AluNews - August 2013

Dubal's growth story

Arabian Business Publishing Ltd. - August 30th, 2013,

In 1978, a small group of men stood on a dusty outcrop just to the south of Dubai in a meeting that would cement the emirate’s future as a trading hub. Front and centre in the group was Dubai’s ruler, Sheikh Rashid bin Saeed Al Maktoum, who was quickly convinced of the idea of building a manmade port to serve the emirate’s brand new aluminium smelter.

Dubai today is well-known as a glitzy tourist hub, the gateway to the Gulf and home to the planet’s tallest tower, but the city’s success has in many respects stemmed from that fateful decision 35 years ago.

Jebel Ali swiftly became the world’s largest manmade port, and the implementation of a free zone in the area has attracted thousands of companies to set up base in the city. Jebel Ali now plays host to a series of industries, including manufacturing, utilities and logistics. Elsewhere, the growth of Emirates Airline has supercharged Dubai’s retail, tourism and property markets.

It’s sometimes easy to forget that aluminium is where it all began, but this sector is thriving just as much as any of Dubai’s other industries. A discreet exit off Sheikh Zayed Road highway in Jebel Ali, away from the shopping malls and residential areas, leads to a city within a city.

Dubai Aluminium (Dubal) has its base in a large area buzzing with machinery and workers in protective gear and warehouses, separated from the rest of Dubai by power lines and a few kilometres of desert. Dubal’s headquarters is structured like a fort, with a security point at the entrance and special vehicles that are cleared for transportation within the area.

It is here that Dubal runs a business that has blossomed into one of the largest aluminium producers in the world.

Aluminium is a popular metal, second in use to steel, that is found in a vast range of products from cars and planes to soda cans and foil. While specific producers and merchants used to deal almost exclusively with the commodity, the entrance of investment banks into this market in recent years has brought changes to normal operations that has affected the entire industry.

Data from Bloomberg showed that for the past eight years, global supply has exceeded demand, contributing to falling global aluminium prices. Now, investment banks have a hand in managing and restraining supply of aluminium to the market. The banks have set up warehouses at the London Metal Exchange where aluminium is stored, which gives them control over supply, and as a result, prices as well.

This makes nice returns for the banks, but it also means that the commodity has become pricier (and prices more volatile) for both producers and consumers.

As the $100bn industry grows, producers, consumers, banks, and regulators are now actively trying to give structure to the market for the commodity. Add to that the strain from the recession years and it’s clear that this hasn’t been an easy time for the aluminium industry globally.

Even some of the most successful companies in the industry, such as British-Australian giant Rio Tinto and American firm Alcoa, admitted to struggles openly this year. Alcoa reported a $119m net loss in the second quarter of 2013 and expressed concern over potential closures of some of its smelters. Meanwhile, Rio Tinto is entertaining plans of reducing local production as the costs of production continue to rise.

It is within this environment that Dubal has made decisions and structured its business in a way to not only stay afloat, but to perform relatively well.

Abdulnasser Kalban, Dubal’s general manager, Power & Desalination Maintenance, has his modest office in an unmarked building in Dubal’s busy headquarters, with wide windows where he can look out over the company that he has helped to manage costs, ride out the recession, prepare for growth, and brace for change.

“The last three years were very tough with the recession, for us and for the commodity market in general,” he says. “Our biggest development this year is the announcement of a merger with Abu Dhabi counterpart, Emirates Aluminium Company, to form a new entity.”

In June 2013, Abu Dhabi and Dubai joined hands by merging Abu Dhabi-based Emirates Aluminium Company with Dubal to create Emirates Global Aluminium. This took place after the Mubadala Development Company in Abu Dhabi bought a 50 percent stake in Dubal. The $15bn joint venture, Emirates Global Aluminium, is intended to form a new industrial giant in the United Arab Emirates by integrating the businesses of Dubal and Emal, with plans for significant local growth and international expansion. While approvals are still pending, joint operations should begin in the first half of 2014.

From the start, there has been a close working relationship between Dubal and Emal, according to Kalban. This has included a single marketing and sales function, collaboration in the procurement of strategic raw materials, technology transfer, and operator training.

“Greater unification is the next, most natural step,” says Kalban.

Dubal’s key markets will continue to focus on Asia, Europe, the Middle East and North Africa region, and the Americas. The company is also capturing new market segments, with measurable success in penetrating the South American market recently. In 2011 and 2012, approximately 33,000 tonnes of Dubal products were shipped to South America.

Dubal manufactures an array of high-quality, premium products in three main forms: foundry alloy for automotive applications, extrusion billet for construction, industrial and transportation purposes and billets for forging applications, and high-purity aluminium for the electronics and aerospace industries.

More than 88 percent of Dubal’s total production volume is exported each year, with Dubal products being shipped to about 300 customers in nearly 60 countries across five continents.

Much of Dubal’s raw materials come from Australia and Brazil. The company is also involved in bauxite mine and alumina refinery development projects in Brazil, Cameroon and Guinea.

The new Khalifa Port (KIZAD) will also play a key role in the import of raw materials and export of finished products in higher volumes for Emal, which will increase Emal’s total production capacity to 1.3 million by 2014 – around the time the merger should be formally complete.

“Two ports like Jebel Ali and Khalifa Port will give us flexibility with shipping lines and make it easier to import raw materials and export goods,” says Kalban. “Many of our customers will be opening new facilities in KIZAD as well, which will help us improve our deliverability for finished goods and metals.”

Kalban explains that during the recession, a lot of aluminium producers curtailed production due to high costs.

“Where other competitors can’t reduce costs, some of them forced themselves out of the market, which created room for us,” he says. “The important thing is to produce high quality metal for our customers and uphold our brand.”

Cutting costs has been a key focus for Dubal. The company has had a stringent focus on cash generation, cash conservation, and cost reduction since 2008, an ethos which has contributed to Dubal’s sustained profitability and the company’s position in the first quartile of the cost curve for the global aluminium industry.

In 2009, Dubal entered into a $45m agreement with GE Energy to reduce the production costs of making aluminium and ensuring that the nineteen GE gas turbines that power the Dubal smelter complex are energy-efficient.

As Dubal has grown into one of the world’s most productive aluminium smelters, GE has helped Dubal to manage costs and maintain energy efficiency – which is no easy feat in the desert, particularly with regard to the necessary amounts of power and water that are needed to keep operations running smoothly.

In 1980, GE had installed nineteen gas turbines in Dubal’s complex, so when Dubal approached GE again in 2009, the company was prepared to make changes. GE replaced aging machines with new turbine technology and built a data monitoring system to maintain efficiency. The new GE system makes Dubal’s smelter 22 percent more efficient, reduces nitrogen oxide by almost one third, and saves $4m in annual fuel costs for Dubal. The upgrade actually paid for itself in three years.

“The aluminium sector is very challenging globally, and Dubal’s success is underlined by the visionary approach of its leaders to not only adopt the best-in-class technologies but also to invest in its professionals and on sustainable growth,” says Mohammed Mohaisen, CEO of Power Equipment and Services Sales of GE Power & Water, Middle East. “We are honored to have been a key partner of Dubal, supporting its objectives of maximising operational and cost efficiencies and conserving the environment.”

In fact, Dubal won top honours in last year’s Aluminium Summit in New York for the systems modernisation powered by GE technology. Since implementing the system, output has increased by 22.69 percent through upgrades of five GE 9B gas turbines. This boosted electricity capabilities by 75 million watts, which is enough to power more than 60,000 homes.

“Sustainable performance also depends on ensuring access to resources and maintaining a good image,” says Kalban. “This means ensuring safety for people and the environment, effective governance in the company, and acting in a socially responsible manner.”

Despite the cost cuts, the company has a clear growth strategy in place that is in line with the merger plans. Dubal develops much of its own technology in-house, with a dedicated research and development team, helping the company stay ahead of the game.

“We have invested heavily over the years in developing advanced technologies that increase productivity, but also reduce the impact of smelter operations on the environment through improved energy efficiency and minimised emissions,” says Kalban.

This culminated in Dubal’s in-house reduction cell technology, which is currently one of the most efficient reduction cell technologies currently available in the world. Developed in 2006, DX Technology has been operational in Dubal’s Jebel Ali smelter complex since 2008. The technology now offers higher productivity levels, an energy-efficient design that enables lower energy consumption, and reduced environmental impact and carbon consumption levels in areas of Dubal and Emal.

The new entity, Emirates Global Aluminium, will also be a source of new jobs; the company reports that there are currently 6,200 direct jobs in Emal and Dubal, with an additional 19,000 indirect jobs in the UAE’s aluminium sector. Once complete and operational, Emirates Global Aluminium is expected to create a further 2,000 direct and 6,000 indirect jobs by 2020. This will mean a total employment of over 33,000 people in the UAE aluminium sector by 2020 – a development that is in alignment with the government’s job creation agendas.

The company is also actively recruiting UAE nationals to be a part of the growth story. Some are recruited directly from school or at career fairs, while others are given scholarships to specialise in certain areas or enlisted in Dubal’s eighteen-month graduate training programme.

“The main challenge is how to make nationals able to adjust to the industrial culture, which is relatively new to the UAE, so this is not easy to do,” says Kalban. “With time, we’ll be able to help many people build a career in this important sector.”

The graduate training programme at Dubal has been in operation for about 30 years and is open to Emiratis only, with eighteen months of hands-on training for a trainee to learn how to become a supervisor. In total, 177 Emirati employees benefitted from Dubal’s training programme in 2012.

“We like to motivate people and find those who have a genuine interest in the field,” says Kalban. “We’ve sent some of our most promising trainees to universities like Harvard and Insead to specialise, because we really want to invest in our staff.”

Dubal also supports the efforts of the UAE to optimise energy utilisation and diversify energy sources. Dubal is a member of the Dubai Supreme Council of Energy and has invested AED20m ($5.4m) in the Sheikh Mohammed bin Rashid Solar Park. The company is also focusing on improving the thermal efficiency of the Dubal Power Plant.

“Generally speaking, Dubal’s main competitors within the industry are the major global aluminium producers, as well as other smaller players such as those within the Gulf region,” says Kalban. “By implementing advanced technologies and continually seeking to improve processes and practices, Dubal’s environmental performance is consistently at the leading edge and, in many instances, sets the industry benchmark.”

Emal Phase II to be ready by December

The Gulf Today - August 27th, 2013,

BU DHABI: More than seventy per cent of the construction of Emal’s (Emirates Aluminium) Phase II expansion is completed and on schedule to meet its December 2013 deadline, the company announced today.

Hailing its cooperation with Abu Dhabi Ports Company (ADPC), “Almost half of the containers of vital equipment had been unloaded and delivered to the EMAL Al Taweelah complex in the six months prior to February 2013.

Khalifa Port’s integrated logistics - which includes radio frequency identification (RFID) tags and automated gates - have contributed significantly towards this rapid progress,” the company said.

Cooperation with Abu Dhabi Ports Company (ADPC) is helping to ensure that the expansion of Emirates Aluminium (Emal) into one of the world’s largest single-site aluminium smelters.

By the time construction is due to be completed in December, around 5,000 containers destined for the EMAL complex will have entered the port, passed through customs and been transported directly to the site.

By February 2013, 2,408 containers had been successfully transported through Khalifa Port (1,192 twenty feet containers and 1,216 forty feet ones) delivering more than 67,000 tonnes of state-of-the-art equipment for the expansion of the industrial flagship.

Khalifa Port’s technology has helped to speed up delivery, allowing trucks to make two deliveries of containers every day to the site, which minimises the number of trucks required.

Commenting on the latest developments, Emirates Aluminium’s Vice President - Projects, Yousuf Bastaki, said, “One of the reasons for this success is the partnership we have developed with Abu Dhabi Ports Company, which has enabled smooth and efficient transportation of the vital equipment needed to build one of the world’s largest single-site aluminium smelters.”

“Such local partnerships highlight the unity that exists within the UAE to deliver world-leading projects which will provide the foundation for our future economic prosperity,” Yousuf Bastaki added.

Exceptionally large bulk pieces such as compressors, modules, transformers and turbines are currently discharged at Zayed Port in Abu Dhabi, barged directly to Khalifa Port and then discharged at Emal’s construction jetty.

Abdulkareem Al Masabi, Vice President Khalifa Port, Abu Dhabi Ports Company, added, “Emirates Aluminium is an anchor tenant at Kizad industrial zone with a dedicated berth at Khalifa Port, and is very much regarded as ADPC’s strategic partner.

“Emirates Aluminium’s purpose-built wharf at Khalifa Port shortens the supply chain of raw materials direct from sea to smelter. We have worked closely with the company to provide the very best logistic solutions for the delivery of construction materials through all of ADPC’s ports.

“We look forward to congratulating EMAL on the completion of its Phase II expansion and to supporting the company’s progress in support of the Abu Dhabi Economic Vision 2030 diversification strategy.”

Emirates Aluminium Company is a strategic joint venture between aluminium producer Dubai Aluminium Company (Dubal) and Mubadala Development Company.

It is a $5.7 billion project to construction and operate a new hi-tech aluminum smelter in the Emirate of Abu Dhabi and is one of the largest Greenfield aluminum smelter ever built.

Abu Dhabi Ports Company was established in March, 2006 as a master developer of ports and industrial zones in Abu Dhabi. ADPC was formed as part of the restructuring of the commercial ports sector in the emirate, and was given control and regulatory enforcement power over all commercial ports assets previously owned by the Abu Dhabi Seaports Authority (ADSA).

Khalifa Port, which was opened in September 2012, together with the development of Kizad (Khalifa Industrial Zone Abu Dhabi) are the major achievements of ADPC to date.

Through the planning and development of ports and industrial zones, the company continues to play a vital role in propelling economic growth in the Emirate of Abu Dhabi.

Alcoa Announces Further Production Cuts

Recycling Today - August 27th, 2013,

Company will close or curtail 164,000 metric tons of aluminum capacity in the United States and Brazil.

The aluminum firm Alcoa has announced plans to reduce its production of aluminum by around 164,000 metric tons by closing production at two locations. The cuts are part of Alcoa’s earlier announced plans to reduce its aluminum capacity by 460,000 metric tons to balance supply and demand. Alcoa had made the announcement on the cuts in May 2013.

To reduce its capacity by 146,000 metric tons the company has decided to permanently remove one potline at its Massena East plant in New York. The closure will remove 40,000 metric tons from the market. Additionally, the company will temporarily curtail around 124,000 metric tons of aluminum from its smelter operations in Brazil. The closures and curtailments are expected to be complete by October 2013.

“We committed in May to review our global smelting capacity for possible curtailment to maintain the company’s competitiveness,” says Bob Wilt, president of Alcoa’s Global Primary Products. “Aluminum prices, including premiums, have fallen to four-year lows and we continue to operate in an uncertain, volatile market.”

To date, Alcoa has announced closures or curtailments representing 269,000 metric tons of the 460,000 metric tons placed under review in May. This includes the permanent closure of 105,000 metric tons of capacity announced earlier this year at Alcoa’s Baie-Comeau smelter in Canada. In addition, Alcoa permanently closed its Fusina, Italy smelter representing 44,000 metric tons that was not part of the May review.

Once the Massena and Brazil closures and curtailments are complete, Alcoa will have idled 16 percent, or 646,800 metric tons of smelting capacity.

China, India raise alumina sales to Iran after sanctions push others out

Reuters - August 27th, 2013,

* Iran imported 30,000 T of alumina from China over June, July
* India's NALCO awards alumina tender to Iran producer
* Shipments are smelter grade, not chemical grade - traders
* Unlikely to have military or nuclear applications
By Polly Yam and Jatindra Dash
HONG KONG/BHUBANESWAR, India, Aug 27 (Reuters) - Iran has hiked purchases of alumina from China and India in the past two months as the country scrambles to shore up supply after the U.S. tightened sanctions on raw and semi-processed materials at the start of July.

Western measures targeting Iran's disputed nuclear programme have hit many sectors of its economy including industries producing steel and other metals, where it is heavily dependent on imports. Tehran says its atomic work is peaceful.

Tightened U.S. sanctions came into effect on July 1 that extended a ban on aluminium metal to cover raw and semi-finished metals as well. China and India have won waivers from any U.S. sanctions on their financial system related to trade with Iran because they have cut imports of Iranian oil.

China's alumina exports to Iran jumped to record levels in June and July, customs data shows, while India's national aluminium producer has awarded an alumina tender to Iran's national smelter in the past two months, company sources say.

"Iran has historically had a decent-sized aluminium industry. Given the savage squeeze in the international sanctions against it, clearly it's easier for Iran to do these kind of transactions with countries like China," said Nic Brown, an commodities analyst at Natixis in London.

"Particularly if they are handled as some sort of barter arrangement, where China gets its energy and in return it provides raw or intermediate goods," he added.

Alumina is a refined version of the raw ore bauxite. It is typically used to make aluminium, but in its high purity form it can have sensitive military applications.

But the price of the material would indicate that Iran's imports from China and India are likely to have been of lower quality smelter grade alumina rather than the high-purity material known as chemical grade, traders said.

Chemical grade alumina can have military uses, such as to make ceramic composites used in missiles and armour.

The prices Iran paid for the material from India and China were less than a quarter of that for chemical grade material. Aluminium alloys can be used to make tubes for uranium enrichment gas centrifuges. Most newer gas centrifuges are made of a carbon composite material, though Iran's current centrifuge programme in operation is based on aluminium. Aluminium is also used in everything from cars to aircraft, buildings and cans.

INDIAN TENDER

China, the world's top producer and consumer of alumina, exported 15,072 tonnes to Iran in July and 15,078 tonnes in June, customs data showed.

That compared with sales to Iran of 553 tonnes for the whole of last year, out of China's total 2012 alumina exports of 43,293 tonnes, customs data shows.

It is unclear from official customs data which companies have been selling to Iran and where the alumina was produced.

Sources in international and Chinese trading houses said the alumina recently shipped to Iran probably came from China's bonded warehouses, where the alumina has not paid China's 17 percent value-added tax, which means the metal was most likely produced outside of China.

Iran has been paying a premium to domestic Chinese prices, making the metal attractive to re-export rather than import into China, traders said.

In India, the National Aluminium Co Ltd (NALCO) has awarded a sell tender to the Iran Aluminium Company (Iralco), two sources said.

The European Union sanctioned Iralco in December 2012 for supplying aluminium to The Iran Centrifuge Technology Co (TESA), which is a subsidiary of the Atomic Energy Organization of Iran (AEOI).

Swiss trading giants Trafigura and Glencore Xstrata have both supplied alumina to Iralco in the past as part of barter deals in exchange for aluminium, but both halted supplies over new EU sanctions.

NALCO company officials, including Chairman and MD Ansuman Das declined to comment on the tender award.

Iralco could not immediately be reached for comment.

IRAN TRADE TIES

A senior official at India's mines ministry, under which state-owned NALCO operates, said the government was not looking into the issue but could investigate if required.

"In general, we do not have anything against trade ties with Iran," the official said.

The sale was for 30,000 tonnes of alumina to Iralco and shipments were due to start in August, the sources said.

The deal comes as India tries to boost exports to Iran to balance a trade deficit with the country due to India's oil imports. India is seeking to boost overall exports worldwide to shore up its currency, which has sunk to record lows.

"(The) Indian government is encouraging exports to Iran. There is nothing wrong in NALCO exporting alumina to that country," a senior company official who declined to be identified due to corporate policy told Reuters.

NALCO said last week it planned to raise its alumina exports by 40 percent to 1.4 million tonnes this fiscal year to help India increase dollar inflows as global investors dump emerging market currencies anticipating the gradual end to U.S. stimulus.

UC Rusal to Upgrade Aluminium Smelter in Krasnoyarsk

Packaging Europe - August 27th, 2013,

The engineering stage will be completed in 2013, and new equipment will be delivered to the production site in 2014. The APP upgrade project will result in a 10% reduction of nitric and carbonic oxide emissions, and it will also cut inorganic dust emissions by 20%. RUSAL raised the funding for the APP upgrade project after implementing an activity focused on reducing perfluorocarbon (PFC) emissions at KrAZ which was planned in line with Article 6 of the Kyoto Protocol to the UN Framework Convention on Climate Change.

RUSAL also envisages to invest over USD 6 million in a project to improve sealing of its pitch storage tanks and furnaces at KrAZ and dramatically reduce benzapyrene and tar emissions during the anode paste production process.

The project to reduce PFC emissions was launched at Krasnoyarsk Aluminium Smelter in 2006 which helped to cut PFC emissions by 35% from 2008 through 2012.

RUSAL’s partner on this project is Carbon Trade & Finance (a joint venture set up by Gazprombank and Commerzbank), which acted as the buyer of ERUs and supported various activities on the joint project. In 2010 KrAZ was among 58 bidders in the second carbon credits tender announced by Sberbank of Russia.

The Big Australian should strike a deal with Rio Tinto

Herald Sun - August 27th, 2013,

In contrast, aluminium ain't going to make a billionaire of anyone. Thanks to China continuing to smelt uneconomically, aluminium has a knack of turning billionaires, corporate or otherwise, into mere millionaires.

BHPB has to be looking very seriously at selling out of the metal. It's just too troublesome. And when, rather than if that happens, its interests in nickel and manganese would also come into play.

BHPB's manganese is a pretty good business. But in the growth dynamics of BHPB it would arguably be too small and disconnected on its own.

Now the question about aluminium, is not so much a decision to sell. If it's not yet been formally taken, it will.

Underperforming aluminium was already an oddity in the BHPB of the last CEO, the aggressive expansionist Marius Kloppers.

But it stands out like the proverbial - or, not so proverbial - sore thumb, in the BHPB of new CEO Andrew Mackenzie, with his ruthless focus on productivity and assets having to generate acceptable rates of return.

Simply put, there's no prospect of aluminium - perhaps the last real vestige of 'social metal' in the 21st century - earning even an UNacceptable rate of return, any time soon.

If BHPB is - quietly - looking to sell, and it must be, although the company would make no comment on it, one option it would have to be, or at least, should be, contemplating, is doing a creative deal with its arch-rival Rio Tinto.

Rio has a much bigger, even more disastrous investment in aluminium. It spent more than $40 billion buying Alcan and has written off more than $30 billion of that.

It wants - publicly, even more desperately than BHPB - to get out of aluminium. Or, less rationally, at least out of some parts of its aluminium business.

But it has failed to find a buyer at a reasonable price, or perhaps even at almost any price.

Publicly, Rio was only looking to sell the smaller part of its aluminium assets, the Pacific Aluminium arm, which has five smelters, an alumina refinery and a bauxite mine in Australia and New Zealand.

Although I have little doubt that if someone walked into CEO Sam Walsh's office with a big enough cheque for the lot, he'd have it at the bank on the same day.

Earlier in the month, though, he announced Rio couldn't find a buyer just for PacAl. It was not possible to get value "in the current environment," and the arm would be reintegrated into the Rio Tinto Alcan group.

Now BHPB could go its own way in seeking to dispose of its much smaller aluminium business. In theory it could aim to sell the particularly troublesome metal smelters and keep the more viable bauxite and alumina operations.

But seriously, why would it bother. Especially as it would probably have to sweeten any sale by offering the fully-integrated mine-to-metal operation.

In my view, any sale could really be sweetened by joining the full BHPB and Rio aluminium businesses, and either selling the combined group or refloating it back into the public market place.

Obviously this would raise some competition issues, but nothing to compare with those raised when BHPB and Rio looked at merging their Pilbara iron ore operations.

Or indeed, earlier when Kloppers got really ambitious and sought to merge the two entire companies.

There's a much more basic truth about the fundamental incompatibility of the aluminium business - all the aluminium business - in Mackenzie's BHPB.

He has set very rigorous profit return projections that proposed investments have to be able to realistically meet, before capital will be allocated to them.

There is no way, in the foreseeable future, that the smelting end of the aluminium business, and arguably the bauxite end as well, will get near to meeting them. Very simply, if you have a business, in which you cannot justify new investment - even to maintain production, far less expand it - what's the point of keeping it in the company?

On the other hand, there's no great urgency to a sale. BHPB is not under any great financial or operating pressure.

That said, BHPB needs to be ready to move if the opportunity presents. And it would be wise to maximise that, by - privately - working through any options with Rio.

Equally, quitting aluminium would be a major - positive - statement by Mackenzie.

Alcoa stock gains by 2.42%

World Aluminium Market - August 27th, 2013,

It had recently been announced by Alcoa Inc that the company had decided to shut down the operations of around 164,000 metric tons of smelting capacitance facilities located in the United States and Brazil. This move taken up as part of the company’s smelting capacitance appraisal plan is expected to enable the company to keep up its competitiveness in the industry. It had been announced that around 40,000 metric tons of the smelting capacitance facility located in the Massena East facility of New York and 124,000 metric tons of facility located in Brazil would be shut down from its operations.

Shares of Alcoa had recently been hit heavily in the markets primarily owing to the absence of healthy, strong and growing economy in the United States for the past few years. As there are recent expectations that there would be an increase in the interest rates in the near future, it is anticipated that the company involved in aluminium products would further take a hit. Investors will thereby have to wait for some more time before there is any turnaround in the price movements of this stock.

Alcoa had on Thursday moved on to report a closing price for the day at $8.03 per share and had thereby presented a gain of 2.42% over the previous closure. The stock had further been presenting price movements during the day to vary from low of $7.91 per share to high of $8.06 per share, while the stock presently has its low price for the year at $7.63 and peak price at $9.93 per share. There are 1.07 billion shares of the company being traded out in the markets in total and the institutional holdings contribute around 58% of the total capital.

Northline wins Rio Tinto freight contract

Ferret - August 27th, 2013,

Northline has won a transport contract to move more than 5000 tonnes of freight annually for Rio Tinto's Weipa bauxite mine.

According to the company the freight transported for the mine will be varied, with items moved including printer cartridges right through to capital pieces of equipment like earthmoving machinery.

It will be transported from Northline's Cairns depot, where it will be then moved to the mine by a local barge contractor.

Northline CEO Craige Witton said the contract "marks a new era for Northline as it realises the potential of its national network to support the supply of freight to remote locations".

"This new contract will utilise our full distribution network through which we’re able to offer economies of scale and apply technologies to reduce costs and increase productivity for Rio Tinto."

It added that it will use its Track and Trace system to allow Rio to monitor its freight 24 hours a day, 7 days per week.

South Port posts record profit even as smelter cuts production

The National Business Review - August 22nd, 2013,

Record imports of fertiliser and a resurgence of log exports were not enough to make up for the business lost to South Port when New Zealand Aluminium Smelters (NZAS) cut production at its Tiwai aluminium smelter.

The operator of Bluff's port reported cargo volume declined by 7 percent to 2.51 million tonnes in the year ended June 30 from a record in the previous year.

Approximately 100,000 tonnes, or about 56 percent, of the reduction in volume related to NZAS, which continues to operate the smelter 15 percent below its normal capacity.

Still, South Port reported a record after-tax profit of $6.5 million, up 8.5 percent on the previous year, and beating the previous peak of $6.26 million set in 2011.

Operating profit before financing costs and tax increased by 8 percent to $9 million.

The port is paying a final dividend of 15.5 cents a share, taking the full-year dividend to 22 cents, up from 20 cents the previous year.

"The improved profit level was largely driven by stronger levels of other bulk cargoes and better cold storage utilisation at both of the South Port physical storage sites," Chairman Rex Chapman said.

Chief Executive Mark O'Connor said a record level of fertiliser product was imported through South Port during the past season and log exports staged a welcome resurgence, particularly in the second half of the financial year.

The port handled 246,000 tonnes of logs, up from 198,000 tonnes in 2012. Two new log exporters, Highlander Forests and Forest Management, moved logs through the port to Asian markets.

O'Connor said more rapid movement of dairy exports reduced use of the port's dry warehouses but a new dry warehouse at the west end of the Bluff Island Harbour completed in June 2013 is fully tenanted.

The port is hopeful a new electricity supply contract between NZAS and Meridian Energy will enable NZAS to achieve a competitive cost position for its operations in the longer term.

Environment Southland owns 66 percent of the company.

Gove talks stall as town waits in hope

NTNews.com.au - August 22nd, 2013,

PACIFIC Aluminium is stalling on discussions about the future of the Gove alumina refinery and won't meet the Territory Government until at least mid-September.

In parliament yesterday, Chief Minister Adam Giles said he had requested a meeting "as soon as possible" to discuss the Government's latest gas supply offer with Phillip Strachan, the acting chief executive and president of the Rio Tinto subsidiary.

In the meantime, the East Arnhem town of Nhulunbuy continues to hold its breath in hope that a deal can be struck to save the 1500 jobs linked to the refinery and mining operations.

A Pacific Aluminium spokesman said they would eventually meet with Mr Giles to discuss Gove.

"However, to ensure the discussion is valuable for both of us, we need some time to consider the gas supply options," the spokesman said yesterday."

The offer on the table includes 175 petajoules of gas from the NT Government and 78 petajoules from Santos Energy and would require the operation of the refinery on a dual fuel basis.

Mr Giles outlined the details of the offer, revealed by the NT News last week, to parliament yesterday.

He said in a statement afterwards that Pacific Aluminium "will recommence negotiations with NT Government after the federal election result is finalised".

"The Federal Coalition has promised to underwrite the building of the gas pipeline to Gove. Labor won't give the same commitment," Mr Giles said.

Resources minister Gary Gray has called on the Territory Government to reinstate the initial offer, announced by former chief minister Terry Mills in February.

The caretaker period prevents the Government from any making firm decisions, but Mr Gray has said the Export Finance Insurance Corporation would need to complete due diligence before guaranteeing to help finance the pipeline.

East Arnhem Chamber of Commerce chairman David Suter said he found it "strange" there was not going to be a dialogue.

Member for Nhulunbuy Lynne Walker called on Mr Giles to "immediately go to Gove and explain to the community what the situation is" for its future.

UAE: Batch Homogenizing plant commissioned at Dubal

Hertwich - August 20st, 2013,

Hertwich Engineering has commissioned a batch homogenizing furnace and a cooling station at Dubal (United Arab Emirates), the homogenizing plant being the third of its kind to be commissioned by Hertwich within the aluminium smelter complex.

Such batch homogenizing furnaces are designed for extra-fast heating of logs. A reversing air concept and regulation by flaps accelerates the heating by an estimated 20%, and achieves improved temperature uniformity. Optimized heating is fully automated and is regulated over measured air- and metal temperatures. The same enhancement is included in the cooling station for more efficient cooling.

Ormet seeks liquidity to keep two aluminum potlines open

Reuters - August 19th, 2013,

Aug 19 (Reuters) - Ormet Corp is negotiating with its equity owner for additional liquidity to keep remaining aluminum operations running, after shutting down two potlines late last week, a spokesman at the U.S aluminum producer said on Monday.
On August 1, the Hannibal, Ohio-based company began shutting two of the smelters' four operating potlines in order to keep electricity costs under control while it waits for an August 27 hearing on the matter.
"We've asked for additional liquidity, which would assist us to get through this--not just the hearing on the 27th, but the Public Utilities Commission would then have to act," he said.
He added that the company was negotiating for additional liquidity from its sole equity sponsor Wayzata Investment Partners LLC to avoid having to completely curtail operations.
While shuttering the plant remains a possibility, the spokesman said it was no longer imminent.
On June 3, Smelter Acquisition, LLC, a portfolio company owned by Wayzata, acquired Ormet once the United States Bankruptcy Court for the District of Delaware approved the sale.
Ormet filed for bankruptcy protection in February to reorganize legacy costs related to retiree healthcare as it struggled to control costs in the current low aluminum metal price and high energy cost environment.
At a hearing set for August 27, the aluminum producer will present its case to the Public Utilities Commission of Ohio for a revised energy deal with power provider, Ohio Power, a unit of American Electric Power Service Corp.
CEO Mike Tanchuk said in an interview with Reuters earlier this month that restructuring Ormet's power costs was all that was left for Ormet to emerge from bankruptcy.
Benchmark aluminum prices on the London Metal Exchange have risen by $100 to $150 per tonne to around $1,900 a tonne since the company began the potline shutdown, though they remain well below the 2013 high at $2,184 a tonne.
"With the level of activity we have right now, higher prices are not as large a help as we'd like it to be, but it's certainly going in the right direction," the source said.
The smelter is currently producing at a rate of about 90,000 tonnes per year. The plant has a total of six potlines with an annual capacity of about 270,000 tonnes per year.
The spokesman said Ormet has had to slow output at its Burnside, La. alumina refinery to match Hannibal's lower output, but no additional workers were laid off at the refinery.

RusAl Braces for Capacity Cuts Amid Market Glut

The Moscow Times - August 19th, 2013,

The world's leading aluminum company, RusAl, reported a $438 million net loss and announced new large-scale capacity cuts on Monday as producers are struggling with a glut of metal and plummeting prices.

RusAl's net loss totaled $438 million in the first half of 2013, compared with a $1 million net profit in the same period last year, while its revenue fell 8.8 percent year on year to $5.203 million.

Aluminum prices on the London Metal Exchange (LME) continued to decline through the first half of the year, falling by 7.8 percent to $1,919 per ton on average.

"Our industry remains in a crisis of its own making with oversupply leading to an excess of products on the market. This status quo cannot be allowed to continue and the sector as a whole needs to take action to optimize," Oleg Deripaska, CEO of RusAl, said in a statement.

At the same time, physical demand for aluminum continues to grow steadily.

RusAl estimates that in the first half of 2013 global primary aluminum consumption reached 25 million tons and is expected to reach 50 million tons by the end of the year, a 6 percent increase compared to 2012. China remains the fastest growing market with an expected 9.5 percent growth rate, followed by India, Asia excluding China and North America.

RusAl sounds a bit overoptimistic on aluminum demand in the U.S., some experts said.

"The aluminum demand in the U.S. was up only 2 percent year on year in the first half of 2013," said Boris Krasnozhenov, an analyst at Renaissance Capital. "At the same time, RusAl forecasts 5 percent aluminum consumption growth in North America this year. We doubt that U.S. consumption may see that much in the second half of 2013."

Although physical demand for aluminum remains, production is unlikely to increase substantially because of large stocks accumulated by traders, said Dmitri Baranov, a senior analyst at Finam Management.

The LME currently holds 5.4 million tons of aluminum.

After several court cases followed continuous holdups of metal by traders there were proposals to overhaul LME delivery system. This will force warehouses to release more stocks, and the prices are expected to go down even further.

"Premiums have started to fall already, and we'd expect if the LME implements the proposals, then we'll see a reduction in warehouse queues from next year … that would push premiums down further," consultant Marco Georgiou of mining research company CRU in London was quoted by Reuters as saying.

In an earlier interview with Interfax, Oleg Deripaska said that at current LME prices, roughly 40 percent of smelting plants around the world, excluding China, would remain unprofitable and would be forced to cut production. By the end of the year, the company is expecting that the world's aluminum production will decrease by a total of 1.8 million tons, while another 1.5 tons of production capacity will go below the red line for every additional $50 per ton decline in the market price, he added.

RusAl itself is cutting down on production capacity in a move to counter the effect of falling prices and has halted or limited smelting at several of its facilities in western Russia and Siberia, the company said in a statement, not disclosing, however, which plants in particular were at stake.

Media reports said earlier that four plants in Western Russia that use obsolete equipment and are deemed inefficient could be shut down.

Overall, in the first half of the year the company reduced its aluminum output by about 100,000 tons compared to the same period in 2012 and plans to cut production capacity further to a total of 357,000 tons by the end of 2013, a 9 percent decrease since last year, compared to the previously announced 7 percent cut.

"The key challenge is massive overcapacity in the sector and inefficient production across major players," Krasnozhenov of Renaissance Capital said. "RusAl is moving in an absolutely right direction when it suspends loss-making production sites, in our view. We see the same trend in the steel and mining sectors."

One of RusAl's old and ineffective smelting plants is the Bogoslovsky alumina facility in the Sverdlov region, which was launched in 1945.

RusAl initially announced plans to shut it down, but they have not yet been confirmed by the management despite repeated requests voiced by the plant's labor union to give the workers an insight into what their future career may look like.

Instead, in mid-August, just before releasing its mid-year results, RusAl signed an agreement with IES-Holding to buy Bogoslovsky power plant, which is the main energy source for the alumina plant. This purchase was made in an attempt to reduce the price of energy for the facility, thus lowering production costs.

But last year the workers of the Bogoslovsky plant were taken on a trip to see the new Boguchansky aluminum smelter, a state-of-the art facility able to generate 600,000 tons of aluminum per year being built on par with hydropower producer RusHydro in the Krasnoyarsk region.

The plant will employ 3,500 workers and some young specialists from the Bogoslovsky plant are already considering an opportunity to move to Siberia, local media reported.

It is now 75 percent complete and there were plans to start production there by the end of 2013. However, such plans have been recently postponed.

RusAl first deputy CEO Vladislav Solovyov said at a conference call on Monday that it could start production in 2014.

"We are currently examining the project with our partners — RusHydro and VTB — which provided the financing," Solovyov said, Prime reported. "We are reevaluating its financial aspect and after that we will decide when to begin production. It is very likely that it will not start this year but will be postponed to 2014."

Finam analysts said that this just means that RusAl was changing its plans due to unfavorable market conditions, an opinion which was backed by the company's own announcement accompanying its half year report.

"As of today, more than 3 million tons of aluminum capacity [at the LME] could potentially be closed by the end of this year. At the same time the industry needs further restructuring and reduction in large aluminum stocks to guarantee sustainable development," RusAl said in a statement.

Oleg Deripaska said earlier that aluminum production at RusAl facilities could be fully restored if prices for the metal reached $2,400 per ton, but he did not expect this level in the next four years.

Overcapacity plagues aluminium sector
Despite losses, smelters are ignoring Beijing's orders to shut inefficient plants amid pressure from local governments

South China Morning Post Publishers Ltd. - August 19th, 2013,

Since 2003, Beijing has issued at least three policy circulars ordering the aluminium industry to correct its overcapacity problem, caused by local governments' pursuit of their own interests.
Ten years on, the situation has not improved and is expected to worsen for at least a few more years.
Until the central government finds an effective way to motivate local officials to change their penchant for investment-led economic growth and to launch a crackdown that bites, analysts say, overcapacity will not be resolved despite strong growth in domestic demand for the lightweight and versatile metal.
"It is a big challenge for the authorities to untangle the power of [vested interests] and to take back some sort of control or reform those industries," said Mark Pervan, the head of commodity research at ANZ Investment Bank. "The local governments don't appear to get the message that you need to shut some inefficient capacity."
Overcapacity has plagued not only the aluminium sector but also copper and steel smelting. All three grind on with low profits or losses as falling product prices, rising energy and environmental protection compliance costs and falling supply of domestic raw materials erode earnings.
The situation prompted the Ministry of Industry and Information Technology to issue on July 25 an edict for 1,433 firms in 19 energy-intensive and polluting industries to shut down and dismantle outdated and inefficient plants by year-end.
The ministry said this was the first batch of firms and projects, without giving the eventual scale of the crackdown. Only nine steel firms were ordered to close down 2.8 million tonnes of annual capacity, a drop in the bucket compared with the steel sector's annualised output of 786 million tonnes in the first half.
The China Iron & Steel Association estimated the industry had 300 million tonnes of excess capacity last year.
Just four firms were asked to shutter plants with a combined 260,000 tonnes of annual capacity. Last year's national output was 23 million tonnes.
"The government has been issuing policy after policy for many years. People do not want to listen any more, they want action," said Helen Lau, an analyst at brokerage UOB Kay Hian. "We need to see whether industry capacity keeps rising, whether local governments and banks are still supporting new capacity."
A report by the steel association on July 29 painted a grim picture. Citing industry data provider Mysteel, it said 31 blast furnaces were under construction, with total annual capacity of 38 million tonnes.
"Although steel prices are falling, almost no steel mill has cut back on output, as they worry about losing market share and bank loans, and they face pressure from local governments to maintain economic growth," the association said. "Ever rising capacity propagated more depressed market conditions."
The aluminium industry is not faring any better.
Citing figures from the China Nonferrous Metals Industry Association, Xinhua's Economic Information Daily reported the mainland had 27 million tonnes of annual aluminium production capacity last year.
With output of 20 million tonnes, implied capacity utilisation was 74 per cent. Ninety-three per cent of the smelters made losses last year, it said.
While the dire situation should prompt the industry to reduce overcapacity, the association forecast that existing and new-build industry capacity could exceed 33 million tonnes by 2015 when projects under construction came on stream. If projects being planned were realised, the capacity could even surpass 40 million tonnes.
Fixed-asset investment in aluminium smelters rose 24.9 per cent last year, in contrast with a 5 per cent fall in other non-ferrous metals smelting.
Bocom International Securities analyst Benjamin Pei said this was due to investment in new smelters in western China, mainly in coal-rich Xinjiang autonomous region and hydro power-endowed Gansu province.
A Xinjiang smelter could have a cost advantage of 4,250 yuan (HK$5,380) per tonne with its own coal-fired power plant over an eastern China smelter buying power externally, said Vanessa Lau, a senior analyst at US brokerage Sanford Bernstein.
Power accounts for about 40 per cent of a smelter's operating costs.

United Company RUSAL Plc: Update on Reduction of Production Volumes

The Wall Street Journal - August 18th, 2013,

HONG KONG--(BUSINESS WIRE)--August 18, 2013--
Regulatory News:
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
UNITED COMPANY RUSAL PLC
(Incorporated under the laws of Jersey with limited liability)
(Stock Code: 486)
UPDATE ON REDUCTION OF PRODUCTION VOLUMES
Reference is made to the announcements of the Company dated 27 August 2012 and 4 March 2013 regarding the program of replacement of less effective production facilities and the reduction of production volumes.
United Company RUSAL Plc (Paris:RUSAL) (Paris:RUAL) (the "Company") announces that the Board of Directors of the Company (the "Board") considered the productivity of the Company and in order to maintain a competitive position of the Company in the global aluminium market, approved further steps in the reduction of primary aluminium production at the less efficient aluminium smelters currently owned and operated by the Company and as a result the relevant expected reduction will be approximately 357,000 tonnes by the end of 2013 as compared to 2012, instead of 300,000 tonnes as disclosed in the Company's announcement dated 4 March 2013.
The long term strategy of gradual reduction of primary aluminium production of the Company shall be considered by the Board later.
The reduction may be subject to certain corporate and statutory approvals.
By Order of the board of directors of
United Company RUSAL Plc
Vladislav Soloviev
Director
19 August 2013
As at the date of this announcement, the executive Directors are Mr. Oleg Deripaska, Ms. Vera Kurochkina, Mr. Maxim Sokov, Mr. Vladislav Soloviev and Mr. Stalbek Mishakov, the non-executive Directors are Mr. Dmitry Afanasiev, Mr. Len Blavatnik, Mr. Ivan Glasenberg, Mr. Maksim Goldman, Ms. Gulzhan Moldazhanova, Mr. Christophe Charlier, Ms. Alexandra Bouriko and Ms. Ekaterina Nikitina, and the independent non-executive Directors are Mr. Matthias Warnig (Chairman), Dr. Peter Nigel Kenny, Mr. Philip Lader, Ms. Elsie Leung Oi-sie and Mr. Mark Garber.
All announcements and press releases published by the Company are available on its website under the links http://www.rusal.ru/en/investors/info.aspx and http://www.rusal.ru/en/press-center/press-releases.aspx, respectively.
CONTACT:
United Company RUSAL Plc

SOURCE: United Company RUSAL Plc Copyright Business Wire 2013

Brazil may see increase in aluminium imports in coming years

Metal Bulletin Ltd. - August 16th, 2013,

Falling domestic production and a rise in demand will drive up Brazilian aluminium imports in the coming years, Tadeu Nardocci, Novelis’ South America president, said recently.
“Consumption in Brazil has [increased, while] production has fallen. Over the next years, demand will be higher than the supply,” Nardocci said at the inauguration of the company’s expanded aluminium rolling facility in Pindamonhangaba, Brazil. “[Increasing] imports of primary aluminium are likely to be necessary in...

Alcoa to close or curtail another 164 000 t of smelting capacity

Mining Weekly.com - August 14th, 2013,

TORONTO (miningweekly.com) – US-based alumina and aluminium producer Alcoa would close or curtail 164 000 metric tons of smelting capacity in the US and Brazil as part of its smelting capacity review that was announced in May.
One potline representing 40 000 t at the Massena East plant, in New York, would be permanently closed, and the company had started to temporarily curtail 124 000 t at its smelters in Brazil. The closures and curtailments would be complete by the end of September.
“We committed in May to review our global smelting capacity for possible curtailment to maintain the company’s competitiveness. Aluminium prices, including premiums, have fallen to four-year lows and we continue to operate in an uncertain, volatile market,” global primary products president Bob Wilt said.
He added that the company would work with stakeholders in affected communities to reduce the impact of the closures and curtailments.
To date, Alcoa had announced closures or curtailments totalling 269 000 t of the 460 000 t placed under review in May. This included the permanent closure of 105 000 t of capacity announced earlier at Alcoa’s Baie-Comeau smelter, in Canada. The company also permanently closed its Fusina smelter, in Italy, representing 44 000 t that was not part of the May review.
Once the Massena and Brazil closures and curtailments were complete, Alcoa would have 16%, or 646 800 t, of smelting capacity idle.
Alcoa said its review of its primary metals operations was consistent with the company’s 2015 goal of lowering its position on the world aluminium production cost curve by 10% and on the alumina cost curve by 7%.
Total restructuring-related charges for the third quarter associated with the operations review, were expected to be between $5-million and $10-million after-tax, or $0.01 a share, of which about 50% would be noncash.
Spot aluminium prices traded at $1 839/t on the London Metals Exchange on Wednesday.

Mining Roundup: Rio Tinto to Look at Expanding Weipa within Next Year

iNVEZZ Limited - August 13th, 2013,

iNVEZZ.com Tuesday, August 13th: London-based Rio Tinto (LON:RIO), the world’s second-largest mining company, would decide within the next year on whether to expand its Weipa bauxite mining operation in Australia to help satisfy rising demand from China, Jacynthe Cote, Chief Executive Officer of the company’s aluminium unit -- Rio Tinto Alcan -- told reporters yesterday.
The division CEO was quoted by Bloomberg as saying: “China imports a great deal of bauxite and output is constrained. When we think about the next project we could seriously take a look at, it’s definitely the expansion of our Weipa bauxite mine.”
Australia’s federal government conditionally approved in May plans to expand mining and extend the life of Rio’s 50-year-old Weipa project. The Queensland facility last year produced 23.7 million metric tonnes of metal-grade bauxite, a source of aluminium. Rio Tinto began studies on the development in 2008, a year after the company acquired bauxite, aluminium and alumina assets as part of its $38-billion takeover of Canada’s Alcan Inc.
Rio Tinto Alcan had sales of $5.29 billion in the first six months of 2013, equivalent to about 20 percent of the company’s revenue. The mining company said last week that it expected to produce a total of 34 million metric tonnes of bauxite, 7.3 million metric tonnes of alumina and 2.5 million metric tonnes of aluminium in 2013.
The Rio Tinto share price in London was 2.07 percent higher at £3,258.00p as of 13:28 BST today.
First Quantum Sees Banks Refinancing Much of $2.5bn Debt
Vancouver-based First Quantum Minerals (LON:FQM, TSE:FM), the copper producer seeking to refinance $2.5 billion of borrowings, expects a “substantial portion” to come from new bank debt, Bloomberg has reported.
The newswire quoted Chief Financial Officer Hannes Meyer as saying in a statement yesterday that First Quantum was “still seeing reasonable appetite in the bank market to take up this debt and it appears that the bond market is still strong.” The CEO added that the miner planned to have the bank financing in place by the end of the year.
First Quantum needs to refinance short-term debt that it took out to fund about half its C$5 billion acquisition of Inmet Mining in April. Adding to the group’s woes, copper prices have dropped 6.3 percent since the end of November, when First Quantum first announced its hostile offer for the smaller miner.
The First Qauntum share price in London was 2.56 percent higher at £1,200.00p as of 13:48 BST today. Yesterday in Canada the stock closed at C$18.76, almost 10 percent up on the day.
Mining Stocks Rally in London
The FTSE 100 was up 0.5 percent this morning, with miners forming the backbone of the gains. Gold and silver producer Fresnillo (LON:FRES) was near the top of the leader board again, up more than five percent at £1,161.00p, with analysts predicting a sustained rise in precious metals prices. Glencore Xstrata (LON:GLEN) rose 1.18 percent to £304.95p, while the Randgold Resources (LON:RRS) share price climbed 1.53 percent to £4,915.00p.

Aluminium smelters braced for shutdowns

South China Morning Post Publishers Ltd - August 13th, 2013,

The mainland's overcapacity-afflicted aluminium smelting industry could soon see a widespread shutdown of uncompetitive plants partly because of more cost-competitive imports, according to the chief of the country's third-largest smelter.
"The second phase of industry rationalisation is already beginning," said Zhang Bo, the chief executive of China Hongqiao.
"The first phase involved capacities that were very outdated, while the second will hit those that are still surviving but will face stiffer rivalry from imports."
Zhang made the comments at a press conference three days after the firm posted a 1.1 per cent year-on-year drop in net profit to 2.81 billion yuan (HK$3.53 billion) for the first six months of the year.
Its performance, supported by self-owned power plants, is among the best in the industry where losses are common due to rising energy and raw material costs. Electricity typically accounts for close to 40 per cent of smelters' operating costs.
Zhang said the industry's competitive threats came from a planned major aluminium smelter project in Malaysia supported by cheap hydropower and greater push from Rusal, the world's largest smelter of the lightweight industrial metal, to sell to China.
Despite the threats, Andrew Driscoll, CLSA's head of Asia-Pacific resources research, said he did not expect imports to account for a major portion of supply since low-cost plants were also being built in coal-rich regions such as Xinjiang.
"New capacities are being built both within China and the rest of the world at the bottom of the cost curve," he said.
China Hongqiao plans to raise its annual smelting capacity to 2.9 million tonnes by the end of the year from 2.46 million tonnes in June. This could cost 2.64 billion yuan.
It plans to become entirely self-sufficient on electricity and alumina in three years. It is 65 per cent self-sufficient on power and 69 per cent self-supplied on alumina in the first half.
Zhang said China Hongqiao planned to "eventually" raise self-owned power generation capacity to 6,000 megawatts from 3,390 MW now, without giving a timetable. It costs 3,500 yuan to add one megawatt.
The firm expects its alumina refinery in Indonesia to come on stream in 2015. It will have its own power plant and port.

CA - Rio Tinto Alcan to close Shawinigan foundry 13 months early

Foundry-Planet Ltd - August 13th, 2013,

Rio Tinto Alcan announced Wednesday that it will shut down its aluminum smelter plant in Shawinigan 13 months earlier than originally planned.
The Shawinigan electrolysis plant plant will now be shut at the end of November 2013, rather than on December 31, 2014, as originally planned and only 60 of the 425 plant workers will continue on with the company after the shutdown of the plant, which opened 71 years ago.
“This decision follows a major strategic review that allowed us to analyze all options for the future of the plant. The technology and low aluminum prices mean that the situation of the Shawinigan plant is currently unsustainable.” wrote President and CEO of Rio Tinto Alcan Arnaud Soirat in a statement.
“We will work with our key stakeholders to manage the impact caused by the reduction of production in the most respecful manner possible," he stated.
The statement added that the affected employees will be given support with vocational training and job searches.
Shawinigan Mayor Michel Angers expressed disappointment with the news and complained that the company was breaking a “social contract,” it has with the municipality.
He said, however, that the city has been trying to engineer a reconversion of the site, but wouldn’t offer details of the project.
Workers’ union president Louis-Gérard Dallaire described the news as a hard blow to the workers, and the city but said that certain clauses in the union contract would alleviate some of the pain.
He said that an employment committee had been set up in 2012 that could help workers find work after the closure.
About 276,000 tonnes of aluminum capacity had been scheduled to be removed when the metal giant's division was slated to close facilities in Shawinigan and Arvida, Que., by the end of 2014. That will be offset by the addition of 60,000 tonnes with the impending opening of a facility using AP60 technology.
An expansion in Kitimat, B.C., will increase production to 420,000 tonnes from the current 187,000-tonne output.
Rio Tinto Alcan suspended two lines of production at the Shawinigan smelter after a major power outage at the end of 2011 forced the closure of two of the plant's four production lines.
The process of gradually restarting the 280 cells that were shut down was completed in the second quarter of 2012.
Commissioned in 1941, the smelter uses Soderberg technology, which is to be phased out of all Quebec primary aluminium smelters by Dec. 31, 2014 in compliance with Quebec environmental regulations.
Rio Tinto and rival Alcoa have been looking to curtail the higher costs of aluminum production as it adjusts to low metal prices.
London-based Rio Tinto is also looking to sell its Pacific smelters which have 1.6 million tonnes of capacity. The company is set to announce its latest financial results results on Thursday.

Rio signs MoU for mine in Arnhem Land

9 News National - August 11th, 2013,

As Aboriginal leaders call for their communities to become economically independent, the people of northeast Arnhem Land may soon own their own mine.
At the Garma Festival held over the weekend on a Yolngu site 14km outside of Nhulunbuy, the Gumatj Aboriginal Corporation and Rio Tinto-owned Gove Operations have signed a memorandum of understanding to carry out a feasibility study for bauxite mining on Gumatj lands in northeast Arnhem Land. Should the mine prove to be commercially feasible it would be owned and operated by the Gumatj Aboriginal Corporation, something welcomed by community leader Galarrwuy Yunupingu as giving substance to a desire for self-sufficiency by allowing Aboriginal people to commercially develop their land.
He said Aboriginal people wanted to have the same opportunities to earn income from their land the way non-indigenous people do. "You're earning money, banking money, and you see your money ... it grows, it grows," he said. "That's the way of living Aboriginal people want, too. My word, we would like to try that."
Collaborating to foster economic independence for the Yolngu people is a key commitment in the Gove traditional owners agreement signed in 2011, said Gove Operations general manager Ryan Cavanagh.
The company will support the Gumatj in their efforts to create a viable and sustainable bauxite mining operation by developing an exploration program to prove up the quantity and quality of potential bauxite reserves on Gumatj land. "This is an important step for the Gumatj, to own and operate a bauxite mine on their country," Mr Cavanagh said. It was an obvious step forward, says Dr Howard Smith, an industrial chemist and scientist and former manager of mining projects at the Northern Land Council.
"Here, mining only started around 1970, so it's 40 years later and technically it's 40 years late," he told AAP. He said Aboriginal people were ideal mine workers due to their connection to the land. "They know where to go, where not to go, which plants need to be here, which animals need to be there, and they can construct the mine according to their needs," Dr Smith said.
"The question over the Rio Tinto and Gumatj memorandum of understanding is how much influence Rio will have over the process; how (big) will the compromise be?" Dr Smith said Aboriginal people running their own businesses will be less dependent on public funding and more able to address the needs of their own communities.
"It's an old story in Australia that people are too reliant on government funding for many things, but people are on the right track here," Dr Smith said.
"If you have a mine or some decent-sized income, production of oil or gas, there's nothing to stop the communities having their own private school or private health clinic as long as the money's there - but the money has to come from somewhere."

Aluminium boom in China causes concern

News Talk ZB - August 10th, 2013,

An aluminium boom in China is causing some concern for our future.
After a year of negotiations Meridian Energy and New Zealand Aluminium Smelters have agreed to terms.
The two have settled on an electricity price for the next 17 years, although there are get out clauses and options for NZAS to scale back its operation.
EPMU Invercargill organiser, Trevor Hobbs says the Chinese are building 60 new smelters.
He says every smelter in the world will be having to compete with Chinese aluminium over the coming decades.
Trevor Hobbs says the Tiwai smelter has one major feather in its cap, the fact it produces some of the most pure aluminium in the world.

US Rusal’s Deripaska Slashing 2013 Aluminum Output; Prices Tick Up

Metal Minar - August 9th, 2013,

Rusal CEO Oleg Deripaska is makin’ moves – to help his company’s margins. Bloomberg reported that Deripaska indicated 8.4% of the company’s production output will be halted this year to help support aluminum prices.
“The company will idle 350,000 tonnes of capacity at five of its plants with high production costs until aluminum rises to USD 2,400 per tonne.
Aluminum prices fell more than 13% this year to USD 1,799 per tonne as global stockpiles reached records and last month traded at the lowest level since 2009,” he is quoted as saying. Prices for Chinese aluminum bar saw the biggest increase on the weekly Aluminum MMI® this week, rising 1.1 percent.
The price of Chinese aluminum billet declined 0.4 percent over the past week. The cash price of Chinese aluminum fell 0.1 percent.
The price of Chinese aluminum scrap did not change since the previous week.

Vedanta rejection at Niyamgiri won't be the last; jinx of bauxite mining may continue

The Economic Times - August 8th, 2013,

When the voting stops on August 19, the scorecard, which is currently 9-0, may well read 12-0. An emphatic and embarrassing rejection of state and corporate plans to mine bauxite atop the Niyam Dongar hilltop in the Kalahandi district of Odisha.
Twelve tribal villages that call this mountain range home have, in all likelihood, secured their religious rights over the hill and its natural resources, including 72 million tonnes of bauxite that the $15 billion mining giant Vedanta Resources has been trying to get its hands on to convert to alumina at its neighbouring refinery.
India's highest court had ordered this referendum in April, after noting that project considerations had not taken into account whether scheduled tribes and other traditional forest dwellers had any rights of worship over the Niyamgiri hills.
There may never have been as much at stake, or such media scrutiny, or judicial intervention, but the unanimous message coming from the gram sabhas being held since July 18 is not new: Odisha's troubled bauxite journey must reassess its challenges. And it could start by revisiting its history.
This is not the first time a plan to mine bauxite in eastern India—home to about 70% of the country's reserves of the mineral used to make aluminium—has collided with a conflation of interests, and stalled or crumbled. Chances are it won't be the last, and will continue to ring-fence the industry's expansion.
"It is a matter of great irony that Odisha has some of the best minerals of all kinds, particularly the finest bauxite, but there's not a single new mine in the last 30 years," says SK Roongta, managing director of Vedanta Aluminium.
In the period that Roongta refers to, six major bauxite projects have found themselves tangled in conflict. These six, which are the gateway to about 30% of India's bauxite reserves of 3.5 billion tonnes, all lie in the eastern belt of Odisha and Andhra Pradesh, passing through some of the poorest parts of the country.
The story of each reveals the details and nuances of the jinx that bauxite mining has come to be. It's not just a Vedanta that is opposed; every aluminium company wanting to secure raw material, be it from the private sector (Hindalco, JSW, etc) or the public sector (Nalco), has felt the backlash. The actors on the other side vary: locals, a Norwegian NGO, a minister, the state itself. The reasons have differed: from religious significance to rehabilitation, from perceived intrusion to policy revision.

China's aluminium market faces increased supply in second half

South China Morning post - August 8th, 2013,

The oversupply of aluminium on the mainland is expected to escalate in the second half of the year as more new capacity is set to come on stream, further reducing the need for imports by the world's top consumer and producer of the metal.
Smelter sources said the stronger-than-expected consumption experienced in the first half would be maintained, but they did not expect further growth this year.
Imports dropped 67 per cent in the first half from a year earlier, official data showed.
Mounting supplies would also weigh on domestic prices, which have fallen more than 5 per cent so far this year, said Zhang Chenguang, an analyst at data provider SMM.
Beijing has tried unsuccessfully to limit aluminium capacity and further tightened regulations last month for new and existing smelters.
Analysts and smelter sources said the regulations would not cut production this year but would limit expansion in the longer term.
The mainland has more than 27 million tonnes of annual capacity. About 10 million tonnes of capacity was being built, the Ministry of Industry and Information Technology said on its website.
Analysts expect the mainland to add more than 3 million tonnes of new smelting capacity this year, and the bulk of it will come from Xinjiang province.
At least 1.3 million tonnes of capacity would start up in the second half in Xinjiang, compared with about 1 million tonnes of new capacity across the country in the first half, said Zhang.
An executive at a large smelter said some new power plants in Xinjiang would also be completed in the second half, prompting smelters to start new aluminium capacity there.
"Output growth would speed up in the second half, mostly from Xinjiang," he said.
State-backed research firms Antaike and Aladdiny estimated the country's aluminium production at 12 million tonnes in the first half, with June output at more than 2 million tonnes.
The estimated figures appear higher than official data, which showed 10.58 million tonnes in the first half, with a record 1.84 million tonnes in June.
Consumption in the first half had risen about 10 per cent from a year earlier as demand from the construction, home appliance and transport sectors grew, said the executive at a large smelter, who expected demand to stay firm in the second half.
A senior executive at an aluminium user in Shandong province that buys primary metal to make semi-finished aluminium products said the firm would more than double its capacity to 2 million tonnes this year.
Reflecting a pick-up in demand, stocks of aluminium ingots in four major industrial cities fell to about 740,000 tonnes from a record 1.23 million tonnes in March, data from SMM showed.
Real consumption in the first half reached about 12 million tonnes and the demand might climb to 24.5 million tonnes for the year if the domestic economy did not falter in the second half, Zhang said.

Rio Tinto moves up Shawinigan smelter closure

Mining Weekly - August 7th, 2013,

TORONTO – Rio Tinto's Alcan division said on Wednesday it will shut down its aluminium smelter in Shawinigan, Quebec, by the end of November.
The company said it will immediately shut down 50 000 t of production and take the remaining 50 000 t of capacity offline by the end of November. Some 425 workers will be affected.
The smelter, commissioned in 1942, uses Soderberg technology, which is less energy efficient than newer ways of smelting aluminium.
Rio had said previously that, because of environmental regulations phasing out Soderberg technology in Quebec, its production lines would have to be shut down by the end of 2014 at the latest.
The company is set to report earnings before markets open in London on Thursday.
The closure will make little difference to the aluminium market, which is facing chronic oversupply of about ten-million tonnes. But it underscores the mounting pressure on aluminium producers with high cost, older technology.
Premiums paid by customers who need physical aluminium delivered, like manufacturers, have kept many smelters in the black as London Metal Exchange prices languish under $1 800/t, below the cost of production for a big portion of smelters worldwide.

More jobs to go in smelter revamp

The Southland Times - August 6th, 2013,

Thirty more jobs are in the firing line at the Tiwai Pt aluminium smelter.
New Zealand Aluminium Smelters yesterday proposed to axe more than 30 maintenance jobs at the smelter.
The cuts are part of the company's plan to streamline its operations to help return the smelter to viability in the face of challenging market conditions.
Last year, New Zealand Aluminium Smelters told The Southland Times that it planned to review its maintenance services this year to reduce costs.
Acting general manager Stew Hamilton said the proposal to cut 31 maintenance jobs would save the company millions of dollars a year.
"Unfavourable conditions in the global aluminium markets have made it vital that the smelter further reduce costs. Aluminium prices remain very low and we are continuing to work with employees, contractors and suppliers to identify efficiencies and cost savings to improve the smelter's viability," he said.
Affected employees would be redeployed to other roles where possible, Mr Hamilton said.
There are 42 vacant roles at the smelter that could potentially be used as redeployment options. The roles were varied and included some maintenance trade jobs, he said.
The vacancies were a result of natural attrition as the smelter had not recruited workers for most of the year, he said.
"We will ensure all impacted employees and their families are provided with the appropriate support. Employees will receive their full benefits and will be given support to identify alternate employment opportunities," Mr Hamilton said.
The company was in the consultation process with employees and there was no talk of redundancies at this stage.
A decision was expected to made on the proposed restructure next month, he said.
Engineering, Printing and Manufacturing Union Southland organiser Trevor Hobbs said he was aware of the proposal but would not comment further before knowing the details.

Production increase approved for Alcoa's Wagerup refinery despite health concerns

Perth Now - August 4th, 2013,

ALCOA has been given the go ahead for a planned production increase at its Wagerup alumina refinery in Western Australia, despite the health fears of local residents.
Nine appeals were lodged against the upgrade of the plant, with residents in the nearby towns of Yarloop and Waroona saying odour and dust emissions from the refinery were a major health worry.
But WA environment minister Albert Jacob has dismissed the appeals saying the company had put in place "significant measures'' to emissions would not increase.
"Alcoa will also be required to publish the results of its odour and air monitoring on its website to give the community access to the information,'' Mr Jacob said.
Mr Jacob said he had also dismissed appeals against the reissuing of a licence for Alcoa's cogeneration power plant on the same site as the refinery.
Appellants had demanded a 10km buffer zone around the refinery, and requested compensation.
But Mr Jacob said he was happy the company had taken sufficient steps to ease resident's concerns.
"It was his strong expectation that the operation of the Refinery should not adversely impact on the amenity of the surrounding area, especially residential areas,'' the report into the appeal stated.
Residents who live near the refinery south of Perth have long claimed they battle long-term health problems such as cancer and organ failure due to dust emissions from the plant.
And in 2010, Alcoa was fined $45,000 for failing to ensure visible dust from its bauxite refining process did not escape the facility.

Bauxite out of bounds, Vedanta now turns to laterite deposits

The Times of India - August 3rd, 2013,

KORAPUT - With hopes of mining bauxite in Niymagiri hills virtually dashed, Vedanta Aluminum Limited (VAL) is now eyeing laterite deposits in Rayagada district for raw material for its Lanjigarh refinery.
The company sought permission for extracting laterite deposits at Sagabari, Panabara and Arotokoni villages spread over 113 hectare under Kashipur block of Rayagada in. The deputy director of mines, Koraput, on Friday forwarded VAL's application and its preliminary report to the Rayagada administration.
Mining experts said laterite soil carries 20 to 25% bauxite.
"If the company gets the government nod to extract laterite deposits, its bauxite problem could be sorted out to some extent. The whole process will take a few months," said mining officer (Koraput) S P Nanda.
Rayagada collector Sashi Bhusan Padhi said, "After going through the report and the application, we will make necessary inquiries. We will then send our report to the director of mines and the department of steel and mines."
However, there is no guarantee that anti-mining bodies will not oppose laterite extraction too.

China: H1 2013 aluminium production up 7.9%

Aluminium International Today - August 2nd, 2013,

China’s aluminium production for H1 2013 totalled 10.58Mt, up 7.9% on the same period last year, according to CNIA figures. Production is likely to accelerate during the second half of the year as new capacity comes on stream, mainly in the North West of the country.
Primary output in June 2013 was 1.84Mt, pointing to an annual rate of 22.4Mt
China’s net imports of primary aluminium reached 45.5kt during the H1 2013 period, down by a staggering 81% from 236kt for the same period last year.
Aluminium semis production was up by 24.58% to 18.2Mt compared with full-year 2012 growth of 14.60%. Net aluminium semis exports from China totalled 1.25Mt, up almost 8% year-on-year and reversing a downward trend reported last year.
Demand for aluminium from the construction sector experienced stable growth as nationwide real estate growth rose by just over 20% for H1 2013, up 4.1 percentage points on the whole of 2012.
Auto production for the period was up 12.83% and China’s demand for the miracle metal should grow by 12% for 2013 overall.

CORRECTED-COLUMN-China's moves to cut metal capacity just getting started: Clyde Russell

Reuters - August 1st, 2013,

China's plans to force more than 1,900 companies to cut excess capacity in bloated industries including aluminium, steel and copper have met with an underwhelming response from the market.
Certainly, the moves to make China's heavy industries more efficient will have little immediate market impact, but what analysts and investors may be shrugging off a little too lightly is that once trends and processes start, they tend to gather momentum.
The edict to close some capacity by September will do very little to end surpluses in aluminium and steel production in China, as they will impact less than 1 percent of capacity.
In aluminium, about 260,000 tonnes of annual capacity may be shut, a fraction of the existing capacity of about 27 million tonnes, which is already about 28 percent higher than demand of about 21 million tonnes.
On these numbers alone, the market is right to be sceptical about the impact of the July 25 announcement.
Aluminium output rose to an annualised rate of 22.42 million tonnes in June, and first-half production was almost 11 percent higher than for the same period last year.
The market dynamic at work in China appears to be that new, more efficient capacity is coming on line at a faster pace than older, uneconomic capacity is closed.
To make matters worse, much of the production that sits higher on the cost curve is being kept active through subsidies on power, largely from provincial governments more focused on keeping jobs.
It's much the same story with steel, where mills would rather run at a loss than idle capacity and surrender market share.
But the question to ask is whether Beijing's moves to trim excess and inefficient capacity will continue, or whether they will stall?
Investors and analysts tend to focus on each announcement in isolation, rather than viewing them as part of a process.
It would be unrealistic to expect China to make huge, sweeping changes in what are, after all, industries vital to economic development.
Much more likely is a fairly lengthy process in which steps are gradual and aimed at creating minimal upheaval, not so much in the market of various metals, but more in the political and social sphere.

Ormet cutting Ohio aluminum operations, cites high power rates

Mining Weekly - August 1st, 2013,

NEW YORK – Ormet Corp was beginning on Thursday to shut down half of the existing operations at its lone 260 000 t/y aluminium smelter at Hannibal, Ohio, according to documents filed a day earlier with Ohio state utility regulators.
Low metal prices and high power rates prompted the decision, CEO Mike Tanchuk said in a notice posted on the aluminium producer's website. On Wednesday, the Public Utilities Commission of Ohio denied Ormet's request for an emergency reduction in electricity rates.
While it did not grant the emergency reduction, the commission still plans to consider lower rates for Ormet at a full hearing on August 27.
Late on Wednesday, Ormet submitted a motion asking that payment of its August and September power bills be deferred to provide liquidity for the aluminium producer to operate its Hannibal, Ohio aluminium smelter.
Deferral would also give the commission time to conduct a full hearing on Ormet's requested relief, regulatory documents said.
Ormet, which has filed for bankruptcy protection, needs "immediate relief from AEP Ohio payments due in August and September, 2013 to continue operating on a limited basis at its facilities in Hannibal, Ohio," and to keep it from shutting down all remaining operations by early September, the filing said.
The Ohio facility is Ormet's only aluminium smelter. The company also operates an alumina refinery in Burnside, Louisiana that is not affected by the AEP Ohio power agreement.
Ormet had sought an expedited ruling to cut its power rates, but the commission denied the request for emergency relief and affirmed its agreement with AEP Ohio, a unit of American Electric Power Service Corp.
At Wednesday's hearing, the PUCO commissioner said the commission thought the issues pertaining to Ormet's power rate application required more in-depth discussion at the formal hearing set for August 27.
"The consequence of this decision is Ormet must immediately begin the shutdown of half of our existing operations to conserve cash," said Mike Tanchuk, CEO and president in its website posting.
Ormet filed for bankruptcy on February 25, due to low metal prices and high power costs.
The Ohio Power industrial rate, which establishes the base rate for Ormet to procure power, increased to $62.83/MWh in June from $39.66/MWh when the company's Unique Arrangement was established in 2009 with AEP Ohio, according to Ormet's notice.
Lowering those rates is one of several requests that will be considered on August 27 in its efforts to restructure its power agreement.

Ghana’s Aluminium Project To Create 2.3 Million Jobs

Ventures - July 31st, 2013,

Ghana’s Integrated Aluminium Project, which has been described as the key to growing the economy with a capital injection of an estimated $8 billion, will reportedly create about 2.3 million jobs.
The integrated project also involves the construction of an aluminium refinery to refine the rich bauxite deposit into alumina at Nyinahin, a town in Ghana’s Ashanti region.
The alumina would then be processed into aluminium by the Volta Aluminium Company (VALCO), and sold to the several downstream industries as aluminium ingot and billet, with consultations already taking place to identify suitable investors to lead the project, sources close to government reveal.
The Nyinahin mine with bauxite deposits of 700metric tonnes, valued at $17.5 billion, is estimated to create about 98,000 jobs, while the aluminium refinery – expected to produce about 350metric tons of alumina – will generate about 19,000 jobs.
However, this can only be achieved if sustainable power supply is dedicated to the Integrated Aluminium project via VALCO.
Indications from some aluminium and steel companies like Aluworks, Western Rod, Tema Steel, packaging companies and the numerous aluminium accessories manufacturing industries show a high eagerness for the sector to take off to reduce the cost of importation of raw materials and offer the convenience.
The decision to dedicate hydro power to aluminium smelting is not only crucial to reduce the cost of generation but also important if Ghana is committed to creating more jobs and reducing the level of youth unemployment.
Dr. Kwabena Donkor, a former Minister of Energy expressed his excitement, especially the use of Ghana’s salt and limestone resources in the Northern and Western region in the manufacturing of aluminium.