AluNews - January 2009

China Power sets up JV smelter in Ningxia

China Knowledge Online, Singapore - Jan. 4, 2009

China Power Investment Corp, one of the Top 5 power producers in the country, has agreed to restructure Qingtongxia Aluminum and set up a joint venture smelter in Ningxia Hui Autonomous Region.

The JV, with a designed capacity of 33 million tons of coal and 1.66 million tons of electrolytic aluminum per year, will become China's second largest aluminum smelter after Chalco, sources reported.

The new joint venture will have a registered capital of RMB 5 billion, in which 70% stake will be owned by China Power, and the rest will be held by the State-owned Assets Supervision and Administration Commission of Ningxia.

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China Agency Buys Large Block of Aluminum

Recycling Today, OH - Monday, January 5, 2009

Published reports have noted that China's State Reserve Bureau is planning on purchasing 300,000 metric tons of aluminum at around $1,750 per metric ton. The move is being done to increase prices and support Chinese aluminum producers.

According to one news report, the price is a 10 percent premium over current market prices.

The SRB will buy about half of the total from Aluminum Corporation of China, the largest aluminum producer in China.

One report notes that additional purchases could total 1 million metric tons.

Despite the purchases, another market report notes that even with as much as 20 percent of aluminum production in the country idled, Chinas supply of the metal may outpace demand by 500,000 tons.

BPA decision on smelter contracts expected this month

Longview Daily News, WA - Monday, January 5, 2009

By Erik Olson

By the end of January, the Bonneville Power Administration will decide on long-term power contracts for two Northwest aluminum smelters, said Scott Simms, a spokesman for the federal agency.

The contracts could raise power costs for Cowlitz County industries.

Alcoas Intalco Works plant in Ferndale could receive rate breaks as high as 40 percent for 17 years beginning in 2012 when the current power-sales contract expires.

The BPA also is reworking a second contract with the Montana-based Columbia Falls Aluminum Co.

Unlike other industrial customers, smelters buy power directly from the BPA, which means changes in their rates have a potentially bigger impact on other industries. Weyerhaeuser Co., Cowlitz Countys largest industrial customer, estimates it could see a jump of $42 million in power costs under the proposed agreement over the life of the contract.

The BPA closed its public comment period on the proposal Dec. 22. The agency is in the middle of revising its current power sales contracts with the smelters because of a recent court decision, Simms said.

Chalco slashes spot alumina prices by 23% in home market

China Knowledge Online, Singapore - Jan. 5, 2009

Aluminum Corp of China Ltd (Chalco), the third-largest alumina producer in the world, has slashed its spot alumina prices by 23%, sources reported.

According to the statement released on its website, Chalco is selling spot alumina at RMB 2,000 (US$293) per ton, compared with RMB 2,600 at the end of 2008.

The move will affect prices in the spot market, a Chalco official said, adding that the company doesn't have much spot material to sell as it has reduced alumina output.

The official added the Chinese aluminum smelters had cut production, reducing demand for alumina, the main raw material for production of the metal.

Industry insiders indicate the price was still higher than RMB 1,800 to RMB 1,900 per ton offered by other producers.

Chalco cut the price to RMB 2,600 in November, down 38% from RMB 4,200 at the beginning of last year.

U.S.-based financial holding company JPMorgan Chase & Co raised its shareholding in Chalco to 6.12% from 5.89% on Dec. 18, according to China Knowledge's earlier report.

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Alcoa cuts in Blount leave officials €~in shock

Knoxville News Sentinel, TN - Wednesday, January 7, 2009

Company to eliminate 450 jobs in this area alone; 13,500 worldwide

ALCOA €” Local government officials are "in shock" and wondering about the ripple effect of Alcoa Inc.s decision to cut 450 jobs in Blount County as part of a global cost-cutting effort that includes a total of 13,500 positions, or 13 percent of Alcoas worldwide work force.

The Pittsburgh-based manufacturer said Tuesday it is shutting down both smelting production lines in Blount County as part of an 18-percent reduction in annual primary aluminum output. Thats a total drop in smelting output of 750,000 metric tons per year and is part of a multipronged strategy by which Alcoa aims to save $450 million per year. The company has about $30 billion in annual revenues.

The rigid packaging division in Blount County isnt affected, company spokesman Kevin Lowery said.

The 450 jobs are being cut in what Lowery called a "temporary curtailment" and represent almost a third of some 1,500 Alcoa jobs in Blount County. The cuts will occur by the end of the first quarter.

"As market conditions improve, we will look to restart that production," Lowery said.

Local officials were devastated by word of the cuts.

"Its going to have a heavy impact on everything across the county," Blount County Mayor Jerry Cunningham said.

He blamed the layoffs on both high utility rates charged by TVA and reduced demand in the aluminum market. He said the layoffs have "a ripple effect. It affects sales tax collections" and is "terrible news, particularly the impact on 450 families."

Mark Johnson, the Alcoa city manager, called the size of the layoff "unprecedented" and said, "It reflects how bad the economic times are." While its difficult to gauge the financial effect on the city, he said, "People are not going to spend as much money, which will reflect negatively on sales tax (collections)."

The aluminum company buys "a considerable amount of water" from the city of Alcoa. "Water is a big-ticket item," Johnson said, so city revenues could be affected on that front as well.

Johnson said city officials are "in shock right now" and have gotten no indication from company officials how long the layoff might last.

Lowery said severance for salaried employees will be based on years of service and that the company will begin discussions with union representatives about hourly workers compensation.

"Its important to note that this is one of many, many, many steps that the company is taking," Lowery said.

Other cost controls include:

Cutting 1,700 contractor positions.

Freezing salaries and hiring.

Reducing 2009 capital expenditures by 50 percent, to $1.8 billion.

Selling four "noncore downstream businesses:" Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe. The four employ a total of 22,600 workers at 38 sites and had 2008 combined revenues of $1.8 billion and after-tax operating losses of about $105 million.

The company cited the global economic downturn in making Tuesdays announcement.

"Unfortunately theres an economic situation going on in the world where the price of aluminum has gone from about $3,300 in July to about $1,500 a ton today," Lowery said.

"Thats a tough thing to have to go through, so you have a combination of economic conditions going on around the world, the overall cost position of the operations there (in Blount County), as well as just a variety of different market conditions," he continued. "We tried to put this off as much as we could. €¦ It is a difficult thing to do. Were going to treat everyone there with respect."

David Keim, continuous news editor for news and business, and contributor Bobby Wilson contributed to this report.

Alcoa cutting 106 jobs in Washington

Seattle Times, United States - Tuesday, January 6, 2009

Alcoa Inc. plans to cut 106 jobs in Washington, 80 at its aluminum smelter in Ferndale and 26 at its plant in Wenatchee.

WENATCHEE, Wash. €”

Alcoa Inc. plans to cut 106 jobs in Washington, 80 at its aluminum smelter in Ferndale and 26 at its plant in Wenatchee.

The world's third-largest aluminum maker said Tuesday it will cut 13 percent of its work force worldwide. The Pittsburgh-based company has the two smelters in Washington.

Alcoa spokesman Kevin Lowery tells radio station KGMI that the Intalco plant near Ferndale is cutting 80 jobs, plus 10 subcontractor positions. Production will remain at current levels.

The plant reduced its work force by 50 jobs in November.

Wenatchee Works spokeswoman Sharon Kanareff says that plant cut 43 jobs in November.

Copyright © 2009 The Seattle Times Company

Alcoa Outline Plan to Overcome Economic Downturn

Azom.com - January 6th, 2009

Alcoa (NYSE:AA) today detailed a series of specific actions to conserve cash, reduce costs and strengthen the Companys competitiveness during the current economic downturn. Building on the Companys commitment from October, these actions address additional production curtailments, cost and procurement efficiencies, portfolio streamlining and reduction of capital expenditures and other liquidity enhancements.

"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn, and flexibility and foresight to be prepared for future uncertainties in our markets," said Klaus Kleinfeld, President and CEO of Alcoa Inc. "We are taking a wide-ranging set of aggressive, but prudent, measures to ensure that Alcoa maintains its competitive lead in todays challenging markets while also emerging even stronger when the economy recovers."

Production Curtailments

Further smelting reductions of more than 135,000 metric tons per year (mtpy) will be implemented resulting in reduction of total primary aluminum output by more than 750,000 mtpy, or 18 percent of annualized output. Alumina production will also be reduced accordingly across the global refining system to a total of 1.5 million mtpy in response to market conditions. Curtailments will be fully implemented by the end of the first quarter 2009.

Cost and Procurement Efficiencies

Targeted reductions, curtailments and plant closures and consolidations will reduce headcount by more than 13,500 employees or 13 percent of the Companys worldwide workforce by the end of 2009. An additional 1,700 contractor positions also will be eliminated. The Company has also instituted a global salary and hiring freeze.

Accelerated procurement actions to address major input costs such as energy, coke, caustic soda, and aluminum fluoride will provide significant short term cash benefits. Initiatives to secure raw materials from alternate suppliers globally are providing cost advantages for several key inputs. These actions are expected to yield savings of greater than 20 percent in each of the materials. Lower market oil and gas prices also are having a positive impact.

Alcoa continued to make progress on its re-powering strategy and has finalized and signed agreements to supply power through 2040 to three smelters in Quebec that will benefit approximately 25% of the Companys smelting production. Nearly 80% of the Companys capacity is now covered by re-powering agreements and self generation through 2025 and the Company is aggressively pursuing other efforts across its portfolio.

Portfolio Streamlining

As previously announced, Alcoa and ORKLA ASA (Orkla) have agreed to exchange their stakes in a Norwegian smelting partnership and a Swedish extrusion joint venture in order to focus on their respective areas of expertise and best practices. Alcoa will receive Orklas 50 percent stake in Elkem Aluminum and Orkla will receive Alcoas 45 percent stake in the SAPA extrusion profiles business.

Elkem Aluminum, which will be 100 percent owned by Alcoa following the transaction, includes aluminum smelters in Lista and Mosjoen, Norway with a combined output of 282,000 metric tons per year (mtpy). Included in the transaction is Elkems stake in a newly opened anode plant in Mosjoen in which Alcoa already holds an approximate 82 percent stake.

Alcoa also intends to divest four non-core downstream businesses: Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe. The businesses to be sold had 2008 combined revenues of $1.8 billion and an estimated after-tax operating loss of approximately $105 million. The businesses employ a combined 22,600 people at 38 locations. Expected net proceeds for the divestitures are estimated to be approximately $100 million.

Capital Expenditures and Liquidity

Building on the previously announced initiative to conserve cash and suspend the Companys share repurchase program, the Company is stopping all non-critical capital investment. Capital expenditures in 2009 are projected to be down to $1.8 billion, a 50 percent decrease from 2008, and will be $1.5 billion after partner contributions. Capital spending includes approximately $750 million for the completion of key Brazilian growth projects. The Sao Luis refinery expansion and the greenfield Juruti bauxite mine are scheduled to be finished in the first half of 2009.

Impact

Total charges for the 4th quarter 2008 due to restructuring, impairment and other special charges are expected to be between $900 and $950 million after tax, or $1.13 to $1.19 per share, of which approximately 80 percent is non-cash. The restructuring and divestiture program is expected to save approximately $450 millionbefore taxes on an annualized basis.

"Because we recently completed an extensive competitive analysis, including a strategic review of each business, we have been able to quickly identify and implement effective responses that strengthen our market competitiveness and financial staying power in the economic downturn. We will continue to monitor the dynamic market situation to ensure that we adjust capacity to meet any future changes in demand and seize new opportunities that emerge. These are extraordinary times requiring extraordinary actions," said Mr. Kleinfeld.

Indian JV plans Indonesian aluminium smelter

tce today, UK - 6/Jan/2009

NALCO takes major share in $4 billion project

by Wendy Laursen

Smelter will produce 500,000 t/y of aluminium

INDIAS NATIONAL ALUMINIUM producer and exporter, NALCO, has entered into an agreement with Rak Minerals & Metals Investment (RMMI), based in the United Arab Emirates, to build a $2.5b aluminium smelter and a supporting $1.5b power plant in South Sumatra, Indonesia.

The smelter will produce 500,000 t/y of aluminium from 1m t of Indian alumina using electricity generated by the 1250 MW coal-fired power plant. NALCO has a 76% share in the deal and RMMI has a 24% share. The project is expected to be completed in 2013.

RMMI will build the necessary port and rail facilities and provide 5m t of low sulphur thermal coal to meet the energy needs of the smelter. NALCO will build the smelter and power station.

"The smelter requires a lot of electricity and we have a lot of energy in India [€¦] but still we find that it makes sense to put the power plant near coal mining here in Indonesia," says NALCOs director B. L. Bagra.

NALCO is a publicly listed company and the Indian government holds a majority stake. It has an estimated turnover of $1.5 billion and has been mining bauxite and refining aluminium for 25 years. The company has ambitious growth plans after being conferred Navratna status by the Indian government which entitles it to more independent managerial powers and commercial autonomy. The company has further plans for new smelters and power stations in India and Iran.

RMMI is looking to expand its current infrastructure in Indonesia. It is planning involvement in other smelting and metal-based fabrication industries in South Sumatra including an industrial park at Tanjung Api-Api for which the local government has committed to providing sufficient land and to fast tracking the approval and licensing process.

Alcoa cuts in Blount leave officials €~in shock

Knoxville News Sentinel, TN - Wednesday, January 7, 2009

Company to eliminate 450 jobs in this area alone; 13,500 worldwide

ALCOA €” Local government officials are "in shock" and wondering about the ripple effect of Alcoa Inc.s decision to cut 450 jobs in Blount County as part of a global cost-cutting effort that includes a total of 13,500 positions, or 13 percent of Alcoas worldwide work force.

The Pittsburgh-based manufacturer said Tuesday it is shutting down both smelting production lines in Blount County as part of an 18-percent reduction in annual primary aluminum output. Thats a total drop in smelting output of 750,000 metric tons per year and is part of a multipronged strategy by which Alcoa aims to save $450 million per year. The company has about $30 billion in annual revenues.

The rigid packaging division in Blount County isnt affected, company spokesman Kevin Lowery said.

The 450 jobs are being cut in what Lowery called a "temporary curtailment" and represent almost a third of some 1,500 Alcoa jobs in Blount County. The cuts will occur by the end of the first quarter.

"As market conditions improve, we will look to restart that production," Lowery said.

Local officials were devastated by word of the cuts.

"Its going to have a heavy impact on everything across the county," Blount County Mayor Jerry Cunningham said.

He blamed the layoffs on both high utility rates charged by TVA and reduced demand in the aluminum market. He said the layoffs have "a ripple effect. It affects sales tax collections" and is "terrible news, particularly the impact on 450 families."

Mark Johnson, the Alcoa city manager, called the size of the layoff "unprecedented" and said, "It reflects how bad the economic times are." While its difficult to gauge the financial effect on the city, he said, "People are not going to spend as much money, which will reflect negatively on sales tax (collections)."

The aluminum company buys "a considerable amount of water" from the city of Alcoa. "Water is a big-ticket item," Johnson said, so city revenues could be affected on that front as well.

Johnson said city officials are "in shock right now" and have gotten no indication from company officials how long the layoff might last.

Lowery said severance for salaried employees will be based on years of service and that the company will begin discussions with union representatives about hourly workers compensation.

"Its important to note that this is one of many, many, many steps that the company is taking," Lowery said.

Other cost controls include:

Cutting 1,700 contractor positions.

Freezing salaries and hiring.

Reducing 2009 capital expenditures by 50 percent, to $1.8 billion.

Selling four "noncore downstream businesses:" Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe. The four employ a total of 22,600 workers at 38 sites and had 2008 combined revenues of $1.8 billion and after-tax operating losses of about $105 million.

The company cited the global economic downturn in making Tuesdays announcement.

"Unfortunately theres an economic situation going on in the world where the price of aluminum has gone from about $3,300 in July to about $1,500 a ton today," Lowery said.

"Thats a tough thing to have to go through, so you have a combination of economic conditions going on around the world, the overall cost position of the operations there (in Blount County), as well as just a variety of different market conditions," he continued. "We tried to put this off as much as we could. €¦ It is a difficult thing to do. Were going to treat everyone there with respect."

David Keim, continuous news editor for news and business, and contributor Bobby Wilson contributed to this report.

Alcoa cutting 106 jobs in Washington

Seattle Times, United States - Tuesday, January 6, 2009

Alcoa Inc. plans to cut 106 jobs in Washington, 80 at its aluminum smelter in Ferndale and 26 at its plant in Wenatchee.

WENATCHEE, Wash. €”

Alcoa Inc. plans to cut 106 jobs in Washington, 80 at its aluminum smelter in Ferndale and 26 at its plant in Wenatchee.

The world's third-largest aluminum maker said Tuesday it will cut 13 percent of its work force worldwide. The Pittsburgh-based company has the two smelters in Washington.

Alcoa spokesman Kevin Lowery tells radio station KGMI that the Intalco plant near Ferndale is cutting 80 jobs, plus 10 subcontractor positions. Production will remain at current levels.

The plant reduced its work force by 50 jobs in November.

Wenatchee Works spokeswoman Sharon Kanareff says that plant cut 43 jobs in November.

Copyright © 2009 The Seattle Times Company

Alcoa Outline Plan to Overcome Economic Downturn

Azom.com - January 6th, 2009

Alcoa (NYSE:AA) today detailed a series of specific actions to conserve cash, reduce costs and strengthen the Companys competitiveness during the current economic downturn. Building on the Companys commitment from October, these actions address additional production curtailments, cost and procurement efficiencies, portfolio streamlining and reduction of capital expenditures and other liquidity enhancements.

"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn, and flexibility and foresight to be prepared for future uncertainties in our markets," said Klaus Kleinfeld, President and CEO of Alcoa Inc. "We are taking a wide-ranging set of aggressive, but prudent, measures to ensure that Alcoa maintains its competitive lead in todays challenging markets while also emerging even stronger when the economy recovers."

Production Curtailments

Further smelting reductions of more than 135,000 metric tons per year (mtpy) will be implemented resulting in reduction of total primary aluminum output by more than 750,000 mtpy, or 18 percent of annualized output. Alumina production will also be reduced accordingly across the global refining system to a total of 1.5 million mtpy in response to market conditions. Curtailments will be fully implemented by the end of the first quarter 2009.

Cost and Procurement Efficiencies

Targeted reductions, curtailments and plant closures and consolidations will reduce headcount by more than 13,500 employees or 13 percent of the Companys worldwide workforce by the end of 2009. An additional 1,700 contractor positions also will be eliminated. The Company has also instituted a global salary and hiring freeze.

Accelerated procurement actions to address major input costs such as energy, coke, caustic soda, and aluminum fluoride will provide significant short term cash benefits. Initiatives to secure raw materials from alternate suppliers globally are providing cost advantages for several key inputs. These actions are expected to yield savings of greater than 20 percent in each of the materials. Lower market oil and gas prices also are having a positive impact.

Alcoa continued to make progress on its re-powering strategy and has finalized and signed agreements to supply power through 2040 to three smelters in Quebec that will benefit approximately 25% of the Companys smelting production. Nearly 80% of the Companys capacity is now covered by re-powering agreements and self generation through 2025 and the Company is aggressively pursuing other efforts across its portfolio.

Portfolio Streamlining

As previously announced, Alcoa and ORKLA ASA (Orkla) have agreed to exchange their stakes in a Norwegian smelting partnership and a Swedish extrusion joint venture in order to focus on their respective areas of expertise and best practices. Alcoa will receive Orklas 50 percent stake in Elkem Aluminum and Orkla will receive Alcoas 45 percent stake in the SAPA extrusion profiles business.

Elkem Aluminum, which will be 100 percent owned by Alcoa following the transaction, includes aluminum smelters in Lista and Mosjoen, Norway with a combined output of 282,000 metric tons per year (mtpy). Included in the transaction is Elkems stake in a newly opened anode plant in Mosjoen in which Alcoa already holds an approximate 82 percent stake.

Alcoa also intends to divest four non-core downstream businesses: Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe. The businesses to be sold had 2008 combined revenues of $1.8 billion and an estimated after-tax operating loss of approximately $105 million. The businesses employ a combined 22,600 people at 38 locations. Expected net proceeds for the divestitures are estimated to be approximately $100 million.

Capital Expenditures and Liquidity

Building on the previously announced initiative to conserve cash and suspend the Companys share repurchase program, the Company is stopping all non-critical capital investment. Capital expenditures in 2009 are projected to be down to $1.8 billion, a 50 percent decrease from 2008, and will be $1.5 billion after partner contributions. Capital spending includes approximately $750 million for the completion of key Brazilian growth projects. The Sao Luis refinery expansion and the greenfield Juruti bauxite mine are scheduled to be finished in the first half of 2009.

Impact

Total charges for the 4th quarter 2008 due to restructuring, impairment and other special charges are expected to be between $900 and $950 million after tax, or $1.13 to $1.19 per share, of which approximately 80 percent is non-cash. The restructuring and divestiture program is expected to save approximately $450 millionbefore taxes on an annualized basis.

"Because we recently completed an extensive competitive analysis, including a strategic review of each business, we have been able to quickly identify and implement effective responses that strengthen our market competitiveness and financial staying power in the economic downturn. We will continue to monitor the dynamic market situation to ensure that we adjust capacity to meet any future changes in demand and seize new opportunities that emerge. These are extraordinary times requiring extraordinary actions," said Mr. Kleinfeld.

Indian JV plans Indonesian aluminium smelter

tce today, UK - 6/Jan/2009

NALCO takes major share in $4 billion project

by Wendy Laursen

Smelter will produce 500,000 t/y of aluminium

INDIAS NATIONAL ALUMINIUM producer and exporter, NALCO, has entered into an agreement with Rak Minerals & Metals Investment (RMMI), based in the United Arab Emirates, to build a $2.5b aluminium smelter and a supporting $1.5b power plant in South Sumatra, Indonesia.

The smelter will produce 500,000 t/y of aluminium from 1m t of Indian alumina using electricity generated by the 1250 MW coal-fired power plant. NALCO has a 76% share in the deal and RMMI has a 24% share. The project is expected to be completed in 2013.

RMMI will build the necessary port and rail facilities and provide 5m t of low sulphur thermal coal to meet the energy needs of the smelter. NALCO will build the smelter and power station.

"The smelter requires a lot of electricity and we have a lot of energy in India [€¦] but still we find that it makes sense to put the power plant near coal mining here in Indonesia," says NALCOs director B. L. Bagra.

NALCO is a publicly listed company and the Indian government holds a majority stake. It has an estimated turnover of $1.5 billion and has been mining bauxite and refining aluminium for 25 years. The company has ambitious growth plans after being conferred Navratna status by the Indian government which entitles it to more independent managerial powers and commercial autonomy. The company has further plans for new smelters and power stations in India and Iran.

RMMI is looking to expand its current infrastructure in Indonesia. It is planning involvement in other smelting and metal-based fabrication industries in South Sumatra including an industrial park at Tanjung Api-Api for which the local government has committed to providing sufficient land and to fast tracking the approval and licensing process.

Rio Tinto slows Kitimat smelter expansion - union

Reuters - Fri Jan 9, 2009

TORONTO, Jan 9 (Reuters) - Rio Tinto (RIO.L: Quote, Profile, Research) has all but halted its $2.5 billion expansion of the Kitimat aluminum smelter in British Columbia, the union which represents workers at the facility said on Friday.

Rio said in December it will cut 14,000 jobs, slash capital spending and sell assets to pay down debt, and suggested that the timeline for Canadian smelter expansion projects could be affected.

But union officials said that, over the past month, expansion activity at Kitimat has slowed to a trickle and that Bechtel Corp, which is the contractor for the expansion, has removed much of its equipment from the site.

"They're down to a stall by the looks of it," said Rick Belmont, president of Canadian Auto Workers Local 2301.

Neither Rio Tinto Alcan nor Bechtel immediately responded to calls seeking comment.

Belmont said Rio has issued a statement locally saying that "the rhythm of spending" will be slower.

"They don't want to come out and say that the expansion's at a halt or anything, but the proof is in the pudding. There's not a lot going on out there," he said.

He said the smelter itself is continuing to operate.

Rio acquired the operation when it bought Canadian aluminum producer Alcan last year. It took on tens of billions of dollars in debt that it is now struggling to pay down, following a sharp drop in aluminum prices.

The expansion is expected to increase production capacity at the smelter by 40 percent to 400,000 tons per year.

($1$1.19 Canadian) (Reporting by Cameron French; editing by Rob Wilson)

Optimizing Profitability Regarding Aluminum Prices and Electricity Prices

Gerson Lehrman Group, New York

This analysis is solely the work of the author. It has not been edited or endorsed by GLG.

More information http://www.glgroup.com/News/Optimizing-Profitability-Regarding-Aluminum-Prices-and-Electricity-Prices-31340.html

Analysis of: Alcoa to slash jobs and sell 4 units (www.reuters.com)

Author of this analysis Contributed by a Member of the GLG Energy & Industrials Councils

Implications: The aluminum industry has seen price pressure before: · The pull of aluminum prices · The push off electricity prices Optimization requires looking at both sets of prices. Electricity is a major portion of the cost of making aluminum. For any world wide price of aluminum, some local electricity prices result in certain smelters being uneconomic. Though the price of aluminum has dropped by 50%, the price for electricity is likely to drop similarly in some parts of the world. Alcoa may be well situated to take advantage of the mix of electricity prices available to it around the world, cutting production in high cost areas, while maintaining production in low cost areas. Its flexibility depends on the contracts Alcoa has, mostly for electricity, but also for labor.

Analysis: The current bust in the price of aluminum is not unprecedented. Other commodities have seen a similar slide, such as the current slide in petroleum prices. Storage, or more accurately the lack of storage, is contributing to the slide in petroleum prices. Reputedly, at least one major has chartered a mega tanker nominally as a storage platform. The finished product is easier to store for aluminum so the decline in demand may not be as critical as it is for the petroleum industry. Since electricity is a major portion of the cost of making aluminum, the profitability of Alcoa will greatly depend on the relative prices of aluminum and of the electricity used to produce the aluminum. The availability and cost of electricity are thus major issues for Alcoa and other aluminum producers. The California electricity crisis of 2000/2001 (part of the Enron debacle) provides relevant anecdotes about the criticality of electricity to Alcoa and the rest of the aluminum industry. Electricity prices soared in California in the fall of 2000. Electricity producers in the rest of the Western US and Canada sold their surpluses into California to produce high profits. The aluminum producers in Oregon and Washington had allotments of cheap power from the Bonneville Power Administration. The contracts allowed the aluminum producers to sell the power to others whenever the power was not being used to produce aluminum. The aluminum producers found selling the power to California to be more profitable than producing aluminum, sometimes even when the aluminum producers still had to pay wages to idled production workers. The California electricity crisis also raised the price of electricity in Venezuela. In May 2001, I lead an IEEE course at University San Bolivar in Caracas on electricity restructuring. Participants roughly described the Venezuela electric industry. A major nationally owned generating company sold electricity to the grid and to the nationally owned aluminum company. The contract specified that the price for electricity would be determined on a net back basis. Effectively, if the price of aluminum doubled, the charge for electricity doubled. The cutback in production by the aluminum producers in Oregon and Washington resulted in record world wide prices for aluminum in early 2001. These high world wide prices for aluminum resulted in high prices for the electricity provided by the Venezuelan nationally owned generating company. Presumably the current drop in world wide prices for aluminum is also causing much lower prices for the Venezuelan nationally owned generating company. The effect of the California energy crisis on the profitability of the Oregon and Washington aluminum producers is a well known story. It demonstrates the importance of electricity prices to aluminum profitability. The effect on Venezuela electricity prices is a less well known story. Together the two stories illustrate the contrasting nature of the contracts covering the electricity sold to aluminum producers. The BPA contracts were for fixed amounts and fixed prices. This allowed the producers to shut down operations and sell the electricity to California. The Venezuela contracts were for a fixed ration between the price of electricity and the world price for aluminum, with the price of electricity based on the price of aluminum. This will ensure continued profitability of the Venezuela aluminum industry during the current downturn in world aluminum prices, though will considerably negatively impact the Venezuelan nationally owned electricity generator. The diversity of electricity supply contracts for the aluminum industry illustrated by the above comparison of Oregon/Washington versus Venezuela is extremely simplistic compared to the fuel supply situations facing the electric industry. Many generating plants have multiple fuel contracts. As a result, utilities have invested huge sums of money into dispatch programs that minimize their cost of production by shifting production away from plants with higher fuel costs to plants to lower fuel costs. It is unclear how well the aluminum industry, and Alcoa, is prepared to make similar production shifts. However, the diversity of Alcoas production facility probably also involves a great diversity in electricity supply contracts that will allow the cost minimization to occur during this period of reduced demand and lower world prices of aluminum. However, one story suggests that the acuity shown by the Oregon/Washington aluminum producers may not be true for the industry as a whole, or at least may not have been at one time. Aluminum production is very sensitive to continuous availability of electricity. When electricity supply is interrupted, the pot lines at the smelters can harden or freeze. When pot lines have frozen, especially unintentionally such as when there is a prolonged power interruption, the pot lines have to be cleaned out, an extremely difficult, costly, and time consuming operations. Allegedly, an electric company negligently interrupted the supply of electricity to an aluminum producer. The aluminum producer sued for consequential damages, not just for the cost of cleaning out the pot lines, but also for the lost revenue associated with not being able to sell the aluminum. Analysis of the alleged damages required an offset for the price of electricity. That analysis showed that the aluminum producer was paying more for electricity at that location than it was currently collecting for aluminum in the world market. The net of the analysis was that the interruption improved the profitability of the aluminum producer, just as the Oregon/Washington aluminum producers improved their profitability by shutting down production and selling electricity, bought under fixed priced contracts, at the prevailing market price for electricity. Alcoa presumably has the analytic tools to make the calculations to be able to dispatch its aluminum production plants in the way that electric companies dispatch their generation plants, where Alcoa seeks to minimize electricity and labor costs while the electric companies generally seek to minimize fuel costs. However, the aluminum industry has not always used those analytic tools, as is illustrated by the supply interruption story.

China Gengsheng Minerals, Inc. Forges Bauxite Supply Partnership with Chinalco's Gongyi Division

Biloxi Sun Herald, USA - Jan. 9, 2009

Chinalco Gongyi to Ensure Supply of up to 250K tons of Bauxite per Year

GONGYI, China, Jan. 9 /PRNewswire-Asia-FirstCall/ -- China Gengsheng Minerals, Inc. (OTC Bulletin Board: CHGS) ("Gengsheng" or "the Company"), a materials technology company in China with products capable of withstanding high temperature, saving energy and boosting productivity in certain industries such as steel and oil, today announced that it has formed a supply partnership for bauxite with Aluminum Corporation of China's Gongyi Division ("Chinalco Gongyi"), which produces bauxite from a mine it owns in Gongyi City of Henan Province.

The bauxite mine has an estimated reserve of 12 million tons, with an average alumina grade of over 70%, and an estimated life of 25 to 30 years. Under the partnership, Chinalco Gongyi will ensure the annual supply of 150,000 to 250,000 tons of bauxite, with an average alumina grade of no less than 75%, to Gengsheng as raw materials for refractory and fracture proppant products. Gengsheng will pay a slightly-below-market price for Chinalco Gongyi's bauxite.

"This long-term strategic supply partnership is meant to ensure the stability of our raw material source for the foreseeable future," said Mr. Shunqing Zhang, Chairman and CEO of the Company. "Chinalco's bauxite mine is about 15 kilometers (9.3 miles) from our manufacturing facilities in Gongyi and we are very pleased to secure a favorable price for their products. In light of the tumultuous commodity prices over last year, we see this partnership as a strong positive for the long-term sustainability and growth of Gengsheng."

Aluminum Corporation of China (NYSE: ACH) is the world's second largest alumina producer, with assets of RMB 377.7 billion ($55 billion) as of June 2008, according to its Website. It is the parent company of Chinalco Gongyi.

About China Gengsheng Minerals, Inc.

China Gengsheng Minerals, Inc. ("Gengsheng") develops, manufactures and markets a broad range of high-tech industrial material products, including monolithic refractories, industrial ceramics and fracture proppants. A market leader offering customized solutions, Gengsheng sells its products primarily to the iron-and-steel industry as heat-resistant components for steel-making furnaces, industrial kilns and other high-temperature vessels to guarantee and improve the productivity of those expensive pieces of equipment while reducing their consumption of energy. Founded in 1986 and based in China's Henan province, Gengsheng currently has over 200 customers in the iron, steel, oil, glass, cement, aluminum and chemical businesses located in China and in 11 other countries. Gengsheng conducts business through Gengsheng International Corporation, a British Virgin Islands company, and its Chinese subsidiaries, which are Henan Gengsheng Refractories Co., Ltd., Zhengzhou Duesail Fracture Proppant Co., Ltd. and Henan Gengsheng High Temperature Materials Co., Ltd. For more information about the Company, please visit http://www.gengsheng.com .

China, private equity close in on Rio Tinto units

Reuters - Fri Jan 9, 2009

By Joseph Chaney and Quentin Webb

HONG KONG/LONDON (Reuters) - A Chinese company, a Western firm and several buyout houses are expected to submit final bids for Rio Tinto's borates and talc units, sources close to the matter said, in a deal that could top $1 billion.

A successful sale would be a boost for Rio (RIO.AX) (RIO.L) the world's No.2 miner, which is selling the minerals businesses to help reduce its near $40 billion of debt.

Final offers for the units will land later this quarter, one source close to the matter said on Friday, after due diligence and meetings with U.S.-based management which are likely to take place in the next few weeks.

London and Sydney-listed Rio was not immediately available in London for comment.

It is axing 14,000 jobs, cutting capital expenditures by more than half, and seeking buyers for a host of core and non-core assets after bigger rival BHP Billiton (BHP.AX) (BLT.L) ended its $66 billion unsolicited takeover bid in November.

The small group of bidders qualified for a second round are likely to have offered up to $1.1 billion in first-round bidding, which ended late last year, a second source said.

Failed bidders, worried about how much the borates business depends on U.S. construction, may have offered as little as $750 million, the source said.

The sources did not disclose bidders' names, and did not want to be named because the auction is at a sensitive stage.

Rio shares were down 0.1 percent at 1,728 pence by 8:50 a.m. EST, having closed 0.2 percent lower at A$43.93 in Sydney earlier.

SMALL DENT

In November, analyst Charles Kernot at Evolution Securities estimated the sale could fetch around $1.2 billion, with borates the far more valuable unit at around $1 billion. He said French industrial minerals group Imerys (IMTP.PA) could bid.

British newspaper The Independent reported in November that Canada's Teck Cominco (TCKb.TO) and buyout firms Apollo Global Management, CVC Capital, and First Reserve were potential bidders.

Investment bank Dresdner Kleinwort is running the auction.

Analysts say state-owned aluminum giant Chinalco is among the likely Chinese bidders for Rio's assets. The company already owns part of Rio and has said it plans to lift its stake to 14.99 percent. Chinalco is the parent of Chalco (601600.SS) (2600.HK).

"The Chinese have been pretty active through the upcycle and were buying at the top of the market over the past year or so, and this is a huge opportunity for acquisitions at much more attractive asset valuations," said Andrew Driscoll, Head of Resources Research at CLSA, adding Chinalco is primarily focused on base metals.

"Chinalco is certainly going to be a company to watch over the next couple of years, and it will be on an aggressive acquisition push," he said.

A New York-based banker told Reuters on Thursday that up to three private equity firms were bidding, but declined to identify them due to the sensitive nature of the deal.

Borates are used in fiberglass, detergents and ceramics, and talc is used in paper, paints, plastics, ceramics, rubber, personal care and roofing.

U.S.-based Rio Tinto Borax supplies nearly half the world's refined borates, and sister company Luzenac produces more than a quarter of the world's talc.

(Additional reporting by Michael Erman in New York and Michael Flaherty in Hong Kong)

China hails success in making alumina from coal ash

Reuters - Sun Jan 11, 2009

BEIJING, Jan 11 (Reuters) - A Chinese power company has succeeded in producing alumina from coal ash, a step that could help ease China's chronic raw materials shortage, the Economic Daily said.

Datang International Power Generation Co (601991.SS) has completed construction of a plant capable of producing 3,000 tonnes of alumina a year from coal ash, and produced its first batch of alumina, the paper said, citing a company forum on the topic.

Ash remaining after coal is burned typically contains metals, including alumina, the raw material for aluminium, and recapturing and using them could reduce demand for natural resources. The challenge has been to develop the technology to the point where it is cost-effective.

China's aluminium smelters have expanded rapidly over the last few years, straining the country's ability to supply alumina as well as its raw material, bauxite.

Although the economic downturn has idled some aluminium smelting capacity, China's appetite for raw materials is still expected to be formidable in the long term.

The plant is expected to source its fly ash from power plants in Inner Mongolia, where alumina content in fly ash can near 50 percent, much higher than from other coal sources, the paper said.

(Reporting by Lucy Hornby, Editing by Dean Yates)

Kaiser Aluminum Trentwood Works Vacancies

The Spokesman Review, WA - Sun Jan 11, 2009

Exciting Opportunities at Trentwood Works, Spokane Valley, Washington

One of the world's most recognized names in the metals business has an

exciting opportunity at our Trentwood Works facility located in the Spokane Valley. Trentwood Works is the largest

flat-rolled-products mill in the Western United States and has been undergoing a major expansion to meet growing customer demands.

ELECTRICAL PROJECT ENGINEERS

As a result of our expansion, we are looking for Electrical Project Engineers who will develop, plan, organize, and manage capital, reliability, and process improvement projects for areas throughout the plant. This position will also

provide maintenance and production support.

Requires B.S. in Electrical Engineering; 5-7 years of project management experience. Demonstrated leadership, organizational, communication, and troubleshooting skills. Computer experience with AutoCAD, MS Word, Excel, PowerPoint, MS Project, and Access.

A comprehensive benefits package includes: medical, dental, prescription drug and vision plans with hire date eligibility; LTD; life insurance; AD&D; HealthAccount and Dependent CareAccount; tuition reimbursement; and 401(k) plan with 100% immediate investing in company match.

Kaiser Aluminum is an Equal Opportunity Employer and supports a drugfree environment. This is an exciting time for Kaiser Aluminum and we are interested in finding people who want to expand their horizons and contribute to a successful team.

If you are interested in this position and meet the qualifications outlined above, please e-mail cover letter and resume in Word format to:

Resume@Kaiseraluminum.com

Evans to leave Rio Tinto Alcan

Globe and Mail, Canada - January 12, 2009 at 6:26 AM EST

BNN speaks to Dick Evans, CEO, Rio Tinto Alcan (Wait for the ad to pass) See the Video at :

http://www.theglobeandmail.com/servlet/story/RTGAM.20090112.wvbnn_oil0112/VideoStory/crashandrecovery/home?pidRTGAM.20090112.wriotinto0112

Rio Tinto shelves $2.15-billion expansion

Globe and Mail, Canada - January 12, 2009 at 6:26 AM EST

SYDNEY/HONG KONG €” €” Global miner Rio Tinto [RTP-N]has postponed the $2.15-billion (U.S.) expansion of its Brazilian iron ore mine as the global downturn hits steel production, and a newspaper said the debt-laden group also was selling an Australian coal unit.

Rio Tinto, the world's fourth-biggest diversified mining group by market value, is scrambling to cut costs and raise cash to ensure it can meet payments later this year on nearly $40-billion of debt.

The firm unveiled plans on Dec. 10 to cut 13 per cent of its workforce, slash capital spending by more than half and sell more assets as it battled with a collapse in commodity prices.

A Rio Tinto spokesman said on Monday employees and contractors had been informed of the decision to postpone the expansion at its Corumba mine in Brazil, which would have boosted annual capacity at the mine more than six-fold to 12.8 million tonnes, from 2 million tonnes.

The planned increased output at Corumba would represent around 9 per cent of Rio's total iron ore output in 2007 of 145 million tonnes and compares to total global output of the raw material for steel of 1.64 billion tonnes.

Rio, the world's second biggest iron ore producer after Brazil's Vale, mines the bulk of its iron ore in the Pilbara region of Australia.

The Corumba expansion was announced last July before the resources boom fizzled. First production from the expansion had been due in the fourth quarter of 2010.

Last month, when Rio announced the huge cut in capital spending, it did not say which projects would be delayed or scrapped. Chief Executive Tom Albanese signalled last month that Rio would provide more detail of the cut-backs and asset sales when the group released its annual earnings results on Feb. 12.

Ahead of the earnings report, Rio Tinto will release its fourth-quarter production and exploration report on Thursday.

Rio shares, which tumbled 72 per cent last year, fell 1.6 per cent in London to 1,604 pence by 1025 GMT, largely in line with the UK mining index.

Rio shares, suffering due to a collapse in metals prices, got pounded further after rival BHP Billiton dropped a $66-billion hostile takeover bid on Nov. 25.

Rio, which said last month it was expanding the scope of its divestment program, has put up for sale its 76 per cent stake in Australia's Coal & Allied Industries, the South China Morning Post reported on Monday, citing unnamed sources. Rio declined to comment.

One company planning to bid is China Shenhua Energy, the country's biggest coal miner, the newspaper added. The unit, which runs three operations in New South Wales, is worth about $3.72-billion, the report said.

Analysts say the news could be a good move for Shenhua as it seeks to secure assets beyond China.

"Many coal companies are trying to cut costs right now, but Shenhua still has an ample cash position," said Michelle Leung, an analyst who covers Shenhua for CIMB.

"Actually the news didn't disclose how much reserve the coal is going to provide or the quality of the coal. There are many uncertainties," Ms. Leung added. "It could help to diversify as a source of resources. This is a good strategy for them to go overseas for long-term reserves."

China Shenhua is also pushing Rio Tinto for more assets to be included in the sale, the report said. The firm's chairman Chen Biting had previously said Shenhua was looking for acquisitions in Mongolia, Indonesia, and Australia, the Post said.

Shenhua's Hong Kong-listed shares closed down 4.7 per cent, underperforming the benchmark Hang Seng Index's 2.8 per cent loss, in what brokers said was a response to the commodity price slump.

Shares in Coal & Allied, a highly illiquid stock due to Rio's majority stake, were not being traded on Monday.

Other likely bidders for Rio's 76 per cent stake in Coal & Allied Industries include Mitsubishi of Japan and Switzerland's Xstrata, the South China Morning Post said.

Bankers and analysts say the world's largest miner BHP, Vale, Xstrata, and China's aluminum giant Chinalco, parent of Chalco, are all eyeing Rio's diverse collection of assets.

Ms Jacynthe Cote is new CEO of Rio Tinto Alcan

SteelGuru, India - Tuesday, 13 Jan, 2009

Mr Dick Evans CEO of Rio Tinto Alcan has given notice of his intention to retire and to step down from the Boards of Rio Tinto on April 20th 2009 at the conclusion of the Rio Tinto AGMs.

Ms Jacynthe Côté currently president and chief executive officer, Primary Metal of Rio Tinto Alcan will take over as chief executive of Rio Tinto Alcan and will join Rio Tinto's executive committee. To ensure a smooth transition, Mr Dick Evans will transfer executive responsibilities to Ms Côté on February 1st 2009.

Ms Côté joined Alcan in 1988 and has significant operational and international experience in the aluminium industry. As president and chief executive officer, Primary Metal, Rio Tinto Alcan, she is responsible for all primary metal facilities and power generation installations worldwide. Her previous roles in Alcan include president and chief executive officer, Bauxite and Alumina business group, and senior management roles in business planning, human resources and environment, health and safety. Jacynthe Côté has a bachelor's degree in chemistry from Laval University in Quebec.

Alcoa Says More Output Cuts May Be Needed After Loss (Update1)

Bloomberg - Jan. 13, 2009

By Rob Delaney

Jan. 13 (Bloomberg) -- Alcoa Inc., the largest U.S. aluminum producer, reported its first quarterly net loss in six years because of "historic" price declines and said demand for the metal may continue to weaken in 2009.

The fourth-quarter net loss of $1.19 billion, or $1.49 a share, compares with net income of $632 million, or 75 cents, a year earlier, New York-based Alcoa said yesterday in a statement. The loss excluding some items was 28 cents a share. The average estimate in a Bloomberg survey of 14 analysts was for a loss of 5 cents. Sales fell 19 percent to $5.69 billion.

Chief Executive Officer Klaus Kleinfeld, who already is reducing production, firing workers and selling units, said he may make deeper cuts if demand continues to wane. Aluminum prices are near five-year lows as orders drop from automakers, builders and appliance manufacturers.

"Without a question, its going to be a tough year" for Alcoa, Charl Malan, a fund manager at Van Eck Associates in New York, said in a telephone interview. "Alumina and aluminum prices are going nowhere in a hurry."

Alcoa fell 6 cents to $10 at 7 p.m. yesterday in trading after the official close of the New York Stock Exchange. The shares plunged 69 percent last year as aluminum on the London Metal Exchange dropped 36 percent and inventories more than doubled to a 14-year high.

Alumina Ltd., Alcoas partner in the worlds biggest producer of the material used to make aluminum, tumbled 5.9 percent to A$1.43 at the 4:10 p.m. Sydney time close on the Australian stock exchange. Aluminum Corp. of China Ltd., or Chalco as the Beijing- based company is known, fell 4.8 percent to HK$3.94 at 12:30 p.m. Hong Kong time.

€~Perfect Storm

Alcoa, the first company in the Dow Jones Industrial Average to announce earnings, last reported a quarterly loss in the fourth quarter of 2002.

"The aluminum industry is caught up in a perfect storm of historic proportion," Kleinfeld, 51, said on a call with analysts after posting the results. "Inventories are building and prices are decreasing. We are prepared to continue adjusting capacity to demand."

Alcoa has set production cuts since June representing about 750,000 metric tons, or 18 percent of its global capacity. The company said on Jan. 6 it plans to fire 13,500 employees this year, eliminate 1,700 contractors and cut 2009 capital spending by 50 percent. The company said yesterday it would post $920 million in losses, including discontinued operations, related to the restructuring plan.

Spending Cuts

Chalco, Chinas biggest aluminum producer, announced on Oct. 22 it also will curtail 18 percent of its output. Another competitor, London-based Rio Tinto Group, said last month it will reduce capital spending and sell assets.

Global aluminum demand may fall 2 percent in 2009 after dropping 3 percent to about 36 million metric tons in 2008, Kleinfeld said on the analyst call.

Alcoa shares plunged in the second half as the credit crisis deepened. The company is the worst-performing Dow Jones industrial component in the past six months with a 71 percent drop through regular trading yesterday.

Alcoa will probably post a loss of 15 cents a share in 2009, Credit Suisse forecast in a Jan. 9 note to clients. The brokerage had previously anticipated the company would earn $1.50 a share.

"At the demand levels were seeing today, there will need to be more capacity cuts," William Hunter, head of mining investment at New York-based brokerage Jefferies Group Inc., said in a Jan. 9 interview. "The cost of production is somewhere about $1 a pound."

Aluminum for delivery in three months fell $54, or 3.4 percent, to $1,516 a metric ton (69 cents a pound) yesterday on the LME. It traded at $1,514 at 2:05 p.m. Hong Kong time.

To contact the reporter responsible for this story: Rob Delaney in Toronto at robdelaney@bloomberg.net.

Governor Paterson signs Alcoa power contract with NYPA

News 10 Now, NY -01/12/2009 07:05 PM

By: Kaitlyn Lionti

MASSENA, N.Y. -- "Long term, reliable, competitively priced power is the life-blood of an aluminum smelter. Its these ingredients that attracted Alcoa to northern New York more than a century ago," said Bernt Reitan, Executive Vice President of Alcoa.

Governor Paterson signed a power contract between Alcoa and NYPA to keep that life-blood flowing through the Massena plants for years to come.

"At NYPA, our job is to help with lost-cost power and economic development programs," said Richard Kessel, CEO of the New York Power Authority. "We want to help the North Country move forward."

And that's exactly what this contract will do. NYPA will supply Alcoa with low-cost hydropower for 30 years.

"In exchange, Alcoa will spend $600 million building a new East Plant to go along with the West Casthouse. And the East Plant will assure that 900 to 1,000 jobs here at Alcoa stay right here in this region," said Governor Paterson.

Paterson in Massena to sign agreement

The Governor plans to be in Massena Monday to sign the power purchase agreement between NYPA and Alcoa. The contract gives Alcoa a secure long-term future in that it will receive the same amount of power for the next 30 years.

And those jobs are a significant part of the contract because they offer hope for the North Country.

"This whole community, not only the Massena community, but the St. Lawrence County, people coming in from everywhere, Potsdam, Canton, that work here at this facility and to know now that it's going to be around for another 30 to 40 years, that's fantastic," said Randy DeLosh, Mayor of Massena.

"The place has been around since 1902. We have many employees whose grandfathers, fathers, have worked here and hopefully we can keep that tradition by sons and grandkids too," said Mark Southwick, Organizational Development Manager for Alcoa in Massena.

The contract is dependent on Alcoa's commitment to modernizing its East Plant. The next step in the process is to present plans for the project to the Alcoa Board of Directors later this year.

The 30 year power contract would begin in 2013 and includes an option for a 10 year extension.

In addition to securing at least 900 jobs in the North Country, the contract keeps Alcoa's $350 million economic impact in the area each year.

Wheel maker Superior will close Van Nuys plant, cut 290 workers

Los Angeles Times, CA - January 14, 2009

The supplier to firms including the Big Three has been hurt by slumping demand for new vehicles.

By Mark Medina

Superior Industries International Inc., an aluminum wheel supplier to most major U.S. and foreign automakers, said Tuesday that it would close its plant in Van Nuys by the end of the second quarter and fire 290 employees, or 9% of its workforce.

The company, which expects to save $16.5 million annually in labor costs, said it was making the cuts because the slumping vehicle sales mean less demand for wheels.

Chief Financial Officer Erika Turner described employee reaction as "somber but not surprised."

"Manufacturing has fallen in our Van Nuys plant in the last year," said Turner, who noted that analysts have predicted a 25% decrease this year in Superior's production. "Our employees were already concerned."

The mood was much different when Superior opened in Van Nuys four decades ago. With lower wage-and-benefit packages than competitors, Superior's ability to manufacture less-costly aluminum wheels appealed to automakers. With aluminum wheels one-third lighter than steel, Superior's product appealed to drivers.

For the first nine months of 2008, however, Superior's revenue fell 28% to $163.5 million compared with $227.6 million in the same period in 2007. Superior, with about 3,200 workers in five plants, lost $11.2 million from January through September, and shipments dropped to the lowest level in 10 years.

Severance and related costs for 2008 will total about $2.1 million, Superior said. Related asset impairment charges have yet to be determined but are expected to be recorded in the company's fourth quarter ended Dec. 28. Superior hasn't said when those figures will be released.

Like many auto-related companies, Superior is expected to face considerable challenges this year, according to a report from Brett Hoselton, an analyst at Cleveland-based KeyBanc Capital Markets. Hoselton projects Superior will lose 94 cents a share this year and 50 cents in 2010. His report indicated the company lost 46 cents a share in 2008.

Suppliers provide about 70% of the content in most automobiles, including seats, specialized bolts on the suspension and wheels. According to a Superior financial report, Ford Motor Co., General Motors Corp. and Chrysler represented about 78% of the company's total wheel sales during the first three quarters of 2008.

"It's really a function of the auto industry in general," said Jim Hossack, vice president at AutoPacific, which provides marketing and product consulting for the industry. "Everyone knows sales are down substantially. In recent months, there has been continued pressure on everyone for lower costs and lower prices. You'd expect that as demand goes down, the least cost-efficient sources are the ones likely to be squeezed out."

Superior has slammed on the brakes recently amid economic uncertainty.

It closed a plant and cut 600 jobs in Pittsburg, Kan., on Dec. 19 in addition to 155 positions at two plants in Arkansas, reflecting a broader effort to cut 29% of its U.S. workforce because of lower sales of pickups and sport-utility vehicles. The company fired 375 employees in 2006 at the Van Nuys plant and closed a plant and cut 500 jobs in Johnson City, Tenn.

Superior has five remaining plants, including the two in Arkansas, two in Mexico and a joint venture in Hungary.

The company's stock traded at a record $53.12 a share on May 9, 2002, but its shares declined for five straight years from 2004 to 2008, including a 40% drop in the last year. Superior shares fell 7 cents Tuesday to $10.12.

"Losing many loyal and long-term employees makes this decision particularly difficult," Chief Executive Steven Borick said in a statement. "Nevertheless, it is imperative to right-size our capacity in line with current and projected vehicle production while maintaining the leverage for future business opportunities."

Turner acknowledged that the future didn't look too bright.

"This facility unfortunately shrunk below profitability levels," Turner said. "We don't see a near-term pickup."

mark.medina@latimes.com

Chalco may reduce staff in Guangxi due to high costs

CCTV, China - 01-14-2009 10:11

The Guangxi branch of Aluminum Corporation of China, also known as Chalco, will have to lay off half of its 3,000 workers without help from the provincial government, said Liu Yonggang, the company's general manager.

That was the message he tried to get through to Guanxi party chief Guo Shengkun at the provincial people's congress, which will finish on Jan 14.

"Only when our spending on electricity is lower than 32 percent of the cost of aluminum production will we be able to stay in business," Liu said.

China's aluminum industry took a hard blow from the global economic downturn. The price of aluminum fluctuated widely in 2008 from 19,000 yuan ($2,778) a ton to 10,500 yuan. Liu said that the current price at around 12,000 yuan is not enough for smelters to make a profit. Liu said that his company has already cut its output by more than 60 percent.

Because the production of aluminum is very energy-intensive, reducing electricity price can help smelters stay afloat in these hard times. Energy accounts for more than 40 percent of the total production cost of aluminum.

While seeking help from the government, Liu also said that if the price for aluminum can bounce back to 14,000 yuan for each ton in 2009, his company will be able to resume production without posting losses. Liu's company is capable of producing 150,000 ton of aluminum each year.

Alumina Unlikely to Revisit Wagerup Expansion Soon (Update2)

Bloomberg.com - Jan. 14, 2008

Alumina Ltd., partner in the worlds biggest producer of the material used to make aluminum, is unlikely to reconsider expanding its Wagerup refinery in Western Australia for two years because of declining demand.

"It will be a year or two before we would go back and make a firm decision" on expanding Wagerup, Ken Dean, chief financial officer of Melbourne-based Alumina, said in an interview today. "It is too early to see any demand-side pickup given the economic circumstances globally."

Alumina and partner Alcoa Inc. suspended the planned expansion of Wagerup in November as the global recession curbed demand for the lightweight metal. Aluminum prices are near five- year lows as orders drop from automakers, builders and appliance manufacturers.

"We have canceled the Wagerup expansion" from the model we use to value Alumina, Merrill Lynch & Co. analyst Olivia Ker said in a report dated yesterday that rated the company as "underperform." "With no near-term driver for the aluminum price, significant 2009 earnings pressure and a highly leveraged balance sheet, we see no reason to own the stock."

The expansion would have cost $4 billion, ABN Amro Holding NV said on Nov. 11. Alumina estimated in 2004 it would cost a total of A$1.5 billion ($1 billion) to expand the refinery to 4.36 million metric tons from 2 million tons.

Alumina declined 1.4 percent to $1.41 at the 4:10 p.m. Sydney time close on Australian stock exchange.

Falling Demand

Global aluminum demand may decline 2 percent in 2009 after dropping 3 percent to about 36 million metric tons in 2008, Alcoas Chief Executive Officer Klaus Kleinfeld said yesterday. There may be further production cuts, North Americas biggest producer said.

The AWAC venture, 60 percent owned by Alcoa and 40 percent controlled by Alumina, produces one quarter of the worlds alumina, a powder refined from bauxite ore. It is then made into aluminum to make aircraft and beverage cans.

The price of aluminum for delivery in three months, down 50 percent last year, recovered recently with a 1.3 percent gain in the past month on the London Metal Exchange.

"What you have seen in the last month is some supply-side response and that is what is stabilizing the market and giving it a bit more optimism," Dean said.

Alumina said yesterday it will write off about A$40 million spent on potential growth projects that have been halted. The one-time charge came from engineering work completed for a proposed expansion of the Jamalco operations in Jamaica, Dean said. The operations are on hold until gas supplies can be secured, he said.

Deans is retiring from his position at the end of the quarter ending March 31 and will be replaced by Judith Downes. She was most recently the chief financial officer of Australia and New Zealand Banking Group Ltd.

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

Rio Tinto 4th-Quarter Profit at Aluminum, Copper Units to Fall

Bloomberg Jan. 15, 2009

By Brett Foley and Rebecca Keenan

Rio Tinto Group, the worlds third- largest mining company, said fourth-quarter earnings at its aluminum and copper units will decline because of falling prices.

Earnings will be "negatively impacted" as a result of a "sharp decline in the aluminum price," London-based Rio said in a statement today. Inventories of aluminum will be written down. Reduced "provisional pricing" for copper lowered earnings by about $360 million in the second half of last year, Rio said.

"It is going to be a horror show," Hugh Dive, who helps manage about $3 billion at Sydney-based Investors Mutual Ltd., said by telephone today. "Just look where aluminum prices have gone in the last six months."

Rio, which is selling assets to pay debt from its $38.1 billion purchase of Canadas Alcan Inc. in 2007, has curbed production of aluminum, iron ore, coal and diamonds as a global economic slowdown sapped demand in China, the largest consumer, and caused prices to fall. It committed to reduce net debt by $10 billion this year.

"We are taking firm action in response to the global economic downturn," Chief Executive Officer Tom Albanese said in the statement to the Australian stock exchange. Rio reports earnings on Feb. 12.

Aluminum, used in cars, planes and beverage cans, slid 36 percent last year on the London Metal Exchange while copper slumped 54 percent, the biggest decline since at least 1987, as purchases slowed and stockpiles grew.

Falling demand for aluminum in the construction and automotive industries has led to a global surplus of the lightweight metal. Metal in warehouses approved by the LME totaled 2.45 million tons as of yesterday, the highest since September 1994.

Production Drop

Production of iron ore fell 18 percent in the fourth quarter to 31.8 million metric tons, from 38.96 million tons a year earlier, Rio said today. The company reported record output of 42.4 million tons for the third quarter.

The decline in output at Rios Pilbara iron ore mines in the quarter resulted in a "rise in unit costs and a general tightening of margins," Rio said today. Rio said in November it would curtail output at West Australian iron ore mines by 10 percent.

Iron ore accounted for 48 percent of Rios operating income in 2007. A 10 percent price change would alter Rios earnings by about 9 percent, Deutsche Bank AG analysts Rob Clifford and Peter OConnor said last week in a note.

Capacity Idled

Aluminum production, which accounted for 9.5 percent of 2007 operating income, rose 21 percent to 1 million tons from a year earlier, due to output increases that took place before Rio idled capacity. It has since shut capacity at high-cost plants, sold a share in a Chinese smelter and shelved its involvement in smelter projects in Saudi Arabia and Abu Dhabi.

Mined copper slid 18 percent to 149,100 tons, from 180,800 tons a year earlier, because of declining grades at the Escondida mine in Chile, the worlds largest copper mine. Rio owns 30 percent of Escondida, which is operated by BHP Billiton Ltd.

Coking coal output advanced 40 percent to 2.2 million tons, from 1.54 million tons a year earlier, the company said.

To contact the reporters on this story: Brett Foley in Melbourne at bfoley8@bloomberg.net; Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

Century Aluminum has some options

Daily Mail - Charleston, WV - Thursday January 15, 2009

Ravenswood plant is looking into reductions in labor and electricity costs

by George Hohmann, Daily Mail Business Editor

RAVENSWOOD, W.Va. -- West Virginia's top elected officials have vowed to do all within their power to save Century Aluminum's Ravenswood smelter and its 685 jobs, but they can't control a key factor: the price of aluminum, which has plummeted over the past six months.

However, there could be some flexibility when it comes to Century's drive to cut its aluminum production costs - specifically power and labor costs.

"It's difficult," Rep. Shelley Moore Capito, R-W.Va., acknowledged Tuesday. "There are a lot of moving parts. One of the major moving parts, of course, is something nobody in the room has control over - the commodity price of aluminum."

Capito, Gov. Joe Manchin, U.S. Sen. Jay Rockefeller and United Steelworkers International President Leo Gerard were among the leaders who met for more than two hours Saturday in Ravenswood to discuss the fate of the plant with Logan Kruger, Century's president and CEO.

Century said earlier the Ravenswood smelter could shut down Feb. 15 unless the price of aluminum on the London Metal Exchange stabilizes and the plant's costs are reduced.

The London aluminum price is used worldwide as a benchmark. It has dropped from about $3,200 a metric ton in July to around $1,440 a metric ton.

The plant at Ravenswood - then known as Kaiser Aluminum - began production in 1957. It is the oldest operating aluminum smelter in the United States.

Century has said it must reduce its costs by 20 percent. The company has already shut down one of the plant's four potlines, where an electric current is passed through alumina, which causes the substance to break down into aluminum and oxygen.

The company has said the potline shutdown will ultimately affect 120 employees. It will cost $4 million to $4.5 million to re-start.

Asked for an update on efforts to reduce costs, Century spokesman Mike Dildine said, "At the moment we are in intense and comprehensive discussions with a wide variety of constituents covering all of the plant's major cost elements. All of us are working toward the same common goal. At the moment, it would be premature for us to be more specific."

During the plant's 50th anniversary celebration in September 2007, Century Chief Operating Officer Wayne Hale said the plant's costs are: alumina, 37 percent; electricity, 26 percent; labor, 16 percent; carbon, 8 percent; and other raw materials, 12 percent.

Given the fact that electricity and labor together comprise 42 percent of the plant's costs and are to some extent controllable, it wouldn't be surprising if some of the cost cutting focuses on those two factors.

There are opportunities in both areas.

However, West Virginia already has one of the lowest industrial rates for electricity in the nation. And Century - Appalachian Power Co.'s largest customer in West Virginia - already has a unique power supply contract. When the price of aluminum is high, Century pays Appalachian Power more than the utility's posted tariff for industrial customers. But when the price of aluminum is low - as it is now - Century pays the utility less than the posted tariff.

This contract expires in July. Appalachian Power had a representative at Saturday's meeting and has said it is talking to Century.

One possibility would be for Appalachian Power to give Century an even bigger break and have other industrial users help make up the difference.

Asked if the governor would support such a move, Matt Turner, Manchin's communications director, said, "We would have to see specifics of such a proposal and, in addition, it would need to be reviewed by the consumer advocate and the Public Service Commission to weigh its consequences."

As for labor costs, Century's contract with the Steelworkers union expires this summer. The average salary at Ravenswood is more than $50,000. The plant has a $34 million annual payroll. It is the third-largest employer in Jackson County, after the adjacent Rio Tinto-Alcan rolling mill and the Jackson County Board of Education.

Steelworkers Local 5668 represents about 580 of the plant's 685 employees. During the last contract negotiations, in 2006, the workers pushed the company to the brink of a strike to keep a cherished healthcare plan.

Century's workers pay nothing in premiums for 100 percent health care coverage. They can go to any doctor they choose, paying only $10 for a visit. When they go to an emergency room, they pay $20 until they're admitted, and then the co-pay is waived.

In 2006 the company tried to put the employees in a preferred-provider organization, also known as a PPO. Employees seeking full reimbursement for healthcare eventually would have been required to see doctors enrolled in the plan. Century failed to get this in the contract.

The union does not see health care as a gold-plated gift. Local 5668 Negotiating Committee member Ryan Corriveau said in a 2006 interview that it's a benefit won in 1994 during tough negotiations with Ravenswood Aluminum, the company that owned the plant then.

Corriveau recalled that during those negotiations, Ravenswood Aluminum executives constantly threatened that the company was on the verge of bankruptcy. The company agreed to the healthcare benefits instead of a 25-cent-an-hour pay raise. If that 25-cent raise had been granted to all employees, it would have been built into the employees' wages and would now amount to millions of dollars, Corriveau said. "So we are paying for this health care," he said.

Obviously, any cost-cutting discussion that focuses on changes in healthcare benefits could open old wounds.

A person familiar with the situation said the union has agreed to meet with the company on Jan. 23. Dave Patrick, president of the local, did not return a call seeking comment.

On another front, Rockefeller has asked Ron Kirk, President-elect Barack Obama's nominee for United States Trade Representative, to investigate the global aluminum market and ensure American companies are on a level playing field with other countries. Rockefeller could get an opportunity to question Kirk during a Senate confirmation hearing later this month.

Meanwhile, Rockefeller said in a prepared statement Tuesday that he was encouraged by Saturday's meeting.

"It was clear that everyone knows this has to be a shared sacrifice, and I know that everyone will continue working together as a team in the coming weeks to do what we can to save these jobs," he said. "There are far too many jobs and families on the line to do anything less. We have to think imaginatively and work as hard as possible to help these employees, their families and the entire Jackson County community."

It appears that Century could cut some costs by installing new technology to increase the plant's efficiency. There are several possibilities. One would be to replace the plant's four 1957-era potlines with new equipment. It also might be possible to recycle waste heat off the potlines to generate electricity.

Last February Manchin and executives of Globe Metallurgical Inc. announced a $45 million to $55 million heat-recycling project at Globe's Alloy Plant in Fayette County. The Alloy project will reduce that plant's electric consumption by about one third. The project will burn no fossil fuel, will emit no pollutants and will eliminate 290,000 metric tons of annual greenhouse gas emissions.

Thomas Casten, chairman of Recycled Energy Development - the company doing the work at Alloy - said last February that such projects hold promise "for Century Aluminum, DuPont at Belle and up and down this chemical valley."

The state and federal government could offer tax breaks and incentives to help Century modernize.

Turner said Manchin "has made it clear that he wants assurance about the long-term viability of this facility. He wants commitment from the company that this plant is here for the long term and that they will invest in Ravenswood when the market rebounds. He would like to see investment that makes this plant a more efficient and lower-cost producer so that we won't be in the same situation in future market downturns."

Capito said, "A great goal to reach would be to re-tool the plant. Obviously there would be a need for a huge cash infusion. It blends in with something I think will be a new topic in the next Congress - a 'greener' manufacturing process across the board in this country. To achieve this, we probably need to look at incentives and businesses' bottom lines, to try to push that along."

Some help for Century could be inserted into the economic stimulus package that's expected to pass Congress shortly after Obama takes office.

Century's stock price has dropped from a 52-week high of $80.52 a share last May to about $8.30. The company reported a loss of $198.2 million through the nine months that ended Sept. 30.

Contact writer George Hohmann at busin...@dailymail.com or 304-348-4836.

Deripaskas Balkan Aluminum Plant May Shut, Seeks Aid (Update1)

Bloomberg, Jan. 14, 2009

By Thomas Biesheuvel

Russian billionaire Oleg Deripaskas aluminum smelter in Montenegro may close unless it gets government aid after plunging metal prices made the plant unprofitable.

"The current economic downturn has left us no alternative but to start talks with the government over an urgent aid package," Peter Lidov, a spokesman for EN+, a unit of Deripaskas Basic Element holding company, said in a statement e-mailed yesterday. "At this stage we cant completely rule out a possibility of stopping production."

The closure of Kombinat Aluminijuma Podgorica, which accounts for 51 percent of Montenegros exports, would add to output cuts made by producers including Alcoa Inc. and Rio Tinto Group. United Co. Rusal, the Russian producer controlled by Deripaska, has reduced supplies from its Ukrainian operations as prices trade near a five-year low.

Aluminum for delivery in three months fell $9, or 0.6 percent, to $1,506 a ton at 11:14 a.m. on the London Metal Exchange. Prices dropped 36 percent last year, the most since at least 1988, on falling demand from automakers and construction.

KAP can produce 120,000 metric tons of the lightweight metal annually, according to the companys Web site. Global aluminum smelter cutbacks this year will total 3.5 million tons, according to Standard Bank Plc analyst Leon Westgate. He estimates there will be surplus output of 900,000 tons in 2009.

2005 Purchase

Basic Element bought KAP in 2005 and agreed not to halt the plants modernization, cut jobs or curtail production. All three measures are required to keep the smelter operating, Lidov said.

"In the current crisis environment the only possible way to operate it is with the governments support," Lidov said

KAP posted a loss of as much as 30 million euros ($39.6 million) for the first eight months of 2008, state-operated RTCG TV reported in October.

Forbes magazine said in April that Deripaska was Russias richest man. Deripaska, 41, is seeking investors for closely held Rusal and other companies under his control as he tries to pay off loans. Hes among Russian investors that pledged some of their holdings as collateral for government support after a plunge in commodity prices and the ruble.

To contact the reporter on this story: Thomas Biesheuvel in London tbiesheuvel@bloomberg.net

An oligarch stumbles, a tiny nation suffers

Globe and Mail, Canada - Jan. 14, 2009

http://www.theglobeandmail.com/servlet/story/LAC.20090114.IBMONTENEGRO14/TPStory/Business

Jamaica's largest bauxite company cuts production

Forbes, NY - 01.14.09

KINGSTON, Jan 14 (Reuters) - Jamaica's largest bauxite and alumina producing company, Alumina Partners of Jamaica, will cut production by 50 percent and lay off staff, a company official said here late Wednesday.

Officials at the company known as Alpart blamed the global economic slowdown for the cutbacks, which take effect on Thursday.

The economic situation required Alpart to take immediate action,' said the Managing Director Alberto Fabrini.

'Alpart has already introduced measures to reduce cost and increase efficiency. We have been in dialogue with the workers and their unions about the measures,' he said in a statement.

The company, which has the capacity to produce 1.65 million tonnes of alumina each year, did not say how long the production cut will last.

Fabrini said 250 part-time or temporary workers would lose their jobs on a phased basis.

'The workers are not in agreement with this move, but they understand that the global crisis has impacted on this situation,' said Vincent Morrison, president of the National Workers Union, which represents some of the workers.

Russia Moves on Plan to Meld Metals Titans Article

Wall Street Journal - JANUARY 16, 2009

By GREGORY L. WHITE

MOSCOW -- The Kremlin is considering a plan to merge some of Russia's largest metals companies into a conglomerate in which the government would take a substantial minority stake, in exchange for writing off some of the crushing debts of the tycoons who control the companies, according to people familiar with the discussions.

A combined metals company would have annual revenue of as much as $40 billion, and give Russia a player to rival global giants like BHP Billiton.

If approved by the government and the companies, the plan would mark the first indication that the Kremlin is using the bailouts it is offering the heavily indebted oligarchs to retake stakes in their industrial assets. Under terms of the rescue deals, a state-controlled bank lent the tycoons billions of dollars to allow them to pay off foreign loans, but the bank took stakes in their companies as collateral.

The metals plan was discussed at a hastily called meeting late Tuesday between President Dmitry Medvedev, other senior officials and metals tycoons including Oleg Deripaska, the largest shareholder in aluminum giant UC Rusal, Vladimir Potanin, a key owner of OAO Norilsk Nickel, and Alisher Usmanov of iron-ore giant OAO Metalloinvest.

All three of the businessmen owe billions of dollars to state-controlled banks. The metals producers have been hammered by plunging demand and declining prices for their products amid the global financial crisis.

A Kremlin spokesman confirmed the session, saying the topics included "anticrisis measures and the restructuring of individual assets" in the metals sector. He declined to comment further on the discussions, which also included Igor Sechin, a top lieutenant to Prime Minister Vladimir Putin, and the head of the state bank that issued the bailout loans.

People familiar with the session say government officials gave the tycoons several weeks to come up with more detailed proposals on the merger.

Early last year, before the financial crisis hit, the tycoons had discussed a potential combination, but without state participation. Messrs. Potanin and Deripaska fought a bitter battle last year for control over Norilsk, but agreed to a truce in November after Mr. Deripaska got a $4.5 billion bailout loan from the government. As part of that deal, the state put a representative on Norilsk's board, former Kremlin chief of staff Alexander Voloshin, who became chairman.

Now, the tycoons are hoping to get ahead of any possible further move by the Kremlin to squeeze them out by offering a deal under which they would retain control, according to people familiar with the meeting. "It's a pre-emptive move," said one.

The government isn't pushing for a takeover, according to people close to the discussions, and top officials have made clear they value the tycoons' management skills. "If it were about taking over the assets, it would have happened already," one person close to the discussions said. But the companies need new capital and "today, the state is the only one with money," this person said.

The merger idea was proposed by Mr. Potanin, the people familiar with the meeting said. Though the proposal remains vague, it might involve a state stake of 25% in the combined company, which would give the Kremlin the power to block major decisions but not full management control. The merger might also involve metals assets from Rostekhnologii, an acquisitive state company run by Sergei Chemezov, a longtime Putin ally. Last month, Mr. Chemezov publicly endorsed the idea of a merger. He attended the meeting on Tuesday, but couldn't be reached to comment.

Mr. Usmanov said in a statement Thursday that a Metalloinvest-Rusal-Norilsk merger was "a possible scenario" that would be "effective and useful" for the sector. He said it was too early to speculate about details, however.

Publicly, Russian officials say they don't plan to use the financial crisis to increase state ownership and that any assets taken over by the government will be sold off later. Officials also note that governments around the world are taking equity in companies and banks to keep them afloat through the global crisis.

Mr. Potanin was the author in the mid-1990s of a controversial privatization plan known as "loans for shares," under which the cash-strapped government gave him and other oligarchs stakes in industrial assets then owned by the state -- including Norilsk -- as collateral for loans to the government. The government later defaulted on the loans and the oligarchs took control of the assets.

The new proposal is "loans for shares in reverse," said another person familiar with the discussions.

The government bailout loans come due at the end of this year, and foreign bankers say there's little sign the debt-burdened oligarchs or their companies will be able to refinance them, meaning they could face losing the stakes they have pledged as collateral.

€”Alexander Kolyandr in Moscow contributed to this article. Write to Gregory L. White at greg.white@wsj.com

Vietnam's war hero Giap urges halt to bauxite mining plans

AFP - Jan 15, 2009

HANOI (AFP) €” Vietnam's famed war hero General Vo Nguyen Giap has urged the communist government to reconsider plans for a major mining project, warning it would harm the environment and lives of ethnic minorities.

Giap, in an open letter to Prime Minister Nguyen Tan Dung published Wednesday by the online news site VietnamNet, called for a temporary halt to a major bauxite mining project in the Central Highlands region.

"I would like to propose to the prime minister to stop the implementation of bauxite exploitation" until its ecological impact is seriously studied by international experts, wrote the 97-year-old retired general.

Giap still carries much moral authority in Vietnam for leading the defeats of both the French colonial forces and the Americans as the military chief and close confidant of late revolutionary leader Ho Chi Minh.

Dung in a November directive approved the exploitation, processing and use of bauxite ore, from which aluminium is made, state media reported.

The state-run Vietnam National Coal and Mineral Industries Group (Vinacomin) has started building an aluminium factory and is preparing for major mining operations in the Lam Dong and Dak Nong provinces.

Vinacomin is targeting yearly aluminium production of 4.8 to 6.6 million tonnes (tons) by 2015, state media has reported.

The plan has met with protests from scientists and local residents of the mountainous coffee-growing region, who fear the open-cut mining will destroy vast forest and crop areas and create mountains of toxic sludge.

Giap pointed to concerns of scientists and activists about "the serious risk to the natural and social environment posed by bauxite exploitation projects" and added, "However, these projects have still been implemented."

The general wrote that in the early 1980s he had overseen a study on whether to mine for bauxite in the region, and that Soviet experts had advised against the project because of the "risk of serious ecological damage."

Kaiser Aluminum to end aluminum smelting

The Spokesman-Review - Fri. January 16, 2009; Posted: 02:28 PM

Kaiser Aluminum Corp. will cease smelting aluminum later this year, breaking with its industrial history as one of world's premier metal makers.

The company announced this week that it will not resume production at its 49 percent-owned Anglesey smelter in Wales after a fire curtailed operations there. The smelter's power contract expires in September and isn't expected to be renewed. The majority owner of the smelter is Rio Tinto Group.

Kaiser made aluminum for more than 50 years at its Mead smelter in north Spokane, a smelter in Tacoma, and others around the world.

The smelters were sold as part of the company's lengthy bankruptcy reorganization several years ago.

The Trentwood rolling mill remains the centerpiece of Kaiser's business operations, employing hundreds of people who produce aluminum sheet and plate for use in airplanes, auto parts, machinery and construction goods.

On Thursday evening Kaiser announced that it expects to report a financial loss for fiscal 2008 because of $185 million in pretax charges related to slumping metals prices, the Anglesey curtailment, the closure of its plant in Tulsa, Okla., and cuts at its Bellwood, Va., factory.

The numbers will be posted Feb. 17.

The global recession and resulting manufacturing cutbacks are hitting aluminum producers hard.

Alcoa Inc. and others have shut smelters and shelved new projects as aluminum prices have tumbled 41 percent during the past year.

Alcoa announced plans this month to cut 106 jobs at its two Washington smelters in Wenatchee and Ferndale.

Kaiser Aluminum expects 4th-qtr loss on charges

MSNBC - Thurs., Jan. 15, 2009

FOOTHILL RANCH, Calif. - Aluminum products maker Kaiser Aluminum Corp. said Thursday it expects to report a net loss in the fourth quarter and in 2008 due to a slew of pretax charges totaling about $185 million.

About $135 million of the charges is mainly related to a decline in metal prices. Other items include restructuring charges related to the closing of Kaiser's Tulsa, Okla., plant as well as cuts at its Bellwood, Va., facility, the company said.

Kaiser said due to the charges and their effects on its net income, the company's revolving credit agreement precluded additional share buybacks and the payment of its regular quarterly dividend.

As a result, Kaiser said it amended the revolving credit agreement to continue to allow quarterly dividend payments, with the requirement that the company maintains availability in excess of $100 million under the revolving credit facility.

The amendment also prohibits future share buybacks without lender approval and increases fees and borrowing costs of the revolving credit facility.

Kaiser declared a regular quarterly dividend of 24 cents. The dividend is payable on Feb. 13 to shareholders of record on Jan. 26.

The company plans to post its fourth-quarter results on Feb. 17.

Shares slipped 34 cents to $24.27 in after-hours trading. The stock had closed up $1.01, or 4.3 percent, at $24.61 in the regular session.

St Ann Bauxite to lay off 150 workers

Jamaica Gleaner, Jamaica - Saturday | January 17, 2009

Carl Gilchrist, Gleaner Writer

St Ann Bauxite Limited (SABL) announced yesterday that approximately 150 positions, or about 20 per cent of its workforce, would be made redundant during the first quarter of 2009.

In a release from its Discovery Bay plant, SABL said the reduction would affect employees, contractors and temporary workers at all levels and would involve workers at the company's facilities in Discovery Bay, Brown's Town and Water Valley - all in St Ann.

The company said the staff cuts represented part of an ongoing cost-reduction programme that has become necessary because of the global financial crisis and "the unprecedented decline" in the demand and price of bauxite and alumina.

But in a quick response, the University and Allied Workers' Union (UAWU), which represents production workers, accused SABL of breaching the Labour Relations Code and said it would write to the company to protest this.

Prudently manage costs

Larry Holley, president of St Ann Bauxite, said: "While we continue to believe that the long-term fundamentals for bauxite and alumina are quite positive, we must prudently manage costs in the current environment.

"We regret the impact that this will have on the affected employees, their families and the local communities. Functional consolidations, which affect valued employees, are always very difficult, but are required at this time in support of the long-term sustainability of SABL," Holley said.

Lambert Brown, UAWU president, told The Gleaner yesterday that the company met with unions representing workers on the day the release was issued, but said the announcement was not consistent with laws relating to labour relations.

"The law says we should have proper consultations and this was not done. I will be writing to the company to insist on this, as they need to be consistent with the Labour Relations Code. We need to work out issues relevant to any redundancy that may take place," Brown said.

It is the second time this week that a bauxite company announced it would be cutting staff.

On Wednesday, Aluminium Partners of Jamaica announced that 250 non-permanent and unskilled workers were to lose their jobs.

That latest reduction brought to 400 the total number of persons the company would have sent home.

This latest news also follows that of another bauxite company, Windalco, which sent home 150 non-permanent workers in December.

The job cuts in Jamaica's bauxite sector come as demand for alumina falls, triggering a decline in aluminium production.

This is as a direct result of the economic crisis now affecting North America, Europe and China, which has seen a slowdown in the construction, transportation and packaging sectors, areas largely responsible for alumina consumption.

Chinalco to Cut Pay by as Much as 50% as Profit Drops (Update2)

Bloomberg New York, Jan 19, 2008

By Xiao Yu

Aluminum Corp. of China, parent of the countrys biggest producer of the metal, will cut executive pay by as much as 50 percent after profit slumped last year on declining metals prices, according to Vice President Lu Youqing.

Workers wages will be reduced by 15 percent to pare costs, which may decline by a total of about 2 billion yuan ($293 million) because of the initiative, Lu said today in an interview from Beijing. There will be no layoffs, he said.

The global recession has undermined demand for metals, dragging down prices and hurting producers profits. Companies including Rio Tinto Group, the third-largest mining company, have fired thousands of workers to rein in costs and reduce debt.

The "wage cut will benefit Chalcos earnings," said Essence Securities Co. analyst Heng Kun, referring to the metal makers listed unit, Aluminum Corp. of China Ltd. Heng has an "add" recommendation on Chalco stock, which was the days biggest gainer on Hong Kongs Hang Seng Index.

"The nonferrous metals industry could face a more severe situation in the first half because of weak demand," Lu said, adding that profit at Chinalco, as the Beijing-based parent is known, declined last year after aluminum and copper prices fell. Sales dropped 2.3 percent to 128.7 billion yuan ($18.8 billion), he said, without giving an audited figure for earnings.

Analyst says Century plant should aim to be lowest cost

Daily Mail - Charleston, WV - Monday January 19, 2009

Official says smelter needs to be cheaper than Hawesville, Ky., location

by George Hohmann, Daily Mail Business Editor

RAVENSWOOD, W.Va. -- An aluminum industry analyst thinks the best way to ensure the future of Century Aluminum's Ravenswood smelter is to make sure it is cheaper to operate than the company's smelter in Hawesville, Ky.

John Tumazos of Very Independent Research, Holmdel, N.J., said all of Century's major assets, except for the Ravenswood and Hawesville smelters, involve either agreements with joint venture partners or political situations in foreign countries.

But Century owns the Ravenswood and Hawesville smelters outright and "are the two assets they have complete, unilateral control over. They may have made a decision to shut something. So the important thing for Ravenswood is to lower their cost more than Hawesville."

Century has said the Ravenswood smelter could shut down Feb. 15 unless the price of aluminum on the London Metal Exchange stabilizes and the plant's costs are reduced.

The Ravenswood smelter, built in 1957, is the oldest operating aluminum smelter in the United States. It has 685 employees. The plant has four potlines with a total annual capacity of 170,000 tons of aluminum a year.

The Hawesville smelter became operational in 1970. It has 775 employees. The plant has five potlines with a total annual capacity of 244,000 tons.

The hourly workers at Ravenswood and Hawesville are represented by the United Steelworkers of America. The union's contract at Ravenswood expires on May 31. The contract at Hawesville expires on March 31, 2010.

Century said in December that it must reduce its costs by 20 percent, an amount confirmed last week by Century spokesman Mike Dildine. But Tumazos said he believes 20 percent is out of date. "The aluminum business has gotten worse" in the past month, he said.

The benchmark London Metal Exchange price of aluminum has dropped from about $3,200 a metric ton in July to around $1,440 a metric ton.

During the Ravenswood smelter's 50th anniversary celebration in September 2007, Century Chief Operating Officer Wayne Hale said the plant's costs are: alumina, 37 percent; electricity, 26 percent; labor, 16 percent; carbon, 8 percent; and other raw materials, 12 percent.

The Ravenswood smelter is Appalachian Power Co.'s largest West Virginia customer. Appalachian Power is a subsidiary of American Electric Power.

"I would think that AEP would make heroic efforts to maintain the customer," Tumazos said.

Appalachian Power spokeswoman Jeri Matheney said the utility met with Century as recently as Thursday.

"We do believe that we can provide some short-term assistance to Century," she said. "We don't have the details worked out yet of how that will work.

"It is our belief that Appalachian Power customers are far better off with Century than without," she said. "Century, as our largest customer in West Virginia, makes a major contribution toward paying fixed costs of providing power. All customers benefit from that because costs are spread out more. Without Century, their share of those fixed costs would have to be borne by the remaining customers. So it's a matter of determining that we're better off selling them power and getting something for it than we are not selling them power.

"As far as the fair way to achieve it, we would work with the Public Service Commission on the fairest way to accomplish this."

Tumazos pointed out that the duration of utility coal purchase contracts do not always match up with their electricity sales. He said there might be some room for the utility to renegotiate some coal supply contracts.

As for labor, Tumazos said, "I think the union basically doesn't have any bargaining position. The business is bad. It's a matter of reducing costs as much as possible. It's very hard for an industrial company when their revenue stream is cut in half."

United Steelworkers Local 5668 represents the hourly workers at Ravenswood. In a posting on the local's Web site (www.fort-unity.sctp.us) Friday, employee Robert Harvey wrote that Century wants union members to take a 12.4 percent pay cut.

The base pay at Ravenswood reportedly is $17.97 an hour, so the cut would amount to $2.22 an hour.

The workers are scheduled to meet Tuesday. The company and representatives of Local 5668 are scheduled to meet Friday.

"I don't know what Century's big picture is," Tumazos said. "But I suspect they have made an intuitive decision to try to reduce output," because there's too much aluminum in the world market.

Tumazos said that in the 1994 aluminum industry downturn, major producing countries signed a memorandum of understanding that reduced worldwide output.

"Century might be planning for a situation where there's a government reason to reduce their output by 5 to 10 percent," he said. "Once again, it becomes a competition between locations."

Contact writer George Hohmann at busin...@dailymail.com or 304-348-4836.

Riding out aluminium's downturn (analysis by Dr Carlton Davis, Guest Writer)

Jamaica Gleaner, Jamaica - Jan 18, 2009

Part 1 Jan 11, 2009 http://www.jamaica-gleaner.com/gleaner/20090111/business/business5

Part 2 Jan 18, 2009 http://www.jamaica-gleaner.com/gleaner/20090118/business/business4

Over 120 workers at Ravenswood plant to be laid off

Charleston Gazette, USA - 19-Jan-2009

More than 120 workers at the Century Aluminum plant in Ravenswood will be laid off by the end of the month, Ravenswood Mayor Lucy Harbert said Monday.

The move was not unexpected, Harbert said. One of the four production lines at the aluminum plant was shut down in December, and the workers were kept on to clean it up.

"They had announced that once the cleanup was finished, those men would be laid off," the mayor said. She said up to 125 workers were affected.

Company officials announced last month that they might shut the plant down in February. Local residents said the plant's closure could devastate the local economy; more than 650 people worked at the plant before the announcement, making it Jackson County's third-largest employer.

State and federal officials including Gov. Joe Manchin, Sen. Jay Rockefeller and Rep. Shelley Moore Capito met with Century and union officials on Jan. 10 to try to find a solution. Harbert said after that meeting officials had set a deadline of Friday to have "something on the table."

Harbert said the fact that the company kept the workers on to clean up the line is a good sign.

"If you don't clean out the potline, the metal in there cools, and it's hard to get out," she said. "This way, the line will be ready to start right up again" - if the plant doesn't close altogether.

"We're just hoping this is a temporary thing," she said. "The men can draw their unemployment, and hopefully the whole thing will work out."

Alcasa's production fell 6 percent in 2008

El Universal, Venezuela - 19-Jan-2009

Plant was hit by problems related to technological obsolescence

The production of the Venezuelan aluminum smelter Alcasa ended last year with a decline of 6 percent. The plant was hit by problems related to technological obsolescence.

The company produced 169,230 metric tons of aluminum ore, according to data posted Monday by the Venezuelan company. The figure is below the 180,085 metric tons produced in 2007, Reuters reported.

Despite having announced an investment plan for the aluminum sector, including the upgrading of the Alcasa plant, the company said it has not received all the necessary resources for technological upgrade of its facilities.

In 2008, Alcasa sold 158,570 metric tons of aluminum ore, out of which 39,442 tons were intended for exports.

Deripaska, Potanin Propose Russian Metals Merger (Update1)

Jan. 19, 2009 (Bloomberg)

By Yuriy Humber

Billionaires Oleg Deripaska and Vladimir Potanin proposed merging OAO GMK Norilsk Nickel with five other Russian metals producers including Evraz Group SA to create the worlds second-largest mining company.

The plan would also involve state-owned titanium maker OAO VSMPO-Avisma, iron ore producer OAO Metalloinvest, potash miner OAO Uralkali and steelmaker OAO Mechel, said Nina Dementsova, spokeswoman for Potanins Interros Holding Co., by telephone in Moscow today, confirming a Vedomosti report. Norilsk and Mechel fell in Moscow trading while Evraz and Uralkali plunged in London.

President Dmitry Medvedev last week asked Deripaska, Potanin and other billionaire investors to consider a merger. The government handed out more than $13.5 billion in bailouts to Russian companies since October after commodity and stock prices plunged. It may swap debt owed by metal producers to state-owned banks for 25 percent of the new company.

"The idea of creating a national champion in mining is opportune both from economic and political standpoints," Troika Dialog analysts Sergei Donskoy and Mikhail Stiskin wrote in a report. Weakened balance sheets "will now make the companies much more willing to engage in discussions."

Shares Drop

Norilsk, the nations biggest mining company, dropped 5.7 percent to close at 1,470.55 rubles in Moscow, valuing the company at 280.3 billion rubles ($8.5 billion). Mechel slid 6.8 percent in Moscow, while Evraz fell 17 percent and Uralkali 26 percent in London.

Deripaska and Potanins proposal would create a company with sales of $60 billion and earnings before interest, tax, depreciation and amortization of $23 billion, according to Interros. It would inherit debt of more than $28 billion and have a market capitalization of $70 billion to $100 billion. Melbourne-based BHP Billiton Ltd., the worlds largest mining company, has a market value of about $105 billion.

United Co. Rusal, Russias biggest aluminum producer and controlled by Deripaska, wont initially participate in the merger as its $17 billion in liabilities would overburden the company, Vedomosti said. Rusal spokeswoman Vera Kurochkina declined to comment on the report. Deripaska and Potanin are also shareholders in Norilsk.

€~Heavy Burden

"Rusal is under a heavy debt burden, so its unlikely that it would be an interesting merger partner for someone right now," Norilsk Chief Executive Officer Vladimir Strzhalkovsky told reporters in Krasnoyarsk, in comments confirmed by company spokeswoman Erzhena Mintasova today.

A merger between Norilsk, Metalloinvest and Rusal was first proposed last year. In December, Russian Technologies Corp., a state holding company for assets including VSMPO, the worlds biggest titanium producer, offered to combine some metals assets with Norilsk.

"We are skeptical that all the named companies would actually participate, as we see little strategic fit in creating a global diversified mining leader," Marat Gabitov and George Buzhenitsa, UniCredit SpA analysts in Moscow, wrote in a note. "We dont rule out the deal not going through given its complexity."

Minority shareholders in Mechel, Norilsk, Evraz and Uralkali would hold as much as 24 percent of the new companys shares, according to Interros.

Deripaska Move

Global economic turmoil led Deripaska to take over as Rusals CEO from Alexander Bulygin, the Moscow-based company said yesterday. Rusal asked the government for $4.5 billion in October to refinance debt and retain its 25 percent stake in Norilsk. The ruble today fell below the weakest level during the 1998 Russian crisis after the central bank devalued the currency for the sixth time in seven days to protect reserves.

Alisher Usmanov, the largest shareholder in Metalloinvest and owner of 5 percent in Norilsk, said Jan. 15 that he also backed mergers in principle as an effective way to cope with the global economic crisis. Any talk of how the transaction could be done or the states involvement is "premature," he added.

Potanin, Norilsks biggest owner with a 30 percent stake, said last August that he wanted the company to pursue mergers with iron ore, potash, coal, uranium and copper assets.

Representatives of Deripaska, Evraz, Metalloinvest, Uralkali, Norilsk and Mechel declined to comment on the plans.

To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net.

Kaiser Aluminum Appoints Christian Bersuder and Philippe Lassince To Lead International Growth Initiatives

FOOTHILL RANCH, Calif.--(BUSINESS WIRE)-- 19-Jan-2009

Kaiser Aluminum Corporation (NASDAQ:KALU) today announced the appointment of Christian Bersuder and Philippe Lassince to lead international business initiatives.

Bersuder has been named Vice President of Sales and Marketing, General Engineering and Aerospace for Europe, Asia and South America. In this newly-created role, he will manage the establishment and execution of Kaisers commercial growth strategies outside of North America. Lassince has been named Director of Research and Development for Europe, Asia and South America, and will lead the technical support for those regions. The company has established an office in France to support its business opportunities and global growth initiatives.

"Furthering our strategy of leveraging our manufacturing and technological capabilities to expand our market presence, Christian and Philippe bring industry knowledge and expertise to pursue profitable global growth opportunities," said Jack A. Hockema, President, CEO and Chairman. "Each brings more than 25 years of experience in the industry and has a solid understanding of the market as well as the needs and interests of our global customers. Their leadership will help solidify Kaiser Aluminums position as a global supplier of highly engineered aluminum products for technically demanding applications."

Bersuder holds more than 30 years of commercial experience in the aluminum industry. He most recently served as vice president, marketing and sales, for the ATI Division at Rio Tinto Alcan. He has a business degree from the Institut Européen dEtudes Commerciales Supérieures de Strasbourg and completed the Executive Program in Strategy and Organization at Stanford University.

Lassince has more than 28 years of technical experience in the aluminum industry. He most recently served as director of research and product development for the ATI Division at Rio Tinto Alcan. He earned an engineering degree from the Ecole Nationale des Mines de Paris.

http://www.businesswire.com/portal/site/google/?ndmViewIdnews_view&newsId20090119005120&newsLangen

Mining group in Irwin battle raises $15m

Sydney Morning Herald, Australia - January 20, 2009 - 11:19AM

A company planning to mine on Cape York, in a move described by Steve Irwin's family as like knocking down Uluru, has raised $15 million in the lead-up to its stockmarket listing.

Cape Alumina Ltd in September 2008 won a court battle to access a portion of the 135,000-hectare Bertiehaugh Station leased by the Irwin family and renamed Steve Irwin Wildlife Reserve.

Cape Alumina is conducting preliminary studies for a bauxite mine on its Pisolite Hills lease, which covers about 15 per cent of the reserve the Irwin family company Silverback Properties purchased after Steve Irwin's death by stingray barb in 2006.

Test drilling revealed a bauxite deposit of more than 100 million tonnes, which could yield about seven million tonnes a year starting in 2012-13.

The company said in a statement on Tuesday its Initial Public Offer (IPO) had closed fully subscribed, raising $15 million and attracting about 500 new shareholders.

The company's shares are scheduled to list on the Australian Securities Exchange by the end of January.

Chairman-elect, George Lloyd, said he was delighted with the response from the public, mainly north Queenslanders.

"This is a great result in a very difficult financial market and enables Cape Alumina to confidently progress the feasibility study into the development of a significant new Australian resource project in Cape York," Mr Lloyd said.

Cape Alumina chief executive Paul Messenger said Cape Alumina would list with cash in the bank, no debt and an advanced resource project which, subject to feasibility, will make the company a major player in the supply of bauxite to the Chinese alumina-aluminium market.

"That market had grown rapidly over recent years and became increasingly dependent on imported bauxite," Dr Messenger said.

The project is expected to create around 350 permanent jobs.

Comment is being sought from the Irwin family, which has to date received 90,000 signatures on a petition to stop the mine.

Family spokesman Wes Mannion has previously described the proposed mine as "environmental vandalism" which would destroy the Wenlock River - one of Australia's last wild rivers.

"It's like mining an area in the Northern Territory and then saying: 'Oh, by the way, we want to knock over Uluru'," he said last year.

Saudi aluminium smelter delayed after Rio pullout

Reuters, Monday January 19 2009

By Asma Alsharif

JEDDAH, Saudi Arabia, Jan 19 (Reuters) - Saudi Arabian Mining Co (Maaden) will delay by three years the start of production at a planned aluminium smelter, its chief executive said after mining giant Rio Tinto Alcan abandoned the project.

Rio Tinto Alcan said in December it had dropped plans to take a 49 percent stake in the $10 billion smelter because of the global financial crisis.

"We are looking for the plant to be in production in 2015," Chief Executive Abdullah Dabbagh told Reuters in an interview.

The two companies had initially announced plans to start production at the smelter in 2012.

Maaden, in which the Saudi government is the largest shareholder, holds the remaining 51 percent in the capital of AlumCo. It Intends to develop a 740,000 tonnes per year aluminium smelter using bauxite from Saudi mines.

Dabbagh said the firm remained committed to going ahead with the project but it would now be carried out in phases.

"We are making presentations to our board with a new plan ... (it) is going to take place in two or three phases," he said late on Sunday. He declined to give further details on the changes to the project.

Maaden has said that it could reconsider the size of the smelter in the light of the global financial crisis.

In August, Dabbagh was quoted as saying the group planned to borrow as much as $8 billion in the third quarter of 2009 to finance the project.

Maaden is investing 60 billion riyals ($16 billion) in projects including phosphate, bauxite, gold and industrial minerals. The investments are a crucial part of government plans to diversify an economy heavily reliant on oil export income.

Dabbagh said one his company's projects, a $3 billion phosphate and fertilisers joint-venture with Saudi Arabian Basic Industries Corp, would be completely operational in 2011.

SABIC and Maaden had said the project would start production in 2010.

"The (SABIC) joint venture is going very well," Dabbagh said. "The project is under construction and we are almost 48 percent complete ... We are within budget and within time."

"The challenge now is to operate the project and that will start in 2010 and more into 2011 for complete operation," he added. (Writing by Souhail Karam, Editing by Anthony Barker)

Alpart gives employees ultimatum

Jamaica Observer, Jamaica - Wednesday, January 21, 2009

Workers to choose shortened work week or layoff without pay

Less than a week after cutting 250 temporary workers, Alumina Partners of Jamaica (Alpart) has given workers an ultimatum, via a letter, to choose between a reduction in work hours or being placed on layoff without pay.

The Observer received a copy of the letter addressed to Alpart staff members, signed by human resource manager Carlton Fearon yesterday, in which Alpart said it was being forced to adjust its manpower in the face of the global financial crisis.

An Observer source, a non-unionised permanent employee, said that he has "strong reasons" to believe that the letter was given to all non-unionised Alpart employees, from the senior management level downwards.

"It is imperative that we adjust our manpower requirement forthwith in keeping with our new production target," said the letter. "In so doing, we will have to assess our existing workforce while seeking to maintain as many jobs as possible.

"Changes to the existing workforce will be by way of layoffs and a variable work week," it added, before giving workers an option between a "shortened work week" or "layoff without pay". Workers were told to inform department managers of their decision by 4:30 pm today.

Alpart, owned by UC Rusal of Russia and Hydro Aluminum of Norway, has been in survival mode since the onslaught of the global economic crisis last year. The company has been forced to put a long-planned US$350-million modernisation programme on hold, and managing director Alberto Fabrini has not ruled out closing down the plant if the situation continues to worsen. The company said last week that the financial crisis had caused it to reduce its production rate by 50 per cent.

Alpart has a total workforce of 250 temporary and approximately 926 permanent workers.

Century says it needs to trim monthly costs

Daily Mail - Charleston, WV - Wednesday January 21, 2009

Company says millions must be cut from Ravenswood smelter to find long-term solution

by George Hohmann

Daily Mail Business Editor

RAVENSWOOD, W.Va. -- Century Aluminum Co. says it needs to eliminate $6 million to $7 million in monthly costs at its Ravenswood smelter immediately so it can gain enough time to find a long-term solution for the plant.

The company on Tuesday listed "the factors with the potential to improve Ravenswood's near-term financial situation and allow for continued operations," along with a statement of current status, on its Web site at www.centurywv.com.

Century has said its Ravenswood smelter could shut down Feb. 15 unless the price of aluminum on the London Metal Exchange stabilizes and the plant's costs are reduced.

The plant has 685 employees and is Jackson County's third-largest employer. Company spokesman Mike Dildine said Monday that 120 workers who were working on a production line that was shut down in December will be laid off Feb. 15.

In the report posted on its Web site, Century said that in December, when it issued the notice that the Ravenswood plant may close, the London price of aluminum was $1,431 a ton. As of Tuesday the price was $1,401 a ton - down 2.1 percent, the company said.

Electricity accounts for about 26 percent of the plant's costs. Century said "rate-relief discussions are ongoing with our power supplier, Appalachian Power Co."

Also, Century said it "is achieving significant cost savings through discussions with alumina, coke, pitch and other key raw material suppliers." This is noteworthy because alumina accounts for about 37 percent of the plant's costs, carbon accounts for 8 percent and other raw materials account for 12 percent.

Union Representing Century Employees Meets Tuesday Night

WOWK, WV - Tuesday, January 20, 2009

United Steelworkers asked to consider a wage reduction.

Story by Nicky Walters

Ravenswood -- Members of the United Steelworkers Union that represents several employees at Century Aluminum met Tuesday evening.

They have been asked by Century executives to consider a 12.41% wage reduction.

Century has announced salaried employees will be taking a similar pay cut.

Company executives have also confirmed plans to layoff more than 120 employees by February 15th.

The news was on the minds of many in Ravenswood.

"Its traumatic to lose your job in this type of economy," said Ravenswood business owner Bob Grimmett. "However I do want to be optimistic."

But aluminum prices have dropped an additional 2.1% since the company announced in December they were losing a significant amount of money.

Sources have said the union plans to meet with Century January 23rd to discuss the pay cut request.

Montenegro Backs Loan

The Moscow Times, Russia (Bloomberg) January 20, 2009

BELGRADE -- Montenegro has offered to guarantee borrowing by Kombinat Aluminijuma Podgorica, the country's only aluminum producer, on condition that majority owner Basic Element, Oleg Deripaska's holding company, maintain long-term production, RTCG TV reported Tuesday.

The government said in a statement on RTCG that it was ready to provide the company, also known as KAP, with guarantees on tens of millions of euros in borrowing and waive fees for electricity, fuel, taxes and other expenses for an undetermined period. (Bloomberg)

Jackson County plant retirees have seen tough times before

Daily Mail - Charleston, WV - 21-Jan-2009

by Justin D. Anderson

RAVENSWOOD - United Steelworkers of America retirees said they're disappointed in what's happening at the Century Aluminum plant south of here and blame Republicans for it, but they're staying optimistic.

Century officials announced this week that 120 of the plant's 685 employees would be laid off on Feb. 15 as the company struggles with falling aluminum prices.

A related and equally devastating blow to the area occurred Wednesday, when Rio Tinto Alcan announced it was laying off 168 of its employees at its rolling mill adjacent to the Century plant. The rolling mill uses aluminum produced at the Century smelter.

Retirees who worked at the 52-year-old plant gathered for a monthly meeting and potluck lunch at the union hall Wednesday. While they said what's going on is certainly bad news, it's not new news.

"Every time the Republicans take over, it happens," said Bob Blare. "I don't know why people keep voting that way, but they do."

Blare, of Ravenswood, retired in 2000 after more than 30 years. He said he went through ups

and downs at the plant and weathered long layoffs himself. He remembered that the plant was shut down for a period in the 1980s during the Reagan years.

Blare, 72, said he has faith Obama's policies will restore economic health to the area.

"I got more hope in him than I've had in a long time," Blare said.

Dovernor Jarrell, 77, agreed with Blare's political perspective.

"That's just about the size of it, it's shameful to say," Jarrell said. "Let's just hope the new president leads us in a better path. He must succeed."

Jarrell, of Ravenswood, said he doesn't understand why the federal government doesn't encourage the stockpiling of aluminum. That would enable plants to continue to operate.

"It's an investment in our future," Jarrell said. "We can't afford to have this plant shut down."

The plant, which has had a turbulent labor history, opened as Kaiser Aluminum in 1957. It sparked tremendous growth in Jackson County.

Jarrell settled in Ravenswood in 1959 and retired in 1993.

If the aluminum business goes under, Ravenswood would become a ghost town, he said.

Leo Sapp, 77, of Parkersburg, retired in 1994. He said the plant usually had a slowdown during the Christmas holiday season. He said he spent at least three Christmases in the unemployment line.

Sapp said the area can't afford to lose the aluminum jobs.

"They've been the lifeblood of Ravenswood and Ripley since 1957," he said.

Larry LaCorte, 72, retired in 2000. He remembered the economic recession of the 1980s and the wintertime slowdowns. He said he was once laid off for 16 months.

LaCorte, of Ravenswood, said the old seasonal slowdowns were due primarily to a decline in production of aluminum lawn chairs and other warm-weather products. He said work at the plant became steadier when more uses were found for the metal.

He said the overall economy is impacting the plant more than anything.

"I have a lot of faith that Obama will do something," he said.

LaCorte said he'd like to see a new federal policy that would give companies some kind of incentive to keep jobs on American soil.

"We can't compete with someone who makes 20 cents an hour," LaCorte said.

As for the complete shutdown of the Century plant, LaCorte said he wouldn't bet money either way on that. He's putting his hopes in state, federal and union officials to hammer out some kind of compromise that will keep the plant open.

Betty Totten, 69, retired in 2002. She said it's not the first time the plant has seen hard times or seemed doomed.

"There's been talk," Totten said. "But there's always been talk."

Century shut down one of its pot lines - a row of electrolytic cells used to convert ore to metal - in December. At the time, the company said a total closure was possible in 60 says.

Totten said the pot line was shut down in an "orderly" way, so it could start back up easily.

Totten said she worked on Obama's campaign and has faith that he can turn the economy around.

"He has so much class and so much style," she said. "It's just a breath of fresh air. I just have great hope. I hope he sticks to his guns."

Bill Click Jr., of nearby Mt. Alto, said he remembers the shutdown of the 1980s. But it didn't spell the end of things.

"It wasn't too long until they opened it back up," said Click, 70.

Click, who retired in 1997, said he agrees with the others as they linked the shutdowns, layoffs and at least one lockout to a Republican administration.

"As the trend's been over the years, that's the way it's been," he said.

Click said he hears Obama when he says he'll work to turn the economy around. But he's not putting all the pressure on the president.

"Everybody's going to have to roll up their sleeves," Click said.

Contact writer Justin D. Anderson at jus...@dailymail.com 304-348-4843.

Dick Evans appointed as Chairman for Newspaper giant AbitibiBowater Inc.

AOL Canada, Canada Business News - 22-Jan-2009

MONTREAL - Newspaper giant AbitibiBowater Inc. (TSX:ABH) has appointed outgoing Rio Tinto Alcan CEO Dick Evans as its chairman.

Evans, 61, replaces John Weaver, who is retiring effective Feb. 1. The aluminum multinational's chief executive recently announced his retirement from Alcan. He will step down from the board in April.

Century Aluminum Releases Progress Report

WTAP-TV, WV - Jan 23, 2009

Century Aluminum of WV Releases Progress Report

Century Aluminum of West Virgina announced in a progress report Friday it needs $6 to $7 million more dollars a month and a stabalization in market conditions in order to stay open.

Key state officials including Senator Jay Rockefellar and Governor Joe Manchin have been continuing discussions with CEO Logan Kruger. One point of discussion Rockefellar noted in a statement is how proposals in the economic recovery legislation may be helpful.

They're also working with American Electric Power because power is one of the plant's largest costs.

Last month the company said it would shut down in February if the demand and price of aluminum do not go up.

Already the price of aluminum is down nearly 10% more since December.

"So not all of the people who work at Century are all from Jackson County. It's not going to only affect Jackson County, it's going to affect other areas as well," said Ripley Mayor Carolyn Rader.

The reduction of about 120 jobs related to the pot line that was shut down last month will soon begin.

According to the progress report the company is planning to reduce salaried workforce costs by 12.41%.

But first the Union is reviewing this wage reduction.

Discussions are also underway with officials on how to save money on power, raw materials and other services.

According to the report all constituents must continue to work together to achieve a solution by Feb. 15.

Senator Rockefellar released the following statement Friday, "Since the meeting at Century, the Governor and I have been working with Century's senior management, American Electric Power, and the workers to put together a package of solutions for keeping the plant open. I want the employees, their families, and the community to know that everyone remains firmly committed to working together -- with shared sacrifice -- to avoid further layoffs. With cutbacks already announced at Century and at other companies, there is no doubt that we are facing a serious crisis. We hope to move quickly in Congress on an economic recovery plan to get our economy moving again, and even more immediately we in West Virginia are focused on keeping every job possible."

Russia, China revise aluminum projects in Guyana

AFP - Jan 23, 2009

GEORGETOWN (AFP) €” Aluminum producers RUSAL of Russia and Bosai Minerals of China have delayed or changed their multi-million dollar investment plans in Guyana, Prime Minister Samuel Hinds said Friday.

Among the world's top producers of aluminum and alumina, United Company RUSAL and China's state-run Bosai Minerals Group Co. have revised their plans in light of a global drop in prices and demand for metallurgical and non-metallurgical bauxite, Hinds told reporters.

Aluminum prices are forecast to remain under "great pressure" in 2009, he added.

The premier said RUSAL's year-old plan to revive a hydro-electric plant deep in Guyana's jungle and to build a smelter and an alumina plant "are clearly on hold." The three projects were to begin construction in 2011, he added.

Formed 10 months ago by the merger of three companies making it the world's top aluminum producer, RUSAL last month laid off at least 200 workers at its bauxite concerns in Guyana and Jamaica as part of a cost-cutting measure.

Hinds also announced that Bosai had amended its plans, announced two months ago, to build a one-billion-dollar alumina smelter in Guyana to produce one million tons annually.

"They may construct it in two stages rather than one-off," Hinds said. "I am hoping that their studies will still prove attractive in the circumstance to proceed with that development."

Guyana's bauxite industry, which is controlled by RUSAL and Bosai, employs 1,280 workers.

Alcoa cuts 220 hourly jobs at Davenport Works

WQAD, IL - Jan 23, 2009 01:10 PM PST

by John David

RIVERDALE, Iowa -- Alcoa is losing a battle to reduce costs and avoid layoffs. The world economy is hitting close to home at the Davenport Works, taking with it 220 hourly jobs at the plant.

That's roughly 10% of its local workforce. The company also plans to cut more salaried jobs at a later date. It's part of global reductions first announced by the company on January 6.

"The downturn has just been so much that it's not possible for us to avoid having to take this step now," said Alcoa Spokesman John Riches.

Union leaders will be meeting with Alcoa next week to sort out the tough decisions as it relates to its labor agreement. They'll decide who will be cut and when their jobs will disappear. Problems are amplified by the sluggish world economy.

"In the past we've done layoffs, and there were jobs out there," said Skip McGill, president of United Steelworkers Local 105. "You could get a job. They're not there right now."

After announced cuts at several local companies in recent days, the recession is hitting close to home.

"It's all over," said Kelly Langston, Mickey's Country Cafe. "People that are going to say it's not, I don't know."

Emotions were running high at the nearby eatery that's popular with the Alcoa crowd.

"I don't know where they work or what they're doing, but I know that it's affecting me personally," she continued.

"I do believe it will be really hard to find a job around here," added customer Ted Pope, who works near the Alcoa plant. "Even the people that still have work going on aren't hiring."

While the union members know about the ups and downs of this economy, adjusting to life outside of Alcoa will pose some major challenges.

Union leaders hope to push retirement packages that could lessen the blow from layoffs, but there's no comfortable solution.

"It's not going to be easy," McGill said. "It can't be. It's difficult, but we'll try to make the transition as easy as possible."

"It's a difficult thing," Riches concluded. "But clearly it's bigger than any one company."

As the gates start to close on hundreds of careers at Alcoa.

Eskom Wants Power Tariff Rise Decision Taken by April (Update2)

Jan. 23, 2008 (Bloomberg)

By Ron Derby

Eskom Holdings Ltd, Africas largest energy supplier, needs a "significant" jump in tariffs to help fund a 353 billion-rand ($34 billion) expansion program and wants the regulator to decide on price increases by April.

"The economic cost needs to be reflected in the price," Jacob Maroga, the companys chief executive officer, told reporters in Johannesburg today. "There have to be significant increases."

South Africas energy regulator will hold public hearings next month on proposed changes to the rules governing tariffs, it said Jan. 21.

In January last year South Africas power network almost collapsed, closing most mines and metal smelters for five days. That resulted in rationing and caused the deferral of some projects, including an aluminum smelter planned by Rio Tinto Group.

Higher tariffs are needed to help fund Eskoms expansion, the company has said. In June last year, Eskom was allowed to raise prices 27.5 percent, less than half the level it wanted.

"Access to capital is a challenge worldwide," and as result Eskom is in talks with the World Bank about a $5 billion loan, Maroga said.

Eskom said peak power demand declined to 35,959 megawatts on July 14 last year from 36,513 megawatts in 2007, as the global financial crisis cut demand from energy-intensive miners and smelters, the utility said.

Sales Decline

Energy sales by the company, which supplies about 95 percent of South Africas power, will fall 3 percent in the financial year through March, Maroga said.

While energy demand has fallen, South Africas power supply is still at risk, he said. The reserve margin, or surplus capacity over peak demand, stands at about 8 percent, Maroga said. That compares with 25 percent in 2001.

Eskom is building two coal-fired power plants, which will add 9,654 megawatts to the power grid, and it will make a decision on whether to erect another within 18 months, Maroga said. It also remains in talks with government about how to expand its nuclear energy program after in December canceling a 120 billion-rand plan to build a second nuclear plant.

Coal stockpiles are at an average of 38 days, with no power stations sitting below 20, Maroga said. At the height of the power crisis in January last year, the average was closer to 10 days, he said.

Last year, about 25 percent of coal was purchased on short- term contracts, and this is expected to increase this year, Maroga said.

All eight units of Eskoms Camden power station are now fully operational, with two Grootvlei units and one Komati unit synchronized to the grid, the company said.

To contact the reporter on this story: Ron Derby in Johannesburg at rderby1@bloomberg.net

Intalco power talks stall with BPA

Bellingham Herald, WA - Jan 23, 2009

JOHN STARK - THE BELLINGHAM HERALD

Hopes of a quick resolution to electric power supply problems at Alcoa Intalco Works faded Thursday, Jan. 22, after Alcoa and the Bonneville Power Administration jointly announced they have so far been unable to reach an agreement to firm up a long-term power supply contract that had been tentatively outlined last October.

"While both BPA and Alcoa worked very hard to reach an agreement, the parties were unable, within the time allotted, to settle on terms that would serve the long-term interests of both parties adequately," BPA and Alcoa stated in a letter to U.S. Rep. Rick Larsen. The letter bore the signatures of BPA administrator and CEO Stephen Wright, and John Thuestad, Alcoa's president for U.S. primary products.

"The current economic recession, which has reduced worldwide demand for aluminum and cut the price of aluminum by more than half in the last several months, has caused Alcoa to reassess the risks of operating its facilities at less than optimal levels," the letter continued. "Based on this analysis, Alcoa was unable to sign a contract based on the proposed framework, but remains committed to working with BPA to secure a long-term contract."

After three rounds of job cuts since October, the aluminum smelter near Ferndale still provides high-paying industrial jobs for about 500 people. But if Alcoa can't get a low-cost power supply deal for the period beginning Oct. 1, 2011, the prognosis for those jobs would be grim.

When BPA announced a tentative deal in early October, the future of those jobs appeared bright. That deal would have supplied the company with enough lower-cost BPA hydroelectric power to operate the plant at half-capacity for 10 years beginning Oct. 1, 2011, plus a somewhat smaller amount of power for the seven years after that.

In exchange for BPA's power supply commitment, Alcoa had tentatively agreed to invest $125 million or more in modernizing the smelter, while maintaining a minimum $48 million payroll - enough for about 480 jobs.

Plant Manager Mike Rousseau downplayed the failure to finalize that deal.

He said Alcoa and BPA would keep on trying to work out a long-term power supply agreement.

"We're absolutely committed," Rousseau said. "Everybody wants to see a long-term deal. ... The long-term deal has to be right. We're close."

He said Alcoa could not make financial commitments that would be money-losers.

"The current economic crisis really opened our eyes," Rousseau said. "Even though the long-term outlook for aluminum is great, you have to have protection from a downturn."

Allen Burns, BPA's vice president of bulk marketing, sounded less upbeat than Rousseau. Asked about the prospects for hammering out a long-term power deal, he replied, "I think it's probably uncertain."

Even at the best power price BPA could offer, Alcoa would lose money at current aluminum prices, Burns said.

He described the breakdown in power talks as "a significant speed bump," but not a disaster.

"We're going to go back to work," he said. "It's too soon to tell. ... If prices stay down where they're at, it will make it much more difficult. I won't say impossible."

Rep. Larsen, D-Everett, urged BPA and Alcoa not to give up.

Vedanta ready to begin bauxite mining in India

SteelGuru, India - 24 Jan 2008

BL reported that Vedanta Resources Plc is ready to start mining bauxite in eastern India and will show next month that it is complying with court orders so it can begin the project, which is opposed by tribal leaders.

Mr PK Panda VP of mining operations said that "We are ready to start mining early next financial year and we do not anticipate any major trouble."

As per report, Vedanta wants to dig open cast mines to feed an alumina refinery it has built in the area as part of an USD 800 million project. It offers to buy balance 20% in Madras Aluminium

The company is due to hand over a report saying that it has met court imposed guidelines, including paying the forest department fees for using land, reforestation projects and development work for the tribes people. It terminates contract with Maytas Infra in Orissa

Mr Panda said by telephone from Bhubaneswar that "Next month we are going to submit a compliance report to the government, which should pave the way for us to start mining."

(Sourced from Business Line)

Alpart asks employees in Jamaica to cut back hours

News & Observer, NC - Jan 22, 2009

KINGSTON, Jamaica -- A bauxite and alumina company in Jamaica is asking non-unionized employees to work fewer hours in a new round of cost-cutting.

Alpart has sent letters to nearly 200 workers, including senior management and engineers. Spokesman Lance Neita said Thursday he expects workers to respond by next week.

He did not say what would happen to those who decline the request.

The company already announced it would cut 250 jobs as demand for bauxite dropped amid the global financial crisis.

Alpart's alumina refinery employs about 1,200 people. It is owned by United Company Rusal, the world's largest producer of alumina.

Jamaica is one of the world's largest producers of bauxite, the main ore used in aluminum.

ALUMINUM PRODUCTION: Permanent closure planned for Beauharnois smelter

Canadian Mining Journal, Canada - January 25, 2009

QUEBEC €” As part of Rio Tinto's global efforts to curtail production, the company has announced a further 6% cut to aluminum output. This follows an early 5% reduction. The reductions will have a significant impact on the operations of Rio Tinto Alcan in Quebec.

Rio has said it will close its Beauharnois smelter southwest of Montreal in Q2 2009. That will eliminate 220 jobs and reduce the company's annual aluminum output by 52,000 tonnes. The smelter was commissioned in 1943 and was marked for closure in 2010 because it uses Soderberg technology.

Production at the company's alumina refinery in Vaudreuil is to be cut by 25% or 400,000 tonnes yearly. A 50% cut in output is planned for the cathode plant at Jonquiere

Rio Tinto also announced reductions at its aluminum operations in France, the United Kingdom and Norway. A total of 1,100 workers will be laid off worldwide.

The company's website is at www.RioTinto.com

Novelis Ceases Alumina Production in Brazil

Azom.com - January 26th, 2009

Novelis announced today that effective March 26, 2009, it will cease the production of alumina at its Ouro Preto unit. In future, the plant will purchase alumina through third-parties. Other activities related to the facility, including electric power generation and the production of primary aluminum metal, will continue unaffected.

Alumina (aluminum oxide) is refined from bauxite ore and is the raw material from which aluminum is produced. The Ouro Preto alumina facility is a small scale operation, primarily supplying the plants own requirements.

"The global economic crisis and the recent dramatic drop in alumina prices have made alumina production at Ouro Preto economically unfeasible," said Alexandre Almeida, president of Novelis South America.

The companys second Brazilian smelter, at Aratu, already purchases its alumina on the open market and is not affected by this announcement.

Approximately 290 jobs will be removed at Ouro Preto, including 150 employees and 140 contractors. The remaining 800 jobs at the plant are not affected and will continue to generate taxes and contribute to the economic and social development of Ouro Preto, including such important programs such as the Aleijadinho Foundation, the Smile Project and restoration of the citys historical heritage sites.

Alumina production activities at the plant will end on March 26, 2009, after a sixty day period in order to complete an organized shutdown, respecting the needs of customers, employees and the community.

Alcoa Inc., union agree on severance package

Knoxville News Sentinel, TN - January 26, 2009

Alcoa Inc. announced Monday it has reached an agreement with union officials to offer eligible employees a voluntary severance package as a way to limit the impact of the 450 lay-offs the aluminum company announced weeks ago.

Christy Newman, Alcoa spokeswoman, said more than 250 severance package offers are in the mail to employees who are members of the United Steel Workers Local 309, as part of an agreement reached last week with leaders of that union.

"Some of the details are still being hashed out," Newman said.

The Pittsburgh-based aluminum manufacturer announced the lay-offs Jan. 6, it was cutting 13,500 jobs worldwide, including 450 in Blount County, and shutting down its smelting operation in the face of falling aluminum prices.

Newman said today that one of two Blount County smelting lines has been idled and the other will remain in operation through March to give time to arrange for new metal sources for Alcoas Rigid Packaging Division.

Newman said the idled smelting pots will be maintained in such condition that they can be quickly restarted when market conditions improve and workers called back. She emphasized in a e-mail newsletter today that even after the workforce reductions, Alcoa will still have 1,100 employees in Bount County and will have a $3 billion per year impact on the area economy.

Aluminum prices are falling to six-year low

Purchasing.com, 1/26/2009

Analysts say global recession is bloating aluminum inventories

By Tom Stundza

The global recession, collapsing consumer and corporate confidence and plunging demand for industrial metals already have combined to drop the aluminum prices on the London Metal Exchange (LME) for January to date to 66˘, which would be the lowest monthly price since April 2003.

A consensus forecast of 14 analysts polled by Purchasing.com puts full-year LME aluminum prices at 79˘/lb, as opposed to a previous three-year average of $1.18. And, according to several analyses, an abundance of aluminum on the global market is fast becoming more visible and could depress prices even further than last Fridays close of 59˘/lb on the LME unless producers shut more capacity to wipe out the growing surplus.

"At current prices most production is not profitable," says Fitch Ratings analyst Sean Sexton, who writes he expects production cuts to accelerate in the first and second quarters of 2009. However, analyst William Adams at BaseMetals.com insists that price will increase at some point in the near future. "Although the economic background is weak and is likely to remain that way, the outlook is not all negative," he writes to clients. "Cutbacks are being made, the supply chain has been run down (and) billions of dollars are about to be pumped into infrastructure projects, which will provide orders and the need to restock."

The tonnage in LME warehouses last week was 2.67 million metric tons, which set a new record above the 2.66 million reported in June 1994. Since cutbacks began last August, some analysts' tallies show about 5.8 million metric tons of annual capacity has been curtailed globally. Analysts say LME inventories are heading for 3 million metric tons by the end of this year. At the current weak rate of consumption, that would bring the global surplus to 1.9 million metric tons this year, up from an estimated 1.16 million in 2008, says analyst Dan Smith, at Standard Chartered in London.

Adam Rowley, analyst at Macquarie Bank, sees about 1.3 million metric tons in surplus this year but thats because he predicts even more production cuts by smelters. Some analyses suggest global supply in 2009 will have to be cut from 40 million in 2008 to 30 million to 35 million metric tons to meet a projected 10-15% drop in demand from 39 million in 2008.

Already, aluminum producers United Company RUSAL of Russia and Bosai Minerals Group of China have delayed or changed their multi-million dollar investment plans in Guyana in light of a global drop in prices and demand for metallurgical and non-metallurgical bauxite. Guyana Prime Minister Samuel Hinds tells the media that the investment revisions were due to the fact that aluminum prices are forecast to remain under great pressure in 2009.

Norsk Hydro, the worlds fifth-largest aluminum firm, is considering closing its biggest German smelting and aluminum products fabricating plant after metal prices plunged and electricity costs to operate the factory surged, the German newspaper, Handelsblatt, reports this morning.

End game for Rusal?

Asia Times Online, Hong Kong - Jan 27, 2009

By John Helmer

http://www.atimes.com/atimes/Central_Asia/KA27Ag01.html

Aluminum Association urges to support economic stimulus package

SteelGuru, India - 27 Jan 2009

The Aluminum Association has announced that it is urging members of Congress to support the passage of the economic stimulus bill.

Mr Steve Larkin president of Aluminum Association said that the aluminum industry supplies a broad range of customers in the transportation, packaging and construction markets and this bill will help ease a downward domino effect. He added that "While the bill is far from perfect, we believe that it will provide a needed jolt to restart economic growth and bring confidence back to consumers and businesses alike."

Assuming the stimulus bill receives prompt debate and immediate passage, Mr Larkin said that many economists believe recovery will be measured in years, not months. He added that "We are in one of the most serious economic situations we have had in a generation. Every country in the world has a common problem right now. We have got to address this setback and approach it in a way that lets everyone know we are working towards relief for both businesses and consumers, this bill is one step in the right direction."

(Sourced from www.aluminum.org)

Alcoa eliminates salaried positions

WQAD, IL - Jan 28, 2009 07:05 PM PST

by Kia Carter

RIVERDALE, Iowa -- There are more job cuts in the Quad Cities. Alcoa has now cut dozens of full-time jobs...just days after the aluminum company announced 220 hourly employees will be cut as well. Wednesday, 41 salaried workers were told that it was their last day on the job.

Alcoa says it's restructuring the company and part of that has meant eliminating salaried positions at the plant. Forty-one out of 400 salaried workers were laid of Wednesday, roughly 10 percent of salaried workers. These salaried layoffs were all across the board, affecting management, engineers and administration.

The company says it's seeing a dramatic drop in orders and restructuring salaried employees will help the plant work more efficiently and effectively to meet customer needs.

"While we did a lot of things during the 4th quarter of last year to try and reduce costs and get to a point where we can avoid layoffs, the drop in business has been so significant that we couldn't avoid that and had to take this action," says John Riches, Alcoa spokesman.

As for layoffs of hourly workers, the company is meeting with the union Thursday to begin talks about which hourly employees will be laid off and when.

A company spokesperson says Alcoa will provide career transition and employee-assistance programs for salaried workers laid off Wednesday. They'll also provide severance based on seniority and health benefits.

DJ Rio Tinto In Talks With Chinalco On Cash Injection - Report

MarketWatch (press release) - Jan. 28, 2009

MELBOURNE, Jan 28, 2009 (Dow Jones Commodities News via Comtex) -- Rio Tinto Ltd. (RTP) is reportedly holding talks with Aluminum Corp. of China, or Chinalco, about a possible cash injection and the sale of assets.

The website of The Times newspaper reported Thursday, quoting sources close to the miner, that Rio is in talks with the Chinese group on a multibillion-dollar capital injection and is also discussing the potential sale of some of its assets.

The newspaper said Rio is also talking to other parties, including sovereign wealth funds about selling assets.

Rio Tinto plans to pay down US$10 billion in debt in 2009 and has said it will look to asset sales to help fund the move, as well as cutting jobs and capital spending.

The Times also reported that Xstrata PLC (XTA.LN) is close to announcing a rights issue of up to US$6 billion, citing sources close to the company.

Newspaper Web site: www.business.timesonline.co.uk

-By Melbourne bureau; 61-2-8235-2950; djnews.sydney@dowjones.com

Shares of Century Aluminum plunge on stock sale

Forbes, NY - 01.28.09, 01:04 PM EST

Shares of Century Aluminum Co. plunged by more than one-third Wednesday as the Monterey, Calif.-based aluminum maker said it will sell shares valued at $100 million.

The company's market capitalization is about $224 million.

Century Aluminum (nasdaq: CENX - news - people ) said it will offer a 30-day option to underwriters to buy up to an additional 15 percent of the new shares to cover possible over-allotments.

The company gave no assurance if or when the offering may be completed or its terms.

Net proceeds from the offering will be used for general corporate purposes, Century Aluminum said Tuesday.

Century Aluminum operates plants in Kentucky, Louisiana, South Carolina, West Virginia, Iceland and Jamaica.

Layoffs were announced at two of the plants. St. Ann Bauxite Limited in Jamaica says it will cut 150 jobs - 20 percent of the work force - because of the global financial crisis and a drop in demand for bauxite and alumina.

Riding the aluminum roller coaster

Tyler Star News, VW - 28Jan09

By STEVEN ALLEN ADAMS, Staff Writer

Its been over a month since Century Aluminum in Ravenswood announced a possible complete shutdown by Feb. 15 if aluminum prices dont recover from their nosebleed.

Its been a shockwave with effects reaching Tyler County.

Precision, Inc., of Sistersville and Aleris Recycling in Friendly have both been forced to layoff workers as the aluminum industry worldwide continues to meltdown.

Precision Vice President Ron Larson reports that after a minor week-long shutdown, their employees are back to work. However, they are only operating with just over half of their original workforce.

"The maintenance shutdown ended Jan. 11, and employees returned to work on January 12, 2009," said Larson. "In late December we announced a layoff of 17 people bringing us to currently 21 employed at our West Virginia facility."

Precisions shut down followed recent news about Century Aluminum of West Virginia, which has shut down one potline at its Ravenswood plant and is considering halting all production because of slumping prices.

Century notified workers of the potential shutdown Dec. 17. Federal law requires employers to provide notice 60 days in advance of plant closings and mass layoffs. The plant would cease operations beginning Feb. 15 if aluminum prices dont stabilize and the company cant reduce monthly costs.

The shutdown of one potline reduced production by about 3,540 tons per month. The shutdown was completed by Dec. 20 and about 120 workers were temporarily moved to other plant operations. The plant employs 685 workers.

"As stated previously, Century is a valued customer of Precisions," stated Larson. "In the past Precision has supplied Century with many of their operational items. We are hopeful that a solution is found to keep the plant open and operating."

Despite being a large supplier to Century, Larson says the end of Century doesnt necessarily spell the end for Precision.

"Precision will continue to operate and serve our other customers," said Larson. "We are a metals fabrication and welding shop and are constantly looking for new opportunities to work with customers in other market arenas such as chemical, power, transportation, and mining."

Precision isnt the only plant in Tyler County that is being affected by the volatile aluminum market. Aleris operates a aluminum recycling plant in Friendly. Aleris Human Resources Director Melissa Olmstead says the Friendly recycling plant hasnt been immune.

"Clearly this is a challenging time for our industry and for the economy as a whole," said Olmstead. "Aleris has felt the impact of the global recession and we have responded in a number of ways, including reducing our costs through temporary and permanent layoffs at our facilities. On December 18, 2008, we announced a temporary layoff of 49 employees at our operating facilities in Friendly, WV. Prior to the layoff, we had approximately 95 employees in both facilities."

Aleris International, Inc. is a global leader in aluminum rolled products and extrusions, aluminum recycling and specification alloy production. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the company operates over 40 production facilities in North America, Europe, South America and Asia, and employs over 8,000 employees.

"As for your remaining questions, because Aleris files financial documents publicly with the SEC, I am unable to comment beyond our initial statement at this time," stated Olmstead.

The global recession and lack of demand for aluminum already have dropped prices on the London Metal Exchange (LME) for January to 66 cents; the lowest monthly price since April 2003.

For the moment, the aluminum industry can only watch as the roller coaster continues on.

Jamaica explores sale of bauxite firm stake

Reuters - Wed Jan 28, 2009

KINGSTON, Jan 28 (Reuters) - Jamaica is exploring the sale of its minority share in one of the Caribbean island's bauxite and alumina producers, Prime Minister Bruce Golding said.

Golding told parliament late Tuesday the government was holding talks with potential purchasers of its 45 percent stake in the Jamalco refinery in the south-central parish of Clarendon.

"If suitable offers are put on the table that did not undervalue the assets of the company, we would be interested," Golding said. He did not disclose a possible asking price.

Aluminum giant Alcoa Inc (AA.N) holds 55 percent of the company, which has a production capacity of 1.4 million tonnes of alumina.

The two parties ran the company under a 50-50 share split until the middle of last year when the government gave Alcoa a further 5 percent stake as payback for the company's US$120 million investment to expand the plant's production by 150,000 tonnes.

"We are continuing our discussions with a number of interests but these discussions are at this point exploratory," Golding said.

Jamaica has suffered as a result of plunging prices for aluminum on the world market. Jamaican producers have slashed production and sent workers home because of the downturn.

"The situation is not getting any better and we are going through the worst slump in the bauxite and alumina industry that has ever been seen," Golding said.

The island's largest alumina producer, Alumina Partners of Jamaica, cut production at its 1.65-million tonne facility on the southwest coast by 50 percent and has laid off more than 250 workers. (Reporting by Horace Helps, editing by Jim Loney)

Rio Tinto considers share issue

Reuters - January 28, 2009

MELBOURNE: The global miner Rio Tinto, facing persistent rumors that it might need to sell shares to help pay off $39 billion in debt, conceded Wednesday that an equity raising was one option being considered.

Rio Tinto has been struggling to sell assets. Its shares in Sydney closed Wednesday down 2.9 percent, bucking a 1.5 percent increase in the S&P/ASX 200 index, as investors bet it might have to use a rights issue to raise at least 4 billion Australian dollars, or $2.67 billion, and perhaps double that.

"They will have to continue to sell assets - there's no doubt about that, even with a rights issue," said Tim Barker, resources analyst at BT Investment Management. But a rights issue "would put them in a better position," he said.

Rio Tinto announced sweeping plans in December to cut jobs, reduce capital spending and expand asset sales, aiming to cut its debt by $10 billion this year after its bigger rival, BHP Billiton, scrapped a $66 billion takeover bid, blaming Rio's debt levels and sliding metals prices.

Rio's chief executive, Tom Albanese, had expected to avoid selling new shares to meet its debt reduction target when he announced the plans. But the company backpedaled Wednesday, saying it was looking at all options, including an equity raising.

Today in Business with Reuters

U.S. House passes $819 billion stimulus packageJPMorgan under fire from investorsFed signals low rates will continueRio has $8.9 billion in debt due this October and $10 billion due the following October.

"In order to preserve maximum flexibility for the group, the boards do not rule out the potential to issue equity as one of the options it has available," the company said.

Rio Tinto had aimed to sell $10 billion worth of assets last year, including its U.S. coal unit, as it tried to pay down debt it took on with its $40 billion takeover of Alcan in 2007.

So far it has sold $3.1 billion worth of assets, including its half stake in a Chinese aluminum smelting business sold this week ***. It is still looking to sell its Alcan packaging business and the American coal unit.

Analysts have said the group might sell its stakes in the Australian company Coal & Allied Industries and in the uranium miner ERA. But the company's top energy executive, Preston Chiaro, said in an interview last week there were no plans to sell those businesses.

Three fund managers said a rights issue might be well supported by investors if Rio Tinto raised enough money to allay concerns about its ability to pay down debt and avoid a fire sale of assets in a tough market.

"I don't think it's necessarily the whole solution," said Tim Schroeders, a portfolio manager at Pengana Capital. "They'll be keen not to go too hard in issuing equity, given the depressed share price and people's concerns over what's gone on with BHP."

A main obstacle for Rio Tinto will be how to structure any rights issue, as the company's London-listed shares are trading about 15 percent below its Sydney-listed shares. "You might have to have a massively discounted rights issue to take into account the disparity in prices," said Schroeders, estimating the discount might have to be as large as 25 to 30 percent.

*** (Forbes) Rio said Tuesday it had sold its half stake in a Chinese aluminum smelting venture to partner Qingtongxia Aluminum for $125 million.

DJ METALS MOVER: Rusal Appoints Fyodorov As Engineering Director

MarketWatch (press release) - Jan. 28, 2009

LONDON, Jan 28, 2009 (Dow Jones Commodities News via Comtex) -- Aluminum producer UC Rusal said Wednesday that it appointed Eugueny Fyodorov as the company's director of engineering and construction.

Fyodorov replaces Valery Matvienko who was appointed the first deputy chief executive officer of Norilsk Nickel in December. Fyodorov was previously the director of Rusal's energy division since March 2008.

Fyodorov will be responsible for improving the efficiency of maintenance and repair activities on Rusal's production sites, supervising in-house engineering works and overseeing construction and modernization projects at the aluminum and alumina operations.

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

Crack in huge Alcoa press may move jobs from Cleveland to California

Posted by Sabrina Eaton and Frank Bentayou / Plain Dealer Reporters January 29, 2009 18:45PM

The 50,000-ton hydraulic press at Alcoa Forged and Cast Products in Cleveland is cracked and will need about $68 million in repairs for the plant to keep making parts for the F-35 Joint Strike Fighter jet under a contract it signed with Lockheed Martin in 2007.

Click the URL to see the press : http://blog.cleveland.com/business/2009/01/crack_in_huge_alcoa_press_may.html

The 10-year-contract is worth $360 million to Alcoa, which is battling with its unions over how to pay for the repairs.

Alcoa has asked the unions to make concessions or face the transfer of jobs to a non-union facility in California, according to Cleveland Democratic Rep. Dennis Kucinich.

On Thursday, Kucinich teamed up with House Defense Appropriations Subcommittee Chairman John P. Murtha of Pennsylvania to write Alcoa a letter urging compromise. Murtha's subcommittee oversees all Pentagon spending.

"We understand that reasonable concessions from employees may be in the best interest of the company's financial health," said the letter to Klaus Kleinfeld, Alcoa's chief executive. "However, whether intentional or not, it would be alarming if Alcoa created a false choice for highly skilled and valuable employees who must now choose between losing their jobs and agreeing to concessions that undermine their health and financial stability."

The letter from Kucinich and Murtha says that even though Lockheed Martin and Ohio have offered Alcoa incentives to fix the inoperable press, the company has asked the union to agree to a four-year wage freeze, to a doubling of out-of-pocket health care costs for employees, to contract language that would undermine the union's right to strike, and to a benefit freeze for new hires.

The letter said Alcoa is "reported to be considering" the purchase of Shultz Steel Co., a non-union plant in California, to fulfill its Lockheed Martin contract if the union won't grant concessions.

"We further understand that if Alcoa fixes the inoperable press, Lockheed Martin will extend the duration of the subcontract for an additional 10 years and the State of Ohio will offer multi-million dollar tax incentives," the letter said.

Kevin Lowery, Alcoa's director of corporate communications, said the plant has kept to its work schedule on F-35 parts forgings by using a range of presses available at the Cleveland facility. "That said," he added in a phone interview, "we want to get that press back up and working, and we are looking at a number of different options to do that."

He added, "We are committed to continuing the work with all the different stakeholders to find the best solution for the business, our employees and the community at large."

Jeff Judson, president of UAW Local 1050, which represents the plant's workers, could not be reached for comment Thursday afternoon. In a recent note to UAW members, Judson said Alcoa sought a four-year contact extension around the Christmas holidays, but discussions reached an impasse because "some of what they were asking for was too much."

"As always, the UAW is willing to listen," Judson said in his Jan. 27 update to Local 1050 members. "As always, your Union Leadership is committed to finding ways to secure jobs in OUR plant and to continue to help make Cleveland Works profitable. We are not going to sit back and watch our jobs disappear."

Alcoa already said it plans to cut costs dramatically. This month the aluminum company announced its first financial loss in six years, the result of plunging industrial demand worldwide. Alcoa reported a fourth-quarter loss of $1.19 billion or $1.49 a share, compared with a $632 million profit, or 75 cents a share, in the same period a year earlier.

Kleinfeld said Alcoa has embarked on "wide-ranging measures" in 2009 that include closing production facilities, terminating as many as 13,500 workers worldwide and selling some of its business units in order to downsize the corporation in light of slower sales.

The 1,250 employees at Alcoa's Forged and Cast Products facility in Cleveland were relieved to hear after the first of the year that relatively few local workers would lose their jobs. The plant, which makes auto and truck as well as some aviation wheels in addition to the lightweight frame members for the F-35, laid off 100 workers Jan. 7, including 50 salaried and 50 hourly, union employees.

Thursday it said 29 more union workers lost their jobs this week and received the same contractual severance package that the earlier dismissed workers received. A spokeswoman for the Cleveland plant did not say whether there would be additional local layoffs.

When Alcoa announced its cost-cutting efforts, it said it would reduce its then 104,000 global employment by 13 percent and also end jobs for another 1,700 contractors.

The company had indicated that the Cleveland jobs associated with the F-35 work were secure. Alcoa won an $850,000 commitment in Ohio workplace grants to help defer the cost of a $24 million capital improvement program and $400,000 for employee training.

Workers disappointed at disinvestment in Venezuela's aluminum companies

El Universal, Venezuela - 29 Jan 2009

After gathering in the aluminum company Bauxilum in the Venezuelan southeastern city of Puerto Ordaz, on Wednesday afternoon, a group of workers and union leaders of the aluminum industry headed for the administrative headquarters of the Guayana's Venezuelan Corporation (CVG) to demand the implementation of a recovery plan for this basic industry towards the domestic development.

The workers wrote slogans in their vehicles demanding "Investments" and showed their concern and confusion about the attitude of the local and national governments with respect to the crisis of the aluminum companies pertaining to CVG (Alcasa, Venalum, Bauxilum and Carbonorca.)

Henry Arias, a worker of Alcasa and former union leader, said that during the 10 months that Minister of Basic Industries and Mining Rodolfo Sanz has been in office there have been not investments at all.

Corus sells last aluminum smelters to PE firm news

domain-B, India - 23 January 2009

Corus, the European steel arm of Tata Steel has signed a share purchase agreement to sell two aluminum smelters to Briand Investments B.V., an affiliate of London-based Klesch, one of the biggest private-equity firms in the metals industry at a time when prices and demand for the metal has fallen.

The two smelters, sold for an undisclosed sum, are located in Delfzijl in the Netherlands, and Voerde, Germany, and have combined annual production of more than 250,000 metric tons of primary aluminum.

Corus said the transaction remains subject to conditions being fulfilled by both the parties.

In August, Corus said that it wanted to concentrate on its core business of steel making and had initiated talks with Klesch to sell its aluminum subsidiaries in the Netherlands and Germany.

The aluminum smelters were the last remaining aluminum business with Corus as it had sold its aluminum rolled products and extrusions business to Aleris in 2006 for ,¬826 million.

Klesch owns Zeeland Aluminium Company in Vlissingen, the Netherlands, which produces 260,000 tonnes of primary aluminium metal per annum and is currently building a 725,000 tonnes primary aluminium smelter in Libya.

Russian metals companies owe USD 10 billion to VTB

SteelGuru, India - January 30, 2009

Bloomberg cited Mr Alexei Kostin CEO of Russian Metals Company as saying that OAO Mechel, Magnitogorsk Iron & Steel and other Russian metals companies have borrowed about USD 10 billion from state controlled bank VTB Group.

He said that metals producers are among Russian companies that have turned to state backed banks for funding after lending dried up as the credit crunch caused the countrys worst economic crisis in a decade. The government is considering proposals from owners of metals companies to convert debt owed to state-operated banks into shares.

Mr Kostin said that "The state, as I know, is interested in consolidation because even from the point of view of assistance from the state, it is easier to give help to a few large holdings than separate companies."

Billionaires Mr Vladimir Potanin, Mr Oleg Deripaska and Mr Alisher Usmanov have proposed to the government competing schemes for creating a national mining champion to gain access to state cash for repaying debt amid a slump in commodity prices. Both Mr Deripaska and Mr Usmanov have urged the government to become a shareholder in the new company based on OAO GMK Norilsk Nickel, the worlds biggest producer of nickel and palladium.

Rusal, Russian newspaper Kommersant said that Mr Deripaska has asked the government for USD 6 billion in return for a 15% stake in aluminum producer United Company. Mr Alisher Usmanov made a similar offer regarding iron-ore company OAO Metalloinvest.

Mr Usmanov said that Metalloinvests debt is about USD 5 billion, while Usmanovs personal loans are about USD 3.5 billion. His comments were confirmed by his spokeswoman, who declined to be named. Usmanov said hes willing to pledge more Metalloinvest shares in addition to as much as 12% stake already held by banks as collateral.

Mr Dmitry Pumpyansky owner and chairman of TMK said that he wouldnt rule out joining a merger of some of the nations biggest metals and mining companies provided the combination had an economic justification.

Mr Vladimir Putin PM of Russian said that Russian metals companies should merge only to enhance competitiveness and not simply to consolidate debt. Mr Putins deputy Mr Igor Shuvalov said that owners of companies seeking emergency funding from the government should dip into their own pockets first because the state wont help everyone.

(Sourced from Bloomberg)

Dick Evans: Adding a power sales strategy

Globe and Mail, Canada - January 30, 2009

http://business.theglobeandmail.com/servlet/story/RTGAM.20090130.wdecision0131/BNStory/robAtWork/home

ANDY HOFFMAN Globe and Mail Update

January 30, 2009

After garnering the largest buyout offer in Canadian corporate history, you would think Dick Evans would be ready to kick back and relax. Instead he's taken on what is certain to be a major headache, accepting the job of chairman at struggling pulp and paper producer AbitibiBowater Inc. [ABH-N]

As chief executive officer of Alcan, Mr. Evans attracted a stunning $38.1-billion (U.S.) offer from Rio Tinto PLC in 2007 that capped a crowded auction for the Montreal aluminum stalwart at the height of the metals boom. Alcan shareholders weren't the only ones who profited handsomely. Mr. Evans received more than $50-million in cash and stock.

After announcing his departure from Rio this month, it would have been no surprise if the 62-year-old had stepped quietly away from business, content with his victories over a four-decade career.

Instead, he opted for another challenge, and it is hard to imagine a bigger one than AbitibiBowater. Its stock has nosedived 96 per cent in a year.

'We can transform this back into a strong ongoing concern," says Dick Evans

The Montreal company has been sideswiped by plunging demand for newsprint. To make matters worse, it is mired in a crippling liquidity crisis with more than $650-million in debt repayments set to come due this year. And it has ticked-off Newfoundland and Labrador's wildly popular Premier Danny Williams, who decided to expropriate the company's hydro assets and timber rights in the province after it shut down its mill in Grand Falls.

So why, exactly, does Dick Evans want to get in the middle of this mess? "That's a good question. It's one that my wife has asked more than once," he says with a laugh.

What now?

Worth more than $26 (Canadian) each just a year ago, AbitibiBowater's shares now fetch less than $1 on the Toronto Stock Exchange. Mr. Evans knows the situation is dire, but he is optimistic that with the right plan AbitibiBowater can avoid filing for protection from creditors.

"Here's a company that is, no question, on the brink. That's what the market says," he concedes. "If we can sort through the financing and get it stabilized and, I think, if there is a real contribution from the shareholders, the bondholders, the employees and the communities in which we operate, we can transform this back into a strong ongoing concern."

As chairman, Mr. Evans won't be quarterbacking AbitibiBowater's restructuring plan. That job goes to CEO David Paterson. He will, however, be playing a key role as the company tries to right itself. "It's going to probably be more time than normal for a non-executive chairman because of the challenges," the U.S. native says.

AbitibiBowater's core business is undergoing a radical shift. The global economic downturn, coupled with a move by readers to online news content, has sapped demand for newsprint.

The newsprint consumption of U.S. dailies skidded 23.5 per cent in December from the year before. Raymond James & Associates analyst Daryl Swetlishoff called the figures "abysmal" in a report downgrading AbitibiBowater to a sell.

The company won't be able to put profit toward its massive debt load. There won't be any. BMO Nesbitt Burns analyst Stephen Atkinson is forecasting a $523-million (U.S.) net loss for 2008 and a $199-million shortfall this year.

It is reportedly in talks to refinance some near-term debt, but the company will have to do more. "This whole industry is going through a shakeout. There will be some survivors. Our objective is to have AbitibiBowater be one of those survivors," Mr. Evans says.

With options dwindling, he says AbitibiBowater must sell assets. Not the derided pulp and paper assets, but the company's hydropower facilities.

Hydropower to the rescue?

The parallels between Alcan and Abitibi might seem incongruous at first; making paper and making aluminum are two very different businesses.

Like Alcan, however, Abitibi has its own power assets to generate electricity for its plants. But the power demands for pulp and paper are far less and AbitibiBowater can afford to unload some of its power plants.

"We should really divest our valuable hydro assets to someone that places a much higher long-term value on it," Mr. Evans says.

Power assets have shown impressive resilience in the market meltdown, holding their value over the last six months.

"The industry has changed. It's natural to split the integrated value chain here," he says.

AbitibiBowater has already struck a deal to sell a 75-per-cent interest in power assets in Ontario for proceeds of about $197.5-million.

Expected next on the block are hydropower assets in Quebec; the company has power facilities in Baie-Comeau, Dolbeau, Gatineau and Jonquière.

Mr. Evans knows both the commercial and political aspects of hydropower. Before its sale to Rio Tinto, Alcan negotiated a deal with the Quebec government, giving it access to more power in return for guaranteed investment in the province. "Certainly my knowledge of hydro assets and working with the Quebec government becomes a plus," he says.

AbitibiBowater is a major employer and the province is "sympathetic" to its troubles, Mr. Evans points out. Quebec is, of course, a potential buyer for the power facilities.

"Obviously, doing a transaction with Quebec on hydro assets could be a win-win for both sides," he says.

What about Danny?

An astute navigator of Quebec politics, Mr. Evans is a relative novice when it comes to Newfoundland and its populist Premier Danny Williams. He expects a deal can be reached that will see the province purchase AbitibiBowater's power assets there for a fair price.

"If called upon as the chairman of the company to try and facilitate something, I certainly will," he says.

He isn't afraid of playing hardball. Don't expect the company to reopen the plant in Grand Falls, he warns. And if the two sides can't come together, the company won't be afraid to take the case to court.

"I've never met Mr. Williams. So I know him only by reputation. I think my assessment of the situation there is that AbitibiBowater has a very strong legal and trade case. This move, obviously, is politically popular in Newfoundland, but it does, we feel, violate both trade and property rights," he says.

If AbitibiBowater can raise enough cash through asset sales to get its financial house in order, Mr. Evans says the company will be poised to benefit when, and if, the paper industry turns around.

"As difficult and tough as it is and with all the problems we have as a company, the upside is greater than the downside."

DJ Rio Tinto Eyes Aluminum Plant In Colombia - Govt

MarketWatch (press release) - Jan. 30, 2009

BOGOTA, Jan 30, 2009 (Dow Jones Commodities News via Comtex) -- Anglo-Australian mining giant Rio Tinto PLC (RTP) is considering constructing an aluminum plant, the government's press agency SNE said Friday.

Richard Evans, Rio Tinto's chief executive officer, held a meeting with Colombian President Alvaro Uribe and Trade Minister Luis Guillermo Plata in Davos Switzerland, SNE said.

Evans said a Rio Tinto delegation is currently visiting Colombia exploring investment opportunities.

An official at the government's mining planning unit, UPME, said the aluminum plant will be located in the state of Cordoba. The plant will generate its own electricity.

Full Story at:

http://web.presidencia.gov.co/sp/2009/enero/30/03302009.html

-By Diana Delgado, Dow Jones Newswires; 571-6955450; diana.delgado@dowjones.com

(END) Dow Jones Newswires

01-30-09 0849ET

Copyright (c) 2009 Dow Jones & Company, Inc

Vekselberg Says Rusal May Sell Shares to Refinance (Update2)

Bloomberg - Jan. 30, 2009

By Lyubov Pronina and Yuriy Humber

United Co. Rusal may sell shares in a private placement as it seeks to refinance about $16.3 billion of debt, billionaire shareholder and company Chairman Viktor Vekselberg said.

The Russian company owes $7 billion to foreign banks, about $6.5 billion to domestic lenders and about $2.8 billion to Mikhail Prokhorovs Onexim Group, Vekselberg said today in an interview in Davos. Rusal is in "active" talks with creditors and may agree on a refinancing of bank loans within three months, he said.

Vekselberg, 51, said Rusal, Russias largest aluminum company, will cut output as much as 10 percent and freeze investment for about three years. Oleg Deripaska, the companys majority owner, returned as Rusals chief executive officer earlier this month after the lightweight metal fell to a five- year low.

Profit may slump 88 percent to $476 million this year, according to ING Groep NV. Aluminum must trade at $1,700 a metric ton for Rusal to service its debt and pursue new projects, Vekselberg said. He forecast prices will reach $2,000 this year.

Aluminum for delivery in three months was 1.2 percent lower at $1,350 a ton as of 12:18 p.m. on the London Metal Exchange.

IPO Plan

Rusal plans to repay Prokhorov in cash and Rusal shares, Vekselberg said. Russias government may act as guarantor for debts to local and foreign banks, he added.

"Russias government is not looking today just to give money to business," Vekselberg said in a separate Bloomberg Television interview. "They are trying to create the right environment. There are many instruments. One is a state guarantee for refinancing with local or foreign banks."

The turmoil in financial markets means Rusal probably wont hold an initial public offering this year, Vekselberg said.

"A private deal is possible, but it is early to talk about it," he said.

Closely held Rusal was forced to seek a $4.5 billion bailout from state-owned Vnesheconombank in October to refinance loans used to buy 25 percent of OAO Norilsk Nickel, Russias biggest metals and mining company. Rusal had sought a merger with the nickel company.

Merger Proposals

Deripaska and billionaire investors Vladimir Potanin and Alisher Usmanov this month proposed to the government separate plans to create a consolidated mining company. The merged entity would get access to state funds to repay debt. Deripaska and Usmanov urged the government to become a shareholder in the new company, which would be formed around Norilsk. Deripaska didnt include Rusal in his merger proposal.

Rusal needs to "restructure" before it can seek a merger with other metals companies, Vekselberg said. The companys indebtedness isnt the only reason why its unwilling to take part in the consolidation, he said.

"Of course its not only because of debt. Indeed, because of the debts it would have been good to participate," he said. "At present I dont see the point or the industrial logic behind Rusal taking part."

Russian metals companies should merge only to enhance competitiveness and not simply to consolidate debt, Prime Minister Vladimir Putin said Jan. 27.

To contact the reporters on this story: Lyubov Pronina in Davos via the Moscow newsroom at 7732 or lpronina@bloomberg.net; Yuriy Humber in Moscow at yhumber@bloomberg.net

Aluminum Association to sponsors cast shop session

SteelGuru, India - Jan 31, 2009

Aluminum Association has announced that it will sponsor the Cast Shop Session on Environment, Health and Safety as part of this years TMS 2009 Annual Meeting & Exhibition. The event will be held on February 17th 2009 at the Moscone West Convention Center in San Francisco.

Plant managers at Cast Shop Supervisors as well as Cast Shop Personnel are encouraged to attend.

Mr Steve Larkin president of Aluminum Association, Mr Marshall Wang sustainability specialist and Mr Seymour Epstein technical consultant will all make presentations during the session.

In addition, a variety of Aluminum Association members are set to speak including Mr Corleen Chesonis and Mr David DeYoung, both of Alcoa and Mr Denis Bernard of Rio Tinto Alcan.

The Aluminum Association has arranged these sessions with TMS every other year for more than a decade. In previous years, the annual show has brought nearly 4,000 professionals from 68 countries, making it a great opportunity to network.

(Sourced from www.tms.org)

Broken Alcoa Inc. press called critical to Cleveland Works

The Plain Dealer - cleveland.com, OH - Saturday, January 31, 2009

Union fears impact on Cleveland jobs

Frank Bentayou, Plain Dealer Reporter

A broken 50,000-ton Mesta Machine Co. press sits idle in its own five-story building at Alcoa Inc.'s Cleveland Works.

But it also rests at the center of a tense debate that could cost Northeast Ohio more than 1,000 jobs and more than $200 million a year. That's the estimated economic impact on the region of the aluminum company's forged and cast products operation on Harvard Avenue.

Arguments in the debate have been shooting across a sprawling triangle with points in Cleveland; Washington, D.C.; and Pittsburgh, where Alcoa is based.

The issue surfaced in late September, when a crack in the press forced its shutdown. Alcoa and local union leaders agree that the plant has been able to continue meeting deadlines for its big jobs by employing other presses at the Cleveland Works. But a strong feeling persists that the idled machine is key to the foundry operation's big-money manufacturing tasks - and to the job security of its roughly 1,250 workers.

This week, Cleveland Democratic Rep. Dennis Kucinich and Rep. John Murtha, Democrat of Pennsylvania and chairman of the House Defense Appropriations subcommittee, told Klaus Kleinfeld, Alcoa's chief executive, of their concern that the company might not be willing to invest the $68 million needed to fix the press and preserve jobs here. They also urged Alcoa to consider the welfare of its employees in making its decision about how to proceed.

Both the company and the local union leadership are concerned about how Cleveland Works can continue making big, delicate and expensive forged aluminum parts when Alcoa's main tool in their manufacture is cracked and out of operation.

The parts include lightweight but super-strong bulkheads for one of the most sophisticated war machines in the world, the F-35 Joint Strike Fighter jet. The Cleveland plant has a contract to forge and machine the units for Lockheed Martin Corp., the prime defense contractor. The multiyear contract is worth more than $360 million.

"That press is the backbone of this facility," according to Jeff Judson, president of United Autoworkers Local 1050, which represents 790 active workers at the plant. Alcoa laid off 70 UAW workers in recent weeks, as the company strives to cut 13 percent of its global work force of more than 100,000. The company also cut about 50 salaried employees in Cleveland.

Judson's concern is that the company won't spend the estimated $68 million to fix the press, opting instead to move the F-35 manufacturing operations to another site. And he's concerned that if Alcoa does repair or replace the machine, the company will seek to take a big portion of its cost out of the salaries and benefits of the union work force in Cleveland.

Kevin Lowery, Alcoa's corporate spokesman, emphasized that the company has made no decision about how to proceed. "That is why we are exploring what the possibilities might be in how we might replace the press or go about addressing how we could make products different ways."

He said he welcomes any suggestions but indicated that the company may be reluctant to commit $68 million to repair a machine that is more than a half-century old. In 1981 the American Society of Mechanical Engineers dedicated the Mesta press as a national historic mechanical engineering landmark.

What are the options without making such expensive repairs to the hulking antique machine?

"You're asking me to look into a crystal ball and make predictions," Lowery said. "It's times like these when, if you're a long-standing member of the community, you'll seek those people who might come up with solutions for us. We're open to any suggestions."

Judson said Local 1050, as well, is "willing to listen to what the company comes up with. We understand that the plant has a very significant impact on not just our workers but the whole region. But we have to try to protect jobs - UAW jobs and salaried jobs as well."

To reach this Plain Dealer reporter: fbentayou@plaind.com, 216-999-4116