirates decided not to use natural gas to fuel smelters. The company also has threatened to close a plant in Wales if it can't secure a new power contract and has suspended work on a new facility in South Africa.

Electricity Supplies

Similar problems are hampering Alcoa's efforts to maintain production. The company has idled half its capacity at a smelter in Texas in response to power shortages and is negotiating a new electricity-supply agreement for its Ferndale smelter in Washington state.

``The two big fundamental drivers are population growth'' and energy, Kleinfeld said.

Aluminum supply exceeded demand by 790,000 metric tons in the first half, compared with a shortfall in the year-earlier period, the World Bureau of Metal Statistics said yesterday in a statement. Demand last year outpaced supply by 88,000 tons in January through June, the Ware, England-based company said.

Alcoa rose 43 cents, or 1.4 percent, to $32.14 in New York Stock Exchange composite trading. The shares have declined 12 percent this year.

Chinese Demand

China's urban population rose 26 percent to 577 million from 2000 to 2006, London-based Rio Tinto has said. The country, which accounts for a third of the world's demand for the lightweight metal, accounted for more than 60 percent of the increase in primary aluminum consumption in 2007, according to Rio.

The price of aluminum, the most actively traded metal on the LME, may rise to more than $4,000 a ton as early as next year because of increasing power costs and higher production expenses in China, Rio Tinto Alcan Chief Executive Officer Dick Evans said in April.

Both Alcoa and Rio expect the market to be about balanced this year, reflecting curtailed supplies in countries including China and South Africa. Alcoa expects global demand to grow about 7.6 percent this year as rising demand from emerging markets such as China and India more than makes up for a decline of about 5 percent in the U.S. and Europe.

Alcoa said Jan. 9 it expects to add as much as 50 cents to per-share earnings in 2008 through new investments, including the expansion of the Fjardaal smelter in Iceland, which will produce about 300,000 tons of aluminum this year. The company is completing a 90,000-ton addition at the Pinjarra alumina refinery in Australia.

Alcoa is studying the feasibility of a new 250,000 metric ton-per-year aluminum smelter in Iceland that would be powered by geothermal energy. Greenland's parliament said in May it would study the potential development of a 340,000 metric ton smelter with Alcoa. The two smelters would be able to supply aluminum to either Europe or the Americas, Kleinfeld said.

To contact the reporters on this story: Dale Crofts in Chicago at dcrofts@bloomberg.net; Stewart Bailey in New York at sbailey7@bloomberg.net.

Examine the Chinese Electrolytic Aluminum Industry Amid an Increasing Global Consumption Rate

Market Watch - Aug. 20, 2008

DUBLIN, Ireland, Aug 20, 2008 (BUSINESS WIRE) -- Research and Markets ( http://www.researchandmarkets.com/research/9a5272/china_electrolytic) has announced the addition of the "China Electrolytic Aluminum Industry Report 2007" report to their offering.

The global aluminum consumption is growing strongly: the global aluminum consumption in 2006 was higher than estimated growth levels with an increase of 8.0%, and the gap between supply and demand was 490 thousand tons. China is still the most important driver in the global aluminum consumption industry with a growth rate of 22.6%. The increase of consumption in China is due to the increase of demand in the construction, electric power and transportation industries.

It is predicted that there will only be a small surplus of primary aluminum in the world in 2007 and 2008: about 390 and 110 thousand tons, which means the increase of global aluminum inventories will be quite limited in the next two years. At present, global aluminum inventories can be supplied in 5.9 weeks, which is far lower than the average level of 9.3 weeks in the past 30 years. And once the consumption growth surpasses estimations, the inventories will be reduced and effect the price of aluminum.

In the next two years, the decreasing price of aluminum oxide will stabilize and will probably not decrease below 3000 Yuan/Ton in 2007.

Along with the increase of the output of China's aluminum oxide industry, the dependency on import aluminum ores has increased drastically; it is predicted that the external dependency in 2008 will increase to 47.3%. And at present, the imported aluminum ores in China are mainly from Indonesia.

"This report is modified at the time of ordering and requires 3-5 days to deliver"

Key Topics Covered:

- Analysis on Prospect of Global Aluminum Consumption

- Analysis on China Electrolytic Aluminum Industry

- Analysis on China Aluminum Oxide Industry

- Analysis on Supply of Aluminum Ores

- Analysis on Aluminum Price

- Analysis on Key Enterprises

- List of Charts

Companies Mentioned:

- Jiaozuo Wanfang

- Yunnan Aluminum

- Shenhuo Coal Industry

- Nanshan Aluminum

- Baotou Aluminum

- Zhongfu Industry

- Aluminum Corporation of China Limited

For more information visit http://www.researchandmarkets.com/research/9a5272/china_electrolytic.

SOURCE: Research and Markets Ltd. Laura Wood, Senior Manager

SNC-Lavalin wins $92 million contract for Rio Tinto Alcan smelter in Australia

The Canadian Press 21-Aug-2008

MONTREAL — Rio Tinto Alcan has awarded joint venture led by engineering giant SNC-Lavalin (TSX:SNC) a $92 million contract for upgrades at its Boyne aluminum smelter in Australia.

The contract with Sinclair Knight Merz will provide engineering, procurement and construction management services for the major sustaining projects at the smelter in Gladstone, Queensland.

It follows a detailed feasibility study completed by the joint venture last December.

The project includes the replacement of two carbon baking furnaces and the replacement of cranes and runways on two reduction lines.

"This contract is further confirmation of SNC-Lavalin's worldwide leadership in managing large aluminum smelter projects," Pierre Duhaime, SNC-Lavalin's executive vice-president, said in a release Thursday.

SKM and SNC-Lavalin have long histories working with Rio Tinto.

"We have worked with Rio Tinto in iron ore, coal, copper and bauxite in Australia, Chile, Peru and, more recently, in Guinea, West Africa, and this latest commission demonstrates the continuing growth of our relationship," added Santo Rizzuto, general manager of Sinclair Knight Merz.

Work is underway and is expected to be completed by the second quarter of 2011.

SNC-Lavalin is a leading global engineering and construction company that operates in about 100 countries.

Corus announces new initiative for disposal of aluminum smelters

SteelGuru, India - August 24, 2008

Corus has entered into exclusive negotiations with a new prospective buyer of its aluminum smelters in the Netherlands and Germany.

In December 2007 Corus and AIAC announced the signing of a non binding LoI for the acquisition of Corus’s aluminum smelters by an AIAC affiliate. Following further discussions with AIAC, a decision has been taken not to proceed any further. Corus has informed the Works Council and Trade Unions about this decision.

The release said that "Corus has started discussions with Klesch & Company Limited, which has been granted a period of exclusivity for due diligence to be carried out. Any eventual Sales and Purchase Agreement that is reached following internal consultation and advice may also be subject to certain external regulatory clearances."

It added that "Following the sale of Corus’s downstream aluminum extrusions and rolling business to Aleris in August 2006, Corus has been looking at opportunities to secure a future for its aluminum smelters outside the Group. The two smelters are based in Delfzijl in the Netherlands and Voerde in Germany and produce more than 200,000 tonnes of primary metal per annum."

Power supplier blamed for layoffs

Houston Chronicle News Services - Aug. 22, 2008, 10:29PM

Alcoa will let go about 300 workers at a Texas smelter and is suing the plant's power supplier, claiming it caused power disruptions that forced the layoffs, the aluminum maker said Friday.

Meanwhile, power supplier Luminant strongly denied Alcoa's accusations.

In June, Alcoa shut down three of the Rockdale plant's six operating lines, because of ongoing interruptions of power supply from Luminant's on-site power generating unit, Alcoa said. Those interruptions exposed the plant to local market energy costs between $2,000 to $4,000 per megawatt-hour during peak hours, about 100 times the normal level, Alcoa said.

Talks with Luminant failed to resolve the supply issue to the satisfaction of Alcoa, which has sued Luminant for damages and other relief. Luminant is a privately held, Dallas-based unit of Energy Future Holdings Corp., formerly TXU Corp., which is owned by Kohlberg Kravis Roberts & Co., and TPG.

Nalco may commence smelting aluminum by 2010 in $3b project

Jakarta Post, Indonesia - August 25, 2008

Mustaqim Adamrah and Khairul Saleh, The Jakarta Post, Jakarta, Palembang

India's state-run National Aluminum Company (Nalco) is progressing well with plans to build a massive US$3 billion aluminum smelter in South Sumatra, targeting to start operation by 2010, an official says.

Industry Ministry metal industries director I Gusti Putu Suryawirawan said Nalco had performed a number of studies for the project since April, including a feasibility study and an engineering study.

"Nalco said it needed one year to finish its studies," he said on the weekend.

"With estimations of six months and one year for equipment deliveries and construction respectively, Nalco's smelter is expected to start operation by the end of 2010."

In its peak, Putu said, the smelter could produce up to 500,000 tons of aluminum ingots per year.

In its first phase, he said, Nalco would need more than 1 million tons of alumina per annum as raw material which it would import directly from India.

"In the long-term, Nalco is planning to work with (state-controlled mining firm) PT Aneka Tambang on an alumina refining plant, to supply raw material for Nalco's future smelter," he said.

Domestic demand for aluminum products is high, thanks in part to encouraging growth in the Indonesian property industry, said Indonesian Aluminum Association chairman Abu Bakar.

Aluminum ingots have long been supplied to the national market by state-owned PT Indonesia Asahan Aluminum (Inalum), the country's only aluminum smelter, which imports 600,000 tons of alumina every year.

Inalum operates in Kuala Tanjung Asahan, North Sumatra, with an annual yield of 250,000 tons of aluminum ingots.

Putu said Nalco and South Sumatra administration were discussing options for the location of the smelter.

"There are two alternatives: One is in Tanjung Api-api, so the smelter could be near Tanjung Api-api port (in Banyuasin regency)," he said.

"The other option is in Muara Enim where a there is an abundant supply of coal."

A location near a coal mine would come in handy as Nalco also planned to set up five coal-fired power plants generating 250 megawatts each, Putu said.

Abu said the Indian government was still negotiating with the Indonesian government to secure a coal supply concession for Nalco's future power plants.

"A smelter consumes lots of energy, requiring one ton of coal to produce around 140,000 kilowatt hours. It is estimated Nalco's coal consumption could reach more than 500,000 tons of coal monthly."

Besides Nalco, Russian Russal (the world's leading aluminum producer) and an Iceland company have also expressed their interest in building aluminum smelters in Indonesia, Putu said.

While unable to provide its name, Putu said the Iceland company planned to build a smelter in West Kalimantan and would use geothermal power plants for energy.

Australia approves Chinalco bid to raise stake in Rio Tinto - Update

RTT News, NY - 8/25/2008

(RTTNews) - The Australian government has approved a bid by China's state-owned Aluminum Corp. of China Ltd., or Chinalco (ACH: News ), to raise its stake to 11% in mining giant Rio Tinto (RTP: News ,RIO.L: News ). The approval was granted by Wayne Swan, Treasurer of the Commonwealth of Australia, on Monday. Rio Tinto is fending off a hostile takeover bid by rival BHP Billiton (BHP: News , BBL,BLT.L: News ).

Swan said that he approved the proposal by Chinalco to acquire up to 14.99% of the shares in Rio Tinto Plc, the London Stock Exchange-listed arm of Rio Tinto. A 14.99% stake equates to an interest of around 11% in the Rio Tinto Group, which includes the Australian-listed Rio Tinto Ltd. In February, a consortium led by Chinalco paid A$14.88 billion, or US$14 billion, to secure a 9% stake in Rio Tinto.

Swan said in a statement, "I have decided to raise no objections under Australia's foreign investment policy to Chinalco acquiring a shareholding interest of up to 14.99 per cent of Rio Tinto Plc on the basis of Chinalco making two undertakings."

He said Chinalco has undertaken it would not raise its shareholding above the current level without notifying and receiving fresh approval from the Australian government Further, Chinalco has undertaken that it would not seek to appoint a director of Rio Tinto Ltd. or Rio Tinto plc as long as it holds a shareholding in that company of below 15%.

"Any future proposal to increase its level of ownership above 14.99 per cent would require re assessment at that time against Australia's national interests under the Foreign Acquisition and Takeovers Act 1975," Swan noted.

He added, "While Australia welcomes foreign investment in our economy, we will carefully examine national interest issues where these arise in relation to foreign sovereign ownership."

Swan said in early July that the government would pay particular attention to applications by foreign entities that seek control of assets where the entity is also a key consumer of the goods produced by the target.

However, a stake below 15% in Rio Tinto is not expected to enable Chinalco to block BHP's bid for Rio Tinto, although it would make the bid more difficult.

In May, media reports said Chinalco may be preparing to buy a stake in BHP Billiton Ltd., prompted by Beijing, in order to block BHP's proposed A$180.7 billion takeover of Rio Tinto over concerns about competition and pricing. China and its state-owned steel companies are against BHP's pursuit of Rio Tinto as the merged company would have major control over of the world's iron ore and coal markets.

Being the biggest buyer of metals, China has been hurt by a threefold rise in commodity prices since 2002, prompting producers, including Chinalco, to make overseas acquisitions. China needs raw materials to meet the needs of an economy that grew 11.4% in 2007, the fastest in thirteen years.

Kaiser Aluminum Corporation Q2 2008 Earnings Call Transcript

Seeking Alpha, NY - 8/24/2008

The reports is 10 pages so here is the link to see the trancript on line:

http://seekingalpha.com/article/92297-kaiser-aluminum-corporation-q2-2008-earnings-call-transcript

BHP `Closely Monitoring' Guinea's Political Situation (Update1)

Bloomberg - Aug 24, 2008

By Rebecca Keenan

BHP Billiton Ltd., the world's biggest mining company, is ``closely monitoring'' the West African nation of Guinea, where it is developing a $4.8 billion alumina refinery and takeover target Rio Tinto Group is planning an iron ore operation.

``The situation in Guinea is something that we are monitoring very closely,'' Marius Kloppers, chief executive officer of Melbourne-based BHP, said today on Australian Broadcasting Corp. television.

BHP is spending at least $90 billion to increase its output of metals to meet demand led by China. The president of Guinea wrote to Rio on Aug. 1, ``purporting to rescind'' a mining concession for its $6 billion Simandou iron ore project.

``It is getting harder and harder to find world-class deposits, which is why companies are going to these destinations,'' said Gavin Wendt, senior resources analyst at Fat Prophets Funds Management in Sydney. ``Governments have to realize that companies won't invest if the rules are going to get changed on them.''

BHP's project in Guinea, a partnership with New York-based Global Alumina Corp., is ``the world's most wonderful bauxite resource,'' Kloppers has said. ``There is country risk, there is political uncertainty,'' he said on June 5.

The refinery will have an initial annual production capacity of 3.3 million metric tons and will increase to 3.6 million tons within five years. A third processing line at the plant may eventually boost production to more than 5.4 million tons, Global Alumina said March 25.

Refinery Project

BHP and Global Alumina each will own a third of the refinery project, which includes an accompanying bauxite mine. Dubai Aluminum Co. will control 25 percent, and Mubadala Development Co. will hold the remainder.

Global Alumina is building the refinery to take advantage of higher prices for alumina as companies including Rio and Alcoa Inc. boost smelting capacity to keep pace with rising aluminum demand. Alumina prices more than doubled in the past five years on rising demand from China.

Alumina is the base ore used to make aluminum and is refined from bauxite, a rock primarily found in tropical areas. Guinea has one-third of the world's reserves of bauxite, according to the International Monetary Fund.

`More Uncertainty'

``These green-fields projects do carry higher risk, more uncertainty than things in the backyard,'' Kloppers said. BHP and London-based Rio both have about half of their operating assets in Australia.

Rio has rejected BHP's $143 billion takeover bid, which BHP said would allow it to deliver more metals at a faster rate to developing nations.

Guinea's government fired two officials on Aug. 5 that were associated with the office of president over the spat with Rio. The dispute ``is just one of the many vehicles for the competing factions within the Guinean political system to flex their muscles,'' Sebastian Spio-Garbrah, a New York-based analyst at the Eurasia Group, a political risk consultancy, said Aug. 5 in a note to clients.

Should there be political change, ``almost all of the country's pre-existing mining contracts will be re-examined and resource-nationalist pressures for high taxes and royalties will grow,'' Spio-Garbrah said, adding that Rio would probably retain the deposit because of concerns rival investors might have over litigation in the country.

Reviews After Boom

Guinea follows Zambia and the Democratic Republic of Congo in reviewing agreements to mine Africa's natural resources after a seven-year boom in prices.

The Simandou project has resources of 2.25 billion metric tons of iron ore and may produce as much as 170 million tons a year, Rio said in May. The project is the world's ``top undeveloped'' deposit, Rio's Chief Executive Officer Tom Albanese said at the time.

Rio is seeking to triple iron ore output to more than 600 million metric tons and benefit from record prices for the steelmaking raw material. The project will need a 750-kilometer (466-mile) rail line to link the mine with a new port facility, Sam Walsh, chief executive officer of London-based Rio's iron ore unit, said Aug. 4.

Rio owns 95 percent of the project and the World Bank's International Finance Corp. 5 percent, Walsh said. Guinea's government has the right to take 20 percent if approval for the project, expected by end-2009, is confirmed, he said.

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

Chinalco's raid on Rio Tinto could put Alcan assets on block

Financial Post, Canada - Monday, August 25, 2008

Duncan Mavin and Peter Koven, Financial Post

HONG KONG - Ownership of the prized assets of former Canadian miner Alcan continues to hang in the air after regulators approved the Chinese acquisition of a stake in Rio Tinto - the company that bought Alcan last year - a move that threatens to block a rival US$143-billion takeover bid for Rio Tinto.

Chinalco, China's largest aluminum producer, paid US$14-billion for a piece of Rio Tinto in February in a joint raid with American miner Alcoa, which had previously been a suitor for Alcan. The move followed BHP Billiton's offer to buy out Rio Tinto in a 3.4-for-one all-share offer.

Industry sources said that Alcoa still covets the Alcan assets that it tried to purchase last year before Rio Tinto acquired the Canadian company. By investing in Rio Tinto, it has positioned itself to become a key player in the BHP-Rio takeover battle, where it hopes some assets could go up for sale by one of the two companies. The terms of the joint purchase of Rio Tinto's shares indicate that Alcoa can compel Chinalco to buy out its US$1.2-billion portion of the stake at market rates after a six-month period.

Chinalco's raid has been under the scrutiny of the Australian Treasury which gave its approval Sunday for the partly state-owned company to take a stake equivalent to 11% of the shares of Rio Tinto which are listed in London and Sydney.

Chinalco's acquisition of a stake in Rio Tinto - the largest single foreign investment made by a Chinese company - has been widely seen as an attempt by Beijing to block the BHP bid. The Chinese government is said to be concerned a BHP-Rio Tinto merger could lead to a rise in the price of the raw materials needed to support China's ongoing economic growth. A combined BHP and Rio Tinto would be worth about US$300-billion and could control about 35% of the global iron ore trade.

Last week it emerged that executives of Chinalco were guests of BHP chief executive Marius Kloppers at the Beijing Olympics. Mr. Kloppers is thought to want Chinese support for his deal.

The Chinese company, which has suffered of late from rising input costs, power shortages and the impact of a series of natural disasters on production levels, is thought to be interested in any aluminum assets that may be sold off if BHP buys Rio Tinto. However, BHP's offer, currently before European regulators who are due to report back in December, is not reliant on Chinalco's support and requires 50.1% approval.

While it remains to be seen whether most of the former Alcan assets end up in the hands of a U.K., Chinese or even a U.S. owner, Rio Tinto is in the midst of plans to sell off US$10-billion in assets to help pay off the debt it incurred to buy Alcan for US$38.1-billion last year. The assets potentially under the hammer include Alcan's packaging and engineered products division, which could raise up to US$5-billion.

However, Rio Tinto has shown no interest in selling Alcan's prized low-cost smelting operations that would be of the most interest to Alcoa.

Shares in Chinalco meanwhile stock jumped 1.98% on the Hong Kong Stock Exchange yesterday following the Australian government's announcement. In Australian, shares in Rio Tinto hit a three-week high, closing up more than 1.0% on Monday

Financial Post with files from Peter Koven, dmavin@nationalpost.com

Alcasa eyeing to build production line 5 – Report

SteelGuru, India - August 26, 2008

BNamericas reported that Venezuelan aluminum reducer Alcasa has confirmed its interest in building production line 5.

Mr José Gil general secretary of Sintralcasa union said that "The company's management and the union both agree on the need to continue with the line 5 project and construction is being considered along with some other projects the company is carrying out with the government right now."

Earlier this month, an Alcasa executive said that line 5 is not currently on the table. But Mr Gil feels the project is perfectly viable since Venezuela has all of the raw materials necessary for the aluminum reduction process, which gives the certainty, that the line will be built.

Mr Gil added that there is already an action timeline focused on asking the government to contribute the investment necessary for beginning construction on the new line.

Line 5 will boost output from 240,000 tonnes per year to 450,000 tonnes per year and take nearly 3 years to build at a total cost of USD 710 million.

In April 2008, the Venezuelan government said that it will proceed with construction of line 5 under a plan to revitalize the aluminum sector which calls for a USD 2.7 billion investment between the four companies in the sector, all state owned.

The Alcasa plant is in the city of Puerto Ordaz in eastern Venezuela. The company is 92% owned by state heavy industry holding company CVG and the remaining 8% is the property of US based Alcoa.

South African Investment in Large Projects Surges (Update1)

Bloomberg - Aug. 25 2008

By Nasreen Seria

South Africa's planned investment in large projects surged to 336 billion rand ($43.5 billion) in the first half of the year as state electricity company Eskom Holdings Ltd. stepped up spending on power plants, Nedbank Group Ltd. said.

The value of announced projects increased from 194 billion rand for the whole of last year, the Johannesburg-based lender, the country's fourth-largest bank, said in a report released today.

Eskom is spending 343 billion rand over five years to boost capacity and ease an electricity shortage that caused gold and platinum mines to shut for five days in January. The power shortfall hasn't curbed investment by manufacturers and property developers, Nedbank said, helping to offset a drop in consumer spending after six interest rate increases since June 2007.

``We've got no real evidence that you have a drop-off in projects because of the electricity constraint,'' Nicky Weimar, Nedbank senior economist, told reporters in Johannesburg. ``Fixed investment spending should remain strong in the next few years.''

The government is spending 568 billion rand in the next three years on power plants, roads and stadiums as it prepares to host the 2010 FIFA World Cup. Companies such as Pretoria Portland Cement Co. and ArcelorMittal South Africa Ltd. are also investing more in capacity to meet rising demand.

Project Postponed

Rio Tinto Group's plan to delay building a $2.7 billion aluminum smelter at the Coega port is the only case of a large project being postponed because of the electricity shortage, Weimar said.

Investment rose an annualized 14.7 percent in the first quarter, up from 14.1 percent in the previous three months, the central bank said on June 19. The government is aiming to boost investment to 25 percent of gross domestic product from 21 percent last year.

``This will increase our export capacity,'' Weimar said. ``The good news is that companies are looking further into the future.''

Nedbank has revised higher its forecast for economic growth this year to 3.5 percent from 2.9 percent, compared with 5.1 percent in 2007.

The report is based on investment in capital projects exceeding 20 million rand and excludes the replacement or upgrade of existing capacity.

To contact the reporters on this story: Nasreen Seria in Johannesburg nseria@bloomberg.net

UPDATE 1-Alumina to raise A$910mln via A$3/share offer

Reuters - Mon Aug 25, 2008

SYDNEY, Aug 25 (Reuters) - Australia's Alumina Ltd (AWC.AX: Quote, Profile, Research, Stock Buzz) plans to raise A$910 million ($791 million) via a deeply discounted A$3-a-share rights issue to shareholders to cover cost overruns at its Brazilian projects, the firm said on Monday.

Alumina's alumina and aluminium operations are run under the Alcoa World Alumina and Chemicals (AWAC) joint venture, which is 60 percent owned by U.S. based Alcoa Inc (AA.N: Quote, Profile, Research, Stock Buzz) and 40 percent by Alumina.

The entitlement offer to existing shareholders, priced at a 31 percent discount to Alumina's last price of A$4.35 a share, follows cost blow outs at its Alumar alumina refinery and Juruti bauxite mine in Brazil.

Alumina on July 21 blamed an unfavourable Brazilian currency, construction delays, and rising equipment spending on the refinery and a bauxite mine for a $1 billion-plus hike in costs for the two projects to $3.7 billion.

Alumina was shouldering about A$550 million of the added expenditure, Alumina's chief financial officer, Ken Dean told reporters.

Additionally, about A$140 million from the raising will be earmarked for dividend reinvestment, with the remaining cash used to help strengthen the company's balance sheet, Dean said.

AWAC holds a 54 percent investment in the expansion of the refinery at Sao Luis in northeast Brazil and owns 100 percent of the mine.

BHP Billiton Ltd/Plc (BHP.AX: Quote, Profile, Research, Stock Buzz) (BLT.L: Quote, Profile, Research, Stock Buzz)) owns 36 percent of the refinery project and Rio Tinto Ltd/Plc (RIO.AX: Quote, Profile, Research, Stock Buzz)(RIO.L: Quote, Profile, Research, Stock Buzz) is a 10 percent stake holder.

The mine is earmarked to initially supply 2.6 million tonnes per year of bauxite to feed the Alumar refinery, where capacity is scheduled to increase to 3.5 million tonnes a year starting in mid-2009.

Kiev economic court to proceed with ZALK de-privatization case

Ukrainian Journal (subscription), NY - WEDNESDAY, AUGUST 27, 2008

KIEV/MOSCOW, Aug. 26 - The Kiev Economic Court will proceed with a case concerning the de-privatization of Zaporizhia Aluminum Combine (ZALK), the country's only aluminum smelter, which is owned by Oleg Deripaska's United Company RUSAL (UC RUSAL).

The new date for the hearing is not yet known.

The Ukrainian State Property Fund said a court of first instance would hear a suit brought by the prosecutor general's office, seeking to sever agreements for the sale of 68.01% of the shares in ZALK for not honoring investment commitments.

The rest of the story is available to subscribers only

http://www.ukrainianjournal.com/index.php?warticle&id7058

Rio Tinto announces $7 billion six-month net earnings

Mongolia Web News, Mongolia - Wednesday, 27 August 2008

Rio Tinto Limited (RIO) posted net earnings of US$6.9 billion for the first half of 2008, up 113% over the same period last year. Much of the success was attributed to record breaking production of commodities including iron ore and aluminum.

Tom Albanese, chief executive, said Rio Tinto's earnings performance in the first half of 2008 easily eclipsed the same period in 2007.

"There is no question that we are living in an era of unprecedented demand for minerals and metals, and we believe rapid demand growth and supply side challenges will be maintained," he said.

Further, Albanese continues to remain optimistic about Mongolia’s Oyu Tolgoi mine, which may be the world’s largest gold and copper mine, still awaiting government approval to be mined.

"In Mongolia, we are making progress with negotiations with the new government to develop the significant Oyu Tolgoi copper/gold deposit."

Chairman Paul Skinner said the company continued to perform strongly and that the outlook remained positive.

"The driver of demand for our products is urbanisation and industrialisation in heavily populated countries like China and India, and these economies continue to grow strongly."

Rio Tinto Alcan to announce labour deal for planned $2.5 billion Kitimat smelter

660 News, Canada - August 26, 2008 - 4:43 pm

By: Dirk Meissner, THE CANADIAN PRESS

VICTORIA - Rio Tinto Alcan will announce a no-strike, no-lockout deal with B.C. unions this week that could lay the foundation for the construction of a long-awaited, $2.5-billion modernization project at its decades-old aluminum smelter in Kitimat, B.C.

But critics are quick to point out that the announcement slated for Vancouver on Thursday is not the final decision to proceed with the project in the northwestern B.C. community, which has been waiting for some good economic news after years of declining population and worries over the future of the smelter.

Rio Tinto Alcan said the announcement will highlight a labour agreement with unions, global construction company Bechtel Corp., and area aboriginals that brings the Kitimat project steps closer to reality.

A B.C. union spokesman said the deal involves the no-strike, no-lockout clauses and agreements to hire local and aboriginal workers.

The spokesman also suggested that in October, Rio Tinto Alcan's board of governors may announce an actual start date.

"Nothing's 100 per cent sure and you never know what's going to happen in that world, but everything that we have done has led towards that," said Wayne Peppard, executive director of the B.C. and Yukon Territory Building and Construction Trades Council.

"A couple of months ago, they (Rio Tinto Alcan) released the preliminary funds to prepare the site and get started under the terms of the agreement that we had not yet signed off on," he said. "So, that's a pretty clear indication that things are rolling."

Peppard said he expects the project to create 1,500 construction jobs at its peak. The project completion date is December 2011, he said.

Rio Tinto Alcan officials could not be reached for comment.

Residents of Kitimat, located about 600 kilometres northwest of Vancouver, have been waiting more than a decade for a smelter announcement after a 1997 project was cancelled.

Kitimat, which was built in the early 1950s to accommodate the aluminum smelter ,has been locked in a divisive legal battle with Alcan over its ability to sell hydro power it generates as part of its smelter operations.

At its peak in 1974, Alcan employed 2,730 people. The company now employs about 1,600 people in the Kitimat area.

When the modernization project is done, it will mean 500 fewer jobs.

Recent census statistics gave Kitimat the dubious distinction of posting the largest population decline of any community in Canada. From 2001 to 2006, Kitimat's population dropped 12.6 per cent, from 10,285 to 8,987.

In 1982, Kitimat's population was almost 13,500.

"This is a big step forward for Kitimat," said businessman Tony Deni. "We look forward to the implementation of this strategy. This is the beginning of a new era for the northwest."

But Kitimat civic officials will not be attending the Vancouver announcement.

"We're kind of persona non grata," said Kitimat city administrator Trafford Hall.

Alcan had been allowed to build a hydro-electric facility originally to power the plant.

But when the company began selling excess power, Kitimat launched legal battles, saying the original development agreement with the government that allowed the company to use provincial water resources only applied to generating power to make aluminum, not for selling power while shedding local smelter jobs.

Kitimat lost that battle in court.

"The fear of trading this water resource for jobs was that Alcan would just forgo the jobs and sell the power," said Hall.

"That's exactly what happened. We tried to stop that. We weren't able. We didn't stop it."

He said the community wants to move past its battle with its largest employer.

"Everybody is hopeful now for an investment," he said.

"People are tired of the power sales thing. We've been kind of bludgeoned by distant and uncaring governments, galleries of lawyers, and just a massive application of money."

The smelter modernization projects amounts to a consolation prize of sorts for Kitimat, which will end up losing jobs, while the company downsizes its smelter operation but expands its power sales with the help of a cheap public resource, he said.

Deni said many Kitimat residents are hoping the smelter modernization project will create other jobs in the area.

BHP Says Rio May Have to Lower Growth Forecast After Delays

Aug. 26 (Bloomberg) --

By Brett Foley

BHP Billiton Ltd., bidding $142 billion for Rio Tinto Group in the world's largest mining takeover, said its target may have to lower growth forecasts because of delays to projects.

Development of the Coega aluminum smelter has been deferred by a power shortage in South Africa. London-based Rio said Aug. 1 the president of Guinea wrote to the company ``purporting to rescind'' a mining concession for its $6 billion Simandou iron ore project. Rio is still negotiating with Mongolia on the share of profits from the Oyu Tolgoi copper and gold mine.

Those projects have been ``substantially delayed or may disappear completely,'' BHP Chief Commercial Officer Alberto Calderon said today in a telephone interview from London. ``They have spoken about their strong growth in the near term, but I think they may need to revise those forecasts at some stage.''

Rio says shareholders stand to benefit the most from its expansion plans as an independent company and it forecasts a compound annual growth rate for production volume of 8.6 percent until 2015. Chief Executive Officer Tom Albanese in February rejected BHP's sweetened bid of 3.4 shares for each of Rio share as too low.

The diversity of projects in its portfolio means Rio can still achieve its forecasts, Albanese told reporters in London today during a presentation. About 70 percent of its forecast growth to 2015 will come from so-called ``brownfield'' expansions, or the enlargement of existing operations, he said.

``We remain comfortable with that number,'' Albanese said. Some projects ``have moved back, some have moved forward. We see no meaningful difference up or down from where we sit today.''

Buying Rio would enable Melbourne-based BHP to vie with Brazil's Cia. Vale do Rio Doce as the world's biggest iron ore company and become the largest producer or copper, aluminum and coal used by power stations.

To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net

500,000 TONNES PER ANNUM ALUMINUM SMELTER

Mineweb, UK - Aug 26, 2008

Author: Dorothy Kosich

Indonesian Industry Ministry says Nalco $3.2b smelter project making good progress

As India’s National Aluminum Co develops smelter and power projects in Indonesia, Iran, and South Africa, Indonesia’s Industry Ministry said the country’s second aluminum smelter could be on line by the end of 2010.

RENO, NV -

Indonesia's Industry Ministry Metals Industry Director says India's National Aluminum Company (Nalco) is making good progress on its plans to build a $3.2 billion aluminum smelter and power plant in South Sumatra.

In its first phase, state-run Nalco plans to build the smelter with an annual production capacity of 250,000 tonnes and the coal-fired power plant with a capacity to generate 750 megawatts of electricity. During the second stage, smelter capacity will be doubled to 500,000 tonnes and another 500 MW will be added to the power plant.

The project will require 1 million tonnes of alumina annually from Nalco mines in India once it is completed.

Indonesia Metal Industries Director Gusti Putu Suyawirawan told the Jakarta Post that Nalco needed one year to finish its studies, including a feasibility study and an engineering study. "With estimations of six months and one year for equipment deliveries and construction respectively, Nalco's smelter is expected to start operation by the end of 2010," Putu said.

Indonesian Aluminum Association Chairman Abu Bakar said domestic demand for aluminum is high, thanks partly to growth in the real estate industry. Aluminum ingots have primarily been supplied by Indonesia's only aluminum smelter, state-owned PT Indonesia Asahan Aluminum (Inalum).

Inalum operates in Kuala Tanjung Asahan, North Sumatra. Putu told the Post that Nalco and South Sumatra public administrators were discussing two possible locations for the Nalco smelter including Tanjung Api-api, in order to utilize the Tanjung Api-api port. Nalco India says that consultants have favored the Tanjung Api-api site in their preliminary site survey and studies.

The other option is in Muara Enim which has an abundant coal supply.

Aluminum Association's Abu said a smelter requires one ton of coal to produce around 140,000 kilowatt hours. He estimated that Nalco's coal consumption could reach more than 500,000 tons of coal monthly.

Nalco's finance director BL Bagra told reporters in January that the South Sumatra government has allowed Nalco to explore the possibility of mining coal in the province. But if there is no available coal, the provincial government will arrange for supplies from the Tanjung Enim coal mine operated by state coal company PT Tambang Batubara Bukit Asam. Bagra said a long-term contract would be arranged with Bukit Asam because the smelter project life is 30 years.

Russia's United Company RISAL and state miner PT Aneka Tambang Tbk signed a $1.4 billion deal last September to construct a bauxite and alumina complex on the island of Borneo. Putu told the Post that an Icelandic company has also expressed interest in building a smelter in West Kalimantan and using geothermal power.

Nalco is also investing in smelter and power projects in Iran and South Africa as well as brownfield and greenfield growth projects in India.

Jizan aluminum smelter slips behind schedule

SteelGuru, India - August 29, 2008

Platts reported that detailed studies to support the construction of a 1 million tonne per year aluminum smelter planned for Saudi Arabia's new Jizan Economic City will kick off in the fourth quarter of the year, suggesting that the time frame to build the plant has fallen behind schedule.

MMC Corporation in a statement to the Kuala Lumpur stock exchange after markets closed said that "Geotechnical studies for the smelter and related power plant is expected to commence by fourth quarter of 2008 with completion targeted for the first half of 2009."

In November last year, senior officials working on the project had targeted for construction of the USD 3 billion smelter to begin in the second half of 2008 with completion planned for 2012. It wasn't clear from this week's project update if the delay to construction would push final completion beyond 2012, of if other parts of the project could be sped up to make up for lost time.

A lot of studies need to be finished in the coming quarter, said MMC adding that due diligence on technology suppliers, a study on using seawater for cooling, and a social impact assessment were all still to be done, as well as a study on power supply stability. Development of a 900 MW power station on site suggests more delays are possible for the aluminum smelter. The first unit of the plant, which will have three units of 300 MW each, is expected to be finished only in the third quarter of 2012.

The new smelter, which is expected to be set up as Sino-Saudi Jazan Aluminum when ready for operation, will be 20% owned by MMC. China's Chalco is expected to own 40% of the project, while a Saudi Arabian consortium including Saudi Binladin Group will hold 40%.

Separately, MMC said survey work for the site of the integrated steel complex had started and should be done by the end of third quarter of 2008. Steel plant construction is expected to kick off before the end of the year.

MMC is developing the economic zone, which lies at the Saudi port of Jizan, along the Red Sea.

Chalco to raise capital and invest outside China

International Herald Tribune, France - (Reuters)August 31, 2008

HONG KONG: Aluminum Corp. of China said it planned to raise capital in the next two years and diversify overseas after reporting a sharp drop in first-half profit.

The top Chinese aluminum maker, known as Chalco, said it would seek shareholders' approval for issuing up to 10 billion yuan worth of 10-year bonds in China in the next 24 months, raising the equivalent of $1.6 billion to restructure its debt and to increase cash flow.

Facing fierce competition and scarcer raw materials, Chalco said it would also ask shareholders to back a plan to start producing high-margin sulfuric acid.

Chalco reported late over the weekend that its first-half net profit fell by about two-thirds, dented by high production costs, output disruptions and oversupply in the aluminum market.

In response to the squeeze, the company is investing in the Aurukun bauxite mining project in the Australian northeast and in several smelter projects, including in Saudi Arabia.

It said it would take a 40 percent stake in an aluminum plant and a 20 percent stake in a power plant in Jazan Economic City in Saudi Arabia in a project with total investment of about $4.5 billion.

"The project is an important initiative for the group to shift to overseas areas with abundant energy sources, thus achieving strategic restructuring of the group," the chairman, Xiao Yaqing, said in a statement.

Xiao said that the company, the world's third-largest alumina producer after Alcoa and Alcan, would strengthen resource acquisition to enlarge the resource reserve.

The state-owned parent, Chinalco, teamed up with Alcoa of the United States to pay $14 billion for a stake in Rio Tinto, which is the target of a bid from the rival miner BHP Billiton that is worth nearly $150 billion.

Xiao said that a combination of global economic head winds and problems at home had weighed on the group's results.

"The U.S. subprime crisis, global inflation, depreciating U.S. dollar, natural disasters including snowstorms and a serious earthquake had a negative impact on China's economic development," Xiao said, adding that uncertainty still surrounded China's economic outlook.

Chalco reported January-June net profit of 2.41 billion yuan, down from a restated 6.97 billion yuan a year earlier and worse than suggested in the company warning in June that its interim net profit would fall by at least 50 percent.

"The production, operation and development of the company will face challenges, mainly due to the great cost pressure driven by high prices of mineral resources, coal, electricity, oil and other energy sources as well as transportation cost," Xiao said.

"The fierce competition in domestic mineral resources and nonferrous metals markets are bringing difficulties for production, supply and sales," Xiao added.

China's smelting capacity is expected to rise by almost a fifth this year to about 19 million tons, as smelters build new plants despite higher construction costs.

Chalco said the average price of alumina, one of Chalco's main products, that was sold to external customers fell 4.5 percent in the first half to 2,830 yuan per ton. The average aluminum price dropped 5.64 percent to 16,241 yuan a ton.

The company has cut spot alumina prices twice since June by a combined 24 percent due to increased production in China.

Chalco shares on Friday ended up 0.29 percent at 7.02 Hong Kong dollars, or $0.89, before the results were announced. The shares fell 44 percent in the first half of the year.

Alumina sells $644m to raise equity

Sydney Morning Herald, Australia - September 1, 2008

Alumina Ltd, the minority partner of the Alcoa World Alumina & Chemicals (AWAC) group, has sold $644 million worth of shares to institutional shareholders to fund projects in Brazil.

The company on Monday opened the retail component of the entitlement offer and is seeking to raise a further $266 million.

Alumina is raising equity to cover the cost blowout of the Alumar refinery - 54 per cent held by AWAC - and the Juruti bauxite mine development, which have come under pressure from currency movements and a rise in construction and labour costs.

The expansion cost of Alumar has risen to $US1.62 billion ($A1.89 billion), from $US1.3 billion, while the Juruti development has increased to $US2 billion ($A2.34 billion), from $US1.2 billion.

US-based Alcoa is the operator of AWAC and holds a 60 per cent interest in the joint venture, with Alumina holding the balance.

Alumina sold shares to institutional shareholders at $3 each.

"The take up by eligible institutional shareholders was very strong and demonstrates their support for our continued investment at a time of unprecedented global demand for aluminium and alumina," Alumina chief executive John Bevan said in a statement.

Alumina shares dropped 36.38 cents, or 8.89 per cent to $3.73 by 1246 AEST Monday.