AluNews - March 2008

New Rio Tinto investors eye Alcan assets

Globe and Mail, Canada - February 1, 2008

ANDY HOFFMAN

China's surprise move to team with Alcoa Inc. and buy a 12-per-cent stake in Rio Tinto PLC for $14-billion (U.S.) is an attempt to force a break-up of the world's third-biggest mining firm and divvy up the assets, including the former Alcan Canadian aluminum operations, sources said.

Representing the largest foreign investment yet made by a state controlled Chinese company, Aluminum Corp. of China (Chinalco) and Alcoa formed a special purpose vehicle to purchase the shares at a 21-per-cent premium to the market price, in hopes of disrupting BHP Billiton Ltd.'s proposed all-stock bid for Rio currently valued at about $122-billion.

Pittsburgh-based Alcoa contributed $1.2-billion to the consortium, an investment that sources said it hopes will give it another chance to bid for the former Alcan aluminum smelting operations, which are concentrated in Quebec.

The aluminum producer launched a hostile, $27-billion stock-and-cash bid for Alcan last May but was later trumped by Rio's knockout $38-billion friendly offer.

China is gravely concerned about the stranglehold a Rio/BHP combination would have on the market for iron ore, a key ingredient in the production of steel. It also wants to expand its mining holdings offshore, but is conscious of the political opposition that some jurisdictions may have to Chinese ownership.

Under company president Xiao Yaqing, Chinalco has become a powerhouse in its own country and has now been given a government mandate to buy foreign assets to ensure a sufficient supply of the metals needed by China's booming economy. Sources have said Chinalco was one of six international mining firms that held talks with Alcan last summer following the Alcoa bid.

Chinalco is said to be keenly interested in Rio's bauxite mining and alumina smelting operations, and its coal assets. It also has its eye on Rio's copper holdings, including a stake in Vancouver's Ivanhoe Mines Ltd., which is developing the Oyu Tolgoi project in Mongolia, one of the world's largest untapped copper resources.

"[Xiao Yaqing] thinks once these assets are gone, they are gone forever. It doesn't mean that he wants all of them. But if Rio and BHP combine, then all those assets are gone and he is stuck with second- and third-tier stuff," said a source close to the Chinalco/Alcoa consortium.

For China, the massive share purchase represents its official coming out as a serious contender for world-class mining assets. Surging Chinese demand for metals has been the catalyst for a seven-year-bull run in commodity prices. Despite producing little copper and nickel of its own, China has, until now, limited itself to small acquisitions in the sector. In June, Chinalco bid $840-million (Canadian) for Vancouver's Peru Copper Inc., which owned the Toromocho project in Peru. Two other Chinese companies teamed in December to buy Northern Peru Copper, also of Vancouver, for $455-million.

Tony Robson, an analyst at BMO Nesbitt Burns in Toronto said the fact that China is suddenly the largest Rio Tinto shareholder represents a dramatic shift in strategy.

"China is now a player globally. They have just made a very public announcement that they are now a global player and can mix and match with the best of the West," the analyst said in an interview.

"Alcoa is back in there for Alcan," he added.

BHP has until Feb. 6 to formally launch its bid for Rio or it must walk away for six months under U.K. rules. Sources said the consortium hopes the stake is large enough to spur talks with either Rio, BHP or both companies. The consortium could also be expanded to include other partners.

Guyana to build three hydroelectric powerhouses in Esequibo

El Universal, Venezuela - Caracas, Friday February 01 , 2008

Guyana government apparently is acting based on Venezuelan President Hugo Chvez's words, as in 2004 he said he had no problem that license agreements were granted for projects in the zone under reclamation. Consequently, Guyana is set to build at least three hydroelectric dams in the Esequibo.

The Guyana government energy sector's official website (http://www.electricity.gov.) reports on the status of the hydroelectric projects to be Developer west the Esequibo River, which Caracas claims belongs to Venezuela.

The projects -currently in the phase of feasibility studies- are the Turtruba hydroelectric powerhouse, on Mazaruni River, which would be built by Trinidad & Tobago's Enma; the Devil's Hole hydroelectric plant, on Cuyun River, to be constructed by Guyana Goldfields, Inc.; and a large powerhouse on High Mazaruni, which was designed by two Japanese firms, with the feasibility study being conducted by the Russian Aluminum Company.

The construction of the hydroelectric dam on High Mazaruni has a special connotation in the history of the Venezuelan complaint. The dam has been in Guyana's plans since the 1970's. In 1981, the determination of the Venezuelan diplomacy stopped Georgetown from building the plant.

How a filthy smelter can help clean up Alcan's books

Globe and Mail, Canada - February 1, 2008

PATRICK BRETHOUR pbrethour@globeandmail.com

The creaking Rio Tinto Alcan aluminum smelter in Kitimat is one of the great greenhouse gas sinners of British Columbia, placing a close second for the title of the province's worst climate change offender.

That looks to be a perilous position as British Columbia moves to implement policies to back up its pledge to slash greenhouse gases by a third over the next 12 years. All those carbon dioxide molecules streaming into the air will soon have a price. For Kitimat as it exists, any price for carbon is all pain, a liability on the balance sheet.

But two events this week, just hours apart, point to a much different possibility - of Kitimat's greenhouse gases becoming an asset for Alcan, one that might just tilt the balance in favour of proceeding with a $2-billion (U.S.) modernization project.

The first event was the revelation from B.C. Premier Gordon Campbell that Ontario and Quebec are interested in joining his climate change crusade and are now sitting as observers in the talks to set up a regional trading system to cut greenhouse gases.

Later in the day, the B.C. Utilities Commission gave its approval to a deal between B.C. Hydro and Alcan to sell electricity from Kemano, the power plant associated with the Kitimat smelter. That approval was the last condition Alcan had laid out before proceeding with Kitimat, and means the company will now scrutinize its internal financials before its board issues its verdict in April.

Whatever the other merits of the modernization project, it comes with a conspicuous benefit in Gordon Campbell's British Columbia: Greenhouse gas output would fall dramatically with the upgraded smelter, as modern technology took the place of machinery that was barely up to speed when it was installed in the 1950s. Even by the least favourable measure, Alcan's emissions would tumble by 40 per cent in B.C.

The same is not true for much of the company's operations in the rest of the country, where it either already has modern technology or doesn't have active plans to upgrade other older facilities.

And that is why the emerging alliance between B.C., Ontario and Quebec could be a significant plus for Kitimat and Alcan, as the three provinces lay the foundation for a cross-country trading system for greenhouse gas credits. The essence of that system is that those who cut emissions more than expected can cash in by selling the difference as a carbon credit to those who haven't found a cost-effective way to reduce their carbon output.

For now, all that is being said publicly is that Ontario and Quebec are attending the sessions as observers. But a senior official with the B.C. government confirms that the two eastern provinces want to join the Western Climate Initiative, (which may want to consider renaming itself shortly).

The rules are still being written for the WCI, but the senior official said the entire reason for the regional initiative is to allow for the trading of carbon credits across jurisdictions. Add it all up, and it means that Alcan could absorb the cost of reducing emissions in Quebec by cashing in carbon credits from British Columbia.

Alcan's stated preference is for an intensity-based system, where the yardstick would be the amount of greenhouse gases generated for a unit of production (in Alcan's case, per tonne of aluminum). On that basis, Kitimat's refurbished smokestacks look like even bigger assets, since Alcan estimates it will be able to slash its intensity by nearly two-thirds.

But even using the most stringent measurement, an absolute reduction in emissions, a significant amount of cash could be in play. The company says emissions would fall by 500,000 tonnes a year under the expansion project, even with output rising. Using the current price of carbon in European markets, that results in a credit worth about $15-million (Canadian).

Set against a total cost of $2-billion (U.S.), that sum might seem like a pittance. But the Kitimat project is, like every other major construction project in B.C., feeling the strains of inflation as the cost of steel, concrete and labour soar by double digits annually. That $15-million could spell the difference between a marginal project that falls short of an acceptable return, or one that just makes it over the hurdle - a shade of green that any executive can embrace.

Shut the guzzling smelters?

Mail & Guardian Online, South Africa -

Lynley Donnelly

In the midst of a national grid meltdownwhich closed the mining industry, BHP Billiton’s three aluminium smelters, powered entirely by Eskom, were up and running -- despite being some of South Africa’s greediest energy guzzlers. And the government appears determined to press ahead with establishing another massive smelter, the Rio Tinto Alcan plant, at Coega in the Eastern Cape. The combined energy consumption of BHP Billiton’s smelters -- the Hillside and Bayside plants in Richard’s Bay and the Mozal plant in Mozambique -- and the proposed Rio Tinto/Alcan smelter, will total 3 750MW.

Load shedding in recent weeks hastypically run at about 3 000MW, while the proposed Medupi power station in Limpopo will create 4 700MW of generating capacity at a cost of R79-billion. Billiton says its plants employ a total of 10 000 workers, including contractors, while the Coega smelter will create 1 000 permanent jobs in addition to 6 000 jobs in the construction phase, according to Earthlife Africa. The total mining industry workforce stands at about 400 000.

Commentators point out that the melters are effective exporters of South African electricity, as they merely process bauxite, which is not locally mined and must be imported. Secrecy shrouds the terms of Alcan’s deal with Eskom, but Earthlife Africa estimates that the company will receive its electricity at 12c a kilowatt hour -- well below the current subsidised industry rate of 17c/kWh. Domestic users, facing a 14% hike, pay about 30c/kWh.

University of KwaZulu-Natal academic Patrick Bond also believes the company will receive a R2-billion tax break. The initial outlay is projected at R20-billion, but the state is looking to pay R12-billion of this because Alcan is only willing to foot 40% of establishment costs. Some policy analysts pose the question of whether South Africa would not be better served in the long term by buying the smelters and closing them down. The plants cannot be temporarily closed as this would cause massive damage to the "pots" used to process aluminium and Billiton’s smelters have continued operating despite the power cut.

"Our contracts do have interruptibility clauses, in terms of which Eskom can shed power to the potlines when they cannot reach demand," said BHP Billiton spokesperson Bronwyn Wilkinson. "We work closely with them to minimise the impact on production and risk to the otlines. We have experienced ongoing load shedding for some months now as Eskom has battled to meet demand. The aluminium smelters are not compensated for this." Wilkinson refused to reveal what the company pays for its power. "We don’t disclose our commercial agreements with Eskom."

Wilkinson did say, however, that in line with government’s request that big industrial users cut down power use by 10%, BHP Billiton will be taking some of the pots out of their potlines "in a controlled fashion". This will save about 240MW. While Billiton’s contracts with Eskom were reached in the late Eighties and Nineties, when South Africa had surplus electricity, the tariffs granted to the proposed Rio Tinto Alcan smelter were negotiated in terms of the department of trade and industry’s developmental electricity pricing programme (DEPP).

This aims to lure foreign investors through the inducement of Eskom power, which remains among the world’s cheapest. A built-in confidentiality clause prevents officials of the department of trade and industry, the National Electricity Regulator, Eskom or non-

Eskom distributors from revealing the prices given to foreign investors under DEPP contracts. Answering Mail & Guardian questions this week, Public Enterprises Minister Alec Erwin said that closing the smelters would mean a significant loss of foreign currency when the country needed it to import power equipment.

"The amount of money we would absorb doing it when our growing economy will need new power stations anyway -- with or without smelters -- is not a wise allocation of funds," Erwin said. He added that aluminium was a vital modern metal and that having supplies of it in South Africa "increasingly benefits our wider manufacturing sector". "The value added to the coal used for electricity for smelters is far greater than that coal being exported. However ... we would not contemplate any large aluminium smelters after the Alcan one." Tony Patterson, of the Aluminium Federation of South Africa, argued that despite the high energy input required for primary aluminium production, once the metal has been produced, it effectively serves as an "energy bank".

Recycling aluminium uses a mere 5% of the energy required to manufacture primary aluminium and more than half of global demand for aluminium is met by recycling, he said. Patterson said local demand for aluminium stands at about 200 000 tons a year. The metal is used by the motor manufacturing, packaging, pharmaceutical and fuel industries. He argued that it made better sense to manage electricity capacity more effectively than to close to the smelters.

Century has to face the numbers

Charleston Gazette, USA - February 3, 2008

Next year will be crucial for Century Aluminum's big Ravenswood smelter. Its labor and power contracts expire then.

The 50-year-old smelter, one of the oldest in the world, has 660 employees. The average salary is nearly $51,000 a year, and the jobs have great benefits.

Two years ago the Steelworkers pushed the plant to the brink of a strike in order to keep a cherished health-care plan. The workers pay nothing in premiums for 100 percent coverage. They can go to any doctor they choose, paying only $10 for a visit. When they go to an emergency room, they pay $20 until they're admitted, and then the co-payment is waived.

Century spokesman Mike Dildine said that since 2001 the company has increased its aluminum produced per man-hour worked by 11 percent. "Even so, under our current labor agreement, our total labor costs per pound of aluminum produced are among the highest in the world at nearly twice the world average," he said.

Ravenswood's labor contract expires May 31, 2009.

The power contract expires June 30, 2009. The Ravenswood smelter uses so much electricity it is Appalachian Power Co.'s largest single customer.

Century negotiated an innovative contract in 2006: When the aluminum price is high, Century pays more than the posted industrial tariff. When the price is low, it pays less.

Chief Operating Officer Wayne Hale said in September that alumina accounts for 37 percent of Ravenswood's costs; electricity, 26 percent; labor, 16 percent; carbon, 8 percent; and other raw materials, 12 percent.

John Tumazos, an independent analyst, said Ravenswood's expenses are in the ballpark when compared to others.

Dildine said labor and energy are the real cost differentiators in the business. Which means about 42 percent of the costs Ravenswood might hope to control will be on the table next year.

Meanwhile, the business is consolidating. Pittsburgh-based Alcoa has been reduced to a pipsqueak as competitors, like Alcan, have either gobbled up others or been bought out, The Wall Street Journal says.

Ravenswood Plant Manager Jim Chapman said in a prepared statement, "With the global consolidations, the competition is getting bigger, better, faster and cheaper. In order to stay competitive, we must do everything we can to effectively manage our power, materials and people costs."

One industry strategy has been to invest in smelters with low-cost power. Century owns a smelter in Iceland that uses hydro and geothermal power. But more competition is on the horizon. United Company RUSAL is considering an $11 billion project in Siberia that includes a nuclear-powered smelter, the Journal said.

Century says it is determined to see Ravenswood succeed. Century has invested $32 million there since 1999. Dildine said significant capital will be invested this year.

Tumazos said others also face challenges. Alcoa, for example, has assets in Quebec, where the Canadian dollar has appreciated, plants haven't been upgraded and electricity costs are rising, "which seems to be a bigger series of challenges than Ravenswood faces," he said.

The coal-fired power Ravenswood uses and the weak U.S. dollar "may permit Ravenswood to be better than some others at the margin," Tumazos said.

Let's hope so.

To contact George Hohmann, e-mail busin...@dailymail.com or call 348-4836.

ABB to provide electrical equipment for mill project at Yunnan Alumimum

Xinhua, China - www.chinaview.cn 2008-02-02 17:08:46

BEIJING, Feb. 2 (Xinhua) -- ABB, the leading power and automation technology group, has won a contract to provide a complete set of electrical equipment for a cold rolling mill project at the Yunnan Aluminum Co., Ltd, said company sources.

As part of a joint project with SMS DEMAG Co., ABB's equipment will help to expand operations and increase Yunnan Aluminum's processing capacity by 80 percent.

Yunnan Aluminum is the largest electricity consumer on the Yunnan Power Grid. In recent years it has invested around 3.7 billion yuan (514 million U.S. dollars) in energy-saving initiatives to bring its consumption down to 13,600 kilowatt hours (kwh) per ton aluminum -- more than 1,000 kwh per ton or seven percent less than the national average for aluminum processing.

The company recently installed the world's most advanced continuous casting and rolling technology for aluminum processing, which uses SMS DEMAG Co. and ABB technologies, to achieve energy savings of 26 percent.

"This order strengthens ABB's position as the leading supplier of electrical and automation systems to the steel and non-ferrous metal industry," said Tobias Becker, Head of the Process Automation Division of ABB China and North Asia.

ABB will supply Yunnan Aluminum with a full set of electrical equipment, including the main motors and drives, automation systems, and engineering and commissioning work for the project.

This was the fourth order in China that ABB has won with SMS DEMAG. ABB has also provided power and automation solutions for the largest aluminum processing plant in Europe, run by Hydro Aluminum, helping to increase capacity by 15 percent and energy efficiency by 25 percent.

The ABB Group of companies operates in about 100 countries and employs more than 110,000 people. It has a variety of businesses in China including R&D, manufacturing, sales and service, with 12,000 employees, 25 joint ventures and wholly owned companies and a sales and service network across 38 cities.

Editor: Sun Yunlong

Aluminium group comes out of the shadows

Times Online, UK - Feb 1, 2008

Jane Macartney in Beijing

Aluminium Corporation of China's relationship with its Government is impeccable. The man who heads Chinalco, which yesterday carried out the largest corporate share raid in Britain, won promotion late last year as an alternate member of the Communist Party's powerful Central Committee, effectively numbering him among the country's 300 or so ruling elite.

Xiao Yaqing, the Chinalco president, is not yet 50 but he is regarded as one of the bolder and more ambitious executives at the head of a state-owned giant.

He was appointed chairman of the country's largest alumina and aluminium producer in 2004 and swiftly began an overseas shopping spree, buying into metals assets to feed China's voracious hunger for industrial raw materials.

He heads Chinalco and Chalco, its listed arm, which runs its premium alumina and aluminium plants in China and has a market capitalisation of $50 billion (25 billion).

Chinalco's record of overseas acquisitions has been better than that of China's big state oil companies, whose attempts have triggered protectionist anger, particularly in the United States.

It bought Peru Copper for $800 million last June and has moved forward on a $2.5 billion bauxite development in Australia. Last year it agreed to build an aluminium smelter costing $3 billion in Saudi Arabia, in conjunction with the Saudi Bin Laden Group.

In addition, it is developing a bauxite deposit in Brazil and is in talks with the authorities in Vietnam on bauxite and alumina refining projects.

Mr Xiao said that the decision to take a stake in Rio Tinto was based on commercial considerations, but the acquisition had been completed with Chinese government approval.

The Chinalco chief has almost certainly taken less high-profile decisions without the go-ahead of senior mandarins in Beijing. However, an investment as sensitive as that in Rio Tinto, one bound to attract worldwide attention, could not have taken place without a nod at the very highest level of government and party.

The professor-level engineer with a degree in pressure processing has made clear that the Chinese giant that he heads is still on the prowl for attractive overseas investment targets. Some analysts have said that he would like to see Chalco as the Chinese equivalent of the giant BHP Billiton.

The company was formed seven years ago when Beijing split up a state-owned conglomerate that had managed all its base metals operations. It produced more than 12 per cent of the world's alumina last year and nearly a tenth of its aluminium, feeding China's booming manufacturers of everything from aircraft to cars to drinks cans.

Its revenues reached 131.7 billion yuan (9.3 billion) last year, up

24.1 per cent from the previous year, with profits of more than 20 billion yuan. In 2007, Chinalco produced 10.46 million tonnes of alumina, 2.56 million tonnes of aluminium ingots and 798,000 tonnes of aluminium products.

BHP Must Match Chinalco to Win Rio, Herschel Says (Update1)

Bloomberg.com 03-Feb-2008

By Robert Fenner and Rebecca Keenan

Feb. 4 (Bloomberg) -- BHP Billiton Ltd., the world's largest mining company, must raise its $127 billion bid for Rio Tinto Group to at least match the price Aluminum Corp. of China paid for its stake, said investors including Herschel Asset Management Ltd.

Chinalco, as the state-owned company is known, and Alcoa Inc. paid 6,000 pence ($117.91) a share for a 9 percent stake in London-based Rio Tinto. That's 23 percent more than the value of BHP's three-for-one share offer, based on Feb. 1's closing prices.

``That is now the opening price for a discussion,'' said Saxon Nicholls, who manages the equivalent of $840 million at Herschel in Melbourne, including shares of both BHP and Rio. Nicholls' Herschel Australian Equity Fund rose 19 percent last year compared with a 12 percent gain in the benchmark S&P/ASX 200 Index. ``The Chinese and Alcoa have forced the issue.''

BHP Chief Executive Officer Marius Kloppers has until Feb. 6 to make a formal bid or walk away for at least six months, the U.K. Takeovers Panel has ruled. He wants to create a company to supply a third of the world's traded iron ore and be the biggest maker of aluminum and energy coal. His counterpart at Chinalco, Xiao Yaqing, may be trying to stop him because of concern the combined group will have too much pricing power.

Rio rose by as much as A$6.08, or 4.8 percent, to A$133.39 and traded at A$132.20 at 10:19 a.m. Sydney time on the Australian Stock Exchange. Rio's London stock gained 13 percent on Feb. 1 to 5,600 pence. BHP rose by as much as A$1.75, or 4.5 percent, to A$40.30 after a 9.8 percent gain on the London exchange.

Lift Offer

BHP spokeswoman Samantha Evans and Rio Tinto spokeswoman Amanda Buckley both declined to comment.

BHP needs to lift its offer by between 33 percent and 48 percent to win support, Michael Rawlinson, an analyst at Liberum Capital Ltd., said in a Jan. 31 report. Rio Tinto's advisers say BHP can afford to increase its takeover offer to as much as five shares for one, The Australian newspaper reported last week, citing a Macquarie Group Ltd. analysis.

``There are other investors who see the value of Rio Tinto,'' said Herschel's Nicholls. ``If BHP are to acquire Rio, it's appropriate for them to make their move now.''

Chinalco and Alcoa's purchase was made through Shining Prospect Pte., a Singapore-based investment vehicle owned by Chinalco, the companies said in a Feb. 1 statement. Alcoa contributed $1.2 billion in funding to Shining Prospect to buy 12 percent of Rio's London-listed shares. That stake is equal to about 9 percent of the combined Rio Tinto Group, listed in the U.K. and Australia.

`Dead in Water'

``Three for one is obviously dead in the water and our view all along is that four for one would be closer to the mark,'' said Gavin Wendt, an analyst at Fat Prophets in Sydney, who rates BHP and Rio's Australian shares ``hold.''

With Chinalco and Alcoa paying cash for their stake while BHP's offer was all stock, Nicholls and Wendt expect any new offer may appeal to investors with a combination of both.

Rio Tinto became the world's biggest aluminum producer last year, leapfrogging New York-based Alcoa, when its $38.1 billion takeover offer for Canada's Alcan Inc. trumped Alcoa's hostile bid.

``While it clearly raises the price BHP have to pay for Rio Tinto, it also gives the Chinese and Alcoa a seat at the table on what will happen to Rio's aluminum assets,'' said Fat Prophets' Wendt.

Chinalco and Alcoa said they don't currently plan to make a takeover bid for Rio Tinto.

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

Chinalco Says Would Sell To BHP "If We Make Money"

CNNMoney.com - February 04, 2008: 12:22 AM EST

MELBOURNE -(Dow Jones)- Chinalco President Xioa Yaqing said Monday the Chinese group's purchase of a stake in Rio Tinto Ltd. (RTP) was a strategic investment but that it would consider selling its stake to BHP Billiton Ltd. (BHP) if the price was right.

Xioa said the purchase of a 9% stake along with Alcoa Inc. (AA) reflected the company's confidence in the global economic outlook, in the future for metals demand and prices and in the ability of Rio Tinto's management to deliver value.

Asked if Chinalco would consider selling its stake into a BHP bid for Rio Tinto, Xiao replied, "if we make money."

Xiao said the purchase was part of the company's drive to diversify its investments, currently focused on aluminum.

-By Alex Wilson, Dow Jones Newswires; 61-3-9671-4313; alex.wilson@dowjones.com

BHP sweetens offer for Rio after Chinalco buys stake

Pittsburgh Tribune-Review, PA - Wednesday, February 6, 2008

BHP Billiton Ltd. raised its hostile offer for Rio Tinto Group to $147.4 billion, in what would be the world's biggest mining takeover, after a Chinese-Alcoa Inc. backed group took a 9 percent stake last week. BHP offered 3.4 shares for every one of Rio's, 13 percent more than its earlier three-for-one proposal, the Melbourne-based company said Tuesday in a statement. Chief Executive Officer Marius Kloppers said the combination, twice as large as its nearest rival, will be able to ship more products faster to China, the biggest consumer of copper, iron ore, aluminum and coal. Chinese commodity companies have been trying to block the deal because it will give BHP too much pricing power. BHP, which made an initial approach in November, had until yesterday to formalize its offer or walk away for six months after a U.K. Takeover Panel ruling.

BHP's bid may put Alcan in play

ReportonBusiness.com, Canada - Tuesday, February 05, 2008

ANDY HOFFMAN AND BOYD ERMAN

Just six months after Alcan Inc. agreed to a blockbuster foreign takeover bid, the company's prized aluminum assets could again be put up for sale after mining giant BHP Billiton Ltd. formalized a hostile takeover offer for rival Rio Tinto PLC worth $147.4-billion (U.S.).

BHP chief executive officer Marius Kloppers said his company, already the world's largest mining firm, will consider selling assets to fund the unprecedented bid.

Rio Tinto won a heated auction for Alcan last summer and sources have indicated that the company's smelting operations in Quebec could be among the properties jettisoned by BHP if it can convince 50 per cent of Rio Tinto shareholders to accept the new sweetened offer.

Australia's BHP increased its bid to 3.4 of its shares for each Rio Tinto share late Tuesday.

In November, it proposed an arrangement offering 3 BHP shares for each Rio Tinto share that was rejected by the British company's board.

The offer represents the richest ever bid in the mining industry and the second largest takeover offer ever behind the $172-billion merger of Vodafone and Mannesmann in 1999.

A successful BHP bid would create a mining industry behemoth controlling more than a third of the world's iron ore market and the No. 1 producer of thermal coal, copper, aluminum and possibly uranium.

It is understood, however, that BHP has already been in contact with some industry players to gauge interest in certain asset sales including some of the former Alcan properties.

Last week, China's largest state-owned mining company Aluminum Corp. of China (Chinalco) teamed with U.S. aluminum producer Alcoa to buy a 12-per-cent stake in Rio Tinto for $14-billion.

Sources said that Alcoa still covets Alcan's Canadian smelting operations, while Chinalco is interested in bauxite mining and alumina assets.

The stake in Rio Tinto is unlikely to give the consortium enough power to block a BHP takeover of Rio, but could give the consortium an advantage in potential asset sales.

BHP said a group of seven banks, including Citigroup Inc., HSBC Bank PLC and Goldman Sachs Group Inc., has committed to lending $55-billion, about half of which will be used for a massive share buyback should the deal close.

The loan would be the largest ever, topping the $52-billion lent to Rome-based Enel SA to fund a purchase of Spain's Endesa SA last year.

The challenge for the arranging banks will be selling the loans to investors, because there's already a backlog of about $150-billion of acquisition loans sitting on bank balance sheets waiting for buyers.

A BHP spokeswoman said the company is confident the loan will be sufficient for the financing needs the offer might trigger as well a proposed $30-billion share buyback if the deal succeeds. The balance of the financing needs would come from "cash flows from operations and any asset disposal proceeds," the spokeswoman said.

BHP said the deal could result in cost savings of $3.7-billion per year. "A combined company would also create the world's premier diversified resources company with both sets of shareholders being offered an opportunity to be part of a truly great global growth story," Mr. Kloppers said in a statement.

Rio Tinto's chairman Paul Skinner said "the Boards of Rio Tinto will consider the terms of the proposal carefully in the light of all circumstances and will make a further statement once they have completed this assessment. In the meantime, the Boards encourage shareholders not to take any action."

© The Globe and Mail

Metals: Here's what you'll pay this year

Purchasing.com, MA - 05-Feb-2008

Full article at

http://www.purchasing.com/TalkBack/Comments?talk_back_header_id6500576&articleidca6518773&article_id6518773

Aluminum

Analysts are anticipating that last year's global surplus of primary metal of 300,000 metric tons will increase further this year mostly because of a sustained decline in purchasing in the U.S. World aluminum consumption in 2007 rose by 11% to 41.12 million net tons after rising 7% in 2006. That's what has kept LME ingot priced at $1.16/lb in 2006 and $1.21 in 2007. In the U.S., demand dropped 4% to 7.17 million tons last year. In 2008, world aluminum consumption is forecast to increase by almost 7% to 44.3 million tons because of sustained strong demand growth from Europe and China. U.S. use, on the other hand, will slide by 4% again because of soft housing, automotive and consumer durables markets. The mavens' consensus forecast shows ingot slipping back to $1.16/lb.

The ore`s the issue

Business Standard / New Delhi February 06, 2008

A lot has been said on how the non-availability of large tracts of land is holding up the setting up of mega projects in India. In Orissa alone, as this newspaper has reported, projects with a capital investment of around Rs 180,000 crore, and with an employment potential of 170,000, are getting delayed since, of the 40,000 acres of land that these projects require, just a fourth has been made available so far. Agitations by non-governmental organisations and local representative groups have ensured that the land is either not available for sale, or that those who are squatting on the land refuse to vacate. In the case of Posco’s proposed 12-million-tonne steel plant, which is said to be India’s single largest foreign investment project, no more than 450 families are holding up the land acquisition. It is also true that villagers who have got wise to the economics of the situation are now asking for a king’s ransom for their land — in Paradip, for instance, land prices were Rs 1-2 lakh an acre when Posco and Essar announced their projects; they have now gone up to the region of Rs 6 lakh while villagers in some areas are demanding Rs 40 lakh! Reports suggest that compromises have been offered at Rs 25 lakh per acre, or more than Rs 500 per square yard in the back of beyond. More reasonably, a deal can probably be arrived at somewhere between Rs 6 lakh and Rs 25 lakh.

Exorbitant as this is, and perhaps unreasonable too, the truth is that even such sky-high land prices do not make these large projects unviable. Take the 30,000 acres of land that the Orissa projects need. If you take the price of land at Rs 10 lakh an acre, the total cost of the land is Rs 3,000 crore. That is not small change, but seen in the context of the projects’ total cost of Rs 180,000 crore, it should be easy to finance and amortise. So, the cost of land is not the deal-breaker, which in reality is the availability (or otherwise) of captive ores. In the Posco project, the company stands to get access to 600 million tonnes of quality iron ore over 30 years; the figure is around the same for the Mittal steel plant; the Vedanta aluminium project hopes to bag a huge bauxite reserve.

Few places in the world allow such dedicated control over raw material, at what may well be concessional terms — and politicians are said to be doing mining deals all the time in the mineral-rich states. It is precisely because of this that firms like Posco and Mittal Steel are willing to wait it out, despite not being able to get possession of the land for a year and more — during which period the cost of delay has certainly been more than Rs 3,000 crore if you consider project cost inflation. In the days when it had not honed down its costs, Tata Steel still managed to be among the cheapest producers of steel almost wholly because of the quality iron ore mines that Jamshetji Tata had negotiated more than a century ago. The lesson here is for state and central governments — do not under-estimate the attractions offered by India’s mineral deposits. Formulate clear lease and price policies before offering mining leases, and make sure that no one walks away with sweet deals.

Vimetco gets bauxite reconnaissance licence in Guinea UPDATE

Forbes, NY - 02.05.08

LONDON (Thomson Financial) - Vimetco NV said it received a reconnaissance permit in December from the Ministry of Mines in Guinea to prospect for bauxite in Kindia Prefecture.

The aluminium producer said the licence covers an area of 2083 sq km and is valid for three months, with the option to renew for another three months.

The company plans to start work in the area immediately and anticipates an analysis of 500 samples be completed by April.

Recently, Vimetco, which also has operations in Romania and China, said its Chinese operations were not affected by the power shortages caused by heavy snowfall and droughts in several or the country's provinces.

All energy requirements for the Chinese aluminium operations are sourced internally, it said.

TFN.newsdesk@thomson.com

Minister: Aluminum production has strategic importance for government

IRNA, Iran - Feb 7, 2008

Bandar Abbas, Hormozgan province, Feb 7, IRNA

Minister of Industry and Mines said aluminum production in the country has strategic importance, so those who are active in this sector must use all their efforts and ability to increase capacity of aluminum production upon time table.

In a visit to the Al-Mahdi Aluminum Complex here Wednesday, Ali Akbar Mehrabian said the ministry uses all its efforts to prevent decrease in production of any item.

Managing director of the complex stressed that "The unit has produced 66,000 tons of aluminum so far in the current year in which 50 percent of it has been exported and the rest has gone to the internal market."

Mehdi Saqafi said the value of exported product has been 96 million dollars.

He also presented a report on new plant dubbed as " Hormoz Al" and added the factory has had 45 percent Physical progress so far.

The cost of new plant has been evaluated as about 314 million euros.

Rio Rejects BHP Billiton's $147 Billion Hostile Bid (Update4)

Feb. 6, 2008 (Bloomberg)

By Brett Foley

Rio Tinto Group, the world's third- largest mining company, rejected a sweetened $147 billion offer from BHP Billiton Ltd. because it ``significantly'' undervalues the iron-ore and copper producer.

BHP's bid doesn't ``recognize the underlying value'' of London-based Rio's assets and prospects, Rio Chairman Paul Skinner said today in a statement. ``Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio.''

BHP Chief Executive Officer Marius Kloppers raised the bid by 13 percent five days after Aluminum Corp. of China, the nation's biggest aluminum company, bought a stake in Rio to block the takeover. The combination of BHP and Rio would create the world's biggest producer of copper and vie with Brazil's Cia. Vale do Rio Doce as the largest supplier of iron ore.

``It's still obviously well short of where Rio places its value,'' Charles Kernot, an analyst at Seymour Pierce Ltd. in London, said by telephone. ``BHP were right to increase their bid today to show they are serious, and I suspect there is still something in their back pocket to raise it a little bit more.''

BHP's American depositary receipts, each representing two ordinary shares, fell $3.35, or 4.8 percent, to $66.13 as of 3:36 p.m. in New York. Rio's ADRs, each representing four ordinary shares, fell $11.69, or 2.8 percent, to $409.81.

Rival Bid

BHP, based in Melbourne, increased its offer to 3.4 shares for every one of Rio's. The bid values Rio at 5,168 pence a share, based on BHP's closing share price in London. State-owned Aluminum Corp. of China, also known as Chinalco, and Alcoa Inc. paid 6,000 pence a share for 9 percent of Rio last week.

Chinalco may be preparing a bid, the London-based Times newspaper said today, without citing the source of the information. Lu Youqing, vice president of Chinalco, declined to comment on the report when contacted by telephone. Chinalco and Alcoa said in a statement today they will ``closely monitor further developments.''

BHP's bid values Rio at 13.6 times earnings before interest and tax, compared with the 13.7 times that Rio paid for Alcan Inc. last year. BHP, which made an initial approach in November, had until today to formalize its offer or walk away for six months after a U.K. Takeover Panel ruling.

`Makes Sense'

``Rio should be having a discussion,'' Don Williams, who helps manage $1.3 billion at Platypus Asset Management, said by phone from Sydney today before Rio said it rejected the bid. He sold half of his Rio holding on Feb. 4 after the Chinalco and Alcoa purchase. ``This ratio makes sense.''

Goldman Sachs Group Inc., Citigroup Inc. and five more banks agreed to provide the world's biggest-ever loan at $55 billion after the bid. Goldman and Gresham Partners LLC are BHP's principal advisers. BHP also hired Citigroup, HSBC Holdings Plc, Lazard & Co. Ltd., Merrill Lynch & Co. Inc. and UBS AG.

Rio hired Morgan Stanley, Macquarie Group Ltd., Credit Suisse Group and NM Rothschild & Sons Ltd. as advisers.

Chinalco may try to block BHP because China, the world's largest importer of iron ore and consumer of copper and aluminum, needs raw materials to feed an economy that grew 11.4 percent in 2007, the fastest in 13 years. The nation's biggest commodity companies have said they're concerned the combination would concentrate supplies and may control prices.

``This is our first and only offer,'' Kloppers, 45, said today in a teleconference. ``We absolutely want full control of this company.''

Kloppers has pledged to generate $3.7 billion in cost savings and revenue gains by buying Rio. BHP has generated a total return of 245 percent since it acquired Billiton Plc in June 2001 and listed its shares in London. Rio has returned 176 percent over the same period.

Kloppers said BHP will seek to talk to Chinalco, Alcoa and all other Rio investors.

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

India's Tata Group to supply parts for Boeing Dreamliner

AFP 07-Feb-2008

NEW DELHI (AFP) — Mumbai-based Tata Group will supply parts for Boeing's delay-dogged 787 Dreamliner, marking a "turning point" for the Indian aerospace business, the companies said on Wednesday.

Under the agreement, TAL Manufacturing Solutions, part of the sprawling Tata Group, will supply floor beams for the aircraft, the first deliveries of which are now expected in early 2009, a statement by the two companies said.

No financial terms were disclosed for the agreement which marks a "turning point for the Indian manufacturing industry to gain a footprint in the global aerospace business," the statement said.

The Dreamliner, Boeing's first new model in more than a decade, takes advantage of huge advances in aviation technology, and has been designed using plastic composites instead of aluminum to reduce weight.

Boeing, which last week announced the latest delay of the Dreamliner's launch, said it was proud to welcome Tata into "its family of world-class aerospace suppliers."

"We are confident this partnership will help Boeing and Tata leverage mutual best-value capabilities," said Carolyn Corvi, a Boeing vice president.

The partnership "will further increase the value of the 787 to our customers, helping make it the world's leading commercial airplane," she added.

The floor beams will be produced at TAL's new facility in Nagpur using advanced titanium and composite materials and transported to Boeing partners in Japan, Italy and the United States for further assembly.

"The production of Boeing's structural components by TAL indicates technical and manufacturing excellence within the group," said TAL chairman Ravi Kant.

"This agreement has the potential to develop into a more broad-based alliance," he added.

The move is the latest in so-called "offshoring" of manufacturing to India. China is currently the favourite choice for outsourcing manufacturing while India is preferred for information technology, finance and customer services.

But analysts say India could challenge its neighbour's position as the world's manufacturing centre in future as China becomes more expensive.

The contract comes as Boeing faces opposition over the amount of outsourced work on the Dreamliner from US unions which have called it unprecedented.

Boeing said the deal was part of its efforts to strengthen "both our presence in India and our strategic relationships with Indian industry."

Boeing has been pursuing various aerospace initiatives in India.

In December, Boeing and India's Hindustan Aeronautics Ltd. signed a deal to bring more than one billion dollars of aerospace manufacturing work to India.

Boeing also said late last month it would soon submit its proposal for an Indian contract involving 126 warplanes worth 10-12 billion dollars.

BHP has retaken the initiative, and Rio's days appear to be numbered

The Age, Australia - February 7, 2008

LAST Friday's $US14 billion raid on Rio ended the opening rounds of the battle for Rio, and yesterday's sweetened, formal bid by BHP is the beginning of the end-game.

The conclusion is still many months away, probably set for the first half of next year, after labyrinthine regulatory mazes have been negotiated. Unexpected developments are still to be expected — but BHP has retaken the initiative, and Rio's days appear to be numbered.

At 3.4 BHP shares for every Rio share, the offer is in the zone: the market pricing of Rio since BHP went public with its three shares-for one merger proposal in November implied a 3.3 share ratio as a rebid base, and the new offer is pitched at a respectable 45% premium to Rio's weighted average share price in October last year, just before BHP was flushed out.

Rio's board will almost certainly continue to argue that the group is worth more, and BHP now has form on the question of value, having boosted an offer it was previously arguing vehemently was fully priced.

But BHP has now declared that it will be happy if it secures just enough shares to pass the 50% shareholding mark, and take control of Rio without moving to full ownership.

The lower minimum acceptance condition is an important development, because it undermines the power of the Rio board's recommendation, and dilutes the blocking power of the 9% stake in the dual-listed Rio that China's Chinalco and its partner, Alcoa of the US, compiled last Friday in an on-market raid.

Earlier incarnations of Rio itself that saw control run from the British parent down to the Australian affiliate, CRA, and from there to a stable of partly owned but securely controlled subsidiaries including Comalco and Bougainville Copper somewhat ironically provide a template for partly owned but tightly run stables.

The Rio board and the Chinalco-Alcoa combine are not impotent. BHP chief executive Marius Kloppers said yesterday that BHP wanted to own 100% of Rio — the multibillion-dollar gains BHP says it will harvest from cost savings and volume increases will be much more difficult to produce if does not — and even if 50% is achieved, 100% will be impossible if Chinalco and Alcoa withhold their 12% holding in Rio plc, and next to impossible if the Rio board recommends against acceptance.

BHP would also welcome Rio's blessing because it would open the way for the hostile bid to be replaced with the more efficient and less costly scheme of arrangement merger that BHP first proposed. BHP's hope now is that Rio will engage directly in discussions that might settle bid terms and allow a scheme to be revived.

The offer would deliver ownership of 44% of the merged group to Rio shareholders, compared with a 41% share under the merger proposal it replaces, and Rio's 35% share of combined market capitalisation in October, before BHP went public.

The sweetened terms are the first element of BHP's revised strategy, the decision to accept control and not full ownership the second: both are leveraged tactically by Britain's takeover code, which governs the offer timetable.

The receipt of key regulatory approvals for the creation of the world's most powerful resources company are preconditions of the bid. European Union merger clearance will be the toughest hurdle, given the tendency of well funded EU competition regulators to dissect deals minutely, and not infrequently restrict or even block them, but pre-conditional nods are also needed from the US Department of Justice, the Australian Government on foreign investment grounds, Australia's ACCC, and Canadian and South African merger regulators.

Given how slowly the wheels of bureaucracy turn, nobody will be surprised if the regulatory reviews run to the end of this year, nor would it surprise if regulators decided that aspects of the combination were anti-competitive, and needed to excised.

Complete rejection of the deal is less likely, but not impossible. Chinalco and Alcoa may have a role in this part of the process, as potential buyers of assets that may spin out. Their main area of interest is the bauxite to aluminium asset chain, a major element of the merger following Rio's $US38 billion takeover of Alcan last year.

If BHP still has an asset combination it wants at the end of the regulatory approval process and any side-deals generated by it, the offer will be put to the shareholders of the London and Australian arms of the dual-listed Rio, and a strict timetable imposed by Britain's takeover rules will kick in.

Unlike the Australian takeover regime, which allows multiple bid extensions, the British regime effectively creates a 60 day deadline. Bid terms must be locked by day 46, and the minimum acceptance condition has to satisfied by day 60. At that point, the bid will be decided — BHP will be either short of 50% and its offer will fail, or past 50% and in control, and then a final 21 day period will run to allow stragglers to accept.

A rush of acceptances would follow if BHP moved above 50% and the question of control — and the control premium — was decided, although Chinalco and Alcoa would still hold the key to full ownership, and their motives for taking a stake remain mysterious.

So far, the market is sending mixed signals about BHP's push. BHP shares fell by twice as much as the browbeaten market, losing $2.99 or 7.5%, at least partly on concern that BHP is offering too much. Rio nevertheless closed 2% above the new bid value.

The Maiden family owns BHP shares.

mmaiden@theage.com.au

Atlas Copco Wins Major Order in Qatar for World's Largest Aluminum Plant

PR-Inside.com (Pressemitteilung), Austria - 2008-02-06 11:17:17 -

Atlas Copco (STO:ATCOA) (STO:ATCOB) has been awarded a turnkey contract to supply the complete compressed air system for Qatalum, which once completed will become the world's largest primary aluminum plant. The order, to be booked in the first quarter, has a value of more than MSEK 100 (MUSD 16).

Qatalum (Qatar Aluminium Ltd.), a joint

venture between Qatar Petroleum and Norsk Hydro ASA, will have an initial production capacity of nearly 600 000 metric tons per year. With future capacity set to double in the second phase of development, it will become the world's largest aluminum plant. Atlas Copco's Oil-free Air division will deliver 10 three-stage centrifugal compressors and 10 heat-of-compression dryers; for a combined capacity of over 100 000 m3/hr to be used in the aluminum smelting process. The whole compressed air system will be controlled and monitored with an innovative energy saving central controller.

"Our ability to deliver a system that will provide significant energy savings and our extensive experience from similar projects, proved essential in winning this order," says Ronnie Leten, President of Atlas Copco's business area Compressor Technique. "It is an important contract for future reference as we see great development potential in the aluminum industry in the Middle East."

Located on the southern coast of Qatar, the machines will need to operate in challenging conditions, having to cope with the high ambient temperatures, dust and salt in the Middle East.

Atlas Copco may be required to disclose the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 09:00 on February 6, 2008.

Atlas Copco is a world leading provider of industrial productivity solutions. The products and services range from compressed air and gas equipment, generators, construction and mining equipment, industrial tools and assembly systems, to related aftermarket and rental. In close cooperation with customers and business partners, and with more than 130 years of experience, Atlas Copco innovates for superior productivity. Headquartered in Stockholm, Sweden, the global reach spans more than 160 markets. In 2007, Atlas Copco had 33 000 employees and revenues of BSEK 63 (BEUR 6.7). Learn more at www.atlascopco.com.

Oil-free Air is a division within Atlas Copco's Compressor Technique business area. It develops, manufactures, and markets oil-free air compressors for all kind of industries worldwide where the air quality is vital, and oil-injected compressors for less critical applications. The division focuses on air optimization systems and quality air solutions to further improve customers' productivity. The divisional headquarters and main production center are located in Antwerp, Belgium.

Rio Tinto's $690m shield for Boyne Island smelter

Courier Mail, Australia - February 08, 2008 11:00pm

Tony Grant-Taylor

RIO Tinto yesterday built another brick in its defensive wall promising nearly three-quarters of a billion dollars into upgrading its Boyne Island aluminium smelter in Gladstone.

Rio has been ploughing ahead with significant developments to show it doesn't need suitor BHP Billiton's help.

Yesterday it announced the joint venture (Rio owns nearly 60 per cent of the operation) had committed to spend $US617 million ($A690 million) to modernise and extend the life of the Boyne Island facility, Australia's largest aluminium smelter.

The announcement brings the amount Rio will spend on capital works in Gladstone over the next couple of years to nearly $US2.5 billion.

This comes on the back of Rio's already announced extension of its Yarwun alumina refinery. The Yarwun expansion is under way, with a budget of $1.8 billion.

It will more than double Yarwun's output of alumina, the product refined from bauxite which is then smelted into aluminium. At its peak, it will employ 2200 construction workers, while adding 270 new permanent jobs on completion.

The Boyne Island upgrade will require a further 450 construction workers as the work on the massive plant peaks.

It is modernisation rather than an expansion and the project will not increase the permanent workforce.

"This upgrade will underpin the successful operation of the smelter and help to ensure the continuing reliable supply of high-quality aluminium to our global customers," Rio Tinto Alcan president of primary metal, Pacific, Xiaoling Liu said yesterday.

In the past, companies such as BHP and Rio have been relatively low key about investments like that at Boyne Island.

But since BHP's November revelation that it had approached Rio suggesting a merger and this week's formal offer, both companies have been beating their chests about every future development or prospect in their huge portfolios of mining and processing assets, in Australia and offshore.

Boyne Island was commissioned in 1982 with a capacity of 206,000 tonnes of aluminium a year.

It was expanded in 1997, taking production to 490,000 tonnes.

Further upgrades have since lifted output to close to 550,000 tonnes a year, making it Australia's largest aluminium smelter.

Iowa wins big if Boeing wins contract

Quad-Cities Online, IL - Feb 8, 2008

By Nicole Harris, nharris@qconline.com

DAVENPORT -- Mayor Bill Gluba and other elected officials hope Boeing will capture a defense contract which would support a thousand-plus Iowa jobs and create a $60 million annual economic impact for the state.

The federal government is expected to award the Air Force's $40 billion aerial refueling tanker aircraft contract within the next 30 to 60 days. Mayor Gluba, along with State Reps. Linda Miller (R-District 82) and Jim Lykam (D-District 85) and United Steel Workers Local 105 President Skip McGill of Alcoa's Davenport Works, emphasized their support for awarding the contract to American company Boeing.

Mayor Gluba said Boeing is competing against European Aeronautic Defense and Space Company (EADS) for the contract. At stake are more than 40,000 U.S jobs, including 1,600 jobs in Davenport, Bettendorf and Cedar Rapids.

Instead of creating thousands of jobs in Europe, Mayor Gluba and the other representatives said 80 percent of the work on the Boeing 767s is expected to be done on American soil, involving more than 300 companies in the defense manufacturing business.

"The importance of this contract is if it goes to a European company we will lose a lot of jobs here in the United States and we won't have some $40 billion being spent in this country to keep people to work," he said. "If it goes to a company in Europe we will be shortchanged again in this world trade situation."

Local companies that would be directly affected by the contract include Alcoa, Carleton Life Support Systems and Cedar Rapid's company Rockwell Collins, Inc.

Mr. McGill said the contract would mean the local Alcoa plant would be operating at full capacity and ensure job security. The contract would not necessarily create new jobs for Alcoa, but could lead to an expansion at a later date.

Alcoa would provide aluminum wings, bars, the skin and essentially the whole air-frame, Mr. McGill said.

"It would mean jobs for a long time to come," he said.

American Federation of Labor and Congress of Industrial Organizations president Mark Smith said concerns are compounded because EADS engages in anti-competitive business practices.

According to an Iowa Federation of Labor press release, EADS is the target of a World Trade Organization's lawsuit for allegedly receiving over $100 billion in illegal subsidies from the European Union.

Additionally, the company’s executives have come under fire for an alleged insider trading controversy and the U.S. Department of Justice has launched an investigation into EADS' partner BAE for possibly bribing a Saudi prince in exchange for diverting military contracts to both companies, the release states.

Region's six key figures in aluminium sector

MEED, United Arab Emirates - Feb 8, 2008

The six most important figures in the Gulf aluminium sector:

Ahmed Saleh al-Noaimi

As chief executive officer (CEO) of Aluminium Bahrain (Alba), Ahmed Saleh al-Noaimi oversees one of the Gulf's biggest aluminium producing complexes at Bahrain's Hidd industrial area. He took over as Alba's CEO in July 2005, replacing Australian Bruce Hall. With more than 30 years experience at Alba, Al-Noaimi has held various positions at the company since starting his career there in 1974. Before becoming CEO, he was deputy CEO, commercial and services, and has also held the position of general manager of finance. Under Al-Noaimi's financial supervision, Alba released a $200m bond on the Bahrain Stock Exchange in 2003. Last year, Al-Noaimi was appointed to the Arab Forum for Environment and Development's (AFED) board of trustees. Following the completion of its $1.7bn expansion in 2005, Alba's five potlines have an aluminium production capacity of 830,000 tonnes a year.

Abdullah Kalban

When appointed in April 2005, Abdullah Kalban was the first UAE national to take the position of CEO at Dubai Alu-minium (Dubal) since its formation in 1979. He joined the company in 1985, beginning his career as a supervisor at the baking kilns at Dubal's Jebel Ali site. Since then, he has held several managerial positions including manager of operations and maintenance at the smelter, and general manager of smelting operations. In 2000, he was made Dubal's director of operations. Kalban holds a bachelor's degree in industrial engineering from the University of New Haven, US. He also sits on the board of directors at Emirates Industrial Bank, and is a former chairman of the London-based International Aluminium Institute's safety committee. Dubal's operations comprise eight potlines with a production capacity of 900,000 tonnes a year.

Truls Gautesen

Truls Gautesen's involvement in the Gulf's aluminium sector goes back more than 30 years to when he began working for Aluminium Bahrain before moving to Norwegian aluminium producer Hydro in 1980. He is currently CEO of Qatalum, a joint venture of Qatar Petroleum and Hydro, which is developing a 580,000-tonne-a-year aluminium plant in the emirate set to begin production in 2010. Before taking up this position, he was Hydro's president of primary aluminium production, overseeing the operation of 11 aluminium plants in Norway, Germany, Australia, Canada and Slovakia. He has held several senior positions within Hydro, making his initial mark as general manager of Europe's largest aluminium plant at Karmoy in Norway. Gautesen studied at the Norwegian Institute of Technology, where he qualified as a chartered engineer, specialising in technical electrochemistry.

Abdullah Busfar

Maaden vice-president Abdullah Busfar is also the company's head of projects and has been responsible for steering Maaden's aluminium strategic business unit. He joined the company in 1999, and now oversees procurement, contracting, human resources, public and government affairs, safety, security and legal services for all of Maaden's business lines. This includes the development of the company's $8.5bn aluminium smelting complex at Ras al-Zour. An electrical engineer by training, Busfar obtained his bachelor's degree with honours from the University of Colorado, US, in 1981. He is also a graduate of the US' Columbia University's senior executive programme. Busfar is a member of the National Industrial Committee in Riyadh, and an executive committee member of the College of Science & Technology in Taif.

Tony Kinsman

Biography Australian Tony Kinsman was appointed CEO of Oman's Sohar Aluminium in 2004. Prior to joining Sohar, he spent 15 years with Australia's Comalco in Australia and New Zealand. Kinsman's experience in the aluminium sector includes overseeing the upgrade of Comalco's New Zealand Aluminium Smelters (NZAS), the development of the company's bauxite mine at Weipa on Australia's Cape York Peninsula, and the $1bn expansion of the Boyne smelter at Gladstone. Kinsman holds a degree in engineering and an MBA from the Graduate School of Management in Melbourne, Australia. Sohar Aluminium is Oman's first new aluminium facility, with a production capacity of 350,000 tonnes a year, starting later this year. The company is 40 per cent owned by Oman Oil Company, 40 per cent by Abu Dhabi Water & Electricity Authority (Adwea), and 20 per cent by Canada's Alcan.

Duncan Hedditch

Biography Australian Duncan Hedditch was appointed CEO of Emirates Aluminium (Emal), a joint venture of Dubai Aluminium (Dubal) and Abu Dhabi's Mubadala, when the company was formed in 2007. He had previously been advising Mubadala on the development of its aluminium projects. Before moving into the Gulf's aluminium sector, Hedditch held the position of managing director of Australian operations for Russian aluminium producer Rusal. He had previously spent two years as managing director at Rusal's Krasnoyarsk aluminium smelter in Siberia. Prior to joining Rusal, Hedditch worked at Australia's Comalco. Hedditch holds a degree in electrical engineering from the Royal Melbourne Institute of Technology, Australia. Emal's $8bn smelter, under construction at the Khalifa Port & Industrial Zone in Taweelah, is expected to start production in early 2010.

Author: Bernadette Redfern. Features Editor

London

Chinese firm wins $587m port deal

AME Info, United Arab Emirates - 11-Feb-2008

United Arab Emirates:

China's Harbour Contracting and Engineering Company has won a SR2.2bn ($587m) contract to build port facilities at Saudi Arabia's Ras Al Zour, reported Khaleej Times. China Harbour has partnered with the local Rafid Group on the project to form China Harbor Engineering Arabia Company. It is the second big contract win in the Kingdom for the company in recent months, and provides further evidence of the increasing influence of Chinese companies across the region. The port, which will cost $600m, will serve nearby fertiliser and aluminum smelting complexes.

United Co Rusal, China Power join hands in plant building

China Knowledge Online, Singapore - Feb. 12, 2008

United Co Rusal, the world's largest aluminum producer, and China Power Investment Corp has agreed to work together to build aluminum refineries in China and Africa, market sources reported.

Under the items of the memorandum signed by the two parties, the Russian firm will be a partner with China Power to build a plant in China's Qinghai Province which is expected to produce 500, 000 tons of aluminum a year. And after completion of the plant, United Co Rusal will hold 49% stake in it.

Meanwhile, a bauxite and alumina complex will also be built in Guinea which is designed with annual output of 2.8 million tons of alumina. China Power will hold 49% stake of the plant.

It is also reported that a special committee has been set up by the two sides to evaluate the projects and the evaluation is expected to be completed by the middle of this year.

As the world's largest aluminum producer and consumer, China is definitely significant for the development of United Co Rusal, said the general manager of the Russian titan.

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Kaiser Aluminum Announces Additional $14 Million in New Investment Initiatives to Increase Extrusion Capabilities and Enhance Efficiency

FOXBusiness - Wednesday, Feb. 13 2008

FOOTHILL RANCH, Calif., Feb 13, 2008 (BUSINESS WIRE) -- Kaiser Aluminum Corporation (NASDAQ: KALU: 66.82, +2.68, +4.17%) today announced that its Board of Directors has approved $14 million in additional investments to enhance and expand extrusion capabilities at its Tulsa, Okla., and Sherman, Texas, facilities, and deploy "future state" upgrades to the casting complex at its Trentwood (Spokane, Wash.) facility. The additional investments increase the capital expenditures of Kaiser Aluminum's organic growth program to $244 million.

The investments expand Kaiser Select(R: 59.68, +0.96, +1.63%) capabilities at Tulsa to produce automotive extrusions. Teaming with the company's world-class London, Ontario, extrusion facility, Tulsa will provide additional capacity to meet growing customer commitments for automotive applications. Demand for automotive applications has been driven by fuel price pressure and new regulations, such as stricter CAFE (corporate average fuel economy) standards now mandating a 40 percent improvement in fleet-wide fuel efficiency by 2020.

Equipment upgrades at Sherman will expand capabilities to produce Kaiser Select(R: 59.68, +0.96, +1.63%) products, which meet the most stringent standards for quality and consistency. The upgrades will also increase efficiency and capacity at the facility, which produces extruded products for ground transportation and industrial applications.

"We're continuing to aggressively pursue attractive growth and efficiency opportunities in our businesses," said Jack A. Hockema, chairman, president and CEO of Kaiser Aluminum. "These additions to our organic growth program will allow us to further serve the growing needs of our customers and continue to improve our quality, efficiencies and costs."

The investment at the Trentwood facility will significantly improve energy efficiency in its casting process, reducing natural gas consumption per pound cast. The improvements will incorporate a state-of-the-art furnace and combustion system design, utilizing environmentally-friendly and energy-efficient regenerative burners and allowing for reduced material waste.

"This is the second casting unit at Trentwood to be upgraded in a strategic move toward a highly-efficient, future-state casting operation," said Hockema. "The investment complements our ongoing $139 million heat treat plate expansion at Trentwood."

BHP mum on electricity buyback

Fin24, South Africa -Feb 14 2008

Sydney - BHP Billiton on Thursday said it wouldn't comment on speculation that power utility Eskom was seeking a complete power supply buyback from aluminum smelters and other industrial users in the region for the rest of 2008.

"At this stage we wouldn't comment or speculate on what Eskom's future plans could be, but we're in discussion with them constantly so that we can make sure we are involved in the solution to the power issue," a BHP spokesperson said.

BHP has already reduced power by 10% for its three smelters, in line with other industrial users such as miners, as Eskom is struggling to meet power demand.

London Metal Exchange aluminum prices rallied following the Reuters report late Wednesday citing an unnamed source close to Eskom.

The market is awaiting confirmation of the plan, a Hong Kong-based trader said.

A power buyback shutting down aluminum smelters, by far the biggest users of electricity in the region, would hit about 1.5 million metric tons of capacity, and would tip the market into a large deficit. BHP has two smelters in South Africa and owns a stake in the Mozal smelter in Mozambique, which also takes power from Eskom, producing nearly 1.2 million tons of aluminum last year.

But traders said that if the report proved correct, Eskom would encounter fierce opposition from mining companies, which would delay an agreement.

LME aluminum prices rallied $99 on the Wednesday afternoon kerb to $2 790/ton at 07:05 South African time.

China's Chalco says Guizhou unit resumes 1 pct of total capacity

Forbes, NY - 02.13.08

BEIJING (XFN-ASIA) - Aluminum Corp of China Ltd (Chalco) (HK 2600;SHA 601600), said its Guizhou unit had resumed one pct of its total production capacity as of yesterday, as power shortages ease.

The company, China's largest alumina and aluminum producer, did not say when the Guizhou plant will resume full operations.

Chalco suspended production at its Guizhou and Zunyi aluminum plants on Jan 23 due to power supply disruptions caused by severe winter weather.

The two plants have annual capacity of 320,000 tons and 110,000 tons of aluminum, respectively.

kelly.zang@xfn.com

Eskom Says 90% Power Limit to Stay in Place to 2012 (Update1)

Bloomberg 13-Feb-2008

By Antony Sguazzin

Feb. 13 (Bloomberg) -- Eskom Holdings Ltd., South Africa's state-run utility, will retain limits on power supply to users such as mines and smelters to 90 percent of normal needs until 2012, exacerbating a crisis that threatens economic growth.

The curbs are unlikely to be lifted ``until 2012,'' when the first new coal-fired plant starts up, Eskom Finance Director Bongani Nqwababa said in an interview yesterday. Asked whether supply may be boosted sooner, he said: ``Unfortunately not.''

Platinum rose to a record today in London on concern the restrictions will further disrupt mine output in South Africa, the biggest producer of the metal. Last month, most of the country's mines shut for five days after Johannesburg-based Eskom said it couldn't guarantee supplies. It later agreed to provide industrial users with 90 percent of normal needs.

On Feb. 7, AngloGold Ashanti Ltd., Africa's biggest gold producer, said the restrictions, coupled with the five-day stoppage, will reduce its output by 400,000 ounces this year. Gold Fields Ltd., Africa's second-largest producer, said its production may fall by more than 15 percent.

Roger Baxter, the chief economist of the Chamber of Mines, declined to comment today. The chamber represents most mining companies operating in South Africa.

Platinum Record

Eskom, which supplies 95 percent of South Africa's power, will spend about 300 billion rand ($39 billion) over five years to boost capacity after a wave of power cuts triggered by government delays in approving expansion. Customers including BHP Billiton Ltd., which runs aluminum smelters in South Africa, and Xstrata Plc, which owns ferrochrome plants, have also had power restricted.

South African President Thabo Mbeki, who has described the power outages as a ``national emergency,'' said on Feb. 8 the government will give Eskom funds to help end a crisis that threatens economic growth. The national budget is due Feb. 20.

The power shortages may trim platinum output in South Africa by 500,000 ounces, Barclays Capital said on Feb. 8. South Africa vies with China as the world's biggest gold producer and supplies almost 80 percent of the world's platinum.

Platinum extended its gains, rising as much as 4.7 percent to a record $2,001.25 an ounce in London. On Jan. 24, the day before the five-day stoppage, it traded at $1,610.50.

Gold traded up 0.2 percent at $908.20 an ounce.

To contact the reporter on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net

Ghana: Country, 11 Others Demand Long-Term Benefit From Mining Sectors

Ghanaian Chronicle (Accra) - 13 February 2008 AllAfrica.com, Washington -

Stephen Odoi-Larbi

Ghana and eleven other countries met on Monday in Guinea to discuss how they could derive more benefits from their respective mining sectors, a World Bank official has hinted.

Among the countries that joined Ghana in the discussions were Nigeria, Sierra Leone, Liberia, Democratic Republic of Congo, Niger, Mauritania, Burkina Faso, Ivory Coast, Mali and Senegal.

According to the official from the World Bank, the event was a two-day meeting backed by the World Bank, Africa Development Bank (AfDB), Economic Community of West African States (ECOWAS) and the French Development Agency (AFD).

The event sought among other things the opportunity for countries involved in the discussions to share ideas on managing mining revenues and improving agreements with foreign firms.

Reports from Reuters say the West and Central Africa sub-regions are countries rich in raw materials including diamonds, gold, iron ore, bauxite and uranium, yet some of them are the least-developed in the world.

According to the report, Guinea is the world's largest exporter of bauxite, the raw material used to make aluminium, yet it remains one of the world's poorest countries. Many residents even in the capital lack piped water or mains electricity.

"With rising commodities prices there is a lot of questioning in Africa about revenues and the benefits that states and populations derive from the mining sector, and how to make sure those benefits become a pillar of sustainable development," World Bank mining expert Boubacar Bocoum said.

"Most of the large mining companies which are advancing in Africa and almost all the financial backers in the sector will take part in the meeting," he told Reuters in an interview in Conakry.

Mr Bocoum said the region's mining sector sometimes lacked a consistent legal framework, was hampered by poor infrastructure, and in some cases its governments failed to negotiate beneficial contracts or manage revenues effectively.

Ensuring that neighbouring countries shared a common approach to regulating the sector was vital.

"When you talk about diamond or gold smuggling between three countries and only one has legislation in place when its neighbours have no appropriate rules, the smugglers will simply go there," Mr Bocoum said.

"Often, infrastructure questions are best managed if approached from the angle of several countries ... Alongside the regional approach, it is clearly important to ensure that within each country measures are taken for good governance in the sector," he said.

Guinea wants more benefit from bauxite, PM says

Reuters - Wed Feb 13, 2008

CONAKRY, Feb 13 (Reuters) - Guinea has not reaped full advantage from its vast deposits of bauxite and other minerals and needs more infrastructure development and local refining capacity, Prime Minister Lansana Kouyate has said.

The West African country, with nearly a third of the world's proven bauxite reserves, is conducting a review of mining contracts. Guinea is poor and has only one alumina refinery while most of its production is shipped overseas as ore.

The Friguia refinery, which converts bauxite into alumina which can then be smelted into aluminium, is operated by privately-owned Russian company Rusal and has a capacity of 640,000 tonnes of alumina and 1.9 million tonnes of bauxite.

"How is it possible that we have all these bauxite reserves and only one alumina refinery? I'm not even mentioning aluminium!" Kouyate told a forum on mining in West Africa late on Tuesday. "That must be reviewed."

"Has Guinea draw the maximum benefit from its mineral resources? I say no ... Our infrastructure has not developed in line with the exploitation of our mineral resources."

"All of what I've said is in the context of the debate which Guinea is conducting: the renegotiation of mining contracts," he said. "This is not a fight between partners ... It is all about development in a win-win framework."

Several foreign aluminium companies are investing in mining and processing capacity in Guinea, including Global Alumina (GLAu.TO: Quote, Profile, Research), which is spending more than $3 billion on a 2.8-million-tonne-a-year alumina refinery due to open by 2010.

Eskom over the last 30 years: why it has crashed – Part III

reamer Media's Engineering News (press release), South Africa 15 Feb 08 - 0:00

This is the third of three instalments that show how Eskom has gone from hero to zero in 30 years. The earlier instalments told of the rise of Eskom's marketing department, morphing from the 'human resources, training and power sales department' to the 'marketing department'.

The marketing department had the idea of increasing power sales by electrifying rural communities, offering municipalities deals to shut down power stations, and 'streamlining' power generation by shutting down power stations which they considered to be uneconomical.

The marketing department also entered into agreements to fund large, power-consuming aluminum smelters in Richards Bay and in Mozambique. By the mid-1990s, Eskom had rid itself of 3 850 MW of power by closing power stations and had committed itself to 2000 MW for the smelters.

It also went to all industrial steam consumers and persuaded them to shut down their coal boilers and install electrode boilers, putting a whole lot of boiler manufacturers out of business. Eskom, thus, reduced its base power reserves by 5 850 MW. Majuba power station came on line but its 3 843 MW was still about 2 000 MW short of what Eskom had shut down or committed to.

Possibly, had the whole matter rested there, Eskom would have been okay. Cahora Bassa power (1 800 MW) was due to come on line, and plans were made for a pumped-storage scheme at Braamhoek (4 x 333 MW ). In addition, Eskom could always demothball Camden, Kaomati and Grootvlei power stations, which would give about 3 000 MW.

Probably for these reasons, Eskom increased the supply to the Hillside and Mozal smelters to allow further expansion of these plants, which used a few hundred more megawatts.

But all was not well back at the castle. The South African government et al decided that they must implement affirmative action. This should have been a process whereby people who had no vote before 1994 were given employment preference. What it became, in Eskom and in the various municipalities, was a scramble to replace all white staff in technical and administrative positions with black staff.

The concept was fine, as long as the black staff had the necessary training and experience – but they didn't. In hundreds of cases, whites were told that they could take early retirement at age 55 with benefits, as if they were 65. As the sickle reaped, many whites left, without being asked to train anyone, many leaving the country to go to power utilities in other countries, which welcomed them with open arms.

The sudden lack of institutional knowledge was a bad thing, made worse by the fact that many newly appointed management had no electrical generation or distribution experience at all. In a few months, large-scale power outages became the norm for Johannesburg.

But this could be fixed – it was just a blip. What couldn’t be fixed was that Eskom needed to start building new power generation and, despite Bramhoek planning, nothing happened. Even a white paper presented to Cabinet in 1998, encouraging generation investment, did not cause government to institute new generation projects.

Other engineers and I wrote to Eskom and asked what the utility would do for power in 2007, when the supply ran out. We didn't even get an ackolowedgement of our letters. Then I heard from my Eskom contacts of an astonishing thing – the government plan was that a private power generation company would be formed, entirely black owned, and it would make up the shortfall in generation.

Given that a power station of any magnitude costs about R60-billion, we were gob-smacked. But the plan came to nothing. Nobody would finance it. Eskom started demothballing Komati, Grootvlei and Camden. It was too late – and it was very difficult. Cahora Bassa power was intermittent.

After this, we older engineers just sat back and watched. We would run out of power in 2007, which was clear. I wrote this in this column column in 2005. Naturally, there was no response. Nobody in the electrical engineering fraternity thought that Eskom or government could be idiot enough to wait until the system crashed. But they were.

Women in purchasing: Cracks appear in the glass ceiling

Purchasing.com, MA 14 Feb 08

It's more evolution than revolution, but women are gaining greater responsibility in purchasing at companies of all sizes. Here are five who have made it to the top, and their advice for others.

By Susan Avery -- Purchasing, 2/14/2008

We may have to wait until November to see if the nation has a woman president. But there are already thousands of women in executive positions in business. In purchasing, women hold 12% of the chief procurement officer (CPO) titles, and earn significantly more than male CPOs ($418,000 vs. $366,000), according to the Center for Advanced Purchasing Studies (CAPS) in Tempe, Ariz. With recruiters saying they're busier than ever trying to fill high-level posts in supply management, the number of women CPOs could grow.

Here's advice for would-be executives from one of five women who have broken through the glass ceiling...

Broaden your expertise

Christie Breves, Alcoa

Christie Breves, chief procurement officer at Alcoa in Pittsburgh, advises those pursuing a career in purchasing to get experience in a variety of areas and not get pigeonholed in one area of expertise. "Have a thirst for learning, make sure you are always developing professionally and have a great sense of urgency and real focus on delivering measurable impact," she says.

Breves is the first individual to hold the CPO title at Alcoa and is responsible for purchasing all direct and indirect materials and services and capital equipment globally, about $18 billion annually. (A separate group buys aluminum, electricity for smelting and some transportation services.) She reports to the chief financial officer.

"I think the recognition of the importance of procurement at Alcoa is really best addressed by the actions of our executive council when it decided three years ago to invest in this new organization," says Breves. "It's all about building more capability in procurement, and having the organization become much more strategic. Part is in reaction to the world supply situation becoming more challenging. But part of it was the value we demonstrate in procurement by doing this right, and by having really talented people in the function."

Breves began her career in accounting and had moved into procurement at Alumax when the company was acquired by Alcoa. She was named vice president of procurement at Alcoa in 2000, a role which, she says, is not the one she has today. Then, she was mainly responsible for leveraging the company's indirect spending; other buying still was done mainly by the businesses.

In 2004, Alcoa's executive council decided to invest in building greater capability in procurement. After a two-year transformation, the organization is now centrally led. Alcoa has more than 300 manufacturing sites in more than 44 countries.

Breves' biggest accomplishment is exceeding a $390 million savings goal after her arrival at Alcoa. "I think achieving that goal is a credit to all the people and teams involved and what led our executive council to make the decision to invest even further in building greater strategic capability in procurement," she says.

Leading the transformation was her biggest challenge because she says it involved a tremendous amount of change for the company. Her focus now is to make sure that her organization is supporting the businesses and helping them achieve results.

When asked about her work in purchasing, Breves says she likes knowing that what she does makes a difference "and the opportunity a career in procurement presents to work with people in a variety of different roles—internal teams, Alcoa's businesses and suppliers."

The skills needed for a successful career in purchasing are the same whether the individual is a man or a woman, she says. "Perhaps women are better listeners and maybe more collaborative, but I think it depends on the individual. I think a purchasing professional needs good business and financial acumen, good customer orientation, an ability to sell ideas and very solid experience in purchasing and business processes."

She believes strongly in the role of mentoring and is involved in a women's network and an emerging leaders program (for women and men) at Alcoa. She also tries to mentor others on a more informal basis.

Breves works to promote the purchasing profession. She's on the editorial advisory board of Purchasing and the board of the Center for Advanced Purchasing Studies (CAPS). She has served on the Institute for Supply Management (ISM) board of directors and is a past member of the Procurement Strategy Council.

Aluminum hits nine-month high

Reuters Fri Feb 15, 2008

LONDON (Reuters) - Aluminum climbed to a nine-month high on Friday, supported by worries over the impact of power cuts in South Africa and China on mine output, analysts said.

A common raw material for cars and aircraft, aluminum for three months delivery on the London Metal Exchange touched $2,873 per metric ton, its highest level since May 22, 2007, and ended the day at $2,820 per metric ton, up $10 from Thursday.

Energy-intensive to produce, aluminum is vulnerable to restrictions on power use.

"Even if the Chinese power problems are fixed, surging thermal coal prices will raise the cost of power in many producing countries," BNP Paribas analyst David Thurtell said.

"South Africa is likely to have problems maintaining or growing production (in the) medium term."

Aluminum has come sharply into focus in recent days on concerns that smelters in southern Africa, with an annual capacity of 1.5 million metric tons, could lose some or all of their electricity supplies in a proposed buyback deal by South African state-owned generator Eskom.

"This will mean fewer supply increases and pressure on those smelters trying to operate against a background of scarce or pricey power," UBS analyst Robin Bhar said in a report.

Investors are taking advantage of power crises in South Africa and China to speculate on further rises in aluminum, which has lagged other base metals in the past few years, analysts say.

Vale posted record production in 2007

ANBA, Brazil - [02/15/2008 - 17:48]

So Paulo – Mining company Companhia Vale do Rio Doce announced today (15) that it reached record levels of production in 2007. According to a company press statement, production totalled 296 million tonnes of iron ore, 17.6 million tonnes of iron pellets, 248,000 tonnes of refined nickel, 284,000 tonnes of copper, 9.1 million tonnes of bauxite, 4.3 million tonnes of alumina, 551,000 tonnes of aluminium, 1.3 million tonnes of caolin and 2,500 tonnes of cobalt.

According to Vale, this performance is the result of investment in 20 projects in existing exploration areas and in new projects that have been under development since the beginning of this decade as well as acquisitions and productivity gains. According to the company, between 2003 and 2007, productivity has grown on average 11.6% a year.

Production of iron ore, according to the company, grew 12% last year, pellets, 23.9%, nickel, already counting the production of the canadian Inco, acquired by Vale, rose 5.6%, copper, calculating the results obtained in Brazil and Canada, grew 6.6%, cobalt, in Canada, rose 27.6%, caolin, 0.1%, bauxite, 28.4%, alumina, 8%, aluminium, 0.1% and iron alloys, 1.4%.

There has been a reduction, however, in the production of manganese ore, platinum, palladium, gold, silver and potassium. The company also announced the production of 2.2 million tonnes of charcoal in mines it runs in Australia.

*Translated by Mark Ament


Google's One Million Servers: The New Heavy Industry

Seeking Alpha, NY - 18 February 17, 2008

Harper’s Magazine has a great feature in its March issue under the "Annotation" banner: It’s a close-up look at the blueprints for Google’s new server farms in The Dalles, Oregon — the ones that the New York Times wrote about back in 2006. The plans describe three giant buildings of almost 70,000 square feet or so, right beside the Columbia River (where there is a handy hydroelectric dam nearby), although only two of the farms have actually been constructed so far.

Based on industry standards for such farms, Harper’s figures they will use about 500 watts per square foot by 2011, which would mean a total of 103 megawatts, or enough to power a town of about 82,000 homes. The piece also notes that a nearby aluminum smelter that is being torn down used about 85 megawatts, and employed about 500 people. Google estimates it will create between 100 and 200 jobs.

When the New York Times wrote its piece in 2006, Google was estimated to have 25 server farm complexes around the globe, with a total of about 500,000 servers. That was already one of the largest distributed computing clusters in the world. According to Harper’s, current estimates are that it has about twice that many now — which means that its power costs could be as high as $200-million a year.


Kaiser Aluminum's 4th-quarter profit doubles

Reuters Tuesday February 19 2008 (Updates with stock rally, CEO comments)

NEW YORK, Feb 19 (Reuters) - Kaiser Aluminum Corp, said on Monday its fourth-quarter profit doubled, boosted in part by higher sales of fabricated products, sparking a rally in its stock.
The shares rose as high as $77.68, before ending up $3.43, or 5 percent, at $71.97 at Nasdaq.
Net earnings rose to $24.4 million, or $1.20 per share, from $11.9 million, or 59 cents per share, a year earlier, the Foothill Ranch, California-based company said.
The fourth-quarter earnings included a $17 million income tax provision, about $14 million of which was non-cash. Sales rose 7 percent to $361 million, Kaiser said.
Kaiser's fabricated products business posted operating income of $40 million, up 25 percent from a year earlier, boosted by rising heat treat plate shipments and strong sales of aerospace and defense applications.
The company also said the strong results were driven by higher realized aluminum prices, improved contractual alumina pricing and a favorable currency exchange.
"We continue to ... capitalize on strong demand for aerospace and defense-related products," said President, Chief Executive Officer and Chairman Jack Hockema.
"Robust demand for heat treat plate products continues, although the ramp-up is slower than anticipated. Strong armor plate demand has cushioned this impact."
He said rod and bar inventories at service centers, which buy metal from manufacturers and process it for specialized customers, hit historic lows in the third quarter and restocking has begun.
"Additionally, export opportunities and newly introduced growth programs will soften the impact of weak demand in ground transportation, which we expect to continue through the first half of 2008," Hockema said.
(Reporting by Steve James, editing by Dave Zimmerman, Richard Chang)


Govt to shut down Alcasa's lines 1, 2 - Venezuela

Business News Americas, Chile - Tuesday, February 19, 2008

The Venezuelan government has definite plans to shut down production lines 1 and 2 at aluminum reducer Alcasa as the lines are obsolete due to a lack of investments, a company spokesperson confirmed to BNamericas.

The decision was announced by basic industries and mining minister and CVG president Rodolfo Sanz after he paid a visit to the plant, according to the spokesperson.

"The decision is not up for discussion considering that the labor conditions in those areas are sub-human and we are going to close them very soon," Sanz was quoted as saying in an Alcasa statement.

Line 1 will be closed halfway through the year and line 2 by end-2008.

The spokesperson said that employees working on obsolete lines will be relocated to lines 3 and 4 and to Alcasa's rolling plant.

Halting operations on lines 1 and 2 will only cut the company's total output by 20% since lines 3 and 4 have a combined capacity of nearly 168,000t/y. Alcasa's capacity with all four lines comes to 210,000t/y.

LINE 5
In regards to construction of Alcasa's production line 5, the project's future is uncertain. Since "there have been no investments to upgrade lines 1 and 2, I don't think there are any plans to invest in a new line," according to the spokesperson.

Line 5 would boost the company's output to 210,000t/y and take nearly three years to build at an estimated cost of US$710mn.

The company churned out 180,086t in 2007. Sales came to 175,644t including 110,383t to the domestic market and 65,261t for export.

Alcasa is located in the eastern Venezuelan city of Puerto Ordaz. It is 92% owned by state heavy industry holding company CVG and the remaining 8% is in the hands of US-based Alcoa (NYSE: AA).


Bauxite Rises 30%, Double Last Year's Gain, on China Demand

Bloomberg - Feb. 19, 2008

By Debarati Roy

Bauxite prices have risen as much as 30 percent since January, twice as much as last year, on rising demand in China and dwindling exports from Indonesia, the Asian nation's main supplier of the aluminum-making material.

Prices have risen to more than $70 a metric ton, including insurance and freight, said Chetan Shah, managing director of Ashapura Minechem Ltd., India's largest bauxite exporter. Prices climbed 15 percent in 2007 and 28 percent in 2006, he said today.

China, which imports 70 percent of its bauxite requirements from Indonesia, faces a supply crunch after the Southeast Asian nation closed several mines to stamp out illegal mining. That's boosted sales for Indian suppliers including Ashapura Minechem.

``We've already found buyers for our entire production of 10 million tons planned for the year,'' Shah said in an telephone interview. Last year, output totaled 6.5 million tons, he said.

Ashapura surged as much as 18.5 percent to 281 rupees, the most in 14 years, on the Bombay Stock Exchange. The stock traded at 263.25 rupees at 2:34 p.m. local time. The company lost more than a third of its market value before today amid a sell-off in equities globally. The stock more than tripled in 2007.

The price of aluminum, used in cars, aircraft and beverage cans, has risen 18 percent this year on increased demand as well as supply disruptions in China and South Africa. Supplies from the Asian nation, the biggest producer of the metal, may continue to tighten as smelters take months to restart after the worst snowstorms since 1954 curbed power generation.

Bauxite is processed into alumina, a white powder used to produce aluminum.

To contact the reporter on this story: Debarati Roy in Mumbai at

Rusal Finalizes Project of Tayshet Aluminum Plant

Financial Information Service(Registration), Russia - February 20 2008

IRKUTSK, UC Rusal informs that it has completed the approval gathering procedure as regards the construction of Tayshet Aluminum Plant and obtained a positive conclusion of Russian Glavexpertiza. The plant's capacity is projected at 750 thousand tons of aluminum per annum and investments are estimated at USD2 billion. The plant will have four electrolysis buildings equipped with RA-400 electrolyzers designed by Rusal's engineering and technological center. The plant will also have foundry, anode, energy, gas purification units and a full infrastructure complex. The first batch of aluminum is to be made at the end of 2009.

Source: IIS Metal Supplies and Sales.--

Eskom crisis ‘will affect Alcan Coega smelter‘ – minister

The Herald Eastern Cape, South Africa - 21-Feb-2008

Patrick Cull POLITICAL EDITOR

TRADE and Industry Minister Mandisi Mpahlwa acknowledged yesterday that the serious shortage of electricity "will affect all industries, including the Alcan Coega aluminum smelter development".

Replying to a written question from Les Labuschagne (DA), the minister said this could "entail the project adjusting the energy requirements for its two phases.

"In addition, alternative energy conservation options will be explored, as there are various alternatives that an energy project of this nature can use to conserve its energy-intensive requirements."

Mpahlwa also acknowledged that the electricity shortage would have an impact on the development of the Coega industrial development zone "in the short to medium term".

However, he stressed: "Eskom is however in the process of providing a peak generation facility which will mitigate the situation. In the meantime, the Coega Development Corporation is working with both national and local government on proposals to conserve power."

Replying to another question from Labuschagne, the minister said the Eskom programme to conserve energy by existing industries was "intended to expand the prevailing narrow reserve capacity margin".

He said given the current energy situation, his department would not promote energy-intensive projects, adding that this policy would be administered in co-operation with Eskom and the department of public enterprises.

Aluminum alloy produces hydrogen on demand

InTech, NC - 21-Feb-2008

A new aluminum-rich alloy that produces hydrogen by splitting water can be economically competitive with conventional fuels.

"We now have an economically viable process for producing hydrogen on demand for vehicles, electrical generating stations, and other applications," said Jerry Woodall, a distinguished professor of electrical and computer engineering at Purdue University, who invented the process.

The new alloy contains 95% aluminum and 5% of an alloy made of the metals gallium, indium, and tin. Because the alloy contains significantly less of the more expensive gallium than previous forms of the alloy, they can produce hydrogen less expensively, he said.

When immersed in water, the alloy splits water molecules into hydrogen and oxygen, which immediately reacts with the aluminum to produce aluminum oxide, also called alumina, which can recycle back into aluminum. Recycling aluminum from nearly pure alumina is less expensive than mining the aluminum-containing ore bauxite, making the technology more competitive with other forms of energy production, Woodall said.

"After recycling both the aluminum oxide back to aluminum and the inert gallium-indium-tin alloy only 60 times, the cost of producing energy both as hydrogen and heat using the technology would be reduced to 10 cents per kilowatt hour, making it competitive with other energy technologies," Woodall said.

A key to developing the alloy for large-scale technologies is controlling the microscopic structure of the solid aluminum and the gallium-indium-tin alloy mixture.

"This is because the mixture tends to resist forming entirely as a homogeneous solid due to the different crystal structures of the elements in the alloy and the low melting point of the gallium-indium-tin alloy," Woodall said.

The alloy has two phases because it contains abrupt changes in composition from one constituent to another.

"I can form a one-phase melt of liquid aluminum and the gallium-indium-tin alloy by heating it. But when I cool it down, most of the gallium-indium-tin alloy is not homogeneously incorporated into the solid aluminum, but remains a separate phase of liquid," Woodall said. "The constituents separate into two phases, just like ice and liquid water."

The two-phase composition seems to be critical for the technology to work because it enables the aluminum alloy to react with water and produce hydrogen.

The researchers had earlier discovered that slow-cooling and fast-cooling the new 95/5 aluminum alloy produced drastically different versions. The fast-cooled alloy contained aluminum and the gallium-indium-tin alloy apparently as a single phase. In order for it to produce hydrogen, it had to be in contact with a puddle of the liquid gallium-indium-tin alloy.

"That was a very exciting finding because it showed that the alloy would react with water at room temperature to produce hydrogen until all of the aluminum was used up," Woodall said.

The engineers were surprised to learn late last year, however, that slow-cooling formed a two-phase solid alloy, meaning solid pieces of the 95/5 aluminum alloy react with water to produce hydrogen, eliminating the need for the liquid gallium-indium-tin alloy.

"That was a fantastic discovery," Woodall said. "What used to be a curiosity is now a real alternative energy technology."

Researchers are developing a method to create briquettes of the alloy they could place in a tank to react with water and produce hydrogen on-demand. Such a technology would eliminate the need to store and transport hydrogen, two potential stumbling blocks in developing a hydrogen economy, Woodall said.

The gallium-indium-tin alloy component is inert, which means researchers can recover it and reuse it an efficiency approaching 100%, he said

"The aluminum oxide is recycled back into aluminum using the currently preferred industrial process called the Hall-Hroult process, which produces one-third as much carbon dioxide as combusting gasoline in an engine," Woodall said.

The aluminum splits water by reacting with the oxygen atoms in water molecules, liberating hydrogen in the process. The gallium-indium-tin alloy is a critical component because it hinders the formation of a "passivating" aluminum oxide skin normally created on pure aluminum’s surface after bonding with oxygen, a process called oxidation. This skin usually acts as a barrier and prevents oxygen from reacting with bulk aluminum. Reducing the skin’s protective properties allows the reaction to continue until all of the aluminum generates hydrogen, Woodall said.

"This skin is like an eggshell," he said. "Think of trying to fry an egg without breaking the shell."

For the technology to work in cars and trucks or for power plants, a large-scale recycling program would be required to turn the alumina back into aluminum and to recover the gallium-indium-tin alloy. Other infrastructure components, such as those related to manufacturing and the supply chain, also would have to be developed, he said.

For related information, go to www.isa.org/manufacturing_automation.

Alcoa Complete $83 Million Modernization of Hungarian Aluminum Operation

Azom.com - February 21st, 2008

Alcoa today announced the completion of a US$83 million, (Euro 70 million), major modernization investment project at Alcoa-Kfm, its operations in Szkesfehrvr, Hungary. The project began in November 2005.

The core of the investment is the modernization of Alcoa European Mill Products, which involves expanding brazing sheet capability to offer a full range of gauges. Brazing sheet is used primarily in the automotive and heat exchanger markets.

In addition, Kfm, which has been producing forged aluminum wheels since 1997, began production of Dura-Bright® aluminum wheels in Hungary. Dura-Bright® is a patented surface treatment that penetrates the wheels and helps keep them bright and shiny, reduces overall labor costs and downtime, and protects the wheels from oxidation and corrosion. Dura-Bright® wheels are available for a broad range of applications including trucks, trailers and buses. This state-of-the-art technology is deployed by Alcoa only in its Hungarian operation, outside the American continent.

The third leg of the investments is the opening of a new manufacturing operation for airfoil castings, supporting the Alcoa Power & Propulsion business unit’s growing jet aircraft and industrial gas turbine business in Europe.

"The modernization project yields in shifting Kfm’s product-mix to a range of higher value-added products, thereby underpinning its competitive operation. It strengthens Alcoa's presence in Europe and its long-term strategic investment in Hungary," said Bela Forgo, Country Manager Hungary and General Manager, Alcoa-Kfm.

The investments received non-refundable government support and created nearly 200 new jobs.

Aluminum plant comes down

EastOregonian.info (subscription), OR 02-Feb-2008

The Associated Press

A wrecking ball slams into the side of the Northwest Aluminum Plant Thursday in The Dalles where petroleum coke and coal tar pitch were once blended to make carbon for the anodes. The building is the first major structure to be demolished, although many of the buildings have already been gutted and much of the metal sold as salvage.

China to eliminate preferential power prices for aluminum producers

Forbes, NY - 02.22.08

BEIJING (XFN-ASIA) - China will eliminate the preferential power prices offered to high-consuming aluminum smelters as part of a national campaign to improve energy efficiency, the country's regulator said.

The National Development and Reform Commission (NDRC) said in an announcement posted on its website that it would begin by abolishing the favorable price policies offered to aluminum firms in southwest China's Guangxi and Sichuan provinces and northwest China's Gansu province.

The prices paid by certain smelters and alumina producers in southwest China's Chongqing will rise by 0.01 yuan per kilowatt-hour, the NDRC said.

It also said that the country's power grids should continue to monitor the tariffs levied on all high energy-consuming companies by regional grid companies with the aim of eliminating all preferential pricing behavior.

bjburo@xfn.com

UC RusAl launches Alscon smelter in Nigeria

SteelGuru, India - February 23,2008

RIA Novosti reported that UC RusAl, the world's largest aluminum and alumina producer has launched the Alscon smelter in Nigeria.

Alscon, based in Nigeria's Akwa Ibom State, produced its first metal in 1997, but was brought to a standstill in 2000 by high production costs, inadequate gas supply, and a lack of working capital. The smelter includes two potlines, an anode rodding shop, a cast house area and various infrastructure facilities including a port on the Imo River and a power generating gas station.

To date, the first start-up section of the cast house has been launched; dry scrubbers installed; two gas-turbine units have been refurbished; the anode rodding shop has been completed, and a system of alumina transportation has been organized.

RusAl said it plans to completely modernize the smelter so that it can reach its full capacity of 197,000 tonnes per annum in 2010. Investment in the plant's modernization, including dredging of the Imo River, will total approximately USD 300 million.

The report said RusAl closed a deal to acquire a majority stake in Alscon in February 2007 receiving a 77.5% share in a 193,000 tonnes smelter as well as a port on the Imo River and a power station. Germany's Ferrostaal AG and the government of Nigeria remain minority shareholders with 7.5% and 15% respectively.

UC RusAl, controlled by Oleg Deripaska's Basic Element, became the world's largest aluminum producer after a March merger between RusAl, rival Sual and Swiss Glencore's alumina assets.

Russian business looks to Africa

RussiaToday, Russia - February 23, 2008

Russian companies are getting more active in Africa. Gazprom has signed a production sharing agreement with Libya’s National Oil Corporation to explore the Gadames deposit in the North African country. Also, Rusal has re-launched Nigeria’s Alscon smelter.

Gazprom is planning to invest $US 100 million in the project.

It is already involved in the Libyan gas sector, with a $US 200-million project underway in the Mediterranean.

Meanwhile, aluminum giant Rusal has re-launched Nigeria’s Alscon smelter.

Rusal plans to modernise the plant, bringing it up to a capacity of 197,000 tonnes by the end of the decade.

The project involves dredging the Eemo River and will cost a total of $US 300 million.

Kitimat loses bid to block Alcan power sales

CBC - Newfoundland & Labrador, Canada - Friday, February 22, 2008

No deal to reserve electricity for smelter, court rules

Kitimat, B.C., home of a storied Alcan aluminum smelter, has lost a legal battle to block sales of electricity from the dam that powers the plant.

On Friday, the British Columbia Court of Appeal dismissed Mayor Richard Wozney's appeal of a ruling in favour of Alcan.

Kitimat, B.C.

The company, now part of the Anglo-Australian mining giant Rio Tinto, has a deal to sell power to BC Hydro.

The mayor, seeking to protect local jobs, has argued that a 1950 deal letting Alcan generate power with publicly-owned water requires it to reserve enough power to run the smelter at full capacity.

The theory got nowhere with a three-judge appeal panel.

Writing on behalf of the panel, Mr. Justice P.D. Lowry said there is no proof the deal included such a restriction, implicit or otherwise.

Rio Tinto Alcan completes construction of US$225M pilot plant in Saguenay

The Canadian Press - 02-Feb-2008

MONTREAL - Rio Tinto Alcan (NYSE:RTP) has completed construction of its "spent potlining" treatment pilot plant, a US$225-million investment creating 50 jobs in Saguenay, Que.

Spent potlining is a material that is removed periodically from the electrolytic cells used to produce aluminum.

Pre-operational checks and pre-commissioning are underway at the plant, which will come on line and begin ramping up in April, the Montreal-based company said Friday.

"We are very pleased that the project is on time and on budget," said Jacynthe Cote, CEO of Rio Tinto Alcan's primary metal business unit.

"Rio Tinto Alcan is proud to have developed an environmentally sustainable, innovative and economically competitive solution for treating potlining. It may well become the industry standard."

With its partners, she said, the company will continue research aimed at full recycling of byproducts generated by the process.

The plant will treat about 80,000 tonnes of spent potlining each year. Some of the byproducts will be reused within Rio Tinto Alcan's alumina refining process.

Spent potlining is made up of carbon and other products and is normally treated before being disposed of in highly controlled conditions.

London-based Rio Tinto acquired Canada's Alcan Inc. last year in a US$38.1-billion deal.

ALSCON bounces back, resumes production

Vanguard, Nigeria - Tuesday, 26 February 2008

The former Aluminum Smelter Company of Nigeria (ALSCON) now RUSAL ALSCON has resumed production, eight years after it was shut down. Over 500 persons, mostly members of management, staff and dignitaries watched on Friday as the company located in Ikot Abasi, Akwa Ibom State, rolled out the first tone of aluminum.

The UC RUSAL, a Russian company in February, 2007, acquired 77.5 per cent of ALSCON shares, with the federal government and German’s Ferrostaal AG, owning 15 per cent and 7.5 per cent respectively. Speaking at the ceremony, the Managing Director of Russian Engineering Company, Moscow , Mr. Valery Matvienko, said that upgrading of facilities had been carried out in the company. Matvienko said that the ultimate goal was to completely modernise the smelter, so that it can reach its full production capacity of 197,000 tones per annum by 2010.

He said that the smelter’s modernisation including the dredging of the Imo River , would cost his company about $300 million. The RUSAL ALSCON chief said that local communities would be consulted with before the dredging of the river in the second half of 2008

"Once ALSCON reaches full capacity, the smelter will provide 1,900 jobs. Associated small and medium size businesses to support the smelter and the development of necessary infrastructure, will also generate approximately 20,000 related jobs," he said. NAN, however, reports that no official of the state government was around to witness the ceremony .

Reacting , the Managing Director of RUSAL ALSCON, Mr. Andrey Partyanskiy, said that top government officials were duly invited.

"RUSAL is never involved in politics; we are here to work and I know that this will not affect our relationship," he stated. Contacted, Mr. Usoro Usoro, the Chief Press Secretary to Gov. Godswill Akpabio, said that government was not aware that the ceremony, which he said had earlier been postponed, would still hold as scheduled.

Alcan's Saudi partner plans US$2.4B IPO

Financial Post, Canada - Monday, February 25, 2008

Souhail Karam, Reuters

JEDDAH -- Saudi Arabian Mining Co (Maaden), a state-owned partner in an aluminum venture with Canada's Alcan Inc., said it planned to raise as much as 9-billion riyals (US$2.4-billion) in a share sale this year.

Alcan and Maaden agreed in April to develop what would be one of the world's largest aluminum-making projects at a cost of US$7-billion. That includes a smelter, an alumina refinery and a power station.

Maaden plans to sell 40% of the company in an initial public offering -- possibly before October -- and another 10% to two Saudi state funds, Maaden Chief Executive Officer Abdullah Dabbagh told Reuters in the Saudi city of Jeddah on the sidelines of an investment conference on Monday.

"This IPO will be the last link in the chain ... The financing will be complete," Dabbagh said.

The share sale, on which JPMorgan Chase & Co. was advising, was initially planned for last year, and put at between US$1.9-billion and US$2.5-billion.

Maaden, which generates most of its revenue from gold production, is developing projects -- including phosphate mining -- worth about 44-billion riyals, as the world's largest oil exporter seeks to diversify its economy from energy.

The phosphate venture with state-controlled Saudi Basic Industries Corp. will cost about 17-billion riyals.

Maaden is looking for more projects, Dabbagh said.

"This growth can be done through acquisitions, mergers or new projects all in the mineral sector," Dabbagh said, declining to be more specific.

Maaden appointed seven banks, including Standard Chartered PLC, to arrange a US$2.3-billion loan to finance the phosphate venture, a banking source told Reuters Loan Price Corporation on Feb. 14.

The planned loan is split between a syndicated Islamic facility, which complies with Islam's ban on the receipt of interest, and a facility guaranteed by the Korea Export Insurance Corp.

The loan is expected to be sold on to other lenders by the end of the month.

© Reuters 2008

European Commission clears Rank Group to buy Alcoa's consumer units

MarketWatch - 4:03pm 02/25/2008

By Peppi Kiviniemi

BRUSSELS (MarketWatch) -- The European Commission Monday cleared New Zealand-based Rank Group Ltd. to buy the packaging and consumer business unit of New York-based aluminum company Alcoa Inc.

4:03pm 02/25/2008 for $2.7 billion.

The businesses being sold include the Closure Systems International, Consumer Products, Flexible Packaging and Reynolds Food Packaging units. Together, the units generated about $3.2 billion in revenues and $95 million in after-tax operating income in 2006.

The Rank Group consists of a number of companies controlled by Graeme Hart, including wood products, building supplies, pulp and paper and packaging.

Rio warns of risks to aluminium prices

The Australian, Australia - Feb 25, 2008

Jeffrey Sparshott, Dow Jones Newswires

ANOTHER disruption to aluminium production this year could push prices past the mid-$US3000 a tonne level, Rio Tinto Alcan said.

"If you had another shock of some kind that would take capacity offline...and the market did go into deficit, I think it would be very interesting to see how much price response you might get in the curve," Rio Tinto Alcan chief executive Richard Evans told Dow Jones Newswires.

"I think it is not unrealisitc to think that if there was another shock you could have short-term prices jump into the mid-3000s or even higher," he said.

It was a "reasonably probable scenario" that the aluminium market would shift from surplus to deficit this year, Mr Evans said in an interview.

Diversified miner Rio Tinto (ASX: RIO: quote) acquired Canada's Alcan last year for $US38 billion ($41 billion). BHP Billiton has since pitched a $US147.4 billion takeover bid for Rio Tinto.

Meanwhile, aluminium prices have climbed steadily as power disruptions in South Africa and China have affected aluminium production.

South African utility Eskom has said it can only guarantee 90 per cent of supply, while in China authorities are still working to restore power in parts of the country following severe weather.

Aluminium prices overnight hovered around $US2900 a tonne, up from $US2463 a tonne on January 24.

Higher aluminium prices also reflect a repricing of inputs amid a shift in energy and electricity costs, more expensive bauxite and alumina - the raw materials for aluminium - as well as a weaker US dollar.

"I do basically think that the market reflects the general realisation that there has been a repricing of the aluminium curve," Mr Evans said.

The South Africa power crisis has forced Rio Tinto to reconsider plans to build a smelter in the country.

Mr Evans said Rio Tinto would delay a decision on building its Coega project for one to four years and in the meantime would divert engineering and financial resources to expanding capacity at existing facilities in British Columbia, Quebec or Oman.

"We are not going to build a smelter unless we have high assurance there will be power," Mr Evans said.

Alcoa's move suggests possible play for Alcan assets, analysts say

The Canadian Press - 02/27/08

MONTREAL - Six months after it was spurned at the altar, American aluminum giant Alcoa Inc. (NYSE:AA) has once again crossed paths with Alcan, possibly to take another run at the assets of its longtime rival, analysts said Friday.

The world's third-largest aluminum company is helping Aluminum Corp. of China (Chinalco) to become the largest shareholder of Rio Tinto, Alcan's new owner, after spending US$14.06 billion to buy 12 per cent of the British-based Rio Tinto PLC. As a result, Alcoa-Chinalco also own nine per cent of the Australian-traded company Rio Tinto Ltd.

Alcoa loaned the Chinese firm US$1.2 billion, which is eventually convertible into equity of Shining Prospect Pte, a Singapore company set up specially to invest in Rio Tinto.

Alcoa and Chinalco insisted their move was purely an investment and they had no "current" plans to bid for the world's largest mining company.

But Charles Bradley of Soleil-Bradford Research doesn't buy it.

"I just wonder if there isn't something else involved, like are they going to try to squeeze Rio Tinto to try to get Alcan," Bradley said in an interview from New York City.

Bradley said there's no love lost between the U.S. and British rivals and therefore there's no reason for Alcoa to support Rio Tinto, which is a takeover target of BHP Billiton.

The involvement of the American and Chinese aluminum companies may complicate or threaten BHP Billiton's efforts to purchase Rio Tinto or force it to raise its offer. BHP has until Feb. 6 to make a firm offer or walk away.

Alcoa and Chinalco said they reserved the right to do so if another party entered a firm bid.

An ultimate change in owner would likely have little or no impact on Alcan's Canadian assets, analysts said.

"Usually you don't buy something in order to do something to it unless it's doing badly," said Bradford. "I don't know if there's anything you would want to do to Alcan. Alcan had been pretty well cleaned up before this whole thing got started."

Any owner of Alcan's Canadian assets will have to honour agreements made to the Quebec and federal governments, added Victor Lazarovici, who recently retired as an analyst for BMO Capital Markets.

Alcoa's small stake in the purchase suggests it's not the leading force in this strategic alliance, said another analyst, who didn't want to be named.

"They're along for the ride," he said. "All they're hoping is that some assets will fall from this that they can afford to buy, that's it."

One of the ways targets buy back large blocks of its stock is to trade them for assets. Consequently, Rio Tinto may seek to repurchase Chinalco's stake using cash and some of its aluminum assets.

But Lazarovici said it's too early to assess Alcoa's intentions.

"What they've done is planted themselves at the table and bought themselves a stake and then they'll see what opportunities develop," he said in an interview.

Severe anti-trust issues would be raised if Alcoa merged with Alcan and Rio Tinto's Comalco aluminum assets, Lazarovici added.

With few options to purchase a smaller aluminum player, Alcoa may simply be partnering with a larger company that it has worked with before to help consolidate the ever changing mining and metals industry. In September 2007, Alcoa sold its stake in Chinalco's Chalco unit for US$2 billion, for which it paid US$200,000 during Chalco's 2001 initial public offering.

"There is a lot strategizing going on in the industry and people are trying to figure out how to position themselves for best advantage given the rapid consolidation we have seen, which a lot of people expect to continue," he said.

Having Alcoa on its side may also make the China's ownership stake more palatable to western countries, than if it had gone it alone, Lazarovici added.

There has been widespread speculation that China was looking for a way to block the merger of BHP and Rio Tinto, which it feared would allow the behemoth to control prices of key commodities by restricting supply.

Alcoa declined to refer specifically to Alcan, saying the aluminum division headquartered in Montreal is now part of Rio Tinto.

"We have long believed that Rio Tinto has a world-class portfolio of assets and is very well positioned to prosper in the current mining cycle," Alcoa spokesman Kevin Lowery said in an interview from London.

"We think that this investment, made in partnership with Chinalco allows us to mutually benefit from the developments in the sector."

Last November, Rio Tinto completed its US$38.1-billion purchase of Alcan after Alcoa withdrew its $28-billion offer for its Canadian rival.

The value of Alcan may be lower now because of the impact of a surging Canadian dollar and lower aluminum prices. These factors may prompt Rio Tinto to be more willing to sell the assets, said Bradford.

Rio Tinto officials declined to comment. In a news release, company chairman Paul Skinner said the "unsolicited development, of which we had no prior notice, reinforces our view of the long term value of Rio Tinto."

China to spend US$42 bil. on Beibu Gulf projects

Bloomberg Friday, February 29, 2008

BEIJING -- China plans to spend 300 billion yuan (US$42 billion) in the Beibu Gulf area near Vietnam, building power plants, smelters and other infrastructure projects, according to a Chinese provincial chief.

Among the projects is PetroChina Co.'s 15.2 billion yuan refinery under construction by China's biggest oil company, an aluminum smelter, a steel mill and a nuclear power plant, said Ma Biao, governor of southwestern China's Guangxi province, at a press conference Thursday in Beijing. A bank may also be set up to finance development in the region, he said.

China's economy expanded 11.4 percent last year, the fastest rate in 13 years, boosting demand for raw materials, fuel and chemicals to feed the nation's industries.

Alcoa faces Bahrain bribery allegation

MSN Money - February 28, 2008

NEW YORK (Reuters) - Alcoa has been accused of a 15-year conspiracy involving overcharging, fraud and bribery by a company controlled by Bahrain, according to the Wall Street Journal on Thursday.

Aluminum Bahrain has alleged in a lawsuit filed in a U.S. Federal court that Alcoa steered payments for an aluminum precursor ingredient to a group of companies abroad, in order to pay kickbacks to a Bahrani government official.

The firm also alleged that Alcoa had overcharged it for the precursor material, alumina.

Alcoa was not immediately available for comment.

(Reporting by Yinka Adegoke; Editing by David Cowell)

Copyright 2008 Reuters

US$8 billion refinery for Libya

ArabianBusiness.com, United Arab Emirates - Thursday, 28 February 2008

by Daniel Canty

on Thursday, 28 February 2008 Libya African Investment Portfolio, represented by Abdulfatah Sharif has signed a joint venture agreement with London-based Klesch and Co to invest in building a vast industrial complex of a new 300,000 barrels per day capacity oil refinery, and a 725,000 tonnes per year Aluminium smelter in Libya.

The deal represents an investment of approximately US$8 billion.

The complex is scheduled for completion in 2011 and will use the latest technology allowing it to optimise the production of finished goods. Both parties also confirmed their interest in jointly developing the mining and refining of Bauxite in Western Africa.

"We are delighted to have signed this agreement," said Sharif. "We welcome the investment and the development of our infrastructure and are extremely impressed with the Klesch organisation," he added.

"We welcome the opportunity to work alongside the Libyan Government in developing their downstream capabilities and firmly believe in the long-term growth prospects of the country and are supportive of their economic development plans," said Gary Klesch.

The Libyan economy depends primarily upon revenues from the oil sector, which contribute about 95% of export earnings, about one-quarter of GDP, and 60% of public sector wages.

Attracting much needed investment picked up steam after UN sanctions were lifted in September 2003 and as Libya announced in December 2003 that it would abandon programs to build weapons of mass destruction.

Almost all US unilateral sanctions against Libya were removed in April 2004, helping Libya attract more foreign direct investment, mostly in the energy sector. Libyan oil and gas licensing rounds continue to draw high international interest; and the National Oil Company set a goal of nearly doubling oil production to 3 million bbl/day by 2015.