AluNews - January 2012

Record production for smelter

Stuff.co.nz - 31-Jan-2012

The Tiwai Point smelter has hit a record in production after 354,030 tonnes of saleable aluminium was made last year.
New Zealand Aluminium Smelters general manager Ryan Cavanagh announced the record today, the highest level since 2007 when 352,976 tonnes was produced.
"This is an achievement every employee should be very proud of and it demonstrates the dedication of the NZAS team,'' Mr Cavanagh said.
The record is more than four times the amount of aluminium produced at the smelter in the year following its opening in 1972, where 85,272 tonnes was produced.

Waiting for triggers

Financial Express - 30-Jan-2012

Sterlite Industries reported strong Q3FY12 results at the operating level with: (i) a strong copper business, and (ii) a fall in production cost at Balco, Vedanta Aluminium (VAL) and power business. After repeated increase in the cost of production at VAL and Balco, the company reported a decrease in cost of production with: (i) higher utilisation leading to efficiency realisation; (ii) lower alumina cost; and (iii) better coal availability lowering power costs. The company has indicated that VAL’s aluminium cost of production at $2,004/t (from $2,554/t in Q2FY12) and Balco’s cost of production at $1,880/t (from $2,399/t in Q2FY12) is sustainable at current levels. Sterlite Energy has also lowered the cost to R2.6/KWH down from R3/KWH in Q2FY12 on higher generation and better coal availability.

Novelis builds on its footprint

Atlanta Journal Constitution - 29-Jan-2012

Bales of used beverage cans are moved through Novelis’ 40-year-old facility in Greensboro, where more than a million pounds a day of aluminum scrap is melted and turned into 50,000-pound-plus ingots.
Novelis has almost 11,000 employees in 11 nations and produces about 19 percent of the sheet aluminum used each year worldwide. Its biggest customers include British can-maker Rexam Plc., Anheuser-Busch and Coca-Cola.
Currently, the 40-year-old facility — Novelis’ first dedicated recycling plant — melts down more than a million pounds a day of used pop cans and other aluminum scrap, turning it into 50,000-pound-plus ingots that are trucked to Novelis’ sheet metal rolling mill in Russellville, Ky.
But Novelis’ appetite for recycled aluminum is insatiable, partly because it takes about 95 percent less energy — by far the biggest cost — to recycle aluminum as it does to produce it from raw ore. The energy savings from recycling 40 pounds of cans instead of smelting ore could propel a car about 400 miles, the company said.
“The more we can make, the less we have to buy elsewhere,” said Davis.
Indeed, such costs savings are a key reason Novelis is hoping to boost its recycled output from about 35 percent now to 50 percent in 2015 and 80 percent by 2020.
The savings are “extremely attractive but not easy to do,” Novelis CEO Philip Martens said in an interview.

Failing aluminum complex threatens Montenegrin economy

Xinhua - 29-Jan-2012

BELGRADE, Jan. 28 (Xinhua) -- The debt of a failing aluminum complex in Montenegro is threatening the tiny Balkan state with economic collapse, reported Radio Television Serbia (RTS) on Saturday.
The Aluminum Plant Podgorica (KAP) is jointly managed by the Montenegrin government and the Central European Aluminum Company (CEAC) controlled by Oleg Deripaska, a Russian billionaire, each with roughly 30 percent of the shares.
According to Minister of Economy Vladimir Kavaric, the Montenegrin government would likely assume payment of the first tranche of 22 million euros due to the Deutsche Bank in February. He said this could "lead to the collapse of the financial system" as the creditors for the remaining debt of 131 million Euros come due: Hungary's OTP Bank in April and the Russian VTB Bank in 2014.
In the past two years the public debt in Montenegro has doubled to 47 percent of GDP. Kavaric said Montenegro would have to borrow the necessary funds to cover the KAP debt, for which it has not budgeted.
Kavaric said the Montenegrin government would like to negotiate with creditors to postpone commitments and also negotiate with strategic partners to assume the state debt in KAP.
The company has been plagued with labor disputes as it slashed its 2,300 workers from its labor force of 3,500 in 2008.
Although KAP represents the largest single source to Montenegrin GDP and exports, it has been running a daily deficit of 200,000 euros since the economic crisis of 2008.

Gulf aluminum output seen rising 10pc

Trade Arabia - 29-January-2012

Aluminium production in the Gulf currently exceeds 7 per cent of the world’s total aluminium production; and is set to increase to 10 per cent by 2020, said an expert.
“The aluminium industry in the Gulf has developed over the years into a substantial hub in global terms,” said Abdulla Kalban, chairman of the Gulf Aluminium Council, the coordinating body that represents, promotes and protects the interest of the aluminium industry in the Gulf.
“Not only has production capacity been established and expanded in various GCC countries, but also diverse downstream industries have emerged over the years,” he added.
Kalban also announced that over 200 chief executive offices and senior officials from organisations that have aluminium business interest in the Gulf will meet at an exclusive event to be organised by GAC in Abu Dhabi.
The prestigious second Gulf Aluminium Dinner is an exclusive, by invitation only event that will take place at the Emirates Palace.

Smelters close as aluminium price melts

Business Live - 28-January-2012

Aluminium smelters are being closed across the globe. And there is the prospect of more to come from the industry's majors as well as its minors.
Towards the end of last April, when hopes were rising that the recession might be licked, the spot price of a ton of aluminium was peaking at about $2760.
Just before Christmas, the metal was trading at little more than $1950. Now it's almost back to $2200. But that recovery has not prevented at least one big producer from hastening to reassure shareholders and customers that its smelters could continue to operate profitably when prices were as low as $1900.
Alcoa, the world's largest integrated aluminium company, and Norsk Hydro have been closing old and inefficient smelters in the US, Australia and Europe in response to weakening metal prices and rising power costs.
In round figures, electricity can make up 40% or more of a smelter's operating costs, much more in the case of plants like those closed by Alcoa and Norsk Hydro that were getting on for 50 years old. Those two companies' closures - and they are not the last - have already cut out some 1.3million annual tons of capacity, but any shortfall will not last long.
While the cost of closures helped push Alcoa into a fourth-quarter loss last year, within 12 months or so the company will fire up a new 740000 t/year smelter in Saudi Arabia where power costs are low.
Similarly, Norsk Hydro's half-owned 585000 t/year plant in Qatar will be at full capacity this entire year.
And this year global production of about 50 million tons is likely, while warehouse stockpiles - there are five million tons accounted for on the London Metals Exchange alone - are hardly likely to be dented.
Rio Tinto has said it was awaiting the "opportune moment" to sell a dozen smelters.
This activity highlights the fact that for smelters to stay open and compete in the aluminium market, they must be assured of cost-effective power, with prices guaranteed for decades.
That is certainly a subject when the tariffs Eskom charges for BHP Billiton's smelters in KwaZulu-Natal come up for discussion.
Last year, BHP Billiton's smelters operated at full capacity across the globe - which includes South Africa - implying that local operations were profitable.
Elsewhere the aluminium picture is far from clear.
Russian group Rusal, which has the capacity to produce 4.7million tons of metal a year, hit the skids in early 2009 when recession sent aluminium prices skidding to $1300 from peaks of $3300 in mid-2008.
Rusal had to restructure massive debt and recently won a covenant holiday from its creditors, meaning it avoids the risk of automatic default if revenues drop.
Rusal is reportedly telling all and sundry that it can cope with a price drop to $1900. Rusal has not said that any smelter would be closed or even mothballed.
Nor have Chinese producers, who churn out just less than 1.5million ton s of aluminium a month, from many inefficient and power-greedy smelters.
Can the metal's price move further ahead? It might be difficult, with Alcoa itself forecasting little growth or even lower demand.
And China's demand growth is far from certain.

BHP Billiton to Halt Bauxite Exploration at Guinea’s Boffa Site

Bloomberg Businessweek - 27-January-2012

BHP Billiton Ltd. plans to halt bauxite exploration at its Boffa-Santou-Houda site in Guinea, the world’s biggest exporter of the ore, after prices for aluminum dropped, said Jean-Francois David, the company’s president in the West African nation.
“Explorations are stopped and all the activities will stop before June 30,” he said in an interview in Conakry, the capital, yesterday. The company will return its mining permits for the site to the government, David said.
The world’s biggest mining company is halting exploration as aluminum prices slumped 18 percent after reaching a peak last year of $2,797 per metric ton on May 3. David said the stop is not linked to planned changes in Guinea’s mining code, that will give the government a bigger stake in projects.
“This closing is not due to the exploration results or Guinea mining policy, but to the decline in alumina and aluminum prices, and the world financial crisis,” he said.
Bauxite is turned into alumina that is in turn refined into aluminum. About four tons of the mineral is used to produce a ton of metal.
Workers went on strike at Boffa-Santou-Houda Jan. 24, asking for a 200 percent pay increase, union leader Bafode Cherif Camara said. The demand doesn’t make sense, given the site’s closing, David said.
“We are ready for the resumption of the dialogue, but on a realistic basis,” he said.
--Editors: Emily Bowers, Karl Maier
To contact the reporter on this story: Ougna Camara in Conakry via Accra at ebowers1@bloomberg.net

UPDATE 1-RUSAL may cut aluminium output in next 18 months

MOSCOW, Jan 27 (Reuters)

* CEO says could cut output by 6 pct in next 18 months
* Statement follows output cuts by Alcoa, rivals
* Producers blame oversupply, weak prices (Adds background, analysts' comment)
By Alfred Kueppers
Russia's UC RUSAL , the world's largest aluminium producer, said it could cut output by 6 percent in the next 18 months, confirming comments by its chief executive reported in the media on Friday.
"It may be up to 6 percent, which we expect may happen in the next 18 months," Chief Executive Oleg Deripaska told Bloomberg Television, according to a company spokeswoman.
The company, which accounts for about 10 percent of primary global aluminium output, said last week that it had no plans to follow U.S. rival Alcoa Inc's lead in cutting production.
Aluminium, which has a wide range of industrial applications in sectors such as aeronautics and automobile production, is a key indicator of global manufacturing demand.
RUSAL said last week that its smelters could continue operations even if prices fall to $1,900 per tonne.
It enjoys a relatively low production cost because it sources 80 percent of its electricity from hydropower plants in Siberia, according to HSBC.
Benchmark three-month aluminium was up 0.3 percent at $2,284 per tonne at 1201 GMT on the London Metal Exchange, well above the levels RUSAL said are required to maintain production.
Prices ended last year near 18-month lows on concerns about economic weakness and oversupply, prompting Alcoa to cut output at several European smelters.
Norway's Norsk Hydro, and Australia's Tomago Aluminium, partly owned by Rio Tinto have since followed suit, but analysts say that much of global production remains in the red.
"Based on the latest cost curve of Brook Hunt, we calculate that at the spot aluminium price some 40 percent of global aluminium production (circa 19 million tonnes in 2012 estimates) is loss-making," HSBC analysts wrote in a recent note. (Reporting by Alfred Kueppers, editing by Jane Baird)

Power prices force smelter cuts

The Southland Times - 27-01-2012

The Tiwai Point aluminium smelter has shut down part of its production as low lake levels continue to keep spot power prices high.
New Zealand Aluminium Smelters general manager Ryan Cavanagh yesterday said the company had shut down 25 of its 672 cells to reduce power consumption to its reduction lines.
Mr Cavanagh could not say how much shutting down the cells would cost the company, but aluminium was being sold for about US$2200 (NZ$2691) per tonne and it was looking like hundreds of tonnes would be lost.
The continuing high spot power price was the cause and forced the smelter to begin shutting the cells down just over two weeks ago, he said. However, he did not want to shut down more than was necessary because they took time to start up again, he said.
"You don't want to just knee-jerk and shut everything down, because they take time to start up again ... but then obviously if things turn, you want to come back as quick as possible. We will keep them off as long as the power price is high." Mr Cavanagh said.
Two weeks ago smelter 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.
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.
The reduction in production has not resulted in any changes for staff.
Meridian Energy spokeswoman Michelle Brooker said the Waiau catchment, which includes lakes Te Anau and Manapouri, was at about 40 per cent capacity yesterday and about 32mm of rain had fallen into the west arm of Lake Manapouri, where the Meridian power station is, by 5pm. However, it was too early to say whether that would be useful, she said.
Fortunately, because it was summer, electricity demand was low and there was still time for the typical large summer rain events to hit the South Island and raise lake levels before winter, she said

Ravenswood plant dedicates $46M aluminum stretcher

Parkersburg News - 26-Jan-2012

RAVENSWOOD - The dedication of a $46 million aluminum stretcher at Constellium Rolled Products in Ravenswood shows a significant investment in the plant, the area and the future, officials said during a ceremony Wednesday.
Local, state and national officials as well as labor officials gathered at the Constellium plant, the former Alcan plant, for a ribbon-cutting ceremony to commemorate the commissioning of the 30 million-pound stretcher. Gov. Earl Ray Tomblin and former U.S. Rep. Richard Gephardt, D-Mo., were among the featured guests.
''This is a historic and symbolic day for the Ravenswood site,'' said Kyle Lorentzen, CEO of the Ravenswood operation. ''This stretcher will be a critical component of the continued improvement plan here. This is an important piece of equipment to us on an important day.''
The Ravenswood plant produces aluminum plate for aerospace and defense markets, as well as coil products for transportation, marine and industrial uses. Ravenswood is known for its wide-coil capabilities and stretchers that enable unique product creation.
The stretcher is a critical piece of equipment, unique to the Ravenswood facility, offering leading-edge technology and production capabilities that allows Constellium to provide high quality and value-added aluminum plate to its customers for use in a variety of industries, company officials said.
The stretcher reduces internal stresses in the metal created by other steps in the manufacturing process, officials said. .........

Alcoa Expanding Aluminum Lithium Capabilities to Meet Growing Aerospace Demand for Its Industry-Leading Alloys

BUSINESS WIRE - 25-Jan-2012

Alcoa today announced it is expanding its aluminum lithium capacity and capabilities at three locations around the world to meet growing demand in the aerospace market for its newest alloys. The alloys, introduced last year and now patented, allow airframers to build dramatically lighter and lower-cost airplanes vs. composite alternatives.
The new alloys provide the best strength-to-weight performance in Alcoa's aerospace alloy portfolio combined with better stiffness and corrosion resistance. The alloys are used in extrusions, forgings, sheet and plate applications across aircraft structures, including airplane wings and fuselage elements. The expansions follow discussions with airframers subsequent to the launch of the alloys last year.
"The demand we are seeing for aluminum lithium is an excellent example of the Alcoa Technical Advantage in action and is the result of our continued leadership in aerospace alloy development across our Alcoa aerospace businesses," said Eric Roegner, President of Alcoa Forged and Extruded Products. "When completed, our aluminum lithium supply chain will be the premier operation in the world, capable of making the widest breadth of products in the most efficient manner -- there will be nothing like it anywhere."
The largest of the aluminum lithium capacity expansions is a greenfield state-of-the-art facility to be constructed adjacent to Alcoa's Lafayette, Indiana plant. When completed the facility will produce more than 20,000 metric tons of aluminum lithium and be capable of casting round and rectangular ingot for rolled, extruded and forged applications. Alcoa plans to invest more than $90 million in this facility alone which will encompass approximately 115,000 square feet and create approximately 75 permanent high-value jobs, as well as approximately 150 additional jobs during the course of construction. Initial work on the new Lafayette facility has already begun and is expected to produce its first aluminum lithium by the end of 2014.
"In addition to producing a wide range of billet sizes up to 33-inches in diameter, we will also be able to produce slab capable of producing wing skin plate and fuselage sheet for any current or planned commercial air program," said Roegner. "Our process, thermal and filtration systems all will be state-of-the-art."
An economic development incentive package from the Indiana Economic Development Corporation (IEDC) and Greater Lafayette Commerce helped secure the selection of Lafayette for the expansion. The incentive package includes tax and financing credits as well as training grants for the Lafayette workforce and new employees. In addition, Alcoa and the United Steelworkers worked together to modify existing work rules to ensure the operational effectiveness of the new facility.
"Alcoa's expansion strengthens Indiana's reputation of manufacturing excellence," said Governor Mitch Daniels. "We are grateful that this global manufacturing leader continues to find the Hoosier State the most advantageous state for growth."
Alcoa is also expanding production at two other locations as a result of customer demand:
-- Alcoa's Technology Center in Alcoa Center, PA near Upper Burrell, PA where aluminum lithium capacity is being expanded 30 percent; and
-- Alcoa's Kitts Green plant in the United Kingdom where upgrades are underway that will create additional casting capacity.
In June of last year, Alcoa launched a series of new technologies that allow airframers to build dramatically lighter and lower-cost short-range airplanes at significantly lower production risk than composite-intensive planes. The new technologies:
-- lower the weight of the plane by up to 10% vs. composite-intensive planes;
-- lower the cost to manufacture, operate and repair planes by up to 30% vs. composite-intensive planes, and at significantly lower production risk;
-- allow for a 12% increase in fuel efficiency, on top of the 15% from new engines; and
-- deliver passenger comfort features equivalent to composite-intensive planes, such as higher cabin pressure, large windows and higher humidity.
"We have received great feedback from the market on our new solutions," said Mark Vrablec, President of Alcoa Aerospace, Transportation and Industrial Products. "The tide has certainly changed in the world of aerospace structural materials and that is a result of our technologists continuing their work to keep Alcoa at the forefront -- more than 90 percent of all the alloys used in the aerospace market today were developed by Alcoa," added Vrablec.
About Alcoa Aerospace
Alcoa Aerospace is comprised of 4 businesses with operations across the world totaling approximately $3 billion in revenues and #1 share positions in their markets: Alcoa Global Rolled Products and Alcoa Forgings and Extrusions serving the structures market; and Alcoa Fastening Systems and Alcoa Power and Propulsion. Alcoa's aerospace solutions run from nose to tail and from wing-tip to wing-tip. Alcoa has been at the forefront of every major milestone in aerospace history based on its commitment to continually innovate and a "beyond materials" philosophy -- where materials, structures, and designs work in concert to provide optimal solutions for customers.

Kaiser unveils $16 million cleanup plan

The Spokesman Review - 25-Jan-2012

Kaiser Trentwood’s plant along the Spokane River has a long, illustrative history. Built to produce aluminum for military planes during World War II, the factory later became a steady source of blue-collar jobs for generations of Spokane-area residents.
But the site bears the scars of nearly 70 years of heavy industrial use. The soil and groundwater surrounding the plant are polluted with hydrocarbons, some dating back to the Bunker C fuel oil used at the factory during the 1940s.
PCBs – which were added to hydraulic oils as flame retardants – are also present in the groundwater.
Kaiser Aluminum’s plans for a $16 million cleanup of historic pollution at the property over the next 30 years will be discussed at a Thursday meeting. Public comments on the plan will be accepted through March 6.
Cleanup of the 512-acre site is a top priority for the Washington Department of Ecology.
“It’s a large site with a significant amount of contamination over the aquifer and it’s very close to the Spokane River,” said Jani Gilbert, an Ecology Department spokeswoman.
The Spokane River violates state standards for cancer-causing PCBs, also known as polychlorinated biphenyls, which has led to health advisories for limiting meals of fish from the river. The Ecology Department is working with other agencies and partners to identify how the long-banned PCBs are getting into the river.
“Here’s a source that’s known, and it’s a big source, so we need to get it cleaned up,” Gilbert said. Bud Leber, Kaiser Trentwood’s environmental manager, said the company is committed to cleaning up the site and protecting the river’s water quality.
Kaiser has already spent $12 million on environmental remediation, he said. The company has installed 160 monitoring wells at the Trentwood property, skimmed 4,000 of gallons of oil from groundwater, removed underground petroleum tanks and hauled off 23,000 cubic yards of tainted soil. To keep plumes of polluted groundwater from reaching the Spokane River, an ongoing pumping and treatment system is in place, Leber said.
Based on extensive analysis, including tracking the chemical “fingerprints” of PCBs on the site, Kaiser officials believe that contaminants aren’t leaving the Trentwood property, Leber said. But Ecology Department officials say they need assurance that low levels of PCBs aren’t migrating into the river.
The company’s cleanup plans call for removing up to 20 feet of soil in polluted areas. Where pollution is deeper, the ground would be capped to prevent water from filtering through the site and mobilizing contaminants.
Kaiser officials have also been intrigued by a site where bacteria in the soil appear to be breaking down PCBs. “The biological activity is a bonus,” Leber said. “It’s almost like Mother Nature is saying, ‘We’ll jump on it from here.’ ”
Kaiser has proposed additional monitoring and studies of the bacteria’s actions. To date, company officials haven’t been able to pinpoint exactly what is happening, Leber said.
Ecology officials, however, say they would need hard evidence that bacteria is breaking down PCBs before the state officials would accept it as a cleanup remedy at Trentwood.
“We have no scientific documentation that that would work,” Gilbert said. “The whole thing about PCBs is that they persist for so long in the environment. We have not heard of a process that breaks them down.”

Alcoa bids to increase hydrogen chloride emissions limit

SteelGuru - 25-Jan-2012

ALCOA, which operates Australia’s largest aluminum recycling plant at Yennora is not planning to increase hydrogen chloride emissions only its emissions limit.
It is presently limited to releasing an average of 50 mg per cm of the gas each hour from its rotary furnace a limit imposed by the Land and Environment Court in 2006 but the company has asked Holroyd Council to double that limit.
It said that because emissions from the furnace are unpredictable, it needs the higher limit to avoid breaching the 50 mg per cm average which the Office of Environment and Heritage records show it did twice in 2010.
A company spokeswoman said that when averaged over one hour, rather than over the 4 hour cycle, there will occasionally be spikes above 50 mg per cubic meter depending on the contaminants in the scrap aluminum and where in the melting cycle the one hour sample is taken.
The request to change the emission limit averaged over one hour to 100 mg per cubic meter is to ensure compliance across the four-hour melting cycle it is not a request to increase emissions. The increase has been approved by the office and is in line with state regulations.
Emissions are expected to stay at the reported 2009 to 2010 level of 14,000 kilogram per year. Former Holroyd mayor and mathematician Mr John Brodie is not convinced that the present limit is insufficient.
He said that it can already accommodate spikes in emissions an argument councillor Ross Grove described as fearmongering at the last council meeting. Council will decide on the matter after a report is returned in the coming weeks, although Cr John Perry is content to let the Land and Environment Court decide. He added that Alcoa bypassed council to get approval in the first place and they should go back to the court and get their ruling on it. (Sourced from parramatta-advertiser.whereilive.com.au)

Glencore assessing Alcoa's Italian plant-ministry

Reuters Africa - 24-Jan-2012

* Glencore has lead and zinc ops in Portovesme
* Alcoa plans to close its smelter to cut global output, costs
MILAN, Jan 24 (Reuters) - Glencore International Plc will look into new possibilities for an aluminium smelter in Italy which the U.S. group Alcoa Inc plans to close, Italy's industry ministry said as it tries to keep the plant running and save jobs.
Alcoa said earlier this month it would close its Portovesme smelter on the Italian island of Sardinia and slash output at two Spanish smelters as part of a broader effort to cut its global output by 12 percent and reduce costs.
"The company (Glencore) has confirmed its intention to assess, starting in the next few days, the possible industrial and market prospects of Alcoa's plant," the ministry said in a statement on Tuesday after a meeting with Glencore's top management and Sardinia's President Ugo Cappellacci.
The ministry said last week it would meet potential new investors in the plant and was also committed to finding "sustainable solutions" for the problem of high energy costs, which had been raised by Alcoa.
Alcoa declined to comment on the matter as did commodities giant Glencore which has its own lead and zinc operations in Portovesme but has suspended the lead plant's production there since 2009.
Alcoa's decision to shut the Portovesme smelter, a major employer on the island, has run into fierce opposition from labour unions and island authorities, who say it would cost the jobs of about 1,500 people and hurt the economy.
In 2010, Italy passed a special decree offering favourable power supply conditions to some industrial consumers to convince Alcoa to keep its Italian plants working.

Production cost key determinant for aluminium prices: RBC Capital

Platts - 24-Jan-2012

London (Platts)--24Jan2012/836 am EST/1336 GMT
The marginal cost of production will be a key determinant for aluminium prices for the next three years, RBC Capital Markets said in a research note Tuesday. As part of its first-quarter outlook, the Canadian investment bank believed that due to high inventory levels and low capacity utilization rates, production costs would remain an important feature of the aluminum market.
"We expect inventories to remain above critical levels throughout our forecast period, limiting upside price potential," the bank said.
RBC Capital expects supply growth of 5.4% in 2012 and 7.1% in 2013.
This will put forecast global production at 45,962 million mt in 2012 and 49,224 million mt in 2013.
It believes that Chinese aluminium production increased by 7.5%, and by 6% in the Western world in 2011 which helped to keep the market in surplus last year.
However, the bank notes the recent production cut-backs and believes that there are likely to be more.
"The correction over the past six months brought the aluminium price down below the 90th percentile of the cash cost curve and has led to recently announced production curtailments. However, more closures are required to balance the market," the bank said.
Russian aluminium producer Rusal recently said that up to 3 million mt of aluminium capacity would have to be closed on the back of low prices. The bank expects demand to grow by 7.2% in 2012 and 2013 after increasing by an estimated 7.3% in 2011.
This means that global demand will increase from a forecast 42,989 million mt in 2011 to 46,063 million mt in 2012. Demand is forecast to grow to 49,368 million mt in 2013.
The bank is forecasting average prices of $0.95/lb ($2,094/mt) in 2012 and $1.00/lb ($2,204/mt) in 2013.
It expects prices to average $1.05/lb ($2,314/mt) in 2014.
Aluminium has been one of the best price performers on the London Metal Exchange so far this year and was trading at $2,227/mt at 1300 GMT on LMEselect, up 10% from a year low of $2,016/mt on 3 January.
Greg Smart, greg_smart@platts.com

Govt to Take Over Inalum

Tempo Interaktif - 24-Jan-2012

TEMPO Interactive, Jakarta:The government will take over PT Indonesia Asahan Aluminium (Inalum), which is currently controlled by the Japanese Aluminum Consortium (NAA). The contract will end by 2013.
State-owned Enterprises Minister Dahlan Iskan said the government had announced that the contract would not be extended. “The contract cites that there must be an extension after 30 years or it must be returned to the government in good condition,” he said.
The takeover will be controlled by the State Investment Center (PIP). Dahlan said several state-run enterprises had expressed interest in Inalum, including PLN, ANTM and PT Timah. “The tender will be won by the enterprise with the highest offer,” he said.

Why UC Rusal Counts So Heavy In Russian-Guinean Relations?

Business Insider - 23-Jan-2011

In Guinea, Russia has more valuable commercial interests than in any other country on the African continent. The Russian beneficiary is United Company Rusal, one fifth of whose bauxite reserves are in Guinea. Rusal’s voyage in Guinea has started in 2002 when it has received a 22 years concession to manage largest country’s bauxite combine Friguia.
The “magic deal” could occur only with the help of heavily corrupted leaders of Guinea — in 2006 President Lansana Conté, who lead the country to prosperity since 1984, allowed Rusal to privatize Friguia for ridiculous 19 million dollars. Unfortunately for Rusal the loyal to the company president has died “after a long illness”, without specified cause of death by the Guinean political leaders. Since then Rusal has started to lose its positions in the country and received various financial, ecological and labour complaints from the forthcoming leaders.
In 2008 Guinea faced the leadership of Moussa Dadis Camara, the head of a military junta. Camara launched various campaigns to break the relations of foreign companies who has worked in the country with Conté’s administration. In particular, Camara was heavily distracted with the unlawful privatization of Friguia by UC Rusal, so when aluminium company has launched its IPO in Hong Kong, Camara has asked for a compensation in the amount of 860 million dollars. The reason behind the request was to compensate ecological problems Rusal had brought to the country. Oleg Deripaska refused to pay and Rusal’s Guinean combines has faced protest movements organized by local workers — they blocked railroad routes to Friguia combine and another Rusal’s enterprise, Societe Bauxite du Kindia (SBK). Some ecological anti-Rusal protests has been launched even in Moscow.
Moussa Camara’s regime has not lasted for long and already in 2009 junta colonel was replaced by another military man. On 3 December 2009, an aide shot Camara during a dispute about the rampage of September 2009. Camara went to Morocco for medical care, while Vice-President (and defense minister) Sékouba Konaté flew back from Lebanon to run the country in Camara's absence.
Later on military leaders has gathered together to promise Guinean nation fair presidential elections without military interference and on 16 November 2010, Alpha Condé, the leader of the opposition party Rally of the Guinean People (RGP), was officially declared the winner of a 7 November run-off in Guinea's presidential election. He has promised to reform the security sector and review mining contracts if elected.
Rusal is “very unhappy with Alpha [Condé]” confides a source close to the president, while Russian sources claim that the company has even developed a plan regarding its actions in Guinea and worked out the ways to neutralize hostile actions of Guinean leaders on Friguia combine. Rusal is fighting back various protests and government actions which blocks company’s operation in Guinea and put its concession ownership under a huge doubt.
The document states that Rusal would cooperate with authoritative structures of Guinea in order to:
Seek arrests of individuals who had participated in the protest actions.
Continue the pressure on defense authorities and civil judges to lead investigations on leaders of unrests to the punishment procedures. Run serious of measures to replace Prefect of Fria city to another loyal official.
Run serious of measures in order to remove Minister Diallo and prohibition of his participation as country’s unions leader. Assist the formation of the government loyal to the Company and Russian Federation.
Organize productive collection of information in Ministry of Defense, General office of National Police, Ministry of Mines and other state supervisory offices.
On the one hand, following plan can be treated as an attempt to neutralize hostile actions against Rusal by Oleg Deripaska and his management in order to preserve their Guinean assets. However, on the other hand, above-mentioned procedures can be visioned as the subject of esteblishment of political influence or even an overturn in the country, as we all know how hostile Alpha Condé to UC Rusal and Oleg Deripaska is.
In parallel, Rusal is fighting back workers strikes on its other combine in Montenegrian Podgorica — Kombinat aluminijuma Podgorica (KAP), which currently belongs to Rusal has faced workers protests due to delays in wage payments, as combine is facing problems with production and sales since March of last year.

Fluctuations in world aluminium capacity

Business Standard - 23-Jan-2011

For its size and multi-country production facilities, frequent technology updates and a balance sheet making it a “confident company in a nervous world,” Alcoa of the US is seen as bellwether of the world aluminium industry. Therefore, when Alcoa reported a loss in the final quarter of 2011, the first since 2009 second quarter, due to wilting demand from packaging to construction to automobile sectors, our expectation of working of local aluminium makers during October-December period gets adequately moderated. The industry had to contend with a 12 per cent drop in aluminium prices in the December quarter and 27 per cent fall from the peak in April 2011.
B L Bagra, chairman of the National Aluminium Company (Nalco), says, “Smelting cost rises particularly on energy account are proving hurtful, but luckily demand for the white metal here is seeing steady demand growth of 9-10 per cent. The power sector will continue to generate strong demand for aluminium and we expect better buying soon from the construction and transport sectors.” The country is targeting additional power capacity creation of 100,000 Mw both in the 12th and 13th Plan. Renewal and building of transmission lines for power evacuation will call for large use of aluminium. Whatever that may be, local aluminium prices are settled by rates at the London Metal Exchange (LME).
Unlike in India where inventories of primary aluminium at the producer end have remained low, stocks with LME warehouses are now close to 5 million tonnes (mt). Europe, besieged by sovereign debt problems, is playing spoilsport for the aluminium market. Alcoa and leading research house CRU are ruling out any demand growth there for aluminium in 2012.
Debates are on as to whether Europe will be in the grip of a recession. But European traders are encountering higher financing costs. Banks, badly mauled during 2008-09 crisis and not inclined to take risks like in the past, are asking for adequate margins and also charging higher rates of interest. So, at every point in Europe – the trade, stockists and actual users – the attempt is to do with minimum inventory of aluminium. Combinations of near-term backwardation and higher financing costs are causing inflows of off warrant aluminium holdings into LME warehouses.
The answer to setbacks in aluminium prices in last year’s final quarter will be largely found in a report of Bloomberg Industries that in the earlier three quarters smelter production outpaced demand by 953,516 tonnes causing inventories to rise. As correctly anticipated by Nalco commercial director Ansuman Das, the three-month forward price has now made some fast recovery from a December end-January beginning low. “At that level of $2,000 a tonne, close to half the global aluminium capacity was found in the red zone. Some demand improvement will boost prices. That, I think, is happening outside Europe. The market has to recognise at some point that because of incremental production cost, aluminium has to have a higher floor,” says Das. So, the three month price now is over $2,160 a tonne.
According to Alcoa CEO Klaus Kleinfeld, despite European economic gloom, world demand will grow seven per cent this year against 10 per cent in 2011. But if China, where demand is set to rise 12 per cent, down from 15 per cent last year, is excluded, then aluminium use by the rest of the world will see growth of only four per cent. This besides, his forecast that the world will have an aluminium deficit of 600,000 tonnes in 2012 – this could be even more if China decides to go long in scrapping high cost smelters – should warm the cockles of the industry’s heart. The global deficit is based on the assumption that 1.1 mt of China’s 5.7 mt of unprofitable capacity will be taken offline. Industry officials will not rule out the possibility of another 1.2 mt of Chinese inefficient capacity being guillotined in case aluminium prices don’t rise fast enough. Doing away with such capacity will be to China’s advantage, since the industry there is import-dependent for raw materials, particularly alumina, has to put up with a rising energy bill and is frowned upon for environment fouling. Das says if China turns ruthless in getting rid of much of its unprofitable smelting capacity, that would give a leg-up to aluminium prices.
Rising energy and other input costs are to cause considerable churning in the world aluminium industry. Alcoa is to decommission 531,000 tonnes of smelting capacity, amounting to 12 per cent of its total. Rio Tinto is waiting for an “opportune moment” for divestment of 13 aluminium assets. Parallel to Chinese moves to shed unprofitable capacity, Shandong has announced plans to build an 800,000-tonne smelter, so also Chalco a 400,000-tonne smelter. Emirates Aluminium is to raise the Al Taweelah smelter to 1.3 mt by 2014 to make it the world’s largest single site smelter. Here Hindalco will have 1.7 mt capacity and Vedanta, including Balco, 2.5 mt capacity. Expect Nalco to build two new smelters of 500,000 tonnes capacity each. “You will see new power efficient smelters replacing inefficient capacity across the globe. After all, global aluminium demand is likely to double by 2020,” says Bagra.

Government Committed to Revitalising the Bauxite/Alumina Industry - Paulwell

Tuesday, 24 January 2012 09:30

Minister of Science, Technology, Energy and Mining, Hon. Phillip Paulwell, says the government is committed to revitalising the local bauxite/alumina industry, which has been ailing for some time.
“This sector is very important to us as a nation, not only for the revenue that it can bring, but in light of the fact that so many Jamaican communities depend on bauxite for their survival,” the Minister stated, while speaking at a press briefing at the Petroleum Corporation of Jamaica, in New Kingston, last week.
Mr. Paulwell said that he has commenced discussions with key players and stakeholders in the sector, with a view to identifying the various concerns and to work at creating solutions.
Meanwhile, the Minister further noted that Jamaica has deposits of some of the highest quality of several industrial materials, including limestone and gypsum, representing a largely untapped industry.
“We will be looking seriously at developing those resources, which will ultimately improve our export potential with focus on value-added production and foreign exchange earnings, as well as adding jobs in many different sectors,” he said.
Mr. Paulwell said the Government is currently working on a mining policy, which is being finalised, and that the public would be informed on the issues surrounding the policy as soon as he receives further information.

New alert over Rio Tinto threat to Great Barrier Reef

January 24, 2012 12:00AM

RIO Tinto's $1.4 billion bauxite mine expansion on Cape York has become the latest flash point over the threats caused by increased shipping in the Great Barrier Reef due to the mining boom.
The federal government has been forced to reopen consideration of Rio Tinto's South of Embley project and may put new conditions on it to protect the reef.

Norsk Hydro : Hydro Green Aluminium Award

01/23/2012 | 09:43am

Students, researchers and others can compete for a $35,000 prize in the Hydro Green Metal Award for improving the climate footprint of aluminium production.
We need to be smarter about how we use our resources, and aluminum is part of the solution.
With its light weight, it contributes to more fuel-efficient modes of transportation and less energy demanding buildings. Also, it's remarkable recycling abilities gives it a long life - of all the aluminium produced since the birth of the industry more than 100 years ago, 75 percent is still in use.
Still, Hydro recognizes that there is more potential for improving the climate footprint of aluminium production and has therefore established the Hydro Green Metal Award in cooperation with Technoport, a Norwegian organization that fosters dialog on science with business and policymakers.

This prize will give tribute to researchers or students that contribute to:
• a solution for more energy-efficient processes and production of aluminum
• new applications of aluminum products with a significant benefit to the climate

The jury is led by Hydro President and CEO Svein Richard Brandtzæg and includes Prof. Mark E. Schlesinger, Missouri University of Science and Technology, U.S.; Prof. Jim Metson, University of Auckland, New Zealand; and Prof. Arne Bredesen, NTNU, Norway.
Nominations may be sent to Trond Furu in Hydro (trond.furu@hydro.com) no later than February 20, 2012. Submissions should be in PowerPoint or similar format.
The winner will be announced at Technoport Awards 2012 in Trondheim on April 17. In addition to the $35,000, the winner will receive a work of art at the ceremony.

Aluminium Smelting Succumbs To Costs

FNArena News - January 23 2012

By Greg Peel
Aluminium is the costliest of the standard base metals to produce, with final smelting requiring significant inputs of water and power. Power has proven the aluminium smelting industry's biggest problem, being the greatest contributor to a 30% increase in production cost over the past two years.
The rising cost curve has lifted the price at which many global smelters turn margin-negative, such that recent price pressure has seen a much higher cut-off price than was experienced in the 2008-09 period of aluminium price weakness. Barclays Capital notes 1.6Mt/y of capacity has been cut back over the past month. We have entered 2012 with 45% of global (ex China) smelters experiencing negative margins based on London Metals Exchange pricing. Were costs back at 2008-09 levels, only 4% would be in the same predicament. If aluminium prices do not rise significantly Barclays suggests 3.6Mt/y of capacity is at risk of closure.
One would expect China's aluminium capacity to be worse off, given 80% of the world's top 20% most expensive smelters are located in China. However the current Shanghai Futures Exchange aluminium price is trading at a premium to the LME price of some US$500/t (latest LME spot US$2219/t), meaning only 250kt/y or 1% of Chinese capacity has been idled due to low prices, Barclays notes, with another 750kt/y idled since the September quarter due to power shortages.
Yet as quickly as China's smelters are idled, further new smelters are being ramped up. December saw a 15.5% year-on-year rise in Chinese aluminium output – below the 2011 peak but not showing any sign of price-related reductions.
The result is that forecasting aluminium prices into 2012 is a difficult task. If prices fall, smelters shut down to reduce supply and hence prices are supported. If prices rise, smelters come back on line again to increase supply and price rises are curtailed. Barclays notes recent production cuts have reduced the size of the expected 2012 surplus to 284kt from 743kt in 2011 and this provides a well defined level of aluminium price support at US$2000/t.
Further smelters shut-downs could well put production into deficit for the year, however inventories are at record levels and a small surplus is expected in the Chinese domestic market in 2012. Hence Barclays sees limited potential for upward price pressure.

TDP will scrap mining project

TNN | Jan 23, 2012, 01.43AM IST

VISAKHAPATNAM: Igniting a fresh debate on bauxite mining, actor Balakrishna said there is no question of going ahead with the project once Telugu Desam Party comes to power. Endorsing Balakrishna's views, forest and environment minister Satrucharla Vijayarama Raju, who was also in the town, said the government would go by the larger public opinion on the issue.
After unveiling a statue of NTR at Paderu on Sunday, Balakrishna said TDP is firmly opposed the bauxite mining in the Agency areas and added that his party would never support anti-people's policies. The actor, who is touring various parts of the state, said that TDP government would scrap the project without any hesitation. He said the local tribals were up in arms against the project. "If the people are not willing, why should the government pursue the project," he added. He asked the government to immediately cancel the project.
Meanwhile, the minister said the government would certainly look into the complaints of the tribals before going ahead with the project. He, however, said the government would also work towards creating awareness among the tribals. He said development of backward areas is not possible without new industries. "People sacrificed their lives for Visakha Steel Plant and VSP today is generating employment and revenue," he pointed out. The minister said despite strong opposition from the tribals and people's organizations against the proposed tiger reserve project in Adilabad, the government would go ahead with the project.

Vimetco appoints Romanian Gheorghe Dobra as CEO

Romania-Insider.com - 23-Jan-2011

Gheorghe Dobra, the general manager of Alro Slatina, has recently been appointed executive member of the Board of Directors and Chief Executive Officer of Vimetco. He will hold this position until the next meeting of the company’s Extraordinary General Meeting of Shareholders, to be organized this year, according to a statement from the company.
Gheorghe Dobra has been Alro Slatina’s general manager since January 1993. See his CV here.
Alro is a subsidiary of aluminum producer Vimetco, with major production assets in Romania, Sierra Leone and China, and a holding company in The Netherlands. Alro is one of the largest aluminum production facilities in Central and Eastern Europe measured by volume, with an installed production capacity of 265,000 tonnes per year.
In the first nine months of 2011, Alro posted a turnover of around EUR 404 million (RON 1.7 billion) and a net profit of EUR 52.7 million (RON 222 million), according to the company.

Edgar Kaiser Jr. Dies at 69

New York Times - 22-Jan-2012

Starting in 1914, Henry J. Kaiser built one of the world’s largest business empires, encompassing ships, cement, steel, aluminum and even kitchen sinks. In the 1970s his grandson Edgar F. Kaiser Jr. began methodically dismantling it — even as he built his own.
When Edgar died at 69 on Jan. 11 in Toronto, he was widely recalled as the former owner of the Denver Broncos who had engineered the trade that brought the quarterback John Elway, later to be named to the Pro Football Hall of Fame, to the team in 1983.
But there were other sides to his life that are less well known. He headed Canada’s largest coal producer and the country’s seventh-biggest bank. He was a recorded musician. He held a speed record for flying around the world in a small plane. And he once had a dream of producing a vending machine to make instant French fries from potato powder. That venture sputtered and failed.
Undeniably, Mr. Kaiser’s shining triumph was persuading the Baltimore Colts to trade Elway to the Broncos, a franchise he bought in 1981 for $33 million. Mr. Kaiser quietly and relentlessly stalked the Colts owners — not forgetting to point out to Elway that both of them were Stanford alumni. Elway had been the National Football League’s No. 1 draft choice in 1983, and the Broncos gave up their own first-round pick and two other players to get him.
Mr. Kaiser sold the Broncos in 1984, doubling his original investment.
Still, his most historic role was an unwanted one: selling off many of the assets that his grandfather had combined to create one of the nation’s most powerful economic engines, the conglomerate Kaiser Industries.
He did try to preserve that heritage. He even moved into an apartment at Kaiser’s famed but troubled steel plant in Fontana, Calif., in a vain effort to reverse the company’s fortunes personally.
But the empire was ultimately taken apart, its pieces sold off. The Fontana plant was dismantled and sent to China.
This was not the legacy Mr. Kaiser had wanted to leave. His ambition had always been to start and direct things, not tear them apart, even if his obligation was to maximize shareholders’ return by unloading operations that had become worth more than their stock prices.
He had found that opportunity in Canada in 1970 when he joined Kaiser Resources, an energy-producing unit of Kaiser Industries.
“He is a builder,” Edgar Sr. once said of his son. “I think he’s kind of got it in his heart that he’s going to build Kaiser Resources bigger than all three of those other Kaiser companies,” referring to Kaiser’s giant steel, aluminum and cement companies.
At Kaiser Resources, Mr. Kaiser rose to chairman and chief executive. Under his watch it produced more coal than any other Canadian company, and he expanded it by buying the Canadian assets of Kentucky-based Ashland Oil. In 1980 he sold Kaiser Resources at a big profit.
The hope was that the proceeds might save the family empire, but they were not enough and, anyway, he had made it clear that he did not want to run the family shop even if it were preserved.
“The fun of building the Kaiser companies was the fun that my grandfather and the men that worked with him had,” he told The Los Angeles Times in 1985. “And my life’s ambition was not to try to somehow achieve the top of administering what they had had fun building.”
So Edgar Kaiser Jr. stayed in Canada, where he had become a citizen. He bought the Bank of British Columbia, a regional bank that challenged Canada’s big five banks in some markets until plunging resource prices put it under. For years afterward he popped up in deals in real estate, waste management and other sectors. The French-fry vending machine venture ended in bankruptcy in 1994.
Mr. Kaiser devoted much of his time to the Kaiser Foundation, which he started in Vancouver, British Columbia, to promote compassionate treatment of drug abusers. The foundation announced his death, but did not give a cause.
Maclean’s magazine once described Mr. Kaiser as “a loner who has never been clubby and has never worried about society’s niceties or what people think of him.” So when details of his private life leaked out, they were eagerly printed. How, for instance, when his house in Vancouver caught fire, he rushed to rescue his Lamborghini and Porsche. Or how he demolished a four-year-old mansion so he could replace it with a better one.
Edgar Fosburgh Kaiser Jr. was born on July 5, 1942, in Portland, Ore., graduated from Stanford in 1965 and earned an M.B.A. from Harvard in 1967. He worked for the United States Agency for International Development as an economist in Vietnam. He was a White House fellow in the Johnson administration and an aide to Interior Secretary Walter J. Hickel in the Nixon administration.
It was his father who had asked him to come back to Kaiser — a request he accepted with sadness, he told The Los Angeles Times, because he knew it would mean dismantling his grandfather’s great achievement. His father died in 1981.
In 1969, as an advance man for a Nixon trip to Asia, he met a Pan Am flight attendant, Lilja Arkolainen, whom he divorced his first wife, the former Caroline Orr, to marry in 1974. That marriage, too, ended in divorce. His survivors include his wife, Susan; his son, Edgar III; and his daughter, Suki Kaiser.
Mr. Kaiser raced cars, motorcycles and sailboats; navigated his yacht up the Amazon; and in 1998 released a soft-rock CD called “Threads of My Life,” on which he sang his own compositions. In 1988 he set the around-the-world record for a medium-weight airplane, and after landing he drove his 8-year-old son to school. Once inside, he grabbed a globe to give the class a geography lesson.

Vedanta to meet MoEF officials regarding Orissa refinery

22 JAN, 2012, 11.40AM IST, PTI

NEW DELHI: Vedanta Aluminium plans to meet officials of the environment ministry "soon" to chalk out its strategy related to expansion of alumina refinery in Orissa, following rejection of its review petition by the Orissa high court last week.
"There is no stricture against us by the (Orissa) High Court. Now, we will have to sit with ministry of environment and forests (MoEF) to decide further course of action," Vedanta Aluminium President Mukesh Kumar told PTI.
He declined to give any particular date by saying that it will be held "soon".
The Orissa high court last week rejected a review petition of the company in which it had sought reconsideration of the decision on not permitting Vedanta Aluminium to expand its refinery's capacity to 6 million tonnes per annum (MTPA).
However, Kumar clarified that the Orissa high court has declared environment ministry's circular of November 16, 2010 as illegal and the petition has been dismissed due to this.
Vedanta had sought permission for expansion under this office order of the MoEF, he said.
"Orissa high court has not rejected Vedanta Aluminium's request. In fact, they have questioned the legality of the action taken by the MoEF as in the eyes of the high court, circular of November 16, 2010, issued by the MoEF is illegal and any action taken based on it will also be illegal," he added.
The MoEF circular deals with procedures to deal with cases involving violation of Environment (Protection) Act, 1986 or Environment Impact Assessment (EIA) Notification, 2006.
In October, 2010, the environment ministry had ordered to stop work at Vedanta's alumina refinery site, after an MoEF panel found that the company was carrying out expansion work with out the environmental clearance.
The Vedanta expansion project envisages to have 6 MTPA alumina refinery, along with a captive power generation capacity of 285 MW at an estimated cost of USD 5.6 billion.
Later, the Anil Agarwal-promoted firm, which has the permission to run 1 MTPA refinery, had sought clearance for expansion under the MoEF's November 16, 2010 circular, although here also, it was denied permission.
According to the procedures laid out in the said circular of the MoEF, all cases of violation will be considered as per the recommendations of the Expert Appraisal Committee of the ministry or a similar state committee.
It also says that the process of environmental clearance will have to be started afresh and it will not be construed at regularisation for violation of the EP Act, 1986 or EIA Notification 2006.
Besides Vedanta, many companies, whose projects were found continuing without the green nod, had sought clearance under the circular. This includes projects like Jindal Power's Tamnar power project in Chhattisgarh and Lavasa project of HCC.

Dar firms worry over power bill

Posted Sunday, January 22 2012

The recent electricity tariff hike in Tanzania has put Pankaj Kumar, chief operating officer at Aluminium Africa Tanzania Ltd, in a tight spot.
“The new rates will make our company uncompetitive in the East African region,” he said.
Aluminium Africa Tanzania Ltd (Alaf), a major manufacturer and exporter of iron sheets and related products, has had its operations affected by the Tanzania Electric Supply Company’s decision to raise electricity tariffs by 40 per cent, from Tsh84 (US cents 5.4) to Tsh118 (US cents 7.6) per unit.
According to Mr Kumar, the long term solution to the problem would be for the government (through Tanesco) to increase generation of power from natural gas.
“If more of our electricity came from natural gas, our production would be secured.
The tariff hike isn’t the only issue because even with the upward adjustment the energy quality and quantity are still a problem,” said Mr Kumar.
Unscheduled outages and voltage deficits are still the norm, he said.
“The power utility must look for cost effective methods to generate power and also improve transmission infrastructure,” said Mr Kumar.
Alaf is among many Tanzanian businesses weighing their options following the Energy and Water Utilities Regulatory Authority, Ewura’s recent approval of a 40.9 per cent increase in the price of electricity.
A senior lecturer at Mzumbe University Dar es Salaam Business School, Dr Honest Ngowi, said the hike will add to the hard economic situation in Tanzania.
“The increased production cost is not good for business and the country’s investment competitiveness,” he said.
The Confederation of Tanzanian Industries estimates 50 companies closed shop last year, after the country’s energy tariffs went up 18 per cent. With this year’s increment being higher, more are likely to close shop.
Analyst say heavy users of electricity are the most vulnerable to the price increase.
“Manufactures like cement producers face the greatest threat from the increments as energy costs is a major production cost,” Eistein Kihanda, an analyst at IceaLion group said.
Even then, energy costs in Tanzania are still the lowest in the region, with a Kilowatt costing US cents 11 compared with UIS cents 13 in Uganda, US cents 16 in Kenya and US cents 24 in Rwanda.
The only relief for Tanzanian consumers and businesses is that the raise was far less than the 155 per cent hike that Tanesco had applied for last November.
Other sources told The EastAfrican that the actual increase was much higher “but the government is shouldering the 60 per cent to a tune of Tsh200 billion.”
Minister for Finance Mustafa Mkulo confirmed to The EastAfrican that the government had forgone a huge debt owed by the utility.
“It is our responsibility as government to see to it that consumers are at least cautioned instead of lumping all the costs on them and at the same time making sure that Tanesco continues to function,” said Mr Mkulo.

Azerbaijani President opens Ganja aluminum factory complex

Trend.az - 21-Jan-20012

Azerbaijan, Baku. President of Azerbaijan Ilham Aliyev has today attended the opening of the Ganja aluminum factory complex.
"DET AL" aluminum complex covers the total area of 74 hectares. It features electrolysis, anode and metal factories. The foundation stone of the complex was laid in 2008. The construction of the complex involved over 2,000 people. The facility`s preliminary manufacturing output is 50,000 tons of aluminum per year.
The complex created 640 jobs at the preliminary stage, with the average monthly salary being AZN450 or nearly $580. The President viewed the complex`s electrolysis factory. Raw material for the factory is purchased from the Netherlands, Indonesia, China, Russia, Mongolia, Latvia, Venezuela and Tajikistan.
The Head of State visited the complex`s automated control center.
He then launched the metal factory, where he viewed production process.
The President the proceeded to the site where a steel factory complex will be built. He was informed that the complex would include several factories. The President was told that $630 million will be invested in the construction work, which will be completed in 2016. The construction work will involve 3,800 people. The President also met the facility`s employees and members of the general public.

RUSAL installs equipment at Krasnoyarsk aluminium smelter to broaden range of alloys

Saturday, 21 Jan 2012

RUSAL the world’s largest aluminium producer announced the development and launch of a unique magnetic hydrodynamic mixer which will enable the Krasnoyarsk aluminium smelter’s cast house to extend its alloy product range. The cost of the new equipment amounts to USD 2 million.
The magnetic hydrodynamic mixer will enable the Krasnoyarsk aluminium smelter to produce 1000, 3000, 5000 and 8000 series alloys and to increase the production quality. In particular, the new inductor can mix metal in 100 tonne holding furnaces with the use of a magnetic field, without the metal inside ever being touched. As a result, the smelter will produce top quality rolling slabs, which can be used for cans and printing production.
The equipment will allow KrAZ to increase its exposure to most in-demand alloys. The smelter’s top priority is to develop strong ties with consumers from Asian countries such as Japan, China, and South Korea while increasing the share of orders from Europe and CIS.
The new equipment is installed on the casting assembly which includes two 100 tonne mixers. Can alloys include higher-melting-point materials: manganese, iron, titan. To obtain an alloy homogeneity in terms of chemical composition and temperature, the mass must be well mixed. Magnetic hydrodynamic mixer performs this operation with greater efficiency, saving energy and reducing sludge formation.
Magnetic hydrodynamic mixer was developed jointly by Krasnoyarsk scientists and metallurgists. The new equipment was developed, delivered and installed by the Krasnoyarsk Research and Production Centre for Magnetic Hydrodynamics. While the equipment was being put into operation, an active part was taken by technicians of all of RUSAL’s business units based in Krasnoyarsk: KrAZ, Engineering and Technology Centre and Russian Engineering Company branch. The project was supported by the Krasnoyarsk Science fund.
Mr Viktor Mann Technical Director of UC RUSAL’s said that “The development of Krasnoyarsk scientists is of interest to all aluminium smelters in Russia and abroad. Although magnetic hydrodynamic mixers have been installed and are being successfully operated by nearly all RUSAL’s Siberian smelters, this particular installation is unique. For the very first time in the history of non ferrous metal production, a magnetic hydrodynamic mixer was incorporated into existing production process with production suspended for just 10 days. During this time, we changed the design of the mixer, mounted a drawer made of non-magnetic steel and installed an inductor.”

Italy eyes investors for Alcoa plant in Sardinia

Reuters Africa - 20-Jan-2012

* Government to meet potential investors next week
* Alcoa plans to close Portovesme to cut output, costs
* Alcoa declines comment on investor interest in Portovesme
By Svetlana Kovalyova
MILAN, Jan 20 (Reuters) - Italy is looking for new investors to take over an aluminium smelter in Sardinia, which U.S. giant Alcoa plans to close, to soften the blow to the island's economy and save jobs, Italy's industry ministry said on Friday.
Alcoa said earlier this month it would close the Portovesme smelter in Italy and slash output at two Spanish smelters as part of a broader effort to cut its global output by 12 percent and reduce costs.
Italy's industry ministry said in a statement it was committed to finding "sustainable solutions" for the problem of high energy costs, which had been raised by Alcoa and "which is one of the conditions for competitiveness of the site".
"At the same time, the government and regional authorities are planning a series of meetings with investors who have expressed interest in the plant," the ministry said.
The statement was released after a meeting between undersecretary Claudio De Vincenti, Sardinia's President Ugo Cappellacci and other senior officials from the island.
The ministry could not provide more details about potential investors, a spokesman said. Alcoa declined to comment on the matter.
Alcoa's decision to shut the smelter, a major employer on the island, has run into fierce opposition from labour unions and island authorities, who say it would cost the jobs of about 1,500 people and would hurt the economy.
On Friday, the government reiterated calls for Alcoa to suspend a collective dismissal procedure, known as mobilita in Italian, which usually leads to closing a business, and urged the U.S. group to work with it on the plant's future.
Alcoa rejected such proposals last week and confirmed its decision to close the Portovesme smelter, one of the most expensive plants in the group.
In 2010, Italy passed a special decree offering favourable power supply conditions to some industrial consumers to convince Alcoa to keep its Italian plants working.

Vietinbank to loan US$100 million for mining

SGGP - 20-Jan-2012

Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) on January 19 signed an agreement to provide a VND2.1 trillion (US$100 million) loan for the Nhan Co Alumina mining project in the central highland province of Dak Nong.
The bank has inked a credit contract with the Vietnam Coal and Mineral Industry Group (Vinacomin), the project's investor, in Hanoi.
The Nhan Co bauxite-alumina project comprises of two components. The first will be a bauxite refining plant, expected to supply 1.65 million tons of bauxite each year. The second will be an alumina plant with capacity to produce 650,000 tons per year.
The project is expected to foster sustainable socio-economic development, security and political stability in the Central Highland and accelerate the regional economic restructuring from agro-forestry to a multi-sector economy with industry and services as its basic components.
Under an approved plan for the period 2007-2015, Vietnam will build a number of alumina plants with a combined output of 6.4 million tons per annum.
On the same day, Vietinbank held a ceremony to hand over 200 houses to poor households in Kon Tum Province. The bank also offered 200 Tet gifts, worth more than VND500 million, to poor households.

Alcan's smelter cuts stir N.American rod market

London South East - 19-Jan-2012

NEW YORK, Jan 19 (Reuters) - A two-week old force majeure at Rio Tinto Alcan's Alma aluminum smelter in Quebec has caused panic among cable and wire makers who rely on the plant for high-quality rod and has forced nearby customer Novelis to source alternative raw material, producers and customers said on Thursday.
The suspension of two-thirds of output from the 438,000 tonne-per-year smelter in early January due to a labor dispute has exacerbated already-tight rod supply in North America and given regional premiums a much-needed boost, they said.
'It certainly has upset the market,' said one cable manufacturer who sources aluminum rod from Alma, which is part of Alcan's vast Saguenay-Lac-Saint-Jean complex on Canada's east coast.
The company, a unit of Anglo-Australian mining giant Rio Tinto, was forced to slash output, cutting off supply to its rod mill and disrupting molten metal deliveries, after it locked out unionized workers due to a dispute over demands to limit the use of subcontract workers and guarantees of a certain number of union jobs at the plant.
Two weeks in, there is no sign of an immediate resolution. No new talks are scheduled with the union, a Rio Tinto Alcan spokesman told Reuters this week.
The spokesman declined to comment on the impact of the suspension, but said, 'We are working with our customers to minimize the impact of the labour disruption and are in constant contact with them.'
INSTANT IMPACT
The impact of news that Alcan could not meet all its contractual commitments was instant, with rival rod suppliers fielding calls from worried cable and wire makers looking for high-purity metal used in electrical transmission lines for housing, power grids and the aerospace sectors.
'Alma's rod wheel (is) idle and so it does have an impact. The reaction was immediate,' said a source at a rival producer who scambled to find fresh supplies to meet the unexpected demand.
And those with substitute supply will be paid handsomely.
'The price of the market is going to be reflective of that ... We are seeing it on both on the inputs and certainly on the output,' the cable maker said.
The shutdown also hit Novelis, whose Saguenay Works, just 25 miles (40-km) from Alma, uses its molten metal to make hot-rolled product, a spokesman said.
The world's largest flat-rolled products company has had to find alternative metal and scrap to feed its mill.
'The flow of molten metal from Alma to us has been affected by their reduced capacity, but we are able to compensate so that at the moment, the impact to us is minimal,' he said.
RISING DEMAND IN A SMALL MARKET
The outage is hitting at the time of year when cable and wire makers typically start building inventory ahead of the busier second and third quarters, exacerbating already-tight market conditions.
'For the last six to nine months, the rod market was tight anyway. This only adds severely to that pain,' said the cable manufacturer.
The effect on this niche market, which is relatively small compared with other aluminum products such as billet, and out of the global 45-million tonne market, is all the more severe because production of higher-quality metal in North America is limited to three other smelters.
'When you curtail one of those, it gets tight in a hurry,' said Lloyd O'Carroll, senior vice president and metals equity analyst with Davenport & Co, estimating North American aluminum wire rod demand, including insulated and covered wire as well as aluminium cable steel reinforced (ACSR), at around 400,000 tonnes in 2011.
Cable makers have already agreed to fork out higher premiums this year than 2011 due to rising demand and may have to rely on imports if the lock-out is prolonged.
'To support the output or the volume that has been lost, not only is it going to be domestic production from the limited players that there are, somebody is going to have to bring rod into this country,' the cable maker said.
The flurry of activity in Quebec breathed new life into the otherwise stagnant North American market.
Alma's problems alongside Alcoa Inc's decision to shut some idled U.S. smelting capacity permanently and the 50-percent suspension at another Alcan Quebec smelter, Shawinigan, have helped to stabilize Midwest P1020 ingot premiums between 7.4 cents and 8 cents per lb after a lackluster end to 2011, market participants said.
Scrap tightness also helped, said a Midwest trader, who had seen premiums rise to 7.5 cents from 7.4 cents in December.
'It's the scrap tightness and not significant volumes available from the producers. It seems like they are playing the premium, holding out for a higher premium.
'I think 8 cents by the end of February, or the middle of March, sounds reasonable,' he said. (Reporting by Chris Kelly; Edited by Josephine Mason) Keywords: ALCAN/ROD (chris.kelly@thomsonreuters.com)(646 223-6042)

HC rejects VAL's review petition

Business Standard - 19-Jan-2012

In a major setback to Vedanta Aluminium Limited (VAL), the Orissa High Court on Thursday rejected its review petition for reconsideration of the decision on not allowing the company to expand the capacity of its Lanjigarh alumina project.
Reacting to the High Court verdict, VAL counsel Prashant Nayak said, “we will challenge the verdict in the Supreme Court.”
The aluminum major had filed a review petition after the High Court in July last year had rejected the writ petition of the company and upheld the Centre's decision to stall expansion of its refinery plant at Lanjigarh.
In December last year, the Union Ministry of Environment and Forest had also halted the issuance of the term of reference (ToR) in favour of Vedanta VAL till the disposal of the review petition.
Vedanta proposed to expand the capacity of its 1 million tonne per annum (MTPA) alumina refinery to 6 MTPA and also to enhance the captive power generation to 285 Mw from existing 75 Mw at its facility at Lanjigarh, where the company planned to invest $ 8.4 billion.
The MoEF, following a report from the Saxena Committee that VAL was carrying out the expansion programme without any environment clearance, had stopped the work on October 20, 2010.
Though VAL had applied for MoEF nod for the expansion project in August 2007, it had gone ahead with the work without getting the clearance.
While a substantial expansion work was in progress, the ministry invoking its power under the Environment (Protection) Act-1986, ordered the company to maintain status quo at the plant site and directed the Orissa Government to take legal action against the company for violating the Environment Impact Assessment (EIA) notification of 2006.
Challenging the MoEF order, VAL had moved a writ petition in the high court, urging the court to quash the ministry’s order as it would hamper the socio-economic development of the area.

Aluminum May Extend Advance to $2295 After Breakout: Technical ...

Bloomberg - 19-Jan-2012

Aluminum, the second best-performing metal on the London Metal Exchange this year, may extend a rally to $2,295 per ton in the next few weeks, according to technical analysis by Commerzbank AG.
“Aluminum has maintained its break higher and continues to correct higher,” Karen Jones, a Commerzbank technical analyst in London, wrote in a Jan. 18 report. The erosion of the December high of $2,168 suggests an extension of the rally, she said in a telephone interview today.
Aluminum for delivery in three months on the LME rose as much as 1.3 percent to $2,233 a ton, the highest price since Oct. 31, and traded at $2,228 a ton by 6:47 p.m. Seoul time. “We believe that the market has some unfinished business on the topside near term and we would allow for an extension of the rally to the $2,278/95 resistance,” Jones wrote. Resistance refers to levels where sell orders may be clustered.
Technical analysts watch for patterns on daily charts, such as moving averages and resistance levels, for clues to price direction.

UNITED COMPANY RUSAL : UC RUSAL installed unique equipment at ...

4-traders (press release) - 19-Jan-2012

Moscow, 19 January 2012 - UC RUSAL (SEHK: 486, Euronext: RUSAL/RUAL, MICEX: RUALR, RTS: RUALR), the world's largest aluminium producer, announces the development and launch of a unique magnetic hydrodynamic mixer which will enable the Krasnoyarsk aluminium smelter's cast house to extend its alloy product range. The cost of the new equipment amounts to USD 2 million.
The magnetic hydrodynamic mixer will enable the Krasnoyarsk aluminium smelter (KrAZ) to produce 1000, 3000, 5000 and 8000 series alloys and to increase the production quality. In particular, the new inductor can mix metal in 100-tonne holding furnaces with the use of a magnetic field, without the metal inside ever being touched. As a result, the smelter will produce top quality rolling slabs, which can be used for cans and printing production.
The equipment will allow KrAZ to increase its exposure to most in-demand alloys. The smelter's top priority is to develop strong ties with consumers from Asian countries such as Japan, China, and South Korea while increasing the share of orders from Europe and CIS.
The new equipment is installed on the casting assembly which includes two 100-tonne mixers. Can alloys include higher-melting-point materials: manganese, iron, titan. To obtain an alloy homogeneity in terms of chemical composition and temperature, the mass must be well-mixed. Magnetic hydrodynamic mixer performs this operation with greater efficiency, saving energy and reducing sludge formation.
Magnetic hydrodynamic mixer was developed jointly by Krasnoyarsk scientists and metallurgists. The new equipment was developed, delivered and installed by the Krasnoyarsk Research and Production Centre for Magnetic Hydrodynamics. While the equipment was being put into operation, an active part was taken by technicians of all of RUSAL's business units based in Krasnoyarsk: KrAZ, Engineering and Technology Centre, and Russian Engineering Company branch. The project was supported by the Krasnoyarsk "Science" fund.
"The development of Krasnoyarsk scientists is of interest to all aluminium smelters in Russia and abroad. Although magnetic hydrodynamic mixers have been installed and are being successfully operated by nearly all RUSAL's Siberian smelters, this particular installation is unique. For the very first time in the history of non-ferrous metal production, a magnetic hydrodynamic mixer was incorporated into existing production process with production suspended for just 10 days. During this time, we changed the design of the mixer, mounted a drawer made of non-magnetic steel and installed an inductor," said UC RUSAL's Technical Director Viktor Mann, commenting on the specialness of the equipment.

Romania's Alro May Reduce Output on Low Electricity Supplies

BusinessWeek - 19-Jan-2012

Jan. 19 (Bloomberg) -- Romanian aluminum smelter Alro SA may temporarily halt some production, lowering total capacity, or restructure operations as power supplies from hydropower generator Hidroelectrica SA falter.
Alro, majority owned by Vimetco NV, is trying to avoid an output cut as Hidroelectrica is only providing about 50 percent of needed electricity, forcing the smelter to buy the rest from the overnight market at much higher costs, the company said today in a filing to Bucharest Stock Exchange.
“We are focusing now on maintaining the activity,” Alro Chief Executive Officer Gheorghe Dobra said in the statement. “We are confident that we’ll find an acceptable solution regarding the electricity supplies, and we’ll be able to implement our long-term development strategy in Romania.”
Alro plans to build its own gas-fired power plant with a total capacity of 250 megawatts after it received financing from the European Bank for Reconstruction and Development and other commercial banks, the company said. The company completed the first step in selecting general contractor for the project.
Editors: James M. Gomez, Douglas Lytle To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net
To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Siemens to equip new tandem cold rolling mill for Novelis Korea

SteelGuru - 19-Jan-2012

Novelis Korea Limited has placed an order with Siemens VAI Metals Technologies to equip its new aluminum cold rolling mill with automation and drive systems. The plant is a tandem mill which will produce high quality flat strip for the beverage can industry in Yeongju in Korea. The value of the order lies in the double digit million euro range and the mill is scheduled to start production in 2013.
Novelis is planning to construct a tandem mill to increase the capacity of the cold aluminum rolling plant in Yeongju, Korea. Siemens will supply all the electrical engineering and equipment, including the basic automation, the human machine interface equipment and the associated sensor systems. The technological control systems, with integrated gauge, strip tension and flatness control, are an important part of the automation equipment. They are required in order to achieve the extremely tight manufacturing tolerances demanded for the end product.
The scope of supply also includes a Level 2 process computer which will enable the presetting of the stands to be calculated online in advance on the basis of analytical mathematical models. All the drive systems, which include main and ancillary motors, will be powered by three phase current. Siemens will install synchronous main motors for the stands and reels. Sinamics SM150 medium voltage and S120 low voltage converters will be used in the drives. All the systems and components used will be taken from the integrated Siroll ALU solution platform for aluminum cold rolling mills. Siemens will also be responsible for supervising installation work, commissioning and customer training.
The main factor that contributed to Siemens winning the order was the excellent experience gained by the aluminum producer during previous projects. In 2010 Novelis ordered from Siemens the electrical equipment for an almost identical tandem rolling mill in Pindamonhangaba, Brazil. Siemens has also recently been entrusted with expanding the hot aluminum rolling mill in Ulsan in Korea.

Cairn-Vedanta deal comes under a cloud

The Hindu - 18-Jan-2012

The successfully concluded $8.48-billion Cairn-Vedanta deal has come “under cloud” following instances of serious human rights violations, default of payment, environmental damage in its mining and metal projects in India, as pointed by the Internal Security section of the Home Ministry against Vedanta and its group of companies.
Following the serious issues raised by the Home Ministry, officials in the Petroleum and Natural Gas Ministry said the deal is likely to be put up before the Cabinet Committee on Economic Affairs (CCEA) for a review in light of these facts brought out in the official note.
In a communication to the Petroleum and Natural Gas Ministry through an office memorandum on November 25, 2011, the Home Ministry conveys its security no-objection certificate (NOC) to the Cairn-Vedanta deal. However, the note states: “Independent of the above security clearances, this company/group has come to notice of involvement in some cases of default of payment, human rights violations, environmental damage in its mining and metal projects in India and abroad. Following summary of adverse comments/facts with respect to the Vedanta (which as assessed does not have a direct bearing on the security NOC) are also brought to the notice of Ministry of Petroleum and Natural Gas.”
Referring to instances of such wrongdoings, the Home Ministry note points out that Directorate of Revenue Intelligence (DRI) had booked a case against Hindustan Zinc Ltd (100 per cent EOU) Chittorgarh (indirect subsidiary of Vedanta Resources Plc). The said EOU defrauded the government exchequer to the tune of Rs.2 crore by exporting the goods manufactured in 100 per cent EOU under DEPB/drawback scheme and suppressed this very fact at the time of filling the shipping bills by mentioning the name of DTA unit as exporter. Investigations in the case are still in progress.
In another instance, it said in February 2010, the Church of England decided to disinvest from the company on ethical grounds alleging human rights violations. There are also a number of court cases filed against the group and its companies in Indian courts. Apart from this, the note states that in 2007, Norway's Government Pension Fund – globally known as “Oil Fund” — had divested/sold Vedanta Resources from its $350 billion Sovereign Wealth Fund for ethical reasons, blaming it for environmental damage and human rights violations in India.
In March 2009, the note states, thousands of tribals protested against Vedanta Resources Alumina refinery being set up in the Lanjigarh area of Orissa and vowed to stop the $874 million project on account of environmental concerns.
Further more, it states Vedanta has been criticised by human rights and activist groups, including Survival International and Amnesty International, due to their operations in Niyamgiri Hills in Orissa which reportedly threaten the lives of the Dongria Kondhs populating the region. In January 2009, thousands of locals formed a human chain around the hill in protest against plans to start bauxite mining in the area.
It also points out that Sesa Goa Ltd. (link of Vedanta Resources Plc with other firms) had come to the adverse notice of DRI. A show cause notice was issued by DRI, Zonal unit, Bangalore demanding customs duty worth Rs. 95,48,171 being evaded by the said firm in their exports of “iron ore” through Mangalore Port. The said case was settled by the Settlement Commission, Chennai, on September 29, 2010 and the party finally paid the customs duty of Rs. 95, 48,171 in addition to interest of Rs. 10, 88,557.
Then the note also goes on to point out a number of cases pending against the group in various courts including the Supreme Court. “We have taken note of the Home Ministry office memorandum and are preparing a fresh Cabinet note for the consideration of CCEA,'' a senior Petroleum and Natural Gas Ministry official said.
All efforts to get a response from the Vedanta group to the alleged charges did not evoke any response

Tomago smelter jobs to go mid-year

Port Stephens Examiner - 18-Jan-2012

In Little more than six months 100 workers at Tomago Aluminium will be shown the door after falling aluminium prices and the rising Australia dollar led the company to restructure its operation.
The smelter is a leading Port employer and the news marks an uncertain few months ahead for the company's 1070 employees and 250 contractors.
But the company, which contributes about $500 million into the Hunter economy annually, plans to maintain production at 528,000 tonnes a year.
"It's not about cutting product," a Tomago spokeswoman said.
The restructure will take place over the next three months with the outcome on where the cuts will be made expected at the end of March.
Job losses should come into play in the second half of this year.
The restructure comes as the smelter has dealt with the announcements of a carbon tax and that majority shareholder Rio Tinto plans to sell its shares in the business.
But the spokeswoman said neither of those were impacting on the restructure.
CEO John Lemberg could not confirm when asked if this would be the last of the job cuts.
"It is difficult to accurately forecast market conditions in these volatile times," Mr Lemberg said. "But this restructure along with cost reduction initiatives will enable Tomago to remain strong through the current difficult market conditions."
Paterson MP Bob Baldwin said the job losses were a sign of the carbon tax's impact and he feared the economic impact.

Russian Rusal says alumina exports from Guinea not affected ...

Platts - 18-Jan-2012

Sydney (Platts) Rusal's alumina exports from Guinea have not been affected despite weeks of reduced production sparked by a dispute with employees over pay and benefits, a source close to the refinery said Wednesday.
Rusal has been able to draw on port stocks to offset lower output from the refinery, he said.
Workers threatened industrial action in mid-December but called off the proposed strike on December 30. By then Rusal had cut back its alumina production in readiness for the staff walk out.
The refinery is about a week away from reaching its pre-incident operating rate, said the source. The episode has not created a shortage in Rusal's global alumina system, he added.
The refinery in the town of Friguia -- also known as Fria -- is wholly owned by Rusal and can produce 640,000 mt/year of alumina, nearly all of which is exported to Russia.
--Joanna Lim, joanna_lim@platts.com

Alcoa Shuts Smelter In Italy (revised)

Daily Markets (blog) - 17-Jan-2012

Aluminum giant Alcoa Inc. (NYSE:AA) announced that it will close its Portovesme smelter in Italy, despite Rome’s interest in keeping operations on the island of Sardinia running.
Further, Alcoa added that it will close its smelter in Italy and slash output at two Spanish smelters as a measure to cut costs and also as a part of its effort to reduce global output by 12%.
The government has proposed to suspend a collective dismissal procedure, known as mobilita in Italian, which usually leads to closing of business, and instead offered to work together to find alternative solutions. Alcoa has stated it is ready to proceed in the consultation process with mobilita, and the company has reaffirmed its decision about the closure of Portovesme smelter on the island of Sardinia.
The Labor Unions of Sardinia are not at all happy and believes that approximately 1500 workers will be directly or indirectly affected and the decision will also be a heavy blow to the island’s economy. The Trade Unions have decided to protest the decision of Alcoa.
As per Alcoa, the plant had some structural deficiencies along with high electricity costs, which made it quite difficult for the plant to sustain. However, the government believes that the company was turning its back on a special decree that it passed in 2010 offering favorable power supply conditions to some industrial consumers for convincing Alcoa to keep its Italian plants working.
Recently, Alcoa Inc. reported loss in its fourth-quarter 2011 results. The company posted a loss from continuing operations of $193 million, or 18 cents per share compared with a profit of $172 million, or 15 cents per share in the comparable quarter of 2010.
Excluding restructuring charge of $159 million and other items, Alcoa’s loss came in at 3 cents per share, below the Zacks Consensus estimate profit of 1 cent. It is the company’s first loss in the last nine quarters.
For full-year 2011, Alcoa reported income from continuing operations of $614 million, or $0.55 per share, which is more than double of 2010 results. The disappointing results were driven by higher costs of energy and transportation.
Though revenues for the quarter rose 6% year over year to $6 billion, business was down in most areas including construction, industrial products, packaging and commercial transportation. Besides, sales to automobile manufacturers fell 2%.
For 2011, revenue rose to $25 billion from $21 billion in the fiscal year 2010.
For 2012, Alcoa expects global aluminum demand to grow 7% due to global deficit in primary aluminum supply.
Alcoa’s growth projection is ahead of the 6.5% rate, which is required to meet its forecast of doubling the global aluminum demand between 2010 and 2020.
In addition, Alcoa believes that growing demand for aluminum, combined with market-related production cutbacks, will result in a global aluminum industry deficit of 600,000 metric tons in 2012.
Currently, Alcoa has a short-term (1 to 3 months) Zacks #4 Rank (Sell rating) and a long-term (6 months) Underperform recommendation.
Alcoa faces stiff competition from Aluminum Corporation Of China Limited (NYSE:ACH), Rio Tinto plc. (NYSE:RIO) and BHP Billiton Ltd. (NYSE:BHP).
(We are reissuing this article to correct a problem. The original article, released yesterday, January 16, 2012, should no longer be relied upon.)

Aluminium's energy nightmare

Business Standard - 17-Jan-2012

The message came loud and clear from Planning Commission deputy chairman Montek Singh Ahluwalia that a power intensive industry like aluminium will do well to be sharply focussed on process improvements to economise on energy consumption per unit of metal smelted.
This is because industry should not be hoping for any respite from high energy prices, the country being 80 per cent import dependent for crude oil. As for coal, there is no escape from rising imports and prices of the fuel will scale higher with Coal India Limited (CIL) to migrate to a price regime based on gross calorific value (GCV).
The point Ahluwalia made at the annual Nalco lecture is that for the country to grow at nine per cent annually, the corresponding growth of the energy sector will have to be 6.5 per cent. The problem is Indian energy prices, in most cases, are at a large discount to world prices. Logically, we should all be braced for energy prices revision across the board in the post elections to five states.
Nalco Chairman B L Bagra, however, says “We are already feeling the heat of coal price rises. In February last year, coal prices for captive power plants (CPPs) were raised 36 per cent. And this month, we have been served notice for another 26 per cent hike in fuel rates. As a result, the share of energy in Nalco’s total cost of aluminium production is to rise to 35 per cent from 30 per cent. In one push, the cost of making the metal goes up by Rs 3,500 a tonne.” What, however, remains unexplained is why the price rise burden should be more CPPs that Nalco and many others own than independent power producers.
On completion of its last round of expansion, Nalco is owning 1,200 Mw capacity to support a smelter of 460,000 tonnes. Under a linkage plan, the company is to receive 14,000 tonnes of coal a day from Mahanadi Coalfields, a CIL subsidiary. Supply is normal now allowing Nalco to build coal inventory equal to 15 days requirements. But, coal supply became so erratic during the last monsoon that Nalco management was left with no option but to decommission some of its 960 operational pots. “We still have 120 pots rested. I could have run these pots with expensive imported and e-auction coal or by buying very expensive grid power. But at the prevailing low aluminium prices, I will not find justification for that,” says Bagra. As luck would have it, at the time of its founding, Nalco opted for coal linkages instead of owning coal blocks. For that one fatally wrong decision, the aluminium maker is now condemned to putting up with increasingly high energy bill.
“Aluminium of late is encountering biggest cost push on energy account. At the same time, other inputs like coal tar pitch, carbon and caustic soda are becoming increasingly expensive. To give one instance, pitch prices are recently up 26 per cent. I don’t think we are going to get relief from raw materials price rises anytime soon. Remember, it is because of the unremitting cost push that aluminium is seeing a new bottom at $2,000 a tonne,” according to Nalco’s director Ansuman Das. The Ahluwalia message of relentless pursuit of doing things with less and less energy seems to have gone down well with the Nalco board. Otherwise why should Bagra be straightaway closeted with his directors to do a review of areas where economy in energy use is still possible.
Nalco had a good start because both at alumina refinery and smelter it had the benefit of technology from Pechiney, now part of Rio Tinto. But have not some technology breakthroughs since Nalco was commissioned passed the company by? “We had success in cutting energy use by extending the life cycle of anodes. Earlier anodes could be used for 68 tappings. Now we are doing 72 tappings before changing anodes in smelter pots. The cycle is further sought to be extended to 76 tappings,” says Bagra. Anodes are large carbon blocks used as electrical conductors.
An area where energy is generally wasted is by way of leakage of heat in smelter pots. Bagra claims that such leakages at Nalco’s smelter have been “capped by tightening the lids on pots. We are driving longer pins through the lids to keep these firmly shut.” What all the three aluminium makers in the country – Hindalco, Vedanta and Nalco – should have are resource efficiency maps covering areas like energy use and water consumption and greenhouse gas emissions. International Aluminium Institute says most smelters operated by its members are using powerful scrubbing equipment to remove emissions from pots.
According to Ahluwalia, since water is becoming a highly scarce commodity, the industry’s challenge is to do with less and less water and also invest adequately in its recycling. “At our power complex, we are doing 100 per cent water recycling by sending out ash in slurry form. But when we bring back the quenched water from ponds through a pipeline, we lose a portion of that because of tapping by villagers for farming,” says Bagra. Should Nalco be taking this as part of its contribution to community welfare?

Cheaper for power company to shut down its generators

Sydney Morning Herald - 17-Jan-2012

The largest electricity generator in the country, the NSW government-owned Macquarie Generation, has decided it is cheaper and more profitable to shut down some of its power generators and buy electricity from the wholesale market.
The disclosure was made by the company as it forecast a slide into losses over the next few years due to the carbon tax, rising coal prices and soft electricity demand.
Macquarie Generation is traditionally the most profitable of the NSW government-owned corporations and generates a high level of dividends, but it expects to pay no dividends to the government from June 2014 as profits collapse.
The carbon tax is only one factor in the foreshadowed reversal of fortunes, as steady rises in power prices have reduced electricity demand, while the strong Australian dollar has forced cuts to industrial output, which is also hitting demand.
Last week, for example, Hydro Aluminium said it would cut output at its Kurri Kurri smelter by a third, which may force down wholesale electricity prices as power sold previously to the company is sold into the market.
Another state-government owned power company, Delta Electricity, is believed to be the principal supplier to the Kurri Kurri smelter.
Macquarie Generation generates its electricity from coal and forecast rises to coal prices will squeeze margins, especially as the new Cobbora mine is developed near Mudgee.
Its decision to shut down generation capacity has meant it is close to running out of space to store any more coal that it has to stockpile.
''In the short term, Macquarie Generation's response has been to stockpile coal and replace with purchases of lower-priced spot electricity, thereby increasing gross trading margins,'' it said in its annual statement of corporate intent, tabled in NSW Parliament.
''In the medium term the challenge will be to commence higher consumption of purchased and stockpiled coal as power station stockpiles reach their physical limits. This is planned to occur from 2011-12.''
The company is forecasting a collapse in profits, with losses anticipated from 2013-14. From a forecast net profit of $87 million in the year to June 2012, this will fall to a $35 million profit the next year, a $35 million loss for the year to June 2014, and rising to a loss of $56 million the following year.
Continued soft demand for electricity coupled with rising supply levels has forced Macquarie Generation to warn that future prices of its output, along with its share of the wholesale electricity market, will come under pressure.
As a result, profit margins will continue to be squeezed, as it encounters rising competition from gas-fired generators while the number of companies to which it is able to sell output has fallen, ''with AGL remaining as the only significant non-aligned retailer,'' it said.
''As a result, Macquarie Generation might need to become a more active trader of the forward production … in order to reduce the margin squeeze resulting from lower prices and restricted avenues to market.''
The federal government is finalising negotiations with Victoria's power companies to provide them with funding to help them cope with the introduction of the carbon tax.

Aluminum smelter seeks financial aid to overcome weak spot

El Universal - 16-Jan-2012

Venezuela's aluminum smelter CVG Alcasa has requested USD 90.4 million in financial assistance from the Executive Office to cover payroll expenses, the purchase of raw materials, spare parts and the reactivation of smelting cells. It has also submitted several proposals to the consideration of the Ministry of Industries to improve cash flow.
Elio Sayago, the president of aluminum smelter Aluminios del Caroní S.A. (Alcasa), said that the first memorandum account includes the import of 5,000 tons per month of aluminum to feed the current inactive installed capacity for mineral processing.
A total of 178 cells out of 396 smelting cells are currently operating in Alcasa. Its installed capacity is 170,000 tons, but it only produced 69,000 tons in 2011, 28% less than in 2010.

China to Curb Nonferrous Metal Production Growth Through 2015

Bloomberg - 15-Jan-2012

China will curb the expansion of smelters producing nonferrous metals including copper and aluminum in the five years through 2015 to reduce overcapacity and energy consumption.
The country’s annual aluminum output will be capped at 24 million metric tons by 2015 and copper production at 6.5 million tons, according to government plans posted on the website of China Nonferrous Metals News. Lead output will be capped at 5.5 million tons and zinc at 7.2 million tons.
China, the world’s biggest user of aluminum, copper and zinc, has stepped up efforts to slow metal production growth to curb surging raw-material prices, protect the environment and contain inflation. The government is also taking measures to conserve electricity after missing its energy-reduction target in the last five-year plan.
Aluminum production may rise 8.8 percent annually during the period, while copper output may gain 7.3 percent a year, according to the plans posted on the newspaper’s website.
By 2015, China will increase its bauxite capacity to produce a total of 8 million tons of alumina, a semi-finished product used to make aluminum, a year in Shanxi, Guizhou and Guangxi provinces and overseas.
The nation plans to add 1.3 million ton of copper concentrate capacity by 2015 by developing mines at home and abroad and acquiring overseas assets.
China will also increase its annual lead and zinc output capacity by 2.3 million tons each, while nickel concentrate capacity will rise by 60,000 tons a year.
To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net; Helen Sun in Shanghai at hsun30@bloomberg.net
To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net.

GMDC board to decide on JV with Nalco for aluminium project

Economic Times - 15-Jan-2012

AHMEDABAD: State-owned Gujarat Mineral Development Corporation (GMDC) today said its board will take a decision next month on setting up an alumina plant and aluminium smelter project in joint venture (JV) with the Navratna PSU Nalco.
Nalco, a leading aluminium producer, recently had qualified as the sole bidder for the over Rs 10,000-15,000 crore alumina and smelter plant project, proposed in Kutch district of Gujarat.
"Nalco, the sole qualified bidder, for our alumina plant and aluminium smelter project, has deposited the upfront fees of Rs 150 crore. We shall now take it to our board by middle of next month, which will take the final decision on JV," a top GMDC official told PTI.
The other companies who had evinced interest through EOI's included Hindalco, JSW Aluminium and Adani group. The bids for project were technically examined by the Nagpur-based Jawaharlal Nehru Aluminium Research Development and Design Centre, a GMDC official said.
"Once our board approves it, the next step would be to take it to the Gujarat government for final approval, which is likely by mid-April," he said.
The project is for one million tonne alumina and 0.5 million tonne aluminium smelter. GMDC will supply bauxite for the project from its group of mines in Kutch.
The estimated Rs 10,000-15,000 crore alumina and smelter is expected to be set up in Gujarat on the lines of such units installed by the UK based Vedanta group in Odhisa, but will deploy more advance technology, a GMDC official said.
Earlier in 2005, Gujarat government had signed an MoU with Aashapura group to set up the plant and smelter unit in Kutch. But later the government did not extend the MoU, following which GMDC in 2010 invited EOIs for the project.
Aluminium smelting is the process of extracting aluminium from alumina. While, alumina is extracted from the ore bauxite by means of a process at an alumina refinery.

Carbonorca reiterates need for coke calcinations plant

SteelGuru - 14-Jan-2012

BNamericas reported that Venezuelan state carbon anode producer Carbonorca is once again emphasizing the urgency of installing a coke calcination plant to supply local companies.
Sutracarbonorca labor union press secretary Mr William Hernandez told BNamericas that "We want the government to understand that Carbonorca needs the coke calcination plant which, in addition to the aluminum sector, could supply the iron sector because it would produce 550,000 tonnes per annum of calcined coke."
Calcined coke consumption in Venezuela's steel and aluminum sectors averages 300,000 tonnes per annum, which the new plant could supply. Since 2009, company workers have been asking the government for the plant, as the primary problem the local industry has faced in recent years is the lack of this input.
He said that "In 2010 and 2011, Carbonorca reduced its production by up to 50% due to the lack of coke and other raw materials."
Carbonorca's goal is to replace the imports of this input that is used in the productive processes of state aluminum reducers Venalum, Alcasa, and state steelmaker Sidor.
Mr Hernandez reiterated that the installation of the calcination plant is halted due to private interests. He said that "There are intermediaries that don't want the problem of the lack of inputs to be resolved as they are making money from their involvement."
In April 2011, Tehran based Isco presented a proposal to the Venezuelan government for the construction of a calcined coke plant to serve the steel and aluminum industries.
Mr Hernandez said that "However, there hasn't been progress on that project either."
Calcined petroleum coke is used as a carbon additive in steel mills and smelters and cathode or anode plants for the aluminum industry.
(Sourced from www.bnamericas.com)

New plant to more than double ingot, billet output

Malaysia Star - 14-Jan-2012

MUKAH (Sarawak): Sarawak will have the capacity to produce 300,000 tonnes of high-quality ingots and billets a year when its second aluminium smeltering plant in the Samalaju Industrial Park begins operations in September.
The first plant, sited 38km from here, produces 120,000 tonnes a year. The two plants are operated by Press Metal Sarawak Sdn Bhd, a subsidiary of Selangor-based Press Metal Bhd.
Group executive vice-president Koon Poh Min said that the company had invested RM3bil in the new plant.
He said the higher combined production would go a long way towards helping the company realise its goal to emerge as a global supplier of ingots and billets.
“With the new plant in operation, we will be the biggest in South-East Asia,” he told reporters after a visit to the plant organised by AZAM and RECODA.
AZAM is a non-profit, state-owned non-governmental organisation that facilitates the state government’s development initiatives. RECODA or Regional Corridor Development Authority is the development, management and promotion authority for SCORE or Sarawak Corridor of Renewable Energy.
Koon said the Mukah plant, which started production in August 2009, was a joint venture with Japanese industrial giant Sumitomo Corp.
“The RM1bil plant is the first and biggest aluminium smeltering plant in the country and the second biggest in South-East Asia,” he said.
He said both plants used Aluminium Corp of China’s technology, which is also used in 215 aluminium smelters worldwide.
Koon said the domestic market accounted for half the company’s current production, while the balance was exported to Japan, South Korea and the growing economies in the Asia-Pacific. He said the Mukah plant, which employs 800 workers on three shifts, was in the midst of installing a third production line to produce a new product called “A356” used to manufacture alloy wheels.
The raw material for both plants was sourced from Australia, he said. — Bernama

Alcoa rejects Rome call to keep Italy plant running

Reuters Africa - 13-Jan-2012

* Rome asks Alcoa to stop pre-closing procedure at Portovesme
* Alcoa says will not accept delays in closing Portovesme
* Alcoa will not close Fusina mill near Venice
ROME, Jan 13 (Reuters) - U.S. aluminium giant Alcoa said on Friday it will push ahead with its plans to close a smelter in Italy, rejecting Rome's calls to keep operations on the island of Sardinia running as a battle around the struggling plant heated up.
Alcoa said on Monday it planned to close its Portovesme smelter in Italy and slash output at two Spanish smelters, part of a broader effort by the U.S. aluminum producer to cut its global output by 12 percent and reduce costs.
On Friday, the government asked Alcoa to suspend a collective dismissal procedure, known as mobilita in Italian, which usually leads to closing a business, and instead offered to work together to find alternative solutions, the industry ministry said in a statement.
But Alcoa has rejected such proposals and confirmed its decision to close Portovesme on the island of Sardinia.
"We just could not accept a delay, so we have rejected this proposal to delay the beginning of the mobilita procedure. We consider the procedure to have begun," Alessandro Profili, in charge of European affairs at Alcoa, told Reuters after a government meeting.
Alcoa's decision has run into fierce opposition from labour unions and authorities of Sardinia who say it would cost the jobs of about 1,500 people linked to the plant directly and indirectly and would deal a heavy blow to the island's economy.
"The rules of the game are not only those set by financial markets but also those which oblige (companies) to do business respecting economic and social impact on the country," Sardinia's President Ugo Cappellacci said in a statement adding he was "dismayed by Alcoa's unreasonable attitude".
Trade unions present at the meeting condemned Alcoa's rejection of the government proposals and said they were getting ready for protest actions.
"The government has shown an intention to look for possible solutions linked to energy costs," Luigi Barra, a representative of Cisl union, told reporters after the meeting in Rome.
Alcoa's Profili said high electricity costs were not the only reason to close down the Portovesme smelter, one of the most expensive plants in the group.
"Energy is the big point but it's not only that. There are some structural deficiencies at Portovesme ... We just do not find some of the services and materials in Sardinia anymore. Everything has to be brought in and it adds to the costs," he said.
The government has understood Alcoa's decision and wanted to mitigate the social impact of the closure, Profili said.
"We also want to mitigate the social impact but we want to do it in the framework of the mobilita procedure," he said.
But the industry ministry said Alcoa's rejection of its proposal was "inexplicable" and the company was turning its back on a special decree the government passed in 2010 offering favourable power supply conditions to some industrial consumers to convince Alcoa to keep its Italian plants working.
Profili said Alcoa was not planning to close another Italian plant, the Fusina rolling mill near Venice, which is well integrated in the group.
"Nothing is going to happen to Fusina," he said.
An Italian industry body has said closure of Portovesme, the country's only producer of primary metal, would hit competitiveness of the national aluminium industry.

CFAC contract paused due to poor economy

KAJ18 Kalispell Montana News - 12-Jan-2012

COLUMBIA FALLS- Right now it seems like the Columbia Falls Aluminum Company (CFAC) may not be opening their doors, at least until the economy gets better.
A spokesman for the plant says the market for aluminum is so bad right now, that it wouldn't be possible to open up CFAC. While the aluminum market suffers, so does the power deal between CFAC and Bonneville Power Administration that could restart the plant this year. The low demand for aluminum has put a pause on the contract because the plant can't restart under the current conditions of the economy.

RusAl Smelters Profitable

The Moscow Times - 13-Jan-2012

United Company RusAl said its smelters can turn a profit should aluminum prices fall to $1,900 a ton, while as much as 45 percent of Chinese capacity may already be running at a loss.
"It's difficult, but it can work," Vladislav Solovyov, first deputy chief executive, said in an interview published on RusAl's Facebook page. "If it goes lower, well then we may see cutbacks." Some of RusAl's smelters are viable with an aluminum price as low as $1,400, he said.
Aluminum traded at $2,193 a ton on the London Metals Exchange on Thursday. The metal has advanced 7 percent since Jan. 1 after falling about 27 percent last year from its May 3 peak of $2,797. China should shut more capacity, Solovyov said, and help drive prices higher. (Bloomberg)

Future Bleak for Australia's Aluminium Smelter Sector

International Business Times AU - 12-Jan-2012

Although forecasts say global aluminium prices may go up for the first quarter of 2012, prospects are bleak for the aluminium sector in Australia.
The Norsk Hydro aluminium smelter plant at Kurri Kurri closed on of its three potlines which would result in the lay off of 150 workers. The Tomago Aluminium also underwent a major restructuring which would lead to the loss of another 100 jobs.
The two developments have not surprised the New South Wale Hunter Valley aluminium industry since both firms have been suffering financial the past few months and workers were aware of the situation.
Norsk's Kumi smelter has 500 employees. The firm will declare the 150 redundant over a period of time cutting across all departments.
Tomago Aluminium, which has 1,200 employees, will also implement several cost-cutting measures aside from reducing its manpower by 100 workers.
The two firms blame the strong Australian dollar and low metal prices for the job cuts and weak performance.
Olaf Wigstol, senior vice president of Norsk, said the lay offs were in response to the weak macroeconomic environment and uncertain market outlook. Part of the restructuring in Norsk is the appointment of Egil Fredriksen as new chief executive to replace Alberto Fabrini who was given a new assignment.
Norsk's Kurri Kurri smelter was the first aluminium smelter to open in NSW in June 1969. The firm built over the years three potlines with different technologies.  Mr Wigstol said the closure of that smelter would definitely impact the plant financially although the firm expects operations to remain unprofitable despite the job cuts.
The 150 job cuts are in addition to the 45 cuts that Norski made in late 2011. With the closure, the company's yearly production would go down by 80,000 tonnes to 120,000 tonnes a year.
The Tomago smelter is expected to operate at full capacity and retain current annual production of 530,000 tonnes of aluminium despite the lay off of 100 workers.
Light Metal Age, the publication of the light metal industry, lists six aluminium manufacturers in Australia with a total capacity of 2,060,000 tonnes per year. Tomago accounts for 26 per cent of the total capacity while Norsk accounts for only 9 per cent.
From a high of $2,800 per tonne in May 2011, global prices for aluminium declined to less than $1,900 in January 2012.
Mukesh Kumar, chief operating officer of Vedanta Resources, India's largest producer of aluminium smelter, forecast that prices could go up to $2,300 per metric tonne at the London Metal Exchange by end of March. The price of aluminium, used for the manufacture of cars and airplanes, was at $2,164 on Wednesday and last closed above $2,300 on Sept 21.
Mr Kumar told Bloomberg the expected increase in aluminium smelter prices is because of more manufacturing activities in China and India which would lead to more sales of vehicles and consumer appliances which also use the resource.
There would also be a supply shortage of aluminium in the global market for the first half of 2012 because of 15 per cent idle capacity of smelters as a result of the debt contagion in Europe and initiatives by China to curb inflation.
The Indian government also plans to boost its spending on public works and utility projects to $1 trillion for the next five years as the south Asian nation targets to reach a 9 per cent economic expansion.
Indian Prime Minister Manmohan Singh said last week that the country's gross domestic product growth rate would likely reach 7 per cent for the year ending March 31, which is lower than the 7.5 per cent growth rate projected in December.
Another analyst from Davenport said aluminium prices will continue to go up through 2013 since more than 40 per cent of global capacity run at a loss and these firms would likely cut output, which would boost prices.
To contact the editor, e-mail: editor@ibtimes.com

Caustic soda demand to fall on more aluminium cuts ヨ US Alcoa

ICIS (subscription) - 11-Jan-2012

HOUSTON (ICIS)--Global demand for caustic soda will drop because customers will likely cut alumina and aluminium production in the coming weeks, ...

China May Idle Most Aluminum Capacity Since 2009

BusinessWeek -  12-Jan-2012

(Bloomberg) -- Chinese aluminum smelters may idle their annual capacity by one-third, the most in three years, as energy costs soar and prices slump.
China may produce almost 20 million metric tons of the lightweight metal and its capacity may be as much as 30 million tons by the end of this year, said Luo Rongjin, a Beijing-based analyst with Bocom International Holdings Co. Monthly output from China, the world’s biggest producer, fell 8.3 percent in November from a record 1.6 million tons in August.
Alcoa Inc., Rio Tinto Group and their global rivals are cutting production after prices dropped 19 percent last year, curbing profits. Alcoa, the largest U.S. producer that reported its first loss in two years this week, said China may use 70 percent of its capacity in 2012.
“China’s aluminum industry is becoming less and less competitive because power is going up and many producers are making losses,” Peter Hickson, managing director of Global Commodity Research and Basic Materials Strategy of UBS AG, said in an interview in Shanghai. Chinese smelters may idle 1 million or 2 million tons of capacity this year, adding to 6 million tons of surplus capacity in 2011, he said.
Aluminum Corp. of China Ltd., or Chalco, the nation’s biggest producer of the metal used in aircraft, beverage cans and auto parts, is “actively studying the market” and may adjust production when needed, spokeswoman Shen Hui said. China will curtail 1.1 million tons of aluminum production capacity this year, Alcoa Chief Executive Officer Klaus Kleinfeld said Jan. 9.
Further Cuts
“We should watch out for further production cuts in and outside China as many aluminum smelters are operating at a loss given the low prices,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. “Aluminum will be strongly influenced by macroeconomic data and political actions, especially regarding the sovereign debt crisis in the euro zone.”
Falling prices may force 3 million tons of global capacity to be closed or mothballed, Oleg Deripaska, CEO of United Co. Rusal, the world’s largest producer, said last month. Rusal itself isn’t planning to cut output yet, and is monitoring the market closely, the Moscow-based company’s press service said yesterday in an e-mail.
Alcoa this month said it would halt 12 percent of its global capacity and Rio Tinto, 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 shut some capacity at its smelter near Newcastle in Australia.
Low Prices
Aluminum prices will stay low until Chalco and other smelters cut production, UBS’s Hickson said. Prices may average $2,275 a ton, down from last year’s $2,397, according to the median of 18 analyst estimates compiled by Bloomberg.
“Ten to 20 percent of production cuts in 2012 is normal,” Lu Changqing, executive director and vice president of China Zhongwang Holdings Ltd., said in an interview Jan. 9. The company is Asia’s largest industrial aluminum extrusion products maker with an annual capacity of 700,000 tons, according to a regulatory filing. “Prices have fallen to some of the smelters’ cost of production. They are unlikely to sustain losses for long.”
China raised retail power prices by an average 0.03 yuan (0.5 cents) a kilowatt-hour from Dec. 1, squeezing profits at smelters that don’t have access to cheaper fuel. That would raise costs by as much as 500 yuan for producing a ton of aluminum, or equivalent to an increase of as much as 5 percent of total costs, Chalco’s Shen said.
‘Heavy Blow’
“More than half of Chinese smelters are already making losses,” said Lang Dazhan, deputy head of China Nonferrous Metals Industry Association’s aluminum unit. “The latest power rate hikes gives another heavy blow and may force them to curtail production in the first quarter. Chalco is certainly a victim.”
Smelters in China’s Henan, Guangxi and Hunan provinces are the worst affected because they are paying the highest power rates, Lang said. Chalco may cut production at its high-cost units in Henan and Shanxi provinces in the first quarter, said Bocom’s Luo.
China’s primary aluminum production gained 9.9 percent to 16 million tons in the first 11 months last year from a year ago, according to the National Bureau of Statistics.
China’s economy grew 9.1 percent in the third quarter from a year earlier, the slowest pace since 2009, on weaker export demand and monetary tightening. Aluminum inventories monitored by the Shanghai Futures Exchange gained for a fifth week last week to 221,624 tons, the highest since July.
Production Restraint
Aluminum prices in London have slumped 23 percent from a record in May to $2,161.75 a ton at 3 p.m. Shanghai time yesterday after global growth decelerated amid a sovereign-debt crisis in Europe and China’s government action to control inflation.
“Smelters will need to show production restraint in the coming years to restore a degree of normality on the aluminum market,” Bank of America Corp. said in a weekly metals report Jan. 9. The bank estimated prices may reach $2,275 a ton this year and $2,375 in 2013.
Still, China will add 3 million tons to 5 million tons of new capacity this year to the existing 24 million to 25 million tons, even as most of the producers won’t make a profit, according to Bocom’s Luo.
Many of these projects are located in provinces such as Gansu, Ningxia and Inner Mongolia that may have access to cheaper electricity or are closer to energy sources, intensifying competitions to plants in eastern regions owned by larger players such as Chalco, Luo said.
“Steel and aluminum projects generate huge output value, and are always a big driver for local GDP and the government’s tax revenue,” he said. “Local governments encourage these projects to be built, sometimes even without appropriate approval.”
--Feiwen Rong, with assistance from Abhishek Shanker in Mumbai, Elisabeth Behrmann in Sydney, John Viljoen and Firat Kayakiran in London and Yuliya Fedorinova in Moscow. Editors: John Viljoen, Amanda Jordan
To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at frong2@bloomberg.net
To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net; Andrew Hobbs at ahobbs4@bloomberg.net

Tens-of-millions lost because of power cut

IceNews - 11-Jan-2012

Because of yesterday’s bad-weather-induced power cuts in Iceland production at both the Elkem ferrosilicon plant and the Norðurál aluminium smelter at Hvalfjörður in the west ground to a halt. It is thought the cuts cost the companies tens-of-millions of krónur.
Power cuts are very bad for aluminium smelters and can cause severe damage to equipment after three or four hours, as molten metal cools. Ágúst Hafberg, the Norðurál manager, says that his plant in all likelihood escaped serious damage yesterday because they were lucky enough to get some limited power back after three hours. It was enough to keep equipment running, although production remained at a standstill. The electricity supply was not fully restored until 06.00 this morning. Salt and snow are blamed for causing a fire at an electrical substation nearby and various difficulties which left much of the country without electric.
“We can only stand about three or four hours without energy or we risk damage to the smelting pots,” Ágúst said in an interview with RÚV today. Asked if any damage had occurred, he said: “We are looking into it, we think it was nothing serious but we still have to finalise how much was done”.
He believes, however, that delays to aluminium production alone yesterday mean millions in losses for the company; but says a concrete figure is not yet available.
The nearby Elkem ferrosilicon plant was without power for around 12 hours. But production foreman Einar Þorsteinsson does not believe the plant’s equipment is seriously damaged: “As far as we can see at the moment, we don’t think so and generally it is the case that if we loses electric supply to our equipment we are not in a position that it causes major damage. It is first and foremost production losses that cost us,” Einar said.
How much was lost yesterday? “I can’t say exactly but it looks like several tens of millions of krónur,” Einar says.
ISK 10,000,000 is about EUR 63,000 at today’s rate.

Rival Sours Rio's Aluminum Sale Hopes

Wall Street Journal (blog) - 11-Jan-2012

Rio Tinto’s hopes of  selling its aluminum assets, possibly via an initial public offering or to a trade buyer, have taken a knock after a rival cast a spotlight on the headwinds facing the sector.
Bloomberg NewsBurdened by a strong Australian dollar and a soft macroeconomic environment, Norsk Hydro said Wednesday it could reduce production at its Kurri Kurri aluminum plant in Newcastle, which employs around 500 people and has a total annual production capacity of 180,000 metric tons.
“We will continue to stay in close dialog with all affected stakeholders, including employees, unions and the local community throughout this process,” executive vice president of Hydro’s Primary Metal business area Hilde Merete Aasheim said in a statement, before adding that ongoing customer demand will be served through its global metal products supply system.
Rio has yet to firm up a plan for its Pacific Aluminum business which includes a bauxite mine, an alumina refinery and several smelters in Australia and New Zealand. The unit was created in October last year as part of a broader restructure of its high-cost aluminum operations, many of which were acquired in its ill-fated Alcan deal in 2007 for around US$38 billion.
“The strength of our balance sheet means that we can choose the most opportune method and timing to divest these assets, which may not occur until the economic climate improves,” Rio chief executive Tom Albanese said at the time. ............

ALRO Slatina is closing down

ACTmedia -  10-Jan-2012

The trade unionists in Alro say they have been warned by the management that the unit will be closed down in February – March, asking the government, the ministry of economy and the Olt county administration not to stop the activity in this unit, thus avoind lay-offs.
“Over the last three months of 2011 there were losses, no employer accepts losses. The situation is very delicate due to the deficit of water from Hidroelectrica. We pay a price for the megawatt twice higher than what Hidroelectrica should take. Hidroelectrica wants to sign off the contract, then to renegociate” Tiberiu Nagy said, as vicechairman of Cartel Alfa Olt.
Alro is the most important producer of aluminium of Romania and southern-eastern Europe is the only shareholder of Alum Tulcea, the unit for calcinated aluminum production with a capacity of 550,000 tons per year and Vimetco Extrusion, production unit with a capacity of 20,000 tons per year extrudated products, the trade unionists said.
In the industry of aluminium there are over 3,500 employees, and the positions of over 20,000 employees, of the horizontal industry and services, depend on this important segement of the national economy. Alro insures the domestic quantity of aluminium, manufactured products and exports over 80 percent of the finite products, including products of high technicity for the aeronautical industry, according to the source. 

Alcoa spares Berkeley plant in cuts

Charleston Post Courier - 10-Jan-2012

Aluminum giant Alcoa said Monday it is trimming production in Europe, sparing for now the company's Berkeley County plant that's locked in negotiations to reduce its power bill.
Partial manufacturing cuts announced last week left open the possibility that the 30-year-old smelter near Goose Creek could be affected.
Instead, Alcoa decided to reduce capacity in Italy and Spain. Previously, it said it would close a smelter in Tennessee and close two of six pot lines at a Texas plant.
"In today's rapidly changing global economy, it is imperative to respond quickly to maintain competitiveness," said Chris Ayers, president of Alcoa Global Primary Products in a statement. "This decision was made after thorough analysis of all the possible alternatives. We are committed to working to find solutions that will minimize the impact on these communities and our workers there."
The manufacturing behemoth is cutting 12 percent, or 531,000 metric tons, of its global smelting capacity because of energy expenses coupled with rising raw material costs and falling aluminum prices.
The Mount Holly plant, which employs about 640 workers, has been in talks with Santee Cooper for a better long-term power rate. It must let the state-owned utility know by June if it intends to renew its contract, which expires in 2015. Alcoa has said if it can't negotiate a better deal it might be forced to close.
Moncks Corner-based Santee Cooper has said the contract talks are a priority, though it must find a way around increasing coal and transportation costs and impending environmental expenses. It also must weigh whether a new deal with Alcoa would be fair to other ratepayers.
Also on Monday, Alcoa reported a fourth-quarter net loss of $191 million after the markets closed as a slower global economy hurt aluminum demand in industries ranging from construction and packaging to automobiles. That compares with a $258 million profit for the same period the previous year. Revenue rose about 6 percent to $6 billion.

Alcoa's Kleinfeld sees 2012 aluminum deficit

Reuters - 09-Jan-2012

(Reuters) - Alcoa Inc (AA.N) Chairman and Chief Executive Klaus Kleinfeld expects the global aluminum market to turn into a deficit this year, as biggest consumer China closes inefficient capacity even though demand remains robust.
At a conservative estimate, the global deficit will be some 600,000 tons, he told analysts on a conference call following the release of the aluminum giant's fourth-quarter results.
"Our assumption for the 600,000 ton deficit in the primary market, (is based on) our assumption that 1.1 million of China's 5.7 million tons of unprofitable capacity will be taken offline," the executive told analysts.
Alcoa estimates China's 2012 aluminum deficit will total 850,000 tons, whereas the rest of the world's supply/demand balance will result in a 250,000 ton net surplus, for a global deficit of 600,000 tons.
He forecast Chinese aluminum demand will grow 12 percent this year, while the Asian nation's GDP is expected to rise between 8 and 9 percent and 8.5 percent next year.
In 2011, China's aluminum consumption grew by 15 percent.
China consumes over 45 percent of global aluminum output.
Even with a brisk economic pace, China's local aluminum industry faces structural problems, including high costs as smelters have to import raw materials, energy constraints and environmental issues with many of its smelters fired by coal.
That means, one-third of Chinese production, or as much as 5.7 million tons per year of output, is loss making, he said, stressing that Alcoa's estimates were made on cash basis and do not include non-cash items like depreciation.
"In the end, the pain level comes when you see cash flowing out the door and 5.7 million tons of Chinese production is cash negative," the executive said.
Specifically, Henan province runs 280,000 tons of capacity that would likely close soon because of drought conditions there that have impacted hydro power plants.
Another 630,000 tons would shut "pretty soon" based on a report by China's economic information center, with another 200,000 tons coming offline that Kleinfled said he had discussed previously where closures were already "in progress."
Citing old technology at inefficient smelters, he said China may close another 1.2 million tons of capacity assuming the metal price remains around current low levels.
"Anybody who would care about using resources wisely would take these offline sooner rather than later," the CEO said.
If China takes any of this next tranche of smelters offline, Alcoa's deficit prediction would increase and metal prices would benefit, the aluminum chief said.
Even if the aluminum price firms, he said, "that does not mean everything in China is suddenly rosy."
"The Chinese aluminum industry has a structural problem that will not go away and that will lead to structural consequences independent of where the metal prices is, mainly how to use the energy in a country that is not energy rich."
He gave a generally positive assessment of the overall market, forecasting global aluminum demand will rise 7 percent this year and reiterating global demand should double by 2020.
Alcoa estimated a 10 percent global growth pace for 2011. Excluding China, it forecasts 2012 demand growth of 4 percent.
"We do see an air of confidence returning to the economy," he said in an earlier interview on CNBC TV, referring to rising U.S. consumer confidence and manufacturing data and falling bond yields in Europe.
Even so, 2011 was a "bumpy" ride with "massive headwinds", he said, blaming the Pittsburgh-based aluminum producer's fourth-quarter loss on charges for cutting back production and softer market conditions.
(Reporting By Josephine Mason and Carole Vaporean; Editing by David Gregorio, Bob Burgdorfer and Bernard Orr)

Alcoa Inc. : Alcoa Plans to Curtail Smelters in Italy and Spain as ...

4-traders (press release) - 09-Jan-2012

Alcoa (NYSE: AA) announced today that the Company intends to curtail operations at three European aluminum smelters as part of a previously announced restructuring in its Global Primary Products business. The restructuring will reduce the Company's global smelting capacity by 12 percent or 531,000 metric tons.
Operations at Alcoa's Portovesme, Italy, as well as La Coruña and Avilés, Spain, smelters are designated for curtailment, with the intended actions to be completed in the first half of 2012. The facilities are among the highest-cost producers in the Alcoa system. Last week, Alcoa announced the permanent closure of the Company's smelter in Alcoa, Tennessee, and two potlines at its Rockdale, Texas, smelter.
At Portovesme, Alcoa will begin the consultation process to permanently close the facility. The La Coruña and Avilés curtailments are planned to be partial and temporary. An uncompetitive energy position, combined with rising raw material costs and falling aluminum prices, led to the planned curtailment of the facilities.
The curtailments represent 240,000 metric tons, or about 5 percent, of Alcoa's global smelting capacity. Total capacity at Portovesme is 150,000 metric tons. Capacity at La Coruña and Avilés is 87,000 and 93,000 metric tons per year, respectively.
"In today's rapidly changing global economy, it is imperative to respond quickly to maintain competitiveness," said Chris Ayers, Alcoa Executive Vice President and President, Alcoa Global Primary Products. "This decision was made after thorough analysis of all the possible alternatives. We are committed to working to find solutions that will minimize the impact on these communities and our workers there."
Alcoa will immediately begin consultation with the relevant employee representatives and governments. The total employment impact will not be determined until consultations are completed. Current employment at the three plants is about 1,500.
The curtailments will contribute to Alcoa's long-term goal of improving its position on the world aluminum production cost curve by 10 percentage points. This action will also increase Alcoa's competitiveness in the current volatile aluminum marketplace. Aluminum prices have fallen more than 27 percent from their peak in 2011.

In addition to the closures and curtailments, Alcoa will aggressively accelerate actions to reduce the cost of raw materials used by its Primary Products business and will adjust capacity across the Company's global refining system to reflect internal demand as well as prevailing market conditions

Alcoa to cut high-cost European smelter output

Reuters - 09-Jan-2012

Reuters) - Alcoa Inc (AA.N) said on Monday it plans to close its Portovesme, Italy, smelter and slash output at two Spanish smelters as the U.S. aluminum producer takes aim at its high-cost European operations.
The measures will throw doubt on the long-term future of the U.S. producer's embattled European operations as they struggle with high energy costs and low aluminum prices.
Ending Alcoa's primary smelting operations in Italy also should provoke stiff opposition from the country's troubled government and fiery trade unions.
The plan, part of the target announced last week to reduce output by 12 percent by the end of June, is particularly galling for the troubled Euro zone as Alcoa plows ahead with its $10 billion project in the Middle East.
Shuttering Portovesme, with a view to permanent closure, will remove 150,000 tonnes per year of capacity and account for majority of the 240,000 tonnes, or 5 percent of Alcoa's global capacity, being cut in Europe.
The remaining 90,000 tonnes will come from curtailments at La Coruña, with annual capacity of 87,000 tonnes, and Avilés, with 93,000 tonnes, both on Spain's northern coast.
This leaves the neighboring San Ciprián smelter with 228,000 tonnes per year of capacity as Alcoa's only remaining European primary smelter operating at full capacity.
The cuts in Spain are planned to be partial and temporary, but the consultation process to close Portovesme will now start.
Alcoa is likely to face strong opposition from the trade unions, which fought a ferocious but unsuccessful battle to save Alcoa's Fusina plant in 2009, and from a government struggling to save the country's troubled economy. The three plants employ about 1,500 people, Alcoa said.
"It's about time. They would have closed (Portovesme) years ago if they could have. It makes metal for a market that is totally oversupplied," said one European trader.
The future in Spain is brighter than Portovesme, which has faced possible closure for several years already.
"For Spain, it's a bit more positive. In terms of cost, Italy was the worst," said a source at Alcoa with knowledge of the plants.
BATTLING COSTS
Industry watchers were not surprised that the Italian and Spanish smelters, the highest cost in Alcoa's global asset base, would fall victim to the latest cost-cutting drive, given the industry's shift to lower cost regions such as the Middle East.
Alcoa has been battling the European Commission over the validity of its power contracts. The authorities ruled in 2009 that energy tariffs agreed with the Italian government were illegal subsidies and launched a separate probe of the company's Spanish contracts.
Alcoa has appealed that ruling, arguing that competitively priced energy, accounting for a third of production costs, is key to the survival of its European smelters.
With those tariffs in doubt, the plants' futures have also been in question, especially with expiry of the Spanish and Italian power contracts at the end of this year.
Traders expect Portovesme to be used as a bargaining chip in what could be fraught negotiations.
"There's still doubt over the power contracts. The plants are loss making. They'll be even more loss making if the subsidies are not there," said a second trader.
The fortunes of Europe's aluminum industry contrast with the Middle East, which has attracted billions in investment from the aluminum industry due to its lower-cost and plentiful supplies of power.
Alcoa is preparing to bring its greenfield 740,000 ton per year aluminum smelter, rolling mill, alumina refinery with its joint venture partner Ma'aden on line next year.
SEEKING ALTERNATIVES
Physical traders with inventory welcomed the news, noting that southern Europe will probably have to rely more on imports from Mozambique, Cameroon, Tajikistan and Russia, which could boost premiums.
There could be other opportunities because Alcoa will have to source aluminum for its European downstream operations on the open market or from its own smelters outside the euro zone, such as in Iceland and Norway.
Traders hope other producers will follow suit with drastic cuts to remove excess high-cost capacity from the market. Three-month aluminum on the London Metal Exchange closed at $2,108 per ton on Monday, up from $2,069, in line with a broader rise among base metals.
These are Alcoa's first cuts to active capacity since the global economic crisis in 2008. Last week, it said it will permanently close Alcoa, Tennessee, smelter and two potlines at its Rockdale, Texas, smelter, representing 7 percent of the company's total capacity. That capacity has been idle since 2009.
Alcoa stock rose 2.89 percent to $9.425 by the close on the New York Stock Exchange and climbed further to $9.48 in after-hours trading after the company reported higher-than-expected fourth quarter revenue and gave an positive outlook for demand, offsetting news of a loss.
(Reporting by Steve James and Josephine Mason; Editing by Marguerita Choy and David Gregorio)

Asia Open - Overnight Highlights

FXMarketAlerts.com - 09-Jan-2012

MUMBAI: Sterlite Industries will offer to buy the government's 49% stake in group company Balco at a mutually agreed price outside of an earlier call option plan, as both parties are keen to resolve stake-sale talks deadlocked for a year.
If Sterlite's proposal is accepted, it will complete the Anil Agarwalpromoted company's 100% ownership of Balco besides helping the government meet its disinvestments target for the current fiscal.
The government, which plans to raise Rs 40,000 crore this fiscal by selling stake in public sector enterprises, has managed to raise only a fraction of it so far, hemmed in by an adverse equities market. "The government is now willing to consider a fresh proposal from the company.
The company will also examine alternatives that will be outside the call option route," said a person familiar with the development and part of the negotiations. An Empowered Group of Ministers has asked Sterlite for the fresh offer and has so far not considered past valuation exercises.
Sterlite Industries, a copper maker and part of billionaire Anil Agarwal's Vedanta Resources, had bid for and bought the government's 51% stake in Balco forRs551.50 crore in a high-profile disinvestment exercise in 2001.
The two parties also agreed that the government's remaining stake would be sold by exercising call options after three years. Call option is an agreement that gives the buyer a right to buy part of an asset at a specified price within a specified timeframe.
However, the government later retracted saying the agreed price was too low, prompting protests from Sterlite and pushing the issue into arbitration.
Full ownership of Balco will allow Sterlite the freedom to push its expansion plans in aluminum, which have been restricted in its other subsidiary, Vedanta Aluminum Ltd, which has a refinery and smelter in Odisha, is finding it difficult after the government banned bauxite mining in Niyamgiri, where it has the refinery, forcing it to buy costly bauxite from outside.
Typically, bauxite is refined into alumina and then smelted to make aluminum. The government has also refused permission to Vedanta Aluminum to expand the refinery capacity from 1 million tonnes to 6 million tonnes. "We are keen that our plans in aluminum are carried out.
It's a pity that despite having one of the world's largest bauxite reserves- India has fourth largest deposits- we are still a marginal producer (less than 5% of global production)," a senior group executive said. Vedanta's plan to boost aluminum production comes at a time when globally the industry is facing problems.
On Thursday, Alcoa, the world's leading producer of aluminum, said it would cut output by 12% due to falling prices and slowing demand. Earlier, another leading producer, Rio, said it would shut down a third of its production in Canada due to high costs.
Aluminum prices have dropped about 25% since May to about $2,030 a tonne on the London Metal Exchange. "The industry is in a pincer-grip," said the head of a leading aluminum and copper producer.
"On the one hand, you have metal prices falling and on the other, Brent (oil price) is rising due to geopolitical factors. So, crude-related inputs like coal have also started rising, putting pressure on aluminum operations," he added.

Analysis: Aluminum traders to producers: Cut like it's 1994<

Reuters - 08-Jan-2012

(Reuters) - To find a precedent for the deep, lasting output cuts that aluminum producers must make to put a floor under prices, traders are looking a lot further back than the last recession.
Three years ago, with the global economy convulsing in the throes of a serious recession, smelters worldwide started cutting back production -- temporarily. As prices quickly rebounded, nearly doubling within a year, those companies were just as quick to fire up their furnaces again.
With the overhang of high inventories and a 28-percent drop in prices since May last year, they're responding again, with Pittsburgh-based Alcoa announcing on Thursday plans to shut down 12 percent of its capacity, some of it permanently.
But traders may not be so readily appeased as three years ago. Many say that much deeper, longer-lasting cuts -- more akin to the post-Soviet government pact of the mid-1990s -- will be required in order to rebalance a market.
"We believe that disciplined action by the industry is required to reduce the overhang that exists," analysts at Dahlman Rose & Co said on Friday.
They said Alcoa's action would be a wake-up call, with further cuts likely to come from relatively higher-cost producers in China, which represents some 40 percent of global capacity.
Alcoa's action appeared to mark a step in the right direction. Some 291,000 tons of annual capacity that it had idled in 2009 will now be shuttered completely, removing the threat of a quick restart that could sink the market once again. It will also curtail another 240,000 tons of annual capacity in production at undisclosed locations. The closures equate to just over 1 percent of the 46-million-tonne per year market.
London Metal Exchange aluminum prices rose only $10 to $2,039 per ton on Friday, signaling that much more would be required to revive a market that's fallen by more than a quarter since last May.
One particularly frustrated trader said cuts need to be greater than in 2009 when at the height of the global economic crisis global output fell by just over 2 million tons to 37 million tons, according to Reuters data.
Market conditions have deteriorated in the last six months, particularly in Europe where demand has ground to a halt due to the debt crisis in the Euro zone, and concerns have mounted about weakening Chinese consumption.
In November, Alcoa announced it would perform unplanned maintenance on some flat-rolled facilities in North America and Europe due to a dramatic reduction in orders.
"The only good news will be if it prompts others to follow suit a bit like 1994," said a dealer at a ring-dealing member of the LME.
So far there appears little rush. Norwegian producer Norsk Hydro (NHY.OL) told Reuters on Friday it was prepared to lower output if prices remain low, , but other major producers including Rusal, Rio Tinto Alcan and BHP Billiton declined to comment.
Rusal and Rio Tinto Alcan both operate smelters using lower-cost hydro electric power-Rusal in Siberia and Rio Tinto in Canada-which means they can withstand the lower prices for longer.
SUSTAINED
This time around, cuts may need to be deeper and more sustained than in 2008, for several reasons.
The speed of aluminum's recovery in 2009 took the market by surprise - from the depths of $1,300 per ton in early 2009, prices surged over 80 percent in value within a year to $2,400 per ton largely on stronger-than-expected demand from China.
But supply also responded and by 2010, global output had already risen to a new high of 40.7 million tons, driven by China's investment in its own smelters and by forecasts of long-term demand growth.
"The price recovery was too quick for anyone to take long-term action. Back in 2010, it looked like we need more metal for Asia," said a senior executive at a large consumer.
Low interest rates have also played a role in creating the massive inventory that overhangs the market, with almost 5 million tons in LME warehouses and a similar tonnage estimated by traders to be sitting in off-warrant storage -- enough to cover global demand for three months.
Incentives by warehouses to lure metal into their storage have given traders a reason to dump unwanted metal, lock it up in financing deals and earn money on the spread -- giving producers less of a reason to slash output.
"The market was oversupplied even in 2008. The industry was still creating inventory but just at a slower rate," said a European trader frustrated at the size of the LME stocks, particularly in Detroit and Vlissingen.
PAINFUL MEMORIES
Memories of 2008 are still painful, but those with longer careers also remember the turmoil of the early-1990s when the former Soviet Union flooded the market with material following the collapse of the Berlin Wall.
By 1993, that surge had annihilated prices to close to $1,000 per ton and the industry, dominated at the time by Europe and Canada, was on its knees.
In an unprecedented move, the governments of the European Union, the United States, Russia, Norway, Australia and Canada, all of which are leading producers, hammered out a voluntary agreement known as the "Memorandum of Understanding" in early 1994 to try and revitalize their countries' manufacturing sectors.
The governments came to an understanding that capacity by their countries would be reduced. Russia agreed as much as 500,000 tons, with the cutbacks that year totaling some 1.2 million tons, according to the U.S. Geological Survey. That equated to about 6 percent of total global output.
The result of the deal transformed the fortunes of the global industry in an astonishingly short period of time.
"Producers colluded through the arms of their governments," said the senior executive, who worked for Alcan at the time remembering the deal. "The price was $1,072 in November 1993 and peaked at $1,295 in January 1995."
Such an audacious move may not be possible in 2012 given anti-trust laws and the dominance of China in the aluminum industry, but some say the industry could learn lessons from the principals behind the MoU of an industry-wide move.
But with Liberum Capital estimating that almost a third of global primary smelting capacity is loss making at $2,000 per ton, additional industry smelter closures look likely.
"Once you start to see producers bleed you know you're coming close to fundamental support," said Andrew Keen, Global Head of Metals and Mining Equity Research at HSBC. "People don't produce for free. I would imagine a lot of producers are navel-gazing at the moment to see if they should turn off or not."
(Writing by Josephine Mason; Editing by Bob Burgdorfer)

Alcan: Big Rivers' rates threaten smelters

Evansville Courier & Press - 07-Jan-2012

In mid-2009, the future looked promising for two of the biggest industries in northwestern Kentucky — the Rio Tinto Alcan and Century Aluminum smelters.
They had secured a new long-term contract for the enormous amounts of electricity they need at prices the companies thought could keep them competitive; that power is vital, accounting for one-third of their cost to produce aluminum.
Further, power producer Big Rivers Electric Corp. didn't anticipate a need to raise rates until 2016.
But after sales of surplus electricity to other power companies came in lower than expected, Big Rivers requested an increase in rates last year. In November, the Kentucky Public Service Commission granted a rate increase that will hike the Alcan and Century power bills by a combined $14.2 million per year — $6 million just for Alcan's Sebree smelter.
Now, the smelters say they are less sure of their ability to survive against worldwide competitors, which pay much less for electricity.
That's especially true if aluminum prices — already down by one-fourth since last April — should plummet further in another economic downturn.
"Seventy-five percent of U.S. smelters have lower power costs," Alcan's Pam Schneider told the board of the Northwest Kentucky Forward economic development organization last week.
Worldwide, she said, aluminum smelters pay an average of $26 per megawatt of electricity; the U.S. average is $28.
"Ours was $43 before the rate increase" that Big Rivers won from the Kentucky Public Service Commission in November, Schneider said. "Now it's $51 to $53."
Compounding the issue, she said, is that aluminum companies don't set their prices. Like corn or crude oil, metals are commodities that are bought and sold daily on the London Metal Exchange; prices can plummet in mere months.
"This is the challenge," Schneider said.
Aluminum prices peaked at $3,300 per metric ton ($1.50 per pound) in mid-2008 before plummeting to just $1,250 per metric ton (57 cents per pound) in late February 2009.
Prices rallied last spring, topping $2,750 per metric last April before falling to $2,000 per metric ton (just under $1 per pound) today. That's still relatively high by historic standards.
"When (aluminum) prices are high, we're fine," Schneider said. "It's when the LME drops that we're at the risk of closure."
"We have to find a solution," she said. "We won't survive with power costs that are twice the world market."
The threat is real. "Twelve smelters have been shut down in the past 10 years because of power costs," she said.
Alcan and Century are pursuing several avenues, including:
Appealing the rate increase: On behalf of the smelters and other large industrial customers, the Kentucky Industrial Utility Customers trade group filed a lawsuit in Franklin Circuit Court last month, appealing Big Rivers' rate increase.
It's been common practice around the country for industries to partially subsidize residential customers' rates. Until recently, the smelters and other large industries subsidized home rates in Big Rivers' system by $13.5 million per year, according to KIUC. The smelters last year sought to eliminate that subsidy entirely.
But the PSC insisted on sticking to its years-long policy of cutting such subsidies "gradually, in incremental steps." So in setting new rates for Big Rivers, the commission only partially scaled back the subsidies, by $2.4 million per year.
In its appeal, KIUC cited a state statute in insisting that the PSC's "refusal to eliminate the subsidy is unreasonable and unlawful."
KIUC labeled other aspects of the state regulators' decision as "arbitrary, unreasonable and unlawful."
Big Rivers President and CEO Mark Bailey said it would be difficult for the approximately 110,000 homes it serves to absorb a rate increase big enough to eliminate all of the subsidies at one time.
"The problem is, it can't be solved through the remaining members on our system," Bailey said. "It's just too much."
While saying that it is "highly sympathetic to the smelters' concerns about their continued
viability and competitiveness," the PSC stated in the order that it has limited authority to address those concerns.
State aid: Alcan's Schneider indicated the smelters will seek help from the state to preserve the high-paying jobs. The smelters' employees average about $60,000 each in wages or salaries, according to a study last year by a University of Louisville economist.
"Rio Tinto Alcan and Century are vital to the northwest Kentucky economy," Schneider said. Alcan employs approximately 500 people while Century's plant at Hawesville has 900.
"These are 'family jobs,' " she said. "Our employees can send their children to college."
The smelters account for 4,733 direct and spinoff jobs in this region, including payroll of $176.3 million and $12.2 million in local and state taxes, Schneider said.
It's in the state's economic interest to ensure that the smelters survive, as some other states have done, she said.
For example, Ohio is providing $60 million in support for Ormet Corp.'s aluminum smelter in Hannibal, Ohio, according to Schneider. In New York and Washington states, Alcoa has restarted closed potlines after securing long-term contracts from public power authorities at rates 40 percent below the world average.
During last year's rate case, the smelters suggested Kentucky establish a statewide development fund, provisions for tax credits and redistribution of their massive electrical load among multiple utilities as possible solutions, according to the PSC.
"We're going to need some relief and some help on power costs," Schneider said, urging Northwest Kentucky Forward board members to encourage legislators and Gov. Steve Beshear to help the smelters.
Big Rivers' Bailey is supportive, saying that the state should be motivated to protect the economy of northwestern Kentucky and that the federal government should help as well, saying retaining the nation's remaining producers of primary aluminum "is a security issue."
"I'm not sure how to solve (the smelters' competitive issues) locally," he said.
Efficiencies: "Since we don't control the price of metal, we have to control the cost of making metal," Schneider said.
Rio Tinto Alcan has taken some steps toward improving the Sebree smelter's cost of producing a pound of primary aluminum. It has just completed $35 million in efficiency improvements at the plant's bake furnace.
Further, Schneider said just before Christmas, the company approved a $20 million project to boost electrical amperage at the smelter; the goal is to boost the plant's annual production from 195,000 metric tons per year to 206,000 metric tons, lowering the plant's cost to produce a pound of aluminum.
And Rio Tinto Alcan has designed a site adjacent to the Sebree smelter in hopes of enticing aluminum-related industries that could buy hot metal straight off the potlines. That would eliminate the need and expense for such industries to operate furnaces to remelt aluminum, Schneider noted, and could create as many as 500 jobs while providing Alcan with new customers next door.
"We've got some pretty interested people," she said of the concept. "But we've got to make sure we are there 10 years from now or those businesses will not come."

Alba hits record metal production in 2011

Trade Arabia -  07-Jan-2012

Aluminium Bahrain (Alba), one of the world's largest aluminium smelters, said it has achieved the highest metal production in its 40-year history in 2011 with 881,310 metric tonnes, a substantial leap from 850,700 mtpa achieved the previous year.
Announcing the historic feat, Alba chief executive, Laurent Schmitt said the company's commitment to operational efficiency and the active involvement of its talented workforce enabled the company to achieve the highest metal production in its 40-year history.
He was speaking at a ceremony held to mark this accomplishment at the Princess Sabeeka Oasis on Thursday in the presence of Alba chief supply chain officer and acting chief operation officer, Isa Al Ansari, chief financial officer, Tim Murray and chief marketing officer, Jean Baptiste Lucas and other senior company officials.
Commenting on the success, Schmitt said, 'It was a challenging year for most industries in Bahrain, and yet, in 2011, Alba succeeded in achieving the highest metal production in the company’s 40-year history.'
'This achievement is significant because it was accomplished without incurring any additional expenditure and was due to the effective teamwork and active involvement of Alba’s talented work force,' he noted.
The production figures for 2011 reached 881,310 mtpa which was the highest level ever recorded and a substantial increase from the 850,700 mtpa that was produced the previous year, said Schmit.
“In addition, Alba’s introduction of Six-Sigma to strengthen quality initiatives across the organisation as well as implementation of lean management techniques to help build a culture of continuous improvement played a substantial role in enabling Alba to achieve this record,' he noted.
According to him, the success of Alba SmartWay launched in 2010 as a bottom-up approach to achieve improved competitiveness provided a key cornerstone in bringing about greater operational efficiency to sustain regional and global challenges in the decades to come.
'Alba’s high-grade aluminium product range includes standard and T-ingots, extrusion billets, rolling slab, propertzi ingots and molten aluminium. They are produced to high purity standards that exceed 99.9 per cent,' he added.-TradeArabia News Service

Norsk Hydro may reduce aluminum output

Arab News - 06-Jan-2012

OSLO: Norwegian aluminum producer Norsk Hydro sees economic uncertainty denting demand and is prepared to lower production if prices for the metal stagnate, its chief executive said on Thursday.
"It is too early to say how 2012 will turn out, but we see now that the uncertainty is influencing our end user markets," Chief Executive Svein Richard Brandtzaeg told Reuters on the sidelines of a conference on Thursday.
Hydro, one of the world's top aluminum makers, said in December it saw demand for primary aluminum outside China rising by 3-5 percent in 2012, after total demand growth slowed to 7 percent in 2011 from a 19 percent rise a year earlier.
"Our customers are concerned, and we see that production volumes and the lead times are going down... we are ready to reduce production even further, utilizing the flexibility in our production system."
Hydro announced in November it would not restart idled capacity at its Sunndal primary aluminum smelter in Norway until market conditions pick up.
Southern European demand remains weak and now France is turning softer as well, Brandtzaeg said, adding that the automotive sector in the United States is also weakening.
"It is the building and construction sector that is the main market that has been hit, and we see in packaging still positive and good demand, but automotive will be a question mark, how that will pan out in the coming months?" he said.
Aluminum prices have declined below many producer's break-even level in recent months with the London Metal Exchange (LME) three-months aluminum price currently down to $2,043 a ton from its peak of $2,800 in May.
Brandtzaeg said that though the price level was not very low on a historical perspective, volatile costs over the last few years had caused trouble for many producers.
"We have quite a margin squeeze in this industry now," he said.
"As more than 30 percent of the capacity is losing money, we see that if there a losses for a longer time, we will see curtailments.
While many steel makers have announced cutbacks in response to the economic uncertainty, aluminum producers in general have been reluctant to cut production despite many of them losing money.
"Maybe there is some hope in the industry that the market will return, but it also costs a lot of money to restart capacity in aluminum, so there is a cost element that is very different from steel. It is still too early to say how this will develop," Brandtzaeg said.
He added that the company's flagship 50/50 Qatalum joint venture plant in Qatar was running at full capacity.

Alcoa closing Blount smelting operation

Kingsport Times News - 06-Jan-2012

Efforts by Alcoa Inc. to restart its idled Blount County smelting operation were dashed for good Thursday with the announcement the company will permanently close the facility as part of a decision to close or curtail 531,000 metric tons of smelting capacity.
Local Alcoa officials have been looking for aluminum prices to rise and were trying to negotiate a long-term power contract with TVA, all with the goal of restarting the smelter. In 2009, the company idled the operation because of plunging aluminum prices and laid off 450 workers. Now, it appears there will be no smelter where they can be called back to work.
"It is a sad day," said Christy Newman, spokeswoman for Alcoa's Blount County operations.

Alcoa to Cut Capacity 12%

Wall Street Journal - 06-Jan-2012

PITTSBURGH—Alcoa, the world's biggest aluminum company, said it will slash global smelting capacity by 12%, as high costs and slumping prices threaten profits.
Alcoa said it will permanently close the smelter in Alcoa, Tenn., a small community founded in 1919 around the company's aluminum plant.
"The plant would have needed a major investment to be competitive with other smelters around the world," said Mark Johnson, Alcoa's city manager. The smelter was idled in 2009. Alcoa spokesman Mike Belwood said the company has no current layoff plans and said the handful of workers maintaining the Tennessee smelter since 2009 will be reassigned.
Alcoa Chief Executive Klaus Kleinfeld promised the company would work with unions and affected communities to "explore ways to redevelop" the closed facilities. "We recognize our responsibility to the people and communities of the affected facilities."
Alcoa, Tenn., pop. 6,920, lies in the foothills of the Great Smoky Mountains. "We're here because of the company," said Patricia Tipton, a spokeswoman for the mayor's office. The town will not have to change its name just yet: It will keep an Alcoa recycling and rolling mill plant that employs 1,000 people.
Thursday's decision comes days before Alcoa kicks off the earnings season with its fourth-quarter results, which promise to be disappointing due to difficult market conditions and now, added restructuring charges.
Alcoa said total restructuring-related charges for the quarter are expected to be between $155 million and $165 million after-tax, or 15 cents to 16 cents a share. Prior to the announcement, analysts forecast the company's earnings per share at around breakeven, down from 21 cents in the fourth quarter of 2010.
Aluminum prices have fallen more than 27% from their peak in 2011, due to slowing housing construction in China, which consumes almost half the world's aluminum, and debt chaos in Europe depressing economies there.
"These are difficult but necessary steps to improve Alcoa's competitiveness, preserve and grow shareholder value and protect jobs in the rest of the Alcoa system," said Mr. Kleinfeld.
In addition to closing the smelter in its namesake town, Alcoa also said it would close two of its six lines in Rockdale, Texas. The Texas and Tennessee closures together will cut annual capacity by 291,000 tons, or 7%. An additional 5% of undisclosed capacity will be curtailed in the first half of 2012.
Alcoa, which is based in Pittsburgh, currently smelts some 4.5 million tons of aluminum per year, for the beer and soda can, auto, aviation, construction, and other industries.
Lloyd O'Carroll, an analyst with Davenport & Co., said aluminum prices are "bottoming out around now." He said "there should be a small uptick [for Alcoa] in the first half of 2012, and a larger one in the second half." Aluminum is selling for about $2,000 a ton on the London Metals Exchange and is expected to reach $2,300 per ton for the year.
Cutting production will help, and is part of the company's wider strategy. Alcoa "is phasing out production in high-cost places, and increasing it in low-cost places," says Mr. O'Carroll.
For example, the company is building a massive new plant in Saudi Arabia, taking advantage of natural gas flares. Power is the main cost component in making aluminum. That's why production is often to be found in energy-rich places like Russia, which has plentiful gas, or Iceland, which has hydropower.

Alcoa cuts capacity by 12 pct due to low prices

Reuters Africa - 05-Jan-2011

* To cut output by 531,000 tonnes per year
* Sees Q4 restructuring charge of $0.15-$0.16/share
* Market eyeing to see if other producers will follow suit
* Shares drop 17 cents in after-hours trading
NEW YORK, Jan 5 (Reuters) - Alcoa Inc, the largest U.S. producer of aluminum, said it will slash its global smelting capacity by 12 percent, becoming the first producer to take direct action to cut costs amid a steep drop in metal prices.
The move will result in a restructuring charge in the fourth quarter that will push the U.S. producer into its first loss in nine quarters.
The cuts are likely to help boost prices , which have languished below $2,500 per tonne since August, traders said. Analysts estimate as much as a quarter of the global production is already unprofitable at that level.
But more brutal industry-wide cuts may be needed to allay deeper concerns about a slowdown in demand from key consumer China and a surplus of metal in the United States and Europe, traders said.
Unveiling what Chief Executive and Chairman Klaus Kleinfeld described as "difficult but necessary steps", Alcoa said it will cut output by about 531,000 tonnes per year and slash costs.
Its Tennessee smelter, which was curtailed in 2009, and two of the six idled potlines in Rockdale, Texas will be permanently closed to reduce global smelting capacity by 291,000 tonnes per year, or 7 percent.
A further 240,000 tonnes, or 5 percent, will be curtailed elsewhere, it added, without saying how many other plants or how many employees were affected.
Alumina output will be reduced to reflect the smelting curtailments as well as prevailing market conditions, it said.
SHARES DOWN, PRICES UP
While the news pushed Alcoa's shares down 17 cents to $9.19 in after-hours trading, traders expected London Metal Exchange prices to rise on the much-anticipated news.
"The market will be up a bit on this," said a New York-based trader noting that the market had hoped such a move would be in the offing.
"Everyone's been waiting for it to happen and nothing's happened until now. If it gets to $2,200 per tonne, there will be a tremendous amount of hedging," he said.
But it remains to be seen if other producers will follow suit or if the measures, in addition to production problems at Rio Tinto Alcan, will be enough to push prices high enough to stop the industry bleeding.
"I think they (Alcoa) would like not to be the only one, but it remains to be seen whether others will follow," said analyst Charles Bradford, of Bradford Research.
Alcoa's cut represents just 1.1 percent of estimated global output of around 46 million tonnes last year.
The market will be keenly watching for closures by Chinese smelters which have some of the highest production costs due to power prices and their reliance on imported raw materials, analysts said.
Some producers such as Norsk Hydro have indicated they would be prepared to lower production, but others may not be so swift to make the cuts. Rio Tinto's Canadian smelters use hydroelectric power and can sustain lower prices for longer.
Until now, the market has barely registered other hitches with output at other companies. Three-month aluminum dropped to $2,036 per tonne on Thursday from $2,065 a day earlier even after news of Rio Tinto's force majeure on deliveries from two of its Canadian smelters.
The temporary removal of 300,000 tonnes per year of Canadian capacity in addition to cuts at its Lynemouth smelter in England was not considered enough to make a dent in the surplus when demand shows no signs of picking up, traders said.
DIFFICULT BUT NECESSARY
Alcoa also plans to speed up efforts to lower escalating costs of raw materials, aimed at lowering the company's position on the world aluminum production cost curve by 10 percentage points, it said.
"These are difficult but necessary steps to improve Alcoa`s competitiveness, preserve and grow shareholder value and protect jobs in the rest of the Alcoa system," said Kleinfeld.
All the measures are expected to be in place by the first half of this year.
Alcoa said it will take restructuring charges of $155 million to $165 million, or 15 cents to 16 cents per share, in the fourth quarter.
That is certain to knock Alcoa into red-ink territory - a victim of slow demand and aluminum prices.
Prior to Thursday's announcement, the average Wall Street estimate for Alcoa's earnings per share was 1 cent, according to Thomson Reuters I/B/E/S. In the same quarter of 2010, Alcoa's profit was 21 cents per share.
Equity research firm Starmine, which gives more weight to estimates from analysts with a more accurate track record, had forecast Alcoa to post a loss of 4 cents per share. That would be the company's first loss since the second quarter of 2009.
At least 15 Wall Street analysts have cut their fourth-quarter earnings estimates in recent weeks for Alcoa, which is scheduled to announce results on Monday after the market close -- the first Dow component stock to report.
Aluminum prices fell 18 percent last year and 6 percent in the fourth quarter due largely to the euro zone debt crisis and fears of a slowdown in China.
Such industry-wide pain from low prices is the first since the global recession in 2008 and 2009 when swathes of capacity in the United States and Europe were taken off line.
But prices might not be the only factor behind Alcoa's decision to cut output.
The company's demand outlook was significantly more measured in the last earnings release in October.
At the time Alcoa chief Kleinfeld said he still expected a near doubling of aluminum demand in the next 10 years, driven largely by China and emerging markets. But he also noted weak economic conditions, particularly in Europe, because confidence in the global recovery has faded.
That has sapped aluminum demand from the automotive, industrial products, construction and packaging sectors since the second quarter, with only the aerospace and transport sectors growing, he said.
"We have seen a weakening trend in the last few months and it will show in the results," said Bridget Freas of Morningstar in Chicago. "Most analysts are blaming what has happened with the LME (London Metals Exchange) price and we ended the year on a low point."

Alcoa to Cut Capacity 12%

Wall Street Journal - 06-Jan-2012

PITTSBURGH—Alcoa, the world's biggest aluminum company, said it will slash global smelting capacity by 12%, as high costs and slumping prices threaten profits.
Alcoa said it will permanently close the smelter in Alcoa, Tenn., a small community founded in 1919 around the company's aluminum plant.
"The plant would have needed a major investment to be competitive with other smelters around the world," said Mark Johnson, Alcoa's city manager. The smelter was idled in 2009. Alcoa spokesman Mike Belwood said the company has no current layoff plans and said the handful of workers maintaining the Tennessee smelter since 2009 will be reassigned.
Alcoa Chief Executive Klaus Kleinfeld promised the company would work with unions and affected communities to "explore ways to redevelop" the closed facilities. "We recognize our responsibility to the people and communities of the affected facilities."
Alcoa, Tenn., pop. 6,920, lies in the foothills of the Great Smoky Mountains. "We're here because of the company," said Patricia Tipton, a spokeswoman for the mayor's office. The town will not have to change its name just yet: It will keep an Alcoa recycling and rolling mill plant that employs 1,000 people.
Thursday's decision comes days before Alcoa kicks off the earnings season with its fourth-quarter results, which promise to be disappointing due to difficult market conditions and now, added restructuring charges.
Alcoa said total restructuring-related charges for the quarter are expected to be between $155 million and $165 million after-tax, or 15 cents to 16 cents a share. Prior to the announcement, analysts forecast the company's earnings per share at around breakeven, down from 21 cents in the fourth quarter of 2010.
Aluminum prices have fallen more than 27% from their peak in 2011, due to slowing housing construction in China, which consumes almost half the world's aluminum, and debt chaos in Europe depressing economies there.
"These are difficult but necessary steps to improve Alcoa's competitiveness, preserve and grow shareholder value and protect jobs in the rest of the Alcoa system," said Mr. Kleinfeld.
In addition to closing the smelter in its namesake town, Alcoa also said it would close two of its six lines in Rockdale, Texas. The Texas and Tennessee closures together will cut annual capacity by 291,000 tons, or 7%. An additional 5% of undisclosed capacity will be curtailed in the first half of 2012.
Alcoa, which is based in Pittsburgh, currently smelts some 4.5 million tons of aluminum per year, for the beer and soda can, auto, aviation, construction, and other industries.
Lloyd O'Carroll, an analyst with Davenport & Co., said aluminum prices are "bottoming out around now." He said "there should be a small uptick [for Alcoa] in the first half of 2012, and a larger one in the second half." Aluminum is selling for about $2,000 a ton on the London Metals Exchange and is expected to reach $2,300 per ton for the year.
Cutting production will help, and is part of the company's wider strategy. Alcoa "is phasing out production in high-cost places, and increasing it in low-cost places," says Mr. O'Carroll.
For example, the company is building a massive new plant in Saudi Arabia, taking advantage of natural gas flares. Power is the main cost component in makingaluminum. That's why production is often to be found in energy-rich places like Russia, which has plentiful gas, or Iceland, which has hydropower.

Output still curbed at Rio Northumberland aluminium smelter

Reuters UK - 05-Jan-2012

Reuters) - Rio Tinto Alcan's Lynemouth aluminium smelter in Northumberland is still running at a reduced rate following a power cut in December which knocked out more than half its capacity, a spokesman said on Thursday.
"One production line (potline) is completely down and 25 percent of the other is also down. No decisions have been taken yet on pot restarts" John McCabe, corporate affairs director, Alcan Aluminium UK Limited said in an e-mailed response to questions.
Some industry watchers question whether the company will restart the pots, especially since in November, Rio Tinto, one of the world's top producers of aluminium, said it was set to close the Lynemouth smelter as rising energy costs put pressure on margins.
A consultation process on its closure is in progress and due to continue to the end of February.
Production problems are not confined to just Lynemouth.
On Wednesday, Rio Tinto declared force majeure on aluminium output from its Alma and Shawinigan smelters in Quebec.
The firm started slashing output at the 438,000 tonnes per year (tpy) Alma smelter on January 1, when it locked out more than 750 unionised workers after contract talks broke down.
It has also been forced to curb production by 50 percent at its 100,000 tpy Shawinigan plant following a circuitry failure.
A spokesman said it had yet to decide whether it would bring the idled capacity at the smelter back on stream before operations are due to wind down permanently by December 2014.
McCabe said the power cut at the 175,000 tpy Lynemouth smelter had been caused by an instrumentation failure with a grid transformer.
(Reporting by Karen Norton)

Rio Declares Force Majeure on Two Canada Aluminum Smelters

BusinessWeek - 05-Jan-2012

Jan. 5 (Bloomberg) -- Rio Tinto Group, the world’s third- biggest mining company, declared force majeure on shipments from two aluminum smelters in eastern Canada because of a technical glitch and a labor dispute.
Production capacity at the Shawinigan plant in Quebec was reduced by 50 percent after two of four pot-lines went off-line because of a circuit-breaker failure, the London-based company said yesterday. Output was cut to one-third of capacity at its Alma smelter, also in Quebec, as Rio Tinto Alcan locked out 755 workers on Jan. 1 after contract talks broke down in December.
“We’ve declared force majeure at Rio Tinto Alcan’s Shawinigan plant and Alma smelter,” David Luff, a company spokesman, said today by phone from Melbourne. Force majeure is a legal clause that allows companies to miss deliveries because of circumstances beyond their control.
The Alma smelter has annual capacity of 438,000 metric tons and the Shawinigan plant 100,000 tons. Rio said in October that its global production target for the metal for 2011 was 3.9 million tons.
“Rio Tinto Alcan will monitor the situation and keep customers informed of any potential impact to supplies and delivery schedules,” Luff said.
The shares closed 0.5 percent lower at A$62.85 in Sydney, while the benchmark index fell 1.1 percent.
Rio Tinto relies on aluminum for almost 25 percent of its annual sales, according to data compiled by Bloomberg. The metal producer doesn’t have a date for when output at the Shawinigan plant, scheduled to close in 2015, will be restored, Bryan Tucker, a company spokesman, said by telephone from Montreal yesterday.
--Editors: Andrew Hobbs, Indranil Ghosh
To contact the reporters on this story: Soraya Permatasari in Melbourne at soraya@bloomberg.net; Sonja Elmquist in New York at selmquist1@bloomberg.net
To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

Alcoa Earnings Estimates Plunge After Aluminum Drop: Commodities

BusinessWeek - 05-Jan-2012

Jan. 5 (Bloomberg) -- Alcoa Inc. earnings estimates have plunged the most in three years as analysts’ expectations mount that the biggest U.S. aluminum producer may even record a fourth-quarter loss.
Net income will tumble 94 percent to 1 cent a share from 21 cents a year earlier, according to the average of 18 analysts’ estimates compiled by Bloomberg. That’s 82 percent less than the average projection from a month ago. Eight of the 11 estimates compiled within the last 28 days are for New York-based Alcoa to post a loss in the fourth quarter.
The average price of aluminum, which is used in beverage cans, aircraft and window frames, was 11 percent lower in the quarter from a year earlier after global growth decelerated amid a sovereign-debt crisis in Europe and government action to control inflation in China. Supply is exceeding demand and inventories have soared, leaving some smelters unprofitable at current metal prices.
“You have 40 to 50 percent of global capacity under water at these levels,” Kuni Chen, an analyst with CRT Capital Markets in Stamford, Connecticut, who has a “buy” rating on Alcoa, said in an interview.
Shares of Alcoa rose 2.4 percent to $9.45 yesterday in New York. The stock slumped 44 percent last year, the biggest decline on the Dow Jones Industrial Average after Bank of America Corp.’s 58 percent drop. Alcoa, which is typically the first company in index to report earnings, is scheduled to publish its results after the close of trading on Jan. 9.
Commodities Drop
Mike Belwood, an Alcoa spokesman, declined to comment on earnings ahead of the announcement.
Net income of 1 cent a share would represent New York-based Alcoa’s worst quarter since the fourth quarter of 2009, when it posted a 22-cent loss.
The decline in the average of estimates for the fourth quarter of 2011 is the steepest since those made for the fourth quarter of 2008, according to data compiled by Bloomberg. Back then, the consensus view deteriorated to a 6-cent loss from a 7- cent profit 30 days earlier, after commodity prices tumbled amid a recession in the U.S. and Europe.
Aluminum for delivery in three months on the London Metal Exchange, the benchmark price on the world’s largest metals bourse, averaged $2,115 a metric ton in the fourth quarter. The metal traded at $1,956 on Dec. 14, a 17-month low and 30 percent less than the 2011 high of $2,803 on May 3.
‘Seen the Bottom’
Prices this year aren’t likely to retrace the decline seen in the second half of 2011, according to the average of 11 analysts’ price estimates. Aluminum will average $2,354 a ton in 2012, the data show.
“We’ve seen the bottom but it’s unclear exactly when it starts to go up meaningfully,” said Lloyd O’Carroll, an analyst at Davenport & Co., in Richmond, Virginia, who rates Alcoa a “buy.”
Global aluminum output exceeded demand by 953,516 tons in the first three quarters of 2011, according to data compiled by Bloomberg Industries. Inventories of the metal stored in warehouses monitored by major commodity exchanges rose 9.7 percent last year and stood at 5.19 million tons yesterday, the data show.
“Certainly by the middle of 2012 you’d see more supply come out” if prices stay at current levels, CRT’s Chen said.
“You have started to see production slowing in China in the last couple months,” he said. “That’s encouraging for the year ahead.”
Energy Costs
Energy costs at Chinese smelters are about $1,000 for each ton of aluminum produced, the highest in the world, Bloomberg Industries said in September. The cost of power represents about 30 percent of smelting costs, Bloomberg Industries analysts said in November.
The average price of crude oil futures rose 10 percent in the quarter compared with a year earlier. Other production costs also increased: Caustic soda, which is used to produce alumina from bauxite, jumped 11 percent on Nov. 25 from a year earlier, according to the most recent data from ICIS-LOR.
Alcoa is a fully integrated aluminum producer. It mines bauxite, an ore that contains aluminum, and refines it into alumina, the raw material used by aluminum smelters. As well as selling primary aluminum to industrial users, Alcoa makes products from the metal, such as can sheet and components for cars and aircraft.
Saudi Project
The company isn’t alone in feeling the pressure from lower prices and higher costs. Russia’s United Co. Rusal, the world’s biggest aluminum company, will post a 45 percent decline in fourth-quarter earnings, according to estimates compiled by Bloomberg.
Chief Executive Officer Klaus Kleinfeld in October forecast aluminum demand will double by 2020. The company is constructing a $10.8 billion mining, refining and rolling complex in Saudi Arabia with the Saudi Arabian Mining Co. to take advantage of cheaper electricity supplies derived from natural gas. The first commercial production is scheduled for next year.
“I think management is doing what they can to continue to move lower on the cost curve but obviously that takes longer,” Chen said.
--Editors: Simon Casey, Steven Frank

Bankrupt ZALCO in talks with 8 possible buyers

Reuters Africa - 05-Jan-2012

* Interested parties have to submit bids in next few weeks
* Plant may be sold as a unit or is parts
By Silvia Antonioli and Harpreet Bhal
LONDON, Jan 4 (Reuters) - Bankrupt primary aluminium producer ZALCO is in talks with eight potential buyers for a takeover of part or all of its plant in Zeeland, the Netherlands, the company's receiver said on Wednesday.
ZALCO, which has a production capacity of 275,000 tonnes per year of aluminium, filed for bankruptcy in mid-December. The plant, which had employed 500 people, was shut down a few days later due to lack of funding to pay energy suppliers.
"We have now started the bidding process, and there are eight parties interested so far," Ernst Butterman, one of the two official receivers, told Reuters in a phone interview.
"They got all the information from us, and we are now waiting for their offers."
The interested parties, which include local and international companies and financial and physical players, have a few weeks to submit their bids for the plant or parts of it.
"Any option is open," Butterman added.
ZALCO's production facilities include two furnaces for producing anodes, 512 electrolysis baths for making primary aluminium and two recycling furnaces, 10 preparation furnaces and four homogenisation furnaces for end products, according to its website.
It is owned by Geneva-based private industrial group Klesch through its subsidiary BaseMet, which also controls two other aluminium-producing plants: Aldel in the Netherlands and Voerdal in Germany.
The London Metal Exchange has suspended the ZALCO primary aluminium metal brand, and no more deliveries of the brand will be accepted for LME warranting, the exchange said on Tuesday. (editing by Jane Baird)

Courts grant Rio Tinto Alcan injunction against workers

MetroNews Canada - 03-Jan-20012

Locked-out workers at a Quebec aluminum processing plant will have to abide by certain rules after the company obtained a court injunction from the Quebec Superior Court.
According to the injunction, protesting Rio Tinto Alcan employees must keep approximately 150 metres away from the plant and limit groups of protestors to 20.
Rio Tinto sought the injunction on the second day of the lockout because company managers need easy access to the smelter without the obstruction of protesters, according to the company.
About 760 employees at the Alma, Que. plant were locked out after their contract expired on Dec. 31. At that time, Rio Tinto announced it would shut down 144 out of the plant’s 432 reduction cells for as long as the lockout was in effect.
The company has decided to begin the process of shutting down an additional 144 cells, leaving one-third of the Alma smelter’s capacity in operation, it announced on Jan. 3.
Leaders at the Syndicat des Métallos d’Alma — the union representing locked-out workers — say they suspect Rio Tinto is using replacement workers to continue production. This is illegal in Quebec.
Union officials say they saw helicopters landing at the smelter on Jan. 1 with numerous passengers on board.
While Rio says about 200 managers will continue operations at the plant, the union claims the smelter requires nearly 1,000 workers and managers when running at full capacity.
The union said it is asking Quebec’s Labour Ministry to investigate whether provincial labour laws are being obeyed.
The two parties disagree over subcontracting conditions. The union is demanding that retiring workers be replaced with unionized hires, while Rio Tinto wants the option of subcontracting out some of the work.
The parties have been in negotiations since Oct. 4, 2011.

PHOTOS: The Aluminum Factory Where Oleg Deripaska Got His Start

Business Insider - 03-Jan-20012

Aluminum is the third most common chemical element on Earth after oxygen and silicon.
Russian oligarch Oleg Deripaska built his fortune by creating the largest aluminum company in the world RUSAL, which accounts for 11% of aluminum production and 13% of alumina production worldwide.
Deripaska and the RUSAL empire got their start at the Sayanogorsk aluminum smelter plant in south central Siberia, Russia, where the future billionaire was a director from 1994 to 1997.
A Russian photo blog Drugoi got an inside look at the Sayanogorsk factory and took some beautiful images of how aluminum is made.
Click here for the photos

RUSAL PROFILE: Aluminium producer looks to cut debt and costs ...

American Metal Market - 03-Jan-2011

Rusal is building the Boguchansk and Taishet aluminium smelters in Siberia, with the aim of creating more than 10000 new jobs....

Taha Starts Aluminum Dross Processing in New Zealand

Recycling Today - 02-Jan-2012

Taha Asia Pacific Ltd., the New Zealand subsidiary of Taha International Corp., Bahrain, has begun processing aluminum dross at its newly opened facility in Tiwai, New Zealand. Taha says it is using a mechanical system to extract all the trace aluminum that will then be returned to an aluminum smelter in New Zealand.
The dross being processed by Taha has been harvested from a landfill in Tiwai. According to Taha Asia, after extraction, the company is left with a high-grade aluminum oxide, which is further processed by another company, Taha Fertilizer Industries, which then converts the material into mineral fertilizer.
To grow its dross processing business, Taha Asia Pacific has formed a partnership with Invest South Ltd. Partnership to strengthen its operations throughout Asia.
Taha Fertilizer Industries was scheduled to begin operations in November 2011, and will employ 10 people.
Construction of the plant started in early 2011 at New Zealand Aluminium Smelters. The facility will process aluminum dross, including around 40,000 metric tons of dross that has been landfilled in Tiwai.

Rio to cut Quebec smelter output after lockout

Reuters Canada - 01-Jan-2012

(Reuters) - Rio Tinto Alcan will shut down about a third of the production at its 438,000-tonne Alma aluminum smelter in the Canadian province of Quebec after locking out hundreds of unionized workers in a contract dispute, it said on Sunday.
Earlier the unit of the Anglo-Australian mining giant said it locked out about 800 workers at the smelter in Saguenay-Lac-Saint-Jean, Quebec, located 480 km (about 300 miles) northeast of Montreal.
Rio said it had begun an orderly shutdown of 144 out of 432 reduction cells at the smelter and would continue to operate the remaining capacity using company staff until further notice.
Rio said it had been bargaining with the union, Syndicat des travailleurs de l'aluminium d'Alma, since October 4. The contract expired on December 31.
Union representatives could not be reached immediately for comment.
(Reporting By Frank McGurty, editing by Leslie Gevirtz and Dale Hudson)

Rio Tinto Alcan initiates lockout at Alma smelter to protect the ...

Canada NewsWire (press release) - 01-Jan-2012

MONTREAL, Jan. 1, 2012 /CNW Telbec/ - Rio Tinto Alcan has initiated a lockout at its 438,000 tonne Alma smelter in Saguenay-Lac-Saint-Jean, Quebec after the Syndicat des travailleurs de l'aluminium d'Alma (Alma aluminium workers' union) rejected the company's final proposal for an agreement. Every effort has been made to reach an agreement in the best interests of employees, customers and the business. During the lockout, Rio Tinto Alcan staff will continue to operate the plant until further notice.
Rio Tinto Alcan has been bargaining with the union since 4 October 2011. The union's contract expired on 31 December 2011. Plans are in place to ensure that our aluminium operations throughout the region continue to run safely and efficiently, and we will work to limit the labour disruption's impact Rio Tinto Alcan's customers.
The Syndicat des travailleurs de l'aluminium d'Alma represents 755 employees at the plant, including 674 hourly workers, 25 office personnel and 56 workers at the pot relining centre.