AluNews - July 2014

Vedanta may invest Rs 10,000 crore on Lanjigarh refinery expansion

The Economic Times - July 31th 2014,

NEW DELHI: Vedanta Aluminium, a unit of NRI billionaire Anil Agarwal-led Sesa Sterlite, may invest Rs 10,000 crore to raise the capacity of its alumina refinery at Lanjigarh in Odisha to six million tonnes per annum (mtpa).

"We have received villagers' approval and now, we need to get some clearances for taking the project ahead. Around Rs 10,000 crore investment would be required to jack up the plant capacity to six mtpa from one mtpa now," a senior official of the company told PTI.

The official, who requested anonymity, said the unit would provide direct employment to about 7,000 people once it goes on full stream. Vedanta has the required land area in possession to carry out the expansion work.

The expansion work might take a while to actually start on ground because of the required clearances, including from the state pollution control board, Ministry of Environment and Forest and Environmental Advisory Committee.

The planned expansion got a fillip as local villagers, a section of which was earlier opposing the move, yesterday gave their approvals to take it forward, hoping a positive change in the local economy with the massive investment.

A company spokesperson said villagers' approval to the expansion of the project shows that the company has acceptance among the locals.

The company had commissioned the one mtpa refinery in August 2007, but has been struggling to get bauxite and as a result, it had to even shut down the plant for some time. It takes around three million tonnes bauxite to produce one million tonnes of alumina.

The company's efforts to mine bauxite ore in Niyamgiri hills had received a setback with villagers objecting to mining in the sacred area.

Vedanta Resources, however, subsequently said it will not look at mining bauxite from the Niyamgiri hills to feed its Rs 5,000 crore refinery until it gets nod of the local community.

The company is actively working with the Odisha government to allocate it a mine in alternate location and itself trying to source bauxite from alternative locations to support existing and the expanded refinery operations.

During the first quarter of current fiscal, the refinery operated at 93 per cent of its rated capacity and produced 233,000 tonnes, which is higher by 6,000 tonnes as compared to the immediate past quarter.

Vedanta Aluminium gets village's nod to expand refinery

The Economic Times - July 30th 2014,

India's Vedanta Aluminium, controlled by billionaire Anil Agarwal, moved closer to raising its alumina refining capacity by six fold from 1 million tonnes per year (tpy) after villagers near the plant voiced no objection to the expansion.

Most of the nearly 2,000 people present on Wednesday at the public hearing in Biswanathpur village of Odisha state were "OK" with the project to expand the refinery, said B. K. Upadhyaya, the top bureaucrat of the district where the village is located.

Vedanta Aluminium has been struggling to source sufficient bauxite to feed the 1 million tpy alumina refinery since its commissioning in August 2007.

It has been buying bauxite from other states as well as importing more than 1 million tpy of alumina. Plans to mine bauxite in Odisha for the alumina refinery are on hold because of opposition from other nearby communities.

Upadhyaya will now send a report on the Biswanathpur hearing to the state government, which will in turn make its recommendation to the federal government.

Arun Bhatt, a spokesman for Sesa Sterlite, which owns Vedanta Aluminium, declined to give a timeline for the refinery expansion, saying it was linked to "raw material security".

Vedanta's need for alumina, produced by refining bauxite, will nearly triple to 4.5 million tonnes by 2015 as it adds aluminium smelting capacity, Managing Director Sushil Kumar Roongta told Reuters in October last year.

India's aluminium consumption is likely to rise to 5 million tonnes per year by 2015 from 1.6 million tonnes now, according to the mines ministry.

India's per capita consumption of aluminium is 1.2 kg per year against a world average of 7-8 kg.

Odisha government to soon grant laterite deposits to Anil Agarwal's alumina project

The Economic Times - July 29th 2014,

In what should serve as a relief for Anil Agarwal's alumina project, the Odisha government will soon grant three laterite deposits that can partially feed the company's controversial refinery in Kalahandi. Raw material uncertainty has plagued Vedanta Aluminium, now merged with Sesa Sterlite, ever since August of last year when local tribals, in a first of its kind referendum ordered by the Supreme Court, rejected the mining project.

Laterite, with some beneficiation and combined with the bauxite the company has been forced to import or source from Gujarat, can be used input to make alumina. According to senior official in the state and the company, the government has zeroed in on three such deposits, covering an area of 140 hectares near Jaipur, in Koraput district.

"They had 5-6 applications, and the government has approved proscpting leases for 3 deposits. This is for prospecting, it will then progress to a mining lease," said a senior government official who asked not to be named.

A 72mt bauxite deposit atop Niyamgiri hills was to be mined by the state firm, Odisha Mining Corporation for the 1million tone refinery. Local administration is scheduled to conduct a public hearing for the expansion of this refinery, from 1million tone annual capacity to 6mt, and of its captive power plant from 75 MW to 285 MWon Wednesday. A more long term solution to the project Patnaik's though will be a captive bauxite supply mined in the vicinity.

According to those in the know, Naveen Patnaik's government is pushing for OMC to develop the 224 mt Karlapat deposit, and the smaller 22mt deposit of Majingamali that can then supply raw material to Sesa Sterlite's aluminum project. The stat has recommended the two deposits be reserved for its PSU; The centre is yet to approve these allocations to OMC.

Sesa Sterlite claims to have invested Rs 50,000 crore in setting up this alumina refinery and a 0.5mtpa smelter and captive 1215 MW power plant in Jharsuguda, banking on their MoU with OMC for a supply of 150 million tones of bauxite. The project has been battling opposition from both local tribals opposed to the mining, environmentalist who they claim are funded by global rivals, and Congress politicians of the former UPA government.

Laterite, unlike bauxite, figures in the list of 'minor' industrial minerals, and its exploitation will not require central government approval. According to former state mines minister, the company has already experimented with laterite from Andhra Pradesh.

Point Henry smelter: Sombre days for Alcoa workers as aluminium plant near Geelong winds up

ABC - July 29th 2014,

After more than 50 years as one of Geelong's major employers Alcoa will close its aluminium smelter this week.

One by one the pot lines are being switched off, with the Point Henry plant's final line being shutdown on Thursday.

The shutdown was announced in February after the company decided the ageing smelter was no longer financially viable.

The closure will leave about 500 workers jobless.

Charlie Ardonetto started working at the smelter nearly 44 years ago, when he was 17.

"When I started here there were more than 2,000 people," he said.

He said changes in technology made work a bit easier, but it was always hot, hard work.

"You really earned your money, people sometimes walked in one day walked out the next, it was that sort of environment," he said.

"Anyone who stayed probably stayed for a long time."

Mr Ardonetto will finish up at Point Henry on Friday.

"It will be very difficult, very emotional," he said

"When you've spent so much time in a place it's very hard to just walk away."

For his retirement, he said he was planning to play some sport, including "a bit of golf, fishing, just putting my feet up and having a break basically".

Bauxite mining ready to roll?

Solomon Star News - July 29th 2014,

Reports of heavy duty mining vehicles arriving on our shores

IS the environmentally hazardous bauxite mining ready to roll in the Solomon Islands?

This was the question most lingering in many people's lips following reports of number of heavy duty vehicles intended for mining exercises on Rennell Island, Renbel province arriving on our shores the previous week.

However to whom do these vehicles belong? And is their arrival a sign of the government giving companies the green light to carry out mining exercises rather than exercising their granted prospecting license?

Reports reaching this paper claimed that a majority of the vehicles that have arrived and awaiting clearance are owned by Indonesian mining company, The Bingtang mining company who are understood to be under a two year prospecting license agreement.

"The vehicles are owned by The Bingtang mining company and are awaiting clearance before shipped down to Rennell to start of both prospecting and mining exercises," a source informed this paper.

Solomon Star understands that along with The Bingtang mining company, other companies also interested in bauxite mining on Rennell include; Asia Pacific Investment Development (APID), Solomon Mining and Solomon Bauxite.

Meanwhile the ongoing roar not only between The Bingtang mining company, but also others and landowners have continued, mostly after landowners claimed to have been bribed into agreeing their areas to be prospected and mined.

"All I was told was that if I signed the document given to me, I would be given $200 and that my community would benefit immensely from it.

"That has yet to be the case as all of a sudden our names and areas are being included in a list of places the company would prospect and possibly mine," a landowner said.

Also others fear that if mining operations and exercises are carried out in the province, then Rennell will lose much of the landmass that makes up the province.

"Rennell is not at all a big island, and if bauxite mining takes place, we will not have our land back as such mining involve digging up our soil, breaking down the very little land that we now call home," another said.

Rennell Island has a land area of 660 square kilometers (250 sq mi) that is about 80 kilometers (50 mi) long and 14 kilometers (8.7 mi) wide. It is the second largest raised coral atoll in the world with the largest lake in the insular Pacific (Lake Tegano) that is listed as a World Heritage Site.

With an estimated population over 1840 people the province lies 236 kilometers (147 mi) south of Honiara.

Canyon Resources announces the discovery of new bauxite ore in Cameroon

Business in Cameroon - July 28th 2014,

Canyon Resources Ltd has alleged locating a large bauxite deposit in the Birsok project, in the centre of Cameroon, that it is in the way to having 75%, following a joint agreement, struck in late 2013, with the British company, Altus Strategies Ltd.

In the research report published on July 23, the ASX listed company indicated that the first round of drilling confirmed the existence of a thick layer of mineralisation, starting from the surface, of high bauxite content in the project involving two licences covering close to 1,460 km2.

The latest results obtained are "the highest to date", especially those of the Djombi plateau, where, in some places, "there is high bauxite content with over 50% aluminium oxide (Al2O3) with low contamination levels, which is at least 5% silicium dioxide from the surface."

The programme involved 19 plateaus which form, through 4 prospects, "a bauxite rich zone of 3.5 km in length and 40 m in width with an average depth of 4 m that contains aluminium oxide ranging between 40 and 45%," reports Canyon Resource which is hoping to produce DSO bauxite in Birsok.

The results available from over a third of the samples include 6m @ 54,0% Al2O3 (2.62% total SiO2) from the surface, 3m @ 5.4% Al2O3 (4.3% total SiO2) from the surface, 4m @ 49,1% Al2O3 (5.8% total SiO2) from the surface, 4m @ 54.7% Al2O3 (1.4% total SiO2) from the surface.

Canyon Resources has an opening participation of 51% in Birsok, for 2 million Australian dollars in financing which it will bring up to 75% with an additional 4 million dollars in financing over three years.

Vedanta Resources Plc eyes new bauxite deposits in Odisha

Business Standard Ltd - July 24th 2014,

Vedanta Resources Plc, a London-listed mining giant, would explore new deposits of iron-bauxite in Odisha to feed its Lanjigarh refinery.

The move is seen as initiative by the company to acquire the raw material required for aluminium producing after the Niyamgiri fallout where Vedanta Resources failed to get environment clearances to mine bauxite. The company has a 1 million tonne refinery in Lanjigarh (Odisha).

"In Odisha, there are actually large Bauxite endowments throughout the state that Vedanta can explore," Tom Albanese, Chief Executive Officer (CEO) of Vedanta Resources Plc, said. He is on a visit to Balco-Korba where the company has a major aluminium facility. Albanese said they would look for those bauxite resources that are not confronting the environment and community challenges. "After identifying such reserves, the company shall demonstrate a positive tract record there and use that (the bauxite reserves) as the bases for the Lanjigarh refinery expansion," he added.

The Vedanta CEO expressed his optimism to see Balco's 1200-Mw power plant going on stream soon. The discussion with Chhattisgarh Chief Minister Raman Singh was encouraging and he was optimistic to get the licence to start the power plant soon, Albanese said. The power plant would help the company to expand its aluminium production."Once the power plant is commissioned, we will have enough power for the aluminium plant and will be able to produce power for sale," he said, he said, adding that the power would be either for sale in the state or it would be for other states. The power shortage in the country had been emerging as a major problem.

Albanese said he was also hopeful to get required support for developing and mining coal from the captive block it had been allotted.

He said captive coal block was quite important for the company for producing power by mining its own coal rather than importing.

It had been frustrating at the federal level to see that Captive Power Plants (CPPs) had not been given coal necessary to produce power. "We are sitting on coal and we are importing coal," he observed. Unfortunately, they are paying other countries for coal, Albanese said.

Aluminium Production Reports Marginal Drop, Still Near All Time Highs

India Infoline - July 23rd 2014,

World Aluminium markets have again showed minor decline in the production figures. The June month brought some relief in the rising trend of production that was near all time highs.

Data estimates from International Aluminium Institute (IAI) showed that the total primary Aluminium production reached 4.303 million tonnes in the month of June 2014 from 4.331 million tonnes in the month of May 2014. Although on a year on year basis the production is still showing signs of improvement. The production gained 1.8% on a y-o-y basis in June 2014.

The production of Aluminium reached record highs of 4.406 million tonnes in the month of March. The production of Aluminium in June 2014, gained by 1.8% compared to corresponding period last year when it was 4.224 million tonnes.

China remained the major contributor to the production as increase in Chinese production also resulted in the increase in the production of World Aluminium on a monthly basis.

The total reported production in China was 1.95 million tonnes in June 2014, compared to 1.898 million tonnes in May 2014. This indicates that China produces 45.31% share of the world primary production.

Production of China in June 2013 was 1.84 million tonnes. This marked an appreciation of 6%. Unreported production in China is estimated around 250000 tonnes.

Asian production excluding China was 193000 tonnes in June 2014, compared to 203000 tonnes in the month of May 2014. Meanwhile, production appreciation in the GCC region was noted. The total production of GCC in June 2014 was 412000 tonnes, up 26% from 327000 tonnes in the month of June 2013.

Smelter projects progressing despite hurdles

The Jakarta Post - July 21st 2014,

Six months after the implementation of a ban on mineral ore exports, the development of a number of smelters are progressing, although challenges have halted the acceleration of the work.

Sixty four smelters are under development by independent or joint mining license holders, according to data from the directorate general of mineral and coal at the Energy and Mineral Resources Ministry.

The ministry estimated the 64 ongoing smelter projects would require US$17.4 billion in investment.

Nickel smelters dominate the projects, with 30 such projects ongoing at present, followed by 13 zircon facilities, seven iron, five bauxite, four kaolin and zeolit, three manganese and two lead and zinc.

"The development of nickel smelters is faster compared to bauxite because bauxite requires more investment," mineral and coal director general R. Sukhyar said.

Other mineral smelters, according to Sukhyar, are also less complicated.

Most smelters are scheduled to be finished next year or in 2016.

The government began the implementation of its raw material export ban on Jan. 12 in an attempt to encourage the country's downstream industry, and in compliance with the 2009 Mining Law.

The downstream policy also aims at changing the country from a raw material exporter into a value-added mineral producer, which is in the higher production chain.

The move has been criticized because building smelters requires a lot of investment.

Mining firms have also been complaining about poor supporting facilities for smelter development, particularly regarding the availability of electricity.

"The supply from PLN [state-owned electricity firm PT Perusahaan Listrik Negara] is unstable. We can use a generator but it will be too costly for us," said Sadman, a commissioner with PT Sumber Baja Prima, which is developing a smelter to process iron sand.

Sumber Baja Prima has a facility to process iron sand into iron pellet in Sukabumi, West Java. The company is planning to continue its work by expanding the facility to process the pellet into sponge iron.

Sadman said the company would need up to 10 megawatts (MW) of electricity when its sponge iron smelter was completed in 2016. The smelter will have a production capacity of 300,000 ton sponge iron.

PT Lumbung Mineral Sentosa, which is developing a facility to refine lead and zinc, is also facing electricity issues.

"We will need 4 MW when our refinery is in operation in 2015. We are now consuming 0.75 MW for our processing facilities. PLN has said it will be able to supply us by the time our refinery starts operation," Lumbung's director Ricky Gowdjali said.

The full ban on raw material exports will begin in 2017, and until then, semi-finished products such as concentrate could be exported.

Reopen we will, but not on Paulwell's deadline! Russian firm pushing to resume bauxite production at Alpart; Kirkvine uncertain

Gleaner Company Ltd - July 20th 2014,

Daraine Luton, Senior Staff Reporter

Even as aluminium giant UC Rusal faces pressure from the Government to restart operations at the Alpart and Kirkvine refineries by January 1, 2015 or lose its special mining leases, Igor Dorofeev, the company's head official in Jamaica, has described the decision to reopen the Ewarton bauxite plant as "a charity" to the people of Jamaica.


"It has not been a business; it has been a charity," Dorofeev told editors and senior reporters at a meeting at The Gleaner Company's North Street offices last Friday.

"It has been a charity to the Jamaican people … . US$21 million per year, that is what it is costing my company," Dorofeev said.

Rusal reopened its Ewarton operations in 2010, months after shutters had been pulled on that plant, along with those at Alpart and Kirkvine.

The Government has been pushing Rusal to reopen the Alpart and Kirkvine plants, which have been closed since 2009, but Dorofeev said while his company is prepared to reopen the plants - at least Alpart, "in the nearest future" - it will do so only after it has secured cheaper sources of energy.

LEVY RELAXED

Energy Minister Phillip Paulwell has said that if the Government did not relax the requirement for Rusal to pay the bauxite levy, the Ewarton plant, which employs 600 people, would have remained closed.

In June, Paulwell told Parliament that the Government had extended a one-year waiver on the payment of the levy, which had expired in October 2013. He said one condition of the concession is for Rusal to commence the construction of a coal-fired power plant.

The bauxite levy is US$7 per tonne, but Dorofeev said it is costing UC Rusal up to US$325 per tonne to produce alumina, while earning only US$290 per tonne for the commodity on the world market.

"Despite the fact that we have been losing money on the restart of Ewarton, we still kept it going because we felt it very important. We have not been sitting idle and waiting for the market to bounce back in order to restart Alpart and Kirkvine. We have been researching the best possible way how to modernise the Jamaican plants and make them effective and competitive," said Dorofeev.

Energy represents 60 per cent of the cost of producing alumina at Ewarton, and Dorofeev said a coal plant planned for the facility, which may be ready in three years, could see the production cost being reduced to US$275 per tonne.

Meanwhile, Dorofeev has said Kirkvine could have a brighter future in other areas than bauxite operations.

"The mines at Kirkvine are mostly yellow bauxite. Kirkvine cannot refine. We are looking at what to do with Kirkvine," Dorofeev said, while stating he cannot divulge everything being discussed in relation to the Manchester facility.

He said Rusal is in discussions with the Jamaica Bauxite Institute and the Government about what to do with Kirkvine, which he said is not viable as a refinery of traditional alumina.

"Why not make it an industrial park?" he said in response to a suggestion that Kirkvine be put to some other use other than for bauxite refining.

"The infrastructure is there, it has a railroad, it has all the roads, it has all the engineering facility, a generating plant and an airstrip," Dorofeev said, while adding that consideration is being given for it to be used for producing of chemical-grade alumina.

Russia's Rusal seen unlikely to start BEMO aluminium project in 2014

Thomson Reuters - July 15th 2014,

Russia's Rusal, the world's largest aluminium producer, is unlikely to start production at its Siberian Boguchansk aluminium project in 2014, the Energy Ministry said on Tuesday.

Rusal, led by Russian tycoon Oleg Deripaska, has already delayed the launch of the 588,000 tonne-per-year Boguchansk smelter several times due to weak aluminium prices.

The project, also known as BEMO, includes an aluminium smelter and a hydropower plant. It is being financed by Rusal and Russian state-controlled hydroelectric power producer Rushydro.

The ministry said in a statement a recent visit by officials including deputy energy minister Vyacheslav Kravhenko showed the Boguchansk hydropower plant was almost ready but the aluminium smelter was not completely ready, "which raises doubts in its launch in the end of 2014".

Rusal declined to comment on the ministry's statement. "Previously investors were talking about starting in the second half of 2014, there is no other decision so far," the aluminium giant said in an emailed comment.

Rusal, with net debt at $10.3 billion at the end of March, is currently talking to creditors over debt restructuring as the situation in the aluminium market has improved.

"As Rusal has not confirmed it, the reason of a (possible) delay remains a question: either the company does not want to hurry while it waits for a further aluminium market recovery, or it is not technologically ready," said Sergey Donskoy, metals and mining analyst at Societe General.

National Aluminium Company Ltd and Indian Rare Earths Ltd sign MoU for Titanium Slag Plant in Odisha

Times Internet Limited. - July 15th 2014,

As part of its diversification plan, the National Aluminium Company LtdBSE -0.92 % (NALCO) has signed an MoU with Indian Rare Earths Ltd (IREL) for setting up a Titanium Slag Plant of 1 lakh tonne capacity in Odisha's Sand Complex at Chatrapur in Ganjam district.

Nalco CMD Ansuman Das and R N Patra, CMD of IREL, a Government of India undertaking under the Department of Atomic Energy, yesterday signed the agreement at Mumbai in the presence of senior officials of both the companies, an official release said today.

As per the MoU, the project is contemplated in Joint Venture mode for which feasibility study and technology selection would be carried out very soon, it said.

The project envisages value addition to Ilmenite to produce titanium slag which is an intermediate product for making titanium sponge and titanium pigments, the release added.

Russia's Rusal starts Dian-Dian bauxite project in Guinea

Thomson Reuters - July 10th 2014,

Russia's Rusal, the world's largest aluminium producer, has launched the Dian-Dian bauxite project in Guinea, the company said in a statement on Thursday.

The decision to start the project comes amid continuing talks between Rusal, whose net debt stood at $10.3 billion at the end of March, and its creditors over debt restructuring.

Dian-Dian is the world's largest bauxite deposit with reserves of 564 million tonnes, the company said. Bauxite is used to producer alumina, which is then used for aluminium production.

The first stage of the Dian-Dian project involves the construction and putting into operation by 2016 of a bauxite mine with an annual capacity of 3 million tonnes with the potential for a further increase of up to 6 million tonnes, Rusal said.

The total investment for the first stage of the project will be more than $220 million, with a significant part of this budget reserved for infrastructure development in Guinea, specifically railway and port development. To transport bauxite from the mine, a new 25 km road will be built, Rusal said.

With the capital spending of $73 million per year over three years, Rusal will be able to finance it internally and will be able to increase its bauxite self-sufficiency to 93 percent from 74 percent in 2013, Morgan Stanley said in a note.

UC RUSAL to invest USD45 million in new casting line at the Krasnoyarsk aluminium smelter

Foundry-Planet Ltd. - July 9th 2014,

UC RUSAL, a leading global aluminium producer, announces that it has begun initial design work on a project to build a new casting line at the Krasnoyarsk aluminium smelter (“KrAZ”). The project is part of the Company’s strategy to increase the share of alloys in total aluminium output. Completion is expected in 2016. Total investment in the project is estimated at USD45 million.

The new casting line will produce a new size range of billets, including up to large diameter billets of 460 mm. Currently, RUSAL produces billets with a diameter of up to 200 mm, therefore greatly increasing our billet production abilities. The capacity of the line will be 120,000 tonnes per year.

Evgeny Nikitin, Director of RUSAL’s Aluminium Division, commented: “Our consumers in construction, packaging and automotive industries will all benefit from the new alloys produced at KrAZ. Large diameter billets are in particular demand in the automotive industry, which are used to produce wheels for pickups and small trucks.”

The new project is part of the Company’s strategy to increase the share of value added products in total output. By the end of 2014, the share of VAP is expected to increase to 45% thanks to the modernization of casthouses at the Sayanogorsk (“SAZ”) and Khakass (“KhAZ”) aluminium smelters. Modernization works at the second casthouse at SAZ will be completed in November 2014 and total investment is expected to reach USD22.8 million. A further USD4.6 million will be invested in the modernization of the casthouse at KhAZ.

Rio Tinto could soon approve Queensland bauxite project

IFA Magazine - July 1st 2014,

London-listed mining stocks were pushed higher on Tuesday by an improvement in Chinese manufacturing activity, though Rio Tinto was a standout performer as analysts made positive comments on its bauxite assets in Queensland.

After a site visit to Rio’s aluminium subsidiary Alcan, Citigroup said that its 22m tonnes-per-annum (mtpa) South of Embley project near the Weipa bauxite mine on Western Cape York Peninsula could be approved later this year.

Citi said that Rio’s management are wanting to ‘capitalise on Indonesian export ban and increase exports to China (currently around 16mtpa)’.

All permits are said to be in place and studies are near completion so the project ‘could be approved as early as October’, the bank said.

Meanwhile, the Australian Financial Review said that Rio expects South of Embley to deliver returns similar to those of its the group’s lucrative Pilbara iron ore operations.

‘The go ahead on the project is not unexpected, particularly given the commodity lift-up as a result of the Indonesian ore export ban,’ according to analysts at Investec.

Rio was trading 3.3% higher at 3,210.45p in afternoon trade, while the FTSE 350 mining index was up 2.6%.

BC

Rio Tinto to approve Qld bauxite mine

Financial Review - June 30th 2014,

Rio Tinto expects its $US4.8 billion ($5.1 billion) South of Embley bauxite project near Weipa in Queensland to deliver returns comparable to its lucrative Pilbara iron ore operations, and is likely to approve its development this year, UBS analyst Glyn Lawcock said.

Mr Lawcock tips South of Embley – which is critical to extending the life of bauxite mining at Weipa – will deliver an internal rate of return of about 29 per cent.

“Rio expects the return on this project to be ‘comparable to the Pilbara’ (i.e. greater than 20 per cent),” Mr Lawcock wrote from a tour of Rio’s Alma smelter, in Canada.

“Rio Tinto Alcan is particularly bullish on the outlook for bauxite, with material demand growth and the Indonesian ban impacting the market. Rio is well positioned to benefit from this.”

Rio’s aluminium division, under new chief Alfredo Barrios, is likely to approve the South of Embley project this year.

JP Morgan analyst Jason Steed, who has also been on the Rio North American site tour, said the focus for growth at Alcan is “clearly weighted towards bauxite over aluminium and alumina, with the South of Embley project well advanced at the planning stage”.

Rio is the largest global producer of bauxite, with a current long position of 18 million tonnes, including Gove.

The South of Embley project would initially produce 22.5 million tonnes of bauxite each year, but 10 million tonnes per annum would be replacement tonnage for Weipa, with the possibility to expand to 50 million tonnes per annum.

Mr Lawcock’s return figure is based on the 22.5 million tonnes per annum run rate.

He values the project at $US4.8 billion, and tips it will cost $US2 billion to $US2.5 billion and take three years to develop.

Rio Tinto Alcan has improved earnings before interest, taxation, deprecation and amortisation by $1.5 billion since 2011 and is likely to build on this next financial year. Most of its assets are in Canada and Australia.

Cost-cutting is helping “create momentum” in the division and the miner is well positioned for a recovery in aluminium prices, Mr Lawcock said.

Mr Steed noted that “the cost reductions across Rio Tinto Alcan have been some of the most impressive achieved across the broader company”.

About $231 million was cut in 2013, and sustaining capital expenditure fell to $847 million, from $955 million in 2012.

“Importantly, management believes these reductions can be maintained,” Mr Steed said.

“When asked whether a 40 per cent margin is achievable from the division, management noted this relies on higher prices (primary metals division is already first cost quartile).”

Rio management has a positive market view on bauxite but are more cautious on alumina and aluminium, Mr Steed said.

“Rio remains bullish on the market over the long term and believes the current outlook is improving,” he says.

Management said it was too hard to predict whether Indonesia will ease the bauxite export ban in the medium term, Mr Steed wrote.

“But (they) did note there were powerful individuals in the country that owned deposits that were frustrated by the new rules. There is currently no activity on the ground. Management believes China still has excess inventory which will take nine to 12 months to reach normal levels.”

Rio predicts aluminium demand will grow at 5 per cent each year to 2020, taking the market to more than 70 million tonnes per annum.

Rio’s Kitimat aluminium smelter project in British Columbia remains on track for commissioning in the first half of 2015, but analysts were not updated on the $3.3 billion capital expenditure budget, which Mr Steed suspects will creep upwards.

Aluminum of China : CHALCO to form JV for alumina project

4-traders - June 30th 2014,

Aluminum Corporation of China (CHALCO) (02600) said

it entered into a joint venture agreement with Hangzhou Jinjiang Group Co., Ltd. to

jointly establish Guizhou Huajin Aluminum Co., Ltd. with a registered capital of

temporarily amounting to Rmb1 billion.

CHALCO and Jinjiang Group will contribute Rmb600 million and Rmb400 million. Upon the

establishment of Huajin Aluminum, CHALCO and Jinjiang Group will hold 60% and 40% equity

interest respectively in Huajin Aluminum.

The construction of Qingzhen Alumina Project involves an investment of about Rmb3.8

billion, among which Rmb1 billion will be financed by Huajin Aluminum by internal funds

while the remaining investment will be made by Huajin Aluminum through the application of

bank loans. (HL)

Alba to start $2.5bn expansion work by year-end

Trade Arabia - June 30th 2014,

Alba's proposed $2.5 billion expansion to add a sixth production line is likely to start by the end of this year, the company's chief executive has said.

In an exclusive interview with the Gulf Daily News, our sister publication, Alba chief executive Tim Murray said the bankable feasibility study was almost complete and the project was now subject to approvals from the board and authorities.

The construction of a fifth power station will also be a part of the expansion, he said.

Next steps include finalising long-term contracts to secure gas supplies for powering the new line.

Murray said the project would take 36 months for completion from the commencement date.

Once the sixth potline goes on-stream, Alba expects to produce an additional 400,000 tonnes of aluminium a year, boosting current production capacity by 45 per cent to around 1.3 million tonnes.

"Line 6 will help us realise our ambition to remain one of the largest smelters in the world," he added.

The company is currently the fifth largest smelter in the world.

"The initiative will help Bahrain capture a significant portion of the aluminium value chain, creating many co-investment as well as employment opportunities downstream.

Alba's last major expansion took place in 2005 when it added a fifth potline at a cost of $1.7bn.

Bechtel, which is doing the feasibility study, was involved in that project too as the engineering, procurement and construction management contractor.

According to Murray, global demand for aluminium remains healthy and is expected to grow at an average of 5pc this year with emerging markets continuing to be the key growth driver.

"However, the market will be oversupplied and without further production discipline, prices are likely to struggle.

"The company is trying to lower costs to stay competitive internationally. This year, the focus is on leveraging strong physical premiums and accelerating our initiatives under 'Project Titan'," he said.

Started in February, Project Titan is a two-year efficiency programme aimed at reducing cash cost by $150 per tonne by end of January 2016.

Murray said the smelter will continue leveraging technology to streamline and modernise its operation in its quest to raise productivity.

Alba achieved a production record of 912,700 tonnes of aluminium last year and expects to better that to 920,000 tonnes this year.

The smelter is a key pillar of Bahrain's economy and contributes around 10pc of the national GDP, he said.

Nearly 88 per cent of Alba's 3,000 plus employees are Bahrainis.

About half the company's aluminium output in the form of billets, slabs, foundry alloys and molten metal, goes to the downstream industry in Bahrain.-TradeArabia News Service

Qatalum inaugurates state-of-the-art Pot Relining plant

Qatalum - June 29th 2014,

US$44m facility will produce almost 300 pots per year by 2016

Qatalum has inaugurated its state-of-the-art Pot Relining plant, following the project's successful and timely completion Wednesday 25th of June

The opening ceremony was attended by Hilde Merete Aasheim, Vice Chairperson to the Qatalum Board and Executive Vice President of Primary Metal at Hydro, together with Tom Petter Johansen, CEO of Qatalum and Hans Petter Lange, Reduction Manager.

Also present were Iain Dodds, Project Manager, representatives from Dutco McConnell Dowell (Qatar) LLC, the project contractor, Davy Fosen, Relining Plant Manager, and representatives from Staref, the relining service contractor.

At an overall cost of US$ 44 million, the Relining Plant Project has been considered a resounding success. The project was delivered on time, with no recordable injuries during the 1,205,961 man hours worked on site.

"I consider this a reflection of the overall quality of operations within Qatalum and an indicator of our ambitions to become a globally leading smelter," said Tom Petter Johansen, Qatalum's CEO.

Significant modifications to the Qatalum site had to be made in order to facilitate the relining facility. Commenting on these, Iain Dodds, Relining Project Manager, said: "Progress was at times challenging but ultimately the safe delivery of a high quality plant was always Qatalum's number one priority. I believe this plant is state-of-the-art, with the durability to last for several relining cycles at Qatalum".

Strong coordination between Qatalum and the contractor was required to complete the more critical and challenging stages in the construction of the largest project outside of the Smelter's construction.

Hans Petter Lange, Reduction Manager and owner of the relining process, said: "The oldest pots in the pot line are now approaching the end of their life. In order get through the extensive program of relining the 704 pots in our potlines during the next 3-4 years we are really happy to receive the state of the art facility on time, on cost and with excellent HSE results during the construction phase. We now look forward to take over the facility from project manager Iain Dodds and from the EPC contractor DMD and get started.

The new Relining facility will be owned by Qatalum and managed by Davy Fosen. Operations, however, it will be conducted by a service contractor. The Pot Relining Service Contract (2014-2019) has already been awarded to Staref, a joint venture between Aluref (South Africa) and STS Oman, and is valid for the relining of 704 pots. Staref management and a small team is already on site with the mobilization of personnel ongoing. During the contract period the service contractor will have up to 250 people on site, working 24 hours a day, 6 days a week. The contractor will in addition to the relining activities also be responsible for operation and maintenance of the Cathode Rodding Shop (CRS), and provide manpower supply to the Pot Start-up teams.