AluNews - May 2009

Alcoa continues to cut costs

Pittsburgh Tribune-Review - Saturday, May 2, 2009

Continuing efforts to cut costs, Alcoa Inc. reached an agreement with unionized employees in Quebec that reduces hours worked and keeps all production lines running at the Becancour smelter. It also agreed to sell its wire harness and electrical distribution unit.

Employees at the Quebec facility voted for a three-year contract that gives them unspecified salary increases in exchange for a 15 percent reduction in working hours, a United Steelworkers union official said. The agreement averts a shutdown of one of three aluminum production lines at Becancour, which is 75-percent owned by Alcoa.

Alcoa will sell its electrical distribution unit to private equity group Platinum Equity LLC, of Bevery Hills, Calif., for undislosed terms.

The unit operates in 13 countries and employs 17,500 workers, and is the largest part of the Electrical and Electronic Solutions unit, which Alcoa said in January it would sell.

CEO Klaus Kleinfeld has said the company will save $400 million a year by reducing its payroll and trimming other costs. Alcoa last month reported a $497 million net loss, capping its first back-to-back quarterly losses since the three months ended in March 1994.

Aluminum prices have declined 46 percent in the past year on the London Metal Exchange. Alcoa has responded by slashing 13,500 jobs, seeking pay cuts from salaried and hourly workers and idling about 20 percent of production since the second half of 2008.

Intalco says BPA's offer not good enough to keep Ferndale smelter running

Bellingham Herald - Saturday, May 2, 2009

JOHN STARK - THE BELLINGHAM HERALD

The grim prospects for the Alcoa Intalco Works aluminum smelter and its 500 jobs got a bit grimmer Friday, May 1, when the company announced that a Bonneville Power Administration proposal would not provide enough electric power to run the plant efficiently.

The BPA proposal came two weeks ago, as a counter-offer to an earlier proposal from Alcoa suggesting that the company pay a variable rate for the power supply it needs to make aluminum at the facility west of Ferndale.

The counter-offer, developed by BPA staff, accepted the notion of a power price that would be linked to the price of aluminum in world markets. But the BPA proposal offers half the quantity of power that Alcoa is seeking. The price break when aluminum prices are low - as is the case today - also would be far less than what Alcoa requested.

BPA is the federal agency that markets the low-cost power produced by federal dams on the Columbia River system. Decades ago, when that cheap power was plentiful, aluminum smelters sprang up across the region, because they need vast amounts of power to produce the lightweight metal.

Today, BPA no longer has enough cheap power available to meet regional demand. As a result, most of the region's aluminum smelters shut down years ago. Now, BPA officials must decide if Alcoa's Intalco smelter should continue to have access to that power, and on what terms.

In formal testimony filed Friday with BPA as part of a rate-making process to determine power prices that would take effect Oct. 1, Alcoa representative Jack Speer said Intalco needs both the bigger price break and the larger power supply to operate economically under today's conditions.

In an interview, Intalco Plant Manager Mike Rousseau put it bluntly.

"We're still evaluating, but our initial blush is, that thing is very close to being dead on arrival," Rousseau said about the BPA proposal.

Intalco operates today at about two-thirds capacity. The company had wanted a BPA commitment to provide enough affordable power to keep operating at that level. Instead, the BPA staff offered only enough for operation at one-third capacity.

Rousseau said that's not good enough: The smelter can't be operated efficiently at that level. Cutting back to one-third capacity also would mean deep cuts in payroll, he said, and there is no likely source of low-cost power for the smelter other than BPA.

"When we saw the BPA (staff proposal) we were very disappointed and very concerned," Rousseau said.

But he noted that the federal agency's staff doesn't have the final word. That will come this summer from BPA Administrator Stephen Wright, who is scheduled to issue a draft proposal for BPA power rates June 23, followed by a comment period and final decision July 21.

Rousseau said BPA officials are still requesting additional information from Alcoa, and that could be a hopeful sign. He hasn't given up hope that Wright will decide to offer Alcoa a better deal than what his staff recommended.

Wright visited the smelter in September and heard the pleas from its workers. He expressed a willingness to try to work out a power supply deal that would give their employer a chance to remain viable.

But Wright also hears very different messages from other BPA customers: the public utilities elsewhere in the region that distribute BPA hydroelectric power to homes and businesses in their service areas. Representatives of those utilities insist that lower-cost power for Alcoa means higher rates for the industries they serve.

"While we cannot state with assurance that this will result in a net loss of jobs throughout the region, it can be stated that at best it is a break-even proposition trading jobs in one community for those in another," according to written testimony submitted to BPA by Western Public Agencies Group, representing several small public utilities.

With conditions in the aluminum industry remaining bleak, is there any assurance that Alcoa will keep the Intalco smelter operating until the company gets the last word from BPA's boss?

"There's no assurances on anything right now," Rousseau said. "No guarantees."

For Whatcom County, the loss of Intalco jobs would be a heavy blow.

Western Washington University's Center for Economic and Business Research estimates that the indirect impact of an Intalco closure could eliminate another 1,000 jobs on top of the 500 that would be lost at the smelter. That would push the county's unemployment rate to 10.4 percent.

Meanwhile, Pittsburgh-based Alcoa, the world's largest aluminum producer, remains under pressure to cut costs to trim its losses. The company reported a loss of $497 million in the first quarter of 2009 and has already cut its aluminum production by one-fifth.

But industry analysts say that there is still too much aluminum in world markets, as a global recession saps demand.

Reach JOHN STARK at john.stark@bellinghamherald.com or call 715-2274.

Koppers Completes Construction Projects in China

Earthtimes (press release) - Fri, 01 May 2009

PITTSBURGH, PA -- 05/01/09 -- Koppers Holdings Inc. (NYSE: KOP) today announced the completion of construction and commissioning of a 300,000 metric ton capacity tar distillation plant for its new 30% owned joint venture in Hebei Province, China, known as Tangshan Koppers Kailuan Carbon Chemical Company Limited ("TKK"), as well as the completion of a project to expand the capacity of its existing 60% owned tar distillation plant in Tangshan, China, known as Koppers (China) Carbon and Chemical Co., Ltd. ("KCCC"), from 150,000 metric tons to 200,000 metric tons. Koppers provided the technology and the commissioning teams for both projects. This expansion of capacity is intended to meet the anticipated increasing demand for high-quality vacuum distilled pitch required by the aluminum and graphite industries in China and various export markets including the Middle East, India, Russia, South Africa, Australasia and the Americas.

Walter W. Turner, President and CEO of Koppers, said, "We are pleased that the construction and commissioning of TKK and the expansion of KCCC have been completed, and we are excited about the additional production that will result from the completion of these projects. We believe that this added capacity will further enhance our abilities not only as a global supplier to the aluminum industry but also increase our footprint in the growing domestic Chinese markets."

Rio seeks Guinea mining contract security

SteelGuru - Friday, 01 May 2009

Reuters quoted Rio Tinto's top executive in the West African country said that Guinea risks jeopardizing the mining investments that form the backbone of its economy if it does not reassure companies their contracts are secure. Rio, which has already spent USD 450 million on exploration at the Simandou iron ore project, hopes the review will resolve a dispute over its concession.

Mr David Smith CEO of Rio Tinto's Guinean operations said that only when the review is complete will firms have security of tenure. Mr Smith said that "Lots of mining companies are pulling back capital expenditure. Companies will make decisions based on lots of factors and one of those will be the risk of the project. For the government of Guinea, there's a real incentive to get on with the things they're doing so the risk factor is decreased. If not, Guinea could suffer more than others."

Mr Smith said that the promised review has not yet begun but the government has taken the first steps toward establishing a review committee. He said that "We welcome a review of mining contracts it will put everything out in the open. We are going through a period of some legal uncertainty. A company that is going to invest a lot of money wants certainty about tenure."

Mr Jordan Feilders spokesman of Rio said that "Restoration of our concession will send a signal to the investment community that large reputable investors in Guinea can have certainty of investment. We need the full concession to make it work as per our design."

Guinea's military leader Captain Moussa Dadis Camara, who took power last December in the world's biggest bauxite producer and a potentially huge source of iron ore has promised to review mining contracts and has repeatedly threatened to cancel ones it finds unacceptable. Many mining projects in Africa and elsewhere have been scaled back or shelved as metals prices have crashed in the past nine months and Guinea, one of the world's poorest countries, can ill afford to lose revenue from its mineral exports.

(Sourced from Reuters)

Aluminum analysts see no quick end to glut

Purchasing.com - 5/4/2009

Tumazos, Adams say cutbacks needed to boost prices

By Tom Stundza

Aluminum analysts reiterated their call for global production cuts to reduce the glut and prop up aluminum prices in their presentations at the recent Institute of Scrap Recycling Industries conference in Las Vegas.

Various news service reports report John Tumazos of Very Independent Research in Holmdel, N.J., and William Adams of BaseMetals.com in London projecting that demand and price recovery on the London Metal Exchange (LME) will be slow so the supply surplus has to shrink for prices to rise. A report on subscription news service Platts.com says that both analysts see little upside in near term demand and called on producers to take more capacity offline. For the full year, Adams forecast aluminum demand will drop by 6% while Tumazos sees full-year demand falling 15%.

"We entered the year awash with metal at a time when demand was slowing rapidly, so we can't expect a quick recovery," says Adams. "It will be especially slow because of the global economy." Tumazos adds the key indicators looking forward will be restraint in aluminum smelter output, the cancellation of aluminum plant construction--especially if new automotive sales and housing construction worldwide rebound slowly.

Adams projects an aluminum surplus of 2 million metric tons this year so the LME price will average 59¢ in 2009, well below the 74¢ average price of aluminum from 1980-2008. Today's prices are 20% below the long-term average, he says, adding that "the outlook is very hazy. Don't expect a quick fix or a strong rebound." Tumazos is more bullish on prices, projecting the 2009 average at 63¢/lb, rising to 70¢ in 2010.

Alcoa To Cut Suriname Alumina Refinery Output By 40%

CNNMoney.com - May 05, 2009

SYDNEY -(Dow Jones)- Alcoa Inc. (AA) will cut production capacity at its Paranam, Suriname alumina refinery by 40% or 870,000 metric tons because of weak market conditions, the U.S.-based aluminum producer said in a statement dated Tuesday.

The refinery is part of the Suriname Aluminum Company LLC (Suralco) bauxite and alumina joint venture operation, where 55% stakeholder Alcoa last week reached an agreement to buy out BHP Billiton Ltd.'s (BHP) 45% stake for an undislcosed sum.

"For the immediate future...we believe both the country and private industry are best served by deferring further bauxite extraction and alumina production until additional in-country bauxite resources are developed and market conditions for alumina improve," said Peter de Wit, managing director of Suralco.

The refinery and mining operations employ 1,150 permanent staff and additional contractors. Alcoa didn't give details of job losses.

BHP and Alcoa local subsidiaries have been in a mining and refinery joint venture in Suriname since 1984.

The deal is expected to close in June, subject to regulatory approvals.

Texarkana’s Alcoa plant to stop operations indefinitely July 5

Texarkana Gazette - Published: 05/05/2009

By: Kristie Avery

Texarkana’s Alcoa North American Rolled Products plant will be idled indefinitely, a company official said Tuesday.

Gwen Schnipper, communications specialist for Alcoa’s Texarkana mill, said the idling is in no way a closure and is due to the lack of volume in the aluminum business and the downward economy.

The aluminum products manufacturer made the announcement to employees at a 7 a.m. meeting today.Workers were sent home for today and will return Wednesday. They are scheduled to work until July 5, when the plant’s idling is scheduled to begin.

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Labrador Aluminum Smelter Still Under Consideration: Premier

VOCM - May 5, 2009

Premier Danny Williams says the province is continuing to examine the possibility of an aluminum smelter for Labrador, for a time when commodity prices pick up. Williams says it's all part of the plans for the Lower Churchill development. Opposition Leader Yvonne Jones says there was much speculation of a pending announcement late last year, after Williams travelled to Brazil to meet with the owners of Vale Inco and Voisey's Bay. She questioned the Premier in the House of Assembly.

Meridian, Rio Tinto In Dispute Over Outage Costs

Scoop.co.nz - Wednesday, 6 May 2009

Press Release: NZ Energy and Environment Business Week

New Zealand Energy & Environment Business Week reports Meridian Energy and Bluff smelter owner Rio Tinto have reached for their lawyers over who should pay the very substantial costs of the transformer failure which has reduced electricity demand and aluminium output by one-third from Rio's Tiwai Point aluminium smelter.

Tiwai Point consumes around 15% of all electricity produced in NZ and is supplied on a "take or pay" basis by Meridian Energy, which manages the Manapouri catchment and generation assets, built largely to service the smelter. Neither company will comment on the dispute, which involves Rio Tinto invoking "force majeure" clauses in their contract for power from Meridian, following the failure of the decades-old transformer.

In a statement to NZ Energy & Environment Business Week, smelter owner Rio Tinto Alcan said it has "an extremely good relationship with Meridian Energy and works closely with them on all matters in relation to the energy supply contract. That contract and discussions relating to it remain confidential to Meridian and Rio Tinto."

The transformer failed last November, removing on average 194MW of demand from the national grid. Rio may be in no hurry to resume production despite the reduction in output of aluminium from the smelter, which produces some of the world’s purest supplies of the metal.

Last month, Rio’s bauxite and alumina president Steve Hodgson announced the company would slow the expansion of its Yarwuna refinery and reduce bauxite production at its Weipa mine in response to "a sharp fall in alumina and aluminium prices." Hodgson says there’s been little improvement in prices even after the industry cut capacity by 21m tonnes a year. He says "at current prices around 70% of the industry is currently operating at a financial loss."

Camec discovers 439Mt bauxite resource in Mali

Creamer Media's Mining Weekly - 5th May 2009

By: Mariaan Webb

JOHANNESBURG (miningweekly.com) – London-listed Central African Mining & Exploration Company (Camec) has discovered an inferred bauxite resource of 439-million tons in Mali, the company announced on Tuesday.

The Faléa resource, which complies with Australia’s Joint Ore Reserves Committee, has an available alumina content of 37,7% and reactive silica of 1,9%, equating to 152-million tons of smelter-grade alumina.

Camec CEO Andre Groves said that bauxite grades and resource size of the Faléa deposit warranted further exploration.

He added that Faléa had a projected smelter-grade alumina cost of $182/t, which puts the resource in the lower quartile of the cost curve.

"With the Chinese pursuing a strategy of self-sufficiency in aluminium supply to meet the demands of intensive urbanisation, and Chinese local production of bauxite/alumina being generally in the higher end of the cost curve, there is increasing demand for new cheaper capacity," he said in a statement to the London bourse.

The company would undertake a prefeasiblity study for the development of a large-scale refinery project, based on the Faléa bauxite district, once its commitments to infrastructure development were assured.

Consultants Butty, Herinckx & Partners, which completed the Jorc-compliant resource, stated that a refinery using the low-cost, low-temperature Bayer Process to produce three-million tons a year of smelter-grade alumina could be built at the deposit.

Faléa is located about 80 km north-west of steel giant ArcelorMittal’s Faleme iron-ore project in Senegal, which should lead to "significant" infrastructure benefits.

Camec said that its cooperation with ArcelorMittal was expediting the promotion of regional infrastructure needs with both the Mali and Senegalese governments.

Trinidad gets Chinese funds for smelter

Stabroek News - Thursday, May 7, 2009

Chinese financing has cleared the way for Trinidad and Tobago to move ahead with construction of its first aluminum smelter plant. Officials said that under the deal, China agreed to provide the twin-island nation with US$112 million.

That’s the balance of a $300 million concessional loan for construction of the 125,000 tonne per year facility.Earlier this year, Venezuela-based aluminum producer Sural, which had a 40 percent stake in the project, withdrew due to financing problems.

The Trinidad and Tobago government, which owns the remaining 60 percent, has said it is looking for a partner.

Reactions to smelter plant project

Power102fm Trinidad & Tobago - May 6, 2009

Anti-smelter activist, Dr Wayne Kooblalsingh, is questioning government’s desire to move ahead with plans to build an aluminum smelter plant at Union Estate, La Brea when the matter is still before the court.

Yesterday, this country signed a loan agreement of 112 million U.S. dollars with China at the Hyatt Regency Hotel in Port of Spain to help fund the project.

The venture is expected to cost 300 million dollars and would also include a rod, wire and cable plant.

Commenting on the matter in an interview with News Power today, Dr Kooblalsingh said he is puzzled by government’s intention to build the plant when the issue is still before the court.

The environmentalist said three local groups have challenged the Environmental Management Authority on the process used to grant government clearance to go ahead with the initiative.

Dr Kooblalsingh added from their research the venture would not be a profitable operation and beneficial to citizens.

Alcan lands huge BPA contract

NRToday.com - Thursday, May 7, 2009

John SowellThe News-Review

Alcan Cable has landed a $9.5 million contract with the Bonneville Power Administration to supply cable for a 500-kilowatt green power transmission line to be installed along a 75-mile portion of the Columbia River in Eastern Oregon.

"It’s a great thing for us and we’re glad to be a part of it," said Sean Milner, plant manager for the company’s Wilbur facility.

Headquartered in Montreal, Alcan operates a cable fabrication plant located off North Bank Road in Wilbur.

The plant will supply aluminum transmission cable for the project that is expected to begin this summer. Alcan-produced cable will be supplied over a five-year period.

The line is being installed between the BPA’s McNary substation outside Umatilla and a substation next to the John Day Dam near Rufus. The transmission line itself will be located mostly along existing right of way along the river’s bank in Washington, with the end points both in Oregon.

The BPA had originally planned to build the transmission line in 2002, but held off over concerns about the viability of electricity generating projects that planned to use the line. Several gas-fired and wind-powered generation plants had been proposed in that area, but concerns over financing and market conditions kept those projects from moving forward at that time.

Last year, the agency received enough new requests for transmission service to add green-produced energy to the transmission grid that the project was taken off hold.

The Alcan contract won’t affect employment at the Wilbur facility, Milner said. Last month, the company laid off 32 workers, about a quarter of its workforce, at the plant.

The BPA is expected to hire a contractor later this spring to build the line, which will facilitate the delivery of 870 megawatts of energy, 700 megawatts of that coming from wind-generated electricity. The project is planned for completion in 2012.

"The investment comes at a great time for the region with near-record unemployment," U.S. Rep. Peter DeFazio said in a written release. "Infrastructure spending is a proven way to create jobs and stimulate an ailing economy. This is a good investment that will get people back to work and improve access to clean, renewable wind power for generations to come."

You can reach reporter John Sowell at 957-4209 or by e-mail at jsowell@nrtoday.com.

US April primary aluminum output off 36.5 pct yr/yr

Reuters - Fri May 8, 2009

NEW YORK, May 8 (Reuters) - The annual rate of primary U.S. aluminum production in April slid 36.5 percent year-on-year to 1,764,641 tonnes from 2,779,160 tonnes in April 2008, and was down 2.5 percent from March's annual rate of 1,809,788 tonnes, the Aluminum Association said on Friday.

For the year through April, the annual production rate tumbled 29.5 percent to 1,948,969 tonnes from a 2,765,372-tonne rate in the comparable 2008 period, according to the industry association's report.

Actual aluminum production for April came to 145,039 tonnes, less than 153,708 tonnes in March, and 227,800 tonnes in April 2008, the association said.

Actual production for the year-to-date through April came to 640,757 tonnes, well below the 914,235 tonnes produced in the same period of 2008, the report said.

April's average daily production at 4,835 tonnes was well below 7,593 tonnes in April 2008, and was down from the 4,958 average daily tonnes produced in March, the aluminum group added.

It also said average daily production was down in the first four months at 5,340 tonnes from 7,556 tonnes in the comparable 2008 period.

The association said companies participating in the survey account for 100 percent of U.S. primary aluminum production. (Reporting by Carole Vaporean; Editing by David Gregorio)

Chalco alumina prices may further slide in coming weeks

SteelGuru - Tuesday, 12 May 2009

Interfax-China reported that the average domestic spot price of alumina from Chinese producers other than the state-owned Aluminum Corporation of China Co Ltd has dropped by CNY 135 per tonne or 6% since the beginning of May and prices are expected to fall further due to weak demand.

Mr Shan Guibin an industry analyst with ChinaCCM.com said "Non-Chalco alumina producers have slashed alumina prices on average by CNY 135 per tonne to between CNY 2,180 per tonne and CNY 2,230 per ton over the past week up to May 11th and alumina prices are expected to continue the downward trend in the coming weeks, as purchases by aluminum smelters remain weak and they refrain from stockpiling raw materials."

Mr Zhang Xin an industry analyst with CBI China also attributed the recent fall in non Chalco spot alumina prices to increased sales of imported alumina. "Some imported alumina is being sold at prices that are similar or even below the current average non-Chalco alumina price."

According to ChinaCCM.com, the prices of imported alumina at Qingdao and Lianyungang ports stood between CNY 2,200 per tonne and CNY 2,300 per tonne on May 11th.

(Sourced from Interfax-China)

Kaiser Aluminum to Host 2009 Investor Day

GlobeNewsWire (press release) - May 11, 2009

FOOTHILL RANCH, Calif., May 11, 2009 (GLOBE NEWSWIRE) -- Kaiser Aluminum (Nasdaq:KALU) today announced it will host an Investor Day on Wednesday, May 20, 2009 in New York City. President, Chief Executive Officer and Chairman Jack A. Hockema, and Senior Vice President and Chief Financial Officer, Daniel J. Rinkenberger will be discussing the company's business strategy, operations and future opportunities. Presentations will begin at 10:30 a.m. EDT followed by a Q&A session, which will conclude at 12:00 p.m. EDT.

A link to the simultaneous webcast can be accessed on the Company's website in the Events and Presentations section at http://investors.kaiseraluminum.com/events.cfm

A copy of the presentation will be available prior to the start of the webcast. An audio archive will be available on the Company's website.

Century Aluminum Company Reports Operating Results (10-Q)

GuruFocus.com - May 11, 2009

http://www.gurufocus.com/StockLink.php?typesec&symbolCENX&date2009-05-11&report10-Q

China releases revitalization plan for metals

CCTV - 05-11-2009

WATCH VIDEO: http://www.cctv.com/video/media/bizchina/2009/05/bizchina_300_20090512_9.shtml

China will restrict new aluminum projects for three years and push for consolidation of base metals production. The news come from a State Council plan to revitalize the sector.

China will restrict new aluminum projects for three years

and push for consolidation of base metals production.

The plan will seek to have three to five big firms by 2011. By that time, the top 10 firms are to control 90 percent of copper production, 70 percent of aluminum, 60 percent of lead and 60 percent of zinc.

The State Council also plans to examine the case for further tax changes and more state stockpiling of base metals. It also confirmed targets to close outdated production capacity.

UAE firm casts doubt over Saudi aluminium venture

Reuters, Monday May 11 2009

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* Doubt is due to current economic squeeze

* Excess aluminium capacity in the region (Adds Ma'aden, analyst, background)

By Amena Bakr and Souhail Karam

DUBAI/RIYADH, May 11 (Reuters) - A UAE-based firm threw into doubt on Monday plans to develop a $5 billion aluminium smelter in Saudi Arabia, dealing the second blow in less than six months to the kingdom's industry ambitions.

An executive of state-owned smelter Dubai Aluminium Co (Dubal) said the future of an aluminium plant project at Saudi Arabia's King Abdullah Economic City was "uncertain" in the current economic climate.

Dubal held talks with Saudi Arabian Mining Co (Ma'aden) in April over the plan, 13 months after it signed an initial agreement with the Saudi Arabian General Investment Authority (SAGIA) and Emaar Economic City to develop the 700,000 tonne per year smelter.

The plant, to be built in King Abdullah Economic City -- the largest of four business and industry hubs under construction in the kingdom -- was hailed as a vote of confidence in the world's top oil exporter efforts to diversify its economy.

"Plans for the King Abdullah Economic City plant are uncertain because of the economic conditions," Walid al-Attar, Dubal's vice president for marketing and sales, said in Dubai.

Attar was not more specific, while Ma'aden said no deal had been reached yet.

"A number of companies including Dubal have expressed an interest in applying for a licence to build a smelter in Saudi Arabia and Ma'aden maintains an interest in hearing about such projects," Ma'aden Chief Executive Abdullah Dabbagh said in response to Reuters' questions.

"However, all such dialogue remains very general in nature and therefore there is no news to be given at this time."

CHALLENGES

Dubal's announcement comes months after mining giant Rio Tinto in December said the global crisis made it impossible to finance its 49 percent stake in an aluminium joint venture with Ma'aden which was projected to cost $10 billion.

Maaden holds the remaining 51 percent in the capital of AlumCo, the company formed with Rio Tinto to develop the 740,000 tonnes per year aluminium smelter using bauxite from Saudi mines.

John Sfakianakis, chief economist at HSBC's Saudi affiliate, said Dubal may have seen the need to opt out of the project because of the impact of the crisis on the United Arab Emirates.

"The UAE has its own financial problems and challenges and the aluminium industry has its own problem because of a lack of feedstock, gas and fuel oil.

"There is also the question of whether there is economic sense in developing extra aluminium capabilities in the region"

Dubal's announcement could push Ma'aden to explore the option of doing it alone. "Ma'aden now should think of acquiring the know-how and the technology. Dubal did it on their own. Maaden has the capital to buy the technology, they need to go out and buy it" Sfakianakis said.

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. (Writing by Souhail Karam; editing by James Jukwey)

PM: UC Rusal-owned bauxite plants may never reopen

Jamaica Observer - May 14, 2009

BY PATRICK FOSTER Observer writer fosterp@jamaicaobserver.com

PRIME Minister Bruce Golding yesterday painted a bleak future for the local bauxite industry, saying that alumina processing plants owned by Russian company, UC Rusal, would not reopen if cheaper energy sources were not identified.

Golding added that the international alumina company, which owns 55 per cent of the island's bauxite holdings, was also facing financial constraints.

"Alpart, Kirkvine and Ewarton are not going to be able to reopen on the basis of the current available energy costs," Golding told journalists at yesterday's post-Cabinet press briefing at Jamaica House in Kingston.

Of the island's four alumina plants, Golding said only Jamalco - majority owned by Aluminium Company of America (Alcoa) - was in a position to remain viable.

"Jamalco will not only survive, it is going to do well," Golding said, adding that Alcoa's president would be visiting the island in two weeks to open a new conveyor system.

Golding's statements came a mere two days before the scheduled May 15 closure of the Alpart alumina plant in Nain, St Elizabeth.

Alpart, which is owned jointly by UC Rusal and Norwegian-based Hydro, announced earlier this year that the company would remain closed for at least a year in response to declining world demand for alumina.

And in March, the Windalco Kirkvine and Ewarton bauxite plants, also owned by UC Rusal, cut production and sent home staff as the worldwide market shrunk.

More than 2,000 bauxite workers have been displaced in the shake-up of the industry that in 2008 earned some US$1.7 billion for the country.

Golding yesterday argued that a reopening of the UC Rusal plants was unlikely unless they were retooled to become energy efficient.

First Aluminum Pot Housings Erected in Helguvík, Iceland

IcelandReview - 14/05/2009

The first buildings, which are indented to house the aluminum smelting pots of the Nordurál – Century Aluminum smelter in Helguvík on Reykjanes peninsula, southwest Iceland, are currently under construction.

The aluminum pot housings of the smelter in Reydarfjördur, east Iceland, under construction. Photo by Páll Stefánsson.

http://www.icelandreview.com/icelandreview/daily_news/?cat_id40764&ew_0_a_id324095

The project is proceeding slowly and it won’t move any more quickly ahead until funding for the Helguvík smelter and related power plants is completed, Morgunbladid reports.

The contractor, Íslenskir adalverktakar (ÍAV), is currently working on two aluminum pot buildings as part of the project’s first 90,000-ton stage. The groundwork is almost completed and the construction of a new harbor for Reykjaneshöfn is also underway.

Ágúst Hafberg, managing director of business development and communications at Nordurál, said they will continue constructing the Helguvík smelter at this pace for most of this year while working on the project’s funding.

Hafberg explained that environmental impact assessment for the establishment of cables and construction of power plants also has to be completed and other licenses need to be obtained as well, so he cannot say when construction will begin at full speed.

Montenegro set to nationalize Deripaska's integrated plant

Russia-InfoCenter - 14.05.2009

Montenegro's authorities intend to nationalize Kombinat Aluminijuma Podgorica (KAP), the aluminum smelter controlled by Oleg Deripaska's investment structures, reports the Kommersant newspaper.

The decision of the Montenegrin government to regain control over KAP was made after employees of the plant, not paid wages for two months, were reported to go on strike. On Tuesday, the 12th of May, several hundred workers still stayed on strike started on Friday, the 8th of May.

KAP, accounting for over 15% of GDP and half of all products exported by the country, has been facing financial difficulties since Autumn of 2008, when price on aluminum plunged on the world market. The debt of the plant exceeds 150 million Euros.

source:

www.lenta.ru

Vietnam minister inspects bauxite mining site

Thanh Nien Daily - 14 May -2009

The Minister of Natural Resources and Environment said Saturday that a committee will be established to evaluate the environmental impact of the projects to mine bauxite and process alumina in the Central Highlands.

Minister Pham Khoi Nguyen made the statement when he was in the Central Highlands province of Dak Nong to inspect implementation of the projects.

Nhan Co Alumina Company Director Bui Quang Tien said Vietnam Coal and Mining Corporation (Vinacomin), the main investor in Nhan Co Company, has signed an Engineering Procurement Construction contract with China Aluminum International Engineering Co. (Chalieco) worth US$427 million to build a factory with a capacity of 650,000 tons of aluminum a year.

Tien said the company has arranged for more than 300 local people to be trained, and has not yet employed any foreign worker.

On Friday, Nguyen visited Lam Dong Province to inspect the Tan Rai bauxite mining and alumina processing project.

Reported by Da Quy

Edgar Kaiser's attachment to Jamaica

Jamaica Gleaner - Thursday | May 14, 2009

Lance Neita, Contributor

The initial steps taken in the 1940s to start the bauxite industry in Jamaica grew into a deep and mutual attachment between Jamaicans and expatriates who contributed their skills and commitment to make the new venture work.

The mission of those pioneer companies, Reynolds, Alcan, and Kaiser, to transform 'red dirt' into 'red gold' would literally not have gotten off the ground without the positive support given by ordinary Jamaicans who came in contact with them as they surveyed, and later purchased, lands for mining.

The companies intro-duced First World mining technology, but it was the human resource qualities available to the industry that helped to establish Jamaica as the world's leading producer of bauxite in the 1960s and made it the important sector of the Jamaican economy that it still is today.

Pioneer leaders

It may be invidious to start calling names, yet no account of that journey could be complete without mention of some of the Jamaicans who are among the pioneer leaders of the industry.

Names such as Alcan's Dr Keith Panton, Kaiser's Bobby Honiball, Rudolph Jobson of Reynolds, and the Jamaica Bauxite Institute's (JBI) Dr Carlton Davis come instantly to mind.

From the overseas side, the industrial magnate Edgar Kaiser, who presided over the empire built by his father, Henry J. Kaiser, was one of those unforgettable personalities who endeared himself to Jamaicans from all walks of life during his numerous trips to Jamaica.

Kaiser Aluminium's remarkable growth was fuelled by bauxite from Jamaica, and Edgar became personally involved in some of the major issues that determined his company's corporate relationship with Jamaica, as the following story will exemplify.

In 1974, Kaiser was among those companies negotiating with the Government over issues of reshaping national policy in terms of the industry's financial returns to Jamaica.

Things came to a head when the parties could not agree, and when Prime Minister Michael Manley announced new legislation leading to the bauxite levy, a Kaiser biography reports that "the industry group, stunned, submitted the dispute to an international body for settlement."

It was at that point that Edgar Kaiser stepped back from the rest, declaring that "in a spirit of co-operation, we can and intend to arrive at a mutually beneficial agreement."

Intense negotiations were launched between Kaiser Aluminium and Jamaica to formulate an answer and a new position.

The mutual admiration that existed between Manley and Kaiser is illustrated by the following anecdote related by a Kaiser employee.

Kaiser had attended an early-morning meeting with the prime minister at Jamaica House on the important levy discussions and was due to leave at 9 a.m. to catch his flight.

However, the meeting went an hour overtime, and about 10 a.m., with the plane waiting on the tarmac, and the driver and Mrs Kaiser waiting patiently in the car, the two men came out of Jamaica House and walked slowly to the vehicle while carrying on an animated conversation which continued for another half-an-hour.

It was Dudley Thompson, the then minister of mining, who eventually broke up the conversation by nudging Kaiser gently into his seat and hurrying the party to the airport.

In the car, Kaiser explained that Manley and himself both realised that they were running behind time but that he did not consider it protocol for him to adjourn the meeting with the prime minister, hence the delay.

In the meantime, the prime minister, who himself was running late for a Parliamentary appointment, was explaining to an aide that he could not possibly be the one to adjourn a conversation with such a charming gentleman like Kaiser as that would have been poor manners and in any case, "we were enjoying each others' company immensely."

Of such was the relationship between two powerful personalities who often sat on different sides of the table, but enjoyed a deep and mutual attachment that forged the kind of relationship between Jamaica and foreign investment necessary for partnerships to work.

It will be a relationship we will need to secure and preserve as we look towards maintaining and re-building the bauxite/alumina industry in the difficult period ahead.

Lance Neita is a communications and public relations specialist with over 35 years service in the bauxite industry. Feedback may be sent to lanceneita@hotmail.com or columns@gleanerjm.com.

Chinese alumina import doubles in April

SteelGuru - Saturday, 16 May 2009

It is reported that China has imported 650,000 tonnes of alumina in April soaring 140%MoM the highest monthly import from 660,000 tonnes last January. The consecutive import for the first four months declined 2.91%YoY to 1.67 million tonnes.

An analyst said "Apparently, this is the result from restarting electrolytic aluminum production in Mar."

Bolstered by warming aluminum price at home, China's electrolytic aluminum enterprises rush to resume production from this February and meet the hot season during March to May. It is learned that, 700,000 tonnes of capacity has been resumed in Henan strongly dragging alumina import up.

Mr Wen Xianjun vice chairman of China Nonferrous Metals Industry Association said the output resumption has also shored alumina price up.

After bottoming out this February alumina price moves upward. Meanwhile, Chalco has lifted alumina quotation twice by now, one on January 19th and another on April 1st to CNY 2300 per tonne from CNY 2000 per tonne.

Buoyed up by aluminum price rebound which is firmer at home than at abroad, the import of unwrought aluminum and rolled aluminum hit 439,902 tonnes in April almost double of that in March. Its first four-month import totaled 703,545 tonnes spurting 118%YoY. In the same period, only 5,868 tonnes of unwrought aluminum has been shipped out, slipping further from volume in March. The total export from January to April plunged by 80.65%YoY to 42,857 tonnes.

(Sourced from.Mysteel.net)

DJ Alro Sees 2009 Aluminum Output At 201,225 Tons, Dn 24% On Yr

Trading Markets (press release) - Fri. May 15, 2009

LONDON, May 15, 2009 Romania's Alro SA Slatina (ALR.RO) expects to produce 201,225 metric tons of aluminum in 2009, down around 24% from 2008 levels due to market-driven production cuts, the company said Friday.

The company, which is a subsidiary of Netherlands-based aluminum producer Vimetco NV (VICO.LN), is "closely monitoring" the aluminum market and continuing to implement its cost reduction plan, it noted.

Alro is "prepared to take further measures if the situation demands it." Vimetco has cut over 40%, or 395,000 tons, of its global aluminum production capacity due to weak macroeconomic prices and poor demand.

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

INTERVIEW - Dubal says to talk to India on Orissa project

Reuters India - Tue May 12, 2009 5:36pm IST

By Amena Bakr

DUBAI (Reuters) - State-owned smelter Dubai Aluminium Co (Dubal) will be holding talks with the Indian government on its bauxite alumina project in Orissa next month, its chief executive said on Tuesday.

The bauxite mine and alumina refinery and smelter, a joint venture with Indian engineering conglomerate Larsen and Toubro, was originally scheduled to start in 2009, but Dubal has said in the past it expected delays due to bureaucratic issues in India.

"We are going on with our India project. We are just waiting for the elections to be completed and then we will hold talks in a month's time with our partners and the government," Chief Executive Abdulla Kalban told Reuters on the sidelines of an industry conference in Dubai.

The talks will cover plans for the plant but no further details over the agenda were available.

Phase one of the facility will have a 1.4 million tonne output capacity per year, while phase two, involving an aluminium smelter, would add another 1.4 million tonnes per year of alumina, Kalban said.

No deadlines had been set for either phase, he said.

Kalban also said the firm's Cameroon project was on track. Dubal, U.S. firm Hydromines and India's Hindalco Industries have formed Cameroon Alumina Limited (CAL), which aims to exploit 1.2 billion tonnes of bauxite from Cameroon. The project is due to start production in 2013.

"We are also going ahead with our Cameroon alumina project. We are currently in the pre-visibility stage, which will be completed by the first quarter of 2010," he said.

A Dubal executive said on Monday the future of an aluminium plant project at Saudi Arabia's King Abdullah Economic City was "uncertain" in the current economic climate.

Last month Dubal met the Saudi Investment Authority and Saudi mining company Maaden to discuss plans to build the plant at the economic city, which is being developed by Emaar Economic City.

Kalban said on Monday Dubal was producing at full capacity of 960,000 tonnes a year and would not cut production, although sales had fallen 30 percent in the first quarter as the global automotive industry suffers from a slump in consumer demand due to the credit crisis.

Aluminium producers worldwide have taken about 15 percent of global capacity offline as demand slumps. Many are operating below break-even levels and industry analysts say further production cuts are needed to boost prices.

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ALUMINUM SMELTING: Rio Tinto Alcan arranges $175M loan from Quebec

Canadian Mining Journal - May 17, 2009

QUEBEC — Rio Tinto Alcan of Montreal has been granted a $175-million loan from the government of Quebec to further the construction of it AP50 pilot plant in the Saguenay-Lac-Saint-Jean region. The loan is repayable in full by 2012.

The pilot plant is the first phase of the AP50 project that will produce 60,000 tonnes of aluminum per year. Using the new technology has the potential to provide lower capital expenditures per tonne; shorter construction, commissioning and startup timelines; improved labour productivity; and reduced operating costs, according to Rio. The technology operates at 500 kA generated exclusively by clean, renewable hydroelectricity.

Rio Tinto Alcan is currently facilitating development of a local network of globally competitive suppliers for the AP50 project through its Regional Industrial Development Office. The Arvida Research and Development Centre will lead on-going initiatives related to industrialisation of AP technology.

Rio has already begun construction of a new 225-MW high-efficiency turbine at the Shipshaw power station. It will replace four generator units at the Chute-à-Caron power station.

More information about the AP50 technology is available at www.RioTintoAlcan.com.

Aurukun refinery plant shelved

Courier Mail - May 18, 2009

Tony Grant-Taylor

CHINESE aluminium group Chalco, which has exploration rights to the Aurukun bauxite deposits on Cape York, has asked the State Government to allow it to shelve plans for a stand-alone alumina refinery dedicated to processing Aurukun's output.

If it can win the argument, Chalco will disappoint Bowen, which had been widely tipped to be the site of the multibillion-dollar plant.

But Gladstone could be a winner, with the Chinese proposing effectively to substitute the Stage II development of Rio Tinto's Yarwun refinery there for the Bowen plan.

Chalco president Luo Jian-chuan pressed the alternative proposal in meetings with Premier Anna Bligh last week.

He told The Courier-Mail that Chalco, whose parent Chinalco is waiting to see whether its proposed $US19.5 billion ($26 billion) alliance with Rio Tinto gets foreign investment and shareholder approvals, saw Queensland as the long-term headquarters of the group's Australia operations.

If the deal goes through Chinalco will emerge with 30 per cent of Rio's Weipa bauxite operation, 50 per cent of Yarwun Stage 1, which is already operating, 29 per cent of Gladstone's Boyne Island aluminium smelter and 21 per cent of Gladstone power station, as well as a chunk of Rio's Pilbara iron ore operations.

Mr Luo said Yarwun Stage II, which Rio put on hold last month, was not part of the $US19.5 billion Rio alliance. He said Chalco was "looking to see if we can make progress on Yarwun II by the end of this month."

DJ China Guangxi Aluminum Smelter To Add 250,000 Tons Output In 09

Middle East North Africa Financial Network - DowJones -Monday, May 18, 2009

DJ China Guangxi Aluminum Smelter To Add 250,000 Tons Output In 09

BEIJING, May 18, 2009 (Dow Jones Commodities News via Comtex) -- Guangxi Laibin Yinhai Aluminum Co., a subsidiary of Guangxi Investment Group Co., plans to produce an additional 250,000 metric tons of aluminum this year, a company spokesman said Tuesday.

Some 500,000 tons of new production capacity is to be created by June, but only about half of the new capacity will be utilized this year because the aluminum market is still relatively weak, said Yang Fan, a spokesman.

Yang confirmed the smelter would aim to fully utilize the additional 500,000 tons capacity next year.

The smelter has an existing capacity of 125,000 tons, Yang said.

The Guangxi Autonomous Region smelter completed the first of two phases of construction of its plant in September, with the second due for completion in June, Yang said.

Earlier press reports said the plant was built with an investment of CNY4.3 billion. Construction began in June 2007.

Laibin Yinhai is one of 38 companies owned by Guangxi Investment Group Co., the region's largest state-owned enterprise. Guangxi Investment Group manages a wide array of the region's assets, including electricity, nonferrous metals, securities and fertilizers.

It also has acted as a bailout agent for local businesses.

In March this year, the group arranged to secure a loan to buy 50,000 tons of aluminum from Laibin Yinhai at CNY12,500 a ton, in a move aimed at soaking up surplus stock while propping up prices and keeping local projects afloat.

Guangxi isn't the only authority bailing out local aluminum smelters through this route.

This month, Henan province started buying 500,000 tons of excess aluminum from local smelters.

However, a provincial nonferrous metals association official said Henan still aims to add up to 800,000 tons of new output capacity this year.

Analysts point to Laibin Yinhai's 500,000-ton project as more evidence aluminum smelters may be in too much of a hurry to get output back on track, a risky move in a climate that suggests some cooling in Chinese demand and too much supply in the market.

"It's not just idled aluminum smelter capacity that is (now) restarting in China, but also new capacity," said Barclays Capital.

The Guangxi region is a major producer of alumina, aluminum, tin and other minor metals.

-By Chuin-Wei Yap, Dow Jones Newswires; 8610 6588 5848; chuin-wei.yap@dowjones.com

Creditors Push RusAl For Stake in RusHydro

The Moscow Times - 19 May 2009 Reuters

A Barclays-led syndicate has asked United Company RusAl to transfer its part of a joint $520 million debt to RusHydro as part of the restructuring of the aluminum maker's debt, a copy of the document said.

According to the original terms of the loan, the funds were borrowed on a 50/50 basis, meaning that RusAl's obligation totals $260 million.

In the May 14 letter, which was also sent to RusHydro, Barclays Capital and other members of the lending syndicate asked RusHydro to take on the entire debt in exchange for RusAl's equity interest in a joint power plant and aluminum smelter project in Boguchansk, Siberia.

"To ensure the effective exit of RusAl from the facility, the value of that equity interest would need to be sufficient to cover, at least, the RusAl obligations in relation to the facility," the letter said.

RusAl is struggling under a $16.8 billion debt burden, and last week it agreed to extend to June 11 a two-month-old standstill agreement with foreign creditors over $7.3 billion in borrowings made during the precrisis raw materials boom.

RusAl spokeswoman Vera Kurochkina declined to comment on the contents of the letter but said her company had no intention of surrendering its stake in the Boguchansk project to RusHydro.

RusHydro spokesman Yevgeny Druzyaka said so far there had not been any discussion on the matter between the two companies and RusAl's creditors.

He said, however, that RusHydro would be amenable to such a proposal.

The two companies in 2006 agreed to carry out the $3.6 billion project, which includes a 3,000-megawatt power plant and a greenfield aluminum smelter with a projected capacity of 600,000 tons per year.

They agreed on April 1 to postpone the smelter launch until 2012 because of declining aluminum demand but said they still intended to start operations at the power plant next year.

Two weeks later, RusAl said it wanted to continue with the smelter project and compensate for the increased output by cutting production at less efficient Soviet-era plants.

The mandated lead arrangers for the original $520 million credit agreement are Barclay's Capital, Calyon and Sberbank.

Jamaica's top bauxite producer closes doors...for now

Caribbean360.com - May 18, 2009

KINGSTON, Jamaica, - Jamaica's largest bauxite and alumina producer, Alumina Partners of Jamaica (ALPART) has acted on its announcement to suspend its operations for at least the next year, leaving 900 people out of work.

The move which took effect last Friday follows ALPART scaling down its operations earlier this year and similar action by West Indies Alumina Company's (WINDALCO) as the global financial crisis reduced demand and the price buyers were willing to pay for the companies' product.

"I want to emphasize that this is a temporary closure, a temporary situation," company spokesman Lance Neita said, adding that there would be a skeleton staff still remaining at the plant.

"We will have a team of employees there until the end of May until they are replaced by another team to carry on the maintenance work during the temporary closure."

ALPART earlier this year cut production in half and laid off its temporary workforce before taking the decision to cut permanent employees' work week to three days.

The business is owned by Russia's UC Rusal and Norwegian aluminium and renewable energy company, Norsk Hydro.

Industry is warming up to Obama's climate plan

Los Angeles Times - May 17, 2009

Companies want to help shape global warming legislation in Congress, figuring the right plan could boost profits.

By Jim Tankersley

Reporting from Washington -- Sprawling across about 9,000 acres of rolling farmland in southwestern Indiana is one of the world's biggest aluminum smelters, operated by Alcoa Inc. The maze of rectangular buildings and giant smokestacks consumes enough electricity to supply a city of 200,000 -- power generated by burning more than 2 million tons of coal a year.

So it may be surprising that company executives are pushing Congress to pass a version of President Obama's plan for combating global warming. After all, Obama wants to slap hefty fees on facilities like Alcoa's that pump millions of tons of carbon dioxide and other pollutants into the air. Those fees could raise costs for the company and leave it vulnerable to foreign competitors.

EPA paves way for broad emission limits

But a growing number of coal users have come to believe that, with the right tweaks, Obama's plan would not only help the environment but boost their profits.

"If we act wisely and swiftly," Alcoa global issues director Meg McDonald told a House committee last month, climate legislation "will assist in restoring growth and provide the means for America to be the global leader in low-carbon technology."

Politically, the decision to get behind the broad outlines of climate legislation mirrors the push by insurers and pharmaceutical companies to remake the nation's healthcare system: In both cases, corporate strategists concluded that some government action was likely, and they might fare better at the table than on the sidelines.

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"Many leaders in both areas are willing to break out of what has been conventional wisdom, and as a result we've been able to build coalitions of CEOs," said Rep. Edward J. Markey (D-Mass.), a top Democrat on the Energy and Commerce Committee who co-wrote the House version of Obama's climate plan.

Companies such as Alcoa and Duke Energy, the nation's largest producer of electricity generated by burning coal, have been marshaling votes on Capitol Hill, working behind the scenes with committee negotiators and providing what House leaders call a blueprint for compromise.

Alcoa is a charter member of the United States Climate Action Partnership, a collection of large environmental groups, utilities, manufacturers and other big businesses. Two coalition members -- the Environmental Defense Fund and Duke Energy -- last week launched a television advertising blitz in support of warming legislation.

"Their support is indispensable," Markey said of the companies.

Not everyone in the business world is on board -- the U.S. Chamber of Commerce, for instance, is not. And some environmentalists have objected to concessions lawmakers have made to industry.

But without a large dose of corporate support, leading Democrats say, Obama has little chance of attracting enough votes to get his plan through Congress. The swing votes belong to senators and representatives from manufacturing and coal- and oil-producing states that almost certainly would face higher costs under the "cap and trade" system Obama wants to create.

The president is proposing nationwide limits on greenhouse emissions that become more stringent over time. Companies would have to obtain government permits to cover their excess emissions.

"There are two issues to get the bill passed," said Sen. Sherrod Brown (D-Ohio). "One is, the states that are heavily dependent on coal need some relief if their energy bills spike, which they will.

"The other is, how do you deal with manufacturing?"

Alcoa's aluminum operations across the U.S. generated 23 million metric tons of greenhouse gas in 2007. The cost per ton of emissions permits hasn't been determined yet, but if it starts at $20 -- a number that falls in the middle of recent Environmental Protection Agency projections -- then cap and trade might add $460 million a year to Alcoa's annual operating costs.

Under an approach favored by industry, the government could soften the blow by giving companies like Alcoa nearly enough free permits in the early years of cap and trade to cover emissions.

The aluminum manufacturer has already cut emissions by a third from 1990 levels. If it continued to reduce emissions -- through such measures as replacing petroleum lubricants in its rolling mills with advanced vegetable oils -- while keeping its full quota of free permits, it would have surplus permits that it could sell to other emitters. Those profits could help pay for greener technology.

In effect, a cap and trade system designed that way would stimulate the drive to reduce emissions, advocates say.

And Alcoa officials see another benefit: Government pressure for cleaner air would increase consumer demand for lightweight cars and more efficient buildings -- boosting the market for aluminum.

The White House has signaled a willingness to provide financial offsets and other relief to the states and companies that would be hit hardest by new cap and trade rules.

At the moment, Obama's budget calls for selling all the emissions permits, a position backed by many environmentalists. The proceeds would fund research on renewable energy and a middle-class tax cut of $400 per person.

Many large manufacturers worry that the system could drive the energy-intensive production of steel, glass, cement and other goods overseas.

"We've lost 5 million manufacturing jobs in this country," said Alan McCoy, a spokesman for Ohio-based AK Steel. "This kind of legislation, poorly crafted, would eliminate the rest of them."

The House version of the legislation would initially hand out more than a third of the permits to utilities, another 3% to automakers and 15% to companies such as Alcoa that consume vast amounts of energy and are exposed to foreign competition. In all, 30% of permits would be sold at the start.

As for "how that pie ends up sliced at the end of the day," said Heather Zichal, deputy assistant to the president in the Office of Energy and Climate Change, "I think we're open to discussions."

jtankersley@latimes.com

Maaden to press ahead with smelter, cost falls

Saudi Gazette - Wednesday, 20 May 2009

RIYADH - Saudi Arabian Mining Co (Maaden) will press ahead with a plan to build an aluminum smelter whose costs had fallen 20 percent to $8 billion even without a partner, its chief executive said on Tuesday.

But Maaden would be willing to sell a stake of up to 49 percent if it was approached by an interested partner, Abdallah Al-Dabbagh said on the sidelines of a conference in Riyadh.

Rio Tinto Alcan abandoned its 49-percent stake in the 740,000 ton-per-year smelter project in December because of the global financial crisis.

"If somebody is there who is interested in joining our project, we are opening our doors slightly because we do not want to be delayed, we want to keep moving fast," Dabbagh told reporters, adding Maaden was not actively looking for a partner. "We are committed to move on this project from the rock to the metal and we are proceeding."

Maaden, in which the Saudi government is the largest shareholder, is investing about $60 billion in projects including phosphate, bauxite, gold and industrial minerals.

Project costs have fallen sharply after the cost of building materials dropped due to declining demand during a global recession. Dabbagh said in January Maaden would put back the start of production at the smelter by three years to 2015.

"The total project is estimated now at $8 billion. The previous estimate was $10 billion," Dabbagh said.

Investments in such projects are crucial to government plans to diversify the economy, which relies on oil exporters for almost 88 percent of state revenues.

The finance minister said earlier on Tuesday that Saudi Arabia had awarded almost $11 billion in contracts for development projects in the first quarter, more than double the year earlier. Dabbagh said Maaden could borrow to finance some of the project costs, but how much it raised depends on the market.

"I think in one year’s time probably the markets would give us a much better indication on the situation," he said. - Reuters

Jamaica has to reposition ownership of bauxite operations, says PM

Caribbean Net News - Friday, May 22, 2009

By Oscar Ramjeet, Caribbean Net News Special Correspondent, Email: oscar@caribbeannetnews.com

KINGSTON, Jamaica -- Prime Minister Bruce Golding has said that the Jamaican government will have to reposition ownership of the country's bauxite/alumina operations, in addition to addressing problems such as energy and technology, before any revival of the country.

In a GIS release, the prime minister said, "We are going to have to reposition our bauxite/alumina operations not only in terms of the technology and investments that have to be made, but also in terms of the control and ownership."

Golding at the time was speaking at a Town Hall meeting in Mandeville to discuss the implications of the 2009/2010 budget with the public.

He addressed the bauxite/alumina fall out extensively, in the light of the industry's importance to the economy of central Jamaica, which includes Manchester. He said that significant capital investments were needed in rebuilding the plants and to put in new technology and equipment to ensure competitiveness.

The prime minister expressed grave concern about the future of United Company RUSAL, the cash-strapped Russian company regarded as the world's largest producer of aluminum and alumina, which currently owns 55% of Jamaica's industry, and reported that the government was speaking with other partners.

"We better start looking for our salvation, because I am not sure we can depend on them to provide the rescue and resuscitation that is necessary," he said

Golding said that the chances of reopening the plants that have closed down - Windalco's Kirkvine and Ewarton operations and ALPART in St Elizabeth -- will depend largely on the country's ability to find cheaper sources of energy.

Russia En+ may swap Montenegro smelter stake for debt

Interactive Investor - 2009-05-26

By Polina Devitt

MOSCOW, May 26 (Reuters) - The Russian owner of Montenegro's biggest exporter, Kombinat Aluminijuma Podgorica, will consider giving up a stake in the aluminium producer in exchange for the government assuming part of its debt, a company executive said.

En+ Group, controlled by indebted billionaire Oleg Deripaska, said the KAP aluminium plant and associated bauxite mine must reduce its workforce by over 60 percent and cut its electricity costs by 37 percent in order to become profitable.

"We are prepared to discuss the acquisition by the Montenegrin government of a stake in KAP on condition that the government splits a significant part of the debt with us," En+ Group General Director Vladislav Solovyov told Reuters.

Kombinat Aluminijuma Podgorica, or KAP, accounts for half of Montenegro's export revenues but is running at a loss due to high operating costs and a slump in the price of aluminium, which has lost two-thirds of its value since peaking last July.

Deputy Prime Minister Igor Luksic said in televised comments this month that the government wanted to take control of KAP, the largest industrial enterprise in the ex-Yugoslav republic.

The company defaulted last year on tax, duties, VAT and other payments to the state and plans this year to halve aluminium production to 60,000 tonnes.

"The company's key strategic task is reducing the cost of producing aluminium, which is defined by the excessively high cost of electricity and overstaffing," Solovyov said in comments emailed to Reuters on Tuesday.

"Without a long-term solution to these two fundamental problems, the plant cannot break even, no matter who its owner is," he said.

JOB CUTS, CHEAPER POWER

En+ Group, part of Deripaska's Basic Element company, also controls United Company RUSAL, the world's biggest aluminium producer but also among the most indebted, having run up debts of $16.8 billion.

Solovyov said KAP could be profitable should it hold the cost of producing a tonne of aluminium at close to $1,600 a tonne. The metal is trading around $1,440 a tonne on the London Metal Exchange, down from last July's all-time peak of $3,380.

To achieve this, it would have to cut the workforce at KAP and the bauxite mine in Niksic to a maximum 1,500 from 3,900 currently. The price of electricity would also need to drop to 22 euros per 1,000 kilowatt hours from 35 euros, he said.

"The possible closure of KAP and the firing of all its workers would lead to social problems, and it's important not to let this happen," Solovyov said.

"Negotiations with the Montenegrin government continue. Our positions have moved significantly closer in the last two weeks and we hope to find a mutually beneficial resolution in the near future."

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(Writing by Robin Paxton, Editing by Peter Blackburn) Keywords: ALUMINIUM MONTENEGRO/ (robin.paxton@reuters.com; +7 495 775 1242; Reuters Messaging: robin.paxton.reuters.com@reuters.net)

China Dominates the Global Aluminium Industry

Your Metal News (press release) - May 25, 2009

LONDON, May 22/PRNewswire/ --

- Roskill Information Services

- The Economics of Aluminium (9th Edition)

- http://www.roskill.com/reports/aluminium

- New Report From Roskill Analyses Worldwide Aluminium Supply and Demand

China dominates the global aluminium industry accounting for one third of both world production and world consumption of primary aluminium. While China is self sufficient in aluminium metal and approaching self sufficiency in alumina, dependence on imported bauxite remains high despite rising output. However, power supply issues and high costs of production could result in declining production in the longer term and the possibility that China will become a net importer of primary aluminium.

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Russia, Canada, the USA, Australia, Brazil, Norway and India are the principal producing countries after China. These countries together account for about three quarters of world output of primary aluminium.

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Although some 200 smelters, half of which are in China, produce primary aluminium, 14 companies operating about 100 plants controlled over 60% of output in 2007. Consolidation of the Russian companies Rusal and Sual with Glencore in 2006 into UC Rusal, and the acquisition of Alcan by Rio Tinto in 2007 resulted in two aluminium producers comparable in size to Alcoa.

Full story available: http://www.yourmetalnews.com/china+dominates+the+global+aluminium+industry_33148.html

World's Leading Aluminum Can Recycler Processes 39 Billion Beverage Cans

Azom.com - May 25, 2009

Aluminum company Novelis Inc. announced today that it recycled an estimated 39 billion aluminum beverage cans in the past year, a new company record. Novelis is the world's largest producer of flat-rolled aluminum and the world's leading recycler of used beverage cans.

By recycling the used containers back into aluminum sheet for new cans, the company estimates it reduced its need for primary aluminum by more than 530,000 metric tons, saving approximately 73 million MBTUs of energy and avoiding the production of nearly 5 million metric tons of greenhouse gases (GHGs).

"The environmental benefit of aluminum recycling is enormous," said Nick Madden, vice president of global procurement and metal management for Novelis. "Not only does it reduce the need for the mining of natural resources, but it eliminates large amounts of emissions generated through primary production. The GHGs avoided through our can recycling program over the past year is the equivalent of taking more than 900,000 gasoline-powered automobiles off the road for 12 months."

Used beverage cans account for approximately half of all aluminum scrap processed by Novelis each year. Aluminum products from automobile parts to building materials can be recycled using just five percent of the energy required to produce the same amount of new aluminum from raw materials. Aluminum is one of the most recycled products on the planet.

"When people look for ways to help the planet and reduce their carbon footprint, one easy thing they can do is make sure their empty cans go into the recycling box, not the garbage bin," said Madden. "Every aluminum can that is recycled saves enough energy to run a television set for three hours, and there is no limit to the number of times it can go around the recycling loop."

Novelis recycles aluminum cans on four continents. The company's plant in Berea, Kentucky, is the largest dedicated can recycling facility in the world, and its U.K. and Brazil plants are the largest in Europe and South America, respectively. In the past year, Novelis increased its recycling capability worldwide by extending its can recycling efforts into South Korea and nearly doubling its recycling capacity in Brazil.

"Recycling is central to our efforts to make our products more environmentally efficient," said Madden," and it is also a strategic source of metal for our rolling mills. We will continue to seek ways to promote recycling and grow this part of our business."

To help measure the potential benefits of aluminum recycling in U.S. communities, Novelis provides a recycling calculator on its web site. Visitors can enter the population number for their community to see the potential economic and energy savings if all aluminum cans were recycled.

Aleris to idle aluminum alloy plants

Purchasing.com - 5/27/2009

By Tom Stundza

Aluminum alloy maker Aleris plans to idle its Coldwater, Mich., and other, smaller secondary aluminum alloy plants because automakers General Motors and Chrysler are planning to shut their plants for several months.

A company spokeswoman for the Beachwood, Ohio, firm says "the specific timing and length of the shutdown will vary by plant based on current demand and inventory levels." The firm plans to continue to ship already made secondary ingot to buyers with firm purchase orders during the smelter-shutdown period.

Angola, Norsk Hydro to study developing up to 1,000 MW of hydro

HydroWorld - 5/27/2009

Angola Energy Minister Emanuela Vieira Lopes signed an agreement May 5 with Norway aluminum producer Norsk Hydro to study developing 750 to 1,000 MW of hydropower integrated with aluminum production facilities.

Lopes and Deputy Industry Minister Kiala Gabriel signed a memorandum of understanding with Norsk Hydro Executive Vice President Arvid Moss to explore the feasibility of an integrated project for hydropower and aluminum production.

The state-run Angola Press said the energy minister emphasized the hydro project is directed to have as its basis the development of the Keve River, a basin with considerable hydropower potential that, so far, has been undeveloped. (HNN 8/29/07) ?

This will involve the implementation of an integrated project for two hydroelectric centrals with an indicative capacity between 750 to 1,000 MW and electricity conveying lines,? Lopes said.

Norsk Hydro said it has been in talks for several years with the Angola government to advance the project. The agreement is the first step in exploring the project, with the parties now beginning an early fact-finding phase. ?If realized, the project will represent a long-term opportunity for Hydro that could also provide a significant boost to social and economic development in Angola,? Norsk Hydro said.

The minister said Angola's economic growth is pushing demand for additional electric capacity, which mainly will be provided by hydropower.

She said feasibility studies have been conducted for the construction of the Middle Cuanza hydroelectric system on the Cuanza (or Kwanza) River as a reinforcement of the national electricity system.

A 2006 study suggested the United States should consider funding a 6,000-MW Middle Cuanza project. (HNN 11/24/06)

The Western Power Corridor Project (Westcor) of Angola, South Africa, Democratic Republic of Congo, Namibia, and Botswana proposes a new transmission link to 6,500 MW of new hydropower projects in the Cuanza Basin. (HNN 12/20/06)

Ormet drops suit

Marietta Times - May 27, 2009

Hannibal business wanted to ensure supply of raw materials to make aluminum

By Brad Bauer, bbauer@mariettatimes.com

Ormet Corp. recently dismissed a lawsuit it said was necessary to ensure its supplier would keep sending raw materials to keep the company's Monroe County facility operating.

In its April filing, Ormet claimed its 1,000 jobs and retirement benefits for 3,000 past workers were at risk because of a dispute with Glencore International AG.

Glencore attorney Eliot Lauer, of New York, confirmed the suit against his client had been dismissed, although he declined to comment further.

A spokeswoman with Ormet said the company would make an announcement Tuesday on the company's Web site, but as of 5:30 p.m., no statement had been posted.

Ormet filed a request in April seeking a preliminary injunction to prevent Glencore International AG from halting delivery of the ore needed to produce metal at its Monroe County facility. The case was filed in U.S. District Court for the Southern District of Ohio.

Ormet Chief Executive Officer Mike Tanchuk said the plant would run out of raw material sometime by the end of May or early June without the cooperation of Glencore or the help of the court.

Aluminum prices declined significantly in the time since the companies agreed on the contract in May 2008, Tanchuk said in April. Under the deal, Glencore agreed to supply the alumina in exchange for tolling fees.

According to the original complaint, Glencore decided to temporarily suspend operations at two of its alumina refineries in Jamaica, including the one that was to supply Ormet, due to a worldwide decrease in demand for alumina. A Glencore spokesman has said that under the contract, the company is not required to provide the alumina during the shutdown. Ormet in its filing argues such a shutdown is not covered in the contract.

Ormet is headquartered in Hannibal, about 50 miles north of Marietta on Ohio 7. A strike by workers in 2006 shuttered the plant for about a year-and-a-half.

The Monroe County plant produces about 266,000 metric tons of aluminum each year.

Aluminum Cuts May Deepen as Quarter Fades, Hydro Says (Update2)

Bloomberg - May 28, 2009

By Brett Foley

Norsk Hydro ASA, Europe’s third- largest aluminum producer, said the industry will probably deepen cutbacks as demand for some products hasn’t improved in what is typically the best quarter of the year.

"It is clear that the industry has to do more to balance out their production to better match demand," Chief Executive Officer Svein Richard Brandtzaeg said in an interview in Brussels. "It will take a long time before the market can eat through that material and bring it back to a normal level. This will have a long-term impact on the price."

Hydro has curtailed production at smelters in Norway, Germany and Slovakia as plunging demand from automakers and builders sent prices to a seven-year low. Global stockpiles almost quadrupled in the past year. Brandtzaeg said that advance demonstrates the industry’s overcapacity, which he estimates to be about 3.5 million metric tons.

Demand for Hydro’s automotive unit’s products fell as much as half after a collapse in vehicle sales, he said yesterday. Hydro has also seen a 25 percent drop in orders for extrusion products, which are used in construction. Demand for some products hasn’t improved in the second quarter, Brandtzaeg said.

"We are a bit concerned because this is normally the best quarter for downstream products," he said, referring to items the company manufactures from the aluminum smelted at its plants. "We don’t see substantial signs today that we will see better developments in the second half."

Dividend Scrapped

Hydro rose 1.4 percent to close at 33.5 kroner in Oslo trading. The stock has fallen 59 percent in the past 12 months on the Oslo Stock Exchange, valuing the company at 41.8 billion kroner ($6.5 billion). Hydro reported last month a 347 million- krone first-quarter loss on slumping prices and an inventory writedown, and scrapped its dividend to conserve cash.

Rival aluminum companies Alcoa Inc., the largest U.S. producer, London-based Rio Tinto Group and Russia’s United Co. Rusal have also reduced output.

Hydro permanently closed 120,000 tons of production from the oldest line at the Karmoy plant in Norway. It’s still evaluating whether to make permanent some temporary closures, including curtailment at the Neuss smelter in Germany, Brandtzaeg said. The company has halted output at its alumina joint venture with Rusal in Jamaica because of the drop in demand for the raw material used to make aluminum.

Chinese Restarts

China, the world’s largest aluminum user and producer, may have restarted as much as 1.4 million tons of capacity in April, Ru Xiaojie, an analyst at Aluminum Corp of China Ltd., said earlier this month. Hydro hasn’t seen any noticeable increase in the country’s demand, Brandtzaeg said.

"The fourth quarter will be very challenging for us if the economy is still very low and we don’t have any changes in the demand for aluminum," he said.

Aluminum for delivery in three months on the London Metal Exchange gained 0.5 percent to $1,412 a ton at 5:38 p.m. local time today. It traded at $1,279 a ton on Feb. 24, the lowest since November 2001.

Inventories stored in LME-monitored warehouses have almost quadrupled in the same period to 4.2 million tons. Worldwide consumption will drop 4.8 percent to 36.4 million tons, Barclays Capital estimated in a May 15 note.

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

Alcoa CEO: No plans to boost aluminum production

BusinessWeek - 29-May-2009

By DANIEL LOVERING

PITTSBURGH

Demand for aluminum has fallen so sharply amid the weak global economy that distributors are selling even their reserves of the lightweight metal without buying more, Alcoa Inc.'s top executive said Friday.

Pittsburgh-based Alcoa, the largest U.S. aluminum producer, has cut its output by 20 percent since last fall, when the deteriorating global economy eroded demand for the metal. Stockpiles grew and prices tumbled about 60 percent in the second half of the year.

Now distributors' stockpiles have dropped to the lowest levels Alcoa has ever seen, Klaus Kleinfeld, the company's president and chief executive, said in an Internet broadcast from an investors' conference in New York.

Most distributors have "thrown out the window" their normal requirements for supplies of aluminum, opting to "get rid of the inventory that generates cash" because the sagging economy has wiped out demand, Kleinfeld said.

Alcoa has no immediate plans to restart production at idled plants because it has sufficient supplies for the near term, he said, and the global industry may further curb aluminum-making if the market doesn't improve this summer.

Lower aluminum supplies and government economic stimulus programs -- like one in China that is working "magnificently well" -- are catalysts for growth, he said. China is the world's largest aluminum producer and consumer.

Distributors have been asking Alcoa how quickly they might get aluminum if they need it because they see so-called "green shoots," or hints of a revival, in some industries, Kleinfeld said.

"Even though there are some green shoots ... I don't think we really need any (production) restarts at this point in time," he said. "I'm not too concerned about it."

When renewed aluminum consumption becomes apparent, "the distribution chain will generate this sucking sound of demand that will come through the system."

Alcoa has forecast a 7 percent drop in global aluminum demand this year, compared with a 3 percent decline in 2008. China will be the only market where demand grows, while Europe and North America will see declines of 15 percent.

Century Aluminum Unable to Complete Long-Term Power Contract for Hawesville, KY Smelter

Trading Markets (press release) - Fri. May 29, 2009

MONTEREY, CA, Century Aluminum of Kentucky, a wholly owned subsidiary of Century Aluminum Company (NASDAQ: CENX), today announced that due to unfavorable business conditions, it is unable at this time to move forward on a proposed new, long-term power contract for the company's Hawesville, Kentucky smelter.

Century, along with Western Kentucky Energy (a subsidiary of E.ON U.S.), Big Rivers Energy, and Rio Tinto Alcan, has been working for more than five years to negotiate an "unwind" of the existing contractual arrangement between Big Rivers and Western Kentucky Energy (WKE), and to define a new agreement that would provide long-term and affordable power to the two smelters in western Kentucky.

"We are disappointed that we cannot proceed with the transaction at this time," said Hawesville vice president and plant manager Matt Powell. "All parties have been working hard for a long time to create a mutually acceptable agreement. We have consistently supported the transaction based upon the expectation that it would produce a power contract that would support Hawesville's long-term profitability. Current and expected economic conditions, however, have created the perfect-storm -- significant weakness in both aluminum prices and wholesale electric prices. The proposed contract might support Hawesville's viability over the long-term, but the contract's take-or-pay requirement, in its current form, could create financial hardship for the company in the short-term. Regrettably, after discussions with WKE and Big Rivers over the past several weeks, we could not find a solution for mitigating the risk. We will continue to work diligently to secure a long-term power agreement that satisfies the needs of all western Kentucky constituents."

At full capacity, the Hawesville smelter produces approximately 250,000 tonnes of primary aluminum annually from five potlines. As a result of the global economic crisis and depressed aluminum prices, Century curtailed one potline in March 2009. The Hawesville smelter currently receives its electrical power from Kenergy Corp (a member of the Big Rivers system), under a power supply agreement between WKE and Kenergy. Although the current power supply agreement expires at the end of 2010, it does provide the plant with necessary operating flexibility.

Century Aluminum Company, the parent of Century Aluminum of Kentucky, owns primary aluminum capacity in the United States and Iceland, as well as an interest in alumina and bauxite assets in the United States and Jamaica. Century's corporate offices are located in Monterey, California.

First fully hydraulic aluminum hot rolling mill in Russia

SteelGuru - Monday, 01 Jun 2009

The Russian aluminum processing company, the Kamensk Uralsky Metallurgical Works now has the first fully hydraulic hot rolling mill in Russia. Siemens VAI Metals Technologies supplied Top Hat hydraulic cylinders and an automatic gauge control system for the new mill. With the new equipment, which is worth around two million euros, KUMZ can reduce the tolerance of its end products even further. The acceptance certificate was issued in April 2009.

Kamensk Uralsky Metallurgical Works is one of the biggest manufacturers of aluminum products in Russia. For more than 60 years the company has been manufacturing semi-finished goods made of aluminum, magnesium and aluminum-lithium alloys. Installation of the new hydraulic Top Hat cylinders and the automatic gauge control is part of a modernization project in the Kamensk-Uralsky factory near Yekaterinburg.

The two new hydraulic top-hat cylinders deliver a combined rolling force of 3,200 tonnes to the roll bite. With the help of the in-pass AGC during the final pass, considerably higher levels of precision as regards the thickness of the finished product can be achieved. An automatic mill set-up function shortens the times between passes as well as the slab to slab rolling times. An integrated data logging system provides the customer with important information on the rolling process and the behavior of the mill load. All the systems and components used are part of Siroll ALU, the integrated solution platform from Siemens for aluminum hot rolling mills.

The scope of supply also encompasses the hydraulic power unit and the valve stands. Siemens was also responsible for commissioning and on site training.

Huge Qld refinery expansion in trouble

The Age - June 1, 2009

A major expansion of Queensland's Yarwun alumina refinery has suffered a setback, amid uncertainty over a $A24.2-billion deal between Rio Tinto and Chinalco.

The deadline for the Aluminum Corporation of China (Chinalco) to agree to help fund the Yarwun expansion has been extended from May 31 to June 15.

It is the second time the deadline has been extended, after an earlier change from March 31 to May 31.

Chinalco had agreed to take a 50 per cent stake in the Yarwun refinery for $A622 million, as part of a proposed $A24.2 billion deal with Rio Tinto announced in February.

Chinalco planned to fund half the expansion costs incurred after the agreement was reached.

But with shareholders angry over aspects of the deal and Australia's Foreign Investment Review Board (FIRB) yet to approve it, Chinalco's participation in the refinery expansion, known as Yarwun 2, is uncertain.

The expansion of Yarwun would more than double the refinery's production, from two million tonnes of alumina to 3.4 million tonnes by 2011.

The Yarwun 2 expansion was approved in July 2007 and is 29 per cent complete.

In a statement, Rio Tinto said the deadline extension was requested by the Chinese state-owned company to allow it to complete project evaluation and approvals processes.

The move comes amid ongoing debate about Chinalco's planned investment in Rio Tinto.

On Monday, The Age newspaper reported that the businessman Ian Melrose would spend $200,000 this week on a TV-advertising campaign to reinforce opposition to the Rio Tinto-Chinalco deal.

The report said Mr Melrose will use images of the Tiananmen Square massacre to highlight his opposition to the planned deal.

The federal government is due to decide by June 15 whether to approve the deal. Opposition leader Malcolm Turnbull has said he is opposed to it in its current form.

© 2009 AAP

DJ Century Aluminum Unable To Reach Power Deal For Smelter

Trading Markets (press release) - Sun. May 31, 2009

SYDNEY, U.S.-based Century Aluminum (CENX) has failed to reach a new, long-term power contract for its Hawesville smelter in Kentucky, citing unfavorable business conditions, the company said in a statement dated Friday.

Stable, long-term power supply agreements are paramount to the aluminum smelting industry, which consumes vast amounts of electricity.

Century along with Rio Tinto PLC (RTP) has been working for more than five years to negotiate an unwinding of the existing contractual arrangement with E.ON AG unit Western Kentucky Energy and Big Rivers Energy, it said.

Rio Tinto owns the Sebree smelter in the region, producing almost 200,000 metric tons last year.

Century's Hawesville smelter produces around 250,000 tons of primary metal from five potlines, but curtailed one potline in March this year because of depressed metal prices.

"We have consistently supported the transaction based upon the expectation that it would produce a power contract that would support Hawesville's long-term profitability," said Hawesville vice president and plant manager Matt Powell.

"Current and expected economic conditions, however, have created the perfect storm - significant weakness in both aluminum prices and wholesale electric prices. The proposed contract might support Hawesville's viability over the long-term, but the contract's take-or-pay requirement, in its current form, could create financial hardship for the company in the short-term," Powell said.

Hawesville currently receives its power from Kenergy Corp, a member of the Big Rivers system, under a power supply agreement between Western Kentucky Energy and Kenergy. The power supply agreement expires at the end of 2010.

-By Elisabeth Behrmann, Dow Jones Newswires;

61-2-8272-4689 elisabeth.behrmann@dowjones.com