AluNews - August 2009

ENERGY-CAMEROON:Dam Project Questioned

Inter Press Service - 03-Aug-2009

Ngala Killian Chimtom

LOM-PANGAR, Cameroon, Aug 3 (IPS) - Construction has begun on a new dam at the confluence of the Lom and Pangar rivers in Cameroon. The government is pushing the project as key to addressing an energy shortfall, allowing for economic growth; observers believe the plan may only increase the country's vulnerability to drought.

Cameroon, which is heavily dependent on hydro-electric power, has recently suffered significant reductions in supply due to drought. Government hopes to use the Lom Pangar dam to regulate seasonal flows of water into the Sanaga River.

With a planned capacity of 7.250 billion cubic meters in a reservoir that will cover 610 square kilometers, the dam will be used to hold water back for release during dry the season to feed the Song-Lou Lou and Edea dams on the Sanaga River downstream.

"These two dams produce a total of 648 MW of electricity, but this production generally drops in the dry season. The Lom Pangar Dam will enable the two dams to produce an additional 170 MW of electricity without additional costs," Celestin N'Donga, director general of the Electricity Development Corporation (EDC) told IPS.

The dam is expected to cost around 240 million dollars, with funding coming from a consortium including the French Agency for Development, The African Development Bank, IMF, and the Islamic Bank.

Flicking the development switch

Government is banking on the dam to jump-start Cameroon's economy. Speaking at the formal launch of construction of the road from Deng Deng in May, the water and energy minister at the time, Luc Bernard Sindeu, said, "I can’t imagine Cameroon evolving into an emerging country by 2035 as planned, without (an) adequate energy supply."

At the formal launch of construction of the road from Deng Deng on May 15, N'Donga told journalists, "This is one of the projects that will spark the third cycle of industrialisation in Cameroon."

Cameroon’s industrialisation has long been hampered by inadequate power supply. Its first cycle of industrialisation, based on state–run enterprises ran into trouble in the 1980s when an excruciating economic crisis set in, prooked by plummeting prices of raw materials in the world market. By 1997 though, the industrial sector had recovered enough to contribute 27.8 percent of GDP.

One of the giants of this growth, the aluminum smelter ALUCAM is eyeing the Lom Pangar dam project with great expectation.

In June 2008, the Electricity Development Corporation (EDC) and Rio Tinto-Alcan, owners of ALUCAM, signed an agreement which lays out modalities for eventual water purchases by the aluminum company. The agreement will allow construction of another power-generating dam downstream at Nachtigal, and ALUCAM's managing director, Titi Manyaka, was quite up-beat.

"This is a major development for ALUCAM. We have been longing to expand production from 90,000 tons per year to 300,000 tons. We couldn’t because of inadequate power supply."

Acute power shortages have forced the aluminum smelter to scale down output by nearly 40 percent. According to Manyaka, ALUCAM needs 180 MW to operate at full capacity. Supply however dropped to 120 MW in 2009.

ALUCAM sources say production this year could drop to just 55,000 tons.

"This is why the Lom Pangar Dam is important to us," Jacques Dubuc, spokesperson for Rio Tinto-Alcan operations in Europe, the Middle East and Africa, told IPS during a recent visit to Cameroon.

"If ALUCAM suffers such production cuts, it is not good news for the company and its shareholders... it is particularly not good news for the Cameroon government which will also lose money in export taxes."

ALUCAM currently represents seven percent of Cameroon’s industrial output, five percent of export earnings, and contributes three percent to the GDP – 106 million dollars - to the national budget.

Claudia Djoho says new factories are expected to sprout in southern Cameroon once the power supply is expanded: a cement factory is planned for Limbe, and several power-intensive mining projects such as the Mballam iron exploitation and another mining cobalt in Lomie.

The plan has its critics

But discordant voices have been raised against the general shout of praise. With ALUCAM planning to use most of the new power to treble aluminum production, it is argued that the energy generated from the dam will not be of benefit to the people of Cameroon.

AES SONEL, the electricity distribution company, currently supplies less than 53 thousand of Cameroon’s nearly 20 million people. Alucam uses up to a third of the country's total energy output - and this at subsidised rates. ALUCAM pays just 0.8 CFA per KwH of electricity – less than one U.S. cent, and far below the ordinary Cameroonian who has to pay between 10 and 12 cents per KwH.

"Industry is desirable," said Essoka Goumone, mayor of Belabo in whose jurisdiction the dam will be constructed. "But it seems like people are now being sacrificed on the altar of industrial expansion."

He said that the indigenes suspect that they will continue to suffer from intermittent power cuts even after the dam becomes operational in 2012.

The region’s electricity presently comes from three aging thermal plants, which produce barely 10 MW of electricity. Sindeu said "a 24MW hydro plant will be constructed at the foot of the dam to cater for the electricity needs of local people".

Terri Hathaway of International Rivers Network challenges the wisdom of constructing yet another dam along the Sanaga River, which already has other dams downstream that provide 95 percent of Cameroon's electricity production.

She says that the heavy dependence by Cameroon on hydroelectric power (and generated from a single river system) puts Cameroon at great risk of economic disruption caused by droughts.

In 2007, low rainfall and drought resulted in the blackouts that provoked a wave of strike actions across the country. The unrest in Cameroon's East Region led to the death of two students, mowed down as they went into violent confrontation with the forces of Law and Order.

Critics believe that it would be wiser for Cameroon to indulge in alternative sources of energy.

"If I were to advise the government, I would tell them to revert to renewable energy sources," Gilbert Achiri of Renewable Energy Services Company (RESCO) told IPS on the phone from Douala.

"Cameroon has an abundance of sunlight. We need just a little political will to convert this light into energy and don’t forget that it can be accessible even to citizens in the most remote areas," he said.

"We are going through a period of energy crisis. It’s not constructing large dams that will get us out of this crisis," Thang adds. "We have a pilot project on solar energy."

They also propose that higher management standards should have been stepped up to avoid energy loses. Thirty percent of Cameroon’s energy is lost in transmission.

But the main promoters of the dam think differently. "Cameroon has enormous hydro potentials – third highest in the world - which cannot be ignored," Claudia Djoho, EDC communication officer told IPS, though she admits that EDC is planning to build several gas-fired plants as back-up energy sources.

"And don't forget that water is also a source of renewable energy, unlike nuclear energy and fuel. Besides, hydro-electric dams also bring along economic benefits to the locals with activities like fishing and trade."

Noranda says smelter repairs on track

American Metal Market - Aug 4 2009

Repair work on Noranda Aluminum Holding Corp.'s damaged New Madrid, Mo., aluminum smelter remains on schedule even though the company has lingering concerns about market oversupply.

An ice storm in January led to a power outage that affected 75 percent of the smelter's 261,000-tonne-per-year capacity. Layle K. "Kip" Smith, Noranda's president and chief executive officer, said during a conference call Tuesday...

This is a preview of the article. The full article is available only to our subscribers and trial users.

http://www.amm.com/login/denied_empty/2009-08-04__17-59-02.html/Noranda+says+smelter+repairs+on+track

UPDATE 2-Century Aluminum divests bauxite, alumina stakes

Reuters - Aug 4, 2009

* To transfer ownership stakes to Noranda Aluminum

* Divesting Gramercy Alumina and St. Ann Bauxite

* Century stock rises 4 pct (Adds executive comments, details from Noranda)

NEW YORK, Aug 4 (Reuters) - Century Aluminum Co (CENX.O) said on Tuesday it is divesting its stakes in a Louisiana alumina plant and a Jamaican bauxite mine, which are currently operating at 50-percent capacity or less.

The Monterey, California-based company said the transaction will allow it to focus on its aluminum smelting business at a time when metal prices are beginning to rebound from an economic downturn that dried up demand, forced production cuts and sent prices diving.

Century Aluminum stock rose 41 cents, or 4.24. percent, to $10.07 in morning trading on Nasdaq.

Century Aluminum said it will transfer its 50-percent ownership of Gramercy Alumina LLC and St. Ann Bauxite Ltd to subsidiaries of privately-held Noranda Aluminum Holding Corp.

Century will make "modest cash payments" to Louisiana-based Gramercy as part of the transaction, which is expected to close this month. A spokesman declined any further comment.

Century said it will also enter into an agreement under which it will purchase alumina -- a raw material produced from bauxite and smelted into aluminum -- from Gramercy for a limited period. Century's aluminum smelter in Hawesville, Kentucky, receives all its alumina supplies from Gramercy.

"This transaction will increase our focus on Century's core aluminum smelting business and our attractive growth projects," said President and Chief Operating Officer Wayne Hale.

He said that current curtailments of aluminum production at its Ravenswood, West Virginia and Hawesville smelters have reduced alumina requirements.

"We have attractive contracts in place which will supply our alumina needs over the next several years," Hale said in a statement.

Noranda, owned by affiliates of Apollo Management, L.P., said it has agreed to release Century from certain obligations. It did not elaborate.

"Our action to become the sole owner of the Gramercy alumina refinery and the St. Ann bauxite mining operations is consistent with our vertical integration strategy and our continuing desire to have a secure strategic supply of alumina," said President and Chief Executive Officer Layle "Kip" Smith.

He said owning 100 percent of the two operations represented an opportunity "to enhance profitability as market pricing improves."

Since the economic downturn last year, aluminum prices have tumbled from a peak of $3,380 per tonne in July 2008. The metal was selling at around $1,940 on the London Metal Exchange on Tuesday. (Reporting by Steve James; Editing by Derek Caney)

© Thomson Reuters 2009 All rights reserved

Century To Transfer Gramercy, St Ann Stakes To Noranda Units

NASDAQ - Aug 4, 2009

LONDON -(Dow Jones)- Century Aluminum Company (CENX) has reached an agreement to transfer its 50% stake in Gramercy Alumina LLC and St. Ann Bauxite Limited to subsidiaries of Noranda Aluminum Holding Corporation, which already holds the remaining interest, the U.S. company said Tuesday.

Noranda will then own 100% of Gramercy, a 1.2 million metric tons a year alumina refinery located in Louisiana, and the 4.8 million tons a year St. Ann bauxite operation in Jamaica.

Due to the economic downturn, Gramercy and St. Ann have been producing at around 50% and 40% of their rated capacities respectively since early 2009.

Century will make "modest" cash payments to Gramercy as part of the transaction, which is expected to close in August.

Century and Noranda will also enter in an agreement under which Century will purchase alumina from Gramercy for a limited period of time. Century's primary aluminum smelter in Hawesville, Kentucky currently receives all of its alumina supplies from Gramercy.

Century executive vice president and chief operating officer Wayne Hale said the deal increases the company's focus on it core aluminum smelting business and other growth projects. "In addition, the full curtailment of Ravenswood and partial curtailment of Hawesville have reduced our alumina requirements. We have attractive contracts in place which will supply our alumina needs over the next several years," Hale added.

Century and Noranda jointly acquired Gramercy and St. Ann from Kaiser Aluminum and Chemical Corp. in 2004.

-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413; andrea.hotter@ dowjones.com

Bauxite Resources to commence mining at North Bindoon

SteelGuru - Wednesday, 05 Aug 2009

ABN Newswire reported that West Australian Bauxite Resources Limited has now received approval for the Company's inaugural Extractive Industries Licence at North Bindoon.

Further the Company's Project Management Plan has also been approved by the Western Australian State Government Department of Mines and Petroleum allowing for the commencement of mining operations.

The grant of the Company's first EIL and PMP allows for the commencement of bauxite quarrying and processing operations, scheduled for commencement later this week, at the Company's initial site in the North Bindoon project area.

The approvals to commence mining have come in less than 21 months since the listing of Bauxite Resources Limited on the ASX.

BRL has entered into 'trial spot sample' shipment sales arrangements with several groups as a 1st stage in its ramp up to developing its initial 1 million tonnes per annum Direct Shipping Ore bauxite business scheduled to commence by Q1 2010. Ultimately BRL aims to be producing 3 million tonne per annum of bauxite as well as downstream value added products.

The Company's planned spot shipments will represent a new era for DSO from the Darling Range, Western Australia, which is the largest bauxite and alumina producing region in the world, home to 4 alumina refineries supplying approximately 18% of the world's alumina which is the feedstock for aluminium smelting.

Exporting DSO bauxite from Western Australia enjoys the benefits of proximity to Asian markets, reduced shipping turnaround as well as the availability of existing rail and port infrastructure at Kwinana and Bunbury.

The DSO of bauxite by BRL will put the Company at the forefront of the rapidly growing trade in bauxite supplies to Asian alumina refineries which rely upon bauxite feedstock. Bauxite imports into China have grown significantly in recent years with China forecast to run out of bauxite within 10 years.

BRL now controls the largest tenement land holding in the Darling Range, Western Australia, for bauxite with over 15,000 square kilometer of ground holdings throughout the south west of Western Australia exceeding the combined Darling Range landholdings of bauxite miners and alumina refinery operators ALCOA and BHP.

(Sourced from Abnnewswire.net)

Experts warn of bubble in Aluminum sector

CCTV - 2009-08-05

With the recovery of China's industrial output,imports of electrolytic aluminum have skyrocketed, growing by a factor of 16 in the first half of 2009. However, analysts warn that a bubble may be emerging in the market.

China's electrolytic aluminum industry has been plagued by over-capacity in recent years. The start of this year saw production volume reach 7 million tons.

However, customs figures show that in the first half of 2009, China imported over 1 million tons of electrolytic aluminum, while only exporting around 300,000 tons. How has this happened?

Yang Yinghui, General Manager of Metal Products Dept., COFCO, said, "The risk-free profit for importing aluminum ingots from the international market can be as high as 1,500 yuan per ton. The huge profits certainly attract large amount of speculative capital."

Industry insiders say it is difficult to reverse the over-capacity at the moment, while skyrocketing imports will only magnify the bubble in the sector.

Wen Xianjun, vice Chairman of China Non-ferrous Industry Association, said, "Both the market bubble and speculative investment are very obvious right now."

With a growing price gap between the domestic and international markets, more and more domestic dealers and manufacturers have joined the stampede to import electrolytic aluminum. However, vast amounts of such imports are actually being stockpiled in their factories instead of being used.

Li Zhihui, General Manager of SH Fushixing Metal Material CO., said, "The stockpile is in case international prices continue to rise after August, when the industry enters its peak season."

Analysts say that China's relatively easy monetary policies at the moment have also contributed to the stockpiles.

Aluminum firms boost prices on coil

Purchasing.com - 8/5/2009

Price hikes in the 2-3/lb range

Tom Stundza -- Purchasing

Aluminum prices fall Alcoa, Novelis and JW Aluminum have increased sheet coil prices by 2-3/lb, depending on the alloy grades. Alcoa, for example, says its North American Rolled Products division increased prices to its customers by 2 for building and construction-related common alloy coil products. JW Aluminum has increased its prices on a number of products in the 1000, 5000, 7000 and 8000 series by 3. As reported earlier, Novelius announced a premium on prices for some sheet products offered through its Web sales program as a result of a spike in demand from its customers caused by low inventory levels within aluminum distribution industry.

Buchanan Team Closes $150 Million Deal for Aluminum Extrusion Client Sapa

PR Newswire (press release) (press release) - 05 Aug 2009

PITTSBURGH, Aug. 5 /PRNewswire/ -- Buchanan Ingersoll & Rooney PC represented Sweden-based aluminum extrusion client Sapa Group in its purchase of U.S.-based Indalex, which filed for bankruptcy protection in March of 2009. The acquisition, which closed on Friday, July 31, includes 11 plants, six in the U.S. and five in Canada. In 2008, Indalex employed 1,800 workers and had sales of $900 million on 200,000 tons of aluminum. Shareholders Craig S. Heryford and Sean W. Moran, from Buchanan's Corporate Finance & Technology Practice, led the team that also included lawyers from the firm's Antitrust, Bankruptcy, Environmental and Real Estate practices.

"This deal really illustrates the firm's ability to get a complex transaction completed in a short amount of time," Moran said. The firm obtained approval from bankruptcy courts in both the U.S. and Canada on the same day, and reached a settlement agreement with the Department of Justice that allowed for the completion of the transaction. More than 600 contracts and 16 facilities were reviewed during due diligence, a process that normally takes several months but was completed in a matter of weeks.

Heryford added, "Buchanan's representation of Sapa in this transaction also demonstrates our geographic diversity and depth in expertise, as the transaction involved negotiations and activities occurring in our Pittsburgh, New York City, Washington D.C. and Wilmington offices and involved significant corporate, business bankruptcy, antitrust and regulatory issues. The transaction further evidenced the firm's ability to work with international clients on transactions that span borders beyond the United States."

In addition to Moran and Heryford, Corporate attorneys Jessica E. Underwood, Amelia Konesni, Evan A. Gelacek, Robin L. Dierbeck, Ryan T. Purpura and Niki Carter provided diligence and transactional support. Chair of the firm's Antitrust Practice Wendelynne J. Newton negotiated the settlement with the Department of Justice, and Corporate Co-chair Thomas G. Buchanan handled the Hart-Scott-Rodino filing. Shareholders William H. Schorling and Jeffrey M. Carbino supervised the bankruptcy issues. Environmental and permitting issues were managed by shareholder Brian J. Clark, counsel Robert L. Burns, Jr., and associate Michael T. Killion. Real Estate matters were handled by associate Lisa A. Pampena, specialist Barb Gourley and shareholder Jason A. D'Amico.

About Sapa Group

Sapa, headquartered in Stockholm, Sweden, is a wholly owned subsidiary of Norway-based Orkla ASA. Sapa develops, manufactures and markets value-added profiles, profile-based building systems and heat-exchanger strips in aluminum and is one of the world's leading manufacturers.

Aluminum plant restoration risks

CCTV - 2009-08-05

Non-ferrous metals are shining stars in China's futures and securities markets with their record high futures prices and hikes in share prices. The aluminum industry, in particular, is being spotlighted for significant growth. However, experts say the current prosperity may have over-charged futures' profits in the sector.

The average cost of China's electrolytic aluminum is 13-thousand yuan per ton. The market price now stands at over 15-thousand yuan. The potential profits have propelled many domestic aluminum plants that reduced output in 2008 to restore their production.

Yang Yinghui, GM of Metal Products Dept., COFCO, said, "Domestic plants used to face deficient operating rates amid the financial crisis. But now the rate has increased to 80 percent from a low of 60 percent."

However, many insiders say this will also bring risks. Although China's economy has started to rebound, the expansion rate of non-ferrous metals has exceeded the overall economic growth. The over-surging prices of such basic materials would add cost to the real economy, and in turn stifle the economic rebound.

Insiders say prices of non-ferrous metals have shown signs of a bubble. They suggest staying alert.

Wen Xianjun, Vice Chairman of China Non-ferrous Metals Ind. Assoc., said, "The electrolytic aluminum industry has already faced over-capacity. If aluminum plants make full use of their capacity, it's hard for the domestic market to digest all the supplies. By then, the over-supply, plus 15-percent export tariffs, will help drive up global aluminum prices. By that time, if investment capitals escape from the sector, the prices would then see a sudden dive."

Given all the potential risks, insiders suggest those manufacturers who have not restored production ... not do so in a rush.

They also warn that if the aluminum prices go down sharply, dealers' hoarding will not only cause their own losses, but also harm the banking sector.

Editor: Liu Anqi

Anti-smelter groups to hold parallel meeting

Trinidad News - Friday, August 7 2009

By Odette Loney

ANTI-SMELTER groups are expected to hold their own public meeting at the roundabout in Vessigny on the same day the People’s National Movement’s bandwagon rolls into Frisco Junction in Point Fortin on Monday.

The PNM has been holding a series of public education programmes at venues across the country and it is expected that the construction of the smelter plant in La Brea will be the focus of the meeting given its locale.

But residents and anti-smelter groups against the construction of the smelter plant said their meeting will inform the public of La Brea about the potential harmful effects the aluminum smelter can have on their health.

Anslem Carter, member of the group Concerned Citizens United, said his group and the Cap-de-Ville Environmental Concerned Association has no intention of hearing what the Prime Minister had to say.

Dr Peter Vine, a physicist and anti-smelter protestor, said the groups were not into politics so they had no intention of attending the PNM’s meeting.

Anti-smelter protestors, however, intend to line the streets at the Vessigny roundabout with placards in hope that that PM Patrick Manning sees them on his way to Frisco Junction.

On June 16, a High Court judge ruled that the Environmental Management Authority acted illegally when it granted a Certificate of Environmental Clearance for work to start on the construction of the smelter plant at La Brea.

The judge found the EMA failed to consider a crucial report on the cumulative impact of the smelter plant and a now under-construction power plant, as well as a planned port facility, and this tainted the process to approve plans for the project.

The EMA has since appealed the court’s decision.

Century Aluminum Announces Equity Investment Impairment

Marketwire - August 7, 2009

MONTEREY, CA - Century Aluminum Company (NASDAQ: CENX) today announced that it will record an equity investment impairment charge of $73.2 million in the second quarter relating to the recently agreed transfer of the Company's 50% ownership interests in Gramercy Alumina LLC and St. Ann Bauxite Limited.

As a result of this second quarter subsequent event transaction announced by the Company on Tuesday, August 4, 2009, management undertook an evaluation to determine the impact, if any, on the carrying amount of the equity investment in the joint venture assets as of June 30, 2009. The Company has concluded that the terms of the sales agreement provided indications of an impairment of the equity investment in the joint ventures and, as a result, has performed an impairment analysis to determine the appropriate carrying amount of these assets as of quarter end. Based on the impairment analysis, the Company will record a $73.2 million impairment charge in the three months ended June 30, 2009.

This non-cash charge will be reflected in the June 30, 2009 financial statements included in the Company's Quarterly Report on Form 10-Q, which is expected to be filed on August 10, 2009.

Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Monterey, California.

China's Bosai expands alumina, aluminium capacity

Reuters - Fri Aug 7, 2009

* Bosai may import Indian bauxite

By Polly Yam

HONG KONG, Aug 7 (Reuters) - China's Bosai Group is doubling capacity of alumina and aluminium in the first half of next year, adding production to the world's top aluminium producing nation.

Privately owned Bosai is in talks with Minermet and Krupadeep Traders, to import Indian bauxite, the ore from which alumina is produced, company sources said.

The firm is building a facility in Sichuan province to boost its annual alumina capacity to 500,000 tonnes in April 2010 from 200,000 tonnes now.

"Our (local) mines do not have sufficient ore supplies," a senior executive said. Importing bauxite from India was one of the firm's options, he added, but did not identify other potential overseas suppliers.

To meet Bosai's expanding alumina production, the firm was likely to import about 500,000 tonnes of bauxite annually, a company source said. That amount would cover half of the firm's annual demand of bauxite from next year.

Alumina is the main material for primary aluminium production.

Bosai's new 110,000-tonne-per-year A-Ba Aluminium Smelter, which was slightly damaged by massive earthquakes in May last year in Sichuan, started production in December 2008 and is adding 90,000 tonnes of annual capacity, the company source said.

Construction of that capacity will be completed as early as June next year, bringing A-Ba's capacity up to 200,000 tonnes per year.

China already produces more aluminium than it needs, with annual smelting capacity of more than 18.5 million tonnes. Capacity is expected by Chinese smelter officials to reach nearly 20 million tonnes by the end of this year.

A-Ba Aluminium also plans to build a 100,000-tonne-per-year plant to produce semi-finished aluminium products, the company source said. (Editing by Clarence Fernandez)

Century Aluminum Company Reports Operating Results (10-Q)

GuruFocus.com - Aug. 10, 2009

Century Aluminum Company (CENX) filed Quarterly Report for the period ended 2009-06-30.

Century Aluminum Company is a producer of primary aluminum. Century\'s principal subsidiary Century Aluminum of West Virginia Inc. owns and operates a reduction facility located on the Ohio River. Century Aluminum Company has a market cap of $813.3 million; its shares were traded at around $10.97 with and P/S ratio of 0.41. Century Aluminum Company had an annual average earning growth of 52.1% over the past 5 years.

Highlight of Business Operations:

We recognized an impairment loss on our equity investments in Gramercy and SABL of approximately $73 million in the three months ended June 30, 2009. See Equity investment impairment below. We will make a $10 million payment to Noranda, with $5 million due at closing and $5 million to be paid on or prior to December 31, 2009. We expect that some additional losses will be incurred on this transaction for other closing costs associated with the transaction.

E.ON U.S. LLC ("E.ON") has agreed to mitigate a significant portion of this risk at a minimum, through December 2010. During this time, to the extent Hawesville does not use all the power under the take-or-pay contract, E.ON will, with some limitations, assume Hawesville\'s obligations. As part of this arrangement, E.ON will defer the payment of approximately $40 million which it had previously agreed to pay to Hawesville as a termination payment and defer funding of an escrow account of approximately $40 million that would have been used to reduce Century\'s power costs during the next several years. E.ON will now pay these amounts when Hawesville consumes power under the contract. At Hawesville\'s current production rate, Hawesville would receive the entirety of these economic benefits over approximately eighteen months. To the extent the aggregate risk mitigation and production payments made by E.ON exceed approximately $80 million, Hawesville would repay this excess to E.ON over time, but only if the LME aluminum price were to exceed certain thresholds.

In February 2009, we completed a public offering of 24,500,000 shares of common stock at a price of $4.50 per share, raising approximately $110.2 million before offering costs. The offering costs were approximately $6.2 million, representing underwriting discounts and commissions and offering expenses.

We have assessed the impact of adopting FSP APB 14-1 on our historical and future net income calculations. The adoption of FSP APB 14-1 increased our reported interest expense by $7.6 million for 2008, and will increase interest expense by $8.2 million in 2009, $8.8 million in 2010 and $5.4 million in 2011.

During the three months ended June 30, 2009, lower price realizations, net of LME-based alumina cost and LME-based power cost decreases, reduced gross profit by $171.9 million. Lower shipment volume, due to capacity curtailments, resulted in a $33.6 million decrease to gross profit. In addition, we experienced $17.2 million in net cost decreases, relative to the same period in 2008, comprised of: reduced power and natural gas costs at our U.S. smelters, $2.3 million; increased costs associated with Gramercy supplied alumina, $3.4 million; reduced costs for materials, supplies and maintenance, $6.2 million; other cost reductions, $10.5 million; and reduced depreciation expense of $1.6 million.

During the six months ended June 30, 2009, lower price realizations, net of LME-based alumina cost and LME-based power cost decreases, reduced gross profit by $307.3 million. Lower shipment volume, due to capacity curtailments, resulted in a $40.4 million decrease to gross profit. In addition, we experienced $6.7 million in net cost increases, compared to the same period in 2008, comprised of: increased power and natural gas costs at our U.S. smelters, $1.1 million; increased costs associated with Gramercy supplied alumina, $12.9 million; reduced costs for materials, supplies and maintenance, $7.0 million; other cost increases, $1.3 million; and reduced depreciation expense of $1.6 million.

Aleris agrees to pay penalty and perform cleanup of site

SteelGuru - Tuesday, 11 Aug 2009

The US Department of Justice and the US Environmental Protection Agency announced that Aleris International Inc and 13 of its subsidiaries have committed to implementing environmental improvements and controls projected to cost USD 4.2 million at 15 plants in 11 states.

The company also agreed to a USD 4.6 million civil penalty to resolve violations of the Clean Air Act which will be allowed as an unsecured claim in Aleris’ bankruptcy proceeding pending in Delaware.

The consent decree requires Aleris to better enclose its furnaces to improve the capture of emissions, retest every furnace using model test protocols, adopt model recordkeeping and reporting documents and install pollution control or monitoring equipment at particular facilities. The settlement is expected to reduce annual emissions of particulate matter by up to 24,000 pounds, hydrogen chloride by up to 870,000 pounds and dioxins and furans by up to 1 pound per year. Dioxins and furans, created during incineration are known to cause cancer and are extremely toxic at low levels.

Mr Cynthia Giles assistant administrator of EPA’s Office of Enforcement and Compliance Assurance said that "Today’s settlement sets a new standard for aluminum recyclers nationwide. This will ultimately result in cleaner air for the people living near Aleris facilities throughout the country."

In a complaint filed last February in the US District Court for the Northern District of Ohio, the US alleged that Aleris violated the National Emission Standards for Hazardous Air Pollutants for Secondary Aluminum Production, which became effective in 2003. The complaint alleged that Aleris failed to design and install adequate systems to capture emissions of pollutants, to demonstrate compliance with federal emission standards through adequate performance testing, to correctly establish and monitor operating parameters and to comply with recordkeeping and reporting requirements.

The settlement requires Aleris and its subsidiaries to implement pollution controls and take other compliance measures at facilities located in Goodyear, Ariz.; Post Falls, Idaho; Morgantown and Lewisport, Ky.; Chicago Heights, Ill; Wabash, Ind; Coldwater and Saginaw, Mich; Uhrichsville, Ohio; Sapulpa, Okla.; Loudon and Shelbyville, Tenn.; Richmond, Va.; and Friendly, W.Va. The states of Idaho, Illinois, Indiana, Kentucky, Michigan, Ohio, Oklahoma, Tennessee, Virginia and West Virginia and Maricopa County, Ariz., joined today’s settlement and will share a portion of the civil penalty. This is the largest number of facilities ever included in a Clean Air Act settlement involving the secondary aluminum production industry.

Chavez loans aluminum, steel companies 3.2 million dollars

Petroleumworld.com, Aug 10, 2009

CARACAS

Venezuelan President Hugo Chavez announced Saturday he would grant 3.2 million dollars in interest-free loans to public aluminum companies and the country's struggling steel company Sidor.

Sidor, which was nationalized last year, and the aluminum firms have been the target of protests and worker strikes over deteriorating conditions and low salaries.

Chavez said loans worth 250.4 million dollars would be distributed between five aluminum companies, with half disbursed in dollars and half in Venezuela's bolivars.

Sidor will receive two loans, one worth 45.4 million dollars and the other 4.4 million dollars, he said.

The money is being drawn from a joint Chinese-Venezuelan fund set up in 2006 and must be repaid within five years, but will not accrue interest, Chavez added.

The funding is part of Chavez's plan to fully nationalize the steel sector over a period of 10 years, he said.

The bulk of the process scheduled to take place between 2012 and 2019, and the Venezuelan leader has said he hopes to run and be reelected for another term in order to continue the program.

Story from AFP

U.S. Electricity Prices Plummet

Wall Street Journal - AUGUST 12, 2009

By REBECCA SMITH

Slack demand for electricity across the U.S. is leading to some of the sharpest reductions in power prices in recent years, offering a break for consumers and businesses who just a year ago were getting crunched by massive electricity bills.

On Friday, the nation's largest wholesale power market serving parts of 13 states east of the Rockies is expected to report that electricity demand fell 4.4% in the first half of the year. That helped to push down spot market prices by 40% during the first half of this year.

.Wholesale electricity -- power furnished to utilities and other big energy users -- cost an average of $40 a megawatt hour in the region, down from $66.40 a year earlier. The price declines in this market, which extends from Delaware to Michigan, come on top of a 2.7% drop in energy use in 2008 over 2007.

The falloff in demand represents a reversal of what has been one of the steadiest trends in business. For decades, the utility sector could rely on a gradual increase in electricity demand. In 45 of the past 58 years, year-over-year growth exceeded 2%. In fact, there only have been five years since 1950 in which electricity demand has dropped in absolute terms.

But this year is shaping up to have the sharpest falloff in more than half a century, and coming on top of declines in 2008, could be the first period of consecutive annual declines since at least 1950.

Dramatic price reductions don't immediately mean lower power bills for all consumers. That's because many customers pay prices based on long-term contracts. But lower prices will have a softening effect over time.

In California and Texas, a combination of cheap natural gas and lower industrial demand is putting pressure on prices.

In the Houston pricing zone, which has many power-gobbling refineries and chemical plants, the spot market price was $61.82 in June, versus $129.48 a megawatt hour a year earlier. Power demand in Texas is down 3.2% so far this year due to business contraction and reductions in employment which are causing many households to economize.

Just a year ago, many businesses and residential customers were reeling from electricity prices on the spot market that had spiked to historic highs, driven by high fuel prices and hot summer weather. Some businesses curtailed their operations because electricity and natural gas were too pricey.

.But the flagging economy has resulted in a slump in demand that has jolted some energy markets. American Electric Power Co. and Southern Co., for example, both reported double-digit drops in industrial electricity use for the past quarter.

Meanwhile, natural gas, which strongly influences electricity prices, has fallen below $4 per million BTUs, or British thermal units. That's down from $12 at last year's peak.

For many businesses, the cost of electricity represents one of the few bright spots in a dismal economy. Andy Morgan, president of Pickard China Inc. in Antioch, Ill., which makes fine china, figures his electricity cost is down 30% to 40%.

Last year, when everything was spiking, he looked at different options -- including negotiating a fixed-price contract for energy with a supplier. He says he held off and now he's happy he did.

"We've definitely reaped savings," says Mr. Morgan, adding that "especially in a down economy, you'll take whatever you can get. That's one of the few blessings during this storm."

Slowdowns at major industrial companies such as Alcoa Inc. help account for the decline in electricity usage this year. The recession and drop in consumer demand for products that contain aluminum has caused the company to idle 20% of its smelting capacity world-wide this year.

In the U.S. the company has cut production at smelters, which are traditionally big energy users, in New York, Tennessee and Texas. Kevin Lowery, a company spokesman, said he did not believe that Alcoa has saved much money thus far because the company primarily purchases electricity through 25- to 35-year contracts.

Steel Dynamics Inc. is benefiting from lower pricing. The company operates five steel mills, with four purchasing electricity at spot market prices in Indiana, Virginia and West Virginia. The benefit, though, is smaller than it might be because the steelmaker is producing less steel this year.

"We're producing fewer tons, but every ton we produce we seek to minimize the costs and electricity is one of those," said Fred Warner, a company spokesman. Its mills are running at 50% capacity this year, down from 85% capacity last year.

Some wonder whether the deregulated markets of the Eastern U.S., Midwest, Texas and California will be especially hard hit if demand comes roaring back. That's because utilities in these markets no longer are required to build new resources. It's left up to the power generators to determine when the market conditions are ripe.

"There's more supply than demand and prices are really low so it doesn't make sense to build anything," says John Shelk, president of the Electric Power Supply Association in Washington, D.C., a group that represents power generators.

Many electricity markets throughout the country have implemented demand reduction programs that give consumers a further incentive to reduce power use. The 13-state PJM Interconnection market has been one of the most aggressive -- and has seen one of the steepest price drops.

A new report from the region's official market monitor found a strong correlation between falling prices and an increase in demand-reduction programs. In the PJM market, energy users can collect money through an auction process for pledging to cut energy use in future periods.

In May, PJM conducted an auction to ensure it will have the resources it believes it will need in 2012-13. About 6% of the winning bids came from those who pledged to cut energy use by a total of 8,000 megawatts in that future period.

—Timothy Aeppel, Sharon Terlep and Kris Maher contributed to this article.

Write to Rebecca Smith at rebecca.smith@wsj.com

Printed in The Wall Street Journal, page A1

Nalco smelter construction may face delay

Jakarta Post - Wednesday, August 12, 2009

Mustaqim Adamrah , The Jakarta Post , Jakarta | Wed, 08/12/2009 10:52 AM | Business

India’s state-run National Aluminum Company (Nalco) may postpone the construction of an aluminum smelter in Indonesia due to problems in securing coal supplies for power generation, an official said Tuesday.

The company plans to build five power plants generating 250 megawatts each to sustain a US$3 billion investment in an aluminum smelter in Tanjung Api-api, South Sumatra.

A total of 5 million tons of coal is needed per year to run the power plants.

In its proposal submitted to the Investment Coordinating Board (BKPM), Nalco plans to commence construction in 2010 and expects to complete the construction in a year.

Upon completion, the smelter will have a production capacity of 500,000 tons of aluminum ingots per year.

However, the Industry Ministry’s director for metal industries, I Gusti Putu Suryawirawan, said

the inability to secure coal stemmed from the fact that existing contract agreements for coal purchases had already exhausted estimated coal output for a considerable period to come.

Gusti confirmed there might be a delay in the commencement of Nalco’s project because of the supply issue.

"Several mining companies are being gathered, but their combined coal output is still insufficient,"

he said.

"However, we’ll try to keep the smelter construction plan on schedule."

Domestic demand for aluminum products has been riding a high in the past few years, thanks in part to encouraging growth in the property industry and automotive industry, said Indonesian Aluminum Association chairman Abu Bakar.

Besides Nalco, Russia’s Russal — the world’s leading aluminum producer — and Iceland’s North Hydro have also expressed interest in building aluminum smelters in Indonesia, Putu said.

He added Russal was likely to invest $2 billion to build a smelter in West Kalimantan, while North Hydro would use geothermal power plants for energy.

Putu said that although he had heard no follow-up from Russal or North Hydro, which also submitted their proposals to the BKPM at the same time as Nalco did, he remained confident they would not back out of their plans.

He added opportunities to build an aluminum smelter here were very high, thanks to domestic consumption increases of 9 to 12 percent a year.

Aluminum ingots have long been supplied to the domestic market by PT Indonesia Asahan Aluminum (Inalum), which runs the country’s only aluminum smelter at present.

Inalum imports 600,000 tons of raw aluminum each year.

Its smelter is in Kuala Tanjung Asahan, North Sumatra, and has an annual yield of around 240,000 tons of aluminum ingots — far from enough to meet the annual domestic demand of 300,000 tons.

European and American Manufacturers of Aluminum Wheels Are At the Verge of Bankruptcy

Earthtimes (press release) - Wed, 12 Aug 2009

Author : Research and Markets Ltd

DUBLIN - (Business Wire) Research and Markets Ltd has announced the addition of the "Global and China Automotive Aluminum Wheel Industry Report, 2008-2009" report to their offering.

China has become a manufacturing center of aluminum automotive wheels in the world now. The export of wheels mainly focuses on the retail market. In the recent years, many foreign OEMs have begun to purchase aluminum automotive wheels directly from China because:

In the cost structure of Chinese aluminum automotive wheels, raw materials account for 55%-60% of the total cost, and labor cost takes 4%-5%. For developed countries, raw materials account for 50%, and labor cost takes 15%-20%. Therefore, China has competitive advantages in labor cost. At present, the average profit margin of foreign automotive aluminum alloy industry has fallen to 2%, so there is no possibility for the decline of selling price. In order to control the cost, international automobile giants have begun to purchase from China aluminum automotive wheels with price advantage or set up joint ventures in China. Japanese manufacturers have already established joint ventures in China.

China also has advantage in upstream resources, but the advantage is reflected in the quantity of alumina manufacturers instead of rich bauxite resources. The competition in the prices of alumina is fierce. After breaking the monopoly of Chinalco, private alumina factories emerged everywhere. To the aluminum wheel industry, raw material cost is the most important factor, in which Chinese manufacturers have advantage. Roaring alumina prices in 2008 made many manufacturers suffer losses. Although alumina price decreased in the second half of 2008, it was kept stable with a slight increase after major manufacturers made efforts to reduce output.

China's output of aluminum automotive wheels rises rapidly. In 2001, China exported 3.5 million aluminum automotive wheels; in 2003, nearly 10 million; in 2008, 35 million, 10 times that in 2001. China produced 35 million aluminum automotive wheels in 2008, of which 30 million ones were for OEM sale, 1.5 million for inventory, and 1.5 million for after-market. Aluminum-alloy motorcycle wheel industry is an important branch of China's aluminum wheel industry, with the annual output of 15-20 million.

Prosperous automobile industry stimulates a number of cities and enterprises to start aluminum wheel projects. In Baotou, Chongqing, Xining, Luoyang, Fushun, Zunhua, Guangyuan, Yuncheng, Kangping, Tongliao, Baise, Shenyang, Jiamusi, Peixian, Baiyin, Xuzhou and Wenchuan, aluminum wheel projects with the investment of RMB in millions have been under preparation or construction. In fact, aluminum wheels are applied to 68% of passenger cars in the world, so the development space for aluminum wheel hubs is limited. Majority of small Chinese enterprises rely on the after-markets of Europe and America, which get inflicted seriously by the economic crisis. As for the field of OEM, it is hard to enter, and requires efforts and funds for continuous years.

Although China has nearly 100 aluminum wheel manufacturers, but few of them have real strength. In China, large aluminum wheel manufacturers are generally supported by foreign investors. Manufacturers funded by Taiwan investors are mostly export-oriented, with the export mainly to Japan, and usually Japanese investors have their shares, for example, Toyota holds shares of Lioho Machinery. Manufacturers funded by Hong Kong investors often cooperate with larger enterprises, aiming at OEM market. Large-scale local enterprises also target OEM market, while small enterprises are engaged in after-market. Citic Dicastal is backed up by the super-large enterprise --- CITIC Group, so it has no difficulty in gathering capital and it has the courage to invest in large scale, which is the key to its success. Besides, Citic Dicastal started to work in aluminum wheel industry earlier than others. Wanfeng Auto is also a pioneer in the industry and was first listed in 2006, and its development depends on financing. Jinfei Machinery is an enterprise restructured from a state-owned enterprise with adequate fund, and motorcycle wheel business takes a large proportion of its business. Jinfei Machinery has set up joint ventures with Indian manufacturers. In the initial phase of 2001, Huatai was supported by foreign investors, who held 60% shares of the first Huatai factory in Shenzhen. At present, Huatai has branches all over China, even merges and acquires foreign production lines directly. Lizhong Wheel is listed in Singapore, depending on Lizhong Group that has aluminum mines, and it has great development potential. Zhongnan Aluminum Wheel enjoys technology strength and cooperates with Japanese investors to produce products with good quality. Fucheng aims at export. Mingqi mainly cooperates with BYD. Jingyuan Heavy Duty Machinery is backed up by the largest tire enterprise --- GITI Tire Group. Shanghai Youfa is a member of Youfa Group and listed in Singapore, aiming at after-sale market. Wuxi Zhenfa is an Indonesian enterprise listed in Indonesia.

Currently, European and American manufacturers of aluminum wheels are at the verge of bankruptcy, for example, Hayes Lemmerz filed for bankruptcy on May 11, 2009. In German, the annual sales of the best-known enterprise --- BBS was less than 8 million euros in 2008, declining 40% with huge losses. However, the situation will benefit Chinese enterprises, especially large enterprise like Citic Dicastal.

In Japan, the giants --- CMW, ENKEI and TOPY cooperate with Toyota, Honda and Nissan respectively. Asahi Aluminum, Hitachi Metals and UBE that have smaller scale cooperate with Honda, Nissan and Mazda respectively. UBE has less than JPY10 billion. In German, the giants --- BORBET, RONAL and UNIWHEEL are unlisted semi-private family enterprises with a history of one hundred years and they acquired a number of small manufacturers. The scale of UNIWHEEL is relatively smaller, but has many shares in the after-market. BORBET and RONAL cooperate with BMW, Mercedes-Benz, Audi and Porsche. American SUPERIOR and Hayes Lemmerz are surviving difficultly.

India's NALCO raises aluminium prices by 6 pct

Reuters - Wed Aug 12, 2009

BHUBANESWAR, India, Aug 12 (Reuters) - India's state-run National Aluminium Co (NALCO) (NALU.BO) raised prices for the second time this month, aided by a recovery in the international markets, the company's chairman said on Wednesday.

"We have hiked the prices of aluminium products by 6,000-7,000 rupees ($124-$145) per tonne," C.R. Pradhan, chairman of NALCO, told Reuters.

The almost 6 percent increase will come into effect immediately, Pradhan said. The rise would apply to local clients. NALCO last raised prices on Aug. 1. ($148.4 rupees) (Reporting by Jatindra Dash; Editing by Himani Sarkar)

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© Thomson Reuters 2009 All rights reserved

ABB boosts energy efficiency at aluminum smelters

AME Info - Thursday, August 13, 2009

Recent ABB advances in high power conversion technology have increased the energy efficiency of aluminum smelters by a massive 18% at two record-breaking installations in the Middle East.

United Arab Emirates: Thursday, August 13

PRESS RELEASE.

The high power converters (also known as rectiformers) are the biggest and most powerful ever built and are part of extensive ABB power and automation solutions for the Sohar aluminum smelter in the Sultanate of Oman and the Qatalum smelter in Qatar.

Both smelters are setting new records for size and production capacity.

Sohar, which started production in June 2008, has the world's largest potline, which consists of 360 pots and produces up to 360,000 tons of aluminum a year; and Qatalum will be the world's largest aluminum smelter with a production capacity of 585,000 tons a year and 704 pots when the plant starts up in late 2009.

At the heart of each smelter are five uniquely large and powerful ABB rectiformers, each weighing more than 400 tons and each designed to enable the plants to operate in all conditions, including worst-case scenarios.

Rectiformers are critical components in the aluminum production process. They control and convert the alternating current delivered by the power grid or onsite power plant into the required direct current that powers the electrolytic process and produces the molten aluminum in the pots.

The potlines have to be constantly supplied with power. If the power conversion station fails, the lines will shut down and the molten aluminum in the pots will solidify and incur massive costs of as much as $100m or more.

For many years the voltage limit of rectiformers was stuck at 1200 volts DC. In the past few years ABB has extended the voltage limit first to 1500 V DC, then to 1650 V DC for Sohar and soon after to 2000 V DC for Qatalum (although the plant will operate at 1750 V DC).

This groundbreaking achievement enables the rectiformers to convert and deliver substantially more power than was previously possible. As a result, each smelter requires only five rectiformers instead of the six that would have been necessary at the lower voltage limit.

In addition to the huge cost saving in eliminating the need for a sixth rectiformer, the increase in energy efficiency achieved by the ABB solution is equivalent to 18% - an enormous saving for plants that consume as much electrical energy in a year as 300,000 homes.

The rectiformers are part of extensive ABB power and automation solutions designed to make both Sohar and Qatalum the most energy efficient, productive and environmentally sound aluminum plants in the world.

Norwegian exec joins others forecasting world demand increase

Purchasing.com - Tom Stundza - Aug 12, 2009

Aluminum producer Norsk Hydro says global demand from such key end markets as construction and transportation has fallen sharply as the global economic crisis has cut prices, weakened sales through midyear and forced capacity cuts by numerous producers. Looking ahead, he says it will be 2010 before demand perks up significantly.

CEO Svein Richard Brandtzaeg of the Norwegian smelter says he "remains cautious" about the outlook for global aluminum demand in the second half of the year—and expects it to be weaker than the first half. He also joins with other forecasters that "aluminum prices are expected to remain low." That's why the head of the world's third largest integrated aluminum supplier says this is "the most difficult period the aluminum industry has ever experienced."

Brandtzaeg expects continued weak financials to be reported by most aluminum suppliers in the July-September quarter. Reason: Aluminum prices seemed to have flattened out at historically low levels of 66/lb through July. That's one reason why the firm has sold more than 90% of its primary aluminum production for the third quarter in advance at 67/lb. That's the same price as the London Metal Exchange spot average for the second quarter when most aluminum firms, led by major supplier Alcoa of the U.S., reported losses as the global recession has crippled demand.

Alcoa expects the global aluminum supply surplus this year to hit 1.2 million metric tons, up from 1.056 million in a prior forecast, driven by increased supply from Western nations. Alcoa estimates that China's aluminum production will come down 140,000 metric tons this year as restarts of closed capacity is less than previously expected. However, it says Western production is expected to be 344,000 metric tons higher this year than last.

Brandtzaeg says underlying demand for light metal products in Europe and North America remains weak and he expects full-year primary aluminum consumption worldwide to decline by as much as 15% to 20% from 2008 levels.

These comments from producers fit with Aluminum Association data that shows North American use of aluminum mill products has dropped an annualized 33.3% through May. The data also shows that mill shipments have fallen 27%, net imports are 44.8% lower and new-order bookings are 1% below five-month levels of 2008—which were 15.8% off the pace of 2007.

The association says demand for all forms of aluminum—ingot and wrought and cast products—in the U.S. and Canada totaled an estimated 7.1 billion lbs during the first five months of 2009, or 26.7% below a year ago.

Overseas projects of NALCO in Iran and Indonesia delayed

SteelGuru - Friday, 14 Aug 2009

Business Standard reported that National Aluminium Company Limited’s Greenfield projects in overseas markets like Indonesia and Iran are in limbo because of political and policy hurdles in those countries.

Mr CR Pradhan CMD of NALCO during his recent visit to Kolkata said that the policies of the Indonesian government and a volatile political situation in Iran are keeping the aluminium major from setting up its plants entailing an estimated investment of over INR 20,000 crore.

He said that "Though, the Indonesian law does not allow foreign companies to have a stake in mineral exploration, the NALCO project would be developed in a JV with a local partner who will have the control of the rights of coal and bauxite mines."

Mr Pradhan said that the company would go ahead with the project, which would require at least INR 10,000 crore investments each, only after there is assurance of the right of some control on the minerals.

He said that NALCO would be the majority shareholder and will control the management of the projects.

In 2008, NALCO had inked an agreement with the government of Indonesia for setting up a 0.5 million tonne aluminium smelter and a 1,250 MW captive power unit at an investment of about INR 17,000 crore. In Iran, NALCO has plans to set up a 0.330 million tonne smelter in a JV with the Iranian firm ALPHA at an investment of INR 10,000 crore. But, the company seeks a better political climate before it submits the project plan to the Iranian government for approval. It also plans to set up an aluminium smelter in South Africa but the project is in nascent stage.

NALCO was aiming to ramp up its production capacity to 0.210 million tonnes per annum for the current fiscal. In 2010 to 2011, the capacity would be scaled up to 0.260 million tonnes.

(Sourced from Business Standard)

Australia Govt Moves To Pass Renewable-Energy Bill

Wall Street Journal - AUGUST 16, 2009

CANBERRA, (Dow Jones)--The Australian government Sunday announced interim measures that could ensure the swift passage of laws that would set a mandatory renewable-energy target for the country, despite the failure of a related bid to green up the economy by capping greenhouse-gas emissions.

Lawmakers Thursday rejected plans to introduce a cap-and-trade scheme in July 2011 - similar to one operating in Europe since 2005 - that would cap Australia's carbon-dioxide emissions, forcing heavy polluters such as power generators and aluminum and cement makers to buy so-called carbon permits to account for their emissions.

The move also jeopardized plans to require that 20% of Australia's electricity be generated from renewable sources by 2020, from less than 5% now - even though lawmakers broadly supported the renewable energy bill - because the two pieces of legislation were linked.

The center-left Labor government has vowed to bring back the cap-and-trade legislation for a second vote in November. But industry groups fear that any further delays in implementing the renewable-energy target could curtail investment in the sector.

Climate Change Minister Penny Wong Sunday announced interim industry assistance arrangements under the renewable-energy target that will de-couple the two bills until such time as the cap-and-trade bill is passed by the Senate. If the cap-and-trade plan still hasn't passed by Jan. 1, 2010 - when the expanded renewable energy target commences - the interim assistance will be provided to certain sectors that are high energy users and are also exposed to international trade.

The government expects industries such as aluminum smelting, silicon production and newsprint manufacturing will be eligible for assistance.

Although Australia accounts for only 1.5% of global greenhouse-gas emissions, it is the biggest per-capita carbon polluter in the developed world due to its reliance of fossil fuels, mainly coal, for more than 80% of its electricity generation.

The renewable-energy bill is currently being debated by the lower House of Representatives, where the Labor government has a majority. But Labor needs the support of at least seven senators from either the main opposition conservative Liberal-National coalition, or other smaller parties, to get a majority in the Senate, where bills become law.

Conservative opposition leader Malcolm Turnbull on Sunday pledged to negotiate with the government with a view to passing the renewable-energy legislation, possibly as soon as this week. Although the government's latest proposal lacks detail, it appears to be "moving in the right direction," Turnbull told reporters.

His conservative party wants adequate protection in the renewable-energy program for industries likely exposed to higher power prices by the move to greener energy sources. They also want it to support emerging renewable technologies such as solar, tidal, and wave energy. "We want this legislation passed, but we want to make sure it's right before we vote for it," Turnbull said.

The environmentalist Greens party, which holds five balance-of-power seats in the Senate, welcomed the move to de-couple the renewable-energy bill from carbon trading. But it expressed disappointment at what it sees as a "browning" of the legislation by extending interim assistance to big polluters.

"The big polluters will get windfall gains from cheaper electricity without having to pay to install the renewable energy in the first place," Greens Deputy Leader Christine Milne said. The Greens want the renewable energy target to be lifted to 30% by 2020.

-By Rachel Pannett, Dow Jones Newswires; 61-2-6208-0901; rachel.pannett@dowjones.com

The aluminium trade-off

Business Spectator (registration) - 17 Aug 2009

The aluminium trade-off The aluminium industry appears likely to be again at the front of the decarbonisation stage this week when the stand-alone renewable energy target is debated in parliament and cost relief for what the mainstream media, echoing the environmental movement, insist on calling a "big polluter" is considered.

The aluminium industry – which is based on this country having a quarter of the world’s bauxite reserves – is by far the biggest single user of electricity in Australia, consuming about 15 per cent of the total. No wonder its product’s nickname is "frozen electricity".

It's an $11 billion-a-year business, selling 80 per cent of its local output overseas and employing 17,000 people directly and 50,000 indirectly in regional areas like Geelong, Portland, the Hunter Valley, Gladstone and Bell Bay. That’s a lot of blue-collar workers.

The value of the industry to its host rural communities can be gleaned from the claim by Tomago Aluminium, whose NSW smelter turns out a quarter of national production, that it spends $450 million a year with local suppliers.

Alan Cransberg, the Alcoa MD in Australia, told the Senate earlier this month: "If you want to know what the world needs, it needs more aluminium. Its use will become very important as we become more and more carbon constrained. It is an extremely important material for future fuel efficient transport systems." And lightweight building construction systems.

Cransberg pointed out that replacing two kilograms of steel with one of aluminium in a car saved 20 kg of carbon dioxide over the life of the vehicle.

At the Senate hearings, Miles Prosser, who heads the industry’s lobbying body, the Australian Aluminium Council, said that what was at issue was not just whether the sector built more plants here – Hydro Aluminium Kurri Kurri in the Hunter Valley is sitting on a $5 billion project, waiting for the outcome of the domestic carbon debate – but also whether it continued to spend on maintenance of the existing developments.

The industry claims that, under the emissions trading scheme as proposed by the government and the RET as currently on the table, it faces $4 billion in extra costs over 10 years – a greater annual cost, said Prosser, than the sector has been spending on average annually in re-investment here.

"You could see an inevitable path to closure," he warned, pointing out that the smelters, for example, invested in rebuilding key components on a five-to-10-year cycle.

"And we have no ability to change our prices," added Cransberg. "They are set by the London Metal Exchange."

The industry points out, via the AAC, that no matter what happens in Australia, there will not be a change in aluminium and alumina prices, no change in global or domestic demand and no change in global production. The hit, if the industry does not expand and actually contracts here, will be taken by the local workers and the local communities – and of course the national economy.

"The world will continue to use large amounts of aluminium," Prosser told senators. "Aluminium is a healthy global industry. What is at play is how much of that aluminium will be produced in Australia – or in China, the Middle East and Brazil."

According to Cransberg, the greenhouse gas footprint of alumina his company produces in Western Australia is a half to a third less than that of a tonne produced in China.

Apart from decoupling the RET from the ETS, a move that the government now seems inclined to concede, what the aluminium mob want is for their electricity consumption to be netted out of the national total against which the target will be set and excluded from the penalty (which is proposed at $65,000 per gigawatt hour). The effect would be to save the sector about $700 million in carbon costs over the next decade.

Its lobbyists are going to have a busy week.

Ormet Corp. to keep producing through 2009

Daily Mail - Tuesday August 18, 2009

by George Hohmann, Daily Mail Business Editor

CHARLESTON, W.Va. -- Ormet Corp. announced it will continue to operate four pot lines through the remainder of 2009 at its aluminum smelter in Hannibal, Ohio.

The company said it has secured fixed-price metal sales contracts for September, October and part of November and said it continues to explore securing contracts for its remaining 2009 metal production.

At the end of July Ormet issued a job layoff warning to 982 employees. The company said that since that time, it has been working hard to maintain operations and protect jobs.

Ormet said it now anticipates layoffs of no more than 100 people through the remainder of 2009.

The company's smelter is on the Ohio River, 25 miles south of Moundsville.

Rio Tinto Selling Alcan Packaging Unit for $2 Billion

New York Times - August 17, 2009

SYDNEY — Rio Tinto agreed Tuesday to sell its Alcan packaging unit for about $2 billion to the Australian packaging group Amcor, easing its debt burden after an ill-timed acquisition two years ago.

The deal is a key step in Rio’s effort to pay down $38 billion in debt. Rio, the largest miner in the world after BHP Billiton, two years ago targeted $15 billion in asset sales to help cut debt after buying the Alcan aluminum business at the top of the market.

With the global financial crisis, buying interest for Rio’s assets slipped away, forcing the company to turn to a $15.2 billion rights issue in June to raise capital.

Amcor, which says the deal will give it leading global positions in key packaging markets, will raise 1.6 billion Australian dollars, or $1.3 billion, of underwritten equity via a 4-9 rights issue at 4.30 dollars a share, as well as debt to fund the deal. The rights give shareholders a discount of 24 percent to Amcor’s last traded price.

"Following the acquisition, Amcor will be among the world’s largest packaging companies with leading positions in flexible packaging, custom PET containers and folding cartons for tobacco packaging," the company said in a statement.

RBS said in a report last week that the potential earnings uplift of an acquisition of Alcan packaging assets would be a powerful near-term share price catalyst.

Amcor also said its net profit before one-offs was 360.5 million dollars for the year ended June 30, from 369.1 million dollars a year earlier. Analysts’ median forecast for net profit before one-offs was 361 million dollars, according to Reuters Estimates.

The deal marks Amcor’s first big buy under its chief executive Ken MacKenzie, following four years of fixing, closing or selling businesses that had suffered after the company’s $3.2 billion takeover binge in Europe and the Americas earlier this decade.

"Now is the right time in the economic cycle to be making acquisitions as asset values are substantially lower than they have been for many years," MacKenzie said in a statement.

Last month Bemis Co. paid $1.2 billion to buy part of Rio’s food packaging business. Bemis paid 7.2 times trailing earnings before interest, tax, depreciation and amortization.

Russia power plant accident kills 11, Dozens missing

Inquirer.net - 08/18/2009

By Anna Smolchenko, Agence France-Presse

MOSCOW – A sudden flood at Russia's largest hydroelectric plant Monday killed at least 11 people and left dozens missing after a surge in water pressure ruptured pipes, officials said.

The accident caused serious power disruption in Siberia, cutting off electricity to smelters of major Russian metals manufacturers UC Rusal and Evraz Group.

It happened when a sudden increase of water pressure in pipes feeding a power unit caused the rupture at the Sayano-Shushenskaya plant in the Khakassia region.

"Eleven people area dead, 14 have been injured and more than 50 people have been reported missing," Interfax said, citing the latest toll provided by the emergency situations ministry.

The plant's chief engineer, Andrei Mitrofanov, told Itar-Tass that "around 300 people" would have been on the ground at the time of the accident.

The components were undergoing repairs when the accident occurred, causing a large portion of the power unit to break off and puncture the ceiling and wall, allowing water to pour in and flood the chamber.

In a statement, the Kremlin said the accident was due to an unspecified "hydraulic impact" at the plant which forced the shutdown of all 10 of the station's power units.

President Dmitry Medvedev ordered Emergency Situations Minister Sergei Shoigu and Energy Minister Sergei Shmatko to fly to the scene and take personal control of the crisis, the Kremlin said.

Prime Minister Vladimir Putin arrived Monday night at the headquarters of the national crisis management centre.

Medvedev sent a message of condolences to employees of the plant.

"We are going to look carefully into the causes of this catastrophe and provide all necessary assistance to the injured," Medvedev said, according to the Kremlin press office.

The accident sparked panic among nearby residents who feared the massive dam at the facility might collapse, but Shoigu said there was no threat to people downstream.

"Towns and villages located downstream are not in danger," Shoigu told reporters in Moscow.

Andrei Klyuyev, an emergency situations ministry official at the site of the accident, 4,000 kilometers (2,500 miles) east of Moscow, said there were still dozens of people unaccounted for.

Klyuyev said rescue divers had pulled out one person from a room underneath the plant's turbine hall where there was apparently a cave-in and flooding but said many more could still be trapped.

Russian television broadcast pictures showing pieces of concrete, cables and twisted metal pylons beneath the 245-metre high dam wall and the main turbine hall flooded with water and debris.

The accident disrupted power supply to key smelters in the region including those of UC Rusal, Russia's largest aluminum producer, and other enterprises.

A Moscow-based spokeswoman for Rusal, which is controlled by billionaire businessman Oleg Deripaska, said however the operation of the smelters had not been seriously affected as power had been diverted from alternative sources.

The company said in a statement later however that Deripaska had discussed with Shmatko the possibility of reducing output from UC Rusal to free up energy resources to ensure "stable functioning of the region".

"The situation has become extremely difficult following the accident," the governor of the Tomsk region, Viktor Kress, told RIA Novosti. "It has left us down around 41 megawatts of power."

Russia's financial regulators ordered the suspension of trading on both Moscow stock exchanges in shares of state-run RusHydro, the corporation that owns the affected hydroelectric station.

Konstantin Reily, a utilities analyst at Finam, estimated that it might cost up to three billion dollars to replace the three damaged power units.

"This is an extraordinary event. This is the first accident of such a scale at the Sayano-Shushenskaya hydroelectric plant," he added.

Rebuilding the plant would take "four years or more", Vasily Zubakin, the acting chairman of RusHydro, told RIA Novosti.

The mayor of the nearby town of Abakan, speaking to Echo of Moscow radio, said queues had begun forming outside bakeries and gas stations.

The natural resources ministry said it was concerned by the environmental impact of the accident, saying an oil slick of more than 25 kilometers (15 miles) had spread along the Yenisei River.

"According to preliminary data, transformer fluid has leaked from one of the hydroelectric station's damaged units," the ministry said in a statement.

Russian Dam Disaster Kills 10, Another 62 Missing

New York Times August 17, 2009

CHERYOMUSHKI, Russia (Reuters) - Ten people were killed on Monday and 62 were missing after a turbine room flooded at Russia's largest hydro-power station, forcing steel and aluminum plants in Siberia to turn to emergency power.

RusHydro, owner of the Sayano-Shushenskaya plant, said the damage would run into "billions of rubles" and take several months to fix. The company's shares were suspended in Russia and fell more than 15 percent in London.

Panicked residents in the shadow of the Soviet-era dam fled the region when news of the accident spread at 8:15 a.m. (0015 GMT). Calm returned after Emergencies Minister Sergei Shoigu said there was no danger of damage to the structure of the dam or that it would burst.

Officials said water flooded a turbine room at the dam, which is more than 3,000 km (1,900 miles) east of Moscow. An investigation was under way to determine the exact cause.

A spokesman for RusHydro, quoting acting chief executive Vasily Zubakin, said 10 people had been killed, 11 were injured and another 62 were missing.

A Reuters correspondent saw about 150 emergency workers in safety helmets gathered at the dam. The damaged pump room, around 100 meters in length, is located high in a concrete wall that has dammed the waters of the Yenisei River since 1978.

Zubakin, speaking on a conference call, said the plant had stopped operations and damage would run into "billions of rubles." Some production units were damaged beyond repair, and even a partial restart of the undamaged units would take several months, he said.

The Sayano-Shushenskaya plant represents 25 percent of RusHydro's total capacity of 25.3 gigawatts of power.

"The accident will serve as a reminder of the importance of electricity in a modern economy, and that safety and reliability cannot be achieved without proper funding," analysts at investment bank Renaissance Capital said in a research note.

Russia's financial markets regulator suspended trading in RusHydro shares on both main stock exchanges at the company's request. The stock had fallen 7.1 percent on the MICEX exchange when suspended, while the main index was down 3 percent.

Aluminum AND STEEL

The power station is only 50 km (30 miles) from two smelters owned by United Company RUSAL, the world's largest aluminum producer and the biggest asset in the empire of indebted businessman Oleg Deripaska.

Electricity to the Khakassia and Sayanogorsk plants was cut but both switched to supplies from the neighboring Krasnoyarsk and Kemerovo regions and resumed normal operations, said Vladimir Shulekin, spokesman for the Sayanogorsk plant.

However, in an emergency meeting chaired by Energy Minister Sergei Shmatko and attended by Deripaska, aluminum output cuts were discussed as a possible way of creating additional energy reserves for autumn and winter, when the load on the power system increases, UC RUSAL said in a statement.

Renaissance Capital said the unavailability of a third of Sayano-Shushenskaya's capacity would reduce RusHydro's 2010 revenues by around $100 million, or 3 percent. It forecast reconstruction costs of between $1.0 billion and $1.5 billion.

Zubakin said RusHydro's monthly losses would be 1.5 billion rubles ($47.3 million), Interfax news agency reported.

Regional power supplier OGK-6 said in a statement it had raised output at its Krasnoyarsk hydroelectric plant to full capacity to help make up the shortfall from the accident.

Steel maker Evraz Group also relies on Sayano-Shushenskaya for some of the power used by its mills and coal mines in Kemerovo region. Evraz said it was doing everything to avoid or minimize any possible production losses.

(Additional reporting by Robin Paxton, Conor Humphries, Anastasia Lyrchikova, Polina Devitt, Lyudmila Danilova and Tanya Mosolova; Writing by Robin Paxton; Editing by Kevin Liffey)

Siberia dam accident could aid aluminum industry

Reuters - 08.18.09

NEW YORK, Aug 18 (Reuters) - A potential drop in Russian aluminum production following a fatal accident at a Siberian hydroelectric plant, should help the global industry by reducing already high inventories, analysts said on Tuesday.

'Any loss of capacity is good,' said Charles Bradford of Affiliated Research Group. 'Less supply is good, as there is too much inventory.'

ercent on Tuesday after Russia's RUSAL said it could lose at least 500,000 tonnes of production after the accident at the Sayano-Shushenskaya power station.

RUSAL, the world's largest producer of the metal, is talking with government officials about the possibility of cutting output after the fatal accident, although no decision has yet been taken, the company said.

Commerzbank said in a note to investors that repair work at the plant could last up to four years. 'Taking this into consideration, the extent of the repercussions on the aluminum market becomes evident.

'However, the production problems in Russia will only reduce the production surpluses,' it said.

Australia Approves Energy Targets

Wall Street Journal - AUGUST 19, 2009

By RACHEL PANNETT

CANBERRA -- Australian lawmakers Thursday approved legislation that would require 20% of Australia's electricity generation to come from renewable sources by 2020.

The legislation cleared the upper house Senate -- where laws are passed -- after the center-left Labor government Wednesday won the support of key conservative opposition lawmakers by agreeing to certain conditions, including improved assistance for energy-intensive industries.

It follows a move by the government to split its renewable energy program from a plan to place a mandatory cap on Australia's greenhouse-gas emissions, which was rejected by the Senate last week.

Both sides of politics were quick to claim victory over the success of the renewable program, which fulfills part of Prime Minister Kevin Rudd's 2007 election pledge to green the economy. But the toughest task still lies ahead for the Rudd administration, which has vowed to reintroduce its controversial greenhouse-gas plan later in the year.

The main opposition Liberal-National coalition remains deeply divided over that plan, which would see Australia introduce a cap-and-trade scheme -- similar to one operating in Europe since 2005 -- capping Australia's carbon-dioxide emissions, forcing heavy polluters such as power generators and aluminum and cement makers to buy so-called carbon permits to account for their emissions.

The rural-based Nationals oppose the plan, with Barnaby Joyce, leader of the Nationals in the Senate, describing it as a massive new tax that threatens to make agricultural production unviable as costs spiral above those of rival exporting nations that don't have a domestic carbon trading program in place.

Malcolm Turnbull, leader of the Liberal-National coalition, has promised to deliver enough conservative votes to pass the program but only if certain conditions are agreed to -- including excluding agriculture from the carbon program beyond 2015, the date at which it is currently flagged for inclusion.

Turnbull adopted a conciliatory tone after reaching a deal with the government Wednesday over the renewable energy program, saying the deal "demonstrates the economically and environmentally beneficial outcomes which can result from good faith negotiations between the government and coalition."

He called on the government to adopt a similar approach to negotiation of its cap-and-trade scheme.

The coalition's preference, however, is to delay the design of Australia's domestic carbon trading scheme until after world leaders meet in Copenhagen in December in United-Nations-led talks to nut out a global climate pact to replace the Kyoto Protocol, which expires in 2012.

The difficulties faced by the Rudd government in negotiating its climate change policies could provide a case study for how similar plans to set mandatory caps on greenhouse-gas emissions will fare in the U.S. Senate next month. The U.S. climate bill passed the House of Representatives by a slim 219-212 margin in June.

Although Australia accounts for only 1.5% of global greenhouse-gas emissions, it is the biggest per-capita carbon polluter in the developed world due to its reliance on coal for around 80% of electricity generation. Clean-air advocates say countries such as Australia and the U.S. need to set a better example before other parts of the world agree to curb their own worsening pollution problems.

The Australian government, industry groups and environmentalists hope the new renewable energy targets approved Thursday will unlock billions of dollars of investment in renewable technologies like wind and solar power.

The plan will create a carrot-and-stick system whereby generators are rewarded for every megawatt hour of green energy they produce, while electricity wholesalers are penalized if they don't source a certain share of their energy from renewable technologies.

Australian Climate Change Minister Penny Wong said the renewable energy program should deliver the "largest increase in renewable energy in the country's history."

Renewable energy accounts for only around 6.5% of Australia's total electricity generation now. Much of that is in hydroelectricity power stations, which have no prospects for expansion. The combined contribution of wind and solar power is just 0.4%.

The renewable energy laws set a statutory target of 9,500 gigawatt-hours from renewable electricity sources in 2010, increasing to 45,000 GWh in 2020.

Under the program, wholesale buyers of electricity will be required to meet a share of the renewable energy target relative to their share of the national wholesale electricity market.

Generators of renewable energy -- ranging in scale from homeowners with rooftop solar panels to commercial renewable energy operators -- will create renewable energy certificates, or RECs, for every MWh of electricity they generate from eligible sources.

These RECs, once registered, will be able to be traded and sold to liable parties who then surrender them to the Renewable Energy Regulator to demonstrate their compliance with the program, and avoid paying a shortfall surcharge of A$65 per MWh.

Making the task of achieving the 2020 target more difficult, however, is the fact that electricity demand is expanding rapidly, raising the bar on the 20% share renewable energy will need to make up.

To mitigate the impact on industries that may face higher electricity costs under the program, the government will provide assistance to high energy users that are also exposed to international trade. They include industries such as aluminum smelting, silicon production and newsprint manufacturing.

Write to Rachel Pannett at rachel.pannett@dowjones.com

Dam Disaster May Push Up Electricity Prices

The Moscow Times - 20 August 2009

By Alex Anishyuk

Energy Minister Sergei Shmatko said Wednesday that electricity prices will have to increase after a disaster at the Sayano-Shushenskaya hydroelectric plant knocked out a quarter of RusHydro’s power production.

At least 13 died and 63 were missing as of Wednesday after the turbine room flooded at the Sayano-Shushenskaya power station Monday.

RusHydro’s stock price plummeted 11.4 percent Wednesday after shares resumed trading following a two-day suspension. The shares fell as low as 1.09 rubles on the MICEX, their biggest one-day loss this year.

"A 5-7 percent growth in electricity rates in Siberia would be an optimistic scenario," Shmatko said. "The price will go up, as cheap electricity from the Sayano-Shushenskaya hydroelectric station will be replaced by energy from coal-powered sources."

The power station is the primary generator for several key factories in the region, including two United Company RusAl smelters, which consume 70 percent of the hydroelectric station’s energy, and two Evraz steel plants. The plants have been getting reserve supplies from other nearby power plants, but the resultant shortage has sent electricity prices up 24 percent on the Siberian spot market, Reuters reported.

RusAl could not be reached for comment. An Evraz Group spokesperson declined to say what effect the disaster had on its business.

An increase of only 5-7 percent next year is an unlikely scenario, however, as the winter heating season is months away and power generators will have no other option but to boost prices, said Nikolai Podlevskikh, an electricity analyst at Zerich Capital Management.

"Gas and coal-powered generators will not miss their chance to say that they’re running out of capacity and will raise prices," Podlevskikh said. "I expect electricity prices to go up 20-30 percent this fall in eastern Siberia, which will result in at least a 10 percent rise in aluminum prices."

In July, the government set the limit for year-on-year growth in electricity prices at 5 percent in 2010, but the cap may now be reconsidered.

After the accident Monday, RusAl’s director of corporate strategy, Anton Volynets, said the company’s aluminum production was under threat and that the accident may "shock" global aluminum prices.

"We estimate that as much as 500,000 tons of annual aluminum production capacity is under threat and maybe even more," he said.

The company is currently relying on reserve capacities of energy, although this is only a temporary solution to the problem, he said, forecasting a total production of 3.9 million tons in 2009, down from the 4.4 million tons the firm produced in 2008.

But not everyone is convinced that RusAl’s woes are quite as serious as advertised.

"Apart from being a forecast figure, the decline rate voiced by RusAl aims at pressuring power suppliers and the state regulator who set the electricity prices," Podlevskikh said. "Moreover, it sets a favorable background to bargain subsidies from the state, including the funding for the Boguchansk construction."

RusAl owner Oleg Deripaska said in a statement Wednesday that RusHydro and the aluminum giant would speed up the construction of the Boguchansk hydroelectricity plant in order to cover the needs of the aluminum industry.

The two parties squabbled over the project earlier this year, after RusAl delayed payments for construction and proposed suspending the project. They later came to an agreement and RusAl is currently up to date on its funding.

Boguchansk was scheduled to start working late 2010 or early 2011, but Podlevskikh said the project’s time frame could by reduced by six months at the most.

Replacing equipment at the Sayano-Shushenskaya power station may take two years, RusHydro said, and the rebuilding could cost 40 billion ($1.25 billion), Shmatko said.

Shmatko waxed optimistic about the reconstruction, however, saying the capacity of each of the plant’s 10 generation units could be increased to 730 megawatts from 640 megawatts.

Cameroon Starts Supplying Extra Pwr To Aluminum Plant-Report

CNNMoney.com - August 19, 2009: 07:51 AM ET

YAOUNDE, Cameroon -(Dow Jones)-The Kribi Power Development Corp. has started supplying electricity to boost aluminum output at Cameroon's sole smelter, a statement issued through Cameroon state radio by the company said Wednesday.

The 41 megawatts additional power supply is part of 155-216 MW of generating capacity for Cameroonian industrial and household consumption to be created by two gas-fired thermal plants under construction by the KPDC.

Cameroon government owns 44% of the KPDC, while the remainder 56% is controlled by AES Corp. (AES). AES bought 56% of Cameroon's former state-owned electricity firm, the National Electricity Corporation, or Sonel, in 2001 to become AES-Sonel.

Alucam, an affiliate of Rio Tinto PLC (RTP), depends on AES-Sonel, which owns KPDC, to power its aluminum production of 90,000 metric tons a year. Due to inadequate power supply, the smelter has temporarily stopped production.

Alucam and AES-Sonel reached an agreement earlier August to get its energy supply raised by September to stabilize aluminum output.

-By Emmanuel Tumanjong, contributing to Dow Jones Newswires; +237-7773-1930, + 237-9655-6261;

Aluminum Association’s 2009 Buyer’s Guide Now Available Online

SYS-CON Media - Business Wire - Aug. 20, 2009

The Aluminum Association’s 2009 Buyer’s Guide is now online at http://buyersguide.aluminum.org/

Completely updated for 2009, the sixth annual Buyer’s Guide online version makes finding information easier and faster. The online version includes sales contacts, addresses, and company information on:

Over 150 primary ingot, recycled ingot, and master alloys manufacturers;

More than 200 extruders;

125 companies specializing in drawing stock, bare wire, pigments and powder, forgings and impacts, ACSR and bare cable, and insulated/covered wire and cable;

Almost 200 non-ferrous casting foundries;

100 aluminum distributors; and

Over 350 suppliers to the industry—ranging from coil coaters to lubricant manufacturers to makers of protective apparel.

"This is the first time we have had an online and searchable tool for our members and suppliers to the Aluminum industry. This guide is comprehensive and is going to really take advantage of the considerable traffic we get at aluminum.org," said Aluminum Association President Steve Larkin.

Companies wishing to be listed in the Buyer’s Guide or to learn more about advertising options contact MultiView Inc. at 800-816-6710 or email aluminumassociation@multiview.com.

The Aluminum Association, based in Arlington, Virginia, works globally to aggressively promote aluminum as the most sustainable and recyclable automotive, packaging and construction material in today’s market. The Association represents U.S. and foreign-based primary producers of aluminum, aluminum recyclers and producers of fabricated products, as well as industry suppliers. Member companies operate more than 200 plants in the United States, with many conducting business worldwide.

Chinese aluminum exports in June rise significantly

SteelGuru - Sunday, 23 Aug 2009

It is reported that as LME aluminum price rallied recently, China’s aluminum product exports increased significantly in June and July.

The forged aluminum exports increased to 19,310 tonne in June and predicted to rise to 28,000 tonne in July. Increasing aluminum exports can help local suppliers to reduce surplus of aluminum supply. Meanwhile, with 13% import tax rebate, Chinese aluminum exporters can gain more profit through export.

(Sourced from YIEh.com)

Norsk Hydro Qatalum smelter 87pct complete without delays

SteelGuru - Monday, 24 Aug 2009

DJ reported that Norsk Hydro's ASA huge Qatalum aluminum smelter is now 87% complete and will start work at the turn of the year as planned.

Mr Svein Richard Brandtzaeg CEO of Hydro said that "I can confirm the plant is on target to start at the year turn 2009-2010 and we've 13% of the project remaining."

He said that production from the Qatari smelter is targeted at Asia and North America under long term contracts, so he doesn't expect the startup to exacerbate the current supply glut in aluminum markets which has driven prices down sharply.

Mr Brandtzaeg said that "Asian demand is picking up. We've already sent metal from Europe to Asia. We are focused on the fact Qatalum capacity will produce upgraded cast house products like extrusion ingots and foundry alloys and is well placed to serve markets outside Europe so it shouldn't influence our Norwegian and German capacity."

The USD 5.6 billion smelter, a joint project between Hydro and Qatar Petroleum, will have an annual capacity of 585,000 tonnes of primary aluminum by the H2 of 2010. Hydro has been forced to curtail its primary aluminum production by around 30% to help balance an oversupplied market and doesn't expect to restart that at the moment.

(Sourced from Dow Jones)

Rio Tinto reportedly in bauxite-deal talks with Chinalco

MarketWatch - Aug 23, 2009

MELBOURNE (MarketWatch) -- Rio Tinto Ltd. /quotes/comstock/13*!rtp/quotes/nls/rtp (RTP 159.25, +5.39, +3.50%) Chief Financial Officer Guy Elliott has reportedly said the miner is in the very early stages of talks with Aluminum Corp. Of China Ltd., or Chinalco, over a possible bauxite and alumina deal.

The Australian Financial Review newspaper reported Monday that Elliott has told analysts the talks have only just started and are a long way from materializing.

Rio Tinto's relations with China have soured after it abandoned a US$19.5 billion alliance with Chinalco earlier this year, turning instead to an iron ore joint venture with rival BHP Billiton Ltd. (BHP.AU), which is opposed by the Chinese.

The company is also locked in a protracted and heated round of iron ore price talks with Chinese steel mills and has seen four of its employees detained for allegedly stealing commercial secrets relating to the pricing of iron ore.

However, if serious talks have restarted with Chinalco on possible cooperation it may be a sign that tensions are beginning to ease.

Rio and Chinalco have adjacent bauxite deposits in the Australian state of Queensland and have held talks on possible cooperation there in recent years.

Rio Tinto was not immediately available to comment on the report.

Recovery in bauxite dependent on China

Jamaica Gleaner - Sunday | August 23, 2009

Dennis Morrison

MUCH HAS been said about the blow that has been dealt the Jamaican economy by the recent closure of several of the island's bauxite and alumina facilities. The focus has been on the loss of foreign-exchange earnings, which has followed the slump in production, given that the bauxite industry has been the second-largest source of exports. But what is less well recognised is that the impact will be more widely felt by way of the downturn in economic activity across certain regions and sectors.

Bauxite towns like Ewarton, May Pen, Mandeville, Santa Cruz and Junction in St Elizabeth have recently enjoyed a boost in business activity and jobs on a wave of investment in the industry. Over the 2002-2008 period, these towns and adjoining districts found themselves at the centre of huge capital spending on a scale not seen since the massive expansion in the 1950s and '60s.

Some US$1.4 billion was invested in expansion and modernisation programmes during the period. Of this amount, about US$420-500 million or annual average of US$60-70 million was spent on local supplies and to employ local contractors, skilled workmen and construction labour across the parishes of St Catherine, Clarendon, Manchester, St Elizabeth, and Kingston. When account is taken of the multiplier effect of this spending, the income generated must have been substantially greater.

An indication of the surge in construction activity was the increased consumption of cement in the mid-2000s when a range of civil works and expansion pro-jects were under way at Jamalco and Alpart simultaneously. These projects included road and rail infrastructure to open up new mining areas. In fact, the cement shortage in 2006, which was generally attributed to problems at Carib Cement's Rockfort plant, was due more to the higher demand coming from the bauxite-related construction activity and new hotel projects. Proof of this is that the increase in cement imports was three times the amount of the fall in production.

Capital spending

In terms of jobs, the significance of the capital spending can be judged by the fact that while 650 people were employed by Jamalco at its alumina plant and port, nearly 2,000 were engaged on the various projects. This comparison is only made to indicate the wider employment spread of the capital spending as against the plant operations, and not to downplay the longer-lasting effect of the permanent employment at the plant operations.

Capital spending by the industry having now come to a virtual standstill, the affected towns and districts are going to suffer a further loss of US$70-80 million, or J$6.3 to 7.2 billion of income per annum on top of the losses arising from plant closures. As the losses take effect fully, people in these communities are bound to wonder about the prospects for recovery and be concerned about their survival. Are there simple indicators that they can use to follow developments in the industry?

The most important indicator of the health of the bauxite industry is the strength of the demand for aluminium products. This is what ultimately drives the production and exports of bauxite and alumina. Aluminium products are used in the transportation sector (29 per cent), in housing and construction (20 per cent), consumer durables (9 per cent) and in packaging (19 per cent). These sectors account for nearly 80 per cent of aluminium consumption. Declines in these sectors lead inevitably to cuts in bauxite and alumina production.

Devastated

The transportation and housing and construction sectors have been devastated by the recession, especially in North America and Europe. Auto-giants General Motors and Chrysler basically went bankrupt as automobile sales in North America, which were running at over 17 million units per annum up to 2007, are now struggling to reach 10 million units. Sales have also fallen drastically in Europe. While China and India are rapidly catching up, strong growth in these markets cannot compensate for the debacle in Western markets.

The housing industry, through sub-prime mortgages, was the trigger for the financial crisis that fuelled the recession. In the advanced countries, the industry suffered its worst year for decades in 2008, and continues to experience falling prices and weak housing starts, and building permits are still declining. The rising foreclosure rate in the United States is weighing heavily on new-home construction. Recovery of the industry will take years.

A third indicator is the level inventories of aluminium held by producers and metal exchanges, which are part of the trading system that connects producers and consumers. As aluminium consumption collapsed last year, inventories rose to astronomical levels before producers carried out production cuts at smelters, and in turn, at alumina refineries worldwide. These inventories remain high, but the production cuts have halted the rapid build-up. This is one of the factors behind the 50 per cent increase in aluminium prices since February.

With prices regaining ground and the adoption by the companies of stringent cost-saving measures, we are beginning to see signs of improved balance sheets. But recovery in demand and production of aluminium, alumina and bauxite will depend on the pace of the turnaround in global economic activity and, in the short- term, on the impact of stimulus measures in the leading economies. China, the leading player in the industry, was the first to make production cuts and is showing signs of a pick-up in consumption. This will be a decisive influence.

Dennis E. Morrison is an economist. Feedback may be sent to columns@gleanerjm.com

DJ Rusal: RusHydro Trying To Shift Cost Of Accident To Consumers

Trading Markets (press release) - Wed. August 26, 2009 M

MOSCOW, Aug 26, 2009 (Dow Jones Commodities News via Comtex) -- HYOGL | Quote | Chart | News | PowerRating -- Russia's United Co. Rusal Wednesday said electricity generator OAO RusHydro (HYDR.RS) was trying to shift the costs of a recent fatal accident at one of its plants to consumers like the aluminum giant.

An accident at RusHydro's Sayano-Shushenskaya hydropower plant last week killed at least 69 people. The station will take three years to repair, officials have said.

Rusal said RusHyrdo's acting head Vasily Zubakin "is trying to put all additional costs on its consumers, who have already incurred losses due to the accident and are now experiencing complications with the energy supply."

"When Rusal and RusHydro signed agreements, they discussed the risks, including emergencies, and RusHydro took full responsibility for such situations, including risks to contracted prices," Rusal said.

Billiton shelves bauxite mine

Phnom Penh Post - Friday, 28 August 2009

BHP Billiton and Mitsubishi Corp have pulled out of a bauxite-mining concession in Mondulkiri province following exploratory drilling and have cancelled plans to build an aluminium refinery in the region, officials said this week.

The companies have informed the Ministry of Industry, Mines and Energy that they will not use their exclusive right to mine the area under the terms of a 2006 mineral-exploration agreement signed with the Cambodian government, a source inside the ministry said.

"They have filed the document officially, but it's not done yet because it needs to be sent to the Council of Ministers," the source said, speaking on condition of anonymity.

Council of Ministers spokesman Phay Siphan said he was unaware of the issue.

Poor returns

The source said a feasibility study, which cost US$10 million and covered 400 hectares of the company's 996-hectare concession, failed to find bauxite in sufficient quantities to make extraction profitable and justify the construction of the aluminium refinery.

Bauxite ore is the unrefined component of aluminium.

A spokesman for BHP Billiton said by email from Australia late Thursday: "We completed our exploration field work in the Mondulkiri province and are in the process of sharing our evaluation with the Royal Government of Cambodia. As such, we have reduced our presence in Phnom Penh."

However, the spokesman refused to give further details, saying only that "we do not comment publicly about the results of our exploration activities".

BHP Billiton was no longer in its Norodom Boulevard offices Thursday when the Post visited, and its project and risk manager, Dave McCracken, could not be reached on his mobile phone.

The general manager of Mitsubishi Corp's Phnom Penh representative office, Morihiko Kondo, refused to comment when approached by the Post on Thursday, saying only that inquiries should be directed to the joint-venture partner.

Kong Piseth, the chief of the Department of Industry, Mines and Energy in Mondulkiri province, said the joint venture had wound up its operations.

"The company has withdrawn from the site in Mondulkiri and even asked us to cut off the electricity," he said Thursday.

"I have the licence they asked for to continue the second phase, but I haven't seen them go back to work yet."

His deputy, Um Saran, said the company suspended its activities in February or March this year. "They have explored for nearly three years and drilled more than 1,000 holes," he said.

'Billions of dollars'

Australia's BHP, the world's largest mining company, and Japan's Mitsubishi, one of the world's largest diversified trading and investment companies, signed a mineral-exploration agreement with the government in September 2006, according to documents on BHP's Web site.

Exploration operations began in May 2007 and were due to conclude this year. No projections were made as to the likely quantity of bauxite reserves in the province, but Deputy Prime Minister Sok An told an investment conference in November 2007 that bauxite in Mondulkiri could result in an investment worth "billions of US dollars".

No estimate was ever publicised concerning the potential value to the province of the proposed aluminium refinery.

Cambodia's mining sector has long been wracked by controversy, with international NGO Global Witness slamming a "total lack" of transparency in the sector in a 70-page report released in February this year.

In Country for Sale, the London-based NGO said the government had granted more than 100 mining concessions - including 21 in 2008 - to companies controlled by "elite regime figures", with little environmental oversight.

It also singled out a 2007 comment by Lim Kean Hor, minister of water resources and meteorology, where he described a $2.5 million BHP Billiton-Mitsubishi social development fund as "tea money".

Iran most advanced aluminum unit to come on stream

SteelGuru - Sunday, 30 Aug 2009

Mehr News Agency reported that Iran’s biggest aluminum plant named Hormozal with an annual capacity of 147,000 tonnes is to start work soon in southern Hormozgan Province.

Iranian Mines and Mining Industries Development and Renovation Organization said that about EUR 400 million and IRR 2 trillion has been invested in the project.

It said that 500 jobs will be created directly and 2,000 jobs indirectly by implementing the project. The most advanced technology in the aluminum industry namely the 230 KA has been applied in the project.

Hormozal plant has been built adjacent to Almahdi aluminum plant in the city of Bandar Abbas. Almahdi plant has a capacity of 110,000 tonnes. Current capacity of aluminum production in Iran is about 310,000 tonnes which will increase by 47% when Hormozal project comes on stream.

(Sourced from Mehr News Agency)

Brazilian H1 aluminum consumption fell by 19pct YoY

SteelGuru - Sunday, 30 Aug 2009

BNamericas quoted National aluminum association Abal as saying that Brazilian aluminum consumption fell 19.1% YoY in the H1 to 453,200 tonnes but usage in just the Q2 grew 4.1% compared to Q1.

The association said it expects consumption to total 984,900 tonnes this year down from 1.10 million tonne in 2008.

Abal is forecasting a 17.3% increase in consumption during the H2 versus the first 6 months of 2009.

Mr Luis Carlos Loureiro president of Abal said in the statement that "For the Brazilian aluminum industry recovery has begun in this H2. We believe consumption will reach the same level as 2008."

(Sourced from bnamericas.com)

Better days ahead for aluminum

National Post - August 31, 2009

by Peter Koven

Mining, Rio Tinto, aluminum, Alumina Ltd.

Aluminum has been a serial underperformer as the entire metals sector rallied over the last several months. But the fundamentals are looking better, according to BMO Capital Markets.

Economist Bart Melek wrote that demand prospects for the metal are improving, and should continue to be positive through the rest of 2009 and 2010 as China continues to "spend on everything" and Western countries emerge from recession.

Aluminum should also get a boost after an industrial accident in Rusal's operations in Siberia, which could remove about 500,000 tonnes of supply from the market, Mr. Melek wrote. The unavailability of inventories from the London Metals Exchange for prompt delivery is another factor that should be good for prices.

Mr. Melek raised his target price for the second half of 2009 to US80 a pound, up from US75. He also increased his 2010 target 12.5% to US90 a pound, while leaving his long-term target unchanged at US$1.15 a pound, which he called "a level necessary to sustain the industry."

Aluminum companies have suffered mightily during the downturn, as prices fell so far that more than 80% of the industry was probably losing money at the bottom of the cycle. But higher prices mean that it could be a good time to look at the equities again.

BMO analysts David Radclyffe and Tony Robson offered up two names for investors willing to take the plunge: Alumina Ltd. and Rio Tinto Ltd. Alumina is favoured for its high-quality assets, solid balance sheet and strong upside in Brazil. Rio, meanwhile, has sorted out its debt problems from the Alcan acquisition and has the most leverage to aluminum among the large-cap, diversified miners.