AluNews - July 2011

Kaiser Aluminum Q2 Profit Rises
RTT News - 28-Jul-2011
Kaiser Aluminum Corporation reported net income of $5 million for the second quarter 2011 compared sequentially to $11 million, for the first quarter 2011 and $0 million for the prior year second quarter. Value added revenue of $160 million for the second quarter 2011 was comparable to the first quarter 2011 and increased $12 million or 8% from the prior year second quarter reflecting the favorable impact of recent acquisitions and improving demand.
EBITDA increased sequentially to $30 million or 19% of value added revenue compared to $23 million or 15% of value added revenue in the first quarter reflecting a sequential improvement in manufacturing efficiencies and improved pass through of metal costs on certain products.
"We are pleased with the improvement and progress we made during the quarter. Solid demand across our end market applications combined with the benefit of our recent acquisitions continued to drive higher sales and higher adjusted EBITDA," said Jack A. Hockema, President, CEO and Chairman.

Kaiser's Kalamazoo plant start slower than expected
Metalbulletin.com (subscription) - 29-Jul-2011
Kaiser
Aluminum Corp.'s Kalamazoo, Mich., extrusion plant has had a slower-than-expected start. "There are a lot of uncertainties as we go through a startup," Jack Hockema, chairman, president and chief executive officer, said during Kaiser's ...

RUSAL to up exports of aluminum alloys to automakers 33% in 2011
PRIME-TASS (subscription) - 28-Jul-2011
MOSCOW, Jul 28 (PRIME) -- Russian aluminum giant UC RUSAL plans to increase primary aluminum alloys exports to the automobile industry by 33.3% on the year to 240,000 tonnes in 2011, the company’s representative told PRIME Thursday.
Aluminum alloys exports account for 24% of the company’s total alloys exports.
The exports mainly go to South Korea, Japan, Taiwan, Thailand, the U.S., and Europe.
RUSAL is the world’s largest producer of aluminum, accounting for about 10% of the global production of aluminum and 10% of global alumina output.

Special report: Goldman's new money machine: warehouses
Reuters Canada - 28-Jul-2011
LONDON/DETROIT (Reuters) - In a rundown patch of Detroit, enclosed by a cyclone fence and barbed wire, stands an unremarkable warehouse that investment bank Goldman Sachs has transformed into a money-making machine.
The derelict neighborhood off Michigan Avenue is a sharp contrast to Goldman's bustling skyscraper headquarters near Wall Street, but the two operations share one important element: management by the bank's savvy financial professionals.
A string of warehouses in Detroit, most of them operated by Goldman, has stockpiled more than a million tonnes of the industrial metal aluminum, about a quarter of global reported inventories.
Simply storing all that metal generates tens of millions of dollars in rental revenues for Goldman every year.
There's just one problem: only a trickle of the aluminum is leaving the depots, creating a supply pinch for manufacturers of everything from soft drink cans to aircraft.
The resulting spike in prices has sparked a clash between companies forced to pay more for their aluminum and wait months for it to be delivered, Goldman, which is keen to keep its cash machines humming and the London Metal Exchange (LME), the world's benchmark industrial metals market, which critics accuse of lax oversight.
Analysts question why London's metals market allows big financial players like Goldman to own the warehouses which store huge quantities of metal even as they trade the commodity.
Robin Bhar, a veteran metals analyst at Credit Agricole in London says the conflict of interest is so acute he wants U.S. and European anti-trust regulators to weigh in.
"I think it makes a mockery of the market. It's a shame," Bhar said. "This is an anti-competitive situation. It puts (some) companies at an advantage, and clearly the rest of the market at a disadvantage. It's a real, genuine concern. And I think the regulators have to look at it."
Goldman said its warehouse subsidiary Metro International Trade Services has done nothing illegal, and abides by the LME's warehousing rules. "Producers have chosen to store metal in Detroit with Metro," a Goldman spokeswoman said. "We follow the LME requirements in terms of storing and releasing metals from our warehouses."
The London Metal Exchange defends its rules. "There is a perception that consumers have not been able to get to their metal when the reality is that it is big banks, financing companies and warehouses that are not able to get to their huge tonnages of metal fast enough," said LME business development manager Chris Evans.
BUSINESS MODEL
Goldman's warehouse business relies on a lucrative opportunity enabled by the LME regulations. Those rules allow warehouses to release only a tiny fraction of their inventories per day, much less than the metal that is regularly taken in for storage.
The metal that sits in the warehouse generates lucrative rental income.
Little wonder that so many want in. Metro was acquired by Goldman in February 2010, while commodities trading firm Trafigura nabbed UK-based NEMS in March 2010, and Swiss-based group Glencore International acquired the metals warehousing unit of Italy's Pacorini last September.
Henry Bath, a warehousing firm and founding member of the London Metal Exchange in 1877, has been owned for about 40 years by traders or banks including Metallgesellschaft in the 1980s and failed U.S. energy trader Enron at the turn of the century. It now comes under the umbrella of JP Morgan, which bought the metals trading business of RBS Sempra Commodities in July last year.
Despite its rental income, Goldman's warehouse strategy apparently hasn't been enough to snap a slumping performance in commodity trading, with the company reporting a "significant" drop in revenues from a year ago in its latest quarter, the sixth time in the past 10 quarters that it has failed to expand.
CONSUMERS FUME
The long delays in metal delivery have buyers fuming. Some consumers are waiting up to a year to receive the aluminum they need and that has resulted in the perverse situation of higher prices at a time when the world is awash in the metal.
"It's driving up costs for the consumers in North America and it's not being driven up because there is a true shortage in the market. It's because of an issue of accessing metal ... in Detroit warehouses," said Nick Madden, chief procurement officer for Atlanta-based Novelis, which is owned by India's Hindalco Industries Ltd and is the world's biggest maker of rolled aluminum products. Novelis buys aluminum directly from producers but is still hit by the higher prices.
Madden estimates that the U.S. benchmark physical aluminum price is $20 to $40 a tonne higher because of the backlog at the Detroit warehouses. The physical price is currently around $2,800 per tonne.
That premium is forcing U.S. businesses to fork out millions of dollars more for the 6 million tonnes of aluminum they use annually.
It has also had a knock-on impact on the global market, which is forecast to consume about 45 million tonnes of the lightweight, durable metal this year.
Also pushing aluminum costs higher are bank financing deals, which are estimated to have locked up about 70 percent of the 4.4 million tonnes of the metal sitting in LME-registered warehouses around the world. LME inventories hit an all-time record above 4.7 million tonnes in May.
In a typical deal, a bank buys aluminum from a producer, agrees to sell it at some future point at a profit, and strikes a warehouse deal to store it cheaply for an extended time period.
The combination of the financing deals and the metal trapped in Detroit depots, means only a fraction of the inventories are available to the market.
Premiums for physical aluminum -- the amount paid above the LME's cash contract currently trading at $2,620 a tonne -- in the U.S. Midwest hit a record high of $210 a tonne in May, up about 50 percent from late last year. In Europe, the premium is at records above $200 a tonne, double the levels seen in January 2010.
The ripple effect into Asia has seen the premium paid in Japan increase 6 percent to $120 a tonne in the third quarter from the previous quarter, the first rise in nearly six quarters.
COLLECTING THE RENT
You won't hear banks like Goldman complaining. Rental income continues to pour in at the 19 Detroit area warehouses run by Metro as of June.
From the outside one recent afternoon, a depot in the Detroit suburb of Mt Clemens appeared to be deserted. But neighbors say the place is a whirl of activity in the early hours of the morning when metal is usually delivered for storage.
The LME sets the maximum allowable rent at 41 U.S. cents per day per tonne. At that rate, Goldman's warehouse operation in Detroit -- said to be holding more than 1.1 million tonnes -- could be generating as much as $451,000 per day or about $165 million a year in revenue.
An exact figure cannot be calculated because many clients negotiate lower rental rates and Goldman declined to detail its income from its warehouse business. But when Swiss-based trading company Glencore listed earlier this year it revealed that its metals warehousing unit generated $31 million in profit on $220 million in gross revenue in 2010.
LONG HISTORY
Caught between consumers and warehouse operators is the 134-year old LME, one of the world's last exchanges with open-outcry trading. Sessions take place in a trading ring with red padded seats while visitors can watch from a gallery. Traders juggle multiple telephones and use archaic hand signals to fill orders from consumers, producers and hedge funds.
The ring is a perhaps more civilized version of the tumultuous trading pits made famous in Chicago. Each of six major industrial metals including copper and nickel are traded for five minute bursts in the morning and afternoon. Only 12 firms have access to the ring, arranged in fixed positions in a circle, with many others involved via the ring dealers and on the LME's electronic trading system.
Longer sessions in the late morning and afternoon allow trading of all metals simultaneously and are known as "the kerb" from the days when dealers continued to trade on the kerb, or sidewalk, after leaving the exchange.
The LME certifies and regulates the Detroit sheds as part of a global network of more than 640 warehouses. The network is meant to even out swings in volatile metals markets. During recessions, surplus metal can be stored until economies recover and demand picks up, when the metal can be released.
But that function is now being undermined by the backlog in Detroit.
LME rules stipulate that warehouses must deliver a certain amount of metal each day. However the rules apply not to each warehouse but to each city that a company has warehouses in. At the moment, a warehouse operator needs to deliver just 1,500 tonnes a day per city, whether it owns one warehouse there or dozens.
That means each of Metro's Detroit warehouses need to release only 79 tonnes of aluminum a day. At that rate, it would take two years to clear the stocks held by Goldman's Detroit warehouses.
The backlog sparked outrage last year, prompting the LME to task London-based consultancy Europe Economics to look into its rules. Europe Economics recommended the exchange raise its minimum delivery rates and earlier this month the exchange announced a new regime for operators with stocks of over 900,000 tonnes in one city.
From April 2012 the minimum delivery rate will double to 3,000 tonnes a day.
Critics dismiss the move as too small to have any real effect, especially because of the delay until it comes in.
"The move is too little and too late to have a material effect in the near-term on an already very tight physical market, particularly in the U.S.," Morgan Stanley analysts said in a July note.
A senior executive at a metals brokerage told Reuters "the recommendations won't change anything. The problem will still be there six, nine months down the line."
"If Detroit has 1.1 million tonnes at the moment, what's to say it won't have 2 million tonnes next year," he said.
MOVING MORE METAL
One obvious solution would be to impose minimum delivery requirements per warehouse or per square meter of warehouse space rather than per city.
It's not as if the warehouses can't cope with delivering more stock: large operations can shift much more than 3,000 tonnes a day, warehousing sources say. An experienced forklift driver takes about 20 minutes to load one 20-tonne truck with aluminum in the United States. That means one warehouse in Detroit with two doors, two forklifts and an eight-hour working day could move out as much as 1,920 tonnes of metal every day.
"If you take Detroit in particular, those warehouses historically extracted metal at a faster rate ... the infrastructure is there," a senior analyst in the metals industry told Reuters.
Madden at Novelis said: "I don't know the specific details of every warehouse but our view is that they seem to be able to absorb metal coming in at almost an infinite rate and so we feel there's a lot more they can do on the output side to push up the (load out) rates."
The LME could also crack down in the same way it did in 1998 when it banned Metro from taking any more copper into its Long Beach and Los Angeles warehouses. Then the complaints were said to have come from copper consumers worried that 80 percent of total copper stocks in LME-approved warehouses were held in California.
The exchange argues that any change right now might disrupt the market.
"Changes to the delivery out rate have required careful consideration because it will impact the cost structure for those holding metal, and were those costs to rise sharply it could affect the way that metal is stored and traded," said the LME's Evans.
The exchange could also rule that a warehouse cannot charge rent once aluminum has been purchased, no matter how long it takes to ship it. But a change like that would hit the LME itself as it receives about 1 percent of the rental income earned by the warehouses it approves.
LEGAL FEARS
Nobody at the LME will say whether the Europe Economics study -- industry sources said it talked to more than 40 companies -- advised more radical measures, arguing that such information is "proprietary".
In any case, say metal markets sources, LME officials may be hesitant to make bigger changes because they fear legal action from the likes of Goldman, which could argue that Metro's business model has been based on existing LME warehouse rules.
The LME declined to comment on possible legal challenges, but its Chief Executive Martin Abbott said at a recent briefing that the warehouse delays were not causing market and price distortions.
"No, I don't believe it is," Abbott said, when asked if the situation was causing distortions in the market.
Abbott said the exchange had received no official complaints from consumers about bottlenecks at warehouses. The LME also dismisses concerns about banks trading metal and owning the warehouses where it is stored.
While a British parliamentary committee raised the issue in May, Britain's Office of Fair Trading declined to open a probe.
The U.S. Commodity Futures Trading Commission, which regulates the futures and options markets, said it would not comment.
Britain's Financial Services Authority, which regulates exchanges where commodity futures are traded but not warehouses that store physical material, declined to comment.
WHAT NEXT?
The lack of real change has some in the industry questioning the very structure of the LME, which, unlike its publicly owned U.S.-based rival commodities exchanges, is owned by many of the financial institutions that trade there.
"The belief is that they are focused on serving their shareholders; most of them being the banks ... We see our clients and contacts trying to avoid the LME as much as possible now," said Jorge Vazquez, Managing Director of the Aluminum Intelligence Unit at HARBOR Commodity Research.
That concern is growing. Critics of the exchange point to a potential problem with zinc supply though New Orleans, where inventories now account for 61 percent of total LME-registered stocks.
Most of the warehouses in New Orleans are owned by Goldman and Glencore.
Metal industry sources believe regulators should take a closer look at the possible conflict of interest that arises when trading houses also own the warehouses.
"If the whole thrust of regulation and regulatory reform is increased transparency and open and above board operations, letting banks own warehouses seems to run entirely counter to that," said Frances Hudson, global thematic strategist at Standard Life Investments said.
The LME says it enforces a strong separation between warehouses and the trading arms of their owners. Just this week it proposed that companies which own warehouses should engage an independent third-party to verify the robustness of Chinese walls.
"We enforce it through regular audits of warehouses," said the LME's Evans. "If people say Chinese walls are leaking then they should bring us evidence and we'll investigate."
(Pratima Desai, Susan Thomas and Melanie Burton reported from London; Clare Baldwin reported from Detroit; with additional reporting by Chris Kelly in New York and Karen Norton in London; Graphics by Vincent Flasseur; Editing by Eric Onstad, Richard Mably and Simon Robinson)
(Created by Simon Robinson)

Alba reinstates 70 staff
Trade Arabia - 28-Jul-2011
Aluminium Bahrain (Alba), ranked one of the largest smelters in the world, announced the reinstatement of 70 staff who had been dismissed during the unrest.
The decision was made by an appeal committee set up by Alba board of directors chairman Mahmood Hashim Al Kooheji to re-investigate all such cases.
It takes the total number of reinstated staff to 204, which includes 134 workers who returned to work earlier this month.
"The move underlines Alba's continuing commitment to support the government of Bahrain's initiatives in strengthening social, economic and political stability across the kingdom," said an Alba statement.
According to the General Federation of Bahrain Trade Unions 416 Alba staff were dismissed from their jobs for failing to show up for work during the unrest. – TradeArabia News Service

Dubai firm to develop $5.6b smelting project
Jakarta Post - 28-Jul-2011
East Kutai regent Isran Noor said Wednesday that a Dubai-based company and an Indian aluminum producer had started the development of an aluminum smelter in Muara Wahau, East Kutai, East Kalimantan.
In addition to the smelter, the two companies — Mineral, Energy, Commodities (MEC) Coal and National Aluminum Co. (Nalco) — would also set up a power plant with a total capacity of 1,400 megawatts and 142 kilometers of railway track connecting Muara Wahau and a port in Lubuk Tutung, Isran reported.
“The total investment for the project reaches US$5.6 billion. They have started the development and we hope that by the end of 2012, the smelter can begin operating with a total capacity of 500,000 metric tons per year,” he told reporters after a discussion on coal mining in Jakarta.
The smelter would be built near the coal mining site of PT Tekno Orbit Persada, a subsidiary of MEC Coal, in Muara Wahau, Isran said. The smelter was designed to process bauxite into aluminum, he added.
He revealed that of 1,400 megawatts capacity of the planned power plant, 200 megawatts would be utilized for people living around the power plant.
MEC said in a press statement available on its website that the projects would create around 5,000 jobs. The company also plans to build a fertilizer plant in East Kalimantan.
MEC Coal is a subsidiary of Dubai-based MEC holdings and the Ras Al-Khaimah Investment Authority, while MEC holdings is a subsidiary of Dubai-based Trimex Group, which invests in the energy and mineral sectors.
According to MEC Coal’s website, Tekno Orbit Persada’s coal concession is located approximately 125 kilometers northwest of the coastal town of Sangatta and covers 5,000 hectares of mining land.
The mining concession contains Joint Ore Reserves Committee (JORC) compliant resources of 1.5 billion tons of environmentally friendly coal.
Last month, Russia also expressed its interest to set up nickel and copper smelters in East Kalimantan. The country said it had prepared around $6 billion to fund the planned investments. The raw materials will be taken from Sumbawa in West Nusa Tenggara province, Papua province and Halmahera in North Maluku province.
PT Aneka Tambang (Antam), the country’s second largest nickel producer, also plans to build an aluminum smelter in Tayan, West Kalimantan. The plant will have an installed capacity to smelter 300,000 tons per year. On February, PT Newmont Nusa Tenggara, the operator of the Batu Hijau gold and copper mine, announced it would not build a smelter in its operation area. The company’s feasibility study showed that the project was not economical due to the difficulty of securing a raw material supply.
The 2009 Law on Mineral and Coal stipulates that starting 2014, all miners are no longer allowed to export raw mine products.
Indonesia has the only aluminum smelter in Southeast Asia located in Asahan, North Sumatra. The smelter, which was built in 1976, is currently operated by PT Indonesia Asahan Aluminium (Inalum). Inalum allocates only 40 percent of production to the domestic market, while exporting the rest to Japan.

Noranda Aluminum mulls $100M expansion

Metalbulletin.com (subscription) - 1 hour ago

Noranda Aluminum Holding Corp. is considering spending as much as $100 million on expansions that could add incremental capacity at its flat-rolling operations and double rod output. Noranda Aluminum Holding Corp. is considering spending as much as ...

Kalimantan's $5.6b Smelter To Operate in 2012: Official
Jakarta Globe - 27-Jul-2011
Operations at Dubai-based MEC Holdings’ aluminum smelter in East Kalimantan are expected to start as soon as next year, a local government official said on Wednesday.
Construction of the $5.6 billion smelter, a joint venture between MEC and India’s second-largest aluminum producer, Nalco, began in East Kutai district last year. “They are working on the project now,” Isran Noor, East Kutai district head, said on Wednesday in Jakarta. “I hope that by the end of 2012 they will finish the project.”
Nalco operates in Indonesia through its subsidiary Nalco International. MEC is a subsidiary of Trimex Group, a mineral resources company based in the United Arab Emirates.
The project comes as the Indonesian government prepares to enforce a regulation that will require all miners to build smelters in an attempt to boost the value of exported commodities and create more local jobs. Under the rule, which will come into effect in 2014, all mining companies will have to process raw commodities, ranging from precious metals like gold to base metals like tin, before they are shipped overseas.
The MEC-Nalco aluminium smelter is being built in Muara Wahau, East Kutai. According to the two firms’ Web sites, the facility will be supported by a 1,400-megawatt power plant and a 150-kilometer railway linking with a port in Lubuk Tutung, also in East Kutai.
Once it starts operating, the aluminum smelter will be able produce 50,000 tons of aluminum wire per year. The facility will be the third smelter producing the commodity in Indonesia, with the Indonesia Asahan Aluminium (Inalum) smelter and another facility operated by Nalco being the others.
Muara Wahau was selected as the site for the project because the area contains huge coal resources that would be able to fuel the power plant and bauxite reserves that can be processed into aluminum.
Nalco has been investing heavily in Indonesia over recent years. The Indian state-owned company invested as much as $3 billion to build a power plant and aluminum smelter in South Sumatra, according to the company’s Web site. The South Sumatra project, which started operations in 2006, can produce as much as 500,000 tons of aluminium wire each year.
Indonesian miners, such as state-owned gold miner Aneka Tambang and tin producer Timah, have said they supported the government’s regulation on processing raw commodities, and have announced plans to build smelters in their respective plants.
Weda Bay Nickel, 10 percent owned by Aneka Tambang and 90 percent by French mining giant Eramet, have also announced plans to build a smelter in Halmahera, North Maluku, at an estimated cost of $4.6 billion. Construction of the facility is scheduled to start in 2013 and would be built in cooperation with Mitsubishi of Japan and Aneka Tambang.

Vedanta to face tough questions and protests at AGM Reuters - 27-Jul-2011
(Reuters) - Miner Vedanta will face tough questions on its social conscience and governance when it meets investors on Wednesday, with pressure groups set to hold fresh protests over plans for a refinery expansion and bauxite mine in India's Orissa state.
Pressure groups including Survival International, Amnesty International and others have long opposed the projected mine -- planned for an area considered sacred by indigenous people -- as well as proposals to increase capacity at Vedanta's Lanjigarh alumina refinery to 6 million tonnes per year from 1 million.
They were joined last year by asset manager Aviva Investors, part of insurer Aviva , and a small but vocal shareholder whose move to join the protest marked a more activist stance from institutional investors on social issues.
Aviva has said it welcomed progress from Vedanta on social issues, including the appointment of a chief sustainability officer, but said this month it would withhold support for three key resolutions at the annual meeting.
Vedanta, one of India's biggest aluminium producers and keen to capitalise on growing demand in the subcontinent, has denied its plans for expansion at Lanjigarh would harm the indigenous Dongria Kondh people, saying it would help lift mineral-rich Orissa out of poverty.
Last week, the Orissa High Court upheld the government's decision to halt the refinery expansion plans. Vedanta can, however, submit a new bid for environmental clearance.
Vedanta, 62 percent-owned by the Agarwal family, is also likely to face questions over corporate governance, an issue of increased debate in the mining sector after a storm at rival ENRC last month forced a corporate governance review.
Like Vedanta, ENRC has hefty founder-shareholders -- a phenomenon not uncommon elsewhere but unusual in U.S. and UK markets where ownership tends to be more dispersed.
It is also likely to update shareholders on progress in the long-delayed deal to purchase Cairn India, given conditional approval by the Indian government last month.
The parties are negotiating over royalties, with India's oil ministry pushing Cairn India to share these with the state-run Oil and Natural Gas Corp . ONGC has a 30 percent stake but pays 100 percent of royalties.
Vedanta, whose financial year runs to end-March, is due to update the market on first-quarter

Eliminating benefits boosts Century's profits Daily Mail - Charleston - 27-Jul-2011
Eliminating health coverage to retirees from its idled Ravenswood plant has once again boosted Century Aluminum's profits, the company said.
Changes Century made to its West Virginia retiree health care program boosted profits by $11 million in the second quarter, the company said in a statement.
That's on top of $11.5 million in savings the company reported in the first quarter of the year.
Early last year, Century informed retirees 65 and older it would no longer provide health insurance or prescription drug coverage for them or their spouses beginning Jan. 1.
Later last year, the company informed early retirees - those between the ages of 55 and 65 - they too would be cut off.
Retirees have been lobbying political leaders to step in on their behalf ever since.
Acting Gov. Earl Ray Tomblin has promised that any talks the state has with the company about restarting the Ravenswood plant, which closed in February 2009, would include discussions about reinstating health coverage.
The company has said it will subsidize early retiree COBRA coverage through this month using funds from the federal Early Retiree Reinsurance Program.
Although Century said the changes boosted profits in the last quarter, the company told analysts it is downgrading second quarter profit forecasts.
That's because the company's production facility in Hawesville, Ky., has not been meeting production targets and has incurred higher costs since restarting some aluminum production lines.
Century officials will detail earnings and discuss issues at the Ravenswood plant when the company formally announces second quarter profits next month.

NALCO sees lower profitability on rising input costs
Moneycontrol.com - 26-Jul-2011
NEW DELHI (Reuters) - State-run National Aluminium Co (NALCO) expects a 10-12 percent rise in turnover this fiscal as new capacities gets added, but rising raw material costs are seen denting profitability, its chairman said on Tuesday.
"The input cost on raw material and coal have gone up during the current year, which will reduce margins," B.L. Bagra, chairman and managing director of NALCO told Reuters.
"Our profit may go up by 4-5 percent this fiscal."
NALCO expects price realisations on aluminum to increase by 7-8 percent in the fiscal year to March 2012 to an average of $2,500-$2,600 per tonne.

RIO Tinto Alcan remains cautious about the short-term outlook for aluminium and says costs are still rising.
The Australian - 26-Jul-2011
Chief executive Jacynthe Cote told investors in Sydney and Melbourne yesterday that while the physical market remained tight, inventories were at high levels.
Merrill Lynch analyst Peter O'Connor said costs influenced by foreign exchange movements were pressuring margins. He said the proposed carbon tax was another headwind that could add $US60 ($55) a tonne to the price of aluminium for the domestic smelting industry.
"The alumina refining and aluminium smelting industries are witnessing continued pressures on cash costs and capital charges," Mr O'Connor said.
While costs are an issue, Ms Cote said the market was gradually recovering and prices were continuing to improve.
She said the company would monitor the sector and take advantage of price opportunities.
The Alcan boss said the company had a competitive advantage in the sector because of its access to bauxite, power, technology and its growth pipeline.
"Strong demand is driven by emerging economies," she said.
Mr O'Connor said Rio was "long" alumina and was optimistic about the move to market-based pricing. "Rio has moved quickly to capture this benefit, and has already transitioned a large proportion of internal sales (to) the new pricing structure. This year is likely the first year to benefit," he said.
The mining analyst said that, given the lack of immediate supply, prices were unlikely to fall much in the short term.
"Although we see scope for somewhat higher prices in the second half of 2011, the smelting capacity overhang remains substantial, suggesting that any sustained appreciation could be met by higher output, ultimately limiting the immediate upside to quotations," he said.

Novelis to invest $200m in Oswego, New York plant
Automotive Business Review - 26-Jul-2011
Novelis, a provider of aluminum automotive sheet, will invest $200m to expand its operations in Oswego, New York, to meet the demand for aluminum sheet for the auto industry in the US.
The company said that the expansion will allow the Oswego plant to produce 200,000 tons more aluminum sheet, five times of its North America capacity.
Novelis's aluminum sheet is being used for making structural components and exterior body panels for vehicles and it can be found in 117 different vehicle models produced by automakers world wide.
Novelis president and CEO Philip Martens said the company is proud to continue building upon its leadership in providing technically innovative aluminum sheet for the global automotive market.
"As the world's number one supplier of auto sheet, we are in a unique position to support the growing demand from automakers for the use of lighter weight materials in new vehicle designs," Martens said.
"This world class expansion will provide these customers with highly engineered aluminum sheet designed to significantly improve the fuel economy and reduce emissions of new vehicles currently in development, while also reducing the lifecycle carbon footprint of their overall operations."
The company expects to hire 100 new employess, production workers and maintenance personnel over the next two years, leading to the start-up of two new high-performance aluminum processing lines in the summer of 2013.

Norsk Hydro Eyes Sunndal Restart By Year-end, Timing Undecided
Fox Business - 26-Jul-2011
LONDON -(Dow Jones)- Norwegian aluminum producer Norsk Hydro ASA (NHY.OS) is aiming to fully restart its Sunndal smelter in Norway by the end of the year, but still hasn't decided on timing for the return to full capacity.
The company said Tuesday that the restart of the remaining 85,000 metric tons of annualized capacity will depend on "continued satisfactory market conditions" and that its timing will be decided later.
In June 2011, Hydro started up 15,000 tons of curtailed production capacity at Sunndal, which has been at reduced capacity since March 2009. The 40-year-old, 100,000-tons-a-year potline is the oldest in the company and is one of several European smelters whose fate hangs in the balance as a result of high costs, particularly for energy.
Copyright © 2011 Dow Jones Newswires

Nalco gets Central nod to mine Bauxite
IBNLive.com - 26-Jul-2011
26-Jul-2011

BHUBANESWAR: The Ministry of Environment and Forests has sanctioned stage-II and final level clearance to National Aluminium Company Limited (Nalco) for diversion of 110.3 hectares of forest land for bauxite mining lease in Koraput.
The forest diversion was required for the renewal of its mining lease for 20 years in Panchpatmali South Block. The original lease period was for 30 years. Since the Navratna PSU has embarked upon a slew of expansion projects, this forest clearance will help enhance its production capacity.
As per the approval, the period of diversion of the forest land shall be for a duration co-terminus with the period of mining lease proposed to be granted under the Mines and Minerals (Development & Regulating) Act, 1957, or Rules framed thereunder, subject to a maximum period of 20 years.
As per the lease conditions, Nalco has to fulfil certain conditions laid down by the ministry. The company has to take up afforestation on degraded forest land and prepare plan to wean away the practitioners of the ecologically destructive jhum cultivation in vicinity of the forest land being diverted and provide funds for its implementation.
The Centre, while granting the approval, has also directed the State Government to ensure the proper utilisation of the company’s CSR fund for peripheral development activities.
The State Government had earlier sought approval of the Centre for the diversion of 110.3 hectares forest land as per Forest (Conservation) Act, 1980. After receiving the in-principle Stage-I approval for the diversion, the Government furnished compliance report and sought the grant of final approval.

Rusal to start refractory bauxite production in 2012
Industrial Minerals (registration) - 26-Jul-2011
The world's largest
aluminium producer, Russia's UC Rusal, has announced plans to develop a refractory-grade bauxite mine in the Republic of Komi, western Russia, by the end of next year. ...

Anode Stub Graphite Coating Systems for Aluminium Smelters from VHE
Azom.com - 24-Jul-2011
t is usual practice in pre-bake aluminium smelters to coat anode stubs (or "pins") with a thin layer of graphite prior to sealing them into the carbon anode with molten cast iron. This graphite film significantly reduces the risk of the cast iron fusing into the stub surface, which can prevent easy removal of the cast iron "thimble" when the spent anode rod is recycled.
In the past, rodding plants often used an organic solvent and graphite mixture which quickly dried at ambient temperatures. Environmental considerations have largely eliminated this practice and today most smelters use an aqueous graphite suspension. The use of water as the diluent means that careful drying is necessary to eliminate the risk of dangerous steam explosions during the anode sealing process.
VHE's Anode Stub Graphite Coating Systems comprise a graphite coating tank and a drying system. The coating tank contains an aqueous graphite suspension and is elevated to the anode rod by hydraulic or pneumatic rams such that the anode stubs are partially immersed in the graphite mixture. The graphite is kept in suspension by continuous agitation of the tank contents.
The drying module may be one of several options, including gas burners, high intensity radiant electric heaters, or induction pre-heating, where residual heat in the stubs dries the graphite film.

Emirates Aluminium plans $4.5 billion expansion
BusinessWeek - 24-Jul-2011
A government-run aluminum smelter in the United Arab Emirates plans to spend $4.5 billion to nearly double its potential output of the widely used metal.
Emirates Aluminium said Sunday that its board approved the expansion plan to increase annual capacity to 1.3 million metric tons (1.4 million tons) by the end of 2014. The facility can now produce 750,000 metric tons (827,000 tons) of aluminum per year.
The Emirates Aluminium smelter is located at al-Taweelah, a coastal industrial complex between Dubai and the Emirati capital, Abu Dhabi.
The company is a joint venture between state-run Dubai Aluminium and Abu Dhabi government investment firm Mubadala Development Company.

NALCO aluminum project in Iran remains a non starter
SteelGuru - 24-Jul-2011
BS reported that NALCO’s plans to spread its arms across the globe aren't taking shape the way it had expected them to. The company's INR 10,000 crore project to set up 310,000 tonne aluminum smelter and 750 MW power plant in Iran continues to languish due to paucity of funds
Mr BL Bagra acting CMD & finance director of NALCO said that the geo political situation in Iran is not favorable due to which we have not been able to proceed with the financial closure for the project.
The project was announced in 2007 and the total project cost then was INR 8,000 crore which now stands in excess of INR 10,000 crore. NALCO had planned to ship bauxite from its Indian mines to Iran and convert it into aluminum. It had signed a MoU with Iran's Kerman Development Organization but an agreement to form JV hasn't been floated yet.
In the meantime, NALCO had held talks with various financial companies, including the Islamic Bank of Indonesia which had shown interest in financing the project. The talks however, did not succeed.
This is not the first overseas project of NALCO to hit a roadblock. Around the same time when the Iran project was announced, the company spoke of setting up aluminum smelters in South Africa and Saudi Arabia. The African project was INR 15,000 crore, half a million tonne smelter and 1,250 MW power plant.
The Saudi Arabian project was shelved at the planning stage and no details on the proposed capacities were given. The company reasoned lack of coal linkages for its decision.
Of the 4 international projects announced, only the Indonesian smelter is close to getting started. NALCO is expected to choose its coal partner this month. It is looking to set up 0.5 million tonne aluminum smelter and a 1,250 MW power plant at a cost of USD 4 billion.
(Sourced from www.business-standard.com)

Emal creates 2000 jobs as it plans capacity expansion
SteelGuru - 24-Jul-2011
Gulf News reported that Emirates Aluminum has created 2,000 jobs that serve a growing clientele base of 280 customers in 36 countries worldwide as it plans to expand production capacity.
Emal uses DX reduction cell technology to produce 750,000 tonnes of aluminum annually with future potential to double output making it the largest smelter in the world.
Mr Saeed Fadhel Al Mazrooei president and CEO of Emal said that the USD 5.7 billion JV between Dubai Aluminum and Mubadala Investment Company makes Emal one of the largest industrial projects in the UAE outside oil and gas and one of the key projects leading the diversification of the UAE's economy.
Mr Al Mazrooei said that Emal supplies 280 customers in 36 countries with high quality aluminum which is available as sow, standard ingots, sheet ingots and extrusion billets. ISO9000 certified sow is traded on the London Metals Exchange.
An advanced infrastructure at the Al Taweelah site provides customers with guaranteed, reliable and sustainable production and distribution. The site includes a 2,000 MW power plant, carbon plant and flexible cast house with a wide variety of world class products. A purpose built wharf at Khalifa Port shortens the supply chain of raw materials direct from sea to smelter.
He added that Emal uses the most sustainable technologies available worldwide to reduce emissions in line with Environment Agency Abu Dhabi requirements to minimize its carbon footprint.
Emal has created 2,000 jobs with emiratization at the core of its employment strategy. The company has also introduced scholarship programs to provide technical training for local graduates with guaranteed job opportunities.
Mr Al Mazrooei said that Emal supplies the world with high-quality metal. Emal has established a global customer base that currently includes 280 customers in 36 countries with high quality aluminum which we plan to double upon completion of Phase 2. Although we supply markets globally, Emal has current focus markets on Asia, Europe, the Middle East and North America.
He said that Emal is currently in the advanced stages of conducting feasibility studies. Most recently we have awarded Feed for our Phase Two expansion. These studies will determine the amount of investment required for the construction of Phase Two which has the potential to double Emal's production to 1.3 million tonnes of aluminum per annum.
(Sourced from Gulf News)

China to add 1 million tonnes of alumina capacity - NDRC
SteelGuru - 22-Jul-2011
Reuters reported that China will add 1 million tonnes a year of alumina capacity adding to its status as world's largest producer.
The National Development and Reform Commission has approved Shanxi Tongde Aluminum Company's plan to build 1 million tonne per year alumina refinery in Baode County in Shanxi province in the north. The plan also includes a power plant and a bauxite mine the ores refined into alumina which is the main material for the production of primary aluminum.
China is also the world's top producer of primary aluminum. The country produced a record 3.143 million tonnes of alumina in June indicating an annual operational capacity of 37.716 million tonnes.
In the H1 of 2011, alumina production rose 17.8% on the year to 17.486 million tonnes. Increased domestic alumina production cut demand for imports which fell 57% on the year to 1.02 million tonnes in the H1 of 2011. In June, imports fell to 70,000 tonnes almost a tenth of the 674,519 tonnes imported in January 2010.

Orbite Successfully Applies Its Alumina Extraction Process to Bauxite
Marketwire (press release) - 21-Jul-2011
MONTREAL, QUEBEC--(Marketwire - July 21, 2011) - Exploration Orbite VSPA (TSX VENTURE:ORT.A) announces that it has successfully extracted alumina from samples of Guinean bauxite. Repeated internal laboratory tests and reviews by independent engineers have confirmed the potential of Orbite's process to extract alumina from bauxite. Orbite's radical innovation has opened the door to an immense new market for the corporation.
A potential alternative to the Bayer process
Laboratory tests at Orbite's Cap Chat facility were conducted by processing bauxite under the patented Orbite process. In particular, the rate of alumina extraction obtained with the tested bauxite compares well with that of the high-alumina clay from Orbite's Grande-Vallée deposit under similar conditions. The quality of the extracted alumina and the application of the Orbite process on bauxite lead management to believe that the Orbite process has the potential to become a viable substitute for the Bayer process. The Bayer process has remained virtually unchanged since its invention in 1887 by Karl Josef Bayer.
"These positive lab tests offer the potential for Orbite's unique alumina extraction process to become a substitute for the Bayer process currently used by the bauxite industry," explained Dr. Joel Fournier, Vice-President, Technologies. "The latest extraction tests demonstrate the possibility of adapting Orbite's patented alumina extraction process to the broader global bauxite market. This would give alumina producers around the world access to a more affordable and environmentally friendly alternative to the Bayer process."
The test results were reviewed by SENECA, an independent and renowned chemical process engineering consulting firm. "We have reviewed the methodology, lab log book and results, and we can confirm the strong extraction potential observed in these experiments using Orbite's technology," stated Raymond Simoneau, Senior Chemical Engineer and Vice-President, Engineering Development at SENECA.
New possibilities for Orbite's patented process
Companies from around the world involved in the extraction of alumina from bauxite continue to make significant investments in researching new ways to manage bauxite residue (a residue of the alumina refining process also known as red mud) in order to minimize the negative environmental impact of its disposal. "Many of today's aluminum producers are looking for new ways to reduce their environmental footprint, and the world is becoming increasingly concerned with the impact of red mud resulting from the Bayer process, particularly since the deadly spill in Hungary last year," said Richard Boudreault, CEO of Orbite. "Considering that Orbite's patented and independently produced alumina generates higher purity alumina without producing the harmful and toxic red mud, we feel confident in our ability to establish relationships with major producers. This new development of extracting alumina from bauxite using the patented Orbite process may result in the possible licensing of our exclusive technology to numerous bauxite refiners worldwide."
World bauxite resources are estimated at between 55 to 75 billion tonnes, and on average, four to five tonnes of bauxite are required to create two tonnes of alumina, from which one tonne of aluminum can be produced. At least 85% of world bauxite production is used in the manufacturing of alumina via the Bayer process(i). The Bayer process uses large quantities of electricity, produces greenhouse gases, and generates toxic red mud ponds. Each metric tonne of alumina produced creates approximately 1.5 metric tonne of red mud(ii). With more than 70 million tonnes of red mud residue generated annually from bauxite processing, the environmental cost of producing alumina with the Bayer process is significant.(iii) The bauxite market is considerable, and with Orbite's unique process, the corporation intends to continue investing time and resources in order to gain a share of this global market.
The foregoing do not constitute a "preliminary feasibility study", a "pre-feasibility study", a "feasibility study" or a "preliminary economic assessment" within the meaning of Regulation 43-101 respecting standards of disclosure for mineral projects (Québec) ("NI 43-101"). No feasibility study, pre-feasibility study or feasibility study pursuant to the requirements of NI 43-101 has been completed to date by Orbite.
About Orbite
Orbite owns 100% of the exclusive mining rights on its 6,441-hectare Grande-Vallée property, the site of an aluminous clay deposit located 32 km northeast of Murdochville, and a 28,000 sq. ft. at scale facility in Cap Chat, both in the Gaspé region. The latest NI 43-101 report issued has identified an Indicated Resource varying between 800 million and 1 billion tonnes of aluminous clay in part of the deposit, thus representing a half-century of the total current Canadian alumina imported. The higher quality metallurgical alumina, containing less iron and silicium impurities, produced by Orbite's process has been independently utilized by internationally renowned facilities such as INRS and SINTEF to produce high quality aluminum. The Corporation also owns the intellectual property rights to a unique Canada and U.S.-patented process for extracting alumina from aluminous ores and for which other international patents are also pending. Orbite is planning on offering smelter grade (SGA) and high purity alumina (HPA) as well as licensing its technologies to well qualified producers. www.orbitealuminae.com

Vietnam aims to start alumina production in September-report
Reuters - 20-Jul-2011
(Reuters) - Vietnam will produce the first alumina from a bauxite complex in the Central Highlands in September after months of delays caused by adverse weather, power shortages and slow equipment delivery, the official Vietnam News Agency reported on Wednesday.
The country's first alumina plant in Lam Dong province is now due to get its first product on Sept. 20, the report said, quoting Tran Duong Le, deputy director of the complex's management board.
Last October officials said the $460 million Tan Rai alumina plant, invested by state mining group Vinacomin, would start operations in February 2011 and being exporting in March.
"Construction progress has been far behind initial plans because of unfavourable weather with much rain, prolonged power shortages, a lack of labour and slow procedures for importing equipment," Le said in the report.
The Tan Rai refinery is slated to produce 600,000 tonnes a year of alumina, a white powder made from bauxite ore for producing aluminium.
Construction, equipment installation and test-runs have almost been completed in connection with a thermal power plant that serves the complex, the report said.
Vinacomin, or the Vietnam National Coal and Mineral Industries Group, has also been developing the Nhan Co project in Lam Dong's neighbouring province of Dak Nong, with projected initial output of 600,000 tonnes of alumina.
The bauxite works have triggered rare public criticism over potential environmental damage and Chinese involvement, but Prime Minister Nguyen Tan Dung has stood by the projects, saying they would pave the way for an aluminium industry in Vietnam.
Vinacomin has awarded the engineering, procurement and construction contract for both the complexes in Lam Dong and Dak Nong to China Aluminum International Engineering Co (Chalieco).
Chalieco is a subsidiary of state-owned Aluminum Corp of China, or Chinalco, the country's top aluminium producer.
Vietnam's mostly untouched bauxite ore reserves are estimated at between 5.6 billion and 8.3 billion tonnes, making it the world's third-largest after Guinea and Australia.
Lam Dong alone has more than 1 billion tonnes, provincial authorities have said.
Vinacomin planned to start operating the Nhan Co complex in Dak Nong in 2012, Deputy Chief Executive Bui Van Khich was quoted as saying by the Saigon Times Online newspaper (www.thesaigontimes.vn) in April.
Vinacomin has also started a two-year exploration of the bauxite reserves in Cambodia's eastern province of Mondulkiri bordering Dak Nong, the report said.
Lam Dong and Dak Nong are among Vietnam's biggest coffee growing provinces but the bauxite mining areas would not hurt coffee trees, traders said. Vietnam is the world's second-largest coffee producer after Brazil.
(Reporting by Ho Binh Minh; Editing by Ed Lane)

Kaiser Aluminum to Expand Zerospace Extrusion Facility
Azom.com - 19-Jul-2011
Kaiser Aluminum Corporation (Nasdaq:KALU) today announced it has commenced expansion of its Kaiser Alexco hard alloy aerospace extrusion facility in Chandler, Arizona. The investment of approximately $11 million is expected to be completed by year end and will provide additional extrusion and heat treat capacity to meet growing demand for these products in the marketplace.
"Today's environment of unprecedented demand and growth in commercial aerospace offers a significant opportunity to leverage our manufacturing platform and market presence to drive growth," said Jack A Hockema, President, CEO and Chairman. "Hard alloy extruded shapes represent an important part of our broad product offering for aerospace applications, and the expansion of the facility will further enhance our position as a strategic supplier of aerospace extrusions in addition to value-added plate, sheet, cold finish products and drawn tube," concluded Mr. Hockema.

Settled. Indonesia to buy Inalum stake for $700m
FT Tilt - 200-Jul-2011
After much debate, the Indonesian government has decided it will pay $700m for a 59 per cent stake in Indonesia Asahan Aluminium (Inalum) that is held by Nippon Asahan Aluminium.
According to the contract agreed by NAA and Indonesia, the Japanese company has to give up or reduce its stake in the joint venture by 2013. The Indonesian government, NAA and Japan’s trade ministry began negotiations last year over the venture, which also includes a hydro power plant and an aluminium smelter.
The Indonesian government, which is taking steps to ensure greater control over its resources, was agreeable to letting the Japanese company continue to operate as a minority partner. But the Japanese company wanted to extend the contract for another 30 years, with majority control and a fresh investment of some $300m to boost capacity, local media reported.
Inalum was set up in 1978 under a build, own and transfer contract till 2013. Inalum’s production of 230,000 tonnes of aluminium a year makes up 40 per cent of domestic output.
Negotiations have been complicated by a disagreement over who will control the stake in Inalum, with local and regional officials, as well as local companies keen for a share. The government could hand over the shares to state miner Aneka Tambang, or sell the shares to a consortium of local companies, which could boost the stalled privatisation process.
The Government Investment Centre (PIP) is another candidate; it is already buying a 7 per cent stake in gold miner Newmont Nusa Tenggara under a similar arrangement to divest control, for about $250m. But that process has also been delayed over a disagreement on valuation and plans for an IPO.

HC rejects Vedanta plea to overrule green ministry
Times of India - 20-Jul-2011
NEW DELHI: Vedanta's plans for an aluminium refinery in Orissa suffered a setback with the Orissa High Court refusing to overrule the Union environment ministry's decision to cancel the environmental clearance to the project's expansion.
Rejecting the company's writ petition, a bench headed by Chief Justice V Gopala Gowda said, "The process for environmental clearance for any expansion attempt by the company has to be started de novo."
Vedanta had gone to the HC asking that cancellation of first level of clearance for expansion of their refinery be annulled. But the HC refused to do so, instead permitting the alumina giant to apply afresh if it so desired. The Centre had decided to stall the expansion plan of the existing refinery and taken back the 'terms of reference' granted earlier to conduct an environmental clearance process after finding it in gross violation of green laws, including expansion of the refinery without the clearance.
Vedanta will now have two options – appeal against the order to the Supreme Court or put a fresh proposal before the environment ministry – both being long drawn processes.
The Niyamgiri mining plan linked to the refinery is already mired in court cases. The environmental clearance was cancelled by the environment ministry recently – which the National Green Tribunal is holding a hearing on. The forest clearance for the project was rejected earlier by former environment minister Jairam Ramesh and the matter is now pending before the apex court.

60 Rio Tinto Alcan workers affected by production problems
Montreal Gazette - 18-Jul-2011
About 60 Rio Tinto Alcan workers in the Saguenay have been forced to take early vacations or accept temporary layoffs because of production problems at the big Alma smelter.
Rio said it has found the primary aluminum metal produced at Alma contains higher amounts of iron and silicon than normal. Equipment used to re-line the pots where the electrolytic process occurs have been diverted to solving the excess iron and silicon. This has meant the shutdown of the re-lining department for two weeks.
Rio spokesman Bryan Tucker said Alma’s production rate has not been affected, but its metal (at the molten stage) is being mixed with primary metal from other Saguenay smelters to ensure that it meets customer specifications.
About 60 work in the pot re-lining operations.

What U.S. Lawmakers Can Learn from Australia's Carbon Tax
Reuters - 18-Jul-2011
In the summer of 2009, U.S. and Australian climate politics had a similar look and feel. The lower houses of legislature in each country had passed climate bills and were waiting on their respective senates to act. While the U.S. House's wide-ranging cap-and-trade bill didn't stand much of a chance in the Senate, many believed at the time that conservatives in the Australian Senate were on the verge of giving the go-ahead to an equally ambitious plan. But after a leadership challenge in the opposition Liberal Party, conservatives reversed their official position on the climate plan, putting the country back on par with what was happening in Washington. After twice failing on votes in the Senate, in 2010, Prime Minister Rudd ultimately backed away from the Carbon Pollution Reduction Scheme, an issue that was a core component of the Labor Party policy agenda. Many cite the move as leading to his demise as prime minister.
Two years later, a climate bill is again on the table in Australia after Prime Minister Julia Gillard Sunday outlined a plan to reduce the country's annual carbon emissions by 159 million tons 2020. "We are moving from the days of words to deeds," Gillard said, in a subtle reference to her former boss Kevin Rudd's failure to stick with the carbon reduction scheme in 2010.
As prime ministers go in Australia, Gillard is not exactly popular. To be precise, she is the most unpopular prime minister in 13 years. But Gillard and her Labor Party colleagues learned a few lessons the last time they pushed a climate bill and now are bringing forward a cautious yet ambitious plan emphasizing the qualities of simplicity, certainty and viability. And while the Obama administration has no intention of moving on a broad climate plan any time soon, U.S. lawmakers who hope to revisit the climate issue one day-along with state legislators-might consider taking a page from their Australian colleagues' playbooks.
Climate politics: Lessons in simplicity, certainty and viability
The nearly fifteen hundred-page American Clean Energy and Security Act of 2009, better known as the Waxman-Markey cap-and-trade bill, was anything but simple. Economists love the idea of simplicity in taxation because it can have a more direct impact on behavior. Want people to smoke less? Tax cigarettes. Want companies to emit less carbon? Tax carbon. But too many taxes and too confusing a code can muck up a well-intentioned bill. Although it is officially being referred to as a fixed-price carbon trading scheme, for the first three years of the plan, the Australian plan will operate basically like a simple carbon tax. Under the plan, starting in 2012, facilities generating 25,000 tons of carbon dioxide equivalent per year, provided they are not in the excluded agricultural or forestry sectors, will pay a fixed price of roughly $25 per ton of carbon emitted. Simple.
And what carbon taxes have been lauded for by liberals and libertarians alike is their financial certainty. Businesses like knowing how much taxes are going to be and what regulations they must follow so they can plan and budget for the future. Talk to any industry likely to be hit hard by climate legislation in the U.S., the one thing they all clamor for is certainty. The fixed price will rise 2.5 percent over the two following years before switching to a market-based pricing system in 2015. Companies will still be able to trade pollution permits in the first phase of the program, but the real trading and market opportunities won't really take root until the government releases control of the carbon price. The fixed price at the outset of the Australian plan provides the kind of financial certainty that business interests are always asking for. Putting all your eggs into a marketbasket with a free-floating price from the outset can be dangerous. Just ask the Europeans, or Matt Taibbi.
Recognizing that they have no chance of passing a bill in Australia without helping the constituencies likely to be hit hardest by it, the Labor Party made several changes to the plan to boost its political viability. First of all, it made the plan smaller. Some 500 companies are estimated to fall under the Gillard carbon reduction plan, roughly half the number of companies that would have been covered by the even more ambitious Rudd plan.
And what did Labor do to deal with the powerful agricultural interests that certainly killed the bill last time in the Australian Senate? It exempted agriculture from the new plan. And to score some support from the general public, more than half of the revenue raised by the scheme will be returned to lower and middle income Australians via tax credits and direct payments as a buffer against rising cost of energy and other commodities. Another $9 billion in funds will also be directed to help heavy polluting steel and aluminum industries and help the country's booming liquified natural gas industry adjust to the price increases. The danger, of course, is that sweetening the bill with so much viability can make it ineffective as policy. It can also backfire and turn off the very constituencies who supported the bill in the first place.
But good policy sometimes requires good politics.
Reprinted with permission from Ecopolitology

Aluminum demand 'Stunningly positive' so far in 2011
Commodity Online - 18-Jul-2011
Aluminum demand data so far in 2011 has nudged the global market into deficit and is offering the basis for a “steady grind higher” in prices over the coming months, say analysts with Barclays Capital.
Global production has hit record highs, Barclays says. However, the bank also cites “stunningly positive” aluminum demand, with global consumption growing 9% for the year to date, enough to leave the market balance in a mild deficit of 419,000 metric tons in the first half.
“One of the key qualities of the demand performance has been balance of strength between non-OECD and OECD regions,” Barclays says. “While the improvements in Chinese (+7%) and Asian (+11%) demand have both been strong, demand indicators such as semis orders for North America (17%) and Europe (+8%) are also equally impressive.”
The packaging, aerospace and electronic sectors have all been strong, as has auto but with moderated support in the second quarter due to supply-chain effects from the Japanese earthquake, Barclays says. The bank looks to average of $2,700 per ton by the fourth quarter

ENRC completes Kazakhstan refinery expansion
MarketWatch - 18-Jul-2011
LONDON -(MarketWatch)- U.K.-listed, Kazakhstan-focused Eurasian Natural Resources PLC (ENRC.LN) Monday said it has completed the expansion of its Kazakhstan alumina refinery on time and within its $305 million budget.
The refinery has also successfully reached its target alumina production of 1.7 million metric tons a year, the company said in a statement.
The larger alumina production capacity will be used to support the company's expanded aluminum production capacity and will enable ENRC to maintain sales to third party customers and provide sufficient alumina for internal consumption.
"We are now able to increase both our internal consumption and external sales of alumina, underpinning ENRC's ability to maintain competitive advantage as a low-cost producer," Felix Vulis, ENRC's chief executive said in a statement.
The refinery expansion is part of ENRC's significant on-going investment program in Kazakhstan and Africa.

Key manufacturing union backs Labor's carbon tax, saying it accepts assurances ...
The Australian - 18-Jul-2011
AUSTRALIA'S biggest blue collar union has belatedly backed Julia Gillard's carbon tax, finding the plan does not threaten jobs in the nation's steel industry.
But Australian Workers Union national secretary Paul Howes criticised the government's attempts to sell the plan to a sceptical electorate, saying “Blind Freddy” could see it hadn't been perfect.
Mr Howes had vowed to oppose the plan if it looked like even “one job” would be lost.
Today, he said a promised $300 million steel industry package meant there was no economic reason for employers to lay off workers.
He said the union would “name and shame” companies that tried to use the tax as cover for unrelated job cuts.
“We believe that the government has developed a package which ensures that jobs won't be lost in emissions-intensive, trade-exposed industries as we make the transition to a low carbon future,” Mr Howes said.
The AWU made the announcement after its national leadership met in Sydney today.
Mr Howes said the AWA executive made a unanimous decision based on the assumption that carbon pricing was “inevitable”.
“Both the Coalition and the Labor Party and the Greens have committed to cutting Australia's carbon pollution,” he said.
Mr Howes played an instrumental role in toppling Kevin Rudd in favour of Ms Gillard, marshalling AWU supporters in the federal Labor caucus to support the leadership switch.
As a new Nielsen poll shows Labor's primary vote at a record low 26 per cent, Mr Howes dismissed suggestions Ms Gillard could also be dumped.
He said she would lead Labor to the next federal election.
“I have bet my house on it,” he said.
The AWU represents more than 135,000 workers in various sectors, including the manufacturing, steel, aluminium, construction and oil and gas industries.

China H2 aluminum output to raise 8pct on H1 - Report
SteelGuru - 16-Jul-2011
Reuters reported that China's production of primary aluminum is likely to rise at least 8% in the H2 of the year from the first, thanks to new capacity and steady prices that prompt smelters to use idle capacity.
Industry sources said that H2 output would not be hurt by Beijing's tighter curbs on new projects because the government was targeting projects planned but not completed. High production in the world's top aluminum producer and consumer could lead to strong exports of semi finished aluminum products and low imports of primary aluminum in the H2.
Exports of Chinese primary aluminum are expected to stay low since China sets 15% tax on exports. In June aluminum production reached a fourth consecutive monthly record of 1.591 million tonnes as a result of
Ms Liang Lijuan an analyst at Cofco Futures in Beijing said that the 2011 output should be above 18 million tonnes. Output should rise further in July and August from June and then it would stay steady through December given that the bulk of new capacity due to start production in 2011 had already started in the H1.
Based on Liang's estimate output could reach 9.337 million tonnes in the second half versus 8.643 million in the H1 which marked a rise of 5.6 percent from the corresponding months in 2010. That 2011 output estimate of nearly 18 million tonnes is lower than the 20 million expected by the powerful industry body, China Nonferrous Metals Industry Association and over 19 million tonnes estimated by state backed research firm Antaike.
Official data showed that output rose 19.9% to 15.65 million tonnes in 2010. The industry body expects China's primary aluminum smelting capacity to rise to 25 million tonnes in 2011 up 14% from 2010, suggesting about 3 million tonnes of additional capacity this year.
A source at a large aluminum smelter said that as far as we know very little new capacity would start production in the second half. So output should peak in August or September, then it would stay steady through December.
Mr Liang said that high prices also would encourage smelters to reopen idle capacity if they had sufficient electricity supply. So far this year, most power hungry aluminum smelters in China have been receiving sufficient electricity.
The front month aluminum prices on the Shanghai Futures Exchange rose more than 5% from two months ago due to higher energy costs and firm demand surprising traders who had expected increased production to weigh on prices. The front month contract ended at CNY 17,490 per tonne exceeding the average production cost of CNY 15,500 per tonne to CNY 16,500 per tonne to Chinese smelters.
(Sourced from Reuters)

Venezuela In Talks With 6 Japanese Cos For Stake In Venalum
Fox Business - 14-Jul-2011
CARACAS -(Dow Jones)- The Venezuelan government said Thursday that it is in talks to buy a 20% stake in state aluminum producer CVG Venezolana de Aluminio, or Venalum, which is currently held by six Japanese companies.
In a statement on its website, the Ministry of Basic Industries and Mining said it had begun negotiations with Showa Denko K.K.(4004.TO), Kobe Steel Ltd. (5406.TO, KBSTY), Marubeni Corp. (8002.TO), Sumitomo Chemical Co. (4005.TO), Mitsubishi Materials Corp. (5711.TO, MIMTF) and Mitsubishi Aluminum Co. The parties expect to reach an agreement within four months, the ministry said.
Copyright © 2011 Dow Jones Newswires

Environmental Performance Enhanced At Alcoa's San Ciprian, Spain, Alumina Refinery
TheStreet.com (press release) - 14-Jul-2011
Alcoa’s (NYSE:AA) San Ciprian, Spain, facility is improving the energy efficiency and environmental performance of its alumina refinery by switching from fuel oil to natural gas.
This week, Alcoa Europe Vice President José Ramón Camino and Regional Minister of Economics and Industry Javier Guerra were on site during the installation of the first liquefied natural gas (LNG) storage tanks at the San Ciprian alumina complex.
The move to natural gas is the result of a joint effort by the Regional Minister of Economics and Industry and Alcoa for sustainable development. Start-up of this equipment is the first step in the progressive substitution of fuel oil for natural gas, which is expected to result in cost savings, and will end once the Mariña pipeline, scheduled for 2013, becomes operational. In this first phase, using natural gas instead of fuel oil will result in an estimated annual 20,000 ton reduction of CO2 emissions.
“We anticipate significant environmental benefits with the change to natural gas,” said Camino. “Alcoa’s sustainability approach involves collaborating with key stakeholders to make decisions that are mutually beneficial to preserve our environment.”
LNG storage will supply about 8 percent of total consumption at the refinery. Currently, the alumina refinery consumes 300,000 tons of fuel oil per year.
Alcoa Spain is committed to sustainable development, energy efficiency and environmental performance. In 2008, Alcoa Spain was the first industrial company to sign an agreement with the Ministry of Environment and the Galician Regional Government (La Xunta) for the voluntary reduction of greenhouse gases. Similarly, investments in the factory have been directed towards improving the environmental performance of its production processes. The Alcoa San Ciprian plant is a world leader among the industrial sector in both environmental and occupational safety.
The Alcoa industrial complex at San Ciprian includes an alumina plant, a primary aluminum factory, and common services facilities. It has a production capacity of a million and a half tons of alumina per year, and another 250,000 tons of aluminum each year.

Outotec to deliver alumina calcination technology to Ma'aden Alcoa joint ...
Reuters (press release) - JULY 14, 2011
Outotec to deliver alumina calcination technology to Ma'aden Alcoa joint venture in Saudi Arabia
Outotec has agreed with Ma'aden Bauxite Alumina Company, a joint venture between Saudi Arabian Mining Company (Ma'aden) and Alcoa in Saudi Arabia, on the delivery of two calciners to the joint venture's integrated aluminum complex at Ras Al Khair (formerly Ras Az Zawr), Saudi Arabia. The overall investment cost for the calciners is approximately EUR 62 million, out of which roughly EUR 50 million will be booked in Outotec's order intake in the third quarter.
Outotec's scope of delivery includes process technology and design, civil work, detail engineering and construction as well as spare parts for the two alumina calciners, each with a capacity of 3,500 tonnes of alumina per day. The project is scheduled to be completed at the end of 2013.
"Outotec® calcination technology is clearly the industry benchmark thanks to its very low energy consumption, and I am confident that our partner will also benefit from very low emission levels as well as the sustainable use of raw materials, reliable operation, high material recovery and low lifetime costs. Our strong experience in large projects is demonstrated by the fact that we have designed and delivered the world's largest sulfuric acid plant complex for Ma'aden at the same Ras Al Khair site and our track record includes over 50 alumina calciners worldwide", notes Outotec CEO Pertti Korhonen.
For further information please contact: OUTOTEC :
Dr. Peter Weber, President - Energy, Light Metals and Environmental Solutions business area tel. +49 6171 9693 165
Eila Paatela, Director - Corporate Communications tel. +358 20 529 2004, +358 400 817 198

US aluminum May imports soar to near 2-year high
Reuters Africa - 12-Jul-2011
* U.S. May aluminum imports surge to near 2-year peak
* Demand from aerospace, auto industries spurs imports
NEW YORK, July 12 (Reuters) - Shipments of aluminum into the United States rose for a second straight month in May, spiking to a near two-year peak, as a growing domestic market deficit and improved demand conditions drove the builds.
Data from the U.S. International Trade Commission on Tuesday showed May aluminum imports surge to 160,847 tonnes, up more than 50 percent from April to stand at their highest level since July 2009, when imports reached 189,671 tonnes. "As we know there is supply tightness in the U.S. and that has caused premiums to increase considerably," said Jorge Vazquez, founder and senior vice president with Harbor Intelligence.
The U.S. Midwest spot aluminum premium paid above the London Metal Exchange (LME) cash price CMAL0 rallied to a record peak at 9.5 cents per lb in May of this year, as lengthy load-out rates at the exchange-monitored warehouses, especially in Detroit, continued to choke off supply flows.
"The market has reacted to those incentives by shipping more semi-finished aluminum to the U.S.," Vazquez said.
The increase in U.S. imports comes at a time when demand from aluminum-intensive industries is on the rise.
Alcoa Inc (AA.N: Quote), America's biggest aluminum producer, expected demand growth for the lightweight metal to continue to grow, especially from the aerospace sector.
"Although the economic recovery is uneven, the overall outlook for Alcoa -- and for aluminum -- remains positive," Alcoa's Chief Executive Officer Klaus Kleinfeld said on a conference call with analysts following the company's second quarter results.
"The aerospace sector has positive momentum and we expect 7 percent aluminum sales growth globally this year."
Demand was also seen picking up from the automotive sector, which accounts for about 25 percent of U.S. aluminum demand.
Automakers reported a 7.1 percent sales increase in June from a year earlier, with a seasonally adjusted annualized rate of sales reaching 11.45 million vehicles.
"The combination of the increased demand in the U.S., supply tightness and the record-high premiums, without doubt, explain the bulk of the increase in imports," Harbor's Vazquez said. (Reporting by Chris Kelly;

China says to close 2 mln T smelting capacity in 2011
Reuters - 11-Jul-2011
China has ordered local governments to phase out a total 2.0431 million tonnes of aluminium, copper, lead and zinc smelting capacity in 2011 as part of a multi-year plan to crack down on energy-intensive and polluting industries.
The target, contained in a statement on the Ministry of Industry and Information Technology website, is 13 percent higher that set in May, when Beijing said it aimed to phase out a total 1.813 million tonnes of outdated aluminium, copper, lead and zinc smelting capacity this year.
But production of the four metals is still likely to rise this year from 2010 as more new capacity comes on stream.
China is the world's top producer and consumer of aluminium, lead and zinc and largest consumer of copper.
In the first five months of 2011, China produced 2.169 million tonnes of refined copper, 7.052 million tonnes of primary aluminium, 1.859 million tonnes of refined lead and 2.114 million tonnes of refined zinc, up 4-26 percent on the year.
More than 100 plants, including those owned by Aluminum Corp of China Ltd and Xinxin Mining , have been asked to phase out outdated capacity in 2011, the statement showed.
Of the total, 618,600 tonnes of aluminium smelting capacity should be shut down versus 371,000 tonnes in 2010.
Copper capacity closures are set at 425,300 tonnes in 2011 versus 144,900 tonnes last year.
China wants 660,900 tonnes of lead smelting capacity to close this year, up from 265,800 tonnes in 2010.
Zinc capacity is set at 338,300 tonnes in 2011 versus 293,700 tonnes last year.
To see a statement and list of capacity to be phased out in chinese, click on the link in the article on the internet
(Reporting by Polly Yam; Editing by Jonathan Hopfner)

China says to close 2 mln T smelting capacity in 2011
Reuters - 11-Jul-2011
China has ordered local governments to phase out a total 2.0431 million tonnes of aluminium, copper, lead and zinc smelting capacity in 2011 as part of a multi-year plan to crack down on energy-intensive and polluting industries.
The target, contained in a statement on the Ministry of Industry and Information Technology website, is 13 percent higher that set in May, when Beijing said it aimed to phase out a total 1.813 million tonnes of outdated aluminium, copper, lead and zinc smelting capacity this year.
But production of the four metals is still likely to rise this year from 2010 as more new capacity comes on stream.
China is the world's top producer and consumer of aluminium, lead and zinc and largest consumer of copper.
In the first five months of 2011, China produced 2.169 million tonnes of refined copper, 7.052 million tonnes of primary aluminium, 1.859 million tonnes of refined lead and 2.114 million tonnes of refined zinc, up 4-26 percent on the year.
More than 100 plants, including those owned by Aluminum Corp of China Ltd and Xinxin Mining , have been asked to phase out outdated capacity in 2011, the statement showed.
Of the total, 618,600 tonnes of aluminium smelting capacity should be shut down versus 371,000 tonnes in 2010.
Copper capacity closures are set at 425,300 tonnes in 2011 versus 144,900 tonnes last year.
China wants 660,900 tonnes of lead smelting capacity to close this year, up from 265,800 tonnes in 2010.
Zinc capacity is set at 338,300 tonnes in 2011 versus 293,700 tonnes last year.
To see a statement and list of capacity to be phased out in chinese, click on the link in the article on the internet
(Reporting by Polly Yam; Editing by Jonathan Hopfner)

Aluminium sector to be hit by carbon price
Ninemsn - July 10, 2011
The Australian Aluminium Council says the federal government's carbon pricing scheme will hit the aluminium industry with rising production costs in the coming years.
The scheme would impose a carbon cost on Australian aluminium producers of at least $60 per tonne of aluminium compared to $8 in China, the council said in a statement on Sunday.
The cost for the local industry will then rise over the next decade to more than $200 per tonne while the cost in China will rise to $60 a tonne.
"The initial costs are bad enough but we need to look at the huge cost increases that are being locked in for the future," the council's executive director Miles Prosser said.
The government had changed the policy from the failed Carbon Pollution Reduction Scheme (CPRS) so that the allocation of carbon permits to the aluminium industry would be lower in future years.
That would cause the carbon cost to the aluminium industry to rise to about $400 million in 2020 from $120 million in the first year of the scheme.
"That will have a huge impact on investment," Mr Prosser said.
He added that it would be a disincentive for new aluminium facilities and existing facilities would find it hard to attract capital to stay viable.

Australia to Tax Nation's Worst Polluters
ABC News - 10-Jul-2011
Australia will force its 500 worst polluters to pay 23 Australian dollars ($25) for every ton of carbon dioxide they emit, with the government promising to compensate households hit with higher power bills under a plan to reduce greenhouse gas emissions unveiled Sunday.
Prime Minister Julia Gillard sought to reassure wary Australians that the deeply unpopular carbon tax will only cause a minority of households to pay more and insisted it is critical to helping the country lower its massive carbon dioxide emissions. Australia is one of the world's worst greenhouse gas polluters, due to its heavy reliance on coal for electricity.
"We generate more carbon pollution per head than any other country in the developed world," Gillard told reporters in Canberra as she released details of the tax, which will go into effect on July 1, 2012. "We've got a lot of work to do to hold our place in the race that the world is running."
The government hopes businesses affected by the tax will seek out clean energy alternatives to reduce their bills. The affected companies will have to pay AU$23 per metric ton of carbon, with the price rising 2.5 percent a year until 2015, when the plan will move to a market-based emissions trading scheme.
The carbon tax is the government's main tool in meeting its pledge to reduce Australia's greenhouse gas emissions by the year 2020 to at least 5 percent below 2000 levels. By then, the tax will have helped reduce carbon pollution by 160 million metric tons — the equivalent of taking 45 million cars off the road, Gillard said.
Critics of the plan say Australian households will be unfairly burdened by higher costs passed onto them by the big polluters. To help compensate for the higher bills, nine out of 10 households will receive some kind of assistance in the form of income tax cuts and payments. Two-thirds of all households will receive enough assistance to cover the entire financial impact of the tax, Gillard said.
Under the plan, the average household will see its costs increase by AU$9.90 a week, which includes an additional AU$3.30 per week for electricity and another AU$1.50 a week for gas. But the government says on average, households will receive AU$10.10 a week in assistance.
Industries affected by the change will get AU$9.2 billion in compensation over the next three years, with the worst-hit businesses expected to be steel and aluminum manufacturers.
Conservative opposition leader Tony Abbott, an outspoken critic of the plan, insisted it will drive up the cost of living for millions of Australians and will do nothing to help the environment.
"It's socialism masquerading as environmentalism," Abbott told reporters. "It's a package which is all economic pain for no environmental gain."
Environmental groups were cautiously optimistic about the scheme.
"This package is not perfect, but it is absolutely essential Australia gets started," Australian Conservation Foundation executive director Don Henry said in a statement.
Greenpeace said the package was a good start, but believes the price per ton of carbon should be higher.
"The fact that we have any price at all is testament to all Australians who demanded the government take action on climate change," Greenpeace Australia Pacific CEO Linda Selvey said in a statement. "But equally, the fact it is such a low price, with such limited coverage is testament to the power of the big polluters to dominate Australia's political leadership."

Rio Tinto Alcan aluminum smelter undergoing $2.5-billion build-out in Kitimat ...
Daily Commercial News -08-Jul-2011
Demolition, expected to be complete by March 2012, is underway at the Rio Tinto Alcan (NYSE: RIO) aluminum smelter rebuild in Kitimat, British Columbia.
At the same time, 250 contractors have gone through a briefing in Vancouver preparing for the next phases of the $2.5-billion build-out.
The briefing outlined the project, the qualification process for subcontractors and allowed major Canadian construction firms to meet local contractors already working on site since 2008.
“We have maximized the use of local contractors,” said Rio Tinto Alcan project director Michel Lamarre.
The Kitimat Modernization Project first phase demolition involves freeing up real estate to shoehorn in the new structure within the confines of the old smelter, while it continues operations.
Lamarre said the new smelter would have a capacity of 420,000 tons compared to the existing facility’s 200,000 tons.
“It is a state-of-the-art facility, which is very efficient and has a smaller footprint,” he said.
A 60-per-cent footprint reduction will be achieved during the multi-phased rebuild stretching over 30 months and finishing in 2014.
The remainder of the plant will then be shut down.
Smelting potlines 7 and 8 are being gutted, following a cleanup operation to mitigate contamination from rainwater leaching, as the structure encapsulating the lines is dismantled.
A partnership between Quantum Murray and Northwest Demolition Canada ULC, a subsidiary of Oregon-based Northwest Demolition, is doing the work.
“We are doing the cleaning, the hazardous abatement and waste management,” said Steve Custeau, vice-president of Quantum Murray.
He said the challenge facing the crews on site is a tight timeline for work.
Bechtel’s Andy Lederman, director of Engineering, Procurement and Construction Management, said Hazco Environmental Services Ltd. has the contract to supply technical support to ensure stringent water and soil requirements are met.
Northwest Demolition Canada is removing the structure.
Vice-president Richard Wayper said the rigging and removal has been subcontracted to Envirocon.
At the peak of the demolition work, an estimated 340 workers from the Quantum/Northwest partnership will be on site.
Lamarre said the plunge in metal prices in 2008, when the project was initiated, was an opportunity of sorts, as it provided time to allow smaller contracts to proceed with local contractors who have now learned Bechtel’s safety and work culture.
Rio Tinto Alcan also had time to fine-tune the smelter design for better efficiency. It spent $300 million in prep work in 2010 and another $300 million is budgeted for 2011.
Contractor IDL Projects of Prince George, B.C. received the contract in early June for the underground utility corridor for natural gas, industrial water and potable water pipes, as well as high voltage and fibre-optic cables in a three-kilometre loop around the new smelter.
Construction started in late June. Lamarre said having the underground utility corridor in place would expedite construction.
IDL is working with the building trades to maximize the number of northern and local workers, including First Nations, working on site.
Lederman said a project labour agreement (PLA) has been signed with unions. The PLA allows non-union contractors to bid on work, but if successful, they must work under union terms while on site.
Currently all vehicles on site are hybrids. Solar panels, to light parking areas, are being considered.

ALUMINA DEVELOPMENT: Orbite to advance Cap-Chat pilot plant to commercial ...
Canadian Mining Journal - 2011-07-07
QUEBEC - Montreal-based Exploration Orbite has raised $57.5 million through a recently completed bought deal. Most of the net proceeds will be used to convert the company's Cap-Chat pilot plant into a commercial facility producing ultra-pure alumina.
Orbite's major holding is its Grande Vallee property in the Gaspe region, 32 km northeast of Murdochville. The property has an identified aluminous clay deposit that grades 23% alumina. It will be mined by open pit methods.
The clay is to be processed at Cap-Chat. The commercial plant will be a 7,000-t/d smelting grade facility using Orbite's patented technology. The company hopes to build a series of these plants that will cut alumina imports for the province's aluminum smelters.
Information about the unique processing technology is available at www.OrbiteAluminae.com.

Indian Aluminum Industry Eyes Growth
MetalMiner - 06-Jul-2011
The Indian aluminum industry has grown and continues to grow at a rapid pace and with at least five prominent aluminum production players, India can emerge as a powerhouse within the next decade. India is the world’s fifth largest aluminum producer, after Australia, Guinea, Brazil and Jamaica, with aluminum production of about 2.7 million tons, accounting for almost 5% of the total aluminum production in the world. India has about 3 billion tons of bauxite reserves, which accounts for almost 7.5% of the world’s 65 billion bauxite reserves. Indian bauxite reserves are expected to last over 350 years.
The most commercially mined aluminum ore is bauxite, as it has the highest content of the base metal. The primary aluminum production process consists of three stages. The first stage involves the mining of bauxite, followed by refining of bauxite to alumina
Technical experts say that production of one ton of aluminum requires two tons of alumina while production of one ton of alumina requires two to three tons of bauxite.
Demand and Consumption
India’s per capita consumption of aluminum metal compares at around 1kg versus the per capita consumptions of other countries like the US and Europe (25 to 30 kgs), Japan (15 kgs), Taiwan (10 kgs) and China (3 kgs).
In India, the industries that require aluminum mostly include power (44%), consumer durables, transportation (10-12%), construction and packaging (17%). However, internationally, the pattern of consumption favors transportation, primarily due to large-scale aluminum consumption by the aviation industry.
Aluminum appears as the third most available element in the earth and also the second most used metal in the world after steel. Due to the consistent growth of the Indian economy at a rate of 8%, the demand for metals, used for various sectors, is also on the higher side. As a result, the Indian aluminum industry has grown consistently.
India’s Aluminum Players
The list of aluminum companies in India includes Hindalco, Nalco, Malco, Balco and Indal. Many consider these five companies as the leading aluminum producers in the country. Other players include Hindustan Zinc, Jindal Stainless, Kennametal India, Ratnamani Metals and Sujana Metal Products. Private sector Vedanta is also a leading
Power represents the largest cost component in the manufacturing of aluminum. Because about 70% of Indian power producers use coal as the main fuel to generate power, coal has become a critical resource necessary to enhance aluminum production in the country.
India has huge reserves of coal but due to large demand India has to import coal to meet the domestic need especially from power, steel and cement producers. Rising coal costs may affect the aluminum cost in the near future.
Industry analysts share a favorable view of the Indian aluminum industry because of the country’s open economy, high GDP growth rate, skilled employees and some government policies that place India ahead of other developing countries.
Moreover, in other countries, bauxite reserves have dwindled yet India still has huge unexplored reserves of bauxite. The low per capita consumption of aluminum in India provides opportunity for the Indian aluminum industry because available figures suggest that the per capita consumption of aluminum metal in developed countries ranges from 20 to 30 kg, whereas India’s per capita consumption of aluminum is approximately 1 kg.
However, the Indian aluminum industry faces a big threat from naxalite groups. Since 2009, the Indian federal government has implemented several initiatives designed to tackle the issue. Industry experts say the naxal problem represents a serious threat to the mining industries especially in the mineral heartland states like, Orissa, Chattisgarh, Jharkhand and Andhra Pradesh, where bauxite is the main mining resource.
Industry experts agreed that despite all the difficulties, the future of the aluminum industry in India is very bright.

Rio Tinto Alcan to reduce greenhouse emissions at Vaudreuil plant
Montreal Gazette - 06-Jul-2011
Rio Tinto Alcan is reducing greenhouse gas emissions and energy supply costs at its big Vaudreuil alumina plant in Quebec’s Saguenay region via a steam supply pact with neighbouring Elkem Metal Canada.
New infrastructure will be needed to handle the steam to be supplied by Elkem, including a heat capture and recovery system and a three-kilometre pipeline to carry the steam to the Vaudreuil Works’ energy centre.
The project is expected to be completed by early 2012. The cost was not disclosed.
The Vaudreuil Works has annual capacity of 1.5 million tonnes of alumina and specialty chemicals. Its energy centre produces process steam from natural gas, oil or electricity and manages distribution of gas and compressed air for Alcan’s entire Jonquière aluminum production complex.
“This pact with Elkem confirms both companies’ desire to seek out groundbreaking ways to cut our costs and GHG emissions,” said Gervais Jacques, head of Atlantic operations, bauxite & alumina, Rio Tinto Alcan.
The bauxite feedstock for conversion into alumina at Vaudreuil is imported from Africa and Australia. Alumina is the intermediate material for production of primary aluminum metal.

EU Welcomes WTO Report On China's Export Restrictions On Raw Materials
Eurasia Review - 05-Jul-2011
The WTO ruled Tuesday against China’s export restrictions of certain raw materials backing a case jointly brought by the EU, US and Mexico. The WTO Panel has found that China’s export restrictions were not justified on environmental grounds and should be removed. Today’s WTO decision was welcomed by Europe’s trade chief.
“This is a clear verdict for open trade and fair access to raw materials. It sends a strong signal to refrain from imposing unfair restrictions to trade and takes us one step closer to a level playing field for raw materials”, said EU Trade Commissioner Karel De Gucht. “I expect that China will now bring its export regime in line with international rules. Furthermore, in the light of this result China should ensure free and fair access to rare earth supplies.”
The Panel’s report clarifies the WTO rules on export restrictions. The findings do not question a country’s right to set environmental standards or to conserve their natural resources. Such aims can justify trade restrictions under certain circumstances.
However, the Panel is convinced that export restrictions on trading these materials are not effective to ensure environmental protection because the production of these materials is not similarly restricted. Without effective domestic measures to manage the supply of its natural resources in a sustainable and environmentally friendly way, the Panel considers that a country cannot rely on the exceptions allowed under WTO law. The Panel states that such exceptions cannot justify measures that shield domestic producers from foreign competition in the name of conservation.
The EU supports and encourages efforts to promote a cleaner and sustainable production of raw materials. However, the EU believes that export restrictions cannot and do not contribute to this aim. There are much more effective environmental protection measures that do not discriminate against foreign industry. These include investment in more environmentally friendly technologies, increasing environmental standards, pollution control and effective production and consumption restrictions, as well as promoting recycling.
The panel’s findings constitute a significant recognition of the interdependence of all WTO Members – whether developed or developing – when it comes to raw material supplies as a fundamental principle underlying the global trading system. All countries will benefit when access to raw materials is ensured on a level and non-discriminatory basis.
Background
China applies export restrictions on key raw materials, such as bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorous and zinc. Some of these resources cannot be found outside China.
The export restrictions are mainly quotas (bauxite, coke, fluorspar, silicon carbide and zinc), export duties (bauxite, coke, fluorspar, magnesium, manganese, silicon metal, yellow phosphorus and zinc), a minimum export price system, as well as additional requirements and procedures for exporters.
These have caused concerns for European industry such as the chemical, steel and non-ferrous metal industries, as well as their downstream clients, ranging from producers of beverage cans, CDs, electronics, automotives, ceramics, refrigerators, batteries and medicines and many more.
Export restrictions can create serious disadvantages for foreign producers by artificially increasing China’s export prices and driving up world prices. At the same time, such restrictions artificially lower China’s domestic prices for the raw materials due to significant increases in domestic supply. This gives China’s domestic downstream industry significant competitive advantages and puts pressure on foreign producers to move their operations and technologies to China.
The WTO dispute settlement case was initiated on 23 June 2009 by the EU and US, followed by Mexico. Consultations were held with China regarding various export restrictions on the exportation of certain raw materials but no amicable solution was found. A WTO Panel was established on 21 December 2009.

Vedanta recovers Vanadium from Red Mud, denies any discharge to river
Economic Times - 04-Jul-2011
BHUBANESWAR: In what appears to be technological break, Vedanta Aluminium Limited (VAL), the Indian arm of London based Vedanta Resources Ltd, is recovering import-substitute Vanadium from effluent red-mud from its alumina refinery project at Lajigarh minting gold from its mud-to-money (MTM) programme.
The company has so far been successful in producing 17-18% grade Vanadium, a soft, silvery gray, ductile transition metal used for producing specialty steel alloys such as high speed tool steels. The market price of per ton of 100% grade Vanadium is pegged at around Rs five lakh, while VAL has been selling at Rs on lakh per ton Vanadium, according to VAL refinery project president and chief operating officer (COO), Dr Mukesh Kumar
Vanadium is recovered as Vanadium Penta Oxide from Alumina Refinery liquor and sold to various Ferro Alloys manufacturers who mainly meet their requirement by import.
"The red-mud disposed in the red-mud stacking area contains 35-45% iron, 10-12% titanium, 10-14% alumina, 7-8% silica and less than one per cent vanadium. By using an internally developed technology, we are separating vanadium," Dr Kumar, told "The ET" on Monday.
He further added, "This is part of our zero waste project. We were able to recover about 100 tons of vanadium last month and we plan to further scale it up. So far we have sold 300 tons of 17-18% grade vanadium to the State Pollution Control Board (SPCB) authorised companies at an average price Rs one lakh per ton."
A large number of companies like Jaiswal Oxides and Pigments, Star Alloys Corporation and others have evinced interest to buy the product, informed the COO.
On the recent allegation that its alumina refinery plant in Orissa is posing a major threat to crops in Srikakulam district, Dr Kumar made it clear that the union ministry of environment and forest has already made it clear that there is no discharge from Red Mud Pond in Lanjigarh. "A high level technical committee from the Central Pollution Control Board along with representatives of the State pollution Control Board visited the site on 25 April 2011 and 17 May 2011 and collected samples from all the surrounding water bodies and from the Red Mud Pond to check for the presence of toxic substances.
Their report categorically says that there has been no discharge from the red mud pond or water pond or any outlet of the industry to Bamsadhara River".

India's Ministry Says No Green Nod For Vedanta's Bauxite Mine Project
Fox Business - 03-Jul-2011
NEW DELHI -(Dow Jones)- Vedanta Resources PLC's (VED.LN) bauxite mining project in eastern India hasn't received environmental clearance, the government said over the weekend.
Reacting to a Times of India report that an environment panel has reviewed and cleared the project in Orissa state's remote Niyamgiri hills, India's ministry of environment said that--whatever the panel's recommendations might be--the project hasn't been given approval to cut forests for mining.
It added that the ministry of environment has the right to reject any recommendation by the environmental panel.
In 2010, the ministry rejected Vedanta's proposal to mine the Niyamgiri hills for supplying bauxite to its alumina refinery in the nearby Lanjigarh town, after vigorous protests by local and international activists who said that the project would cause grave damage to the Dongria Kondh tribals who live in the hills.
Several proposals for mining or setting up factories in the mineral-rich eastern Indian states of Jharkhand and Orissa have been stalled as the environment

Aughinish refinery group back in black after two years of losses
Irish Times - 04-Jul-2011
THE LARGEST aluminium refinery in Europe, Rusal Aughinish on the Shannon estuary, returned to profit last year after sustaining combined pre-tax losses of $63.6 million (€43.7 million) in 2009 and 2008.
A spokesman for the company confirmed yesterday that its 2010 accounts are expected to show a “modest level of profitability given the size of the site investment”, when they are finalised.
According to spokesman, a 195-acre facility for disposing of bauxite residue from the plant will be completed and commissioned later this month. It will extend the life of the plant to at least 2026.
The site will hold up to 18 million tonnes of the waste, known as “red mud”. The existing disposal facility, which holds 23 tonnes of waste, will be full next year.
Rusal has been working on the project for the last three years. It will have the capacity to accept 1.2 million tonnes of the bauxite residue each year.
Aughinish Alumina secured planning permission from An Bord Pleanála for the bauxite residue disposal area in 2007 in the face of opposition from local farmers and residents.
Work was suspended on the project in 2009 as a result of the then very difficult trading conditions when alumina production at Aughinish plummeted.
Last year, the facility enjoyed a 50 per cent increase in production, producing 1.86 million tonnes of alumina after processing 4.1 million tonnes of bauxite ore.
This compares to 1.24 million tonnes of alumina produced after processing 2.7 million tonnes of ore in 2009.
Rusal’s spokesman said the 2010 production rate represented a return to a normal annual production rate. During 2009 output was cut very significantly due to reduced worldwide demand.
“Production rates in 2011 are expected to be only slightly higher than 2010 rates,” he added.
The plant employs 650 workers made up of 450 permanent staff and 200 contractors. The company estimates that it contributes €100 million a year to the local economy

Novelis invests $15.8 mn to expand aluminum recycling in Italy
Waste Management World - 01-Jul-2011
India, July 1 -- Novelis Inc. the world s largest producer of rolled aluminum and a global leader in aluminum recycling today announced the investment of $15.8 million in the construction of a new continuous casting line at its production facility in Pieve Emanuele Italy. The new line will recycle painted scrap aluminum into the metal needed to produce rolled aluminum sheet.
Today s announcement follows the company s stated commitment in May to increase the amount of recycled metal it uses in its rolling operations around the world from 34 percent today to 80 percent by 2020. Novelis is leading the aluminum industry in sustainably reducing the embedded carbon footprint of its operations and of its customers products through increased recycling.
This is one step towards Novelis reaching our ambitious global recycling target said Tadeu Nardocci president of Novelis Europe and senior vice president of Novelis Inc. It also makes sound business sense to install a fifth continuous caster at our Pieve plant so that we can better meet the demands for material across our European operations.
This is good news for the environment for Novelis and for our Italian employees added Emilio Braghi general manager Litho and Painted Value Stream Novelis Europe. Indeed the decision announced today will see the largest single investment in our Italian facilities in twelve years. It will increase the amount of continuous caster material used for our Painted Products where Novelis has an undisputed leadership in supplying premium specialty surface finishes to the European market with coil coating lines in Bresso G&ouml ttingen and Nachterstedt.
The Novelis plant at Pieve Emanuele is an integrated continuous casting rolling and finishing operation. The aluminum sheet and coil produced at the facility is sold to distributors and end users in a number of industrial and construction markets. The Pieve plant is also the supplier of aluminum coil to the nearby Novelis mill at Bresso where it is processed into pre painted textured and bright finish material for use in transport construction and industrial applications. Applications include roofing architectural cladding and domestic appliances.
The painted scrap that is generated during the production processes in Novelis Italian operations as well as other low grade used aluminum from external sources will be recycled into high quality rolled aluminum on the new equipment. The lifecycle environmental benefits are significant as recycling aluminum uses only five percent of the energy required to make the metal from raw materials and avoids 95 percent of the greenhouse gases associated with primary aluminum production.
The use of continuous casting technology also brings logistical advantages as a key production step is brought in house thus saving transport and other costs. Furthermore the investment at Pieve will also free up capacity where it is needed elsewhere in the Novelis Europe system to meet the growing demand for other high end products such as can body sheet and automotive sheet.
Installation of the new line which will include a double chamber melting furnace continuous casting line and ancillary equipment will be completed by the end of 2012. The installation will be followed by a commissioning and ramp up period. Published by HT Syndication with permission from Commodity Online. For any query with respect to this article or any other content requirement, please contact Editor at htsyndication@hindustantimes.com

New tender to open for Qld bauxite mine
Sky News Australia - 02-Jul-2011
A new tender will open for the development of a massive bauxite mine in Queensland's western Cape York.
The tender for the new bauxite mine and alumina refinery in Aurukun had been won by Chinese company Chalco in 2007, but the deal folded on Thursday because Chalco was unable to build the required alumina refinery.
Treasurer Andrew Fraser said the government will now reassess the development conditions for the future tender.
The new tender process will commence by the end of this year.