AluNews - December 2008

Alcoa Searches for Fresh Start in Troubled Market

Wall Street Journal - 02-Dec-2008

Aluminum Maker Takes Measures to Reduce Costs and Could Broaden Its Ties With Chinese Partner Chinalco
Alcoa Inc., which had been counting on obtaining some discarded aluminum assets from a merged BHP Billiton and Rio Tinto PLC, has fewer strong options to improve its prospects amid one of the worst aluminum markets in decades now that the deal has collapsed.
With aluminum inventories just shy of record levels, prices at their lowest level in 2008 and nearly half of the world's aluminum production unprofitable, Alcoa is scrambling to cut capacity and find buyers for some of its downstream businesses, which is proving more difficult given the tight capital markets and reluctance of many companies to take on debt.
Neither of those efforts however, addresses the company's fundamental challenge: Alcoa remains the high-cost producer of the world's major aluminum makers when compared with Rio Tinto's Alcan and Russia's United Co. Rusal. Knowing that BHP wasn't keen on the aluminum market, Alcoa had been hoping to buy all or part of Alcan, which has lower energy costs, after BHP bought Rio Tinto.
With that prospect off, speculation is mounting that Alcoa will look at other avenues. "Everybody understands the current economic situation in the world," requires certain steps, said Alcoa spokesman Kevin Lowery. "In the interim, we are taking steps to reduce costs and taking steps to position ourselves so we will be stronger than competitors. That is what we are focusing on."
John Tumazos, an analyst with Very Independent Research, said the company has few good options as its influence in the commodity world is nowhere as sure as it once was. "They need to idle more smelters than they have cut," he said.
So far, Alcoa is keeping a lid on its options, but industry observers say it could deepen its existing relationship with its partner Aluminum Corp. of China, also known as Chinalco. The two currently own a 9% stake in Rio Tinto that they jointly purchased for $14 billion in January. The stake is valued at about 80% less since BHP's planned takeover of Rio collapsed last month.
Alcoa could increase its existing stake, betting on a rise in commodity prices. It also could sell its stake, which would bring about $200 million in cash to its coffers and represent a huge loss from its initial $1 billion investment. The two companies also could combine into a single company. Such a deal, while in no way an easy task because it would result in Chinese ownership of a key U.S. company, could work for both sides. A combined Alcoa and Chinalco would make it one of the biggest producers of aluminum and both alumina and bauxite, necessary ingredients for the aluminum production.
In addition, a combined company would be able to better rationalize expensive smelters and other production facilities in Europe, the U.S. and China, leaving just the lowest-cost facilities to compete with Rio Tinto and UC Rusal.
Mr. Tumazos said Alcoa's sagging stock price, which is hovering around $10, makes the company a fairly inexpensive purchase. "Chinalco could buy Alcoa for about $8 billion plus a premium," he said. "That is less than it paid for a stake in Rio."
Alcoa said it doesn't comment on market speculation.
Write to Robert Guy Matthews at

Russia's RUSAL calls for state metals reserve

Reuters - Tue Dec 2, 2008

MOSCOW, Dec 2 (Reuters) - Russia's United Company RUSAL, the world's top aluminium producer, called on the government to create a metals reserve to support the industry through the financial crisis, a presentation obtained by Reuters showed.
The document, presented at parliamentary hearings at the Duma lower chamber this week, said that such a move would "restore fair pricing", cut the risks of a metals glut and allow the state to reduce its exposure to equity investment risks.
RUSAL did not specify the volume of metals purchases it wanted the government to make.
It said that rising metals prices would provide the government with $2.4 billion in additional budget revenues in 2009-2012 if it created the reserve.
The company also asked the government to consider a range of other benefits to industrial producers including reduced tariffs for natural monopolies, long-term investment in the electricity sector and support for industrial projects worth at least $1 billion which also employed at least 3,000 workers.
RUSAL is Russia's dominant aluminium producer, with a range of smelters in locations such as Bratsk, Krasnoyarsk, Volgograd and Irkutsk.
It is also involved in billions of dollars worth of new projects including the construction of a smelter in Taishet, Russia and a new bauxite and alumina complex in Russia's Komi Republic. (Reporting by Alfred Kueppers)

The road to reliability at Century Aluminum

Reliable Plant Magazine, OK - 12 hours ago

"I've had a vision of Century Aluminum someday being on the cover of your magazine ... in three or so years. But, perha ps now is the time for a story about ..."
See the full article at

(I have this article in a Word document in case .... Willem)

Noranda Aluminum to lay off 338Nashville Business Journal, NC - Thursday, December 4, 2008

Noranda Aluminum Holding Corp. is laying off 338 employees and contract workers.
The Franklin, Tenn. company announced the layoffs today as part of a company-wide workforce and business restructuring to reduce operating costs, conserve liquidity and improve operating efficiencies.
Noranda says in a release it expects the restructuring to generate cash cost savings of about $23 million annually.
It is estimated the actions will result in one-time, pre-tax charges to be recorded in the fourth quarter of 2008 of approximately $7 million to $12 million, mostly due to one-time termination benefits. Almost all of the charges will result in cash expenditures
The reduction in the employee work force includes 228 employees in Noranda’s upstream business, the company says. The reductions at downstream facilities in Huntingdon, Tenn., Salisbury, N.C., and Newport, Ark., include 96 employees.
The reductions will occur in this year’s fourth quarter and the first quarter of 2009, the company says.
"Noranda remains committed to its strategy to improve productivity and grow its business to support our customers, communities, suppliers, co-workers and investors," CEO and President Layle "Kip" Smith says in a press release. "Current economic conditions require that we take accelerated actions to reduce our costs, improve our productivity and conserve our liquidity, so that we can continue to build a long-term sustainable company."
Noranda Aluminum Holding Corp. is a leading North American produces aluminum products and rolled aluminum coils.
The company has two businesses. The primary metals business, or upstream, produces approximately 259,000 metric tons of primary aluminum annually.
The rolled products facilities, or downstream business, is one of the largest foil producers in North America and a major producer of light gauge sheet products.
Noranda Aluminum Holding Corporation is a private company owned by affiliates of Apollo Management LP.

Rio to Slash Investment by Half, Cut Debt, Morgan Stanley Says

Bloomberg Dec. 8, 2008

By Brett Foley
Rio Tinto Group, the world’s third- largest mining company, will probably slash investment spending by half next year to reduce its debt, Morgan Stanley said.
Rio will cut spending to $4.5 billion next year, from the company’s current guidance of $9 billion, and to $5.3 billion in 2010, analysts including Craig Campbell wrote today in a report. The bank had previously forecast capital spending of $8.7 billion next year and $7.8 billion in 2010.
London-based Rio will spend $1.1 billion less on Australian iron-ore projects next year than the company previously forecast and $900 million less in 2010, Campbell wrote. The Yarwun alumina expansion in Australia will be cut by $700 million next year and $800 million in 2010. Canadian and Brazilian iron-ore expansions will be slashed, as will spending on commodities including aluminum, coal, diamonds and molybdenum, Campbell wrote.
"We think it is prudent for Rio Tinto to reduce its capital spending and thereby provide a cushion to cash flow if commodity prices deteriorate further," he wrote.
Rio is reassessing expenditure to cut costs and conserve cash after demand for metals plunged and prices slid. The company is also evaluating projects after BHP Billiton Ltd. scrapped a hostile bid on Nov. 25 because of turmoil in global financial markets and Rio’s $42.1 billion of debt. Rio paid $38.1 billion to buy Canadian aluminum maker Alcan Inc. last year.
The company may cut thousands of jobs and postpone billions of pounds of "big projects," including the Simandou iron-ore mine in Guinea and other ore and aluminum projects in Canada and Africa, the Daily Mail reported Dec. 6 without citing anyone.
The debts are "manageable" considering savings and undrawn debt facilities of $6.8 billion, Campbell wrote. Rio isn’t in danger of breaching its debt covenants as the ratio of debt to earnings before interest, tax, depreciation and amortization will remain less than a 4.5-to-1 limit, Campbell wrote.
To contact the reporter on this story: Brett Foley in London at

Can Guinea's £3bn mine spell change?

BBC News, UK - Monday, 8 December 2008

By Richard Phinney

Read the article at:

Rio Tinto Sheds 14,000 Jobs to Cut $40bn Debt
Buzzle, CA - 12/10/2008
Company to shelve $5bn (£3.4bn) of projects in face of falling commodity prices and alarming figures from China
Rio Tinto is to slash 14,000 jobs and shelve $5bn (£3.4bn) of new projects in a bid for "survival" in the face of falling commodity prices and alarming figures from China.
Shares in the mining group, which have fallen 54% in the past month, soared by just over 20% to £15.14 after the cuts were announced. The City was relieved that the miner, which has been under pressure to reduce $40bn of debts, was not attempting a rights issue.
Tom Albanese, Rio's chief executive, said: "Given the difficult and uncertain economic conditions and the unprecedented rate of deterioration of our markets, our imperative is to maximize cash generation and pay down debt. We will minimize our operating and capital costs until we see credible and meaningful signs of a recovery in our markets, but will retain our strategic growth options."
The scale of the difficulties was underlined by new figures from China, where economic growth has helped make miners huge profits over recent years. November exports from China fell 2.2% compared with a 19% growth in October and despite a huge domestic stimulus package.
The 14,000 redundancies represent 13% of Rio's workforce and some of the job cuts are expected to fall in the London and Melbourne headquarters of the group. Rio also has three aluminum smelters in Britain: at Holyhead in Anglesey, Lochaber in the west Highlands and Lynemouth in Northumberland.
Analysts were delighted that the company - the object of a $66bn takeover by BHP Billiton that collapsed last month - was taking decisive action and not tapping shareholders for more funds.
"Drastic times call for drastic measures," said Tim Schroeders, portfolio manager at investment house Pengana Capital in Melbourne. "They've addressed all parts of the equation. They've definitely gone into survival mode, which is appropriate given the market circumstances."
Rio said it would slash capital spending next year by more than half from $9bn to $4bn with some mining projects deferred and others canceled, with details provided at year-end results due in February. The massive Simandou iron ore project in Guinea is among those to be dropped.
The group also canceled plans to boost its dividend by at least 20% this year and next. In August, as Rio was fighting BHP's bid, it raised its interim dividend by 31%. But yesterday it said the total 2008 dividend would remain flat at 136 US cents.
Asked whether it was a mistake for Rio Tinto not to have entered talks with BHP on its takeover offer, which Rio rejected outright, Albanese said: "I don't think it would have changed the outcome." BHP eventually walked away under pressure from the European competition regulators and the slump in commodity markets.
Rio took on huge bank debt to fund last year's $38bn acquisition of Alcan and pledged to raise $15bn, most of it this year, from selling non-core assets, including Alcan's packaging business and Rio's US coal business.
Analysts believe the measures should be enough for Rio to meet its target of $10bn in debt reduction. Schroeders said: "Even if there's some slippage in asset sales, the other measures - staff reductions, cost-cutting operations and the dividend - will more than likely see them make that payment in October next year."
© Guardian News & Media 2008

Work on Kitimat smelter modernization to continue
BCLocalNews, Canada - December 10, 2008 4:18 PM
Work on modernizing Kitimat’s aluminum smelter will continue despite Rio Tinto’s Wednesday announcement of job cuts and reduced spending.
The mining giant said it will be cutting 14,000 jobs worldwide and reducing its 2009 capital expenditure from the planned $9 billion to $4 billion.
However, Rio Tinto media relations director Stephano Bertolli said the Kitimat modernization project (KMP) "will continue to advance, even in this current economic context."
In October the board of directors approved the spending of a further $300 million on KMP, bringing the total commitment to half a billion dollars.
Asked if by "continue to advance" he meant within that $300m, Bertolli confirmed, "right now we will be looking at the timing of spending and the rate of capital outlay, but we will continue to progress along those lines."
However, while Rio Tinto had been pushing the KMP team hard during this past summer, the company will likely now be reviewing the pace of the project.
That said, Bertolli emphasized, "It will continue to progress because it is a good project and we are committed to it."
KMP will increase production capacity at the smelter by 40 per cent to 400,000 tonnes per annum while reducing total emissions by 45 per cent.
The most recent figures used for the cost of the project were approximately US$2.5 billion.
However, Bertolli said that number will be reviewed given the economic situation was putting downward pressure on the cost side.

RusAl to Cut Production
The Moscow Times, Russia - 11 December 2008
United Company RusAl will slash output and investment plans, CEO Alexander Bulygin said Wednesday, Itar-Tass reported. "Due to the difficult situation, our future investment programs at the company's plants are frozen, and production cuts are planned," Bulygin said, adding that no mass job cuts were planned.
RusAl said Wednesday that the company had planned to close two potlines and another two aluminum smelters "for environmental modernization" by 2015, but decided to do it now because of the tough situation on the market. (MT)

World aluminum price slides to 4 ½-year low, MA - 12/10/2008
Month-to-date average has tumbled to 70 /lb
By Tom Stundza
Aluminum prices have tumbled to a four-and-a-half-year low of 66¢/lb this week on the London Metal Exchange (LME), which market insiders and analysts pinned on concern over rising inventories and an ever-worsening demand outlook in the two large light metal market sectors of automotive and construction. The December month-to-date average now is 70¢.
In the U.S., construction spending through the first 10 months of this year of $906.3 billion is down 5.7% from $960.9 billion in the same period last year, according to Census Bureau figures. New orders for manufactured durable goods in October decreased $14.3 billion, or 6.9%, to $191.7 billion. Through November, motor vehicle sales have dropped 16.3% to 12.3 million units, which has caused North American assembly to slide 15.7% to 12.2 million units.
These factors have reduced aluminum purchasing, which is expected to drop overall by 6% to 13 billion lb. Mill shipments of aluminum sheet and plate by U.S. and Canadian producers of 680 million lb during October were down 10.2% from the same month last year, according to data supplied by the Aluminum Association in Arlington, Va. Shipments of aluminum extruded products by U.S. and Canadian producers totaled an estimated 254.5 million lb during October, a year-over-year drop of 18%.
In this market environment "of plummeting demand, the surplus will continue to increase, given insufficient output cuts, adding to the weakness and uncertainty in the metal’s price," says JPMorgan Chase & Co. analyst Michael Gambardella in a note to clients.

DJ Norsk Hydro Board Approves Plan To Close Soederberg Potlines
Trading Markets (press release), CA - Wed. December 10, 2008
OSLO, Dec 10, 2008 The board of directors of Norwegian aluminum company Norsk Hydro ASA (NHY) has approved a plan to prematurely close the company's Soederberg potlines at Karmoey, Norway, in light of sharply falling aluminum prices.
Soederberg produces around 120,000 metric tons of aluminum a year. The closure has been brought forward to the first quarter from later in 2009 as aluminum companies scale back on production to help support prices.
The closure, which will affect 450 employees, was initially forced by the imposition of more stringent emissions limits.
The Karmoey complex where Soederberg is situated will produce 170,000 tons of primary aluminum a year, and employ 950 people, Hydro said. The closure is expected to cost around 300 million Norwegian kroner ($42.3 million).
Company Web site:
-By Elizabeth Cowley, Dow Jones Newswires; +47 22 20 10 58;

Production pruning - Madras Aluminum suspends production
Steel Prices China, India - 12 Dec, 2008
BL reported that Madras Aluminum, which has mining, refining and smelting capacity in Tamil Nadu, has decided to suspend production with immediate effect from today.
Madras Aluminum said that "In view of continuous fall in London Metal Exchange aluminum prices, it has reviewed the business outlook for aluminum business and has decided to temporarily suspend the entire aluminum production with immediate effect."
It said that the company will review the situation in the coming months and decide on future course of action.
However, the company’s captive power plant will continue to operate and sell power to third parties. Average aluminum prices on LME have dipped 28% to USD 2,041 a tonne in November from USD 2,845 a tonne in June. Stockpiles in LME were up by 49% to 1.49 million tonnes in November from 1 million tonnes in June.
Earlier, the company had temporarily reduced its aluminum production by 60% on account of falling aluminum prices and high cost of production.
As per report, Malco has its own bauxite mines in Tamil Nadu at Yercaud having reserves of 0.8 million tonne and Kolli Hills having reserves of 0.9 million tonne. It has a smelting capacity of 40,000 tonne an annum, refining capacity of 80,000 tonne per annum and a captive power plant of 75 MW at Mettur in Tamil Nadu.

Some Japan 1Q Aluminum Contracts Agreed To At $63 Premium - December 11, 2008

SINGAPORE -(Dow Jones)- A few Japanese aluminum first-quarter 2009 contracts have been agreed to at a $63 premium to the London Metal Exchange cash price per metric ton, but most contract negotiations remain unresolved, traders said Friday.
Japanese premiums for good western brand aluminum, which are set on a quarterly basis, are regarded as a benchmark for the Asian region.
The negotiations between Japanese aluminum producers and large consumers from the manufacturing and construction sectors have been on for three weeks and are due to end today so that shipping arrangements can be made.
Fourth-quarter premiums this year had been set at $75-$77 over the LME cash price.
At 0321 GMT, three-month LME aluminum was at $1,558/ton, down $4 since Thursday's kerb.
-By James Campbell, Dow Jones Newswires; 65-64154-082; james.campbell@
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// You can use this link on the day this article is published and the following day.

Rio wasn't the only loser in Alcan deal

Globe and Mail, Canada - December 11, 2008
Not long ago, Alcan chief executive Dick Evans hinted that he might have sold out too soon when he signed the record-setting, mid-2007 deal to surrender the Canadian icon to Rio Tinto PLC [RTP-N] for $38.1-billion (U.S.). Only months later, he figured Alcan was already worth more than that.
It seemed overly optimistic, considering that BHP Billiton – which then still had an offer for Rio Tinto on the table – was pegging Alcan's worth at only $20-billion. Now, we know it was.
Almost every independent observer now concedes Rio Tinto overpaid for Alcan when it put up $101 a share in cash, a 66-per-cent premium over the price the stock was trading at before it had been put in play by an earlier, hostile bid from Alcoa Inc.
The price was a windfall beyond all contemplation for Alcan's shareholders, including top management, who rightly took advantage of multiple suitors' willingness to outbid each other for the company.

But the $39-billion in debt (almost all of it from that deal) on Rio Tinto's balance sheet – an amount that now surpasses Rio's own market capitalization – will now force Alcan to cut jobs, production and capital spending in Canada. Rio unveiled the bad news yesterday.
It means a host of long-promised projects – from Kitimat, B.C., to Saguenay, Que. – are in limbo.
Alcan says "it remains committed" to the expansion of its Kitimat smelter and will "honour all the obligations" of an agreement with the Quebec government that grandfather the company's vast and lucrative hydro operations in the province in exchange for jobs and investment. We just don't know when we'll ever see the money.
"Whenever anyone says ‘we commit' it doesn't mean ‘we've spent,'" notes one long-time Alcan observer in British Columbia. "They can change their minds, and they have many times in the past." So far, Alcan has "committed" only $500-million to the Kitimat modernization – a project expected to cost upwards of $2.5-billion. Should the overhaul be delayed much longer, the new smelter likely would not be up and running before the current 54-year-old facility dies of old age.
Many in Kitimat and on Bay Street alike think that would suit Alcan – and Rio, if it manages to hang on to its aluminum division – just fine. Alcan owns its own hydro generating facilities in B.C., and produces far more power than it needs to make metal. It sells the surpluses to BC Hydro. Even at lofty aluminum prices, its margins on energy sales surpass those earned in smelting.
As in Quebec, Alcan was initially granted the water rights by the B.C. government to produce power in exchange for building smelters that provide hundreds of jobs. But though you might make the case that Alcan has a moral obligation to proceed with the Kitimat expansion, B.C. courts have established that it has no legal one.
So, if it hasn't done so in the first quarter century since a new smelter was promised, what are the odds it will do so in the next?
As long as Rio Tinto is rationing capital, if not fighting for its life, the odds aren't high. Besides, instead of fetching the $4,000-a-tonne Mr. Evans was projecting just last spring that aluminum could command in the near term, the price of the lightweight metal is currently hovering at a five-year low of about $1,500.
Cheap hydro power makes Canada a great place to make aluminum, since, globally, energy accounts on average for about one-third of smelting costs. The near-free electricity Alcan produces for itself here means that it has an unbeatable advantage over competitors. But if Alcan can sell electricity to government-owned utilities, why, with capital already scarce, would Rio tie up new funds in more smelter capacity?
There are constraints on power sales – transmission capacity is restricted in B.C. (for now) and a more vigilant provincial government in Quebec seeks to protect the 6,000 Alcan jobs in the Saguenay region. But Rio Tinto's dire straits have given Alcan an excuse to buy time with governments.
In Quebec, that means the $3.5-billion (Canadian) that Alcan touts in slick TV ads that it is investing in the province will now be spent at a snail's pace, if at all. Premier Jean Charest can be thankful Rio Tinto waited until two days after the provincial election to drop the news. The government has extended advantages to the company that sell well in the Saguenay, but which are heavily criticized by economists in Montreal and beyond.
The Alcan deal remains the biggest corporate takeover the country has seen. It was a boon for the hundreds of lawyers and investment bankers working for Rio Tinto, Alcan, Alcoa and four other would-be buyers who kicked the tires. Shareholders were obviously winners. But as we're now finding out, there were losers, too.

NALCO inks pact with RioTinto Alcan

India, India - Dec 12, 2008

The strategic alliance agreement signed on Dec 11 in Bhubneshwar, facilitates both the companies to share information to identify potential to create value for both the organization

National Aluminium Company Ltd (NALCO) has signed a strategic alliance agreement with Rio Tinto Alcan (RTA), a Canadian Company and global supplier of bauxite, alumina and aluminium on December 11, 2008 at Bhubaneswar.
The strategic alliance agreement signed on Dec 11 in Bhubneshwar, facilitates both the companies to share information to identify potential to create value for both the organization.

State economy under threat as mining boom ends, Australia - December 11, 2008
Tanya Chilcott and Tony Grant-Taylor
QUEENSLAND'S economy is under siege and the jobs of thousands of workers are in jeopardy as the state comes to grips with the end of the mining boom.
Rio Tinto has yet to tell its 6300 Queensland employees whether they will be laid off as the mining colossus sheds jobs across the globe.,27574,24787743-3102,00.html
Entire communities have called for Rio Tinto to make a quick decision on plans for its Queensland operations, which include coal mines, alumina plants and power stations.
But the State Government also faces an anxious wait, fearing an effect on Queensland's bottom line.
The reliance on mining royalties means hopes of avoiding financial pain hinge on the resources sector.
The state had already downsized its forecast revenue before the Rio Tinto decision but it is still hoping to reap $2.8billion from coal royalties next financial year.
"It really confirms our view, as a government, that we need to batten down the hatches, that 2009 will be tough," Treasurer Andrew Fraser said.
Prime Minister Kevin Rudd has pledged "whatever it takes" to ensure Australia's economy is not further eroded by the global conditions.
The national unemployment rate rose to 4.4 per cent in November, up from 4.3 per cent, and economists warn that worse is to come.
Residents of Queensland's prosperous mining towns fear they could join the unemployment line and are demanding certainty from Rio Tinto.
The company generates about one-fifth of the economy in Gladstone and local MP Liz Cunningham said the community was facing its "biggest challenge in recent times".
"I would ask people not to panic until Rio clarifies exactly which sectors of their business are going to be affected," she said. "But I would ask Rio to clarify as quickly as possible any job impacts here in the Gladstone region."
Rio has said full details of job cuts, and project deferrals, may not be sorted out until the first quarter of next year.
But analysts believe most Queenslanders will survive Rio Tinto's decision to cut 14,000 from its global workforce.
Rio has a significant head count in Brisbane of Rio Tinto Coal Australia and Rio Tinto Alcan staff. But the majority of its employees are at its operations - from its Weipa bauxite mines on Cape York to its aluminium refining and smelting operations in Gladstone and coal mines in the Bowen Basin.

Alcoa: Australia Carbon Scheme Recognizes Indus Challenges - December 15, 2008
SYDNEY -(Dow Jones)- U.S.-based aluminum producer Alcoa (AA) Monday said Australia's proposed carbon emissions cut and trading scheme recognized challenges to industries competing internationally.
But Alcoa also warned that the viability of its Australian operations would be at stake if preferential treatment under the scheme is rolled back too quickly.
"If our Australian operations incur significant additional costs - and our competitors do not - it will render Australian industry unviable," Alcoa said in a statement.
Alcoa together with Alumina Ltd. (AWC.AU) is a joint venture partner in Alcoa Worldwide Alumina and Chemicals, or AWAC that operates a global network of bauxite mines, alumina refineries and aluminum smelters.
Under the carbon trading plan, big polluters - classified as those producing more than 2,000 metric tons of carbon emissions per A$1 million of revenue - will initially pay for only 10% of their emissions while the government will pay for the remaining 90%.
They include aluminum smelters, cement clinker production, lime production and integrated iron and steel-making.
Firms producing 1,000-1,999 tons of carbon dioxide per million in revenue, such as alumina and petroleum refiners, and liquefied natural gas producers, would be liable for 40% of emissions.
-By Elisabeth Behrmann, Dow Jones Newswires;

Australian LNG Producers Win Concessions on Carbon (Update2)
Bloomberg - Dec. 15, 2008
By Angela Macdonald-Smith
Woodside Petroleum Ltd., Chevron Corp. and other liquefied natural gas producers in Australia won concessions that may reduce the cost to their businesses of Australia’s planned carbon trading system.
The LNG industry was included among emissions-intensive businesses exposed to international trade that will probably qualify for some free permits under the design of the system announced today by Climate Change Minister Penny Wong. LNG wasn’t eligible for any free permits under the government’s draft proposal, causing companies to warn investments in new projects were at risk.
"This is a major step forward," Belinda Robinson, chief executive of the Australian Petroleum Production & Exploration Association, said in a telephone interview. Concerns that the effect of the carbon trading system would threaten investment in new LNG projects "have been alleviated quite considerably."
Australia will aim to reduce carbon emissions by between five and 15 percent from the 2000 level by 2020, Wong said today. Australia’s LNG producers, alumina and oil refiners "appear likely" to be eligible for 60 percent free permits under the plan, while aluminum smelters and steelmakers may get 90 percent of their permits free, the government said.
Australia’s LNG output might have been cut by more than 37 percent in 2020 from what it would otherwise have been under the original proposals for emission reductions, the petroleum industry lobby group said in September.
Steel, Plastics
Perth-based Woodside, operator of the A$25 billion North West Shelf venture, has said introducing carbon trading may more than double operating costs for a typical project and that it threatened the viability of the proposed Browse LNG project, estimated to cost as much as A$30 billion.
Woodside "remains concerned" that the carbon trading plan may make Australian LNG producers less competitive than rivals in other countries where there is no cost on carbon, Chief Executive Officer Don Voelte said today in an e-mailed statement.
"We look forward to working with the government to minimize the impact of the scheme on LNG and to discussing other measures which can enhance the growth of the industry in Australia," Voelte said.
Final decisions on the eligibility of industries for free permits will be made next year after a "thorough assessment," the government said. The pulp and paper manufacturing industry, the iron and steel industry and plastics, chemicals and glass manufacturing may also be eligible for some free permits, it said.
Activities that emit more than 2,000 tons of carbon dioxide-equivalent per million dollars of revenue will get 90 percent of their permits free, while those that emit between 1,000 and 1,999 tons per million dollars of sales will get 60 percent free, according to the White Paper. The eligibility for free permits may also be assessed in terms of millions of dollars of value added during processing, it said.
Coal Assistance
The carbon trading plan also allows for A$3.9 billion of assistance for the most-polluting coal-fired power plants, based on an initial carbon price of A$25 per metric ton. The permits will be distributed to each eligible generator over the first five years of the trading system. The last two years of payments may be withheld should it appear a generator is likely to earn windfall profits from the assistance, the government said.
Coal-fired plants with an emissions intensity of more than 0.86 tons of carbon dioxide-equivalent per megawatt-hour of power generated will be eligible for the assistance.
That threshold means that almost all Australia’s coal-fired plants will qualify for the aid, not just the most-polluting brown-coal generators, said Sajal Kishore, associate director at Fitch Ratings in Sydney. The only ones that may not be eligible are the newer plants in Queensland such as CS Energy’s Kogan Creek generator, he said.
‘Dud’ Target
International Power Plc’s Hazelwood generator in Victoria, the most-polluting in the state, may be the only plant to be "run down over time" rather than maintained because of the introduction of a cost on carbon, Kishore said.
"The generators will probably make a noise in the press, but I don’t think overall this will have too-significant an impact on their operations," Kishore said. Also, the final emissions-reductions target will probably be 5 percent rather than 15 percent, which is "fairly mild," he said.
The assistance for industry and the size of the emissions- reductions targets were criticized by environmental groups. The Nature Conservation Council of New South Wales described the carbon-reduction target as "a dud."
"The most heavily polluting industries in this country have had undue influence over a decision that is going to impact on all Australians now and in the future," the council said. "These industries don’t want to play fair; they just want to protect their profits."
Australia’s greenhouse gas-reduction target is less ambitious than the European Union’s goal to cut greenhouse gases by a fifth by 2020 from 1990 levels.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at

Rio Tinto Alcan Cancels Smelter Project in Iceland

IcelandReview, Iceland - 15/12/2008
Rio Tinto Alcan has canceled its planned 40,000-ton enlargement of the aluminum smelter in Straumsvík by Hafnarfjördur, as the company’s CEO, Jacynthe Coté, announced to Iceland’s Minister of Industry Össur Skarphédinsson on Wednesday.
Rio Tinto Alcan had planned to undertake the smelter enlargement next year and the initiative was welcomed by Iceland’s government since it would have created jobs for a host of construction workers, engineers and designers, Fréttabladid reports.
The decision may also have an impact on the plans of the National Power Company, Landsvirkjun, on a new power plant by Búdarháls and consequently also on Verne Holdings’s planned data center by Keflavík International Airport, which was supposed to be powered by the Búdarháls plant.
According to Fréttabladid, Alcoa recently postponed its plans for an aluminum smelter by Bakki near Húsavík in north Iceland.

DJ Rusal CEO Says To Cut Aluminum Output By 4% - Interfax

TMCnet - December 15, 2008
MOSCOW, Dec 15, 2008 (Dow Jones Commodities News via Comtex) --
Russia's United Co. Rusal plans to cut aluminum production by 4% a year, Chief Executive Alexander Bulygin told the Interfax news agency in an interview published Monday.
"We plan to lower output in six factories in the Urals and northwestern regions and in Volgograd," Bulygin said. "Production will remain flat in more profitable Siberian plants."
The overall reduction will be 180,000 metric tons, although Rusal still plans to increase its global market share to 15% in 2009 from 12% this year

Bauxite blow - Economic climate forces Windalco to send home 150 workers

Jamaica Gleaner, Jamaica - December 16, 2008
Arthur Hall, Staff Reporter

The worsening global financial meltdown is continuing to have a devastating impact on the local bauxite industry with another 150 employees set to lose their jobs.
This time, it is the West Indies Alumina Company (Windalco) which is sending home workers and comes months after Alumina Partners of Jamaica (Alpart) also made 150 positions redundant.
However, the management at Windalco said the persons to be sent home this time around are non-permanent employees, who could be called back as the situation demands.
"We anticipate that no more than 150 non-permanent employees will be affected and we will still have an ongoing requirement for non-permanent labour in our operations," said Andrew Currie, acting managing director of Windalco.
Currie said the staff cut comes as Windalco slashes its production by 35 per cent in response to the reduced world demand.
"There has been a significant reduction in demand from the sectors that typically use aluminium and its alloys. Other refineries around the world have already implemented the curtailment of production as a response to the downturn in the industry," added Currie.
Difficult to assess
He admitted that it was difficult to assess when the demand for aluminium would improve, but said Windalco would continuously review its production levels.
Currie made it clear that no permanent employee would lose their jobs because of the reduction in production.
"Windalco has been on a cost-reduction drive since 2005 and will be taking additional measures to further reduce costs and assist the operations through these difficult times," Currie said.
That is a position endorsed by the Ministry of Mining and Telecommunications which said the decision to reduce production at Windalco was a negotiated one.
"With the demand for bauxite down and inventories piling up, there was no point in turning out more, so we decided to cut production," Marcia Forbes, permanent secretary in the Ministry of Mining, told The Gleaner yesterday.
Forbes accepted that some contract and part-time employees would be sent home, but argued that this was inevitable in the face of the global crisis.
"The Government has been working closely with the unions and in regular dialogue to minimise the impact," added Forbes.
Mining Minister Derrick Smith had previously announced the possibility of job cuts in the sector.
"Based on what is happening and what some observers are suggesting could happen in the next 18 to 24 months, one cannot rule out the possibility of layoffs," Smith had told a press conference at the start of this month.
On Sunday, Prime Minister Bruce Golding disclosed that the Government has been in intense discussions with the bauxite/alumina companies to try to avoid the closure of any alumina plants.
Doing everything possible
"The government has had to offer certain concessions and we may not be able to avoid a cutback in production, but we are doing everything possible to keep the plants in operation and save the jobs of the workers in the industry," Golding said in a wide-ranging address to the nation when he announced measures to reduce the impact of the global meltdown.
Yesterday's announcement from Windalco came hours after its parent company, the world's largest aluminium producer, Russia's United Company (UC RUSAL), disclosed plans to cut output by four per cent or around 180,000 tonnes.
UC RUSAL also announced plans to cut its staff by five per cent, mainly at its foreign production units.
United States aluminium giant Alcoa has also slashed 615,000 tonnes or 15 per cent of its aluminium-making capacity worldwide.
Aluminium prices fell from a high of over US$3,200 per tonne earlier this year to just over US$1,700 per tonne on the London Metal Exchange.

Alcoa dredges contaminated sediment from Columbia

Seattle Times, United States - 16-Dec-2008
Alcoa Inc. has removed more than 5,000 cubic yards of PCB-tainted sediment from the Columbia River and its shoreline at an old smelter site in Vancouver.
Alcoa Inc. has removed more than 5,000 cubic yards of PCB-tainted sediment from the Columbia River and its shoreline at an old smelter site in Vancouver.
Alcoa built the aluminum smelter about 3 miles northwest of Vancouver in 1940 and operated the plant until its closure in 1985. State officials have been working with the company since 1990 to characterize the extent of the contamination there.
Cleanup had been stalled for a decade, until Gov. Chris Gregoire ordered the state Department of Ecology to speed up negotiations with the company.
To date, Alcoa has spent about $42 million cleaning up the site, including $34 million to clean up PCBs. Some $3 million has been spent this year alone.
The area is a large, complicated industrial site with different kinds of environmental contamination that required different approaches, Ecology Director Jay Manning said Tuesday.
"Over a decade, we picked those off one by one, but one of the big and most complicated and most technically challenging parts was what to do in the river," he said.
The two sides identified about 45,000 cubic yards of sediment that needed to be removed from the river and shoreline because it was contaminated with PCBs, which collect in the human body and can cause liver damage or cancer.
Authorities gave Alcoa a window to complete the work, Nov. 1 through Feb. 28, without hurting fish runs in the river. But a permit for the work was delayed several weeks, forcing Alcoa to hold off on the dredging until Dec. 1.
The 5,000 cubic yards of sediment removed from the river so far this month contained the highest concentration of PCB material, or about 90 percent of the PCBs in the river and shoreline overall, said Mark Stiffler, Alcoa's director of asset management.
The project covers some 3,500 feet of Columbia River shoreline.
Community concerns about the contamination prompted Alcoa and Ecology to push forward on the cleanup, which could have taken as long as two years, he said.
"We worked very hard to accelerate that process so that we complete it in about a year," Stiffler said. "We're well on our way, and things are progressing as planned."
The project is expected to be completed by the end of February.
Still to be determined is a plan for cleaning up contaminated groundwater at the site. Groundwater cleanup represents that last major hurdle to restoring the site.
Manning and Stiffler said the company and the state expect to reach agreement on the technical approach to that cleanup in mid-January.

Minister of Industry: News of Smelter Incorrect

IcelandReview, Iceland - 16/12/2008
Minister of Industry Össur Skarphédinsson said at Iceland’s Althingi parliament yesterday that Rio Tinto Alcan had not canceled its planned enlargement of the aluminum smelter in Straumsvík near Hafnarfjördur, as reported by Fréttabladid yesterday.
The news story said that director of Rio Tinto Alcan in Canada Jacynthe Côté had notified Skarphédinsson of the cancellation of the enlargement in a phone call, Fréttabladid reports.
Skarphédinsson said he had indeed talked with Côté, but that she had called to notify him that the enlargement plans for Straumsvík would not be canceled, although the dates of certain parts of the project could be subject to change.
Ólafur Teitur Gudnason, managing director of the communications division of Alcan in Iceland, also said that Côté had informed him yesterday that she had not announced to Skarphédinsson that the enlargement plans had been abolished

Goldman Sachs sees aluminum price to drop further

SteelGuru, India - 16/12/2008

Goldman Sachs has predicted that the 3 month future price on aluminum will drop to USD 1300 per tonne from current USD 2020 per tonne. Also, the 3 month future price on copper will slide to USD 2700 per tonne from current USD 3835 per tonne.
Meanwhile, nickel and zinc prices are forecasted to drop to USD 8000 per tonne and USD 1080 per tonne respectively.
Besides, Goldman Sachs forecasted that the global aluminum demand in 2009 will drop slightly by 1.7% compared to 2008.
(Sourced from YIEH.corp)

Century Aluminum shuts potline at West Va. smelter

Reuters- Wed Dec 17, 2008
NEW YORK, Dec 17 (Reuters) - Century Aluminum Co (CENX.O: Quote, Profile, Research) said on Wednesday its West Virginia subsidiary will immediately begin to curtail one potline at its Ravenswood, West Virginia aluminum smelter.
It said it expects to complete the Ravenswood potline shutdown by Dec. 20, reducing primary aluminum production by about 3,540 tonnes a month.
The plant produced 170,000 tonnes of aluminum in 2007.
The potline curtailment will impact an estimated 100 hourly and 20 salaried employees, who will be temporarily redeployed throughout the smelter on Dec. 20, following curtailment.
In a related move, the Monterey, California-based aluminum producer said it gave Ravenswood employees 60 days notice that a 100 percent plant shutdown was possible.
It said it gave employees notice under the federal Worker Adjustment and Retraining Notification Act (WARN).
Unless the London Metal Exchange aluminum price stabilizes and Century Aluminum is able to materially reduce costs and stem monthly losses, the WARN notice said the plant could be completely curtailed.
Since reaching an all-time high in July at $3,375 a tonne, aluminum has tumbled to a more than five-year low at $1,440 a tonne on Tuesday.
The West Virginia plant will actively look to reduce costs for power, alumina, coke, pitch, labor and other materials and services, the company said.
"If the LME aluminum price does not stabilize and/or the company is unable to obtain the necessary monthly cost savings, the company will curtail 100 percent of smelter operations, beginning Feb. 15, 2009," the company said in a press release.
Ravenswood plant manager Jim Chapman said, "These are economic decisions based on the global economic crisis and the unprecedented decline in aluminum prices. We are experiencing significant losses at the current aluminum price."
He added that the potline curtailment will allow Century to immediately reduce cash losses while it works with suppliers, customers, employees, and government officials over the next 60 days to improve plant economics and maintain operations.
(Reporting by Carole Vaporean; Editing by Marguerita Choy)

ALCOA Signs Contract to Keep Jobs

WCAX, VT - December 17, 2008

Massena, New York
There is some good economic news from the Alcoa aluminum plant in Massena, New York.
They have agreed to a deal with the New York Power Authority that requires keeping at least 900 employees at the plant through 2043. Alcoa will provide aluminum in exchange for cheap power rates.
Governor Paterson must approve the deal.
This is good news as the General Motors plant in Massena is expected to close soon, leaving 250 people without work.

Government of Jamaica, bauxite firms haggle over levy - $28-billion stimulus package could grow

Jamaica Gleaner, Jamaica - December 17, 2008
The Jamaican government and the owners of the island's alumina refineries and bauxite-mining operations are haggling over what concessions the island will have to provide for firms to stay open in the face of a slump in demand for aluminium.
"The companies have placed what they want on the table and the talks are turning on what they, in turn, are willing to give in return for any reduction in the bauxite production levy," senior government and trade union sources said yesterday.
The levy was projected to bring in more than $8 billion in revenue for the Government this year, but is off target so far by a third. The negotiations form part of efforts by the Golding administration to shock the economy back to life.
The stimulus package unveiled by Golding amounts to no less than $28 billion to be injected in the economy mostly in the form of loans to businesses.
More details to come
Indeed, the package is con0siderably higher in value, but the mortgage relief to be provided by National Housing Trust, the likely concessions on the levy and the bigger pay-outs for government contracts under the 10 per cent procurement concession have not been costed.
Finance Minister Audley Shaw has said the details of the stimulus package, including its financing and fiscal impact, would be addressed in January when the revised budget is tabled.
Administration officials, meantime, have declined to divulge the government's negotiation position, but trade union sources told the Wednesday Business that the alumina firms would like to see the suspension of the levy for up to two years.
"My reading of it is that the administration does not believe that it can make a concession at this level, but is perhaps willing to meet the companies somewhere in between the extremes," one trade unionist said. "However, how the far the government goes will depend of how much production they undertake to keep in Jamaica," he said. "There could be a kind of sliding-scale, benchmarking me-chanism."
Bauxite is the raw material from which alumina is refined.
Alumina, in turn, is smelted into aluminium - a metal widely used in the aviation, motor vehicle and building industries.
The Jamaican Government earns most of its income for the exploitation of the mineral from a levy on the companies that is linked to the price of aluminium on the London Metal Exchange.
One company, Jamalco, a joint venture between Alcoa and the Jamaican government, is governed by a regular income tax regime, to which it moved in 2001 when it undertook a 25 per cent increase in its capacity. That offer was open to all firms operating here.
In the current financial years, which ends on March 31, 2009, the government projected earnings of $8.6 billion from the bauxite production levy, or just over two per cent of $265 billion in taxes it expected to pull in for the fiscal year.
But with the with aluminium prices having collapsed in the world market in the face of the global recession, the government's earnings from the levy for the first seven months of the fiscal year — up to the end of October — at $3.21 billion, was $1.55 billion or 32.5 per cent below projections.
Bauxite production for 2008 is to projected to be marginally above last year's 14.6 million tonnes.
This shortfall in levy earnings, which is expected to grow worse, will leave a substantial gap in the government's budget and make it even harder for the Golding administration to meet its target of a fiscal deficit of no more than 4.7 per cent of GDP.
However, the government is prepared to provide the companies with concessions to prevent them from closing plants that would throw up to 5,000 workers employed in the industry out of jobs.
Already the firms have laid off at least 350 workers and could cut more.
The major players in the industry here are Alcoa and UC Rusal, the Russian firm, which controls two refineries formerly owned by Alcan, and has a 65 stake in Alumina Partners, which it owns with the Norwegian firm, Norsk Hydro.
St Ann Bauxite, a mining operation, which used to be controlled by Kaiser, is now owned by Century Aluminium and Miranda Minerals.
In a broadcast Sunday night Golding confirmed that his government had offered "certain concessions" to keep the firms from mothballing their operations, but took it as a given that jobs would go.
"... We may not be able to avoid a cutback in production, but we are doing everything possible to keep the plants in operations and save the jobs of the workers in the industry," Golding said.
The PM has already signalled that a portion of the finacing for his stimulus plan will come from multilateral sources, saying some US$600 million of inflows are due in six weeks, but some of the funds are already costed in the budget.

Weak demand digs deep into Anglo and Rio growth plans
Times Online, UK - December 18, 2008
Carl Mortished, World Business Editor
Two leading mining groups have scrapped multibillion-dollar projects to smelt aluminium in the Gulf and dig coal in Africa.
Dwindling industrial demand for metals has forced Anglo American and Rio Tinto to abandon plans set in stone only months ago.
Rio has effectively pulled out of a $10 billion (£6.4 billion) aluminium project in Saudi Arabia, reducing its role from joint investor to technology partner. The Anglo-Australian group's retreat will help it to preserve cash when it is weighed down with almost $40 billion in net borrowings.
Meanwhile, Anglo has halved its $9 billion capital budget, retreating from plans to produce more platinum, copper, iron ore and coking coal.
Cynthia Carroll, the chief executive of Anglo, said that she was taking action because of the fast-changing economic climate. The miner, which has extensive interests in South Africa, is capping its budget for 2009 at $4.5 billion by pushing back expansion plans.
Rio said that it would continue to work with Ma'aden, the Saudi Arabian mining company, to develop the aluminium project - a 740,000-tonne-a-year smelter that would use bauxite mined in the country - but its role would shift from joint equity partner to a technology co-operation agreement. Dick Evans, the chief executive of Rio Tinto Alcan, Rio's aluminium subsidiary, blamed the deteriorating market: "The crisis has changed Rio Tinto's outlook throughout the world."
The Ma'aden aluminium project would have absorbed significant cash resources when Rio is straining under a heavy burden of borrowing incurred in part with the purchase of Alcan, the Canadian producer.
Last week, Rio said it would reduce spending on capital projects next year from $9 billion to $4 billion and cut 14,000 jobs. The company said that it was committed to reducing net borrowings, at present $39 billion, by a further $10 billion.
A sudden drop in demand from China for base metals has sent the global mining companies into a scramble to unravel expansion plans.
In addition, Anglo said yesterday that demand for platinum was being hit by falling car sales and the planned expansion of a copper mine in Chile and the commissioning of a nickel mine in Brazil are to be delayed.

Alcoa announces 100 layoffs
Victoria Advocate, TX - December 17, 2008
Reduced demand for product forces cutbacks to stay afloat in economy

POINT COMFORT - About 100 layoffs are in the Point Comfort Alcoa plant's future, the plant announced Wednesday.
The company will lay off about 40 salaried employees in December and another 60 hourly employees during the first quarter of 2009, company spokeswoman Laurel Cahill said in an e-mail.
"Point Comfort Operations is affected by the same cost challenges and decreased demand for our product as other Alcoa locations in the U.S.," Cahill said. "Unfortunately, because of these business conditions, we need to take the difficult step of reducing the workforce."
The plant employs about 650 employees.
In July, aluminum went for $3,300 a ton on the London Metal Exchange, Cahill said, but has dropped to about $1,500 a ton in December.
Prices for alumina, which the Point Comfort plant produces, also have decreased sharply, she explained. Alumina is a product that aids in aluminum production.
Alcoa announced in late October it was cutting alumina production by 25 percent by the end of November at its Point Comfort plant and cutting smelting production worldwide. The area plant is operating at about 60 percent, Cahill said.
And although the plant worked to remain efficient, Cahill said, increasing prices for bauxite, caustic and energy also came into play.
Salaried workers affected by the December reductions will receive severance packages of up to 56 weeks' salary, depending on their time with the company, according to the e-mail. Both salaried and hourly employees will remain eligible for health-care benefits, based on the terms of Alcoa's benefits plan.
Alcoa is the latest in a string of cutbacks at chemical plants in the Crossroads region.
Alcoa has faced downturns in the past and knows that, above all, safety must remain key, Cahill said.
"We will continue to control costs, make improvements to secure process stability and produce a quality product for our customers," she said in the e-mail.
It is important to remain flexible, she said, and to adapt to market changes.
"We do not know how long this downturn will last," she said, "but we do know that we want to position the plant for a strong comeback once the economy and demand for our product recover."

Nalco Raises Estimate for Sumatra Plant to $4 Billion (Update1)
Bloomberg Dec. 19, 2008
By Bambang Dwi Djanuarto and Naila Firdausi
National Aluminium Co., India’s biggest alumina maker, raised the projected cost of an aluminum smelter in Sumatra, Indonesia by 25 percent to $4 billion to pay for extra infrastructure, including rail links.
The venture, the company’s first overseas, may invest $2.5 billion to build a plant capable of processing 1 million metric tons of alumina into 500,000 tons of aluminum ingots, Finance Director B.L. Bagra said today. The remaining $1.5 billion will be for railways, a 1,250-megawatt coal-fired power plant and a port.
Indian companies are stepping up investments in Indonesia, Southeast Asia’s largest economy, to boost profits and secure access to raw materials, such as coal. The project will be located in Sumatra because "the coal supply for power plant is close" and Indonesia is a major market, Bagra said today in Jakarta.
"Securing coal supplies is of utmost importance for Nalco," said Sanjay Makhija, head of institution sales at Mumbai-based Fortune Financial Services Ltd. "The company has faced severe problems in India because of erratic coal supplies."
The shares, down almost 60 percent this year, swung between gains and losses today, trading 1.3 percent lower at 199.5 rupess at 2:36 p.m. Earlier, the stock had gained as much as 3 percent.
Production Cut
Nalco, as the company is called, has cut production three times this year because of inadequate fuel supplies. Its alumina production dropped 20 percent in September for want of coal.
"The estimated cost increased because we’ll have to build additional infrastructure," Bagra said after signing a stakeholder’s agreement with RAK Minerals & Metals Investments, a unit of RAK Investment Authority. Nalco put the cost in January at $3.2 billion.
Indonesia, the world’s fourth-most populous country, has just one aluminum smelter, operated by PT Indonesia Asahan Aluminum, according to the Jakarta Post on Aug. 25, which cited the Indonesian Aluminum Association. That facility imports about 600,000 metric tons of alumina a year, the report said.
The new venture, in which Ras Al Khaimah, United Arab Emirates-based RAK Minerals has a 24 percent stake, may sell equity to local partners, including PT Aneka Tambang and regional governments, or through an initial share sale, after production starts in 2013, Bagra said.
The alumina for the smelter would be shipped in from India, Bagra said. PT Tambang Batubara Bukit Asam will supply coal.
Aluminum, the lightweight metal that’s used to make beverage cans and auto parts, is smelted from alumina, a semi-processed material made from bauxite ore. Energy accounts for the about a third of a smelter’s costs.
To contact the reporters on this story: Naila Firdausi in Jakarta at; Bambang Dwi Djanuarto in Jakarta at

Century Aluminum to cut 13 pct of salaried workers
Reuters, Friday December 19 2008
NEW YORK, Dec 19 (Reuters) - Century Aluminum Co told 13 percent of its salaried workers on Friday that they would be laid off, two days after warning it might stop all aluminum production if the price of aluminum stays low and it could not cut costs.
"Given the unprecedented recent decline in aluminum prices, we have no choice but to aggressively explore every opportunity to reduce our costs across the company," President and Chief Executive Officer Logan Kruger said.
"While we continue to believe that the longer-term fundamentals for aluminum are quite positive, we have an urgent need to prudently manage costs in the current environment."
A spokesman told Reuters 27 jobs were being cut.
Century said in its statement the jobs would be eliminated at its headquarters in Monterey, California, and its Kentucky operations.
The company has an annual production capacity of 785,000 tonnes of aluminum.
On Wednesday, Century informed all employees at its Ravenswood, West Virginia, primary aluminum smelter of a possible complete plant curtailment in 60 days.
It also began an immediate shutdown of one potline at that plant, which produced 170,000 tonnes of aluminum last year. The potline curtailment affected an estimated 100 hourly and 20 salaried employees.
Since reaching an all-time high in July at $3,375 per tonne, the price of aluminum has tumbled to a more than five-year low around $1,440.
On Wednesday, Century Aluminum said if the aluminum price did not stabilize and the company were unable to obtain monthly cost savings, it would curtail 100 percent of smelter operations, beginning Feb. 15, 2009.
Century Aluminum owns primary aluminum capacity in the United States and Iceland, as well as an interest in alumina and bauxite assets in the United States and Jamaica.
The company's shares closed down 0.12 percent at $8.68 on Friday. (Editing by Gerald E. McCormick)

Alcoa and Hydro-Québec sign power deal through 2040

The Gazette (Montreal), Canada - December 19, 2008

Alcoa Inc. and Hydro-Québec have finalized a previously announced long-term power deal linked to the $1.2 billion modernization of its Baie Comeau smelter.
The agreement, which provides power to Alcoa at the industrial "large power" rate – currently set at 4.2 cents per kilowatt hour – covers all three Alcoa smelters in Quebec and runs until the end of 2040, the company said today. The power contract is for a total of 2,100 megawatts.
The smelters at Baie Comeau, Deschambault and Becancour can produce about 1.1 million tonnes of aluminum, or more than 25 per cent of the U.S.-based company’s total capacity.
The modernization and expansion at Baie Comeau’s smelter will provide more environment-friendly technologies and increase output by 110,000 tonnes per year, the company said. The project is to be complete by 2014. The work should generate about $540 million in economic spin-offs over four years, Alcoa Canada president Jean-Pierre Gilardeau said.
Engineering studies have already started at Baie Comeau and some dismantling work has already been undertaken, Robert Després, vice-president, public and government affairs, said.
The current economic downturn has served to speed-up the project by one year, Després said. When some production was curtailed at the plant, it was decided that the dismantling work would begin immediately. The project was originally to be complete by 2015.
In March, the government of Jean Charest announced that it and Alcoa had signed a memorandum of understanding for the power deal.

Century Aluminum Loss $580 Million Hit for W.Va.
WSAZ Newschannel # - Dec 19, 2008
Reporter: Scott Saxton
A report from the West Virginia University College of Business and Economics indicates the closing of Century Aluminum in Ravenswood would cost the state more than a half billion dollars.
Century Aluminum employed more than 660 in 2007, according to the report. The company announced earlier this week that it may have to close by February due to plummeting aluminum prices.

"Century has a significant economic impact on the West Virginia
economy, accounting for a total of nearly 1,600 jobs - 667 directly with
Century and 910 jobs with other West Virginia businesses - and nearly
$580 million in business volume in 2007," Randy Childs,
research assistant professor in the WVU Bureau of Business and Economic Research and lead author of the report, said.
The report states that Century is connected to $5.9 million in assorted state taxes.
"The jobs impacts estimated do not include downstream jobs associated
with the Alcan Rolling Mill adjacent to Century’s operations,"
Childs said. "The approximately 1,500 jobs at Alcan and its other
suppliers add up to a much larger number of jobs beyond those estimated in this report."
WVU Professor Tom Witt said the loss of Century Aluminum would also affect American Electric Power's West Virginia operations.
Read the full report at the link

Kaiser Aluminum closes Okla. plant, cuts jobs

MSNBC - Fri., Dec. 19, 2008
FOOTHILL RANCH, Calif. - Kaiser Aluminum Corp. said late Thursday it plans to close its Tulsa, Okla., plant and scale back operations at its facility in Bellwood, Va., affecting a combined 170 employees.
The moves "are a result of deteriorating economic and market conditions," Kaiser said. The company expects to take a resulting fourth-quarter charge of $6 million to $10 million.
About 45 employees at the Tulsa facility and 125 employees at the Bellwood facility will be affected. The company employs about 2,600 people, according to Capital IQ.
The two facilities produce tube and rod as well as bar products for general engineering uses.

Alro Romania dismisses half of it's 3500 workforce
NewsIn (Abonament), Romania - 17 hours ago
The administrative board of Vimetco, the majority owner of the largest aluminum maker Alro, decided to let go of 1800 of its about 3500 employees

DJ Alcoa Enters Letter Of Intent With Chinese Petroleum Coke Co
MarketWatch (press release) - Dec. 19, 2008
LONDON, Dec 19, 2008 (Dow Jones Commodities News via Comtex) -- U.S. aluminum producer Alcoa Inc (AA) has entered into a letter of intent with Weifang Lianxing Carbon Co. for the establishment of a joint venture in calcined petroleum coke production in China, it said late Thursday.
The proposed joint investment was signed Thursday and includes Lianxing's existing annual calcined coke production capacity of 300,000 metric tons, as well as an approved expansion next year of 200,000 tons.
It also includes participation in Lianxing's future capacity expansion potential, which Alcoa said is "considerable."
Calcined petroleum coke is used to make electrodes for the aluminum industry.
The joint venture is located in the Binhai Economic Development Area near Weifang City in Shandong.
Under the proposed terms of the deal, Alcoa will deploy Lianxing calcined coke into selected smelters across its global smelting system.
The Lianxing coke will supplement Alcoa's existing arrangements with established Chinese and Western coke producers, Alcoa said.
The joint venture will draw upon the combined strengths of Lianxing in the manufacture and management capability of calcined coke, and Alcoa's global smelting reach and technical capabilities.
In addition to calcined coke, Alcoa said it is aggressively pursuing backward integration opportunities in globally competitive caustic soda production.
-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413;

Romanian aluminum plant plans 1,200 layoffs

The Associated Press - 20-Dec-2008
BUCHAREST, Romania (AP) — A Dutch-owned aluminum plant in southern Romania plans to lay off up to 1,200 people — more than a third of its work force — as the economic crisis grips Romania.
Union leaders said the figure could be even higher.
A statement from Vimetco blamed a 50 percent drop in world aluminum prices for the planned layoffs at the Alro Slatina plant. Vimetco owns 84 percent of Alro Slatina.
The statement on Friday said that up to 1,200 people would be laid off and production halved. It added that a final decision regarding numbers would be made next week. Union leaders quoted by Hotnews news agency said that 1,800 of the 3,500 work force would be made redundant.
Some 400 workers on Friday protested the plans outside the factory in the southern town of Slatina. It is the biggest aluminum smelter in central and eastern Europe.
Alro Slatina's profits fell by more than 20 percent in the first nine months of 2009.

Things Looking Up At Ormet

Wheeling Intelligencer, WV - December 21, 2008
By FRED CONNORS Staff Writer
HANNIBAL - At a time when bleak economic conditions dominate the news, at least one local company is staying ahead of the curve.
Mike Tanchuk, chief executive officer of Ormet Corp. in Hannibal, said his company is in a unique position for dealing with the economic downturn because Ormet locked in its revenues for 2008 and 2009 early this year.
Tanchuk's comments came Thursday in response to questions about Ormet's financial profile as compared to that of Century Aluminum of Ravenswood, W.Va., which announced Wednesday it would be shutting down one pot line and, maybe, the entire plant for 60 days. The single production line was to be shut down by Saturday with about 120 employees to be shifted to other operations, Century Aluminum said. Production is expected to be reduced by about 3,540 tons per month as a result.
But Century officials said the entire plant could be idled unless the London Metal Exchange selling price for aluminum stabilizes and the company is able to reduce its costs and stem its losses. Otherwise, the plant could cease operations beginning Feb. 15. "These are economic decisions based on the global economic crisis and the unprecedented decline in aluminum prices," Century plant manager Jim Chapman said in a statement. "We are experiencing significant losses at the current aluminum price."
Ormet, though, is not facing the same challenge.
"We are in a different situation (than Century) because we are covered for '08 and '09," said Tanchuk. "All aluminum priced through LME is priced very low. What we did at the beginning of the year, when prices were higher, is we sold our metal for '08 and '09 for a higher price than the current market."
Tanchuk said that move will have a positive effect on Ormet's bottom line.
"Our revenue will be based on a higher price for '08 and '09," Tanchuk said. "This gives us a little bit more of a runway."
But in spite of the wiggle room, Tanchuk remains cautious.
"Even though we are pre-priced, we are continually looking for better ways to make the company financially viable," he noted.
Tanchuk, who once worked for Century Aluminum, sees the worldwide economic slowdown as a positive thing for Ormet.
"We have seen the cost of our raw materials come down because there is less demand," he said, noting that the carbon used at Ormet comes from China.
And while he is confident for the short term, Tanchuk is looking toward the company's future.
"We have to focus on 2010," he said. "Our power contract with American Electric Power expires at the end of this year. It is critical for us to have a long-term, competitive power contract."
He said Ormet has a fixed-rate contract with AEP for power.
Such is not the case for Century and its contract with Appalachian Power.
When the price of aluminum is up, Century pays Appalachian Power more than the utility's posted tariff for industrial customers. When aluminum prices are low, the company pays less than the posted tariff, published reports have said.
The cost of electricity is important to aluminum producers, as a lot of power is required for the process. The amount of electricity needed to operate the Ormet reduction plant at Hannibal has been compared to the amount needed to power the entire city of Pittsburgh. The annual electric bill at Ormet's reduction plant is expected to increase to $223 million this year, up from $146 million in 2007, when fewer potlines were in operation there.
In fact, AEP's Kammer Plant, located south of Moundsville along W.Va. 2 near the Ohio River as part of the Kammer-Mitchell complex, was built in the 1950s specifically to provide electrical power for Ormet. AEP spokeswoman Carmen Prati-Miller has said Ormet actually owned Unit 1 of the Kammer Plant, which became operational in 1958, as well as Unit 2, which began operating in 1959. She said an additional Unit 3 also began operating at Kammer Plant in 1959, but it was not owned by Ormet. According to Prati-Miller, this arrangement continued until 1967, when AEP's Ohio Power purchased Units 1 and 2 from the aluminum producer.
In addition to the cost of electricity, which has risen in West Virginia along with the price of coal, declining demand for aluminum is hitting the Ravenswood plant hard. Matt Turner, a spokesman for Gov. Joe Manchin, pointed out that some of Century's "key customers are automobile and aerospace." He added that as a result of the decline of those industries, the outlook for aluminum right now is "just not good."
But Tanchuk believes Ormet is well positioned for the future. He noted Ormet's Hannibal facility now employs about 1,000 people and has an annual payroll of $56 million.
"We estimate the total impact on the local economy is $200 million," he said.
Ormet Corp. has been producing aluminum and alumina since 1956, when company information states it was first organized by Olin Corp. and Revere Copper and Brass Inc. Ormet has endured the purchase and sale of several divisions linked to the aluminum industry, several private owners and market fluctuations.
In November 2004, a labor dispute between Ormet Corp. and members of the United Steelworkers all but idled the primary aluminum facility and the rolling mill in Monroe County. Management staff continued to try and operate the facility, but the lengthy dispute caused economic strain for many in the Ohio Valley. The company eventually sold its rolling mill but kept the reduction plant.
After 19 months, the USW and the company reached an agreement, and the company also managed to negotiate a new agreement with AEP. By December 2006, power was restored at the facility and production resumed.
Ormet produces rectangular-shaped "sows" formed when molten aluminum is poured into containers. These sows weigh 1,500 pounds each, and the plant produces 1,000 sows each day. The Ormet plant operates 24 hours a day, seven days a week.
City Editor Jennifer Compston-Strough and Staff Writers Casey Junkins and Joselyn King contributed to this report.

Superior closes its doors

The Morning Sun - Dec 20, 2008
PITTSBURG — More than four months after the announcement that sent shock waves through Pittsburg, Superior Industries is closed.
Superior announced in August that it would close its Pittsburg plant effective Dec. 19. The local facility, which employed more than 600 people, ranked only behind Pittsburg State University in number of employees. Superior's payroll of $27 million ranked third behind PSU and Mt. Carmel.
Manufacturing at the plant concluded earlier this month, as workers rolled out the last of more than 40 million wheels produced at the plant. Superior supplies aluminum wheels to Ford, General Motors, Chrysler and several other automobile companies. Superior cited as one of the reasons for closing the local plant the reduced demand for sport utility vehicles and light trucks.
Mark Turnbull, Pittsburg economic development director, estimated Pittsburg's unemployment rate at 5 percent before the Superior layoffs. That number was expected to increase following the plant's official closing on Friday, as Superior's employees represent 4.6 percent of Pittsburg's entire workforce.
Out of those 600 former Superior employees, 384 are located in Crawford County, with 457 residing in Kansas.
"It's obviously in our best interests to keep them here," Turnbull said. "They have proven to be excellent employees — skilled workers, and we would like to keep as many of them here as we can. I guess we'll see (how many the city can keep)."
Interim City Manager John Van Gorden said in August that Superior's closing marked the largest local shutdown since McNally's closure. McNally sold its Pittsburg building in 1989 and slowly phased out production until totally closing the facility in early 2002.
"The biggest thing, with a closing like this, or like McNally's is the psychology," Turnbull said. "People said, "McNally's is Pittsburg.' It's not always easy to get past that."
Blake Benson, president of the Pittsburg Area Chamber of Commerce, said Superior's economic impact on the community will not be forgotten. He estimated earlier this year that the Superior's economic impact on Pittsburg was more than $110 million annually.
"Superior and their folks have helped mold Pittsburg into what it is today and we certainly do appreciate what they've done for our community," he said.

Two workers kidnapped at Russian firm in Nigeria, Canada - Sunday, December 21, 2008

MOSCOW - Two employees of Russian aluminium giant Rusal were on Saturday kidnapped in Nigeria where the multinational has operations, the company said.
"This morning in Nigeria, in the southern part of Ikot Abasi town, a group of militants attacked a township of UC Rusal's employees, who work at the ALSCON aluminium smelter," it said in a statement from its Moscow offices.
"Two employees have been kidnapped. The company is undertaking all possible measures to resolve the situation and free the hostages."
UC Rusal -- controlled by self-made Russian billionaire Oleg Deripaska -- describes itself on its website as "the world's largest producer of aluminium and alumina".
Its operations in 19 countries include the Aluminium Smelter Company of Nigeria (ALSCON), in the coastal oil-producing Nigerian state of Akwa Ibom.
In June 2007, six UC Rusal employees were abducted, and a local driver shot and killed, in a similar incident, company spokeswoman Vera Kurochkina said on Saturday. Some two months passed before the workers were freed.
UC Rusal was founded in March 2007 through the merger of Rusal, Sual and the alumina assets of Glencore. It accounts for around 12 percent and 15 percent of the global production of aluminium and alumina respectively.

DJ Rio Tinto Reviews Planned Aluminum Smelter In Malaysia-Report

Trading Markets (press release), CA - December 21, 2008
KUALA LUMPUR, Dec 21, 2008 (Dow Jones Commodities News via Comtex) -- AL/W | Quote | Chart | News | PowerRating -- Rio Tinto Alcan is reviewing its proposed multi-billion ringgit aluminum smelter given current global economic turmoil, the Edge weekly reported over the weekend.
"Rio Tinto recently announced a thorough review of all our capital projects for all phases of development. We are currently undertaking a detailed stakeholder engagement program and a project by project review will be given at the publication of our full year results," the Edge reported, quoting an unnamed Rio Tinto's spokesman.
Rio Tinto is teaming up with Malaysia's public listed Cahya Mata Sarawak Bhd. (2852.KU) on the project.
Newspaper Web site:
-By Kuala Lumpur bureau; Dow Jones Newswires;

Alcoa and Orkla to Barter Equity Stakes In Elkem Aluminum And SAPA Extrusions Business

Trading Markets (press release), CA - December 22, 2008
Aluminum producer Alcoa Inc. announced that it has entered into an agreement with Orkla ASA, under which both the companies would exchange their corresponding stake in a Norwegian smelting partnership and a Swedish extrusion joint venture in order to focus on their respective areas of expertise and best practices.
Under the terms of the deal, Alcoa would receive Orkla's 50% stake in Elkem Aluminum ANS, while Orkla would obtain Alcoa's 45% stake in the $3.7 billion SAPA extrusion profiles business. The transaction is expected to be completed in the first quarter of 2009.
Following the closing of the transaction, Alcoa would hold 100% stake in Elkem Aluminum, including aluminum smelters in Lista and Mosjoen, Norway with a combined output of 282 thousand metric tons per year or mtpy, and a newly opened anode plant in Mosjoen, in which Alcoa already holds about 82% stake. The addition of these assets increases Alcoa's global smelting capacity to more than 4.7 million metric tons, making Alcoa the world's largest primary aluminum producer.
In turn, Orkla would own 100% interest in SAPA Profiles business. Production in the SAPA Profiles takes place in 15 European countries, the US and China.
The SAPA joint venture, which is an independent manufacturer of aluminum extrusions and engages in extensive processing operations, including surface treatment, hydro-forming, friction-stir welding and CNC treatment, was formed in July 2007 when Alcoa combined its soft alloy business with Orkla's SAPA unit. Aluminum extrusions are used for design solutions in virtually all sectors.
The two companies would continue to hold joint ownership in the carbothermic process technology Alcoa is developing together with Elkem, which is in the research and development phase.
The Carbothermic process is a new technology that holds the potential to produce aluminum at a lower cost, driven by reduced conversion costs, lower energy requirements, and lower emissions and at a lower capital cost than traditional smelting. The technology also holds potential for significant cost improvement in the production of other metals.
Commenting on the agreement, Alcoa's president and chief executive officer, Klaus Kleinfeld said, "We will be assuming control over businesses where we are the recognized global leader - two smelters with long-term clean power contracts and an anode business that plays a vital role in supporting our operations in Europe and Iceland. This move makes good strategic and financial sense for both Alcoa and Orkla."
Pittsburgh, Pennsylvania-based Alcoa said that it expects to record an impairment charge in the fourth quarter of 2008 related to the exchange of its interests in the extrusion joint venture and is working with its advisors to determine the details.
In recent times, Alcoa considerably cut its production volume and also shelved certain expansion programs due to weak aluminum price and the fact that the aluminum market remains in surplus despite the production cuts.
On November 10, Alcoa curtailed an additional 350 thousand metric tons per year or mtpy of aluminum production, beginning immediately, due to lower end-market demand and global economic softness.
Prior to that, the company curtailed production at its 265 thousand mtpy smelter in Rockdale, Texas. Overall, the company has now curtailed 15% of its annualized output or 615,000 mtpy in the second half of this year.
Further, the company shelved its proposed expansion of the Wagerup refinery due to the market softness brought about by the global financial crisis.
Pursuant to the negative news, Friedman, Billings, Ramsey on November 11, downgraded Alcoa shares to Market Perform from Outperform and lowered its price target to $10 from $20. The brokerage reduced its 2008 fourth quarter earnings per share estimate to $0.10 from $0.13, its 2008 estimate to $1.54 from $1.56, its 2009 estimate to $0.40 from $0.79, and its 2010 estimate to $0.99 from $2.52.
Further, recently on December 19, Friedman, Billings, Ramsey downgraded Alcoa stock to $8 from $10, while maintaining its Market Perform rating. The brokerage reduced its 2008 earnings per share estimate to $1.32 from $1.54, its 2009 estimate to a loss of $0.88 from profit $0.40, and its 2010 estimate to a loss of $0.20 from profit $0.99.
AA closed Monday's regular trading at $9.23, down $0.47 or 4.85% on volume of 22.86 million shares. The stock has been trading at the range of $6.80 - $44.77 for the past 52 weeks with a 3-month average volume of 27.51 million shares.
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Aluminum furnace collapse kills three, hurts six in E China

People's Daily Online, China - December 22, 2008
Three workers died and six others were injured in east China's Shandong Province on Monday, when a furnace used to produce raw materials for aluminum collapsed, local officials said.
The accident took place at about 11 a.m. in Pingyin County in the suburbs of Jinan, capital of Shandong, as nine workers attempted to dismantle an in-ground furnace that produced pre-baked anode cells, which are the raw materials for aluminum.
The isolation walls of the furnace toppled, burying all nine workers. The furnace, which had been offline for more than two months, was owned by a private firm based in Kongcun Township, the officials said.
Two of the victims were pronounced dead at the scene and a third died during surgery.
The injured, two of whom were in serious condition, remain hospitalized.
Local authorities are investigating the cause of the accident.
Source: Xinhua

Nalco needs ally in Indonesia

Calcutta Telegraph, India - Dec. 22, 2008
Calcutta, Nalco, the country’s largest integrated aluminium producer and exporter, plans to include another investor in its upcoming Indonesian venture.
Last week, the company had signed an agreement to offload a 24 per cent stake in the Rs 14,000-crore smelter and power plant to RAK Minerals and Metal Investments of the UAE. It, now, plans to sell another 25 per cent stake in the project.
Nalco chairman C.R. Pradhan told The Telegraph that the company would hold a majority stake.
"We are looking for one more investor in the project," he said, adding that the company would not sell shares to the public.
Nalco will go for the financial closure of the project once it brings in the second investor.
"Once funds are tied up, we will seek the government’s nod for the venture," Pradhan said.
Sources said Nalco was already in dialogue with prospective investors.
"I cannot comment on who the new partner will be before the deal is finalised," he said. The project report will be ready by next month.
Navratna PSU Nalco had entered into a memorandum of understanding with the government of Indonesia in January this year for the project. It received approval in November to set up a 5-lakh-tonne aluminium smelter and a 1,250MW captive power plant in the country.
The venture plans to build a railway line and a port in south Sumatra, which has the largest coal reserve in Indonesia.
After picking up a stake in Nalco’s venture, the UAE company will be entitled to use the infrastructure.
RAK Minerals will also build an industrial park in south Sumatra along with a freight corridor. The park will have metal-based industries and a captive power plant.
Nalco, which does not have any bauxite resource in Indonesia, plans to ship alumina from its Damanjodi plant in Orissa to make aluminium from the proposed smelter, which is likely to be commissioned in about five years.

Akilagpa cautions against hasty passage of Aluminium Bill

Joy Online, Ghana - 22 December 2008

Professor Akilagpa Sawyerr, former Chairman, Volta Aluminium Company (VALCO) Agreement Negotiation Committee, has added his voice to calls on Parliament not to rush the passage of the Aluminium Authority and Integrated Aluminium Industry Bill.
In a Memorandum to Parliament, Prof. Sawyerr said he was concerned that Parliament might be rushing to a decision on matters of very grave consequence for Ghana’s industrial and energy future without adequate consideration of important technical, legal and economic factors.
The Bill seeks to establish an Aluminium Authority to deal with the regulatory aspect of alumina production in the country.
Under the proposed Bill, the Aluminium Authority would have the power to undertake the evaluation of applications and make grants in respect of bauxite rights.
Prof. Sawyerr said since the sale and purchase of 70 per cent shares of VALCO was at the centre of the integration project, the denial of commitment of the two companies, CVRD and Norsk Hydro, removed "the basis for any rush to restructure established arrangements for managing national mineral resources".
"Related to this situation of uncertainty about the existence or otherwise of such an agreement, there are several aspects of the integration project itself, as announced by government, that require further due diligence and evaluation to establish its soundness and how far it would serve the national interest," Prof. Sawyerr said in the memorandum.
The current regime for the grant of mineral rights assigns significant roles to the Mineral Commission, the Minister Responsible for Mines and to Parliament.
The Minerals Commission evaluates applications and makes recommendations, the minister makes a decision to grant rights based on the recommendation and Parliament decides whether or not to ratify the decision of the minister to make the grant of mining rights.
However, under the proposed bill, the Aluminium Authority will have the power to undertake the evaluation of applications and to make grants in respect of bauxite rights.
Further, the decision of the Authority may be exempted from the ratification power of Parliament.
This arrangement, Prof. Sawyerr said, "would create a monolith whose activities would lack the transparency and checks and balances necessary in an institution dealing with the management and allocation of critical national resources".
"Considering, further, that the Authority is expected to hold ‘not less than 25 per cent equity’ in a joint venture company to mine bauxite, the proposed arrangement would concentrate in one body both final regulatory authority and commercial functions in relation to the same field."
This, Prof. Sawyerr said, opened up possibilities for corrupt deal-making.
The Memorandum to the Bill states that the Minerals Commission has given authorisation to the Aluminium Authority to approve the grant of rights, concessions or contracts related to the exploitation of bauxite.
However, Prof. Sawyerr said, this was odd and wondered why the Minerals Commission would cede its power to a body which had yet to be set up, before anyone knew what competence and resources would be available to that body.
He urged Parliament to satisfy itself, by an investigation in open session of the nature of the supposed authorisation by the Minerals Commission, the circumstances in which it was given as well as its basis in policy and law.
Prof. Sawyerr also asked Parliament to be fully satisfied about who were behind the consortium of International Aluminium Companies since the credibility and standing of partners in the industry were crucial to the viability prospects of the project.
Equally important are technical work supporting the conception, costing and design of the project.
Dr Yao Graham, Coordinator of Third World Network (TWN), an advocacy group, said the memo accompanying the bill was silent on details of the aspects of the mining phase, which total cost was estimated to be US$500 million.
He said it was important to establish the identity of members of the consortium who were willing to invest over US$4 billion in the industry at the time aluminium prices had fallen steeply on the world market.

Plant says drastic cuts needed to stay afloat

Huntington Herald Dispatch, WV - 23-Dec-2008
RAVENSWOOD, W.Va. -- Officials at the Century Aluminum plant in Ravenswood told politicians and others the company needs to cut costs by 20 percent to avoid shutting down by February.
At a meeting Tuesday, the company said the plant -- which employs 685 workers -- is being hurt by the falling cost of aluminum.
The company says it costs $31 million a month to operate the facility, with $9 million of that coming in power bills.
American Electric Power says it's willing to work with Century to reduce costs, but those reductions will be passed on to other customers

BHP Shuts Guinea Office as Coup Closes Country on Conte Death

Bloomberg - December 23, 2008
By Rebecca Keenan
BHP Billiton Ltd., the world’s largest mining company, closed its office in Guinea after the army suspended the constitution and dissolved the government following the death of President Lansana Conte.
"The Conakry office is closed following the public announcement that people should stay at home," Kelly Quirke, a spokeswoman for Melbourne, Australia-based BHP said today. "We will reopen the office as soon as it is safe to do so."
A military group calling itself the National Council for Democracy and Development pledged to set up a government of national unity. Conte’s rule was marred by delayed elections, boycotted referendums, strikes and protests. Conte, who was 74, died after a long illness.
The coup may disrupt the economy of the country that has the world’s biggest reserves of bauxite, an ore used to make alumina, the raw material used to produce aluminum. United Co. Rusal and Alcoa Inc. run bauxite and alumina operations in Guinea, while BHP is considering developing a $4.8 billion alumina refinery there.
BHP’s project in Guinea, a partnership with New York-based Global Alumina Corp., is "the world’s most wonderful bauxite resource," BHP’s Chief Executive Officer Marius Kloppers has said.
The refinery will have 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.
To contact the reporter on this story: Rebecca Keenan in Melbourne at

Columbia Falls Aluminum to shut down

Daily Inter Lake, MT - Tuesday, December 23, 2008 4:40 PM CST The Associated Press
The Columbia Falls Aluminum Co. on Tuesday gave employees 60 days notice that the plant will be shut down, eliminating about 200 jobs.
Low demand for aluminum plus a 9th U.S. Circuit Court of Appeals ruling that could lead to higher electricity prices contributed to the planned shutdown, CFAC spokesman Haley Beaudry said. The company is a major consumer of electricity.
Employees of Columbia Falls Aluminum, which is owned by Switzerland's Glencore AG, were notified Tuesday morning.
The 60-day notice is required under a federal law that guarantees workers will be paid for 60 days, though the plant could close sooner.
In July, CFAC shut down one of its pot lines and laid off 125 employees, citing soaring energy prices. Since then, hundreds of workers in the Flathead Valley have been let go from Plum Creek Timber Co., Semitool Inc., Goose Bay and the Troy Mine.
"We're going to stop producing aluminum and whether or not we restart some time depends on the situation," Beaudry said.
The mood among the plant's employees was somber but the work continued, said Dave Toavs of the Aluminum Workers Trade Council, the union representing them.
"We're running business as usual," Toavs said. "We're still making metal."
Beaudry said further information about the closure may not be available until after the holidays. The company informed the governor's office of the layoffs.
"It's too early to know what all is going to happen," Beaudry said. "Nothing is in place yet, but we have qualified for certain federal retraining programs in past cutbacks."
Among Montana's counties, Flathead County ranks relatively high in unemployment. It's November rate was 7.3 percent, compared to 4.9 percent for the state and 6.7 percent for the nation.

Fight to Save Century Aluminum

WOWK, WV - Tuesday, December 23, 2008

The Governor says he is willing to do whatever it takes to save the company.
Story by Kristen Sell
RAVENSWOOD -- There's serious work to be done, but officials at Century Aluminum in Ravenswood say they're cautiously optomistic they can keep their doors open.
During a meeting of the minds this afternoon, the Governor met with city, state and u-s representatives as well as plant officials to come up with short and long term solutions.
In December, the plant announced they would be shutting down because of a struggling aluminum market.
"The market will return. Will it return in six months or a year from now, we don't know. We just have to be tough enough to get through it and i'm willing to do whatever it takes from the state to get through it. They're not asking for a handout or a bail out. We're talking with real figures and these are real people's lives," said Governor Manchin.
Officials say they can temporarily stay afloat if they cut $12 million dollars by February 15th.

"China: Aluminum Fabrication Industry"

Earthtimes (press release), UK - December 23, 2008
DUBLIN, Ireland - (Business Wire) Research and Markets ( has announced the addition of the "China: Aluminum Fabrication Industry" report to their offering.
Will China be the world's new green aluminum fabricating base?
Growing demand for aluminum products in China is driving the rapid expansion of aluminum fabricating capacity. China's aluminum fabricated product output rose significantly in the past five years, at an average annual growth of 34.1 percent, and output hit 12.4 million tons in 2007, according to statistics released by China's National Bureau of Statistics.
The statistics indicate that China became a net exporter of aluminum foil in 2004, and will become a net exporter of aluminum strip and plate this year, suggesting that, in addition to supplying its own growing demand, China is well positioned to supply the world with aluminum products.
The thriving aluminum fabricating facilities in China, including cross-national joint ventures and solely foreign-owned companies, which involve leading players like Aloca and Rio Tinto Alcan, reinforce China's position within the industry. Can the aluminum fabricating industry, based on its ability to promote energy conservation and waste reduction, see a new green base in China? How will the consolidation of the aluminum fabricating sector in China enhance its competitiveness? What concerns may arise over China's increasing fabricating capacity and export volume?
Room for development
Being the world's largest aluminum producer and consumer, China's aluminum industry has many opportunities to expand into the domestic downstream fabricating sector. In the transportation market, for example, only 19 percent of domestic aluminum production is used for vehicle production, which is far less than the average 30 percent in developed countries. The figure is expected to rise in the next five years.
China's per capita consumption of aluminum plate and foil averages at 0.4 kilograms and 0.2 kilograms respectively, compared with the world's average consumption levels of 1.7 kilograms and 0.3 kilograms, indicating China's great potential for aluminum demand growth.
The major markets for aluminum products are transportation, power grid, packaging, building construction, durable consumer goods and machinery manufacturing. To meet the demand of China's urbanization progress, the country's investments in public transportation, infrastructure construction and power grid have grown at an unprecedented rate.
Aluminum products are increasingly welcome for their light weight, fuel efficiency, low emissions and recycling features. The industry will likely move to high value-added product development and production. Despite growing capacities nationwide, the country still lacks high-end aluminum products and advanced technology R & D capability, while it faces overcapacity in low-end aluminum fabricated products.
As of Feb. 26, 2007, China's proposed large-scale passenger jet project won approval from the State Council. The project will require an initial investment of over RMB 50 billion ($7.14 billion) to RMB 60 billion ($8.57 billion), which would in turn promote the R & D capability of high-end aluminum products.
In addition, the self-developed continuous hot-rolling line and ultra-thin aluminum foils in the second half of 2007 have also made it possible for China to break away from relying on imported techniques and products.
China's total aluminum fabricating capacity is expected to reach 25 million tons by 2012, 54.32 percent up from 2007. The Aluminum Corporation of China (Chinalco), China's largest aluminum and alumina producer, is expanding its downstream fabricating business. Chinalco plans to add 1.05 million tons to its current capacity, to reach 2.17 million tons by the end of 2010.
Companies Mentioned:
Chalco - Northeast Light Alloy Co. Ltd.
Chalco - Southwest Aluminum (Group) Co. Ltd.
Changzhou Aluminum Co. Ltd.
Jiangsu Alcha Aluminum Co. Ltd.
Ministry of Land and Resources
National Development and Reform Commission (NDRC)
Shandong Nanshan Aluminum Co. Ltd.
Xingfa Aluminum Holdings Ltd.
Yunnan Aluminum Co. Ltd.
For more information visit
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Laura Wood
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China may purchase between 400,000 and 500,000 tons of aluminum for reserves - CNMIA official

Interfax China, China - December 23, 2008
Shanghai. December 23. INTERFAX-CHINA - The Chinese government may purchase between 400,000 and 500,000 tons of aluminum from domestic producers for national reserves, an official with the China Nonferrous Metals Industry Association (CNMIA) told Interfax on Dec. 23.

Alcan must pay $47 million stamp duty

Northern Territory, Australia - December 24th, 2008
A PROMINENT mining company will have to pay millions in stamp duty after a three-year legal battle ended yesterday.
The NT Government has been trying to force Alcan to pay the tax on its 2001 purchase of the Gove bauxite mine and refinery through the courts since 2005.
In February 2007, the Supreme Court ruled Alcan would have to pay the tax, but that was overturned on appeal in December, 2007.
The NT Commissioner of Taxes in turn appealed the decision, which was decided by Chief Justice Brian Martin, Justice David Angel and Justice Stephen Southwood yesterday.
The commissioner had assessed stamp duty on the transactions at $47,527,997, including a penalty, in 2005.
In Chief Justice Martin's reasons for judgement, he said the amount of stamp duty that was payable depended on the value of the land, which was held in mineral leases.
In question was whether Alcan had to pay stamp duty on the two transactions which gave it full ownership of Gove Aluminium Limited.
The judges unanimously ruled in favour of the commissioner yesterday.
The court also found 2-1 that the company's goodwill - which is not taxable - could be included in the land value.

RSB Group to build aluminum complex in Orissa

SteelGuru, India - December 26, 2008

It is reported that RSB Metaltech a subsidiary of the RSB Group has contracted a MoU with the Orissa government on December 19th 2008 to establish an INR 6,800 core integrated light metal aluminum complex in the state of Orissa, India.
As per report, this project will plan to make production output of 7 million tonne alumina and 1.75 million tonne aluminum. 90,000 tonne of metal will be converted into final products on automotive, aerospace, railway and construction category for industry applications in the first phase.
The report added that 1.75 million tonne will be directly converted into those infrastructures which especially make for these final products in the second phase. Meanwhile, the mining and alumina refineries with their vendors will be coming up to set up in Orissa too.

Meishan Aostar Aluminum halts production on weakened demand The Foreign Exchange Market, Spain - December 24, 2008
Shanghai. December 24. INTERFAX-CHINA - Sichuan Meishan Aostar Aluminum Co. Ltd. has halted production at its 125,000-ton aluminum smelting facility, according to an announcement by its Shenzhen-listed parent company Guangdong Gold Horse Group on Dec. 24.

China's state reserve agency stockpile to buoy aluminum sector

Xinhua, China - 2008-12-26

BEIJING, Dec. 26 (Xinhua) -- China's State Reserve Bureau (SRB) will buy 300,000 tonnes of aluminum at 12,300 yuan (about 1,750 U.S. dollars) per tonne next month to push up prices and support producers, Friday's Shanghai Securities News reported.
The price represents a 10-percent premium on current market levels.
The SRB will buy about half of the total from Aluminum Corporation of China (Chalco), a listed arm of state-owned metals firm Chinalco. The rest will come from seven other smelters, sources told the newspaper.
Several sources said officials were still discussing further purchases, which could total 1 million tonnes.
The SRB maintains stockpiles of key raw materials.
This is the government's first move in the current market crisis to prop up the ailing nonferrous metals industry. Slumping prices and weak demand, due to the global economic crisis and China's own slowdown, have forced smelters to slow production and cut jobs.
On Wednesday, Zhang Ping, minister in charge of the National Development and Reform Commission (NDRC), delivered an economic report to the Standing Committee of the National People's Congress, the top legislature.
Zhang said that the central government will take immediate measures to support nine industries, including the nonferrous metals sector.
Governments at all levels immediately announced policies to aid the smelting sector, including relaxed export controls, stockpiling metals, offering electricity subsidies and raising loan ceilings.
The southwestern province of Yunnan said it would buy 1 million tonnes of nonferrous metals from local smelters and neighboring Sichuan Province said it would cut electricity prices for smelters.
These measures have had an immediate impact on the market, with Shanghai aluminum futures up 0.5 percent to a three-week high.
Analysts said the metals industry in general is regaining confidence as a result of the purchase plan, as well as increased demand for steel by promoting infrastructure construction.
"Although the market trend won't soon reverse, these procurement plans do help companies tide over the crisis," said Heng Kun, an analyst at Essence Securities.
Company inventories of aluminum are estimated at about 1 million to 1.5 million tonnes, industry sources said.
Zhang of the NDRC said procurement and reserves are "key measures" of the State Council, or Cabinet, to boost market confidence.
According to the National Bureau of Statistics (NBS), the profits of the non-ferrous metal and processing industry fell 34.1percent year-on-year and those of the iron and steel industry by 13.7 percent during the first 11 months of 2008.
On Thursday, the same day as the NBS announced the profit slump and the SRB announced the procurement plan, Bao Steel Group, China's top steel maker, raised its February steel prices by 100 yuan/tonne to 300 yuan/tonne.
That was Baosteel's fifth price adjustment since August but only the first raise in that period.
In November, China decided to launch a 4 trillion yuan stimulus plan to boost domestic demand over the next two years.
Combined with another 3 trillion yuan for railway construction and post-quake reconstruction, the investments are expected to increase steel demand by 200 million tonnes.
On Tuesday, two days before the price hike, Baosteel's board director Xu Lejiang said despite the many stimulus measures, the industry won't experience a full recovery in the short run.
Wu Wenzhang, general manager of, an industry website, said steel prices would return to a profitable level in the second quarter next year.

Get the Best Bang for Your Yuan

Motley Fool - December 29, 2008
By Christopher Barker

While Fools conscientiously realign their spending habits with a new economic reality, the Federal Reserve is busy printing dollars and finding new ways to spend them. Meanwhile, across the Pacific, China continues to follow an investment strategy that appears substantially more frugal.
Providing further evidence of a serious commitment to sustain the nation's vast industrial complex, China announced late last week that the State Reserves Bureau will purchase about 300,000 metric tons of aluminum in January. At about a 10% premium to spot aluminum prices, the $540 million purchase will help struggling Chinese smelters to endure this period of weakened demand without resorting to even deeper cuts to productive capacity.
About half of the total will be purchased from Aluminum Corp. of China (NYSE: ACH), which sliced production by 720,000 metric tons annually as about 20% of China's total aluminum capacity has been idled. With plans to acquire another 700,000 metric tons after this purchase, China is not only obtaining substantial aluminum inventory at prices that could scarcely have been imagined just a short time ago, but also injecting demand to help stem the relentless slide in aluminum prices. Although smelting remains a borderline proposition at these prices, these purchases help to build a foundation for eventual recovery.
The reserves bureau also voiced its intention to purchase 300,000 metric tons of zinc next year. No figures were released concerning copper, but an industry group advising the board suggested a purchase of 400,000 metric tons of copper in 2009. Adding the previous commitment by China's Yunnan Province to purchase 1 million metric tons of various metals, I believe the scope of these purchases collectively will prove far more productive than many analysts concede now. For struggling miners like Teck Cominco (NYSE: TCK) and Rio Tinto (NYSE: RTP), the potential price support could hardly come too soon.
Given some compelling clues emanating from steelmakers like POSCO (NYSE: PKX) and China's Baosteel Group, the specter of a declining U.S. dollar, and the swiftness of worldwide production cuts from mining giants like Freeport-McMoRan (NYSE: FCX) and Vale (NYSE: RIO), I continue to sense a recovery in commodity prices in the medium term, and I continue to look to China for confirmation. With these metal purchases from China for the largest infrastructure build-out in modern history, I believe Fools will get more bang for their bucks by investing where China is investing its yuan --in aluminum, copper, and zinc.

New Bauxite Mining Venture in Cameroon Promises Thousands of Jobs

Voice of America - 29 December 2008
By Divine Ntaryike
Douala, Cameroon. Governments in Africa are taking steps to lure more investors to their mining sectors with friendly legislation and attractive tax breaks. One example is Cameroon, which has just wrapped up a deal with an American-led consortium to explore and exploit a bauxite deposit. The project will curb dependence on the country’s slumping oil reserves and create thousands of new jobs and infrastructure development. Voice of America English to Africa Service reporter Ntaryike Divine, Jr. in Douala says thousands of jobless Cameroonians are rubbing their palms in anticipation of employment when a giant bauxite mining project takes off in three years.
Experts say world demand for bauxite will surge by 2011. They anticipate by then the current financial crisis will have eased and expect increased activity in housing construction and the manufacturing of automobiles and aircraft. All of those sectors require bauxite, the main raw material used to produce aluminum.
A consortium called Cameroon Alumina Ltd will carry out the venture. It is led by an American mining company, Hydromine, and includes Dubai Aluminum from the United Arab Emirates and India’s largest smelter and bauxite mining company, HINDALCO.
They will spend six billion US dollars over the next 18 months.
The figure includes an environmental impact study. Peter Briger, chairman and CEO of Hydromine, says getting the project underway will require the creation of some 15,000 jobs, either directly or indirectly. He has assured the Cameroon government that local labor will receive preferential treatment in hiring.
There are two locations for the mining project, Ngaoundal and Minim Martip, some 600 km north of Cameroon’s port city Douala. It will be designed to last between 50 and 70 years. Experts estimate the area holds two billion tons of bauxite, making it the sixth biggest bauxite reserve worldwide. When operations are underway, Cameroon Alumina Ltd plans to produce between two and three million tons yearly from the two sites.
Guinea is currently ranked the world’s largest bauxite producer. It holds 30 percent of global reserves and accounts for 94 percent of the continent’s total production. Bauxite is a mineral ore that is first transformed into alumina and then smelted to obtain aluminum, an industrial metal used in the manufacture of roofing sheets, kitchen utensils, processed foods and drinks cans, aircraft and cars.
It was first discovered in 1821 by a geologist at a ruined southeastern French medieval town, Les Baux, which gave its name to the mineral -- Bauxite.
Economists say worldwide demand will soar in two years. Aluminum, however, suffered its worst price slump at the London Metal Exchange this November. But economists say they expect a boom.
The project will provide work in a country of 18 million people suffering from 30 percent unemployment. Among the projects planned are infrastructure, such as a railway linking the mining sites, a hydro-electricity dam and a seaport to ease exports of the product. The government says the railway link will open up remote parts of the country’s northern region and at the same time allow farmers access to markets. The dam will address energy deficit problems, while the envisaged seaport will significantly decongest Cameroon’s lone port in Douala.
The project will also build schools and hospitals as part of a corporate social responsibility agreement that’s part of the deal with the government.
The government says the project is a major milestone aimed at boosting the country’s low economic growth. The government passed mining legislation in 2001 granting investors incentives such as a five-year tax break and the free transfer of capital out of the country. But poor infrastructure, red tape and corruption have stalled development.
But a two-year-old government campaign to attract investors to the sector now seems to be paying off. In the last two years, some 63 mining permits have been handed out, as the country seeks to curb dependence on oil production. That sector – which had climaxed the 1980’s – is now in decline.
Officials say Cameroon is teeming with reserves of other minerals like cobalt, nickel, uranium and iron ore. And major global mining companies like Sundance, Geovic and Rio Tinto Alcan are planning further investments there.
Nevertheless, the government has cut its 2009 economic growth forecast from 6.5 to 4 percent following slumps in the world market prices for oil and metals. Officials hope for a recovery in the international economic situation and a return to past years, when soaring commodity prices attracted foreign investors.

Union: Aluminum firms must present recovery plan in 1Q09 - Venezuela

Business News Americas, Chile - Monday, December 29, 2008 17:51 (GMT-0400)
By Harvey Beltrán
Venezuelan aluminum producers are required to present a sector recovery plan to the country's basic industries and mining ministry (Mibam) during the first quarter of 2009, spokesperson for the Sintralcasa union Arquímedes Hidalgo told BNamericas.
"The plan will be drawn up under the premise that no more raw materials will be produced for export. It will all be tagged for diversifying what we already have," he added.
A Mibam official said the ministry has allegedly approved a recovery plan that includes paying off debt and updating technology at companies in the sector.
"A Mibam committee in charge of the issue said that 4bn bolívares [US$1.9bn] will be needed for getting companies up-to-date," the official said.
Unions from the four state companies in Venezuela's aluminum production chain - Alcasa, Venalum, Bauxilum and Carbonorca - have been asking the government for several months to invest in technological upgrades at their plants to overcome the operational crisis they are currently experiencing.

State aid, Alro Slatina's solution to weather crisis

Wall-Street, Romania - 30 December2008
Managing director of SC Alro SA Slatina, Gheorghe Dobra said after the meeting with county authorities, trade unions and members of the parliament, that the company would seek a governmental capital injection in the wake of deepening economic crisis.
The boardroom of the company handled talks last week with the county authorities, representatives of the seven trade unions, and members of the Parliament from Olt County, in order to draw measures to avoid the 50% cut in production and layoff, NewsIn informs.
At the end of the two-hour meeting, managing director of Alro Slatina, Gheorghe Dobra said the attendants had called for a commission to study the current situation of the company and to move forward with all proceedings to call upon state aid.
Dobra did not disclose the amount needed for capital injection. "It remains to be seen, the extent of the support we will seek after a new review of damage and whether the production cut and layoffs will still be applied. It is early to estimate the exact amount", said the managing director of SC Alro SA Slatina.
Gheorghe Dobra added that the commission would soon be formed, in order to start procedures as soon as possible.
Moreover, the effects of the crisis over the aluminum smelter were anticipated since June, when the internal reorganization program started, whereas, the bearish evolution of aluminum was extremely sharp. Dobra denied all rumors the company plans to outsource production in China, affirming that his interest is to keep business on the floating line.
"Last year, we’ve cut costs by over 13 million dollars at 900 million dollars turnover. We moved fast on costs cut, but the market moved even faster", Alro manager added.
Gheorghe Dobra said some of the clients of the company had requested the termination of contracts, and it was decided that all misunderstandings regarding their breach of the terms would be amicably resolved in order to avoid a full disconnection with business partners.

According to a prior announcement, on December 19, 2008, Alro Slatina would cut production output by 50% and as of next year, the workforce would shrink by 1,200.
Due to the bearish quotation of aluminum, which fell by roughly 50% since mid July 2008, Vitmeco recommended in this week’s meeting new production output reductions at Alro SA and layoffs. This recommendation comes as a result of a general review of Vimetco’s global operations.
According to own statements, the company registered 292.8 million lei after-tax earning in first nine months this year, 22% down from a year ago, due to 5% decrease of turnover.
Alro Slatina reported 376.2 million lei after-tax earning for first three quarters, 2007.

Agreement on Helguvík Smelter Well Underway

IcelandReview, Iceland - 29/12/2008
An investment agreement between Iceland’s Ministry of Industry and Nordurál – Century Aluminum because of the planned aluminum smelter in Helguvík, south Iceland, was presented at a cabinet meeting on December 23.
Minister of Industry Össur Skarphédinsson confirmed to Morgunbladid that the agreement had been discussed at the meeting and that it was well underway. However, the agreement has not been completed and the minister would therefore not go into details at this point.
According to, the agreement is of great importance to Nordurál because it confirms the government’s support to the Helguvík project and makes financing the project easier.
Before the agreement is signed, it has to be accepted by the European Free Trade Association (EFTA) Surveillance Authority (ESA), as is the case with all public grants of this kind. Thereafter, the agreement has to be accepted by Iceland’s Althingi Parliament.
When a similar agreement was made between the Ministry of Industry and Nordurál because of the Reydarfjördur aluminum smelter it took some time before ESA accepted it due to special circumstances such as exemptions from certain laws.
For example, Nordurál was exempt from paying various public tariffs for the Reydarfjördur smelter and Nordurál does not have to pay higher taxes than 15 percent of the smelter's basic income, despite potential tax increases.
According to Morgunbladid’s sources, the planned agreement with Nordurál on the Helguvík smelter is of a similar nature.

Result of BPA suit: $17 million loss to CFAC

Flathead Publishing Group, Montana - Wednesday, Dec 31, 2008 - 09:13:12 am PST
By CHRIS PETERSON, Hungry Horse News
A multi-tiered federal lawsuit had a poison pill for the Columbia Falls Aluminum Co. — it effectively ceased a $17 million annual payment from the Bonneville Power Administration.
That payment, brokered in a 2006 deal between BPA and the company, was designed to bridge the gap between the market rate for power and what CFAC and other aluminum companies in the Northwest said they could afford to pay.
The Ninth Circuit Court of Appeals struck the deal down late last month — a week before the company announced it was shutting down the plant. The company was scheduled to get its 2009 payment in mid-January, according to BPA spokesman Scott Sims. In light of the court ruling, BPA will not make the payment.
The case

In 2006, an agreement was struck in which BPA would pay Direct Service Industries (aluminum companies, in this case) cash instead of of providing power directly to the aluminum companies.
The cash was meant to bridge the gap between low BPA rates and what CFAC would be charged on the open market.
The contract also had caps on it to protect BPA’s financial exposure. For example, CFAC’s subsidy was based on the plant taking 140 megawatts of power annually — enough to run a little less than half the plant.
The total deal was worth about $59 million annually, of which CFAC was supposed to get about $17 million a year through 2011. The remainder went to Alcoa and the Port Townsend Paper Co.
The cash payment was also a hard cap — BPA agreed it would not pay a differential between the market price and $24 a megawatt annually.
But the deal was challenged in court in a multi-faceted lawsuit brought by several Northwest electrical cooperatives, including the Pacific Northwest Generating Cooperative, aluminum giant Alcoa, and the Public Power Council.
The cooperatives and the Power Council challenged the power agreement, claiming it was an illegal subsidy because it resulted in higher electric rates for other customers.
BPA, even when the deal was first announced, admitted that was true. The court agreed with the cooperatives on that point. It noted that while in some cases it was proper to "monetize" power rather than physically deliver it, in this case, it was not.
The cooperatives also argued that DSIs weren’t obligated to get power at all from the BPA. They argued that when Congress formed the administration, which oversees all the power produced by federal dams in the Northwest, it’s primary customers were intended to be average citizens, not the aluminum companies.
But when the dams were first built, the aluminum industry was a good customer. It took a steady supply of power at a stable rate. Aluminum plants are electricity hogs. The process of turning alumina into aluminum uses tremendous amounts of electricity — enough for thousands and thousands of homes.
But then the Pacific Northwest saw a population boom. There were more people with more demands. Now the demand has shifted: The average citizen needs the power.
"Times have changed," the court noted bluntly.
The fine print
Aluminum companies were still good customers. But they needed power more cheaply than what the market rates were. CFAC for example, has long maintained it needs power at less than $30 a megawatt hour to run its plant.
The market rate for DSIs in 2007, however, was about $45 a megawatt hour.
BPA has several rate structures, including a low, cost-based rate that, in 2007, was $27.33 megawatt hour; and an "IP" rate for DSIs, at $45 a megawatt hour.
So BPA crafted its monetization schedule to bridge the gap — but the schedule was at the wrong rate, the court found. BPA was using the cost-based rate.
See, Congress also set out language that BPA should run like a regular business, using "sound business principles."
In this case, the court ruled, BPA wasn’t following those principles.
"We conclude that BPA’s interpretation of its governing statutes is reasonable and that, under appropriate circumstances, BPA may lawfully monetize its energy contracts. Such circumstances, however, do not exist here ... BPA’s decision to monetize the aluminum DSI contracts amounts to an impermissible subsidy of those companies’ operations," the court ruled, because BPA was creating a subsidy at a rate lower than, by law, it was required to offer.
In short, the DSIs were getting a more than what they were entitled to, because BPA’s subsidy amounted to a rate that was less than the $27 cost-based rate and market rates.
BPA claimed by selling its power at a lower cost, it was diversifying its customer base.
The court disagreed.
Diversification, the court ruled, "does not justify a sale of power at below market or statutorily mandated rates."
The Alcoa argument
Alcoa, in turn, sued because it didn’t like the monetized schedule — it wanted the physical power delivered to its plants. It also argued that BPA was "obligated" to sell power to DSIs.
The court also disagreed. It said that while BPA could sell power to DSIs if it chose to do so, it wasn’t obligated to sell them power. The court did rule, however, that the BPA cannot refuse to sell DSIs power before selling power to an entity outside the region and it must offer the power at a rate set by statute.

Tough choice for Gulf leaders

The National, United Arab Emirates - Dec 30, 2008
Ivan Gale, Travis Pantin and Tom Spender
Infrastructure projects throughout the region are under threat because of the global economic crisis. Ryan Carter / The National
As GCC leaders gather in Muscat today, the deepening global economic crisis may force them to choose between multibillion-dollar projects proposed during more optimistic times.
Cancellations or delays of government-backed deals worth tens of billions of dollars have already been announced in industries from petrochemicals to aluminium production and oilfield expansion. On Sunday, the Kuwaiti government issued an 11th-hour reversal and cancelled a US$17.4 billion (Dh63.9bn) deal to create a petrochemical joint venture with the US company Dow Chemical.
A key topic on the agenda in the Omani capital today is a proposed 1,940km rail network to connect the six nations of the GCC. It could cost member states more than $14bn.
There was disagreement within the bloc over the best way to finance the project, said Mohamed al Mazroui, the GCC assistant secretary general for economic affairs. A feasibility study by the GCC secretariat of the proposed rail network – intended to carry both freight and passengers – would be submitted for approval during the summit, he said.
Although financing may be difficult to procure, analysts say projects such as these are needed and are likely to proceed. "Exchanges in resources like water and power create greater economic scale," said Simon Williams, the chief economist at HSBC in Dubai. "Over the medium term I think they make a good deal of sense."
The GCC has nearly completed one joint infrastructure project – a Gulf-wide electricity grid – that many point to as a model.
"We will throw the first switch in mid-January," said Ahmed Ali Ebrahim, the director of system operations at the GCC Interconnection Authority. "This is more than just a power project. Its significance is as a demonstration of co-operation."
Still, as a group and individually, Gulf states face tough choices amid the dramatic shift in global economic and financial conditions.
Despite having signed a binding agreement on the proposal at the beginning of the month, Kuwait’s Supreme Petroleum Council bowed to opposition in parliament and cancelled the Dow Chemical deal. Parliamentary opponents said the deal was too expensive since chemicals industry revenues were plummeting.
"I think Kuwait, right now, is satisfied with the collapse" of the deal, said Mohammad al Obaid, an independent member of the parliament who opposed the agreement. "The deal is bad because of the situation with the international economy."
Other petrochemical projects are likely to proceed because they are too far advanced to cancel, said Pat Rooney, the Middle East director for CMAI, a global chemicals consultancy. In Saudi Arabia, at least five petrochemical projects are "way deep in construction at this point", he said, adding that they remain appealing because of their low projected operating costs.
"These are being made to withstand the bottom of the cycle."
Cancelled deals have not been limited to the petrochemical sector.

On Dec 17, Ma’aden, the Saudi Arabian mining giant, announced that a proposed $10.5bn aluminium joint venture with Rio Tinto would not proceed. The project would have developed a bauxite mine, an alumina refinery and aluminium smelter but is on hold after Rio Tinto pulled out, citing the financial crisis.
Saudi officials have also suggested that several multibillion-dollar oil production capacity expansions could be delayed until conditions improve in the oil market.
Development of the Munifa offshore oilfield, estimated to cost $15bn, would probably miss its target construction date of 2011 because of the "market situation", Ali al Naimi, the Saudi oil minister, told Bloomberg last week.
The kingdom also issued a fresh construction deadline of 2015 for an oil refinery at Jazan, a two-year delay to the original schedule, the London-based weekly Middle East Economic Digest reported.
But recent progress has been made at the Jubail oil refinery, where Saudi Aramco and Total, the French oil company, yesterday awarded a construction contract for its $12bn refinery and petrochemical facility.
Other large-scale industrial projects under scrutiny include a proposal to develop a new port, airport and free-trade zone at Duqm in Oman. The sultanate has already poured $12bn into developing a top-class port and industrial zone in Sohar to facilitate new centres for logistics, petrochemicals and metals, and press reports have suggested one of the anchor tenants, Shadeed Iron and Steel, is having difficulties raising financing for its $760 million plant.
Oman has similar plans for Duqm, including a new oil refinery, petrochemical complex and fisheries facilities.
While industrial projects in the UAE appear safe, there have been a number of delays to several high-profile master-planned communities. Nakheel is delaying its plans for a Trump Tower on Palm Jumeirah, and has also slowed dredging work on the much larger Dubai Waterfront and Palm Deira projects. Planners of Dubailand, which will feature homes, theme parks and hotels in the Dubai desert, say they are reviewing the construction schedule and could announce delays in the coming weeks.
A project with strong backing from government planners is Dubai World Central, the $33bn airport and logistics zone in Jebel Ali. "The project is long term and we view the global economic crisis as a short-term crisis," said Abdulla al Falasi, the project’s director of marketing and corporate communications. "It is not going to slow down the progress at Dubai World Central."