AluNews - February 2012

Baucus presses BPA for timeline to reopen CFAC

KAJ18 Kalispell Montana News - February 29th, 2012

COLUMBIA FALLS- Senator Max Baucus is redoubling his call to re-open Columbia Falls Aluminum Company (CFAC) and bring hundreds of jobs to the Flathead Valley.
The Democrat met with the administrator of the Bonneville Power Administration (BPA)on Wednesday, pressing him for a timeline to re-open CFAC.
Baucus specifically asked BPA Administrator Stephen Wright to finalize a power contract with the company.
BPA completed an environmental review but has not closed a power sales agreement with Glencore, CFAC's parent company.
The deal is expected to pave the way to re-opening CFAC, which shut down in 2009, by providing power to the facility.
Reopening CFAC is expected to create as many as 350 jobs in the Columbia Falls community.

W.Va. factory restart possible after retiree deal

WOWK - February 29th, 2012

CHARLESTON, W.Va. (AP) - Century Aluminum has taken a major step toward restarting its shuttered West Virginia plant.
The company announced an agreement in principle late Wednesday with retired workers from the Ravenswood factory regarding their health benefits.
Century dropped the health coverage in December 2010. The Ravenswood smelter closed in 2009, costing more than 600 workers their jobs.
Retirees must approve the deal. But resolving this impasse would remove a major hurdle in the quest to restart the plant.
Century says remaining factors include the aluminum market, a competitive labor agreement and an energy contract.
The Legislature appears ready to consider a tax credit meant to help the Ravenswood plant offset initial losses after restarting.
Gov. Earl Ray Tomblin and U.S. Sens. Jay Rockefeller and Joe Manchin were among those heralding Wednesday's announcement.

Montenegro parliament backs govt smelter takeover

Reuters - February 29th, 2012

* Lawmakers reject no-confidence motion over aluminium plant
* Russia's EN+ says to sue over takeover
* KAP plan vital to Montenegrin economy
By Petar Komnenic
PODGORICA, Feb 29 (Reuters) - Montenegro's government won parliamentary approval on Thursday to take control of the country's economically vital KAP aluminium plant, escalating an ownership fight with its Russian partner, EN+.
Lawmakers also rejected a no-confidence motion tabled by the opposition Socialist People's Party over the government's handling of the Kombinat Aluminijuma Podgorica plant.
The government of the EU candidate country said this month it would launch takeover proceedings after it was forced to assume maturing debt of 132 million euros ($177 million) owed to foreign creditors.
In a 2009 deal with Russian EN+, the Montenegrin government guaranteed KAP's debt to banks in exchange for half of EN+'s 58 percent stake in the company.
KAP is a key driver of the Montenegrin economy with an annual output of 120,000 tonnes of metal, accounting for 4.7 percent of gross domestic product.
But the plant has been losing money since global metal prices fell in 2009 and has cut its workforce and output sharply. Its total debt is estimated at around 350 million euros.
The opposition had accused the government of mismanaging state resources, but the no-confidence motion was rejected by 49 votes to 23 in the 81-seat parliament. Three deputies abstained.
EN+ executive director and chairman of the KAP board of directors Aleksei Kuznjecov said the takeover initiative was illegal, and would send the wrong signal to badly-needed foreign investors.
He said the company would sue the government.
"We bought an unprofitable factory, invested in its modernisation and covered operational losses at a total of 200 million euros," Kuznjecov said.
"As soon as the factory became profitable, Montenegro's government has started trying to eliminate us." ($1 = 0.7450 euros) (Writing By Daria Sito-Sucic; Editing by)

United Company RUSAL : UC RUSAL's NAZ completes first modernization stage

4-traders - February 29th, 2012

Moscow, 28 February 2012 - UC RUSAL (SEHK: 486; Euronext: RUSAL/RUAL; MICEX-RTS: RUALR), the world's largest aluminium producer, is pleased to announce the completion of the first stage of its Nadvoitskiy aluminium smelter's (NAZ) modernization and the increase in alloys production due to the smelter's revamping programme. The investments at the first stage of the project amounted to USD 2,3 million.
The installation of new equipment - a 30-tonne-mixer and 2 casting conveyors with total capacity of 14 tonnes per hour - is completed at the NAZ casting complex. The launch of this equipment will enable the smelter to increase its annual alloy production capacity from 15,000 tonnes to 45,000 tonnes. As a result the alloys share in NAZ general production rate will increase up to 60%.
New products will mostly be used for the engineering and automobile manufacturing industries. The smelter in particular will produce A356.2 alloy for wheel disks production. New products will increase the smelter's competitiveness as the special alloys sale price is higher than the primary aluminum's one. The upgraded casting complex will start production in March.
Alexey Arnautov, Director of RUSAL's Aluminium Division West, commented: "We will keep on implementing the plan to convert the production capacities of the Aluminium Division West to high-value added production. Currently the alloy production rate at NAZ is only 60%, but once the second stage (the modernization of A356.2 alloy T-type ingots casting machine) is completed, the alloys production share will increase to 80%. The smelter is already producing a standard ingot with a special chemical composition, and following the completion of the second stage 100% of production will be high-value added. Amid today's complicated economic situation the only way to keep competitive is to install new equipment and to upgrade current equipment".

Azerbaijan ceases imports of ready aluminum

Azerbaijan Business Center - February 29th, 2012

Baku, Fineko/abc.az. The Azerbaijani government has unveiled plans to stop importing finished products from aluminum.
President Ilham Aliyev has claimed that a new aluminum plant opened in Ganja manufactures 50,000 tons of high quality aluminum per year and is able to produce 100,000-200,000 tons.
"So why do we continue importing products made of aluminum? Because only part of the work has been done. To develop manufacture of finished products from aluminum it is needed to create a technology park to operate under the Ganja aluminum plant. I appeal the Ministry of Economic Development to involve the private sector in creation of such a technology park to enhance the level of processing of aluminum in the country," Aliyev said.
Azerbaijan has two aluminum plants - in Sumgait and Ganja, and its own raw material base (alunite).

Sohar Aluminium

Business Excellence Magazine - February 28th, 2012

Henk Pauw, CEO of Sohar Aluminium, talks to Gay Sutton about the company’s role in promoting industry in Oman and creating jobs for local people.
Oman is perhaps one of the most impressive but least widely recognised success stories of the Arabian Peninsula. Rich in oil and gas, and occupying a favourable position on the eastern coast of this dry and desiccated land mass, it has a long and distinguished history as a trading and seafaring nation. Small wonder, then, that when the Sultan of Oman initiated a campaign to diversify the nation’s economy and make it less reliant on oil revenue, much of the industrial effort centred around the port of Sohar, which has a shipping heritage dating back millennia.
“Sohar’s history goes back over 5,000 years. Moreover, at one time it was the capital of Oman,” explains Henk Pauw, CEO of Sohar Aluminium, a company that is spearheading the modern industrialisation and the trading renaissance of the region. In ancient times copper was mined and smelted in the mountains behind Sohar and exported to the great Sumerian and Persian empires of the era, while food was produced and exported throughout the Gulf region. Today, copper mining continues in the mountains, but it is aluminium smelting and the manufacture of downstream products that is taking over as a revenue generator and acting as a trigger for a national industrial development.
Being a heavy consumer of electricity, aluminium smelting is in the process of moving away from the older industrial nations of the West where energy is relatively expensive, to the Middle East where power is cheap. With a ready supply of gas that would previously have been flared off from the oil wells, many of the oil producing countries are capable of generating large amounts of power at a relatively low cost, and this is ideal for the power hungry smelting process.
Sohar therefore has it all—low cost gas piped in from the vigorous oil industry and a location on the Arabian Sea that lies on the direct shipping route between the Suez Canal and the Far East providing easy access to the major global trade routes for importing materials and exporting finished products. In addition, the choice of Sohar as a location for Oman’s new industrial centre is even more pertinent in view of its distinguished cultural history, the archaeological evidence for which is widely scattered around the region. “His Majesty, the Sultan of Oman’s vision is to restore Sohar to its former glory as the nation’s shipping centre,” Pauw continues.
The Sultan’s programme to diversify the Omani economy and create wealth and jobs through industrialisation is embodied in the Vision 2020 document. And the development of a new modern deep water port at Sohar along with a strong aluminium industry is a major element of that. Supporting both port and industry, the internal transport infrastructure has also been updated and continues to be developed. A modern expressway to Muscat and a new airport are both under construction and will be completed this year, while there are ambitious plans for a railroad linking Muscat and Sohar to Dubai and Abu Dhabi. Currently, Dubai is just over two hours’ drive by road; by ship the journey is much longer and involves navigating through the tortuous, narrow and congested waters of the straits of Hormuz, all of which places Sohar in a very strong position as a global shipping port, providing timely and cost effective access to the Gulf States.
The flagship enterprise in the industrialisation of the region, and the new port’s first major customer, is Sohar Aluminium. The company was launched in September 2004 through a powerful alliance between three well established businesses, each of them bringing a significant level of expertise and knowledge to the project. Oman Oil Company, which owns a 40 per cent share in the company, is a commercial body wholly owned by the government of Oman and charged with pursuing investment opportunities in the energy sector, both in Oman and further afield. TAQA, 51 per cent owned by the Abu Dhabi National Energy Company PJSC, another government body, has a further 40 per cent share in the company, while the remaining 20 per cent is provided by Rio Tinto Alcan, the aluminium division of the global mining and metals group, Rio Tinto.
The plant currently produces 375,000 tonnes of aluminium per annum, and employs a workforce of 1,000 people. But the aluminium smelting facility is just the starting point for a growing industrial base. Pauw believes the company indirectly employs some 3,000 people, across a range of downstream industries. A considerable proportion of the plant’s output is cast into ingots and exported around the world through the Port of Sohar. However, part is supplied in liquid form to an adjacent factory that produces aluminium cables for high voltage power lines. These cables are then either supplied to Oman’s growing aluminium industry or exported. By manufacturing from liquid aluminium direct from the smelter, the cable factory is able to operate at a markedly reduced cost as it bypasses the metal melting process most of its competitors go through.
The downstream industry is still growing strongly. A new aluminium rolling mill is currently under construction close to the smelting facility. “Our target is to pass 60 per cent of our output on to Omani companies. We’re not there yet, and there’s still room for improvement. But when the rolling mill is up and running we will be getting close to that target.”
Based on cost and output figures, Sohar Aluminium is calculated to be the most competitive and cost effective smelter in the world, although Pauw is characteristically cautious about such claims. “I always take these numbers with a pinch of salt,” he comments. At the heart of this energy efficiency is a 1,000 MW combined-cycle captive power generation facility constructed and owned by Sohar Aluminium, which produces abundant low cost energy fuelled by natural gas that is supplied under the terms of an agreement with the government of Oman.
“Another factor in our competitiveness is that the plant employs Rio Tinto Alcan technology. Engineered in France and constantly under development, it is the most reliable and consistent smelting technology on the market today. We are currently operating with the AP36 version, and we are now looking at the AP40.” This latest iteration of the technology will certainly be utilised in any planned expansion of the plant, and may well be part of future upgrades or updates. “It’s what’s known as creeping your plant,” he says.
As a greenfield development, the plant is also free from the constraints of previous projects, and therefore includes a number of a number of innovations such as the world’s highest capacity ingot caster, and a specially designed elevated walkway that separates man from machinery, and ensures the highest level of safety for the workforce.
The third element that has contributed to the company’s highly competitive performance is what Pauw calls using resources wisely. To achieve this he has been introducing the concept of lean. Developed for the automotive sector, lean has become a universal business improvement process, used with great success in almost every conceivable area of business from manufacturing and engineering through to health services and banking. “The principles are always the same,” Pauw says. “Lean is about focusing on waste and empowering people on the shop floor. It’s about toolboxes and data, about taking responsibility and doing something about it—not blaming other people.”
As with everything the company does, training plays a key role in introducing and maintaining the lean process. The company runs what it calls the Sohar Aluminium Academy at the plant and this provides a comprehensive portfolio of training, ranging from welding and technical courses through to safety, management and leadership training. “We started our first lean workshops about a year ago and we’re now rolling it out over different departments. Almost all our leaders have completed a three-day lean session where they have learned about the principles of lean and about the lean toolbox.”
Lean is a relatively new concept in Oman and in many ways Sohar Aluminium is pioneering the change. The experience has certainly been interesting. Having worked in the automotive industry for 10 years and gained a plethora of experience in lean implementations and operations, Pauw has observed that its introduction has been less difficult at Sohar than in many businesses, industries and locations. “The response here has been good,” he says. “And that’s partly because our local employees have no previous industrial experience, so there is very little resistance to change.”
Much of lean implementation is about changing mind sets and culture. And again, Oman has presented a slightly unusual challenge. “With lean there is no right or wrong, just a problem that needs a solution. Nobody has a better solution than anybody else, and this is what the Omanis find difficult. They find it hard to criticise a leader because the leader is, traditionally, always right. With lean, we are turning the traditional hierarchical management pyramid on its head and creating a serving leadership and not a boss leadership.” And this new mindset is being instilled successfully by completely engaging management and tasking them with leading by example.
A major part of Sohar Aluminium’s original remit, of course, was to generate growth and prosperity for Oman, and to provide jobs for its rapidly growing population. The population demographics in Oman are similar to those in many Gulf States: the average age of the population is around 25, and families continue to have four or five children, so the requirement for more jobs does not look likely to abate any time soon.
Currently, around 70 per cent of Sohar Aluminium’s 1,000 workforce are Omanis, and the company is well on the way to its goal of Omanisation of the business. “When we began the project phase of site development, we employed just one per cent of Omanis. But we have continuously been taking on and training local people,” Pauw says. “We embarked on construction of the power generation plant and smelting facilities in 2005 and by the time we went into full production in April 2009 our Omani workforce had increased to around 40 per cent. They now comprise around 70 per cent of our workforce and our aim is to increase that to 85 per cent in the next two-and-a-half years.”
The standards at Sohar Aluminium are world class, conforming to all Rio Tinto Alcan’s global targets for quality, health and safety. The training department is therefore provided with a significant budget to ensure newly recruited Omanis and longer-term employees are provided with the relevant skills and mindsets to operate at globally recognised levels of best practice. “The educational system in Oman is still based on learning things by heart, but we want our people to think for themselves. And that can be a challenge because it’s not what they’re used to. However, we have a large training budget, and we’re achieving a great deal of success with this type of training.”
The global aluminium market continues to be very dynamic in spite of the recent economic uncertainties, and countries like Oman are in a good position to increase output to meet this growing demand. “If you look at the predicted growth in demand for aluminium worldwide, it stands in the region of five per cent, depending on which figures you look at,” Pauw says. “We’re talking of four million tonnes of aluminium per year at present and that’s expected to increase to close to 10 million tonnes by 2020. That means the world needs to build five or six plants the size of Sohar Aluminium to keep up with demand.”
This creates considerable opportunities for companies like Sohar Aluminium. In line with its mandate to provide wealth generation and jobs for Oman, the company is currently in the planning phase for a major programme of expansion that would more than double the plant’s output from its current rate of 375,000 tonnes per annum to one million tonnes. “We’re currently in talks with the minister of oil and gas to secure an allocation of gas for the power plant. The trick is to get it at the right price.” If the gas allocation is agreed and the expansion goes ahead, a new 1,600 MW power plant, new AP40 pot lines, carbon plant and casthouse will be constructed adjacent to the current facilities, and all of this is likely to cost in the region of $4 billion.
Beyond the remit of its own business, the company is very active working with the local community, both at a social and economic level, and also in promoting the growth of business and industry in the wider sense. Its involvement ranges from simple events such as cleaning up the local beach in conjunction with the local community through to major projects such as building a centre for the blind and contributing to local schools and hospitals, or targeted efforts such as supporting women’s groups and training women to drive trucks.
As Oman migrates from an oil-based economy to an industrial one there is a much wider need for education and support to stimulate growth. “There is a need for different skill sets, and for an understanding of what it is to work in industry,” Pauw explains. “And we see our role as one of the educators. One of the things we’re currently focusing on is supporting and promoting SMEs, and this is where the real job creation will come in Oman,” he adds.
The percentage of SMEs in Oman is very low in comparison with Western countries so there is plenty of opportunity for expansion. By providing a mixture of financial support, business knowledge and training over a two or three year period, the company aims to get a number of new businesses off the ground and ensure they reach a standard where they can compete at a global level in terms of quality, cost and financial stability. “Our aim is to ensure they will be sustainable businesses, and not depend on us in the long term.”
Interestingly, many of these new businesses are not associated in any way with the aluminium industry. For example, the company has worked with new SMEs in the food, safety clothing and tourist industries, and is currently looking at the production of artificial reefs for the fishing industry.
Environmentally, the Batinah area in which Sohar is located is highly sensitive. Among the rare and endangered species is an Omani breed of the giant blue whale, which is believed to not take part in the species’ annual migration because of the sheer abundance of food in the region. The island of Masirah is the second largest breeding ground for the loggerhead turtle. Meanwhile, the endangered Arabic leopard can be found in the Dhofarmountains along with the oryx, almost hunted to extinction at one time. Sohar Aluminium works with the ESO (Environmental Society of Oman) to help protect these precious species.
From an operational perspective, the plant has been constructed to the highest levels of environmental performance, exceeding even those required under European law. “In addition to that, we’ve also been working to reduce our emissions, reduce our power consumption and increasingly recycle waste,” Pauw comments.
In this essentially dry part of the world, water supply is a major environmental and social issue. In ancient times, Oman and many of the Persian-influenced Gulf States achieved phenomenal feats of engineering, constructing a series of underground channels that stretched over many miles to bring fresh cool water from the mountains or from springs and wells, to the centres of agriculture and population. Known as qanats across the wider region and falaj in Oman, the systems predated Roman aqueducts by hundreds if not thousands of years. Today, these systems are being renovated as part of the campaign to address water shortages. Desalination plants are also being built around the coast to convert seawater to drinking water, and Sohar Aluminium has a role to play by condensing the steam generated in its power plant into fresh water.
“We have three generators, and this provides us with enough power to take one down at any time for maintenance. However, during the summer months when the weather is at its hottest and national power demand peaks, we run all three generators at peak capacity and export the excess power to the grid. This also helps us produce more than enough water for our needs. In the winter, however, we do the majority of our major maintenance and don’t export anything to the grid.”
Looking to the future, Pauw has a number of major objectives. The first is to achieve the planned expansion. “The second is to stay cost competitive,” he says. In spite of the economic troubles of recent years, the company has remained firmly in the black and intends to stay that way, maintaining its cost reduction process through further implementation of lean.
“Thirdly, we are not only about making money, but about creating future leaders for Oman. And that’s not something you usually find in your year-end financial objectives. We believe we have a job training role to play, and I would like to see some of our Sohar Aluminium employees find jobs in other companies and to be recognised as the best employees to have.
“Finally, our vision is to be the very best. We want to be a role model for industry in the Gulf. We haven’t achieved that in every department, but we have made big strides in getting there.”
As a Dutch man with worldwide business experience, Pauw believes Oman is a great place to work and live, for a number of reasons. Under the leadership of the current Sultan the country is diversifying and its people flourishing. As a result, the country has seen little of the tumult that has recently taken place in Tunisia, Egypt and Libya.
Certainly Oman retains its unique character, even down to the scenario that many ex-pats will instantly recognise—camels, goats and donkeys wandering in and occupying the parking lots. “The Sultan has brought Oman to where it is today,” Pauw concludes. “And it’s something I’m proud to be a part of.”

NALCO to finalise Gujarat refinery in a month

The Economic Times - February 28th, 2012

State-run National Aluminium Co Ltd (NALCO) is likely to finalise within a month a deal to set up an alumina refinery in the western Indian state of Gujarat, Chairman B.L. Bagra said.
Gujarat had last year invited bids for a refinery and smelter in the state and committed to supply bauxite, a key raw material, at a pre-determined price.
NALCO, the country's third largest aluminium producer, had emerged as the only qualified bidder and plans to set up only the refinery for now.
There have been several meetings between NALCO and Gujarat Mineral Development Corp(GMDC) to finalise the draft agreement for the refinery project.
"Once the agreement is finalized, we will proceed with the preparation of detailed project report and construction of the refinery," Bagra told Reuters on Tuesday.
NALCO will take four to five months for preparation of the feasibility report after the deal is finalised and another two to three months for financial closure.
NALCO aims to invest 40 billion rupees in the one-million-tonnes-per-annum refinery project. It hopes to start construction within 2012 and commence production by 2015-end.
The state-run producer is also open to a joint venture with the Gujarat government for the project, Bagra said.
"In case ultimately it becomes a joint venture NALCO will prefer to have a controlling stake," he added, without elaborating further.
He said NALCO will considering setting up a smelter only when it has access to captive coal blocks and electricity supply at economic rates.
NALCO, which currently operates a 2.1 million-tonnes-a-year alumina refinery in the eastern Indian state of Odisha, plans to expand the refinery by a million tonnes but is still awaiting allocation of bauxite deposits.

Century Aluminum, retirees at an impasse

Charleston Daily Mail - February 28th, 2012

Century Aluminum representatives remain at an impasse with retirees over how to restore some health care benefits while at the same time securing a profitable restart of the company's idled Ravenswood plant.
Company, union and retiree representatives met throughout the day Sunday to try to forge an agreement that would give retirees some health care benefits prior to a restart of the Ravenswood aluminum smelter.
"It was a very difficult day for retirees," retiree spouse Karen Gorrell said in an e-mail to the media Monday evening. "At this point, the talks between the retirees and the company have not been productive enough to reach an agreement."
Century idled the plant in 2009, sending more than 650 people to the unemployment lines.
In 2010, the company ended health care coverage for Medicare-eligible retirees in 2010. It followed suit with early retirees - those between the ages of 55 and 65 - in 2011.
The retirees have fought for the past year to get those benefits back.
No one involved in the negotiations Monday would comment about specifics on the record.
Sources familiar with the talks say the retirees are not comfortable with the latest offer from the company, which included a partial reinstatement of about $4 million per year in benefits. To contrast, Century said the total elimination of all benefits saved the company about $18 million last quarter.
Gorrell spoke generally about the offer in her e-mail.
"The last offer by the company appears huge in volume, but the enormous cost of health care for retirees in this age range will quickly diminish the offered funding," she said.
"We have met the company on almost every significant demand they have presented and we are hopeful that Century will be willing to offer a 'fair' deal as we stand ready and willing to accept a 'fair' deal when we see it for the sake of all concerned parties and the future of Jackson County," Gorrell said.
Sources also said retirees were seeking a 10-year guarantee of any restored benefits. The company's offer, however, detailed that benefits would only be guaranteed so long as Century was in business.
The 10-year guarantee would protect retirees, should the company be bought out or declare bankruptcy. That requirement appears to be one of the factors keeping the two sides at loggerheads.
If the company and retirees can strike a deal to end the impasse, it would clear the way for the company to take the final necessary steps toward restarting the plant.
Officials with Gov. Earl Ray Tomblin's office have been monitoring negotiations between the two sides. Tomblin met with retirees during a closed-door meeting at the Capitol last week.
Administration officials had not heard any new details from either side by Monday evening, but Tomblin chief of staff Rob Alsop said Monday the governor remains committed to seeing the situation resolved.
"We're determined to get that plant back open," Alsop said.
If the company and retirees can strike a deal, it would clear the way for the company to take the final necessary steps toward reopening the plant.
That restart would be a significant boost to the local economy in Jackson County and throughout the surrounding area.
A 2008 study by the West Virginia University Bureau for Business and Economic Research conducted just prior to the plant's closing found that Century generated $579 million in both direct and indirect business activity each year.
While the plant employed more than 650 people prior to closing, the WVU study said many more people were employed by companies that supported Century. The WVU study estimated that Century accounted either directly or indirectly for more than 1,600 jobs amounting to $111 million in employee compensation each year.
It was also a key customer for Appalachian Power.
Century accounted for about 10 percent of Appalachian's West Virginia customer load before its closure, using 325 megawatts of electricity. That's roughly enough power to supply about 325,000 homes.
"We're certainly anxious for them to start back up again," said Jeri Matheney, spokeswoman for Appalachian Power. "Any time you add a new customer, that helps spread out the fixed costs it takes to generate power."
Fixed costs are basically any cost a business has to pay just to be in business. For smaller businesses, it includes things like rent or equipment purchases.
The more customers, the easier it is to spread out costs and control rates, Matheney said.
But she said a Century restart would not prevent future rate increases.
She said the chief driver of rates over the past half-decade has been the surge in the price of coal. If the plant comes back online, it would still have to buy the coal it takes to power the smelter.
A reopened plant could affect a new plan the power company is trying to get approved in the Legislature.
Appalachian Power is seeking approval to sell about $300 million worth of bonds this year to offset coal purchases.
Under the company's plan, the state Public Service Commission would ensure that Appalachian's 500,000 customers would pay rates high enough for the company to pay off the multi-year bond. Appalachian Power is pitching this as the only way it can avoid a one-year, 30 to 40 percent rate increase.
Matheney said a Century restart could ease customers' power bills.
"It would help because how we determine each customer's share of costs (for the bonds) is based on how many customers you have to divide the costs by," she said.
Each year, the power company and PSC would determine how much customers have to pay toward the bonds and incorporate that into its rates.
If Century comes online and the power company has a new, large customer, it could lead the portion of the rates going to the bonds to be adjusted down.
"If it's based now on not having Century and next year we have Century, the amount that comes out of a customer's bill is going to be adjusted down by that," she said.

Century may restore benefits

Charleston Daily Mail - February 26th, 2012

With hundreds of potential jobs on the line, Century Aluminum executives sat down with retirees and union representatives in Charleston Sunday afternoon in hopes of finalizing a deal that could help restart the company's shuttered Ravenswood plant.
That plan also appears likely to include a restoration of at least some health care benefits for hundreds of Century retirees, who lost coverage last year.
"We are cautiously optimistic that today could become the beginning of the final chapter of our battle and that once again, the retirees can live with dignity as they so deserve to do," Century retiree representative Karen Gorrell said in an email Sunday morning.
Century CEO Michael Bless announced last Thursday that restarting the Ravenswood smelter was a top priority for 2012.
"We believe we're ready to go," Bless said. "We continue to believe this will be a good investment for our shareowners and we're determined to get it done."
Century shut down the Ravenswood plant at the height of the recession in 2009. More than 650 men and women lost their jobs in the shutdown, and the local economy has been reeling ever since.
In recent months, rumors had been circulating that the company was moving toward a restart. But Bless's comments Thursday were the first definitive statements from anyone at Century that a restart loomed.
Now, leaders across government and the private sector are working to make sure that restart becomes a reality.
"You're talking over 500 manufacturing jobs here - it's the basis for industrial manufacturing operations in the mid-Ohio Valley," said Delegate Mitch Carmichael, R-Jackson. "We absolutely need that."
Lawmakers in both parties agree the company must first remedy an issue that has tarnished its reputation in the past few years: the elimination of retiree health care benefits.
"The key element is the retiree health care benefits," Carmichael said Friday. "The company is diligently working and the union representatives and the retirees are all working toward obtaining that goal.
"There seems to be some movement on that and some willingness to compromise on both sides," Carmichael said.
The company pulled the plug on all retiree health care coverage in recent years, beginning with retirees 65 and older in 2010 and early retirees (ages 55 to 65) in 2011. While that saved the company tens of millions of dollars each quarter, it also soured public opinion on the company.
When the company tried last year to push through legislation that would ease its power costs in the case of a restart, Senate lawmakers balked. Public pressure also has been mounting from U.S. Sen. Jay Rockefeller, D-W.Va., and Gov. Earl Ray Tomblin.
Tomblin vowed last year the state would have no further talks with the company about a restart unless a restoration of retiree benefits was on the table.
Over the past few months, retirees have had several meetings with executives to discuss a restoration of benefits. Sunday's talks appear to be the final phase in striking a deal.
"I am cautiously optimistic that it can happen but there are a couple huge hurdles that have to be crossed," Gorrell said. "We are only seeking a 'fair' deal. We hope Century is prepared to deliver."
The groundswell of support for retirees has been cited as a factor in a corporate coup d'état that reformed Century management last year.
Wayne Hale, Century's chief of U.S. operations, was terminated in May. In June, global commodities investment firm Glencore International was able to put three Glencore-backed members on the company's board of directors.
In November, then-Century CEO Logan Kruger - nicknamed "Chief Execution Officer" by retirees - abruptly left the company. Kruger sued for wrongful termination, but the company maintains he terminated his own employment. The matter has since gone to court in California.
With Kruger out of the picture, the company's attitude seems to have turned to the retirees' favor.
Bless, who was named CEO in early February, said on the conference call the first step to reopening the plant was working out issues with labor representatives. He was sure to mention retirees among that group.
Bless visited with retirees in early February at the Ravenswood plant, where retirees have been holding an "Occupy Century Aluminum" camp since December.
Gorrell did not know Sunday afternoon how long the talks would last, but remained hopeful a positive solution would be reached for all parties.
"We are hoping for a new beginning with Century Aluminum that will restore their ethical standing in the community, get the laid-off workers back to work and give a big boost to Jackson County and our great state," she said.
There was no word if a deal had been reached Sunday evening, though talks were continuing.
State lawmakers are eyeing the situation as they move into the final two weeks of the legislative session.
The bill dealing with Century's power situation has been introduced again this year. That bill would provide some smoothing of the company's power rate using extra revenues generated when aluminum prices were high.
Lawmakers do not intend to move forward on the bill until they receive word the company has struck a deal with retirees.
With the Legislature in session for only two more weeks, time is running out. According to the Legislature's joint rules, all bills have to be passed out of the house they were introduced by Wednesday.
Even if a deal is not struck by then, House Finance Chairman Harry Keith White, D-Mingo, said that wouldn't mean the bill is dead.
"We'll be here till March 10," White said. "If they reach an agreement and we're still here, I think we'll be able to suspend the rules and take it up.
"If not, and the session's over with, I think the governor would be inclined to call a special session on that," he said.

We aim to create diversified mega mining company in India: Anil Agarwal, Chairman, Vedanta Resources

Economic Times - February 26th, 2012

What is the rationale for the merger?
The whole objective was based on a vision... to create a large diversified resource company based out of India. Brazil has Vale, Australia has BHP Billiton, UK has Rio and South Africa has Anglo-American. We wanted to create one that can use the abundant deposits that India has in minerals. It is also to simplify the group structure and have synergy.
What accounts for the timing?
We were waiting for the completion of the Cairn acquisition to start work on this restructure. The intention was also to reduce crossholding. Exposure in oil is something that all global majors have.
There have been problems for your aluminum project which is supposed to be a growth driver for you.
Aluminum is a fantastic business. We have put up 1.75 million tonnes of smelter facilities through Vedanta Aluminum, that no one can replicate. The problems in Vedanta Aluminum (closure of mining and cancellation of refinery expansion) are short term. I believe that in a few months we will get the approval for aluminum refinery.
At the moment, we buy bauxite from outside and that is costly. We are still in the lowest quartile as far as production cost is concerned. We have faith in the system. We invested $14 billion in aluminum and energy in Orissa. Globally, all mining projects face delays.
What is the status of alumina refinery expansion which was cancelled by the environment ministry?
We have made an application and re-applied on the directions given to us by the government.
New terms of references were issued and we have filed that. It is a normal process and we are confident that issues will be resolved.
There are reports that the restructure would enable you to to free cash flow to acquire the residual stakes in Balco and Hindustan Zinc.
The government is very business-friendly. We have started the process to buy out the remaining stakes. We have had talks with them. It will take some time. But yes, the ultimate aim is to buy the residual stake.

Tan Rai bauxite factory to open in April

Steel Guru - February 26th, 2012

The project management board said that the Tan Rai ore bauxite factory part of the Lam Dong Aluminum and Bauxite Complex Project is expected to come into operation in April.
At present, the Tan Rai Aluminum Bauxite Project has completed around 90% of its targeted construction.
With investment capital of almost USD 700 million, the Tan Rai complex located in Lam Dong Province aims to produce 600,000 tonnes of alumina per year and will increase its output to 1.2 million tonnes by 2015.
The duration of the project run by the Viet Nam National Coal and Mineral Industries Group will be 30 years.
Vinacomin is also developing the Nhan Company bauxite mining and refinery complex in Dak Nong. The complex is expected to churn out its first produce early next year. With the operation of the Tan Rai and Nhan Co bauxite mining and refinery complexes, Vietnam hopes to become a competitive alumina exporter worldwide.
The country is currently recognized as having the third largest bauxite reserves in the world after Genuine and Australia but most of the mineral remains untapped and concentrated in the country's northern mountains and the Central Highlands.

Century Aluminum hopes to restart Jackson plant

Saturday Gazette Mail - February 26th, 2012

When Century shut the plant down on Feb. 15, 2009, it laid off 651 workers.
Century Aluminum Chief Executive Officer Michael Bless told shareholders during a conference call Thursday that his company hopes to announce in April when it will reopen the plant. He said conditions are favorable for a restart, and cited discussions with union, state, utility and regulatory representatives and recent improvements in the aluminum market outlook.
Bless said it would cost $70 million to restart the plant this year.
Harbert, the first woman to serve as Ravenswood's mayor, said she spoke with Century Vice President John Horner Friday morning about helping the plant reopen.
"When it reopens, there would be about 450 workers," she said. "I am hoping they hire a couple-hundred more after they begin operating again.
"If Century reopens, they will bring in new people. Some of the employees who were laid off have moved away and some have retired."
Century Aluminum operated a smelting plant that originally was part of the aluminum complex built and operated by Kaiser Aluminum and Chemical Corp. between 1958 and 1989, when Ravenswood Aluminum bought the operations.
When Ravenswood Aluminum sold the facility, it was split into two plants, one operated by Alcan Rolled Products and the other by Century Aluminum.
Alcan continued operating its part of the Ravenswood facility after Century shut down. In May 2011, Paris-based Constellium bought the Alcan plant.
Constellium recently secured a $46 million "stretcher" to make aluminum airplane parts. Harbert said that would help the company continue to employ more than 1,000 people.
Bob Grimmett, a member of the local Chamber of Commerce, owns the Robert Mason Co., an office supply store in the Ravenswood Plaza near downtown.
Grimmett said Century's $100 million annual payroll would help the whole area when the plant reopens.
"We need to get serious about manufacturing. That helps everyone in the region," he said. "People in Charleston, Parkersburg and Southern Ohio will all benefit. I am excited.
"This is the best news we have had in three years. There is finally something besides gaming and prisons to create jobs."
Grimmett said a typical worker at Century would make between $60,000 and $80,000 a year, plus benefits.
Mike McCann, a clerk for the city of Ravenswood, said, "A whole cloud of gloom could be lifted" if Century reopens. When the aluminum plants are open and do well, he said, the city also does well.
"It will be great if Century's reopening brings us more business," she said, "but we aren't counting on it. When Century closed, they took all the retirees' insurance away. That is a big thing. Who knows what they will offer to the new people who come to work there."
When Century shut down, its leaders promised to continue providing health benefits to "early retirees," who retired between the ages of 55 and 65, and to workers who already were retired, as required under its contract with the United Steelworkers of America union.
On Jan. 1, 2011, though, Century cut off all health coverage for early retirees. Century paid COBRA premiums to let them keep health insurance for six months. However, that coverage ended in July. (COBRA stands for Consolidated Omnibus Budget Reconciliation Act.)
The restoration of those health benefits has been a major issue in reopening the Century facility. Century said cutting off retiree health benefits saved the company $18 million during the last three months of 2011.
If Century wants any economic help from the state, Gov. Earl Ray Tomblin has said, the company must restore health benefits to its retired workers.
"Retiree benefits have been a major stumbling block," Harbert said on Friday.
"I do believe they should be taken care of. They agreed not to get pay raises so they could keep their benefits," Tomblin said, adding, "but I feel very confident that Century will be running again."

Sterlite and Sesa Goa to merge

Business Standard - February 25th, 2012

Vedanta group companies Sterlite Industries and Sesa Goa announced a merger of Sesa Goa and Sterlite on Saturday.
As per the plan, the Sterlite will merge into Sesa Goa, which will be called Sesa Sterlite. Three shares of Sesa Goa will be issued for every five Sterlite shares.
Vedanta Aluminium and Madras Aluminium will be 100% consolidated into Sesa Sterlite.
Vedanta’s direct holding of 38.8% in Cairn India will be transferred to Sesa Goa, together with the associated debt of $5.9 billion, at cost. After the transfer, Sesa Sterlite will have a 58.9% shareholding in Cairn India.
The new firm will be the seventh largest global diversified natural resources major by earnings before interest, tax and depreciation. Anil Agarwal, Vedanta chairman, said, “Sesa Sterlite will be one of the largest global diversified natural resources majors, supporting the country’s industrial growth. This transaction is a natural evolution, leading to simplification of the group’s structure. Sesa Sterlite will be the principal operating company in the group and with its high quality assets, growth projects and strong management, it is well placed to create value for all shareholders.”
The group also plans to double capacity in the next three years. The management also said the new firm will have greater scale and diversification reduces volatility of earnings for Sesa Sterlite. The press release said increased diversification would reduce volatility of earnings through commodity cycles, lowering the cost of capital and enhancing value.
The press release also said there would be significant synergies from the merger, and there would be cost savings of around 1,000 crore a year.
After the consolidation, Vedanta will own 58.3% in Sesa Sterlite. The group’s 79.4% shareholding in Konkola Copper Mines will continue to be directly held by Vedanta.

CHIC to build alumina refinery

China Daily - February 24th, 2012

China Henan International Cooperation Group Co Ltd will spend $3 billion to build an alumina refinery in Sangaredi, Guinea, within four years, said Ousmane Kaba, an adviser to the African nation, on Tuesday. Annual production capacity at the site, 350 kilometers northwest of the Guinean capital, Conakry, will be 3 million metric tons, said Kaba. The plant will process 10 million tons of bauxite, the ore that is refined into alumina, which in turn is made into aluminum.

Century Aluminum hopes to restart plant this year

Charleston Daily Mail - February 24th, 2012

CHARLESTON, W.Va. - Century Aluminum's chief executive says restarting the company's Ravenswood plant is a top priority for 2012, and he hopes to announce that restart before April.
"We hope to get to the finish line on this reasonably soon," Century CEO Michael Bless told shareholders and industry analysts on a conference call Thursday evening.
Century announced its 2011 fourth-quarter earnings on Thursday. While the company announced a $31 million loss for that quarter, Bless said recent improvements in the aluminum market outlook and renewed talks with local representatives have created favorable conditions for a Ravenswood restart.
The company shuttered the plant in February 2009, laying off more than 650 workers in the process. The company was Jackson County's second-largest private sector employer, and the continued shutdown has depressed the local economy ever since.
Bless listed the Ravenswood restart, along with company-wide improvements in safety and a renewed push to control power costs, as a top priority for 2012.
"Another major, major effort continuing for this year - certainly for the first two months and we believe going forward - is the complex process whereby we would hope to restart the Ravenswood smelter," Bless told shareholders.
After three years offline, Bless told shareholders he hopes to get the plant up and running later this year.
"We continue to believe this will be a good investment for our share owners, and we're determined to get it done," he said. "We hope to have that positive update for you when we announce earnings in April, if not hopefully sooner."
Bless said company executives are engaged in "detailed discussions" with the three main groups involved in a restart.
He said the No. 1 group is the United Steelworkers Union, which represents active and retired laborers.
His mention of retirees was significant.
Ravenswood retirees have waged a steady campaign for restoration of their health care benefits over the past year. The company eliminated those benefits for retirees last year, a move that saved the company over $18 million in the fourth quarter.
U.S. Sen. Jay Rockefeller has been a vocal advocate for the retirees, and Gov. Earl Ray Tomblin has said the state would not engage in talks with the company if restoration of retiree benefits was not included.
That has led to a continuing dialogue between the company and retirees. There have been talks in recent weeks about a deal to restore some benefits.

Greg Combet outlines three key areas in need of Aussie innovation

Start Up Smart - February 23rd, 2012

Aluminium production
Combet said the aluminium industry in Australia is under extreme pressure, partly because lower international prices have been exacerbated by the higher Australian dollar.
“This is an energy-intensive industry, so the parent companies are looking for clean energy sources in the emerging low-carbon global economy,” he said.
“The future of the aluminium industry lies in lower-carbon production and, if we are to retain a strong industry, we must have a mature economic discussion about the real issues.”

Smelter mustn't be allowed to leave toxic legacy, say villagers

New Post Leader - February 22nd, 2012

HORRIFIED villagers are calling for action to be taken to prevent a toxic legacy being left after Lynemouth’s Rio Tinto Alcan smelter complex closes later this year.
The Lynemouth plant is home to vast lagoons containing millions of tonnes of waste created by four decades of aluminium production, and residents are demanding that they be cleaned out.
Their campaign – launched following concern being expressed about the lagoons at January’s meeting of Newbiggin Town Council – is being supported by Ashington-born businessman Sir John Hall, town councillors were told at their meeting this month.
Some villagers want the Environment Agency to look into the potential for recycling the pulverised fuel ash into granular glass for use in construction projects as such a development would create jobs.
Newbiggin county and town councillor Alan Thompson has been researching the viability of recycling the waste following an expression of interest by Swansea-based businessman Howard Denby, as reported in last week’s News Post Leader.
Coun Thompson told fellow councillors: “I don’t think any other community anywhere in the UK would tolerate that waste being left.
“I don’t think it’s generally realised just how large these lagoons are. They cover the equivalent of three 18-hole golf courses.
“If we are left with that, it could be left there for all time.”
Rio Tinto Alcan proposes to close the aluminium smelter, with the loss of 515 jobs, and sell the 40-year-old power station next door with planning consent for conversion to wood pellet fuel.
Having to take responsibility for the lagoons – including sodium and aluminium fluorides created by the smelting process – could deter potential buyers, fear councillors.
Coun Malcolm Peden told this month’s council meeting, held at the Northumberland Church of England Academy’s Grace Darling Campus: “This power plant will not last much longer because it’s at the end of its life.
“I can’t see anybody taking over this plant and having the responsibility of moving eight million tonnes of ash out of our district.
“Before Alcan disappears over the horizon, we have to get everybody on board to make sure the people of Newbiggin are left with something decent – not a spoilheap for 100 years – for our children and grandchildren.
“I have even contacted Sir John Hall about this to get him on board, and he is on board, to make sure that we are not left with this.”
Coun Thompson added: “This place has been absolutely ravaged in the past.
“We don’t want to hinder anything, but, at the same time, we want as good a deal as anyone else would ask for because we have been used and abused here with all this waste that has been thrown around this area for far too long.”
Environment Agency spokeswoman Alexandra Wales told the News Post Leader: “Should the power station and smelter close, we would closely monitor and manage the whole closure process to prevent any damage to the environment or human health.
“When a power station or similar industrial site is closed, we will oversee the closure plan to ensure that all sources of potential pollution are removed from site before the permit can be surrendered.
“We would also see that the lagoons on the site are capped and restored in line with landfill directive requirements.”
“If the power station is to continue to run under a different owner, then it would still need the lagoons to store the ash, and it would still have to operate under an environmental permit from us.
“A key part of our role would also be to give advice and guidance to any new owners on regulatory requirements, including those covering the condition of land and ground water.”

Noranda expanding Missouri plant

Nashville Post (subscription) (blog) - February 22nd, 2012

Noranda Aluminum Holding is moving ahead with plans to expand its massive New Madrid, Mo., smelter. One phase will cost $38 million and replace rectifiers and expand production by 35 million pounds per year. Work on that phase is expected to yield additional capacity beginning in 2013. Separately, the Franklin-based company (Ticker: NOR) said it also has started engineering work for a planned rod mill that still needs final board approval. That project would be worth $40M in all.

Ore-bauxite factory to open in April

Viet Nam News - February 22nd, 2012

Ha Noi — The Tan Rai ore-bauxite factory, part of the Lam Dong Aluminum-Bauxite Complex Project, is expected to come into operation in April, said the project management board.
At present, the Tan Rai Aluminum Bauxite Project has completed around 90 percent of its targeted construction.
With investment capital of almost US$700 million, the Tan Rai complex, located in Lam Dong Province, aims to produce 600,000 tonnes of alumina per year and will increase its output to 1.2 million tonnes by 2015. The duration of the project, run by the Viet Nam National Coal and Mineral Industries Group (Vinacomin), will be 30 years.
Vinacomin is also developing the Nhan Co bauxite mining and refinery complex in Dak Nong. The complex is expected to churn out its first produce early next year.
With the operation of the Tan Rai and Nhan Co bauxite mining and refinery complexes, Vietnam hopes to become a competitive alumina exporter worldwide.
The country is currently recognized as having the third largest bauxite reserves in the world after Genuine and Australia, but most of the mineral remains untapped and concentrated in the country's northern mountains and the Central Highlands. — VNS

Alcoa, China Power finalize joint venture

Pittsburgh Business Times - February 21st, 2012

Alcoa and China Power Investment Corp. have inked a deal for a joint venture on high-end fabricated aluminum, the companies said Tuesday.
Alcoa Chairman and CEO Klaus Kleinfeld and China Power Investment President Lu Qizhou signed the agreement Tuesday in the Great Hall of the People in Beijing, Alcoa said. Also on hand was Gary Locke, U.S. ambassador to China. Alcoa didn't announce terms of the agreement but said the new company, Alcoa CPI (China) Aluminum Investment Co. Ltd., will be based in Shanghai. Alcoa will manage and be the majority owner.
The joint venture was announced in September after Alcoa (NYSE: AA) and China Power Investment signed a letter of intent. The agreement covered high-end aluminum for the Chinese markets in auto, aerospace, packaging and consumer electronics.
"This is a significant milestone in the partnership we have forged with CPI, leveraging our combined strengths to capture opportunities in the high-growth Chinese aluminum market," Kleinfeld said in a statement. "This alliance will enhance Alcoa's competitiveness and further position our businesses for continued profitable growth."
China Power Investment integrates power, coal, aluminum, rail and port.

Alcoa job deal 'not an issue'

Geelong Advertiser - February 21st, 2012

ALCOA has denied any exodus of workers from Point Henry to a new aluminium smelter and rolling mill in Saudi Arabia, with just one Geelong manager joining the project.
A total of seven managers and supervisors from Alcoa's Victorian operations will help set up the smelting, rolling and refining operation in a joint venture between Saudi Arabian mining company Ma'aden and Alcoa.
It comes as Alcoa conducts a review of the future viability of the Point Henry smelter and the jobs of 600 Geelong-based workers, citing falling aluminium prices, a high Australian dollar and rising input costs.
The Herald Sun reported Point Henry workers were being offered lucrative pay deals to relocate to the Middle East.
But an Alcoa spokeswoman said the Middle East job openings had no connection to the Point Henry review.
"Alcoa is presenting opportunities for employees from all over the world to help build and commission the new ... facilities in Saudi Arabia," she said.
"A very small number are from Australia, with 10 from our Western Australia operations and seven from Victoria."
The spokeswoman said such opportunities were normal within a global organisation.
Australian Workers Union Victorian secretary Cesar Melhem said the Saudi Arabian recruitment drive had been announced several months ago and was a non-issue as far as the union was concerned.
"It's actually a storm in a teacup," Mr Melhem said.
"It's just part of a normal recruitment drive to attract some senior people to be ex-pats and go and work there.
"It's not an issue at this stage but we're monitoring the situation."
The Alcoa spokes-woman said the reports were unsettling for Point Henry workers, who were still grappling with the review and there hadn't been any "flood of interest".
The smelter and rolling mill are scheduled to begin production next year.
with AAP

World daily average aluminium output down in January: IAI

Platts - February 21st, 2012

World primary aluminium output averaged 69,000 mt/day in January, down from an average of 70,600 mt/day in December but up from 68,900 mt/day in January 2011, according to figures from the International Aluminium Institute.
Total production in January was 2.140 million mt, down from 2.189 million mt in December but up from 2.137 million mt in January last year.
For the full year 2011, aluminium production averaged 70,200 mt/day, up from 66,500 mt/day in 2010. Production for the year totaled 25.625 million mt, up from 24.290 million mt the previous year.
China's primary aluminium production averaged 48,900 mt/day in January, up from 48,400 mt/day in December and from 41,400 mt/day in January 2011, the IAI said, quoting data previously published by the China Nonferrous Metals Industry Association.
January production totaled 1.517 million mt, up from 1.501 million mt in December and from 1.284 million mt in January 2011.
For the full year 2011, Chinese output averaged 48,700 mt/day to total 17.786 million mt, up from 16.131 million mt at 44,200 mt/day in 2010.

Rusal unveils details of alloy investment programme

Metal Bulletin - February 20th, 2012

United Co Rusal has released further details of its programme of investment in alloy production as it looks to increase the proportion of value-added products in its total output, following a roundtable held in Russia on February 16.
“The upgrade work is taking place at practically all the smelters of the company,” a spokeswoman for Rusal said. The company’s Aluminium Division West, for example, which manages smelters in the European part of Russia and the Urals, as well as Kubal in Sweden, is implementing a modernisation programme aimed at creating a value-added products (VAP) hub. The five smelters participating in this programme are Volgograd, Nadvoitsy, Kandalaksha, Urals and Volkhov, and the aim of the programme is to shift to 100% VAP production at these smelters, the spokeswoman said. “Total capex of [this] programme is $55 million, which will better enable Rusal to meet the demand for products tailored for customers’ needs, drive a rise in smelters’ profitability, and lead to further interaction with end-customers,” she added. The first smelter to be modernised within the upgrade programme was the Volkhov aluminium smelter (VAS), where the...

Alcoa Offers Workers More Than 100% Pay Hike if They Will Accept Saudi Arabia Post

International Business Times AU - February 20th, 2012

To appease Alcoa workers in Geelong who may lose their jobs as the company reviews the viability of its Point Henry aluminium smelter facility, Alcoa has dangled a more than 100 per cent hike compensation package. The big if is conditioned on the workers being posted in Saudi Arabia,
Alcoa is planning to open a new smelter in the Middle Eastern kingdom. Takers of the offer are guaranteed a total compensation package of $190,700 versus the $73,300 current compensation of Geelong-based employees, the Herald Sun reported.
The Saudi Arabia package is broken down into $163,200 annual salary tax free, $27,500 travel allowance and free accommodation. In contrast, the salary of a Geelong employee is only $100,000 on the average which is deducted $26,700 for taxes, leaving the Alcoa worker based in Australia only $73,300 or less than half of what his counterpart in Saudi Arabia would earn.
Despite the high offer of pay to workers, Alcoa said the new smelter in Saudi Arabia would be the world's cheapest and most efficient aluminium producer. At least one Australian manager and his wife are on a pre-commitment tour of the Saudi Arabian Alcoa facility.
Up to 600 Alcoa workers are at a risk of losing their jobs because of the high Australian dollar and weak prices of aluminium in the global market, which led to the ongoing review by Alcoa of the viability of maintaining the Geelong facility.
Reports said many Geelong workers are considering the Saudi Arabia offer. The facility in Ma'aden is expected to go online in 2013.
An Alcoa spokeswoman confirmed that a manager is in the Middle East touring the proposed plant, but said the pay package was different from the reports. She declined to provide figures because the compensation package is confidential.
Despite the 5.1 per cent unemployment rate registered in January, more jobs are being axed throughout Australia across different industries, although manufacturing was hit hard.
Given this situation, it appears that Australian workers - despite the relatively stable and sound national economy - may go the way of Asian and African workers who have for three decades become foreign workers in the Middle East to take on jobs that pay several times over what they earn home.

NALCO to invest Rs 900 cr in nuclear power business by 2012-13

The Times of India - February 19th, 2012

State-owned aluminium major NALCO plans to spend Rs 900 crore by next fiscal on nuclear power ventures, for which it had signed a joint-venture agreement with Nuclear Power Corporation of India Ltd (NPCIL) in November.
As per the plan, the investments will be made on unit 3 and 4 of Kakarapar Atomic Power Station (KAPS) in Gujarat, a senior company official said, adding that both the units are of 700 MW each.
The official further said that "NALCO would be investing Rs 300 crore in the current quarter on the project, in lieu of its 26 per cent stake, while rest of the money will be invested in next fiscal".
Both the units of KAPS entail a total investment of Rs 7,000 crore and are planned to be commissioned by 2015.
The company, which currently has the permission of having only 26 per cent stake in nuclear power ventures, is talking to the government for increasing the limit to 49 per cent, the official added.
In case of increase in its stake, the aluminium major would invest more money on the developments of both the units of KAPS, the official said.
Venturing into the nuclear power sector is part of NALCO's future growth plans, under which it aims become a diversified metals, mining and power producing company, with an estimated turnover of over Rs 25,000 crore by 2020.
As per the plan, the company would venture into power sector as an independent producer and once the generation capacity goes up substantially, the business will be hived off into a wholly-owned subsidiary.
The aluminium major produces about 1,200 MW for captive uses and has been planning to bid for upcoming ultra mega power projects.
The company had also announced to set up a 50 MW wind mill in Andhra Pradesh for about Rs 274 crore. Besides, it is also looking to diversify into other metal segments like copper and uranium.
Last year, the company completed second phase of its expansion at an investment of Rs 4,402 crore. Post expansion, NALCO has an alumina refinery capacity of 2.1 million tonnes per annum (MTPA) and an aluminium smelter of 4.6 MTPA. It also has bauxite mining capacity of 6.3 MT.

Should Geelong be concerned?

The Canberra Times - February 19th, 2012

WHEN ALCOA announced a review of operations at its Point Henry smelter it was not just the 600 workers at the plant who got the jitters.
Employees in companies dependent on Alcoa contracts also saw the threat.
How many workers might lose their jobs at, for example, Brockman Engineering, which fabricates and repairs pots for Alcoa at its Corio plant, or at IXL Foundry, which is a preferred supplier for Alcoa?
And what job losses might flow from laid-off workers cutting back on purchases of everything from food and clothing to entertainment? The overall answer is up to 3000 in a region where some suburbs like Corio have an unemployment rate of 10 per cent and the regional average is 6 per cent, compared with a national figure of 5.2 per cent.
If the worst happened and the plant closed, the district could see unemployment jump from 7000 to 10,000, out of a workforce of about 110,000. And the impact could be felt even as far afield as Anglesea, where 110 people work in the power plant supplying 40 per cent of Point Henry's energy.
But the mood now in the manufacturing-dependent and AFL premiership-winning Geelong region is far from gloomy. This year is not a repeat of the early 1990s, when many businesses closed, the Pyramid and Countrywide building societies collapsed, and nearly one-third of Geelong's automotive workforce lost their jobs, pushing unemployment up to 16 per cent.
David Sykes, the general manager of Backwell IXL, which owns the IXL Foundry, told the Sunday Canberra Times that in this time of adversity he believed his company could maintain its position in the marketplace. This is a strong statement given that Backwell not only supplies Alcoa from its foundry, but also services Ford and Toyota in the threatened auto industry. But Backwell - best known for its four-globe IXL Tastic bathroom heating and lighting system - has demonstrated resilience and, by adapting to change, has grown steadily. In its 150 years in Geelong, it has seen the town move from one dependent on wool exports and the textiles industry, to a diversified economy. Sykes sees this continuing and, among other things, gives credit to government programs such as the Automotive Supplier Excellence scheme for helping make it happen. He says this low-cost scheme, which his company uses, ''has made a significant difference to our business''.
But can, or should, government assistance be provided to support Alcoa? And if so, what level and type of assistance?
Alcoa is the world's largest integrated aluminium company with plants in 31 countries. In January it announced a fourth quarter 2011 loss due to lower metal prices and the restructuring costs of the closure of plants in Italy, Spain, Tennessee and Texas. Over a year the metal price has dropped by 15 per cent in US dollar terms but 20 per cent in Australian dollars.
As it contemplates the future for its 50-year-old smelter at Point Henry, Alcoa is building a state of the art, fully integrated, aluminium complex at Ras Al Khair in Saudi Arabia. The Saudi smelter and rolling mill are scheduled to begin production in 2013.
Australia is the world's largest producer of bauxite - the best raw material for aluminium production - and Alcoa has major mines in Western Australia. But the key determinant of where to locate an aluminium smelter is energy cost. In the past Australia was an attractive location thanks to Tasmania's cheap hydro-electric power and Victoria's cheap coal power. Alcoa's Point Henry smelter benefited greatly from its initial contract, getting electricity at giveaway prices in a deal signed by the Bolte government in the 1960s.
Today power costs account for about 20 per cent of the smelter's production costs. While much has been made of the impact of the carbon tax, the state government could, if it wished, ensure the viability of the plant by again offering cut-price electricity. But to do so would not only cut government revenue, it would encourage the consumption of highly polluting, brown-coal-generated electricity.
The political pressure is on both the federal and state governments. By most measures, Geelong is a relatively disadvantaged region. According to comparisons prepared by the Parliamentary Library, it has a high proportion of one-parent families with dependent children and more lone-person households and more low income households. Fewer people have internet connections. At the micro level, more than 70 per cent of students at Corio Bay Secondary College are from families in the lowest socio-economic status quartile. Even worse, in Corio the proportion of young people who are neither working, nor studying, is considerably higher than the national average.
The region is also more dependent on manufacturing with 16 per cent of its workforce in the sector. Manufacturing has always faced international competition, a challenge new technology is now bringing to other sectors, such as retail and financial services. Today the high dollar, brought about by the resources boom and the Reserve Bank's high interest rate policy, challenges all sectors, except mining itself. Economic theorists can no longer claim that unemployed manufacturing workers can easily shift to tourism or financial services.
Despite all the competition, Geelong still has Australasia's largest carpet manufacturer, Godfrey Hirst, employing more than 500 people and producing not only Hycraft wool-blend carpets but also a unique eco-friendly polymer carpet derived from natural cornstarch. The region can also boast the largest olive oil manufacturer in Australia, and products as diverse as ugg boots manufacture, military pyrotechnics and hospital supplies.
Such diversified companies are essential if Australia is to avoid being vulnerable when the mining boom ends.

Alba expansion plans on track

Bahrain News Agency - February 18th, 2012

Aluminium Bahrain (Alba), which owns the world's fourth-largest aluminium smelter, yesterday said its planned sixth production line could be completed by early 2015.
Feasibility studies are currently underway, with banking feasibility studies seen ready by 2013, chief executive officer Laurent Schmitt said in a conference call.
"First metal would be available in early 2015," Mr Schmitt said.
The line is expected to add 400,000 tonnes annual capacity to Alba's current production of 881,000 tonnes a year, he said.
A one-time social cost of $16 million was incurred during the fourth quarter due to reconciliation packages for employees terminated as a result of the unrest.
"We are offering packages according to the number of years worked so they range from around one to two years of pay," said Tim Murray, the company's chief financial officer.
Mr Murray said it was still unclear whether Bahrain would again significantly raise gas prices it sells to Alba.
The country's state-run energy supplier had raised the prices of gas it sells to Alba starting January 1 by $0.75 per million British thermal units (mmbtu) to $2.25/mmbtu.
The move is expected to increase Alba's costs significantly but still offers the plant cheaper fuel than most of its competitors outside the region.
"We still have no clarity on what it will be," Mr Murray said when asked if he expected prices to further jump within the near future.
The company and local authorities are discussing a long-term contract to secure availability and price of gas beyond 2012. EM

Gulf aluminium industry: Bright future

Arabian Business.com - February 18th, 2012

A fully-integrated aluminium industrial complex being built as a JV between Alcoa and Saudi Arabian Mining Co. (Ma’aden) alone involves a capital investment of about $10.5bn. More foreign investors are looking to the Gulf for aluminium business due to its inexpensive gas stocks and strategic geographic location, with Europe already sourcing around 6% of its aluminium demand from the region.
The UAE and Saudi Arabia rank among the Gulf’s two biggest aluminium markets. Smelting operations managed by the Dubai Aluminium Company Ltd. (Dubal) and Emirates Aluminium in Abu Dhabi produce around 1.8 million tons of aluminium a year, or 40% of total annual Middle Eastern production.
“Aluminium has emerged as one of the key economic activities of the Arab World, and complements region-wide efforts to diversify national development beyond oil and gas,” said Gulf Aluminium Council general secretary Mahmood Daylami.
Last year Emal commenced construction on Phase Two of its $5.7bn smelter project. A symbolic ground-breaking ceremony marked the start of the Al Taweelah smelter’s second phase, with completion and full production planned to be reached in little more than two years, Emal said in a statement.
This will boost Emal’s total production capacity to around 1.3 million metric tonnes by the end of 2014, making Emal one of the largest single-site producers of primary aluminium in the world. Emal’s board, shareholders and other VIP guests visited the site to witness the first step in the $4.5bn expansion.
Phase one was completed ahead of time and to budget, with the company supplying 280 customers in 36 countries with high quality aluminium. Phase two will include the addition of a new potline and will result in the world’s longest ever single smelting line. Saeed Fadhel Al Mazrooei, Emal president and CEO, said: “When complete, Emal will take its place as the largest and most advanced single-site producers of primary aluminium in the world, and one of the leading contributors to deliver a stable and prosperous Emirati future.”
Emal is a 50-50 joint venture between Dubai Aluminium Company Ltd. and Mubadala Development Company, Abu Dhabi’s investment vehicle. The company, which supplies customers in 36 countries, first started production from its $5.7bn project located at Al Taweelha in Abu Dhabi in January 2010.
Contracts worth more than $700m have been awarded as part of the expansion. The most significant contract was signed with SNC Lavalin to carry out engineering, procurement and construction management (EPCM) at the plant, which is essential if Emal is to meet its target of achieving first hot metal in Q1 2014. SNC Lavalin provided the same support and services during Phase One.
The award of the contracts for long-lead items packages is vital for EMAL to meet the challenging timetable for Phase Two. “Our target to achieve full production by 2014 depends on the successful execution of these contracts. We are confident that we have engaged the best partners with the best technology and will get the best outcome,” said Al Mazrooei.
The other successful companies in this round of contract awards were: Sojitz/Fuji – transformers, rectifiers; Sojitz/Hyundai – 400kV Intertie transformer; ABB Switzerland – 220kV GIS; Alstom Norway – gas and fume treatment centres; Outotec – green carbon plant, butts crushing, anode rodding shop and hot bath removal; and Rio Tinto Alcan Pechiney – anode baking furnace technology.
Elsewhere in the region, Sohar Aluminium also mulled a production expansion last year. The Omani manufacturer, which produces 740,000 tonnes of aluminium annually and recently produced its millionth tonne, started its first pot line in June 2008.
Formed by a joint venture of Oman Oil (40% stake), Abu Dhabi National Energy Company PJSC (40%) and Rio Tinto Alcan (20%), the company saw high initial investment and boasts a 1,000MW power station and world’s longest single potline. It is also the first smelter in the world to implement Rio Tinto Alcan’s benchmark AP36 smelting technology.
Henk Pauw, CEO, told local press in Oman that the rough expenditure for the expansion should be higher than the $4bn originally mooted, but that it depended on the gas supply. He added that the Ministry of Oil & Gas was negotiating with British oil company BP as to the cost of the natural gas to power the facility. “Until that is concluded, it is very hard for me to speculate on what it means for us,” he told Times of Oman.
Sohar Aluminium, which produces aluminium ingots and sows, spends 56% of its cash in the domestic market, which stood at $50m last year. It hawarded a number of tenders in 2011 for the development of its facilities, including awards to Al Makhadram National Associated and Petron Gulf.
Company expansion would come at the same time that Oman undergoes a wider industrial revolution to develop its manufacturing capabilities. This includes significant projects to develop the ports of Salalah and Sohar to expand logistics services and the possibility of manufacturing.
Aluminium is a product with unique properties, making it a natural partner for the building industry. Thanks to its strength, durability, corrosion resistance and recyclability, it has become an essential product for the building industry. Over the past 50 years, its use in building applications has shown continuous and consistent growth.
Aluminium extruded, rolled and cast products are commonly used for window frames and other glazed structures, ranging from shopfronts to large roof superstructures for shopping centres and stadiums, for roofing, siding, and curtain walling, as well as for cast door handles, catches for windows, staircases, heating and air-conditioning systems. Most recently, aluminium has played a significant role in the renovation of historic buildings. The characteristics and properties of aluminium as a material have lead to revolutionary and innovative changes in building techniques and architectural and engineering projects.
In addition to their particularly long service life, aluminium construction industry products can either be used after dismantling or indefinitely recycled, without any loss of the materials’ basic qualities and properties. The use of recycled aluminium also offers substantial energy benefits. Remelting used aluminium requires only 5% of the energy needed to produce primary metal. Thus, rather then contributing to society’s growing waste problem, aluminium can be remelted and reformed to produce a new generation of building parts.
Aluminium, in general, has always been recycled at a higher rate than most other raw materials. Given the necessary infrastructure, it is possible to recycle all aluminium construction industry applications, for several reasons.

UC Rusal update on aluminum production on Asia

Scoop Independent News - February 18th, 2012

Sarawak Chief Minister accused of abusing Bakun dam excess power for family deal with Rio Tinto Alcan
Rio Tinto Alcan involved in negotiating a huge corruption deal with the Taib family - Malaysian Anti Corruption Commission asked to stall aluminium smelter licence given to the Taib family-controlled SALCO corporation.
(KUCHING, MALAYSIA) An explosive report by whistleblower website Sarawak Report accuses Sarawak Chief Minister Abdul Taib Mahmud (“Taib”) of massive insider deals over plans to build an aluminium smelter in the Malaysian state of Sarawak on Borneo.
According to the website, SALCO (Sarawak Aluminium Company Sdn Bhd), a company currently involved in Sarawak smelter negotiations with Rio Tinto Alcan, is secretly owned by Cahya Mata Sarawak (CMS), an 85% Taib family-controlled corporation. SALCO has been handed a licence by the Malaysian federal government to build an aluminium smelter in Similaju, which should be powered by excess electricity from the controversial Bakun dam. The recently completed 2400 MW hydropower dam has caused a power glut in Sarawak as local demand has never exceeded 1000 MW.
While SALCO pretends, on its official website to be a joint venture between Rio Tinto Alcan and Cahya Mata Sarawak (CMS), official records are showing that it is 100%-controlled by the Taib family’s business flagship CMS. The Australian High Commissioner in Malaysia, Miles Kupa, recently travelled to Sarawak to lobby for a deal between Rio Tinto Alcan and CMS despite fears that Rio Tinto Alcan might close down its current aluminium smelter in Tasmania and shift operations to Sarawak instead.
The Bruno Manser Fund asks the Malaysian anti-corruption watchdog to stall the smelter licence handed to SALCO as the company is a pure political outfit of the Taib family and has no experience whatsoever in producing aluminium. “This is massive corruption at the highest level of government and should lead to immediate political consequences and a criminal investigation by Malaysian prosecutors.”
Malaysian authorities have recently come under fire for their plans to build another twelve new dams in Sarawak which would displace thousands of indigenous people and cause an environmental disaster in the tropical rainforests of Borneo.

Sarawak Chief Minister accused of abusing Bakun dam

World Socialist Web Site - February 18th, 2012

Alcoa Australia, a subsidiary of the US-based multinational Alcoa, announced on February 8 that it would complete a review by June of the “future viability” of its Point Henry aluminium smelter in the regional Victorian city of Geelong. Working in conjunction with the federal Labor government of Prime Minister Julia Gillard and the trade unions, the company is preparing to axe the plant or use the threatened closure to impose another round of attacks on jobs and conditions to drive up productivity.
The closure of Point Henry, which has been operating since 1963 and has an annual output of 190,000 tonnes, would destroy 300 jobs in the smelter and 200 in the neighbouring rolling mill and drive up unemployment in Geelong, population 175,000. An estimated 3,000 people in the regional community depend on the plant for their income.
Alcoa Australia managing director Alan Cransberg told the media that despite successful attempts “to minimise costs and improve margins”—carried out in collaboration with the unions—the company faced difficulties keeping its plant “globally competitive in the foreseeable future.”
The threatened closure is part of wave of restructuring and job destruction underway internationally by Alcoa, which employs 61,000 people and is the world’s largest aluminium producer. In 2009, Alcoa sacked 15,000 workers globally.
Last month, the company announced it was reducing its annual output by 12 percent, axing three “high-cost” plants in Italy and Spain and sacking 1,500 workers, and permanently closing already curtailed facilities in Tennessee and Texas. Last week, Alcoa shelved a $3 billion expansion of its alumina refinery in Wagerup, Western Australia for five years. The expansion was expected to create 1,500 construction jobs.
Another aluminium company, Norsk Hydro, which has operations in the neighbouring Australian state of New South Wales, declared this week that its Kurri Kurri smelter was “unsustainable” and under consideration for closure. The plant, which employs 350 workers, has shed 190 jobs in the past four months. Another 2,000 jobs in the community are threatened if the smelter shuts.
Alcoa and Norsk have highlighted the high Australian dollar, which make exports more expensive, and depressed aluminium prices—down 27 percent from last April—as major factors in their downsizing. This month, Deutsche Bank downgraded Rio Tinto’s Australian and New Zealand aluminium assets by 32 percent. The mining giant has attempted to sell the assets since October, but has been unable to find a buyer.
Point Henry Alcoa employees have been subjected to a systematic attack on their jobs and conditions over the past two decades by the management, working hand-in-glove with the Australian Workers Union (AWU). The union has repeatedly claimed that sacrifices by workers would ensure the plant remained “competitive.”
Graham, who has worked in the plant’s rolling mill for more than 20 years, told the World Socialist Web Site this week: “The last few years we’ve been getting 3-3.5 percent pay rises, which barely keep up with inflation. In 2008, we agreed to freeze our wages for that year and the next. We agreed with the company that it was necessary to keep the place going. We were under the impression that our wages would improve.”
Graham added: “We restructured several times. Part of our current EBA [Enterprise Bargaining Agreement] states that we will deliver ‘continual improvement.’ That means doing away with people—workers taking on more jobs or using more automated machinery. In the rolling department, we used to have 15 on crew, now we have 5. They told us that if they can do our job with two people, they will.”
Whatever Alcoa Australia decides about the Point Henry plant, the Labor government and the AWU are desperately working behind the scenes to organise either an ‘orderly closure’ or facilitate another round of restructuring.
Gillard this week justified the sweeping “structural adjustments” in manufacturing by saying they would “open up new opportunities in other sectors.” In reality, what is taking place is an escalating destruction of jobs, especially in manufacturing, that cannot possibly be replaced by openings in other areas.
Gillard, industry minister Greg Combet and AWU national secretary Paul Howes met with an AWU shop steward and several other Point Henry employees in Canberra this week. Combet also met with the Alcoa management. In an attempt to divert attention from the union’s closed-door discussions with Alcoa and the government, Howes issued a series of chauvinist statements, blaming manufacturing job losses in Australia on China and its undervalued currency.
What is taking place mirrors the operation carried out by the AWU and other unions at BlueScope Steel in Wollongong, New South Wales, and Hastings in Victoria, where the company axed over 1,400 jobs last September. The unions refused to defend a single job and helped management find enough redundancy “volunteers.” (See: “Australian steel unions impose BlueScope job destruction deal”)
Point Henry AWU senior steward Brett Noonan made clear this week on ABC’s Radio National that the union would impose further “productivity” demands. “We’ve got a fairly good relationship with our company. We work really hard with the unions and the company to try and make sure we stay competitive,” he said.
The result of this class collaborationist policy is already evident in Geelong, where manufacturing has drastically declined over the past three decades. Major companies have downsized or shut down altogether. The proportion of jobs in Geelong that are in manufacturing fell from 27 percent in 1986 to 15 percent in 2006. Over the same period, the percentage of largely-casualised hospitality service jobs more than doubled. Working class suburbs such as Corio now have official unemployment levels of 10 percent, twice the national average.
If Alcoa workers are to prevent the closure of the Point Henry plant and defend their jobs and conditions, they have to learn the lessons of the BlueScope Steel betrayal and organise independently of the AWU. The unions can no longer be called workers’ organisation in any meaningful sense of the word. As the past decades have demonstrated, the unions are labour syndicates that defend the privileged position of their officials by imposing whatever demands are made of them by the corporations.
Alcoa Australia workers need to establish their own independent rank-and-file committee and to turn out to other sections of the working class, including at the Kurri Kurri aluminium smelter and Alcoa workers internationally, facing similar attacks. What is needed is a common struggle for a workers’ government to implement socialist policies, including the placing of giant corporations such as Alcoa under public ownership and the democratic control of the working class.

UC Rusal update on aluminum production on Asia

Steel Guru - February 18th, 2012

General growth in Asia varies between the mature market of Japan, which has experienced years of flat growth and China which has been growing at 11% per annum. Whilst we predict that Japan's growth is likely to expand in 2012 with reconstruction after the earthquake and tsunami in March of 2011, the strong value of the YEN against the USD will continue to affect exports.
The trend of Japan's automotive and electronics plants moving to low cost countries in South East Asia or to North America and Eastern Europe is expected to continue. This is likely to impact on the growth in Japan in the medium to long term.
Demand in Korea and Taiwan is expected to moderate in 2012 with a slowdown in US and Europe related export activity and contraction of the domestic construction sectors.
China's growth related to slower exports is expected to be offset by an easing of credit availability as the government attempts to rebalance with domestic consumption based on infrastructure and housing spending. Early indications show that the decline has bottomed and GDP will grow at about 9.5% in 2012.
For the first time since 2009, imports of primary aluminium are commercially attractive due to the arbitrage in LME and SHFE prices. In 2012, arbitrage windows are expected to open periodically due to short term supply demand imbalances in China.
Premiums in Asia as reflected by the CIF MJP indicator are expected to remain firm at or above the 2011 year end levels on 7% regional demand growth coupled with an expectation of curtailed supply from the traditional smelting centers in Australasia.

Norway's Hydro says aluminium industry faces challenging time

Platts - February 17th, 2012

The aluminium industry is facing a challenging time as producers tackle high input costs and lower prices for aluminium and aluminium-related products, Norwegian producer Norsk Hydro's CFO said Thursday in an interview.
"For many players it's still challenging, there is always more you can do," CFO Jorgen Rostrup told Platts.
Hydro announced its intention to idle one potline at its Kurri Kurri primary aluminium smelter in Australia in January, trimming production at the plant by 60,000 mt from a total capacity of 180,000 mt.
The plant has recently been hindered by a strong Australian dollar, high raw material costs and weaker aluminium prices.
"We will do whatever we need to do... We are evaluating what to do next on Kurri Kurri," Rostrup said.
He noted that the Kurri Kurri operation was Hydro's most troubled plant and that the company may take out more capacity in the future.
In its fourth-quarter results presentation, Hydro states that it took a NOK970 million ($170.1 million) writedown on the Kurri Kurri smelter.
However, Rostrup stated that Hydro was on target with the implementation of its $300/mt operational improvement plan. He said that the company was $200/mt into the program and that Hydro would complete the next $100/mt within the next two years.
Rostrup said that Hydro had closed down inefficient capacity within a very short response time and would continue to monitor downstream capacity in the near term.
He refused to speculate on how much capacity would be curtailed across the entire industry, but noted that 1 million mt had already been cut. "We shall see," he said.
On the general outlook for the aluminium market in 2012 he said that China and other emerging countries looked good, as did the US market. He was more cautious on the European outlook and noted that Southern Europe was particularly weak.
"We haven't changed our outlook since December," Rostrup said. Hydro stated in December that it expects growth outside China of around 3-5% in 2012.
On a positive note, Hydro's Qatalum smelter reached full capacity in September and is now producing 600,000 mt/year of primary aluminium. Rostrup said that this was above expectations.
On Hydro's raw material pricing, Rostrup said that it prices some of its alumina on long-term contracts that perform on a percentage of the London Metal Exchange aluminium price.
However, he added that the company was terminating these contracts gradually out to 2015 and freeing up the long-terms.
The rest of the contracts use index-related products to price alumina. "It's very valuable to have several ways to market a product," he said. "Yes, we are buying and selling on Platts."
Platts alumina price benchmark closed the week Friday at $317.50/mt FOB Australia, little changed over the course of the week, but gaining $5.50/mt in the last month.
Hydro reported Thursday a net loss of NOK739 million for the fourth quarter of 2011, compared with a profit of NOK745 million in Q4 2010.
Fourth-quarter underlying earnings before financial items and tax amounted to NOK1.133 billion, down from NOK1.646 billion in the previous quarter.
The company produced 1.982 million mt of primary aluminium last year, up from 1.415 million mt in 2010.

ABB Wins Five-Year Full Service Contract at Oman Aluminum Plant

Control Engineering Asia - February 17th, 2012

Will be responsible for all maintenance activities at OARC's rolling mill plant in Sohar.
ABB has announced a contract worth US$9 million from Oman Aluminum Rolling Company (OARC) to develop, implement and execute all maintenance activities at the company's rolling mill plant in Sohar, Oman.
The Greenfield aluminum rolling mill will produce flat sheet and aluminum foil with a capacity of 140,000 tonnes per annum and will primarily serve the Middle East and European markets. The projected completion of the build is expected during Q3 2013 when the plant will commence operations.
Through the ABB Full Service concept, ABB will manage, develop, implement and execute the entire maintenance function at the plant including all mechanical and electrical maintenance regimes, shutdown management, planning and scheduling and reliability maintenance. The agreement involves 55 ABB employees and will start in June 2012 and continue for a minimum five year period.
“We look forward to having ABB as a partner in the new rolling facility. ABB brings experience in Oman and gives us access to their global rolling capabilities of ABB for maintenance services and rolling technology support.
“The agreement is performance based and provides both parties incentives for success. OARC and ABB will work jointly to provide a high rate of Omanization within the maintenance work force which is in the interest of our shareholders,” says Buddy Stemple, chief executive officer of Oman Aluminium Rolling Company.
“This Full Service agreement highlights ABB's capabilities in providing comprehensive service solutions for the industrial sector. Our innovative approach to performance-based services ensures improved production and equipment performance, energy efficiency and reliability for the entire facility,” noted Saeed Fahim, country manager for ABB in Oman.
ABB says it has around 100 similar Full Service agreements with customers in the paper, mining, chemicals and oil and gas industries globally. ABB best practices applied to maintenance operations aim to improve the performance and reliability of production assets, increasing plant efficiency and optimizing total maintenance cost.

Aluminium Bahrain sees sixth line complete by 2015

Reuters - February 17th, 2012

Feb 17 (Reuters) - Aluminium Bahrain (Alba), which owns the world's fourth-largest aluminium smelter, said on Friday its planned sixth production line could be completed by early 2015.
Feasibility studies are currently under way, with banking feasibility studies seen ready by 2013, Laurent Schmitt, the company's chief executive officer said in a conference call.
"First metal would be available in early 2015," Schmitt said.
The line is expected to add 400,000 tonnes annual capacity to Alba's current production of 881,000 tonnes a year, he said.
The company saw its fourth-quarter net income drop 84 percent due to unrealised derivatives, a statement released earlier on Friday said.
The firm reported a net income of $16 million during the fourth quarter, compared to $103 million a year earlier.
A one-time social cost of $16 million was incurred during the period due to reconciliation packages for employees terminated as a result of the unrest that rocked Bahrain in early 2011.
"We are offering packages according to the number of years worked so they range from around one to two years of pay," said Tim Murray, the company's chief financial officer.
Unrest still looms large in Bahrain which was rocked by months of anti-government protests in early 2011. Activists have said more than 120 protesters were wounded in clashes this week in a crackdown to stop majority Shi'ites breaking out of their neighbourhoods to stage protests one year after an uprising.
Murray said it was still unclear whether Bahrain would again significantly raise gas prices it sells to Alba.
The country's state-run energy supplier had raised the prices of gas it sells to Alba starting Jan. 1 by $0.75 per million British thermal units (mmbtu) to $2.25/mmbtu.
The move is expected to increase Alba's costs significantly but still offers the plant cheaper fuel than most of its competitors outside the region.
"We still have no clarity on what it will be," Murray said when asked if he expected prices to further jump within the near future.
The company and local authorities are discussing a long-term contract to secure availability and price of gas beyond 2012, said the statement. (Reporting By Maha El Dahan; editing by James Jukwey)

Tiwai Point smelter faces losses

The Southland Times - February 17th, 2012

The Tiwai Point smelter has lost at least half a million dollars in aluminium production because of continuing high spot power prices.
New Zealand Aluminium Smelters general manager Ryan Cavanagh yesterday said the capacity of the smelter's production remained reduced by about five per cent, which meant "hundreds of tonnes of lost production each month".
Aluminium has been selling for about US$2155 (NZ$2602) per tonne, which means more than $500,000-worth of aluminium production has been lost since the smelter reduced its output in mid-January.
Last month, acting general manager Stewart Hamilton said the smelter was paying about $120 to $130 per megawatt on the spot market, or wholesale market – about five times the average spot price of $24/MW for the same time during the past five years.
The high price has been caused by low lake levels and Mr Cavanagh said he would continue to monitor the spot market closely.
Most of the smelter's electricity, believed to be about 90 per cent, is supplied by contract, but the remainder is bought on the spot market.

Norsk Hydro CEO Sees Aluminum Cuts in West, Not China

The Wall Street Journal - February 16th, 2012

LONDON—Look to the west, not China, to make further aluminum production cuts to help reduce the market oversupply, the chief executive of Europe's largest producer of the metal said Thursday.
Speaking in an interview with Dow Jones Newswires, Norsk Hydro ASA's Svein Richard Brandtzaeg said that history shows China keeps its domestic market as close to balance as possible by adjusting its imports, exports and production.
"We haven't calculated on short-term support from China," he said. "Companies in the west are realistic about what they can achieve [with production cuts]."

‘Red mud’ recycling unit planned for RUSAL smelter

Recycling International - February 16th, 2012

Russia: Russian aluminium giant UC RUSAL is aiming to launch a Euro 15 million alumina production waste recycling facility at its Urals Aluminium Smelter in October 2014.
With only 10% of this waste currently recycled and the remainder stored in special disposal areas, this represents a major global problem, says the company. The new facility will be able to process around 200 000 tonnes of ‘red mud’ per year.
Annual production capacity of the Urals Aluminium Smelter is 75 000 tonnes of aluminium and 740 000 tonnes of alumina, its main customers being the packaging and automotive industries.

Montenegro says to take over indebted aluminium plant

Reuters - February 16th, 2012

PODGORICA Feb 16 (Reuters) - Montenegro's government said on Thursday it would launch a procedure to take full control of the Adriatic country's heavily indebted aluminium plant, in which it shares a controlling stake with Russia's EN+ company.
The government made the move after it was forced last week to assume a 132 million-euro ($172.16 million) maturing debt owed to foreign creditors by Kombinat Aluminijuma Podgorica (KAP), which it guaranteed in 2009.
KAP is Montenegro's sole aluminium plant and a key driver for its economy. However it has been losing money since global metals prices fell in 2009 and output at the 120,000 tonnes a year plant was cut sharply.
"The government has opted for this move in order to closely follow the situation in the plant and define the policies related to the further production of aluminium," Finance Minister Milorad Katnic told a news conference.
Katnic did not say if the takeover means an instant break of the contract with EN+, owned by Russian tycoon Oleg Deripaska, which owns a 29.7 percent stake in the plant while the remaining stake is owned by small shareholders.
In 2010, EN+ gave the Montenegro government a half of its 58 percent stake in KAP after it agreed to provide guarantees for its loan to repay other debt and pay for redundancies.
Economy Minister Vladimir Kavaric was quoted by local media on Thursday as saying the government would offer 1 euro to EN+ for its stake.
The KAP's maturing debt will put an additional burden on Montenegro's budget, which has not foreseen funds for its payment. The plant has a total debt of 350 million euro. ($1 = 0.7668 euros)

Algeria to increase refining capacity by 5 million tonnes

Sydney Morning Herald - February 16th, 2012

Algeria's refinery output capacity is now 25 million tonnes per year, and ongoing maintenance and improvement works will help increase production to 30 million tonnes, Energy and Mines Minister Youcef Yousfi said on Thursday.
Yousfi told state radio the government was planning to build new refineries to meet increasing long-term demand.
He also said the ministry would later this month sign a deal with "the world's largest firm" to set up an aluminium plant with a capacity of 1 million tonnes per year. He did not name the company.

BHP scraps plans for Congo smelter

Sydney Morning Herald - February 16th, 2012

BHP Billiton has shelved plans to build an aluminium smelter that would have underpinned a hydropower plant known as Inga III in the Democratic Republic of Congo.
“Following a review of the project’s economics, BHP Billiton has decided not to continue with its smelter project in the DRC, which was still at a very early stage,” Ruban Yogarajah, a London-based BHP spokesman, said overnight.
The Inga plant was to provide about 5000 megawatts of energy at an estimated cost of $US5.2 billion. Between 3500 and 4200 megawatts would have been used for Congo’s internal demand, prioritizing BHP’s proposed aluminum smelter, according to the Energy Ministry. Advertisement: Story continues below
Aluminium producers such as BHP and Rio Tinto, the world’s third-largest mining company, have reined in projects as the price of the metal has slumped. Aluminium, used in cars, packaging and houses, has declined nearly 21 per cent since May 3, cutting income for producers, including United Co. Rusal and Alcoa.
BHP and ArcelorMittal, the world’s biggest steelmaker, scrapped talks on a proposed iron ore mine joint venture concerning a deposit of the steelmaking raw material straddling the border of Liberia and Guinea in September 2010.
BHP also plans to halt exploration for bauxite, an ore required for aluminum production, at its Boffa-Santou-Houda site in Guinea, the company said on January 27.
“Aluminium has had a structural profitability downturn, as opposed to a cyclical profitability downturn,” BHP chief executive Marius Kloppers told reporters on a conference call last week. “That probably makes us a little bit more comfortable in saying more definitely that we, at this stage certainly, do not want to allocate more capital to this sector.”
Mr Kloppers added that the aluminium unit has “a very strong mandate: no new capex, minimize spend, keep the assets in a net cash generating position.”
Rio posted a second-half loss in the six months ended December 31, its first in four years, after taking a $US8.9 billion one-time charge on the value of its aluminium business. The miner in October said it planned to sell 13 aluminium assets, including smelters and alumina plants to improve its finances.
The Inga project would supplement energy production from two other partially functional hydropower plants on the Congo River, the second-biggest by volume after the Amazon. Congo, where most households go without electricity, has the potential to produce 100,000 megawatts of hydropower, the World Bank has said.
The BHP deal supplanted an earlier plan with Western Power Corridor, a venture involving five southern African countries, to build the plant, which was intended to fill a regional energy shortfall, which led to mine closures in South Africa in 2008.
“With or without BHP we will go forward with Inga III. There are many other partners waiting - South Africa, Botswana, or internal demand,” Energy Minister Gilbert Tshiongo Tshibinkubula wa Tumba said by phone from Kinshasa, the capital.
Congo is moving forward on negotiations to build the world’s largest hydroelectric power plant, the 40,000 megawatt Grand Inga complex, Mr Tshiongo said.

Carbon tax to push alumina refining to China, says Rusal

The Australian - February 15th, 2012

THE Australian chairman of aluminium giant Rusal has bluntly urged Julia Gillard to suspend the introduction of the carbon tax in the absence of comparable international schemes, warning that it will push alumina refining to China and drive up global emissions.
John Hannagan told The Australian yesterday the carbon tax would cost Queensland Alumina Ltd, in which Rusal has a 20 per cent stake, about $20 million in the first year of the operation of the carbon tax. This would be the equivalent of forgoing about 150 jobs.

Ex-Aluminium Bahrain Executive Charged by U.K. With Corruption

BusinessWeek - February 15th, 2012

Feb. 15 (Bloomberg) -- U.K. prosecutors charged Bruce Allan Hall with corruption and money laundering tied to his time as an executive at Aluminium Bahrain B.S.C., a smelting company in Bahrain.
An Australian national, Hall was released on conditional bail and must appear at a London criminal court next month, the Serious Fraud Office said in an e-mailed statement today. He is accused of accepting bribes over an eight-year period while he worked at the company, known as Alba, the prosecutors said.
Hall was extradited from Australia to London to face the charges, the SFO said. His co-defendant in the case, British investor Victor Dahdaleh, is also scheduled to appear at the same court hearing, the SFO said.
Dahdaleh was charged Oct. 24 with six counts of making corrupt payments, two counts of money laundering, and one charge of conspiracy to corrupt. He is accused of paying bribes to Alba officials to win contracts for Alcoa Inc., the largest U.S. aluminum producer.
The SFO said it opened the probe in July 2009 with help from the City of London Police’s Overseas Anti-Corruption Unit.
Efforts to reach Hall or an attorney representing him were unsuccessful. A call to the SFO wasn’t immediately returned.

Rio Tinto Alcan welcomes the first electrolytic cell at its Arvida AP60 Technology Centre

HazMat Management Magazine - February 15th, 2012

MONTREAL, Feb. 13, 2012 /CNW Telbec/ -The first AP60 cell has been delivered to Rio Tinto Alcan's Arvida AP60 Technology Centre, located in Saguenay-Lac-Saint-Jean, Quebec.
"This is a momentous day for Rio Tinto Alcan. With the new generation of AP60 cells, metal production per cell will be 40 per cent higher than in other existing smelters", declared Étienne Jacques, chief operating officer, Rio Tinto Alcan Primary Metal, North America.
The arrival of the first AP60 cell at the plant is a significantmilestone. Indeed, the AP60 technology will become an aluminium industry benchmark due to its operating costs, energy consumption, and environmental performance.
"This is all the more significant because the cell was built right here in Saguenay-Lac-Saint-Jean, by Charl-Pol Saguenay, a company that will deploy the leading edge technology around the world. First metal is expected at the plantin 2013", added Mr. Jacques.
Note that Phase I of the Arvida AP60 Technology Centre is the launching pad for the next series of AP electrolytic cells, which makes Rio Tinto Alcan a leader in aluminium electrolysis technology. Phase I will see the commissioning of 38 cells in 2013, with a yearly aluminium production capacity of 60,000 tonnes. Construction of this first phase of the project, a US$1.1 billion investment, currently involves 900 employees. Rio Tinto Alcan invests one million dollars per day in the project. Production capacity could reach 460,000 tonnes in the upcoming phases, which are currently under study.
About AP60 technology
The AP60 technology was initially developed at the Rio Tinto Alcan research & development laboratories in the Rhone-Alpes region of France. When Phase I of the smelter becomes operational, the Arvida Research & Development Centre, in Jonquiere, will conduct the continuous development of the AP60 technology, leading to its eventual market readiness. The Rhone-Alpes team will also be supporting these development efforts.
AP60 is the most advanced AP electrolysis technology within Rio Tinto Alcan and is an industry benchmark. Much like the other AP technologies, it focuses on productivity and the reduction of overall production costs.

Aluminium smelters' search for cheap power sources

Business Standard - February 15th, 2012

More than anything else, it is the cost of power that defines operational viability of an aluminium smelter. Depending on energy source and whether a smelter is backed by a captive power complex, electricity accounts for 30-50 per cent of aluminium making cost. Power is a relatively small cost component for other metals. Indian aluminium makers with linkages to coal mines but not ownership of coal blocks have time and again experienced irregular supplies, especially during monsoon months, forcing them to import and also buy the fuel through e-auction at a hefty premium.
S K Roongta, now heading Vedanta group’s aluminium business after doing a turnaround at SAIL and launching its Rs 72,000-crore expansion programme, sees irony in the country’s smelters finding an issue with coal supply and the escalating cost of energy when the country is counted among the leading owners of this mineral resource. At last count, India’s coal resources are approximately 277 billion tonnes (bt), including 66.3 bt in Orissa, which will have an increasing share of our rapidly growing aluminium smelting capacity.
Similarly, Jharkhand, Chhattisgarh and Madhya Pradesh all endowed with large reserves of coal, will also have a growing presence in the country’s aluminium map.
“Being so richly endowed with the resource, aluminium smelters should ideally find coal a low-cost commodity. But, because of the widening gap between demand and supply, we perforce have to import the fuel at a high cost. But coal imports could be restricted by promoting mining of coal for captive use, like by aluminium smelters, and also through merchant mining. Policies should facilitate allocation of coal blocks through transparent bidding. Our port, rail and road infrastructure is already stretched and moving imported coal from ports to merchant and captive thermal stations is a logistical challenge,” says Roongta. It certainly is not a happy situation that the country is importing annually 100 million tonnes (mt) of coal at a cost of around $10 billion. Moreover, imported coal commands a premium of up to 40 per cent over the local prices.
India, according to Roongta, being the repository of the world’s fifth-largest bauxite reserves, and 10 per cent of coal reserves remains one of the more attractive centres to make aluminium.
“When you have coal and bauxite in abundance, you as the producer of alumina (the intermediate chemical that is smelted) and aluminium can stay at the lowest end of the cost curve,” he says. In fact, the major portion of the aluminium industry here harnesses the resources in a way to be found in the lowest cost quartile of global production costs. Local aluminium making cost is to come down further, provided companies here come to own coal blocks to feed their captive power complexes with low cost fuel.
Aluminium groups here have come to realise that risk is involved in their building new smelters without first ensuring allotment of coal blocks. Balco, in which Vedanta has 51 per cent ownership through group company Sterlite, is at an advanced stage of commissioning a new 325,000-tonne smelter at Korba, to be backed by a 1,200 Mw captive power station.
The operation of the new smelter – Balco is now running a 245,000-tonne smelter – should be setting a new benchmark in aluminium making cost here, since coal for the power complex will be available from captive mines. For its three new aluminium ventures of 359,000 tonnes each in Orissa, Madhya Pradesh and Jharkhand, Hindalco has first underwritten coal supplies for captive power complexes through mining joint ventures with the likes of Tata Power and Essar Power. Nalco is keen to build a 500,000-tonne smelter in Orissa. But it will commit the investment, provided it gets a coal block.
Orissa, where coal and bauxite are found in proximity will be claiming the highest portion of Vedanta group’s investment of Rs 60,000 crore in aluminium. Not only are 1.7 bt of the country’s 3 bt of bauxite resources are in Orissa, but the mineral in the eastern state is much sought for its high alumina content and low traces of silica. “The smelting capacity at Jharsuguda in Orissa, now at 500,000 tonnes, is being expanded by 1.25 mt. We will start commissioning the new capacity next year,” says Roongta. As a result, the Jharsuguda smelter will become the world’s largest single site one much bigger in capacity than what Emirates Aluminium is creating at Taweelah in Abu Dhabi.
Roongta says, “Rapid urbanisation and growing use of the white metal in electricity, transport, packaging and construction will justify all the new aluminium capacity creation. Our per capita aluminium consumption at 1.5 kg is too low. Encouragingly, however, Indian aluminium demand is growing at a double-digit rate. Vedanta is committed to a sustainable nature and people-friendly growth of the entire aluminium industry value chain. ”
Aluminium demand growth is to get a boost with India set to spend $1 trillion in infrastructure development during the 12th plan. In the meantime, the Inter-national Aluminium Institute says India, with China and Brazil, will remain in the forefront of the metal use, to lift the global demand to 75 mt by 2020.

Alcoa Celebrates the Redesign of Iconic Forging Press in Cleveland

MRO - February 15th, 2012

Alcoa announced today the completion and restart of its redesigned 50,000-ton forging press at the company’s Cleveland Works. A $100 million dollar investment that Alcoa announced in 2009, the new press strengthens Alcoa’s position as the preeminent supplier of large aluminum, titanium, nickel and steel forgings to the aerospace, defense, energy and industrial markets.
“Combining our advanced alloy and manufacturing process technology with our state-of-the-art 50,000 ton press capabilities, we will be unmatched,” said Eric Roegner, president, Alcoa Forgings and Extrusions, at a special celebration shared with federal, state and local legislators, community and industrial leaders, and employees. “Our unique press offers the ability for Cleveland Works to double its capacity to serve our customers in the commercial and defense aerospace markets as well as industrial and energy markets.”
The multi-million dollar investment involved the complete redesign and modernization of the 50,000-ton press, a 92-foot structure – with five stories above and seven below the ground – that began production in 1955.
“As one of only five existing heavy closed die forging presses in the United States, this national historic engineering landmark is strategically important to our nation’s defense and Alcoa’s commercial competitiveness,” said Roegner. The press was originally installed as part of the Air Force Heavy Press program following World War II and has been used to build parts for nearly every military aircraft, helicopter, and tracked and combat vehicles from the 1950s through present day.
“Our iconic press played an integral role in Alcoa’s rich history and will be an equally key component to our company’s future growth and success,” Roegner said. “It is vital not only to our business, customers, and employees, but to the continued growth and stability of our manufacturing operations in the greater Cleveland community.”
Alcoa’s segmented die technology, advanced alloys, and proprietary signature stress relief™ technologies allow Alcoa to make parts that are larger, thicker and more complex than those that can be produced by competitors on similar-sized forging presses. Alcoa Cleveland Works manufactures the large aluminum structural die forgings for the F-35 Joint Strike Fighter Program. The forgings include bulk heads – the primary structural support for the wing and engine that can weigh from 1,800 to 6,000 pounds and range from 10 to 23 feet in length – and wing box parts which serve as an important component of the skeletal structure to the wing.
As part of the celebration, Lockheed Martin showcased its F-35 Lightning II mobile cockpit demonstrator to Alcoa’s guests.
Alcoa’s investment was supported by a package of economic development incentives from the state of Ohio, city of Cleveland, Cuyahoga County, village of Cuyahoga Heights and city of Independence.

Rusal to boost Siberian aluminium alloy capacity by 800,000 mt/year

Platts - February 15th, 2012

Russia's Rusal said Tuesday it to increase its aluminium alloy production capacity in Siberia by 800,000 mt/year to 1.93 million/year by 2016, representing a 70% boost in its Aluminium Division East alloy output.
The Russian aluminium producer said it will invest $5 million in 2012 in the upgrade of its Krasnoyarsk, Bratsk, Sayanogorsk, Novokuznetsk and Irkutsk aluminium smelters.
Rusal will increase slab production at Krasnoyarsk, Bratsk and Sayanogorsk to meet demand growth from the packaging and automotive industries. The smelters' slab production capacity is set to increase by 83,000 mt/year to 507,000 mt/year in 2012.
Upgrades at Krasnoyarsk and Bratsk will include the smelters' melt quality analyzers, which will allow them to produce high quality slabs for lithographic plates and automobile panels, Rusal said in a statement.
The Novokuznetsk smelter will broaden its production range to include extrusion bullets for the construction industry. The rolling mill at the Irkutsk smelter will be upgraded to produce aluminium wire rod from rare-earth elements and transition metal alloys for the cable industry.

Alcoa defers $3bn refinery plan over carbon tax fears

The Australian - February 15th, 2012

MINING giant Alcoa has shelved a $3 billion expansion of its Wagerup alumina refinery in Western Australia for up to five years, in the latest sign of the group's struggle against the strong Australian dollar and the Gillard government's carbon tax.

PRICE TRENDS: Chinese bauxite will continue to lead pack

Industrial Minerals (registration) - February 15th, 2012

Roskill expert explains price trends; says WTO fallout “difficult to predict”
By Alison Saxby, senior consultant, Roskill Information Services
From levels of $65-85/tonne ten years ago, Chinese refractory bauxite is now priced five times higher, at $500/tonne FOB China or over, for many grades. Chinese prices lead the way and dominate the marketplace, and will continue to do so.
International prices have been increasing gradually since 2004. Then prices for refractory grade material were around $90/tonne, which had increased to $150/tonne by 2007. By 2008 they rose further, not only on scarcity of supply but also...

Aluminium weakens on global cues

Business Standard - February 14th, 2012

Aluminium prices edged lower by 0.42% to Rs 107.85 per kg in the futures market after speculators reduced positions taking weak cues from overseas markets amid sluggish spot demand.
At the Multi Commodity Exchange, aluminium for delivery in February shed 55 paise, or 0.42%, to Rs 107.85 per kg, with a business volume of 524 lots.
March aluminium moved down by 60 paise, or 0.36%, to Rs 109.30 per kg, in a turnover of 68 lots.
Aluminium was trading flat at $2,210 per tonne on the London Metal Exchange (LME) in early trade today.
Market analysts said weak trend in base metals on the LME along with subdued spot demand, weighed down aluminium prices at futures trade.

Chinalco to Build 500,000 Ton Aluminum Project in Erdos: News

Bloomberg News - February 13th, 2012

Aluminum Corp. of China signed a framework agreement with the local government of Erdos in Inner Mongolia region to build an integrated 500,000 metric ton aluminum project, the Erdos Daily reported on Feb. 11.
The company, known as Chinalco, will invest 30 billion yuan ($4.76 billion) to build a coal mine with an annual capacity of 10 million tons, three 350 mega-watt power units, along with the primary aluminum plant, according to the newspaper.
The report didn’t provide details on when the projects will be completed. Two calls to the press office of Beijing-based Chinalco were not answered.
To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

ALSCON workers down tools

Daily Times Nigeria - February 12th, 2012

Accuse the Russian managers of the smelter company of not keeping agreements
Production at the Aluminium Smelter Company of Nigeria (ALSCON) in Ikot Abasi, Akwa Ibom State has been disrupted by a workers' strike over the non implementation of a 25-percent salary increase.
The company is run by Rusal, a Russian firm which won the bid to take over its operations under the federal government privatisation scheme in 2007.
The workers, who have been on strike for more than one week, said they would not return to work until "a collective agreement reached between the workers and management is signed and implemented by management."
Blocking entry into the factory, the workers claimed that management had earlier accepted to implement the salary increment but backed down at the last minute citing lack of budgetary provisions.
Displaying placards with various inscriptions, such as 'Nigerians are not fools', 'No gratuity, No Rusal', and 'Enough of this Zombie', among others, the workers alleged that the condition of service was poor and discriminatory. They also alleged that the company stopped the payment of leave allowance and maternity leave allowance; a development they said was unacceptable.
Kelechi Otuh, the chairman of ALSCON joint labour movement, said that while the management had agreed to implement the 25 per cent salary increment on the basic salary, workers were insisting that it should be across the board, adding that what the workers were asking for amounted to "a little over N3,000 to each of the workers."
According to him, several attempts at negotiations involving both the Akwa Ibom State government and officials of the Nigerian Export Processing Zone Authority (NEPZA) at various locations did not yield any positive results.
The workers also demanded that 79 Nigerians who have been engaged as labourers for the past four years in the company should be employed while the management should approve the payment of terminal benefits to workers.
Otuh also alleged that the management has not many any new investment since taking over the company many years ago adding that it was not surprising that the company was operating at 12 percent capacity.
When contacted, the company's Director of Government and Public Affairs, Albert Dyabin, said a statement on the face off between the management and workers would be issued.

Global aluminium market 'almost balanced' in 2012: Rusal

London (Platts) - February 13th, 2012

A combination of output cuts covering around 8% of global supply and an upturn in demand should leave the global aluminium market "almost balanced" in 2012, Russian aluminium producer Rusal said Monday.
Global primary aluminium consumption is set to grow 7% in 2012 to 48.2 million mt, while total lost aluminium production from output cuts is set to be around 3.9 million mt, or about 8% of global production, the company said.
China is expected to be the fastest-growing market, with 11% growth, followed by India (10% growth), Japan (5%), North America (5%) and Latin America (5%).
Consumption growth in Europe in 2012 is expected to be be flat to 2011 levels, the company said.
"Despite flat aluminium demand in some regions in the last six months, it remains well above the 2009 recession levels, thereby challenging expectations of a severe contraction predicted by many market participants," Rusal said in a statement detailing its 2011 production results.
"The uncertainties seen in 2011, namely the current eurozone financial crisis and slowdown or hard landing in Chinese growth, may continue to dominate the outlook for the metal markets in the months to come, with evidence of the potential recovery coming in the second quarter of 2012," the company added.
From a pricing point of view, Rusal forecasts that an improvement in demand for aluminium from the North American physical market will support the US Midwest premium at the 2011 level of 8.0-8.5 cents/lb plus LME cash, "with additional upside related to the extent of supply disruption and curtailments in the region."
The Platts Midwest Transaction premium assessment is currently set at 8.00 cents/lb.
In Europe, premiums have been under pressure across all products, with the major impact on the extrusion billet and primary foundry alloy sector, the company said.
"Stronger demand in North America as well as supply chain restocking and a continuation of warehouse/financing deals are expected to absorb primary metal excess to consumption requirements," Rusal said, adding that as a result it expects premiums to be firm over 2012 from the lows at the end of 2011.
The Platts duty-paid Good Western premium assessment is currently at $175-190/mt plus LME cash, in-warehouse Rotterdam.
In Asia, premiums reflected by the CIF MJP indicator "are expected to remain firm, at or above the 2011 year end levels on 7% regional demand growth, coupled with an expectation of curtailed supply from the traditional smelting centers in Australasia," the company said.
The Platts CIF Japan premium assessment is currently at $110-112/mt plus LME cash.
China's growth related to slower exports is expected to be offset by an easing of credit availability as the government attempts to rebalance with domestic consumption based on infrastructure and housing spending, the company said.
"For the first time since 2009, imports of primary aluminium are commercially attractive due to the arbitrage in LME and SHFE prices," Rusal said. "In 2012, arbitrage windows are expected to open periodically due to short-term supply-demand imbalances in China."
--Andy Blamey, andy_blamey@platts.com
Similar stories appear in Metals Week. See more information at http://www.platts.com/Products/metalsweek

Power Grid Corp in talks with Nalco, RINL for joint ventures

Live Mint - February 13th, 2012

Power transmission utility Power Grid Corp. of India Ltd (PGCIL) is in talks with other state-controlled companies, including National Aluminium Co. Ltd (Nalco) and Rashtriya Ispat Nigam Ltd (RINL), to form joint ventures (JVs) to make conductors and towers.
PGCIL is also exploring the possibility of setting up JVs for important equipment such as transformers, reactors and insulators, R.N. Nayak, chairman and managing director, said in an interview on Friday on the sidelines of a press conference to report the company’s third-quarter earnings.
“Many equipment manufacturers are entering the transmission line construction business, and on the basis oftheir inherent strength in manufacturing, they are bidding aggressively to bag projectsin a bid to remain competitive,” Nayak said. “In such a scenario, we also need to create our own manufacturing base.”
He declined to give details, saying “things are still at a preliminary stage”.
PGCIL lost its monopoly in January last year for inter-state power transmission projects after the power ministry changed the rules for such projects and made it mandatory to award them only on tariff-based bidding to attract private investment.
The power ministry plans to award six so-called ultra-mega transmission projects. So far, three such projects have been awarded, out of which two were won by Anil Ambani-controlled Reliance Infrastructure Ltd and Sterlite Technologies Ltd.
These projects are auctioned on the so-called built, operate and transfer basis, and the bidder quoting the lowest tariff for transmitting the power gets the rights to develop a particular transmission corridor.
PGCIL’s plans to enter the equipment manufacturing business through JVs with equipment manufacturers will help it become more competitive against private sector companies that are bidding aggressively for transmission projects in the country, analysts say.
Kameswara Rao, executive director and leader of utility, mining and infrastructure practice at consulting firm PricewaterhouseCoopers Pvt. Ltd, said, “PGCIL is a bit slow in exploring possibilities of JVs as the government made tariff-based bidding mandatory last year, but considering it is a public sector company and the constraints under which such companies operate, it is understandable. But such JVs will definitely help PGCIL offer competitive tariffs and win projects as PGCIL has its own strengths like a vast pool of technically qualified human resources.”
Ramesh Chandak, chief executive and managing director of KEC International Ltd, an equipment manufacturer and turnkey contractor for the transmission and distribution sector, said, “PGCIL’s step is in the right direction, but it should go for JVs only where the products are proprietary in nature and can’t be easily outsourced.”

Emal’s expansion on track

Khaleej Times - February 12th, 2012

Emirates Aluminium, popularly known as Emal, is very well-placed to meet the rising global demand for aluminium and its expansion plan will not get hit by the debt crisis in Europe and the United States, its top official said.
Emal, a joint venture between Abu Dhabi’s Mubadala Development Company and Dubai Aluminium, or Dubal, plans to increase its customer base in the wake of the second phase of its $4.5 billion development that will almost double its production capacity to 1.3 metric million tonnes by 2014.
“Emal is a global business attracting customers around the world, with focus on local, Middle East, European, Asia and North American markets,” Saeed Fadhel Al Mazrooei, president and chief executive officer of Emal, told Khaleej Times during an interview.
He said the company currently supplies aluminium products to over 200 customers around the globe. The UAE currently provides 50 per cent of the aluminium capacity of the GCC, which represents eight per cent of the total world production in 2011.
“The year 2011 has been a landmark year for the company. The future outlook for Emal is very positive and we expect 2012 to be another successful year in the development of this Abu Dhabi flagship industrial project,” Al Mazrooei said. Excerpts from the interview:
How much total investment is being made in phases one and two of Emal’s development to increase production?
The investment in phase one was $6 billion and for phase two it will be $4.5 billion, which makes a total investment of $10.5 billion. As a result Emal’s production capacity will rise to 1.3 metric million tonnes. What is the progress on phase two so far?
Emal conducted a study before announcing the start of phase two. In August 2011 main contractors have been selected and in September 2011 an official ground breaking ceremony was held on site at the Al Taweelah smelter, announcing the start of the construction activities.
How was 2011 for Emal in terms of sales, production and profit growth? How do you see the outlook for 2012?
2011 has been a landmark year for Emal. We began 2011 hitting full production and by November 2011 we hit the symbolic mark of one million metric tonnes of hot metal produced. Emal is now producing over 2,000 tonnes of hot metal every day. Emal currently supplies over 200 customers around the globe and is looking to increase its customer base once phase two is fully operational. The future outlook for Emal is very positive and we expect 2012 to be another successful year in the development of this Abu Dhabi flagship industrial project.
What is the projected increase in global aluminium demand by 2015?
Global demand for aluminium is expected to total 44 million metric tonnes in 2011 and will rise to 58 million metric tonnes in 2015. Do you think Emal’s 1.3 metric million tonnes output by 2014 will meet the projected demand in global markets?
With world demand due to increase by five per cent and phase two to almost double the production capacity, future demand was a factor in our decision to announce the phase two development in 2011. Emal is very well placed to meet this increased demand and is very confident about the future.
Which are the key export markets for Emal? Which markets would you like to explore after the expansion?
Emal currently supplies quality aluminium products to over 200 customers around the globe and our target is to increase that customer base as a result of the Phase II development. Emal is a global business attracting customers around the world, with focus on local, Middle East, European, Asia and North American markets.
The Gulf region is investing heavily in infrastructure and development projects. How do you see the aluminium demand in the region?
While the trend remains for production in the region to be exported demand for aluminium in the region is expected to increase. Published figures indicate $985 billion in infrastructure investment within the GCC between 2010 and 2015, including large-scale projects such as the GCC rail network, which will lead to increased metal demand and thus greater growth potential than previously anticipated. This demand will be supplemented by growth in the local downstream market for which Emal is ideally placed due to the immediate proximity of the Khalifa Industrial Zone.
How much Emal production is sold in UAE and Gulf markets? What is its share in the export market?
The UAE, through both Emal and Dubal, currently provides 50 per cent of the aluminium capacity of the GCC, which represents eight per cent of the total world production in 2011. Approximately 88 to 92 per cent of aluminium produced in the UAE is exported to global markets. In 2011, Emal exported 172,000 metric tonnes of aluminium to Europe, compared to 22,000 metric tonnes in 2010.
Do you think slowdown in global markets in the wake of the debt crisis in Europe and the US may hit Emal’s expansion plan?
Emal’s business plan has been developed in line with the Abu Dhabi 2030 Vision to bring long-term diversification and economic growth to the country. Emal see a bright future for the global aluminium industry and has no plans to alter its expansion programme. How did Emal perform during the recent recession?
Work only began on building the smelter in 2007. The project was delivered ahead of schedule and on budget. At the end of 2010 Emal hit full production capacity of 750,000 metric tonnes and by November 2011 we hit the major milestone of one million tonnes of hot metal produced.
How is Emiratisation at Emal? How many Emiratis are in your payroll?
Currently we have 391 Emiratis, of which 81 are male engineers and 15 are female engineers and we are committed to increasing that number with phase two expansion. Emal has an advanced training programme, which includes pre-employment courses, or PECs, for Emirati graduates, a university scholarship scheme and summer training for students. Successful completion of one of the four PECs (smelter, power plant, craft [1 and 2] and administration) leads to an automatic job opportunity for Emiratis.
How many jobs will be created after the expansion and how much will go to local people?
The current number of employees is 2,000, which will rise to 3,000 in 2014 upon completion of phase two development. Emal is committed to increasing the numbers of Emiratis who work for the company. How much does Emal invest in staff training?
Emal’s approach to training is ‘to invest today for tomorrow’. In addition to training for prospective employees such as the summer training programme (which was expanded in 2011) and Pre-Employment Courses (PEC) (which added a new course in 2011), Emal invests in its staff. We support the professional development of our employees to better equip them to innovate and pursue excellence in their roles.
Emal is going to be world’s largest smelter after the expansion plan. Any impact on the environment because of its industrial operations?
Emal will be one of the world’s largest single-site smelters, operating the world’s longest single production line at 1.7km once phase two is completed. Emal is committed to protecting the environment and has already invested over $700 million during phase one in the latest sustainable cutting-edge technologies to minimise its carbon footprint, and ensure the ecology of the area continues to thrive. For phase two, Emal will adopt a similar strategy in protecting the environment, which works in line under the guidance of The Environment Agency – Abu Dhabi.
How important was the DuPont Safety Awards for Emal? How did this award add value to your company?
Health and safety is at the core of the Emal philosophy. Winning the Du Pont award in 2011 is a global recognition of the hard work everyone in Emal has contributed to the deep-rooted culture of safety we insist upon at Emal. We are proud to have this award from an organisation such as DuPont that has a mutual belief in promoting safety culture by adopting positive safety behavior, working together will enhance the pursue of being at the top of safety.
What is the track record of Emal in terms of corporate social responsibility?
Emal takes its responsibilities to society very seriously. Emal’s objective is to be at one with the local community: to be a part of the community, not just a neighbour. Emal has an open, continual dialogue with people living near the Al Taweelah smelter, which includes newsletters, open meetings and special community events.

Minister signs ban on metal ore exports

The Jakarta Post - February 11th, 2012

After long debates and time-consuming negotiations with miners, Energy and Mineral Resources Minister Jero Wacik has signed a ministerial regulation affirming the ban on metal ore exports starting 2014.
The regulation stipulates that all raw metals — including gold, copper, nickel, bauxite and iron — have to be processed in the country as mandated by the 2009 Minerals and Coal Law.
The export ban aims to boost the capacity of the country’s metal production, utilize the processed products for domestic purposes, use the by-products of the processed metals for chemical and fertilizer industries’ raw materials and increase the country’s revenue.
Deputy Energy and Mineral Resources Minister Widjajono Partowidagdo said the regulation did not oblige every mining company to build a smelter. Mining companies can process raw materials in any smelter in the country, he added.
“The most important thing is that the smelters are located in Indonesia. Many investors have expressed interest in building smelters here, so a mining company can choose whether it wants to build its own smelter or not,” he told reporters at his office in Jakarta on Friday.
Considering expensive investments required to construct a smelter, the government was currently considering the possibility of providing incentives for investors, Widjajono revealed.
As a comparison, state mining firm PT Aneka Tambang (Antam) needs around US$1.6 billion to build a ferronickel processing plant in East Halmahera, North Maluku, with an annual production capacity of 27,000 tons.
The ministerial regulation says for mining permit holders that cannot comply with the regulation, or do not process their own raw materials in the country, punishments will include: written warning, temporary termination of their activities and the revocation of permits.
To effectively implement the export ban, Indonesian Mining Association (IMA) deputy chairman Tony Wenas argued that companies not engaged in mining should build smelters.
“This regulation should not burden miners. Because the sanctions are very harsh, the government has to work hard to invite investors to build smelters and it is necessary to provide incentives,” he said.
The chairman of the Indonesian Mining Experts Association (Perhapi), Irwandy Arif, agreed with the government’s move in issuing the regulation, however he warned that it would be difficult to fully implement it in 2014.
“As of today, there are not any smelters being built in the country. Several companies have indeed planned to build processing plants, but none will be ready in 2014,” he said.
He said that to build a smelter, a company needed to spend between seven and eight years from proposing the idea to the government to commercial operation. But, since the regulation had been issued, the government and miners had to cooperate to implement the regulation on schedule.
“With only two years left, we have to take all necessary measures to ensure that in 2014 we’ll be ready.”
As of today, only Antam has committed to building smelters. In addition to the one in East Halmahera, the firm also plans to build three other processing plants in Tayan in West Kalimantan, Mewapah in East Kalimantan and Mandiodo in Southeast Sulawesi.

Alcan Proves Costly to Rio Tinto

The World Street Journal - February 10th, 2012

Rio Tinto's $8.9 billion write-down on its Alcan aluminum division casts a pall over the struggling aluminum sector and offers a cautionary tale to mining companies contemplating big buys, the most significant being Glencore International AG and Xstrata PLC's current plans to combine into an $80 billion mining giant.
Rio Tinto has now written down $18.2 billion—nearly half of the $38 billion purchase price—since it bought Alcan Inc. in 2007, illustrating the risks of big acquisitions in such a cyclical industry. If the Glencore-Xstrata deal works out, it would be the biggest mining deal since the Alcan purchase.

Analysis: Aluminium losing battle against oversupply

Reuters - February 10th, 2012

Excess capacity in aluminium smelting will drag on for years to come, even while losses weigh on producers, as political pressures in China and Russia to keep jobs and push self-sufficiency prevent or delay plant closures.
Rio Tinto (RIO.L) (RIO.AX) acknowledged a gloomy outlook for the sector this week, when it slashed the book value of its Alcan unit by $9 billion.
Rio Chief Executive Tom Albanese warned margins may continue to be squeezed in the medium term. "The current environment in the aluminium industry is tough ... I can't predict when the price will recover."
In China, which accounts for 40 percent of global output, local authorities are wary of closing smelters that lose money but provide jobs, while the central government continues to drive an overall capacity expansion to maintain self-sufficiency.
Election politics in Russia also have halted at least one planned shutdown.
Throughout the sector, furthermore, smelters that consider closures are often hampered by long-term contracts to buy power and raw materials.
Companies are losing money on 30 to 40 percent of global output, analysts estimate. Margins have been hammered by five years of surpluses and rising input costs, particularly for power.
Benchmark aluminium prices on the London Metal Exchange have crumbled by a third since hitting a peak in July 2008 of $3,380 per tonne.
Producers including Rio, Alcoa (AA.N) and Norsk Hydro (NHY.OL) have cut global capacity by around 1.3 million tonnes as prices slumped in the second half of 2011 to reach below $2,000 per tonne, but more cuts are needed to bring the market into balance.
Analysts in a Reuters poll last month expected further market surpluses of 600,000 tonnes this year and 415,000 tonnes in 2013.
Earlier in the week, the head of rival BHP Billtion (BLT.L) (BHP.AX) was even more downbeat, saying the world's largest mining group had halted investment in aluminium and had to review the future of its business.
"There is no sense in letting something hang ... on the balance sheet if it doesn't want to be there," CEO Marius Kloppers said.
"It's something that we've got to review. It's clearly not something that's an issue now, but I do think I have to note the aluminium reductions (in profitability) are structural. It's not a cyclical thing."

CHINESE PRESSURE
The elephant in the room is China with its many ageing and high-cost operations.
"In China, there is some political pressure at a local level to continue some high-cost plants running, especially if they are in a small city where they are the largest employer," said Paul Adkins, managing director of Beijing-based aluminium consultancy AZ China.
Chinese aluminium prices are not low enough to cause widespread shutdowns and authorities are keen to remain self-sufficient in the metal, he added.
Albanese said Rio had been taken by surprise by an increase in smelting capacity in western China, where stranded coal is being used to generate cheaper electricity for smelters.
China's annual production capacity of primary aluminium may jump 60 percent in the next four years, an official at a state-backed industry association said last November.
"In our opinion, the Chinese government has been unsuccessful in controlling aluminium capacity growth," Macquarie said in a note earlier this month.
Macquarie estimated that nearly 80 percent of Chinese producers were not profitable, based on total cost of production including administration, finance and depreciation.
The cost of shutting down capacity is high, however, so most smelters will strive to maintain existing output, it added.

RUSSIAN POLITICS
In Russia, home to top global aluminium producer UC RUSAL (0486.HK), political considerations have also come into play.
Prime Minister Vladimir Putin, seeking to return to the presidency next month, intervened in December to prevent an archaic 67-year-old smelter from closing.
"There is sensitivity, especially in an election year that we're in now," said analyst Erik Danemar at Deutsche Bank in Moscow.
"There are limits to how quickly RUSAL can move and also how much they can move. But over time the government is also reasonable over what needs to be done."
RUSAL, which accounts for about 10 percent of global production, said last month it might cut output by 6 percent over the next 18 months.
Its European operations could take the brunt of any cuts since they are less profitable than the Siberian smelters, which have access to cheap hydroelectric power.
"The European operations are probably breaking even, maybe making a little money if they get a good premium," Danemar added.

No blank cheque for Alcoa: Wayne Swan

The Australian - February 10th, 2012

TREASURER Wayne Swan says the Gillard government won't be writing a "blank cheque" to bail out the aluminium industry.
With Alcoa to review the future of its Geelong aluminium smelter, Mr Swan said the government was talking to the aluminium industry about the challenges it faced.
“We're talking to the industry and I am not necessarily signing up for any cheque at all,” he told ABC radio.
Mr Swan said the government was talking about how it could help the industry, which has been hit by unfavourable global conditions.
“We will continue to have those discussions and what we will do in the process is behave responsibly,” Mr Swan said.
Alcoa said this week it was reviewing the viability of the Point Henry smelter because low metal prices, a high Australian dollar and input costs had made it unprofitable.

The Victorian government today began talks with Alcoa on how to save the 600 jobs at Point Henry, as debate continued about the impact of the carbon tax on the smelter.
Victorian Regional Cities Minister Denis Napthine said today's dawn meeting between the Baillieu government and Alcoa had discussed the impact of the new tax.
While blaming a high dollar, lower aluminium prices and higher input prices for forcing the review, Alcoa said this week a carbon tax would “make life more difficult”.
The Coalition is using the tax as a blunt political instrument, accusing the Gillard government of undermining industry.
“With the carbon tax, the aluminium industry is essentially dead in this country,” Tony Abbott told reporters in Melbourne.
“So the best thing the government can do to help the workers of Point Henry and Portland and all the other aluminium facilities in this country is drop the carbon tax,” said the opposition leader, who later met Alcoa management in Melbourne today to discuss the smelter's future.
However Julia Gillard said again today that Alcoa had made it “crystal clear” the company's Point Henry plant was not under threat because of carbon pricing.
“It's about the structural changes that are going on in our economy because of the structural changes that are going on in the global economy,” she said in Sydney.
“Our dollar is very high, that's because we are in the right region of the world that is growing and we are selling a lot of resources to the region of the world we live in. That makes our dollar strong. “Our dollar is also strong because we are increasingly viewed as a safe haven economy.”
Ms Gillard said other proposals for additional relief for Alcoa, such as a cut to payroll tax, were a matter for the states.
“Payroll of course is in the domain of state governments and I know that Premier Baillieu in Victoria has had some discussions with Alcoa.”
Mr Napthine, who with Premier Ted Baillieu met senior management at the plant today, said the state government had pledged to help the company during its review process.
Dr Napthine said today's discussions, which went for about 90 minutes, included possible industry assistance and a range of other issues.
“The discussions were wide-ranging and they discussed issues such as the high Aussie dollar, the world market and projections for world markets and they discussed the issue of the carbon tax,” he said.
“And (Alcoa) made it very clear, as they did in their press release on Wednesday, the carbon tax will add costs to their production at Point Henry, which is a factor they'll have to consider.”

Aluminium warps Rio out of shape

Herald and Weekly Times - February 10th, 2012

FALLING aluminium prices sparking a massive writedown of Rio Tinto's assets have sent the miner's full-year net profit tumbling almost 60 per cent.
And chief executive Tom Albanese has been forced to forego any bonus for 2011 due to the bleak development.
The mining heavyweight's aluminium business had been struggling due to a sharp drop in prices and a weak US dollar but the size of the $8.2 billion writedown surprised the market.
Its net profit dropped from $13.32 billion in 2010 to only $5.39 billion last year.
Rio announced the result late yesterday after the Australian market closed, but the group's London-listed shares dropped 2 per cent on opening last night. Away from the massive write-downs, Rio's underlying earnings jumped to $14.4 billion for the year to December, up from a record $13 billion the previous year, to beat analysts' expectations.
The miner also announced a 34 per cent climb in its full-year dividend, taking it to $US1.45 per share, which it said reflected its confidence in the long-term outlook.
That view was illustrated when Rio committed
$12.3 billion last year to capital expenditure, with much aimed at the booming iron ore sector in the Pilbara.
Rio hopes to boost its iron ore production by 50 per cent in Western Australia by mid-2015 to cash in on China's insatiable appetite for steel.
Mr Albanese admitted the expansion into aluminium -- with the ill-timed $US39 billion buy-up of Alcan in 2007 -- "happened on his watch" and meant it was only right that he and chief financial officer Guy Elliott were not considered for a bonus this year.
"This is the heavy price for acquiring Alcan at the top of the market," he said.
Aside from aluminium, prices for other major commodities produced by Rio improved, with copper up 18 per cent and gold prices surging 29 per cent.
But Mr Albanese warned the cost of doing business in Australia had risen and it had changes from one of the company's "cheapest places to one of the most expensive" in the past five years.

Romania’s Alro Invested $77 Million to Lower Energy Consumption

Bloomberg - February 9th, 2012

Alro SA (ALR), a Romanian smelter, said it completed last year investments worth $77 million aimed at increasing energy efficiency, according to a filing to the Bucharest Stock Exchange.
The Romania Slatina-based company, majority owned by Vimetco NV (VICO), increased its aluminum production to a maximum of 288,000 tons in 2008 from 240,000 tons in 2005 following investments in lowering electricity, gas and water consumption, according to the statement.

BHP looks at aluminium businesses

Business Day - February 9th, 2012

Will not allocate more capital to struggling aluminium units including smelters in SA, BHP Billiton looking at rationalising excess capacity
DIVERSIFIED miner BHP Billiton expects the volatility in the commodity markets to continue as sovereign debt problems in Europe weigh on customer behaviour, it said yesterday in its report for the six months ended December last year.
The company reported a 5,5% fall in profit to $9,9bn. Revenue was up 9,7% to $37,4bn. It declared an interim dividend of 55 US cents per share versus 46c in the previous interim period.
BHP said it would not allocate more capital for its struggling aluminium businesses, including smelters in SA. CEO Marius Kloppers said: "Our view is that aluminium has had a structural profitability downturn ... At this stage we don’t want to allocate more capital in this sector.
"Our rules around what to run and not what to run are pretty straightforward. If you don’t make a cash contribution or the customers don’t want your products ... we are going to rationalise capacity.
"I don’t want to predict anything in SA’s aluminium smelting system at this stage."
BHP’s aluminium business took a knock. It posted an underlying loss of $67m in the six months to end December. Analysts said it was important for the company to cut costs in areas that were struggling.
"One of the key areas to focus on for the group is cost control and to prove to investors that spending excessive capital on operations is worth it. They will look at operations and parts of the business operating at a loss," Charles Cooper, a mining analyst from Oriel Securities said. "Gas prices are lower than they were. They have to think how to proceed with the US shale gas business."
Late last year BHP acquired US shale gas assets for $20bn, but since then gas prices have been falling.
BHP pointed out that in the longer term, "it expects the rate of growth in steel making raw materials demand, particularly in China, to decelerate as underlying economic growth rates revert to a more sustainable level".
But copper and iron ore were expected to be supported by supply-demand fundamentals.
With iron ore, BHP said it was well placed to achieve a production rate of more than 200-million tons a year at Western Australia Iron Ore (WAIO) by the end of 2014, without the need for additional major growth project approvals. The company achieved a record production in iron ore in the six-month period.
At WAIO iron-ore output rose to a record annualised rate of 178-million tons per annum.
BHP said broader challenges for the group were industrial action and lower iron-ore grades at Escondida, Chile and the effect of wet weather at Queensland Coal in Australia.
BHP downplayed the threat of the Glencore and Xstrata merger.
"If you look at the two companies that you have spoken about, their strategy has been quite different, which is to own mid-tier assets. We don’t see anything that is going to change the intrinsic dynamics of the market," Mr Kloppers said.

BHP may sell $10bn of smelters, mines

Money Web - February 9th, 2012

As spending increases on shale gas, iron ore, coking coal and potash.
BHP Billiton Ltd. (BHP), the largest mining company, may considerselling about $10 billion of aluminum, nickel and coal mines and smelters as it trims its portfolio, Deutsche Bank AG said.
The $4.7 billion Cannington silver, lead and zinc mine and the $1 billion Worsley alumina smelter in Australia are among the possible candidates, Deutsche Bank resources analysts Paul Young, Kaan Peker and Grant Sporre said yesterday in a report.
Chief Executive Officer Marius Kloppers said in December that BHP may trim some of its assets and products in the next decade as spending increases on shale gas, iron ore, coking coal and potash. BHP will continue to rationalize its portfolio, he reiterated yesterday when the company reported first-half profit.
“The potential disposal proceeds are significant but we believe that BHP Billiton will be in no hurry to harvest these options,” they said. ”The challenge for BHP Billiton is both in timing the harvest to achieve maximum value and ensuring that these assets attract sufficient investment and attention in the meantime to remain attractive to prospective buyers without being significant cash sinks.”
Kelly Quirke, a Melbourne-based spokeswoman for the company, declined to comment.
The company’s aluminum unit, which is valued at $2.2 billion, may also be a sale candidate, the analysts said. It includes smelters in South Africa, a stake in a smelter in Mozambique and bauxite mine in Brazil. Other candidates are its coal mines in New Mexico, valued at $792 million, and its Nickel West operations in Australia at $1.3 billion, they said.

DIAMOND REVIEW

These assets may be worth as much as $12.5 billion, based on a peer group comparison, they said.
BHP announced a review of its diamond business last November, saying it will probably sell some, or all, of the unit, and agreed the following month to sell its 51 percent stake in a Canadian diamond project to Peregrine Diamonds Ltd. It won’t make big investments in nickel and aluminum, Kloppers said.
BHP agreed this month to sell its 37 percent stake in Richards Bay Minerals for an undisclosed sum to Rio Tinto Group exit the titanium minerals industry.
A “piecemeal” sale of aluminum assets was more probable than listing the assets as a separate company,” Deutsche Bank said. “Especially in their Brazilian and Mozambique assets where the company holds minority stakes.”
BHP this month cut the mining rate at Nickel West in Western Australia by 30 percent, citing lower metal prices and the high Australian dollar.
“BHP Billiton is unlikely to sell the entire Nickel West operation, as this would effectively signal the company’s exit from nickel,” they said. “However, BHP Billiton’s current move away from downstream processing means that this business would be less attractive.”
BHP could also sell its Yeelirrie uranium project in Australia and some petroleum assets, Citigroup Inc. said today in a report.

Aluminium sector needs govt support: union

Business Spectator - February 9th, 2012

Following Alcoa's announcement of a review of its Point Henry smelter, manufacturing unions have called on the federal government to draft a bailout of the aluminium industry similar to the one supporting the auto sector, according to a report by The Australian.

The Australian Workers Union Victorian state secretary Cesar Melhem said that Alcoa would need to invest in its Geelong plant in order it to regain competitiveness, but said that the government should step in to relieve the plant's short term crisis.

“It is an ageing plant but it had been making money until six or seven months ago,” Mr Melhem said, according to The Australian. “It is not a chronic problem. It is a matter of weathering the storm.”

Although Alcoa has not asked for government assistance, it has raised the issue of cheaper electricity contracts as part of a sustainability plan for the plant.

Federal Labor MP Richard Marles, who represents the Point Henry plant region, said “It is important that the government works with Alcoa to explore all possible options about the future of the plant,” according to The Australian.

Paulwell unaware of bauxite shutdown

The Gleaner - February 8, 2012

THE GOVERNMENT has confirmed reports that bauxite mining firm, UC Rusal, has been taking some of its equipment out of the island and sending it to Guyana.
However, Phillip Paulwell, the minister of science, technology, energy and mining, told the House of Representatives yesterday that the Government was unaware of any plans for the firm to close its operations here.
"UC Rusal has not stated any intentions to close Ewarton," Paulwell said.
UC Rusal owns 100 per cent of Alpart and 93 per cent of Windalco. The Alpart and Windalco Kirkvine plants have been closed since 2009, while the Ewarton plant was reopened in 2010.
Idle equipment
Responding to questions posed by the opposition spokesman on mining, J.C. Hutchinson, Paulwell said the equipment being exported had been idle for three years.
According to Paulwell, equipment being removed by UC Rusal is owned by a third party. He said the contract for the supply of the equipment, which included large trucks, was terminated last November as it was determined it was less economical to operate.
UC Rusal bought the equipment from the third party and is exporting it to its Guyana operations.
"The equipment includes tractors, haul trains, cranes, pickups, compressors, service trucks and other service equipment.
"No equipment are being removed that will affect adjoining communities," Paulwell said.
The minister said he was not aware of the removal of bridges by the bauxite company and added that he would be touring the plant on Friday.
"I will make my own observations but so far there are no such removal of bridges or water systems," Paulwell said.

Carbon tax to add to Alcoa uncertainty caused by high dollar, higher input costs

National Affairs - February 8, 2012

ALCOA says a carbon tax will make life harder for the company as it reviews the future of its Victorian smelter and the jobs of up to 600 workers.
However Alcoa Australia managing director Alan Cransberg said today the looming tax was not the reason for the review, as Tony Abbott sought to link a carbon price to jobs at the Point Henry aluminium smelter at Geelong.
Julia Gillard weighed into the debate, labelling as “disgusting” the opposition's use of potential job losses in its campaign against the carbon tax, which will be implemented on July 1.
Alcoa announced it would examine the viability of the smelter because a high dollar, higher metal prices and input costs had made it unprofitable.
Mr Cransberg said while the carbon tax was not the reason for the review, it would hurt business.
“Obviously post July 1 that will make life more difficult for us,” he told journalists.
“Post July 1 we have obviously got another challenge to overcome and we're very keen on doing that.”
Mr Abbott said the looming carbon tax would be an additional strain on Alcoa's business.
“Obviously, if there was no carbon tax the Point Henry smelter would be in a much better position,” he said in Canberra.
“The carbon tax is an additional substantial cost to an operation which is already losing money.
“I say to the Prime Minister, if you are serious about protecting the jobs of the manufacturing workers of this country, scrap the carbon tax.
“As I say, if they were serious about protecting manufacturing jobs they'd scrap the carbon tax, that would be very welcome news to the workers of Alcoa in Point Henry.”
Victorian Treasurer Kim Wells also said the carbon tax was partly to blame for the decision to review operations at the smelter.
“This must be the worst possible time to introduce a carbon tax,” he told state parliament.
However the Prime Minister said her carbon tax had nothing to do with Alcoa's decision.
“The CEO of the company has made it absolutely clear that this is not about carbon pricing, but about other pressures on the business, including the high Australian dollar,” Ms Gillard said.
“I think it is disgusting that the opposition takes the approach of using the potential job losses of hard-working Australians as grist to its mill for its fear campaign.”
Ms Gillard said the government was determined to implement its carbon tax on July 1.
“We are confident in the design of the carbon price and we are confident that it is going to be the cheapest way to take us to a clean energy future,” she said.
She said other nations were marching ahead to shift to clean energy economies.
Mr Cransberg said Alcoa hoped to keep the smelter operating and meeting production targets.
“However one possible outcome of the review is that production at Point Henry may be curtailed,” he said.

“We will do all we can to ensure the smelter is competitive.” The review is expected to be completed by the end of June.
Alcoa's associated aluminium rolling mill at Point Henry is not included in the review.
The union representing workers at Point Henry reacted angrily to the news.
Australian Workers Union Victorian secretary Cesar Melhem said the review was not a complete surprise, given Alcoa had put plants in Europe and North America in a similar position.
However, he said the Point Henry plant could have been spared this fate had Alcoa not treated the plant with “corporate contempt” and failed to reinvest profits to upgrade the facility.
“I am angry about it,” Mr Melhem said.
“That will devastate Geelong if Alcoa goes.”

NALCO: Rising energy bill may lead to production cut

The Economic Times - February 8, 2012

The impact of higher raw material costs and lower aluminium prices resulted in an 80% drop in profit for Nalco. And even though the price of aluminium has improved since the beginning of January, it is still significantly lower than the same period last year.
This leaves the country's largest aluminium producer with little choice but to curtail production in the coming months in an environment where input costs remain high.
The sharp drop in LME aluminium prices has made it unviable for several aluminium producers across the globe to operate forcing them to partially shut down smelters. This is because the cost of production, mainly the cost of power, remains high, hurting margins of all producers, including the cheapest producers like Nalco.
With the cost of coal higher by almost 50% and LME aluminium about 11% lower, the company's move to take 120 pots off the stream at its smelter in Angul makes sense. According to the management, coal prices are expected to stay at the current 2,000/tonne rate till March.
Aluminium prices, though 5% higher than last quarter, are still about 14% lower than January 2011. Given this scenario, the management is not likely to increase production, which means it will report a drop in production for the year.
Sales growth has been declining over the past three quarters. For the nine months to December 2011, the company's sales stood at 4,825 crore, which is three-fourth of its annual sales for March 2011. Earnings have declined from 2.96 per share to 2.20 at present.
Shares of Nalco have shot up 27% since the beginning of January, in line with the rally in metal stocks.
It has been one of the worst performing metal companies on the bourses in the past 12 months posting negative returns of 42% compared with a 27% decline in the BSE Metal index.
At 61, Nalco's scrip trades at 18.2 times its trailing 12 months earnings per share. This is expensive compared with Hindalco and Sterlite Industries which trade at 12.3 times and 7.6 times, respectively. Investors should use the current rally to exit the stock considering the company's medium-term outlook.

Century Aluminum names Bless president and CEO

CBS News - February 7, 2012

Aluminum producer Century Aluminum Co. named Michael Bless its president and CEO.
The appointment comes nearly three months after former President and CEO Logan Kruger left the company and sued it, alleging breach of contract and wrongful termination. At the time Century Aluminum said that Kruger's claims were without merit.
Bless was named acting president and CEO then. He has served as chief financial officer and executive vice president of the company since January 2006. Before joining Century, Bless was CFO of Rockwell Automation.
"Mike has shown excellent leadership during this interim period and has clearly demonstrated to the Board that he is the right person to lead Century and its experienced management team," Chairman Terence Wilkinson said in a statement.
Shares of Century Aluminum, based in Monterey, Calif., fell 13 cents to $10.84 in midday trading.

Barclays Forecasts Aluminum Shortage, Copper Surplus in 2014

Bloomberg Businessweek - February 7, 2012

Aluminum will be in shortage in 2014 for the first time since at least 2005 as copper moves into surplus, Barclays Capital said.
The aluminum shortage will be 33,000 metric tons against a surplus of 224,000 tons this year and 336,000 tons next year, Barclays said in a report e-mailed today. Copper will have the first surplus since at least 2005 in 2014, at 121,000 tons comapred with a shortage of 376,000 tons this year and 7,000 tons next year, according to the report. Barclays forecasts copper will average $9,000 a ton this year and aluminum $2,313 a ton.

UC RUSAL's Chinese mistake

Rus Business News - February 7, 2012

UC RUSAL's general director, Oleg Deripaska, has announced a reduction in the manufacture of primary aluminum. The company intends to close some of its production plants in Russia. It is likely that electrolytic production at Bogoslov Aluminum Plant (BAP) will be shut down, as the equipment there is quite outdated. Experts believe that economic considerations kept the owners from including that plant in their modernization plans. As this columnist for RusBusinessNews has determined, BAP became the victim of Derpaska's strategy - in the mid-2000s, Mr. Deripaska decided not to expand the manufacture of high-value-added aluminum products.
The reason for the cutback was the surplus of aluminum, which led to a sharp price drop at the end of 2011 ($2,170 per ton). A 9% increase in aluminum production prompted leading global companies such as Rio Tinto Alcan, Alcoa, and Norsk Hydro to announce the shutdown of their facilities that could not operate efficiently at that price. UC RUSAL followed their example. The Russian company's unusually high burden of debt also helped to force its hand. Last summer the state-run Vneshekonombank agreed to lend UC RUSAL 40 billion rubles to complete the construction of the Taishet aluminum smelter in Siberia, a facility with a 750-ton capacity. In order to service its many debts, the company took out a $4.75 million syndicated loan in the fall of 2011.
The falling price of primary aluminum forced Mr. Deripaska to begin negotiating a lower interest rate on his loans. He was able to work out a 12-month debt covenant, which is in reality an extension of the term of the loan. Experts believe that these agreements will allow UC RUSAL to easily shut down some of its facilities, which will lead to an increase in the price of aluminum.
In an interview with Bloomberg Television, Oleg Deripaska claimed that he would close some of his plants within 18 months. He might reduce production as much as 6%, or by approximately 250,000 tons of aluminum. Experts predicted that the first plant to be shut down will be the Bogoslov Aluminum Plant, which produces about 200,000 tons of aluminum a year using outdated and expensive electrolytic cells. But the total of one million tons per year that the Taishet and Boguchansk plants can produce will more than make up for the loss of the Bogoslov smelter.
But UC RUSAL's press office is in no hurry to announce which candidates might get the ax. The PR representative for the Urals Federal District, Roman Lukichyov, told RusBusinessNews that no final decision had yet been made. He emphasized, "The company has no plans to shut down any one factory in particular. The planned decrease in production may affect the older, less profitable, and less environmentally responsible facilities. But in any event, electrolytic production at BAP would not be affected. As was stated earlier, there are plans to modernize that facility, and a feasibility study of that project is currently being developed".
However, in an interview with Interfax, the company's first deputy general director, Vladislav Solovyov, claimed that the only way to rescue aluminum production at BAP would be to buy the Bogoslov thermal power station at a reasonable price from IES Holding, CJSC. Nikolai Kulyushin, the director of IES Holding's department of strategic communications, told RusBusinessNews that the thermal power station would be sold along with the obligations and rights for the construction of a new power station, since the equipment at the Bogoslov power plant is quite worn out.
The seller estimated the value of the thermal power station at 3.5 billion rubles, including the fee for a contract to provide power for the construction of a new thermal power station. But UC RUSAL was not satisfied with that sum. According to Vladislav Solovyov, the company is only willing to compensate IES Holding for the expenses of buying and servicing the thermal power station. The construction of a new thermal power station is not part of the discussion. Roman Lukichyov reported that the "right to build the Novobogoslov thermal power station belongs to IES Holding, and hence it is they who should answer those questions".
The dispute over paying for a contract to provide power suggests that UC RUSAL is not positive it will need new power plants in the future. The company is purchasing this "ramshackle" plant merely to reduce the cost of its electricity, thus allowing BAP to operate cost-effectively until 2013, when the Taishet smelter will open with its lower production costs, thanks to cheap electricity from hydroelectric plants in Siberia. At that point, electrolytic production at the Bogoslov plant will probably be shut down. All the talk about modernizing the company is only to reassure the public during the presidential campaigns. It is no accident that several different dates have been announced for BAP's renovation. The government of the Sverdlovsk region expects this to begin in late February, but UC RUSAL's press office is claiming early April.
Kirill Chuiko, an analyst at UBS Bank, believes that UC RUSAL is not actually reducing its production of aluminum, but is simply replacing the expensive facilities in the Urals with more modern and competitive plants in Siberia. The company is being forced in this direction by China, which is closing down its outdated equipment and facilities en masse. This is precisely why Bogoslov Aluminum Plant seems doomed. It is not economically feasible to produce primary aluminum there, and it is risky to try to convert the plant to produce high-value-added products, because the market is already mature, and it would be extremely difficult for a new factory to find its niche.
In reality, BAP was a victim of Oleg Deripaska's strategy. In 2005, Mr. Deripaska decided to focus on the production of alumina and primary aluminum, instead of developing high-value-added products. Accordingly, he sold off all of his non-core assets (processing facilities). The primary owner of UC RUSAL explained this step by citing the lack of qualified personnel and the fact that the old Soviet factories he acquired during the privatization process were so uncompetitive.
Meanwhile, Alcoa Inc. bought two aluminum plants from Oleg Deripaska in Samara and Belaya Kalitva (in the Rostov region) and invested about $500 million in their renovation. The money was spent to improve the production equipment for aluminum semi-finished products, which Alcoa decided to sell on the Russian and international markets. The foreign company was not dissuaded by the poor reputation of Russian industry, nor by the difficult market. They focused on the fact that Russian companies have been slow to produce high-value-added products. According to Helmut Wieser, the executive vice president of Alcoa, UC RUSAL sold its plants at a time when Russia is importing nearly half of its sheet metal for the production of aluminum cans.
Oleg Deripaska's fears about finding enough qualified staff at the Samara and Belaya Kalitva plants were unfounded. Helmut Wieser claimed in an interview with one publication, "The Russian experts working at Alcoa Russia have more than met our expectations, both professionally and in their approach to innovation".
Alcoa and United Aircraft Corporation (UAC) signed an agreement in 2007 to supply improved materials and to transfer modern production technology for the construction and production of next-generation civil aircraft. And other companies have begun to actively develop the Russian market. In 2008, i.e., three years after Oleg Deripaska sold his processing plants, the British company Rexam built a factory in record time in the Chelyabinsk region for the production of aluminum cans.
In that same year of 2008, UC RUSAL also announced that it was willing to invest two million dollars in new innovations that would expand the use of aluminum and aluminum products. Some of the promising ideas that were considered were improving energy efficiency and transportation safety, as well as several other projects. But three years later, UC RUSAL has made no real progress toward manufacturing innovative products.
Meanwhile, Alcoa signed a memorandum in the summer of 2011 with Rusnano Corporation and Holding IDGC, OJSC regarding the production of next-generation wires and cables with improved conductivity and anti-icing properties. In addition, the Samara plant will apply special coatings to oil and gas pipes used in drilling.
Experts claim that these long-term projects could easily be brought to fruition even at the Bogoslov Aluminum Plant. But UC RUSAL's strategists felt that in the shorter term, China will increase its imports of primary aluminum, and thus all their efforts and resources have been focused on modernizing and constructing new facilities to produce low-value-added products in Siberia, which is near the border with the Middle Kingdom. The workers at BAP will have to pay for Oleg Deripaska's commitment to an economy based on raw materials, and many of them will soon lose their jobs.
Officials in the Sverdlovsk region are not about to comment on the statement made by UC RUSAL's primary owner about closing down unprofitable factories. Ilya Maltsev, the press secretary for the Ministry of Industry and Science, advised waiting until March 5, when UC RUSAL will present its vision for the future development of the aluminum industry in the Urals at the presidium of the regional government. The government will react to the company's proposals based on what they hear there. Although it's unlikely that anyone in Russia will be interested in the prospects for the future of the aluminum industry the day after the Russian presidential elections.

Rio’s Pacific Aluminium Could Fetch US$4.4Bn: Deutsche Bank

The Wall Street Journal - February 7, 2012

Rio Tinto may have to swallow a cut-price deal if it wants to get the sale of its aluminum division away.
That’s the view of Deutsche Bank analysts who have slashed their valuation of Rio’s interests in six Australian and New Zealand aluminum assets to US$4.4 billion. The new valuation represents a whopping 32% drop on its previous US$6.5 billion estimate a little over four months ago.
Rio insists it isn’t a forced seller of the Pacific Aluminium business, and there’s still plenty of time for the aluminum price to recover. At an investor strategy day on Nov. 29, Rio’s management pointed to their strong balance sheet and a timeline that extends to 2015 to scotch any talk of an imminent firesale.
“We expect that Pacific Aluminium’s new management will be given time to define the earnings potential and free cash flow of the assets and improvement opportunities…we thus assume the business unit is divested by the first half of 2013,” Deutsche’s Paul Young said in a note.
The broker reckons Rio’s sale could be through an initial public offering, similar to its divestment of its US coal business through the IPO of Cloudpeak. Other options include an in-specie distribution, trade sale or even a break-up.
Mr. Young also suggested Rio may need to wait for an uptick in commodity prices.
As well as Pacific Aluminium, Rio management flagged the sale of three smelters and specialty Alumina refineries. However, Deutsche notes the closure rather than the sale of the higher-cost smelters may be a more realistic option.
When Rio reports Thursday, Deutsche expects a US$6 billion writedown from its US$38 billion aluminum division. Because it is non-cash, it won’t impact Rio’s cost of debt and also won’t change any upside from the proposed transformation program which Deutsche estimates could see the division contribute 20% of group earnings by 2017.
Since 2008, Rio has written off US$6.1 billion of the US$19 billion in goodwill that was attached to its Alcan acquisition.

Easing Its Debt Allows Rusal To Focus Down the Euro Road

The Wall Street Journal - February 6, 2012

Oleg Deripaska spent the best part of his Moscow working days in 2009 in what he called a "war room," dealing with Russia's biggest-ever corporate-debt restructuring.
Three years on, and aluminum and energy producer United Co. Rusal PLC still has a war room, but the work being carried out there is significantly different.
"That first war room was about what we could achieve in nine months; now it's about what we can achieve in three years," Mr. Deripaska, Rusal's chief executive, says.
At the end of 2009, when it completed its restructuring, Rusal, which produces aluminum, a metal used in transportation, packaging and construction, had debts of $16.8 billion. By the end of September 2011, this had been cut to $10.9 billion through repayments and tough cost-cutting programs throughout its network. In 2011, months of negotiations with more than 70 international and Russian banks resulted in the successful refinancing of this sum with 13 international banks. Right now, Rusal has a 12-month holiday from its debt covenants.
Rusal's debt mountain was the result of the twin evils of a collapse in commodity prices during the economic downturn in 2008-9 and the company's voracious appetite for borrowing to finance expansion. Aluminum prices more than halved, causing producers around the world to slash output.
But Mr. Deripaska says the company is now in a much better position to take on the new deterioration in market conditions seen as a result of the euro-zone crisis.
"It's not just doom and gloom. Last year we decided that we had to have even harder targets to stay competitive," he says. "We believe the aluminum market will be better in the second part of this year."
Mr. Deripaska is one of Russia's best-known entrepreneurs, but his desire for privacy means little is known of his personal life. In person, he seems almost the exact opposite of the ruthless businessman the media often make him out to be; rather he comes across as a softly spoken professional with a dry sense of humor and strong sense of his roots in the Krasnodar region of southern Russia, close to the Black Sea.
If the war room is less active these days on the restructuring front, it might still be required for the company's battle with fellow Russian miner, OAO Norilsk Nickel. Rusal, which has a 25% stake in Norilsk, is embroiled in a fight with Interros Holding, controlled by billionaire Vladimir Potanin, for control over the nickel miner. Interros has a 30% stake in Norilsk which, with a market cap of about $36.5 billion, is the world's biggest producer of nickel and palladium—producing 20% and 45% of total global out put of these metals respectively, and a sizeable producer of platinum and copper.
Mr. Deripaska says the existing Norilsk management uses the firm as a "cash cow" which they milk without having a clear development plan, dividend policy or proper corporate governance structures.
He is also scathing of Norilsk's decision to sell an 8% stake in the company in the form of treasury stock to commodities trader Trafigura. Neither Trafigura nor Norilsk have disclosed the exact terms of the deal, which was announced in December 2010. Rusal has taken Interros to court in several different jurisdictions over this matter.
"Trafigura has never bought this 8% in Norilsk. It easy to calculate that a party who bought it has realized a profit of about $1.5 billion on subsequent sales back to Norilsk, but no corresponding profit can be found on Trafigura accounts," Mr. Deripaska says. "We hope that people and organizations involved will rectify this wrongdoing before they fall under criminal investigation," he adds. Trafigura declined to comment on the matter. Norilsk and Interros dismissed Mr. Deripaska's comments as baseless.
But Mr Deripaska still believes Norilsk is "an opportunity" for Rusal, though he rules out merging the two companies to create a national champion.
"At the moment we [Rusal and Norilsk] clearly have different views, but we're very patient," Mr Deripaska says. "We believe there are synergies for our two companies, especially in Siberian development, and the investment community recognizes this and also expects changes in Norilsk."
Corporate governance is a bugbear for Mr. Deripaska, largely because he thinks the lack of it makes Russia appear to lack credibility in the international markets. "We just need to change corporate practice because the rules of the 1990s are not acceptable any more," he says.
But he believes Russia "will be different" after the presidential elections in March. "It's not just a simple desire to develop Moscow as an international center. Russia needs to stop capital flight, needs to realize its unique opportunity," he says. "We have low public debt to gross domestic product, less than 12%—total debt of less than 27%—a profitable budget and a stable monetary policy. Russia's macroeconomic points are positive."
If Mr. Deripaska is steadfast in his praise of Russia, the same can't be said of his opinions on Europe. His criticism of Europe's past and present policy makers and their apparent unwillingness to risk their popularity to address the region's key problems—sovereign debt, weak banks, low growth—is relentless.
"We need to find a politician on top who wants to deal with this issue," he says. "At the moment, there's no European politician willing to spend 1% of his or her popularity, because the party political competition is so narrow. The most important issue is how do you really put this on top of the agenda, how can you win public support, and how quickly will the public accept that not just one, not two, but three generations will not have the happy lives of the 1990s and the last decade."
Rusal listed on the Hong Kong and Paris stock exchanges two years ago, a change that Mr. Deripaska says brought adjustments to corporate practices, including increased transparency and more dealings with shareholders. It didn't go for a London listing and found a U.S. listing too cumbersome.
"The issue is that regulation should fit with the market situation. If you scare people to death, like in New York, and you establish so many formal rules, which in reality just help management to do nothing, it's not very productive," Mr. Deripaska says. "London is sort of in the middle."
He doesn't rule out a London listing in the future—"let's see what happens over the next three years"—and says that where the large number of Indian companies that are planning to list eventually float will be an indicator of the location for future IPO growth.
Aluminum is where Mr. Deripaska started. After graduating in physics from Moscow State University and then economics from the Plekhanov Academy of Economics, he set up the Military Investment and Trade Company, a small metals-trading operation, using its profits to buy a stake in the Sayanogorsk Aluminum Smelter in Eastern Siberia, eventually becoming its director-general in 1994.
Rusal is majority-owned by Mr Deripaska's EN+ Group, a Russia-based diversified mining, metals and energy group which includes one of the world's largest hydro-electric generation companies and the country's biggest independent power producer, EuroSibEnergo PLC. The group is in turn owned by Basic Element, a conglomerate spanning activities in energy, manufacturing, aviation, construction and financial services.
Mr. Deripaska says his businesses have a "unique reputation" in Russia, with no door closed. "We lower the Russia risk for our partners and investors. I'm very open to approaches for joint-venture projects, and if other companies need something, they ask for it," he adds.
But where does he see Rusal in a decade?
The company will be like a "laboratory, producing new solutions for new prod- ucts... for the Asian market," Mr. Deripaska says, noting that Asia already accounts for a third of the aluminum producer's business. "Rusal in a decade will be a different size, just based on the size of Asia in the world economy, and Asia could definitely double."

Alcan to bring Quebec smelter to full capacity by Q2

Reuters - February 6, 2012

* Rio Tinto Alcan to restart 2 suspended production lines
* Alcan says no labor talks scheduled at Alma smelter
Rio Tinto Alcan will restart two suspended lines of production at its 100,000-tonne Shawinigan aluminum smelter in Quebec, Canada that forced the company to declare force majeure earlier this year.
The company, a unit of Anglo-Australian mining giant Rio Tinto , will gradually restart the 280 cells that were shut down in the aftermath of a major power outage in late December. The facility will back up and running at full production by the second quarter of 2012.
"We have established a restart plan that secures operations and enables us to fulfil our customers' orders," said Étienne Jacques, chief operating officer of primary metal for North America, in a statement.
There were no updates on Rio Tinto Alcan's largest wholly-owned aluminum smelter, Alma, which has been operating at one-third capacity since early January after contract talks between the company and unionized employees broke down.
A company spokesman said there were no talks scheduled between the two sides.

VHE's New Ohmmeter Offers Enhanced Capabilities for Aluminium Smelters

AZom - February 5, 2012

VHE's enhanced ohmmeter is able to measure the electrical resistance between points of different voltage potential. Conventional ohmmeters do not have this capability.
Much of the equipment installed in aluminium smelter potroom has significant electrical potential to earth (or ground). The series connection of the pot busbar systems means that pots may have a potential to earth of 1500 volts or more. Alumina dust and metallic objects can compromise the installed electrical insulation and it is necessary to monitor insulation performance on a regular basis.
Traditional instruments for this purpose have been large and cumbersome. VHE's enhanced ohmmeter is portable, lightweight and fitted with comfortable shoulder straps, freeing both hands to use the measuring probes. The instrument has a clear digital display and works just like any other ohmmeter but with the added ability to measure live conductors.
An earlier version of VHE's ohmmeter has been in use at RTA ISAL in Iceland since 1997.
About VHE
Velaverkstaedi Hjalta Einarssonar - VHE is a major mechanical fabricator, offering a comprehensive range of design, manufacturing and site services. VHE now provides all Stimir solutions to the primary aluminium industry, with particular focus on the Rodding Plant. All aspects of design and fabrication are undertaken at VHE's own facilities, ensuring total quality control and on-time delivery.

Maaden Alcoa refinery work gathers pace

ARAB NEWS - 5th February, 2012

RIYADH: The Maaden Alcoa aluminum joint venture announced that it had poured the first concrete in the construction of the region's first alumina refinery at the fully integrated aluminum complex at Ras Al-Khair.
Once complete, the refinery will initially produce 1.8 million metric tons of smelter-grade alumina per year.
In another first within the Kingdom, the refinery will utilize a technologically advanced, engineered natural system to treat, recycle and conserve significant volumes of water.
Speaking at the ceremony marking the pouring of first concrete Abdullah Busfar, chairman of the board of directors of Maaden Aluminium Company, said the refinery was highly symbolic of the Kingdom's emerging strength as a competitor in the regional and global aluminum industry.
"We have everything we need to develop a fully integrated aluminum industry within Saudi Arabia," Busfar said.
"In Maaden itself we have the experience and local knowledge required to develop the bauxite reserves and the other natural resources needed for feedstocks. We have the support and leadership of the government. And we have a partnership with Alcoa that is accelerating the development of the skills and technology required to build out this complex and the downstream opportunities it will create."
Ken Wisnoski, Alcoa vice-president and president of Alcoa's Primary Products Growth group, said the joint venture's commitment to world-class design and low operating costs was apparent throughout the complex.
"The refinery, as with the smelter and the rolling mill, will be based on best-in-class technologies and operating practices. Conserving resources is crucial to maintenance of low operating costs and, as with the other facilities within this complex, this refinery has numerous advantages designed to reduce its demand on energy and other natural resources, such as water. We're pouring concrete today as the foundation for a long-term, highly competitive, low-cost and sustainable operation," Wisnoski said.
Maaden President and CEO Khalid Al-Mudaifer commended the project team for their ingenuity in applying measures to protect the environment.
He also highlighted the project's role in creating new careers for Saudi nationals and developing a local supplier program to benefit communities near the future operations.
The complex's smelter and rolling mill are scheduled to begin production in 2013.
The mine and refinery will follow in 2014.
In its initial phases, the joint venture will develop a fully integrated industrial complex which will become the world's preeminent and lowest-cost supplier of primary aluminum, alumina and aluminum products, with access to the growing markets of the Middle East and beyond.
The complex comprises:
— A bauxite mine with an initial capacity of 4,000,000 metric tons per year
— An alumina refinery with an initial capacity of 1,800,000 metric tons per year
— An aluminum smelter with an initial capacity of 740,000 metric tons per year
— A rolling mill, with initial capacity of 380,000 metric tons per year. The mill will be the first in the Middle East and will be one of the most technically advanced mills in the world.
First commercial production from smelter and mill is scheduled for 2013, followed by first commercial production of alumina from the mine and refinery complex, scheduled for 2014.
Alcoa will supply alumina to the smelter in the interim period.
Maaden was established as a Saudi Arabian joint stock company in March 1997 to facilitate the development of Saudi Arabia's non-petroleum mineral resources and to diversify the Kingdom's economy away from the petroleum and petrochemical sectors.
Maaden is engaged in the development, advancement and improvement of all aspects of the mineral industry, mineral products and by-products and related industries in Saudi Arabia.

In 2011 ENRC increased aluminium production by 9.8%

Caspio Net - 4th February, 2012

The extraction of bauxite equalled 5.495 million tonnes with a 3.5% increase and alumina production increased by 1.8% to 1.670 million tonnes.
According to a report of the ENRC, in 2011 the company increased the production of aluminium by 9.8% to 249 thousand tonnes. The Eurasian Natural Resources Corporation deals with the extraction and processing of chrome, manganese and iron ore, the smelting of ferroalloys, the extraction and processing of bauxite for receiving alumina, the production of aluminium, copper, cobalt, the extraction of coal and the production of power energy as well as the transportation and sale of products. The production assets of the group of companies are mainly situated in Kazakhstan.

Rio Tinto Alcan to fully restart Quebec smelter hobbled by massive power outage

Winnipreg Free Press - 3rd February, 2012

Rio Tinto Alcan plans to begin restarting its 70-year-old aluminum smelter in Shawinigan, Que. in a few days and have it operating at full capacity by the second quarter, the company announced Friday.
A circuit breaker failure on Dec. 29 cut the smelter's annual production capacity in half to 50,000 tonnes.
The company, a division of Anglo-Australian mining giant Rio Tinto (NYSE:RIO), said Friday it will gradually restore two pot lines and production will be at full capacity by the second quarter of 2012.
The smelter, which uses old Soderberg technology, has been scheduled to shut down by the end of 2014 because of provincial environmental regulations.
Stephen Jacques, primary metal chief operating officer, said the restoration of full production capacity is great news for employees and the Saguenay community.
"Collaboration with employee representatives was important because the plant will increase the efficiency of its operations and streamline its organization," he said in a news release.
The plant employs some 450 workers.

VLADIMIR LISIN TOSSES OLEG DERIPASKA OUT OF THE RING – PREPARES TO TAKE OVER VANINO PORT

Business Insider - 3rd February, 2012

Oleg Deripaska appears to have lost a nine-year long battle to take control of Vanino, an eastern seabord port on which Deripaska depends for imports of alumina to feed his aluminium smelters in Siberia, and to load finished aluminium for export to buyers in the US and East Asia.
The man who appears to have bested him is Vladimir Lisin, the steelmaker. The tussle for the port, on the Tatar Strait and the Sea of Okhotsk, won’t be over until Lisin wins the bidding for the state control shareholding – if he wins. But the flags now flying from the Vanino flagpole signal that Lisin has once again won over Deputy Prime Minister Igor Sechin, the key decision-maker in the government for both the resources sector and for the maritime sector.
If Lisin can oust Deripaska in Sechin’s affections – whether to serve as a warehouser of assets until a more lucrative price can be taken from the market, or to guard Sechin’s interests against the ambitions of oligarchs he trusts less — the consequences for Deripaska’s control of other assets, including government favours for electricity, taxation, and transportation, could be grave. According to a ruling decided on January 23, but not published until January 30, the Federal Antimonopoly Service (FAS) in Moscow has approved an application by the ports holding company owned by Lisin – United Cargo Logistics (UCL) Holding, registered in Amsterdam – to acquire 100% of the shares of the Vanino port company. At this point, the federal government owns 55% of the port company capital, 73% of the share issue; this is administered by the Federal Property Management Agency. The remainder of the shares is held by companies in Deripaska’s group.
Lisin, whose wealth comes principally from the Novolipetsk steelmaking group (NLMK), avoided the leveraging which in 2008 led Deripaska to the edge of insolvency with more than $20 billion in debts. As he built up NLMK, Lisin acquired river-shipping fleets and port terminals on Russia’s western seabord in order to protect the supply chain to his steel mills, and his access to export markets, principally in Europe. These maritime assets, trimmed down to fleets and ports by recent disposals of shipyards, are being reorganized for an initial public offering (IPO) whose date has yet to be set.
Vanino is a relatively small port by Russian standards. In 2010 its cargo turnover was 6 million tonnes. In the first nine months of 2011, turnover fell 7% to 4.3 million tonnes; export tonnage was 1.9 million tonnes, down 9% compared to the same period of 2010. The official auction of the state stake in Vanino port has yet to be scheduled and a result announced. An auction failed last year because the winning bid for $396 million by an unknown company called Seltekhstroy failed to materialize with the money. The Deripaska group’s bid was reported to have been half as much at $194 million.
It is suspected that the Vanino management, led by Alfir Bogudinov, was behind the mystery bidder with the aim of stalling Deripaska and preventing Rusal taking control.
Last week’s authorization by FAS of the possibility of a winning bid by Lisin is a signal that another rival bid by Deripaska will not be approved. Also, the rejection by the federal government a few days ago of an attempt by Deripaska to oust the port company management opposed to his takeover is a further sign that Deripaska has been beaten.
His spokesman, Sergei Babichenko, declined to return calls or respond to questions.
In 2003, when the Russian government first suggested it wanted to privatize its control stake, Vanino port sources reported rivalry between Rusal and its domestic competitor, Victor Vekselberg’s Siberian Ural Aluminium company (SUAL) for use of the port to load aluminium exports. At the time, the port was shipping about more than half a million tonnes per annum of aluminium for Rusal; and about 200,000 tonnes for SUAL. The port had 1.2 million tonnes of capacity for export shipments, but the aluminium producers had left this unused while they loaded ships at St. Petersburg. When Rusal decided to reorient its trade flows from St. Petersburg to Vanino, and from Europe to Asia and North America, it clamped tight secrecy over details of the trade.
Far Eastern Shipping Company (Fesco), owned by Sergei Generalov, was one of the shipping companies contracted by Rusal for shipping its metal across the Pacific. But in 2006 Generalov had fallen out with Deripaska, and proposed to buy the state stake in the port and take control for Fesco. Lobbying by the two men of government officials led to an impasse, and the Moscow authorities repeatedly put off the privatization auction.
After the auction result of last year was nullified, Deripaska then tried to oust Bogudinov as chief executive of the port company. His candidate for the job was Dmitry Lisin. Vladimir Lisin has a son, Dmitry, born in 1983; but the UCL spokesman, Dmitry Baukov, emphasized today “they are just namesakes. And by the way, [the unrelated] Dmitry Lisin had once worked in our group in the post of Deputy CEO of the Taganrog port. But, nevertheless, he doesn’t have related communications with our shareholder.”
Last month, Zakir Vagapov, spokesman for Vanino, told Fairplay many companies are interested in taking stakes in the port, and together “they are ready to pay much more than [the Deripaska holding company]. So his action against the port management has been aimed at getting the purchase of the asset more cheaply.” Vagapov and his boss Bogudinov expressed this confidence after they had successfully lobbied Prime Minister Vladimir Putin and the Ministry of Economic Development to overrule a recommendation from the Federal Property Management Agency supporting Deripaska’s attempted shakeup.
Today Bogudinov and his spokesman confirm the FAS ruling in favour of UCL. But they won’t say if they support Vladimir Lisin’s takeover. “The management doesn’t comment on this situation,” Vagapov said, “because the port is a state company, so they just receive the decisions which have been made [in Moscow].” In a written statement by the port company to follow, the hope is expressed that “after the sale of shares in OAO Commercial Sea Port Vanino, the purchaser will implement his obligations, including the issues of further development of the port, and ensure the stable operation of the enterprise.”
Is Lisin acting as a white knight for the port to ensure that Deripaska is driven off? Baukov for UCL says only that his group remains interested in buying Vanino, but will “make the final decision to acquire only when there will be details of the second auction (the starting price and the date).”
Alexei Bezborodov, an expert on the maritime sector in Moscow and chief analyst for Infranews.ru, said he is sceptical about the valuation and pricing. “The assets themselves are not worth it. A lot of money is needed to invest in the port. So the terms ‘contest’ and moreover ‘white knight’ are not suitable for this situation at all. It’s just a little war on Deripaska.”
Taras Sobko of the Ministry of Economic Development and Arina Lazareva of Federal Property Management Agency said they would not respond to questions unless they were put in fax form. When they were, they didn’t reply.

Rusal sees aluminium prices at $2,500 by end Q2

Mineweb - 3rd February, 2012

Aluminium prices are expected to rise up to 10 percent from current values by the end of the second quarter, as output cuts take effect, a senior executive at Rusal, the world's largest producer of the metal, said on Wednesday.
Prices could rise up to $2,400-$2,500 per tonne, Rusal executive Oleg Mukhamedshin forecast.
Aluminium prices ended last year near 18-month lows on concerns about economic weakness and oversupply, prompting Alcoa and Norsk Hydro to cut capacity. Rusal is also considering cutting capacity.
Still, Mukhamedshin forecast that demand from Asia and the U.S. will rise this year which, together with the reduced output, will support prices.
"We still see strong demand for aluminium. This year is going to be another record in consumption," Mukhamedshin told reporters in Moscow on Wednesday.
Prices for three-month aluminium on the London Metals Exchange traded at $2,266.50 per tonne at 1710 GMT against Tuesday's close of $2,239.
Mukhamedshin said he thought the aluminium market reached a bottom in the fourth quarter of 2011 when the price went below $2,000 per tonne.
"We estimate about 30 percent of all the producers around the world dropped below water," he said. "Currently the marginal producers' cash cost is above $2,400 per tonne. So this is why all major companies in the industry  announced shut downs of production".
Top U.S. aluminium producer Alcoa said earlier this month it would slash output at two Spanish smelters and shut its Portovesme smelter in Italy, putting about 1,500 people out of work.
Norwegian producer Norsk Hydro has meanwhile said it plans to idle a third of its output at a plant in Australia.
Rusal is also considering shutting down of up to 6 percent of current production within the next 18 months and sees growing demand in China, the largest market for aluminium, Mukhamedshin added.
He expects demand in Japan to rise 6-8 percent and that in the U.S. to rise by 5 percent. Demand in Europe should be flat, he believes.
Mukhamedshin added that premiums for physical aluminium on the global market are slightly less than before but are above $100 per tonne.

Odisha: N.R. Mohanty is NALCO’s new Director (P & T)

OrissaDiary.com - 2nd February, 2012

Bhubaneswar: Shri N.R. Mohanty, GM (Smelter), NALCO, Angul has joined as the Director (Projects & Technical) of the company on superannuation of Shri P.K. Padhi, from 1st February 2012.
After completing his Engineering in Mechanical discipline from NIT Rourkela as best Graduate of Sambalpur University in 1980, Shri Mohanty started his career from Larsen & Toubro (L&T). He also worked in BALCO before joining National Aluminium Company Limited (NALCO) in December 1986. He has held different positions in company’s Smelter Plant and Corporate Office.
Shri Mohanty has rich and varied experiences of more than 30 years in aluminium industry. He has been conferred with several awards and recognitions throughout his professional career.
Shri Mohanty is the son of Smt. Kanaklata Mohanty & late Kishori Charan Mohanty and son-in-law of Smt. Kadambini Mohanty and late Shasibhusan Mohanty.
With Shri Mohanty joining as Director (P & T), NALCO’s Board of Directors has been further strengthened.

Aluminium record set in 2011

Radio New Zealand - 2nd February, 2012

The smelter at Tiwai Point produced a record amount of aluminium last year.
The smelter produced 354,030 saleable tonnes. The previous highest year was 352,976 tonnes in 2007.
The smelter is New Zealand's largest single user of electricity and creates export sales in excess of $1 billion.
The record production is despite generally low aluminium prices. Other smelters worldwide are cutting their production. The plant is up for sale by its global owner, Rio Tinto.
NZ Smelter general manager Ryan Cavanagh says the achievement is a significant milestone which the plant's employees can be very proud of.
He says the smelter is setting a benchmark for other industries in New Zealand. Hard to repeat aluminium production level
The Tiwai Point aluminium smelter says it will struggle to better last year's record production level.
New Zealand Aluminium Smelters general manager Ryan Cavanagh says the secret to last year's record production is the plant's stable workforce, with almost a third of its 900 employees having 25 years' service.
Mr Cavanagh says the smelter makes the purest aluminium in the world so can grow production at a time when others are shutting down.
But, he says, it will be difficult to repeat the feat this year because the plant cut production last month by 5% due to high wholesale power prices.

Rio Tinto Alcan's Kentucky smelter adding capacity to offset power costs

Louisville (Platts) - 1st February, 2012

A $20 million project to boost electric amperage is under way at Rio Tinto Alcan's Sebree, Kentucky, aluminum smelter in an effort to increase the plant's aluminum-making capacity to help offset rising electricity rates.
The project, expected to be completed later this year, "allows us to make more metal ... that's what we want to do," plant spokesman Kenny Barkley said Wednesday. He said Sebree produced about 196,000 metric tons of aluminum in 2011. Increasing the amperage should allow the smelter to produce an additional 5,000 to 15,000 mt, moving it above 200,000 mt on an annual basis, he said.
"The intent is to increase capacity," Barkley said. "That's one way to help alleviate costs if power prices increase, by making more metal with the same amount of equipment and people."
Commission, the smelter's roughly $43 per megawatt-hour rate is expected to climb above $50/MWh, among the highest in the United States.
The Kentucky Industrial Utility Customers, a trade group in which Alcan is a member, has warned state regulators that Sebree could close unless ways are found to keep a lid on power prices that typically account for about a third of a smelter's operating costs.
Barkley acknowledged that "everybody has their concerns" about Sebree's future, but said he is cautiously optimistic "as long as we stay efficient."
In October, Rio Tinto announced it was looking to sell 13 facilities worldwide, including Sebree. Michael Tanchuk, CEO of Ohio-based Ormet Corp., the operator of the 270,000 mt/year Hannibal, Ohio, aluminum smelter, recently said his company might be interested in buying Sebree.

Aluminum Surplus May Fall to Lowest Since ’07, Sumitomo Says

Bloomberg - 1st February, 2012

A global aluminum surplus may shrink to the lowest level since 2007 as major producers cut output amid soaring energy costs and sluggish demand, said Japan’s third-largest trading house.
Supply will exceed demand by 941,000 metric tons this year, down 42 percent from 1.61 million tons in 2011, said Shingi Yamagiwa, manager of light metals trading at Sumitomo Corp., which has stakes in smelters in Australia, Brazil, Malaysia and Indonesia. The surplus was 770,000 tons in 2007, he said.
Aluminum, used in cars, packaging and houses, has declined 12.5 percent in the past year, hurting producers such as Alcoa Inc., Rio Tinto Group and United Co. Rusal, which are cutting output. Alcoa, the largest U.S. producer, reported its first loss in two years this month and said China may use 70 percent of its capacity in 2012.
“We’ve seen an increase in production costs for aluminum since 2009, when producers cut output after prices fell below $1,500 a ton,” Yamagiwa said in an interview on Jan. 30. “We now have output cuts by high-cost producers as prices fell below $2,000 a ton.”
The metal may decline as much as 15 percent to $1,900 a ton in the first half, he said. Aluminum for three-month delivery on the London Metal Exchange fell 0.2 percent to $2,233 a ton at 4:24 p.m. in Tokyo.
Rusal, Alcoa
Global supply may increase 3.8 percent to 46.6 million tons this year and demand may grow 5.5 percent to 45.7 million tons, Yamagiwa said. Demand in China, the world’s top consumer, will increase 8 percent to 19.8 million tons, while output climbs 6.5 percent to 19.7 million tons, he said. Japan is Asia’s biggest importer of the metal.
Rusal, the world’s largest aluminum producer, may cut output 6 percent in the next 18 months, Chief Executive Officer Oleg Deripaska said Jan. 27. Rusal has an annual capacity of 4.7 million tons a year. Low prices may force as much as 3 million tons of global capacity to be closed or mothballed, Deripaska said in December.
Alcoa last month said it would halt 12 percent of its global capacity and Rio, the world’s third-biggest producer, said in November it would shut its Lynemouth smelter in England. Norsk Hydro ASA, Europe’s third-largest producer, said Jan. 10 it may take some capacity offline at its smelter near Newcastle in Australia. ‘Key Determinant’ Aluminum’s marginal cost of production will be a “key determinant” of prices over the next three years amid high inventory levels and low capacity-utilization rates, said RBC Dominion Securities Inc. The metal’s “fundamental price support” is around 95 cents a pound ($2,094 a ton) to $1 a pound, analysts including H. Fraser Phillips, said on Jan. 24. Producers have closed almost 1.6 million tons of smelting capacity in about the past month, Barclays Capital said. About 3.6 million more tons of capacity is “at risk” if prices don’t rise significantly, Nicholas Snowdon, an analyst at the bank, said Jan. 19. About 250,000 tons of capacity was idled in China, or less than 1 percent of the domestic total, he said. “While China’s aluminum demand will stay balanced in the short term, the country may become a net importer in the long term on surging costs for energy and raw-materials such as bauxite and alumina,” Sumitomo’s Yamagiwa said. Bauxite is turned into alumina, which in turn is refined into aluminum. About four tons of the mineral is used to produce one ton of metal.

Gulf set to become global aluminium destination

Gulf Times - 1st February, 2012

The Gulf Cooperation Council (GCC) region’s aluminium industry is set to contribute 10%-11% of global output, thus growing to the stature of global aluminium destination, next to oil wealth, according to Frost & Sullivan.
The GCC possesses some great advantages such as low power cost and gas prices, favourable logistics owing to well connected airports and sea ports to all global destinations and skilled manpower supply from Asian neighbours sustaining over four decades to provide knowledge transfer to the local manpower adding to their employment opportunities, it said.
“GCC smelters are now actively engaged in downstream development to instigate local demand and value addition to primary aluminium production,” Frost & Sullivan said.
Another advantage to the GCC down stream industry is the availability of liquid metal which provides further competitive edge on production costs over other international players, according to its report.
This is also appropriately supported by the respective governing ministries to promote the aluminium industries’ development by facilitating rapid clearance and awarding subsidies for the green field projects, it said.
Earlier a report by Ventures Middle East had estimated Qatar’s demand for fabricated aluminum products to grow by an average 12% during the next four years to reach $436mn by 2015 in view of the buoyancy in the construction market.
Property development in Qatar is expected to witness tremendous growth following the country winning the bid to host the FIFA World Cup in 2022, according to various reports.
The construction boom in Qatar has also boosted the country’s aluminium sector with demand for fabricated aluminium products in the construction industry expected to increase at a CAGR of 12% from $252mn in 2010 to $436mn in 2015.